Washington Former Intelligence Czar a Prime Recruit for McLarty Associates

Source: IntelligenceOnline.com

John Negroponte, who was the first Director of National Intelligence, has joined the McLarty Associates consultancy headed by Bill Clinton’s former chief-of-staff, Thomas McLarty.

Specializing in strategic and geopolitical consultancy for multi-nationals and big equity funds, McLarty Associates is particularly active in Latin America where John Negroponte was U.S. ambassador on two occasions (Mexico and Honduras) before becoming boss of American intelligence. Employing a staff of 30 consultants, the Washington-based company studiously keeps the names of its clients secret (they are mainly multinationals, including France’s nuclear energy group Areva, and financial institutions). The firm has worked hand in glove since 2003 with the law concern Covington & Burling; two of whose alumnae are the new attorney general Eric Holder and the newly-appointed assistant attorney general for criminal division, Lanny Breuer, who was Bill Clinton’s lawyer at the White House. Associated with McLarty until last year in the firm Kissinger McLarty Associates (IOL 565), former secretary of state Henry Kissinger has remained a member of the advisory board of the firm re-named McLarty Associates. Ties between Kissinger and Negroponte date back to the 1970s when the two worked together at the state department during the Vietnam war.

NEED TO STRENGTHEN SECURITY FOR SONIA GANDHI

B.RAMAN

Angered by the reluctance of the international community, including the Government of India, to exercise pressure on the Government of Mahinda Rajapaksa to observe a ceasefire to protect the 150,000 Sri Lankan Tamils caught up in the conflict zone in the Wanni area, pro-LTTE web sites have kept up their attacks on the Government of India and the Congress (I). These attacks are in the form of unsigned or pseudonymous articles and letters to the web site editors.

2. The attacks on Mrs.Sonia Gandhi tend to be vicious. The Congress (I) is projected as the "Sonia Congress" and the "Dynasty Congress " and the Government of India as the "Sonia Establishment". She has also been projected as not nationalistic. On February 3,2009, criticisms of Shri M.Karunanidhi, the Chief Minister of Tamil Nadu, appeared for the first time. Pro-LTTE elements abroad seem to be unhappy with him for not exercising pressure on the Government of India to stop the fighting in the Wanni area.

3. While there is no evidence to show that these attacks are emanating from the LTTE leadership, the fact that they are being disseminated through pro-LTTE web sites would show a silent nod of approval of the LTTE leadership for these orchestrated criticisms. Keeping in view the dangers of a negative impact of such attacks on the minds of irrational elements in the Tamil community, it would be prudent to strengthen the security for Mrs.Sonia Gandhi.

4.The LTTE leadership and those sections of the Sri Lankan Tamil diaspora supporting it are increasingly desperate and bitter over the reluctance of the international community to exercise pressure on the Sri Lankan Government to suspend the military operations in the Wanni area. The LTTE's calculations that just as the international community exercised pressure on Israel to suspend its military operations in the Lebanon in 2006 and in Gaza recently before Israel had achieved its military objectives, it would exercise pressure on the Rajapaksa Government to suspend the military operations against the LTTE have proved wrong.

5. Prabakaran's cynical use of the civilians to intimidate the international community into intervening is one more diastrous blunder committed by him and has lost him even the little sympathy which he might have had in the past. He is apparently in such a state of illusion that he does not seem to realise that whereas almost the entire Islamic world supported the Hezbollah and Hamas and exercised pressure on Israel to discontinue its operations, the LTTE has no friends left in the international community except possibly the African National Congress (ANC) of South Africa.

6. He and his irrational supporters do not seem to realise that the world's attitude to terrorism changed after 9/11 and that India's attitude to terrorism became stronger after the 26/11 terrorist attack in Mumbai. How can India demand strong action against the jihadi terrorists by Pakistan and come in the way of strong action by the Sri Lankan Government against the LTTE's terrorism?

7. The anger of many of the Sri Lankan Tamils should be a cause for concern. While India cannot but support ---or at least refrain from criticising---- the counter-terrorism operations of the Sri Lankan Government,it should remove the impression widely prevalent in the Sri Lankan Tamil community that but for its military assistance the Sri Lankan Army could not have succeeded. Large sections of the Sri Lankan Tamil community in Sri Lanka itself as well as abroad have convinced themselves that the Govt. of India has been playing a double game-----making a pretense of supporting the human rights of the Tamils and, at the same time, quietly assisting the Rajapaksa Government in crushing the Tamils.

8. In the absence of strong statements or denials from Delhi, the Sri Lankan Government and its officials such as Gothbaya Rajapaksa, the Defence Secretary, who is the brother of the President, and Lt.Gen.Sarath Fonseka, the Army chief, have been mischievously creating an impression that whatever they are doing against the Tamils has the tacit support of the Govt. of India,

9. It is not advisable for the Govt. of India to be seen by large sections of the Sri Lankan Tamils as not only anti-LTTE--- rightl;y so--- but also as anti-Tamil. Indira Gandhi was the most popular Indian leader among the Sri Lankan Tamils. They felt that her heart genuinely bled for the rights and sufferings of the Sri Lankan Tamils. Large sections of the Tamil community are bitter that the present Congress (I) leadership does not share her empathy for them.

10. How to have this impression corrected without giving an impression of encouraging terrorism? That is the question, which should engage the attention of the Indian political leadership and diplomats. (3-2-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com )

SRI LANKA: INDIA'S MOMENT OF TRUTH

B.RAMAN
( Text of an interview through E-mail given by me to a Russian journal )

(a). Sri Lanka is less developed than India because even though the
percentage of literacy in Sri Lanka is high, it does not as yet have
educational institutions of excellence like the Institutes of Technology in
India. India has better human and material resources than Sri Lanka. The
Indian economy is highly diversified. The Sri Lankan economy is still a
three-item economy---tea, rubber and tourism.

(b).Its economy is dependent on tea, rubber and tourism. The main tea and
rubber growing areas are in the South where the Sinhalese are in a majority
and not in the North and the East where the Tamils are in a majority. The
insurgency has, therefore, not badly affected these three items. Iran,
Pakistan and China are funding its arms purchases. Teheran has been
supplying oil at concessional prices and giving it cheap credit to enable it
to pay for the arms purchases. Pakistan and China sell arms at concessional
rates and provide low-interest credit to enable Sri Lanka to pay for them.

(c).India's interest in the island is partly emotional and partly strategic.
The emotional interest arises from the fact that India has a large Tamil
population in Tamil Nadu, a southern province, who have ethnically and
linguistically much in common with the Tamils of Sri Lanka. Any policies of
the Government of Sri Lanka, which affect the Sri Lankan Tamils, have an
echo in Tamil Nadu. Hence, the close Indian interest in the problems and the
well-being of the Sri Lankan Tamils. Strategically, the Sri Lankan
Government has been cultivating China and Pakistan to keep India in check.
It has good political and economic relations with China. It has invited
China to construct a modern port in Hambantota in southern Sri Lanka. It has
invited the Chinese to help it in gas exploration in areas which are close
to India. Similarly, there is a growing military-military relationship between
Sri Lanka and Pakistan, which worries India.

(d). Indian aid is partly economic and partly military. The economic aid is
in the form of cheap credit to enable Sri Lanka to import from India what
it needs. India has been helping in gas exploration and has taken on lease
the large number of oil storage tanks in Trincomallee in the Eastern Province,
which were constructed by the British during the Second World War.India is
hoping to play an important role in the economic development of the Tamil
areas in the North and the East when the LTTE is defeated by the Sri Lankan
Army. The military aid is in the form of supply of defensive equipment such
as radars at concessional prices and training to the Sri Lankan Armed Forces
and Police in India.

(e).The Sri Lankan President Mahinda Rajapaksa comes from a party (the Sri
Lanka Freedom Party (SLFP), which is left of centre and has been traditionally
friendly to India. He has been warm to India and claims to be attentive to India's
strategic interests. At the same time, he has been determined to crush the LTTE
not only as a terrorist organisation, but also as a Tamil political movement with
assistance from India, if possible, and from China and Pakistan,
if necessary. Sensitivities of Tamil public opinion in Tamil Nadu have put limits
on the kind of military assistance that India can give to Sri Lanka. He has tried
to make up for this by seeking assistance from China and Pakistan and credit from
Iran. Thus, the strategic space for India in Sri Lanka is slowly getting reduced due
to the increasing presence of not only China, Pakistan and Iran, but also the US. In the
past, India was concerned over the US presence in Sri Lanka. It is no longer so
since Dr.Manmohan Singh became the Prime Minister in 2004. He does not share
the traditional concerns of India over the impact of the US presence in the Indian
neighbourhood on the regional influence of India. As a result of the victories of the
Sri Lankan Army, there has been an increase in
Sinhalese pride and chauvinism. Just now, Rajapaksa has been asssuring India
that once he crushes the LTTE, he would give to the Tamils a federal set-up which
will satisfy their political aspirations. It is doubtful whether he would keep his word
In view of the increased influence of Sinhalese
extremism on policy-making, he is likely to go back on his word and give the
Tamils something less than what he had promised. It would have been in India's
interest to help him in destroying the LTTE's capability for insurgency and terrorism,
while at the same time preserving its potential and strength as a political movement
which would safeguard the interests of the Tamils.
Of all the Tamil organisations in Sri Lanka, the LTTE was the most motivated. Many
of its young cadres, who fought ferociously against the SL Army, joined it long after
the assassination of Rajiv Gandhi in 1991. They had no role in his assassination. India should
have made a distinction between those who had a role in his assassination and those
who did not and tried to wean away the latter to India's side. It did not do so. It was a
very short-sighted policy. Rajapaksa has skilfully and cunningly used Indian support
and ambivalence to destroy not only the capability of the LTTE for terrorism , but also
its potential and usefulness to India in future as a political strategic asset. Indian
political class never understands the importance of identifying and preserving our
strategic assets in the neighbourhood. Jawaharlal Nehru let go our strategic assets
in Tibet.I.K.Gujral, who was the Prime Minister in 1997, unwisely and in a moment of
misplaced generosity let go our strategic assets in Pakistan. Manmohan Singh, the
present Prime Minister, has let go our strategic assets in Nepal and Sri Lanka. It could be
a great tragedy. (5-2-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi,
and, presently, Director, Institute For Topical Studies, Chennai. E-mail:
seventyone2@gmail.com )

The Russia-Belarus Military-Technical Cooperation

Strategic Culture Foundation

Anatoly TSYGANOK

The highlight of February 3rd was the signing by Russia and Belarus of an agreement on setting up a joint air-defence system. According to the chief of the RF Airforce General-Colonel Aleksandr Zelin, the new combat force will include five air squadrons, ten missile batteries, five radar facilities and a radio combat unit. It will be under orders of commander of the united Air and Air Defence Force of either side, appointed by the presidents of both states.

So, the not-easy-to-come agreement between the Russian Federation and the Republic of Belarus has been finally signed. It is titled “On the joint defence of the exterior border of the Union State in the air space and the establishment of the Joint regional air defence system of the Republic of Belarus and the Russian Federation.” Russia’s military cooperation with the CIS countries is a model of relations a big country like Russia can have with smaller states (except for Ukraine). In turn, they may not lose face while benefitting from this situation by focusing their efforts on solving their bottleneck problems and profitably trading in their “allegiance to the military cooperation with Russia” for real economic and political concessions.

With no alternative to Russian-made military hardware the real military cooperation with the post-Soviet states boils down to supplies of spares, training specialists, supplies of samples of equipment for controlling troops operations, based on different forms of economic agreements – by barter, on subsidized prices or free of charge.

The Russian-Belorussian military-political cooperation is carried out within the framework of the Agreement on the Establishment of the Union State as well as the Organisation of the Agreement on Collective Security.

A big number of military-technical facilities in Belarus influence maintaining strategic security in the centre of Europe. These include the radar near Baranovichi, a missile attack warning station, similar to 8 stations in Russia. The Baranovichi facility must ensure early warning of ABM launches in particular from Germany, France and Britain. It has been on combat duty since 2002 being capable of screening the airspace virtually of the entire Western Europe. In the USSR, similar facilities were built in Latvia, Ukraine, the Caucasus and Krasnoyarsk. They were to form a protection belt for Russia’s central parts against a NATO missile attack. Following the break-up of the USSR these plans were discarded. The Skrundje facility in Latvia was destroyed, the sites near Lvov and in the Caucasus remained undeveloped, and only Belarus gave its go-ahead for the Russian airospace force to complete this facility and lease it for itself.

Another Russian military facility in Belarus is the submarine control station in Vileika that is designed to relay signals to Russian fleets in the Central and North Atlantic.

The north-western extremes of Russian borders have long been screened by the Belorussian air-defence system. Russia virtually does not have any troops stationed in the north-west and the west. This territory is the responsibility zone of the joint Russian-Belorussian air-defence system with the prevailing role of Belarus.

In the re-armament in 2006 of its 115-anti-missile brigade Belarus got 4 divisions of the anti-missile C-300ПС systems for the replacement of the morally outdated C-125s. Since then, regular meetings of the Union Collegium of the Frontier Committee of the Union State have been held by turns in both Moscow and Minsk. The union budget annually earmarks around 100 million roubles to finance the programme “Training Belorussian servicemen at the military educational centres of the Russian Federation”, which has been successfully carried out since 1998. At present about 100 Belorussian career officers and close to 400 cadets get their training in Russia within the framework of this programme

Analysts in Russia do not rule out that the oil and natural gas debate between Gazprom and Belarus that is not totally extinguished, may with time grow into a Russian-Belorussian military standoff. For example, Aleksandr Lukashenko might “bill” Russia for “unpaid-for use of territories leased by Russian military facilities during the entire post-Soviet period. An increase of rent for the lease of land is also possible, and - as an extreme measure, the dismantling of the radar facility.


But it was quite fortunate that the “Voronezh” type missile attack early warning station commissioned in November of 2008, has actually closed the window of invisibility and inaudibility of the radar field that existed since the destruction of a similar facility in Latvia, covering the space controlled by the “Volga” facility in Gantsevichi. So, if in dire straits, Russia can give up its Baranovichi facility even though security of both Belarus and Russia would diminish. As concerns the Navy communication facility, things are more complicated but to a degree part of its functions could be performed by the Communications Centre of the Baltic district of Kaliningrad.

Russia influences Kyrgyzstan to close key U.S. airbase

By TOM LASSETER AND JONATHAN S. LANDAY
McClatchy Newspapers

http://www.kansascity.com/451/story/1016230.html


The U.S.-led campaign against the Taliban suffered two logistical blows Tuesday as the president of Kyrgyzstan announced that he'd shut a U.S. airbase in his country and insurgents in Pakistan blew up a bridge, disrupting the main U.S. supply route into Afghanistan.

The developments were the latest reminders of the vulnerability of the long and complex transportation system on which the 60,000 U.S.-led forces in Afghanistan depend for fuel, ammunition, construction materials and a great deal more.

The announcement by Kyrgyzstan President Kurmanbek Bakiyev that he will close the Manas Air Base also gave President Barack Obama a first taste of the challenge he faces from Russia, which is trying to restore its clout in countries that were part of the former Soviet Union.

Bakiyev made his announcement in Moscow, not in his own capital, shortly after the Russian government reportedly agreed to lend Kyrgyzstan $2 billion, write off $180 million in debt and add another $150 million in aid. The timing and place of the announcement indicated the Kremlin's involvement.

"It's a direct challenge to the new American administration. Russia is going out of its way to close an American base," said Pavel Felgenhauer, a Moscow-based military analyst.

Manas is the main transit point through which U.S. troops fly into and out of Afghanistan. As such, it is vital to plans to send 30,000 more American troops to stabilize Afghanistan. A U.S. Air Force Web site calls it "the premier air-mobility hub" for U.S. and allied operations in Afghanistan, with about 1,000 military personnel from America, Spain and France stationed there.

A senior U.S. military official said the U.S. military hopes Bakiyev's decision is not final but is the latest gambit in what has been a lengthy effort to squeeze more money out of Washington.

"There is a long list of things that he wants, some of which we can't do, like debt relief, relieving the debt he owes other governments," said the U.S. military official. "The bottom line, we hope, is that this is simply a card being played as part of the negotiating process. Obviously, we don't want to lose Manas."

Another U.S. official, who also spoke on condition of anonymity, said Bakiyev had been trying to play the U.S. off against Russia for months in order to secure more funds. The official could not be identified by name because he was unauthorized to speak to reporters.

The U.S. has been paying Kyrgyzstan about $63 million a year to use Manas. The money is part of some $150 million in annual direct and indirect U.S. aid.

Gen. David Petraeus, the head of the U.S. Central Command, which oversees U.S. military operations in the Middle East and South Asia, said senior Kyrgyz officials had assured him that there were no discussions between the country and Russia about closing the base in exchange for aid.

The senior U.S. military official said the base is also used to "bed down" U.S. tanker aircraft used for midair refueling operations over Afghanistan.

Bakiyev explained in Moscow that the decision had been made because "we have repeatedly raised with the U.S. the matter of economic compensation for the existence of the base in Kyrgyzstan, but we have not been understood," Russian media reported.

Bakiyev said that after the base opened in 2001 the understanding was that "it was one or two years that were being talked about. Eight years have passed."

The Soviet invasion of Afghanistan in 1979 touched off 30 years of war, and Moscow is again turning into a player in Afghan politics. Two days before Obama's inauguration, the Afghan government said that Russia had accepted a request from President Hamid Karzai for military aid.

Kyrgyzstan: U.S. to be denied use of Manas Air Base

Source : IntelFusion

Mike Eckel has the story for the AP:

MOSCOW (AP) — Kyrgyzstan’s president said Tuesday his country is ending U.S. use of an air base key to military operations in Afghanistan— a decision with
potentially grave consequences for U.S. efforts to put down surging Taliban and
al-Qaida violence.

Why is this happening now? Because Kyrgyzstan is in dire financial straits. That’s also the reason why the opposition party is gaining strength and posing a serious challenge to the Bakiyev presidency. To solve his country’s financial problems and retain power, Kurmanbek Bakiyev will pretty much go with whoever writes him the largest check.

What is Russia offering:

write off $150 million in debt to Moscow
make a $2 billion low interest loan
Receive $150 million in financial aid
Russian President Medyedev has also agreed to build the 1,900 MW Kambaratinsk hydro power plant.

What is the U.S. offering?

$63 million in annual rent with the possibility of raising the amount.

Is it any wonder that Bakiyev has reportedly opted to end his deal with the U.S.?

According to Ferghana.ru, the deal will be cemented by a meeting of EurAsEC (Eurasian Economic Community) member states:

On Wednesday Bakiyev will attend a session of the Collective Security Treaty
Organization and take part in an extraordinary summit of the heads of state of
the post-Soviet economic organization EurAsEC.
EurAsEC, established in 2000, is an international economic organization comprising Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. Three other former Soviet republics, Armenia, Moldova, and Ukraine have observer status.

The sheer enormity of the economic dilemma that Kyrgyzstan finds itself in is the primary reason why I discounted the issue of the Manas air base as the reason for the Kyrgyz sDDoS attacks of January 18, 2009. The scope of the attacks were simply too small to make any difference in this major issue.

Where Human Intelligence and Machine Intelligence Meet

Source: IntelFusion
Kudos to Kevin Kelly, one of the co-founders of Wired magazine, for finding a way to describe, with elegant simplicity, the future of man and machine. Outstanding work, Kevin.
Here’s a snippet from his post at The Technium:

One strand of massive connectionism is currently called social media. The goal
is to connect everybody to everybody else in as many different arrangements as
possible. Twitter, Flickr, Facebook, Digg, Delicious, Yahoo Answers – the whole
10,000 strong universe of Web 2.0 sites employ various webs of humans to
accomplish new things. In this regime, humans are the nodes. They generate the
signals.

The other strand of massive connectionism relies on a massive number
of machines, CPUs and computer transistors linked together in as many ways as
possible to get things done. For example, gigantic server farms, data centers,
and telecommunication networks. At the extreme level we’d have to include the
mega-network of the One Machine consisting of all cell phones, PDAs, PCs,
routers, wi-fi spots, satellite links, and so on. On this side, the signals at
each node are generated by machines.

CIA National Clandestine Service Ad On YouTube (YouTube via Got Geoint?)

The US Geospatial Intelligence Foundation's surprisingly hip Got Geoint? blog pointed to an interesting recruiting ad from the CIA (see below). The content is about what you would expect but the venue -- YouTube -- seems new. Worth a look (Another thing worth a look is Got Geoint? It is destined to be the Danger Room of the Geoint beat...)

SourcesAndMethods.Blogspot.com

Iran's Stealth Aircraft to Fly Soon

TEHRAN (FNA)- Iranian Air force Commander Brigadier General Hassan Shahsafi Tuesday announced that Iran's home-made radar-evading aircraft will join the country's fleet within the next 8 months.


"Military Experts are working on the radar-evading aircraft and God willing its test flight will be done in the first half of the next (Iranian) year (beginning on March 20)," Shahsafi told reporters here in Tehran.

He added that the experts have already designed and manufactured the aircraft in a one-seventh scale.

"After test flights and equipment testing, the project will be transferred to the defense ministry for the start of mass production," the Iranian air force general reiterated.

Stressing that defensive measures set a priority for the air force, he added, "All actions and achievements of the Iranian army solely serve defensive purposes."

The commander also reiterated the craftsmanship of Iranian experts, and said that they enjoy the most advanced technologies in producing military tools and equipment.

Referring to the test-firing of a heat-tracing air-to-air missile, Shahsafi announced, "The test was successfully done in two phases and we are increasing our missiles' range in line with our defensive doctrine," he said.

The military official said that the missile which has a range of 40 kilometers has been successfully fired in two separate tests in Tabriz and near Tehran, "and now we are increasing its range."

Tehran launched an arms development program during the 1980-88 Iraqi imposed war on Iran, to compensate for a US weapons embargo. Since 1992, Iran has produced its own tanks, armored personnel carriers, missiles and fighter planes.

Yet, Iranian officials have always stressed that the country's military and arms programs serve defensive purposes and should not be perceived as a threat to any other country.

Iran Sends First Home-Made Satellite to Orbit

TEHRAN (FNA)- Iran successfully sent its first domestically made satellite into orbit, ushering the country in an era of independence in its space program.



The satellite called Omid (Hope) was launched early on Tuesday after Iranian President Mahmoud Ahmadinejad gave the order to proceed.

Omid was sent into space by the Iranian-produced satellite carrier Safir 2 (Ambassador-2) rocket, which is an upgraded model of carrier Safir 1.

Equipped with two frequency bands and eight antennae, Omid will transmit information to and from earth while orbiting the planet 15 times per day.

The lightweight telecommunications satellite is equipped with remote sensing, satellite telemetry and geographic information system technology as well as remote and ground station data processing.

Omid is a research satellite that has been designed for gathering information and testing equipment. After orbiting for one to three months, Omid will return to earth.

Omid carries experimental satellite control devices, communications equipment and power supply systems to a distance of 250 to 350 kilometers from the earth's atmosphere.

The launch of Omid comes amid celebrations of the 30th anniversary of victory of the 1979 Islamic Revolution.

Iranian President Mahmoud Ahmadinejad in a message congratulated the nation on the new aerospace achievement and emphasized, "Dear people of Iran, your children have sent Iran's first domestic satellite into orbit... May this be a step toward... justice and peace."

"Iran's official presence in space has been added to the pages of history," Ahmadinejad said, press tv reported.

Omid is the third Iranian-made satellite to be sent into space. In 2005, Iran launched its first commercial satellite on a Russian rocket in a joint project with Moscow. Iranian officials first started developing the satellite, which weighs 27 kilograms (60 pounds), in 2006.

Iran has said it wants to put its own satellites into orbit to monitor natural disasters in the earthquake-prone nation and improve its telecommunications.

Iran hopes to launch three more satellites by 2010, the government has said.

Tehran also has an ambitious plan for sending its first astronaut into space in ten years from now.

---

Iran goes into space
20:07 | 03/ 02/ 2009



MOSCOW. (Andrei Kislyakov for RIA Novosti) - On February 3, Iran fulfilled its promise to launch its first satellite, Omid (Hope), into orbit by its own carrier rocket before the end of the Iranian year (which ends in March).

The world media reported that it has already transmitted a message from the Iranian leader to the effect that the successful launch "officially seals Iran's presence in space."

The technical details of this start may be very interesting, but they are not decisive. What difference does it make if the satellite works in orbit for the declared several months, or merely makes a suborbital flight?

The bottom line is that by deciding to become a fully-fledged space power, Iran will do so by any means. In any other case, the launch of a national satellite into space would not give rise to any apprehensions, let alone fear. In this case, however, Western experts associate what Iran has long declared as its "peaceful space program" exclusively with the development of nuclear missiles.

Are these apprehensions well-grounded, especially considering that the launch was a success? In principle, the answer is affirmative. A number of successful launches of medium-range ballistic missiles and suborbital carriers suggest the scientific and technical ability to test strategic ballistic weapons in the near future.

But that's about it. There is no reason to fear that a country that has made several successful space launches will be equipped with full-fledged nuclear missiles in the near future.

These weapons require certain parameters, such as combat readiness and the ability to complete a very sophisticated flight. Moreover, an attempt to use even a single successfully tested nuclear missile is doomed to failure by current early warning systems and interceptors.

High combat readiness of a nuclear missile force is determined by a prompt reaction to rapid situational changes and the ability to make the right decision.

In the Soviet Union, preparations to launch the famous R-7 missile took 10 hours, but Soviet leaders kept repeating that it had the ability to strike U.S. territory. This was true only in theory, and in practice was highly unlikely. There are no grounds for thinking that Iran will be able to make its strategic weapons combat ready simultaneously with their development. For the time being, it does not even have such weapons.

Moreover, launching a satellite is one thing, while delivering a warhead via intercontinental missile is another. At one time, the Soviet Union was pulling out all the stops in order to get the nuclear stick as soon as possible. However, Sergei Korolev and his team had to make countless tests before they managed to prevent the destruction of warheads in the dense layers of the atmosphere. The triumph of the fall of 1957, when the first satellite produced its "beep, beep" sound, was precipitated by a lack of ideas on how to deliver warheads to targets. The first sputnik was designed to distract a government that was bent on nuclear arms development.

The effect exceeded all expectations, but that is a different story...

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

---

Mottaki Underlines Peaceful Nature of Iran's Space Program

TEHRAN (FNA)- Iranian Foreign Minister Manouchehr Mottaki said on Tuesday that the country's first domestically made satellite, launched into orbit today, merely serves peaceful purposes.





"Iran's satellite technology is for purely peaceful purposes and to meet the needs of the country," Mottaki told a news conference on the sidelines of an African Union summit in Addis Ababa, Ethiopia.

His remarks followed the successful launch of Iran's first home-made satellite into orbit, ushering the country into an era of independence in its space program.

The satellite called Omid (Hope) was launched early on Tuesday after Iranian President Mahmoud Ahmadinejad gave the order to proceed.

"Satellites are a very essential means of gathering environmental data, climate data ... and lots of necessary information that we need for technological, agricultural and economic projects," Mottaki was quoted by Reuters as saying.

Tehran launched the Omid satellite as it marks the 30th anniversary of the victory of the 1979 Islamic revolution these days.

Mottaki also said Iran believed the latest technologies should be available to all states.

"The difference between our country and some countries which have these capacities is that we believe science belongs to all humanity," he said.

"Some people believe that advanced technologies belong to some countries exclusively."

Mottaki also reiterated that Iran's military capabilities served purely defensive purposes.

"In Iran's history, in the last 100 years, you cannot point to aggression by Iran against any other nation," he said.

"Iran's people are peace-loving they want peace with all countries around the world."

Iraq's trend-setting elections

Feb 2009

Iraq's provincial elections indicate a move away from sectarian- and religious-based politics and a public desire for a strongman, found in Prime Minister al-Maliki, Kamal Nazer Yasin in Iraq reports for ISN Security Watch.

By Kamal Nazer Yasin in Basra for ISN Security Watch




While not significantly redrawing the political map, Iraq's provincial elections will nonetheless reinforce important political trends underway since the end of the 2005-2007 Iraqi civil war.

Held under the watchful eyes of thousands of American and Iraqi military personnel, 14,431 candidates, including 3,912 women, running in 14 of Iraq's 18 states, contested Iraq's trend-setting provincial elections for 444 legislative seats on 31 January.

Iraq's second local elections since the US invasion were unusually peaceful by Iraqi standards - only nine people were reported killed - but the overall turnout, at 51 percent, was lower than the last national and local elections, which had participation rates of 76 percent and 57 percent, respectively.

In the 2005 provincial elections, a massive boycott by Sunnis and the al-Sadr group led to a lopsided victory by the two dominant Shia groups, the Islamic Supreme Council of Iraq (ISCI) and the Dawa Party in local councils - an over-representation that further polarized Iraqi society and played no small part in the communal killings that followed soon afterward.

While the results of the Saturday poll will not be in until later this week, these elections will highlight and reinforce several important trends that have been underway for the last year and a half.

National reconciliation

Since Iraq has returned from the abyss of civil war and radical groups have been widely discredited for their extremism, Iraqis of all walks of life are welcoming a return to normalcy and national reconciliation.

"We all used to live peacefully with one another," Walid Ya'gubi, a Sunni resident of (the predominantly Shia) Basra told ISN Security Watch. "It is time to forget what happened during the last few years and go on re-building our lives," he added, before casting his vote.

For its part, and as a result of intense US pressure, the government of Prime Minister Nouri al-Maliki has belatedly taken some steps to remedy the situation.

Sunnis, which at 27 percent of the population are the single most important disenfranchised group in Iraq, are being slowly recruited to the military, and some top-level government positions are to be made available to them. Preliminary election results in Sunni-dominated states like Nineveh and Diyala indicate decent above-average voter turnouts of 60 percent and 57 percent, respectively - the comparable results for Sunnis four years ago were under 2 percent.

Even the supporters of the firebrand cleric Moqtada al-Sadr are joining the national reconciliation in droves. In this election, they supported several lists of sympathizers and independents.

The exception in this trend may be the vote for the oil-rich state of Kirkuk, whose mixed Arab-Kurdish ethnicity may potentially lead to a massive ethno-sectarian conflagration when elections are held later this year.

Turn from religious, sectarian politics

With the breakdown of social order in the aftermath of the 2003 US invasion, Iraqis turned en masse to their sectarian and religious identities and to groups that best articulated these views. This was due partly to the ideological void left behind after the invasion and partly to the need to defend oneself against the predations of rival communal groups.

Naturally, under these circumstances, economic improvement and welfare took a backseat to "security" as the number one issue of concern for most people.

Starting in 2007, as the level of violence ebbed and general party performance came under scrutiny, many people became greatly disaffected with sectarian- and religious-based politics and the groups that espoused them.

Taking their cue from the public mood, for the first time last year, the Iraqi legislature banned the use and display of religious imagery and symbolism in political campaigns. The ISCI, the largest and most organized religious group in Iraq, is expected to lose many of its seats in this year's election.

In addition, in contrast to four years ago, almost every banner and poster in Iraq was filled in this election with "normal" bread-and-butter or "clean politics" slogans. This reflected the demands for the delivery of better services and accountability of public officials as well as a general turn away from religious sloganeering.

Steep rise in al-Maliki's power base

Six years ago - unlike other Shia groups such as the ISCI and the Sadrists - the Dawa Party, to which Maliki belongs, had very limited resources and support to start with. The party largely came to power because the US favored it over the more pro-Iranian ISCI.

However, in the course of last year, the fortunes of al-Maliki's and his party have changed drastically.

Last spring, al-Maliki successfully took on the Mahdi Army of Moqtada al-Sadr in their Baghdad and Basra strongholds. Since then, the once-mighty movement has been left badly isolated and demoralized, with Maliki winning much admiration among ordinary Iraqis.

The next move that earned al-Maliki much praise - particularly among the Sunnis - was his adroit maneuvers last year in the disputed northern disputed regions of Kirkuk and Nineva.

Critics, however, see in al-Maliki's rising power the signs of a strongman in the making. Al-Maliki has set up two separate independent security forces that report to him alone and who appear to be tasked with intimidating his opponents.

Likewise, in the southern areas, he has replicated the success of the Tribal Support Councils in the north, and routinely overpasses the local governments in giving federal funds to pet projects. In Basra, currently, much of the money for reconstruction projects is delivered via intermediaries other than the provincial government.

"He (al-Maliki) is funneling lots of money to his tribal and other supporters in Basra and the southern regions for his political campaign," Duhragam al-Ajwadi, an official with the Virtue Party (Fadhila), told ISN Security Watch. "This isn't right."

This criticism aside, many in Iraq long for the rise of a strong hand capable of restoring order again - as ordered was restored under Saddam Hussein. One such individual is Ali Abdul Latif, a cab driver from the Tanouma neighborhood of Basra. "I voted for Maliki because he is not afraid to beat the bastards," he told ISN Security Watch. "We only need a strongman in this country."

Finally, many approve of al-Maliki's move to ensure a speedy withdrawal of US forces from Iraq. In tandem with these and sensing a general secular shift in the country, the prime minister, whose party is Shia fundamentalist, has recently recast himself as an ardent nationalist. The Dawa Party was one of the main groups that supported the opposition's motion in the parliament to ban all religious-leaning political propaganda.

What all this means is that not only is al-Maliki going to receive a large proportion of the votes this year, but the next few months should see a continued rise in his power.

Natural resources: Continued disparity

The last few years have seen a disproportionate use of resources by a handful of players at the expense of the rest. For instance, the ISCI's stranglehold over six of the nine southern provinces - which was made possible through an institutional arrangement with occupying US forces at the time of the invasion - as well as its use of two nationwide TV stations and other instruments, has given it enormous advantages over its rivals.

The same goes for the two main Kurdish groups in the north, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), which have basically monopolized access to resources and information. They do not shy away from the use of an iron fist to silence their critics in the Kurdish regions.

Another byproduct of this trend is the predominance of larger groups as opposed to smaller ones. For instance, in this election as opposed to four years ago, the electorate won the right to vote for "open lists," meaning the ability to vote for individuals rather than closed part lists. However, this was as a result of a compromise in the parliament, where large parties acceded to this demand on the condition that voters must vote both for individuals and party lists or their votes would be invalidated.

In Basra, this caused much confusion, and in effect meant that large parties like the ISCI, Dawa and Fadhila would still dominate the local councils. It is not clear if the instances of irregularity (such as those reported by the 11-member secular list in Basra headed by businessman Hatem al-Bachary where many of their candidates' names failed to show up on the vote registry) were systemic or not. But clearly non-affiliated or independent candidates have little chance of winning this year's election.





Kamal Nazer Yasin is the pseudonym of an Iranian journalist reporting for ISN Security Watch from Tehran.

Pakistan: Anatomy of a Crisis, Skeletal Opportunities

This brief discusses the political instability in Pakistan and its implications for Western countries. It states that while an Islamic coup or a breach of nuclear security is not on the cards, stabilizing Pakistan will remain a long and complex task. The author argues that the West must engage with Pakistan militarily and at the civilian level as part of a broader strategic realignment in the region.
© 2009 Center for Security Studies (CSS), ETH Zurich

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English (PDF · 3 pages · 356 KB)
Author:
Matthew Hulbert
Series:
CSS Analyses in Security Policy

Afghan intelligence breaks up Kabul bombing cell

By RAHIM FAIEZ – 20 hours ago

KABUL (AP) — The Afghan intelligence service has broken up a cell of suicide bombers allegedly responsible for six attacks in Kabul that killed 20 civilians, a spokesman for the agency said Tuesday.

Agents arrested 17 people who were involved in the suicide attacks in the capital over the last two years, said Sayed Ansari, the spokesman for the National Directorate of Security.

Three others are still on the run and believed to be in neighboring Pakistan, he said.

The breakthrough came following an attack outside a U.S. military base in Kabul on Jan. 17, when a suicide bomber killed four Afghan civilians and a U.S. soldier, Ansari said.

Insurgents use suicide bombings against Afghan and foreign troops, but the number of such attacks have decreased in 2008 compared to a year before. The majority of the victims in such attacks have been civilian.

Ansari said 124 civilians were also wounded in the six attacks allegedly organized by the group.

Those arrested had links to a Pakistani-based jihadist group, Harakat ul-Mujahedeen, and Sirajjudin Haqqani, an insurgent leader in eastern Afghanistan, Ansari said.

Harakat ul-Mujahedeen has in the past acted as a proxy for the Pakistani military against India over the disputed state of Kashmir, but have more recently sided with Taliban-style tribal militants to fight Pakistani security forces in the border regions.

Haqqani, meanwhile, leads a group of fighters battling American troops in eastern Afghanistan. The U.S. military has a $200,000 bounty out on Haqqani, who is believed based in Pakistan's North Waziristan tribal region.

CBI arrests RAW man on bribery charges; remanded to three days

New Delhi (PTI): Country's external intelligence gathering agency -- RAW -- was again in the news for a wrong reason when one of its senior officials was arrested by the CBI for allegedly taking bribe of Rs 1 lakh from a Chennai-based manufacturer.

Dr A S Narayan Rao, an official of Director rank working as scientist in the technical division of RAW, was arrested by the CBI from a hotel in Karol Bagh of Central Delhi last night while he was allegedly accepting a bribe amount from the manufacturer, official sources said here on Tuesday.

Rao had allegedly demanded Rs 8 lakhs as a bribe for clearing the export licence of the Chennai-based firm and Rs one lakh was the first instalment, the sources said, adding searches were conducted and documents pertaining to the Chennai-based company seized.

He was produced before a court here which remanded him to a three-day CBI custody.

RAW has been dogged by controversies since 2004 after one of its Joint Secretary Rabinder Singh, was allegedly found leaking sensitive documents to a western spy agency. He fled the country despite counter-surveillance leaving RAW red faced.

Rao's arrest may be seen as an major embarrasment as he is possibly the first serving officer of RAW - an organisation responsible for gathering intelligence from other parts of the world - has been arrested by the CBI.

China: New defense posture

A new white paper on China's military places sharp focus on the country's international role, signaling a growing confidence in its clout in the world community, writes Adam Wolfe for ISN Security Watch.

By Adam Wolfe in New York for ISN Security Watch

On the day that Barack Obama was sworn in as US president, China's defense department issued a white paper on the current status and plans of the People's Liberation Army's (PLA) - an English-language report aimed primarily at an international audience concerned about China's growing military presence.

It is the sixth such white paper since 1998, and the sixth demonstration that the country's attempts at transparency can be maddeningly unclear to western observers.
The paper reflects China's growing confidence in its increasingly important role on the world stage, while at the same time downplaying issues that have strained ties with the international community.
As with previous reports, China's National Defense in 2008 is short on specifics about equipment and technology. Also, the US intelligence community remains convinced that China has understated its military budget by about 50 percent and is deliberately hiding its intentions. What is notable about the new paper is that it directly addresses the budget.
In one of its longest sections, the paper states that China's military budget has grown by about 20 percent annually in recent years for three reasons: rising salaries and benefits for servicemen; compensation for the rise in food and fuel prices; and modernizing the PLA's equipment. The paper further argues that as a percentage of GDP, China's defense spending remains much lower than that of the US, the UK, France, Germany or Japan. Even if the CIA's higher estimates of China's defense budget were accepted, this would remain true.

Another shift in tone came in remarks on Taiwan. Previous papers used the threat of Taiwanese independence as one of the main reasons for China's naval build-up. The new white paper all but declares victory on this front: "The attempts of the separatist forces to seek 'de jure Taiwan independence' have been thwarted, and the situation across the Taiwan Straits has taken a significantly positive turn."
Still, US weapon sales to Taiwan and increased military presence in the Asia-Pacific region are cited as security concerns for China.

Whereas previous papers downplayed China's global ambitions, the white paper signals a fresh confidence in China's position in the world. "The Chinese economy has become an important part of the world economy, China has become an important member of the international system, and the future and destiny of China have been increasingly closely connected with the international community," the paper argues. From this perspective, the paper highlights China's growing presence in global "military operations other than war," (MOOTW, in military jargon).
The white paper notes that China had close to 1,950 military peacekeepers serving in nine UN missions last year. The PLA recently held joint training missions with 14 countries, including the US, India, Australia and the UK. In this regard, the decision to send the Chinese navy to participate in the anti-piracy operations off the coast of Somalia is probably more of a sign of things to come than a one-off publicity stunt.
Strengthening US ties

While the old concerns remain for both sides (Beijing's lack of budgetary transparency, Washington's weapon sales to Taiwan), the overall trend is toward closer ties between the Pentagon and the PLA.

The US-China relations probably hit their lowest point since the establishment of diplomatic relations early in the Bush administration when a Chinese F-8 fighter and a US Navy EP-3 reconnaissance aircraft collided near Hainan, China in April 2001. At the time, the Pentagon had put military-to-military communications on hold pending a review. After the incident was resolved, both sides began to take steps to ensure that a dialogue would remain open between their militaries, even if both continued to see each other as potential competitors.

Chinese and US forces staged their first joint search-and-rescue maneuvers in the Pacific and South China Sea in 2006, and Washington downplayed an unexpected surfacing of a Chinese submarine near a US aircraft carrier later that year. There were some hiccups along the road - such as Beijing's refusal to grant a US aircraft carrier a port call in November 2007 - but the both sides continued to pursue a deeper dialogue.

In April 2008, a military-to-military hotline was established to prevent any misunderstandings as Beijing begins to project its power beyond its littoral waters. Obama's decision to retain Defense Secretary Robert Gates seems to indicate that the trend will continue, though there are likely to be further problems along the way.
The new white paper also highlights some of the steps that the PLA has taken to improve its transparency on the international stage - one of the main sticking points for the Pentagon.
Last year, Beijing launched the Information Office of the Ministry of National Defense, which regularly releases military information and holds press conferences. Also in late 2007, Beijing rejoined the UN Standardized Instrument for Reporting Military Expenditures.

Still, the new white paper does not mention China's aircraft carrier program or its missiles aimed at Taiwan - and these are both major concerns for Washington.

The PLA's regional ties

The PLA has - established strong ties with its Central Asian neighbors through the Shanghai Cooperation Organization (SCO), which has held large-scale joint training exercises in recent years. But the new white paper also stresses improving ties with India and Japan as well.

Previous papers emphasized concerns about Japanese attempts to modify its constitution to allow a military build-up. The new paper only mentions mutual visits by the Japanese and Chinese navies, and says the bilateral relationship has improved. The paper also downplays Indian concerns about the Chinese naval build-up and an ongoing border dispute. Instead, the report cites the joint counterterrorism training exercises held in China and India in 2007 and 2008.
While Japan and India are sure to appreciate the new tone, concerns remain about China's regional intentions. Japan and China claim overlapping ownership of a section of the East China Sea. Though diplomatic progress has been made on the issue, it remains unresolved and both sides have adjusted their defensive postures in recent years as a result.
Negotiations over the disputed border with India have gone nowhere in recent years. Also, China's "string of pearls" strategy, which seeks to establish new naval bases and military ties along the sea lanes from the Middle East to the South China Sea, continues to be watched with a wary eye from New Delhi. Just as India is seeking "blue-water status" for its navy, or the ability to project power further away from its coastal region, China appears to be moving into the region with its navy.

International spotlight

Whereas previous white papers stressed the continued need for training within the PLA, the most recent report's emphasis is clearly on China's new place in the world. It describes the country as an indispensable nation: "China cannot develop in isolation from the rest of the world, nor can the world enjoy prosperity and stability without China."

While this emphasis is likely to cause concern in capitals around the world, it also opens the door for greater cooperation with China's neighbors and the US. The Chinese ships heading to Somalia will be the first test case for what Beijing clearly believes will be a new role for its military.
Adam Wolfe is a freelance writer based in New York. His blog is On Political Risk.
Publisher

International Relations and Security Network (ISN)

What the U.S. Presidency Needs To Know About the Russians

Increase Decrease January 29, 2009 (LPAC)--The following article will appear in the Feb. 6, 2009 issue of Executive Intelligence Review.

What the U.S. Presidency Needs To Know About the Russians

by Michael Kirsch

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As the Obama Administration assumes the duty of command, what is the state of Russian thinking with regard to the current global crisis, at a time when that Administration must reach out for collaboration on solving the biggest economic collapse since the 14th-Century New Dark Age?

No one country is safe from the present crisis; no one country can solve the global crisis within its own borders. Presently, if nations do not unite for a solution, they will be destroyed by the British Empire's intent to destroy them; a British Empire which is presently at the end of its own life span.

There is now nothing more urgent for the survival of both the United States and Russia, than for the Obama Administration to open the door for a strong partnership with Russia, which excludes all British and kindred imperial influences from within and without our borders. For that partnership to work, however, the Administration must understand the current thinking in Russia with regard to the global crisis.

What follows is an examination of how Russia's leaders have exhibited their thinking in the months leading up to the Inauguration of President Obama, relative to the state of their own and the world economy, and actions to deal with it. First, we shall look at how the crisis has hit Russia, and what the outcome was of the initial, emergency attempts made to remedy it. After this, the deeper-rooted issues which underlie the current Russian failures in economics will be addressed. Lastly, we shall examine the ambiguities and struggle in Russia, which reflect the potential for change.

I. The Effects of Global Collapse

Russia Wakes Up

In mid-September 2008, the Russian government realized it had to take emergency action. The Russian stock market collapsed 18% in a single day, Sept. 16, on its way to a 72% fall for the year. Net foreign capital inflows to Russia of $25.5 billion in the first half of the year abruptly gave way to capital flight, which reached $15 billion by Sept. 21. The ruble began to weaken. Bank lending virtually came to a halt, as banks hurriedly converted ruble holdings to supposedly more reliable dollars and euros, simultaneously with Central Bank (RCB) interest rate hikes to defend the ruble. On Sept. 9, the RCB started injecting liquidity into the markets (in amounts like $20 billion two days in a row) and the banking system. Following non-stop emergency meetings throughout the second half of September, the government put forward an anti-crisis package. New infusions from the country's foreign-currency reserves included over $30 billion lendable to cash-strapped banks, as so-called subordinated credits through Russia's large, partially state-owned banks, and $50 billion earmarked for Russian firms to convert their foreign currency-denominated foreign debt into debt to Russia's own banks.

"The crisis on world financial markets has proved worse than predicted, in even the most pessimistic forecasts,'' President Dmitri Medvedev admitted to an extraordinary government session on Sept. 18, as trading was suspended on the main Russian stock exchanges.

Finance Minister Alexei Kudrin stopped repeating his Summer 2008 mantra that "Russia is a safe haven'' in a storm hitting the rest of the world. Official statements as to the cause of the crisis were, essentially, "The United States has infected the whole world.''

Somehow, Russia, as Lyndon LaRouche wrote in his Dec. 27 essay, "How Russia Was Surprised,'' was not up to speed on the crisis, and "allowed itself to be misled into pretending that it would not be hit massively by what were, in fact, the inevitable spill-over of [the waves of global financial crisis already hitting the U.S.A. and others] into Russia's own economy.'' The spill-over struck hard, and awoke Russia to the fact that its insulation from the crisis was thinner than preconceived.

From the standpoint of available knowledge and competent forecasts, the Russian leaders had no business being so surprised. Visiting Moscow in 2007, LaRouche had laid out, in two web-media interviews, what Russia faced. LaRouche told KM.ru on May 15, that, without action by Russia, China, India and the United States to initiate a new financial and economic system, "The entire world economy will go into a dark age.'' He warned, "The world strategic volcano is going to erupt sometime earlier than September [2007].... The present world system, the present parameters, can not survive. The present system will never get better. It will get worse. There are no solutions within the framework of the present system. The party is over!'' The volcano erupted at the end of July 2007.

Russian Academician Sergei Glazyev likewise kept his own and LaRouche's warnings in the public eye. In May 2008, an interviewer from the weekly Zavtra commented that Glazyev "and a number of well-known economists in our country and the world, including LaRouche,'' had long said that a crash of the "global financial pyramid'' was inevitable. Glazyev rejoined, "If the leaders of the Central Bank and the government had listened to the recommendations from the Parliamentary hearings, which we held seven years ago,'' Russia would not already be losing value from its reserves, with the dollar declining at that time. Those hearings on "Measures To Protect the National Economy Under Conditions of Global Financial Crisis'' were convened by Glazyev in June 2001, in his capacity as chairman of the State Duma Committee on Economic Policy. The lead-off witness was LaRouche. A Russian commentator wrote in January 2009, "The current global financial and economic crisis was foreseen and predicted long ago.... In particular, the prominent American encyclopedic thinker Lyndon LaRouche has talked about its inevitability for a number of years. He visited our country several times and spoke at the State Duma. He is the one who talked about the irreversible collapse of the reigning liberal financial and economic system, but Russian officials just waved off his warnings.''

Why did the Russian leaders wave off those warnings from LaRouche concerning the magnitude of the crisis? How did they come to tolerate the prior conditions, which they now were forced to try and change? What pernicious influence was at work? Whatever led Prime Minister Vladimir Putin, for instance, to claim on Nov. 20 that "within the existing world financial system, nothing could have been done to prevent [the crisis], just like a natural disaster''?

In the months since the blow struck in September, Putin has rightly declared that the crisis showed "the incompetence of all the basic elements of the system of regulating financial markets and institutions'' (Oct. 20). The crisis provoked him to speak of building an independent financial system, one which could withstand exposure to external problems. Putin has attacked Russian companies for abetting capital flight by purchasing foreign currency, in effect creating their own stabilization funds. He has stressed the need to remove the dependence of important domestic economic development projects on foreign financing.

But, why did such a wish-list come into existence after disaster struck, and not before? Besides LaRouche's warnings, the ingredients of a different policy were in hand. As we shall review below, key Kremlin officials had staged the world's most substantial commemoration of Franklin Roosevelt on his 125th birth anniversary, including in-depth discussion of the New Deal, in February 2008, and then-President Putin had invoked FDR half a dozen times. Leading analysts like Valeri Fadeyev of Expert magazine, a member of the Public Chamber, had written that the "national economy'' school of Friedrich List, Sergei Witte, and Dmitri Mendeleyev (which is none other than the famous anti-British American System of Political Economy) was the missing ingredient in Russia's economic policy today.

These economic policy discussions coincided with a public reexamination, unprecedented in recent decades, of the role of British imperial subversion of Russia over many centuries. In October 2007, then-head of the Federal Security Service (FSB) Nikolai Patrushev alleged that the British MI6 was on a major offensive against Russian interests, adding that Britsh secret agents had been doing this since the 17th Century.

On Oct. 5, 2008, as the crisis hit hard, Russian state television even put LaRouche on a prime-time broadcast, saying that the emergency alternative "would require that the United States would have to go to Russia, China, and India. If they agree on reorganizing the international financial-monetary system, we could solve the problem. This would mean going to a Roosevelt approach, to a kind of new Bretton Woods system.''

Yet, due to the same type of pernicious influences as have dominated U.S. policy, the Russian leadership blundered ahead with the same incompetent bailout-type solution as did the U.S. Treasury and the Federal Reserve. In countless government meetings on banking, Russian officials have congratulated themselves on the sophistication of Russia's version of the bailout, trumpeting that the Russian bailout would be more transparent than the American one.

- Crisis Hits Full Force -

By late November and into December, in the wake of the Nov. 15 Group of 20 summit's failure to enact anything even vaguely approximating LaRouche's New Bretton Woods, the physical effects of financial rot began to be seen in their full horror. Russia entered a precipitous economic collapse.

Major sectors of Russian industry and transport slumped deeply. By the end of November, Russia's manufacturing production was down 10.3% year-on-year; steel pipe production fell 36.9%; coking coal production dropped 38.7%; and fertilizer production fell 51.6%.

In the metals sector, the Novosibirsk Steel Works, a specialty steel producer, cut its staff by 25%. A Chelyabinsk coal mine closed, with 3,000 jobs lost. Steel production was slashed an average of 50% nationwide, including at the giant company Severstal, the famous Magnitogorsk plant (Magnitka), and others throughout the southern Urals industrial region. A similar situation developed in the aluminum industry.

Some of the metals collapse was related to the fall of export prices by up to 70%, as Medvedev reported in a Jan. 12 speech. But transactions inside Russia also ground to a halt. Yuri Boldyrev, formerly an Accounting Chamber official, linked the industrial shutdowns to the credit and liquidity crunch. "Business activity is flickering out,'' he wrote in a Nov. 26 Zavtra article. "Nobody trusts anybody, everybody is trying not to pay anybody else, and, if possible, not to deliver goods because the customers might not pay. A striking example is Magnitka refusing to supply steel to Gorky Auto Works.''

By the end of November, the giant Gorky Auto Works moved to a three-day week. Overall car sales fell by over 50% in October alone. The Siberian regional airline KrasAir ran out of money so quickly that its planes were stranded on the runway. Russian railways reported a 20% year-on-year decline of freight transport, with haulage of non-ferrous metals falling even more steeply. Machine-tool output collapsed by 20-60%.

Unemployment skyrocketed. In mid-November, even with many companies holding back statistics on how rapidly their workers were being idled, 100,000 workers from 3,000 companies had been laid off. The layoff rate doubled in a two-week period. Oil sector sources reported in December that one oilfield operation after another was rehiring less than half its staff for 2009. Calculations for October-December 2008, released Jan. 21, showed an increase of official unemployment by 20% to a total of 1.5 million people. Another 30,000 people lost their jobs during the first two weeks of January. In some areas, layoffs in these few months are running double the levels of the 1998 crisis, after Russia defaulted on its government bonds. Wage arrears jumped by 33% from October to November, and 93% from November to December.

Another sign of pressure on the workforce was Putin's call in December to lower by 50% the quota of non-citizen workers that Russian companies can hire. Currently there are 10-14 million such guest workers in Russia. Layoffs of these workers also has a huge impact on Central Asian economies. As much as 20% of Tajikistan's GDP, for example, comes as remittances from its citizens working in Russia.

- Faulty Remedy -

In one crisis meeting after another, Putin's Cabinet, maneuvered to protect the real economy from the financial collapse plague. But, First Deputy Prime Minister Igor Shuvalov reported to Medvedev, in early December, the billions of dollars channeled to the banks had not reached the real economy. With the stock market collapse having slashed companies' asset valuations by 75%, he explained, industries could not meet the banks' asset standards for borrowers. Interest rates of up to 25%, resulting from the RCB rates policy and illegal rate hikes by individual banks, make it impossible for businesses to borrow.

Like the U.S. investment banks which used their TARP (Troubled Asset Relief Program) bailout money to either continue speculating, or cover their losses, Russian banks have been accused of pocketing the emergency subordinated credits, using them to purchase foreign currency.

The shadows surrounding the Russian banks' failure to resume lending point up the need for a new Pecora Commission, to clean out the corrupt global system of speculation which has been imposed on governments. President Medvedev gamely proposed to Shuvalov that companies could qualify for loans by counting the real asset value of the borrowers, rather than their market share value, but such a solution would be a mere tweaking of the system, within an unsustainable monetarist framework. The Russian government continues to maneuver to change bank laws, as though this would solve the growing crisis, without addressing the rotten, criminal core of the international system.

In the face of the rapid down-spiral, the Russian leadership's refrain is that the crisis will soon be over. Shuvalov says Russia should keep building railroad machinery because, "when the global economy will again be growing at rapid rates,'' then Russian Railways will need those locomotives. According to him, Central Bank experts calculate that "this period'' will only last a quarter or two. For Prime Minister Putin, the dawning of the "post-crisis period'' already sounds like an article of faith in a new era soon to arrive. On Dec. 15, Putin said Russia must salvage its big projects, because otherwise "it will be difficult to develop the economy in the post-crisis period.'' At the end of the month, he called for positioning Russia, "for the post-crisis period.'' And again, on Jan. 11, Putin motivated tax exemptions to help employers not merely in these lean years, "but also to invest in the future by creating a basis for post-crisis development.''

How is this "post-crisis period'' going to come about? Is there something magical in the current Russian conception of the "market,'' causing certainty about a reality that will never occur, so long as the present monetary system is in place?

II. Deeper Questions

Getting to the heart of the matter, in order to reveal the foundational axioms of Russian policy, let us look at the seemingly impossible situation which has been created, due to the country's dependence on raw materials exports.

LaRouche wrote in "How Russia was Surprised,'' that "Russia's apparent refusal to recognize, in time, that its recent role has turned out to have been blind faith in a vastly overpriced market for its raw materials in energy supplies, misled Russian leaders into the view that its temporary margin of profit from exports was permanent. This illusion contributed to luring Russia into its present crisis. The solid evidence in the matter, is that Russia was misled into acting as if it did not need to put the priority on investing in vigorous expansion of its industrial and related output'' (emphasis added).

Russian economist Prof. Stanislav Menshikov, in The Anatomy of Russian Capitalism, points out that the reliance on income from raw materials exports was interwoven with the Russian leadership's failure to invest in any sectors of the economy besides those which had already been developed under state regulation in the Soviet period. They didn't develop new sectors of manufacturing and production, which, to succeed, would have required a high degree of regulation and protection, as prescribed by the American System of economics.

Instead, during the heyday of privatization and deregulation in the post-Soviet 1990s, and beyond it, into the current decade under Vladimir Putin as President, Russia remained hostage to momentous investment decisions made in the Soviet period. It was in the wake of the 1971 demise of the Bretton Woods system, and the 1973-74 war and oil price crises, which catapulted the petroleum spot market into its status as a major driver of the speculative floating-exchange-rate monetary system, that the U.S.S.R. chose massive development of the West Siberian oilfields for purposes of export, as its most concentrated area of industrial effort.

- The Case of Russia's Far East -

On Jan. 12, the Russian daily Nezavisimaya Gazeta carried a feature on the "economic disintegration'' that Russia faces, echoing LaRouche's description of Russia's negligent policy of development. The author wrote, "During the years of economic prosperity, Moscow did not bother to establish motor vehicle manufacturing or the mass production of high-tech products in general, in Siberia and the Far East, by granting some kind of concessions to potential investors. Without such concessions, it is not profitable to invest in any high-tech production facilities there.''

Konstantin Simonov, head of a Russian think tank called the National Security Energy Fund, also pointed to the lack of investment. In September, he stated that only the government could solve the huge problems of the Far East region. "Huge investment paired with huge risks is not for private businesses,'' he said, chastising government officials for their irrational fear of "accusations of dirigism.'' During an October visit to the Far East, Medvedev himself stated, "We must understand one perfectly obvious fact and, incidentally, one that you feel more acutely when you are actually in the Far East. If we do not intensify our work, then it is possible that we could lose everything.'' These warnings came, as LaRouche put it, not "in time.''

The auto sector, as noted, took a beating from the "overflow'' of the world economic crisis into Russia's economy. Putin pushed through protectionist measures to rescue the industry, including a duty on imported cars. In the Far East, however, that duty threatens to throw hundreds of thousands of workers out of work, disrupting the lives of millions, because importing and servicing used Japanese and Korean cars is a huge part of the area's economy. Thus, while protectionism would seem to be an interim solution in the current crisis, the lack of investment in high-grade technology in the Far East meant that the Russian government created a situation where simple protectionist measures for one sector backfired in another. The Pacific coast city of Vladivostok saw serious protest demonstrations against the tariffs in December, with SWAT teams being flown in from other cities to suppress them.

The Far East case is indicative of the need for a more far-reaching solution. But the Russian government has been dealing with the global crisis as a set of seemingly individual crises that keep flying in its path. The real problem is not that tweaking one part of the economy in western Russia upsets something in the Far East, or vice versa; the problem is systemic, and the Russian leadership's failure is not having acted on it as systemic.

- The Revealing Matter of the Projects -

Going deeper into current Russian errors in thinking, turn to an element interrelated with the industrial collapse of Russia, namely, the crisis in what has appeared as a most promising aspect of economy policy: big infrastructure projects.

In late November, the government met to discuss the danger that projects already launched might never be finished, in the crisis. Questions were even raised as to whether foreign nations, due to a lack of capital in Russia for the task, might win contracts for projects such as the integrated energy-mineral resource-rail project called Industrial Urals-Polar Urals (UP-UP), or construction for the 2014 Winter Olympics in Sochi. Media discussion of the threat to the projects mentioned that the construction of the fifth unit of the Kursk Nuclear Power Station had been frozen, and that Russian Railways would have to cancel its plan to build a railroad from Yakutsk to the Bering Strait.

In early December, Shuvalov said that, to avoid the problem of unfinished projects, those lacking funding to be finished by 2010-11 would not be started at all. Big projects like UP-UP and the South Yakutia Development Complex would remain on the agenda, so far, but were mentioned as likely targets for delay.

The interconnection of the projects with saving jobs in industry escaped nobody. The governor of the steel-belt region of Chelyabinsk, forecasting losses of 37,000 jobs monthly in 2009, said Dec. 22, that it will take three to five years to recover from the damage sustained by his region in just three months. UP-UP, for example, is supposed to create 50,000 jobs in Chelyabinsk by opening up new resources for Russian industry, but also through the demand for industrial products to build railroads and other components of the project.

On Jan. 14, the government announced that project money from the state Investment Fund will be only half the level planned just months ago. Of 21 projects on its roster, only 15 remain. One gets the image of a storm closing in on the government, whose existence is not discussed, but merely the effects; one dodges a falling tree or breaking glass, but no shelter is constructed.

Where was the funding for these projects supposed to come from, which is now lacking? An official from the company Base Element stated at the end of November, "Long money [long-term credit] cannot be found anywhere, and prices for the resources it was planned to develop in these regions, like coal, metals, and uranium, are dropping. The companies had calculated the profitability of investing in these, under entirely different circumstances.''

There is a dramatic, sensuous case of the same error in planning, which led to Russian surprise at the global economic collapse. The government left itself dependent on its own raw materials export earnings to fund these projects and other vital spending: The 2009 budget draft assumed international crude oil prices of $90/barrel (as we go to press, they are $41). Furthermore, Russia intended to do the projects through Public-Private Partnerships (PPPs), counting on money from the private sector, whose interest in the projects was largely motivated by the very same high prices on those raw materials!

Such thinking is revealing of the problem in the Russian economy today. Depending on the projected earnings of private capital from mining raw materials, as the basis of determining the feasibility of infrastructure projects which are essential for the survival of a people, is alien to the mission of government. More broadly, the notion that the projects on which a nation depends should be determined by the "market price'' of raw materials, is an error detrimental to mankind, and is just plain stupid.

Thus, Russia was constrained by "market forces'' and the well-being of a private sector deeply entangled in the global speculative system--which is now dead.

In addition to PPPs as a source of financing, reliance on raw materials export income points to another crucial flaw: looking to obtain money "profit'' abroad, thus thinking about profit in terms of a fixed idea of value, exchange value, inherited from Adam Smith via Karl Marx. This problem is one of deep, axiomatic outlook: Russia and many European countries have been seduced and infected by the British liberalism of Adam Smith, of which Marx was the flip side. Why would Russia fall in with the over-used hussy, M'Adam Smith? Let us examine this more closely.

- A Misconception of Value -

Russia was denied the ability to rebuild itself in collaboration with Europe, after the collapse of the Soviet Union. During the 1990s, when radical monetarists trained by the London Institute of Economic Affairs seized the reins of power in Moscow, the looting of Russia's raw materials base and the accumulated industrial capacity of the Soviet era proceeded on a huge scale.

Menshikov describes what happened as "Leninism in Reverse.'' Just as the transition from the "capitalism'' of the 19th Century to "socialism'' under Lenin assumed that the needed physical basis for that shift had been created under the old system, so the free-market radicals running Russia after the collapse of the Soviet Union assumed that 'socialism' had laid the physical preconditions for a shift to market "capitalism.'' Instead, Russia's economy was ravaged, through a process of carpetbagging by foreign interests and widespread organized crime, with agents of foreign countries and institutions directly running economic policy until the late 1990s. The spread of globalization throughout the 1990s had created a false market, which Russia adjusted to, out of seeming necessity, but from which it did not benefit. Now, with the entire world system of "globalization'' dead, the inevitable collapse of Russia's export markets has occurred.

Under Putin, especially in 2006-07 during his second term, the Kremlin at least announced an industrial policy, with the launching of a nuclear power revival, big infrastructure projects, and national corporations for the auto, aircraft and possibly machine-tool sectors. All of those are now jeopardized by the global systemic crisis.

Why, then, do Russian leaders remain officially committed to globalization, boasting that they are first-rate players in its game? What would make the Russian government believe that a recovery in the markets will come about through self-correction, after inefficient parts of the economy are weeded out? What would cause them to believe that, in the long run, the cycle of the market leads to gain? What axioms guide these deadly policies?

During the recent conflict with Ukraine over natural gas prices, both Putin and Medvedev, to say nothing of die-hard monetarist Finance Minister Kudrin, have repeatedly quoted chapter and verse on the necessity for every nation to put its well-being in the hands of "market prices.'' Putin stated that price is "determined by the market and not by administrative decisions.'' Not only does the government back Gazprom's imposition of world-level prices for natural gas on its near neighbors, but raising domestic prices to those levels remains official policy, as well--even though, at the moment, the government admits that to do this for gas or rail freight rates would shut Russian industry down even more.

Medvedev, at a recent meeting with President Islam Karimov of Uzbekistan, stated that competition determines price, and that "those who wish to get by, thanks to low prices, are undermining their own efforts to build economic prosperity. They place their hopes on preferential prices, but in real life, this can not last forever.''

That is to say that countries which don't pay market prices are harming themselves by using artificial advantages. This way of speaking reflects the belief that there is an inherent value, which the market knows and bestows upon a commodity; if you want to change the price, bad things will happen to your country. With what other belief would such barbaric behavior be justified?

But, how could the market know the right price? The market only knows the names of the speculators who have been using it to destroy the economies of nations over the last 40 years. There is no sane reasoning behind it, as Russia should be well aware.

The reasons why Putin's team, when they jettisoned the free-market radicalism of the 1990s, did not abandon such axioms of globalism must go beyond merely the holdover of free-marketeers like Kudrin or Shuvalov in the government. One explanation is that their habits of thinking were inherited from the time when Marxist doctrine reigned. Marx's theory of value of the "commodity'' derived from the same method as Adam Smith's analysis of economic value. The idea that a nation would get its income from a fixed commodity, limited only to certain sectors, is cause for a lack of integrated, domestic development. Is the purpose of developing a railway to get money from it? So it might seem. "How can we extract the value from it, and get the money?'' But, set aside the notion that something's value depends on its generating monetary profit. The concept that a resource is valuable because it makes profit, is alien to building infrastructure.

Infrastructure, if looked at as a means to obtain and ship commodities for sale, will be thought of as providing the ability to build or obtain particular things. But, if infrastructure is conceived of from the standpoint of its role in integrating a national economy--an idea driven by a nation's will to apply scientific discoveries made by individuals--then its true potential to increase value for the economy as a whole emerges in a qualitatively different way.

Productivity comes from that which increases the power to develop and meet the requirements of the population, not that which has value because the "market'' has determined it to have a high price. Value is created as a consequence of the government's intention to develop the nation. Price is a mere effect which, by means of protectionist regulations of government--not the magic of the marketplace--is caused to converge upon that which leads to the maximum development of the physical economy.

The market ideology breeds a view of value as the monetary profitability of a resource, seeing infrastructure as a means to extract wealth for the purpose of getting money. But, these are not reasons to mobilize the people of a country. Projects are launched for the long-term development of the territory as a whole, for the sake of the development of the minds of the people, and increases in the standard of living.

What is made clear through the economics of the nation-state, with its further development, in our time, by LaRouche, is that the entire discussion of "capitalism'' and its stages is a fallacy, even beyond its being an empiricist analysis of an economy. What is more demonstrative of the fraud upon which it stands, is that, like Adam Smith, such a system of analysis is constructed apart from the existence of nations, and the particular tendencies which different nations have for their own development. It is conceived outside of the existence of constitutional republics, whose economies are the expression of development of their citizens and their unique minds.

As evidenced by the U.S. Constitution, true Constitutional republics are crafted with the understanding that the powers entrusted to the Federal government are, with respect to their objects, sovereign. Meaning, that in respect to their objects, powers imply the ability to construct all the means necessary to affect those objects, and all the means which relate to its regulation; powers of government are not rules to be defined literally--not formulas--but, rather principles to be applied generally--and not locally--requiring creative people who can conceptualize the economy as a single unified process; a process whose end is the maintenance of the action of an unseen principle of the stated intention of the Constitution at each moment. Government implies an intentional unfolding of a conception for the citizens of a nation, with an overarching plan of action, one that begins with the recognition that citizens are the resource from which the nation's progress is achieved, through the employment of their thinking power.

It is the failure to understand this principle of government, whether in Russia or the U.S.A., which sends either side running for some mess of mechanical, free-market rules, which are founded on relinquishing the powers that government implies.

As the system of globalization, through which Russia has acquired its raw materials revenue, collapses, Russia must not merely break from its dependence on raw materials exports, but from the delusion of globalization, and the superstition that the "magic of the marketplace'' determines value. It were wise of Russians to heed the words of the late Prof. Taras Muravinsky: "It will be impossible to find an exit from the crisis, without sensible government regulation of the economy. The chaos of destruction cannot be overcome through the spontaneity of the market.''

III. Opportunities for Cooperation

Russia has fallen into the mentioned traps, but that is not the end of the matter. We have looked at the problems in the Russian reaction to the world crisis. To complete our review of the paradoxes presented by the question, "How should the Obama Administration reach out to the Russian government for cooperation?'', we must take up certain ambiguities, which offer a key to the answer.

Although the Russian response to the economic crisis has been chained to a monetarist approach, at the expense of an integrated national-economy approach, the Russian leadership's own announced projects and stated desires point toward a basis for escaping from monetarism, especially in cooperation with the United States.

What are the redeeming qualities, expressed by the Russian leadership, that the U.S. government could align with, as a first measure to move out of the crisis? Is there something in current Russian thinking about the development of the real economy and banking, which could, if brought into collaboration with a restored American System credit system in the U.S.A. itself, serve as a gateway to initiating a global Hamiltonian credit system by the United States, China, India, and Russia?

- FDR in Russia? -

In recent years, many in Russia have explicitly invoked the importance of Franklin Delano Roosevelt for the development of Russia.

On Feb. 6, 2007, the Russian Ministry of Defense daily Krasnaya Zvezda published a special message on the occasion of FDR's 125th birthday, including a commentary by Academician Andrei Kokoshin, one of Russia's leading specialists on the United States and strategic affairs, and also a committee chairman in the Duma. Kokoshin called FDR "one of the greatest statesmen, not only of the U.S.A., but in world history,'' and cited the genius of the New Deal, as a symbol of mutually beneficial cooperation between the U.S.A. and Russia.

Two days later, at a Moscow conference titled, "The Lessons of the New Deal for Today's Russia and the Whole World,'' held at the Foreign Ministry-linked Moscow State Institute for Foreign Relations (MGIMO), Deputy Chief of the Presidential Administration Vladislav Surkov spoke of the similarities between the measures the Russian government needs to take, and those of Roosevelt: ``to centralize and reinforce administrative governance, and make maximum use of his presidential powers under the Constitution.'' He pointed to the importance of Roosevelt's ideas for Russia, saying, "The simplistic theory that says the less government, the better, is wrong and immoral.'' Roosevelt, said Surkov, "our ideological ally in the 21st [Century], will remain ... for all of us, for every Russian, the greatest of all the great Americans.'' (Surkov remains a top Kremlin aide to Medvedev, as he was to Putin, at that time.)

On the same day, Boris Titov, chairman of the Business Russia Association, stated, "Before Roosevelt, it was believed that the market would settle any problems that came up.'' But, he said, FDR brought the government in, to play the crucial role of "eliminating failures in the economy ... and regulating the market. That is very important for our country.... [In the 1990s] we believed the market would take care of everything.''

The Russian government, which now pronounces that it is committed to the powers of the market to take care of its current and future generations' well-being, would do well to pay attention to this discussion from just two years ago.

Vladimir Putin himself, in his annual Presidential message to the Federal Assembly, May 10, 2006, quoted FDR on the necessity of treading on the corns of "those who attempt to gain position or wealth, or even both, by taking shortcuts at the expense of the common good.'' On Oct. 18, 2007, asked by a reporter about his vision for Russia, President Putin invoked the New Deal, saying that, "Roosevelt laid out his plan for the country's development for decades in advance,'' and that he often battled the elites. "At the end of the day, it turned out that the implementation of that plan benefitted both ordinary citizens and the elites, and eventually brought the United States to the position it is in today.''

- Economy of Science? -

LaRouche stated in "How Russia Was Surprised,'' that Russia did not make the needed transition in its economy, "in time.'' The lack of investment in domestic manufacturing made Russia dependent on an ephemeral stability provided by oil- and gas-export revenue, which was quickly pulled out from under the country. Yet, a solution was implicit in some policy-commitments on which the Russian government has been explicit. The failure to implement a shift in a timely fashion takes us back to the curious matter, of what forces have dominated administrative decisions, blocking such action.

Menshikov points out that Russia needed only to unite its income from raw materials with its enormous engineering, scientific, and technological capabilities, to finance and quickly develop a manufacturing sector. Indeed, it has been Putin's stated intent, to break from dependence on raw materials and to develop manufacturing.

In February 2007, then-President Putin launched a campaign for an industrial policy, with a series of speeches. He told the Russian Union of Industrialists and Entrepreneurs, "We must take qualitative steps to change from simply exploiting natural resources, to fully processing these resources and, in turn, this must serve as the basis for the development of an innovation economy.... Russian industry's accent on raw materials increases its dependence on foreign markets and on the fluctuations of world prices. And Russia has already seen, more than once, how destructive, and sometimes how devastating, for the national economy, this dependence can be.... One of our important economic priorities is to diversify Russian industry.''

Was this stated intent to break Russia from the dependence on raw materials and market fluctuations merely lip service, or did some bad advice or pressure prevent Russia from enacting FDR-type government regulation, in order to initiate the changes "in time''?

In his webcast of Jan. 22, 2009, LaRouche discussed the social and political problems that challenge any Russian attempt to make such a shift. LaRouche cited the Soviet model of economy, which lacked a commitment to generalize scientific progress in production throughout the economy. The Soviet Union mobilized the will to develop the military and space sectors, and strategic infrastructure, he said, but creative breakthroughs in these areas were not part of the conception of the domestic economy as a whole. They lacked motivation, in applying scientific discoveries to their factories and farms.

Has Russia now shown the will to break from this model? On Oct. 21, 2008, Prime Minister Putin, speaking at a conference in Krasnoyarsk on "Expanded Use of Space Technologies for the Socio-Economic Development of the Country's Regions,'' attacked "the old model,'' whereby "the space program existed as a thing in itself.'' He underscored that "the process of introducing the achievements of space research into the economy has still not been made systematic,'' and said this must change.

In the same vein, one of the threatened infrastructure projects mentioned above, the UP-UP, has been designed by Russian Academy of Sciences specialists to develop natural resources, not merely for export, but to be integrated with the region's manufacturing industries, demanding the involvement of other machine-building industries. Does this indicate a change toward thinking about an integrated national economy, a self-developing system within Russia's national boundaries? Does Russia want to escape from "free trade,'' where circulation is unregulated--with results much like what happens when an arm is cut off at the wrist, allowing a spurt of "free circulation.''

Even in recent months, Putin's refrains about the magical speedy end of the crisis were punctuated with statements reflecting such a potential policy shift, in broad terms.

In response to the world financial crisis, Putin has stressed that a "robust national economy'' is the only safeguard. He says building up Russia's internal resources will mean that "in the next few years, Russia should achieve a significant improvement in the quality of work of the main, backbone industries, such as transport, the fuel and energy complex, the banking sector, and agriculture.''

Putin stated in October that Russia is trying to develop "long money,'' not the short-term "hot money'' of the oil price bonanza. His recipe for "long money'' involves, at least in words, building up the domestic economy with domestic resources. The government's official position is that Russia needs to keep investing in R&D, despite the crisis, to achieve the latest technologies and to build up national innovation, in a "diversification'' strategy of developing high-tech sectors of the economy. They have stressed infrastructure for all territories.

More advanced ideas are also on the table. Despite the failure to develop the Far East "in time,'' it was in the context of discussing Far East development that Moscow Mayor Yuri Luzhkov told RBC Daily, on Sept. 26, 2008, that Russia's authorities should follow in the footsteps of Sergei Witte, Russia's transport, finance, and then prime minister under Tsars Alexander II and Nicholas II--and a great proponent of the "national economy'' school in Russia. Luzhkov noted that Witte had realized the importance of the Far East and had gone to great lengths to develop the region.

- American System Protectionism? -

Despite the official posture that Russia has successfully transitioned from socialism to the free market, both Putin and Medvedev have cast doubt on that formula in recent months.

After the November G-20 summit, President Medvedev announced that the participants had pledged not to resort to protectionism, but he said he fully expected nations to act to protect their own economies. Putin made clear that Russia will attempt to do so, saying, "We shall use customs and tariff protection for our domestic market, such as in agricultural goods.'' Spelling out a program of price preferences for domestic producers, for use in designing state orders, Putin said, "I think that protectionism of this sort is a temporary measure, but it is entirely appropriate today.'' He has further stated that under current world conditions, it is necessary to "not fully conform to competition'' but to use protectionist measures, or, "secure priority directions of our industry.''

On Nov. 24, Medvedev elaborated, "Where rejection of protectionism ends, and the defense of one's own producers begins, is a question of taste and measure, of what is adequate in one situation or another.... Not a single country, not a single head of state, will ever be so bold as to state that they will never act to defend their own producers, their own real sector. Therefore, measures taken to defend one's own producers and production, industry, the real sector, need to be sensible and adequate. But what those measures are, is a decision for each nation to make in its own way.... We shall do what we need to do, in order to protect our real sector, and help it, by providing supplementary credits, and some other measures which may be justified.''

This is an inclination that must be embraced by patriots of the United States, as well, who want to save their nation, and implement American System policies.

- Credit Policy in Banking? -

As some in the United States government are beginning to heed LaRouche's call, in his Jan. 16 and Jan. 22 webcasts, concerning the bankruptcy of the banking system, perhaps knowledge of the ambiguity of Russia's positions can help to transform the ability of both sides to solve the crisis.

Recent months have brought signs of new approaches in Russia, which could be of general benefit.

Glazyev, a long-time critic of the government's monetarism, who now has an official position as secretary of Russia's Customs Union with Belarus and Kazakstan, put forward a crisis plan in August 2008. He proposed that the Central Bank issue rubles based on credit applications from Russian producers, rather than on the current basis, whereby the Russian money supply is increased through the conversion of dollar-denominated export earnings.

On Oct. 21, former Central Bank chairman Victor Gerashchenko, interviewed on Radio Ekho Moskvy, advised listeners to look at "the example of the U.S.A.--not the consequences today, but at how it developed a huge country for over 50 years, and kept its level high for a long time.'' Yes, there was military spending as a driver, he said, but "that very military spending also means, as a rule, technological breakthroughs in various areas simultaneously.'' If the U.S.A. enjoyed success by issuing "treasury bonds, and even simply currency,'' for such earmarked purposes, said Gerashchenko, "why can't we do that?'' It should work, he added, "as long as the money goes for productive purposes.''

In November, Putin called for the creation of "long money for long-term, capital-intensive projects.'' To accomplish this, he called for expansion of the program under which commercial banks can obtain preferential financing from the Central Bank, earmarked for the purchase of bonds issued by companies in the real sector of the economy. In parallel, he said, "there should be broader use of the potential of our development institutions, as well as banks that are partially state-owned.'' Government and state-owned banking support to the real sector should emphasize the improvement of infrastructure, he said.

These three examples reflect a potential directed-credit policy, which would be essential to avoid assured disintegration of the world economy under monetarist dogmas such as currently have a stranglehold on Russian policy.

Collaboration among the United States, Russia, China, and India under long-term treaty agreements, with the guidance of the American System credit system, as put forward by LaRouche, could set the stage for Russia's state-owned VEB Bank and Development Bank to serve as a basis for national banking, having already acted on directed funds for industry, rather than merely funneling money to commercial banks.

- So, What's the Problem? -

With this multitude of seemingly positive tendencies, we return to the question posed at the outset: What has stood in the way of these becoming the dominant, guiding policies of the Russian government?

LaRouche wrote in his cited essay, that, over the last year, Russia's increasingly visible source of disorientation, was "perhaps supplied, in part, by certain ostensibly British assets known to me as being from outside Russia itself. This `assisted disorientation' is what has been recently suffered by some leading parts of Russia's institutions.'' LaRouche stressed again, on Jan. 22, that Russia's leaders were caught by surprise by the crisis, because they were accepting the advice of someone else, and that they should get rid of that someone else.

Therefore, one would make a mistake to assume that Vladimir Putin or Dmitri Medvedev are "tragic figures.'' Historically, forces in Russia have fought to adopt American System economic policies, as happened repeatedly in the 19th Century. The American System is not peculiar to a group of people united around a belief; it is not a religious dogma. The American System was a method of developing the creative powers of mankind in society. It is a universal scientific principle for all sovereign nations. Therefore, resistance to collaboration with the United States on a new international credit system could only be the result of brainwashing by the British Empire, in favor of acceptance of a foolish, purely dogmatic view of history such as the "stages of capitalism.''

It would be such follies, imported from outside, which blocked a break from reliance on peddling raw materials. Splitting Russia and American apart, economically and otherwise, has been a British imperial priority for over two centuries. What Russia should do today, is to throw out the advice of anyone who had proposed reliance on raw materials, or market prices of raw materials. Throw out the advice of those who propose an image of Russia's mission as standing in opposition to some false concept of the United States as the new empire. The basis for cooperation between the United States and Russia is that both nations have a common enemy, and this shared enemy is not a nation. This common enemy is the supranational financial forces: the Brutish Empire, which has been intent on destroying sovereign nations for some time. This problem must be noted by the Obama Presidency, in order to form a truly cooperative relationship with Russia, based on the Russian government's more promising inclination, toward the policies of FDR.

In Summary

International leaders failed to declare the existing, speculation-based international financial system bankrupt, and to implement LaRouche's policy for a New Bretton Woods, at the November G-20 summit. The effects of this failure were felt acutely in subsequent weeks, exposing the fact that leading personalities of governments, such as Putin, Medvedev, or France's Nicolas Sarkozy, were neither responsible for generating the idea of a New Bretton Woods, nor capable of carrying forward the momentum for a genuine Rooseveltian solution. But the opportunity which was missed two months ago, sabotaged by the City of London and the Bush Administration, now has a second chance, with the inauguration of the new U.S. Administration.

The Obama Administration must ask: If we are faced with the same type of collapse of our own banks, production, and infrastructure, what do we have as a capability, lacking in Russia, which allows us to solve the crisis they have, as yet, been unable or unwilling to solve? What do we have, which could initiate a path for global cooperation?

The credit system of Alexander Hamilton is based on an awareness of the role of government as primary. The failure to use this stated intention of the U.S. Constitutional system, renders the United States government as impotent as Russia has been, in providing that for which the government was constituted in the first place.

Instead of this dance of the eunuchs, discussions on resolving the global crisis must begin with an acknowledgement of the bankruptcy of the British imperial monetary system. Rather than continuing to play the game of manipulating effects, act on the cause: Throw the system out, and under a new Pecora Commission, prosecute those who are responsible for upholding that system against governments.

Above all, there must be a return to the American System's concept of the role of government in guiding the implementation of needed scientific principles. Anything less, any mental pollution, such as a mystical belief in the magic of Marx's stages of capitalism, or the inclination to respect and protect ``market forces'' as if they were part of nature, means sure death for the world economy.

FOOTNOTES:

1. Written with Leandra Bernstein. Research material for this article includes contributions from Rachel Douglas, Mary Burdman, Pavel Penev, and Matthew Ogden.

2. Lyndon LaRouche, "A New Dark Age Is Now Near: Today's Brutish Imperialism,'' EIR, Oct. 31, 2008.

3. Lyndon LaRouche's "2007 Was Already a Year of Crisis: How Russia Was Surprised,'' EIR, Jan. 9, 2009, is essential to read for understanding the picture presented here.

4. Rachel Douglas, "Franklin Roosevelt in Post-Soviet Russia,'' EIR, Feb. 23, 2007.

5. Rachel Douglas, "Russian Editor: Revive `National System of Political Economy,''' EIR, July 1, 2005.

6. Stanislav M. Menshikov, The Anatomy of Russian Capitalism (Washington, D.C.: EIR News Service, 2007).

7. But, could this not also be said for the folly existing, if Felix Rohatyn's and Michael Bloomberg's fascist infrastructure program is the fantastical method of "funding'' chosen by the U.S. Congress? Placing the future in the hands of private capital is obviously a folly, as seen in their Mussolini-modeled PPP schemes. See Marcia Merry Baker, "Felix Rohatyn's PPP Swindles: The Mussolini Model for Infrastructure,'' EIR, Dec. 8, 2006.

8. LPAC-TV, "The Lost Chance of 1989, Part II: The Fall of the Wall,'' September 2008.

9. Frederich List, Outlines of American Political Economy in Twelve Letters to Charles J. Ingersoll, Letter 2 (Wiesbaden, Germany: Dr. Boauttiger Verlags-GmbH, 1996).

10. Concerning Article I, Section 8 of the U.S. Constitution, Alexander Hamilton referred to those things to which the powers related, such as taxes, duties, and imposts, as "objects.''

11. Michael Kirsch, "Hamilton Counsels Congress: Rediscover Your Powers,'' EIR, Feb 9, 2007.