IN THIS ISSUE

* Russia implements its most radical military reform in 200 years
* ...while Chechen rebel leader reportedly dead or wounded
* Kyrgyz president exploits divided opposition's policy vacuum
* Turkish government introduces a new stimulus package to promote industrial growth
** New in the Jamestown blog on Russia and Eurasia (http://www.jamestown.org/blog):
- New Obstacles for the Nord Stream Pipeline

Russian Military Weakness Increases Importance of Strategic Nuclear Forces

Pavel Felgenhauer

On June 5 the Russian Chief of the General Staff and First Deputy Defense Minister Army-General Nikolai Makarov gave an important press conference. Makarov began with a two hour statement on military reform, followed by a slide show involving almost 30 slides, dazzling journalists with a deluge of facts and figures. Russia's radical military reform agenda has recently provoked growing criticism. Last month a meeting of top-brass retired generals expressed disappointment over not being consulted or informed about the reform plans. Former Interior Minister Colonel-General (retired) Anatoly Kulikov announced that the reform plans were not well thought out, and are being implemented too rapidly -which threatens Russia's "territorial integrity and sovereignty" (Nezavisimaya Gazeta, May 25).

A working group, formed by the Duma defense committee and headed by its deputy chairman from the ruling United Russia party Mikhail Babich, also produced a damning report. Babich told journalists that the planned dismissal of 323,000 officers and praporshiki (warrant officers) must be postponed, and the transformation of army divisions into brigades must stop. According to Babich, the reforms can only proceed after the appropriate legislation is introduced and approved by parliament (Vedomosti, June 1).

Makarov angrily dismissed such criticism during his press conference, claiming that top brass retirees did nothing while they were in charge, which had plunged the military into a catastrophic crisis. According to Makarov, there is no time left for "experiments." The Russian military must be reformed immediately and radically, before it totally disintegrates. Makarov pointed out, "our military theory is outdated," since the 1980's Western militaries have been transformed to fight the wars of the future, while the Russian armed forces hibernated. Makarov explained that Russia's outdated military is inferior to its Western counterparts in terms of equipment, training and organization.

In Makarov's opinion, the arsenals are full of aging heavy weapons that have not been properly maintained or repaired for many years, and are consequently mostly obsolete. The Air Force, for instance, has fewer flight-worthy aircraft and more badly trained pilots -rather than procuring modern platforms in sufficient numbers. Makarov said that air force pilots compete for the few aircraft remaining, and are incapable of conducting real combat operations: "They can run bombing missions only in daytime with the sun shining, but they miss their targets anyway" (Interfax, June 5).

Makarov expressed considerable contempt for the rank and file officers and praporshiki: "no-one wants to do anything - our officers have become degraded." Makarov believes that "unready officers" must be fired - "we do not need them." Moreover, Makarov asserted that since the military reforms of Field Marshal Dmirty Milutin in the nineteenth century, which created a mobilization force instead of a regular standing army, "nothing has changed in our military for 200 years." A slide produced by Makarov displayed an image of Russia surrounded on all sides by "threats" that included not only the United States and its allies, but also China. Makarov said, "We will not cut the strategic nuclear rocket forces - today they are our only real defense, while we need at least three years to reform" (ITAR-TASS, June 5). Russia plans to reform and modernize under the nuclear umbrella, while its conventional armed forces remain extremely weak.

Makarov acknowledged that rearming the military with modern weapons will take several years, whereas the organizational reforms can be carried out now. By June 1, the first half of the reorganizations of the MoD will be complete. By December 1, the overall organizational reform must be finished: all units that are left in the army will be fully ready for immediate action ("in one hour" - repeated Makarov). Units will be expanded to full wartime personnel levels - with no place left for reservists. According to Makarov, as the reforms are pushed ahead, the remaining reserve component will be comparable in size with the regular military. Most of the reservists, however, will be civilian professionals such as drivers and doctors (Interfax, June 5).

In the recent wars in the Caucasus, the Russian military actively used separate tactical battalion groups, reinforced by artillery and other heavy equipment. It transpired that an army division could at best field no more than three such battalion groups, since it lacked sufficient reinforcements or support to deploy more. Regular battalion commanders in many cases lacked command experience, and coordinated different units within a heavy separate tactical battalion group, consequently colonels or generals had to take over direct command. Makarov has reported that divisions are being disbanded, with new "heavy brigades" formed to replace them -already comprised of several reinforced tactical battalion groups (ITAR-TASS, June 5).

Military reform in Russia has been long overdue and often harshly or sporadically introduced. Hundreds of thousands of officers will now be discharged. Makarov stressed that all will receive due payouts and allowances; while those who are allowed to stay in the military will see their pay increase threefold.

Nonetheless, there is massive discontent and opposition to the radical change from a mass mobilization force built to fight a global war with the U.S., transferring to a smaller and more capable standing army, designed to fight local wars in the Caucasus or other territories on the periphery of Russia. To quell any possible open military discontent, the elite airborne corps has been protected from any further cuts and declared as an example of the new army. A sergeant's academy to prepare NCO's for all the services is being created in Ryazan at the Airborne Academy: "to teach the rest the virtues of the airborne forces," stated Makarov (ITAR-TASS, June 5).

The Chechen campaign veteran accused by human rights organizations of war crimes, Lieutenant-General Vladimir Shamanov has been appointed commander of the airborne forces (EDM, June 2). Under his command, Russian paratroopers are capable of suppressing any discontent, if it emerges. Radical military reform is rapidly advancing -and it appears that it might indeed succeed.

Kadyrov Claims Umarov Gravely Wounded, Accuses U.S. of Subversion

The Jamestown Foundation

Chechen President Ramzan Kadyrov claimed on June 10 that the leader of the armed Islamic separatist movement in the North Caucasus, Dokka Umarov, was wounded earlier this month during a special operation conducted along the Chechen-Ingush administrative border. "It can be said with a large share of probability that Dokka Umarov, the chief terrorist, was badly wounded," Kavkazky Uzel quoted Kadyrov as saying. However, Kadyrov would not confirm earlier reports that Umarov had been killed, saying such reports need to be checked carefully (Kavkazky Uzel, June 10).

Russian media reported on June 8 that Umarov had been killed. Interfax quoted a "source in Russia's power structures" as saying that an operation to eliminate Umarov had been successfully carried out in one of the republics of the North Caucasus. Itar-Tass reported that Umarov had been killed near the village of Muzhichi, located in Ingushetia's Sunzha district near the Chechen-Ingush administrative border, and quoted an unidentified source as suggesting Umarov's body was among several charred corpses found in a car that had been hit by some kind of artillery fire. The source said Umarov had been seriously wounded the previous week during a special operation near the village of Dattykh, during which his bodyguard was killed. Interfax, it should be noted quoted an unnamed Chechen law-enforcement official on June 8 as saying he had no information either confirming or denying that Umarov had been killed (Interfax, ITAR-TASS, June 8).

Adam Delimkhanov, the State Duma deputy and close Kadyrov associate who is wanted in the United Arab Emirates on charges of organizing the assassination of former Vostok battalion commander Sulim Yamadaev in Dubai, told Kadyrov on June 4 that Umarov may have been wounded during a special operation along the Chechen-Ingush administrative border (www.newsru.com, June 4). Ingushetia's President Yunus-Bek Yevkurov, for his part, claimed on June 9 that a "mercenary" from Azerbaijan who was Umarov's bodyguard had been killed near the village of Nizhny Alkun in Ingushetia, but that it could not be confirmed that Umarov had also been killed (Kavkazky Uzel, June 9).

Some independent observers have not ruled that Umarov was killed. Aslambek Apaev, a North Caucasus expert with the Moscow Helsinki Group, said he still doubted the reports that the Chechen rebel leader had been killed, but added that if they were true, then the authorities were waiting to announce his death until the June 12 Russia Day holiday, which commemorates the day in 1990 that Russia's parliament formally declared its sovereignty (Kavkazky Uzel, June 9).

The Kavkaz-Center website, which is the mouthpiece for the armed Islamist wing of the North Caucasus rebel movement, has denied reports that Umarov was killed or wounded. The website said in a June 9 posting that reports stating that the "emir" Dokka Umarov - "emir" is the title the Islamist rebels have given Umarov in his role as leader of the so-called Caucasus Emirate - "do not correspond to reality." The website said the reports of Umarov's wounding or death had been leaked to "weaken the effect" of the news of Dagestani Interior Minister Adilgerei Magomedtagirov's June 5 assassination, adding that such leaks were typical of "informational active measures" employed by Russia's special services. The website noted - as did some independent observers - that Russian authorities have prematurely declared Umarov dead several time before (www.kavkazcenter.com, June 9).

Ramzan Kadyrov, meanwhile, launched his latest attack on the United States, accusing it of fomenting conflict and tension in the North Caucasus. "I like to call things by their right names," he said in an interview posted on the Chechen president's website. "And it is precisely from the side of America that work is being carried out aimed at the disintegration of the sovereign Russian state. It is not terrorists, not Islamists. There is not even a whiff of Islam there [in America]. They invented this system. They are creating problems for Russia; they want to pull Russia down. That did not work through Chechnya, [so] now they want to do it through Abkhazia, South Ossetia, Dagestan, Ingushetia. They have such a system working - all sorts of social organizations created to spread rumors and gossip, to agitate people; they know that that in the Caucasus the only way to create problems for Russia is on a religious basis."

Kadyrov added in the interview that "they" - meaning the United States - are using "powerful specialists," claiming that certain "Arabs" active in the North Caucasus (he cited the names "Yasser" and "Makhdan") have already been in the region for 14 years. "The speak Russian better than I do but do not utter a single word in Chechen," Kadyrov said. "They have excellent training. They do not take part in fighting; they are special services workers, they are provided for, guarded and financed; they have been sent to Russia to conduct subversive activities."

Such "agents," Kadyrov added, are working to ensure that there is no order in Russia. "And the Chechen people understood that, and all the peoples of Russia need to understand that," he said. "The countries of the CIS also must understand that striving for and orienting toward the West will lead to no good. They must live with and be friends with Russia. In any case, they will reach that same conclusion at the end of the day. Russia is a mighty and great power, and it will never be possible to pull it down" (www.chechnya.gov.ru, June 10).

Last September, Kadyrov accused the United States of fomenting unrest in the Caucasus and encouraging Georgia to attack South Ossetia.

Bakiyev Confident Ahead of Presidential Election

Erica Marat

Approximately one month before the presidential election in July, Kyrgyzstan's incumbent leader Kurmanbek Bakiyev has clearly emerged as its most likely winner. The president has managed to strengthen his personal leverage over the parliament, the Central Elections Commission (CEC) as well as the security structures in the run up to the election. The opposition, in the meantime, has become increasingly fragmented and inconsistent in their declared policy goals.

Earlier this year, when Bakiyev first announced staging an early presidential election, opposition forces saw a fresh opportunity to challenge the regime. However, as time elapsed, the opposition's hopes for ousting Bakiyev faded. A series of violent attacks against opposition members and journalists, lawsuits and political assassinations allegedly staged by the supporters of the regime, exposed Bakiyev's zeal to retain his grip on power. Today, some opposition members now appear resigned to Bakiyev winning the forthcoming election.

The opposition leaders hoped to pressure Bakiyev to cancel his candidacy prior to the election. But the leaders of the United Opposition Movement (UOM), uniting several major political parties, were unable to gather large crowds, even for their regional party meetings due to Bakiyev's successful alienation of the opposition from the government and parliament.

"The people are not ready to come together in protest and we must use another way to challenge the regime," concluded one member of the Ata Meken party. According to this view, the population is willing to tolerate Bakiyev's regime despite his low popularity rating. "Akayev was ousted after almost 15 years of rule, with the last five years of his regime being deeply unpopular," commented its leader Omurbek Tekebayev referring to former president Askar Akayev who was forced to resign in spring 2005.

Other members of the UOM believe that Bakiyev will retain his presidency for many years to come. Both groups, however, agree that Bakiyev leaves the opposition with no other option but to remove him forcefully.

Yet, few UOM members admit that the opposition forces have failed to produce a coherent message that would prove popular among the politically active population. Instead, the same arguments about Bakiyev being a corrupt and undemocratic leader, intermixed with ethno-centric calls for patriotism, dominate the debate among opposition members. Aside from a few posters in public places, Almazbek Atambayev and Temir Sariyev, both presidential candidates from the opposition, did not communicate any sense of new policies they intend to introduce if elected.

The programs and reforms suggested by UOM fail to provide concrete strategies for reducing state corruption or contributing to the democratization process. One such program offered by the opposition sought to prevent any party from earning more than 60 percent, yet the proposal was undermined by its numerous loopholes. It did not, however, suggest any changes to the electoral process or a division of power among the state institutions.

In a desperate search for support, some UOM leaders called for mobilizing crowds to protest against the current regime on the basis of Kyrgyz ethnic identity. Their reluctance to formulate strategies beyond anti-corruption slogans and ethno-centric ideas, demonstrated the UOM's faulty conviction in its own righteousness. UOM leaders rarely question their own means of fighting Bakiyev's clan-based and criminal regime. Calls to unite on the basis of ethnicity, however, contributed to the ethnic minorities' reluctance for greater political participation. As one UOM leader and a potential presidential candidate dangerously asserted, ethnic minorities in Kyrgyzstan are mere bystanders of political changes, while those born "Kyrgyz" are fighting the unjust political regime.

In the meantime, according to the leader of Ata Meken Omurbek Tekebayev, parliamentarians from the pro-regime Ak Zhol party were ordered to actively work with their constituencies (www.24.kg, June 9). He commented that "officials are meeting with their fellow villagers, bringing food, and butchering livestock," to persuade them to vote for Bakiyev.

Bakiyev chose July to stage the elections in order to secure re-election prior to the government having to ration electricity production in the winter months. Last winter the government had to ration electricity in order to prevent the collapse of the hydropower sector. Bakiyev has also realized the importance of small and medium sized businesses in his presidential campaign. He has promised to protect businesses from illegal raids by the tax agencies (www.akipress.kg, June 10). This policy shift followed introducing the deeply unpopular patent system that affected small businesses last January.

Despite encountering numerous difficulties from the regime, the UOM will initiate their own independent count of the votes and closely work with the mass media on election day (www.24.kg, June 9). This effort is genuine, yet it is unlikely to result in any significant challenge to Bakiyev's re-election ambitions. The president has announced he will bring more observers of his own.

Turkey Reports Signs of Economic Recovery

Saban Kardas

Data recently released by the Turkish Statistics Institute (TurkStat) has raised expectations that the economy might be on its way to recovery. According to TurkStat, the capacity utilization rate within the Turkish manufacturing sector increased for the third consecutive month in May (www.tuik.gov.tr, June 10). Although the improvement is attributed largely to the AKP government's economic stimulus packages, it remains uncertain whether domestic demand alone can sustain economic development.

Starting in the second half of 2008, the Turkish economy felt the impact of the global financial crisis: industrial production output, exports, economic growth and industrial capacity utilization rates dropped dramatically, while unemployment soared (EDM, February 18). In January and February, the industrial capacity utilization rate dropped to 63.8 percent and hit a record low in the last two decades, presenting the starkest evidence of the contraction within the Turkish economy. In an attempt to prevent a deeper recession, the Central Bank gradually cut its interest rates. In addition, the AKP government, which was under fire for failing to take effective precautions, adopted several economic packages. In March, temporary tax cuts were introduced in major sectors including automotive, housing and household appliances in order to stimulate domestic demand (EDM, March 16).

Recent economic trends indicate that these precautions slowed the pace of the downturn. In March, the capacity utilization rate increased for the first time since September 2008 and has continued to climb; it moved from 63.8 percent in February to 64.7 in March, and to 66.8 in April and 70.4 percent in May.

While confirming this trend, TurkStat's report highlighted low domestic and foreign demand as the major factors negatively affecting the capacity utilization. Although in May the capacity utilization rate indicated a 12 percent decline compared to the previous year, demonstrating the extent of the economic downturn, the report provided other signs of recovery. The production volume in May increased by 7.6 percent compared to April, which is estimated to continue growing by 6.7 percent in June. The sales volume increased by 6.4 percent in May and this is forecast to continue in June (www.tuik.gov.tr, June 10).

The recent figures were interpreted by government officials as a sign that Turkey might be able to mitigate the full impact of the crisis. The Minister of Trade and Industry Nihat Ergun attributed the growth in the capacity utilization to the production triggered by the government's earlier economic packages. He argued that a slow recovery was now under way. Nonetheless, he avoided drawing an overly optimistic picture, and added that without the complementary expansion in foreign demand, the recovery might be short-lived (www.cnnturk.com, June 10).

Indeed, following the introduction of the latest economic package, several companies that were considering halting their production dropped these plans. Likewise, many companies that had applied for the government sponsored short term pay compensation, in order not to lay off their employees stopped receiving those benefits and began paying full salaries (Zaman, April 13). Moreover, a report published by an Ankara-based think-tank found that a majority of the automotive sales were financed by consumer savings and seller credits, rather than bank loans. The report suggested that this might prove an important indicator, signaling the growing consumer confidence in the market -a key factor for economic recovery (www.tepav.org.tr, June 4).

The stimulus package has provided temporary relief, but it is uncertain what will occur after the tax incentives expire this month. Since the global economy is unlikely to recover in the short term, foreign demand cannot serve as the main stimulant for the Turkish economy. Therefore, the key question might be whether Turkey's domestic demand can sustain its economic growth. Some experts maintain that with improved economic coordination and more intensive public involvement in the functioning of the economy, Turkey can stimulate domestic demand and maintain its economic growth (www.tepav.org.tr, May 27). However, other analysts expect that, short of any major surge in foreign demand, it will be difficult to sustain such economic growth in the second half of 2009. On the contrary, they forecast that the automotive sector is likely to face "renewed sharp contraction in the second half of 2009 and a slow recovery beyond that" (Hurriyet Daily News, May 29).

Since the automotive sector is one of the engines of Turkish economic development, the government needs to implement additional measures to redress the deficit caused by this contraction. With such considerations in mind, Prime Minister Recep Tayyip Erdogan announced the fifth economic incentives package on June 4. The package seeks to enhance the economy's competitive power and eliminate regional discrepancies through region, sector and project specific incentives and investments. Businesses investing in poorer regions such as in eastern Turkey will be entitled to free land, tax breaks on corporate taxation, and government assistance for employees' social security premiums, etc. An additional package aims to reduce unemployment by funding various seasonal public works, such as repairing schools and hospitals and planting trees, as well as providing vocational training. With this new package, the total cost of the stimulus packages for 2009 and 2010 is expected to reach 60 billion TL ($38.7 billion) (www.32gunhaber.com, June 4).

The government's economic policy is driven by the need to reduce the impact of the crisis on households to prevent the erosion of its political popularity. In this context, it has elongated the negotiations with the IMF to sign a loan deal, which might have imposed tighter budgetary rules on public spending. Recent reports suggest that in response to the signs of recovery, the treasury has an alternative plan to continue the economic program without a stand-by agreement with the IMF (Referans, May 20). The government has managed to slow the downturn and escape a deep recession, but it is still too early to determine when the Turkish economy will experience a permanent recovery. Moreover, if the global crisis continues beyond 2009 the heavy financial burden of the stimulus packages on the budget might return to haunt the Turkish economy, and possibly damage the government's popularity.

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