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Thursday, October 02, 2008

Putin's Growing Appetite

By Dr. Rachel Ehrenfeld

President George W. Bush meeting today (Monday Sept. 29) with Ukraine’s President, aims at strengthening Viktor Yushchenko’s stand against the Kremlin. On the agenda is Russia’s growing threats against and meddling in Ukraine’s domestic politics in effort to derail its pending integration into NATO.

This meeting, as Bush’s condemnation of the Kremlin’s aggression towards its neighbors, and Secretary of State Condoleezza Rice’s fierce criticism of Russia’s war against Georgia, do little to slow Prime Minister and former President Vladimir Putin’s efforts to destabilize Ukraine, corner its food industry’s development and export, and buy a foothold in its major ports.

On September 15, Moscow efforts led to the collapse of Ukraine’s coalition government. This crisis came shortly after the Russian foreign office condemned Ukraine's "unfriendly" policies toward Moscow, especially President Viktor Yushchenko’s latest movement restrictions on Russia’s Black Sea fleet , and his objection to renew the Kremlin's lease of Ukrainian ports. Russia needs these ports to obtain greater access to their shipyards and to the Black Sea.

Russia’s military and political aggression became a cause célèbre in the West. Unnoticed, however, are the activities of the Kremlin’s loyal oligarchs growing control over Ukraine’s ports. Going far beyond energy, the Russian strategy now expands to control over the region’s scarce commodities, including food resources, threatening to leave millions of people cold and starving.

Food shortages and spiraling prices are spurring riots and creating emergencies worldwide, says director general of the Rome-based UN Food and Agriculture Organization (FAO), Jacques Diouf. Over 852 million (above 13%) of the world population is malnourished. Last April, global cereal reserves were already so low; they could feed the world for only 8 to 12 weeks.

The World Bank calls Ukraine “one of the few countries in the world,” capable of significantly increasing net grain exports. Aptly, Kiev decided last April to increase its grain export quotas.

For 69 years, Ukraine was the U.S.S.R. “breadbasket” Until breaking free in 1991 from the Soviet boot, Ukraine supplied over 25% of all the U.S. S. R. agricultural produce; now it’s the world’s 8th largest wheat exporter, and ranks 10th overall for cereals exports.

Ukraine’s government early this year asked the World Bank to facilitate President Viktor Yushchenko’s 2005 plan to double its food production, thus turning it to the “breadbasket of Europe.” The World Bank prepared a special Note: “Competitive Agriculture or State Control: Ukraine’s response to the global food crisis,” concluding, “Ukraine is in a position to make a significant contribution to the international effort to deal with the food crisis.”

Unfortunately, Ukraine’s unstable coalition government almost simultaneously thwarted Yushchenko’s plans with new grain export restrictions costing Ukraine food producers more than $2 billion last year, thus devaluing its entire agro-business industry. This opened the door to the Russians.

In February 2008, according to Ukrainian media reports, Russia’s FedComInvest assumed control of Sumykhimprom, Ukraine’s largest fertilizer manufacturer, whose products are essential to growing healthy crops and increasing Ukraine agricultural yields.

FedComInvest belongs to the leading Russian sulfur supplier, FedCom, which generates some $2 billion in annual sales. It was founded in 1996 by Alexei Fedoricsev, a minor league millionaire, and listed as a major investor in the 2014 Sochi Winter Olympics.

The Sochi Winter Olympics are Putin’s treasured baby. Like the Chinese with the Beijing Olympics, Putin aims through the Sochi Olympics to validate the success of his very own “new Russia.”

With Putin’s ‘encouragement’ Russia’s oligarchs -- the richest, $28 billion worth Rusal chieftain Oleg Deripaska (banned from entering the U.S.), to less known, and other shadowy figures like Fedoricsev, who barely squeaked onto the tail end of a recent Forbes Russia Golden 100 list, with roughly $450 million -- invest heavily in the forthcoming Sochi Olympics, and other related projects.

Meanwhile, Fedorychev’s Russian TransInvestService, another FedCom company, recently obtained a $50 million contract to build the largest Ukrainian container terminal for the Port of Yuzhny, to facilitate food- and fertilizer-shipping to Europe and the Middle East. (The Saudis are becoming major clients.) Ukraine's Transportation and Communications Ministry describes FedComInvest’s activities as “corporate raiding.” Other Russian companies also made huge investments in major Ukraine sea and river ports.

“The Kremlin has established a group of “service oligarchs,” people with shady past, who are ready to use any methods to reach their ends,” states Dr. political science professor Valentin Yakushik at Kiev’s Mogilaynsky Academy. Moreover, Fedorychev allegedly has a criminal record and was on the receiving end of Yukos’ remains after Khodorkovsky’s lynching, according to prominent Russian investigative journalist Yulia Latynina.

Not long ago, Interpol investigated Fedorychev for alleged money laundering and links to notorious international arms/drugs and diamond dealers Leonid Efimovich Minin, now serving time in Italy, and illusive Victor Anatolyevic Bout, who was arrested in Thailand last March on an FBI warrant.

The French newspapers Le Monde, Le Parisien, and Aujourd'hui followed the investigation closely, reported Fedorychev got away due to lack of evidence. Though “Fedorychev’s close associate was indicted” says Inna Weiss at the Central Group of European Political Monitoring. “The publicity led cautious members of Europe's money elite -- notably, late Prince Rainier of Monaco -- to cut business ties with Fedorychev to the minimum.” This, however, did little to stop Putin’s oligarchs from gaining control over strategically important assets in Ukraine and other former Soviet republics, thus threatening the stability of the region and U.S. national security.

Moreover, Putin uses President Bush’s support to Ukraine and Georgia’s fledging democracies as justification and opportunity to further undermine the U.S. influence in the region. Indeed, challenging Putin’s ambitions while defusing the tension in U.S. Russian relations would present a real test to the next U.S. Administration.

Source: Human Events

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