Russia

In November 2006, Russia will host the Global Forum for Partnerships between States and Businesses to Counter Terrorism. This event marks the completion of a successful year of international mobilization by Russia as President of the G8. The decision by the G8 countries in St. Petersburg in July of 2006 to support the Russian initiative in this field has been one of the most important decisions in the field of counter-terrorism in a long time. This decision gives further impetus to a number of pre-existing moves in the direction of establishing public-private partnerships to combat terrorism.

EWI's project was launched at the time of large-scale reforms in key areas of government and municipal administration in the Russian Federation, including administrative, local government and budget and urban development and housing legislation reforms. 

It contains key documents prepared by experts of EWI's project on "Reforming Municipal Finance of the Kaliningrad Oblast through Performance Budgeting" in 2005-2006, which shed light on the challenges in managing budgeting processes at the local government level in the Kaliningrad Oblast. Tendencies towards modernizing these processes through administrative and budgetary reforms in the Russian Federation and the policy of the oblast authorities are also explored. The authors devote particular attention to the relationship between performance-based budget management and strategic regional development planning.

In order to deal with resurgent nationalism in the global scramble for energy resources.

Media Coverage:

• 10-Feb-2007: CBS News: Persecuted Public, Tomorrow's Terrorists?
• 7- Feb- 2007: Reuters: Nuclear Terrorism Risk Seen as Growing

On April 25, 2007, EWI formally unveiled its three-year US-Russia Constructive Agenda Initiative with an inaugural roundtable discussion co-sponsored and hosted by the Kennan Institute. This discussion on the way forward for Russian-American relations took place on an auspicious date: 62 years ago to the day, Russian and American troops met and embraced on the Elbe, indicating clearly that the end to a bloody and vicious war was in sight. On a more somber note, the discussion was held on a national day of mourning in Russia occasioned by the funeral of Russia's first president, Boris Yeltsin.

Executive Summary

International efforts to disrupt terrorist and organized crime networks must pay special attention to how these networks are financed. Global trade in precious metals and gemstones has become a significant source of financing for both organized crime and terrorist groups. As the demand for materials bearing precious metals and stones continues to grow, criminal and terrorist networks will exploit weak national and international monitoring of the trade to finance activities that threaten us all. Public-private partnerships offer a real chance of increasing transparency and monitoring in the trade of precious metals and gemstones, thus undermining the financial foundation of global terrorist networks.

Serious efforts have been undertaken by governments, international organizations, and the global business community to stem illegal trade in many commodities used in money laundering and terrorist financing—especially since the terrorist attacks of September 11, 2001, in the United States. Significant success has been seen in disrupting the trade of illegal rough diamonds through the Kimberly Process. But success has been elusive in the illegal trafficking of precious metals and gemstones. Efficient law enforcement in this area is hampered by the lack of internationally recognized procedures for certifying batches of primary precious metals-bearing raw materials and a lack of well-established methods of identifying the origin of both precious metals and gemstones. These shortcomings complicate the process of distinguishing between legal and criminal supplies and place a substantially greater burden on the due diligence efforts of precious metals refiners and stonecutters to ascertain the veracity of their customers.

Russian research institutes and forensic laboratories, led by the mining and metallurgical company Norilsk Nickel, have devised advanced methods to identify the origin of semi-products bearing platinum-group metals (PGM). This methodology can be expanded to other metal groups and gemstones, taking the form of a Platinum Initiative to ensure efficient certification procedures in the international metal trade and strengthen existing certification schemes in the diamond and gemstones industries.

In July 2007, an informal international working group, including experts from the private sector, government, and independent think tanks, was established under the auspices of the G8 in order to explore the potential of the Platinum Initiative. The conclusions and recommendations formulated in this policy paper are to a large extent based on the initial findings discussed at the first three meetings of this Working Group held in July and October 2007 and February 2008.

Key Recommendations

• Develop the Platinum Initiative into a strong industry-focused program that includes:
  • an international register of verified and legitimate traders in PGM;
  • enhanced customs control procedures to identify PGM-bearing goods;
  • internationally shared databases of PGM-bearing raw materials;
  • enhanced control measures in mining and metallurgical companies;
  • an international network of certified forensic and expert laboratories capable of tracing the origins of the goods and commodities in question.
• Coordinate the enforcement mechanisms of the Platinum Initiative with the relevant international organizations—in particular, the World Customs Organization (WCO), appropriate UN agencies, the Financial Action Task Force (FATF), and the G8 governments.
• Incorporate data on platinum-metals bearing goods and materials into the existing WCO framework using tracking systems such as the Harmonized Commodity Description and Coding System and the Customs Enforcement Network.
• Establish standardized procedures for information-sharing between national law enforcement agencies and PGM-producing companies to respond rapidly to the appearance of suspicious consignments of unfinished precious metals-bearing materials on the market.
• Strengthen the implementation and regulatory framework of the World Bank’s anti-money laundering (AML) program to reflect the significant role of illegal precious metals trading as an instrument of terrorist financing.

Executive Summary

The United States and Russia are still the giants of nuclear power, accounting for more than half the world’s enriched uranium production. Twenty-five percent of the world’s nuclear power plants are found in the United States and half of those power plants use Russian uranium. Russian nuclear fuel now constitutes 10 percent of the U.S. power generation mix. The interdependence arising from existing trade in nuclear fuel points toward a natural partnership.

The two countries, however, have been unable to capitalize as well as they might on this potential at the bilateral level or in important multilateral forums. Both the United States and Russia would benefit from demonstrating stronger joint leadership to promote civil nuclear energy frameworks on two levels: domestically, to satisfy rising power demand and to align foreign investment regimes; and internationally, to restrain nuclear proliferators and/or contain rising insecurity about proliferation threats. Aside from the benefits for energy security, bilateral cooperation in this field could also rejuvenate stalled United States-Russia dialogue on other matters of global strategic importance.

This potential for an effective political framework for cooperation will remain unrealized until and unless both governments step up and make concrete commitments to move this promising agenda forward beyond current plans.

The civil nuclear dossier has often been held hostage to serious divergences between Moscow and Washington over larger global strategic issues, including Iran. There are profound differences in opinion between Russian and U.S. (and Western) security experts and elites as to the range of cooperative possibilities in the nuclear energy relationship. The delay in ratifying the United States-Russia Civil Nuclear Cooperation Agreement by the Senate has been one of the most recent policy developments that reinforce this perception of almost insurmountable differences. The delay overshadows the points on which the two countries have a commonality of interest and see eye to eye. On the U.S. side, one of the major concerns is the lack of openness of Russian nuclear industry to foreign investment and competition.

But there is reason for optimism as the stage is already set for closer cooperation between the United States and Russia. A proliferation-resistant, closed fuel-cycle solution for civil nuclear energy is a point on which both countries can agree. Add in complementary expertise in nuclear power generation and you have an ideal match. The United States and Russia should build on these foundations by promoting technical cooperation between their respective civil nuclear industries that would significantly advance national energy security and bring tangible commercial benefits.

The United States and Russia share a vision of a sustainable energy future less reliant on dwindling and environmentally damaging fossil fuels. A joint U.S.-Russian initiative on civil nuclear energy would be a step closer to this goal. Such a partnership could also help to close the door on past rivalry between these two major powers while simultaneously promoting global security. Given the likely benefits of cooperation that would accrue to both states, it would be careless to let past suspicions overcome prudence.

Key recommendations to the Governments of Russia and the United States

• Commit to a firm date such as 31 June 2009 for making a joint proposal on an international fuel bank that effectively merges the separate proposals of each (U.S. Global Nuclear Energy Partnership and Russian Fuel Bank Initiative), while incorporating the most promising elements of other related proposals from countries like
  Germany and Japan.
• Create a bilateral inter-governmental commission to map concrete technical parameters for civil nuclear cooperation and to smooth over potential non-nuclear obstacles.
• Put in place a firm framework for transfer to developing countries of affordable and proliferation-resistant technology through a multilateral nuclear technology knowledge bank based on public-private cooperation under the auspices of the International Atomic Energy Agency.
• Use the knowledge bank to develop a set of political and business incentives that promote a clear and rapid move to new power generation solutions, such as thermo-nuclear fusion.
• De-couple bilateral civil nuclear cooperation from U.S.-Russian negotiations on Iran and third party non-proliferation issues.

It also recommends adopting a common policy on reduction of nuclear forces and combating nuclear proliferation. At their recent summit meeting, Presidents Bush and Putin agreed to cooperate on civil nuclear issues and the disposition of strategic nuclear forces. President Putin also noted that the two countries "...are now discussing a possibility of raising our relations to an entirely new level that would involve a very private and very...sensitive dialogue on all issues related to international security."

At their recent summit meeting, Presidents Bush and Putin worked to reverse the deterioration in bilateral relations by moving forward on civil nuclear cooperation and reviving a dialogue on the disposition of strategic nuclear forces. President Putin also noted that the two countries "...are now discussing a possibility of raising our relations to an entirely new level that would involve a very private and very...sensitive dialogue on all issues related to international security."

The approach is consistent with EWI's US-Russia Constructive Agenda Initiative and reflects the recommendations in our new policy paper, "New Russia, New Ally: A Bilateral Security Agenda Beyond 2008."  

Click here for the Russian version of the report.