MEMORANDUM BY THE FOREIGN AND COMMONWEALTH
OFFICE
THE FCO'S ROLE IN PROMOTING BRITISH INTERESTS
IN AND RELATIONS WITH RUSSIA
INTRODUCTION
1. Relations with Russia, and her stability
and development, remain important for the United Kingdom. with
about 146 million people, and a seventh of the world's land surface,
she is a permanent member of the UN Security Council, a member
of the G8, a nuclear power, and has the potential to become an
increasingly close political and economic partner, or a source
of international concern. The UK has already done much to help
Russia with the difficult process of change: there is a strong
UK interest in satisfactory further developments.
THE RUSSIAN
CONTEXT
2. The eight years since the collapse of
the USSR have seen some dramatic changes. The Communist one-party
state and central command economy have been replaced by a more
open society, based on a mass franchise. In line with the Constitution,
Yeltsin is obliged to step down after Presidential elections by
July 2000. This would make him the first Russian leader to hand
over power according to the popular will. Duma elections take
place on 19 December 1999. Russia has a new culture of press freedom
and vibrant political debate; and the foundations for a market
economy are being laid. A foreign and defence policy of confrontation
and hostility towards the West has largely been replaced by an
approach offering a number of possibilities for international
partnership and cooperation.
3. There are some grounds for optimism.
No serious political grouping in Russia now openly advocates the
re-establishment of the Soviet system. Younger Russians in particular
seem energetic and eager to free themselves from the constraints
of the past. The information revolution is having an important
impact on their sense of the wider world. Russia possesses enormous
natural resources and a skilled population. Despite growing social
inequalities, there continues to be no large scale unrest. And,
outside the North Caucasus, (which is a large exception) there
are no signs of serious threats to the territorial integrity of
the Russian Federation.
4. But Russia still faces major problems.
The balance of political and economic power between the federal
government and the regions remains contentious and unresolved.
No more than a dozen regions are net contributors to the federal
budget; the majority continue to look to the centre for state
subsidies but, in practice, the federal authorities fail to give
them funding they feel they need.
5. On the political front, other than the
Communists and, to a much lesser extent, the liberal Yabloko party,
no party has developed a national organisation. There is no articulated
tradition of popular participation in non-governmental organisations
or pressure groups. Their development has therefore varied considerably
from region to region. And unlike many of the transition states
of Central and Eastern Europe, there is no popular memory of a
democratic past or a market economy. The experience of Cold War
confrontation has coloured the approach of key policy-makers.
Many Russians find it hard to come to terms with the sudden loss
of empire and super-power status. There are suspicions and resentments
about the enlargement of NATO, and NATO military action in the
Balkans. And the sheer size of Russia magnifies its problems.
6. For significant numbers of Russians,
the process of change has been hard. Many have little understanding
of why change has been hard. Many have little understanding of
why change is necessary, or what it involves, and scant evidence
of what benefits it can bring. The apparent security of life in
the USSR has been replaced by economic and social uncertainties,
more crime, and corruption. During the 1990s the Russian population
has experienced increasing levels of disease, poverty, crime,
and suicide, and a falling life expectancy—male life expectancy
fell to a mere 57 years in 1994 (below that of eg India). The
public focus on the behaviour of key leaders has tainted perceptions
of the political process, and of politicians themselves. There
are reservations about the trustworthiness of institutions. And
the financial collapse of August 1998, which wiped out many Russians'
savings, also affected the stability of the rouble, one of the
fleeting achievements of economic reform.
7. There are also structural economic difficulties.
Much of the Soviet legacy remains. The Soviet economic system
left Russian industry in a parlous state: uncompetitive, badly-organised
and over-dependent on outdated technology. Russia can no longer
rely on the captive markets of the USSR's satellites. Most Russian
manufactured goods are largely uncompetitive in global markets.
The country remains heavily dependent on exports of minerals,
metals, oil and gas. While the rapid increase in world oil prices
(from $10 at the start of the year to over $21 per barrel now)
has improved hard currency earnings, Russian dependence on global
market prices has been made rudely clear. Nor is there an adequate
fiscal regime to capture the value of oil and gas sales for public
revenues. And the depredations of industry on the environment
are in many cases catastrophic, and continue.
8. Progress in the key area of industrial
restructuring has been very limited, hampered by powerful vested
interests and the dependence of communities on single enterprises.
Large sections of former state industries have been privatised.
But this process has rarely been transparent, and the state has
retained strong influence or control in some sectors. Both in
business and the public sector, corruption and an uncertain legal
environment are major problems. The introduction of proper business
practices has been slow. Accounting standards are poor, the tax
system opaque and inconsistently applied, and the banking system
flawed. This has led to a dependence on barter arrangements; high
rates of inter-enterprise debt; and capital flight. These are
major obstacles to economic growth, sound public financing, and
domestic and foreign investment, which could potentially help
transform business, and bring Russia inflows many times greater
than any direct financial assistance likely to be available from
International Financial Institutions or commercial lenders.
9. These problems need to be seen in perspective.
Given the size of the country, and scale of the legacy of 75 years
of communism, modernisation was bound to take time. Progress has
been made. The challenge now is to build on the achivements of
the past eight years, and create conditions for further progress.
This depends largely on the Russians themselves. Only they can
take and implement the necessary decisions. But international
engagement is also crucial in support of reform in Russia and
to encourage Russia to adopt suitable domestic and foreign policies.
We can help by providing financial and technical assistance and
advice, and seeking to integrate Russia into the key international
political and economic structures. The UK already plays an important
role in this, both nationally and through its involvement in multilateral
and international organisations.
UK PRESENCE
10. Our interests in Russia are managed
by our Embassy in Moscow, and Consulates General in St Petersburg
and Ekaterinburg. Diplomatic activity includes commercial, political,
press and public affairs, consular, immigration, law enforcement
liaison and management work. There are also sizeable Defence and
Know How Fund Sections (see below). A summary of staffing compared
to France, Germany and the US is contained in the table below.
| Posts | Homebased Staff
| Locally-engaged Staff |
| UK | 3 | 90
| 161 Russians and 36 expatriates |
| France | 2 | 85
| 65 Russians and 28 expatriates |
| Germany | 4 | 209
| 142 Russians and 52 expatriates |
| US | 4 | 429
| 826 Russians and 82 expatriates |
KNOW HOW
FUND
11. An important part of British activity in Russia is
the provision of technical assistance by the Department for International
Development's Know How Fund (KHF). Its purpose is to help Russia
complete the transition to a market economy, while ensuring its
benefits are sustainable and spread through all levels of society.
Its budget for Russia is around £30 million per year. It
funds projects which help promote an open society, strengthen
Russia's economic performance, and improve the quality of life
of those adversely affected by change.
12. One of these is "The Russian President's Management
Training Initiative". Under the initiative, 500 young Russian
managers will be trained in the UK under KHF auspices. The objective
is to expose them to best Western business practice. To date over
100 have been placed. Another on-going initiative is "The
Marshall Plan for the Mind". The Department for International
Development has provided £10 million to the BBC for making
and broadcasting programmes in support of civic society, reform
and democratisation. These programmes now attract up to three
million listeners and have been broadcast to over 150 regional
radio stations.
13. The Know How Fund has built a strong reputation in
Russia for pragmatism, expertise and speed of response. It is
active mainly in eight priority cities and regions (Moscow, St
Petersburg, the Leningrad region, Sverdlovsk, Kemerovo, Rostov,
Nizhny Novgorod and Samara). Its range of activity outside the
capital means it is well placed to take account of increasing
regionalisation in Russia.
BRITISH COUNCIL
14. Regional reach is also a feature of the work of the
British Council, a vital part of British engagement with Russia.
Apart from its central office in Moscow, the Council operates
nine regional offices, and plan to open a further two next year.
They are located in cities or regions which are a priority for
KHF or British business (for example in Sakhalin, where BP Amoco
are providing support); or where there are reformist ministries
of education.
15. The Council does much to spread knowledge of the
UK, and to demonstrate British interest and involvement, across
Russia. It runs an active programme of cultural links, in which
the Russians have always had a strong interest. It manages a growing
number of academic contacts, and helps Russians to undertake study
in the UK. It works with Russian partners to modernise the Russian
education system. It manages the FCO's scholarship programme,
which funds 15-20 Chevening scholarships each year, and the new
FCO Regional Public Service Scholarship scheme, which will bring10-12
young regional administrators to study in the UK this year. It
also manages technical assistance projects for KHF and TACIS.
And it runs a growing English language teaching programme. The
Council will submit a separate report to the Committee.
PRINCIPAL UK INTERESTS
16. Our principal goals are the development in Russia
of:
(i) political stability and democracy, and
(ii) a stable market economy.
This is central to progress in other key areas, including:
(iii) a healthy trading relationship, providing opportunities
for British business, and a legislative and regulatory framework
which promotes and protects direct investment;
(iv) a constructive foreign and security policy partnership;
(v) a reduced threat from weapons of mass destruction
(WMD) and conventional weapons, through arms control and work
to counter proliferation;
(vi) increased respect for human rights;
(vii) cooperation to counter international crime;
(viii) a reduced cross-border environmental threat;
(ix) an improvement in the living standards of ordinary
people, especially the poorest.
POLITICAL STABILITY
AND DEMOCRACY
17. Russia is committed to observing established democratic
norms through its membership of the OSCE and Council of Europe.
But there are continued concerns in Russia over the distribution
and exercise of political power.
18. In Russia as elsewhere, the UK does not seek involvement
in domestic politics. But we are actively engaged in the development
of pluralist democracy, civic society and human rights. We support
a growing programme of visits and contacts between British and
Russian parliamentarians: Madam Speaker visited Russia last year,
and several key Duma Committees have visited the UK this year.
Russian Parliamentarians attended the opening of the Scottish
Parliament in July. The KHF and FCO also support seminars for
Russian politicians and parliamentary staffers to share our experience
of parliamentary democracy. A key KHF priority is support for
an independent media, vital to the development of democracy. And
we use our contacts with senior Russian politicians to remind
them of the importance of ensuring that political change in Russia
continues to follow a constitutional path.
A STABLE MARKET
ECONOMY
19. Sustainable economic growth is vital if Russian living
standards are to rise, if the Russian government is to be able
to meet its obligations to its citizens, and for profitable international
trade with Russia.
20. Lending through the IFIs or from Western commercial
banks has been important to support Russia's macroeconomic stability
. Since 1991, Russia has received $23.8 billion from the IMF and
$6.5 billion from IBRD. The UK, providing 5 per cent of the capital,
is one of the main share-holders in these two institutions. In
addition, Russia has received $2.1 billion EBRD lending. Russian
sovereign debt is now around $79 billion, of which the UK share
is around $2.2 billion.
21. In July this year the UK supported a decision by
the IMF to agree a new $4.5 billion loan programme. This was an
important sign of international commitment to continued reform
in Russia, in exchange for which the Russian Government persuaded
the Duma to agree new targets for revenue collection and public
expenditure, and important measures to take forward bank restructuring.
The programme effectively rolls over Russia's debt to the Fund,
and unfreezes some $4.7 billion in IBRD loans. Without the loan,
there was a risk that Russia would have defaulted on its IFI debts,
triggering a further collapse of financial confidence in Russia.
The programme allowed Russia to agree rescheduling of Russia's
Soviet era debt at the Paris Club, and to start negotiations with
London Club private creditors.
22. But IMF lending on its own is not enough to secure
macroeconomic stability. This was clearly demonstrated in August
1998 when the announcement of a $20.5 billion IMF loan was not
enough to counterbalance the markets' lack of confidence in the
Russian economy. This year Russia is likely to run a trade surplus
of $30 billion, but much of this money will not be reinvested
in Russia. There is a large outflow of private money from Russia
to countries such as Cyprus and the US. While some of this money
is the illegal proceeds of criminal activity, much belongs to
private citizens and businessmen trying to find a safe home for
their capital. This is a reflection of the poor investment environment
in Russia. To build long-lasting growth and confidence Russia
needs to make basic structural changes. Conditionality to encourage
this has been built into recent IMF programmes.
23. Technical assistance can play an important role in
helping to develop the skills and institutions Russia needs. The
Know How Fund is active here, focussing on public finance and
administration, support for SMEs, enterprise restructuring and
management training. It finances the UK's £5 million contribution
to President Yeltsin's management training programme, in which
young Russian managers are attached to British companies to get
experience of Western business techniques.
24. Much of the public scepticism about recent economic
change results from the loss of a comprehensive social support
system. In the USSR, the state and its enterprises provided a
range of social benefits for employees and pensioners. Federal
and regional governments now have to provide these benefits. But
neither receive sufficient tax revenues to cover them. Such funding
as exists is often poorly targeted or inefficiently distributed.
Improved social protection is a priority sector for KHF assistance,
which offers advice on healthcare management, pension reform,
care for the elderly and neglected children, as well as direct
funding for projects which directly support vulnerable groups
such as the homeless. HMG also supports the work on international
institutions providing technical assisance to Russia, including
the EU (see para 40 for details), OECD, UNDP, and others.
FOOD AID
25. Russia's economic problems and the poor 1998 harvest
also led to low foodstocks in certain areas in winter/spring 1998-99.
The EU provided 470 million euro of emergency food aid to help
ease the situation. The food is being sold at market prices. It
is intended that the profits should go into a fund to support
social programmes. We are currently considering whether conditions
justify renewed assistance in 1999-2000. But we must be careful
not to damage domestic Russian food production and distribution
systems, to ensure that the help goes to those who need it most,
and to avoid building a culture of dependency on Western aid.
Our current assessment is that large scale food aid will not be
needed: Russia's economic position and expected harvest are both
better this year. However, targeted humanitarian assistance to
vulnerable communities may be needed. Last year the UK gave £1.4
million to ICRC programmes in Russia.
THE TRADING
RELATIONSHIP
26. Bilateral trade figures in each case for the six
months from January to July, are (£ million):
| 1997 | 1998
| 1999 | % change 98-99
|
| UK Exports | 420.3 | 712.6
| 296.1 | -58% |
| UK Imports | 459.0 | 761.8
| 763.4 | +0.2% |
27. The impact of the rouble's devaluation on the level
of British exports is clear. Many goods have been priced out of
the market. Some UK sectors have been hit here, including British
sheep farmers. Figures for Russia's other trading partners show
similar declines.
28. Among Russia's commercial advantages are vast natural
resources, and a well-educated population receptive to Western
goods and services. It therefore has the potential to become an
important trading partner. A number of British and UK-based companies
have made substantial direct investments there, including BP Amoco,
Shell, Unilever, Cadbury Schweppes and British Gas.
29. Despite present economic difficulties there is still
important trade promotion work to do. Many UK firms remain keen
to do business in Russia, and expect sales volumes to pick up
over the next three years, if there is relative political and
economic stability. The August 1998 rouble devaluation marginally
increased exports, a trend which has continued with the increase
in world oil prices. Most existing investors have opted to stay
on in Russia, and look to the long term.
30. A total of 12 staff (UK based and Russian) are assigned
to commercial work in our three missions in Russia. They provide,
on request, reports on the potential market for specific British
products and services. They spread awareness in Russia of British
industry capability. They find opportunities for British commercial
visitors, and participants in trade missions and exhibitions to
build up their Russian contacts and improve their understanding
of the market. They engage with federal and regional administrations
in support of British companies encountering Russian bureaucratic
obstacles. The Embassy organises regular fora for British business
people to meet Russian counterparts and government representatives.
It identifies opportunities in Russian science and technology,
and organises events to introduce innovative Russian technologies
to potential British investors and collaborators.
31. ECGD has provided £250 million loans to UK exporters
since 1991, and a credit line of £500 million is still available
for ventures which have a reasonable risk. The importance of creating
an attractive investment climate is a central theme of our political
contacts with the Russians.
32. But the medium term outlook for trade and investment
remains uncertain. The quality of Russian finished goods will
need to improve if they are to compete in international markets.
Existing British investment is seriously affected by the structural
problems which cripple Russian enterprise. Potential new foreign
investors lack confidence that their investments will be adequately
protected, and that they will have a fair chance to make a profit.
33. Fair market access for Russia is also important.
We are working through the EU and bilaterally to help Russia understand
and meet the requirements of WTO membership, and to satisfy the
EU so that the few remaining anti-dumping measures can be removed.
A CONSTRUCTIVE FOREIGN
POLICY AND
SECURITY PARTNERSHIP
34. Like other countries, Russia wishes to protect its
wide national security and international commercial interests.
In some parts of the world, notably the Balkans, Far and Middle
East, South Asia and CIS, Russia retains considerable influence.
Inevitably in some areas our interests diverge.
35. Our approach is to engage Russia as far as possible
in resolving international issues together. This does not mean
holding our policy hostage to Russian consent, but rather looking
to involve Russia as far as possible in areas where we share common
interests, and trying to convince Russia that its interests are
best served through such cooperation.
36. We have a range of opportunities to do this. The
Prime Minister and President Yeltsin meet at least once each year,
and speak regularly by phone. The Foreign Secretary has frequent
contact with his Russian opposite number, and so far this year
has visited Russia once and hosted Foreign Minister Ivanov here
in July. They also meet regularly in the margins of international
gatherings, eg of the G8, UN and the Contact Group. The new Minister
for Europe was in Russia in September. Foreign policy is an important
theme of parliamentary contacts. Senior officials meet regularly;
following the signature in March this year of an agreement on
foreign policy consultation, a series of meetings is planned over
the next nine months to discuss issues ranging from the Middle
East, UN, Asia, Caucasus, the Balkans, regional conflicts, strategic
stability and arms control, crime and drugs, and human rights.
We also maintain contacts in the UN Security Council, G8, OSCE
and the NATO-Russia Permanent Joint Council.
37. We use a range of FCO-sponsored visits and conferences
to make clear our views to key Russians. We also use our public
diplomacy work to get across our position to a wider audience
in Russia, in particular through regularly-placed articles and
interviews for the Russian media by the Ambassador and senior
Embassy staff, press conferences, the Embassy newsletter and website,
promoting a wide range of themes, in line with our public Diplomacy
Strategy. This work proved particularly important during the Kosovo
crisis.
38. We have a similar approach on defence matters. The
changing international picture has brought a new relationship,
eg on arms control, which can be advanced through the Ministry
of Defence's programme of defence diplomacy. This has been one
of the pillars of the bilateral relationship, with an annual budget
of around £1.5 million per year. It has included a series
of joint seminars, training courses and service visits and exchanges,
designed to show our wish for engagement with Russia, overcome
remaining Cold War suspicions and hostility, and develop the skills
and mutual confidence necessary for cooperation with the Russian
armed forces in peacekeeping or other operations. These bilateral
contacts run in parallel with growing NATO/Russia cooperation,
in which the UK has been heavily involved.
39. Bilateral defence links were however truncated by
the Russians following allied airstrikes on Iraq in December 1998,
and frozen during the Kosovo air campaign. We hope to resume defence
contacts with the Russians soon. We are also looking for opportunities
to expand NATO/Russia cooperation beyond SFOR and KFOR, to which
it now remains restricted at Russian insistence.
40. Differences over Iraq and Kosovo did not however
affect our continuing programme to retain redundant Russian Officers.
Since its inception in 1995, the MOD's Russian Resettlement Project
has trained over 7,000 redundant officers at a cost of £1
million per year. Almost three-quarters of our graduates find
work within three months of leaving the project. We are now looking
for opportunities to expand the scheme, possibly in cooperation
with other countries, and were helping to organise a similar NATO-run
programme, currently suspended.
KOSOVO
41. The Kosovo crisis was the greatest recent challenge
for our foreign policy relationship with Russia. Throughout 1998
and in early 1999, Russia played a full role in the efforts of
the Contact Group (UK, US, France, Germany, Italy and Russia)
to promote a political solution to the Kosovo problem. But she
refused to support a UN Security Council Resolution authorising
the use of force. Russia provided one of the three negotiators
at the Kosova peace talks in France in February and March 1999,
insisting throughout that deployment of peace-keeping forces could
only be with Belgrade's consent. Following the start of NATO action
on 24 March, Russia froze relations with NATO and tabled a UNSCR
condemning the airstrikes. From April, Yeltsin's special envoy,
former PM Viktor Chernomyrdin, joined international efforts to
persuade Milosevic to withdraw his forces, and Russia thus played
a major role in diplomatic activity within the G8. Some 3,600
Russian troops have deployed to Kosovo as part of KFOR.
42. Russian opposition to NATO action was almost universal.
To many Russians it confirmed fears of NATO, already heightened
by NATO Enlargement, and seemed to call into question the role
of the UN in resolving international crises. Suspicions of the
West in general and the US in particular have therefore increased.
But Russian political opposition to NATO action was not translated
into military support, as Milosevic may have hoped, and there
has been no significant political or public support for a return
to cold War confrontation or cutting of all contact with the West.
IRAQ
43. UK-US military action against Iraq in December 1998
("Operation Desert Fox") was also the subject of strong
Russian opposition. Russia's traditional closeness to Iraq, and
in particular to the present regime, strengthened their condemnation
of what they argued was blatant disregard for the will of the
Security Council. Russia temporarily withdrew its Ambassador to
the UK in protest. We have since then worked to allay Russian
fears about our intentions towards Iraq, and in particular have
sought their support for a draft resolution offering a clearer
path to the suspension and then lifting of sanctions, conditional
on Iraq making further progress towards fulfilling its obligations.
The Russians tabled a rival draft proposing almost immediate lifting
of sanctions, but have since agreed to take part in P5 discussions
aimed at finding a consensus on the way forward.
EU
44. The EU's relations with Russia are governed by the
partnership and Cooperation Agreement, which entered into force
in December 1997. This covers political dialogue, trade and investment,
and economic, social and cultural cooperation. It establishes
trade between the EU and Russia on a Most Favoured Nation basis,
and aims to establish the conditions for a Free Trade Area. At
the Cologne European Council in June 1999 the EU agreed its Common
Strategy on Russia, setting objectives for EU and member states'
policies on Russia and making them more coherent and effective.
This was the first use of a Common Strategy, a new instrument
of the EU's Common Foreign and Security Policy, incorporated in
the Amsterdam Treaty. The EU Northern Dimension initiative, which
is being actively pursued by the Finnish Presidency, will give
further opportunities for strengthening EU relations and cooperation
with Russia. The UK contributes around 15 per cent of the EU's
TACIS technical assistance programme, which allocates about 100
million euro for Russia annually, plus a further 100 million euro
on cross-border projects benefiting Russia. TACIS has allocated
2 billion euro to Russian projects since 1991.
G8
45. The Russians value their participation in the G8
highly. At the Prime Minister's instigation, the Cologne G8 Summit
in June agreed an initiative for better coordination of international
support for Russia, focussing in particular on support for small
and medium sized enterprises (SMEs), in tackling social problems;
on law enforcement; and on closer cooperation with Russia's regions.
The UK also supports Russia through the IMF, IBRD, EBRD and Paris
Club.
ARMS CONTROL
AND NON-PROLIFERATION
46. Russia plays a key role in international negotiations
on arms control, non-proliferation and disarmament. We seek to
engage the Russians in a constructive dialogue. Russia retains
a large arsenal of nuclear warheads (over 6,000 strategic warheads,
and an unknown number, perhaps as high as 15-20,000, of sub-strategic
warheads). The Russian Government has pledged to try again for
Duma ratification of START II this autumn, and has already begun
talks with the US on a START III treaty in which substantial further
cuts in strategic warheads are envisaged, following an agreement
by Presidents Clinton and Yeltsin at Cologne in June. They also
agreed to discussions on the 1972 ABMT Treaty, which the US wishes
to amend to take account of its plans for National Missile Defence;
Russia has so far opposed amendment. We have funded seminars for
Duma deputies and staffers to develop their knowledge of the issues
involved. Russia is a party to and a depositary of the Nuclear
Non-Proliferation Treaty; has signed, but not yet ratified, the
Comprehensive Test Ban Treaty.
47. Under the provisions of the Chemical Weapons Convention,
which it has ratified, Russia has declared stocks of chemical
weapons in excess of 40,000 tonnes. According to the Convention
these should be destroyed by May 2007. But progress to date has
been slow. We are considering possible assistance to the Russian
destruction programme. Russia is also a party to, and depositary
of, the Biological and Toxin Weapons Convention; and is taking
part in the Geneva negotiations on a verification protocol.
48. Russia is a member of the Missile Technology Control
Regime and of the Nuclear Suppliers Group. We hold regular senior
official talks on non-proliferation and export control issues.
We have provided training assistance to Russian entities engaged
in export control. The UK, bilaterally and through the international
Nuclear Safety Account, has contributed to programmes promoting
protection of, and materials-accounting for, Russian fissile material.
We are also participating in the G8 programme to identify the
most effective way of disposing of Russian surplus weapons-grade
plutonium. Through the EU we have helped to fund International
Science and Technology Centres, which employ ex-weapons scientists.
49. Russia has been actively interested in conventional
arms control, notably through adapting the Treaty on Conventional
Forces in Europe (CFE). We have regular bilateral talks with the
Russians on the subject, in NATO-Russia contacts and in the CFE
negotiations in Vienna. We hope for signature of an adapted CFE
Treaty at the November OSCE Summit in Istanbul.
HUMAN RIGHTS
50. Russia's membership of the Council of Europe has
brought with it important human rights obligations. While not
a problem on the scale of Soviet days, we still have some concerns,
partly because of systemic weaknesses into the judiciary and government.
Among these are:
— the separate but similar cases of journalists
Nikitin and Pasko, accused of breaching security by releasing
information on the environmental impact of Russian naval nuclear
installations in North West and Pacific Russia (Pasko was convicted
on lesser charges, but has since been released under a general
amnesty, while Nikitin is awaiting retrial, though he is not in
detention);
— anti-semitism, heightened by a stabbing in the
Moscow Jewish Cultural Centre in May, and a bomb attack on the
Moscow Lubavitch synagogue in July. Yeltsin denounced recent "ugly
manifestations of anti-Semitism" on 2 August when he met
the Israeli PM. Anti-semitic remarks by extremist Communist MPs
Makashov and Ilyukhin last year also caused concern;
— the restrictive 1997 law on religion, which discriminates
against "non-traditional faiths";
— conditions in Russian prisons; and
— capital punishment, which although effectively
abolished by President Yeltsin, remains on the statute books (though
a bill to abolish it formally was submitted to the Duma in August
1999).
51. There are also significant weaknesses, both in policy
and implementation, in the government's treatment of vulnerable
groups and its obligation to protect their rights. In particular,
the lack of effective protection for the elderly, women, children,
members of ethnic or religious minorities and the disabled is
of concern.
52. Human rights are a regular subject of our high-level
discussions with the Russians. We instigated EU action to raise
with Russians concerns over the Nikitin and Pasko cases, and on
anti-semitism. We hold annual talks with the Russians on human
rights issues, and arrange visits by Russians involved in the
field, including the President's human rights adviser Professor
Kartashkin, and the human rights ombudsman, Oleg Mironov. We have
funded seminars on such issues as the treatment of prisoners,
and our Embassy coordinates KHF, FCO and British Council activities
in a programme of events and assistance worth around £650,000
in 1998. The FCO, British Council and KHF are developing a common
human rights strategy. The Council of Europe's Parliamentary Assembly
is likely to consider Russian progress against is obligations
next year.
COOPERATION AGAINST
INTERNATIONAL CRIME
AND NARCOTICS
53. Corruption and crime within Russia are major obstacles
to social and economc development. Russia's murder rate is one
of the highest in the world and is rising. The growing problem
of drug addiction in Russia is of concern to the UK, although
it is not at the moment a major threat. The FCO reviews the threat
assessment from drugs on a six monthly basis, with input from
HM Customs & Excise, the National Criminal Intelligence Service,
the Intelligence Services, Europol (the European centre for law
enforcement contact) and Interpol. Our Embassy in Moscow provide
regular briefings, as does the HM Customs and Excise Financial
Crime and Drugs Liaison Officer based in Moscow. We are also in
regular contact with the United Nations Drugs Control Programme
(UNDCP), who have an office in Moscow.
54. Money laundering is a significant concern to the
UK and will remain so until money laundering legislation is in
place and law enforcement agencies are able to investigate and
prosecute those responsible. We have signed an MOU with the Russians
to improve bilateral cooperation against organised crime. We are
working on a similar arrangement between the EU and Russia. The
G8 Ministerial in Moscow from 19-20 October will discuss a number
of issues of particular concern to Russia, including the need
for money laundering legislation, global standards on money laundering
and tackling abuse of off-shore centres and bank secrecy by organised
crime. Recent allegations about possible money laundering of IMF
funds are disturbing but unproven.
ENVIRONMENT
55. Russia faces a range of environmental problems. More
than 40 per cent of the population lives in cities that regularly
exceed the maximum concentrations of one or more air pollutants.
Most major rivers are heavily polluted and the government admits
that it cannot guarantee the quality of drink water. 13 per cent
of tested soil is contaminated.
56. Pollution adds to Russia's acute public health problems.
Residents of heavily polluted areas suffer from higher rates of
diseases of the blood, lungs and glands, as well as higher rates
of nervous system disorders and congenital defects. Russia is
experiencing a general decline in health. Average male life expectancy
has fallen to 58 from 67 years in the last 10 years. Researchers
tend to blame poverty and the breakdown in medical care rather
than pollution, but one estimate claims 14,000 Russians a year
die from air pollution. Many small towns suffer from the fact
that the one local industry is damaging to the environment and
health. There are several towns with 40-100,000 people and an
ancient copper smelting plant, steelworks or aluminium factory
as the only employer. It has proved very difficult to close such
plants because of the potential problems of removing not only
the local employer but also the provider of hospitals, schools
and nurseries, etc. Lack of capital has hampered efforts to encourage
investment in cleaner production.
57. The UK contributes to efforts to deal with mainstream
environmental problems. About £2 million is spent annually
through the KHF on projects targeting chronic air, water and soil
pollution. This includes £500,000 on small projects, typically
suggested by NGOs in the regions.
58. The nuclear environment remains a real concern for
Russia's neighbours. The most serious problems are those associated
with the safety of nuclear reactors and the safe disposal of nuclear
waste. Since 1992, the UK has contributed £18.25 million
to the EBRD Nuclear Safety Account (NSA) programme, together with
circa £2 million per year bilaterally. This provides funds
for safety upgrades for Soviet-designed nuclear power stations
in Eastern Europe.
59. There is also growing international interest in helping
to deal with the large amounts of hazardous waste produced by
Russian nuclear-powered civil and naval vessels. Much of this
is stored unsafely in North West and far Eastern Russia, presenting
a potential threat both to the local population and neighbouring
countries. The Foreign Secretary has taken a personal interest
in the situation in the Kola peninsula, and, following his visit
there in March 1999, announced £3 million of UK assistance,
now raised to £5 million. We are now negotiating with the
Russians and other international partners a legal and financial
framework for this assistance, and determining the projects it
will be used for. Secure casks for storage of nuclear waste from
the Russian naval base at Murmansk are likely to be a particular
priority.
VISA WORK
60. The Moscow Embassy deals with more visa applications
than any other British visa-issuing post. While nearly 78,000
visa applications were processed in 1998, the August 1998 economic
crisis has led to a reduction of about 35 per cent. Other Embassies
in Moscow have seen similar reductions. Straightforward applications
are dealt with within 24 hours of receipt, with 93 per cent of
all applications being authorised within 10 minutes of being seen
by an Entry Clearance Officer. Less than 3 per cent of applications
are refused. The visa operation is conducted in accordance with
the FCO's Best Practice Guidelines on entry clearance work. Following
the launch in June this year of the Prime Minister's initiative
to attract more overseas students to the UK, the Embassy and the
British Council in Moscow will be examining ways to streamline
the visa process for genuine student applications.
61. The level of permanent visa staffing (both UK-based
and Locally Engaged) is adjusted to take account of the level
of applications. In August 1999 16 UK-based staff and 40 Locally
Engaged staff, mainly Russian nationals, were employed in the
Visa Section. The Section takes on temporary staff to assist in
the busy summer months. The new Embassy will provide much better
facilities for visa work than the present site offers.
MOSCOW NEW
EMBASSY BUILDING
62. Since January 1997 we have been constructing a new
Embassy building in Moscow, to be completed by early 2000. Our
present offices, split between two separate sites, are overcrowded
and inadequate for present day demands. The new building will
bring under one roof all parts of the Embassy, as well as 31 staff
flats, a service area, and social facilities. Designed by the
UK architects Ahrends, Burton and Koralek, it is being built in
a joint venture between Taylor Woodrow of London and Skanska of
Finland. The present Embassy buildings will be used for additional
staff accommodation, reducing our exposure to the expensive Moscow
property rental market.
63. An annex on the major inward and outward bilateral
visits over the past 12 months is attached.
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