CSTO’s rapid-reaction force to equal NATO’s – Medvedev

MOSCOW, February 4 (RIA Novosti) – The collective rapid-reaction force to be created by a post-Soviet regional security bloc will be just as good as comparable NATO forces, Russian President Dmitry Medvedev said on Wednesday.

The Collective Security Treaty Organization (CSTO) agreed on Wednesday at a summit in Moscow to set up the new force, to be based in Russia.

Medvedev said the force, to be comprised of a “sufficient” number of units, would be “well trained and well equipped.”

“Russia is ready to contribute a division and a brigade,” he said. “This gives you an idea of the scale.”

The Russian president also said the CSTO was open for cooperation with the United States in the fight against terrorism in Central Asia.

The Collective Security Treaty Organization (CSTO) is a security grouping comprising the former Soviet republics of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Uzbekistan and Tajikistan.

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IMF agrees $2.5bn for Belarus

Belarus has secured an emergency loan of $2.5bn (£1.74bn) from the International Monetary Fund.

It becomes the sixth country after Iceland, Hungary, Ukraine, Latvia, and Pakistan to need a rescue since the crisis began.

The ex-Soviet state – still run by strongman Alexander Lukashenko – has suffered a run on its foreign reserves as the economic downturn engulfs Eastern Europe. The country’s key exports are potash fertilizer and oil products, both hit hard by the commodity crash.

The IMF’s chief, Dominique Strauss-Kahn, said the tough terms of the bail-out include “strict public-sector wage restraint” and cuts in state spending. Russia has pledged a further $2bn.#

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Belarus President Seeks to Deploy Russia Missiles

[Belarus]
President Alexander Lukashenko of Belarus, left, who met Oct. 26 near Moscow with Russian President Dmitry Medvedev, says that Belarus would like to deploy missiles even if it doesn’t reach an agreement with Moscow.

MINSK, Belarus — President Alexander Lukashenko is in talks with Moscow about placing in Belarus advanced Iskander missiles that could hit targets deep inside Europe.

The talks raise the ante in the debate over a U.S. plan to deploy missile defense in Europe. They also complicate Western hopes for warmer ties with Belarus, which some in the U.S. and Europe hope could help to counterbalance an increasingly hostile Kremlin.

In an interview with The Wall Street Journal, Mr. Lukashenko said that he would like to see closer relations with the West but that he sympathizes with Russia on two flashpoints that have rocked relations — the conflict in Georgia and U.S. plans to place antimissile systems in Europe to counter a potential threat from Iran.

Mr. Lukashenko said he “absolutely supports” Russia’s plans to place Iskander missiles in Kaliningrad that would target the U.S. missile system. Kaliningrad is a Russian enclave in Europe that borders NATO members Poland and Lithuania, and missiles there could reach the proposed U.S. missile sites in Poland.

Mr. Lukashenko said Russia also had proposed putting Iskander missiles in Belarus, which is situated between Russia and Poland. And if a deal on the issue isn’t reached, Belarus itself would like to deploy the missiles, he said.

“Even if Russia does not offer these promising missiles, we will purchase them ourselves,” said Mr. Lukashenko, who said the technology for the Iskander optics and fire-control systems comes from Belarus. “Right now we do not have the funds, but it is part of our plans — I am giving away a secret here — to have such weapons.”

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IMF may need to “print money” as crisis spreads

The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

IMF's work in countries such as Turkey is only just beginning
IMF’s work in countries such as Turkey is only just beginning

The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning.

“When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds,” he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

“Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We’re in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is,” he said.

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”

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