Russia Tightens Economic, Military Grip On Allies

Medvedev said funds would be distributed as repayable loans to `countries finding themselves in a difficult situation`.

Russia announced a financial rescue fund for a group of ex-Soviet allies and won their agreement on Wednesday to form a military rapid reaction force it said would match NATO standards.

Moscow's latest moves to reassert influence in the region came as one of the aid recipients, Kyrgyzstan, announced that the United States must close a key air base on its soil which supports U.S. operations in nearby Afghanistan.

Russian President Dmitry Medvedev said the new force, to which Russia would contribute an elite division and a brigade, should be able "to rebuff military aggression", fight international terrorism, drug trafficking and organised crime, and handle natural and technological disasters.

"These are going to be quite formidable units," he said. "According to their combat potential, they must be no weaker than similar forces of the North Atlantic alliance (NATO)."

"You must understand the scale (of the plan)," he said. "This force will be equipped with the last word in military technology."

The moves showed Russia's determination to assert its economic and military influence despite the impact on its own economy of the global crisis. Its markets have lost three-quarters of their value and its gold and currency reserves have plummeted to under $390 billion from more than $600 billion last summer.

But Russian leaders insist the economy is still strong enough to weather the storm and help its allies.

"To create the anti-crisis fund, which is worth approximately $10 billion, Russia will contribute $7.5 billion, Kazakhstan $1 billion," Belarussian President Alexander Lukashenko said at a summit held in the Kremlin. The share of other nations has yet to be established.

Medvedev said funds would be distributed as repayable loans to "countries finding themselves in a difficult situation".

They are available to members of the economic grouping known as EVRAZES, which brings together Russia, Belarus and the Central Asian states of Kazakhstan, Kyrgyzstan and Tajikistan.

The same nations, together with Uzbekistan and Armenia, form the Collective Security Treaty Organisation, whose spokesman said the rapid reaction force could number more than 10,000 soldiers.

On Tuesday, Russia also agreed to allocate a $1 billion loan tranche to Belarus and said it would also consider Minsk's request for another 100 billion roubles ($2.77 billion).

That day, Belarus agreed to form a joint air defence system with Russia, whose relations with NATO have reached post-Cold War lows in the past year.