WHAT THE RUSSIAN PAPERS SAY

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MOSCOW, September 30 (RIA Novosti)

Novye Izvestia

RUSSIA TO EXAMINE POLITICAL PARTIES FOR 2007 ELECTIONS

On Thursday, Federal Registration Service (FRS) Director Sergei Movchan announced that they would begin examining Russia's political parties. The main issue is the number. Starting next year, every party must have no less than 50,000 members. Only 4-10 of the 37 now functioning will qualify for elections in 2007.

The FRS reported that only four parliamentary parties - United Russia, the KPRF, the LDPR and Rodina, have presented information about the number of their members. Other parties are either recruiting supporters or holding unification talks. Otherwise they await liquidation.

To be able to participate in 2007 Duma elections, the newly created parties have to apply to the FRS no later than December 1, 2005.

Many Russian parties are facing financial difficulties which prevent them from paying for TV time and newspaper advertising as it was during 2003 Duma elections.

Head of Central Election Committee Alexander Veshnyakov has already stated that no more than 10 Russian parties will take part in the parliamentary elections in 2007. Head of the Political Information Center, Alexei Mukhin, thinks that only "Kremlin-affiliated parties" will make it to the elections - United Russia, Rodina, Party of Life, the LDPR, and maybe, Narodnaya Partia (People's Party) and the "legal opposition"- the KPRF.

Alexander Ivanchenko, head of the Independent Institute of Elections, thinks that the survivability of all but four parliamentary parties is doubtful, even if they have the required 50,000 members. The expert says that there are no party-testing methods confirmed by law, and the officials are free to manipulate congresses, statutes and procedures.

For Yabloko and the SPS everything will depend on the results of the December 2005 Moscow City Duma election. "Their political safety guarantee will be whether they'll pass the 10% success test. As for the other parties, chances are questionable," said Ivanchenko.

Kommersant

RUSSIAN RAILWAYS REDUCES PURCHASE OF HIGH-SPEED TRAINS FROM SIEMENS

Russian Railways company's (RZD) new leadership has significantly changed its joint project with Siemens for manufacturing high-speed trains. Now only a tenth of the previously planned number of such trains will be bought.

Gennady Fadeyev, former chief of the transport monopoly, signed a contract last April in Hanover for the joint development and manufacture of trains on the basis of the Inter City Express (ICE-3), its top speed being 300 km per hour. It had been supposed that the project would cost Siemens over _150 million while RZD would pay about _2 billion. Of this sum, _1.5 billion was to be spent on purchasing 60 new trains.

"By 2015 German works will be busy fulfilling our orders," President Vladimir Putin, who attended the ceremony of signing the contract, said.

The change of the RZD president in June was followed by an increase in the number of trains ordered under the contract, and for the Moscow-St. Petersburg railway line it means a reduction of the expected speed by 50 km per hour.

"The project is being seriously revised," said new RZD president Vladimir Yakunin. He considers it wrong to "subsidize the German industry." "We have signed a contract for drawing up a rough plan and have already paid _20 million," he explained. "But I would have never signed such a contract, because under it the company does not own technical documents."

Valentin Gapanovich, RZD vice president and chief engineer, said his company did not agree on the price offered by the German side.

Meanwhile it is clearly understood in RZD that Siemens is not the only fish in the sea. "I would like to resume cooperation with Finnish railways," Yakunin explained. A project of express traffic between St. Petersburg and Helsinki had already been discussed three years ago. The Finns could contribute their Pendolino high-speed train to a joint venture, and RZD could offer assets of an adequate cost. "We have information that the Finnish side is prepared to go back to the bargaining table concerning this idea," Yakunin said.

Vedomosti

RUSSIA'S BUDGET POLICY WORRIES ECONOMISTS

Analysts from leading brokerages, feeling concern about the future of the Russian economy, have sent a letter to Prime Minister Mikhail Fradkov. In it they criticize his government's current budget policy and even offer their "intellectual" help. But their recommendations have been received with bad grace.

"Russia is the country we live in and we want to see it stable and steady," Yevgeny Gavrilenkov, Troika Dialog chief economist and one of the letter writers, explains their motives. "The trends we are drawing your attention to are fraught with economic upheavals similar to 1998 ones."

What worries them particularly is a growth of non-interest budget expenditures planned for next year - from 15.6% to 16.7% of GDP. "We support the president's and government's intention to improve the well-being of Russians, but consider this task can hardly be achieved by budget policy alone," the letter says. This requires more new jobs in the private sector, the analysts indicate, because a mere rise in government officials' salaries leads to inflation and creates a vicious circle: inflation forces salaries up, which whip up inflation.

"It is not that all spending should be banned," explains OFG chief economist Yaroslav Lissovolik. "It is the increasingly populist nature of budget policy that alarms us, while we should concentrate on the quality of expenses, rather than on their quantity."

A Finance Ministry official familiar with the address believes that the authors are not sincere. "Increased budget expenditures and inflation are not directly related, although they do influence each other," he says. But Andrei Klepach, director of an Economic Development and Trade Ministry department, says the experts' concern is justified, though he thinks "they see the problem in the wrong place". By cutting back state investments, "we will worsen conditions for business and economic growth will get retarded," the official says with certainty.

Moskovskiye Novosti No. 38

SIBNEFT DEAL HAS HALLMARKS OF SWINDLE OF THE YEAR - EXPERT

The purchase of Sibneft by the gas monopoly [Gazprom] for $13 billion is called the biggest acquisition in Russian history, but analysts are lost in surmises what the state-crafted deal means.

Alexei Melnikov, member of Yabloko's federal council, says: "This deal is economically unprofitable for Gazprom, and runs against the company's and Russian society's strategic interests. The tasks facing Gazprom are enormous: to build the North European gas pipeline, to open up the Shtokman deposit, and to develop the Zapolyarnoye field. All these projects require huge investments: $15 billion as a minimum. And, lo and behold, the idea is conceived to buy Sibneft for $13 billion.

"Besides, specialists have more than once pointed to Sibneft's low capital investments in field development. Gazprom's deal to acquire Sibneft has all the hallmarks of the swindle of the year."

Mikhail Delyagin, director of the Institute of Globalization Problems, says: "The aim of the deal is to consolidate assets in Gazprom's hands, and this suggests that state is increasing its role in the economy not only covertly but openly, which, in my view, is more rational. When power-wielding oligarchs control a large corporation unofficially, all profits go into their pockets. But if a big corporation is state-owned, the possibility of getting more transparency and seeing money contributed to the federal budget appears."

Andrei Bunich, head of the Union of Entrepreneurs and Leaseholders of Russia, says: "If a company like Norway's StatOil were to emerge from the joining of Yukos and Sibneft assets, it could only be welcomed. In Norway, the state not only controls oil exports, but also directs part of the earnings directly to meet social needs, as prescribed by law. A state oil company should be legislatively pegged to solving social problems."

Nezavisimoye Voennoye Obozreniye No. 37

MOSCOW'S AIR DEFENSES INADEQUATE

The rapid development of aerospace attack assets requires the equally rapid improvement of aerospace defense assets, with air defense weapons making up their core. But their essential component in Russia, the S-50 system designed to protect Moscow and the surrounding area, is today in a pitiable condition.

The time required to put S-300 anti-aircraft missile regiments on full alert was previously counted in minutes. Today it may run into days, because units are undermanned and need bringing to full strength, which takes time.

With drastic cuts effected in these regiments, the S-50's combat efficiency is now catastrophically down. While earlier, before the system was reformed, two to six low-flying strategic cruise missiles out of a hundred could penetrate Moscow's and Moscow region's defenses in an unexpected first strike, the present figure is no less than 75, even following lengthy defense preparations.

The S-50 stationary command posts deployed for more than half a century in locations known to the potential enemy are to be hit in the first strike. The same fate would befall all stationary facilities of space missile defenses stationed in the area and covered by the S-50.

Russia's Security Council once drew an important conclusion: air attack assets - strike aviation and cruise missiles of all basing modes - pose the greatest menace to Russia. So no task is today more urgent and important than to reactivate the S-50 system.

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