WHAT THE RUSSIAN PAPERS SAY

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MOSCOW, October 03 (RIA Novosti)

Novye Izvestia

EXPERTS DISCUSS ROLE OF PUBLIC CHAMBER

The Public Chamber held its first working session on October 1. It is intended to spend 140 million rubles ($4.91 million, or _4.08 million) on the Public Chamber's work. So, here is what experts have to say about the role of this organization.

Alexei Makarkin, Deputy General Director, Center of Political Technologies:

Federal authorities have established the Public Chamber in order to receive advice on various bills and the government's activities from society's representatives. The party of power now boasts a constitutional majority in the absolutely controllable Russian Parliament. Consequently, the Parliament's role has diminished. This is why the Kremlin wants to beef up the Parliament with other controllable bodies that would facilitate exchanges of opinion. At the same time, such bodies should have no constitutional powers. Nor should they adopt any binding decisions.

Sergei Markov, Director, Institute for Political Studies:

Russian authorities may need the Public Chamber for implementing some kind of a modernization project. At the same time, it may be used for political spin technology purposes, simulating public opinion. But this would lead to negative consequences.

As to the future activities of the Public Chamber, it is unlikely to launch any political debates with the authorities, as it includes few opposition-minded people. Still there is the danger of its extreme loyalty and bureaucratization.

Dmitry Oreshkin, head of the research center Merkator:

The Public Chamber may become an instrument of ideological struggle or ideological defense. Moreover, this public organization can hardly be called a public movement. It is an institution of state authority for defending the Kremlin's interests in the areas of public movements.

Vedomosti

RUSSIAN CREDITS TO WEAPONS BUYERS

Russia will now grant credits to countries ready to buy its weapons. Credit facilities are widely used by arms exporters, but the Russian industry has been cautious to use them so far.

Russia has decided to keep pace with its main competitor - the U.S. - which under its Foreign Military Financing Program (FMFP) provides $3-5 billion a year in credits, says Marat Kenzhetayev, an expert at the Center for the Study of Disarmament Problems.

The first step within this new credit program is a Rosoboronexport contract with Jordan to supply two Il-76 MF transport aircraft for $100 million, which was signed at the Moscow aerospace show (MAKS) in August. Last week during negotiations with an Indonesian military delegation, Moscow offered Jakarta credits to purchase military equipment apart from their traditional barter.

Indonesia expects to buy from Russia 12 Su-27/Su-30 fighter planes, and aviation equipment totaling $600 million. In dealings with Jakarta the arrangement is particularly well suited because Indonesia shelved the idea of buying Russian fighters early this year stating financial problems caused by the devastating tsunami that hit it, and increased oil prices.

A source in the aviation industry says Peru has used Russian credits to conclude a $20 million contract to have its Mi-8 and Mi-24 helicopters repaired. A credit line of up to $250 million is currently being negotiated to repair several dozen combat and transport aircraft of Soviet and Russian manufacture.

All in all, the draft budget for 2006 allocates $500 million in credits to foreign states under the heading of military technical cooperation.

"Surprisingly, the Russian defense sector has benefited more from credits to other countries than through the state defense order, but that is better than nothing," Konstantin Makiyenko, an expert with the Center for the Analysis of Strategies and Technologies, says with conviction. A source in another aviation industry company believes that the situation will be the same as with deliveries of Russian arms in repayment of Russia's debt where budget settlements with enterprises are usually effected at 60% of the market rate.

Kommersant.

NASA TO PAY ROSKOSMOS TO GET ITS ASTRONAUT BACK TO EARTH?

A Soyuz TMA-7 spacecraft blasted off for the International Space Station from the Baikonur space center Saturday morning. But getting astronaut William McArthur, commander of the previous expedition, back from orbit may cost NASA $10 million.

Russia's last launch completes its obligations regarding free transportation of NASA astronauts to the ISS. According to Alexei Krasnov, head of manned programs at Roskosmos, Russia's space agency, "formally we are not even obliged to return William McArthur from orbit on the Soyuz."

NASA expects its astronaut to return to earth in March 2006 on a shuttle. But if the launch is delayed, in April McArthur will have to leave the ISS on the Soyuz, and for a payment that could be up to about $10 million.

However, Roskosmos and NASA may reach a deal, given that Russia has no geostationary telecommunications satellite of its own for communications with the ISS and leases NASA's channels on TDRS satellites for an annual fee of $10 million.

Moscow and Washington are set to resolve this problem in November at a meeting of heads of the space agencies participating in the ISS. Experts are slated to join at the end of next week to help formulate an acceptable decision.

According to NASA administrator Michael Griffin, who saw off the Baikonur launch, the ISS as approved was too ambitious. Griffin said that if the decision had rested with him the U.S. would never have agreed to build the station the way it was now being built.

Griffin left for the U.S yesterday. He had been invited by Roskosmos to watch the Soyuz TMA-7 docking with the ISS on Monday from Mission Control center in Korolyov outside Moscow, but, unlike his predecessors, opted to do it from Houston.

Gazeta

LUKOIL BUYS KAZAKH OIL COMPANY

Russia's No. 1 oil company LUKoil has long harbored ambitions of getting into Kazakhstan, which boasts the second largest hydrocarbon deposits in the former Soviet Union after Russia. "Our company has suggested that Bermuda-registered oil firm Nelson Resources sell its part in Kazakh oil business to LUKoil for $2 billion," said Gennady Krasovsky, Head of Investor Relations at LUKoil.

LUKoil has repeatedly tried to assert itself on the Kazakh market. It made an attempt to acquire a 50% stake in the Turgai Petroleum venture owned jointly with Canada's PetroKazakhstan. However, the Canadians turned down LUKoil's offer and sold its business to CNPC of China instead.

However, the owners of Nelson Resources proved far more compliant. In total, 65% of the U.S. company's shareholders now support LUKoil's proposition, because the Russians are offering 27.5% more on each share's face value in the last six months. The management of Nelson Resources will soon inform all other co-owners about the LUKoil offer.

LUKoil claims that it will be an independent deal and it will borrow money to buy Nelson Resources. However, it seems unlikely that the company will do it without its partner, Conoco Phillips.

Russian officials will profit from the Nelson Resources purchase, as LUKoil will export part of its Kazakh oil to China in late 2005 or early next year. In so doing, LUKoil will give the Russian Government a breather, which is good because Moscow has not yet constructed a pipeline to export Eastern Siberian oil to Asia. Eastern Siberian oil deposits have not yet been developed, and consequently China, which needs oil now, may decide to turn to Kazakhstan or another country. By gaining a foothold on the Kazakh market and in the Caspian region, LUKoil would help avoid this negative scenario.

Nezavisimaya Gazeta

GOVERNMENT TO SHOW CAUTION IN EXPENSES - EXPERTS

Results of the first budget reading showed that some industrial structures, interested in state investments, actively started lobbying their interests. At the same time Finance Minister Alexei Kudrin announced that Stabilization fund resources would be converted into foreign securities. Experts say that at next years' talks concerning the 2007 budget, the government will change its position.

Pavel Teplukhin, President of the Troika Dialog company:

All sorts of lobbyists have become particularly active, because budgetary appropriations as regards to separate budget items would be examined at the second reading. In addition, the authorities are getting ready for the elections. This year, the situation is more or less calm, but next year, with the parliamentary elections in December and presidential election reaching its run-up, the budget distribution will be of paramount importance. There will be inevitable additional budgetary allocations to raise the wages of most underprivileged classes that constitute the most active electorate.

As for the Stabilization Fund, Kudrin has long deserved a monument built in his honor, for having resisted this siege for one and a half years. Its expenses inside Russia will lead to inflation. Lobbyists' pressure on the government is the state's fault. It must reduce its interference in the economy, including its appetite for investment. Private structures must develop themselves independently.

Andrei Illarionov, Presidential Advisor:

Situations we are dealing with would be impossible in other counties. A group of investment companies' analysts suddenly comes to the rescue of the Finance Minister who has to protect the budget from lobbyist activities by some ministers and a number of deputies. They write to the prime minister, warning him about the danger of bloated state expenses, which lead to macroeconomic instability. Thus they are more consistent in protecting the state's interests than those in charge of it.

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