What the Russian papers say


MOSCOW, May 3 (RIA Novosti) Japan may lose Russian markets - senator /Russia's huge mineral reserves not an obstacle to democratic development/Peugot chooses site for its Russian plant/Gazprom finds another route to British market/New air carrier to rival Aeroflot


Japan may lose Russian markets - senator

Dmitry Mezentsev, deputy speaker of the Federation Council, the upper house of Russia's parliament, and co-chairman of the Russian-Japanese Forum, said expanded multi-faceted cooperation is the best way to solve the territorial problem in Russian-Japanese relations.
He said the level of bilateral cooperation is not enough to downplay the territorial dispute around the South Kurile archipelago.
According to Mezentsev, Japan, a "self-made country" that became the second-largest economy in the world after World War II, considers the territorial issue a high-priority because it has a simplistic view of Russia.
A Japanese businessman recently thanked Russian Prime Minister Mikhail Fradkov for "crude oil" during his visit to Japan.
Although Tokyo mostly perceives Moscow as a supplier of hydrocarbons, we must prove that Russia is a reliable partner in many spheres, Mezentsev said.
He said Moscow is always forced to find excuses for its failure to settle the territorial dispute, for the alleged "mistreatment" of Japanese businessmen in Russia, for cracking down on freedom of speech and for "insufficient" democracy.
We are treated as underachievers who are unable to create a free-market society and economy, Mezentsev told the paper.
He said it would be impossible to talk about civilized 21st century relations if that attitude toward Russia persists, if multi-polar world concepts are implemented, if the West continues to insist that Moscow has no place in the system of the international division of labor and views it as a potential adversary.
Mezentsev quoted Prime Minister Fradkov as saying that Japan could lose Russian markets completely.
He said Moscow, which had expected Japanese investment five to seven years ago, now has enough money to finance its own infrastructure projects.
I believe other countries, including those in the Asia-Pacific region, will provide investment if Tokyo does not hurry to implement ambitious cooperation projects with Russia, Mezentsev said.


Russia's huge mineral reserves not an obstacle to democratic development

The campaign to tarnish Russia's image being waged in the Western and some liberal Russian media highlights the alleged inadequacies of its economic policies, a prominent political analyst writes in the popular daily Izvestia.
According to Vyacheslav Nikonov, head of the Moscow-based think tank Politika, journalists claim that GDP growth in Russia is ensured by the oil and gas sector, whereas all other sectors, primarily high-tech, are neglected.
That prompts the conclusion that Russia, like other countries whose prosperity depends on energy and other commodities revenues, is not a democracy, and promotes an inferiority complex in Russia, Nikonov writes.
But are such arguments true?
According to the analyst, the initial reasoning is false. The share of the oil and gas sector in the country's GDP is not as large as many think and has been shrinking.
In the Finance Ministry forecasts used to draft the country's budget for 2008-2010, the share of the oil and gas sector will decline from 18.9% in 2007 to 14.9% in 2010.
At the same time, trade, construction, telecommunications, the banking sector and agriculture have been growing rapidly. The oil and gas sector accounted for only 1% of the 7% GDP growth registered in 2006, Nikonov writes.
Leading Western economists and investment funds believe that Russia's growth has become consumer driven.
Even if we assume that Russia is merely a raw materials provider, what does that mean?
According to Nikonov, there are quite a few respected countries whose revenues are mainly ensured by commodities and energy exports, and who have no qualms about it.
They include Canada, Australia and Norway. Iceland, whose main export commodity is fish, and Denmark, which is a predominantly agrarian country, have no compunctions either.
It does not matter how a country earns its revenues, the analyst writes. What matters is how it is distributed among other sectors, and whether it benefits the people.
The above countries are vivid proof that economies dependent on raw materials can be democratic, and that oil prices have nothing to do with democratic maturity.
According to Nikonov, the United States is a major oil producer, although the share of the oil sector in the U.S. economy was largely the same several decades ago as it now is in Russia.
All human rights organizations have noticed problems with democracy in the U.S., but none of them have linked them to growing oil prices, the analyst concludes.


Peugot chooses site for its Russian plant

The French car manufacturer PSA Peugeot-Citroen can give up the idea of building a plant in St. Petersburg or the Leningrad Region. Officials in the Saratov Region and Tatarstan are trying to persuade the managers of Europe's second-largest car manufacturer to build a plant in their region.
For nearly a year, PSA Peugeot-Citroen has been discussing with the Russian Ministry of Economic Development and Trade the details of an investment agreement on building a plant in Russia.
Ivan Prostakov, the head of the Russian trade representative's office in France who attended the talks, said PSA had to choose a site and make a final decision on construction this summer.
According to him, the company has already decided to build the plant from scratch. Prostakov said the plant would produce 75,000 cars a year.
It was reported earlier that the French company was looking for a site for its plant in St. Petersburg. But officials in St. Petersburg's City Hall and the Leningrad Region said no talks had been held with PSA.
Meanwhile, the Ministry of Economic Development and Trade in the Saratov Region yesterday said that it was in talks with the French car producer on the possible construction of a plant capable of producing 75,000 cars a year.
Tatarstan would like to lure PSA, too. The Prime Minister of the Russian republic, Rustam Minnikhanov, said the government was in talks with a European car producer on building a plant. He would not give the name, but a source in the Russian government told Vedomosti that PSA Peugeot-Citroen was the company in question.
According to Igor Korovkin, the executive director of the Union of Russia's car producers, PSA may be scared by the strike problems at the Ford plant in the Leningrad Region. And the cost of labor in St. Petersburg is higher than in other Russian regions.
PSA has not revealed the amount it is prepared to invest in the project. According to Ivan Bonchev, a car industry expert with Ernst & Young, building a plant will cost the company about $300 million. Mr. Korovkin said the project might cost PSA nearly $200 million.


Gazprom finds another route to British market

Wingas GmbH, a joint venture of the German concern BASF and the Russian energy giant Gazprom, will buy from Norway's Hydro 50% in British gas trader HydroWingas Ltd. That will enable Gazprom to get more than the planned 10% of the British gas market.
Experts said Hydro had agreed to withdraw from HydroWingas to create favorable conditions for talks with Gazprom on the participation of foreign partners in the development of the Shtokman gas condensate deposit in the Barents Sea.
The companies' reports said that the deal was initiated by Wingas. They hope to complete the deal, which must be approved by the European Commission, by June 1.
Gazprom refused to comment on the agreement with Hydro, but said it planned to increase its standing on the British gas market to 10% by 2015.
According to Gazprom Germany (Gazprom's holding company in Germany, formerly known as ZGG GmbH), the monopoly held 9% on the British market in 2006. To raise it to 10%, Gazprom needs to increase its share in Wingas from 35% to 50%.
Experts believe that Hydro agreed to sell its share in HydroWingas to curry favor with Gazprom in other projects.
Konstantin Batunin, an analyst with Alfa Bank, said the Norwegian company would not gain much from the deal, but had agreed to it as a kind of "advance payment" for gaining access to the Shtokman project.
Gazprom resumed talks with foreign companies on their possible involvement in the project in February 2007.


New air carrier to rival Aeroflot

On Wednesday, President Vladimir Putin sanctioned the merger of five regional airlines, namely, KrasAir, Domodedovo Airlines (DAL), Samara, Omskavia and Sibaviatrans, into the company AiRUnion. The state will own a 45% stake in the new alliance.
AiRUnion, due to be completely established in the next six months, could become the second-largest national air carrier after Aeroflot - Russian Airlines.
The state will contribute 51%, 50% and 46.5% stakes in KrasAir, DAL and Samara to the alliance.
Private shareholders are to contribute 49%, 49,7% and 53.51% stakes in KrasAir, DAL and Samara, and will completely cede control over Omskavia, Sibaviatrans and the limited-liability company AiRUnion-RRJ with an authorized capital of over $20 million that was established in order to buy Sukhoi Superjet airliners.
In 2006, KrasAir co-owner and general director Boris Abramovich proved his loyalty to the Kremlin by signing a contract for the purchase of 15 SSJs worth $400 million. He also received an option for another 15 SSJ aircraft.
Abramovich, who maintains good relations with the Economic Development and Trade Ministry and the Kremlin administration, has helped form the AiRUnion alliance, buy Hungarian air carrier Malev and establish the low-cost airline Sky Express, which is operating along the most lucrative routes.
It appears that AiRUnion will change the balance inside the national civilian aviation sector. Last year, the five aforementioned regional airlines carried 4.9 million passengers. S7, the second-largest national air carrier, posted the same results in late 2006. However, nothing threatens the leading positions of Aeroflot, which carried over 7 million passengers last year.
Last year, the companies of Abramovich boosted profits by 24%, whereas Aeroflot earned 13.53% more.
In any event, the state, which owns the main carrier, has gained control over 50% of the new alliance that could become the second-largest national carrier and control 30%-35% of the Russian air-traffic market.

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