MOSCOW, May 4 (RIA Novosti) U.S. missile defenses in Eastern Europe could trigger new arms race - Russian military chief of staff/ Libya to spend over $2.2 billion on Russian arms/ Kazakhstan refuses to build trans-Caspian pipeline bypassing Russia/ Norilsk Nickel lays claim to 20% of global nickel market/ Gazprom, Rosneft may clash over Yukos assets
Rossiiskaya Gazeta
U.S. missile defenses in Eastern Europe could trigger new arms race - Russian military chief of staff
It looks like the missile defense concept has lost its purely technological, applied meaning. It has become an instrument which can either contribute to European security or trigger off a new confrontation. "My opinion is that the U.S. anti-missile bases planned for Eastern Europe will mark the beginning of a new round in an uncontrolled arms race," said Yury Baluyevsky, chief of the Russian Armed Forces General Staff.
We have already heard quite a few statements describing Russia's reaction to the U.S. missile shield plans as "inadequate." Whatever efforts they make to explain, they say, Russia fails to understand that these plans are not meant to affect its interests. On the contrary, it would rather benefit from the "Euro-ABM." They even offer a series of transparency instruments Russia could use, like visiting the construction sites and internal tours of the air defense bases once they are completed.
Those who make such statements seem to have a lopsided perspective of the problem. They analyze its political and military aspects separately, whereas these aspects are interrelated; it certainly is a complex issue.
We here are not looking at "Euro-ABM" as an isolated system, because we know only too well that it is part of the U.S. global missile defense system comprising military bases in Alaska, radar stations in Britain and Greenland, as well as the U.S. Navy's Aegis missile defense system, satellite basing detectors, and other military facilities.
We are not so much concerned about the number of interceptors and radars in Europe. We are worried because the U.S. is building an important component of its global missile defense infrastructure which could easily be reinforced by a unilateral decision by the U.S. military and political leaders.
The U.S. missile defense plans will certainly be implemented to one extent or another, which will inevitably entail a change in the existing strategic, offensive balance between Russia and the United States. The military potentials and weapon systems are designed for decades to come, and consequently cannot change quickly; therefore, they will certainly influence the military and political forecasting and strategic planning in Russia and many other countries as well.
It is also possible that this new situation will force Russia to adjust its approach to further strategic and conventional arms reduction.
Kommersant
Libya to spend over $2.2 billion on Russian arms
Rosoboronexport, Russia's largest arms exporter, and Libya are preparing to sign a $2.2 billion arms deal. Tripoli, which has not bought Russian weapons for over 15 years, could now become one of Moscow's top ten customers.
The paper's sources said Libya plans to buy primarily air-defense systems, namely, four battalions of S-300PMU-2 long-range surface-to-air missile systems and 20 Tor-M1 short-range SAMs. Tripoli also plans to acquire 12 Sukhoi Su-30MK2 Flanker fighters, 12 Mikoyan-Gurevich MiG-29SMT Fulcrum fighters, one or two Mk 636 submarines and to pay for repairs on two previously supplied escort ships and one small guided missile boat.
Libya could become Russia's second most important customer in North Africa after Algeria, which has signed arms contracts worth about $8 billion. Russia also supplies air-defense systems to Morocco and is negotiating the sale of SAMs and MiG-29SMT fighters to Egypt.
Russian-Libyan contracts are to be signed during President Vladimir Putin's visit to Tripoli later this year. Moscow would be expected to write off Libyan debts in exchange for Tripoli's pledge to expand fuel and energy and nuclear cooperation.
Although Moscow believes that Tripoli owes it $4.4 billion, Libya is ready to repay just $1.72 billion.
Konstantin Makiyenko, deputy director of the Center for Analysis of Strategies and Technologies, said Libya, which had last purchased large batches of Soviet weaponry in 1986-1987, must now upgrade its armed forces. High oil prices are facilitating expensive North African arms purchase contracts.
Just like Algeria, Libya is focusing on powerful air-defense systems, which are seldom used in regional conflicts. Tripoli now has a border dispute with Chad and supports the government of Sudan in the Darfur conflict.
Makiyenko said SAM purchases are an insurance policy in case of confrontation with the United States or Egypt.
Gazeta
Kazakhstan refuses to build trans-Caspian pipeline bypassing Russia
Judging by all the signs, the anti-Russian gas alliance, whose formation is being actively lobbied by the United States and the European Union, could die before it is even born. On May 3, Kazakhstan confirmed it would not take part in the construction of a trans-Caspian gas pipeline bypassing Russia.
Kazakhstan's President Nursultan Nazarbayev reacted negatively to the project immediately after the visit by Russia's Prime Minister Mikhail Fradkov to Astana, Kazakhstan's capital. The sides discussed the granting of long-term oil transit guarantees to Kazakhstan. After the visit, the European Union hastened to assure the potential project participants of its readiness to give them political and financial support. However, Kazakhstan has not changed its stand.
Kazakhstan mentioned the problem of the status of the Caspian Sea as one of the project obstacles. "Construction of a trans-Caspian pipeline towards Erzurum is a most complicated issue as the Caspian Sea does not belong to Kazakhstan alone. The issue concerns the five countries lying around this sea and their interests," said Bolat Akchulakov, Kazakhstan's deputy minister of energy and mineral resources, at a meeting of the Republic of Kazakhstan-European Union parliamentary cooperation committee held in Astana on May 3, 2007.
Ona Jukneviciene, head of the European parliament's delegation, tried to hint at Russia's experience as it has made independent decisions on the North-European Gas Pipeline.
However, Akchulakov did not agree with her. "The Baltic Sea is a deep sea and part of the world ocean. Regrettably, the Caspian Sea is a closed reservoir," the deputy minister stressed. He added that "this is a unique reservoir most vulnerable from the ecological point of view."
The EU counts on the trans-Caspian gas pipeline to become a natural extension of the gas tandem Nabucco (Turkey-Austria) - UKG, Southern Kazakh Pipeline, (Baku-Tbilisi-Erzurum). It relies mostly on Kazakhstan's resource base. The implementation of the project could make Kazakhstan a key gas supplier to Europe. However, the Kazakh side's fears that the fragile ecological balance of the Caspian Sea will be disrupted could put an end to Brussels' plans to diversify gas imports.
Vedomosti
Norilsk Nickel lays claim to 20% of global nickel market
Russian metals giant Norilsk Nickel has announced that it will make a cash offer to acquire 100% in the Canadian company LionOre Mining International Ltd. for $4.77 billion. Its rival in the deal will be Swiss Xstrata, whose offer of $4 billion has so far been supported by the Canadian company's management.
LionOre is an international nickel concentrate producer with operations in Western Australia, South Africa and Botswana and a gold mine, Thunderbox, in Western Australia. Its nickel production is supported by significant by-product credits in the form of copper, cobalt, platinum group metals and gold.
NorNickel's director general, Denis Morozov, said: "The combination of Norilsk Nickel and LionOre will result in greater scale in key commodities, enhanced geographic diversification and an exciting pipeline of projects, supported by a long-life and low-cost production portfolio."
NorNickel is also attracted by LionOre's technology for recovering nickel from base ores. According to Morozov, the united company will hold more than 20% of the global nickel market.
The Russian company plans to complete the deal on June 18, provided at least two thirds of LionOre shareholders support it. Morozov said the deal would be financed from NorNickel's own funds and loans, which it plans to attract from BNP Paribas and Societe Generale.
Vladimir Katunin, an analyst with the Aton brokerage, said most of the funds would be borrowed, as Norilsk Nickel has little free money and has spent $3.1 billion on the acquisition of 37.9% in OGK-3 this year, and would spend about as much on the buyout of minority shares of the wholesale generating company.
Olga Okuneva from Deutsche UFG has calculated that Norilsk Nickel had some $1.9 billion free money in late 2006 and will increase the sum this year, which means that it can easily handle a major loan.
LionOre's board of directors so far supports the offer by Xstrata.
Mikhail Stiskin, an analyst with Troika Dialog, said the Swiss company, which is an experienced player on the M&A market, might up the stake. Last year, it bought Canadian Falconbridge Limited, a leading producer of copper and nickel, with investments in zinc and aluminum, for $17.3 billion, outbidding Canada's Inco.
The acquisition of LionOre will be Norilsk Nickel's largest international acquisition, which it has initiated shortly before Mikhail Prokhorov is to sell his share in the metals giant to Interros head Vladimir Potanin.
Larisa Zelkova, Interros's PR director, said the partners had not yet agreed on the configuration and deadlines of the division of their assets, or their price. This means that the acquisition of LionOre may influence the price of the deal.
Gazeta.ru
Gazprom, Rosneft may clash over Yukos assets
Energy giant Gazprom and state-controlled oil company Rosneft, which fought to gain control over production assets of embattled oil giant Yukos at a recent auction, may become embroiled in a serious conflict.
During the action, Neft Aktiv, a Rosneft subsidiary, bought Tomskneft, the East Siberian Oil and Gas Company (VSNK) and the Achinsk refinery in the Krasnoyarsk territory, the most lucrative Yukos assets to date.
Previously, experts said Gazprom would take over Tomskneft and VSNK because its Gazprom Neft subsidiary needs to produce more oil.
However, the debt-ridden Rosneft will now have to invest heavily into Tomskneft, a problem asset.
Analysts said the latest purchase of three Yukos production units by Rosneft could trigger a scandal with Gazprom.
Alexander Blokhin, an analyst with Ak Bars Finance brokerage, said Gazprom and Rosneft had signed an agreement on dividing Yukos assets.
Under the agreement, Gazprom was entitled to Eastern Siberian companies, whereas Rosneft was to have received the so-called Samara group of assets, comprising Samaraneftegaz and three nearby refineries in the Volga Region.
Gazprom and Rosneft had to sign the aforesaid agreement because of their lop-sided structure. Rosneft lacks refineries, while Gazprom Neft does not have enough production units. Both companies have decided to divide the remaining Yukos assets because they are reportedly controlled by two powerful Kremlin clans and because they have connections in high places.
The bilateral agreement will either have to be revised or has already been modified. Blokhin said the next auction would make things clear.
Alexander Razuvayev, head of the market survey department at Sobinbank, said the state is trying to provide Rosneft with additional assets because the company has less potential than Gazprom.
He said the above mentioned asset allocation concept is too simplistic.
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