MOSCOW, May 22 (RIA Novosti) Belarus to produce oil in Iran/ Putin approves ruble strengthening/ Russia to establish two more defense holding companies/ Scandal over EADS contained
Kommersant
Belarus to produce oil in Iran
Iranian President Mahmoud Ahmadinejad has brought good news to Minsk: Tehran will allow Belarus to develop its Jofeir oil deposit in the south of the country. This will make Belarusian President Alexander Lukashenko's dream of making Belarus an oil-producing country eventually come true.
The present official visit of Mahmoud Ahmadinejad to Minsk is a response visit: Alexander Lukashenko visited Tehran last fall. The two leaders, who are both in sharp confrontation with the West on the whole, and the United States in particular, have reached complete mutual understanding. According to Lukashenko, the two countries "have established relations of a strategic partnership." He stressed: "Belarus and Iran are subjects of international law. We do not have any forbidden themes now; we are ready to cooperate along all lines."
It became known during the presidents' meeting on May 21 that the Iranian side had approved a general plan proposed by Belarusneft, a state-run production company, to develop the Jofeir oil deposit in Iran. The plan was drafted by Minsk at the end of last year and analyzed in Tehran. While in Belarus, the Iranian president said he was satisfied with the project. Alexander Lukashenko has long seen Belarus in the role of an oil producer. Belarus's own oil deposits are insignificant: the country annually produces about 1.8 million metric tons of oil and its production is in constantly decline. Alexander Lukashenko tried to negotiate Belarus's participation in oil production with its ally Russia but to no avail.
Last summer, during the visit of Venezuelan President Hugo Chavez to Belarus, Lukashenko tried to reach an agreement with him on Belarus's involvement in the development of Venezuelan oilfields. Under his plan, oil was to be sold on the Latin American market and Russian oil bought instead. The plans are still under discussion.
The Jofeir project is the first foreign project involving Belarusian oil companies. On the one hand, this is a demonstration of Belarus's commercial success in the oil and gas sector, and on the other, an opportunity to show Moscow that Belarus can work in the oil sector without reliance on Russian resources and infrastructure.
However, Russian interests are represented in the Jofeir project. The investor which is to finance the development of the oilfield in Iran is Vietsovpetro, 50% of which belongs to Zarubezhneft, Russia's leading foreign trade company in the oil and gas sector.
High political risks are the only thing that cast a shadow on the new agreement as the threat of military operations against Iran still exists.
Vedomosti
Putin approves ruble strengthening
Giving out money to the poor is not enough in a pre-election year. A market economy must produce market achievements, and this is probably why Russian President Vladimir Putin has expressed concern over the situation on the stock market and proposed investing state funds in stagnating blue chips.
This may be a good or bad idea; what really matters is Putin's new policy of dipping into the oil and gas super profits.
The majority of blue chips are oil and gas companies, and the slow rise of the Russian stock market amidst soaring oil prices is a problem for the Russian economy. Under the current system of taxation in the oil sector, oil companies posted a significant decline in their profits in the fourth quarter of 2006 and the first quarter of 2007.
The injection of oil and gas super profits accumulated in the treasury will most likely encourage speculation, but will not create major growth points.
The president's words reflect the stance of some officials, who are dissatisfied with the policy of the Finance Ministry. Investment of the Stabilization Fund into low-yield but reliable foreign equity allows the ministry to save funds and prevent their inflation-driven squandering on the domestic market.
The opponents of that policy said the fund could be invested in the real economic sector, which would spur GDP growth and consequently make good inflation outlays. If the ministry does not want to spend money, it could at least increase the profitability of investments by locating the Stabilization Fund in Russia.
Putin announced in his last state of the nation address to parliament that the government would appropriate nearly 700 billion rubles (over 20 billion euros) for additional outlays, and that the Pension Fund's deficit could be covered by the accumulated oil and gas reserve funds.
This made many people think that the Stabilization Fund was no longer the holy cow, and that the oil and gas super profits would at long last be put to common use.
To invest or spend part of the Stabilization Fund in Russia, the government will need to sell some of its foreign currency reserves, which will initially strengthen the ruble against the dollar.
Putin, who said in May that strengthening of the ruble must be prevented because it was bad for the manufacturing sector, yesterday announced that the Central Bank had so far not seen any negative consequences caused by ruble strengthening.
Vremya Novostei
Russia to establish two more defense holding companies
First Deputy Prime Minister Sergei Ivanov, a likely candidate to succeed President Vladimir Putin in 2008, told a meeting of the Public Chamber, a consultative body overseeing the work of executive agencies and law enforcement issues, that the government plans to establish two more defense holdings in the radio electronic and space rocket sectors.
He said both companies would have a huge R&D and production potential, a large workforce and would be financed regularly by investors and state defense orders.
Ivanov said the new holdings would in the next few years become leading players on the global arms and civilian markets, as well as the main driving force of the Russian economy.
In November 2006, the United Aircraft Corporation, which consolidates all major state-controlled aircraft production assets, was established. The state owns a 75% stake plus one share in the corporation.
In late March 2006, President Putin decreed the establishment of the state-owned United Shipbuilding Corporation.
And Atomenergoprom, the only holding company for the Russian civil nuclear industry, will be established on June 1 under another presidential decree. It will produce uranium and fuel, generate electricity and build nuclear power plants in Russia and abroad.
Unlike other defense industry segments, the large vertically integrated holding companies will maintain a different relationship with the state. For instance, the government will monitor their R&D spending more closely.
Sergei Ivanov said intellectual property issues and piracy had always been a big problem, but the situation would soon change.
The United Aircraft Corporation's capitalization would soar, if the intellectual property of aircraft giants Mikoyan-Gurevich and Sukhoi were taken into account.
Ivanov advocated an effective system of long-term science and technological forecasts for copying the best aspects of foreign experience.
The establishment of joint ventures and engineering centers could become an optimal model for cooperation with foreign companies on the basis of technology transfers, provided that Russian producers keep the controlling stake.
Ivanov said Russia now could overcome the current technological lag and create a powerful economy and a welfare state.
Nezavisimaya Gazeta
Scandal over EADS contained
The European Aeronautic Defense and Space Company (EADS) is in the midst of a powerful scandal in Russia.
If Russia's United Aircraft Corporation (UAC) and EADS sign a partnership agreement on the localization of Airbus production in Russia, the government might increase its stake in the concern, Arkady Dvorkovich, head of the Kremlin's expert department, said yesterday. If the talks fall through, Vneshtorgbank (VTB) might sell its 5% stake in EADS.
The scandal has not become an international one only because news agencies did not go ahead with the story, citing "Dvorkovich's clarified stance."
The Kremlin official said Russia would either produce the entire family of civil aircraft jointly with foreign partners and using modern technologies, as it is doing in the automotive industry, or would work alone. If it joins forces with foreign partners, Moscow could buy out the additional EADS shares, because the concern is badly in need of investment. If not, it will have to sell its stake on the market, which would have negative consequences for the concern.
That hidden threat could be viewed as blackmail, because EADS is in the middle of a major crisis. VTB bought its rapidly falling shares at a 30% discount, for about $1 billion.
However, several hours after the revised statement was published, VTB senior vice president Vasily Titov said: "VTB does not plan to make any additional investments in EADS."
Veniamin Oks, an analyst with United Strategic Consultants, said VTB was unlikely to seriously increase its stake in EADS despite French President Nicolas Sarkozy's decision to sell the government's 15% stake in the concern.
"Sarkozy said during the election marathon that he was against allowing Russia to seriously increase its stake in EADS," Oks said. "Although the Russian bank is the investor the concern needs, Europe believes that the Russian aircraft industry is working mainly for defense, and therefore its large-scale participation in EADS could endanger the security of European Union member states."
In a word, VTB will not be allowed to increase its stake in EADS even up to 7%-8%.
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