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What the Russian papers say


MOSCOW, August 6 (RIA Novosti) Washington delivers deathblow at START-1/ International community's flawed policies in Middle East/ United Russia's election campaign jeopardizes talks on the Arctic shelf/ Russian oil companies could return to Iraq/ German drug maker poised for landmark deal

Vremya Novostei

Washington delivers deathblow at START-1

The decision by U.S. Congress to allocate $100 million for the Prompt Global Strike initiative is an indication that Washington intends to withdraw from the START-1 Strategic Arms Reduction Treaty.

Alexander Sharavin, director of Russia's Institute for Political and Military Analysis, said: "Americans have long planned to mount conventional warheads on these missiles, so they can be used in any part of the world, but their plans were being hampered by START-1 limitations."

"If the United States withdraws from the treaty, it will be free to use conventionally-tipped strategic missiles. It will be a completely new situation, because we have never considered using such missiles," Sharavin said.

According to him, the U.S. is implementing the Prompt Global Strike initiative not only to be able to deliver strikes at terrorist bases.

"While Russia and the United States worked for rough parity and control of each other, new players, notably China, appeared on the global scene," Sharavin said.

"Russian and U.S. intermediate and smaller-range missiles are limited by treaties, whereas China is building up its arsenal and already has about 700 such missiles," he said. "Beijing claims that they are targeted at Taiwan, but it can easily redirect them to other targets. Moreover, 700 nuclear-tipped intermediate and smaller-range missiles on the Russian border will be nearly as dangerous as strategic missiles. In short, Russia and the U.S. have problems."

Sharavin said: "The Chinese leaders have announced their intention to orbit a GPS system of five stationary and 30 non-stationary satellites in a year, which will be twice as many as Russia has."

The Soviet Union and the United States signed the START-1 Strategic Arms Reduction Treaty on July 31, 1991; it came into force on December 5, 1994. Its current signatories are Russia, the U.S. and three non-nuclear states - Belarus, Kazakhstan, and Ukraine. The treaty will expire on December 5, 2009 unless Moscow and Washington agree to extend it.


International community's flawed policies in Middle East

It is an open secret that Western diplomatic missions even led by retired VIPs make no real difference in politics. Tony Blair's post-premier employment as peace envoy of the Middle East Quartet, for example, is merely an episode in his personal biography, said Yevgeny Satanovsky, president of the Institute for Middle East Studies.

The world is no longer a stage for a large-scale political game played by great powers alone. The pawns they used to move have sprung into life and started to move all by themselves - the presidents and prime ministers of the couple of dozen countries in the region as well as thousands of field commanders, religious leaders, and tribal chiefs. This "salad" is too finely sliced to be handled with traditional diplomatic "cutlery." It can only be brought under control by a ruthless meat mincing machine of totalitarian regime.

By destroying the former secular regimes in the region and weakening the traditional power mechanisms in Mideast monarchies, the West has released an anarchic tribal chaos instead of fostering democracy. The new regime is not fit for interacting with the modern world in a diplomatic way than the Barbarians were with dealing with the Roman Empire during the so called great resettlement of peoples.

It seems that the international community steps on the same rake each time it tries to solve the problems of the Middle East in the run-up to an election.

Eventually, the region is bound to come into an equilibrium similar to Europe's; but it may take another 30 or 50 years before those who survive all the wars will work out a formula for peace.

As of now, the U.S. will keep supplying arms to its allies, while Abu Mazen in Palestine will carry on the national reconciliation dialogue with his Hamas opponents with the help of some 50 Russian armored vehicles. He hardly has a chance of building up Palestine's statehood, however.


United Russia's election campaign jeopardizes talks on the Arctic shelf

The actions taken by members of Russia's parliament the United Russia party, who dived deep below the North Pole [to justify Russia's claims to the energy riches of the Arctic] have evoked a series of sharp statements in the Western media. Russia's claims to the polar riches are being called ungrounded. Is their criticism justified?

Boris Makiyenko, deputy director of the Center of Political Technologies: "Plans for research work in the Arctic are made prior to the expedition, therefore it was hardly designed to be purely an election campaign. They took the opportunity [for the expedition] and have overdone its PR element, and it has been done in bad taste. But for this irritating RP campaign, it would have been a quite acceptable claim by Russia to the arctic territories supported by scientific and cartographic evidence in diplomatic circles. Our claims could hardly be welcomed, but we would have avoided loud public statements against Russia. As a result, a loud answer followed a loud statement. It will jeopardize negotiations. I hope, further diplomats and lawyers will take up the issue, and Russia will prove its right."

Alexander Konovalov, president of the Institute of Political Assessments: "Usually, Russia in its foreign policy would give a response to what has happened. And here we are half a step ahead, which is not bad. At present, no one actually plans to consider the exploitation of arctic reserves: cold, deep and inconvenient. What is costly today, may lose its value tomorrow. According to the UN Convention on the Law of the Sea, if the continental shelf stretches over the economic zone, the state has a sovereign right to develop reserves. But now it is more difficult to stake a claim to the territory than earlier. Only weighty evidence will convince international experts. We hope that he who was the first to begin obtaining information will find it easier to advocate his view. Russia is doing research work and making quite acceptable statements that its shelf stretches beyond the economic zone. The negative reaction from other countries can be explained by fears that Russia will secure the arctic territories contrary to the consent of the international experts."

Business & Financial Markets

Russian oil companies could return to Iraq

Russian Industry and Energy Minister Viktor Khristenko will meet with Iraqi Oil Minister Hussein Shahristani in Moscow on August 8-10 to discuss resuming oil operations in Iraq by Russian oil companies.

The meeting is to be attended by representatives from LUKoil (Russia's largest private oil company), state-controlled oil producer Rosneft, Zarubezhneft (Russia's leading foreign trade company in the oil and gas sector) and Neftegazexport (which works on oil, gas and power projects under turnkey terms).

Experts are hoping that LUKoil will return to West Qurna 2, and that Rosneft could get a stake in it.

The talks will most likely touch on the issue of the West Qurna 2 deposit, which was launched in 1997. Its reserves were estimated at 6 billion barrels of oil and requisite investment at $4 billion. LUKoil has a 68.5% stake in the project, Iraq 25%, and Zarubezhneft and Machinoimport (exporter of machinery and technological equipment) 3.25% each.

LUKoil's operation in Iraq was curtailed in the spring of 1999 due to UN sanctions. In December 2002, the Iraqi Oil Ministry announced that it was unilaterally severing the contract with LUKoil. However, according to international commercial law and the conclusions of a legal audit, the contract is still valid.

LUKoil wants to resume working in Iraq under the old terms, said its spokesman. He added that other Russian shareholders were also willing to start work.

Vladimir Vedeneyev, an analyst with the Bank of Moscow, said Russian companies might return to Iraq.

Experts believe that the Iraqi government wants to implement the West Qurna 2 project as much as the management of LUKoil, as Iraq's oil revenues make up nearly 70% of the country's GDP and more than 95% of its profits.

Analysts believe that Rosneft could also enter the Iraqi market. Vik Vagner, an oil and gas analyst with 2K Audit Business Consulting, said that Rosneft might claim the shares of Machinoimport and Zarubezhneft in West Qurna 2.

On the other hand, there are many other large deposits in Iraq, and Rosneft could be offered a stake in one of them. This would suit the interests of the Russian oil producer, which so far has no major assets outside Russia.


German drug maker poised for landmark deal

German pharmaceuticals firm Stada is expanding its presence in Russia. Following its purchase of Nizhpharm, the company has agreed to buy another large producer, Makiz-Pharma. The deal will be the biggest in Russian pharmaceuticals history and total $135 million.

Stada Arzneimittel, one of the largest European drug companies, was founded in 1985. Institutional investors hold 54% of its stock. Its earnings in 2006 were 1.245 billion euros, and net profits, 92.5 million euros. Capitalization on the Frankfurt bourse on Friday evening was 2.9 billion euros.

Makiz-Pharma will be Stada's second acquisition on the Russian market. In 2005, the company bought a 97.5% stake in large drugmaker Nizhpharm for 80.5 million euros. At the time the deal was struck, Nizhpharm had 5% of the Russian drug market, but since then its percentage has dropped to 1.7%, said DSM Group general director Alexander Kuzin.

His estimate is that following the deal Stada's share of the Russian pharmaceuticals market will be 1.85% and, according to the Pharmexpert marketing research center, 2.1%. Market leaders in 2006, according to RMBC and Pharmexpert, were: Novartis (6.53%), Sanofi-Aventis (5.18%), and Servier/Egis (4.25%).

Western investors are pouring into the Russian drug market because of its rapid growth, said Yury Krestinsky, head of the Health Ministry's department for pharmaceuticals. According to DSM Group, the Russian medical market will grow 10%-11% to $11 billion by the end of 2007.

Early this year, Poland's Polpharma announced plans to buy Akrikhin for about $120 million, while Servier began building a 40 million euro plant in the Moscow Region.

As seen by David Melik-Guseinov, head of Pharmexpert's market department, the deal to sell Makiz-Pharma is now the largest in the history of the Russian drug market, followed by the sale of Akrikhin.

RIA Novosti is not responsible for the content of outside sources.


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