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What the Russian papers say


MOSCOW, August 17 (RIA Novosti) China plays war with the United States, friends with Russia/Russia-EU relations depend on Ukrainian elections/British Greens to deprive Sakhalin II of another creditor/Gazprom may get assets in Britain/Alcoa may pave the way for UABC's emergence on world markets


China plays war with the United States, friends with Russia

The summit and the Peaceful Mission 2007 military exercise of the Shanghai Cooperation Organization (SCO) took place at a trying time for the Russia-West and China-U.S. relations.
However, that will not help Russia promote relations with China, which is playing war with the United States and friends with Russia.
The China toy-safety scandal is a logical extension of the trade war between China and the U.S., and China's huge trade balance deficit could be dangerous to the United States, whose authorities are increasing pressure on China to liberalize the exchange rate of the yuan.
The campaign waged in the United States against Chinese goods is reminiscent of the "Don't buy Estonian" campaign in Russia.
However, there are few Estonian goods on the Russian market, while the United States and Europe heavily depend on Chinese goods.
The U.S. and China know that their economies have become inseparable, and conflicts between them are part of their large-scale cooperation.
Russia could seemingly benefit from U.S. and European fears, notably over the strengthening of China and the rumored establishment of a military alliance in the SCO.
The SCO, a regional group largely seen as a counterweight to U.S. influence in Asia, comprises Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, and has Iran, India, Pakistan and Mongolia as observers.
Russia and China, the two key players in the region, are trying to draw Central Asian countries into their zones of influence, where problems would be tackled without the involvement of the U.S. and other Western countries.
Judging by press reports, the West believes that the SCO is turning from an economic bloc into a military alliance designed as a counterbalance to NATO.
It is not clear how SCO members will solve their problems without the assistance of other countries.
Their economic interests (above all those of Russia and China) have not been harmonized, as Russia is an energy supplier, while China is a consumer, but both are fighting for the resources of Central Asian states.
Moreover, Russian-Chinese cooperation ($33.4 billion according to China, and $28.6 billion according to Russia) is substantially less than China's cooperation with the West.
China's trade with the U.S. exceeded $260 billion and with the European Union, $270 billion, in 2006.
That year, China was Russia's fourth-largest trading partner, which ranked only 10th on the list of China's trading partners.
The U.S.-Chinese trade war is unlikely to reduce turnover between them. Likewise, China's "military friendship" with Russia will not increase its trade with China.

Nezavisimaya Gazeta

Russia-EU relations depend on Ukrainian elections

Russia-EU relations may grow highly strained a few weeks before the Russian parliamentary elections, according to Alexander Rahr, director of Russia and CIS Programs for the Foreign Policy Council of Germany.
If people from the former "orange" coalition win the September 30 parliamentary elections in Ukraine, that country will immediately launch a new diplomatic initiative to accelerate its EU and NATO entry.
That will come amid an election campaign in Russia, a country pausing at a political crossroads. Therefore, it will hardly be willing and able to directly interfere in Ukraine, having enough on its plate.
In addition, the Kremlin has far less influence on Viktor Yanukovych, earlier believed to be a pro-Russian politician, now that the Ukrainian prime minister began forging his own relations with Brussels, the expert said.
The United States and the European Union are now working out a new strategy for the Black Sea region after the second round of NATO's eastward expansion.
They will wish to use Ukraine as a bridge to help them lay their hands on the rich Caspian resources.
The Americans have only to persuade the cautious West Europeans, who are wary of annoying Russia too much, to admit Ukraine to NATO as soon as possible.
No forecasts available about Ukraine hold any geopolitical cataclysms in store for Russia, Rahr believes.
Ukraine will vote as expected. Its president and prime minister will have to confirm some sort of compromise dividing power so as not to break the nation apart.
Unlike many former Soviet republics, Ukraine has always been able to find peaceful and wise solutions to its crises. Without resorting to compromise, it would have long disappeared from the political map.
Russian President Vladimir Putin has not lost Ukraine and is unlikely to loose Europe.
But geopolitical realities are changing on the European continent. Both Russia and the West would have to adopt some different attitudes to be able to discuss strategic partnership and mutual integration again.
It is high time the West realized that Russia has changed dramatically since the 1990s. It is unlikely to return to a liberal model of development after taking a different path and finally stabilizing under Putin, the expert concludes.

Vremya Novostei

British Greens to deprive Sakhalin II of another creditor

The scheme for financing the Sakhalin II oil and gas project is sustaining growing failure.
Britain's Export Credits Guarantee Department (ECGD) may follow EBRD's lead, which finally refused to grand a loan to Sakhalin Energy, the project's operator, after energy giant Gazprom acquired a controlling stake from the British company Shell.
The London branch of the World Wildlife Fund (WWF) filed a request to investigate the legitimacy of the ECGD's decision to grant Sakhalin II guarantees worth $1 billion to pay for work on the project implemented by British subcontractors. The guarantees have not been issued yet.
According to the plaintiffs, the list of unresolved problems remains the same - the noise produced by the platform, which has a negative impact on the population of grey whales, ground pipelines that could cause damage to Sakhalin rivers and salmon spawning, and a projected liquid natural gas (LNG) plant that could negatively influence the environment of the Aniva Bay.
The WWF's claims testify to the fact that along with their care for grey whales, to which only suspending the project at this stage could help, the matter has a political dimension.
Relations between London and Moscow have significantly chilled of late, and the British government has no reasons to grant cheap financial outlays for the project.
The Green wave, caused by WWF Britain, comes in handy.
As soon as the ECGD withdraws from financing the project, and now there is no doubt about it, its scheme will remain only on paper.
The U.S.'s Eximbank and Japan's JBIC may also find a pretext to withdraw from the project.
It means that Gazprom will have to find $3 billion to pay its share of the investment. That is not a huge sum for the company, but still rather unpleasant since it has $40 billion of net debt.
WWF Russia officially supported their colleagues' concern for the fate of grey whales. However, off the record they said such a sharp move was a surprise to them, as nobody had been informed about the preparations for it.
"Such lack of coordinating actions only worsens the matter, especially now when we are streamlining a positive dialogue with Sakhalin Energy," said a spokesman for WWF Russia.


Gazprom may get assets in Britain

Wulf Bernotat, the CEO of the German energy concern E.ON AG, said the company could transfer part of its energy assets in Britain to Gazprom.
Experts have said that E.ON could be encouraged to take a positive decision by the new data on the reserves of the Yuzhno-Russkoye gas deposit in Western Siberia.
E.ON and the Russian energy giant have recently resumed talks on an asset swap as part of the German concern's accession to the Yuzhno-Russkoye project.
They reached a preliminary agreement in 2004, but the talks were stalled by E.ON's unwillingness to turn over to Gazprom its blocking stake in E.ON Ruhrgas.
E.ON resumed consideration of the project after Gazprom expanded its cooperation with BASF.
The German chemical concern was granted the right to participate in development projects in Russia in return for increasing Gazprom's stake in Wingas from 35% to 50% minus one share, and turning over to Gazprom a 49% stake in Wintershall and also its share in the new joint venture, Wingas Europe, which BASF and Gazprom plan to establish for marketing natural gas in the European Union.
After nearly two years of negotiations, the two companies have signed a framework agreement on assets exchange, but the final agreement will not be signed for some time, according to Gazprom.
Experts said that the talks would be completed only after additional exploration of the Yuzhno-Russkoye field, which began in 2005, is over. Gazprom has not made public its results or informed E.ON.
According to the German concern, the deposit's reserves have been tentatively estimated at 700 billion cubic meters, but Gazprom believes they amount to 1 trillion.
Therefore, E.ON regards all previous agreements with the Russian company as preliminary.
Experts said that E.ON's intention to cede part of its place on Britain's energy market to Gazprom could mean that the company has received additional information about the reserves of the Yuzhno-Russkoye deposit.


Alcoa may pave the way for UABC's emergence on world markets

The Russian division of Alcoa, a U.S. company, now has a chance to take two of its Russian plants out of the red.
At the MAKS-2007 aerospace show next week, the company will sign a cooperation agreement with the United Aircraft Building Corporation (UABC).
Industry experts, however, believe that Alcoa could make money on the Russian aviation market only if the UABC implements its large-scale plans, which do not look too realistic.
A source close to one of the parties said Alcoa "is unlikely to become an exclusive UABC supplier."
According to another source close to the negotiators, a contract with Alcoa could "for strategic considerations" be limited to shapes and sheets for civilian aircraft only.
For Alcoa, however, even a few orders from the Russian aircraft industry could be considered fortunate.
The point is that the American company's Russian plants - the Belaya Kalitva metals production group and the Samara metals plant - that Alcoa bought from Rusal for $257 million in 2005, are loss making.
One of the reasons is the lack of an aluminum outlet for the aircraft building industry, which historically has been the main consumer of rolled products from these plants.
UABC President Alexei Fyodorov said Wednesday that between 2007 and 2025 the corporation would manufacture about 4,500 planes, two thirds of which would be civilian and transport aircraft.
It emerges that Russia will be producing about 250 aircraft a year. Analysts and market players decline to comment officially on the feasibility of those plans. But the results reported by the aviation industry in recent years bear out the boldness of UABC plans.
According to the Rostransnadzor transport watchdog agency, Russian aircraft companies produced five planes in 2006, as many in 2005, six in 2004 and eight in 2003.
Boris Rybak, head of the Infomost consultancy, said that in the mid-1980s, the peak of its development, the Russian aviation industry was manufacturing no more than 150 long-haul aircraft a year with a take-off weight of over 100 metric tons.
Oleg Panteleyev, head of the Aviaport think tank, believes that the UABC is also interested in common business with Alcoa.
"With plans to export UABC products, the issue of international certification of aircraft and their materials assumes particular importance," Panteleyev said.
Alcoa could organize the production of materials under international standards at its enterprises, paving the way for the UABC's entry onto the world market.

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