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MOSCOW, August 30 (RIA Novosti) U.S. may squeeze Russia out of Indian arms market/West alarmed by Russia's growing clout - expert/Gazprom to raise gas prices for CIS and Baltic countries/Tajikistan to UC Rusal: "No thanks!"

Vremya Novostei

U.S. may squeeze Russia out of Indian arms market

India has announced an international tender for 126 multi-role combat aircraft, whose winner will be awarded a contract worth more than $10 billion. Invitations have been sent to the world's six largest producers of combat aircraft.

Experts believe that India's decision in the tender may be influenced by political considerations.

Lieutenant General Gennady Yevstafyev (Ret.), who served in the Foreign Intelligence Service and is now senior adviser at the Center for Policy Studies in Russia (PIR Center), said: "For years, India maintained priority military-technical cooperation with the Soviet Union, and then with Russia. But now it wants to be free to choose the best the global military market has to offer."

In his opinion, changes in India's foreign policy could be encouraged by the agreement on nuclear cooperation it signed with the United States in June.

The document provides for the resumption of U.S. deliveries of nuclear fuel and equipment for India's nuclear power stations.

Washington suspended them 30 years ago after India held its first nuclear tests and refused to join the Non-Proliferation Treaty (NPT).

Now, Washington seems ready to disregard India's unwillingness to join the NPT. It argues that not all signatory countries honor its provisions (an apparent reference to Iran), while India at least does not sell its nuclear technologies to other countries.

The 123 Agreement, signed for 40 years and extendable by 10 years, commits the United States to ensure uninterrupted fuel supplies to Indian reactors, even if it terminates its cooperation, and to help create a strategic fuel reserve for Indian safeguarded nuclear reactors.

"The 123 Agreement, named after Section 123 of the United States Atomic Energy Act of 1954 (Cooperation with Other Nations), is not limited to civilian nuclear cooperation," Yevstafyev said.

"It also covers other spheres, including military cooperation, which gives the United States a chance to eventually squeeze Russia out of the Indian arms market," he said.

The U.S. deal with India may influence the outcome of the aircraft tender, encouraging New Delhi to choose U.S.-based Lockheed Martin over European aircraft producers, including Russia's MiG, for political considerations.

Vedomosti

West alarmed by Russia's growing clout - expert

The European Union may now abandon the tradition of nominating only its members' nationals to head the International Monetary Fund (IMF). The only condition they set is to appoint Dominique Strauss-Kahn of France this time.

Why is Europe willing to pay such a high price in the first place?

Vladislav Inozemtsev, the head of the Center for Post-Industrial Society Studies, a Moscow-based think tank, said it was not clear why Europe is willing to pay the price for having its candidate approved now.

The U.S. and Europe together have enough votes to appoint him without Russia's consent. The West is probably unnerved by Russia, China and Brazil's growing clout, the expert concluded.

Yaroslav Lisovolik, chief economist at Deutsche Bank, said Europe has put so much effort into negotiating Strauss-Kahn's nomination that it was unlikely to abandon its candidate.

However, there is a growing awareness in the international community, European nations included, that the old structure of global institutions has worked itself out.

To give a new lease on life to globalism, a broader political consensus will be needed. It means the decision-making procedure should no longer be limited to industrially developed nations, but developing countries should be involved as well, the expert added.

Sergei Karaganov, chairman of the presidium of the Council on Foreign and Defense Policy, said Europeans realized the tradition of appointing one of their compatriots to head the IMF would die sooner or later.

The post will soon be claimed by countries whose role in the global economy has grown dramatically of late.

Strauss-Kahn's nomination might not be supported, so they prefer to trade some remote future for his appointment today. I think the proposal will be accepted, to everybody's relief, the expert added.

Europe will be happy to have gained its point, while Russia will be proud to have asserted its clout, proving it has enough influence to block a candidate it doesn't want.

Kommersant

Gazprom to raise gas prices for CIS and Baltic countries

Russian gas monopoly Gazprom is launching its traditional negotiating campaign on gas price rises for members of the Commonwealth of Independent States (CIS) and the Baltic countries for next year.

If it succeeds, it will boost its earnings on those markets by 15%-40%. However, in the past two years the company could not complete talks without serious conflicts threatening delays in gas deliveries to Europe.

The proposed price rise for Lithuania is 40% ($280 instead of the present $190-200 per 1,000 cubic meters). In September, Gazprom will begin discussing gas prices with Latvia and Estonia, in October with Ukraine, and in November with Belarus.

The Baltic countries will be pressed the hardest. According to a Gazprom manager, "normal European prices," uniform for the entire region, will be fixed for Lithuania, Latvia and Estonia.

So far, Gazprom has kept prices down, taking into consideration a three-year transition period for the Baltic countries' accession to the European Union.

This year, Latvia and Estonia paid $210-$220 per 1,000 cubic meters of gas. In effect, the Baltic countries' governments received a moratorium on a steep rise in gas prices in exchange for Gazprom's access to their national gas networks - the Russian concern received a 37.1% stake in Lietuvos Dujos, a 34% stake in Latvijas Gaze and a 37.02% stake in Eesti Gaas, the Baltic gas transportation companies.

The moratorium will expire January 1, 2008, and prices will be raised to the average European level, the negotiators said.

If Gazprom succeeds in setting the prices being discussed now into its export contracts for 2008, the concern's earnings on the markets of the Baltic countries, Ukraine and Belarus will increase from $10.5 billion to $12-$14.7 billion.

However, Gazprom's policy may force consumers to look for alternative suppliers or other energy sources.

On August 29, Moldova's national energy regulation agency reported that in the first half of the year the country cut gas consumption by 18%, to 620 million cubic meters, because of this year's rise in gas prices from $111.8 to $172.8 per 1,000 cubic meters.

Belarus cut gas consumption in January-June 2007 by 5%, to 10.05 billion cubic meters, and Ukraine by 1%, to 27.93 billion cubic meters.

Vedomosti, Vremya Novostei

Tajikistan to UC Rusal: "No thanks!"

Tajikistan has turned down UC Rusal's services to build the Rogun hydroelectric power plant.

The government quashed the contract with the Russian company, concluded as far back as 2004. No great loss, experts say.

The HEPP itself, with the authorities deciding not to privatize the Tajik Aluminum Plant (TAZ), does not interest the company. Still, the Russian company is facing the problem of how to recoup its investment in the smelter's modernization.

In October 2004, Rusal (now UC Rusal), by agreeing to cooperate with the Tajik government, undertook to complete the first stage of the Rogun HEPP and build a new 200,000-ton-per-year aluminum smelter and two electrolyzer workshops next to the TAZ in southern Tajikistan.

Total investment was estimated at $1.3 billion. However, the construction never got off the ground. As the parties began to prepare a conceptual design, they disagreed on the type and height of the dam.

The government insisted that capacity be increased from 2,400 MW to 3,600 MW, and the height from 285 meters to 335 meters (850 to 1,000 feet). Rusal disagreed, doubting the wisdom of such a step. The power generated, they said, would remain uncalled-for.

The conflict was also politically motivated. "The 335-meter height," said a Vremya Novostei source close to Rusal, "could create a huge water reservoir on Uzbekistan's border. As a result, Dushanbe would be able to redistribute water flows and influence Tashkent."

Apparently Rusal decided against a role in that political struggle.

Withdrawal from the project is no great loss for Rusal, said Denis Nushtayev, a Metropol analyst.

The power facility alone is unlikely to attract the company. Rusal's original idea was to tender for the privatization of the TAZ, the only aluminum smelter in the republic, he said. However, last year the Tajik government said it would not sell the asset.

Rusal meanwhile is not losing heart: if anything, it would like the $50 million it invested returned.

Konstantin Zagrebelny, the company's spokesman in Dushanbe, said "agreements like that cannot be canceled by unilateral action."

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

 

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