MOSCOW, September 19 (RIA Novosti) Presidential elections as a gauge of Russian society's health / Russia to control its segment of the international uranium-enrichment market / Government steps up pressure on private companies / Foreign companies stage a comeback in Venezuela via Russia / Government may renounce control over AvtoVAZ
Vedomosti
Presidential elections as a gauge of Russian society's health
If Viktor Zubkov, former head of the Federal Service for Financial Monitoring recently appointed prime minister, is elected president next spring, this will mean that Russian society is gravely ill, a Russian expert writes.
Vladimir Milov, president of the Institute of Energy Policies, told popular business daily Vedomosti that a healthy society cannot elect a person who only few people knew of five months before.
In Russia, the president is the key figure on all counts, including under the Constitution and as a result of strengthening of the vertical system of power in recent years.
According to Milov, even if Putin keeps hold of unofficial levers of power after leaving the post of the chief executive, the system will be unable to operate properly without the formal approval of the new president.
If the new president proves unable to operate without the advice of the country's true master, this will slow down decision-making to a near standstill. If he tries to work independently of his predecessor, this will mean that the country concluded a blind bargain. Moreover, there will be a high probability of a managerial conflict.
What can the country expect from Viktor Zubkov? How will he act in a critical situation? Can he adequately respond to domestic and foreign challenges? The expert believes that five months is not a sufficient period to obtain answers to these questions, or to make a good choice.
Milov writes that he saw Zubkov only once, on the Russian delegation to the G8 summit in Canada in 2002. According to him, Zubkov kept quiet, and he later did not even remember his face. In fact, Milov writes that he cannot recall anything at all about Zubkov, a man totally unlike Mikhail Khodorkovsky or Anatoly Chubais, who project a strong impression of leadership and human qualities at first glance.
The question is not who Mr. Zubkov is, but who Russians are if they elect a dark horse to the country's top post, Milov writes.
If Russia wants to be a successful modern country, rather than continue surviving on its oil and gas super-profits, it needs appropriate leaders elected in a maximally transparent procedure. The people must not tolerate treatment as a brainless mob, or else nobody will respect them.
Milov concludes that if Zubkov runs for the presidency next March, the elections will become a test for the Russian nation, rather than for him.
Kommersant
Russia to control its segment of the international uranium-enrichment market
Addressing the 51st International Atomic Energy Agency (IAEA) General Conference on September 18, Sergei Kiriyenko, director of the Federal Agency for Nuclear Power, said Russia planned to create guaranteed reserves of low-enriched uranium worth up to $300 million at an international nuclear center in Angarsk, Eastern Siberia, and that they would be controlled by the nuclear watchdog.
"Russia intends to establish guaranteed reserves of up to two loads of nuclear fuel (low-enriched uranium) for a 1,000-MW reactor," Kiriyenko said, adding that a fuel load of slightly more than 80 metric tons for a pressurized water reactor cost some $150 million.
Uranium reserves will be financed by Russia, stored at the international uranium enrichment center that was established in May 2007 by Russia and Kazakhstan, a Central Asian republic, and supplied to countries that have been denied access to nuclear fuel.
Ukraine has not yet joined the international center. A source in the Russian delegation said the center and the fuel reserve were called on to deal with possible contingencies and to provide reliable guarantees to countries wishing to develop their own nuclear power industry with an incomplete fuel cycle.
"Unlike many other international initiatives, the center has already become a reality," the source told the paper.
Although Russia accounts for 45% of global uranium-enrichment facilities, it controls just 35% of the low enriched uranium market. The share of uranium supplied under the Russia-U.S. Uranium Delivery Agreement (The HEU-LEU Agreement) is quite substantial.
However, the Russian share is certain to become less because the United States and France have now started building new uranium enrichment plants.
An anonymous expert in the Russian nuclear sector said the international center and uranium reserves were a good way to find new clients and to control the market segment.
Tougher competition is expected because South Africa has announced plans to enrich uranium, and because China could also enter the market.
The first fuel batch will probably be delivered to the Iranian nuclear power plant in Bushehr. Russia could supply uranium to Iran through the IAEA, without violating the HEU-LEU Agreement, in the event of U.S.-IAEA differences.
An IAEA guarantee bank in Russia could eventually help settle most conflicts linked with problems in the third world nuclear industry.
Gazeta.ru
Government steps up pressure on private companies
The Russian government is trying to introduce an institute of investment tenders to replace open auctions to select operators for subsoil development projects.
The Natural Resources Ministry said it would stimulate production and processing, while experts talk about an increase in corruption and mounting government pressure on private companies.
"Suspended development has become popular of late, when companies obtain development licenses without planning to start right away," said Natalia Yanakayeva from Center Invest Group. "With investment tenders, however, they will have to start earlier, as the government is interested in boosting development."
The Ministry said they had not made a final decision yet, but market operators still sounded pessimistic. "Our government officials have never been too outspoken," a market expert said. "This unwillingness to share information might mean everything has been decided."
The expert expressed concern that the new initiative would encourage corruption. "Corruption will flourish among those who will be responsible for selecting the winners of closed tenders," he said.
The analyst is convinced that government companies with solid administrative resources would be the ones to benefit from the new order. "Gazprom and Rosneft are getting all the juicy cuts anyway. The new procedure will just legalize the privilege," the expert explained.
On the other hand, experts believe state-owned companies will obtain all major licenses without competition. "It would be only logical to hand strategic oil and gas fields to Rosneft and Gazprom, without auctions or tenders," said Alexander Razuvayev, head of the market analysis department at Sobinbank, a Russian commercial bank. "Large fields require large investment, which only government-owned companies can afford. The modern world belongs to giants, they need to be supported."
The metals sector is faced with a more complex situation. "There are no clear pro-government players in Russia's metallurgy industry today," explained Finam analyst Denis Yegoryev. "So the government will be able to show favor to one or another company of its choice by granting it access to prolific deposits."
Kommersant
Foreign companies stage a comeback in Venezuela via Russia
TNK-BP, taking its cue from LUKoil, has decided to take advantage of the special terms enjoyed by Russian business in Venezuela. This will also benefit BP itself, which has taken some beating there following the nationalization of the local oil sector. The return of overseas companies to Venezuela on the coat-tails of Russian companies may soon become an accepted practice.
In the summer, TNK-BP had to sell to Gazprom its controlling stake in the Kovykta gas condensate field. "TNK-BP has lost some of its assets in Russia, and it is already obvious that state-owned companies will rule the roost in Eastern Siberia," said Maxim Shein, of Broker Credit Service. "For state-owned companies their deposits abroad are a secondary consideration, but for private firms it is an opportunity to build up their assets." He believes that by agreeing to sell some of its holdings in Russia to state companies, TNK-BP can look forward to state support in other regions.
The positive momentum in Moscow-Caracas relations made itself clear from 2004. At that time, the Russian and Venezuelan presidents signed a number of bilateral documents on economic cooperation. Russian companies covered by those documents obtained a special status in Venezuela.
"Under Venezuelan law, contracts or agreements concluded as part of country-to-country cooperation with Russia are not conditioned on tenders, but are given some preferential advantages," said State Duma deputy Vladimir Semago, first deputy head of the Russia-Venezuela Council of Entrepreneurs. "These are not preferences pure and simple - prices, schedules and quality requirements are kept in line with market standards. The special terms only help to do away with competition and to secure mutual economic and political effect with less effort."
Foreign access to Venezuela by proxy (Russia) is becoming increasingly widespread. A source working on the Venezuelan market under a country-to-country agreement said foreign companies had offered to purchase his Russian operations to gain priority status. "Several overseas companies are already operating in Venezuela, positioned as Russian ones," he said.
Business & Financial Markets
Government may renounce control over AvtoVAZ
Boris Alyoshin, the newly-appointed CEO of automotive giant AvtoVAZ, said the state did not plan to retain control over the company. Previously, top managers and corporate shareholders had repeatedly said the state would keep the controlling stake.
Alyoshin said the AvtoVAZ controlling stake was not a goal in itself.
In December 2005, the government took over AvtoVAZ and appointed top managers from Rosoboronexport, the main state arms exporter. They promptly decided to abolish crossholding and began buying AvtoVAZ stocks on the market.
In the spring of 2007, AvtoVAZ representatives said Rosoboronexport had accumulated enough shares in order to receive a 75% stake after abolishing crossholding and after redeeming the shares of AvtoVAZ subsidiaries.
Although Rosoboronexport CEO and AvtoVAZ board chairman Sergei Chemezov later said the blocking stake could be sold to a strategic investor, the state decided to retain control over the company.
Alyoshin said AvtoVAZ needed the state not as a strategic investor but as an investor "having subsidiary responsibility in small stakes."
Sevastyan Kozitsyn, an analyst with Broker Credit Service, said any foreign automotive giant could agree to become a strategic investor only if it received a blocking stake.
He said Aloyoshin was hinting that the state was ready to sell its stake in AvtoVAZ.
Analysts said the government could sell corporate shares to a Russian company. Although the state views AvtoVAZ as a loss-making venture, it must keep the company afloat and prevent mass lay-offs, Uralsib analyst Kirill Chuiko told the paper.
He said the state could agree to privatize AvtoVAZ and two other Russian automotive giants, namely, KamAZ and GAZ if the owners agreed to assume major social commitments before the companies' personnel.
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