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What the Russian papers say


MOSCOW, January 9 (RIA Novosti) Lithuania again demands compensation for "Soviet occupation" / Gazprom wants to develop Nigerian gas reserves / Nord Stream's rapidly mounting costs / Hedging oneself against likely siloviki persecution / New Year holidays cost Russia $28.5 billion



Lithuania again demands compensation for "Soviet occupation"

Lithuanian President Valdas Adamkus is demanding $28 billion compensation from Russia for the Soviet occupation in 1939-1941 and 1945-1991. He said it was a key priority for his country's foreign policy in 2008.
Experts believe Russia has a valid argument for refusing to pay the compensation.
The Lithuanian authorities first raised the compensation question in the early 1990s, and Adamkus formulated his stance in the autumn of 2000. He said then that compensation depended on Russia's maturity and political will, and therefore Lithuania would not appeal to international legal institutions.
Moscow's stance has not changed since then: Russia is refusing to pay. It is generally believed that occupation includes removing material resources from the occupied country, which was not the case in the Baltic countries. Moreover, Lithuania received a territorial bonus from the Soviet Union, i.e., part of East Prussia equal to 30% of Lithuania's territory.
According to statistical data, industrial production in Lithuania increased by approximately 85 times, and agricultural output went up 150% between 1940 and 1990. The country's economic development was financed by cheap oil and petrochemicals, delivered mainly from the Russian Federation. On the whole, Lithuania benefitted by $35 billion from being part of the Soviet Union.
Alexei Makarkin, deputy director general of the Center of Political Technologies, said: "We should scrutinize international law to determine if it was occupation or annexation."
Since the Soviet Union actively invested in the development of the republic annexed to it in 1940, the UN International Court of Justice may refuse to recognize the consequences of the Molotov-Ribbentrop Act as occupation. There are no other signs of occupation. In particular, elections to local and federal bodies of power were held in the republics, a state of emergency was not proclaimed there, and local citizens were not legally discriminated against.
"It is difficult to describe the situation as occupation if we consider the situation objectively," Makarkin said. "If this is a case of annexation, we should balance profit and loss, and I am sure it will be in Russia's favor."
Politicians in Poland, the Czech Republic, Ukraine, Georgia and Azerbaijan demanded compensation from Russia. In late 2007, Mohammad Karim Rahimi, spokesman for Afghanistan's president, said that the government of Afghanistan was considering a demand for compensation from Russia for the occupation of his country.


Gazprom wants to develop Nigerian gas reserves

According to foreign media, Russian energy giant Gazprom is offering to the Nigerian authorities to invest $1-2.5 bln in the country's economy in exchange for access to the mineral reserves of that African country.
A Gazprom representative has made no comment on the offer, but confirmed that negotiations with Nigeria were underway, emphasizing that discussions were at the early stage. Representatives from the Nigerian Energy Ministry and the Nigerian National Petroleum Corporation (NNPC) left Vedomosti questions without answer.
Nigeria has the largest in Africa proved natural gas reserves, 5.21 trillion cubic meters, which is a ninth of Russian gas reserves (BP data, end of 2006.) Annual gas output is 28 bln cubic meters, which is comparable with Kazakhstan, but considerably less than in Algeria and Egypt.
Poor infrastructure impedes the development of the Nigerian natural gas reserves. The western giants like Shell, Chevron and ExxonMobil have been working in that country for a long time. During the last five years they have invested $5 billion in the construction of gas liquefaction plants but only one is operating today.
Nigeria is a promising market. Unlike other countries in western Africa, its reserves have not been divided up yet, says Valery Nesterov, analyst with the Troika Dialog. But investment can be risky because of the unstable political situation in that country and current restrictions on gas sales, part of which should be sold on the domestic market.
Gazprom has declared that it is going to become part of the global market to strengthen its position and to increase capitalization. The attempt to partake of the Nigerian gas reserves development is a logical step in that direction, says the expert.


Nord Stream's rapidly mounting costs

The construction of a gas pipeline through the Baltic will cost more than anticipated, Nord Stream technical director Dirk von Ameln said the other day. Its undersea section will cost far more than the estimated 5 billion euros.
It is not reported, however, by how much the underwater pipeline is set to rise in price. Nor is anything mentioned about the reasons for the review. According to von Ameln, the company will not publish new figures until March.
But, it can be supposed the difference between actual and planned value will be substantial.
As earlier announced, Nord Stream's overland section (between Gryazovets and Vyborg) will increase in cost terms almost three-fold - from $1.1 billion to $3 billion. This stretch of the pipeline has become Gazprom's most high-priced dry land project: $3.2 million per a kilometer of pipe.
Andrei Kruglov, Gazprom's deputy CEO, who named the new figure, said that costs related only to one string of the pipeline instead of the planned two.
Even considering that existing infrastructure would be used to build the second string, the Russian segment of Nord Stream's overland section would cost $5 billion.
Preliminary estimates show that the undersea section must cost 50% to 100% more than the Gryazovets-Vyborg line.
The emerging figures indicate that the underwater section will cost $10 billion and the entire project $15 billion.
Nord Stream is not the only pipeline project whose costs have to be reviewed.
In the summer of 2007, the State Office for Project Examination and Approval (Gosexpertiza) confirmed they were re-estimating the East Siberia-Pacific Ocean oil pipeline. Compared with the previous costing, its estimated costs had risen by 11%, from $11.2 billion to $12.5 billion.
During the project's life, its costs have almost doubled. The justifications are an increased length of the line and growing prices for materials (above all pipes) and services.
With Nord Stream's route still uncertain, prices for metal (and as a result for by products) will continue to grow in 2008, and perhaps even speed up.
It is not ruled out, therefore, that by the time the project is launched in 2011, the cost of the gas pipeline will have to be reviewed once again.


Hedging oneself against likely siloviki persecution

Semyon Vainshtok, head of the Olympic construction corporation (Olympstroi), said he wants to include members of the Interior Ministry and the Prosecutor General's Office in "tender committees and other working bodies of the state corporation."
Even if everything is done according to book, in three to four years' time people could say that things should have been done the other way around, he said.
Olympstroi will be allocated at least 195 billion rubles in budget funds, and its main purpose will be to contract out the construction of Olympic facilities.
No official commentaries were available from Olympstroi, the Prosecutor General's Office or the Interior Ministry.
A source in prosecutor's bodies said that investigators would ensure that all tenders and generally all actions by Olympstroi and local authorities conform to the law.
For this purpose Prosecutor General Yury Chaika set up a special department in the prosecutor's office in the Krasnodar Territory. In the fall, an inter-departmental group on the Olympic Games was set up to include representatives from the Prosecutor General's Office, the Interior Ministry, and the Federal Security Service, a source at the Interior Ministry central offices said.
Prosecutors will be supervising the legality of deals, the police will fight corruption and the FSB ensure security.
"A conflict of interests will appear," said Yelena Dobrolyubova, general director of the Center for Economic and Financial Consulting. "These bodies must watch the observance of laws, not guarantee their fulfillment with their presence."
The siloviki will not provide protection against future persecution, they will act only as experts, she said.

Komsomolskaya Pravda

New Year holidays cost Russia $28.5 billion

Economists have calculated that the 10-day New Year holidays cost Russia 700 billion rubles ($28.51 billion).
Igor Nikolayev, chief of strategic analysis at FBK, one of the first private auditing firms in Russia which joined PKF International, a worldwide association of legally independent firms in 199 countries, in 1995, said: "The country loses 600-700 billion rubles during the extended New Year holidays. This is more than 2% of GDP."
According to psychologists, workers find it very difficult to resume their duties after such lengthy holidays, but are not concerned about the country's losses.
Yevgeny Gontmakher, director of the Center for Social Studies at the Institute of Economics of the Russian Academy of Sciences, said: "Let's look at the problem from a different angle. By the New Year, turnover went up 50%-100% because of the pre-New Year purchases of gifts and food. In other words, GDP increased in late December and went down in early January, in fact balancing the month's total. In addition, Russians get an additional vacation and will resume working with redoubled zeal in February, doing much more for the country than they would have done without the holiday."
Gontmakher said there are many people in Russia who never take vacations, or take only two-week paid leave.
Nikolayev said that the people need to have some rest, but it would be better if they took paid leave.
"When some people take annual leave, others continue working, keeping up the output," he said. "But the economy is forcefully stalled in early January."
The newspaper provides data from the UK Travelodge company, which puts the cost of the Christmas holidays in Britain at $1.5 billion.

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