MOSCOW, February 1 (RIA Novosti) Russia doesn't want foreigners to monitor presidential race/ Communists play into Kremlin's hands - analysts/ArcelorMittal enters Russia's coal market/ General Motors to boost production capacity in Russia/ TNK-BP to bargain with Gazprom for Rusia Petroleum stake/ Russia's bailiffs to receive special service status
Nezavisimaya Gazeta, Vremya Novostei
Russia doesn't want foreigners to monitor presidential race
Russia's Central Election Commission (CEC) has invited foreign organizations to send their observers to the presidential election in March. Some of them are dissatisfied with the terms - as Russia does not want them to send many observers, and insists that they should monitor only the voting and not the election campaign leading up to the election.
The OSCE's main election monitoring arm, the Office for Democratic Institutions and Human Rights (ODIHR), asked Russian authorities to increase the number of observers at the elections and allow them to come before March 2. However, Russia says it alone is in a position to set the rules.
According to experts, Russia is trying to overcome the "disciple complex."
Alexei Makarkin, deputy head of the Moscow-based Center of Political Technologies think tank, said Russia views the presence of international observers as proof of its insufficient democracy.
Russian authorities believe that "we have completed the disciple stage and merit a different attitude. Why do foreign observers no longer monitor elections in Hungary, the Czech Republic or the United States?" Makarkin asks.
"Periods of self-assertion usually coincide in Russia with a favorable economic situation," he adds. "Its economy has grown by 7% (compared with 2% in the United States) and oil prices are sky-high. If the price of crude falls to $12-$13, Russia will again become a disciple and will change its attitude to the OSCE missions, which act as the chief examiner."
It appears that the CEC plans to drag out the diplomatic exchange with the OSCE office until bargaining becomes useless. This will happen very soon, as ODIHR Public Affairs Officer Curtis Budden has said the office might refuse to monitor the Russian elections unless the first group of observers is allowed to enter Russia next week.
In short, the OSCE office will most likely boycott the March 2 elections in Russia, but this does not worry the CEC.
Communists play into Kremlin's hands - analysts
Communist Party leader Gennady Zyuganov's election headquarters decided on Thursday that he should take part in TV debates, because the party does not have enough air time to spell out their candidate's election program.
Analysts, however, say the Communists' campaign could have a stronger effect if Zyuganov refused to appear on TV. In taking part, the Communist Party (KPRF) will add weight and legitimacy to the presidential campaign, which is exactly what the Kremlin wants. The Communist Party's choice only shows it is incapable of decisive action.
The rumor that the Communist candidate will refuse to take part in TV debates was circulated after United Russia nominee, First Deputy Prime Minister Dmitry Medvedev, opted out of televised debates.
Analysts believe that the Communists made the wrong decision. Yury Korgunyuk of the Indem Fund said: "Zyuganov would have produced a stronger effect by refusing to participate in debates, it would have won him more votes."
According to him, TV debates featuring only [LDPR leader Vladimir] Zhirinovsky and [Democratic Party leader Andrei] Bogdanov, without the Communist leader, would have added to the absurdity of the whole business. Still, one should know how to use that absurdity to their advantage - something KPRF is incapable of, the analyst added.
"The only thing they are good at is holding on to their ageing supporters, whose only ambition is to live their last years in a 'decent' way," Korgunyuk said. "That is why the Communist Party has similar ambitions: a small but decent faction in parliament and TV appearances every now and then, and that is it."
Sergei Chernyakhovsky of the International Independent University of Environmental and Political Sciences, agreed with his colleague: "This was certainly a mistake, because the Communist leader's appearance will only make the TV debates and the whole campaign look stronger, even though the outcome is so obviously predictable."
It is the Kremlin, not the KPRF supporters, who needs respectability on the face of it, but it is hard to expect decisive action from party leaders reared by the Soviet regime, he added.
On the other hand, Chernyakhovsky never said the Communist Party was living its last years, despite the blunders made by its leaders. "It does not simply exist because its leaders want it to, but because there is a demand in Russian society for this kind of ideology. Not all of their supporters are aged," he argued.
ArcelorMittal enters Russia's coal market
ArcelorMittal has bought mines and a coal field from Severstal and its subsidiary for $720 million. Experts believe the sum is 20% higher than the fair price, but growing prices for coking coal justify the deal.
The output of the three mines in Siberia's Kemerovo Region is 3.14 million metric tons a year. Their reserves are more than 140 million tons. The company, according to its chief Lakshmi Mittal, can increase the supply of coking coal by 10% to 15%.
This is not the first time that the steel giant (which accounts for 10% of world output) has tried to tap Russia's coal market: last year it wanted to bid for Yakut coal but was barred from tenders. The step must have been dictated by the reluctance of Russian authorities to let one of the largest coal deposits go to a foreigner. The winner was Russia's Mechel, which paid 58 billion rubles for Elgaugol and Yakutugol.
The ultimately successful entry has cost ArcelorMittal a large sum of money, analysts believe. According to Finam analyst Denis Gorev, the overcharge was 20%.
However, ArcelorMittal evidently thinks the buy was worthwhile. Earlier, it discussed plans to build a 1 million ton steel plant in Russia. Coal will also come in handy for its plants in Kazakhstan and Ukraine. Gorev noted that coal for ArcelorMittal plants in other countries is simpler and cheaper to supply from Russia than, for example, from Australia.
Igor Nuzhdin, an analyst with Zenit Bank, added that the company can either export coal to China or sell it in Russia, to companies such as MMK, without their own resources.
The world market situation also favors cost recoupment. Forecasts suggest that coal prices will rise 20% to 30% in 2008.
UniCredit Aton analysts consider Severstal's desire to sell holdings with prices growing and demand increasing "surprising." But they acknowledge that the holdings being sold are not crucial to Severstal's bellwether enterprise - the Cherepovets steel plant.
Business & Financial Markets
General Motors to boost production capacity in Russia
The world's largest car maker, General Motors, plans to increase production capacities in Russia.
GM produces cars in Russian plants such as Avtotor (Kaliningrad) and GM-AvtoVAZ (Togliatti). The company is building its own car plant which will produce 70,000 cars a year in Shushary, near St. Petersburg. It is planned to start operation in November 2008. But it is clear even now that this number of produced cars will not be enough.
Earlier GM took the decision to increase car production from 40,000 to 70,000 cars a year. But there is a shortage of manpower in St. Petersburg, complicating further development in this region, said Karl-Peter Forster, GM Europe President.
Another option to increase car production is to cooperate with a Russian company. GAZ might be this partner. According to a B&FM source in GAZ Group, the negations are already underway. The parties are discussing investment conditions. GAZ is ready to cooperate with GM only if the Russian company's share in this project will not be less than 51%, the source said.
Apart from receiving profit, GAZ will get the necessary experience and technology in assembling modern foreign cars, which the company does not produce now, said Ingosstrakh analyst Yevgeny Shago.
According to the analyst, GM may be interested in this partnership because of the unclear situation about Avtotor, as the Association of Russian Automakers demands to deprive Avtotor of custom privileges. Cooperation with GAZ will allow relocating production of Chevrolet from Avtotor to Nizhny Novgorod within less time and with less money spending, said Shago.
GM sold 260, 000 cars in Russia last year, and plans to sell more than 300, 000 cars in 2008. Currently the company produces Chevrolet and plans to produce Opel. In a few years GM might increase sales to 500, 000 cars a year, said Ilya Frolov, an analyst at Rye, Man&Gor Securities.
TNK-BP to bargain with Gazprom for Rusia Petroleum stake
On Thursday, Anatoly Ledovskikh, director of Russia's Federal Agency for the Management of Mineral Resources (Rosnedra), said his agency had modified the license to develop the Kovykta gas condensate deposit in the Irkutsk Region, East Siberia, in late 2007, and that Rusia Petroleum, a consortium 62.8% owned by oil company TNK-BP International, would not have its license revoked.
In 2006, the Natural Resources Ministry told TNK-BP that it would revoke the Kovykta license because of violations.
Under the 1997 license, TNK-BP was expected to produce up to 9 billion cubic meters of gas per year (starting with 2006) at the Kovykta deposit in order to meet regional demand.
However, officials had no misgivings about the far lower regional demand. The problem was not solved last summer, even after TNK-BP signed an agreement on selling Rusia Petroleum shares to energy giant Gazprom.
Rosnedra simply asked Gazprom to submit a new plan for developing the Kovykta deposit and decided not to revoke the license for the time being.
Ledovskikh said the license no longer stipulated production of 9 billion cubic meters of gas per year. According to Rosnedra Deputy Head Pyotr Sadovnik, local output must match the required feasibility studies.
Rusia Petroleum said the Irkutsk Region would require 2-2.4 billion cubic meters of gas in 2008, and that local demand would reach 2.5-2.6 billion cubic meters by 2010. The estimates were listed in the regional economic development forecast.
BrokerCreditService analyst Maxim Shein said TNK-BP could negotiate the price of its Rusia Petroleum stake with no discount. A TNK-BP spokesperson declined to elaborate.
Denis Borisov, an analyst with IFK Solid, a Russian broker-dealer, said the license had to be modified in order to assess possible routes for pumping gas to Russia and China, respectively.
A Gazprom spokesman declined to comment on the issue.
Russia's bailiffs to receive special service status
Russians leaving the country may have problems when crossing the border starting today, as court bailiffs may stop alimony evaders, bank debtors and even those who fail to pay traffic fines.
The powers of bailiffs have been greatly enhanced. They can now open locked premises without the permission of owners and confiscate financial documents.
According to the Federal Bailiff Service, in 2007 courts made about 15 million rulings on debtors. Russian collector agencies Sequoia Credit Consolidation and Pristav say that 1.5-2 million of these did not repay bank loans. The Central Bank does not register bank debtors.
The service reports that 80% of rulings on debtors concern traffic fines, most of which do not exceed 100 rubles ($4.1).
Last year, about 12,000 Russians encountered problems when leaving the country.
The new wording of the law on the penal procedure also assigns other powers to the Federal Bailiff Service. Bailiffs can now confiscate financial documents and open locked premises on the orders of the chief bailiff without the permission of owners.
Law experts say that this is turning bailiffs into another security service. "Their powers have been substantially enhanced," said lawyer Alexander Dobrovinsky.
The well-known lawyer Genri Reznik said the extension of bailiffs' powers was justified.
"More than half of suits filed by Russians in the European Court of Human Rights concern failure to fulfill court decisions, which the European court always recognizes as a violation of human rights."
Lawyer Pavel Astakhov does not agree: "The situation will not improve much, as bailiffs had had enough powers to collect money from debtors before but no desire to do this, and I don't think having more powers will help."
Lawyers agree that the new powers give bailiffs more opportunity for abuse.
"There have been 'designer cases' in court, and now we may have 'designer inspections'," Astakhov said.
According to Dobrovinsky, businesses will add a new major expense item to their budgets for payments to bailiffs.
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