MOSCOW, February 8 (RIA Novosti) OSCE refuses to monitor Russia's presidential elections/NATO eastward expansion to hit Ukraine hardest - analyst/Gaz de France chooses South Stream/Gazprom could halt gas supplies to Ukraine/Norilsk Nickel eyes Europe's largest copper refinerer/Ambitious Russian elite realize its childhood dreams
Vremya Novostei
OSCE refuses to monitor Russia's presidential elections
All attempts to cushion the scandal over international monitoring of the March 2 presidential elections in Russia have failed.
The OSCE Office for Democratic Institutions and Human Rights (ODIHR) yesterday said it would not monitor the polls due to "restrictions imposed on its planned election observer mission." The OSCE's Parliamentary Assembly also refused to send its observers.
Moscow said the decision was "unacceptable."
The decision by the two organizations has pained Russia, but analysts say this will not affect the legitimacy of the vote.
Vyacheslav Nikonov, president of the Politika foundation, said: "The presence or absence of international observers will not affect the elections' legitimacy."
According to Igor Bunin, director of the Center for Political Technologies, a Moscow-based think tank, "The question of legitimacy is raised only when society refuses to accept the election results, as happened in Ukraine when international observers legalized the 'orange revolution.' There are no 'orange' elements in Russia."
Some experts were surprised by the Kremlin's harsh reaction to the issue.
"Russian authorities are acting by inertia, believing that they must not cede one iota, although it does not matter when and how many ODIHR observers come to the country," Bunin said.
Alexander Konovalov, president of the Institute for Strategic Assessments, said: "The elections are not limited to ballot casting. Observers want to see how candidates use the TV and if they have equal rights [and opportunities]. There is nothing terrible in the ODIHR's request. Formally, Russia's decision was taken in compliance with rules, but it was a demonstration of weakness rather then strength, as if we have something to fear."
The stumbling block was the request for five more working days for the ODIHR observers in Russia, which the Kremlin interpreted as an infringement on the country's sovereignty.
The sides did not so much try to find consensus, as to demonstrate their high principles and slam the door at an opportune moment.
Rosiiskaya Gazeta
NATO eastward expansion to hit Ukraine hardest - analyst
Having practically exhausted its expansion resources, the North-Atlantic alliance finally ventured outside its zone of responsibility zone to try and stabilize Afghanistan. Certain NATO members have begun warning that if the alliance failed in Afghanistan it would be doomed. Therefore, as there are signs it will fail its leaders have turned to expansion plans again, suggested Sergei Karaganov, chairman of the board of the Russian Council for Foreign and Defense Policy.
Ukraine's accelerated accession to NATO was considered in Washington two years ago, but it didn't work out then. Now this scenario is likely to be revived, even though Kiev will not join the NATO Membership Action Plan (MAP) at a summit scheduled for early April in Bucharest, Karaganov said.
Russia's NATO neighbors have probably abandoned their attempts to convince Russia that the alliance's eastward expansion is a good thing Russia could benefit from, like they did in previous years. Suffice it to recall their ridiculous promises that democratic trends in Russia would be spurred after NATO, the stronghold of stability and democracy drew nearer to its borders.
The analyst believes Ukraine's accession will primarily require a more effective demarcation of its border with Russia. But demarcating the land will be different from delineating territories on the map: it is bound to arouse numerous disputes over "historic" hills, hollows and forests, fraught with armed clashes. Essentially, an artificially created "conflict belt" will emerge right in the center of Europe, which could fuel tensions for decades to come.
The strict delineation between Moscow and Kiev will effectively consolidate the positions of those few in Russia that supported the split and instability in Ukraine. It will also motivate Russia to support any opponents of the West in the most sensitive issues. The area for possible and useful cooperation will therefore be drastically reduced.
Ukraine will certainly be the one who suffers the most. It may turn into "cannon fodder" in a new political or even military crisis. It will be torn apart, its economy greatly weakened, maintained Karaganov.
Europe will have its hands full with yet another crisis similar to Yugoslavia, although hopefully not as violent that may eventually abandon all hope of becoming a major force in the future world order.
Only the United States can possibly try and benefit from NATO expansion initially, mostly from Europe's weakening and Russia's predicament. But what price victory when the U.S. will be left with no strong allies to meet really dangerous challenges? Everyone will lose in the end, the expert concluded.
Kommersant
Gaz de France chooses South Stream
Yet another contender has emerged for the South Stream pipeline, being built by Russian gas giant Gazprom and the Italian energy group Eni. Gaz de France refused to participate in the Nabucco gas pipeline project from Central Asia to Western Europe voicing its intention to join the South Stream project.
On February 6, Germany's RWE joined the Nabucco project. The other participants include Austria's OMV, Hungary's MOL, Romania's Transgaz, Bulgaria's Bulgargaz and Turkey's Botas. The choice of the sixth partner was predetermined by Turkey's recent criticism of France over its recognition of the Armenian genocide in Turkey and objections to Ankara's entry into the European Union. In fact, Gaz de France was offered the opportunity to become the seventh partner in Nabucco but it rejected the proposal. Moreover, on February 7, the company expressed its full support for South Stream.
Gazprom welcomed the French position. "The issue has not been negotiated yet, but additional gas consumers will not be unwelcome in our project," said a Kommersant source in Gazprom. According to him, Gazprom has stepped up its negotiations on South Stream with Hungary and Greece. The first consultations at an intergovernmental level are scheduled for February.
"When agreements with Bulgaria, Serbia and Austria were signed, the idea of the gas pipeline was more clearly outlined, so faster progress can be made now," says a manager of the Russian gas monopoly familiar with the course of the talks.
Valery Yazev, deputy speaker of the State Duma, the Russian parliament's lower house, and president of the Russian Gas Society, said that a series of talks on South Stream has seriously undermined the Nabucco project's positions. "The feasibility of the project is under doubt more and more," the Duma deputy says. "The difference between the projects is that the Russian project has a resource base and Nabucco does not have any," he explains.
Valery Nesterov of the Troika Dialog investment company points to a statement made by Turkmenistan's Foreign Ministry that the region has no gas to spare. "All gas is written into contracts," the analyst explains. "The chances of South Stream continue growing, while the issue of a resource base for Nabucco remains unresolved."
In Nesterov's opinion, RWE joining the project "only resembles its strengthening, in real fact it shows the Nabucco partners' concern over the project."
Gazeta.ru
Gazprom could halt gas supplies to Ukraine
Russia's gas monopoly said it will cut off gas supplies to Ukraine on February 11 unless Gazprom receives $1.5 billion debt.
According to experts, the renewed political battles in Ukraine are between Prime Minister Yulia Tymoshenko and President Viktor Yushchenko, who are unable to reach an agreement over energy issues.
Sergei Kupriyanov, the official Gazprom spokesman said Ukraine owed $1.5 billion. "Ukraine is receiving and using our gas, but it is not clear who will pay for the deliveries," he said.
Alexander Razuvayev, chief market analyst at Sobinbank, said the situation was similar to the 2006 gas war, which saw gas siphoned off and gas transits blocked and similar moves.
"But the problem will be settled one way or another," the expert said. "Gazprom knows how to do it."
Political analysts say that a compromise is improbable now, and Russia will dictate its conditions to Ukraine from a position of strength.
Alexei Makarkin, deputy head of the Center for Political Technologies, said Moscow had already demonstrated the seriousness of its intentions toward Ukraine.
"The conflict between Ukraine's premier and president has deepened, and it is not clear who is now responsible for the country's policy, let alone gas payments," he said.
Makarkin said Ukraine will drag this out to the last possible moment. "However, Russia is unlikely to show respect for her neighbor's plight for a long time," he said.
Ukraine will soon have to cut gas consumption and possibly even initiate energy-saving programs.
"Gas prices in Ukraine will be raised to European levels in the next few years, which is more than $300 per 1,000 cubic meters at present," Razuvayev said. "Russia may still need Ukraine as a transit country for gas supplies to Europe. But the commissioning of new projects, such as Nord Stream, will make that transit route unnecessary and Gazprom will toughen its liberal attitude."
Russia and Germany are building the Nord Stream natural gas pipeline along the Baltic Sea bed to detour the ex-Soviet Baltic states and Poland.
A market player said Ukraine is fully aware of the danger. "What we have seen over the past few years was an attempt by some structures in Ukraine to stash away as much money as possible," he said.
Business & Financial Markets
Norilsk Nickel eyes Europe's largest copper refinerer
The Russian mining giant Norilsk Nickel may offer to buy a leading European copper refinerer, Germany's Norddeutsche Affinerie, it has been unofficially reported. Another attraction is $2 billion worth of credit to refinance debts incurred in purchasing Canadian LionOre Mining. Experts believe that if the reports are anything to go by, it means Norilsk plans to increase its capitalization through new purchases and borrowings to avoid a hostile takeover by UC RusAl.
Global agencies said Norilsk Nickel is in a position to offer 35 euros per share, which would mean a total bid for Norddeutsche could reach $2 billion, a fair price according to Capital brokerage analyst Pavel Shelekhov.
To make the purchase, the company will have to obtain new loans, experts said. "Norilsk is unlikely to sell off its power holdings worth a total of $7 billion," Shelekhov said.
In diversification terms, a copper smelter is a good buy for Norilsk, experts said. But the main purpose of the project, according to them, is to increase capitalization as much as possible.
"Norilsk is trying to fend itself against a hostile buy out by UC RusAl. The new acquisitions and credits are all designed to increase company value," said Sergei Krivokhizhin, an analyst with Okrytie brokerage.
It was reported on Thursday that the mining company is planning to raise three-year credit worth $2 billion to refinance some of the loans used to buy LionOre Mining, said a source in the banking community.
Norilsk's current debts are low. As estimated by Shelekhov, they stand at about $4.5 billion. "The company could easily raise another $5 billion," the expert said.
Vedomosti
Ambitious Russian elite realize its childhood dreams
Energy giant Gazprom will celebrate its 15th anniversary in the Kremlin soon. The list of artists invited to perform includes Deep Purple, the favorite group of First Deputy Prime Minister and outgoing Gazprom CEO Dmitry Medvedev who is likely to be elected Russia's next president on March 2.
The Federal Security Service (FSB), which marked its 90th anniversary in December 2007, invited The Scorpions who were banned by its predecessor, the dreaded KGB, in Soviet times and were called a "fascist" group by the national media.
Russian businessmen who could not even dream of seeing their favorite Western performers in childhood can now invite them here for a couple of days. But promoters are complaining that top stars are now reluctant to take part in regular concerts because they are used to making money on the side. There is another aspect to the problem: Some wealthy Russians are already sick and tired of listening to Western singers at birthday parties.
Although the nouveau riche from the Russian heartland prefer buying football clubs, Formula 1 racing teams, sports car manufacturers or hiring top performers, they are often unable to appreciate them seriously.
Their reaction is quite interesting, amounting to comments on the way "that Sting (Pink, Elton John, Jennifer Lopez, Shakira and others) drink vodka."
State-owned companies and state-power institutions also prefer to invite their aged teenage idols, including Tina Turner, who will sing for top Gazprom managers and employees in the Kremlin.
This can probably be explained by the establishment's conservative nature and the fact that it mostly comprises middle-aged officials.
Senior government officials, who dreamed of becoming polar explorers, sailors and cosmonauts in their younger years, now fly by helicopter to the South Pole or Mount Elbrus in the North Caucasus, descend to the bottom of the Arctic Ocean inside deep-sea subs and undergo space training.
As a rule, nobody knows the price of such publicity stunts. But it appears that the Soviet-era slogan "catch up with the United States and overtake it" can be changed to "buy, buy, buy while we have the money."
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