MOSCOW, February 29 (RIA Novosti) Kosovo and Abkhazia will not return to their parent states/ Russia forced Transdnestr to negotiate with Moldova/ Non-transparent gas supply schemes cause conflicts between Ukraine and Russia/ Kiev could obstruct South Stream project/ Iran set to assemble 100 Russian airliners
Kosovo and Abkhazia will not return to their parent states
The people rights are higher than the state's. So if Russia decides to integrate with Abkhazia, this will be a violation of international law. But the people of Abkhazia have a right to secede from Georgia and establish an independent state, if they want to.
The same principle applies to Kosovo, which does not intend to become part of another nation, but wants to be an independent state in its own right, writes a prominent Russian analyst.
Nikolai Zlobin, director of Russian and Asian programs of the U.S. Information Defense Center, writes in the popular daily Vremya Novostei that Kosovo's independence is under the condition that it does not become part of any other state.
Therefore, it would not be correct to compare the Kosovo situation with the Munich Agreement, under which the Czech Sudetenland was incorporated into Germany in 1938, he writes.
What has happened in Serbia is a human tragedy, but it began long before February 17 when Kosovo proclaimed its independence.
According to Zlobin, Russian delegates said at meetings in Washington and Brussels over the last few months that the Kremlin would take harsh measures, but later added off the record that it would do nothing.
Just as Abkhazia will not reunite with Georgia, so Kosovo will not reunite with Serbia, no matter how broad an autonomy it is offered and whatever the stance of the UN Security Council. The European Union and the United States have decided to respect realities and assumed full responsibility. They decided that maintaining Kosovo's status quo would be more dangerous than disrupting it.
International law is not rigid, the analyst writes. Russia must become a leader in developing new international law. The world must stop clinging to old norms and procedures, even though they did offer certain privileges in the past, but start molding the future from current realities.
Serbia wants to join the EU and NATO, and Kosovo and other Balkan states want the same for themselves. Serbia should have created conditions under which the rebel province would not want to break away. But it failed, Zlobin writes.
President Vladimir Putin has started talking about making Russia an attractive country, which is a wise decision and a more effective method of fighting separatism than appeals to other states, which care more for their own problems. Zlobin writes that we should create a country other countries would like to be friends with and even join.
Russia forced Transdnestr to negotiate with Moldova
Igor Smirnov, the leader of the self-proclaimed Transdnestr Republic within Moldova, said Thursday he was ready to negotiate with the Moldovan government on the settlement of the decades-long conflict. Smirnov's unyielding stance softened after he met with Gazprom executives and the republic's foreign minister was summoned to Russia's Foreign Ministry.
In the past two years, Tiraspol has been determined to avoid any contact with Chisinau, and redoubled efforts at secession from Moldova after Kosovo proclaimed independence.
Tiraspol has had no contact with the Chisinau government after Moldova and Ukraine introduced a new customs regime for Transdnestrian goods in 2006, accusing them of slapping an economic blockade on the region. In the fall of 2006, the breakaway republic's government held a referendum on independence and accession to Russia, which was supported by 97.2% of the local population. Later Smirnov said on a number of occasions that reuniting the two banks of the Dniester was now out of the question.
Russia then praised Smirnov's radical approach, given its rather strained relations with Moldova. Later, however, Moldovan President Vladimir Voronin managed to win back the Kremlin's favor. The rapprochement which began in the summer of 2007 was mainly due to Voronin's vows to respect the inviolability of Russia's property in Transdnestr and not to join NATO.
Meanwhile, Russia gradually became dissatisfied with Tiraspol's misuse of Russian gas and its $1 billion debt. "They steal it twice in fact - first take our gas without paying for it, and then resell it, while the money simply vanishes," a outraged Kremlin source told Kommersant.
Kosovo's unilateral declaration of independence on February 17 brought Moscow's special policy toward Transdnestr into the spotlight. While leaders of Abkhazia and South Ossetia were freely given a rostrum in Moscow to demand independence following the Kosovo model, representatives of Tiraspol have never even appeared in the Russian capital. Which means it was Tiraspol's own decision to begin claiming independence again, and punishment followed immediately.
Transdnestr Foreign minister Valery Litskai was summoned to Russia's foreign ministry earlier this week to meet with Deputy Minister Grigory Karasin. Litskai was told bluntly that Moscow did not approve of any methods which are "not in line with international law, as was the case in Kosovo."
Non-transparent gas supply schemes cause conflicts between Ukraine and Russia
Ukraine as an economic partner is becoming increasingly like Iran. Kiev doesn't want to pay for Russian natural gas, just like last year Tehran didn't want to pay Russia for the Bushehr nuclear power plant.
Tehran tried to convince Moscow that it had paid for its services, but Rosatom, the Federal Agency for Nuclear Power, said it had received no payments. The transfer was made only after the problem was taken up by political leaders.
In the case of Ukraine, it is possible to determine who has failed to pay enough or not delivered enough gas, but the truth is that the conflict is kept alive by the non-transparent supply scheme.
Naftogaz, UkrGazEnergo, RosUkrEnergo and Gazprom have different views of the problem, and there are too many negotiating sides. Their number has not been reduced even when the problem was taken to government level, because when Viktor Yushchenko reaches agreement with Yulia Tymoshenko, he cannot agree with Vladimir Putin. And Tymoshenko has her objections when Putin and Yushchenko find common language.
During their talks in Moscow, the Russian and Ukrainian presidents agreed to replace RosUkrEnergo and UkrGazEnergo with two new joint ventures between Naftogaz and Gazprom. As a result, Gazprom will have a 50% share in Ukrainian sales instead of a 25% stake in UkrGazEnergo.
Gazprom may have won the battle, but it cannot defeat Ukraine, just like Naftogaz cannot defeat Russia. Since Russia has arbitrarily changed the terms of production sharing agreements, Ukraine now thinks it can block commercial agreements with foreign partners if it believes they damage its economic security.
Such conclusions are for politicians to make. Blocking agreements would provoke a scandal affecting European gas consumers. It can be settled with the help of ultimatums and gas cuts, but at a high political cost. Settling such conflicts with the help of documents would be very difficult, because the scheme is not transparent.
But will it become more transparent after the replacement of old subsidiaries with new ones?
Kiev could obstruct South Stream project
The South Stream gas pipeline project from Russia to Europe via the Black Sea could face new problems. Its underwater section will pass through the Ukrainian economic zone, and Russia and Ukraine are currently in a sharp conflict over gas. Kiev could delay the implementation of the project and get access to another instrument of pressure on Moscow.
On February 28, Russia and Hungary signed an intergovernmental agreement on cooperation in building the South Stream pipeline via Hungary. This was the last section to be negotiated. However, experts say that support for the South Stream gas pipeline by the transit countries' governments does not guarantee its timely construction.
Russian gas giant Gazprom is repeating the mistakes it made in the Nord Stream project (a gas pipeline from Russia to Europe via the Baltic Sea), says Mikhail Korchemkin, director of East European Gas Analysis.
"First, the gas monopoly signs agreements with importers and announces the gas pipeline construction, and then it applies to a transit country it has offended for a permit to conduct operations in its exclusive economic zone. Nearly the entire South Stream route is on the continental shelf of Ukraine, and a part of it runs through the Romanian shelf," he said.
A source close to the Russian gas monopoly confirms that the route will run through either the economic zone of Turkey (which was excluded from the South Stream project in 2006), or via Ukraine and Romania.
Anatoly Yanovsky, deputy industry and energy minister, says that Russia will need Ukraine and Romania's consent to build the pipeline.
"Ukraine cannot ban the gas pipeline construction but Russia must negotiate over the pipeline route and the environmental assessment," says Grigory Vilchek, deputy head of the Peter Gaz company's department now working on the environmental impact audit for the Nord Stream project. Under Ukrainian legislation, the negotiating time is limited by one year.
"Ukraine can make use of the Finnish, Estonian and Polish experience of putting obstacles in Nord Stream's path," Korchemkin says.
The Ukrainian authorities have not yet commented officially on the South Stream theme. However, a source in Yulia Tymoshenko's government explained on February 28 that everything will depend on the White Stream project (from Central Asia to Europe via Ukraine).
"If Europe decides to build it, we will need Moscow's permission to lay pipes on the seabed of the Black Sea. Then we may discuss an exchange: Ukraine will build the White Stream and Russia the South Stream," the source said. Otherwise, he added, it is not in Ukraine's national interests to support the Russian project." However, Ukraine has no right to ban the project, it can only delay it.
Russian power generation: first investors, last investors
Finnish energy concern Fortum has won the bidding for the government stake in the Urals territorial generation company, TGK-10, buying the 55.29% stake for a record price of $767 per 1KW. This deal seems to be the last sale of Russian generation assets to foreign investors, which means E.ON, Enel and Fortum will remain the only foreign holders of Russian energy stakes.
A well-informed source said Wednesday that French Electricite de France and Gaz de France, German RWE, Czech CEZ and others were refusing to buy Russian assets because they were too expensive and the investment climate was not favorable after state monopoly RAO UES changed the payment method for connection of new generators to grids: generating companies must pay rather than the Federal Grid Company (FGC) now.
Foreign investors complain that no one informed them they would have to pay for connection to grids when they bought into OGKs and TGKs. They all have signed investment programs stipulating the planned generators' capacities and the timeframes to put them into operation. Now investors will be fined for failing to meet the deadlines.
But the payment for connection to the grids, which was not mentioned at the time, will send a project's costs up 15%-20%, the source said. What with surging equipment prices, costs are set to grow substantially now, the source said.
The problems of connecting to grids are not the only reason why foreign companies have became reluctant to invest in Russian assets. As is known, RAO UES overinflates prices for the assets it sells. E.ON had to pay almost $6 billion for the controlling interest in the wholesale generating company OGK-4, while Enel paid $1.5 billion for a blocking stake in OGK-5.
The real value of those shares is much lower. E.ON bought OGK-4 stocks for 3.35 rubles per share, while they closed at 3.01 rubles on the RTS Thursday and have never exceeded 3.2 rubles this year. The same holds true for OGK-5: Enel paid 4.42 rubles per share, while their current value is 3.95 rubles.
It follows that to gain control over major Russian generation assets, investors need to raise significant funding, which is extremely difficult in light of the current liquidity crisis plaguing Western markets. Therefore, these investments become economically inefficient, and companies abandon their plans.
Iran set to assemble 100 Russian airliners
In the next decade, Iran plans to assemble 100 Tupolev Tu-204 and Tu-214 medium-haul passenger airliners under a $2-2.5 billion license contract, due to be signed in Moscow in late May. But analysts doubted whether the Iranian industry could fulfill the contract.
A source close to the talks said Russia would supply ready-made planes to Iran, and that other aircraft would be assembled from Russian and Iranian components in Iran.
There are also plans to sign another agreement on servicing and maintenance of Tu-204 and Tu-214 planes and Tu-334 regional airliners in Iran. AIO Maintenance Company, Russian aircraft manufacturer Tupolev and spare-parts provider IFK-Tekhnik are undertaking the project. The Iranian side plans to buy five Tu-334 aircraft in the next four years. Depending on the project's success and the performance of Tu-334 planes, Iranian aircraft companies will decide on subsequent license production four years later.
In August 2007, leasing company Ilyushin Finance and Iran Air Tour signed a contract for the sale of five Tu-204-100 planes worth over $200 million starting with 2009.
This week, a delegation of Russia's United Aircraft-Building Corporation consolidating private companies and state assets engaged in the manufacture, design and sale of military, civilian, transport, and unmanned aircraft visited a plant of the Iran Aircraft Manufacturing Industrial Company (HESA) in Isfahan and the Tehran-based engine plant of Iranian Aircraft Industries (IACI). The Russian side doubts Iran has the ability to launch small-batch production of Tu-204 and Tu-214 airliners starting with 2010 and to assemble 68 planes in eight years.
Analysts also doubt the ability of Tehran to implement the ambitious program. Oleg Panteleyev, head of research at Aviaport, a Mosow-based aviation analytics firm, said Iran could not buy aircraft elsewhere, and that only three IrAn-140 planes, Iranian versions of the Antonov An-140 short-range turboprop airliner, had been assembled since 1995.
The Ukrainian-Iranian contract for the assembly of IrAn-140 aircraft at HESA plants stipulated production of 100 planes until 2020 with the technical assistance of the Antonov aviation research complex, the Kharkov aircraft plant, the Zaporozhye-based Progress machine-building design bureau and the aircraft engine manufacturer Motor Sich.
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