MOSCOW, March 11 (RIA Novosti) Moscow prepares to recognize Abkhazia and South Ossetia / Putin explains to the West who Mr. Medvedev is / Volkswagen seeks 10% of Russian market / Russia may lose market of anti-submarine aircraft / Norilsk Nickel to sell palladium jewelry / Korean 'spy' will not fly aboard Russian spacecraft
Kommersant
Moscow prepares to recognize Abkhazia and South Ossetia
Last week, the Kremlin made a first step toward recognizing Abkhazia and South Ossetia, two self-proclaimed republics in Georgia. It may soon start taking the plan further.
Russia has lifted economic sanctions against Abkhazia as a constituent region of Georgia and resumed economic contacts with it at the state level.
The announcement is the first of a set of measures planned by Russia's Security Council in December 2007 as a response to the possible recognition of Kosovo's independence.
According to Kommersant, the plan also includes the establishment of a Russian diplomatic mission in Abkhazia and appointing a Russian political advisor to the commander of the joint peacekeeping force in South Ossetia.
The Kremlin recently received a joint statement signed by the presidents of Abkhazia and South Ossetia who expressed their concern over Georgia's projected accession to NATO. The leaders of the two self-proclaimed republics appealed to President Vladimir Putin because the majority of the population of the two republics are Russian nationals and therefore can count on Russia's support.
The Kremlin probably views this document as "insurance" against whatever schemes involving Georgia might occur to the Alliance. If, by the beginning of the April NATO summit in Bucharest, it becomes clear that Georgia will be invited to join the NATO Membership Action Plan, Moscow will try to "collect the compensation," as well as take a number of further steps toward recognizing Abkhazia and South Ossetia as nation states.
It is obvious that Moscow's efforts are focused on making Georgia think twice before joining NATO. It is in fact given an either-or choice between territorial integrity and NATO membership. Moldova, which was also faced with the dilemma earlier, preferred to abandon the plan to join NATO but to preserve Transdnestr.
However, Georgia is unlikely to meet Russia's expectations and abandon its accession plans. On the other hand, the threat might work well against NATO itself. Brussels is certainly realizing that by making Georgia a candidate to join up, the international community will give Russia green light to recognize two more self-proclaimed republics. The latter might entail even more serious consequences than the Kosovo precedent.
Nezavisimaya Gazeta
Putin explains to the West who Mr. Medvedev is
President Vladimir Putin has tried to indicate as clearly as possible that no one should expect concessions from Dmitry Medvedev. The current leader presented Russia's next president at a joint news conference after the Moscow talks with German Chancellor Angela Merkel.
Putin's motivation in making this statement is unclear. He could have been trying to add toughness to Medvedev's image - something the chosen successor appears to lack. Or, he probably said it because he wants the new president look more like himself - a tough security officer, always vigilant and prepared for enemies' malicious schemes. But then, he should have chosen Sergei Ivanov instead, a former security officer with a "hawk" image in the West.
It is also possible that Putin's statement about Medvedev (probably quite disappointing for certain Western leaders) was triggered by his desire to take the victorious successor down a peg or two.
When asked about Russia's future foreign policy at a "big night" news conference in his election headquarters, Medvedev was as clear as could be: "A country's foreign policy is determined by its president." It might therefore have been Putin's way of reminding the new president who would really control the country's foreign policy.
In any case, Putin's statement will make it more difficult to begin building new relations with the West from scratch. Moscow's rigid rhetoric about its Western partners has not had much effect so far. It was no accident that Merkel said she would discuss the most pressing issues with Russia's future leader and confront him with all unpleasant questions.
Putin's attempts to explain to the West and to Russia "who Mr. Medvedev is" are only natural in a model of choosing the leader, which Russia has adopted recently. After avoiding any kind of open competition, such as public debates, Medvedev is bound to remain a stranger. Which means his actions can now be broadly interpreted and his intentions wildly guessed at by domestic and foreign politicians alike.
Putin's idea of Medvedev's nationalism "in a good sense" explains a lot, but it also provides very specific guidelines and limitations. This, in fact, is a working model of the dual power pattern.
Vedomosti
Volkswagen seeks 10% of Russian market
Volkswagen, a German car manufacturer, wants to increase its share of the Russian market by more than one third, bringing it up to 10%. The first step the corporation took was to review the output of its plant, which opened in Kaluga in November, from 115,000 to 150,000 cars.
The Russian market, alongside markets in India and the United States, is very important for Volkswagen, Jochem Heizmann, member of its board of directors responsible for production, explained to the paper. He said that in the medium term Volkswagen Group would like to have 10% of the market.
The Kaluga plant was put into operation in November of last year. So far the capacity of its conveyor line is 40,000 units a year. The project is estimated at more than $1 billion. It is expected to reach full capacity in 2010.
Volkswagen wants to win Russia not only with volumes. As production is localized in Russia, car prices will fall, Heizmann assured. The corporation is now negotiating suppliers' moving into Russia and considering options for attracting Russian contract partners. Ideally, he said, the company would like to see Russian cars made from Russian materials.
Volkswagen is not the first automaker to have decided to increase the capacity of its plant in Russia before it was completed.
General Motors, whose plant in St. Petersburg will not start operations before the end of the year, last year decided to increase its output from 40,000 cars a year to 70,000 and is now considering further expansion.
Suzuki Motors initially planned to turn out 30,000 cars a year in Russia, but recently announced that by 2012 the design capacity of the plant it is building in St. Petersburg may reach 100,000 units a year.
Mikhail Pak, a Kapital analyst, said that with the Russian market set to become the largest in Europe, the intention of the automakers to increase their output is easy to explain.
Ivan Bonchev, an analyst at Ernst & Young, believes it is a very ambitious objective for Volkswagen to corner 10% of the market. Last year its share (together with the brands of Skoda, Audi and others) was 3.2%. The market leaders - AvtoVAZ, General Motors and Ford Motor Company - accounted for 28%, 11.0% and 10.9%, respectively.
Volkswagen could well reach its target, but until several years' time, Bonchev said.
Last year car sales in Russia amounted to 2.37 million units, and this figure is likely to grow in the next few years. So even if the Volkswagen plant now ran at full capacity, the corporation's market share would not exceed 5%.
Kommersant
Russia may lose market of anti-submarine aircraft
By the end of March, Rosoboronexport, Russia's arms export monopoly, must agree with India on the size of the penalty to be paid by the Russian side for the delay in supplies of the Il-38SD patrol aircraft.
Experts say that Russia may lose the market of anti-submarine aircraft. The Ilyushin design bureau has already lost a tender for the supply of another eight planes to India.
Rosoboronexport signed the contract for modernizing five Il-38 planes as Il-38SD aircraft in 2001. The contract amounted to $150 million. In September 2007, news arrived that India had suspended the contract payments: Indians said the Il-38SD planes' performance during the tests had not complied with the technical assignment, while the Russian side insisted that the system had operated according to the set regime.
Rosoboronexport's success in the tender for the supply of eight anti-submarine defense planes (to replace the Tu-142 aircraft received by India from the U.S.S.R. in 1986), declared in 2006, largely depended on the situation surrounding the contract for modernizing the Il-38 planes.
Initially, it was proposed to modernize them in Russia, but after problems arose in connection with the contract for Il-38SD planes, New Delhi decided to withdraw them from the Indian Navy.
"Officially, India has not yet announced the results of the tender, but it is already clear that we have lost it because one of the terms of the tender was the supply of currently manufactured aircraft, while the Il-38 planes have not been manufactured since the 1970s," said a Russian Defense Ministry source familiar with the terms and conditions of the tender.
Instead of Il-38 as a patrol plane, Rosoboronexport is promoting its Il-114 aircraft on the market, which should be produced by the Tashkent aircraft building plant, as planned by the United Aircraft Building Corporation (UAC).
This aircraft has been offered to Venezuela, but the installment of arms on it, as well as of the target search and track system, has not been finalized yet. Production of the Il-114 aircraft for the Russian Defense Ministry is not expected before 2020.
"If Venezuela places an order for 20 planes, the anti-submarine version of the Il-114 patrol plane could be built within five years," the UAC explained.
However, analysts doubt that there will be export clients for this plane in the near future.
Oleg Panteleyev, head of the Aviaport analytical service, says that as a result Russia may lose the market of anti-submarine aircraft. The reason is primarily the chronic underfinancing of enterprises developing new armaments.
Business & Financial Markets
Norilsk Nickel to sell palladium jewelry
Russia's largest nickel producer Norilsk Nickel will buy up the liabilities of its American subsidiary, Stillwater Mining, the world's largest producer of platinum and palladium.
Analysts say the Russian metals giant is ready to pay $80 million because it plans to expand sales of palladium jewelry in the United States and China.
Stillwater will issue $165 million in convertible bonds maturing in 2028.
The money raised will be spent on clearing debts and on corporate development.
Nornickel confirmed the report, adding that it planned to buy a stake for $80 million, which is its way of supporting the U.S. subsidiary's development.
Nornickel holds a 54% stake in Stillwater.
Stillwater's capitalization as of last Friday was around $1.6 billion. In 2007, it posted a net loss of $14.3 million, after a net profit of $7.9 million in 2006. Stillwater must have failed to benefit much from surging palladium group metals because of its long-term contracts with automakers, who use these metals in automotive emission controls. Those contracts inflicted a shortfall of about $31.7 million.
Experts believe that Nornickel's plans to help its U.S. subsidiary are linked to its project to boost palladium jewelry sales. The first stage will be launched this year and will target the U.S. and Chinese markets, said energy expert Tamara Kasyanova, director general of 2K Audit - Business Consultating.
Izvestia
Korean 'spy' will not fly aboard Russian spacecraft
A month before the launch of the Soyuz TMA-12 spacecraft set for April 8, which was to put Korea's first astronaut Ko San into space, it has been decided to replace him for violating rules at the training center. The decision was formally taken by the South Korean Ministry of Science and Technology, but not without some pressure from Russia.
"The decision to replace the astronaut was taken by the Korean side, but it did so at our bidding," Anatoly Perminov, head of the Russian Space Agency (Roscosmos), told the paper. "Ko San repeatedly violated instructions for handling sensitive documents and took them out of the training area. He ignored our warnings. And we decided to be tough."
"I do not think he is a spy," Perminov went on. "A spy would have acted like a pro, while this one wanted to make easy money. The Korean side has acted wisely. We have a lot of shared projects together, and to aggravate things in the wake of presidential elections held in both countries would be unprofitable."
Ever since the 1990s, when overseas astronauts began regularly visiting Russia's Mir station and now, when work is conducted in the national segments of the International Space Station (ISS), it often happens that foreigners show excessive interest in Russian life support systems, considered to be unrivalled in cosmonautics.
Gennady Strekalov, who has commanded many crews, said that he physically checked many foreign crew members as they tried to hide on their body pieces of equipment, such as oxygen-generating candles. Sometimes they would say innocently that they merely wanted to take a picture of some component in their segment of the station where they claimed the light was better.
A 31-year-old Korean, Ko San, an expert on robotics and computers, who won an all-Korean competition among 36,000 contenders and gained the highest professional rating, has long been jokingly dubbed as "spy" in the Star City. He is associated with Samsung.
In his efforts, Ko San tried to secure materials that were unrelated to his training program and even regularly sent parcels back home which, aside from his personal items, contained internal documents. Although Korea returned the parcels to Russia. Patience ran out when the Korean obtained a manual on the Soyuz craft, something he was not cleared to read.
"Ko San is not just a curious young man, he knew what he was and wasn't allowed to do and signed a written pledge," said one of the heads of the Cosmonaut Training Center.
"Roscosmos handles all political issues," said Lieutenant General Vasily Tsibliyev, chief of the center. "We train cosmonauts and report any irregularities."
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