What the Russian papers say


MOSCOW, March 12 (RIA Novosti) America will have to cooperate with Russia - official/ Central Asian ultimatum to Gazprom will bury Caspian pipeline/ Russia to upgrade over 60 MiG-29 fighters for India/ Severstal can buy into U.S. subsidiary of ArcelorMittal/ Biofuel plant to be built in Tambov Region/ Sergei Ivanov tests Glonass receivers in Antarctica


America will have to cooperate with Russia - official

There will have been no love lost between Russia and the United States over the latest Kosovo incident. With all the tension and controversy between the two nations, it is seriously hampering the efforts by the whole international community to resolve really serious problems.
Today's problems are no less important than those on which the U.S. and the Soviet Union reached agreement even during the Cold War, said Mikhail Margelov, chairman of the foreign affairs committee in the Federation Council, the Russian parliament's upper house.
U.S.-Russia relations are based on mutual political dependence, he went on. This kind of dependence would never allow any new U.S. president, whether Republican or Democrat, to use offensive language in a dialogue with Russia. Because any U.S. president, whatever his personal political preferences, should defend the nation's interests. Which means that America will have to team up with Russia in certain spheres, albeit unwillingly and unhappily. No U.S. president will let the bilateral cooperation drop below the current level.
One of the key problems which neither the U.S. nor Russia can handle alone is international terrorism. However, experts say that the two countries are not employing their joint potential effectively enough. Each of the countries is dealing with "its own" terrorists, not entirely trusting each other, Margelov said.
Another global area for U.S.-Russian cooperation is fighting the proliferation of weapons of mass destruction. The Soviet Union and the U.S. once were the main initiators of the non-proliferation regime. That regime is in deep crisis now, Margelov said. The international community is unable to do anything about the new nations forcing their way into the "nuclear club." The world is waiting for new initiatives to be advanced by Russia and the U.S., including some decisive action to resolve the nuclear problem - for example a total ban on nuclear weapons, similar to the one on chemical weapons.
Analysts also expect the U.S. to become more active in proliferating its values, such as democracy and human rights issues. But rights violations are not an exclusively "Russian issue."
The Strasbourg Human Rights Court is flooded by complaints from all parts of Europe, not just from the CIS countries. It is certainly a shame, Margelov admits. But, unlike "old" democracies, Russia knows its flaws and is capable of self-criticism and development. It is much worse when a nation is so utterly convinced that its political regime is perfect - it may eventually lose the ability to reflect on its own deviations from the principles stated.

Vremya Novostei

Central Asian ultimatum to Gazprom will bury Caspian pipeline

Gas-rich Central Asian countries yesterday did a U-turn in their relations with Gazprom. The heads of state-owned companies in Turkmenistan, Uzbekistan and Kazakhstan told Alexei Miller, CEO of the Russian monopoly, that beginning next year they would be selling gas at European prices.
This is the first time that Moscow, which has more than once speculated on the threat of setting up a "gas OPEC" with other large gas exporters, faced a united front from Asian suppliers in price bargaining.
The paradox of the situation is that Gazprom's agreement to the ultimatum will finally torpedo an alternative project supported by Washington - an undersea gas pipeline across the Caspian from Turkmenistan to Azerbaijan, Turkey and further on to the Balkans. And it will also reinforce the hand of Russia and its Central Asian partners to build a Caspian gas pipeline, which is expected to transport an additional 10 billion cubic meters of Turkmen gas and the same again of Kazakh gas.
The main loser is going to be Ukraine, which buys Central Asian gas and has been able, until now, to purchase it at non-European prices. But since it is Gazprom that controls gas supplies to Ukraine, the state managers from Central Asia came to Moscow, not Kiev. What is more, the Russian corporation has no option but to accept the new conditions. The 58 billion cubic meters of gas which Gazprom buys in Central Asia is part of its export portfolio, and nothing can compensate it for its loss. Moscow just cannot stand and refuse to buy, as Rem Vyakhirev, a former Gazprom head, did in the early 1990s, although tactically, in building up relations with Ukraine, it would be wiser to work out a smoother transition to European prices, say, within two or three years.
But Ukraine has something to fight back with - transit tariffs for Russian gas. Raising them to European levels in response could somehow cushion the impact of Central Asia's price dictate. And in this case the offended party would be Gazprom, which will have to pay out of its own pocket for the increased profitability of its Central Asian partners. The price in question for the Russian giant, should tariffs grow to European levels, could amount to $1-1.5 billion a year.
Sources in Ashgabat reported that the level was roughly set at $200-230 per thousand cubic meters depending on the handover point (cheaper in the case of Turkmen gas and higher in the case of Kazakh gas, which is delivered to the Russian border). The price has been calculated on the basis of current prices in Europe (around $330 in Slovakia and Romania).


Russia to upgrade over 60 MiG-29 fighters for India

The Russian Aircraft Corporation MiG and India have signed a multi-billion dollar contract to convert 60 MiG-29 Fulcrum fighter-interceptors into fighter-bombers.
New Delhi was not deterred by the recent decision by Algeria to return 15 allegedly defective fighters it bought from Russia.
Analysts agreed that the Russian-Algerian conflict had political, rather than technical, implications, and that French President Nicolas Sarkozy had persuaded Algerian leaders to choose Dassault Rafale fighters instead.
Under the five-year contract, the Indian MiG-29s will receive new avionics, Zhuk radars developed by Russia's Phazotron-NIIR company, revamped air-to-air missiles and "smart" remote-controlled air-to-surface missiles and laser-guided bombs.
Although the 25-year service life of the Indian Air Force's MiG-29s, bought in the mid-1980s, will expire soon, the warplanes will continue to fly for another 15 years.
The first batch of aircraft will be upgraded in Russia; and Indian companies will use Russian components to overhaul the rest.
However, the Indian Navy faces problems with the Admiral Gorshkov aircraft carrier, currently being refitted at nuclear-powered submarine manufacturer Sevmash in Severodvinsk, northern Russia.
Under the $1.5 billion contract, New Delhi was to have received the Admiral Gorshkov/Vikramaditya by 2008. But it will take three more years and additional funds to implement the project.
In February, Norwegian shipping major Odfjell cancelled a contract for the construction of 12 chemical tankers with Sevmash, citing serious delays and cost overruns. The setback negatively affected the company's business reputation.
On February 29, the Slovak Air Force received several top-quality revamped MiG-29s.
Polish and Bulgarian fighters are also being overhauled. All this helps to promote the hard-hitting combat planes on the global market.

Business & Financial Markets

Severstal can buy into U.S. subsidiary of ArcelorMittal

Russian metals giant Severstal is eyeing the U.S. Sparrows Point steel mill, owned by ArcelorMittal and producing 3.9 million tons of steel a year, the French press reported.
Severstal declined to comment, while the U.S. ArcelorMittal office neither confirmed nor denied the information.
Experts say Sparrows Point would be a good acquisition for the Russian company, roughly estimating the deal at $5.5-7 billion.
The U.S. Department of Justice demanded in February 2007 that ArcelorMittal sell Sparrows Point, in a bid to prevent a monopolization of the market after the merger of Mittal Steel and Arcelor.
Bill Steers, a spokesman for ArcelorMittal Americas, said the company was still cooperating with the DOJ and "consulting with a court-appointed trustee who is overseeing the sale on its next steps."
The trustee, attorney Joseph Krauss, a partner at Hogan & Hartson in Washington, was not available for comment yesterday.
Pavel Shelekhov from the Kapital brokerage said Sparrows Point could augment Severstal's consolidated revenue by around 7%.
The steel mill is located on the U.S. East Coast, which is a convenient location for the Russian company to supply iron ore from the Karelsky Okatysh mine, Severstal's primary raw material asset, said Sergei Krivokhizhin from the Otkrytie brokerage, adding that an accident had happened at Severstal North America Inc. earlier this year, which caused a reduction in output.
"Severstal had around $2 billion free cash as of September 2007, while its net debts totaled $1 billion. Therefore, it is in a perfect position to take out another $5 billion loan," Krivokhizhin said. He estimated Sparrows Point at about $5.5 billion.
Shelekhov, in turn, said its value was closer to $7 billion.
ArcelorMittal is a 100% owner of the facility.


Biofuel plant to be built in Tambov Region

The former deputy chairman of the Gazprom board, Alexander Ryazanov, has decided to build a biofuel plant for exporting fuel to Europe and the United States as it is unprofitable to sell biofuel in Russia. The cost of the project is 220 million euros.
Marat Ishmiyarov, director general of the Metasintez company which manages the project, told the Vedomosti paper that the company had already found a construction site for the plant and has prepared a feasibility study. The plant will be built in the village of Dmitrovka (Tambov Region), where the company has leased out a 23.5-hectare plot of land. The plant is to reach its annual projected capacity of 250,000 metric tons of biofuel by 2011. Investments in the project will amount to 220 million euros, of which 85% are to be borrowed from Russia's state-controlled trade bank Vnesheconombank (VEB).
The project is aimed at exports because the biofuel sales are unprofitable at the moment in Russia, Ishmiyarov said. The federal standard (GOST) permitting the production of alcohol-laced gasoline was endorsed in 2004 but bioethanol, which is a component of such fuels, is subject to the same excise duty as food alcohol, he said.
The company intends to export biofuels to Europe and the United States. Considering transportation costs, annual income from biofuel is projected at 202 million euros with around 12% of annual profits. This, however, will depend on the prices for raw materials, primarily wheat.
Russia has never produced biofuels before.
According to Dmitry Rylko, director of the Institute of the Agrarian Market Studies, this is a business of high risk: Russia will have to compete with Brazil, which has cheap sugar cane and later with Ukraine, which plans to produce biofuels from maize.
However, if grain prices reach $200 per one metric ton and oil prices $100 per barrel, biofuel production will be profitable in Russia, said Alexei Ablayev, director of the National Biofuel Association.


Sergei Ivanov tests Glonass receivers in Antarctica

On Tuesday, Russia's First Deputy Prime Minister Sergei Ivanov in charge of the Global Navigation Satellite System (Glonass) project visited the Novolazarevskaya research station about 80 km from the ice-bound Lazarev Sea coast. Ivanov who severely criticized the system in January now said he was quite happy with its operation.
This is the second visit by a senior Russian official to Antarctica. On January 5, 2007, Nikolai Patrushev, director of the Federal Security Service [FSB], Vladimir Pronichev, head of the Federal Border Service, and famous polar explorer Arthur Chilingarov, deputy of the State Duma, the lower house of parliament, visited the Bellinsgauzen station on King George (Waterloo) Island 120 km off the northwest Antarctic coast.
Ivanov probably decided to go to Antarctica in the wake of the November 12, 2007 visit by UN Secretary General Ban Ki-moon.
According to Ivanov, Glonass receivers were used to land his plane in Antarctica for the first time, with six Glonass satellites in orbit above the area; however four satellites were enough for a textbook landing.
Although Glonass satellites were not visible for three hours over Novolazarevskaya on Tuesday, a source in the space industry said at least five of them were circling above the station during Ivanov's landing.
The source said this was a safety precaution in case one of the satellites developed a malfunction and in case the Glonass receivers failed, the plane was equipped with a Global Positioning System (GPS) for use in possible emergencies.
The Glonass information-analytical center said the system now has only 15 operational satellites, and that another satellite was switched off for maintenance purposes.
Glonass receivers cover 70-92% of Russian territory, making it possible to use the system; but less than four satellites fly over southern Russia for up to seven hours a day.

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