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What the Russian papers say


MOSCOW, March 20 (RIA Novosti) U.S. proposes that Russia monitor European missile defense components/ Western analysts expect new 'thaw'/ Government increases pressure on private firms in the interests of state ones/ LUKoil forces Germany to seek alternative oil suppliers/ State Duma to pass strategic sectors bill/ Russia and India to shorten lead time on MRTA

Izvestia/Nezavisimaya Gazeta

U.S. proposes that Russia monitor European missile defense components

Russia could monitor the functioning of a missile defense shield in Europe. This proposal was made by U.S. representatives at two-plus-two talks held in Moscow on Tuesday. Foreign Minister Sergei Lavrov disclosed the details on Wednesday.
The U.S., he said, proposed that Russia monitor components of an anti-missile system to be deployed in Europe at Tuesday's meeting.
"The American side is prepared to offer us a series of confidence-building measures to help convince us the system is not working against us," Lavrov said in an interview with Izvestia.
According to the minister, the proposal is this: "We will be able to track what the radar is doing and what the real state of the interceptor base is - both the human factor and technical means."
"They [the Americans] continue to tell us that they have no intention of using these bases in Poland and the Czech Republic against us, but they also have to accept our argument as well: what matters in such cases is potential, not intentions," the Russian minister said.
"It is not just a matter of the third positioning area, or radar or ten interceptor missiles, but of a system that is actively developing and set to spread not only to Central Europe, but also to South East Asia together with Japan, to the United Kingdom and even, the media say, to Turkey, although there is no official confirmation yet," the minister said.
What are the real prospects of reaching an agreement?
Viktor Kremenyuk, deputy director of the Institute of the U.S. and Canada, in an interview with Nezavisimaya Gazeta, focused on the growing awareness by the sides of the need to strengthen strategic cooperation between the U.S. and Russia, including in the fight against nuclear terrorism. On the other hand, in his view, there is still no real progress toward concrete cooperation mechanisms in this area.
However, the fact that presidents Vladimir Putin and George W. Bush are showing obvious impatience encourages him. They want to end their tenure in office on a positive note, with real advances in Russian-American cooperation in such a key sector. And they are trying to urge their teams, above all ministers and secretaries, to look for mutually acceptable decisions.

Nezavisimaya Gazeta

Western analysts expect new 'thaw'

American experts on Russia are under the impression that president-elect Dmitry Medvedev is really different from Vladimir Putin - a gentler personality, a more refined intellectual and an accomplished lawyer. Hence their naive expectations of a new "thaw," [similar to the mid-1950s liberal reform period associated with Nikita Khrushchev.]
To back up their conclusions, they point to three important features in the two leader's behavior in the first 24 hours following Medvedev's election. First, during the triumph meeting in Moscow's Vassilyevsky Spusk, Medvedev did not say he was grateful to Putin, although he even thanked his rivals' voters. Second, Putin tried to correct Medvedev, who said that he would restructure Russia's executive power branch, by adding that they would handle the issue jointly. And third, when Medvedev quoted the Russian Constitution regarding the president being responsible for Russia's foreign policy, Putin interfered again, insisting that Russia's foreign political course would remain unchanged.
These subtle hitches in the two leaders' apparent unanimity are now being analyzed to provide hints about the future. Some analysts interpret them as a sign of Medvedev's leadership ambitions, or even of a potential conflict in the Kremlin.
One gets the impression that Americans are desperate to see Medvedev as someone very different from Putin. But how would that help them resolve their geopolitical issues? Without Putin, will they be more comfortable with NATO's eastern or southern expansion, or all around the globe?
There are no obvious answers to the question. Moreover, U.S. experts and officials must be extremely naive to expect anything different now. Medvedev has not just flown down from the Moon - he has been one of the most important members of Putin's team for eight years. He was an architect of the new Russian statehood - one he will be running from now on. And, just like any other creator, he is responsible for the structure's flaws. On the other hand, he must be aware of those flaws better than anyone else, for the same reason. Or, he could be oblivious to them, like a father who can find no fault in his beloved child.
In any case, they have dismissed criticism thinking that the current situation is still better than what we had earlier. But it is too early to jump to conclusions, to try and spot controversy that might lead to a conflict and a schism between different political elites. Even a major change in Russia's policy is unlikely, not after so much effort has been put into launching the very concept of continuing Putin's plan, a keynote of the two latest election campaigns in Russia.


Government increases pressure on private firms in the interests of state ones

On March 19, the Russian-British oil company TNK-BP was searched and documents were seized that are related to an old case involving the non-transparent bankruptcy procedure of the SIDANCO oil company, whose assets are held now by TNK-BP.
However, analysts think that this is just a pretext for attacking the Russian-British holding to weaken it in the interests of state companies.
According to experts, there are at least three key versions of the events. The first one is connected with a lack of free oil processing capacities on the Russian market.
According to Dmitry Abzalov, an expert at the Centre for Current Political Studies, these events could be the start of an attack against TNK-BP in order to buy its assets cheap later.
"Since the seizure of the documents was conducted by an investigation agency, which was close to Rosneft, one can assume that the attack was provoked by Rosneft," Abzalov said.
Under the second scenario, Russian gas giant Gazprom, which wants to get a controlling stake in the Kovykta gas condensate deposit in Eastern Siberia as cheap as possible, could also start playing against TNK-BP.
"Gazprom and TNK-BP have not come to terms on the price of this asset, and the gas monopoly does not like to pay more if it can pay less. According to our forecasts, Gazprom will get Kovykta cheap through pressure on TNK-BP," says an expert of the sector's market.
The third version is also connected with Gazprom. "Under the current legislation, the owner of gas pipelines, i.e., Gazprom, is the exclusive gas exporter," Abzalov says. "However, now the Federal Anti-Monopoly Service is drafting amendments to the law on gas exports whereby exports will be distributed proportionately to production."
The expert says that if these amendments are endorsed, independent gas producers, like TNK-BP, which is one of the largest among them, will be able to double their gas production at least. And it is believed that TNK-BP has initiated these amendments.
"Therefore, Gazprom may be deprived of up to 22% of its exports," Abzalov continues. "It is quite possible that when amendments to the law on [gas] exports were first mentioned, a 'preventive blow' was dealt on the Russian-British company."
Regardless of which of these versions is correct, what we are seeing now is pressure by the state on private companies in the interests of state companies.
"This shows that nothing has changed with Dmitry Medvedev coming to office," a market expert says.

RBC Daily

LUKoil forces Germany to seek alternative oil suppliers

Russia's largest private oil company LUKoil is unlikely to resume oil deliveries to German refineries in April because it wants to shut out the logistical middleman from its exports to Germany. The Russian company plans to ship its products directly to the refineries. Right now, however, Germany will have to seek alternative suppliers so as not to reduce its refining capacities because of the recent cut in LUKoil's supplies.
Last year, LUKoil exported 5.3 million metric tons, or 38.96 million bbl, of oil to Germany. This year, it supplied 515,000 metric tons in January and planned to supply another 520,000 in February, but the company failed to reach an agreement on price with Sunimex, the oil trader it was using as a mediator.
Last summer, LUKoil also cut deliveries to Germany by one third, from the agreed monthly amount of 450,000 metric tons due to a drop in the economic efficiency of those deliveries. However, LUKoil eventually reached an agreement with Sunimex then on a $0.3 per barrel rise, and supplies resumed. But even so, the temporary cut then made German companies, particularly the Schwedt refinery, seek alternative suppliers.
LUKoil has made no comment on the situation. Western media say it plans direct deliveries to German oil refineries. The company said last November that a relevant agreement had been reached, but later it turned out not all German intermediaries had been removed.
The German government said the current cut in LUKoil's supplies was not critical, and so did the refineries, but last year some of them had to buy crude shipped by sea, which is certainly more expensive than delivery by pipeline.
As for LUKoil, it is unlikely to incur any losses due to the high liquidity on the oil market, said Artyom Konchin, analyst at the Aton UniCredit brokerage, adding that the company would be able to sell the oil that was not shipped to Germany in other countries. He said the only problem would be that shipments to the most profitable export destinations could be delayed because sea terminals were too busy.
The analyst said LUKoil was right to insist on the rise because it supplies large amounts of oil.
Denis Borisov from the Solid brokerage said LUKoil was trying to reduce its price discount against Brent quotations, which was justified because at current sales, it will earn an additional $25 million a year.


State Duma to pass strategic sectors bill

On March 21, the State Duma, the lower house of parliament, could review a second reading of a bill allowing foreign investors to operate inside strategic sectors. Its industry, construction and high technology committee said the bill should be adopted.
In the first reading, the bill was approved in September 2007; and the new State Duma, elected last December, passed amendments on foreign companies' access to strategic sectors, whose list has been modified five times.
Committee chairman Martin Shakkum said there will be no major changes after the bill's second version has been approved.
The bill's final version lists 42 strategic sectors, including the nuclear industry, signals, production, weapons sales, aviation, mineral resources, fishing, television channels and radio stations broadcasting to over 50% of any region's population, newspapers and magazines with a print of over a million copies. Natural monopolies, except the postal service, telecommunications and power transmission, are also listed in the strategic sectors category.
The bill does not apply to companies, including energy giant Gazprom, developing mineral resources that are more than 50% owned by the state.
Foreign investors must receive permission from the Federal Anti-Monopoly Service to acquire over 50% of a strategic company's shares or 10%-plus stakes in mineral resource developers.
Foreign state-owned companies will have to coordinate the purchase of 25%-plus stakes and 5%-plus stakes in local companies developing mineral deposits.
It will take the government commission three to six months to approve each deal. The Federal Security Service and an interdepartmental commission on state secrets will provide the required expert checks. Each deal can be contested at the Supreme Arbitration Court or declared null and void in case of legal violations.


Russia and India to shorten lead time on MRTA

In April, Russia's state arms exporter Rosoboronexport and the Indian corporation Hindustan Aeronautical Ltd plan to sign a company-to-company contract to prepare a conceptual design for a joint multi-role transport aircraft (MRTA). The approach will mean the project, estimated at $600 million, will be cut by a year.
Experts, however, think the aircraft will cost more and its implementation by MAK Ilyushin (Ilyushin Interstate Aircraft-Building Company) will be one of the risks.
The MRTA is based on a project drawn up in the 1990s at the Ilyushin Aviation Complex (now being transformed into MAK Ilyushin) to build an Il-214 medium military transport aircraft. The plane's maximum carrying capacity is 20 metric tons. Russia's Air Force plans to order 100 MRTAs and India, 45.
The MRTA program, already seven years behind schedule, can at last enter its realization stage. With orders from Russia and India already known, total orders for the Il-214 (the Russian version of the MRTA) could, according to Ilyushin's estimates, be as high as 250 units, or with the price of one aircraft put at $35 to $40 million, a total of $10 billion.
True, market capabilities have been calculated with an eye on the number of similar An-12 planes currently in use in the world (a total of 250). Their manufacture was wound up in the 1970s. On the whole, 1,900 military transports planes capable of carrying 20 metric tons are used across the world now, with U.S. Lockheed Martin's C-130s taking 80% of the market.
The development costs for the MRTA, before starting mass production, are estimated by Ilyushin director general Viktor Livanov at $600 million given parity financial contributions of $300 million from each side. Similar foreign programs are estimated at $2 billion.
Maxim Pyadushkin, editor of the air space publication Russia/CIS Observer, said that "since no plane yet exists even on paper, its cost and deadlines will be naturally adjusted."
Konstantin Makiyenko, an analyst with the Center for the Analysis of Strategies and Technologies, believes that "the $600 million figure is probably from an uncorrected 1999 business plan." He said the Sukhoi Superjet 100 program to build a smaller configuration plane has been estimated at $1.5 billion.
In addition, he said, making Ilyushin the sole manufacturer involves "high risks, because the company does not have a good post-Soviet era record."

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