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MOSCOW, April 10 (RIA Novosti) NATO's summit in Bucharest models energy diplomacy / Russian-Georgian relations turn sour / United Russia trying to guess Kremlin plans - analysts / Russia tired of sponsoring Mongolian economy / U.S. military space lobby proposes orbital missile defense system / Ukraine insists on safety of its nuclear fuel, keeps Russia away

Vedomosti

NATO's summit in Bucharest models energy diplomacy

Berlin has vetoed Ukraine's and Georgia's early accession to NATO, no doubt, to annoy Washington. The United States imports negligible amounts of Russian fuel, while Europe is very dependent on Russia in this respect. Therefore, if Europe approves Ukraine's admission now, it will have to pay for it in America's stead.
Russia supplies almost half of natural gas supplies to Germany, and provides almost 100% of gas consumed by Slovakia, Finland, Greece and Bulgaria.
For Russia, gas is one of the few really effective foreign-political tools. Ukraine, too, depends on Russia's deliveries and is interested in Russia selling gas cheaply. As of now, it is traded at $179.5 per 1,000 cu m on the Ukrainian border, while its price for Western Europe is nearing $400.
Once Ukraine joins NATO, this privileged price, so beneficial for its domestic industry, will end. To compensate for that, Ukraine will begin charging Russia more for transit. In any case, the situation will be fraught with conflicts and interrupted deliveries.
It is little wonder that many Ukrainians and Europeans believe that a purely symbolic boost in defense capabilities would be too high a price for undermined energy security.
On the other hand, the energy sanctions Russia might apply, although effective initially, will stimulate the diversification of supplies. Even today, Russia is Europe's most important supplier of fuels, but not the only one. Oil accounts for 40% of energy resources consumed by Europe (16% supplied by Russia), natural gas for 24% (20% from Russia), coal for 18%, nuclear fuel for 12%, whereas 6% comes from recoverable sources, including hydro-energy. Overall, Europe receives around 60% of energy from diversified sources (22 countries), while 40% (oil and gas) comes from Russia and the Middle East. Which means Russia accounts for a total of 12% of Europe's energy supplies.
This is not a small share, but does not mean an absolute dependence either. If European nations take no action to diversify supplies, its dependence on Russia will grow to 15%-20% by 2030, mainly due to gas. Therefore, future investments in nuclear energy, coal and recoverable sources are a key to upholding Europe's energy security. Russia, in turn, will be working to diversify the demand for its mineral resources, for example by boosting exports to China. As a result, the very logic of the market will make it difficult to use economic pressure tools further.

Nezavisimaya Gazeta

Russian-Georgian relations turn sour

Following a statement by Foreign Minister Sergei Lavrov that Russia would do everything to prevent Ukraine and Georgia from joining NATO, Russian-Georgian relations took another nosedive.
Tbilisi described the statement not only as interference in its internal affairs, but as a direct threat to it. Even experts joined the indirect dispute: in response to advice to accept an inevitable defeat Moscow replied that Tbilisi should define the borders within which it is going to join the alliance.
Koba Liklikadze, a Radio Liberty military analyst in Tbilisi, said: "Uncontrolled territories are a serious problem. But they are no obstacle to joining NATO. Territorial problems and conflicts plague organization members as well. Perhaps Russia will stoke disturbances and military provocations in the conflict areas and use its energy leverage against Europe. It would, however, be more constructive if Moscow accepted Georgia's inevitable entry into the alliance."
Mikhail Pogrebinsky, director of the Center for Political and Conflict Studies in Kiev, said: "Russia could work more actively with the public by exploiting the gap existing between it and the pro-Western political elite. It does nothing of the kind, unlike the West, which has groomed a whole generation of Ukrainians under NGO auspices and its grants. In that sense, Ukraine's shift toward the West is pre-determined."
Vladimir Zharikhin, deputy director of the CIS Institute (Moscow), said: "The entry of Ukraine and Georgia into NATO runs counter to Russia's interests. Russia therefore is fully entitled to oppose this process with the same vigor with which countries that consider Georgian and Ukrainian NATO membership meeting their national interests promote it."
"Practically every region in Ukraine has NATO information centers which conduct entry propaganda among the population. Russia should also work in this direction, highlighting the negative aspects of membership: serious economic problems (the gas issue will seem insignificant), border-crossing difficulties, and complications for Ukrainians working in Russia.
"Tbilisi, on the other hand, should be told that joining NATO will mean the abandonment of Abkhazia and South Ossetia, where no referendums were held on their quitting the Soviet Union and now on NATO membership. Georgia should decide within which borders it is going to join the alliance."

Kommersant

Nezavisimaya Gazeta

United Russia trying to guess Kremlin plans - analysts
On Tuesday evening, Boris Gryzlov, Speaker of the State Duma, the lower house of parliament, and leader of the pro-government United Russia party, said President-Elect Dmitry Medvedev could become a member of the party.
Although Gryzlov doubted the likelihood of this the day before, the Duma opposition said the Kremlin had corrected him. Sources of the business daily Kommersant said Medvedev had no intention of joining any party.
Gryzlov and other United Russia officials declined to comment. First Deputy State Duma Speaker Oleg Morozov, a member of the party's Supreme Council, said he did not see any contradictions in Gryzlov's statements. According to Morozov, the Speaker had noted the absence of a legal ban on Medvedev joining the party.
Yekaterina Kuznetsova, director for European programs at the Center for Post-Industrial Society Studies, said Gryzlov's second statement was an attempt to anticipate Kremlin plans. She said some external factors had forced Gryzlov to make this statement, and that his stance remained the same.
"Gryzlov was either pressured or decided not to quarrel with the president-elect," Kuznetsova told the paper.
Oleg Kulikov, Secretary of the Russian Communist Party's Central Committee, said Gryzlov had only mentioned Putin, without saying anything about Medvedev, and that someone had corrected him.
Andrei Ryabov, deputy director of the Center of Political Science Programs at the Gorbachev Foundation, said there was no choice but to correct Gryzlov.
According to Ryabov, the Speaker's opinion that it was impossible for Medvedev to join United Russia had coincided with a statement by Vladimir Zhirinovsky, leader of the Liberal Democratic Party of Russia, who proposed different deadlines for parliamentary and presidential elections and speculated that Medvedev could resign in 2009.
Ryabov said Gryzlov was told to make another statement in order to dispel doubts that Medvedev was only a temporary president.
Stanislav Belkovsky, president of the National Strategy Institute, said Gryzlov's altered opinion reflected a struggle between Kremlin groups to use United Russia to counterbalance Medvedev.

Izvestia

Russia tired of sponsoring Mongolian economy

Passions are running high about the visit to Moscow by Mongolia's Prime Minister Sanjiyn Bayar. Opinions are voiced in parliament that it is time Russia introduced sanctions against Mongolia because that country is deliberately ousting Russian businesses from its territory. Russian state companies annually lose over $200 million there to discrimination.
Russian-Mongolian joint ventures account for up to 40% of taxes paid in that country, and that amount is bound to grow.
However, the Mongolian government's welcoming attitude is oddly selective. In June 2006, Mongolia ratified an agreement on mutual protection of investments, but its government announced tax amnesty for all companies but Russian.
"The amnesty applied only to local businessmen, but the accompanying budget expenditures were shouldered by companies with shares of Russian capital," said Mikhail Khartman from the Center for Regional Policy, a Russian think tank.
"Mongolia's many positive statements are being made to shield the de-facto expulsion of Russian businesses," a source close to Agriculture Minister Alexei Gordeyev told Izvestia. "To compensate for excessive budget costs, Mongolia has introduced a super-profit tax (68% of the additional income from growing prices of gold and copper), which violates the agreement on mutual protection of investments. As a result, Russia loses a substantial part of its potential profits and taxes, and is forced to act as a donor for Mongolia's economy."
The Russian-Mongolian joint venture Erdenet Mining paid $400 million under the new tax to Mongolia, causing the Russian government a shortfall of $196 million. This is despite the Mongolian-Canadian Boroo Gold being exempt from the super-profit tax and enjoying a number of other tax privileges.
According to the Ulan-Bator Declaration signed in 2000, Russia agreed to write off $13.5 billion of Mongolia's debt in exchange for priority treatment of its investment projects. "Every time Russia has put an additional strain on its own budget, it has been rewarded by another abuse of its interests in Mongolia," Khartman said.
"We are not just losing a lucrative market, but writing off debts and sponsoring another country's economy," a government source echoed.
Viktor Ilyukhin, deputy chairman of the State Duma committee on constitutional law, suggested harsh economic measures, similar to those imposed on Ukraine, as a solution.

RBC Daily

U.S. military space lobby proposes orbital missile defense system

The United States could deploy orbital missile interceptors in place of the proposed European missile defense system.
"Space gives you a faster response and flexibility than ground-based missile defense," Senator Alan Wayne Allard (Rep.) from Colorado told the National Space Symposium in Colorado Springs.
"This is not anything like Ronald Reagan's Star Wars plan, though Reagan gave us many good concepts for moving from mutually assured destruction to defense," Allard said.
Allard has pulled together a space coalition among industry, civilian space and military space agencies to better coordinate space lobbying efforts in Congress.
Allard told reporters in Colorado Springs that such a system makes sense in the post-Cold War era, where small, well-funded groups scattered around the globe might launch a missile. "I think this makes more sense than going back into the 'assured mutual destruction' mentality of times gone by," he said.
Analysts said they doubted the effectiveness of orbital missile defense systems and their controllability.
Andrei Ionin, an expert with the Moscow-based Center for Analysis of Strategies and Technologies, said, unlike orbital weapons, ground-based facilities could be repaired or upgraded anytime.
Moreover, orbital missile defense systems are more vulnerable than their ground-based equivalents. Ionin said the aforementioned small, well-funded groups feared by Washington could breach computer security and either disable orbital weapons or use them to attack U.S. installations.
The proposed orbital missile defense system would compensate the U.S. defense industry for possible losses if Washington decides to mothball missile defenses in Poland and the Czech Republic. The democratic-dominated Congress, now examining the Pentagon's $585.4 billion spending request for 2009, wants to cut allocations for the European missile defense system by $85 million.
Bill Kincaid from the Royal United Services Institute for Defence and Security Studies said Congress realized that the military space industry's normal development depended on government contracts, but that subsequent efforts to develop the European missile defense system in Poland and the Czech Republic were fraught with excessive political risks.

Kommersant

Ukraine insists on safety of its nuclear fuel, keeps Russia away

Russia's TVEL corporation has asked Ukraine's Energoatom to explain how it will continue to buy nuclear fuel for the country. The matter cropped up when Energoatom signed an agreement with American Westinghouse on supplies without a tender. TVEL is concerned at the safety of American fuel. Ukraine is not obliged to conduct fuel tenders, and considers them wasteful, although Russian fuel is half as costly as American.
Americans will supply Ukraine with 630 fuel rods for its reactors. All in all, Ukrainian nuclear plants are currently using 2,781 such rods.
Until now, Russia has been Ukraine's sole supplier of fuel. According to unofficial figures, a Russian fuel rod costs $500,000, compared with $900,000 for an American one. As a result, Ukraine will pay an extra $250 million, with Russia losing $315 million, for 630 American rods. But, as Ilona Zayats, Energoatom spokeswoman, said, Ukrainian legislation does not request a tender to purchase nuclear fuel. She said nuclear fuel tenders are uneconomical, because the country's system of government purchases only adds to their price.
"The issue concerns energy security, not a favorable price-quality ratio," she said. "After its gas wars, Ukraine should seek a maximum number of potential partners, not a low-cost supplier."
She added that the maximum amount of American fuel supplies was not limited under the contract, "so if TVEL wants to keep the remaining four-fifth of the market, it will have to do some bargaining."
According to Zayats, the Westinghouse contract price is fixed, while the TVEL price is annually adjusted according to a formula that depends on uranium prices. Since the early 2000s, the uranium price has grown ten-fold, but from June 2007 it has almost halved.
Viktor Mikhailov, director of the Institute of Strategic Stability, believes Russia should negotiate "reasonable fuel prices" with Ukraine to maintain its position.
Westinghouse has had problems with fuel in other countries. Finland's Loviisa and Czech Republic's Temelin turned its fuel down in favor of TVEL's. "Temelin's experience has shown that American fuel needs careful handling," said Rudolf Vespalec, a fuel planning expert from the Czech plant.
Ludvig Litvinsky, director of the State Research and Engineering Center for Control and Crisis Response Systems in Ukraine, said: "The second fuel source guarantees a feeling of security. The diversified channel is a decision based on safety should one of the fuels fail."


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