What the Russian papers say


MOSCOW, April 16 (RIA Novosti) Putin as party leader will have leverage against the Kremlin/ Conflict between power groups inevitable/ Russia to make Libya its strategic partner/ Gazprom cheering its shareholders/ Russian air carriers losing foothold on European markets/ Oil companies demand state investment


Putin as party leader will have leverage against the Kremlin

Vladimir Putin's agreement to become the leader of the United Russia party means that the outgoing president will remain in power.
The balance of the vertical system of presidential power in Russia depends on the tacit agreement of all the key players, but Putin as prime minister and leader of the largest party can demand the restoration of the government's powers stipulated in legislation.
Putin clearly carries more political weight than Medvedev. United Russia, which has 315 seats in parliament, can block presidential bills, while the regional legislatures it controls can stop the appointment of governors from Dmitry Medvedev's team. The party can overcome the president's veto and ensure the approval of any bill drafted by the party and the Putin government.
Medvedev has few instruments for influencing the prime minister and the government. If he decides to dismiss the prime minister, the current State Duma, the lower house of parliament, may refuse to approve any other candidates.
However, the president-elect is ready to work with a stronger prime minister and parliament.
"We can take practical steps to using more of the latent political potential of the government and parliament stipulated in the Constitution," he said at the United Russia congress held April 14-15.
This could amount to Russia's gradual movement from a presidential republic to a presidential-parliamentary one, which entails a clearer definition of the government's powers and the Kremlin's prerogatives. The latter have so far not been formalized and can therefore be expanded.
So far, the redistribution of powers has been going on quietly and without legal formalization. The weakening of presidential powers during the transition period and their subsequent strengthening depend on informal agreements.
They will determine (or have already determined) how many political and personnel powers comparable with those of the Soviet Communist Party's central committee the Kremlin will retain, and if the new president will be able to appoint members of his team to key posts.
The approval of laws on the president and on the presidential administration, or refusal to draft them, will show whether the authorities are ready to redistribute powers in a public and transparent procedure.

Vremya Novostei

Conflict between power groups inevitable

The new power configuration in Russia will inevitably lead to a conflict of interests between groups standing behind the president and the prime minister, political experts believe. The Communist Party leader thinks Putin and United Russia can claim to have made a new invention in politics.
Dmitry Oreshkin, head of the Merkator think tank, said: "The future prime minister Vladimir Putin and those behind him will need to consolidate all their administrative resources to stop the successor Dmitry Medvedev from opening any kind of warfare against the Putin group in the future."
"It is true that Medvedev is himself a member of that group, but the group is not uniform internally. We all remember how Putin had to choose between the president-elect and Sergei Ivanov, and now those behind the latter feel slightly offended. The interests of the groups standing behind Putin and behind Medvedev are bound to clash, because oil and gas attract everyone. The group behind Putin is pressuring him to establish rigid control over Medvedev.
"On Putin's part, it is entirely correct not to become a member of the United Russia party. In a couple of years' time, Russia will enter a crisis period, partly because during the Putin era of opportunity, unpleasant but very necessary decisions were not made. In the eyes of public opinion, the new president and United Russia will be responsible for that. Putin realizes that he must be in a position to criticize them to improve his political standing.
"Until now Russia has had no experience of two centers of power coordinating their activities with each other over a long period of time - if they were formed, one always absorbed the other. In perspective a conflict between groups of influence is inevitable."
Boris Makarenko, first deputy general director of the Center for Political Technologies, said: "In the near future Russia will be run by two leaders, the president and the prime minister, and we hope that they will always see eye to eye, as they say. But their staff and support groups will always have conflicts - the Cardinal and the King may always agree, but the King's Musketeers and the Cardinal's Guards will always fight and intrigue. Having tied himself to United Russia, Putin has institutionalized a base of personal support. This means that at some turn of events more conflicts could erupt between the two groups."
Gennady Zyuganov, leader of the Russian Communist Party and head of its parliamentary group in the State Duma, said: "It is an absolutely new and purely Russian invention in politics when a non-party person heads a ruling political party. This political experiment is curious in that the party will not be able, when necessary, even to administer a simple reprimand to its non-party chairman for shortcomings in his work."


Russia to make Libya its strategic partner

On Wednesday, President Vladimir Putin will become the first Russian leader to visit Libya. The massive Russian delegation comprises other senior officials and corporate CEOs.
Although Moscow is ready to write off the $4.6 billion Libyan debt in exchange for arms export and energy contracts, it may fail to gain a foothold in this vital region.
Analysts said Putin's visit has come too late despite Moscow's ambitious plans. Alina Volkova, a senior analyst at RosAfroExpertiza Center specializing in African affairs, said many Western leaders, including Tony Blair and Nicolas Sarkozy last year, had visited Libya after Tripoli mended relations with the world.
She said President Putin had chosen the right time for his visit because Tripoli knew little about president-elect Dmitry Medvedev and because the sides would therefore have to renegotiate the terms of his possible visit.
Russia has missed a chance to buy into Libyan assets. This February, the Chinese Civil Engineering Company (CCEC) defeated transport monopoly Russian Railways (RZhD) and signed a $2.68 billion contract for building two 1,200 km (746 miles) railroads. Although RZhD now plans to bid for the $2.69 billion 550- km (342 miles) Sirt-Benghazi railroad, Tripoli prefers the cheaper CCEC proposals.
It appears that even if Moscow signs a few profitable contracts in Libya, it will not turn the country into its regional strategic partner.
Volkova said it was pointless to stake on Libya because other countries will soon create their own spheres of influence there.
"Libya never attaches priority to any specific country because Muammar Gaddafi always skillfully chooses several partners and successfully exploits their interests," she told the paper.

Vedomosti/Business&Financial Markets

Gazprom cheering its shareholders

Gazprom is preparing to beat its own record of generosity by paying $2.7 billion in dividends for 2007. But world oil and gas companies pay more.
Two managers of the monopoly said its board yesterday recommended dividends at 2.66 rubles per share. If the board of directors and shareholders' meeting (to be held on June 27) endorse the figure, Gazprom owners will receive 62.97 billion rubles.
On 2006 results, Gazprom paid 60.1 billion rubles (2.54 rubles per share). So growth could be a record 4.7%. But, according to Alexander Razuvayev, head of market research at Sobinbank, given the current price of stock, the dividend yield will be 0.87%, or 0.18 percentage point lower than the yield at the closing date of the share register last year.
Gazprom dividends will line the pockets of the richest Russians. About 5% of Gazprom stock belongs to businessman Suleiman Kerimov, whose wealth is estimated by Forbes magazine at $17.5 billion. Among other major holders are Inteco founder Yelena Baturina (with 0.4% shares in Continental Unit Investment Fund, or PIF) and Alisher Usmanov (1.5%). Kerimov is credited with a bit more than three billion rubles ($127.66 million, or 82.19 million euros); Usmanov, 940 million rubles ($40 million, or 25.75 million euros); and Baturina, 250 million rubles ($10.64 million, or 6.85 million euros).
The sector's world leaders offer far greater dividends. For 2007, Shell is prepared to pay $9.2 billion (up 9% on 2006 and 28.8% of annual profit) and BP $8.1 billion (up 5.7% and 38.3% of profit). Only ExxonMobil will keep its dividends at last year's level, at $7.6 billion. But it is still more lavish than Gazprom, with its dividends being 18.8% of 2007 net profits.
Officials have long been pressing state-owned companies to increase dividend payments. Since 2005, the Federal Agency for the Management of Federal Property (Rosimushchestvo) has been recommending them to channel 20% of consolidated net profit into dividends, according to the international accounting standards. If Rosimushchestvo's formula were used, Gazprom would have to pay $4.7 billion in dividends.
Gazprom payments are calculated in line with a policy approved by the board of directors, the monopoly manager said. If the state alters the document concerned, it will have to alter the formula too, he said. Gazprom dividends are not determined according to general rules, an official from the Economic Development and Trade Ministry said: the monopoly's priority is its investment program, with shareholders' payment coming second.
Still, analysts consider investments in Gazprom attractive. "Strategists determine the weight of Gazprom stock from the pattern of future profits and cash flows, rather than the current size of dividends," Razuvayev said.


Russian air carriers losing foothold on European markets

The European Commission may soon act on a recommendation by the European Aviation Safety Agency (EASA) and forbid regional airlines from using uncertified Soviet-made planes.
Although Russian aircraft manufacturers claim that the new planes will not face similar problems, market players and analysts said their certification was a major problem. The Tu-204 plane has been in the process of certification for eight years.
EASA said EU carriers now operated 260 Soviet-made planes and helicopters, and that the restrictions would apply to the An-24 Coke, An-72 and An-74 Coaler, Tu-154 Careless and Yak-40 Codling airliners, as well as the Ka-26 Hoodlum, Ka-32-AO, Ka-32-S and Ka-32-T Helix helicopters.
Daniel Heltgen, head of public relations at EASA, said the agency had no right to impose aircraft operation bans, and that the European Commission was supposed to decide on the future of obsolete planes and helicopters.
The European Commission, which declined to comment on Tuesday, usually abides by EASA recommendations.
Analysts said European aviation authorities were deliberately ousting Russian rivals from the EU market. "I would not be surprised if the European Commission decides to ban all Soviet-made planes," Boris Rybak, head of the Infomost aviation consultancy, told the paper.
Oleg Panteleyev, head of research at Aviaport, a Moscow-based aviation analytics firm, said old-generation planes had to be fitted with advanced avionics in line with increasingly tough EU aviation-safety standards, and that it was unprofitable to upgrade Soviet-made aircraft which would eventually be ousted from the European market.
The press service of the aircraft leasing company Ilyushin Finance, which has been trying to obtain an international flightworthiness certificate for the new An-148 regional airliner since February 2007, said Brussels did not want Russian planes to operate in Europe, and that it was defending the interests of EU producers.
Rybak said the European Commission's decision may also have positive aspects. "From now on, Russian air carriers can use such cheap planes to meet domestic passenger demand," he told the paper.


Oil companies demand state investment

Leonid Fedun, vice president of Russia's largest private oil company LUKoil, told The Financial Times on Tuesday that the era of easy oil was over and that the government should annually invest $4 billion in the sector to sustain hydrocarbons production and export.
Analysts interpret this as the oil companies' campaign for tax relief.
Oil production will decline in the future because "the period of intense oil production is over" in Russia's main oil-producing region of Western Siberia, Fedun said.
But market players are less pessimistic.
Konstanin Gulyayev, an expert at the Region investment group, said: "There is no reason to expect a decline in Russia's oil production. Moreover, LUKoil is increasing production, because the construction of new pipelines will be senseless otherwise."
Lawrence Eagles, oil industry and markets division head at the International Energy Agency (IEA), said: "You have a lot of areas in Russia that are completely under-explored, but in order to find that oil and get it to market, the country needs considerable investment."
Russian analysts share this view, saying that companies readily produce "easy oil" and then proceed to new fields instead of investing more to sustain production at old ones.
Natalia Yanakayeva, an analyst at the CenterInvest Group, a Russian securities and consultant company, said the deposits in Eastern Siberia and Yakutia have huge oil and gas reserves.
"When speaking about declining production, Fedun most likely referred to the next few years, before new fields, which need expensive infrastructure and technology for developing complicated offshore deposits, are commissioned," Yanakayeva said. "Russia does not have such technology."
In other words, Fedun most likely addressed his words not to Western buyers, but to Russian authorities.
Oil majors have long been advocating tax relief. Rosneft, the largest state-controlled oil company, has asked for tax privileges for its offshore oil and gas projects in the Far East.
But the Russian government is not yet ready to cut the mineral resource tax, so oil companies keep reminding it that it will either have to cut taxes or subsidize the development of new fields.

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