MOSCOW, May 5 (RIA Novosti) Kremlin policy regarding Abkhazia contradicts Russia's interests / Poland asks too high a price for U.S. base / Russian leaders never carry on their predecessors' policies / Future of Baltic Pipeline System to be decided by new government / Lukoil's project to produce quality petrol will cost twice the planned figure
Kremlin policy regarding Abkhazia contradicts Russia's interests
Strategically, Russia needs relative peace in and around Abkhazia, but it has no reliable plans for attaining it. Abkhazia is a specific problem, even compared with South Ossetia, because it directly affects Russia's interests.
Abkhazia has huge gravel deposits necessary for the construction of facilities for the 2014 Winter Olympic Games in Sochi, and Abkhazian workers will most likely become the core of workforce there.
Russia does not need a war or a near-war situation in Abkhazia in the last year or two before the Games, because the overwhelming majority of Abkhazians hold Russian passports and therefore Russia will have to become involved, one way or another.
Tensions in Abkhazia, let alone a war, would jeopardize safety at the Games, and the International Olympic Committee would be forced to move them to another country.
Russia needs peace in Abkhazia and around it at least in 2012-2014, but the Kremlin's policy of refusing to accept the current Georgian regime and protesting against its accession to NATO prevents it from helping Tbilisi's potential peaceful attempts at making up with the breakaway republics.
Contradictions between Russia's foreign policy and its internal political interests, including those related to the Sochi Olympics, are creating additional political tensions.
The problem of Abkhazia, especially for Russia, is different from the problem of Kosovo. Russia will have to formulate a clear policy based on a combination of its real interests, rather than on the inflated geopolitical ambitions of the Russian elite garbed in populist slogans.
However, Russia cannot do this now because it has no time or patience for political debates, while measures proposed by officials, even if successful, cannot form the core of its policy. Crucial political decisions must be discussed publicly, for example in parliament.
Poland asks too high a price for U.S. base
A dispute that has emerged between Warsaw and Washington could jeopardize the deployment of a U.S. anti-missile base in Poland. However, a Russian expert is convinced that the U.S. will eventually make Poland cool its financial appetite.
A U.S. government source, who preferred to remain anonymous, said a few days ago that the United States will consider a different site for its anti-missile base if the negotiations with Poland do not produce the expected result. Last Friday, George Bush's administration asked Congress to approve $20 million for military aid to Poland, while Poland had asked for $20 billion to modernize its armed forces, according to unofficial data.
The United States is extensively using the carrot and stick policy in its dialogue with Poland. The "accidental leakage" about an alternative location for the base was made to prod the excessively demanding Poles to sign the agreement, said Alexander Pikayev, director of the department of disarmament and conflict resolution at the Moscow-based Institute of World Economy and International Relations (IMEMO).
The U.S. would prefer to reach an agreement with Poland before the current administration leaves office in January 2009. Under the initial plan, Secretary of State Condoleezza Rice was to sign a U.S.-Czech agreement in Prague on May 5, but it was moved to a later date in June.
Pikayev attributes the delay to Poland's lack of compliance: "The Czech Republic is biding its time, waiting to see if Poland manages to sign a good agreement with the U.S. If Prague is alone, the Czech parliament may well vote it down," he said.
According to the expert, the U.S. has to keep in mind the radar's location while agreeing on the anti-missile base in Europe. "It needs to be close to the Czech radar, which is needed to guide interceptors. The radar won't be able to guide interceptors based in Turkey, for example," he said.
Hypothetically, the interceptors could be deployed in Lithuania, but it is not a good option for the U.S., which does not want "another row with Russia," or to upset its allies by another crisis on their doorsteps. In addition, it would spark more controversy in the European Union, which is already annoyed with Vilnius for refusing to mandate the new PCA talks with Russia again recently.
Pikayev believes that Slovakia and Hungary wouldn't want to quarrel with Moscow either. "If Poland eventually refuses to host the base, the U.S. will have to relocate the entire regional structure, including the Czech radar, which means there are practically no alternatives to the Poland-Czech Republic duo."
Russian leaders never carry on their predecessors' policies
Russia's president elect, Dmitry Medvedev, will take the oath on May 7, yet the majority of Russians still consider Vladimir Putin the national leader. Many people, at least in the West, cannot grasp what Russia's second (or is he the first after all?) leader thinks, a prominent political analyst writes in the popular daily Vedomosti.
Nikolai Zlobin, the director of the Russian and Asian programs at the U.S. Information Defense Center, said it was thanks to Putin that United Russia, an "unnatural party," developed into a new power vertical that is much more powerful than the presidential vertical created by Putin.
While assuming control of the party and the lower house of parliament, Putin has nevertheless remained fully independent of them. He also left Medvedev outside the party, making the president personally dependent on him, Zlobin writes.
Putin can be proud of restoring stability in Russia. Yet no Russian politician or expert visiting Washington can say how the powers will be distributed between Medvedev and Putin, or if the Constitution will be amended.
The Russian press has no answers either, while the Kremlin PR team pretends, unsuccessfully, that they know but will not tell. Some analysts forecast a conflict between the president and the prime minister, with an unclear outcome, while officials shy away from questions about who they will petition to solve their problems, trying in vain to demonstrate loyalty to both leaders.
Putin's stability, if that is what it is, looks like a stable unpredictability, Zlobin writes.
Russia's foreign partners must know how the Medvedev-Putin tandem will work, because there is no, nor can there be any balance between them. Putin is not Medvedev's equal according to the Constitution, and Medvedev is not Putin's equal in reality. However, even a weak leader, when he sits in the Kremlin, becomes the country's top man.
Stalin in 1921, Khrushchev in 1953, Brezhnev in 1964 and Putin himself in 2000 were all "pushed" into power by their predecessors, yet tradition inevitably made them assert their legitimacy by crushing them. No leader in Russia's long history has carried on the policy of his or her predecessor, even if they tried to convince the world and themselves that they could do this, the analyst concludes.
Future of Baltic Pipeline System to be decided by new government
The Russian government, which will resign after Dmitry Medvedev takes the presidential oath on May 7, did not have enough time to approve or blackball plans for the second phase of the Baltic Pipeline System, BPS-2.
Initially, Transneft proposed in 2007 that the pipeline should bypass transit countries, including Belarus and the Baltic states, and run to the ports of Primorsk and Ust-Luga. This would cut the expenses of the pipeline monopoly and Russian oil exporters, but also aggravate problems with transit countries and ultimately undermine Russia's influence on their economies.
The ministries, including the Industry and Energy Ministry, did not like the BPS-2, the second largest project after the Eastern Siberia-Pacific Ocean pipeline. Its capacity was eventually cut from 75 million metric tons (551.25 million bbl) to 50 million metric tons (367.5 million bbl).
Since then, Transneft has changed its stance regarding Primorsk as the preferred destination for loading oil for shipping, and is now favoring Ust-Luga. The pipeline is also to have an offshoot to the Kirishi oil refinery controlled by Surgutneftegaz, which accounts for 13% of Russia's total crude production.
The dispute over the BPS-2 route is a financial battle and a war of lobbies. If Ust-Luga is chosen as the preferred destination, Surgutneftegaz and its traders will be able to supply oil to the Kirishi refinery, whose capacity is being increased. If the choice is made in favor of Primorsk, the export possibilities of all the Russian oil companies will be increased equally.
And lastly, a decision on the BPS-2 will also affect the future of the Druzhba pipeline, which might remain a core of Russia's oil and gas policy in Eastern Europe, or lose its strategic significance.
The future of the BPS-2 now depends on the new government, which will discuss the general development plan for the country's oil pipeline system until 2020, drafted by the Industry and Energy Ministry.
Lukoil's project to produce quality petrol will cost twice the planned figure
The Lukoil-Nizhegorodnefteorgsintez oil refinery is to start producing Euro 4 petrol a year later than planned. According to Vladimir Nekrasov, Lukoil's vice president, the project will cost $1 billion to implement - $400 million more than planned.
Daniil Smirnov, deputy director general for public relations at Lukoil Volganefteprodukt, a Lukoil marketing company, told Vedomosti that the catalytic cracking complex that is to ensure the production of Euro 4 petrol would be launched a year later than expected - in 2010 instead of 2009. Smirnov explained that additional work was needed to "enhance the technological effectiveness of oil processing and the production of light petroleum products."
Dmitry Dolgov, head of Lukoil's press service, said that the rise in the cost of the project was caused by higher prices of building materials and equipment and the fall of the dollar.
Lukoil specialists say that the company's modernization program will be recouped within about five years, while Finam's analyst, Vladislav Isayev, gives a figure of three to four years.
The level of oil conversion at Russian oil refineries is about 68%, against nearly 90% in the West; with only two-thirds of Russia's oil refining capacities being used, Isayev said. Therefore, experts think that "any modernization expenses increasing the share of high-octane petrol in output" are justified.
Alexei Kokin, a senior analyst at the Metropol investment and financial company, said that Lukoil was lobbying a draft law at the State Duma which should cut excise duties on the production of ecologically clean fuel; in 2009, Lukoil hopes to save about $200 million from this measure.
Meanwhile, the Nizhni Novgorod oil refinery produces only diesel fuel in keeping with the Euro 4 standard, and only "several thousand tons a year" (from 2006).
Since 2007, Lukoil-Nizhegorodnefteorgsintez has been producing Euro 3 petrol (over 50% of total production). Spokesmen from local Lukoil companies do not specify the share of Euro 4 petrol in their companies' total output. According to Kokin, the share of Euro 4 petrol on the Russian market is currently about 1%-2%.
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