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MOSCOW, August 15 (RIA Novosti)
Moscow decides to recognize Georgia's self-proclaimed republics/ The West unable to force Russia to leave Georgia/ Moscow will not tolerate foreign alliances in post-Soviet space/ U.S. plan to expand "security and democratic space" suffers fiasco - expert/ Chrysler seeking lifeline in Russia/ Daimler Trucks faces new requirement in KamAZ deal

Vedomosti

Moscow decides to recognize Georgia's self-proclaimed republics

Georgia's territorial integrity is no longer one of Russia's priorities. However, it is in no rush to recognize South Ossetia and Abkhazia.
President Dmitry Medvedev said Thursday at a meeting with the two republics' leaders, Eduard Kokoity and Sergei Bagapsh, that Russia would support any decision made by the peoples of South Ossetia and Abkhazia in accordance with the UN Charter, the 1966 International Covenant on Civil and Political Rights and the Helsinki Accords on European security.
A Kremlin source said that a decision on the two republics' status should be discussed along with their security. However, that does not mean Russia should take any immediate steps to promote their independence, which is still premature.
At the same time, he went on, it is hard to imagine that Ossetians will agree to live in the same country with Georgians for the next 30 or 40 years, as passions are running too high in South Ossetia. Russian peacekeepers in Tskhinvali even had to provide an escort to a group of Turkish journalists who, Ossetians believed, were covering the conflict from Tbilisi's perspective.
Therefore, Moscow sees it as one of its tasks to keep all parties from taking aggressive action, the source concluded.
Moscow is not going to stick to preserving Georgia's territorial integrity, he said.
"A political settlement plan should be implemented first. After that, the parties may move to discussing the [two republics'] status," said Igor Lyakin-Frolov, a spokesman for the Russian Foreign Ministry.
It is extremely important to get countries other than Russia recognize them, said Andrei Isayev, one of the leaders of the pro-Kremlin United Russia Party. Otherwise we risk being alone like Turkey which is the only country to recognize the Turkish Republic of Northern Cyprus.
Russia is unlikely to ever convince anyone to follow suit, said Fyodor Lukyanov, editor-in-chief of the Moscow-based magazine Russia in Global Affairs, while the U.S. has managed to talk several dozen influential nations into recognizing Kosovo.
Nevertheless, officials in Moscow have made a basic decision to recognize South Ossetia and Abkhazia, said Nikolai Silayev, an expert with the Center for Caucasus Studies at the Moscow State University of Foreign Relations. "While earlier, Russian diplomacy simply used the self-proclaimed republics as an instrument to pressure Tbilisi, now it finally has to make some decisions," he said adding that Russia could offer to agree to Kosovo's UN accession in return.

Kommersant

The West unable to force Russia to leave Georgia

Various media sources and experts are currently proposing similar methods to put pressure on Russia to force it to change its policy concerning Georgia. In Russia, they consider such recipes as having no future, and explain the fuss around the military conflict by the upcoming presidential elections in the United States. Some U.S. diplomats believe there are certain forces in Russia that are totally unafraid of the threat of returning to a full-scale Cold War.
"Holding the Olympic Games in Sochi, accepting Russia into the WTO, Russia's G8 presence and activities of the Russian companies on global markets could all be under question," said Ariel Cohen, a senior research fellow at the Heritage Foundation.
Charles Krauthammer, a columnist and commentator for The Washington Post, proposes similar measures towards Russia in case it "breaks its ceasefire commitments in Georgia." He suggests dissolving the NATO-Russia Council, blocking Russia's entry into the WTO, a U.S. and European boycott of the 2014 Winter Olympics in Sochi, and then excluding Russia to create the G7 of the seven world's major democratic countries.
Alexei Malashenko, member of the scientific council for the Carnegie Moscow Center, doubts the effectiveness of such initiatives. "It is not serious and is just rhetoric prior to the U.S. presidential elections. The only serious point concerns the WTO."
"Of course, if the Olympic Games were going ahead in Sochi next year, then a boycott could be in first place. But we are talking about 2014 and many presidents will have been replaced by then."
"If they want to put Russia under pressure they should act in a different way - as they say in such cases, 'hug to death'", Malashenko told Nezavisimaya Gazeta.
A Kommersant source close to the U.S. State Department is also skeptical about the situation. "Many experts propose numerous measures to make Russia withdraw its troops from Georgia, assuming Moscow officials do not want a new Cold War. However, the situation appears that some do want this," the source said.
"Overall, we can do nothing to force Russia to leave Georgia," the source concluded.

Moskovsky Komsomolets

Moscow will not tolerate foreign alliances in post-Soviet space

The current Georgian-Ossetian conflict will not trigger WWIII, but Russian-Western relations may be seriously affected, Russian experts believe.
Alexei Arbatov, director of the International Security Center at the Institute of World Economy and International Relations: "Theoretically everything is possible, but in practice a world war is unlikely. Some things have changed compared with the First and Second World Wars.
"First, the great powers have developed many common long-term interests. Second, there are nuclear weapons that make victory in war impossible therefore making world wars meaningless. So, such a war is only possible if events escalate out of control. When, for example, a state takes a small step hoping to stop at that but other states retaliate by taking their own steps, the situation can then get out of control.
"Today we are on the brink, not of a new world war, but of a serious complication in relations between Russia and the West. Russia has, at long last, indicated where the "red line" lies: Moscow will not tolerate foreign military-political alliances in the post-Soviet space. Yes, we have surrendered the Baltics (but that was a special case), but Russia will not tolerate anything like that further.
"In general, the public whipping of Georgia is not only connected with South Ossetia, although Georgia provided more than a valid occasion for Russia to launch this action with a clear conscience. There is a background to the issue, namely, Georgia's bid to join NATO and America's wish to admit it to NATO. The process has gathered momentum and has provided the background to the conflict.
"We are of course very fond of the Abkhaz and Ossetians, but one should put a broader perspective on it: we do not want military-political blocs of which we are not members to move to our borders in the post-Soviet space."
Leonid Ivashov, former chief of the Russian Defense Ministry's International Military Cooperation Directorate: "Europe does not want war, nor does Russia. Georgia does not count. It is a puppet playing its local role. Georgia might have been a trigger and a casus belli if the world was ready for war, but that is not so."
Viktor Yesin, former first deputy commander of the Strategic Missile Forces: "World wars happen when the national interests of states are involved. The conflict in Ossetia pursues local, not world goals. The U.S. and Europe are not prepared militarily to become embroiled in this mess. The U.S., of course, has its own interest: to support its satellite, Georgia, but not by jeopardizing its own national interests."

Gazeta.ru

U.S. plan to expand "security and democratic space" suffers fiasco - expert

The events in Georgia signify the failure of another foreign policy initiative by the administration of President Bush who is not just simply a "lame duck" but a duck that can barely walk.
Seeking to produce at least some foreign policy successes at the end of his presidency the White House has concentrated on two areas: finalizing the talks on the deployment of missile defense elements in Poland and the Czech Republic and putting Ukraine and Georgia on NATO Membership Action Plans, having failed to do so in Bucharest in April.
His finishing spurt has caused great anger in the Kremlin which thought that the balance sheet of Russia-U.S. relations was finally approved at the Bush-Putin meeting in Sochi in early April. The Declaration on Strategic Limitations was the U.S. president's initiative. He tried to fix the position that there was no impasse with Russia and that the dialogue was continuing. Moscow did not particularly need the document, but because the personal chemistry between Putin and Bush has always been good, the Russian leader decided to meet him halfway.
It was understood, however, that it would mark the end of Bush's efforts regarding NATO and missile defense and that further decisions would be made by the next president. As it turned out, Washington thought otherwise: we seem to have reached an accommodation with the Russians, now it is time to tackle missile defense and NATO.
Judging from the U.S. reaction, Mikheil Saakashvili's attack on South Ossetia took it by surprise. But the Georgian leader had no doubt that Washington had no other option but to support him. Eventually, that was what happened. True, the damage inflicted by Russia's retaliation was so great that the political "cover" obtained may not cover all the costs. In the meantime, it turns out that a friend and ally had been given promises and in fact egged on to act, but when it came to a crunch, there is nothing the U.S. could do to help him.
What is happening in and around Georgia has nothing to do with democracy or security. To save face it is necessary to create the impression that Russia backed down when it saw how determined the U.S. was. Russia, of course, has the opposite approach: face down the whole world (almost literally) and wait until the general hysteria subsides.
Geopolitical and strategic rivalry is a fact, hypocrisy and cynical juggling with facts are unsurprising. But how is it possible that throughout the conflict not a single official representative of the country that claims to be the world's moral leader, has said a single word in regret, if only formally, of what has happened to the civilian population of Tskhinvali?
We should thank the U.S. for such an abject lesson in adherence to the highest moral standards.
(Fyodor Lukyanov is the chief editor of the journal Russia in Global Affairs)

Vedomosti

Chrysler seeking lifeline in Russia

Neither the Georgian conflict nor a looming crisis in Russia-U.S. relations can stand in the way of financial capital. The loss-making Chrysler company is looking for a lifeline on Russia's growing car market. GAZ Group could become partners with the Americans.
Chrysler will cultivate partnerships with other automakers in an attempt to increase its global sales, Chrysler president Tom LaSorda said on Wednesday.
The car giant is sinking: in 2007 its losses surpassed $2.5 billion, and in the first fiscal quarter of 2008, $0.5 billion. In the first seven months of 2008, sales slipped by 23%.
To get out of the morass, any trick is good. Aside from unions with India's Tata, China's Chery and Italy's Fiat, Chrysler is also considering an alliance with a Russian auto manufacturer, LaSorda said.
He said a joint venture in Russia would appear before the end of the year. Russian automakers, according to him, need state-of-the-art technology, and Chrysler could offer them its engineering brains, capacity, and brands.
LaSorda did not disclose the name of a possible partner, while the company's spokesman declined to comment.
In May, Sergei Zanozin, GAZ Group general director, said in a Vedomosti interview that GAZ was negotiating with Chrysler (as well as GM) on a joint new car platform.
On Thursday, a GAZ spokesman said in 2006 the company bought equipment from Chrysler from the sale of the Sterling Heights plant complete with a license for the manufacture of its brand product Sebring (its capacities in Nizhny Novgorod are already turning out the Volga Siber). The plant's capacities enable it to produce 120,000 to 150,000 units per year, although it is not planned to make more than 60,000 as yet.
GAZ Group is currently negotiating with several overseas partners on the possibility for making full use of this capacity, the spokesman said.
Two sources close to GAZ admitted Chrysler was among them. The American auto giant is offering GAZ Group several platforms for assembly in Nizhny Novgorod, a source told the paper, one of them is the Dodge Caliber.
The GAZ spokesman had no comment.
Mikhail Pak, a Metropol analyst, is confident the Russian market is more appealing to Chrysler than, for example, Chinese. In China, carmakers already feel crowded, while in Russia free niches are still plentiful, he said. In 2007, car sales in Russia topped the 2 million mark and in 2008 the Russian market is set to become the largest in Europe.
Politics has nothing to do with this: when you have to pull yourself out of a crisis, economic interests always come first, he said.

RBC Daily

Daimler Trucks faces new requirement in KamAZ deal

Halfway through the negotiations on the acquisition of a 42% stake in Russia's KamAZ truck maker, Daimler Trucks is unexpectedly facing a new requirement. The Russian plant's director general, Sergei Kogogin, is insisting that he should retain his post following the buyout.
Analysts believe this condition might lead Daimler, which hasn't made a final decision yet, to lower the price.
Troika Dialog, the Russian brokerage group currently controlling KamAZ with over 54%, has been in talks with Daimler Trucks since the second quarter of this year. The German firm has due diligence activities underway. Although it has been considering plans to build a factory in Russia, now it says it may instead buy 42% of KamAZ.
Kogogin, who directly owns 0.002545% in KamAZ, told Daimler Thursday that his keeping his post would be one of the conditions of the deal pointing out that his contract was still running.
Industry analysts believe that a chief executive is replaced in 70% of acquisitions in Russia.
Sevastyan Kozitsyn from BrokerCreditService said Kogogin's requirement should not baffle the German company, as KamAZ has achieved good results under his management.
"One shouldn't change horses in midstream. I hope the Germans realize that a person who knows the business inside out is best suited for the job," he said.
On the other hand, Dmitry Baranov from Finam said Daimler could demand a price cut if it had not known of the condition and agreed to it before. He added that it might have less to do with Kogogin's ambitions and more to do with the government's intention to control the company through him.

RIA Novosti is not responsible for the content of outside sources.

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