What the Russian papers say


MOSCOW, September 16 (RIA Novosti)
Georgia putting NATO, EU at odds/Ossetian-Abkhazian precedent cannot spread to other territories - expert/Russian-American space cooperation may survive/ Current crisis could benefit labor market like in 1998/Russian industry posts growth/Russian industry posts growth/Russian fertilizer producers suspected of price fixing

Novye Izvestia

Georgia putting NATO, EU at odds

NATO Secretary General Jaap de Hoop Scheffer, who spoke in Georgia at an external meeting of the alliance, said he did not agree with the peace plan proposed by Presidents Dmitry Medvedev of Russia and Nicolas Sarkozy of France.
However, the NATO chief's statements were at odds with a much milder position taken by the European Union. Analysts differ on how far the EU-NATO controversy over Georgia might take them.
Alexander Konovalov, head of the Institute for Strategic Assessments in Moscow, said the EU in fact was in full agreement with the United States, but needed to sound milder. "The EU is unlikely to be happy with more Russian forces in Abkhazia and South Ossetia, the two regions that both Europe and the U.S. continue to view as part of Georgia. [French President] Sarkozy has preferred to let it pass by so far, but only for the sake of the talks which threatened to reach a dead end.
"They reached a grudging agreement that Russia remove its checkpoints from Georgia's undisputed territory, while the issue of Russian peacekeeping contingents in the two self-proclaimed republics is still pending," he added.
Sergei Karaganov, dean of the world economy and politics department at the Moscow-based Higher School of Economics, said he was in no doubt there were differences between NATO and the EU, but NATO's position would have little impact on the peace process ahead.
"The NATO chief simply wanted to please the Georgians, and his statement should not be viewed as anything but a political gesture. NATO and Europe have been slightly at odds for ages, because the United States is obstructing the development of Europe's own military-political bloc.
"This time around, the alliance found itself an outsider in the conflict, whose interests were harmed nevertheless, as Georgia is prevented from being admitted to NATO while involved in an active conflict," he said.
Yet, the analyst does not expect this to lead to a real split between the alliance and the EU.
Nikolai Zlobin, director of the Russia and Eurasia Project at the Washington-based World Security Institute, said the parties to the conflict would have to find a compromise eventually.
"Neither the United States, nor Europe, nor Moscow will be satisfied with a status-quo. Although Russia's position is more advantageous, it is still annoyed with the disruption of its technological cooperation with the U.S., and with the additional financial burden and military costs in the self-proclaimed republics.
"Therefore, they will have to sit down and find a compromise. A compromise is a situation which makes no one happy because everyone has had to make a sacrifice to reach it.
"The options are numerous. For example, Russia could give access to international observers, and agree to territorial restrictions or limit the numbers or responsibilities of Russian and foreign peacekeepers in the republics.
"The West also has room for bargaining, ranging from legal security guarantees for South Ossetia and Abkhazia to recognition of their independence," he suggested.


Ossetian-Abkhazian precedent cannot spread to other territories - expert

The August 2008 war with Tbilisi over South Ossetia, Georgia's breakaway province, means that other post-Soviet conflicts will need to be settled, and that the old-style Abkhazian and South Ossetian peace settlement models are no longer valid, writes Sergei Markedonov, head of the inter-ethnic relations department of the Institute for Political and Military Analysis in the Kommersant daily.
Just like Taiwan and the Turkish Republic of Northern Cyprus, the two breakaway Georgian provinces now have the status of partially recognized territories.
Nagorny Karabakh and Transdnestr that broke away from Azerbaijan and Moldova in the early 1990s still rank as unrecognized states. The conflicts have been neither settled nor become frozen, however, the warring sides fear a possible war that could inflict major casualties and also cause their respective governments to lose face, the expert writes.
This August, Georgian President Mikheil Saakashvili made an abortive attempt to capture Tskhinvali, the capital of South Ossetia, which resembled the precedent of Serbian Krajina, when Croatia successfully conducted a military operation against Serb separatists in 1995.
Russia's tough response to Georgia's actions has become a warning to other post-Soviet republics that it is better not to resort to force to solve their territorial problems.
Moldova lacks the required military potential to overrun Transdnestr, while the influential Armenian diasporas in the EU and the United States is dissuading Azerbaijan from repeating the Croatian experience.
Rhetoric by Azerbaijani leaders over the last month demonstrates that Baku has stopped talking about Croatian actions.
No matter what the victory-intoxicated Russian politicians and analysts may say, Moscow is unable to apply the Abkhazian-Ossetian precedent to other self-proclaimed republics. However, the Kremlin wants Moldova to remain neutral and would also like to maintain partner-like relations with Azerbaijan, Markedonov writes.
In August-September 2008, Baku kept a low profile during Russia's peace enforcement operation in Georgia. It did not accuse Moscow of annexing part of Georgian territory and remained within the CIS.
Moscow is interested in a secular Azerbaijan that distances itself from the West, implements authoritarian modernization policies, and which together with the Kremlin can jointly fight radical Islam, the main threat to Russian security in the North Caucasus.
Consequently, Russia could turn the self-determination of both former Georgian provinces into a unique precedent. Moscow's peacekeeping operations in Karabakh and Transdnestr would convince the international community that the Kremlin is not trying to rebuild its empire and is ready to play the lead in reconciling the warring parties, the expert writes.

Nezavisimaya Gazeta

Russian-American space cooperation may survive

The experience of Soviet/Russian-American space cooperation suggests that they both depend directly on the relationship between the two nations, writes Yury Karash, corresponding member of the Tsiolkovsky Russian Academy of Cosmonautics.
The latest events in the Caucasus, in the view of Senators John McCain, Kay Hutchinson and David Witter, have called in question the credibility of Russia as an International Space Station (ISS) partner and provider of space transport services.
But there are two conditions that may allow this cooperation to be kept alive.
The first is that the United States, according to Masha Lipman, an analyst at the Carnegie Moscow Center, needs Russia more than Moscow needs the U.S. The U.S. demand for Russian support, at the end of the first decade of the 21st century, is incomparably higher than during confrontational periods between the two superpowers, when the United States required backing of other countries against the Soviet Union. But now a series of pullouts and instructional actions by Washington against Moscow pales in comparison with similar steps that Moscow could take against the U.S., the analyst stressed.
The U.S. needs Russia's support in its war against the Taliban in Afghanistan, and in its drive to make Iran and North Korea give up their nuclear programs and maintain security over Russian facilities containing weapons of mass destruction, Lipman said.
The ongoing Russian-American space union centered on the ISS must be a reminder that the Moscow-Washington strategic partnership, despite current differences, is more alive than dead.
The second condition is that unlike the East-West period of confrontation the U.S. space program depends on Russia. On the one hand, without Russia's Soyuz launch vehicles acting as lifeboats, the Americans will be unable to maintain a permanent presence on the ISS and after the shuttles are phased out in 2010, even to get there. On the other hand, without Russian spacecraft the U.S. will be unable to fulfill its commitments to Canada, Europe and Japan to transport their astronauts to and from the station, let alone accommodate them there.
It is the case of real dependence by the U.S. on Russia in space, not interdependence.
As NASA chief Michael Griffin has said, Russia alone can keep the ISS alive.


Current crisis could benefit labor market like in 1998

The news of U.S. invest bankers losing jobs in torrents brings back the memories of the August 1998 events when Russia was severely hit by a financial crisis and many financial analysts, office workers, PR specialists and other professionals not involved in basic production found themselves unemployed.
That crisis in fact added several important names in Russian journalism as former financiers quickly gained renown in their new careers.
It is clear now that the difficulties plaguing Russia's stock market are not temporary. The downward trend continues despite good news coming from abroad and the favorable macroeconomic situation in the country. And, just like ten years ago, financiers are tempted to suspend their careers and take up yoga, for example, or enroll in an advanced degree program outside Russia.
So, is there any chance that the current financial crisis will renew the labor market as the 1998 default did? It was a global transformation then, as the shock of the ruble's plunge lasted for six months. Russia's unemployment rate hit an all time high of 13.2% then, but quickly subsided as domestic producers got a competitive edge over imports and took advantage of the low ruble.
Russian companies' rapid growth sent the demand for industrial workers sharply up, while economic growth that followed the crisis eventually shaped the labor market to what it is today with the lowest-ever unemployment rate (5.6%) and personal incomes index twice that of labor productivity.
Economists are unanimous that the 1998 crisis actually benefitted Russia's labor market. It helped restore healthy proportions and provide employment and made the government consider education reforms.
But in the past four years, bubbles have been growing dangerously on the labor market, inflated by a shortage of qualified personnel and the inflow of super profits from exports.
They talk enthusiastically at corporate events about friends and relatives who have changed jobs several times over the last four years, boosting their incomes five or ten-fold. Certainly their professional qualifications could not have grown at this rate.
But employers agree to pay exorbitant salaries even to candidates whose qualifications are not up to the mark. The current crisis will probably help solve this problem.


Russian industry posts growth

Despite high inflation, capital flight and high interest rates on loans, industrial production grew by 4.7% in August and 5.3% in January through August, Economic Development Minister Elvira Nabiullina said on Monday referring to unpublished data from the State Statistics Service.
Some analysts were pleased, but others expressed concern.
Alexander Osin, chief economist at the Finam holding, said: "The situation in the industrial sector remains stable despite a dramatic fall on the stock market and deterioration in the debt segment."
According to the innovation-based scenario of economic development drafted by the ministry, annual industrial production should grow by 5.2% in 2008, Osin said, adding, "From this viewpoint, the August figures are quite favorable."
Analysts say growth was boosted by the manufacturing sector, where production increased by 6.5% in August, compared with 4.6% in July and 0.6% in June.
However, not all analysts expressed optimism.
Alexei Pavlov, deputy head of the analytical department at the Arbat Capital investment company, said it would be premature to say the situation had improved.
"Annual industrial production grew by 6% in 2006 and 2007, whereas the figure dropped to 5.3% in the first eight months of 2008 and we predict that it will continue to fall," he said.
Valery Mironov, chief economist at the Development Center economic research foundation, said: "Our growth is approximately one percentage point slower than before."
High inflation, high interest rates on loans and the flight of Western capital have limited investment potential for Russian industries, which, in turn, is causing a slow down in industrial growth, Pavlov said.
Igor Nikolayev, director of strategic analysis at Financial and Bookkeeping Consultants (FBC), said he was worried by the August figures, which stand in stark contrast to other indicators, such as growth in production prices and investment in fixed assets as well as the situation on the stock market.
"I'm afraid the statistics service may start fiddling the figures," he said.
Analysts hope that more detailed information from the statistics service, to be published today, will give a more accurate explanation for growth and allay doubts.

Vedomosti, Kommersant

Russian fertilizer producers suspected of price fixing

A small U.S. fertilizer-producing company has accused global producers of potash, including Russia's Uralkali and Silvinit, of price fixing schemes.
Potash is the key ingredient used in fertilizers by farmers across the globe.
It is the first time Russian companies have been accused of colluding with foreign firms, although such allegations are not uncommon outside Russia. However, this particular case will not go to court anytime soon.
Minn-Chem, whose annual revenue is $9.5 million (according to Hoover's), filed a complaint with the U.S. district court of Minnesota against Canada's Potash Corp., Mosaic and Agrium, Russia's Uralkali and Silvinit, Belarusian Belaruskali, and their traders. Taken together, they account for 71% of global potash exports.
The U.S. company claims they have "conspired to fix, raise, maintain and stabilize" the price of their potash exports to the United States "at artificially inflated and anti-competitive levels" since July 1, 2003. As a result, potash spot prices have grown by 60% to $200-$240 per ton in 2004-2005 (from $150 per ton in 1985-2001) and almost doubled in 2007 and early 2008.
BPC, the potash export arm of Uralkali and Belaruskali, said in July that it had signed a contract to supply 30,000 tons of potash to the U.S. at $1,000 per ton.
The suit filed by Minn-Chem seeks class action status, which means any company that has bought potash from the named companies in the U.S. since 2003 can participate in the legal claim.
Ilya Rachkov, a partner at the law firm Norr Stiefenhofer Lutz, said that if the company's price fixing allegations were proved, producers could face fines of millions of dollars, which is much more than the actual losses, and their directors could also face prosecution.
Steven Dashevsky, managing director at Unicredit Aton, said all major potash producers are involved in the case, including Uralkali and Silvinit, so the lawsuit cannot be put down to a deterioration in U.S.-Russia relations.
According to Potash Corp. and Agrium, Minn-Chem's assertions are without merit.
Sergei Sokolov, a partner at the Marks & Sokolov International Law Firm, thinks "the Russian companies could contest the jurisdiction of the U.S. court."
The hearing would last more than a year, he said, as notification of foreign defendants takes between three and six months and the issue of the court jurisdiction between six and nine months.

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