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What the Russian papers say


MOSCOW, September 26 (RIA Novosti)
Putin promised to liquidate border between Russia and South Ossetia / Moscow, Washington made hostages to regional problems / Russia to issue arms purchasing loan to Venezuela / Iran proposes rival project for South Stream, Nabucco / Russian Railways wants a bit of German flavor / Russian company to buy plant equipment from Mitsubishi Motors Australia

Vedomosti, Vremya Novostei

Putin promised to liquidate border between Russia and South Ossetia

Prime Minister Vladimir Putin has decided that the pro-Kremlin United Russia party should help the newly independent republics in the Caucasus.
Putin, who is also chairman of United Russia, has held his first meeting with the party's regional leaders - speakers of regional assemblies and heads of the party's regional branches. More than 150 people gathered in the Volzhsky Utes health resort in the Samara Region on the Volga.
The only notable absentee was Mintimer Shaimiyev, president of Tatarstan since 1991, who had been mistakenly reported dead. A lawsuit has been filed in the republic against those who spread the rumor.
Putin told the regional leaders what they should do, adding that one of the priorities was "to liquidate the border between Russia and South Ossetia."
The prime minister said the requisite legislation was being drafted and reminded the audience about the treaty of friendship and cooperation recently signed with that newly free republic.
Russia needs to sign one more document with South Ossetia, he said, to ensure Russia's border security and give the people the freedom to move without "administrative barriers."
This is the first time a high-ranking Russian official has mentioned the possibility of canceling border control between Russia and South Ossetia.
Vadim Tyulpanov, speaker of the St. Petersburg legislature, told Putin that he and the municipal deputies informed European colleagues about developments in South Ossetia.
Putin asked if St. Petersburg had a sister city in Georgia. "Yes," Tyulpanov replied blushing. "It's Tbilisi." Putin advised him to work also with Georgian colleagues, saying: "It would be wrong to let nationalists wreak havoc in Georgia."
Moscow Mayor Yury Luzhkov, co-chairman of the United Russia's Supreme Council, said South Ossetia was a de facto part of the Russian Federation.
Political analyst Alexander Kynev said United Russia did not have own resources for promoting relations with the newly free republic and would therefore need state allocations.


Moscow, Washington made hostages to regional problems

The war in the Caucasus has not changed the essence of Russian-U.S. relations or their dynamics, which have been negative for years, a Russian expert told the business daily Kommersant.
Nikolai Zlobin, director of the Russia and Eurasia Project at the Washington-based World Security Institute, said the global project to bring together the two nuclear powers had failed, and they had not found a new format for their relations.
The United States still regards Russia as a country that needs to be reformed, Zlobin said. For its part, Russia's foreign policy in the past few years has been aimed at lessening the U.S. domination in the world. Both approaches proved to be wrong and have also weakened the two countries, making them vulnerable to a multitude of new factors.
As a result, Moscow and Washington are becoming hostages to regional problems, which are overshadowing the fundamental essence of their bilateral relations, the expert said. In fact, theirs are not proper relations between two countries, because they almost always concern third parties, such as South Ossetia, Kosovo, Iran or the World Trade Organization.
Zlobin writes that there are no reasons for confrontation in Russian-U.S. relations. Paradoxically, Russia's recognition of Abkhazia and South Ossetia has made it closer with Washington as regards understating the essence of current global developments and a desire to review the obsolete model of international politics.
Russia and the United States have come much closer than ever before to serious discussion of the fundamentals of a new world order, the expert writes. They need to discuss new approaches to global, regional and national security issues, to new international law, and to the establishment of new international structures capable of bringing order to the two countries' impromptu foreign policies.
They should do at least three things to attain this goal.
First, they must overcome, if possible, growing mutual mistrust and suspicion.
Second, they must stop threatening each other with confrontation, sanctions and isolation, because quite a few other players would be happy to go fishing in troubled waters.
And third, they must stop pushing each other into another Cold War and instead make bilateral relations truly fruitful.


Russia to issue arms purchasing loan to Venezuela

President Dmitry Medvedev, who will meet with Hugo Chavez in Orenburg on Friday, prepared a present for his Venezuelan counterpart on his seventh visit to Russia.
Kremlin sources said Moscow was prepared to issue Caracas a $1 billion loan for purchasing Russian arms. Analysts expect mounting interest in mutual projects on both sides.
Two years ago in the Urals city of Izhevsk, Chavez asked for a loan but the issue was suspended then. It is indicative that the Kremlin would decide to grant the financial request of its South American friend and ally now, amid the global economic crisis and mounting tensions with the West.
According to the source, a total of 12 arms delivery contracts worth in excess of $4.4 billion were signed with Venezuela between 2005 and 2007.
Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies think tank, said lending to Venezuela was far from a charitable business, and very different from the support that the Soviet Union was providing to the communist regimes in Cuba and Peru.
"Cuba was a purely political project. Venezuela is a rich and solvent country. Russia should be interested in further cooperation with it," Pukhov said, adding that supplying arms could lead Russia to other Venezuelan markets, including energy.
Russia's Gazprom and Venezuelan oil and gas company PdVSA signed an agreement last week giving the Russian gas monopoly 15% in the third stage of the Delta Caribe Oriental project to produce 4.7mn metric tons of liquefied natural gas a year. It will also be involved in exploration and production projects at the Blanquilla and Tortuga offshore fields in the Caribbean basin.
Russia is already supplying weapons to Venezuela, including 100,000 modernized Kalashnikovs (AK-103). Two plants are under construction in Venezuela which will assemble Russian submachine guns and ammunitions under Russian licenses.
Russia is successfully implementing a contract to supply to Venezuela 24 Su-30ÌÊ2 fighter jets and 50 helicopters.
Venezuela plans to purchase up to 20 Tor-M1 surface-to-air missile systems and three diesel-powered Varshavyanka [Kilo]-class submarines.
"The anti-American rhetoric, or the concept of a multi-polar world as they put it in Russia, could make a good replacement for an absent national idea in both Russia and Venezuela, as well as something to unite the two countries," Pukhov added.

RBC Daily

Iran proposes rival project for South Stream, Nabucco

Tehran is planning to respond to the Nabucco and South Stream pipeline projects with one of its own, the $4 billion Pars facility to carry its natural gas to Europe.
Iran's deputy oil minister Akbar Torkan said his government was in talks with a well-known European company about becoming the operator of Pars. However, analysts doubt that a European company would agree to take part in an Iranian project.
Pars will run from Iran to Turkey, Greece, Italy and on to Switzerland, Austria and Germany, carrying 37 billion cu m of gas annually. Torkan did not cite the timeframe of the project.
The EU-backed Nabucco project is designed to carry 26-32 billion cu m a year to Europe bypassing Russia. South Stream is a joint project between Russian Gazprom and Italian Eni to ship 30 billion cu m of Russian and possibly also Central Asian gas to Europe across the Black Sea. Both pipelines are to be laid by 2013.
Pars is unlikely to be built soon, because the European Union and the United States, the two forces Turkey considers with reverence, have strained relations with Tehran, said Alexei Belogoryev, an expert at the Institute for Natural Monopoly Studies.
Iranian LNG imports would be safer in the current situation. If relations between Tehran and Brussels improve, most European gas majors would be interested in this project, primarily Eni, Shell and BP. But today, none of the large players would venture to get involved, he added.
Iran's project does not look viable, agreed Sergei Pravosudov, director of the National Energy Institute. The Iran-Turkey pipeline breaks down every year after Kurd terrorist attacks. Who would agree to build another, larger pipeline there?
Suppose Pars is built and commissioned, it would put Nabucco out of business, said Alexander Shtok, head of the Due Diligence department at 2K Audit - Business Consulting. Central Asian countries have already made their choice in favor of shipping their gas across Russia, he said.
Mikhail Korchemkin, director of the East European Gas Analysis consultancy, said Gazprom could try to join the Pars project in order to buy up Iranian gas and resell it to Europe. It would be the best way of avoiding competition.


Russian Railways wants a bit of German flavor

Russian Railways (RZD) intends to buy a 5% stake in Deutsche Bahn in the German company's IPO scheduled for late September and early October, its president Vladimir Yakunin said.
Experts say the deal would be worthwhile if RZD manages to drum up the 1 billion euros necessary for the acquisition, but such a sum is currently unlikely to be obtained without direct state support.
The Frankfurt Stock Exchange will be selling 24.9% of Deutsche Bahn stock. The placing will be done by the holding company Deutsche Bahn Mobility and Logistics, in which the state-run railroad company put all its passenger, cargo, logistics and maintenance services in May of this year. The state now owns only railroad infrastructure. In 2007, the company's earnings totaled 31.3 billion euros, and net profits, 1.7 billion euros.
German government spokespersons said in the spring that the company was planning an IPO to raise 5 billion euros ($7.36 billion). Yelena Sakhnova from VTB doubts that without direct state backing RZD can obtain the required sum (1 billion euros). "No bank is able to provide such an amount now," she said.
An RZD source said the liquidity crisis also hit the rail monopoly: recently the company spent a month casting about for 2 billion rubles ($80 million).
A manager of the Russian investment bank that cooperated with RZD said it is hard to find finance these days. "If TransContainer had held its scheduled IPO this fall, there would have been fewer problems with financing," he said.
Yevgeny Shago, head of analysis at Ingosstrakh-Investments, also doubts that the Russian company can borrow 1 billion euros on easy terms within a short period of time. But he is sure Deutsche Bahn would cut the offer.
"Portfolio investors will not agree to accept such a placement and strategic investors will have to be given a sizeable discount," the expert said. It is only in this case that RZD will find it profitable to take part in the offering. "With a financial crisis and cautious investor sentiment prevailing on the global markets the estimated offer could be lowered," Sakhnova said.


Russian company to buy plant equipment from Mitsubishi Motors Australia

Automobile Motor Ural (Amur), a small Russian regional carmaker, said it wanted to buy equipment of the bankrupt Mitsubishi Motors Australia plant that had manufactured Mitsubishi Galant 380 front-wheel drive sedans.
Two sources close to the Amur top management said the company also wanted to buy the Mitsubishi Galant 380 platform.
Amur CEO Pavel Chernavin declined to comment on the reports but said the company was negotiating joint passenger-car production with Mitsubishi Motors, and that the talks' results would be known in late October.
Mitsubishi Motors spokesman Tetsuji Inoue said the company was looking for someone to buy its Australian plant but declined to comment on the talks with Amur.
Russia is one of the few countries receiving U.S.-assembled Mitsubishi Galant 380s. However, only 1,667 vehicles were sold here in January-July 2008.
Inoue said the Australian plant could annually assemble 30,000 cars, but that it had turned out just 10,000 vehicles last year and had to be shut down in March 2008.
A source said the equipment and car platform would cost $100 million, and that Amur wanted to use them for assembling sedans, SUVs and minivans.
Previously, Amur said it wanted to spend $150 million on the project. However, the company posted 570 million rubles ($22.8 million) in net profits last year, earned another 2 billion rubles ($80 million) and assembled 4,225 Chinese Geely and Zhongxing vehicles and 1,910 Russian ZIL and Indian Tata trucks.
The Sverdlovsk Region's government and the international consultancy TGI Group are looking for a coinvestor that would finance Amur projects.
Alexei Rakhmanov, director of the regional government's automotive industry department, said Amur's industrial car-assembly request was repeatedly denied because it did not match specific requirements.
He said Amur now wanted to implement another car-assembly project stipulating relocation of production.
Ivan Bonchev, a car industry expert with Ernst & Young, said Amur could spend up to $150 million on the project, but that SUVs and minivans could increase the cost to $200-300 million.
This is not the first time that Russian companies are relocating production from abroad.
GAZ Group, Russia's second biggest carmaker, recently bought equipment of the U.S. Sterling Heights plant and developed its Volga Siber car based on the Chrysler Sebring sedan.

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