MOSCOW, October 3 (RIA Novosti)
Europe wants to punish Russia, reluctant to lose financial donor / Questions surround Kiev's arms shipments to conflict zones / U.S. starts scramble for Indian nuclear market / Russian-German friendship sealed with huge gas deal / Gazprom postpones South Stream for two years / Equal conditions to be created for all TNK-BP employees
Kommersant
Europe wants to punish Russia, reluctant to lose financial donor
PACE adopted a resolution on Thursday on the consequences of the Russia-Georgia war. Fortunately, for all the harsh rhetoric, Moscow still managed to neutralize the main threat posed by it, said Fyodor Lukyanov, editor-in-chief of the Moscow-based magazine Russia in Global Affairs.
The amendment automatically banning the Russian delegation from voting in the PACE unless it cancels the recognition of Abkhazia and South Ossetia was eventually removed from the final resolution.
Russia's membership in the Council of Europe, which was established to promote "European values", is a heritage of the time when Moscow had an obsession of proving it belonged. Back in the 1990s, Moscow's membership in the various clubs was more than a matter of prestige, it was a self-identification factor: we wanted to go where "civilized nations" went, Lukyanov said.
The same issues are still there, prestige and self-identification, only we come up with different solutions these days. Russia now needs to prove it has the right to act as an inpendent force, although it is unclear how we should do it in a group designed to promote the spirit of ideological and political integration.
The end of the Cold War failed to landmark the beginning of a new global and European order. A different choice was made instead of building some institutes which would reflect the new realities: the world opted for expanding the alliances established within the "victorious" Western bloc to global ones.
The approach seemed to work a decade ago, the expert said. New democracies lined up to join all the "free world" clubs, from the WTO and IMF to the Council of Europe, NATO and the EU.
It soon became clear that Western influence expanded so rapidly only due to the unique moment in history. Firstly, Russia was knocked out geopolitically, while China was still concentrated on domestic developments. That period lasted for ten years and then ended.
Secondly, the old institutions' capacity to adapt to the new realities turned out to be very limited. They are no longer capable of carrying out their missions, Lukyanov said.
It is difficult to describe the triumph of real politics using the terminology accepted in the Council of Europe. There are also mercantile interests interfering with political and humanitarian aspects. On the one hand, they want badly to punish Russia, but on the other, no one is interested in losing a major financial donor.
Europe cannot avoid building a new security system, which will certainly have to include a discussion club. The Council of Europe, which is the oldest European organization still in place, could provide a suitable site for that. For one thing, its mandate and legitimacy, unlike those of the OSCE, are not disputed by anyone, not even by the constantly criticized Russia. But for that, we all should first recognize that the world has changed and that things have not gone to plan like we expected them to back in the early 1990s.
Nezavisimaya Gazeta
Questions surround Kiev's arms shipments to conflict zones
The current standoff between Ukraine's President Viktor Yushchenko and Prime Minister Yulia Tymoshenko may escalate into a major international scandal.
On Wednesday, Tymoshenko told journalists that Kiev was illegally supplying weapons to other countries, but that the National Security and Defense Council would not allow an independent investigation.
South Ossetian leaders recently accused Ukraine of illegal arms shipments to Georgia, and another similar scandal is highly undesirable to Kiev.
That same day Paul Holtom, a researcher with the Stockholm Peace Research Institute, said Kiev had supplied small firearms to Azerbaijan, Georgia, Chad, Kenya and Libya in 2006-2007.
Ukraine's opposition said the European Union would become more concerned after the hijacking by Somali pirates of the freighter Faina that was carrying tanks to Kenya.
Kiev said it had the right to supply weapons to Georgia, which is not under any international sanctions.
Opposition deputies Valery Konovalyuk and Valery Bondik, members of a parliamentary investigation committee, told journalists that a fire that destroyed an ammunition depot in the Kharkov Region, eastern Ukraine, late August could have been the result of arson and a cover-up by smugglers.
In its preliminary report, the committee said Ukraine sold weapons to Georgia at dumping prices, and that the operation was supervised by President Yushchenko.
Konovalyuk said the government had deliberately impaired national defense capability, that it had removed surface-to-air missile (SAM) battalions from active duty and sold them to Georgia for next to nothing.
"Instead of being adopted by the Ukrainian army, five brand-new Shkval underwater missiles went to Georgia," Konovalyuk said.
Analysts said the prime minister was supposed to sign all arms-export contracts, but that Tymoshenko probably knew nothing about contraband deals.
"President Yushchenko, who voices political support for his Georgian counterpart Mikheil Saakashvili, could facilitate this process in line with bilateral agreements," Ukrainian political analyst Vladimir Fesenko told the paper.
The scandal will create problems for Yushchenko in his dealings with foreign partners and could lead to the Ukrainian leader's criminal prosecution, analysts said.
However, members of the parliamentary investigation committee said they doubted whether Yushchenko's complicity in illegal arms shipments would be proved.
Gazeta.ru
U.S. starts scramble for Indian nuclear market
The U.S. Senate has ratified an American-Indian strategic agreement on nuclear cooperation, also known as the 123 Agreement. The decision makes India, which already has nuclear weapons, a member of the nuclear club and puts paid to the non-proliferation regime. Economically, however, the new agreement brings benefits not only to the United States, but also to Russia and France, say experts.
India has been practically isolated from international trade in nuclear materials since 1974 when as a non-signatory to the Nuclear Non-Proliferation Treaty, it conducted its first nuclear bomb test. Other countries, such as South Africa, Taiwan and Brazil, froze their nuclear programs, but Washington is in no hurry to conclude similar agreements with them.
Timofei Bordachev, director of the Center for European and Global Studies, said: "Since India and Pakistan not only acquired nuclear weapons, but in fact legitimated their possession, the non-proliferation regime in its present shape is doomed."
According to him, "there are serious grounds for concern," considering that Pakistan, in a lingering political crisis, and its rival India lack "the expertise of civilized deterrence."
However, the International Atomic Energy Agency (IAEA) and the Nuclear Suppliers Group (NSG), which comprises 45 uranium fuel producers, have agreed, under U.S. pressure, to admit India to the nuclear club.
In this way, Bordachev said, "conditions have been created for competing for the Indian nuclear market."
With NSG approval under its belt, India has this week concluded a promising nuclear cooperation agreement with France. India is interested in the European pressurized-water (EPR) nuclear reactor of the third generation, and the French holding Areva is ready to build at least two such units, complete with fuel.
New Delhi also looks to cooperation with Russia. In August Anil Kakodkar, chairman of India's Atomic Energy Commission, told reporters that he would like to cooperate with Russia not only in engineering projects, such as the construction of the Kudankulam nuclear plant or supplies for the Tarapur nuclear plant, but also in fundamental research.
In an interview with Gazeta.ru, an official representative of Atomstroyexport, which represents Russia's nuclear industry interests abroad, said that with the embargo lifted Kudankulam could now get another four new-generation reactors. "This agreement was initialed in February, and now we can start implementing it," she said.
Gazeta, RBC Daily, Vedomosti
Russian-German friendship sealed with huge gas deal
President Dmitry Medvedev has given his blessing to the first large deal since he took office.
It was also the first deal involving a major Western company signed since the Georgian-South Ossetian conflict last August. After five years of negotiations, Germany's E.ON finally acquired the coveted 25% stake in one of the biggest projects implemented by Russian energy giant Gazprom, the South Russkoye oil and gas project in West Siberia, in exchange for 1.44% of Gazprom's own shares.
The asset swap will take effect on January 1, 2009, and the deal will be closed in the second half of next year. The gas monopoly emphasized that E.On would retain direct ownership of the 3.5% Gazprom stake remaining in its possession.
Gazprom CEO Alexei Miller said it was a lucrative deal for his company and an honor for E.ON. "We do not let just any company join our production projects," Miller told reporters on Thursday.
Most analysts share Miller's enthusiasm, and say that the agreement has sealed Germany's status as Russia's top priority energy partner.
Some analysts also believe that the terms of the deal signify E.ON's strategic victory over Gazprom. The German company successfully retained its sole control over key European energy assets. Gazprom had been eyeing large stakes in E.ON subsidiaries in Europe in exchange for the South Russkoye stake.
Dmitry Lyutyagin from Veles Capital said Gazprom was lucky to buy back its shares giving the government de-facto control of 50% in the monopoly. Moreover, as the company's capitalization grows, it could use the stocks to acquire stakes in other projects, including overseas ones. The deal is also important in the political sense as the first one since the recent Russian-Western tensions over the Georgian - South Ossetian conflict.
Mikhail Korchemkin, director general of the East European Gas Analysis consultancy, does not think it was a particularly good deal, as Gazprom failed to get hold of E.ON's Hungarian assets mentioned in the 2006 agreement.
South Russkoye is nothing like other giants such as the Urengoyskoye, Yamburgskoye or Zapolyarnoye fields. Urengoyskoye, for example, yielded over 276 billion cu m of gas a year in 1978, or half of Gazprom's current total production. Still, it is one of the largest fields covered by the foreign investment laws adopted last spring.
Russia's antitrust regulator has not yet received E.ON's request, said Svetlana Levchenko, the head of the FAS department for control over foreign investment. Such requests are usually considered three to six months according to the established procedure, she added.
Vedomosti
Gazprom postpones South Stream for two years
Russian energy giant Gazprom has postponed the commissioning of the South Stream natural gas pipeline until at least 2015. Analysts say this gives the Nabucco pipeline a chance to finish the race first.
The South Stream pipeline is designed to transport Russian natural gas to Italy, via Bulgaria and Serbia to Hungary and Austria. The Nabucco pipeline should pump natural gas from Turkey to Austria, via Bulgaria, Romania and Hungary.
Gazprom CEO Alexei Miller said last January that South Stream would be commissioned in 2013, a deadline he described as "realistic." But the gas monopoly's draft development concept for the gas sector up to 2030 says South Stream, with a capacity of 31 billion cubic meters, will come on stream in 2015-2024.
"The deadlines for commissioning perspective projects [including South Stream] will depend on the situation on external and domestic markets, state policy in the sector (including taxation), metal prices dynamics, and other factors," the concept says.
The deadline for commissioning the South Stream pipeline will be set after the feasibility study for the project is ready, a Gazprom representative said. The study for the countries across which the pipeline will run should be ready in the third quarter of 2009.
The source also said the deadline would depend on the outcome of discussions of the pipeline's route, volume of gas transit in the countries involved, as well as the governing principles for the SPV set up to build and operate the pipeline.
Gazprom plans to build onshore sections of the pipeline jointly with the project's participant countries.
The project has not even been properly assessed.
Gazprom earlier said its offshore section would cost $10 billion, and Paolo Scaroni, CEO of Italian utility Eni, which holds 50% in the project, said the onshore section would cost an equal amount.
Vyacheslav Bunkov, an analyst at the Aton-Line web securities trader, said each year of postponement would increase costs by 5%-10%, given the growing metal prices.
Vladimir Vedeneyev, an analyst at the Bank of Moscow, thinks the initial deadline of the project, which has not even started, was unrealistic. Given the scale of the project, it would take between five and seven years to complete it.
Gazprom also needs to build 2,400 km (1,492 miles) of the pipeline across Russia, the company's development concept says. However, it is unclear from which deposits it would start.
Initially, South Stream was to be commissioned simultaneously with Nabucco, which is designed to deliver 26-32 billion cubic meters of natural gas to Europe.
Konstantin Cherepanov, an analyst at KIT Finance, one of the five largest Russian municipal and corporate bond underwriters, said this gives Nabucco a chance to come on stream in Central Europe ahead of its rival, forcing Gazprom to review its plans of gas supplies to South Stream.
Kommersant
Equal conditions to be created for all TNK-BP employees
For the first time in Russia's corporate history, a major foreign company has admitted that labor conditions for its Russian staff were inferior to those of its foreign managers.
TNK-BP Management and its 16 top managers have signed an amicable agreement in court obliging the company to create equal conditions for all employees.
Sixteen vice presidents and department directors of TNK-BP Management (15 of them Russians and one a U.S. national) filed a lawsuit on July 17 seeking protection for their labor rights and accusing company CEO Robert Dudley of preferential treatment of foreign staff.
According to the suit, of the 97 nonresidents employed with the company 55 are top managers, accounting for 30% of all top managers at TNK-BP Management.
"A nonresident employee of BP costs $800,000 a year, or $67,000 a month. The annual average income of a nonresident top manager is 70% higher than the annual average income of a comparable Russian employee," the suit says.
The amicable agreement invalidates the document on guarantees and compensation for nonresident employees, which specifies a monthly allocation of between $4,000 and $18,000 to nonresident top managers for renting housing in Moscow, payment for the education of their children, provision of a chauffeured car, and VIP service in airports.
Sergei Akhundzyanov, the claimants' lawyer, said he was convinced that equal labor conditions would now be created for Russian and foreign staff of the company.
Lawyers say this is an unprecedented lawsuit, especially as it was initiated by a large group of top managers of a major company.
Denis Uzoikin, a lawyer with the Moscow Regional Bar, said: "We have not had such hearings before, as cases of discrimination seldom reach courts."
However, it would be premature to speak of the court's position or a precedent, because the case has been settled in an amicable agreement, he added.
Uzoikin thinks that TNK-BP's decision to sign an amicable agreement amounts to the admission of its mistakes and the guilt of its CEO, Robert Dudley.
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