MOSCOW, November 7 (RIA Novosti) Europe shocked by Russian decision to deploy missiles in Kaliningrad / China supports Russian decision to deploy missiles in Kaliningrad Region / Medvedev calls for extending presidential, Duma terms / Neo-socialism will sweep the world after global crisis / Russia assists former socialist countries again / LUKoil asks for bailout /
Europe shocked by Russian decision to deploy missiles in Kaliningrad
The West has been shocked by Russian President Dmitry Medvedev's intention to dispatch the Iskander missile systems to the Kaliningrad Region on the Baltic Sea in response to the U.S. ballistic missile shield deployment in Europe.
The European Union said Russia's plans were an unpleasant surprise and blackmail. Even Russia's traditional partners have spoken out against its decision.
European politicians are disappointed with the new Russian president.
Benita Ferrero-Waldner, the European Commissioner for External Relations and European Neighborhood Policy, said this could prevent the implementation of one of Medvedev's main initiatives. He proposed last June that Russia and the EU draft a comprehensive Euro-Atlantic security treaty as the foundation for a new world order.
Medvedev's latest decision fits in with the operating model he recommended to Russian diplomats in July, when he said they should uphold Russia's interests more aggressively. Subsequent events, including the war in the Caucasus, recognition of Abkhazia and South Ossetia's independence, and the intention to deploy Russian military bases there, prove that the Kremlin is following Medvedev's recommendations to the dot.
The decision to deploy the Iskander systems in Kaliningrad is a new element of this policy. When Vladimir Putin was president of Russia, the Kremlin said it would react to the deployment of the U.S. ABM systems in Europe. Medvedev has shown a readiness to act on that promise.
Russian diplomats responsible for policy regarding Europe warn against dramatizing developments.
Vladimir Chizhov, the Russian ambassador to the EU, told the business daily Kommersant yesterday: "The president's words about the deployment of the Iskander systems were a warning about Russian measures to be taken in response to the possible implementation of U.S. plans. Europe is not sure it needs the U.S. ABM system. I think the victory of Barack Obama is another pointer that these plans of the previous U.S. administration may not be implemented. In this case, the Iskander missiles will not be deployed in Kaliningrad."
Chizhov said it was too early to bury the idea of a comprehensive Euro-Atlantic security treaty.
"I am convinced that this initiative will be discussed at the upcoming EU-Russia summit and Medvedev's first meeting with Barack Obama on November 15 during the Group of 20 economic summit," he said.
China supports Russian decision to deploy missiles in Kaliningrad Region
The Russian-Chinese consultations on strategic security that opened in Moscow will see a discussion of possible changes in U.S. policies after the victory of Democratic candidate Barack Obama during the November 4 presidential elections.
Moscow is concerned about the deployment of elements of the U.S. National Missile Defense (NMD) system in Europe, while Beijing is worried about possible U.S. curbs on Chinese exports.
Russian and Chinese leaders want to prepare for new challenges posed by Washington.
China's Zhongguo Xinwenshe news agency quoted local analysts as saying that the new U.S. president could limit Chinese exports in order to protect domestic producers and reduce unemployment.
This policy does not suit China, because industrial enterprises in Shenzhen, a major national export production center and the world's largest manufacturing base, as well as in other Chinese cities, are currently being shut down due to the global financial crisis.
China is expected to post lower economic growth rates for the first time in several years.
Chinese Foreign Ministry spokesman Qin Gan reacted promptly to Moscow's decision to deploy Iskander tactical missiles in the Kaliningrad Region, its Baltic exclave. Gan said this was a direct consequence of U.S. policies to set up a missile-defense system in Eastern Europe.
Although Beijing tries to avoid disputes and conflicts with Washington, it always approves Russian criticism of U.S. policies.
Dr. Yury Galenovich, a China expert with the Institute of Far Eastern Studies in Moscow, and Dr. Yakov Berger, senior researcher at the same institute, commented on the significance of the current bilateral consultations.
Galenovich said national delegations were headed by Russian Security Council Secretary Nikolai Patrushev and Dai Bingo, China's First Deputy Foreign Minister and State Council member, and that both men had close ties with national leaders.
He said Patrushev had headed Russia's Federal Security Service (FSB), while Dai Bingo had supervised Russian policy issues at the Chinese Communist Party's Central Committee.
Several years ago, Dai Bingo visited Moscow and facilitated regular consultations on strategic issues, Galenovich told the paper.
The current consultations are motivated by Moscow's desire to once again explain its stand on the Russian-Georgian conflict to Beijing, Galenovich said. Naturally, both sides are also sending a message to the new U.S. president that they will coordinate their actions on the international scene.
Berger said Beijing had counted on joint Chinese-U.S. economic development, but that the financial crisis had thwarted such plans. The increasingly anti-American Chinese stand facilitates greater cooperation with Russia, he told the paper.
Medvedev calls for extending presidential, Duma terms
The extension of presidential and State Duma terms, proposed by Russian President Dmitry Medvedev in his state-of-the-nation address Wednesday, could also be applied for the current president and Duma. The amendments to the Constitution might be introduced in November and approved later this year, with no possible legal restraints, as chief executives and deputies said.
According to the proposal by Medvedev, the increase in the presidential term from four to six years and the State Duma term from four to five years is supposed to apply to the new president and Duma to be elected in 2012 and 2011, respectively. The proposal, however, immediately evoked talk on a possible extension of the current president's term.
Alexander Moskalets, First Deputy Chairman of the State Duma's Committee on Constitutional Law and State Development, said the proposals would meet no legal restrictions, adding that passing the amendments would require the support of 300 out of the 450 Duma deputies.
Meanwhile, State Duma deputies are prepared to work up to December 27 to pass the amendments, State Duma Speaker Boris Gryzlov said.
The current four-year presidential term was introduced in Russia in 1993, reducing the previous five-year term initiated by law in 1991. Politicians have suggested the extension of the presidential term since February 2000, the year Vladimir Putin was elected president.
"The authorities are not eligible to amend the state body structure, its powers and terms of exercise of powers - otherwise it would lead to violations of legal foundations," Tamara Morshchakova, adviser to the Chairman of the Constitutional Court of Russia, said.
Analysts find it difficult to say who will benefit from the amendments. "It is unlikely that Dmitry Medvedev, who prioritizes following the law, will seek to extend his term," Stanislav Belkovsky, head of the Institute for National Strategies, noted. According to him, Medvedev's proposal for amending the Constitution to increase legislative powers is aimed at establishing a basis for a presidential and parliamentary republic in Russia and "does not relate to a certain politician."
According to political analyst Dmitry Oreshkin, the increase in presidential term is motivated by the Vladimir Putin team's striving to preserve power for a longer period. "Ultimately, it is not crucially important who takes the presidential post," Oreshkin noted.
Neo-socialism will sweep the world after global crisis
The victory of Barack Obama in the United States is not simply another change of power in a separate country, even if this country is a superpower, a once powerful Russian businessman writes.
Mikhail Khodorkovsky, the founder of the Yukos oil company currently serving eight years in a Siberian jail on fraud and tax evasion charges, writes that the paradigm of global development is about to change. The era inaugurated by Ronald Reagan and Margaret Thatcher 30 years ago is over.
He writes that, being a liberal himself, he thinks that the world will take a left turn. A global perestroika would be a logical response to the global crisis.
We have the moral and expert right to say that 30 years of libertarianism have come to an end, Khodorkovsky writes. In the early 1980s, the leaders who came to power in the U.S. and Britain - Reagan and Thatcher - saw that 'real socialism' was becoming uncompetitive economically, politically and socially. It means that the bipolar world will not last forever and we can win the Cold war, with reliance on the good old liberalism, they thought.
Social Democrats failed to clearly and unambiguously dissociate themselves from communism, in which they discerned many productive and positive ideas. European and American leftwing parties thought the communist camp would never fall, and so the struggle against it should not imply fighting for victory tooth and nail.
According to Khodorkovsky, the global situation has taken a U-turn. Reaganomics exhausted its possibilities after 25 happy years, giving way to neo-socialism. John Keynes will soon become more popular than Milton Friedman or Friedrich August von Hayek, the businessman writes. The quite tangible arms of the state and international alliances are longer than the invisible arms of the market.
A left turn - not a national or regional, but a global one - will be the world's response to the challenge of the crisis, or rather to numerous problems that have accumulated over the past 25 years, Khodorkovsky writes.
The neo-socialism that will win at the end of the 21st century's first decade will not be the totalitarian socialism of the world divided in Yalta, because neo-socialism was preceded by the neo-liberalism of Reagan and Thatcher.
Globalization will slow to a crawl, but will not stop, Khodorkovsky writes. The "golden billion" of the world's richest people will have to abandon hopes of increasing their wealth, but the high consumer standards, which developed at the end of the 20th century, will be unaffected by the change. The striving for political freedom and open competition of personalities and ideas will not disappear.
Formally, the forecast made by Francis Fukuyama, best known as the author of The End of History and the Last Man, has not materialized. But his assessment was largely correct, which we must admit at the turn of the global left turn.
Liberalism will return at the next turn in human progress, possibly in 12-15 years, after neo-socialism clears the debris left by the global crisis and harmonizes the global economy. A right turn is logical after a left turn. We will deal with this problem as and when we approach it, Khodorkovsky concludes.
Russia assists former socialist countries again
Russia will grant a $335 million loan to Cuba. For the first time since the end of the Soviet era, Russia has resumed financial aid to former socialist countries. As in the past, Cuba will spend that money to buy Russian goods and services.
According to the CIA World Factbook, Cuba's 2007 budget exceeded $40 billion. The Cuban-Russian annual trade turnover is smaller than the currently granted credit.
Although Cuba's debt to the U.S.S.R. stood at $20 billion, neither former Russian Prime Minister Mikhail Fradkov visiting Cuba in 2006, nor other leaders talked this issue over with the island's government. Cuba doesn't recognize the debt, saying comparable damage was done to its economy by the dissolution of the Soviet Union.
"Cuba is more than any other Latin American country interested in buying Russian engineering equipment, which accounts for up to 70% of Russia's imports to the island. Firstly, Cuba is accustomed to Russian-made equipment, utilized by many of the island's enterprises. Secondly, the country doesn't have enough money to buy Boeing aircraft and can only afford Russian-made Tupolev and Ilyushin airliners," said Vadim Teperman, deputy director of the Institute of Latin America.
"This kind of cooperation is profitable for Russia, and, moreover, Cuba is capable of paying $100 million a year. As for the $20 billion debt, this issue won't be resolved in the near future," he added.
Russia has resumed intensive cooperation with Cuba recently despite the global financial crisis. Russia's Deputy Prime Minister Igor Sechin has already visited Cuba two times since he was transferred to the government.
Russia is canceling the debts of many developing countries, ranking fourth in the world in this regard. In February 2008, Russia decided to write off $12 billion worth of debts. In April, Libya's $4.5 billion debt was canceled in exchange for multibillion contracts with Russian companies, and Algeria's $4.7 billion debt was cancelled after the African state agreed to buy Russian military hardware worth the equivalent sum. Additionally, debts of Afghanistan (over $10 billion), Vietnam ($9.4 billion) and Mongolia (over $11 billion) were written off. Currently, only Cuba and North Korea remain major Soviet-era debtors of Russia.
LUKoil asks for bailout
LUKoil has, after all, decided to apply for a Vneshekonombank loan, although it is still continuing to discuss its terms. The company says it needs $1.8 billion. Earlier, the company said it did not like the conditions on which VEB grants loans to repay debts to foreign banks.
"Our application for $1.8 billion is with VEB, but no decision has yet been taken," said Vagit Alekperov, LUKoil chief. "We are trying to bargain, because we consider the rate too high."
A source close to one of the oil companies described the terms as "enslaving." According to VEB standards, a loan-receiving company must allow the bank to have its representatives on the board, to use export receipts as collateral, and agree with the bank new loans and newly issued securities, as well as large deals to sell assets.
According to LUKoil's latest GAAP report, the company needs to pay $2.311 billion in loans before the middle of next year. Besides this, it needs funds to subsidize foreign asset takeovers announced last summer.
LUKoil has already negotiated a deferral on the payment of half the sum for Akpet, a network of gasoline stations in Turkey, whose purchase for $500 million the company announced in July.
Recently, LUKoil said it had borrowed $250 million from a consortium of international banks to cover the deal, and had its clinching moved from the end of this year to the end of the next.
A similar outlook exists for another major acquisition - a 49% stake in the company running the ISAB refinery in Sicily. In July, LUKoil negotiated to buy it from Italy's ERG (which will keep 51%) for 1.347 billion euros. The last payment for the asset was supposed to have been made in November. But yesterday, during a visit to Russia by Italian Prime Minister Silvio Berlusconi, LUKoil and ERG signed an addendum to their production-sharing agreement. It provides for the closing of the deal by December 1, but at that date LUKoil will have contributed only the first installment (600 million euros), with the remainder to be paid in three tranches before September 2009.
Konstantin Cherepanov, of KIT Finance, believes an alternative to the VEB loan is to reduce the capital costs which the company was ready to undertake but which meant a possible cut in future output. "LUKoil's debt situation is not as serious as, for example, Rosneft's," the analyst said. He believes the motivation is LUKoil's hesitancy over the VEB loan.
According to Denis Borisov, of the Solid Investment Financial Company, LUKoil's decision to seek a bailout from VEB was prompted by the failure of oil prices to rally, something the market so much looked forward to, and by fears that prices might continue to slide in a $40 to $50 band. Besides, he said, floating bonds was too complicated as an alternative.
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