MOSCOW, December 25 (RIA Novosti)
Putin says era of cheap gas is over/ Russian president holds televised conference/ Tokyo calls on Moscow to reduce car import duties/ Belarus secures better gas prices but at a cost
Moskovsky Komsomolets
Putin says era of cheap gas is over
When Prime Minister Vladimir Putin said the era of cheap gas was over, the West feared it was a start of an economic war. In fact, it was a desperate gesture. On Wednesday chief Kremlin economist Arkady Dvorkovich said Russia would have a deficit budget in 2009, the first time in a decade.
However, the EU may suffer too if it ignores the warning and fails to bring Ukraine, its partner in European integration, to its senses.
Putin said correctly that energy could no longer be cheap because production costs are huge. Leonid Grigoryev, one of Russia's most respected analysts, said the development of oilfields is profitable only if crude costs at least $60 per barrel. And the same, or almost the same, goes for natural gas, he said.
This means that the Russian authorities' room for economic maneuver is rapidly shrinking.
Moscow has been trying to increase it, but made a major mistake before the Russian-Ukrainian gas conflict in 2006. It should have explained to the EU that Ukraine's refusal to pay up would backfire on Europe. The Kremlin has taken this into account now, and Energy Minister Sergei Shmatko has openly encouraged the EU to force the Ukrainian officials, busy fighting among each other, to pay the gas debts or prepare for gas supply problems.
Unfortunately, Europe may misunderstand Russia's broad hint, because the friend-foe inertia still prevails there. Europeans cannot admit that "authoritarian" Russia may be right in its conflict with "democratic" Ukraine. This promises to be the economic equivalent of the Caucasus war in January.
In August 2008, the West saw that Russia was ready to use military force to protect its interests in the post-Soviet space. In January, it may witness Moscow's resolve to use economic weapons to protect these same interests. Putin and his "army" have nowhere to retreat, because the treasury is almost empty.
Nezavisimaya Gazeta, Vedomosti, Gazeta.ru
Russian president holds televised conference
On Wednesday, three federal channels broadcast a new program, which may become a regular event, Yearend Results with the Russian President.
This is a new form of presidential addresses, because Medvedev's predecessors traditionally summed up the results of the past year in their New Year greeting.
Analysts say this form of communicating with the public was chosen so as not to clash with Prime Minister Vladimir Putin's annual Q & A sessions. They say the president does not need such interactive forms.
The hour-long show was taped the evening before. According to a manager at Channel One, work on the secret project began even before Putin held his three-hour Q & A session on December 4.
"It has been decided that this format should be left to Vladimir Putin, and we are searching for other forms of public and press communication for Dmitry Medvedev," said a source in the Kremlin.
The president is expected to rely mainly on the Internet, especially since he held his first online conference with users in spring last year, while first deputy prime minister, and launched his personal video blog this fall.
Political analyst Alexei Makarkin said Medvedev's televised interview was to compensate for a lack of direct contact with the people. The president needed to show publicly that he is the top executive and not a caretaker, as some people have begun thinking since he proposed extending the presidential term.
Yevgeny Minchenko, head of the New Image analytical agency, said the difference between the president and the prime minister's methods of public communication is mirrored in the differences in their authority.
"Medvedev is in charge of the country's strategic development and foreign policy, while Putin is responsible for practical economy," the analyst said.
RBC Daily
Tokyo calls on Moscow to reduce car import duties
The Japanese government urged Russia to reduce car import duties. Tokyo believes that the protectionist measures, introduced by Vladimir Putin's government, run counter to World Trade Organization (WTO) principles and specific commitments assumed by Moscow during the November 2008 G-20 summit in Washington.
The summit involved the leaders of 19 of the world's 25 largest economic powers, plus the European Union (EU), and achieved a general agreement on how to cooperate in key areas so as to strengthen economic growth, deal with the financial crisis, and lay the foundations for reform to avoid similar situation in the future.
Analysts said Tokyo's threat to block Moscow's accession to the WTO would prove ineffective because the Japanese automotive industry depended on sales to Russia's Far East to the same extent as Russia depended on Japanese imports.
Russia has already warned that it could suspend the WTO-accession process itself, unless the WTO speeded it up, Nikolai Petrov, an analyst with the Moscow Carnegie Center, told the paper.
He said the government would eventually have to reconsider its decision to charge restrictive import duties on Japanese cars. "Despite the government's transportation benefits, the national automotive industry cannot substitute second-hand Japanese cars in Russia's Far East," Petrov told the paper.
On the other hand, it is important for the Japanese automotive industry which is experiencing the most serious crisis since its inception, to export used cars to Russia. Due to high domestic used-car taxes, Japan finds it more profitable to sell them to Russia and to stimulate nationwide demand for new vehicles.
If the new import duties are introduced, this plan would stop working, and Japanese carmakers would have to scale back production still further. This November, Japanese automotive giant Nissan Motors said it would scale down production by 34% on November 2007. Two other leading automakers, Toyota Motors and Honda, have downsized production by 27% and 10%, respectively.
Gazeta.ru
Belarus secures better gas prices but at a cost
Russia is ready to cut gas prices for Belarus by two-thirds, Belarusian President Alexander Lukashenko said on Wednesday. "We will work it out," the president said. Minsk will have to speed up the formation of a Union state with Russia and recognize the independence of Abkhazia and South Ossetia, experts say, otherwise there will be no cheap gas for Belarus.
According to the Belarusian leader, next year's price for Russian gas to the republic will be a "falling" one - over the course of the year it will drop by 2.5 to 3 times. The exact price is not known - Gazprom's management is not disclosing it, yet analysts believe the starting figure was $150 to $180 per 1,000 cu m. By the end of next year, it is expected to go down to $50 or $60 (from the current $128).
"Such a price is no bonanza for Gazprom, but given current oil prices the monopoly will have to cut gas costs for European consumers," said Natalya Milchakova, a senior analyst at Otkrytie brokerage. "And do the same for Belarus - Gazprom attaches much importance to its transit, and does not want any headache over supplies to Europe."
But the price factor is not the main one. Experts believe Lukashenko's remarks are the result of a deal between Russia and Belarus. The most likely scenario is that Belarus will repay for the benefits by recognizing the independence of South Ossetia and Abkhazia. But Russia seems to have asked for more. "A 70% cut in price is too handsome a bonus," said Alexander Shatilov, an analyst at the Center for Current Politics. "In this context, the bargaining chip must have been something larger: for example, deployment of Russia's Iskander missiles on Belarusian soil and speedier progress towards a Union state."
At the next Supreme Council of the Union state, which is to meet in January 2009, Russia expects its Belarusian opposite numbers to make some real headway on the unification, the analyst believes.
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