What the Russian papers say


MOSCOW, March 16 (RIA Novosti) Russia puts forward conditions for joining OPEC / Russia gains nothing from South Ossetia's independence / Toyota to shut down its St. Petersburg plant / Local governments propose allowing individuals to engage in gold digging

Nezavisimaya Gazeta

Russia puts forward conditions for joining OPEC

Russia may consider joining OPEC "if all agreements are honored," Deputy Prime Minister Igor Sechin said at an OPEC meeting in Vienna.

Analysts are not sure Moscow should or would do so. Russian officials' statements sound dubious, they say.

Russia's oil "export has grown by 2.7% according to some sources and by over 3% according to others," said an oil analyst on the condition of anonymity. "This has increased its revenues, but the move has also cut the price of Urals crude by 4%-5%. The relation between this and the statements on coordinating policies is unclear, especially because the authorities' actions sometimes clash with their proclaimed intention to stop the fall of [oil] prices."

Dmitry Aleksandrov, a leading analyst at the Financial Bridge investment company, said OPEC membership would not benefit Russia. "The advantages [it promises] can be easily attained outside the organization," he said.

If it joins OPEC, Russia will have to comply with production and export quotas, which will allow the West to claim that it is strangling the global economy.

"As regards price formation, it would be more effective to conduct bilateral talks with Iran, Venezuela, Algeria, Libya and Qatar," Aleksandrov said.

Viktor Markov, an analyst at the Zerich Capital Management Group, said accession to OPEC would take a very long time and so it would be unwise to consider its advantages now.

"In view of its climate, Russia cannot conserve its wells like the Middle Eastern oil-producing countries do," Markov said. "Therefore, it will have to stock crude, which will create a number of problems, including with taxes. This is why Russia is only making statements now, although sometimes even a demonstration of the impossibility of increasing production can pressurize the market."


Russia gains nothing from South Ossetia's independence

South Ossetian independence has been of no benefit to Russia, and has even been advantageous to Georgia, said Andrei Malashenko from the Moscow Carnegie Center.

The ethnic Ossetian population of the disputed area feels certainly better now under Russia's strong protection. However, no one in Tskhinvali really feels independent. They see the place as a de facto part of Russia, receiving retirement pensions from the Russian government and using the Russian national currency along with U.S. dollars.

Another group happy about the change includes officials who distribute Russian billions allocated for the restoration of South Ossetia. On the other hand, the newly-independent republic could be a perfect target for President Dmitry Medvedev's next anti-corruption raid as a destination never reached by government money. The Russian president is in an urgent need of some impressive success.

As far as Moscow is concerned, South Ossetia is more of a pain in the neck than anything else, Malashenko writes. The smoke of the victorious battle dispersed to reveal that Russia was not really interested in the independence of that strip of adjacent land. The Kremlin was not rewarded for the fight it had put up for South Ossetia in any way, neither domestically nor abroad.

Other peoples of the North Caucasus still wonder about what they now have for a neighbor, an independent republic, or just another constituent entity of Russia's Southern Federal District.
In foreign politics, Russia lost an effective pressure tool in the Caucasus, namely its longstanding ability to either recognize Georgian autonomous areas or not.

The CIS countries showed no understanding either. They in fact have learned that Russia could bite off a piece of another member.

Moscow has been lucky in some sense, according to Malashenko. The Caucasus war was overshadowed by the economic crisis, followed by [U.S. President] Barack Obama's proposal to smoke the peace-pipe with Russia. As a result, the Caucasus conflict was pushed to the margins.

Georgia has benefited from the turmoil without a doubt, even if that country's politicians still fail to realize their luck. It was relieved of problem region it did not really need, in exchange for a healthy cash injection, which is very valuable in an economic crisis, and the prospect, albeit a remote one, of NATO membership, Malashenko concludes.


Toyota to shut down its St. Petersburg plant

On March 30, Japanese automotive giant Toyota will shut down its St. Petersburg plant for a week, citing the global financial crisis and the ongoing recession.

The 750 workers will receive two-thirds of their average wages during downtime. A corporate spokesperson declined to name car-assembly volumes starting from April 7, but stressed future shutdowns would depend on the market situation.

Commissioned in December 2007, the Toyota plant and a similar Volkswagen plant near Kaluga, a city 190 km (118 miles) southwest of Moscow, were expected to become the Russian automotive industry's most ambitious projects..

Toyota invested $200 million in its St. Petersburg plant, and planned to annually assemble 20,000 vehicles and to boost production to 50,000 cars in 18 months. The Japanese company planned to expand long-term annual production to 200,000-300,000 cars.

Although Toyota wanted to make 16,000 cars last year, it assembled only 1,500 vehicles in January-June 2008. The company's 2008 production volumes have not been disclosed.

Yevgeny Bogdanov, head of Moscow office of A. T. Kearney, a global strategic management consulting firm, explained the current shutdown by plunging demand and a dwindling market.

The European Business Association said Toyota's Russian sales had plunged by 43% (7,669 cars) this February and by 37% (13,849 cars) in January-February 2009.

Bogdanov said this problem now worried all automakers, except Volkswagen, whose car prices were not pegged to the dollar or the euro, and that the Ford plant had been shut down from December 29, 2008 until January 21, 2009.

The Toyota plant remained closed from December 29 until January 11. The General Motors plant in St. Petersburg was shut down on January 25-February 15 and now operates only three days a week.

In February, Toyota announced its decision to stop importing Toyota Camry vehicles from Japan because its St. Petersburg plant had attained design capacity.

The company planned to sell off its idle stocks in April and May. A Toyota dealer explained the shut-down by a desire to prevent market overstocking and warehouse giveaway sales.

Novye Izvestia

Local governments propose allowing individuals to engage in gold digging

The government of the Magadan Region in Russia's Far East has appealed to federal authorities for the right to issue development licenses for gold deposits without balance reserves and depleted fields.

"This will not increase gold production much, but will ease social and employment tensions at Kolyma," Alexander Aleksandrov, chairman of the Magadan regional legislature, said, adding that quite a few pensioners would like to become gold diggers.

Analysts say the time when one could earn a fortune by digging for gold with a spade is long past.

"Individuals could earn a living from gold digging until the early 1960s," said Viktor Tarakanovsky, chairman of the Russian Union of Gold Prospectors. "Since then, the mining and geological situation has dramatically deteriorated. When gold production began in the Magadan Region in 1932, the gold content was 27 grams per cubic meter of ore. It fell to 2 grams by 1957, and now 0.5 grams per cubic meter is considered a boon."

"Even companies using mechanical equipment produce only 1 kg of gold per man a season, and the best individual prospector digs up only 100-150 grams," Tarakanovsky said.

In this situation, the chances of pensioners are minuscule.

"If this helps some, very good; but it will not harm anyone either if nobody claims individual gold-digging licenses," said Oleg Shein, deputy chairman of the State Duma Committee on Labor and Social Policy.

He added that the initiative now has more chances of legal approval than before.

But analysts point to a possible negative consequence of the decision, which is growing theft at gold-producing companies, the same as it happened in the period of legalized individual gold digging.

Tarakanovsky explained the scheme: "A person working at a gold producing company steals a little gold there, while his pal, claiming to be an individual prospector, sells the stolen gold to the state."

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