What the Russian papers say


MOSCOW, March 27 (RIA Novosti)
Russia to establish Arctic forces/ Washington still prioritizing relations with NATO/ Finance Ministry returns to idea of foreign loans/ Russia, Turkey set to expand Blue Stream gas pipeline to bypass Ukraine


Russia to establish Arctic forces

Russia is considering creating an Arctic group of forces. The Arctic Strategy prepared by its Security Council also suggests making the Federal Security Service (FSB) responsible for the region, which is expected to become Russia's "main strategic resource base" by 2016.
The drafting of the Arctic strategy began last year, but the Security Council published it on its website just this week, without any kind of announcement and hidden among the archive of old doctrines and concepts.
Chapter 4 of the document points out the need to "create a group of general purpose forces, other troops and military units and facilities in Russia's Arctic zone to ensure military security in special military-political situations."
Another point is "an active FSB coast guard system in Russia's Arctic zone."
Moscow politicians welcome the idea.
Artur Chilingarov, a special presidential representative on the Arctic, said the Defense Ministry was actively involved in Arctic development. In particular, the Air Force is helping Chilingarov deploy the Barneo station near the North Pole.
"The establishment of the Arctic forces is a natural desire to protect one's territory. I don't see any signs of aggression here," said Vladimir Gruzdev, a deputy of the State Duma, the lower house of Russia's parliament, who place a capsule with the Russian flag on the Arctic Ocean bed together with Chilingarov in 2007.
The strategy outlines a schedule for developing the Arctic. All materials necessary for the international legal registration of the external border of Russia's Arctic zone should be collected by 2010. Russia must prove that the Lomonosov and Mendeleyev underwater ridges are the continuation of the Russian continental shelf and therefore part of the Russian territory.
The project began several years ago, when Russia filed its first such request with the UN in 2001. However, Vladimir Sokolov of the Arctic and Antarctic Research Institute, said, "There have been no positive dynamics because nothing has actually been done. We don't even have a deep water multibeam echo sounder."

Vremya Novostei

Washington still prioritizing relations with NATO

President Dmitry Medvedev is scheduled to meet with U.S. President Barack Obama in London April 1. Both countries have started focusing on their relations with NATO in the days leading up to the summit.
On March 25, Russian Foreign Minister Sergei Lavrov stressed Moscow's guarded attitude of NATO's eastward expansion plans, while Foreign Ministry Spokesman Andrei Nesterenko voiced concern over NATO activity in the Arctic.
Moscow apparently toughened its stand in response to President Obama's statements on March 25 when he met with NATO Secretary-General Jaap de Hoop Scheffer and talked of the importance in improved relations with Russia. But he also stressed the need to expand NATO to any country that meets the criteria for membership.
Alexander Sharavin, director of the Institute for Political and Military Analysis, said President Obama's pro-NATO stand should not be seen as a factor hindering improved Russian-U.S. relations.
"The United States cannot renounce NATO's strict voluntary-membership principles. No action will be taken to admit Georgia and Ukraine. On the contrary, everything will be done to prevent this," Sharavin said.
He said Washington now considered better relations with Russia to be more important than NATO's expansion by admitting Kiev and Tbilisi.
Maria Lipman, an analyst at the Carnegie Moscow Center, said the United States had never renounced the expansion of NATO, be it before President Obama or today. She said this hard-to-resolve issue would be the subject of long and painstaking discussions.
"The United States is now prioritizing Iran, Afghanistan and the Middle East where the situation is hopelessly bleak, while Russian priorities are still undisclosed," Lipman said.
She said Moscow and Washington were able to reach rapid progress on disarmament issues. "The United States wants the London summit to succeed. Otherwise there would have been no reports circulating on a possible visit by President Obama to Russia this summer," Lipman said.


Finance Ministry returns to idea of foreign loans

Russia may turn to the foreign debt market before it uses up its Reserve Fund, said Konstantin Vyshkovsky, a department head at the finance ministry, suggesting that a solid Reserve Fund would maintain Russia's ratings and keep potential loan interest down.
However, analysts do not believe the idea of more foreign borrowing is quite as attractive.
In 2009 Russia will spend 2.7 trillion rubles from the 4.9-trillion-ruble Reserve Fund, in accordance with this year's budget plan.
The Ministry estimates that the Fund will last the country until mid-2011. However, if the downturn persists for more than three years, it will have to be stretched for a longer period. Sergei Shvetsov, a department head with the Bank of Russia, said: "It wouldn't be wise to hope to secure foreign loans on better conditions in two or three years."
Prime Minister Vladimir Putin only recently claimed Russia would not use foreign loans again, and Finance Minister Alexei Kudrin dismissed the very need for such instruments. The Russian government's foreign debt stood at about $40 billion as of March 1, or 3% of GDP - one of the lowest in the world.
Russia is bound to have some budget deficit in 2010 and 2011, but to finance it with the Reserve Fund means to use up the fund and the international reserves and would guarantee destabilization of the national currency, said MDM Bank chairman Oleg Vyugin.
Investors will know for certain that in five years, Russia will have no reserves, but will have a huge budget deficit, warned Yevgeny Nadorshin, senior analyst at the Trust bank.
Pavel Pikulev, another Trust analyst, said there was no point in turning to foreign loans, because they are unlikely to be higher than $6-$8 billion in one year, split into several installments, each more expensive than the last. This year's budget deficit is over $90 billion, so even a $20 billion loan from abroad won't cover it.
Therefore, the government needs domestic loans, Vyugin said. It would be best to borrow in foreign currency but on the domestic market which has a potential of over $150 billion, Pikulev said suggesting such bonds would be much cheaper.


Russia, Turkey set to expand Blue Stream gas pipeline to bypass Ukraine

Moscow and Ankara have started discussing construction of the third line of the Blue Stream pipeline on the Black sea bed to bypass Ukraine.
Technically speaking, the new offshoot will transport gas to Israel. The proposed pipeline's capacity and construction deadlines remain undisclosed.
Analysts say the new project is a consequence of aggravated Russian-Ukrainian-EU relations over gas deliveries to Europe.
Russian and Italian energy giants Gazprom and ENI own the Blue Stream pipeline on a parity basis.
Troika Dialog analyst Valery Nesterov said both Blue Stream pipelines had an annual capacity of eight billion cubic meters each and had pumped just 10 billion cubic meters last year. He said it would be appropriate to commission the project's third line only after 2015.
However, project Blue Stream 2 is largely politically motivated. Russia and Turkey stopped discussing the pipeline's expansion two years ago with the appearance of an alternative project South Stream (from Russia on the Black Sea bed to Europe). Turkey joined the Nabucco project, a planned EU-backed gas pipeline that will transport gas from Turkey to Austria, via Bulgaria, Romania, and Hungary.
In early 2009, Moscow and Ankara resumed talks on the Blue Stream 2 project during the Russian-Ukrainian gas conflict. At that time, Turkey threatened to withdraw from the Nabucco project.
An official statement on resuming the Blue Stream 2 project was made during a new gas conflict involving Russia, Ukraine and Europe. "This is a better and cheaper way of stopping Nabucco because Blue Stream 2 will be linked to the Turkish gas-transport network near the Nabucco starting point," Mikhail Korchemkin, director of the East European Gas Analysis consultancy, said.
Nesterov said the EU and Russia were fighting for control of energy flows via Turkey.
But Moscow and Ankara may become divided on some issues.
"Gazprom wants to strengthen its positions in Central Asia and the Middle East before the regions start receiving Iranian and Iraqi gas. But Ankara also wants to become an energy hub and strives to establish an independent policy and will probably use the new project to pressure the EU," Nesterov said.

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