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Russian Press - Behind the Headlines, March 15

© Alex StefflerRussian Press - Behind the Headlines, March 15
Russian Press - Behind the Headlines, March 15  - Sputnik International
Fewer Than Half Russians Trust Election Results – Survey / Experts Declare a Crusade Against Social Inequality and Poverty / LUKoil Plans to Invest in Iraq, Triple Dividends

Less than half of Russians Trust Election Results – Survey

Only 44 percent of voters in Russia trust the election results, according to a survey by the state-run pollster VTsIOM. This has been linked to rising tensions in society following the parliamentary elections.

The number of voters who find the results credible dropped by 9 percent compared to the poll conducted in 2004, when Vladimir Putin was re-elected for his second presidential term. Up to 34 percent now allow for the possibility of fraud. Some 14 percent believe the election results cannot be trusted. Participants of the latest poll agree, however, that some measures taken to increase election transparency had a positive impact. Over 61 percent of respondents believe the Voters League and public observers coaching ensured the elections were fairer. Installation of web cameras at polling stations increased the confidence of 69 percent in the election results.

Sergei Obukhov, the Communist Party’s information and analysis secretary, says diminishing trust confirms that the elections were “unfair, unfree and illegitimate as legitimacy is based on people’s trust rather than on court decisions.” The webcam PR campaign was launched for these purposes.
“The poll reveals a decline in trust for a vital state institution, which is elections. It is not a radical drop though,” Valery Fyodorov, VTsIOM CEO, told Kommersant. He admits the situation would have been much worse if not for the countermeasures taken by Putin and his team, including the web camera project and constant focus on fair elections.

Diminishing trust has been a natural outcome of the past three months, said Alexei Grazhdankin, deputy CEO of Russia’s largest independent pollster Levada Center. “The public refused to accept fraud in the State Duma elections, which fuelled suspicions. Although the protests did not spread beyond Moscow, St. Petersburg and several other big cities, the trust in elections was lost,” Grazhdankin told Kommersant. People “are coming to see that it is not only about fraud and ballot stuffing but about the entire political system, which works to support the ruling party. This means vote manipulation is not the only strategy in unfair elections,” the expert says.

“Most people used to say that their votes did not count. They believed this is just the way it is. The majority vote for Putin and his election is a ritual of a kind – whether there is fraud or not,” says Leonty Byzov, a senior researcher at the Russian Academy of Sciences’ Institute of Social Sciences. Even if fraudulent practices were not widespread in the 2012 election, “society has become more concerned about this issue,” Byzov said. “This does not mean, however, that the election results are questioned by the majority of the electorate.”

Rossiiskaya Gazeta
Experts Declare Crusade Against Social Inequality and Poverty

Expert groups working to upgrade Russia’s socioeconomic development strategy for the period until 2020, Strategy 2020, have published a final report detailing steps for fighting social inequality and poverty in Russia.

Among other things, the report suggests issuing food stamps and increasing child benefits for low-income families, and launching a guaranteed minimum wage program.

Simultaneously it proposes increasing the pension age for men and women to 63 years by 2030 and minimum pensionable seniority from five to 15-20 years.

It is planned to introduce four types of pensions: social (for the unemployed, for people with low formal sector seniority, and low-income employees in the informal sector), basic (for low-income formal sector employees), combined (for middle-income categories), and combined-cum-alternative (for high-income categories).

According to the report, the rate of insurance contributions should be reduced from 30 percent to 20 percent-22 percent, which is supposed to curb the underground economy and increase product competitiveness.

Russia must also encourage private pension plans. Cumulatively, the above measures result in federal savings of 1.2 trillion rubles by 2020 and 4.4 trillion by 2030.

For housing policy to be successful, mortgage loan interest rates should not exceed 4 percent, with inflation averaging at 2 percent-3 percent a year. Infrastructure bonds covered by utilities payments and investments into utilities projects by Vnesheconombank and pension funds will make it possible to pour additional funding into the utilities sector. These steps are to be implemented between 2012 and 2014 along with a number of macroeconomic measures.

The report’s other proposals include a step-by-step abolition of export oil duties, an increase in mineral mining tax, a two-stage “non-radical” privatization by 2015, and a full-scale privatization of major companies between 2016 and 2020, or at least scaling down the government share to block holding.
LUKoil Plans to Invest in Iraq, Triple Dividends

Private crude producer LUKoil plans to invest $150 billion in development within ten years, mostly in Iraq, and to triple dividends. Experts say these plans are highly risky.

Under its development strategy to 2021, LUKoil will invest $126 billion in exploration and production, mostly in Iraq. In 2009 it won a tender for the right to develop one of the world’s largest deposits, West Qurna 2, with 1.75 billion tons (12.86 billion bbl) of oil reserves. In 2011, it announced plans to invest $3.5 billion in the project in 2012-2013.

LUKoil also plans to invest in Uzbekistan (gas), in offshore Caspian deposits and West Siberia’ Yamal-Nenets Autonomous Area, and hopes to start working offshore near Cote d’Ivoire, Ghana and Sierra Leone in West Africa.

Some 16 percent of the planned investment ($24bn) is to be channeled into refining and marketing ($15bn in Russia). LUKoil will use the funds to modernize existing facilities and increase the depth of refining (the difference between crude input and marketable products output).

The company aims to produce about 10 billion barrels of oil equivalent (boe) within 10 years by increasing production 3.5 percent annually. By 2021, its annual output should grow 50 percent compared with 2011, to 1.17 billion boe. Of that amount, 17 percent (about 200 million bbl) will be produced outside Russia. The share of natural gas should reach 27 percent.

LUKoil’s new program is aimed at enhancing its investment attractiveness and increasing shareholder payments several-fold. For example, dividends for 2012 should be 25 percent larger than for 2011.

Dividend payments for 2011 have not been determined yet but company head Vagit Alekperov said they will be 25 percent larger than for 2010, when LUKoil paid 59 rubles per share or 50.183 billion in total (18.3 percent of the group’s profits). So dividends could be 73.75 rubles per share in 2011 and 92.20 rubles in 2012.

Within ten years, LUKoil plans to triple dividends to about 220 rubles. Last year Vice President Leonid Fedun said that dividend payments should ultimately reach 30 percent of its net profit.

Nomos Bank analyst Denis Borisov estimates LUKoil’s planned dividends at $6 billion. “Under its strategy based on the oil price of $100 per barrel, its EBITDA should reach $25 billion. Considering the $15 billion investment and also taxes, LUKoil will have about $6 billion of excess cash it could pay out as dividends,” he said.

But in this case it will have no excess cash left, limiting its investment opportunities. “On the other hand, it could always borrow,” Borisov said.
LUKoil’s strategy is aggressive and risky, said Andrei Polishchuk from Broker Credit Service. “Considering that the bulk of funds are to be invested in foreign projects, LUKoil may show a negative cash flow in the next year or two,” he said.

Those investors who expected their money to grow fast may sell their LUKoil shares. The response to LUKoil’s strategy is not negative so far: its shares gained 0.33 percent on the MICEX and now cost 1,921.80 rubles.

RIA Novosti is not responsible for the content of outside sources.

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