MOSCOW, March 31 (RIA Novosti) Kosovo precedent/ Putin's policies or election strategies?/ Gazprom and Belarus/ RDR bill/ Kremlin's tight grip on Chechnya's oil
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Kosovo path a trap - political analyst
The hasty settlement of the Kosovo problem has revived the issue of the political prospects for self-proclaimed territories in the post-Soviet space. Sergei Markedonov, head of international relations at the Institute of Political and Military Analysis, said the harsh statements by the leaders of Georgia, Moldova and Ukraine mask a clear ambition to speed up the settlement of problems with rebellious territories before the world recognizes Kosovo's independence.
From now on, Kosovo will be a crucial factor in the domestic and foreign policies of the commonwealth of unrecognized states - a sort of second CIS (Commonwealth of Independent States). The leaders and ideologues of Transdnestr, Nagorny Karabakh, Abkhazia and South Ossetia continue to cite the Russian president's thesis of following precedent in settling ethnic-political issues in the post-Soviet and post-Yugoslav spaces, the political analyst said.
Vladimir Putin's statement was adopted, a priori, by Russian experts. But Russian politicians and diplomats who strove to prevent Kosovo from being recognized should not compare the former Yugoslav territory with the second CIS. Rather they should consider the inadequacy of the territory's government institutions, the global terrorist threat and the spread of illegal drugs - these things concern Kosovo more than anything else.
Proposing its own criteria for the recognition of new states, Russia could free its hands of both the Balkans and the second CIS, Markedonov said. Why is Russia assisting South Ossetia and Abkhazia? Because Tbilisi is discriminating against ethnic minorities - Abkhazians and Ossetians, as well as Azerbaijanis and Armenians, and eliminated the Adjarian Autonomy.
Learning the basics of Western political language and diversity in policy-making would save Russia from the trap of following the precedent of ethnic self-determination, the expert said. The recognition of the "right of blood" by Russia as a key motive for the revision of borders is fraught with a new parade of autonomies that no "power vertical" could suppress.
Kremlin begins preparations for 2007-2008 elections
The growth of social spending and state involvement in the economy, the adoption of a harsher foreign policy, and the related halt of liberal economic reforms are elements of the Kremlin's new policy with a view toward the 2007 parliamentary and the 2008 presidential elections.
First Deputy Prime Minister Dmitry Medvedev, who is in charge of national projects, will be Putin's successor, according to Vladimir Tikhomirov, a senior economist with investment bank Uralsib. The best way to transfer power is to charge the successor with projects "that involve the distribution of benefits to the people," the analyst said in a report titled "Building an Empire: The Kremlin Starts Election Preparations."
Tikhomirov points to the "transformation of an ideologically neutral policy" into a "policy deeply colored by great power patriotism," citing such examples as the strengthening of pro-Kremlin party United Russia and the increasing control over the media. He also detected "great power intonations" in foreign policy.
"The Kremlin administration has become much less tolerant of neighboring countries' attempts to gain more independence from Russia, which has cooled relations with a number of traditional partners - Ukraine, Georgia and Moldova," he said.
Tikhomirov said liberal reforms had fallen victim to election preparations and predicted the undertaking of major privatization projects and the possible postponement of the restructuring of natural monopolies.
Roland Nash, managing director and head of research for investment group Renaissance Capital, disagreed with Tikhomirov's conclusions, saying the growing state interference in the economy had been an element of Putin's policy for at least five years. In his opinion, such policies were part of Putin's economic views rather than preparations for the 2008 elections.
"The trends indicated in this report became apparent a couple of years ago," Kirill Tremasov, chief analyst for the Bank of Moscow, said. "I would not attribute them to the Kremlin's election preparations."
Gazprom attacks Belarus
Gazprom has launched a vigorous assault on Belarus ultimately to gain control over its gas transit system. Gazprom CEO Alexei Miller announced Thursday that from 2007 on Russia would provide the republic with natural gas at European prices. Analysts said Miller was pushing the unfavorable conditions on the republic in order to wrest concessions on Beltransgaz, Belarus' gas transit monopoly.
The Russian energy giant has been seeking to control the Belarusian system since 1995. There was even talk of the company purchasing Beltransgaz, but the sides disagreed on a price: Belarusian President Lukashenko named $5 billion, whereas Gazprom evaluated the Belarusian company at $700 million.
Timur Khairullin, an analyst with brokerage Finam, said Belarusian authorities would simply have to set up a joint venture with Gazprom to run Beltransgaz because the Belarusian economy was obviously unprepared for a sharp jump in gas prices from the current $46.70 per 1,000 cubic meters.
Natalia Yanakayeva, an analyst with Tsentrinvest Group, agreed that this time Gazprom would be able to force the Belarusian authorities to set up a gas transit joint venture. But she added that the (European) price of $230 was not possible. "Belarus cannot pay more than $80 per 1,000 cu m, and even this will be hard for it to fork out," the analyst said, adding that $60 would be a more realistic price.
Khairullin said a mutually acceptable solution could again fail to materialize. "Then, most likely, another 'gas hysteria' will break out, with economic interests veiled by political slogans," the analyst said.
Mikhail Korchemkin, the director of East European Gas Analysis, attributed Miller's unexpected statement to political motives. "Lukashenko is becoming popular in Russia," he said. "And Putin has decided to reveal the foundations of Belarus' prosperity. Essentially the money of Russian pensioners and public-sector workers is being passed on to the pensioners and public-sector workers of Belarus: the Belarusians are paying less for their gas and, on top of everything else, receiving transit fees."
RDRs to appear on stock market
In April or May of this year, the State Duma (lower house of the Russian parliament) will receive a draft bill that would allow foreign companies to issue Russian Depositary Receipts (RDRs) for their shares. Market players are divided over the issue.
Denis Matafonov, chief analyst for Antanta Capital, said the securities of about 150 issuers are traded in Ukraine, which constitutes a quarter of the Russian stock market. "Companies need funds, which is why they are working on the Russian market whose capitalization is approaching $1 trillion," he said. This instrument "will also benefit Russian investors, who will have more opportunities for investment."
Gennady Margolit, deputy general director of the MICEX Stock Exchange, said the minimum cost of holding an initial public offering (IPO) on Russian exchanges would be $23,500, whereas the figure for foreign markets is $240,000-$410,000.
"Kazakhstan is not developing a national stock market because issuers mostly float their stock in the West," Alexei Zakharov, an analyst with investment bank Trast, said. "Several Kazakh companies recently held their IPOs in London."
Oleg Vyugin, the head of the Federal Service for Financial Markets, said Thursday that Canadian gold companies, which have many assets in Russia, were the first to show interest in RDRs. Vyugin was most likely referring to Barrick Gold, which has a development license for the Lyubavinskoye deposit in Siberia's Chita Region, as well as Bema Gold, which is developing the Kupol deposit in Chukotka, the far northeastern part of Russia.
Vyugin said operating on Russian sites was not very easy for Western investors and entailed additional costs to register property rights because foreigners did not want to assume broker risks. The agency head said risks could be minimized, including for foreign investors, by the creation of a central depositary, but that nobody knew when this might take place.
Kremlin refuses to allow Chechnya control over its own oil
A new stage of talks on the division of powers between Chechnya and Moscow produced no results, as the presidential administration refused to allow the North Caucasus republic to control its oil or receive additional money for infrastructure. The Kremlin said the demands of the Chechen leaders were absolutely unrealistic.
Moscow and Grozny have been trying to finalize an agreement on the division of powers for more than three years. On March 30, chief of staff Sergei Sobyanin, presidential envoy to the Southern Federal District Dmitry Kozak, Chechen Prime Minister Ramzan Kadyrov and Dukhvakha Abdurakhmanov, speaker of the Chechen Popular Assembly (parliament), tried to reach a consensus on the format of the controversial agreement in Moscow but to no avail.
This setback would have gone unnoticed except that the Chechen side immediately told journalists that the talks had been completed and that the agreement could be signed anytime.
"It would be absolutely unrealistic to sign this document, to talk about an all-out 10-15-year tax exemption for Chechnya or the creation of a free economic zone in the republic, or to allow Chechen authorities to control local oil wells," a source in the presidential administration told the paper.
The official said the Chechen demands made sense: the "normal people" in Chechnya are not demanding new ownership for the local oil fields and they are rightly insisting that the republic's economy receive proceeds from Rosneft's oil sales. "Chechnya would no longer rely on subsidies as a result," the source said.
The official said this issue could be examined as soon as Chechen authorities substantiated their additional budgetary needs. "The Chechen side, which claims that the money is being used for construction and rebuilding the republic, has been unable so far to spend the existing available appropriations," he said.