MOSCOW, July 4 (RIA Novosti) Real-estate-minded Ukraine / Putin, ministers differ on calculations / Sharp corners of Ukrainian roundtable / Investment Fund promises 50 billion rubles to investors
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Even with its debts to the Paris Club paid, Russia will not be totally free from foreign claims. Ukraine, for one, is not going to waive the right to foreign property of the former U.S.S.R. Lawyers say: final settlements with creditors will not protect Russia against actions by one-time sister nations.
Finance Minister Alexei Kudrin told state television that the pre-schedule payment of Russia's debt to the Paris Club "will enable Russia to claim all foreign assets of the former U.S.S.R." Kudrin hopes the last settlement with the club will allow Russia to establish rights to still unclaimed property abroad.
Viktor Khrekov, spokesman for the presidential administrative department, said that real estate on its books had still not been formalized in nine out of 75 countries, and these are among the biggest, including the United Kingdom, Japan and Poland.
In 1992, former Soviet republics signed a so-called zero-option agreement. Russia pledged to pay the Soviet-era debt totaling $96.8 billion in exchange for the others waiving their rights to foreign property of the former U.S.S.R.
But the next year Ukraine, whose share in the Soviet-era debts was 16.9%, or about $16.5 billion, reneged on the agreement. Its claims took the form of a list that included real estate in 28 countries and which was sent to the Russian government in 1994.
"We did not want to negotiate in the dark, seeing the debt, but not seeing the embassies, trade missions and land plots," said Alexander Ryabchenko, former Rada deputy and now director of the Institute of Privatization, Property Management and Investment. Russia, he said, demanded that Ukraine pay for property audit, and so it still has not got the list.
In the early 1990s, the Pinkerton detective agency assessed Soviet property abroad at $300-400 billion, with the figure later modified by the Audit Chamber to $150-200 billion. In 2001, Ukraine sued Russia in London's High Court, demanding the building of the Russian trade mission. The court accepted the claim, but is yet to make a ruling.
"Ukraine has failed to get anything back through the courts, we did not pass a single piece of property to it," said Khrekov.
"There is no full list of contested assets or the total number of claims," said Albert Yeganyan, managing partner of Vegas-Lex company, which has been working on the problem for several years. No comment could be obtained from the Foreign Ministry on Monday.
Alexander Shokhin, a former deputy prime minister, said with all payments made to the club the courts of 18 creditor nations must not accept Ukraine's claims to Russian assets. Ukraine has not paid more than $16 billion, and this is our main argument, said Shokhin.
Foreign property will not automatically revert to Russia, said Viktor Pleskachevsky, chairman of the State Duma's property committee: "Many influential people in Europe will side with Ukraine and refuse to recognize our formula: whoever pays shall have the use of property."
Former chairman of a Supreme Rada committee Alexander Gudyma said that as soon as Ukrainian parliamentarians shared portfolios, the subject of Soviet-era foreign property would be taken up again. Ukraine has not withdrawn its claims to real estate, said Ryabchenko, and Russia's settlements with the Paris Club will have no effect. He said the case was still on in London.
Russia's repayment of the Paris Club debt will not make things easier for us, Yeganyan also agrees: relapses like the London action may occur, and a court in each particular country will look at the specific circumstances of the case. He regrets that Russia has not yet passed legislation on succession regarding the assets and liabilities of the former U.S.S.R., tsarist Russia and the Provisional Government. "Ukraine's position could be hedged in should we have such laws," he said.
But Pleskachevsky doubts it. The State Duma, he said, wanted to adopt a law on the immunity of Russia and its property in 2000, but deputies realized that the document would not become a statutory provision in international law. In his view, the problem can be addressed only by reaching political understandings with Ukraine.
Putin, ministers differ on calculations
Russian President Vladimir Putin devoted yesterday's meeting with the government in the Kremlin not so much to the economy as to being economical.
He was satisfied with the 2006 inflation forecast of 8-9%, and was also glad to hear from Defense Minister Sergei Ivanov about funds saved in financing military enlistment offices.
The president had questions only to Finance Minister Alexei Kudrin: how did he manage to include money in the budget saved from early debt repayment to the Paris Club, which does not exist yet?
Russia will save as much as $7.7 billion on interest payments to the club of creditor nations. The money will be transferred to the Investment Fund, and will be used to build roads and bridges, and to develop power generation.
The president only recently instructed the government to arrange for early debt repayment, but the government has already included the money in the draft budget for 2007, he said. Kudrin did not attend the meeting, so Putin asked Deputy Prime Minister Alexander Zhukov to look into the issue.
Ivanov, however, had a report ready. He said that the Defense Ministry had closed down 407 enlistment offices out of 2,600, reducing spending by 20%. It has turned out to be too expensive to maintain such offices in certain districts and rural areas, where there are very few conscripts.
The next task is to eradicate bribes for draft-dodging. Enlistment offices will now "rotate employees that have held their positions for over three years," Ivanov said. "We estimate that this will help us to avoid corruption."
The defense minister also presented a strategy for developing Russia's space forces up to 2015. The program envisages "improving the quality of carrier rockets and spacecraft." The minister emphasized the point: "Quality, rather than quantity. In order to use spacecraft more efficiently in the interests of the national economy and defense."
Ivanov proposed creating dual-use satellites to simultaneously solve the problems of creating a unified information space and ensuring efficient troop management.
The president, however, decided against saving money on satellites, saying: "Quality and service-life are important factors, but the quantity is also very important for us, and we have to ensure it." The minister immediately concurred that the optimal number of satellites in orbit was above 100. To which Putin said, "Great. Now we have to reach this number."
Sharp corners of Ukrainian roundtable
The Ukrainian opposition has foiled talks with the parliamentary coalition that were to be held Monday on the initiative of President Viktor Yushchenko. The leader of the opposition Party of Regions, Viktor Yanukovych, did not appear for the roundtable, where the adversaries were expected to come to terms.
The president's idea of holding talks between the "orange" coalition and the opposition, which had been blocking parliament sessions for a week, was doomed from the very beginning. On Sunday, when the parliament advanced the reconciliation idea, Yanukovych called on his powerbase in the east of the country to pursue a campaign of public disobedience.
Ukrainian experts say the opposition party wants only the dissolution of the parliament, although Yushchenko said in his radio address: "I say again that there will be no repeat elections. They are too expensive for the republic, and a much too high price for the ambitions of some politicians."
Kost Bondarenko, director of the Kiev-based Institute of Management Studies, told the newspaper: "The immediate goals of Yanukovych's supporters are a secret ballot on the parliament speaker and cancellation of package voting (speaker plus prime minister). Their ultimate goal is to attain leadership of 42% of the parliamentary committees, including the committees on the budget, regulations, freedom of speech, and several others."
Bondarenko said the "orange" politicians, who cannot come to terms with each other, had created a pretext for the opposition's offensive. He said the pro-presidential factions could not join forces against their political opponents, because they had not decided whether they should support Petro Poroshenko (pro-presidential Our Ukraine) for parliament speaker.
On June 29, head of the Socialist Party Oleksandr Moroz called on pro-presidential bloc Our Ukraine to replace Poroshenko. Anatoliy Kinakh of the Party of Industrialists and Entrepreneurs (Our Ukraine) supported the idea.
But Dmitry Vydrin, a member of parliament from Yulia Tymoshenko's eponymous bloc, told the paper that a decision had been made on a secret ballot for the post of speaker.
This should not be seen as a concession to the Party of Regions, because the procedure is stipulated in the regulations, he said. Another candidate would be nominated if Poroshenko loses the vote.
Vydrin said it was not clear why Our Ukraine insisted on such a weak candidate. Poroshenko threatened to start talks with the Party of Regions if he lost.
Investment Fund promises 50 billion rubles to investors
On Monday, the Russian Economic Development and Trade Ministry's commission for selecting projects to be funded using the Investment Fund approved two new federal plans worth a total of 50.9 billion rubles ($1.89 billion).
The programs envision financial support for Norilsk Nickel, the world's largest producer of nickel and palladium, in its efforts to develop deposits in the East Siberian Chita Region, and the construction of a new exit road to link Moscow's Ring Road (MKAD) with the Moscow-Minsk-Brest Highway, leading to the western border of Belarus.
Deputy Economic Development and Trade Minister Kirill Androsov, who heads the commission, said it had also examined a project to construct the Orlovsky tunnel under the Neva River in St. Petersburg.
Androsov said all three projects had been approved; but the commission, which is due to meet again in late July, will authorize only the first two projects, and the third one will be resubmitted for further review.
"We have asked the investor to specify the technical parameters of the project and resubmit it to the commission," Androsov told the paper. Officials, who think the project is too expensive, want the investor to reduce its cost estimate, specifying tunnel dimensions and traffic volumes.
The investment commission also revised the Norilsk Nickel scheme. The company's request, worth 142 billion rubles ($5.28 billion), called for developing a polymetal ore deposit, constructing a railway and building four ore-processing factories. The metals giant requested about 45 billion rubles ($1.67 billion) from the Investment Fund for co-funding of 75% of the railway's cost.
"The investment commission has decided that the investor can finance 31%, rather than 25%, of railway costs; and this would reduce federal investment volumes by nearly 3.6 billion rubles ($134 million)," said Androsov. The project would therefore receive 40.9 billion rubles ($1.52 billion).
However, the commission decided not to reduce allocations for the road project. The cost of this project is estimated at 17.3 billion rubles ($643.84 million), out of which 10 billion rubles are to be received from the Investment Fund. But the relative proportion of federal and private investment may still change. This project will be implemented under a concession agreement with whichever investor offers the most money.
This also applies to the Orlovsky tunnel construction.
Androsov said standard concession agreements in the sphere of transport and road building had already been approved.
It appears likely that, in addition to the four Investment Fund projects, the investment commission will approve two more requests in late July.