MOSCOW, December 21 (RIA Novosti) Western sanctions leave Belarus unfazed / Russia does not need second-hand foreign airliners / Italy's Unicredit pays $424 million for Russian investment business / Foreigners to sell Gazprom half their stakes in Sakhalin II / Corporate power struggle may impair Russia's chances on warplane markets
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Nezavisimaya Gazeta, Kommersant
Western sanctions leave Belarus unfazed
Following moves by the European Union, the United States, and Canada to introduce economic sanctions against Belarus, Minsk is more concerned about the losses it could incur from Russia's actions.
Minsk is not commenting on the bad news from the West. Yaroslav Romanchuk, director of the Belarusian Mises Research Center, said the Western sanctions taken together "are a pat on the shoulder compared to what Russia is doing to Belarus."
Romanchuk said Canada's share in Belarusian trade is less than 1%, and therefore its sanctions are merely a political gesture that cannot seriously affect the Belarusian economy.
According to the expert, economic sanctions, which the EU intends to enforce next spring, as well as the U.S. embargo could cost Belarus $250-$300 million. However, Russia's decision to increase crude tariffs will subtract more than $3 billion from the Belarusian budget.
The West, which suspects Moscow of preparing the ground for incorporating Belarus, has started preparations for a battle for Minsk. U.S. Ambassador to Belarus Karen Stewart said the United States would not recognize the results of a referendum on the establishment of a Union State of Russia and Belarus, which the Kremlin has been forcing on Minsk for a long time.
Ariel Cohen, senior research fellow in Russian and Eurasian Studies and International Energy Security at the Sarah and Douglas Allison Center of the Davis Institute for International Studies at the Heritage Foundation, said the ambassador's words were directed not only at Alexander Lukashenko, but also at Vladimir Putin.
In addition to an open refusal to recognize the legitimacy of the referendum, proposed by Secretary of the Union State Pavel Borodin, the State Department is probably hinting to the Kremlin that it would not recognize the legitimacy of a third presidential term for Putin, if he becomes the head of the state formed through the unification of Russia and Belarus, Cohen said.
Russia does not need second-hand foreign airliners
The state-owned United Aircraft Corporation [OAK], which consolidates Russian aircraft manufacturers and related federal assets, said 30% of import duties should be charged on all used foreign aircraft aged over ten years.
Market players said local air carriers will be unable to overhaul their fleets, because Russian enterprises cannot produce enough aircraft.
Transport Minister Igor Levitin said the Economic Development and Trade Ministry, the Transport Ministry and the Industry and Energy Ministry had already supported this idea. The corresponding mechanism for raising customs duties is now being developed, Levitin said.
All air carriers buying foreign planes have to pay 42% of customs duties, depending on their price. This sum total includes 20% of import duties and value-added tax.
Airline spokesmen were surprised by the OAK proposal because their companies have been lobbying lower customs duties, or their possible abolition over the last few years.
Lev Koshlyakov, deputy general director of Aeroflot, the largest national air carrier, said this proposal could wreck Russia's civilian aircraft industry. "We still have nothing to protect," he told the paper.
Another airline spokesman, who wished to remain anonymous, said OAK would do better to offer to mass-produce the same fuel-efficient aircraft and provide the same top-quality warranty support. I am surprised that the state wants to prop up the aircraft industry at the expense of the $7 billion local airline market, he said.
Levitin advocated lower customs duties on unique planes not produced in Russia. But the deadlines for this reduction are still unclear. According to the paper's sources, customs duties on new aircraft will be gradually reduced for seven years after Russia joins the World Trade Organization.
Boris Rybak, general director of aviation consultancy Infomost, said proposed OAK measures will not shield anyone, but will make things more difficult for airlines.
He said planes should not be divided into old and new ones. A flight-worthy plane in good working condition, which has been serviced accordingly, does not differ from any new aircraft. The national aircraft industry's low output does not depend on foreign aircraft imports, he said.
Italy's Unicredit pays $424 million for Russian investment business
It was announced Wednesday that a larger part of Aton investment group had been sold to Italy's Unicredit for $424 million. Russian investment banks are unable to compete with foreign giants and are forced to sell their businesses to them.
In 2005, Aton owners held tentative talks with the American investment bank Goldman Sachs. Then such names as Stanley, JPMorgan Chase and Merrill Lynch were mentioned among the claimants, but in March, Bank Austria Creditanstalt, belonging to the Italian group Unicredit, joined the negotiations. Soon it became the main contender, and on Wednesday the sides announced a deal. The Italians will pay the whole sum at once. The deal is expected to be closed in the first quarter of next year.
Internet-broker Aton-Line, as well as the group's asset managing business, including Aton Management, will stay with the former owners. The head of Trust Bank board of directors, Ilya Yurov, is not surprised that Aton shareholders have decided to keep the business to themselves.
"Russia is the largest consumer market in Europe, and bids fair to develop everything oriented on the mass consumer," he said.
On the other hand, Russian companies are squeezed for resources to develop investment and broker businesses. "It is clear that most of the world's leading players are going to work on the Russian market, making it hard to go it alone. The current arrangement affords an acceptable combination of capital and expertise," Aton president Yevgeny Yuryev said on Wednesday.
"Foreign investment companies are more interested in the Russian market itself than in Russian asset-management businesses," said Sergei Kharlamov, deputy head of the Federal Service for Financial Markets.
"They make their choice of either buying an established Russian business or taking out a license and developing on their own," he said.
As long as there is a chance for a good buy, most companies will opt for acquisition instead of building up. It was no accident that JPMorgan Chase, another major world bank, was eyeing Troika Dialog. Sources say the sale of the main operator of the national stock market is an almost foregone conclusion.
Foreigners to sell Gazprom half their stakes in Sakhalin II
Reports were confirmed yesterday that Russian energy giant Gazprom will pay for a stake in the Sakhalin II oil and gas project in cash, not with assets.
Oil and gas giant Shell will sell the gas monopoly 27.5%, not 30%, in the project operator, Sakhalin Energy. Analysts say Shell is willing to reserve as many Sakhalin II resources as possible. The parties will hold the final round of negotiations in Moscow Thursday.
"Shell is seeking to retain the largest possible stake in Sakhalin II," said Denis Borisov, an analyst with the Solid brokerage. "If the company owns from 20% to 50% in the project, it will put the reserves on its balance, and take into account profit corresponding to its share." The expert said as soon as Shell cedes a stake in Sakhalin II to Gazprom, the oil major will also have to yield part of its resources. Last year, just 67% of Shell's output came from new reserves, while for its main European rival BP the figure was 95%.
The size of the stake matters less to the Japanese participants in the project - all they want is to ensure stable LNG supplies to the country, which is going to be the project's largest gas consumer.
All the parties involved in the deal, including the Russian government, have announced that the negotiations, which were launched on December 15, will be completed later this week, on Friday or Saturday.
Sakhalin II is being implemented under a product sharing agreement. Its operator is Sakhalin Energy, a joint venture of the Anglo-Dutch Royal Dutch Shell (55%), Japan's Mitsui (25%), and Mitsubishi (20%).
The project is aimed at developing the Piltun-Asokhskoye and Lunskoye fields, whose reserves total 150 million metric tons of oil and 500 billion cubic meters of gas. There are plans to export 8 million metric tons of oil and 9.6 million metric tons of liquefied gas annually through the project.
Corporate power struggle may impair Russia's chances on warplane markets
The Moscow Prosecutor's Office said Wednesday that the first deputy general director of the Russian Aircraft Corporation MiG, Sergei Tsivilyov, has been charged with major fraud.
The Tsivilyov case, which involves the falsification of documents for aircraft components worth $637,000, may prevent MiG from winning a $9 billion fighter tender announced by the Indian Air Force, analysts said.
MiG officials said a struggle for the post of corporate general director is now underway.
Some experts said the scandal reflects a power struggle in the emergent United Aircraft Corporation (OAK).
All top OAK positions have already been taken, but lower posts are still vacant, said Ray, Man & Gor Securities expert Yevgeny Linchek.
An anonymous expert said the main confrontation involves the holding company Sukhoi and the corporation Irkut.
Business advisory firm Deloitte Touche Tohmatsu said Sukhoi costs twice as much as its main rival Irkut, which therefore has weaker positions in OAK.
Linchek said the Tsivilyov case will probably be hushed up because former MiG general director, OAK president and Irkut co-owner Alexei Fydorov is supported by Deputy Prime Minister and Defense Minister Sergei Ivanov, who is also OAK board chairman.
However, MiG's rivals may take advantage of the situation and win the Indian Air Force tender on the sale of 126 fighters if authorities continue to investigate the case, Ruslan Pukhov, editor of Moscow Defence Brief magazine, said.
According to Pukhov, British law enforcement agencies have recently closed a case against BAE Systems, the largest national defense company, accused of operating a slush fund to support the extravagant lifestyle of members of the Saudi royal family. This decision was made in order to save a similar ambitious contract on the sale of 72 Eurofighter aircraft worth $19.7 billion.
However, Russian authorities may prove less tractable, and their position will, doubtless, improve the chances of MiG's rivals on Indian and other foreign warplane markets, Pukhov said.