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    Russia overestimates its foreign policy achievements/Belarus may block Gazprom's export pipeline/ Iran offers LUKoil new oil deposit/Ilyushin short of funds to fulfill Chinese contract/Russian Navy's modernization program may fail

    MOSCOW, December 27 (RIA Novosti)Russia overestimates its foreign policy achievements/Belarus may block Gazprom's export pipeline/Iran offers LUKoil new oil deposit/Ilyushin short of funds to fulfill Chinese contract/Russian Navy's modernization program may fail


    (RIA Novosti does not accept responsibility for articles in the press)

    Rossiiskaya Gazeta

    Russia overestimates its foreign policy achievements

    The unexpected, rapid growth of Russia's international stature has frightened many people, partly because the Kremlin has become giddy and sometimes behaved arrogantly, a prominent political analyst told the newspaper Rossiiskaya Gazeta.

    Sergei Karaganov, chairman of the board of the Russian Council for Foreign and Defense Policy, told the newspaper that the Kremlin underestimated how the world would respond to a neo-conservative consolidation of power in Russia, which looks like reactionary backsliding. Many people in the West who are influential in global information and politics have started to view Russia as an alien and potentially dangerous country, rather than a member of the international community.

    This is why we are paying such a high price for our mistakes, Karaganov said. The way in which gas supplies to Ukraine were cut off [last winter], combined with Europe's feelings of political weakness and energy deficiency, have provoked a disproportionate reaction. Washington has exploited this to its advantage.

    According to the expert, Russia's excessive reaction to Tbilisi's outrageous behavior was also perceived as old-style neo-imperialism. Likewise, the international community reacted negatively to the Kremlin's decision to start a kind of ethnic purge against Georgians and Georgian companies in Russia.

    We are paying a price, however small, for the unwarranted tactics of our geostrategic offensive. Using its favorable economic situation, Russia has started regaining its positions in all spheres, without choosing a direction for the main strike. As a result, it has spread its "forces" far and wide and provoked resistance nearly everywhere.

    Russia is entering a shallow and farcical cold war, Karaganov writes, and it should do everything in its power not to aggravate the situation. It remains almost invulnerable so far, and is the world's second-largest military power despite lagging far behind the United States.

    However, Russia has nothing and nobody in the world it can rely on, Karaganov writes. It must take advantage of its current prosperity to carry out a political and economic modernization.

    The expert also writes that the Kremlin has exhausted its resources available for its neo-conservative consolidation of power and should start moving forward again. If it chooses this policy, those who are unhappy with Russia's strengthening will be pushed aside, and the world will become adjusted to a new, stronger Russia.

    If Russia succeeds in doing this, it will be able to start a new round of constructive rapprochement with the rest of the world, including the West, on more favorable conditions.


    Belarus may block Gazprom's export pipeline

    Belarus has refused to toe the line of Russian energy giant Gazprom, which said it was ready to increase the price the country pays for gas in 2007. Experts say Gazprom is trapped because Minsk can block the Yamal-Europe pipeline, which supplies Russian gas to the West.

    Belarus is now the only former-Soviet republic to buy Gazprom's gas at the low price of $46.68 per 1,000 cubic meters. Negotiations about a price increase were launched in mid-2006, when Gazprom first demanded that Belarus pay $200. However, no agreement has yet been reached.

    A government official close to Gazprom said the terms for Minsk are the most privileged in the entire post-Soviet space. "Lukashenko's loyalty is not worth $3 billion a year," he said angrily. "Together with oil and sugar preferences, this amounts to $4-5 billion of Russian direct subsidies to the Belarussian economy."

    However, Belarus' has a trump card. In addition to a gas contract for Belarus, Gazprom must also sign a transit contact for gas exports through the Yamal-Europe pipeline, said a source close to Gazprom and the negotiators. He said Minsk has always dealt with the two contracts in tandem. Unless a transit contract is signed, Belarus may consider the gas illegal and stop the compressor stations. In addition, Belarus may also illegally siphon off gas.

    "The gas pipeline still has a few branches that connect it to a pipeline owned by Beltransgaz," the source said. "They could confiscate half of the daily supply from the European pipeline."

    Alexei Makarkin, deputy director of the Center for Political Technologies, said the annual cut-offs that so worry European consumers will further tarnish Russia's reputation, whereas Lukashenko has always been an outcast and has nothing to lose.

    An official close to the negotiations between Gazprom and Belarus said the republic has already put aside reserves of fuel oil and coal. "If Gazprom cuts off gas supplies to Minsk, Gazprom's export contracts may be disrupted, and the damages from that may exceed profits from a potential gas price increase," he said.

    Poland, which receives half of its gas through Belarus, would be hit hardest, said Mikhail Korchemkin, director of East European Gas Analysis.

    Vremya Novostei

    Iran offers LUKoil new oil deposit

    Russian oil company LUKoil has a good chance of establishing a presence in Iran. Gholamhossein Nozari, managing director of the National Iranian Oil Company (NIOC), said Iran was negotiating with Russia on its participation in the development of the North Azadegan oil field.

    Iran hopes LUKoil will soon produce a general plan for development. LUKoil has refused to go into detail, but it confirmed its interest in the oil field.

    In mid-November, LUKoil's first vice-president, Ravil Maganov, said his company was willing to work in Iran and participate in the Azadegan project. He said the oil field would be lucrative mostly because of its size. Maganov added that Andrei Kuzyayev, head of LUKoil Overseas, a wholly owned subsidiary of LUKoil, had already visited Iran to discuss the project. However, the company has not made any subsequent statements on the deal.

    Two years ago, LUKoil took part in a tender for the development of three oil fields in southern Iran - North Azadegan, Kushk and Hosseineh - but with no luck. This year, Iran has repeatedly said that it is ready to cooperate with Russian companies such as LUKoil, despite the fact that the latter has a U.S. strategic partner and shareholder, ConocoPhillips.

    During his trip to Teheran in mid-December, Ivan Materov, deputy industry and energy minister, told the press that Iran was ready to transfer the right to develop 17 oil and gas areas to Russian companies. LUKoil's position in the country improved after it managed to open up the Azar deposit in the Anaran block along with Norway's Hydro. The deposit contains some 2 billion barrels (285.7 million metric tons) of oil.

    Experts say Iran has a huge potential for oil production that is closed to the global market, and many non-U.S. companies have been seeking to establish a presence in the country in order to be able to use their experience in the future, when the country's political situation stabilizes and investment in its oil projects becomes less risky. Gaining such a foothold is all the more important because Iran has begun to attract foreigners to its state service companies.


    Ilyushin short of funds to fulfill Chinese contract

    Rosoboronexport has decided to replace the principal contractor for a deal to supply China with 38 Il-76 and Il-78 transport aircraft worth $1.045 billion. Instead of Uzbekistan's Tashkent Chkalov Aircraft Building Association (TCABA), the Ilyushin Company will build them. Rosoboronexport and Ilyushin, however, need to find more than $400 million in order to fulfill the Chinese contract.

    TCABA, acting as a subcontractor for the Ilyushin International Aviation Company (MAK), will build only 15 aircraft, to be delivered in 2008-2010. The remaining 23 planes will be assembled at Aviastar-JV in Ulyanovsk. The government will allocate 6.4 billion rubles ($242.79 million) between now and 2009 to complete the project. Assembly is scheduled to begin in 2010, and starting in 2012 the Ulyanovsk plant is expected to turn out 10 each of the Il-76MD and Il-76MF aircraft per year. Because of the change in the principal contractor, the Chinese contract may not be completed until 2013 instead of 2012 as originally planned.

    The actual cost of assembling the 38 planes for China will be over $400 million more than the contracted price. Ilyushin will close the gap either with state subsidies or banking credits guaranteed by Rosoboronexport. To compensate for some of the costs, MAK has already waived all royalties, and President Islam Karimov of Uzbekistan has exempted TCABA from VAT and import duties on components until the end of 2009.

    Delivery of the first aircraft to China was planned for 2007, but last March, TCABA refused to sign a commission contract with Rosoboronexport for the price agreed upon with the Chinese. As a result, Beijing halted negotiations on a series of new contracts for the supply of weapons and military equipment.

    On November 21, in an attempt to save the contract, Boris Alyoshin, head of the Federal Industry Agency (Rosprom), and Alexei Fyodorov, president of the United Aircraft Building Corporation (UABC), signed an agreement in Tashkent affirming that the corporation was interested in further contacts with TCABA with a view to its likely admission to the UABC. The move, however, fell flat.

    Konstantin Makiyenko, an analyst with the Center for Analysis of Strategies and Technologies, doubts that TCABA will join the UABC. "With the Chinese contract fulfilled, Russia has no reason to keep the Tashkent plant afloat. If the Il-76 is supplied with a new engine and new avionics, it will sell for another 10 to 15 years."



    Russian Navy's modernization program may fail

    On Tuesday, a solid-propellant Bulava (Mace) ballistic missile failed to hit its target on the Kamchatka Peninsula after being launched from the strategic submarine Dmitry Donskoi in the White Sea.

    The military declined to comment on the abortive launch. But it is obvious that one of the most expensive programs for modernizing the Russian Navy's strategic nuclear force may fail.

    There are plans to build five state-of-the-art Mk 955 Borei-class submarines; one submarine will have 12 Bulava missiles with at least 10 multiple independently targeted warheads each.

    The first such submarine, the Yury Dolgoruky, will be launched at the Severodvinsk machine-building company in 2007, and all five submarines will enter service with the navy by 2010. This is a crucial deadline because Russia will scrap 17 of its 27 strategic submarines by that time and because Borei-class submarines will become the main element of the Russian Navy's strategic nuclear force.

    Work began on the Bulava submarine-launched missile in 1998, and a mock-up was launched successfully from a silo; however, the four subsequent experimental launches failed.

    However, Federal Space Agency director Anatoly Perminov said the failures were not as worrying as they seemed because the Bulava missile's specifications were improving with every launch. Nearly 12 to 14 launches would be required before the Bulava missile can enter service. However, it will take about three years to accomplish this because only two to three missiles are launched each year.

    An interdepartmental board of inquiry that started investigating the accident's causes on Tuesday is to submit a classified report by February 2007.

    Another Defense Ministry commission that began working the same day is to find out how information about the failed Bulava launches was leaked to the press.

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