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    MOSCOW, February 19 (RIA Novosti) Putin will remain Russia's leader after 2008/Kosovo will be stumbling block between West and Russia - expert /Russia to sell weapons, air-defense systems in the Middle East/Foreign investors to be barred from energy companies in border regions/Rosneft set to acquire oil and gas assets in Bashkortostan

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    Putin will remain Russia's leader after 2008

    It became clear a year ago that Putin would not run for a third term. It now appears that he intends to keep his grip on power after 2008, according to an analyst.
    Succession, which amounts to the de facto prolongation of Putin's power, calls for a successor who would agree to play the role of "a junior czar," accepted by the largest possible number of key political figures in Russia, said Vitaly Ivanov, deputy head of the Center for Current Politics in Russia.
    When tackling that problem, Putin will most likely prefer not to formalize the nomination of his successor by appointing him prime minister, Ivanov said. The future prime minister will act independently of the future president.
    There are reasons to believe that such a power system will be unbalanced, but that is the most acceptable variant now, the analyst said.
    Putin will preserve his status following the presidential election in March 2008. But how can that situation be formalized?
    Some say he will simply remain "a powerful citizen," which is not acceptable in Russia, where the people expect a citizen with claims to power and influence, and especially if he has both, to also have an official post and status.
    Putin has announced that he would not take a post in a corporation, nor would he become prime minister, Ivanov said.
    Putin is unlikely to accept a position in the upper house of parliament or the Constitutional Court. Therefore, he will most probably take a post in the Russian Security Council.
    According to Ivanov, the pro-Kremlin party, United Russia, would like Putin to become its leader. Does the president need or want this?
    It appears that the constitutional majority in the new parliament will be formed by the two parties that owe their existence to Putin - United Russia and A Just Russia.
    A structure uniting these two parties, as well as all other parties, could prove useful in that situation.
    Such a structure can be modeled after the Chinese People's Political Consultative Council, which the Chinese leader, Deng Xiaoping, headed in 1978-1983. In that case, Russia will have as head of state - the president and the political leader - Putin, Ivanov said.

    Nezavisimaya Gazeta

    Kosovo will be stumbling block between West and Russia - expert

    The issue of Kosovo is likely to become a stumbling block in relations between the West and Russia, writes Alexander Rahr, program director for Russian and CIS affairs at the German Council on Foreign Relations.
    Many in the West seem to think that after the NATO campaign against Belgrade of 1999, Russia has not and cannot have any geopolitical interests in the Balkans.
    They believe that Russia, angry over possible independence for Kosovo, is not protecting Serbia's interests but starting a bargaining process over frozen ethnic-territorial conflicts in the post-Soviet Union.
    Until now, no attention has been paid to the Russian argument that the Kosovo precedent may set an example for settling conflicts in other areas.
    But Putin's Munich speech has had a sobering effect on many. It may have set a new "red line" which Russia does not think the West has the right to cross in order not to provoke Moscow's anger and retaliation.
    Until the latest escalation of relations with Russia, the European Union thought it could do its own peacemaking in the post-Soviet space, and somehow, without Russian participation, begin solving ethnic conflicts in Abkhazia, South Ossetia, Nagorno-Karabakh and Transdnestr.
    Perhaps some in the United States hoped to carry out peacekeeping operations in Georgia and Transdnestr with NATO help. It is safe to assume that if the "orange" coalition were in power in Ukraine today, NATO's last Riga summit would have affirmatively resolved the question of Ukraine's and Georgia's inclusion in NATO.
    But today's situation appears to have altered drastically. Geopolitics in Europe is changing before our eyes, above all because oil and gas have been factored in.
    The European Union is facing energy dependence on Russia more than ever before, and EU strategists now take into consideration whether to agree with Russia on stable gas and oil deliveries or take risks and act brusquely in the post-Soviet space.
    To all appearances, the West will secure independence for Kosovo. But Russia will gain time in order to try and resolve ethnic-territorial conflicts in former Soviet republics on its borders in its own favor.


    Russia to sell weapons, air-defense systems in the Middle East

    Most of the weapons and air-defense systems Moscow sells are exported to the Middle East, Southwest Asia and North Africa, accounting for about one-third of the $50 billion global arms market, according to the Center for Analysis of Strategies and Technologies.
    Army weaponry and air-defense systems sales make up $5 billion of the grand total.
    On Sunday, the Seventh International Arms Fair IDEX-2007 opened in Abu Dhabi. Forty-three Russian enterprises controlled by Rosoboronexport, the main national arms exporter, are attending the fair, where they face stiff competition from companies representing 50 other countries.
    The Arab world is traditionally interested in Russian light armored vehicles, air-defense systems and specialized weapons, said Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies. Last year, air-defense systems accounted for 21.6% of Russian arms sales.
    The center's experts analyzed open-source data and said Russian arms exports totaled $3.86 billion in 2006.
    In late 2006, Mikhail Dmitriyev, head of Russia's Federal Service for Military-Technical Cooperation, estimated projected arms sales at $6 billion.
    If Dmitriyev is right, then air-defense systems will account for over $1.2 billion of 2006 arms sales.
    Iran has already paid $780 million for Tor-M1 surface-to-air missiles (SAMs).
    Syria and Morocco have reportedly bought six short-range Tunguska SAM/gun systems worth $100 million each. Moreover, Egypt and Iran have paid Russia to upgrade their Kvadrat and Pechora SAMs.
    Moscow would like the Arab world to operate Russian-made air-defense systems.
    Most importantly, Russia must enter the Saudi Arabian arms market, which has traditionally been dominated by the United States, the United Kingdom and France, said Konstantin Makiyenko, deputy director of the Center for Analysis of Strategies and Technologies.
    A great deal depends on the customers' political sympathies rather than the quality of Russian weapons and their attractive prices.
    Global arms markets, primarily Arab markets, are politicized, he told the paper.


    Foreign investors to be barred from energy companies in border regions

    The Kremlin is not prepared to give the Finnish concern Fortum control over the TGK-1 territorial generating company, which unites the energy networks of the northwest border region of Russia.
    Experts said that position might discourage Western participation in the Russian electricity sector.
    Alexander Chikunov, a board member of electricity monopoly RAO UES, said at a Friday meeting with analysts that Fortum could not hope to gain control over TGK-1.
    UES later issued a statement saying Chikunov's words do not mean that foreigners would be entirely barred from the sector.
    However, according to a source who attended Chikunov's Friday meeting, the official expressed the idea very clearly and even said that St. Petersburg, where TGK-1 operates, is "a politically loaded region" and that therefore control over the company cannot be given to a Western company.
    Fortum offers a wide variety of electricity, heat, cold, operations and maintenance, and related services. It owns 25.7% of TGK-1 shares, and was the first Western investor to show interest in Russia's electricity sector.
    UES plans to issue and sell 39% of TGK-1 shares in July.
    "I am not ready to say if foreign investors will encounter problems with the acquisitions of the above shares," said Alexander Pirozhenko, head of the Federal Anti-Monopoly Service's department for the supervision of the fuel and energy sector.
    However, a source close to RAO UES said there would be problems.
    "Fortum will be told not to file a request for the acquisition of the entire additional issue, because the Kremlin will not allow it to assume control of the company," he said. The Finnish concern "is unlikely to protest, especially because it already has a blocking stake" in TGK-1.
    "A decision not to allow foreign strategic companies to assume control over border companies appears logical politically," said Dmitry Skryabin, an analyst with the Aton brokerage. "If a Western company controls power generation in St. Petersburg, it may switch off electricity if we threaten to cut off gas."
    Dmitry Tsaregorodtsev, an analyst with FIM Securities, said Fortum might sell its stake in TGK-1.
    "It has recouped spending on its acquisition, which we estimate at $254 million," he said. "Its stake now costs about $860 million."


    Rosneft set to acquire oil and gas assets in Bashkortostan

    In late 2006, Anatoly Serdyukov, former head of Russia's Federal Tax Service (FNS) and the newly appointed Russian Defense Minister, sued Ural Rakhimov, the son of President Murtaza Rakhimov of Bashkortostan, a republic in the Volga Region, and his partners.
    Experts said the FNS, which wants to obtain controlling stakes in the Bashkir oil industry, is likely to win the case.
    The FNS filed lawsuits with the Moscow Arbitration Court contesting the legality of transferring the Bashkir fuel and energy sector's shares from Bashkir Capital, a company widely believed to be owned by Rakhimov Jr., to privately-owned limited-liability companies, also reportedly controlled by him and his partners.
    The FNS said the deals run counter to the requirements of law, order and morality. Furthermore, Bashkir Capital faces a 42-billion ruble ($1.6 million) lawsuit for failure to pay profit taxes after the gratis transfer of shares to charity foundations.
    A minority shareholder of the Bashneft oil company said the lawsuits had been lobbied by state-controlled oil major Rosneft.
    The Rosneft press service declined to comment. However, the company's president, Sergei Bogdanchikov, has repeatedly stated his interest in Bashkir refineries.
    Andrei Korelsky, of Vegas Lex law firm, said the FNS based its claims on the rarely used Article 169 of the Civil Code, but that particular article is "like heavy artillery."
    If the court proves the defendant's malicious intent, then all assets would be transferred into the federal budget, and that would mean that no restitution would be given to the owners, he said.
    Maxim Shein, an analyst with BrokerCreditService, said the situation with Bashkortostan's fuel and energy industry highlights the government's intention to control as many oil and gas assets as possible.
    Rosneft is likely to receive such assets if the state takes them over, he said.

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