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    MOSCOW, March 20 (RIA Novosti) Russian diplomatic missions to get early-warning radars/ Tokyo prods Moscow towards solving Kuril issue/ Oil and gas from ex-Soviet republics will bypass Russia/ Gazprom's appetite in Sakhalin grows/ BMW Group, DaimlerChrysler to open credit car sales in Russia

    Nezavisimaya Gazeta

    Russian diplomatic missions to get early-warning radars

    Colonel General Vladimir Popovkin, commander of the Russian Space Force, said Russian embassies in some countries could receive early-warning radars for tracking objects in outer space.
    The latest issue of the journal Novosti Kosmonavtiki (Space News) quoted Colonel General Popovkin as saying that the Defense Ministry and the Foreign Ministry are now discussing the installation of early-warning radars at some Russian embassies.
    "It would then be possible to monitor missile launches, which cannot be observed from Russia, as well as their boost phase and adjust trajectories in case of emergency," Popovkin told the journal.
    He said new generation radars do not require regular maintenance and take up little space.
    The Foreign Ministry, which was obviously taken aback by Popovkin's statement, declined to make any comment.
    Stanislav Lekarev, a former operative of Russia's Foreign Intelligence Service, said Russian diplomatic missions operate powerful telecommunications networks which are stuffed with satellite-communications and space-reconnaissance equipment.
    He said U.S. embassies in the Middle East use low-power radars to scan nearby streets for terrorists, but powerful early-warning radars are nonsense.
    Anyway, local authorities should be notified about plans for siting such equipment, Lekarev said.
    Some experts said Popovkin's statement implies that Russia has developed a new top-secret low-power technology for observing ballistic-missile flight paths.
    "It is unclear why the general has divulged this secret. The only explanation is that he wants to calm public anxiety and tell the world that Moscow can respond adequately to the U.S. National Missile Defense program," an anonymous expert said.
    "But everybody knows that military men are not diplomats," he told the paper.


    Tokyo prods Moscow towards solving Kuril issue

    Tokyo announced March 19 the dissolution of the Council of Wise Men, set up by Russian and Japanese leaders in 2003, following a failure to prepare the ground for a compromise in the two countries' territorial dispute.
    The decision signifies Japan's disappointment at lack of progress at the talks, and also a change in government tactics. Early this year, Tokyo established a new channel for confidential talks with Moscow and has been using it to prod the Kremlin towards solving the South Kuril issue.
    The government of Shinzo Abe, which came to power in September 2006, seems to be keener to promote relations with Russia than the previous cabinet. The neoconservatives, who set the tone in the Japanese government, believe that Tokyo needs Moscow to keep China in check and for guaranteed electricity supplies.
    The Japanese elite is energetically discussing possible resolutions in a compromise over the South Kurils, without which relations with its northern neighbor cannot be truly close.
    Neoconservatives rejected the Council of Wise Men as the mouthpiece of public opinion because the average Japanese wants the "Northern Territories" returned, and only the government's efforts can change the mood. Shotaro Yachi, first deputy foreign minister of Japan, has been chosen for the difficult task being one of the smartest diplomats and master of undercover intrigues.
    Alexander Losyukov, Russia's deputy foreign minister for Asia, was in Japan during Prime Minister Mikhail Fradkov's February visit. It is rumored that he met with Shotaro Yachi to exchange opinions, and it was decided to carry on negotiations, although a compromise seems unlikely now.
    The Russian Foreign Ministry has noticed Tokyo's departure from previous demands with regard to the South Kuril Islands. Nevertheless, there are few chances of reaching a compromise, as the "the national struggle for the Northern Territories" syndrome is limiting Tokyo's room for maneuver. In addition, Moscow is not prepared to make concessions.
    "The issue should be put on ice, at least until 2008," said a competent Russian source.

    Novye Izvestia

    Oil and gas from ex-Soviet republics will bypass Russia

    So far, Moscow has managed to maintain control of prices and energy supplies to Europe. But the situation is changing rapidly. The Russia-initiated transition to market relations in energy supplies has aroused in the capitals of oil- and gas-rich former-Soviet countries a desire to be independent players on the energy market. The black sheep of the region - Ukraine and Georgia - have been swift to take advantage of this sentiment.
    According to persistent rumors in diplomatic circles, Ukrainian President Viktor Yushchenko and his Georgian counterpart, Mikheil Saakashvili, have persuaded Kazakh President Nursultan Nazarbayev to take part in a summit of countries dependent on Russia for their energy. The meeting is due to take place in Warsaw in May to consider schemes for energy supplies from Kazakhstan bypassing Russia. Moreover, again prompted by President Yushchenko, Kazakhstan and Poland have agreed to consider the possibility of the former joining the Odessa-Brody-Plotsk oil pipeline. Kazakh oil would be transported across the Caspian to Baku, and from there by pipeline to the Georgian oil terminal of Supsa and further across the Black Sea to Odessa.
    Meanwhile, Moscow is not really concerned about these unexpected "moves" by its rivals, apparently in the belief that the need for several different stages of shipment makes the Odessa-Brody-Plotsk project uncompetitive in comparison with transportation through Russia. One must remember, however, that oil is not simply a continuation of politics; it is politics. As demonstrated more than once in the past, dwindling energy resources are again becoming a source of potential friction and conflict. It is noteworthy that in private conversations, European diplomats and businessmen are saying more and more often that if relations between Russia and the West continue to deteriorate, the European Union will support any, even the most unprofitable, energy project that could guarantee the stability of vital supplies.


    Gazprom's appetite in Sakhalin grows

    Plans by the Russian gas giant Gazprom to cooperate with the U.S. major ExxonMobil may lead to a major conflict with Rosneft, the state-controlled oil major, on the Sakhalin 1 energy project. The confrontation is set to increase as the 2008 presidential elections approach.
    Gazprom's CEO Alexei Miller said they were in talks with ExxonMobil, which is the operator of Sakhalin 1, an offshore oil and gas project in Russia's Far East. The state-controlled gas monopoly is interested not in financial participation in the project, but in increasing efficiency and ensuring that the interests of Russian consumers are taken into account, he said.
    Experts are positive that Gazprom intends to join Sakhalin 1 as a fully fledged shareholder. "The project's foreign operators only think about exporting oil," said Natalia Yanakayeva, analyst with CentreInvest Group. "Miller spoke of protecting the interests of Russian consumers, but it is almost impossible to force Exxon to direct its products to the domestic Russian market."
    Stanislav Kleshchev of VTB said, "Gazprom will most likely negotiate a minority stake in the project, and Russia will have two companies, Gazprom and Rosneft, holding a 20% stake in Sakhalin 1." This development may lead to a conflict between the two state-controlled majors, because experts believe Gazprom will not be satisfied with a minority stake.
    "Even if Exxon gives Gazprom its entire stake (30%), the gas monopoly will still not have control [over the project]," Yanakayeva said. "So it will have to work with some other shareholder, most likely, Rosneft." The oil major refused to comment on these speculations.
    Political competition should not to be forgotten either. Alexei Makarkin, deputy director general of the Center of Political Technology, said, "Last year the president [Vladimir Putin] tried to divide Gazprom's and Rosneft's areas of operation, but competition, especially political, still remains." "Two political and economic clans within the Kremlin, one of them oriented toward Gazprom and the other toward Rosneft, are fighting for influence," he said. "This fight will increase as the 2008 elections approach."


    BMW Group, DaimlerChrysler to open credit car sales in Russia

    BMW Group and DaimlerChrysler, global luxury car manufacturers, will open banks in Russia this year and start issuing auto credit. The companies say they have been prompted to do this by the dynamic growth of the Russian automobile market.
    BMW Financial Services, a bank of the BMW Group, is planning to start operations in Russia by the end of this year. Up to now, BMW has issued auto credit through Austria's Raiffeisenbank, but last year's 42% increase in sales to 9,527 cars has forced the company to change its operational plans. Christian Kremer, CEO of BMW Russland Trading, believes it is better to develop one's own financial service operation than to share profits with a partner. All documents for the bank's registration have been prepared and the company is just waiting for a permit from the Central Bank of Russia.
    Mercedes, BMW's main rival, whose sales surged by 92% last year, will have its own bank in Russia even earlier. A subsidiary of the DaimlerChrysler Bank will open in Moscow this October, said Yelena Divakova, a spokeswoman for DaimlerChrysler in Russia.
    However, other automobile concerns are still reluctant to open their subsidiaries in Russia and are finding it more profitable to work through partnerships with universal banks with their ramified branch networks, said Yelena Semyonova, head of the crediting and consulting department at Independence-Finservice, a major Russian company working in the automobile business.
    She believes foreigners find it difficult to assess the profitability of the Russian market: in Russia, only 30% of automobiles are sold on credit against 60% in Europe, and not all Russian creditors can provide documentary evidence of their incomes.
    Life will not be easy for BMW and DaimlerChrysler banks. Practice shows that only 50% of buyers of premium-class cars are ready to provide data on their income, while all the rest fear information leaks. Therefore, a bank is taking more risks by issuing credit to such buyers.
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    RIA Novosti is not responsible for the content of outside sources.

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