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    MOSCOW, June 24 (RIA Novosti) Russia proclaimed the most undemocratic post-Soviet country/ Russian president checks his political reserves / Israel to help Gazprom supply gas to Blue Stream / Chevron: oil not found / Russia seeks to block Nabucco project by selling weapons to Turkmenistan / Social inequality makes the poor lose heart/

    RBC Daily, Gazeta, Gazeta.ru

    Russia proclaimed the most undemocratic post-Soviet country

    Russia is the most undemocratic post-Soviet country, says the human rights organization Freedom House.
    "The confluence of official state power with the commanding heights of the economy-along with the security services-has forged a deeply entrenched 'Iron Triangle' of interests in Russia," Freedom House writes in its Nations in Transit 2008 report.
    Analysts view this as the beginning of a new round of diplomatic confrontation between Russia and the United States.
    However, not only post-Soviet countries have problems with democracy.
    Alexander Sobyanin, chief strategist at the Association of Crossborder Cooperation, said: "There is a clear trend for a growth in the role of the security services and a decline in civil freedoms in many countries, including Russia, the United States, China, Germany, France and Britain. The state is learning more about its citizens, but has loosened control over their lives."
    Sobyanin said the Freedom House report shows that Russia has become, for the first time in the last eight years, a major target for attacks by the United States, which is increasing its military and political influence in Central Asia.
    Political analyst Yury Shevtsov said Washington had increased pressure on Moscow ahead of the November presidential elections.
    "Tensions in the sides' diplomatic relations will inevitably grow," he said. "The United States has apparently started putting pressure on Russia, in a bid to strengthen Ukraine and increase pressure on Russia in Central Asia and Kazakhstan, above all regarding Gazprom's agreement with Turkmenistan, Uzbekistan and Kazakhstan."
    This may indeed be so, especially since Kazakh President Nursultan Nazarbayev signed the decision to build the South Kazakh pipeline on June 6.
    Oleg Kozlovsky, coordinator of the youth movement Defense, said the Russian authorities would either pretend not to notice Freedom House's report, or would denounce it as lies and accuse the West of double standards.
    Kozlovsky, who was arrested last winter for his opposition activities and was then forcefully recruited into the army, said there were indeed double standards in the report.
    "Human rights activists in the West often have a cautious attitude to elections and political prisoners in Russia, because they have to take into account the diplomatic and political interests of their governments," he said.

    Vedomosti

    Russian president checks his political reserves

    President Dmitry Medvedev's statement at a meeting with his Belarusian counterpart in Minsk that the Russia-Belarus union state does exist but still has to be filled with tangible content, is a good old diplomatic mantra, but only in part. This union state as a shell is too important to even touch, let alone filling it with content before time. Any change now would mean a revision of relations.
    Russia and Belarus are in fact very mutually dependent. Russia's economy depends, among other things, on oil and gas shipments to Europe across Belarus, while the security of Russia's western border relies on the Belarusian army and the unified air defense system. Incidentally, President Alexander Lukashenko modernized his part of the shield in the 1990s.
    From the geopolitical perspective, Belarus is part of Russia's zone of influence, the loss of such influence fraught with a shattered image and foreign-political role.
    Any attempt to develop the union state would mean infringement upon Belarus's - and Lukashenko's - sovereignty, no matter how good the intentions. Lukashenko's occasional statements about possible integration with Europe or China are certainly as far-fetched as further integration with Russia. But it is still clear that he won't "sell" his sovereignty cheap.
    Therefore, despite the Kremlin's somewhat commercialized policy toward the Belarusian "brothers," it is unlikely to go too far right now. After slapping an export duty on oil for Belarus in early 2007, Russia then offered it $3.5 billion worth of loans, leaving the Belarusian finance minister utterly perplexed, because "his country had requested far less."
    The Russia-Belarus union state is mothballed history, a kind of Russia's political reserve. It could be given a new impetus either by political changes in Belarus, or by Russia-EU relations propelled to a new level.

    Kommersant

    Israel to help Gazprom supply gas to Blue Stream

    Israeli Minister of Industry and Trade Benyamin Ben-Eliezer has proposed that Gazprom should supply gas to Israel. This would help Gazprom to fill the Blue Stream pipeline, but entails building a pipeline from Turkey to Israel.
    Sergei Kupriyanov, Gazprom's deputy director for information policy, told the business daily Kommersant natural gas could be supplied to Israel via the Blue Stream pipeline linking Russia and Turkey across the Black Sea, but it would be premature to speak about volumes and deadlines because talks have lasted nearly three years.
    Oil accounts for 67% of Israel's fuel and energy balance, coal for 30%, and natural gas for less than 1%. Israel has proven natural gas reserves of 47 billion cu m (1.66 trillion cu f) and produces about 800 million cu m a year.
    According to the Israeli government, it will need as much as 8 billion cu m of natural gas by 2010. At present, it buys gas from the Israeli-American consortium Yam Thetis, which produces natural gas in Israel, and from the Israeli-Egyptian group Eastern Mediterranean Gas.
    Russian energy giant Gazprom started talks on natural gas supplies to Israel in 2006, when President Vladimir Putin said that the Blue Stream pipeline could be prolonged to Israel. Ehud Olmert, then acting Prime Minister of Israel, said the relevant agreement could be signed in 2007 if the sides agree on fixed gas prices.
    But Russia and Israel failed to agree on the contractor for laying the pipeline from Turkey to Israel.
    At present, Russia supplies 11 billion cu m (388.3 billion cu f) of natural gas to Turkey along the Blue Stream and plans to increase this to the design capacity of 16 billion cu m in 2011. Gazprom said building a pipeline from Turkey to Israel would be too expensive.
    "The scheme could work if Turkey agrees to supply Azerbaijani gas to Israel in a swap agreement stipulating the deliveries of Russian gas to Greece," said a high-raking source in Gazprom.
    Mikhail Korchemkin, director of East European Gas Analysis, a consulting company, said: "The only viable project is to build an expensive seabed pipeline to Israel, because the construction of an onshore pipeline will be prevented by Israel's [tense] relations with Syria."
    Maxim Shein, head of analysis at BrokerCreditService, said the potential contract between Gazprom and Israel was a political, rather than a commercial project.

    Vedomosti

    Chevron: oil not found

    Gazprom Neft, the oil arm of Russia's state-controlled gas giant, and Chevron, the second-largest U.S. oil company, have lost $20 million, as their joint venture failed to prospect new oil deposits of commercial value in two years.
    The partners told Vedomosti they decided to suspend exploration of the Aykhettinsky and Pyakutinsky areas in the Yamalo-Nenets Autonomous Area in northwest Siberia. "The decision was taken due to the outcome of the past two years' work. The project has failed to meet expectations," said Irina Rybalchenko, a Chevron spokesperson.
    Russia's Federal Mineral Resource Agency (Rosnedra) estimated the two areas' potential resources at 250-300 million and 70-110 million bbl, respectively. However, the reserves discovered proved meager and their extraction economically inefficient, added Gazprom Neft's Natalia Vyalkina. The companies had to decide before June 23 whether they should continue or suspend the project.
    Northern Taiga NefteGaz was registered in November 2006, 30% owned by Gazprom Neft and 70% by Chevron. In September 2007, the Russian partner augmented its share to 75%. The two companies' investments in the project were proportionate to their shares, spending $10 million on the two areas' development in 2006-2007, and a similar amount in 2008, a source close to the companies disclosed. They drilled one exploration well in the Aykhettinsky area and two in the Pyakutinsky area.
    The partners have not disclosed the specific amounts invested.
    However, Valery Nesterov from the Troika Dialog brokerage estimated the drilling of one well in the region at $2-3 million. With other expenditures added on, the companies could have invested around $20 million in two years, the analyst agrees.
    The partners have no plans to liquidate Northern Taiga NefteGaz. "We expect to find other interesting joint projects and are already negotiating certain proposals," said Vyalkina, seconded by the Chevron representative. Neither elaborated on the subject of the negotiations underway.
    Gazprom Neft president Alexander Dyukov said the company had proposed to Chevron the joint development of another west Siberian deposit.

    Kommersant

    Russia seeks to block Nabucco project by selling weapons to Turkmenistan

    Russia and Turkmenistan signed a contract for the sale of six BM-30 Smerch (Tornado) multiple rocket launchers from Russian weapons maker Motovilikha Factories to Ashgabat.
    Analysts linked the deal to ongoing negotiations over the Caspian littoral pipeline project, the paper said.
    A source at Motovilikha Factories said two Smerch launchers with a 90-km range each would be delivered this year; and the rest will reach Turkmenistan in 2009. Based on the average cost of a single BM-30 unit, the deal may be worth up to $70 million.
    This is the first major Russian-Turkmen military-technical cooperation contract and the most expensive deal with a Central Asian republic in the past decade.
    Moscow and Ashgabat did not implement any major military-technical cooperation projects since 1998 because Ashgabat strove to cooperate with NATO and also bought several patrol ships from Iran.
    Last spring, Russian President Vladimir Putin negotiated military-technical cooperation, jointly with energy issues, with the new Turkmen President, Gurbanguly Berdymukhammedov, and persuaded Ashgabat and Astana to build a Caspian gas pipeline into Russia via Kazakhstan.
    The declaration was signed on May 12, 2007; and construction is scheduled to begin in July-December 2008.
    Although Moscow is betting heavily on the project that would allow it to control hydrocarbon exports to Europe, it continues to face tough competition from Washington and Brussels.
    Since February 2007 when Berdymukhammedov was elected president, both the United States and the EU have been offering to pay more for Turkmen gas, due to be pumped along the Nabucco pipeline advocated by Brussels and the Trans-Caspian Pipeline.
    Mikhail Korchemkin, the founder and managing director of East European Gas Analysis, a consulting company that specializes in cost-benefit and financial analysis of natural gas projects in the former U.S.S.R., said Central Asian nations considered the Nabucco project more profitable because, unlike the Caspian Pipeline, they would get the pipeline for free.
    The Smerch deal may be another incentive from Moscow to persuade Turkmenistan to give up any long-term commitments to building the EU-sponsored Nabucco gas pipeline, designed to circumvent Russia, and to opt for the Caspian Pipeline.
    "Considering the fact that Moscow is negotiating the pipeline's construction with Ashgabat, the price of the Smerch contract may be less than its market value," Konstantin Makiyenko, deputy director of the Moscow-based Center for Analysis of Strategies and Technologies, told the paper.

    Gazeta.ru

    Social inequality makes the poor lose heart

    Almost 40% of Russians consider themselves poor, and nearly half of them say they have never lived comfortably.
    Experts say the real figure is half as high, and growing social inequality is to blame for such figures. But even an imagined poverty is a threat to the nation.
    The "poor" are spread evenly across the country: in Moscow and countryside their numbers are the same. Nor is age the decisive factor: 15% of young people and 19% of elderly people say they are poor.
    "The figures are the same as in the 1990s," Olga Kuzina, director general of the National Agency for Financial Research, said, commenting on the poll results of the Public Opinion Foundation (FOM).
    These results disagree with the statistics showing that incomes in Russia are on the rise. In January-May 2008, real incomes increased by 9.4%, compared with in the same months of the previous year, says the Russian Federal State Statistics Agency (Rosstat).
    Experts say the real poverty level in the country is below the FOM results although still high enough. "We estimate the poor make up 15% to 20% of the population," Kuzina said.
    Igor Polyakov, an analyst from the Center for Macroeconomic Analysis and Short-Term Forecasting, gives 18%.
    The low reported figures of one's wellbeing are due to a growing split in society. In 2005, the incomes of the richest were 15.2 times higher than those of the poorest; in 2006 the gap widened to 16 times, and in 2007, to 16.8 times, Polyakov said.
    "TV and an aggressive touting of the good life play a big role. It is common knowledge that suicides grow when things begin to look up, not when they look down. People are just unable to catch up with their get-rich ambitions, which are increasingly overtaking them with every passing day," Kuzina said.
    But even such a toned-down, rather than a glaring, poverty poses a danger for the social and economic climate in society. "Facing such a mismatch, people lose heart and see no way of improving their living standards," said Dmitry Baranov, an analyst at Finam Management.
    "The mounting inequality will slow down economic growth, cut consumer demand and lead to social sluggishness. With the middle class getting no support, the benefits will all go to the rich," Polyakov added.

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