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    MOSCOW, September 12 (RIA Novosti)
    Russia scared by NATO's "paper tiger" in the Black Sea / Abkhazia does not plan to accede to Russia, seeks CSTO membership / President Medvedev asked to implement urgent rearmament program / Azerbaijan set to push Gazprom back in Europe / Russia seeks ways to attract foreigners for mineral exploration / Rupert Murdoch pulls out of Russian assets


    Russia scared by NATO's "paper tiger" in the Black Sea

    NATO has proved its political and military impotence by dispatching warships to the Black Sea. Unfortunately, Russia has not seen through the ruse, a Russian analyst writes.
    Alexander Khramchikhin, chief analyst at the Institute of Political and Military Analysis, said Russia has failed to see that NATO's eastward expansion is weakening the bloc, not strengthening it. Nearly all continental European countries have sent very small groups to Afghanistan and refuse to take part in fighting there. And Britain does not have enough forces to send them to both Iraq and Afghanistan.
    The conflict in Georgia has proved this without a doubt, the analyst writes in the popular daily Izvestia.
    The member countries wholeheartedly supported Georgia during the recent conflict over South Ossetia, yet NATO did not provide any military assistance. It did not even send arms, let alone troops, to Georgia, or adopt a clear pro-Georgian political declaration.
    The group of NATO warships dispatched to the Black Sea after the conflict only confirmed the bloc's impotence, Khramchikhin writes.
    NATO's navy is much larger than Russia's Black Sea Fleet. It has 17 aircraft carriers, but none of them was sent to the Black Sea. No ground-based NATO aircraft were sent to Turkey, Bulgaria or Romania, which left the bloc's group of warships without air support.
    This alone should have shown that the gesture was designed to show that NATO was not threatening Russia but was trying to save face.
    The analyst said he saw no reason for Russia to raise ballyhoo over such a small group of NATO warships. The Kremlin actually took fright at a "paper tiger" - one destroyer. The rest of the group comprised frigates, which have limited combat capability for naval fighting and none at all against onshore targets.
    I hope this fright will pass soon, Khramchikhin concludes.


    Abkhazia does not plan to accede to Russia, seeks CSTO membership

    Abkhaz President Sergei Bagapsh disclosed the newly-independent state's immediate plans. He said Abkhazia did not intend to accede to Russia, but would seek membership in the CIS, CSTO and the Russia-Belarus Union. However, it soon became clear that those plans did not comply with Moscow's perspective.
    Foreign Minister Sergei Lavrov was the first to respond to Bagapsh's statement, dismissing Abkhazia's project to join CSTO as "legally impracticable."
    "I admit that it is impossible now," said his Abkhazian counterpart, Sergei Shamba, commenting on the emerging differences. "But we are talking about long-term prospects. That is why we cited membership in the Union State as our current priority. It will certainly be equally impossible unless Belarus recognizes Abkhazia, but we sincerely hope it will. Being a part of this Union, it will be easier for Abkhazia to push for recognition by the members of the CSTO, SCO, CIS, and possibly membership in these alliances."
    Bagapsh said Abkhazia would become a "democratic and demilitarized country governed by the rule of law." For some reason he failed to explain how the "demilitarization" plan would coordinate with Russia's plans to deploy 3,800 troops in the republic.
    Shamba said the president just meant "a demilitarized zone between Abkhazia and Georgia." "A demilitarized state is a very attractive idea. Unfortunately, it is currently infeasible given our close vicinity to Georgia," the diplomat added.
    Bagapsh's slip was eloquent enough to deduce that Abkhazia was basically against hosting Russia's military bases. Abkhazian officials had even mentioned it on various occasions saying they wanted "to keep their sea resorts clean."
    Ever since Russia recognized Abkhazia, they have been expecting Moscow to try to influence Sukhumi's personnel policy. It is quite possible therefore that Bagapsh's statement showed a glimpse of Abkhazia's desire to keep its independence from both Georgia and Russia, in a sense.
    Abkhazian Deputy Prime Minister Alexander Stranichkin has made another curious statement: he said they would amend the republic's law "in consideration of Russian investor interests," to ensure that they "operate almost in their own legal environment."
    The Abkhazian government declined to comment on that, citing the absence of the republic's top officials, who were visiting Russia at that moment. However, a source in the Cabinet predicted that the initiative to amend laws to suit Russian investors would be highly unpopular in Abkhazia: "If foreign citizens are allowed to buy land, prices will surge and property will become unaffordable for Abkhazians," he said.


    President Medvedev asked to implement urgent rearmament program

    The Russian military asked President Dmitry Medvedev to implement an urgent rearmament program following the war with Georgia over the breakaway South Ossetia province last month.
    The government may have to redistribute defense budget allocations in order to accomplish this objective.
    The Caucasian crisis and Georgia's continued militarization will influence specific decisions to rearm the Russian Armed Forces, President Medvedev said Thursday.
    Opening a conference in the Kremlin, Medvedev said he had decided to send two Tupolev Tu-160 strategic bombers to Venezuela at the invitation of its leadership. Medvedev also said on the eve of the seventh anniversary of 9/11 that Moscow was ready to jointly fight terrorism with the United States.
    The conference involved Defense Minister Anatoly Serdyukov, Chief of Staff of the Presidential Executive Office Sergei Naryshkin, Finance Minister Alexei Kudrin, General Staff Chief Nikolai Makarov and Deputy Defense Minister Vladimir Popovkin, who is in charge of procurement and armaments.
    No update on the results of the conference was immediately available.
    A Defense Ministry official said those involved in the conference had officially approved the urgent procurement of weapons systems following the conflict in South Ossetia.
    He said the military had submitted their proposals to the president who would issue orders to specialized agencies, and that the finance minister was supposed to list presidential orders in the federal budget.
    The Defense Ministry official said the new arms-procurement contracts could be signed in two months if the decisions were formalized today, but that the weapons would be received much later.
    The Defense Ministry's procurement budget is unlikely to exceed 500 billion rubles ($19.4 billion) next year, the official told the paper.
    Analysts said the Russian air force's unsuccessful operations on the first day of the conflict were the main problem. The war showed that the air force must be able to suppress enemy air defenses beforehand, Mikhail Barabanov, scientific editor of Arms Exports magazine, told the paper.
    The Russian air force reportedly lost seven planes, including three Sukhoi Su-25 Frogfoot ground-attack jets and one Tu-22M3 Backfire strategic bomber, on the first day, Barabanov said.
    He said the air force command was surprised by Georgia's Ukrainian-supplied Buk-M1 surface-to-air missile (SAM) systems that downed the four warplanes, and that combat-training programs had to be revised.


    Azerbaijan set to push Gazprom back in Europe

    Greece yesterday supported Azerbaijan's plans for direct natural gas supplies to Europe. The Baku authorities hope Caspian gas will soon push back Russian gas there, but Russian experts don't think so.
    Greek Development Minister Christos Folias said Greece would become Azerbaijan's gate to the EU, adding that the process would be launched by an agreement between Azerbaijan, Turkey, Greece, and Italy on the shipment of Caspian gas to Europe.
    Azerbaijan plans to ship gas from its Shah Deniz deposit (reserves assessed at 1.2 trillion cubic meters) through the Baku-Tbilisi-Erzurum pipeline linking Azerbaijan with Turkey and the Karacabey-Komotini pipeline running from Turkey to Greece.
    Caspian gas will reach Italy in 2011, when the Poseidon subsea gas pipeline between Greece and Italy is to be completed.
    At present, Russian energy giant Gazprom is the main natural gas supplier of Greece and Italy (80% and 25% of the local gas market respectively).But Azerbaijan thinks it can push it back and take over up to 30% (about 1 billion cu m) of the Greek market within a few years. Azerbaijan is also ready to supply 8 billion cu m of natural gas to Italy.
    Analysts say Azerbaijan will most likely attain these goals because Europe wants to diversify its energy suppliers. But this will not greatly reduce Gazprom's share of the Italian market.
    Svetlana Savchenko, head of investment planning at 2K Audit-Business Consulting, said: "Although Azerbaijan has large natural gas reserves (up to 1.5 trillion cu m), it so far cannot export considerable amounts. In 2009-2015, it will be able to supply only 10 billion cu m of natural gas to Europe at the most."
    She said such supplies would not endanger Gazprom's position on European markets.
    "However, the more suppliers, even small ones, Europe has, the quicker Gazprom will lose its monopoly position," Savchenko said.


    Russia seeks ways to attract foreigners for mineral exploration

    To attract foreign investment in geological prospecting, the Ministry of Natural Resources (Minprirody) has promised overseas companies bonuses for the discovery of strategic deposits.
    Not so long ago, Russia put a cap on foreign access to strategic resources. Uranium, diamonds, nickel, cobalt, and beryllium are just a few minerals which, when discovered, make the deposit in which they are found a strategic one. The rule also applies to oil fields with over 70 million tons, gas deposits of over 50 billion cu m and the continental shelf. The share of foreign capital in such projects may not be higher than 10%. Exceptions are possible, but only by a government decision.
    While previously all companies discovering a new deposit had the priority right to develop it, strategic fields now retain such rights only for Russian players. Foreign companies may be partners only when their stake is not greater than 49%.
    But the ministry is anxious for foreign companies to keep working in Russia and has provided additional incentives. If they discover a strategic deposit, it says, the state must not only refund all their costs (100%), but also pay a bonus - either an additional 50% of the expenses incurred, or 50% of a license price bid at a tender by the future owner.
    The mechanism for such bonuses will be regulated in a government resolution, which will take not less than a month to prepare, said a ministry spokesman. The appropriate sums will be budgeted for, as is the case in most Western countries, he said.
    Bonuses can be fairly large and run into billions of rubles, to judge from the sums paid to the treasury at recent tenders for large coal and potash fields. One of the latest records is the Polovodsky section in the Upper Kama (potassium and magnesium salts), which was bought at an auction by Silvinit company for 35,140 million rubles (25 times the starting price).
    Ministry bonuses will be interesting not so much for strategic players as to service companies, which can go into geological prospecting on their own, believes Solid analyst Denis Borisov. A staff worker from a large international oil servicing company thinks this unlikely: "Our job is to be contractors, and exploring resources on our own means conflicting with clients' interests."


    Rupert Murdoch pulls out of Russian assets

    Employees of News Outdoor Russia were given the news Thursday that the company was changing hands. Media mogul Rupert Murdoch is selling the outdoor advertising arm of his News Corporation to French JC Decaux.
    However, experts do not seem to link the decision to Monday night's raids by investigation authorities on the company's office.
    The deal is estimated at over $1 billion, to be paid partly in cash and partly with new JC Decaux shares to be issued shortly. There is no information yet as to the stake News Corporation will get in the French firm.
    Analysts say News Corporation had had plans to sell News Outdoor long before the raids. Andrei Berezkin of the company Espar Analytic said outdoor advertizing markets were booming across the globe, while in Russia it had stabilized and even showed a downward trend. Murdoch couldn't have overlooked that trend.
    The French company has a different motive for acquiring the Russian asset. Vladimir Yevstafyev, vice president of the Russian Association of Advertising Agencies, said the acquisition would put JC Decaux in the global leadership position, "let alone give it leadership of the Russian market." He added that JC Decaux had been on the Ukrainian market for three years and was currently leading that market.
    News Outdoor currently controls 20% of Russia's outdoor advertising market. Analysts say the French company stands a good chance of boosting that share to 35%.
    Russia introduced a bidding system for securing ad carriers on July 1, which means small operators can no longer compete with large ones. "Different companies no longer have equal opportunities. Small operators suspect large ones of having pushed the bill through the Duma," Berezkin told Gazeta.
    Incidentally, former News Outdoor CEO Sergei Zheleznyak is currently a Duma member.

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