MOSCOW, September 23 (RIA Novosti)
Russia, Ukraine to prolong friendship treaty despite cooler relations / Renaissance Capital becomes world's largest investment bank / Gazprom gets 15% stake in major Venezuelan gas project / Russia compensates Kazakhstan's losses from war with Georgia / RusAl to build aluminum smelter and power plant in Libya / President puts Chubais in charge of nanotechnologies
Russia, Ukraine to prolong friendship treaty despite cooler relations
October 1 is the deadline for filing applications to back out of the friendship and cooperation agreement between Moscow and Ukraine. According to Kommersant information, Moscow and Kiev plan to extend it automatically for another decade, despite the mass of mutual complaints.
It wasn't difficult to predict that Russia and Ukraine would eventually stop short of disrupting the "big" agreement because both benefited from it.
For Kiev, it is most of all valuable because it contains Russia's legal recognition of Ukraine's territorial integrity within its present borders. This clause is enough for advocates of political independence as well as for major business leaders who have long learned to use sovereignty tools to promote their commercial interests.
Ukraine is different from the Baltic countries, and it has never had a goal of entirely disrupting its ties with Russia while craving rapprochement with the West. Ukraine knows it wouldn't gain anything from a conflict with Russia unless it had some strong guarantees of EU or NATO membership.
It is making a special effort to preserve all the good parts of its eastern policy that do not openly clash with its North Atlantic integration plans, knowing that Brussels will like it better for the offered prospects of interaction with Russia.
Russia, too, would rather not rock the boat. Backing out of the friendship agreement would mean an official revocation of its previous recognition of the Crimea as a Ukrainian territory.
Coming immediately after the conflict with Georgia over South Ossetia, it would further strain Russia's relations with the West. Kiev wouldn't even have to argue and convince anybody of its peaceful policies and its neighbor's aggressive ambitions. With all the current controversy in Europe, nobody knows what the reaction would be.
The issue of the Black Sea Fleet deployment in Sevastopol would acquire a new tinge. Although there is no formal legal connection, it is generally known that the Black Sea Fleet agreements Russia wanted so badly ended up traded for the "big" agreement.
Russia's withdrawal could be viewed as a dramatic change of the situation, which Ukraine could use as grounds for denunciation of the whole legal framework of the fleets presence in the Crimea, which could have the most disastrous consequences.
Finally, Moscow now has no need to use the agreement as a tool to prevent Ukraine's NATO accession. That country's politicians have done enough harm to have lost their chance of joining the Membership Access Plan at least before the presidential elections.
Renaissance Capital becomes world's largest investment bank
On Monday, the last two major U.S. investment banks, Goldman Sachs and Morgan Stanley, decided to change their status to bank holding companies. The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions.
The change continued the biggest restructuring on Wall Street since the Great Depression Depression.
The Federal Reserve approved the banks' decision to change their own status and will provide increased funding support to both institutions during the transition period against various types of collateral.
Russian-based Renaissance Capital has now become the world's largest private investment bank.
We are probably the largest investment bank in the world, now that Goldman Sachs and Morgan Stanley have left the investment business, Renaissance Group CEO Stephen Jennings said in Moscow on Monday.
The United States, which had taught Russia the art of free market economy and criticized Moscow for expanded state economic regulation, is now moving to build state capitalism and is spending trillions of dollars on private companies.
On the other hand, private business decides the future of problem-ridden Russian companies, including Renaissance Group, mobile retailer Evroset and others.
The U.S. market economy which, together with Washington's politics, was based on grandiose hypocrisy is now disintegrating. The United States has forgotten all about market economy principles that it tried to impose on the world and is using the entire federal machinery to save its financial system.
The U.S. government did not bother to ask the opinion of shareholders and discarded all liberalism after it realized that America no longer dominated global financial markets and could plunge into the abyss at any time.
However, Russia is tackling corporate problems in the best market economy traditions and without any state intervention.
Renaissance Group found itself on the verge of bankruptcy during last week's stock market crash. This prompted its main owner, Stephen Jennings, to sell a 50% stake (minus one share) in his favorite investment bank, Renaissance Capital, to Mikhail Prokhorov, CEO of private investment fund Onexim Group and Polyus Gold, a major national gold producer, for only $500 million.
Prokhorov, who recently sold his stake in Norilsk Nickel, the world's leading producer of nickel and palladium and currently Russia's leading gold producer, can afford to close such deals.
"We had to hurry and attain reasonable compromises because of global economic problems. We are ready to take advantage of our rivals' problems," Prokhorov told the paper.
Gazprom gets 15% stake in major Venezuelan gas project
Russian energy giant Gazprom is expanding its presence in Latin America - in Venezuela it can now launch its first liquefied-gas operation abroad. Analysts say cooperation with other suppliers will enable the Russian monopoly to enter the American market.
Yesterday, Gazprom signed a memorandum with Venezuela's state-owned company Petroleos de Venezuela (PDVSA) to develop the shelf deposit Blanquilla Este y Tortuga. The project is the third phase of another large-scale project - Delta Caribe Oriental - costing a total of $20 billion (each phase has its own participants). The third phase is expected to be launched in 2016. The partners of Gazprom, which has acquired a 15% stake in the project, will be PDVSA (60%), Italy's Eni and Malaysia's Petronas (10% each), and Energias de Portugal (5%), said a Gazprom manager. The cost of this phase amounts to $6.41 billion.
Vitaly Kryukov, an analyst with Kapital Investment Group, says the third phase of the project is little researched and requires considerable investment in prospecting and production, as well as construction of a gas liquefaction line. "The investments carry a high degree of risk and could be compromised should the market situation deteriorate," he said.
Alexander Shtok, director of the Due Diligence department at 2K Audit-Business Consultations, an independent consulting group, said Gazprom would find a way of borrowing funds for the project, which opens up entirely new prospects for the holding: "Now Gazprom can look to the American LNG market, considering that the U.S. is a major importer of Venezuelan gas. At the same time, Gazprom is inching towards the idea of a so-called gas OPEC."
The analyst says that in the current situation Washington is unlikely to purchase gas from Gazprom, but by setting up a coalition with Venezuela and other gas-exporting countries, Gazprom will be able to infiltrate the American market.
Analysts say that the Venezuelan project is bringing Gazprom nearer to its cherished ambition - taking part in the construction of a transcontinental pipeline system for South America to link Venezuela, Brazil, Argentina, Uruguay, Paraguay and Bolivia into one transnational grid.
Vremya Novostei, Vedomosti
Russia compensates Kazakhstan's losses from war with Georgia
Russia is compensating Kazakhstan's economic losses from war with Georgia by investments into its economy. Mechel, one of Russia's leading mining and metals companies, invested about $1 billion in the mining and enrichment plant at the Voskhod chrome ore deposit. Its commissioning was timed to coincide with the Aktyubinsk forum of frontier regions with the participation of eight Kazakh and 16 Russian regions.
Russian President Dmitry Medvedev said that once a month he discusses Russian-Kazakh interaction in the international arena with Kazakh President Nursultan Nazarbayev. Kazakhstan's president confirmed the similarity of the two countries' positions, including on Georgia.
On the day of President Medvedev's arrival, Akylbek Kurishbayev, Kazakhstan's agriculture minister, announced his country's refusal to build a grain terminal in the Georgian port of Poti. He admitted that this issue was connected "with international problems and the situation in Georgia."
This is the second unpleasant surprise for Tbilisi from Astana over the past few weeks. Earlier, the Kazakh national company Kazmunaigaz, which owns Tbilisi's gas networks, decided to suspend the construction of an oil-processing plant in Batumi. However, the official pretext was the lack of a site for a big enterprise, not political aspects.
Prior to the armed conflict, Georgia predicted this year's economic growth of over 10% (it was 12.4% last year). The International Monetary Fund (IMF), which forecasted Georgia's GDP growth at about 9%, lowered the figure to 3.5% after the crisis.
"Force majeure circumstances have caused a curtailment of investment. Investing in the most attractive sectors, such as the construction business and shipment, now involves high risks," Georgy Khukhashvili, a Georgian expert, told the Vremya Novostei daily.
According to him, "the only hope is that the new American administration will not go back on the current U.S. leadership's promise of $1 billion in aid." The Georgian authorities also expect international assistance of $3-4 billion.
According to Andrei Grozin of the CIS Institute, a larger portion of Kazakh investment went into Georgia (apart from Russia). Besides, Kazakhstan was the second largest investor in the Georgian economy after the United States ($2-2.5 billion over the past five to six years). The main spheres of Kazakh investment were transport and the energy sector.
Russia has clearly shown that it can turn Georgia's infrastructure into a heap of junk within several days, the expert sums up.
RusAl to build aluminum smelter and power plant in Libya
United Company Russian Aluminum (UC RusAl) has signed a memorandum of understanding with Libya's Economic and Social Development Fund (ESDF) to build an energy and metallurgical cluster. It undertakes projects across the globe in the hope of preserving its global leadership.
The cluster will comprise an aluminum smelter with an annual capacity of 600,000 tons and a 1,500 MW power plant fuelled by natural gas.
RusAl is to hold a 60% stake in the joint venture to be set up for the project. Libya's National Oil Corporation will supply natural gas for the smelter.
The sides expect to finalize the agreement on the joint venture in 2009 and start construction in 2010.
Stanislav Fomenko, an analyst at the Veles Kapital investment company, said cheap labor and relatively cheap electricity were the project's advantages. Besides, he said, Libya, which is developing rapidly, has no aluminum plants.
Maxim Semenovykh from Alfa Bank said the memorandum on understanding did not mean the Russian company would definitely work in the region. He said RusAl, which needs to maintain its global leadership, had announced several projects in Russia and other countries apparently believing that the more projects it announces the more chances it will have to implement at least some of them.
RusAl has several assets in Africa, including the Alscon aluminum plant in Nigeria and two alumina and bauxite assets in Guinea.
Last year it announced several projects with state involvement in different countries, including plans to set up a joint venture with Vietnam's Vinacomin to build a hydroelectric plant and an alumina refinery with an annual capacity of 750,000 tons.
Some time later, RusAl and China Power Investment signed a memorandum of partnership to build an energy and metallurgical cluster (annual capacity 500,000 tons of aluminum) in China and a raw materials complex in Guinea.
A RusAl spokesperson said these projects were proceeding according to the relevant agreements, with a feasibility study being prepared for the Vietnamese project and the feasibility study for the Chinese cluster almost ready.
UC RusAl, the world's largest producer of aluminum and alumina, was established in March 2007 through a merger between Russian aluminum giants RusAl and Sual and the alumina assets of Glencore (Switzerland).
President puts Chubais in charge of nanotechnologies
President Dmitry Medvedev has signed a decree appointing Anatoly Chubais, former CEO of electricity monopoly RAO UES (reformed out of existence on July 1, 2008), director general of the Russian Nanotechnologies Corporation (Rosnano).
Chubais has promised that Russian companies will sell nano products worth 1 trillion rubles ($40 billion) by 2015, but analysts think he was chosen primarily for his talent for finding compromises that suit rival clans.
He loves big numbers. Nearly 1 trillion rubles ($40 billion) of private investment was channeled into the Russian power generation sector during the past year and the sector's investment program until 2012 is estimated at 4.3 trillion rubles ($170 billion).
Chubais has announced the goal of increasing Rosnano's sales revenues to match those of RAO UES. But the corporation, set up in July 2007, has so far received only 130 billion rubles ($5.14 billion) from the state budget.
Analysts differ on Chubais's chances in the new sector.
Dmitry Abzalov, an analyst at the Center for Current Politics think tank, said: "Confrontation between two influential groups in the state corporation fighting for federal resources, one led by Chubais and the other associated with the Kovalchuk brothers, will grow."
Mikhail Kovalchuk is director of the Kurchatov Institute research center and a member of Rosnano's supervisory council. His brother Yuri is a co-owner of the Rossiya commercial bank. The two brothers are rumored to be close friends of Prime Minister Vladimir Putin.
Other analysts think Chubais has been appointed chairman of Rosnano to balance the interests of business and the authorities.
Alexei Makarkin, deputy director general of the Center for Political Technologies, said: "Chubais can find compromises with different people. After all, he had found common language with many critics of the energy reform, including governors and UES minority shareholders."
He said the task of Chubais would be to create an effective mechanism of public-private partnership between the state, scientists and private investors, which could later become a model to be emulated by other such corporations.
The core of the team is unlikely to be changed, but Chubais will most probably bring along some of his allies who had helped him to carry through the UES reform, Makarkin said.
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