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    Russian Press - Behind the Headlines, December 19

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    Putin Relates to Parliament’s Response to Magnitsky Law/ Gazprom Halves Capex for 2013/ ZIL Limo Sent Back for Improvements

    MOSCOW, December 19 (RIA Novosti)


    Putin Relates to Parliament’s Response to Magnitsky Law

    The President’s Press Secretary Dmitry Peskov expressed Vladimir Putin’s stance on the ‘Magnitsky counter-law’
    currently being discussed in the State Duma:

    “Putin can relate to parliament members’ hard determination with regard to adopting the ‘Dima Yakovlev bill’.”

    “This heated response from the Russian parliament is quite understandable. Of course, the executive’s position is more moderate, but in view of certain anti-Russia actions, President Vladimir Putin can relate to these Russian members of parliament,” Dmitry Peskov said today.

    At the Legislative Council meeting on December 13, Vladimir Putin supported the first draft of the bill. He also
    warned that the response to the Magnitsky Law should be “appropriate and reasonable.”

    During the second reading of the ‘Magnitsky counter-law,’ 407 parliament members voted for the bill, two were against and one abstained.

    Three amendments had been made to the bill by the time of the second reading. They generated both a huge public debate and major contention amongst officials. The first amendment bans the activity of any non-commercial organization in Russia if it is in any way supported by the United States.

    The second amendment bans Russian citizens who also hold US citizenship from taking up management positions in Russian non-commercial organizations and from working in politics. The last and most controversial amendment bans US citizens from adopting Russian children and stipulates that adoption agencies must stop offering services in this area.

    This morning there were protests outside the State Duma. Some 15 people were detained. Meanwhile, ministers disagree with parliament members on the adoption issue.

    Minister of Education Dmitry Livanov and several of his colleagues say this ‘eye for an eye’ law is illogical.

    “We must put children’s interests over everything else,” Deputy Prime Minister Olga Golodets said.

    Minister Mikhail Abyzov supports suspending cooperation with the US over adoption issues unless the country can ensure the protection of “young Russian nationals.”

    “But I think linking the protection of our children with sanctions in response to the Magnitsky law would be a mistake,” he says. “These are two independent issues and they must be addressed separately, without haste and with due professionalism.”


    Gazprom Halves Capex for 2013

    Gazprom has downgraded its projected capital investment for next year by 50% to 790 billion rubles ($25.5 billion) by cutting priority projects. The 2013-2015 program has been cut as well, although analysts do not rule out a later revision.

    The board of directors of Russia’s natural gas monopoly will discuss its 2013 budget and investment program on Thursday. Capital investment for 2014-2015 is expected to be cut by one third to 2.8 trillion rubles (circa $90 billion) compared with last year’s projections.

    Investments in fixed assets are usually planned with due account of the company’s priority projects, as well as its financial capabilities, a Gazprom source said. Long-term projects are later adjusted. As of today, Gazprom’s three-year investment plan, even though downgraded, is still in balance with the company’s capitalization (3.3 trillion rubles on the Moscow Exchange on Tuesday).

    In 2013, the company will cut some of its priority projects, including the development projects in Yamal and the South Stream pipeline, which still lacks the required approvals for building the underwater section. As for large projects, the Shtokman field is now out, but listed are some of the 2014 Olympic facilities and a program to create comprehensive gas production, transport and distribution in the Far East, with the potential to export to China.

    Cutting these large projects would seem to be good news, said Raiffeisenbank analyst Andrei Polishchuk, however the company is known for continually increasing its capital investment.

    The reduction is likely to meet with a positive response from investors, said Yekaterina Rodina from VTB Capital.
    But these figures should rather be viewed as general targets and are likely to be revised. This year’s planned investment of 777 billion rubles was raised to 975 billion in late October.

    Moreover, these investments will not necessarily pay off because Gazprom might not be able to keep its share of the Russian market – not with Novatek and Rosneft expanding aggressively, Polishchuk said. The monopoly exporter is also being forced to cut supplies to Europe.

    To keep hold of its European market share, Gazprom had to grant its European customers retroactive discounts. The retroactive payment reserve was 201 billion rubles ($6.5 billion) in its 2012 budget, and around 70 billion rubles ($2.26 billion) is allocated for next year, a source said, adding that expenses may be increased by another 100 billion rubles.

    Gazprom may also cut dividends in 2013, after paying a record 212.35 billion rubles ($64.9 billion) this year, according to the board meeting material. This may be linked to a projected fall in net profit.

    On the other hand, this prediction might not come about after all. The government, Gazprom’s main shareholder, has recently issued an order requiring state companies to pay at least 25% of net profit in dividends. Moreover, its dividends are expected to grow with every year, according to a Finance Ministry estimate.

    A Gazprom representative said that the 2013 budget was based on a conservative forecast because it was drafted before this year’s results had been evaluated.


    ZIL Limo Sent Back for Improvements

    Russian car manufacturers ZIL, GAZ and Marussia Motors are designing an executive car for the president. The GAZ and ZIL designs are based on Soviet-era premium cars.

    Vladimir Putin has tested one of the cars and rejected it, a Kremlin source told Izvestia.

    “There are some issues with it that need to be rectified,” the source said. The Presidential Property Management
    Directorate plans to choose the company to produce the new car in the first half of 2013.

    “At the moment we cannot say even approximately when the president will be able to use a Russian-made executive car,” directorate head Vladimir Kozhin said.

    The country’s top leaders used ZIL cars in the Soviet period. After the dissolution of the Soviet Union, Russia’s first president, Boris Yeltsin, used a German-made Mercedes car. Vladimir Putin and Dmitry Medvedev also use armored Mercedes-Benz S-Guard Pullman cars. In 2010, then-President Medvedev ordered the creation of a Russian-made executive car. A whole line of executive cars for state officials and escort cars is planned for development as part of the Cortege project.

    ZIL was the first to join the project. It has created a ZIL-4112R car, which resembles an upgraded Soviet ZIL executive car.

    “It was a joint idea of the client and the company, which used to manufacture ZIL cars for Soviet leaders,” said
    Tatyana Lomakina, PR director of AMO ZIL.

    The company said that their car has been tested at the Kremlin garage, where cars for the president, the prime minister and ministers are kept.

    ZIL has not been issued any concrete recommendations, but its design has not been officially rejected either. The company management admits that they will need to upgrade the plant’s facilities to be able to produce a modern executive car.

    Marussia Motors, which belongs to actor and racer Nikolai Fomenko and produces sport cars, would only be able to make a practicable executive car by 2017. The project would cost from 4 billion to 15 billion rubles ($129 million to $484 million).

    GAZ hopes it will eventually manufacture the presidential car type also for other state officials and even private individuals.

    “We believe that all projects have to make financial sense,” GAZ Vice President Yelena Matveyeva said. GAZ plans to use an existing platform, which will cut expenses and implementation time, as well as give the car a future on the market.

    GAZ said that their executive car would certainly incorporate elements of Soviet executive cars. “We will produce a modern remake of the Soviet-era car,” Matveyeva said.

    Boris Nemtsov called for using Russian-made Volga cars when he was a deputy prime minister in Yeltsin’s government.
    Deputy Prime Minister Dmitry Rogozin recently said that he plans to replace his official BMW car with a civilian
    version of the GAZ-2330 Tiger vehicle. 

    The Russian president is the only G8 leader to use a foreign-made car.

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