MOSCOW, April 20 (RIA Novosti) Back in the U.S.S.R.? Part I/Gazprom eyes nuclear expansion/Cellphone group mulls Iraq move/The myth of ruble convertability/Airline solves problems - by going to Iran/Back in the U.S.S.R.? Part II
(RIA Novosti does not accept responsibility for articles in the Russian press)
Kommersant
Russia to reinstate Soviet-style property confiscation laws
On April 19, the State Duma, or lower house of parliament, passed amendments to the Criminal Code on confiscation of property for 47 crimes, including 13 white-collar crimes, in the first reading with no prior discussion. The Duma's security committee submitted the bill, which was drafted by the presidential administration at the request of the Prosecutor General's Office. Some experts said the decision, which virtually reinstates Soviet-era property confiscation concept, could become a new method of property redivision.
Although the amendments do not mention tax crimes, businessmen may also see their property confiscated. Mikhail Khodorkovsky, former chief executive officer of embattled oil company Yukos, was found guilty of fraud, while Svetlana Bakhmina, deputy head of the legal department at Yukos-Moskva, was found guilty of embezzlement on Wednesday.
The Duma's committee on civil, criminal, arbitration and procedural legislation reacted negatively to the amendments, with its chairman Pavel Krasheninnikov being a consistent advocate of economic punishment for white-collar crimes during 18-month discussions of property confiscation.
Andrei Nechayev, president of the Russian Financial Corporation, said a new property redivision method would be created.
Gennady Gudkov, a member of the pro-presidential United Russia faction, told the paper that the business community, a long-time cash cow, would now be milked more actively and get less money. Gudkov said the consequences of such amendments would be obvious in Russia, which is notorious for its corruption levels.
Alexander Rappoport, managing partner of Rappoport & Partners, said the payment of damages, a more appropriate measure, was being actively applied in criminal law practice, and that this was enough to restore social justice. Rappoport said confiscation was a step backward, while the new initiatives made it possible to abuse bona fide purchasers.
Yevgeny Chichvarkin, head of Euroset, Russia's largest mobile-phone retail network, said the Duma ought to have amended the law on the protection of property rights and proprietors' rights instead.
Vedomosti
Gazprom to build nuclear power plants
State-owned energy giant Gazprom wants to broaden its operations from gas, oil and electricity generation to the nuclear industry, its CEO Alexei Miller said. He said Wednesday that the company is planning to participate in the construction of new nuclear power plants (NPP), rather than privatization of existing ones.
The idea was generated in the Kremlin, say sources close to the presidential administration. Earlier this year, President Vladimir Putin said the nuclear industry should produce 25% of the country's electricity by 2030, against the current 16%.
The Federal Atomic Energy Agency said this called for construction of 40 nuclear reactors, which experts assessed at $60 billion. The nuclear industry does not have this kind of money. The Audit Chamber calculated in early 2006 that it does not even have the funds to implement current projects.
Gazprom will profit from the construction of NPPs, the Kremlin source said. The NPPs will satisfy growing demand for electricity, allowing Gazprom to increase gas exports. One nuclear reactor saves up to 2.3 billion cu m of gas a year, which can bring in about $320 million to Gazprom and up to $250 million to the federal budget, said Yuri Saakyan, director general of the Institute of Natural Monopolies.
Diversification is a good idea, said Andrei Zubkov, an analyst with investment bank Trast. But the nuclear business has its drawbacks: NPPs cost much more than gas-fuelled plants, and tariffs on nuclear-generated electricity will be limited in the foreseeable future.
Not all Gazprom shareholders like the idea of investing in nuclear power plants.
"Its projects in the oil and gas sectors are more profitable that investment into other areas of power generation," said Vadim Kleiner of Hermitage Capital Management, a leading Russia-dedicated investment advisory firm.
"The budget will be unable to shoulder the proclaimed volume of investments into the nuclear generating sector, which is why the legislation will be amended to lift the ban on private investment into NPPs," said a staff member of a federal nuclear establishment.
Gazeta.ru
Russian cellular operator eyes Iraq market
Telecom System will bid in a tender for a GSM license in Iraq, but will face competition from three Iraqi GSM operators and other Russian telecom companies in one of the world's hottest spots.
AFK System's telecommunications subsidiary, Telecom is drafting a tendering bid and looking for an Iraqi partner to set up a consortium and jointly to participate in a tender to operate the 900 and 800 MHz bands in Iraq. The Iraqi regulator plans to automatically extend the 15-year license period for another five years if the licensee observes the commitments it takes on.
Experts say that following American bombings fixed-line communication penetration in Iraq declined to 4%, meaning cellular communication is virtually the only way of communicating in the country. Mobile penetration in Iraq is now at 15-20% (3.6-4.8 million users). Over the last year the number has risen by more than 300%.
Apart from the Iraqi companies, System may be challenged by Alfa Group's Altimo, which has already indicated its interest in the Iraqi and Afghan markets.
Experts say the Iraqi market is attractive overall to System, although it has many drawbacks.
"In Russia the cellular boom is over, while adjoining territories are either all staked out or lack growth points, and so our companies are casting about for projects in other regions: MTS in Egypt, Altimo in South East Asia and System in Iraq," says Prospekt brokerage analyst Oleg Salmanov. At the same time he said there are political and military risks in Iraq: "The future situation is not very clear, especially with Iran next door."
Yelena Bozhenova, an Aton analyst, said the Iraqi market is outperformed by the Indian and Chinese markets (Iraq's population is 25 million). She also said competition is very high on the market, and that investments to develop Iraq's communications networks may prove considerable.
Nezavisimaya Gazeta
Ruble will be fully convertible only on paper
Sergei Kamburov, deputy head of the financial markets department at the Central Bank, on Wednesday cast doubt on official prognoses that the ruble would be a fully convertible currency from January 1, 2007. He said convertibility would be only a formality, while in practice it will take much longer.
This year is the tenth anniversary of serious work on introducing a freely convertible ruble. In 2003 and 2004, President Vladimir Putin mentioned the idea in his state of the nation addresses. In 2004, a law was even adopted to lift the last remaining conversion restrictions from January 1, 2007. Last fall this was confirmed by Kamburov's direct boss, deputy Bank chairman Alexei Ulyukayev.
But official pledges to sharply raise the ruble's role in monetary circulation inside the country have proved overoptimistic. According to Kamburov, despite favorable macro-economic indicators, growth of gold and hard currency reserves, and helpful global energy prices, the day the ruble will become a world currency is still far off.
He said that January 1, 2007 would see the last restrictions on major transactions lifted, but "these restrictions have little or no real effect on capital flows even now."
Other experts share Kamburov's view. Finam analyst Olga Belenkaya said "the withdrawal of all caps from January 1, 2007 does not mean real convertibility of the ruble at all." She said several other conditions were necessary: first, the ruble must be in demand on the world market, with demand being steady and independent of external factors and the oil market situation; second, the area of ruble settlements should be greatly enlarged. At present no efforts "can broaden it even within the CIS framework," she says.
Biznes
Russian airline mulls Iranian market options
State-run Bashkir Airlines (BAL) plans to stop operations in Russia in the next twelve months and enter the Iranian market, which experts say is the best solution to its problems.
A BAL source told the paper that the company, currently operating two airplanes in Iran, planned to shift all five of its Tupolev Tu-154 Careless jetliners to Iran Air under a wet-lease agreement whereby the lessor will provide minimum operating services, including aircraft, crews, maintenance, insurance and property-tax payments.
The company, which has debts of nearly 3 million rubles ($109,250) to Ufa international airport, and total debts of over 70 million rubles ($2.55 million) in late 2005, will use its earnings to repay debts to creditors. BAL was recently declared bankrupt, but the Urals Federal District's Arbitration Court stopped receivership proceedings after the company and the federal Property Ministry appealed the verdict.
BAL, which has lost the support of the Bashkir authorities, failed to restore its position as the main regional airline after the company Bashkortostan, a 100% subsidiary of the Domodedovo-based company VIM-Avia that owns 12 Boeing 757-200 airplanes, entered the regional market.
Bashkir Airlines, which no longer rewards frequent flyers and corporate clients, will axe 400 of its 2,000 employees under its anti-crisis program.
Analysts said the company had no choice but to enter the Iranian market. Oleg Panteleyev, head of AviaPort.Ru analytical department, said the situation was unique because Iran, which lacks air transport, needed Tu-154 planes and has lower domestic petroleum prices. Panteleyev said BAL, which operated at a profit in Iran, could soon repay its debts. "BAL will find guaranteed work in Iran," said Boris Rybak, head of aviation consulting firm Infomost.
Novye Izvestia
Soviet methods of fighting crime will be ineffective - analysts
A bill on administrative control over former prisoners drafted by the Interior Ministry has got the support of the Federal Penitentiary Service, and the United Russia faction has submitted it to the State Duma. But the draft has drawn sharp criticism from the human rights community.
The main grudge with the bill among legal experts and human rights activists is that it violates the Constitution, as it implies repeat punishment for one crime.
Foundation for Effective Policy president Gleb Pavlovsky, who in 1982 was convicted for publishing the anti-Soviet free Moscow magazine Poiski, is confident that reviving the Soviet system of administrative control over former inmates makes no sense.
"The Soviet system of supervision and monitoring is absolutely incapable of functioning outside the Soviet regime," he said, "All Soviet citizens were barely mobile, tied as they were to their jobs and domicile registration." In these conditions, the control system was effective and to some extent prevented repeat offences, although, Pavlovsky said, it was "extensively criticized and objected to even in the Soviet press."
Pavlovsky said the proposed system would only exert pressure on "socially hated persons, and, on the other hand, can be easily overridden by small-time corruption."
The real reason for growing crime in the country, according to Pavlovsky, is that the present correctional system is unchanged since Soviet times. Even in the U.S.S.R., "it was regarded as an anachronism." "Taken all in all, we have an irreformable system of reforming offenders," he said.
"I wish they had suggested something unconnected with repression," said National Bolshevik leader Eduard Limonov. Limonov was convicted in 2003 for illegal possession of firearms.
"They will drive people into a corner. Their actions will only cause anger among people and, as a result, a still greater isolation of inmates from the rest of society. And ultimately they give rise to further growth of crime," he said.
