MOSCOW, June 2 (RIA Novosti) Russia ready to recognize self-proclaimed republics/ Russian MPs want Crimea back/ VimpelCom-Kyivstar deal falls through/ State wants to show it is a good owner/ TNK-BP to pay out record dividends/ Russian doubt the anti-corruption drive
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Gazeta
Russia ready to recognize post-Soviet separatist regimes
Russia's Foreign Ministry has cast aside all its earlier caution and for the first time declared openly and officially that unrecognized republics in the post-Soviet space have the right to self-determination.
Official spokesman Mikhail Kamynin said that Georgia could regain its territorial integrity only through negotiations with South Ossetia "based on the universally recognized principle - the right to self-determination."
If South Ossetia joins Russia territorially - it has already stated that it wants to unite with the Russian republic of North Ossetia - it will mean a war with Georgia and confrontation with the rest of the world. So it is unlikely to happen. But the threat of recognizing South Ossetia's independence remains one of the most effective tools of bringing pressure to bear on Georgia. There is already a precedent - the Turkish Republic of Northern Cyprus - with its independence approved only by Turkey.
One explanation for the Russian diplomat's transparent hint is that Moscow intends to solve the South Ossetian issue once and for all. Vladimir Zharikhin, deputy director of the Institute of CIS Countries, a think tank, said: "There are two UN-acknowledged but mutually exclusive principles: territorial integrity and self-determination. All interethnic conflicts of the recent period have been solved in line with the second principle, and the Foreign Ministry has cottoned on to it."
It is not that Tskhinvali, the capital of the South Ossetia, is maverick. Recently, Georgia, Ukraine, Azerbaijan and Moldova, meeting in Kiev, transformed GUAM, their regional grouping, into an international organization, much to Moscow's displeasure. One of its aims is to pursue a common policy in relation to the "unrecognized republics." And immediately GUAM members felt the effect. Protests in the Crimea against an American military visit to Feodosia have a distinct anti-Kiev bias. The situation in Transdnestr may also deteriorate: its president plans a referendum on the republic's status. Azerbaijan is saddled with the unsolved problem of Nagorno-Karabakh. GUAM leaders going pro-west should beware of being violently anti-Russian.
Moskovskiye Novosti
Parliamentarians seeks return of Crimea to Russia
Last week, some Russian parliamentarians submitted an initiative to the Russian government to consider the possibility of securing the return of the Crimean peninsula.
"The bilateral agreement on Russia's recognition of Ukrainian borders expires in 2007," said protocol instructions of the State Duma (lower house). "In this light, we should declare that we will not extend the agreement by November 30, 2006, and return the Crimean peninsula to the Russian Federation under the 1774 Treaty of Kuchuk-Kainarji."
"Despite the evident legal drawbacks of the proposal we have already asked the government to consider re-annexing the Crimea," said the Duma's committee for CIS affairs. "Now everything depends on the executive."
Vyacheslav Igrunov, director of the Institute for Humanitarian and Political Studies, a think tank, says the Duma's position runs counter to the official stance of the Russian government. "Reviewing the borders between Russia and Ukraine is almost impossible now," said the political analyst. "The only thing Russia could gain here is further damage to its international image and a revival of the myth about its imperial ambitions."
Igrunov said the decision was a warning to Ukraine. "However, the initiative of Russian parliamentarians confused anti-NATO politicians in Ukraine who have long been insisting that Moscow will always recognize Ukraine's integrity and will never pose a danger," he said.
The analyst also said that with anti-NATO sentiments growing every day in Ukraine, the country may suspect Russia of threatening its integrity, which could lead to NATO's further consolidation and interference in Ukraine's internal affairs.
Kommersant
Biggest foreign deal from Russian business falls through
VimpelCom, Russia's second largest cell phone operator, will not purchase Ukraine's largest mobile operator Kyivstar for $5.456 billion in the foreseeable future in what would have been the biggest overseas deal in Russian business history.
VimpelCom chief executive Alexander Izosimov said Thursday the major shareholders of Alfa Group and of the Norway-based Telenor communications, IT and media company, had failed to reach progress after three months of talks and would not acquire 36.3% and 36.1% stakes in a joint company.
Telenor representatives said the termination of duel partnership - when a conflicting shareholder could launch a process enabling only one partner to buy out all shares - was the main pre-condition for the VimpelCom-Kyivstar merger. But this scuppered the talks because Alfa Group refused to buy a 100% stake in the new joint company.
Experts said in early February that the deal was unlikely to be concluded. "The talks have been unsuccessful for the last month and the parties have basically returned to their initial positions," said Konstantin Chernyshev, senior analyst with Uralsib financial corporation. "VimpelCom is expanding aggressively in Ukraine and will soon pass the point of no return in terms of investment, which means a merger with Kyivstar would be pointless."
"Conflicts are a typical feature of Alfa Group, which has profited during the merger talks, strengthened its ties with the VimpelCom management and enhanced its positions in Kyivstar," Boris Ovchinnikov, analyst of J'Son & Partners consulting group, told the paper. "Alfa Group possibly needed tactical victories during the talks rather than the merger itself."
VimpelCom ADRs had risen 4.95% on the New York Stock Exchange by 21.00 p.m. Moscow time Thursday despite the news. "VimpelCom's impressive first-quarter performance and its successful initial start in Ukraine reduced the impact of the bad news about Kyivstar," said Nadezhda Golubeva, an analyst at Moscow-based Aton brokerage. "The better VimpelCom's subsidiary in Ukraine develops, the less investors will care about how it entered Ukraine."
Gazeta.ru
Russian state eager to prove effectiveness as owner
Russia's government has instructed state-controlled companies to pay dividends on the basis of their consolidated financial reports. The resolution to this effect will benefit minority shareholders of state-owned companies and may stop management manipulating funds.
All state-run companies, including energy giant Gazprom, electricity monopoly RAO UES, pipeline monopoly Transneft, oil company Rosneft, telecom holding Svyazinvest, air carrier Aeroflot, and Russian Railways, pay dividends from unconsolidated profits calculated according to Russian accounting standards, which means that dividends are paid from the profits of the parent company.
"From now on, private shareholders will receive dividends from all aspects of their company's operation," said Alexander Razuvayev, chief analyst with the Megatrustoil investment company.
In the past, state-run companies redirected profits from the parent company to subsidiaries. Transneft quite legally accumulated all its profits in subsidiary companies, owing to which the holders of privileged shares, who have the right to 10% of dividends from net profits, did not receive anything.
The state does not want companies to increase profitability; it wants to control the money flow.
"The collection of taxes is a much more important objective," said 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 Soviet Union. "The state received about $400 million from Gazprom in dividends for 2004 and more than $13 billion in taxes."
However, experts told the paper that the resolution was not a cure-all. Gazprom, and also Rosneft after it conducts an initial public offering, will use international accounting standards, which are more transparent than Russian ones.
Some observers also say that the top managers of state-run companies will find a way to evade the new rules and the main reason for the resolution is a PR campaign for investors initiated by state-run companies.
"The state mostly likely decided to show that it is an effective owner and state-run companies correspond to international standards," Razuvayev said.
Vedomosti
TNK-BP to pay out up to $5 billion in dividends
The first dividends to be paid out by TNK-BP Holding, which consolidates the assets of the British-Russian oil company, are expected to set a national record.
Of the overall $5 billion, minority shareholders will get around $250 million, unlike in previous years when everything went to the owners of TNK-BP, while most minority stakes concentrated in subsidiary production units, technically, generated little profit and therefore yielded no dividends.
Shareholders' protests subsided only after the owners promised early last year to consolidate assets, making TNK-BP Holding the sole corporate benefactor and allocating no less than 40% of net profit for dividend payouts.
According to two sources close to TNK-BP, the decision is subject to approval by a June 28 shareholders' meeting after which the board will recommend the figure.
"Key owners have long promised to share the spoils with minority stakeholders," a spokesman for one of the majority owners said.
The sources said owners had recommended a dividend of 8 rubles ($0.30) per any (ordinary or privileged) share, which makes all in all around $5 billion, almost all of TNK-BP Holding's free cash. The company closed last year with 59.3 billion rubles ($2.21 billion - Russian accounting standards) in net profit and had nearly 95 billion rubles ($3.53 billion) in unallocated profit at the end of 2005.
Analysts with Moscow-based Aton brokerage predicted the consolidated profits would rise to $5.9 billion when recalculated under international accounting standards. This will put TNK-BP's dividend yield at 11%, much higher than oil company Sibneft's, which closed its books before its shareholders' meeting at 5.8%, and Sibneft's owner, Gazprom, which lags behind with 0.4%.
Novye Izvestia
Russians do not believe anti-corruption drive in top echelons is serious
This week Volgograd mayor Yevgeny Ishchenko was put behind bars, following the arrest last week of Alexei Barinov, governor of the Nenets Autonomous Area. Some view the events as echoing reprisals of the 1930s, whereas others regard them as a full-time campaign against graft. Social analysts, meanwhile, said Russians long ago ceased to be surprised by the venal habits of politicians and civil servants.
"Corruption is a key mechanism for maintaining the balance within the elite," says Dmitry Oreshkin, head of analysis at the Merkator think tank. "The powers that be buy the loyalty of the bureaucratic class. They win over the bureaucrats by allowing them to pursue far from legal ways of living. No doubt the vast majority of officials are absolutely honest and conscientious, but there is one unmentionable rule of the game: you can go a little wayward within limits in exchange for loyalty. And this is even encouraged."
But a breach of these rules is severely punishable. "If you act disloyally - not toward the state - but a clan, or a group, this clan always has something up its sleeve with which to ruin you," Oreshkin continued. "The Khodorkovsky case is most revealing. He acted like others within the accepted system of values, but he broke the rules by going against a clan. As punishment he was called to order for violations all the others were free to make."
Social studies point to people's apathy. "Corruption has become so widespread that the Russians see no light at the end of the tunnel," says Leonty Byzov, head of analysis at VTsIOM (All-Russia Center for the Study of Public Opinion). "The public mind works under a preconceived idea of guilt. In the public eye any high-ranking official is by definition a thief and a grafter."
The analyst said that the latest corruption scandals had only "confirmed the view that any high-placed executive can be arrested." "Since this is practiced only against some of the bureaucrats, the immediate assumption is that this means settling political scores," the analyst said.
