MOSCOW, July 12 (RIA Novosti) "British sanctions against Russia? What rubbish!" - expert/ Putin to be re-elected in 2012 - expert/ European Court approves Alrosa's demands/ Ocean bed deposits dangled before Russian companies/ Hermitage executives leave Russia for London
Moskovsky Komsomolets, Kommersant
"British sanctions against Russia? What rubbish!" - expert
Russian-British relations are in for a loud scandal. Next week the British Foreign Office is going to report to Parliament on the country's position over Moscow's refusal to extradite Andrei Lugovoi, who is accused by Scotland Yard of killing Alexander Litvinenko. Britain is expected to introduce tough sanctions against Russia, up to and including breaking diplomatic relations. This sharp reaction has surprised Russia.
The main argument by the Russian authorities in the case of Lugovoi is that he is a Russian national and, according to the country's Constitution, Russia cannot extradite its nationals. President Vladimir Putin actually said a month ago that the request by British law enforcement agencies to extradite Lugovoi was evidence of their stupidity.
Yuly Kvitsinsky, first deputy chairman of the State Duma's international affairs committee, said: "The British can threaten us with all sorts of sanctions: that is their game. We have our own ground rules, and the main one is spelled out in the main book called the Constitution: we do not give up our own kind. Britain has very weak grounds for sanctions."
Sergei Goncharov, Moscow City Duma deputy and president of the Association of Alfa Counter-Terrorist Squad Veterans, said: "What rubbish! The British will never enforce any sanctions on Russia. This is just another spiral in our not very warm relations. Here everything is plain to the utmost: they will not extradite Berezovsky and Zakayev, and we will not extradite Lugovoi."
Professor Aslan Abashidze, of the Peoples' Friendship University of Russia, an international law expert, said: "The European 1957 Convention on Extradition stipulates that a citizen of one country may be extradited to another if his or her guilt has been proved and if the crime committed comes within the courts' scope in both states. It was in accordance with that convention that Russia asked Britain to extradite Akhmed Zakayev and Boris Berezovsky. Britain refused to do so, saying that evidence of their guilt was insufficient. Because the United Kingdom did not show goodwill to honor the convention, Russia can act on the same grounds."
Mikhail Margelov, head of the Federation Council's international affairs committee, said: "The incident with Turkmenistan [several years ago the European Human Rights Court accused Russia of violating its own constitution by extraditing a Russian national to Turkmenistan] has taught us a bitter lesson and we no longer give up our citizens. They wanted us to behave like this - we are simply fulfilling their obligations to the letter."
Nezavisimaya Gazeta
Putin to be re-elected in 2012 - expert
Alexander Rahr, program director for Russian and CIS affairs at the German Council on Foreign Relations, commented on the approaching Russian presidential elections and said both deputy prime ministers, Sergei Ivanov and Dmitry Medvedev, the two likely candidates to succeed President Vladimir Putin, were openly competing against each other.
He said Russian political scientists did not believe in a democratic presidential race, which contradicted the interests of several top Kremlin officials controlling Russian financial flows and economic resources.
According to Rahr, most experts think that Putin will choose a successor.
He said the president could find another "crown prince," appoint him prime minister and proclaim him as his favorite candidate. This scenario will be implemented if Putin decides to stage a political comeback in 2012, Rahr told the paper.
Everybody wanted to know about Putin's next job, rather than who would become the next Russian president. He said experts no longer discussed with Putin such job offers like leader of the pro-Kremlin United Russia party, or president of a revamped State Council comprising regional governors. Putin is also likely to become president of the International Olympic Committee.
Rahr said Putin had failed to ensure the political reintegration of CIS countries, and that a common economic space was still lacking. Just like in Boris Yeltsin's times, a military alliance involves only Russia and Central Asia.
He said Putin had managed to restore the potential of the former Soviet energy sector, and that an emerging powerful gas cartel would soon offer tough competition to OPEC.
According to Rahr, energy resources will become the main feature of a new world order, and a "gas OPEC" will further reassert Russia's status as a global power. He said its future CEO would receive an extremely powerful instrument, namely, energy giant Gazprom.
Gazeta.ru
European Court approves Alrosa's demands
The European Court thought the European Commission's claims restricting diamond sales between De Beers and Alrosa were unjustified. The European Commission had ordered De Beers to stop buying rough diamonds from Alrosa as of 2009.
A representative of Alrosa, the Russian diamond monopolist, said the court ruling is unlikely to significantly influence the company, which does not target the European market.
However, experts say Alrosa cannot yet do without South Africa's De Beers, the world's largest diamond producer.
According to EU experts, Alrosa's diamond sales to De Beers were not to exceed $600 million in 2006, to be further reduced to $500 million in 2007, and $400 million in 2008. The European Commission, which accused De Beers of monopolizing the diamond market in order to create conditions for developing competition among suppliers of rough diamonds.
Alrosa, which accounts for 25% of world diamond production, was pleased with the court ruling. It is planning to sell over 80% of its rough diamonds at the Moscow stock exchange and showed no interest in the European market.
"Any decision by the European Commission, or lack thereof, can hardly significantly influence Alrosa's development strategy, because we are out of the European Union's jurisdiction. The ruling primarily concerns De Beers. We believe the company will trade its products on the Moscow market, and its relations with its clients will be regulated by Russian legislation," said Andrei Polyakov, head of Alrosa' PR department.
Experts positively responded to Alrosa's court win.
"At present, Alrosa cannot exist without De Beers as it needs to develop its brand and distribution net to enter the world market. The company is too weak here so far," said Vladimir Zhukov, analyst with Alfa Bank. "It's a real challenge for the Russian company, which will have to spend much time and effort to target these objectives, as Belgium and the Netherlands are the main consumers of rough diamonds."
"The Russian company has little experience," said Kirill Chuiko, analyst with the Uralsib financial corporation, "perhaps later it could become an independent seller, but now the deal would require considerable financial outlay."
Kommersant
Ocean bed deposits dangled before Russian companies
Before July is out, Russia intends to file a request with the United Nations to carry out geological surveys of ocean deposits for copper, nickel, gold, lead, zinc, and silver, with up to 70% of the metal in the ore. But any start can only be made in 10 to 15 years' time and on condition that metal companies agree to spend hundreds of millions of dollars on the technologies, which as yet unavailable. So far, none of the industry's holdings has stepped forward to announce its interest in the project.
The territory concerned is 200 miles out from the coastline of world oceans and contains deposits of copper, nickel, gold, manganese and cobalt at a depth of 1,500-2,000 meters.
Areas of interest have already been determined, said Sergei Fyodorov, director of the department concerned with state policy on geology and subsoil use at the Ministry of Natural Resources, but they are not being disclosed because Russia's rivals include France, the United States, South Korea, China, and Japan.
"These are very promising and profitable ore deposits, and their development will enable us to meet our metal needs in full," Fyodorov said.
Underwater development of fields has one big benefit, said Alexander Pukhayev, analyst at Deutsche UFG. "Its logistics is simpler because there is no need to build railroads. But investing 15 years ahead is either an act of charity on the part of business, or the state must give tax breaks in return."
The likely investors (Renova and Norilsk Nickel) have been cool to the idea.
The only supporting voice came from Vladimir Yevstigneyev, project leader from the Bazela research and engineering center: "Such projects cost hundreds of millions of dollars and only large private transnational corporations have the financial clout to take part. And they have to club together to develop the ocean bed, the same way airlines join forces to make their flights safe."
Currently, there are no technologies available in the world that can obtain metals from a depth of 1,500-2,000 meters. Every country is developing its own techniques, and none is willing to share with others, they said at the Natural Resources Ministry. The ministry itself cannot drum up capital for such projects, because "the administrative reform has stripped it of this right." But, Fyodorov added, the ministry is ready to "organize, support and coordinate research."
Vedomosti
Hermitage executives leave Russia for London
All executives of Hermitage Capital Management, the premier investment advisory firm specializing in Russian equities and formerly the largest portfolio investor on the local market, have left Moscow for London together with the company's founder and CEO William Browder, whose Russian visa was revoked in November 2005.
In late June, a survey conducted by Thomson Excel and Interfax news agency named Hermitage the best investment management company in Russia.
Hermitage executives did not want to follow in the footsteps of Yukos managers and be questioned about a criminal case involving tax evasion charges against a company linked to their firm.
Several weeks ago, the Russian police wanted to question several executives of companies linked with Hermitage, but could not reach some of them because they had left Russia and the CIS. The Moscow police department declined to give their names and say whether they were suspects or witnesses.
A top manager of a Russian brokerage said director of research Vadim Kleiner, portfolio manager Sergei Ambartsumov and the company's chief accountant were among those who had fled.
Another investment company manager said Kleiner had reportedly left Moscow, and that Hermitage executives had recently scheduled meetings in London.
An analyst from another brokerage said he had been unable to phone Hermitage for the last two months.
The manager of a major trust fund said he understood their motives, and that disputes with the taxmen seldom had a happy ending.
The tax evasion case against bankrupt oil giant Yukos demonstrates what happens to those who stay behind. Before his arrest, corporate CEO Mikhail Khodorkovsky, now serving eight years in prison, told his employees about impending problems and advised them to resign and to leave the country.
Eight former managers of Yukos and its subsidiaries, including Khodorkovsky's business partner Platon Lebedev, are currently serving prison sentences; and three others are on trial.
About 40 former Yukos managers now live in London.
On Tuesday, Browder said he did not plan to stop doing business in Russia. Since 1996, his company posted 34.5% average annual profitability, which reached 38.6% last year. In 2005, Institutional Investor magazine named Browder among the world's most successful hedge fund managers with $130 million earned through Russian stock.
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