What the Russian papers say


MOSCOW, August 3 (RIA Novosti) Russia not concerned over U.S. response to its proposal/International humanitarian organizations given two weeks to register in Chechnya /Gazprom to bar Sakhalin I shareholders' access to export pipe/Belarusian president promises to repay gas debts to Gazprom/Russia becomes the biggest importer of Chinese automobiles


Russia not concerned over U.S. response to its proposal

Foreign Minister Sergei Lavrov said yesterday that Russia has been waiting for a U.S. response to proposals it made at an expert meeting in Washington July 30-31, which discussed the deployment of U.S. missile defense elements in Europe.
Washington's negative answer could leave Moscow free to act, military sources said.
These proposal have not been made public, but the Gazeta newspaper found out that they concern: firstly, President Putin's offer to use the Daryal-type radar at Gabala in Azerbaijan, instead of deploying a missile defense system in the Czech Republic; secondly, a joint use of a new Voronezh-type radar, which is under construction near Armavir, in southern Russia; and thirdly, setting up a single exchange data center in Brussels instead of creating two matching centers in Brussels and Moscow.
A source told the newspaper that Russia agreed to play a second fiddle in the enterprise by delegating one team of operators to the center.
Soviet President Mikhail Gorbachev and U.S. President George Bush Sr. were the first to discuss setting up a joint exchange data center in 1991. In 2000, President Putin and his U.S. counterpart Bill Clinton signed a memorandum on establishing a center in Moscow ahead of signing the Strategic Offensive Reductions Treaty (2002). However, the project remained only on paper.
"There is only one reason for this: Americans do not want to tie themselves down with strategic arms obligations, so as to ensure they will be able to act as they want in any situation," said Viktor Yesin, the former chief of staff of Russia's Strategic Missile Forces.
Military experts said Russia's current initiatives are also doomed.
"We should expect them to say that they showed an interest in the proposal and wanted detailed elaboration on the project; however, radars in Gabala and Armavir do not rule out the deployment of a radar in the Czech Republic. Since radars do not hit missiles, the construction of a missile defense base in Poland remains in force," said Alexei Arbatov, director of the International Security Center of the Institute of World Economy and International Relations under the Russian Academy of Sciences.
However, a source in the Defense Ministry said that a refusal from the U.S. would not bother Russia. On the contrary, it would give Russia a new argument that the U.S. missile shield is designed to target Russia's missile units rather than rogue countries.
A refusal from Washington would enable Russia to withdraw from the Treaty on Conventional Armed Forces in Europe and deploy its Iskander missile complexes in the Kaliningrad Region, Russia's exclave in Europe, and possibly in Belarus, which would be the asymmetrical response the Russian leader has repeatedly spoken of.

Gazeta.ru, Kommersant

International humanitarian organizations given two weeks to register in Chechnya

Chechen President Ramzan Kadyrov has issued a stiff ultimatum to international human rights agencies: they have two weeks in which to move to Chechnya and get registered. If not, they will lose the right to work in the republic.
Human rights activists are sure that the authorities want to establish rigid control over non-governmental organizations in the North Caucasus republic.
Also, foreign humanitarian bodies must relocate their offices and storehouses to Chechnya within the same period. "Although large sums of money are mentioned, real aid in many cases fails to reach the republic's people.
Offices, if opened here, will also create additional jobs in the republic," said Ramzan Lechkhadzhiyev, head of the Chechen president's department for external affairs, explaining Kadyrov's motives.
Kadyrov had attempted earlier to ban international human rights organizations from the republic. In February 2006, the Chechen government suspended the operation of Danish Council for Refugees humanitarian agency.
At the time, Kadyrov decided to keep out any Danish organizations because of the Mohammed "cartoon" scandal.
Later the Danish Council resumed its activity in Chechnya, but in December of the same year Nikolai Patrushev, the director of the Federal Security Service (FSB), accused the organization of attempts to carry out intelligence activities in Chechnya.
"This is an open interference by the authorities in the work of non-governmental organizations, and claims that the moving of offices will increase tax deductions to the local budget and help solve the unemployment problem are mere pretexts," said Ruslan Badalov, head of the human rights organization Chechen Committee for National Salvation.
Human rights activist Grigory Shvedov, editor-in-chief of the Kavkazsky Uzel (Caucasian Knot) website, thinks Kadyrov is "making an enemy image out of foreign human rights defenders." In the activist's view, more and more young people in the republic are beginning to support militants.
"The personality cult of Kadyrov is being inculcated in Chechnya, and we see that it is increasing numbers of young people siding with the militants. Kadyrov has decided to cultivate an enemy image out of such a weak opponent as international human rights organizations," Shvedov said.
He thinks the new campaign "echoes the federal processes, which will be successful in Chechnya."


Gazprom to bar Sakhalin I shareholders' access to export pipe

Plans of U.S. oil major ExxonMobil, the operator of the Sakhalin I oil and gas project in Russia's Far East, to supply Sakhalin gas to China are unlikely to be implemented.
Russian government officials did not approve the company's export strategy and supported Gazprom's proposal to supply gas from the project to the Russian market.
Last October, ExxonMobil signed a tentative agreement with state-run China National Petroleum Corporation (CNPC) on Sakhalin gas supplies. ExxonMobil planned to build a pipeline to China with an annual capacity of 8 billion cubic meters of gas.
The above information was received from two Russian government officials from the authorized state agency (UGO) for the Sakhalin I project. In the opinion of state representatives, gas from the project should go to the domestic market.
This information was confirmed by a representative of the Industry and Energy Ministry supervising the Sakhalin I production-sharing agreement. He said the government officials had asked the partners in the Sakhalin project to step up talks with Gazprom, which is now seeking the right to sell all gas produced by ExxonMobil on the Sakhalin I deposits.
The gas monopoly is also negotiating Russian gas supplies to China, so CNPC's agreements with ExxonMobil will allow the Chinese to force down the prices, Gazprom's manager explained recently.
The government officials' decision came as no surprise for ExxonMobil, according to a source close to the U.S. company: they had often expressed their support for Gazprom, and have now expressed it openly.
ExxonMobil is ready to sell gas to Gazprom if it makes a competitive proposal. ExxonMobil's spokesman said the company would not abandon its export plans but it was also ready to consider gas sales to Gazprom.
"The UGO must protect state interests, not those of Gazprom," said Mikhail Subbotin, director of PSA-Expertiza. "It should only show interest in the market where Sakhalin I gas could be sold at higher prices. If the company earns larger profits, the state will get a bigger portion from the product sharing scheme," he said.
Valery Nesterov, an analyst with the Troika Dialog investment company, said an agreement between Gazprom and ExxonMobil on liquefying the Sakhalin I natural gas at the Sakhalin II facilities would be a way out of the conflict for them.


Belarusian president promises to repay gas debts to Gazprom

Belarusian President Alexander Lukashenko promised to repay the $460 million debt to Russian gas monopoly Gazprom for gas supplies in the first half of the year. This happened barely a day before Gazprom was to cut supplies by 45%.
Belarusian authorities pledged to use reserves of the National Development Fund set up a year ago, but promises are not enough.
Lukashenko said yesterday that the Kremlin had offered Minsk a loan on "unacceptable" terms, at 8.5% annual interest.
He said Russian President Vladimir Putin and he had tentatively agreed early this year that Russia would grant Belarus a stabilization loan of $1.2-$2 billion for 15 years, with a grace period of five years, to make up for rising energy prices.
"I will not go to the Kremlin and go down on my knees," Lukashenko said. "We'll survive. I think they will still need us, and very soon."
He has made an unprecedented decision to allocate money from the extra-budgetary National Development Fund, from which no withdrawals had yet been made.
It was set up to modernize the republic's strategic industries and introduce energy-saving technologies. The fund was to receive some $600 million annually.
In December 2006, the press reported that each major company in Belarus was allegedly required to transfer $100 million to the Fund. Russian oil company Slavneft attempted to protest publicly, but its Mozyr refinery located in Belarus eventually transferred the required sum.
Gazprom spokesman Sergei Kupriyanov said Lukashenko's words were "encouraging," but did not mention postponing cuts.
Valery Nesterov, an analyst with the Troika Dialog brokerage, said Gazprom was unlikely to cut gas supplies to Belarus because the issue is not as important as the one discussed half a year ago, "when Belarus was encouraged to accept market conditions."
"This time, it is Gazprom that needs the money, because its net profit has plummeted by 22%," the expert said.

Business & Financial Markets

Russia becomes the biggest importer of Chinese automobiles

In the first half of 2007, Russia imported 38,600 cars, trucks and buses worth $450 million from China, becoming the world's largest importer of Chinese automobiles.
The runner-up is Kazakhstan, with just 6,445 Chinese automobiles.
Fu Beizhao, from China's Chamber of Commerce, said his country increased auto exports by 72%, to 241,000 automobiles worth $2.7 billion, in the first half of the year.
Experts are not surprised that Russia has become the world's largest importer of Chinese automobiles.
Konstantin Romanov, an analyst with the Finam brokerage, said car sales are the largest in the United States and Western Europe, which do not market Chinese cars because of their low safety standards.
Ivan Bonchev, head of the automotive industry services department at Ernst & Young, said that Chinese cars make up only 2% of the Russian auto market, but that sales are growing rapidly. In the past two years, Chinese automakers have greatly strengthened their positions in Russia, and Russian buyers have learned to trust Chinese cars more because of the acceptable price-to-quality ratio.
Romanov said Chinese car imports could eventually expand to 5% of the Russian market.
Only the government, which would benefit from supporting Russian producers, can stop the Chinese auto offensive. To increase sales, Chinese automakers need to organize production in Russia, but the Russian government has not so far signed a single assembly agreement with them, Bonchev said.
The government can also hinder auto imports. Romanov said that when AvtoVAZ, Russia's largest carmaker, stops production of Zhiguli cars in 2008, the government is likely to toughen technical requirements to cars sold in Russia. Many Chinese cars will not receive Russian certificates in this case, Romanov said.
Experts believe that Russia will not remain the largest importer of Chinese automobiles for long.
According to Romanov, the Chinese automotive industry is progressing very fast, and will soon learn to make automobiles that will be acceptable in the U.S. and Europe, whose markets are much larger than Russia's.

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