MOSCOW, November 20 (RIA Novosti) It makes practically no sense to subsidize the opposition in Russia now / Finance Ministry anticipates more arrests / China allowed to re-export Russian engines to six countries / Magna to acquire blocking stake in AvtoVAZ / First private emerald producer may appear in Russian market
Vedomosti
It makes practically no sense to subsidize the opposition in Russia now
Whether or not Anatoly Chubais intends to quit the Union of Right Forces is a matter of personal choice. For society, his example illustrates the survival problem of the opposition in Russia.
In 2007, the opposition has found itself de facto deprived of legitimate sources of finance. This means there is no economic basis for political independence in Russia now.
There are political and economic risks. Political risks were highlighted by the Khodorkovsky case and are being fueled by less high-profile affairs, government decisions as well as simple hints and wishes.
But the problem lies deeper. In countries where parties compete with one another, business can support the symbolic left in the knowledge that sooner or later it will replace the symbolic right, which is currently in office.
In Russia, business is seeing that authority stays put. Therefore, financing the political opposition in Russia is ineffective: to gain dividends it is necessary to invest in a future successor, i.e. to be close to the authorities and possess insider information (although the margin of error is still great).
Supporting the opposition had some economic sense when it afforded lobbying chances. However, in the fifth State Duma, United Russia is likely to have a large constitutional majority. So it has become practically senseless to invest in the opposition.
The opposition political forces are now forced to go radical in their programs, aware that their activities will remain non-parliamentary in the near future.
The trend towards the hegemony of the state in the economy undermines the economic base of any opposition. Within the framework of this trend private business is being insistently offered the chance to work in "partnership" with the government, which means private business must become a state loyalist.
Risks for businessmen spell not only a jail term, but also the inability to conclude advantageous and profitable contracts.
Applicable laws put serious limits on donations for the parties. These limits apply not only to foreign or foreign-related organizations and companies, but also to Russian authorities and companies that are more than one-third state-owned.
If the economy continues to be state-dominated, opposition parties will soon have to rely on membership fees and private contributions alone.
Gazeta
Finance Ministry anticipates more arrests
The amount of the planned embezzlement was not even the most important piece of news about Sergei Storchak, a deputy finance minister arrested the other day, impressive though it was - $43.4 million. It is more interesting that more accomplices will probably be arrested soon, according to a source close to the investigation.
Storchak's subordinates did not try to conceal their concerns when asked whether more arrests were expected at the ministry: "Nothing is for certain anymore," they said.
Even Finance Minister and Deputy Premier Alexei Kudrin may be in trouble. Sergei Dubinin, a top manager at electricity monopoly RAO UES and former Bank of Russia chairman, said Kudrin could not remain entirely clear of the "dirty investigation" in his own office. Dubinin also pointed out the eloquent coincidence that Kudrin had been abroad at the time of his deputy's arrest.
Sources close to the ministry hinted that the Federal Security Service had arrested Storchak after Kudrin warned that prices would skyrocket unless the country's budget and monetary policies were toughened. His statement meant the sealing of Russia's Stabilization Fund with Kudrin himself remaining the only one in charge. As of now, the Stabilization Fund is being tapped into increasingly often to fill the share capitals of mushrooming state corporations.
Following the source's logic further, one can see that the reasons for Storchak's arrest are far more serious than the former Soviet Union's debts he was dealing with. The purpose of the assault on Kudrin is to force him to share control of the Stabilization Fund with the attackers, above all the FSB and the Kremlin siloviki.
It is not even the first attack. Some 18 months ago, former Prime Minister Mikhail Fradkov (now foreign intelligence service director) demanded that Kudrin ensure more transparency of operations with the fund. It was then that sources close to the ex-premier said it was an attempt by the military and security chiefs to snatch the control of the Stabilization Fund from Finance Minister Kudrin and Central Bank chairman Sergei Ignatyev.
Kommersant
China allowed to re-export Russian engines to six countries
On Monday, the Federal Military-Technical Cooperation Service allowed China to re-export Klimov RD-93 engines installed on Chinese-Pakistani FC-1 fighters to six countries, including Egypt, Nigeria, Bangladesh, Saudi Arabia and Algeria.
Beijing was recently allowed to resell such engines to Pakistan.
A source said China wanted to re-export its fighters to the aforementioned client states.
Lebanon, Myanmar, Iran and Sri Lanka also want to buy FC-1 fighters.
It appears that Algeria wants to buy FC-1 warplanes because it does not like the quality of Russian-made Mikoyan-Gurevich MiG-29SMT and MiG-29UB Fulcrum fighters.
Under a March 2006 bilateral contract, Russia was to have supplied 28 MiG-29SMT and six MiG-29UB fighters to Algeria. In August 2006, Algerian President Abdelaziz Bouteflika complained about their inadequate technical condition to President Vladimir Putin.
A source said Moscow had offered to replace two MiG-29UBs, supplied in 2006 by Sokol aircraft plant in Nizhny Novgorod, but had received no reply from Algeria to date.
Experts said that although MiG-29 fighters were 100% more effective, their poor technical condition probably explained Algeria's decision to purchase FC-1 fighters.
The FC-1 fighter, whose Pakistani version is designated as the JF-17, features one RD-93 engine, manufactured at the Moscow-based Chernyshev Machine-Building Plant.
In 2005, China and Rosoboronexport, the largest state arms exporter, signed a $238 million contract for the sale of the first 100 RD-93 engines.
Experts were surprised by the decision to allow Beijing to re-export the engines to Algeria.
Maxim Pyadushkin, editor of aerospace publication Russia/CIS Observer, said Moscow was convinced that despite problems with the MiG contract, the lighter FC-1 was no match for the Russian fighters.
Business & Financial Markets
Magna to acquire blocking stake in AvtoVAZ
Although they have abandoned the idea of building a plant jointly with Magna, AvtoVAZ executives have not ruled out a possible sale of a blocking stake in its Volga production asset to the Canadian auto parts giant. According to analysts, Magna could acquire AvtoVAZ shares in partnership with Russian Machines, a company controlled by billionaire Oleg Deripaska who also bought 15.9% in Magna in September.
Boris Alyoshin, president of Russia's largest automaker AvtoVAZ, said Magna was interested in strategic participating in the Russian auto giant's development, and it could opt for buying AvtoVAZ shares jointly with its partner. Magna refused to comment.
AvtoVAZ and Magna have been partners since 2006. In December, the two companies signed an agreement on the development of a new C class model to replace the Lada Priora in 2009. In May, they signed an agreement of intent to set up a joint venture and build a new plant for manufacturing the new and promising model, but abandoned the plan in October.
Industry observers doubt that Magna is the most preferable strategic partner for AvtoVAZ, which would do better to cooperate with Renault, for example. The Canadian company has experience in development and manufacturing, but it doesn't have its own platforms and lacks experience in marketing and sales, said Sevastyan Kozitsyn from BrokerCreditService Consulting. Magna views AvtoVAZ as a major production asset, which could later be used to manufacture foreign models under license.
Experts agree that Russian Machines, a wholly-owned subsidiary of Russian industrial holding Basic Element (BasEl), could partner up with Magna to buy AvtoVAZ shares.
Mikhail Pak, analyst with the Investment Group Capital, sees no point in buying AvtoVAZ shares for Russian Machines which controls the GAZ auto group. "However, the government might ask the company to share the risks with Magna," the expert said. A GAZ Group representative refused to comment.
Kommersant
First private emerald producer may appear in Russian market
At an auction held on November 19, 2007, the Urals Mining Company, which may be directly connected with the Urals Mining and Metallurgical Company, bought the right to develop the Sverdlovskoye emerald deposit for 12 million rubles.
Experts estimate the value of the reserves at $10-$12 million, but this may be enough in order to gain the monopoly position in the market where only Gokhran, Russia's state depository for precious metals and gemstones, has been operating of late.
Reserves of the deposit near the Malyshevo village equal 642.3 kg of emeralds (of C1+C2 category), whereas reserves of Europe's largest Malyshevskoye deposit, which is not far from the smaller Malyshevskoye deposit, exceed 61 metric tons.
Denis Gorev, an analyst with the Finam investment company, assesses the need for investments of $1.5-$2 million. The expert tentatively projects output at 1,500 carats a year.
The Urals Mining and Metallurgical Company refused to comment on its links with the Urals Mining Company.
Analysts say that the license will allow the company to become the first private player on the emerald market. Earlier, Russia had one private emerald deposit - the neighboring Malyshevskoye deposit. The right to develop it belonged to the Russian-Irish joint venture Zelenkamen. However, the joint venture has failed to start production there since 1993. Now Russia's environmental protection agency Rosprirodnadzor is trying to deprive Zelenkamen of its license.
"The market of precious stones is similar to that of precious metals and it is constantly growing by 20%-30% a year," said Anastasia Zhdanova, an analyst with the BrokerCreditService investment company.
"Today, all Russian mining and enrichment companies which used to produce emeralds are standing idle, therefore the buyers will be monopolists on this promising market," forecasts Dmitry Parfenov, an analyst with the Prospekt investment company. He thinks that if the Urals Mining and Metallurgical Company really stands behind the winner of the auction, the holding's next possible purchase will be the large Malyshevskoye deposit.
Vladimir Teslenko, head of the Russian Jewelers' Guild, says that "with luck, the new owner of the Sverdlovskoye deposit may seize up to 1% of the international market." However, the expert refused to assess the economic efficiency of the project because of the absence of data on the distribution of gems in ore minerals.
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