MOSCOW, January 28 (RIA Novosti) Brussels holds key to Kosovo issue, not Moscow/ Russia may become closer to Europe, U.S. under Medvedev/ Ex-Premier Kasyanov adds legitimacy to Kremlin's pre-election play/ South Stream now hinges on Hungary/ South Stream now hinges on Hungary/ Control of people's incomes to be toughened in Russia
Vedomosti
Brussels holds key to Kosovo issue, not Moscow
The second round of the presidential election in Serbia is slated for this weekend. Belgrade is witnessing yet another battle of Western-oriented forces and supporters of "a special way." The outcome of this confrontation is not crucial to Serbia alone, but to Europe as a whole. In the current situation, however, the European Union has a unique chance of announcing the admission of Serbia as it is, said Vladislav Inozemtsev, the head of the Center for Postindustrial Studies, a Moscow-based think tank.
Russia has already played its trump cards, the expert said. The country announced its uncompromising stance on the issue a while ago, and does not have much left to add now. It has declared economic cooperation and support, but ended up offering [President Boris] Tadic 400 million euros for control of a national energy company worth at least 2 billion euros. An EU membership would give Serbia far greater economic and political benefits - EU assistance to Bulgaria and Romania reached 2.85 billion euros in 2007.
If Serbia joins the EU while retaining its current borders, the rights of Kosovo Albanians will be guaranteed by European laws on regional policy and EU human rights laws. Kosovo might even be granted a status similar to that of Catalonia, Inozemtsev said.
It is also possible that the Kosovo residents will adopt a milder standpoint if given a choice between becoming one of the territories under the jurisdiction of a European nation, or reaping the fruits of formal independence currently enjoyed by Palestine and East Timor.
Now it is Brussels who would best make the first step toward resolving the problems in the Balkans, a region dubbed 'the soft underbelly' of Europe by Winston Churchill. It should be done primarily because that underbelly has grown into an enclave inside the European Union in the past years, the expert concluded.
Nezavisimaya Gazeta
Russia may become closer to Europe, U.S. under Medvedev
The nomination of First Deputy Prime Minister Dmitry Medvedev as the presidential candidate of the pro-Kremlin United Russia party has removed hostile rhetoric in Russian-West relations. The only exception is the conflict with the U.K. over the British Council.
Pro-Western Russian dissidents have stopped their attacks on the Kremlin, while some NATO members (Bulgaria, Greece and Hungary) have started forming an energy alliance with Russia.
The West has seemingly forgotten about the danger of a new Cold War with Russia, and now thinks that Vladimir Putin will really end his presidential term without violating the constitution. The rumor that KGB-esque elements are regaining influence over Russia through a cartel of siloviki has been laid to rest. The West views the nomination of Medvedev as Russia's attempt to make peace with it.
Foreign policy is an ideal floor for a liberal politician such as Medvedev. The stance of Russia has improved. The Untied States has revised its plans to bomb Iran after its intelligence proved that Iran is no longer working to create nuclear weapons. The issue of a central European ballistic missile shield has been seemingly removed from the political agenda.
Poland's new government does not want to quarrel with Moscow, and U.S. Congress has refused to pay for questionable military games. If a Democratic president comes to power in the Untied States, the ABM issue in its current version will be voted down.
Europe has so far not reacted to the openly expressed desire of Ukraine and Georgia to join NATO.
The West apparently wants to give Medvedev a chance to develop a new kind of strategic partnership. It hopes that Medvedev will pursue a foreign policy in the spirit of his statements made at the world economic forum in Davos a year ago, which was heavenly music for the western intellectuals.
Judging by Medvedev's public statements, if he comes to power he will spur Russia's accession to the World Trade Organization. The key element of his foreign policy will be environmental protection, notably global climate change and the Kyoto process. His European policy will be also based on environmental values, which will bring him closer to the West, in particular Europe.
Vedomosti
Ex-Premier Kasyanov adds legitimacy to Kremlin's pre-election play
Former Russian Prime Minister Mikhail Kasyanov hasn't been registered as a presidential candidate. He could appeal against it in court, but the outcome is as predictable as all other events which have happened since President Vladimir Putin named his chosen successor. So why has Kasyanov not just slammed the door and abandoned the race, but on the contrary, deliberately helped add legitimacy to the game?
Being a presidential candidate has been his only job for the past few years. It is a role he has been playing on Russia's political stage and a role in which he has been accepted by the West and financed by sponsors. None of his other roles - a former prime minister, a leader of a small political movement, a leader of a newly created and still unregistered party, or the chairman of a semi-collapsed coalition - is any match to that one.
It is not a role to be played for a month, between the registration of candidates and actual voting. Kasyanov took on the job long before the election, and has performed it successfully in the past two months, judging by the attention from the media, with the exception of TV channels. He will probably carry on as successfully as a candidate taken off the race on the home straight.
Ivan Rybkin and Oleg Malyshkin aren't remembered as a former Russian Security Council secretary and a former parliament member from Vladimir Zhirinovsky's Liberal Democratic Party either. They are remembered as presidential candidates. However, no one really cares whether or not Rybkin's name was ever on the candidates' list at all.
In March, the world's most important discussion sites - Moscow, Strasbourg, Brussels, London, Washington and others, will start debating whether or not the Russian presidential elections were free and fair. Kasyanov will come into the spotlight once again, the perfect argument against it, the single opposition candidate who has not even been allowed to run against [Dmitry] Medvedev. It will be much better for him then to come fourth of the five.
But is it also better for the Kremlin? They have probably reckoned that taking Kasyanov off the race would harm Medvedev's image less than allowing him to take part in TV debates.
The lawmakers are considering the idea of reserving free air time for candidates nominated by parliamentary parties. This way, there will be no need to take anyone off the list. They will just be let run quietly and rally their 0.5% if that makes them happy.
Kommersant
South Stream now hinges on Hungary
Following the signing of agreements with Serbia and Austria on Friday, Hungary now remains the last hurdle to the South Stream natural gas pipeline project. In the view of analysts, it "can fix any price" in such a situation, especially with the United States sharply criticizing the European countries' loyalty to Russian gas giant Gazprom.
The agreement between Russia and Serbia ensured very favorable conditions for Gazprom in that country. Gazprom bought the state-owned Petroleum Industry of Serbia (NIS) cheaply and obtained advantages in accessing the Serbian section of the future South Stream gas pipeline.
Gazprom's positions on Europe's gas distribution market were further reinforced by another cooperation agreement signed on Friday - with Austria's OMV.
The document provides for handing the monopoly 50% of Central Europe Gas Hub (CEGH), a subsidiary of OMV Gas International. The CEGH is one of the largest European gas trading platforms at Baumgarten, Austria.
The response from opponents of Gazprom's increased weight in Europe to these agreements was immediate.
The U.S. saw in them Europe's "greater economic dependence" on Russia. The U.S. authorities also expressed concern over the development of energy cooperation between Russia and Bulgaria and reminded the EU that the Nabucco gas pipeline project, to deliver gas to Austria via Bulgaria, Rumania and Hungary, is the best way of "diversifying energy supplies to Europe."
Nabucco is to go on stream two years ahead of South Stream, in 2011, although the project is making slow progress. Last week, Iranian authorities said they were ready to provide resources for Nabucco.
The last remaining obstacle to South Stream is an agreement with Hungary. Although partnered with Hungary's MOL, Gazprom has been unable to implement a single project in the past few years with the company, despite talks on acquisition of some of MOL's transport and trading assets and its preparation of feasibility studies for South Stream.
Mikhail Korchemkin, director of East European Gas Analysis, said that in a situation when Hungary, which is traditionally disloyal to Russia, remained the last link in the South Stream chain, Budapest "could charge any price for its section."
However, even if the parties fail to agree, Gazprom has an alternative route left - from Bulgaria to Greece and via the Mediterranean to Italy.
But that would leave the Serbian gas project hanging in the air.
Nezavisimaya Gazeta
Russia turning into China's trade colony
The "big leap" in Chinese exports has enabled China - for the first time since the breakdown of the Soviet Union - to end the year with a trade surplus of $8.8 billion. Russian exporters have to admit that the Chinese market has practically been lost for goods with high added value.
Russian supplies to China are mainly crude oil and timber. The only exception is the chemicals that are still required in China.
On the other hand, engineering products have come to dominate Chinese supplies to Russia - last year they rose almost 90%, up to $8.7 billion. Supplies of vehicles from China to Russia have almost doubled, and the export of Chinese consumer goods has grown by 278%.
Experts said that in the past few years the trade and economic relations between Moscow and Beijing have undergone irreversible changes.
"Today a typically colonial structure prevails in trade between Russia and China. We supply raw materials to them, and they export engineering products to us," said Dmitry Sorokin, first deputy director of the Russian Academy of Sciences' Economics Institute.
He said that 10 years ago engineering products made up about one quarter of Russian exports. Raw materials and energy resources accounted for 5% of the total amount exported.
Now the picture is entirely different. Only 1.5% of Russian exports to China are engineering products, while two-thirds are energy and timber.
Chinese partners are in fact dictating to Russian exporting companies the prices at which they agree to buy hydrocarbons.
"China is energy-independent and in a position to substitute Russian gas and fuel oil with coal, reserves of which are vast in China. We, however, have no choice. Without Chinese contracts we will not be able to diversify our energy exports in order not to be tied exclusively to the European market," Sorokin said.
Business & Financial Markets
Control of people's incomes to be toughened in Russia
December 2007 was the best month of the tax amnesty, when over 83% of the total 3.054 billion rubles ($125 million) collected since March 2007 was declared. In all, Russians have legalized 28.2 billion rubles ($1.15 billion).
Vadim Zaripov, a tax expert at Pepeliaev, Goltsblat & Partners, said the success of the tax amnesty could not be judged by the amount of money collected. It is much more interesting to know how many people took part in it, but "this information is kept secret, possibly because the number is small," he said.
Experts say officials may start discussing amendments to legislation to toughen control over people's incomes as soon as this autumn.
Mikhail Orlov, chairman of the expert council on the budget and taxes at the State Duma, the lower house of Russia's parliament, said larger fines for tax evasion could be proposed.
"The logic is simple," he said. "It is extremely difficult to find all tax evaders, but those who are nailed will be forced to pay maximum fines. Discussions of stricter control over the people's incomes may start this autumn; this is unlikely before the presidential elections."
Tax agencies will toughen control over those who lease their flats, raise money by selling shares, and get revenue from their own businesses, Zaripov said.
Natalia Burykina, chair of the tax subcommittee of the parliamentary committee on the budget and taxes, said the ceiling of unpaid taxes punishable by law could be lowered from the current 100,000 rubles ($4,092).
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