MOSCOW, August 14 (RIA Novosti)
Russian peace process plan adopted with Georgian proviso / Russia will not act as monopolistic peacekeeper in Caucasus / Retired brass condemn Russia's early ending of hostilities against Georgia / War with Georgia to change Russia's budget / Russian steel works take advantage of U.S. recession / Robert Dudley's career in Russia at an end - analyst
RBC Daily, Nezavisimaya Gazeta
Russian peace process plan adopted with Georgian proviso
A plan to settle the South Ossetian conflict proposed by [Russian President] Dmitry Medvedev was agreed with the EU foreign ministers in Brussels Wednesday. Georgia in fact added only one small correction, albeit a key one, concerning the future status of South Ossetia and Abkhazia.
Political analysts say Russia was forced to agree because otherwise it would have found itself politically isolated. Legal experts add that the decision on their status will also depend on the self-proclaimed republics themselves.
Political analysts believe Russia has made this concession now but is planning to bring up the issue to the Western community later.
"It is a diplomatic move. It is important that the conflict be settled along the lines proposed by Russia now," Dmitry Badovsky, deputy director of the MSU Research Institute of Social Systems, told RBC. He is convinced that the wording used will enable Russia to initiate a large-scale discussion of the issue later. "The problem exists objectively and will inevitably have to be tackled. Europe recognized this much by giving a go-ahead yesterday and won't be able to pretend there is no such problem at all," he explained.
"There were several critical issues on Medvedev's plan which Russia insisted on, including Georgia's pullout, a commitment to refrain from using force, and no mention of Georgia's territorial integrity," said Alexei Makarkin, vice president of the Center of Political Technologies, a Moscow think tank. These remained unchanged. The rest gave room for compromise, and Russia performed a wise maneuver.
Makarkin believes that Russia could have found itself in political isolation if it had tried to insist on adopting the plan unconditionally. All the more so since Russia has already lost the information war as Western TV channels flooded the air with news of Russia's "aggression against sovereign Georgia," while Saakashvili and his team eagerly supplied the media with biased and sometimes false field reports.
Vyacheslav Nikonov, executive director of the Russian World presidential foundation, reminded that Western news agencies had for some reason kept silent during the first 15 hours of the attack, when Georgian forces bombed civilians in Tskhinval.
"South Ossetia has been an independent state, even though unrecognized, for the past 15 years, and exercised jurisdiction on its own territory," Dr. Oleg Khlestov, vice president of the Russian Association of International Law, told NG. "It should be allowed to decide whether or not it will be part of Georgia, as Tbilisi demands, and its decision should be taken into account," he added.
Gazeta.ru
Russia will not act as monopolistic peacekeeper in Caucasus
The Russian-Georgian war will inevitably result in the internationalization of the peace process in South Ossetia and Abkhazia. However, Russia should not view the loss of its peacekeeping monopoly as a defeat, but rather as the only opportunity for establishing any stable peace - if, of course, this is the actual aim of Russia's policy in the Caucasus.
The sixth condition of the 6-Point Plan for Peace for the Georgia War, agreed upon by Russian President Dmitry Medvedev and French President Nicolas Sarkozy, implies "international talks on the future status of South Ossetia and Abkhazia and ways to provide their security."
Russia clearly views this condition as the European Union's acceptance of the impossibility to return to the pre-war status quo. The West, on the contrary, can quite consider the plan as returning to the pre-war state of affairs, taking into account the other conditions such as withdrawal of the Russian troops from Georgia and the breakaway republics. But, obviously, international talks on the status of South Ossetia and Abkhazia are inevitable, and Russia will not act as the monopolistic peacekeeper, the role it failed to handle if we consider the very fact of the war.
For Russia, sharing the responsibility for the state of affairs in the breakaway republics with the co-sponsors would be more beneficial, at least from the point of increasing chances for establishing a stable peace. If Russia has to constantly bring its regular troops to the neighboring state to help its peacekeepers or to adjudge South Ossetia and Abkhazia to an indefinitely long existence in a state of war, this could hardly be considered as the country's geopolitical or military victory.
Russia has had to admit the failure of the existing peacekeeping methods by the very fact of adopting the 6-Point Plan for Peace by Medvedev and Sarkozy. Nevertheless, the country now has the full right - and what's more important, a reasonable necessity - to involve the other major geopolitical players such as the European Union in activities to establish a scheme of peaceful existence of South Ossetia and Abkhazia. Accepting the assistance from the U.S. would be sensible as well, since the fact of Georgia's existence cannot be disregarded to resolve the issue of South Ossetia and Abkhazia.
Russia would hardly like to make Mikheil Saakashvili's words on Georgia having become a frontline of the U.S. and NATO's struggle with Russia a reality. Even Russia's most rabid imperialists would hardly favor starting a full-fledged third world war over South Ossetia and Abkhazia.
Nezavisimaya Gazeta
Retired brass condemn Russia's early ending of hostilities against Georgia
The war in South Ossetia is over and the aggressor "has been punished and suffered great losses," President Dmitry Medvedev said. Meanwhile, a group of notable Russia's military experts, who held top posts in the Defense Ministry in their day, are harshly criticizing the national leadership's handling of the conflict.
"The victory over Georgia has been handed down to Nicolas Sarkozy on a platter, although he has already overhauled the points concerning conflict settlement, which is sure to have the most devastating effect on Russia's geopolitical interests in the South Caucasus," Colonel-General Leonid Ivashov, president of the Academy of Geopolitical Studies, told this paper. He is confident that Russia stopped its military operations against Georgia and agreed to a dialogue with EU brokers too soon.
In the opinion of Lieutenant-General Yury Netkachev, who in 1993-2000 was deputy commander of the Group of Russian Forces in Transcaucasia, Russia, during its "peace enforcement" operation, went most ineffectively about destroying Georgia's military targets. The analyst believes that Moscow was within its rights to extend its naval blockade not only to Abkhazia's coastline, but also to the whole of Georgia. It could have also considered an aerial blockade to keep military aid out. "The Russian leadership acted half-heartedly. Russia failed to break Georgia's military machine and, by agreeing to a ceasefire, heavily compromised its punishment of the aggressor, something so sternly demanded by Russia's Defense Ministry recently," Netkachev said.
General of the Army Anatoly Kornukov, former commander-in-chief of the Russian Air Force, lists miscalculations and troops' inadequate training for hostilities. In his view, "the crew of the Tu-22 that was shot down over Georgia were sent to their death," because no timely steps were taken to identify Georgia's aid defenses.
General of the Army Makhmut Gareyev, president of the Academy of Military Sciences and one in favor with the Defense Ministry leadership, believes that "the short-lived act of Georgian aggression has brought to light all the painful defects in the training and battle management of our troops, as well as in decision-making in a military period."
The former deputy chief of the General Staff of the U.S.S.R. believes that in the opening hours of the conflict the Russian political leadership was over-hesitant and the generals should have taken the initiative in their hands: "When guns, in this case Georgian multiple rockets, scream and roar, it is truly bad form to wait for instructions from higher-ups: it is necessary to strike immediately at enemy bases and firing positions. It is the ABC of warfare."
Vedomosti
War with Georgia to change Russia's budget
Russia's General Staff promised to analyze its recent combat experience and order new weaponry, which will need massive funding.
The Finance Ministry reports that it delayed submitting the financial plan covering the period up to 2023 due to supplemental budget requests from state agencies, including security ministries. A representative of the Defense Ministry says the previous preliminary requests by the military had been drawn up without taking into account the results of combat action in South Ossetia and are likely to be revised.
First of all, the military needs to purchase new individual equipment for soldiers, as the Georgian army appeared to be better outfitted, says Igor Korotchenko, member of the Defense Ministry's Public Council. He added that Russian combat vehicles need to be equipped with night vision devices, tactical communication and reconnaissance means, including unmanned aerial vehicles. The Georgian ambush which resulted in Russia's 58th army commander General Khrulev being wounded, most likely would have failed, if the army had UAVs at its disposal, the expert says.
Due to Igor Korotchenko's estimates, priority measures to provide the above mentioned equipment to the troops deployed in the Caucasus will require not less than 50 billion rubles of funding. Meanwhile, acquisition of the Topol-M strategic missiles should be increased to 25 or 30 units from the current 10, as it's the only means to prevent military pressure from the West.
There's going to be lots of requests from various branches of the Armed Forces and their lobby, says Konstantin Makienko of the Strategy and Technology Analysis Center, but key priorities have to be determined, as any amount of money could disappear without effect otherwise.
An official from one of the security agencies admits that the transformation of the military procurement scheme is too slow. The Weapons Supply Agency, established in 2007 and led since May 2008 by Viktor Cherkesov, former head of the Drug Enforcement Agency, still has neither an office nor a postal address to which mail could be sent.
Kommersant
Russian steel works take advantage of U.S. recession
Novolipetsk Steel (or NLMK), a leading Russian steel producer, has announced the purchase of 100% of the John Maneely Company (JMC), the largest independent pipes manufacturer in North America, for $3.53 billion.
Experts explain the relatively low price set for the company by a difficult situation in the Carlyle investment group, JMC's largest shareholder, and predict that a successful expansion of Russian metallurgical companies in the United States may slow down because of the exacerbation of Russian-American relations.
The deal, paid by NLMK from borrowed funds, must be closed after it is approved by regulatory bodies in late 2008.
JMC specializes in the production of tubular pipes for construction, welded general purpose pipes, and pipes for power transmission lines. The company unites 11 production plants in five U.S. and Canadian states with their aggregate annual production capacity exceeding 3 million steel pipes.
Christopher Ullman, director of the Carlyle Group for global communications, told the Kommersant daily that the group was satisfied with the amount of the transaction. He does not think it to be too low. Ullman also said JMC is a promising company which has a future under a good owner.
However, analysts underline that there was a tangible discount on the deal, which was profitable for NLMK.
"The EV/EBITDA indicator was 7.3, against the regular 8.7 in the developed markets. This is not a public company, therefore a 16% discount," said Oleg Petropavlovsky, analyst at the BrokerCreditService investment company.
James Lewis of MDM Bank says that only the crunch of two key funds in the group could prod the Carlyle group to sell a share packet in JMC.
The above deal is not the first acquisition of Russian metallurgical companies in the United States in recent years. This year alone, Severstal bought U.S. companies Sparrows Point, WCI Steel and Esmark, while Evraz and TMK (or Tagmet) divided Canada's IPSCO business between themselves. Mechel is now negotiating the purchase of a coal asset in the United States.
However, Yevgeny Nadorshin, chief economist at the Trust investment bank, thinks that the worsening of Russian-American relations caused by the conflict in South Ossetia may have a negative effect on the Russian companies' expansion in the United States.
"U.S. business is more public, therefore transactions with ill-reputed countries cannot but arouse ill feelings," the expert says.
True, the United States is in a state of recession now, while Russian companies have funds. This means that the Russian expansion will continue. However, the assets will cost more and their purchase will require more effort, Nadorshin predicts.
RBC Daily, Gazeta.ru
Robert Dudley's career in Russia at an end - analyst
Viktor Vekselberg, a co-owner of TNK-BP, an embattled Russian-British oil firm, has filed another request with Moscow's labor inspectorate about new labor law violations by TNK-BP head Robert Dudley. The authorities have informed him that a third administrative case would be opened against him.
Some experts believe Dudley will now resign from the company, which has been locked in a dragged out shareholder row.
The AAR consortium of Vekselberg's Renova, Mikhail Fridman's Alfa Group and Leonard Blavatnik's Access Industries, which owns 50% in TNK-BP, has repeatedly demanded Dudley's resignation, accusing him of running the company exclusively for the benefit of British shareholders and staling business development.
The issue was discussed by the TNK-BP Management board in July, but the British directors that dominate the board decided against the replacement of the company's head.
Dmitry Abzalov, an analyst at the Center for Current Politics think tank, pointed out that earlier Russian shareholders had refrained from direct attacks on Dudley, while all complaints had been filed by TNK subsidiaries and considered by the Tyumen Region's Arbitration Court. Abzalov said that AAR was trying to avoid damage to its image until another conflict broke out, this time between Vekselberg and Fridman.
"Fridman has had talks with BP CEO Tony Hayward, who offered to fire Dudley in exchange for Vekselberg's and TNK-BP executive director German Khan's resignation," Abzalov said. "Fridman's stake is greater than Renova's so he could try and influence Vekselberg's resignation."
Therefore, Vekselberg threw discretion to the wind and embarked on a massive publicity campaign aimed at bringing Dudley down before Fridman conspires with the British shareholders behind his back.
The labor inspectorate has already initiated two cases against Dudley, but he got off with only small fines both times. This time around, things may be different.
Vladimir Lipavsky, who heads the Ost Legal law firm, said that, according to Russian law, if Dudley faces a third administrative case against him, he may be banned from holding top executive posts for up to three years. "However, such extreme measures are rarely applied," the lawyer added.
Still, one analyst said the British top manager is likely to be disqualified this time. "Another administrative case will mean the end of Robert Dudley's career in Russia," he said.
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