MOSCOW, August 22 (RIA Novosti)
Russia shouldn't recognize rebel republics unilaterally - analyst/ Russia to decide upon further cooperating with international community - analyst/ Dmitry Medvedev increasingly seen as independent politician - survey/ Russian Armed Forces in need of deep reforms/ China, India compete for Russian energy resources/ Gas monopoly to invest record sum into production
Moskovsky Komsomolets
Russia shouldn't recognize rebel republics unilaterally - analyst
The current situation in and around Georgia is the first time over the past 17 years that Russia has really stood up to the West with action rather than empty words. Moscow undertook a series of strong moves showing the radical change in its policy toward the West, and culminating in the recent initiative to recognize the independence of South Ossetia and Abkhazia. In fact Russia could unilaterally recognize the two rebel republics as independent states as early as next week.
Vladimir Zharikhin, deputy director of the Institute of the CIS Countries think tank, said: "[President Dmitry] Medvedev said he would support any decision by their peoples, but quoted the UN Charter which stipulates that an independent country should be recognized as such at the General Assembly. Russia should hold back from recognizing the rebel republics unilaterally. What Medvedev could do is apply to the UN, asking it to consider the two republics' status, because the UN cannot just wave him aside.
"His request is most likely to be declined. Then, the next step could be to adopt a federal law regulating Russia's relations with Abkhazia. In that case, Abkhazia would obtain some security guarantees and economic independence.
"Also, the United States could be reminded about a similar law of its own concerning Taiwan. That country isn't recognized by the international community either, but the U.S. signed a mutual defense agreement with it in 1972.
"Similar deals would probably suit both South Ossetia and Abkhazia, even if Russia does not recognize their independence."
Political analyst Stanislav Belkovsky said: "Russia has much to gain by recognizing the two republics now. It would certainly be our greatest foreign-political victory over the past few years. However, one should bear in mind that this move could severely hit the Russian political elite's commercial interests in the West. That is why these people are lobbying against the move, and the process is therefore likely to get dragged out for years."
Sergei Markov, head of the Institute of Political Studies, a Kremlin-connected Moscow think tank, said: "If the West keeps supporting [Georgian President Mikheil] Saakashvili, Georgia will probably try to carry out another intervention in South Ossetia. Its preparations for a new aggression will then make Russia face the need to provide assistance and protection. Recognition of [South Ossetia's] independence will make it legitimate to send Russian forces there."
Gleb Pavlovsky, president of the Effective Policy Foundation, said: "We are currently investing huge funds into the restoration of South Ossetia. How can we be sure the money won't be lost after Georgia uses the Grad launchers in yet another attack on what we have restored? We need to go ahead with the recognition from a purely pragmatic standpoint, even though we certainly cannot expect the two republics to become subjects of international relations right away. It may take years."
Rossiiskaya Gazeta
Russia to decide upon further cooperating with international community - analyst
Russia has to choose whether it intends to further collaborate with the international community or whether it takes a somewhat independent position, with both alternatives having their advantages and disadvantages.
At the present stage, when Russia has repeatedly attempted to cooperate with the West while the latter wouldn't pay attention to its arguments, it would do well for Moscow if it took a break, left the game and stopped communication with the West for a while. However, this would be harmful for what Russia and the European Union have achieved together for the past 15 years. That is why the most important thing Russia should do is withdraw its forces from Georgian territory at the demand of the international community and bring them where they could stay on a legal basis - that is, to the borders with South Ossetia, Abkhazia and Georgia.
The West should also view the situation soberly and not move in the wake of the U.S. policy, which is aimed at 'punishing' Russia for the way it dealt with Mikheil Saakashvili. Europe shouldn't yield to the demands of the U.S., which insists that Europe should turn NATO and the European Union into some tools the United States could use to restrain Russia.
What will happen to Georgia is still the major question. It is unreal to imagine that South Ossetia and Abkhazia will now become part of the country.
Are there any solutions to change the situation? If Russia seeks to annex the territories of Abkhazia and South Ossetia, this will only aggravate the conflict. If Russia recognizes the two republics' independence, it may face the risk of doing so alone since no other country will recognize Abkhazia and South Ossetia that soon. That is why the Russian side should thoroughly think before resorting to this alternative.
I suppose there is only one possible way out, with the sides reaching a compromise and finding some formula of confederation for Georgia, with a 'three in one' state. This would be a reasonable solution that has been tried in the Balkans.
If Georgia becomes a confederation it will not be able to enter NATO - yet both Abkhazia and South Ossetia will have all opportunities and levers for controlling their economies and conducting independent policies. However, there is a chance that Georgia may face disintegration.
Alexander Rahr is an expert for the German Council on Foreign Relations (DGAP).
Kommersant
Dmitry Medvedev increasingly seen as independent politician - survey
President Dmitry Medvedev's first 100 days in office culminated in the military conflict in Georgia, which in fact sent his popularity up as well as strengthened Prime Minister Vladimir Putin's ratings.
The conclusions have been drawn by Russia's leading public opinion services from their ongoing monitoring of public sentiments.
Although Russians obviously recognize Medvedev as the first man in the Russian government, Putin remains the most popular politician with them.
The "peace enforcement" operation in Georgia hasn't sent the two leaders' popularity soaring for a simple reason, sociologists maintained. Their ratings had been extremely high even before the latest aggravation of the Georgian-South Ossetian tensions.
According to the Levada Center pollster, 70% of Russians approved of the president's policies in July. The figure is now 73%. Putin's popularity grew by a similar margin, to 83% from 80% a month before.
On the whole, the president has been the most important official for most Russians for the past 15 years, said Valery Fyodorov, general director of the VTsIOM pollster.
He said that had not changed when Medvedev took over as president. However, Putin is still the most popular politician in Russia. His name is cited most often (55%) when respondents are asked to name five or six politicians they like. Medvedev ranks second with 40%.
Levada Center analysts have also established that the number of Russians for whom it was unclear as to who really runs the country has also reduced. In August, 14% said they were convinced it was the president (9% in July), while only 10% said they didn't know (16% at the beginning of 2008).
Oleg Savelyev, Levada Center's spokesman, said most Russians have concluded from TV coverage of the South Ossetian crisis that Medvedev is capable of harsh and decisive action at the same time keeping to his balanced attitude and legality, that he can lay legally impeccable claims along with censuring Georgia's aggression "without avoiding rough language."
That must have helped convince the Russians of his independent political will and showed them that Putin has become far less protective and supportive of his successor. In July, 36% said they were convinced that Putin had not really let go of the reins, but only 26% think so now.
Vedomosti
Russian Armed Forces in need of deep reforms
The recent war in South Ossetia offered an opportunity to test the capabilities and determine the weaknesses of the Russian Army and, in part, the Navy, in hostilities opened by a weaker opponent. Future development of the Armed Forces largely depends on the evaluation of the war's results and combat experience by the state and society.
It might seem there is no occasion for alarm about the short-term campaign against Georgia. The outcome of combat, however, highlighted again the lack of training and insufficient equipment of the Russian Armed Forces. Experts of the Center for Analysis of Strategy and Technologies (CAST) say the recent combat employment showed that reconnaissance, command, control and communications equipment of even the elite Russian units are obsolete. The Russian Air Force also failed to accomplish a number of missions.
Experts from CAST and the war economy laboratory of the Institute for the Economy in Transition say Russian warplanes failed to cripple the Georgian Air Force, suppress the enemy's artillery positions and air defense means. Russian aviation appeared to have no modern bombs and missiles to strike military installations with a minimum risk for civilians.
Russian troops fought mostly in an old-fashioned manner, with motorized infantry and tanks fighting in the mountainous areas. There were no mountain troops, despite the fact that Russia began their formation in the North Caucasus four years ago. The Russian air defense means failed to destroy any Georgian warplanes or helicopters. Experts say this gives evidence to weakness of equipment and poor crew training.
Some of the military think the problem could be resolved without serious reforms of the Armed Forces, by boosting new equipment deliveries. They hope that the government will keep its promise, voiced by Prime Minister Vladimir Putin, to devote 70% of the military budget to re-equipment.
The re-equipment program for 2007-2015 is estimated to cost the federal budget around 17 billion euros a year. Russia already spends significant amounts of money on hardware, with over 10 billion euros allocated in 2008, nearly as much as France did for a similar purpose, while the troop readiness of the Russian Armed Forces is inferior to that of France.
The society should pay attention to the death of conscript soldiers in the recent campaign and think of major problems in the Army, and convince the government to admit the necessity to shift to a professional army.
Gazeta.ru
China, India compete for Russian energy resources
Indian and Chinese companies have launched a competition for Britain's Imperial Energy Corporation (IEC), an oil exploration and production company operating in Russia (in the Tomsk Region) and Kazakhstan.
Experts think China's Sinopec has a better chance because Russia's state-controlled oil major Rosneft is interested in cooperation with it.
India's state-run Oil and Natural Gas Corporation (ONGC) is ready to offer about $2.5 billion for Imperial Energy. The purchase of this oil company is of strategic importance for ONGC as it will give India an opportunity to get a foothold on the Russian market. Today, ONGC's only Russian asset is a stake in the Sakhalin-I project.
However, China Petrochemical Corporation, or Sinopec Group, China's second largest oil company by size of assets, can frustrate the Indian company's plans. In early August, Sinopec also offered a merger to IEC.
Experts say China could win the competition for this attractive asset. "Both companies are not inclined to pay over the odds for the asset, but Russia would prefer Sinopec over ONGC," says Dmitry Abzalov, an expert at the Center for Current Politics. "On the whole, the Indian company's cooperation with Russia did not turn out as expected: India has not offered special preferences or interesting projects. Meanwhile, Rosneft is most interested in cooperation with China."
Abzalov believes that the Eastern Siberia - Pacific Ocean (ESPO) oil pipeline, which could supply oil to China, is of greatest interest to Sinopec. "If Sinopec buys IEC, this will help to resolve the latter's problems with environmental agencies, for Rosneft could make use of its administrative resource for the sake of its Chinese partners," he says.
However, according to Natalia Milchakova, head of the fundamental analysis department at the Otkrytie financial corporation, Rosneft managers will make their final choice only when Sinopec announces its bid price. "The price range offered by ONGC is too low compared with our company's fair evaluation of IEC at $3-$4 billion. Sinopec can offer a higher price to the seller, considering that Chinese oil companies successfully compete with ONGC for profitable resources in oil exporting countries," she says.
Kommersant
Gas monopoly to invest record sum into production
Russian energy giant Gazprom is planning to invest a record sum - 1 trillion rubles ($41 bln) - into new production and transportation projects. This is the way the gas monopoly has responded to European Union charges that it underfinances its sphere of interest. The news came when its capitalization slipped to a critical low.
Gazprom's Deputy CEO Valery Golubev explained the record investment by a growing volume of gas sales and a favorable price situation. During the first half of 2008, Russian gas supplies to Western Europe rose by 22% year-on-year to reach 65 billion cu m. Prices increased from $345 to $410 per thousand cu m. According to Russian accounting standards, Gazprom's non-consolidated earnings from H1 sales shot up 47%, compared with the same period of 2007 and reached 1.013 trillion rubles. This equals the sum Gazprom proposes to invest in its infrastructure.
Denis Davydov, of the Solid investment company, thinks the news is good on the condition that the monopoly uses the money to speed up the development of Yamal fields, and particularly Bovanenkovskoye. "In terms of net profits, the year is going to be a record one for Gazprom, amounting to $40 billion, or an adjusted investment program, allowing the monopoly not to borrow outside," the analyst said.
He believes the monopoly's moves are logical: buoyed up by a favorable market, it is investing additional funds into production to avoid a gas squeeze in 2011-2012.
Valery Nesterov from Troika Dialog agrees that the funds will go into Yamal (currently, Russia's 80% of gas is produced in the Nadym-Purtazovsky region, though the fields are 70-80% depleted) and Arctic development (the Shtokman deposit).
"The EU is anxious to ease its dependence on Gazprom: the other day it announced conclusion of future contracts for gas deliveries through Nabucco in 2013 bypassing Russia, and construction of liquefied natural gas terminals in 2015," Nesterov said. "But in the next five years Europe will have nothing to counter Gazprom's expansion with. During this period Gazprom must offer enough gas for sale and prove the credibility of its projects."
Golubev made his remarks at a critical time for Gazprom: its capitalization fell to $244 billion from $360 billion. His words produced no excitement, though the monopoly's stock at the LSE went up 1.4% and on the Moscow Inter-Bank Currency Exchange and RTS, 1.6%, with market indices growing by 0.5%.
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