MOSCOW, September 10 (RIA Novosti)
The West will have to accept new Caucasus realities / Sociologists say Putin still overshadows Medvedev / Washington aims to punish Russia for its actions in the Caucasus / Russian stock market sees one of largest tumbles of this century / Russia willing to sign car assembly agreements again / Kremlin urges TNK-BP, Gazprom to speed up Kovykta deal
Nezavisimaya Gazeta, Vedomosti
The West will have to accept new Caucasus realities
Russia has officially established diplomatic relations with South Ossetia and Abkhazia, sending an important message to the international community. Moscow has shown it will not succumb to Western pressure.
Sources in the Abkhazian government said Moscow and Sukhumi would soon sign a friendship, cooperation and mutual assistance agreement. A similar agreement will be signed with South Ossetia.
The draft agreements endorsed by the Russian, Abkhazian and South Ossetian foreign ministers include clauses on using their territories for deploying military bases, Vedomosti writes. The agreements will be signed a week after they are finalized, said Russian Foreign Ministry spokesman Igor Frolov.
The deployment of Russian bases in the newly-independent republics will cause far less pressure than Russian forces stationed in Georgia proper, said Fyodor Lukyanov, editor-in-chief of the Moscow-based magazine Russia in Global Affairs. Even in the West, few really believe in the restoration of Georgia's territorial integrity now, echoed Arnaud Dubien, a French analyst. Public sentiment will soon stop pressuring the government about Georgia in any case, he said.
"The establishment of diplomatic relations with Abkhazia and South Ossetia means that Russia is determined to continue interaction with these republics as independent states," Mikhail Aleksandrov, head of the Caucasus section at the Institute of the CIS think tank, told Nezavisimaya Gazeta.
"First of all it means that Moscow has no intention of annexing these states, something Georgia is accusing Russia of. Why should anyone establish diplomatic relations with countries they are planning to incorporate? It also means that South Ossetia's plans to reunite with North Ossetia will not materialize, at least in the near future.
"Second, the move sent a message to the West that all its efforts to dissuade Russia from its decisions have been entirely ineffective. The West will eventually have to accept the new realities in the Caucasus," he concluded.
Vedomosti
Sociologists say Putin still overshadows Medvedev
If Russian Prime Minister Vladimir Putin decides to run in the 2012 presidential elections, he will be supported by 58% of the country's residents, while President Dmitry Medvedev will garner only 28% of votes, a recent opinion poll by the Yury Levada Analytical Center revealed.
According to the poll, conducted among 1,600 residents in Russia's 46 regions and territories in mid-August, 33% of respondents said they would support Putin if the presidential elections were held next Sunday, while only 14% would vote for Medvedev. In comparison to a similar survey conducted last December, when Medvedev was already announced as Putin successor, Medvedev's electoral rating has fallen by 41% while Putin's has increased by 9%.
Medvedev is still overshadowed by Putin, with people's high evaluation of his presidential performance transferred to his activities as prime minister as well, the Center's deputy director Alexei Grazhdankin said.
"Russian citizens evaluate not Putin's activities but Putin per se, with his common rhetoric of combating foreign enemies and Russia's special mission in today's world," Grazhdankin elaborated.
According to him, Putin distances himself from solving urgent tasks and issues but handles strategic questions, which was impossible for previous prime ministers - thus, the presidential and prime minister's responsibilities appear to be mixed.
Meanwhile, Medvedev's name is prevailing in Russian media reports. From August 1 to September 7, the president was mentioned 40,780 times and appeared 516 times on federal TV channels, while prime minister was mentioned 32,013 times and was shown 247 times, a monitoring by Medialogiya company revealed.
Gazeta.ru, Nezavisimaya Gazeta
Washington aims to punish Russia for its actions in the Caucasus
The U.S. administration has acted on its promise to withdraw from the Congress an agreement on civilian nuclear cooperation with Russia.
Section 123 of the United States Atomic Energy Act of 1954, entitled "Cooperation with Other Nations," stipulates an agreement for cooperation as a prerequisite for nuclear deals between the US and any other nation.
This can be seen as the U.S. response to Russia's actions in Georgia, although Moscow says the move has in fact saved the agreement from inevitable failure in Congress.
The administration of President George W. Bush had praised the agreement signed in May 2008 as a major success for the Untied States.
The agreement was signed for 30 years and "permits the transfer of technology, material, equipment (including reactors), and components for nuclear research and nuclear power production."
Stephen Sestanovich, a top Russia expert and former special adviser to the secretary of state, described the withdrawal of the bill as "only a de facto sanction." The deal is "dead in this Congress, but a new administration will have a look," he said.
Nuclear nonproliferation expert Robert Einhorn played down the harm that canceling the deal would cause Russia. It would have been beneficial to both countries as they promote nuclear nonproliferation and seek to ensure that terrorists do not acquire sensitive materials, he said.
"This is not a big favor we have done for the Russians, and so this is not a great punishment to deny it to them," Einhorn said.
Analysts say the U.S. decision actually suits Russia, because under American law a bill that has not been enforced can be returned for congressional consideration by the next administration, which will assume office in January 2009.
A source in the state-owned nuclear corporation Rosatom said Washington had notified Russia of its decision and actually saved the agreement.
"The White House has alerted Moscow to the decision saying it could be reconsidered at some point in the future, because Congress would have definitely blocked the agreement in the current political situation and this would mean working out a new agreement," the source said.
According to analysts, the U.S.-Russian agreement on civilian nuclear cooperation was a political document, even though the market of nuclear fuel waste, which it could open to Moscow, is worth billions of dollars.
Kommersant
Vedomosti
Russian stock market sees one of largest tumbles of this century
Gazprom CEO Alexei Miller's dream of heading a company with a market value exceeding $1 trillion is slipping further and further from his grasp. The monopoly's capitalization sank to $191.76 billion yesterday.
Russian stock does not need any pretext to fall any more. Yesterday, the RTS index plunged 7.5% and MICEX by 9.1%, while almost every other market was growing. A stampede of foreign investors motivated by either political or economic reasons could push the indexes down by a further 10-20%.
The Russian market is falling constantly despite the economy's fundamentals looking solid. Troika Dialog president Pavel Teplukhin says, "No one cares either for fundamentals or for expectations today".
Oil and gas stocks were the outsiders, with Gazprom shares plunging 7.8%, LUKoil 9.1% and Rosneft 10.2%. For the first time in two years, Gazprom's capitalization sank beyond $200 billion, falling down to $191.75 billion, which is almost 48% below the high-point of $366 billion.
"The market developments look like a depression, nobody wants to buy shares, there are only panic mongers left, grabbing every opportunity to sell any shares," says Alfa Capital portfolio manager Andrei Kilin.
The market is weak, trading volumes are low, and there are no buyers, despite positive external appearances, Alfa Bank strategist Erik DePoy said.
"Nobody wants to buy Russia, Western investors are selling everything", says Troika Dialog chief trader Timur Nasardinov. A rumor went through the market that a major raw materials fund is closing positions, boosting the flurry and pushing everyone to sell oil and gas shares", says Alexander Zakharov, deputy head of equities at Metropol. "Russia is a raw material producing country, and this is particularly plain to see in such periods," he says.
Pavel Teplukhin says major foreign investors who entered the Russian market with a total of $150 billion between 2005 and 2006, are pulling their money out now, with the figure currently at $100 billion. The market will start growing depending on the fundamentals after major foreign investors pull back all of their investments. "Then we will revive the market with our own money, as it was in 1998", he says.
Gazeta.ru
Russia willing to sign car assembly agreements again
Automakers expect new privileges now that Russia has suspended its WTO accession talks. The Economic Development Ministry has returned to signing industrial car assembly agreements, which were mothballed under WTO requirements. The earlier suspended proposals include many regions across Russia, from its Far East to its westernmost exclave, Kaliningrad.
The agreements were frozen in the fall of 2007, but now more than 20 companies can operate under such agreements.
Industry watchers believe it was only natural to lift the restrictions on Russian auto plants assembling foreign brands.
Ivan Bonchev, auto industry expert at Ernst & Young, said: "Developing domestic automaking is certainly one of Russia's strategic priorities, as Prime Minister Vladimir Putin said last spring. However, forecasts say that car imports will still prevail over local production even after most Russian plants reach their design capacity. Russia badly needs additional measures to stimulate domestic auto industry."
Russia was expected to gradually reduce car import duties after WTO accession, from 25% to 15% by 2015. But given the new realities, Russia can afford to refuse to do so, experts say.
"Higher import duties will benefit Russian automakers, which are still less competitive than foreign ones," Bonchev said adding that import duties could grow even higher in the next few years, rather than fall.
"If importing end products becomes inefficient, foreign automakers will be encouraged to invest in production facilities here," agreed Roman Tkachuk, transport analyst at the Zerich Capital Management Group.
"Russia's declared refusal to observe WTO agreements indicates its desire to dissociate itself from the international community," said Vladimir Rozhankovsky from the Center-Invest brokerage.
He added that Russia has embarked on a pro-Chinese economic development scenario. "The scheme involves two stages. At the first stage, Russian companies 'borrow' and copy technologies without notifying the foreign automaker. At the second, they design similar models and bring their quality up to the original," he said.
A non-WTO country can probably get away with it. "Russia has a perfect trump card which even China did not have, oil and gas. The commodities will ensure that no serious sanctions are slapped on us," Rozhankovsky concluded.
Kommersant
Kremlin urges TNK-BP, Gazprom to speed up Kovykta deal
Russian mineral resource regulator Rosnedra may revoke TNK-BP's license for the Kovykta gas condensate deposit in East Siberia unless the Russian-British venture closes a deal to sell it to Gazprom this year.
The Kovykta development license is held by Rusia Petroleum, whose main shareholder is TNK-BP.
This will not change much for the Russian energy giant, which is not in a hurry to start developing the field and may get the license for it without a tender.
In June 2007, TNK-BP signed a framework agreement with Gazprom to sell a 62.89% stake in Rusia Petroleum within 90 days. At the same time, BP, TNK-BP and Gazprom agreed to form a pool of joint projects worth $3 billion by January 1, 2008.
Natural Resources Minister Yuri Trutnev said yesterday: "Unless the problem is solved soon, we will have to intervene. The ministry or the mineral regulator will have to make a decision by the end of the year."
Maxim Shein, chief analyst at BrokerCreditService, said the government wants to accelerate the deal between TNK-BP and Gazprom. Otherwise the development license will be revoked and transferred to the fund of undistributed deposits.
However, this will not create problems for the monopoly, which will receive 10 mineral licenses from the state without a tender, but not for free, in September.
According to Gazprom, it is not connected with the potential revocation of the Kovykta license, because Rusia Petroleum does not legally belong to it.
In August 2007, the Gazprom management promised to submit to the Natural Resources Ministry its plans for commissioning the project, but has not done so allegedly because its deal with TNK-BP has not been closed.
The gas monopoly recently bought a development license for the country's largest oil and gas condensate field, Chayanda in Yakutia, which can be effectively developed only jointly with Kovykta.
Mikhail Korchemkin, director of the East European Gas Analysis consultancy, said Gazprom's export program in the Far East had been tied to Kovykta since October 2004.
"This is logical, because the Kovykta deposit lies closest to China," he said. "Gas production there could only be limited by associated helium, and can reach 30 billion cu m (1.06 trillion cubic feet) annually. In other words, the deadlines for the construction of the first pipeline depend only on an agreement with China."
Shein said Gazprom bought Chayanda, whose reserves have been estimated at 1.2 trillion cu m (42.36 trillion cubic feet), for 8 billion rubles ($312.7 million), but Kovykta may cost it 10-13 billion rubles ($508 million). In this case, the shareholders of TNK-BP will not get anything.
Analysts agree that the Kovykta problem has not been solved, because Gazprom is in talks on the acquisition of a stake in TNK-BP.
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