MOSCOW, September 11 (RIA Novosti)
West ready to get rid of Georgian president / Kremlin wants OPEC on its side / NATO induces Kazakhstan to support Georgia / Residents flee from Russian stock market /16 year-long history of sale of Udokan field comes to an end / Latvia wants to tap its own offshore oil
RBC Daily
West ready to get rid of Georgian president
Storm clouds are gathering over Georgian President Mikheil Saakashvili. Representatives of the Pentagon and the U.S. House of Representatives actually admitted during debates on the recent war in Georgia that it was Tbilisi who had started the war by attacking South Ossetia.
At the same time, the Organization for Security and Cooperation in Europe (OSCE) has reminded Saakashvili, who was brought to power by the Rose Revolution, about violations international observers registered during the May 21, 2008, parliamentary elections in Georgia.
It seems that Washington, aware of the dangers of confrontation with Moscow, has decided to replace Saakashvili with a pro-Western politician with an unblemished reputation.
Anatoly Utkin, who heads the Center for International Studies at the Russian Academy of Sciences' U.S.A.-Canada Institute, said: "The U.S. administration is ready to replace Saakashvili, as relations with Russia are more important to Washington. The resignation of Saakashvili would create conditions for resuming a normal dialogue with Moscow. This is very important for the outgoing U.S. president, George W. Bush, who doesn't want to go down in history as the president who 'lost' Russia."
"Ballot-box stuffing, beatings of opposition activists, biased news coverage and government officials campaigning for President Mikheil Saakashvili's party tainted Georgia's parliamentary elections this year," according to an OSCE report quoted by Reuters.
The final report by the OSCE election watchdog, ODIHR, was significantly tougher than the monitors' initial report, which described election day as calm and generally positive, although with some shortcomings.
"The OSCE seldom changes its assessments of events," said an OSCE source. "It appears that the organization knew about the violations in Georgia earlier but preferred to remain quiet about them."
The West seems ready to sacrifice the Georgian president, ordering his resignation for failing to live up to expectations.
Gazeta.ru
Kremlin wants OPEC on its side
Russia hopes for a closer dialogue with the Organization of Petroleum Exporting Countries, OPEC. Analysts believe that Moscow could begin supplying the Middle East with cutting-edge weapons in exchange for the support of countries annoyed with U.S. policies.
Russia, which is not an OPEC member, has long been an observer there, while pursuing its own policy. Igor Sechin, Russia's highly influential deputy prime minister, represented Russia at the most recent OPEC conference in Vienna. It was the first time such a high-ranking Russian official had attended an OPEC meeting.
Alexei Makarkin, deputy director general of the Center for Political Technologies, said that Russia's proposal to establish a regular dialogue with OPEC was a show of intent for the West. "The Kremlin wishes to show that if Russia's relations with the United States and Europe grow more strained, we could take a harder line. Russia is not really seeking OPEC membership, which would be economically inefficient because of the cartel quotas restricting production, but it would like to put in place an effective consultations procedure, and is using its observer status to achieve that," he explained.
Dmitry Abzalov, an analyst with the Center for Current Politics think tank, said many nations were dissatisfied with Washington's current policies, including tried-and-true allies like Saudi Arabia. "Therefore, Russia stands a good chance of getting support. From this perspective, hosting an OPEC meeting in Moscow is certainly a gesture to please U.S. opponents," he added.
Abzalov believes Russia has something to offer to potential OPEC allies. "It can propose infrastructure projects, steel-making projects some Middle East nations are quite interested in, and military technical cooperation. Incidentally, the U.S. is not supplying the Middle East with the best and newest samples of its military hardware, which makes Iraq, Iran and Saudi Arabia increasingly discontented, especially given the rapid growth of Israel's defense industry. Our missile defense systems are obviously more competitive than U.S. ones," he said.
Therefore, Abzalov concluded, Russia can supply weapons in exchange for what it wants - an upward correction of global oil prices.
Nezavisimaya Gazeta
NATO induces Kazakhstan to support Georgia
During his two-day visit to Kazakhstan, which starts today, NATO Deputy Secretary General Claudio Bisogniero is likely to propose that Astana participate in the alliance's program to provide energy security assistance to Georgia and Ukraine, Nezavisimaya Gazeta reported citing its sources with the Kazakh government.
U.S. Ambassador to Kazakhstan John M. Ordway has publicly urged Astana to articulate its stance towards the situation in the South Caucasus. "Americans want Kazakhstan to support Georgia," the director of the Kazakhstan-based Political Risks Assessment Group Dosym Satpayev said. "Moscow expects Kazakhstan to deliver its clear-cut position, which should be opposite to that of the United States. Finding itself between Scylla and Charybdis, Kazakhstan will seek to remain as neutral as possible."
President Nursultan Nazarbayev spoke in favor of the measures Russia undertook to secure stability in the region. However, he is in no hurry to recognize South Ossetia and Abkhazia.
"To make Kazakhstan an offer of that kind, they need weighty arguments. Astana should know what it will gain in exchange. But they haven't been offered anything particular so far," Satpayev noted. Nazarbayev said he didn't mind alternative energy carriers supply routes "if it is economically sound." The project Odessa-Brody-Plotsk, Ukraine has lobbied for, is not lucrative for Kazakhstan, the expertsaid. "As to the Baku-Tbilisi-Ceyhan oil pipeline, it is now less attractive since the level of political and investment risks in the region has soared recently. Even Azerbaijan is trying to redirect some of its energy resources supply routes to Russia," Satpayev said.
Investing some $2 billion in Georgia's economy, Kazakhstan staked on the country's transport infrastructure, which would allow it to export its production, mainly crude oil, to external markets. But it is Baku, not Tbilisi, that Astana has always regarded its major partner: Kazakhstan has a sea border with Azerbaijan. In the framework of their cooperation, Astana and Baku are planning to export hydro carbons via the Caspian Sea and build a refinery in Azerbaijan.
"The possible risks for the Kazakh investment in the Georgian economy will be offset by the new Azerbaijani prospects. I'm not sure that NATO will be able to win over Kazakhstan. The Kazakh and Azerbaijani economies now allow for an independent policy," Azhdar Kurtov, an analyst with Russia's Strategic Studies Institute, said.
Kommersant
Residents flee from Russian stock market
A new fall on the U.S. stock market provoked sharp reactions around the world yesterday, with the Russian market falling harder than any other. Residents are moving in the footsteps of foreign investors to withdraw capital from the country.
Analysts say the Russian government may use the situation to take control of several attractive assets.
Oleg Zhelezko, managing partner at the Da Vinci Capital group of investment companies, said: "Investors' pessimism grew due to the Mechel affair, the conflict between the TNK-BP shareholders and the escalation of fighting in Georgia."
Financial statistics show that panic has spread to residents.
"The volume of currency swap transactions is growing rapidly," said Yevgeny Nadorshin, senior analyst at the Trust bank. "This means residents, seeing the dramatic depreciation of the ruble because of the Bank of Russia's belated intervention, have panicked and started selling to be able to buy dollars."
Valery Yesaulenko, head of NEO Center Consulting, said residents would sell even assets they would not have sold before, with many transactions made at a discount.
Residents are withdrawing from Russian securities to buy foreign currency or remove money from Russia. The Bank of Russia, alarmed at these developments, has strongly recommended that lending organizations focus on the operations of legal entities to transfer money to accounts opened with banks in Kazakhstan, Moldova, Estonia, Latvia and Cyprus.
"We were encouraged to believe that the currency flight schemes had been killed off, but they are still alive and kicking," Nadorshin said. "The most popular methods are to keep export revenues abroad and demand prepayment for imports."
Analysts say the government may take advantage of the foreign investors and residents' flight.
Alexander Zakharov, head of the brokerage department at the Metropol investment financial company, said: "State companies and corporations, such as VTB and Russian Technology, now have a relatively civilized way to buy assets cheaply, which will be seen not as a silent re-privatization, but as support for the Russian market."
He said the government might take control of a large number of companies, which worries investors.
"However, today's situation is such that no one except the government could be interested in certain assets," Zakharov said.
Vedomosti, Kommersant
16 year-long history of sale of Udokan field comes to an end
The Udokan copper field, Russia's largest and the world's third largest copper deposit, in the Chita Region will go to Metalloinvest, Alisher Usmanov's holding, which agreed to invest 100 billion rubles in its development.
The government has been trying to sell the right to develop the Udokan field since 1992. The Federal Agency for Subsoil Resources (Rosnedra) was going to sum up the results of the tender for its development on September 17, but suddenly announced the winner on September 10.
All the projects were submitted on time and the tender commission had enough time to examine them, so there was no reason for delay, Rosnedra's head, Anatoly Ledovskikh, told the Vedomosti daily.
This was an unpleasant surprise for Vladimir Yakunin, president of the Russian Railways (RZD) rail monopoly and leader of the rival consortium Russkaya Med (Russian copper) formed by RZD (with Urals Mining and Metals Co. and Vnesheconombank, or VEB, as its partners).
According to the Kommersant paper, Yakunin met with Russia's President Dmitry Medvedev on September 10 to discuss, among other things, the Udokan tender, non-official sources say. However, the future of the deposit had already been decided.
The Mikhailovsky Mining and Processing Integrated Works, or Mikhailovsky GOK (incorporated into the Metalloinvest Group) was declared the winner.
Ledovskikh said it would pay 15 billion rubles for the development license issued for a term of 20 years (the initial payment was fixed at 4.5 billion rubles). Ledovskikh does not say how much Russkaya Med offered for the license. He is sure the main criterion was not money but the terms and conditions for developing the deposit (with reserves of 20 million metric tons and 1.45% copper content in ore), and Mikhailovsky GOK offered better ones. It must pay for the license within a month after its issue.
Metalloinvest earlier said that it would develop the Udokan deposit together with the state-run corporation Rostekhnologii (Russian Technologies). Alexei Aleshin, first deputy director general at Russian Technologies, said on September 10 that the corporation had not changed its decision. Metalloinvest relies on private-public partnership in the Udokan project under the government's resolutions on the development of the Russian Far East, Usmanov told Vedomosti.
Russkaya Med planned to invest $1.9 billion in the project to produce as much as 210,000 metric tons of cathode copper a year within 25 years. Metalloinvest hopes to bring the plant's annual capacity to 474,000 metric tons of cathode copper already in 2016, by spending $4.2 billion for this purpose.
Alexander Yakubov of the Trust investment bank says government officials have chosen the most expensive and bulky project.
Gazeta
Latvia wants to tap its own offshore oil
In its desperate search for ways out of the economic crisis, Latvia suddenly remembered it had oil. Prime Minister Ivars Godmanis asked the economics ministry on Wednesday to thoroughly study the possibilities of tapping the country's offshore deposits.
Latvia's oil reserves were estimated back in Soviet times at around 100 million metric tons, worth some $70 billion at current prices. In the late 1970s, petroleum engineers obtained material proof of their theories after drilling several exploration wells. The matter was then set aside to return to it later, and remembered in the 1990s after Latvia declared its independence.
In 1996, the Latvian government set up an expert group which spent several years working on a package of documents, including amendments to laws needed to begin oil prospecting and production in Latvia's offshore area.
Dr. Astrid Freimanis, geologist and an honored doctor of the Latvian Academy of Sciences who headed the group, said the unstable political situation prevented them from doing so at the time. A quick succession of several governments resulted in the dissolution of the expert group.
Now that the political crisis has given way to an economic recession, Latvia's government has remembered it has oil of its own. However, they are now faced with an array of problems, primarily the territorial one. The offshore oil bearing area is very close to the border with Lithuania, something disputed for over 15 years now. Andris Berzins who heads the parliamentary foreign affairs commission, believes that oil is the only reason why Latvia and Lithuania have not yet ratified the sea border agreement.
Money is another problem. A 1km-deep well requires an investment of around $1 million. "No investor will provide the money without knowing exactly to what country the field belongs," said Dzintars Zakis, economist and parliament member. His colleague on the economic commission Yury Sokolovsky told Gazeta that things may turn out the other way, i.e. the territorial dispute may be quickly resolved if someone is ready to develop the fields. But the fields might also end up not in Latvia's possession, he added.
RIA Novosti is not responsible for the content of outside sources.
