MOSCOW, October 6 (RIA Novosti) Russian should learn to consider Ukraine a friendly nation / United States worried by weakening position in Kazakhstan / Deripaska sells 20% stake in Magna International / Deputy PM to consolidate Russian energy company's foothold on foreign markets/ Russian officials call for oil companies to join sturgeon preservation/ Private capital flees from Russia/
Kommersant
Russian should learn to consider Ukraine a friendly nation
Ukraine is playing a risky game, staking not only its political reputation, but also its future as an independent state, a Russian analyst writes in the popular business daily Kommersant.
Andrei Fyodorov, director of political programs at the Russian Council of Foreign and Defense Policy, deputy foreign minister in 1990-1991, writes that not even the emergency elections to its parliament can help stop the apparent crisis of Ukraine's political elite.
But it is much more important for Russia to formulate a strategy with regard to Ukraine, because it will have to take a stand on many issues soon.
To begin with, Ukraine's accession to NATO and the EU, even if Germany and France slow it down in December 2008, is inevitable and no Ukrainian politician can, or wants, to change this, Fyodorov writes. If it really wants to protect its national interests, Russia should learn to live side by side with a different Ukraine.
Secondly, Ukraine has instruments of pressure on Russia and will definitely use them soon, especially if the current government hangs in the balance. The West will take Ukraine's side in this situation, above all because the United States will need it for pressurizing Russia.
Thirdly, Russia should not rely only on one or two Ukrainian politicians, hoping that they will play fair. According to Fyodorov, Russia should show that it needs not individual Ukrainian politicians, but Ukraine as a friendly Slavic state, and that it would consider certain concessions to attain this goal.
He writes that it would be foolish to try to scare Ukraine with a territorial split for political reasons. By doing this, Russia would very quickly lose Ukraine.
Fourthly, Russia must see that the CIS will fall apart without Ukraine, accelerating negative processes in the post-Soviet space.
And lastly, Fyodorov writes that the world has changed after the conflict in the Caucasus, to Russia's detriment. In this situation, a conflict with Ukraine would deliver one more blow to the Russian economy, which is in for a hard time.
One can love or hate Ukrainian politicians, especially when they make anti-Russian statements, for example on the Black Sea Fleet. But we must not give these politicians additional advantages by making political mistakes at an accelerating pace, Fyodorov concludes.
Nezavisimaya Gazeta
United States worried by weakening position in Kazakhstan
U.S. Secretary of State Condoleezza Rice visited Kazakhstan Sunday on her way from New Delhi to Washington, in an earnest bid to grasp the subtleties of the oil-rich Asian country's multi-vectoral policy during a stopover visit to Astana.
Rice probably remained unconvinced by Kazakh Foreign Minister Marat Tazhin's statement at the 63rd session of the UN General Assembly in New York, where he said that Astana would participate in all major energy projects as before. Her doubts must have emerged from the recent meeting between President Dmitry Medvedev and Kazakh President Nursultan Nazarbayev in Aktyubinsk, which made it clear that Astana was giving Moscow high priority among its other allies.
In Astana, Rice immediately confronted the issue that worried her by asserting that the United States was not vying with Russia over Kazakhstan in its energy policy: "This is not some kind of contest for the affection of Kazakhstan between the countries of the region," she said.
Russian expert on Central Asia Yury Solozobov said: "The U.S. Secretary of State has been making high-profile statements lately about all American initiatives, trying to win over potential partners such as Kazakhstan. As far as Washington is concerned, Kazakhstan is showing alarming signs, which could lead to the United States losing control there."
He said Kazakhstan took the South Ossetian crisis calmly - being Georgia's second largest investor after the U.S. Washington must have expected Astana to condemn Moscow's actions, but it didn't.
Moreover, local business leaders began considering divesting from Georgian assets. Shortly after that Tazhin said their relations with Russia were "excellent." "Russia is our strategic partner," said Tazhin, adding that Kazakhstan would not review their relations because of the conflict in the Caucasus.
Last Sunday, Tazhin made the same statement for the sake of his American guest: "Our relations with the United States are strategic and stable."
Rice responded with matching courtesy followed by praising the planned Nabucco pipeline and the Baku-Tbilisi-Ceyhan oil link - already onstream - urging Kazakhstan to make good on its vow.
"Tazhin, who is the founding father of the 'multi-vectoral' policy, couldn't have acted otherwise. Each of his gracious gestures toward Moscow is always followed by one for Washington, and then China and the EU. We have been watching the diplomatic routine for a long time," Solozobov said.
Vedomosti
Deripaska sells 20% stake in Magna International
Last fall, Russian billionaire Oleg Deripaska, the owner and CEO of Basic Element, a diversified investment company established in 1997 with assets in Russia and abroad, bought a 20% stake worth $1.54 billion in Magna International, Canada's largest auto components manufacturer.
The deal was financed by one of the three oldest French banks, BNP Paribas, that syndicated a $1 billion loan for Basic Element's automotive unit, Russian Machines, which bought the Magna stake.
BNP Paribas loaned the money on the condition that it and other concerned banks would be able to acquire the shares if their value plunged by over 40%.
Since September 25, the Magna stake plunged by 19% on the Toronto Stock Exchange, tapering off at $909.7 million on October 2.
The stake which costs $630 million (41%) less since the deal was closed has now gone to BNP Paribas.
Magna and Russian Machines still implement a number of projects, corporate CEO Valery Lukin told the paper.
He said the company still had enough cash, despite its 3:1 debt-to-EBITDA ratio, but declined to say anything about the corporate debt. Russian Machines may revise its production-investment programs, depending on solvent end-product demand, Lukin told the paper.
Deripaska's decision to sell the Magna stake is the first serious consequence of the global stock-market crisis that has affected his business empire, Mikhail Pak, an automotive analyst at Metropol Investment Financial Company Ltd., said.
Deripaska ranks among Russian businessmen, who have received far too many loans, VTB analyst Alexander Pukhayev told the paper.
He said Deripaska's United Company RUSAL, the world's largest aluminum and alumina producer, had bought a blocking stake in Norilsk Nickel for about $7 billion, and that it had borrowed $4.5 billion using NorNickel shares as collateral.
In 2006-2008, companies owned by Deripaska bought assets worth over $5 billion.
Stakes in Russian transport builder Transstroi, Germany's largest construction company Hochtief, a leading international construction services provider, and Strabag, Austria's largest construction company, cost Deripaska over $2.5 billion.
UC Rusal bought several foreign aluminum plants worth at least $650 million and acquired $800 million and $900 million stakes in Rosneft, Russia's largest state-owned oil company, and U.S. automotive giant General Motors, respectively.
The company also spent over $200 million on building sports facilities for the 2014 Winter Olympics in Sochi on the Black Sea coast.
Unlike other companies owned by Deripaska, Rusal faces greater problems, including a 3:1 debt-to-EBITDA ratio and $15 billion debts, Pukhayev told the paper.
He said the increasingly cheaper NorNickel shares had already faced margin calls.
Ivan Zavadsky, business analyst with Capital brokerage, said loans had accounted for 30%-70% of assets used to purchase the aforementioned companies, that the deals had not produced the desired results against the backdrop of the global crisis, and that Deripaska's companies faced over $10 billion in debts.
Kommersant
Deputy PM to consolidate Russian energy company's foothold on foreign markets
Igor Sechin, a deputy prime minister and chairman of the board at the state-own Rosneft, is launching into a different sphere of business, electrical energy.
According to sources in the Energy Ministry and Inter RAO UES, he will head Inter RAO board of directors, a mid-size Russian power exporter with plans to become the country's largest supplier by 2015.
Inter RAO UES, a former RAO UES subsidiary, was incorporated in 2008 as an open stock corporation.
Analysts expect Sechin to be able to pursue his own energy policy by controlling both Rosneft and Inter RAO, and have dubbed the potential political bundle of the two companies a "soft version of Gazprom."
Inter RAO mainly operates on foreign markets. French Electricite de France will soon become its co-owner and partner. The Russian power import-export monopoly will elect its board at an extraordinary shareholder meeting on October 23.
The list of candidates for the 11-member board only contains three names of the current board - chairman Yevgeny Dod, Rosatom head, Sergei Kiriyenko, and the director of Atomenergoprom, Vladimir Travin.
The list includes some unexpected names, too, such as Vyacheslav Kravchenko, CEO of Rosneft Energo (a company managing Rosneft's energy assets), Kirill Seleznyov, head of Mezhregiongaz (manages Gazprom's energy assets), and Sergei Maslov, former head of state pipeline company Transnefteprodukt.
A source familiar with the situation around Inter RAO UES, said the proposed new board reflects the change in the lineup of forces in the energy sector.
"The country's power generating and trading sector has been reformed, while outside Russia, many options and opportunities are still available. But one should know how to use them. Sechin knows how to handle them in the oil industry; now he will do the same in electric energy," the sources said.
Until recently, Sechin was not on any energy company's board. He already controls almost as much of the fuel and energy sector as Gazprom, a traditional rival of Rosneft which is also developing the power generating business.
Sergei Pikin, head of the independent Power Development Fund, said Sechin's personal control of Inter RAO would mean a change in the government's attitude toward the company, turning it primarily into a tool of influence rather than a commercial enterprise.
Mikhail Korchemkin, director of the East European Gas Analysis consultancy, described it as a softer part of on-going gas expansion. The markets are wary of Gazprom, but not yet of Inter RAO.
Korchemkin also believes that this expansion fits with Sechin's own position: "Gazprom shouldn't grab all the energy assets there are, but Russia should keep them all."
Gazeta
Russian officials call for oil companies to join sturgeon preservation
For the first time, Russian officials have offered their suggestions on the imposition of a five-year moratorium on catching sturgeon in the Caspian Sea, proposing that oil companies join activities to help preserve the sturgeon population.
"It is necessary to establish special zones in the sea to ban the development of hydrocarbon resources of the sea shelf or restrict the works during sturgeon migration," Andrei Krainy, head of the Russian Federal Fisheries Agency, announced.
According to the head of the agency's public relations center Alexander Savelyev, the proposal implies that oil companies should restrict their development activities for one or one a half months a year. However, he said, no official comment on the suggestion has been received yet.
The signing of the moratorium is in doubt as well. Although Azerbaijan, Kazakhstan and Turkmenistan have given their approval for the project, the final word has to come from Iran, the country which uses the Caspian Sea's marine resources most actively, with its annual caviar exports amounting to 200,000 tons.
The big question, Savelyev says, is whether Iranian authorities intend to part with legal profits from caviar exports only to see poaching activities rise in other countries' territorial waters. "Iranians think rationally, and they are aware that even with the present monopoly bringing them profit the current favorable situation will not last for long," he noted.
Among strict initiatives to combat poaching in the Caspian Sea proposed by Russia is the establishment of international armed fishery protection troops.
"As paradoxical as it sounds, poachers from the Caspian countries have already agreed on everything and launched international crime groups, while we are still trying to coordinate things among ourselves," Savelyev lamented.
As evidence of poaching decreases in Russia, the country's officials cite retail prices for black caviar. According to Savelyev, last year a kilogram cost 14,000 rubles ($539) while now certain shops sell it for 230,000 rubles ($8,846).
However, it is easy to find a bunch of online shops which offer the product for prices two or three times lower, which certainly proves the caviar is illegal. According to official statistics, over 90% of caviar sold is delivered to the domestic market via poaching.
Vedomosti
Private capital flees from Russia
Net private capital flight from Russia in September has reached $25 billion, or nearly as much as have been invested in the country in the first eight months of the year.
In 2007, Russia registered a record-high net private capital inflow, $83.1 billion. A month ago, Sergei Ignatyev, chairman of the Central Bank of Russia, said capital inflow (the difference between the growth of Russian companies and banks' foreign assets and liabilities) would be half that figure in 2008.
"According to the Central Bank, we will be in the black this year, one way or another," Prime Minister Vladimir Putin told foreign businessmen in Sochi.
However last week, Alexei Ulyukayev, first deputy chairman of the Central Bank, said the $40 billion capital inflow forecast for this year could be reviewed.
Ulyukayev said the balance for January-August was $25.5 billion in September, with the outflow of $5 billion in August.
Together with the September outflow, capital flight for the first nine months is $30 billion, another negative record apart from the stock market crash. Deutsche Bank economist Yaroslav Lisovolik said the situation in Russia was comparable to the 1998 financial crisis, because a considerable part of the money is fleeing from the stock market.
Gross capital flight in the third quarter was $41.7 billion, with banks yielding $24.6 billion and enterprises and the public $17.1 billion. Companies imported almost as much money as they exported, but banks attracted only $8.7 billion.
Yevgeny Gavrilenkov, chief economist with the Troika Dialog investment company, said the global financial crisis was the main reason behind the record-high outflow of capital, because money-hungry global banks are collecting liquidity wherever they can, including from their subsidiaries.
Another reason was that the people started buying dollars, Lisovolik said, because the ruble lost 4.6% of its weight against the dollar in September.
Yevgeny Nadorshin of Moscow's Trust Investment Bank said the reduction of narrow money (M0) by 25 billion rubles ($965.25 million) in the last week of September could be connected to foreign currency acquisitions.
Economists say capital flight will continue in the fourth quarter.
Vladimir Tikhomirov, senior economist at the Uralsib bank, said companies would be unable to refinance their foreign debts abroad, and so results in the fourth quarter will be the same as in the third quarter.
Gavrilenkov thinks there can be capital outflow of $10 billion or an inflow of $10 billion by the end of the year.
Lisovolik said the flight continued in early October, with stock indices falling and the ruble losing weight.
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