MOSCOW, November 14 (RIA Novosti) Russia on the verge of dramatic change/United States not taking Russia's missile defense argument seriously/ Belarus exchanges dollar loan for ruble dependence/ Europe outlines boundaries for gas talks with Moscow/ Russia unable to finance timber processing/ Sport, like economy and politics, depends on oil
Gazeta.ru
Russia on the verge of dramatic change
Russian President Dmitry Medvedev talked to the French newspaper Le Figaro about his proposal to extend presidential terms, but did not say when his term would end.
Political analyst Dmitry Oreshkin said the situation was dubious.
"Is extending the presidential term really a strategic problem that needs raising in the state of the nation address, discussed and approved by parliament within a week?" he wonders.
Such unacceptable haste can only mean that "the amendments are not being made to extend Medvedev's remaining 3.5 years in the Kremlin," Oreshkin said. He thinks Russia is going to see dramatic change very soon, because the government is living "in fear of an impending social crisis."
"Putin's consensus, which allowed the elite to develop business and pay bribes, will crumble, giving way to a conflict in the elite against the backdrop of the shortage of reserves," he said.
"The Putin team probably knows that it will have to take emergency measures, up to and including the resignation of the president, dismissal of parliament and introduction of a state of emergency," Oreshkin said.
They will be unable to admit that they have done this to allow Putin to reclaim power next February, but the foundation for six or 12 years of his rule needs to be created now, the analyst said.
Political analyst Andrei Okara does not agree with this opinion. In his view, Medvedev's state of the nation address, in which he made public the idea of extended presidential and parliamentary terms, and his current ambiguous statements show that the "struggle in the elite has reached a dramatic stage."
"They don't yet have a scenario for the transfer of power or the transformation of the status quo," Okara said, adding that the idea of an extended presidential term should appeal to the elite.
"Even the Kremlin's chief of staff, Sergei Naryshkin, who was initially viewed as the guarantor of stability of a dual system of power during the transition period, would rather live in Russia with Medvedev, rather than with Putin as president," the analyst said.
Vremya Novostei
United States not taking Russia's missile defense argument seriously
The U.S.-Russia argument over the U.S. plan to deploy radar and interceptor bases in Central Europe is gaining momentum. Pentagon chief Robert Gates emphasized Thursday that he hoped for a more constructive relationship with Russia in the future, but would not bow to pressure from Moscow to cancel plans for the missile defense system to be partly based in Europe.
Since Gates is probably the only U.S. official likely to keep his post under the next democratic president, his statements must be taken very seriously.
Speaking of President Dmitry Medvedev's threat to install Iskander missiles in the Kaliningrad Region, Russia's westernmost exclave, in retaliation for the U.S. move to deploy a radar in the Czech Republic and interceptors in Poland, Gates said such provocative remarks were "unnecessary and misguided".
"All U.S.-Russian missile-defense discussions stumble over one major problem, which is the colossal mistrust between Russia and the United States," Nikolai Zlobin, director of the Russia and Eurasia Project at the Washington-based World Security Institute, told VN.
"All debate boils down to mutual suspicion that there is possible cheating. If this trust-losing trend isn't reversed soon, Moscow and Washington will face more difficulties in reaching agreements on many key bilateral issues, not just missile defense," he added.
The analyst believes a compromise is seriously hampered by the Americans' "genuine and strong astonishment" at Russia's harsh criticism of their missile defense plans.
"Moreover, Washington has no authority to allow Russian observers to inspect the bases because permission is up to the governments of Poland and the Czech Republic. If America says Yes and then Poland says No, the issue will run into another dead end," he explained.
Kommersant
Belarus exchanges dollar loan for ruble dependence
Belarusian Finance Minister Andrei Kharkovets and his Russian counterpart, Alexei Kudrin, signed an agreement in Moscow on Thursday to allocate $2 billion to Belarus for 2008-2009 on the condition that it pays for Russian oil and natural gas in rubles beginning in 2009.
The stability of the Belarusian economy now depends on the Russian ruble, because the agreement will force it to accumulate ruble reserves.
"This is our contribution to giving the ruble the status of a regional reserve currency," Kharkovets said at the signing ceremony.
The first half of the loan may be provided in the next few days, and the remaining $1 billion in the first half of next year, under an agreement to be signed by February 28.
Natural gas constitutes the bulk of Russia's energy exports to Belarus. Next year, gas monopoly Gazprom will deliver approximately 21.6 billion cubic meters of natural gas to Belarus at a new price. Sources at Gazprom say it will be $200-$250 per 1,000 cu m at the beginning of 2009, which means the energy giant will net over $4 billion by the end of the year.
In 2008, Belarus spent some $2.5 billion on 21.2 billion cu m of Russian natural gas, at $120 per 1,000 cu m. Gazprom buys gas transportation services in Belarus for dollars, and Russian companies supply oil under dollar-denominated contracts.
The agreement signed yesterday means that up to 40% of Belarusian foreign trade will be converted to rubles, making it a reserve currency for the National Bank of Belarus.
The bank started making settlements in rubles after the country's gold and foreign currency reserves dropped below $4 billion (the IMF figure is smaller by $400-$500 million).
Belarus could refuse to settle fuel deals in rubles, if it could get an IMF loan. However, last week the IMF delegation, which arrived in Minsk for talks on a $2 billion reserve loan on October 26, extended its stay for a week without taking a decision on the loan.
Russia has not yet calculated the financial boons of extending the ruble zone to Belarus. The agreement will not add stability to the Russian ruble, and will change the exchange fluctuations risks of Gazprom and Gazprom Export only slightly.
But Belarus will be made hostage to the Russian exchange rate in 2009, and will have less room for exchange rate maneuver.
Izvestia
Europe outlines boundaries for gas talks with Moscow
European officials are determined to save the EU from Russian domination of natural gas supplies. The key goal of the Community Gas Ring, a plan drawn up by the European Commission linking all European power and gas networks, first into an "energy web," and then an "energy ring." As a result, natural gas will flow easily from any one point within Europe to another.
The document is careful not to cite any specific threat, but Russia is present between the lines as a country supplying 40% of European gas needs (over 150 billion cubic meters), and 30% of oil (around 290 million metric tons). Central Asian and Kazakhstan's gas is also shipped through Russian pipelines because there is no other alternative, which means that the hint about the "few" producers of the commodity exchanging it for Europe's riches was clearly aimed at Moscow.
The proposed solution involves building two more pipelines, Nabucco from South Caucasus and Iran and the Trans-Saharan Pipeline from Africa. Europe has been talking about building the two gas links for the past 15 years, but nothing has come of it but talk so far. The problems are high construction costs and the literal "explosion hazards" in the regions. Even the Nabucco route hasn't been agreed in this time.
"Europe's demand for natural gas is growing steadily, so these projects aren't mutually exclusive," a gas industry source told Izvestia. "However, no one would invest billions in a pipe which risks remaining idle in the end. Any project must begin with contracts which are often signed for decades ahead. Nabucco isn't backed by 'future gas.'"
On the other hand, said Alexei Serov, chief analyst at the Financial Bridge brokerage, the European Commission could have timed the Gas Ring plan to coincide with President Dmitry Medvedev's visit to Nice on November 14 - just to outline the boundaries for the talks there.
"It is their idea of a response to the 'gas OPEC' plans," the analyst suggests. "Apprehensive that gas suppliers will join ranks and coordinate pricing policies, The European Commission is trying to diversify suppliers, which is almost impossible during the current financial crisis."
In addition, Russia is not the only opponent European officials will have to deal with. European gas companies aren't happy with the plan either, namely, the part about dividing them all up into producers, transporters and distributors. They are afraid they won't be able to find the large investment they need after this kind of division.
Kommersant
Russia unable to finance timber processing
On Tuesday, Russian Prime Minister Vladimir Putin said after talks with his Finnish counterpart Matti Vanhanen that export duty on raw timber would, at best, be raised next fall.
Russian timber companies supported the decision not to raise the duty to 50 euros per 1 cubic meter because most investment projects, due to be established through the higher export duties, will need credit.
Large timber producers will suffer because restrictive duties helped them to squeeze small companies from the market.
The global economic crisis forced the Russian government to back down. "The companies are now unable to invest in new timber processing facilities," Anastasia Kopylova, a senior analyst with global timber trader Lesprom Network, told the paper.
"Russia must export timber because of reduced corporate-modernization investment programs," said Natalia Pinyagina, director of the Arkhangelsk Pulp and Paper Mill's department for cooperation with state agencies.
She said Russia's Far East had no timber processing facilities, and that regional timber companies were on the verge of bankruptcy.
National timber companies said the government had made a reasonable tactical decision in the current situation.
Ilim Group board chairman Zakhar Smushkin said income from regular timber export would have a positive influence on the financial standing of timber companies and would also help create jobs.
Smushkin said timber export duties would be raised in the long-term.
"Moscow could take advantage of the delay during another round of WTO accession talks, Kopylova told the paper.
The decision to freeze timber export duties will mainly affect large timber producers. Kopylova said they had expected higher duties to lead to the end of small timber producers undercutting prices for small orders, and that they will have to wait for a subsequent export duty increase.
Siksten Sunabaka, timber operations director at Finnish pulp, paper and timber manufacturer UPM-Kymmene Oyj, called the delay positive because it would give the country's timber industry some extra time, but would not influence corporate plans to reduce imports and to fell more forests in Finland.
Vedomosti
Sport, like economy and politics, depends on oil
Global sport, like the entertainment industry, which is heavily dependent on consumers and sponsorship, has run into serious trouble since the crisis. Russian sport, too, might again take a back seat, or become state-financed. Or both.
Roman Abramovich is cutting spending on Chelsea. Liverpool is faced by the option of either selling the club or the players. Clubs are losing sponsors, who now have little time for sport. The overall debt in the English Premier League has reached 3 billion pounds. Cuts have begun in Formula 1, the NBA, NHL and other leagues. The organizers of the 2012 Olympic Games in London are fearing for their business plans.
Russia has the same problems. Construction of soccer stadiums for Zenit, CSKA and Spartak is slowing down or being reviewed. Soccer, ice hockey, basketball and volleyball clubs expect a reduction in their transfer budgets. Some provincial teams are delaying paying wages. Ahead of the country's bandy championship, nearly half the teams were unable to pay their registration fees.
Some voices, however, express happiness with the situation: now we will be able buy all Western stars for a song, they say. But that is unlikely. It is more likely that they will have to sell the ones they have. Players will be sold and caps imposed on uncapped wages and cuts introduced for capped wages.
In Russia, sport is not yet a commercial business. Even the most successful clubs - soccer, ice hockey, and basketball - as a rule depend on one owner (a company or the state in the shape of regional government). Ticket sales and television rights bring in miserly revenues. But there is one source of income that is easy to lose now - even some of the largest natural resource companies are cutting back on their investment programs and giving up non-core assets. Our sport depends on oil prices in the same way as it does the economy and politics.
Inevitable economies have their advantages. A kind of Dutch disease has struck Russian sport recently: a wage competition and the buying up of internationals, on the one hand, helped quickly to improve standards but, on the other, slowed the development of children and youth sports. Now costly imports will be reduced, while teams will increase the number of local players. However, the financing of children and youth sports will be trimmed, too.
The existence of Russian sport outside the economic model is possible and justified by its social impact. A city's soccer or an ice hockey team has one large plant (say, a metal factory) that is part of the social welfare package. The refusal by the plant to subsidize this package is as significant as refusing to pay health insurance or a decision to cut wages. It is likely to get the whole city anxious.
What, then, should be done? It may well be that the state will have to come to the rescue. Is it financially strong enough to do that? At any rate, sport will have to curb its requests.
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