MOSCOW, December 10 (RIA Novosti)
Russia hopes to strengthen foothold in Latin America / Serdyukov to reinstate Russian-Chinese military-technical cooperation / De Beers to divest Archangelsk stake / Russia tops bribe payers list /
Kommersant
Russia hopes to strengthen foothold in Latin America
Russian President Dmitry Medvedev will hold talks today with Argentinean President Cristina de Kirchner, who met with Prime Minister Vladimir Putin yesterday.
Moscow, which hopes to promote its relations with Argentina to the level of strategic partnership, views Kirchner's visit as another chance to strengthen its foothold in Latin America. It revitalized its policy in the continent after falling out with the West over the Caucasus war last August.
One of the first friendly moves could be a visa free regime between Russia and Argentina. According to a source in the Argentinean delegation, President Kirchner intends to ask Medvedev to annul visas.
Alexei Yermakov, deputy head of the Latin America department at the Russian Foreign Ministry, said: "We may soon respond positively to that proposal."
Russian-Argentinean trade is worth approximately $1.5 billion, an almost five-fold growth over the past four years. Russia's exports amount to some 30%, with Argentinean agricultural products making up the bulk of bilateral trade.
Russia supplies machinery and mineral fertilizers to Argentina, while engineering commodities make up only 7% of its exports and there are very few large projects.
This time the Kremlin intends to offer several major projects to Argentina, one of them for arms supplies. According to the Foreign Ministry, Nikolai Patrushev, head of Russia's Security Council, went to Argentina last September to discuss that possibility.
"Argentina clearly outlined its interest in buying multirole combat aircraft, helicopters, and transport planes," said a source in the Russian defense industry. "However, they did not discuss any particular types."
Sources in the industry say Argentina has been focused on U.S. companies.
Analysts say it will not be easy for Russia to strengthen its foothold in Argentina because the current situation on the financial markets has complicated the funding of major projects.
Vedomosti
Serdyukov to reinstate Russian-Chinese military-technical cooperation
Russian Defense Minister Anatoly Serdyukov will negotiate arms sale contracts in Beijing. Analysts say Moscow has once again started focusing on military-technical cooperation with China and India.
Serdyukov, who co-chairs the Russian-Chinese intergovernmental military-technical cooperation commission which adopts arms purchase decisions, will attend its December 11 meeting for the first time in three years.
At its last meeting in 2005, the commission decided to sign a $1.1 billion contract for the delivery of 38 Ilyushin Il-76 Candid strategic airlifters to China.
However, Russia failed to fulfill the contract, said a source at a company, part of the Russian Technology Corporation (RTC), now growing into an industrial behemoth with assets in many sectors, from the defense and automotive industry to civil aviation.
The Center for Analysis of Strategies and Technologies said China accounted for 64.3% of Russia's $6.1 billion arms export volumes in 2005, 38.3% of its $6.5 billion arms sales in 2006 and 21% of its $7.5 billion arms sales in 2007, respectively.
In 2007, Moscow and Beijing signed military-technical cooperation contracts worth just $700 million, primarily R&D and component delivery agreements, a source at a company, part of RTC, told the paper.
An RTC spokesperson declined to comment on the issue.
On Tuesday, a spokesperson for the Federal Military-Technical Cooperation Service declined to specify the volume of 2007 Russian-Chinese contracts.
Konstantin Makiyenko, deputy director of the Center for Analysis of Strategies and Technologies, estimated that bilateral contracts worth up to $1 billion were signed last year.
Reinstated contracts could stipulate the sale of Ilyushin Il-76 cargo jets and Sukhoi Su-35 and Su-33 Flanker fighters, a manager with an aircraft industry company said.
"Ties with Chinese and Indian defense ministries helped the Russian industry to stay afloat throughout the 1990s and have once again become highly important," Makiyenko told the paper.
Vremya Novostei, Kommersant, Gazeta
De Beers to divest Archangelsk stake
Top diamond producer De Beers is ready to pull out of a deal with Russian oil major LUKoil to acquire a 49.99% stake in the Verkhotinsky diamond project in the Arkhangelsk Region worth $225 million. The deal came close to completion last spring after 15 years of corporate conflict and lawsuits between the two companies.
Analysts say the problem still could be settled if Russian authorities legally allowed De Beers to export its share of produced diamonds.
The Archangel Diamond Corporation (ADC), a venture wholly owned by De Beers, said the deal could be derailed at the last moment. The diamond monopoly was to pay LUKoil $100 million for the asset, plus $75 million when the development protocol is signed and another $50 million after production begins.
De Beers estimated three years ago that the deposit contains a total of 67 million carats of extractable diamonds.
ADC, which holds the Verkhotinsky license, explained its decision to withdraw by the lack of antitrust approval. LUKoil also said it would resume negotiations with De Beers only after the government commission for foreign investment issues a permit required by the new foreign investment law. Although De Beers already has the company's informal consent, LUKoil said it would only confirm that consent if the foreign company agrees to cut diamonds here in Russia.
The Federal Antitrust Service (FAS) said it would grant approval before December 31, but only if ADC undertakes commitments to cut all diamonds in Russia. "They still have 20 days before the the deadline. Maybe they will agree to our requirement," a FAS source said.
A diamond market source said De Beers was trying to buy time by bargaining with Russia. He said the government should give De Beers an export quota for raw diamonds, because Russian cutters never processed more than half of the raw diamonds mined, even during better times.
De Beer's withdrawal will benefit LUKoil, on the one hand, as the Russian company will become the sole owner of Verkhotinsky, but on the other hand, it will have to develop the project alone.
RBC Daily, Gazeta.ru, Novye Izvestia
Russia tops bribe payers list
Russian companies are believed to be the most likely to engage in bribery when doing business abroad, according to Transparency International's 2008 Bribe Payers Index (BPI) published yesterday.
The 2008 BPI ranks 22 of the world's wealthiest and economically dominant countries by the likelihood of their firms to bribe abroad. It is based on the observations of 2,742 senior business executives from companies in 26 developed and developing countries, selected on the size of their imports and inflows of foreign direct investment.
According to it, Russia is far ahead of the richest Western countries as well as its BRIC colleagues - Brazil (ranks 17th), India (19th) and China (21st) - in this respect.
Kirill Kabanov, board member of Transparency International Russia, said: "The West tends to see Russia as an extremely corrupt state with corrupt business, largely because the top Russian officials say corruption permeates everything in this country."
He said most Russian companies are not transparent. "This concerns both major exporters and state-controlled companies," Kabanov said. "For example, a large oil company has recently spent a huge sum allegedly on charity, but nobody, not even its majority shareholders, has been able to establish where the money actually went."
Other analysts mistrust the Bribe Payers Index.
Sergei Pukhov, a leading analyst at the Development Center, said: "Such rankings are often biased and do not provide an objective picture. If our companies give bribes abroad, this means somebody abroad takes them, and so the corruption level abroad is not that low."
Dmitry Shusternyak, head of the Finexpertiza Consulting group, said: "Our compatriots are acting abroad as they do at home. The only difference is that in the West corruption has transformed into civilized lobbying. The Russian business has not yet become part of the Western lobbying system, and therefore our businessmen use the old method of bribing officials to attain their goals."
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