MOSCOW, December 29 (RIA Novosti) Moscow would have no regrets if Saakashvili remained president / Gas prices a key issue for Russian economy / Japanese company decides to take advantage of Russian crisis / Russians choose toilet paper holders over diamonds for gifts
Moscow would have no regrets if Saakashvili remained president
Georgia will face major changes in the near future because the incumbent President Mikheil Saakashvili has lost face with his compatriots and U.S. patrons. This process is probably irreversible because Brussels and Washington are ready to dump Saakashvili, who staged the so-called Rose Revolution in November 2003, and to support a new candidate instead.
Saakashvili has become Russia's main antagonist in the CIS and probably the entire world. Moscow and Tbilisi are unlikely to maintain good-neighborly or even neutral relations while Saakashvili remains in power.
However, there are no pro-Russian politicians among Saakashvili's possible successors. All opposition leaders side with the United States and want the country to join NATO. And not a single Georgian politician will recognize the independence of the self-proclaimed Abkhazian and South Ossetian Republics.
Saakashvili is probably the best opponent for Moscow because he has blundered whenever possible. After attacking South Ossetia this August, Saakashvili convinced the West that he was an unscrupulous and irresponsible politician. His regime is also a far cry from being democratic, providing the Russian media with numerous arguments in any debate.
However, Russia finds it inappropriate to quarrel with Georgia, which is part of the Russian world. An odious and unbalanced Georgian president would suit Moscow only if it plans to confront Tbilisi for years to come. But neither country can afford such a standoff.
The new Georgian president will side with the United States in the foreseeable future. He will also try to reintegrate Abkhazia and South Ossetia or he would lose the support of Georgian voters. Russia will not demand that Saakashvili's successor accomplish the impossible. The Kremlin will only advise him not to start a new war which would spell trouble for Georgia, not to provoke Moscow on a regular basis and to stop exporting "color revolutions."
Gas prices a key issue for Russian economy
Vladimir Putin's words that "the era of cheap gas is over" speak of worries in the government. While gas prices are pegged to oil, even indirectly, gas will fall as oil falls. For the Russian economy and the country's political elite this may spell disaster.
OPEC's attempts, backed by independent producers, are unlikely to push prices back to an acceptable $70 per barrel level. In these conditions, natural gas comes forward as the main revenue earner. Gas prices are not plummeting as fast as oil prices. But gas contracts are concluded for a long time, and this poses the risk of cut-price supplies even when the financial crisis ends, which many analysts predict around the end of 2010. This is why a new idea is being mooted to set up a gas OPEC. But Russia will have to make a difficult choice between the construction of gas pipelines and development of LNG.
It will become technically possible to control gas prices only when liquefied gas is delivered by cargo ships. Now most of gas supplies go by pipeline and are based on long-term contracts.
To control future gas prices the Russian leadership will have to abandon the predominantly pipeline-based delivery of gas and, as a result, Gazprom's current tactics in relation to Western countries, which is to buy into their supply networks on the coattails of its business partners. Pipelines and LNG are rival projects. Available resources are unlikely to allow them to develop in parallel. Opting for LNG will require considerable investments and Russia is weak in this sector. Of course, Gazprom has an LNG program running but as always there's a snag - financing: no one knows where to get the money.
Japanese company decides to take advantage of Russian crisis
Nissin Foods Holdings, a Japan-based instant noodle maker, plans to buy a 14.99% stake in Russian peer Angleside Ltd. in January for $102.9 million.
Nissin said Russian demand for instant noodle products was estimated at about 2 billion packs in 2008, with per capita consumption standing at around 14 packs a year and expected to grow further.
The Russian producer accounts for 41% of the market share in Russia's instant noodle market.
Nissin will boost its stake to 33.5% by September 2010 by acquiring new shares in Cyprus-based Angleside, which owns 100% in Mareven Food Central, the producer of Rollton and BigBon instant noodles.
Overall, Nissin intends to spend $296 million on the 33.5% stake, which puts the market value of Mareven at $686-$885 million.
Maxim Seltser, head of Nomura CIS Ltd, the bank that is consulting Nissin on the acquisition, confirmed the reports of the planned deal. He said Mareven's revenue in 2008 would be approximately 10 billion rubles ($345 million), which puts its value at 2-2.5 of its annual revenue.
Ivan Kushch, an analyst at VTB Capital, VTB Group's investment business, said Russian food producers usually sell at 0.2-0.4 of their annual revenue.
Seltser said the bulk of funds would be invested in Angleside's charter capital and the rest would be paid to the company's current beneficiaries, the top managers. He explained Nissin's interest by saying that Mareven "is a profitable company holding some 40% of the Russian market in its segments," mostly instant noodles and snacks.
The banker said Nissin did not intend to change Angleside's management, but would appoint directors to the company's board.
Nielsen, the world's leading provider of marketing information and audience measurement, says that retail sales of instant noodles in Russia grew 4% in physical terms and 31% in money terms from December 2007 through November 2008, to 12.75 billion rubles ($439.5 million).
Alexei Nearonov, head of the Kukhnya Bez Granits (KBG) trading house, a rival of Mareven, said the evaluation of Mareven inspired him. The consumption of instant noodles grows during crises, when people buy more cheap food.
Russians choose toilet paper holders over diamonds for gifts
The influence of the global financial crisis is evident in people's choice of gifts during Christmas shopping. Last year people in Moscow raided jewelry shops and home-electronics stores despite skyrocketing prices during the holiday season. With the looming financial crisis, people are no longer keen on parting with their money.
Diamond rings worth 25,000-30,000 rubles (around $1,000) sold exceptionally well in late 2007. Today, jewelers are happy to sell anything. "Our total Christmas sales have dropped to one-fifth of last year's level," sighs Natalya Vitalyevna, director of a large jewelry store. "Consumer demand has dropped drastically and clearly."
"Isn't it unheard of, people buying only a dozen small pieces from us in a whole day with Christmas so near?" a sales assistant in another jeweler's complained.
What she meant by "small pieces" was relatively cheap rings, earrings and bracelets worth 1,500-2,000 rubles, or 5,000 rubles ($170) at the most.
One sees the same sad picture in home-electronics stores. They haven't even stocked expensive plasma TVs worth 177,000 rubles (over $6,000) this year for lack of demand.
"Cheap irons are in demand this year, as well as hair driers, electric shavers, kettles and microwaves," a sales assistant said. "Those buying expensive washing machines, TVs, or fridges, do not mean them as gifts. These are planned purchases for home."
For customers with good sense of humor, they offer an unusual accessory - a talking toilet paper holder for 2,000 rubles. It can record anything, the owners' voices or their favorite tunes.
Widely advertised iPhones worth 27,000 rubles for the most part gather dust on the shelves. A sales assistant at a cellphone retail outlet said customers mostly go for inexpensive handsets, Christmas pendants and gift mobile plan packages.
Olga, a Moscow resident, is shopping for gifts with her husband. They have not yet decided what to buy. "Love is certainly the best gift," her husband laughs. "Personally, I have a lot to give. I wish you all to have as much!"
RIA Novosti is not responsible for the content of outside sources.