Rossiiskaya Gazeta
Matter of principle
This is the first time the leaders of Russia and the European Union have met since the Lisbon Treaty came into effect, bringing with it institutional changes across Europe.
President of the European Union Herman van Rompuy is leading the EU delegation to Rostov-on-Don. President of the European Commission and old summit acquaintance of the Russian leadership Jose Manuel Barroso, and EU deputy president Catherine Ashton are keeping him company.
Moscow is inclined to view the new EU delegation format favorably. "Such a stable configuration offers hope that the European Union will be more consistent in implementing understandings discussed during the summit," said Russia's Deputy Foreign Minister Alexander Grushko.
Whether or not this is the case will become clear in six months' time, at the next summit. In Rostov, meanwhile, the delegations will discuss matters of interest to them. Russia, for example, wants to settle the issue of a visa-free regime with Europe, draft a "road map" for such a transition and even set concrete dates. Russian officials are convinced there are no technical obstacles to this.
Europe has its own view, which is not without a political background, because not all EU countries wholly support visa-free travel to Russia. Besides, the EU has complaints about the way Russia is implementing the agreement, in place since 2007, to make the visa regime easier. "Currently we are waiting for favorable conditions to emerge for a visa-free regime," said Fernando Valenzuela, head of the European Union mission to Russia. "I believe a great deal could be done to simplify the visa regime to make mutual trips by our citizens easier and more convenient."
Work is also continuing on a new basic cooperation agreement, something that has been ongoing for several years now. Both sides admit that progress is slow. The negotiating process on trade and economic issues is also slow. First, because there is some uncertainty surrounding Russia's entry into the World Trade Organization. And, secondly, energy is the traditional stumbling block.
The delegations will also no doubt deal with the Russian initiative on a new European security treaty and international issues. Human rights in Russia, this time fueled by the death of lawyer Sergei Magnitsky in detention cells, are also issues traditionally raised at Russia-EU summits.
Vedomosti
Central Bank cuts refinance rate to 7.75%
Russia's Central Bank will cut its refinance rate and certain transaction rates by 25 basis points on June 1, the regulator's foreign and public relations department said late on Monday.
The refinance rate therefore decreased from 8% to 7.75% in a fourth consecutive cut since it was 8.75% at the beginning of this year.
The regulator cut the seven-day repurchase rate to 2.75% (down a record 50 bp), but left the overnight deposit rate at 2.5%.
The year-on-year inflation rate continued declining in May, to 5.7% as of May 25, while the risk of a surge in inflation in the coming months is considered to be minor, the regulator said.
At the same time, the external environment for the Russian economy remained volatile, with potential for instability of revival of lending and economic growth. This situation determined the expediency of this move to support economic activity, the regulator said.
However, the Central Bank sees the rates remaining steady for the coming months.
The new rates cut had been expected, as inflation remained flat at 0.1% for the past few weeks, and is now 5.7%, down from 8.6% a year ago, said Nikolai Podguzov from Renaissance Capital. The Central Bank's efforts are entirely aimed at stimulating loans to the non-financial sectors of the economy. At the same time, the regulator is clearly indicating that it is completing a policy of cutting rates for the time being. The economy will continue with low rates at least until 2011. Another cut in the fourth quarter of this year cannot be ruled out, Podguzov concluded.
The new cut is moderately detrimental for the ruble but beneficial for the stock market, because it generates expectations of a small growth in domestic liquidity, said Sergei Suverov, vice president of Deutsche Bank. At the same time, the ruble fluctuations are much more dependent on the situation on the international exchange markets, the current balance of payments, the Central Bank's policies and the federal budget deficit. Market players also believe that it is the last cut this year, he added.
Izvestia
Ukraine no longer afraid of Russian secret services
The counterespionage department of Ukraine's National Security Service (SBU) no longer follows Russian secret service operatives. Journalists in Kiev say this goodwill gesture was made on the initiative of the national government.
Moreover, SBU and Russia's Federal Security Service (FSB) have signed an agreement on returning Russian secret service operatives to Ukraine. They will be primarily stationed in Sevastopol, Russia's main naval base in the Crimea.
Andrei Kozhemyakin, former deputy SBU chairman for secret service operations and a member of the Verkhovna Rada (parliament), discussed upcoming SBU-FSB cooperation.
Kozhemyakin said national security and SBU acts regulated secret service operations, and that the SBU found it normal to cooperate and maintain partner-like relations with foreign secret services, including those of Russia.
He said secret services of various states usually cooperate in such spheres as the fight against international organized crime, illicit drug trafficking, illegal migration and slave trade.
Counterespionage divisions which have always protected and will continue to protect state secrets, including R&D projects and economic information, tackle national security issues and protect state sovereignty, Kozhemyakin said.
He said counterespionage divisions also facilitate information security and thwart the interference of foreign secret services in state affairs. They act in line with the law, and this situation would not change.
I have information that FSB operatives did not go anywhere, Kozhemyakin told the paper. They have now been legalized. FSB officers will work in Sevastopol and other Ukrainian regions. Russia's Black Sea Fleet has its facilities in Balaklava and near Yevpatoria, also in the Crimea.
It does not matter for Ukraine how many FSB operatives work in the country. Even one legalized secret service agent can accomplish his objectives without working undercover. Consequently, Ukraine has made things easier for the FSB, Kozhemyakin said.
When asked by the paper whether Russian secret services had staged any provocations during the November 2004-January 2005 Orange Revolution, Kozhemyakin replied that no subversive activity had been exposed.
"Moreover, we cooperated actively with Russia. Any subversive activity was out of the question. An agreement not to conduct such operations in a friendly country was honored," Kozhemyakin said in conclusion.
Vzglyad
Israel's attack on Gaza flotilla a violation of international law
Israel's decision to board the peace flotilla carrying 700 people and 10,000 tons of supplies for Gaza before dawn on Monday was a bad mistake that provoked indignation around the world even though Gaza is ruled by Hamas militants and is subject to an Israeli-Egyptian blockade.
Commandos boarding one of the ships Monday encountered resistance and killed nine pro-Palestinian activists in the ensuing clash.
The UN Secretary General and the leaders of many countries have denounced the raid, which the Russian Foreign Ministry described as "a gross violation of generally recognized international legal standards."
Anatoly Kolodkin, president of the Russian International Law of the Sea Association, told this newspaper that a blockade, provided it is imposed legitimately, must not be violated. Israel apparently viewed the peace flotilla moving toward Gaza as such a violation and could understandably suspect the ships of carrying more than just humanitarian aid.
However, Israel should have detained them only after inspecting the vessels and establishing that they were carrying military cargo. It should not have opened fire without first establishing the facts. At the same time, there is little information about the incident and not all the reports have been verified, the analyst said.
Israel's actions have resulted in the loss of life. It should have used some other method, for example warships to stop the peace flotilla for inspection of its cargo. Even if it suspected the flotilla of bringing weapons to Gaza it should not have raided it in the open sea. Suspicion alone is not enough in this case, for it was not a naval operation against pirates, Kolodkin said.
Israel might be called to account for its actions. The UN Security Council might issue a statement, or Turkey might file a lawsuit against Israel with the UN International Court in The Hague or the International Tribunal for the Law of the Sea, because the vessels were flying the Turkish flag and their crew had the right to self-defense. Theoretically, they could have assumed pirates were attacking.
A vessel can be detained if it is used for piracy or slave trade, or illegally broadcasts radio or TV signals, or is suspected of carrying drugs, or has no nationality and flies no flag. None of this applied to the Turkish ships, Kolodkin concludes.
RBC Daily
Russian corporations weather the crisis
The gloomy warnings that the global downturn and the plummeting prices of energy resources will undermine large Russian corporations have not come true. A survey by German business daily Handelsblatt suggests that Russian companies currently show the world's highest earnings and profitability levels.
According to the survey, the revenues of 500 leading companies in 27 European countries dropped by an average of 9.6% in 2009, while their 2009 net profits dropped by 26% year on year. Therefore, it is highly surprising that Russian companies, which have only just entered the stock market, came through the global recession turmoil almost unscathed.
Despite a 7.9% drop of Russia's GDP, which is twice as deep as in most eurozone countries, Russian companies have shown an exceptional profitability of 13.7%, or two percentage points above the 2008 level.
Their success is especially remarkable because Russian companies initially stood lower than German ones: in 2009, oil prices, as well as gas prices pegged to oil, were 30% lower than in 2008. This sent the earnings of Russian companies, entirely dependent on energy prices, down 13%, which was much deeper than anywhere in Europe.
However, Russian companies reacted promptly. Mining giant Norilsk Nickel cut costs by nearly 30% within one year. Its former 87,969 staff was reduced by 4,048. Yet, the world's largest producer of nickel and palladium showed a net profit of 2.65 billion euros in 2009, after a loss of 555 million euros the year before.
On the downside, the total number of people employed by the 30 Russian companies surveyed by Handelsblatt decreased by 111,705, or 5.5%, while European companies cut personnel by an average of 2.7%. On the other hand, following a Soviet era tradition, state-controlled companies in Russia still have much more employees than their Western rivals. Gazprom, for example, employs more people than BP and Royal Dutch Shell taken together.
On the whole, while the International Monetary Fund and the world's leading banks predict a significant economic growth of at least 4% in Russia in 2010, Europe can only expect a minor revival of slightly over 1%. As for the financially weaker European countries, including Greece, Spain and Ireland, they may be facing a new recession.
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