Kommersant
Peaceful atom ready for war
A new conflict is emerging in already strained relations between Russia and Belarus. Minsk has officially announced its refusal to set up a joint venture with Russia's Inter RAO energy company to sell electricity from a future Belarusian nuclear power plant. As a result, the signing of an intergovernmental agreement on construction and the beginning of project implementation are being postponed indefinitely. But Minsk has an alternative: China's participation in the project.
Minsk refuses to set up a joint venture with Russia to sell electricity from a planned Belarusian nuclear power plant (2.4 GW), Belarusian Deputy Prime Minister Vladimir Semashko said on Wednesday. He said an intergovernmental agreement on construction was nevertheless near signing. Russia made the joint venture a must condition for the agreement. The venture was expected to supply electricity inside Belarus and export it to other countries, including Lithuania, which in 2010 closed its Ignalina nuclear power plant.
Rosatom, the Russian Federal Atomic Energy Agency, did not comment on Semashko's words on Wednesday. Inter RAO said the refusal came as a surprise. A company spokesperson said that Belarus had until recently been willing to set up the venture, and reasons why Belarus changed its position are unknown to Inter RAO. But now the whole system of agreements is to undergo a fundamental change.
In March, a Russian-Belarusian joint venture was called one of the ways of repaying a loan which Moscow was going to grant Minsk for the construction of the nuclear plant. The amount required varied, according to unofficial figures, from 5 billion euros (the sum Russia offered for the construction of the plant) to 9 billion euros (according to Belarusian estimates, which included infrastructure and accommodation for builders).
But now two Kommersant sources familiar with the situation say that it is Inter RAO that needs the venture to advance into Belarusian and Baltic markets. Earlier the energy company planned to supply up to 6.5 billion kWh to the Baltic countries, and up to 5.5 billion kWh to Belarus. But energy transit via Belarus and its deliveries to the country have stopped since the beginning of the year. Minsk explains this by repairs to power transmission lines. A distribution joint venture is important for Inter RAO, agrees Sergei Beiden, a senior analyst at Metropol Investment Financial Company. He says that it is strategically important to control the reroutings of electricity between the Baltic countries, Belarus and the Kaliningrad Region.
The refusal by Minsk to set up a joint venture with Russia to sell nuclear power, which has so puzzled Moscow, may be due to the straining of political relations between the two countries in recent months.
Vedomosti
Last inflation record
Inflation in Russia dropped to an all-time 12 month low in July at 5.5%. However, these record rates are unlikely to continue because of food price increases due to drought since last month.
Consumer prices increased 0.4% in July, just as in June, according to the Russian state statistics service, with prices growing 4.8% from the beginning of the year. For the past twelve months the inflation rate fell to an all-time low of 5.5%.
This record is most likely to be the last one. Since the beginning of this year, price growth rates have been decreasing relative to the same period last year, but partly because inflation was null in August through October, 2009, something which is unlikely this year due to the drought, Maria Kataranova of the Economic Expert Group says. The main question now is how fast prices for agricultural products will grow, speculates Oksana Osipova of the Development Center at the Higher School of Economics. Since the beginning of the year, these prices have already surged 11.7% (against 8% over 2009) and if the increases reach 15%, which is possible, the overall consumer prices index may exceed the 8.8% of last year and climb to 9% or 9.3%, Osipova believes.
According to Alfa Bank, following a 30% increase in global grain prices in July, the annual inflation in Russia could reach 7.5%. But these estimates do not include possible increases in milk and meat prices resulting from higher prices on forage. "An annual inflation rate of even 7.5% currently sounds optimistic," the bank's analysts say. This year's official forecasts for inflation are 6% to 7%.
Over the past week, from July 27 to August 2, the prices of buckwheat, flour and butter have been rising at rates which were growing two to six times. White bread has become 0.7% more expensive since the beginning of the year, with the past week accounting for 0.2 of a percentage point in the increase.
The worst surprise is still to come in the autumn, Vladimir Tikhomirov of Uralsib predicts. Increasing imports will push prices up. This record-low inflation growth rate was possible because of the financial downturn, which slowed demand, but inflation's key causes, including monopolized markets and the Russian economy's low competitiveness, have not disappeared, Tikhomirov says. The situation of 2006 and 2007 could be repeated, when inflation surged from 9% to 11.9% due to an increase in world food prices.
It is too early to perceive this increase in inflation growth negatively because this scenario is typical of an economic recovery, Maria Kataranova says. The main risk now is an expectation of inflation, which will only spread to other sectors. In 2006 and 2007 other countries faced different consequences in similar situations, Kataranova recalls. In developed markets it was only food prices that surged while in Russia the price shock spread to non-food sectors.
Izvestia
Ruble unlikely to rise to pre-crisis level
The recent plunge of the U.S. dollar below 30 rubles has generated a host of speculations. Could it be a new trend on the foreign exchange market? Oil prices remain high enough, and Russia is getting a substantial petrodollar income - a situation very similar to pre-crisis trends, when the U.S. currency was in a steady decline against the ruble.
Still, despite the similarities, the current situation is quite different. Oil and gas prices are not as high as pre-2008 levels, as the global economy simply cannot afford it. Therefore, no dramatic changes should be expected on the foreign exchange market. Analysts surveyed by Finansovye Izvestia maintain that the dollar is likely to keep fluctuating at the 27-29-ruble level.
The current oil prices, although quite high compared with last year's average, are very unstable. Andrei Polishchuk, an analyst with BrokerCreditService, said oil is unlikely to remain at the $82 per bbl level long. Oil futures growth was largely provoked by the dollar's weakening, and the speculator-induced growth could end at any moment. U.S. reserves may begin to grow again once the automobile sales season is over. This means oil prices could settle at the $77-$80 range.
Timur Khairullin, deputy director of the analytical department at the Grandis Capital brokerage, is also confident that oil prices will not increase much more. In his words, today's price is higher than the present-day economy can afford. Buying oil at $83 per barrel, the world will have to spend nearly $2.5 trillion a year, or over 4% of the global GDP ($60 trillion). Oil accounts for about 3% of GDP on average; it has exceeded 4% on only seven occasions over the past 30 years. Consequently, a correction to $74 per barrel should be expected on the oil markets to harmonize this spending and bring the oil to GDP ratio in line at about 3.5%.
Based on the above, Russia will not gain super oil profits, meaning the ruble will not appreciate further and the dollar will not fall below 27-28 rubles. In other words, oil prices are unlikely to rise above $82-$83, and the ruble is dependent on that.
The ruble exchange rate depends on other factors as well, including international investor sentiments. Many countries, including Europe, still have uncertainties about their debts, and the prices of gold and other precious metals remain high. As for Russian assets, foreign investors have always viewed them as a high-risk investment. A massive inflow or outflow of foreign investment can also affect the ruble.
Nezavisimaya Gazeta
Moscow defends Belgrade in UN Security Council
Russian and British diplomats clashed over the future of Kosovo during a regular meeting of the UN Security Council on the break-away Serbian province. Russia's permanent representative to the UN Vitaly Churkin said that Moscow would continue backing Serbia and would block the self-proclaimed republic's membership in the United Nations.
The sharp exchange began with the UK deputy permanent representative to the UN Philip Parham reproaching Serbian Foreign Minister Vuk Jeremic for voicing Belgrade's commitment to finding a mutually acceptable solution to all outstanding issues through peaceful dialogue.
Parham flatly rejected the possibility of restarting the negotiations on Kosovo's status or its boundaries. He said that if Belgrade goes down this path, it will face a showdown with those nations that have already recognized Kosovo's independence. The UK will firmly resist such attempts, the British diplomat added.
Experts point out that this was one of the most strongly worded statements on Kosovo to date made by western diplomats. Kosovo Albanians proclaimed their independence on February 17, 2008 with the support of the United States and several EU countries. Kosovo's independence has been recognized by 69 out of 192 UN member-states.
Russia's permanent representative to the UN was quick to respond to Parham's sharp words. He questioned the British diplomat's authority to speak on behalf of all those nations and expressed hope that most of them had moderate and balanced approaches to the issue and would not oppose Pristina's dialogue with Belgrade, which is the only right decision.
Meanwhile, Pristina continues to flatly reject such a dialogue. Kosovo's Albanian government welcomed the non-binding decision by the International Court of Justice (ICJ) in The Hague, which ruled on July 22 that Kosovo's declaration of independence did not violate the international law. Pristina looks forward to more countries recognizing its independence, something it was promised by Washington and which will help it to secure a majority vote in the UN General Assembly.
Kosovo interpreted the ICJ decision as recognition of its independence and sovereignty. Based on this understanding, Pristina has intensified its diplomatic efforts in the UN. Thus, Kosovo's foreign minister Skender Hyseni has asked the UN Secretary-General to cancel the Security Council Resolution 1244, adopted in 1999. The resolution reaffirms Serbia's territorial integrity and authorizes the UN Mission in Kosovo (UNMIK) to exercise the supreme power in the province.
Vitaly Churkin strongly rejected the Kosovo Albanians' claims. As a permanent member of the UN Security Council, Russia has the power of veto. Churkin made it clear that Moscow would ensure that Resolution 1244 is not be replaced by any other document and that Kosovo is denied a UN membership.
RBC Daily
Government commission approves foreign deals worth one billion dollars
On Wednesday, Government Commission on Monitoring Foreign Investments gave the go-ahead to seven major deals totaling 1 billion dollars, Igor Artemyev, head of the Federal Antimonopoly Service (FAS), said at the end of the meeting. Artemyev explained the success by the economy's emergence from the crisis.
Wednesday's meeting of the government commission in Novo-Ogarevo began and ended on optimistic notes. In his opening remarks, Prime Minister Vladimir Putin said that foreign direct investment in Russian economy amounted to $21 billion in the first six months of 2010. "This year's investment indices have been quite good," he said. In 2009, according to Rosstat, the state statistics service, foreign investment in Russia fell by 21%, down to $81.9 billion, and foreign direct investment, by 41.1%, or down to $15.9 billion. The prime minister said that capital investment in June 2010 was 7.4% higher than a year earlier. These facts show that business is picking up old projects and launching new ones.
At the end of the meeting, Artemyev said that the negotiations on most of the projects had been going on for a long time. And it is only now that investors decided to return to their plans. In particular, France's Danone has been granted permission to purchase Unimilk, one of Russia's dairy market leaders. Danone's investment in the next five to seven years is estimated at 15 billion rubles. The Coca-Cola Company will acquire a 100% stake in Nidan-Soki. The amount of investment is not being disclosed, but, as the FAS head supposes, it will run into hundreds of billions of dollars.
The largest of the approved plans is for Canadian gold miner Kinross Gold Corp to buy two goldfields on the Chukotka Peninsula. "Kinross Gold is acquiring a 100% stake in an offshore controlled by Severnoye Zoloto Company and Regionruda, both of which own goldfields in Chukotka," Artemyev said. He said the deal will amount to $365 million.
Two infrastructure projects were also approved. Fraport AG, the owner and operator of Frankfurt Airport, will become a co-investor in St. Petersburg's Pulkovo Airport. It is an investment of hundreds of millions of dollars. As was earlier reported, the Northern Capital Gateway consortium, which includes VTB Kapital, German airport operator Fraport AG and the Greek investment financial Kopelousos Group, will invest 1.2 billion euros in Pulkovo modernization through 2013. Next to Pulkovo-1 terminal, catering to domestic flights, a new terminal will be built in place of Pulkovo-2, which will be phased out of operation. Bulgarian investors are prepared to invest in Kazan International Airport in Tatarstan. That project will also entail an investment of several hundred millions of dollars.
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MOSCOW, August 5 (RIA Novosti)
