Izvestia
Motorists rejoice as international commodity exchanges plummet
Russia’s key source of income, oil exports, is threatened by plummeting crude prices. This means that the country’s budget may be facing a deficit but motorists’ hopes for cheaper gasoline have revived.
This downward trend will not impact Russia’s budget with its burden of social spending for several months, until long-term oil contracts have been fulfilled. Crude markets collapsed on Monday as the OPEC basket (a weighted average of prices for petroleum blends produced by OPEC countries) dropped by $1.11 per bbl and Light Sweet futures plunged by $2.28, also pushing Russian exchanges down.
Analysts explain this trend by continued uncertainty in the Middle East and North Africa as well as by speculative trades.
“Prices were inflated,” said former Russian Economics Minister Andrei Nechayev. “Now we’ve seen a correction. But there is another reason too: there are expectations of shrinking oil demand in China due to an economic slowdown.”
Oleg Abelev from the Ricom Trust brokerage said profiteers are moving into metals, expecting a surge in demand from Japan’s recovering economy and hedging oil risks arising from the growing U.S. oil and gasoline stockpiles.
This is bad news for the Russian budget. “The government has taken on a load of social obligations,” Nechayev said. They cannot cut social spending this close to the elections.
“That would be downright dangerous, given the Communists’ growing popularity,” said Sergei Smirnov from the Higher School of Economics. “Freezing pensions now they would as good as hand 35 million pensioners’ votes to the KPRF.”
The government could cut inefficient administrative spending and unprofitable investment instead of social programs, he added. It would also be a good idea to tighten rules for awarding social benefits. Finally, there are pro-active steps such as raising the retirement age.
On the upside, there is a chance that gasoline prices will fall. Yet, Grigory Sergiyenko, executive director of the Russian Fuel Union, is less optimistic. Oil export tax will rise on June 1, making exports unprofitable. Oil companies might try to compensate for the resulting income shortfall by hiking domestic prices, he explained.
All the above makes it more crucial than ever to seek ways to reduce the Russian economy’s dependence on oil and gas. Experts reworking the Strategy-2020 have suggested gradually cancelling oil export duties by 2017, a measure that would strip the budget but at the same time reduce its volatility. At this stage, non-oil revenues are unimpressive, but there is still time before 2017.
Moskovsky Komsomolets
St. Petersburg upper house speaker could lose authority today
A hearing on Sergei Mironov has been set in the St. Petersburg legislature for May 18. Mironov, the upper house speaker arrived in the city the previous day, to deliver a lecture on minerals at the Mining Institute.
Since this issue was not added to the legislature’s agenda ahead of time, the deputies will need 26 votes to do so today. The United Russia party has 23 seats in the 50-seat legislature, A Just Russia 13, the Communists 9 and the Liberal Democratic Party 5. The vote on Mironov will be held by secret ballot.
Mironov has come under attack over his recent calls for the resignation of St. Petersburg Governor Valentina Matviyenko and his description of St. Petersburg as one of the most corrupt cities in Russia.
United Russia, which called on Mironov to resign, has pushed itself into a corner. Polls held in St. Petersburg show that 80% of the respondents see this as punishment for voicing a dissenting opinion. Nearly 70% say they have no sympathy for the speaker but are sure his revocation would strengthen the political monopoly.
St. Petersburg residents are dissatisfied with the current party system in Russia; United Russia’s ratings in the city have plunged to 12% and the ratings of other parties are even lower.
Parties usually hold separate meetings before voting on serious issues, but not this time. Vladimir Zuikov’s team said their party, the KPRF, will likely not take part in the Mironov vote because it had no time to discuss its position. “This is a game between United Russia and A Just Russia; let them play it,” they said.
The Liberal Democratic Party always supports Untied Russia. In this case they have been instructed to vote for Mironov’s revocation no matter what arguments he may use. The only thing that can save him now is new instructions cancelling the previous order, which happens only rarely.
If the Liberal Democratic Party supports United Russia, Mironov’s authority will most likely be terminated. The worst part is that six members of A Just Russia who have left the party in the past few years may now support United Russia.
But the remaining party members remain loyal to Mironov.
Oleg Nilov, head of A Just Russia in St Petersburg’s legislature, said: “If the question of Mironov’s revocation is put on the agenda, United Russia … will have to admit that it persecutes people just for being members of other parties. This will turn it into a monster, at least in St. Petersburg, and Mironov into a martyr. As a result, we will certainly win the December elections to the municipal legislature.”
Nilov believes United Russia could avoid damage by not adding the Mironov issue to the agenda and could later absolve itself by shifting the blame to Vadim Tyulpanov, head of the St. Petersburg legislature.
Nezavisimaya Gazeta
Polar defense: Russia expands Arctic deployment
Colonel General Alexander Postnikov, the commander of Russia's Ground Forces, visited the Western Military District’s Polar garrisons yesterday. The purpose of his three-day trip was “to work through issues related to the formation of the Arctic brigades,” Defense Ministry spokesman Lieutenant Colonel Sergei Vlasov said.
“We decided to form the first large unit for action in the Arctic base at the 200th Motorized Infantry Brigade stationed in Pechenga,” Vlasov said. “So far, we have made only preliminary plans for the upcoming reforms.”
The deployment is scheduled based on the Security Council’s “Russian Principles of State Policy in the Arctic Until 2020 and Beyond.”
The brigade that has been deployed in the Arctic for decades is a natural base for creating the first such large unit. The 200th Motorized Infantry Brigade originated from the 45th Division, formed in 1943.
The unit liberated Petsamo (Pechenga) and the Norwegian town of Kirkenes. Later, it became the Order of Kutuzov 131st Motorized Rifle Second-Degree Division, and almost 15 years ago it was converted into a separate motorized rifle brigade.
The brigade has gained immense service experience in the Arctic, but has also inherited quite a few problems. Topping this list are the brigade’s extremely outdated equipment and weapons.
Most of its vehicles are over 30 years old and the unit expends considerable effort just to keep them in working condition. The unit would be better served to replace these vehicles with new ones, as the models used are long obsolete, but no replacements for them have been found.
The unit's personnel have not heard yet that their equipment may soon get a radical upgrade. The unit’s field camps are equipped with antiquated, faded tents heated by stoves and augmented with all manner of handmade welded-metal additions.
The fact that Russia’s military industry produces excellent field camps on a turnkey basis is not common knowledge. The unit's personnel were also unaware that the Defense Ministry has purchased a field camp made by the German company Karcher Futuretech GmbH, and it seems it would be better if they did not know at all. It was used by NATO forces in Afghanistan and is not intended for temperatures below minus 17 degrees Celsius. Yet, the Defense Ministry is aggressively pushing the idea of equipping all units and formations of the armed forces with such equipment.
For now, the Defense Ministry has only described the military re-equipment of the brigade in general terms. The units delegated for operation in the Far North will be equipped with all-terrain vehicles. The personnel will be trained in special programs and equipped with appropriate equipment and modern communications technology. Some units in each brigade will be made airmobile. The Arctic brigade in Pechenga will deploy in 2011.
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