Russian Press - Behind the Headlines, August 25

© Alex StefflerRussian Press - Behind the Headlines, August 25
Russian Press - Behind the Headlines, August 25 - Sputnik International
Election campaign period underway in Sochi / Russia attracts record foreign investment in January-June / Abkhazia to elect new president

Nezavisimaya Gazeta
Election campaign period underway in Sochi

Russian President Dmitry Medvedev will sign a decree on the December 4 State Duma elections and meet briefly with the official leaders of all Russia’s parties on Monday. The president will not only meet the people who lead the four parties with seats in the Duma – United Russia, the Communist Party, the Liberal Democratic Party and A Just Russia – but also the heads of the Right Cause, Yabloko and Patriots of Russia.

In other words, the president is putting all parties on an equal footing with one exception. The meeting with United Russia may actually take place ahead of the other meetings because it is rumored that United Russia’s head, Prime Minister Vladimir Putin, will represent the party at these meetings. Experts say that Medvedev's meeting with United Russia will be the most important of all the Sochi meetings since Medvedev's talks with the other parties’ leaders will take place as usual behind closed doors.

The Communists as usual will present a “big package” to the president. Party Secretary Sergei Obukhov said that the “critical situation” in science and education would be on the agenda, as would the upcoming election itself. Obukhov said that only 30% of the Communists’ election-related proposals have been implemented, even though the president verbally approved many initiatives. For example, a bill to mandate that all ballot boxes be transparent has been upheld in the State Duma.

The A Just Russia party has also prepared a few key issues for the president, a party source said, without elaborating. Nevertheless, the source emphasized that social problems were the party’s priority.

United Russia did not divulge any details regarding the upcoming talks, but the non-parliamentary parties were slightly more talkative. The Right Cause party's spokesman Alexei Urazov asked for a telephone request to share Mikhail Prokhorov's plans for the Sochi trip to be put in writing in an e-mail. Yabloko leader Sergei Mitrokhin said he would ask the president about issues the party raised at the previous meeting in early June. Among these is the anti-corruption campaign. Opposition leaders have not been included in the presidential council on that issue.

Mitrokhin also promised to raise Russia's economic problems and since the meeting will be in Sochi, he said that time allowing he would mention environmental problems on the Black Sea coast and criticize the elections over the “grossly reactionary, and even feudal electoral system.”

Nadezhda Korneyeva, deputy head of Patriots of Russia, also suggested that the talks with party leader Gennady Semigin would focus on electoral issues – particularly the excessive bureaucratization of political processes. For example, notarization of election documents is proving a major problem because notaries generally refuse to do it. The number of criteria that petition signatures need to meet in order to be recognized has grown from 12 to 14. And in some regions, non-parliamentary parties are required as many signatures as on a nationwide level.

Russia attracts record foreign investment in January-June

Russia’s statistics service, Rosstat, registered a record foreign capital inflow for the first six months of the year: $87.7 billion. Half of that came into Russia as Swiss loans, only to be returned within this six month period.

Foreign investment in Russia shot up in the first half of this year, exceeding even the 2007 peak of $60.4 billion. Russian companies invested $67.2 billion abroad.

However, these statistics do not give a true picture of investment activity because half of the total inflow, $44.4 billion, was invested in the financial sector, while Russian financial companies invested $44.5 billion abroad. The financial sector involves companies providing financial services but Rosstat’s investment analysis does not include banks.

These funds mainly came from Switzerland ($42.9 billion), as short term loans rather than as direct or portfolio investment.
Russia’s financial services sector has never been a leader in foreign investment, accounting for just $1.3 billion in the first half of 2010, or 4% of all investments, and less than 4% of accumulated investment.

Rosstat head Alexander Surinov declined to comment on these unusual statistics, which also seemed to baffle the financiers Vedomosti asked for an explanation.

One financial director at a large bank said neither Swiss units of Russian groups nor their Swiss counterparts have shown any unusual activity, and no bank turnover peaks were recorded over this period. These statistics could show growing investor interest in the Swiss franc, another banking source said.

This figure accounts for 13% of Russian companies’ total foreign debt as of July 1 and is too large for a single transaction, said Oleg Solntsev from the Center for Macroeconomic Analysis and Short-Term Forecasting. This could indicate intensive market speculation, but this behavior is more characteristic of banks than financial companies, said Sergei Aleksashenko from the Higher School of Economics. “When money comes and goes, it looks like some scheme is underway. It looks like someone has used Russia’s economy as a laundromat – injecting illegal capital into its financial system to launder it. Could it be drug dealers?” he said.

It looks like one or more transactions by a large company, possibly in the oil sector, as they have all the money, said Troika Dialog economist Yevgeny Gavrilenkov. Rosneft and BP did plan to buy the AAR consortium out of TNK-BP for $32 billion, but the deal never came through.

The statistics picture looks similar for the first quarter. It is possible that they simply transferred funds between different legal entities to clean up their balances. “It looks like there was no real cash flow here. Possibly, someone just needed to close down one offshore company and boost another one,” Solntsev said. Many Russian companies are registered in offshore zones, so this kind of statistics effect is completely unrelated to investment. 

Abkhazia to elect new president

On Friday, Abkhazia will go to the polls to elect a new president. Voting processes promise to be fair, competitive and peaceful. At least all candidates said they would not use smear campaigns. But the reality proved otherwise: Alexander Ankvab, one of the candidates, was accused of conspiring with Tbilisi during the Georgian-Abkhazian war of 1992.

Three men are contesting the post: Vice-President Alexander Ankvab, Prime Minister Sergei Shamba and opposition leader Raul Khadzhimba. When the election campaign got off the ground, the candidates signed a fair vote charter, pledging not to use smear campaigns.

“The election campaign rolled along quietly until a Russian newspaper ran an interview with Georgia’s former defense minister Tengiz Kitovani,” says Manana Burgulia, head of the Apsny-Press news agency.

“Kitovani charged Ankvab with acting hand in glove with the Georgian authorities. Someone brought the recorded interview to Sukhumi, where a rally was held in the city park and Shamba’s supporters spoke. Later Shamba said he had no hand in the affair, but the damage was done: the interview hit not only Ankvab but also Shamba.”

Many view the interview’s publication as a watershed moment, ending that period of fair play. “The fact that the footage was shown has effectively played into Ankvab’s hands,” says Irakly Knitba, a political analyst. “The Georgian card which is played at every election is losing its appeal. People are tired of it. The general public wants fair elections.”

“Shamba lost a great deal in protesting that he was not behind the Kitovani scandal,” agrees Burgulia. She also believes that Ankvab lost some support in the affair.

The candidates’ election programs are virtually identical. They all advocate combating corruption, improving living standards and making friends with Russia.

“No wonder someone needed the Kitovani interview to make the voters’ choice easier given the similarity between their programs,” says expert Inal Khashig.

The expert believes each candidate has shaped his own image and that it is this image that will decide the final choice of voters: in Abkhazia people vote for personalities, not programs.

“Ankvab looks like someone who will deal robustly with graft and put bribe-takers behind bars,” explains Khashig.

Shamba’s campaign is more visual. He won the support of Shamil Adzynba, a war hero and youth leader. Adzynba brought several youth groups to Shamba’s headquarters. Young people seldom vote, so this group of electors may play an important role in the outcome.

Raul Khadzhimba may yet prove a dark horse. Though he has lost all previous ballots, he has not only put himself forward as a candidate, but also offered the post of vice-president to Svetlana Dzhergenia, the widow of Abkhazia’s first president.

“Raul Khadzhimba played brilliantly,” Knitba admits. “He was the one who proposed the fair vote charter and, when the Kitovani interview went public, stopped his supporters from going to the anti-Ankvab rally. This earned him more kudos,” Inal Khashig believes.

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