Russian Press - Behind the Headlines, September 9

© Alex StefflerRussian Press - Behind the Headlines, September 9
Russian Press - Behind the Headlines, September 9 - Sputnik International
Russia balances budget by upgrading 2012 oil price forecast to $100 / Terror alert in the United States / Russian cruiser Azov kept out of Azov


Russia balances budget by raising 2012 oil price forecast to $100

Russia’s Ministry of Finance has completed its 2012-2014 budget revision, raising the projected oil price to $100 per barrel. The government can now pay for all its pre-election vows.

In June, the ministry made all of its budget estimates based on oil priced at $93. In fact the lower forecast was used as an excuse to include such unpopular budgetary measures as a sharp rise in alcohol and tobacco excise taxes and a new set of requirements for corporate social security contributions last summer.

A modest rise in the projected oil price for 2012 would have made it closer to the effective 2011 level and enabled the Finance Ministry to adjust federal revenues and expenditures without changing the 2.7% estimate for the budget deficit made this summer, a level quite acceptable even by pre-crisis EU standards. However, the ministry preferred to use the opportunity to cut the planned budget deficit instead.

Deputy Minister Tatyana Nesterenko said the new estimate has increased federal revenue to 11.8 trillion rubles ($400 billion) in 2012 while projected federal expenditures will grow by a far smaller margin, to 12.7 trillion rubles ($430.5 billion). The ministry also decided to cut the 2012 budget deficit by half, to 1.5%. As a result, the average projected oil price that would enable Russia’s budget to be balanced has declined to $116.2/bbl from July’s level of $124.6.

The ministry’s latest estimates are obviously a compromise to suit all the agencies involved in budgeting. When Minister Alexei Kudrin started working on the draft budget in May 2011, he began by proposing that President Dmitry Medvedev and his government go back on some of their pre-election promises, including budget cuts totaling 500 billion rubles. However, his latest estimates indicate that the Finance Ministry no longer has to turn down the president’s financing requests.

Although the ministry has yet to publish details of its spending plans, no special interests will be able to benefit from the additional revenue, because the government is scheduled to approve the final version of the budget on September 20.

The adjusted budget will also be more stable in case the $100/bbl forecast proves unrealistic, as Kudrin had warned earlier. If the price falls to $90, the effective budget deficit will be around 3% if spending remains unchanged.

On the other hand, it remains vulnerable because the 2012-2014 draft budget was calculated assuming Russia will have a stable balance of payments. If the oil price falls fast enough, the balance of payments will deteriorate as well, which will immediately lead Russia’s industry to require more “budget support.”

Conceptually, the new budget is as dependent on the stable growth of oil prices in 2012-2013 as the previous - balanced - budgets of 2009-2010 were.

Rossiiskaya Gazeta

Terror alert in the United States

U.S. authorities said Thursday they received “specific, credible but unconfirmed” information about a terror threat timed to coincide with the 10th anniversary of the September 11 attacks in the United States.

A high-ranking White House official told the media that New York and Washington were the potential targets.

Counterterrorism officials spent the night assessing the threat, which came to light late on Wednesday, the Associated Press said.

President Barack Obama “was briefed on this specific threat information this morning and has been updated on it throughout the day,” a White House official said. The president is scheduled to mark the 9/11 anniversary with a stop at New York's Ground Zero. Defense Secretary Leon Panetta and other officials are to attend the commemoration ceremony at the Pentagon in Washington.

“The United States government has already significantly enhanced its security posture in advance of the 9/11 anniversary to protect the country against possible terrorist threats,” a White House official said, adding that the president “directed the counter-terrorism community to redouble its efforts in response to this credible but unconfirmed information.”

Congress has been notified of the possible terrorist attack and about the administration’s serious concern in this regard.

The Department of Homeland Security said they suspect that three individuals - including one who is thought to be a U.S. citizen - had entered the United States in August intending to stage an attack on the 10th anniversary of the attacks on the World Trade Center towers in New York and the Pentagon in Arlington, Virginia.

Although the attack plans have not been fully investigated yet, the threat is believed to involve vehicle bombs.

Homeland Security Secretary Janet Napolitano earlier said that her department will be at a heightened level of readiness as the nation commemorates the anniversary, “staffing up” federal air marshals and other agencies. “We know it's an iconic day to al Qaeda, in part because of what was found at the [Osama bin Laden] compound. So we are preparing accordingly,” she said.

Since 2001, al Qaeda has tried to stage several terrorist attacks in the United States. The biggest of them was a car bomb in Times Square in New York, which a naturalized U.S. citizen from Pakistan, Faisal Shahzad, tried to detonate in May 2010, and the failed attempt by would-be underwear bomber Umar Farouk Abdulmutallab, a Nigerian, on a flight to Detroit on Christmas Day 2009.

The bloodiest attack on U.S. soil, which involved an individual with no clear ties to terrorist organizations, was carried out by U.S. Army Major Nidal Hasan, who opened fire at the Fort Hood military base in November 2009, killing 13 people and wounding 29.

Russian cruiser Azov kept out of Azov

Ukraine denied permission for the Russian amphibious warfare ship Azov to pass through the Kerch Strait unless it paid pilotage fees for passing through disputed waters, even though such fees were abolished in recent years. A top-level source in Russia's Black Sea Fleet said that the incident was related to the gas conflict between Moscow and Kiev, and can serve as a pretext for resuming talks on the disputed waters near the island of Tuzla.

The large landing ship was denied clearance by the Kerch sea traffic management center, which unexpectedly filed a demand for pilotage fees. The Russian side rejected the demand and diverted to the Russian side of the channel, after which it continued on its course.

The ship was en route from Sevastopol to Azov to attend City Day celebrations there, the source said.

A new round of the Russian-Ukrainian dispute over gas deliveries began about a week ago. The Ukrainian Energy Ministry said that in 2015 the Ukrainian government plans to reduce purchases of gas from the current 40 billion cubic meters to 12.5 billion cubic meters. In addition, Ukraine has declared it would liquidate Naftogaz and all of its agreements will be reviewed. The Ukrainian side finds the price formula for gas unacceptable.

Konstantin Zatulin, a State Duma deputy from the Committee for CIS Affairs and Relations with Compatriots, said that in the 1990s, Ukraine, believing that the waters of the channel of the Kerch Strait are theirs, began charging Russian vessels customs duties for passage through it. In recent years, when the waters were recognized as disputed, the fee was waived.

The island of Tuzla plays an important role in the territorial dispute between Russia and Ukraine over the ownership of the Kerch Strait. Zatulin said that 19th-century maps clearly show that Tuzla has historically been a Russian peninsula adjacent to the Taman Peninsula. In the late 19th century, a canal was dug between Tuzla and the Taman peninsula, which later became a large conduit for ship traffic and Tuzla became a Russian island.

Later, in the 1940s, in the Soviet era, Tuzla was transferred from one party executive committee subordinate to the Krasnodar Regional Party Committee to another subordinate to the Crimean authorities. This was done due to the underdeveloped infrastructure of the Krasnodar Territory and the difficulties in delivering voter ballots to island residents - it was easier to deliver ballots by sea through Kerch than from Krasnodar. Later, the Crimea became part of Ukraine and Tuzla became Ukrainian territory, but Russia considers it disputed.

Zatulin believes that tying gas and territorial conflicts together does not play into the hands of either Russia or Ukraine. He said that the main consequence of the incident should be a resumption of talks on disputed waters of the Kerch Strait and the island of Tuzla.

RIA Novosti is not responsible for the content of outside sources.

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