Russia - WikiLeaks
Russia 100611
Basic Political Developments
• RIA: Newly elected Japanese PM set to improve relations with Russia - "I will actively work to solve the main problem [in Russian-Japanese relations] - the territorial dispute and signing of a peace agreement [with Russia]," Kan said during his keynote speech to the Japanese parliament.
• RIA: Medvedev to discuss missile defense during U.S. visit - "This [the U.S. missile defense plans in Europe] will be one of the topics for discussion; we have high expectations of this summit," Sergei Lavrov said in an interview with Russia's Kommersant daily.
• Xinhua: Russia to abide by UN resolution over S-300 supplies to Iran - Russia will adhere "strictly" to the resolution by UN Security Council over the delivery of S-300 air defense systems to Iran, said Deputy Foreign Minister Sergei Ryabkov Friday.
• RIA: Russia calls on Israel to join non-proliferation treaty - "We are convinced that this [Israel's joining the NPT] will contribute to strengthening the non-proliferation regime of nuclear weapons and to creating a zone free of weapons of mass destruction and delivery vehicles in the Middle East, enhancing peace and stability in the region and worldwide," Russia's envoy to the IAEA, Grigory Berdennikov, said.
• RIA: Russian-Iranian S-300 missile deal not against UN resolution — U.S.
• RIA: Russia not to abolish visas for EU citizens unilaterally – Lavrov: "We prefer to be guided by the principle of reciprocity in international relations," Lavrov said in an interview with Russian business daily Kommersant, which was published on Friday.
• PUTIN IN FRANCE
o VOR: Vladimir Putin to meet Nicolas Sarkozy and Jacques Chirac in Paris
o RFE/RL: Putin Meeting French Leadership - Putin's talks with the French leadership were expected to focus on cooperation in the energy, space and aviation sectors, as well as efforts by Moscow to acquire a French Mistral-class assault ship containing sophisticated technology.
o AP: France should press Putin on rights - Amnesty International says France should not only be looking at its pocketbook while Putin is in town, but also raising concerns about abuse of those who criticize authorities in Russia, notably in and around Chechnya.
o VOR: Putin, Fillon meet in Paris
o AFP: Putin visits France amid warship row
o Itar-Tass: Putin to open in Paris Russia national exhibition
o Bloomberg: Russian $12 Billion European Arms Spree May Benefit DCNS, Iveco
• RBC: Russian, Belarusian leaders to discuss Customs Union's functioning
• Itar-Tass: Medvedev, Lukashenko to discuss Customs Union, bilateral issues - During his stay in Moscow Lukashenko is also planned to meet with Russian Prime Minister Vladimir Putin and visit the All-Russian Research Institute of Electromechanics with the A.G. Iosifyan Plant where the work on the creation of a Belarusian satellite for the Earth’s remote sensing is coming to an end. It is planned to launch the satellite simultaneously with the Russian satellites Canopus-V by the Soyuz-FG rocket carrier. The two satellites will form the base of the Russian-Belarusian space group for the Earth’s remote sensing.
• Charter97: Kremlin: Lukashenka won't get cheap gas - Before Lukashenka's meeting with Medvdedev, sources in the Kremlin told to Russian media that Belarus must pay debts for gas.
• Telegraf.by: Gazprom Does Not Need Beltransgaz on Account of Belarus' Debt, the Kremlin - On the eve of Dmitry Medvedev and his Belarusian counterpart, Alexander Lukashenko, meeting, sources in the Russian presidential administration stated that Belarus should pay the debt for gas in the amount of 192.3 million dollars and pay for its supply at current prices. Gazprom does not intend to acquire a controlling stake of Beltransgaz on the account of debt payment, stressed in the Kremlin.
• SCO SUMMIT
o VOR: SCO to send observers to Kyrgyzstan
o VOR: SCO summit gets under way in Tashkent
o AFP: Shanghai group meets for expansion without Ahmadinejad
o France24: Shanghai group set to deny membership to Iran
o Nezavisimaya/Russia Today: SCO sets a barrier for Ahmadinejad
o RIA: Russian, Kazakh leaders discuss customs union problems, cooperation
o Xinhua: Chinese president calls for enhancing ties with Russia, Tajikistan
o Daily Times: Zardari, Medvedev discuss bilateral ties, regional situation
o Russia Today: Russia to discuss security and war on drugs with Shanghai partners
• Barentsobserver: Fish industry skeptical to Barents delineation deal - The fish industry in Murmansk fears that the Russian-Norwegian deal on the delineation of the Barents Sea will deprive Russian fishermen of vital fishing grounds in the area.
• AFP: S.Korea, Russia probe rocket failure - South Korean and Russian experts launched an investigation Friday after the fiery failure of the Asian country's latest rocket launch, which some researchers blamed on inadequate testing.
• Itar-Tass: Two schooners flying Cambodia flag detained near Sakhalin
• Russia Today: Russian police find and destroy cop-killing gang
• Russia profile: Poppy Diplomacy - Russia Has Launched a Publicity Offensive to Bring Attention to the Threat of the Afghan Heroin Trade, but There’s a Long Way to Go to Consensus
• BBC: Russia's drive to improve its image - Russia, unhappy with its image abroad, has taken a fresh public relations approach to present a better view of itself and attract foreign investment.
• Bloomberg: Putin 'Trust' Rating Falls to Four-Year Low, Russian Poll Shows
• RIA: Public trust in Medvedev, Putin drops 10%
• VOR: Press review
o Today the printed media are focused on the ongoing summit of the Shanghai Cooperation Organization, or SCO, in Tashkent.
o According to the Izvestia daily, the United States supports Russia’s joining the World Trade Organization and is drafting proposals for Moscow’s joining the WTO.
o The Gazeta publication quotes the ITAR-TASS news agency as reporting that Russian Foreign Ministry spokesman Andrei Nesterenko has told journalists that the UN Security Council resolution on Iran does not apply to air-defence systems, with the exception of shoulder-fired missiles
o According to the Noviye Izvestia daily, a largest German-Russian festival has got under way in Berlin.
o The Moskovsky Komsomolets daily wonders what will prove the most striking difference of the world football championships, kicking off in South Africa, from the previous ones.
• Reuters: PRESS DIGEST - Russia - June 11
o Russia's Supreme Court has adopted a decree which effectively bans jailing people who commit economic crimes while running their own businesses, the daily says.
o Russia's gas monopoly Gazprom (GAZP.MM) has lowered its 2010 production plan by more that 10 billion cubic metres due to falling global demand for gas, the daily reports.
o The daily runs an interview with Russian Foreign Minister Sergei Lavrov on the upcoming meeting of Russian and U.S presidents.
o 100,000 university professors may lose their jobs by 2015 due to falling student numbers as a result of low birth rates in the 1990s, the paper writes.
o Fifty-three percent of Russians trust President Dmitry Medvedev and 61 percent trust Prime Minister Vladimir Putin, a fall of 7 percent and 6 percent, respectively, the paper reports, citing a poll by the Public Opinion Foundation.
o Russian Finance Minister Alexei Kudrin on Thursday criticized Moscow's Mayor Yuri Luzhkov for not maintaining the city's road network, the paper reports.
o Russian President Dmitry Medvedev plans to build a ski resort in the North Caucasus at a cost of 450 billion roubles ($14.26 billion) to increase the flow of tourists to the region by 5-10 million people per year, the daily says.
o Russian car maker Avtovaz (AVAZ.MM) will receive 10 billion roubles ($316.9 million) from the government to restructure its debt by the end of the year, the daily writes.
o The European Court of Human Rights in Strasbourg ruled that Russia has violated the rights of members of the Jehovah's Witnesses community in Moscow, the daily writes.
o Russia's gold and foreign currency reserves grew by 2.7 billion roubles ($85.55 million) to 458.2 billion ($14.52 billion) in a week from May 28 to June 4, the daily says.
o Around 3,000 Russian soldiers and officers died and 12,000 were injured during service in the North Caucasus since 1988, the paper writes.
National Economic Trends
• Reuters: Russian rouble up on oil, profit-taking caps gains
• Bloomberg: Russian Bank-Deposit Growth May Reach Record, Kommersant Says
• Moscow Times: Surprise Tax Inflows Prompt 3% Hike in Federal Spending
• Moscow Times: Russia to Drive Regional Recovery
• Bne: Russia the driver for Europe's economic recovery - Russia will play a key role in Europe's recovery as one of the few engines of growth on the continent in the near term, the World Bank said on June 10 in a report.
Business, Energy or Environmental regulations or discussions
• Bloomberg: Gazprom, Magnitogorsk, Rosneft, Severstal: Russia Stock Preview
• DJ: Russia Funds See Second Straight Week Of Inflows
• Bloomberg: Boeing May Help Russia Make Biggest Cargo Jet, Kommersant Says
• Interfax: MMK net profit down 57% to $94 mln in Q1
• Reuters: UPDATE 1-Russia's MMK beats Q1 profit forecasts
• Moscow Times: Kerimov May Finalize Outlines of Purchase in Uralkali
Activity in the Oil and Gas sector (including regulatory)
• News.az: Russia overtakes Saudi Arabia as world oil production leader
• Bne: Russia now world's leading oil producer - Russia has overtaken Saudi Arabia to become the world's biggest producer of oil, Kommersant reported on Thursday. However, at the same time, the country was toppled from its leading role in gas production.
• Moscow Times: Oil Tax Discount in Cards? - The government may impose a discounted tax rate on exports of east Siberian crude on July 1, while cutting the duty on crude oil exports as much as 16 percent after international oil prices declined.
• VTB Capital: Export duty for East Siberia fields in July might be USD 9.5/bbl
• Reuters: RPT-Med Crude-Urals quiet, seen topped out in Med - Urals NWE bid up to dated minus 75 cents, no interest; Urals MED unseen, said fair at dated minus 45 cents; Russian July monthly export duty projected to fall
• Oil and Gas Eurasia: Irkutsk Oil Company and Marubeni Ink Cooperation Memorandum
• Oil and Gas Eurasia: SIBUR Net Profits Rise 20.6 Percent on Asset Sales
• Oil and Gas Eurasia: TNK-BP Discovers New Oil Reservoir in Sorochinskneft Licensed Area
• Moscow News: Is Russia BP’s ace in the hole?
• FT: BP's Russian misadventure may be useful experience
Gazprom
• Reuters: UPDATE 2-Gazprom to sign South Stream deal with EDF next week
• Reuters: Gazprom, Naftogaz merger still being discussed-Azarov
• Barentsobserver: Gazprom to invest 14 billion RUB in production program
• FT: Gazprom resists pressure to alter its contracts
• Times: Gazprom boss joins calls for BP blowout inquiry
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Full Text Articles
Basic Political Developments
RIA: Newly elected Japanese PM set to improve relations with Russia
10:44 11/06/2010
Newly elected Japanese Prime-Minister Naoto Kan pledged on Friday to improve economic and political ties with Russia as well as settle territorial disputes.
"I will actively work to solve the main problem [in Russian-Japanese relations] - the territorial dispute and signing of a peace agreement [with Russia]," Kan said during his keynote speech to the Japanese parliament.
Tokyo's claims over the four islands off northeast Japan, which were annexed by the Soviet Union after World War II, have so far prevented Russia and Japan from signing a formal peace treaty to end World War II hostilities.
Kan's comments are taken almost directly form the keynote speech of his predecessor, Yukio Hatoyama, who resigned earlier in June, which shows his commitment to continue the foreign policy agenda of the previous government.
Hatoyama stepped down in early June following a series of scandals involving the misappropriation of political funds by high-ranking Japanese officials.
TOKYO, June 11 (RIA Novosti Novosti)
RIA: Medvedev to discuss missile defense during U.S. visit
10:41 11/06/2010
Russia President Dmitry Medvedev will discuss the controversial issue of missile defense with the U.S. leadership during his upcoming visit to the United States, the Russian foreign minister said.
Relations between Russia and the United States have warmed since Medvedev and his U.S. counterpart Barack Obama announced last year a new policy of resetting bilateral ties and overcoming Cold-war era set-backs.
Russian President Dmitry Medvedev plans to visit the United States in June to boost Russian-U.S. cooperation in various spheres, including trade and the high-tech industry.
"This [the U.S. missile defense plans in Europe] will be one of the topics for discussion; we have high expectations of this summit," Sergei Lavrov said in an interview with Russia's Kommersant daily.
"We have not yet agreed on this [missile defense] issue and we are trying to clarify how the agreements reached by the two presidents...correlate with the actions taken unilaterally by Washington," Lavrov said, adding that the Obama administration had not coordinated its missile defense plans with Russia.
Although Obama suspended last September plans by the Bush administration to deploy missile-defense elements in the Czech Republic and Poland, Washington has not given up on its European missile shield initiative.
The United States opened in May a temporary military base near the northern Polish town of Morag, 80 km (50 miles) from the border of Russia's Baltic exclave of Kaliningrad, in accordance with an agreement negotiated under former President George Bush in 2008.
U.S. troops will be deployed to train Polish forces at the site until 2012, when the base is expected to become permanent. Moscow has expressed concern over the base's proximity to the Russian border and suggested that it be moved to a different location.
The Russian Foreign Ministry said on Wednesday that the deployment did not enhance regional security and cooperation.
The United States is also in talks with Bulgaria and Romania on deploying elements of the U.S. missile shield on their territories from 2015.
Russia believes the deployment of anti-missile weapons near its borders undermines the existing balance of forces and threatens its national security.
MOSCOW, June 11 (RIA Novosti)
Xinhua: Russia to abide by UN resolution over S-300 supplies to Iran
2010-06-11 15:17:29
MOSCOW, June 11 (Xinhua) -- Russia will adhere "strictly" to the resolution by UN Security Council over the delivery of S-300 air defense systems to Iran, said Deputy Foreign Minister Sergei Ryabkov Friday.
"In the S-300 issue, as well as in all other aspects that proceed from this decision taken by the UN Security Council we will adhere strictly and unequivocally to the criteria and demands set in the resolution," the Russian diplomat said as quoted by the Itar-Tass news agency.
|Editor: Fang Yang |
RIA: Russia calls on Israel to join non-proliferation treaty
06:28 11/06/2010
Russia joined international calls for Israel to join the Nuclear Nonproliferation Treaty and allow the International Atomic Energy Agency (IAEA) to inspect its nuclear facilities.
The IAEA governing board, which convened on Thursday, was the first such event since 1991 where the issue of Israel's alleged possession of nuclear weapons was put into spotlight.
"We are convinced that this [Israel's joining the NPT] will contribute to strengthening the non-proliferation regime of nuclear weapons and to creating a zone free of weapons of mass destruction and delivery vehicles in the Middle East, enhancing peace and stability in the region and worldwide," Russia's envoy to the IAEA, Grigory Berdennikov, said.
The NPT is an international agreement on control over the proliferation of nuclear weapons and technology. It fixes the right of all member states to research, produce and use nuclear power for civilian purposes.
All UN members except Israel, India, North Korea and Pakistan are signatories to the NPT.
The discussion on Israel was initiated by Arab countries, who said in a statement that the Jewish state continues to "defy" the international community by refusing to join the treaty and by not allowing the IAEA to inspect its nuclear facilities.
"We cannot fail but also point out that the concern of the Israeli nuclear danger is reinforced by Israel's aggressive policies towards Arab countries," said Sudan's envoy Mahmoud El-Amin who spoke on behalf of all Arab states.
Israel said in response that it opposed any actions which could damage its national security and the countries who initiated the debate were "the ones that do not recognize Israel's right to exist."
China also showed its support for the initiative.
China "has always insisted on building a non-nuclear-weapon area in the Middle East" and "all the countries in the region should conscientiously fulfill NPT obligations, as well as sign and ratify the IAEA agreements and its Additional Protocols," Xinhua quoted Chinese envoy Chen Qiufa as saying.
The United States and the European Union were reluctant to join the discussions.
"Singling out Israel for censure is in our view both counterproductive and inappropriate," U.S. envoy Glyn Davies said. "What the region needs is to come together in a cooperative, consensual way."
The EU also said the discussions were counter-productive as a conference to discuss nuclear-free zone in the Middle East was scheduled for 2012.
Israel, however, has already ruled out its participation in such a conference.
VIENNA, June 11 (RIA Novosti)
RIA: Russian-Iranian S-300 missile deal not against UN resolution — U.S.
05:30 11/06/2010
The U.S. State Department said on Friday that the delivery of Russian S-300 surface-to-air missile systems to Iran is not against the recently imposed UN sanctions.
The Resolution 1929, adopted on Wednesday, imposes the fourth round of sanctions against Iran, including tougher financial controls and an expanded arms embargo. It also imposes an asset ban and a travel freeze on more than three dozen companies and individuals.
"The [Resolution] 1929 prohibits the sale and transfer of items on the U.S. Register of Conventional Arms, which does not include the S-300. That said, this is a sale that Russia concluded with Iran a number of years ago and Russia has exercised responsibility and restraint and has not, at this point, delivered those missiles to Iran," State Department spokesman Philip Crowley told a daily press briefing.
He said that the Resolution 1929 is aimed at strengthening the nuclear non-proliferation regime and provides a framework for addressing nuclear non-proliferation concerns of the global community.
"There's significant limitations on conventional weapons, missile technology, nuclear technology. It [the resolution] focuses on banking, financial sector and so forth," Crowley said.
"So we are looking for a strong, united international response to make it clear to Iran that it will pay a price for its current course and that it should — based on this pressure, that it will begin to feel — very quickly change course," he added.
Russian Foreign Minister Sergei Lavrov said on Thursday Russia would ensure "absolute protection for all significant channels of trade and economic cooperation existing between Russia and Iran."
Lavrov said Russia will also continue to cooperate with Iran on the Islamic Republic's first nuclear power plant.
A Foreign Ministry spokesman said the delivery of Russian S-300 surface-to-air missile systems to Iran will not be hit by the UN resolution.
WASHINGTON, June 11 (RIA Novosti)
RIA: Russia not to abolish visas for EU citizens unilaterally - Lavrov
09:54 11/06/2010
Moscow will not introduce a visa-free travel regime for EU citizens before the EU is ready to abolish visas for Russians, Russian Foreign Minister Sergei Lavrov said.
"We prefer to be guided by the principle of reciprocity in international relations," Lavrov said in an interview with Russian business daily Kommersant, which was published on Friday.
He said he expects a swift agreement on the issue, "especially as more than three dozen countries already have a visa-free travel regime with the EU, including some that are less favorable than Russia in terms of criminality.
Russia presented the EU with a draft agreement on the introduction of a visa-free travel regime during an EU-Russia summit in late May in the southern Russian city of Rostov-on-Don.
Russian President said after the summit that nothing prevented Russia from abolishing visas for EU citizens "as early as tomorrow" if the EU was prepared to do the same for Russians.
Deputy Head of EU delegation to Russia Michael Webb said that the EU would consider the draft agreement, but Russia should not expect the abolishment of the visa regime any time soon.
MOSCOW, June 11 (RIA Novosti)
VOR: Vladimir Putin to meet Nicolas Sarkozy and Jacques Chirac in Paris
Jun 11, 2010 09:53 Moscow Time
Russian Prime Minister Vladimir Putin arrived in France on Thursday night on a working visit and has since met his French counterpart Francois Fillon. The two Prime Ministers have taken up energy, social and humanitarian cooperation.
Today Vladimir Putin is scheduled to meet French President Nicolas Sarkozy and his predecessor Jacques Chirac.
Also today Vladimir Putin is due to inaugurate a Russian national exhibition at the Grand Palais in Paris. The exposition features major achievements by Russian companies, and is timed for Russia-France Cross Year, reports the Rossia-24 TV channel.
RFE/RL: Putin Meeting French Leadership
June 11, 2010
Russian Prime Minister Vladimir Putin is in Paris for talks with French President Nicolas Sarkozy and to open a major Russian exhibition.
Putin arrived in the French capital in the evening of June 10 and held talks with Prime Minister Francois Fillon.
Putin's talks with the French leadership were expected to focus on cooperation in the energy, space and aviation sectors, as well as efforts by Moscow to acquire a French Mistral-class assault ship containing sophisticated technology.
If agreed, the warship would mark the first sale of advanced military hardware by a NATO member to Russia.
In addition to the French president and prime minister, Putin is expected to meet with former president Jacques Chirac and the head of the French oil giant, Total.
Putin is also scheduled to inaugurate a five-day Russian exhibit at the Grand Palais in Paris as part of the Year Of Russia In France and the Year Of France In Russia cultural festival.
Ahead of Putin's visit, the human rights group Amnesty International has called on French leaders to pressure Putin on the killings in Russia of journalists who have been critical of Russian authorities, as well as racist crimes and torture in Russia.
compiled from agency reports
AP: France should press Putin on rights
Today at 06:18 | Associated Press
Human rights activists say fighting torture and racism in Russia should be on the agenda for Prime Minister Vladimir Putin's visit to France, a trip more likely to focus on gas pipelines and Iran's nuclear program.
Putin arrived Thursday evening and held talks with French Prime Minister Francois Fillon. France is eager to expand its business with Russia, and talk of energy, space and aviation deals was expected to dominate Putin's meetings with Fillon and talks Friday with President Nicolas Sarkozy.
Putin, who has urged French oil giant Total SA to take a more active role in Russia's energy sector, also will meet Total CEO Christophe de Margerie as well as former President Jacques Chirac.
Amnesty International says France should not only be looking at its pocketbook while Putin is in town, but also raising concerns about abuse of those who criticize authorities in Russia, notably in and around Chechnya.
Journalists who have investigated abuses in Chechnya have been tortured and even killed. One of Chechnya's best-known rights activists, Nataliya Estemirova, was kidnapped and killed last year.
In Moscow and around the country, racially motivated attacks by neo-Nazi groups have led to deaths and severe injuries in recent years.
Amnesty welcomed Putin to the French capital with a brief video clip projected around Paris that shows the making of a macabre matryoshka, or Russian nesting doll. The smiling, pristine outer doll conceals three oppressed figures within, one bloodied, one chained, one muzzled.
The video ends with a screen message: "Let's not let Russia's charm make us forget the atrocities."
"We cannot be silent about what is happening," the president of Amnesty International France, Genevieve Garrigos, told The Associated Press. "We do not understand why human rights is not on the agenda."
She criticized what she called "a climate of general impunity" for those who commit racist crimes and torture.
An open letter in French daily Liberation on Thursday accuses Russia's leadership of "permitting" the killing of human rights advocates. The letter was signed by former Czech President Vaclav Havel and South African Nobel Peace Prize winners Desmond Tutu and Frederik de Klerk.
Putin, in an interview on France-2 television ahead of his visit, noted that France's overcrowded prisons have come under fire from human rights groups, too. "There are threats (to human rights) everywhere. Take for example the threats to human rights in the French penitentiary system," he said.
The crux of Putin's visit is a showcase for Russian industrial might at Paris' Grand Palais, an exhibit that appears aimed at engineers and companies shopping for spaceships or other heavy equipment.
The head of Russian gas giant Gazprom is also in France this week. Alexei Miller said at an energy conference in Cannes on Thursday that despite worldwide efforts to seek nontraditional energy sources, western Europe will be dependent on natural gas — including Russian gas — for the long term.
Putin's visit may give French and Russian officials a chance to hammer out hitches in talks on the sale of up to four French Mistral-class warships to Russia's navy, a sale that has worried Russia's neighbors, some of France's NATO allies and human rights activists.
Putin said earlier this week there were still questions about how much of the ship or ships would be made in Russia.
Another difference between France and Russia that may come up at the meetings is Iran, after the U.N. Security Council on Wednesday approved new sanctions against Iran over its nuclear program. France loudly championed the sanctions and wants the European Union to press Iran even harder, while Russia only reluctantly backed the sanctions and says they won't keep Moscow from selling Iran missiles.
VOR: Putin, Fillon meet in Paris
|Jun 11, 2010 07:40 Moscow Time |
Prime Minister Vladimir Putin, on a two-day working visit to France, arrived at Matignon Palace on Thursday for talks with his French counterpart Francois Fillon. The two are expected to discuss a raft of economic, social and cultural ties between the two countries.
Briefing French reporters ahead of the visit, Vladimir Putin emphasized a 30% first quarter spike in bilateral trade turnover.
Friday, 11th June 2010
AFP: Putin visits France amid warship row
AFP
Russian Prime Minister Vladimir Putin arrived in Paris yesterday for a series of talks with French leaders and to open a big exhibition, but a row over a warship sale could put a damper on the fete.
Mr Putin said in an interview on the eve of his visit that a deal on the Mistral-class assault ship, now under negotiation for more than five months, is possible only if the vessel comes equipped with cutting-edge technology.
France has said it will not lump sophisticated radar systems and other sensitive technology into the deal, which would be the first sale of advanced military hardware by a Nato member to Russia.
"For us, this deal is interesting only if it is accomplished with a parallel transfer of technology," Mr Putin said.
The warship deal was expected to figure prominently in talks during a meeting scheduled late yesterday evening between Mr Putin and Prime Minister François Fillon and with President Nicolas Sarkozy.
Mr Putin was also due to meet on Friday with France's ex-president Jacques Chirac, his former counterpart, and with Christophe de Margerie, head of the French oil giant Total, aides and the company said.
Two major French energy companies are involved in Russian-led projects to bring gas to Europe: EDF in the South Stream gas pipeline and GDF in another known as North Stream.
Also today, Mr Putin will inaugurate a five-day exhibition showcasing cultural and economic ties between France and Russia at the Grand Palais, a prime venue off the Champs Elysees.
The giant fair will display Russian industrial and technological clout, such as the latest Sukhoi fighter jets and prototypes of new Avtovaz cars, as part of a year-long Franco-Russian festival.
The Prime Minister is leading a delegation of top businessmen from Russian aerospace, energy and transport who will be sounding out prospects for new partnerships during a series of round-table discussions.
Mr Putin last held talks in France in November and President Dmitry Medvedev was warmly received during a state visit in March that yielded a string of deals in energy, transport, aeronautics and aerospace.
The countries also cooperated in pushing through fresh sanctions this week against Iran over its suspect nuclear programme.
Itar-Tass: Putin to open in Paris Russia national exhibition
11.06.2010, 05.09
PARIS, June 11 (Itar-Tass) - Russian Prime Minister Vladimir Putin will open in Paris on Friday the Russian national exhibition. French Prime Minister Francois Fillon will take part in the opening ceremony at the Grand Palais palace that will become one of the most important of the Russia-France Cross Year. French President Nicolas Sarkozy will receive the Russian government head at the Elysee Palace in the afternoon.
The Russian national exhibition is to be held in Paris for the first time over the past 50 years. The exhibition space of the Grand Palais (almost 77,000 square metres) are given to the leading Russian partners – 15 regions, including Moscow and St. Petersburg and companies in the leading sectors. A wide range of innovations will be presented by the Russian Federal Space Agency (Roskosmos), the Irkut, Sukhoi, Russian Helicopters, Rostekhnologii, AvtoVAZ and Russian Railways (RZD) companies.
“The most important task is to demonstrate the achievements in the development of our cooperation, assist the development of trade-economic and investment interaction between Russia and France,” the RF government’s press service said. “Special attention will be given to the development of partnership between scientific and cultural centres. The Russian Academy of Sciences will present the results of fundamental research, including those conducted together with the French Academy of Sciences in the field of energy saving and environmental protection,” the press service said. Putin will hold a conversation at the Grand Palais with Total Director General Christophe de Margerie.
“We pin big hopes on the current strengthening of our relations,” Minister of State for Foreign Trade Foreign Trade Anne-Marie Idrac said. France is involved in many projects on the Russian market, including in the automobile industry. Idrac noted “growing interaction in space exploration, which will result in Russian rocket launches from Kourou.”
The forthcoming Russian-French contacts will give additional dynamics to the bilateral economic partnership, believes First Vice President of the ruling Union for a Popular Movement Jean-Pierre Raffarin. “The fact that Russia today is becoming one of the leading generators of economic growth is positive not only for it, but also for France,” he noted. “We have managed to develop good cooperation, including in such a complicated issue as the provision of energy resources,” he added.
There are no problems between France and Russia that would impede the development of ties, believes the official. According to him, the side have already managed to ease the mutual travel of businessmen, artists, athletes, and in the future will be able to make a transition to a visa-free regime. “The issue of visa cancellation will be certainly settled,” Raffarin is certain.
The exhibition will also have a business dimension entitled “Russia and France: One Economic and Humanitarian Space.” It will include conferences, thematic roundtables, press conferences and presentations, all aimed at promoting further development of trade, economic, scientific, and technical ties, diversification of bilateral cooperation, and expansion of joint educational, cultural and humanitarian programmes.
The prime ministers of the two countries approved the programme of the Year of Russia in France and the Year of France in Russia on November 27, 2009 in Paris. Despite budget restrictions necessitated by the global economic and financial crisis, the programme includes more than 400 events covering such spheres as culture, education, youth exchanges, sport, science, economy, and communications.
The Year of Russia in France and the Year of France in Russia were officially opened in Paris on March 2, 2010, when the presidents of the two countries opened the exhibition “Holy Rus” at the Louvre.
Bloomberg: Russian $12 Billion European Arms Spree May Benefit DCNS, Iveco
By Ilya Arkhipov
June 11 (Bloomberg) -- Russia may buy $12 billion of arms from European and Israeli companies, including DCNS and Iveco SpA, over the next five years as the world’s second-biggest arms exporter hunts for higher-quality weapons than domestic companies can provide, according to a Moscow research institute.
The two biggest deals -- about 1.5 billion euros ($1.8 billion) each -- may be signed within two years, according to a report compiled for Bloomberg News by the Center for Analysis of Strategies and Technologies. Russia plans to acquire four Mistral helicopter carrier ships from Paris-based DCNS, and is in talks with Iveco, a unit of Turin, Italy-based Fiat SpA, for as many as 3,000 M65E light armored vehicles, the report shows.
“Russia has been an exception on military procurement, because no other country in the last 15 years tried to be 100 percent autonomous,” said center Director Ruslan Pukhov. “Now we have recognized that you can’t be competitive in all areas.”
While the military has always purchased some weapons from abroad, the search for overseas suppliers increased after the five-day war with Georgia in 2008 revealed weaknesses in Russian technology, Pukhov said. The drive for foreign equipment is now reaching the stage of large-scale deals. Russia ranked 80th in arms imports in 2005-2009, behind Myanmar, according to the Stockholm International Peace Research Institute.
Prime Minister Vladimir Putin is on a two-day visit to Paris, where the deal to buy Mistrals from state-owned DCNS, may be discussed. The purchase would interest Russia if it were accompanied by a technology transfer, Putin said in an interview with Agence France-Presse published June 9.
‘Proven Accurate’
The Center for Analysis of Strategies and Technologies publishes Arms Export, a bimonthly journal on the weapons trade and defense industry, and Moscow Defense Brief, which covers Russia’s view on security issues for an international audience. Pukhov sits on the Defense Ministry’s public advisory board.
The center “probably possesses the widest range of information on Russian defense procurement, technologies and arms exports and imports of any Russian research institute,” said Konstantin von Eggert, a Moscow-based political analyst and member of the Royal Institute of International Affairs in London. “It has proven accurate in its analysis.”
President Dmitry Medvedev called for an overhaul of the military after the war with Georgia. At least 30 percent of the army’s weapons must be “state-of-the-art” by 2015, he said last month.
“When ordering new weapons and technologies, the army will think first of all about what’s best in terms of personnel safety,” Defense Minister Anatoly Serdyukov said in April.
‘Advanced Weapons’
Russia is still the second-biggest arms exporter, with 23 percent of the market, behind the U.S. at 30 percent, according to the Stockholm institute. Annual shipments more than doubled to $8.6 billion in the past decade, Putin said in February.
The move to buy arms abroad shows “a clear realization” that the defense industry “isn’t ready to supply the armed forces with high-tech, advanced weapons,” von Eggert said.
Most of Russia’s purchases will be made in North Atlantic Treaty Organization countries, indicating a shift in Russia’s relationship with the alliance, Pukhov said.
“You have rhetoric that can be quite anti-Western at times,” he said. “Russia’s real policy is to buy arms from NATO countries. This means Russia doesn’t see the alliance as a main threat any longer.”
French Warship
The biggest item on Russia’s shopping list is four Mistral warships. One vessel will probably be built at an STX France SA shipyard, according to the report. A second may be built by STX in sections and assembled in Russia, and two more may be built under license in Russia, the center said.
Nikolai Makarov, head of the Russian military’s General Staff, said the Mistral contract is almost finished, Interfax reported June 8. The vessel is superior to ships used by Russia, the independent Russian news service cited Makarov as saying.
The army may acquire as many as 3,000 of Iveco’s M65E vehicles, which would be assembled by OAO KamAZ, Russia’s biggest truck maker, according to the report.
Oleg Afanasyev, a spokesman for KamAZ, said the Naberezhnye Chelny, Russia-based company is in talks with Iveco, though no agreement has been reached. Fiat spokesman Richard Gadeselli said neither Fiat nor Iveco is in talks with Russia to produce military vehicles.
The report cites three more deals that may be concluded within two years. Russia may sign a 300 million-euro joint- production agreement with Tel Aviv-based Israel Aerospace Industries Ltd. to make pilotless aircraft, the center said.
Thales, Sagem
Doron Suslik, a spokesman for Israel Aerospace, said the company is interested in doing business with Russia, though he declined to discuss potential deals.
A contract to buy thermal cameras for tanks from Neuilly- sur-Seine, France-based Thales SA, may also total 300 million euros, the center said. A deal to purchase battlefield optics and navigation equipment from Sagem, part of Paris-based Safran SA, may cost the same.
Licensed production of Thales cameras will begin July 9 at a plant in Vologda, Russia, said Alla Kuznetsova, the company’s Russia chief. Patrick Barraquand, who heads Sagem’s Russian unit, said he couldn’t comment.
To contact the reporter on this story: Ilya Arkhipov at iarkhipov@
Last Updated: June 10, 2010 19:24 EDT
RBC: Russian, Belarusian leaders to discuss Customs Union's functioning
RBC, 11.06.2010, Moscow 10:56:07.Russian President Dmitry Medvedev is scheduled to meet with his Belarusian counterpart Alexander Lukashenko, who will be paying a working visit to Moscow today. On Wednesday, the two presidents held a telephone conversation and defined the items on the agenda of today's meeting.
The key topic for discussion will be the functioning of the Customs Union of Russia, Kazakhstan and Belarus. Medvedev and Lukashenko are also expected to discuss a series of matters related to bilateral relations between Russia and Belarus. Lukashenko is also scheduled to meet with Russian Prime Minister Vladimir Putin.
Itar-Tass: Medvedev, Lukashenko to discuss Customs Union, bilateral issues
11.06.2010, 01.40
MOSCOW, June 11 (Itar-Tass) - Problems of the Customs Union (CU) of Russia, Belarus and Kazakhstan will be one of the main subjects of talks that will be held in Moscow on Friday by Russian and Belarusian Presidents - Dmitry Medvedev and Alexander Lukashenko.
“It is planned to give special attention to the Customs Union problems regarding a meeting of the Interstate Council of the Eurasian Economic Community (EurAsEC) and the CU troika at the level of the heads of state that are scheduled for July 5 in Astana, as well as accords reached by the heads of governments of the CU member countries on May 21 and by the Russian and Kazakhstani prime ministers in St. Petersburg on May 28,” an official of the Kremlin administration said commenting on the forthcoming working visit of the Belarusian president to Russia.
The heads of state confirmed this in a telephone conversation they had on Thursday. “Moscow has always considered it expedient to hold a regular, open, direct and honest dialogue on issues of Russian-Belarusian cooperation in all spheres without exception,” the Kremlin administration official stressed.
“The sides are also expected to raise the issues of interaction in the fuel and energy sphere, including the supplies of oil and gas that are being carried out in strict compliance with the earlier reached agreements on the gradual transition to the principles of market price formation in mutual trade,” the Kremlin source noted. “The Russian side is for the unconditional observance of the obligations assumed in this sphere, including on the payment for Russian gas supplies,” he stressed recalling t hat the Belarusian side as of May 1, 2010 accrued a debt worth 192.3 million US dollars to Russia’s natural gas monopoly Gazprom.
“It is also planned to discuss other important issues of bilateral interaction, including the progress of the fulfilment of existing agreements on the further development of Russian-Belarusian integration cooperation,” the RF presidential administration noted. “During the talks the parties will consider possibilities for the further intensification of the trade-economic relations and building up of the mutual trade turnover volumes that in January-April 2010 increased by 21.2 percent, as compared with the similar period last year,” the Kremlin representative said. He also noted that Russia’s supplies to Belarus grew by 9.4 percent, and Belarusian to Russia – by 51.3 percent; e.g. – the Belarusian export growth to countries outside the CIS region reached just 11.8 percent.
“The heads of state are also likely to discuss a number of regional issues in the context of membership in the common integration unions – the CIS, Collective Security Treaty Organisation (CSTO) and EurAsEC,” the RF presidential administration noted.
During his stay in Moscow Lukashenko is also planned to meet with Russian Prime Minister Vladimir Putin and visit the All-Russian Research Institute of Electromechanics with the A.G. Iosifyan Plant where the work on the creation of a Belarusian satellite for the Earth’s remote sensing is coming to an end. It is planned to launch the satellite simultaneously with the Russian satellites Canopus-V by the Soyuz-FG rocket carrier. The two satellites will form the base of the Russian-Belarusian space group for the Earth’s remote sensing.
Russia remains the largest and most important partner for Belarus both in the political and economic fields. The Treaty on Equal Rights of Citizens between Belarus and Russia was signed in December 1998, covering employment, an access to medical care and education.
Belarus and Russia have been independent states since the break-up of the USSR in December 1991. In the very beginning of the separate existence, efforts had been made to escape from imposing barriers in mutual trade. In November 1992, the Free Trade Agreement (FTA) was signed. In January 1995, a protocol on the implementation of this FTA without exemptions was signed as well as the Agreement on the Customs Union. In May 1995, the border pole was symbolically dug out by the prime ministers of the two countries. After protracted disputes and setbacks, the two countries' customs duties were unified as of March 2001 but the customs controls were soon restored. In terms of trade, almost half of Belarusian export goes to Russia. Due to the structure of Belarusian industry, Belarus relies heavily on Russia both for export markets and for the supply of raw materials and components.
Before 2004, Gazprom sold gas to Belarus for Russian domestic prices, mainly due to the political integration process between the two countries. As this process started to falter in the 2000s and late 1990s, Gazprom wanted to ensure reliable transit of Russian gas trough Belarusian territory by taking control of the Belarusian transit network. Gazprom suggested to purchase the Belarusian network operator Beltransgaz, but disagreements over the price led to the 2004 Russia–Belarus gas dispute, in which Gazprom ceased supplies to Belarus on 1 January, 2004. A new gas contract was signed in June, 2004, and relations between the two countries improved afterwards.
The goal of the introduction of common currency had been mentioned numerous times since the beginning of the 1990s. In ten years, the process of technical preparation finally started: Central banks of the two countries signed a plan of coordinated activity for 2001-2005.
Charter97: Kremlin: Lukashenka won't get cheap gas
11.06.2010
Before Lukashenka's meeting with Medvdedev, sources in the Kremlin told to Russian media that Belarus must pay debts for gas.
Belarus must unconditionally adhere to obligations for paying for Russian gas deliveries. Such a statement has been done by the Kremlin on the eve of today's meeting of Dmitry Medvedev and Alyaksandr Lukashenka. The source in the administration of Russian president reminded "Interfax" that as of May 1 indebtedness of the Belarusian side to Gazprom was about $192.3 mln.
As said by a Kremlin source of another agency, RIA Novosti, it is expected that during the talks in Moscow "issues of cooperation in the fuel and enegry sphere would be raised, including oil and gas deliveries, which are carried out in strict adherence to earlier reached agreements on phased transition to the principles of market-based price formation in mutual trade".
The Russian side, as the interlocutor of the agency underlined, "is in favour of unconditional keeping of the accepted obligations in this sphere, inculding the ones for payments of the Russian gas".
We remind that earlier Vice Prime Minister of Russia Igor Sechin stated that the issue of Belarus' extinguishment of debt for Russian gas is to be solved within the legal framework.
Now the contract price of gas deliveries to Belarus is $169 per 1,000 cubic metres, however Belarus still pays $150, which has caused an indebtedness. According to Gazprom evaluation, Beltransgaz debt can grow up to $500-600 million by the end of the year becuase of paying less than the contractual price.
The main topic of the talks between Medvedev and Lukashenka are issues of the Customs Union formation. However, this week Minsk has published a list of its claims to Moscow, among which are gas price decrease and cancelling export duties for oil products deliveries.
Telegraf.by: Gazprom Does Not Need Beltransgaz on Account of Belarus' Debt, the Kremlin
09.03.2010
On the eve of Dmitry Medvedev and his Belarusian counterpart, Alexander Lukashenko, meeting, sources in the Russian presidential administration stated that Belarus should pay the debt for gas in the amount of 192.3 million dollars and pay for its supply at current prices. Gazprom does not intend to acquire a controlling stake of Beltransgaz on the account of debt payment, stressed in the Kremlin.
At a meeting of the two countries' presidents "there will be raised questions of cooperation in the energy sector, including oil and gas supplies, which are carried out in strict accordance with the previously reached agreement on step-by-step transition to market pricing principles in mutual trade", a source of RIA Novosti in the Kremlin informed.
According to him, Moscow demands Minsk the unconditional compliance with obligations taken in the sphere, including payment of Russian gas supplies.
In their turn, in Belarus' Presidential Administration they reported that the main topic of Alexander Lukashenko's meetings in Moscow would be the functioning of the Customs Union of Belarus, Kazakhstan and Russia, as well as a number of topical issues of bilateral Belarus-Russia cooperation.
As Telegraf previously reported, in 2010 Belarus pays for Russian gas at last year's price of 150 dollars per thousand cubic meters. In the first quarter of this year the price of gas for Belarus amounted to 169 dollars, in the second, it is expected to increase to about 184 dollars, while the average price is predicted at about 187 dollars. As a result, Gazprom estimates that Belarus' debt for gas may reach 500-600 million dollars by the end of the year.
Earlier, Belarusian leader invited Russia to acquire a controlling stake of Beltransgaz, now Gazprom's share in it is equal to 50%. In Russian company the acquisition was named unreasonable.
SCO SUMMIT
VOR: SCO to send observers to Kyrgyzstan
|Jun 11, 2010 11:35 Moscow Time |
Russian President Dmitry Medvedev has told the ongoing SCO summit in Tashkent that the Shanghai Cooperation Organization will send a group of observers to Kyrgyzstan to monitor a referendum on Kyrgyzstan’s new constitution. The referendum is due on the 27th of this month.
Medvedev said it was important to guarantee that statehood in Kyrgyzstan will develop in keeping with a lawful scenario. The Russian leader said that the SCO nations could not keep aloof from the developments in the Central Asian country and offered assistance to the people of Kirgizia without delay. The Russian leader said the SCO would continue to help Kyrgyzstan, since the republic is an SCO founder, an ally and a close partner.
The SCO is interested in that Kyrgyzstan quickly copes with its problems and forms a government that would be able to settle urgent problems of socio-economic development, Medvedev said.
The SCO is a regional international organization, set up back in 2001. The organization members are Russia, Kazakhstan, China, Kyrgyzstan, Tajikistan and Uzbekistan.
VOR: SCO summit gets under way in Tashkent
|Jun 11, 2010 09:38 Moscow Time |
A summit meeting of the Shanghai Cooperation Organization, or SCO, has got under way in the Uzbek capital Tashkent. Taking part are the SCO leaders, including Russian President Dmitry Medvedev.
The parties to the meeting will specifically focus on the situation in Kyrgyzstan, regional security, fighting drug trafficking, and also on the joint transport, energy and trade projects.
The Russian leader held several bilateral meetings yesterday, specifically with his Kazakh counterpart Nursultan Nazarbayev, to discuss the development of the Customs Union. When meeting Pakistani President Asif Ali Zardari, Medvedev took up security problems, according to the Vesti TV channel.
AFP: Shanghai group meets for expansion without Ahmadinejad
By Muhammad Sharif and Anna Smolchenko (AFP) – 4 hours ago
TASHKENT — The Shanghai Cooperation Organization (SCO), where Russia and China call the shots, gathered Friday to consider changes to its membership guidelines which could lead to further expansion for the bloc.
At its annual gathering in the Uzbek capital Tashkent, leaders including Russia's Dmitry Medvedev and China's Hu Jintao were expected to adopt new guidelines seen as potentially opening the door to SCO observer nations India and Pakistan.
But Mahmoud Ahmadinejad, the leader of another SCO observer nation, Iran, was expected to stay away from the summit after his country was slapped with fresh sanctions approved by the UN Security Council this week.
Russia's Foreign Minister Sergei Lavrov said the guidelines to be approved Friday would not allow countries under UN sanctions to obtain membership, a major blow to Iran who sorely needs international support.
"Tomorrow (Friday) a provision will be approved," Lavrov told reporters, when asked to confirm that under soon-to-be-adopted rules, a nation seeking SCO membership could not be under UN sanctions.
"Among membership criteria, will be the one you've mentioned," Lavrov said late Thursday, without referring to Iran directly.
Russia's Kommersant newspaper reported that the provision was pushed through by Moscow and Beijing who are unwilling to jeopardize their relations with the West because of Iran.
Despite close economic ties with the Islamic republic, Russia and China, two of the five UN Security Council veto-wielding permanent members, this week supported a new round of UN sanctions against Iran.
The Kommersant report, citing diplomatic sources in SCO member countries, said Ahmadinejad had wanted an invitation to the event, but Russia, China and Kazakhstan, the current chairman of the Organization for Security and Cooperation in Europe, had "politely denied" it.
By contrast, Ahmadinejad was warmly greeted at the SCO annual summit in Russia last June, which he chose for his first foreign trip following his disputed re-election victory last year.
Senior Russian officials have denied Moscow had asked the Iranian leader to stay away this time.
Hamid Karzai of Afghanistan, Asif Ali Zardari of Pakistan and Turkmen leader Gurbanguly Berdymukhamedov were also in attendance at the summit.
Analysts said approving the new membership guidelines would not immediately bring in new SCO members since observer nations like India and Pakistan have testy ties and China has not yet signalled its support for the group's expansion.
A Chinese diplomat, Zhang Xiao, said the blueprint to be adopted Friday was just the start of work in this direction.
"In fact, approving this document does not automatically mean the expansion of the SCO," said Zhang, deputy director-general for European and Central Asian affairs at China's foreign ministry.
"In order to accept new member states SCO members have to work out a range of new documents. In other words the job already done represents only one percent, we have another 99 percent to do."
Poor security in Afghanistan and ethnic violence in Kyrgyzstan will also likely weigh against the group's immediate expansion, analysts said.
Early Friday, Kyrgyzstan saw a new flare-up of violence that left at least 14 people dead and more than 100 wounded, in the latest unrest since an uprising toppled president Kurmanbek Bakiyev in April.
The SCO was set up in 2001 as a security counterweight to NATO that would allow Russia and China to rival US influence in Asia.
Increasingly, it is also looking to cooperate at an economic level.
11 June 2010 - 07H59
France24: Shanghai group set to deny membership to Iran
AFP - The Shanghai Cooperation Organization (SCO), where Russia and China play a major role, is set to deny membership to Iran at a meeting Friday, Russian Foreign Minister Sergei Lavrov said.
The SCO is expected to vote Friday on a blueprint for expanding cooperation that will not allow countries under UN sanctions to obtain membership, Lavrov said late Thursday in Tashkent.
"Tomorrow (Friday) a provision will be approved," Lavrov told reporters, when asked to confirm that under soon-to-be-adopted rules, a nation seeking SCO membership could not be under UN sanctions.
"Among membership criteria will be the one you've mentioned," Lavrov said, without referring to Iran directly.
Despite close economic and energy ties with the Islamic republic, Russia and China, two of the five UN Security Council veto-wielding permanent members, this week supported a new round of UN sanctions against Iran.
The Islamic republic, which has observer status in the SCO, has expressed interest in full membership of the regional security group.
Russia's Kommersant newspaper reported this week that Russia and China had insisted on the new provision regarding UN sanctions so as not to jeopardize their ties with the West.
The report, citing diplomatic sources in several SCO member countries, also said Iran's besieged leader Mahmoud Ahmadinejad wanted an invitation to the Friday gathering.
Ahmadinejad is keen to secure support of his allies in the face of intensifying international pressure.
But Russia, China and Kazakhstan, the current chairman of the Organization for Security and Cooperation in Europe (OSCE), had decided to "politely deny" it, the report said.
By contrast, Ahmadinejad was warmly greeted at the SCO annual summit in Russia last June, which he chose for his first foreign trip since his disputed re-election victory last year.
Russian senior officials have denied Moscow had asked the Iranian leader to stay away this time.
"He himself decided not to come," Lavrov told reporters.
Earlier this week, the Kremlin's top foreign policy adviser Sergei Prikhodko expressed a similar sentiment, saying the Iranian leader chose not to come.
The SCO was set up in 2001 as a security counterweight to NATO that would allow Russia and China to rival US influence in Asia.
Increasingly, it is also looking to cooperate at an economic level.
Nezavisimaya/Russia Today: SCO sets a barrier for Ahmadinejad
New criteria for accession into the organization a disappointment for Iran
By Viktoria Panfilova
The two-day Shanghai Cooperation Organization (SCO) summit began in Tashkent yesterday. The main topics of discussion will be: security and the situation in Afghanistan and Kyrgyzstan. Four documents are scheduled to be adopted today, the most important of which governs the rules of admission of new members into the SCO. Before the summit, President Dmitry Medvedev held a number of bilateral meetings with his colleagues from the “Shanghai Six” and the heads of the SCO observer states.
Read more
The new rules for admission into the SCO were a disappointment to Iran. This country, which submitted its documents for accession into the organization two years ago, had lost this opportunity, because now, the SCO charter prohibits the membership of countries which are under UN sanctions.
Therefore, Iran’s President Mahmoud Ahmadinejad, who regularly attends all SCO meetings, did not arrive in Tashkent. From Dushanbe, where he had concluded his two-day visit, the Iranian leader headed to Shanghai to open Iran’s National Pavilion Day at the 2010-Expo. At the same time, the document basically lifts the moratorium on the accession of all other countries interested in the organization.
One of the main themes of the summit is the situation in Kyrgyzstan. The political situation in this republic affects the interests of all the SCO members. In the region, it is believed that Bishkek’s decision to choose a parliamentary form of government may fall short of expectations – democratization could open the door for extremist and terrorist organizations in Central Asia, which threaten not only Uzbekistan or Kazakhstan, for example, but also China. However, observers believe that the members of the “Shanghai Six” do not yet have any solutions for the stabilization of situation in Kyrgyzstan. In the meantime, Bishkek may be offered to take a loan from the monetary fund created within the SCO.
The SCO members are no less concerned about the situation in Afghanistan, and it is not by chance that the extended meeting will be attended by the presidents of Afghanistan and Turkmenistan – Hamid Karzai and Gurbanguly Berdymukhammedov respectively. At the initiative of Russian President Dmitry Medvedev, a separate discussion will address the Afghan drug trafficking problem.
The heads of states that do not see each other as frequently as they would like had the opportunity to discuss all the accumulated problems. Before the summit took off, Dmitry Medvedev had the chance to speak with the head of the country hosting the summit – Uzbek leader Islam Karimov. According to media reports, Uzbekistan’s leader discussed the difficulties in preparing for the summit.
“Practically all the documents are ready, although the negotiation process was not easy,” Karimov told Medvedev, and noted that leaders of SCO member states could, if need be, collectively or individually make certain changes to the documents at the forthcoming talks. He offered the Russian president to prolong his trip for another day in order to review the situation in Tashkent and discuss some bilateral issues.
“The wishes of certain experts to see someone try to encourage Uzbekistan return to the EurAsEC, or change its position on the creation of rapid reaction forces within the CSTO, were unjustified. It is still premature. The Uzbek leadership is not likely to change the already-declared stance of its involvement in these organizations,” Azhdar Kurtov, of the Russian Strategic Research Institute, told Nezavisimaya Gazeta (NG). In his opinion, the future for economic cooperation looks grim. The European demand for natural gas has yet to restore to its previous level. This means that Russia has no reason to increase its gas purchases from Central Asia. “This is the main topic that could have been discussed, and perhaps the main thing that could interest Uzbekistan,” says Kurtov.
According to Vladimir Paramonov, an expert from Uzbekistan on Central Asian and SCO issues, “the main result of the summit is Uzbekistan’s highly successful attempt to position itself as the key player in the SCO, on whose position depends the future development of the SCO, Central Asia, and even future Russian-Chinese cooperation in the region”.
The host of the event, Islam Karimov, will face difficult talks with the President of Tajikistan, Emomali Rakhmon, today. The relations between the two countries remain tense due to the transport blockade, which had been imposed by Uzbekistan. In Dushanbe and Washington, crowds have gathered near the Uzbek embassy, demanding that cargo be permitted to be transferred to Tajikistan and Afghanistan.
Local analysts say that the transport blockade was imposed due to the construction of the Rogunsky hydroelectric power station – something that is very negatively perceived by Tashkent, which believes that the power station could cause some serious water problems and even a “technogenic” disaster in the region, and therefore an international examination of the construction project must take place. The disagreement between the neighbors is so serious that one meeting, even if it is on the highest level, is unlikely to overcome the differences.
The SCO will continue to expand
The SCO includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. The status of observer countries belongs to India, Iran, Mongolia, and Pakistan. Presidents of Afghanistan and Turkmenistan have been invited to the current summit as guests of honor.
Read this article on newspaper's website (in Russian)
RIA: Russian, Kazakh leaders discuss customs union problems, cooperation
02:37 11/06/2010
Russian President Dmitry Medvedev met on Thursday evening with his Kazakh counterpart Nursultan Nazarbayev to discuss the Customs Union, preparations for the G20 summit and cooperation in nuclear energy and space.
"We have a common target — to establish a customs union and later a single economic space. Here we have certain achievements, but also some problems," Medvedev said before the meeting.
Russia, Kazakhstan and Belarus are establishing a Customs Union. It was scheduled to be launched on July 1, but Belarus has recently released a list of trade problems with Russia that it says hinder the signing of the final agreement.
The Russian president also said he would discuss Russia's preparations for the forthcoming G20 summit with his Kazakh counterpart. At G20 meetings, Russia presents the consolidated position of all CIS countries, including Kazakhstan.
Nazarbayev said ahead of the meeting that the two leaders are to discuss a deal on cooperation in nuclear energy and space, which may be signed during the forthcoming summit of the Eurasian Economic Community (Eurasec).
"I would like to speak about the forthcoming Eurasec summit in Astana, we have good agenda for it, including bilateral deals on uranium, nuclear [energy] and Baikonur," Nazarbayev said.
Russia rents Baikonur, the Soviet-built launching facility in Kazakhstan since the Soviet Union broke up in 1991, paying an annual rent of $115 million.
The Kazakh president said he would also like to discuss with Medvedev the ongoing political crisis in neighboring Kyrgyzstan, where a new wave of riots broke out on Thursday night.
TASHKENT, June 10 (RIA Novosti)
Xinhua: Chinese president calls for enhancing ties with Russia, Tajikistan
2010-06-11 10:43:39
TASHKENT, June 11 (Xinhua) -- Chinese President Hu Jintao Thursday called for more efforts to enhance all-round cooperation with Russia and Tajikistan during his separate meetings here with presidents of the two countries on the sidelines of the annual summit of the Shanghai Cooperation Organization (SCO).
In his meeting with Russian President Dmitry Medvedev, Hu said Sino-Russian relations witnessed all-round progress in the first half of this year and several important events will take place in the second half between the two countries, including Medvedev's visit to China and the regular meeting of prime ministers of the two countries.
He called on both countries to further advance economic cooperation, promote cultural and people-to-people exchanges through such important events as the ongoing "Chinese Language Year" activities in Russia, and strengthen strategic communications in accordance with changes in the international system and in major international and regional issues.
He said he was confident that the Sino-Russian relations of strategic cooperan.
Friday, June 11, 2010
Daily Times: Zardari, Medvedev discuss bilateral ties, regional situation
\06\11\story_11-6-2010_pg7_29
* Both presidents express satisfaction over the level of relations between Islamabad and Moscow
TASHKANT: President Asif Ali Zardari and his Russian counterpart Dmitry Medvedev held a bilateral meeting on Thursday and discussed matters of mutual interest.
During the meeting, which was held on the sidelines of the 10th summit of the Shanghai Cooperation Organisation (SCO), the two leaders exchanged views on matters relating to bilateral ties, the regional situation and the matters of international importance. President Zardari and Medvedev also talked about the menace of terrorism, which posed a threat to the world peace and agreed on the need to eliminate this menace through increased regional and international efforts and cooperation. On the bilateral issues, the two presidents expressed satisfaction over the current level of bilateral engagement between Pakistan and Russia and hoped the bilateral cooperation between the two countries in various fields would expand in years to come.
Separately, President Zardari also met Chinese President Hu Jintao and discussed matters of mutual interest and bilateral relations.
Also on Thursday, President Zardari arrived at Tashkent to attend the SCO summit. He will address the summit today (Friday) and hold meetings with the leaders of China, Uzbekistan and other countries. The president’s delegation includes Interior Minister Rehman Malik, Defence Minister Chaudhry Ahmed Mukhtar and Minister of State for Foreign Affairs Nawabzada Malik Emad Ahmed Khan and others. President Zardari was received at the airport by Uzbek Prime Minister Shavkat Mirziyoyev. The president was accorded a guard of honour by a contingent of the Uzbek armed forces, as he came down from his special aircraft.
The member countries of SCO include China, Russia, Kazakhstan, Kyrgystan, Tajikistan and Uzbekistan. Pakistan, India and Mangolia are observer countries. The summit would also discuss giving permanent membership to the observer countries. The SCO has assumed significance as it seeks to promote peace and stability in the region besides combating terrorism, extremism and organised crime. The organisation has also been able to further expand its mandate to include economic and cultural cooperation. A statement by the Foreign Office said the president’s participation in the SCO Summit reflects the immense importance Pakistan attaches to further strengthening its mutually beneficial cooperation with the countries of the Eurasian region. app
Russia Today: Russia to discuss security and war on drugs with Shanghai partners
10 June, 2010, 19:23
Russia’s president is in Uzbekistan to take part in the summit of the Shanghai Cooperation Organization. Kyrgyz unrest and Afghanistan drug trafficking are among the issues at the top of the agenda.
A two-day summit has kicked off in Tashkent, Uzbekistan’s capital. The regional bloc brings together Russia, China and four former Soviet republics in Central Asia: Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Mongolia, Pakistan, India and Iran currently act as observers. A number of high-ranking guests have been invited to attend the summit, among them the President of Afghanistan Hamid Karzai, whom Russian President Dmitry Medvedev is planning to meet later for bilateral talks.
Ahead of the main events of the summit, Medvedev held a meeting with his Uzbek counterpart.
The Russian head of state has also held talks with Chinese President Hu Jintao. This is the third time the two leaders have met each other in 2010 and both presidents expressed their satisfaction over the frequency of meetings.
Medvedev noted that the summit is an opportunity to discuss a whole range of regional problems that have arisen recently and over which Russia and China are holding a direct dialogue.
In his turn, the Chinese president suggested discussing the issues connected with Dmitry Medvedev’s upcoming visit to China, due to take place in September.
“We have to work together to achieve even better results in such areas as trade, energy, military technology and interregional cooperation,” said Hu Jintao.
Barentsobserver: Fish industry skeptical to Barents delineation deal
2010-06-11
The fish industry in Murmansk fears that the Russian-Norwegian deal on the delineation of the Barents Sea will deprive Russian fishermen of vital fishing grounds in the area.
While Norwegian authorities hope that the historic delineation agreement will be ratified and come into effect within a year, the Russian fish industry believes another 10-15 years of negotiations are needed to settle all aspects of the agreement, Rossiiskaya Gazeta reports.
The historical agreement signed by Norway’s Jens Stoltenberg and Russia’s Dmitry Medvedev in April this year implies a sharing of the 175,000 square kilometer area in the Barents Sea into two equal parts. With the agreement in place, the socalled Grey Zone Agreement from 1978 is cancelled. That agreement regulated fishing in a big area stretching over both Norwegian and Russian waters and gave both countries’ fish industries access.
The Grey Zone Agreement was renewed annually and fishing in the area was regulated by both parts in the Joint Fishery Commission.
Representatives of the industry in Murmansk now express concern that Russian trawlers with the new agreement will be unable to operate in areas where they traditionally have been doing good catching. General Director of the Northern Union of Fish Industrialists, Vasily Nikitin, says to RG.ru that the new agreement must document not only the border line, but also the conditions for the fish industry.
Also Vyacheslav Zilanov, Vice President of the All-Russian Association of Fishing Companies, argues that Russia and Norway now need to agree on how to divide the area. -There are aspects about which we significantly disagree. However that does not mean that we are unable to agree about an important issue like the division of the Barents Sea, he says.
At the same time, he argues that the regulations which currently are being applied by the Norwegians in the area, and especially in the waters around the Svalbard archipelago, are discriminatory against the Russians.
The Russian fish industry interests are now submitting input to the authorities. According to Vadim Sokolov from the Murmansk regional Fishery Committee, proposals regarding the new agreement have already been submitted. He also says that the Federal Fishery Agency has established a working group with members from regional authorities, the fishing fleet and fisheries organizations, and that the recommendations from this group "must be an integral part of the agreement”.
Also on the Norwegian side, parts of the fish industry are skeptical towards the new Barents Sea deal. Leader of the Norwegian Association of Fishing Boat Owners, Audun Maråk, says to Fish.no that “Norway has little to celebrate” and that the Norwegian-Russian agreement favors the Russians.
AFP: S.Korea, Russia probe rocket failure
By Park Chan-Kyong (AFP) – 5 hours ago
SEOUL — South Korean and Russian experts launched an investigation Friday after the fiery failure of the Asian country's latest rocket launch, which some researchers blamed on inadequate testing.
The Naro-1 rocket, which was Russian-made but assembled in South Korea, veered off course and exploded 137 seconds after blast-off on Thursday.
The mishap came after a first rocket failure last year, thwarting South Korea's plans to launch a scientific satellite and setting back its dreams of joining Asia's space race.
The Korea Aerospace Research Institute (KARI) said the debris fell into the sea, some 470 kilometres (295 miles) south of the Naro Space Centre's launch pad off the southern coast.
KARI on Friday convened a meeting of a joint investigation committee of the two countries to determine the cause of the failure, a spokesman for the Education, Science and Technology Ministry said.
"It went wrong after the first-stage rocket completed two-thirds of its work," KARI research fellow Chae Yeon-Seok told AFP.
Researchers said this was verified by video from a camera mounted on the rocket as well as live TV footage, which both showed a sudden brightening and orange flames of an explosion.
South Korea was trying to join an exclusive club currently numbering nine nations that have put a satellite into orbit using a domestically assembled rocket.
Its first attempt failed last August when fairings on the nose cone of the Naro-1 did not open properly to release the satellite.
"It is very regretful that we were unable to verify whether the faulty aspects that caused last year's failure were properly addressed this time, as we lost the rocket too early in flight," Chae said.
He and other South Korean researchers noted that the Russian rocket was a new vehicle that was still under development and whose performance was not fully tested through flights.
"When we launched the rocket in the first attempt last year, that was the only flight test before this launch. We have not had many chances to verify its credibility," Chae said.
Professor Shim Hyun-Chul of the Korea Advanced Institute for Science and Technology said Russia should take responsibility.
"There have been concerns over the reliability of the rocket as it has not been tested enough," he told Yonhap news agency.
The government put a brave face on the second failure.
"Though we humbly accept the results, we shall not give up on our dream of becoming a space power," Science and Technology Minister Ahn Byong-Man said Thursday.
Plans for a third attempt will be announced after the investigation is completed, he said.
Under its contract with South Korea, Russia is supposed to provide another rocket in case of a failed launch, officials in Seoul said.
South Korea's biggest-selling daily, the Chosun Ilbo, said the country must take heart from the way it rapidly industrialised from modest beginnings.
"We have a long road ahead and the Naro-1 launch is only the first step," it said in an editorial. "When we started shipbuilding and the IT industry, we were also behind others."
South Korea, despite its status as an international economic powerhouse, entered Asia's space race relatively late.
It has previously sent 10 satellites into space using launch vehicles from other countries.
In 2007 the country announced a plan to launch a lunar orbiter by 2020 and to send a probe to the Moon five years after that.
Itar-Tass: Two schooners flying Cambodia flag detained near Sakhalin
11.06.2010, 07.35
VLADIVOSTOK, June 11 (Itar-Tass) - The fishing schooners Tairy and Seiko flying the Cambodian flag have been detained for poaching near Sakhalin. Coast guard inspectors found on the schooners 8.5 tonnes of live snow crab, and the captains of the vessels had no permission for the catch.
The public relations group of the Sakhalin coast guard department of the Russian Federal Security Service (FSB) said on Friday that the poacher schooners were detained in the eastern part of the La Perouse Strait on June 10. In 2009, the same schooners had already been caught poaching when 16.5 tonnes of crab were found on them. Both vessels are currently under investigation.
Russia Today: Russian police find and destroy cop-killing gang
11 June, 2010, 09:00
Russian police said on Friday that they have found and surrounded the gang of cop killers that they have been chasing through the forests of the Far East over the past days.
Some of the suspects have been killed, but the rest are putting up resistance and reportedly have a hostage.
On Friday morning, RIA Novosti news agency reported that law enforcers had tracked and surrounded the armed group that had been attacking policemen in the Far Eastern region over the past week. Two suspects were killed in a shootout, while one has surrendered and another has locked himself in a shop, holding a saleswoman hostage. Two policemen and a passerby were wounded in the gunfight, the source said.
The operation is taking place in the city of Ussuriysk, in Khabarovsk Region. The local directorate of the Main Investigation Committee of the Prosecutor General’s office has neither denied nor confirmed the report.
Last week, the group staged an audacious raid on a police station. On Tuesday, traffic officer Arkady Povalyaev was the latest to be in their gun sights.
“We saw a suspicious vehicle passing by. When we told them to stop they didn't. We followed them. They turned in to a field, came out and started firing straight at us. We had to escape. I was shot in the leg,” Arkady Povalyaev remembers.
Over the past two weeks there have been three such attacks on police officers. At least one officer has been reported killed, while several have been shot. The gang is also suspected of killing two civilians whose car they stole.
Before the series of attacks hit the region, the gang sent out letters addressed to law enforcement forces, Russian newspaper Komsomolskaya Pravda reports. The criminals demanded resignations in police bodies. The threats were dismissed at the time.
Someone claiming to be the gang's leader has also posted messages on an Internet forum. He has accused law-enforcement officers of “occupying” Russia, and said the gang members are ready to lose their lives in fighting them.
Now, allegedly holed up in the forests of the taiga with a huge manhunt underway, a final shootout with the police seems inevitable.
“We are combing the forests. They are heavily-armed and one is a trained bomb-maker. But our ring is closing around them,” police department official Yury Krikunov acknowledged.
So far five members of the gang have been identified, but the police admit there could be more involved. According to a local police source, it is not clear how many criminals from the gang are currently enclosed in the forest. The source says the police will soon demand that the group surrenders, otherwise the police will have to use force, Interfax news agency reports.
Internet speculation is rife about the gang's identity and motives. While most have a poor opinion of the assailants, others have praised them as modern-day Robin Hoods.
Boris Kagarlitsky from the Institute of Globalization and Social Movements estimated that “One of the problems in society is that people have less and less reason to trust justice of the official side, to trust things that are going to be resolved in the legal way.”
“It is too early to say what drives these men. People say it is ideological. But they haven't just attacked policemen. We suspect they were involved in robberies as well, and they may just be attacking the police because we are on their tail,” police department official Yury Krikunov assumed.
Police believes the group of bandits has military training and connections to extreme nationalist movements.
Officials say it is vital the criminals are stopped before they escape further East, using their underground connections in the large city of Vladivostok, which will make them harder to hunt down.
June 10, 2010
Russia profile: Poppy Diplomacy
By Roland Oliphant
Russia Profile
Russia Has Launched a Publicity Offensive to Bring Attention to the Threat of the Afghan Heroin Trade, but There’s a Long Way to Go to Consensus
Russia hosted an international drugs conference in Moscow this week in a bid to put the problem of Afghan heroin production higher on the international community’s agenda. Afghanistan has seen a surge in opium production in the past decade, and Kremlin officials have long complained that most of it ends up on the streets of Russian cities. They have managed to win recognition of the problem, but there remains an insurmountable gap between what Russia wants done, and what NATO is prepared to do.
Since the beginning of the current conflict in 2001, Afghan heroin production has boomed from next to nothing when NATO forces first arrived, now accounting for some 90 percent of the world’s opiates – exporting 3500 tons annually according to the United Nations Office for Drugs and Crime (UNODC).
The effect on Russia, the largest single national market for Afghan heroin, has been traumatic. Heroin addiction levels have surged by a factor of ten in the past decade, to reach as much as two percent of the population. Russian addicts get through some 75 to 80 metric tons of Afghan opiates – about 20 percent of Afghanistan’s output – every year. According to government estimates the heroin epidemic kills 40,000 Russians annually – out of 100,000 victims worldwide.
Over the past two days these figures have been quoted, (and misquoted, and embellished) ad nauseam in the conference centre of Moscow’s Swiss Hotel, where the Russian authorities had summoned an impressive range of stakeholders to address what it sees as a long neglected problem. But while the diplomats and ministers from Russia, the United States, Afghanistan and Central Asia did their best to sing from the same song sheet – President Dmitry Medvedev set the tone with an opening address about “global responsibility” and a warning against politicizing the issue – when it came to the practicalities of fighting narcotics, major fault lines were apparent.
What is to be done?
The Russians, who hosted and organized the event, are pushing a seven point plan, known by the Tom Clancy-esque title of “Rainbow Two.” Much of it is unobjectionable – it calls for the UN Security Council to classify Afghan drug production as “a threat to global peace and security,” and advocates economic development and job creation in Afghanistan, sanctions against opium producers, better intelligence sharing and cooperation between national counternarcotics agencies.
But Russia also wants NATO to do more to eradicate narcotic crops (and not just opium poppies – Afghanistan is also the world’s number one producer of hashish).
Russian officials, who have been frustrated by television footage of British and American forces picking their way through poppy fields, have been calling for a Columbia-style eradication program. The director of the Federal Drug Control Service, Viktor Ivanov, a long-standing critic of NATO’s counternarcotics strategy in Central Asia, laid out his demands very clearly. “The EU and United States are spending $500 million in agricultural subsidies, but it is not reducing the opium crop,” he told the conference. “In Columbia, where subsidies were a fraction of that, production has been drastically produced – through eradication.”
The fight against cocaine production in Colombia is something the Russians keep on coming back to – they even invited a Colombian police colonel to offer insight into successful eradication strategies (for the record, he said the secret was to incentivize farmers to eradicate the crops themselves, not to spray herbicides from the air).
But it’s an analogy U.S. Ambassador John Beyrle politely but firmly rejected, citing the myriad of cultural, historical and economic differences between the two countries. Besides, argue the NATO countries, eradication is taking place – it’s just being carried out by Afghan rather than foreign forces.
Russia wants eradication written into ISAF’s mandate. Dmitry Rogozin, Russia’s outspoken ambassador to NATO, told Russia Profile on the sidelines of the conference that the only reason America is not eradicating Afghan opium poppies is that, unlike Colombian cocaine, “these drugs are not destined for America.”
“In this instance Mr Rogozin is not being fair, and he knows it,” countered Maurits Jochems, deputy assistant secretary general for plans in NATO’s International Secretariat. And he’s got a point. The United Nations’ chief expert on the matter, UNODC Director Antonio Maria Costa, made it clear that “there is no role for NATO forces in eradication at the farm level” because it risks turning communities toward the Taliban. (He also pointed out that production has actually dropped in the past year – party from interdiction, and partly because of a blight affecting the poppies). And lest suspicions be cast on Costa’s neutrality, it should be pointed out, he is the man behind the 2009 UNODC drug report that every delegate was quoting like it was divine truth.
So who’s right? Russia Profile thought it would be an idea to ask the Afghans themselves, but Counter Narcotics Minster Zarar Ahmad Muqbil sidestepped the question. “Why are we always talking about eradication?” he asked, before arguing at length that only an economic solution – providing farmers with alternative livelihoods – would solve the problem.
That is, of course, the ideal to which all the delegates aspire – in the long term. No one was willing to guess how long it will take.
BBC: Russia's drive to improve its image
Page last updated at 22:56 GMT, Thursday, 10 June 2010 23:56 UK
By Konstantin Rozhnov
Business reporter, BBC News
Russia, unhappy with its image abroad, has taken a fresh public relations approach to present a better view of itself and attract foreign investment.
One example is the Russian National Exhibition in Paris, organised by Russia's Ministry of Industry and Trade and being opened by the country's Prime Minister Vladimir Putin.
It's another attempt by Moscow to tell what it sees as the real story, different from what some Russian commentators call an excessively negative coverage of Russia in Western media.
In recent years, Russia has launched international English and Arabic news channels, hosted international economic forums and discussion clubs, started funding supplements in foreign newspapers and even hired some Western PR companies.
Large international PR agency Ketchum was hired to help Russia "shift global views" of the country prior to and during the 2006 G8 summit.
It said afterwards that the main aim had been "to ensure that Russia's openness, accessibility and transparency were widely communicated to participants and observers of the summit and to the media".
The Kremlin's greater openness during that summit, and its dignified response to the recent tragedy of the Polish presidential plane crash, certainly sent positive signals abroad.
But experts agree that it will require much more to change Russia's image than a number of PR moves, no matter how good and expensive.
"It takes generations for a country's international standing to change, and countries need a great deal of patience if they are serious about such things," policy adviser Simon Anholt told the BBC.
Conflict-related
Dmitry Gavra, Russian political expert and professor at the Saint Petersburg State University, believes that Russia's image has been damaged by both historical "negative constants" and some recent developments.
He highlights "image mistakes" made by Russian officials, a lack of institutional and structural reforms in the country and Russia's recent attempts to return to the system of global competition in geopolitics, technology and economy as the new factors.
They have been combined with the usual perceptions of Russia as a country with an anti-Western attitude, always eager to expand and position itself as a missionary in dealings with its neighbours and the rest of the world.
For example, gas rows with Ukraine and Belarus, seen by most Russians as purely economic disputes, were criticised by some Western opponents as Russia's attempts to use its energy superpower status as a geopolitical weapon.
Mr Anholt says that one of the main problems for Russia is a very low number of "informal ambassadors" around the world, such as famous consumer brands or international media personalities that people like and associate with Russia. The country also does not have a big tourism profile.
"Russia's business and political figures usually seem to acquire their international profile for negative reasons," says Mr Anholt.
"The only international media stories about Russia generally relate to conflict or instability."
Internal view
Mr Gavra also points out that it is impossible to separate internal and external images of Russia.
Bureaucracy, corruption, the huge gap in earnings between wealthy and poor Russians, the low prestige of state institutions, relations between the police and the people - all these factors create a negative image of the country, even among many Russians.
"Of those Russians who spend their holiday abroad, some do not even want to admit they are from Russia and try to speak foreign languages," he says.
In turn, Mr Anholt believes that Russia does not come over as being very well disposed to outsiders.
"The truth may well be rather different, but perception, unfortunately, always trumps reality," he says.
Positive moves
Experts agree that only big changes in Russian policy and in its dealings with the rest of the world could gradually improve the country's image.
The question is, though, whether Moscow is ready to implement these long-term changes and will not abandon them if the internal situation changes.
The Kremlin's rhetoric for most of the 2000s alerted many in the West, who considered it hawkish and unfriendly towards private business.
But Mr Gavra believes that "for many Russian officials, those things are right which are effective".
It was effective back then to be seen as tough, he says, but the situation has changed.
"We already see important changes in the areas which matter to Russia's Western partners," says Mr Gavra.
They include the new anti-corruption drive, new ways of dealing with suspected corruption and the rise of the internet.
This has brought about a kind of "electronic democracy", in which entrepreneurs can do much of their business online, avoiding queues and not having to deal with corrupt bureaucrats.
"These things will be better for Russia's image than 10 economic forums," says Mr Gavra.
As Mr Anholt puts it: "'What can Russia say to make itself liked?' is simply the wrong question.
"The only meaningful question is: 'What can Russia do to make itself relevant?'"
Bloomberg: Putin 'Trust' Rating Falls to Four-Year Low, Russian Poll Shows
June 11 (Bloomberg) -- Prime Minister Vladimir Putin's "trust" rating with the Russian public fell to the lowest level since 2006, according to the Public Opinion Fund.
Sixty-one percent of respondents in a poll conucted June 5- 6 said they trust the premier, down 3 percentage points on the week, while those who said they distrust Putin remained at 14 percent, said the fund, which is also known by its Russian acronym FOM.
The rating for President Dmitry Medvedev, who succeeded Putin in the Kremlin in 2008, also fell by 3 points, to 53 percent, the lowest since the first quarter of 2008, FOM said on its website. FOM said it polled 2,000 people in 44 regions. No margin of error was given.
RIA: Public trust in Medvedev, Putin drops 10%
12:07 11/06/2010
MOSCOW, June 11 (RIA Novosti) - Public levels of trust in Russian President Dmitry Medvedev and Prime Minister Vladimir Putin has dropped by almost 10% over the past six months, Russian daily Gazeta said on Friday.
A total of 53% of Russians said in June they trusted Medvedev, according to a survey by Russia's Public Opinion Fund. In January, the figure stood at 62%, and in May at 60%.
The current figure is the lowest since Medvedev took office in 2008. Only half of Russians (49%) then trusted their president. The number of those who say they do not trust Medvedev has risen by 3% over the past half a year.
Putin, the poll revealed, is considered more trustworthy than Medvedev. The pole showed 61% trusted their prime minister, a drop of 8% from January and 10% from the third quarter of 2009.
Some 14% of Russians said they do not trust Putin, 4% more than in January. In 2003-2005, when Putin was Russian president, only 46-47% of Russians said they trusted him.
Leonty Byzov, a senior research associate at the Institute of Sociology at Russia's Academy of Sciences, told Gazeta the research proved a theory that public confidence in the leadership of a country tends to drop after a crisis is resolved, rather when it is at its peak.
He said people begin blaming the authorities when the pace of economic recovery turns out to be slower than people expected. According to Byzov, the crisis caused an increase in the number of Russians who believe the country is going nowhere.
"It is linked with systematic corruption. People see no actions by Putin and Medvedev aimed at fighting it," Byzov said. "As a result, citizens are no longer satisfied with the minimum social guarantees provided by the authorities."
He said the increased number of billionaires after the crisis also served to lower public opinion of the government.
VOR: Press review
Jun 11, 2010 11:49 Moscow Time
Today the printed media are focused on the ongoing summit of the Shanghai Cooperation Organization, or SCO, in Tashkent. The Komsomolskaya Pravda reminds in an article that the SCO comprises Russia, Kazakhstan, China, Kyrgyzstan, Uzbekistan and Tajikistan. On the first day in the Uzbek capital the Russian leader Dmitry Medvedev was basically focused on bilateral talks with his SCO counterparts. He had a tête-à-tête meeting with the summit host, Uzbek President Islam Karimov, followed by his meeting with Chinese President Hu Jintao, President Nursultan Nazarbayev of Kazakhstan and Pakistani President Asif Ali Zardari (Pakistan has been granted an observer status with the SCO, along with Mongolia, India and Iran). A more prominent on the summit agenda is the situation in Afghanistan, with Medvedev speaking at length of the need to boost the efficiency of fighting Afghan drug trafficking at a recent anti-drug forum in Moscow. Another subject of major importance on the Tashkent summit agenda is SCO enlargement.
According to the Izvestia daily, the United States supports Russia’s joining the World Trade Organization and is drafting proposals for Moscow’s joining the WTO. In June last year the Russian, Kazakh and Belarusian Prime Ministers notified the WTO of that they would join it as a single customs area. All three nations suspended their independent talks with the WTO for consultations on agreeing a common Customs Union position. In October last year Russia, Belarus and Kazakhstan said they would resume talks on joining the WTO on a stand-alone but agreed-on basis.
The Gazeta publication quotes the ITAR-TASS news agency as reporting that Russian Foreign Ministry spokesman Andrei Nesterenko has told journalists that the UN Security Council resolution on Iran does not apply to air-defence systems, with the exception of shoulder-fired missiles. This is the way he replied to the question if the new resolution bans the delivery of Russian S-300 air-defence systems to Iran. Earlier the Duma International Affairs Committee Chairman Konstantin Kosachev made a similar statement.
According to the Noviye Izvestia daily, a largest German-Russian festival has got under way in Berlin. The event is held for the fourth time and is meant both for Germans and Russians. It is traditionally held at the Karlshorst hippodrome. The festival has taken over from the holiday of friendship between the peoples of the USSR and Germany, a holiday that was held in the German Democratic Republic in the past. The organizers believe that the festival is due to promote relations between the two countries’ cultures.
The Moskovsky Komsomolets daily wonders what will prove the most striking difference of the world football championships, kicking off in South Africa, from the previous ones. The correct answer is not climatic characteristics or playing skills, but a loud monotone of vuvuzelas, or local stadium horns, that are quite an irritant to some people (who claim they will turn off sound in their TV sets), while others really like the horn. So, it is vuvuzelas that will give the championships in South Africa an inimitable colouring.
Reuters: PRESS DIGEST - Russia - June 11
Fri Jun 11, 2010 7:36am GMT
MOSCOW June 11 (Reuters) - The following are some of the leading stories in Russia's newspapers on Friday. Reuters has not verified these stories and does not vouch for their accuracy.
KOMMERSANT
kommersant.ru
- Russia's Supreme Court has adopted a decree which effectively bans jailing people who commit economic crimes while running their own businesses, the daily says.
- Russia's gas monopoly Gazprom (GAZP.MM) has lowered its 2010 production plan by more that 10 billion cubic metres due to falling global demand for gas, the daily reports.
- The daily runs an interview with Russian Foreign Minister Sergei Lavrov on the upcoming meeting of Russian and U.S presidents.
VEDOMOSTI
vedomosti.ru
- 100,000 university professors may lose their jobs by 2015 due to falling student numbers as a result of low birth rates in the 1990s, the paper writes.
- Fifty-three percent of Russians trust President Dmitry Medvedev and 61 percent trust Prime Minister Vladimir Putin, a fall of 7 percent and 6 percent, respectively, the paper reports, citing a poll by the Public Opinion Foundation.
- Russian Finance Minister Alexei Kudrin on Thursday criticized Moscow's Mayor Yuri Luzhkov for not maintaining the city's road network, the paper reports.
- Russian President Dmitry Medvedev plans to build a ski resort in the North Caucasus at a cost of 450 billion roubles ($14.26 billion) to increase the flow of tourists to the region by 5-10 million people per year, the daily says.
- Russian car maker Avtovaz (AVAZ.MM) will receive 10 billion roubles ($316.9 million) from the government to restructure its debt by the end of the year, the daily writes.
VREMYA NOVOSTEI
vremya.ru
- The European Court of Human Rights in Strasbourg ruled that Russia has violated the rights of members of the Jehovah's Witnesses community in Moscow, the daily writes.
- Russia's gold and foreign currency reserves grew by 2.7 billion roubles ($85.55 million) to 458.2 billion ($14.52 billion) in a week from May 28 to June 4, the daily says.
NEZAVISIMAYA GAZETA
ng.ru
- Around 3,000 Russian soldiers and officers died and 12,000 were injured during service in the North Caucasus since 1988, the paper writes.
National Economic Trends
2010-06-11 08:46
Reuters: Russian rouble up on oil, profit-taking caps gains
MOSCOW, June 11 (Reuters) - The Russian rouble rose in early trade on Friday, buoyed by stronger oil prices and rallying stock markets, though gains were capped by still high domestic demand for dollars and by profit-taking.
By 0710 GMT, the rouble was up 14 kopecks at 34.41 against the euro-dollar basket, approaching the presumed range of 33.40-34.40 within which the central bank is expected to maintain interventions to absorb inflows of foreign currencies.
Such inflows into Russia's export-focused economy are assured by high oil prices that went above $75 per barrel on strong Chinese data, implying solid demand from the world's No. 2 oil user.
A generally positive backdrop supported the rouble but it remained pressured by lingering concerns about euro zone finances, and dealers say position squaring is possible on Friday in order to minimise risks ahead of the long weekend.
Russian markets will be closed on June 12 for a national holiday.
Against the dollar, the rouble firmed 23 kopecks to 31.38 and it gained 10 kopecks to 38.03 versus the euro .
Dealers said exporters are not as yet rushing to convert their dollar and euro revenues to meet local tax payments.
"There is a sense of shortage of dollars in the country amid lack of exporters' sales (of foreign currencies) and presumed redemption of corporate debts," said Denis Korshilov at Citibank in Moscow.
Profit-taking is also crimping rouble gains as local banks holding short positions in the basket use downside moves as an opportunity to lock in profits, Korshilov said.
In the longer term the rouble has the potential to firm due to possible inflows of foreign capital into Russian assets given fading risk aversion and buoyant oil prices.
"With the current environment on international markets the upward rouble trend will (continue)," said Ilya Ilyin, analyst at Nomos bank.
(Reporting by Andrey Ostroukh; editing by John Stonestreet) Keywords: RUSSIA ROUBLE/
(andrey.ostroukh@, +7 495 775 12 42)
Bloomberg: Russian Bank-Deposit Growth May Reach Record, Kommersant Says
By Paul Abelsky
June 11 (Bloomberg) -- Russian bank-deposit growth this year may exceed last year’s record as people seek safer investments than stocks and real estate, Kommersant reported, citing Alexander Turbanov, head of the country’s Deposit Insurance Agency.
The agency raised its forecast for 2010 to 25 percent growth from 20 percent, the Moscow-based newspaper said. Russians had 7.5 trillion rubles ($238 billion) in bank accounts at the end of last year, according to Kommersant.
To contact the reporter on this story: Paul Abelsky at pabelsky@
Last Updated: June 11, 2010 00:45 EDT
Moscow Times: Surprise Tax Inflows Prompt 3% Hike in Federal Spending
11 June 2010
By Anatoly Medetsky
The government on Thursday decided to increase spending by 3 percent this year because the recovering economy and expensive oil are generating bigger tax revenues than planned.
Spending will swell by 325.5 billion rubles ($10.3 billion) under the amendments to this year's budget approved by the Cabinet, making it the second consecutive year that revenues have beat expectations in the wake of the 2008 meltdown.
The government will sink almost half of the money into the Pension Fund to cover a shortfall caused by a huge increase in retirement payments, Prime Minister Vladimir Putin said. Most of the remaining cash will buy apartments for World War II veterans and military officers, he said.
"Obviously, thanks to the economic recovery, we now have a chance to increase funding for priority items and to reduce the budget deficit more rapidly,” Putin said. “I will stress, however, that the budget remains under strain.”
Finance Minister Alexei Kudrin said the spending did not risk spurring inflation, which shouldn't top 7 percent this year.
"Our forecast of lower inflation … is exactly why we consider it possible to increase federal spending," Kudrin told reporters after a Cabinet session. "It will not worsen the inflation rate."
The need for an additional transfer to the Pension Fund stemmed from its poor collection of payments so far this year, said Renaissance Capital economist Anton Nikitin.
The 125 billion rubles that Putin earmarked for apartments is almost half of the 280 billion rubles invested in the construction industry in April, the latest month for which statistics are available, Nikitin said. The extra cash injection from the government will provide "serious" support to homebuilders, he said.
In total, additional federal revenues will amount to 833.8 billion rubles, Kudrin said. After the deduction for the spending spike, the rest of the money will go toward plugging the budget deficit to reduce it to 5.4 percent of gross domestic product from the previously planned 6.8 percent, he said.
Kudrin had predicted over the past few weeks that this year's deficit would not top 5.9 percent, which it was last year.
While assigning new spending Thursday, the government also rearranged existing expenses. It allocated more funding to the renovation of Moscow's Bolshoi Theater, St. Petersburg's Mariinsky Theater and a children's recreation center called Okean, or Ocean, near Vladivostok, Putin said. He didn't give disbursement figures.
The government will also spend 16 billion rubles on building roads in large cities and 7.8 billion rubles on security measures for public transportation, Putin said.
Total budget spending will climb up to 7.8 trillion rubles, according to a Finance Ministry statement published on the Cabinet web site.
Additional non-oil and gas revenues will amount to 284 billion rubles. Of that sum, 113 billion rubles will come from the Central Bank's profit for last year, which it contributed to federal coffers, Kudrin said.
Additional oil and gas revenues will represent a much more solid 550 billion rubles, the ministry said in the statement.
The government will probably borrow $10.3 billion less abroad than it planned, setting the total ceiling at $53 billion.
The Cabinet will send the amendments to the State Duma in a matter of several days, Kudrin said.
Putin promised to revisit budget spending in the fall to raise the salaries to federally paid employees such as teachers and doctors if the economy allows. Nikitin said he doubted that the employees would see raises because that would put further, unnecessary strain on federal finances.
Moscow Times: Russia to Drive Regional Recovery
11 June 2010
By Irina Filatova
A rebound in Russia's economy will be among the main drivers of economic recovery in Europe and Central Asia this year, the World Bank said Thursday.
The region will see a 4.1 percent recovery in its real GDP, with Russia and Turkey accounting for 62 percent of that, the bank said in a report.
The World Bank expects Russia's economy to grow by 4.5 percent this year, more than the forecast of 4 percent announced by the Economic Development Ministry earlier this year. The bank's forecasts for 2011 and 2012 are 4.8 percent and 4.7 percent, respectively.
The Russian economy, which saw year-on-year growth of 2.9 percent in the first quarter, is likely to perform well over the first half of 2010, the report said.
But that growth may taper off by the end of the year.
"The recovery in Russia, initially export-led and fed by bounce-back factors, is expected to continue through the first half of 2010 but should lose some momentum toward the end of the year as these factors fade," the report said.
Unlike a number of small economies, including Ukraine, Belarus, Armenia, Bulgaria, Latvia and Lithuania, industrial production in Russia has bounced back and returned to the pre-crisis level driving the economic recovery in the region, the report said.
Industrial output in Russia rose 5.8 percent year on year in the first quarter, the State Statistics Service reported in April, after the indicator fell 10.8 percent in 2009.
But despite the positive indicators, weak consumer demand and investment levels, brought on by high unemployment and spare capacity, are lagging the broader economic recovery, the report said.
At the same time, the bank is expecting rising wages, oil revenues and "a reduced drag from the financial sector to support an increasing prominent role for domestic demand in the recovery."
"These forces, however, will be partially offset by the appreciation of the currency, which would curb export competitiveness," the report said.
Russia's oil-driven economy, whose contraction during the financial crisis and subsequent rebound was among the world's most volatile, has an outsized effect on some of the smaller, regional economies, which are largely dependent on remittances from the country, the World Bank said.
Workers' remittances from Russia to other members of the Commonwealth of Independent States declined by 26 percent and reached $5.3 billion in 2009, according to the Central Bank.
With Russia's GDP increasing over the coming two years, the economy in Europe and Central Asia is likely to grow by 4.2 percent and 4.5 percent in 2011 and 2012, respectively, the report said.
The growth for CIS countries in particular over the period will remain relatively stable at 4.5 percent.
Bne: Russia the driver for Europe's economic recovery
bne
June 11, 2010
Russia will play a key role in Europe's recovery as one of the few engines of growth on the continent in the near term, the World Bank said on June 10 in a report.
Russia together with Turkey will make up just under two thirds of all growth in the region this year. The economy of the region as a whole is expected to grow by 4.1%, but Russia's growth is already accelerating as it emerges from the other side of the crisis. Russia's economy is expected to grow by 5.3% in the second quarter of this year, according to Russian investment bank Renaissance Capital. The official forecast for this year is a more modest 4% of growth, but that is based on the budget assumption of an average oil price of $58, well below the current levels.
Turkey is also powering ahead. In a recent report the OECD predicted that Turkey would turn in growth of 6.8% this year. Both countries have managed to weather the financial storm well: Russia thanks to its extremely large hard currency reserves, and Turkey thanks to the fact its banking sector has been extremely prudent since the last big financial there in 2000.
"Turkey though still stands out as offering reasonably good news more or less across the board," Timothy Ash, head of research at Royal Bank of Scotland said in a recent report."
The World Bank expects Russia's economy to grow by 4.5% this year, and 4.8% and 4.7% in 2011 and 2012 respectively.
However, Russia's continued recovery is by no means a certainty. Renaissance warns that further out Russia's recovery is very dependent on oil prices remaining at the current level of about $74 and the state's ability to deliver on all the reforms it is currently attempting to put in place. If either oil prices fall or the Kremlin fails to make the reforms stick the bank predicts that growth will collapse again in 2013. The World Bank also warned that the growth could run out of steam.
"The recovery in Russia, initially export-led and fed by bounce-back factors, is expected to continue through the first half of 2010 but should lose some momentum toward the end of the year as these factors fade," the report said reports the Moscow Times.
Still, unlike its neighbours, Russia has already bounced back and largely returned to the pre-crisis level driving the economic recovery in the region, the report said. The bank is expecting rising wages, oil revenues and "a reduced drag from the financial sector to support an increasing prominent role for domestic demand in the recovery," forces that will be off-set by a return to the appreciation of the ruble, which has already gained 9% in value since the start of the year, the Central Bank of Russia said this week.
Still, the EU is well aware of Russia's potential to spur growth in their own markets and vowed to hit "the fast forward" button in improving relations with Russia.
EU President Herman Van Rompuy said at the end of the 25th Russia-EU summit, held in Rostov-on-Don at the start of June: "With Russia, we don't need a reset. We want a fast-forward," he said, referring to the "reset" of relations between Moscow and Washington last year.
Business, Energy or Environmental regulations or discussions
Bloomberg: Gazprom, Magnitogorsk, Rosneft, Severstal: Russia Stock Preview
June 11 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.
The Micex Index of 30 stocks climbed 1.9 percent to 1,340.09 at the close in Moscow. The dollar-denominated RTS Index rose 1.8 percent to 1,358.94.
OAO Gazprom (GAZP RX): The world's largest natural-gas producer may review export targets to Europe if the sovereign debt crisis hurts the economy, Chief Executive Officer Alexei Miller said. Gazprom slipped 0.2 percent to 157.68 rubles.
OAO Magnitogorsk Iron & Steel (MAGN RX): The Russian steelmaker is due to publish first-quarter results on June 11. Magnitogorsk advanced 1.1 percent to 23.16 rubles.
OAO Rosneft (ROSN RX): Crude oil jumped to the highest level in four weeks as equities surged after economic reports from China, Japan and Australia indicated the global recovery is strengthening. Shares in Russia's largest oil company rose 1 percent to 216.17 rubles.
OAO Severstal (CHMF RX): Russia's largest steelmaker is scheduled to hold its annual shareholders' meeting on June 11. Severstal added 0.9 percent to 316.61 rubles.
--Editor: Glenn J. Kalinoski
DJ: Russia Funds See Second Straight Week Of Inflows
Jun 10, 2010
MOSCOW -(Dow Jones)- Russia-focused funds reported their second consecutive week of positive inflows, as investors bet on emerging markets despite increased volatility in global exchanges, data from Emerging Portfolio Fund Research showed Friday.
Russia funds drew $108 million in new cash for the week ending June 9, compared to $74 million in the previous week. Among its peers in the so-called BRIC group of countries, China recorded inflows of $140 million and India funds drew $48 million. Brazil funds, however, saw outflows of $71 million.
Year-to-date, Russia-focused funds have drawn cumulative inflows of some $1.9 billion, more than any other BRIC country.
-By Ira Iosebashvili, Dow Jones Newswires; +7 495 232 9195; ira.iosebashvili@ -0-
Bloomberg: Boeing May Help Russia Make Biggest Cargo Jet, Kommersant Says
By Paul Abelsky
June 11 (Bloomberg) -- Boeing Co. may help Russia resume production of the Soviet-era Antonov An-124, or Ruslan, the world’s largest mass-produced cargo airplane, Kommersant reported, citing Foreign Minister Sergei Lavrov and United Aircraft Corp. chief Alexei Federov.
Boeing is in talks to particpate in the later stages of the production process to make versions of the aircraft for U.S. customers, the Moscow-based newspaper said today.
To contact the reporter on this story: Paul Abelsky at pabelsky@
Last Updated: June 11, 2010 00:39 EDT
June 11, 2010 10:19
Interfax: MMK net profit down 57% to $94 mln in Q1
MOSCOW. June 11 (Interfax) - Magnitogorsk Iron & Steel Works (MMK) (RTS: MAGN) saw consolidated net profit fall to $94 million in the first quarter, a decline of 57% from the fourth quarter of 2009.
The result is slightly below the consensus forecast of $100 million. MMK posted a net loss of $110 million in the first quarter last year.
Revenue in the latest quarter equaled $1.652 billion and EBITDA was $364 million. Those indicators were also lower than the consensus forecast ($1.715 billion and $381 million).
RTS$#&: MAGN
jh
Reuters: UPDATE 1-Russia's MMK beats Q1 profit forecasts
Fri Jun 11, 2010 6:39am GMT
* Q1 net profit $94 mln vs $110 mln loss last year
* Reuters forecast $85 mln net profit
* Q1 revenue rose to $1.65 bln vs $965 mln last year
(Adds detail)
MOSCOW, June 11 (Reuters) - Russia's Magnitogorsk Iron & Steel Works (MAGN.MM) (MAGNq.L) beat analysts forecasts as it swung to a first quarter net profit of $94 million, up from a $110 million loss last year.
The company, Russia's third largest steel producer, said in a statement on Friday it had moved into the black due to increased production and higher prices than in 2009 -- a year when the global economic crisis destroyed demand for industrial metals.
MMK said first quarter revenue soared to $1.65 billion, compared to $965 million in the same period last year and a Reuters forecast of $1.67 billion.
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) more than tripled to $364 million from $99 million.
The company's shares rose by around 1 percent in the opening on the Moscow market. (Reporting by John Bowker; Editing by Hans Peters)
Moscow Times: Kerimov May Finalize Outlines of Purchase in Uralkali
11 June 2010
Reuters
Senator Suleiman Kerimov could finalize the framework for the purchase of a stake in Russian potash miner Uralkali by the end of June, several banking and financial industry sources said.
The sources did not say how much of Uralkali the tycoon might purchase, but they noted that he will likely pay for the shares in installments and use part of his stake in Polyus Gold as collateral.
"The collateral will be about 10 percent," one of the sources said Thursday.
Kerimov is considered to be on good terms with the Russian government, indicating that it would support a share purchase.
He already owns 37 percent of Polyus Gold — Russia's largest gold miner.
The $5.5 billion share of Polyus Gold makes Kerimov Russia's 19th-richest businessmen, according to Forbes magazine.
Sources previously said Uralkali majority owner Dmitry Rybolovlev values his company at $10 billion.
Activity in the Oil and Gas sector (including regulatory)
News.az: Russia overtakes Saudi Arabia as world oil production leader
Fri 11 June 2010 | 06:33 GMT
Russia produced more oil and less gas than Saudi Arabia in 2009 and is now the world's biggest oil producer, Russian business daily said on Thursday.
Kommersant daily quoted BP's 2009 annual fuel and energy report as saying that global oil consumption saw its strongest decline since 1982 (down 1.7 percent year-on-year.)
BP CEO Tony Hayward said the report reflected long-term changes in the world's energy patterns and a trend towards more eco-friendly energy sources.
The report showed that while the oil extraction in the Organization of the Petroleum Exporting Countries (OPEC) saw a 7.3 percent decrease, Russia, Brazil, Kazakhstan and Azerbaijan increased their oil output.
Russia increased its output to 1.5 percent against the 10.6- percent-decline of Saudi Arabia and is the new leader in the sector. The United States occupy the third position in the world oil output with a 7 percent increase to 7,196 million barrels per day.
However, Russia fell from the top spot in gas production, which saw a 12.1 percent decrease in 2009.
Experts say it is unlikely that Russia will retrieve its status as the top gas producer as Europe will hardly increase its demand for Russian gas.
Vitaliy Kryukov of Russian private investment fund IFD Kapital said global energy demand is dramatically low this year. He says this is caused by the debt crisis in Europe and Chinese efforts to slow the economy to avoid overheating.
Kryukov said in the longer term, gas demand will overtake demand for other energy sources, especially in China, where natural gas will begin to replace coal.
RIA Novosti
Bne: Russia now world's leading oil producer
bne
June 11, 2010
Russia has overtaken Saudi Arabia to become the world's biggest producer of oil, Kommersant reported on Thursday. However, at the same time, the country was toppled from its leading role in gas production.
Quoting BP's 2009 annual fuel and energy report, the newspaper wrote that global oil consumption saw its strongest decline since 1982, with a 1.7% drop, year-on-year. BP CEO Tony Hayward said the report reflected long-term changes in the world's energy usage patterns, and a trend towards more eco-friendly energy sources.
Still, Russia increased its oil output 1.5% through the year, whilst Saudi Arabia dropped production by 10.6%. The US remains the third biggest producer in the world, and increased output 7% in 2009.
Overall, OPEC countries cut output by 7.3%, as the organization tried to stem production in order to support prices, which dropped to $40 at times during 2009. OPEC also spent much of the year complaining to Moscow that it was tiring of making such production sacrifices, whilst Russia did nothing, but still benefited from its action. Russia was joined by Brazil, Kazakhstan and Azerbaijan in increasing output last year.
However, Russia fell from its top spot in gas production, with a 12.1% drop through the year, with the Saudis taking over, and is unlikely to take back its crown in the near future, as European demand is unlikely to revive.
Moscow Times: Oil Tax Discount in Cards?
11 June 2010
The government may impose a discounted tax rate on exports of east Siberian crude on July 1, while cutting the duty on crude oil exports as much as 16 percent after international oil prices declined.
The standard export tax rate may fall to about $246 to $249.80 per metric ton, according to Bloomberg calculations based on Finance Ministry data.
A discounted tax rate of about $70 per ton may be imposed on east Siberian fields that now enjoy an exemption.
(Bloomberg)
VTB Capital: Export duty for East Siberia fields in July might be USD 9.5/bbl
VTB Capital
11 June 2010
News: According to Alexander Sakovich, the Head of the Ministry of Finances research department, as of 1 July the export duty on East Siberian oil will be USD 9.5/bbl, if the government sticks to the formula proposed by the ministry earlier this week. On Tuesday, Deputy Minister of Finance Sergei Shatalov said that an export duty for East Siberian crude was to be imposed starting from July, with the special rate set at 45% of the normal rate and a USD 50/bbl threshold.
Our View: The proposed formula implies that Rosneft would only have to pay around 30% of the statutory duty rate on Vankors crude through the end of 2010. The main question at this stage is whether the government will stick to the preferential rate for Vankor in 2011 and 2012. Should the government set a full export duty rate for Vankor starting from 2011, our 12-month Target Price for Rosneft would drop some 15%, from USD 11.9 to USD 10.3. While this would not undermine our bullish case for Rosneft, the stock could remain under pressure until there is full clarity over the duty mechanism.
Reuters: RPT-Med Crude-Urals quiet, seen topped out in Med
Fri Jun 11, 2010 8:08am GMT
* Urals NWE bid up to dated minus 75 cents, no interest
* Urals MED unseen, said fair at dated minus 45 cents
* Russian July monthly export duty projected to fall
(Repeats to additional subscribers)
LONDON, June 10 (Reuters) - Urals differentials firmed
slightly in northwest Europe on Thursday on supply tightness,
traders said.
Mediterranean activity was subdued in the assessment window,
and traders said they felt the upper limit of its discount to
dated Brent had been reached.
"Urals is being allowed at -0.475 (cents), but I do not
think Urals has any more legs," one trader said.
Urals has reached its strongest differential to dated Brent
in recent weeks on the back of increased demand and a much
tighter loading programme in June. [ID:nLDE64R1FJ]
RUSSIAN URALS
* In northwest Europe Glencore bid on a June 20-24 cargo at
dated Brent minus 75 cents with no interest, and Gunvor was seen
bidding on a June 21-25 at dated minus 85 cents. The grade is
said fair value around dated minus 90 cents.
* Gunvor withdrew an offer of July 1-5 NWE at dated minus 30
cents.
* There was no MED activity in the assessment window.
Traders said supply was tight as most cargoes were placed
through the second decade.
RUSSIAN FUNDAMENTALS
* Russia may cut oil export duties for July to $246-$250 per
tonne after oil from June's $292 per tonne based on lower oil
prices in the period from May 15-June 14. [ID:nLDE6590FZ]
FREIGHT RATES
* Baltic Exchange rates for Black Sea-Mediterranean ships
Aframax daily freight rates have fallen to W114.21, or $34,018
per day, from W116.67, or $35,124 a week ago. [CRU/TAN]
AZERI LIGHT
* Traders said Azeri Light was fair value cif Augusta at
around dated plus $1.70, with most of the first decade already
sold, and indications the differential could get stronger.
"There's no reason why it can't get to $1.85," one trader
said.
SWAPS
* Traders said Urals CFDs were roughly unchanged on
Thursday:
MED NWE
B O B O
JUN -1.00/-0.65 -1.25/
JUL -1.15/-1.05 -1.45/-1.20
AUG -1.35/-1.10 -1.45/-1.20
SEP /-1.00 -1.45/-1.20
Q3 -1.45/
Q4 -1.80/ /-1.00
REFINING MARGINS
* Urals margins for complex refineries in the Mediterranean
rose on Thursday to around $2.29 from Wednesday's $2.09 and
below the average of $4.11 over the last 5 days, according to
Reuters models.
For a database of oil supply and demand fundamentals
upstream and downstream, Reuters subscribers can click here
(Reporting by Chris Baldwin; editing by Keiron Henderson)
11.06.2010
Oil and Gas Eurasia: Irkutsk Oil Company and Marubeni Ink Cooperation Memorandum
The Irkutsk Oil Company and the Japanese trading company Marubeni Corporation signed a memorandum on cooperation on June 10, the Irkutsk Oil Company reported in a news release. The goal of the memorandum is to confirm the two companies' strategic relationship in refining natural gas and associated petroleum gas (APG), including the construction of gas pipelines, gas refineries and gas chemical facilities. the companies will also implement energy conservation and environmental protection projects, supply equipment and construction know-how for oil and gas condensate fields and organize financing for projects in Irkutsk region, attracting Japanese credit agencies.
The memorandum was signed by Irkutsk Oil Company General Director Marina Sedyx and Marubeni Executive Director S. Ikuta.
Copyright 2010, Oil and Gas Information Agency. All rights reserved.
11.06.2010
Oil and Gas Eurasia: SIBUR Net Profits Rise 20.6 Percent on Asset Sales
According to SIBUR Holding's consolidated financial report for 2009, the company's net profits rose 20.6 percent to 19.3 billion rubles, the company reported in a news release. At the same time, the company's revenue slipped 7 percent to 161.4 billion rubles and its EBITDA figures dropped 21.9 percent to 31.8 billion rubles.
The main factor influencing the drop in EBITDA was the fall in demand and price for oil products on both domestic and foreign markets. Net profits rose due to income generated from selling off non-core assets (the company left the methanol business), lower income taxes and hedging on currency rates.
In 2009, 27.6 billion rubles was spent on modernizing production (in 2008, 33.6 billion rubles was spent on these purposes).
Despite the economic crisis, SIBUT managed to execute large projects including the launch of the second line of the South-Balyk gas refinery and treatment facilities at Voronezhsintezkauchka, the modernization of production of ABC+PC materials at the Plastik unit.
Pure debt to EBITDA at the end of 2009 was 1.36. This figure is inline with international figures and allows for debt to grow to carry out investment programs.
Copyright 2010, Oil and Gas Information Agency. All rights reserved.
10.06.2010
Oil and Gas Eurasia: TNK-BP Discovers New Oil Reservoir in Sorochinskneft Licensed Area
A new oil reservoir has been discovered in Frasnian deposits in the Vostochno-Radovsky license area of NGDU Sorochinskneft, a TNK-BP subsidiary, Sorochinskneft Exploration Department Head Alexander Popov said. Production of Frasnian oil will begin after drilling and case-hole testing works are completed.
NGDU Sorochinskneft is conducting extensive exploration works. Construction of two exploration wells is currently underway in the Vostochno-Radovsky and Vostochno-Tolkaevsky license areas. Three-dimensional seismic exploration is started in the Kichkassky license area, which will complete last year’s exploration works for fulfillment of license commitments and exploration of the Alisovsky license area.
Copyright 2010, TNk-BP. All rights reserved.
Moscow News: Is Russia BP’s ace in the hole?
by Oleg Nikishenkov at 10/06/2010 19:36
As BP’s struggle to stem the biggest oil spill in US history in the Gulf of Mexico passes its 50th day, speculation is mounting over whether the oil major can survive.
Yet it could be BP’s Russian joint venture, TNK-BP, which is helping hold the company up, generating huge dividends for its shareholders just two years after its future was the source of rumours that the British firm would be forced out.
The international pressure is growing on BP, in particularly its CEO Tony Hayward after President Barack Obama said the embattled boss deserved to be fired. In the US a boycott of BP service stations is gathering pace as consumers become increasingly disappointed with the firm’s slow, chaotic response to the disaster.
Credit Suisse believes that the total liability could add up to $17.6 billion after clean-up costs and claims.
But BP’s investment in Russia is unlikely to be affected due to the firm’s strong cash flows.
“The accident in the Gulf [of Mexico] did not directly impact BP’s investment in Russia,” said Roland Nash, of Renaissance Capital. “I would be really surprised if BP sells off its equity interest to write off financing. It depends on how bad things get in the Gulf, but the money BP is spending aren’t yet threatening its financial integrity.”
BP has increased its focus on Russia after it sold its interests in Kazakhstan in 2009, and analysts believe any sharks looking to take a bite out of the beleaguered firm will see the price rocket back up.
“I can’t think of anyone who could find the cash to buy half of BP,” said Mitroshin, senior oil and gas analyst at Otkritie. “To acquire such a company one would need to offer a serious premium to the current market price, and if this process starts the price of BP equity may surge back to where it was before the spill.” page 4
BP has seen its stock value plummet from over $180 billion in mid April to under $90 billion on June 9.
Clean-up ultimatum
On Thursday, Obama’s administration gave the company three days to present its latest clean-up plans to the government as signs of distrust towards the company grow. In addition to the direct costs from the explosion at Macondo, which killed 11 people, BP could also face years in the doghouse.
“Macondo raises questions regarding BP’s future ability to win licenses as a reliable global operator, arguing for a higher discount rate versus peers,” Credit Suisse analysts wrote in a note on May 28.
As its position in the US weakens, the oil major’s lucrative joint venture in Russia, TNK-BP, could become increasingly important as it will avoid most of the Gulf fallout.
“TNK-BP wasn’t affected by the Gulf spill at all, except negative PR associated with the BP name,” said Scott Semet, head of research at IFD Kapital.
In London, BP spokesman Mark Salt praised the Russian joint venture, saying they were “committed to add[ing] value to TNK-BP and to grow its capability in the interest of all shareholders.”
“[TNK-BP has] generated a net profit over $33 billion since its creation; … paid its shareholders over $26 billion in dividends [and] has increased by 33 per cent organic production since 2003,” Salt said in an e-mailed response to questions.
A senior official at the holding company for the Russian shareholders in TNK-BP, Alfa Access Renova (AAR), who asked not to be identified, also said that the Macondo disaster would have no effect on TNK-BP.
Two years ago BP and AAR, the Russian major shareholder in the venture, went head-to-head over then BP-appointed CEO, Robert Dudley, who has now been moved to the latest tough project, leading the Gulf clean-up.
Kovykta unit’s bankruptcy
Despite the obvious improvement in relations between the two sides and the solid profits, problems remain for the oil major’s operations in Russia.
President Dmitry Medvedev has criticised BP and proposed an international fund for insuring against global environmental risks, while Deputy Prime Minister Igor Sechin has called for tougher safety requirements.
And last week TNK-BP’s Rusia Petroleum was declared bankrupt after failing to develop Kovykta, despite investing $600 million in the gas field, potentially one of the world’s largest with reserves of more than 2 trillion cubic metres of gas.
Alexander Pasechnikov of the National Energy Security Fund, a think tank, said that the Kovykta field was being used as a political football between the state-backed giants Rosneft and Gazprom.
“[Minister of Natural Resources] Yury Trutnev already declared that Kovykta gas basin will be explored whether the bankruptcy takes place or not, and Gazprom is a favourite in this race,” Pasechnikov said.
The current gas glut means that TNK-BP may be in for a long wait for bidders, and this could drive the price down with owners Viktor Vekselberg and Mikhail Fridman reportedly keen to get rid of it.
FT: BP's Russian misadventure may be useful experience
By Paul Betts, Andrew Hill and Joe Leahy
Published: June 11 2010 03:00 | Last updated: June 11 2010 03:00
BP is no stranger to dealing with threats from politicians. But they usually come from the Kremlin, not Capitol Hill.
The risk of expropriation of assets and abuse of shareholder rights have been facts of life for BP in Russia in recent years. TNK-BP, the oil company's Russian joint venture, has endured a long-running stand-off with Gazprom, the state gas supplier, over its interests in the country. In the middle of a 2008 dispute with investors, Bob Dudley, the American now in charge of BP's US oil spill response, attempted to run the venture from exile in an unknown European location. Little did he know that experience obtained in the rough-and-tumble world of Russian oil would be valuable to him in his homeland.
But recent history suggests Mr Dudley should not have been surprised by the heavy-handed US response. When anti-gambling laws were tightened in 2006, the US became a no-go zone for directors of UK-listed online gaming companies, after some were arrested and, in at least one case, prosecuted when they passed through US airports. In 2008, Mike Turner, then chief executive of BAE Systems, and Sir Nigel Rudd, a director and one of the UK's most senior business figures, were detained by US authorities investigating bribery allegations against the defence group (a case settled earlier this year).
Some British shareholders in BP and senior UK business figures see lawmakers' threats to force suspension of dividends, or President Barack Obama's suggestion that he would have sacked Tony Hayward, the BP chief executive, in the same light. One former chairman of a FTSE 100 company said he always tried to avoid lawsuits and confrontation with government in the US because "they tend to favour their own".
Unlike in Russia, where cooked-up environmental concerns were used to pressurise foreign oil companies, BP and Washington are dealing with a genuine environmental catastrophe. But, as in Russia, the decision on whether to drive BP to the wall lies in politicians' hands. BP can cover the cost of a clean-up. What it cannot do is fight a politicised attempt to drive it out of business. If Mr Obama and US lawmakers want to keep the faith of global companies and investors, they must recognise that to act on the more lurid threats would be a step too far.
Bharti into Africa
For Bharti Airtel's controlling shareholder, Indian billionaire Sunil Mittal, the hard work has just begun.
Mr Mittal, chairman of India's largest mobile operator, this week closed the company's $10.7bn acquisition of most of the African networks of Zain of Kuwait.
The deal has gone relatively smoothly given the terrain - Bharti had to win the approval of regulators across 15 markets. But a sign of the challenges in turning round the networks came when Standard & Poor's downgraded Bharti's credit rating to "BB+" from "BBB" after the closure of the largely debt-funded deal.
The rating agency said Bharti's leverage and cash flow ratios would "deteriorate significantly" and it would be exposed to high political risk.
On the other hand, the deal enlarged Bharti's subscriber base by more than 30 per cent to 170m users and revenue by nearly 50 per cent to $12.5bn.
S&P warned if Bharti's debt following the deal consistently exceeded three times earnings before interest, taxation, depreciation and amortisation, the rating could be downgraded further. But if it fell below two times ebitda, it could be upgraded. Bharti's debt was 1.4 times ebitda at the end of last year.
Brokerages have similar concerns. HSBC analyst Rajiv Sharma said in a research note that earnings accretion from the deal could be nearly four years off and even then would not be significant.
Mr Mittal rose from small beginnings to conquer India's telecoms industry. Replicating this in Africa could prove an even greater challenge.
Cultural revolution
For the unlisted French family mass retailer Auchan, the idea of floating its booming Chinese hypermarket business on the Hong Kong stock exchange is something of a cultural revolution.
Auchan first invested in China a decade ago and its retailing business is now part of a joint venture, Sun Holding, with Taiwan's Ruentex group and its RT Mart China brand. The two combined have become China's leading mass retailer, ahead of Carrefour and Walmart.
The money from floating a 30 per cent stake in Sun Holding would finance construction of hypermarkets in smaller urban centres and help the partnership maintain its Chinese market leadership. Well worth a cultural revolution for Auchan's controlling Mulliez family.
world.view@
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Gazprom
Reuters: UPDATE 2-Gazprom to sign South Stream deal with EDF next week
Thu Jun 10, 2010 6:03pm GMT
* Gazprom in talks with EDF on size of stake
* Gazprom wants to stick to end 2015 deadline for pipeline
(Adds meeting with EDF, size of stake)
CANNES, France, June 10 (Reuters) - Russian gas firm Gazprom will sign a deal with EDF (EDF.PA) next week involving the French utility taking a stake in the multi-billion South Stream gas pipeline project, the CEO of Gazprom said on Thursday.
Gazprom CEO Alexei Miller said he would meet with EDF's CEO Henri Proglio on Friday to finalise the deal. One option for EDF, Miller said, was for the French former power monopoly to take a 10 percent stake in the pipeline project.
Previously, Italy's ENI (ENI.MI) and gas giant Gazprom (GAZP.MM), who are partners in the 20 billion euro plus project, had said they had offered EDF an up to 20 percent stake.
South Stream aims to carry gas from Russia under the Black Sea to the Balkans and into Europe.
"The Southstream project will gain new momentum with the signing [of the accord] next week," Miller told journalists in a briefing on the sidelines of the European Business Congress.
Construction of the South Stream pipeline, which will transport up to 63 billion cubic metres (bcm) of gas a year, will start in the first half of 2012.
European Union politicians see it as a rival to the Brussels-backed Nabucco pipeline, which will bring Caspian and Central Asian gas to Europe, bypassing Russia.
Miller said that Gazprom was determined to stick to its latest deadline to complete the South Stream gas pipeline, designed to supply southern Europe with new volumes of Russian gas, by end of 2015. But he admitted that the target was ambitious.
"Our foreign partners know its a tight schedule, and a tough one," said Miller.
(Reporting by Muriel Boselli; Editing by Keiron Henderson)
Reuters: Gazprom, Naftogaz merger still being discussed-Azarov
Thu Jun 10, 2010 4:40pm GMT
KIEV June 10 (Reuters) - Ukrainian Prime Minister Mykola Azarov said on Thursday a Russian proposal for a merger between Russia's gas export monopoly Gazprom (GAZP.MM) and Ukraine's energy company Naftogaz was still under discussion.
Russian Prime Minister Vladimir Putin took the new leadership of the ex-Soviet republic by surprise in April by proposing to merge the two.
In an interview with Reuters, Azarov indicated that the Ukrainian government had suggested, as part of a possible deal, that Moscow hand over a gas field to Ukraine for development.
"The question of Putin's proposal has not been put off. It is current," said Azarov, in reply to a question.
"When the head of a neighbouring government suggests thinking about merging our efforts in mutually-advantageous conditions, we would ask: How do you see a merger of these efforts?," Azarov said.
He said if there was a "mutually-advantageous proposal" in which Ukraine was given a gas field from where it could extract gas that would mean getting gas cheaper.
"We must find an appropriate mechanism which would allow us to go to them (the Russians) with our proposals," he said.
A merger of the two companies could give Moscow control over Kiev's gas transit network which ships a fifth of Europe's gas consumption from Siberian fields.
Barentsobserver: Gazprom to invest 14 billion RUB in production program
2010-06-10
Gazprom will invest more than 14 trillion RUB in the production program in the period 2010-2013, says Gazprom official. 40 percent of the investments will be used on Yamal and Shtokman. At the same time, Gazprom has lowered the prognoses for production in 2010.
According to Deputy Head for strategic development in Gazprom Sergey Pankratov, the company’s projects on the Yamal peninsula and the Shtokman offshore gas field in the Barents Sea will take 40 percent of investments in the coming four years, web site RosBiznesKonsalting writes.
According to head of Gazprom’s production department, Vsevolod Cherepanov, the company plans to produce 519 billion cubic meters of gas in 2010, a reduction from the original plan of 530 billion cubic meters. The reason for this is lower demand for gas on the markets.
In course of the five first months of 2010 Gazprom produced 228,588 billion cubic meters, which is 21 percent more than in the same period in 2009, Vedomosti reports. The company has experienced a sharp decline in demand for gas in the month of May, and explains this with seasonal variations.
Gazprom plans to increase production in the period 2011-2013, from 528,6 billion cubic meters in 2011 to 565,5 cubic meters in 2013.
FT: Gazprom resists pressure to alter its contracts
By Catherine Belton in Moscow
Published: June 11 2010 03:00 | Last updated: June 11 2010 03:00
Gazprom chief executive Alexei Miller yesterday fought back against pressure to further renegotiate its oil price-linked contracts as the Russian gas group battles falling demand and an influx of alternative gas sources.
Mr Miller said he expected demand in Europe, where Gazprom supplies about 20 per cent of the continent's gas needs, to recover by 2012. This would close the gap, he said, between pipeline gas prices and spot ones, which are currently much cheaper.
The state-controlled gas export monopoly is coming under pressure to further renegotiate its long-term gas contracts, which are linked to the oil price, to reflect sweeping change on global gas markets. Spot prices have fallen amid an influx of liquefied natural gas into European markets and the rapid development of alternative shale gas in the US.
For the first time, Gazprom earlier this year renegotiated its contracts with European energy groups to allow for up to 15 per cent of the sales to be tied to spot prices. But talks are still ongoing on further changes.
The company has also been forced to delay two flagship projects to develop big new gasfields on the Yamal Peninsula and in the Arctic because of the changed market conditions.
Addressing the annual European Business Congress in France for the first time since 2008, Mr Miller said sales had recovered in the first few months of 2010, "but the month of May has seen the positive trend reversed. As we see, financial turmoil in the eurozone has started to affect energy markets."
Swiping at those pressing for linkage to spot prices, Mr Miller said this price could soon rise as demand recovers, while Gazprom's long-term contracts offered greater stability.
"In several cases we have agreed to take into account the spot market component," he said. "But please note: when in a couple of years the market bounces back, do not ask us to revert to previous price practices."
Jonathan Stern, director of gas research at the Oxford Energy Institute, said Mr Miller's comments on gas prices appeared to be "overly optimistic".
"The only way that can happen is if demand recovers to where it was in 2008 and all the additional supply [from LNG and shale gas] is absorbed. It is possible but it seems overly optimistic . . when you see the crisis going through the eurozone," he said.
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June 11, 2010
Times: Gazprom boss joins calls for BP blowout inquiry
Robin Pagnamenta, Energy Editor
Leaders of the world’s biggest oil and gas companies have held crisis talks to determine the cause of BP’s deadly accident in the Gulf of Mexico, the chairman of Gazprom told The Times.
Alexei Miller, who leads the Kremlin-controlled gas export monopoly that supplies almost 20 per cent of Europe’s gas supplies, said: “After the accident, of course, the leaders of the top oil and gas companies have been communicating and asking why and how this happened. These are people with a lot of gravitas and authority.”
Mr Miller, who met Paolo Scaroni, chief executive of ENI , the Italian oil group, yesterday, said a full investigation was essential into the causes of what he said looked like a “freak accident” that occurred because of multiple failures of different pieces of equipment and safety devices.
He also emphasised that it was vital to determine the cause of the deadly blast on April 20 quickly because of the growing importance of offshore drilling to future global energy supplies. “The overall trend is to increase the overall volume of oil produced offshore in the years ahead.”
BP figures published this week showed that total industry production from the Gulf of Mexico provided the biggest single increase in world oil supplies last year — of nearly 400,0000 barrels per day.
Mr Miller said it was too early to say what the long-term implications of the accident would be for BP or whether there would be damage to the company’s reputation or its ability to do business in Russia — one of its biggest markets.
He also forecast that oil and gas prices would rebound in 2012, with crude prices reaching more than $100 per barrel driven by strong industrial demand.
“By 2012 the gas market will recover fully and Gazprom is planning the volumes of production and deliveries to be above pre-crisis levels. By that point we think that gas prices will be in the $100-plus corridor.”
He also launched a withering attack on European plans for a revolution in green energy, drawing parallels between subsidies for wind and solar energy and the creation of a Soviet planned economy.
Mr Miller, a close associate of Vladimir Putin, the Russian Prime Minister, dismissed Europe’s plan to eliminate carbon emissions from its economy by the middle of the century through the widespread adoption of renewable energy as science fiction. “Maybe it’s not bad that European authorities are ready to invest huge sums of money at the expense of taxpayers, in the widespread use of renewable energy. We are aware that some European governments are considering the introduction of mandatory fixed quotas for renewable energy.
“We in Russia are well familiar with the Soviet-planned economy. And their results are well known: under mandatory distribution, natural incentives to improve competitiveness evaporate. This is a disservice to consumers but also to the new alternative energy.”
Speaking at the European Business Congress in Cannes yesterday, Mr Miller also sought to explode what he described as another “myth” — the revolution in world gas supplies triggered by the growing development of unconventional shale gas resources in the United States.
He suggested that talk of a long-term transformation in the world’s gas market caused by growing supplies of shale gas was a “fashion trend” rather than a long-term shift in the industry.
“It is obvious that this combination of factors is temporary. Shale gas will play an important and useful role in balancing gas markets at the regional level but there are no reasons to crown it and elevate it to the king of the gas market,” Mr Miller said.
Gazprom, which supplies a quarter of Europe’s gas, has been hit hard by falling global prices for the fuel, which have been caused by the growth in shale gas supplies from the United States.
Miller’s plans crossed out
Commentary Robin Pagnamenta
In the world of energy geopolitics Alexei Miller is a pivotal player.
As the man who runs Gazprom, Russia’s biggest company and the world’s largest natural gas producer, he has close ties to the Kremlin and oversees a vast industrial operation that supplies a quarter of Europe’s gas needs through pipelines from fields in the farthest corners of the Siberian Arctic.
But Dr Miller, 48, who grew up in St Petersburg, is on the defensive.
Surging production of “unconventional” gas in the United States, and now elsewhere, has loosened Gazprom’s grip on Europe’s energy and depressed prices of the fuel worldwide.
As a result, Gazprom has been forced to shelve a string of big gas projects to deal with the downturn, although it is pressing ahead with two mammoth projects, Nord Stream and South Stream, to build subsea pipelines to Western Europe via the Baltic and Mediterranean seas.
After studying economics in St Petersburg, he worked for the Mayor’s office in his home town — where he worked for Vladimir Putin, then a senior official in the municipal government before he became President. He was later appointed Russia’s deputy energy minister and since 2001 has served as Gazprom chairman.
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