Moscow, November 10 (RIA Novosti)
KOMMERSANT
Duma Toughens Control Over Hi-Tech Exports
On November 9 the Russian State Duma passed amendments to the Administrative Violations Code in the first reading. The amendments stipulate tougher control in the area of military-technical cooperation. Russia may now have trouble operating in international hi-tech markets, some deputies say. Experts believe that this bill is spearheaded against Washington.
The amendments were drafted by Russia's Defense Ministry, which is responsible for military-technical cooperation with other countries. They stipulate tougher administrative responsibility for violations of export control legislation with regard to goods, services, operations, information and results of intellectual activity that may be used to develop weapons of mass destruction, as well as other types of weaponry and combat hardware. Moreover, it is intended to increase the statute of limitations for violating export control procedures from 60 days to one year.
Defense industry enterprises reacted with understanding to these measures. "No one in the world would be able to make far-fetched accusations concerning our military supplies, after we adopt this world-class legislation," a source at the Tula-based instrument engineering design bureau said. This enterprise has the right to independently export its military products.
According to independent experts, the decision to amend legislation in the field of military-technical cooperation is a reaction to Washington's long-standing criticism of Moscow's insufficient control over nuclear and missile technologies.
"This implies Moscow's goodwill with regard to its U.S. partners. These measures will enable the government to defend Russian interests in case of U.S. pressure at a time when Washington regularly demands that we curtail or stop our cooperation in the field of dual-purpose technologies with Iran, China and India," Ruslan Pukhov, director, Centre for Analysis of Strategies and Technologies, noted.
NEZAVISIMAYA GAZETA
Russia's Ex-Premier Switches to New Election Campaign Tactics
Last week, Russia's ex-premier Mikhail Kasyanov changed his election campaign tactics. Once an ardent oppositionist, he now calls himself a constructive opponent of the Kremlin. Supposedly, Kasyanov has taken his fellow-oligarchs' advice and changed into a "peacemaker's" clothes. True, this fancy dress will hardly deceive anybody.
Kasyanov does not always sound sincere. His stint as prime minister was followed by a swift series of discoveries that are "sore spots in Russian society." However, the ex-premier's recent trip to Samara on November 1-3 seems to have marked the turning over of a new leaf.. Once an enthusiastic activist for Russia's "orange" happiness, he now appears as a calm, sensible and sober leader of "the new democratic wave."
Some six months ago, Mikhail Kasyanov returned from the U.S. to declare that he would be running in the 2008 presidential elections. He unleashed strong criticism on the results of administrative reform and amendments to the election legislation and proposed staging a new redistribution of property. Now he looks as if he has mellowed. The ex-premier is now paying his respects to the government and points to just a few of its "mistakes" saying that the president deviated from the appropriate action just recently (after the Yukos case) and hinting that he, Kasyanov, is a successor to the "formerly correct" Putin.
However, it's clear that this new image is the same old mask and Kasyanov's deviation from his aggressive tactics of clashing with the Kremlin is nothing but a tactical trick because he continues to support the opposition and has, in no way, abandoned his previous rhetoric of secretly attacking the government. So, the ex-premier's theatrical moderateness looks like just a disguise.
IZVESTIA
Nazarbayev Suits Both Moscow and Washington
The United States is looking for an eastern bridgehead seeking a prompt response to changes in the Russian regions. The U.S. and NATO have a western bridgehead - the Baltic countries and possibly Ukraine, and the only possible site in the east is Kazakhstan.
In view of the deterioration of U.S.-Uzbek relations, Washington needs to carefully analyze the situation in Kazakhstan and its relations with Russia, China, Iran, Turkmenistan and Uzbekistan.
In this situation Kazakhstan's President Nursultan Nazarbayev has to pursue a very delicate policy, maneuvering and taking proactive steps in the Russia-China-U.S. triangle. Kazakhstan commented rather tacitly on the withdrawal of NATO troops from Uzbekistan. It is not against their deployment in Kyrgyzstan, is not spurring cooperation with Turkmenistan, and its relations with Russia spotlight the economy, which determines policy.
Kazakhstan is one of Russia's top ten trade partners. While conducting independent WTO accession negotiations, Moscow and Astana coordinate their positions. Kazakhstan, with a population of 15 million and energetically growing production, needs Russian markets. And Russia is developing relations with it in the hope that this will encourage other post-Soviet states to become its partners.
Moscow is aware of the futility of putting pressure on Kazakhstan, as Astana is becoming increasingly independent in terms of energy. But political factors, primarily joint resistance to the threat of "color revolutions," are no less important for Moscow. The Kremlin is becoming the most consistent ally of Astana in this respect.
The current leadership in Kazakhstan and its President are a compromise choice for the U.S., Russia and China. A direct or indirect incitement of "orange" sentiments there will depend both on the situation in the country and on Washington's relations with Russia, Iran and China.
VEDOMOSTI
RAO UES Leaves Moldova Without Electricity
Yesterday Russia resorted to unprecedented economic measures against Moldova. RAO UES suspended power supplies to the country because of its refusal to accept new tariffs.
The Russian energy monopoly owns 100% of the Moldovan thermal electric power plant located in Transdnestr, which yesterday cancelled supplies. The plant accounts for 54% of electricity consumed in the country. It explained the decision by Moldova's refusal to accept the increase in tariffs - 4.08 cents per one kWh instead of the previous 3.05 cents.
Relations deteriorated between the two countries after the parliamentary election in Moldova in March 2005. The ruling Communist Party won the vote and had the opportunity to reelect its leader Vladimir Voronin to another presidential term. The Kremlin supported his rival, Serafim Urekyanu, and Russian mass media campaigned in his favor. The Moldovan authorities sent over a hundred Russian observers out of the country. In response, the Russian parliament urged the government to introduce entry visas for Moldovans and economic sanctions against the country. A week after the election Valery Pasat, foreign economic adviser to the RAO UES chairman of the board responsible for the country's projects in Bulgaria and Moldova, was detained at the Chisinau airport. Moldovan prosecutors accused him of organizing the theft of state-owned property.
The parties did not confine themselves to political swordplay. Last summer Gazexport raised gas prices for Moldova by 5.6%, from $71 to $75 per 1,000 cubic meters. Gazprom's deputy CEO Alexander Ryazanov warned that another increase was planned for early 2006. Last spring Russia suspended meat and vegetable imports from Moldova. In early September, the Federal Customs Service suspended, for two months, the issue of excise duty stamps to exporters of Moldovan wines.
Konstantin Zatulin, director of the Institute of CIS Studies, says that as Moldova has taken a pro-Western stand, Russian companies have the right to behave as they see proper. Gleb Pavlovsky, president of the Efficient Policy Foundation, maintains that President Voronin is "conducting an inexplicably aggressive policy against Russia." He believes that the only way out is to make the two countries' relations purely commercial, which is exactly what Russia is doing.
VREMYA NOVOSTEI
Gazprom, LUKoil to Grab Eastern Russian Resources
On November 9 LUKoil president Vagit Alekperov met Gazprom board chairman Alexei Miller and discussed detailed joint strategies for controlling Eastern Siberian and Far Eastern resources.
It was announced two years ago that a consortium involving state-controlled companies, namely, Gazprom, Rosneft and Surgutneftegaz, would try and establish control over Eastern Siberian and Far Eastern mineral deposits. However, this consortium never materialized after a standoff between Gazprom and Rosneft. Gazprom, which was ordered to develop regional deposits, decided to forge an alliance with LUKoil and to buy a stake in the Sakhalin-3 project together with this company.
Rosneft is also involved in this two-part project. The company owns a 74.9% stake in the Veninsky block, with the rest belonging to Sakhalin Oil. This sector apparently contains more than 100 million tons of crude oil and 315 billion cubic meters of natural gas. Rosneft, ExxonMobil and Chevron studied the Vostochno-Odoptinsky, Ayashsky and Kirinsky blocks on a parity basis. They discovered an estimated 610 million tons of oil and nearly 800 billion cubic meters of gas there. But Gazprom and LUKoil also want to develop these ownerless deposits.
Few experts can predict the outcome of the Sakhalin-3 auction because asset prices would soar appreciably, if Rosneft teams up with Surgutneftegaz or some Chinese companies. At the same time, Rosneft can afford to lose this auction, as it already owns a stake in Sakhalin-3.
BIZNES
"Business Objective" to Hit the Statute Book
Supreme Arbitration Court chairman Anton Ivanov yesterday declared himself in favor of introducing the concept of "business objective" in tax legislation - the first in the establishment to do so. The underlying motive is that any deal seeking to optimize tax payments must pursue a certain goal - extraction of profits, for example.
If the deal is mostly or totally aimed to minimize taxes, it must be seen by tax authorities as a "void transaction."
Also, he said the courts have cases on record when VAT refunds were claimed unlawfully. They were in fact the only purpose of the deals. So, according to Ivanov, definite principles must be introduced for describing the economic object of a transaction. If such principles are adopted in legislation, honest taxpayers will be better placed.
The new concept has been authored by German law firm Haarmann, Hemmelrath & Partner, which won a contest announced by the presidential administration and was commissioned to make amendments to the Tax Code spelling out the difference between tax optimization and tax avoidance. The company offered the precept of "business objective" and suggested the terms "honest" and "dishonest" taxpayers be excluded from law enforcement practice for ever.
"If fiscal bodies prove that the deal, apart from tax minimization, had no other aim, they will be qualified to charge extra taxes," Anna Lesova, a legal expert of Haarmann, explained.
The new principle also has a more radical support base. "Those making deals with no economic sense must be penalized," Vladimir Panskov, auditor of the Audit Chamber, is convinced.
Experts are insisting that it is necessary to work out the smallest details of its application. "In the opposite case its adoption will make no sense," says Dmitry Kostalgin, director of the legal department of Rusfininvestaudit. "Our tax bodies are incapable of working from general principles."
NOVYE IZVESTIA
Privatization in Russia Is Hidden Nationalization
Some time in the future current events in Russia will be put in economic and history textbooks. It is the unprecedented operation of making money from nothing. We might later learn the secret conditions for the acquisition of oligarchic companies by state structures, but so far the state does not even deem it necessary to devise a credible explanation for these hair-raising deals.
It was announced in early September that Gazprom would buy Sibneft for $12 billion, and within a month the price rose to $13.09 billion. Nobody was surprised when Roman Abramovich bought half of Sibneft shares from Boris Berezovsky for the ridiculously small sum of $1.3 billion this year. The state-run Rosneft is buying Surgutneftegaz (though it should be vice versa, judging by their assets) for the unbelievable sum of $20 billion.
Norilsk Nickel is being sold to state-run diamond producer ALROSA, which has only one thing in common with NorNickel - both use mineral resources. This is why ALROSA is making feeble attempts to resist the purchase, as it does not know what to do with this non-core asset and a heap of social problems in Norilsk. But nobody is asking ALROSA's opinion on the matter.
This is the backdrop for making new Russian money. Real inflation is being spurred, illegal immigration is on the rise, most reforms have been scuttled, and corruption has reached such a proportion where we should not expect a real increase in investments or in the people's incomes soon.
What can be the result of this? Your guess is as good as mine. But there is an indicator that will mark the beginning of the end - the oil price. A barrel of oil cost $70 a couple of months ago and it is $57 now. Expect serious trouble three or four months after the price falls to $40. This is when we will see that the result of Russian privatization is nationalization on extremely unfavorable terms for us and our children.
