What the Russian papers say

MOSCOW, May 16 (RIA Novosti) Prosecutor General finds organized crime everywhere in Russia / Russian exporters expect few miracles from WTO membership / Why foreign banks' branches are dangerous for Russia / Russia may lose status as key player on oil and gas market / United Russia fights attempts to create internal opposition / Not enough bureaucrats in Russia

(RIA Novosti does not accept responsibility for the articles in the press)

Nezavisimaya Gazeta

Prosecutor General finds organized crime everywhere in Russia

Russia's Prosecutor General Vladimir Ustinov said organized crime had infected all spheres of life in the country. On Monday, he addressed the coordinating conference of the heads of law enforcement agencies at the Office of the Prosecutor General, and used these words to describe a phenomenon that in Europe and the Untied States has had a specific name for a long time - the mafia.
The conference was probably designed to show that the enforcement agencies have already launched the fight against corruption, which the president declared in his May 10 address to parliament.
However, Olga Kryshtanovskaya, head of the Center for Elite Studies, said: "to a large extent there is a reliance on PR here - the anti-corruption PR campaign takes priority over real measures."
"A real fight against corruption is possible if the order comes from above," she said. "In such cases, much can be done, not because of financial injections, but on the basis of political will alone. If officials know that there is such political will and sanctions, they will stop taking bribes. But currently, corruption is widespread because it goes unpunished."
Georgy Satarov, the president of the Indem Foundation, a Moscow-based think tank, is even more pessimistic: "Organized crime and corruption are closely linked, and have always provided breeding grounds for each other. They are two facets of the same phenomenon called the disintegration of state power."
Saratov said: "What we see is only the semblance of a fight against these evils. The key condition for the spread of corruption is the absence of control over officials. There is no political or public control over them, and power is fantastically non-transparent. The fight will be impossible under these conditions."
According to a poll conducted by the Public Opinion Foundation (FOM) in December 2005, the most corrupt institutions are police, customs and law enforcement agencies (57% of respondents), traffic inspection (45%), and courts and prosecutor offices (32%).
 
Vedomosti

Russian exporters expect few miracles from WTO membership

Russian exporters will be able to contest numerous trade barriers and save billions of dollars when the country joins the World Trade Organization. But companies themselves, including metals and chemical companies, which would benefit most of all, do not expect any miracles from WTO membership.
The Economic Development and Trade Ministry said 19 countries have now implemented 107 protectionist measures, which inflict $2-billion annual losses on Russian companies. Andrei Kushnirenko, a department head within the ministry, said 90% of these protectionist measures were directed against chemical companies, mostly mineral-fertilizer producers, and ferrous metals companies.
Russia's WTO accession does not mean that other WTO members will abolish protectionist measures, but they would have to justify such measures.
Alexander Popov, vice president of the Novgorod-based Akron Holding, a producer of fertilizers, said his company was losing $30 million in profits each year due to trade barriers, while the whole sector loses $500,000. "The EU will behave with less disregard for Russian interests after the country joins the WTO; but customs duties will be reduced, not abolished," said Popov.
Pyotr Kondrashev, general director of Silvinit, a major potassium-fertilizer producer, said it would take the WTO at least two years to analyze corporate complaints.
The Russia-EU agreement calls for abolishing steel quotas after the WTO admits Russia. "We could saturate the EU steel market; but Europe would erect new barriers two years later. The domestic market now receives 50% of our products, and we would boost exports by 5-10% when Russia joins the WTO," said Vasily Varyonov, deputy general director of the Magnitogorsk Iron and Steel Works.
Andrei Shikhanovich, sales manager of Severstal, the second largest Russian steel producer, said current U.S. protectionist measures with regard to Russian metals companies would not be abolished. "The United States will revise trade barriers if Russia abrogates the bilateral steel agreement, and after it imports a certain amount of metals with regard for anti-dumping duties. This would be less profitable than the current regime. But our WTO membership would prove useful during new anti-dumping investigations," said Shikhanovich.

Vremya Novostei

Why foreign banks' branches are dangerous for Russia

Debates around providing access to branches of foreign banks on the Russian market have become so heated that at a certain point talks have turned into mutual ultimatums. Experts have even begun to assess what is more important for Russia -joining the World Trade Organization, or protecting its banking sector. Many of them say that that "banking sovereignty" is justified and necessary.
"A national banking system is an attribute of statehood and an element of economic politics," said Alexei Terekhov, vice president of FBK. "Some East European countries, notably the Czech Republic and Poland, do not have national banking systems, having delegated these powers to the EU. We, however, are not willing to have our banking system outsourced to foreigners. For Russia, giving up its national banking system is similar to abolishing the ruble and introducing the U.S. dollar."
Yaroslav Lisovolik, chief economist with Deutsche UFG, said the Russian banking sector "is not properly reformed and is underdeveloped." "If foreign banks get significant exposure to the market, there will be many losses among those who will not be able to stand the competition," he said. "With the redirecting of customer flows, the banking system may face a double confidence crisis: on the part of customers and on the inter-bank market. These crisis developments would first of all spread among medium-sized banks."
Considering the size of the Russian banking system compared to the world's market leaders, the authorities' logic is easy to understand. After all, any of the world's largest banks, if it enters the Russian market through a direct branch, will be a player dwarfing domestic banking systems, making the Central Bank's regulations seem inconsequential.
The situation could probably change if the Russian system were to grow at a high pace. So far, however, this scenario is purely hypothetical.

Izvestia

Russia may lose status as key player on oil and gas market

Vagit Alekperov, the head of Russia's largest oil company LUKoil, believes that unless Russian companies actively invest in the development of new oil fields and foreign projects, the country's authority on the world oil and gas market may dwindle. The geographical expansion of oil production alone will not help Russia retain its leading positions. Russia needs to establish control over the entire added-value cycle: from the production of crude oil to the marketing of high-quality oil products.
This primarily concerns Russian refining capacity. Once production geography is expanded, it will be necessary to build new production chains. In other words, Russian companies should develop their own refining and marketing potential, and acquire foreign capacity. Only then will it be possible to sell end-products to foreign customers, the LUKoil CEO said.
Alekperov said the world currently views Russia exclusively as an oil and gas supplier. To change this situation, Russian investment in the economies of energy consumers - mostly European countries, the United States, India, and China - should be encouraged.
LUKoil has long been pursuing this goal, he said. One third of the company's oil refineries and two thirds of its marketing facilities are now based abroad. Bulgaria, Romania, and Ukraine know the company as a large producer, while the U.S., Finland, Poland and other countries view LUKoil as a major supplier of oil products.
Experience has taught us how difficult it is to find an end consumer abroad, Alekperov said. It is here that economics comes closest to politics. While foreign investments in the Russian economy are traditionally called globalization, Russian investments in foreign economies are viewed as expansion. This is nothing other than double standards.

Novye Izvestia

United Russia fights attempts to create internal opposition

Igor Demin, a high-ranking official of pro-Kremlin party United Russia, has accused Tver Governor Dmitry Zelenin of attempting to create opposition within the party. The governor has not so far been ejected from the party, but Demin has called on members to respect party discipline.
Experts say the issue of party unity has now become particularly important.
In early April, the Tver governor published an article calling on the party "to take over the ideology of liberal conservatism."
Last Sunday, Igor Demin, deputy chairman of the propaganda commission at the presidium of United Russia's general council, warned potential opponents that the idea was "a political request to create a right-wing opposition within the party." He said United Russia was not the Soviet Communist Party, and so would not exclude proponents of right-wing opposition from the party, but they were "obliged to vote as prescribed."
Alexei Mukhin, director general of the Center for Political Information think tank, said the collapse of the party was inevitable. "It is logical, because the party of power is a short-term project launched for specific elections. It would be a mistake to attempt to use it twice, as the examples of Our Home Is Russia and other similar structures show."
Mukhin said United Russia was in the throes of a deep ideological crisis. "The reason is simple," he said. "Vladimir Putin is no longer the party's brand because he will not run for re-election in 2008," the researcher said. Therefore, United Russia should take any action that may prevent its disintegration.
The expert said disintegration was already underway. "There are a large number of groups fighting each other within the party," he said. "Some of them are dissatisfied with Kremlin monopoly control over the management, members, and finances of United Russia. If the party wants to win elections, it should clearly formulate an ideology, or it will fall apart under the influence of inevitable centrifugal trends."

Kommersant

Not enough bureaucrats in Russia

Contrary to popular belief, Russia as a whole has very few bureaucrats. The myth of Russia's bureaucratization emerged because of the extreme concentration of officials in the center: federal bureaucrats account for about half of all officials in the country.
In fact, they are most needed at the low level, where there is an acute shortage. Any person who has stood in an endless line to obtain an international passport or to register a company could confirm this.
Last year, the number of officials at all levels grew by 10.9% to 1.462 million, or 1% of the country's population, according to the Federal Statistics Service. This number is very small compared to developed economies. Such a low proportion of bureaucrats is typical among developing countries. According to the World Bank, in Brazil officials account for 1.5% of the population, in Chile for 1%, in China for 1.6% and in Poland for 0.7%. In developed countries, their share is significantly larger: 6.1% in Germany, 6.8% in the United States and 11.7% in Sweden.
However, Russia has overtaken many developing countries in the number of civic state employees. This category includes workers within state organs of power at all levels, and health and education workers. The Armed Forces and the police number about two million.
Troika Dialog brokerage estimates that labor productivity in the state sector fell by some 4% last year. It declined 1% in the financial sector, remained constant in the energy sphere, and edged up in all other industries (up to 10-15% in the construction industry, hotel businesses, and agriculture).
Compared to 2002, labor productivity of state officials and law-enforcement and security structures plummeted by 7%. At the same time, their wages are 25% higher than the average salary, 70% higher than doctors' wages, and 100% higher than those of teachers. "Not only is the state machine working less and less efficiently, but it is also attracting manpower from other, more efficient economic sectors," said Anton Struchenevsky, a Troika analyst.