MOSCOW, October 30 (RIA Novosti) China presses for right to re-export Russian arms to Pakistan /Russia allegedly sells more conventional arms than U.S. to Third World/Volkswagen - a new threat to the Russian automobile industry/United Russia to allow president to declare economic sanctions/Competition between two parties of power dangerous for society
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Kommersant
China presses for right to re-export Russian arms to Pakistan
China has applied to Russia for permission to include Pakistan on the list of countries with which Moscow has military-technical cooperation. Unless that is done, Beijing will be unable to fulfill its contract to supply Pakistan with FC-1 fighter planes powered by Russian engines.
Russia's refusal may complicate its cooperation with China, which totals some $2 billion a year. Consent, on the other hand, threatens to disrupt its cooperation with India, which yields over $1.5 billion a year.
The Federal Service for Military-Technical Cooperation has told Kommersant that it will not include Pakistan on the list. If it does, the move might give rise to a conflict with India, with which Russia has an intergovernmental agreement not to supply military hardware to Islamabad.
Military-technical cooperation between Russia and India is worth $1.5 billion a year. The MiG Corporation is also taking part in an Indian tender to deliver 126 fighter aircraft valued at $6.5 billion.
However, Beijing can exert pressure on Russia where future contracts are concerned. Negotiations are under way on the supply of Su-33 ship-borne fighters (up to 48 aircraft worth $2.5 billion), 15 Be-200 anti-submarine amphibian planes with the Morskoi Zmei (Sea Dragon) search and homing systems ($400 million), nearly 40 Ka-29 assault troop-carrying helicopters and more than 20 Ka-31 helicopters (about $200 million altogether), and four Zubr hovercraft (around $210 million).
Experts do not think China will gain concessions from Russia on the re-export issue, and will seek alternative compromises with Pakistan.
"Russia will never give China the right to re-export its military equipment to Pakistan, since that would scuttle the multibillion dollar contracts Russia has with India," said Maksim Pyadushkin, editor of the mainstream publication Russia/CIS Observer.
"Beijing, however, will not abandon the FC-1 program. It is essential for China to obtain the RD-93 engine in order to study it closely and later copy it, as is China's wont."
In the expert's view, Beijing will either offer Pakistan another aircraft, or, at the very least, return the money for the development of the FC-1.
Gazeta
Russia allegedly sells more conventional arms than U.S. to Third World
Russian experts said they doubted claims by the United States Congressional Research Service that Russia sold more conventional weapons to the Third World in 2005 than the United States.
CRS experts listed all countries, except the United States, Russia, Japan, Australia, New Zealand and Europe, in the Third World category. But it is unclear whether they considered Albania and Macedonia to be industrialized states.
The United States, which exported the bulk of conventional weapons delivered to the Third World in 2002-2004, fell behind Russia and France last year. The report's authors estimated Russian, French and U.S. arms-sale contracts at $7 billion, $6.3 billion and $6.2 billion, respectively.
China still buys the most Russian weapons, primarily warplanes and warships. CRS analysts were mostly worried about the purchase of Ilyushin Il-76-TD transport planes and Il-78-M tanker aircraft by Beijing.
They said China might stage an all-out airborne landing on Taiwan anytime, and threaten other U.S. interests in the region.
Dmitry Vasilyev, chief editor of Arms Exports magazine, said the United States remained the number one arms exporter in the world. He said the CRS survey did not take into account gratis U.S. arms supplies to allied countries.
Kazakhstan, Moldova, Georgia and other countries were among allied recipients over the last decade.
Russia is so far unable to make such lavish gifts. The Federal Service for Military-Technical Cooperation said Moscow sold weapons worth $22.7 billion between 2000 and 2004. Russian arms exports totaled $6.12 billion, rather than the projected $5.1 billion, last year.
Arms export volumes are expected to increase. Senior officials at Rosoboronexport, the main state arms exporter, said arms contracts, which totaled $15-16 billion in the last few years, now stood at $23 billion, which rivals arms exports during the Soviet period.
Vedomosti
Volkswagen - a new threat to the Russian automobile industry
Volkswagen will produce four models at the auto works in the Kaluga Region, as well as a car designed for Russia based on the Volkswagen Polo.
So far, it is the largest project by a foreign auto concern in Russia, and it is fraught with danger not only for foreign cars assembled in Russia, but also for AVTOVAZ, whose chairman of the board of directors, Vladimir Artyakov, was present when the foundation stone was laid for the VW plant.
Some 60-70% of production will be local, and VW intends to attract its suppliers to Russia, Bernd Pischetsrieder, chairman of Volkswagen AG, said.
They will work in the Grabtsevo technology park, for which the Kaluga authorities have reserved an adjoining 400-hectare plot, or 988 acres (the area occupied by the technopark and the plant will total 800 hectares, or 1976 acres).
The region has undertaken to develop the site. The budget has earmarked about two billion rubles over the next three years to implement the project, said the Kaluga Region's economics minister, Nikolai Lyubimov. He also said the region was going to grant VW a property tax moratorium for 12 years and transport tax benefits.
Germany's Siemens, VW's potential supplier, intends to independently develop the manufacture of electrical equipment in the Kaluga Region, officials said.
With that aim in mind, Siemens intends to purchase the plants Avtoelectronica (electronic auto components), Avtel NPP (engine sensors) and OAO Insel (tools), and invest about $30 million in them. Siemens will unveil the project October 31, and therefore declined to comment.
The VW project may become one of the largest of all foreign projects in Russia, said Uralsib's analyst Kirill Chuiko. Only Toyota has promised to build a high-capacity plant (200,000 cars a year) and attract its suppliers (with investments amounting to about $1 billion).
Experts are convinced that this approach will allow the projects to recoup investment quickly. In VW's case that will happen in five years, the Kaluga authorities claim. In Chuiko's opinion, it will take from three to five years.
Even simple big-unit assembly makes a car 10% cheaper, and with such a lineup VW will be able to compete with all automobile manufacturers in Russia, from Lada to Toyota, said Sergei Alekseichuk, an independent automobile market expert.
Novye Izvestia
United Russia to allow president to declare economic sanctions
The pro-presidential United Russia party has submitted to the lower house of parliament a bill that would allow the president to declare economic sanctions against other countries.
The bill said a country could be punished for corporate or individual acts "which create an international emergency situation." The president could declare sanctions without prior consultations. Experts said the sanctions would not frighten anyone.
Russian officials said Georgian and Moldovan wine, Latvian sprats and other banned foods were substandard. It appears other products may be blacklisted, too, because the new bill would enable the authorities to impose economic sanctions on any country.
Economic sanctions include eight restrictions and need not be approved by parliament. The president would have the authority to declare all sanctions without prior discussions and debates. Experts said the bill could prove counterproductive.
Pavel Medvedev, deputy chairman of the State Duma's financial markets committee, which has not discussed the bill yet, said Russia was trading with other countries because it found it profitable, and not because it wanted to please them. Sanctions, even if justified, always hit a country that imposes them.
Medvedev said he does not understand why anybody needed the bill in conditions of de facto sanctions. The state has apparently chosen other victims. Even morally justified sanctions are not very effective. This has been proved by long-running UN sanctions. "Sanctions do not prevent a tyrant from getting rich, but they do cause widespread famine," he told the paper.
Izvestia, Moskovsky Komsomolets
Competition between two parties of power dangerous for society
On October 28, the formal procedure for creating the country's second system-forming party, the left-of-center A Fair Russia, took place. The Party of Life, the Pensioners Party and the Rodina (Fatherland) parties have been consolidated into one.
But the question of whether the second party of power will be viable or not is still open. Despite support from the Kremlin, the existence of the new party is fraught with dangers for all of society, as well as for its own future.
The first alarming signal for the pro-presidential two-party political structure sounded October 27. The Federation Council (the Russian parliament's upper house), headed by Sergei Mironov, failed to approve the candidate for the auditor's post at the Audit Chamber simply because the candidate nominated by the Party of Life stepped aside (allegedly under pressure), and the other candidates from the United Russia party failed to gain the necessary majorities.
That is not the main issue, but if it goes on like this, the country is in for a full-scale political crisis one day. If the Federation Council and the State Duma (parliament's lower house) are headed by leaders of seriously competing parties, one can hardly expect a broad consensus in the Federation Council.
The second danger is even worse, because it combines the ambitions of the sponsors and participants in the new project. Sergei Mironov's supporters say openly that they now live according to the principle "all or nothing" - either they are Party Number One, or nobody. Numerous business groups that invested into the new party are no less resolute.
The degree of independence of the new party's leader from investors, among whom they say are representatives of law enforcement and security agencies, is another big question. The new party is not created to share power with United Russia. Its goal is to make the entire political system more reliable, to set up a sort of 'reserve political structure'," said Gleb Pavlovsky, the president of the Effective Policy Foundation.
"The method is questionable, because it creates as many problems as it is called upon to resolve," he added.
"Theoretically, the new party has been devised 'to pinch off' Communists' votes and keep the Fatherland's votes. At the same time, they would like to 'beat' United Russia," said Sergei Markov, director with the Institute of Political Studies.
