MOSCOW, October 27 (RIA Novosti)
U.S. again blacklists Russian arms exporter/ Gazprom wants to remain pipeline monopoly until 2011/ Bermuda authorities suspend Russian plane registrations/ Severstal to supply Volkswagen/ Ruble devaluation inevitable/ Roman Abramovich runs out of soccer money
Vedomosti, RBC Daily
U.S. again blacklists Russian arms exporter
The U.S. administration has again approved sanctions against Russian state-run arms exporter Rosoboronexport over claims of breaking non-proliferation legislation.
Moscow thinks this is punishment for its unyielding stance on Iran. Rosoboronexport says the sanctions are "unscrupulous competition."
On October 23, the U.S. announced the introduction of sanctions against Rosoboronexport as well as Venezuela, China, North and South Korea, the United Arab Emirates, Sudan, and Syria, and the Iranian Islamic Revolutionary Guards, for violating the Iran, North Korea, and Syria Nonproliferation Act, which prohibits the proliferation of weapons of mass destruction, other dangerous weapons and related material as defined under the Act.
The sanctions are valid for two years and bar any U.S. aid, contracts or arms sales to the blacklisted companies.
The Act came into force in the late 1990s. The U.S. also slapped sanctions on Rosoboronexport in July and December 2006 for allegedly passing on equipment to Iran that could be used to develop weapons of mass destruction.
Russian Foreign Minister Sergei Lavrov said the sanctions were connected to Moscow's unwillingness to accept the U.S. approach to Iran's nuclear problem.
A week before, Deputy Foreign Minister Sergei Ryabkov said in Tehran that the six countries mediating a settlement of Iran's nuclear problem could not agree on tougher sanctions proposed by the U.S. and some other Western members of the group.
Radzhab Safarov, director of the Moscow-based Center of Modern Iranian Studies, said the sanctions against Rosoboronexport were an attempt to punish Russia for its independent, active policy regarding Iran.
Rosoboronexport currently has no major arms contracts with Iran, and so the sanctions have likely been imposed for its arms supplies to Syria, a source in the Russian Technology Corporation said.
Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies, said the U.S. sanctions were a ritual that would not affect the export business of the companies connected with Rosoboronexport through its parent company, Russian Technology Corporation, such as titanium producer VSMPO-Avisma.
A Rosoboronexport representative called the sanctions a "manifestation of unethical competition."
Vyacheslav Davydenko, the company's press secretary, said: "According to the Stockholm International Peace Research Institute, Rosoboronexport has become a global leader in terms of sales in the past few years. The discriminating decision has been taken immediately after this data was published."
The company's export revenues totaled $6.7 billion last year, and its arms supplies in the first nine months of this year increased by 23%.
Kommersant
Gazprom wants to remain pipeline monopoly until 2011
The board of directors of Russia's state-controlled gas giant, Gazprom, will discuss opening up its unified pipeline systems to allow independent gas producers non-discriminate access.
The monopoly could lose part of its revenues if it is stripped of the preferential right to transport natural gas, which is what Deputy Prime Minister Igor Sechin who heads the Rosneft board wants to happen.
Desperate to retain its earnings amid the global financial crunch, Gazprom has proposed putting the "equal access" idea on hold for now and going back to it after 2011. This would primarily affect oil producers.
Last year, Gazprom produced 550 billion cu m of gas, and independent gas companies, a total of 98.5 billion.
This year, 32 independent producers were given access to the pipeline system to ship 56.9 billion cu m, down from 114.9 billion in 2005. In addition, Gazprom has made a request to raise transit tariffs by 20% next year.
Gazprom is equally unhappy with the federal anti-trust regulator's latest proposal of making the gas giant's subsidiaries equal in status with independent companies. This would mean that both Gazprom subsidiaries and independent gas companies would be allowed to transport gas volumes on a par with the amount requested, explained a source familiar with the FAS proposal.
Gazprom claims it would make sense to consider changing the current system once domestic and international market prices are in line, which is not due to happen until 2011. The monopoly said that would mean equal terms for all players.
"The global crisis and the monopoly's need for financial support will certainly be their key argument," said a source close to the Gazprom board. He added that Gazprombank, which is the monopoly's settlement bank, was already concentrating solely on serving Gazprom's needs.
A number of the bank's customers said it was closing down other projects and cutting lending to other clients explaining that it needed resources for Gazprom.
Industry watchers generally agree with the monopoly's reasoning. "Independent producers market gas at free prices. By letting them into its pipelines, Gazprom in fact will let them profit at its own expense," said Konstantin Cherepanov, analyst with KIT Finance.
A three-year moratorium could be a compromise until financial markets straighten out. Some independent gas producers, including Rosneft, will only commission new gas projects in 2012-2013, added Valery Nesterov from Troika Dialog.
Indeed, independent gas producers seem in no hurry to boost deliveries. Itera and Novatek, in fact, said they are currently able to get the entire volume of gas they want through the pipelines.
Oil companies are a different story. TNK-BP said the company wanted more pipeline capacity for its Rospan subsidiary to increase deliveries from the Achimovsk gas deposits in West Siberia.
RBC Daily
Bermuda authorities suspend Russian plane registrations
The Department for Civil Aviation of Bermuda's Ministry for Tourism and Transport has notified Russia's Transportation Ministry that it is suspending the commercial registration of aircraft on its territory. Market insiders say this will seriously hit Russian carriers which were registering between 20 and 30 aircraft every month.
Around one third of Russia's 1,500 airliners are registered in Bermuda. On the 15th day of every month, the aviation authorities on the island nation consider registration applications for between 20 and 30 aircraft, which is an additional source of income to Bermuda's budget, with airline carriers paying $80,000 and $110,000 to register of a Boeing 767 and Boeing 747 for one year.
The Irish have around 120 Russian airliners, including the whole fleet of the KD Avia company registered with the country's aviation authorities. However, they are currently too busy registering aircraft owned by domestic airline carriers. Moreover, Ireland has stopped registering foreign medium and long-haul airliners.
Market players say registering an airline on the Russian aviation register is equal to that of African states in terms of continuing airworthiness. Once an aircraft has been registered in Russia, its market price falls by between 20% and 30%.
"Russian aviation authorities don't monitor the airworthiness of aircraft to the same level as European and American standards," said an airline carrier representative. According to his estimates, between $8 and $10 million is required to ensure an aircraft complies with European standards, which is comparable to the amount the plane's depreciate in value.
On October 7, Bermuda's aviation authorities suspended the Part 145 C-Check certificate for maintenance of Boeing 737s at the Vnukovo aircraft repair plant, which had been responsible for maintenance of the Aeroflot Nord airliner that crashed outside Perm. An EASA check revealed minor violations in the plant's operations.
"Bermuda authorities are unhappy with the standards of Russian aircraft maintenance, which they blame for the crash of the Aeroflot-Nord Boeing 737, also registered in Bermuda", says an airline carrier representative.
Market insiders predict that the checks initiated by Bermuda's authorities, including the internal investigation of safety operations by civil aviation, could take as long as one year. A new intergovernmental agreement could be signed no earlier than six months after the check has been carried out, with Russian airline carriers not permitted to buy aircraft until that time.
Vedomosti, RBC Daily
Severstal to supply Volkswagen
Russia's steelmaker Severstal has established a joint venture with Spanish auto component producer Gestamp Automociîn to build a plant manufacturing auto stamp parts.
Gestamp will control the JV with 74.98%, while Severstal will hold a blocking stake (25.02%). The partners will build a 100 million euro pressing shop in Kaluga and begin production in 2010. Severstal said in a statement that it would supply rolled steel sheets. Gestamp was unavailable for comment.
Traditional customers for Gestamp's stamp parts include global automobile manufacturers which have already built, or are building, plants in Kaluga, such as Volkswagen and Peugeot Citroen. The former has already begun production of Volkswagen and Skoda models, using imported components. It plans to produce a total of 150,000 vehicles a year.
The company also plans to launch full-cycle production, including welding and spraying of car bodies, in the first half of 2009, said a Volkswagen Rus spokesman. The plant will also produce Japanese Mitsubishi models.
The Peugeot Citroen PSA is currently preparing a construction site for a plant to produce 115,000 vehicles a year starting from 2011.
Volvo will build a truck plant in Kaluga producing 10,000 trucks a year. Ivan Bonchev, an auto industry expert with Ernst & Young, said Gestamp only planned to cater to the Volkswagen project, as 100 million euros would only be enough to produce 100,000 component sets a year.
The Severstal-Gestamp venture will also own a half share in a stamp plant in the Leningrad Region, which the Spanish company is building jointly with British Stadco, said Stadco's Managing Director Andrew Morris. He did not elaborate on Severstal's role in the project, however, and Severstal declined to comment as well.
The 200 million euro plant is due to produce 100,000 auto body sets by 2015. The first 66 million euro production line already built by Stadco will start production in November.
Severstal is the second Russian steelmaker to launch a stamping business. Last year, the Magnitogorsk Iron and Steel Works (MMK) acquired a 75% stake in Interkos IV, a company making large stamped parts, press-tools and pressed parts.
The partners plan to build a 300 million euro production facility near the Shushary-2 industrial estate which houses a Toyota plant and two more plants under construction by GM and Suzuki. The new stamping plant will go on stream in late 2009.
Nezavisimaya Gazeta
Ruble devaluation inevitable
Russian Central Bank and government leaders said last weekend they would prevent a sharp devaluation and fluctuation of the ruble.
Analysts have been alerted by the word "sharp." Some economists say ruble devaluation is inevitable and compare the present situation with the 1998 financial crisis.
First Deputy Prime Minister Igor Shuvalov said on Sunday that the Bank of Russia had the instruments to prevent sharp fluctuations in the exchange rate. A day prior to that, Alexei Ulyukayev, first deputy chairman of the Central Bank, made a similar statement regarding a "sharp devaluation."
Few economists believe these promises.
Mikhail Khazin, president of the Neokon Expert Center, said: "Ruble devaluation is inevitable today just as it was inevitable in 1998. Russian banks and companies have been borrowing dollars since 2003 because they couldn't get ruble loans. The government acted likewise before the 1998 default, when banks exchanged rubles so that their contractors could play on the market of government bonds. It is not surprising that the same policy has again pushed the country toward the same result, ruble devaluation."
The government now only has a choice between a smooth and sharp devaluation, Khazin said.
Mikhail Delyagin, director of the Institute for Globalization Studies, a Moscow think tank, said: "Shortly before the 1998 default, the Central Bank issued stabilization loans to banks, which immediately exchanged them for foreign currency and stashed it abroad. Today the Central Bank is again supplying liquidity to banks, which are again exchanging it for foreign currency."
According to Delyagin, the Russian banks and companies will pay as much as $53 billion on foreign loans in the fourth quarter, while the foreign currency reserves have plummeted by $45 billion over the past month.
"The dynamics of currency reserves show that the money issued to banks is exchanged for foreign currency, which is increasing pressure on the ruble," he said. "Like in 1998, the Central Bank is just pretending that it has any control over how the banks use state financial assistance."
"Given the current rate of spending, the international reserves could run out by the end of this year, because some of these reserves have been invested in low liquidity instruments, which prevents them from being used quickly," Khazin said. "In other words, a considerable part of the country's international reserves exists only on paper."
Khazin said there is a theoretical danger of defaults by large commodity producers, such as Gazprom and Rosneft, which would give creditors the right to shift their claims to large Russian oil and natural gas deposits.
$martMoney
Roman Abramovich runs out of soccer money
Quite recently, in June, the Russian national soccer team, coached by Guus Hiddink, achieved a real victory by reaching the semifinals of Euro2008 championships, but by August, the National Football Academy set up by Roman Abramovich had stopped paying him his salary. Now the Russian Football Union is paying the Dutchman. The sum involved is not small: according to unofficial information, Hiddink receives about 14 million euros a year, with half of that paid in taxes.
It is quite likely that Roman Abramovich has run out of cash: the oligarch is spending huge amounts of money on sport. Compared with Chelsea's running expenses, Hiddink's paycheck is peanuts: according to the British press, the English club owes Abramovich something like 730 million pounds. Considering that his fortune, to judge from the market value of the assets he controls, has shrunk by $15 billion over the past couple of months, and Abramovich's main asset - Evraz Holding - is unlikely to pay its shareholder sizable dividends because of falling demand for its products, it is time for the oligarch to take a breather and think about the wisdom of his spending on sport. At any rate, Chelsea chairman Bruce Buck has already said he is going to cut his club expenses drastically.
A wave of bankruptcies may soon sweep through English clubs. Not so long ago, David Triesman, chairman of England's Football Association, said that the combined debt of English clubs totaled about 3 billion pounds. The money cannot be found anywhere: numerous companies involved in sponsorship, such as ING and Royal Bank of Scotland, or AIG, are experiencing huge problems themselves and are already cutting their advertising and sponsorship expenses.
Strange as it is, sport in Russia has found itself in a more advantageous position than in America or Europe. And not because the main sponsors, such as Gazprom or RZD, are not feeling the pinch. Simply because spending by Russian teams is still ten times lower than in the West. And problems have not happened yet in the advertising market.
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