MOSCOW, October 28 (RIA Novosti) Russia considers Cuba as response to U.S. missile shield plans / Belarus looks to West to avoid Russia's friendship / Oil producers to pledge shares for state loans / Rosneft, Transneft seek huge loans / Barclays offers Sberbank share swap / Russians far from feeling crisis victims
Gazeta, Gazeta.ru
Russia considers Cuba as response to U.S. missile shield plans
Russia has started air defense consultations in Cuba, which may be the Kremlin's response to the deployment of a U.S. missile shield in Eastern Europe.
Analysts note that Russia's relations with Cuba are progressing rapidly.
A Russian delegation led by Gen. Alexander Maslov, chief of staff of the Army Air Defense, went to Cuba yesterday. The officers will discuss the possibility of training Cubans to man modern equipment, which is why the delegation includes a representative of Russia's only air defense academy, located in Smolensk.
This is the first visit by high-ranking Russian officers to Cuba since 2001, when the Lourdes signals intelligence (SIGINT) facility was closed there.
According to the Russian Defense Ministry, this is a planned visit aimed at discussing the maintenance and repair of the Russian-made Igla, Osa, Kvadrat and P-18 and P-19 air defense systems. They are used to protect airfields and longer-range air defense systems, such as S-300 and S-400.
Russian military analysts say Russia is unlikely to limit its assistance to Cuba to repairs of obsolete systems.
Anatoly Tsyganok, head of the Military Forecast Center at the Institute for Political and Military Analysis, said the visit was connected to U.S. missile defense plans for Europe.
Alexander Pikayev, an expert at the Institute of World Economy and International Relations of the Russian Academy of Sciences, echoes this view: "Although it will be denied officially, Russia's actions are clearly a reply to the deployment of U.S. ballistic missile defense systems in the Czech Republic and Poland, and to NATO's decision to help Georgia restore its air defense system."
It was rumored last summer that the Tu-160 strategic bombers, which had resumed long-distance flights, might use Cuba for transit landings, allegedly as Russia's reply to America's ABM plans for Europe.
The Defense Ministry confirmed at the time that Russian aircraft, although not bombers, had landed in Cuba on reconnaissance missions.
Tsyganok said the visit would be followed by the deployment of Russian aircraft, warships and submarines in Cuba.
"At first the sides may plan joint war games, and will later discuss arms supplies," he said.
Gen. Leonid Ivashov, vice president of the Academy of Geopolitical Problems, said: "Russia may later repair [Cuban] ports to receive warships," but direct arms supplies are unlikely because of Cuba's insolvency.
Kommersant
Belarus looks to West to avoid Russia's friendship
Belarus is in talks with the International Monetary Fund on a $2 billion reserve loan. The discussions began in capital, Minsk, on Monday.
Belarusian President Alexander Lukashenko decided to ask the IMF for assistance amid his skidding relations with Russia, after he despaired of getting a similar loan from Russia as well as a discount on its natural gas, while Western friends are ready to do right by him.
Over nearly 15 years in office, Lukashenko has shown an incredible ability to maneuver in unfavorable waters. Today, he finds new prospects opening up for him.
Fyodor Lukyanov, editor-in-chief of the Moscow-based magazine Russia in Global Affairs, believes the global financial instability will affect the lineup of forces in the post-Soviet countries as strongly as the Russian-Georgian conflict did.
"Both crises, each in its own way, have shown that pressure will be mounted on the former Soviet republics to force them to make certain geopolitical choices. While the August armed conflict emphasized force, this time it is a question of who will be able to help the CIS out of the current economic plunge. And the benefactor will naturally want something in return," the political analyst wrote.
Lukashenko is desperately trying to avoid Russian economic serfdom.
His range of possibilities has been shrinking ever since Vladimir Putin became president. Moscow has been indicating with increasing clarity that it had no intention of further paying for assurances of eternal friendship, but expected real rapprochement for its subsidies. Russia's pressure was all the more effective for lack of alternative, because the West regarded Lukashenko as an outcast.
But the situation has changed now. Europeans have worked out a different approach: why ask more of Belarus than of other CIS countries? According to Lukyanov, Europe's earlier bias against Lukashenko came from looking at Minsk in the context of Eastern Europe, with a hypothetical prospect of EU membership.
However, if they treated Belarus as simply a part of the CIS - an alliance of Central Asian republics, Azerbaijan and Russia with which Europe is maintaining an active dialogue, they found that Belarus wasn't much different. They decided they could defreeze relations, especially after Lukashenko made a couple of pro-Western statements.
Admittedly, the Belarusian leader might find himself in debt to two creditors, Russia and the IMF, if he achieves the "balance" he wants. On the other hand, it is the only chance amid the current financial panic to obtain the funds while avoiding total dependency. And, as competition for influence on the former Soviet republics is still on, he might even hope for better loan conditions.
RBC Daily
Kommersant
Oil producers to pledge shares for state loans
The government is considering a different way to support companies, which could eventually lead to their "soft nationalization." It is offering to guarantee mineral producers' loans in exchange for their shares, Natural Resources Minister Yury Trutnev said.
Analysts warn that pledging shares amid a volatile market is taking an extremely high risk, which companies might take only if they are driven to the worst extreme.
In early October, oil companies asked the government for several billion dollars in loans to refinance their foreign debt. The government authorized Vnesheconombank - the state development bank - to lend a total of $50 billion to private companies. The loans will be issued at market rates, their use limited to refinancing companies' debts. The bank recently said their total requests exceeded $100 billion.
Many companies had adopted investment programs based on borrowed capital. State guarantees amid the Russian market meltdown would earn Russian companies a more favorable hearing from their creditors, suggests Svetlana Savchenko, in charge of the investment planning department at the 2K Audit-Business Consulting company.
Pavel Sorokin from UniCredit Aton expects only smaller companies with no alternative sources of financing to accept the government's offer.
The risks of pledging shares in such a volatile market are enormous. If the shares in custody keep falling, the company will have to add more or seek other sources of financing again. If a company breaks a payment deadline guaranteed by the state, the pledged shares will go to the government. Therefore, most companies prefer to secure their loans with export revenues or, as last resort, with their assets.
Another obstacle to accepting the government's offer would be a lack of treasury shares that can be pledged. Few companies have them ready, and most are reluctant to issue more, said Alexei Kokin, an analyst with the Metropol brokerage.
Economists are wary of the government's idea of purchasing shares directly. Merrill Lynch's Yulia Tseplyayeva said: "Such ideas will naturally emerge in the present turmoil. The government is always tempted to redistribute something. I don't like the idea much, I would rather they issue loans."
Vitaly Kryukov from the Kapital investment group said government cash would do companies much more good now than state guarantees. But the government likes the idea of non-monetary support better.
Kommersant
Rosneft, Transneft seek huge loans
State-controlled Russian companies have found a way to weather the financial crisis. Rosneft, Russia's largest state-owned oil producer, is negotiating a 20-year contract on oil supplies to China in the hope of receiving loans worth $12-$15 billion. Oil pipeline monopoly Transneft expects to get $8-$10 billion.
Chinese Prime Minister Wen Jiabao came to Moscow yesterday for talks with Prime Minister Vladimir Putin. The key issue on their agenda will be oil supply contracts. According to sources in the sector, China wants to receive up to 15 billion metric tons of oil annually in the next 20 years. The supplier, Rosneft, may hope to receive loans worth $12-$15 billion.
"The final agreements have not been reached yet, but we have these figures in mind. We still have the whole night ahead to discuss the terms," a source with close ties in Rosneft told the business daily Kommersant on Monday evening.
In 2005, when Rosneft badly needed money to buy Yuganskneftegaz, the main oil producing unit of the now defunct oil company Yukos, Chinese companies granted it $6 billion for a promise to supply 48.4 million metric tons of oil within five years.
However, Rosneft was not satisfied with the price - Brent minus $3 - and it warned its Chinese partners in 2007 that it would not renew the agreement on the same terms.
Russian Energy Minister Sergei Shmatko said last week the sides would agree new terms soon.
The Russian government's decision to build a branch from the East Siberia-Pacific Ocean (ESPO) pipeline to China depends on Rosneft's plans. The project is still hanging by a thread.
Deputy Prime Minister Igor Sechin said on Saturday that Transneft had finished plans for building the offshoot to China and was ready to discuss project conditions with China's CNPC. Transneft announced on Monday that the agreement might be signed on Tuesday.
Konstantin Cherepanov of KIT Finance said Rosneft was again badly short of money. According to its half-year financial report, the company has to repay $13.4 billion of debts out of a total of $21.15 billion by next summer, but "income has dried up due to falling oil prices."
Transneft needs money for building the second ESPO leg, at a cost of $11 billion.
Sergei Sanakoyev, head of the Russian-Chinese Trade and Economic Cooperation Center, said: "The long-term nature of the contract suits China." He thinks it is logical that the sides "have agreed on the tried-and-tested scheme of pre-export loans."
Vedomosti
Barclays offers Sberbank share swap
Barclays, the second largest British bank, has offered Sberbank, a major Russian state-controlled bank, to swap shares. The bank said no, and now Vneshtorgbank (VTB) may become Barclays' partner.
A week ago, Sberbank's supervisory board was to consider a share swap with a large European bank, according to several sources close to the state bank. One of them said the stakes were to be 5% each, while a top manager at the bank said they were to be just under 5%.
Because it was complicated to assess the share value in the current situation, it was decided to postpone a decision, according to the top manager.
The bank in question was Barclays, said a source close to Sberbank. The swap proposal came from Barclays, said the newspaper's source.
On the day Sberbank's supervisory board met, Barclays' capitalization reached $33.9 billion, and that of Sberbank (excluding "preferreds") $21.6 billion. Since the board met, Sberbank shares have come down in price by 27.4%, to 19.31 rubles.
"The board's refusal to consider a deal with the British was due not only to economic reasons," said a source in Sberbank. "Someone in the country's leadership told [Barclays Capital chairman Hans-Joerg] Rudloff that shares should be better swapped with another state bank." Among the state banks, only shares of Sberbank and VTB trade on the stock exchange.
The sources do not say why Barclays needs a share swap with a state bank. Sberbank president German Gref declined to comment, as well as spokesmen for VTB, Barclays and the government. A telephone call from Vedomosti to Rudloff's office went unanswered.
In March, Barclays bought Expobank for $745 million. Barclays' investment division rustles up syndicated loans for Russian companies (which ranked third in Thomson's rating, and sixth in Dealogic's rating in the first six months of the year).
Barclays is one of the few large British banks that has not resorted to government aid. Before the end of the year, Barclays intends to borrow 6.6 billion pounds from investors. According to The Guardian, the bank could raise 2 billion pounds from its largest shareholder - Qatar's state investment agency.
RBC Daily
Vedomosti
Russians far from feeling crisis victims
The current economic crisis may go unnoticed for most Russians in a similar way the recent economic upturn has occurred to them, a recent poll revealed.
According to the survey conducted by the Bashkirova & Partners monitoring company among 1,500 residents in Russia's 110 cities, towns and villages in mid-October, 53% of the respondents think the crisis has in no way affected them, 31.6% believe they have been slightly affected while only 7.9% of the polled admitted the crisis has brought drastic harm in their lives.
The residents of the country's big cities who have put their money into bonds, as well as the bank sector employees, were the first to suffer from the crisis impact, the poll showed. Meanwhile, with employers starting to trim workforces, employees in all sectors are in danger of facing unemployment and reduced incomes.
The survey revealed a low number of those belonging to the middle class who buy bonds, with most Russians either not having free assets or trust in activities of the kind. Over 43% of respondents believe that the country could face a crisis similar to the 1998 default, with more people putting money into currency and making deposits in state, rather than private, banks.
Meanwhile, all employee groups are bound to be affected by the crisis consequences. "By the end of October, about 380,000 people will have already suffered wage delays," Federation Council Speaker Sergei Mironov said Monday.
According to him, a 10% cut in workforce is currently observed in all branches of Russia's economy, most particularly in the construction, trade and financial sectors. The number of people who have lost their jobs in the past few weeks is near 100,000, Mironov said.
"The crisis concerns all companies actively involved in credit operations," said Tatyana Ivanova, adviser at the personnel department for RBS audit and consulting group.
Companies are freezing investment projects, reducing expenses and dismissing personnel, Ivanova lamented, noting that the number of people seeking jobs is currently higher than average at this time of the year.
Yet, 62% of the respondents said none of their friends or relatives had lost their job in the past two months, according to another poll conducted by the All-Russian Public Opinion Research Center VTsIOM on October 11-12.
Among Moscow and St. Petersburg residents, the number of those reaches 74%. According to the survey, which was conducted among 1,600 respondents in 140 Russian cities, towns and villages, 25% of the surveyed knew only two or three people who have been dismissed, while only 10% said many of their friends and acquaintances have lost jobs.
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