What the Russian papers say

MOSCOW, October 20 (RIA Novosti) Moscow will have to build new relations with Ukraine - expert / United States tries to stop Iranian oil deliveries to China / Turkey, Russia reach agreement on oil and gas projects / Restoration of Russian economy will be quick but short-lived

MOSCOW, October 20 (RIA Novosti) Moscow will have to build new relations with Ukraine - expert / United States tries to stop Iranian oil deliveries to China / Turkey, Russia reach agreement on oil and gas projects / Restoration of Russian economy will be quick but short-lived

Kommersant

Moscow will have to build new relations with Ukraine - expert

The presidential campaign has taken off in Ukraine. But whoever beats the others in the race and wins the first price - the presidency - the country's situation and policy are unlikely to change. Ukraine will continue its drift toward the West, writes Alexei Malashenko, an analyst with the Moscow Carnegie Center.

The "orange revolution" is history now, which means the country is now past an important crossroads. The multidirectional policy so popular among post-Soviet countries for Ukraine means being equidistant from the Russian east and the European west, but more inclined toward the latter. There is no way back.

However, the past five years' problems between Ukraine and Russia should not be viewed entirely as a defeat for Moscow. This is simply a reason to acknowledge that the Ukrainian Soviet Socialist Republic is history. What is left is a qualitatively different country, with which it is necessary not to rebuild relations but to build them anew, taking into account the fact that Ukraine's national interests could be different from and even in conflict with Russia's.

It would also be advisable for Russia to bide its time while adopting a policy of benevolent noninterference with regard to Ukraine. The experience of past Ukrainian elections has shown that Russian politicians and political campaigners make way too much fuss that eventually does more harm than good. Any external pressure is likely to prod Ukrainian politicians to showing their "fidelity to national interests" by setting those against relations with Russia.

Notably, Malashenko concludes, Europeans are not expecting any drastic changes in Ukraine either: they are apparently confident that Kiev has nowhere else to go, and that Ukraine's inclusion in Europe is only a matter of time.

Vremya Novostei

United States tries to stop Iranian oil deliveries to China

Worried that Iran may become a nuclear power soon, the U.S. administration has decided not to limit itself to sanctions against it and has been actively lobbying Arab countries to increase their oil deliveries to China.

According to Washington's plan, increased Persian Gulf oil exports to China will be a big blow to Iran, whose budget revenues depend heavily on hydrocarbon deliveries to China. However, analysts say that the Chinese market has huge potential and Beijing will not have to choose between suppliers.

The United Arab Emirates has decided to increase oil export to China by 150,000-200,000 barrels within six months. Kuwait and Saudi Arabia are expected to follow suit soon. Saudi Arabia is the largest importer of Chinese weapons and consumer goods, and some analysts say that it could use its trade connections to convince China to cut the import of Iranian oil.

Agvan Mikaelyan, director general of the FinExpertiza audit consultancy, said this could create problems for Iran.

"Iran exports a considerable part of its oil to China. If Beijing dramatically cuts imports from Iran, Tehran will have to sell its oil at dumping prices to somehow fill its budget. It has no other buyers," Mikaelyan said.

However, Andrei Ostrovsky, deputy director of the Russian Academy of Sciences' Institute of the Far East, said increased oil supplies from the Gulf would not necessarily encourage Beijing to stop importing Iranian oil.

"Even if Saudi Arabia, the biggest oil supplier, delivers 30 million tons of oil instead of the current 25 million, there will still be enough place for Iran, which supplies some 20 million tons, and other countries in the structure of Chinese imports," Ostrovsky said. "It does not matter much to China where it gets its oil. It has an agreement with Russia on the construction of an offshoot from the East Siberia-Pacific Ocean oil pipeline, which will supply 15 million tons of oil annually. China is also considering similar projects with Kazakhstan, Venezuela, Nigeria and Gabon."

The analyst said Saudi Arabia has a limited ability to convince China to stop importing Iranian oil. "Putting pressure on China is quite useless," Ostrovsky said.

RBC Daily, Vremya Novostei

Turkey, Russia reach agreement on oil and gas projects

Russia's state-owned Transneft and Rosneft have officially joined the Samsun-Ceyhan oil pipeline project currently implemented by Italy's Eni and Turkish Calik Holding. The new pipeline will bypass the Bosporus Strait.

Analysts believe Russia's participation is a response to Turkey's support for the Gazprom-led South Stream.

Eni, Calik Holding, Transneft and Rosneft signed a memo of understanding on the Samsun-Ceyhan project on Monday in Milan. The new link will carry Caspian oil around the Bosporus. The memo provides for setting up a working group to discuss technical details and evaluate the economic efficiency of laying the 555 km pipeline, which will cost an estimated $1.5 billion.

South Stream will run along the Black Sea floor linking Russian gas pipelines with European ones directly rather than across other countries - primarily Ukraine, but also Turkey, which was considered as a potential transporter of Russian gas to the EU as part of the so-called Southern Gas Ring pipeline project that calls for extending Blue Stream to the Balkans and Apennines.

Gazprom opted for Blue Stream, but faced a need to obtain a permit from either Turkey or Ukraine. Therefore, Russia had to compromise with regard to the Samsun-Ceyhan project, which it had deliberately ignored until very recently while promoting its own oil project bypassing the tight straits - the Burgas-Alexandroupolis pipeline across Bulgaria and Greece.

Analysts believe Russia's decision to participate in Samsun-Ceyhan project is part of a trade-off also involving Turkey's support of Blue Stream.

"Eni does not have any commercial reason to participate, but the company is Russia's strategic partner in South Stream, and the partners will share the financial risks in this case," said Alexander Pasechnik, expert from the National Energy Security Foundation.

Russia's participation in both projects is important for keeping hold of the key transit routes, said Dmitry Abzalov, an analyst at the Center for Current Politics think tank. "Turkey is unwilling to give up the control of the straits. But it is equally reluctant to openly oppose Russia's energy policies. Moscow can assist Turkey in playing against their common rivals, the European Commission and the United States, in exchange for certain preferences," Abzalov concluded.

Vedomosti

Restoration of Russian economy will be quick but short-lived

The Russian economy will recover quickly, but not for long; it will again decline in 2013, according to a forecast made by investment bank Renaissance Capital. New bubbles will grow and burst on the stock and commodities markets, and the Russian economy will not create non-oil sources of growth.

Restoring Russia's economy will most likely follow a script of boom-and-bust, Renaissance Capital said. After a deep recession in 2009, average GDP growth in 2010-2012 will not be higher than 6%. It will start in 2010, peak in 2011, slow down in 2012, and contract in 2013.

The new slump will again be triggered by the global market, said Alexei Moiseyev, an analyst with Renaissance Capital. Throughout the world, not only in Russia, active support for the financial system has not led to an increase in credit or accelerated money turnover.

For example, the U.S. Federal Reserve channeled nearly $1 trillion into the market in March-September by buying securities, but the money supply grew by only $39 billion. Money invested in the stock and commodities market has only created new bubbles, yet the authorities will continue to supply more liquidity, Moiseyev said.

"The Great Depression showed that stimuli must not be withdrawn too quickly," he said, adding that economic cycles are becoming shorter. The dot-com bubble grew for nearly 10 years, while the mortgage bubble matured in only six years.

The Russian economy started growing in the third quarter of 2009 due to the replenishment of the reserves that collapsed in the six months before, and also private consumption supported by the growth of social expenditure, Moiseyev said, asking: "But what happens when the easy source of growth is exhausted?"

The steel and construction sectors were only slightly affected by the crisis, which hit above all mechanical engineering, transport machine-building, and the production of electronic and optical equipment, which accounted for nearly one-third of the crisis slump.

The crisis accelerated the disintegration of the least reformed, "Soviet" sectors, but there is nothing to replace them with. Industrial facilities were working almost to capacity before the crisis struck, and their rehabilitation will be fast but not lasting.

However, a new slump can be avoided if the authorities launch fundamental institutional reforms, many of which were planned back in 2000 but never became reality.

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