What the Russian papers say

Iran's agreement with IAEA terms brings Moscow political dividends / Russian methods of warfare lag 10-15 years behind U.S. and NATO / Leaks frustrate sale of Russia's gold / "Strong ruble party" rules in Russia - expert

MOSCOW, October 28 (RIA Novosti)

Iran's agreement with IAEA terms brings Moscow political dividends / Russian methods of warfare lag 10-15 years behind U.S. and NATO / Leaks frustrate sale of Russia's gold / "Strong ruble party" rules in Russia - expert

Vedomosti

Iran's agreement with IAEA terms brings Moscow political dividends

The Iran nuclear problem is close to resolution: Tehran has tentatively agreed to accept the key points of a plan proposed by Russia, the United States and France to ship most of its uranium abroad for enrichment, while only insisting on the right to make "important changes" to it.

Under the plan, Iran is to ship 1,200 kg of its stockpile of low-enriched uranium (LEU) to Russia, where it will be enriched to a 19.75% concentration of 235U and shipped to France. The French will turn it into fuel that can be used for electricity production or scientific research, but not for military purposes, and return it to Iran.

Analysts at Russia's Institute of World Economy and International Relations (IMEMO) point out that even if implemented to the letter, this plan will not put an end to Iran's military development, if there is any, but will merely postpone its creation of a nuclear bomb. Tehran will still have 300 kg of uranium left, which is technically enough for one bomb, even allowing for the annual consumption by the country's existing reactors.

Still, Iran's recent agreement to ship uranium abroad for enrichment and to admit IAEA inspectors to a classified nuclear plant near Qum will be an important contribution to the nuclear non-proliferation regime.

Iran's final agreement to the terms proposed by the Iran Six countries and the IAEA - if Iran does agree - will be an important victory for Moscow. It is not just that the Russian nuclear industry will win a contract for re-enrichment of Iran's uranium - the contract is unlikely to be worth more than several tens of millions of dollars. What's more important is that other countries involved in the Iran nuclear problem talks will have accepted Russia's proposals without the usual skepticism and routine.

The West should not buy Iran's official rhetoric attempting to present the agreements as its own diplomatic victory. Iran might also try to delay the uranium shipment to Russia hoping for a split in the coalition. It is important not to repeat the blunders of 2006. Tehran then agreed to a uranium enrichment venture talks with Russia in a bid to avoid sanctions, but later torpedoed the deal after the Kremlin's approval.

If Iran sticks to the "uranium for fuel" agreement, it would consolidate the non-proliferation regime, and ease the tensions in Southwest Asia and the Middle East. Russia's southern regions will thus be secured from a nuclear strike from an unpredictable political regime.

Vremya Novostei

Russian methods of warfare lag 10-15 years behind U.S. and NATO

Commenting on the results of the recent West 2009 military exercise, Gen. Nikolai Makarov, chief of the Russian Armed Forces' General Staff, said the war games had primarily aimed to "assess the switchover to a new system for controlling the armed forces."

According to Makarov, the system "should primarily be based on the switchover to a system of network-centric warfare."

This statement is baffling because the reality is a long way from the stated objective, writes Mikhail Rastopshin, Ph.D.

Network-centric warfare, now commonly called network-centric operations, a new military doctrine or theory of war pioneered by the United States Defense Department, seeks to translate an information advantage, partly facilitated by information technology, into a competitive war-fighting advantage through the robust networking of well-informed geographically dispersed forces.

Modern and new weapons account for 70% of weapons systems wielded by U.S. and NATO armed forces now switching over to network-centric warfare, Rastopshin writes.

According to Russian Defense Minister Anatoly Serdyukov, such weapons make up for only 10% of the Russian army's weaponry. Naturally, one is prompted to ask how does network-centric warfare apply to the Russian Armed Forces, whose weaponry and military equipment were mostly developed in the 1970s and the 1980s?

The August 2008 peace-enforcement operation during the Russian-Georgian conflict over the breakaway province of South Ossetia exposed major failings in the Russian military, including weak reconnaissance and telecommunications capabilities, the low automation of troop-control and weapons-control processes, the lack of troop-level information support and the high vulnerability of specific army weapons and combat-equipment models.

It would be naive to think that all these shortcomings have been eliminated in just over a year, Rastopshin writes.

The Russian Armed Forces' weaponry now lags behind U.S. and NATO equivalents by 10-15 years. According to Rastopshin, the West 2009, Ladoga 2009 and Caucasus 2009 military exercises and their results show that the Russian army is not yet switching over to network-centric warfare.

Gazeta.ru

Leaks frustrate sale of Russia's gold

Russia is unlikely to sell up to 50 tons of gold by the end of the year as the information was leaked. On the other hand, if it sells the gold next year, it will get more than $1.7 billion for it.

Last week, a source with inside knowledge about government decisions said Russia's state depository for precious metals and stones, Gokhran, planned to sell 20-50 tons of gold, or 0.5%-1.25% of the annual global demand, by the end of 2009. Analysts estimated the amount at between $682 million and $1.7 billion, since gold prices are very high now.

Gokhran hoped that the falling dollar would encourage many people to lower their inflation risks by buying gold.

"However, the planned deal will not be closed in the said amounts by the said deadline because of information leakage," said Sergei Gorny, deputy head of the state jewelry sales monopoly, Almazyuvelirexport, through which Gokhran exports its precious metals and stones.

"It was most likely an unplanned leakage," said Dmitry Baranov, a leading analyst at Finam Management. "On the other hand, insider information could be used in the interests of gold miners, who want gold prices to remain high, because an increased offer could affect their price quotations."

Marat Gabitov, an analyst with UniCredit Securities, said: "The gold could be sold to free up funds for Gokhran's support of the diamond sector."

Since the beginning of the year, Gokhran has been buying diamonds from Russia's largest miner, Alrosa, which sold $1.24 billion worth of diamonds in January-September, most of them to Gokhran.

The returns from the planned gold deal could also be used to replenish Russia's budget.

"However, the sum is minor considering the budget parameters, and besides, the government has more than once declared its intention to diversify its currency reserves by decreasing the share of dollars," said Nikolai Sosnovsky from UralSib.

Moreover, now is not the best time to sell gold, which is a fundamental asset that is only gaining in price.

"Many countries, for example China, have cut gold sales and are buying instead," Gabitov said.

The Central Bank of Russia does not rule out the possibility of buying gold in this situation, said Alexei Ulyukayev, the bank's first deputy chairman.

Nezavisimaya Gazeta

"Strong ruble party" rules in Russia - expert

The Russian government and the Central Bank are dominated by a "strong ruble party," which insists on the stabilization of the national currency at 22 rubles to one dollar, said Sergei Aleksashenko, former first deputy head of the bank. In his words, these people believe that the death of unprofitable businesses would clear the way for the modernization of the country. Analysts say that the revaluation of the ruble is an idea being promoted by the importers' lobby, as they have lost more than $75 billion over the year and crave revenge.

"The Central Bank believes that if they stop regulating the ruble, the dollar will stabilize at 22 rubles," Aleksashenko wrote in his blog, citing a source close to the Cabinet. "The ruble's appreciation will send tumbling all of the national manufacturing, including fertilizers and half of oil refining, but they seem to see it as a good thing," added Aleksashenko, a former banker, now director for macro-economic research at the Higher School of Economics.

Importers lost about 40% of their earnings in the first eight months of 2009 ($144 million, down from $191.1 billion in 2008). It would be hard to revive the flow of imports without a fast appreciation of the ruble.

However, analysts warn that the national currency's appreciation will bring nothing but more problems.

"It sounds like 'economic modernization' and 'restructuring' implies weakening the foundations of the national economy - mining, manufacturing and oil and gas sectors," said Timur Unarokov from the Intercom-Audit consultancy. "This is in no way good for the Russian economy, which will no longer be a supplier to international markets, but only an ultimate consumer of imported products," he added.

"A surge of the ruble will entail a 30%-40% slump in industrial production; unemployment will grow dramatically; the budget system will collapse, and so will the social security system. No one in their right mind would call this 'modernization,'" said Oleg Grigoryev of the Neocon consultancy.

"There is indeed good reason to believe that importers are lobbing for the ruble's appreciation. But it is difficult to distinguish between those who promote product importers' interests and those who support technological retooling of industry," said Dmitry Shiryayev from the audit and consulting group FinExpertiza.