What the Russian papers say

MOSCOW, November 10 (RIA Novosti)

Tehran again blasts Moscow for failure to deliver contracted missile systems/Russian gas pipelines closing around Europe/Russia worried by potential American arms supplies to Georgia/AvtoVAZ gets one more chance, thanks to the crisis

Nezavisimaya Gazeta

Tehran again blasts Moscow for failure to deliver contracted missile systems

An influential Iranian MP has again criticized Russia for taking time on a contract concluded two years ago to deliver S-300 surface-to-air missile systems to Iran. The Islamic Republic warns that the failure to honor the contract will have a negative effect on bilateral relations.

Yesterday the pro-government newspaper Tehran Times quoted Alaeddin Boroujerdi, head of Iran's national security parliamentary committee, as saying, "A new chapter has been opened by the Russians on reneging on their promises. Our cooperation with Russia is extensive, and if they do not fulfill their contract it will be a negative point in the two countries' relations."

The S-300 contract was signed in 2007, but Russia still has not confirmed it. Naturally, Iran has made no payments, said a source in the Russian establishment.

How can Iran respond to Russia's failure to deliver S-300s?

"Russia's relations with Iran now have no landmark cooperation plans which could affect Russia's standing in the international market," says Nina Mamedova, head of the Iranian department at the Russian Academy of Sciences' Institute for Oriental Studies. "We are routinely building up our trade relations." But the Islamic Republic is a key geopolitical partner of Moscow in the region, the expert says. So any weakening of political contacts, should Tehran decide to go ahead, would do more harm to Moscow than cuts in trade ties. In Mamedova's view, one should not forget either that Russia's economic links with the West carry more weight than with Iran.

It is not unlikely that the S-300 issue is being raised by those political forces in Iran that want to exploit the image of an external enemy for domestic political aims. The Russia card may also be played by those who back attempts to normalize Tehran's relations with Washington: this may be a case of zero-sum game blackmailing - if Russia refuses to back Iran, the latter would try to make friends with the United States against it.

One way or another, it is clear that Russia would not gain politically from S-300 deliveries to Iran now that Tehran is still refusing to go along with international proposals to settle matters relating to Iran's nuclear program.

Kommersant

Russian gas pipelines closing around Europe

Russia and Slovenia plan to sign on November 14 an intergovernmental agreement on the South Stream gas pipeline. The plan is to cross Slovenia on the way from Serbia to northern Italy. If Austria joins the project as well, which is to be discussed at the top level on Tuesday, the 63 billion cu m South Stream will embrace Europe on three sides.

Slovenian Prime Minister Borut Pahor and Russian Prime Minister Vladimir Putin are to sign an agreement to build a gas pipeline across Slovenia, a Russian government source confirmed. "Slovenia is not granting any tax privileges, citing the European Union requirements," the source said.

Gazprom officials also confirmed plans to establish a parity venture in Slovenia to build a 10 billion cu m gas link there.

Sergei Pravosudov, general director of the National Energy Institute, said that once Slovenia joins the project, all Gazprom will have to do is sign an agreement with Austria, the main initiator and promoter of the Nabucco project. Austria is unlikely to turn South Stream down, the analyst says, because Nabucco is currently suspended after U.S. criticism of the Turkish-Iranian agreement on gas export from South Pars.

Mikhail Korchemkin, director of the East European Gas Analysis consultancy, said Gazprom has had strained relations with Austria's OMV since January 2008, as the monopoly refused to sell gas to the traders who reserved transport capacity in the Trans-Austrian pipeline shortly after the two companies signed a cooperation agreement. According to Korchemkin, Gazprom and OMV simply failed to divide Austria's domestic market.

A source in Gazprom said that the talks were still on. President Dmitry Medvedev and Prime Minister Vladimir Putin could accelerate the process, as they have a meeting with Werner Faymann, federal chancellor of Austria, in Moscow today.

South Stream could become one of the strategic areas of Russian-Austrian cooperation, a Kremlin source said, adding that an intergovernmental agreement was in the works on joint construction of the pipeline's Austrian section.

However, a Gazprom source said they were not planning to sign any agreements.

RBC Daily, Komsomolskaya Pravda

Russia worried by potential American arms supplies to Georgia

Anonymous sources in the Russian intelligence community say that the United States plans to supply weapons, including a Patriot-3 air defense system and shoulder-launched Stinger missiles, worth a total of $100 million, to Georgia.

Russian military analysts have said more than once that Georgia was searching for ways to strengthen its air defense and anti-tank systems, whose vulnerability became apparent during the August 2008 conflict with Russia in South Ossetia.

Felix Stanevsky, an analyst at the Institute of the CIS and formerly a Russian ambassador to Georgia, said Georgia needs the weapons to resolve the problem of Abkhazia and South Ossetia.

"The Georgian authorities have been pursuing this policy since 1992, and see no other way to resolve the problem," Stanevsky told RBC Daily.

It is unclear how the U.S. will deliver the weapons. One of the sources said the deliveries would be made by Barrington Alliance Inc. headquartered in Chicago. However, there is no information about that company's registration in the United States.

The Georgian Defense Ministry said the rumor about a potential sale of missile systems to Georgia was "a lie and misinformation."

Russian military analysts also questioned the credibility of the news, saying that the Patriot surface-to-air systems cannot be exported without the approval of the U.S. Congress. However, Russian intelligence officers said Georgia was buying weapons through other countries, in particular Israel and Ukraine.

Earlier, Alexander Shlyakhturov, head of Russia's military intelligence service (GRU), said that Ukraine supplied weapons and air defense systems to Georgia.

This time an officer of the Russian General Staff said it had been reliably established that "a batch of weapons will not be supplied by the U.S. administration, but with its approval."

The officer told Komsomolskaya Pravda on Monday: "We will have to adjust our groups of forces in the North Caucasus accordingly. If someone complains that Russia is building up troops in the Caucasus, they should ask the United States why we are doing this."

Vedomosti

AvtoVAZ gets one more chance, thanks to the crisis

"Russians have a love-hate relationship with Lada," according to Christian Esteve, Renault's senior vice president and general director in Russia. Although Esteve is not Russian, he cut to the heart of matter.

People love AvtoVAZ cars because they are inexpensive and easy to service. One does not have to dig deep to find the source of the hatred: everyone knows the quality of the cars leaves much to be desired.

The solution is clear: develop a comprehensive quality control plan. And then, Esteve is confident, "Russians will line up all day to buy Ladas." Romania's Dacia (owned by Renault) and the Czech Skoda (now owned by Volkswagen) went through a similar metamorphosis.

With Renault paying $1 billion for a blocking stake in AvtoVAZ, its managers will understandably go out of their way to recoup the costs. The problem is that the French are not in control, and thus have minimal input.

Esteve does not hide this fact: "Our main problem is a lack of faith in ourselves ... Tolyatti is not hell. We should only believe in our ability to succeed and we will do it."

AvtoVAZ has a chance to survive. The company still dominates the domestic market. Almost one in four new cars sold in Russia is a Lada. But time is working against the Tolyatti company. AvtoVAZ's directors are not hiding the fact that the economic crisis is Avtovaz's last chance to save itself. In other words, AvtoVAZ has three to four years to improve quality through design and production line upgrades or the number of unemployed in Russia will increase by another 100,000 people.

Either way, judging from Esteve's words, AvtoVAZ is not likely to have any models of its own left. The only possible exception being an entry-level model based on the Kalina. The rest (including the Lada models) will be Renault/Nissan derivatives. This may be the best approach; after all, a car is only a means of transportation.

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