Less than successful medal quest in Vancouver prompts official action/ Authorities concerned by anti-government protests in regions/ Gazprom struggling to retain control of European markets/ Russian stock market again the most attractive among BRIC countries

Vedomosti

Less than successful medal quest in Vancouver prompts official action

The Russian National team's poor showing at the XXI Winter Olympic Games in Vancouver, Canada, negatively affects the positions of sports officials prompting them to want to overhaul the entire athlete-training system. However, today's Russian sports system is part of the national economic system dominated by "favorites" whose main objective is to show off and to carve up non-transparent budgets.

Last weekend, Leonid Tyagachyov, President of the Russian Olympic Committee, said the Committee and the Federal Agency for Physical Fitness and Sports (Rossport) had drafted a new program for managing professional sports and had acquainted national leaders with it. This was done prior to the Vancouver Olympics and in anticipation of the Russian team's inadequate performance.

The Olympic Committee's training headquarters said in the run-up to the Olympics that the Russian team was expected to win 27-31 medals, including 7-11 gold medals. The Olympic Committee hoped the team would be third in overall team qualification or that, at best, it would be first.

This also made the fans feel optimistic. About 50% of those polled felt confident that Russia would accomplish this objective. However, many Russians felt like they were deceived and even insulted after the team's poor showing and against the backdrop of an unprecedented official presence in Vancouver.

The Russian delegation comprised dozens of officials, members of parliament, actors, performers, "sponsors" and friends. Apart from the "federal" guests, many people were sent by government departments and regional administrations.

Russia House, with a 10,000 sq. m. pavilion, probably became the most expensive facility of this type in the entire history of the Olympics.

At the same time, Russian Olympic luge veteran and Turin silver medalist Albert Demchenko was unable to buy a new bobsled for the Vancouver Olympics and had to ask friends to finance repairs for the old one.

Sports officials propose strengthening the relevant "authority" and turning various national sports federations into Rossport divisions. Minister of Sports, Tourism and Youth Policy Vitaly Mutko recently said such federations should be more closely linked with the state.

Mutko and other officials would assume full responsibility "till the last bullet" if Rossport gets the required authority. Consequently, there will be more sports officials who will, as usual, try to accomplish difficult objectives through financial allocation.

Each federation will be patronized by a business oligarch and controlled by an official who will field modern, hugely paid gladiators capable of implementing the "bread and circuses" principle, thereby strengthening the authority's legitimacy.

Kommersant-Vlast

Authorities concerned by anti-government protests in regions

For a month now, Russians have continued to hold protest rallies across the country. Some analysts were quick to see this as an "anti-Putin trend" and even as presaging an "Orange revolution." A revolution is out of the question for the time being, but the authorities have reason for concern.

It all began in Kaliningrad where about 10,000 people turned out in the city square on January 30 to demand the repeal of a local Duma resolution raising transport tax and the resignation of Governor Georgy Boos, the central government and its head Vladimir Putin. Dispersing, the opposition promised to hold an even bigger rally on March 20.

Other protests: in Moscow, Irkutsk, Samara, Makhachkala and the Khanty-Mansiisk Autonomous Area were less spectacular. They attracted far fewer participants than the regular Communist gatherings and were nowhere near the size of the spontaneous protests of early 2005 against cash replacing benefits in kind.

It would seem the authorities have nothing to worry about. According to a December poll conducted by VTsIOM, the number of Russians satisfied with life has risen from 25% in January 2009 to 28% in December, and those expecting "a change for the better," from 20-28%. The population's "protest potential" remains at the pre-crisis level of 30-32% and, if the polls are anything to go by, no more than 10-12% of Russians are prepared to go out onto the streets.

But a nervous and sometimes panicky response to these protests by Russian authorities is a sign that the Kremlin and the government take these surges in popular protest very seriously.

These rallies differ radically from, for example, regular protests by the Russian Communist Party (KPRF), which, despite their size (150,000 people took part in November 7 rallies, according to Interior Ministry estimates) and their anti-government slogans, are usually not begrudged by the authorities.

Kaliningrad seems to have staged what was by no means the first and what will seemingly not be the last high-profile action by a broad variety of opponents of the ruling regime - both from the "systemic" opposition (KPRF, LDPR and Yabloko) and the radicals (the Solidarity movement). And although the authorities grudgingly tolerate purely Communist demonstrations or Yabloko pickets, they immediately see the phantom of an "Orange revolution" in any broader coalescence among the opposition. The example of thousands of Russians easily converging on the central square to defend their personal interests rather than abstract party political ideals and to demand the resignation of a governor, and even the prime minister, can easily become infectious. If, all of a sudden, something like that were to happen, no riot police would be able to restore constitutional order in the provinces.

Gazeta.ru

Gazprom struggling to retain control of European markets

The Russian gas export monopoly is offering more concessions to its partners. Italy and France will follow Germany in having their gas contracts de-linked from the oil price. Cost will be based on the spot market price of gas instead. Analysts believe further price cuts are unavoidable, as the booming shale gas production is threatening Gazprom's position on the European markets.

Spot market pricing is some 25% below what is stipulated in Gazprom's long-term contracts (currently around $300 per 1,000 cubic meters).

Gazprom management has agreed to changes in gas contracts with European energy groups, including GDF Suez of France, E.on of Germany, and Eni of Italy, the Financial Times reports.

Gazprom sources sounded vague as they commented on the situation. "Talks with some of our European customers have resulted in mutually acceptable decisions while complying with the terms of their long-term contracts. We are currently adjusting prices taking current market trends into account," a source said.

Gazprom has not disclosed the volumes to be purchased by Italy and France this year. Alexei Logvin, an analyst with the Rus Capital asset management company, estimates the potential losses as "minor." "Even if Gazprom adjusts all of its European contracts, linking them to gas prices on the spot market, it would only cut the company's revenues by 15%. On the other hand, making concessions to its European customers will help Gazprom keep its share of the European markets. Russian gas is currently the most expensive in Europe, so European customers are opting for other producers such as Norway or African countries," he said.

According to estimates, Gazprom will earn about $116.5 billion in 2010, which means the contract adjustments could result in a $17.5 billion loss - not a critical sum for a monopoly like Gazprom. The company could always compensate for its losses by hiking domestic prices.

However, Logvin sees a different threat for Gazprom: growing shale gas production is more serious than the need to use spot market prices. "America has managed to replace natural gas imports almost entirely by developing shale gas production. European countries are doing the same. Gazprom might lose the market for its huge quantities of gas," the analyst said.

In this situation, all the Russian monopoly can do is encourage its western partners to abide by their long-term contracts. Price cuts are one possibility, although it might not be enough, Logvin added.

Kommersant

Russian stock market again the most attractive among BRIC countries

The recent decline on the Russian stock market has attracted foreign players who last week invested $214 million in Russian and CIS stocks exceeding the total invested in China, Brazil and India.

According to Emerging Portfolio Fund Research, which provides fund flows and asset allocation data to financial institutions around the world, $214.5 million was channeled into funds investing in Russia and the CIS over the week ended February 24. This is the second best result in 2010 and the third best since October 2009.

The Russian market looks considerably better than the markets of the other BRIC countries (Brazil, Russia, India and China). Investors channeled $113 million into Brazil and withdrew $21.2 million and $5.4 million from Chinese and Indian stock markets respectively.

Funds investing in Russia have attracted over $420 million in total since the beginning of 2010.

At the same time, Russia's stock indices underperformed those in industrialized and emerging countries last week, mostly because of speculators' aggressive sales strategies.

"Speculators booked profit amidst the economic uncertainty and weak U.S. macroeconomic statistics," said Dmitry Sadovy, the managing director of SI Capital.

State controlled Gazprom and Sberbank suffered most, losing 3.5% and 5.1% respectively over the week. Taken together, they account for up to 30% of Russian indices, and their fall therefore seriously affected the Russian stock market.

"The [downward] change in Sberbank quotations is a litmus test showing that speculators have become the largest players on the market," said Alexander Zakharov, head of international sales at the investment bank Otkritie.

An inflow of sizeable funds against the backdrop of falling indices has become a distinct trend on the Russian market. Over the past six months, it has been in evidence every 1.5 months: every time the market bottomed out, the subsequent two or three weeks would see growth of 6% to 11%.

"Western investors are not overoptimistic, but the demand for highly profitable instruments, including ruble assets, will persist for as long as the U.S. monetary authorities continue their dollar injections into the economy," Zakharov said.

The price of commodities, which are the main source of income for the Russian budget, remain high, and a consistent strengthening of the ruble against global currencies is making the Russian stock market more attractive to foreign investors.

"Some players who sold Russian assets late last week have now started taking long positions on these securities," Sadovy concluded.

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MOSCOW, February 27 (RIA Novosti)