Izvestia
Russia resumes military cooperation with Iran at the right time - experts
Experts say that Russia has decided to resume military cooperation at the right time because other leading arms exporters without political scruples are moving to take its place on the market.
Iran could become the third largest buyer of Russian arms. The top two clients - China and India - have bought nearly all of the best and latest Russian weaponry and are now increasingly looking to the Western market. This is largely why Moscow has earned $600 million less in 2005 than in previous years ($5.7 billion in 2004).
Alexander Denisov, deputy head of the Federal Service of Military-Technical Cooperation, said the gap could be filled by the sale of equipment for previously delivered hardware. However, the bulk of arms exports (and thus profits) constitute tanks, aircraft and air defense systems.
The delivery of 30 Tor-M1 fifth-generation air defense systems worth $1 billion to Iran is the second time Moscow acted contrary to Washington's wishes. The first time was when it sold the Strelets air defense systems to Syria.
Experts say that France is energetically marketing the Mistral air defense systems and the Mirage aircraft in Iran, while Germany has offered Tehran armored vehicles and submarines. It is known that the Americans have tried to sell dual technologies (cryogenic missile engines) to Iran. But they were "private American companies," and therefore Washington did not make any loud objections. Other arms suppliers to Iran are China, the two Koreas, and Pakistan.
"Washington demands that Iran and North Korea keep their nuclear programs transparent but disregards Israel's considerable nuclear arsenal," Yury Baluyevsky, chief of the Russian General Staff, said. "The same is true about the treaty on the non-proliferation of missile technologies."
Kommersant
Moscow Duma elections: new political reality
The Moscow Duma elections have, for the first time, taken place under a new political reality - 20 out of 35 deputies were elected from party lists, and this very composition will have to approve President Putin's nominee for the new mayor. In reality, the new system is based on a few principles about which nothing has yet been said officially.
Firstly, the winner is not elected - everybody knew in advance that United Russia would undoubtedly be the leader. Second, the winners do not vote - the victory of United Russia carrying Yury Luzhkov's banner does not mean the mayor will stay in power. Yesterday's vote could not, by any possible stretch of the imagination, be considered city council elections.
On the whole, Moscow's poll looked like a ratings election designed to reveal society's moods and the potential "junior" partners of the winning party for the next Russian parliament.
But the poll has not completed this function in full. Firstly, the Democratic, Communist, and Nationalist parties were supposed to run for the ratings election, but Rodina, which was to represent the latter, was excluded from the list. Obviously, there was a fear that the result would not be that predictable or appropriate. The vote count was problematic, too. As of Sunday morning, Yabloko representatives reported numerous violations of the voting procedures that would certainly enable them to contest the official voting results.
Officially, the situation is similar to that which existed before the "color revolutions" in the former Soviet republics. The only difference is that this election revealed just an insignificant share of the "democratic minority" and not Yabloko's victory.
Not a single candidate asked a recognized monitoring company to perform an exit poll. The lack of survey data will allow United Russia to insist that the official results are correct. And the Democrats and Communists will be able to claim that they would have shown better results if not for United Russia's administrative resource.
Nezavisimaya Gazeta
Gazprom introduces market prices for most CIS partners
Moscow has refused to sell energy cheaply, even to its relatively loyal CIS partners, though loyalty remains a privilege-earning asset. Armenia, one of Russia's geopolitical allies, will be sold gas at the price of $120 per 1,000 cubic meters (the old price was $56), whereas disloyal Ukraine will have to buy it for $160.
Dmitry Mangilev, an analyst with Prospect brokerage firm, said: "The market price for importing countries largely depends on Gazprom's transport outlays. Since the distance to Armenia and Ukraine is roughly the same, we can assume that private likes and dislikes played a role in determining gas prices for them."
"It is no secret that Russia often uses energy as a lever to attain political goals," but the decision to raise gas prices for Armenia and Ukraine was a purely economic one, Alexander Razuvayev, chief analyst at the Megatrustoil brokerage firm, said. The time has passed when Russia sponsored other countries' economies. The analyst said that the price of $160 per 1,000 cu m would be a severe blow to Ukraine, rendering "its economy unprofitable."
Ukraine is insisting that the barter plan of gas payments should be preserved for at least another year. But unlike Armenia, it has failed to come to terms with Moscow. However, President Viktor Yushchenko believes that "the problem will be solved by the end of the year."
Valery Yazev, head of the Russian state committee for energy, transport and communications, said Ukraine should not hope that Europe would put pressure on Russia. He said that if the situation were aggravated to absurd proportions and Ukraine started unwarranted collection of gas exported to the EU, Russia "would sell gas to European consumers on the border with Ukraine, which would make Ukraine responsible for the transit across its territory."
Vedomosti
Russia not prepared to assemble luxury cars
The S-class luxury Mercedes is too sophisticated to be fully assembled by Russians, believes DaimlerChrysler. In this case, retort Russian officials, industrial assembly methods that result in savings will be ruled out.
Investment in the future plant in St. Petersburg was to exceed $100 million. Its capacity was to have been 30,000 cars a year with the production of six Mercedes models, including the prestigious S-class. "Plans were to assemble between 700 and 1,000 of them a year," a source in the city government said.
Differences arose when an initial investment agreement was hashed out. The Germans were insisting that some of the electronics and other units for the S-class vehicles be installed in Germany, "since Russia cannot guarantee the required quality," a federal official said. But the policy on industrial assembly puts strict limits on car components imported free or at a reduced rate of 3% rate instead of 15%. "We cannot change the conditions of the decision especially for DaimlerChrysler," he said. "But this does not pose any obstacles to the other five models."
Sergei Alexeichuk, an independent car market analyst, said DaimlerChrysler was being capricious. "There is no economic sense in clinging to the assembly of 1,000 S-class Mercedes cars," he said. "They want to make 30,000 cars, but these will be impossible to sell in Russia," a source familiar with DaimlerChrysler's Russian project said.
Yelena Sakhnova, an analyst with the United Financial Group, said the luxury-class segment in Russia was a slow grower, but a local production setup could help DaimlerChrysler increase sales. "An E-class car now costs about $72,000, and local assembly could bring the price down to $54,000," she said. "This is certain to boost demand." A 10%-15% cut in the price will let DaimlerChrysler sell up to 20,000 vehicles a year, Maxim Virchenko, head of sales for the St. Petersburg Mercedes dealership, said.
Biznes
Government reshuffle halts aircraft industry reform
The recent government reshuffle has negatively affected plans to consolidate Russia's aircraft industry. It turns out that the ambitious project to establish a united aircraft consortium has been virtually frozen since Defense Minister Sergei Ivanov was promoted to deputy prime minister.
This is not the first attempt to consolidate all Russian aircraft factories and design bureaus to eliminate unnecessary competition on the global market and to increase the capitalization of sectoral outsiders with the help of leading companies' profits. Unlike other projects, the united aircraft consortium has received the blessing of top Russian leaders. Consequently, there existed ample administrative resources and political will for implementing the venture.
The concerned parties moved to design effective merger mechanisms, established stock-exchange coefficients, and discussed product-range issues. Oboronprom, which was established by Rosoboronexport and no longer existent Gosinkor, has managed to establish a helicopter holding company. This legal entity comprises the Mil and Kamov rival helicopter factories and the Kazan helicopter factory as well.
Technically, Oboronprom will not compete with the united aircraft consortium. But Sergei Ivanov's allies are responsible for creating the helicopter holding company. The defense minister's adviser and former Gosinkor chairman, Vladimir Chernov, is a member of Oboronprom's board of directors, and Chernov's former deputy is the general director.
In his new position, Ivanov wants to control the Russian defense industry. Quite possibly, Oboronprom will supervise the military aircraft sector on Ivanov's orders. It would be senseless to establish a purely civilian united aircraft consortium because Russia's Ilyushin and Tupolev passenger airliners can hardly compete with Boeing and Airbus. Sacrifices always must be made.
Novye Izvestia
Government tightens grip on key areas of economy
Vladimir Putin has approved amendments to the law on state energy tariffs control. Introducing state control on tariffs for gasoline, housing and utilities, and communications is in store. Experts think it is time the government chose between further controlling the economy and encouraging market relations and competition.
The government is also fixing 2006 housing and utilities tariffs and is not going to loosen its grip on gasoline and communications tariffs. A majority of experts believe government interference hampers market growth. And, as a rule, its key objective to protect citizens' interests is not being fulfilled.
Galina Khovanskaya, a member of the Russian State Duma committee for civil, criminal, arbitrary and procedural law, said: "Setting price limits for housing and utilities designed to control tariff growth on the federal level will not yield the expected results." She said the amendments to the law on tariffs control adopted by the Duma in the first reading would restrain tariff growth for only 5% of housing. The deputy said the new draft law would only scare off private investors and that the sector needed "long" money right now.
Mikhail Chistyakov, an analyst with the investment company Obraz (Image), agreed that housing and utilities could not develop without private investment. He said tariffs were the only guarantee for recouping investments. "An investor concludes an agreement of up to 25 years with the state," Chistyakov explained. "If the government lowers tariffs, the investor will simply go bankrupt."
"Obviously, the authorities fear that if they ease the pressure on the key sectors of the economy, they will lose political influence," he said.
