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RIA Novosti

What the Russian papers say

What the Russian papers say

What the Russian papers say
20:00 19/08/2009

MOSCOW, August 19 (RIA Novosti) Moscow Middle East meeting: outlook uncertain / Moscow must review its North Caucasus policy / Gazprom gains foothold in Turkey / Evraz Group pulls out of Australia /

Gazeta.ru, Gazeta

Moscow Middle East meeting: outlook uncertain

A statement on the 70th anniversary of the beginning of World War II, in which 43-year-old Dmitry Medvedev and 86-year-old Shimon Peres opposed the glorification of Nazism, has proved the only document signed by the presidents of Russia and Israel after their informal meeting in Sochi. A Moscow Middle East meeting remained a big question mark. According to both foreign ministries, the two countries are undecided whether to invite Hamas to it or not.

Medvedev hopes for the presence of "all parties to the conflict," including the radical Palestinian movement Hamas, now controlling the Gaza Strip, a Russian Foreign Ministry source told Gazeta.ru. "Without Hamas, which is a real force and shapes developments in the region, any agreements would be impossible or short-lived," the diplomat believes.

Peres said he would attend the meeting only on condition that Hamas or other terrorist organizations are kept out.

Previously, Russia, which early in 2009 decided to breathe new life into Vladimir Putin's four-year-old idea to call a summit of Russia, Israel, the United States and Arab countries, planned it for July.

Evgeny Satanovsky, president of the Institute of Middle Eastern Studies, does not believe there will be a breakthrough whenever it meets. "Israel places its bets on the Moscow meeting rather than one in Paris [as suggested by Nicolas Sarkozy]. Especially as a conflict with Iran is on the agenda, and Russia is the only country on good relations with Israel and Iran," the analyst told Gazeta. "The Moscow meeting will be non-productive with one exception: it will show that Russia is a respected member of the international community. No other conceivable things are possible, because the Middle East peace process is as dead as a doornail."

It is now clear that the meeting is unlikely to be held before the year's end, said a high-ranking official in the Russian Foreign Ministry.

Vremya Novostei, Vedomosti

Moscow must review its North Caucasus policy

The situation in the North Caucasus has deteriorated dramatically in the past few months. The media reports sound like news from the frontline.

The latest events in Daghestan, where militants attacked a police post and a health center last week, and in Ingushetia, where a suicide bomber rammed an explosives-laden minivan into the gate of police headquarters in Nazran on Monday, have shown that the situation in Russia's North Caucasus is far from stable.

There was a short period of relative stability there after a large terrorist attack in Nalchik, the capital of Kabardino-Balkaria, in October 2005. It rested on three factors - relative order in Chechnya, a favorable economic situation in Russia, and several wise personnel appointments in the North Caucasus.

The economically rich years allowed millions of people from the Caucasus who lived and worked in other Russian regions to earn well and therefore to provide sufficiently for their families. The new personnel appointments engendered a hope for driving back corruption.

However, none of these three factors lasted long enough.

After two Chechen wars, the Kremlin tried to calm down the Caucasus by applying a 19th-century policy based not on legislation common to the entire country, but on the paid loyalty of local feudal lords who were in turn allowed to retain all their powers.

Order - if it can be described as such - rested on a policy whereby the ruling clan kept the political and financial reins, allowed to maintain temporarily a semblance of tranquility disregarding the interests of the people.

That system aggravated the drawbacks of modern Russia for the bulk of people in the North Caucasus, notably social stratification, corruption, selective application of law, and shoddy implementation of social projects.

The social system of the 19th century also implied specific relation between the powers-that-be and the population, when the survival of the officially registered unemployed depended on the feudal lords, for whom they worked for meals. Social integration proceeded according to the ethnic principle.

Since 1991, when the Soviet Union collapsed, blood feuds have again become a fact of life in the North Caucasus, and violence became the only means of solving financial, social and personal problems during the Chechen wars.


Gazprom gains foothold in Turkey

Gazprom Germania ZMB GmbH, a subsidiary of Russia's state-controlled gas monopoly will boost, in the second half of 2009, its stake in the Turkish company Bosphorus Gaz Corporation A.S. from 40% to 51% with an option to augment it to 71% later. This company, which distributes gas directly to the country's consumers, plans to increase sales by 50%. The Russian monopoly plans to use Bosphorus Gaz as a stronghold on the Turkish market during its liberalization period, and especially during the privatization of the country's gas distribution networks.

Bosphorus Gaz Corporation was registered in 2003 in Istanbul, shortly after the launch of the Blue Stream pipeline that linked Russia and Turkey. The company now controls 3% of the country's market. In 2005, Bosphorus Gaz won a tender to resell part of the gas purchased by another company, Botas, from Gazprom. Bosphorus Gaz acquired the right to annually sell 750 million cu m (26.48 billion cu ft) of gas to Turkish consumers until 2021.

Now Bosphorus Gaz is to become Gazprom's stronghold on Turkey's domestic market, a high-ranking source in Gazprom said on Tuesday. "The company will boost sales, and explore various possibilities of participating in the privatization of the country's gas distribution networks and in building underground gas storage tanks in Turkey," he said adding that it was a must for Gazprom to have its own companies in Turkey as the country is turning into a global gas hub.

Sinan Ogan, director of the Turkish Center for International Relations and Strategic Analysis (TURKSAM), said that Gazprom had attempted a foray into Turkey's internal market, but that proved difficult. Whereas Bosphorus Gaz, which has been close to Gazprom ever since it was established, is perfectly entitled to do so, but lacks the required capital. This is therefore a mutually beneficial deal, he said.

"Turkey is planning to build a system of pipelines, and Botas wants to sell its share of the domestic market. Now Gazprom has a chance of participating in these processes," Ogan went on to say.

Maxim Shein from BrokerCreditService estimated an 11% stake in Bosphorus Gaz at around $30-$50 million. "If the company expands its orders portfolio and boosts sales, Gazprom will have to pay much more for a 21% stake in the future - not twice that amount, but several-fold, as the company's turnover will grow."

RBC Daily, Kommersant

Evraz Group pulls out of Australia

Australia's mineral resources, so attractive to Russian investors only a year ago, have lost all their appeal. The Evraz Group has sold the minority stake in Australia's Cape Lambert Iron Ore Ltd. it bought in July last year. The group has also withdrawn from a joint venture with China Metallurgical Corp., set up to develop Cape Lambert's iron ore deposit in Western Australia, owned by the Australian company. Experts agree that Evraz, though it has enough of its own raw materials, can no longer afford to invest in new projects abroad because of heavy liabilities.

The Cape Lambert project was estimated at $400 million. According to JORC international qualifications assessment, the deposit contains 1.56 billion tons of ore, with 31.2% iron content.

"The decision to quit was due to a review of our investment portfolio," says an Evraz spokesman. However, Evraz declined to disclose details of the sale of an 11.45% stake in Cape Lambert to Australian and British investors .

It is not surprising that Evraz has decided to pull out of Cape Lambert, believes Georgy Buzhenitsa, an analyst with UniCredit Securities. "Evraz has resources in Russia and Ukraine," he says. "And though iron ore prices have doubled since February-March lows, the medium-term outlook is dim, and it is justified to focus on the basic activity, spending nothing on new overseas projects."

The crisis has modified Evraz's strategy, agrees Dmitry Smolin from Uralsib brokerage. The company cannot afford to invest in greenfield projects (Evraz's net debt stands at $7.8 billion). And this is not the first project Evraz is abandoning. Early in the year, the company declined to purchase a license for the Mezhegeiskoye coal field in Tuva.

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