MOSCOW, February 12 (RIA Novosti)
Russia-NATO dialogue hampered by mutual mistrust/ Russian government to resume integration of regions/ Fiat gets cheap ticket to Russian market/ Russia's fifth-generation aircraft will corner 30% of fighter market - analyst
Russia-NATO dialogue hampered by mutual mistrust
Russian President Dmitry Medvedev has approved the country's new military doctrine, which includes the option of using nuclear strikes against potential aggressors. This has convinced the West that the reset policy has not helped to cure Moscow of its NATO-phobia.
When NATO developed a new strategy, it invited Russia to express its opinion, but Moscow has not understood the importance of that gesture, a Russian analyst writes.
Fyodor Lukyanov, editor-in-chief of the Moscow-based magazine Russia in Global Affairs, writes that the West does not want to make concessions to Russia, who in turn is not enthusiastic about developing new relations with the alliance.
But Russia and NATO cannot develop a mutual understanding because they are dealing with imaginary partners and not with reality, the analyst writes.
Moscow fears that NATO will become a global force, acting as it pleases, even though the bloc's inability to grow into a "policeman to the world" became apparent several years ago.
Analysts say openly that NATO's first full-scale military operation outside its traditional zone of responsibility, Afghanistan, will also be its last. However, Article 5 of the North Atlantic Treaty signed in Washington binds the signatories to provide assistance to partners attacked in Europe or North America.
Karl-Heinz Kamp, Director of the NATO Defense College Research Division, said this makes further expansion of NATO unlikely because of the risk of large-scale complications, such as Moscow's strong opposition.
At the same time, NATO does not see Russia as it is either, Lukyanov writes. It is argued that the United States and the other leading powers made a mistake after the end of the Cold War by ignoring Russia's bid to regain prestige and status.
Therefore, if the bloc showed a willingness to listen to Russia's ideas and offered it a relatively equal partnership, it would convince Moscow to forget the offences it suffered in the 1990s and 2000s and to agree to join a security system with the U.S. as its core.
The dialogue between NATO and Russia could be more interesting had the idea been realized seven or eight years ago, Lukyanov writes. The Kremlin was working feverishly for prestige and status then, and Vladimir Putin spent most of his presidency knocking on doors.
However, today such a proposal (which has not been clearly formulated anyway) is unlikely to impress Moscow, because the general situation has changed.
Asia's ambitions and the growing number of regional conflicts complicate the Western effort to attain global leadership. Besides, an invitation to Russia to join the bloc could be seen as an attempt to convince it to shoulder part of the problems the United States and NATO cannot bear unassisted, such as the Afghan war or the hypothetical containment of China.
Moscow would like to see Afghanistan stabilized and to find a counterbalance to a fast growing China. However, it is no longer sure that the U.S. and NATO would be the best partners for attaining these objectives.
Russian government to resume integration of regions
State Duma Speaker Boris Gryzlov recently proposed merging the Russian regions with budget surpluses with those that run a deficit. His proposal was clearly aimed at probing public sentiment and regional leadership's willingness to accept more changes.
News from the Kremlin suggests that the government is ready to resume its earlier policy of integrating the regions into larger units, a policy suspended due to the global recession.
The previous wave of mergers occurred in 2003-2007. Five regional referendums were held, reducing the number of regions from 89 to 83.
One rationale for merging regions is that the policy helped reduce the number of economically underdeveloped areas requiring subsidies. The extent of disproportionate development of Russia's regions is indeed enormous, as Moscow accounts for 23% of the country's GDP, with the Moscow and Tyumen regions together (including oil and gas-rich autonomous areas) accounting for 35%. The top ten regions contribute 57% of the aggregate GDP, while the 73 remaining regions make little economic difference.
The World Bank's World development report 2009: reshaping economic geography says that there are always high and low income areas within one country, which is due to their economic specifics, distribution of natural resources and geographic location. The gap between high and low income areas has been growing lately. Previously successful companies go out of business, while emerging economic sectors no one has even heard of before, show a booming growth.
So how would the merger of two different regions improve the lives of the poorer one's residents? Wouldn't it be merely a statistical improvement, as the number of low-income regions would decline on paper? This would only disguise the inequality, not eliminate it.
Incidentally, a region's economic status - high-income or subsidized - may well depend on the local government's policy with regard to local taxes: how much it invests in local development versus what it sends to the federal coffers. If that is the case, it would be enough to change that policy to improve the situation on paper.
Fiat gets cheap ticket to Russian market
Italian automotive giant Fiat which had failed to buy a blocking stake in Russia's largest carmaker AvtoVAZ two years ago, will build a similar enterprise in Russia seven years later. Moreover, the state-owned Vnesheconombank (VEB) will finance the construction project.
On Thursday, Fiat CEO Sergio Marchionne and Vadim Shvetsov, CEO of Russian automaker Sollers, signed an agreement to establish a new joint venture on a parity basis.
Within two years, the joint venture will manufacture some 300,000 cars annually. The models will be based on Fiat and Chrysler platforms, and production is expected to reach 500,000 vehicles by 2016.
The total investment, including in production expansion, R&D and localization of engine and transmission production, is estimated at 2.4 billion euros (99.6 billion rubles). The government plans to allocate 2.1 billion euros (87.1 billion rubles).
Russian Prime Minister Vladimir Putin said Thursday that the government would consider lending 2.1-billion euros to the joint venture for 15 years.
VEB is assessing project-funding options, a corporate spokesperson said. Ministry of Finance and VEB sources are saying the issue has been almost settled. 2.1 billion euros is a huge sum for VEB which will either allocate its own funds or borrow money, but not from the National Wealth Fund, a Finance Ministry source said.
VEB's stake in the joint venture is currently being negotiated, the sources said.
Fiat has not launched a serious project based in Russia. In 2007, the Italian company tried unsuccessfully to buy a 25% stake in AvtoVAZ, whose shareholders preferred the Renault-Nissan alliance instead.
Fiat hardly regrets this misstep because the French-Japanese carmaker, which invested $1 billion to enter the market, lost 370 million euros (15.3 billion rubles) from its AvtoVAZ shareholding out of its total losses of 3.1 billion euros (128.6 billion rubles) in 2009. Moreover, the Russian government expects Renault-Nissan to provide additional investment.
Fiat will enter the Russian market virtually free of charge and with government support, saving the time and money that would have been spent on a new manufacturing venture, said VTB Capital auto analyst Yelena Sakhnova. The 2.1-billion euro loan to be borrowed by the joint venture will not be consolidated on the Fiat-Sollers balance sheet.
Sakhnova estimates sales of about 3.5 million vehicles annually in the Russian auto market by 2016. She said the Russian-Italian joint venture would control 12% and AvtoVAZ, including Renault-Nissan projects, 20% of the market.
However, Sollers is starting virtually from scratch, while AvtoVAZ remains the largest national automaker. A 12% market share is not bad at a time when AvtoVAZ faces bleak prospects, Sakhnova said in conclusion.
Russia's fifth-generation aircraft will corner 30% of fighter market - analyst
The fifth-generation T-50 fighter, also known as Future Tactical Aviation Concept (PAK FA), has been under development by the Sukhoi design bureau since the 1990s. It made its maiden flight in late January of this year. Years of work lie ahead (the shakedown and workup of the U.S. F-22 Raptor, for example, has taken the Americans 25 years), yet experts see a bright future for the T-50 on international markets.
"The plane is equipped with advanced avionics that act as an electronic pilot," says Givi Dzhandzhgava, head of Avionika. "The fighter itself analyses the situation and offers options to the pilot. This greatly reduces the mental load on the pilot and allows him to focus on tactical tasks."
"After 2020, two or three models will dominate the fighter aviation market unchallenged: the U.S. F-22, Russia's T-50, and perhaps a Chinese imitation of the 5G fighter," says Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies. "The Russian product will be able to command 30% of the fighter market."
"Some countries, for example, India, will build their air complements with both Russian T-50s and U.S. F-35s," he continued. "The Russian-Indian plane may dominate the markets in Southeast Asia and some Middle East and Maghreb countries, which traditionally buy Soviet and Russian aviation equipment."
In Makiyenko's view, "these fighter jets have but one fundamental fault: they are prohibitively expensive: expensive to buy, to maintain and to train pilots on."
According to the analyst's estimate, the PAK FA project will be reviewed in 2012 and may undergo critical changes. Optimistically, volume deliveries will start in 2018-20, with initial combat readiness to be achieved two to three years later, Makiyenko believes.
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