World discusses sanctions against Iran, but still hopes Tehran will step back - analyst/ President launches law enforcement reform/ Russia overlooks its rundown anti-aircraft system - analyst/ Societe Generale, Interros set up Russia's largest private bank
World discusses sanctions against Iran, but still hopes Tehran will step back - analyst
The ritual dances around the Islamic Republic are reaching the final act, writes Fyodor Lukyanov, editor-in-chief of the Russia in Global Affairs magazine. As early as last fall it became clear that endless threats of sanctions won't do; sooner or later it will be necessary to get down to brass tacks. But a direct face-off scares everyone. A string of statements by Tehran, Washington, Moscow and European capitals should be seen as a final attempt to raise the ante and avoid a fatal finale.
Past experience shows that sanctions do not lead to the desired result. The first step in forcing an opponent must logically be followed through on, and the final step in this case is military action. Nor can the world ignore the possibility that a "loss of face" (inability of the United States to carry out the declared threats) will be seen by the U.S. establishment as a higher price for the country's prestige than any consequences of a military operation.
Tehran knows that no one is willing to go to war with Iran and is going out of its way to demonstrate strength and self-confidence. From the Iranian point of view, the higher the psychological tension, the more likely it is that cracks will appear in the international front. However, this estimation may not be entirely accurate.
Earlier Secretary of State Hillary Clinton brought up last year's idea of granting nuclear guarantees to Iran's neighbors. It appears the United States believes it will be able to rally the Gulf Arab monarchies around it. Pledges to unfold a nuclear umbrella over the region's Arab allies should demonstrate to Tehran how serious Washington is.
Moscow is still spewing forth a litany of buzzwords about sanctions, but generally is shifting towards support for some punitive measures. Russia is prepared to renege on its contract to supply S-300s to Iran (President Dmitry Medvedev confirmed this to Benjamin Netanyahu), but wants to preserve the fundamental right to conduct military-technical cooperation with Tehran. If sanctions envisage a ban, it is difficult to imagine Russian approval.
Another subject of controversy is an embargo on oil products. According to an U.S. story, that could be the most effective measure: oil-rich Iran lacks refining facilities and depends on imports. Russia, however, stresses that sanctions should not affect the population, so gasoline is out of the question.
China's stand is a conundrum. Iran's major trading partner has until recently avoided any political discussions on the Iranian issue. But in the present aggravation of relations with the U.S., there is the likelihood that Beijing will not hide behind Russia's back, and decide to demonstrate its strength to America.
Nezavisimaya Gazeta, Vedomosti
President launches law enforcement reform
President Dmitry Medvedev has started reforming Russia's law enforcement system by firing 17 Interior Ministry generals and two deputy ministers, cutting the ministry's central staff in half, and simultaneously increasing criminal responsibility for the police.
The president explains the need for the changes by the alarming situation with the country's law enforcement authorities. Analysts also cite the president's need to boost his political authority while nevertheless admitting that he is taking the right step. Only these steps are not enough, because they are limited to the Interior Ministry reforming itself, they say.
This is Russia's first attempt at a large-scale reform of its law enforcement ministry. Medvedev has fired more Interior Ministry officials than Vladimir Putin did during his eight-year presidency. This is to show that Medvedev does not share his prime minister's view - Putin has often said that law enforcement personnel issues should be handled with care because there are not many replacements to choose from.
Medvedev does not seem to see this as a problem. He is thus signaling to society and the political and business elite that the Interior Ministry reform is a purely political issue and his privilege, as are all military and security issues.
Alexei Malashenko at the Research Council of the Carnegie Moscow Center believes the president is trying to show that he is willing to and capable of making independent decisions. "This is an area where he is able to prove that he is the president, not just a member of the tandem. He is active because he feels he has the power," Malashenko said.
Gennady Gudkov who heads the lower house security committee said Medvedev's proposals are certainly correct, but that they do not go far enough, because effectively they come down to the Interior Ministry reforming itself.
Alexander Moskalets, deputy head of the lower house committee on constitutional law, said he would willingly sign off on each of the president's proposals. However, he pointed out that the situation at the Interior Ministry is no different than at any other Russian ministry or agency or the country as a whole.
"The president is absolutely right because other federal executive bodies are facing the same problems. Their management and staff are inflated, and they have departments which do not meet any objectives, but instead occupy themselves with vague busywork. Their lack of transparency is as great as ever," he said.
Nezavisimoye Voyennoye Obozreniye
Russia overlooks its rundown anti-aircraft system - analyst
Moscow's outrage over U.S. plans to deploy a missile defense system in Bulgaria and Romania seems to be just a habitual response. Only several years ago Russia tried to persuade the international community that southeast Europe needed exactly such a system to counter a hypothetical Iranian threat.
Under no circumstances will this missile defense system create problems for Russia, unless it plans to attack Romania or Bulgaria. At the same time reports of the deployment of a naval missile defense system comprising Aegis class guided missile cruisers in the Black Sea are being ignored, writes an influential Russian analyst.
Alexander Khramchikhin, deputy director of the Institute of Political and Military Analysis, says each U.S. cruiser or destroyer has two Mk-41 vertical missile launchers with 90-122 compartments for storing Tomahawk cruise missiles, a family of surface-to-air Standard missiles or RUR-5 ASROC anti-submarine rockets.
Obviously, the United States does not need to deploy the latter in the Black Sea because the only Russian submarine which is under constant repair is unlikely to create any problems, the analyst writes.
U.S. nuclear-powered submarines that can operate unhindered in the Black Sea also carry Tomahawk missiles.
Russian military aircraft and the Black Sea Fleet's few warships are also no problem for the U.S. Navy, which can launch Tomahawks from the Black Sea's southeastern sector to hit six divisions of the Russian Strategic Missile Force accounting for 60% of the country's intercontinental ballistic missiles.
Four missile divisions lack any surface-to-air missile (SAM) systems. The Strategic Missile Force's largest Tatishchevo Missile Division near Saratov accounts for 25% of Russian ICBMs and is defended by a two-battalion regiment of obsolete S-300PS Angara (SA-10 Grumble) SAMs.
Another missile division in Dombarovskoye near Orenburg, making up for over 50% of the remaining R-36M (SS-18 Satan) ICBMs, is shielded by a two-battalion regiment of S-300V (SA-12 Gladiator and Giant) SAMs, the analyst writes.
Each S-300PS and S-300V battalion has no more than 48 combat-ready missiles. Consequently, the number of U.S. Navy Tomahawks that can be launched against their respective targets exceeds that of combat-ready SAMs.
The rundown air defense system is unable to shield various installations, the analyst writes. That's why Washington can voluntarily or unilaterally reduce its strategic nuclear forces because it can use high-precision non-nuclear weapons to suppress Russian nuclear arsenals, the analyst writes.
A missile defense system now would create such a headache for Moscow and would finish off the surviving individual ground-based or submarine-launched ballistic missiles.
Although missile defense elements in the United States and warships in the Arctic cannot neutralize a massive missile strike, they can cope with individual missiles. Russia's dwindling strategic nuclear forces and air defense elements can help the U.S. achieve this objective in the foreseeable future, the analyst writes in conclusion.
Societe Generale, Interros set up Russia's largest private bank
French banking group Societe Generale and its partner in Russia's Rosbank, Interros, have agreed to combine their Russian assets, a joint press release reads. Following consolidation, Rosbank will become the largest private bank in Russia in terms of assets and the largest Russian asset of any foreign bank.
Analysts say that Societe Generale (SG) has chosen an opportune moment for consolidating its large network, which was unusual in Russia.
In the past SG has said there is no need to consolidate its subsidiaries because each of them was effective in its own discipline. But analysts say the decision was inevitable because last year SG's Russian subsidiaries lost 200 million euros and their retail operation plummeted 51%.
SG's retail structure was the largest in Russia among banks with a single foreign shareholder, according to Dmitry Dmitriyev, an analyst with VTB Capital, the investment division of state-controlled VTB Group.
SG owns 100% of DeltaCredit (mortgage financing), Rusfinance (consumer credit) and BSGV (a universal bank) and 64.68% of Rosbank (a universal bank).
Russian asset management group Interros owns slightly more than 30% of Rosbank through Pharanco Holdings Co Limited (19.276% of that stake is committed as loan collateral with VTB). The remaining stock belongs to minority shareholders.
When the deal is closed, Societe Generale will hold an 81.5% share of the new bank. The stake of Interros will be diluted to less than a blocking package.
The consolidation is to be completed within 12-15 months.
The combined bank could become the largest bank in terms of assets held by a foreign partner and the largest commercial bank in Russia.
"According to Interfax rankings for 2009, the new bank's assets will be worth 715 billion rubles ($23.75 billion)," said Olga Belenkaya, an analyst with Sovlink, a company focused on attracting foreign investment to Russia's fuel and energy sector.
Rosbank was ranked 11th and BSGV 24th by asset in 2009.
"When the market is growing rapidly, investors usually lack resources for internal operations," said Pavel Gurin, board chairman of Raiffeisenbank, a subsidiary of Raiffeisen International Bank-Holding AG. A merger offers an opportunity "to conduct the same amount of business cheaper and with fewer personnel."
"Consolidation within one legal entity will cut expenses through the centralization and elimination of overlapping functions, including administration, accounting, and risk management," Belenkaya said.
Rosbank and BSGV will preserve their independent brands, while Rusfinance and DeltaCredit will become 100% subsidiaries of the new bank. The Group will become the fifth-largest investor in the Russian banking sector based on the size of the credit portfolio.
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MOSCOW, February 19 (RIA Novosti)
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