Iran need not worry until summer / The chances of improving Russian-U.S. relations may vanish - analyst / United States and China could unleash a global trade war / Russian defense industry needs one trillion rubles in additional funding /
Iran need not worry until summer
Iran can calmly pursue its nuclear program until July: no UN sanctions will threaten it before that time. Analysts have concluded this from what Prime Minister Vladimir Putin told U.S. Secretary of State Hillary Clinton in Moscow last week.
"Russia's sanctions against Iran are possible only if they are not counter-productive," said Yury Ushakov, Deputy Chief of Government Staff, following the discussion between Putin and Clinton on Friday night. Meanwhile, Foreign Minister Sergei Lavrov, quoting President Dmitry Medvedev, hinted that Iran sanctions would be supported if they were inevitable.
Before the Moscow Lavrov-Clinton meeting, Putin had visited the Volgodonsk Nuclear Power Plant in the Rostov Region, where he said Russian specialists would put the Bushehr Nuclear Plant into operation in July.
Ariel Cohen, a leading expert with The Heritage Foundation and one close to the Republican Party, believes Russia may support direct U.S. sanctions provided it could profit from them. If, for example, Iranian oil and gas projects were boycotted, preventing Iran from exporting hydrocarbons to Europe. That would benefit Russia by eliminating a likely rival from the energy market, he said.
However, Moscow is not going to enter into direct confrontation with Tehran at least until the launch of the nuclear plant in Bushehr. Cohen believes that even if Russia agrees to back EU and U.S. sanctions, they will have little effect without China.
In the opinion of a UN diplomat, Russia will finally determine its position on sanctions only when China formulates its own. In the past the Chinese have hidden behind Russia on sanctions, while now it is the other way around, the diplomat quoted The Financial Times as saying on Friday.
Russia's stance leaves little hope for introducing really effective measures against Iran, believes Vladimir Dvorkin, chief researcher at the Russian Academy of Sciences' Institute of World Economy and International Relations. It is this opposition that stands in the way of the discussion on sanctions.
The chances of improving Russian-U.S. relations may vanish - analyst
The U.S. Secretary of State Hillary Clinton's visit to Moscow is a last-ditch attempt to salvage U.S.-Russian relations, which were reset a year ago.
Although bilateral dialogue has resumed and relations have improved, there have been no drastic changes for the better. The situation in trade the economy has even deteriorated, writes an influential Russian analyst.
Sergei Rogov, Director of the Russian Academy of Sciences' Institute of U.S. and Canadian Studies, writes that Moscow and Washington have unfortunately failed to agree the new strategic arms reduction treaty (START) after 10 rounds of talks.
The document's Republican opponents and those inside President Barack Obama's administration have now become more active. The approval of a new U.S. nuclear doctrine is being delayed for the fourth time due to disagreements between the White House and the Pentagon, the analyst writes.
The Department of Defense opposes drastic changes in the approach toward nuclear weapons and is highly skeptical of Obama's disarmament calls.
Many Russians also oppose the new START agreement. Although the Russian press writes a lot about missile defense issues, it often fails to perceive the difference between strategic and non-strategic missile defense systems and substitutes political realities with military-technical fantasies and ultrapatriotic rhetoric, the analyst writes.
Unlike strategic Ground Based Interceptors (GBIs) whose planned deployment in Poland was cancelled by Obama, SM-3-type ground-based systems, currently being negotiated between the United States, Romania and Bulgaria, are unable to intercept Russian intercontinental ballistic missiles.
A vacuum in the sphere of bilateral arms control was created for the first time in 40 years after the expiry of the START-I agreement on December 5, 2009. The entire nuclear weapons control and non-proliferation regime will be undermined, unless both sides sign a new document in coming weeks pending the April 12 Global Nuclear Security Summit in Washington and the May Nuclear Non-Proliferation Treaty Review Conference in New York, the analyst writes.
The arms control mechanism comprising missile defense and START agreements, the Intermediate-Range Nuclear Force (INF) Treaty, the Conventional Forces in Europe (CFE) Treaty and the Nuclear Non-Proliferation Treaty, constitutes the foundation of strategic stability in a bipolar world and now risks being completely wrecked, the analyst writes.
A U.S. attempt to consolidate a unipolar world has already weakened the arms-control system to a considerable extent. Multilateral strategic stability must be strengthened at a time when a multi-polar world is reasserting itself. However, this will not happen if Russian-U.S. agreements are violated.
It appears that the 2009 "window of opportunity" for improving Russian-U.S. relations may be slammed shut. In that case, the world would face multi-polar chaos reminiscent of the early 20th century, the analyst concludes.
United States and China could unleash a global trade war
Some 130 members of the U.S. Congress last Monday sent a letter to Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke to demand retaliatory duties of 25% on Chinese imports. The United States would be able to do this if it labels China a currency manipulator. The American lawmakers think the yuan, or renminbi (RMB), is 30%-40% undervalued.
If the Untied States approves trade barriers, China, whose automobile market has grown larger than that of the U.S., could introduce prohibitive duties on imported cars or on U.S. chicken meat.
China has been openly offended by the U.S. lawmakers' intentions, which have increased the risk of an open confrontation. If a trade war breaks out between the two powers, it will hinder the global economic recovery much more than a cheap yuan could.
Any such war would involve more than those two countries, because over 50% of Chinese exports consist of products made locally by foreign companies. At the same time, a considerable part of Chinese imports comprises raw materials and components for Chinese exports. Therefore, a cheap yuan benefits hundreds of U.S., Japanese, Korean, Taiwanese, Russian and other foreign companies.
According to the International Monetary Fund, a 20% appreciation of the yuan would boost the U.S. GDP 1%. Is it worth the trouble?
Contrary to the general belief, the United States is benefitting from a cheap yuan because it imports Chinese clothes, footwear, electronics and other goods cheaply, whereas China is accumulating huge funds that could turn to ashes overnight if the United States makes that move. China's international reserves have reached $2.4 trillion, with the bulk of them invested in low-interest U.S. Treasury bonds.
Thanks to the undervalued yuan, Chinese consumer goods exported to the United States are much cheaper than they could be, which benefits medium and low-income Americans. U.S. companies say that a cheap yuan undermines their competitiveness and is forcing them to lay off workers. But the American consumers' benefits are ultimately far more substantial than any losses from layoffs due to the weak yuan policy.
On the other hand, a weak yuan is bad for the Chinese consumers and importers, for whom the price of imports is kept artificially high. The policy benefits Chinese exporters, but what they gain is relatively small compared to the potentially negative effect of this policy on the welfare of the average Chinese person.
Russian defense industry needs one trillion rubles in additional funding
On Friday, Russia's Deputy Prime Minister Sergei Ivanov asked President Dmitry Medvedev to increase annual funding for the defense industry reform by 100 billion roubles ($3.4 billion). Ivanov said this was the only way to guarantee the implementation of the new state rearmament program in 2011-2020.
Analysts say Ivanov, a former defense minister, has merely confirmed the inability of Russia's defense industry to fulfil state defense contracts.
The 2011-2020 state rearmament program, approved by the Russian president, is the fourth post-Soviet national rearmament program to date. The first program, in 1996-2005, was shelved a year after started. The 2001-2010 program, which prioritized strategic nuclear forces, also proved non-viable.
The current rearmament program for the period until 2015 was approved in October 2006 and received almost 5 trillion rubles ($171 billion) in federal funding. Under the program, 40 tank, 97 motorized-rifle and 50 assault battalions are expected to receive new and upgraded equipment.
Five missile brigades are to receive 60 9K720 Iskander (SS-26 Stone) mobile theater ballistic missile systems, while the Navy and the Air Force are to get 31 ships and over a thousand fixed-wing aircraft and helicopters, respectively.
However, so far arms procurement remains limited to several dozen units of military equipment. Under the 2006-2015 program, major purchasing is to commence this year.
Mikhail Barabanov, editor-in-chief of the Moscow Defense Brief magazine, said it was pointless to discuss the implementation of the program, which had been modified beyond recognition.
Barabanov said the program's initial version did not stipulate the purchase of 48 Su-35 Flanker-E fighters and a Mistral-class assault landing ship from France.
Vasily Zatsepin, analyst with the military economic laboratory at the Institute of Economy in Transition, said it was impossible to solve the rearmament problem by merely increasing allocations, a method typical of Ivanov.
This is proved by permanent setbacks during tests of the RSM-56 Bulava (SS-NX-30) submarine-launched ballistic missile (SLBM), the most expensive project of the Russian defense industry.
Annual 100 billion ruble allocations are obviously not enough to revive the crisis-ridden national defense industry, Barabanov said. Such funding merely highlights the sector's current disastrous state.
Andrei Frolov, an analyst with the Center for Analysis of Strategies and Technologies, said the state rearmament program had become hostage to the Russian defense sector's limited potential, primarily in the sphere of hi-tech weapons.
RIA Novosti is not responsible for the content of outside sources.
MOSCOW, March 22 (RIA Novosti)
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