Russian-Israeli business projects lack political support / Putin outraged by bureaucratic inefficiency / RusAl claims initial win in Guinea court battle / Russia to import China's most expensive vodka /
Russian-Israeli business projects lack political support
Politicians and analysts agree that dynamically expanding Russian-Israeli relations lack a reliable economic base. At the same time, national leaders say they are ready to display political will in order to promote economic cooperation.
It was decided to hold the first Russian-Israeli business forum in Moscow in order to improve the situation.
Israel's Minister of Industry, Trade and Labor Binyamin Ben-Eliezer headed an unprecedentedly large Israeli business delegation comprising 50 representatives of agricultural, telecommunications, banking, security, water purification and diamond production companies to Moscow.
Although both countries have repeatedly tried to streamline large-scale economic cooperation, bilateral deals were not closed for different reasons, primarily due to direct U.S. pressure.
Analysts say the setbacks of previous years were largely caused by the lack of active support for bilateral business projects by Russian and Israeli leaders. The sides are now trying to eliminate this drawback.
On Monday, an inter-governmental cooperation agreement in the sphere of industrial R&D projects was signed.
"We must take advantage of the current positive political atmosphere in Russian-Israeli relations. Top Israeli leaders are indicating their readiness to cooperate," said Alexander Losyukov, deputy CEO of the state-owned Russian Nanotechnology Corporation, whose brief is to implement state policy in nanotechnology and the nano-industry.
Joint development of the Tamar-1 gas field, a natural gas field in the Mediterranean Sea west of Haifa, could help create a reliable foundation of long-term bilateral cooperation.
Other joint projects are being discussed. Israel, which has gained a reputation for its diamond business, plans to buy more uncut diamonds from Russia. Top security agencies hope to be awarded contracts under the Sochi-2014 program involving preparations for the XXII Olympic Winter Games.
However, bilateral cooperation is partially hindered by the lack of an agreement on mutual investment protection, which is being drafted for the past 15 years. Disagreements on the settlement of disputes are the main stumbling block.
Business partners are supposed to settle all disputes at international courts. Russia insists that cases be submitted there only by mutual consent, while Israel considers this unacceptable. On Monday, both sides once again stated the lack of progress and delayed signing the document.
Putin outraged by bureaucratic inefficiency
Within a week, both President Dmitry Medvedev and Prime Minister Vladimir Putin admitted publicly that their directives regularly remain unfulfilled. Experts say this is a systemic problem and no sporadic exhortations by top officials will remedy the situation.
The prime minister demanded yesterday that Deputy Prime Minister Dmitry Kozak sack immediately, within one day, those responsible for maintaining high prices in construction in Russia financed out of public budget, which, unlike in the European Union, do not decrease. The prime minister was surprised that given lower wages and cheaper electricity and materials, construction work in Russia often costs more than in Europe. The blame was put on Deputy Minister of Regional Development Sergei Kruglik for wrong calculating the estimates.
Instances of executive inefficiency no longer surprise anyone, and even double control - by the president and the prime minister - does not help. "The problem lies in the overall ineffectiveness of the system, which has assumed too many functions, is bogged down in daily routine and cannot set its priorities right," says Anton Danilov-Danilyan, head of Business Russia expert council and former chief of the Presidential Economic [now Expert] Directorate.
Inefficiency is part and parcel of the current bureaucracy, believes Evgeny Yasin, research director of the State University - Higher School of Economics, who held the post of Russian economics minister in the mid-1990s. The prime minister, not to bring conflict into the ruling tandem, has to demonstrate that ministers disregard not only the president's instructions, but also openly sabotage their direct boss's orders.
"All these things are the natural results of the 2000 administrative reform, which was mainly concerned with shakeups in government bodies made for the sake of appearance, such as converting ministries into departments or agencies and back again," said Igor Nikolayev, director of strategic analysis at FBK think tank, as he traced the history of the rise of today's Russian bureaucracy. In his opinion, the main thing - motivation for officials - was left undone: most view their posts as sources of income. "In addition, the situation was worsened by the crisis when many developed an express mentality of timeservers," says the expert. "At the same time, officials realize that it is not so easy to find their replacement overnight, and this means their superiors will think twice before axing a subordinate."
RusAl claims initial win in Guinea court battle
The Guinean Court of Appeal has overturned a September ruling that said RusAl had illegally acquired the Friguia bauxite and alumina complex. The Court of Appeal referred the parties to the International Court of Arbitration in Paris, where the company will have a significant advantage, lawyers say.
The Friguia refinery complex has the annual capacity of 2.2 million metric tons of bauxites and 700,000 metric tons of feedstock alumina and includes a bauxite mine, alumina plant, railway and other facilities. It was acquired by RusAl in 2006 for $19 million. The company invested $400 million in its development. Guinea's military junta, which seized power in 2008, has been trying to renationalize the Friguia refinery.
The Russian aluminum giant announced the court's ruling yesterday. The court's decision to redirect the claim to the Paris International Court of Arbitration was based on the fact that local courts do not have proper jurisdiction to hear the dispute.
However, Mahmoud Thiam, the Guinean minister in charge of the mining industry, said the court has not given up financial claims against RusAl. "The company still owes $860 million and an additional compensation for the losses the Guinean government incurred when the deal was signed," he said.
Metropol analyst Denis Nushtayev believes that the decision made by the Guinean Court of Appeal is good for RusAl. Friguia is an important asset producing 12% of the company's alumina and has a low prime cost.
It is obvious that the relations between RusAl and the Guinean government began to improve after the changes in government coalitions, Vadim Zaitsev of the Russian Academy of Sciences' Institute of African Studies said. Managing partner of the Karelsky and Partners law firm Andrei Karelsky doubts that the Guinean government will try to win the dispute in the Paris International Court. RusAl is a large company that has managed to survive the economic crisis and solved its debt problems, so the government must be interested in its presence in the country, he believes. Karelsky thinks that in any case, RusAL will have an advantage in the Paris court, for there will be no conflicts of interests. But only the new head of state who will be elected this summer, will decide if the country will try to invalidate the privatization deal, Zaitsev said.
Russia to import China's most expensive vodka
Guizhou Maotai, one of China's largest liquor producers, plans to export its vodka to Russia, but local producers say Russians will not buy Chinese vodka.
The Maotai vodka, which has been produced for over two thousand years, is considered a national drink in China. It has recently been granted a national status and is offered to high guests at official parties.
A 52%-54% (100 proof) yellowish spirit, it was named after the village of Maotai in the Guizhou province, southwestern China. It is distilled from fermented sorghum; the complicated process takes five years, after which the liquor is kept for another three years.
This expensive liquor is sold at 1,000 yuan, or $150, per bottle. Guizhou Maotai, which has a production license for it, occupies more than 30% of China's alcohol market.
Russian vodka producers believe that the Chinese vodka is unlikely to win a large niche on the Russian market. Kirill Kirakozov, managing director of White Gold, a unit of the Cristall distillery, said that Russians would not drink the Chinese vodka first of all because of its taste, which is considerably different from what they are used to.
Moreover, Russians mostly think that Chinese products are of low quality, Kirakozov said.
In his opinion, Maotai could become quite popular in Chinese restaurants and "shops frequented by gastronomic experimenters," but has no market future in Russia.
Sergei Velichko, general director of Ukraine's Khortytsa trading house, the largest importer of vodka into Russia, said: "The consumers will not believe their eyes, as only Slavic countries make good vodka."
Besides, there are enough premium vodka brands in Russia, Velichko added.
According to Kirakozov, Russian vodka holds 60%-70% of the premium brand sector of the Russian market, and some 30% is held by such famous foreign brands as Absolut and Finlandia.
RIA Novosti is not responsible for the content of outside sources.
MOSCOW, March 23 (RIA Novosti)
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