Russian Press - Behind the Headlines, March 16

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Ukraine, Turkmenistan Team up Against South Stream / Most Preferred Luxury Item in Russia: Alcohol / Stalin’s Grandson Sues FSB General over Katyn

Nezavisimaya Gazeta

Ukraine, Turkmenistan Team up Against South Stream

Ukraine-Turkmenistan relations have thawed lately as both post-Soviet countries are opposed to bypass routes for Russian gas exports. Ukraine is trying to secure Europe’s support for its position.

Turkmen President Gurbanguly Berdimuhamedov made Turkmenistan’s first official visit to Ukraine after a ten-year break. Ukrainian President Viktor Yanukovych visited Turkmenistan in September 2011. The two officials discussed the European Commission’s decision to include the Trans-Caspian Gas Pipeline as a key component of its Southern Corridor initiative.

Turkmenistan seems to be losing patience on this issue and is now trying to persuade Ukraine to put up a more pronounced resistance to Russia’s South Stream project by pressuring both Russia and the EU. At this point, Ukraine’s criticisms of Gazprom are only mild as they maintain hope for reaching an agreement on gas consortium plans and a reduction in Russian gas prices from the current $420 per 1,000 cu m.

The two presidents mainly focused on these issues during their meeting while pushing other cooperation issues aside. Given that Russia is aiming to secure Europe’s political and financial support for its bypass project, Ukraine’s interference might ruin its attempts to reach an agreement with the EU.

Turkmenistan is extremely interested in Europe’s support for the Trans-Caspian gas project, an offshore pipeline to link Turkmenistan with Azerbaijan. Further plans include connecting it with one of the routes for supplying Caspian gas to Europe, such as Nabucco, the Trans-Anatolian or the Trans Adriatic Pipeline or the Interconnector Turkey-Greece-Italy, all of which rival South Stream. The new pipeline would also help Turkmenistan break its growing dependence on Chinese loans that have exceeded $8bn. In the past five years, China has become its largest partner in gas projects.

Ukraine’s potential profit from pressuring the EU is clear: it could help squeeze some concessions from Gazprom, although a 50 percent or even 30 percent cut in the gas price is certainly not likely, not even with the ephemeral possibility of Turkmen gas supplies across Russia. Buying gas from Turkmenistan could save it 10 percent or 15 percent at best because Turkmenistan sells gas to Russia for $350 without transportation fees. Moreover, it won’t be able to supply a huge volume of gas because most of its gas is bought by Iran, China and Russia.

Therefore, Ukraine is more interested in Turkmenistan as a trade partner. As for statements made by Energy Minister Yuri Boyko about turning to Turkmen gas, these are a bluff for Gazprom’s sake, a way to pressure the ever skidding Ukrainian-Russian gas talks.

Yanukovych seems to be wisely prioritizing his construction projects including Ukrainian companies’ participation in gas development projects, as well as encouraging trade with Turkmenistan. He must also realize that joining Turkmenistan’s ploy regarding South Stream, the Trans-Caspian Pipeline and a hypothetical Turkmen gas supply via Russia is like playing “Russian roulette,” an approach that won’t guarantee a profitable outcome.

 

Vedomosti

Most Preferred Luxury Item in Russia: Alcohol

Evidently, the Russian luxury goods market is fundamentally different from others, according to the well-known consulting firm, McKinsey & Company. Almost half of all luxury sales in Russia are alcoholic beverages, with relatively low sales of jewelry and watches.

In 2011, Russia’s luxury goods market grew 17 percent over 2010 to reach $5.3 billion, Alexander Sukharevsky, a partner at McKinsey’s Russian office, told Vedomosti. According to a McKinsey study of the Russian luxury market, the annual growth rate has averaged 13 percent over the past six years. This is much better than the global indicator for all luxury markets (4 percent annually and $212 billion in 2011). 

However, the study found that the consumption pattern in Russia is unique: alcoholic beverages account for nearly 45 percent of sales, with clothes adding up to another 36 percent, while the share of jewelry, watches, electronics and crystal is very low – about 3 percent. In India, sales of these items added up to a 76 percent share and in China to 51 percent. The figure is 17 percent in Brazil, McKinsey says. 

McKinsey’s conclusions seem accurate: Russia has unique consumption preferences, agrees Anatoly Korneyev, executive director of Simple, an alcoholic beverage importer. Most well-off Russians cannot afford the consumption habits seen in developed countries. They also lack the sophistication to invest in art objects, for example, or the living conditions to, say, buy yachts, he argues.

Another variable is that luxury prices in Russia are on average 15 percent to 30 percent higher than in Europe and thus Russians prefer to make luxury purchases abroad, the McKinsey study suggests. Russians spend twice as much on luxury items abroad as they do in Russia, Michele Norsa, general director at Salvatore Ferragama, told Vedomosti. According to VAT refund company, Global Blue, Russians are second in the world after the Chinese in spending abroad, based on Global Blue’s client statistics.

It is tourists from developing countries, including Russia, that were behind the small growth in the European market in 2011, Sukharevsky emphasized. The claim that brand goods in Russia are priced higher is not entirely true, argues Alla Verber, vide-president of the Mercury Group. Of course, Italian brands are cheaper in Italy, and French items in France, but one should take into account shopping costs in Europe. Russian retail margins, which do not exceed an average of 20 percent, include import costs and customs duties, Verber stressed. The prices for costly jewelry in Europe are comparable with Russian prices, while in Asia jewelry is often cheaper, but at the expense of quality, says Dmitry Baranov, commercial director at Adamas.

In Russia, a very small percentage of the population would traditionally qualify as luxury item consumers, McKinsey says. Only 6  percent of the population has an income over 60,000 euros annually, and it is people outside the core of the target audience who account for nearly one-third of all luxury spending. These people can only buy expensive items occasionally.

 

Moskovskiye Novosti

Stalin’s Grandson Sues FSB General over Katyn

On Thursday the Nikulinsky district court in Moscow held a pretrial hearing for a complaint against Gen. Vasily Khristoforov, head of the FSB records and archive department.

The plaintiff in this case is Yevgeny Dzhugashvili, the grandson of Joseph Stalin. Dzhugashvili claims that during a conference on the Nuremberg Trials and modern day falsifications of WWII history, held in Moscow last fall, Khristoforov said that the shooting of Poles at Katyn was a crime personally ordered by Stalin. Dzhugashvili filed a libel suit, demanding refutation from the FSB official.

Stalin’s grandson has been busy filing various complaints in defense of his infamous grandfather’s honor and dignity. However, in this case Dzhugashvili may not have studied the facts very thoroughly. Khristoforov, a doctor of history and a member of the presidential commission on political rehabilitation, did not denounce Stalin but only commented on a report by Dr. Alexei Plotnikov from the parliamentary expert commission, who insists on a Soviet version which puts the blame for the Katyn tragedy on the Nazis. During the conference last fall, Plotnikov complained about the dominant “anti-Russian interpretation in the Katyn case” and called for upholding the historical truth because “no one else can protect us from this falsification of history.”

Khristoforov said in his comments that making such a statement after the parliament had adopted an official statement on Katyn, which says that the Poles were shot “on direct orders from Stalin and other Soviet leaders,” is evidence of democracy. He said that everyone is entitled to a personal opinion but added: “Speaking about Katyn, where over 4,000 Polish citizens are buried, we should also remember Mednoye with 7,000 Polish officers buried in mass graves. Can their deaths be blamed on the Germans too?” In response, Plotnikov accused Khristoforov of speaking “in the spirit of Polish propaganda.”

Dzhugashvili, who did not attend the conference, filed a lawsuit and complemented it with an audio recording made by the conference organizer, The Central Museum of the Great Patriotic War, for the museum archives. The defendant’s representatives told Moskovskiye Novosti that Khristoforov’s statements were “the personal opinion of a Russian citizen who may have a personal view of historical events.” They also said that the “plaintiff had not quoted Khristoforov’s statements accurately.”

Sergei Strygin, who represented Dzhugashvili at the pretrial hearing, firmly believes that the Nazis killed the Poles at Katyn. He told MN: “The case was falsified. The documents [on the involvement of Stalin’s government in the shooting of Polish nationals at Katyn, Mednoye and other towns, published on the government’s official websites] were falsified twice, in 1956 and in 1991. We should hold a treason hearing.” In fact, Dzhugashvili’s representative has accused the Russian leadership, which approved the publication of these documents, of supporting those who falsified history.

The first hearing in the case has been set for April 12. Strygin said that his client, Dzhugashvili, would not attend but that Alexei Plotnikov was expected to show up. 

RIA Novosti is not responsible for the content of outside sources.

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