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Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 346,520 310,000 259,600 16
         
GNI per capita
 US $ 2,140 1,750 1,690 100
Ranking is given out of 208 nations - (data from the World Bank)

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Area (sq.km)
17,075,400

Population
144,526,278

Principal 
ethnic groups 
Russians 82%
Tatars 3.3%
Ukrainians 2.7%

Principal towns 
Moscow (capital)
St Petersburg
Novosibirsk 
Nizhni Novgorod 
Yekaterinburg 
Samara 

Currency 
Rouble

President 
Vladimir Putin

  

Update No: 288 - (01/01/05)

Russia had a turbulent year of it in 2004, what with Chechnya still with civil war, the Beslan tragedy and a series of disruptive events in its wake, leading to a new more authoritarian polity. Yukos heads to the bankruptcy court and former chief of the company, Mikhail Khodorkovsky, to a long jail sentence. Russia remains about the most news-worthy place on Earth.

Chechen mayhem again
The Chechen rebels are anything but defeated. On 9 May, Chechen separatists assassinated the Moscow-backed leader of Chechnya. Akhmed-hadji Kadyrov was killed after a bomb exploded beneath the stands where he and others were watching a World War II memorial parade. 
Russian President Vladimir Putin confirmed his death on Russian television: "Akhmed Kadyrov passed away on 9 May, on the day of our national holiday, the day of victory. And he left victorious as well." 

The horror of Beslan in September 
Actually, it must be the Chechen hardliners who are feeling that they are winning. Shamil Basayev, the most hard-line of them all, claimed responsibility for the ghastly Beslan affair.
On 1 September, Chechen-led militants descended on the southern Russian town of Beslan. On the first day of school, the militants took more than 1,000 children, parents, and teachers hostage. 
After a three-day standoff, explosions were heard, and then intense gunfire broke out. An official count said more than 300 hostages, nearly half of them children, were killed. But some reports say the toll might have been much higher. A parliamentary commission is still investigating. 
It is clear by now that there are two civil wars in Chechnya. The oldest is a continuation of Chechnya's age-old struggle fro independence. Overlaying that are the units of Islamicist hard-liners under Baseyev, many of whom are al-Qaeda imports who believe that they are fighting a holy war in which Chechen independence is incidental.
President Vladimir Putin addressed the country in a televised speech: "We, as I have said many times before, have been hit by many crises, uprisings and terrorist attacks. But what has happened now is inhumane and unprecedented cruelty by terrorists. This is not a challenge to the president, to parliament or to the government. It is a challenge to all of Russia. It is a challenge to all our people. It is an attack on our nation." 

Authoritarian fall-out
Putin showed his authoritarian instincts in the aftermath of the tragedy. He took it as an excuse to abolish elections in the regions. Mayors and governors are now to be appointed by the Kremlin. Small parties are being squeezed out of the Duma, as are independent candidates on the constituency list, which is to be abolished. The all-encompassing party list will remain dominated by the pro-government lickspittles of United Russia, and is a certain recipe for corruption at every level of the party involved in making the list..
The USSR is back! Well, not quite. But a simulacrum of it is now in place again, a fascistoid affair. Putin undoubtedly fancies himself as a fixture in the Kremlin, although it is not clear how he is going to negotiate the difficult fact that he is barred from standing for a third presidential term by the constitution. Either it could be changed by an obsequious Duma or he could switch to a new more powerful post of premier, clipping the wings of the presidency. 
The latter was the initial ambition of the establishment forces in Kuchma's Ukraine, over which a compromise has been reached. Events in Russia and Ukraine are always likely to influence each other. 

Putin's blunder on Ukraine
Putin backed Bush to win in the US election and got it right. But he made a big blunder in backing the establishment candidate in the Ukraine presidential elections, premier Victor Yakunovich, with his Russian-speakers in support. The opposition candidate, Viktor Yushchenko, has survived two assassination attempts and blatant vote-rigging to fight again. He has become the icon of his country and a hero to the Western world.
The gloomy predictions that Ukraine will once again be divided in half are not proving to be true. The president of all-Western and Central Ukraine. Yushchenko. looked certain to beat the president of all-Eastern and Southern Ukraine, Yakunovich, from the moment a re-run was declared necessary by the Ukrainian Supreme Court. 
Putin earlier shook a fist at the OSCE, a European organization that considered the elections undemocratic. Belarussian president Lukashenka congratulated Victor Yakunovich with his presidential victory. So, officially or not, three leaders expressed their support for Yakunovich: Russian President Vladimir Putin, Lukashenka and the leader of the Trans-Denestr breakway (and globally unrecognised) Moldovan Republic Igor Smirnov. A nice crew - adepts of controlled democracy! 
It was unwise of Putin to be so openly partial; it has badly backfired, as Ukrainians concluded that Yushchenko was a better bet than a stooge of Moscow in Yakunovich, a thrice-convicted criminal at that!
Putin will now have to back-pedal and patch up things with Yushchenko, who is after all a product of the old system and not necessarily an enemy of Russia. Indeed, like his main ally, Julia Timoshenko, he comes from the eastern part of Ukraine.

Yukos Files for Bankruptcy in U.S. 
Meanwhile the Yukos saga continues to unfold and capture almost as many headlines as Ukrainian developments. In an eleventh-hour move, the Yukos oil company has filed for bankruptcy in a United States Court and is demanding the cancellation of an auction of its main production unit. Yukos filed for bankruptcy under Chapter 11 in Houston in mid-December. Yukos said the impending auction of Yuganskneftegaz, its main production subsidiary, "will cause the company to suffer immediate and irreparable harm." Yukos maintains that the auction is illegal.
While the filing is a dramatic challenge to the Russian government to enter arbitration proceedings, it is doubtful that the appeal will impede what is clearly a Kremlin-sponsored carve-up of the nation's largest oil producer. 
"Yukos is asking the court for a temporary restraining order halting the planned auction of Yuganskneftegaz by Russian authorities," the company said in a statement posted on its Web site. Yukos threatened legal action against bidders for Yuganskneftegaz in a full-page advertisement in the Financial Times newspaper. 
CEO Steven Theede called the move "the only resort" left for Yukos, which the Russian government has targeted in a relentless legal campaign that has sent the company's value plunging. 
The campaign against Yukos and its owners, including former CEO Mikhail Khodorkovsky, has been seen as a Kremlin-inspired effort to punish Khodorkovsky's perceived political ambitions, including his funding of opposition parties. President Vladimir Putin has cast the case as part of an official crackdown on shady bookkeeping and corruption. Khodorkovsky, who has been in jail for 14 months, is being tried on charges including fraud and tax evasion. 
Tax authorities say Yukos owes them US$27.8 billion. Core subsidiary Yuganskneftegaz is scheduled for auction to cover a part of the bill and observers suggest the tax claims have been engineered to transfer the unit, which produces some 60 per cent of Yukos' oil, to a Kremlin-controlled company - most likely state gas giant Gazprom. 
Yuganskneftegaz's proposed starting price of US$8.6 billion is lower than even the most conservative valuation commissioned from a Western investment bank. 
"The management of Yukos has worked tirelessly and in good faith over the past year to establish a dialogue with the Russian authorities in an attempt to work out a compromise that would have prevented today's reorganization filing," Theede was quoted as saying. "We have submitted more than 70 settlement offers and publicly stated that reorganization was a distinct possibility if a reasonable resolution was not reached. It is regrettable that we did not receive one substantive response." 
Mikhail Berger, a prominent Russian economic analyst, told Ekho Moskvy radio that the bankruptcy filing did not come as a surprise, since the state's scheduling of the Yuganskneftegaz auction one day before Yukos' shareholders' meeting - when the company could have decided to apply for bankruptcy protection in Russia - left Yukos with no other way out. 
"They appealed to an American and not a Russian court because that would be useless ... nothing that could help Yukos could be ruled by a Russian court," Berger said. 
"Now we'll see what's more important for the Russian authorities: to punish Khodorkovsky as an example for everybody, or to act like any state that respects the law, including international law." 
But even if the Houston court hears the case on the grounds that Yukos has assets or conducts part of its operations in Houston, and subsequently issues an injunction banning the auction, analysts doubted that the Russian government would have any qualms about ignoring it after unleashing a campaign that has made Russia's most promising company virtually worthless. 
"Why do this when its stated purpose won't be realized?" said Ronald Smith, oil and gas analyst with the Renaissance Capital investment bank. Yukos, he said, is "playing a very limited hand." 
Yukos asked the U.S. Bankruptcy Court for the Southern District of Texas in Houston for an emergency hearing to consider its appeals for bankruptcy and an injunction against the auction, as well as its request to force the Russian government to arbitrate the company's claims for billions of dollars in damages. "U.S. bankruptcy law has worldwide jurisdiction over property of the debtor and the company is seeking a judiciary that will protect the value of all shareholders' investment in Yukos," the company said.
In its filing, Yukos said that as of Oct. 31, its total assets equalled approximately US$12.276 billion and its total debts were about US$30.79 billion, including "alleged taxes owed to the Russian government." It said it had from 200 to 999 creditors.
Yukos shares were down more than 7 per cent at 75 cents in mid December on Moscow's RTS change. Before Khodorkovsky's arrest, they were valued at US$16 apiece.

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ATOMIC POWER

Russia to launch six atomic power generation units by 2010


By the year 2010 Russia is planning to launch six atomic power generation units with a total capacity of 5,800 MW. This was announced recently at a round-table session in the Presidium of the Russian Academy of Sciences by the chairman of the State Duma energy, transport and communications committee, Valeriy Yazev, said, ITAR-TASS News Agency reported.
"The current situation in the atomic energy sector is clearly lagging behind the strategic development plans," Yazev said. Direct consequences of this, Yazev thinks, include a slowdown of Russia's economic development, which will foil the plans to double GDP, the shutdown of social development programmes in the regions where the construction of new atomic power plants was envisaged (Kursk, Rostov, Saratov, Yekaterinburg) and the closure of atomic machine-building enterprises with respective social consequences (St Petersburg, Moscow Region).
"From the point of view of prospects for social and economic development of the country, this will mean reduction of scientific and technological potential and opportunities for innovation breakthroughs," Yazev said.

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AVIATION & SPACE

Russia works to upgrade its GLONASS satellite navigation system

The launch of a large-scale Global Navigation Satellite System (GLONASS) project began recently at the third Siberian International Aerospace Show (SAKS-2004). It is being presented by the Reshetnev applied mechanical engineering association in Zheleznogorsk, which is upgrading the system and is developing the new GLONASS-M and GLONASS-K satellites, ITAR-TASS News Agency reported.
"These new-generation satellites can supply navigational data to an unlimited number of people anywhere on Earth or in near space," the association's chief designer, Albert Kozlov, said. "They have a service life that is more than twice as long at up to seven years, and greater navigational precision."
Kozlov noted that "although Russia has set up a programme for making ground equipment for GLONASS, there is no mass production yet." He stressed that "to organize serial manufacture of equipment, we need investment and interest from industry and orders for this equipment to be fitted to vehicles."
The Reshetnev association in Zheleznogorsk is one of Russia's leading players in developing space-based communications, broadcasting, navigational and geodesic systems, and accounts for 75 per cent of all satellites made in Russia.

Official outlines plans for production of Russian aircraft in India

The combat capabilities of the Russian Su-30MKI fighters produced in India on a licence will improve, President of the Irkut Corporation, Aleksey Fedorov, has said at a news conference in Moscow, Interfax-AVN Military News Agency web site reported.
"The licensed production of Su-30MKI aircraft will be organized in several stages that will provide for the improvement of combat capabilities of the fighters," he said.
In response to a question from Interfax-Military News Agency, he said that the programme of licensed production in India envisages the annual assembly of six aircraft starting from 2005, eight from 2008, and 10 and more from 2009 till 2017.
He added that the first Russian multi-role Su-30MKI fighter built by Indian HAL on a licence was handed over to the Indian Air Force on 28 November 2004. As of now, two such aircraft have been assembled there. 
Fedorov added that most of the work was done in Russia, while the final assembly was organized at Indian enterprises.
He also said that the total price of all contracts signed for the delivery of 50 Su-30MKIs to India and licence production of another 140 such fighters is estimated at US$5bn.
Fedorov thinks that India is not the only foreign country interested in the Russian aircraft. He recalled that 18 Su-30MKms are to be delivered to Malaysia under a contract. Negotiations are under way with other countries, and it is possible that more contracts will be signed soon.
In compliance with the licensed production contract signed in 2000, India will produce a total of 140 Su-30MKI fighters in 2004-2017. This is the largest contract, signed between Russia and India throughout their military-technical cooperation, with its overall cost assessed at US$3bn. 
Under the contract, the HAL corporation got the licence to manufacture all components of the plane, including the unique AL-31FP engine with thrust vector control, designed by the Lyulka-Saturn corporation. A total of five Indian plants will participate in producing Su-30MKIs, including the Nasik plant (tasked with assembling aircraft and their units) and the Koraput plant. Aircraft equipment, including the radar, will be produced at plants, situated in Lucknow, Korwai, and Hyderabad. 
Licensed production is divided into several stages. The share of parts, exported from Russia, will decrease with each stage, while that of parts, manufactured in India, will increase. From 2007-2008 on, the Su-30MKI is expected to be completely assembled at HAL enterprises. 
At the present time India operates 18 Su-30K and 22 Su-30MKI fighters. It is the world's first state to have fielded aircraft, powered by thrust vector control nozzle engines. 
The Su-30MKI is fitted with the Bars radar, capable of detecting enemy fighters at a range of up to 130 km in the forward hemisphere, and over 60 km in the rear hemisphere. 
The aircraft is capable of carrying almost the whole range of weapon systems with a total weight of up to eight tonnes. Its range totals 3,000 km without refuelling, or 5,200 km with one refuelling.

Russia to resume serial production of Ka-50 helicopter in 2005

There are plans to resume the production of the Ka-50 Black Shark helicopter (NATO codename Hokum) in 2005, Russian air force commander-in-chief, Vladimir Mikhaylov, said recently, Interfax-AVN Military News Agency Web site reported.
"The air force did not spend a lot of assets for the development of the Black Shark to simply quit the project now. The air force deals with a variety of tasks and we require different helicopters to fulfil them. Therefore, we plan to resume the Ka-50 production in 2005," he said.
He noted that despite the very poor funding provided the sophistication of the chopper continued. "Those who saw video reports of the Rubezh-2004 exercise in Kyrgyzstan noticed the innovations in the aircraft exterior. It is premature to say now what these innovations mean, but I am sure that the air force will obtain new capabilities with the new solutions of the Kamov plant coming into service," he added. 
Addressing the question, why the Ka-50 was not fielded after it had been adopted for service in 1995, Mikhaylov said: "It happened for reasons that have nothing to do with the air force proper."
"The economic crisis, the default and other difficulties reduced the already cut military budget considerably. The decision to focus on funding the research and development of the new chopper and modernizing the existing fleet was the only [one] possible for that time, in my opinion, as it allowed us to retain both the design bureaus and army aviation as a whole," he said.
There are also plans to commence mass production of the Ka-52 (Russian codename Alligator) combat helicopter in 2006, Army-Gen Vladimir Mikhaylov, Russian air force commander-in-chief, said.
"If the air industry does not fail and the economic situation in the country allows the defence budget to remain at least at the level it is now, the Ka-52 Alligator will be put into series already in 2006," he said. 
He noted that if the situation remains normal the Mi-28N will also be mass-produced beginning from 2008. "The proportion of these helicopters in the air force will be determined by the military and political situation, i.e. the existing threats. But both types will be procured," he added.
He emphasized that the air force and design bureaus have been working on the development of future helicopters even when hard up.

Russian 5th generation fighter to fly in 2007, says air force chief

The 5th generation combat aircraft under development for the Russian air force at the Sukhoi company will fly no later than 2007, Army General, Vladimir Mikhaylov, air force commander-in-chief, said, Interfax-AVN Military News Agency Web site reported.
He added that he had visited Sukhoi recently, and spent in excess of three hours discussing the problems arising in the course of the new combat tactical aircraft development. He also said that "great work has been done" in this sphere. "I am satisfied with the results. The electronic model of the 5th generation fighter is ready, its aerodynamics and other parameters calculated," he said.
According to him, over 100 Defence Ministry specialists, and both military and civilian research and development institutions are analysing the work done. "We instructed them to find as many shortcomings as possible so that the developers could eliminate them at early stages of the process and could move further at higher tempo," he said.
"There are some unsolved problems, for instance, with the weapons suite and avionics. We should think over the possibility of introducing foreign elements, or maybe refuse this possibility at all. However, these are all on-stream problems, and we have made a good step forward, even in light of the limited funding in 2003-2004 and 2005," he added.
Addressing the question whether the new aircraft will be a real 5th generation or a further derivative of the existing Su family, Mikhaylov said: "Of course, it will be a totally new aircraft. As for the modifications, we are working at them too. Last year, we made the Su-27SM Flanker. It was a good one. Even those who offered other modernization parameters recognize this fact. The Su-27SM is close to the 5th generation aircraft in terms of performance, but will never reach it, as the backlogs on the 5th generation tactical fighter will turn even better with the years."

Russian air force to get first TU-214 aircraft in 2006

The Russian air force will get the first Tu-214 aircraft adjusted specially for it by Kazan aviation specialists in 2006, Army Gen, Vladimir Mikhaylov, Russian air force commander-in-chief, said, Interfax-AVN Military News Agency web site.
"We have ordered three Tu-214s at the Kazan aviation production association (KAPO) and are going to order another one soon," he said, adding that the first of the batch is expected to come in the inventory in mid-2006.
Mikhaylov explained that the Tu-214 is required due to the fact that the stricter noise and emission regulations of ICAO [International Civil Aviation Organization] will come in force on 1 January 2006. "In the long run, the Tu-214 will be fielded more intensively in replacement of the existing air force fleet of transport aircraft," he added.
"KAPO has not had many orders of late, so we could not promote the intensive manufacturing of the aircraft. However, now it is ready. The aircraft has PS-90 engines of the Permskiye Motory enterprise. The only thing necessary to launch the production is money," he said. It was reported earlier that the Tu-214 attracted the attention of the Russian Defence Ministry owing to its long flight range, few amendments to the design required for its adjusting for service with the military, the easiness of serial production and plausible price. Yet another important factor is that, unlike most of aircraft currently operated by Defence Ministry officials, i.e. the Tu-154 Careless, Tu-134 Crusty and Il-62 Classic, the new plane meets the noise and emission requirements of the ICAO. 

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BANKING

Russian, Turkish foreign economic banks sign cooperation deal

The agreement on cooperation between Vneshekonombank [Foreign Economic Bank], Roseksimbank [Russian Export-Import Bank] and Turkey's Eximbank which was signed in Ankara recently on the sidelines of the Russian president's visit makes it possible to start implementing joint projects in the CIS, in particular in Ukraine, the chairman of Vneshekonombank, Vladimir Dmitriyev, said, Interfax News Agency reported.
"We are now examining the possibility of enacting this agreement when implementing projects in the construction sector in Ukraine, in Crimea and in Kiev," Dmitriyev said.
He explained that while carrying out these projects Turkish and Russian suppliers "will be able to cooperate with the support of joint financial institutions." "Together with Turkey's Eximbank we intend to link up our resources, and Ukraine's Eximbank is also ready to assist in this. We are already conducting specific negotiations on this," Dmitriyev stated. He said this would involve projects for building office and residential housing in Ukraine, and "as for Crimea, we are looking at buildings relating to the sanatorium sector."
Dmitriyev said that Turkish construction firms were working quite successfully in Ukraine. "We have looked at the possibility of Russian suppliers and understood that their potential could be linked up with the possibilities of leading Turkish construction firms," the banker explained. 
He pointed out that the agreement aims to create conditions for joint financing of projects in third countries, "but is not limited to these opportunities alone." "What we are talking about here, in principle, is expanding cooperation between Vneshekonombank and Roseksimbank - as the main government agent for promoting Russian non-raw materials exports - and Turkey's Eximbank," Dmitriyev stressed.
He said the sides had agreed that "financing from Turkey's Eximbank will be used on specific projects." "In the case in question, we are talking about supporting Turkish exports, not only in third countries but also in Russia," the bank president said.
As for projects in third countries, Dmitriyev said that "these might involve projects which the Russian side may value more highly than our Turkish partners, and where it will not be possible at first to create a consortium of Russian and Turkish companies." "Russian banks will simply take on the risks of specific projects in third countries, primarily in CIS states, where Turkish companies have a wide presence," Dmitriyev explained.
Speaking about support for Russian projects in Turkey, Dmitriyev underlined this to be "one of the key areas of our business, both independently and through Roseksimbank (which is a subsidiary of Vneshekonombank - IF) under the government programme of support for Russia and raw materials exports." He explained that in Turkey Vneshekonombank has been working on the Blue Stream oil pipeline project. "In addition, we are working on settling Russia's debt to Turkey (which is now over US$300m) through exports," Dmitriyev said.
He announced that amongst other things, as part of settling the debt currently "various projects are being examined, such as supplying helicopters and special Be-200 fire-fighting aircraft."
At the same time he underlined that supplies of helicopters and Fire-fighting aircraft to Turkey "could also be carried out outside the framework of the debt, since Turkey has particular interest in this equipment, primarily for fire-fighting, and also for other civilian programmes."

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ENERGY

Russian, Indian gas majors sign cooperation agreements

The head of the Gazprom gas company, Aleksey Miller, and the head of the Gas Authority of India Ltd, Proshanto Banerjee, have signed an agreement on strategic cooperation, in the presence of Russian President, Vladimir Putin, and Indian Prime Minister, Manmohan Singh, ITAR-TASS News Agency reported. 
The document states, amongst other things, that joint work between Gazprom and the Gas of India Authority will mainly focus on studying and implementing projects for delivering natural gas to India. In addition, the agreement envisages cooperation between the companies in the oil sector. 
The two companies will also interact in areas such as surveying, extracting and transporting natural gas, oil and other fuels, and in the planning, construction and use of major pipelines, underground oil and gas storage facilities and distribution pipeline networks.
The document also envisages joint work in processing gas and other forms of raw hydrocarbons, use of gas as a motor fuel and also supplying equipment for the oil and gas industry. 
The two companies will also develop scientific and technical cooperation, primarily in prospecting and developing gas and gas condensate deposits. It is planned to study the opportunities for prospecting and extracting gas hydrates on the Indian shelf, and extracting methane from coal seams. The sides will set up a joint coordinating committee to implement the agreement successfully.
India has 850bn cubic metres of natural gas reserves, and every year extracts up to 30bn cubic metres. All of this is used on the domestic market. Next year demand for natural gas is forecast to go up to 37bn cubic metres, and by 2010 to 110bn cubic metres. 
India has 700m tonnes of proven oil reserves. In 2003, oil extraction in India reached 36.7m tonnes, with consumption running at 113m tonnes. India's main oil suppliers are Saudi Arabia, Nigeria, the UAE and Iran.

Russian gas deliveries to Greece will reach record level this year

Russian gas supplies to Greece reached their highest level in 2004 and amounted to more than 2bn cubic metres of gas, head of Gazprom, Aleksey Miller, said, Interfax News Agency reported.
He said that Russia supplied up to 80 per cent of Greece's gas requirements. According to Miller, Greece were "fully supplied with Russian gas in the medium term." "The contracted volumes of gas cover Greece's requirements for this fuel until 2016," he said.
Miller said "by 2016 the volumes of gas needed by Greece will amount to about 7bn cubic metres per year and most of this gas will be used to produce electricity." "Supplies of Russian gas to Greece, both today and in the future, are aimed at supplying power companies in that country," Miller said.
He stressed that "there are no issues that might hinder the signing of new contracts" to supply Greece with Russian gas.

Russian minister, Polish deputy premier discuss gas pipeline at Moscow talks

Russia and Poland intend to complete all work on the Yamal- Europe 1 gas pipeline in 2005, Russian Minister of Industry and Energy, Viktor Khristenko said after his meeting with Polish Deputy Prime Minister, Jerzy Hausner, ITAR-TASS News Agency reported.
"Both sides reiterated that we will definitely not deviate from the outlined timetable," Khristenko said.
He said the completion of the work would enable the gas pipeline to reach its design capacity of 32bn cu.m. of gas a year.
The construction of the second string of the Yamal-Europe gas pipeline "depends on how efficiently the Yamal-Europe 1 gas pipeline functions," Khristenko said. "We agreed, by the end of 2004, to exchange official letters outlining key questions of the work of the Yamal-Europe 1 gas pipeline in order that we can appreciate the tasks which face us in adopting an investment decision on the construction of the second string of this pipeline," he said.
The minister noted that "a number of questions connected with improving the work of the EuRoPol GAZ company, the operator of this project, and with securing long-term tariffs for the transit of gas across Poland are to be discussed" in the context of this plan. 
Khristenko also said that during the meeting they discussed "progress in preparing the necessary documents for implementing the reverse supply of gas from Germany to Poland." He said "these documents are now being drafted by Russia's Gazprom and by the Polish company PGNiG."

Russian Gazprom, Turkish BOTAS sign cooperation agreement

Recently in Ankara, Gazprom's chairman, Aleksey Miller, and general director of the Turkish BOTAS petroleum pipeline corporation, Mehmet Bilgic, signed a memorandum on development of cooperation, ITAR-TASS News Agency reported. 
According to Gazprom's press service, the company will study the possibility of supplying gas to Turkey either direct or through its subsidiaries, including to end consumers.
For the purpose of development of gas consumption, BOTAS will assist Gazprom in participating in gas-supply projects, as well as in the sphere of gas distribution and creating gas energy capacities in Turkey. At the same time part of the profit from Russian gas supplies to Turkey is expected to be invested in the above projects.
According to the press release, an important place in the memorandum was given to improving the reliability and safety of gas supplies from Russia, particularly during peak demand periods. In this connection Gazprom and BOTAS "will study the possibility of jointly developing capacities for storing gas underground in Turkey." As one option a project will be considered to build an underground storage facility near the Salt Lake. 
The sides agreed to study joint projects on organizing transit through the territory of Turkey to markets in third countries where at present Russia does not supply gas, above all in the southern direction.
Miller and Bilgic shared the view that liberalization processes that are currently under way in the Turkish gas sector create additional conditions for developing new forms of cooperation for Russian gas supplies to the country.
According to Prime-TASS, the Russian-Turkish cooperation in the gas industry began in 1984 when an agreement was signed between the USSR and the Turkish governments on natural gas supplies to Turkey. 
In total, from the beginning of supplies in 1987 until and including 2003 Russia exported to Turkey about 105.8bn cubic metres of natural gas, which was exported using two routes: the Transbaykal gas pipeline and the Blue Stream gas pipeline.
Blue Stream complements the already existing gas transport corridor from Russia to Turkey through the territory of Ukraine, Moldova, Romania and Bulgaria. Gas supplies by Blue Stream considerably improve the reliability of gas supplies to Turkey and create additional prerequisites for the development of a gas market and gas infrastructure in this country.

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FOOD & DRINK

Mars to produce pet jellies

Leading world foodstuffs producer Mars plans to start producing jelly for pets at its pet food plant in Novosibirsk, Interfax News Agency reported recently. 
Vasily Yurchenko, head of the regional industry department, told Interfax that agreement on the construction of the second stage of the plant - a jelly production line, was reached during recent talks between the regional administration and Mars management. "During the talks we resolved all the issues brought up by Mars management on this project and I think that next year the second phase of the plant will be launched," Yurchenko said.

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FOREIGN DEBT

Russia pays off more of its debt to IMF

Russia's Finance Ministry paid €22.375m on the country's principal debt to the International Monetary Fund (IMF) recently, the ministry said, Prime-TASS News Agency reported. 
In 2004 Russia was to pay a total of about US$1.7bn to the IMF. The total amount of Russia's foreign debt payments due and partly made this year is US$16.1bn.

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FOREIGN ECONOMIC COOPERATION

Russia, Greece adopt action plan to boost economic cooperation

Moscow and Athens intend to develop trade and economic as well as investment cooperation. According to an action plan recently, the intergovernmental commission will convene at least once every two years. The next commission session will take place in Moscow in 2005, the document said, ITAR-TASS News Agency reported. 
Russia and Greece intend to update the existing agreements based in the economic sphere as well as complete procedures for enforcing the intergovernmental convention on the prevention of double taxation and tax evasion. The sides will make every effort to resolve pending economic questions and discuss them within the framework of the intergovernmental commission, according to the action plan.
The countries will step up cooperation in the construction of energy infrastructure facilities on the territory of Greece in accordance with the existing agreements and in view of the accumulated rich experience of positive interaction.
A separate discussion is under way on the necessity to cooperate in the sphere of telecommunications, information technologies and transport. The sides will participate in the development of international transport corridors and will consider holding a meeting of the Russian-Greek commission to discuss issues of international car transit. The date of the meeting will be agreed through diplomatic channels.
Russia and Greece welcome the initiation of work towards an agreement on the facilitation of visa procedures between Russia and the EU.
Moscow and Athens intend to develop tourism and to this effect will try to encourage greater interaction in the spheres of air, marine, car and rail communication. The sides noted that "there are great opportunities in developing tourism especially religious, recreational or sports tourism." 
The sides agreed to create a joint commission in the near future in order to encourage specific actions being taken in this respect. Russia and Greece, "will try to step up cooperation in the sphere of sea transit, especially in relation to security, safe navigation and protection of the sea environment."
The agreement was reached in the spheres of agriculture and veterinary science. The sides will encourage creation of joint companies.
Moscow and Athens will continue cooperation in the spheres of justice and police. Among the specific directions in this respect the action plan singles out the fight against terrorism and its funding, prevention of illegal drugs trafficking, the fight against transnational crime, illegal arms trade, human trafficking, illegal migration, theft and illegal trade with pieces of cultural heritage as well as the fight against financial crime.

Iraqi PM encourages Russian firms to take part in reconstruction

Iraq is prepared to cooperate with Russia and to sign any contracts, Iraqi Prime Minister, Iyad Allawi, said in an exclusive interview with ITAR-TASS News Agency.
Allawi said that on 7 December he had meetings with Russian businessmen who represent various sectors of industry, and the oil sector, in particular. "In the course of these meetings I spoke about the need for Russian companies to take part in the reconstruction of Iraq," Allawi said. 
He said that his visit to Moscow "presents a wonderful opportunity to meet the Russian people who have a friendship with Iraq that goes back over a long time." Allawi said that he had had very productive meetings and stressed the importance of his meeting with Russian President, Vladimir Putin, at which prospects for developing bilateral relations were discussed.

Ingushetia seeks to join in Russian-Turkish economic cooperation

A total of 36 Russian regions are currently engaged in cooperation with Turkey, and Ingushetia intends to join in the process, Murat Zyazikov, president of Ingushetia, told Russian journalists ahead of negotiations in Ankara, ITAR-TASS News Agency reported. 
While in Turkey Zyazikov discussed possible cooperation on 13 projects. "These included geological exploration drilling, the construction of an oil refinery with a capacity of 300,000 to 500,000 tonnes a year, assembly lines for electrical home appliances, investment in the equipping of the Magas international airport, the provision of valuable timber and housing construction in the republic's towns," Zyazikov said. "Ingushetia is counting on being represented on the business council for Russian-Turkish cooperation," he said. Zyazikov also spoke in favour of opening a Turkish trade centre in Ingushetia. 
"At the State Council meeting held by Russian President, Vladimir Putin, regions were advised to develop economic cooperation with both CIS and other foreign countries," Zyazikov said. He said that Ingushetia hopes to attract foreign investments into its economy and suggests that a free economic zone be set up in the republic. "Operating conditions for businesses in a free zone of this sort will be civilized, transparent and predictable," Zyazikov said.

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FOREIGN RELATIONS

Russia backs 6-nation talks on North Korea

Russia still backs the six-nation talks format on North Korea's nuclear programme, Interfax News Agency said recently. 
Russian Foreign Ministry spokesman, Alexander Yakovenko, said that Russia views the six-nation talks to resolve the problem of North Korea's defiance of international monitoring on its nuclear programme as the most suitable format, Interfax said. The talks involve the United States, North Korea, South Korea, China, Russia and Japan. China hosts the negotiations in Beijing.
"A settlement is possible only if a persistent search for mutually acceptable solutions continues. We are convinced that the six-nation format is the best for attaining this goal," Yakovenko told a news conference.

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MINERALS & METALS

Russia's gold, forex reserves reach new high of US$121.6bn

Russia's foreign exchange and gold reserves rose to US$121.6bn as of 3 December, from US$117.1bn as of 26 November, the Central Bank of Russia said recently, Prime-TASS News Agency reported.
Foreign exchange and gold reserves stood at US$76.9bn as of 1 January last year, up from US$47.8bn on 1 January 2003. 

Severstal bids for bankrupt Canadian steel group Stelco

Russian steel giant Severstal made an offer to buy bankrupt Canadian steel company Stelco, Interfax News Agency reported recently, citing a statement from the Russian company. 
The offer includes buying all of the Canadian company's assets, clearing its debts, and investing a further CA$400m (US$334.7m) into the enterprise, the Severstal statement said.
OAO Severstal, Russia's third biggest steelmaker, offered to acquire the assets of Stelco Inc, a bankrupt Canadian steelmaker, to increase its production by more than a fourth, Bloomberg news service reported. It also would seek a new labour agreement with Stelco workers, Deputy CEO, Vadim Makhov, said in a letter sent to Stelco's management in Hamilton, Ontario.
The Cherepovets, Russia-based company is expanding in North America to benefit from record steel prices and avoid import quotas and tariffs. Severstal bought Rouge Industries Inc, the largest supplier of steel to Ford Motor Co, earlier this year, boosting its annual production capacity to 14m tonnes. Stelco would add 4m tonnes of annual production, Bloomberg said.
Severstal paid US$285.5m for bankrupt Rouge and is working to double the Dearborn, Michigan-based steelmaker's capacity to 4m a year. Severstal also has mining, automobile manufacturing and transportation operations in Russia. Financing for the bid has already been secured and the company's board has already approved the offer, Severstal said. Stelco filed for bankruptcy protection from its creditors in January because of high energy, labour, pension and raw-materials costs. The company has been losing sales to US steelmakers.

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PETROCHEMICALS

Strada to purchase Nizhfarm

Germany's Strada Arzneimittel AG tabled a bid of €80-85m for Russian pharmaceuticals major Nizhfarm, Interfax News Agency reported recently. 
In a statement for the stock exchange, Strada said it would buy 97% of Nizhfarm, pending satisfactory due diligence. Strada said Nizhfarm posted revenue of €40.8m in 2003. The company could "almost double" net profit in 2004, which was €5m in 2003, and also predicted a subsequent powerful growth in profit in 2005.

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TRANSPORT

Railways, Siemens set up JV

Russia's state-owned transportation monopoly Russian Railways and Germany's engineering giant Siemens AG agreed recently to establish a joint venture based in Moscow, New Europe reported recently. 
The newly created company will produce new generation fast trains using Siemens technology, Russian Railways' press service was quoted as saying by Prime-Tass economic news agency recently. The draft agreement on the creation of the joint venture was drawn up by Russian Railways' President Gennady Fadeev and members of Siemens' managing board Edward Krubasik and Rudi Lamprecht in Munich. It is expected that the first train will be produced in 2007.

New bridge in Russia's Siberia gives access to iron ore deposit

People in Krasnoyarsk Territory have been brought closer together. After four years of work, a bridge over the river Kizir in the taiga has been put into operation and now links two previously separate parts of one of the territory's districts. 
It will also give access to a major iron ore deposit, which can now be developed for industrial purposes, thus creating new jobs.
The bridge, which is almost 300 metres long, can be used for both road and rail traffic, Channel One TV reported.

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