Nov 30, 2006

Officialy, 362,000 Russians HIV Positive

According to Russia's chief sanitary doctor Gennady Onishchenko, there are currently 362,000 people registered with HIV in Russia, RIA Novosti reports. However, according to Vadim Pokrovsky, head of Russia's federal AIDS research center and a leading Russian expert on HIV/AIDS, the actual number of HIV positive cases may be closer to one million.
BBC presents a profile of four Russians diagnosed with HIV as a part of their coverage of World Aids Day on December 1.

Irish Police Launches Formal Investigation Into Gaidar's Poisoning

Less than a week after the death of former KGB spy Michael Litvinenko in London, the Irish police started a formal investigation into the suspected poisoning of former Russian PM, Yegor Gaidar. The spectacular series of murders that seems to be shattering the remainder of the illusions about the progress in Russia culminated yesterday with the news that Gaidar suffered from a mysterious illness. While initially dismissed by Irish authorities, it immediately started a storm of speculations whether the illness was indeed a poisoning and whether it was related to the murders of Litvinenko and Russian journalist Ana Politkovskaia. Yesterday, Anatoly Chubais, former associate of Gaidar and the current head of the Russian monopolist Unified Energy System expressed no doubts that Gaidar was poisoned and that the poisoning was connected to the previous murders.

Kiseliev Still Optimistic About Russia

Evgeny Kiseliev, the former general director of NTV and host of the now cancelled political talk show “Itogi” expressed optimism about Russia’s political direction in his talk at Stanford University, The Stanford Daily reports. He does not consider Russia a totalitarian state and sees political debate in Russia being well and alive, though hidden in the background. Kiseliev also discussed the presidential elections in 2008 that will, at least under current constitution, bring to the end the presidency of Vladimir Putin. According to Kasiliev there are several ways in which Putin could retain his power besides changing the constitution which would discredit Putin in Russia and abroad.

Zhirinovski Blames Foreigners

In his usual manner, Vladimir Zhirinovsky, deputy speaker of the lower house of parliament and leader of the ultra-nationalist LDPR party, blamed foreigners for the recent killings of Ana Politkovskaya and Alexander Litvinenko, as well as the apparent poisoning of Yegor Gaidar, the former PM.

Cheap Vodka for the Masses

Osman Paragulgov, the head of Russia's union of wine and spirits producers, has presented a solution to the ever increasing rate of Russians dying from poisoning from bootleg vodka. He calls for a cheap, but safe and regulated drink that even poor Russian drinkers will be able to afford.

Large numbers of Russians, especially in poor alcoholism-stricken rural areas, are no longer able to afford the national drink and frequently reach to cheaper substitutes instead. However, often with dire consequences as the bootleg vodka often contains poisonous, and even lethal substances. Last year alone, more than 40,000 people died after consuming counterfeit alcohol.

Paragulgov points out that there is no intention to flood the Russian market with cheap vodka – regulation would be necessary.

We suggest that for effective regulation the prices should be set at Rb 3, so that it’s easier to put together a troika.

Nov 29, 2006

Radioactive traces on BA planes

BBC reports that radioactive traces have been found on three Boeing 767 airliners operated by British Airways. Two of them have been grounded at Heathrow airport while the third is on the ground at Moscow’s Domodedovo airport awaiting an inspection by British forensic investigators. Apparently, BA is trying to make contact with the 330,000 passengers who traveled on the planes affected since the suspected contamination. The traces could have been left by someone who was in contact with poisoned Alexander Litvinenko or by someone who has brought the substance to the UK.

Foreign Investors Cautious

RosBusinessConsulting reports that “Russia attracts investors - but they are not overoptimistic.” As Russia’s GDP keeps growing and its stock market rising, foreign investors keep coming. However, the recent events like the Politkovskaya murder, the Litvinenko poisoning, the harassment of foreign oil firms in Russia, and the reality that Russia's economy’s strong performance is almost entirely due to the high prices of oil and natural gas in today’s environment of geopolitical uncertainty, give investors reasons to be cautious. What happens remains to be seen but it seems that the investors are starting to take notice (see today’s article in The Guardian).

Russia Lifts Wine Embargo

BBC reports that Russia has lifted the trade embargo on Moldavian wine and meat. Russia suspended the wine imports from Moldova and Georgia in March supposedly due to poor health regulation in both countries. Many observers, however, have noted that the move might have been political due to severing ties with both former Soviet republics.

Gaidar Poisoned?

The Financial Times reports that Yegor Gaidar, the former PM and architect of the shock therapy was hospitalized last week with a mysterious illness while visiting Ireland. He is in a stable condition and recovering in a Moscow hospital, however, his doctors have not been able to explain the symptoms of his illness. Anatoly Chubais, his former associate in the 1990’s reformist government, expressed a suspicion that Gaidar may have been poisoned.

In the meantime, Boris Berezovsky issued a statement confirming the close ties he had with Alexander Litvinenko after radioactive traces of polonium-210 were found in his offices.

For an interesting analysis of the recent events of Litvinenko’s poisoning and Politkovskaya’s murder, see Yulia Latynina’s column in The Moscow Times “The Lessons of Litvinenko's Death”.

Nov 28, 2006

"Gazprom will use 100% of the Shtokman field resources on its own"

This is the very first sentence that you can see on Gazprom's homepage. Alexander Medvedev can talk and offer assurances and promises to anxious European public and politicians. But at the end of the day that's what it is - talk. The truth probably is that nobody, including the Gazprom officials, knows how the project will be carried out.

Alexey Miller: “Gazprom will use 100 per cent of the Shtokman field resources on its own. Over the continuous period of time Gazprom has studied the possibility of providing foreign companies with a 49 per cent stake in the Shtokman project. International companies however failed to offer assets matching Shtokman’s reserves in amount and quality. The field will be developed with the use of state-of-the-art technological developments, including for LNG production. Authoritative international companies will be invited as project contractors for these purposes. Meeting project deadlines and costs is a prerequisite for prospective contract awards. This decision is an additional guarantee of the Russian gas supply to Europe security in the long-term and proof that the European market is of dominating significance for Gazprom”.

Western Companies May Join In Shtokman Gas Project

Itar-Tass -- Nothing will prevent Western companies from participating in the development of the Shtokman field, Gazprom Board Deputy Chairman Alexander Medvedev said.

In an interview with the French newspaper Echos on Monday, Medvedev said Gazprom's recent decision to develop the field on its own was caused by "purely economic reasons."

"We would like our future partners to make an upward revision of potential earnings they can get from this very important field," Medvedev said.

He said Western companies would be allowed to participate in the project as project operators and on shared liabilities terms. "Other approaches are also possible in the development of the Shtokman field," he added.

Medvedev rejected Western criticism of Gazprom's investment programme and said that of 10 billion euros envisaged for 2006 half would be earmarked for 'the development of the company's gas transport and storage infrastructure both in Russia and abroad."

"These investments will grow in the future," he said.

"Given such plans, it is absolutely groundless to accuse Gazprom of allegedly harbouring plans to stop gas supplies to European consumers," Medvedev said. In October, Gazprom CEO Alexei Miller said his company would develop the Shtokman gas field on its own.

Miller said the field would be developed without foreign companies being allowed to put some of its reserves on their books.

According to Miller, all gas from the Shtokman field will be supplied by the North European Gas Pipeline. "The European market is number one for Gazprom," he said, adding that Gazprom would supply 150 billion cubic metres of gas to Europe in 2006.

Gazprom's Executive Board said supplies from the Shtokman gas field to Europe would have supremacy over liquefied gas supplies.

"The Shtokman field will become the resource base for the export of Russian gas to Europe by the Nord Stream pipeline now under construction. Gazprom will develop the field on its own, without foreign partners," the board said in a press release.

Miller said, "Gazprom will be the sole user of the Shtokman field."

"For a long time Gazprom was considering giving a 49-percent stake in the project to foreign partners. However foreign companies could not offer assets corresponding to the volume and quality of the Shtokman reserves. Modern technologies and techniques will be used in the development of the field, including in the production of liquefied gas. To this end, authoritative international companies will be hired as contractors. Compliance with the schedule and cost estimates will be an important condition of these contracts," Miler said.

"This decision is an additional guarantee of reliable supplies of Russian gas to Europe in the long term and proves that the European market is of paramount importance for the company," he said.

The head of the Union of Independent Gas Producers, Nikolai Baranov, said Gazprom's decision to develop the Shtokman gas field on its own is "not energy diktat" but "a natural desire" of the country to use its subsoil resources.

"This decision agrees with the state energy policy because by so doing Russia will develop its subsoil resources on its own," he told Itar-Tass.

He disagreed that Gazprom's decision leads to Russia' energy diktat. "Why should be allow Western companies to develop our subsoil resources if we can do it on our own? And why doesn't anyone speak about diktat when Norway develops the Snow White field alone?" he said.

Baranov said, "The Russian gas company has all necessary technologies to work in the Arctic Sea alone."

"Even if there is some need for additional expertise, Gazprom can hire Western specialists under a work contract," he added.

President Vladimir Putin said later that the Shtokman gas project was not closed to foreign companies.

"We will not bar partners from the field development, the transportation and the production of liquidified natural gas. Yet only Gazprom will be the mineral developer and the owner of these resources," he said.

Putin said Gazprom was considering redirecting part of the resources from the Shtokman field to European markets, adding, "Such a decision of
Gazprom could be made very promptly."

Putin also recalled that German Chancellor Angela Merkel had recently raised in Moscow "the question of re-orientating part of the resources from the Shtokman gas deposit, one of the biggest in northwest Russia, to the European markets".

The president said Russia exported 55 billion cubic metres of gas to Germany a year. The
Shtokman field can give 25-45 billion cubic metres of gas to Germany. Industry and Energy Minister Viktor Khristenko said Gazprom would need advanced technologies and contractors in the development of the Shtokman field.

He believes that the decision on the Shtokman field development should not "frighten off foreign investors. This decision derives from economic interests, as business votes with money."

The gas field is Russia's most ambitious project that offers "unprecedented volumes and possibilities", Khristenko said.

He said the first stage of the project envisaged the extraction of 15 billion cubic metres of gas to bring production eventually to 45 billion cubic.

The first phase of the field's development is estimated to cost 12-14 billion U.S. dollars while the first shipment of Shtokman gas can be supplied to the United States in late 2011 or early 2012. Gas supplies from the Shtokman field may be as big as 70-90 billion cubic metres a year.

Gazprom was choosing a partner out a short list of five companies that included Norwegian Statoil and Hydro, American Conoco Phillips and Chevron, and French Total, but then decided to develop the gas field on its own.

The Shtokman field in the Barents Sea is believed to contain 3,700 billion cubic metres of natural gas and more than 30 million tonnes of gas condensate.

Zoning Russian Style

The New York Times and BBC report that in spite of protests, Gazprom announced that it is determined to go-ahead with its Gazprom-City project on the Neva River in historic St. Petersburg. The winner of the design competition of the project should be announced shortly. While the supporters of the project hope to increase the economic profile of St. Petersburg, long in the shadow of Moscow, the political and business capital, its opponents point out the architectural incompatibility with the historic city of St. Petersburg. In all proposed designs, a high-rise tower of 300 meters (990 feet) dominates the project, and as it critics fear, will dominate the 18th and 19th Century skyline.

Russian Gas Price Increase

Gazprom is planning to raise the prices of natural gas for its European customers by an average of 14 percent next year, The Moscow Times reports. This move will bring the average price for 1,000 cubic meters of natural gas to $293.

Nov 27, 2006

A few views on the Litvinenko case...

... from the New York Times, The Guardian, the Eurasian Home, and the European edition of the Time magazine.

Russia's buying spree continues

Riding the high commodity prices, Russian companies shop for acquisitions abroad. Only last week, the Evraz Group, controlled by the oligarch Roman Abramovich, offered $2.3 billion for Oregon Stell Mills (OSM). This acquisition follows the trend of strengthening and consolidation of other Russian core industries like the oil and natural gas industries.

Whether this trend will be beneficial to Russia's economy remains to be seen. The scepticism however, appears to be growing. In their coutry analysis released today, the Organization for Economic Cooperation and Development (OECD) was critical of the cozy relationship between Moscow and the industry. According to the report, the growing nationalization and consolidation could (read the trend is so strinking that the use of euphemisms is no longer sufficient) lead to corruption and inefficiencies. The striking example, of course, is Gazprom which follows the course of quick acquisitions of related and unrelated businesses, whose operational efficiencies, however, are not on par with its competitors from the developed world.

OECD raps Russian state control

Now that's some news! BBC reports OECD findings that Russia's growing consolidation of key industries in state's hands contributes to the deterioration of business climate in Russia.

Nov 26, 2006

The Litvinenko Saga

The spy games are back on. You may want to wait before you discard the old John le Carré books that take up space in your bookcase. The plot of the murder of the Russian ex-spy (and vocal critic of President Vladimir Putin) Alexander Litvinenko could come right from the pages of one of them.

Here are a few links from the news:

A short profile of the FSB from the BBC website:

Profile: Russia's secret police

Some speculations also from the BBC website:

The mystery of Litvinenko's death

The Economist is probably right about the outcome of the investigations:

Abandon hope

Meanwhile the Russian (Soviet) spy tradition lives on:

Putin's Speech at the New Headquarters of the Chief Intelligence Directorate of the Russian Armed Forces General Staff on November 8, 2006

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