Russia 090313
Basic Political Developments
· Kudrin to attend G20 financial meeting
· Russia opposes minimum fiscal stimulus for G20
· British Minister Praises Russia's G20 Role
· Building a Tower of Babel at the G20 Summit - But more likely than not, President Dmitry Medvedev will return from the summit in three weeks with little to show for the G20's anti-crisis efforts.
· Moscow to host CIS Economic Council meeting
· Transnistrian, Moldovan leaders to meet in Moscow
· Pirated Chinese weapons worry Russia
· Space station's close call with junk: More to come
· South Ossetia becomes stronghold of KGB and Russia’s intelligence services
· Senior policemen Amirkhan Tatiev short dead in Ingushetia
· Land mine explosion in Chechnya kills civilian
· Police say unauthorized action in Moscow involved 30 people
· Russian opposition holds 'Day of Dissent'
· Russian Cops Quiz Anti-Putin Protesters
· St. Petersburg "dissenters" hand anti-crisis demands to authorities
· Russian Agency May Monitor Officials’ Finances, Kommersant Says
· Surprise Pick for Agriculture Minister - President Dmitry Medvedev appointed Yelena Skrynnik, the little-known head of equipment leasing company Rosagroleasing, as agriculture minister Thursday in a surprise decision praised by industry insiders.
· Nemtsov in Bid to Be Next Mayor of Sochi
· Litvinenko suspect Lugovoi may run for Sochi mayor
· Gryzlov's Son Joins United Russia
· Kremlin loyalist says launched Estonia cyber-attack
· Nashi Activist Says He Led Estonia Cyberattacks
· Lessons From the Russia-Georgia Cyberwar
· Russia’s FSB 2008 report issued; 104 terrorist attacks foiled last year
· Hotwired Justice - The European Court of Human Rights yesterday delivered a landmark ruling in a case brought by a Russian against the FSB’s handling of an investigation. The court’s finding – that the investigative methods used jeopardized Anatoly Bykov’s right to a fair trial – will have implications for law enforcement agencies beyond Russia. But it is just one of many Russian cases that the Strasbourg court is inundated with.
National Economic Trends
· Russian monetary base up $728 mln in week to $106.9 bln
· Ignatyev Against Controls
· Russian bank balances fall to 381.4 bln rbls
· Budget Surplus Falls To $3.3Bln
· February budget slips into deficit
· Trade Balance Widens In January
· Trade Surplus Up To $9.4Bln
· Remittances Fall 26%
· PPI increases for the first time in five months
· RBS: Russia update
Business, Energy or Environmental regulations or discussions
· Novatek, Rosneft, Polymetal May Move: Russia Equity Preview
· Russia ponders ways to protect private stock investors
· Central Bank to conduct first 3-mth repo deals on MICEX March 13
· VTB group loaned 109 bln rubles in Feb
· Sberbank targets 100% Belpromstroybank control
· MOSCOW BLOG: Russia stabilises but banks remain the danger - Investors into Russian equities were starting to breath again by the start of March as the fear of a complete meltdown began to recede. The news in general wasn't good, but at least it wasn't appalling either. Russia's economy is stabilising, but the banking sector could still buckle and bring the economy to its knees.
· State will not purchase metals from producers
· Putin Offers Miners a Crash Course on Crisis
· Russian Electric Utilities: Awaiting Key Decisions
· Enel cuts modernization CAPEX for OGK-5's existing units
· RusHydro holds conference call - The long-awaited listing of RusHydro's GDRs will be completed in late 2Q09. The bourse was not disclosed.
· Alfa Seeks $1Bln in Debt From Deripaska's Firms
· Alfa to recover $1bn debts from Deripaska empire
· Rusal Pledged Stakes in Units for Russia Bailout Loan, VEB Says
· Rusal Pledged Stakes to Russia as Loan Collateral, FT Says
· Svyaznoy shakes hands with VimpelCom
· Svyaznoy reportedly has marketing agreement with Vimpelcom
· Norwegian Stake in Russian Joint Venture Seized
· Sistema reportedly sells 50% stake in MTT to Synterra
· Moscow City Government to compensate AFI for infrastructure works on Tverskaya Zastava
Activity in the Oil and Gas sector (including regulatory)
· Russia to propose oil forum for OPEC members
· Russia to propose new pricing formula on crude at Moscow conference
· Russian president says Russia keen on fair, stable oil prices
· KAZAKHSTAN & TURKMENISTAN DEAL BLOW TO NABUCCO PIPELINE PROSPECTS
· Rosneft plans for development 245-South block in Algeria are approved
· Rosneft’s O’Brien Says Planning to Start Vankor Output This Year
· LUKoil, NLMK Reach Lube Deal
· ONGC looking for Imperial team
· Novatek Operational Update Leads Us To Lift 4Q08 Ebitda Estimate
Gazprom
· Gazprom Considers Investing in Japan Power Utilities (Update1)
· Gazprom to carry out explorations at 4 Uzbek blocks by end-2010
· GAZPROM: Is it Time to Hit the Reset Button?
· On meeting of Gazprom’s Central Subsurface Use Commission - The meeting considered the issues of obtaining the rights to use the subsurface resources of the Yamal-Nenets Autonomous Okrug and the Okhotsk Sea offshore areas.
· Taqa May Spend up to $4 Billion on Takeovers in 2009 (Correct) - The company also plans to invest 600 million euros ($769 million) with OAO Gazprom, Russia’s natural-gas exporter, in their Bergermeer Dutch gas storage project.
· Zenit St Petersburg will have to cut their budget by 10 percent this year, according to the club's owner, Russian energy giant Gazprom.
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Basic Political Developments
Kudrin to attend G20 financial meeting
http://www.itar-tass.com/eng/level2.html?NewsID=13672141
LONDON, March 13 (Itar-Tass) -- Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will attend the G20 ministerial meeting that opens on Friday.
“We have to coordinate the anti-crisis policy and design anti-crisis measures to prevent similar crises in future,” an official in the Russian delegation said.
Russia believes certain provisions in the communiquй of the meeting need to be specified. In particular, the proposal to earmark not less than two percent of the GDP for anti-crisis measures does not correspond to the existing situation in various countries of the group. Therefore, the concrete bailout volumes shall not be fixed.
“Differentiation is necessary by groups of countries. It has to be discussed taking into account the opinion of BRIC countries” (Brazil, Russia, India and China), the official said.
Russia also believes the British proposal to decrease the refinancing rate does not reflect the specifics of developing and oil producing countries. “The economic situation differs and there is no single recipe for all,” he said.
The finance ministers will discuss the reform of the International Monetary Fund, specifically the amount of additional reserves, quotas and decision-making mechanisms.
“Such institutions as the IMF should not just provide urgent aid to certain countries, but also envisage the consequences, which the world economy would face in six-twelve months because of the anti-crisis measures,” the official said.
The ministers will also consider the capitalization of development banks. Thus, the World Bank can provide to all of its members not more than 100 billion dollars in three years, which is clearly insufficient in current conditions. However, developed nations are in no hurry to up its capitalization.
“There should be no group egoism and the task of the G20 is to consider how the world economy would react, to balance the instruments and measures that are taken to confront the challenges faced by various groups of countries. Hypothetically, it can be supposed that growing crisis phenomena can make certain states bankrupt and it is necessary to prevent such areas of social and political instability,” the official said.
Russia opposes minimum fiscal stimulus for G20
http://www.reuters.com/article/gc08/idUSTRE52C0G120090313
Thu Mar 12, 2009 9:54pm EDT
MOSCOW (Reuters) - Russia will oppose UK proposals for all G20 members to set a mandatory minimum fiscal stimulus level at 2 percent of gross domestic product and cut interest rates, a Russian delegation source told reporters on Thursday.
The source said both proposals were included in the draft communique circulated by G20 host Britain ahead of a meeting of G20 finance ministers and central bankers in Horsham, southeast England on Friday.
"We need to differentiate between groups (of countries). We will need to discuss it taking into account opinions of BRIC countries," the source said regarding the minimum fiscal stimulus requirement.
Delegations from Brazil, Russia, India and China will meet ahead of the G20 meeting on Friday. Russia's own fiscal stimulus package currently amounts to 4.5 percent of GDP.
The source said another UK proposal calling for all G20 countries to cut interest rates in line with similar policies in the United States and the euro zone countries did not reflect the realities of commodity-exporting economies.
"The economic situation is different and there is no common recipe for interest rate policy," the source said. Russia has been raising its interest rates to support the rouble's exchange rate and stem capital flight.
UK Foreign Office Minister Mark Malloch-Brown criticized Russia and other emerging nations for not doing enough to stimulate their economies and for keeping high interest rates to support their currencies and stem capital flight.
(Reporting by Gleb Bryanski; Editing by James Dalgleish)
British Minister Praises Russia's G20 Role
http://www.themoscowtimes.com/article/1010/42/375255.htm
13 March 2009
The Moscow Times
British Foreign Office Minister Mark Malloch-Brown said Thursday that Russia was playing a "major role" in the preparations for the G20 summit next month in London.
Malloch-Brown is on a two-day trip to Russia to discuss strategy and agenda topics for the April 2 summit, and he met Thursday with First Deputy Foreign Minister Andrei Denisov.
Malloch-Brown, speaking at a briefing held by the Association of European Businesses, said the Russian government and Britain "shared" four main objectives for the summit: developing a unified strategic vision for tackling the problems in the world's real and financial sectors; discouraging the growth of national protectionism through a recommitment to free-trade; tightening banking and financial regulation; and creating aid packages for poorer countries.
On Friday, he is to meet Foreign Minister Sergei Lavrov and presidential economic adviser Arkady Dvorkovich.
Building a Tower of Babel at the G20 Summit
http://www.themoscowtimes.com/article/1028/42/375234.htm
12 March 2009
By Martin Gilman
By now almost everyone on the planet has felt to one degree or another the most virulent global economic crisis since the Great Depression. Its largely unanticipated destructive force has humiliated once-mighty financial institutions and companies, humbled economists, devastated investors, scared consumers and challenged public authorities around the world.
It is natural that at a time of such confusion and even desperation many people look to their leaders for solutions. This is the context in which the much-hyped expectations of many are focused on the second summit of the Group of 20 countries in London on April 2. But more likely than not, President Dmitry Medvedev will return from the summit in three weeks with little to show for the G20's anti-crisis efforts.
The G20 "sherpas" will meet on Thursday in London to prepare the summit agenda. Undoubtedly, they will once again produce empty pledges to avoid protectionism, coordinate policies, strengthen regulatory oversight and -reform international financial institutions.
Regarding the threat of protectionism, the G20 pledge in November to forego any protectionist actions and promote the Doha Round of trade talks was ignored, but nonetheless, it is likely to be repeated this time along with a promise to monitor such measures. Much effort will be expended on the search for scapegoats or secondary issues like tax havens. There will be more calls to coordinate regulatory regimes, but U.S. authorities have already insisted that they will continue to conduct their own regulation of financial institutions and markets.
In any case, it is hard to conceive that this heterogeneous group could ever agree on much. Its membership reflects geographical and social factors as much as economic size. It excludes some of the world's 20 largest economies, such as Iran and Taiwan, while smaller economies, such as Saudi Arabia, Argentina and South Africa, are included.
The preponderance of European countries in the G20 is reflected in the stalemate on reform of the International Monetary Fund. Other than calls for surplus countries to place more of their money for use in its lending operations, there is unlikely to be any real steps to improve governance by shifting control of the IMF from overrepresented European countries to China, Russia and South Korea. Despite some hypocrisy, none of the existing shareholders seems willing to cede its share or, more sensibly, to consolidate the European representation into a single vote.
Thus, Russia, China and other major emerging economies, the new creditor class of the 21st century, have been largely disenfranchised by the "debtors" who control the international financial and economic institutions. The only way that the G20 can really make a difference is by recognizing this new reality and having the political courage to start a realignment of power and control to reflect the tectonic shift in relative global economic forces. Unlikely as it may seem, this is a chance for Medvedev to display real leadership.
The United States is also underrepresented -- at least relative to its share of global gross domestic product -- but it could still try to make common cause with the new creditors. It is hard to imagine that President Barack Obama would be willing to offend his host and allies on one of his first forays into foreign affairs.
Ironically, if the IMF's shareholders had taken Russia's proposal in 2006 to appoint the experienced Czech Josef Tisovsky as head of the fund rather than French politician Dominique Strauss-Kahn, perhaps it would now be in a better leadership position in the current crisis. But Russia's views are not taken seriously, not least because they could upset the long-standing predominance that the Europeans enjoy. And no matter how concerned the United States is about the crisis, a real reform of the IMF and other institutions is just politically too costly.
In London, the heads of government will also discuss their numerous proposals to revive their economies through tax cuts and spending. But any proposal that binds stimulus packages to a percentage of GDP is likely to meet resistance.
This is because the crisis manifests itself in different ways in different countries. There is little need to dwell on the adverse impact of the crisis on Russia. The collapse of oil prices, bank credit, government revenues and the ruble together underscore the country's economic predicament. But unlike all the other G20 economies where stagnation is the primary concern, Russia is the only one trying to contend with stagflation -- that lethal combination of economic stagnation and inflation.
In the context of any coordinated effort to stimulate the global economy, as White House economic adviser Larry Summers called for earlier this week, Russia's hands are tied. Unlike many countries where a major expansion of public spending is constrained by large debt burdens, Russia -- which has not forgotten the lessons from its 1998 default on domestic ruble-denominated bonds -- has little sovereign debt (4 percent of GDP at the end of 2008).
Instead, a Russian effort to expand government spending, as its contribution to boost to the global economy, is restricted by inflation. Russia's inflation rate rose to a four-month high in February as the weaker ruble drove up the price of imports. The annualized rate jumped to 13.9 percent from 13.4 percent in January. February's increase in inflation reflects the ruble's sharp but controlled depreciation of about 35 percent between Nov. 11 and Jan. 22.
These devaluation effects could last through April before we see what impact the decline in real income and shrinking money supply will have on dampening inflation. It is by no means a given that the official inflation forecast of 13 percent for 2009 will be realized. Much will depend upon how the authorities revise the 2009 budget.
Russia is already making too large a contribution in the G20 framework in terms of relative fiscal effort. Its budget balance -- and hence its contribution to real GDP -- could swing from a budget surplus of 4 percent of GDP in 2008 to a budget deficit of as much as 8 percent of GDP in 2009. This 12 percentage-point injection, envisaged by Finance Minister Alexei Kudrin, is almost twice as much as contemplated by the United States. The net result will be sustained inflation and poorer medium-term prospects.
Kudrin should aim for a much smaller deficit, and he would still be able to say that Russia is doing more than most to boost the global economy.
Martin Gilman, a former senior representative of the International Monetary Fund in Russia, is a professor at the Higher School of Economics.