NATO drills in Georgia to streamline coalition operations against Russian Army - analyst / Russian Sberbank, GAZ join Magna's Opel bid / Severstal ready to sell U.S. assets / Russian government only pretends to fight corruption
NATO drills in Georgia to streamline coalition operations against Russian Army - analyst
Five out of 19 NATO members and partner countries decided not to take part in the May 6 - June 1 Cooperative Longbow/Cooperative Lancer 2009 exercises rehearsing crisis response operations at the multinational brigade level in Georgia.
Russia is worried about plans to streamline NATO operations with a potentially hostile state, rather than the list of exercise participants.
Igor Korotchenko, a former officer of the Russian Armed Forces' General Staff and a member of the Russian Defense Ministry's Public Council, said Cooperative Lancer 2009 stipulated the use of light firearms, armored vehicles and helicopters.
However, Moscow is more concerned about Cooperative Longbow 2009, which aims to improve "interoperability between NATO and partner countries," a euphemism for streamlining Georgian Army and NATO coalition-force operations against the Russian Armed Forces.
A source in the Russian Defense Ministry said the planned exercises showed that NATO was ready to share information, which could be used against Russia, with Georgia.
Moscow reacted calmly to Cooperative Longbow/ Cooperative Lancer 2008 exercise that involved 1,100 officers and soldiers from 21 countries in Armenia. This time, however, President Dmitry Medvedev said that NATO's plans to hold exercises in Georgia were "an open provocation". "Exercises must not be held there where a war has been fought," Medvedev said.
Some countries decided not to take part in the exercises. Latvia and Estonia based their refusal on a lack of personnel. Kazakhstan, Moldova and Serbia backed out after consultations with Russia, said Russia's ambassador to NATO, Dmitry Rogozin.
This April, the State Duma, the lower house of the Russian parliament, passed a special statement expressing dismay over the decision of Azerbaijan and Armenia, a member of the Collective Security Treaty Organization, to take part in the exercises.
Neither Yerevan, nor Baku has decided to quit yet. Contrary to Moscow's discontent, their intentions are motivated by efforts to conduct a multi-dimensional policy that can hardly be called far-sighted, said Sergei Mikheyev, a vice president at the Center for Political Technologies.
Due to the aggravated Georgian political situation, Russian troops in South Ossetia and Abkhazia have also been put on alert and have conducted several small-scale exercises, an officer of the North Caucasian Military District said.
He said the exercises had involved much fewer military personnel than the 10,000 figure mentioned by Tbilisi.
Russian Sberbank, GAZ join Magna's Opel bid
Sberbank, Russia's largest retail savings bank, and GAZ, its second-biggest carmaker, owned by Oleg Deripaska, are joining Canadian Magna International Inc. in a bid for a controlling stake in Opel. The German authorities officially confirmed on Monday that the partners would bid for the stake along with Italian Fiat.
The partners will need no less than 5 billion euros ($6.7 billion) to revive Opel. However, the deal might cause disapproval of the Russian government, which is currently busy trying to solve GAZ's own financial problems.
A takeover proposal for Opel from North America's largest auto-parts supplier is being supplemented by offers from Russian Sberbank and GAZ Group, Juergen Reinholz, economy minister in the German state of Thuringia, said without elaborating further. Both GAZ and Sberbank declined to comment. Executives of several other Russian car manufacturers said they had heard about GAZ's plans to co-own Opel.
All sources wonder where GAZ will get the money from, with its own debt reaching 45 billion rubles (about 1 billion euros, $1.3 billion).
GAZ has some experience in buying Western production facilities, including British LDV and equipment from one of the U.S. Chrysler plants for manufacturing Volga Siber in Nizhny Novgorod. However, the former project is facing bankruptcy and the latter is unprofitable.
To get tangled in the Opel project at the moment is madness, said Yelena Sakhnova, analyst with VTB Capital. In her opinion, GAZ had better forget its carmaking ambitions and focus on the market for light commercial vehicles as the most important for it.
Until recently, the group was unsuccessful in the car segment, but the failures came from attempts to extend to Russia production of outdated models, already taken out of production, said Bank of Moscow analyst Mikhail Lyamin. With the Opel project, however, GAZ is poised to get access to new B and C class models.
However, the deal might cause raised eyebrows at a number of ministries, a federal official said. "There is no logic. Why are we studying the group's financial problems, meeting with its creditors, when GAZ really needs the money for the Opel bailout?" he said.
Opel/Vauxhall sold 1.459 million vehicles in 2008. Opel ranks 8th in Russia in terms of sales with 98,800 vehicles sold last year.
Severstal ready to sell U.S. assets
Russian steelmaking giant Severstal wants to sell its U.S. assets as part of a debt-repayment plan but may have trouble finding buyers. Severstal, which in 2004 became the first Russian company to enter the U.S. market, will have to modify its strategy because rapid regional expansion is fraught with major setbacks in this time of crisis.
Severstal will have to repay and refund debentures worth $1.9 billion during 2009, plus another $5 billion in 2010-2013.
Several years ago, Russian iron and steel companies considered it profitable to buy assets in the United States. Severstal invested $3.7-$3.8 billion in such assets, which are now worth at least 50% less.
The company will have a hard time finding buyers because its U.S. assets mostly cooperated with the automotive industry, which has now been wrecked by crisis, analysts said. In this situation, Severstal's foreign subsidiaries are posting losses.
"Aggressive corporate expansion had raised questions from the very beginning. Some U.S. assets were unprofitable in the pre-crisis period and are now generating losses," said Nikolai Sosnovsky, an analyst with Uralsib, a leading Russian financial corporation.
Investors initially hoped that Severstal would effectively streamline foreign-company outlays, said Dmitry Parfyonov, a trader with Prospect Investment.
Expensive energy and manpower and environmental restrictions make for high U.S. steel production costs. The crisis also leads to falling demand. Sosnovsky said Severstal could post $125 million in net losses this year if its foreign subsidiaries operate at 45%-50% of their capacity.
Parfyonov said Severstal would also try to sell its European assets, including Italy's Luchini SpA, a Brescia-based steelmaker. The company could now concentrate on gold-mining business, the expert said.
Russian steelmaker Evraz Group, TMK, the world's second-largest producer of steel pipes for the oil and gas industry, and the Novolipetsk Iron & Steel Corporation also bought assets in the United States.
Russian government only pretends to fight corruption
The most hardened bribe-takers in Russia are teachers, medical doctors and policemen - as much naturally follows from a report by Prosecutor General Yury Chaika he will officially present at a Federation Council meeting next week.
According to his statistics, physicians, college and university faculty and policemen are predominant among bribe-takers, while only 189 perpetrators were exposed among federal, regional and municipal government officials.
Over 80% of people convicted for bribery were charged with accepting less than 30,000 rubles (less than $1,000). A total of 3,500 bribe giving cases were sent to court, mainly involving drivers.
So far, what we are witnessing is a pretend fight against corruption. It is pointless to measure success by the number of cases that go to court, said Kirill Kabanov, head of the National Anti-Corruption Committee, an advocacy group. Most of these cases are the result of entrapment - that is why most of them involve teachers and doctors. Most real cases never reach the courts.
The presidential anti-corruption package to come into effect soon is unlikely to change this pattern, agrees Mikhail Grishankov, deputy head of the State Duma security committee. It has always been easier to bring minor bribe-takers to court, while dealing with high-level corruption cases requires strong political will.
The Prosecutor General's report cites dwindling effectiveness of the Interior Ministry's own security department. The number of corrupt police officers exposed dropped by more than a quarter (down 26.3%). Indicatively, the number of top officials of the Federal Drug Control Service charged with corruption fell to one-ninth of the previous year's level - three cases in 2008 from 28 in 2007.
A source in the Interior Ministry's central staff said police crime and corruption was a latent indicator and the figures cited could mean nothing at all.
Fighting corruption does not mean sending everyone to jail - we have already tried that, said Anatoly Lyskov, head of the Federation Council committee on legal and judicial issues.
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