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MOSCOW, May 29 (RIA Novosti)


Russia, U.S. lose standing as world order upholders / Loan scandal sours Russian-Belarusian relations / Azerbaijan has no extra gas for Gazprom / Russian rail monopoly involved in European railway project


Russia, U.S. lose standing as world order upholders

The North Korean nuclear test explosion has further complicated the situation in the field of nuclear proliferation. Analysts are pining for the past when the two superpowers, the United States and the Soviet Union, could join forces to uphold noble international principles.

Unfortunately, they no longer work together, writes a Russian political analyst.

Fyodor Lukyanov, editor-in-chief of the Moscow-based magazine Russia in Global Affairs, said the large-scale pressure the United States and the Soviet Union put on South Africa to abandon its nuclear arsenal was the best example. They also scored other achievements in this sphere, in particular ensured the termination of nuclear projects in Brazil and Argentine, Latin America's perennial rivals.

In fact, Moscow and Washington did this to protect their positions as the guarantors of the world order, even though that order was based on mutual assured destruction, Lukyanov said. But today their relations are too asymmetrical, filled with too much bitterness and mistrust to allow for joint action. In a way, their mutual mistrust is now deeper than during the Cold War, because it has been compounded with a feeling of inequality.

But even if Russia and the U.S. honestly wanted to ensure non-proliferation, they could no longer do it. The time when they could decide the future of the world one-on-one is long past.

The analyst said many countries are now seeking to acquire nuclear weapons for different reasons, but mostly as an instrument of pressure on their neighbors. The relevant examples are India, Pakistan and Israel, and this also explains Iran's nuclear ambitions.

North Korea, which has been doing its best to make the Untied States look at it and negotiate with it, is the simplest case, Lukyanov said. The problems of other nuclear aspirants are more complicated, because they cannot be solved without first untying the tight knots of regional contradictions.

As for North Korea, all it wants is to survive, but this is exactly where progress is unlikely, given the current world situation, the analyst concludes.



Loan scandal sours Russian-Belarusian relations

On Thursday a scandal flared up at a meeting of the Council of Ministers of the Russia-Belarus Union State after Minsk refused to accept a $500 million Russian loan tranche because Moscow proposed converting it into rubles.

Russian Finance Minister Alexei Kudrin could not hide his irritation and said the $500 million tranche would be issued only if Moscow were convinced of "the Belarusian government's adequate behavior to stabilize the country's economy."

Kudrin said the Russian government viewed Minsk's measures as insufficient, primarily due to large-scale Belarusian ruble issues.

Earlier this year, Belarus requested a 100 billion ruble ($3.2 billion) Russian loan for promoting bilateral trade.

Moscow wants Minsk to reciprocate in exchange for Russian assistance. "Russia has obvious economic interests because a number of attractive petrochemical companies are located in Belarus," Alexei Makarkin, vice-president of the Center for Political Technologies, said.

Alexander Razuvayev, chief analyst at the Galleon Capital investment company, said Russia could buy them cheap in exchange for financial assistance.

Minsk declined to comment on the loan scandal but suggested that, in its opinion, Russia had refused to issue the tranche. On Thursday, the Russian Finance Ministry received a Belarusian government request for a nuclear power plant construction loan worth $9 billion.

"The Belarusian economic model implies massive subsidies. Nothing has changed in this respect," Razuvayev said.

The decision to issue funding is not made by the Finance Ministry and is not financially motivated, said Konstantin Sonin, a professor with the Higher School of Economics.

"Although President Alexander Lukashenko has signed numerous agreements with Russia, he has fulfilled only those which he considers profitable," Belarusian political analyst Yaroslav Romanchuk said.


Azerbaijan has no extra gas for Gazprom

The State Oil Company of Azerbaijan is ready to start supplying gas for Gazprom as early as 2010, but not more than 1 billion cubic meters, company department chief Vagif Aliyev said yesterday. Russia, of course, had bargained for more, said an Energy Ministry official, but he gave no figures: Energy Minister Sergei Shmatko is planning to discuss the issue in Baku today.

Azerbaijan is a potential supplier of gas for the Nabucco gas pipeline, which is expected in 2013 to link the Caspian region with Europe, bypassing Russia, and cut the EU's dependence on Gazprom. Azerbaijan is the only CIS country exporting gas, but not to Gazprom, thus upsetting its monopoly on fuel purchases on the post-Soviet space.

Azerbaijan can conclude a 20- to 30-year agreement with Russia, but the stumbling block is the price, the country's Minister of Industry and Energy Natig Aliyev said the other day. Gazprom is prepared to pay the so-called European price (including a 15% to 20% margin for itself), but Azerbaijan wants to know what this means, the minister said. For comparison: in 2008, Gazprom's average price for Europe was $409 per 1,000 cu m, while Azerbaijan exported most of its gas to Turkey at $120.

The Europeans are promising Azerbaijan much more than Russia - investment and technology, and this means Gazprom might fail to get extra gas, says Chingiz Ismailov, head of the Center of Regional Development in Azerbaijan. Azerbaijan remembers how in 2007, when the republic still depended on Gazprom's imports, the company planned to cut supplies and raise the price to $235 - twice as high as for Armenia.

However, Azerbaijan so far has no surplus fuel for Gazprom. The republic's annual gas output is about 20 billion cu m. Domestic consumption, as estimated by Gazprom, is 12 to 14 billion cu m. Another 7 billion cu m must be exported to Turkey.

From an economic standpoint Gazprom would do better not to buy Azeri gas at all, says Mikhail Korchemkin, director of East European Gas Analysis. The corporation is already losing profit from the resale of gas from Turkmenistan, Uzbekistan and Kazakhstan (about 60 billion cu m a year). But from a political perspective, Gazprom needs it all, he added.


Russian rail monopoly involved in European railway project

Russia, Ukraine, Slovakia and Austria have agreed on a joint venture to design and build a rail link between Slovakia's Kosice and Vienna, complying with Russian standards.

The partners plan to complete the six-million euro design work in a year. The construction could take from three to five years, while their estimates range from $2-$3 billion to $11-$14 billion. Analysts praise the project although admitting that it would be hard to find investors for it.

Ukraine and Kosice are currently linked by a Russian-standard railway, 1,520 mm wide, while European tracks are 1,435 mm wide.

Russian Railways President Vladimir Yakunin said the project's operator would most likely own the railway when it's completed. Mikhail Kostyuk, general director of Ukraine's state railway administration, said international banks were showing keen interest in the project.

The partners disagree on the estimated cost of the project. RZD's report cites $4-$5 billion, while Ukraine insists the construction will cost 8-10 billion euros (about $11-$14 billion).

Independent analysts say neither is close enough to reality. "The project's expediency is obvious, considering the effectiveness of freight transportation," said Yury Saakyan, head of the Natural Monopolies Institute, a Moscow think tank. "But the cost will be higher than their estimates, and the most important question is who will provide financing, and what the conditions will be," he added.

On the contrary, Yevgeny Shago, chief analyst at Ingosstrakh Investment, said even RZD's estimate of $8-$10 million per kilometer of rail was seriously overestimated. "For example, Mechel is building a 320-km railway in Yakutia for $900 million, which puts the cost of one km at about $2.8 million," he said, adding that the European landscape makes construction easier and cheaper than in Siberia.

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

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