Problems in Afghanistan prompt NATO to resume cooperation with Russia / Customs Union not sealed, members feel tensions grow / Sberbank, Magna may back out of Opel deal / Russia: expats' paradise /
Problems in Afghanistan prompt NATO to resume cooperation with Russia
Russia and NATO have decided to resume political and military cooperation, which they suspended after Russia's war with Georgia over South Ossetia in August 2008. The decision was taken at Saturday's meeting of the NATO-Russia Council in Corfu, Greece.
The decision was facilitated by NATO and U.S. plans to redouble their efforts in Afghanistan. Russia is prepared to help them and will also earn handsomely from transiting a dozen U.S. military transport planes daily.
"The Afghan issue was at the top of the meeting's agenda," said a source in the Russian delegation. The meeting was held behind closed doors.
Alexander Grushko, a Russian deputy foreign minister, said that Afghanistan was one of the issues on the Russia-NATO agenda on which the sides' interests coincide. He said Moscow is ready to sign additional agreements on military transit with NATO member states similar to the ones it has with France, Germany and Spain.
A source close to the NATO Secretary General said the first Russian-American agreement on the air and ground transit of U.S. military cargo to Afghanistan via Russia could be signed in early July, during President Barack Obama's first visit to Moscow.
"If all goes well, some 12 U.S. military transport planes carrying military cargos will overfly your country daily," the source said. "Before that, Russian Railways (RZD) will start the ground transit of military cargo, which implies a lot of money. RZD has already filed a request for a U.S. grant to expand the narrow crossing on the Uzbek-Afghan border near Termez."
The source said the deal was attractive, with the price of transiting one container over 3,000 euros.
"The deal involves hundreds of containers per month, so you can calculate the revenue, which concerns only the ground transit, yourself," he said.
Customs Union not sealed, members feel tensions grow
The process of WTO entry for the Customs Union of Russia, Belarus and Kazakhstan may take 10 to 12 years, said Vladimir Semashko, first deputy prime minister of Belarus. On the other hand, Belarus expects to establish a free trade zone with the EU within three to four years, he added.
However, before creating this free trade zone, Belarus will have to reach agreement with its Customs Union partners, Russia and Kazakhstan, said Maxim Medvedkov, Russia's chief WTO negotiator.
Semashko said in the wake of his talks with EBRD and EU foreign policy chief Javier Solana that Belarus could be restored to the EU's Generalized System of Preferences this year, which would give it preferential access to the EU market.
Cooperation priorities are being determined right now, said Sergei Musiyenko, a member of Belarus's presidential public council. Belarus's relations with Europe are getting harmonized faster than its Union State with Russia. Brussels has already indicated that it has drawn conclusions from the Russian-Belarusian "milk wars" by allocating 10 million euros to improve the Belarusian product standardization quality system.
A European Commission official said he could not give any planned timeframe for the Customs Union's accession to the WTO at this point, given that they have not yet started discussing conditions, and that the Customs Union itself was not yet a reality. In this situation, creating a free trade zone with Europe might become a higher priority for Belarus, said Alexei Portansky, director of the Information Bureau for Russia's accession to the WTO. He also warned that the EU's recommendations could contradict Customs Union policies.
To create a free trade zone with the EU, Belarus will have to reach agreement with Russia and Kazakhstan, Medvedkov said, adding that Customs Union members would be banned from signing independent trade agreements after the deal is sealed in 2010.
The Customs Union has yet to be agreed on, but tensions are already mounting between its members, said Yaroslav Lissovolik from Deutsche Bank in Moscow. The free trade zone between Belarus and Europe is more a political declaration than anything else, said Vasily Kashin from the Higher School of Economics, as free trade requires neither state regulation of the retail market nor import restrictions, characteristic of Belarus.
This alliance could spur an inflow of investment, but Belarus is unlikely to venture to open its market, thus stripping its own companies of preferences, Lissovolik adds.
Sberbank, Magna may back out of Opel deal
Russia's biggest lender, Sberbank, and Canadian auto parts manufacturer Magna International may still back out from the planned takeover of General Motors' Opel unit. The buyers are struck in negotiations with the seller on the future use of its intellectual property and Opel technology, while investment in business development required by GM (over 7 billion euros) is much higher than what Sverbank can offer (500 million euros).
The bank has not signed any binding documents yet, only a memorandum of intent, said deputy CEO Denis Bugrov, which means the Opel deal still can be cancelled at any moment.
If Sberbank and GM eventually reach an agreement, they will sign the deal before the end of July and close it in September, said the bank's head, German Gref.
Auto market sources say the problem with the deal is its high cost. It is hardly expedient to spend this much Russian money to support the European economy. Sberbank and Magna are naturally wary of investing in Opel development without being its controlling shareholders, as the planned conversion of their interest-free loan in Opel shares will not be completed until 2013.
Another problem is the GM management's determination to include in the deal a buyback option to be exercised in a few years' time, when the Russian partner has completed Opel's financial rehabilitation. GM in fact expects to stabilize Opel with the help of other people's money and then claim it back, said a source close to the Gaz Group.
Bloomberg cited another major disagreement between the parties - Sberbank's and Magna's failure to reach an agreement with GM on the use of Opel technology and design.
They want to control the unit, but this would not make any sense unless they can get unrestricted access to the German producer's technology, said Mikhail Lyamin from the Bank of Moscow. This would mean a collapse of the Opel deal, because its ultimate objective is building a joint Russian-German model based on Opel technology, said Mikhail Pak, an analyst with the Metropol brokerage.
The deal's cancellation would benefit Russia's AvtoVAZ in the end - the country's largest automaker will then be entitled to guaranteed government financing of its projects with Renault, Pak said.
RBC Daily, Vedomosti
Russia: expats' paradise
The best-paid expats live and work in Russia, HSBC said in a report. Some of the reasons they are so well paid are low taxes and the exaggerated cost of living in Moscow. Incidentally, according to recruiters, the share of expats in Russia may fall by one-third during the recession.
Expat Explorer, now in its second year, surveyed 3,146 expats from 30 economic sectors living in 26 countries. HSBC said it was the largest survey of its kind.
According to the annual survey, nearly a half of all expatriates working in Russia (43%) make over $200,000 a year. A third of all expats in Russia - the highest proportion in the world - earn more than $250,000 a year, followed closely by expats in Hong Kong, Japan, Switzerland and India (25%-27%). In Australia and Belgium, generous salaries are scarce, as more than 60% of expats in both countries earn under $100,000, making them the poorest expats.
Western employers view Russia as one of the least comfortable countries to live in, and Moscow as one of the most expensive cities for foreigners to live, so the cost of recruiting for Russia has always been high, said Igor Shekhterman, a managing partner at RosExpert, a major headhunter. However, 97% of respondents said their disposable incomes, savings and investments here were higher than at home. Therefore, 83% are not planning to go home, even though 73% said they had to cut spending because of the economic downturn.
The authors of the survey said Russian conditions are extremely beneficial for foreign professionals. Residents in Russia pay a 13% flat individual income tax, while in European countries it is two or four times higher. In Russia, in addition to their high salaries expats also get a full social package including a good apartment, a company car, and tuition fees for their children, said Oksana Yakimyuk, a partner at Arthur Hunt. In addition, working in Russia accelerates the foreign executives' career growth.
Expatriates are in demand because of their higher qualification compared to local workers. They more often have narrow specializations, analysts say. However, the economic downturn has jeopardized Russian companies' plans to hire foreign executives. The number of expats in Russia could drop by one-third, Yakimyuk said, as companies will more often choose Russian employees over expats to cut costs.
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