Russia 090922 Basic Political Developments

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WSJ: WTO Bid Still Faces Obstacles, Russia Says


WASHINGTON -- Russian First Deputy Prime Minister Igor Shuvalov said Russia aims to finish negotiating its entry into the World Trade organization next year, although various stumbling blocks remain.

"We would like to finalize our accession," Mr. Shuvalov said at the Russian ambassador's residence here, after meeting with U.S. Trade Representative Ron Kirk. "It's not easy. We've doing this for 16 years."

Among the complications is that Russia is negotiating not only for itself. It wants to join the WTO at the same time as two partners in a customs union, Kazakhstan and Belarus, even though the two countries are far less developed economically.

Of Belarus, Mr. Shuvalov said: "They're ready to change legislation and tariff barriers. They're ready for compromises."

While the three countries should negotiate on the same schedule and join the WTO at the same time, Mr. Shuvalov said, he left himself an out if that arrangement slowed negotiations too much. The heads of sovereign nations can always make changes in their plans, he said.

WTO officials have said there are no established procedures or precedent for admitting a customs union. Russia, which has been negotiating for 16 years to join the WTO, is the biggest economy outside the 153-nation group.

Among the toughest issues remaining in discussions with the U.S. over the WTO, he said, are the levels of allowable subsidies for Russian state-owned enterprises -- an appeals process to handle Russian prohibitions on the import of U.S. pork and veal; toughened intellectual property agreements; and reducing Russian barriers to imports of cryptographic equipment.

Write to Bob Davis at

Prague Monitor: Russian analyst: Radar scrapped due to Czechs, Obama not at fault

22 September 2009

Moscow, Sept 21 (CTK) - It was Czech politicians who have actually decided on scrapping the Czech-US anti-missile radar plan as they withdrew it from parliament where its chances were uncertain, Russian analyst Alexandr Pikayev has told CTK, adding that it has no sense to blame Washington in this respect.

He was reacting to Barack Obama administration's withdrawal from the plan to install the radar on Czech soil, and a base with interceptor missiles in Poland, as elements of its anti-missile shield in Europe, aimed against potential missile threat from countries such as Iran.

The project was from the beginning sharply opposed by Russia, which viewed it as threatening its own security.

This does not mean that Washington has turned its back to Prague and Warsaw. "Obama cannot leave Prague and Warsaw in the lurch," Pikayev, from the Russia Academy of Sciences Institute of World Economy and International Relations (IMEMO), said.

"Washington showed big respect to its Czech ally also by the visit Obama paid to Prague [this spring] and by the crucial speech he made there," Pikayev said.

He said the Czech Republic is a country that feels pressure from its big neighbours and therefore it is interested in having good relations with the USA and in the U.S. presence in Europe.

However, the developments around the radar "have worsened rather than improved Czech-US relations" and "the Czech Republic, with its internal political disputes, has not presented itself as a reliable partner of Washington," Pikayev said.

Next time the Czechs should not accept such controversial commitments. They should rather support the U.S. in Afghanistan, which is Obama's priority, Pikayev said.

At a press conference earlier today, Pikayev said that Washington's changing position on missile defence has taught Prague and Warsaw how precarious it is for countries to base their policy on "negative agenda."

According to Pikayev, the U.S. radar project was not only aimed against a not-existing Iranian threat and in fact against Russia, but it was to help split the EU. The Czechs and Poles were to play the role of the Trojan horse," Pikayev asserted.

By giving up the plan, initiated by the previous George Bush administration, and by showing efforts to improve Washington's relations with Moscow, Obama showed how quickly bilateral relations can change, Pikayev told the press conference.

He warned against the danger of a possible installation of US units in Poland in compensation for the scrapping of the missile defence plan.

Pikayev said that not only US anti-aircraft defence systems Patriot are involved. Within the discussion about the new strategic plan of NATO, the Poles reportedly also demand security guarantees resting in the transfer of U.S. tactical nuclear weapons from Germany to Poland, Pikayev said.

He said this has been only mentioned by experts and no official statements have been made in this respect for now. However, if this were true, the situation in the sensitive central European region might escalate again, he said.

It is important for the possible "compensation" measures not to violate the Russia-NATO agreement from 1997 in which NATO pledged not to install nuclear weapons or significant conventional forces contingents on the territory of the new NATO states," Pikayev pointed out.

UPI: MiG probe undercuts Russia's arms push
Published: Sept. 21, 2009 at 6:34 PM

MOSCOW, Sept. 21 (UPI) -- Russia says it is investigating a claim by Algeria that Moscow sold it sub-standard MiG-29 jets, an allegation that could undermine Russia's drive to boost military exports in a bid to reverse the decline of its once-mighty defense industry.

In February 2008, the Algerians returned the first 15 of 34 MiG-29 variants delivered in May 2007 under a $1.3 billion contract. They refused to accept the remaining 19 and suspended payments to Russia in October 2007.

The contract signed with Rosoboronexport, Russia's state-owned arms export agency, covered 28 upgraded MiG-29 SMT variants and six MiG-29 UBT training aircraft.

The contract was part of an $8 billion arms package signed in March 2006 when Russian President Vladimir Putin visited Algeria. In return, Moscow agreed to write off a debt of $7.4 billion that Algeria had run up before the 1991 collapse of the Soviet Union.

The return of the MiGs, which Algiers deemed to be of "inferior quality," was a slap in the face for Moscow at a time when it was making an all-out effort to boost military exports, particularly aircraft and big-ticket systems.

Some Russian analysts said the collapse of the Algerian contract underlined the steady decline of the federation's arms industry in recent years.

This was due in large part to the sharp reduction of orders by Russia's armed forces, much reduced in strength from its peak during the Cold War and by the massive budget cuts that followed the collapse of communism.

Moscow must secure large export orders for its weapons systems to ensure that production lines can be kept running to provide equipment for its heavily downsized military, and to fund research and development of new weapons.

Western analysts say it is difficult to envisage how Moscow will be able to sustain a major improvement in its arms exports because of the reputation for substandard products that the defense industry has acquired over the years.

From the 1970s on, the arms that the Soviet Union shipped to its client states in the Third World were so plagued with problems that even the Russians called them "monkey models."

The Russians now appear to be seeking to save face and limit the damage to their export drive.

Russian state prosecutors announced Sept. 18 they were investigating the suppliers of the alleged substandard parts. The prosecutors said a firm called ATK AviaRemSnab made a deal worth $14.3 million with MiG to supply spare parts for the aircraft.

"But it was established … the parts for the aircraft to be supplied to Algeria's Defense Ministry were used ones, made in the 1980s-1990 while the accompanying documents registered them as new ones," the Prosecutor-General's Investigative Committee said in a statement.

Russia's arms exports have increased in recent years, and reached $7.5 billion in 2007, a post-Soviet record. But that may not last. Algeria is not the only client to have had trouble with Russian purchases.

India, one of Russia's biggest foreign clients, is locked in a dispute with Moscow over a contract to refurbish the Soviet-era aircraft carrier Admiral Gorshkov for the expanding Indian navy at the Severodvinsk yards in northern Russia.

The project is years behind schedule because of bitter wrangling over the cost of upgrading the 45,000-ton Kiev-class carrier.

New Delhi signed a $750 million contract in 2004, with completion scheduled for 2008.

Moscow then said it had underestimated the scale of the project and demanded another $1.2 billion for work that should keep the vessel in service until 2042-45.

A new agreement is expected in October, with delivery to the Indian navy scheduled for 2012.

Independent Online: New Russian nuclear plant worries residents
September 22 2009 at 07:54AM

Russia's plans to build a nuclear power plant in its Baltic territory of Kaliningrad, hemmed in between Poland and Lithuania, has local residents and environmentalists worried.

Russian state energy corporation Rosatom announced plans last year to build a 1,200-megawatt nuclear plant near Sovetsk by 2016. The site is just 20 kilometres (12 miles) from Lithuania's border.

But memories of the world's worst nuclear accident at Chernobyl in 1986 in what is now Ukraine has convinced residents like Lyudmila Litvinova and others who went to a meeting with local officials that the risk is too high.

"Why would we want to succumb to a radiation risk here in Russia?," Litvinova, 52, told AFP.

"Nuclear power plants don't just explode, they also generate a small amount of radioactivity that could be very harmful to the population," Alexandra Koroleva, co-chairwoman of the environment group Ecodefence, told AFP.

A recent survey by the Kaliningrad Express newspaper showed 43 percent of residents oppose the nuclear plant, 26 percent support it but had safety concerns, while 19 percent gave full support.

Beyond safety concerns, opponents also question why Kaliningrad needs a plant at all.

Koroleva said he group believed the region would not need a nuclear power plant for 15 years.

A new gas-fired, 900-megawatt plant is due online in Kaliningrad by 2010. Kaliningrad deputy governor Yuri Shamilov told a public meeting that its output would be "just enough to meet the needs of the region today." The plant is similar in design to an upgraded facility west of Saint Petersburg in Russia, according to Rosatom spokesman Igor Konyshev.

Rosatom wants to supply Kaliningrad and also surrounding European Union nations however. "Selling energy abroad will allow us to keep the energy costs low for domestic consumption," Konyshev added.

The project is part of what appears to be a new regional nuclear race.

"It's amazing to witness the shift in the debate since Chernobyl. Now there's a big revival in nuclear power," Nils Muiznieks, a University of Latvia professor focused on Russia and its ties with its EU neighbours, told AFP.

For Russia, an energy giant, the project helps diversify its power exports beyond natural gas, Muiznieks said.

The Baltic states and Poland have nuclear power plans to reduce reliance on Russian energy, he said.

Poland plans to build its first nuclear plant by 2020. Lithuania is working with Estonia, Latvia and Poland to replace an ageing Chernobyl-type plant near its eastern town of Ignalina. Vilnius pledged to close the existing facility at the end of this year under its 2004 EU entry deal.

The original target for opening the new 3 200-megawatt plant was 2015, but experts suggest 2020 is more realistic.

Ignalina generates three quarters of Lithuania's power and a plant in Kaliningrad could plug the energy gap once it is switched off. But Russia's energy dominance raises jitters in Vilnius which has rocky relations with its former Soviet-era master.

Ignalina currently supplies a third of Kaliningrad's electricity.

Belarus is also planning a plant, with the first power unit due online in 2016 and the second in 2018.

In Kaliningrad, Rosatom is offering a stake of up to 49 percent to foreign investors in the future plant. It signed an agreement with Kaliningrad's regional administration in 2008 and is expected to apply for a construction licence in October. – AFP

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