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Thursday, May 29, 2008

Russia to sue Swiss Noga for $1.6 mln over French asset seizure

MOSCOW, May 28 (RIA Novosti) - The Russian government will sue Swiss trader Noga for 1 million euros ($1.6 million) following the seizure of Russian assets in France, the Finance Ministry said on Wednesday. The French accounts of Russian organizations including Russia's Central Bank and news agency RIA Novosti were frozen in January over a 49-million euro ($75 million) claim filed by Noga for outstanding debts under barter oil deals struck with Russia's government in the early 1990s. A French court ruled in early May that a Russian Central Bank account held with France's Calyon bank, which was frozen in January following a Noga suit, should be unfrozen. The decision was followed by a court ruling in Paris on May 16 unblocking RIA Novosti's account in France. The court also ordered the Swiss company to pay 15,000 euros ($23,000) to the Russian news agency. The Russian government filed a compensation claim with a French court on Tuesday, saying the actions by Noga damaged Russia's reputation and economic interests. Asked whether it was possible to obtain the compensation from the bankrupt company Noga, Russian Deputy Finance Minister Dmitry Pankin answered positively, adding that the claim involved French justice bodies as well. Since 1993, Noga has repeatedly applied for the seizure of Russian property abroad, including a sailing vessel and military aircraft that were taking part in exhibitions and shows. In 2005 it seized a collection of paintings owned by the Pushkin Fine Arts Museum in an attempt to secure the repayment of debts.

Tuesday, May 27, 2008

Serious division of the Arctic begins

05/26/2008 - MOSCOW (RIA Novosti political commentator Andrei Fedyashin) - On May 27-29 Denmark plays host to its main Arctic neighbors at the Arctic Ocean Conference held in the small town of Illulissat in Greenland. In addition to the hosts (Denmark/Greenland), it will be attended by the foreign ministers of Russia, the United States, Canada and Norway. The declared theme of the meeting is "strengthening cooperation among Arctic states in managing the Arctic Ocean." The Danes hope that the conference will adopt a "political declaration... on the main problems of the future orientation and management of the ocean." In reality, before strengthening cooperation we need to legally define the interests of the Arctic Ocean states. The ministerial meeting in Illulissat is the first serious step in this direction. Leaving diplomatic niceties aside, it will be about dividing up the Arctic, or rather, the continental shelf. There is a consensus that the time has come to legitimize the interests of the Arctic countries. However, so far the approach to division, its legal principles and even whether the Arctic should belong to the Arctic countries or to the world in general are questions that have yet to be answered. Antarctica on the opposite end of the globe is regulated by international treaties. But the Arctic is still a "no man's land," pieces of which tend to be grabbed from time to time. It is clear from the composition of the Illulissat meeting that the ministers will not come up with any earth-shattering decisions. The chosen participants raised eyebrows even before the meeting because the Danes failed to invite Iceland, Sweden and Finland. And yet these countries, along with the participants, are members of the Arctic Council, an intergovernmental organization set up with the express purpose of discussing the problems of the Northern region. Faced with complaints from those who have been left out, Denmark promised that all the other council members would receive detailed reports on the results of the Greenland meeting. "We have been assured," said Urdur Gunnarsdottir, a spokesman for the Icelandic Foreign Ministry, "that it would be a one-time meeting and not an attempt to create an alternative to the Arctic Council." The "five" would hardly be able to create such an alternative (without causing a row), especially if one considers that the Arctic Council is becoming more and more popular as the ice melts revealing untold natural riches. Already its observers include Italy, France, Germany, Holland, Britain, Poland and Spain. China joined the council as an observer late last year. Now it will send its only icebreaker, the Snow Dragon, to "explore" the icy waters every year. The Arctic "five," of course, cannot seize the entire region, but they can develop the general rules that all the other members of the "Arctic club" will have to follow. Russia, Canada, the United States, Denmark and Norway have claimed as their sovereign right everything that is on, over, in and under the Arctic Ocean. But the gaps between their visions of how to divide it are as wide as the difference between the tip of the iceberg and its real size. The status of the continental shelf is regulated by the 1958 Continental Shelf Conventions (without limits) and by the UN Law of the Sea Convention ("the marine constitution of the world") of 1982 (200-350 nautical miles from the territorial waters or a hundred miles from the depth of 2,500 meters). The Canadians have always favored (and Russia supported them until 2001) "the sectoral principle" that would draw borders from the tips of the national territories straight along the meridians until the North Pole. In such a set-up, the Arctic would be divided into very unequal parts like the tip of a water melon: Russia would get the biggest slice (about 5.8 million square kilometers), followed by Canada, Denmark (Greenland), Norway and finally the United States. Obviously, such an approach does not suit Washington. The Americans have not even ratified the 1982 Convention, and therefore can happily ignore all its limitations. They demand a territory stretching 600 nautical miles from Alaska to the Pole. The tip of the Earth would remain a no man's land of about 3 million square kilometers where everyone would be allowed to fish and mine. The Danes have their own, and strangest, approach of all. Copenhagen wants Arctic borders to run at an equal distance from the coasts of the claimant countries. Because Greenland is closest to the Pole it would have the Pole under the Danish plan. Denmark would get a slice almost as big as Canada's, and Russia would lose about 1.8 million square kilometers. The European Union backs Denmark because it would like to get an Arctic section with Denmark's help. Until 2001, Russia adhered to the "sectoral principle," but after it ratified the 1982 Convention in 1997, it agreed to its restrictions. A state can claim either 350 miles of the continental shelf, or 100 miles beyond the depth of 2,500 meters. Russia has opted for the latter variant, and is now trying to prove that the underwater Lomonosov Ridge is the continuation of the Siberian continental plate and that Russia is entitled to it. If we prove this, the North Pole will be Russia's. But proving this will be a lot harder than conquering the North Pole.

Is Putin Now Stronger Than Medvedev?

May 23, 2008 - Russia Profile - by Vladimir Frolov - The new government and the Kremlin lineup that were announced last week appear to have strengthened the role of Prime Minister Vladimir Putin and demonstrated President Dmitry Medvedev’s constraints in personnel policy, while diminishing the influence of some of the security services hardliners who opposed Medvedev’s elevation as Putin’s successor.
Putin transferred some of his presidential aides to the cabinet, including his powerful deputy Igor Sechin, while leaving some allies on Medvedev’s staff. Some prominent siloviki were removed from their posts, including Sechin’s ally Vladimir Ustinov as justice minister, Viktor Ivanov as presidential assistant, and Nikolay Patrushev as the Federal Security Services (FSB) director.
In order to enhance the role of his new cabinet, Putin brought some of his presidential aides with him: presidential administration head Sergey Sobyanin became a deputy premier and head of the cabinet's staff; presidential aide Igor Shuvalov became first deputy premier for economics; presidential administration deputy head Sechin became deputy premier for industry; and presidential protocol chief Igor Shchegolev became minister of communications and media.
These appointees were mostly Putin choices, and very few people close to Medvedev have been promoted to key government and presidential staff positions – Alexander Konovalov as the new justice minister, and Konstantin Chuichenko, a former Gazprom official, as Chief of the Presidential Auditing Department. The appointment of Igor Shuvalov as first deputy prime minister has also been attributed to Medvedev, who reportedly wanted Shuvalov as his Chief of Staff. However, Shuvalov has been a Putin loyalist, and was chosen by the latter to carry the heaviest load of duties, in order to relieve Putin of small managerial tasks.
Two important aspects stand out in this reshuffle.
One is that continuous constraints are placed on Medvedev in running the country. All important decisions continue to be made by Putin and his men. Putin even reorganized the Cabinet by setting up a narrow governing body – the Presidium--filled with his men, comprising the defense and the foreign ministers. This is a sign that Putin will continue to have a final say on national security issues. Medvedev would not even hold the weekly government meetings Putin used to chair every Monday. Medvedev’s role appears to be evolving; he is in search of a mission, while Putin continues to be where he has always been – in a commanding position of power.
The other important aspect is the nearly full annihilation of the siloviki camp within the Kremlin. Although the new Presidential Chief of Staff Sergey Naryshkin is a classmate of Putin from the KGB foreign intelligence school, he is more of an economic administrator than a security man. The removal of Igor Sechin and Victor Ivanov from the Kremlin (the latter became the chief of the Drug Enforcement Service), the retirement of former FSB Chief Nikolai Patrushev to an inconsequential position of the Secretary of the Security Council, as well as the removal of Vladimir Ustinov from the Justice Ministry, have left the siloviki without an operating platform and a leader to coalesce around. Sechin’s elevation to deputy prime minister having no control over the government staff has made him a publicly accountable official with a heavy portfolio. Putin and Medvedev appear to have decisively dealt with the feuding security clans, and signaled that the siloviki would no longer exercise much political influence.
Although the Russian stock market showed increasing confidence in the Putin-Medvedev Dream Team, growing by almost ten percent in one week, a few serious questions remain. How will the key decisions be made in the country? Why does Medvedev continue to exercise so little freedom of movement, while the spotlight remains on Putin, who seems to be relishing the role of the super powerful prime minister? Would the current constraints on Medvedev gradually be lifted, allowing him to take control of policy making, or would the current strange arrangement continue till the next presidential election in 2012? Would Medvedev bolt from the arrangement that makes him look like a figurehead president? Will the present power sharing arrangement between Putin and Medvedev help ensure stability and economic growth, or would it prove destabilizing and crippling for the country’s ability to make difficult decisions? How will the demotion of the siloviki affect both economic and foreign policy in Russia? What is the idea behind creating a separate Federal Agency for the CIS Affairs? Is Russia signaling that it no longer considers the CIS affairs “foreign”?

Russia Went to Law against Noga

May 27, 2008 - Kommersant - Russia’s government has filed a suit to a French court against Swiss Noga, seeking the compensation of material damage caused by illegal seizure of the RF assets in France, the RF Finance Ministry announced via the press release. Noga is expected to compensate for the damage caused to the Central Bank of Russia (CBR) and RIA Novosti news agency. Although the company was unable to seize the government’s assets, its actions were to the detriment of Russia’s reputation and economic interests, the ministry’s statement says without specifying the claimed amount. France froze the assets of CBR and RIA Novosti in January 2008 by demand of Noga, which alleged that those institutions were divisions of the RF government and therefore, its debtors. Russia currently owes 49 million euro to Noga. CBR and RIA Novosti contested that decision of French leadership in March, Russia promised to file a counterclaim against Noga in April, and the assets were finally released in May. Swiss Noga clinched deals for supplying goods to Russia in early 1990s. The contract was cancelled under the government’s demand and the company failed to prove the exact worth of the goods shipped to the country. The U.S. businessman Alexander Kogan bought out the government’s debt in 2006 and transferred it to the government afterwards. Russia owes nothing to Noga, he reiterated.

Monday, May 19, 2008

New U.S. Ambassador with a Past

Picture of John R. BeyrleMay 15, 2008 - Kommersant by Sergey Strokan - U.S. President George W. Bush has announced his decision to appoint John Beyrle the new ambassador to Russia. Beyrle had been ambassador to Bulgaria. The U.S. Senate has to confirm that appointment, but Beyrle could arrive in Moscow this summer. Beyrle’s appointment is tied to hopes of normalizing Russian-U.S. relations, which have been going through a difficult period. Beyrle may be considered a symbol of friendship. He speaks Russian well and has worked in Russia twice before. His father was the only American soldier to serve in the Soviet Army. Beyrle’s candidacy for ambassador to Russia became known from an official notice distributed by the White House on Tuesday. The presidential press service said in a statement that Beyrle has already worked in Russia twice. One of those times was between 2003 and 2005, when he was deputy chief of mission in Russia. U.S. Secretary of State Condoleezza Rice first mentioned a change of ambassadors in Moscow in January. It was announced at that time that current Ambassador William Burns would return to Washington to take the third-highest post in the State Department, under secretary of state for political affairs, replacing Nicholas Burns (no relation). American media reported at that time, citing State Department sources, that 54-year-old Beyrle was the main candidate for new ambassador to Russia. After his official nominations, according to established procedure, Beyrle has to be confirmed by the U.S. Senate. The U.S. embassy in Moscow was unable to suggest when Beyrle would arrive in Moscow. “The nomination and confirmation process depends on the working schedule of the U.S. Senate,” an embassy spokesman explained. Nonetheless, Kommersant has learned that Beyrle may be confirmed by the upper house of the Congress before its summer vacation in August. Beyrle will not have an easy time ahead of him in Moscow. He is coming to the Russian capital at one of the difficult periods in U.S.-Russian relations, one which current Ambassador Burns has called a period of great disappointment and serious doubts. A look at Beyrle’s record suggests, however, that he may be the type of ambassador with the best chance of normalizing relations. His previous experience in Russia, beginning in Soviet times, is particular evidence of that. Beyrle’s first assignment was in Moscow, shortly after beginning at the State Department in 1983. He was an eyewitness to Gorbachev’s perestroika as an embassy employee. His second appointment in Moscow came during the Putin era, when he worked as deputy chief of mission from 2003 to 2005. Beyrle was a presidential aide, director for Russia, Ukraine and Eurasia affairs of the U.S. National Security Council and acting special advisor on the former USSR to the Secretary of State during his time in Washington between assignments overseas. H speaks Russian, Bulgarian and Czech. The most curious and symbol fact from Beyrle’s biography is his father, Joseph Beyrle’s, ties to Russia. The elder Beyrle, who died in 2004 at the age of 82, is known as the only American who fought against the Nazis as a member of both the American and Soviet forces. His unique story was told in the 2002 book The Simple Sounds of Freedom: The True Story of the Only Soldier to Fight for Both America and the Soviet Union in World War II. Carl Levine, chairman of the Senate Foreign Affairs Committee, wrote the foreword to the book, which tells of Joseph Beyrle’s capture by the Nazis, his escape and his fight against Hitler with the Soviet Army. The American storm trooper was taken prisoner by the Germans in 1944. In January 1945, he escaped and fought for three weeks with a Soviet tank battalion. He was wounded and hospitalized and met Soviet Marshall Georgy Zhukov, who helped him return to the American forces, which thought that he was dead. In 1994, Joseph Beyrle was among a group of veterans who received medals from U.S. president Bill Clinton and Russian president Boris Yeltsin. Clinton said in his speech at that event that Beyrle’s son works in the White House as one of his advisors on Russia. The current appointment of John Beyrle in Moscow may be very timely as a symbol of Russian-American cooperation.

Thursday, May 08, 2008

Dmitry Medvedev: Gazprom Chairman Of Board Of Directors Became Russian President

08.05.2008 - [Neftegaz.RU] - In his first speech as head of state, newly inaugurated President Dmitry Medvedev vowed Wednesday to strengthen the rule of law and to bring as many Russians as possible into the middle class. As he addressed more than 2,000 VIP guests who had gathered in the Great Kremlin Palace for the pomp-filled inauguration ceremony, Medvedev also said he would rely in office on the continued support of his predecessor, Vladimir Putin. He carried through on his words less than three hours later by nominating Putin as prime minister, fulfilling a promise he made in December. The State Duma is expected to confirm Putin's nomination in a special session Thursday. Describing the eight years of Putin's presidency as a "strong foundation" for growth, Medvedev said his priorities would include defending civil rights and raising living standards. Returning to a theme from his election campaign, Medvedev promised to strengthen rule of law, which he said was necessary to stop corruption and encourage growth. A lawyer by training, Medvedev first used the term "legal nihilism" in a January speech that marked the beginning of his election campaign. Boosting the rule of law was also a favorite Kremlin theme during the early years of Putin's presidency, when Putin called for a "dictatorship of the law." Putin appeared somber throughout much of Wednesday's ceremony. State television showed him arriving in a small motorcade and walking alone through the Kremlin's Cathedral Square toward the Great Kremlin Palace. He summed up his legacy in a short farewell speech, which he gave immediately before Medvedev was sworn in. Putin's words were met with applause. Cameras cut to the outgoing first lady, Lyudmila Putina, who appeared gloomy and was looking down at the floor — a sharp contrast to the beaming expression on the face of Medvedev's wife, Svetlana, who was standing beside her.

Putin's gov't to foster Russian companies' investments abroad

RBC, 08.05.2008, Moscow 16:52:22.– Russia welcomes and will continue to foster Russian companies' investment activity abroad, as this helps Russia further integrate into the global economy, gain access to new technologies and modern governance standards, former Russian President Vladimir Putin told the State Duma in a speech preceding a vote on his appointment as Prime Minister. The PM candidate noted that, according to international experts, due to some politically motivated decisions Russian companies were prevented from investing some $50bn in certain industrialized economies. According to Putin's estimates, foreign capital investment in Russia is 10 times greater than that of Russian companies in other countries. The ex-President said that the government would set out to convince its partners that Russian investment is no worse than that of any other country. Meanwhile, if other countries should impose restrictions on Russian investment, Russia would also be forced to impose certain limitations. In this connection, Putin thanked deputies for adopting a law regulating foreign investment in industries of strategic importance.

U.S. promises cannot be trusted - Gorbachev

MOSCOW, May 7 (RIA Novosti) - Promises made by U.S. leaders cannot be trusted, former Soviet president Mikhail Gorbachev said in an interview with The Daily Telegraph published on Wednesday. "The Americans promised that NATO wouldn't move beyond the boundaries of Germany after the Cold War, but now half of central and eastern Europe are members, so what happened to their promises? It shows they cannot be trusted," he said in Paris. He also said that Washington's claims that a missile defense system it is planning to build in central Europe was aimed exclusively at countering the threat from so-called rogue states could not be believed either. The Pentagon's missile shield deployment plans continue to be a major bone of contention in relations between the U.S. and Russia. Moscow considers the project a threat to its national security. Gorbachev said the missile shield plan jeopardized world peace and could lead to a new Cold War. He continued that that "erecting elements of missile defense is taking the arms race to the next level. It is a very dangerous step". "I sometimes have a feeling that the United States is going to wage war against the entire world," the former Soviet leader said. "The United States cannot tolerate anyone acting independently. Every U.S. president has to have a war," he concluded, also saying that the world had squandered the chance in the decade after the Cold War to "build a new world order."

Wednesday, May 07, 2008

President Medvedev's economic challenges

05-07-2008 - MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - Russia's new president, Dmitry Medvedev, has inherited many economic problems, such as Russia's dependence on raw materials, monopolies, red tape and corruption, which are spurring prices and hindering economic development. On the other hand, he has a powerful instrument of tackling these problems, oil prices, which have soared to $120 per barrel. But Medvedev will also have to deal with other, no less formidable economic challenges.
Inflation Russia seems to have been developing quite well despite this chronic problem. However, the growth of prices accelerated last year and reached nearly 12% compared with 9% in 2006 and the planned 8.5% in 2007. The Russian government and Central Bank hope to stop inflation at 10% in 2008, although it has already reached 6.3% in the first four months. Experts predict yearend inflation at between 12% and 18%, which will discourage investment. Vladimir Putin pointed to a decrease in the fund for reforming the housing and utilities sector because of growing inflation, but the problem is much more serious. Investments are difficult to plan and make when prices keep rising. The outgoing government failed to draft a comprehensive anti-inflation program, but on May 6, its last day, it approved a schedule for a rapid growth of natural monopolies' tariffs until 2011, which will further stimulate inflation.
Commodities dependence Oil prices have soared to $120 per barrel and are unlikely to fall very low, even though economic growth in the United States and Europe has slowed down, reducing the demand for energy. Under a pessimistic scenario, the stagnation of the U.S. economy would last two years and spread to Europe, bringing oil prices down. However, the Russian government's economic advisers point to long-term macroeconomic stability in Russia, referring mainly to "safety bags" created mostly with export revenues, notably the Central Bank's international reserves and the reserve and national welfare funds. But if oil prices plummet, although this is highly unlikely, these safety bags will suffice only for a year or two. After that, the ruble will start losing weight, along with people's real incomes. Worse still, Russia's manufacturing sector will lose contracts because investment programs will be curtailed due to a fall in export revenues. In this event, the Russian economy will first overheat and then its growth will almost come to a standstill.
Banking crisis Unlike the hypothetical decline in oil prices, the likelihood of a banking crisis is growing quickly because Russia is linked to the global economy not only through commodities prices, but also through capital flows. In the past few fat years, Russian banks have taken out a huge amount of relatively cheap loans in the West. But the banking crisis currently underway there and subsequent increase in commercial interest on loans have greatly complicated Russian banks' ability to refinance debts. They are now denied loans abroad, or offered them at a high interest. Short-term loans are refinanced by the Central Bank's financial injections, but long-term refinancing will already become a serious problem this year. The Central Bank is helping banks by injecting money into the market, but it is also complicating their life by increasing its refinance rate. The Russian banking community has already proposed using the National Welfare Fund, even if partially, to solve the long-term refinancing problem.
Demographic problem The shortage of workforce is becoming a huge problem in Russia. Industries lack qualified personnel, and the number of agricultural workers is plummeting because people are moving to the cities. At the same time, prices of agricultural products have been growing rapidly, spurring inflation in 2007 and 2008. Russia can no longer offer cheap labor, which had been its advantage over industrialized countries, because people's incomes are growing. Therefore, a key task for the government is to train personnel and attract skilled labor migrants.
Modernization There is a remedy for the chronic disease of the Russian economy and a way to reply to global challenges. The country must invest petrodollars in new technologies and transportation infrastructure to ease its dependence on raw materials and stop the fear of a fall in oil prices. With high technologies and reliable infrastructure, Russia will be able to maintain high GDP growth rates even despite a relatively small, compared with Asian countries, but skilled and economically active population. Workers in high-tech sectors will receive high wages, but gains will be also immense because of high labor productivity. The successful development of high-tech sectors is impossible without increasing competition. Therefore, the government and state officials must give up their excessive economic functions and powers. Competition is the main anti-inflation tool in a market economy. Russia has created the initial conditions for attaining these goals. It has set up development institutions, such as the Russian Venture Company and the Bank for Development, and has been working for over a year on a concept of socio-economic development until 2020, which provides for innovation-driven progress. However, the development institutions are not yet working to capacity, and the outgoing government has not presented the final wording for the Concept 2020. Dmitry Medvedev's economic policy spotlights four I's - institutions, infrastructure, innovation and investment. This gives hope that the new president will see the challenges facing Russia better than the outgoing administration and government.

Tuesday, May 06, 2008

Putin signs bill on foreign capital's access to strategic assets

RBC, 05.05.2008, Moscow 13:47:16.– Russian President Vladimir Putin has signed a federal law setting out the procedure for foreign investment in enterprises considered as strategically important to ensure national security, the leader's press office reported. The bill was passed by the State Duma on April 2 and approved by the Federation Council on April 16. The law imposes restrictions on foreign investors or groups of individuals with the participation of foreign capital for carrying out transactions with the shares of strategically important enterprises with a view to acquiring control over such companies. The document stipulates that any deal, which would result in a foreign investor gaining more than 25 percent of voting shares in strategically important enterprises or over 5 percent of voting shares in companies operating fields of federal importance, would be subject to prior approval. An exception would be made for transactions concluded by foreign investors that already held, directly or indirectly, more than 50 percent of voting shares prior to the deal. The bill lists 42 types of activities that are considered to be of strategic importance.

Written interview with Gerhard Schroeder

05–05–2008 –  RIAN News – Written interview with Gerhard Schroeder, a former German chancellor and the current chairman of the Nord Stream shareholders' committee - RIA Novosti
Question: You are on good terms with Vladimir Putin. But what about Dmitry Medvedev? You must know him well - he was one of the heads of Gazprom.
Answer: I've known Medvedev for many years, and respect him as a man open and ready for discussion and guided by firm principles. As first deputy prime minister, he has shown that he is not only competent in economic and social policies, but is strong enough to implement his decisions. He has stated that consolidating a law-based state is one of his priorities. I'm sure that he will achieve this goal. There is no doubt that he has amassed enough experience in the world arena during his numerous meetings abroad. He will continue following the path that Russia chose as a stable and reliable partner in international politics and as a G8 member. There are complicated international tasks which can only be resolved by cooperating with Russia, such as the non-proliferation of weapons of mass destruction, settling conflicts in the Middle East, and climate change. I'm convinced that Russia will make a substantial contribution to the resolution of these problems under Medvedev's leadership.
Q: The West believes that Medvedev will be a more liberal president than Vladimir Putin. What do you think on this score? A: I don't see any political differences between Putin and Medvedev. Up until now they have jointly determined Russia's policies. The West often misinterprets Putin's policies and convictions. There is no doubt that Russia has become a more open, democratic, stable and successful state than it was before Putin became president. By and large, the new president will continue Putin's policy, as he has declared. This is the correct decision. In the last few years, Russia has been a stable factor, unlike the rest of the world. I'm sure that under Medvedev, Russia will remain stable.
Q: On the eve of the recent NATO summit in Bucharest, Germany, France and some other European countries were against Ukraine and Georgia immediately joining the NATO Membership Action Plan. Nevertheless, NATO said that its doors are open to everyone and promised to resume a discussion of this issue at the end of this year. What chance do Ukraine and Georgia have of joining NATO? Will Germany side with its NATO allies on this issue, or will it consider the position of Russia, which is resolutely against NATO's advance toward its borders? A: Many nations, including some NATO countries, are skeptical about Ukraine and Georgia's entry into NATO. I'm skeptical, too. Most people in Ukraine are against joining NATO. The domestic political situation in Georgia is uncertain; moreover, it has outstanding conflicts, which cannot be taken into NATO by any means. I'd advise refraining from any action that may be interpreted as encircling or deterring Russia. NATO membership for these countries would be such a step.
Q: Kosovo's unilateral declaration of independence has not yet received broad international support. Moreover, some countries, including Russia and a number of EU members, insist that the actions of the Kosovo authorities violate international law and UN Security Council Resolution 1244. Moscow believes that those who have strongly supported Kosovo's independence have failed to explain why its situation is unique. Do you believe that it is unique? Do you think it may trigger off a chain reaction in other regions with "frozen conflicts"? A: Indeed, having recognized Kosovo's independence, the majority of EU members and the United States have created many problems. I mean not only Kosovo but also the conflicts that you have mentioned. In my opinion, this step was wrong because it was premature. There were other options. I think that Serbia should be admitted to the EU, if it wants. Kosovo could join the EU as part of Serbia, or it could acquire independent statehood when Serbia becomes a member. In any event, this conflict cannot be resolved without the participation of pro-European forces from President Boris Tadic's team. However, Kosovo's recognition has weakened these forces, probably so much that we will soon have to deal with an isolated and unpredictable Kosovo. To be honest, it is a pity that the EU has followed the United States' lead on this issue. This decision was probably in America's favor, but it was not at all in Europe's interests.
Q: Some of Germany's neighbors are accusing it of being friends with Russia ‘over their heads' with regard to Nord Stream. Is Nord Stream really that dangerous for Poland, the Baltic nations and Sweden? They are going to all-out to impede its construction. Will it be put into operation as planned - the first line in 2011 and the second in 2012? A: Nord Stream is not directed against anyone. To the contrary, it will make a major contribution to Europe's reliable supply of natural gas. This is a Russian-European rather than a Russian-German project. This is why the European Union views Nord Stream as a project which is of interest to all of Europe. And this is why all EU members should support it. Needless to say, the gas pipeline's construction and operation will comply with all environmental and technical standards. We believe that accelerated construction and intensive dialogue with other countries will allow us to start gas supplies in 2011.
Q: What about the attitude of other countries toward Nord Stream's sea route? When will they finally agree to it? A: Responding to their wishes, we are currently studying alternative routes for Nord Stream. In order to avoid delays, we are trying to streamline construction and allocate enough time to getting the approval of other countries. We will harmonize our subsequent actions with all Baltic states during international consultations. This process will take several months. Concrete deadlines will depend on how constructive the efforts of all countries are.
Q: Why has the project become more expensive - 7.4 billion euros according to Gazprom's estimate?  Its price tag was previously about 6 billion euros. A: The previous estimate was too rough; it was made more than two years ago, when the project had just been launched. Now a number of important factors have been taken into account during its planning. A considerable part of the increase is explained by safety regulations and environmental considerations. The dynamics of world prices have also exerted considerable influence on Nord Stream's costs, as well as on all its relevant infrastructure projects.

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