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Tuesday, November 25, 2008

U.S. Global Trends report predicts gloomy future

11/24/2008 MOSCOW - (RIA Novosti political commentator Andrei Fedyashin) - The U.S. National Intelligence Council (NIC) published its new report "Global Trends 2025: A Transformed World." It is not a good prelude to President Barack Obama's inauguration on January 20. The report predicts a gloomy future for the United States, and the only scant consolation is that its predictions are for 2025 when neither Obama nor many other current leaders will be in power. The NIC comes up with these reports every four years. This report is the fourth since 1997, and the most dismal, at least for the United States. The report has some good news for Russia. The one negative for us is a reduction from the current 141 million people to 130 million in 2025, which is an open secret. Otherwise, we will continue to benefit from oil and gas, and even global warming. According to the report, by 2025 the European Union will not be able to diversify its energy imports and will still depend on Russian energy sources. By 2025, Europe's energy consumption will go up by 60%, and 57% of all gas reserves will be amassed in Russia, Iraq, and Qatar. Many of the current oil producers will lose their positions, and almost 40% of the world's oil will come from six countries: Russia, Saudi Arabia, Iran, Kuwait, the United Arab Emirates, and Iraq. For aggregate oil and gas reserves, there will be two great energy powers, Russia and Iran. Global warming will bring trouble, like floods and draughts, to some countries, whereas Russia will only gain from it. We will expand cultivated land, and have easier access to gas, oil, and other Arctic mineral resources. Russia will also gain from the opening of Arctic navigation. However, Russia may not be so lucky if it does not invest heavily in human resources, expand and diversify its economy (that is, if it does not kick its oil and gas habit), and integrate into the world markets. Our influence will not grow if oil prices do not exceed $50 to $70 per barrel. The report predicts that the United States will continue losing its influence. It will remain a powerful state in 2025, but will be less dominant. The same fate will befall the dollar. The void left from America's decline will be filled by Brazil, India, China, and the Korean Peninsular (apparently, by that time two Koreas will merge). The latter three are likely to form an association. The world will become multipolar, and Western models of economic liberalism and democracy will lose their appeal (which is already happening). The EU will lose its influence and become a "hobbled giant." Wars may break out because of limited resources, water, oil and gas... This sounds horrible. It would sound even worse if these reports were flawless. In the previous reports for 2010, 2015, and 2020, intelligence analysts made forecasts which contradict what they are writing now. They predicted the growth of the EU's role and influence, and the steady advance of Western economies by about 2% a year through 2010. These reports are not accurate forecasts but rather a reminder for U.S. leaders what will happen if they do not pursue this or that policy. They offer food for thought and encourage certain ideas. To see whether the NIC is objective in its reports, we should recall what it is. This is the number one think tank headed by the director of the U.S. National Intelligence Council, Michael McConnell, and conducts medium- and long-term strategic analysis. Its current chairman Thomas Fingar is his direct subordinate. The NIC was set up in 1979. The NIC submits its reports to all U.S. leaders. National Intelligence Estimates (NIE) is its main commodity. Most of them are classified, but there are always inspired leaks to the press. The council makes what it calls over-the-horizon analysis. Sometimes, it goes far beyond that for political reasons. The NIC, as is often the case with intelligence organizations set up for administrations, always deviates moderately from the party line. With time it dawns on them that they are expected to say what is required of them rather than make predictions. This makes the NIC's role most unrewarding. It is supposed to coordinate the analytical reports of all U.S. intelligence centers - the CIA, the Defense Intelligence Agency, the political intelligence of the Department of State, intelligence services of the army, air force, and navy, as well as of the border patrol, the departments of the Treasury and Energy, and finally, the FBI (counterintelligence). But here is the problem. All these services and departments are trying to take advantage of the NIC, trying to push presidents, departments, or Congress to make the "right" decisions. The NIE and analysis of intelligence information always lead to heated debates for this reason. They analyze any subject - from Russia or Israeli's nuclear weapons to the evaluation of potential consequences of a poor rice harvest in Asia. The NIC may produce several reports per year. The heads of the afore-mentioned departments are furious when they find out that their assessments did not make it to the NIE's final version. The same is happening with Global Trends.

Monday, November 24, 2008

China's Hu, Russia's Medvedev Discuss Crisis at APEC

Nov. 23, 2008 (Bloomberg by Rob Delaney) -- China's President Hu Jintao and Russian President Dmitry Medvedev pledged closer cooperation on international efforts to ease the global credit crisis, China's Foreign Ministry spokesman Liu Jianchao said. The two leaders, in a one-on-one meeting, also vowed to implement a strategy they agreed on during the G-20 meeting in Washington this month that involves energy supplies and supporting each other's economic and trade interests, Liu said in an interview today at the end of the Asia-Pacific Economic summit in Lima. The ``strategic action plan' is meant to be carried out from 2009 to 2012 as part of a ``good neighborly relations and peace' treaty that guides the bilateral relationship, Liu said. ``Hu and Medvedev approved this plan in Washington and now they will implement it,' Liu said. ``This action plan covers politics, economics and energy, though energy -- including natural gas -- is a key part of it.' Leaders of Pacific Rim nations including China and Russia promised today to ``act quickly and decisively' to resolve the global economic crisis. A worldwide slump has prompted central bankers and governments to cut lending rates and announce spending packages and tax cuts designed to sustain growth.
Oil, North Korea: OAO Gazprom Neft plans to send 1.2 million tons of oil through the Atasu-Alashankou pipeline to China next year, Interfax reported on Nov. 14, citing a company official. Gazprom Neft has an agreement with China National Petroleum Corp. to deliver the crude, Deputy General Director Anatoly Cherner said, according to the Moscow-based news service. The Russian producer is allowed to export 250,000 tons of oil through the link in the fourth quarter of this year, Interfax said. Gazprom Neft is the oil arm of Russia's natural-gas export monopoly, OAO Gazprom. Liu declined to comment further on energy supply agreements Hu and Medvedev agreed to. Both governments also agreed to push for progress in efforts to restrain North Korea's nuclear program through a six-nation dialogue. The six nations, including the U.S., Japan, South Korea and Russia, will meet in China on Dec. 8 for a new round of negotiations on North Korea's nuclear program, Secretary of State Condoleezza Rice told reporters returning from Peru with President George W. Bush aboard Air Force One. The U.S. is seeking a pledge from North Korea to dismantle its nuclear program and assurance that a verification program will be put in place. Earlier negotiations stalled when North Korea indicated Nov. 12 that international inspectors wouldn't be allowed to remove samples from its Yongbyon reactor, saying that it had never agreed to do so.

Russian finance guru dies at 51

Russian finance guru dies at 5121 November 2008 - Russia Today - Russia’s Former Vice-Premier and two times Finance Minister Boris Fedeorov has died on Thursday, November 20. Doctors from London’s Wellington clinic say the cause of death of the 51-year-old was from a stroke. Colleagues describe him as one of the brightest Russian economists and someone, whose contribution to the economic reforms in the country cannot be underestimated. Boris Fedorov was put into hospital over a month ago on October 13. He collapsed during a business trip to the English capital and since then had been in a coma. Several brain surgeries were performed to save the economist but they brought no result. Fedorov first became finance minister of Russia in 1990. He took an active part in the reforming of Russia’s economy, which switched from state-controlled to a free market after the collapse of Soviet Union in 1991. From 1991 – 1992 he worked for the European Bank for Reconstruction and Development and in 1992 became the director of the World Bank. He returned to the post of Finance Minister in 1993, but resigned in 1994. After that he started a business career and United Financial Group (UFG), an investment bank which was sold to Deutsche Bank in 2005. In 1995 Fedorov entered the Russian parliament. In 1998 he once again joined the government as Tax Minister and Deputy Prime Minister of Russia. He was also a member of various company boards, including Gazprom, Sberbank and Ingosstrakh.

Wednesday, November 19, 2008

World Bank lowers Russia's GDP growth outlook to 6% in 2008

MOSCOW, November 18 (RIA Novosti) - The World Bank has downgraded its forecast for Russian GDP growth to 6% from 6.8% in 2008 and to 3% from 6.5% in 2009 due to effects of the global financial crisis. "After a decade of high growth, the global financial crisis has affected Russia, posing a new challenge for macroeconomic policy. Having grown at an impressive 7% a year during 1999-2007 - and at an overheating 8% in the first half of 2008 - the Russian economy has started a gradual slowdown," the World Bank said in its Russian Economic Report. The Russian government's GDP growth forecast for 2008 remains unchanged at 7.8%. However, government officials have recently said the domestic economy will grow by 7-7.3% in 2008. The Finance Ministry and the Economic Development Ministry are expected to give their forecast of GDP growth for 2009 by December 1. Experts say Russia's GDP growth is likely to slow down to 3%-5% next year due to the financial crisis. The report also said unemployment in Russia was expected to rise moderately to 5.9% from 5.3% by the end of the year, reflecting losses in labor intensive sectors such as construction, trade and services, and also the financial sector. Inflation in Russia is expected to be at least 12% in 2009 compared with the government's forecast of 7.5-8.5%, the report said. "In 2009, reducing inflation below 12% will be difficult. This could be possible if the global financial crisis shows signs of easing by the end of that year," the report said. Russia's inflation in 2008 is expected to hit 13.5%, corresponding to the Russian government's projections, the report said. Net capital outflow from Russia could reach $50 billion in 2008, and double in 2009 as companies continue to repay foreign debts amid a lack of large foreign investment, the report said. Russia's Central Bank predicted in late October that net capital outflow from Russia could reach $20 billion in 2008, with net inflow into the country forecast at $20 billion in 2009.
weltun

Monday, November 17, 2008

Kasparov predicts short Medvedev presidency, mass protests

Kasparov predicts short Medvedev presidency, mass protestsMOSCOW, November 17 (RIA Novosti) - Russian opposition leader Garry Kasparov told a U.K. newspaper that he does not expect Dmitry Medvedev to last more than 18 months as president, and that the financial crisis will lead to mass protests. Discussing Medvedev's election as president earlier this year, the chess grandmaster told The Independent: "I don't like to call it an election: that gives the wrong impression. Barack Obama had 65 million voters. Medvedev had one." "I would be surprised if this regime lasts more than 18 months," he continued. "I don't know what form change will take. We just have to hope it won't be violent: this country has had enough violence. But the regime is pushing it towards that. Soon there will be hundreds of thousands of people on the streets." Kasparov leads the United Civil Front, part of The Other Russia, an umbrella group uniting various small opposition parties. He said that with Russia's economic downturn - the stock market has lost 70% of its value since May and the Central Bank's international reserves are falling by billions of dollars each week - the main support base of Prime Minister Vladimir Putin will decline. "The 15 per cent of people who make up this 'new middle class' - they are Putin's strongest support group - have had it good," he told the paper. "They could get credit, they could buy cars, maybe even an apartment, travel abroad. Now they are facing major problems. You can lose your job, you can lose your apartment because you cannot pay. They are used to a passive political mode, but they read the Internet and they see all these billions of dollars disappearing. Where does the money go? Into the hands of Putin's buddies. These people will learn quick political lessons." At a meeting of the World Association of Newspapers in June, Kasparov said he considers RIA Novosti to be a Kremlin mouthpiece, publishing only propaganda. The agency denied the allegation, noting that it had hosted 50 news conferences and other events involving fellow The Other Russia members. Kasparov was held by police in Moscow for five days after leading an opposition rally in the run-up to the parliamentary election, and pulled out of the presidential race the following month, saying the authorities had made it impossible for him to run.

G20 outcomes offer hope but little detail

G20 outcomes offer hope but little detail17 November 2008 - Russia Today - At the emergency summit in Washington, G20 leaders agreed to tighten regulations, clarify accounting rules and increase the transparency of the financial markets. But how to go about it remains unclear. The big bang many hoped for at the G20 summit didn’t happen. But that’s no reason to feel dissatisfied according to Russian President Dmitry Medvedev. “I think the results are quite positive. All the participating countries have demonstrated the will and the desire to overcome the crisis that perhaps has not reached its peak yet. That’s why we have to double our efforts.” The efforts will focus on “better identifying vulnerabilities” by improving transparency and disclosure, and restructuring the IMF and the World Bank. But when it comes to specific details, the leaders didn’t offer much. Evgeny Nadorshin, Chief Economist at Trust Bank says the action plan is too vague to be impressive: “Its really difficult to understand how that might work and how that might be implemented and how deep those people who will be implementing it are ready to go. But still there is space for hope, which a lot of investors lack recently.” And while the hopes for a brand new global financial order could not have been realized over a one-day meeting, the summit proved that the greater role of emerging economies like Russia is the new reality of the 21st century.

Oil Falls Below $50, MICEX Sputters

Market Watch - A short, sharp, shock - down11-14-2008 - Moscow Times - The price of Urals crude fell below $50 per barrel on Thursday for the first time since early 2007, sinking Russian stocks and putting additional pressure on the ruble as the government struggles to balance the budget. Meanwhile, confusion dominated the MICEX stock exchange, as an order from the government watchdog commanding a resumption in trading contradicted an announcement earlier by the exchange that it would stay closed until Monday. The MICEX Index fell as much as 17 percent before the halt, only to recoup some of the losses later in the day to close down 8 percent. Plunging oil prices and shaky investor confidence have led to Russian stocks shedding more than $1 trillion dollars during Dmitry Medvedev's presidency, investors said. The dollar-denominated RTS exchange said the capitalization of the stocks it handles has fallen more than $1 trillion to $385 billion since a market peak on May 19. "Things are as bad as they possibly could be: The Russian market no longer functions," said James Beadle, an asset manager at Pilgrim Asset Management, which invests in stocks and bonds. "The main reasons are obviously what is going on globally, particularly with commodity prices, and political issues within Russia," Beadle said. As capital flight and the global credit crunch have drained investor confidence, the bourses have responded with frequent trade suspensions to the consternation of many funds, which have difficulties reporting net asset value to their investors. The MICEX, the country's most liquid index, was halted from late Tuesday, and activity resumed Thursday only to be stopped again after 35 minutes. The exchange said Thursday that the suspension would last until Monday or an order from the markets watchdog, which then commanded a resumption after just one hour. Half an hour later, the MICEX announced a one-hour suspension, followed within moments by an order from the watchdog for trade to continue uninterrupted. "The decision was taken in order to synchronize the trade of stocks on Russian bourses," said a watchdog representative, referring to the dollar-denominated RTS, which remained open for most of Wednesday. The sharp fall on the MICEX was in part due to its playing catch-up with Wednesday's 12.5 percent sell-off on RTS, as well as with London-listed Russian companies, which lost 17.6 percent while the MICEX was closed. Rosneft, the country's biggest oil producer, led the decline as crude for December delivery traded near a 21-month low in New York. Urals blend crude traded at $48.80 to $48.90 a barrel, its lowest since January 2007. The government says its budget can be sustained on $50 oil next year, as it can resort to the use of gold and forex reserves. The Central Bank reported on Thursday a $9.2 billion drop in reserves, which are now down about $120 billion since their August peak, mainly on the back of heavy interventions to support the ruble.

Thursday, November 13, 2008

So Much for Secretary of State

// Moscow received William Burns, but will hold talks with Barack Obama only Moscow to conduct political negotiations with Barack Obama only
11-13-2008 - Kommersant by Mikhail Zygar - Moscow, seemingly, is not going to conduct political negotiations with Washington until Barack Obama substitutes for George Bush. Yesterday's visit of Under Secretary for Political Affairs William J. Burns to Moscow was a failure — news agencies cited Kremlin sources as saying that Bush's administration “tries to put new U.S. President in a stalemate” using the current negotiations. Meanwhile yesterday it became known that Dmitry Medvedev's meeting with Barack Obama in Washington this weekend will not take place. U.S. political analysts, interrogated by Kommersant, stated that the relations of the two Presidents are unlikely to be as warm as George Bush and Vladimir Putin had.
It is possible to shift the meeting: Yesterday a high-ranking Washington official Under Secretary for Political Affairs William J. Burns visited Moscow for the first time after the end of the war in Georgia. According to the U.S. embassy’s press attaché, David Sifkin, former U.S. ambassador to Russia William Burns was to meet with a number of Russian politicians: Foreign Minister Sergei Lavrov, Presidential Aide Sergey Prikhodko, Finance Minister Alexei Kudrin, the Government’s Deputy Chief of Staff Yury Ushakov, and Deputy Foreign Minister Sergey Ryabkov. According to Mr Sifkin, a new round of ABM negotiations, planned for December, was to be highlighted during talks.
As a matter of fact, this news was sensational — after all, the Russian government in a pointed manner refused to have any contacts with the outgoing American administration, preferring to postpone addressing the matters till Barack Obama’s inauguration. Therefore William Burns' arrival could testify that Moscow decided to abandon its hard line and become more emollient towards George Bush's team. However, Mr Burns received such a cold welcome that it showed that Russia still sticks to its policy. After the end of the negotiations Russian news agencies began reporting their failure referring to high-ranking sources in the Kremlin.
The Government’s Deputy Chief of Staff Yury Ushakov stated that “neither party wants this pause to be absolutely empty”, therefore, according to Mr Ushakov, Russia and the U.S. will hold negotiations about START and the economy in the near future. Mr Ushakov said nothing about the next round of ABM negotiations in December.
It is obvious that Moscow expects Barack Obama to be more compliant during talks about ABM. However, Stephen Sestanovich, the foreign relations expert of the American Council and the former adviser to U.S. State Secretary Madeleine Albright, told Kommersant that “both Barack Obama and John McCain supported the idea of an antimissile shield against Iran, but expressed doubts over the project’s technical practicability.” According to Mr Sestanovich, “ABM will be deployed only in case there is an obvious threat posed by Iran. Even if the Russian military officials continue arguing that a small number of interceptors are a mortal threat to Russia, few people will listen to them.”
Nevertheless, Dmitry Medvedev won’t be able to discuss this problem with his future counterpart in Washington. Despite Russian Foreign Minister Sergey Lavrov’s statement that such an informal meeting during the economic summit of the G20 in Washington is rather probable, Barack Obama decided to abstain from premature negotiations with his future partners. Yesterday head of his transition team, John Podesta, stated that the next U.S. President decided not to come to Washington these days at all, staying at home in Chicago.
A source of Kommersant in the Kremlin confirmed that Dmitry Medvedev will have bilateral meetings with George Bush, China’s President Hu Jintao, Britain’s Prime Minister Gordon Brown and German Chancellor Angela Merkel in Washington. Meanwhile, according to the interlocutor of Kommersant, during their recent telephone conversation last Saturday, Barack Obama and Dmitry Medvedev agreed to meet in the near future — however, obviously, it will happen already after the summit.
End of friendship: Vice President of the Heritage foundation, Kim Holmes, told Kommersant that it depends on Moscow whether Russian-American relations will change after Barack Obama’s inauguration. “I feel that confrontation with the USA is just what the Russian Government wants. It makes Vladimir Putin more popular at home, Russia appears a stronger player in the international arena, and Europeans are more fearful of it. If the Russian Government wants a confrontation, it will happen. In either case, it is impossible to say all the time that the U.S. is degrading and that Russia and China’s time has come, remaining a G8 member. Perhaps it no cold war, but it is not partnership any longer,” Mr Holmes considers.
Anyway, according to American political scientists, the warm relations, the U.S. and Russian Presidents tried to demonstrate every time they met, are in the past. Barack Obama is a much more reserved person than George Bush, and you can hardly expect him to quickly make friends with Dmitry Medvedev. “George Bush’s policy has been unintelligible. On the one hand, he invited Vladimir Putin to his ranch, called him his friend, and on the other hand, the U.S. lobbied for admitting Georgia to NATO, whereas Russia rebuffed it,” Kim Holmes told Kommersant. “If we have problems with Russia, it is pointless pretending that you see Putin's soul. It is necessary that someone tell him, “We are not friends any longer, and we are dissatisfied with what you do.”
John McCain’s defeat in the presidential election made the matter of excluding Russia from the G8 obsolete; however, American analysts believe that after the war in Georgia and the economic crisis the G8 will never be the same again. “I cannot imagine that Russia is excluded from the G8 or it is necessary to explain to Russia why it is not excluded. But it is possible to imagine that the Group of Eight will cease to exist at all. Most likely, its place will be taken by an extensive group of the world’s largest economies. Probably, there will be a smaller group of democracies within that group, and it won’t include Russia,” Stephen Sestanovich opines.
Evidently, such an organization already exists. It is the G20, gathering in Washington this weekend; apart from the G8, the new body includes Argentina, Brazil, Mexico, the Republic of South Africa, Turkey, Saudi Arabia, China, India, South Korea, Indonesia and Australia, as well as the EU. The Group of Seven can easily co-exist with the Group of 20. And Barack Obama is unlikely to insist on adding Russia to it.

WTO odyssey approaching final straight?

WTO odyssey approaching final straight?November 10, 2008 - Russia Today - Russian president Dmitry Medvedev is expected to announce this week that Russia is ready to settle the issue of its entry into the World Trade Organisation within weeks. It's understood he'll be raising the subject at this Friday's Russia-EU Summit in Nice. But it's unclear whether the current financial crisis could speed up Russia’s WTO accession or hold it back. When will Russia finally join the WTO? - that was the only question left unresolved as Russian WTO negotiator Maksim Medvedkov met with businesses to discuss progress on accession. “Russia’s economy will not die without WTO. We have alternative methods of securing our trade policy interests. At the same time we would like to be in and we will be in as soon as our partners will agree that we should join.” Russia has been in negotiations about joining the WTO since 1995. Its entry to the bloc has been delayed by a number of issues, including rules managing Russian state monopolies, export taxes, and agricultural subsidies. At the end of August Prime Minister Vladimir Putin said Russia may abandon some of the deals it had previously made in order to join the organization. Moscow has cut quotas for poultry imports and raised duties on imported cars. Evgenny Nadorshin, Chief Economist at Trust Bank, says Russia's anti-crisis measures and domestic market protectionism won't help the process, but the global financial crisis could do. “There is more space to compromise actually. Especially taking into account that our internal market is still strong. And as our internal market is attractive we can use it as kind of economic feature that may improve our bargaining position negotiating our new terms of WTO entry.” Russia is set on finalizing its entry into the WTO this year. Analysts say, its chances are slim. The next meeting of the working group will take place in Geneva on November 24.

Wednesday, November 12, 2008

Russia's net capital outflow hit $50 bln in October

MOSCOW, November 10, 2008 (RIA Novosti) - Net capital outflow from Russia totaled around $50 billion in October, Central Bank Chairman Sergei Ignatyev said on Monday. He said the Central Bank would release more exact figures in the near future. October's figure is an all-time high. Net capital outflow in September was $26 billion and about $7 billion in August. The Central Bank has warned that further outflow could affect the country's balance of payments. Billions of dollars have been pulled out of Russia by international investors since the global credit crisis hit in August, while lower oil prices have also reduced the flow of capital into the country.

Friday, November 07, 2008

Main points of Medvedev's state of the nation address

11/05/2008 - MOSCOW, November 5 (RIA Novosti) - Russian President Dmitry Medvedev delivered his first state of the nation address to both houses of parliament on Wednesday. His speech to the Russian parliament was broadcast on state television and became the longest-ever presidential address, lasting 1 hour and 25 minutes. In line with the Russian Constitution, the president annually addresses the Federal Assembly, comprising the Federation Council and State Duma, talking about the domestic situation and the key areas of Russia's foreign policy. The Russian president in his address:
- Georgia's military offensive on South Ossetia was a consequence of policies unilaterally followed by the U.S. administration
- Russia will push for reforms to global political and economic systems
- Russia will not give up its role in the Caucasus
- Political and economic changes in Russia will not violate political freedoms and private property
- Russia will fulfill its obligations to protect individuals' savings, pensions and social security
- Russia will establish a self-sufficient financial system in the near future
- pledged that the implementation of the country's strategic programs will continue on schedule
- the global credit crisis is far from over, and the government and business must consider this factor in their planning
- warned against attempts to ignite social and national strife amid the financial crisis
- proposed guaranteeing parliamentary seats for parties that win between 5% and 7% of the vote
- warned against delays in implementing the government's bailout measures
- proposed to abolish election deposits in Russia
- proposed drawing up amendments to ensure a rotation of party leaders
- said the Internet and digital TV guarantee freedom of speech
- proposed extending the presidential and parliamentary terms of office from the current four years to six and five years respectively
- proposed a gradual reduction in the number of voter signatures required for parliamentary polls
- said he would present a draft law reducing the time civil cases are considered by courts
- said the Constitution plays an important role in establishing Russia's democracy and is a guarantee of the country's resurgence
- urged a reduction in federal executive bodies in the regions
- suggested granting more power to parliament, placing the activities of the government under the supervision of the State Duma
- announced that 2010 will be the Year of the Teacher
- Russia will deploy short-range Iskander missiles in its exclave of Kaliningrad next to Poland in response to U.S. missile plans for Europe
- Russia has cancelled plans to take three missile regiments out of service in the central part of the country, in response to the U.S. missile shield plans for Europe
- Russia will not be drawn into an arms race, but will continue to ensure the security of its citizens
- hoped the new U.S. administration will seek better relations with Russia
- the ongoing global economic crisis is no reason to nationalize domestic industries and banks
- Russia has sent its proposals on reforming the global economic system to the G20 nations
- Russia should adopt legislation on establishing the country as a global financial center by the end of the year
- Russia will continue its efforts to settle the post-Soviet conflicts over Nagorny Karabakh and Transdnestr
- Russia will use electronic warfare to counteract the U.S. missile shield - urged a switch to the ruble in payments for gas and oil supplies

Tuesday, November 04, 2008

Russian Reserve Fund tops $134bn

11–01–2008 – RBC News – Russia’s Reserve Fund reached RUB 3.572 trillion, or $134.6bn, as of November 1, 2008, the Finance Ministry reported. The balances of the fund's foreign currency accounts stood at $64.64 billion, EUR 43.81 billion, and GBP 7.31 billion as of November 1. Since its creation, when the Reserve Fund was worth RUB 3.057 billion, it has increased 16.8 percent. In October, it was up 0.36 percent. Total return on the investment of the Reserve Fund’s assets, as expressed in dollars, amounted to $4.16 billion (RUB 110.36bn) in the period from January 30 to October 31, 2008, including $1.45 billion (RUB 38.50bn), EUR 1.59 billion (RUB 55.65bn), and GBP 370 million (RUB 16.22bn). Exchange rate difference from the revaluation of the balances of the fund’s foreign currency accounts in the period from January 30 to October 31, 2008 reached RUB 54.55 billion (approx. $2bn). The National Wealth Fund stood at RUB 1,667.48 billion, or $62.82bn, as of November 1, according to the Finance Ministry. Of this amount, RUB 170bn (approx. $6.27bn) is deposited with the Bank for Development and Foreign Economic Affairs (Vnesheconombank), including RUB 125 billion (approx. $4.6bn) until December 31, 2019, at an interest rate of 7 percent, and RUB 45 billion (approx. $1.7bn) until December 31, 2013, at an interest rate of 7 percent. In October, the fund added 35.7 percent from RUB 1,228.88 trillion (approx. $47.56bn) as of October 1. The National Wealth Fund was worth RUB 782.8bn (approx. $28.89bn) as of February 1, when it was established, and it has more than doubled since then. RUB 435.77 billion (approx. $16.14bn) of the federal budget’s oil and gas revenues was transferred to the National Wealth Fund in October 2008. As of November 1, the balances of the fund's accounts in the Central Bank stood at RUB 358.12 billion (approx. $13.26bn), $20.41 billion, EUR 14.07 billion, and GBP 2.38 billion; and RUB 170 billion (approx. $6.3bn) in Vnesheconombank. Total return on the investment of the National Wealth Fund’s assets, as expressed in dollars, amounted to $1.09 billion (RUB 28.81bn) in the period from January 30 to October 31, 2008, including $350 million (RUB 9.31bn), EUR 430 million (RUB 15.24bn), and GBP 100 million (RUB 4.26bn). Exchange rate difference from the revaluation of the balances of the fund’s foreign currency accounts in the period from January 30 to October 31, 2008 reached RUB 9.33 billion (approx. $345.56m).

U.S. elections unpredictable

11–01–2008 – RBC News – It is very hard to predict the outcome of the 2008 presidential election in the United States, chairman of the Federation Council’s foreign affairs committee Mikhail Margelov told journalists today. He pointed out that, although Republican candidate John McCain was lagging behind Democrat Barack Obama, he could still win the race. Everyone is talking about Obama’s lead, but these figures are just poll results, the Russian politician notes. “It is one thing when we look at polls, as many respondents cannot even tell one soldier from the other, but it is a whole different matter when people actually have to press an actual button and cast a vote in favor of one candidate,” Margelov said. He reiterated that there were precedents in U.S. history, for instance in governors’ elections, when the candidate had the lead during an election campaign, but lost in the elections. Furthermore, we should not forget that popular California Governor Arnold Schwarzenegger, who endorses Republican candidate John McCain, has encouraged Barack Obama to “start beefing up” and “put some meat on his ideas.” Evidently, most of affluent Americans are going to vote for McCain, the senator believes. “It is hard to forecast how the Jewish population will vote. They say that in terms of money, these people have just as much money as the Republicans do, but usually vote democratic. At the same time, influential Americans are scared of Obama’s economic program,” Margelov stated. According to the official, “the pitfall of Barack Obama’s campaign was buying up prime time on television.” During the crisis, the candidate should be a little more frugal and behave in the way most Americans do at the moment. “But McCain’s primary point is his army-style boldness and predictability, while his less experienced competitor may fail under the load of problems, as some experts say,” the official warned. Margelov stressed that he understood that “making forecasts is not the best thing to do, but the gap separating Obama and McCain is closing, and it is happening not in the middle of the campaign, but just prior to the Election Day.”

Russian-U.S. relations after the elections

U.S. Presidential Election 200810/29/2008 MOSCOW - RIA Novosti world affairs commentator Ivan Zakharchenko - Next week Americans will face a difficult choice - they will cast their ballots for the candidate, who, in their view, will ensure enough jobs in the country, protect their bank accounts, and bring a sense of normalcy back to the government after George Bush's two disastrous terms. Other countries are following the U.S. election campaign to find out how the world order will change in its aftermath. Let us then examine what outcome on the other side of the Atlantic would be beneficial to Russia and Russian-U.S. relations in general. Russia's foreign policy strategy, approved by President Dmitry Medvedev on July 12, is different from the previous one, issued eight years ago. Although its principles - a pragmatic and multi-vector approach, as well as advancement of national interests in a non-confrontational manner - remain the same, experts point out that the strategy's wording is not as emphatic as it was before: no fear, no illusions, and no euphoria. For this reason, Moscow's reaction to the U.S. election is likely to lack emotional coloring as well. No matter who triumphs in the U.S. election - Barack Obama (D-IL) or John McCain (R-AZ) - Russia's cooperation with the U.S. will be based on equal rights and mutual interests. Aware of possible risks, Moscow is ready to face any developments. The same holds true for Russian-U.S. relations. Even if the new U.S. administration prefers not to have any relations at all with Russia, Moscow is ready for it. One hopes, however, that the outlook is not so gloomy. In fact, the situation appears paradoxical. Since the end of the Cold War, Russia and the U.S. no longer regard each other as adversaries; on the other hand, they have not become friends either, a fact that is evident during George Bush's time in office. The two countries are becoming less dependent on each other in many aspects; Moscow can even afford to abstain from debates with Americans about issues they might be keen on. Obviously, taking strategic stability interests into consideration, one can say that Russia has been historically linked with the U.S. However, the foundations of these relations are gradually shattering, as experts have noted many times. When they finally collapse, there will be nothing left to bind the two states. Nevertheless, Russia is unlikely to abandon its efforts to keep the positive potential it has accumulated in its relations with the U.S. It should be, though, that Moscow will only make prudent, pragmatic and reciprocal moves. It is reciprocity that should become the basis of international relations, and only time will tell if it does. Many people are alarmed by McCain's anti-Russian statements, namely his support of Russia's exclusion from the G8. One might conclude that his triumph bodes ill for Russian-U.S. relations, but it is important to keep in mind that presidential candidates often say things that voters expect or want them to say, rather than what they really believe. After winning, such people may change their tone and attitude. Strange as it might seem, there is a popular assumption that John McCain's victory would benefit Russia more than Barack Obama's coming to power. The thing is, under George Bush, Moscow and Washington agreed to draft a new bilateral Strategic Offensive Reductions Treaty, and confirmed their commitments for the Nuclear Non-Proliferation Treaty. Russia and the U.S. launched talks about the U.S. plan to deploy AMD elements in Poland and the Czech Republic, which raised concerns in Moscow. Should Democrats come to power, it might be that the parties will need to rebuild contacts. Moreover, it may happen that Democrats will pick on Russia even more, accusing it of violating human rights and relegating matters of strategic importance. Even if the McCain administration's stance toward Russia turns out to be more negative and biased than it is now, Moscow will always have the opportunity to point to the agreements reached with their predecessors, and thus seek their complete implementation. The current voting will be held against the backdrop of a snowballing global financial crisis. Russia and the U.S. have already expressed their eagerness to jointly confront new challenges, including international terrorism, drug trafficking, and climate change. The financial crunch gives both countries an opportunity to combine efforts with other states. Collective measures will be discussed on November 15 at an emergency G8 summit in the Washington D.C. area, with other major economic powers invited. The common struggles may bring Russia and the new U.S. administration closer, no matter who moves into the White House.

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