Russia: Other Points of View

Response To Washington Post article 'Gas Issue Points to Ukraine's Failures'

Washington Post, January 19, 2009

RMW analysis by Russia: Other Points of View

Philip Pan deserves credit for getting past his editors with an article that at least begins to look at the Kiev’s political interests standing behind the 2009 gas crisis.  The Washington Post article reviewed below, not surprisingly only goes part of the way in delving into the politics of the Ukrainian government’s sly gas dealings with Russia. 

It omits the point that it was Yushchenko and his team that scuttled the agreement and prolonged the dispute because they sought to maintain the corrupt middleman in the Russian-Ukrainian gas trade, RosUkrEnergo, which Russian Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko wrote out of those relations in a preliminary agreement signed in October 2008.  Thus, the article ignores the real political issue and source of the problem. It instead focuses cryptically on the “corrupting role” Russia has ostensibly played in Ukrainian politics by selling gas to Kiev at less than market.

To access the full version of the analysis, please click here Download GH_Pan_Tymoshenko.Jan09

Experts Examine Russian Economy in Global Context

www.usrussiatrade.org

For those who may have missed yesterday's Carnegie event on Russia's economy featuring Clifford Gaddy of Brookings and Barry Ickes of Pennsylvania State University, we wanted to share some highlights:

Although the event was initially titled "Russia's Economic Meltdown," Gaddy and Ickes focused on how Russia's economic policies under Putin have faired in the global context and pointed to potential underlying strengths in the Russian economy.  They argued that the large drop in the Russian stock market in recent months is a sign not of a failing economy, but of an end to the oil price bubble.  Interestingly, they noted that the Russian Trading System (RTS) has now reverted to a level last seen in 2003, when the Russian economy was in an upswing.  Therefore, they suggested that Russia is in comparatively better standing in the current crisis than it was during the economic collapse in 1998.

How Did Russia Rebuild Itself? Sorry, But You're Wrong.

By Stephen Kotkin

Mrt. Kotkin, a professor of history at Princeton, is the author of Armageddon Averted: The Soviet Collapse, 1970-2000 (paperback Oxford University Press, 2008).

Which large country’s global integration over the past two decades has radically transformed the world economy and geopolitics?  Which large country is a defensive dictatorship that persecutes any sign of opposition?  If you answered “China” to the first question, and “Russia” to the second, you would be in lock step with the prevalent view in America.  Of course, if you answered “Russia” to the first question, and “China” to the second, you would also be right.  Both countries are authoritarian, and both have globalized, with far-reaching consequences.  But the story of China and globalization is well told in scores of books, and has reshaped the teaching of the history of China.  The story of Russia and globalization has largely escaped the attention of analysts and historians.  This is a challenge I attempted to meet, at least partially, in an updated edition of Armageddon Averted: the Soviet Collapse, 1970-2000 (Oxford), which contains a new chapter covering Russia during the years 2000-2008.  That’s the period when the prolonged collapse finally ended, and Russia enjoyed a spectacular revival.

ALTERNATIVE SCENARIOS FOR THE MARKELOV MURDER: Going Beyond the Mainstream Media’s Agenda

By Gordon M. Hahn

On January 19, civil rights lawyer Stanislav Markelov and Novaya gazeta journalist Anastasia Buburova were gunned down in broad daylight in the center of Moscow.  Mr. Markelov leaves behind two children two-years and four-years old.  Ms. Buburova does not appear to have been a target; she may just have been in the wrong place at the wrong time.

It was expected that U.S. mainstream media will use this tragedy for political purposes, to blame Russian leadership for these murders without considering the evidence or the alternative scenarios.

Currency, Equities, Economy – Slip Sliding Away

by Chris Weafer

•    Russian equities are now trading at a forward P.E. of 3.0 times. That is by far the cheapest amongst major emerging markets. This is a great entry point for traders looking for a bear market rally and investors looking to build a long-term portfolio. Such cheap valuations cover the risk of earnings downgrades and the timeline uncertainty.

•    Currency stability will be key to the start of a rally and Central Bank, after last week’s action, is now a lot closer to finding a more supportable level for the ruble.

•    Sberbank will report today and results are expected to be better than VTB presented last week. Both bank shares fell almost 40% over the past five days. Sberbank, the safer of the two, is trading at a very low price to book of 0.3 times for 2009. Polyus and Polymetal are also likely to feature early this week as the price of gold and silver rises along with global financial market uncertainty. Nickel’s 12% rally last week is positive for Norilsk, albeit worries over shareholding and possible minority investor dilution is the dominant driver.

Court Rules for Rights Group

By Galina Stolyarova

from The St. Petersburg Times

The Dzerzhinsky District Court on Tuesday ruled in favor of the Memorial human rights group and declared the Dec. 4 police raid on the organization’s local headquarters at 23 Ulitsa Rubinshteina illegitimate.

Response to Eurasia Daily Monitor article Russia’s Gas Disinformation Game

JF Eurasia Daily Monitor, January 13, 2009

RMW analysis by Russia: Other Points of View

The Jamestown Foundation’s (JF) Eurasia Daily Monitor moves beyond subtle propaganda to an outright disinformation campaign in “Russia’s Gas Disinformation Game.”  A pillar of JF’s campaign is to use “former KGB agent as often as possible, eve where facts of a person’s alleged former KGB ties are pure speculation or in dispute. In this case it is GazProm deputy, CEO Aleksandr Medvedev.  JF ignores the fact that every former Soviet republic has former KGB people in top government and business positions. The article ineffectively pokes holes in Russian claims, while ignoring the inconsistencies coming from the Ukrainian side in the Great Gas Dispute of 2009.

To access the full version of the analysis, please click here Download GH_GasJamestown

Russian Federation Weekly SITREP

by Patrick Armstrong

Gas Wars. On Saturday, Prime Ministers Tymoshenko and Putin met in Moscow and fairly quickly came to agreement. For this year, Naftohaz will pay European prices less 20% with the transit fees remaining as previously agreed. For next and subsequent years it will be full European prices and full European transit fees. In short, an agreement not hugely different from what President Yushchenko walked out on last month and fully in line with the Tymoshenko-Putin agreement of three months ago. There is one significant difference – but always implied by Gazprom – which is that the “European price” is linked to the price of oil.

Gas Wars: Who Won, Who Lost?

by Chris Weafer

Two new gas deals have been signed by the representatives of Russia and Ukraine and, this morning, gas exports to Europe via the Ukraine pipeline have resumed. The new contracts will run for ten years. Following one last year of discount in 2009, the price at which Ukraine buys gas from Russia and also the price at which it charges for transit of exports to Europe, will move up to the European level.

In a conference call earlier today, the Deputy CEO of Gazprom, Alexander Medvedev made clear that Russia is disappointed that the EU did not support the pipeline consortium plan and did not get more actively involved in the discussions. It certainly seemed that Russia was very keen to have the EU involved in some sort of guarantor role for the future. That is because even though the new gas supply and transit contracts run for ten years, and will be fully commercial from 2010, the big question mark is what happens if Ukraine again runs into arrears.

Rumbling Ruble

by Chris Weafer

•    Ruble is experiencing a period of more rapid weakening and, although now down 40% since mid July, looks more likely to hit 35.0 against the dollar. This period of weakness will likely last until end month or early February when the government decides on revised 2009 macro forecasts.

•    The price of oil is distorted with the unusually wide spread between the February and March WTI contracts. The former is trading almost $10 p/bbl lower than the latter. However, as the OPEC oil market report showed, the consumption trend is still lower.

•    The gas summit in Moscow will be crucial for ending the dispute. Russia is clearly hoping that the EU will have to get involved as a guarantor of any deal.