What the Russian papers say

© Alex StefflerWhat the Russian papers say
What the Russian papers say - Sputnik International
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Russian-Ukrainian nuclear ties warm up / European renovation / Russian army says it needs trillions of rubles / Charity to be reevaluated / Oil price forecasts for 2011

Expert Online

Russian-Ukrainian nuclear ties warm up

Russian nuclear fuel producer TVEL, part of Rosatom state corporation, has signed a long-term contract with Ukraine's Energoatom to supply fresh nuclear fuel to nuclear power plants in Ukraine after 2010, the companies said in a statement.

The companies have declined to comment on the timeframe, amount and value of the supplies or the pricing policy adopted citing a signed confidentiality agreement. However, there are reports that Russia has granted a discount to its Ukrainian partner equal to Tvel's annual export income, about $1 billion, in exchange for removing U.S. Westinghouse from the Ukrainian market.

The 25-year contract between Tvel and Energoatom is the second major manifestation of the rapid warm-up in Russian Ukrainian nuclear relations after Moscow agreed to provide a $6bn loan to Ukraine to pay Rosatom for building the third and fourth generation units of the Khmelnitskaya nuclear power plant.

"Under the current circumstances, Russia is obviously the preferred partner for Ukraine in nuclear energy projects," explained Valentin Mezhevich, a member of the Russian parliament's upper house.

Still, Ukrainian politicians are not unanimous about the contract. Government officials announced that Russian nuclear fuel would cost 30% less than importing it from the United States. Opposition leaders argue that this contract binds Ukrainian President Viktor Yanukovych to Russia in future decision-making.

Ukrainian parliament member Oleksandr Gudyma is worried because Russia and Ukraine eventually decided against signing a contract to build a nuclear fuel plant in Ukraine. The 50-50 joint project was discussed at a recent meeting between the two presidents. "As a result, Ukraine has signed a contract to buy fuel but not a project to build a plant. Therefore, if a U.S. company wins the contract to build this plant, the agreement with Russia will become useless two years from now because Ukraine will be able to produce its own nuclear fuel," Gudyma explained.

Building a nuclear fuel plant in Ukraine amid the constant political instability there would be a third major step Russia could take toward integrating the two country's nuclear sectors.

According to Ukraine's new energy strategy, the country plans to double its nuclear power plants' total capacity from 13.8 GW to 29.5 GW. However, it is unclear how Ukraine plans to finance this kind of growth.

Rossiiskaya Gazeta

European renovation

European politicians want to boost economic growth prioritize innovation. This could also become a precious asset for Russia, said Ruslan Grinberg, director of the Russian Academy of Sciences' Institute of Economics.

Other analysts discussing the current eurozone crisis on Thursday agreed. Grinberg said this could mean the creation of a new organization modeled on COMECON, the Council for Mutual Economic Assistance that comprised Communist-bloc nations from 1949 to 1991.

Russia could propose a common modernization program utilizing the eurozone's resources, Grinberg told the paper adding that European politicians and economists seem willing to accept this proposal.

But the program needs to be based on mutually beneficial terms. Europe has underused production facilities and would like a market for its goods, Grinberg said.

On the other hand, the European Union can effectively commercialize various R&D projects, while Russia is rich in human resources and boasts a solid fundamental research program, Grinberg added. He said Russia could eventually become an associate member of the EU.

Russia's First Deputy Prime Minister Igor Shuvalov has repeatedly advocated the ambitious concept of a common economic space stretching from the Atlantic to the Pacific Ocean.

The crisis has exposed numerous weak spots in the EU, primarily the coexistence of two antipodes, namely, a common European Central Bank and currency unit, as well as independent national financial policies. This has facilitated major distortions, massive external debts and budget deficits.

Dr. Fabian Zuleeg, a senior policy analyst responsible for the Programme on Europe's Political Economy at the Brussels-based European Policy Center, said Europe was ready to correct its own mistakes.

In the long term, this could mean creating a mechanism to regulate financial and economic systems, Zuleeg explained. The EU plans to promote this idea at the meeting of G20 Finance Ministers and Central Bank Governors.

Russian economists say this does not mean that we will soon see a global economic government emerge. National feeling remains high despite countries' tremendous inter-dependence and mutual economic penetration, Grinberg said.

However, Europe faces other medium-term and long-term problems similar to those confronting Russia. European officials are primarily concerned about the extremely weak economic growth, Zuleeg admitted. The main driving force of economic growth includes innovation and education, Zuleeg said in conclusion.

Gazeta.ru

Russian army says it needs trillions of rubles

On Thursday, Lieutenant-General Oleg Frolov, acting chief of armaments of the Armed Forces, demanded a sharp increase in financing to re-equip the army. At parliamentary hearings on state policy in the defense industry, Frolov said allocations for armaments under the state program for 2011-2020 were insufficient. Instead of the 13 trillion rubles ($420.7 billion) allocated, he requested 36 trillion rubles ($1.1 trillion).

According to Frolov, the sums provided by the current program would only cover maintaining strategic nuclear forces at the required level and purchases of anti-aircraft defenses and aviation. At least 28 trillion rubles are needed if the ground forces are to be supplied with new weapons.

The government took a skeptical view of the Defense Ministry's requests. Vladislav Putilin, first deputy head of the Military Industrial Commission, said the Ministry failed to provide sufficient proof that the amounts allocated are inadequate.

Prime Minister Vladimir Putin had earlier said that nuclear deterrence, space defenses, and anti-aircraft weapons should be the country's military development priorities.

The Finance Ministry believes that the Defense Ministry has been allocated enough money. National defense spending in Russia's budget will rise from 2.6% in 2010 to 3.2% after 2013, Deputy Finance Minister Anton Siluanov said on Thursday.

Experts believe the Defense Ministry is simply not spending the money well enough, and that defense industry enterprises do not know how to work normally in a non-competitive environment.

Military expert Vladimir Yevseyev does not believe this threefold increase is realistic or necessary. "The Defense Ministry wants parity with the United States, which is not needed. If we want to go to war with NATO, then the budget should be increased, although perhaps a better option would be to cut the number of nuclear warheads, reach agreement with the United States on anti-missile defenses, cooperate in aviation, and spend money on conventional high-precision weapons," Yevseyev said.

The deputy head of the State Duma defense committee agrees: "We have a positive example in the purchase of the Mistral helicopter carrier from France. We should purchase fire arms and unmanned aerial vehicles abroad to break the deadlock and create competition for our defense and defense-related industries."

Moskovsky Komsomolets

Charity to be reevaluated

Life just got easier for charities and their beneficiaries: the government has at last submitted a bill to the State Duma promising tax breaks and "favorable conditions" for non-profit organizations and those providing welfare services.

Non-profit and private organizations providing welfare services under contracts with state or municipal authorities will no longer be liable for VAT (currently only state-owned and municipal institutions are exempt from VAT). The list of services includes: care for sick people, the disabled and the elderly, group classes with children, selection of guardians and custodians, retraining those officially registered as unemployed following job center recommendations.

Those who produce and distribute welfare advertising will also be exempt so long as they do so for free. But here some conditions apply, the main one being modesty: any mentions of sponsors in welfare advertising on TV or radio must not last more than three seconds or take up more than 7% of the airtime.

The government also decided not to tax incomes received by orphaned children from charitable or religious organizations. Those who receive free and non-refundable grants in education, culture, art and sports (with the exception of professional sport) will not have to pay individual income tax.

Donations for charitable purposes to non-profit and religious organizations will mean a tax exemption for the donor. But the exemption cannot exceed 25% of all taxable revenue.

The law is due to come into effect on January 1, 2011.

ForbesRussia.ru

Oil price forecasts for 2011

The Russian government has coordinated the basic indices for its 2011 budget. After lengthy debates, the ministries of economic development and finance decided that crude oil will cost $75 per barrel next year. Is this high or low?

This is $16 more than the previous target price of $59, but still a very conservative estimate. A Forbes survey of the forecasts made by major energy market analysts shows that they are much more optimistic than the Russian government.

Projections are given for West Texas Intermediate (WTI), the standard measure of U.S. oil prices, with the exception of the UAE National Bureau of Statistics.

1. Goldman Sachs: Over $100 per barrel

In spring 2008, Goldman Sachs analysts predicted that oil prices would soar to $150-$200 per barrel, but they plunged to $36-$40 soon afterward. However, they again believe in oil price growth.

2. Morgan Stanley: $100 per barrel

The investment bank expects oil prices to grow due to increased demand in China, India, Brazil and other developing economies, according to its January report.

3. Canadian Imperial Bank of Commerce (CIBC): Over $85 per barrel

The Canadian media cite local bankers as saying that oil price will grow in 2011 although the industrialized countries will take time getting out of the crisis. They say oil prices will be boosted by China's demand.

4. U.S. Energy Information Administration (EIA): $85.5 per barrel

The EIA, a unit of the Department of Energy, said the average oil prices should grow in 2011, adding that this is only a tentative forecast because oil prices are fluctuating rapidly even within short periods of time.

5. The UAE National Bureau of Statistics: $82 per barrel

Statistics analysts in the United Arab Emirates say oil prices will fluctuate between $70 and $90 per barrel in 2010 and will be about $82 in 2011. UAE Minister of the Economy Sultan Bin Saeed Al Mansouri said he feels "comfortable" with an oil price of $80 per barrel.

***

A number of Russian analysts said the oil price of $75, on which the Russian budget is based, is not too high. If the forecasts of major fuel market analysts come true and the price exceeds that mark in 2011, Russia will have a safety net to protect it from possible turbulence in the oil market.

 

RIA Novosti is not responsible for the content of outside sources.

MOSCOW, June 4 (RIA Novosti)

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