RPT-UPDATE 2-Russia to sell $29 bln state assets on market

July 30, 2010 By Leave a Comment

MOSCOW, July 27 (Reuters) – Russia plans to sell $29 billion worth of assets on the open market, a senior government official said on Wednesday, allaying investors fears about the transparency of the biggest privatisation since the 1990s.

The planned asset sale is designed to fill budget holes that Russia is to battle for the next few years.

“We will sell significant stakes in state companies on the market. We plan to keep controlling stakes,” Finance Minister Alexei Kudrin told a press briefing ahead of a government meeting on Thursday, which will debate key budget parameters and privatisation plans.

“(Assets) will be valued publicly, in line with market prices and tenders will be open,” he said. “We are fully ruling out a situation when somebody sells something to someone at an artificially low price.”

He said the government wanted to earn around $10 billion next year from asset sales but did not name the companies that would be auctioned off. The government will meet on Thursday to approve draft budgets for 2011-2013 and asset sales.

If approved, the sale would become Russia’s most ambitious since President Boris Yeltsin’s era, when well-connected tycoons snapped up some of the biggest oil and metals firms at low prices.

Investors have applauded the plan to sell minority stakes in major state firms in the next three years but have said they are keen to see how transparent the process will be and whether foreigners will be allowed to bid.

The plan could help the Kremlin plug budget holes ahead of the 2012 presidential election, which will require the authorities to maintain high social spending to guarantee good approval ratings.

Sources told Reuters over the weekend the government wants to sell minority stakes in firms such as Russia’s biggest oil producer Rosneft (ROSN.MM), lender VTB (VTBR.MM) and oil pipeline monopoly Transneft (TRNF_p.MM). [ID:nLDE66P0S0]

The plan could offer the government an alternative to higher taxation in its battle to reduce budget deficits.

On Tuesday, Kudrin said Russia was unlikely to balance its budget deficit until 2015 and on Wednesday Prime Minister Vladimir Putin said Russia may not be able to reduce the deficit below 5 percent — or $80 billion — this year. [ID:nLDE66R1YA]

The plan ensures Russia will keep control of the firms in a clear signal the Kremlin is not moving away from the resource nationalism it has developed over the past decade of high commodity prices.

The sales plan would undergo a final review as part of budget debates on Sept 7, and then filed to parliament.

Speaking of taxes Kudrin said the government had approved a decision to increase mineral extraction taxes on gas producers by 61 percent from next year.

For a factbox on the proposed asset sales, please click on [ID:nLDE66P1DU]

(Reporting by Gleb Bryanski, writing by Dmitry Zhdannikov, Editing by Lidia Kelly, Ron Askew)

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FACTBOX – Twists and turns in Polish-Russian relations

April 8, 2010 By Leave a Comment

REUTERS – Russian Prime Minister Vladimir Putin and his Polish counterpart Donald Tusk attended a memorial service on Wednesday for 20,000 Polish officers killed by Soviet forces in 1940 and vowed to work towards better bilateral ties.

Below are key developments in Polish-Russian relations over the last 20 years:

* 1989 – Poland became the first Soviet satellite to overthrow communism, triggering the collapse of the Soviet Bloc and the communist regime in Russia itself.

* 1992 – Russian President Boris Yeltsin released secret clauses of the 1939 Molotov-Ribbentrop pact between Nazi Germany and the Soviet Union that showed they agreed to carved up Poland at the outbreak of World War Two. Two weeks after Adolf Hitler launched his ‘Blitzkrieg’ against Poland on Sept. 1, 1939, and Britain and France declared war on Germany, Soviet forces invaded eastern Poland.

– Yeltsin also gave Poland documents showing Soviet dictator Josef Stalin ordered the execution of thousands of Polish POWs at the Katyn forest in the western Soviet Union.

* 1993 – Yeltsin visited Poland and was feted by the hero of the Polish anti-communist struggle, President Lech Walesa. Walesa obtained Yeltsin’s declaration that Russia would not object to Polish NATO entry — which caused an outcry in Moscow. The Kremlin backtracked and launched a drive to warn the alliance against accepting its former satellites.

– Last Russian soldiers stationed on Polish soil since World War Two left.

* 1999 – Despite vehement Russian protests, NATO admitted Poland, Hungary and the Czech Republic.

* 2004 – Poland joined the European Union. President Aleksander Kwasniewski met Russian counterpart Vladimir Putin. Ties strained over Polish reluctance to allow Russian energy companies buy Polish peers.

– Kwasniewski infuriated Putin by leading the EU mediation in Ukraine following the rigged presidential election there in December 2004. A re-run resulted in victory for pro-Western candidate, Viktor Yushchenko.

* 2005 – Conservative Law and Justice led by brothers Lech and Jaroslaw Kaczynski won power in Poland, taking a sharply anti-Russian course. Moscow imposed a ban on Polish farm imports, including meat.

– In December, Russian gas monopoly Gazprom and its German partners agreed to build an undersea gas pipeline bypassing Poland. Radoslaw Sikorski, then defence minister, now foreign minister, compared the agreement to the Molotov-Ribbentrop Pact.

* 2007 – Poland declared it was ready to host a U.S. missile defence system on its soil, sparking a violent reaction from Putin.

– In May, Poland blocked talks on a new EU-Russia strategic partnership over the meat ban.

– In October, centre-right Civic Platform party won a parliamentary election, with its leader and future prime minister Donald Tusk promising to improve ties with Russia.

– In November, Poland lifted a veto on Russia’s talks to join the Organisation for Economic Cooperation and Development. Russia reciprocated by lifting ban on Polish meat imports.

* 2008 – Foreign Minister Sikorski met Russian counterpart Sergei Lavrov in January, who said Moscow would not put pressure on Warsaw over its readiness to host the U.S. missile shield.

* 2009 – Poland said it was unlikely to sign a gas deal with Russia during Putin’s visit to Warsaw. Attempts at a deal had failed in late July but talks continued.

* 2010 – President Lech Kaczynski criticised the centre-right government in January for prolonging gas negotiations with Russia and deepening Poland’s already-heavy reliance on Russian gas.

– In February, Poland approved a long-delayed gas deal with Russia ensuring higher deliveries until 2037, with the settlement still awaiting a final rubber stamp.

– Warsaw faced an annual shortfall of 2.5 billion cubic metres of gas as of 2010. The new accord with Russia’s Gazprom has been delayed repeatedly due to lengthy negotiations and a spat between the Russian gas giant and Poland’s gas monopoly, PGNiG.

– Poland imports about 65-70 percent of the 14 billion cubic metres of its annual gas consumption from Russia.

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NATO vs Serbia, a decade on: Could it have gone better?

March 18, 2009 By Leave a Comment

Brussels – After NATO bombed the then-Yugoslavia for 78 days in 1999 to force Serbian forces to pull out of Kosovo, the commanding US General Wesley Clark was asked how many targets were destroyed.

“Enough,” Clark said. Now, 10 years since it launched its aerial campaign against the Serbian military, NATO still gives no figures about the number of targets it destroyed.

There is also no NATO figure on the number of civilian casualties of the bombing, as only the political goal mattered: to stop the ethnic cleansing carried out by Slobodan Milosevic’s regime against the majority ethnic Albanian population in Kosovo.

“A just and necessary action” is how former (1999-2003) NATO secretary general George Robertson described NATO’s first war, which effectively involved the entire membership, then 19 countries.

The campaign was conducted by his predecessor, today the European Union’s chief diplomat, Javier Solana, as an intervention to prevent a humanitarian catastrophe. Already in late 1998, 300,000 Kosovo Albanians were on the run from Serbian forces.

“We were able to stop and reverse the worst ethnic cleansing … in Europe in the past half century,” Roberston said.

In Brussels’ NATO headquarters, the aerial war against Serbia – 38,000 flights, out of which 10,484 carried precision bombs – is considered an important success.

The population in Kosovo was protected and the road for its return home cleared with Milosevic’s capitulation. At the same time, contrary to what Milosevic had hoped for and expected, the alliance did not disintegrate and the front against him remained intact.

Most of all, a message was sent to Russia, where Boris Yeltsin was still president, that NATO was a military force to be taken seriously.

“Could it have been done better?” The question heads a page on NATO’s official website, acknowledging a series of issues that remain open.

One of them is whether the intervention was legal without a mandate from the United Nations Security Council. Another asks whether there was indeed a genocide to warrant an attack.

NATO chiefs allow themselves no doubts of their righteousness and often point that not a single Allied was killed in action. Critics, however, say that is so because only high-altitude missions were allowed, even if that lead to civilian casualties.

Officials in Brussels vehemently deny any disregard for civilian life, insisting that targets and weapons were carefully selected for each mission, with an aim to avoid unintended casualties and damage.

“Despite all this, it was inevitable that some mistakes would occur and that weapon systems would sometimes malfunction,” Robertson has acknowledged.

According to the international organization Human Rights Watch, 90 missions produced civilian casualties. But NATO shrugged that off, noting that figures amounts to less than 1 per cent of all sorties.

NATO heads also dismiss allegations of bias, pointing out that Serbs in Kosovo also enjoyed NATO protection, safe from vengeful attack of the Albanians.

Another unanswered question, now a decade old, is what finally forced Milosevic to capitulate?

NATO says it was in response to the increasing devastation of Serbia under the steadily increasing power of bombing attacks and the threat of a ground invasion. Others point to Yeltsin’s withdrawal of full political support, perceived in Belgrade as Russia’s betrayal.

Zbigniew Brzezinski, President Jimmy Carter’s security adviser, says that Yeltsin and Milosevic miscalculated with their plan, spoiled by NATO, to keep at least a part of Kosovo Serbian.

NATO plans no special occasions to mark the 10th anniversary of the war on Yugoslavia, which meanwhile disintegrated further when Montengro split from Serbia.

A year ago, Kosovo, which was under UN administration since Belgrade’s capitulation to NATO in June 1999, unilaterally declared independence from Serbia. (dpa)

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