People’s Daily: Chubais: Russia hopes for high-tech co-op with China

People’s Daily: Chubais: Russia hopes for high-tech co-op with China

11:14, February 04, 2010

Russia is closely following China's achievements in the high-tech sector, particularly in nanotechnology, said Anatoly Chubais, a former first deputy prime minister under late Russian president Boris Yeltsin.

Chubais hailed China's big investment in innovation and expressed the hope that Russia and China will reach consensus on cooperation projects.

Russia will improve its investment climate and provide unique financial services in a bid to attract foreign investment and cooperation projects, he told Xinhua while attending the Troika economic forum in Moscow.

Chubais said Russia's heavy dependence on energy is not standing in the way of building an innovative economy.

Chubais believed that the reliance on natural resources is not so harmful because many countries with distinctive raw materials are able to establish an innovative economy within 15 to 20 years.

He stressed that traditional oil and natural gas businesses should not be grounded in the pursuit of an innovative economy. On the contrary, special natural resources could become major driving forces in the process, he said.

Chubais admitted that Russia has lagged behind in fostering an innovative economy in recent years. However, given its enormous human capital and resources, Russia has a good chance of changing the status quo and nurturing a first-class innovative economy through technological innovation and increased investment in the transformation of science.

Talking about Russia's ongoing innovative projects, Chubais said Russian nanotechnology has more than 60 cooperation projects on the table, and some of them will be put into practice in the near future.

In particular, Russia is building its largest solar panel factory, he noted.

He added that dozens of new nanotechnology factories are being built with sponsorship from Russian Nanotechnology. The factories, which will work on national innovative projects, are expected to number more than 100 by 2015.

Russian Nanotechnology, a state-run company, was established in 2007 to oversee nanotechnology research and implement policies related to nanotechnology.

Last update - 06:22 04/02/2010

Haaretz: Moscow cancels Jewish Agency meet over presence of Putin adversary

The Jewish Agency canceled a board meeting planned for St. Petersburg, Russia, later this month, after Moscow yesterday told the Israeli embassy that it would not allow it to take place.

Agency sources attributed the diplomatic row to the presence on the board of businessman Leonid Nevzlin, who is a political enemy of Prime Minister Vladimir Putin.

The agency's board meets three times a year to determine policy. The meeting was scheduled to be in two and a half weeks in Russia, where agency chairman Natan Sharansky was born. It had been planned for months and was promoted as an historical event. It was to be attended by hundreds of Israeli and Jewish delegates from all over the world.

Sharansky announced officially that the St. Petersburg convention was canceled and would take place in Jerusalem instead. An agency spokesman said preparations took some three months and coordinated with the Israeli Foreign Ministry and the St. Petersburg governor.

In the last two weeks the agency and the Israeli embassy in Moscow received messages from Moscow objecting to the gathering. The official reason was that the agency, acting in Russia legally as a local NGO, could not hold an international conference.

An agency source said the Kremlin's real objection stems from Nevzlin's membership on the board. The Russian-born Nevzlin, who made his fortune as a high-ranking executive in the former Russian oil firm Yukos, settled in Israel six years ago after business partner Mikhail Khodorkovsky was arrested.

Nevzlin and other Yukos executives paid a heavy price for supporting some of Putin's political rivals, as Russia issued arrest warrants against them. Russia is seeking Nevzlin on allegations of attempted murder and corruption.

The Israeli Supreme Court has rejected the extradition requests, citing insufficient evidence.

"Obviously Nevzlin himself wouldn't have come to the meeting," an agency source said. "He wouldn't want to be arrested and end up like Mikhail Khodorkovsky in prison. But the fact that he's a member of the board is a red flag to the Russians."

A senior official blasted the agency yesterday for inviting hundreds of people to the event before making sure the Russian government would allow it to take place. The source said the agency's management was "amateurish."

"Someone probably didn't notice that Nevzlin's name appears on all the lists of governors' names passed on to the Russians. They should have known it would infuriate the Russians," the source said.

Agency officials also slammed the Foreign Ministry and especially Foreign Minister Avigdor Lieberman, who boasts of his close relations with the Russian administration.

Had they acted in time they could have avoided the embarrassment to the most active Israeli body operating in Russia, they said.

The Foreign Ministry and Lieberman's office refused to comment. Nevzlin's spokesman said, "we are not familiar with the case."

EU-Russiacentre: EU-Russian relations in January 2010

A few important issues dominated the EU-Russian relations agenda in January 2010: the Ukrainian elections and future gas transit, the beginning of the Spanish EU presidency, some progress in Russia’s support for the “South Stream” gas project and issues surrounding with European security.

In 2010, Ukraine faces a $10 billion deficit in servicing its $33 billion plus external debt, with projected deficits growing to $20 billion in 2012. The question is, whether Ukraine will have to be bailed out by its neighbour Russia, and what price Russia might ask for that level of assistance.

Whoever wins the elections on February 7, they will be a much more comfortable partner for Moscow than Yuschenko. The new president will be more Russia-friendly, will stop talking about NATO membership, or at least speaking about it in the near future and will consider extending the lease on the Russian Black Sea Naval base at Sebastopol. But this new president will not become a Russian puppet who will obey “orders” from Moscow. The new president will definitely continue the course which aims to strengthen Ukrainian sovereignty. It would appear that the vast majority of the Ukrainian political and economic elite will adhere to a policy of further integration with the European institutions. Russia is considered as a possible economic partner, but not as an example of a society to be followed as a model.

A key question is whether both countries will succeed in preventing “gas wars”, which have been so harmful for Europe. Although the two countries avoided a “gas war” this year, the underlying problems that caused previous gas conflicts remain unresolved. “Naftogaz Ukrainy”, the country’s heavily taxed national oil and gas company, will struggle to pay for its imports. Ukrainian industry, battered by the world economic crisis, will struggle to pay higher prices. And Russian, Gazprom will not be inclined to offer concessions. The IMF has estimated Naftogaz’s operational deficit at just under $3 billion. Without the fund’s acquiescence, Naftogaz could never have paid last year’s gas import bills of more than $6 billion. The Central Bank had shifted money from Ukraine’s foreign exchange reserves into Naftogaz’s accounts to make sure that no payments were missed.

This year, European gas prices will come down a little, following the price of oil. But if oil is about $70 per barrel, Ukraine’s gas imports will probably cost more than $9 billion. Where will the money come from to pay for them?

Viktor Yanukovych has already called for the January 2009 gas contract to be renegotiated. The “base price” used in the contract, which is supposed to reflect European border prices, appears to be about ten per cent higher than it should be. Last year, Prime Minister Vladimir Putin waived the penalties Ukraine owed Russia for missing payments and gas consumed. Might they be waived in future and, if they were, what would Russia demand in exchange? For Gazprom, discounted sales to Ukraine and Belarus (the latter is a member of the newly formatted Customs Union with Russia and Kazakhstan, as well as a member of the Union State with Russia) carry heavy implied losses. Having tied Ukrainian import prices to European levels, Gazprom will surely fight to keep them there. The company, with its European customers, will also press on with the Nord Stream pipeline — which is not a substitute for transit pipelines across Ukraine, but would mitigate any impact on Gazprom from supply interruptions. This will reduce Ukraine’s ability to use gas transit as a bargaining chip. The Ukrainian elite clearly understands that kind of vulnerability and under the new president, who will be more friendly towards Russia, will try to repair Ukrainian gas relations with Russia in order to discourage Moscow from building pipelines which would bypass the country.

“Nabucco” vs “The South Stream”
By the end of 2009 Russia had almost finalised preparations for building the “South Stream” pipeline which would bypass Ukraine. The project appeared to develop even more successfully than the earlier “North Stream”. Even when former French President Jacques Shirac rejected the proposal made by Vladimir Putin to head the project it, this was only a minor blow. The biggest success had been not only clearing all the judicial formalities with the participating countries, but gaining the consent of Azerbaijan to act as the key supplier to “South Stream”. From the beginning of this year Azerbaijan starts to supply Gazprom with 1 billion cubic metres of gas per year from the Shah Deniz II field in the Caspian Sea, promising to increase this amount in future. Potentially, this could be a severe blow for Nabucco.

The EU made an attempt to diversify Nabucco’s gas supply by signing an agreement in January to develop gas reserves in Iraq. The agreement sets out cooperation in principle to develop natural gas, but does not include any details about specific investments or developments. Iraq has considerable reserves of natural gas but only a fraction of them have been developed. In the case of a substantial expansion of gas production in Iraq, Europe would gain an important alternative source of gas for the Nabucco pipeline.

The other important player in this geopolitical game is Turkey. So far, Azerbaijan has failed to reach an agreement with Turkey over transit fees and conditions were Turkey to become a transit country for Azeri’s gas supplied to the Nabucco pipeline. Russia, in turn, has succeeded in strengthening its ties with Ankara, including energy cooperation. Putin’s visit to Ankara in January was very successful, delivering a flurry of promises on energy cooperation between Russia and Turkey, signalling that the countries are getting closer through their partnership. It has been announced that Moscow will soon gain formal consent to build a section of the South Stream gas pipeline on Turkish territory.

Ankara has always cautiously backed both Nabucco as well as South Stream, now it appears that Turkey has decided to cooperate with Russia more closely. Some experts have even suggested that Turkey could join Italy and Germany as Russia’s “strategic partner”. Italy’s ENI is co-funding the South Stream project, and late last year Germany gave its final approval for Nord Stream, sparking discontent on the part of its East European neighbours.

Both sides publicly support the idea of visa-free travel, but so far the process of negotiations has become bogged down in technical details, such as the rules of extradition, issuing multiple visas for Europeans and the rules of temporary registration for travellers in Russia. Many Russian bureaucrats are not very keen on the idea of opening the country up to foreigners. Thus, the prospects of visa-free travel are gloomier than might appear from the politicians’ public statements.