Russian Press at a Glance, Friday, December 17, 2010

FT Blog: Russia in Africa: hunting for uranium

December 16, 2010 11:31am

by Stefan Wagstyl

ARMZ Uranium, Rosatom’s mining division, plans to acquire the Tanzanian assets by taking over its owner, Australia-based Mantra Resources in an agreed bid. Mantra said on Wednesday that it had recommended the offer to its shareholders. Mantra’s principal asset is the Mkuju River Project in Tanzania, which holds 101.4 million pounds of uranium.

“Mantra’s flagship asset, the Mkuju River Project, is a world class deposit,” ARMZ Director General Vadim Zhivov said. “We believe Mantra will complement our portfolio of assets and is consistent with our stated strategy of acquiring low cost, long life, geographically diverse assets.”

ARMZ has offered A$8.00 per share, or A$1.16 billion, for the firm, 15.5 percent above its 20-day average price on the Sydney exchange.

As the FT has reported, ARMZ, the world’s fourth largest uranium producer, has most of its mines in Russia and Kazakhstan, but it is rapidly expanding in the face of a growing demand for nuclear fuels. Last month it gained final approval for a $610m bid that allows it to increase to 51 per cent its stake in Canada’s Uranium One a company with operations in Kazakhstan, the US and Australia.

Rosatom first went into Africa in 2008 with a joint venture with SWA Uranium Mines in Namibia. There was a time when such aggressive expansion in the nuclear industry by a Russian state company would have raised hackles in Washington. But not now. The US relies heavily on imported uranium, including from Russia. And, when it comes to natural resources acquisitions, it is more concerned about China than Russia.

December 16, 2010
Renewed Rivalries

http://www.russiaprofile.org/page.php?pageid=International&articleid=a1292516088

Renewal’s Victory in Transdnestr’s Parliamentary Elections Marks a Milestone in its Development as an Independent Republic

Transdnestr is fundamentally different from all other post-Soviet territories with a similar status not only because it does not have a clearly defined “titular ethnicity.” The population of Transdnestr is divided into three groups, which are roughly equal in size – Russians, Moldovans and Ukrainians. It is also the closest of the “separatist republics” to the EU. Neither Georgia nor Azerbaijan (to which Abkhazia, South Ossetia and Nagorny Karabakh officially belong) have a land border with the EU. There is also significantly less military rhetoric used in Transdnestr, and calls for a high democratic standard. It is no accident that on the eve of elections to the Transdnestr Parliament, the head of the Interior Ministry of the unrecognized republic Valery Yastrebchak met with representatives of a number of EU bodies. The EU does not recognize elections in Transdnestr, but is keeping a close eye on the internal dynamics in the republic, particularly since between 2005 and 2010 these dynamics became notably more exciting.

For many years the Moldovan political class has turned to both its electorate and external groups, such as the EU and the United States, with the following argument: “At a time when we are building a ‘European democracy,’ in Transdnestr there remains an authoritarian regime, ‘the last oasis of communism in Europe’.” The communism argument can be immediately dismissed because unlike Moldova, where the Communist Party was in power from 2001 to 2009 (and remains to this day a leading faction in parliament) in Transdnestr there are two communist parties competing with each other and lacking their own parliamentary faction. It is hard to argue with the claims of authoritarianism, although there are certain important nuances to be aware of. In Transdnestr, in contrast to Nagorny Karabakh, South Ossetia and Abkhazia, the leaders never change. Transdnestr has known only one head, Igor Smirnov, who has been in power for 20 years. Furthermore, rumor has it that he has no intention of leaving his post until at least the next presidential elections. But Transdnestr, like the rest of the world, has its own objective laws that no political dinosaur is in a position to annul.  

Over the years of the existence of the de-facto state, a young generation of businessmen has grown up to whom the old managerial ways (Smirnov comes from the Soviet-era managerial class) have become a burden. They have begun to convert their economic influence into politics. This spurred Renewal, initially a political movement that turned into a political party. Its first assault on political power came in December of 2005, when it enjoyed success in parliamentary elections, outstripping the pro-Smirnov association Respublika. Renewal’s candidate Evgeny Shevchuk (who calls himself a “technocrat” and a “supporter of a socially-oriented market”) took the speaker post, replacing another veteran of the Transdnestr political scene, Grigory Marakutsa. 

At that time many observers predicted that Shevchuk would run in the 2006 presidential elections. However, the strong pressure exacted by Ukraine and Moldova on Transdnestr (which is referred to in the republic as “a blockade”) consolidated the electorate around “patriotic ideas” and made the participation of the Renewal leader impossible. But during his time in Parliament, Shevchuk was able to build up political muscle to such an extent that in 2009 he was able to head the movement opposed to the constitutional amendments proposed by Smirnov (these would turn the unchallenged leader of Transdnestr into a Central Asian-type dictator.) In December last year Shevchuk even publicly demanded the president’s resignation, which would have been inconceivable just a few years ago. But because politics is “the art of the possible,” Shevchuk had to leave his post as parliamentary speaker, handing it over to his colleague from Renewal Anatoly Kaminski. But this did not prevent Shevchuk and his allies from stopping the constitutional reforms. This was Smirnov’s biggest defeat since 1990. 
 
In December of 2010 Renewal went into the elections as the likely winner, having won in the local elections that took place in March. Renewal’s main “weapon” is the financial-industrial corporation Sherif, which controls up to 70 percent of Transdnestr’s economic assets, in particular in such spheres as the production and sale of foodstuffs, telecommunications and bank services, sales of fuels and lubricants, construction and agriculture. At the opposite pole was the pro-Smirnov bloc RSPP, created by the alliance of the Republicans and the Patriotic Party of Transdnestr (in which Oleg Smirnov, the president’s son, played a leading role).  

Meanwhile, despite the presence of different interests and different party programs among the candidates, there were some points of consensus, the vector of geopolitical development among them. All the political players in Transdnestr are not prepared to consider reintegration with Moldova. And sympathy toward Russia is very high among all the candidates. Because unlike Abkhazia and South Ossetia, Transdnestr does not have a land border with Russia, and, moreover, neighbors Ukraine, the idea of cooperation with this neighboring country also enjoys support, especially since almost a third of Transdnestrian voters are ethnically Ukrainian. Therefore, the number one issue of the campaign was the voters’ personal attitude toward Igor Smirnov, and the model of the future that the different political powers envisage. Renewal received a constitutional majority in the elections on December 12. Unlike in Moldova, in Transdnestr elections are held not according to party lists, but on a majority vote system. We can expect somewhere in the order of 25 to 30 deputies (of 43) to be associated in one way or another with Renewal. 

Will this victory mark a full-blown renewal of internal politics in Transdnestr? For now it is still difficult to answer. The party and its allies’ strategy has yet to be defined, as has that of its rivals for 2011, a presidential election year.

Obvioisly 2011 will be the main date in Transdnestr’s five-year political cycle. Renewal has already demonstrated its strong defensive capabilities. They rebuffed Smirnov’s constitutional attack. However, the party and the businessmen that support it are yet prove themselves “on the offensive.” They are obviously discussing various problems and which steps to take first: whether to launch a cavalier attack on the president or negotiate with his team about choosing a successor who would receive consolidated support? In any case, December 12, 2010 has a chance of marking a new milestone in the history of Transdnestr and its unrecognized statehood. A real renewal would remove one of the criticisms that have been aimed at Tiraspol for years – usurping power and the absence of political competition and democratic procedures.   

http://www.bne.eu/storyf2416/From_Russia_with_a_Christmas_wish_list

Dear Santa,

Things are getting better in Russia and all the talk has been all about "modernisation" this year. But while we have been waiting all year for some gifts from the Kremlin, very little has appeared.

Really, the only exciting thing that happened was that Russian President Dmitry Medvedev said he wants to change the name of the militsiya to politsiya (yawn) – oh, and now we are allowed to have parties with the gays on Triumph Square, which is something I guess.

Still, without wanting to appear greedy, below is a short list of simple things we would like to get in 2011 that we think will make a big difference to living and working in Russia at almost no effort or cost. Do you think you could see your way to sorting them out with Tweedledum and Tweedledee in the Kremlin? I am sure they will listen to you, (as they seem to have a bit of problem listening to anyone else).

• WTO

17 years in waiting? Enough already. Let Russia in.

• Traffic

Paint yellow grids over every junction in the city and then ban any driver that stops in the box for six months (use cameras at junctions to police this rather than the ravenous GAIshniki). At a stroke, you would double the flow of traffic.

Get rid of the law that demands cars that hit each other have to stand where they are until the police come (at least 30 minutes), which only causes huge jams behind them.

Increase the fine for having your car towed away from RUB100 to $100. And ban parking on the pavement (again, but this time make it stick).

Ban police from drinking beer while they driving their police cars. It looks bad.

• Visas

Unilaterally drop the visa requirement for EU and US citizens entering Russia. Or at the very least allow them to get a visa at the border. If you want foreign investment, the first thing you need to do is let investors into the country. Don't wait for the EU to reciprocally drop visa requirements for Russians, as this will take a decade to organise.

Oh yes, while you're at it, put up those little poles with straps between them in the arrival hall at Domodedovo and Sheremetyevo so there is a proper queue to passport control.

• Business education

Poor management skills is the biggest drag on Russia's productivity, according to several studies. So instead of wasting $3bn on setting up Skolkovo that won't really function properly for another 10 years (if the Dean Wilfried Vanhonacker's track record is anything to go by), set up a fund of say $100m and pay for 2,000 young Russian managers to take MBAs in France, UK and US every year.

There are about 50,000 significant companies in Russia and in five years you could create an army of well-trained managers. You can even make the scheme self-financing if you force the students to repay the money after their studies end.

• Pension reform

Act now. Pensions and social spending already account for a quarter of the budget deficit and this is only going to get worse. What is so hard? You can take anyone one of the three Baltic state's systems (all successful, but all three taken slightly different models) and just adopt it wholesale.

Close all the shell companies that were set up in the last attempt and do nothing. Make pension investments into legitimate funds tax-free. The programme to make Moscow an International Financial Centre will fail unless pension reform is successfully implemented. Make Sberbank set up western-style mutual funds.

And while you are thinking about social issues, change the constitution to fix the amount of budget spending on education at something high like 4-8% of GDP, like the Taiwanese did.

• Do a Georgia on red tape

Take a deep breath. Swallow your pride. And get Kakha Bendukidze to come back to Russia from Georgia to cut red tape. Bendukidze, who made his first fortune as a Russian industrialist, was given the power to slash the bureaucracy and chuck out stupid rules in Georgia's legislation and has made the tiny Caucasus republic the easiest place to do business in the CIS.

If Bendukidze is a bridge too far, then get someone else to this job – preferably someone Finnish, like Ilkka Salonen, former deputy chairman of Sberbank.

• Proper CSD with T+3 DVP

Talk, talk, talk and no action on setting up a central securities depository. Everyone wants this and with T+3 settlement (trade plus three days), it would at a stroke greatly reduce the cost of trading and so the cost of capital. It is only a question of will and this reform will materially make everyone's life easier and cheaper.

• Khodorkovsky

Several top analysts we have asked all want the second case against Khodorkovsky dropped and for him to be released on New Year's Eve in an act of clemency.

And on the same note, resolve Prosperity Capital Management's row over TGK-2 in favour of minority shareholders, as you can't seriously let them get dicked over and still pretend that Russia is an "attractive investment destination."

• Food

Send a swarm of locusts to destroy Russia's entire dill crop – forever.

Lots of love

bne staff and Everyone who lives in Russia or has to deal with it

oxo