RA’s Daily Russia News Blast – Dec. 5, 2007

Former Soviet President Mikhail Gorbachev said that a pillar of the arms control system could fall if Washington and Moscow replace the landmark START nuclear arms reduction treaty with a less formal pact. On the majority won in the State Duma elections, Gorbachev commented that President Vladimir Putin had “really rescued” United Russia. A video of ballot stuffing, claimed to be recorded during the State Duma elections, has been posted on the Internet, prompting further allegations of electoral fraud from opposition activists. The regions that failed to meet United Russia’s voting target at the parliamentary elections will face repercussions – the mayor of Udmurtia’s Glazov-town, where United Russia got no more than 41%, has stepped down after the chief of republic, Alexander Volkov, expressed his disappointment over the outcome. The Fifth State Duma won’t differ from its predecessor. Putin said the government and the Central Bank would make cautious efforts to help the banking sector deal with the liquidity shortage. A state fund, an Israeli merchant bank and the EBRD have pulled the plug on a Russian investment venture after Oleg Shvartsman, a minority shareholder, said in an interview that Kremlin siloviki had given him the go-ahead to conduct “velvet reprivatization” in strategic industries. Shvartsman has since discredited the interview, which will, as a result, be heard in court. Igor Sechin, Putin’s powerful deputy chief of staff and chairman of Rosneft’s board, has lost three vice presidents from the company, sparking speculation that he too is “on the way out“. Vladimir Potanin’s chances of buying his business partner Mikhail Prokhorov’s stake in Norilsk Nickel are looking increasingly remote after it was reported that rival bidder RusAl had been offered the stake for $3 billion less. Unified Energy System has set the price of its new TGK-12 shares. Sistema has been permitted by the Foreign Investment Promotion Board in India to increase its share in Shyam Telelink to 74%, the maximum a foreign company is allowed to own in an Indian Telecommunications company. Russia’s tax authorities have demanded over $6m dollars worth of back taxes from the local operations of the fast-food giant McDonald’s, amid fears that this could spark a new wave of other claims. General Motors is pursuing a “significant” stake in Russia’s biggest automaker, AvtoVAZ. Gazprom saw profits fall 20% in the second quarter of 2007 after operating costs rose and warmer weather caused a drop in demand. Russia and the US have signed a memorandum on bilateral military cooperation and the interoperability of their respective Armed Forces for 2008. Following the release of a new US intelligence report which said that Iran had stopped work to develop nuclear weapons four years ago, Putin has pushed for transparency, telling Iran’s top nuclear negotiator that Tehran’s nuclear program should stay under the control of the United Nations atomic watchdog. Foreign Minister Sergei Lavrov said that Iran would quickly answer all outstanding questions of the International Atomic Energy Agency. Aircraft manufacturer Sukhoi will start this week in-flight tests of a new engine for its SuperJet 100 regional aircraft. Roman Abramovich’s investment in Highland Gold Mining “underlines that the precious metal is becoming more precious by the month.” “It is rather easy for foreigners to get into trouble in Russia, even if they are not interested in torpedo blueprints.”