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RA’s Daily Russia News Blast – Oct. 3, 2007

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Gazprom logo in front of Russia’s government building in Moscow. Russian gas monopoly Gazprom has warned it would cut gas supplies to Ukraine, which transports 80% of Russian gas supplies to western Europe, if Kiev did not pay over a billion dollars in debt this month.(AFP/File/Alexander Nemenov)

There is speculation about how Vladimir Putin could manipulate a role as prime minister to his favour. His decision to head the United Russia party has “changed the country’s political structure”, but will not have come as a surprise to many Russians, who were polled a month ago by VTsIOM about whether or not they would vote for “Putin’s Party”. The positive reaction of global investors to Putin’s news has been criticized by Garry Kasparov. “In the short term, the benefits can be significant, but in the long term the country is going to be destroyed,” he said. “Western bankers are looking for a profit, we’re looking [out] for the country’s future.” David Clark, chairman of the Independent Russia Foundation, said that there remain some flaws in Putin’s plan. “Russia’s strength is built entirely on energy, on oil and gas, nothing else. And that’s all going to unravel in the coming years.” As predicted, Russia found an excuse to threaten gas cuts to Ukraine following the results of its recent election in which it is almost certain that the Orange Revolution will come marginally ahead of Viktor Yanukovych. Following threats by Gazprom to reduce gas supplies to Ukraine, the Ukrainian energy minister has flown to Moscow to discuss the situation. Ukraine’s Naftogaz, the country’s gas importer, implied that the demand was unexpected. “We are studying the situation and why this figure arose in the statement by Gazprom,” he said. The government’s lifting of price caps on electricity, due to growing demand, has benefited Russian companies – OAO OGK-6 has posted a first-half profit. Russia is to raise sugar duties in a bid for the industry to become “self-sufficient” in the next ten years, but falling domestic demand is damaging Brazilian exports into the country, and India also wants a slice of the market. The Chelyabinsk Zinc Plant, which produces over half of Russia’s zinc, distributed 49 million new shares to stockholders to increase trading. Russian potash maker OAO Uralkali will start selling its shares as its main owner, Dmitry Rybolovlev, seeks to raise funds for other ventures. Absolute Bank says it will achieve growth and remain sheltered from the effects of the global financial crisis with help from its Belgian owners. Uniastrum Bank has narrowed its mortgage program, refusing to grant loans in foreign currency, most likely due to liquidity and refinancing issues, and the lessening popularity of dollar deposits. Norilsk Nickel is to buy 7.2% of stocks in Canadian Royalties Inc. for $25m, in order to provide nickel concentrate for its refinery in Finland. The overall value of supplies could surpass $450m. Unified Energy System is holding back plans to increase generation capacity until it has upgraded the country’s grid system and secured fuel supplies. It is thought that Gazprom had influenced the decision with its reluctance to provide UES with subsidized gas. Kazakh state oil company KazMunaiGaz is expecting an agreement to be made on a new gas pipeline that would link Russia to Turkmenistan. Telecoms company MegaFon has launched its new commercial network ahead of competitors. Russian billionaire Alisher Usmanov has signalled his intention to buy Arsenal in a £120m investment, although it is not clear when the deal will go ahead. “We have no intention to bid for the club today.” Russia is home to a “growing group of very serious collectors who are buying contemporary art,” according to the Gagosian Gallery. US scientists are concerned that the missile defence shield which the US plans to deploy in Eastern Europe may pose a danger to Russia’s nuclear arsenal. Barack Obama has said that new thinking is needed over nuclear policies. “We’ll work with Russia to take U.S. and Russian ballistic missiles off hair-trigger alert.” President Putin has criticised Russian sports officials for attracting sportsmen from abroad instead of grooming homegrown champions. “Looking at our teams, one cannot immediately understand whether those are ours, or a team from Africa,” he said. Russia’s religious leader Patriarch Alexy, has “assailed homosexuality as a sin”.