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RA’s Daily Russia News Blast – Oct. 9, 2007

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Russian President Vladimir Putin takes his seat as Presidents Berdymukhamedov of Turkmenistan and Lukashenko of Belarus talk during a CIS summit over the weekend. (Photo: Reuters)

President Vladimir Putin has removed Andrei Kazmin as chief executive of Sberbank, instead appointing him head of the country’s loss-making postal service. Kazmin’s departure from Sberbank had been widely predicted, and analysts are expecting German Gref to take his place. United Russia is now trying to force doctors and teachers to join its party, an “interference” that could result in the political elite “becom[ing] scared of the consequences.” Russia is currently experiencing a “democracy paradox“, within which, “given a free choice, a majority of Russians would choose some sort of antidemocratic form of government.” According to the Russian Industry and Energy Ministry, the country could cut the term for considering foreign bids for strategic assets in half, and simplify application requirements. Viktor Cherkesov, a longtime associate of Putin and the head of Russia’s drug control agency, has warned of “infighting among the special services” in Russia, an ongoing turf battle that could “weaken the government and undermine the nation’s stability.” In response to Putin’s apparent worries about inflation, the 2007 target for which will not be met, the government has decided to introduce export duties on wheat and barley. Deputy Prime Minister Alexey Kudrin has told Putin that the Central Bank and Finance Ministry are prepared to release additional liquidity into the market, including budget funds earmarked for the capital of state corporations. Such a measure is a contradiction of anti-inflationary measures, but the Finance Ministry sees the threat from the crisis in liquidity as more serious. Novorossiisk Commercial Sea Port is the latest Russian firm to announce plans to list in London amid indications that the next flurry of about $5 billion in public offerings will find it hard to attract their desired valuations. Many of the Russian companies holding IPOs this year have performed poorly due to fallout from the US subprime crisis. Russian banks, which must repay $50 billion to foreign lenders by the beginning of next year, can count on the central bank for financial support, according to its deputy chairman. Nikolay Tokarev, a friend of Putin, is considered a likely candidate to take over Russia’s state-run oil pipeline operator Transneft. An environmental impact report produced for potential lenders to the Sakhalin II oil and gas development has given overall approval to the $20 billion project. Rusal will build the world’s largest aluminum smelter and two nuclear reactors in central Russia as part of a $10.9 billion expansion plan. Gazprom will receive $650 million dollars and 5 billion cubic meters of gas to settle a $1.3 billion debt dispute with Ukraine. The company is being sued by Moncrief Oil International, a privately held US oil and gas company, which claims that it holds the rights to develop a disputed Russian gas field. Ukrainian Prime Minister Viktor Yanukovich will have his first negotiations with Russian Prime Minister Viktor Zubkov in Moscow, and will discuss the conflict over natural gas sparked by last week’s Ukrainian elections. “France is ready to lead Europe out of its cul-de-sac, including in its relations with Russia,” said Yury Rubinsky, head of the French Studies Center at the Russian Academy of Sciences’ Institute of Europe. France will assume the EU’s rotating presidency in July, and French president Nicholas Sarkozy’s meeting with Putin this week “will be held through the prism of its presidency.” A chief strategist at UralSib thinks that, “of the four major countries in the EU, the best chance for a Russian ‘ally’ is currently with France,” but Sarkozy said this week that France will not compromise on the need for tougher sanctions on Iran, and last week accused Russia of “complicating” the world’s problems. Are America’s hopes on Russia “misplaced”? Russia’s current stance on Iran is “win-win”. A US strike on Iran would likely benefit Russia as a “key reconstruction contractor”, and would damage global US relations.