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RA’s Daily Russia News Blast – Sept. 11, 2007

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US Ambassador to Russia William J. Burns, center, holds a candle during a liturgy at St. Catherine Church of Russian Orthodox Church Abroad to mark the sixth anniversary of Sept. 11 in downtown Moscow on Tuesday, Sept. 11, 2007. (AP Photo/ Mikhail Metzel )

Vladimir Putin has completed his visit to the United Arab Emirates. Putin’s visit to the country’s capital, Abu Dhabi, underscored Russia’s influence in the region, where the United States has come under fire from all sides over its occupation of Iraq, with Putin appearing to gain ground in areas where the United States has long been unchallenged. Russia opposed the US over its invasion in Iraq from the outset. Putin’s opening discussion with UAE President Khalifa Bin Zaid Al-Nahayyan concerned modern Russian weapons, and it has emerged that in exchange for Russia’s $500m debt to the country, an agreement will be drawn up to allow the UAE to use the Russian GLONASS satellite navigation system, in which its primary interest is military. Russia’s Deputy Finance Minister, Sergey Storchak said, “We will give back part of the debt in products of heavy industry, including heavy equipment and you-know-what.” On his visit to Abu Dhabi, Putin defended the recent $1bn loan granted to Indonesia for arms purchases, saying that “Indonesia is an absolutely solvent country.” The Guardian reported that Russia is building an Akula-class nuclear submarine at its Komsomolsk-on-Amur shipyard for lease to the Indian navy which is expected to be ready for trials in 2009. The third round of talks on missile defense between Russia and the US is set to take place in Moscow in early October. Senior investigator Salavat Karimov, who led the Prosecutor General’s Office’s two investigations of Mikhail Khodorkovsky, has been fired, after the head of Russia’s powerful new Investigative Committee, Alexander Bastrykin, declined to hire him. The new Committee will assume jurisdiction of over 60,000 criminal cases, including those of Litvinenko and Politkovskaya. In today’s Times, Ukrainian President Viktor Yushchenko accused Russia of blocking the investigation into the plot to assassinate him with poisonous dioxin. The Moscow Times says that a new freeze on work permits for Moscow expatriates is unlikely to result in significant repercussions for the foreign investment climate, challenging the government’s commitment to promote foreign investment. Direct foreign investment is likely to surge in Russia and China in the next few years, however, although the growth could be undermined by protectionist sentiment in emerging and developed markets, according to a report by the Economist Intelligence Unit and Columbia University. A new report from Standard & Poor’s says that the global credit squeeze may negatively affect Russian banks in the second half of this year, and could weaken the financial achievements already made by the bigger banks in the region due to their challenges of increased operating costs and fewer opportunities to attract capital. But the country is seen as a safe haven for debt amidst the current credit crunch, with loans to Russian companies by American banks hitting new highs. At the World Social Security Forum in Moscow, First Deputy Prime Minister Dmitry Medvedev said that the demographic problem in Russia is limiting economic growth. Cambridge Energy Research Associates, a leading energy consultancy, has said that that European Commission’s efforts to liberalise Europe’s energy markets and reduce dependence on Russian gas imports will increase the risk of supply insecurity as the relationship with Russia deteriorates. Gazprom is going ahead with the South Stream gas project that aims to export Russian natural gas to the European Union. Turkmenistan, the second-largest natural-gas producer in the former Soviet Union, may back two additional pipelines to break Russia’s hold on its exports. A special report in today’s Moscow Times on the December election says that the most recent election was won with the help of Khodorkovsky’s arrest and United Russia’s policy of ‘redistribut[ing] national resources’. The article foresees Putin fishing in public opinion for a third term, and says it is an option which, if it proved to be popular enough, would easily merit the changing of the law to allow it. Severstal confirmed that it has doubled net profit this year, and outlined plans to spend $6bn on domestic expansion and $4bn on projects in Italy and the United States. Billionaire Mikhail Prokhorov has accumulated a 25% stake in Norilsk Nickel, and could sell it to someone other than co-owner Vladimir Potanin, with BHP Billiton, Roman Abramovich and Oleg Deripaska named as possible buyers. At the Reuters Russia Investment Summit, financier and former media magnate Boris Jordan speculated that Surgutneftegaz, one of the country’s biggest oil companies, could be bought out by either Gazprom or Rosneft, predicting that only three oil giants will remain in Russia in the long-term. Gazprom has offered to buy out the remaining shareholders in Moscow utility OAO Mosenergo for $5.1 billion, seeking to gain a third of the country’s electricity industry.