RA’s Daily Russia News Blast – Sept. 12, 2007


A new ordnance, claimed by the Russian military the world’s most powerful non-nuclear bomb, explodes in a giant fireball during a test in this undated television image shown by Russian Channel One television, Moscow, Tuesday, Sept. 11, 2007. (Photo: AP)

A special report at The Economist is forecasting at least 7% growth for Russia’s ‘rosy economy’ this year, but says that the rate of expansion in the oil and gas industry will be slower than it was earlier in the year. Russia’s metals and mining industries continue to go from strength to strength. Polyus Gold said that it had become one of the world’s top five gold mining companies in terms of proved and probable reserves. Russian metals giant GMK Norilsk Nickel is creating an international mining and metallurgical division to be headed by managers of Canada’s LionOre. Severstal-Avto and Fiat are putting together a venture to focus on distribution. Rosneft has declared it won’t renew its crude supply contract with China’s CNPC after 2010 unless the terms are changed. Apparently Rosneft has stolen enough refining capacity from Yukos to enable them to meet the demands of this initiative. Russia’s antitrust agency has denied a request from German conglomerate Siemens AG to expand its stake in Power Machines, Russia’s leading turbine manufacturer. The authorities said that if Siemens were allowed to dominate the market for equipment for the electricity generation plants, there would be a ‘reduction in competition’, although Russia is prepared to allow foreign companies to control up to a quarter of its electricity generation industry. A partner with Ernst & Young said that as many as 90% of foreign investors are prepared to expand their businesses in Russia. With three months still to go before the elections, there is no shortage of gloom and panic in the media, with one journalist announcing that, “A lack of transparency is the distinguishing feature of politics under Putin.” Fulfilling this prophecy, Putin surprised everyone today by dissolving the Russian government a few hours after testing the world’s largest non-nuclear bomb (see photo above). Russia’s Prime Minister, Mikhail Fradkov, sweetened the blow with a strangely triumphant resignation speech full of admiration and awe for the president, saying that he wanted to provide Putin with as much freedom and flexibility as possible. In this power vacuum, Putin took off on a scheduled trip and asked the Duma speaker announce Fradkov’s replacement – an almost entirely unknown money laundering watchdog from St. Petersburg named Viktor Zubkov. A Kremlin aide told Reuters that a change of president should give no cause for worry to foreign investors, as current pro-market policies are ‘firmly established’. Topping up military tension between Russia and the west, Russian military have successfully tested a lethal, air-delivered ‘Father of all Bombs’ – claimed to be four times more powerful than the US ‘Mother of all Bombs’. It is not surprising that attempts to draw up a new agreement to replace the Strategic Arms Reduction Treaty are hitting difficulties due to ‘very serious’ differences between Russia and the US. Iran’s foreign minister is likely to press Russia to complete construction of its Bushehr nuclear plant. Russia is said to be stalling because it does not fully trust President Mahmoud Ahmadinejad’s intentions. The world press is having a field day with the news that workers in the Ulyanovsk region, Lenin’s birthplace, have been given the day off work today to procreate in exchange for prizes. ‘The Day of Conception’ was announced in a bid to boost the birth rate. A 4×4 will go to couples who give birth to a child on June 12th, Lenin’s birthday and Russia Day. As the International Herald Tribune puts it, ‘Make a baby. Win a car.’ The Times is reporting that a leaked document from Gazprom of a few months back suggests that the company was aware of “anti-Gazprom” attitudes in the UK. Supposedly, after reporting on the Gazprom/Dow Jones bid, a member of staff at The Times’ was robustly interviewed by someone from a Russian radio station who persistently tried to find out the story’s source.