Author: Talar Tumanian

YERKIR Online Armenian Newspaper
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YERKIR Online – February 07, 2005
1. OSCE fact-finding mission completes work
2. French speaker proposes research on Armenian Genocide
3. New encyclopedia on Karabakh war published
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1. OSCE fact-finding mission completes work
The Organization for Security and Cooperation in Europe (OSCE) observers
completed their mission in Nagorno Karabakh and will leave the region
today, Armenpress reported.
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2. French speaker proposes research on Armenian Genocide
During his Turkey visit last week, the Speaker of the French Parliament
Jean Louis-Debre has proposed that an independent international institution
conduct research into allegations of the Armenian Genocide.
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3. New encyclopedia on Karabakh war published
A new encyclopedia, titled “Karabakh Liberation War: 1988-1994,” has been
published in Yerevan, Armenrpess reported.
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Direct your inquiries to [email protected]
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YERKIR provides this news service for the personal use of Armenian News Network/
From: Emil Lazarian | Ararat NewsPress

ARMENIAN DEPUTY SPEAKER SAYS COUNCIL OF EUROPE’S KARABAKH REPORT “REEKS OF
OIL”
Mediamax news agency
28 Jan 05
YEREVAN
Armenian Deputy Speaker Vaan Ovanesyan is concerned at the Azerbaijani
authorities’ attempt to take the format of the Karabakh problem
settlement outside the OSCE Minsk Group framework and into the
parliamentary structures of the Council of Europe, NATO and other
organizations, where the superficial study of the problem is being
carried out.
Ovanesyan said this at a meeting with journalists at the National
Press Club in Yerevan today.
In this way official Baku avoids settling the conflict, and the Minsk
Group co-chairmen are really involved in solving it, taking into
consideration the opinions of all the parties to the conflict, he
said. The deputy speaker expressed an opinion that discussions of this
issue at experts’ level in any case lead to proposals which are more
advantageous to the Armenian side than to the Azerbaijani one. He
recalled that after the change of the authorities in Armenia in 1998
all the proposals of the OSCE Minsk Group were rejected by Azerbaijan.
Ovanesyan noted that reports of international structures are
non-binding since the mandate to settle the Karabakh problem belongs
to the Minsk Group. At the same time, the deputy speaker expressed
concern at the fact that PACE (Parliamentary Assembly of the Council
of Europe) rapporteur David Atkinson in his speech devalued the
mediators’ work holding them responsible for the difficulties in the
settlement process. Ovanesyan also condemned the report for the
failure to mention the prime cause of the conflict.
“The document reeks of oil,” he said, noting that the report took into
account the interests of oil consortiums engaged in the construction
of the Baku-Ceyhan oil pipeline.
From: Emil Lazarian | Ararat NewsPress

PRESS RELEASE
Ministry of Foreign Affairs of the Republic of Armenia
Contact: Information Desk
Tel: (374-1) 52-35-31
Email: [email protected]
Web:
Minister Oskanian Comments on Recent Statements by US Asst Sec of State
Elizabeth Jones, Upcoming Speech on Liberation of Auschwitz, and on Trip to
Egypt
In an interview to Armenia’s Channel 1 Public Television Hailur News
Program, Armenia’s Minister of Foreign Affairs Vartan Oskanian spoke about
his recent trip to Egypt, his upcoming trip to NY and the United Nations, as
well as the President’s Official Visit to Italy. He also reacted to the
comments made in a recent press conference by US Assistant Sec of State
Elizabeth Jones.
The Minister stated that he was surprised and appreciative of the level and
intensity of public reaction to her statements made during a press
conference, wherein she referred to the various unresolved conflicts within
the former Soviet space.
The Minister acknowledged that her remarks were ambiguous enough to lead to
misperceptions about US policy on the NK conflict. He said that although
those familiar with the very positive role that the US has played in the NK
resolution process could assume that her comments about ‘criminal
secessionists’ did not at all refer to NK, still, the ambiguity made it
impossible to categorically rule out such reference, either. Given the
seriousness of the charge, this was reason enough for concern. However,
Minister Oskanian added that during a telephone conversation with Ms. Jones
on Friday, January 21, she had made it clear that she did not in any way
intend for her comments to refer to NK. The Minister expressed satisfaction
that the issue was clarified.
The Minister also spoke highly of the Memorandum of Understanding that
Armenia had just signed with the Arab League, during his recent visit to
Cairo. He explained that given Armenia’s warm relations with the countries
of the Middle East, such a protocol will make it easier to work more
effectively with the Arab countries, with which Armenia already has good
relations.
He also explained Armenia’s decision to participate in the UN Special
Assembly on the Occasion of the 60th Anniversary of the Liberation of Nazi
Concentration Camps in New York, on Monday, January 24. He explained that
Armenians have the moral right and the moral responsibility to speak out at
such forums, since the Holocaust is inarguabley associated with Hitler, who
in turn, linked his plans to the Genocide of Armenians in 1915 and the
impunity with which the Armenian Genocide was carried out.
>From New York, the Minister explained he will travel to Rome to accompany
President Robert Kocharian on his official trip to Italy.
From: Emil Lazarian | Ararat NewsPress

The Messenger, Georgia
Jan 21 2005
A new state in Georgia’s bond market
By M. Alkahzashvili
Finance Minister Zurab Noghaideli has said that Georgia will issue
new state bonds in 2005, and will increase the amount of treasury
liabilities by 60-65 percent by the end of the year.
Currently, Georgia’s Ministry of Finance only issues treasury bonds
with an 18-month maturation date. However, the treasury is planning
to phase in a longer maturation period of 2 years. “This will be a
new state in the development of the bond market in Georgia,” said
Noghaideli in the newspaper Akhali Taoba.
With interest rates dropping dramatically in 2004 – from a peak of
over 40 percent to a year end interest rate of around 13 percent –
T-bills reflected both the new found confidence and reliability of
the government’s economic plan.
During the 2005 fiscal year, the ministry hopes to sell GEL 20
million worth of treasury bonds, currently the only type of bond
issued by the state. Georgia’s use of state-issued bonds to balance
its budget began in 1997. The state plans to use this year’s bond
income to do more than decrease the budget deficit, hoping to use
some of the funds for economic development.
International banks are expected to represent 60 percent of large
buyers in the primary market this year. In 2004, only 10 banks
participated in the primary market sale, according to the newspaper
Rezonansi.
Other papers note that still more can be done to improve the bond
market. Khvalindeli Dge praises changes in the Ministry of Finance
over 2004 for reducing interest payments to 13 percent but points out
this is still higher than the 10 percent annual interest of
neighboring Armenia and Azerbaijan.
Even when the government was at the very limit of its funds, it has
always paid in full when bonds mature. And while corruption remained
in branches of the government tasked with expenditures, it became a
non-factor in the sale and redemption of Georgian treasury bills.
Another question is how the government will perform in the
administration of treasuries. Akhali Taoba reports that in the past,
the Georgian government did not have enough money in the budget to
pay out interest to bond holders, requiring the state to take out
loans, thus increasing rates, from commercial banks to pay the
interest. To date the state has borrowed some GEL 842 million from
the National Bank, according to the newspaper.
But the trend remains encouraging as long as the government can
maintain its revenue collections and wisely manage expenditures. As
long as this is the case, investing in Georgian T-bills will become
an even surer bet, good news for the government and for commercial
borrowers who will see lower private rates as a result.
From: Emil Lazarian | Ararat NewsPress

ArmenPress
Jan 18 2005
AZERI NEWSPAPER ACCUSES TOP OFFICIALS OF TRADING WITH ARMENIA

BAKU, JANUARY 18, ARMENPRESS: An Azeri newspaper Azatlig claimed
in a recent issue that high-ranking officials have taken under their
protection companies which trade with Azerbaijan’s arch-enemy
Armenia. The newspaper alleged that the chief of AzPetrol which it
says was shipping fuel to Armenia across Georgia is the brother of
economic development minister.
It also claimed that the customs service protects those companies
which sell to Armenia tea, vegetable oil and fish products. It also
said the chief of president Aliyev’s staff protects the company that
sells wheat and grains to Armenia.
From: Emil Lazarian | Ararat NewsPress

MILITARY COOPERATION OF ISRAEL AND USA WITH TURKEY MAKE THEM
CO-PARTICIPANTS IN CRIME AGAINST HUMANITY
YEREVAN, JANUARY 12. ARMINFO. It is tragic that part of the
understanding between Israel and Turkey was that Israel would continue
to deny the Armenian Genocide and would not comment on Turkey’s human
rights violations against Turkey’s 20% Kurdish minority. Furthermore,
Israel’s military cooperation with Turkey makes Israel an accessory to
Turkey’s ethnic cleansing, crimes against humanity and genocide
against its 15- 20 million Kurdish minority. It should also be noted
that the U.S. military and economic assistance to Turkey these past
decades has made the U.S. the prime accessory to Turkey-s massive
human rights violations against the Kurds. Israel-s failure to
acknowledge the Armenian Genocide mirrors those nations and
individuals who do not acknowledge the Jewish Holocaust.
Unfortunately, Israel does not stand alone in this regard: the U.S.
Executive Branch has also failed to acknowledge the Armenian
Genocide. The U.S. and Israel also need to acknowledge the genocide by
Turkey between 1914-1923 of 350,000 Greeks of the Pontos, Black Sea
region.
The attempts to deny the Jewish Holocaust have been vigorously
denounced and rightly so by Israel and the U.S., in books, articles,
speeches and in the media. Yet where is the outcry against Turkey’s
and Israel-s denial of the Armenian Genocide? And where is the outcry
against Turkey’s horrendous crimes against its Kurdish minority? It is
imperative that the U.S. change its policy towards Turkey.
From: Emil Lazarian | Ararat NewsPress

NEW US EMBASSY COMPOUND TO BE OPERATIONAL BY APRIL 2005
ArmenPress
Dec 23 2004
YEREVAN, DECEMBER 23, ARMENPRESS: The US embassy in Yerevan told
Armenpress that the construction of the new embassy compound is
scheduled to be completed in March 2005. They Embassy will be fully
operational in April 2005, when the embassy plans to move out of its
current building on Baghramian Street in downtown Yerevan.
The Embassy grounds, located on the right side of Etchmiadzin-Yerevan
highway comprise 9 hectares – in terms of land occupied, this is one
of the largest Embassy compounds in the world.
Besides the main chancery, there are two compound access control
buildings, a two-story annex with offices and technical work areas,
a warehouse, and a Marine Security Guard residence. On the lower
level of the site we hope to eventually build recreation facilities.
All US Government sections and agencies will be co-located at the new
chancery except for Peace Corps and some of our Agriculture program
office. Our staff is not getting larger as a result of the move, but
all of our current employees (70 Americans and more than 400 local
staff) will finally have adequate workspace. The consular section and
public areas will also be much larger so that there is room for all of
our visitors and customers – no more standing in lines on the sidewalk.
The buildings on the compound are designed to be modern,
state-of-the-art, and secure. They are built to meet the highest US
standards and reflect the latest is seismically safe architecture.
The Embassy is intended to be a fine example of US Architecture and
mechanical design, while providing spacious, functional workspace for
all of our employees. The main Chancery building is five stories
tall. All the other buildings are two stories.
Currently there are 796 construction specialists, engineers and
security personnel working at the new embassy site. This includes
644 Armenian craftsman, 84 Turkish and 38 Philippine commercial
construction specialists, with 30 American staff members. Workers
from other countries were brought in for special skills not available
among the local workforce.
Many have worked on other US Embassy projects across the world. As
a part of the project in Yerevan, the Embassy invested more than
a quarter of a million dollars to establish a training program for
Armenian craftsman, teaching them the advanced construction skills
needed for this type of project. One hundred and twenty-six local
construction specialists graduated from the program, providing Armenia
with a new cadre of skilled workers who will help make this sector
of Armenia’s workforce internationally competitive.
Construction began in September 2002 after almost ten years of
planning. In total the project budget is $80 million. Through
employment and direct purchase of materials, much of that sum has
been directly invested in the Armenian Economy.
The new embassy building is testament to the commitment of the U.S. to
stay and work with Armenia for many years to come. “Drawing on the
strength and intelligence of the Armenian people, we are confident
that much can, and will, be accomplished toward building a truly
independent, democratic, and prosperous Armenia.” the embassy said.
From: Emil Lazarian | Ararat NewsPress

By the Highest Standards
Kommersant, Russia
Dec 18 2004
The year 2003 was a year of large-scale mergers and acquisitions for
Russia. They included the formation of the BP–TNK alliance, the
buy-up of the Georgian power industry by Russian natural monopolies,
and Shell’s commitment to invest $10 billion in the Sakhalin-2
project. However, the volume of failed deals is even more telling.
British Petroleum–Tyumen Oil Company
Photo: Aleksei Kudenko
Under the leadership of Sergei Bogdanchikov (in the photo), Rosneft
acquired AO Northern Oil for $600 million (one of its co-owners,
Andrei Vavilov, is shown in the photo on the lower right)
On February 11, the owners of Tyumen Oil Company (TNK) announced that
they were merging their assets with those of British Petroleum (BP)
in Russia and Ukraine to form a single company. The final agreement
between the shareholders was signed in London on June 26. The amount
BP paid for its share in BP–TNK was reduced by $600 million to $2.4
billion. TNK’s shareholders received $6.85 billion from the
Anglo-American British Petroleum for the right to set up a joint oil
company with TNK. In order to do this, TNK’s largest owners, Mikhail
Friedman and Viktor Vekselberg, had to give up the title of oil
magnate, since TNK shareholders receive only 50% in the new company,
called BP–TNK. Friedman believes that the next deal of this size
involving Russian businessmen will have to wait for at least two or
three years.
In many respects, the deal with BP stemmed from the Anglo-American
company’s less than successful development in the mid-1990’s,
particularly the muddled and complicated business with SIDANKO, which
bankrupted TNK. However, TNK made no secret of its intentions to form
a partnership with BP by any possible means. The deal will probably
enter textbooks on strategic management: it was the first time a
Russian company had successfully convinced a Western partner that it
was more advantageous to work with it than to expand in Russia
independently.
Rosneft–Northern Oil
Photo: Vasily Shaposhnikov
Andrei Vavilov
On February 12, Rosneft announced the acquisition of AO Northern Oil
(Severnaya neft) for $600 million.
The oil industry was the leader in the number of large deals at the
beginning of the year, although in January everyone expected problems
in this sector: it was assumed that war in Iraq would lead to a drop
in prices. Nevertheless, Russian oil became a very attractive asset
in the first quarter of 2003. For example, the owners of Northern
Oil, who included former deputy finance minister Andrei Vavilov, sold
the company to Rosneft for an even $600 million. In a departure from
Russian business tradition, the parties paid for Northern Oil through
Sberbank of Russia rather than through offshore or Western banks.
With this deal, Northern Oil set still another record as the only
relatively large oil company to increase its market value
approximately ten times between 1999 and 2003, while increasing oil
production on the same scale. It was rumored that after the head of
Rosneft, Sergei Bogdanchikov, had familiarized himself with Northern
Oil’s operations, he gave orders not to make any major changes, but
to turn the company into a model subdivision of the state company
that they could show to foreign delegations and visiting government
officials.
The Northern Oil deal sparked a lot of hearsay and false rumors. In
particular, there was talk about a huge kickback received by
structures of the presidential administration for supporting it.
Nevertheless, this deal was important primarily because it gave the
entire market an excellent reference point. A company that had grown
from zero to $600 million in only a few years was worth that much for
Rosneft as a business, not as a source of oil reserves or as a means
of increasing capitalization.
Mechel–Korshunov Ore Mining and Processing Plant
Photo: Valery Melnikov
The main event in the area of railway reform was the formation of AO
Russian Railways, headed by Minister of Railways Gennady Fadeev
Mechel’s acquisition of Korshunov Ore Mining and Processing Plant
(Koshunovsky GOK) was the last big old-style deal in the
metallurgical industry. The history of the sale by SUAL-Ruda GOK,
which supplied raw materials to Siberian steel plants, began with the
standard Russian scandal: the Korshunov plant was bankrupt, and
Mechel’s rivals from Evrazholding made no secret of their intentions
to fight for Korshunov GOK using all available means, including
force.
Nevertheless, Mechel obtained a final decision on the question at the
negotiating table and in the arbitration court, although during the
struggle for Korshunov GOK, the company had used more habitual means
of fighting for industrial facilities, e.g., legal actions, police
officers, “dropping in” on the plant’s management, and other romantic
stuff of the mid-1990s. The question cost Mechel 2.4 billion rubles,
a sum that included the amount of the deal along with Korshunov’s
debts, which the owner assumed in order to get the company out of
receivership.
The Korshunov plant was the last large ore mining and processing
company without a major corporate partner. The other ore companies
had long ago become part of Russian metallurgical companies. Not
everyone was lucky: some Russian steel companies were left without
their own raw material sources. Their only option is to buy mining
assets from other owners. Therefore, both metallurgists and analysts
believe that the investment attractiveness of Russian ore mining and
processing companies will increase.
The tension is heightened by the rapid increase in world prices for
steel raw materials resulting from increased demand for ore in
Southeastern Europe. Another source of raw materials for steelmakers,
scrap iron and steel, is inadequately collected in Russia and cannot
be relied upon.
It is not surprising that the last ore mining and processing company
went to Mechel. In 2003, Mechel had already expanded its operations
beyond Russia and the CIS and had started buying companies of its
profile in Romania and Slovakia. Thus, the company had an acute need
for a raw material base, and it had to buy this base in a way that
would not raise doubts among future partners and investors in Europe
and in other parts of the world. A reputation is worth money, so
there was simply no question of settling the situation with Korshunov
GOK by force.
Troika Dialog–Rosgosstrakh
Troika Dialog Investment Company (IG Troika Dialog) paid 661 million
rubles for the right to control Rosgosstrakh, one of the best known
brand names of Soviet times. On the results of three auctions, Troika
Dialog became the owner of 49% of Russia’s oldest insurance company
at the end of 2001. The government owned a block of 26% minus one
share of Rosgosstrakh, which it also put up for auction. Bidding for
the share package of the former Soviet insurance monopoly took all of
three minutes, beating the record set at the Slavneft auction by one
minute. As a result, Troika Dialog became the owner of 75% minus one
share of Rosgosstrakh.
The amount collected from the sale of the former giant hardly
disturbed anyone except Duma deputies, who even tried to annul the
auction. “The winning consortium of investors led by Troika Dialog
has to solve the very urgent problem of attracting investments to the
Rosgosstrakh system, ” the system’s press secretary, Igor Ignatev,
told Kommersant. According to Ignatev, Rosgosstrakh will require
about $50 million to develop automobile liability insurance programs
alone.
The government intends to keep a blocking parcel of Rosgosstrakh
shares at least until 2004, according to Kirill Tomashchuk, deputy
head of the State Property Fund. The Ministry of Property Relations
wants to use the blocking parcel as a guarantee of debt payments
under policies written by Gosstrakh (Rosgosstrakh’s Soviet-era
predecessor). However, at Rosgosstrakh, they told Kommersant that
judging from the pace of the debt offset program, it will take at
least ten years to pay off all the debt.
National Reserve Bank–Aeroflot
Monopolies, both past and present, are becoming more and more
attractive to Russian businessmen. National Reserve Bank (NRB), which
was once closely connected with both Gazprom and RAO UES of Russia
(RAO EES Rossii), turned its attention to former Soviet monopoly
Aeroflot and bought 26% of the company’s shares for $135 million, a
record amount for the Russian airline industry.
It is not hard to understand why the bank headed by Aleksandr Lebedev
wanted the shares. Aeroflot flatly refuses to buy Il-86 airplanes,
and NRB is actively involved in an Il-86 production program. Now that
it has seats on Aeroflot’s board of directors, NRB is counting on
convincing the company of the undeniable advantages of Russian
aircraft over Airbus and Boeing. A scandal is anticipated. Aeroflot
has repeatedly stated that problems with access to Western airplanes
are having a negative impact on the company’s business. Despite some
improvements in Aeroflot’s financial indicators, the company’s
situation is far from ideal. At the end of the year, Aeroflot began a
“rebranding” campaign to bring its image more in line with its
Western competitors.
Ministry of Railways–Russian Railways
AO Russian Railways (Rossiyskie zheleznye dorogi; RZhD), perhaps the
largest Russian company in terms of assets, was formed in Russia at
the end of September. Anna Belova, who at the time was still Deputy
Minister of Railways, announced that the ministry would be
transferring property worth 1600 billion rubles to Russian Railways.
RF Minister of Railways, Gennady Fadeev, was appointed president of
the company split off from the Ministry of Railways. The Ministry is
expected to be eliminated by combining it with the RF Ministry of
Transport, but Russian Railways has already started operating. It is
still difficult assess the results of the deal, since there are no
noticeable practical differences in Russian Railways’ operations
compared with the Ministry of Railways.
Georgia–Russia
The business calm in Russia did not prevent two Russian economic
giants, Gazprom and RAO UES of Russia, from carrying out an economic
blitz with record speed in a country that was previously not very
welcoming to Russian investors. The two unreformed monopolies
captured Georgia’s power industry in about a month.
On July 1, Aleksei Miller, chairman of the board of Gazprom, signed a
cooperation agreement with Georgia’s Minister of Fuel and Energy,
David Mirtskhulava, which gives Gazprom the prospect of acquiring up
to 100% of the Georgian gas market. Then in early August, RAO UES of
Russia bought 75% of the shares of the Telasi power distribution
network in Tbilisi and two power-generating units of the Tbilisi
Thermal Power Plant with a total capacity of 600 MW (this represents
a large part of Georgia’s power industry) from the American company
AES Silk Road and its partners.
On August 1, RAO Nordic, a subsidiary of RAO UES of Russia, bought
all of the American group AES’s Georgian business, which amounted to
nearly 50% of Georgia’s power facilities. RAO Nordic paid $70 million
for the assets; the only reason for such a low price was that the
assets were burdened with monstrous (by Russian standards) debts,
both payable and receivable.
The Georgian opposition accused President Eduard Shevardnadze of
betraying national interests, but neither RAO UES of Russia nor
Gazprom seems to have had any particular political aims. Although
accusations of “selling the homeland” played a certain role in the
Georgian president’s resignation, immediately after the coup,
contrary to expectations, the new Georgian leaders said nothing about
a possible review of the deals. Gazprom’s only actual interests in
Georgia are the long-distance gas pipeline to Armenia and replacing
Itera Oil and Gas Company (NGK Itera) on the Russian domestic market.
This second aim is already succeeding in a way: the first thing the
new managers of Tbilisi’s gas supply systems did was to cancel the
contract with Itera.
Russian natural monopolies had never carried out this sort of blitz
before, but RAO UES of Russia did not stop there. In keeping with
chairman Anatoly Chubais’ political policy of creating a “liberal
empire” through economic domination of the entire CIS, the company
bought 33% of the shares of a Ukrainian company owned by ten regional
power companies. RAO UES of Russia intends to continue expanding into
Ukraine next year. Gazprom’s plans include the formation of a joint
venture with the Belarussian company Beltransgaz, investments in
Central Asian gas pipelines, and a whole set of “imperial deals”.
SUAL–Fleming Family & Partners
In February 2003, OAO SUAL announced the formation of a transnational
corporation that included SUAL’s aluminum assets, the coal company
Access Industries (Eurasia), and two facilities of the English
company Fleming Family & Partners in Cuba and Mozambique. Chris
Norval, former vice-president of strategic planning of the South
African company BHP Billiton, was appointed general manager of the
SUAL International industrial group and president of SUAL Holding.
Despite of its lack of publicity, the deal between SUAL and the large
English private fund was one of the signal events of 2003. SUAL is a
company able to compete with Russian Aluminum (Russky alyuminii),
which has a virtual monopoly on the aluminum market, and Viktor
Vekselberg is one of biggest players of the “oligarchic” political
scene, which increases the investors’ risks. Nevertheless, the
Flemings approved the deal, which made similar investments in Russia
an acceptable risk for other serious partners. After all, the matter
concerns a resolutely nonpolitical deal that is also one of the
year’s ten largest transactions, which in theory should form the
basis for an increase in foreign investments in Russia and
globalization of the Russian economy.
Shell–Sakhalin-2
On May 15, 2003, the Sakhalin Energy (SE) consortium, shareholder of
the Sakhalin-2 project, decided to begin the second phase of the
project. The partners, the main one of which is Shell, committed to
invest $10 billion in Sakhalin-2.
SE had planned to make the decision to start the second phase of
Sakhalin-2 in the first half of 2003; but after SE’s management
expressed a number of complaints about legislative guarantees of the
safety of future investments (particularly the inconclusive
settlement of SE’s rights to set tariffs for oil and gas pipelines
from fields offshore Sakhalin to ports on the southern part of the
island), there was talk of suspending the project. According to
unofficial versions, SE and its shareholders (Shell, 55%; Mitsui,
25%; and Mitsubishi, 20%) wanted to postpone the decision on starting
the second phase until fall 2003 or even later.
The main factor in making the decision to start the project was
apparently a contract concluded between SE and the Japanese company
Tokyo Gas for delivery of 1.1 million tons of liquefied natural gas
(LNG) per year for 24 years. Philip Watts, Shell’s CEO, recently
announced that the company plans to conclude similar contracts for
LNG deliveries to Japan, South Korea, Taiwan, and the United States
in the near future. However, it is not inconceivable that Shell
decided to speed things up as a result of unofficial statements from
Gazprom to the effect that if something happened, Gazprom’s status as
coordinator of gas field development in Eastern Siberia and the Far
East and gas exports from Russia to countries in the Asia-Pacific
region might be extended to Sakhalin-2 as well. Shell decided not to
wait until Gazprom’s hints turned into concrete actions and announced
the start of the largest investments in Russia’s history.
No Deal
Despite the impressive appearance of the first ten deals, the list
would have been much more impressive if a number of large deals in
Russia’s most important economic sector, the fuel and energy complex,
had taken place or been concluded.
First of all, the future of the merger of YUKOS and Sibneft into the
unified company YukosSibneft, the largest deal in Russian business
history, is still unknown at present. On April 22, 2003, YUKOS and
Sibneft announced the start of the merger into YukosSibneft. In the
first phase, Sibneft shareholders were to sell 20% of their shares to
YUKOS for $3 billion; and then in the second stage, they would
exchange their remaining Sibneft shares for about 26% of
YukosSibneft’s securities. However, after the head of YUKOS, Mikhail
Khodorkovsky, was arrested, Sibneft announced a suspension of the
deal that might have formed a company worth $50–55 billion, making it
the largest company in Russia in terms of capitalization and giving
it control of nearly one-third of Russian oil production.
Two other failed megadeals also have a chance of taking place in
2004. The first is a deal to give a consortium made up of Gazprom and
the Ukrainian company Naftogaz of Ukraine control of all of Ukraine’s
gas pipeline infrastructure (for an estimated cost of no less than
$25 billion). One of the main reasons for the holdup is Kiev’s
obstinate insistence on including Kazakhstan, Uzbekistan, and
Turkmenistan in the gas transport consortium (gas from these
countries is exported through Ukrainian pipelines, but their
membership in the consortium means that Gazprom would lose its
monopoly position as natural gas exporter to Europe.
The second is the creeping privatization of Bashkortostan’s oil
production and oil refining industries. In early August, the
government of Bashkortostan reorganized the property structure of AO
Bashneft and Bashneftekhim, which had previously belonged to it in an
ownership chain, with the aim of protecting them from possible
privatization. Now the companies control their own capital according
to a complex scheme. The problem is that as a result of the deal the
republican budget lost assets worth at least $2 billion. The deal is
also being contested and is directly dependent on the outcome of the
pre-election fight between President of Bashkortostan Murtaza
Rakhimov and his rivals.
The last two deals are the attempted acquisition of Surgutneftegaz by
Sibneft shareholders, which led to an unprecedented increase in
Surgut shares in spring 2003, and the would-be sale of a large
package (25 to 40%) of YUKOS shares to either ExxonMobil or
ChevronTexaco. Based on estimates of the company’s market value, the
deal should have been worth $20–35 billion, which beats the record
set by BP–TNK by several times. Strangely enough, President Putin was
the first to officially announce that negotiations were going on. The
company itself is keeping dead silent; and Lee Raymond of ExxonMobil,
who met with nearly all members of the government and oil and gas
industry elite in Russia last October, has not said a word about the
results of these meetings.
It is certain that three of these five deals have not taken place
because of active interference of the Russian authorities. The YUKOS
affair in particular, which arose as a result of the initial efforts
to form YukosSibneft, became the determinant for businessmen who had
been planning deals two or three orders of magnitude smaller. By the
end of 2003, there were noticeably fewer of them than at the
beginning of the year; and this should be considered one of the
year’s main results.
by Dmitry Tatarinov
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Chirac to defend backing for Turkey EU talks
By John Thornhill in Paris
FT
December 14 2004 20:41
Jacques Chirac will on Wednesday night give a rare television
interview to explain why he favours opening accession talks with
Turkey while the majority of his compatriots oppose the idea.
The French president will have to be at his persuasive best, just two
days before European Union leaders are expected to approve a
Commission recommendation to start entry talks with Turkey.
An opinion poll published by Le Figaro newspaper this week showed that
67 per cent of French voters opposed Turkey’s entry, making France the
most sceptical of the EU’s big countries. Resistance runs even higher
among Mr Chirac’s own party, with 71 per cent of UMP supporters
against Turkish membership.
There are several reasons why Turkey’s admission inflames such debate
in France, ranging from esoteric arguments about the dilution of the
EU’s essence to scarcely veiled Islamophobia on the extreme right.
Many MPs are also angry that Mr Chirac has not allowed them more of a
say on such an important issue. The government allowed a parliamentary
debate in October on Turkey but did not subject itself to a binding
vote.
Sylvie Goulard, a political science professor, says that if Turkey
were admitted to the EU – becoming its biggest and poorest member
state – it would kill the dream of Europe’s founders of an ever deeper
and closer union. The French government’s failure to initiate a proper
debate on this issue has created a public backlash.
“If you want to change the whole European project then you have to
take into account the views of the people,” she says. “But they have
refused until now to talk to the public and that is why they are in a
mess.”
France’s Armenian population, estimated at about 300,000, has also
been influential, highlighting Turkey’s refusal to accept
responsibility for the Armenian genocide of 1915 and Ankara’s poor
human rights record.
The French government has scrambled to mollify public opinion by
insisting that the future is not pre- ordained, that Turkey’s possible
admission is more than a decade away, and that voters will be given
their say on Turkey’s membership in a referendum. French diplomats
have also been exploring the possibility of offering Ankara a
“privileged partnership” with the EU.
Moreover, Michel Barnier, the French foreign minister, has this week
attempted to parry criticisms from the Armenian community by urging
Ankara to face up to its past. “The European pro- ject is founded on
the very idea of reconciliation,” he said yesterday. “I think the time
has come for Turkey to make an effort to address the memory of this
tragedy which has affected hundreds of hundreds of thousands of
Armenians.”
Opinion polls show that many French voters could be persuaded to
change their minds on Turkey’s membership if Ankara fulfilled its
promises to reform over the next decade.
Even Harout Mardirossian, president of the Committee for the Defence
of the Armenian Cause, says it is possible to imagine a thoroughly
reformed Turkey being admitted into the EU.
But Mr Chirac is staking an enormous amount on Turkey’s ability to
deliver on reform. In the meantime, he risks isolation within his own
party and among the public. His great fear is that the intensity of
the Turkey debate could yet infect next year’s referendum on the EU
constitutional treaty.
From: Emil Lazarian | Ararat NewsPress

ARMENIAN MEDICAL ASSOCIATION PROTESTS AGAINST GOVERNMENT’S DECISION TO DRAFT
RESERVE DOCTORS TO ARMY
YEREVAN, DECEMBER 6. ARMINFO. Armenian Medical Association is
protesting against the Government’s decision to call up reserve
doctors to the army for two years.
The president of the association Paronak Zelveryan says that this
President approved decision stipulates that drafted to the army
should be doctors with master’s degree and those having three and more
children. Zelveryan is indignant that doctors with scientific degrees
should be called up to the army. He calls groundless the Government’s
motivation that the army needs doctors. This is a violation of the
very law on draft, he says.
For 10 years already Yerevan State Medical University’s Military
Medical Department has been graduating highly qualified doctors for
the army. Where is the personnel of the Defence Ministry then?
So the association is ready to cooperate with the Ministry urging
the Government to revise its decision and to analyze the deficiencies
causing lack of doctors in the army. The association urges all NGOs and
scientific and educational companies to speak up on the issue. “We are
ready to take part in any discussion of this problem,” says Zelveryan.
From: Emil Lazarian | Ararat NewsPress