Roj TV, Denmark
Dec 18 2004
French President Chirac interprets the summit and Kurdish Problem
French President Jacques Chirac stating he expected the candidacy of
Turkey to the European Union (EU) would bring the principles of
peace, dialog and especially respect with, interpreted the given date
for negotiations as “If we remain engage for 15 years, this will
result in a happy marriage.”
In a press conference held in Brussels, Jacques Chirac , the
president of France where was on the focus of the most intensive
debates before the Oct. 17 summit of the EU, made crucial statements
on the given date for starting talks, Cyprus and Kurdish problems. He
emphasized that the date to be handed to Turkey does not mean
candidateship and, gave the message Turkey should make great attempts
to access to the European community. If Turkey does not make the
required efforts and the unity decrees Turkey not to have done or not
to want to do so, the EU will stand on a strong formula of
relationship out of candidacy.” President Chirac said and stated the
way of parley was ”long and hard”.
‘Turkey has many steps to take”
To question ”Will you make a call on Turkey, which has been fighting
with Kurdish guerillas for 30 years, to start a dialog with the
Kurdish side”, Mr.Chirac said the problem would be solved within the
framework of Copenhagen Criteria. Taking attention to the existence
of the Criteria which point out respect for human rights, the French
President said: ”This should be implemented into practice for the
Kurds, as should for the others. These criteria to be imbibed by
Turkey will bring forth effects especially for the Kurds, too. One of
the important problems is deliberation. If we believe the conditions
of respect for human rights not to be fulfilled, this should be
imposed upon ”He expressed that Turkey had many steps to take on
that way, and warned the Turkish state that the debate will be
stopped in case of Turkey violated human right.” To enter this
culture is needed. I hope the negotiations and the candidateship of
Turkey bring the principles of peace, dialog and particularly respect
with it. We call this Copenhagen Criteria, which will open the way of
peace and dialog.” he added.
If Cyprius is not recognized, the talks end’
By stating that Turkey was ready for signing the protocol related
with the Ankara Agreement on the Cyprus Issue, Chirac emphasized the
negotiations would end in case Cyprus was not recognized. He
expressed a wish of marriage between the Turkish state and the EU by
saying :” If we stay engaged for 15 years, I believe, this will lead
up to a marriage.”
‘France is very sensitive about Armenians subject’
The president answering a question stated France was very sensitive
especially about the Armenian problem and said that France opened its
gates to Armenians in 1915 and there is an Armenian society
well-integrated with the state. He also recorded that Turkey should
have made a memorial examination on Armenian issue, otherwise Turkey
would incur an intervention of the French people in the referendum to
be held for the candidacy of Turkey to the EU.

RECOVERY OF POPULATION’S SOVIET TIME SAVINGS IS MORAL, SOCIAL AND ECONOMIC PROBLEM
YEREVAN, DECEMBER 18. ARMINFO. The recovery of the population’s
Soviet times savings is a moral, social and economic problem, says
Artak Arakelyan, MP representing the State of Law party.
“We owe money to those who built the country that was successfully
destroyed later. Even though we have been taught how to cheat in the
past years the money should still be returned,” says Arakelyan.
He notes that nobody pressured him and some other MPs to collect
signatures for calling a special session on the issue. He says that his
party drafted such a bill as early as 2000 but it has never reached the
parliamentary floor. Now the parliament has to consider three bills at
a time. “We should find an optimal solution,” says Arakelyan. He calls
a bluff the talk that WB and other international financial institutions
may refuse Armenia further financing if the savings are returned.
Arakelyan is sure that this issue will cause no split inside the
ruling coalition but regrets that socially oriented ARFD objects to
returning people their own money. Let them come and vote against rater
than deliberately boycott the session, he says. As for the Republican
Party’s skepticism Arakelyan calls it political jealousy.
From: Emil Lazarian | Ararat NewsPress

IMF EXECUTIVE COMMITTEE DOES NOT GIVE POSITIVE ESTIMATION TO SITUATION OF
CUSTOMS AND TAX SPHERES OF ARMENIA
YEREVAN, DECEMBER 18. ARMINFO. During the Dec sitting IMF Executive
Committee did not give positive estimation to the situation in the
tax and customs spheres of Armenia. IMF Resident Representative to
Armenia James McHugh stated in the interview to daily “Republic of
Armenia”. According to him, it seem that the affairs in this sphere
are not so good as they could be.
Mr. McHugh expressed an opinion that in today Armenia the most
anxiety is aroused by the low level of tax collection which creates
problems in the budgetary sphere. He stated that this problem is
directly connected with corruption phenomena. According to him,
IMF has agreed with the government of Armenia for introduction of
new software and systems in tax and customs bodies. They will allow
to estimate the impartiality of amounts of fixed payments. The IMF
initiates elaboration of a code of behavior of an agent of customs
service and a department is established which will carry out a control
after clearance. Another innovation must bring to minimum the direct
contact of freight forwarders and recipients with customs officials.
At the same time James McHugh informed that IMF task group will visit
Armenia in March of the next year, and it will prepare proposals
concerning a new credit program. By this period the fund will form
the list of the so-called preliminary actions whose fulfillment will
prove about the adherence to the government to the selected course
and it will include the arrangements for perfection of the tax and
customs spheres. Nevertheless, IMF executive committee members think
that Armenia has reached significant economic results and is following
correct way. James McHugh noted that Armenia remains in the list of
the state with low income per capita.
It should be noted that at the beginning of Dec IMF allocated the
last tranche to Armenia worth 9 mln SDR under the program PRGF worth a
total of 69 mln SDR. In total, during 10 years of cooperation IMF has
provided a credit assistance to Armenia worth a total of some $300 mln.
From: Emil Lazarian | Ararat NewsPress

Chess Academy of Armenia
Yerevan, Armenia
Contact: Aram Hajian
Tel: (3741) 52-02-46
Fax: (3741) 52-02-46
E-mail: [email protected]
Web:
Round 1 Report
by Aram Hajian
The first round of the Petrosian Internet Memorial was
a hard-fought success. Each team enjoyed one victory,
endured one defeat, and came out of the day with two
out of four points. Winners in the Armenia-Russia
match were GM Sargissian over GM Khalifman on board 3,
and GM Zvjaginsev over GM Minasian on board 4, each
converting for the full point with the white pieces.
On board 1, the event’s top rated player GM Svidler
enjoyed a significant advantage with the black pieces
over GM Aronian, who pulled a rabbit out of his hat in
holding the position despite being down to one minute
for nearly twenty moves. A draw was the fortunate
outcome. Meanwhile on board 2, Lputian played a
strong novelty to equalize with black against GM
Dreev, and a draw was the just outcome.
In the China-France match, GM Ni ground down GM
Fressinet in a tortuous endgame with the black pieces
on board 2, while GM Nataf dispatched his board 4
opponent GM Wang with a strong king-side attack on the
white side of a Sicilian defense. The struggles on
boards 1 and 3 saw GMs Bu and Lautier share the point,
and GMs Zhang and Bauer agree to the peace as well.
Round two sees France take on Armenia, and Russia
facing off against China. Technically, the games went
well, without any disconnections, distractions, or
internet problems in any of the four locales. Visit
for news, information,
interviews, and games from the event, which runs from
December 18-23.
Standings after 1 round:
1st place with 2 points: Armenia, China, France,
Russia

ARMENIAN PARLIAMENTARY SPEAKER: WHEN REFORMING THE ELECTION CODE, WE MUST NOT
BE GUIDED WITH A PRINCIPLE THAT “GUILLOTINE IS THE BEST REMEDY FOR DANDRUFF,”
YEREVAN, DECEMBER 18. ARMINFO. When reforming the Election Code,
we must not be guided with a principle that “guillotine is the best
remedy for dandruff,” says Armenian Parliamentary Speaker Artur
Baghdasaryan in his interview with the Armenian Second TV channel
“H2.” A.Baghdasaryan is the Leader of the Orinats Yerkir party included
in the ruling coalition.
In his words, two project of distribution of the parliamentary seats
exist at present: either 100% proportional system, or 60% and 40%
in favor of the proportional system. Each political force expressing
its opinion on this problem must be ready to a compromise. At present
70%/30% version is considered, which will maintain the rights of
single-mandate seats as well. It will allow political forces to
develop. A consensus is reached and the draft reforms, including
in them expansion of observers’ rights, will be submitted to the
Parliament in February, 2005, the speaker says.

REGULAR FERRY OPERATIONS TO BE STARTED BETWEEN KAVKAZ AND POTI PORTS JAN 5 2005
YEREVAN, DECEMBER 18. ARMINFO. Regular ferry operations will be
started between the Georgian port of Poti and the Russian port of
Kavkaz Jan 5 2005, Armenia’s Transport and Communication Minister
Andranik Manukyan said during his visit to Georgia.
The first ferry has already carried 24 carriages from Kavkaz to
Poti. An Armenian-Georgian meeting is planned for Jan 10 to discuss
the terms of the ferry communication between the ports. “Judging
from the mood of the Russian and Georgian sides one can infer that
the communication will become regular Jan 5,” says Manukyan.
It should be noted that presently the Armenia-Georgia-Russia railroad
operations are carried out via Ukraine (Poti-Ilichevsk) as Russia has
had no ferry port on the Black Sea. As a result the transit fees to
Ukraine amount to 30%-40% of the Russia-Armenia cargo transportation
costs. The Kavkaz ferry port was first exploited in May 2004. Its
maximum capacity is 500,000 tons a year. But shallow coast is a
serious problem for the port as it can receive only small ships.

Constitutional reforms doomed to failure – Armenian opposition MP
Arminfo
18 Dec 04
Yerevan, 18 December: “The draft constitutional changes proposed
by the Armenian authorities are doomed to failure in their present
form,” a member of the Armenian National Assembly from the opposition
Justice bloc and the leader of the National Democratic Party, Shavarsh
Kocharyan, said at a meeting with journalists at the Azdak club today.
He said that since the overwhelming majority of the people do not trust
the authorities, it is almost impossible for the draft constitutional
changes proposed by the ruling coalition to receive the necessary
support from one third of the overall number of voters to be adopted.
“This can only be done through massive falsification of the results
of the plebiscite. However, I do not think that the powers that be
will do so because they resort to any violations only when their
self-preservation is at stake,” Kocharyan said.
At the same time, the only way out of the current situation would be
to put up for debate by the people draft constitutional amendments
resulting from public concord, he pointed out.
“If representatives of the ruling coalition started a dialogue
with the opposition on constitutional reforms not in words, but
in deeds, then we would regard the basic law as important to the
country’s future without changing our position on the illegitimacy
of the regime and would probably reach an agreement on this issue,”
Shavarsh Kocharyan said.
Passage omitted: The Justice bloc has submitted its own constitutional
changes to the Council of Europe’s Venice Commission
From: Emil Lazarian | Ararat NewsPress

ARMENIA’S PRESIDENT SATISFIED WITH WORK OF VANADZOR MUNICIPALITY
YEREVAN, DECEMBER 18. ARMINFO. During his today’s visit to Lori region
Armenia’s President Robert Kocharyan expressed his satisfaction with
the work of the municipality of the regional center Vanadzor.
In Vanadzor Kocharyan took part in the opening of a 25 m long and
16 m wide covered pool. $370,000 have been spent on the project –
$270,000 by the local community and $100,000 EETA company from
Greece. Kocharyan expressed hope that the pool will help to raise
future swimming champions.
He also visited the museum house of the great Armenian writer Hovhannes
Tumanyan. The house was recently repaired by the hayastan Foundation
while the road leading to it by the local authorities.

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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The Australian, Australia
Dec 18 2004
Fenech’s man champion
By Petr Kogoy
A FIREWORKS display interrupted yesterday’s flyweight world title
fight in Florida, but when the smoke cleared Australia had a new
world champion.
The Jeff Fenech-trained Vic Darchinyan claimed the IBF flyweight
title with an 11th-round knockout win over Colombian Irene Pacheco.
The contest was even after nine rounds before officials took the
unusual step of stopping the bout after the fireworks display.
Following a 10-minute delay, Darchinyan came out in the 10th round
and dropped Pacheco for the first time in the fight with a left hand.
Pacheco, 33, took a mandatory eight count, got up and made it to the
end of the round. He was dropped again in the 11th round with another
pile-driving left hand. Then Pacheco’s corner called a halt.
Darchinyan’s win took his record to 23-0, with 18 knockouts.
Darchinyan became Fenech’s first boxer to win a world title.
“I’ve finally got the monkey off my back,” Fenech told The Weekend
Australian.
“I went into the fight with a plan for Vic and it worked. The
Colombian took a lot of punishment before he hit the canvas the first
time in the 10th.
“The straight left Vic threw at him in the 11th that finally ended
the fight was a piledriver. The punch would have stopped a raging
bull in its tracks.”
Born and raised in Vanaezor, Armenia, Darchinyan was spotted by
Fenech at the Sydney Olympics in 2000.
“I’ve waited for this chance a long time,” Darchinyan said.
“While I’m proud of my Armenian heritage, I am also proud to be a
naturalised Australian.
“I’m so happy, having my girlfriend Olga Stovvoun in my corner
tonight.
“This is a dream come true for me. I’ve been a fighter for 20 years.
But I knew if I wanted to win, to beat Pacheco, I needed to throw
more punches. He proved to be a tough and very strong opponent.”
Meanwhile, Kostya Tszyu’s manager Matt Watt yesterday questioned the
professionalism of promoters Frank Warren and Vlad Warton after
continuing conjecture about a fight between the IBF super-lightweight
champion and mandatory contender Ricky Hatton.
Watt and Tszyu have spent two weeks denying the Australian-based
fighter has signed to defend his title against Hatton in Manchester
next year.
However, Warren insists he has a deal with American pay television
network Showtime for a fight between Tszyu and Hatton in April or
May.
Bombarded by calls from Australian journalists seeking confirmation
of the fight, Watt has repeatedly said Tszyu has yet to sign a deal.
English promoter Warren has been dealing with Tszyu’s American-based
promoter and former manager Warton, but neither has had any recent
contact with Watt.
Watt said he had not held any discussions with Warren and it had been
at least three weeks since his last conversation with Warton,
although in that time there had been “written correspondence of a
very generic, non-specific nature” between them.
Watt said he was waiting for Warren or Warton to explain why it made
sense for Tszyu to fight in the challenger’s backyard at a proposed
local time of 4am to accommodate American and Australian television
schedules.