COMPANIES ADD TO RUSSIA’S FOREIGN DEBT
Izvestia, October 3, 2002, p. 2 EV
The Central Bank of Russia has released a report on Russia’s foreign debt for the first six months of this year. The debt burden was reduced by only $500 million, and currently totals $150.6 billion. The Finance Ministry has reduced the national debt by nearly $5 billion, but banks and companies have borrowed abroad to the tune of $4.5 billion.
Unfortunately for the government, the increase in foreign loans has not been accompanied by growth of direct investment in Russian industry. Foreign lenders attribute their current caution to a global slowdown in business activity. The Russian government does not put much stock in this explanation, however: Russia ranked seventeenth on the investment attraction ranking drawn up by A.T. Kearney Consulting Company. The list covers sixty nations, with China ranked first. Last year, when the influx of foreign capital was much greater, Russia was ranked thirty-second in the list. Nonetheless, investors, as they admit, tend to be guided not by rankings, but their own analyses of long-term risks. In their opinion, communist China with its 10% industrial growth rate offers far lower risks than democratic Russia, which is dependent on oil exports.
Alexander Ovchinnikov, head of the bond markets group at the Trust & Investment Bank, attributes the increase in non-government borrowing to the fact that Russian companies, primarily oil companies, have recently been entering foreign bond markets on their own and have begun issuing eurobonds. “This is a positive trend,” says Ovchinnikov. “Enterprises are coming out of the government’s shadow and creating their own credit histories.”
Alexander Khandruyev, a member of the Duma’s advisory council on the banking sector, supports this view. “This undoubtedly testifies that Russian operators are becoming more attractive for foreign investors.”
Yevgeny Gavrilenkov, chief economist with Troika-Dialog Investment Company, has a very different opinion: “In my view, this is further proof that it is cheaper and easier for companies to borrow abroad. Foreign currency loan rates at Russian banks remain around 10-12% per annum. Moreover, most banks service their own affiliated structures and are rather reluctant to lend to non-affiliates; whereas in the West inflation is lower and interest rates are under 10%.”
KRASNOYARSK ELECTION COMMISSION RESISTS
Moskovskii Komsomolets, October 3, 2002, p. 2
There has been an unexpected new twist in the scandal over the Krasnoyarsk territory elections. Yesterday, the Krasnoyarsk election commission made another attempt to invalidate the results of the vote.
The previous decision of the election commission was overturned by the Krasnoyarsk territorial court, which ordered the election commission to present the election results “in compliance with the law”. However, the chairman of the Krasnoyarsk election commission, Georgy Kostrykin, claims that the commission has not changed its view of the issue: since “there have been gross violations of electoral law”, due to which the election results may be described as invalid. A day earlier, Central Election Commission chairman Alexander Veshnyakov said that observers’ complaints had not been verified and election results could not be annulled on the grounds of those complaints alone. In Veshnyakov’s opinion, the situation is reminiscent of a corporate takeover. The only difference was that instead of shareholders that might demand bankruptcy there have been election observers.
According to the law, a regional election commission may be disbanded if it does not obey the resolutions of a court or the Central Election Commission.
ANOTHER SCANDAL ABOUT GEORGIA
Moskovskii Komsomolets, October 3, 2002, p. 2
It seems that there will be a new scandal focused on Georgia in the near future. A Duma member, Gennady Gudkov, is seeking to submit a parliamentary inquiry to President Putin with a request “to make the leaders of the General Staff account to parliament for their actions”.
A directive from Chief of the General Staff Anatoly Kvashnin, on considerable cuts to the numbers of the Russian Armed Forces Group in the Trans-Caucasus deployed on the territory of Georgia, came into effect on October 1. But no agreements on Russian military bases have been made so far at the current Russian-Georgian negotiations. Gudkov received information about sweeping cuts to troop numbers as long ago as spring; but to all his inquiries the General Staff replied that the presence of the Russian military in the region had not been reduced. At the moment, Russia has base 12 in Ajaria and base 62 in Akhalkalaki, the headquarters of the Russian Armed Forces Group in the Trans-Caucasus located in Georgia. The abovementioned bases have around 7,000 military personnel and 1,500 civilians (Georgian citizens for the most part). By order of Kvashnin, the military and civilian staff in Tbilisi, Batumi and Akhalkalaki will be reduced by six or seven times before January 1. Gudkov claims that “the General Staff is withdrawing troops from the region at its own initiative (and covertly, at that!) – which is not in line with Russia’s official policy. This makes it unclear why Russia is negotiating with Georgia at all.”
RUSSIA AND CHILE EXPAND COOPERATION
Parlamentskaya Gazeta, October 3, 2002, p. 1
President Ricardo Lagos of Chile is visiting Russia, and his schedule promises to be packed. He is planned to meet with the Russian president, the prime minister, the speakers of both houses of parliament (Sergei Mironov and Gennady Seleznev), Moscow Mayor Yury Luzhkov, top officials of the Russian Union of Industrialists and Entrepreneurs and the Chamber of Commerce and Industry.
Along with interaction between Russia and Chile on the international scene, which is becoming particularly significant in light of Chile’s prospective non-permanent membership of the UN Security Council, the main attention of negotiators will be focused on expanding bilateral trade and economic relations. A group of fifty Chilean business leaders have come to Russia before the president’s visit to discuss possible fields of cooperation and seek promising business partners.
The Chilean president will be in Russia until October 6. This is Lagos’ first visit to Russia, but it is worth noting that thirty years ago he was appointed by President Salvador Alliende as ambassador to the USSR. Because of the coup organized by Pinochet in the early 1970s, that decision never came into effect.
Most likely, Ricardo Lagos as president of Chile will now have much greater opportunities to extend relations between Chile and Russia.