Tweet
COSTLY FRIENDSHIP
by Denis Malkov, Maria Tsvetkova, Natalia Kostenko
WPS Agency
What the Papers Say (Russia)
February 4, 2009 Wednesday
Russia
Russia promises its allies $3.5 billion and 100 billion rubles;
Russia has promised a great deal of money to its allies in the past
few days. These countries include Belarus, Cuba, Kyrgyzstan, and
Armenia. The Euro-Asian Economic Community is establishing its own
Anti-Crisis Fund.
In the past three days, Russia has promised its allies around $3.5
billion, plus 100 billion rubles.
At talks with Belarus yesterday, Russia agreed to deliver a $1 billion
loan in February - following on from the $1 billion provided in
November. Minsk has asked to borrow a further 100 billion rubles. On
January 23, Deputy Finance Minister Dmitri Pankin told us: "We
aren't even considering that request." But presidential aide Sergei
Prikhodko said yesterday that staff have been instructed to work on
this issue over the next two weeks; the loan sum in rubles hasn't
been decided, but it would run into tens of billions. Pavel Borodin,
state secretary of the Russia-Belarus Union State, assured us that
Belarus would receive 100 billion rubles in the first half of 2009.
President Kurmanbek Bakiyev of Kyrgyzstan announced in Moscow that
the US air base at Manas, used to support US-NATO operations in
Afghanistan since 2001, will soon be shut down. Bakiyev said that the
USA hadn't been receptive to Kyrgyzstan's proposals regarding economic
compensation for hosting the base. US General David Petraeus maintains
that the American base brings in $63 million a year for Kyrgyzstan,
while the rent is only around $17 million a year.
The Euro-Asian Economic Community (EAEC) is holding an extraordinary
summit in Moscow today. One of the two main items on the agenda is the
Anti-Crisis Fund. This $10 billion fund was announced in December,
when the presidents of Russia, Kazakhstan, Kyrgyzstan, Armenia, and
Tajikistan met in Kazakhstan. Prime Minister Vladimir Putin said in
late January that the money for the fund would be provided by Russia
and Kazakhstan; the share contributed by the other countries would
be small. The fund will be managed by a board, with each country
having votes in proportion to its contributions. A Cabinet staff
source told us that Russia is supposed to deliver 10% of its first
annual contribution within three months of signing the agreement.
A large delegation from Armenia, headed by President Serge Sargsian,
has come to Moscow. Russian Deputy Prime Minister and Finance Minister
Alexei Kudrin said on January 22 that Armenia has asked Russia for
a stabilization loan. Vardan Aivazian, chairman of the parliament's
economy commission, told us that Armenia is negotiating with Russia
for a loan of $500 million to $1 billion.
The Armenian parliament voted yesterday to approve Armenia joining the
Euro-Asian Bank of Development, which will be used for Anti-Crisis
Fund payments. The bank was established by Russia and Kazakhstan in
2006 in order to finance EAEC projects. Its authorized capital is
$1.5 billion, including $1 billion from Russia and $100,000 from
Armenia. According to Armenian Energy Minister Armen Movsisian,
participating in the bank will enable Armenia to raise money to build
a new nuclear power plant and a railroad to Iran.
Moscow's generosity began on January 30, when Medvedev held talks
with Cuban leader Raoul Castro; the volume of loans and aid to
Cuba grew from $20 million to $354 million. According to a Foreign
Ministry source, the two sides agreed just a few hours before signing
the papers that Russia would allocate an extra $150 million (to buy
Russian-made agricultural and construction equipment) and $100 million
(for leasing Russian machinery).
Debts and loans were also discussed at talks with Kyrgyzstan yesterday.
On January 28, following a visit to Bishkek, Deputy Prime Minister Igor
Sechin said that Moscow is prepared to give Kyrgyzstan a non-repayable
grant of $150 million, along with $300 million in the form of a
low-interest loan, repayable over 40 years, with a seven-year grace
period before repayments start.
What's more, Moscow will write off $180 million of Kyrgyzstan's
debts in exchange for a 48% stake (the largest stake) in OAO Dastan -
an enterprise that produces torpedo components.
Far more substantial aid to Kyrgyzstan was announced after yesterday's
talks. As well as the debt write-off agreement, Russia and Kyrgyzstan
also signed agreements on non-repayable financial aid ($150 million)
and an immediate state loan of $2 billion. Moscow and Bishkek also
agreed to build the Kambaratin hydro-electrical power plant together.
President Emomali Rakhmon of Tajikistan arrived in Moscow yesterday
after all. Vladimir Zharikhin, deputy director of the CIS Countries
Institute, says that Rakhmon made a mistake in ignoring a scheduled
February 2 meeting with Medvedev; he had an opportunity to sort out
the financing for the Rogun hydro-electrical power station (up to $3
billion) and to discuss Uzbekistan's objections to this project.
In each of these cases, there is a different explanation for Russia's
generosity. A source from the presidential administration says
that aid to Cuba is being increased due to Deputy Prime Minister
Sechin's activity in Latin America; Sechin chairs the Russian-Cuban
inter-governmental commission. The source adds that the EAEC fund is
being established because Russia wants to reach agreement with its
CIS neighbors on a common regional anti-crisis policy. Ermuhamet
Ertysbayev, aide to President Nursultan Nazarbayev of Kazakhstan,
told us that the fund is being established to facilitate a transition
to ruble-based payments. According to Kudrin, Belarus needs the 100
billion rubles "to increase its gold and currency reserves." Medvedev
said that aid to Kyrgyzstan is being provided due to the special
alliance nature of bilateral relations.
Vadim Gustov, chairman of the Federation Council's CIS Affairs
Committee: "Russia is showing its neighbors that it's a good friend
in times of trouble. If we don't give them the money, others will."
Vladimir Nikitin, a member of the Duma's CIS Affairs Committee, says
that the Russian leadership is pursuing geopolitical objectives: the
question of whether Kyrgyzstan will continue to cooperate with the USA,
and the question of which way Tajikistan and Turkmenistan will look.
Zharikhin explains that the loans are being granted to countries
that have visa-free travel agreements with Russia and practically no
borders: if the situation turns critical in any of these countries,
millions of refugees would flood into Russia. From Moscow's
perspective, it's much better to keep them afloat now.
by Denis Malkov, Maria Tsvetkova, Natalia Kostenko
WPS Agency
What the Papers Say (Russia)
February 4, 2009 Wednesday
Russia
Russia promises its allies $3.5 billion and 100 billion rubles;
Russia has promised a great deal of money to its allies in the past
few days. These countries include Belarus, Cuba, Kyrgyzstan, and
Armenia. The Euro-Asian Economic Community is establishing its own
Anti-Crisis Fund.
In the past three days, Russia has promised its allies around $3.5
billion, plus 100 billion rubles.
At talks with Belarus yesterday, Russia agreed to deliver a $1 billion
loan in February - following on from the $1 billion provided in
November. Minsk has asked to borrow a further 100 billion rubles. On
January 23, Deputy Finance Minister Dmitri Pankin told us: "We
aren't even considering that request." But presidential aide Sergei
Prikhodko said yesterday that staff have been instructed to work on
this issue over the next two weeks; the loan sum in rubles hasn't
been decided, but it would run into tens of billions. Pavel Borodin,
state secretary of the Russia-Belarus Union State, assured us that
Belarus would receive 100 billion rubles in the first half of 2009.
President Kurmanbek Bakiyev of Kyrgyzstan announced in Moscow that
the US air base at Manas, used to support US-NATO operations in
Afghanistan since 2001, will soon be shut down. Bakiyev said that the
USA hadn't been receptive to Kyrgyzstan's proposals regarding economic
compensation for hosting the base. US General David Petraeus maintains
that the American base brings in $63 million a year for Kyrgyzstan,
while the rent is only around $17 million a year.
The Euro-Asian Economic Community (EAEC) is holding an extraordinary
summit in Moscow today. One of the two main items on the agenda is the
Anti-Crisis Fund. This $10 billion fund was announced in December,
when the presidents of Russia, Kazakhstan, Kyrgyzstan, Armenia, and
Tajikistan met in Kazakhstan. Prime Minister Vladimir Putin said in
late January that the money for the fund would be provided by Russia
and Kazakhstan; the share contributed by the other countries would
be small. The fund will be managed by a board, with each country
having votes in proportion to its contributions. A Cabinet staff
source told us that Russia is supposed to deliver 10% of its first
annual contribution within three months of signing the agreement.
A large delegation from Armenia, headed by President Serge Sargsian,
has come to Moscow. Russian Deputy Prime Minister and Finance Minister
Alexei Kudrin said on January 22 that Armenia has asked Russia for
a stabilization loan. Vardan Aivazian, chairman of the parliament's
economy commission, told us that Armenia is negotiating with Russia
for a loan of $500 million to $1 billion.
The Armenian parliament voted yesterday to approve Armenia joining the
Euro-Asian Bank of Development, which will be used for Anti-Crisis
Fund payments. The bank was established by Russia and Kazakhstan in
2006 in order to finance EAEC projects. Its authorized capital is
$1.5 billion, including $1 billion from Russia and $100,000 from
Armenia. According to Armenian Energy Minister Armen Movsisian,
participating in the bank will enable Armenia to raise money to build
a new nuclear power plant and a railroad to Iran.
Moscow's generosity began on January 30, when Medvedev held talks
with Cuban leader Raoul Castro; the volume of loans and aid to
Cuba grew from $20 million to $354 million. According to a Foreign
Ministry source, the two sides agreed just a few hours before signing
the papers that Russia would allocate an extra $150 million (to buy
Russian-made agricultural and construction equipment) and $100 million
(for leasing Russian machinery).
Debts and loans were also discussed at talks with Kyrgyzstan yesterday.
On January 28, following a visit to Bishkek, Deputy Prime Minister Igor
Sechin said that Moscow is prepared to give Kyrgyzstan a non-repayable
grant of $150 million, along with $300 million in the form of a
low-interest loan, repayable over 40 years, with a seven-year grace
period before repayments start.
What's more, Moscow will write off $180 million of Kyrgyzstan's
debts in exchange for a 48% stake (the largest stake) in OAO Dastan -
an enterprise that produces torpedo components.
Far more substantial aid to Kyrgyzstan was announced after yesterday's
talks. As well as the debt write-off agreement, Russia and Kyrgyzstan
also signed agreements on non-repayable financial aid ($150 million)
and an immediate state loan of $2 billion. Moscow and Bishkek also
agreed to build the Kambaratin hydro-electrical power plant together.
President Emomali Rakhmon of Tajikistan arrived in Moscow yesterday
after all. Vladimir Zharikhin, deputy director of the CIS Countries
Institute, says that Rakhmon made a mistake in ignoring a scheduled
February 2 meeting with Medvedev; he had an opportunity to sort out
the financing for the Rogun hydro-electrical power station (up to $3
billion) and to discuss Uzbekistan's objections to this project.
In each of these cases, there is a different explanation for Russia's
generosity. A source from the presidential administration says
that aid to Cuba is being increased due to Deputy Prime Minister
Sechin's activity in Latin America; Sechin chairs the Russian-Cuban
inter-governmental commission. The source adds that the EAEC fund is
being established because Russia wants to reach agreement with its
CIS neighbors on a common regional anti-crisis policy. Ermuhamet
Ertysbayev, aide to President Nursultan Nazarbayev of Kazakhstan,
told us that the fund is being established to facilitate a transition
to ruble-based payments. According to Kudrin, Belarus needs the 100
billion rubles "to increase its gold and currency reserves." Medvedev
said that aid to Kyrgyzstan is being provided due to the special
alliance nature of bilateral relations.
Vadim Gustov, chairman of the Federation Council's CIS Affairs
Committee: "Russia is showing its neighbors that it's a good friend
in times of trouble. If we don't give them the money, others will."
Vladimir Nikitin, a member of the Duma's CIS Affairs Committee, says
that the Russian leadership is pursuing geopolitical objectives: the
question of whether Kyrgyzstan will continue to cooperate with the USA,
and the question of which way Tajikistan and Turkmenistan will look.
Zharikhin explains that the loans are being granted to countries
that have visa-free travel agreements with Russia and practically no
borders: if the situation turns critical in any of these countries,
millions of refugees would flood into Russia. From Moscow's
perspective, it's much better to keep them afloat now.