World's Energy

Nov. 27, 2006 Kommersant by Vladislav Inozemtsev, director of the Center for Researching the Post-Industrial Society
// Russia needs to declare the entry to the EU as its goal
Off-the-road maps
“Theory becomes a material force as soon as it has gripped the masses,” said Karl Marx. It is clear today that none of the ideas thrown into the society by Russian authorities have any chances to become that “material force”. Only those who are satisfied with everything can support united Russia when nothing threatens its unity. The very language of Russia’s political elite is rapidly turning into a mixture of blatant lies and meaningless bureaucratic wordings. Recent reforms in the electoral system show that authorities realize their inability to lead the people, and that they prefer to waive the people’s right to participate in the political process. Yet, is it really true that Russians are satisfied with their position and the situation in the country? According to Levada-Center’s recent polling, 30% of Russian citizens are satisfied with the authorities’ economic policy, while 63% are not. Ethic atmosphere in Russia satisfies 15%, and dissatisfies 81%. Over 65% do not think that the actions of federal authorities help create an effective system for governing Russia. On the whole, Russians do not believe that the development according to some special “Russian pattern” is going well enough. Are there patterns to follow? Only 5% of Russians think that Russia is rather an Asian country which should cooperate with its neighbors in Asia. Larger half of the population approves of the European pattern (41% according to ROMIR-monitoring). Sixty-nine percent like the EU itself, and 86% of Russians like the citizens of EU states. And it is the EU, and not the West in general. Sergey Yastrzhembsky has recently acknowledged that nearly 80% of Russians like the EU, while a little over 50% like the West in general. Despite this, and the fact that EU share in Russia’s export is 60.4%, and 53.2% in import, while European countries provide about 70% of foreign investment into Russia, the country’s European future is not very promising. Demagogic speeches about “getting closer” to the EU are beneath criticism. Russia is rapidly diverging from European principles of market competition, democracy, and human rights, while Europe is desperately trying to protect itself from investment of Russian state companies, and to diversify the supply of energy resources. “Common spaces”, the agreement on which was signed in Moscow last May, remain fictional. Meanwhile, speeches of Russian politicians are changing. In 2002-2003, the predominating statement was that “the EU does not want Russia”. In Financial Times’ recent article, President Putin openly declared that “we do not set the goal to enter the EU”. At the same time, Europe remains attractive for Russian citizens. Many see Europe as the paragon of social market economy, of honest electoral competition, and even as the force capable of countering US hegemony. Yet, even more surprising is the level of trust to courts: there are 18,500 claims from Russian citizens, who lost hope to achieve justice at home, in the European Court of Human Rights. We might suppose that a political force which will risk using the slogan opposite to Putin’s “we do not set the goal to enter the EU” will have good electoral chances.
European Russia Project
Strategically, European Russia project is based on 2 circumstances. On the one hand, Russian society is growing indifferent and disappointed due to the administration’s increasing abuse of power and the material disparity, along with civil freedoms curtailment. The country’s sovereignty is now used to the advantage of its ruling elite, while the European pattern of voluntary surrender of some sovereign functions for the sake of common institutions, which would be able to call red tape to task, cannot help finding support. On the other hand, in the new world of the XXI century, Russia is ‘squeezed’ between united Europe (the largest subject of world economy with $13.4 trillion of gross regional product) and China (whose GDP is 4 times more than Russia’s). The U.S. cannot be Russia’s ally as well. In such position, Russia will inevitably have to come closer either to its western or eastern neighbors, so as not to get torn by the “lines of tension” in Eurasia. And Europe looks like a more attractive ally. Finally, Russia-EU maximum rapprochement, followed by Russia’s entry to the EU, would drastically change the world’s political and economic map. Together, the EU and Russia would become the biggest market in the world. Their total gross product would reach about $15 trillion. They would have raw-material and technologic independence which no other country has. And their military potential would greatly exceed that of the U.S.
Russia’s European Mission
This strategic project will undoubtedly encounter an important tactic obstacle which results from the peculiarities of Russian national self-perception. For centuries, Russians saw their country as a special civilization with international historic mission, and as great in its selfhood, but not in following western recommendations. So, we should not hope that most Russian citizens would want to be ‘subordinate’ to Europe, especially now when authorities do everything to make the people see their country as a fortress besieged by enemies. However, Russia’s aspiration to Europe might be represented as caused by the desire to save the Old World and to give it a new impulse – economic and political, to save Europe as a Christian civilization by replacing the influx of Islamic migrants with labor reserves of Russia and Ukraine. So, we might suppose that the idea of integrating Russia into the EU for the sake of saving aging Europe from the threats of the new century will not be rejected. French politologist Dominique Mo�si said that if there were “one West and two Europes” in the last years of Cold War, there is “one Europe and two Wests” in the modern world. This solves the eternal dilemma of Russia, allowing it to return to united Europe without becoming a completely western country. It is absolutely necessary to seize that opportunity. Russia has no one else to go with in this world, and one can’t go far alone, neither Russia, nor united Europe. Russia’s movement towards Europe might cause serious resistance of the now-ruling “national security-tycoon elite” which is so used to seeing the country as its own property. However, this movement is now able to unite broad stratum of healthy forces who no longer believe either in abstract democracy or in abstract justice. The only thing which can summon those forces is the paragon of actual democracy and justice, and that paragon now exists in the EU only.

MOSCOW. (Yury Zaitsev for RIA Novosti) - On October 3, the Royal Swedish Academy of Sciences announced that the Nobel Prize in physics had been awarded to two U.S. astrophysicists for their landmark research on the Big Bang theory and the origins of galaxies and stars. One of the recipients, George F. Smoot, has a dual appointment with Lawrence Berkeley National Laboratory and the University of California at Berkeley physics department. The other, John C. Mather from NASA's Goddard Space Flight Center, also earned his doctorate in physics at UC Berkeley. The prize was given for a 1992 discovery by NASA's Cosmic Background Explorer (COBE) satellite team that ushered in a new era of being able to take precise measurements of the first moments of the Universe, as well as for the discovery of small temperature variations in the "cosmic microwave background radiation" that fills space. The Royal Swedish Academy of Sciences said both men had confirmed the main postulates of the Big Bang theory formulated in the 1940s and the 1950s by George Gamow, who had emigrated from the U.S.S.R. in 1934. Gamow suggested the Hot Big Bang model, applying the ideas of nuclear physics and thermodynamics to cosmology. According to his model, time, space and matter did not exist until about 13.7 billion years ago. They appeared after the explosion of an infinitely dense point with a radius of 10-33 cm containing tremendous heat energy (the so-called singular state) and all information on the future Universe. According to Gamow, the early Universe consisted of a heterogeneous and extremely hot substance. At that time, cosmic microwave background radiation, or CMB, spread evenly throughout space. If the theory of a hot early Universe is correct, then the modern Universe must still contain traces of CMB. As the Universe expanded, the temperature of its matter and energy gradually subsided. It is thought that CMB must now have a temperature of only five to six degrees Kelvin, or just over 2,700 degrees Celsius. Many scientists regarded CMB as a figment of Gamow's imagination. However, after the existence of this phenomenon was confirmed in 1964 by U.S. radio astronomers Arno Penzias and Robert Wilson, the scientific community gave its seal of approval to the theory. In 1978, Penzias and Wilson received the Nobel Prize for their landmark discovery. Unfortunately, Gamow never got the Nobel Prize for his outstanding achievements. The discovery of CMB confirmed the Hot Big Bang theory. Scientists then tried to discover the radiation's anisotropy, i.e. extremely small fluctuations in its average temperature depending on its direction as the Universe moves through the CMB. Soviet scientists had long been using the world's largest radio-telescope, the RATAN-600, to conduct such research as part of the Kholod (Cold) project. However, their equipment was two to three times less sensitive than required and could not therefore detect CMB. In 1983, the Soviet Union conducted the Relikt-1 experiment aboard the Prognoz-9 satellite in order to pinpoint CMB for the first time in history. This experiment was prepared by the Space Research Institute of the Soviet Academy of Sciences and supervised by Dr. Igor Strukov. The Prognoz-9, featuring an 8 mm band radiometer with an unprecedentedly high sensitivity of 35 microkelvin per second, was placed into a high apogee orbit with a 400,000 km semi-axis. The radiometer comprised two megaphone antennas, each with a 50% directional pattern. Both antennas formed a 900-degree angle and the same radiometric pattern. It took the satellite two minutes to rotate along one of its axes. The mainframe megaphone antenna was directed along the rotating axis and received radio signals from a preset celestial point. The second antenna conducted a complete scan of the ecliptic plane perpendicular to the rotating axis in two minutes. Consequently, each element of this ecliptic was scanned several thousand times in a week. The satellite then changed its spatial orientation and scanned another ecliptic. It took six months to scan the entire celestial sphere. Computerized data processing and modeling methods were slow at that time. Moreover, the radiometer could not conduct multi-band astronomical observations. A multi-band experiment would have provided an insight into anisotropy, whereas the single-band experiment left a lot of room for speculation. A preliminary assessment of a radio signal pattern based on Relikt-1 data produced negative results; however, the temperature variation, i.e. anisotropy of CMB was confirmed many years later. The results of the Relikt-1 project were reported at international symposia and invariably won acclaim from experts. The heat radiation map of the Universe served as the emblem of the 1989 international conference "The Cosmic Wave Background: 25 Years Later" in L'Aquila, Italy. In 1986, the Space Research Institute's Academic Council decided to study the anisotropy of CMB as part of the Relikt-2 project. The sensitivity of the equipment had increased fivefold by that time and exceeded that of the Relikt-1 satellite 20 times over. The Libris spacecraft was scheduled to lift off in 1993-1994, but the launch never took place because of the Soviet Union's break-up and lack of funding. The discovery of anisotropy by the Relikt-1 spacecraft was first reported officially in January 1992 at the Moscow astrophysical seminar. Several months later, George F. Smoot, the head of a similar U.S. project, told a news conference about the discovery of CMB anisotropy by the COBE satellite. The mass media reported this as the main science news of the day. The project's co-head, John C. Mather, told Newsweek magazine that he knew a lot about the Relikt project, which had been conducted long before the launch of the COBE. He said the project had been one of the first attempts to discover CMB anisotropy, and that to the best of his knowledge, it had proved successful. Mather then congratulated those involved in the Relikt experiment. He told Newsweek that many researchers had carried out similar projects at that time. He and his team fully acknowledged the achievements of their predecessors, who had obtained many valuable results, but their own results were better. All this is fine, but according to the Nobel Committee's official statement, the prize went to Smoot and Mather for the experimental discovery of the correlation between CMB and its anisotropy. No matter what anyone else may say, Russian scientists were really the first to discover this phenomenon. The Royal Swedish Academy of Sciences has not been entirely politically correct in declining to analyze all aspects of this issue. Alas, the latest U.S. PR blitz has once again eclipsed the findings of Russian physicists and underscored the importance of secondary achievements by their American counterparts. Russian scientists, however, share the blame for this misunderstanding. It is easy to talk about cash-strapped national space programs, but the Americans had also faced similar problems. A U.S. space shuttle was to have launched a probe to measure CMB parameters. However, the project's future looked bleak indeed after the 1986 Challenger disaster. The COBE project's managers had a hard time persuading their superiors to provide funds and a specialized launch vehicle, but in the end they succeeded. Russian scientists, however, were unable to overcome government and academic red tape. Moreover, Igor Strukov said he was unpleasantly surprised by Russian astrophysicists' lack of interest in the Relikt-1 experiment's data. Yury Zaitsev is an expert at the Space Research Institute of the Russian Academy of Sciences.

 11–20–2006 Interfax News – The Democratic Party’s recent victory in the midterm congressional elections in the U.S. will have diverse effects on Russian-U.S. relations, Russian Chamber of Commerce and Industry President Yevgeny Primakov has said. “
On the one hand, we do not always have an easy time with the Democrats when they are in power, because issues related to human rights and democracy in the American understanding of these concepts are brought up much more often,” Primakov, a former prime minister and foreign minister, said in an interview with Interfax. “This is sometimes done without taking into account internal conditions, the internal situation, and the alignment of forces in Russia and without understanding that we are in the process of a difficult search for optimal solutions,” Primakov said. On the other hand, Primakov suggested that “the era of unilateralism” in the U.S. is ending. “The unilateralist doctrine was declared by the Bush Administration at the suggestion of neo-conservatives, whose position in the new situation is now weak,” Primakov said. “The matter does not only imply Rumsfeld’s resignation. Even more colorful figures – Paul Wolfowitz and Richard Perle – have left the administration somewhat imperceptibly,” he said. “The erosion of the unilateralism doctrine started with the developments in Iraq,” Primakov said. Although the U.S. leaders said in the first days of the operation in Iraq that the UN would not play any role in this, the U.S. had ultimately had to appeal to the UN, Primakov said. “But everything started with a doctrine that proclaimed the United States’ independence or, if you will, self-reliance in solving all major international issues at their own discretion,” he said. “In other words, the combination of these factors will have quite a mixed effect on our relations with the U.S.,” Primakov said. At the same time, the U.S. Administration now has “a slight chance to somewhat strengthen its positions in the new conditions at home if there is some progress, for instance in the Middle East,” Primakov said. “This progress could be achieved only through the U.S.’s cooperation with Russia and Europe, with the United States and Russia being the main actors here,” he said. Russia is maintaining contacts with both sides to the Middle East conflict and has some influence on Syria, Iran, Hamas, and Hezbollah, Primakov said. Hamas has undergone some evolution after it came to power and could be a party in negotiations with Israel now, Primakov said. “There is every reason to suggest that Hamas, after it came to power, has undergone some evolution, however gradually it has been done, toward turning into a force that could join negotiations with Israel,” he said. “I had the chance to see this myself while meeting recently with Hamas leader Khaled Mashaal in Damascus,” he said. Commenting on Israel’s recent shelling in Gaza, Primakov called this “a desperate attempt to crush Hamas, which appears counterproductive even from the Israeli viewpoint.” “I am deeply convinced that the way out of the impasse could be found only through negotiations, through convening a peace conference at the initiative of the Quartet of mediators. The Quartet should consult with all parties and develop a compromise settlement plan,” Primakov said. “True, a compromise always produces opponents on all sides,” Primakov said. “But this is the only way toward a settlement. Therefore, I believe that this compromise plan should be imposed on all parties to the conflict, including Israel, the Palestinians, and Syria,” he said. Primakov called for taking into account the real state of affairs in the Middle East. “It is absolutely clear that Israel has not won by launching a large-scale military operation in Lebanon,” he said. “I could assume that Israel’s bombing of the entire territory of Lebanon disabling its infrastructure was aimed at producing a force inside Lebanon that would proclaim the liquidation of Hezbollah as its primary goal,” he said. He recalled that Israel’s occupation of Lebanon in 1982 prompted local forces to demand the expulsion of armed Palestinians from Lebanon. “Israel has failed to achieve this goal. It is absolutely clear that Israel will not be able to establish its borders recognized by the international community in a military way,” he said. Primakov also suggested that there should be no haste in the execution of the death penalty recently handed down to Saddam Hussein. “It seems to me that it would be wiser not to rush, especially bearing in mind that the court ruling’s hastiness was prompted to a large extent by the midterm congressional elections in the U.S.,” he said. “The elections are behind, and now this issue does not seem that pressing to American public opinion,” he said. Saddam Hussein’s execution will not stabilize the situation in Iraq, Primakov said. “I disagree with the experts, mainly the Americans, who believe that Iraq is on the verge of a civil war. What ‘verge’ are we talking about while, according even to the U.S. estimates, 650,000 people have been killed in Iraq since the U.S. started the operation?” he said”.  “You have to admit that the clashes between the Shiites and the Sunnis have grown into a real civil war,” Primakov said. The Shiites have had the experience of a regime leaning on the Sunnis, “but there have not been religious-motivated clashes between the Shiites and the Sunnis since time immemorial.” “The Sunnis were given priority to the Shiites in government appointments and had more power under Saddam. Naturally, they will interpret the execution as a blow to their interests,” Primakov said. “This would further fuel disagreement between the Shiites and the Sunnis, because the Shiites will basically support both the death penalty and Saddam Hussein’s actual execution,” he said.

20–11–2006 Kommersant.ru – The WTO Accession –
Russian and U.S. presidents are to announce the end of bilateral talks on Russia’s accession to the WTO. Russia has almost gone the whole way to the membership. Remaining obstacles such as the U.S. Congress and Georgia’s enmity are all only about political games.
Russia has been seeking the membership in the organization for 13 years, which is not fantastic at all. China and Saudi Arabia each, for one, spent 12 in the talks while Vietnam negotiated the membership for 11 years. The longest and the hardest part in the process is bilateral talks with the big four - the EU, the United States, Japan and Canada, experts at the World Bank say.
President Vladimir Putin told the Federal Assembly back in 2001: “We must achieve basic agreements with WTO country-members by the end of this year.” Experts were upbeat about prospects of our country’s integration in the organization. The ruble was weak after the 1998 default while salaries had gone down, which gave Russian producers an edge. What is more, labor cost half as much as it had done before the default. If Russia had managed to join the WTO then, the lifting of customs barriers would have boosted not only metallurgy and chemical industries but also Russian machinery and equipment exports. Igor Belyakov, an export at the Economic Expert Group says: “After the failure triggered by the 1998 crisis Russian, exports grew 49 percent in value terms and exports of machinery, equipment and transport means went up 14 percent.”
The negotiation process, however, took five more years, and the situation in Russian economy took a U-turn. The influx of petrodollars raised people’s incomes and strengthened the ruble. It hit Russian exporters twice. Expenses on labor went up whereas products became more expensive for overseas consumers. For example, an average monthly salary went up from $111 in 2001 to $302 in 2005, according to the information of the Russian Statistics Agency. What is more, labor productivity was growing slower than salaries were in a lot of sectors. The Development Center estimated that labor productivity fell behind salaries in 2000-2004 in agriculture, power industry, food industry, building trade, ferrous metallurgy, chemical industry and machinery construction. As evidence for this, the World Economic Forum recorded Russia’s decline in the business competitiveness rating, down from rank 58 in 2001 to number 79 this year.
The situation is the following. Russian machinery, equipment, transport and equipment exports rose 41 percent between 2001 and 2005. In money terms, the exports climbed from $10.5 billion to $13.5 billion, or 19 percent up (taking inflation into account). Consequently, the profitability of exports is falling. Over the past five years, Russia has been selling more machinery but at lower prices. “Our machinery and equipment are usually sold to emerging nations (China, India, Eastern Europe and the CIS),” Belyakov explains. The volume of supplies grew 22 percent in the last five years while exports prices dropped 16 percent because those countries are trying to develop their our machinery industries. The situation with exports to CIS countries is somewhat better. These supplies grew 106 percent while prices added 5 percent, which is also because the ruble against CIS currencies has been growing slower than in relation to other currencies.
Thus, Russia’s accession to the WTO will not bring the country lofty dividends as it would have in 2001 when the membership could Russian machinery exports more competitive. CIS countries which are still continuing to ask for more Russia imports are not WTO members. On another note, exports of natural resources do not need any special protection measures. At the same time, machinery exports seem to be on a rise only because of declining prices, according to statistics.
The problem is that the current model of Russian economic growth is stitched to the growth of domestic demand boosted by profits from natural resources exports. In this situation, Russia’s profits from joining the WTO will be marginal. Metallurgy and chemical industry appear to be the only industries which will have major wins. On the other hand, the accession to the WTO will make our domestic market more accessible for overseas investors. However, all these arguments do not mean that Russia ought not to enter the WTO. It is completely out of question for a country which hopes to occupy a decent place in the world economy. Still, the biggest profits from the WTO memberships flow to the countries which have the product to offer on foreign markets, but not simply boost stock-lists and the size of exports.