Press Review (1-7 June)

Russian Opel

The Opel deal was clearly the most striking news-maker. RBC Daily, a leading Russian business title, says, "What a couple of months ago appeared unthinkable has become a reality. With 35 per cent of the stock, Sberbank will be the biggest Opel shareholder. Sberbank believes that the new asset will help upgrade the Russian automotive industry."

German Gref, Sberbank's chairman, said in an interview to Vesti, a state-owned television channel, "As a bank, we want to buy such assets in order to re-engineer the Russian motor industry. It is a good opportunity for Russia to acquire one of the most technologically advanced automakers in Europe at the lowest historical price."

RIA Novosti, a Russian state-controlled news agency, says that the Russian Government was also involved. Arkadiy Dvorkovich, an assistant to the Russian President, explained to the agency the position of the government regarding the deal, "This is an element of the pre-existing strategy, which was adopted some time ago. We regard this acquisition as a measure helping both to integrate Russia into the global economy-and do so in an effective way as the company has a strong technological base-and to modernise the Russian automotive industry."

Vremya Novostey, an independent Russian newspaper, reminds the public about a meeting in Munich in October 2006 where Russia's then-President Vladimir Putin reassured the German business audience on account of aggressive Russian investors, "Those who are coming to you today are not the Red Army, but capitalists like you!" The newspaper continues, "The global crisis has achieved what the Russian government had been struggling to do for several years, and forced the West to embrace investors from Russia. Therefore, the Opel deal with the largest Russian retail bank, which is over 60 per cent owned by the Central Bank, is a momentous turning point."

A less sanguine judgement was pronounced by Evgeniy Bogdanov, Director of A.T.Kearney in Moscow, quoted by Vedomosti, another Russian business newspaper published jointly with the Financial Times and the Wall Street Journal, "Hopes of gaining free access to technologies are misplaced. The deal can be regarded merely as Sberbank's portfolio investment, and it will have no impact on the Russian motor industry in economic terms."

The liberal Echo of Moscow Radio also thinks that getting hands on Opel is only the beginning, "Sberbank is simply a money purse. A genuine revamping of the national automotive industry will take a lot of hard work on the part of Sberbank, GAZ (a leading Russian car maker), and the Russian authorities who should create an environment conducive for the industry to recover."

St Pete's revelations

The hosts of the St Petersburg International Economic Forum deliberately avoided adding the somewhat ominous "thirteenth" to the forum's title. Regardless, dark forces were rampant enough depressing the world with crisis and drenching St Petersburg with rain.

The Gazeta newspaper listed seven "revelations" of the 2009 Economic Forum, including Russia's proposals to reform the International Monetary Fund. Alexey Kudrin, the Russian Finance Minister said the IMF "should become a union of the leading economies adequately represented in proportion to their significance".

The Gazeta continued its list of Economic Forum revelations with "the recognition of a possible second wave of the banking crisis, expectations of $75 per barrel of oil, and a vision of the yuan's ascent to the status of a global reserve currency as early as 10 years from now. The Russia-specific revelations were the new budget deficit estimates of 10 per cent in 2009 (instead of the previously expected 8 per cent), with 5 to 6 per cent in 2010, and ponderings on the free-floating rouble. One more striking revelation was about the Russian Government, which did not appear to have an articulate anti-crisis programme for 2010."

The Vedomosti sounded disappointed with the Forum's outcome, "Before it began, journalists had asked a score of Russian businessmen about their expectations for the forum. The answers basically boiled down to the same idea: getting direction on how to move forward. But discussions of the global agenda, denunciations of the old world order and speculations over plans to build a fairer one left no room for the most important conversation, which was the main reason hundreds of top executives across Russia took the time to come to St Petersburg. As a result, the forum left many of them disappointed and was generally described as boring.

Dairy War with Belarus

The last week, relations between Russia and Belarus were overshadowed by scandals. According to the Moscovskiy Komsomolets, a popular Russian tabloid, the bickering started with the Russian Finance Minister Alexey Kudrin, who said that Minsk was short of gold and foreign currency reserves, and might be unable to pay its debts. He also said that Moscow would withhold the scheduled loan installment. This provoked a fit of fierce displeasure from the Belarus leader, Alexander Lukashenko, who responded in kind saying that Mr Kudrin "completely sided with our local rubble-raisers who are paid by the West to make noises here and lecture us on how to manage things".

According to the Izvestia newspaper, Mr Lukashenko complained that Moscow had been blackmailing Minsk with its $500 million loan allegedly offered in exchange for recognition of South Osetia and Abhazia.

These remarks have not passed unnoticed in Moscow. It is difficult to say whether the two episodes were related, but shortly afterwards Russia imposed a ban on Belorussian dairy products. Gennadiy Onischenko, Russia's top public health official, explained that Belorussian manufacturers had failed to obtain new permits to comply with updated technical regulations.

The Kommersant newspaper estimates that as a result of the ban Belarus may lose as much as $1 billion dollars out of its paltry $15 billion budget.

Russian dairy producers are happy, says Rossiyskaya Gazeta, the official Government mouthpiece, but "whether Russian consumers feel the pain of it will soon become clear from dairy prices".

All rights reserved by Rossiyskaya Gazeta.