Press review (3-9 August)

The Russian media's focus has recently shifted to the economic implications of pension increases, potentially deteriorating Russian-Chinese relations following the closure of Moscow's Cherkizovsky wholesale market and the farewell statements of the outgoing NATO Secretary General.
Independent newspaper Vremya Novostey published a statement from NATO Secretary General Jaap de Hoop Scheffer, who said that neither Georgia nor Ukraine were ready to join the North Atlantic bloc yet and "the situation is unlikely to change in the near future. He emphasizes that the simple desire to join does not guarantee admittance to the alliance and states wishing to join must comply with all NATO requirements. According to Scheffer, the internal political situation in both countries is blocking their admission to NATO. In Ukraine, the situation is "complicated to put it diplomatically", and it "not simple" in Georgia either.

Vremya Novostey notes that in December 2008, the Secretary General pledged maximum support to Ukraine and Georgia as they pursued admission to NATO, but with his August resignation looming, Scheffer's position has become increasingly balanced and realistic.

Komsomolskaya Pravda published an interview with Russia's ambassador to NATO, Dmitry Rogozin, who expressed his satisfaction at these developments. "About a year and half ago we were bracing ourselves for the worst-case scenario, but now all this talk about Ukraine and Georgia joining NATO no longer seems serious. It's nothing but a comedy." Virtually all the media discussed the controversy arising from Georgian President Mikheil Saakashvili's interview with The Wall Street Journal, which quoted him as saying "my country's hopes of joining NATO are almost dead. It's tragic. If they manage to kill NATO [Georgia's hopes of joining the alliance], it means the Russians fought for the right reasons". According to Izvestia, one of Russia's most prominent newspapers, Saakashvili accused the WSJ of misinterpreting his words almost immediately following publication of the interview. He insisted that he never said Georgia's hopes of joining NATO were dead and that the Wall Street Journal had already apologized. The following day, however, Dow Jones (the owner of the WSJ) spokeswoman Kate Dobbin denied any apology on behalf of the newspaper. Izvestia's conclusion - Saakashvili simply lied.

Vedomosti, a Russian business journal published jointly with the WSJ and FT, reports that the closure of Moscow's Cherkizovsky market has escalated into an international incident bringing a large delegation of Chinese officials to Moscow. Their chief complaint was that the rapid liquidation of the market and late notification provided to vendors led to the loss of 80,000 Chinese jobs and the seizure of goods valued at $2 billion. And the worst is yet to come: the Chinese factories that supplied the market are closing one by one due to the lost business. The newspaper believes that the strong language on the part of the Chinese heralds deteriorating Sino-Russian relations. "They are clearly hinting at the possibility of economic sanctions."

Zavtra, Russia's nationalist-leaning opposition paper, emphasised that the Cherkizovsky market, a hub for more than $50 billion worth of "black" and "grey" imports from Asia, was of significant import to Chinese-Russian relations. The closure could lead to a considerable cooling in the relationship between Beijing and Moscow, while meanwhile the Chinese vendors will simply move their business to neighboring Belarus.

Russian Prime Minister Vladimir Putin confirmed his plans to increase the average Russian pension by fifty percent, up to 8,000 roubles ($250) per month. To meet this commitment, Putin is ready to dip into the state reserves and put other public expenditures on hold if necessary. Russia's pensioners are delighted, although the business press predicts a potential negative impact on the Russian economy.

Business paper RBC-Daily reports that the Russian government was choosing between fiscal responsibility and social stability, with the latter ultimately prevailing. Yet such a budgetary approach will hardly pull the Russian economy out of the crisis, and raises doubts about the Russian government's ability to meet its commitments in the future.

Kommersant, Russia's oldest business newspaper, quotes various experts who are confident that "the government's focus on social policy at the expense of investment and infrastructure development is economically unsound, as social spending contributes very little to economic recovery." Hence, this is nothing but politics. "In the context of the ongoing crisis, the government is trying to coax support from Russia's most protest-prone social group, the pensioners."

Nezavisimaya Gazeta predicts that "the country's development will be sacrificed for the sake of pensioners," as some economic development projects will have to be sacrificed. Future public spending plans could also be jeopardized by a drastic drop in tax revenues, leaving the state coffers starved for cash. To plug the budget gaps, the government might be forced to draw upon national funds ahead of schedule or to borrow billions of dollars on the domestic or international market.

Rossiyskaya Gazeta, the Russian government's daily newspaper, quotes Deputy Minister for Economic Development Andrei Klepach as saying that "in 2009 social spending will be increased while other public expenditures are unlikely to grow and could even be reduced." Yet he hopes that Russia's 2009 budget "will be a development budget."

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