Russia Reform Monitor: No. 1600

October 17:

Venezuela plans to purchase Russian-made T-72 battle tanks and armored reconnaissance vehicles, the Associated Press reports. The head of Venezuela’s Strategic Operations Command, Gen. Jesús González, made the announcement following talks with Kremlin Security Council secretary Nikolai Patrushev about arms purchases that could also include military planes, naval vessels and combat helicopters.


October 20:

Prime Minister Vladimir Putin has told a meeting of the Foreign Investment Advisory Council, which he chairs, that Russia’s economy is “sufficiently well prepared for protracted external shocks,” Vesti.ru reports. He said the Reserve Fund, financed by oil taxes and worth $140 billion, will “fully compensate” for the drop in world oil prices and that the country’s hard-currency reserves – the world’s third-largest, totaling around $530 billion as of October 10th – will make it possible to maintain a stable ruble exchange rate. Putin said financial authorities in the U.S., Britain and Europe, unlike those in Russia, were caught off-guard by the global financial crisis.

Meanwhile, Putin’s former economic adviser, Andrei Illarionov, has said that while the Kremlin is blaming external factors, including the U.S. credit crisis, for the 70 percent drop that Russian stock markets have experienced since May, Russia’s own policies have made matters much worse. “It’s completely clear that investors, both foreign and Russian, judge the situation of the Russian economy as much worse than that of other countries, with the possible exception of Ukraine,” Reuters quotes Illarionov as telling reporters in Moscow. He blamed the under-performance on the Russian government’s clashes with the private sector, war with Georgia, unilateral recognition of the independence of two breakaway Georgian regions and bellicose rhetoric.


October 21:

Deputy Finance Minister Sergei Storchak has been freed from Moscow’s Lefortovo prison but ordered not to leave the Russian capital, Polit.ru reports. Storchak was arrested in November 2007 and still faces charges of allegedly attempting to embezzle more than $43 million in state funds. Allies of Storchak, who oversaw Russia’s debt negotiations with foreign countries and multi-billion-dollar stabilization fund, believe he was targeted by “siloviki” hardliners seeking to take control of the stabilization fund and weaken his boss, Finance Minister Alexei Kudrin.

Konstantin Biryulin, deputy head of the Federal Service for Military and Technical Cooperation (FSMTC), has said that Russian arms exports increased 23 percent the first nine months this year over the same period in 2007, NEWSru.com reports. According to the FSMTC, Russian arms exports totaled $7.4 billion in 2007.


October 22:

Russia, Iran and Qatar, which control 60 percent of the world’s gas reserves, have announced they are forming an OPEC-style gas cartel, the Guardian reports. Gazprom CEO Alexei Miller said they were forming a “big gas troika” and warned that the era of cheap hydrocarbons has come to an end. “We have agreed to hold regular - three to four times a year - meetings of the gas G3 to discuss the crucial issues of mutual interest,” Gazprom CEO Alexei Miller said, adding that the group is also setting up a technical committee to discuss the implementation of joint projects.

Deputy Prime Minister Igor Sechin, who oversees the energy sector, has said that Russia is considering creating an oil production reserve, which could allow it to become a swing producer to influence global prices, Reuters reports. OPEC Secretary General Abdullah al-Badri met in Moscow with President Dmitry Medvedev on October 21st. “Russia is also a major producer and exporter of oil and is interested in maintaining stable, predictable prices,” Medvedev said after the meeting. Badri, for his part, said he liked the idea of a Russian oil reserve, saying it could help alleviate “global oil shortages.”