Russia Reform Monitor: No. 1642

July 9:

Alcohol prices in Russia are poised to skyrocket next year, Lenta.ru reports. Russia's Ministry of Finance has suggested starting taxing alcohol and tobacco products heavily in 2010, to cover the budget deficit, which may amount to 6.5 percent of GDP by the end of the decade. The tax will be levied on the producers of alcoholic beverages, and not on the producers of ethyl alcohol itself. Specifically, the tax on beer may triple, while the price of the cheapest vodka, which currently costs 90 rubles per 0.5 liters ($2.8), will rise by almost 20 percent, to at least 110 rubles ($3.5).

The Chinese government is raising concerns over the treatment of Chinese nationals in Russia. A recent raid by Russia's Federal Migration Service in the Cherkizovsky Market, east of Moscow, led to the seizure of some 150 Chinese for various immigration and trade violations, and an appeal from the PRC for more sympathetic treatment. "We have urged the Russians to protect Chinese businessmen's interests in Russia and we also reminded all the Chinese entrepreneurs there to abide by the local laws and regulations," Chinese Foreign Ministry spokesman Qin Gang has told reporters in comments carried by China's official People's Daily.


July 10:

How long will it take Russia to recover from the global economic crisis? Nezavisimaya Gazeta reports that even the most optimistic Russian analysts claim the country will need at least 3-5 years to fully recover from the economic crisis. Almost no one now believes that GDP will grow in 2010. One huge factor behind this prognosis is that demand for oil is at a historic low, driving prices for the commodity down. And as a result, Russia's undiversified economy, which relies heavily on oil, gas, and metal exports, will continue to suffer. In a sign of this ongoing economic malaise, industrial production in Russia dropped by over 15 percent between January and May of 2009, downgrading many forecasts of the country's economic well-being.

As part of its efforts to offset Western influence in the "post-Soviet space," the Russian government is seeking to open another military base in Kyrgyzstan. The request, Reuters reports, came during a visit to Bishkek by Deputy Prime Minister Igor Sechin and Defense Minister Anatoly Serdyukov in a move analysts say is a bid to increase its regional "influence." Russia and the United States currently each have one military base in the Central Asian state.


July 13:

Gazprom has embarked upon an ambitious "masterplan" to help Russia raise its global energy profile. The Agence France Presse notes that the Russian state-owned energy conglomerate has made a number of major deals in recent weeks, including a June agreement with Azerbaijan that threatens Europe's vaunted Nabucco pipeline project, and sewn up a series of lucrative contracts in Africa concurrent with the Kremlin's renewed attention to that continent. The activism, observers say, reflects the key role Gazprom now plays in Russian foreign policy. “Gazprom has acquired the function of the foreign energy relations ministry,” says Mikhail Korchemkin, director of the East European Gas Analysis think tank. “[And] Like the ministry, it’s being driven by factors other than profit.”


July 14:

Russia has no plans to vacate its naval base in the Ukrainian port city of Sevastopol, Kremlin officials have announced. "We have not set ourselves a goal of leaving Sevastopol," Gen. Nikolai Makarov, the Chief of the Russian General Staff, has told reporters in comments carried by RIA Novosti. Russia's current lease for the Black Sea facility runs through 2017, but officials have expressed their interest in extending it beyond that date. Still, unsettled politics with its former satellite are forcing Russia to think about alternatives to the Ukrainian base. According to Makorov, Russia is planning "to build Black Sea fleet facilities near Novorossiisk" as a potential substitute for Sevastopol. That facility is expected to be completed by 2020.