News 11 Jan

Net capital inflow into Russia hit $82.3 bln in 2007

MOSCOW, January 11 (RIA Novosti) – Net capital inflow into Russia reached a record $82.3 billion in 2007, almost double the previous year’s figure, the Central Bank announced on Friday.

In 2006 the figure was $42 billion. In the last three months of 2007, net capital inflow was $23.5 billion, compared with net outflow of $7.6 billion in the third quarter.

This is around 6% of Russian (nominal) GDP. Foreign investors are rushing in to buy into Russian IPO’s.

Russian carmaker AvtoVAZ raised exports 7.9% y-o-y in 2007

AvtoVAZ’s domestic sales reached a record high of 663,500 cars, 6.2% more than in 2006.

The company expects to raise 166 billion rubles ($6.8 billion) in 2007 earnings and is seeking to increase its yearly output to almost 1.3 million cars by 2012.

Foreign car manufacturers aim to raise car production up to 1mn by 2012. This means that around about 3mn cars should be produced in Russia by 2012, double the 2007 figure (1.5mn) – a production capacity equivalent to that of France today.

US missile plan under threat as Poland demands guarantees

Poland and Russia engaged in their first talks over the Pentagon’s plans to install missile defence systems in central Europe yesterday, amid signs that the project could unravel because of political shifts in the US, Poland, and the Czech Republic.

Russia’s deputy foreign minister, Sergei Kislyak, went to Warsaw to warn the Polish foreign minister, Radek Sikorski, of the “strategic dangers” posed by the project, bitterly opposed by the Kremlin which is threatening a new arms race if the US goes ahead. Over the past week a flurry of coordinated statements from the new liberal government of the Polish prime minister, Donald Tusk, in Warsaw has signalled the mounting troubles engulfing the missile shield project.

Poland is demanding security guarantees and beefed-up air defence hardware from Washington, worried that the deployment of interceptor missile silos on Polish territory could jeopardise rather than enhance Polish security.

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Despite opposition to the project among Czechs – rising to 70% in a survey this week – the Czech government is keener than its Polish counterpart to strike a deal with the Americans.

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For the first time this week Poland contradicted Washington’s claims. “This is an American, not a Polish project,” said Sikorski. “We feel no threat from Iran.”

The missile shield is not in Poland’s or the Czech Republic’s direct foreign policy interests. Iran’s current most advanced missile, the Shahab-3, has a range of 2100km – ie, its maximum range just about covers Greece’s eastern border. While the Fajr-3 is a MIRV and has a slighly longer range (2500km), military analysts believe it to be a bluff. While there are rumors of a Shahab-5 (ICBM with 10,000km range), it remains just that – rumors. In any case, if the United States truly believes Iran is the threat, they could have taken up Putin’s goodwill offer to site the radar station in Azerbaijan.

As it stands, the Russians can be forgiven for thinking this missile defence is aimed against them (the Russian General Staff thinks in terms of capabilities, not intentions). The influential US Foreign Affairs journal argued that the next two decades could see the rise of US nuclear primacy (the Russian development of advanced ICBMs with evasive capabilities like the SS-30 Bulava can be seen as a response to this threat). This is a goal that is perceived to be true, due to the “Bush administration’s 2002 National Security Strategy”, which “explicitly states that the United States aims to establish military primacy: “Our forces will be strong enough to dissuade potential adversaries from pursuing a military build-up in hopes of surpassing, or equaling, the power of the United States”.” To quote from the article in extenso:

Washington’s pursuit of nuclear primacy helps explain its missile-defense strategy, for example. Critics of missile defense argue that a national missile shield, such as the prototype the United States has deployed in Alaska and California, would be easily overwhelmed by a cloud of warheads and decoys launched by Russia or China. They are right: even a multilayered system with land-, air-, sea-, and space-based elements, is highly unlikely to protect the United States from a major nuclear attack. But they are wrong to conclude that such a missile-defense system is therefore worthless — as are the supporters of missile defense who argue that, for similar reasons, such a system could be of concern only to rogue states and terrorists and not to other major nuclear powers.

What both of these camps overlook is that the sort of missile defenses that the United States might plausibly deploy would be valuable primarily in an offensive context, not a defensive one — as an adjunct to a U.S. first-strike capability, not as a standalone shield. If the United States launched a nuclear attack against Russia (or China), the targeted country would be left with a tiny surviving arsenal — if any at all. At that point, even a relatively modest or inefficient missile-defense system might well be enough to protect against any retaliatory strikes, because the devastated enemy would have so few warheads and decoys left.

And that’s the crux of the matter. The Russian General Staff fears that the US believes it has the capability of executing a decapitating first strike against Russia. Seen in that context, the European missile shield (whose current 10 interceptor missiles can be increased once built, of course, and with much less media fuss) becomes the means by which the US hopes to prevent a massive retaliatory strike from hitting the homeland. Are their fears justified? We don’t know – we hope not, anyway. But as long as Russia and NATO remain fundamentally separate and conform to Cold War thinking – or appear to conform to Cold War thinking – the possibility that the Russian generals and nuclear war planners are right cannot easily be dismissed.

Déjà Vu – Tymoshenko, Ukraine’s PM again, wants to review agreements of gas prices with Gazprom. Go on. After all, populism always fails against Realpolitik.

Russia’s Top Beauty – mmmh. Doesn’t look that fit.

Trial of activists in spring riots begins in Estonia Jan. 14

eSStonia shows its true colors – black, with a hint of red and white.

Man in south Russia dies after warming his bed with irons

Again, some things never change.