Russia 090813 Basic Political Developments

Customs Union to make the case for WTO accession

http://www.russiatoday.ru/Business/2009-08-12/customs-union-make-case.html/print

12 August, 2009, 22:56

Russia, Belarus and Kazakhstan have formed a single negotiating group to gain accession to the World Trade Organisation. But the newly-formed "Customs Union" may face obstacles.

After 16 years of talks and coming 95% of the way towards WTO membership, Russia changed its priorities.

In June Prime Minister Vladimir Putin declared that Russia would now seek entry to the Trade group as part of the Customs Union of Russia, Belarus and Kazakhstan. It was a shock to experts worldwide, with Aleksey Portnyansky, Director of the Office on Russia’s Accession to the WTO saying the customs union being created will be a first for the world body.

“We’ve seen customs territories joining the WTO, but the bid by the customs union has no precedent. Under WTO rules it can be joined either by a country or by a customs territory which has the full autonomy in its foreign trade. The customs union which is being created now doesn’t have such independence.”

The creation of the Customs Union is a top economic priority for Russia. Analysts say it will help Russia become a regional centre and strengthen its economic and political influence.

But First Deputy Prime Minister Igor Shuvalov, says the Customs Union states have formed a single negotiating team.

“Our priority is that Russia, Belarus and Kazakhstan enter the WTO at the same time and on the same terms. If the sides are forced to accept any other decision, we will be ready for them, but these decisions need to be coordinated with country leaders. We are proceeding from the idea that the strategic goal is that all three countries become members of the WTO.”

Igor Shuvalov says in case of legal difficulties the parties will hold bilateral talks. Another challenge for the Union will be to synchronize Kazakh and Belorussian economic laws with those of Russia which already comply to a high level with those of the EU.

Experts say that the joint accession is possible, but it may make it more complicated for Russia to join the World Trade Organisation. The first round of talks between the Customs Union and the WTO is due to start in September.

Customs Union created uniform WTO group

http://eng.gazeta.kz/art.asp?aid=135793
11:23 13.08.2009
text: Kazakhstan Today

The Customs Union has created uniform negotiation group for joining World Trade Organization (WTO) headed by Maxim Medvedkov. First Vice Prime Minister of the Russian Federation, Igor Shuvalov, informed, following the results of the seventh session of the Customs Union Commission taken place in Moscow on Wednesday, Kazakhstan Today agency reports citing RBC.

"We have created the negotiation group, which consists of the representatives of all three states. They are skilled negotiators. We have agreed that this uniform group will be headed by M. Medvedkov," I. Shuvalov said. Now, M. Medvedkov heads the Russian delegation at the negotiations for joining WTO.

"This negotiation group will carry out the negotiations on introduction of the Customs Union to WTO and for introduction of Russia, Belarus and Kazakhstan to WTO on acceptable conditions," I. Shuvalov said. First Vice Prime Minister underlined that "the priority is introduction of Russia, Belarus and Kazakhstan on the same conditions and at a time".

He informed that the group will be created by August 24 and will immediately start formal negotiations with WTO Secretariat."

Customs Union Commission coordinated scheme of distribution of customs payments for transporting goods

http://eng.gazeta.kz/art.asp?aid=135795
13:02 13.08.2009

The Customs Union Commission coordinated the scheme of distribution of customs payments for the transporting goods. First Vice Prime Minister of the Russian Federation, Igor Shuvalov, informed, following the results of the seventh session of the Customs Union Commission taken place in Moscow on Wednesday, Kazakhstan Today agency reports citing television channel Vesti.

According to the television channel, the participants of the session of the Customs Union Commission discussed how payments for the transporting goods will be distributed. As a result, they agreed on the scheme, which suits all three states.

According to I. Shuvalov, this "scheme is the most transparent, the simplest in application and does not require additional bureaucratic decisions."

The amended project of the Customs Code will be presented in November to the meeting of the leaders of the states of Russia, Belarus and Kazakhstan.

AUGUST 13, 2009

Egypt Has a Problem With Russian Wheat

http://online.wsj.com/article/SB125011390891427059.html

A Scandal Strains a Key State Food Plan and a Trade Route

By SARAH MCFARLANE

A criminal investigation into a shipment of Russian wheat in Egypt is having ripple effects across the world's wheat market and putting pressure on a bread program vital to the government.

Since the investigation began in May, authorities have rejected several Russian wheat shipments arriving in ports, citing quality concerns. They have also detained and released on bail four staff members from the government wheat buyer's office, and continue to detain the head of a large Egyptian grain trading firm.

Egypt's General Prosecution Office says it suspects forged inspection certificates were used for a Russian wheat shipment that contained too many insects and weed seeds for human consumption.

The investigation has discouraged traders from offering Russian wheat, which is some of the cheapest in the world, on worries that unclear purchasing standards could lead to shipments being rejected or delayed.

When global grain prices jumped last year and demand for subsidized bread increased, the resulting food shortages caused protests in Egypt. The unrest provided a stark reminder of the dangers facing governments of developing nations who let people go hungry.

It is also a significant wheat market. With 83 million people, Egypt is the most populous Arab nation and the second-most populous African state. Egypt's General Authority for Supply Commodities, or GASC, buys around six million tons of wheat each year to supply the subsidized bread program. In recent years, roughly half of this has been sourced from Russia, which has undercut other wheat producers.

But in recent months, GASC has bought more French wheat than usual, purchasing around 570,000 tons since July, compared with 90,000 tons of Russian wheat. As long as traders are reluctant to offer Russian wheat, the Egyptian government will have to absorb the extra cost of buying more expensive wheat from other countries -- likely to be millions of dollars -- rather than increasing bread prices.

"The costs to Egypt could be really high," said Keith Flury, wheat market analyst at German-based research firm F.O. Licht.

Global wheat prices are below last year's highs, as the world reaps a second consecutive bumper wheat crop, which will buffer Egypt to some extent. But to ensure the government secures the quality of wheat it needs at fair prices, Egypt wants to keep its sourcing options open.

Since the investigation began, officials have increased their scrutiny of Russian wheat imports at Egyptian ports. Grain trading houses have reacted either by ceasing to offer Russian wheat, or by charging a $10- to $15-a-ton premium for Russian wheat sales to the Egyptian government.

In March, Russian wheat offers to Egypt were around $20 lower a ton than for U.S. or French wheat. However, now it is only around $3 a ton less, partly because of the risk of selling to Egypt. Traders say they are simply pricing in a premium for risks associated with a sudden lack of clarity in government standards.

"Over the past few weeks, there have been efforts to clarify regulations pertaining to inspection of wheat and the storage facilities in which imported wheat is being shipped," said an official from Egypt's Ministry of Trade and Industry. "If this is being seen as a type of rigidity, this is probably just a time of adjustment to these regulations," the official said.

Officials at GASC, along with the chief executive of one of Egypt's largest wheat importers, Egyptian Traders Co., are being questioned by the country's General Prosecution Office over allegations that documents relating to a shipment of Russian wheat were forged.

Ashraf El Attal, the chief executive of Egyptian Traders Co. was unavailable to comment Wednesday, as "he is being investigated at the moment," a company representative said.

RIAS Trading SA, the Swiss office of Rosinteragroservis, Russia's second-largest grain exporter, said the information on the inspection certificate presented by Egyptian Traders Co. to GASC for the wheat was different from the information RIAS had on its certificate issued before the shipment left Russia.

Prior to the investigation, GASC considered up to 18 offers from local and international trading houses when it tendered for wheat. In recent months, most of Egypt's local grain trade houses have ceased to make offers to GASC, cutting the bids for its latest tender to nine. Only two of those offers included Russian wheat.

Some Russian grain exporters have begun to exclude Egypt as a potential destination for their wheat because of the risks associated with trading wheat with the country.

RIAS has had a shipment of wheat -- the Sea Bird -- held for three months at the Red Sea port of Safaga as a result of a payment dispute between GASC and Egyptian Traders Co. for a previous shipment.

"For me, Egypt is off the map," said Chris Vanhonacker, commercial director at RIAS. "It's in the same category as Somalia because the detention of the Sea Bird is an act of piracy."

A GASC official said in July it was holding the shipment until it received payment from Egyptian Traders Co. for a previous shipment.

Traders say U.S.-based grain merchant Bunge declined to make an offer to GASC in its tender last week, holding off until the government answered its letter requesting clarification of the bid terms. Bunge declined to comment on the matter.

"It's quite a murky situation, especially with some of the [grain] companies wanting clarification from GASC and not getting it," said F.O. Licht's Mr. Flury.

—Summer Said in Dubai contributed to this article.

Write to Sarah McFarlane at [e-mail]

FROM JOSEPH FARAH'S G2 BULLETIN
Russia sides with Hezbollah against Israel?

http://www.wnd.com/index.php?fa=PAGE.view&pageId=106681

Sources: Intel agents snooping, relaying information to terror group

Posted: August 13, 2009
12:20 am Eastern

The Russian intelligence service may be providing valuable information to Hezbollah about Israeli activities, prompting concern in Tel Aviv that any future military initiative against the group may not come as a surprise, according to a report from Joseph Farah's G2 Bulletin.

Russia's Federal Security Service, or FSB, may be providing intelligence based on intercepts it is acquiring from its enlarged presence in the Middle East, especially at a new base in Tartus, Syria, according to informed sources. The Syrians have allowed Russia to enlarge facilities at Tartus to increase its naval presence. Tartus is only 25 miles from Lebanon's northern border with Syria.

Russia's increased presence in Syria is meant to dampen any notion to attack either Syria or Lebanon. At the same time, it has permitted the Russians to introduce sophisticated surveillance systems capable of blanketing all of Lebanon and Syria.

For Hezbollah, such coverage comes at a time when Israel has warned Hezbollah that it will launch attacks on its positions in Lebanon should there be any provocations into Israel launched from there.

To date, Israeli officials have not officially commented on reports of FSB-Hezbollah cooperation. However, sources say that without the intelligence provided by the Israeli spy network in Lebanon, the Israeli Air Force would not have knocked out Hezbollah medium-range missile launchers during the 2006 war between Israel and Hezbollah.

The prospect of cooperation between the FSB and Hezbollah has led to one unconfirmed report from the Israeli website DEBKAfile claiming that the Russian intelligence service assisted Hezbollah in uncovering an alleged Israeli spy ring in Lebanon. Called the Al-Alam spy ring, it reportedly operated primarily in southern Lebanon, leading to the arrest of some 70 people of varying national origins.

In addition to Lebanese, the alleged spies also were said to be Palestinian and Egyptian citizens.

The spy ring reportedly developed following the 2006 failed Israeli military effort in Lebanon to eliminate Hezbollah.

To date, the Russians have not commented on providing information to Hezbollah. Nevertheless, the relationship between the Russians and Hezbollah has a long history.

It began between the then-Soviet Union and the Shiite religious leadership in Lebanon as far back as 1972 when Soviet authorities were asked to provide humanitarian aid. Between 1972 and 1975, Soviet military officers were in contact with Iranian opposition members and radical Lebanese Shiite groups who were undergoing training in Palestinian camps which the Soviet officers visited.