Russia 090421 Basic Political Developments

Russia invites Europe to join new energy charter

http://euobserver.com/9/27970

ANDREW RETTMAN

EUOBSERVER / BRUSSELS - Russia has floated plans for a new global treaty on trade in fossil and nuclear fuel in an attempt to consign to history an earlier pact, the 1991 Energy Charter Treaty.

Russian President Dmitry Medvedev unveiled the project at a press conference with Finnish head of state Tarja Hallonen in Helsinki on Monday (20 April).

"Our task today is to maintain, or rather ensure for the future, the balance of producers of energy resources, transit states and consumers of energy resources," he said.

A detailed paper has been sent to G20 and G8 members as well as Russia's allies and neighbours. Talks at the EU level are to begin "as soon as possible."

The new pact is to cover oil, gas, nuclear fuel, coal and electricity and to include the US, China and India as well as European countries.

It is aimed at replacing the Energy Charter Treaty (ECT), which gives legal protection to Western energy investors in the former Soviet bloc and sets out rules on gas transit.

The charter has 51 signatories, including the EU states and Russia. But Russia has not ratified it, saying it gives an unfair advantage to Western firms.

"We have not ratified these documents and do not consider ourselves bound by them," Mr Medvedev said.

The new initiative has a bearing on a major lawsuit in the Hague, where shareholders of the bankrupt Yukos oil firm have attacked Russia on the basis of the 1991 charter.

Russia broke up and sold off Yukos five years ago after its CEO tried to mount a political challenge.

"Russia cannot unilaterally cancel the ECT," the ex-Yukos side's lawyer, Tim Osborne, told EUobserver. "The [arbitration] tribunal will decide whether or not Russia is provisionally bound, not Russia."

Mr Medvedev's project could also impact EU-Russia negotiations on a new bilateral treaty, which was supposed to preserve the legal "principles" of the ECT.

Analyst Pierre Noel of the European Council on Foreign Relations says Russia and Germany have worked together on the new global pact, which is likely to have Berlin's support.

But he predicted the pact will be too vague to improve EU energy security.

"A treaty is only worth signing if it limits the room for manoeuvre of the people signing it. This is what the ECT is," he said. "The Russians want to put on the table a treaty that will not constrain anyone."

"They want to be free in the way they treat investors," Mr Noel added.

The Nord Stream question

The Medvedev-Hallonen meeting also saw Finland withhold support for the Nord Stream gas pipeline for the time being.

Ms Hallonen said Helsinki will in June give more details on its evaluation of the Russian-German pipeline's potential ecological impact on the Baltic Sea.

Russian analysts say Finland is using the ecology card to secure better rates on timber imports from Russia for its pulp and paper companies.

RF-Finland relations are fine and contacts regular – Halonen

http://www.itar-tass.com/eng/level2.html?NewsID=13855987

HELSINKI, April 21 (Itar-Tass) - Relations between Russia and Finland are fine and contacts regular--this appraisal was given by Finnish President Tarja Halonen in a speech on Monday at a ceremonial dinner given by her and her husband in honour of the State visit by Russian President Dmitry Medvedev and his wife.

"Cooperation covers all fields of public life," Halonen pointed out, recalling that Russians are the largest group of foreign tourists in Finland. Last year Finnish diplomatic missions in the Russian Federation issued 750,00 visas, which was more than the number of visas in any other member-country of the European Union (EU).

"We are also regular guests on the Russian land. A large number of Finns work in Russia while Finnish companies employ tens of thousands of Russians," Halonen said, emphasizing, "The functioning of border services is of importance to both nations. Our task is to ensure that the border functions effectively and successfully".

Speaking of promising areas of cooperation between Russia and Finland, Halonen mentioned the protection of the environment, and first of all that of the entire Baltic Sea area, as well as science and technologies. She recalled that an innovations center had opened in St Petersburg last year. Through the center the Russians can cooperate with Finnish partners in this respect.

"Last year Russia became our most important trading partner both in export and import. The amount of investments also increased," Halonen said. She added, "To Finland as an EU country it is very important that relations between the EU and Russia have been strengthened and that talks on a new basic agreement will be continued".

"We also hope that talks on Russia's bid for membership at the World Trade Organisation will yield a positive result as soon as possible," Tarja Halonen said.

Finland Withholds Pipeline Backing

http://www.themoscowtimes.com/article/600/42/376433.htm

21 April 2009

By Anatoly Medetsky / The Moscow Times

President Dmitry Medvedev didn't win firm backing for the Nord Stream gas pipeline from his Finnish counterpart Tarja Halonen in Monday talks, a signal that bargaining will continue in the next few months.

Halonen said Finland was still studying the project in terms of its environmental safety and suggested that a decision might be coming in July, when the countries' prime ministers are scheduled to meet.

"As Finns have said earlier, the gas pipeline is an ecological question," Halonen said, speaking at a joint news conference with Medvedev. "If it can be built in an ecologically safe way, then we think it's a good solution."

Medvedev said simply that Russia would continue to promote the pipeline.

In exchange for permission to lay the undersea pipeline off its coast, Finland may ask Russia for further changes in timber export policy and discounts for gas and electricity imports, said Dmitry Abzalov, an expert at the Center of Current Politics, a think tank.

Russia is a major exporter of timber for Finland's sprawling forestry industry.

"I think Helsinki is trying to bargain," Abzalov said. "They are first and foremost interested in timber."

Gazprom, Germany's E.On and BASF and Holland's Gasunie expect all permits from Finland and four other littoral states for the pipeline's construction across the Baltic Sea by the end of the year. Gas shipments are scheduled to start in 2011.

Prime Minister Vladimir Putin delayed the introduction of prohibitively high export duties for timber from last January by nine to 12 months after a meeting with his Finnish counterpart Matti Vanhanen in November. After those talks, an irritated Putin said the environmental impact study on Nord Stream was so extensive as to cover "stones, fur-seals, birds, shipping, cables laid on the bottom and ammunition left from World War II."

As a return favor for the export-duty gesture, the Kremlin expected unconditional support for Nord Stream from Finland, a Kremlin source said ahead of Medvedev's visit.

"We are hoping for Finland's active participation on the issue of the Nord Stream pipeline," the source said, Interfax reported. "We hope this participation will be as active as when Finland turns to us on timber supply-related issues."

Nord Stream AG, the company set up to build the pipeline, in March presented Finland with a formal request to allow construction through two separate permits -- one in accordance with the Exclusive Economic Zone Act and the other under the Water Act. The company also needs permission from Russia and Germany, the countries that stand to gain from the pipeline, as well as Sweden and Denmark.

Medvedev also said he would present new proposals for energy cooperation in an effort to offer an alternative to the European Energy Charter, which Moscow has refused to ratify.

The alternative proposals, which will cover coal, nuclear fuel, oil and gas, aim to balance the interests of producers, buyers and transit states, Medvedev said.