Igor Naumov
Analysts, industrialists criticise Putin-Jiabao agreements
No sooner had the ink dried on the October 28 agreements between Russian and Chinese Prime Ministers Vladimir Putin and Wen Jiabao, than Russian industrialists and analysts started sharply criticising them.
The Union of Oil and Gas Equipment Manufacturers opposed an agreement on a tied Chinese loan for buying drilling equipment from China. Analysts said the agreements tied Moscow to Beijing, and would enable the Chinese side to dictate its terms to Russia.
Wen Jiabao negotiated in Moscow and reached an agreement on loaning $300 million to Russia's Gazprombank from the Export-Import Bank of China. The loan will finance mid-term and long-term Chinese equipment deliveries to Russia and related services. China's Export & Credit Insurance Company (Sinosure) will take on all the risk.
On October 29, Russian drilling rig manufacturers sharply opposed this agreement. They are convinced that the requisite loan will damage the national oil and gas engineering sector. Many companies would be forced to lay off workers and mothball production development programmes.
"The attraction of such loans discriminates against national engineering companies and runs counter to the interests of Russian industry," the Union of Oil and Gas Equipment Manufacturers said.
In its statement, the Union sarcastically commented on the Chinese Government's highly effective efforts to support its drilling rig exporters. Such methods make it possible to "effectively oust Russian drilling equipment from Central Asian markets," the statement said.
The loan, due to be received by Gazprombank, is the first in a chain of Beijing's multi-billion-dollar investment projects aiming to create the required raw materials base and infrastructure for exporting Russian hydrocarbons to China.
On October 29, Interfax quoted an Oil Information Agency source at Rosneft, the largest national state-owned oil company, saying that Chinese partners could issue a $15 billion loan as prepayment for long-term oil deliveries to China.
The source said this implied the annual delivery of 15 million metric tones of oil after 2010, and that the sides were discussing a possible $10 billion loan to pipeline monopoly Transneft.
Analysts are noting a paradoxical situation. The Central Bank estimates Russia's external corporate debts at over $530 billion, while its own gold and foreign currency reserves, being used to prop up the rouble, have dwindled to $515 billion.
Refinancing problems caused by the global financial and stock market crisis have placed many large Russian companies on the verge of bankruptcy.
Although the business community is requesting almost $100 billion, the Government has set aside just $50 billion to Vnesheconombank, which will use the sum to keep major companies afloat.
On the other hand, Rosneft and Transneft debt will snowball with the Government's blessing.
Analysts are dismayed because the Chinese will not provide state-of-the-art technology, equipment or managers with their loans. This violates the main principle for attracting foreign loans, including Western credit.
"I don't think we should count on Chinese technology," Troika Dialog chief economist Yevgeny Gavrilenkov told the paper. He said the projected credit agreements were a large-scale, albeit short-term, decision needed to implement investment projects being hindered by the current crisis.
Gagvrilenkov said this decision was politically motivated, and that the Government could have issued a rouble loan to Rosneft and Transneft.
Former Central Bank deputy chairman Sergei Aleksashenko said Beijing would provide a long-term and easy-term loan that would be repaid by oil deliveries. He said the Chinese side was skilfully preparing a beautiful mousetrap for its Russian partners.
Aleksashenko said Beijing would persuade Moscow to let in Chinese workers and equipment, and that Rosneft would eventually be tied to the Chinese market and would have to sell oil for prices dictated by Beijing.
"This implies that Russia will not profit from Chinese loans and will sell cheap oil to Beijing," Aleksashenko said.
