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The Interpreter
@Interpreter_Mag
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Interpreter_Mag
Russia Update: December 8, 2016

Publication: Russia Update
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The Interpreter
@Interpreter_Mag
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Interpreter_Mag
Kremlin Jumps the Gun in Announcing Rosneft Sale, Not Yet Completed

Russian media have uncritically reported the sale of 19.5% of Russia's oil giant Rosneft, a majority state-owned company, to Glencore and Qatar for €10 billion ($11.3 billion) as "the deal of the year," implying that it is already completed.

But as the Wall Street Journal (WSJ) points out, Glencore has issued a statement saying that the deal is not yet done.

Igor Sechin, CEO of Rosneft and a close associate of President Vladimir Putin, said that Glencore and Qatar's Investment Authority (QIA) "each took half" of the shares offered for sale by the Russian government, WSJ reported.

But they have not invested equal amounts of cash, in fact, as in a statement on its website, Glencore writes that it is in "the final stages of negotiations" and is currently committing only €300 million, "with the balance of the consideration for the acquisition of the Shares to be provided by QIA and by non-recourse bank financing."

A non-recourse loan is secured by a pledge of collateral, typically real estate, but for which the borrower is not personally liable.

Perhaps mindful of what happened to the former BP-TNK joint venture, and the general instability of the Russian market, Glencore noted this term of the deal:

Glencore Limited liability structure fully ring-fenced and non-recourse to Glencore apart from its €300 million equity contribution and the provision of certain guarantees, the risks of which would be fully indemnified by appropriate financial institutions.

Glencore noted that the deal was expected to be completed in "mid-December" and was "conditional" on the finalization of relevant financing. 

Glencore plc is an Anglo–Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. Its shares have been rising on the London Stock Exchange and the Rosneft investment represents "a return to deal-making and expansion" for the country.

So clearly, the Russian government and state media have jumped the gun on this deal, possibly to force the hand of the parties involved.

And there's also speculation that this sale is directed related to the recent OPEC agreement to reduce oil production to achieve higher prices, long in negotiation due to both Saudi and Russian reluctance to make cuts. 

Russia desperately needs a cash infusion because of the woeful state of the economy; the State Duma passed the draft budget in the second reading with plans to raid the Reserve Fund and the National Welfare Fund to patch deficits. 

The price of Brent crude shot up about 10 points from its position in November, after the OPEC agreement, and is currently trading at $53.91, but slid yesterday due to skepticism that the cuts will actually be made.

Rosneft is under US sanctions due to its role in the annexation of Crimea and the war in Ukraine. But because the funds from the sale will go directly to the Russian government, the sanctions will not apply, Reuters reported.

The EU has also imposed sanctions on Rosneft, which Rosneft unsuccessfully challenged in the European Court of Justice. But Switzerland is not a member of the EU and recently the UK voted to leave the EU.

The story of Rosneft's privatization of 19.5% of it shares has had a number of twists and turns. Earlier this month there were reports that Rosneft had not found a foreign investor and  was contemplating buying its own shares, Reuters reported.

To get a sense of what "privatization" means in Russia, we can look at the Kremlin's report on the staged meeting between Putin and Sechin broadcast on all state media, in which Sechin says:

"Given the very difficult economic circumstances and the extremely tight deadlines for this kind of project, I can report to you that we were able to land this deal thanks to your personal contribution, your support."

This deal was held very closely in secret by Kremlin officials. When RBC, an independent wire service increasingly under government pressure, reported that officials were saying they did not want the shares to go to BP, Rosneft filed a lawsuit against RBC for "damaging business interests" that could wind up closing down the news site.

-- Catherine A. Fitzpatrick 

The Interpreter
@Interpreter_Mag
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Interpreter_Mag
Kremlin Spokesman Denies Former Trump Advisor Is Meeting Top Officials


As we reported, Carter Page, founder and manager of Global Energy Capital, a former Trump adviser who has been closely scrutinized by US media and law-enforcement, arrived in Moscow today.

All the major Russian state and independent media ran stories of his arrival and his brief replies to questions about the purpose of his trip -- "to meet with business people and thought leaders."

("Thought leaders" is Silicon Valley jargon for figures believed to influence markets by shaping how products are viewed. Russian media has rendered the term as "idea leaders" or "ideological leaders".)

But the Russian Foreign Ministry's deputy head Sergei Ryabkov said "diplomats did not plan to meet" with Page, RIA Novosti reported.

Russian presidential spokesman Dmitry Peskov said no one from the presidential administration would be meeting with Page, and they learned about his visit from the media, Ekho Moskvy reported.

That seems unlikely, as visa applications have to be cleared by the Foreign Ministry, and such a high-profile visitor would likely be flagged by both foreign ministry and intelligence officials.

Page is expected to give a speech at Moscow's Higher Economics School, said Ekho Moskvy. He plans to stay in Moscow until December 13, RIA Novosti reported.

The pro-government news site Vesti said Page had come to Moscow to "test the waters." Vesti claimed that in the past, Page had said the Trump Administration "needed people who believe in the potential of Russian-American relations" and that dialogue between the two countries was impossible "without trust in the Russian leader."

Page himself has not stated in Moscow that he is still serving as an advisor to Trump, but most Russian media, including RIA Novosti, Vesti, and Ekho Moskvy, have headlined his visit describing him as an "advisor".

Page, who says he has advised Gazprom, formed his company with former Gazprom executive Sergei Yatsenko. Politico reported that Page's firm, based in Manhattan, has yet to actually start a project.

In an interview with the Washington Post's Josh Rogin, Page described as "complete garbage" claims that he had engaged in private communications with top Russian officials.

While Trump campaign officials said Page had "never met Trump, never briefed him," and was put on his list of advisors "by chance," Page announced that he had "chosen to take a leave of absence" from the campaign because the accusations were causing a "distraction.

But president-elect Trump himself, when asked by The Washington Post in March whom he was consulting, listed Page among his advisors. Trump representatives later said Page "had no role" or "was an informal advisor". Rogin said he had never met Trump nor drafted his speeches, although he worked with Sam Clovis, a policy adviser who joined the Trump team in 2015.

US intelligence officials were reported at the time to be investigating his ties to "Kremlin-aligned Russian figures" while visiting Moscow in July, but nothing seems to have come from their investigation.

For more on ties between Donald Trump's advisors and the Kremlin, see our four-part series in The Daily Beast:

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Trump and Russia: All the Mogul's Men

Follow the Money This is the fourth and last in our series of articles laying out all you ever wanted to know about Trump and Russia, but were afraid to ask. Read parts one, two and three. Between the summer of 2015 and the GOP convention a year later, a great many pundits were surprised by the rise of Donald Trump.

View full page →
Dec 08, 2016 23:04 (GMT)
-- Catherine A. Fitzpatrick
The Interpreter
@Interpreter_Mag
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Interpreter_Mag
Russia Closes 'Deal of Year' in Sale of 19.5% of Rosneft to Glencore, Qatar; Chechen Police Sent to Syria

The ruble is trading at 63.38 to the dollar and 68.23 to the euro. Brent crude is selling for $52.98. 








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