Caucasian Press Review (October 12-18)

Caucasian Press Review (October 12-18)

Breakthrough points of growth in the industrial complex of Kabardino-Balkaria, taking into account the existing resource base, material and technical equipment and the availability of relevant expertise, are the development of non-ferrous metallurgy and mechanical engineering. We are talking about the development of the complex for mining and deep processing of wolfram-containing materials, the pharmaceutical and medical devices industry, the development of the agro-industrial park, and industry for the production of agricultural machinery and agricultural equipment. As reported by the newspaper ‘Kabardino-Balkaria Pravda’, this was stated by the First Deputy Prime Minister of the KBR, Muaed Dadov, at a meeting of the working group for the development of industrial production in the North Caucasus Federal District, chaired by the Minister of Industry and Trade, Denis Manturov.

Dadov noted that the index of industrial production in the republic for the first eight months of the year for operating activities amounted to 106.1%, in the manufacturing industry – 109.8%. Enterprises of all industries shipped products worth 22.7 billion rubles, which is 22% higher than in the corresponding period of the year.

Dadov emphasized that state support is necessary for successful development of the projects. He proposed including the machinery and equipment produced in the Republic on the list of equipment subsidized in accordance with the RF Government Decree №1432 of December 27, 2012 ‘On approval of rules for granting subsidies to manufacturers of agricultural machinery.’

Manturov gave instructions to the heads of the relevant departments of Industry and Trade of Russia to work out the issue of including the range of products planned for release in the framework of  presented investment projects of the KBR in the sphere of production of agricultural machinery and agricultural equipment on the list of subsidized products.

* * *

The Ministry of Economy of Abkhazia has approved and submitted for consideration to Moscow 16 investment projects, the issue of funding of which the Board of Directors of ‘Investment Agency’ and representatives of Russian banks must decide. As reported by the Abkhazia-Inform news agency with reference to the Minister of Economy, Adgur Ardzinba, from a total amount  of 150 investment projects that applied for a loan under the program of concessional lending at the rate of 10% per annum, those that correspond to the priority areas of the economy of Abkhazia were selected. They are the agro-industry, tourism sector and production based on local raw materials. Among the approved projects were farming, production of pasta, jams, cheeses of Abkhazia, construction of hotel complexes, creation of a hothouse economy and a fishing economy.

According to the minister, the risks of a loan default are borne by the borrower and the lender, the Republic will not bear the loan commitment. Nevertheless, the state investment agency under the Ministry of Economy of Abkhazia intends to monitor the implementation of loan commitments by entrepreneurs. "We are interested in Abkhaz businessmen being conscientious borrowers and repaying their debts on time. Otherwise, it could negatively affect the credit rating of the whole country," the minister said.

Potential borrowers will personally present their business plans to a working group of the Ministry, responding to specific questions. The position ‘On the working group’, which defines the criteria for all projects and a sample of the business plan were developed and published on the official website of the Ministry for the convenience of the businessmen.

The investment program is being developed for three years, 1.2 billion rubles will be sent for the realization of the projects during this time. The maximum loan term is 10 years.

* * *

The newspaper ‘Voice of Armenia’ commented on the intention of the head of the Union of Armenians of Russia (UAR), Ara Abrahamyan, to establish a political party and take part in the upcoming 2017 elections. Abrahamyan said that he is a Russian citizen and a member of the council, which is chaired by President Vladimir Putin. "We are in a normal relationship with the president, he gives orders and I carry them out." On being asked whether the Russian president approved his decision to take part in the parliamentary elections in Armenia, Abrahamyan said: ‘’I am getting approval from the Russian president when I work in the Russian Federation." In addition, in one of his answers Abrahamyan used the phrase ‘Putin is always right.’

According to the newspaper, even with an unbiased view the position of the head of the UAR looks doubtful and puzzling, so what can we say with a biased look, openly anti-Russian. For the author it is clear that Abrahamyan is entering the political field of Armenia without hiding the fact that he will directly broadcast the Kremlin's interests there. In this regard, the journalist believes that the success of  Abrahamyan’s political career in Armenia is more than doubtful. The pro-Russian political orientation created him by in Armenia is irrelevant.

The author raises concerns about the way the West might react to this situation, perceiving Abrahamyan’s intention to move Armenia into Moscow's orbit. This could lead to the transformation of the domestic political landscape of Armenia in the arena of the conflict of interests between the West and Russia. Obviously, the newspaper writes that the introduction of pro-Russian or pro-Western elements in the political life of Armenia contradicts both the current policy of the Armenian state and its national interests as a whole. An explicit bias towards one of the sides, the complete withdrawal into the orbit of one pole would be just devastating for the country. Practice has shown that the only way for Armenia is a balance of interests, instead of sweeping recognition of the priority of one of the vectors, the article says.

* * *

The issue of the purchase by the Azerbaijan State Oil Company (SOCAR) of the Greek gas distribution company DESFA, seems to be near completion. Certain concessions on both sides led to the achievement of a long-standing compromise, the weekly Region Plus published in Baku reports.

The newspaper reminds that in 2012-2013 Greece attempted a large-scale sell-off of state assets to raise funds for fulfillment of the budget, which was going to pieces. At the same time, SOCAR won a tender for the purchase of the shares of the company DESFA, and in December 2013 the parties signed an agreement. The contract provided for the purchase of 66% of the shares of DESFA for 400 million euros. The remaining 34% of shares were reserved by the Greek State. But the deal has not been completed so far. First, the European Commission interfered with the deal, launching the procedure of checking the transactions in compliance with the antitrust laws. Then the Greek coalition SYRIZA, after coming to power, almost immediately announced its intention to revise the contract with SOCAR, and even voiced plans for the possibility of changing the terms of the agreement on the Trans Adriatic Pipeline. The new issue quickly found a solution – the new Minister of Energy of Greece explained in Baku that the agreements on TAP are intergovernmental in nature, and no one has the right to change them regardless of a change in government. As for the deal on the transaction of DESFA, the question remains hanging in the air. Moreover, the new government of Greece has repeatedly expressed the desire to retain a controlling stake in the asset. SOCAR, which had made an advance payment by that time, insisted on completion of the transaction on the agreed terms.

At the same time, the European Commission could not make a decision on the transaction. As suggested by the publication, it deliberately shortened the time that both sides were able to reach an acceptable compromise. On the one hand, the EC is forced to reckon with the opinion of the Greek Government, on the other hand, Azerbaijan is a new source of gas for Europe, and attempts to completely block the transaction could adversely affect the subsequent cooperation. As a result, both sides agreed to a compromise to get out of this impasse. SOCAR has agreed to reduce its stake to 49% and the Greek government promised assistance in obtaining the permission of the European Commission on the completion of the transaction.

It is supposed that SOCAR will acquire the agreed 66% stake in DESFA, and then sell 17% of it to other companies. In this case, Azerbaijan will remain the largest shareholder of the company DESFA, though without a controlling stake. According to Greek media, interest in purchasing the package was expressed by several companies, including Belgian Fluxys, Dutch Gasunie and Italian Infrastrutture Trasporto Gas and Snam Rete Gas. Greece’s consent to the version with the transfer of the shares of DESFA to third companies was expressed by the Minister of Environment, Energy and Climate Change, Panos Skurletis, who said that the privatization process is going smoothly at a meeting with the Azerbaijani Ambassador to Athens, Rahman Mustafayev, and a representative of the SOCAR. Furthermore, this assignment perfectly suits the EC Directorate for Competition. It is expected that a decision on the protracted issue of DESFA privatization will be taken in the coming months, the paper concludes.


The newspaper ‘North Ossetia’ describes the process of the return to life in the republic of the one-time industrial giant factory of sparkling wines ‘Source’ as the ‘return of a legend’. At its peak in 2007 ‘Source’ held up to 35% of the market of sparkling wines in Russia. The volume of production then amounted to 70 million bottles of champagne. However, in 2008 the plant entered the stage of bankruptcy, as they say, due to its risky policy.

The new owners of the company, two closed joint stock companies ‘Istok’ and ‘Noviy Istok’, have decided to revive the production of wines, of which, according to them, there are no analogues in the country. They have acquired most of the rights of the creditors, amounting to over 5 billion rubles, and all the unmortgaged property of the company. The bankruptcy procedure is being completed at the moment, after which registration of the license will proceed. The management of the plant reported that the workers will soon get paid. About 600 people on the company's staff during the period of bankruptcy have been waiting for their money for 6 years. About 30 million rubles have already been allocated for the repayment. Moreover, those who were left without work after the collapse of the flagship will be able to return. In total, there are about 3000 such people. By the end of the year it is planned to start the alcohol factory, then the winery and distillery.

According to experts, the company located in an area of ​​45 hectares can carry out huge orders. At just one time the capacious plant can make 8 million liters and it has large warehouses. The equipment is not out of date and is technically almost ready for launch. It is still unique, because there is no similar production in any region of Russia. 20 specialists who continued to work here have been maintaining the appliances of the production for all six years. For example, in the workshop of the fermentation of champagne, where they maintained the necessary temperature and the regime, about 2 million liters of fermentation mixture still remain, which after a brief treatment will be high-quality champagne.

The products will return to the market under the famous brand ‘Istok’. A new line will be produced, including beverages of premium or economy class. Development of the trademarks has been entrusted to a famous London company. The owners of ‘Istok’ will distribute their products through their counterparts in 82 regions of the country who are already waiting for the start.

The taxes on production and sales of sparkling wines will go to the North Ossetian budget in full, from other products 40% will remain in the republic and 60% will go to the federal budget.