Russia attempts to mediate between Azerbaijan and Armenia to resolve the contentious Karabakh issue in an attempt to play a more prominent role in the region; French firm ‘Total’ buys a stake in Russian Gas Supplier Novatek; Russia delivers humanitarian a
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    • President Dmitri Medvedev of Russia has tried to project Moscow's diplomatic clout in the Caucasus by mediating between the leaders of Armenia and Azerbaijan in an attempt to resolve the Nagorno-Karabakh conflict.1 President Serge Sargsyan of Armenia and his counterpart from Azerbaijan, Ilham Aliyev met in Sochi with the Georgia war in 2008 appearing to have lent fresh impetus to diplomatic efforts to resolve the conflict. Ethnic Armenians in Nagorno-Karabakh broke away from Azerbaijan in a war as the Soviet Union fell apart and the region now runs its own affairs, with support from Armenia. It has declared its independence but is not recognized by any state. Turkey, a NATO member and ally of Azerbaijan, had taken the diplomatic lead on Nagorno-Karabakh in the wake of the Russia-Georgia war of 2008. The initiative by Medvedev is seen as Russia trying to play a more prominent role in a region where Russia and the West are vying for influence over vital energy transit routes from Central Asia to Western markets. Armenia is considered Russia's strongest ally in the region, but is also being courted by the United States. It is also a member of the NATO Partnership for Peace program and has hosted alliance exercises in the past.

    Reports noted that French firm ‘Total’ became the third energy major to forge an alliance in Russia this year by agreeing to pay 4 billion US$ for a stake in Novatek and joining its Arctic Yamal liquefied natural gas project.2 The three deals signed this year all represent a major shift in Russia's energy strategy away from the knockabout oligarchic capitalism born in the 1990s. Now, companies either controlled by or allied with the Kremlin are contributing reserves and keeping control while foreign partners get minority stakes and provide technology, know how and capital. The latest deal, under discussion since mid 2010 fits that pattern with Total signing a memorandum of understanding to acquire 12% in Novatek for 4 billion US$ with a view to raising its holding to 19.4% within 3 years. Total said it estimated the reserve capacity at the Yamal project was around 44 trillion cubic feet of gas. This would allow the companies to produce more than 15 million tons of LNG each year.3

    Russia has delivered humanitarian aid which includes baby food and tents to the Libyan refugees in Tunisia. According to the Red Cross more than a hundred thousand people have crossed the Libya-Tunisia border since the crisis erupted.4 Influential UK research based agency the Economist Intelligence Unit has rated St. Petersburg as the city with the best quality of life anywhere in Russia.5 The experts who compiled the ratings evaluated residents’ economic, social and personal well-being based on 30 major criteria. These include GDP per capita, security, employment, health care standards, transport infrastructure, the level of environmental pollution and divorce rates.

    Reports noted that Microsoft gave a $100,000 grant to the anti-piracy start-up Pirate Pay on Friday thus making it the first company to receive seed funding as the result of cooperation between the IT company and the Skolkovo Foundation.6 This is also an indication of President Medvedev’s modernization initiative getting off the ground with real companies now beginning to come into the picture.

    According to reports, with a view to attract private equity, Russia is setting up a $10 billion fund to co-invest with international private equity firms .7 Private equity firms have been cautious about investing in Russia, nervous about political risk and the country's energy-focused economy. Modernization of Russian economy and establishment of Moscow as a major global financial hub has been a key plan of President Medvedev and the private equity plan perfectly fits the bill.

    In other developments, Nord Stream AJ, a joint venture, has managed to raise 2.5 billion Euros ($3.5 billion) from 24 banks, thereby completing financing for construction of the Gazprom-led natural-gas pipeline from Russia to Germany under the Baltic Sea.8 Nord Stream will use the funding to start second-phase construction in May while work on the first line of the gas link will be completed in April. Gazprom and its European partners plan to directly ship gas to Europe by bypassing transit countries like Ukraine. Nord Stream’s first line will start delivering gas to European consumers in early October. Nord Stream will carry natural gas to supply both businesses and households. The new pipeline will be an important factor of energy security in Europe. Nord Stream will transport up to 55 billion cubic meters of gas each year. This is enough to supply more than 26 million households. 9

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