Russian Investment in US Steel Industry

I just hung up the phone discussing the possibility of Russian investment in the US steel industry (and said that there would probably not be another acquisition until after the US Presidential election in November 2008), and read Peter Marsh's (Financial Times) article describing Severstal and Evraz's further investments in Rouge Industries and Oregon Steel.

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Turkmenistan cuts gas supply to Iran by half

Zahra Hosseinian of Reuters writes that Turkmenistan has reduced their gas output by half to Iran; although Iran claims this is due to technical reasons, they think that it might also be a warning signal regarding pricing issues.

Interestingly, the announcement came soon after the announcement of resumption of direct flights between Turkmenistan and Iran, a further sign of the gradual opening of Turkmenistan.

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Peugeot to build car plant in Russia

John O'Doherty of the Financial Times reports that PSA Peugeot Citroën is to build its first factory in Russia as it aims to double its sales in the country within three years.

Additionally, Marcel Michelson of Reuters reported that other manufacturers, including possibly Mitsubishi, may use some of the production capacity in the future. Further news: Mitsubishi Motors signed an agreement for the granting of incentives with Russian Ministry of Trade, although no specific manufacturing facility is mentioned

PSA chose Kaluga, site of the Kaluga Special Economic Zone, over Nizhny Novgorod (the historic center of the Soviet auto industry) and St Petersburg (which President Putin recently declared as "evolving into Russia's and world's largest automobile production center").

According to PSA's website:

PSA Peugeot Citroën has notified the Russian authorities of its decision to build a plant in the city of Kaluga, 180 kilometers southwest of Moscow. Scheduled to come on stream in 2010, the new factory will produce vehicles in the midsize segment, which represents nearly 60% of all sales in the fast expanding Russian market. The new facility is central to PSA Peugeot Citroën's development strategy in Russia, considered to be a priority growth market. The Group plans to sell 100,000 Peugeot and Citroën vehicles in Russia in 2010, with a commitment to eventually raising this number to 300,000 a year. The signing ceremony for the project is scheduled to take place in Russia in early 2008.

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Citi Receives Permission to Open Rep Office in Baku Azerbaijan

Azerbaijan Business Center

Citi has been active in Azerbaijan since 1991 (often through their Turkish subsidiary), although they haven't yet opened a represetantive office (it is expected to open in early 2008). Loans completed by Citi include

• USD 75 MM AIOC, Early Oil Project - B Loan, Azerbaijan
• USD 4.5 MM AzTelecom Import Financing, Azerbaijan

Perhaps this is the first step to Citi opening a retail network in this fast-growing Caspian nation.

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High Design for Low-Income Housing - WSJ.com

High Design for Low-Income Housing - WSJ.com

Ben Casselman of The Wall Street Journal discusses how architects are answering pressure for social responsibility by planning low-cost housing which is also of sensible, even inspiring, design.

Of course, for at least the last two centuries architects have been aware of their responsibility with regards to social housing. Frank Lloyd Wright designed Usonia in Westchester County, New York as a model community with thoughtful design which he wanted to duplicate around the country. Also, the avant-garde architects of post-Revolutionary Russia considered housing their most important assignment, and even today their designs appear fresh and innovative.

See the books of William Brumfeld, professor at Tulane, for more on the architecture of Russia.

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China: New Dam Builder for the World - WSJ.com

China: New Dam Builder for the World - WSJ.com

The article does not mention the potential for hydroelectric power development in Kyrgyzstan, nor does it mention the substantial interest which the Chinese apparently have shown in the country.

An article published in China and Eurasia Forum Quarterly, Volume 5, No. 2 (2007) p. 131-148

Kyrgyzstan is considered the third largest hydroelectric power in the CIS after Russia and Tajikistan. Its potential production is estimated at between 140 and 160 billion kwh per year but only 10 percent of its resources are currently being exploited.

Hydroelectric power is probably the most important exploitable resource in the Kyrgyz republic, and can be shipped to western China, Kazakhstan, Russia, Tajikistan, Afghanistan and Pakistan.

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Kazakhstan, Oil Firms May Be Near Deal on Kashagan Field - WSJ.com

Kazakhstan, Oil Firms May Be Near Deal on Kashagan Field - WSJ.com:

Gabriel Kahn of The Wall Street Journal said it clearly:

In a Dec. 26 letter viewed by The Wall Street Journal, Kazakh President Narsultan Nazarbayev, has called the heads of the six foreign oil firms toAstana, the Kazakh capital, for a meeting on Jan 11 with himself and the country's prime minister.

The presence of Mr. Nazarbayev, who holds a tight grip on power in the il-rich country and has rarely been involved in talks over the oil field, is a signal that the two sides could be close to a deal.

"For me it is difficult to imagine that President Nazarbayev and Prime Minister [Karim] Massimov meet the most important oil companies without a resolution," said Paolo Scaroni, chief executive of Eni SpA, which is the chief operator of the Kashagan field and has been leading the negotiations.

President Nazarbayev will probably use this as an opportunity to emphasis the role which Kazakhstan will play in world energy security.

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Simon LeVine's The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea

The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea by Simon LeVine (a financial journalist) gives much of the back story to Syriana, the 2005 movie about power politics in the Middle East and the US energy industry. It deserves a place in the bookshelf next to Daniel Yergin's classic The Prize : The Epic Quest for Oil, Money & Power .

Visit LeVine's website at http://www.oilandglory.com/

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Ford Motor Strike Ends/Average Wage

One interesting point to come out of the strike which temporarily halted construction at Ford Motor's plant outside of St. Petersburg: Despite all the progress in Russia's economy, and despite all the hoopla about "New Russians," the average monthly wage at the plant is currently approximately $800, and this is earned by professionals who consider this to be a good, steady job. This reminds us that Russia is still an emerging market.

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Heidi Brown On Russia - Forbes.com

As usual, Heidi Brown of Forbes made some good predictions on Russia's economy and politics for 2008. She is one of the few journalists who recognize that Putin's posturing is largely to serve a domestic audience.

Lower oil prices and presidential elections in the U.S. and Russia will edge the countries toward détente. As oil prices drop, Russia will be more motivated to cooperate with foreign firms. Once Russia's elections have passed and Putin's role as prime minister is cemented, his need to posture for the electorate at home will ease.

Frankly, though, I am not sure that the US elections mean closer ties; if anything, I am nervous that Russia will become a campaign issue and that the American candidates will be posturing to their domestic audiences. The Council on Foreign Relations has a good summary page on where each of the US Presidential candidates stand on US-Russian relations.

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