Russia Shrugs Off International Protests Concerning Greenpeace Activists Arrest

Moscow is building its own trade alliance with former Soviet republics and is reluctant to see its neighbors, particularly Ukraine, slip further out of its sway by signing free-trade and political association agreements with the EU. Lithuania, which borders the Russian exclave of Kaliningrad and joined the EU in 2004, has had transport trucks held up at Russian customs for up to 20 days at a time in recent weeks, causing heavy losses for its freight industry. Taking aim at another sector, the Russian consumer protection agency Rospotrebnadzor said inspections of Lithuanian dairy imports had revealed “numerous violations” of quality and sanitary standards in products including cheeses and yoghurt. “We are seeing a sharp weakening of (Lithuania’s) position on protecting the rights and safety of consumers,” Rospotrebnadzor chief Gennady Onishchenko said, according to the Interfax news agency. Lithuania exported dairy products worth $193 million to Russia last year, according to the Russian National Milk Producers’ Union – the vast majority of it cheese that is found on many shop shelves. Russia is also stepping up monitoring of Lithuanian meat and fish imports, state-run news agency Prime reported, citing an unidentified source. Rospotrebnadzor declined to comment. POLITICAL PRESSURE Onishchenko regularly denies any geopolitical motives, but past bans on products from ex-Soviet republics – such as wine and mineral water from Georgia – have been widely seen as a form of political pressure. In Brussels, the European Commission said it had “complete confidence” in the quality of Lithuanian dairy products and called for discussions with the Russian side. “The EU has the most stringent system in the world when it comes to food safety,” Frederic Vincent, Commission spokesman for health and consumer policy, told a regular press briefing. Of the 15 former republics that became independent states when the Soviet Union disintegrated in 1991, only the Baltic states of Lithuania, Latvia and Estonia have joined the EU.

The Arctic Sunrise is registered in the Netherlands, with it’s port of registry being Amsterdam. Two of the 28 activists are Dutch citizens, which has triggered the Dutch government to take legal action. On Friday, the Dutch foreign minister, Frans Timmermans, told the media that their goal is to get the group of 30 freed and the Arctic Sunrise released. The Netherlands has applied to the UN’s Tribunal for the Law of the Sea and claims that the ship’s seizure is unlawful. The Netherlands is the first and only country who has decided to take legal action. “I don’t understand why this could be thought to have anything to do with piracy, I don’t see how you could think of any legal grounds for that,” said Timmermans. The Russian deputy foreign minister, Alexei Meshkov, claims that Russia has repeatedly spoken with the Netherlands concerning the “illegal activity” by the Arctic Sunrise and its crew of activists. Meskhov claims that they asked the Dutch government to take action against the ships owner, Stichting Phoenix. “Unfortunately, this was not done. Therefore, we have far more questions for the Dutch [government] side than they can [possibly] have for us. Everything that happened with the Arctic Sunrise was pure provocation,” said Meshkov. Dutch and Russian relations have been under fire since Russian president, Vladimir Putin , signed off on a so-called anti-gay propaganda law. During Putin’s visit to the Netherlands, in April, thousands of Dutch took to the streets to protest against Russia’s anti-gay propaganda law. The law bans homosexuality and allows the government to fine someone close to $15,500 for being homosexual.

UPDATE 2-SocGen buys VTB’s Rosbank stake in costly Russia turnaround

Jean-Pierre Lambert, analyst at Keefe, Bruyette & Woods, estimated the value of the stake at around 200 million euros but said he expects a 50 million euros negative pre-tax impact on SocGen from the deal. Lambert said he is assuming a “20 percent haircut on the assets sold by SocGen.” A source close to Rosbank said that it had already begun to sell its real-estate holdings and shareholdings and selling more of these assets to VTB was a continuation of the strategy of slimming down its balance sheet. VTB said in May that the stake was not strategic and that it was in talks on a sale. DOUBLE OR QUITS Russia and Eastern Europe are key planks of SocGen Chief Executive Frederic Oudea’s recovery strategy, which aims to offset stagnating domestic retail revenues and volatile trading profits with exposure to dynamic economies beyond the euro zone. Although this has yet to fully bear fruit, Oudea pledged in June that its Russia operations would deliver a sustainable return on equity of over 15 percent by 2015 as the cost-cutting efforts of the past few years begin to take effect. By contrast, SocGen is targeting an overall group return on equity of 10 percent in the same time-frame. SocGen’s shares trade at a discount relative to French and European peers, reflecting market scepticism over Oudea’s strategic vision. Golubkov was replaced by his first deputy, Igor Antonov, who remains acting chief executive until a replacement can be found. The Russia boss has a long way to go to meet profit hopes for the year. SocGen reported 29 million euros profit for the first half for Rosbank and its Russian mortgage and consumer-finance arms, versus a 291 million-euro loss in the year-ago period, hit by goodwill writedowns. Analysts have said they want to see annual profits of 120 million euros to prove the unit is on track. “It is not so obvious (why SocGen would) increase their already controlling stake,” said Gazprombank’s Klapko. “Probably they are providing some assets they do not need in exchange.” While Western banks flocked to Russia after the 1991 Soviet collapse, this no longer fits President Vladimir Putin’s vision for a country which was badly exposed to the Wall Street crash almost two decades later. Large state-controlled banks are increasingly competitive, enjoying a funding advantage thanks to the backing of a sovereign with low debts, and they have reinforced management with foreign talent. A report by Moody’s on Monday said over the coming 12-18 months, operating conditions for Russian banks will be challenging partly due to slower economic growth.