>From http://defence-data.com/current/page4009.htm Russia starts building India's three Krivak class destroyers March 22nd, 1999 by Gordon Feller, Defence Systems Daily's correspondent in Moscow After being delayed several months while furiously looking for financing, on Wednesday St. Petersburg's Baltiisky Zavod shipyard finally laid the keel on the first of a $1 billion trio of state-of-the-art warships ordered by the Indian navy. Vladimir Yukhnin, the chief naval architect at the Severnoye PKB, which designed the frigates, calls them the "warships of the next century" and said that no foreign navy has anything comparable. The 4,000-ton frigates are equipped with advanced-guidance missiles to neutralise surface, subsurface and aerial targets. Reports have said that the ships are also equipped with "stealth" technology that enables them to avoid detection by enemy radar, and Yukhnin said the ships also have a bombing complex called RBU-6000 and facilities to harbour helicopters - all of which makes them extremely competitive on the international market. India ordered the three Krivak class warships from Russia's state arms dealer, Rosvooruzheniye, in 1997 to "partially arrest its declining force levels and to improve combat capabilities," according to Indian news reports at the time. On Wednesday shipyard director Oleg Shulyakovsky said Baltiisky Zavod will deliver two of the frigates by 2002 and the third by 2003. The first frigate has to be completed in April of 2002 - two years later than originally planned - with the second coming six months later and the third six months after that. "The keel for the second warship will be laid by the end of the year," Shulyakovsky said. The project and the shipyard's controversial director have received considerable attention in the Russian media. Last month, when Shulyakovsky appealed to the Kremlin for funds for the project, the media accused him of embezzling India's down payment, which, according to Shulyakovsky himself, was more than $100 million - but he denied the charges. Construction, which was supposed to begin last year, was put on hold after the shipyard - one of the largest in Russia - saw its credit line disappear with the crisis. The original investor, Uneximbank - which owns 50.5 percent of the shipyard - sold its stake just before the August crash. But even before the sell-off and the crisis the shipyard was having trouble getting financing. The framework agreement with India calls for Baltiisky Zavod to borrow private money to complete the projects because the cost of the first frigate is estimated at $270 million, and India agreed only to pay a small portion of that before 2001. Shulyakovsky tried several different tracks to attract a new lender -including last month's request to First Deputy Prime Minister Yury Maslyukov to print $300 million worth of roubles. Another option, which Shulyakovsky proposed in January, was a state guarantee for the loans the shipyard planned to attract from abroad. It is unclear where the money is coming from, however. At Wednesday's keel-laying celebration Shulyakovsky would only said that the "financial problem had been solved" and he declined to elaborate. There is nothing unusual in borrowing money for contracts that are paid off steadily over several years, experts said Thursday. But this deal was particularly difficult to finance because commercial conditions are worse here than in other European shipyards. And Baltiisky Zavod has been troubled by the recent economic situation, which has forced it to change its prospective partners several times. Shulyakovsky did say, however, that the shipyard is not using any state money and has attracted a $140 million credit line with a "satisfactory" interest rate, but he declined to name the bank or specify the conditions of the loan. There are several possible sources of financing for Baltiisky Zavod. The shipyard has significant support from Inter-regional Investment Bank, known by its Russian acronym MIB, which is one of the shipyard's shareholders and has tight connections with Rosvooruzheniye through affiliated companies. Another possible source of financing, according to the respected daily newspaper Kommersant, is Vneshtorgbank. And another bank, Vnesheconombank, is already close to the deal by performing the role as agent to handle payments from India to Rosvooruzheniye. Whichever bank is involved, however, the project is finally up and running with financing based on the future payments from India. "The credit line the shipyard received recently is guaranteed by the prospective payments of the Indian government," Shulyakovsky said cautiously. Baltiisky Zavod desperately needed this contract to move ahead. Losing the Indian navy as a client would probably have forced the shipyard to layoff staff and made getting future contracts more difficult. But now, thanks in part to finally finding a lender, business is looking up for the shipyard. Baltiisky Zavod is currently negotiating with a Norwegian company to build four chemical tankers worth $18 million each," Interfax reported on Tuesday. Although Baltiisky Zavod has never before built whole warships for India, the shipyard's cooperation with India in shipbuilding has a long history and the prospects for future deals looks promising, according to Gennady Tkachev, chairman of St Peterburg's External Relations Committee. Tkachev said that India is the largest importer of items produced in St. Petersburg, which include pharmaceuticals and industrial machinery as well as various kinds of water craft. Another of St. Petersburg's shipyards, Admiralteyskiye Verfi, is also currently building something for the Indian navy - a submarine. REF XQQEE XQQMA XQQSA Whither NATO? by Gordon Feller, Defence Systems Daily's correspondent in Moscow The celebration earlier this month of the formal inclusion of Hungary, Poland, and the Czech Republic into NATO highlighted the existence of three very different views among alliance members about the nature of the challenges they face and about the proper role of the Western alliance in meeting them. The first view, articulated most strongly by the leaders of the newest members of the alliance, might be called the traditional one. It identifies Russia as the most likely potential threat. And it presents NATO as a guarantee of the independence and security of alliance members precisely because it, unlike all other European institutions, involves the power of the United States in the defence of the continent. The second view, reflected in the speeches of many European leaders, simultaneously downplays the possibility of a Russian threat but insists that the alliance not expand its mission beyond its traditional one as a defence pact. Some of those who hold this view stress the role of the alliance in maintaining a link with the US, while others see it a security system that will permit the gradual expansion of Europe itself. And the third view, presented primarily by US officials, shares the assessment of most Europeans that Russia is no longer a threat but argues that other threats to the security of the continent, such as the conflicts in Bosnia and Kosovo, mean that NATO must assume a new and more active role, even if that means the alliance must redefine itself as something other than simply a defensive one. As they have in the past, spokesmen and commentators in alliance countries insisted that these views did not reflect any fundamental divisions in the alliance. Instead, they said, such variations in view were simply matters of differing emphasis on parts of a common agenda. But in the absence of a common threat which all members agree upon, these differences are likely to grow. And to the extent that happens, they are thus likely to have a profound impact on those who have joined or want to join the alliance, on links between European members of the alliance and the United States, and on relations between NATO, its particular members, and the Russian Federation. The most immediate impact of these divisions within the alliance may be on those countries who have just become members and on those who want to join as soon as possible. All of these countries want to join NATO because they see the Western alliance as the best means of protecting themselves from a new Russian threat. If they discover that the alliance now has a different agenda, they may find themselves in some difficulty. The governments of these countries have justified the financial costs of NATO membership in terms of popular expectations that NATO has not changed. If it becomes too obvious that the Western alliance has, at least some portions of their populations may be less willing to pay those costs. And these regimes have counted on the alliance precisely because of its American dimension. If they decide that Europe and the United States are moving in different directions on security questions, that too may lead some to question the value of alliance membership. The impact of these differences on ties between NATO's European members and the United States, however, is also likely to grow. Not only are Europeans seeking to play a larger role in a grouping long dominated by Washington and thus prepared to play up divisions that earlier they would have suppressed, but the US also appears to many of them divided on the future role for NATO and thus open to pressure. Both Europe and the United States downplay any immediate Russian threat. Indeed, both appear to want to include Moscow in ever more alliance councils. But they openly disagree on what Europeans call "out of area" activities and what Americans stress are the major challenges facing the West now - the violence in the Yugoslav successor states. But the greatest impact of these differences within the alliance is likely to be on relations between the alliance and its individual member, on the one hand, and Moscow, on the other. The Russian leadership not only opposes the expansion of the Western alliance to the east but also believes that NATO, which it describes as a "relic of the Cold War," should cease to exist. Consequently, it is almost certain to seek to exploit these differences in approach in at least three ways. First, it is likely to try to avoid any step so overtly threatening that it would unite the alliance once again. Second, it is likely to continue to reach out to European countries, such as Germany, that appear most opposed to American efforts to redefine the mission of the alliance. And third, Moscow is likely to try to play up the notion of a special relationship with Washington, something that may anger Europeans and restrict US efforts to overcome these divisions within the alliance itself. Fifty years ago, one observer commented that NATO existed to "keep the Russians out, the Americans in, and the Germans down." Now, both the divisions within the alliance and the policies of its members could create a situation in all of these would be reversed - with the Russians increasingly inside Europe, the American role there reduced, and the roles of individual European states far larger and more unpredictable. REF XQQAS XQQEE ~~~~~~~~~~~~ A<>E<>R The only real voyage of discovery consists not in seeking new landscapes but in having new eyes. -Marcel Proust + + + + + + + + + + + + + + + + + + + + + + + + + + + + Every great advance in natural knowledge has involved the absolute rejection of authority. -Thomas Huxley + + + + + + + + + + + + + + + + + + + + + + + + + + + + Forwarded as information only; no endorsement to be presumed + + + + + + + + + + + + + + + + + + + + + + + + + + + + In accordance with Title 17 U.S.C. section 107, this material is distributed without charge or profit to those who have expressed a prior interest in receiving this type of information for non-profit research and educational purposes only.
