For the average Russian, the economy remains a depressing mess – enough to drive a comrade to drink. But at the top end, the oil, gas and commodities-in-general money is pouring in, making the statistics look good and some people very rich. Increasingly, Russia is flexing some of its new financial muscle.

It’s not without cost, though. James Packer is going into the Moscow casino business and part of the price of forming the world’s biggest aluminium company appears to be taking Brian Gilbertson on as the boss.

As Jamie Freed reports, the mooted merger of Glencore’s aluminium assets with the two Russian producers, Rusal and Sual, would bring together Gilbertson (Sual’s head) and former WMC chief Andrew Michelmore, deputy chairman of Rusal. Allegedly the controlling Russian oligarchs think the new structure and an eventual London listing would give them legitimacy.

Receiving less attention but potentially more interesting are the reports that a Russian bank has snapped up nearly 5% of EADS, the maker of delayed Airbuses, along with various other aerospace toys. EADS share price is up about 4% over two sessions on the story that has been neither denied or confirmed.

The UK Daily Telegraph ponders the defence implications of the move as Vneshtorgbank’s US$1.2 billion plunge is believed to be on behalf of Vladimir Putin’s Russian United Aircraft venture:

Brigadier Geoffrey Van Orden, a Tory MEP and vice-chair of the European Parliament’s foreign affairs committee, said the Kremlin stake raised a host of concerns.

“There are all sorts of security implications since EADS has some very sensitive defence contracts, not least in the UK where EADS Astrium builds satellites and military communications,” he said.

“We are talking about a Russian state bank, which would mean even more government control over EADS on top of all the problems of French state interference. It would further upset relations with the US which is already reluctant to share military technology,” he said.

What the Cold War couldn’t achieve, maybe surging commodity prices and stock market raids will.

Peter Fray

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