Despite statements by Russia's top officials that the country's economic crisis is close to bottoming out, the state-controlled natural gas giant OAO Gazprom (GAZP.RS) has cautioned lenders on the possibility that weakening economic conditions there could cause escalation of social unrest in Russia.
In its latest eurobond memorandum, dated July 19 and seen by the Dow Jones Newswires Tuesday, Gazprom said "the weakening economic conditions and turmoil in the financial markets in Russia may result in high unemployment or the failure of state and private enterprises to pay full salaries on time and the failure of salaries and benefits generally to keep pace with the increasing cost of living".
In a memorandum accompanying a previous eurobond issue in March, Gazprom also mentioned the failure to pay full salaries on time as a possible risk, but made no mention of possible repercussions from the ongoing troubled economic situation.
The two documents differ further, as that from March cites events of early 2005 as an example of public discontent, while the latest refers to the possibility of a "certain amount of labor and social unrest that may continue or escalate in the future".
Both documents cite a possibility of "labor and social unrest", which may cause "increased support for a renewal of centralized authority, increased nationalism, including restrictions on foreign involvement in the economy of Russia". However, only the most recent prospectus includes mention of a risk of "increased tension between the Government and its people".