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Russia 101222Basic Political DevelopmentsRussia urges six-party nuclear talks - Deputy Foreign Minister of Russia Alexey Borodavkin and Korean Ambassador to Russia Kim Jong-Il have exchanged their opinions on potential measures to address the escalating tension on the Korean Peninsula.Russian envoy held secret talks with South Sudan officials in Israel: report - A secret meeting was held last week in the Israeli capital Tel Aviv between the Russian envoy to Sudan, Mikhail Margelov, and officials from South Sudan, according to an Israeli media source.U.S. envoy on Eurasian energy hopes U.S. investments in Russian energy sector will growU.S. demand for Russian LNG to fall if shale gas projects successful - U.S. diplomatSTART TREATYRussia's State Duma may approve new START by yearend - "If the Senate ratifies the deal, our committee may hold an unscheduled meeting to discuss the document," First Deputy of Russia's International Affairs Committee Leonid Slutsky said. "The new years celebrations will be more pleasant if the treaty is ratified," he added.New U.S.-Russia arms pact nears Senate approval (Update 1)White House convinced of START ratificationArms treaty with Russia nears Senate approvalNuclear Arms Pact Is Poised to Pass MEDVEDEV IN INDIAWarm Russian, Indian ties outlive Cold WarDmitry Medvedev meets with Indian counterpart in New DelhiRussian president heads to India's financial capitalMedvedev’s date with Taj Mahal, Bollywood Medvedev Rekindles Russia’s Cold War Bollywood AffairIndia, Russia strike deals during Medvedev visit-FACTBOXIndian Prime Minister "Delighted" With Indo-Russian Oil, Gas PactPrime-Minister of Kyrgyzstan to depart for Russia - The Prime-Minister of Kyrgyzstan will depart for Russia. As sources of information in the Government Office reported to 24.kg news agency Almazbek Atambayev intends to visit Moscow with working trip on December 26. Reappointed Kyrgyz PM to visit MoscowP.M.s of Russia and Armenia to discuss economic issuesSaint Petersburg hosts Sargsyan-Putin meeting todayVladimir Putin to hold talks with Armenian premierRusHydro to buy Armenian hydropower plants - paper: No final agreements have yet been signed, a source familiar with the companies' plans told RIA Novosti.Putin to make working trip to St Petersburg Wed - The Premier will hold a teleconference link-up with the Sayany-Shushenskoye hydropower station where a ceremony will take place to mark a resumption of the operation of Hydropower Unit 3, restored after the Aug 17, 2009, breakdown at the station. Georgian MPs called on Russia to begin de-occupation of territories - Georgian MPs called on Russia to begin de-occupation of Georgia’s invaded territories before restoration of friendly relations between Georgia and Russia.KAPO?confirms Savisaar asked 3 million euros from MoscowGreece and Russia Cut Visa Red Tape - Greece’s Deputy Minister of Culture and Tourism, George Nikitiadis suggested the simplification of procedures for visa issuing. After his meeting with representatives of Visa Center there he announced 5 new visa centers will open in Russia, bringing the total to 8 in 2011. These offices will collect all necessary documents, and visas will be issued within a maximum of 48 hours. Moreover, visa centers will cooperate with a private courier service company covering 177 points all over Russia.Agreement on Malév could be reached in January - An agreement with the Russians on the fate of troubled Hungarian airline Malév could be reached in January, National Development Minister Tamás Fellegi said in an interview published in business daily Napi Gazdaság on Wednesday. Hungary Says Talks on Surgut’s Mol Stake ‘Slower,’ Napi Reports - Negotiations between Hungarian and Russian officials on OAO Surgutneftegaz’s 21.2 percent stake in Mol Nyrt., Hungary’s largest refiner, are “slower” than on other issues such as talks on an “energy cooperation package,” Hungarian Development Minister Tamas Fellegi told Napi Gazdasag. Russia, China To Finance 63% Of Ecuador Hydroelectric Plant Russia to build nuclear station and LNG terminal in MoroccoMoscow Gets Russian Treatment in Algiers - In recent months, Russian oligarchs have tried to buy two of Algeria’s most strategic assets and, despite Kremlin support, have faced stiff resistance so far.Chechen warlord killers' sentences reduced in DubaiDubai court overturns life sentences of 2 men involved in Chechen warlord murderThe Klitschkos and the Chechen Despot - Vitali and Wladimir Klitschko aren't just feared boxers -- they?are almost universally admired for their support of democracy. But recent appearances with infamous Chechen ruler Ramzan Kadyrov have many wondering if the brothers are worthy role models.Gang leader detained in Kabardino-Balkaria -"Police detained a gang leader in the course of a special operation in Nalchik on Tuesday. He resisted the arrest, threw a grenade at the policemen and was wounded, when law-enforcement agents returned fire. There are no casualties among police or civilians. Police found at the scene an F-1 grenade, ten rounds of ammunition, a 200-gram TNT block and an electric detonator. Britain expels Russian spy for 'overstepping the mark' - Britain has expelled a Russian spy, as sources accused him of "overstepping the unwritten rules of spying". Russia and UK expel diplomats over spying allegationsAnna Chapman 'to lead youth wing of Putin's United Russia party' - Anna Chapman, the glamorous former Russian spy, is reportedly to become a leader of a youth wing of Vladimir Putin's United Russia political party. Sexy Russian spy Anna Chapman nude in January issue of PlayboyIn a First, Duma Deputy Resigns - Valery Kornilov, 46, a member of the ruling United Russia party, refused to elaborate on the circumstances of his decision in his letter to Duma Speaker Boris Gryzlov or in talks with colleagues, the report said. An unidentified Kornilov aide told Interfax that he also was unaware of the reasons for his boss to quit.Russia investigates Bank of Moscow loan - Russian law enforcement officials have opened a criminal investigation into a top Russian bank owned by the Moscow city government, the Kommersant business daily reported. The probe into the Bank of Moscow, which has been majority-owned by the city since 1995, is linked to a 12.76-billion-ruble (415-million-dollar) loan the bank issued to a little known firm in 2009, Kommersant said.Bank of Moscow Dismisses Criticism from VTB Bank of Moscow in embezzlement probeMuscovites address thousands of questions to mayor - Moscow residents have sent a few thousand questions to Mayor Sergei Sobyanin, some of which he will answer live during the new Our City program on the state-run TV Center channel on Wednesday, Sobyanin's spokeswoman Gulnara Penkova said.Sobyanin to answer city folk questions in live broadcast WedPregnant Moscow women to protest new law cutting maternity leave allowanceRF FCC to adjust ISS orbit for docking with spacecraftISS to move to higher orbitU.N.-Russia call on world to fight Nazi glorification“The level of anti-Semitism in Russia has declined significantly” - Personal Representative of the OSCE Chairman-in-Office on Combating Anti-Semitism, Andrew Baker, gave an interview to Kommersant“Russia and the World of Islam” Published in Moscow - It is a collection of the speeches presented at the scientific international conference held in November 2006 at the Faculty of Orientalism in Russia’s Academy of Sciences. Siberian police officers found guilty of tortureMoscow press review for December 22, 2010PRESS DIGEST - Russia - Dec 22Russian Press at a Glance, Wednesday, December 22, 2010What Russia can do on North Korea - Keen to boost its profile in East Asia, Russia is pressing to play a bigger role in tackling tensions on the Korean Peninsula. - By?Richard WitzNational Economic TrendsRUSSIAN TRADE SURPLUS WAS $10.6 BLN IN NOV COMPARED WITH $11.5 BLN A YEAR AGO - ECON MINISTRY?RUSSIAN GDP GREW 4.2% IN NOV, 3.7% IN 11 MTHS – NABIULLINARussian GDP grew 4.2% in Nov, 3.7% in 11 mths – NabiullinaRussia's budget deficit in 2010 was 3,8% of GDP - Nabiullina Russia can resume grain exports in 2011 if harvest tops 80 mln tonnes - Grain Union Russia plans to zero grain import dutiesBanks have 628.9 bln rbs on CBR correspondent accounts on December 22.VAT Likely Candidate for Hike Bond Sales Pulled as Yields Hit Four-Month High: Russia Credit High Corruption and Low Growth Spoil 2010 - By Anders AslundBusiness, Energy or Environmental regulations or discussionsRussian markets -- Factors to Watch on Dec 22Rosneft, Polyus Gold, Norilsk, Razgulay: Russian Equity Preview Gref Sees Sberbank Profit Reaching Record $6.5 Billion in 2011REFILE-Alrosa eyes 49 pct stake sale to Rio Tinto in Severalmaz – reportRio Tinto may invest $385 mln in Alrosa subsidiaryPolyus to Build $1Bln Plant VimpelCom plan for Weather deal hits snagTrafigura May Struggle to Fund Norilsk Stake Purchase Norilsk Sells $3.5 Billion Stake to Rival of Glencore (Update1) Russia: Hyundai to add shift at St PetersburgDr Reddy's Laboratories to collaborate with R-Pharma RussiaSevmash to appeal against court decision in Odfjell caseNovatek said Tuesday that an entity controlled by chief executive Leonid Mikhelson and shareholder and board member Gennady Timchenko have a two-year option to buy a 9.4 percent stake in the gas firm from a Gazprombank investment vehicle. (Bloomberg) Japanese instant noodle maker Nissan Foods said Tuesday that it will spend $88 million to raise its stake in domestic food producer Mareven Food Holdings to 24.99 percent from its current 14.99 percent, which it acquired in January 2009. (Bloomberg)State development bank VEB said Tuesday that it will provide up to 21 billion rubles ($680 million) of funding to meat producer Miratorg to build a cattle farm and slaughter complex in the western Bryansk region. (Bloomberg)Is Anyone Going To Stop Three Oligarchs From Forming A Potash Monopoly? - Three years ago, the US Government had no reluctance allowing Oleg Deripaska’s Rusal to swallow its only domestic aluminium smelting competitor, even if the State Department wouldn’t allow Deripaska a visa to cross the border. Kerimov’s personal position may be similar, so far as the US Government’s visa authority is concerned. But down the passage at the US Department of Justice, where the anti-trust bureau is getting ready to take its holiday, it would be surprising if he had much trouble at all. Merry Christmas, Suleiman Abusaidovich.The entrance ticket to the Titanium Valley was estimated at 3 million euro - As "RusBusinessNews" was informed by representatives of the Sverdlovsk Region's government, the prerequisite for being qualified as a zone resident is investment equal to minimum 3 million euro in industrial production operations performed within the Special Economic Zone, provided that minimum 1 million euro has been invested within the first year upon registration. At the initial stage of operations in the Titanium Valley, the total amount of investment is estimated at about 40 billion rubles.Activity in the Oil and Gas sector (including regulatory)One fifth of Russia's oil to be produced at shelf deposits by 2020 Lukoil in Talks With Pertamina to Explore Indonesian Offshore ONGC, Sistema to Merge Russia Oil Assets, Economic Times Says ONGC Arm Enters Into Framework Agreement With SistemaIndia, Russia sign IGA on oil & gas, differ on project timeline normUPDATE 2-Novatek CEO, board member get 9.4 pct stake optionGazpromGazprom finds gas in TajikistanGazprom: Armenia To Begin Paying Market Prices For Gas In April------------------------------------------------------------------------------------------Full Text ArticlesBasic Political DevelopmentsRussia urges six-party nuclear talks , 22.12.2010, Moscow 10:44:58.Deputy Foreign Minister of Russia Alexey Borodavkin and Korean Ambassador to Russia Kim Jong-Il have exchanged their opinions on potential measures to address the escalating tension on the Korean Peninsula. According to the Russian ministry's information and media department, the Korean diplomat related his country's official position on the matter, as well as the outlook for the development of the situation in the region.??????The Russian official, in turn, noted that the country was ready to provide support to both Pyongyang and Seoul on resolving existing problems by means of political and diplomatic dialog. Moscow is also prepared to resume six-party talks in order to settle the Korean Peninsula's nuclear problem and improve relations between participants of these talks. ??????On Tuesday, the U.S. Executive Office announced that the White House did not support the idea of resuming the six-party talks on North Korea's nuclear problem that were suspended after North Korea's nuclear tests in May 2009. ?Wednesday 22 December 2010 Russian envoy held secret talks with South Sudan officials in Israel: report 21, 2010 (KHARTOUM) – A secret meeting was held last week in the Israeli capital Tel Aviv between the Russian envoy to Sudan, Mikhail Margelov, and officials from South Sudan, according to an Israeli media source.The IzRus website, a key Russian-language online outlet based in Israel, reported on 16 December that Margelov had absconded briefly in Tel Aviv, where he was on a six-day official visit, in order to meet representatives of South Sudanese government who were in Israel at the time.According to the website, which is cited as one of Israel’s five leading Russian-language websites, Margelov skipped an appointment with Israeli foreign ministry officials in the morning of 16 December and went to meet south Sudanese officials.The website, which is edited by Michael Falkov who previously served between 2003 and 2004 as a media advisor for Israeli foreign minister Avigdor Lieberman, claimed that the covert meeting was related to the referendum vote on South Sudan independence.The semi-autonomous region of South Sudan, where the majority of the population follows Christianity and traditional beliefs, is preparing to gain full independence from the largely Muslim-Arab north in a referendum vote set to take place in January, 9 2011.The plebiscite is the centerpiece of the 2005’s Comprehensive Peace Agreement which ended nearly half a century of intermittent civil war between north and south Sudan.Margelov, who also heads the Russian Federation Council’s Committee for International Affairs, was named as his country’s special envoy to Sudan in December 2008, and has ever since visited the country on several occasions.Earlier this year, Margelov draw the ire of southern Sudanese when he warned of the failure of a new state in south Sudan and expressed fears of a new Somalia emerging in the region."We as an international community and countries that are permanent Security Council members do not want a new Somalia in South Sudan," he said.The Russian envoy also supported the re-election of President Al-Bashir in April disputed elections, and opposed legal actions taken by the International Criminal Court (ICC) against Al-Bashir.(ST)12/22 10:28 ? U.S. envoy on Eurasian energy hopes U.S. investments in Russian energy sector will grow 10:38 ? U.S. demand for Russian LNG to fall if shale gas projects successful - U.S. diplomat TREATYRussia's State Duma may approve new START by yearend 22/12/2010The lower house of the Russian parliament, the State Duma, may ratify the Russian-U.S. new strategic arms reduction treaty (START) by the end of 2010, if it is approved by U.S. Senate soon, a Russian deputy said on Wednesday.The Senate is due to hold a final vote on the arms pact on Wednesday."If the Senate ratifies the deal, our committee may hold an unscheduled meeting to discuss the document," First Deputy of Russia's International Affairs Committee Leonid Slutsky said."The new years celebrations will be more pleasant if the treaty is ratified," he added.The treaty, which restricts both nations to a maximum of 1,550 nuclear warheads, down from the current ceiling of 2,200, was signed by Russian and U.S. presidents Dmitry Medvedev and Barack Obama in April.The agreement will come into force after ratification by both houses of the Russian parliament and the U.S. Senate. Medvedev has made it clear that Russia will not ratify the treaty until the pact is finally approved by the U.S. Senate.The deal is an important part of the efforts to "reset" relations between Russia and the United States. However, many Republicans still maintain that it could stand in the way of the modernization of the U.S. nuclear arsenal.MOSCOW, December 22 (RIA Novosti)New U.S.-Russia arms pact nears Senate approval (Update 1) 22/12/2010The new strategic arms reduction treaty between the United States and Russia is nearing approval by the U.S. Senate, with the final vote due to take place on Wednesday.The new START treaty secured enough votes in the U.S. Senate on Tuesday to close out debate and move to the final approval stages. Eleven Republicans joined Democrats to vote 67-28 to end debate on the issue. Senators also rejected a few last-minute amendments."We are on the brink of writing the next chapter in the 40-year history of wrestling with the threat of nuclear weapons," Senate Foreign Relations Committee chairman John Kerry, a Democrat, said following the vote. Kerry said he expects 70 senators to eventually back the agreement.Russian and U.S. presidents Dmitry Medvedev and Barack Obama signed the treaty, which restricts both nations to a maximum of 1,550 nuclear warheads, down from the current ceiling of 2,200, in April. It needs a two-thirds majority in the Senate for ratification.The deal is an important part of the efforts to "reset" relations between Russia and the United States and Obama, who has delayed his vacation for the cause, has been trying to convince senators that the new nuclear deal is in the interest of the United States. Many Republicans claim the treaty could stand in the way of the modernization of the U.S. nuclear arsenal.The agreement will come into force after ratification by both houses of the Russian parliament and the U.S. Senate. Medvedev has made it clear that Russia will not ratify the treaty until the pact is finally approved by the U.S. Senate.The ratification of the new arms cuts treaty would be Obama's third major victory in Congress in less than a week, the other two being a tax deal with Republicans and the repeal of a ban on gays openly serving in the armed forces.WASHINGTON, December 22 (RIA Novosti)White House convinced of START ratification 22, 2010 00:38 Moscow TimeThe White House maintains its deep conviction "that the new Russian-American treaty on strategic offensive arms will be ratified in the next day or two by the U.S. Congress. Presidential spokesman Robert Gibbs confirmed this to journalists on Tuesday, commenting on news that nine Republican senators were in favor of the treaty. This virtually guarantees the ratification of the START Treaty. However, Gibbs said that Barack Obama is "extremely superstitious" and not in a hurry to celebrate a victory on this and other matters under consideration by lawmakers. The Press Secretary reiterated that the U.S. administration is unanimously in favor of ratifying the new treaty on strategic offensive arms.Arms treaty with Russia nears Senate approval ISTBy David Alexander and Thomas FerraroWASHINGTON (Reuters) - President Barack Obama wrapped up enough support on Tuesday to win Senate approval for a strategic nuclear arms pact with Russia later this week, a key step in his drive to improve ties with Moscow and curb atomic weapons proliferation.The new START treaty cleared a procedural hurdle in the Senate by a vote of 67-28 as 11 Republicans joined Democrats in a decision to limit further debate. The treaty will move to a final vote on Wednesday after lawmakers deal with a rash of last-minute amendments.Obama's Democrats need a two-thirds majority in the 100-member Senate for final approval of the treaty. Senator John Kerry, who led floor debate as chairman of the Foreign Relations Committee, said he expected 70 senators to ultimately vote in favor of the accord."We are on the brink of writing the next chapter in the 40-year history of wrestling with the threat of nuclear weapons," Kerry said.The treaty, which would cut strategic atomic weapons deployed by each country to no more than 1,550 within seven years, was signed by Obama and Russian President Dmitry Medvedev in April.It is a centerpiece of Obama's bid to "re-set" relations with Russia, which has been increasingly cooperative on issues related to U.S. national security, from curbing Iran's nuclear program to the war in Afghanistan."This treaty will make America safer and restore our leadership in global efforts to stop nuclear proliferation," Senate Democratic Leader Harry Reid said.Senators debated and defeated a series of amendments on Tuesday aimed at changing the treaty's handling of weapons inspections, data exchanges and other issues. Changes that would amend the treaty would effectively kill it by forcing a renegotiation with Russia.At least 12 Republicans have said that they will vote with Democrats to approve the pact, which would give Obama his third major victory on Capitol Hill in less than a week.He earlier won repeal of the U.S. ban on gays serving openly in the military and passage of an $858 billion deal with Republicans to extend expiring tax cuts and spur economic growth.RUSSIAN "VETO" POWERRepublican opponents of the accord, angered by the their inability to stop the march toward passage, charged the Obama administration had negotiated a bad treaty that let Russia limit U.S. missile defense options when the real strategic threat was not Moscow but states like North Korea and Iran."Nothing that he has done has convinced me that he is committed to missile defense," Senator Lindsey Graham told a news conference, saying Obama was effectively "giving the Russians a veto" over U.S. missile defense plans.The Senate's top two Republicans -- Minority Leader Mitch McConnell and Minority Whip Jon Kyl -- have announced they will vote against START, saying lawmakers haven't had enough time to fully consider the treaty.But the chamber's third-ranking Republican, Lamar Alexander, joined Democrats on Tuesday in agreeing to end debate and move to approval of the pact."I will vote to ratify the New Start Treaty ... because it leaves our country with enough nuclear warheads to blow any attacker to kingdom come, and because the president has committed to an $85 billion, 10-year plan to make sure that those weapons work," Alexander declared in a Senate speech.Alexander's state of Tennessee is home to one of the nuclear facilities that will receive billions of dollars in modernization funding under an agreement worked out between lawmakers and the White House.There has been far less public or political debate over the treaty in Russia. The Russian State Duma has yet to approve the accord and Medvedev has made clear that parliament should not ratify the treaty until U.S. Senate approval is certain.Konstantin Kosachyov, the pro-Kremlin chairman of the international affairs committee, said Russian lawmakers would carefully examine the U.S. Senate's resolution of ratification and other declarations before proceeding with their own vote, which could conceivably be held this year.(Additional reporting by Steve Gutterman in Moscow and Richard Cowan and Donna Smith in Washington; Editing by Mohammad Zargham and Anthony Boadle)DECEMBER 22, 2010Nuclear Arms Pact Is Poised to Pass NAFTALI BENDAVID And JONATHAN WEISMAN WASHINGTON—A new strategic arms agreement with Russia is on the verge of being ratified by the Senate, presenting President Barack Obama with a potential political victory while exposing splits within the Republican Party on whether to oppose the president on important national-security issues.At least 11 Republican senators broke Tuesday with party leaders and the emerging Republican presidential field, likely giving the treaty's backers enough votes to ensure victory. The Senate voted 67-28 to move to a final vote on the New Strategic Arms Reduction Treaty, or New Start. If those tallies hold, the pact will meet the two-thirds margin needed for ratification. Many lawmakers believe the treaty will gain more supporters. A strong final vote for ratification, expected Wednesday, could reassure European allies who supported the treaty that Mr. Obama still has enough political muscle to back words with deeds after Democrats' midterm defeat. Ratification would mark the first time any Democratic president has successfully negotiated and ratified a nuclear-arms reduction treaty.The long and winding road to ratification roiled the GOP in a policy area long considered a strength. Days ago, the treaty seemed to be in jeopardy, as the Senate's top Republican, Minority Leader Mitch McConnell (R., Ky.), and his second-in-command, Sen. Jon Kyl (R., Ariz.), announced their opposition.That opposition was echoed by some potential presidential candidates, many of whom are staking out ground to the right of their congressional colleagues. Former Massachusetts Gov. Mitt Romney wrote an editorial in the Washington Post July 6 declaring New Start Mr. Obama's "worst foreign policy mistake yet."Sen. John Thune of South Dakota, another potential Republican contender, condemned the accord. Former Alaska GOP Gov. Sarah Palin, writing in the National Review, urged the Senate to defeat the treaty, arguing that it was "one-sided and makes no strategic sense." This stance appears to have had little effect on sitting lawmakers, with a string of Senate Republicans dropping their opposition to the treaty, citing the near-unanimous support of the U.S. military and fresh promises from the White House. The division suggests that debate within the GOP could diverge along two tracks, with a vocal set of presidential candidates looking to sharpen their ideological differences with Democrats, while some in Congress say the party has to show concrete achievements. A number of potential candidates also opposed the tax compromise hashed out between the president and Senate Republicans. Kevin Madden, a Republican strategist who advised Mr. Romney in 2008, said that once the presidential race begins in earnest, Republican lawmakers in Washington will be pulled to the right on an array of issues, following the lead of the potential candidates.The straw poll of Republican activists in Ames, Iowa, has been set for August, marking a formal beginning of the GOP race. "By late summer, early fall, the heat's going to be very apparent," Mr. Madden said, indicating Republicans on Capitol Hill are likely to be pulled into line with the nomination fight. To many in the foreign policy establishment, the split over New Start was eye opening. Leslie Gelb, president-emeritus of the Council on Foreign Relations, said leaders abroad were mystified at Republican opposition to a treaty that if anything was initially criticized for being too modest. The debate, he said, "seriously damages [Republican] credibility on national security."The treaty limits the U.S. and the Russian Federation to 1,550 deployed warheads, a cut of about one-third, and 700 deployed launchers. It would also resume inspections of nuclear weapons facilities on both sides.When the treaty was signed in April, ratification didn't seem a heavy lift. But its prospects ebbed and flowed as it became embroiled in the midterm elections, the peculiar politics of the lame-duck session of Congress and splits in the GOP.Opponents complained Mr. Obama was making too many concessions and was hastening the pact through the Senate. Some also feared the treaty would constrain U.S. plans for missile defense, a central plank of Republican foreign policy since Reagan.Mr. Obama again promised to modernize the U.S. nuclear arsenal and push ahead with a missile-defense system. An intense White House lobbying effort also won over wavering Republicans. On Wednesday, Tennessee Sen. Lamar Alexander, the chamber's third-ranking Republican, told colleagues he was backing it "because it leaves our country with enough nuclear warheads to blow any attacker to kingdom come, and because the president has committed to an $85 billion, 10-year plan to make sure that those weapons work."The Obama administration vowed to move on swiftly to a new round of arms talks with Russia. It now plans to begin talking about curtailing thousands of smaller, tactical nuclear weapons, conventional forces and the countries' remaining strategic arsenal.It takes two-thirds of the senators present to ratify a treaty under the Constitution. Ordinarily that means 67 senators, but Sen. Ron Wyden (D., Ore.) has been absent due to illness, bringing the number down to 66.Write to Naftali Bendavid at naftali.bendavid@ and Jonathan Weisman at jonathan.weisman@ New Start for Arms ControlCurrent Arsenal: U.S.Strategic warheads: 1,968Tactical nuclear weapons: 500Total warheads (including active, decommissioning and stockpiled): 9,600Current Arsenal: Russia Strategic warheads: 2,600Tactical nuclear weapons: 2,050Total warheads: (including active, decommissioning and stockpiled): 12,000Treaty Limits for U.S. and RussiaDeployed strategic warheads: 1,550 Weapon-delivery systems (including ICBMs, submarine launchers and bombers): 800Deployed ICBMs, submarine missiles and heavy bombers: 700Tactical nuclear weapons: not addressed.Source: Federation of American Scientists, State Department MEDVEDEV IN INDIAWarm Russian, Indian ties outlive Cold War Dec 22, 2010 6:40am GMTBy Paul de BendernNEW DELHI (Reuters) - Russian President Dmitry Medvedev's warm reception in India, including wrapping up a stealth fighter jets deal potentially worth $35 billion (22.6 billion pounds), dispels Russian fears its former Cold War ally has turned to the West.Prime Minister Manmohan Singh, who has in the space of a few months hosted all the leaders of the permanent members of the U.N. Security Council, said "Russia is a time-tested friend of India" at the start of Medvedev's two-day trip on Tuesday.Russia has been India's close economic and political partner since Soviet days, and monopolised India's defence market for decades, but India wants to reduce its reliance on one country to reflect its growing influence on the world stage."President Dmitry Medvedev has done well to dispel the growing misperception that Indo-Russian relations have lost their salience amidst India's new warmth with the U.S. and the West," the Indian Express newspaper said in an editorial on Wednesday.Medvedev will spend his last day in India touring the Taj Mahal in Agra, meeting students in Mumbai and touring "Bollywood" film studios.Russia joined the United States and France in offering support for India for a permanent seat at an expanded Security Council to reflect the growing might of emerging economies.India says a seat on the Security Council would reflect the G20 nation's importance as its $1.3 trillion economy helps spur global growth and its government exerts more and more influence over issues from Doha trade to climate talks.India's growing ties with the United States, underscored by a landmark civil nuclear deal, has made Russia ill at ease.India, the second fastest-growing major economy in the world after China, is one of the top arms importers and plans to spend about $50 billion on defence in the next few years to upgrade its ageing Soviet-era arsenal, mainly to counter a perceived China threat.World leaders, accompanied by top executives, are hungry to secure a slice of India's economy, expected to grow at near-double digit rates for the next decade, making it one of the five largest economies in the world by 2020.BARGAINING POWERRussia has long seen India as a counterweight to China and a potential ally in Afghanistan."The strategic, economic and political importance of Russia can not be overstated," said Bhaskar Roy, a New Delhi-based strategic affairs columnist."India needs Russia for its energy requirements, to counter-balance China, for retaining influence in Afghanistan once the Western troops leave, for influence in energy-rich Central Asia, and generally for support and backing at all major international fora. India needs Russia to realise its ambitions, global goals," Roy said.No details were given as to the size of the potential aircraft deal between Russia and India, but both countries have in the past talked about producing 250-300 such fighters over 10 years, unofficially said to be worth about $35 billion."That in turn has enormously increased India's bargaining power with the U.S. and European suppliers of advanced conventional weapons," the Indian Express said.Boeing's F/A-18 Super Hornet, France's Dassault Rafale, Lockheed Martin Corp's F-16, Russia's MiG-35, Sweden's Saab JAS-39 Gripen and the Eurofighter Typhoon are competing for a separate order from India for 126 fighter jets, valued at about $10.4 billion.India and Russia agreed to open talks on building a third and fourth reactors for a nuclear power plant in India's southern state of Tamil Nadu, but failed to sign a firm deal because of Russian concerns over a recently passed liabilities bill.(Additional reporting Krittivas Mukherjee; Editing by Robert Birsel)Dmitry Medvedev meets with Indian counterpart in New Delhi 22/12/2010Russian President Dmitry Medvedev wound up the first day of his official visit to India by meeting with his Indian counterpart Pratibha Patil in New Delhi on Tuesday.Earlier on Tuesday, Russia and India signed a contract to jointly develop a design for a new fifth-generation multirole fighter; the countries also signed intergovernmental agreements on cooperation in the oil, gas and nuclear energy spheres as well as IT development.Bilateral relations have blossomed in recent years, with India becoming one of the biggest importers of Russian military hardware.In 2009, Russian-Indian trade reached the $7.5 billion mark. It grew 20% in the first nine months of 2010, and the countries plan to raise the figure to $20 billion by 2015.The biggest joint projects today are the construction of the Kudankulam nuclear power plant in southern India and the exploration of the Sakhalin-1 oil and gas field with the participation of India's ONGC state-run corporation.?NEW DELHI, December 22 (RIA Novosti)Russian president heads to India's financial capital Phil Hazlewood (AFP) – 1 hour agoMUMBAI — Russian President Dmitry Medvedev headed for Mumbai on Wednesday, after squeezing in a tour of the Taj Mahal on the second leg of an India visit focused on strengthening defence and trade ties.In Mumbai, where security has been stepped up over a reported intelligence warning of a possible militant attack targeting foreigners, Medvedev was scheduled to speak to students at a technology institute before flying home.On Tuesday Medvedev held talks with Indian Prime Minister Manmohan Singh in New Delhi and witnessed the signing of a raft of defence and nuclear deals potentially worth billions of dollars.The two sides also agreed to double bilateral trade to 20 billion dollars by 2015."I believe that trade between us does not nearly reflect our privileged partnership," Medvedev told reporters at a joint press briefing.One standout deal was a contract on the joint design and development of fifth-generation fighter aircraft with stealth capabilities.Although no figures were mentioned, experts say the final fighter deal could be worth close to 30 billion dollars, with India planning to induct up to 300 of the aircraft into its air force.Medvedev's visit concluded a flurry of top-level diplomatic activity that has seen the leaders of all five permanent members of the UN Security Council beat a trade-focused path to India's door over the past six months.British Prime Minister David Cameron was in the country in July, and US President Barack Obama, French President Nicolas Sarkozy and Chinese Premier Wen Jiabao have passed through over the last six weeks.Each visitor brought large-scale business delegations and used the visit to trumpet new deals with the world's second-fastest-growing major economy.Medvedev was especially keen to fend off growing international competition for a slice of India's increasingly lucrative market for military hardware -- once monopolised by Moscow.Traditionally India's default defence supplier, Russia now has to compete with top manufacturers from Europe and the United States as India diversifies its sources of military hardware and becomes more demanding over pricing and quality.As well as bilateral issues, Medvedev and Singh discussed regional security and agreed to deepen counter-terrorism cooperation."Those who hide terrorists hide criminals. No modern civilised state can hide terrorists," Medvedev said.He made no specific mention of India's arch-rival Pakistan, which Delhi accuses of harbouring militant groups like Lashkar-e-Taiba (LeT) -- blamed for the November 2008 attacks on Mumbai.The Press Trust of India, quoting unidentified official sources, said suspected LeT infiltration was behind the alert sounded in Mumbai on Tuesday ahead of the Christmas and New Year holidays."There are conscious efforts by terror organisations to target foreigners during these two festivals here," said Mumbai Police Commissioner Sanjeev Dayal.Medvedev’s date with Taj Mahal, Bollywood on Wednesday, December 22, 2010, 10:55Agra/Mumbai: Russian President Dmitry Medvedev will arrive in Agra Wednesday to visit the world famous eternal monument of love - Taj Mahal. Giving more details about the Russian leader’s visit to Taj, Additional District Magistrate (Protocol) Alok Shekhar said.”The programme is confirmed. He is coming at around 11 am and will leave at 2 pm from Kheria airport by a special plane to Mumbai." A Russian advance team of security personnel has been camping here for the past two days to oversee security arrangements. It has procured its own vehicles from Russia. Team members had discussions with district authorities and inspected the route from Kheria airport to the 17th century monument of love. Homage to 26/11 victims/ visit to Bollywood In Mumbai, Medvedev will stay at the Taj Mahal Hotel, one of the targets of 26/11 Mumbai terror attacks, and pay homage to the victims. After a visit to IIT, he will head to the Film City as a tribute to Bollywood, which continues to inspire and entertain his countrymen. Although the silver screens in Russia have been captured by Hollywood-controlled film distributors, who give limited access even to domestically produced movies, Bollywood is still alive and kicking in millions of homes across the vast Eurasian giant due to round-the-clock Russian language paid channel 'India TV'. Many private TV channels like Domashny TV (Home TV), STS and others regularly show Bollywood movies, which are very popular among the young and old alike, especially in the Russian regions. "Because the 'good' always wins over the 'evil', a dream which every Russian cherishes," Russian Deputy Culture Minister Andrei Busygyn said, explaining the popularity of Indian movies in his country.Surprisingly, the younger generation of Russia knows about the modern constellation of Bollywood stars, better than many Indians of the older-generation living in this country. If the older generation of Russia cherishes the images of Raj Kapoor and Nargis in the fond memories of their youth, Amitabh Bachchan and Hema Malini are the idols of the middle aged Russians, while the younger generation adores Aishwarya Rai, Hritik Roshan, Priety Zinta and others, in whom they see the image of a 'Global Indian'. "Do you know the secret of Bollywood movies popularity in our country? The Indian movies 'Awara' and 'Shri 420' came to Russia in early fifties after the devastating war, when we were enduring hardships. "There we saw that life in India was even more miserable, but they had smiles on their faces. "It was a great inspiration for us," said Ludmila Sekacheva, the head of "Parade of Indian and Russian Heritage'- an NGO involved in promoting Indian culture in Russia. Medvedev arrived in New Delhi early Tuesday morning, the two sides have signed over a dozen agreements, including a key pact on Moscow building more nuclear reactors in India. With Agency InputsDecember 22, 2010, 1:51 PM ISTMedvedev Rekindles Russia’s Cold War Bollywood Affair Tom WrightIt was the height of the Cold War and Hollywood films were still off limits in Russia. Stalin had just passed away and the newly-appointed Nikita Khruschev was looking for ways to allow Russians more than Communist propaganda.The answer, part of a cultural period known as “Khruschev’s Thaw” — which began following Stalin’s death in 1953 — was to let in Bollywood films. Then-Indian Prime Minister Jawaharlal Nehru was tilting to Moscow and, although India was still officially non-aligned, films from Mumbai were preferable for Soviet authorities to cultural imports from the U.S.In homage to this unexpected cultural exchange, Russian President Dmitry Medvedev will today visit Yash Raj Studios in Mumbai, a major Bollywood film enterprise set up in 2007 by impresario Yash Chopra.Word is that he’ll meet a bevy of Bollywood stars there, including Priyanka Chopra, not a usual stop for a visiting head of state to India but one that speaks to a romantic vision of Bollywood that many older Russians remember with fondness.“Our country is one of the places where Indian culture is most admired,” Mr. Medvedev said yesterday at a joint news conference with Indian Prime Minister Manmohan Singh. “Russia and India are the only countries where satellite channels broadcast Indian movies 24/7.”Indians who traveled to Moscow, East Berlin or other parts of the Communist Block in the late 1950s and 1960s remember ushanka-wearing Soviet soldiers, who spoke no Hindi and had likely never been to India, being able to sing famous songs from Raj Kapoor films like “Shree 420” and “Awara.”“It was a window to the open world,” says Evgeny Pakhomov, a correspondent in New Delhi with RIA Novosti, of Bollywood films in the 1950s.But Mr. Medvedev’s visit is not just about rekindling nostalgia for a bygone era. There’s a business angle, too.According to the Indo-Asian News Service, Moscow and New Delhi are mulling financing a remake of famous Raj Kapoor films with casts made up of actors from India and Russia.Mr. Medvedev was to visit RK Studios in Mumbai, which Mr. Kapoor set up in the 1950s and was the location for the shooting of many of his classic films. But the trip was canceled due to “logistical reasons,” the Business Standard reported.Bollywood films still use Russia as a location for filming. But, in general, the period of Russia’s love affair for Bollywood is over, more a memory cherished by Russia’s older generation.It’s Hollywood flicks that people line up to watch in cinemas across Moscow today, with Bollywood films available for enthusiasts on television or DVDs, Mr. Pakhomov says.India, Russia strike deals during Medvedev visit-FACTBOX December 23, 2010 04:32:07 PM GMTINDIA-RUSSIA/AGREEMENTS (FACTBOX)(For the main story on Medvedev's visit: [ID:nSGE6BL038]) NEW DELHI, Dec 22 (Reuters) - India and Russia signed a series of defence, energy, trade and cultural agreements during Russian President Dmitry Medvedev's two-day visit to India. The deals announced were largely already known, and no financial figures were given, but the accords will go some way to satisfy those concerned about India too quickly cutting its close ties with its Cold War ally. Following are details of some of the major agreements and memorandums of understanding signed: FIFTH-GENERATION FIGHTER AIRCRAFT India and Russia concluded an agreement for the design and development of what is expected to be 250-300 supersonic fighter aircraft over 10 years, reported to be worth up to $35 billion. The agreement, which will see India's state-run Hindustan Aeronautics Ltd work alongside Russia's Rosoboronexport and Sukhoi, is expected to begin delivery of an Indian version of the Russian aircraft by 2017. The deal had first been discussed more than a year ago. It is a boost for Indo-Russian defence ties, which date back to Soviet times but have waned recently. Russia now competes with companies from the United States, France and other European countries to win contracts for new aircraft in one of the world's biggest defence markets. NUCLEAR POWER The two countries signed a deal to expand a Russian-built nuclear power plant in Kudankalum in southern India, involving discussions on the construction of a third and fourth reactor. Media reports say Russia declined to finalise a deal on two more reactors until they get clarification on a liabilities bill passed in India's parliament, which has worried foreign firms. Russia is keen to continue supplying nuclear technology and expertise to India as the country plans to add 63,000 megawatts of nuclear power by 2032 to underpin its economic growth, but faces competition from French and U.S. suppliers. State-run Rosatom said it was planning to build 18 reactors across three sites in India, the head of the Russian firm, Sergei Kiriyenko, said. HYDROCARBONS Russia, the world's largest energy producer, signed an agreement with India to create an administrative framework for joint projects in the oil-gas sector, and agreed to increase hydrocarbon cooperation to allow smooth formation of public and private joint ventures in both countries. India has been keen on Russia to invest in its hydrocarbon reserves and, in turn, increase its participation in Russian exploration as Asia's third-largest oil consumer seeks less dependence on imports. India's state-run Oil and Natural Gas Corp is in talks with Russia's Bashneft about developments in the Arctic Trebs and Titov oilfields, and the company already has a stake in Russia's Sakhalin-1 oil and gas project in the Pacific. ONGC signed an agreement with Russian oil-to-telecoms firm Sistema to consider opportunities for a potential transaction involving Sistema`s majority stake in oil company Bashneft. Sistema said its 49 percent stake in mid-sized oil company Russneft, as well as ONCG's fully-owned Imperial Energy, may also be considered for possible deals. Russia's largest petrochemical company Sibur and India's Reliance Industries also announced the creation of a joint venture for production of butyl rubber in India with $450 millions of investments. PHARMACEUTICALS India, considered the 'pharmacy of the world' for its market-leading position as a generic drug manufacturer, signed a memorandum of understanding with Russia on enhanced cooperation in the pharmaceutical sector, through joint ventures, joint research projects and knowledge exchanges. Both countries had highlighted pharmaceuticals as a key sector of trade negotiations prior to Medvedev's arrival in Delhi, with India keen to leverage its global expertise, and Russia looking to lower its dependence on imported medicine. VISAS In a bid to increase people-to-people contacts and encourage cultural exchanges, the two countries signed a memorandum of understanding to simplify procedures for obtaining business and tourist visas for citizens of both countries. The countries signed a second agreement on establishing a framework to check irregular migration. TRADE Behind the rhetoric of expanding ties with its fellow BRIC economy -- the term used to group emerging powers Brazil, Russia, India and China -- bilateral trade is eclipsed by Russia's booming economic ties with the European Union and China. The Kremlin said trade with India will total $10 billion this year, while official statistics show Russia's trade with the European Union stood at $246 billion in the first 10 months of 2010, and trade with China was $47.5 billion in the same period. India and Russia agreed to boost bilateral trade to $20 billion by 2015. (Reporting by Henry Foy and Krittivas Mukherjee; Editing by Paul de Bendern) № 11 (November 2010)Indian Prime Minister "Delighted" With Indo-Russian Oil, Gas Pact Prime Minister Dr. Manmohan Singh on Tuesday expressed his delight and satisfaction over India and Russia concluding an inter-governmental agreement on cooperation in the oil and gas sector following the hard work put in by both the sides.By Sify News "I am particularly glad that we have concluded an inter-governmental agreement on cooperation in the oil and gas sector. This is the result of a lot of hard work put in by both sides, and reflects the complementarities between our two economies. We will work towards its implementation through a mutually agreed roadmap," said Dr. Singh in his opening statement at the 'Joint Press Interaction' along with visiting Russian President Dmitry Medvedev.Speaking on the occasion, Dr. Singh said the talks with the Russian President Medvedev have been comprehensive and result oriented, and added that the two sides have also decided to enhance cultural exchanges."We have signed several important agreements covering a large number of sectors. This reflects our mutual desire to bring our cooperation in other areas at par with our traditionally strong cooperation in the defence and nuclear fields," said Dr. Singh."We welcome the increasing role being played by the India-Russia Forum on Trade and Investment and the CEOs Council. We have signed agreements in the pharmaceuticals and information technology sectors. These are areas, which have immense possibilities for expansion. The agreement on visa simplification that has been signed will help in ease of travel of citizens of our countries," he added.Further applauding Russia for helping India in developing a scientific and industrial base, Dr. Singh said: "Long before other countries it was Russia which helped us in the development of our scientific and industrial base. I am therefore happy that we have renewed the Integrated Long Term Technology Programme with a mandate to establish an innovation based technology partnership."In the field of defence cooperation, we reviewed the ongoing projects, including those relating to joint design, development and production," he added.The Prime Minister said India and Russia have also discussed the setting up of additional nuclear reactors at Kudankulam in Tamil Nadu."Discussions have progressed on the construction of additional Russian designed nuclear reactors at Kudankulam, and we have signed an agreement to broaden scientific and technical cooperation in the field of nuclear energy," said Dr. Singh."We also reviewed the situation in our region and ways and means to further strengthen our coordination on international issues. We have agreed to intensify our consultations on Afghanistan. We look forward to working with Russia in the United Nations Security Council during our term over the next two years. We will work closely within the BRIC and G20 framework," he added.Expressing his delight at the arrival of President Medvedev to India for the 11th India - Russia Annual Summit, Dr. Singh said India's relations with Russia are a factor of peace and stability in the region and the world, and stressed that the Summit has added even more substance to the cooperation between the two sides."I am delighted to welcome His Excellency President Medvedev to India for the 11th India - Russia Annual Summit. Our Summit this year marks the completion of ten years of the India-Russia Strategic Partnership. This is also the third Annual Summit meeting that I have held with President Medvedev. We deeply value the role that President Medvedev has played in taking forward our relationship," said Dr. Singh."The tradition of Annual Summits with Russia symbolizes the richness of our ties with Russia. Russia is a time-tested friend of India that has stood by us in our times of need in the past.Ours is a special and privileged strategic partnership. It is a partnership that has and will continue to develop independent of our relations with other countries," he added.Prime-Minister of Kyrgyzstan to depart for Russia 06:58, Bishkek – 24.kg news agency The Prime-Minister of Kyrgyzstan will depart for Russia. As sources of information in the Government Office reported to 24.kg news agency Almazbek Atambayev intends to visit Moscow with working trip on December 26. Supposedly, the Kyrgyz Prime-Minister will hold negotiations with the chairman of Russian government Vladimir Putin and Kremlin’s high-ranking officials. Let’s remind after his appointment to the Premier post Almazbek Atambayev stated answering on reporters’ questions that his first foreign visit will be to the Russian Federation. The day before Vladimir Putin congratulated the new Prime-Minister of Kyrgyzstan on his assumption of the office. “I am reckoning on close cooperation with you and the Government you head in favor of further development of friendly relationships and practical cooperation between our countries to ensure stability and security in Central Asia,” stressed Vladimir Putin. Turkish President Abdullah Gul has also congratulated Almazbek Atambayev on confirming in the Premier’s office.URL: Kyrgyz PM to visit Moscow 22, 2010 09:40 Moscow TimeAccording to the Kyrgyz Government’s administration, the reappointed Kyrgyz Prime Minister Almazbek Atambayev is due to visit Moscow this coming Sunday, December 26th. Atambayev said that Russia would be the first country he would visit as Prime Minister when his candidacy was still under discussion at parliament last Friday. He told the MPs then that he did not rule out Kyrgyzstan’s joining the Customs Union of Russia, Belarus and Kazakhstan. ?P.M.s of Russia and Armenia to discuss economic issues 22, 2010 06:01 Moscow TimeOn Wednesday, Prime Minister Tigran Sargsyan will be on a one-day working visit to St. Petersburg to discuss bilateral economic cooperation with his Russian counterpart Vladimir Putin.The Armenian delegation is comprised of the Minister of Finance, the Minister of Energy and Natural Resources, as well as the deputy foreign minister. ITAR-TASS.Saint Petersburg hosts Sargsyan-Putin meeting today 22/12/2010 Prime Minister of Armenia Tigran Sargsyan will pay one-day working visit to Saint-Petersburg today, Government’s information and PR department reports.According to the source, Armenian PM will have a meeting with his Russian counterpart Vladimir Putin. The senior officials of Armenia and Russia will focus issues related to the bilateral economic cooperation.PM Tigran Sargsyan’s delegation includes Head of Government’s Staff Davit Sargsyan, Minister of Finance Vache Gabrielyan, Deputy Foreign Minister Shavarsh Kocharyan and other senior officials.Vladimir Putin to hold talks with Armenian premier 22/12/2010? RIA Novosti. Alexei DruginynPrime Minister Vladimir Putin will on Wednesday travel to the northwest Russian city of St. Petersburg to hold talks with his Armenian counterpart Tigran Sargsyan, the government press service reported."Russia is currently Armenia's key foreign trade and economic partner and a leading investor in the Armenian economy," it said in a statement.A number of big Russian corporations, including energy giant Gazprom, rail monopoly Russian Railways and services conglomerate AFK Sistema, successfully operate in Armenia.Moscow and Yerevan also closely interact in the CIS, a loose association of former Soviet republics.MOSCOW, December 22 (RIA Novosti)RusHydro to buy Armenian hydropower plants - paper 22/12/2010Russia's largest hydropower producer RusHydro plans to buy hydropower plants in Armenia, currently owned by International Energy Corporation, a subsidiary of Russian state-controlled power trader Inter RAO UES, and invest about 40 million euros in their reconstruction, Kommersant business daily reported on Wednesday.No final agreements have yet been signed, a source familiar with the companies' plans told RIA Novosti."We have agreed with our colleagues from Inter RAO that they specialize more in heat power plants. I hope we will complete the deal on the asset purchase in the nearest future," RusHydro Chairman Yevgeny Dod told the paper."The program of comprehensive reconstruction was agreed with the government of Armenia three years ago. The sum of investment is about 40 million euros. It is our major specialization, that is why this asset is interesting for us; moreover we know Armenia and have worked there for a long time," Kommersant quoted Dod as saying.A RusHydro spokesman said the company planned to purchase the cascade of hydropower plants on the Razdan River in Armenia through the acquisition of 100% in International Energy Corporation, which fits "the logic of mutually beneficial cooperation between the two companies.""The parties have currently achieved an agreement in principle , but the date of signing has not yet been confirmed, the companies need more time to work on the issue. The price parameters of the deal have been agreed and no swap deals are envisaged," the spokesman said.MOSCOW, December 22 (RIA Novosti)Putin to make working trip to St Petersburg Wed, December 22 (Itar-Tass) - RF Head of Government Vladimir Putin on Wednesday makes a working trip to St Petersburg where he will participate in a number of arrangements. The Premier will hold a teleconference link-up with the Sayany-Shushenskoye hydropower station where a ceremony will take place to mark a resumption of the operation of Hydropower Unit 3, restored after the Aug 17, 2009, breakdown at the station. This is already a fourth hydropower unit (HPU) restored at the station. Hydropower Units 6, 5, and 4, were re-energized earlier this year (in February, March, and August, respectively). The re-start of HPU 3 adds another 640 megawatts of the HPS operating power to bring it up to 2,560 megawatts. HPU 3 seriously differs from the three earlier restored HPUs. It is fitted out with an up-to-date automated control system, which is an advanced elaboration by the Silovyye Mashiny (power machines) Company, the leading Russian producer of power equipment. The re-start ceremony is timed to coincide with the Day of the Power Engineer, marked on December 22. The restoration of the generation of electric power at the HPS raises the reliability of Siberia's power supply, and creates additional reserves in the power grid to meet peak power consumption needs in the autumn and winter period of 2010-2011. This also enables the HPS to let water pass through in a standard mode without the use of no-load discharge of water. This reduces risks for its hydraulic engineering facilities. Next phase of the restoration of the HPS will begin in 2011: six new HPUs with a higher efficiency and longer service life will be installed at the station. The four HPUs, restored in 2010, will be subsequently dismantled as well and replaced by new ones. While in St Petersburg, Putin will also hold talks with Armenian Prime Minister Tigran Sarkisyan, who is currently in Russia on a working visit. It is planned that they will discuss a wide range of matters concerning Russo-Armenian trade-and-economic cooperation, and a number of other subjects of current importance that are on the bilateral and international agendas. Russia confidently holds the positions of Armenia's main foreign economic partner: chief partner in bilateral trade and a key investor in the Armenian economy. A number of leading Russian corporations effectively operate on the Armenian market. Moscow and Yerevan also closely interact in integrational formats in the post-Soviet space of the Commonwealth of Independent States. The Russian Prime Minister will also tour a physical culture and health-building center Moskovsky -- one of four such centers built by Gazprom in St Petersburg in implementation of the Gazprom-to-Children programme. Georgian MPs called on Russia to begin de-occupation of territories 22 December 2010 07:38 GMT | 8:38 Local TimeGeorgian MPs respond to statement of Vladimir Putin.Georgian MPs called on Russia to begin de-occupation of Georgia’s invaded territories before restoration of friendly relations between Georgia and Russia.The Georgian lawmakers thus responded to the statement made by Russia’s Prime Minister Vladimir Putin on December 21 when opening a Memorial of Glory at Poklonnaya Gora in Moscow.Neighbourhood and true partnership, - this is how Vladimir Putin sees Russian-Georgian future. ‘I believe that nobody will succeed to deteriorate Georgia-Russian relations, tear traditional human and spiritual tires,’ Putin said.Russian Primer reminded the society with the explosion of Kutaisi memorial and called it a ‘shameful act of state vandalism’. ‘People cannot be next to those who want to destroy memory. Furthermore, it concerns heroes,’ Putin noted.Primer Putin says that the new monument is symbol of unity of people, as ‘we were one in fight against fascism. We see that nobody can belittle people’s attitude towards joint history and past,’ Putin said.The ceremony was attended by Moscow Mayor and head of Georgian community Mikheil Khubutia.‘It consists of two parts, one brings us back to 1945, and the second reminds us of the last year’s vandalism,’ Putin said. Khubutia thanked Russian government for ‘preserving the memorial and historical truth’. 1TV.GEKAPO?confirms Savisaar asked 3 million euros from Moscow, 10:13 Estonian security police KAPO has confirmed to the government security committee this week that Mayor of Tallinn and Centre Party leader Edgar Savisaar secretly asked Russian officials for financial assistance, writes ?rip?ev.The committee that consists of PM Andrus Ansip, defence minister Jaak Aaviksoo, minister of the interior Marko Pomerants, minister of foreign affairs Urmas Paet, minister of justice Rein Lang and minister of finance Jürgen Ligi was informed that Savisaar asked 3 million euros (47 million kroons) in assistance from Moscow, and was promised half the amount.Savisaar has claimed that he asked Russians for financial assistance to help complete the building of the Russian Orthodox Church in Tallinn. However, according to KAPO, Savisaar asked 3 million euros in assistance to the Centre Party plus 1.5 million euros for the church. The money was aimed to the party, not to Savisaar personally, said the police.KAPO says that Savisaar asked the money through Vladimir Yakunin who is chairman of Russian Railways, a former KGB office and a close ally of Vladimir Putin.Savisaar himself called?a press conference yesterday in which he accused prime minister Andrus Ansip of waging a media war against him. He says that he asked the money only for the church. Later in the day Savisaar claimed that Russian special services were behing the attack.According to the media, Savisaar's meetings with Yakunin are believed to have been recorded by Russian secret services and this information has been leaked to Estonian authorities.Toomas H?bem?gibbn@chararipaev.eeGreece and Russia Cut Visa Red Tape on Dec 22, 2010 by Vicky Karantzavelou Greece’s Deputy Minister of Culture and Tourism, George Nikitiadis’ recent visit to Russia and his participation in a seminar of Hellenic-Russian Federation under the title “Russia – Greece – Cyprus: Political, Economic and Cultural Synergies in Present and Future”, bore fruit with hi announced opening of more Greek visa centers in Russia.More specifically, during his visit in Moscow aimed at strengthening tourism relations between Russia and Greece Mr. Nikitiadis suggested the simplification of procedures for visa issuing. After his meeting with representatives of Visa Center there he announced 5 new visa centers will open in Russia, bringing the total to 8 in 2011. These offices will collect all necessary documents, and visas will be issued within a maximum of 48 hours. Moreover, visa centers will cooperate with a private courier service company covering 177 points all over Russia.According to statistics, in 2010 328.000 Russian tourists were issued visa to visit Greece; an upward trend of 52 percent in comparison to 2009, and this increase is expected to be more than 50 percent more in 2011. Mr. Nikitiadis stressed the new governmental strategy for the promotion of Greek tourism product as well.Last but not least, Nikitiadis informed participants about investment opportunities in the tourism sector in Greece and the simplification of relevant procedures through fast track initiatives. Also worth mentioning is that on 20th December Greek government announced the privatization of tourism real estate.In Moscow Mr. Nikitiadis, accompanied by the President of Greek National Tourism Organization (NGTO), Mr. Kanellopoulos (seen above), had meetings with the Ambassador of Hellenic Republic in Russian Federation, Mr. Michael Spinellis, the General Consul, Mr. Ioannis Plottas, the Consul Mr. Theodosis Theos and representatives of Russian tour operators.Agreement on Malév could be reached in January 9:09, December 22nd, 2010 An agreement with the Russians on the fate of troubled Hungarian airline Malév could be reached in January, National Development Minister Tamás Fellegi said in an interview published in business daily Napi Gazdaság on Wednesday. The next round of talks with the Russians could take place in the middle or at the end of January, Mr Fellegi said. There will not be further Russian ownership of Malév, he added.Russia's state-owned Vnesheconombank holds an indirect stake in Malév at present.There are two parties seriously interested in the airline, Fellegi said.Asked about Russian participation in the expansion of Paksi Atomer?m?, Hungary's only nuclear power plant, Fellegi said it would be good if companies from several countries formed a consortium for the project. Talks have been held with companies not only from Russia, but from Germany, France, the US, Finland and South Korea, he added.The ministry has proposed that the government take a decision on the nuclear power plant's expansion during the winter, Fellegi said. (MTI-ECONEWS)Hungary Says Talks on Surgut’s Mol Stake ‘Slower,’ Napi Reports Zoltan SimonDec. 22 (Bloomberg) -- Negotiations between Hungarian and Russian officials on OAO Surgutneftegaz’s 21.2 percent stake in Mol Nyrt., Hungary’s largest refiner, are “slower” than on other issues such as talks on an “energy cooperation package,” Hungarian Development Minister Tamas Fellegi told Napi Gazdasag. “The Russians are defending their positions hard but in a correct manner,” Fellegi said, according to the newspaper. “We are also defending out national interests in a hard and correct manner.” Fellegi on Oct. 20 said it would be “beneficial” for the Hungarian state to become a shareholder in Mol and one way of doing this is “by means of purchasing the stake currently held by Surgutneftegaz.” To contact the editor responsible for this story: Zoltan Simon at zsimon@ To contact the editor responsible for this story: Willy Morris at wmorris@ Last Updated: December 22, 2010 03:17 ESTDECEMBER 21, 2010, 5:57 P.M. ETRussia, China To Finance 63% Of Ecuador Hydroelectric Plant (Dow Jones)--State companies Water Energy of China and Russia's Inter Rao UES are set to build and will finance 63% of the new Toachi-Pilaton hydroelectric plant in Ecuador. The plant will cost $517 million to build, not including financing costs. Of this, $204 million, or 39.4% of the financing, will come from the Chinese company, while $123.25 million, or 23.8%, will come from the Russian company. The Eximbank of China and the Eximbank of Russia are to provide loans for both companies. The remaining $189.75 million will be paid by Ecuador's government via its publicly owned hydroelectric provider and owner of the new plant, Hidrotoapi. The financing and construction contract with China's Water Energy is due to be signed at the end of this week, while the contract with Russia's Inter Rao UES was signed last October, the manager of Hidrotoapi, Byron Granda, told journalists. The new plant is slated to have a production capacity of 204 megawatts and is expected to begin operating in mid-2014. Both companies are replacing Brazil's Norberto Odebrecht, which in September 2008 was expelled from Ecuador for suspected contract irregularities. -By Dow Jones Newswires; 0059389167095; peru@ Russia to build nuclear station and LNG terminal in Morocco 21, 2010 20:47 Moscow TimeRussia wants to take part in construction of a nuclear power station and a liquefied natural gas terminal in Morocco, a statement released by the Russian Economic Development Ministry on its web site says.Atomstroiexport has won a tender to build a nuclear power station in the town of Sidi Bulerba. Russia’s energy giant Gazprom is expected to participate in construction of the liquefied natural gas terminal. Moscow Gets Russian Treatment in AlgiersDecember 21, 2010, 3:22 PM GMT Benoit Faucon In Algeria, Russia’s proverbial treatment of foreign investors may have finally met its match.In Moscow, companies are used to getting the business version of the “veniki”, a birch twig used to beat the backs of sauna customers to enhance blood circulation.Royal Dutch Shell with Russian gas giant Gazprom, and then BP with its oligarchic partners in TNK-BP both got a robust “veniki” treatment. But you get used to it, and despite the bruising, they all came back for more of Russia’s huge oil and gas reserves.The Algerians don’t do “veniki.” Instead, they do “chorba,” a spicy soup with an intensity and richness that can leave the taste buds of visitors bewildered. And now they are giving the Russians a taste of their local broth.In recent months, Russian oligarchs have tried to buy two of Algeria’s most strategic assets and, despite Kremlin support, have faced stiff resistance so far.Attempts by Russian telecoms firm VimpelCom to buy Middle-East mobile giant Orascom Telecom have hit a snag in the North African nation. Since its launch in 2002, Djezzy, Orascom’s Algerian unit, has turned into a cash cow and the market leader in the country, but the government doesn’t want it to go with a foreign buyer.When Russian President Dmitry Medvedev and his business delegation came to plead for the sale in October, his Algerian counterpart Abdelaziz Bouteflika wouldn’t have any of it. No interference, it’s between us and Djezzy, he said, according to a person who was present at their meeting.TNK-BP, a venture between a group of Russian billionaires and BP, is also interested in Algerian assets operated by BP—the largest foreign oil investor in the country.But again, Algeria has signaled its state-oil company Sonatrach could snatch the fields, and in any case, it will take time before making up its mind.Algeria welcomed investors like BP and Orascom Telecom during and immediately after a civil war that killed thousands in the 1990s. But it feels like investors had their chorba a bit too sweet. Bouteflika was particularly incensed by the decision by Orascom Construction to sell its cement unit to Lafarge of France. He took exception for not having been informed by the Egyptian company, which held a strong position on the Algerian market.Nassef Sawiris, the owner of Orascom Construction, is the brother of Naguib Sawiris, who controls Orascom Telecom, and the Algerians don’t suffer from short memory loss syndrome.The new recipe for “chorba” may have a strong character, but this being Europe’s third largest gas exporter, it is likely to still taste delicious in the end. The coveted assets may well go to Russian companies. Indeed, both countries have an incentive to keep on amicable terms, in order to defend their natural-gas market share in Europe.But as Russia has now discovered, other nations have their national interest to defend too.Chechen warlord killers' sentences reduced in Dubai Mustafa Last Updated: Dec 22, 2010DUBAI // The Dubai Court of Appeals has slashed the sentences of the men accused of assassinating the former Chechen warlord Sulim Yamadayev in Dubai from life to three years.MH, a horse groom for the Chechen president, Ramzan Kadyrov, and MJ, 32, a Tajik national, had been convicted and sentenced to life in prison by the lower court in April for aiding and abetting the premeditated murder of Mr Yamadayev, a rival to Mr Kadyrov.They were also convicted of possessing an unlicensed weapon, a gold-plated 9mm Stechkin APS, thought to be the weapon that killed Mr Yamadayev.Mr Yamadayev was shot to death in the basement car park of his Jumeirah Beach Residence building on March 28, 2009, in an assassination that is thought to have been politically motivated.Upon receiving the verdict, MH’s wife, Zohrah Nikam started praying and thanking God in the courtroom.She told The National: “I’m very happy. I cannot say anything right now to express my feelings.”Key to the verdict was a declaration signed by the Yamadayev family executor in which the family forfeited the right for retributive punishment and said they were not seeking financial compensation for the murder.Closing arguments in Mr Yamadayev’s case were held earlier this month.Lawyers for the defendants accused of killing Mr Yamadayev said their clients were threatened with torture if they did not confess to the crime, and they said the case was tainted by politics.Nine men, including MH, MJ, a former deputy prime minister of Chechnya and a current Russian member of parliament, are believed by police to have been involved.Dubai police issued seven Interpol red notices, or arrest warrants, for the suspected killers. One of the men wanted by Dubai is a Russian Duma member and close associate of Mr Kadyrov, Adam Delimkhanov.Mr Yamadayev had been living in Dubai with his wife and six children since January 2009.Dubai court overturns life sentences of 2 men involved in Chechen warlord murder 22/12/2010An Iranian and Tajik jailed for life for their parts in the assassination of a Chechen military commander last year have had their sentences overturned.Without explanation, the Dubai Appeal Court limited the sentences of Iranian Mahdi Lorniya and Tajik Makhsudzhon Ismatov to 27 months.Lawyer Lorni Abdulli Al-Madani said the two men have already spent 21 months in prison, which will be counted in the new sentences."We find this decision to be just; we expected it," Al-Madani told RIA Novosti.Ziyad Sabsabi, the deputy chairman of the Russian Federal Council's international committee, said the decision paves the way for the dropping of charges against other suspects in the case.Sulim Yamadayev, 35, a former battalion commander and a member of a prominent family which opposed Chechnya's pro-Kremlin leader Ramzan Kadyrov, was assassinated in the United Arab Emirates on March 28, 2009.Yamadayev, an ethnic Chechen and holder of the Hero of Russia medal, was shot three times in the chest by a gunman in an underground car park in Dubai. He joined the ranks of a number of Kadyrov's foes to have been assassinated in recent years.Dubai police accused Adam Delimkhanov, a close ally of the 33 year-old rebel-turned-leader of Chechnya, of ordering Yamadayev's killing. Both Delimkhanov and Kadyrov have vehemently denied any involvement.In January 2009, Umar Israilov, a former bodyguard for Kadyrov who had accused him of torture and kidnapping, was gunned down by two men on a street in Vienna.Yamadayev's brother, Ruslan, was shot dead as his car stood at traffic lights in central Moscow in September 2008.DUBAI, December 22 (RIA Novosti)12/21/2010 01:30 PMAwkward EncountersThe Klitschkos and the Chechen Despot Stefan BergVitali and Wladimir Klitschko aren't just feared boxers -- they?are almost universally admired for their support of democracy. But recent appearances with infamous Chechen ruler Ramzan Kadyrov have many wondering if the brothers are worthy role models.The Klitschko brothers are, without doubt, exceptions in the boxing world. Between the two of them, the brothers Wladimir, 34, and Vitali, 39, have racked up an impressive number of titles and trophies, including several world championships. Both put up tough fights in the ring without ever coming across as tough guys outside of it -- and they have successfully kept their distance from the worst of the fickle boxing world.The public has always known the Ukrainian brothers as two likeable, dapper and well-spoken gentlemen. Both became advocates for UNESCO and have been awarded the German media awards Bambi and the Golden Camera. Former German President Johannes Rau appointed the brothers "ambassadors of integration."Even in the political arena, the Klitschko brothers have seemed faultless. The two threw their support behind the pro-democracy protests during the 2004 Orange Revolution in Ukraine and Vitali Klitschko even founded his own party, running for mayor of Kiev. "If the world is watching," he said then, "even brutal, power-hungry leaders think hard about whether they will be able to defeat a peaceful movement."Squeaky Clean? No one has had cause to doubt the sincerity of such lofty sentiments. Now, though, doubts are beginning to surface about just how deep the boxers' professed love of democracy runs. Take, for example, an encounter on August 15, 2009. That summer evening, the otherwise squeaky clean Wladimir met a politician with a reputation for being far more than just a tough guy. Photographs that have been largely ignored in the West depict Wladimir Klitschko at the side of Ramzan Kadyrov, the infamous ruler of Chechnya.Kadyrov is the son of former Chechen leader Akhmad Kadyrov, murdered in 2004 --- and the younger Kadyrov once oversaw his father's bodyguards. Then Russian President Vladimir Putin appointed him as Chechen president in 2007. World leaders do their best to avoid Kadyrov.With good reason: Human rights organizations accuse Kadyrov of personally having committed torture and of ruthlessly persecuting his opponents. Austrian investigators even suspect the president of having ordered the murder of a Chechen living in exile -- a trial related to the murder is ongoing in Vienna. "We're quite good at destruction," boasts the Chechen leader, whose signature possession is a gold-plated pistol.Recognition On that evening in August, Kadyrov finally received the recognition he so yearned for -- in the form of a world-renowned personality and an avowed believer in democracy: Wladimir Klitschko. Klitschko's agency, K2 East, had organized a boxing festival in Grozny, the Chechen capital. Following the event, Klitschko addressed his host: "I'd like to thank Ramzan Kadyrov, president of Chechnya." This, at least, is the quotation attributed to Klitschko on Ukrainian websites. The boxer is also quoted as suggesting that the boxing festival wouldn't be the last in the Chechen Republic and that it provided an opportunity for young people to establish their characters as "true warriors." Just an anomaly? Not likely. Early this December, Vitali Klitschko sat next to Kadyrov at the boxing ring in the Ukrainian city of Brovary. Photos of the event almost exclusively show Kadyrov -- inside or near the ring, almost always striking a champion's pose, sometimes embracing one of the boxers, sometimes hoisting him onto his shoulders.Just days before, Dick Marty, special rapporteur of the Council of Europe, gave testimony in the Vienna murder trial in which he described the Chechen ruler as a psychopath: "He lives in a palace with golden lions at the entrance. He has a private zoo which includes a tiger that's on the WWF's red list." Are we to believe the Klitschkos weren't aware of any of this?Out of Shape A Klitschko agency was once again responsible for the boxing event in Ukraine. The agency also distributed photos in Grozny of Kadyrov together with Wladimir Klitschko. Yet the boxers' official homepage makes no mention of the event. Only by searching through the forums on the site can one find comments concerning the encounters between the Klitschkos and the despot, many of them critical.Bernd B?nte, director of the Klitschko Management Group, refutes all accusations, suggesting that since Chechen boxing star Zaurbek Baysangurov is signed to one of the Klitschkos' agencies, contact with Kadyrov is virtually unavoidable. Neither of the Klitschko brothers has ever expressed positive sentiments concerning Kadyrov, B?nte continues, and statements to the contrary in the Ukrainian press were completely fabricated. The brothers, he said, have no position on the Chechen president. The boxers, the manager adds, are unavailable for comment.Perhaps a statement Wladimir once made on the radio can function as a stand-in. "Democracy is like sports," he said. "If you don't train regularly, you quickly get out of shape."Translated from the German by Ella OrnsteinGang leader detained in Kabardino-Balkaria, December 22 (Itar-Tass) - Police in Kabardino-Balkaria detained a senior militant involved in a number of high profile crimes, the press service of the Interior Ministry's department for the North Caucasus Federal District told Itar-Tass on Wednesday. "Police detained a gang leader in the course of a special operation in Nalchik on Tuesday. He resisted the arrest, threw a grenade at the policemen and was wounded, when law-enforcement agents returned fire. There are no casualties among police or civilians. Police found at the scene an F-1 grenade, ten rounds of ammunition, a 200-gram TNT block and an electric detonator. Police withheld the detainee's name in the interests of the investigation. Britain expels Russian spy for 'overstepping the mark' has expelled a Russian spy, as sources accused him of "overstepping the unwritten rules of spying". By Duncan Gardham, Security Correspondent, and Andrew Osborn in Moscow 8:14PM GMT 21 Dec 2010 William Hague, the Foreign Secretary, said in a written statement that the government had asked the Russian embassy in London withdraw a member of their staff from Britain on December 10. He said the request was "in response to clear evidence of activities by the Russian intelligence services against UK interests." "They broke the rules of the game," a security source said. "Once we detected what they were doing we had no other option than to act. It's just not on." The source said it was a "question of Smiley-esque tradecraft," referring to the character from novels by John le Carre. "There is a huge Russian intelligence operation in the UK and all over the world which is both active and assertive but in this case they have crossed a line and it needed a response," he added. A government source said: "We are not talking about murder or stealing the Trident launch codes. But it was crossing a line." The spying was said to be conducted by the "Russian machinery" and the person expelled was one of a number who were taking part. The intelligence relationship between the two countries has been in the "deep freeze" since the assassination of Alexander Litvinenko, a former Russian spy killed with radioactive polonium in London four years ago. In June 2007 Britain expelled four Russian diplomats after a man was detained at the Hilton Hotel on Park Lane, London, allegedly on a mission to assassinate the exiled Russian oligarch Boris Berezovsky. The latest expulsion follows, but is not connected to, the recent scandal of two female spies with connections to Britain. Katia Zatuliveter, 25, was arrested earlier this month and served with a deportation order on the grounds of national security following concerns that she had access to confidential documents as a researcher for Mike Hancock MP, a member of the defence select committee. Anna Chapman, 28, an alleged Russian "sleeper" was arrested in the US in June after spending five years in London, leading to a Cold War-style spy trade between the two countries. Russia responded in a tit-for-tat move to the latest expulsion on December 16 by requesting the removal of a member of the British Embassy staff in Moscow. "We reject any basis for this action," Mr Hague said, but added: "Both staff members have now been withdrawn." Britain has shied away from using the "reset" language of President Obama over the relationship with Russia but diplomats say there can still be co-operation over international issues such as Iran, Afghanistan, the Middle East and economic issues. Mr Hague said: "We remain open to a more productive relationship with Russia, as with any other country, on the basis of respect for our laws." A Russian government source said last night: "It was a routine matter. I can only hope that London and Moscow will be as reasonable as Washington and Moscow were." Russia and UK expel diplomats over spying allegations: 22 December, 2010, 08:51Edited: 22 December, 2010, 10:31 British Foreign Secretary William Hague says that Russia and the UK have each expelled a diplomat from their embassies amid a row over alleged spying. According to Hague, a Russian envoy was asked to leave the country two weeks ago after evidence of espionage activities surfaced. He claims that Russia’s reaction followed a week later, and a British official was booted from the British embassy in Moscow. Moscow has yet to comment. Earlier this month, a Russian working as a parliamentary aide to a British MP was arrested in London for allegedly spying.The last tit-for-tat expulsions between Russia and the UK took place in 2007, when three Russian diplomats were expelled from London. The move was in protest at the Kremlin's refusal to extradite Andrey Lugovoy, who was charged by the Crown Prosecution Service in May 2007 with Alexander Litvinenko's poisoning.Anna Chapman 'to lead youth wing of Putin's United Russia party' Chapman, the glamorous former Russian spy, is reportedly to become a leader of a youth wing of Vladimir Putin's United Russia political party. 9:24PM GMT 21 Dec 2010 Miss Chapman, 28, who was expelled from the US in a historic spy swap in June, is to be appointed at a congress of Molodaya Gvardiya (Young Guard) in Moscow today, according to Russian media. Miss Chapman's role in the pro-Putin youth organisation will involve working with "patriots and young businesspeople". "Chapman will become the head of one of the new governing bodies of Molodaya Gvardiya," a source in the organisation told Russian media. Mr Putin rallied to the defence of Miss Chapman and the nine other Russian spies after they were expelled and promised them all 'important' work in their homeland. Last week, Miss Chapman attended the same technology forum as Russian president, Dmitry Medvedev. Sexy Russian spy Anna Chapman nude in January issue of Playboy 10:50:00She has been exposed yet again, but this time in a way that would appeal to her fans worldwide - Russian spy Anna Chapman will be seen naked in the January issue of Playboy.The naked pictures are from an ex-boyfriend and were part of a batch of nude photos, which appeared online in July. Her ex-husband, Alex had also given the world a peek into their sex life and shared several semi-nude pictures of her."I found her Russian accent such a turn-on. We were having so much fun. We also experimented with sex toys," the New York Daily News quoted him as telling the News of the World.Chapman did pose for the Russian edition of Maxim magazine in October."Seduction, like love and friendship are the same everywhere," she told Maxim in Russian."Most men are divided in three categories: primitive, those that only want sex; smarter, those that want to be loved, and [the] last group-those that not only want to be loved, they also need that this love will be the biggest and most amazing feeling in your life," she said. (ANI)In a First, Duma Deputy Resigns December 2010The Moscow TimesIn a first in State Duma history, a lawmaker has filed a resignation letter, citing unspecified “family circumstances,” Interfax reported Tuesday.Valery Kornilov, 46, a member of the ruling United Russia party, refused to elaborate on the circumstances of his decision in his letter to Duma Speaker Boris Gryzlov or in talks with colleagues, the report said. An unidentified Kornilov aide told Interfax that he also was unaware of the reasons for his boss to quit.The move puzzled fellow lawmakers, with Sergei Ivanov of the Liberal Democratic Party demanding a more thorough explanation.“Was he tortured, beaten? The cause is completely unclear,” Ivanov said at a Duma hearing. But the resignation was nevertheless approved by the legislature, with Alexander Gurov, a member of the Duma's Credentials and Ethics Commission, pointing out that the Constitution allows a deputy to resign voluntarily.Kornilov, a Nizhny Novgorod native and a former GAZ employee, is married and has two daughters, Gzt.ru reported.Russia investigates Bank of Moscow loan(AFP) – 43 minutes agoMOSCOW — Russian law enforcement officials have opened a criminal investigation into a top Russian bank owned by the Moscow city government, the Kommersant business daily reported.The probe into the Bank of Moscow, which has been majority-owned by the city since 1995, is linked to a 12.76-billion-ruble (415-million-dollar) loan the bank issued to a little known firm in 2009, Kommersant said.That company then went on to purchase a plot of land at what investigators believe was an inflated price from Yelena Baturina, the wife of the now-deposed mayor of Moscow, Yury Luzhkov.Baturina has risen to become Russia's richest woman according to Forbes magazine on the back of Moscow real estate contracts awarded to her Inteko construction firm.But the company has been riddled with debt since the 2009 financial crisis.The Financial Times reported that the transaction took place on the same day as the Moscow city parliament approved a 15-billion-ruble transfer to the Bank of Moscow.Russia's interior ministry is now checking to see whether the funds were transferred to help Baturina settle her debts, the Financial Times said.Luzhkov became mayor of Moscow in 1992 and eventually established himself as one of Russia's most powerful regional bosses.But he lost a political tug of war with the Kremlin and was fired by President Dmitry Medvedev in September.The Russian media reported this month that Baturina has been negotiating to sell her company. Inteko officials have refused to publicly comment on the reports.Bank of Moscow Dismisses Criticism from VTB December 2010The Moscow TimesThe Bank of Moscow on Tuesday described critical statements about the bank by VTB's top executives as a ploy to seek a lower acquisition price.VTB, the country's second-largest lender, has said it wants to buy control of the Bank of Moscow in what would be the biggest banking deal in the past few years.The VTB executives, including CFO Gerbert Moos, reportedly told a group of industry analysts that they were concerned the Moscow city government didn't effectively own control of the Bank of Moscow and insisted the Bank of Moscow's cash flow was too dependent on the city budget. The Bank of Moscow said the statements — carried in a Vedomosti story Monday — were wrongful and represented an attempt to “reduce the value of the Bank of Moscow's stock” ahead of a possible acquisition by VTB. “Public comments that regard activity of another company, especially if they are based on inaccurate facts, run counter to the principles of business ethics and mislead customers,” the Bank of Moscow stated. “A potential buyer would act more constructively by holding discussions with all the concerned parties at a negotiating table.” According to the lender's web site, City Hall directly owns 46.5 percent of the stock. Insurance company Stolichnaya Strakhovaya Gruppa, which says its 25 percent belong to the city government, owns another 17.3 percent of the bank.The city budget funds account for only 12 percent of the Bank of Moscow's assets, the bank said.The lender also responded to the doubts that its bad debt ratio was 4 percent to 5 percent, lower than the average of at least 7 percent for the sector. It said the bank was “extremely conservative” about risk management. Bank of Moscow in embezzlement probe Isabel Gorst and Catherine Belton in Moscow Published: December 21 2010 19:56 | Last updated: December 21 2010 19:56Law enforcers in Russia have launched a criminal investigation into an alleged embezzlement by the Bank of Moscow as pressure grows on the businesses linked to the former city mayor. The charges come as VTB, the Russian state bank, holds talks to buy the Moscow city government’s stake in Bank of Moscow, signalling the start of a redistribution of assets in the capital following the ousting of Yuri Luzhkov as city mayor. Mr Luzhkov was fired by the Kremlin in September amid allegations that he ran Moscow as a personal fiefdom. Yelena Baturina, his wife, rose to become Russia’s richest woman with a vast construction and property business. “A criminal investigation has been opened at Bank of Moscow in connection with an alleged embezzlement,” Viktor Biryukov, a Moscow interior ministry official, said on Tuesday. He declined to elaborate on details of the case.However, state news agencies linked the probe to a 2009 deal in which the Bank of Moscow lent Rbs12.76bn to a real estate company that then bought land at a price believed by market analysts to be over-priced from Ms Baturina, whose company, Inteko, was overburdened by debt. Questions were raised about the transaction because it took place took place the same day as the Moscow city parliament approved the transfer of Rbs15bn of city budget funds to the Bank of Moscow to boost the bank’s capital.The FT has reported that Russia’s interior ministry was investigating whether the city budget funds were in fact transferred to help Ms Baturina settle her debts. Inteko and Bank of Moscow have denied any wrongdoing. Investigators said on September 20 that there were not enough grounds to launch a criminal investigation of the deals. However, people familiar with the matter told the FT prosecutors had sent back the case for further investigation. The transaction may be just one of many deals at Bank of Moscow that have come under scrutiny since Dmitry Medvedev, the Russian president, sacked Mr Luzhkov after a bitter feud. During his 18-year tenure as mayor, Mr Luzhkov oversaw a construction boom in Moscow, parcelling out building permits and tenders even as Inteko became the city’s biggest development group. Mr Luzhkov has denied any wrongdoing, including using his position to help his wife’s business flourish. Bank of Moscow, Russia’s fifth biggest bank, funded most of the big development projects that transformed the Russian capital into a glitzy modern city under Mr Luzhkov’s watch. Pressure on the Bank of Moscow mounted last week as the Russian Audit Chamber said it would examine all the bank’s operations and involvement in city programmes. Bank of Moscow said on Tuesday it had not received any official notification of the criminal investigation. Muscovites address thousands of questions to mayor 22/12/2010Moscow residents have sent a few thousand questions to Mayor Sergei Sobyanin, some of which he will answer live during the new Our City program on the state-run TV Center channel on Wednesday, Sobyanin's spokeswoman Gulnara Penkova said.Muscovites sent questions for the city chief starting from December 14 via the websites of RIA Novosti and TV Center, as well as through Facebook. The questions mainly deal with municipal services and transport problems."In their addresses to the mayor, the Russian capital's residents also give advice on how to solve the city's urgent issues: improve traffic organization, clean the urban area and create additional parking lots," Penkova said.Sobyanin has pledged to solve the Russian capital's transport problems. When appointed, he said he would take "extraordinary measures" to eliminate traffic jams. President Dmitry Medvedev has said he will personally oversee the effort.The new mayor replaced long-serving Yury Luzhkov, fired in late September by Medvedev over a "loss of confidence." Luzhkov had in particular been criticized for his inability to cope with Moscow's notorious traffic jams.Sobyanin recently said some 8 billion rubles ($266 million) will be allocated from the city budget in 2011 to build more parking lots and garages.Luzhkov's program on TV Center was called Facing the City. It was shown on Center is owned by the Moscow city administration.?MOSCOW, December 22 (RIA Novosti)Sobyanin to answer city folk questions in live broadcast Wed, December 22 (Itar-Tass) - Moscow Mayor Sergei Sobyanin will for the firs time answer Muscovites' questions in a live TV broadcast on Wednesday night. A new TV programme, "Our City", will come on the air on the TV Center channel at 20:00 on Wednesday. The programme will be "really an interactive one", officials in the press service of the Mayor and the Moscow city government say. Over the past week, the TV Channel's Desk has been collecting questions from city folk. The questions were then arranged according to concrete subjects. "Sobyanin will seek to cover as broad the spectrum of questions as possible and give answers on key subjects that are uppermost in the city folk’s minds," mayoral press secretary Gulnara Penkova said. Several thousands of questions addressed to the Mayor have come in. Moreover, there was also an opportunity to send in a question by video so as to show the essence of the problem in detail. "Due to such messages both the televiewers and personally the Mayor will be able to 'estimate the state of affairs', so to say, in an online mode," Penkova emphasized. Pregnant Moscow women to protest new law cutting maternity leave allowance 22, RT News lineAbout 50 pregnant women are expected to rally on Wednesday at the Ministry of Healthcare in Moscow. The protest will be aimed against a new law that reduces maternity leave allowance. The organizer of the rally, Anastasiya Ermakova, claims many women are not aware of the new law, which will deprive them of a lot of money. According to her, with this law the government is planning to save 80 billion rubles next year alone.RF FCC to adjust ISS orbit for docking with spacecraft, December 22 (Itar-Tass) - The Russian Flight Control Center (FCC) is to carry out an operation Wednesday to adjust the orbit of the International Space Station (ISS) so as to create favorable conditions for the station's docking with the resupply spacecraft Progress and the America space shuttle Discovery. An FCC official has told Itar-Tass, "In accordance with the programme for ballistic ensurance of the ISS flight, an ISS orbit adjusting maneuver is scheduled for December 22". "The maneuver will be carried out with the use of eight berthing and orientation engines of the supply spacecraft Progress M-07M, which is docked with the assembly compartment of the service module Zvezda (star). The purpose of the operation is to shape optimum ballistic conditions prior to the arrival of the resupply spacecraft Progress M-09M and the space shuttle Discovery, the launches of which are slated for January 28 and February 3, 2011, respectively," the FCC official specified. "According to the FCC ballistics service, the engines of the Progress spacecraft will be ignited at 19:28, Moscow time, and will operate for 1,270 seconds. As a result, the ISS will get an additional impulse of 2.4 metres per second. The average altitude of its orbit will rise by 4.2 kilometres and will be 352.9 km. Fuel for the maneuver will be used from the tanks of the functional cargo block Zarya (dawn)," the FCC official pointed out. ISS orbit adjustment maneuvers are usually carried out to bring the ISS to a needed orbit to dock with a resupply spacecraft or a manned spaceship, as well as to evade space debris. The ISS orbit altitude gets lower by 150-200 metres every day under the action of the Earth's gravitational pull and other factors. ISS to move to higher orbit 22, 2010 08:07 Moscow TimeOn Wednesday the Russian cargo spacecraft "Progress", will increase the altitude of the International Space Station (ISS) by more than four kilometers, the press service of the Mission Control Center reported. It is calculated that the engines of Progress, docked to the ISS, will operate for just over 20 minutes and add an additional 2.4 meters per second of speed to the station. Due to this speed the height of its orbit will be increased by more than 4 kilometers. The objective of the maneuver will be to ensure the proper conditions for docking the next Russian Progress cargo vessel ?and the American space shuttle Discovery to the ISS.U.N.-Russia call on world to fight Nazi glorification 22, 2010 08:08 Moscow TimeThe UN General Assembly called upon countries to fight against the glorification of Nazism, including the Legion of the Waffen SS, and attempts to desecrate or destroy monuments to those who fought against the fascists. The resolution was adopted on Tuesday on Russia's initiative. It was supported by 129 states. Three countries voted against the resolution: the United States, Palau and the Marshall Islands. 52 delegations, including the EU, Ukraine, Georgia and Moldova, abstained.“The level of anti-Semitism in Russia has declined significantly”: 21 December, 2010, 06:13Edited: 22 December, 2010, 02:50Personal Representative of the OSCE Chairman-in-Office on Combating Anti-Semitism, Andrew Baker, gave an interview to KommersantThe Personal Representative of the OSCE Chairman-in-Office on Combating Anti-Semitism, Andrew Baker, arrived on an official visit to Moscow. Although the main goal of the visit was to assess the threat level of anti-Semitism in Russia, the surge of nationalistic sentiments in the RF, which coincided with Andrew Baker’s visit, added relevance to his talks in Moscow. In an interview with Kommersant’s correspondent, Sergey Strokan, Andrew Baker said that the fight against racism might become one of the areas of cooperation between Moscow and the OSCE.Kommersant: What are the goals of your visit to Moscow?Andrew Baker: The first time I visited your country was in the mid-1990s, and since then, have already visited Russia nine times, which allows me to follow the dynamic of anti-Semitism and intolerance. This time, I was invited to come here by the Permanent Representative of the RF in the OSCE, Anvar Azimov, in order to assess the threat level of anti-Semitism at the current stage. At the end of the visit, a report will be drafted for the OSCE Council of Ministers.? ?Kommersant: How did the talks progress and what were their results?AB: The talks were conducted in a constructive atmosphere. I held a series of meetings with the leadership of the Ministry of Economic Development, Ministry of Education and Science, and the Justice Ministry. A detailed conversation was held with the head of the Interior Ministry’s Department of Counteraction to Extremism, Yury Kokov. In addition to that, I closely communicated with human rights activists and representatives of Jewish organizations in Moscow.? Floriane Hohenberg, head of the Tolerance and Non-Discrimination Department of the OSCE Office for Democratic Institutions and Human Rights (ODIHR), also took part in the talks. The main conclusion that we made is that despite the concerns, expressed by human rights activists and representatives of the European organizations, the level of anti-Semitism in Russia – unlike that in many of the West European countries – has reduced significantly. This cannot but inspire optimism. Kommersant: But just a few years ago, fighting anti-Semitism and other manifestations of ethnic and religious strife, were mainly the prerogative of the United Nations. What forced the OSCE to actively move into this area? ?AB: It was discovered that the UN is unable to perform this function. A clear example of this fact was the UN World Conference against Racism, Racial Discrimination, Xenophobia and Related Intolerance, which was held in September of 2001, in South Africa’s Durban. I would like to remind you that many participants in the conference have turned it into a platform for propagandistic attacks against Israel as a “racist society”. ?Kommersant: And at that moment, the OSCE decided to take the initiative?AB: After the conference in Durban, the OSCE was given a mandate to work in this area, and in 2003-2004, three personal representative posts were created within the organization – on combating discrimination against Muslims, on combating anti-Semitism and on combating xenophobia in general. In addition to that, in 2003, the Tolerance and Non-Discrimination Department was established within the ODIHR. Its task includes performing four functions: preparation of annual reports on the level of xenophobia and intolerance in various countries, training policemen and law enforcement agencies to appropriately and in a timely manner respond to crime motivated by ethnic or racial hatred, curriculum development for elementary schools, and finally, issuing recommendations for improvement of legislation.?????? ?Kommersant: Is there a special way that law enforcement agencies need to act when suppressing attempts to incite racial hatred or unrest? AB: While being fully aware of the importance of clear and decisive action, we cannot allow law enforcement agencies to, as it often happens, write off hate crimes as simple hooliganism or vandalism. Clearly, police forces require additional training that, depending on the situation, allows them to act with utmost flexibility while realizing the delicacy and potential explosiveness of the situation. That is the kind of training that the OSCE is ready to provide to the countries, including Russia.? ?Kommersant: Your visit to Moscow has coincided with a surge of nationalistic sentiments in Moscow and other regions. Do you find it paradoxical that, at the time when the level of anti-Semitism in Russia is declining, other manifestations of intolerance are becoming more and more frequent? AB: Yes, it’s a paradox. I don’t have a ready-made answer as to why this is happening, I can only think aloud on this subject. Of course, we need to have police that are able to control the situation. As for the recent events in Moscow, I’m getting the impression that the police did not fully control the situation or are, at least, were close to losing control. As for the regions, I’m not sure that anyone has a clear picture of what exactly happened.? ?In any event, I would like to point out that similar problems cannot be resolved solely by the means of police force. It is necessary to develop an awareness of the problems on the civil society level. But that is very difficult to do without having developed open society institutions. ?So far, you are not doing a very good job with working at the grassroots level. However, in our opinion, that is a necessity: the OSCE Council of Ministers has repeatedly warned that hate crimes pose a threat to the safety of individuals and social cohesion, and in the future could lead to larger-scale conflicts and violence.“Russia and the World of Islam” Published in Moscow book entitled “Russia and the world of Islam; historical revision and modern attitudes” by W.Y. Blakernitski and E.W. Zayetsoff and N. U. Ulchenko was published in Russian language in Moscow.(Ahlul Bayt News Agency) - A book entitled “Russia and the world of Islam; historical revision and modern attitudes” by W.Y. Blakernitski and E.W. Zayetsoff and N. U. Ulchenko was published in Russian language in Moscow. It is a collection of the speeches presented at the scientific international conference held in November 2006 at the Faculty of Orientalism in Russia’s Academy of Sciences. History of relations of Russia and Turkey has been investigated in detailed and Islam in Russian and Ottoman Empire has been discussed in another part. The mutual relations of Russia with Iran, Pakistan and Afghanistan have also been stressed at the book. It is a research made on globalization, democracy and religious tolerance in the Middle East and Arab countries and aspects of the mutual relations of Russia with Central Asian governments as well as the complex situation caused through the influences of such relations in Muslim regions of Russia. The book is written in four chapters namely “Russia and Muslims’ region”, “Islam and today’s political issues”, “political, cultural and historical aspects in mutual relations of Russia and the world of Islam” and “Islam in the history of Russia and Turkey”. The 479-page book was published by the Faculty of Orientalism and Craft Publications.End item/ 129Siberian police officers found guilty of torture 22/12/2010A court in Siberia's Irkutsk region has found five police officers guilty of torturing suspects, the local investigations committee said on Wednesday.The investigation report said the police officers used "unauthorized interrogation methods," including beating two suspected robbers and forcing them to do push-ups wearing gas masks.Four of the officers, including a police major, were sentence to three years in prison for abuse of power and the other received a four-year sentence for infliction of moderate bodily harm.MOSCOW, December 22 (RIA Novosti)December 22, 2010 10:35Moscow press review for December 22, 2010. Dec 22 (Interfax) - The following is a digest of Moscow newspapers published on December 22. Interfax does not accept liability for information in these stories.VEDOMOSTIThe supervisory board of the Russian diamond monopoly Alrosa (RTS: ALRS) will discuss a deal with the mining giant Rio Tinto on December 28. An explanatory note to the board meeting says that Rio Tinto is supposed to pay $250 million for 50% minus one share in Severalmaz. Rio Tinto has also undertaken to invest $135 million for the facility to reach its projected capacity of 2 million karats by 2015. Alrosa's board has proposed approving the deal, which will also have to be cleared with the government commission on foreign investments. An Alrosa spokesperson declined comments, and Rio Tinto refused to answer questions by Vedomosti. However, a source close to Alrosa's supervisory board confirmed to Vedomosti on condition of anonymity that such a deal is in the pipeline ('Diamonds for Rio Tinto').The only deal signed in the absence of members of the press on the sidelines of Russian President Dmitry Medvedev's three-day visit to India was an unprecedented contract on developing a graphic and technical design of a projected multifunctional fighter. The contract was signed by Rosoboronexport General Director Anatoly Isaikin and Chairman of Hindustan Aeronautics Limited (HAL) Ashok Nayak. A source close to Rosoboronexport's management said the contract is worth about $300 million. A manager from a company incorporated in Russia's United Aircraft Corporation (UAC) said the contract envisions that India will finance the development by Sukhoi of a graphic and technical design of a two-seat version of the T-50 aircraft, known also as the Sukhoi PAK FA, or the Future Airborne Complex of Frontline Aviation, Russia's fifth generation fighter, the first prototype of which performed its maiden flight in January 2010 ('Project for Half Century').Six out of the nine members of Vimpelcom Ltd.'s supervisory board have approved those terms and conditions of a merger with Weather that do not concern relations between the shareholders, the company's press service said. The deal has been supported by the independent directors and Altimo's representatives, while Telenor's representatives voted against it, having said before the supervisory board meeting that the merger did not make sense strategically and financially. Therefore, the board did not approve a new version of the shareholder agreement (which would have become tripartite had Weather shareholders joined Altimo and Telenor) and did not consider other issues concerning the shareholders ('Vimpelcom Will Revise Deal').KOMMERSANTRussia and India have concluded the first official agreement on cooperation in the oil and gas field. AFK Sistema, the principal shareholder of Bashneft (RTS: BANE) and a Russneft (RTS: RUSN) stakeholder, and India's ONGC plan to consider the consolidation of all or some of their oil production and processing assets (page 11, 'Sistema to Bind Russia and India', see also Vedomosti, 'Chance for ONGC').Gazprom (RTS: GAZP) has once again revised downward its gas production forecast for 2015 by 6% to 570-580 billion cubic meters. Gazprom has already adjusted several times its target for 2010, reducing it the last one to 515 billion cubic meters. Market players, however, do not believe that even this level will be achieved. Analysts agree with this and also suppose that the 2015 target will not be reached, either (page 11, 'Forecast for Skin').A stake in Russia's independent gas producer Novatek (RTS: NVTK), which Gazprom recently sold to Gazprombank, may change hands once again. A company belonging to Novatek's head Leonid Mikhelson and to its major shareholder Gennady Timchenko signed a contract on buying 9.4% in the company within two years, which will make Timchenko's stake in Novatek larger than a blocking one. The stake, which cost over $3 billion on the market on Tuesday, could also be used to draw foreign partners (page 9, 'Gennady Timchenko Overcomes Block', see also Vedomosti, 'Timchenko's Partner').PRESS DIGEST - Russia - Dec 22 Dec 22, 2010 9:09am GMTMOSCOW Dec 22 (Reuters) - The following are some of the leading stories in Russia's newspapers on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.KOMMERSANTkommersant.ru- RusHydro (HYDR.MM) could exchange its shares for stakes in foreign companies to gain access to markets outside Russia, the company's head, Yevgeny Dod, says in an interview.- Co-owner of Swiss-based Gunvor oil trader Gennady Timchenko has increased his stake in Russia's second-biggest gas producer Novatek (NOTK.MM) to exceed a blocking stake, the daily says.- Russia's government will provide the defence industry with state guarantees to encourage crediting of the sector by local banks.VEDOMOSTIvedomosti.ru- Russia's state-run diamond miner Alrosa is ready to attract Rio Tinto (RIO.AX) to take part in its northern Severalmaz project, the daily says.- Russia's Sistema holding company (AFKC.MM) has signed an agreement with India's state-run explorer Oil and Gas Corp (ONGC) (ONGC.BO) on a possible merger of their assets.- The Russian government will have to undertake unpopular measures, including tax hikes and spending cuts, after the 2012 presidential election, according to local experts.IZVESTIAizvestia.ru- St Petersburg authorities are considering introduction of a one euro tax for foreign tourist arriving in the city. Last year Russia's northern capital hosted almost 5 million guests, the daily adds.NOVYE IZVESTIAnewizv.ru- Pregnant women will protest on Wednesday in front of the health ministry in Moscow against decreases in state subsidies to future mothers from 2011.- Russia's human rights ombudsman Mikhail Fedotov has dismissed speculation of local communists that Russia is launching a campaign of destalinisation of life in the country.NEZAVISIMAYA GAZETA- Russia could toughen its migration policy as a result of the outbreak of violence in the capital sparked by the murder of a soccer fan during a clash between ethnic Russians and migrants from the North Caucasus, the daily says, quoting Prime Minister Vladimir Putin in a meeting with soccer fans on Tuesday.Russian Press at a Glance, Wednesday, December 22, 2010 22/12/2010? RIA Novosti. RybchinskiyPOLITICSPresident Barack Obama secured enough votes on Tuesday for the ratification in the Senate of the New START treaty with Russia, boasting a major foreign policy victory.(Moscow Times, Nezavisimaya Gazeta, Vedomosti, Rossiiskaya Gazeta)President Dmitry Medvedev and his delegation of more than 100 business leaders wrapped up the second day of their visit to India on Tuesday by signing over 20 agreements, including one on the joint manufacture of advanced fighter jets.(Moscow Times, Vedomosti, Nezavisimaya Gazeta)Because of the current budget deficit in Russia, the country's next leader will have to make unpopular decisions following the 2012 presidential elections. Tax hikes, cancellation of benefits and an increase in the pension age all look likely.(Vedomosti)The EU is likely to suspend dialogue with Belarus as a result of Sunday's "flawed" election count, which gave long-standing leader Alexander Lukashenko a landslide victory, and the subsequent crackdown on opposition protests by the authorities. (Kommersant, Nezavisimaya Gazeta)ECONOMY & BUSINESSThe Bank of Moscow on Tuesday described critical statements about the bank by the top executives of Russia's second largest state lender VTB as a ploy to seek a lower acquisition price.(Moscow Times)Police suspect large-scale fraud in the Bank of Moscow(Vedomosti, Kommersant, Rossiiskaya Gazeta)SOCIETYFive of the nine opposition candidates from Sunday's presidential elections in Belarus were still in prison on Tuesday following the police crackdown on protests in Minsk demanding an end to President Alexander Lukashenko's rule.(Moscow Times)In a rare reversal, authorities acted to protect the interests of an opposition leader on Tuesday as court marshals broke into the apartment of the former director of a state arms exporter to collect $700,000 owed to liberal politician Boris Nemtsov.(Moscow Times)Prime Minister Vladimir Putin urged football fans on Tuesday to resist the influence of extremists who might use them to stage nationalist riots like the ones that rocked Moscow and several other cities earlier this month.(Moscow Times, Vedomosti, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta)The Moscow authorities have approved a plan to fight traffic jams. The city will allocate 203 billion rubles ($6.6 billion) for the purpose in 2011. Priority will be given to the construction of new roads and the development of public transport.(Kommersant, Nezavisimaya Gazeta)The TV Center channel will begin on Wednesday airing a new show called Our City, in which Moscow Mayor Sergei Sobyanin will answer questions put to him by residents of the Russian capital.(Rossiiskaya Gazeta)DEFENSEA St. Petersburg engineering and technical center has won one of the Defense Ministry's largest contracts, worth 10 billion rubles ($326 million), to transport the military and its cargoes for three years. The organization was the only participant of the tender.(Vedomosti)What Russia can do on North Korea 22, 2010By?Richard WitzKeen to boost its profile in East Asia, Russia is pressing to play a bigger role in tackling tensions on the Korean Peninsula.Events over the past few weeks have underscored Moscow’s desire to play a major role in resolving the disputes between North Korea and its neighbours. But they’ve also highlighted the limits of Moscow’s influence.Unlike Russia’s refusal to concur with most international experts that North Korea torpedoed South Korean corvette the Cheonan in March, Russian diplomats explicitly condemned Pyongyang for its November 23 artillery attack on Yeonpyeong Island. Immediately following the artillery barrage, Russian Foreign Minister Sergey Lavrov censured Pyongyang in a press conference, later explaining that the US-South Korean ‘firing drill is one thing, and shelling a residential area is quite another. People died and that is most important.’Russian Prime Minister Vladimir Putin, meanwhile, called on North Korea to ‘unconditionally abide by’ its denuclearization commitments.? He stressed, however, the importance of resuming talks among the parties. Putin said during an interview with US talk show host Larry King that ‘It’s impossible to come to an agreement without dialogue.’This generally tougher line was in stark contrast with the one adopted by Beijing, which refused to blame North Korea for either incident, and moved Russia closer to the views of South Korea and its allies. Indeed, Lavrov also expressed ‘deep concern’ over North Korea's newly revealed uranium enrichment capabilities, which, like North Korea’s plutonium programme, could also be used to build nuclear weapons.That said, despite diverging from Beijing in publicly casting blame, the Russian government’s initial response was still to support China’s November 28 call to hold emergency six-party talks on the crisis.?Lavrov said his government considered it essential to relaunch the process of six-party talks on the North Korea issue. But perhaps not surprisingly, Japan, South Korea, and the United States objected to a move that they feared would effectively reward North Korea for its bad behavior, as well as divert attention from its need to fulfill its commitment to dismantle its nuclear weapons infrastructure.Moscow’s next move was to engage in some high-profile shuttle diplomacy, inviting North Korean Foreign Minister Pak Ui Chun and Wi Sung-lac, South Korea’s lead nuclear envoy, to Moscow for separate meetings in the middle of this month to discuss the subject. Russian diplomats also held emergency consultations with Japanese and US diplomats on the crisis.It wasn’t all about criticizing the North Koreans. Lavrov suggested that the US-South Korean military exercise that occurred before the shelling had also increased regional tensions, a theme that became more prominent after Seoul and Washington announced their intention to hold another joint exercise, again with live artillery firing, from December 18 to 21 in the Yellow Sea near Yeonpyeong Island. North Korea threatened to retaliate vigorously.Indeed, the Russian Foreign Ministry summoned the South Korean and US ambassadors to express ‘extreme concern’ over the planned live-firing drill, with Deputy Foreign Minister Alexei Borodavkin, who met with the envoys, reportedly ‘insistently’ urging South Korea and the United States to refrain from conducting the planned firing. The Russian military, for its part, raised the alert status of its units near the Koreas.?Failing to avert the drill, Russian diplomats called an emergency session of the UN Security Council to try to find a way to avoid a possible military exchange. Russia’s draft resolution wanted UN Secretary General Ban Ki-moon to send a special envoy to Seoul and Pyongyang to ‘consult on urgent measures to settle peacefully the current crisis situation in the Korean Peninsula.’?(Until then, the Council had been reluctant to involve Ban much in the crisis due to his previous position as South Korean foreign minister).But the feared North Korean retaliation to the drills never took place. In fact, the North Korean government not only decided not to respond to the US-South Korean exercise, but even offered to allow IAEA inspectors to re-enter their country.So, did the Russian pressure pay off? Actually, it was former US Ambassador to the United Nations Bill Richardson, acting as an unofficial envoy, who helped defuse the crisis by proposing that North and South Korean forces establish a military hotline to avert future incidents. He also proposed creating a joint military commission to monitor disputes in the Yellow Sea region.?Yet although in this case it was Richardson’s diplomacy that seems to have been decisive, Moscow is still in some ways well-situated to serve as a key mediator in international efforts to resolve the ongoing disputes between North Korea and South Korea, Japan, and the United States.Most obviously, Russia borders the Korean Peninsula, sharing a 17-kilometre common frontier along the Tumen-river with North Korea. This proximity guarantees substantial Russian official interest in developments in the Koreas as well as a desire to have influence in any international negotiations regarding the Peninsula. This closeness has also contributed to the development of substantial historical and ethnic ties between Russians and Koreans. Meanwhile, Russians have outgrown some of their previous unhelpful historical proclivities, such as viewing North Korea as a fellow communist ally under threat from the capitalist South Koreans and their American allies.The fact is that the Russian Federation is now arguably one of the most disinterested potential mediators in the Koreas. Russian economic and security interests would be strongly served by an enduring period of peace and prosperity in the Koreas, while Moscow’s policy makers would likely resist only the extreme outcomes of regime change or reunification.The recent moves come against the backdrop of a broader Russian desire to deepen integration with the prosperous East Asian region, something that would enhance the health of the Russian economy in general and the economic recovery of the Russian Far East (RFE) in particular. Russia’s trade with the major East Asian countries of China, Japan, and South Korea lags far behind these three states’ economic exchanges with one another. Similarly, the RFE lags western Russia and is becoming a security liability with its diminishing ethnic Russian population, which creates a troublesome demographic imbalance along the Russia-China border. Securing greater Chinese, Japanese, and South Korean trade and investment would therefore help stimulate growth and modernization for Russia, especially in the RFE.In addition, while a commercial surge would help integrate Russia into lucrative East Asian economic processes generally, developing economic ties with South Korea specifically would help prevent Russia from becoming overly dependent on China for its energy exports and other commercial deals. Closer links with South Korea would also improve Russian leverage with Beijing as Chinese negotiators would likely worry that if they bargain too hard, then Russia will be in a position to seek better deals with South Korea and other Asian countries.Russian Korea diplomacy is in part ultimately aimed at highlighting Moscow’s status as an important player in East Asia by emphasizing Russia’s ability to communicate with all parties thanks to good relations with every player. It’s a strategy Russia has already been pursuing in the Middle East, and is how it justifies ties with Iran, Hamas, and other controversial actors in the name of preserving communication lines for mediation. (This was almost certainly one motivation for convening the Valdai conference on the Middle East earlier this month, which was also covered by The Diplomat).Unfortunately, Russia hasn’t enjoyed sufficient influence in either region to broker a settlement. After a decade of neglect during the 1990s under Yeltsin, Putin took it upon himself to significantly improve relations with North Korea, making a personal visit to Pyongyang in July 2000. But he suffered embarrassment just a few days later, when he announced at the G-8 summit that Kim Jong-il had told him that North Korea would abandon its ballistic missile programmes in return for international assistance in creating a civilian space programme, only for the North Koreans to dismiss Putin’s statement as a joke.?More recently, Russia and China last year both sent high-level delegations to Pyongyang. But while North Korean leader Kim Jong-il chose to meet with both Premier Wen Jiabao and Chinese Defense Minister Liang Guanglie, he didn’t bother to even greet Russian Foreign Minister Lavrov or the Chairman of the Upper Chamber of the Russian Parliament, Sergey Mironov.The fact is that Moscow’s problem with the Korea situation is that its diplomatic and economic weight in the Asia-Pacific region is still too limited. This problem is compounded by the fact that Russia’s relations with Japan are strained over the South Kuriles, while China has much greater economic clout in both South and North Korea. So, while US diplomats seek to engage their Russian counterparts regarding Korean issues, their main interlocutors are still in Tokyo, Seoul, and Beijing.If Russian officials want to enhance their influence in the region, they’ll need to become more generous towards Japan, and less focused on (and beholden to) China, whose diplomats and experts generally ignore Russia when it comes to the Koreas anyway.National Economic Trends12/22 11:28 ? RUSSIAN TRADE SURPLUS WAS $10.6 BLN IN NOV COMPARED WITH $11.5 BLN A YEAR AGO - ECON MINISTRY? 11:27 ? RUSSIAN GDP GREW 4.2% IN NOV, 3.7% IN 11 MTHS – NABIULLINA 22, 2010 12:04Russian GDP grew 4.2% in Nov, 3.7% in 11 mths – Nabiullina. Dec 22 (Interfax) - Russia's GDP grew 4.2% in November 2010 compared with November 2009, Economic Development Minister Elvira Nabiullina told journalists.GDP was 3.7% higher in January-November 2010 than in the same period last year.Seasonally adjusted GDP growth was 0.5% in November, following growth of 0.9% in October and 0.3% in September.jhRussia's budget deficit in 2010 was 3,8% of GDP - Nabiullina TRANSLATION22/12/2010 11:33 MOSCOW, December 22 - RIA Novosti. The federal budget deficit in 2010, according to the Ministry of Economic Development, will be at the level of 3,8% of GDP, reported to journalists on the head of the ministry Nabiullina. "In December, costs would be twice the average and, according to our estimates, the budget deficit will be at the level of 3,8%," - said the minister. According to the Minister, Ministry of Economic Development in their estimates came "from the projected reasonable conduct on the spending budget in December." Nabiullina stressed that the increase in costs in December will rise and the deficit. "But, first, it will not be the most effective cost, and secondly, it can lead to inflation", - believes Nabiullina. Last Saturday, 18 December, Vice Premier, Finance Minister Alexei Kudrin said the disagreement with the calculations of Economic Development on the federal budget deficit. In his view, the figure will be in 2010 4,3% of GDP. Russia can resume grain exports in 2011 if harvest tops 80 mln tonnes - Grain Union will only be able to resume exporting grain in 2011 if the harvest amounts to at least 80 million tonnes (bunker weight), Russian Grain Union President Arkady Zlochevsky said."With a minimum harvest of 80 million tonnes, exports might total 10 million-15 million tonnes. If we harvest 70 million tonnes, then there won't be any exports," Zlochevsky told journalists on Monday.Russia's grain reserves as of the beginning of the 2011 farm year [July 1, 2011] should total 15 million tonnes, which would make it possible to resume grain imports."The world market remembers us and our traditional buyers - Egypt, Syria, other countries - are waiting. The whole issue is the risks represented by Russian grain. There is the risk that after we conclude contracts, we'll pull some other stunt," he said.When it returns to the export market, Russia will have to cut prices by $5-$10 per tonne. "Previously we offered prices $1-$2 per tonne below the market. Now we'll have to cut it by $5-$10 per tonne, because importers will prefer to pay $5 more to the Americans if it avoids risk," he said.Even if the harvest does equal 80 million tonnes, Russia will have to be careful it doesn't export too much. "With that kind of harvest, the resource will not be sufficient to export grain throughout the season, so export limits will be an issue," he said. "In order to avoid restrictions, we need an export resource of about 25 million tonnes, since in previous years our exports have totaled 20 million-22 million tonnes."Russia tried to limit wheat exports in 2008 with an export tariff equal to 40% of the customs value but no less than 0.105 euro per kg. "But that limitation just created additional problems for the market and for grain producers," Zlochevsky said. "Therefore we need to create another, sounder mechanism that won't cause problems," he said.Russia imposed a ban on grain exports on August 15, 2010. The ban is set to expire on July 1, 2011.world-grainRussia plans to zero grain import duties 10:11??The Russian Grain Union offers to zero the customs import duties for grains till July 2011. It is necessary for the further renewal of the domestic deficit, which will appear in February–March period in the regions, which suffered from the summer droughts. The Ministry of Agriculture and grain market participants support the idea. However, they should not account on cheap grain volumes, due to the fact that the price level on the world market is higher as opposed to the index in Russia. Russian Grain Union sent the offer for zero tax imposition to the Commission for defending measure and the Ministry of Agriculture, stated Arkadiy Zlochevskiy, the President of the industry union. The Ministry of Agriculture supported the offer, stated A.Zlochevskiy. According to him, zero duties should be imposed for all grain group, including wheat, barley and rye. Now all grains, except of maize, are under the duty, which totals 5%. Grain volumes from the CIS countries can be imported without import duties. A.Zlochevskiy explained that by March 2011, the country will face the domestic resources deficit: till the end of the season (June 30) it will be necessary to import about 3-3.5 mln tonnes of grains to Russia. Previously, with a good level of harvested grain volumes the country used to import 1-1.5 mln tonnes of grains, and only in 2009/10 agricultural year due to surpluses stocks, the country imported just 0.5 mln tonnes of grains. If in 2011 grain production volumes will total the level less than 80 mln tonnes, the grain embargo imposed in the summer may be prolonged, added A.Zlochevskiy. While the current grain export ban is valid till June 30, 2011. Grains import duty cancellation is the necessary measure, stated Vyacheslav Baklykov, the Deputy Commercial Director of the company RusGrain Holding. The cheaper processors purchase grains, the easier it is to hold the certain price level for their products, including cattle-breeding, stated he.December 22, 2010 09:10Banks have 628.9 bln rbs on CBR correspondent accounts on December 22.. December 22 (Interfax) - Russian banks have 628.9 billion rubles on correspondent accounts in the Central Bank as of December 22 including 428.0 billion rubles for Moscow banksThe balance on December 21 was 606.4 billion rubles and 415.6 billion rubles, respectively.Banks had 326.7 billion rubles on deposit accounts in the Central Bank on December 22 against 288.1 billion rubles on previous day.VAT Likely Candidate for Hike December 2010ReutersRussia's rising budget spending — likely to be exacerbated by 2011-12 elections — will make tax hikes unavoidable, with value added tax likely to be raised first, Deputy Finance Minister Sergei Shatalov said in an interview. Russia delayed some tax hikes during the crisis of 2008-09, as the government kept spending high in a bid to drag the economy out of recession, plunging its finances into the red after a decade of budget surpluses. But with the economy now back on track, the social security levy is set to rise from Jan. 1 despite protests from business, and, according to Shatalov, further tax increases will follow. "We are on the trajectory of tax increases … In order not to slow down economic growth, the most sensible thing is to increase indirect taxes: VAT, excise duties," he said. "If we are not able to cut spending, and are once again forced to increase revenues, then VAT, in my view, is the No. 1 candidate." Russia's maximum VAT rate is set at 18 percent, although some goods are exempt and others subject to a lower levy. The duty accounts for about 30 percent of budget revenues, making it the second source of state cash after the oil and gas sector. The budget sees spending of 10.7 trillion rubles ($339 billion) in 2011, against revenues of 8.8 trillion, but Shatalov said the figures do not include many already announced projects in areas such as defense. Analysts are also concerned that voter-friendly policies ahead of parliamentary elections in 2011 and presidential polls in 2012 could pump up the spending figures. "It is perfectly clear that before elections there are various 'presents,' which also cost money," Shatalov said. "We think spending is already excessive. However, if political decisions are taken, we will inevitably be faced with the question of which taxes to raise." In addition to higher VAT, he estimated that Russia could raise up to an extra 100 billion rubles by increasing the excise duty on strong alcohol. Such a move could prove unpopular with the public, but would fit in with President Dmitry Medvedev's drive to wean Russians off excessive vodka drinking. The already high pace of duty increases on tobacco means that there is little room left to get more cash out of that particular area, Shatalov said. Higher mineral extraction duty on gas could be used to add "tens of billions of rubles extra, but not hundreds," he added. He also dismissed the idea of increasing the income tax from the current 13 percent. "I do not think the income tax should be moved … This tax is very important for business, for how it develops in Russia, for investment," Shatalov said. Russia will carefully monitor the impact of the planned hike in social security tax to 34 percent from 26 percent, which some fear could send small businesses underground. "We have a very serious risk next year," Shatalov said, adding that Moscow would be ready to act if it saw a strong negative impact on business from the tax hike. Medvedev has promised a grace period for some companies, which Shatalov said could end up costing the budget some 60 billion rubles a year — higher than originally thought. The finance ministry also hopes to reach an agreement this week with other government bodies on 2011 duty for oil products, which are set as a percentage of the export taxes on crude oil. "For us it is key to reduce the differential [between oil and oil products duties] … If we are unable to do it from Jan. 1, then we will move from Feb. 1," Shatalov said. "As a working plan: the maintenance of the oil export duty at the current level and the increase in the oil products level on average against the basket to 73 percent [in 2011]. There is also an option when we cut the oil export duty and increase the duties on oil products even more in absolute terms. As yet there is no answer which plan is better." He added that, if the oil products duty is indeed raised to 85-90 percent — as proposed by the Finance Ministry and opposed by the Energy Ministry — the process will take several years. Russia levies 72 percent of crude oil export fees on light oil products and 39 percent on heavy ones, resulting in an overall burden for the sector of about 55 percent. Bond Sales Pulled as Yields Hit Four-Month High: Russia Credit Emma O’Brien and Denis MaternovskyDec. 22 (Bloomberg) -- Russia scrapped a sale of ruble bonds for the second time this month as the prospect of rising interest rates sent yields to the highest in at least four months and threatened plans to double borrowing next year. The Finance Ministry yesterday canceled its last sale of so-called OFZs for 2010, an auction initially scheduled for Dec. 1 and delayed until today, citing “unfavorable market conditions” in a statement on its web site. The government pulled a sale of OFZs due 2016 last week after yields reached 7.78 percent, the highest since the debt began trading Aug. 5, prices on Bloomberg show. Yields are climbing on bets Russia will join Brazil and China in raising interest rates to quell the highest inflation rate in 11 months, with forward-rate agreements signaling an increase of 0.63 percentage points in the next three months. Higher consumer prices are a “worry” and rates may be raised in the first quarter, Bank Rossii Chairman Sergey Ignatiev said Dec. 9. The central bank will next review rates Dec. 24. “The market is taking a cautious stance before the central bank meeting,” Nikolay Podguzov, head of fixed-income strategy in Moscow at VTB Capital, the investment banking arm of Russia’s second-largest bank, said by e-mail yesterday. “The regulator recently sounded quite hawkish and the key rates could be hiked as soon as Dec. 24.” Russia has sold 558 billion rubles ($18.1 billion) of OFZs this year, falling short of its 839 billion-ruble target, according to Bank Rossii data. The Finance Ministry plans to raise 1.3 trillion rubles next year, 1.5 trillion rubles in 2012 and 1.49 trillion rubles in 2013. Budget Gap Russia is stepping up borrowing to help bridge a budget gap that swelled to 911.5 billion rubles through November. The government expects a budget deficit until 2014. Demands for higher yields are hampering efforts to expand issuance in rubles. Russia stalled plans to borrow as much as $3 billion in its first local-currency Eurobonds as the government ruled out paying more than the yield on OFZs, Deputy Finance Minister Dmitry Pankin said Nov. 30. “I don’t see any surprise in the OFZ cancelation as recent auctions were not on fire,” Alexander Dotkin, a bond trader at Moscow’s Bank Zenit, said by e-mail yesterday. “Once they place an OFZ with a premium investors will likely expect it at future auctions and that’s not in the Finance Ministry’s plan.” Aborted The Finance Ministry had planned to issue bonds due June 2011 and November 2014 in the aborted auction. The 2014 notes yielded 7.23 percent yesterday, compared with 6.85 percent on their first day of trading on Sept. 28, prices on Bloomberg show. The yield on the bonds due next year touched 4.83 percent on Dec. 13, a five-month high, and rose 4 basis points, or 0.04 percentage point, to 4.64 percent yesterday. Policy makers canceled the second tender on Dec. 15 after selling 72 million rubles out of 9.6 billion rubles of 2013 OFZs offered in the first sale, according to data from the central bank. Investor demand fell short after the Finance Ministry offered the lowest yields relative to market rates since they began providing guidance in September. The ruble, which is managed by the central bank against a dollar-euro basket to limit swings, rose 0.2 percent yesterday to 30.7420 per dollar. Non-deliverable forwards, which provide a guide to expectations of currency movements and interest-rate differentials, showed the ruble weakening to 31.0360 per dollar in three months. Dollar Debt Russia’s dollar bonds due in 2020 gained, cutting the yield 10 basis points to 5.04 percent, the lowest in 1 ? weeks. The extra yield investors demand to hold Russian debt rather than U.S. Treasuries rose 3 basis points to 207 yesterday, according to JPMorgan Chase & Co.’s EMBI+ indexes. The difference compares with 141 for debt of similarly rated Mexico and 181 for Brazil, which is rated two steps lower at Baa3 by Moody’s. The yieldspread on Russian bonds is 47 basis points below the average for emerging markets, the widest gap since Oct. 21, according to JPMorgan. The cost of protecting Russian debt against non-payment for five years using credit-default swaps advanced 1 basis point yesterday to 148, down from this year’s peak of 217, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. Refinancing Rate Credit-default swaps for Russia, rated Baa1 by Moody’s Investors Service, its third-lowest investment grade rating, cost 6 basis points more than contracts for Turkey, which is rated four levels lower at Ba2. Russia swaps cost as much as 40 basis points less on April 20. Russia’s refinancing rate, one of the benchmarks used by the central bank to manage inflation, will remain at a record- low 7.75 percent at the Dec. 24 review, the last in 2010, according to the median estimate of 15 economists surveyed by Bloomberg. Only one bank, UniCredit SpA, is predicting an increase this year, to 8.25 percent. The rate will rise 0.25 percentage point to 8 percent by the end of March, according to the median of 14 estimates in a separate survey. “It is clear that without a premium the OFZs planned for sale would have been uninteresting,” Olga Efremova, a fixed- income analyst at Moscow-based Nomos Bank, said by e-mail yesterday. Investors need a “sizable premium” to be lured back to OFZs, she said. Brazil, China The Finance Ministry plans to start selling zero-coupon OFZs with maturities of up to 12 months, according to a statement on its website yesterday. The notes will be sold at auction or in closed subscription, the statement said. “They believe market players will buy these short-term T- bills when the market environment is worse,” Alexander Ovchinnikov, vice president for global markets at Troika Dialog, Russia’s oldest investment bank. “I expect low demand because these are like a savings instrument or a deposit and don’t belong in the official borrowing program.” Russia’s 7.75 percent refinancing rate, its 5 percent rate charged on overnight repurchase loans and the 2.5 percent deposit rate, compare with Brazil’s 10.75 percent Selic rate, and China’s 5.56 percent target. Brazil has raised its key rate three times this year and China has increased its benchmark once, on Oct. 20. Bank Rossii cut its main rates 14 times between April 2009 and May this year as it sought to revive the economy in the wake of the global financial crisis. An influx of ruble funds is expected on the market over the second half of December as the government spends any leftover budget funds before the end of the year, VTB’s Podguzov said. “They will start placing bonds more aggressively at the start of the year when there will be more ruble liquidity,” Podguzov said. To contact the reporters on this story: Emma O’Brien in Moscow at eobrien6@; Denis Maternovsky in Moscow at dmaternovsky@; To contact the editor responsible for this story: Gavin Serkin at gserkin@. Last Updated: December 22, 2010 01:38 ESTHigh Corruption and Low Growth Spoil 2010 December 2010By Anders AslundWhen Russian leaders review the country’s economic development in 2010, they can only be disappointed. There were no great economic disasters, but Russia has clearly underperformed its peers.Until 2008, the favorite Russian measuring mark was other BRIC countries, but that is no longer so. In 2009, Russia did worse than all other Group of 20 countries with gross domestic product plunging 7.9 percent. This year, growth will be about 4 percent, less than half of India’s and China’s.Two years ago, Russia’s GDP per capita at current exchange rates was four times as large as China’s, but now it is only twice as large. From Moscow’s horizon, China looks increasingly like a threat rather than a peer.The stock market has passed a similar judgment. While other BRIC stock markets have exceeded their prior high marks, the Russian stock market is still 30 percent below its May 2008 peak. A current account surplus persists, but it has shrunk, and large capital outflow in the third quarter was quite a surprise.Low Russian growth is all the more striking given the unexpected high oil price of $88 per barrel. But inefficient and corrupt state corporations are gobbling up ever more private enterprises, reducing the country’s overall economic ernment finances have faltered accordingly. The Finance Ministry expects a budget deficit of 4.6 percent of GDP this year. By current Western standards, that is not bad, but deficits are forecast for the foreseeable future, and public expenditures have changed structure. This year, pensions rose sharply by 30 or 40 percent while infrastructure investment was cut, the opposite of investing in the future. Russia’s fiscal policy has swung from solidly conservative in 2000-08 to quite populist.The sad truth is that Russia’s anti-crisis policy has greatly reduced the efficiency of the economy. In a recent speech, Lilia Ovcharova of the Independent Institute for Social Policy summarized the distributive effects of Russia’s crisis policy. Bureaucrats have defeated professionals and businessmen. Big business has won over small and medium-sized enterprises. With its inadequate incentives, Russia’s anti-crisis policy was a policy of stagnation.Amazingly, Gazprom performed almost as poorly in 2010 as in 2009, which is quite an achievement. Gazprom’s poor performance is untenable. The company needs strong, highly qualified managers, not a bunch of predators.The only two advances concerned Prime Minister Vladimir Putin’s two favorite pipeline projects, Nord Stream and South Stream — both of which are unnecessary and overpriced. Even Gazprom’s long-term partner, Germany’s E.On, has given up on it and sold 3.5 percent of Gazprom’s shares. Nobody but VTB wanted to buy it. In addition, ConocoPhillips gave up on LUKoil and sold its shares.Another Putin pet project, the customs union with Kazakhstan and Belarus, has been consummated, but, as most observers expected, turned out to be a big flop. In reality, this nonevent had already taken place in 1995 without any real impact on trade relations.In Ukraine, the Kremlin is supposed to now have a Russia-friendly president in Viktor Yanukovych, but never has Putin suffered a more unpleasant foreign trip than when he went to Kiev in late October. Uniquely, he did not even stay for the official dinner. Ironically, the allegedly closest post-Soviet rulers, Belarussian President Alexander Lukashenko and Yanukovych, now seem Putin’s greatest enemies.To end the misfortunes, Russia declined even further on the Transparency International Corruption Perceptions Index.These kinds of dismal results often help spark interest in reversing the negative trends. This could breed hope. Moreover, the ruling elite, for their part, are not satisfied with the country’s underperformance.As the customs union took place, and no benefit was apparent, World Trade Organization accession is becoming more important. WTO membership is likely to happen within the next year, and it will change Russia’s economic engagement with the outside world.Finance Minister Alexei Kudrin can always be trusted as the honest broker and truth-teller. Today, he speaks openly of the dangers of runaway public expenditures and the growing pensions bill. He demands that no less than 60 percent of GDP — or $900 billion — be sold off from public corporations and allocated to the National Welfare Fund. That would mean most of the state corporations. Kudrin’s argument is impeccable, and during times of confusion and crisis, logic tends to win. If Kudrin’s advice is taken, this could profoundly change and improve the Russian economic system.After so many police scandals and ultranationslist riots, serious police reform must finally take place. How can Russia tolerate crazed neo-Nazis standing, of all places, on the Zhukov monument shouting, “Sieg Heil!”? Law enforcement reform is being drafted, and recent events are bound to make it all the more radical and real.The emergence of the effective technocrat Sergei Sobyanin as Moscow mayor shows how many things that can be done differently. Why allow parking along the street on crammed major thoroughfares? Why build huge shopping centers without sufficient parking and no roads in the center of Moscow? Why allow more than 50 percent in kickbacks on public procurement? The beauty of a tighter budget is that Russia can no longer afford such large kickbacks, and the advantage of new appointees, such as Sobyanin, is that they can reduce the kickbacks and blame their predecessors. If Russia moved to a more moderate kickback level of 10 or 12 percent — an accepted level in many Arab countries — it would be great progress. Corruption cannot be eliminated, of course, but it can certainly be brought down to more controllable levels.The Central Bank has moved closer to inflation targeting with a floating exchange rate, but it does need to raise the interest rate to a significantly positive real rate. The current inflation of 8.5 percent is far too high for no good reason.The Pepsi purchase of Wimm-Bill-Dann in early December was a strong achievement to close out the year. This should be the tune of the future — major international companies entering the Russian consumer market by buying local leaders and thus enhancing competition. Looking forward, 2011 may bring great improvement for the Russian economy. As the saying goes, “Insanity is doing the same thing over and over again but expecting different results.” The Russian leaders can no longer afford to keep doing the same thing.Anders Aslund is a senior fellow at the Peterson Institute for International Economics and co-editor with Sergei Guriev and Andrew Kuchins of “Russia after the Global Economic Crisis.”Business, Energy or Environmental regulations or discussionsRussian markets -- Factors to Watch on Dec 22 EST MOSCOW, Dec 22 (Reuters) - Here are events and news storiesthat could move Russian markets on Wednesday. You can reach us on: +7 495 775 1242 STOCKS CALL (Contributions to moscow.newsroom@): Chris Weafer: "After yesterday's quiet news day,, there aresome reports of interest today, albeit investor interest is nowfirmly in a pre-holiday stasis. In the US, the final reading ofthe 3rd Qtr GDP is not expected to reveal any surprises while itis hoped that the latest existing home sales report will confirmthe economic improvement is broadening." OTP Bank: The external background is moderately positivetoday and we expect the markets to open higher than yesterday'sclose. EVENTS [RU-DIA] (All times GMT): SAINT-PETERSBURG - Prime Minister Vladimir Putin meets withArmenian counterpart Tigran Sarksyan. MOSCOW - Russia's Economy Minister Elvira Nabiullina holds abriefing on year-end economic results. MOSCOW- Russian Defence Minister Anatoly Serdyukov speaks atthe parliament IN THE PAPERS [PRESS/RU]: Russia's state-owned diamond miner Alrosa is looking to sella 49 percent stake in its northern Severalmaz project to globalminer Rio Tinto (RIO.AX: Quote, Profile, Research, Stock Buzz) for almost $400 million Vedomostinewspaper reported on Wednesday. [ID:nLDE6BL01T] Kommersant runs an interview with Evgeny Dod, the head ofRusHydro (HYDR.MM: Quote, Profile, Research, Stock Buzz), who discusses the state-owned hydroelectricpower producer's expansion plans in India, South-East Asia;purchase of a hydroelectric plant in Armenia from Russianutility InterRAO (IUES.MM: Quote, Profile, Research, Stock Buzz); and the government's plan to lowerits stake in the company to 51 percent. TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]: TOP NEWS:* Arms treaty nears U.S. Senate approval [ID:nN21272425]* Belarus jails 600 opposition activists [ID:nLDE6BK1C2] COMPANIES/MARKETS:* Novatek CEO, board member option for 9.4 pct [ID:nLDE6BK1HU]* Sistema to consider deals with India ONGC [ID:nLDE6BK0XT]* MTS goes to court to retain Turkmen licence [ID:nLDE6BK1IA]* Vimpelcom wants new terms for Orascom deal [ID:nLDE6BK03A] ECONOMY/POLITICS:* Belarus okays free trade zone with Russia [ID:nLDE6BK1JU]* Putin lashes out at Georgia with WW2 statue [ID:nLDE6BK1VX] ENERGY:* Gazprom pre-crisis output levels later thanplan[ID:nLDE6BK0R2] COMMODITIES:* Alrosa to sell Rio Tinto 49 pct in Severalmaz [ID:nSGE6BL03M]* Russia Polyus Gold speeds up Natalka project [ID:nLDE6BK1I0]* Russia Sibur,India Reliance create $450 mln JV [ID:nLDE6BK1PD]* Norilsk Nickel sees more palladium sales [ID:nLDE6BK0KC]* RUSAL finalises $300 mln trade finance [ID:nLDE6BK0L5] MARKETS CLOSE/LATEST: RTS .IRTS 1,760.8 +0.29 pct MSCI Russia .MIRU00000PUS 924.4 +1.01 pct MSCI Emerging Markets .MSCIEF 1,125.1 +0.07 pct Russia 30-year EurobondRU011428878= yield: 4.870/4.824 pct EMBI+ Russia 11EMJ 200 basis points over Rouble/dollar RUBUTSTN=MCX 30.7200 Rouble/euro EURRUBTN=MCX 40.3826 NYMEX crude CLc1 $90.05 +$0.23 ICE Brent crude LCOc1 $93.50 +$0.31 For Russian company news, double click on [E-RU] Treasury news [M-RU] Corporate debt [D-RU] Russian stocks [.ME] Russia country guide RUSSIA All Russian news [RU] Scrolling stocks news [STXNEWS/EU] Emerging markets top news [TOP/EMRG] Top deals [TOP/DEALS] European companies [TOP/EQE]Rosneft, Polyus Gold, Norilsk, Razgulay: Russian Equity Preview Anna ShiryaevskayaDec. 22 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow. The 30-stock Micex Index rose 0.6 percent to 1,673.83, the highest level in two weeks. The dollar-denominated RTS Index gained 0.9 percent to 1,755.79. OAO Rosneft (ROSN RX): Oil rose for a third day as U.S. same-store sales jumped the most since April, and the Standard & Poor’s 500 Index completed its recovery from the 2008 plunge. Russia’s biggest oil producer rose 0.1 percent to 220.36 rubles. OAO Polyus Gold (PLZL RX): Gold prices rose for the third straight session on speculation that Europe’s debt woes will spread, boosting demand for the precious metal as a store of value. Russia’s largest gold producer declined 0.1 percent to 1,878.15 rubles. OAO GMK Norilsk Nickel (GMKN RX): Copper prices jumped to a record after China said monthly imports of the metal increased for the first time since August and an accident at the Collahuasi mine in Chile disrupted supply. Norilsk Nickel, Russia’s largest miner, rose 0.3 percent to 6,698.33 rubles. OAO Razgulay Group (GRAZ RX): Agricultural commodities may be in limited supply next year as land availability will tighten and fertilizer and financing will be short, Rabobank said in a report. Razgulay, a Russian grain and sugar producer, was little changed at 47.01 rubles. To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@ To contact the editor responsible for this story: Will Kennedy at wkennedy3@ Last Updated: December 21, 2010 22:00 ESTGref Sees Sberbank Profit Reaching Record $6.5 Billion in 2011 Denis MaternovskyDec. 22 (Bloomberg) -- OAO Sberbank expects profit to jump more than 20 percent next year from this year’s record as Russia’s biggest lender boosts corporate loans and issues more credit cards, Chief Executive Officer German Gref said. “We are expecting net income in the vicinity of 200 billion rubles,” Gref told reporters in Moscow late yesterday. That equals $6.5 billion at today’s ruble rate. Profit this year will be “at least” 160 billion rubles, Gref said. Most of the gain will come from “main operations” rather than from freeing up cash set aside during the global credit squeeze to guard against bad loans, Gref said. The state-run successor to the Soviet Union’s savings bank also expects a “big investment” in information technologies to improve productivity and revenue, he said. The 169-year-old lender holds almost half of the country’s savings through its network of 19,100 branches across 11 time zones. The bank has about 250,000 employees. Corporate lending will probably grow about 14 percent next year, while retail lending will surge as much as 23 percent, according to Gref. The company this month reported net income surged 10-fold in the third quarter to 45.8 billion rubles ($1.49 billion) under international accounting standards. Dividends ‘Wrong’ Accelerating inflation may force Sberbank to increase its deposit rates in the first quarter, Gref said. Central bank Chairman Sergey Ignatiev on Dec. 9 said rising consumer prices were a “worry.” The bank will next review rates on Dec. 24. The inflation rate reached 8.1 percent in November, the highest level this year, according to government data. Record profit won’t prompt the bank to increase dividends because it would be “wrong to cash out from the bank,” Gref said. “Shareholders are benefitting from the rising share price,” he said. “We’ll come to a moment when we’ll have to boost our dividend payout, but it won’t be for 2010.” The stock has gained 29 percent this year, beating the 23 percent gain for the Micex Index of 30 Russian stocks and valuing the company at about $75 billion. That makes Sberbank the third-largest Russian company by market value, behind gas exporter OAO Gazprom’s $151 billion and oil producer OAO Rosneft’s $76 billion. To contact the reporters on this story: Denis Maternovsky in Moscow at dmaternovsky@ To contact the editor responsible for this story: Gavin Serkin at gserkin@ Last Updated: December 22, 2010 04:01 ESTREFILE-Alrosa eyes 49 pct stake sale to Rio Tinto in Severalmaz – report Dec 22, 2010 6:28am GMT(Refiles to correct day of report in lead paragraph to Wednesday) MOSCOW Dec 22 (Reuters) - Russia's state-owned diamond miner Alrosa is looking to sell a 49 percent stake in its northern Severalmaz project to miner Rio Tinto for almost $400 million, Vedomosti newspaper reported on Wednesday. Citing a copy of a memo for Alrosa's supervisory board meeting on Dec. 28, the paper reports that the Russian miner plans to sell Rio Tinto 50 percent minus one share of Severalmaz, for $250 million to Rio Tinto . The purchase will then require Rio Tinto to invest $135 million to bring the company up to full mining capacity -- 2 million carats in 2015 -- at its Lomonosov diamond deposit in Russia's Arkhangelsk region, the memo states. Alrosa, currently the world's No. 1 diamond miner, estimates total 2011 output at 34.44 million carats. (Writing by Jessica Bachman; editing by Muralikumar Anantharaman) Rio Tinto may invest $385 mln in Alrosa subsidiary 22/12/2010MOSCOW, December 22 (RIA Novosti) - Global miner Rio Tinto may buy 50% minus one share in Russia's Severalmaz, part of the country's diamond monopoly Alrosa for $250 million and invest $135 million in the development of the Lomonosovsky deposit, Vedomosti said on Wednesday.Alrosa's supervisory board will discuss the deal on December 28, an explanatory note for the meeting obtained by Vedomosti, said.Alrosa and Rio Tinto declined to comment.If approved by Alrosa, the decision will be agreed with a governmental foreign investment commission.The Lomonosov deposit requires a 7.3 billion ruble ($235 million) investment for it to work its design capacity of 2 million carats by 2015.Alrosa has to invest billions of rubles in its core deposits in Yakutia. Alrosa had made offers to Russian and foreign mining companies, the note said.Rough & Polished agency expert Sergei Goryainov said that Alrosa had tried open mining at Lomonosovsky but water intrusion appeared, while Rio Tinto has technologies which help deal with the problem.Polyus to Build $1Bln Plant December 2010Polyus Gold said Tuesday that its board decided to begin building a $1 billion processing plant at its far-eastern Natalka deposit to be completed by the end of 2013.Polyus plans to produce the first 18.2 metric tons (585,000 ounces) of gold at the field in 2014, according to a statement. The company previously forecast output of 675,000 ounces at Natalka for 2013, according to a presentation in April 2009. By 2020 the facility will process 40 million tons of ore and produce 50 tons, or 1.6 million ounces, of gold. Producers, including Polymetal and Severstal’s Nord Gold unit, are seeking to expand as gold prices rose 27 percent this year. Polyus’ owner Mikhail Prokhorov plans to merge the company with a global rival as early as 2011 to become one of the world’s three biggest miners of the metal. (Bloomberg) VimpelCom plan for Weather deal hits snag Mary Watkins in London and Isabel Gorst in Moscow Published: December 21 2010 10:03 | Last updated: December 22 2010 00:19VimpelCom’s bid to merge with the telecoms assets of Naguib Sawiris, the Egyptian entrepreneur, has hit another hurdle after a supervisory board told the Russian mobile phone group to renegotiate the terms of its $6.6bn deal.Six of VimpelCom’s nine-person supervisory board agreed in principle to a deal under which the Russian operator would buy the assets of Weather Investments, Mr Sawiris’ private investment vehicle. The six directors included three representatives of Altimo, an investment arm of Alfa Group, VimpelCom’s largest investor.However, three directors representing Telenor, the Norwegian operator that is VimpelCom’s second-largest shareholder, rejected the deal. As a result, VimpelCom’s supervisory board did not pass a shareholder-related agreement that is a condition of the transaction and advised VimpelCom to go back and negotiate further with Weather over terms and conditions.The deal to create the world’s fifth-largest mobile phone group by customers is a big test for Alfa and Telenor, which only resolved a bitter dispute relating to Ukrainian telecoms assets last year. Telenor, which holds 36 per cent of VimpelCom’s voting shares, said it disagreed with the deal based on price and because it believes it does not make “strategic sense”.A deal with Weather would represent a change of strategy for VimpelCom, which has until now focused on expanding in emerging markets. However, Weather’s assets include Wind, Italy’s third-largest mobile operator.Weather has a controlling stake in Orascom Telecom, the Cairo-listed telecoms company. Telenor and Orascom have overlapping assets in Bangladesh and Pakistan, which could create regulatory issues.Andrew Hogley, a telecoms analyst at Execution Noble, said that the issue for Telenor was likely to be less about price and more about the shareholder structure following the merger. But he added that while Telenor had the ability to block the deal, the Norwegian group was unlikely to want to enter into another protracted dispute with Alfa.With Christmas looming, followed by Russia’s holiday season, analysts speculated that talks could continue well into the New Year.Mr Sawiris said that once he had received “a revised and final offer” the Weather board would assess the options that were in “best interests of our stakeholders”. He later told Al Arabiya television that the value of the deal would not change. VimpelCom confirmed it would negotiate a revised transaction with Weather, adding: “This is not a final halt to the deal.”Under the terms of the deal Weather would receive $1.8bn in cash and obtain a stake worth $4.8bn in VimpelCom. Weather would hold 19 per cent of the voting shares in the enlarged VimpelCom group.VimpelCom is headquartered in Amsterdam but has operations in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Georgia, Armenia, Kyrgyzstan, Vietnam and Cambodia.DECEMBER 21, 2010, 4:20 P.M. ETTrafigura May Struggle to Fund Norilsk Stake Purchase LEIA PARKER And CAROL DEAN LONDON—Privately held commodities trader Trafigura Beheer BV may struggle to fund its purchase of a roughly 8% stake in Russia's Norilsk Nickel due to the relatively small size of its balance sheet, people familiar with the company's financial situation said Tuesday. These people and analysts are raising questions and doubts about Trafigura's strategic rationale for such a large transaction because of the commodities trading house's reluctance so far to provide detailed information about the deal and its financing. Trafigura confirmed Tuesday that it's finalizing arrangements to buy about 8% of the share capital of OJSC MMC Norilsk Nickel—the world's largest nickel producer—and to strengthen its commercial ties with the company. Trafigura declined, however, to comment on its own net worth, to say how it is financing the deal or how much it's paying for the shares. Norilsk said Monday it had agreed to sell shares it holds on its own balance sheet to Trafigura. At current market prices, the stake is roughly equivalent to an 8% stake with a market value of about $3.5 billion. One person familiar with Trafigura's financial situation, however, said Trafigura's own net worth is less than the market value of the stake it's buying in Norilsk Nickel. "Trafigura is a big company, but Norilsk is absolutely massive," the person said. "This deal is very surprising, very unusual." Investment bank Troika Dialog likewise highlighted in a research note the size of the deal relative to Trafigura's own balance sheet: "We strongly doubt the capacity of Trafigura to raise this amount alone," Troika said. "A proper distinction should be made between trade finance and principal investments, and Trafigura hardly possesses the balance sheet to undertake such investments." Trafigura, one of the world's largest independent commodities traders, said Tuesday it expects the deal will fast-track its expansion into the nickel market by giving it greater direct access to nickel production. But it's unclear how Trafigura will finance such a large transaction without overextending itself, and the company isn't divulging many of the particulars. "Trafigura will not be commenting about the bid's value or related financial aspects at this time," a company spokesman said in an e-mail. Trafigura has global investments in industrial assets of more than $1.5 billion. The company declined to say Tuesday whether it would swap any of those assets with Norilsk to help fund the stake purchase. The spokesman did say Trafigura isn't planning to float its roughly $1.5 billion of industrial assets, contrary to a previous U.K. press report. The Telegraph reported in May that Trafigura was considering an initial public offering of its industrial assets, quoting Trafigura's Chief Financial Officer Pierre Lorinet as saying the company would never float its core physical trading business, but that it might float its industrial business in the next couple of years. Trafigura's spokesman Tuesday said, "Despite what the Daily Telegraph reported earlier this year, Trafigura has no current plans related to an IPO." Trafigura had turnover of $47.3 billion in 2009, its website says. The company's corporate brochure says it has access to approximately $20 billion in credit facilities. But Trafigura's credit facilities are primarily secured, short-term financing, not the kind of funding needed to buy a significant stake in a company as large as Norilsk, one of the people familiar with the company's financial situation said. Trafigura recently approached banks concerning refinancing debt that is due to mature in the first quarter of 2011, said another person familiar with Trafigura's financial situation. The company actively talks to banks on maintaining its funding arrangements. The financing is typically to fund the company's ongoing corporate activities. It's unclear whether there's a covenant in the existing loan documentation prohibiting the use of the funds for acquisition purposes, this person said. Trafigura agreed a $625 million one-year loan in March this year with an array of international banks that the company is likely looking to refinance, a person close to the matter said. The commodities trader's purchase draws Trafigura into a long-running struggle for control of Norilsk by two of Russia's richest men. Oleg Deripaska, who controls aluminum giant United Co. Rusal PLC, and Vladimir Potanin, who owns Interros Holding, each own 25% of Norilsk through their respective conglomerates and are fighting for control. Norilsk didn't say for how much it had agreed to sell the stake and only said it will use the proceeds for "general corporate purposes," without providing further details. One of the people familiar with the company's financial situation questioned the logic for Trafigura of such a large stake buy, saying it doesn't make sense for the trading house to step into the politics of the Russian company's takeover battle in exchange for some "mysterious off-take agreement." Trafigura has left many unanswered questions about such a significant and unusual investment, the person said. "One might question whether lenders would be happy that they're completely changing the shape of the company and providing no information whatsoever," the person said. Trafigura, however, said it sees considerable synergies with Norilsk that will benefit both companies. "Norilsk has significant reserves as well as expertise in mining and metallurgy," Trafigura said. "Trafigura brings the benefits of global reach, strong origination, deal structuring and distribution."—Alexander Kolyandr contributed to this article.Write to Leia Parker at leia.parker@ and Carol Dean at carol.dean@ Norilsk Sells $3.5 Billion Stake to Rival of Glencore (Update1) Ilya KhrennikovDec. 21 (Bloomberg) -- OAO GMK Norilsk Nickel, the mining company whose largest holders are locked in a dispute, agreed to sell $3.5 billion of stock to commodities trader Trafigura Beheer BV as analysts signaled a possible end to the feud. Norilsk will sell an 8 percent stake in the form of American depositary receipts to gain funds for “general purposes,” the Moscow-based company said in a statement yesterday. Trafigura has no plans to increase its holding to more than 10 percent, Norilsk said. Billionaire shareholders Oleg Deripaska and Vladimir Potanin have bickered over influence on Norilsk’s board and use of cash in a feud dating back to 2008. Norilsk last week offered $12 billion to buy back the 25 percent stake held by Deripaska’s United Co. Rusal, and yesterday’s accord would provide cash for such a deal, according to Nomura Holdings Plc. “The sale of treasury stock may indicate that Norilsk is going ahead with its plan to buy out” Rusal, said Vladimir Zhukov, an analyst at Nomura in Moscow. Selling 8 percent would also keep Norilsk below the 30 percent threshold that triggers a mandatory offer to minority holders, he said. While Rusal rejected Norilsk’s bid, analysts including Zhukov said the aluminum company may stand to benefit from such a deal. “It’s a very attractive price,” Zhukov said Dec. 16. No Discussion As part of the transaction, Trafigura may have asked the company “to direct a certain portion of nickel sales via the trading house,” said Dmitriy Kolomytsyn, an analyst at Morgan Stanley in Moscow. Trafigura couldn’t be reached for comment while Norilsk spokeswoman Maria Uvarova declined to comment when contacted in Moscow. Norilsk Nickel, the world’s biggest nickel producer, said in August it declined an offer from Glencore International AG to take over the mining company’s nickel sales. Glencore owns 8.75 percent of Rusal. Trafigura, based in Amsterdam, is the world’s second- largest trader of non-ferrous metals. It had revenue of $47.3 billion last year compared with $106.4 billion at Switzerland- based Glencore, according to the company’s websites. “We are concerned that an asset worth over $3.5 billion was monetized without discussion and voting at the board,” Rusal said yesterday in a statement. “Moreover, the stake was sold to Trafigura, a company which is a direct competitor of Norilsk Nickel for marketing and sales of its metals.” ‘Ultimate Acquisition’ The sale to Trafigura could presage an “ultimate acquisition of Rusal’s stake in Norilsk,” whereby Trafigura provides funding for Norilsk’s bid, said Erik Danemar, an analyst at Deutsche Bank AG in Moscow. Norilsk’s Uvarova and a spokesman for Trafigura both declined to comment. “We consider Trafigura to be an important industry investor in Norilsk Nickel,” the company’s press service said by e-mail yesterday. “Selling a stake to Trafigura further strengthens our partnership.” Norilsk was up 0.2 percent at 6,694.98 rubles at 1:41 p.m. in Moscow, while Rusal advanced 2.6 percent to HK$11.26 in Hong Kong. To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@ To contact the editor responsible for this story: Amanda Jordan at ajordan11@ Last Updated: December 21, 2010 06:41 ESTRussia: Hyundai to add shift at St Petersburg, December 22, 2010, Hyundai will add a second shift at its St Petersburg plant in Russia next year, most likely between March and May, reports Prime-Tass, citing Hyundai Motor Manufacturing Rus communications chief Mariya Maltseva. A third shift will follow in 2012.The plant currently employs around 1,200 people. By 2012, this should reach 2,400.The South Korean OEM officially opened the St Petersburg facility in September this year, though mass production won’t begin until January 2011. The plant is expected to roll out 105,000 vehicles in its first year of operation, rising to 150,000upa in 2012. The first model will be the new four-door Solaris sub-compact sedan.Published on Wednesday, December 22, 2010Dr Reddy's Laboratories to collaborate with R-Pharma Russia Market / 11:31 , Dec 22, 2010 Dr. Reddy's entered into licensing, technology transfer, manufacturing and marketing agreement with R- Pharma, a Russian pharmaceutical company which is into R&D, manufacturing, promotion and distribution of pharmaceuticals used in hospital and specialty care, which has revenues of 26.7 bn RUR in 2009. The Russian pharmaceutical market is one of the largest in the world with total revenues of US $ 15.3 billion in 2009, which is anticipated to remain on a path of dynamic growth due to multiple initiatives by the Russian government. The '2020 pharmaceutical programme' by the government aims at strengthening domestic manufactures which ensures 50% of pharmaceuticals circulated with domestic origin in Russia by 2020.Dr.Reddy's collaboration with R-Pharma is in the area of high technology and agreed to work upon profit sharing model. In addition, it will entail licensing of manufacturing know-how of products by Dr. Reddy's, local manufacturing of products in Russia, co-development of high technology products and knowledge sharing between both parties at regular menting on the agreement, Satish Reddy, Managing Director and COO, Dr. Reddy's said, “We are excited about this collaboration as it helps us to deepen our engagement with Russia, one of our key markets. The agreement allows us to bring innovative medicines to the Russian people with active collaboration of a local pharmaceutical company R-Pharma. It will also allow Dr.Reddy's to import and market R-Pharm products in India according to agreed terms. The collaboration demonstrates our commitment to play a leading role in supporting the Russian government's policy of Pharma 2020”Dr.Reddy's is the largest Indian Pharmaceutical Company in Russia and also fastest growing international branded generic company by volume, entered in to Russian market in 1992. Omez, Nise, Ketorol and Ciprolet are top four brands in the Russian market and ranked No1 in their respective segments.Sevmash to appeal against court decision in Odfjell case The Sevmash shipyard has appealed a court decision from Arkhangelsk that rules in favour of the Norwegian shipping Company Odfjell regarding a $44 million dispute after Sevmash failed to deliver 12 chemical tankers ordered by Odfjell.A court ruling from Friday December 10th approved Odfjell’s application concerning the recognition and enforcement of the arbitral award filed against Sevmash. The shipyard has now appealed this decision, Anastasiya Nikitinskaya from Sevmash told BaltInfo.Back in 2004 Odfjell placed an order at Sevmash, Russia’s largest shipyard, for up to 12 chemical tankers, each of about 45,000 tons capacity. The newbuilding contracts included an arbitration clause under Swedish law. The contract on 12 tankers was described as historical in Norwegian-Russian industrial cooperation when it was concluded in 2004. The agreement worth $450 million was the biggest order ever made by a Norwegian company in Russia. However, the relationship between the parts soon started to show signs of trouble. Excessive and continuing delays of construction forced Odfjell in 2008 to cancel these contracts.Odfjell claimed damages from Sevmash, and the Swedish arbitration tribunal unanimously, on 30 December 2009, awarded Odfjell damages of USD 43 million plus reimbursement of legal costs plus 8.5% p.a. interest for any delay in settling the award.Text: Trude PettersenFor the Record December 2010Novatek said Tuesday that an entity controlled by chief executive Leonid Mikhelson and shareholder and board member Gennady Timchenko have a two-year option to buy a 9.4 percent stake in the gas firm from a Gazprombank investment vehicle. (Bloomberg) Japanese instant noodle maker Nissan Foods said Tuesday that it will spend $88 million to raise its stake in domestic food producer Mareven Food Holdings to 24.99 percent from its current 14.99 percent, which it acquired in January 2009. (Bloomberg)State development bank VEB said Tuesday that it will provide up to 21 billion rubles ($680 million) of funding to meat producer Miratorg to build a cattle farm and slaughter complex in the western Bryansk region. (Bloomberg)?Is Anyone Going To Stop Three Oligarchs From Forming A Potash Monopoly? is the season for believing. But less than a fortnight ago, one of the three wise men in the picture – left to right, Filaret Galchev, Alexander Nesis, Suleiman Kerimov – was saying aloud (privately) that the problems of satisfying stakeholders in the proposed Russian potash consolidation were so complicated, he couldn’t hazard a guess on how they would be resolved, except slowly – very slowly. This evening, even with his feet up and noone else listening in, he says he still doesn’t know how the announcement of the merger between Uralkali and Silvinit was finalized yesterday, or even whether it has been finalized.Not a single report by the Russian business media or the Moscow investment banks and brokerages has been able to explain this either. As transparent businesses go, this isn’t. It is thus in the hands of the anti-trust regulators of the US and China, and the big commercial interests standing behind them, to have the last say on whether the loot-bearing camels move in the direction Kerimov is pointing. This puts the most silent man in Russian business — the only oligarch who has never said a word in public – on trial in Washington and Beijing.“He is the main player, as everyone knows. He had the idea from the beginning. But who knows what will happen next.,” says a person familiar with exactly what the wise men are thinking, who has himself a sizeable financial stake in having the camels with their loot move in his direction. So what changed over the past few days to produce the announced terms of the merger agreement, creating a single Russian potash producer, and subsuming the Silvinit shareholders in Uralkali’s listed shareholding? “I don’t know what changed.”On only one thing the source says he is sure. “Noone from the outside, noone external pushed. There was no role of the government.” For a deal in Russian resources valued at almost $24 billion to be executed without the preliminary nod or explicit say-so of the deputy prime minister Igor Sechin is unprecedented. Unbelievable – unless this is Christmas.But Christmas comes every day to VTB Capital, the principal Russian investment bank, and Goldman Sachs, which advised Uralkali on the deal terms; and Bank of America-Merrill Lynch which advised Silvinit. They have done the arithmetic according to which, in its transaction announcement Uralkali explains that Silvinit will cease to exist, its ordinary shareholders receiving for each Silvinit share, 133.4 Uralkali shares; while the preferred Silvinit shareholders will receive just 51.8 Uralkali shares.This exchange ratio, claims Uralkali, “ensures that the proposed combination is in the interests of the shareholders of both companies.” VTB, it is also clear, loaned the money for the principal shareholders who have now agreed on the deal to buy into it and buy out those who had controlled Uralkali and Silvinit separately until this year.In point of fact, it is obvious that only Kerimov and his associates, Zelimkhan Mutsoev and Anatoly Skurov, are satisfied with the deal terms so far. Whether the opposition of the other shareholders who think they have been stiffed will be potent enough to stop the deal remains to be seen. The deadline for the Silvinit shareholders to agree on the takeover terms is February 4, 2011.Before then, if he hasn’t said or done anything to date to influence the terms of the consolidation, Sechin will be obliged to act. Prime Minister Vladimir Putin will also have to signal what he is thinking. President Dmitry Medvedev has already endorsed the consolidation of Russia’s milk and juice markets into just two foreign-owned giants, so he is bound to tag along with this one.Technically and legally, the proposed combination of assets worth $23.9 billion at the current market capitalization involves sale and purchase transactions by foreign companies based in Cyprus. Even if they are beneficially owned by Russians, the offshore haven regiistrations should trigger the requirement for review and approval by the Government Commission for Control of Foreign Investment in the Russian Federation, aka the Control Commission. Putin is chairman; de facto secretary is Igor Artemyev, head of the Federal Antimonopoly Service (FAS). If Putin knows what he thinks of the deal, he would have told Artemyev to say something in public. Their silence so far means Kerimov’s deal isn’t done, yet.According to Russian law, the merger must be supported by 75% of all shareholders of Silvinit, including both common and preferred shares, which will be treated equally for voting purposes. UBS reports “we believe this might be a potential obstacle to the deal. In particular, 50.9% of the company’s capital is owned by a group of investors headed by Mr. Kerimov.”The two most important of the Silvinit shareholders are Zelimkhan Mutsoev (24%) and Anatoly Skurov (23%). Acting with Kerimov, they started buying out the original Silvinit shareholders several months ago. Although Silvinit denied they were a concert-party group, this was obvious. VTB loaned Mutsoev and Skurov the money for their buyout; VTB’s board chairman is Finance Minister Alexei Kudrin. He is the nervous type; he wouldn’t dare to let Kerimov, Mutsoev (both members of the Russian parliament, incidentally) and Skurov to have their way with VTB’s cash unless he checked with Sechin and Putin first.Acron, which owns a 6.1% stake in Silvinit’s total share capital and whose controlling shareholder, Vyacheslav Kantor, used to have Putin’s backing for his own consolidation plans, has expressed its intention to vote against the deal. Kantor appears, however, to have lost the battle for upstream potash mining assets to be consolidated downstream, at the processing and mixing stage where he does his business.In their presentation of the consolidation deal, Uralkali’s fib sheet claims there is a “unique asset fit” between Uralkali and Silvinit, which had “historically operated as one company until 1983.” Joining them up again, the presentation claims, would save $80 million a year in operating costs, plus $20 million in transportation. In terms of their combined production capacity of 10.6 million tonnes per annum, Uralkali and Silvinit would rank third in the potash world after Canada’s Potash Corporation, with 12.8 million tonnes, and Mosaic of the US with 11.2 million tonnes. For the North Americans, that means that Kerimov will control 15% of global potash output.In two years’ time, it is estimated that the new Russian potash miner would rank number-2 worldwide in production capacity – 13 million tonnes compared to 14.3 million tonnes for Potash Corporation. If the output of the Belarus state potash miner Belaruskali is added – with Uralkali they already trade through the Belarussian Potash Company (BPC) — then more than 40% of the global potash trade would be in Kerimov’s hands.UBS analyst Alexei Morozov reports to clients that the synergy and savings claims for the deal are worthless. “We do not believe that there are strong cost synergies from the merger, given that both companies are low cost producers with a relatively low sensitivity of their earnings to cost changes. We believe mining costs would be hard to change, some savings are possible in logistics and overheads.”So this is how Kerimov intends the stakes in the new potash company to be carved up, at least for the year or so before he sells out to someone else, as he always does:For the consolidation to go through, 56% of the Silvinit shareholders would have to vote in favour of the deal on February 4. Renaissance Capital, part-owned by Mikhail Prokhorov, encourages speculation that not everyone who isn’t an insider with Kerimov, Mutsoev and Skurov will be persuaded to go along with them – at least not now at the current offer price. “We think that some holders of SILVP [Silvinit preference shares] will vote against the deal because the implied discount of SILVP to SILV [Silvinit ordinary shares], at 61%, is significantly below the six-month average discount of 45%, and the implied price of $357/SILVP is below the price six months ago of $386 and below our target price of $554. Moreover, URKA [Uralkali] would not provide the same dividend yield as SILVP. Also, we expect that Acron (owns 8.1% of Silvinit common shares) will vote against the deal at the EGM, as it did at Silvinit’s board of directors meeting. Shareholders who vote against the deal or do not vote will be able to receive cash for their shares according to an independent appraisal of RUB203.37/URKA ($6.6/URKA), RUB27,133.5/SILV.”According to Renaissance Capital, Nesis and Galchev, who have shared control of Uralkali with Kerimov since June “will approve the deal, since the valuation of SILV implies a discount to URKA, reflecting the lower liquidity of SILV and the fact that the announced conversion ratios are below the average six-month level.”UBS says the same thing: “We note that the deal’s terms imply a 31% 2011E EV/EBITDA discount of Silvinit to Uralkali, which is not fundamentally justified, in our view. This discount is to a substantial extent driven by the lower liquidity of Silvinit, which is not fully applicable for M&A, in our view. However, apparently Uralkali was valuing Silvinit in line with the latter’s market valuation, resulting in such a high discount of Silvinit to Uralkali.”Uncertainty about the final take-home price for Silvinit shareholders doesn’t mean that the Uralkali and Silvinit shareholders are in much doubt about the deal going through in Moscow. But privately they admit to greater concern for the reaction of the Chinese, who (with India and Brazil) dominate the purchasing of potash to fertilize their crops. “China may ask for special terms [to approve the merger]” acknowledges a source close to Uralkali.Three years ago, the US Government had no reluctance allowing Oleg Deripaska’s Rusal to swallow its only domestic aluminium smelting competitor, even if the State Department wouldn’t allow Deripaska a visa to cross the border. Kerimov’s personal position may be similar, so far as the US Government’s visa authority is concerned. But down the passage at the US Department of Justice, where the anti-trust bureau is getting ready to take its holiday, it would be surprising if he had much trouble at all. Merry Christmas, Suleiman Abusaidovich.This post was published at Dances With Bears >The entrance ticket to the Titanium Valley was estimated at 3 million euro — NewsSVERDLOVSK REGION.2011 will see the development of the first phase (300 hectares) of the Special Economic Zone, Titanium Valley, in the Sverdlovsk Region. On December 16th in 2010, the Prime Minister Vladimir Putin signed the ordinance for development of Russia's fourth special economic zone.By 2016, the total area of the Titanium Valley will amount to 700 hectares. Its anchor resident will become the VSMPO-Avisma Corporation, which initiated the creation of the special economic zone. Arvi, SR Systematics, MAG, and the United Aircraft Construction Corporation announced their intention to become residents of this zone. It is planned that the residents will not pay property, land and transport taxes; the profit tax rate will be decreased from 20 to 15.5%. The Titanium Valley will have the status of a free customs zone: the residents will have the right to import goods to Russia without having to pay customs duties and VAT. As "RusBusinessNews" was informed by representatives of the Sverdlovsk Region's government, the prerequisite for being qualified as a zone resident is investment equal to minimum 3 million euro in industrial production operations performed within the Special Economic Zone, provided that minimum 1 million euro has been invested within the first year upon registration. At the initial stage of operations in the Titanium Valley, the total amount of investment is estimated at about 40 billion rubles.Activity in the Oil and Gas sector (including regulatory)One fifth of Russia's oil to be produced at shelf deposits by 2020 , 22.12.2010, Moscow 11:44:42.The Russian Energy Ministry indicated in its plan for the development of sea deposits that one fifth of Russian oil would be produced on continental shelf oilfields by 2020, the RBC Daily newspaper reported today.??????According to the plan's authors, the oil and natural gas deposits on the continental shelf oilfields are estimated at 12.2bn tonnes and 63.2 trillion cubic meters, respectively. At the same time, the plan indicates that sea deposits that are mainly located in the Arctic Sea, only 5 percent of which have been explored so far, are considerably lower - at 1.2bn tonnes and 10.54 trillion cubic meters. ??????The publication also states that the government plans to solve the problem of the low exploration rate by introducing a new set of taxes. "Existing geological risks and the extended exploration and development period (which may last up to 20 years), along with the current taxation system, is dragging the investment attractiveness of continental shelf deposits down," the plan's developers explained.??????Meanwhile, the newspaper believes that Rosneft will contribute the most to oil production on the continental shelf, since it is expected to get the most licenses for Arctic Sea oil deposits. Lukoil in Talks With Pertamina to Explore Indonesian Offshore Stephen BiermanDec. 22 (Bloomberg) -- OAO Lukoil, the Russian company with the most assets overseas, has made progress in discussions on oil projects with Indonesian state oil company PT Pertamina, according to Russia’s Economy Ministry. Indonesia is interested in potential Lukoil participation in exploration and production in the country’s offshore West Papua area, the Russian ministry said in a trade summary document posted on its website late yesterday. Lukoil and Pertamina agreed to form a venture to seek exploration rights in the Southeast Asian country in 2007, Ari Soemarno, then president of Pertamina, said at the time. Lukoil is currently exploring offshore West Africa and producing oil from the Russian sector of the Caspian Sea. To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@. To contact the editor responsible for this story: Will Kennedy at wkennedy3@. Last Updated: December 22, 2010 02:35 ESTONGC, Sistema to Merge Russia Oil Assets, Economic Times Says Rakteem KatakeyDec. 22 (Bloomberg) -- Oil & Natural Gas Corp. and AFK Sistema agreed to merge their energy assets in Russia, the Economic Times reported, citing an unidentified oil ministry official. The two companies will form a venture to manage the assets in which India’s ONGC will have a 25 percent stake, according to the report. ONGC Chairman R.S. Sharma could not immediately be reached on his mobile phone for comment. To contact the editor responsible for this story: John Chacko at jchacko@ Last Updated: December 21, 2010 21:45 ESTONGC Arm Enters Into Framework Agreement With Sistema(RTTNews) - State-run Oil & Natural Gas Corporation Ltd., or ONGC, said its subsidiary ONGC Videsh Ltd. had signed a Framework Agreement on Co-operation in Hydrocarbon Sector with Sistema, a public financial corporation in Russia and CIS.The agreement was signed between OVL's managing director R.S. Butola and Sistema Chairman Vladimir Yevtushenkov during the visit of Russian president Dmitry Medvedev to India.Under the agreement, the two companies agreed to consider opportunities for a potential transaction involving the acquisition of majority stake by ONGC Videsh in Sistema's subsidiary JSC Bashneft and 49% stake OAO RussNeft. In return, OVL may divest its entire stake in Imperial Energy Corp. Plc., for which it had paid $2.1 billion (Rs.9,513 crore). The agreement also involves acquisition of any other oil and gas assets, which the aforesaid companies may acquire before definitive agreement are signed.The parties further agree to consider joint investments in each other's existing and future exploratory assets in certain third countries. ONGC proposes to lead a consortium of Indian oil sector PSUs to consider acquiring the stake offered by Sistema under the agreement.The company said no binding commitments of any kind would arise between them until the execution of binding legal documentation and receipt of any necessary corporate and governmental approvals. The parties are targeting June 30 next year to finalize the terms for potential transaction.Sistema has major investments in a host of other industries in Russia and CIS including telecommunication. It has since diversified its activities in the oil and gas sector as well.ONGC shares are being traded at Rs.1,30.95, up by 0.64% from the previous close at the BSE. India, Russia sign IGA on oil & gas, differ on project timeline norm: Wed Dec 22 2010, 03:59 hrs New Delhi:India and Russia today concluded an inter-governmental agreement (IGA) on cooperation in oil and gas sector but failed to agree to an annexure that would have bound Moscow to ensure that these projects or their financials conclude in the stipulated time. “This (IGA) is the result of a lot of hard work put in by both sides, and reflects the complementarities between our two economies. We will work towards its implementation through a mutually-agreed roadmap,” Prime Minister Manmohan Singh said at the ‘Joint Press Interaction’ along with visiting Russian President Dmitry Medvedev. The annexure would have provided the much-needed tax relief from next year to ONGC Videsh’s Imperial Energy for oil and gas produced from Tomsk field. Imperial pays Mineral Extraction Tax at $13.5 a barrel and export duty of $4 on crude price of $25 a barrel with an extra 65 per cent duty on price exceeding $25. Sources said that Russia promised that from 2012 onwards, taxes would be levied on the profit instead of every barrel of oil produced. The annexure would have also fixed a timeline for concluding cooperation in giant oilfields of Trebs & Titov with Bashneft, Kirinsky gas block with Gazprom, Yurubcheno-Tokhomskoye oil field with Rosneft and Yamal LNG project with Novatek, among others. UPDATE 2-Novatek CEO, board member get 9.4 pct stake option, Dec 21 2010* Mikhelson and Timchenko get option to up stake* Option held by jointly owned vehicle Hibridge* Timchenko has no plans to increase stake -spokesman(Adds comments from Timchenko spokesman, details)MOSCOW, Dec 21 (Reuters) - Novatek (NOTK.MM: Quote, Profile, Research) chief executive Leonid Mikhelson and board member Gennady Timchenko have obtained options to raise their stake in Russia's second-biggest gas producer through a joint vehicle, the company said Tuesday.In a statement, Novatek said Hibridge Ventures Ltd had obtained the right to buy a 9.4 percent stake from Dhignfinolhu, a vehicle of Gazprombank, a bank with close ties to Russia's gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research).However, a Timchenko spokesman told Reuters: "We have no intention to materially increase the stakes we have or take up any new positions in the company's management."The stake is valued at almost $3 billion as of Tuesday's market close.Novatek said on Monday the Gazprombank vehicle had acquired a similar-sized stake from Gazprom. [ID:nLDE6BJ1NZ]Before the deal Gazprom owned 19.4 percent of Novatek. Gazprom does not directly control Gazprombank.Timchenko's fund Volga Resources this year raised its stake in Novatek to 23.5 percent to become the largest shareholder.Mikhelson, ranked by Forbes magazine as the 189th richest person in the world with a fortune of $4.4 billion, cut his stake in Novatek several years ago.(Reporting by Vladimir Soldatkin; editing by David Hulmes) GazpromGazprom finds gas in Tajikistan Stan Rogers2010-12-21DUSHANBE -- Gazprom now estimates Tajikistan has enough natural gas to meet the country's needs for 50 years, Radio Free Europe/Radio Liberty (RFE/RL) reported December 20. The Russian energy corporation began drilling in the Sarykamysh gas field December 7. It intends to drill elsewhere in Tajikistan, Gazprom CEO Alexei Miller said. The gas could give resource-poor Tajikistan new leverage in its dealings with Uzbekistan, which has periodically cut off natural gas exports to Tajikistan to force payment of bills, RFE/RL reported. The Tajik government owes Uzbekistan more than US $35m, avesta.tj reported December 21, quoting a source in the Tajik Finance Ministry. 22.12.2010Gazprom: Armenia To Begin Paying Market Prices For Gas In April on April 1, 2011, Armenia will begin paying market prices for Russian gas, Deputy ArmRosGazprom Chair Anatoliy Podmyshalskiy said on Tuesday. ArmRosGazprom has a monopoly on Russian gas supplies to and distribution in Armenia which are delivered via Georgia. The company was founded in 1997 by Gazprom and the government of Armenia."Beginning on Aril 1, Armenia will pay market level prices for gas", Podmyshalskiy said according to RIA-Novosti."If there are other variants to calculating the value of the gas, they can be resolved in the next two to three months if negotiations are organized", he added.Armenia currently buys Russian gas at $180 per 1,000 cubic meters. According to official data, that price could jump to $220 on April 1.At the beginning of September, Gazprom announced it would begin charging market prices for gas in Belarus, Moldova and Armenia in 2011.Copyright 2010, 1news.az. All rights reserved. ................
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