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Russia 110713Basic Political DevelopmentsItar-Tass news outlook for Wednesday, July 13. KAZAN – The divers continue the search through the MS Bulgaria. The official death toll reached 100 people. MOSCOW – Presidents of Russia and Switzerland Dmitry Medvedev and Micheline Calmy-Rey will attend a ceremony to launch a renovated Shchurovsky concrete making plant in Kolomna, the Moscow Region. The plant belongs to the Swiss Holcim Group. MOSCOW – The presidents of the countries will discuss bilateral cooperation on the world arena, including the representation of Russian interests in Georgia. MOSCOW – Russian Prime Minister Vladimir Putin will chair a meeting of the Vnesheconombank Supervisory Board to consider a VEB annual report for 2010. MOSCOW – The Russian prime minister will chair a meeting of the organizing committee for the run-up to the 150th birthday anniversary of prominent Russian reformist Pyotr Stolypin in 2012. WASHINGTON – Russian Foreign Minister Sergei Lavrov will meet with U.S. President Barack Obama and will have talks with U.S. Secretary of State Hillary Clinton. MOSCOW – Chief of the Russian General Staff Gen. Nikolai Makarov will go on a working visit to Ukraine. He will meet with Ukrainian Defence Minister Mikhail Ezhel and will have negotiations with his Ukrainian counterpart Grigory Pedchenko. RABAT – Libya can face the food shortage, Minister of Agriculture, Maritime and Animal Resources Abdul Majid al-Gaud said. WASHINGTON DC – Muammar Gaddafi’s government is short of fuel for the troops and people and the cash of the remuneration of loyal servicemen, U.S. intelligence sources told reporters. MOSCOW – The Federation Council will complete its spring session with a 300th anniversary plenary meeting. The senators will debate 54 bills at the plenary meeting. VIENNA – Chairman of the Russian Audit Chamber Sergei Stepashin will participate in a UN/INTOSAI seminar devoted to the efficient practice of cooperation between the supreme audit institutions and people for a higher accountability rate of the state sector and will meet with head of the UN Office in Vienna Yuri Fedotov. TEL-AVIV – President of the Skolkovo Foundation Viktor Vekselberg will discuss prospects for cooperation with Israeli Minister of Industry, Trade and Labour Shalom Simhon during a visit to Israel. ANKARA – Turkish Minister of State Egemen Bagis will discuss prospects for European integration of the country with EU Commissioner for Enlargement and European Neighbourhood Policy Stefan Fule. CHISINAU – European integration of Moldova and the Dniester peace process will be high on the agenda of a summit between the Moldovan top officials and Lithuanian President Dalia Grybauskaite. MOSCOW – A news conference devoted to the motor sport festival Formula Sochi and exhibition runs on a temporary track due in downtown Sochi on July 17 will be held at the Itar-Tass news agency. Itar-Tass news digest for Wednesday, July 13 : 1. MOSCOW — Some 100 victims from the sunken MS Bulgaria were raised from the ship, the information department in the Ministry of Emergency Situations told Itar-Tass on Wednesday. “As of 8 a.m. Moscow time the death toll reached 100 people,” the information department reported. Some 30 people are on the missing list. MOSCOW — Interaction between Russia and Switzerland in the world arena, including on the issue of representation of Russian interests in Georgia will be discussed on Wednesday by the two countries’ Presidents Dmitry Medvedev and Micheline Calmy-Rey. Their meeting will be held in the town of Kolomna in the Moscow region, the Kremlin press service told Itar-Tass. MOSCOW — Topical aspects of bilateral relations and development of economic interaction will be in the focus of Wednesday’s talks between the Russian and Swiss presidents, Dmitry Medvedev and Micheline Calmy-Rey, that is due to be held in the Moscow region’s town of Kolomna, the Kremlin press service said on Tuesday. MOSCOW — Russian President Dmitry Medvedev and President of Switzerland Micheline Calmy-Rey, who is in Russia on a working visit, on Wednesday will attend an opening ceremony of the renovated Shchurovsky Cement plant in Kolomna outside Moscow. This company belongs to the Swiss group Holcim. About 500 million euros was invested in the modernisation of the facility. MOSCOW — Russian Prime Minister Vladimir Putin on Wednesday will hold a regular meeting of the Supervisory Board of Vnesheconombank (VEB) at which the bank’s draft annual report for 2010 will be considered. DUSHANBE —— The Collective Security Treaty Organisation’ s Secretary General, Nikolai Bordyuzha, discusses with Tajikistan’s President Emomali Rakhmon the situation in the region security in the framework of the organisation’s responsibility. VLADIVOSTOK — The Russian-American Pacific Partnership (RAPP) opened its session here on Wednesday. Businesspeople from the countries are participating in the RAPP session. Governor of the Kamchatka Territory Vladimir Ilyukhin noted that the relations between the Russian Far East and the United States have long-standing good traditions. VLADIVOSTOK — U.S. Ambassador in Russia John Beyrle stated that the United States and Russia are about to sign an agreement for an easier visa regime between the countries. In a video address to the participants in a meeting of the Russian-American Pacific Partnership (RAPP), which opened in Petropavlovsk-Kamchatsky on Wednesday, the U.S. diplomat noted that the U.S. and Russia will sign an agreement in just a few hours that will permit to issue three-year multiple entry visas for businessmen and tourists. MOSCOW — The Soyuz-2 carrier rocket was launched from the Baikonur cosmodrome on Wednesday. It will orbit six American communications satellites of the Globalstar system. “The launch of the carrier rocket equipped with the Fregat upper stage was made at 06:27 MSK,” head of the press service of the Federal Space Agency (Roskosmos) Alexei Kuznetsov told Itar-Tass. TULA — One of the biggest cement plants in Europe will go operational in the Alexin District of the Tula Region on Wednesday. The new plant is a joint venture with an annual capacity of two million tonnes of cement. It is built in the Novogurovsky Village under an agreement between the region’s administration and Germany’s HeidelbergCement Group, which the two sides inked during the Tula economic forum in 2008. The project’s cost exceeds 12 billion roubles. NEW YORK — Severstal North America – a branch of the Russian steel giant OAO Severstal joint stock company will get from the US government a loan worth 730 million US dollars, The Associated Press said. According to information from knowledgeable sources, with these funds Severstal plans to modernise the plant in Dearborn (Michigan). The renovation of the facility’s production capacities will require employment of 2.5 thousand builders. Upon completion of the modernisation the enterprise’s staff will be increased by 260 people. WASHINGTON — Russian Foreign Minister Sergei Lavrov will meet in Washington on Wednesday with US President Barack Obama and will hold talks with Secretary of State Hillary Clinton. The Russian Foreign Ministry reported that Lavrov will discuss in detail with the American side the missile defence issues, prospects for Russia’s early accession to the WTO, as well as the situation in the Middle East and North Africa. It is planned to agree on a schedule of contacts at the highest level, including Barack Obama’s possible visit to Moscow this year. TOKYO — Outdated ammunition were being disposed on the South Kuril island of Kunashir some time ago and the explosions, which were heard on the island, “were not linked with any military exercises,” the Russian Embassy in Tokyo said in reply to a request from the authorities in the Japanese city of Nemuro, from which Kunashir is seen in a good weather. The request was passed to the municipality through the Japanese Foreign Ministry, local media said. BARNAUL — The Vostochny District Court of Biisk in the Altai Territory has pronounced a guilty verdict for Biisk Mayor Anatoly Mosiyevsky on Wednesday. The court has read the guilty verdict since Tuesday. Mosiyevsky is found guilty of office abuse, a source in the court told Itar-Tass on Wednesday. The court sentenced him to three years in suspension. The court ruled that Mosiyevsky is to indemnify 22 million roubles of damages to the Biisk budget. VLADIVOSTOK — Three begs and a metallic box with the pieces of dismantled shells were found at the site of an ammunition blast, in which Uzbek workers were killed in Vladivostok. An inquiry before the investigation is being made over the ammunition blast, in which two people died and another two were injured, the Primorsky territorial investigation department in the Investigation Committee said. NAZRAN — Two officers of the patrol and inspection service have been wounded in the town of Malgobek in Ingushetia in a shootout. The republic’s Interior Ministry told Itar-Tass that they came under fire at about 23:00 MSK, Tuesday when they were patrolling in a UAZ vehicle in the town’s centre near a park. An unknown perpetrator fired on their car from a grenade launcher. Both were rushed to hospital with wounds. According to doctors, the condition of one of the policemen is very grave. The shooter disappeared. European business raises significance of EU-Russia visa-free dialogue, says diplomat - The scrapping of visas is high on the European Union-Russian agenda, Director of the Russian Foreign Ministry's Department of European Cooperation Vladimir Voronkov, who chairs the Russian negotiating delegation, told journalists. RF, Germany to hold top level consultations in Hannover July 18-19 - . Russian President Dmitry Medvedev and German Federal Chancellor Angela Merkel will head the delegations of the countries.Lavrov to meet US president, secretary of state. Anti-missile row mars Russian-American thaw - Speaking in Washington, the Russian Foreign Minister Sergey Lavrov has reiterated the need for cooperation over the US plans for a European missile shield. The issue is creating a widening chasm between the two nations.Exclusive interview of Sergei Lavrov to the Voice of Russia – by Ricardo Young, Jessica JordanRAPP session opens in Petropavlovsk-Kamchatsky - The Russian-American Pacific Partnership (RAPP) opened its session here on Wednesday. Businesspeople from the countries are participating in the RAPP session. Russia's Soyuz spacecraft with U.S. satellites blasts off from BaikonurKunashir blasts triggered by munition disposal rather than drill. Russian, Swiss presidents to discuss partnership for modernizationMedvedev, Calmy-Rey to discuss Moscow-Bern cooperation. RF, Swiss presids to take part in cement plant opening in Kolomna - This company belongs to the Swiss group Holcim. About 500 million euros was invested in the modernisation of the facility. Bordyuzha discusses with Rakhmon CSTO security aspects. The Collective Security Treaty Organisation’s Secretary General, Nikolai Bordyuzha, discusses with Tajikistan’s President Emomali Rakhmon the situation in the region security in the framework of the organisation’s responsibility. Lukashenko: New problems arise in Russian-Belarusian relations - "As regards our common homeland, Russia, Belarus, and I would not rule out Ukraine, here we have a lot of work to do. Because the world is not that simple, and unfortunately, we have quite a few problems with Russia and new ones are arising," Lukashenko said at a meeting with President of the Russian Club of Military Chiefs Anatoly Kulikov in Minsk on Tuesday.Russia and Belarus still bickering over privatisation prices as more targets added - Belarus admitted on Tuesday that it is in negotiations with Russian interests over the privatisation of seven major companies, including potash mine Belaruskali and truck maker MAZ. However, it was also strongly hinted that the two continue to disagree on prices.Chief of General Staff of the RF Armed Forces on a working visit in Ukraine on July 13-14.New Russian-built jet fighters arrive – Kampala: The Shukoi Su-30 fighter jets that government bought from Russia at $740 million (Shs1.8 trillion) have arrived in the country, military sources confirmed last mander: Russians stunned by Iranian version of S-200 Air Defense SystemRussian-Chinese relations reach an all-time high – Ambassador Why Can’t the Dalai Lama visit Russia?HELCOM to practice oil spill liquidation - The Helsinki Commission for the Protection of the Environment of the Baltic Sea (HELCOM), appointed the 30th of August the day for maneuvers off the coast of the Danish island of Bornholm.Russia changed its Ambassador in Israel - Sergei Yakovlev, 63, was appointed a Russian Ambassador to Israel by President of Russia on July 12. He will change Peter Stegniya, who has held this post since 2007.Putin to hold regular meeting of VEB Supervisory Board. Russian authorities to tighten water transportation rules Death toll in Russian boat disaster reaches 100Eighty five bodies from sunken Bulgaria riverboat identifiedRussian boat disaster shows public immorality - Patriarch KirillMedvedev signs law on radioactive waste managementPresidential council is for Caucasus ex militants’ social adaptation. Two policemen wounded in shootout in Ingushetia. Two policemen wounded in attack in Russia's IngushetiaTwo killed as shell explodes in Vladivostok 3 begs, box with dismantled shells found at death site of workers. Vandalism probe launched into Moscow synagogue arson bid – sourceMoscow attacks prompt fears of nationalist revengeInvestigators launch criminal probe over prosecutor Sizov death (Part 2)Officials detained for trying to sell seat in State Duma for 7.5 mln eurosBiysk mayor gets suspended sentence, to repay RUR 22 mln to budget. RIA Russian Press at a Glance, Wednesday, July 13, 2011ITAR-TASS Russian Press Review. A Vicious Cycle - The Recent Murder of a School Director in Dagestan Has Exposed Local Religious Tensions“Hundreds of billions in drug money pumped into banks during crisis” - The head of Russia's Federal Drug Control Service Viktor Ivanov told RT how the problem is being tackled in the country and worldwide, and how those profiting from the addiction resist this effort.Russian business urged to pick sides before vote - Russian President Dmitry Medvedev urged top businessmen to decide who they want to see as the country's next president amid the uncertainty ahead of key polls, a report said on Wednesday.Thirst for power seen trumping Russian rhetoric - The election cycle has thrown up deep uncertainty over Russia's utilities sector, but investors and analysts argue that it's no more than a temporary blip, and the prospects for the sector after March 2012 are bright. Putin discusses privatisation plans with academicians; Medvedev discusses them with oligarchs – RenCapNational Economic TrendsRussia may issue OFZs instead of EurobondsGrain Harvesting in Russian Areas Delayed by Rains, Center SaysRussia harvested over 4.6 mln tonnes of grains - Ministry of AgricultureAugust in America - A US default would raise the ruble exchange rate and create new risks for the Russian economy. By Eva Burtshtein, Elena Kukol Business, Energy or Environmental regulations or discussionsOAO Sberbank, OAO Rosneft, OAO Lukoil: Russian Equity PreviewSberbank's net profit surges in H1 Sberbank net profit triples to $6 bln in H1 2011European Commission will not extend quotas and tariffs on potash imports from Russia and Belarus Stadler rail on right tracks in Russia - A SFr240 million ($290 million) deal signed by Switzerland’s Stadler Rail to provide rolling stock to Russia highlights the importance of freight shipped by rail in the country.GURYEV'S STAKE IN PHOSAGRO TO STAND AT 70.9% FOLLOWING IPOPlacement price for PhosAgro's IPO comes to $14 per GDR, capitalization put at $5.2 blnUPDATE 1-Russia's Phosagro raises $538 mln in IPORaspadskaya Rises for Second Day on Report of Stake Sale to VEBTranscontainer 1H11 operational results: Strong, as expected - but what's next? Russia VEB, Severstal postpone Eurobond issues-sourcesSeverstal to increase crude steel output in 2011 up by 5pct YoYN America branch of Severstal to get US gvt loan of $730 mln. AP Sources: Russian steelmaker to get US loan - Two people briefed on the matter say the North American arm of Russia's largest steel company is getting a $730 million loan from the U.S. government.Yandex is read its copyrights - Authors ask the search engine to remove links to pirated content. Activity in the Oil and Gas sector (including regulatory)Belarusian premier hopes for reasonable compromise in Beltransgaz selling. Russian companies eye Belarus refineries-reportsShtokman project could be exempt from property tax Rosneft and Gazprom Neft Salavat experiencing problems in modernizing refining capacity, not so for Lukoil and Gazprom- Shmatko (Part 2)Rosneftegaz needs to acquire refinery able to produce over 2 mln tonnes annually – ShmatkoRosneftegaz to purchase fuel from oil firms for reserve at market prices - Shmatko (Part 3)For Oil Field Work, New Tech Deemed Critical - For the?lifeblood of?the Russian economy — oil and?gas — it will be just as important to?find a?way to?invigorate the?service and?equipment sector. In?fact, innovation could prove to?be the?miracle water. By Alec LuhnGazpromGazprom, Ukraine discuss gas deliveries under current contractMoscow's Ratings Remain Unaffected By Gazprom Export's Planned Move To St. Petersburg, Pending The Effect On Revenues------------------------------------------------------------------------------------------Full Text ArticlesBasic Political Developments10:32?13/07/2011ALL NEWSItar-Tass news outlook for Wednesday, July 13. Tass 94 Telephone: 8 (499) 791-00-18 Fax: 8 (499) 791-00-19 THE SHIP-WRECKAGE KAZAN – The divers continue the search through the MS Bulgaria. The official death toll reached 100 people. PRESIDENT-SWITZERLAND MOSCOW – Presidents of Russia and Switzerland Dmitry Medvedev and Micheline Calmy-Rey will attend a ceremony to launch a renovated Shchurovsky concrete making plant in Kolomna, the Moscow Region. The plant belongs to the Swiss Holcim Group. MOSCOW – The presidents of the countries will discuss bilateral cooperation on the world arena, including the representation of Russian interests in Georgia. THE GOVERNMENT MOSCOW – Russian Prime Minister Vladimir Putin will chair a meeting of the Vnesheconombank Supervisory Board to consider a VEB annual report for 2010. MOSCOW – The Russian prime minister will chair a meeting of the organizing committee for the run-up to the 150th birthday anniversary of prominent Russian reformist Pyotr Stolypin in 2012. RUSSIA-THE UNITED STATES WASHINGTON – Russian Foreign Minister Sergei Lavrov will meet with U.S. President Barack Obama and will have talks with U.S. Secretary of State Hillary Clinton. RUSSIA-UKRAINE MOSCOW – Chief of the Russian General Staff Gen. Nikolai Makarov will go on a working visit to Ukraine. He will meet with Ukrainian Defence Minister Mikhail Ezhel and will have negotiations with his Ukrainian counterpart Grigory Pedchenko. THE SITUATION IN LIBYA RABAT – Libya can face the food shortage, Minister of Agriculture, Maritime and Animal Resources Abdul Majid al-Gaud said. WASHINGTON DC – Muammar Gaddafi’s government is short of fuel for the troops and people and the cash of the remuneration of loyal servicemen, U.S. intelligence sources told reporters. THE FEDERAL ASSEMBLY MOSCOW – The Federation Council will complete its spring session with a 300th anniversary plenary meeting. The senators will debate 54 bills at the plenary meeting. SERGEI STEPASHIN’S VISIT TO VIENNA VIENNA – Chairman of the Russian Audit Chamber Sergei Stepashin will participate in a UN/INTOSAI seminar devoted to the efficient practice of cooperation between the supreme audit institutions and people for a higher accountability rate of the state sector and will meet with head of the UN Office in Vienna Yuri Fedotov. ISRAEL-RUSSIA TEL-AVIV – President of the Skolkovo Foundation Viktor Vekselberg will discuss prospects for cooperation with Israeli Minister of Industry, Trade and Labour Shalom Simhon during a visit to Israel. TURKEY-THE EU ANKARA – Turkish Minister of State Egemen Bagis will discuss prospects for European integration of the country with EU Commissioner for Enlargement and European Neighbourhood Policy Stefan Fule. IN THE CIS AND BALTIC STATES CHISINAU – European integration of Moldova and the Dniester peace process will be high on the agenda of a summit between the Moldovan top officials and Lithuanian President Dalia Grybauskaite. IN ITAR-TASS MOSCOW – A news conference devoted to the motor sport festival Formula Sochi and exhibition runs on a temporary track due in downtown Sochi on July 17 will be held at the Itar-Tass news agency. Taking part in the conference will be Deputy Governor of the Krasnodar Territory Alexei Agafonov, Director of the engineering department of Marussia Virgin Racing team Nikolai Fomenko, the festival’s sport director Igor Konovalov, manager of pilot of Lotus Renault GP Vitaly Petrov Oksana Kosachenko, representatives of the Russian Automobile Federation, companies Lukoil and Megafon, racers and participants in the festival. 11:15?13/07/2011ALL NEWSItar-Tass news digest for Wednesday, July 13 : 1. Tass 132 MOSCOW — Some 100 victims from the sunken MS Bulgaria were raised from the ship, the information department in the Ministry of Emergency Situations told Itar-Tass on Wednesday. “As of 8 a.m. Moscow time the death toll reached 100 people,” the information department reported. Some 30 people are on the missing list. MOSCOW — Interaction between Russia and Switzerland in the world arena, including on the issue of representation of Russian interests in Georgia will be discussed on Wednesday by the two countries’ Presidents Dmitry Medvedev and Micheline Calmy-Rey. Their meeting will be held in the town of Kolomna in the Moscow region, the Kremlin press service told Itar-Tass. MOSCOW — Topical aspects of bilateral relations and development of economic interaction will be in the focus of Wednesday’s talks between the Russian and Swiss presidents, Dmitry Medvedev and Micheline Calmy-Rey, that is due to be held in the Moscow region’s town of Kolomna, the Kremlin press service said on Tuesday. MOSCOW — Russian President Dmitry Medvedev and President of Switzerland Micheline Calmy-Rey, who is in Russia on a working visit, on Wednesday will attend an opening ceremony of the renovated Shchurovsky Cement plant in Kolomna outside Moscow. This company belongs to the Swiss group Holcim. About 500 million euros was invested in the modernisation of the facility. MOSCOW — Russian Prime Minister Vladimir Putin on Wednesday will hold a regular meeting of the Supervisory Board of Vnesheconombank (VEB) at which the bank’s draft annual report for 2010 will be considered. DUSHANBE —— The Collective Security Treaty Organisation’ s Secretary General, Nikolai Bordyuzha, discusses with Tajikistan’s President Emomali Rakhmon the situation in the region security in the framework of the organisation’s responsibility. VLADIVOSTOK — The Russian-American Pacific Partnership (RAPP) opened its session here on Wednesday. Businesspeople from the countries are participating in the RAPP session. Governor of the Kamchatka Territory Vladimir Ilyukhin noted that the relations between the Russian Far East and the United States have long-standing good traditions. VLADIVOSTOK — U.S. Ambassador in Russia John Beyrle stated that the United States and Russia are about to sign an agreement for an easier visa regime between the countries. In a video address to the participants in a meeting of the Russian-American Pacific Partnership (RAPP), which opened in Petropavlovsk-Kamchatsky on Wednesday, the U.S. diplomat noted that the U.S. and Russia will sign an agreement in just a few hours that will permit to issue three-year multiple entry visas for businessmen and tourists. MOSCOW — The Soyuz-2 carrier rocket was launched from the Baikonur cosmodrome on Wednesday. It will orbit six American communications satellites of the Globalstar system. “The launch of the carrier rocket equipped with the Fregat upper stage was made at 06:27 MSK,” head of the press service of the Federal Space Agency (Roskosmos) Alexei Kuznetsov told Itar-Tass. TULA — One of the biggest cement plants in Europe will go operational in the Alexin District of the Tula Region on Wednesday. The new plant is a joint venture with an annual capacity of two million tonnes of cement. It is built in the Novogurovsky Village under an agreement between the region’s administration and Germany’s HeidelbergCement Group, which the two sides inked during the Tula economic forum in 2008. The project’s cost exceeds 12 billion roubles. NEW YORK — Severstal North America – a branch of the Russian steel giant OAO Severstal joint stock company will get from the US government a loan worth 730 million US dollars, The Associated Press said. According to information from knowledgeable sources, with these funds Severstal plans to modernise the plant in Dearborn (Michigan). The renovation of the facility’s production capacities will require employment of 2.5 thousand builders. Upon completion of the modernisation the enterprise’s staff will be increased by 260 people. WASHINGTON — Russian Foreign Minister Sergei Lavrov will meet in Washington on Wednesday with US President Barack Obama and will hold talks with Secretary of State Hillary Clinton. The Russian Foreign Ministry reported that Lavrov will discuss in detail with the American side the missile defence issues, prospects for Russia’s early accession to the WTO, as well as the situation in the Middle East and North Africa. It is planned to agree on a schedule of contacts at the highest level, including Barack Obama’s possible visit to Moscow this year. TOKYO — Outdated ammunition were being disposed on the South Kuril island of Kunashir some time ago and the explosions, which were heard on the island, “were not linked with any military exercises,” the Russian Embassy in Tokyo said in reply to a request from the authorities in the Japanese city of Nemuro, from which Kunashir is seen in a good weather. The request was passed to the municipality through the Japanese Foreign Ministry, local media said. BARNAUL — The Vostochny District Court of Biisk in the Altai Territory has pronounced a guilty verdict for Biisk Mayor Anatoly Mosiyevsky on Wednesday. The court has read the guilty verdict since Tuesday. Mosiyevsky is found guilty of office abuse, a source in the court told Itar-Tass on Wednesday. The court sentenced him to three years in suspension. The court ruled that Mosiyevsky is to indemnify 22 million roubles of damages to the Biisk budget. VLADIVOSTOK — Three begs and a metallic box with the pieces of dismantled shells were found at the site of an ammunition blast, in which Uzbek workers were killed in Vladivostok. An inquiry before the investigation is being made over the ammunition blast, in which two people died and another two were injured, the Primorsky territorial investigation department in the Investigation Committee said. NAZRAN — Two officers of the patrol and inspection service have been wounded in the town of Malgobek in Ingushetia in a shootout. The republic’s Interior Ministry told Itar-Tass that they came under fire at about 23:00 MSK, Tuesday when they were patrolling in a UAZ vehicle in the town’s centre near a park. An unknown perpetrator fired on their car from a grenade launcher. Both were rushed to hospital with wounds. According to doctors, the condition of one of the policemen is very grave. The shooter disappeared. /Itar-Tass Turkey invites Russia, China to attend Libya Contact Group meeting 13, 2011 11:05 Moscow TimeThe Turkish Foreign Ministry has invited Russia and China to attend a meeting of the Libya Contact Group, due in Istanbul on July 14th and 15th . This came in a statement by a spokesman for the Turkish Foreign Ministry earlier today.Russia and China have been invited as the UN Security Council permanent members, but the degree of their participation has not yet been determined.The meeting is due to be held at the Foreign Minister level, and 15 countries, including France, the UK, Australia and the United States have confirmed their participation in the talks.The Turkish Foreign Ministry is expecting the forthcoming meeting to make political decisions that would put paid to the ongoing armed conflict in Libya.European business raises significance of EU-Russia visa-free dialogue, says diplomat at 11:40 | Interfax-Ukraine Brussels, July 12 (Interfax) - The scrapping of visas is high on the European Union-Russian agenda, Director of the Russian Foreign Ministry's Department of European Cooperation Vladimir Voronkov, who chairs the Russian negotiating delegation, told journalists. "For business people, applying for a visa is a burdensome factor, although they have no problem with being entitled to it and they have money for it. But it is a waste of time that is never enough," Voronkov said after the EU-Russia consultations on visa-free travel at the level of senior officials in Brussels on Tuesday."This is no longer a factor of merely human contacts, but an economic factor for both sides," he said.Scrapping visas will allow people from Russian regions to travel directly to Europe, he said.Currently, the problem of getting visas makes them spend time and money on trip preparations and procedures."There are rough estimates that, as a result of abolishing the visa regime, tourism to and from the Russian Federation could at least double. In any case, the income structure of our population allows for such an increase," the diplomat said.The EU's fears about a possible influx of migrants from Russia in the event of visa-free travel are "phobias and wrong ideas about the Russian Federation," he said."Even by the EU's internal estimates, we are not a high migration risk country. This is contrived," said the head of the Russian delegation."There is no explanation for these phobias, but one can understand them," he said, adding that about 6.5 millions of Russians travel to the EU countries each year. Read more: NEWSRF, Germany to hold top level consultations in Hannover July 18-19. Tass 130 MOSCOW, July 13 (Itar-Tass) —— Russian-German interstate consultations will be held on July 18-19, the Kremlin official website reported on Wednesday. Hannover will be a venue of an upcoming bilateral summit, Chief of the Russian Presidential Staff Sergei Naryshkin said earlier. “The preparation of this major political event is nearing completion, bilateral documents are about to be drafted and will be signed upon the results of the top level consultations,” Naryshkin said. He called the interstate consultations “as a major political event” in the relations between Russia and Germany. The format of such meetings is long-standing. The interstate consultations were launched in 1998, when Boris Yeltsin was the first Russian president. These top level consultations are traditionally held once a year in Russia and Germany in turns. St. Petersburg and Yekaterinburg hosted the Russian-German consultations in 2008 and 2010 and Munich hosted the event in 2009. The consultations in Hannover will be the 13th round of interstate consultations next week. Russian President Dmitry Medvedev and German Federal Chancellor Angela Merkel will head the delegations of the countries. The bilateral interstate consultations are traditionally held simultaneously in time and a venue with the St. Petersburg Dialogue public forum. 07:47?13/07/2011ALL NEWSLavrov to meet US president, secretary of state. Tass 8 WASHINGTON, July 13 (Itar-Tass) — Russian Foreign Minister Sergei Lavrov will meet in Washington on Wednesday with US President Barack Obama and will hold talks with Secretary of State Hillary Clinton. The Russian Foreign Ministry reported that Lavrov will discuss in detail with the American side the missile defence issues, prospects for Russia’s early accession to the WTO, as well as the situation in the Middle East and North Africa. It is planned to agree on a schedule of contacts at the highest level, including Barack Obama’s possible visit to Moscow this year. As coordinators of the Russian-American Presidential Commission Lavrov and Clinton will analyse the activities of 20 working groups and review the implementation of joint projects. The priority issues are - transport security, strengthening cooperation in the field of culture and ecology, in particular, the establishment of a natural reserve on both sides of the Bering Strait. The ministers are expected to sign the Protocol to extend the agreement on joint study of radiation exposure and exchange notes on the ratification of the Protocol to extend the arrangements for the disposal of surplus plutonium. According to the Plutonium Disposition Agreement, the United States plans to burn 25.5 tonnes as mixed oxide (MOX) fuel and immobilize the remaining 8.5 tonnes. Russia intends to burn all 34 tonnes as MOX fuel. Both countries must begin either immobilisation or burning at the rate of at least 2 tonnes per year. In the second phase, the disposition rate should reach 5 tonnes per year. The agreement bans any reprocessing of irradiated MOX fuel until all 34 tonnes are disposed of. Any additional plutonium designated in the future by either country as excess to defence needs can be disposed of under the terms and conditions of the 1 September 2000 agreement. Verification, monitoring, and inspections are vital aspects of the agreement. The September 2000 agreement sets forth broad principles upon which monitoring and inspection would be based, but since facilities in Russia and the United States were not scheduled to be online until 2007, details would be covered in a separate “follow-on” negotiation. The United States and Russia are engaged in consultations with the International Atomic Energy Agency to work out verification procedures. It is unknown so far whether the parties will sign the Agreement regulating the procedure for international adoption of children. A source told Itar-Tass that the American side has not yet given its final consent. Lavrov explained earlier that “the Agreement requires mandatory psychological testing of prospective adoptive parents, it allows adoption only through a specially accredited agency, and also includes a clause stating that before they come of age the children adopted by Americans will retain Russian citizenship.” According to official Russian data, last year 1,079 children were adopted from Russia by American parents. To date, according to various estimates, approximately 130,000 children have been included in the data bank of those who are ready for adoption. A few years ago there were 160,000 of such boys and girls. Earlier, US Ambassador in Moscow John Byerly said the Russian foreign minister and the US Secretary of State would sign an adoption agreement in Washington next week. Byerly said, “My task is to build more constructive and more fruitful relations between our countries. It can be said much: about the START Treaty, Russia’s upcoming to the WTO and ambitious economic deals.” “But the most important thing for me is that next week, when I go to Washington, Sergei Lavrov and Hillary Clinton will sign an adoption agreement and an agreement on liberalising the visa regime. All of us should applaud it because this proves the depth of our relationship,” the US diplomat noted. Anti-missile row mars Russian-American thaw: 13 July, 2011, 08:24Edited: 13 July, 2011, 09:19 Speaking in Washington, the Russian Foreign Minister Sergey Lavrov has reiterated the need for cooperation over the US plans for a European missile shield. The issue is creating a widening chasm between the two nations.Washington maintains the shield is to protect against attacks from rogue states such as Iran, but Moscow is increasingly discontented with the plan. Russia wants legally binding guarantees that the system will not compromise its own security, but all the US is prepared to offer is its word on it.Some experts explain Russia’s concern with promises in the past that were never fulfilled. For example, when the Soviet Union collapsed, Moscow was assured that NATO would not expand towards its borders. But the alliance did, recruiting new members over two decades.Russia insists that words are good, but words put on paper and properly signed and ratified are much better. Moscow wants the strategic balance in the world not to be tipped by the shield.“Facts on the ground, that have been created on the basis of American national design of missile defense, which was not accepted by us as a reasonable way to respond to what is perceived as being the purpose of this anti-missile system. So we want to stick to the original agreement that there will be no parts of the system that would create risks for the strategic stability and for the potential in the strategic stability area, namely strategic arsenals of the participants of the system,” Lavrov said.Russia has offered to build a missile shield in Europe with NATO, but that offer was turned down. NATO said Russia can participate, but it can’t be a joint project because Russia is not part of the alliance.The shield is to have the whole of Europe covered. Romania was chosen as one of the locations for elements of the system, and the local population seems to be much less doubtful about the project, as compared to people in Poland and the Czech Republic, who protested against similar plans on their soil.The vice-mayor of the Romanian village of Deveselu still cannot believe his luck. After Washington picked the place in Romania’s poorest region to locate a new radar base, locals have been all smiles about hypothetical investment.“When we first heard that the US will build a radar base here, we were a little bit scared. But later we were informed that having this base here would mean better infrastructure and possibly jobs for us locals. The airbase in Deveselu was deserted for ages, now it will have a second chance,” he told RT.The proposed base is to consist of radar facilities and interceptor rockets. It is scheduled to be built by 2015 and will become instrumental in President Obama’s European anti-missile defense shield.In the 1950s, an airbase in the Romanian town of Deveselu was used by the Soviet forces. Now, with Washington’s plans to place a radar base there, locals have a joke: should Bucharest change its foreign policy again, the place will be occupied by the Chinese.Similar plans were no joke for some in other European countries. Thousands in the Czech Republic and Poland protested against the initiative to have military bases on their soil, with mixed results. While the first line of interceptor missiles was eventually placed in Poland, the Czechs suddenly pulled out of the anti-missile defense plans. In Romania, there have been no demonstrations like that at all. “There is a historic reason which makes Romania one of the most pro-American countries in the world. It has been explained to us by our older generations that bad things and the communists came from the East, so everybody expected the Americans to balance the whole thing. So there is this sentiment and feeling that the US presence is a counter-balance to the Russian presence or influence in the region,” explains Iulian Chifu, Director of the Centre of Conflict Prevention and Warning in Bucharest.If that is the case then what security would this new shield provide? And, most importantly, defense from whom? Not even two years since Barack Obama restructured the Bush-era European shield scheme, Moscow’s delight over the US president’s move was replaced by feelings of discontent and concern.“We are worried that Washington does something before informing us of these actions. It is unclear what exactly they are creating. As soon as we understand, that this system won’t be used against Russia, when we will have legally binding guarantees to that, then this tension will be resolved,” Russian Deputy Defense Minister Anatoly Antonov says.Despite being described as fruitful, the recent summit between President Medvedev and NATO ambassadors in Sochi brought no consensus on anti-missile defense.? So experts say the issue will remain a thorn in the side for both Moscow and Washington. At least until next year, when the next NATO-Russia council meeting will be held in Chicago. By that time, construction of the radar facility in Deveselu would most likely be in full swing.Exclusive interview of Sergei Lavrov to the Voice of Russia Young, Jessica JordanJul 13, 2011 02:00 Moscow TimeSpecial guest today is the minister of Foreign Affairs of the Russian Federation Sergei Lavrov.?First of all we would like to send our condolences to the families of those who lost their loved ones in the Volga river tragedy.Thank you, we appreciate this.We wonder how you would comment on the results of the Quartet meeting.Well, the Quartet met yesterday in Washington. We discussed the situation which is not very encouraging at the moment because the negotiations have been stuck for almost a year. And we all agreed that we all want the parties to resume the negotiations without any preconditions but of course respecting? the previous agreements and the existing? legal basis accepted internationally -? these basis being the Security Council`s? resolutions, the European initiative, the road map plan, the Madrid principles.The components of the final deal are all there. But not all these components the parties must agree.For the time being Israel is mostly preoccupied with its security (which is very much understandable).? The Palestinians are preoccupied with the fact that for many, many decades they could not have their own state as promised by the international community in the middle of last century. So the components of the deal, as I said, are available.We all understand that the parties would start by discussing specific borders based on the 1967 lines with agreed swaps, And the second priority would be Israel`s security. Those two issues are very difficult for obvious reasons but it is also understood that while concentrating on them the parties would not abandon other elements of the final status issues, namely the fate of Jerusalem, the fate of Palestinian refugees, water resources, and so on. Our discussion yesterday showed that we all want them to start, at the same time we also believe that the Quartet could usefully help the parties to sit down to the negotiation table with a position which we want to negotiate. The elements of this position are almost agreed. We need to find the right language because psychological effect is no less important than the substance sometimes, and this is exactly the case. So we encouraged our experts to continue discussing the language, and we give them instructions on what we want to achieve - the resumption of the negotiations and assuring the parties that the interest of neither of them would be ignored.Well, the western countries continue their military operation in Libya while maintaining their call for a new Security Council resolution on Syria and supplying Libyan opposition with weapons. As we know, Russia strongly opposes any new resolution on Syria provided the Libyan experience for US air strikes. But critics of Russia say that Russia supports the dictatorship of Gaddafi. What is your stand on that and how would you respond?Well, I think this is something based on lack of knowledge of the Russian position. When Gaddafi gave orders to his air force to kill civilians on the ground, we were among the first to condemn this, and we joined consensus in the Security Council on the first resolution on Libya (number 1970) which called for immediate cessation of hostilities, which authorized total arms embargo on any supply of weapons to the Libyan territory and which also called for immediate beginning of the political process. And as I said this was a resolution adopted by consensus, including of course the Russian voice.Then when Gaddafi did not listen to the international community, the second draft was introduced on the basis of the request from the League of Arab States, which wanted the Security Council to authorize a no-fly zone in the Libyan air space and Russia supported this request. And we negotiated the text in the Security Council which did exactly that, namely declaring the no-fly zone over Libya, but we had problems with the way this resolution described the means to achieve this goal, the paragraph which prevented us from voting in favor, gave a carte blanche to everyone to do anything they want to achieve the purpose of this resolution. We wanted to specify it so we could know before the vote who is going to volunteer to implement the authorization of the Security Council, what would be the rules of engagements, given the fact that the task of the operation is to ensure the no-fly zone regime, not to attack the ground targets, including non-military targets.We wanted to know what would be the limits to the use of force. Unfortunately, co-sponsors rejected our proposal to finalize the negotiations on this paragraph, and they put it to a vote the way it was drafted, which as I said prevented us from supporting the resolution. But since we supported the goal but disagreed with the means we did not use veto and abstained together with China, Germany, India and Brazil.So now we unfortunately see that our concerns have been grounded because the way the resolution is being implemented goes far beyond the authorization about the no-fly zone,? no-fly zone regime was tried by the Security Council in the past in Iraq and it was interpreted unambiguously in a very clear way that the no-fly zone regime involved too legitimate targets: first, the air force of the country in question, which is in the air space and the second legitimate target when the coalition planes patrolling the no-fly zone are being targeted by the radars and entire aircraft systems of the country in question.These two legitimate targets have been used in interpreting the resolution on Iraq. The current resolution is being interpreted by NATO which volunteered to implement it in the way which is absolutely without any limits. You mentioned the supply of arms, before that there were instructors from Europe sent to the ground and people even talk about a ground operation. The air strikes themselves go well beyond military targets, some residential quarters were hit and it is a cause of concern because the main goal of the resolution is not to hit the targets with the risk for civilian population, it is exactly the protection of the civilians, who suffer both from Gaddafi forces and forces of the coalition. So I think the recognition that this is not what we all want is gaining ground and just a couple of days ago discussions were renewed on the need for political process.We support the African Union initiative to start talks between representatives of Tripoli and those of Benghazi transitional national council on the understating that Gaddafi himself of course would not have any place in future Libya and that Gaddafi himself would not participate in those discussions.We have some encouraging signs that both Tripoli and Benghazi are discussing now specific terms of introducing something like administrative mechanism for preparing for the transition. So we will be only gratified if this succeeds. President Medvedev repeatedly made initiatives on supporting the mediation efforts on the African Union, the UN. He met last week with President Zuma of South Africa in Sochi, and President Zuma presented the African Union plan which is very much about creating these interim negotiating administrative mechanisms which would open the way for full-fledged discussions of the future state of Libya.What do you think should be the status of Muammar Gaddafi if there are talks between the two?Well, we agree, as I said, that he must go, he has no place in the new Libya, and the rest is subject to discussion. And first of all it will be for Libyans themselves, I heard the views of Benghazi people expressed informally that they would be prepared to discuss a compromise, whereby Gaddafi would stay at an agreed place, probably in Libya itself, which will be provided with some subsistence. Of course he is under the International Criminal Court verdict, but again we have to think not about formalities but about the future of Libya and of the fastest way to stop the violence. You also mentioned Syria. You know, in any situation we want to promote political process, we want to promote engagement, not isolation. Of course President Assad made some mistakes, but unlike Gaddafi, Assad introduced a series of reforms, he cancelled the state of emergency which had lasted for several decades in Syria, he announced two amnesties of prisoners, he invited the opposition to a national dialogue which started a couple of days ago and should continue, in which many opposition leaders agreed to participate. He also suggested to discuss at this national dialogue some very far reaching reforms –constitutional reform, electoral legislation reform, reform of the legislation of the media, and the opposition should not ignore this. If the opposition believes that they should reject anything coming from Assad and the expectations that the Libyan scenario would be repeated, I believe that it is against the interest of the Syrian people and of many neighboring countries, because Syria is a very special place in the Middle East and it plays a very important role in what happens in Lebanon, what happens with the Kurds in many countries, and what happens in relations between Shia and Sunni of the Arab nation.Actually, I would like everyone to look on what is going on around Yemen –the situation is no less dire in that country- only to mention the fact that the presidential palace was hit by the shells and president himself was gravely wounded, as well as prime minister, deputy PM, speakers of two chambers of the parliament. But everyone is talking not about condemning one side and supporting another side, but about the dialogue which both the government and the opposition must immediately engage in - this is the unified position of the US, of the EU, Russia, the UN, the Arab League, the Gulf Cooperation Council, and I believe the responsible approach would be to use the same position vis-à-vis what is going on in Syria, encourage people to sit down and talk, don`t create illusion on one side that they can count on the military support of the intern community like it happens in Libya.We know you are going to meet Hillary Clinton here and you are going to sign a long-awaited child adoptions agreement. And according to the Russian child rights ombudsman, a similar document will be signed with Israel in near future. Can you explain why Russia insisted on that kind of intergovernmental agreement and why did it become important to sign it after decades of living without it?I think that in any situation which involves citizens of two or more countries it is necessary to protect them as much as you can. And international intergovernmental agreements is a very reliable way to do this. We already signed the agreement on cooperation in the area of adoption with Italy, we are also negotiating one with Israel, and on the basis of the same principles we suggested to the US government to start negotiating a similar treaty. The reason being the absolutely outrageous facts of humiliations and even murder of Russian children adopted in the US, you know about these cases, I think they are almost 20 now, some of them are in court. But bad treatment of kids in some families continues. Please, understand me right- these cases are minimally compared to the entire number of adoptions in the US from Russia and the number of adoptions is more than one hundred thousand.So those are indeed could be considered as violations of? children`s rights but this does not make it less important because every life is precious and we want to be sure that everything a state can do to protect a child in such situations must be done.The US government for quite some time was quite reluctant to enter negotiations explaining that here in the US those issues are within the competence of the states, not the federal authorities, but I was very gratified when eventually we persuaded our partners to sit down and look at this situation and we agreed a treaty which protects Russian kids, which ensures the mechanisms to monitor how they are doing in the families in the US, who adopted them, and which also makes sure there will be no so-called independent adoptions, all adoptions would be made through a competent authority, to be designed by the US, the federal government and the states, which would be responsible for checking whether the candidates who adopt a Russian child are psychologically stable and which would also be responsible for making sure that there is an access of the Russian government to a kid if need be. This is all part of the agreement, and I believe it is a fair deal.Let`s talk about Russia-NATO decision to postpone issue of the European missile defense to the next summit in Chicago. Moscow says that ignoring Russia`s concerns on the European defense system could hurt the Russia-NATO ties and possible lead to a new arms race. Do you think it is possible still to reach an agreement with NATO on this issue?First of all, we did not postpone any decision to any particular date, we have not even agreed to have a NATO-Russia summit next year in Chicago. Our NATO partners were mentioning this as a date when it could be possible to meet but the formal invitation was not issued, and I cannot even think at this moment that we would be ready to reply immediately, for one reason - it is not some artificial deadlines, it`s the substance of the agreement on missile defense, on anything else on this matter which must take precedent.And on missile defense as far as substance is concerned. In July 2009 when President Obama visited Moscow they issued with President Medvedev a joint statement on missile defense, saying that they want their teams to work together to develop a common vision of missile defense, based on common analysis of threats, common design to respond to those threats, and then common effort to establish technical and military means to be ready for potential threat. And the talks started between Russia and the US. Then after the Lisbon summit last year similar exercise began in Russia-NATO Council and these discussions continue on both tracks, bilateral and with NATO, but the problem is that parallel with those discussions that have not reached results yet facts on the ground are being created on the basis of American national design of missile defense which was not accepted by us as a reasonable way to respond to what is perceived as a purpose of the entire system.So at the moment we want to stick to the original agreement, that we need to have a joint understanding of why we need this missile defense system, where threats are coming from. If it is from outside the Euro-Atlantic area as the Americans tell us, why don`t we discuss criteria which would guarantee that it is exactly the way it would be constructed and that there would be no parts of the system which would compromise, which would create risks for the strategic stability and for the potential in the strategic stability area namely strategic arsenals of the participants of the system. So we not only say as we did in Lisbon that we do not represent a threat to each other and we are partners but we also translate this statement into practical arrangements on missile defense. Actually it relates also to a broader issue of indivisibility of security in the 1990s in NATO-Russia Council, in Organization for Security and Cooperation in Europe, the presidents and prime ministers endorsed several statements saying that security is indivisible and no country in Euro-Atlantic region would increase its own security at the expense of security of any other country in this region.It is a political declaration, a political commitment but unfortunately it did not work in practical terms, despite the promises to the contrary NATO was expanded in the absence of the Warsaw Treaty.Despite the commitments to the contrary, military infrastructure was created on the territory of new NATO members, all this was, solemnly proclaimed as our common position as the political commitment but those commitments have not been respected. So we believe and President Medvedev three years ago suggested to do this in the form of the European security treaty that those commitments must acquire legal force, that they must be implemented in practice, and the situation with missile defense is exactly about indivisibility of security.We either have? the Euro-Atlantic community united against common threats as the design of the US as being presented but without any practical translation into real life or we will create more and more dividing lines in Europe and we will create in Europe zones with different security level.So we need- first- guarantees that no participant of this European missile defense will feel that its security is at risk and that the discussions on the criteria to make sure this is the case that the future missile defense system would be created to protect all of us from threats coming outside, that such criteria geographically, in military terms, technically should be discussed and agreed.We are not pessimistic about the entire exercise though the latest developments certainly do not make us happy, we continue the talks, we did so in Sochi when NATO-Russia Council held its meeting and Pr Medvedev talked to the participants and we will be discussing this tomorrow with the US and there will be continued discussions between the two military.You know, it`s been mentioned that Moscow will submit a claim next year to the UN to expand its Arctic shelf borders. Other nations including the US have also increased their activities in the region, and it is described by some analysts as a new re-division of the Arctic. How do you see the role of Russia in this process and does it need to increase its military presence there as the US and Canada do??? May the future of the Arctic be resolved peacefully?Well, first of there is no such thing as redesigning of the Arctic landscape and redesigning the legal regime of the Arctic. The five coastal states, the Arctic Five so to say, back in 2008 agreed during their meeting that there is no single problem in the region that cannot be resolved on the basis of existing law, this law being the international Convention of 1982.Then this position was endorsed by the entire Arctic Council which is composed by eight Arctic states and you now the fact that this is really the case was demonstrated by the signature and entry into force of the Russian-Norwegian agreement on de-limitation in the Barents Sea area.There is no single issue in the area that would require any military presence of the non-regional actors, be it countries or organizations. The Arctic Five, Russia, the US, Canada, Norway and Denmark are perfectly capable of maintaining the necessary level of security, the freedom of shipping and safety of the shipping and we are open to other countries who want to cooperate but on the basis of the rules of the game established by the Arctic countries.We met last May in Greenland, in the city of Nuuk, as the Arctic Council ministerial meeting and we adopted the first pan-Arctic legally binding agreement on search and rescue and instructed our experts to draft a Treaty on how you fight oil spills. We also endorsed the rules for observers who want to participate in the work of the Arctic Council which provide for them to be parties to projects like exploration of oil and gas, transportation of oil, gas and other commodities through the Northern Sea route, participation in scientific research and many other activities.But I would like to emphasize once again that there’s no problem requiring any military involvement in the Arctic. Everything must be and should be on the basis of the international convention of the law of the sea and it’s a common position of the members of the Arctic Council, including Russia and the US.How would you describe Russian-US relations right now?Well, they are certainly on the rise and the Obama administration when it announced the reset of our relations clearly recognized in my view that the policy of the previous administration was leading us to some very unnecessary confrontational situations.I want to be understood right, both President Putin when he was president and Dmitry Medvedev when he became the leader of Russia they had very good personal relations with President Bush but somehow the chemistry from the top didn’t translate into some cooperative efforts on the lower levels, on the contrary on the lower levels, we felt some confrontational attitude, unnecessary and artificial irritators and when the Democrats came to the White House the situation changed.We have much more developed and elaborate system of cooperation which is not based only on very good personal relations between the two presidents. It is also structured and systemic. Testimony to that is a successful launching and functioning of the presidential commission which was created under the two presidents with the Secretary of State and the Foreign Minister of Russia being coordinators of twenty working groups now.Last two groups were created on innovations and legal issues. All of them have produced some very meaningful results and the groups cover any imaginable area of our cooperation, economy, military, environment, social issues, human rights etc.The new approach of the new Administration to American-Russian relations also helped us to conclude very important START Treaty and 1,2,3 agreement on cooperation and peaceful usage of nuclear energy was eventually ratified by the Congress and it’s beneficial not only for bilateral relations between Russians and Americans but also for our joint cooperation in third countries.So, there are achievements which are not negligible but there are challenges ahead. What we want it to concentrate on projects that would promote joint ventures in innovation and modernization area and quite a number of American companies are coming to Russia. We also want to take decisions jointly the positive effect of which will be felt by the citizens of the countries, you mentioned the adoption agreement, I think, this is one of them.I would also mentioned an agreement reached to facilitate the visa regimes, so that Russian and American businessmen and tourists could receive long-term visas, multiple visas and save time for visiting each other. And also official travel would be liberalized and brought to the multiple visa basis.And when Vice President Biden was in Moscow in spring, the Russian side suggested to have a more ambitious goal to move towards a visa-free regime. We negotiate this regime with the EU, we already have such regime with almost 100 countries, including Israel by the way, and we see no reason why we should not put this goal as an immediate task to start working on with the US. Two-three years ago this would be unthinkable even to mention that we might have a visa-free regime but now I think it is very realistic.Of course, we have differences, any two big countries would have something on which they do not see eye to eye - I mentioned missile defense, there are some other things, but the main feature of this particular period of the Russian-American relations is that we do not make too much fuzz out of these differences but we concentrate of course on where we can agree, where we can achieve result but we also discuss in a open friendly manner the things on which we differ, and I am sure that this approach is the only way to proceed. We would not ever agree on each and every coma in our positions but as we concentrate on the things which still divide us, we reduce the list of such items, we add to the positive agenda and this is the way to proceed.Our special guest in the Voice of Russia in Washington was Russia`s foreign minister Sergei Lavrov.? Mr. Lavrov, thank you very much.Thank you! I congratulate the VOR on the opening of this studio here in Washington and I wish you good luck. I am sure that your work here would help the Americans to know more about Russia.Thank you so much.09:24?13/07/2011ALL NEWSRAPP session opens in Petropavlovsk-Kamchatsky. Tass 72 VLADIVOSTOK, July 13 (Itar-Tass) —— The Russian-American Pacific Partnership (RAPP) opened its session here on Wednesday. Businesspeople from the countries are participating in the RAPP session. Governor of the Kamchatka Territory Vladimir Ilyukhin noted that the relations between the Russian Far East and the United States have long-standing good traditions. “Our territories launched a close cooperation during the Great Patriotic War, when Petropavlovsk-Kamchatsky was a transit hub for Lend-Lease supplies,” the governor noted. He expressed hope that the Petropavlovsk-Kamchatsky port will turn in a transit and refuelling base for U.S. ships soon. The port operates currently to handle the vessels within the Northern Sea Route. In a video address to the participants of the RAPP session, U.S. Ambassador to Russia John Beyrle noted that RAPP is among the achievements of bilateral policy seeking for mutual beneficial cooperation. The ambassador emphasized the U.S. gives a close attention to Russia’s entry in the World Trade Organization. The Russian-U.S. trade makes 31 billion dollars and only one percent of U.S. overall trade and the U.S. investments in Russia amounted to 0.5% of total U.S. investments, Beyrle stated. He noted that Russia’s accession in the WTO will promote broader bilateral relations and an expansion of bilateral business ties. The diplomat stated that the countries will sign an agreement just in a few hours that will permit to issue three-year multiple entry visas for businesspeople and tourists. The countries are ready to issue 12-month multiple entry visas for officials from both states that will be the first step for the transition to three-year multiple entry visas and the first step for further liberalizing of the relations between the two countries, Beyrle said. The Russian-American Pacific Partnership will discuss numerous issues to improve economic relations between the countries at a two-day session in Petropavlovsk-Kamchatsky. RAPP is holding its 16th session. Under the bilateral agreement RAPP has sessions once a year in the U.S. and Russia in turn. Russia's Soyuz spacecraft with U.S. satellites blasts off from Baikonur 13/07/2011MOSCOW, July 13 (RIA Novosti)Soyuz-2.1a space carrier with six U.S. Globalstar-2 communications satellites blasted off on Wednesday morning from the Baikonur space center in Kazakhstan, a spokesman for the Russian Space Agency, Roscosmos, said.The launch of the spacecraft equipped with a Fregat booster was initially scheduled for July 11 and was later moved to July 12. Both launches were postponed due to various technical reasons during the preparations for the launch.The separation of the satellites from the Fregat booster is scheduled for 8:39 Moscow time [4:39 GMT]," the spokesman said.Globalstar is a low-earth orbit (LEO) satellite-based telecommunications system founded by U.S.-based Loral Corporation and Qualcomm Inc. It provides high-quality satellite voice and data services across North America, and to over 120 countries mercial launches of Soyuz carrier rockets are managed by Starsem, a European-Russian joint venture, which comprises EADS SPACE, Arianespace, the Russian Federal Space Agency, and the Samara-based Progress design and production center.09:13?13/07/2011ALL NEWSKunashir blasts triggered by munition disposal rather than drill. Tass 86 TOKYO, July 13 (Itar-Tass) —— Outdated ammunition were being disposed on the South Kuril island of Kunashir some time ago and the explosions, which were heard on the island, “were not linked with any military exercises,” the Russian Embassy in Tokyo said in reply to a request from the authorities in the Japanese city of Nemuro, from which Kunashir is seen in a good weather. The request was passed to the municipality through the Japanese Foreign Ministry, local media said. Nemuro and several other settlements on the northernmost Japanese Island of Hokkaido have heard strong blasts on Kunashir since last April. Local residents affirmed that the windows and the walls were shaking in their houses. The Nemuro authorities addressed in the Japanese Foreign Ministry to make the situation clear. July 13, 2011 10:04Russian, Swiss presidents to discuss partnership for modernization. July 13 (Interfax) - The Russian and Swiss Presidents, Dmitry Medvedev and Micheline Calmy-Rey, respectively, are meeting in Kolomna near Moscow on Wednesday to discuss pressing bilateral and international issues and to attend the signing of a declaration on partnership for modernization."An essential part of the forthcoming talks is expected to be the discussion of Swiss representation of the Russian interests in Georgia and Georgian interests in Russia. Our country cut diplomatic ties with Tbilisi in 2008. Thanks to Switzerland's 'good services' there is an opportunity to address the humanitarian problems of our fellow citizens and the large ethnic Georgian community in Russia," the source said."At the current stage, Russian-Swiss ties are characterized by a steady, positive dynamic. The intensity of our political dialogue has reached an unprecedentedly high level in recent years," the source said. The declaration regarding cooperation for economic modernization will be signed in Kolomna by the two countries' economy ministers, E. Nabiullina and J. Schneider-Amman, in the presence of the Russian and Swiss leaders. "A draft of this document was prepared on the basis of the 2011-2013 Economic Cooperation Action Plan between the Russian Economic Development Ministry and the Swiss Economy Ministry, signed during the previous Russian-Swiss summit in Sochi on August 26, 2010," the source said.Switzerland is also one of Russia's stable trade partners, the Kremlin official said.In 2010, trade grew by 36.2% of the previous year to $11.1 billion, including Russian exports at $8.7 billion and imports at $2.4 billion. In January-April 2011, the positive dynamics remained: compared to the same period in 2010, trade rose by 26.6%, including exports by 25.9%, imports by 29.2%, which allows the parties to talk about reaching the pre-crisis level of the bilateral trade in the short term. Despite the general reduction of the Swiss investment abroad, throughout 2010 the Russian economy managed to raise additionally about $4.7 billion in Swiss investment. Russia's total investment by the end of 2010 stood at around $5.6 billion (ranks 12th among investor countries), including $3.2 billion in direct investment.Swiss President Micheline Calmy-Rey is in Russia on a working visit at the invitation of her Russian counterpart Dmitry Medvedev. This is her second visit to Russia as the head of state (the first one was in November 2007). The current visit by the Swiss president is timed to coincide with the opening in Kolomna of a new plant of the Schurovsky Cement company, owned by Swiss Holcim Group (the facility upgrade costs around 500 million euro). "The opening ceremony will be attended by the two heads of state," a Kremlin source said.kk jv(Our editorial staff can be reached at eng.editors@interfax.ru)04:48?13/07/2011ALL NEWSMedvedev, Calmy-Rey to discuss Moscow-Bern cooperation. Tass 4 MOSCOW, July 13 (Itar-Tass) — Interaction between Russia and Switzerland in the world arena, including on the issue of representation of Russian interests in Georgia will be discussed on Wednesday by the two countries’ Presidents Dmitry Medvedev and Micheline Calmy-Rey. Their meeting will be held in the town of Kolomna in the Moscow region, the Kremlin press service told Itar-Tass. “The exchange of views on important issues of European and world politics will be aimed at expanding cooperation spheres,” the press-service noted. The Kremlin has pointed to “a significant convergence of views of Russia and Switzerland on the most pressing global and regional issues, which creates a good basis for cooperation between the two countries within international organisations and forums.” Bern took a benevolent interest in the Russian initiative for a European Security Treaty, and makes a practical contribution to its substantive discussion by organising in 2009 and 2010 in Geneva a series of expert high-level meetings on the European security architecture - the so-called Chambesy process - with the participation of representatives of international organisations (the United Nations, OSCE, CSTO, NATO) and political scientists. “The discussion of cooperation with Switzerland on the matters of representation of Russian interests in Georgia and Georgian - in Russia after official Tbilisi broke diplomatic relations with our country in 2008 is expected to become an important part of the upcoming talks,” the Kremlin noted. The press service recalled that it is carried out through the relevant Interest Sections at the Swiss Embassy in Tbilisi and Moscow, which are regulated by intergovernmental agreements - the Russian-Swiss of 13 December 2008 and the Georgian-Swiss of March 4, 2009. “Thanks to Switzerland’s good offices there is an opportunity to solve urgent consular and humanitarian problems of our compatriots and the numerous Georgian diaspora in Russia,” the Kremlin noted. Russia’s export to Switzerland increased by 43 percent and exceeded one million Swiss francs, Chief of the Swiss Federal Department of Economic Affairs Johann Schneider-Ammann said earlier. At Monday’s meeting of business communities at the Russian Chamber of Commerce and Industry he noted that the two countries have got prosperous and intensive relations. But, he is confident that Russia and Switzerland should pay special attention to further development of innovations. Russia has a huge potential in this sphere, Schneider-Ammann said. According to the Swiss minister, Russia highly appreciates his country for confidence, while Switzerland considers Russia’s colossal potential. In 2010, Russia’s export to Switzerland grew by 43 percent, as compared to the period of the global financial and economic crisis, Schneider-Ammann said, adding, that the indicator reached 1.4 million Swiss francs. The Swiss high-ranking official stated that his visit to Russia is aimed at the analysis how to intensify bilateral cooperation. In his words, Switzerland hails Russia’s accession to the World Trade Organisation, which will make it possible to turn the relations between the two countries into more transparent. Deputy President of the Russian Chamber of Commerce and Industry Georgy Petrov stated that “closer relations with Switzerland are simply of huge necessity for our country in the process of Russia’s modernisation and transition into the innovative development way.” “About 600 Swiss companies develop business activity in Russia. The above-mentioned companies are involved in the business activities not only in Moscow and St. Petersburg, but also in Vladivostok, the Arkhangelsk region and the Republic of Tatarstan,” he said. 02:46?13/07/2011ALL NEWSRF, Swiss presids to take part in cement plant opening in Kolomna. Tass 2 MOSCOW, July 13 (Itar-Tass) — Russian President Dmitry Medvedev and President of Switzerland Micheline Calmy-Rey, who is in Russia on a working visit, on Wednesday will attend an opening ceremony of the renovated Shchurovsky Cement plant in Kolomna outside Moscow. This company belongs to the Swiss group Holcim. About 500 million euros was invested in the modernisation of the facility. The interagency Declaration on cooperation for the economy modernisation will also be signed in the presence of the two leaders. The draft document was prepared based on the Action Plan on Economic Cooperation between the Russian Ministry of Economic Development and Swiss Economics Ministry for 2011-2013, which was signed during the previous Russian-Swiss summit in Sochi on August 26, 2010. The document was signed by RF Economic Development Minister Elvira Nabiullina and Swiss Economics Minister Johann Schneider-Ammann. Shchurovsky Cement is Russia’s first cement factory, founded in 1870 by German national Emil Lipgart. The plant sells its products in Russia and CIS countries. In 2007 the plant launched a major modernisation process that was aimed at transferring the production to a modern, dry process. The upgrading allowed the enterprise to meet the latest requirements for all key indicators: environmental safety, economical use of natural resources, more efficient use of all forms of energy, an innovative concept and technical support, as well as the minimum risk of work injuries. Shchurovsky Cement is the only Russian producer of white cement. The plant’s products have high quality characteristics that allow their use for the production of concrete and reinforced concrete monolithic structures, precast concrete, as well as the use in all types of civil and industrial construction. The Moscow authorities pointed to the stable upward dynamics in the Russian-Swiss relations and a high level of the political dialog. The presidents of the two countries had held regular contacts in the past years. In particular, Calmy-Rey’s visit to Russia is the second one after her visit of 2007. In September 2009, Medvedev paid first-ever official visit to Switzerland. Switzerland considers Russia as an important partner. In the effective foreign political concept of the country, Russia plays an important role as one of the most important countries exerting influence on the European stability, the Kremlin press service said earlier. Switzerland is one of Russia’s stable trade partners. In 2010, trade turnover went up by 36.2 percent as compared to 2009, and reached 11.1 billion U.S. dollars, the press service noted. In January-April 2011, bilateral trade increased by 26.6 percent, versus the same period of 2010, while allows the sides to negotiate prospects for the regaining of the pre-crisis indicators of trade, it said. Russia mainly exports to Switzerland energy resources, non-ferrous metals, precious metals and gems, while importing pharmaceutical goods, machines, electro-technical products, optical and measuring instruments and equipment, and watches. In spite of the overall decline of the investment activity of Swiss companies abroad, in 2010, Russia managed to draw extra 4.7 billion U.S. dollars of Switzerland’s investments in the country’s economy. All in all, Russia accumulated about 5.6 billion U.S. dollars of Swiss investments by the end of 2010. More than 600 companies with the participation of Swiss capital are registered in Russia. Among the biggest Swiss investors operating in Russia are Nestle (food industry), Asea Brown Boveri (ABB) (engaged in the production of equipment for industry, construction and public utilities), as well as Schindler (elevator and escalator maker). Among the biggest joint projects with the participation of Swiss companies is the Novartis Company’s plan to build a pharmaceutical facility in the St. Petersburg Special Economic Zone (SEZ). Russia’s accumulated investments on the market of Switzerland are estimated at 7.8 billion U.S. dollars. Renova Group is Russia’s biggest investor in the economy of Switzerland. Its total investments exceed three billion U.S. dollars. Currently, Renova is the biggest investor of such companies as Oerlikon (innovations in the spheres of solar energy, space exploration, laser technologies, e-data storage units, and so on) and Sulzer (production of high-tech equipment for the energy, metallurgical and pulp-and-paper industries). The two presidents will also discuss humanitarian cooperation. Starting from February 1, 2011, the Russian-Swiss agreement on easier visa regime and the agreement on readmission become effective, which is an important step in the development of bilateral relations. Those important agreements opened new possibilities for closer humanitarian contacts and created a solid basis for the counteraction to illegal migration. This year in the Russian-Swiss relations is full of cultural events. On February 10, 2011, Russian Culture Minister Alexander Avdeyev in the presence of the president’ s wife, Svetlana Medvedev, opened the Festival of Russia’s Culture in Switzerland. 11:14?13/07/2011ALL NEWSBordyuzha discusses with Rakhmon CSTO security aspects. Tass 122 DUSHANBE, July 13 (Itar-Tass) —— The Collective Security Treaty Organisation’s Secretary General, Nikolai Bordyuzha, discusses with Tajikistan’s President Emomali Rakhmon the situation in the region security in the framework of the organisation’s responsibility. Bordyuzha came to Dushanbe on a four-day visit on Tuesday night, Deputy Secretary of Tajikistan’s Security Council Akram Amonov said on Wednesday. The meeting is organised in the Palace of Nations in the one-to-one format behind the closed doors for reporters, thus no details are available. Amonov said that “the general range of issues discussed includes the situation in the organisation’s responsibility in the Central Asian region, fighting against terrorism and extremism, illegal turnover of drugs.” In the framework of the visit, Bordyuzha will have negotiations with heads of the country’s law enforcement authorities, he will visit the country’s presidential drug control agency. Reporters are not invited to those meetings, either. Lukashenko: New problems arise in Russian-Belarusian relationsToday at 10:00 | Interfax-Ukraine Minsk, July 13 (Interfax) - The Russian public does not have objective information about the situation in the Russian-Belarusian relationship, which is about to experience new problems, Belarusian President Alexander Lukashenko said. "As regards our common homeland, Russia, Belarus, and I would not rule out Ukraine, here we have a lot of work to do. Because the world is not that simple, and unfortunately, we have quite a few problems with Russia and new ones are arising," Lukashenko said at a meeting with President of the Russian Club of Military Chiefs Anatoly Kulikov in Minsk on Tuesday."So any association, particularly of influential people in the Russian Federation, is very important for us. We would like at least to deliver to you the information that is available today neither to the Russian public nor even to the Russian elite. This is why this is very important for us," Lukashenko said. Read more: and Belarus still bickering over privatisation prices as more targets added 13, 2011Belarus admitted on Tuesday that it is in negotiations with Russian interests over the privatisation of seven major companies, including potash mine Belaruskali and truck maker MAZ. However, it was also strongly hinted that the two continue to disagree on prices.Speaking at a meeting of the Customs Union in Moscow, Belarusian Prime Minister Mikhail Myasnikovich said his government is negotiating the possible sale of a number of assets to Russia. The pair are widely believed to have agreed a plan for the sales during the drawn out negotiations on the $3bn bail out to Minsk from the EurAsEC anti-crisis fund. It's assumed that the talks on the loan dragged on as the two bickered about price, and the PM's words yesterday suggested little progress is being made on that front. Since then, there have been claims and counter claims over imminent deals, but none have yet gone through, with the antagonism between the pair clear. With a massive trade deficit to balance, Belarus has few options to get its hands on more cash right now apart from selling its prize assets. Russia knows this and has been seeking to drive home a number of bargains. The highest profile potential deals include the purchase of pipeline operator Beltransgaz by Gazprom and Uralkali's interest in Belaruskali. Since the loan was issued, Minsk has been trying to backtrack on Beltransgaz to link the deal to upcoming renewal of the gas supply contract between the two. However, Myasnikovich stated that gas sales, price formulas, and the gas transit system are all separate issues that are not directly linked, reports Prime. At the same time, it's worth noting that he did not explicitly state that they are not linked. Following reports in June that Uralkali had agreed to pay $15bn for 50% of Belruskali - as well as to loan $1bn up front - both sides pulled back to deny any talks had gone on. However, Myasnikovich discussed those talks that haven't happened yesterday, according to RIA Novosti, saying Uralkali has not outlined its proposals and complaining that the talks "could have been more dynamic." The PM complained that Uralkali has made no firm proposals on the deal, according to Belta; "I do not know why," he added, "probably they just do not want it." Myasnikovich also appeared unhappy about the pace of a deal to sell a stake in Maz to Russian Technologies to merge it with Kamaz. The PM directed reporters to ask the Russian side why the process is taking so long, adding that the selection of an assessor of the Belarusian assets had taken a considerable time. Other negotiations ongoing include the sale of a stake in fertilisers complex Grodnoazot to Rosneft and/or Sibur, a stake in refiner Naftan to Lukoil, a stake in the Mozyr oil refinery to Rosneft, a stake in Integral - a producer of semi-conductors - with Russian Technologies, and the stake in MTS Belarus - presumably to MTS.Uralsib writes: The acquisitions could add about 20% to Rosneft?s and 10% to LUKOIL?s primary refining capacity and would be a good fit for both companies? assets given the location of these refineries. However, there has been no indication of the potential price, and we believe that Belarus will attempt to avoid selling the assets at a discount to their Russian counter- parts. As for Gazprom, gaining control over Belarusian pipelines is unlikely to change its strategic plan of bypassing Belarus alto- gether as a transit country to the EU. We reiterate our Buy recommendations for LUKOIL, Rosneft and Gazprom.Rencap writes: We think Belarusian assets are of strategic importance to Russian oil and gas companies for a number of reasons. First, Russian oil companies could increase their margins by operating refineries closer to end customers in Europe (in contrast to refineries inside Russia, which face high transportation costs). Second, Belarusian refineries would allow Russian companies to partially hedge the Urals/Brent spread, which should be captured by refiners' margins. Third, both the Mozyr and Naftan refineries are located along the Druzhba pipeline and thus benefit from quite attractive logistics. For Gazprom, full ownership of Beltransgaz would reduce transit risk and strengthen its negotiating positions with European customers. As for the likely price, we think the current state of Belarus?s economy undermines its bargaining power and hence we expect fairly attractive terms for Russian companies, but tough negotiations. If the deals go through, we expect LUKOIL's refining capacity to grow 18% to 1,413 kbpd, and Rosneft's by 11% to 1,438 kbpd (assuming a 42.6% stake acquisition).TRANSLATED FROM RUSSIAN of General Staff of the RF Armed Forces on a working visit in Ukraine on July 13-14.13.07.2011, Moscow 00:50:15 Chief of General Staff of Armed Forces (AF) of Russia - First Deputy Defence Minister Gen. Nikolai Makarov, will be on a working visit in Ukraine on July 13-14, 2011. The press and information service of the ministry of defence informed. In accordance with the program of the visit, he will meet with Minister of Defense of Ukraine, Mikhail Ezhel and hold talks with Chief of General Staff - Chief of the Armed Forces of Ukraine, Colonel-General Grigory Pedchenko.The head of the Russian General Staff, with the leadership of Ukrainian defense ministry will discuss the status and development of the armed forces of both countries, the prospects for military and military-technical cooperation between them, the planning and conduct of joint activities of operational and combat training in Russia and Ukraine.In Zhytomyr Makarov plans to visit the 95th separate airmobile brigade to get familiar with its infrastructure and organization of educational process.New Russian-built jet fighters arrive Butagira & Martin Ssebuyira? (HYPERLINK "javascript:void(0);"email the author) Posted? Wednesday, July 13?2011?at?00:00KampalaThe Shukoi Su-30 fighter jets that government bought from Russia at $740 million (Shs1.8 trillion) have arrived in the country, military sources confirmed last night.UPDF Airforce yesterday used one of the fighter planes to conduct test flights over Entebbe, sparking panic among residents with the din of the roaring engines.People residing in or around Entebbe town said the deafening noise took them unawares and disrupted peaceful living. Lugonjo, Katabi, Kitooro, and Kiwafu were the most affected areas. “I am a poultry farmer and earn my living by rearing layers. The jets being tested on Sunday and Monday caused a setback in the way the birds lay their eggs,” said Ms Rose Namagara, a resident. Airforce Spokesman, Capt. Tabaro Kiconco, however, said the test flights are “normal and people should not get scared whenever we fly our aircrafts”.He said: “Areas in close proximity of military installations or airbases the world over are synonymous with such noise.”Defence officials declined to state when the jets were shipped into the country on grounds movement of military equipment and personnel is confidential information “since it has a security element.”The acquisition, at Shs1.8 trillion, of the military jets on the backdrop of soaring inflation stirred public anger with critics questioning the cost, timing and necessity - especially that Uganda is not known to be on the edge of war with any country. Mr Emmanuel Mutebile, the central bank governor, threw the Ugandan shilling into its worst volatility in 17 years, when he told UK’s leading business newspaper, the Financial Times, that President Museveni ignored technical advice to raid the country’s meagre foreign exchange reserves to buy the jets. The reserves that could last at least six months consequently diminished to a probable four months, he said. The statements triggered commotion in the local financial market, plunging the Ugandan shilling, which is now showing signs of recovery, to trade at 2, 700 to a US dollar.The Russian-built Shukoi SU-30 jet fighter, which the UPDF is understood to have acquired, is a twin-engine, multi-purpose aircraft for all-weather, air-to-air and air-to-surface deep interdiction missions, according information gleaned from the Internet. It can undertake combat missions within 3, 000 kilometre range, affording the UPDF the legroom to strike at distant targets with precision and efficiency.Speaking about the jet fighters in May, the Chief of Defence Forces said the investment would relieve the army for at least 25 years and the UPDF is “late in acquiring the aircrafts.” “There is nothing to celebrate [in the acquisition],” Gen. Aronda Nyakairima told journalists then at his Mbuya office. He said Uganda had no country on its mind while buying the sophisticated jets that some analyst predict could spark arms race in the mander: Russians stunned by Iranian version of S-200 Air Defense System[13.07.2011 10:20]Iran's experts have been able to optimize the Russian-made S-200 anti-aircraft missile system so well that the Iranian version of the system has stunned Russian experts, Commander of Khatam ol-Anbia Air Defense Base Brigadier General Farzad Esmayeeli said, Fars News Agency reported."These changes have been acknowledged and praised by those who have developed the system (Russians),"the commander stated, adding that the features of the Iranian version of the system are basically different from those of the Russian type.Esmayeeli added Iran plans to change the system's name due to the profound changes it has made in the system.Meantime, Esmayeeli pointed to the country's radar power, and stated that the Iranian air-defense unit owns systems that can easily monitor and trace all radar-evading and stealth aircrafts.He noted that Iran's radar capability was proved during the military drills conducted in the last Iranian year (ended on March 20, 2011) when Iran warned two US spy planes which wanted to near the Iranian borders.In November 2010, Iran successfully test-fired its sophisticated S-200 anti-aircraft missile systems.Iran's S-200 system is a very long range, medium-to-high altitude surface-to-air missile (SAM) system designed to defend large areas from bomber attack or other strategic aircrafts. Each battalion has 6 single-rail missile launchers and fire control radar. It can be linked to other, longer-range radar systems.Each missile is launched by 4 solid-fueled strap-on rocket boosters. Maximum range is between 200 and 350 km depending on the model. The missile uses radio illumination mid-course correction to fly towards the target with a terminal semi active radar homing phase.Russian-Chinese relations reach an all-time high – Ambassador 13, 2011 12:23 Moscow TimeRussian-Chinese relations have reached an all-time high, says the Russian Ambassador to China, Sergei Razov, in an interview on the occasion of the 10th anniversary of the Treaty on bilateral friendship and cooperation. According to the diplomat, territorial problems have been settled over the period, and economic cooperation has been boosted. Specifically, a gas pipeline is being built for Siberian gas to be pumped to China. Moscow and Beijing are coordinating their foreign policy, coming up with joint initiatives at the United Nations and other international organizations. The Russian Ambassador singled out increasingly intensive cross-border cooperation and contacts between people.Why Can’t the Dalai Lama visit Russia? 12, 2011In temple after temple in Buryatia, the capital of Buddhism in Russia, one color photo invariably holds a position of honor, often surrounded by garlands of flowers.The photo is of the Dalai Lama, the leader of Tibetan Buddhism since 1950.The vast majority of Russia’s estimated 1.3 million Buddhists follow Tibetan Buddhism. Despite the rupture of the Soviet era, this is a direct a legacy of work performed Tibetan and Mongolian missionaries who came to Buryatia and Tuva four centuries ago.Today, followers of Tibetan Buddhism, from Nepal to Mongolia to Colorado, revere the Dalai Lama as the latest reincarnation of a long line of spiritual leaders who have chosen to be reborn in order to enlighten others.In 1979, the current Dalai Lama made his first visit to the Soviet Union. In 1990, the year after the Nobel Committee awarded him Peace Prize, the Soviet Union awarded him one of its own top awards – The Order of Peoples’ Friendship. Coming at a time when economic ties with China were minimal, this gesture was a low cost way of trying to maintain the fiction of religious freedom in the Soviet Union. After the collapse of the Soviet Union, warm relations continued. In 1994, the Dalai Lama gave an address to Russia’s Duma, parliament. In later years, he received rapturous receptions on visits to Russia’s three heavily Buddhist republics – Buryatia, Kalmykia and Tuva. There, on Russia’s southern edge, he inaugurated temples and monasteries.But as Moscow’s trade with China became increasingly important, Russian visas slowed and, after 2004, stopped. China’s objections to the Dalai Lama center around his role as head of Tibet’s “Government-in-Exile,” a group that advocates independence for Tibet, currently an autonomous region of China.But Russia’s Buddhist population is steadily expanding. And visa requests for the Dalai Lama keep coming.In May 2010, Russia’s Foreign Minister Sergei Lavrov said in a speech to Russian lawmakers: “Russia is ready to help settle the conflict between China and the Tibetan spiritual leader, Dalai Lama. We know that the Chinese leadership is deeply committed to the Dalai Lama dissociating himself from any kind of political activity and separatist tendencies in regard to one or another territory in China.”Russia’s mediation offer seemed to have vanished into thin air.Then, two months ago, as the Dalai Lama was approaching the end of his 75th year, he formally resigned his political post as head of Tibet’s “government-in-exile.” Today, he officially exerts only a religious role as the head of Tibetan Buddhism worldwide.On a five day visit to Buryatia in early July, I got the same, unflinching view from Buddhists: we want the Dalai Lama to come and visit us. At one prayer hall, a nun, Tenzin Choidrin, her head shaved and her heavyset frame swathed in magenta robes, said that a price cannot be put on the role of the Dalai Lama for the rebirth of Buddhism in Russia. His visit, she said, would be like water, which is needed by parched, sunbaked soil.Now, when things are calm, would be a good time for Russia to stand up to China, and to follow the wishes of its Buddhist minority. One only has to look at Russia’s tense relations with its Muslim minority to see how indifference can lead to alienation, radicalization and secessionism. Just on Saturday, in the latest killing in a slowly grinding cultural war, Islamic militants in Dagestan, Russia shot dead a school principal who refused to allow female students to wear headscarves.Here on Russia’s Buddhist edge, Mongolian separatism is now on the back burner, after flaring up in the 1990s.The Kremlin is highly reluctant to irritate Beijing. China’s population is 10 times bigger than Russia’s. By the end of this decade, China’s economy is to be 10 times bigger than Russia’s.But now may be the time for Moscow to embark on proactive diplomacy.HELCOM to practice oil spill liquidation 13, 2011 04:00 Moscow TimeDuring the international response exercises to a major oil spill at sea, oil will be simulated by popcorn.The Helsinki Commission for the Protection of the Environment of the Baltic Sea (HELCOM), appointed the 30th of August the day for maneuvers off the coast of the Danish island of Bornholm.According to the scenario on which the exercises in the waters of the Baltic Sea are based, an oil tanker collides with another ship.As a result, the tanker’s hull is damaged which causes an outflow of five thousand tons of oil.The HELCOM Commission brings together nine countries: Russia, Germany, Denmark, Finland, Sweden, Poland, Latvia, Lithuania and Estonia.Russia changed its Ambassador in Israel 10:00Sergei Yakovlev, 63, was appointed a Russian Ambassador to Israel by President of Russia on July 12. He will change Peter Stegniya, who has held this post since 2007.??????Sergei Yakovlev got to know about his appointment in Washington and took part in the U.S –Russia high level meeting on Israel-Palestine conflict, which occurred on July 11-12.??????Mr. Yakovlev will arrive to Israel in the end of August. The ex-Ambassador Peter Stegniya is leaving Israel for Russia on Thursday, July 14. ??????Sergei Yakovlev is 40-year- experience diplomat. He was born in 1948. He started his diplomatic service?in 1971. Since September 1997 until January 2001 Mr. Yakovlev was Deputy Director of Near East and North Africa Department at the Ministry of Foreign Affairs. In 2001 -2006 he was a Russian Ambassador to the United Arab Emirates. Since March 2006 he was a special representative of Russian Minister of Foreign Affairs on Near East conflict. 06:33?13/07/2011ALL NEWSPutin to hold regular meeting of VEB Supervisory Board. Tass 7 MOSCOW, July 13 (Itar-Tass) — Russian Prime Minister Vladimir Putin on Wednesday will hold a regular meeting of the Supervisory Board of Vnesheconombank (VEB) at which the bank’s draft annual report for 2010 will be considered. The RF government’s press service said that the meeting participants also plan to discuss various projects with the bank’s participation, including financing the construction of the first start-up complex of the Arkhyz all-season mountain resort in Karachai-Cherkessia. The project’s cost is 6.4 billion roubles, VEB’s limit of the line of credit is 5 billion roubles. The project is implemented in accordance with the government’s resolution “On the creation of a tourism cluster in the North Caucasus Federal District, Krasnodar Territory and Adygeya Republic.” The Development Corporation of the North Caucasus (100 percent subsidiary of Vnesheconombank, designed to support investment projects in the North Caucasus Federal District) and OAO Resorts of the North Caucasus joint stock company, which was co-founded by VEB, take an active part in the project implementation. The agenda includes the issue of the instruments and mechanisms of VEB’s participation in the creation of the Institute for Development in the Far East Federal District and in the Baikal region. Within the framework of support by the bank of the country’s innovation process the meeting will consider the funding of the pre-investment stage of innovation projects of residents of the Skolkovo Foundation. The meeting will also discuss the issue of VEB’s participation in the activity of the Agency for Strategic Initiatives, funding of Olympic facilities, the financial rehabilitation of a number of Russian enterprises. In 2010, VEB profits amounted to 28.85 billion roubles. The amount of VEB own funds (capital) as of January 1, 2011 increased to 363.5 billion roubles against 340.1 billion roubles a year earlier. The bank’s loan portfolio amounted to 541.0 billion roubles, which is less than the figure at the beginning of 2010 (706.5 billion roubles). The portfolio volume decline is the result of the completion of the programme of refinancing of organisations’ debts to foreign financial institutions. The debt on loans provided by Vnesheconombank was either fully settled or transfer of receivables was made. Assets of the Bank of Russia, provided for the funding of these operations are returned in full, including interest on deposits. The loan portfolio of the Bank for Development proper increased by 24 percent and by the end of 2010 reached 348.9 billion roubles. As part of this portfolio the amount of investment credits (under investment projects) increased by one-third and reached 306.1 billion roubles. Vnesheconombank is a Russian, and former Soviet, bank and translated to English as the Bank of Foreign Economic Activity. It is commonly called the Russian Development Bank, although it refers to itself as “the state corporation “Bank for Development and Foreign Economic Affairs.” The institution is used by the Russian government to support and develop the Russian economy, to manage Russian state debts and pension funds. It is a part in the governments plan to diversify the Russian economy, and to do so receives funds directly from the state budget. From 2005 to 2006, both the assets and liabilities of the bank doubled from around $6bn to $12bn, and the income rose by 1.3 from $239mn to $301mn. In 1988, Joint Stock Bank Vneshtorgbank of the USSR was renamed the Bank for Foreign Economic Affairs of the USSR (Vnesheconombank of the USSR). In 2002, Vnesheconombank was restructured and it stepped up its efforts in servicing government programmes, reduced the scope of its commercial business and gave high priority to supporting government structural reforms. In April 2002, Vnesheconombank was appointed Vnesheconombank agent for investing temporarily free Pension Fund’s assets in securities denominated in foreign currency. In January 2003, VEB was appointed as State Trust Management Company responsible for investing pension funds. The special structural subdivision to handle pension funds was formed. In April 2007, the State Duma passed the federal law “On Bank for Development” regulating the legal conditions for the VEB. According to the bank’s website, Vnesheconombank is an instrument for pursuing government economic policy aimed at fulfilling objectives of overcoming economic growth infrastructure restrictions, boosting efficiency of natural resources utilization, developing high technology industrial sectors, unlocking the potential of innovation and production potential of small and medium-sized enterprises, supporting industrial exports and services. In pursuance of the Federal Law “On the Bank for Development” Vnesheconombank undertakes its activity as a development institution. It is responsible for providing financial support for investment projects of great importance for the development of the Russian economy, as they do not receive sufficient financial resources from the private sector because of high risks, long pay-back periods and complexity of required support instruments, etc. Vnesheconombank supports such projects both by way of extending credits and loans directly (jointly with private financial institutions) and by way of reducing risks (extension of guarantees, insurance of credits etc). Vnesheconombank’s participation in implementing investment projects of national significance allows private financial institutions to classify them as acceptable in terms of profit-risk ratio. RT News line, July 13Russian authorities to tighten water transportation rules State Commission, which has been investigating the tragic? sinking of the Bulgaria cruise ship, is due to propose changes to the code regulating water transportation rules in Russia, the transport minister, Igor Levitin, said on Tuesday. The minister said that the commission is considering tightening the safety regulations as well as the rules of passenger transportation on water. Despite the Bulgaria’s capacity only being 140, at the time of the tragedy it was carrying 208 people.Death toll in Russian boat disaster reaches 100 BSTMOSCOW (Reuters) - The confirmed death toll in a Russian riverboat accident reached 100 on Wednesday after divers recovered more bodies from the sunken vessel, an Emergency Situations Ministry official said.Twenty-nine of the 208 people believed to have been aboard the ageing, overcrowded boat when it sank in the Volga River on Sunday were still unaccounted for. Officials say 79 people were rescued.(Reporting by Tatiana Ustinova; writing by Steve Gutterman; editing by Jessica Bachman)Eighty five bodies from sunken Bulgaria riverboat identified 13/07/2011MOSCOW, July 13 (RIA Novosti)Eighty five out of 98 bodies recovered from the sunken Bulgaria cruise vessel in Russia's river Volga have been identified by their relatives, the forensics bureau of the republic of Tatarstan said on Wednesday.The bureau also said that the list of the identified people includes names of 12 children.The twin-deck Bulgaria sank on Sunday at 01:58 PM Moscow time (09:58 GMT) near the village of Syukeyevo in the Kansko-Ustinovsky district of the Republic of Tatarstan.The ship, built in 1955 and renovated 30 years ago, had no license for carrying passengers and had a number of safety faults, including a broken engine and a list to starboard as well as being grossly overloaded.13 July 2011, 10:09Russian boat disaster shows public immorality - Patriarch Kirill, July 13, Interfax - Sunday's sinking of the cruise boat Bulgaria in a Volga River reservoir, which claimed at least 90 lives, reflects the degree of immorality in Russian society, Patriarch Kirill of Moscow and All Russia said."If it were just a one-shot, exceptional event! But it isn't. Quite recently we were mourning the innocent fatalities of the air crash in Petrozavodsk. But how many fatalities have been caused by so-called manmade disasters! And think of the hot summer of last year, which claimed many lives," he said after a worship service that marked the 450th anniversary of St. Basil's Cathedral on Red Square, one of Moscow's landmarks.The service included a prayer for those killed in Sunday's shipwreck."There was the so-called human factor in all those terrible disasters," the Patriarch said."If a piece of equipment has become obsolete, can it be used with human lives being put at risk just in order to make some money?" he said.Furthermore, there were those who were taking pictures with their mobile phones both on the site of the Petrozavodsk crash and on that of the Bulgaria accident, and "this means that nothing had turned in those people's souls," he said."What is happening today is an insult to the government, to society, to the entire people, and we must not see this calmly as just one more accident. We must pluck up courage, use our willpower, our financial resources to prevent possible disasters of this kind in the future," he said.And the main point is that people must learn to be sympathetic and able to come to others' rescue, and remember that "anyone may get into trouble, and we know how this happens during disasters and during terrorist acts," the Patriarch said. Medvedev signs law on radioactive waste management Medvedev signed the law on radioactive waste management, RIA Novosti reports citing the Kremlin press service.The bill was adopted by the State Duma on June 29th and by the Federation Council on Juky 6th, 2011. It presupposes changes in several legislative acts of the Russian Federation.The document establishes a united state system of radioactive waste management. However, it doesn’t concern nuclear fuel waste.The law guarantees security of the state control under radioactive waste management.12:20?13/07/2011ALL NEWSPresidential council is for Caucasus ex militants’ social adaptation. Tass 158 MOSCOW, July 13 (Itar-Tass) —— Human rights experts suggest to use the experience of Dagestan in other republics of the North Caucasus, where special commissions are involved in social adaptation for former militants, member of the Presidential Human Rights Commission Svetlana Gannushkina said on Wednesday. This topic was among others discussed at the meeting of the council with the president in Nalchik on July 5, she said. “We suggest organizing in other republics, like it was done in Dagestan, special commissions to assist in adapting to peaceful life those who decided to give up terrorist or extremist activities,” she said adding that the initiative may involve only those who were not involved in grave crimes. “It will be so that relatives may bring the person and give him over into the hands of justice without fearing that illegal methods would be administered to him, but being sure that he will have rehabilitation and will be able to return to peaceful life,” she explained. At the same time, she confirmed that a similar commission in Dagestan “is working slowly.” Another suggestion the human rights experts voiced during the meeting with the president in Nalchik was to organize in the North Caucasus “a permanent conference of law enforcement authorities and human rights organizations,” Gannushkina added. She believes that heads of the republics should chair such conferences. 03:59?13/07/2011ALL NEWSTwo policemen wounded in shootout in Ingushetia. Tass 22 NAZRAN, July 13 (Itar-Tass) — Two officers of the patrol and inspection service have been wounded in the town of Malgobek in Ingushetia in a shootout. The republic’s Interior Ministry told Itar-Tass that they came under fire at about 23:00 MSK, Tuesday when they were patrolling in a UAZ vehicle in the town’s centre near a park. An unknown perpetrator fired on their car from a grenade launcher. Both were rushed to hospital with wounds. According to doctors, the condition of one of the policemen is very grave. The shooter disappeared. Two policemen wounded in attack in Russia's Ingushetia 13/07/2011MAGAS, July 13 (RIA Novosti)Two policemen were wounded late on Tuesday night after unknown suspects opened fire on their patrol car in Russia's North Caucasus republic of Ingushetia, a local police spokesman said."Unknown suspects fired from a grenade launcher at a police patrol car at about 23:00 Moscow time [19:00 GMT] near the town of Malgobek. Two policemen were wounded as a result," the spokesman said.He added that the policemen were taken to a hospital with one of them in grave condition.This was the second attack on policemen in Ingushetia on Tuesday as earlier in the day a suicide bomber attacked a police post near the village of Galashki. The militant blew himself up but no one else was hurt in the attack.More than a decade after the end of a war against separatists in Russia's North Caucasus republic of Chechnya, Russian security forces continue to fight militants in other regions in the area besides Chechnya, including Kabardino-Balkaria, Ingushetia, Dagestan, and North Ossetia.Frequent attacks are staged on security forces, police and civilians.RT News line, July 13Two killed as shell explodes in Vladivostok people have been killed and two more seriously injured as a combat shell exploded in Vladivostok in Russia’s Far East. Uzbek workers found the shell at a construction site located near former military ammunition warehouses. According to the police, the men were trying to dissemble the shell in order to sell the metal. At the site of the explosion, the police found three sacks and a metal box with parts of other shells. An investigation is underway to establish how the workers obtained the shells.09:46?13/07/2011ALL NEWS3 begs, box with dismantled shells found at death site of workers. Tass 73 VLADIVOSTOK, July 13 (Itar-Tass) —— Three begs and a metallic box with the pieces of dismantled shells were found at the site of an ammunition blast, in which Uzbek workers were killed in Vladivostok. An inquiry before the investigation is being made over the ammunition blast, in which two people died and another two were injured, the Primorsky territorial investigation department in the Investigation Committee said. Uzbek workers were attempting to dismantle the shell and to sell its pieces made of nonferrous metals to a metal scrap point, the press service of the Primorsky police reported. The incident occurred late on Tuesday evening in a residential area in Vladivostok. A major construction site is located there and Uzbek workers were working at the site. The ammunition explosion incidents are quite frequent in the Primorsky Territory. People, who have found the shells, are seeking to dismantle them and sell as metal scrap, but they die or are injured in the shell blasts. July 13, 2011 11:51Vandalism probe launched into Moscow synagogue arson bid – source. July 13 (Interfax) - A criminal case on the charge of vandalism has been launched over an attempt to set a synagogue in northeast Moscow on fire, a law enforcement source told Interfax on Wednesday.Two teenagers threw four half a liter bottles containing inflammable mixture into the synagogue in Signalny Proyezd in northeast Moscow, investigators said."Three of them broke and caught fire, the fourth one was seized during the scene inspection. The brick wall has been burnt as a result," the source said.The building keeper extinguished the fire on his own and reported the incident to police, he said. Vandalism of buildings and other structures and damage to property in public places can entail a prison sentence of up to three years, if committed by a group of persons on the ground of religious hatred. kk jv(Our editorial staff can be reached at eng.editors@interfax.ru)Moscow attacks prompt fears of nationalist revenge Tom Washington at 13/07/2011 12:09?Molotov cocktails in a synagogue and a bomb in an investigators’ office, could be something more sinister than wanton hooliganism.Both attacks came the day after 13 members of the Nationalist Socialist (or Nazi) Society received heavy sentences for the mass murder of migrant workers and their own ideologically ‘unsound’ comrade. And expert opinion suggests that the attacks, which were mercifully small scale, could be part of a revenge mission from nationalists.?A wave of discontent“It’s serious, but not because of these attacks themselves but because of the trend, practically everyday we see in the papers, on the TV, or hear on the radio about something similar,” Alexei Malashenko, analyst at the Carnegie Center, told The Moscow News. “I don’t want to predict anything but nationalism in the short term future could become a certain ideological base, to consolidate certain forces. So it is necessary to pay more attention to these attacks,” he said by telephone.? ?HooliganismMonday’s heavy penalties for the race-hate murders are part of an inconsistent line from the authorities. At 11.30 pm on Monday night, shortly after the sentencing, someone threw a bomb equivalent to 100 grams of TNT into the Investigative Committee’s office in north west Moscow (see picture above). The explosion damaged walls and ceilings and shattered cabinet windows. No-one was hurt.? Five people were taken in for questioning in connection. Charges are being brought against them for disorderly conduct and trafficking explosives, RBC reported. Later that same day trouble-makers lobbed four Molotov cocktails into the Darkei Shalom synagogue. A similar attack had happened there on 1 Jan. 2010.“Last time they also caused a good deal of damage,” Rabbi David told Moskovsky Komsomolets. “After the synagogue these people then turned over two patrol cars and even murder featured in this instance. They found the gang and not long ago there was a trial.”?Playing with fireDiscontent is fuelling nationalism and the government is playing with fire if it thinks it can control it. “I believe that finally the Russian government will begin to pay attention to this kind of activity, but it is only the beginning and don’t forget about the elections… frustration, lack of opposition,” Malashenko warned.Both the president and the prime minister seem to think they can tap this wave of energy but, like radical Islam, nationalism is tough to bring to heel. “It is extremely difficult to control, in every country. I don’t even want to mention Germany in this context. If you want to control them you have to be a little bit nationalist yourself,” Malashenko added. July 13, 2011 11:20Investigators launch criminal probe over prosecutor Sizov death (Part 2). July 13 (Interfax) - A criminal case has been launched over the death of head of department at the Russian Prosecutor General's Office Vyacheslav Sizov, who shot himself in his office on July 5, Investigative Committee spokesman Vladimir Markin told Interfax."The criminal case has been opened under Article 111 part four of the Russian Penal Code (inflicting grievous bodily harm with intent, leading inadvertently to the victim's death), Markin said."The decision to open the criminal case was made for an objective and comprehensive clarification of the circumstances surrounding Sizov's death and due to the need to conduct an inquiry, including a number of forensic tests, including a postmortem psychological and psychiatric examination," Markin said."The investigators are going to question Sizov's relatives and co-workers," he said. "I will repeat once again that all these investigative procedures will be carried out solely to ascertain all the circumstances surrounding Sizov's death and to find out the true causes that prompted him to commit such an act," Markin said.Sizov shot himself in his office in the afternoon of July 5, causing himself a severe head injury. On July 8, Sizov was moved to the general intensive care unit at the Sklifosovsky Emergency Medicine Institute. Doctors said his condition was critical and declined to make any predictions about his well-being. Sizov died on July 10.kk jv(Our editorial staff can be reached at eng.editors@interfax.ru)RT News line, July 13Officials detained for trying to sell seat in State Duma for 7.5 mln euros Head of the Protocol Department of the Fair Russia opposition party and an assistant to one of the Fair Russia MPs have been detained on charges of attempting to illegally include a candidate onto the parliamentary election candidates’ list. According to the investigation, the officials promised an unnamed man to have his name put on the list of United Russia’s candidates for the upcoming elections to the State Duma. They reportedly wanted to achieve this via connections in the presidential administration. The price of the service was set at 7.5 million euros.11:03?13/07/2011ALL NEWSBiysk mayor gets suspended sentence, to repay RUR 22 mln to budget. Tass 74 BARNAUL, July 13 (Itar-Tass) —— The Vostochny District Court of Biysk in the Altai Territory has pronounced a guilty verdict for Biysk Mayor Anatoly Mosiyevsky on Wednesday. The court has read the guilty verdict since Tuesday. Mosiyevsky is found guilty of office abuse, a source in the court told Itar-Tass on Wednesday. The court sentenced him to three years in suspension. The court ruled that Mosiyevsky is to indemnify 22 million roubles of damages to the Biysk budget. The public prosecutor demanded five years in prison for Mosiyevsky. The detectives found out Mosiyevsky forced the chief executives of several companies to pay 1,840,000 roubles of ‘voluntary donations’ for the services to issue business permits from 2007 to 2008. “The legal interests of the businessmen, who are the injured parties in the criminal case, were blatantly violated with the material damages done to them,” the investigators said. Meanwhile, Mosiyevsky extorted 15 million roubles from a Barnaul businessman to transfer to the Biysk budget for a permit to build a car trading centre. A building in Biysk was sold by the mayor to his relative at the market price. The Mosiyevsky criminal case included 10 office abuse episodes. Anatoly Mosiyevsky became the Biysk mayor in October 2006. He was re-elected as Biysk mayor on April 4, 2010. Russian Press at a Glance, Wednesday, July 13, 2011 13/07/2011POLITICSRussian President Dmitry Medvedev met with heads and representatives of 27 major state and private companies. Among other issues, the president discussed with leading businessmen politics and possible candidates for the 2012 presidential elections(Vedomosti)At their meeting on Tuesday, top Russian and European negotiators on bilateral visa-free travel agreements may finish the list of joint measures needed to mutually scrap visas(Vedomosti)President Dmitry Medvedev held a traditional meeting with leaders of political parties represented in the State Duma, the lower house of the Russian parliament(Rossiiskaya Gazeta)President Dmitry Medvedev has submitted amendments to the State Duma, Russia's lower house of parliament, introducing chemical castration for criminals guilty of sexual offences against children(Rossiiskaya Gazeta)?ECONOMY & BUSINESSRussia, Belarus and Kazakhstan, which have recently formed a common economic space (CES), should start talks to create a free trade zone with the European Union, Russian Prime Minister Vladimir Putin said(Kommersant, Rossiiskaya Gazeta)The Russian Ministry of Communications intends to double capital investments in the development of techno parks in Russia, envisaged by the budget for 2011-2014(Rossiiskaya Gazeta)ITPopular Russian artists and culture activists called on Yandex to follow Google’s pattern and exclude from the search all links to websites with piracy contents(Kommersant)DEFENSEPresident Dmitry Medvedev, exasperated by complaints about high prices and low quality of defense industry products, has urged the Defense Ministry to buy more weapons abroad(The Moscow Times)ENERGYIn many Russian folk tales, a man is raised from the dead after he is doused in waters. For the lifeblood of the Russian economy - oil and gas - it will be just as important to invigorate the service and equipment sector(The Moscow Times)WORLDAfghan President Hamid Karzai confirmed his half brother Akhmed Wali Karzai 's assassination in the city of Kandahar on Tuesday(Rossiiskaya Gazeta)Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Hillary Clinton will sign on Wednesday a framework agreement regulating the controversial issue of child adoption(Rossiiskaya Gazeta)Britain granted political asylum to former Kazakh BTA bank board chairman Mukhtar Ablyazov, who is on Kazakhstan's wanted list for embezzlement and large-scale fraud(Kommersant)INVESTIGATIONSPolice on Tuesday detained the head of the company that leased the Bulgaria riverboat for a weekend cruise on the Volga River, where more than 120 people drowned when it sank(The Moscow Times, Kommersant)MOSCOWMoscow will more than double in size under a new plan signed off by the city's Mayor Sergei Sobyanin, in a bid to ease the city's chronic overcrowding and transport problems(Vedomosti, Kommersant, Rossiiskaya Gazeta)11:28?13/07/2011ALL NEWSRussian Press Review. Tass 91 MOSCOW, July 13 (Itar-Tass World Service) —— Russia, Belarus and Kazakhstan get united in Eurasian economic union Prime Ministers of Russia, Belarus and Kazakhstan Vladimir Putin, Mikhail Myasnikovich and Karim Masimov participated on Tuesday in a business conference of the three countries – From Customs Union to United Economic Space: Business Interests. Following the organisation of the Customs Union /CU/ and the Common Economic Space /CES/, Russia, Belarus and Kazakhstan will get united in the Eurasian Economic Union, and from 2012 they will start negotiation with the EU organization of a free trade zone. Organisation of the Customs Union is a big geopolitical event, the Rossiiskaya Gazeta quotes Vladimir Putin as saying. For the first time from the collapse of the USSR, this has been the first realistic step towards reconstruction of natural economic and trade relations, which existed in the post-Soviet space, the three neighbouring countries have provided new business conditions, he said. The result is the high-capacity emerging market with over 165 million potential consumers. Besides, the very rules of the game become more stable and predictable, the Rossiiskaya Gazeta writes. “Business starts working really in the competitive environment,” Putin said. Russia, Belarus and Kazakhstan will not stop at the organization of the Customs Union, which was launched in 2010, and of the CES, which will start working in 2012, the Vedomosti reports. Next year, they will sign an agreement on formation of the Eurasian Economic Union to begin in 2013, Vladimir Putin said. Besides, following the organization of the CES, the three countries are ready to start negotiation with the EU organisation of a free trade zone, he added. It was back in winter of 2010 that the Troika (Three states) agreed to organize the Eurasian Union, the newspaper quotes a source at the government administration as saying. Kazakhstan’s President Nursultan Nazarbayev is the author of the idea. At the first stage, the Eurasian Union will be just a formal name for the common economic space, and later on it will have a common currency, the source said but could not forecast when this might happen. This is possible “in very long term only,” Professor of the Higher School of Economics Alexei Portansky said. Russia’s Minister of Economic Development Elvira Nabiullina stressed that for avoiding excessive bureaucratic influence on businesses from the Customs Union countries, there should be a system of supranational authorities, the Novye Izvestia writes. Later, Vladimir Putin also highlighted the topic of supranational authorities, saying that national bureaucrats should not be replaced with supranational ones. Associate Professor of the World Economy and Policies of the Higher School of Economics Andrei Suzdaltsev is sure that such supranational authorities should start working already now, even if in a test regime, the newspaper reports. “The interest of prime ministers to launch soon a supranational authority is quite evident, but we should remember that we are just gaining experience in the framework of the CU. In reality, a supranational authority does exist already – the Customs Union’s Commission, which hosted the meeting of prime ministers of the three countries,” the expert said. X X X President promises new reforms to party leaders Russia’s President Dmitry Medvedev had on Tuesday a traditional meeting with the leaders of the parliamentary factions. He said that he will not stop at changes in the election legislation, where the minimum required amount of votes for State Duma deputies goes down to five percent. “I would like to tell you that, most probably, my suggestions in this sphere will not be limited with this,” the Nezavisimaya Gazeta quotes the president as saying. Dmitry Medvedev expressed hope that the coming election campaign “will be open, honest, and the elections will be absolutely fair.” He stressed that the present political system still required improvement. “In my opinion, our political system requires further improvement,” he said. “It can never be static, especially that after that phase of rest mode certain movements have started. This is not bad, I believe.” The aspect of fair elections was raised at the meeting not incidentally, the Kommersant writes. The topic of elections’ falsifications arouses every time as opposing parties meet with the president. The biggest scandal occurred in autumn of 2009, as local elections had so many violations, that Dmitry Medvedev had to acknowledge that “the elections were not sterile.” However, the opposition did not limit itself to claims only, in late June the Yabloko Party suggested to all registered parties signing a memorandum on joint observing the elections to the State Duma. The draft memorandum was forwarded to the Just Russia, LDPR, Communist, Right Course and Patriots of Russia parties. The immediate reaction to the initiative from the opposing parties was sceptical. But last Monday, leader of the Just Russia Party, Sergei Mironov, said that his party did not rule out it may cooperate with other parties’ observers at the December elections to the State Duma. The president named the main political task as the necessity to decentralize management, the Novye Izvestia writes. For example, structure inter-budget relations need to be corrected. “It is clear that most part of the economic and social objectives should be solved not in Moscow, not in the Kremlin, not in the parliament, or even in the government, but in the regions,” he said. “By easier election rules, the president tries to attract opposing parties,” the newspaper quotes Rostislav Turovsky of the Centre of Political Technologies as saying. “By declaring the direction towards the decentralization, he wants to form up his team of governors loyal to him. Thus it is his signal that he is prepared for sharing the power.” But it does not mean somebody should expect any changes, he continued. Neither radical changes towards decentralization nor realistic further corrections of the election legislation will follow. X X X President presents to State Duma a bill on pedophiles’ chemical castration Russia’s President Dmitry Medvedev presented to the State Duma amendments to the Criminal Code and other legislative norms, which toughen responsibility for sexual crimes against children and which introduce chemical castration for pedophiles. The pedophiles, who are brought to responsibility for the first time will be liable for “enforcement actions of medical character” – psychiatric treatment. The so-called chemical castration, which has been much argued about, is suggested by the bill to be used voluntarily. Those responsible for sexual crimes against children under legal age may be sentenced to forced treatment, the Rossiiskaya Gazeta writes. However, the bill does not exclude cases, where a pedophile may initiate on his own will using a complex of medical measures for him. This complex may include use of preventive medicines, including chemical castration. At the same time, the treatment, the bill reads, should not be stopped as the convict goes at large. Thus, the bill makes the administration of a prison to inform healthcare authorities of the district where the ex-convict is going to live about the medical measures administered to him. However, the convict should agree to have this information disclosed. Dmitry Medvedev has heard the urges of the society and parliamentarians, the Kommersant writes. Both the Civil Chamber, and the Investigative Committee; and some deputies have been suggesting introducing chemical castration. The president himself started talking about it in May. The bill suggests banning parole and delay in execution for those accused of crimes against those under legal age. Recidivists under these articles will have tighter sentences including imprisonment for life. Besides, the bill introduces forced medical measures based on court decisions, where a psychiatric expertise will be a must. The bill says that the treatment will be continued after the convict goes at large. Besides, it introduces voluntary medical measures, including chemical castration (injections to block hormones), which will be made if the convict asks for it or agrees to it. The State Duma’s legislation committee has received the document. The committee’s head, deputy Pavel Krasheninnikov, said several times that he was against chemical castration of pedophiles. Earlier, the government rejected twice a bill on chemical castration for pedophiles, which was initiated by the Just Russia’s deputy Anton Belyakov. It was only in June that Minister of Healthcare Tatiana Golikova said that castration of pedophiles is a too expensive procedure for the government. Head of the movement For Human Rights Lev Ponomarev says that “the current legislation is quite sufficient,” the Kommersant quotes him as saying. “It is necessary to focus not on tightness, but on unavoidability of punishment,” he said. “This is a populist measure. While there is no trust in the judicial system and law enforcement authorities, it is not correct to introduce such tight laws.” Head of Russia’s Investigative Committee Alexander Bastrykin said that chemical castration did not contradict international norms and rules, the Vedomosti writes. Russian children’s ombudsman Pavel Astakhov refers to the USA’s statistics, which says that repeated commission of an offence by criminals, who underwent chemical castration, makes only three percent, and they may be freed only after it is made. If a pedophile undergoes chemical castration, it would not mean at all that he 100 percent would not commit a similar crime in future, the Komsomolskaya Pravda reads. “The thing is that the procedure depresses male hormone testosterone and reduces dramatically sexual attraction. We hope that this would be effective, but there is no 100-percent proof for every case, of course,” Associate Professor of the Psychotherapy Department of the Institute of Psychoanalysis, Psychiatrist Vladimir Feinzilberg said. Pedophilia is a psychiatric disease and it does not have a treatment. A Vicious Cycle Recent Murder of a School Director in Dagestan Has Exposed Local Religious TensionsBy Andrew Roth Russia Profile 07/12/2011 The murder of School Director Sidikullakh Akhmedov in the town of Sovetskoye in Dagestan over the weekend has drawn attention to a rising trend of violence targeted at local leaders in Dagestan. It is believed that the attacks, which have affected both religious and secular leaders, are being carried out by radical Islamic groups. But considering the rumors of the round-up and mass beatings of about 100 “radical” Muslims in Sovetskoye in mid-May, some experts see clear roots for the recent violence in law enforcement’s heavy-handed tactics in the region.Local authorities reported that Akhmedov died at home from multiple gunshot wounds late Friday night after being attacked by two assailants. His death comes in the same month as those of two state-backed imams, who also opposed the spread of fundamentalist sects in the region. Experts are now talking about a definite increase in targeted violence in Dagestan: “It’s one thing to try to instill some form of non-religious upbringing [as Akhmedov did], but it’s another thing to kill a person,” said Enver Kisriev, a Dagestan expert at the Caucasus Center of Civilization and Religion Research at the Russian Academy of Sciences. “We’re crossing a boundary here. There will be an escalation of violence.”Akhmedov’s murder is the product of a demographic, primarily religious, shift in the small town of Sovetskoye, which is home to about 5,000 residents. In Kisriev’s words, Sovyetskoe began to transform following the arrival of a fundamentalist sect of Islam that called for strict adherence to certain rituals, including the wearing of paranjas for women. This wave of fundamentalism came into conflict with local established Islamic groups. Claiming they needed the space to pray, representatives of the new sect drove the local worshippers out of the mosque several months ago.The appearance of the sect created serious tension in the everyday life of the town, which had previously seen little of the violence that has affected much of northern Dagestan. “Nobody who wanted to pray there was prevented from doing so [before]. In that time there were no attempts to interfere in secular life. Now they want to force girls to wear the paranja and they’re threatening their parents,” a local resident named Patimat told the BBC Russia Service in late June, before Akhmedov’s death.Local authorities responded in mid-May, when armed and masked police burst into the mosque and detained somewhere around 100 worshippers at the mosque. Scandal broke out when the detainees later claimed that they were beaten and some had their beards shaved. Police denied the allegations, saying that they merely fingerprinted the worshippers. As would later emerge, by this time Akhmedov had already forbidden the hijab at the local school, and had allegedly gone to different classes with local law enforcement officers, threatening to punish those who broke the rules by stripping them naked in front of the whole school, reported Kommersant. In terms of the mosque, Akhmedov also backed an unpopular decision by the school’s deputy director to have those students arrested at the mosque serve a 15-day sentence. “The director of the school was seen to have been sympathetic to these actions, because he had old values, he didn’t want the youth to become seriously involved with religion,” said Kisriev. “You can look at this murder in one of two ways: either this was true revenge for the insult of the case concerning the mosque, or this was used by more radical groups who were trying to incite local groups. Either way it was a terrible act.” While the mosque arrests in mid-May did not make major waves in Moscow, they did attract the interest of human rights groups. Some have said that the heavy-handed tactics of local police may be to blame for the rise in violence and in alienating the majority of the population living in villages like Sovyetskoye.“Particularly in Dagestan, it’s important to note that the danger is not only that several hundred young people have started an armed conflict, and are carrying out attacks against the authorities and terrorist actions against the peaceful population,” said Evgeny Primakov, a veteran Russian and Soviet politician and academic, reported the government newspaper “Rossiskaya Gazeta.” In Primakov’s words, the main danger is that “the greater part of the local population is not against them, and many secretly sympathize with them,” and that without a change in public opinion about the radical groups, any attempt to put down the movement will be “in vain.” While attention has focused specifically on the advent of non-traditional Islam in north Caucasus republics like Dagestan and Chechnya, Kisriev also noted that other factors, including high unemployment, poverty, and a widening generational gap between old and young are heavily feeding the new groups and serving as a source for rising tensions. “In reality many of these groups are half-religious, half-criminal, and they’ve been a source of incredible tension in the recent period in the region.” In Kisriev’s opinion, the attack is likely to lead to further repression by local law enforcement, which may drive many belonging to the town’s sect “into the forests,” a clear reference to the conflict elsewhere in the North Caucasus.? “Hundreds of billions in drug money pumped into banks during crisis”: 13 July, 2011, 11:07Edited: 13 July, 2011, 11:53 The head of Russia's Federal Drug Control Service Viktor Ivanov told RT how the problem is being tackled in the country and worldwide, and how those profiting from the addiction resist this effort.Russian business urged to pick sides before vote(AFP) – 55 minutes agoMOSCOW — Russian President Dmitry Medvedev urged top businessmen to decide who they want to see as the country's next president amid the uncertainty ahead of key polls, a report said on Wednesday.At a Kremlin meeting this week, Medvedev told tycoons that it was time for them to pick sides between him and his mentor Vladimir Putin, Vedomosti business daily said, citing several unidentified businesspeople who attended the gathering."You have to decide whether you support my programme or leave things as they are," one businessman told the newspaper, summing up his impression of Medvedev's message."It was so unexpected that I simply went numb."With just eight months left before the key March presidential elections, neither Medvedev, 45, nor Prime Minister Putin, 58, have announced their candidacy amid warnings from businesses that the uncertainty was now hurting the investment climate.Medvedev has indicated he wants a second term and said his decision on whether to run would depend on a number of factors including the elite's political preferences and people's support.Many observers believe however the final decision on who will run rests with former president Putin, who remains Russia's most powerful politican.Analysts say support of Russia's top tycoons could help sway the unspoken contest between the country's two most powerful men in Medvedev's favour.Medvedev has repeatedly said Russia needed decisive reforms instead of steady development, championed by his mentor and predecessor Putin who has said earlier he wanted to steer clear of "liberal experiments."The Kremlin chief also called for decentralising decision-making in Russia, which could mark a possible erosion of the carefully-constructed vertical system of authority implemented during Putin's decade in power.Medvedev's appeal to 27 businesspeople including billionaires Oleg Deripaska and Viktor Vekselberg came up unexpectedly at the end of the meeting which focused on Russia's battered investment climate and ways to improve it, said Vedomosti.Thirst for power seen trumping Russian rhetoric Gosling in Moscow July 13, 2011The election cycle has thrown up deep uncertainty over Russia's utilities sector, but investors and analysts argue that it's no more than a temporary blip, and the prospects for the sector after March 2012 are bright. Election years provoke populist policy around the world. In Russia inflation is nearly always top of the list and so Prime Minister Vladimir Putin's call for a 15% price cap on electricity tariffs in February inevitably hit investor sentiment on the sector. In the debate that followed, officials suggested tariff growth in 2012 could be capped as low as 5%, sending shares in the sector sliding further. In January, the RTS utilities index sat at its highest since July 2008; by May, it was at its lowest in 16 months. However, although a final decision is not due until the middle of July, it appears that investors have begun to recollect that the government has kept all of its promises to the private investors that came into the sector over the past 10 years. Comments from officials have hinted at a softer stance, suggesting the government will stand by promises made during the privatisation of UES in 2008. The break-up of the state’s rump electricity holding saw investors commit to build 36 gigawatts (GW) of new capacity whilst the government essentially promised to ensure returns. Whilst the RTS index saw its traditional early summer sell off in June, utilities began to climb out of their hole. The revival accompanied improving inflation figures, as the growth of food prices slowed in June and allowed record lows in Russia's CPI. The Ministry of Economy promptly suggested tariffs should be allowed to swell by as much as 11%. "The market has over reacted to the government comments," insists Liam Halligan, chief economist at Prosperity Capital Management (PCM), a large minority shareholder in several generation companies (gencos). "The government has said that revenues foregone due to any limit of power tariffs would be shifted to future years, rather than lost completely. In addition, as the election season ends in early 2012, the negative rhetoric will subside." Derek Weaving at Renaissance Capital points out that while officials have complained publicly that consumers simply can't afford higher electricity prices, this is clearly not the case. As he illustrates, Russian household electricity prices are the lowest in Europe, accounting for no more than 1% of household expenditures. The majority of analysts support the idea that strict tariff caps are no more than playing to the gallery, and retain a bullish view on the sector given healthy demand forecasts. As Mikhail Rasstrigin at VTB Capital suggests: "The market is likely to start pricing in the possibility of there being a positive resolution to the tariff debate. Hence, risk takers might start buying at current depressed levels." Halligan says PCM has been buying through the dip. "The medium- and long-term potential of the sector is huge and the latest pre-election rhetoric has made valuations even more attractive," he says. The crux of the issue for analysts and investors alike is that the government has little choice but to let tariffs off their leash once the elections for the Duma and presidency are past in March. The sector kicked off the privatisation and liberalisation processes a decade ago because Russia desperately needed investment into new generating capacity. Nothing has changed today. According to the International Energy Agency, the sector has "huge investment needs," pitching the figure at $380bn from 2003 to 2030, with the bulk of this investment needed after 2010. "The federal government has no choice but to revert to its previous policy of competition- based reform and price liberalisation," states Weaving. Over and above anything else, the need for investment will see tariffs cut loose sooner rather than later. "The building of power sector capacity is absolutely crucial to Russia's future growth," says Halligan. "The government is well aware that building such capacity requires private sector capital and that investment will only happen if the private owners of Russia's gencos are able to make decent returns." "The deal," he continues, "has always been that if private investors build new capacity, then the government would allow them to make returns. They've always kept those promises throughout the last 10 years – and I don't see them stopping now." Not just policy Meanwhile, commentators suggest that whiles sector sentiment is overwhelmingly driven by government policy right now, the fundamentals currently being overlooked look strong. For one thing, the growth of fuel costs appears to be slowing dramatically for some. Rasstrigin points out OGK 4 (with fuel accounting for 72.5% of costs) entered into a five-year fuel supply contract in 2010 offering flat year-on-year fuel price growth for 2011 (versus an industry average of up to 15%). Halligan points out that, "ministers said that gas tariffs may not be allowed to rise by much more than electricity prices. This obviously helps gas-powered generation companies." Clearly, in the current policy environment, such cost management is vital across the industry, especially given the high cost of capital in Russia, huge volumes of which are needed to build the new capacity. Alexander Kotikov of Troika Dialog notes that OGK 4 is expected to increase its total installed capacity by 13% by the end of the summer, and Weaving says that management at many generating companies appear unconcerned by the prospect of long term tariff caps. Overall, according to VTB, the Ministry of Economy forecasts electricity production will grow by up to 2.7% in 2011, 2.0% in 2012 and 2.2% in 2013, with $125.6bn to be invested in the sector, including 26.15 GW new capacity, in the same period. At the same time, major consumers such as industrial companies are worried about price rises in the medium term, points out Rasstrigin. Minister of Energy Sergey Shmatko has talked of the need to create the economic stimulus needed to prevent them leaving the dilapidated national grid. It's the inefficiencies in distribution pushing up prices most, according to analysts, and Rasstrigin says that he expects this scenario to prompt reform that will "finalise market liberalisation and enhance competition." Such concerns are also likely behind the disparaging comments from the anti-monopoly commission that met the announcement of a tie up between the utilities arms of Gazprom and Renova in early July. Pioneer power But it's not "only" the sector's key role in economic growth that makes its path so important. Power utilities are also a pioneer, and therefore a signpost, for Russia's investment climate as a whole. One that should carry more weight than a jailed oligarch. The 10-year reform programme through which the generating segment has passed is almost finished. It is one of the major industry transformations in the country, which saw it switch to a free market, embark on widescale privatisation, and provoke advanced regulatory practice and economic stimuli to efficiency. However, deregulation only happened in January, and hit the election rhetoric almost immediately. Halligan agrees that's another factor that should see the government keep its promises to investors. With a new $50bn privatisation programme taking its first steps, and the search for foreign investment to upgrade the rest of the country's infrastructure cranking into serious gear via tools such as the new Russian Direct Investment Fund , "experienced investors would be aghast should the government renege on its commitments," he claims. Putin discusses privatisation plans with academicians; Medvedev discusses them with oligarchs CapitalJuly 13, 2011On Monday (11 July), Prime Minister Vladimir Putin met with academicians and President Dmitry Medvedev met with oligarchs and businessmen to discuss upcoming privatisations, the investment climate and the lack of long-term funding, as well as to discuss economic strategy. The views of the two groups were expected to be the exact opposite of each other, reflecting the deep division on these topics in Russia; the privatisations of the 1990s are still being questioned, and a manually managed and centrally planned economy might still appeal to a majority of the population. Academicians in Russia, as in many countries, are heavily dependent on government funding, and therefore tend to view the state's role in the economics of the country as exaggerated. During the meeting, which was chaired by Putin and also attended by Finance Minister Alexei Kudrin, the academicians voiced their concerns about the upcoming privatisations, stating that privatisation was not a quick fix. Instead, they offered the familiar remedies of Soviet-style micromanagement of key enterprises and the provision of long-term, cheap financing on a case-by-case basis to modernise key plants and sectors. At the same time, they advocated additional spending to create new domestic industries specialising in nanotechnology, allowing Russia to occupy this new technological niche. In our view, the opinions of the academicians have been largely addressed by the current economic reality of Russia, which, under Putin, has been transformed into a symbiotic free market and Soviet-style managed economy, with prices set by the government in many sectors. The privatisation of key infrastructure monopolies, such as Gazprom, Transneft and Russian Railways, is not on the cards in the near future. Russian VEB has been acting as a development bank, providing cheap funding during the crisis to the 295 key companies on the government's list, and is on track to lunch a programme to finance PPP projects in Russia. Finally, Rusnano Corporation, headed by Anatoly Chubais, is gradually gaining experience and knowledge, and is securing projects to ensure Russia has a competitive advantage in certain new industries, such as nanotechnology. During Medvedev's meeting with businessmen and state-owned company barons, the opinions heard were quite the opposite of the academicians'. Medvedev addressed the key issues of his plan to improve the investment climate in Russia, the so-called Magnitogorsk thesis. Medvedev has criticised the slow pace of privatisations in Russia. According to the current plan the government will retain controlling stakes in key enterprises until at least 2016. Medvedev has been pushing for more aggressive privatisations and he expects to see a new plan by 1 August. He also said that he expects to see the creation of legislature that limits the government's ambitions in strategic sectors. Various commentaries on the Medvedev meeting have been supportive of privatisation. It was evident that improving the current investment climate was very important to the interests of the audience, and there were numerous suggestions on how to do this. Interestingly, the meeting was also attended by Mikhail Gutseriev, president of Rosneft, who has recently returned from London where he had been in hiding after an attack on his business. However, no invitation was sent to Dmitry Kamenshik, CEO of Domodedovo airport, who recently cancelled the company's IPO. Meanwhile, the 1 August deadline for the government's privatisation programme, set by Medvedev during the St Petersburg investment forum, is drawing near. Vedomosti leaked information on the companies that are to be privatised according to the new Ministry of Economic Development programme (refer to Figure 1). According to the leaked programme, the state will reduce its stake to zero in two key assets, Rosneft and Rushydro, whilst retaining a golden share in each; it will reduce its stake to zero in 11 enterprises, including VTB; and it will retain a stake of 50% +1 share in six other key enterprises, including Russian Railways, Transnet and MRSK Holding. The current plan for Sberbank as we understand it is to sell a 7.5% stake, and there was no mention of the government lowering its stake to zero in the Vedomosti report. The combined value of the shares to be sold is at least $110bn. An ambitious target to complete by 2017, in our view. Russia is turning away from state capitalism to improve its investment climate, which we believe is just another way of saying it is turning away from state socialism. Russian state-owned companies currently operate with the unfair advantage of having access to much cheaper capital than their private competitors, skewing competition as a result. Moreover, the Russian state is not trying to amend this situation, which it could do by requiring dividends from state-owned companies to balance the skewed cost of capital. Therefore, we think privatisation is the best solution to this problem, as it will end the disadvantages felt by private companies, and it will also make it much easier for the government to draw higher fiscal revenues from the newly privatised companies, financing the current and any future deficit. Finally, privatisation revenues could provide a cushion if oil prices drop.National Economic TrendsRussia may issue OFZs instead of Eurobonds DialogJuly 12, 2011First Deputy Central Bank Chairman Alexei Ulyukaev announced yesterday that Russia may increase its issuance of OFZs by reducing external borrowing. According to the current budget, this year the government retains the ability to place up to $3 bln in foreign-currency denominated paper. It also has the authority to redistribute the form of borrowing without amending the budget, and it apparently intends to use precisely this power.The trigger for this decision may be the issue with sterilizing theR295 bln disbursed for the rehabilitation of Bank of Moscow. Earlier, the Central Bank expressed its concern about the possible acceleration of inflation should this volume of resources find its way into the financial system. One of the options being considered by the regulator is Bank of Moscow's purchase of OFZs using this money. Granted, by employing this option, the authorities will also have to make sure that the received securities are not used for market operations.Between January 1 and July 6, the Finance Ministry issued around R930 bln in ruble paper (including GSOs and ruble-denominated Eurobonds), while the overall plan for 2011 totals R1.7 trln. Thus, if Bank of Moscow acquires R295 bln in OFZs, the Finance Ministry would have to attract only an additional R475 bln. This "reserve" would be sufficient for only four to five months. If we assume that inflation in Russia slows down, then demand for long-dated paper will increase and the Finance Ministry will have the ability to borrow at lower rates. However, the remaining limit may not be enough to satisfy investors' appetite. The substitution of external with internal borrowing will allow for an increase in the amount by around R90 bln. This, of course, is not a radical solution to the problem, but is nevertheless a more comfortable option for the ministry.That said, it cannot be excluded that the authorities will think up some other option, particularly since the Finance Ministry has not voiced its agreement with the Central Bank's suggestions.Alexander KudrinGrain Harvesting in Russian Areas Delayed by Rains, Center Says Marina Sysoyeva - Jul 12, 2011 6:24 PM GMT+0200 Harvesting was “substantially” delayed in Russia’s Southern and North Caucasus federal districts in the first 10 days of July because of rains, the state weather center said on its website. More rain forecast for North Caucasus in the next 10 days will worsen harvesting conditions, while the weather will be mainly satisfactory elsewhere, the Federal Hydrometeorological Center said. To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@ To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@ Russia harvested over 4.6 mln tonnes of grains - Ministry of Agriculture 13:16The Southern and North Caucasian Federal Districts of the Russian Federation continue harvesting winter barley and wheat. Agricultural enterprises of the Republics of Kalmykia and Ingushetia started the summer harvesting campaign, informed the press service of Ministry of Agriculture of Russia. As of July 12, agrarians harvested grains in the country throughout the areas of over 1.1 mln ha, and produced over 4.6 mln tonnes of grains with the average yield of 42 c/ha.August in America: 13 July, 2011, 06:08Edited: 13 July, 2011, 06:14 Eva Burtshtein, Elena Kukol A US default would raise the ruble exchange rate and create new risks for the Russian economy.United States’ refusal to pay its debts or a default of the world’s largest economy could lead to consequences that will make the recent crisis of 2008 seem like child’s play, say experts. Though, at the same time, they note that this very possibility is, at least for now, only hypothetical.? Nevertheless, if this scenario is played out, its consequences could be compared to a nuclear disaster in the global financial sector that would spread to each and every country, says Yakov Mirkin, chairman of the Financial Markets and Credit Organizations Committee of the Russian Chamber of Commerce and Industry. The US accounts for more than a third of financial assets worldwide. Meanwhile, the “risk-free” US treasury bonds are the core of US finances and, in many ways, global finances as well, notes the expert.? Russia, too, will suffer losses. According to the US Federal Treasury, our country is the eighth largest holder of US national debt, says Mirkin. In April of 2011, this indicator equalled $125 billion, or about a quarter of Russia’s foreign reserves. A default will primarily result in a decline of confidence in the dollar. This means that the price of other currencies, including the ruble will rise, adds Sergey Pukhov, senior researcher at the Development Center of the Higher School of Economics. He predicts the dollar could lose 10-20% of its value. And for the Russian economy, which already suffers from a strengthening ruble and an influx of imports, this situation is disadvantageous. Moreover, problems in the US are liable to plunge the world into a second recession, says Pukhov.?????? The economy of all other states will start to shrink and finally go into stagnation, continues Pukhov. Demand will fall, including for Russia’s main export items. Oil prices could fall to $60 per barrel. Russia’s budget planning for next year is based on the price of oil being at $95 per barrel.? However, with the fall of the dollar commodity prices will, contrarily, begin to rise, says Aleksey Vedev, director of the Center for Structural Research at the Gaidar Institute of Economics. A default could cause a sharp rise in the price of gold as investors will be saving themselves by investing in any other assets, particularly gold, adds financial analyst Sergey Suverov. A default threatens the collapse of all stock markets, and losses in people’s real income. Not only will US citizens suffer losses, but so will the residents of other countries, including Russia, whose stock market is closely tied to the movement of world indices. Conditions for access to foreign resources will become more complicated, adds Vedev.?? However, this grim scenario is unlikely to happen, argue almost all of the experts interviewed by Rossiyskaya Gazeta (RG). Default is unimaginable. There has not been a single precedent in the world, excluding military events, of a major economy refusing to pay its debt, says Sergey Moiseyev, deputy director of the Financial Stability Department at the Central Bank. Americans will not allow such a turn of events to happen even if it kills them. Disputes over what to do in order to prevent non-payment of even government securities have been ongoing between the Democrats and Republicans over recent weeks.???????? Nevertheless, it should be acknowledged that the first deputy head of the Central Bank, Aleksey Ulyukayev, did not exclude the possibility of a technical default. Perhaps some portion of the obligations will not be covered and some US debt holders will be forced to incur losses, he suggested. But this will not lead to any major consequences and will have an insignificant effect on the dollar exchange rate against the ruble, noted Ulyukayev, advising citizens not to panic or rush to get rid of their dollars.?? However, some experts consider even a temporary suspension of payments on obligations to be quite dangerous. A technical default is, of course, not a collapse, but it is a crisis which indicates that payments may be delayed for several weeks or months, says Vedev. And that will result in shocks and negative expectations on the financial markets, warns RG’s interlocutor.? “There is a risk that a technical default could cause a chain reaction of systematic risk in the US and throughout the entire perimeter of developed markets,” says Mirkin. “The price of financial assets of banks and other financial institutions will drop, followed by insolvency of financial institutions on their obligations. Next, it will be the violation of payments and clients’ ‘raids’ on banks, which no one will be able to help as governments will have lost their liquidity.” He went on to outline the following possibilities: capital flight from developing markets, such as Russia, pressure on national currencies and devaluations, inflation outbreaks, “black holes” in banks’ balance sheets, and the violation of payments.???? At the same time, experts argue that the US will not allow a technical default to take place. The qualification of the teams, which are currently trying to reach an agreement, excludes such a possibility, says Mirkin. A technical default does not interest the Republicans or the Democrats as it contradicts their goals, explains Yevgeny Nadorshin, senior economist at AFK Sistema.The way other countries will react to such a turn of events is very important, says Pukhov. Much will depend on China, as the yuan is pegged to the dollar. Not a single country in the world is interested in having a sharp rise in the price of its currency. In the worst case, there could be another currency war, says Pukhov. Interventions will soften the fall of the dollar, though the trend will continue. “Regardless of how actively the situation with a technical default is being discussed, the ruble will still continue to strengthen against the dollar,” predicts Nadorshin.?? Nevertheless, the ignited passions have become another wake-up call for the world. A default is currently impossible, but there is no guarantee that it will not happen in the future. Market participants have long not considered this to have a zero probability, says Nadorshin. If the problem of America’s high level of national debt is not resolved, then in 10-15 years technical default and default will be a relevant question, says Pukhov. The question now is how well Russia, and the world in general, will be able to prepare for this.Business, Energy or Environmental regulations or discussionsOAO Sberbank, OAO Rosneft, OAO Lukoil: Russian Equity Preview Marina Sysoyeva - Jul 12, 2011 10:00 PM GMT+0200 The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading. The 30-stock Micex Index rose 0.3 percent to 1,705.92. The dollar-denominated RTS Index dropped 0.1 percent to 1,916.81. OAO Sberbank (SBER03 RX): The country’s biggest lender will publish earnings for the first half of the year under Russian accounting standards. Russia’s state bank gained 0.1 percent to 102.53 rubles. OAO Rosneft (ROSN RX): Belarus is in talks to sell state holdings in seven companies to Russian investors, Prime Minister Mikhail Myasnikovich told reporters in Moscow yesterday. The negotiations include a possible sale of Grodno Azot to OAO Rosneft and ZAO Sibur Holding, he said. Rosneft shares climbed less than 0.1 percent to 235.63 rubles. OAO Lukoil (LKOH RX): Belarus is in talks with Lukoil about selling it a stake in the state-owned Naftan refinery, Myasnikovich said. Russia’s second-biggest oil producer increased 0.1 percent to 1,809.60 rubles. To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@ To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@ Sberbank's net profit surges in H1 , 13.07.2011, Moscow 10:20:21.Sberbank's RAS net profit increased to RUB 171.3bn (approx. USD 6.04bn) in January-June, up from RUB 60.7bn (approx. USD 2.14bn) in the same period of 2010, the bank said in a statement today. Sberbank net profit triples to $6 bln in H1 2011 EDT* Profit up on provision release * Sberbank forecasts 230-250 bln rbls net profit for 2011 MOSCOW, July 13 (Reuters) - Sberbank , Russia's biggest lender, announced on Wednesday a trebling of net profit in the first half to 171.3 billion roubles ($6.1 billion) under Russian accounting standards (RAS), lifted by the writeback of loan provisions. Sberbank, in which the state plans to sell a 7.6 percent stake worth around $6 billion later this year, had posted a net profit of 60.7 billion roubles under Russian standards in the same period last year. RAS results, which are released by state-controlled Sberbank monthly, provide a rough guide to earnings on the basis of international financial reporting standards which are published with a bigger delay. Sberbank released 17.8 billion roubles from provisions against doubtful lending as Russia continued its economic recovery, compared with net provisioning of 104.6 billion roubles last year. The bank cut its non-performing loan ratio to 4.52 percent from 5.04 percent at the beginning of 2011. Sberbank also said its assets, which account for a third of overall assets in the Russian banking system, had risen by 5 percent to almost 9 trillion roubles since the start of the year. The lender expects to post net profit of between 230 to 250 billion roubles in 2011, a target analysts view as conservative. (Reporting by Katya Golubkova; Editing by David Holmes) European Commission will not extend quotas and tariffs on potash imports from Russia and Belarus BankJuly 13, 2011According to Kommersant, the European Commission will not extend import quotas and tariffs on potash from Russia and Belarus expiring July 13. Earlier this year EU potash producers, K+S and the European branches of ICL, were rumored to call for the European Commission to maintain import tariffs on potash from Russia and Belarus until at least 2016. However, this did not materialize. We view the news as NEUTRAL for Uralkali. The import tariff on potash supplied by Uralkali was 12.3% while the tariff for Belaruskali was 27.5%. However, these tariffs were applied only for potash supplied above 2.2mmt per annum while combined Uralkali and Silvinit deliveries were below this level at around 1.3mmt. Therefore, we believe the decision regarding the import tariffs is unlikely to have any material impact on Uralkali. However, the reluctance of European potash producers to file for an extension of the quotas suggests that the EU potash market is tight and any barriers to imports are regarded as unwelcome. Vladimir DorogovJul 13, 2011 - 09:03Stadler rail on right tracks in Russia Allen in Moscow, swissinfo.chA SFr240 million ($290 million) deal signed by Switzerland’s Stadler Rail to provide rolling stock to Russia highlights the importance of freight shipped by rail in the country.Stadler Rail has been contracted to provide 100 diesel-powered drive components in the next three years to trains owned by Russian manufacturer Transmasholding. The details were released at a meeting of Swiss and Russian rail companies gathered in Moscow on Tuesday.?The state-owned Russian railways company states that 43 per cent of all freight in the country, even accounting for oil and gas that is shipped through pipes, is transported on trains.?“Russia produces vast quantities of raw materials, much of them in the east of the country,” Urs-Peter Wepfer told swissinfo.ch. “The railway network ships the vast majority of these materials to refineries and production plants all over Russia.”?Wepfer is head of Swiss manufacturing specialist company United Machinery that has been present in Russia for 12 years.?The Stadler deal coincided with the visit of a Swiss trade mission to Russia, headed by Economics Minister Johann Schneider-Ammann, that featured a railways forum to explore future collaboration between the two countries.?Russia is in the process of upgrading its infrastructure, that includes 85,000 kilometres of track and 20,000 locomotives, to improve shipment of raw materials across the country and provide more impetus to the economy.Inroads The Swiss rail specialists have already made significant inroads into eastern Europe and Baltic states in the last few years, adapting its carriages and components to suit the track gauge and climatic conditions prevalent throughout the former Soviet Union.?“We made a good start by winning an order for trains from Helsinki,” Stadler rail boss Peter Spuhler told swissinfo.ch. ??“To meet the requirements of this order we had to adapt our concept to broad gauge tracks and to artic temperatures. We were then able to roll out these same products to Belarus and Estonia, and now we have landed in Russia.”?Daniel Steiner, president of the Swissrail umbrella group, told representatives of the industry from both countries in Moscow that Switzerland is well positioned to offer its experience as Russia bids to upgrade its infrastructure.Steiner talked about Swiss expertise at dealing with extreme temperature differences and the country’s mountainous terrain – such as the Gotthard base tunnel that will be the world’s longest rail tunnel when it is completed in 2017.Swiss precisionPeter Spuhler told swissinfo.ch that his company had timed its entrance to the Russian market with Swiss precision.?“Russia is a market that is recovering well after the financial and economic crises,” he said. “Rail transport is the most important form of transport here - more important than the roads. The railways have to be upgraded so we have arrived at just the right time.”?“The Swiss brand is held in high regard not just in Russia, but throughout central Asia. It is clear to me that there is a lot of potential for the Swiss machine building and transport infrastructure sectors,” he added.?While Russia does hold a lot of business potential, it is also deemed to be a difficult ?market because of its unwieldy and centralised bureaucratic system and notoriously corrupt public officials.?However, Spuhler denied that his company had encountered any particular problems, and for good measure had avoided currency exchange rate problems weighing on many Swiss firms by negotiating the whole contract in Swiss francs.?Ironically, Spuhler has had reason to criticise the Swiss Federal Railways in the last two years for choosing Canadian firm Bombardier ahead of Stadler Rail for a substantial new order for carriages.?Stadler decided only last year not to appeal against the tender process following a lengthy review by the company.No easy markets“These days there are no more easy markets,” Spuhler said. “Every market has its own characteristics but general business has become difficult across the board.”?“The art of our work is to constantly adjust to the mentality of different customer groups. If we want to access a new market we must adapt to the customer rather than the customer having to adapt to us.”?“The strong franc has of course caused problems in our home market. Our strategy is to build up extra capacity outside of our borders, and Russia is a prominent part of this plan.” ??Stadler Rail achieved sales of SFr1.08 billion ($1.3 billion) and said at the beginning of the year that it had record incoming orders worth SFr2.87 billion.Matt Allen in Moscow, swissinfo.ch10:59GURYEV'S STAKE IN PHOSAGRO TO STAND AT 70.9% FOLLOWING IPO 13, 2011 10:37Placement price for PhosAgro's IPO comes to $14 per GDR, capitalization put at $5.2 bln. July 13 (Interfax) - PhosAgro has set the placement price for its IPO on the London Stock Exchange at $420 per share, or $14 per Global Depositary Receipt (GDR), the company said in a statement. On Tuesday, market sources said that PhosAgro narrowed the pricing guidance for its GDRs in the IPO to $14-$15. Earlier, sources said that the initial guidance came to $13.75-$15.75 per GDR. At the start of book-building on June 28 the announced guidance was $13-16.5 per GDR.The company's capitalization following the IPO is valued at $5.2 billion.Ih(Our editorial staff can be reached at eng.editors@interfax.ru) UPDATE 1-Russia's Phosagro raises $538 mln in IPO, 13th Jul 2011 07:59MOSCOW, July 13 (Reuters) - Russian fertiliser group Phosagro raised $538 million in an initial public offerning on Wednesday after pricing the deal near the low end of the range.Phosagro became the seventh Russian company to float on overseas markets this year, as private business owners seek to tap capital markets that rebounded following the financial crisis. The offer has valued the group at $5.2 billion, and represents 10.3 percent of the company's total share capital prior to the exercise of an over-allotment option, Phosagro said in a statement. 'I am delighted at the positive response to our flotation in London and Moscow. This is a key milestone for the company and will allow us to capitalize on the significant growth opportunities that are present in the fertiliser sector,' said Maxim Volkov, Phosagro's chief executive officer. The company earlier set an indicative price range of $13 to $16.50 per global depository receipt for its market debut, hoping to value the company at as much as $6.1 billion, and later narrowed it to $14.0-$14.5. Phosagro's IPO proceeds may increase to up to $594 million if the over-allotment option is fully exercised. Citi, Renaissance Capital, Troika Dialog, Credit Suisse and BMO Capital Markets acted as joint bookrunners for the offering, and Raiffeisen acted as co-lead manager. Fertiliser has been a hot sector in 2011 due to growing demand for food supplies and biofuels. Unconditional trading in Phosagro shares is expected to begin on July 18 under the symbol (Reporting by Maria Kiselyova; editing by Jessica Bachman) Keywords: PHOSAGRO/ (maria.kiselyova@, +7 495 775 12 42, Reuters Messaging: maria.kiselyova.@)Raspadskaya Rises for Second Day on Report of Stake Sale to VEB Jason Corcoran - Jul 13, 2011 9:29 AM GMT+0200 OAO Raspadskaya, a Russian coal producer, climbed for a second day after Interfax reported yesterday state-run VEB bank may pay $5.3 billion for an 80 percent stake. The stock added as much as 3.6 percent and last traded 2.2 percent higher at 182.47 rubles by 11:14 a.m. in Moscow. Its shares jumped 2.8 percent yesterday. The $5.3 billion price implies a premium of about 36 percent to the current market value of the company, according to Dmitry Smolin, an equity analyst at UralSib Financial Corp. in Moscow. The deal may be approved at VEB’s supervisory board meeting scheduled for today, Smolin sad in e-mailed report. To contact the reporter on this story: Jason Corcoran at Jcorcoran13@ To contact the editor responsible for this story: Gavin Serkin at gserkin@ Transcontainer 1H11 operational results: Strong, as expected - but what's next? CapitalJuly 13, 2011Event: Yesterday (12 July) Transcontainer released operating results for 2Q11 and 1H11. The company's rail container transportation volumes for 2Q11 increased 13.9% vs 2Q10 to 341k TEU, mainly due to an increase in export transportation by 15k TEU, or 21.6%, and the company's domestic transportation volumes increased by 23k TEU, or 13.0%. The company also published strong transportation volumes for 1H11, which increased 18.3% to 654k TEU, vs 553k TEU in 1H10, mainly due to an increase in import and export transportation. There was also a significant improvement in asset utilisation ratios. Empty container runs decreased 4.2 ppts YoY in 1H11, to 35.7%, while empty runs for flatcars fell by 0.3 ppts during the same period, to 8.7%. Action: Moderately positive for Transcontainer, in our view. Rationale: We think Transcontainer's 1H11 operating results are relatively strong, but also expected, due to a low base effect in 1H10. We expect the growth rate to decrease in 2H11, and we estimate an 11% growth rate in transportation volumes for FY11. On the positive side, we note the current growth is based not only on an increase in import container transportation, but on export container transportation as well. This may allow the company to exceed our expectations in terms of cargo turnover and empty container runs for the current year. According to the company's guidance, the transportation volume growth rate for FY11 could be 12-15%, with the empty run ratio stable at 35-36%, which could, we think, create upside risk potential for Transcontainer shares in 2H11. Dmitry KontorshchikovRussia VEB, Severstal postpone Eurobond issues-sources Jul 13, 2011 8:28am GMTMOSCOW, July 13 (Reuters) - Russia's state development bank VEB and steel company Severstal (CHMFq.L) (CHMF.MM) postponed Eurobond issues on poor market conditions, banking sources told Reuters on Wednesday."Both held road shows, tested the market, and decided not to issue now. But they may open books at any favourable moment," one of the sources said.VEB and Severstal declined to comment.Sources told Reuters earlier that VEB plans to tap the Eurobond market in early July, with Severstal (CHMF.MM) likely to follow later this month. [ID:nLDE75J0BG] Another source said Severstal may return to the market next week. (Reporting by Oksana Kobzeva and Polina Devitt, writing by Katya Golubkova; editing by Jessica Bachman) Severstal to increase crude steel output in 2011 up by 5pct YoY, 13 Jul 2011It is reported that in the current year Russian steelmaker Severstal Russian Steel plans to produce 11.5 million tonnes of crude steel up by 5%YoY.In the first quarter of 2011, Severstal increased its crude steel production by 5%YoY compared to Q1 2010 to 3.652 million tonnes but this volume was down 5% compared to Q4 2010. In the given period, Severstal Russian Steel produced 2.6 million tonnes of pig iron down by 4% compared to Q4 2010.(Sourced from SteelOrbis)Visit for more07:29?13/07/2011ALL NEWSN America branch of Severstal to get US gvt loan of $730 mln. Tass 41 NEW YORK, July 13 (Itar-Tass) — Severstal North America - a branch of the Russian steel giant OAO Severstal joint stock company will get from the US government a loan worth 730 million US dollars, The Associated Press reported on Tuesday. According to information from knowledgeable sources, with these funds Severstal plans to modernise the plant in Dearborn (Michigan). The renovation of the facility’s production capacities will require employment of 2.5 thousand builders. Upon completion of the modernisation the enterprise’s staff will be increased by 260 people. The announcement of the provision of the loan to the steel making company is expected on Wednesday. Meanwhile, a spokesperson for the US Department of Energy Karissa Marcum declined to comment on this information. According to AP, the people asked for anonymity because the Department of Energy was not expected to make the announcement until Wednesday morning. Energy Department spokeswoman Karissa Marcum wouldn't comment on the announcement Tuesday. A message seeking comment was left with Severstal North America, which is based in Dearborn. The money comes from a $25 billion low-interest loan programme created in 2007 to help companies retool older factories to build more energy-efficient cars. Severstal makes a lightweight, high-strength steel that can make cars more fuel-efficient. The money will be provided under a $25-billion loan programme with low interest rates, designed to support the production of environmentally friendly cars. The Severstal plant produces thin rolled metal with high strength that makes it possible to effectively use it for making compact cars that have a low level of hazardous emissions. The US Department of Energy has already approved the extension of loans to Ford and Nissan that will receive in total $7.5 billion. In the government’s programme also involved the electric car manufacturer Tesla Motors. A sum of $ 465 million dollars has been allocated to the company as it prepares to launch production in California. Earlier, the steel mill located in the River Rouge industrial complex, was owned by Rouge Industries that was part of the automotive empire founded by Henry Ford. Severstal has acquired the plant and other assets of Rouge Industries for $285.5 million in 2003. Severstal North America is a steelmaker in the United States with headquarters located in Dearborn, Michigan. Severstal North America produces high-quality flat-rolled carbon steel products, including hot rolled, cold rolled, electro-galvanized, and hot-dip galvanized. Major markets include automotive, appliance, construction, container, converter, service centre and other industries, according to the company website. Pursuing its commitment to an exceptional quality product and to the protection of human and environmental health, Severstal North America facilities have earned TS 16949, OHSAS 18001 and ISO 14001 certifications, the international standards for quality, health and safety, and environmental management systems, respectively. Severstal North America is a wholly owned subsidiary of OAO Severstal, Russia’s largest steelmaker by volume and one of the most global. To further extend its participation in additional value-added products, Severstal North America has several joint ventures for electrogalvanizing and hot-dipped galvanizing. These operations supply the highest quality coated steel products with unparalleled precision to demanding customers. The joint ventures are located in Michigan, close to major consuming markets including the automotive industry. The company was founded in 2004 with the acquisition by OAO Severstal of substantially all of assets of the former Rouge Industries and its operating subsidiary Rouge Steel Company. Alexei Mordashov, OAO Severstal’s Chief Executive Officer, hailed the purchase of Severstal Dearborn as an important milestone in the global consolidation of the steel industry. He viewed the acquisition as an opportunity to combine the best qualities of the respective companies and to strengthen their economic effectiveness and market position. In 2005, Severstal entered into a joint venture agreement to develop SeverCorr, the newest mini mill in the United States. In early 2008, Severstal acquired the full ownership of SeverCorr, which is located in Columbus, Miss., and renamed the facility Severstal Columbus. The purchase of this electric-arc furnace shop, built in the mid 2000s, allowed Severstal North America to expand into the growing market for light flat rolled steel products in the south-eastern United States. In 2008, Severstal North America greatly increased its participation in the lucrative and robust North American steel industry with key acquisitions of respected fully integrated steel companies in Sparrows Point, Md., Warren, Ohio, and Wheeling, W.Va. The purchase of the Severstal Wheeling also included a coke oven operation to supply essential coke to Severstal North America’s plant as well as an electric arc furnace. The growth in 2008 allowed OAO Severstal to achieve operating and supply synergies. Severstal is one of the world’s leading vertically integrated steel and mining companies with key assets in Russia, the US and Europe. The company’s shares are traded on the RTS (CHMF), MICEX and LSE. AP Sources: Russian steelmaker to get US loan DEE-ANN DURBIN, AP Auto Writers – 6 hours agoDETROIT (AP) — Two people briefed on the matter say the North American arm of Russia's largest steel company is getting a $730 million loan from the U.S. government.They say Severstal plans to modernize a plant in Dearborn, Mich., that makes steel for the auto industry. The project will employ around 2,500 construction workers and create 260 factory jobs.The people asked for anonymity because the Department of Energy wasn't expected to make the announcement until Wednesday morning. Energy Department spokeswoman Karissa Marcum wouldn't comment on the announcement Tuesday. A message seeking comment was left with Severstal North America, which is based in Dearborn.The money comes from a $25 billion low-interest loan program created in 2007 to help companies retool older factories to build more energy-efficient cars. Severstal makes a lightweight, high-strength steel that can make cars more fuel efficient.The Dearborn plant has been producing steel for Ford Motor Co. since the early 1920s. Severstal bought it in 2004. Severstal North America is a unit of OAO Severstal, one of Russia's largest steelmakers.Ford and Nissan Motor Co. have been approved for a total of $7.5 billion in loans from the program. Electric car maker Tesla Motors also has received $465 million in loans to build cars in California.Chrysler Group LLC is still waiting for the department to approve its request for $3 billion to develop fuel-efficient engines and other technologies. Chrysler CEO Sergio Marchionne had expected to get approval by the end of last year, but said the process was held up because the department was deciding what collateral from Chrysler could be used for the loans.General Motors Co. withdrew its application for $14.4 billion in Energy Department loans earlier this year, saying it no longer needs them.Yandex is read its copyrights: 13 July, 2011, 06:32Edited: 13 July, 2011, 06:58 Pavel Belavin Authors ask the search engine to remove links to pirated content. Popular Russian authors and artists are asking Yandex to follow Google’s example and delete pirated content from search results. Under Russian law, it is impossible to oblige the search engine to remove links, it is a matter of goodwill, warn lawyers.?? Yesterday one of Russia’s major publishers, Eksmo,? published an open letter on behalf of its authors to Yandex CEO Arkady Volozh. Most of Russia’s search engines help unprincipled users find websites that publish stolen copyright material, argue the writers. They urge Yandex to follow Google’s example and remove links to pirated content from the search results at the request of copyright owners.?? Four of the writers who have signed the letter, Daria Dontsova, Tatiana Ustinova, Tatiana Polyakova, and Anna Litvinova, are among the top ten most read authors in 2010 (according to the Russian Book Chamber). The letter was also signed by Yulia Vysotskaya, Andrey Konchalovsky, Leonid Parfyonov, Andrey Makarevich, and others. ?Yandex is the most popular search engine in Russia. According to LiveInternet.ru, in June its share of the Russian search market equalled 64.4% and that of Google 23%. According to TNS Russia, in May of 2011, Yandex’s monthly audience amounted to 25.84 million people. In the spring, during its IPO on NASDAQ, Yandex raised $1.3 billion with the company’s valuation at $8 billion.??? ?Yandex’s competitor, Google, has already begun working with Russian copyright owners. In April of this year, at the request of Eksmo, Google eliminated 446 links to 106 websites with pirated content without any judicial intervention. Instead, Google acted in accordance with the US Digital Millennium Copyright Act, a US law on copyrights in the digital space.?? ?But under Russian law, the search engine is not obliged to respond to a copyrights holder’s request to delete illegal content from the search results, argues head of Uskov & Partners, Vadim Uskov. However, he suggests that Yandex could still meet authors halfway.“Being accused of aiding piracy is something Yandex absolutely does not want for its image. Meanwhile, links to pirated books compared to websites with illegal video files do not produce a great amount of traffic, so it is possible to do without it,”he says. The main problem, according to the lawyer, will be separating those websites with pirated and legal content. The search engine itself of course won’t be able to monitor pirated sites. This will require copyright owners to make the necessary requests, explains Mr Uskov.??????? ?Yandex’s spokesman, Ochir Mandzhikov, says that the company has the right to determine the content allocation policy and impose restrictions only where it serves as the host on such servers as Yandex.Narod, Yandex.Video, and Yandex.Fotki. But it does not have the discretion to intervene in issues concerning third parties’ use of someone else’s intellectual property.“The Yandex search engine, just like other similar search engines, only indexes information accessible to the public, and in the event it is removed from the source site it will not be found by the search system,” he explains.???? According to the non-profit organization Federation of Intellectual Property Rights, the illegal segment of the e-books market in Russia reached $7.5-9.5 million (227.7-288.42 million rubles in accordance with the 2010 average exchange rate). Meanwhile, legal book sales in the electronic format for 2010, according to the online store Litres, reached only $2 million (60.72 million rubles), doubling from $1 million (31.75 million rubles) in 2009.Activity in the Oil and Gas sector (including regulatory)23:30?12/07/2011ALL NEWSBelarusian premier hopes for reasonable compromise in Beltransgaz selling. Tass 457 MOSCOW, July 12 (Itar-Tass) —— Belarusian Prime Minister Mikhail Myasnikovich hopes for a reasonable compromise in selling 50% in Beltransgaz to Russia and further negotiations on the gas price formula. The negotiations on selling Beltransgaz stock and the negotiations on the gas price formula “are two independent processes,” he said. “This is the first time in the European history that a sovereign state is transferring its gas transport routes to a partner in the Customs Union.” Asked whether Belarus linked the gas price formula to the Beltransgaz selling, Myasnikovich said, “That is implied but not linked directly.” He said the issue was raised at bilateral negotiations with Russian Prime Minister Vladimir Putin on Tuesday. “Additional instructions will be given,” Myasnikovich said. He also said that the Belarusian government was negotiating the selling of stakes in seven large companies with Russian investors,. Belarus negotiates the selling of the state stakes in Grodnoazot with Sibur and Rosneft, in Naftan with LUKOIL, in Beltransgaz with Gazprom, in the Mozyr oil refinery with Rosneft, in MAZ with Russkiye Mashiny and Rostekhnologii and in Integral with Rostekhnologii. Vladimir Yevtushenkov’ s entities are negotiating the acquisition of a stake in the Belarusian cell phone operator MTS. In the opinion of Myanikovich, the negotiations could have been more energetic. Uralkali has not formulated its bid for a share in Belaruskali. “They have not made a bid. I do not know. Maybe they are not interested,” he remarked. Russian companies eye Belarus refineries-reports, Jul 12 2011MOSCOW, July 12 (Reuters) - Russia's oil majors, Rosneft (ROSN.MM: Quote, Profile, Research) and LUKOIL (LKOH.MM: Quote, Profile, Research), are in talks to buy Belarus refineries, Russian news agencies are quoting Belarus prime minister as saying on Tuesday.Mikhail Myasnikovich said that Rosneft is looking to acquire a stake in Mozyr refinery, while LUKOIL is in talks to buy a state share in Naftan.(Reporting by Vladimir Soldatkin; editing by John Bowker) Shtokman project could be exempt from property tax CapitalJuly 13, 2011Event: Yesterday (12 July), a draft law on the potential exemption of property tax for the Shtokman project was submitted to the Duma for approval. According to Interfax, citing supplementary documents, phase one of the project could generate c.RUB937.7bn of tax revenue for the government in the first 25 years. No details on an approval timeline were revealed. Action: Marginally positive for Gazprom, in our view. Rationale: The Shtokman field development (3.9tcm of gas reserves) remains a never-ending story. After its discovery in 1988, production was originally scheduled to start in 2000, but this has been rescheduled many times. The most recent change was due to the global oversupply of gas and uncertainty over future gas prices. Gazprom (51% shareholder of phase one; Total and Statoil hold 25% and 24% stakes, respectively) remains committed to commencing pipeline delivery (13.5bcm pa) in 2016, followed by 7.5mn tpa of LNG in 2017, but a final investment decision is expected in December 2011. Shtokman's economics remains unclear, partially due to the state's lack of firm commitment regarding tax breaks (unlike for Novatek's South Tambei project). Property tax concessions are the lowest of the possible breaks (e.g. zero MET and/or export duties) and could allow Gazprom to save c.$500mn pa in phase one, on our estimates (assuming phase one capex over $20bn). We expect further tax breaks to be granted to Shtokman; however, it may have little impact on Gazprom's share price given the long-dated nature of the project. Ildar Davletshin12:00Rosneft and Gazprom Neft Salavat experiencing problems in modernizing refining capacity, not so for Lukoil and Gazprom- Shmatko (Part 2) needs to acquire refinery able to produce over 2 mln tonnes annually – Shmatko to purchase fuel from oil firms for reserve at market prices - Shmatko (Part 3) Oil Field Work, New Tech Deemed Critical July 2011By Alec LuhnIn?many Russian folk tales, a?man is raised from?the dead after he is doused in?waters that heal his wounds and?bring him back to?life.For the?lifeblood of?the Russian economy — oil and?gas — it will be just as important to?find a?way to?invigorate the?service and?equipment sector. In?fact, innovation could prove to?be the?miracle water.Right now "we don't have this kind of?water," said Sergei Shatokhin, director of?consulting firm Prefish in?the Urals city of?Tyumen. If competition with major international oil and?gas services companies heats up — and?such companies already have footholds in?the Russian market —?then companies here "won't buy our Russian products anymore," he said.Russian companies must design new products, Shatokhin said, and?they need an?"upsurge of?innovativeness."For the?Urals oil field services industry to?thrive — or even survive — cutting-edge products and?innovative practices will be needed, consultants and?equipment makers said in?interviews. Changes are already occurring: Increasingly tough physical conditions for?extracting deposits and?increasing competition from?multinational companies are forcing the?market to?consider new approaches. In?the next three years, for?instance, Russian pipe producers plan to?invest at?least $5 billion in?modernization, the?Pipe Industry Development Fund lobbying group has announced.Prodding an?IndustryOil field services companies offer the?infrastructure, equipment and?services necessary to?extract and?transport oil and?gas. In?the Urals, the?manufacturing and?maintenance of?that equipment — rigs, drilling components, turbines, pipelines and?more — is an?important business.The Urals Federal District leads the?country in?both oil and?gas production, and?it holds about 70 percent of?Russia's oil reserves and?90 percent of?its gas reserves, according to?figures from?Moscow-based consulting firm IRP Group. A?number of?major plants in?the Urals, such as state enterprises Uralvagonzavod and?the Elektrokhimpribor Combine, manufacture and?make repairs on?oil and?gas extraction equipment. The?Urals in?general are known as Russia's industrial backbone. But large-scale investment in?the Russian oil field services industry began in?earnest only in?the past decade, and?the sector as a?whole lags behind its international competitors, Valentin Tazetdinov, managing director of?ChelPipe's Vysota 239 factory, said in?an interview. At?the recently opened Chelyabinsk facility, Tazetdinov oversees the?production of?large-diameter pipes for?oil and?gas pipelines."Without innovation, we will simply be stunting the?growth of?the oil industry, including oil equipment manufacturing," Tazetdinov said. "We just aren't able to?extract the?oil and?gas that is rushing freely in?our country."A number of?companies have invested in?innovative production practices and?facilities, including ChelPipe, Russia's third-largest producer by?production volume of?oil and?gas pipes. ChelPipe spent about $2 billion to?construct Vysota 239 and?the Iron Ozone 32 facility, which is about 50 kilometers outside Yekaterinburg, in?Pervouralsk. Both facilities opened in?2010 and?have new equipment, a?work approach based on?the Japanese practice of?kaizen and?a number of?aggressive staff policies, such as daily breathalyzer alcohol testing of?employees and?programs for?discouraging smoking.Pushin said the 'newborn demand forced domestic companies to pay attention to innovative products.'The second-largest Russian producer of?steel pipes, OMK, also cites innovation as a?key part of?its growth strategy and?says it is spending more on?modernization. In?the Urals, OMK makes pipeline fittings at?its Trubodetal factory in?Chelyabinsk.Yet, consultants and?producers said the?Russian oil field services industry as a?whole is facing serious hurdles: a?deficit of?skilled young employees, aging equipment and?a lack of?financial help from?the regional governments."For now, [innovation] is insufficient to?the extreme," Shatokhin said from?Tyumen. "There's no plan for?innovation.""It's easier for?companies to?cruise along the?rails they're already going along," he said.Urals oil and?gas services plants face competition from?multinationals providing oil field services in?the region. Those include Baker Hughes, Halliburton, Schlumberger, Weatherford International and?Total. Notably, Schlumberger has built manufacturing plants in?Bashkortostan and?Tyumen, Weatherford has production in?Usinsk, and?Baker Hughes plans to?set up production in?Tyumen.Multinational ContestThe entry of?foreign companies into?the oil and?gas services market forced domestic producers to?begin thinking innovatively, noted Mikhail Pushin, commercial director at?Izhevsk's NPF Mekhanik, which produces pump assemblies and?components."Until recently, the?market was very conservative and?didn't adopt anything new," Pushin said by?e-mail.That changed with the?arrival of?the multinationals, which offered services for?borehole maintenance that had been impossible to?perform with domestic equipment, he explained. In?West Siberia, which is included in?the Urals Federal District, most wells have been in?operation for?some time, and?the boreholes, or holes drilled for?extraction, are old.As a?result, the?services offered by?the multinationals — such as cementing boreholes, or offering hydraulic fracturing — quickly attracted demand from?Russian companies."This newborn demand forced domestic companies to?pay attention to?innovative products and, accordingly, forced us to?manufacture them," Pushin said. The Tyumen region is a?case study. A?hub for?gas- and?oil-related technologies since Soviet times, the?southern Urals region is now an?example of?what needs fixing. Up to?70 percent of?equipment in?the region is worn out, and?up to?90 percent is low-quality or outdated, Shatokhin estimated.It's no surprise, then, that a?development plan for?oil field services in?the Tyumen region — commissioned by?the government and?drafted not long ago by?the Prefish firm — suggested revamping the?region's machine manufacturing by?introducing new products.Meanwhile, oil and?gas extraction is progressing from?more-accessible to?less-accessible deposits, which in?turn is driving the?demand for?new technologies.4 Kilometers BelowFor example, with oil companies drilling more often in?the ocean and?north of?the Arctic Circle, the?extraction pipes must be able to?withstand temperatures ranging from?minus 60 degrees Celsius to?plus 50 C, as well as depths of?up to?four kilometers below sea level, according to?pipemakers."Current conditions for?oil and?gas extraction get more complicated every year," Tazetdinov said.For all of?these reasons, pipe producers are spending heavily on?new technologies and?facilities. During the?past eight years, Russian pipemakers invested $10 billion in?the development and?modernization of?production, according to?the Pipe Industry Development Fund. OMK put 21 billion rubles ($752 million) into?the modernization of?its production facilities last year and?plans to?invest 33 billion rubles this year, said OMK spokesman Vladimir Stepanov."Investment in?new technologies is part of?OMK's strategy, which is directed toward the?creation of?a vertically integrated company, increased production efficiency and?the reduction of?costs," Stepanov said by?e-mail.At ChelPipe and?OMK, a?lot of?innovation spending has been devoted to?ramping up production of?large-diameter pipes, which can range from?508 millimeters to?1,420 millimeters in?diameter. Of?the 13.5 million tons of?pipes produced annually in?Russia, 5 million tons are large-diameter pipe, the?Pipe Industry Development Fund said in?December. In 2005, OMK became the?first Russian company to?produce large-diameter pipe. It set up a?production line even though no buyers — not even industry giant Gazprom — were guaranteeing future purchase of?the product, Stepanov said.He said the?risk paid off when OMK won a?tender to?supply pipe for?Nord Stream, the?multinational gas pipeline project in?the Baltic Sea that is spearheaded by?Gazprom. (For Nord Stream's second pipeline, OMK is supplying large-diameter pipes along with Germany's Europipe and?Japan's Sumitomo.)"Innovation lies in?implementing unique technologies and?predicting demand for?high-tech production," Stepanov said.ChelPipe's large-diameter pipe facility in?Chelyabinsk also has taken investment risks. Although ChelPipe didn't add customers by?opening Vysota 239, it did win new orders, a?spokesman said. The?company has spent about $10 million to?$15 million on?research and?development for?large-diameter pipe, said Tazetdinov, Vysota 239's managing director.'Innovation lies in implementing unique technologies and predicting demand for high-tech production,' OMK's Stepanov said.ChelPipe plans to?eventually produce seamless pipe, an?even more advanced technology, but this will require significant investment, ChelPipe's spokesman said.Rivalry isn't the?only impetus for?creating new technologies. Having foreign and?Russian companies working in?a single hub can encourage innovation, according to?Shatokhin. Oil and?gas operations often cluster around multinational companies, and?those operations can attract local companies, leading to?more domestic competition.Such a?cluster is forming in?Tyumen, where Schlumberger and?other foreign companies have offices and?production operations, Shatokhin said. He pointed to?Tyumenskiye Motorostroiteli, a?group of?enterprises led by?Gazturboservis — the?"flagship" innovative oil field services company in?the region — and?situated at?the Tyumen Motor Factory. For Gazturboservis, which produces and?repairs turbines, innovation plays a?key role in?its development strategy, said spokesman Yevgeny Alexeyev. The?company has implemented new methods of?production, new control systems and?a new technology for?making parts out of?moulds and?casts. Its main customer, Gazprom, and?other buyers have benefited from?the innovations, he said."They like it when work is faster and?higher-quality," Alexeyev explained.Yet, there are some barriers in?the way of?more innovation in?oil field services. Shatokhin, for?one, lamented the?lack of?government funding. Although government benefits in?Tyumen decrease the?cost of?domestically produced equipment by?about 8 percent, government aid is insufficient, he said. He estimated that less than 1 percent of?Tyumen's gross regional product is spent on?innovation.ChelPipe has enjoyed government aid, including a?loan from?Gazprombank that was approved only after the?government guaranteed the?loan for?one year, Tazetdinov said. He said the?company "worked very seriously" on?building a?relationship with the?government. In?addition to?the loan itself, proof of?that relationship came in?the form of?a photo op: Prime Minister Vladimir Putin attended the?ceremonial openings of?both Vysota 239 in?July 2010 and?Iron Ozone 32 in?November 2010.Innovations vs. ActionsTightfistedness on?the part of?Russian oil and?gas customers is the?main impediment to?innovation, said Pushin of?NPF Mekhanik. Domestic oil and?gas firms often spend as little as possible on?products, without regard to?the quality of?the technology that they are buying, he said.He added that although equipment producers can carry out research and?development, Russian industry lacks the?capacity to?manufacture innovative products, at?least in?the pumping sphere. Innovation-minded companies must buy equipment from?abroad, which exposes them to?administrative barriers in?the form of?customs-related costs, as well as tax audits. And?foreign producers aren't keen on?keeping inventory in?Russia.In any part of?the oil field services industry, it comes down to?competition, Pushin noted: Domestic companies aren't interested in?innovation until "real competition" — usually provided by?foreign players — enters the?market and?threatens to?force them out."Our area desperately needs innovative finished products because [foreign] competition has appeared in?our sales market. So, it's a?question of?survival," Pushin said.Russian Producers & Pipe SalesCompanyTotal Pipe Sales 2010Large-Diameter Pipe Sold (Thousands of?Tons)TMK33%671Vyksa Steel (OMK)23%1,300ChelPipe16%600Izhora Pipe (Severstal)5%471Other23%—Source: Compiled by?Andrei Lobazov, Alfa Bank Research, in?July 2011.GazpromGazprom, Ukraine discuss gas deliveries under current contractYesterday at 18:42 | Interfax-Ukraine Moscow, (Interfax) - Gazprom CEO Alexei Miller has discussed gas cooperation at a meeting with Ukrainian Energy and Coal Industry Minister Yuriy Boiko. "Specifically, the discussion concerned gas deliveries to Ukraine under the existing long-term contract," Gazprom said in a press release.Since the beginning of July, Naftogaz Ukrainy has sharply reduced the amount of Russian gas it has taken delivery of, compared with June, according to data from the Fuel and Energy Central Dispatch Service.Ukraine took delivery of 28.969 billion cubic meters (bcm) of Russian gas through July 3, which is 13.826 bcm or 91% more than in the same period last year.Ukraine plans to import 40 bcm of gas from Russia this year.Prime Minister Mykola Azarov said previously that Ukraine would reduce imports in the second half of 2011 compared with the first half in anticipation of rising prices in the last two quarters of the year. Ukraine paid about $264 per 1,000 cubic meters of Russian gas in the first quarter, $297 in the second, $350 in the third quarter, and this might reach $400 in the fourth. The price is tied to the price of a basket of oil products with a nine-month lag.Naftogaz Ukrainy has been trying to negotiate changes in the contract that would provide a discount based on the volume purchased, as well as seasonal discounts.At a recent meeting with Boiko, Miller said a reduction would only be possible if Gazprom and Naftogaz Ukrainy merge.Under the gas contract between Gazprom and Naftogaz Ukrainy that was signed in January 2009, Naftogaz agreed to buy 52 bcm a year beginning in 2010. It can import less, but under the contract's take-or-pay provision, Ukraine must pay for a minimum of 80% of that volume, regardless of the actual amount taken.The contract provides for the basic volume to be amended down to 41.6 bcm, but the change must be agreed before July 1 of the preceding year. The change would reduce the take-or-pay threshold to 33.3 bcm.The companies signed a supplement to the contract in April 21, 2010 under which Ukraine receives a discount reflecting a reduced export duty on the gas exported to Ukraine.The export duty discount, which is in effect through 2019, equals $100 per 1,000 cubic meters but not more than 30% of the contract price, and applies to the first 30 bcm of Russian gas imports in 2010 and to the first 40 bcm in subsequent years. Volumes above that amount will be subject to the 30% export duty on gas.The discount in the gas price for Ukraine will be reflected in the rental payment for maintaining Russia's Black Sea Fleet in Sevastopol. Read more: 's Ratings Remain Unaffected By Gazprom Export's Planned Move To St. Petersburg, Pending The Effect On Revenues & PoorsJuly 12, 2011Standard & Poor's said today that OOO Gazprom Export's planned move to St. Petersburg from Moscow does not immediately affect the issuer credit rating on the City of Moscow (BBB/Stable/--). On July 8, 2011, Russia-based energy company Gazprom Export announced its plan to relocate its headquarters to St. Petersburg from Moscow, where it has been since 1997. In our opinion, this move may weigh on Moscow's creditworthiness if we find that it significantly weakens the city's financial and debt indicators.Because details as to exactly how the move could affect the budget revenues of both Moscow and St. Petersburg (BBB/Stable/--) remain undisclosed, we are not assuming any immediate effect on the creditworthiness of either city. One uncertainty is whether or not Gazprom Export's tax residency will change with the move.We believe, however, that a change in tax residency could cause a significant redistribution of budget revenues in favor of St. Petersburg. Gazprom Export is the world's largest natural gas exporter and until now has been Moscow's biggest taxpayer. If Moscow's potential loss of revenue were not accompanied by appropriate austerity measures or federal compensation, its budgetary performance could structurally deteriorate in our view. This might lead us eventually to lower its ratings. St. Petersburg's credit standing would not benefit, in our view, as its rating is already capped by that on the Russian Federation (BBB/Stable/A-3).If Gazprom Export moves to St. Petersburg as announced, it may start paying corporate profit taxes into that city's budget as of next year. Our base-case scenario estimates this could reach about Russian rubles 110 billion in 2011.Under this scenario and without appropriate consolidation or federal government support, we believe Moscow's budgetary performance could notably weaken during 2012 and 2013 as it could lose about 9% of its operating revenues, annually, in line with our base case. Its operating surplus could decrease to 5%-6% of operating revenues from 19% in 2010, while its deficit after capital accounts could touch the legal limit of 15% of revenues. In the medium term, this may hasten debt accumulation and see currently hefty cash reserves dry up. Positively, though, Moscow's tax base could eventually become less volatile and more diversified as one of the main risks of revenue redistribution in favor of other regions would be realized with this decision.St. Petersburg's budget could significantly strengthen to a strong double digit surplus after capital accounts as a percentage of revenues. This would obviate the city's need for new borrowing in 2012 and 2013. But as the city's rating is already capped by that on the Russian Federation, this would not lead to an upgrade independent of the sovereign.This potentially large-scale redistribution of revenues between Russia's two largest cities as a result of one company's business decision highlights to us the developing and unbalanced character of the institutional framework established for Russian local and regional governments, as well as highly concentrated nature of the Russian economy. ................
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