Russia - WikiLeaks
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Basic Political Developments
• N. Korea Nuclear Blast Was as Powerful as Hiroshima, Russia Says
• Russia Says UN Meeting On NKorea Set For 2000 GMT Monday-Reports
• Russia confirms N.Korea nuclear test, voices concern – 2
• Russian Defence Ministry confirmed that North Korea conducted a nuclear test
• UN Security Council to discuss N.Korea test – Tass
• RT: North Korea carries out nuclear test
• Russia voices 'concern' over NKorea nuclear test
• Russia says DPRK's nuclear test "evokes concern"
• Lavrov in Beirut in Biden's Footsteps: Support Stability, Free and Transparent Polls
• Lieberman gives Russians pass for meet with Meshal
• Syria says MiG deal with Russia still on
• Report: Israel to expedite UAV production for Russia
• Russian army chief to visit India today - General Vladimir Boldyrev, the Commander-in-Chief of Russian Land Forces, will be in New Delhi today, where he will discuss joint cooperation in mountain-warfare training and will tour Indian military facilities in Siachin, Igor Konashenkov, the Commander's aide was quoted as saying by ITAR-TASS.
• IAF drops Russia from $1 bn deal - Russia is set to lose a billion dollar (Rs 48,000 crore) defence deal for midair refuellers, signalling a break in its over 50-year-old monopoly as India’s preferred military supplier.
• Russia to lose mid-air refueller deal with India: report
• MiG Corporation modernizes fighter jets for Bulgaria
• Armenia: Yerevan Buying Russian Arms At CSTO Discount
• Russia denies trespass into Georgia by motorboat, helicopter
• Russian embassy in Tallinn sends note on war monument being vandalized
• Russian destroyer prevents Somali pirate attack on cargo vessel
• Soyuz blast-off preparation in full swing - Engineers are going through the final checks on the latest Soyuz spacecraft, due to blast off in three days, taking three members to create the first six-person crew on the International Space Station.
• No health threat to Russian infected with swine flu – Onishchenko
• Russia confirms second A/H1N1 flu case
• Second swine flu patient in Russia - The resident of the Kaluga region returned from the Dominican Republic on May 18 but only sought medical assistance two days later after his temperature began to rise.
• May 28: Prime Minister Vladimir Putin to visit Belarus
• Lukashenko Critical Ahead of Putin Visit - Belarussian President Alexander Lukashenko criticized Russia on Friday for failing to carry out decisions on integrating the two states a week before Prime Minister Vladimir Putin is due to visit.
• Europe-Russia Economic Forum: Romania hosts Europe-Russia economic forum, an event chaired by President Traian Basescu. (To May 27)
• NATO Parliamentary Assembly discusses Alliance role in High North - Norwegian Minister of Foreign Affairs Jonas Gahr Støre told the NATO Parliamentary Assembly that the alliance should increase its role in the High North. Deputy Minister of Defence Espen Barth Eide believes this should be done in cooperation with Russia.
• MT: No Kremlin Guarantee of Gas to EU
• Putin warns outsiders over Ukraine - Prime Minister Vladimir Putin warned the West on Sunday not to meddle in relations between Russia and Ukraine, according to remarks cited by state-run news agencies.
• Russian Orthodox Church Patriarch to visit Turkey - In July Russian Orthodox Church Patriarch Cyril will visit Turkey, Turkish CİHAN news agency reported.
• Moscow Fumes at OSCE's Choice of a Russian: "Vadim Zhdanovich is a very experienced elections expert who has for many years worked at the Office for Democratic Institutions and Human Rights," ODIHR spokesman Jens-Hagen EschenbКcher told The Moscow Times.
• Russian Orthodox Consecrate Parish in Rome - The Vatican described a solemn ceremony on Sunday for the consecration of the first parish of the Moscow Patriarchate in Rome as a sign of further thawing of relations with the Russian Orthodox Church.
• Bomb near Russian gas pipeline defused - The Interior Ministry of the Russian North Caucasus Republic of Daghestan said Sunday an explosive device found near a gas pipeline has been found and defused.
• Large arms cache found in Chechnya - Police have found a large cache of weapons hidden in a forest in Russia's troubled North Caucasus republic of Chechnya, a local police source said on Sunday.
• Armed clash between police officers and militants occurred in Ingushetia; militant destroyed
• Gunman killed in S.Russia shootout - One gunman was killed in a clash with police on Monday morning in Russia's North Caucasus republic of Ingushetia, a local police spokesman said.
• Military Action Underway Across the Northeast Caucasus
• Rebels killed in Chechnya, 15 others arrested in Ingushetia: report
• Polish citizen, who is a correspondent of the Polish TV company, was beaten up in Moscow
• Polish reporter badly beaten in Moscow road rage attack
• Constitutional Court Reform Passed - The State Duma on Friday passed in a third and final reading a Kremlin-drafted bill that would tighten control over the selection of the Constitutional Court's president and double the length of the judge's term.
• Desperate Russians won't turn up their nose at expired food - Trafficking in spoiled food, a familiar racket during the chaotic collapse of the Soviet Union, is making a comeback in both markets and wholesale Internet shopping. A semi-underground enterprise, it is difficult to trace. But consumer groups, shoppers and anecdotal evidence all indicate its ascendance.
National Economic Trends
• Unemployment in Russia Rises, Retail Sales Slide
• Foreign direct investment in Russia plummets 43% to $3.2 bln in Q1
• Foreign investment falls 30% in 1Q09
• Russian domestic demand grows m o m in April
• Economic data for April show continuing deterioration in trends
• Russian retail sales declined 5.3% in April
Business, Energy or Environmental regulations or discussions
• Siemens Eyes Russian Nuclear Revival - More than 20 years after Chernobyl, Russia is racing back into nuclear energy. Germany's Siemens hopes to profit from helping build dozens of new reactors
• Sberbank Wants 35% Of Opel in $981M Bid
• Turkish firm leaves its mark on Olympics [pic]- Turkey’s Hazinedaroğlu Construction Group is building the new Winter Olympics facilities in Sochi, Russia. Despite the negative effects of the global crisis on Russia, the Turkish firm continues its business as usual, Chairman Turan Hazinedaroğlu says
• FACTBOX-Russian steelmakers and their bond covenants
• Severstal proposes to make cash offer - High River: Reuters reported that Canada's High River Gold Mines Ltd said that Russian steelmaker Severstal has proposed to make a cash offer of 18 Canadian cents a share to its minority shareholders
• Severstal launches tender offer for High River Gold
• Boguchan project facing delays as RusHydro gets Rusal exit prompt
• RZD may lose RUB 100 billion this year
• Russian freight volume dips in January to April
• Grand development of Murmansk Transport Hub
• Russia seeks cooperation with Norway in fishery modernization
• Russian investment firm offers Facebook $200 million
• Russian Regional telcom players could lose frequencies
• Wait is over as Moscow prepares for 3G
• VEB expects some of its lenders to default
• Sberbank to lengthen consumer loan terms
• Sibirskiy Cement: Building on an expected recovery
Activity in the Oil and Gas sector (including regulatory)
• 1% Fall in Oil Exports - Russia plans a 1 percent decrease in daily shipments of Urals and Siberian Light crude from six Baltic and Black Sea ports in June.
Finance Ministry plans to introduce annual indexation of gas extraction tax from January
• IEA Head: Russia-Ukraine Spats Spark Gas Supply Rethink
• FACTBOX-The latest Russian-Ukrainian gas issues
• Thirteen states, among them Russia, signed energy efficiency deal in Rome
• Buying Russian Stocks on Oil Is ‘Leap of Faith,’ UralSib Says
• UPDATE: Russian Energy Min Sees Russia Oil Output Stable In 09
• Tycoon Vekselberg may be interim TNK-BP CEO –paper
• TNK-BP CEO Search Intensifies
• TNK-BP Completed the Ryazan Refinery Overhaul
• Rosneft to Build $14 Billion Refinery in Far East to Process Crude Oil from ESPO Pipeline
Gazprom
• Committee to Pay Gazprom - Gazprom may be paid for gas supplies to Eastern Europe in the 1990s after the government sets up a special committee this week to resolve the matter, Kommersant said, citing unidentified government officials.
• Russia Gazprom output may fall 18 pct in 2009-report
• Gazprom deputy CEO on production, Argus on capex
• Gazprom won't delay Shtokman over crisis
• Gazprom Neft Increases Stake in Sibir Energy to 27.5%
• Gazprom Neft may be in talks to acquire control of Sibir Energy
• Gazprom, Slovenia sign 15-year gas supply agreement
• CNN: Why does Russian energy giant Gazprom wield such power?
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Full Text Articles
Basic Political Developments
N. Korea Nuclear Blast Was as Powerful as Hiroshima, Russia Says
By Torrey Clark
May 25 (Bloomberg) -- The nuclear device North Korea detonated today was about as powerful as the bomb the U.S. dropped on Hiroshima at the end of World War II, according to Russian estimates.
The North Korean explosion had an explosive yield of between 10 kilotons and 20 kilotons, said Alexander Drobyshevsky, a spokesman for the Defense Ministry, on state television. The blast occurred about 80 kilometers (50 miles) from the northern city of Kilchu, near the borders with China and Russia, Drobyshevsky said.
The “Little Boy” bomb the U.S. dropped on Hiroshima in 1945 had a yield of 15 kilotons, according to the U.S. Federation of American Scientists. The “Fat Man” bomb dropped on Nagasaki had a yield of 21-23 kilotons, according to the research group. A kiloton is an explosive force equal to 1,000 metric tons of TNT.
To contact the reporter on this story: Torrey Clark in Moscow at tclark8@
Last Updated: May 25, 2009 03:24 EDT
Russia Says UN Meeting On NKorea Set For 2000 GMT Monday-Reports
MOSCOW (AFP)--The U.N. Security Council will meet Monday at 2000 GMT to discuss North Korea's nuclear blast, Russian Foreign Minister Sergei Lavrov said, quoted by Russian news agencies.
Russia confirms N.Korea nuclear test, voices concern – 2
11:5925/05/2009
(Recasts, adds details, U.S. and UN response in paras 3-4, 10-15)
MOSCOW, May 25 (RIA Novosti) - Russia's Defense Ministry confirmed on Monday that North Korea had conducted a nuclear test, and said it would closely monitor the situation.
North Korea announced earlier in the day it had conducted a successful underground nuclear test explosion "as part of the measures to bolster its nuclear deterrent for self-defense."
The ministry's spokesman Col. Alexander Drobyshevsky said: "The test was carried out 80 kilometers (50 miles) to the northwest of the town of Kilchu. The nuclear device had a yield of between 10 and 20 kilotons [of TNT equivalent]."
"We are currently monitoring the situation," he added.
The Russian Foreign Ministry earlier voiced concern over the reclusive communist state's announcement of its second nuclear test. Pyongyang withdrew from the Non-Proliferation Treaty (NPT) in 2003 and conducted its first nuclear test explosion in October 2006.
"The information on North Korea's nuclear test is a cause of concern, but before we draw any final conclusions it should be thoroughly verified," the ministry's press service said in a statement.
Geological survey agencies around the world said they had detected a 4.7-magnitude tremor in the area where the blast is believed to have taken place.
South Korea's Yonhap news agency reported that after Monday's nuclear explosion, Pyongyang test-fired a ground-to-air missile with a range of 80 miles (130 kilometers) from its northeastern Musudan-ri launch site.
The Russian permanent mission to the UN said the Security Council would convene for emergency consultations at 16.00 EDT (20.00 GMT) on Monday and could decide to hold an emergency meeting on the issue.
U.S. President Barack Obama issued a statement saying North Korea's nuclear and missile tests were a "matter of grave concern to all nations" and called for an immediate response from the international community.
"North Korea's attempts to develop nuclear weapons, as well as its ballistic missile program, constitute a threat to international peace and security," the president said.
Obama said Washington would work through the U.N. Security Council and the six-party talks format on North Korea's denuclearization, involving North and South Korea, Russia, Japan, China and the United States, to address the issue.
The six-nation talks were launched in 2003 after Pyongyang withdrew from the NPT Treaty.
Under deals reached in 2007, the North began disabling a nuclear reactor and other facilities at Yongbyon under international supervision, in exchange for economic aid and political incentives.
However, in December last year, a round of six-nation talks ended in deadlock over a U.S. demand that nuclear inspectors be allowed to take samples out of the country from North Korean facilities for further analysis.
The reclusive communist regime had been threatening for several weeks to resume work at its Yongbyon nuclear facility, which produces weapons-grade plutonium, after withdrawing from six-nation talks. The move came in response to international condemnation of an April 5 rocket launch, which Pyongyang said was carrying a communications satellite.
North Korea had also said it would conduct further nuclear tests and rocket launches to ensure its security and defense capability.
Russian Defence Ministry confirmed that North Korea conducted a nuclear test
MOSCOW, May 25 (Itar-Tass) - The Russian Defence Ministry has confirmed that North Korea conduced a nuclear test in the northeast of the country early on Monday.
“Yes, indeed, our national facilities fixed the fact of a nuclear test in North Korea. Now we are analysing data on the test. The power of the nuclear explosion is being specified,” a ministry source told Tass.
UN Security Council to discuss N.Korea test – Tass
Mon May 25, 2009 2:15am EDT
• Russian officials studying reports of North Korean test
• Japan reported to have asked for Security Council meeting
(Adds quotes and details)
MOSCOW, May 25 (Reuters) - The U.N. Security Council would meet on Monday to discuss North Korea's nuclear test, Russia's U.N. ambassador Vitaly Churkin was quoted as saying by Itar-Tass news agency.
Russian officials told Reuters they were studying reports of the test.
Moscow currently holds the rotating monthly presidency of the Security Council.
"Japan made a request to the president of the Security Council that they hold a Security Council meeting on North Korea," said a diplomatic source, asking not to be identified.
The source said Security Council talks might be held later on Monday, although that was tentative. (Reporting by Conor Humphries)
North Korea carries out nuclear test
25 May, 2009, 11:17
North Korea has successfully carried out an underground nuclear test, officials in the country have confirmed.
There have also been reports from South Korea that a short range missile was test-fired immediately afterwards.
Both Japan and South Korea have called emergency security meetings after monitors detected what South Korea claims was an "artificial earthquake".
The Russian Defence Ministry confirmed that the seismologists in the Far East have registered an underground earthquake caused by an underground nuclear test in North Korea.
There have been conflicting reports concerning the magnitude of the earthquake, with South Korean seismologists saying that the earthquake registered about 4.5 points at Richter scale, while Russian geophysicists are claiming it was around 5.1 points.
Also, according to Russian estimates, North Korea’s nuclear test was equivalent to 10-20 kilotons.
Russia's Ambassador to the UN, Vitaly Churkin, has said the UN Security Council will hold an emergency session in New York later on Monday to discuss the issue.
Russia is concerned with what’s happening on the peninsula because North Korea is a neighboring country, although the border between them is only about 18 kilometres long.
Even so, should any nuclear incident occur on the peninsula, Russia would be one of the first countries affected.
Russia’s Foreign Minister Sergey Lavrov, who is now on visit to Lebanon, has expressed his concerns over the issue.
“Japan suggested convening the UN SC today at 16:00 NYC time, and the delegations of the countries that have seismic monitoring stations should have information by that time which will help us understand what exactly happened,” Lavrov said.
It is hard to say at the moment what North Korea is trying to gain from this nuclear test, but one of the things that nuclear experts are talking about is the fact that Pyongyang is trying to set itself as a major player in the world arena, and attract attention to what is happening on the peninsula.
Last month, Pyongyang pulled out of six-nation talks including Russia and the United States, which were convened to deal with the communist country's nuclear programme.
It also warned that it would revive the programme and carry out new tests.
North Korea's first nuclear test was carried out in October 2006.
Russia voices 'concern' over NKorea nuclear test
|Mon, May 25, 2009 |
|AFP |
MOSCOW, May 25, 2009 (AFP) - The Russian foreign ministry voiced "concern" on Monday about North Korea's nuclear test but was still examining the situation, the RIA-Novosti state news agency reported.
"The information about the North Korean nuclear test evokes concern, but before reaching any final conclusions it must be carefully checked," the ministry's press service was quoted as saying.
Earlier on Monday, North Korea said it had staged a "successful" underground nuclear weapons test which was more powerful than its previous test of an atomic bomb almost three years ago.
South Korean officials said a tremor was detected around the northeastern town of Kilju, near where the first test was conducted in October 2006.
Russia has been a participant in the six-party talks aimed at convincing the reclusive Communist state to scrap its nuclear weapons programme, along with the two Koreas, China, Japan and the United States.
Russia is also a permanent, veto-holding member of the UN Security Council, which last month condemned a North Korean rocket launch, angering Pyongyang.
Russia says DPRK's nuclear test "evokes concern"
2009-05-25 13:10:02
MOSCOW, May 25 (Xinhua) -- The Russian foreign minister on Monday expressed concern over the reported nuclear test by the Democratic People's Republic of Korea (DPRK), the RIA-Novosti state news agency reported.
The report about the nuclear test "evokes concern," but "before reaching any final conclusions it must be carefully checked," the ministry's press department was quoted as saying.
Earlier on Monday, the DPRK said it had successfully conducted an underground nuclear test.
South Korean officials said an "artificial earthquake" was detected near the northeastern town of Kilju, about 10 km away from the site where the DPRK staged its first nuclear test in October 2006.
Lavrov in Beirut in Biden's Footsteps: Support Stability, Free and Transparent Polls
Russian Foreign Minister Sergei Lavrov is in Beirut in a show of support for the Lebanese president ahead of crucial parliamentary elections.
An official statement from the Russian embassy said Lavrov, who arrived in Beirut overnight, will express support for Lebanon's stability and the efforts of the Lebanese authorities to hold free, fair and transparent parliamentary elections.
Lavrov on Monday held talks with President Michel Suleiman and Prime Minister Fouad Saniora. He will also meet with Speaker Nabih Berri.
The daily As Safir said on its front-page headline on Monday that Lavrov's visit is aimed at examining the repercussions of "Hurricane Biden," a reference to U.S. Vice President Joseph Biden who was in Beirut last week.
Diplomatic sources, meanwhile, told the Kuwaiti news agency, KUNA, that Russia "respects" the various Lebanese parties, and would deal with any Lebanese team that wins the parliamentary elections "away from external interference."
Biden's visit, which also was a show of support for Suleiman, was seen by the opposition as meddling in Lebanese internal affairs.
"It appears that this visit is part of a U.S. bid to supervise the electoral campaign of a Lebanese party which feels threatened politically ... in light of the expected outcome of the legislative vote," Hizbullah MP Hasan Fadlallah had said of Biden's brief trip.
Lavrov will extend an invitation to Lebanon to participate in Russia's planned international conference on the Middle East.
Russia announced in January its intention to stage a Middle East conference in the first half of this year, but the idea has not been received with enthusiasm in either Israel or its key ally, the United States.
Lavrov was in Damascus on Sunday where he briefed Syrian President Bashar al-Assad on Moscow's wish to "organize a conference on the Middle East in order to discuss the peace process."
Syria's news agency, SANA, said Assad responded that "the conference must be well-prepared" and "set out objectives as well as the positions of those parties concerned" in the Israeli-Arab conflict.
Beirut, 25 May 09, 08:18
Lieberman gives Russians pass for meet with Meshal
By Barak Ravid
A week before Avigdor Lieberman's first diplomatic visit to Moscow as Israel's foreign minister, a controversy has erupted over a meeting which Lieberman's Russian counterpart, Sergey Lavrov, held Saturday evening in Damascus with Hamas politburo chief Khaled Meshal.
Lieberman shelved a statement condemning the meeting which the Israeli Foreign Ministry had drafted, in deference to the Russians, but then relented and released a weaker response expressing "deep disappointment" that the meeting took place.
The Russian foreign minister arrived in the Syrian capital on Saturday to participate in a meeting of foreign ministers sponsored by the Organization of the Islamic Conference. The meeting with Meshal came following a cooling of relations between Hamas and Russia, including Russian support of Israel's Operation Cast Lead in Gaza.
The Israeli foreign ministry was miffed over the Lavrov-Meshal meeting, especially when it was followed by a statement by Lavrov indicating that Russia would continue its contacts with Hamas despite international criticism.
Yesterday morning, after discussions at the foreign ministry, the foreign ministry decided to release a statement of condemnation. Because of the sensitivity of the matter with Lieberman's scheduled June 1 visit to the Russian capital, the statement was sent to Lieberman for his personal approval.
After shelving the statement, Lieberman's office noted that this was "not the Russian foreign minister's first get-together with Meshal and it was nothing to get all excited about."
After the Prime Minister's Office subsequently condemned the meeting in Damascus, Lieberman pulled an about-face and issued a new response. "The Foreign Minister," the new statement read, "expresses deep disappointment over the meeting and believes that any meeting with Hamas makes a peace agreement more remote and legitimizes terrorism."
Senior foreign ministry officials expressed amazement at the indecisive response by Lieberman to Lavrov's meeting with Meshal.
"If the British or French foreign minister [had met Meshal], we would have already recalled our ambassador," one of the officials said.
Syria says MiG deal with Russia still on
Sun May 24, 2009 9:38am EDT
DAMASCUS (Reuters) - Syria denied on Sunday a Russian media report that Moscow no longer wants to sell it eight advanced MiG-31 planes because of pressure from Israel.
"This is part of attempts to undermine the friendly relations and cooperation between Syria and Russia," an official Syrian statement said.
The statement was issued as Russian Foreign Minister Sergei Lavrov visited the Syrian capital and met Syrian President Bashar al-Assad.
Kommersant newspaper quoted an unidentified person close to Russia's state arms exporter as saying that the $500-million deal, agreed to in 2007, was halted after Israel protested.
The paper quoted another source in an unidentified Russian ministry as saying the contract had been halted because Syria could not come up with the money to pay for the fighters.
Syria, which has adhered to a ceasefire with Israel on the Golan Heights since 1974, has been trying to upgrade its military in the last several years.
(Editing by Jon Hemming)
Report: Israel to expedite UAV production for Russia
[pic]2009-05-24 16:09:12
JERUSALEM, May 24 (Xinhua) -- Israel will facilitate the production of unmanned aerial vehicles (UAV) for Russia as Moscow declared last week it had decided to halt the sale of advanced MiG-31 fighter jets to Syria, Jerusalem Post reported Sunday.
Russia signed a deal worth of 50 million U.S. dollars in April with Israel Aerospace Industries (IAI). This is the first Israeli sale of military platforms to Russia, which would include some of Israeli second-tier UAVs, including the Bird-Eye 400 mini-UAV, the I-view MK150 tactical UAV and the Searcher MK II medium-range UAV, according to the report.
The delivery of the UAVs to Russia would begin by the end of the year.
Russian Deputy Defense Minister Vladimir Popovkin is expected to visit Israel in the coming weeks to get a look at production, said the report.
Moscow had agreed in 2007 to sell eight MiG-31 fighter jets to Damascus for 500 million U.S. dollars, but called off the deal in April.
Last month, Israeli defense officials told the Jerusalem Post that Israel had decided to sell advanced UAV to Russia on condition that it would not transfer the technology to Iran or Syria and would suspend the sale of anti-aircraft systems to these countries.
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Moscow, May 25 (PTI) Top Russian Military Commander who will be on a week-long visit to India, plans to fly to icy Siachen Glacier, to transfer Indian army's mountain fighting techniques to his forces.
General Vladimir Boldyrev, the Commander-in-Chief of Russian Land Forces, will be in New Delhi today, where he will discuss joint cooperation in mountain-warfare training and will tour Indian military facilities in Siachin, Igor Konashenkov, the Commander's aide was quoted as saying by ITAR-TASS.
General Boldyrev will hold talks with Defence Minister A K Antony and Chief of the Army Staff Gen Deepak Kapoor on military cooperation between India and Russia and problems and prospects for development of the two countries' land forces.
The Russian delegation is scheduled to visit Jammu and Kashmir on May 26th, where 14th army corps of India's northern military is deployed. It would also visit Siachin glacier, where Indian servicemen are deployed on combat duty at the altitude of 7,000 metres in the harsh climate.
Moreover, Russian Army chief would also visit a training centre in Goa and Airborne troops in Agra during his India visit. PTI
IAF drops Russia from $1 bn deal
Rahul Singh, Hindustan Times
New Delhi, May 25, 2009
First Published: 01:25 IST(25/5/2009)
Last Updated: 01:45 IST(25/5/2009)
| | | |
Russia is set to lose a billion dollar (Rs 48,000 crore) defence deal for midair refuellers, signalling a break in its over 50-year-old monopoly as India’s preferred military supplier.
The former communist giant has clearly lost favour with the Indian military, as the air force has decided not to field any more Russian Ilyushin-78 refuellers to keep fighter jets airborne for considerably longer periods by tanking them up during flight.
After operating Il-78 tankers for almost six years, the Indian Air Force has said the Russian platform does not meet its requirements and it wants to deploy the Airbus A330 multi-role tanker transport (MRTT) offered by European aerospace corporation EADS.
The Il-78 and Airbus 330 MRTT were competing for the $1 billion global tender floated three years ago by the defence ministry for six midair refuellers to extend the operating radiuses of Indian fighter jets.
In an exclusive interview to HT, IAF chief Air Chief Marshal Fali Homi Major said, “We have finished all evaluations and selected the A330 MRTT. The deal will come up for final approval by the Cabinet Committee on Security (CCS) very soon. The Russian platform did not meet certain requirements.” The A330 MRTT is a military derivative of the Airbus A330 airliner.
Cracks in the India-Russia defence relationship have existed for some time now. Some of the irritants include Russia seeking mid-course price revisions in contracts for Sukhoi-30 fighters and aircraft carrier Admiral Gorshkov, a problem of steady supply of spares, poor vendor support after the disintegration of the Soviet Union and transfer of technology issues.
The air chief, who retires on May 31 on turning 62, said, “After the disintegration of the Soviet Union, Russia has changed the whole pattern of doing defence business. Now we are faced with issues concerning spares, vendor support and built-in delays in the structure of their centralised military corporations.”
Two years ago, Navy chief Admiral Sureesh Mehta had publicly said that India needed to take a relook at its military relationship with Russia, much to the government’s discomfort. The armed forces maintain that Russian equipment comes cheap but entails huge maintenance costs.
The A330 MRTT has won several tanker competitions with contracts signed by the governments of United Kingdom, Australia, Saudi Arabia and the United Arab Emirates. The first A330 MRTT would be delivered to the IAF within three years of signing of the deal while the remaining five would be inducted 15 months after that.
Russia to lose mid-air refueller deal with India: report
[pic]2009-05-25 11:27:01
NEW DELHI, May 25 (Xinhua) -- Russia is set to lose 1 billion U.S. dollars worth of defense deal for mid-air refuellers, which might signal an end to Moscow's 50-year monopoly over Indian military supply, reported local daily Hindustan Times on Monday.
The Indian air force has decided not to field any more Russian Ilyushin-78 refuellers after operating such refuellers for six years, said the report.
The Indian Air Force wants instead to deploy Airbus A330 multi-role tanker transport, a military derivative of Airbus A330 airliner, offered by European aerospace corporation EADS, said the report.
Russia and EADS are competing for the 1 billion U.S. dollar global tender floated three years ago by the defense ministry for six midair refuellers.
Indian air force chief Air Chief Marshal Fali Homi Major told the paper that India has finished all evaluations and selected theA330 tanker transport and the deal will come up for final approval by the Cabinet Committee on Security very soon.
He was also quoted as saying that the "Russian platform did not meet certain requirements."
The newspaper said cracks in the India-Russia defense relationship have existed for some time now, because of Russia's seeking of mid-course price revisions in contracts for Sukhoi-30 fighters and aircraft carrier Admiral Gorshkov.
Other problems include lack of steady supply of spares, poor vendor support and transfer of technology issues, said the paper.
MiG Corporation modernizes fighter jets for Bulgaria
SOFIA, May 24 (Itar-Tass) -- Russia’s MiG Corporation has successfully modernized MiG-29 fighter jets for Bulgaria, Bulgarian Prime Minister Sergei Stanishev said at the Krumovo airbase on Sunday as the modernized aircraft had completed show flights.
A contract on the modernization of 16 fighter jets was signed in April 16, Stanishev said.
“The service life of the jets has been extended for 4,000 hours. Thus, they may be used until 2030 and efficiently protect the Bulgarian air space and national security,” he said.
The Plovdiv aviation plant took active part in the jets’ modernization, he said.
Cochairman of the Russian-Bulgarian Intergovernmental Commission for Military-Technical Cooperation Mikhail Petukhov, United Aircraft Corporation (UAC) head Mikhail Pogosyan and MiG CEO Sergei Vypryazhkin took part in the Sunday ceremony.
The sides will soon negotiate current maintenance of Bulgarian aircraft.
Armenia: Yerevan Buying Russian Arms At CSTO Discount
5/22/09
Russia is selling guns at a discounted price to its budget-conscious allies Armenia and Belarus under membership provisions of the Collective Security Treaty Organization (CSTO), a Moscow-led counterweight to the North Atlantic Treaty Organization (NATO), the Arminfo news agency reported.
"Agreements on the basic principles of military and technical cooperation within the framework of the CSTO are fully effective and include supplying military hardware to CSTO states at a privileged price," CSTO spokesperson Vitaly Strugovets told Arminfo. He added that Belarus and Armenia are making effective use of the opportunity.
The volume of orders for Russian weaponry and materiel tripled between 2007 and 2008, Strugovets said.
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Russia denies trespass into Georgia by motorboat, helicopter
MOSCOW. May 25 (Interfax-AVN) - The Russian Defense Ministry has
dismissed all reports claiming that a Russian patrol motorboat and a
military helicopter entered Georgian territory without permission, and
said that this is an "informational provocation" staged by Georgia.
"Any violations of the sea and air border by any motorboats or
helicopters are out of the question," Col. Alexander Drobyshevsky,
acting spokesman for Russia's Defense Ministry, told Interfax-AVN on
Monday.
"It is just another informational provocation of the Georgian
authorities, which is aimed at destabilizing the situation in the
region," Drobyshevsky said.
Georgia's Rustavi-2 television reported on Sunday, referring to the
Georgian coast guard service, that a Russian patrol motorboat and a
military helicopter escorting it had trespassed into Georgian territory.
Russian embassy in Tallinn sends note on war monument being vandalized
TALLINN. May 25 (Interfax) - The Russian embassy in Estonia has
sent a note to the Estonian Foreign Ministry in relation to a monument
to Soviet soldiers which was vandalized in the town of Kehra near
Tallinn.
The embassy press officer, Maxim Kozlov, said that a slab honoring
Soviet soldiers who died freeing Estonia from Nazis in 1944 was
overturned and two stone bowls at the foot of the monument were broken.
"The note requests a investigation into the case and the punishment
of the culprits," Kozlov said.
A criminal case of insulting the memory of the dead was opened, the
Northern prefecture of the Estonian police told Interfax.
Russian destroyer prevents Somali pirate attack on cargo vessel
09:3625/05/2009
VLADIVOSTOK, May 25 (RIA Novosti) - A destroyer from Russia's Pacific Fleet, which was escorting six merchant vessels through the Gulf of Aden, fired warning shots at Somali pirates as they tried to seize a ship, a Navy spokesman said on Monday.
The Eide Trader, sailing under the Marshall Islands flag, was part of the convoy being escorted by the Admiral Panteleyev on Saturday when two speedboats closed in on the slow-moving ship in an attempt to hijack it. The Russian destroyer fired warning shots at the pirates who immediately backed off.
"Six merchant ships from different countries were under the Admiral Panteleyev's protection as part of an international convoy through a safe region in the Gulf of Aden. The Pacific Fleet agreed to escort the Eide Trader freighter... despite its slow speed," the Navy spokesman said.
All the ships made it safely through the pirate infested waters and the Admiral Panteleyev is heading for Bahrain to take on supplies before returning to its duties in the Gulf of Aden.
The Admiral Panteleyev is an Udaloy-class missile destroyer armed with anti-ship missiles, 30-mm and 100-mm guns, and two Ka-27 Helix helicopters.
The destroyer seized in April a boat carrying 29 suspected pirates, believed to have been involved in the unsuccessfully attack on a Russian-crewed oil tanker as it passed through the Gulf of Aden en route to Singapore.
Around 20 warships from the navies of at least a dozen countries are involved in anti-piracy operations off Somalia. According to the United Nations, Somali pirates carried out at least 120 attacks on ships in 2008, resulting in combined ransom payouts of around $150 million.
Soyuz blast-off preparation in full swing
25 May, 2009, 08:32
Engineers are going through the final checks on the latest Soyuz spacecraft, due to blast off in three days, taking three members to create the first six-person crew on the International Space Station.
The Soyuz spacecraft has been assembled and delivered to the launch pad.
One of its most important parts is the emergency recovery system, which will help the spaceship detach from the rocket in case something happens to the rocket engine.
Now the rocket is ready to be fuelled, put in vertical position – and eventually launched.
On this mission the Soyuz spacecraft will take Russian cosmonaut Roman Romanenko, as well as Frank De Winne and Robert Thirsk, astronauts from Belgium and Canada respectively, to the station.
Each of the cosmonauts is expected to spend about six months in space.
This, the 20th expedition, will have more than 45 tasks to carry out in space, including research in physics, geophysics, and medical science.
No health threat to Russian infected with swine flu – Onishchenko
MOSCOW, May 25 (Itar-Tass) - A second case of the H1N1 virus was confirmed in Russia, the head of the Russian consumer rights watchdog, Gennady Onishchenko, said on Sunday.
The tests confirmed that a resident of the Kaluga region who returned from the Dominican Republic contracted the H1N1 flu.
The man addressed for medical assistance on May 20 after he watched his temperature rise, Onishchenko told the Vesti news channel. However, on May 18 upon his arrival from the Dominican Republic he “successfully underwent screening through thermal scanners.”
He is held under medical supervision and gets treatment as a patient with acute respiratory disease, the head of Rospotrebnadzor said.
“At present, the man and his wife are at an in-patient clinic in Kaluga. The woman has negative analyses. The four relatives they contacted to upon their arrival in Russia are put under medical control as well,” he said.
“The state of the patient’s health is satisfactory. There is no threat to his health. The man gets adequate treatment,” Onishchenko said.
He stressed that there was no need to monitor other passengers of the same flight from the Dominican Republic as the man fell ill only on the second day after his arrival.
“However, we have the list of all passengers and in compliance with the international rules, we, of course, will not inspect all passengers of the plane, but only two rows in front and two rows behind the infected man. We will supervise their health,” he said.
Onishchenko believes that taking into account the fact that passengers arrived on May 18, “the maximum incubation period is already over.”
Russia confirms second A/H1N1 flu case
2009-05-25 05:08:21
MOSCOW, May 24 (Xinhua) -- Russia confirmed its second case of A/H1N1 flu on Sunday, the Itar-Tass news agency reported, citing the country's chief public health official.
The new patient, who returned with his wife from a trip to Dominica recently, tested positive for A/H1N1 flu, Gennady Onishchenko said.
The man was quarantined in hospital and was in a stable condition, Onishchenko said.
Those who came into contact with the man were under medical observation, and his wife and relatives have not shown any symptoms, the official said.
A 28-year-old man, who arrived in Moscow from New York, has been confirmed as the first case with A/H1N1 flu in Russia on Friday.
More than 12,000 A/H1N1 flu infections and 86 deaths have been recorded worldwide, according to the latest World Health Organization statistics.
Second swine flu patient in Russia
25 May, 2009, 07:40
A second case of the H1N1 virus has been confirmed in Russia. According to the head of the Russian consumer rights watchdog, Gennady Onishchenko, there’s no threat to the infected man.
The resident of the Kaluga region returned from the Dominican Republic on May 18 but only sought medical assistance two days later after his temperature began to rise.
The man is now being held under medical supervision and receiving treatment for acute respiratory disease.
“At present, the man and his wife are at an in-patient clinic in Kaluga. The woman has tested negative for the flu. The four relatives they met with upon their arrival in Russia have been placed under medical care, as well”, Onishchenko said.
He added that there was no need to monitor other passengers from the same flight from the Dominican Republic as the man fell ill only on the second day after his arrival and the maximum incubation period was already over.
The first case of H1N1 was reported last Friday, on May 22. It was diagnosed in a 28 year-old patient who returned to Moscow from New York City the day before.
On Saturday, Russian media reported that a passenger who arrived in Moscow from the U.S. was taken to hospital with H1N1 flu, though the diagnosis was not confirmed.
May 28: Prime Minister Vladimir Putin to visit Belarus
Lukashenko Critical Ahead of Putin Visit
25 May 2009 Reuters
MINSK -- Belarussian President Alexander Lukashenko criticized Russia on Friday for failing to carry out decisions on integrating the two states a week before Prime Minister Vladimir Putin is due to visit.
The two countries have talked for more than a decade about a "union state" bringing the countries closer together, even though Lukashenko has sought a rapprochement with the West after years of isolation and accusations of human right abuses.
Despite talks of adopting the Russian ruble for trade, Minsk has been frustrated by what it sees as unequal access to Russian markets as both ex-Soviet countries grapple with the global economic downturn.
"Everything that we agreed, that we discussed at the supreme state council, the appropriate documents that we signed -- all of this has been blocked," Lukashenko said, the official BelTA news agency reported.
"If we are going to be blocking each other on such issues and Russia starts denying us access to its markets, then who needs this so-called integration process?" he said. "The presidents take decisions, and the Russian government fails" to implement them.
Lukashenko said he would discuss these issues when Putin visits on Thursday. The two are also expected to discuss the release of a $500 million Russian loan to Belarus and the idea of a currency swap, which would allow Belarus to move to the ruble in its trade accounts.
Lukashenko has to perform a balancing act between Russia, a traditional ally that is kinder to Lukashenko's style of rule and supplies Belarus' energy, and the EU, which can offer modernization and investment.
Lukashenko began moving away from Russia after a 2007 dispute over gas prices. Accused by the West of flouting human rights, Minsk has now taken steps toward the European Union such as releasing the last of what the bloc called political prisoners.
The EU suspended a travel ban on Lukashenko, and Belarus was invited to join the bloc's Eastern Partnership, an initiative to bring former Soviet states apart from Russia closer to the EU.
"It's not my fault that we're not moving toward integration, that we are developing a bridge to the West, that we have entered the Eastern Partnership and so on. ... In which direction are we supposed to move?" Lukashenko said.
Minsk is under pressure from Moscow to recognize as independent states the Georgian regions of South Ossetia and Abkhazia after Russian forces drove the Georgian army out last summer. The EU has made it clear that such a move would unravel any progress being made with Belarus.
Europe-Russia Economic Forum
Romania hosts Europe-Russia economic forum, an event chaired by President Traian Basescu. (To May 27)
NATO Parliamentary Assembly discusses Alliance role in High North
2009-05-25
Norwegian Minister of Foreign Affairs Jonas Gahr Støre told the NATO Parliamentary Assembly that the alliance should increase its role in the High North. Deputy Minister of Defence Espen Barth Eide believes this should be done in cooperation with Russia.
- The challenges in the High North are important to NATO countries, Minister of Foreign Affairs Jonas Gahr Støre pointed in a speech on Sunday to the NATO Parliamentary Assembly, which currently is holding its spring session in Oslo, Norway, news paper Nordlys writes.
As examples he emphasized climate, energy and safety at sea. He underlined that it is important to hold on to NATO’s relevance, both by operations outside the alliance’s core area and by a strong presence in local areas.
On Saturday Norwegian Deputy Minister of Defence Espen Barth Eide held his speech to the Assembly, where he said that an increase of NATO’s role in the High North should be done in cooperation with Russia:
- An increased NATO profile in the Arctic should be tailored not to provoke Russia, but to demonstrate Allied interest in the area. This could be done by establishing a presence sufficient to act as a stabilizing factor in conceivable crisis scenarios and provide opportunities for interaction with Russian counterparts, a press release from the NATO Parliamentary Assembly reads.
Eide called on the Alliance to search actively for areas of cooperation of mutual benefit with Russia, including addressing challenges related to expected new Arctic sea lines of communication. He cited as examples surveillance, patrolling, and search and rescue.
The Norwegian Deputy Minister of Defence went further in calling for a comprehensive approach by NATO to the challenges in the High North, especially the development of good working relationships with organizations such as the Arctic Council, the UN Convention of the Law of the Seas, the International Maritime Organization and the EU.
No Kremlin Guarantee of Gas to EU
25 May 2009
By Nadia Popova / The Moscow Times
Russia cannot guarantee that there will be no halts in gas supplies to Europe, President Dmitry Medvedev warned at a news conference closing an EU-Russia summit in Khabarovsk on Friday.
Further raising the specter of a new gas shut-off, Prime Minister Vladimir Putin separately indicated that the country would not extend any loans to Ukraine. Ukraine's failure to pay for Russian gas resulted in the halt of deliveries to more than 20 European countries in January.
"Russia has offered no assurances and will not offer any," Medvedev said when asked about the possible suspension of gas supplies to Europe later this year. "What for? There are no problems on our part. ... Let the one who pays for the gas offer assurances."
Adding to the tension, Medvedev said he had doubts about Ukraine's ability to pay for gas this year. "If the Ukrainian side has got the money, that's great. But we have got some doubts about the solvency of Ukraine," he said.
Ukraine currently needs about $4 billion to pump 19.5 billion cubic meters of gas into its underground reserves, Medvedev said.
Putin gave different figures later in the day, saying Ukraine needed about $5 billion.
"The gas should be pumped in now, because it will be impossible to pump it in the needed volume later," Putin said in the Kazakh capital, Astana, after talks with Ukrainian Prime Minister Yulia Tymoshenko. The prime ministers met on the sidelines of a CIS summit.
Asked to explain the discrepancy between Medvedev's and Putin's figures, Russian government spokesman Dmitry Peskov said the leaders had rounded off the figures.
Valentin Zemlyanskiy, a spokesman of Naftogaz, Ukraine's state-controlled gas monopoly responsible for filing the reserves, did not answer his cell phone Sunday.
Moscow has previously indicated that it was willing to lend the money to Kiev as an advance on gas transit fees for the next five years. But Putin said Friday that Ukrainian President Viktor Yushchenko "considers the form of payment unacceptable and nearly illegal."
"We will hardly be able to solve this problem under such a regime," Putin said, according to a transcript of his remarks posted on the government's web site.
Medvedev said in Khabarovsk that Russia wanted to help Ukraine but expected the European Union to share a considerable part of the burden. "In other words, if the talk is about loans, let's help the Ukrainian state obtain the amount of money it needs. It is not us who have problems with solvency, after all," he said, according to a transcript on the Kremlin's web site.
But Putin suggested that no loans would be forthcoming. "We have applied to the European Commission with this question" of providing financial support to Ukraine, Putin said. "We got the answer through a minister of finance, 'We have no money for Ukraine.'"
"Supplies for domestic consumers in Ukraine is a very important condition for gas transit to the European consumers," Putin said. "No one should pretend it doesn't concern him."
EU officials attending the summit in Khabarovsk expressed concerns about possible gas disruptions. "There should be no more suspensions in the gas supplies," European Commission President Jose Manuel Barroso said at the news conference. "We ask Russia and Ukraine to do everything in their power to prevent another crisis next year."
Medvedev, however, maintained that the Energy Charter -- the current legal framework that regulates energy supplies in EU countries and establishes rules for resolving disputes -- was not enough to prevent disruptions. "Ukraine ... is a member of the Energy Charter, and so what? They did what they wanted to do. They spat on the Energy Charter," Medvedev said. "It means that some other instruments are needed."
Medvedev has suggested a new energy charter that would replace the current one adopted in 1991 and signed by 51 countries. Russia signed the charter in 1994 but never ratified the document, which it now calls "outdated."
"We consider some of these ideas very useful," Barroso said, adding, though, that the EU would "rather build on existing agreements."
European Energy Commissioner Andris Piebalgs said in Khabarovsk that the EU was ready to consider incorporating some Russian proposals into the existing charter, Bloomberg reported. Russia, however, has insisted on a full overhaul of the document rather than spotty changes.
Turning to another thorny issue, the Eastern Partnership program, Medvedev said EU officials had "failed to persuade" him that it would not harm Russia's interests. "What confuses me is that some states ... take this partnership as a partnership against Russia," he said.
The Eastern Partnership program, which involves all 27 EU members as well as Azerbaijan, Armenia, Belarus, Georgia, Moldova and Ukraine, seeks free trade agreements and relaxed visa rules between the EU members and the former Soviet countries, and it promises support for political reforms in those countries. The partnership is worth at least 600 million euros ($841 million) from 2010 to 2013, according to the European Commission's web site. Russia is worried that an Eastern Partnership agreement that was signed on May 7 is an EU attempt to meddle in what it considers its sphere of influence.
"We have tried to persuade President Medvedev ... that the idea of the Eastern Partnership is not aimed against anybody and of course, not against Russia," Czech President Vaclav Klaus, whose country holds the EU's rotating presidency, said at the news conference, flanked by Barroso, Medvedev and EU foreign policy chief Javier Solana.
No progress was reached at the summit on a replacement for the EU-Russia Partnership and Cooperation agreement that expired in December 2007.
The Gas Problem
Russia called on the European Union on Friday to help find money for Ukraine to prevent a new gas supply crisis while failing to agree with Kiev on how to store gas to ensure smooth gas transit to Europe this winter. Any hint of a gas dispute raises the blood pressure of European governments and consumers (who get a fifth of their gas from Russia via Ukraine), piques the interest of Naftogaz bondholders and casts a shadow over ties between Russia and Ukraine.
The following are key facts about gas issues that the two countries have to resolve while grappling with a deep economic crisis that has hit the state finances and currencies of both.
• Gas has to be stored in Ukraine for the winter period to guarantee smooth transit to Europe.
• As gas consumption rises during winter, the two countries do a simple gas swap. Ukraine uses Russian gas meant for Europe entering the country in the northeast and compensates Russia by sending gas stored in the west of the country to Europe.
• More than 10 billion cubic meters needs to be stored to ensure this transit to Europe.
• Ukraine"s government has said it has 16 billion cubic meters of gas in storage and wants to buy a further 12 bcm, worth about $3.25 billion at current prices, to cover Gazprom"s and its own winter needs. Naftogaz has not confirmed these figures.
• At the start of the year, Ukraine had 17 bcm stored, and gas intermediary RosUkrEnergo had 11 bcm. RosUkrEnergo stocks were transferred to Ukrainian ownership, so about 12 bcm has been consumed since January as Ukrainian purchases of far dearer Russian gas fell.
• Gazprom does not want to simply give the storage gas to Ukraine for safekeeping.
• Ukraine prefers to limit its purchases of the gas now because prices are to expected to drop sharply later in the year when the gas is needed.
• Ukrainian state energy firm Naftogaz has proposed that it could buy the extra gas for storage using Gazprom"s advance payment of transit fees for using the Ukrainian pipeline system to pump gas to Europe.
• But with European consumption falling sharply, it is difficult to tell how much transit fees Gazprom will pay, risking Naftogaz having to pay back money later in the year.
• A Russian government source said Gazprom had paid its 2009 fees in full already. A Ukrainian source close to the gas talks said $2.15 billion had been paid, the majority of which Ч $1.7 billion Ч being the amount that was owed in the first quarter.
• The Ukrainian government, its finances stretched to the limit, has said state banks could lend Naftogaz the money for the extra gas. A bill in the parliament proposes the idea of the funds coming from the state purse.
• Naftogaz, receiving support from the state, needs to pay back a $500 million Eurobond by Sept. 30. Investors have been wary of a Ukrainian default after the currency plummeted and the country plunged into recession.
Reuters
Putin warns outsiders over Ukraine
By STEVE GUTTERMAN – 11 hours ago
MOSCOW (AP) — Prime Minister Vladimir Putin warned the West on Sunday not to meddle in relations between Russia and Ukraine, according to remarks cited by state-run news agencies.
After laying a wreath at the grave of Anton Denikin, who fought against the Red Army after the 1917 Bolshevik Revolution and is now cast by the Kremlin as a patriot, Putin urged journalists to read Denikin's diaries, RIA-Novosti and ITAR-Tass reported.
"He has a discussion there about Big Russia and Little Russia — Ukraine," they quoted Putin as saying. "He says that nobody should be permitted to interfere in relations between us, they have always been the business of Russia itself."
Portions of present-day Ukraine were part of pre-Revolutionary Russia and were sometimes called "Little Russia" or "Lesser Russia," while the bulk of the country was known as "Great Russia." Many Ukrainians find the terms offensive and misleading.
Putin's remarks came as the dominant Russian Orthodox Church called for Slavic unity amid celebrations honoring Saints Cyril and Methodius, considered founding fathers of a common Slavic culture.
But the comments could anger Ukrainians and increase their wariness about Moscow's intentions toward the former Soviet republic.
Ukraine has been independent since 1991, when the Russian-dominated Soviet Union collapsed. But Putin's remarks seemed to suggest that Moscow's close historical ties with Ukraine means gives it a measure of influence that other countries cannot claim.
The remarks come amid competition between Russia and the West for influence in Ukraine.
Russian officials have said they are determined to keep Ukraine out of NATO. For some Ukrainians, Russia's war last year against pro-Western Georgia was a chilling suggestion of how far Moscow is willing to go.
Russian nationalists want to regain the Crimean Peninsula, which was made part of Ukrainian Soviet Republic by Soviet leader Nikita Khrushchev in the 1950s. There is tension between Russia and Ukraine over Russia's Black Sea Fleet, which Ukrainian leaders have said they will evict from the Crimean port of Sevastopol when the current lease runs out in 2017.
Denikin, who died in exile in the United States in 1947, was reburied in 2005 in the cemetery Moscow's historic Donskoy Monastery.
Putin's visit to his grave was a reflection of how the prime minister, a longtime KGB officer who was president from 2000-2008, has celebrated individuals and images from both the Soviet era and czarist times in a drive to instill pride in Russians.
Russian Orthodox Church Patriarch to visit Turkey
22.05.09 20:09
In July Russian Orthodox Church Patriarch Cyril will visit Turkey, Turkish CİHAN news agency reported.
Authorized Secretary of the Russian Orthodox Church on Foreign Affairs Nikolai Balashov said that during his visit, Patriarch Cyril meet with the Greek Patriarch Bartholomew.
It is expected that after leaving Turkey, Patriarch Cyril will visit Egypt, Syria and Ukraine.
Moscow Fumes at OSCE's Choice of a Russian
25 May 2009
By Nikolaus von Twickel / The Moscow Times
The Central Election Commission is fuming that the Organization for Security and Cooperation in Europe's election watchdog has appointed a Russian citizen to head its observer mission in upcoming European Parliament elections.
Commission member Igor Borisov said the watchdog, the Office for Democratic Institutions and Human Rights, or ODIHR, should have asked for permission before appointing Vadim Zhdanovich to head the mission that will assess the elections on June 4 to 7.
"This is a loophole that needs to be fixed -- an international organization appoints a citizen of one of its member states without asking permission from that state's representatives," Borisov said Friday, Interfax reported.
The OSCE denied that it had to get approval for the appointment and argued that it had chosen election observers from non-EU countries to give its mission an independent character.
"Vadim Zhdanovich is a very experienced elections expert who has for many years worked at the Office for Democratic Institutions and Human Rights," ODIHR spokesman Jens-Hagen EschenbКcher told The Moscow Times.
"The Russian elections commission knows that our experts never act as representatives of their countries of origin but are bound only by the ODIHR, its methods and code of conduct. ... Thus, no permission from their home countries is needed," the spokesman said by telephone from Warsaw.
Borisov, however, said the ODIHR had portrayed Zhdanovich as a Russian representative. "We are not against Russians working there but against them being nominated as representatives of the Russian government," he said.
In announcing the observer mission earlier this month, the ODIHR released a statement saying that "a group of 22 experts, headed by Vadim Zhdanovich of Russia," would assess the election.
In a bizarre twist, Zhdanovich himself is a former Central Election Commission official. According to an official biography distributed by the ODIHR, he served as a department head on the commission from 1994 to 1997, when he joined the OSCE.
The dispute is not the first of its kind. In March, the Central Election Commission complained that the OSCE had, "for absolutely inexplicable reasons," appointed without consultation a Russian-French citizen to an observer mission in Macedonia.
Tensions have simmered between Russia and the ODIHR since the watchdog cancelled its observer missions to the State Duma elections in 2007 and the presidential vote the following year, saying restrictions by Moscow severely hampered its monitors.
Russia has in recent years unsuccessfully championed proposals to reform the OSCE, which Moscow's critics say aim to boost the organization's security dimension at the expense of democracy and human rights.
Sergei Markov, a Duma deputy for United Russia, said the latest spat was an example of the ODIHR taking a role that it had no mandate for. "They have distanced themselves from the member states. They have practically left the OSCE and have become a quasi-American organization controlled by the U.S. State Department," he told The Moscow Times.
EschenbКcher expressed bewilderment over how "the appointment of an experienced Russian election expert" should show that ODIHR is under control of the United States or any other government.
"ODIHR is not controlled by any individual government; it is responsible to all 56 participating states of the OSCE," he said. "We are guided in our work exclusively by our mandate, which was agreed by all participating states, including the Russian Federation."
Russian Orthodox Consecrate Parish in Rome
By ELISABETTA POVOLEDO
Published: May 24, 2009
ROME — The Vatican described a solemn ceremony on Sunday for the consecration of the first parish of the Moscow Patriarchate in Rome as a sign of further thawing of relations with the Russian Orthodox Church.
“We are happy that the Russian Orthodox community has a new church in the center of Rome. It is a sign that we are nearer to each other,” said Cardinal Walter Kasper, president of the Pontifical Council for Promoting Christian Unity, who attended the three-hour dedication of the Church of the Great Martyr Saint Catherine on the grounds of the Russian Embassy.
Expatriate parishioners joined a Russian delegation that included Svetlana Medvedev, wife of the Russian president, and Yuri M. Luzhkov, the mayor of Moscow. Overflow spectators watched the ceremony — officiated by Metropolitan Valentin of Orenburg and Buzuluk, along with other ranking patriarchate clergy — on television screens set up in a chapel underneath the main church.
“We are very excited,” said Anja Senynets, an immigrant from Ukraine. “There is nothing like celebrating in our own language, with our own habits.”
A Russian Orthodox church has existed in a palazzo near the Termini train station since the 1930s, and Roman Catholic churches regularly host Orthodox congregations. But the green-roof, gold-domed church consecrated Sunday is the first “to look like a Russian Orthodox church is supposed to look,” said Anna Rudakova, a parishioner. Painters came from Russia to work on the traditional iconostasis, a partition inside the church depicting icons and religious scenes.
The idea for an official Orthodox church in the Italian capital dates from the 19th century, but revolution and 70 years of communism intervened. A building fund was established in 2004 whose contributors included the Russian ambassador to Italy, Alexey Meshkov, and the AC Milan soccer forward Andriy Shevchenko. The church has been open for services since October 2006.
On Sunday, at the official dedication, Cardinal Kasper presented the church with a relic of St. Helen, “a saint of the first millennium common to both churches.”
The second millennium was more problematic, opening with the Great Schism of 1054, which divided the church into the Eastern and Western branches.
Since then ecclesiastical, theological and political disputes have kept the two churches apart. However Pope Benedict XVI has pledged to make unification of Christian churches a priority of his pontificate.
“Today is a special event,” said Andrey Shumkin, a priest with the delegation from the Moscow Patriarchate, “and the presence of two cardinals here is a visual sign of collaboration.”
Cardinal Kasper said that “a lot of progress” between the Vatican and the Russian Orthodox church had been made in the last 10 years. Both sides have demonstrated a willingness to discuss, as have the pope and Patriarch Kirill, the head of the Russian Orthodox Church, he said. A meeting between the two will come “when the time is mature,” he said.
Bomb near Russian gas pipeline defused
Published: May 24, 2009 at 12:15 PM
MAKHACHKALA, Russia, May 24 (UPI) -- The Interior Ministry of the Russian North Caucasus Republic of Daghestan said Sunday an explosive device found near a gas pipeline has been found and defused.
The ministry told RIA Novosti that police located the bomb outside the city of Makhachkala near part of the Mozdok-Kazimagomed trunk pipeline.
Bomb experts were immediately called to the scene and they successfully neutralized the device without any injuries, the ministry said.
The ministry added all gas supplies to the section of the pipeline where the bomb was found were temporarily halted as a precaution.
RIA Novosti said the Republic of Daghestan, just like the neighboring Chechen Republic, is a common target for militant attacks and acts of terrorism.
Large arms cache found in Chechnya
13:3724/05/2009
MOSCOW, May 24 (RIA Novosti) - Police have found a large cache of weapons hidden in a forest in Russia's troubled North Caucasus republic of Chechnya, a local police source said on Sunday.
The arms cache was discovered on Saturday near the village of Chishki in the Grozny district, the source told RIA Novosti.
The cache contained a flame thrower, two grenade launchers, three machine guns and three Kalashnikov assault rifles.
A portion of the arms was destroyed on the spot, as the hideout appeared to be mined, the source said.
Militant attacks and clashes remain common in Russia's North Caucasus although the Kremlin campaign to fight separatists and terrorists in Chechnya has officially ended. Violence often spills over into nearby republics, in particular Ingushetia and Daghestan.
Armed clash between police officers and militants occurred in Ingushetia; militant destroyed
NAZRAN, May 25 (Itar-Tass) -- An armed clash between police officers and militants occurred in the area of the settlements of Nesterovskaya and Berd-Yurt of Ingushetia’s Sunzha region at 11.10 Moscow time on Monday.
As ITAR-TASS learnt at the Interior Ministry of Ingushetia, during the armed clash one gunman was destroyed. His identity is being established.
None of the police officers was injured.
An operation to search for other members of this gang is underway. The gang, according to the available information, consists of 6-7 people.
Officers of the Ingush Interior Ministry, the Chechen Interior Ministry and a mobile detachment of the Russian Interior Ministry have been conducting a joint special operation in the this region for over seven days already.
Gunman killed in S.Russia shootout
12:3025/05/2009
ROSTOV-ON-DON, May 25 (RIA Novosti) - One gunman was killed in a clash with police on Monday morning in Russia's North Caucasus republic of Ingushetia, a local police spokesman said.
Police located a group of around six militants during an operation in a forest in Ingushetia's Sunzhensky district at 10:30 a.m. (06:30 GMT), the spokesman told RIA Novosti.
The militants resisted arrest and returned fire. One of them was fatally injured in the shootout, but no police officers were wounded.
The remaining gunmen have not yet been captured, and are continuing a standoff with police, the spokesman said.
Military Action Underway Across the Northeast Caucasus
[tt_news]=35024&tx_ttnews[backPid]=7&cHash=29c4eb286d
Publication: North Caucasus Weekly Volume: 10 Issue: 20
May 22, 2009 01:48 PM Age: 3 days
Category: North Caucasus Weekly, The Caucasus, North Caucasus , Home Page, Featured
By: Mairbek Vatchagaev
For the first time in recent years, joint military and police operations targeting fighters of the armed resistance are underway simultaneously in all three republics of the Northeast Caucasus: Dagestan, the Chechen Republic and Ingushetia. The operation in Chechnya involves the troops from the defense ministry and the Federal Security Service (FSB), yet it is the only place where the action is described as a police-only maneuver. The reason for the misnomer is Chechen President Ramzan Kadyrov’s sensitivity to the term “counter-terrorist operation,” which is commonly used in the region. In Dagestan and Ingushetia, however, all similar operations are managed specifically by the Anti-Terrorism Center.
In another development in Chechnya, Kadyrov delivered an embittered speech during Friday prayers at Grozny’s central mosque calling for a take-no-prisoners response to those who take up arms against the government (). The speech came on May 15, after a suicide bomber (shaheed) earlier that day detonated a bomb in front of Chechnya’s Interior Ministry, which infuriated Kadyrov. The president declared that amnesty for rebel fighters was now out of the question, and that any of them who had not yet surrendered would be eradicated.
Kadyrov’s harsh statement, which has no basis in Russian laws, will most likely be revised by Moscow in order to avoid embarrassment before the Western community. Kadyrov said he had decided to deal a decisive blow against the armed resistance by dividing the mountainous areas of Chechnya into sectors where authorized officers would be charged with eliminating everyone found to be armed. In his speech, Kadyrov referred to 70 rebel fighters, but it was not quite clear whether he meant that there were 70 rebels in the area where the anti-rebel operation was being conducted or was instead repeating the old claim that the total number of rebels in Chechnya is no more than 70, and that the goal of the current operation in the mountainous area of Chechnya is to eradicate them.
On May 16, Kadyrov personally traveled to southern Chechnya’s Vedeno district to oversee the operation (). At the same time, reports from the western part of Chechnya indicated that a joint operation between Chechnya’s and Ingushetia’s law enforcement troops, supported by Russia’s federal forces, is currently underway near the village of Bamut in Chechnya’s Achkhoi-Martan district, which borders Ingushetia’s Sunzha district (). Joint operations of that sort are not often seen in the region, where coordinated action remains difficult due to the many tensions clouding the relationship between regions of the Russian Federation despite their common federal ties. As for the operation’s progress, the government has already reported three dead and several wounded rebels, including one casualty believed to be a Middle East native. The rebel group was reported to consist of 20 to 25 men. Two previously stolen vehicles were also recovered during the operation ().
It is not quite clear why the government claimed that the group of rebels found near the border between Chechnya and Ingushetia has ties to Dokka Umarov, as the news media reported. In accordance with the established tradition, the reports make no mention of losses among the federal forces: all the news of casualties among the interior ministry, FSB and defense ministry troops become public only in the event of an information leak. For instance, on the evening of May 17, a serviceman was taken to the hospital, which was followed by reports of one wounded soldier among the federal forces. As for the rebel siege operation, as of 1 a.m. on May 17 it was overseen personally by Ingushetia’s president, Yunus-Bek Yevkurov, and one of Kadyrov’s most trusted associates and member of the Russian State Duma, Adam Delimkhanov along with his younger brother Surkho, who commands the Sever (North) battalion, which was established as a counterweight to Sulim Yamadaev’s Vostok battalion (). The involvement of top officials suggests that the hunted rebel group may not be merely associated with Umarov: there must have been some intelligence claiming that Umarov himself was with the group, and the goal therefore would be his capture, which would certainly be the best present imaginable for Kadyrov. All-day operations using artillery and aviation units were underway in Ingush villages bordering Chechnya (Dattykh, Nizhny Alkun and Chemulga) on May 17 ().
The joint efforts of the pro-Moscow Chechen and Ingush governments were triggered by a number of high-profile actions carried out by the rebels as well as by what in all likelihood were criminal elements. In Ingushetia, it is often hard to determine who is behind a particular operation (). On May 16, the rebels kidnapped two residents of Verkhny Alkun village, who were later retrieved by the police during a shootout with the rebel group near Nizhny Alkun (). That same day gunmen targeted houses in Sleptsovskaya and Karabulak villages, and a stationary checkpoint near Yandare village was shot at as well (, May 17). A number of murders and armed assaults against private homes forced Yevkurov to react swiftly and mount a response to the actions of the armed opposition—specifically, the Shariat Jamaat led by Amir Akhmed Yevloev.
The joint operation of May 17 was concluded with a joint press conference of Yevkurov and Kadyrov in the Ingush capital Magas, where both leaders emphasized the need for stronger coordination of their anti-rebel activities. Not much more should be expected from the joint operation considering that both presidents rushed to announce its “preliminary” results by mid-day. News reports cautiously admitting that the rebels dispersed in the mountainous areas should be read to indicate that the rebels broke the siege again (). On the evening of May 17, Yevkurov quoted a realistic number of rebel fighters (i.e. 15). Yet, despite Yevkurov’s admission, a day later (May 18) Russian news media continued to say that the rebel headcount in the area was as high as 70 (). Contradictory numbers in Russian government reports are nothing new: the FSB, interior ministry and local governments routinely give differing reports, a sign that the government agencies lack coordination even when it comes to press relations.
Operations in Dagestan are not being coordinated with Chechnya but rather have continued on their routine course, and recently news reports cited places like Khasavyurt, Karabudakhkentsky district and Buinaksk. On May 13-14, a large-scale military and police operation targeting the Khasavyurt Jamaat (the Dagestan Front of the Caucasus Emirate) was conducted in the forest near Endyrei village and the Sulak River. Four rebels and one serviceman of the elite Alfa special forces group were killed during two days of fighting. The Dagestani government hoped that casualties might include the new Dagestani amir Al Bara (Umalat Magomedov); however, after Magomedov did not turn up among the dead, the government reported the casualties included the amir of the Khasavyurt sector, Amirza Abdullaev (gazeta.ru/politics/2009/05/14_a_2986313.shtml).
The government barely had time to declare victory over the local rebels when a senior police lieutenant was gunned down by unidentified individuals on May 16 in Khasavyurt ().
Additional federal regiments were dispatched to Karabudakhkentsky district, designated as a site of counter-terrorism operation on May 17. This area is located to the southeast of Buinaksk and is settled primarily by ethnic Kumyks. The government reported that the forest near the villages of Kakashura, Kakamasi, Chankurbe and Dorgeli serves as a hideout for a group of rebels responsible for several assaults against law enforcement and government forces (). During his interview with the Kavkazky Uzel website on April 17, Dagestani President Mukhu Aliev admitted that dozens of interior ministry servicemen are being killed in the republic ().
Taken together, military actions in the area indicate that the current year will be no exception to the general trend of increasing rebel fighter activity in the spring and the summer. Therefore, those who monitor developments in the region will be paying close attention to the government’s actions toward the rebels as well as tactics used toward their families. In the meantime, the Chechen government announced that all law enforcement agencies in Chechnya are on heightened alert and all military units are on standby (). It is not known how long the police in the republic will be operating on this status.
Rebels killed in Chechnya, 15 others arrested in Ingushetia: report
1 day ago
MOSCOW (AFP) — Two rebels were killed Saturday in Chechnya and in the neighbouring Caucasus republic of Ingushetia, where 15 others fighters were also arrested, Russian news agencies reported.
In Chechnya, a rebel died during clashes with the army near the mountain region of Bamut, south west of Grozny, a spokesman for the Chechnyan interior ministry told Itar-Tass.
"Traces of blood were found at the scene allowing us to believe that other rebels may have been injured and another one possibly killed," he added.
Interfax quoted an army spokesman in Russia's southern Rostov-on-Don city as saying that the dead fighter was a former police officer who had been on the run since 2007 after deserting.
In Ingushetia, a rebel fighter was killed and three police officers injured in a gun battle in Nestorovskaya village, said a spokesman for the investigating team.
Police also arrested 15 rebels during a special operation in the village of Yandar in the Nazran region of Ingushetia, according to the local interior ministry, Interfax reported.
Russian television showed the fighters lying face down on the ground after their weapons were seized.
Attacks on security officials and other government targets are common in Ingushetia and across much of the North Caucasus.
Since the Soviet Union's collapse, Russia has fought two wars in Chechnya, which neighbours Ingushetia. Kidnappings and summary executions blamed on security forces are frequent.
Analysts say separatist and Islamist influences have combined with rampant corruption to drag down the region.
Polish citizen, who is a correspondent of the Polish TV company, was beaten up in Moscow
MOSCOW, May 25 (Itar-Tass) -- A Polish citizen, who is a correspondent of the Polish TV company, was beaten up in Moscow.
The Russian wife of the Polish journalist called police, a source in the Moscow police told Itar-Tass on Monday. “According to her, when her husband was going on the crosswalk in Dmitry Ylyanov Street on Sunday evening, three unidentified hooligans of Caucasian appearance instigated a quarrel with the journalist. They beat up the man and escaped in a dark-coloured car,” the source said.
The Polish journalist sustained a brain concussion, a fracture of the lower jaw and was hospitalized.
The investigation into the incident is underway. The police believe that “a conflict on the road could cause the incident.”
Polish reporter badly beaten in Moscow road rage attack
Today, 12:08 PM
A Polish journalist was badly beaten by a Moscow driver and his two friends on Sunday, after the journalist refused to give way to the driver at a pedestrian crossing. Zaukh Andjey, a TVN television reporter is currently in hospital being treated for head injuries and a broken jaw. Doctors say his condition is stable.
The attack took place in South Moscow at around 9pm Moscow time as Andjey was crossing the road at a green light for pedestrians.
“A black foreign-made car stopped right in front of me. The driver wanted to go through the red light, but I did not give him way. Then the driver and two his Caucasian friends got out of the car and attacked me. It seems that I was beaten up just for walking across the road,” Andjey told the police.
Andjey’s wife heard a commotion and called the police. The 40-year-old woman said that three unknown men beat up her husband on the pedestrian crossing near their apartment.
Police have begun a search for the attackers but it has so far yielded no results. The investigators say that the reason for the attack could be road rage.
Constitutional Court Reform Passed
25 May 2009 Combined Reports
The State Duma on Friday passed in a third and final reading a Kremlin-drafted bill that would tighten control over the selection of the Constitutional Court's president and double the length of the judge's term.
Analysts said the Kremlin appeared to be cementing its control out of fear that the court could block early elections to return Vladimir Putin to the presidency.
The amendments, approved by a vote of 352-57, would curb the right of the 19 Constitutional Court judges to elect their own president for a three-year term.
Communist and Liberal Democratic Party deputies opposed the bill. United Russia deputies are "defying" current laws and the Constitution with their approval of the bill, Communist Deputy Sergei Reshulsky said at the Duma session Friday.
Both the Communists and the Liberal Democrats criticized the haste with which the bill was passed. President Dmitry Medvedev submitted the bill to the Duma earlier this month, and it was passed in a first reading on Wednesday.
The Duma passed the bill in both a second and third reading on Friday. It will now be sent to the Federation Council for consideration, and then sent to Medvedev to be signed into law.
Medvedev currently nominates judges to the 19-member court, who must be then be ratified by the Federation Council. Currently, however, the judges alone select their president. The bill also extends the length of the term of the Constitutional Court's president from three to six years. Medvedev said the term extension is aimed at bringing it line with the length of the terms served by the heads of the Supreme Court and the Supreme Arbitration Court, RIA-Novosti reported Friday.
The bill "contradicts the principle of independence of judicial power," Constitutional Court judge Gadis Gadzhiyev told Kommersant.
"This is a clear decrease in the level of democracy and the level of independence in the Constitutional Court," a retired deputy chairwoman of the Constitutional Court, Tamara Morshchakova, told Ekho Moskvy radio earlier this month.
The Constitutional Court played a key role in the political turmoil of the early 1990s, declaring illegal a coup against Soviet President Mikhail Gorbachev in 1991 and striking down laws put forward by President Boris Yeltsin.
It has not made a major ruling against the Kremlin in recent years.
Nikolai Petrov, a political analyst with the Carnegie Moscow Center, said the Kremlin was likely preparing for a possible attempt by Putin to run for president if early elections are called. "Control over the Constitutional Court ... to some extent means control over the political system," Petrov said.
The next presidential election is scheduled for 2012.
The Constitutional Court's current president, Valery Zorkin, was elected to his post in February, and his term expires in 2012.
nThe Duma on Friday passed in a third and final reading a Kremlin-backed bill that would reduce the number of signatures needed by parties to participate in parliamentary elections from the current 200,000 to 150,000 in 2011 and 120,000 thereafter, according to the Duma's web site.
(MT, Reuters)
Desperate Russians won't turn up their nose at expired food
By Megan K. Stack
May 25, 2009
Reporting from Moscow -- The cheeses are spotted with mold. The sausages are ominously gray. Slime is beginning to overtake the chicken.
But the stooped and slow clientele who crowd this pungent stretch of market stalls in the southern fringes of the Russian capital don't seem bothered. Elderly retirees mass and push before spreads of lukewarm yogurt and moldering fish. Business has never been better, the steely-eyed manager says.
Theoretically, selling expired foodstuffs is a crime punishable by fine under Russian law. But the climbing prices, falling salaries and withering demand of Russia's economy appear to be driving a surge in the sale of past-their-prime goods.
Trafficking in spoiled food, a familiar racket during the chaotic collapse of the Soviet Union, is making a comeback in both markets and wholesale Internet shopping. A semi-underground enterprise, it is difficult to trace. But consumer groups, shoppers and anecdotal evidence all indicate its ascendance.
"If you lower the price to pennies, people will buy it even at the risk of being poisoned," says Irina Vinogradova, director of the Russian Institute of Consumer Evaluation. "This crisis has led some people into a situation where they have absolutely no money to survive on."
Outside the market, known as the Moskvoretskoye, Galina Abrosimova shows a tub of cottage cheese she bought for about 30 cents. The cheese is tepid;the date on the lid shows it expired two weeks ago.
"So what?" she says, tucking it shyly back into a dirt-smeared shopping bag. "If I don't like the taste, I'll just use it for pancakes."
Abrosimova, 82, is a retired construction engineer who has carefully painted her lips pink before venturing forth into the world. Her overcoat is grimy and her flat shoes scuffed, but she has draped a lace scarf around her throat and covered her white hair with a brunet wig.
She lists the cheapest places she has found to scrounge for spoiled food in Moscow. The Moskvoretskoye is the market for dairy, she says. Fruit and vegetables are cheapest at a market near her house, where one aisle is set aside for expired goods.
Abrosimova can't afford meat, but she knows a canning factory in the far northern suburbs out by the railroad tracks that unloads lightly rotten fish for pennies.
"They sell some horrible stuff there," she says. "It makes you sorry to see it."
But she goes every week, scavenging several days' worth of fish for about $1.20.
Like many of the shoppers here, Abrosimova had been buying spoiled food even before the crisis hit. Supermarkets are an impossible dream for many of Russia's retirees, surviving on pensions. They spend their days shuffling from one far corner of Moscow to the next, hunting the best bargains.
Most Russians still haven't been forced to buy spoiled food. But these days, Abrosimova shrugs, she's competing with bigger crowds. You can't be lazy, she says -- you have to arrive early. And you have to understand how to handle the food, shoppers warn sagely, to discern between slightly spoiled and potentially sickening.
"You have to be careful with meat," says Nikolai Terekhov, 69. "The part that looks weather-beaten has to be cut off and boiled or roasted for a very long time."
Terekhov trained as a doctor and served in the Soviet military in Germany. Now he wanders from the market, gazes up the road through foggy glasses and jokes, "The buses look like hearses, bringing loads of old people here."
But he shrugs it off. "You have to survive. You have to adjust. That's our life," he says. "We've been adjusting all our lives."
In the middle of the market, a group of middle-aged men clusters around a metal table, swapping newspaper sections and running eyes over their domain. They wear suits or leather; they look tough and wary, as if they were sent over from a "Sopranos" casting call. When they notice a foreign reporter wandering from stand to stand, they send over a pair of burly security guards in black jumpsuits to hover along.
"What are you doing? You can't take photographs here," one of the guards says, although nobody is taking photographs and the only camera is in a bag, out of sight.
Staring and muttering, the men at the metal table fan out to the market stalls and, one after the next, shutters crash to the floor, hiding the food from sight. Bang! There goes the moldering fish. Bang! The expired goose liver pate. Bang! The old milk.
The elderly shoppers blink around in confusion. The market isn't supposed to close for hours yet.
The manager's name is Pyotr Aksyonov. As the shutters clang to the ground, he comes strolling over.
"Let me put it this way," he says of the expired food. "Some deviations are found everywhere, and here is no exception."
He pauses, then adds, "We weren't prepared for your visit."
There is a system, Aksyonov says. The market thrives by accepting damaged and leftover goods from the nearby factories and warehouses, thereby cutting down on transport costs. And, sure, why not sell dented cans or crumpled boxes? The contents, he insists, are still good. Or at least, good enough.
Aksyonov's business has been booming, he adds, since the financial crisis struck. As for the authorities, he insists that his market is subjected to regular inspections, and always passes muster. Times are tough, he shrugs, and anyway, his market is providing a service.
"Low-income and even lower-middle-class people who lost their jobs can no longer afford supermarkets," he says. "We are trying to accommodate them. We are trying the best we can to make them able to buy something."
megan.stack@
National Economic Trends
MAY 25, 2009
Unemployment in Russia Rises, Retail Sales Slide
By LIDIA KELLY
MOSCOW -- Russian unemployment has reached its highest level this decade as thrift replaces a culture of consumer spending, official data released Friday showed.
The number of unemployed in Russia rose to 7.7 million in April, or 10.2% of the total labor force of 75.2 million, data from the Federal Statistics Service, or Rosstat, showed.
Around 3 million workers have lost their jobs since late summer. Russia's economy has been dragged down by lower oil prices and decreased access to short-term capital.
Prime Minister Vladimir Putin and other Kremlin officials have repeatedly said that Russia's economic slowdown will be short-lived and that gross domestic product may begin to rise again next year. Some officials, however, including Finance Minister Alexei Kudrin, have warned on numerous occasions that even though oil prices are rising and the ruble has regained some relative stability, the crisis may last longer than expected.
Friday official data showed retail sales fell 5.3% in April on the year -- the third monthly decline in a row after nine consecutive years of robust growth. This suggests that Russian consumers -- once known for their exuberant spending -- are becoming increasingly frugal. Earlier last week, new figures showed industrial production in April dropped 17% from a year earlier.
"There is no doubt that Russia is mired in a deep recession," Neil Shearing, an emerging-market economist with Capital Economics in London said.
A sustained recovery in the economy "is dependent on a recovery in capital inflows, the restoration of credit flows and a pickup in external demand," he said. He forecasts the Russian economy will shrink as much as 10% this year.
Write to Lidia Kelly at Lidia.Kelly@
Foreign direct investment in Russia plummets 43% to $3.2 bln in Q1
22.05.09]
Foreign direct investment (FDI) in Russia fell 43% in the first quarter of 2009 compared with the same period of last year, to $3.182 billion, the Federal State Statistics Service (Rosstat) said.
Overall foreign investment fell 30.2% to $12.031 billion. Rosstat said foreign portfolio investment fell 6.5% year-on-year to $115 million. This includes a 38.2% drop to $66 million for investment in equities.
Other forms of investment in Russia fell 24.6% in to $8.734 billion, including $2.58 billion in trade credits, which fell 6.5%, and $6.114 billion in other credits, down 24.8%.
The manufacturing sector received the most foreign investment in Q1 2009 with $5.189 billion. The extractive industry received $999 million. Cumulative foreign investment in the Russian economy was $226.7 billion at the end of Q1 2009, up 2.6% from a year previously. Investors from the Netherlands, Luxembourg, Germany, Cyprus, UK, United States and France accounted for 76.2% of the overall cumulative investment and 76.3% of the cumulative FDI. (Source: Interfax)
Foreign investment falls 30% in 1Q09
Rencap, Russia
Monday, May 25, 2009
On 22 May, Rosstat reported that foreign investments into Russia amounted to $12bn and declined 30% YoY in 1Q09 from $17.3bn in 1Q08. Direct investment dropped 43% YoY in 1Q09 and equalled $3.8bn. Portfolio investments were almost zero, and other investment (primary credits) accounted for $8.7bn (a decrease of 24.4% YoY in 1Q09).
The main receiver of foreign investment in 1Q09 was the manufacturing sector ($5.2bn or 45% of total foreign investment). The trade sector received $2.7bn (or 23% of the total), transport and communication $1.3bn (11%), real estate $1.1bn (10%), and mining $1bn (9%). If we compare the structure of foreign investment in 1Q09 and the total for 2008, this year the leader is the transport and communication sector where the share of investment increased from 5% in 2008 to 11% in 1Q09 (see Figure).
On the other hand, domestic investment abroad increased in 1Q09 and amounted to $19.7bn which was 2.7x higher than in 1Q08. This largely reflects the process of capital outflow from Russia in 1Q09.
Foreign investment dynamics show that in the crisis period, investment into Russia has fallen sharply and there has been an increase of capital outflow (investment from Russia). We expect a deepening of the decrease in foreign investment in 2Q-3Q09.
Russian domestic demand grows m o m in April
Troika, Russia
Monday, May 25, 2009
Investment was down 16.2% y o y in April, bringing the 4m09 tally to -15.8%.
However, the seasonally adjusted figure indicates that the local bottom of investment activity was reached in January, and that the recovery took place in February April. The construction sector's revival was rather rapid in April: the y o y figure was -16.3%, but this was better than the -80.7% in 1Q09. Thus, in m o m terms, construction grew even faster that month than a year earlier.
Retail sales were down 5.3% y o y in April (down 2.2% over 4m09). Formally, this was the worst result in y o y terms since September 1999. But in m o m terms, seasonally adjusted retail sales stopped falling and even rebounded slightly that month. Importantly, real disposable income remained effectively unchanged y o y in February April, and we thus expect retail sales to continue to recover gradually.
As we have pointed out in previous editions of our Russia Economic Monthly, the economy was overheated in 2007 and 1H08 by expensive oil, cheap foreign capital and generous budget policy. We reiterate our view that the economy will expand after the decline at end 2008 and early 2009. However, the expected paces of growth will moderate, relative to 2007 and 1H08. Besides, despite the expected recovery in domestic demand, the annual changes of retail sales and investment may remain negative.
Economic data for April show continuing deterioration in trends
Alfa, Russia
Monday, May 25, 2009
Both retail and investment trends in April show that the economy continued to decline. The increase in the unemployment rate offset any positive effects from the slower decline in real disposable income. Also, investment growth continued to fall, triggering a further decrease in industrial output.
We believe that the continuing decline in investment reflects both the inaccessibility of banking loans and poor fiscal support for investment activity.
In April, investments declined 16.2% y-o-y vs. the 15% y-o-y drop in 1Q09.
Unsurprisingly, this has resulted in lower industrial output, whose decline accelerated from 14.3% y-o-y in 1Q09 to 14.9% y-o-y in 4M09. In addition, the increase in unemployment hurt consumer spending despite some improvement in real disposable income: retail sales declined 5.3% y-o-y in April, putting the 4M09 retail sales decline at 2.2% y-o-y vs. the 1.1% y-o-y drop in 1Q09.
The main question is how fast the economy will react to fiscal spending, which according to budget execution reports began to be financed in April. Our take is that without addressing NPLs, it will take a long time for the banking sector to transmit fiscal flows to the rest of the economy. We maintain our -5.7% GDP growth forecast for this year.
Russian retail sales declined 5.3% in April
Alfa, Russia
Monday, May 25, 2009
According to Rosstat, Russian retail sales decreased 5.3% y-o-y in April in real terms compared with a 4.0% decline y-o-y in March.
The share of food, beverages and tobacco in total sales increased 2.0 ppts to 48.8% from 46.8% last April. In 1Q09, sales of imported goods decreased to 44% in total sales from 46% in 1Q08.
The decrease in retail sales indicates continuing weakness in consumer confidence, slowing income growth and/or contraction and rising unemployment. This is consistent with our view that consumer spending has yet to bottom. We anticipate further weakness in retail sales in the months ahead. While the listed food retailers should deliver a stronger performance than the secular trend, given the defensive nature of food purchases, we do not exclude a further slowdown in LFL sales trends, driven by weaker consumer purchasing power.
Elena Mills
Business, Energy or Environmental regulations or discussions
Siemens Eyes Russian Nuclear Revival
May 22, 2009, 9:11AM EST
More than 20 years after Chernobyl, Russia is racing back into nuclear energy. Germany's Siemens hopes to profit from helping build dozens of new reactors
By Philip Bethge, Dinah Deckstein, Wladimir Pyljow and Matthias Schepp
Olga Kurochkina can hardly hide her delight at making her German guests squirm. She has just served them caviar and pirogies and is now triumphantly waving a document in their faces. "Our students recently debated whether Germany needs nuclear energy," says Kurochkina, a teacher at an elite Moscow high school. "The arguments, of course, favor electricity from nuclear energy."
Kurochkina insists that there are "significant disadvantages" to all other energy sources. Wind turbines? "They produce infrasound, which causes depression." Solar cells? "They cause local cooling of the air."
It is hard to believe, but German energy policy is up for debate in Russian classrooms. The students at Kuochkina's school pay rapt attention to a multimedia show in which a virtual professor praises the electricity generated by nuclear power. At the end of the film, a growing orange tree appears on the screen, symbolizing the growth of the Russian nuclear industry. The message is clear: Things are going uphill fast.
Nuclear power is back in vogue in Russia, as if the meltdown at the Chernobyl nuclear power plant had never happened. The giant country has plans to build 26 new domestic reactors by 2030, and 20 more abroad
Major Nuclear Projects
In India and Bulgaria, Russian nuclear engineers are currently erecting turbine buildings and reactor shells, and there are plans to build more reactors in China, the Middle East, Southeast Asia and North Africa. Russia will even start the series production of floating nuclear power plants designed to desalinate seawater in remote corners of the earth.
The Russians are now confident enough to embark on major nuclear projects, and are doing so under the aegis of a company called Rosatom. Sergei Kiriyenko, the head of Rosatom and briefly a prime minister under former President Boris Yeltsin, is considered one of the country's most competent managers. This year alone, he has €3.4 billion ($4.6 billion) at his disposal for new nuclear power plants. He intends to invest about €35 billion ($47 billion) by 2015, of which the government will contribute 40 percent.
Russia's nuclear energy czar is backed by solid political support. Prime Minister Vladimir Putin, in particular, is an avowed proponent of nuclear energy. He has announced that 25 to 30 percent of Russia's electricity will be generated by nuclear power within 20 years. Today nuclear power satisfies 16 percent of the country's electricity needs.
Kiriyenko scored his biggest coup to date in March, when he and Peter Löscher, the CEO of German electronics giant Siemens (SI), agreed to enter into a "strategic partnership." The two companies envision the construction of a nuclear power plant in the Russian enclave of Kaliningrad as their first joint project.
The duo believes that there will be demand for about 400 nuclear power plants worldwide by 2030. "We want to be the global market leader," says Kiriyenko, "and one third of the market is a respectable target." Löscher anticipates "a market potential of €1 trillion ($1.35 trillion)" and "close cooperation for many years."
Siemens Market
Both sides have high expectations of the deal. Rosatom wants to benefit from German know-how in the fields of control technology, steam turbines and generators, and has high hopes for the "psychological" effect of the joint venture, as Kiriyenko calls it. In other words, nuclear power plants with a German seal of quality are more marketable. The Russians also hope to enter new markets. "Latin America, for example, is a traditional Siemens market," says Kiriyenko.
Siemens, for its part, which only recently ended a hapless joint venture with the French nuclear power company Areva, wants the Russians to help it quickly find its way back into the nuclear power business, an attractive field once again. Besides, an alliance with Rosatom would provide Siemens customers with reliable access to fuel rods for decades. Russia has more than 40 percent of worldwide uranium enrichment capacity.
But will it really work out for the Germans? The partnership is already stalling before it has even begun. In March, Löscher announced that the objective was to sign the final contracts by the end of May. Now officials at Siemens are saying that the contracts will most definitely be signed by the end of the fiscal year in September. The difficult negotiations over parting ways with Areva are said to be the main reason behind the delay.
On the other hand, the Soviet nuclear legacy could also get in the way of the partnership. Rosatom is struggling with various problems, including unresolved disposal issues, staffing shortages and countless breakdowns and accidents. More than a third of the country's 31 nuclear power plants are more than 30 years old.
The many contradictions in the Russian nuclear industry are in evidence in Sosnovy Bor, on the Gulf of Finland about 80 kilometers (50 miles) west of St. Petersburg. The road to the city passes through thin pine and birch forests, past sandy hollows and rustic wooden dachas, under a bright blue sky, to Koporskaya Bay.
Earthquake Proof
A special permit is required to pass through a checkpoint on the outskirts of the city. Sosnovy Bor, with its 68,000 inhabitants, is one of Russia's tightly controlled nuclear cities.
A blue sign labeled LNPP-2 points to the left, to a roughly 100-hectare (247-acre) construction site, where the first reactor of the Leningrad 2 nuclear power plant is being built. The reactor will be one of the modern pressurized water reactors, which made a strong impression on Siemens engineers. Even Western experts concede that the VVER-1200, the model being built here, is of the highest quality. The planned double containment shell around the reactor core is supposedly earthquake-proof and strong enough to withstand an airplane crash. As with French producer Areva's competing product, the EPR, if a meltdown occurs, the radioactive material flows into a collecting tank under the reactor pressure vessel to cool down.
The Russians can even passively cool down the reactor core if there is a total power blackout. If that happens, water from pressurized tanks would extinguish the resulting nuclear fire, which reaches temperatures of up to 1,200 degrees Celsius (2,192 degrees Fahrenheit). "Western safety standards are met or even exceeded," says Hannes Wimmer, an expert with the German technical inspection organization TÜV Süd, which tested the reactor model for Siemens.
Kiriyenko's team is not as eager to discuss a group of gray structures standing next to the construction site at Sosnovy Bor, the red-and-white striped chimneys of the Leningrad 1 nuclear power plant. They include four reactors of the same model used at Chernobyl, the RBMK, the oldest of which is 36 years old.
Eleven of these nuclear power plants continue to generate electricity for Russia today. Although their operators insist that all plants have now been upgraded, no amount of modern technology can fully correct the model's basic design flaw: As the temperature rises in the core of the RBMK, so does reactivity. Unless the reactor is cooled, conditions can escalate to the point of meltdown.
Twenty Tons of Plutonium
"These reactors pose a danger for the entire Baltic Sea region," says Oleg Bodrov of the environmental organization Green World. Bodrov, who once worked in the Russia nuclear industry himself, has documented dozens of leaks in the Soznovy Bor nuclear reactors. He believes that an overfilled storage facility for spent fuel rods contains 20 tons of plutonium. The site lies directly in the approach path to the St. Petersburg airport. "If a plane crashes here, it will be a disaster," says Bodrov. And St. Petersburg is downwind from Soznovy Bor.
But Bodrov's warnings always trigger the same reaction. "The plants are declared a state secret, and that's that," says the 57-year-old environmental activist.
This is precisely what could prove to be the biggest obstacle to the German-Russian nuclear pact. Glasnost has remained a foreign word in the industry, in which military and civilian elements remain tightly interwoven.
Secrecy and the resulting corruption are widespread.
When Prime Minister Putin met with Kiriyenko and other nuclear industry executives at the Kalinin nuclear power plant in mid-April to discuss the situation, his speech included bitter accusations about "non-purposeful use" of government funds—a thinly veiled reference to embezzlement and waste.
The location of the nuclear meeting was well chosen. Kalinin is perhaps the most state-of-the-art nuclear power plant in Russia. A tour of the plant's Reactor 3 offers a fascinating look at modern nuclear technology. The reactor's one-gigawatt steam turbine sits in the tower-sized machine building, looking like a fat, yellow bug. A muffled humming sound suggests the forces that are at work here, where the power of the atom is literally palpable. The nuclear fire blazes less than 30 meters (98 feet) away, in a pressure vessel with a diameter of only four meters (13 feet).
In a small chapel on the eighth floor of the administrative building, a statue of St. Nicholas keeps watch over the plant—apparently with success. "We have had only minor incidents in the last 10 years," says Igor Bogomolov, a senior engineer at the plant. Nevertheless, he does have his worries. "We lack specialists," he says. "The young, qualified people prefer to stay in the cities and work for private companies."
World Class Cadres
Western experts are critical of the Russian nuclear industry's aging workforce and its use of too many poorly trained guest workers. The Russians recognize these problems, and Putin has promised money for a "national nuclear energy university." The aim of the new elite university, which would center around the renowned Moscow Engineering Physics Institute (MEPhI), would be to train "world-class cadres," says Mikhail Strikhanov, rector of the MEPhI.
Under the plan for a national nuclear energy university, Strikhanov would join forces with 23 other institutions, most of them located at nuclear power plant sites. "We must train the students in proximity to the plants; otherwise they will not work there," Strikhanov explains. Salaries are low, he says, and the nuclear sector's image is poor. Nevertheless, Strikhanov is confident that the new university will be capable of training about 2,000 students a year. "However," he adds, "it will be far more difficult to build such a large number of power plants."
He has a point. Insiders report that the Atommash plant in southern Russia, once the country's largest producer of equipment for nuclear power plants, is currently out of commission. The Ishora plant near St. Petersburg is hardly capable of producing more than one reactor a year—far too little to satisfy Russian ambitions.
Critics also question whether the country can even afford a nuclear renaissance. "A nuclear reactor costs €5 billion ($6.75 billion) today, but Rosatom is calculating with a sum equal to less than half that amount," says Alexander Nikitin of Bellona, a Norwegian environmental organization. "And now the financial crisis has been added to the mix."
Even Vladimir Generalov, director of the government's nuclear power plant development office, Atomenergoprojekt, concedes, "whether entirely new projects will be pushed depends on the worldwide economic situation." According to Generalov, the demand for electricity will decline. "It is hard to say how many reactors will end up going into operation." However, Generalov believes that at least 10 nuclear power plants will be built.
No Permanent Storage Sites
Rosatom has even more worries. For one, the cost of storing about 20,000 tons of spent fuel rods weighs heavily on the budget. There are no permanent storage sites. Instead, Rostatom has a stunning concept on hand for the waste. "Waste? But it isn't waste," says Rostatom spokesman Sergei Novikov. "We leave the material where it is, until it becomes usable in a few decades."
The Russians still dream of a plutonium economy. They are among the last countries worldwide that still operate fast breeder reactors, which produce, at least in theory, more nuclear fuel than they consume. In principle, they could recycle spent fuel rods from conventional reactors.
The world's biggest commercial plant of this type operates in Beloyarsk in the Ural Mountains region, where a second, larger breeder reactor is under construction. But no one is about to win accolades for the plants. Despite decades of research, all attempts to operate breeder reactors at a profit have failed. Besides, the technology is considered to be especially risky.
Another project that has critics up in arms is the construction of floating nuclear power plants. As recently as late April, nuclear energy czar Kiriyenko was strolling cheerfully through the production buildings at the Baltiiski Shipyard in St. Petersburg. At a ceremony there, he pressed a button to launch the construction of a 144 meter (472 foot) long model plant slated for completion in 2011.
Critics also fear that the floating power plants, each equipped with two 35-megawatt reactors, constitute a significant proliferation risk. The specialty reactors burn particularly highly-enriched uranium. "How you do want to prevent terrorists from boarding the ships and simply weighing anchor?" asks Vladimir Kuznezov, a former nuclear inspector and current critic of Rosatom. "We can't even stop Somali pirates."
More Embarrassed than Amused
Given these obstacles, how then can Kiriyenko's team build confidence in Russian nuclear technology among nuclear power plant customers?
Bizarre image campaigns, such as last year's "Miss Atom" contest, are more humorous than effective. In the campaign, attractive female employees at nuclear power plants, the nuclear symbol dangling in front of their beautiful bodies, entered a beauty competition. And when Kiriyenko candidly reported in Kalinin that he taken a dip in the lake into which the plant's cooling water is fed, his audience was more embarrassed than amused.
Only transparency and reliability can make Russia a full-fledged partner of Siemens. In the past, too many plans never made it off the drawing board. In 1992, for example, the Russians planned to build 26 domestic reactors. A grand total of three have been completed since then.
The Russians also have some catching up to do when it comes to technology. Kiriyenko's nuclear power plant salesmen are proud to take new customers on tours of a Russian-built nuclear power plant in the Chinese city of Tianwan. However, the plant's operators complain that it can only be run at full capacity just over 80 percent of the time. This complaint was probably one of the reasons a contract to build another nuclear power plant in the coastal Zhejiang Province was awarded to a competitor, US nuclear power plant producer Westinghouse.
Nevertheless, optimism still prevails at Siemens headquarters. The Russian government plans to subsidize the nuclear industry with about €15 billion ($20 billion) by 2015. In the event of a joint venture, the money would also benefit the Germans. Besides, public criticism is hardly to be expected in Russia, where there is no anti-nuclear movement. And the press has been more or less forced to toe the pro-nuclear line.
The Siemens executives even choose to ignore an image problem of Russian technology. "I have no doubt that Russia will satisfy our quality standards," says Wolfgang Dehen, the head of the energy sector at Siemens. "Chernobyl, after all, is more than 20 years in the past."
Translated from the German by Christopher Sultan
Sberbank Wants 35% Of Opel in $981M Bid
25 May 2009 Combined Reports
Magna, one of at least three competing bidders for General Motors's Opel unit, aims to join Sberbank in investing as much as 700 million euros ($981 million) in the deal.
Under the offer, GM would keep a 35 percent stake in Opel, while Sberbank would take 35 percent, Magna would get 20 percent and Opel's employees would get 10 percent.
"There is no assurance that any transaction will result from Magna's current involvement," Magna said in a statement.
"Opel has a very strong, global brand, and Vauxhall is strong, too," and the GM units have potential to return a profit in a few years, Magna co-chief executive Siegfried Wolf said at a news conference in Oberwaltersdorf, Austria, on Friday.
GM is selling at least a minority stake in its European operations as it confronts a U.S.-government deadline of June 1 to reorganize worldwide or be forced into bankruptcy.
Fiat and RHJ International are also looking for stakes in Opel and Vauxhall.
Magna's plan may involve eliminating 9,000 jobs in Europe and would need as much as 5 billion euros in government loan guarantees, Wolf said. GM had already asked employees at Opel and Vauxhall to provide $1.2 billion in labor-cost concessions. According to Magna's proposal, the workers would own 10 percent of the GM Europe operations.
German Economy Minister Karl-Theodor zu Guttenberg was quoted on Sunday as saying that all three bids have shortcomings and that a bankruptcy filing might still be a better option.
"We now have three offers for an Opel takeover, but that doesn't mean that one of them will automatically come to fruition," Guttenberg told the Bild am Sonntag newspaper.
"We must first have a high degree of certainty that the significant tax money we will have to provide is not lost," he said. "From my point of view, none of the three offers so far provides this certainty in a sufficient way.
"If these deficits were to remain, an orderly insolvency would clearly be the better solution — it also could open opportunities for the future of Opel," Guttenberg said.
But Roland Koch, prime minister of the German state of Hesse, called Magna the "preferred bidder" on any Opel transaction and said authorities wouldn't pursue talks with other bidders at the moment.
Opel, the maker of the midsized Insignia sedan, has pledges of 1.5 billion euros in bridge loans from Germany, with half coming from the federal government and the remainder from the four states where the unit has plants. The carmaker also operates factories in Spain, Poland and Belgium.
(Bloomberg, Reuters, AP)
Turkish firm leaves its mark on Olympics [pic]
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SOCHI, Russia - Turkey’s Hazinedaroğlu Construction Group is building the new Winter Olympics facilities in Sochi, Russia. Despite the negative effects of the global crisis on Russia, the Turkish firm continues its business as usual, Chairman Turan Hazinedaroğlu says
Preparations for the 2014 Winter Olympic in Sochi, Russia, continue despite the effects of the global crisis. As Russia looks to make Sochi a winter sports center similar to Switzerland’s Davos, the Turkish construction firm Hazinedaroğlu is making its mark on the region.
The company has received $1 billion-worth of business, while it has completed $500 million-worth of business in Sochi. Projects that stopped due to the crisis are anticipated to start again. Chairman Turan Hazinedaroğlu said the company started its business in Russia with the reconstruction of an extrusion facility as a subcontractor to the company Agrisovgaz in Maloyaroslavets.
Agrisovgaz expected the subcontractor to complete the business in question in a very short period of time, Hazinedaroğlu said. The employees worked hard, getting only two or three hours of sleep every night, thus the company completed the business within six months. Hazinedaroğlu said that after this project, the company started to work with Gazprom and Yukos on new infrastructure projects. Thanks to more rapid work, the company now enjoys "good relations" with Gazprom, Hazinedaroğlu said.
On Gazprom’s offer, Hazinedaroğlu has started to build the infrastructure of the Blue Stream natural gas pipeline. "While constructing Blue Stream, we have faced baseless accusations," Hazinedaroğlu said. "But today the importance of the project is obvious for us, as the country is considering a second pipeline."
The chairman added that Hazinedaroğlu lost $16 million in the Blue Stream project. "Because of the accusations that we have faced during this project, our company lost a lot of money. We have evaluated the period and found that we can strengthen our budget by only returning to the Russian market."
Calling for investments
Hazinedaroğlu noted that Russia is deeply affected by the global crisis. "Before the crisis, we were working with 600 employees. After the crisis, as the firm that we worked with halted one of the projects, the number of our employees declined to 560."
Hazinedaroğlu added that Russia would come through this crisis sooner or later. "People should come and make investments here. Russia will be one of the countries which will return to its [glorious] past."
"Turkey is supporting businesspeople that are doing business in foreign countries. However, we should see the support of the banks also," he said."Between 1993 and 1998, we did business worth $350 million. Now, with the new business, this figure almost reaches $1 billion," Hazinedaroğlu said. "Here we have constructed a hotel, a villa, an apartment and a gas line from Adler to the Krasnaya Polyana area. We will also take part in the renovation and expansion of this line. In the Winter Olympics area we built a rope railway line and a skiing field. This area will become a tourism center."
Hazinedaroğlu constructed a 702,000 square-meter service building, another 975,000 square-meter service building, a 7,700 square-meter mountain guesthouse and 67,8-hectare ski field in the framework of the Winter Olympics facilities.
FACTBOX-Russian steelmakers and their bond covenants
Fri May 22, 2009 4:58am EDT
MOSCOW, May 22 (Reuters) - Russia's steel companies risk
triggering leverage control covenants as their earnings fall
amid slumping demand.
Russian steel makers owe more than $30 billion following
massive overseas expansion when commodity markets were booming.
Following are the forecasts of eight analysts polled by
Reuters. All figures are in millions of dollars.
debt incurrence EBITDA TOTAL DEBT
covenants* /EBITDA
09'fcast 09'fcast**
Severstal Total Debt/EBITDA 1,167.0 7.11
(CHMF.MM: Quote, Profile, Research, Stock Buzz) upto 3.0
Evraz Total Debt/EBITDA 1,900.0 4.73
(HK1q.L: Quote, Profile, Research, Stock Buzz) upto 3.0
TMK Total Debt/EBITDA 851.5 3.76
(TRMK.MM: Quote, Profile, Research, Stock Buzz) upto 3.5
Full-year forecasts by Nomura, Deutsche Bank, ING, Troika
Dialog, Unicredit and UBS
*Source: Bond prospectus, Troika Dialog
** For a factbox on debt in the Russian steel sector see
[ID:nLU975877]
Severstal proposes to make cash offer - High River
Monday, 25 May 2009
Reuters reported that Canada's High River Gold Mines Ltd said that Russian steelmaker Severstal has proposed to make a cash offer of 18 Canadian cents a share to its minority shareholders.
High River said the outlook for the company remains uncertain in the absence of further financial support and there can be no guarantee that such an offer will ultimately be made at this stage.
High River, which has operations in Russia and West Africa, said it has formed a special committee of independent directors to oversee discussions with Severstal and evaluate any proposal that may be made.
High River said its total scheduled principal and interest debt repayments due in May and June was about CAD 15.5 million and it has about CAD 22 million additional repayments due in the second half of 2009. It said it was looking at ways to obtain additional financing needed to meet its financial obligations, but there was no assurance that it could do so.
It also mentioned that it remained in breach of certain financial covenants under its loan agreements with Royal Gold Inc and Severstal.
(Sourced from Reuters)
Severstal launches tender offer for High River Gold
Rencap, Russia
Monday, May 25, 2009
Reuters has reported that Severstal may launch a tender offer for minority holders of High River Gold, as confirmed by Severstal Resources (Severstal's mining division). According to 2008 financial accounts, Severstal owned 53.8% of the asset at 31 Dec 2008. The stake was acquired by Severstal for $45mn last year. High River is a Toronto Stock Exchange-listed goldminer (ticker: HRG) with a portfolio of producing mines, mines under development and advanced exploration projects in Russia and Burkina Faso. Reportedly, Severstal may offer CAD0.18/share ($0.16) for High River (the current price is CAD/share). The offer price has reportedly been discussed by Severstal and the High River Gold board. At 31 Mar, High River Gold's gross debt was $137mn, including a $64mn facility with Nomos Bank. The remaining debt is primarily related to facilities with Royal Gold and Standard Bank. It was reported in Mar 2009 that High River Gold had been unable to gain Severstal's support to restructure its debt.
In our view, Severstal wants to gain maximum control over the asset before providing assistance with debt restructuring and investment capex financing. In addition, the recent rally in gold caused by the weakening dollar makes gold mining development projects an attractive investment opportunity at current levels. Both Russia and China would like to hold more gold as a reserve currency, as they are overexposed to the dollar.
Boris Krasnojenov
Boguchan project facing delays as RusHydro gets Rusal exit prompt
22 May, 2009, 19:27
Russia’s largest electricity generator, RusHydro says it may have to look for a new partner to replace Rusal in the construction of the huge $3.6 billion-dollar Boguchan project.
RusHydro claims its partner has fallen behind on paying more than $50 million dollars. According to Vedomosti, Rusal denies the claim.
The Boguchan project includes a 3-Thousand Megawatt hydro-electric plant and an aluminium smelter with an annual output of 600,000 tons.
The hydro generator says Rusal has a month to pay the money – otherwise the project’s launch, scheduled for December 2010, will have to be delayed.
RusHydro has received a letter from Barclays Capital in which the consortium of project creditors, including ABN Amro, Barclays, Sberbank and Calyon suggests Rusal hands over its obligations of a half a billion dollars to RusHydro, in exchange for transferring its equity interest in the Boguchan project.
According to RusHydro spokesman, Evgeny Druzyaka, the company says the company is looking to come to agreement with Rusal, but may be forced to consider the suggestion made in the letter from Barclays Capital.
“Our company and our project partner Rusal have received a proposal from creditor banks of both Rusal and the Boguchan project for Rusal to exit the project. We may consider and implement this proposal if we fail to sign an investment agreement with Rusal, which would oblige Rusal to fulfill its financial obligations. We understand the interest of Rusal’s creditors in debt repayment and ridding Rusal of its investment burden of more than $500 million under the Boguchan project.”
As of Friday evening Rusal was unavailable for comment.
RZD may lose RUB 100 billion this year
Monday, 25 May 2009
Railway Market reported that Russian railway monopoly Russian Railways may lose RUB 100 billion in 2009.
Due to this fact, the company plans to ask the government to raise subsidies to RUB 80 billion from previous RUB 50 billion.
(Sourced from Railwaymarket)
Russian freight volume dips in January to April
Monday, 25 May 2009
According to RZD-Partner, Russian Railways freight volumes during January to April 2009 went down by 26 %.
Loading in January-April 2009 was 336.8 million tonnes that is 26 % lower than the similar period of last year.
It included the following transit volumes
1. Coal more than 86 million tonnes down by 18.6 %
2. Coke 2.6 million tonnes down by 40.2 %
3. Oil and mineral oil 75.8 million tonnes down by 5.1 %
4. Iron and manganese ores more than 28 million tonnes down by 23.7 %
5. Ferrous metals 19.6 million tonnes down by 33.4 %
6. Chemical and mineral fertilizers 12.7 million tonnes down by 20.4 %
7. Grain and grain refinery products 8.3 million tonnes up by 19.5 %
8. Construction materials 34.4 million tonnes down by 47.5 %.
Loading in April of the current year was 89.2 million tons of cargoes down by 22.7 %. In comparison with April 2008 there was a decrease in the loading of coal by 12.6 %, coke went down by 38.6 %, oil and mineral oil down by 2.4 %, iron and manganese ores down by 15.6 %, ferrous metals down by 36 %, chemical and mineral fertilizers down by 14.3 % and construction cargoes down by 39.2 %.
In April 2009, in comparison with March 2009, the loading of coke grew by 5.5 %, iron and manganese ores down by 6.5 %, cement down by 18.2 %, wood cargoes down by 3.1 % and construction cargoes down by 9.3 %.
(Source: RZD-Partner)
Grand development of Murmansk Transport Hub
2009-05-22
Russia will spend 66 billion RUB on development of the Murmansk Transport Hub. Governor Dmitry Dmitriyenko believes the project will be as important for Murmansk as the Shtokman gas field.
- The Murmansk Transport Hub is going to be a grand investment project on federal level, perhaps only comparable to the Olympic Games in Sochi, Dmitry Dmitriyenko said at a meeting in Murmansk today.
66 billion RUB will be allocated to the project over the Federal Budget, Dmitriyenko said, and underlined that Russia’s independence and security in the sphere of transport depends on the development of infrastructure in Murmansk, Regnum.ru reports.
As BarentsObserver reported, Dmitry Dmitriyenko earlier this week attended a meeting with the United Russia party in Moscow, where he got the party’s support for development of the Murmansk Transport Hub.
In December, Prime Minister Vladimir Putin signed a decree on implementation of the project, stating that development of the Murmansk Transport Hub will be financed by the federal budget as part of the earmarked program “Development of Russia’s transport system 2010-2015”.
Murmansk port will become a northern Russian hub for container shipping, oil reloading and coal and fertilizers terminals, and will be integrated in the International North-South Transport Corridor.
Russia seeks cooperation with Norway in fishery modernization
2009-05-25
Head of the Russian Federal Fishery Agency Andrey Krainy says cooperation with Norway over trawler fleet modernization is a necessity.
The obsolete Russian fishing fleet now is in dire need of upgrades, the powerful official highlighted to RIA Novosti.
-Our fishermen can not compete with the Norwegians because the prime cost of our production is 25 percent higher due to enormous fuel consumption level, Mr. Krainiy said, Portnews.ru reports with reference to RIA Novosti.
The Federal program for the development of the civil sea fleet provides allocations of 1 billion rubles for the construction of new fishing vessels. Within the frames of this program there will be announced tenders for the construction of small, medium and large capacity vessels under the state control.
Mr. Krainiy in the interview stressed that federal authorities should use mechanisms of state guarantees or direct financing of the shipyards for construction of new vessels. Then the vessels will be passed to the private companies under the strict registeration conditions. -I think that the consortiums will be established with Norwegians who are the leaders in this field, said Andrey Krainy.
The Fishery Agency leader in the interview also highlighted the successful cooperation with Norway at the Brussels European seafood exposition in April this year where Russia and Norway showed a joint presentation on the use of the resources of the Barents and North Seas.
-I hope that this experience will be a basis for the Moscow fish industry exhibition “Interfish” which is to be held in autumn, he underlined.
Russian investment firm offers Facebook $200 million
By Matthew DeCarlo,
Published: May 24, 2009, 12:58 AM EST
Citing the ever-elusive “people familiar with the matter”, the Wall Street Journal has reported that a Russian Internet investment group has offered to invest $200 million in Facebook. The WSJ said that it is presently unknown whether the popular social networking site has responded to Digital Sky Technologies’ offer. The proposal comes as Facebook is reportedly in discussion with various venture-capital and private-equity firms about generating funds to aid in its growth.
Under the terms of DST's proposed deal, they are prepared to buy between $100 million and $150 million in Facebook common stock at a $6.5 billion valuation. The amount would likely be used to buy up Facebook employees' company shares.
The WSJ reports that Facebook has struggled lately with finding investors, and if this deal is accepted it’d be the first significant funding boost in a year and a half. The company’s chief executive, Mark Zuckerberg has said that they may raise more money, but that it wasn’t necessary. Facebook is forecasting a 70% minimum revenue growth in 2009, that's a revenue projection of around $500 million or higher for the year.
Russian Regional telcom players could lose frequencies
Rencap, Russia
Monday, May 25, 2009
According to Vedomosti and Kommersant today (25 May) regional operators - Tele2, Sky-Link, SMARTS and Svyazinvest's Baikalvestcom - could lose frequencies if they do not roll-out GSM networks by the end of 2009. Rossvyazkomnadzor (the regulator) turned down the operators' applications to delay the launch of the networks in the regions where they have licences, but have not yet rolled out the networks. The operators obtained the licences in 2007.
Tele2 and Sky-Link delayed the rollout of each of their networks because Summa Telecom disputed the issuance of frequencies to them in court. After that the crisis hit and operators tried to save funds by cutting capex. Now, the operators are finding themselves cornered, as Tele2, for instance, won 17 licenses but planned to launch one network this year; and, Sky-Link does not have sufficient funds to invest in a GSM-network roll-out. Although the operators can dispute the decision of Rossvyazkomnadzor, we think the news is positive for MTS and VimpelCom because it would eliminate potential competitive pressure (primarily from Tele2 and Sky-Link, which won almost 50 licences). On the other hand, we think this case is important for big three mobile operators's 3G network roll-outs and confirms that licence-related capex commitments need to be met.
Ivan Kim
Wait is over as Moscow prepares for 3G
25 May, 2009, 10:45
Russians have purchased around 6 million mobile phones with 3rd-generation technology support. But, one of the country's largest markets is still waiting for the service to be switched on.
3G is available in 77 cities in Russia and 29 regions but, surprisingly, not in Moscow.
After 2 years of seeking licenses to bring high-speed data transmission to the Russian capital, Mikhail Shamolin, President, MTS mobile operators are preparing for the launch.
“We, in fact, have got permission to place base stations in the metro and in buildings. The documents which would allow us to switch those base stations on are in the approval process and we expect them to come out within the next to to three weeks.
The core of our strategy for the next coming years is going to be data. Data usage and mobile Internet. Overall, we predict a switch from voice to data over the next coming years and we have to be prepared for that.”
In 2008, Russia's "Big 3" – MTS, Vimpelcom, and MegaFon – spent between $250 and $300 million dollars investing in 3G networks – accounting for 12.5% of their overall network investment.
Because 3G will be available only indoors, operators are still hoping to secure permission from the military for outdoor use. They're ready to provide a full 3G network as early as next year.
Then there's the task of encouraging subscribers to make the most of 3G – sending photographs and trawling the Internet. Maksim Savvatin, Analyst, IKS Consulting says the market analysis and consumers need to become more sophisticated in their usage.
“Operators count general traffic – not broken down to 2G or 3G. Basically a 3G subscriber can be anyone who has a working terminal that supports the technology. However a lot of our users don't even think about the possibility of using it.”
Russians are big texters but with an average monthly of less than 15 dollars a month – the mobile operators have a challenge a
VEB expects some of its lenders to default
Citibank, Russia
May 25, 2009
Interfax reported that the bank is increasing the number of people it employs in the "bad-debts department". VEB representative, Sergey Vasiliev, says that there are two ways to deal with bad debts: restructuring or creating an asset management company that will deal with bad assets. VEB-Invest or a newly created entity may serve as such an asset management company. Vasiliev also said that while restructuring is possible, there should be legal framework in place.
According to the Vedomosti report, two lenders are in talks with VEB on the potential terms of restructuring. Vedomosti quotes another source close to VEB as saying that two of the most problematic debts are those of UC Rusal (US$4.5bn) and Evraz (US$1.8bn). Previously a scheme where VEB issued bonds convertible to UC Rusal shares was discussed, however there no decision yet by the bank on any of potential schemes.
Our take: UC Rusal restructuring will be the first litmus test as to how VEB (and by the same token VTB and Gazprombank) will deal with borrowers that are unable to pay back on time. The fact that VEB is increasing the number of people to deal with bad-debts and may create an asset management subsidiary signals that simple roll-overs and extensions of loans may not be a likely scenario.
Daniel Yakub
Sberbank to lengthen consumer loan terms
Citibank, Russia
May 25, 2009
Sberbank will increase maximum maturity of several consumer loan products from 3 to 5 years starting from June 1 leaving the credit requirements for borrowers and interest rates unchanged, Vedomosti reports, quoting the bank's spokesperson Irina Kibina. The bank has tightened its lending standards raising interest rates and reducing the maximum maturity on consumer loans since November last year, which resulted in a decrease of the retail loan portfolio. According to RAS reporting, retail loans declined by 3.8% qoq to Rbl1,209bn in 1Q09.
The lengthening of tenors of consumer loans will allow the bank to offer more favourable terms via reduced monthly payments and attract new customers. According to FY2008 IFRS report, consumer loans (loans to individuals other than housing acquisition, construction and reconstruction) amounted to Rbl762.99bn, or 11% of the bank's assets.
Sibirskiy Cement: Building on an expected recovery
Rencap, Russia
Monday, May 25, 2009
The Russian cement market: Surviving the trough into 2009. Russian construction volumes declined about 20% YoY in 1Q09. Despite relatively high consolidation in the country's cement sector, demand for cement fell 44% YoY over the quarter, affecting the prices (down 43% YoY) and volumes of cement producers. We estimate Russian cement consumption of 38mnt over 2009 (down from 60mnt in 2008), recovering to 54mnt in 2011. Production volumes shed 35% YoY in 1Q09. The cement price started to recover in April (+10% over the month) and we expect it to continue increasing over the course of this year. We have updated our view on Sibirsky Cement (Sibcement; BUY; 12-month target price $35/share [reduced from $87/share]) based on our revised cement consumption forecast. Sibcement's main plants reported a 34% utilisation rate in 1Q09, and we expect the holding to achieve 3.7mnt of production in 2009, assisted by a seasonal recovery over the summer. We forecast revenues of $276mn and EBITDA of $96mn in FY09, and we expect the company's capacity expansion plans in Russia and Kazakhstan to be completed on schedule. We estimate EV/capacity of $84/tonne in 2009 and $44/tonne in 2012. In our view, Sibcement's key advantages are its low production costs (we estimate a $44/tonne cash cost in 2008); its large market share (more than 60% in Siberia); good progress in its capacity expansion projects; and its stable financial position (we estimate its debt at $120-130mn at end-1Q09. The company trades on 5.5x EV/EBITDA 2009 and 2.5x EV/EBITDA 2010, on our estimates.
Activity in the Oil and Gas sector (including regulatory)
1% Fall in Oil Exports
Russia plans a 1 percent decrease in daily shipments of Urals and Siberian Light crude from six Baltic and Black Sea ports in June.
Russia will ship about 2.81 million barrels a day of crude oil from the Baltic ports of Primorsk and Gdansk and from Novorossiisk, Yuzhny, Odessa and Tuapse in the Black Sea, according to Transneft's loading schedule. Exports were originally scheduled at 2.84 million barrels a day in May. (Bloomberg)
Finance Ministry plans to introduce annual indexation of gas extraction tax from January
2010
Citibank, Russia
May 25, 2009
The draft of the Ministry's tax policy for 2010-12 suggests the introduction of the annual indexation of gas extraction tax in line with wholesale gas tariffs growth to withhold significant rental income from the gas industry. Since 2006 the rate of gas production tax has been 147 Rbl/mcm. In 2008, the Finance and Economy Ministries suggested raising the gas output tax by 5 times to 735 Rbl/mcm but the decision was postponed due to Gazprom's large investment program, according to Finance Minister Aleksei Kudrin.
In our view, it is unlikely that the government could raise the tax significantly, as the scale of Gazprom's investment program continues to be challenging, especially given sharp decline in export gas price and gas consumption in Europe and domestically. In our model we forecast annual gas production tax growth in line with domestic gas tariffs hikes from 2011. Also, for 2010, we forecast natural gas taxes to amount to around 3.5% of Gazprom's opex; thus, even if taxes are hiked starting 2010, the impact on Gazprom's profitability will be minimal. We view the news as slightly negative for Gazprom and Novatek and to a smaller extent for TNK-BP Holding, Lukoil and Rosneft that plan to start development of large gas deposits in the next few years.
Alexander Korneev
MAY 24, 2009, 2:49 P.M. ET
IEA Head: Russia-Ukraine Spats Spark Gas Supply Rethink
ROME (Dow Jones)--Continuous spats between Ukraine and Russia over natural gas contracts are inspiring a rethink of supplies to Western Europe to be discussed in October, the head of the International Energy Agency said Sunday.
The remarks come after Russian President Dmitry Medvedev Friday said Moscow doubted that Ukraine - which transits Russian gas to Western Europe - had enough money to pay for the supplies, hinting at more disruptions to come. "The Ukrainian issue triggers lots of discussion between the European Union and the IEA," Nobuo Tanaka told Dow Jones.
The IEA, which represents the most industrialized energy consumers, will be "discussing gas security in October with energy ministers" of its member countries, he said. They will talk about "what kind of coordination" they could have to confront the supply insecurity risk, Tanaka said. "IEA members should have as many possible alternatives, invest into energy efficiency and diversify sources of transmission. [Liquefied natural gas] is a good alternative," he said.
Russian gas supplies - long seen as among the most reliable in the world - have been subject to interruptions in past years due to disputes over pricing and debts related to the supply and transit of gas to Ukraine.
The spats have led to several shutdowns of exports of this major route to Western Europe. Gazprom cut deliveries of 90 million cubic meters of natural gas per day, destined to Ukraine, on Jan. 1 over unpaid debts, hitting supplies to countries in the region, such as Bulgaria and Moldova. The supply was fully restored after three weeks but it followed another shutdown over a pricing dispute in 2005-2006 and a threat to cut supply late in 2007.
More recently, a blast, apparently accidental, in a breakaway Moldavian region temporarily halted some Russia natural gas supplies to the Balkans.
-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@
FACTBOX-The latest Russian-Ukrainian gas issues
Published: 24 May 2009 17:07:56 PST
May 22 - Russia called on the European Union on Friday to help find money for Ukraine to prevent a new gas supply crisis while failing to agree with Kiev on how to store gas to ensure smooth gas transit to Europe this winter. Any hint of a gas row raises the blood pressure of European governments and consumers, who get a fifth of their gas from Russia via Ukraine, piques the interest of Naftogaz bondholders and casts a shadow over ties between the two ex-Soviet allies.
The following are key facts about gas issues the two countries have to resolve, while grappling with a deep economic crisis that has hit the state finances and currencies of both.
* Gas has to be stored in Ukraine for the winter period to guarantee smooth transit to Europe.
* As gas consumption rises during winter, the two countries do a simple gas swap. Ukraine uses Russian gas meant for Europe entering the country in the north-east and compensates Russia by sending to Europe gas stored in the West of the country.
* Over 10 billion cubic metres needs to be stored to ensure this transit to Europe.
* Ukraine's government says it has 16 billion cubic metres (bcm) of gas in storage and wants to buy a further 12 bcm, worth about $3.25 billion at current prices, to cover Gazprom's and its own winter needs. Naftogaz has not confirmed these figures.
* At the start of the year it had 17 bcm stored and gas intermediary RosUkrenergo had 11 bcm. RosUkrEnergo stocks were transferred to Ukrainian ownership, so about 12 bcm has been consumed since January as Ukrainian purchases of far dearer Russian gas fell.
* Gazprom does not want to simply give the storage gas to Ukraine for safekeeping.
* Ukraine prefers to limit its purchases of the gas now because prices are to expected to drop sharply later in the year when the gas is needed.
* Ukraine's state energy firm Naftogaz has proposed it could buy the extra gas for storage using Gazprom's advance payment of transit fees for using the Ukrainian pipeline system to pump gas to Europe.
* But with European consumption falling sharply, it is difficult to tell how much transit fees Gazprom will pay, risking Naftogaz having to pay back money later in the year.
* A Russian government source said Gazprom had paid its 2009 fees in full already. A Ukrainian source close to the gas talks said $2.15 billion had been paid, the majority of which -- $1.7 billion -- being the amount owed in the first quarter.
* The Ukrainian government, its finances stretched to the full, has said state banks could lend Naftogaz the money for the extra gas. A bill in parliament proposes the idea of the funds coming from the state purse.
* Naftogaz, receiving support from the state, needs to pay back a $500 million Eurobond by Sept. 30. Investors have been wary of a Ukrainian default after the currency plummeted and the country plunged into recession.
Thirteen states, among them Russia, signed energy efficiency deal in Rome
ROME, May 24 (Itar-Tass) -- Thirteen states, among them Russia, signed the charter of the International Partnership for Energy Efficiency Cooperation (IPEEC) at the G-8 energy summit in Rome on Sunday.
“This platform is open to everyone interested in the development and exchange of energy efficiency techniques,” Italian Economic Development Minister Claudio Scajola said.
He said the document signed by Russia, Brazil, Canada, China, France, Germany, Italy, Japan, South Korea, Mexico, the UK, the US and the EU was a big success.
Buying Russian Stocks on Oil Is ‘Leap of Faith,’ UralSib Says
By William Mauldin
May 25 (Bloomberg) -- Buying Russian stocks on oil-price increases is a “leap of faith” because crude may fall as the global economy slumps, UralSib Financial Corp. said.
“The trend in the economy remains weak, and slipping OPEC compliance may soon undermine the oil-price strength,” Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, wrote in a note to investors. “Incremental buying in Russia is increasingly a leap of faith.”
Russia’s equity market is dominated by energy companies including OAO Gazprom, the world’s biggest natural-gas producer, and OAO Rosneft, the country’s biggest oil producer, which benefit from higher oil and gas prices.
Saudi Arabia Oil Minister Ali al-Naimi said May 24 in Rome that close to 80 percent compliance with OPEC’s output quotas is the “best we can expect.” The 11 members of the Organization of Petroleum Exporting Countries bound by targets implemented 77 percent of planned output cuts of 4.2 million barrels a day in April, down from a revised 82 percent for March, the Vienna- based organization said on May 13.
Crude oil prices have jumped 38 percent this year while Russia’s Micex Index has risen 71 percent.
To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@
Last Updated: May 25, 2009 03:09 EDT
MAY 24, 2009, 12:26 P.M. ET
UPDATE: Russian Energy Min Sees Russia Oil Output Stable In 09
ROME (Dow Jones)--Russia's crude oil output will be at least stable in 2009 compared to the previous year, the country's oil minister said Sunday, contrasting earlier statements that it would fall.
"I think that in 2009 oil output will be at the level of 2008 as a minimum," Sergei Shmatko said on the sidelines of a G8 meeting of energy ministers.
The statements will likely be closely scrutinized at a meeting Thursday of the Organization of Petroleum Exporting Countries.
Russia, which is an OPEC observer but not a member, had previously said its production would fall this year as lower oil prices hinder investment in the world's second-largest oil exporter.
Russia's Deputy Prime Minister Igor Sechin said in December at an OPEC meeting that Russia may cut production by 320,000 barrels a day in 2009 to cooperate with 4.2 million barrel cut decided by the cartel.
-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@
Tycoon Vekselberg may be interim TNK-BP CEO –paper
Mon May 25, 2009 1:29am EDT
MOSCOW, May 25 (Reuters) - Russian tycoon Viktor Vekselberg could next month become interim chief executive officer of the country's third-largest oil firm, TNK-BP (TNBPI.RTS: Quote, Profile, Research, Stock Buzz), in which he holds 12.5 percent, the Vedomosti daily reported on Monday.
TNK-BP became a battleground for internal wrangling between British oil major BP (BP.L: Quote, Profile, Research, Stock Buzz), which controls half of the firm, and its Russian shareholders, including Vekselberg.
A truce was called last year with the election of a new board, but half a year later a new CEO has yet to be appointed. [ID:nLM111522]
Denis Morozov, the former head of Russian miner Norilsk Nickel, had been seen as a likely candidate for the post but talks with him ground to a halt earlier this year.
Now shareholders have reached a preliminary agreement that Vekselberg will take charge, Vedomosti reported, citing an unnamed businessman familiar with BP's management.
The appointment could be approved by the board of directors as soon as next month, a source close to the shareholders told the business daily.
Representatives of TNK-BP shareholders and of Vekselberg declined to comment when contacted by Vedomosti.
One of the conditions in the truce between the Russian and the British shareholders had been that the new chief would be independent of either side.
As such, Vekselberg's appointment would be only temporary until a new candidate was found to lead the company on a permanent basis, the sources told Vedomosti.
(Writing by Toni Vorobyova; editing by John Stonestreet)
MAY 25, 2009
TNK-BP CEO Search Intensifies
By GREGORY L. WHITE in Moscow and GUY CHAZAN and ALEXANDER KOLYANDR in London
The search for a new chief executive for TNK-BP Ltd., BP PLC's Russian oil venture, is heating up and one of the possibilities under consideration would be to name one of TNK-BP's Russian billionaire shareholders as acting chief, according to people close to the company.
Under an agreement reached last year to resolve a bitter conflict at the 50-50 joint venture, the British giant and its Russian partners agreed to appoint an independent CEO to succeed Robert Dudley, a BP veteran who fled Russia under pressure last summer. But the search took longer than expected after talks with the preferred candidate broke down over compensation. In the interim, Tim Summers, a former BP executive who had been chief operating officer at TNK-BP, was serving as acting CEO.
But Mr. Summers' current contract expires June 1 and both BP and the Russian shareholders have said they want a permanent executive in place as soon as possible. A decision could come as early as this week, people close to the company said.
"A company of this size can't continue to function without an independent CEO," said a person close to the Russian shareholders. "We're six months into this temporary arrangement and there's no light at the end of the tunnel."
People close to both sides said the discussions are cooperative, without any sign of the tensions that marred the relationship between BP and its Russian partners during the conflict last year.
If BP and its Russian partners can't agree on a new CEO soon, they are considering extending Mr. Summers as acting CEO or possibly appointing another top executive at the company as acting CEO, people close to both sides said. A potential candidate is Viktor Vekselberg, who now heads TNK-BP's natural-gas business and owns the Renova industrial group. Along with Mikhail Fridman of the Alfa Group and Len Blavatnik of Access Industries, Mr. Vekselberg is one of TNK-BP's Russian shareholders.
Mr. Vekselberg couldn't be reached for comment Sunday.
"If he's just going to be an interim CEO, we don't mind," said a person close to BP. "But it's not our preferred solution." Last year, BP officials had criticized the management roles of Mr. Vekselberg and German Khan, another Russian shareholder, saying they undermined governance at TNK-BP.
"Maybe this will accelerate BP's search," said the person close to the Russian shareholders, of the possibility of Mr. Vekselberg's appointment. "It's only reasonable for the other shareholder to appoint their representative for the next three to six months while we complete the search."
Under the terms of the TNK-BP shareholder agreement, BP nominates CEO candidates, subject to approval by both shareholders. A person close to the British company said that after months of making little progress on the search, BP has proposed a new candidate this week. He is Pavel Skitovich, formerly CEO of Russian gold miner OAO Polyus Gold and a longtime executive at the Interros industrial group in Russia. He couldn't be reached for comment late Sunday. A person close to the Russian shareholders said they were still studying his candidacy.
Write to Gregory L. White at greg.white@, Guy Chazan at guy.chazan@ and Alexander Kolyandr at Alexander.Kolyandr@
TNK-BP Completed the Ryazan Refinery Overhaul
Friday, May 22, 2009
TNK-BP completed the overhaul of processing facilities at CJSC “Ryazan Oil Refinery Company” (RORC, operator of the Ryazan Refinery), the press service of TNK-BP said to the Petroleum Information Agency (ANI).
Implementation of the modernization project will help the Ryazan Oil Refinery Company increase the quantity and improve the quality of oil products produced by the Ryazan Refinery.
In particular, a considerable amount of diesel fuel for Russian consumers will have a higher quality. Apart from that, the negative environmental impact will be minimized owing to the equipment revision carried out during the overhaul.
The total cost of the overhaul amounted to 870 million rubles.
The modernization and repair of 17 units at the Ryazan Refinery took 45 days, three days less than initially planned. Some 2,300 specialists of contractors were involved in the repair works.
Production processes did not stop at the refinery during the repair works. Suspension of processing facilities at the Ryazan Refinery did not affect the consumers, because a sufficient stock of raw materials and final products was accumulated at the refinery prior to the beginning of repair works.
Dmitry Bedarev, General Director of CJSC “Ryazan Oil Refinery Company” quoted by the press service, noted that the company managed to accomplish the overhaul in a short time without injuries and accidents.
The next repair of facilities and units at the refinery will start two years later.
Rosneft to Build $14 Billion Refinery in Far East to Process Crude Oil from ESPO Pipeline
BANGALORE, INDIA--May 25, 2009--Researched by Industrial Info Resources (Sugar Land, Texas)--Rosneft Oil Company OJSC (MCX:ROSN) (Moscow, Russia), an integrated petrochemical company, recently announced plans to develop a $14 billion petrochemical refinery in the Primorye region of Russia off the Pacific Coast. Crude oil for the project will be supplied from the new East Siberia-Pacific Ocean (ESPO) oil pipeline.
Gazprom
Committee to Pay Gazprom
Gazprom may be paid for gas supplies to Eastern Europe in the 1990s after the government sets up a special committee this week to resolve the matter, Kommersant said, citing unidentified government officials.
East Germany, Poland, Czechoslovakia, Hungary and Bulgaria signed agreements from 1985 to 1987 to build gas infrastructure in the former Soviet Union in exchange for 83.8 billion cubic meters of gas that Gazprom supplied the following decade, the newspaper said.
The company wants $280 million for the difference between the value of the gas it provided and the infrastructure that it received under the deal, Kommersant said. (Bloomberg)
Russia Gazprom output may fall 18 pct in 2009-report
Fri May 22, 2009 6:51am EDT
MOSCOW, May 22 (Reuters) - Russia's Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) faces a drop in natural gas output of up to 18 percent this year, or 450 billion cubic metres, the deputy head of the gas export monopoly, Alexander Ananenkov, said on Friday, Interfax reported.
Gas production at the state-controlled firm fell by more than a quarter last month to the lowest level in a decade in response to plummeting demand in Europe. [ID:nL2356210] (Reporting by Simon Shuster, editing by Robin Paxton)
Gazprom deputy CEO on production, Argus on capex
Troika, Russia
Monday, May 25, 2009
Gazprom Deputy CEO Alexander Ananenkov stated on Friday that production this year could fall by as much as 18% to 450 510bn m3, according to Interfax. Earlier, Gazprom had projected production in 2009 at 492bn m3 (down 10%). Ananenkov's minimum guidance is the lowest given by the company so far, and is therefore negative for sentiment, though we believe that such a low output figure is unrealistic. We currently model deliveries of about 518bn m3, and if Ananenkov's estimates prove accurate, then our EBITDA projection of $33.7bn may be too optimistic. However, the market will need to continue tracking the strength of the rebound in export deliveries (as European customers refill their storage) to see a clearer picture. For now, inventory replenishment is proceeding at a healthy pace: as of May 18 (the last reported date), storage levels were only 29% below the level at this time last year, compared with 47% lower y o y as of early April. Domestic gas demand has also rebounded in April (see separate story).
Also, Argus FSU Energy said on Friday that Gazprom is considering significant cuts in capex this year. The article mentioned a figure of R400bn, which, assuming it refers to capex only, and given the 30% reduction in planned long term investment to R150bn (as mentioned by Deputy CEO Valery Golubev last week), means that Gazprom may end up spending R550bn ($16.2bn), or 40% below the R920bn ($27.0bn) formal plan.
We believe that cutting capex from R700m to R400m would be difficult, though not impossible, but in any case the final figure will not be known until summer. Argus states that the board will make the final decision in July, though we still expect it to be announced as early as June.
Oleg Maximov
Gazprom won't delay Shtokman over crisis
(Interfax) - Gazprom does not plan to move back the start to development of the big Shtokman field due to current slump in demand for gas. "There is no reason to delay," Deputy CEO Alexander Ananenkov told journalists in Perm on Friday.
"Gazprom and its partners expect to bring the Shtokman field on-stream in 2012. We believe that the crisis won't persist so long and that by then gas consumption will pick up, both on Russian and foreign markets. And we will most likely see that in 2011," he said.
he Shtokman field is located in the central part of the shelf of the Russian sector of the Barents Sea. C1+Ñ2 reserves amount to 3.8 trillion cubic meters of gas and about 37 million tonnes of gas condensate. The Shtokman gas condensate field will become a source of Russian natural gas for pipeline and LNG deliveries to the Atlantic market. Sevmorneftegaz holds the license to the field. The first phase involves producing 23.7 billion cubic meters of natural gas per year. Pipeline gas supplies should begin in 2013 and liquefied gas supplies in 2014.
A joint venture, Shtokman Development (Gazprom - 51%, Total - 25%, StatoilHydro - 24%), has been set up to carry out the first phase of the development. (Source: Interfax)
Gazprom Neft Increases Stake in Sibir Energy to 27.5%
By Torrey Clark
May 25 (Bloomberg) -- OAO Gazprom Neft raised its stake in Sibir Energy Plc to “approximately” 27.5 percent after a second purchase of shares on May 22.
“Following closing and settlement of today’s invitation to offer for sale, Gazprom Neft expects to increase its stake by approximately 10.6% of the outstanding shares in Sibir,” Renaissance Capital, which bought the shares for the state- controlled oil producer, said in a statement late May 22.
The oil arm of OAO Gazprom bought 16.95 percent of London- listed Sibir in April. Renaissance declined to comment on the price.
To contact the reporter on this story: Torrey Clark in Moscow at tclark8@
Last Updated: May 25, 2009 01:25 EDT
Gazprom Neft may be in talks to acquire control of Sibir Energy
Troika, Russia
Monday, May 25, 2009
Gazprom Neft on Friday made another tender offer for Sibir Energy shares, and said by the end of the day that it has increased its stake by about 10.6%, from 16.95% to roughly 27.5%. The price was not set; the company said it reviewed offers on an individual basis. Separately, Interfax said that according to several sources, Gazprom Neft had also agreed to acquire Igor Kesayev's 23.3% stake in Sibir Energy and was in talks with Ruslan Baysarov (the ultimate owner of another 23.3% stake that was litigated away from Shalva Chigirinsky) for his stake. Baysarov confirmed the talks.
As such, Gazprom Neft may soon be in a position to take control and consolidate Sibir Energy. It may be doing this in order to expand its consolidated production. Sibir Energy's equity oil output was almost 3.5m tonnes in 2008, and the company is aiming for 4.3m tonnes this year. We expect Gazprom Neft's oil output to be just north of 30m tonnes in 2009. Control over the 9.8m tpy Moscow Refinery (77.25% of which is owned by a 50:50 JV between Sibir Energy and Gazprom Neft) would also increase its processing rights at the plant. We do not know the price at which Gazprom Neft may build up its stake, although the earlier tender offer was made at GBp500 per share, and Sibir Energy itself during the tender offered Gazprom Neft 10.6m shares (2.7% of share capital) for GBp500 apiece (the proceeds are to go towards repaying Chigirinsky's debt to the company). A similar price would value Kesayev and Baysarov's combined 46.6% stake at over $1.4bn (in addition to about $481m, at the then prevailing exchange rate, that we estimate it paid for the 16.95% stake).
Oleg Maximov
Gazprom, Slovenia sign 15-year gas supply agreement
17:1222/05/2009
LJUBLJANA, May 22 (RIA Novosti) - Gazprom and Slovenia have agreed on a deal extending Russian natural gas supplies for another 15 years, the Russian communications and media minister said on Friday.
The current agreement expires next year.
Igor Shchyogolev said the agreement was signed between a Gazprom subsidiary and Slovenia's state-controlled Geoplin.
The Slovenian economy minister said Slovenia and Russia would sign a deal on the South Stream gas pipeline project in June.
South Stream is a rival to the Western-backed Nabucco pipeline, designed to bring gas from Central Asia and the Caspian to Europe bypassing Russia. The EU, nervous about growing energy dependence on Russia, is backing the project despite the current economic crisis.
Why does Russian energy giant Gazprom wield such power?
May 22, 2009 -- Updated 1424 GMT (2224 HKT)
• Russia, single-largest natural gas producer, has 20 percent of global gas reserves
• Gazprom business accounts for 10 percent of Russia's gross domestic product
• Gazprom disputes with Ukraine has seen European nations wary of the company
• Russian president and prime minister show strong interest in the company
By Kevin Voigt
(CNN) -- Riding through the streets of Moscow or flipping through channels of Russian TV, it's difficult to escape messages from the country's natural gas monopoly, Gazprom.
"I'm driving under a huge Gazprom sign right now," Yuri Pogorely, vice-president of Interfax, the Russian business news wire, said in a phone interview. Television ad campaigns have promoted the company as a "national treasure" and, more recently, the business that makes "dreams come true."
"It can make someone think, why does a Russian monopoly need this kind of branding? After all, there are other state-owned companies that don't present themselves as a symbol of Russia," Pogorely said. "But Gazprom is not just any company."
If the Soviet Union promoted its interests through satellite states and military prowess, Russia today flexes its might on the global stage through its vast oil and natural gas fields. And no company exemplifies this more than Gazprom.
"By reputation, it is the largest and most powerful Russian company," said Lev Snykov, an analyst with VTB Capital in Moscow. [pic]Watch Gazprom chief Alexander Medvedev explain future strategy »
But its strong-arm tactics in contract negotiations with the Ukraine -- shutting off gas supplies three times in the past four years at the height of winter -- have European Union customers looking for alternatives to their reliance on Russian natural gas. The company has the world's largest distribution system of gas, maintaining 97,560 miles (157,000 kilometers) of pipelines that stretch, like Russia, from the Far East to Europe.
The perennial conflict with the Ukraine -- through which much of the natural gas supply of Eastern Europe flows -- is of deep concern to nations such as Germany and Greece, which depend on Russia for up to 50 percent and 90 percent of their natural gas, respectively.
Gazprom saw its market share in the European Union drop in the second half of 2008. Gas exports from Russia to Europe dropped 33 percent in October alone, according VTB Capital.
"The Ukraine conflict may have served as a catalyst for European customers to become more averse to Russian gas imports," says a VTB report on the Ukraine crisis.
The Russian economy, reliant on commodities, is suffering because of the fluctuating oil market, down from its record of nearly $150 a barrel to about $60 today. As a result, Gazprom saw profits fall 84 percent in the last quarter of 2008, prompting the company to slash its dividend by 86 percent, to 11 cents a share.
Russia has 20 percent of the world's gas reserves, and is the single-largest producer of natural gas. Gazprom posted profits of $30.8 billion last year -- down from $40 billion the year before -- and its business alone accounts for 10 percent of Russia's gross domestic product.
So it's no surprise that Gazprom is a pet project of Russian Prime Minister Vladimir Putin. His replacement as president, Dmitry Medvedev, is a former chairman of the company.
Putin's "interest in Gazprom is very deep. As a journalist who writes about energy issues, I've seen him give very detailed information and knowledge about what's happening with the company and company logistics," said Pogorely of Interfax. "When you hear him speak, it's like you're not talking to the prime minister of Russia, but one of the top company managers."
Alexander Medvedev, deputy chief executive officer of Gazprom Exports, deflects questions about the perception that Gazprom is a tool of Russian government and energy policy. [pic]Watch Medvedev explain Gazprom's plans »
"Nobody is challenging the view that Gazprom is a very special company, that we have a mixed capital structure, the majority of our shares are in the hands of the Russian government," he said. "But the rest are in the hands of private shareholders, including private citizens all around the world."
The company's goal is to become an energy leader with a diversified portfolio around the world, he said.
"Like Alexander Ovechkin... not everyone enjoys him, but he's a leader, and we would like to perform as good as Ovechkin in hockey," he said, referring to the controversial Russian ice hockey star who was named Player of the Year this week by National Hockey League players.
That sentiment echoes how Russians feel about Gazprom. A recent poll by the Public Opinion Foundation found one in five Russians under 26 would like to work for Gazprom. "In rural areas, Gazprom is dramatically important for people because of our harsh winters," Pogorely said.
"Russians love someone big who sticks up for you. OK, sometimes they may not be very nice to you. But if he cares for you and makes your life better, that's OK," Pogorely said. "But if you're doing business in Russia, Gazprom is the power you wouldn't mess with."
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