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Russia 100202
Basic Political Developments
• Itar-Tass: US seeks to interact with RF in missile defence issue – Pentagon
• Itar-Tass: Russia, Guyana presidents to discuss interaction
• Itar-Tass: Sarkozy telephones Medvedev to discuss Russian leader’s visit to France
• Russia Profile: Parlez-Vous Français? - This Year’s Exchange Between Russia and France Will Be an Exercise in Cultural Diplomacy
• Xinhua: Indian Navy to induct MiG 29K on Feb. 19
• Brahmand: BrahMos - A bright illustration of India-Russia cooperation: Nikolay Patrushev
• Emportal: Moscow: Strategy for northern Kosovo violates the Resolution 1244
• AFP: HRW calls on Russia to stop blocking 'peaceful' demos
• Itar-Tass: Medvedev to hold conference on investclimate in Russia
• RIA: Russia's presidential envoy arrives in protest-hit Kaliningrad
• Itar-Tass: Kiev seeks to remove emotional component in ties with Moscow – FM
• Civil.ge: Lavrov: Pace of S.Ossetia, Abkhazia Recognition Normal
• Itar-Tass: RZD train with humanitarian aid arrives in Mongolia
• RIA: Khloponin becomes member of powerful Russian inner Cabinet
• Itar-Tass: Railway traffic resumed after explosion in St. Petersburg
• Reuters: Russia blast hurts rail worker, terrorism suspected
• Russia Today: Blast hits St. Petersburg railroad
• Bloomberg: Bomb Attack on St. Petersburg Railroad Wounds Train Driver
• Russia Today: Interview causes scandal in Moscow riot police unit
• The Moscow Times: OMON Officers Complain of Corruption in Their Ranks
• RIA: Fire breaks out at East Siberian aluminum plant, one dead
• Russia Profile: A New Take on the Caucasus - A New Policy in the Caucasus Suggests Power Is Shifting to Dmitry Medvedev
• RFERL: Is Ramzan Kadyrov's Star On The Wane?
• The Jamestown Foundation: Dagestan’s Political Uncertainty Joined by Turmoil, Technological and Social Failures
• The Moscow Times: Rechnik Conquered, Luzhkov Sets Sights on Fantasy Island
• NY Times: Russians Rally Around a Falling Enclave
National Economic Trends
• Bloomberg: Russian Economy Shrank Annual 2.2% Last Quarter, ING Estimates
• EmergingMarkets: Foreign banks and investors to invest up to $170m in Russian bad debt
• Rencap: Russian PMI data show surprise improvement in manufacturing sector
Business, Energy or Environmental regulations or discussions
• Reuters: Russian markets -- Factors to Watch on Feb 2
• Interfax: Moscow press review for February 2, 2010
o VEDOMOSTI
o A Russian consortium, comprised of Rosneft, Lukoil (RTS: LKOH), TNK-BP, Gazprom Neft (RTS: SIBN) and Surgutneftegaz (RTS: SNGS) (with equal stakes), and PdVSA, signed a contract on Monday to set up a joint venture to develop Junin-6 oil field in the oil belt of the Orinoco River.
o By October 1, Gazprom (RTS: GAZP)'s debt had increased to a record 1.762 trillion rubles for July to September - an increase by almost 50 billion rubles.
o Nearly all major banks with foreign capital have reduced their assets in Russia.
o Troika Dialog (RTS: TROY) has dropped out of the list of major management companies, according to the National Rating Agency (NRA).
o KOMMERSANT
o Gazprom (RTS: GAZP) has received the first revenue from the Sakhalin-2 project, whose operator, Sakhalin Energy, earned over 10 billion rubles, compensating losses sustained in the first half of the year.
o Mechel Energy plans to increase the amount of steam coal, used at its electric power plants by 60% by 2015, which will allow the company to almost fully spend the industrial coal product at its thermal power plants
o Russian coal companies in February are expected to raise prices for coking coal for the second time since the end of last year.
o Sberbank (RTS: SBER) is the first Russian bank to have joined the annual rating of 500 most significant bank brands, taking 15th place.
• Bloomberg: Lukoil, Norilsk Nickel, Rosneft: Russian Equity Preview
• Bloomberg: Russia May Cap Certain Drug Prices This Year, Vedomosti Reports
• EmergingMarkets: LSE and Micex deepen ties with launch of Russian IPO platform
• Alfa: Foreign banks operating in Russia see assets fall faster vs. competitors
• Abc.az: Russia’s Savings Bank recognized as 20th banking brand of world
• The Moscow Times: Gold Production Up 11%
• Rencap: Mechel's 4Q09/FY09 operating results - good things in store for Mechel
• Interfax: Interros still prepared to buy Rusal out of Norilsk Nickel – newspaper
• Bloomberg: Deripaska May Exit Oil Industry, Sell Shares of Energy Company
• : Potanin plans charitable legacy
• Barentsobserver: Post-crisis optimism on the Russian tourists market
• VTB: Russian Internet January Search: Tripled Over Two Years
Activity in the Oil and Gas sector (including regulatory)
• Reuters: Russia Jan oil output edges down, gas rises
• Prime-Tass: Russia’s natural gas output up 17% on year in January
• Interfax: Oil supplies to Russian refineries up 6% in Jan
• EasyBourse: BP's Russian JV TNK-BP Swings To Profit In 4Q
• Bloomberg: Novatek May Seek Shell, Exxon for Yamal LNG Project (Update1)
• Upstreamonline: Rosneft pumps up Russia's output
• VTB: Rosneft: Waiting for Vankor
• WSJ: Russian Energy Earnings Increase
• ISRIA: Russia - Prime Minister Vladimir Putin meets with LUKoil President Vagit Alekperov
Gazprom
• Prime-Tass:
o Feb 2: Gazprom to make presentation for investors in London
o Feb 4: Gazprom to hold meeting with investors in New York
o Feb 4: Gazprom board of directors to discuss preparations for AGM
o Feb 5: Gazprom to hold meeting with investors in Moscow
• Rencap: Gazprom 3Q09 IFRS results: Hardly an event
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Full Text Articles
Basic Political Developments
Itar-Tass: US seeks to interact with RF in missile defence issue – Pentagon
02.02.2010, 12.41
WASHINGTON, February 2 (Itar-Tass) - The United States seeks to interact with Russia in the missile defence sphere, it is said in the US Ballistic Missile Defence Review (BMDR) released Monday. Such a document has been prepared by the Pentagon for the first time.
The review says that the US administration seeks to interact with Russia in the ballistic missile defence sphere. Together with Russia it is working on a wide agenda focused on the mutual early warning about missile launches, possible technical and operational cooperation.
It is admitted in the review that as of today only Russia and China have the potential for launching a large-scale attack on the US territory with the use of ballistic missiles. However, according to American specialists, such a scenario is very low probable and is not in the focus of the US missile defence plans.
Regarding Russia as an important partner, the document stresses further, the Barack Obama administration is working on the agenda aimed at bringing the two countries’ strategic military doctrines in line with the relations formed between them after the end of the Cold War. It is explained in the document that the United States and Russia are not enemies any longer and that there is no serious threat of war between them.
According to the US Department of Defence, the Ballistic Missile Defence Review is a review conducted pursuant to guidance from the President and the Secretary of Defence, while also addressing the legislative requirement to assess US ballistic missile defence policy and strategy. The BMDR will evaluate the threats posed by ballistic missiles and develop a missile defence posture to address current and future challenges.
The BDMR will assess the threats posed by ballistic missiles and develop a missile defence posture to address current and future challenges. The BMDR will determine the appropriate role of ballistic missile defence in the national security strategy and military strategy of the United States. The BMDR will provide a strategic context for current and future missile defence program and budgetary decisions. The BMDR will align force structure with national priorities and strategic realities.
The proliferation of ballistic missiles and associated technologies continue to pose threats to US territory, its deployed forces, and its friends and allies. US ballistic missile defence strategy and policies must be responsive to a changing threat environment, as well as budgetary constraints, it says.
The US must develop capabilities that are cost-effective and proven, undergoing operationally realistic testing to assess and demonstrate reliability and effectiveness. The Department must continue to support cooperative ballistic missile defence efforts with friends and allies, developing common missile defence strategies and capabilities.
Key areas of focus for the BMDR include:
Implementing a phased, adaptive approach for missile defence in Europe, as outlined in the Fact Sheet on US Missile Defence Policy: A “Phased, Adaptive Approach” for Missile Defence in Europe; Providing effective regional missile defences for US forces and allies against short-, medium-, intermediate-range missiles; Providing effective defence of the United States against longer-range missiles; Balancing ballistic missile defence capabilities and investments, accounting for near and long-term threats to the US, allies, and deployed forces; Determining requirements for ballistic missile defence capabilities, as well as the execution and oversight of the US ballistic missile defence program; and The objectives, requirements, and standards for ballistic missile defence program testing and evaluation
Like the Quadrennial Defence Review and other ongoing reviews, the BDMR process embraces a “whole of government” approach. The Department of Defence consults actively with other US Government departments and agencies and appropriate Congressional committees. The BMDR is informed by ongoing Department of Defence reviews and interagency strategic reviews, to include the QDR and the nuclear and space posture reviews.
The Secretary of Defence has established a governance structure to manage the BMDR, which is co-led by the Office of the Secretary of Defence and the Joint Staff. Combatant Commands and Military Services engage frequently to inform and shape the Review. The BMDR process includes consultations with friends and allies.
Itar-Tass: Russia, Guyana presidents to discuss interaction
02.02.2010, 04.02
MOSCOW, February 2 (Itar-Tass) - President Dmitry Medvedev of the Russian Federation (RF) meets with Bharrat Jagdeo, President of the Co-operative Republic of Guyana, here on Tuesday to discuss interaction between the two countries, primarily that in the economic sphere, a Kremlin official has told Itar-Tass.
"During a brief meeting, the leaders of the two countries will discuss matters aimed at furthering the bilateral political dialogue, at stepping up trade, economic and humanitarian cooperation, and at strengthening the legal-treaty basis," the Kremlin administration official said.
"Special attention is to be devoted to the tasks of broadening and diversifying bilateral trade and to inviting state-run and private-owned businesses entities to participate in the (interaction) process," the Kremlin official pointed out, recalling that the United Company RUSAL actively operates in Guyana. In 2004 RUSAL established a Russo-Guyanese joint-venture enterprise for the mining and processing of bauxites. The company plans to implement projects to build processing facilities and a hydropower station in Guyana.
RF presidential administration analysts believe that "There is also a considerable potential in other areas of cooperation, specifically that in the fields of energy, agriculture, and the mining of minerals".
"During the upcoming conversation, the Heads of State will also touch upon interaction in the international arena, primarily that in Latin America and the Caribbean," the Kremlin official said.
The 40th anniversary of the establishment of Russo-Guyanese diplomatic relations is to be marked in 2010. An important role in them is being played by interaction in the sphere of humanitarian contacts, first of all those in the field of education. Over 200 Guyanese specialists have been trained at Soviet and Russian institutions of higher learning. More than 100 of them underwent training at the Russian University for Friendship among Peoples. Jagdeo is also an alumnus of the Friendship University. His present private visit to Russia is timed to coincide with participation in ceremonies marking the 50th jubilee of the University.
Jagdeo's present visit to Russia in his capacity of the President of Guyana is already a third one. He visited Moscow in 2003 and 2007. Russia's President received him on both occasions.
Itar-Tass: Sarkozy telephones Medvedev to discuss Russian leader’s visit to France
01.02.2010, 23.44
MOSCOW, February 1 (Itar-Tass) -- French President Nicolas Sarkozy telephoned President Dmitry Medvedev on Monday to discuss the latter’s upcoming state visit to Paris in early March.
Sarkozy and Medvedev discussed pressing issues of bilateral cooperation, including in the cultural and humanitarian field.
February 1, 2010
Russia Profile: Parlez-Vous Français?
By Elena Rubinova
Special to Russia Profile
This Year’s Exchange Between Russia and France Will Be an Exercise in Cultural Diplomacy
The year 2010 will have special significance for the relationship between Russia and France. This year has been officially named as the year of Russia in France and the year of France in Russia. Some 400 events dedicated to culture, trade, industry, science and space research, education and sport will take place in both countries. At the highest level, the program includes a visit by President Dmitry Medvedev to Paris and a visit by President Nicolas Sarkozy to Russia. France will also be the guest of honor at the St. Petersburg International Economic Forum.
Russia and France have a lot on common: their intellectual, artistic and cultural ties (which at times translated into political and economic connections) date back over three centuries. The decision to hold a reciprocal national year, made back in 2007 by the two heads of state, was motivated by the desire to demonstrate what those ties are like today. “Russians will be able to discover France in its diversity, as a country with rich history and proud of its cultural legacy on the one hand, and as one that is modern, vibrant and inspired by everlasting ideas of freedom and multicultural society on the other. By holding this cross year we hope to overcome many stereotypes and prejudices, as well as to trigger mutual interest, so that the French and the Russians meet the challenges of the 21st century together with other European nations,” said Nicolas Chibaeff, the French general commissioner of the year France-Russia. Chibaeff has been working on preparing the cross year together with his Russian colleague Mikhail Shvydkoy for over two years.
Philippe Pegorier, the Head of Ubifrance, the French economic mission in Russia, thinks more pragmatically but no less highly about the upcoming cooperation in various fields. “In my opinion, the cross year can greatly contribute to Russia’s image in France. It’s important to give the broader French audience an idea of what modern Russia is like. Economic relations will benefit from this approach.”
On January 25, the Pleyel Concert Hall in Paris hosted the official launch of the cross year, with maestro Valery Gergiev conducting the Mariinsky Theater Orchestra. In fact, the cross year started long before the festival opening in the French capital, and has already spurred many cultural events. From early January, the French public has been enjoying Russian ballet: the Perm Theater is on tour in 12 cities across the country. In the beginning of January, Nice city center hosted the "Ruskoff" festival of Russian art. Thousands of kilometers away, Kazan, the capital of Tatarstan, celebrated the beginning of the Year of France in Russia with the “Beijing-Amur-Paris” exhibition, featuring works by a French photo artist Charles Vaprout.
But contemporary culture is not just about the established brand that Russian culture represents. It also encompasses the creations of young people working outside the mainstream, away from the spotlight. This year, the International Comics Festival in Angouleme displays the work of young Russian cartoonists within the framework of an exchange with its St. Petersburg counterpart, the “Boomfest.” Eight artists from Moscow and St. Petersburg put on a collective exhibition entitled "Born in the USSR," a theme largely unknown to younger French audiences. “By all means, the cross year of Russia and France presents an opportunity for young artists to show their art at this prestigious European art forum. It took us a year to develop this idea, and our participation in Angouleme demonstrates the power of cultural relations,” said Dmitry Yakovlev, the artistic director of “Boomfest.”
Two other remarkable events aimed at the younger audience will take place later in the year: the “Trans Musicales de Rennes” festival that will be travelling from Samara to Sochi and а special writers’ train across the Trans-Siberian railway will allow young Russians to experience today’s French literature and music first hand.
France is known for its well thought-out and well funded cultural policy, with a very broad and active network of various French institutes. The Russian counterpart of the Alliance Francais is the Russky Mir Foundation, set up several years ago to promote the Russian language abroad and popularize Russia's national heritage. Russky Mir is launching a series of projects, such as opening a Russian library at the bilingual education center in Paris and a library at the Russian Orthodox seminary, as well as financially supporting Russian-language media in France, such as “L’Observateur Russe” and “La Pansee Russe.” “While preparing for the year of Russia in France we used the experience gained last year during the year of Russian language in China. For example, we are going to translate a few interactive education games and applications into French, so that French kids can learn Russian playing board and computer games. I am pretty sure that French children will like them just as much as the Chinese do,” said Vyacheslav Nikonov, the executive director of the foundation. “Among other projects, the foundation is preparing a large-scale diversified joint program with Rossotrudnichestvo, which includes jointly organizing student forums, linguistic exhibitions and events dedicated to outstanding Russians,” he added.
France is now Russia’s ninth-biggest trade partner. Back in November, during Vladimir Putin’s visit to France, the two countries signed 15 strategic deals, the South Stream gas project and joint gas field exploration with France’s Total among them. But this year, a new approach to economic and commercial relations has been taken. In June, France will be the first country to be the guest of honor at the St. Petersburg International Economic Forum. “The interest in investment is huge among French businesses; this year we will be bringing nearly 800 companies to Russia, almost twice as many as we brought to Brazil in 2009, when France had a national year there,” Pegorier said. “Ubifrance will be holding a variety of events, but three of them are of special significance. The exhibition in the Manezh dedicated to French know-how and the ‘art of living’ will give Russian consumers, professionals and trade organizations a chance to see the latest products from over 100 French manufacturers that are not on the Russian market yet. Also in the second half of the year, we are organizing a meeting for professional winemakers and a B2B business forum in Moscow.”
As always, space cooperation will be in the spotlight, but this time also in a special format: a planned exhibition will follow the first flights of the Soyuz rocket from the Kourou spaceport in French Guiana. Russia will welcome a major tour by the Comedie Francaise and the Opera de Paris ballet troupe, which will perform in Novosibirsk. Choreographer Angelin Preljocaj will bring together the Bolshoi and his own dancers in contemporary ballet. But for the Russian audience, the year of France in Russia would be incomplete without Patricia Kaas. Her concert tour “Thank You, Russia” is coming to Moscow in February. And Kaas is indeed thankful to Russia, where she has been popular for over 20 years.
The cross year’s closing ceremony will take place at the Bolshoi Theater on December 8, 2010.
Xinhua: Indian Navy to induct MiG 29K on Feb. 19
2010-02-02 16:01:32
NEW DELHI, Feb. 2 (Xinhua) -- The Indian Navy is to induct Russian-made MiG 29K combat jets into its marine fleet for aircraft carrier Admiral Gorshkov on Feb. 19 in the western state of Goa, where the ship is currently docked, Defense Ministry sources said.
"On Feb.19, a squadron of four fighter jets will be deployed on Admiral Gorshkov. The squadron has been codenamed Black Panthers. The Navy acquired the fighter jets in December last year. The induction ceremony will take place at Goa's INS Hansa naval base. A Russian team is in the base to help with the induction," the sources said.
The fighter jets will start operation after Admiral Gorshkov, rechristened as INS Vikramaditya, is delivered for operation in 2012, the sources said.
The jets were purchased by the Indian Navy as part of the 740 million U.S. dollar contract signed in January 2004 for Admiral Gorshkov, which has been renamed INS Vikramaditya.
India and Russia last month signed another 1.2 billion U.S. dollar deal under which the Indian Navy would acquire 29 additional MiG-29Ks, bringing the total number of MiG-29Ks on order to 45.
The MiG-29K multirole carrier-based fighter is designed to air cover the ship grouping, gain air superiority and destroy sea surface and ground targets with guided high-precision weapons, day and night, in any weather. The jets are also capable of playing the role of an air refueller.
|Editor: Deng Shasha |
Brahmand: BrahMos - A bright illustration of India-Russia cooperation: Nikolay Patrushev
Last Updated: Feb 02, 2010
NEW DELHI (BNS): The Secretary of the Security Council of the Russian Federation, Nikolay Patrushev and the Ambassador of the Russian Federation to India, Alexander Kadakin, visited the BrahMos Complex here on Tuesday.
Dr. A.S. Pillai, CEO & MD of BrahMos Aerospace, explained to the official the progress made by the Joint Venture in the last 10 years and the possible areas for future collaborations between the two partnering countries.
The Russian Security Adviser, who was accompanied by a high level delegation, said that he was delighted by such an "excellent visit" and lauded BrahMos for its remarkable achievement in a short span of time.
"The JV BrahMos is a bright illustration of successful work of Russian & Indian scientists and designers. It is based on highest trust and respect. I wish great successes in future ventures in further strengthening of Russia-India friendship," Patrushev said.
Kadakin said that the BrahMos project is a dream made true by the joint efforts of the Russian and Indian scientists and congratulated the pioneers of BrahMos with its magnificent work.
"Bringing together the best of the brains of the two countries not only brings down the cost but makes the system developed highly advanced and reliable overtaking other countries. BrahMos is on the helm of the world of cruise missiles and is a great tribute to the power of scientific communities of our two nations," said Kadakin.
Dr. Pillai said that the high level visit is highly encouraging for the JV to show more results. He said that BrahMos is already inducted in the Indian Navy in number of Ships and also in the Indian Army. He also mentioned that the first ship being built in Kaliningrad has been installed with Vertical launcher and FCS delivered by BrahMos with ITF launch being planned this year itself as per schedule in Baltic sea. We have now 4 versions- Sea to Sea, Sea to Land, Land to Sea and Land to Land already fully developed and operational. The work on the underwater launch and air version development is under progress, he added.
Emportal: Moscow: Strategy for northern Kosovo violates the Resolution 1244
02. February 2010. | 09:23
Source: EMportal, Tanjug
The official Moscow believes that the socalled strategy for northern Kosovo violates the Resolution 1244 and generates tensions in the province, Russian Foreign Ministry spokesman Andrei Nesterenko stated.
The official Moscow believes that the socalled strategy for northern Kosovo violates the Resolution 1244 and generates tensions in the province, Russian Foreign Ministry spokesman Andrei Nesterenko stated.
We believe that, in the existing circumstances, we should effectively prevent any attempt to implement decisions that may harm Kosovo, Nesterenko said.
By this I refer to the socalled strategy for the northern Kosovo, whic violates UN SC Resolution 1244 and generates tensions in the province, he added.
The Russian official added that Moscow insists on the UN Mission fulfilling its obligations in representing Kosovo in regional and international institutions. There must be no canges in this respect, Nesterenko underlined at a regular briefing at the Russian Foreign Ministry.
We believe that the reduction of UNMIK staff is unaceptable as this would undoubtedly limit the body's capacities in implementing the authorizations granted by the UN SC, Nesterenko said.
Acording to him, Russia is confident that no one has the right to prevent UNMIK from fulfilling its tasks, including those referring to the enforcement of the democratic standards established by the international community.
AFP: HRW calls on Russia to stop blocking 'peaceful' demos
(AFP) – 5 hours ago
MOSCOW — US-based rights group Human Rights Watch (HRW) called Tuesday on the Russian authorities to stop blocking "peaceful" demonstrations.
The call came two days after riot police arrested scores of opposition activists in central Moscow at an unsanctioned rally to defend the right to free assembly.
"Russian law clearly grants the right to freedom of assembly," HRW's Moscow deputy bureau chief Tanya Lokshina said in a statement.
"But the arrest... of the peaceful demonstrators is an excellent example of the authorities' blatant violation of this right."
Activists have been holding regular protests in the Russian capital. They are routinely denied authorisation and dispersed by riot police.
Dozens of police were deployed in vans around Moscow's Triumfalnaya Square to prevent Sunday's demonstration, which drew 200 to 300 people. They broke up the rally within half-an-hour, amid shouts of "Shame" from the crowd.
Kremlin critic Boris Nemtsov was among those rounded up, along with the heads of the Memorial rights organisation, Oleg Orlov, and of the Movement for Human Rights, Lev Ponomarev.
A spokesman for the Solidarnost opposition movement said all the activists had been released and ordered to appear before a judge on Thursday to answer charges of breaching rules on public gatherings.
On December 31, police detained the 82-year-old Russian dissident Lyudmila Alexeyeva -- a founder of Russia's oldest active rights organisation, the Moscow Helsinki Group -- at one such rally, sparking protests from the White House.
"The election of (Dmitry) Medvedev as president brought a certain optimism on a new climate of respect and support for pluralism and for civil society," Lokshina said.
"But we have not yet seen significant changes," she added. "President Medvedev must back his rhetoric with concrete acts, including guarantee of freedom of peaceful assembly."
Earlier, the European Union urged the Russian government to stop its "heavy-handed" treatment of protesters.
And the US State Department said the arrests, "together with reports of mistreatment against some of the demonstrators," constituted "another blow against freedom of speech and assembly, which are universal and fundamental rights that deserve to be protected and promoted."
Itar-Tass: Medvedev to hold conference on investclimate in Russia
02.02.2010, 00.52
MOSCOW, February 2 (Itar-Tass) - President Dmitry Medvedev is to hold a conference here on Tuesday to discuss matters concerning the investment climate in Russia.
Kremlin analysts believe that the state of the investment climate is made up of not only purely economin components but also takes shape under the influence of other factors as well. In this sense, the President-chaired conference can give a positive signal to potential investors that took up a more guarded attitude or a wait-ad-see one in the period of financial downturn.
The Head of State himself repeatedly spoke of an intention to raise this theme. "It is time we returned to the matter concerning the investment climate in our country," he told a meeting on economic matters in mid-January, in particular."
He is convinced that "This does not mean that it (the investment climate) in our country is overly bad. However, frankly speaking, in the recent period we did not do much to improve it, apart from getting out of the downturn, engaging in modernising our own country, our own economy and switching over to a high-technology, investment-wise and innovations-based way of developement."
"I suggest devoting a special big conference to this matter and I an assigning the govevrnment, specifically the Minister of Economic Development, the Minister of Finance, and other colleagues to prepare essential proposals," Medvedev said then.
The theme of investment climate had been also touched upon by Medvedev earlier as well, at a conference on the development of small and medium-sized businesses in summer 2008. The Head of State said at that time, "All the decrees and laws will be absolutely insufficient (in this respect). They will simply produce zero effect if we fail to establish a full-value auspicious business climate in our country".
"What we need is a normal investment climate in our country, and this is a task for absolutely all of us -- both the authorities as a whole, law enforcement agencies, and businesses," the President emphasized.
Medvedev is convinced that "Everyone must participate in bringing about a business climate: if we do not do that together, all our efforts will be to no avail".
RIA: Russia's presidential envoy arrives in protest-hit Kaliningrad
11:1502/02/2010
Russia's presidential envoy arrived to the country's Baltic exclave of Kaliningrad shaken by a large-scale anti-government protest rally last week, a Kremlin spokesman said on Tuesday.
At least 6,000 demonstrators gathered on Saturday in Kaliningrad's Central Square protesting against the increase of transportion tax, housing and communal amenities tariffs and demanding the dismissal of the local government.
Representatives of opposition parties, Communists, Liberal Democrats, and Patriots of Russia and a number of non-profit organizations reportedly took part in the rally, which lasted for about two hours.
Ilya Klebanov arrived in the city on Monday, the spokesman said. According to the Kommersant daily, Deputy Prosecutor General Alexander Gutsan accompanied the presidential envoy. Some representatives of the ruling United Russia party also reportedly arrived in the Baltic exclave to study the situation.
Kommersant said a number of local administration officials, members of the ruling United Russia party, face dismissals over the meeting, and were accused by the central authorities of underestimating the scale of the rally. Local parliament speaker Sergei Bulichev, a close ally of Kaliningrad region's Governor Georgy Boos is among those who could be affected, the paper said.
"In Moscow, demonstrations are dispersed by riot police, we have not done this. Is this the governor's fault?" a local government official was quoted by Kommersant as saying.
On Sunday, Moscow police detained some 100 human rights activists, who gathered for an unsanctioned rally in downtown Moscow, which involved some 200 protesters. The leader of the opposition movement The Other Russia, Eduard Limonov, former Russian deputy prime minister Boris Nemtsov and head of the Memorial human rights group Oleg Orlov were among the detained.
In a similar crackdown on protesters on Moscow's Triumfalnaya Square just hours before New Year's, Moscow police arrested about 50 people, including the 82-year-old head of the Moscow Helsinki group, Lyudmila Alexeyeva, prompting criticism from the U.S. and European human rights organizations.
MOSCOW, February 2 (RIA Novosti)
Itar-Tass: Kiev seeks to remove emotional component in ties with Moscow – FM
02.02.2010, 11.51
KIEV, February 2 (Itar-Tass) - The Ukrainian Foreign Ministry has changed policy in relations with Russia, “doing everything to remove the emotional component,” Foreign Minister Pyotr Poroshenko said in an interview with the Kommersant-Ukraina newspaper on Tuesday.
“The amount of notes and public statements rocking the boat of Ukrainian-Russian relations has reduced manifold,” the minister said, adding that “a change in the policy depends not only on the Foreign Ministry”.
The minister noted that Ukrainian and Russian diplomats “brilliantly coped with averting a conflict” connected with the issuing of credentials for Russia’s new Ambassador Mikhail Zurabov. The potential of cooperation between the two countries “is vast with the arrival of Mister Zurabov,” he stressed.
“All rumours about a very tough or anti-Ukrainian moods of the new ambassador don’t meet the reality at all. I read in media outlets that his statement in Ukrainian upon the arrival in Borispol consisted of studied phrases. I can testify that it is not so. I spoke with Zurabov several minutes in Ukrainian, and I am very pleased to note that he demonstrated both a 100 percent understanding of the language and a wish to speak Ukrainian,” Poroshenko stressed.
In reply to whether one must expect “angry notes of the Russian Foreign Ministry” in connection with the fact that President Viktor Yuschenko recognized the Ukrainian rebel army as fighter for Ukrainian independence, the minister said “First of all this is an internal affair of Ukraine”.
“Inside the country there can be discussions, and different opinions of political and public organizations can exist. The opinion of other countries is only taken into consideration, not more. There are a lot of countries in the world where this or that public activist is a national symbol or a hero, causing sharp disapproval in other countries. Ukraine is not unique in that respect,” the foreign minister added.
Poroshenko said that a dialogue with Russia on demarcation and delimitation of the border has resumed over the past three months. “A new page in Ukrainian-Russian relations, which will begin after the presidential election, gives us grounds for optimism concerning the time framework of the beginning of work on the border issue”.
The minister offers to settle “step-by-step” the problem of the stationing of the Russian Black Sea Fleet in Ukraine’s Crimea. If the sides fail to settle it in package, it must be divided into parts. For example, Poroshenko said, there was a problem with coordinating the procedure of issuing permissions for the travel of hardware. It was heated up by a big number of mutual notes accusing the other side of a non-constructive approach.
There were no talks on the issue for half-a-year. Now the dialogue has resumed, and the sides demonstrate readiness to settle the problem, the minister said. He is confident that the Black Sea Fleet will withdraw from Ukraine in 2017 in line with a basic agreement between the two countries.
Poroshenko also said that the problem of Ukraine’s recognising the independence of Abkhazia and South Ossetia is not on the agenda. He himself does not “admit the possibility of the recognition” of these two states, “as this violates fundamental principles of international law”.
The stance of official Kiev on Kosovo “is absolutely clear and distinct - Ukraine did not recognize the independence of Kosovo and believes that at the present moment there are no grounds for such recognition,” the top Ukrainian diplomat emphasized.
|Civil.ge: Lavrov: Pace of S.Ossetia, Abkhazia Recognition Normal |
| |
|Civil Georgia, Tbilisi / 2 Feb.'10 / 00:59 |
Pace of international recognition of Abkhazia and South Ossetia is “normal”, Russia’s Foreign Minister Sergey Lavrov said and added that this process “is faster than the pace of recognition of Soviet Russia was.”
“I am sure, as the process of stabilization in Trans-Caucasus becomes free of ideology and momentum of the past and as the reality, which won’t disappear anywhere, are recognized by everyone and as the statehood of Abkhazia and South Ossetia are steadily strengthened, this process [of international recognition] will proceed faster,” Lavrov said on February 1.
He was speaking in Moscow at a joint news conference with Murat Jioev, the foreign minister of breakaway South Ossetia. Moscow signed visa-free agreement with Tskhinvali – the move described by officials in Tbilisi as “ludicrous”.
In December, 2009, the tiny Pacific island of Nauru was the third country to follow Russia’s suit in recognition the two breakaway regions, following Nicaragua and Venezuela.
Itar-Tass: RZD train with humanitarian aid arrives in Mongolia
02.02.2010, 12.29
MOSCOW, February 2 (Itar-Tass) -- A special train of Russian Railways (RZD) with humanitarian aid for Mongolia’s residents who suffered as a result of frosts arrived in Ulan Bator.
As the company reported on Tuesday, a special train consisting of 34 cars brought fuel and lubricants, medicines, warm clothes and other top priorities to the country. Besides, the train delivered hay and straw for agricultural animals.
The company decided to render aid worth about 15 million rubles to Mongolia in connection with the extreme situation which emerged as a result of unusual for this country bitter frosts.
RIA: Khloponin becomes member of powerful Russian inner Cabinet
12:2002/02/2010
MOSCOW, February 2 (RIA Novosti) - Alexander Khloponin, recently appointed deputy premier in charge of the volatile North Caucausus, has been included into the powerful inner Cabinet, the government said on Tuesday.
Russian Prime Minister Vladimir Putin signed the decree on January 29.
Russian President Dmitry Medvedev announced the establishment of the North Caucasus district on January 19 and named Krasnoyarsk governor and former business executive Alexander Khloponin deputy prime minister and presidential envoy to the volatile North Caucasus. Analysts describe Khloponin as a "crisis manager" for the region.
Putin formed the Russian government presidium, comprising deputy prime ministers and issue-specific ministers, in May 2008. The move was widely seen as part of an ongoing redistribution of presidential and governmental powers.
Under the federal Constitutional law on the Russian government, any inner Cabinet decisions must be approved by a majority and should not contradict resolutions adopted at government meetings. The government has the right to annul any decision taken by the presidium.
Itar-Tass: Railway traffic resumed after explosion in St. Petersburg
02.02.2010, 11.18
ST. PETERSBURG, February 2 (Itar-Tass) - Traffic of local trains from St. Petersburg’s Baltic Station suspended due to a blast early on Tuesday has been resumed, a local railway transportation company told Itar-Tass.
Railway traffic was suspended for five hours after an explosion hit a rail car near a railway station in the south of St. Petersburg. The railway traffic control service arranged traffic from other stations and the city’s transportation administration arrange bus traffic to these stations.
As was reported earlier, the accident occurred at 4:20 Moscow time. The blast yield was 200-400 grams TNT. The rail car operator’s leg was slightly injured while the rail car remained on the track. The explosion damaged the track leaving a crater.
Traffic of local trains from the Baltic Station was suspended.
Investigation into the accident is underway.
Reuters: Russia blast hurts rail worker, terrorism suspected
Tue Feb 2, 2010 2:54pm IST
MOSCOW (Reuters) - An explosion hit a railway technician's engine in St. Petersburg on Tuesday, slightly injuring its operator, Russian Railways said, and investigators said they suspected the blast was a terrorist attack.
No passenger carriages were attached to the engine, which was used to check lineside equipment. But the blast could raise fears of train travel two months after a bomb killed 26 people aboard an passenger express from Moscow to St. Petersburg.
Russian Railways did not say what caused the blast near St. Petersburg's Baltic Station, on a line leading to Belarus. But RIA news agency, citing law enforcement authorities, said it was apparently a bomb and left a metre-wide crater.
"We consider it a terrorist act, that's the main theory," the Interfax news agency quoted Anatoly Kvashnin, head of a regional investigative department for transport systems, as saying. There was no word on possible suspects.
In November, a bomb exploded on the tracks between Russia's largest cities. Islamic militants from Russia's North Caucasus claimed responsibility for the attack on the Nevsky Express and vowed further "acts of sabotage", but no major attacks have followed so far.
Traffic was halted Tuesday on part of the line near the blast site, Russian Railways said.
(Writing by Steve Gutterman; editing by David Stamp)
Russia Today: Blast hits St. Petersburg railroad
02 February, 2010, 11:08
A blast on a St. Petersburg railroad has injured a trolley driver. The explosion is believed to be a terrorist act.
“This is the main version of the investigation. It is better to overstate things,” head of the North Western transport investigation agency Anatoly Kvashnin told the press.
He added that the criminal case on charges of illegal trafficking of explosives has been launched.
According to a statement by Russia’s Investigative Committee, the blast happened at 04:21 local time under the wheels of the trolley car.
“An investigation and operational group of the North Western investigation transport agency of the Investigation Committee is working at the scene,” the statement said.
According to the local prosecution, the power of the blast was, in terms of TNT, from 200 to 400 grams. The explosion left a crater one meter in diameter, although the trolley remained on the rails. The trolley driver did not receive serious injuries in the incident.
Just two months earlier another explosion killed 28 and injured 90 after the Nevsky Express train derailed on its route from Moscow to St. Petersburg. A criminal case on charges of terrorism was opened.
Bloomberg: Bomb Attack on St. Petersburg Railroad Wounds Train Driver
By Anastasia Ustinova
Feb. 2 (Bloomberg) -- A homemade bomb exploded on a railroad in St. Petersburg today, injuring the driver of an oncoming train, state television reported.
The device contained the equivalent of 200 grams to 400 grams of TNT, Rossiya 24 said, without providing any more details immediately.
A bomb attack on a train en route to St. Petersburg from Moscow on Nov. 27 killed at least 26 people.
To contact the reporter on this story: Anastasia Ustinova in St. Petersburg at austinova@
Last Updated: February 2, 2010 01:45 EST
Russia Today: Interview causes scandal in Moscow riot police unit
02 February, 2010, 08:48
A group of Moscow policemen subjected their superiors to sharp criticism in an interview published on February 1. The accusations extended to illegal use of crack units for personal protection and fights over property.
Titled “The slaves of OMON”, the article caused a major scandal in the Moscow police force.
According to the magazine The New Times, known for its extreme criticism towards Russian government, the policemen sent a letter to President Dmitry Medvedev expressing their deep dissatisfaction with conditions of work, but never got an answer.
In their address, special police officers mentioned such facts as being forced to work 10-15 days straight without days off, working 20 hours a day without lunch breaks, and having a forced minimum of people to detain per day under a threat of reducing the policemen’s bonuses. They also claimed that their bosses are making money by renting out officers to private companies, and even using them to protect prostitution rings.
Despite the authors of the letter calling themselves actual employees of OMON, Zhanna Ozhimina, Moscow Directorate of Interior Affairs’ deputy head of Information Department, said that they were fired in November 2009 after a major scandal.
“Correspondent of the media where the story was published knew that, but refused to publish our official comment,” stated Zhanna Ozhimina.
Three of the policemen are suspected in a robbery attempt and soon are going to be charged. One of them was fired after multiple attempts to fake a medical certificate.
Such statements have been made numerous times, Ozhimina added. Several inspections based on the claims have been made, and no claim has been proved, she said.
Meanwhile, The New Times journalists insist they have no doubts that everything written in the article is true. Ilya Barabanov, one of the authors of the controversial piece, claims he has seen the policemen's awards and documents.
“Publicity is the only thing that can help them in the current situation, even though I don't think they'll continue serving in the police for long after the scandal, regardless of whether their allegations are true or not… but who knows?” – says Barabanov.
An investigation will follow this case, said Mikhail Sukhodolsky, first deputy of the Interior Minister.
“All the facts mentioned in the article will be examined. In case they are proved – which I really doubt – the culprits will be punished severely,” he said. If the allegations are found false, the Interior Ministry will protect their employees in accordance with Russian law, Sukhodolsky emphasized.
The head of OMON has urged journalists from The New Times to check the situation and work methods in Moscow’s OMON themselves.
One of the largest in the world, Russia’s police force has long been plagued by allegations of corruption and negligence. But the year 2009 was brutal even for its already tattered reputation. A series of Internet exposés, followed by numerous cases of policemen turning their guns on citizens, forced the government to launch a wide-ranging reform of law enforcement.
A Moscow based journalist, Leonid Radzikhovsky, says, “A few years ago they wouldn't have made a scandal out of it but now, when a campaign against the police force's leadership is underway, many officers are using it to settle their old scores. It doesn't mean that what they're saying isn't true, but for some time they were more or less content with it.”
Boris Kagarlitsky from the Institute of Globalization and Social movements thinks that this scandal is meant to add pressure on the decision makers.
“This is something which can be interesting for quite a few different political forces or political tendencies inside of the country because definitely there are plenty of people who hate the police and, of course, when you see all these stories coming out they will just say – oh, that’s true, that’s how it is,” Kagarlitsky told RT. “Though, in fact it’s not necessarily guaranteed that it’s all true. What is guaranteed is that there are serious forces behind this story – people who want to hold a debate on OMON.”
The Moscow Times: OMON Officers Complain of Corruption in Their Ranks
02 February 2010
By Nikolaus von Twickel
The Interior Ministry pledged on Monday to investigate complaints by a group of OMON riot police officers about being forced to make false arrests and to work with fellow officers who held second jobs as bodyguards for gangsters.
Moscow police, meanwhile, flatly denied the allegations.
OMON officers are being hired by private businesses to offer protection for everyone from mafia bosses to the owners of fast-food kiosks, the opposition New Times reported Monday, citing officers who had appealed to the magazine.
"One of us once protected a shwarma place outside a hotel in [Moscow's] Ismailov [district]. … On Arbat, we guard the office of a Georgian thief-in-law," one officer told the magazine, explaining that his battalion commander tolerated illegal side jobs in exchange for a share of the proceeds.
The officers also said they were press-ganged into arresting innocent people because of orders to make at least three detentions per shift. Otherwise they risked seeing their monthly salaries of 26,000 rubles ($850) being cut by 10,000 rubles, the report said.
Because of this, 12 of the weekly detainees in the Kitai-Gorod district are homeless people arrested for petty crimes, the officer said.
The police officers took the highly unusual step of publicizing their complaints after they received no reaction to a letter sent to President Dmitry Medvedev, the report said.
The letter, copies of which were also sent to the Interior Ministry and the Prosecutor General's Office, was signed by "about a dozen" members of the city's second OMON battalion, five of whom the New Times identified.
A Kremlin spokesman said Monday that he could not say whether the letter had been received.
First Deputy Interior Minister Mikhail Sukhodolsky said the allegations would be carefully investigated.
"In the unlikely case that they are confirmed, those responsible will have to face the most serious consequences," Sukhodolsky said, Interfax reported.
Moscow police, however, described the allegations as "slander" by disgruntled officers who had been fired. "We have repeatedly received such allegations. An internal investigation of these latest complaints did not confirm them, and they are clearly slander," police spokeswoman Zhanna Ozhimina told Interfax.
She said four of the five officers identified in the report had been fired for various criminal and disciplinary offenses last year. The fifth, she said, had never served with the OMON.
But New Times reporter Ilya Barabanov, who co-authored the article, told The Moscow Times that he had seen the officers' badges and suggested that the dismissals had been backdated.
He said the police officers whom he had interviewed had told of recruits having to sign undated dismissal orders that were kept in the battalion commander's safe. "The fact that they now take them out and put a suitable date on them just illustrates the system's deficiencies," Barabanov said.
Barabanov said he expected that the whistleblowers, who had approached him at a recent meeting with police trade union members, would face punishment. "Appealing to journalists was a desperate and last step for them. I do not exclude that they will end up like Dymovsky," he said.
Alexei Dymovsky, a former police major from Novorossiisk, made similar corruption allegations and posted appeals to Prime Minister Vladimir Putin that surfaced on YouTube in November. Dymovsky was fired, charged with abuse of office and taken into pretrial detention last month on accusations that his calls were trumped up.
The OMON case is more notable because, unlike Dymovsky, the officers openly blame their battalion commander for permitting illegal activities, said Andrei Soldatov, a security expert who heads the Agentura.ru think tank.
"This is very important because it provides an opportunity to check their allegations," Soldatov said.
RIA: Fire breaks out at East Siberian aluminum plant, one dead
11:0702/02/2010
Residents of the southeastern Siberian city of Shelekhov had to put on facemasks to protect themselves from possible airborne contaminants after a blaze at a local aluminum plant killed at least one person.
The fire broke out at one of the plant's sections early on Tuesday and quickly spread to the roof, destroying some 700 square meters. One worker was killed; another was taken to hospital with burn injuries.
Eyewitnesses said the fire was caused by a blast, though officials have dismissed the reports.
Though authorities ordered to close the majority of schools and kindergartens in Shelekhov and recommended residents to remain indoors, people still can be seen in the streets, wearing facemasks.
"The sky above the city is clear, there is no panic. Emergency situations at the Irkutsk aluminum plant and its pollutants are a common occurrence here, we are used to it," a city resident told RIA Novosti.
The blaze released a cloud of smoke, which moved towards the neighboring city of Angarsk. Experts said harmful substances might have been released into the air, though the local sanitary watchdog, doctors and rescue services announced the cloud posed no threat.
"In this case, the only threat is carbon monoxide poisoning," a medic told RIA Novosti. "We are working as usual."
Sanitary authorities in Angarsk said samples of air showed no dangerous levels of toxic substances. The situation is being monitored with another test to be carried out on Tuesday afternoon.
IRKUTSK, February 2 (RIA Novosti)
February 1, 2010
Russia Profile: A New Take on the Caucasus
By Graham Stack
Special to Russia Profile
A New Policy in the Caucasus Suggests Power Is Shifting to Dmitry Medvedev
Kremlinologists pricked up their ears when, in October of 2009, a little-known legal scholar called Magomed Abdullaev was named deputy prime minister of the troubled North Caucasian republic of Dagestan, reeling from a series of Islamist attacks and pubic disorders. The appointment took place in the final months of incumbent President Mukhu Aliev’s term in office. With Aliev turning 70 and security in the republic deteriorating, the Kremlin was obviously considering a new man at the top, but all alternative candidates seemed enmeshed in the republic’s clannish and corrupt politics.
Abdullaev’s unexpected appointment as deputy prime minister suggested that he would be the Kremlin’s man. Spiteful tongues claimed that Abdullaev had never run a staff of more than five people – but he did seem to possess one important qualification: like President Dmitry Medvedev, he had taught law in St. Petersburg universities in the 1990s, had a career in legal scholarship, and was apparently acquainted with the president from those times. His parachuting in to the republic at such short notice to such a high post seemed to indicate that the Kremlin had marked him out for a top post - exactly how high will likely be revealed this week.
But for Kremlinologists, the appointment was not just interesting in the Dagestani context, but as another indication that Medvedev was finally becoming president, one and a half years into his first term. Apologists argue that the transition from former President Vladimir Putin – now Russia’s prime minister – to Medvedev may have been delayed by the twin emergencies of the Georgian war in August of 2008 and the world economic crisis. Putin, they say, bit the bullet and dealt with the fallout himself, thus protecting his protégé Medvedev. With the economy stabilizing in mid-2009, Medvedev seems to have signaled his re-launch with his manifesto-like “Go Russia!” article, published in September of 2009.
Following this publication, Medvedev announced and began implementing three liberal reform policies: reversing the proliferation of state corporations that contradict Russia’s civil code, reforming Russia’s corrupt and oppressive police force, and combating resurgent extremist violence in the Northern Caucasus by remedying social ills.
In regard to the latter, addressing the assembled leadership of the Federal Security Service (FSB) on January 28, Medvedev underscored the point that “the roots of many problems (in the North Caucasus) lie in economic weakness and the absence of prospects for the people living there.” The most urgent task in combating extremism would be to tackle these problems, Medvedev told the FSB, which has often preferred to see “foreign intervention” as the driving force behind the insurgency.
There was also a new face at Medvedev’s meeting with the FSB leadership last week: that of Alexander Khloponin, the presidential plenipotentiary to the newly-created North Caucasus Federal District (NCFD) and a deputy prime minister. Khloponin had long been tipped for promotion due to his liberal anti-crisis management – as CEO, he transformed the nickel and copper mining giant Norilsk Nickel in the 1990s, and then did the same for the Krasnoyarsk Region in the 2000s, so he might be the right person to deal with the North Caucasus in the new decade. While analysts see Khloponin as unlikely to intervene much in Chechnya, which is firmly under the thumb of President Ramzan Kadyrov, they claim that the Islamist threat is now greater in other North Caucasian republics. “The trend is toward Dagestan, Kabardino-Balkaria and Karachaevo-Cherkessia, where currently it is easier to recruit Islamists than in Chechnya,” said Alexei Gunya, a senior researcher at the Institute of Geography at the Russian Academy of Sciences.
Medvedev failed to mention to the FSB the second North-Caucasus initiative he outlined in his State of the Nation address in October of 2009: an invitation to tycoons with North Caucasian roots to invest in their native regions. Within a matter of weeks of Medvedev’s address, one of Ingushetia’s most famous sons, oil tycoon Mikhail Gutseriev, who fled Russia in 2007 due to tax evasion charges, suddenly found himself free to return, with charges dropped and his oil company Russneft returned to him. In Dagestan, billionaire Suleiman Kerimov already plays an influential role behind the scenes. The fact that he is registered in his native republic alone adds $100 million to regional revenues every year. Khloponin himself has excellent ties to oligarchs – his best friend from student years and former business partner is Mikhail Prokhorov, currently Russia’s richest man.
Using big business rather than the FSB to tackle the root problems of the Caucasus is a clear shift in policy. “Oligarchs are one of the parallel methods which the Kremlin is trying to deploy to solve the problems of the North Caucasus. But their effectiveness will depend on the how successful the creation of the North Caucasus Federal District is,” said Gunya.
The third policy has been to replace the regional leaders with co-nationals “parachuted” in from the outside and thus independent of the Caucasus’ corrupt and clannish politics. “I will continue to implement the necessary changes in the corpus of governors where the situation demands,” Medvedev told the FSB. This might be where the legal scholar Abdullaev fits in with Dagestan. “I think we see a new approach and I would add the appointment of Yunus-bek Yevkurov [president of Ingushetia since 2008], who has been a very successful appointment even if no results have been readily apparent because of the jihadists' tenacity. Another sign of change was Boris Ebzeev as president of Karachaevo-Cherkessia, formerly a member of Russia's Constitutional Court,” said Gordon Hahn, the senior terrorism researcher at the Monterey Institute for International Studies.
But analysts are apprehensive about whether appointing Abdullaev as president of Dagestan is even feasible, given his lack of management experience and of experience in the republic. “Magomed Abdullaev is a lightweight figure,” said Gunya. “His pluses and minuses derive from the fact that he is not closely connected to the clans. It is unlikely that he will offer anything new to the republic, but he will be receptive to policies coming from Pyatigorsk [the capital of the North Caucasus Federal District].”
So rapid has been Abdullaev’s political rise that virtually nothing is known about his views, connections and capacities. Apart from ties to Medvedev, his time in St. Petersburg as a legal scholar in the late 1990s also acquainted him with Deputy Prime Minister Dmitry Kozak, who was then vice-governor of the city but retained links to his alma mater law department. Kozak was presidential plenipotentiary for the Southern Federal district until 2007, and established a high reputation among North Caucasus elites.
In any case, Abdullaev’s sudden appearance on the scene in Dagestan highlights the shift in Kremlin power and policy, believes Hahn: away from the “siloviki” group of former security officials linked to Prime Minister Vladimir Putin and toward Medvedev and his more liberal network of “civiliki,” or legal scholars and economists. “I think Medvedev is gradually taking over power from Putin who protects both the siloviki and civiliki, but has now shifted to promote the latter along with Medvedev,” said Hahn.
February 01, 2010
RFERL: Is Ramzan Kadyrov's Star On The Wane?
Just a few months ago, Ramzan Kadyrov's position as Chechen Republic head appeared unassailable. He was even named in December as a possible candidate for the post of federal official responsible for the entire North Caucasus. But since the start of the year, he has incurred veiled criticism from both Russian President Dmitry Medvedev and Prime Minister Vladimir Putin. In addition, he has been the subject of damaging allegations from media outlets both in Russia and abroad.
In the three years since his appointment as president in the spring of 2007, Kadyrov has set about eliminating or sidelining anyone perceived as an inconvenience, let alone a potential threat to his authority. The victims include Grozny-based human rights activist Natalya Estemirova; several Chechens living in exile outside Russia; and obstreperous military commander Sulim Yamadayev and his brother Ruslan, a former State Duma deputy gunned down in broad daylight in Moscow in September 2008.
At the same time, Kadyrov has presided over reconstruction on a massive scale of infrastructure destroyed or damaged during the fighting of 1994-96 and 1999-2000. He seeks to promulgate a brand of ethno-territorial nationalism based largely on popular Islam. And he has done little to discourage the personality cult that has grown up around him.
Last summer, Kadyrov's trusted henchman Dukvakha Abdurakhmanov held a series of meetings in Europe with Akhmed Zakayev, head of the Chechen government in exile, and secured Zakayev's backing for Kadyrov's plan to promote political reconciliation. In mid -September, Medvedev publicly defended Kadyrov against criticism from Western experts, affirming that "he is trying to cope with his duties" and has accomplished a great deal in terms of economic development. Medvedev said that while some of the criticism of Kadyrov is justified, it is mostly unwarranted: "He's not as bad as people make him out to be."
Whether Medvedev's disillusion with Kadyrov predated that statement in his defense, and if not, what subsequent action or statement by Kadyrov served as the final straw, can only be guessed at. Nor is it clear whether Medvedev's announcement in his November address to the Federation Council that he planned to appoint a senior official to oversee the North Caucasus (and who would be empowered to issue orders to the various republic heads) was conceived in the first instance as a way of circumscribing Kadyrov's influence and appetite for power.
Kadyrov has criticized the limits to the powers federation subject heads currently enjoy, and also the existence of the presidential envoys who serve as an intermediary between the federation subject heads and the president.
In an interview one year ago with regnum.ru, he argued that "thanks to the system of 'divide and rule,' we ourselves create opposition to the leader of the region. Take my functions, for example. The president confirms me, but at the same time he appoints the heads of a whole string of Chechen Republic structures. We and they have the same status. The one thing that distinguishes me is that I am the guarantor of the constitution. But how can I ask them to work if I am not authorized to do so?"
In early January 2010, shortly before President Medvedev named former Krasnoyarsk Governor Aleksandr Khloponin to head a new North Caucasus Federal District of which the Chechen Republic is one of the seven components, Kadyrov told "Versiya" that he considers the existence on an intermediary between the Russian president and the republic heads a demonstration of weakness: "If I am the president [of Chechnya] and people trust me, then I should report directly to the head of state."
Kadyrov added that he personally considered Russian presidential administration deputy head Vyacheslav Surkov and Deputy Prime Minister Sergei Sobyanin the most qualified candidates for the post of federal official with overall responsibility for the Caucasus, but that for either of them that position would constitute a demotion. Kadyrov's subsequent reaction to the appointment of Khloponin was lukewarm. He told reporters in Grozny that "if the head of state has placed his trust in Aleksandr Khloponin, that means [Khloponin] is capable of trying to resolve the region's problems." Khloponin will focus primarily on economic problems, Kadyrov added. He said he "would like to hope" that the creation of the new North Caucasus federal district will help raise living standards in the region, but fears it might deter potential investors.
Other factors that may have contributed to Medvedev's disenchantment with Kadyrov are the failure of the Chechen security forces subordinate to Kadyrov to defeat the Muslim insurgency, and Kadyrov's efforts to undermine his Ingushetian counterpart Yunus-Bek Yevkurov, whom Medvedev appointed in October 2008 and clearly backs to the hilt Ingushetia.
Despite the counterterror operation launched by Kadyrov in mid-May along the border between Chechnya and Ingushetia, Islamic militants have undertaken a whole string of high-profile suicide bombings and other attacks against targets in Chechnya, Ingushetia, and Daghestan. Kadyrov nonetheless continues to affirm, as he has done for the past several years, that resistance fighters number no more than a few dozen at most, and that the last of them will be killed or captured in the near future.
That Medevedev is neither impressed nor convinced by such predictions is clear from his veiled reference at a high-level meeting in the wake of the January 6 suicide car-bomb attack on police In Makhachkala. On that occasion, Medvedev stressed that "we must simply systematically destroy the bandits," rather than "close our eyes [to their existence] and spout figures" that may not reflect reality.
Prime Minister Putin has long been regarded as Kadyrov's patron and protector. Indeed, in his January interview with "Versiya," Kadyrov affirmed that "I am wholly Vladimir Putin's man. I shall never betray Putin; I shall never let him down. I swear by the Almighty: I would rather die 20 times." That avowal did not stop Putin from implicitly criticizing Kadyrov during a meeting in Pyatigorsk on January 22 with the heads of the seven regions that comprise the new North Caucasus federal district. Putin ordered them and the police under their command to "do everything to ensure the normal work and functioning of human rights organizations whose activities do not contravene the constitution of the Russian Federation.
Khloponin's appointment coincided with a series of further incidents or allegations that reflect poorly on Kadyrov. The first was the appearance of a website, , calling for his nomination as a candidate to succeed Medvedev when the latter's presidential term expires in 2012. Kadyrov condemned that initiative as "ideological sabotage."
Then on January 26, Reuters carried an interview with Vakha Umarov, whose brother Doku is overall commander of the North Caucasus resistance. In that interview, Vakha Umarov claims that some senior members of the Chechen Republic secretly channel funds to the insurgency as insurance in the event that the latter succeeds in overthrowing Chechnya's secular government. Predictably, Kadyrov rejected that claim; but Medvedev subsequently again stressed the need to monitor more scrupulously the use by North Caucasus leaders of federal funds.
In an apparent bid to deflect attention from the Reuters interview, Kadyrov went on the counteroffensive. In an interview with Russia Today (RT) television station, he implicated exiled oligarch Boris Berezovsky in the killing in July 2009 of Grozny-based human rights activist Natalya Estemirova. Estemirova's colleagues dismissed that claim as absurd.
Casting himself in the role of victim, Kadyrov also said that the killing in 2004 of his father, Akhmed-hadji Kadyrov, has still not been solved. But Oleg Orlov of Memorial human rights center, for which Estemirova worked, pointed out that Kadyrov earlier blamed his father's death on Chechen resistance commanders Aslan Maskhadov, Shamil Basayev, and Khairulla, and then, in 2009, on Sulim Yamadayev.
The veiled barbs directed by both Medvedev and Putin against Kadyrov could be construed as confirmation of Zakayev's comment two years ago to a Polish TV station that "I doubt very much that Medvedev wants the kind of Chechnya Putin has bequeathed to him -- a Chechnya with bands of fighters headed by Ramzan Kadyrov."
But even if Putin and Medvedev are now in agreement that Kadyrov has outlived his usefulness, sidelining him will not be easy, given the combination of Kadyrov's own peasant cunning; the knowledge he has acquired over the past five years of how the Russian political system can be manipulated; his ongoing rebranding of himself as a statesman who commands respect across the region; and the seemingly limitless financial resources and private army at his disposal.
To write him off as simply a semi-literate, thuggish, power-hungry psychopath is no longer a valid option.
The Jamestown Foundation: Dagestan’s Political Uncertainty Joined by Turmoil, Technological and Social Failures
[tt_news]=35989&tx_ttnews[backPid]=7&cHash=df9e05cbce
Publication: Eurasia Daily Monitor Volume: 7 Issue: 21
February 1, 2010 03:21 PM Age: 11 hrs
By: Valery Dzutsev
As of January 29, an estimated 50,000 inhabitants of Dagestan’s capital Makhachkala remained without central heating, water and stable electricity supply for several days. Officials said that cold weather was causing the disruption and they would attend to the problem. Over 100 protestors blocked railways in Makhachkala that connect Russia and Azerbaijan for an hour on January 29, demanding a restoration of the utilities supplies. The police managed to restore the order after negotiations with the protestors (kavkaz-uzel.ru, January 29).
In 2009, various Dagestani cities experienced blackouts as the electricity supplier cut electricity because of payment arrears. In response, protestors blocked highways and occasionally illegally restored power supplies. Technological failure is at least part of the problem, as Makhachkala’s official population grew more than two-fold in the past twenty years, up to 700,000, while unofficial estimates put the figure even at one million. The city stretches from south to north along the Caspian Sea coast for over 70 kilometers. The abundant growth was not accompanied by corresponding investments in the city’s infrastructure.
The mass protests coincide with uncertainty over the future of Dagestan’s leadership. The republic’s current president, Mukhu Aliev, is widely believed to be stepping down by the time his first presidential term expires on February 20. There has been no official confirmation of this, however. Several contenders are competing to succeed Aliev. Most experts and media reports suggest Dagestani Deputy Prime Minister Magomed Abdulaev would replace Aliev, while Magomedsalam Magomedov, a former speaker and now member of the republican parliament, would become Dagestan’s prime minister. In a report on January 27, Gazeta.ru referred to sources in the Russian presidential administration and the State Duma asserting that a change of leadership in Dagestan was imminent. Abdulaev is reportedly close to State Duma Speaker Boris Gryzlov and Nikolai Patrushev, the Secretary of the Russian Security Council and former head of the Federal Security Service (FSB).
The ethnicity of leaders is an important consideration in Dagestan, the most ethnically diverse republic in the North Caucasus. Abdulaev, an Avar, would replace Aliev, also an Avar, as president of republic, while Magomedov is a Dargin, the second largest ethnic group in Dagestan after the Avars. Besides, Magomedsalam Magomedov is the son of Magomedali Magomedov, who preceded Mukhu Aliev as the republic’s leader.
The republic is rife with speculation about who will succeed the current president, and the nervousness is growing. On January 27, the Vice-Speaker of Dagestan’s parliament, Nikolai Alchiev, reportedly survived an attempt on his life when an unknown attacker driving in a car shot at his vehicle near Makhachkala (kavkaz-uzel.ru, January 27). Later, some of Alchiev’s colleagues in the parliament expressed their doubts about whether the assassination attempt actually occurred (kavkaz-uzel.ru, January 28).
The issue of last year’s fraudulent mayoral elections in the large southern Dagestani city of Derbent, which is connected to the republican leadership succession issue, also remains in an ambiguous state. On January 28, Dagestan’s Supreme Court turned down an appeal by pro-opposition voters to hold mayoral elections on March 14 –the next regularly scheduled election day in Russia. Instead, the electoral commission said they would hold the elections in October 2010 and the Dagestani Supreme Court agreed with this proposal.
According to opposition supporters, President Aliev put pressure on the court to make this ruling. “There is a legal vacuum in Derbent,” one of the court applicants Shakhban Gapizov said, explaining their motives for appealing to the court to have the elections as soon as possible. “An illegitimate mayor, Felix Kaziahmedov, disrupts all work. There has been no heating [or] water supply in the city for the past four months; teachers and medical staff have not received wages for the past three and a half months; people are suffering,” Gapizov noted. The applicants said they would appeal to the Russian Supreme Court to allow them to have earlier elections (kavkaz-uzel.ru, January 28).
The court’s ruling added to the state of limbo in Dagestan, as President Aliev is known to support Kaziahmedov, Derbent’s de facto mayor. The elections in the city that took place in October 2009 were so manifestly rigged and voters there so agitated that they riveted the attention of the Russian president and press, resulting in the elections’ results being overturned in December. The scandalous elections may have added to Moscow’s dissatisfaction with President Aliev’s conduct and the impression he was losing control over the republic.
Meanwhile, the ongoing problem of extra-judicial reprisals by law enforcement agents against suspected Islamic insurgents took an unexpected turn. On January 22, the police in Makhachkala tried to arrest Rumil Begeyev, a 27-year-old Salafi Muslim and Derbent resident who the police had registered as a suspicious character. Police say that after Begeyev was apprehended, he managed to kill a policeman and escaped from their car. However, the witnesses told the Dagestani paper Chernovik that Begeyev was crying out for help when four armed men in plain clothes suddenly approached, beat him with a handgun and dragged him into their car. While the police tried to take him away, their car collided with two other cars and Begeyev escaped from the police as one policeman accidentally shot another colleague. The escapee’s relatives are now trying to secure a just hearing on his case and make him surrender under certain guarantees from the authorities (Chernovik, January 29).
“Economic problems are not the most pressing issues for Dagestan, but rather the death squads [of the security services], that kidnap and shoot young people without investigating and trying them in the court,” said Adallo Aliev, a well known Avar poet and an outspoken critic of the Dagestani authorities, in a recent interview (Novoe Delo, January 29).
For the next president of Dagestan, dealing with the issue of transparency in the police force will be one of many problems to reckon with in this complex North Caucasian republic.
The Moscow Times: Rechnik Conquered, Luzhkov Sets Sights on Fantasy Island
02 February 2010
By Bela Lyauv and Dmitry Kazmin / Vedomosti
Even as the demolition of Rechnik continues, Mayor Yury Luzhkov has set his sights on the neighboring Fantasy Island luxury village, which is home to ministers and generals rather than a planned sports school and a rehab center for the disabled.
In an interview to the Moskovsky Komsomolets newspaper, Luzhkov promised to deal with the Fantasy Island community. "Sports facilities were supposed to be built here, not houses for the complicated people who now live in them. … We'll certainly go to court, since the builders of the elite village blatantly violated the terms of the investment contract that they signed with the city and that, by the way, is not yet closed," he told the newspaper.
The work at Fantasy Island will begin once the homes in Rechnik are all demolished, he said. "It will be an entirely different story, although with a similar ending."
Luzhkov's press service confirmed that the mayor was quoted accurately. City Hall is preparing to check the legality of the construction in Fantasy Island, a senior source in the Moscow city government told Vedomosti.
It remains unclear, however, which of the "complicated" residents Luzhkov was referring to. Izvestia reported that the wife of Alexander Bulbov, an arrested general from the Federal Drug Control Service, has a home in Fantasy Island. A source in the city government said Industry and Trade Minister Viktor Khristenko and his wife, Health and Social Development Minister Tatyana Golikova, currently live there, as do former Senator Umar Dzhabrailov and billionaire Iskander Makhmudov.
"I bought property in this village on the secondary market in 2007. The property is listed in my income declaration, which, by the way, was printed in the press. All of the rights to it were registered correctly and within the time frames established under the law," Khristenko said through a spokesperson. He declared a 218.6 square meter apartment.
Dzhabrailov told Vedomosti that many residents in Fantasy Island had to register their property through the courts and that he spent half a year doing so. "You can't punish people twice — we've already suffered as it is, buying apartments from a builder who didn't handle the construction documentation properly. And the mayor of Moscow needs to deal first with his subordinates who allowed this construction. It's unlikely that an entire village was built without their knowledge," he said.
Makhmudov could not be reached for comment.
Construction of Fantasy Island, located on the banks of the Moscow Canal in the western district of Krylatskoye, began in 2000. According to Moscow city government Order No. 525, the area was supposed to be used for a water-skiing complex.
In that document, investor FSK Tesko, with co-investor Mir Fantazii, was given two plots: 9.63 hectares and 21.9 hectares based around the Viktoria sports school. In March 2003, the city government signed an investment contract with Mir Fantazii to build a rehabilitation center for the disabled and a hotel and clinic complex.
The sports facilities were not handed over to the city, said Vladimir Silkin, the city's property minister. In late 2005, City Hall decided to cancel the investment contract, but by then, the developers had already managed to build Fantasy Island. According to the complex's web site, the village was built with a loan from VTB and includes 24 cottages and 19 four-story buildings.
VTB's press office said Mir Fantazii was given a $50 million, five-year credit line in April 2003 but that the company had repaid the loan by 2005 and is no longer the bank's client.
A spokesperson for Mir Fantazii declined to comment on Luzhkov's threat, saying that all of the property in the village had already been sold. Property there is currently being offered by the real estate agency Russian Realty, with prices averaging $17,000 per square meter.
The agency's employees answer the phone numbers listed for Mir Fantazii.
Builders believe that the company's owner is Sergei Grishchenko, the former board chairman and co-owner of KD Avia. He is currently in pretrial detention on charges of deliberately bankrupting the airline. A Sergei Grishchenko is listed as the main owner of both Mir Fantazii and FSK Tesko in the SPARK database.
Dmitry Vasilyev, a lawyer and member of the Moscow City Bar Association, studied in detail the documents to build the village in 2005 at the request of a potential property buyer. "I gave a negative recommendation, since the documents for the building had legal defects, the main one being that the actual use of the land did not correspond to its intended purpose as stated in the rental agreement," he said.
Vasilyev said it was possible that a court could rule that the construction was unauthorized, although the owners still have a chance — what matters now is who goes to court first.
Homeowners in the village may be able to save their property, agreed Alexei Melnikov, another member of the city bar. According to Article 272 of the Civil Code, real estate cannot be demolished if the building's value is clearly greater than the value of the plot it stands on.
NY Times: Russians Rally Around a Falling Enclave
By MICHAEL SCHWIRTZ
Published: February 1, 2010
MOSCOW — The bulldozers came at night, flanked by armor-clad riot police officers, to clear the houses of a small neighborhood here at the behest of Moscow’s mayor, forcing residents out into subzero temperatures.
The mayor, Yuri M. Luzhkov, said they were living on the land illegally. But as more and more homes — some stately, some mere shacks — have come tumbling down over the last week and a half, an uncharacteristically fierce backlash has broken out, challenging one of Russia’s most powerful politicians. Politicians, human rights activists, media organizations and even nationalist and anarchist groups have come to the defense of the neighborhood, called Rechnik. Legal or not, these critics say, the demolition operation has crossed the line.
“The methods used to resolve this problem were completely unacceptable,” Vladimir Lukin, Russia’s government-appointed human rights ombudsman, told the Interfax news agency on Thursday. He called on the prosecutor general’s office to investigate what he called “gross violations” of Russian law.
On Monday, residents and their supporters blocked the entrance to the neighborhood, preventing crews from resuming demolitions.
More than a dozen homes have now been destroyed, and Moscow officials have told Russian news agencies that the operation would continue throughout the week.
Sergei Mironov, the speaker of the upper house of Parliament, said the city had “discredited” itself.
“I am personally disturbed by the fact that the Moscow government decided simply to throw these people out on the streets despite the minus-20-degree temperatures,” he wrote on his blog, citing the Celsius equivalent of minus 4 degrees Fahrenheit.
Even government-run television channels, typically gushing in their coverage of top officials, have focused their cameras on dumbfounded and teary-eyed residents watching the bulldozers tear their homes apart.
Once a charming neighborhood of about 200 single-family homes, a rare sight in a city dominated by hulking apartment blocs, Rechnik has become a battleground in a long-running fight between the government and homeowners over Russia’s ambiguous land laws.
The Soviet government set aside the plot of land on the Moscow River as a gardening collective in the 1950s. Residents claim that Soviet-era permits, which many bought or inherited from the original holders, give them de facto title over the land that their houses stand on. The city says those permits are invalid, and never allowed for the large mansions and quaint cottages that the residents built.
Mr. Luzhkov, who in his 18 years as mayor has not been given to tolerating affronts to his authority, has stood firm. In an interview published Thursday in the newspaper Moskovsky Komsomolets, he called the residents “impostors” squatting on land that he said was zoned to be a park. “These cottages are located in a protected environmental zone,” he said. “The city has been saying for years that construction in this area was forbidden.”
To prove his resolve, he has promised next to send his bulldozers to a luxury housing development neighboring Rechnik, where several government ministers are said to live.
Critics have accused the mayor, whose wife is a billionaire real estate developer, of using ambiguous land laws to acquire prime property and resell it to private interests. Just over a year ago, several dozen similar homes were destroyed in a neighboring community that was in the same nebulous legal situation.
President Dmitri A. Medvedev, who has the authority to remove Mr. Luzhkov, has been silent on the issue, as has Prime Minister Vladimir V. Putin, who appointed the mayor to his current term. After years of threats and legal battles, police officers in black riot gear finally swept into Rechnik around 3 a.m. on Jan. 21, rounding up several dozen residents who had blockaded the entrance with their cars, said Konstantin Shtoiko, one of the residents. “We called the police and they told us that they were conducting a special operation as if we were terrorists in Dagestan,” Mr. Shtoiko, 39, said, referring to the volatile region neighboring Chechnya.
About a dozen homes have been demolished in the last week, and crews began tearing down more on Friday, officials said. Several elderly residents have reportedly been hospitalized with chest pains, as have others who were beaten with nightsticks.
National Economic Trends
Bloomberg: Russian Economy Shrank Annual 2.2% Last Quarter, ING Estimates
By Tasneem Brogger
Feb. 2 (Bloomberg) -- Russia’s economy probably contracted an annual 2.2 percent in the fourth quarter, ING Bank NV economist Tatiana Orlova said in a note to clients today.
Fixed investment shrank 14.2 percent from a year earlier and household spending declined an annual 9.6 percent in the three final months of the year, ING estimates.
“All these improvements fit the picture of a gradual recovery from a low base,” Orlova said in the note. “The household consumption growth figure especially gives not much ground for optimism. We expect the picture to change little in the coming months.”
Russian output contracted a record 7.9 percent in 2009, the State Statistics Service said yesterday.
Click here for web link
Last Updated: February 2, 2010 01:58 EST
EmergingMarkets: Foreign banks and investors to invest up to $170m in Russian bad debt
by admin on February 1, 2010
Rustam Botashev, Equity Analyst at Unicredit Securities
Foreign financial institutions intend to invest up to $170m in overdue loans in Russia, Kommersant reports. The IFC alone, through collection agency KG EOS Holding GmbH & Co, plans to invest $50m in bad debt.
Our view: The total volume of overdue loans in Russia stood at RUB 1,043 bn ($34.8bn) as of end-November 2009, representing around 6.4% of the aggregate loan portfolio. In other words, the foreign financial institutions would be purchasing slightly less than 5% of overdue loans, which is far from enough to clean up bank balance sheets.
On the other hand, we see the intention as a positive signal confirming stable external interest in the Russian banking industry.
We expect total overdue loans to peak in 1H10E at around 11%-12% and Russian banks to start cleaning up their balance sheets. Foreign investors being ready to buy out bad credit from local banks should facilitate this process, and we believe that it would likely increase prices for past-due loans, which should have a positive effect on bank financials.
Rencap: Russian PMI data show surprise improvement in manufacturing sector
Rencap
February 2, 2010
Russian manufacturing PMI data came in at 50.8 in January, vs 48.8 in December, signalling that manufacturing improved for the first time since Sep 2009. According to an official press release, companies continued to cut headcount, but more slowly, and new orders increased. We think the headcount reductions largely reflect negative seasonal effects, and we think this tendency may reverse as early as March. New orders from overseas changed only marginally, with the increase here driven by improved conditions in the domestic market. Official statistics for 4Q09 showed that since October, retail sales increased a seasonally adjusted 2.1%, and January manufacturing PMI continued to support this trend, as it indicated that demand for final goods may continue recovering.
Another positive sign was reported yesterday by Russian Railways, which indicated that cargo loadings in Jan 2010 grew 17.2% YoY (see separate article in today's Morning Monitor), but we do not think this should be misleading, as Jan 2009 2009 saw the lowest level of loadings in a couple of years. On the other hand, we estimate that transport services were responsible for around one-third of the total rate of economic growth in 4Q. On the other hand, it is quite surprising to us that despite the decline in cargo loadings in nominal terms in the recent months, transport services were responsible for around one-third of the total rate of economic growth in 4Q, according to Rosstat.
Business, Energy or Environmental regulations or discussions
Reuters: Russian markets -- Factors to Watch on Feb 2
Tue Feb 2, 2010 7:11am GMT
MOSCOW, Feb 2 (Reuters) - Here are events and news stories
that could move Russian markets on Tuesday.
You can reach us on: +7 495 775 1242
STOCKS CALL (Contributions to moscow.newsroom@):
OTP Bank: The positive external backdrop, including higher
oil prices, will add optimism on the Russian market which is
likely to open up.
Troika: WTI is up for a second day, trading near $75/bbl.
Markets in Asia are up on positive news from the US and firmer
commodity prices. We are opening our prices up 0.5-1.0 percent.
EVENTS [RU-DIA] (All times GMT):
MOSCOW - President Dmitry Medvedev will hold a meeting on
the investment climate - 1200.
MOSCOW - President Medvedev will meet his counterpart from
the Republic of Guyana, Bharrat Jagdeo.
MOSCOW - A court will consider a libel case brought by
Chechen President Ramzan Kadyrov against the opposition Novaya
Gazeta paper.
MOSCOW - Video press conference of NATO spokesman James
Appathurai on Russia-NATO relation from Brussels - 1200.
MOSCOW - The Energy Exchange Russia Offshore 2010 5th annual
meeting, theenergyexchange.co.uk/3/13/articles/64.php.
MOSCOW - Russia's Finance Ministry to place up to 100
billion roubles of temporarily free budget funds in one-month
deposits at commercial banks.
MOSCOW - Russia's central bank to hold an auction for
five-week collateral-free loans for commercial banks, with 5
billion roubles on offer.
IN THE PAPERS [PRESS/RU]:
Kommersant reports that Russia's Industries and Trade
Ministry may in 2011 amend the retail law which came into force
this year, admitting that some of its articles may hamper
competition and lead to consumer price increases.
Russian coking coal producers will increase prices by 30-40
percent in February to $120-130 per tonne, Kommersant writes.
Vedomosti reports that the Russian government may forbid
domestic drug makers to increase prices for essential
medications this year.
Vedomosti runs an interview with Vladislav Solovyov,
director general of Oleg Deripaska's EN+ group of companies, who
says that En+ may exit the oil business and focus on uranium an
solar energy instead.
TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]:
COMPANIES/MARKETS:
*Rouble eases, but support from oil limits losses [nLDE6101VO]
*INTERVIEW-Deripaska says will stay as RUSAL CEO [nLDE61008Z]
*Gazprom Q3 net profit up 33 pct, shares up [nLDE61009U]
*Severstal mill to sell $525 mln Eurobond [nLDE6101IF]
*Mechel Q4 coking coal output up 37 pct [nLDE6101ZY]
*INTERVIEW-McDonald's U.S. trend sustainable -CEO [nLDE6101VB]
*Seventh Continent 2009 sales up 12 pct yr/yr [nLDE6100CW]
ECONOMY/POLITICS:
*Russia econ posts biggest contraction in 15 yrs [nLDE6100EY]
*Russia rail freight up 17.2 pct y/y in Jan [nLDE6101C1]
*Belarus' external debt more than doubles in 2009 [nLDE61015Q]
*Ukraine Tymoshenko revels as rival shuns TV clash [nLDE6102CR]
*Georgia says TV channel forced off air by Moscow [nLDE6101BC]
ENERGY:
*Russia oil output to hit 500 mln T in 2010 - Sechin[nLDE61025P]
*Russian oil tsar backs zero duty as debate heats up[nLDE6102FF]
*INTERVIEW-Rosneft seeks clarity on Russian taxes [nLDE6102FO]
*Rosneft eyes Asian markets, tax doubts weigh [nLDE6101WT]
*Russia, Venezuela set up $20 bln oil venture [nLDE6102FC]
*LUKOIL sees West Qurna investment exceeding $30 bln[nLDE6102DG]
*LUKOIL sees first North Caspian oil in April [nLDE610265]
COMMODITIES:
*Russia boosts 2009 gold output 11.2 pct to 205.2 T [nLDE6101DD]
*Russia SDS to mine 5.9 pct more coal in 2010 [nLDE610257]
*Ukraine to up 2010 sugar beet area as prices bite [nLDE6101RC]
*Russia govt sells 13,810 T maize via interventions [nLDE6100O1]
*Russia grain prices lack trend on weather, markets [nLDE6100C4]
MARKETS CLOSE/LATEST:
RTS .IRTS 1,476.5 +0.39 pct
MSCI Russia .MIRU00000PUS 817.1 +0.34 pct
MSCI Emerging Markets .MSCIEF 936.5 +0.24 pct
Russia 30-year EurobondRU011428878= yield: 5.438 pct
EMBI+ Russia 11EMJ 206 basis points over
Rouble/dollar RUBUTSTN=MCX 30.2500
Rouble/euro EURRUBTN=MCX 42.1400
NYMEX crude CLc1 $74.68 +$0.25
ICE Brent crude LCOc1 $73.33 +$0.22
For Russian company news, double click on [E-RU]
Treasury news [M-RU] Corporate debt [D-RU]
Russian stocks [.ME] Russia country guide RUSSIA
All Russian news [RU] Scrolling stocks news [STXNEWS/EU]
Emerging markets top news [TOP/EMRG]
Top deals [TOP/DEALS] European companies [TOP/EQE]
Interfax: Moscow press review for February 2, 2010
MOSCOW. Feb 2 (Interfax) - The following is a digest of Moscow newspapers published on February 2. Interfax does not accept liability for information in these stories.
VEDOMOSTI
A Russian consortium, comprised of Rosneft, Lukoil (RTS: LKOH), TNK-BP, Gazprom Neft (RTS: SIBN) and Surgutneftegaz (RTS: SNGS) (with equal stakes), and PdVSA, signed a contract on Monday to set up a joint venture to develop Junin-6 oil field in the oil belt of the Orinoco River. The contract was signed during Prime Minister Vladimir Putin's meeting with a Venezuelan delegation, led by Energy and Oil Minister Rafael Ramirez. Under an intergovernmental agreement, signed on September 10 2009, a 60% stake in the joint venture will be held by Corporacion Venezolana del Petroleo (CVP, which is PdVSA's 100% subsidiary) and a 40% stake by the Russian National Oil Consortium (NNK). (Entrenched in Venezuela, see also Kommersant, Page 1, Years of Solitude Coming for Russia).
By October 1, Gazprom (RTS: GAZP)'s debt had increased to a record 1.762 trillion rubles for July to September - an increase by almost 50 billion rubles. Compared to early 2009 the debt had grown by 396 billion rubles, or 29%. The money on the company's bank accounts has shrunk considerably with 288.7 billion rubles available by the end of September (minus 23% for the third quarter alone). As a result, Gazprom's net debt has reached 1.47 trillion rubles, up 4%, compared to early 2009. (Debt Record).
Nearly all major banks with foreign capital have reduced their assets in Russia. Most of them claimed that it was a deliberate policy and that they would build up their businesses this year. Foreign banks' Russian assets in 2009 shrank by an average of 20%, which was due to a drop in business activity on the market. "The drop results from a rigorous credit policy and decreasing financial capabilities of our corporate clients," Bank Societe General Vostok's Director General Pierre-Yves Grimaud said (Fleeing Russia).
Troika Dialog (RTS: TROY) has dropped out of the list of major management companies, according to the National Rating Agency (NRA). By the end of 2009, the assets managed by Troika had shrunk to 79.2 billion rubles and it found itself in fifth place, although it had ranked second after Lider for several years running. Troika's main rival - Renaissance Group, which had 110.1 billion rubles in management by the end of 2008, does not figure i the ranking at all as it refused to provide data, according to the NRA. (Troika without Troika).
KOMMERSANT
Gazprom (RTS: GAZP) has received the first revenue from the Sakhalin-2 project, whose operator, Sakhalin Energy, earned over 10 billion rubles, compensating losses sustained in the first half of the year. Gazprom's net profit in the third quarter grew by 33% against the backdrop of EBITDA's decrease by 41%. Instead of the traditional fall in demand in the quarter, Gazprom increased sales to countries outside the Commonwealth of Independent States by 20.5%. Analysts claim further demand will depend on Gazprom's flexible pricing policy. (Page 9, Gazprom Earns on Sakhalin).
Mechel Energy plans to increase the amount of steam coal, used at its electric power plants by 60% by 2015, which will allow the company to almost fully spend the industrial coal product at its thermal power plants. In analysts' estimate, Mechel (RTS: MTLR) will have to invest about $800 million in the construction of new capacities for burning 1.5 million tonnes of coal. (Page 12, Mechel will Burn All).
Russian coal companies in February are expected to raise prices for coking coal for the second time since the end of last year. Prices will rise by 30%-40% to reach $120-$130 per tonne. Analysts think it would be a fair price: coking coal has been traded on world markets at a price starting from $180 per tonne against growing production volumes in the metal industry, which is the main consumer. But experts are not sure prices for steel will grow enough to allow the steel industry to shift growth in outlays on its consumers. (Page 11, Coal Industry Heating Market).
Sberbank (RTS: SBER) is the first Russian bank to have joined the annual rating of 500 most significant bank brands, taking 15th place. Britain's HSBC remains leader for a third year in a row. Compilers of the rating note that the overall worth of world bank brands has topped the pre-crisis level by 4%. (Page 10, Bank Brands Overcome Crisis).
Bloomberg: Lukoil, Norilsk Nickel, Rosneft: Russian Equity Preview
By Lucian Kim
Feb. 2 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.
The 30-stock Micex Index fell 0.2 percent to 1,417.00. The dollar-denominated RTS Index also retreated 0.2 percent, to 1,470.79.
OAO Lukoil (LKOH RX): Crude oil rose after the dollar dropped against the euro and U.S. manufacturing increased at the fastest pace since August 2004. Shares in Russia’s largest non- state oil producer advanced 0.2 percent to 1,687.46 rubles.
OAO Polyus Gold (PLZL RX): Gold prices rose the most in three weeks on speculation that the dollar’s rally will stall, boosting demand for the metal as an alternative investment. Shares in Russia’s largest gold miner retreated 0.5 percent to 1,483.51 rubles.
OAO Rosneft (ROSN RX): Russia’s largest oil producer said proved reserves were 22.9 billion barrels of oil equivalent. Rosneft slipped 0.9 percent to 233.82 rubles.
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
Last Updated: February 1, 2010 22:00 EST
Bloomberg: Russia May Cap Certain Drug Prices This Year, Vedomosti Reports
By Maria Ermakova
Feb. 2 (Bloomberg) -- Russia may cap prices on certain drugs this year in line with new regulations, Vedomosti reported, citing a letter sent last week by government officials to drug producers and distributors.
Nikolai Yurgel, head of Russia’s Healthcare Watchdog, and Sergei Novikov, head of the Federal Tariffs Service, said in the letter that the cap will be applied to most important drugs in 2010, the newspaper reported.
Russia last year approved rules that allow drug prices to be raised once a year and ban increases that exceed inflation, Vedomosti said.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@
Last Updated: February 2, 2010 00:43 EST
EmergingMarkets: LSE and Micex deepen ties with launch of Russian IPO platform
by admin on February 2, 2010
By Ivan Anderzhanov in Mosocw
The London Stock Exchange and the Micex today launched a Russian IPO information platform to serve the growing pipeline of Russian companies seeking to list overseas.
The site, which is located at , provides companies, advisers and market participants with access to trading information, news and statistics from Russia and the CIS in both english and russian languages.
Both exchanges have been cooperating on marketing dual IPOs in London and Moscow since they signed a jagreement to promote Russian IPOs on their respective markets back in 2006.
Xavier Rolet, chief executive of the London Stock Exchange, last week said he expects more companies from Asia to seek listings in London, with companies from the energy, mining and agribusiness sectors to the fore.
He also expects more listings from Russian companies in spite of the decision of the Russian aluminium producer Rusal to conduct its $2.2bn listing in Hong Kong.
Some bankers believe think that Rusal’s dismal debut to trading has reduced the threat to more traditional bourses, such as the London Stock Exchange.
“I think Russian companies where their corporate governance is less than pristine may opt for Hong Kong,” said one broker with a number of Asian clients. “But ultimately, its cheaper and more efficient to have a listing in the London Stock Exchange and the Russians love come to town for Chelsea, Harrods and all that.”
Alfa: Foreign banks operating in Russia see assets fall faster vs. competitors
Alfa
February 2, 2010
According to Vedomosti, of the 15 banks that saw the largest drop in assets in 2010, nine were owned by foreign shareholders.
The article maintains that the sharper drop was in reaction to deteriorating credit quality; we believe there is more to it than that. First, foreign banks were unable to use the subordinated loans and refinancing facilities made available by the CBR and the government to prevent the Russian banking system from contracting. Therefore, while Russian banks were able to smooth the contraction of their assets with an inflow of rubles from state coffers, foreign banks relied on market funding.
Second, foreign banks were more exposed than Russian banks to the retail lending market. Last year, all banks saw their retail loan books decrease 10-12%, while corporate loan books were flat y-o-y. Thus, the decline of foreign banks' balance sheets reflects their higher exposure to retail vs. corporate lending.
We therefore do not believe that the more rapid contraction of foreign banks' assets in Russia signals a negative perception of Russia's investment case or an unwillingness to do business in Russia. The country's low penetration of banking services (retail lending of 9-10% of GDP and corporate loans of around 30% of GDP) continues to make it attractive.
Natalia Orlova
Abc.az: Russia’s Savings Bank recognized as 20th banking brand of world
Baku, Fineko/abc.az. The Banker journal and consulting company Brand Finance have renewed rating Banking Brands that has been published in February annually since 1996.
TOP 3 of banking brands of the world included UK’s HSBC, Bank of America and Spain’s Santander. Russia’s Savings Bank became the best on the ex-USSR area and entered the first time in TOP 20 of the most significant banking brands by occupying 15th place in Banking Brands. Last year Saving Banks was 26th and a year earlier 56th.
Rating is calculated on the basis of stock accounting of banks and forecasts of its development for the next five years. Overall cost of world banking brands reached $716 bn in 2009 with rise of 49% during the year. The figure exceeded pre-crisis level of 2008 by 4%.
In 2009 Russian banks in international list of TOP 500 banking brands held only 7 positions, including two in TOP 100 of most popular brands. Russia’s Savings Bank and VTB are leading banks in TOP 100, and Bank of Moscow, Bank Zenit, UralSib, Rosbank and Bank Vozrojdenie in TOP 500.
Out of these banks only VTB is represented in Azerbaijan.
The Moscow Times: Gold Production Up 11%
02 February 2010
Reuters
Gold production rose 11.2 percent year on year in 2009 to 205.2 metric tons (6.6 million ounces) in line with expectations, the Russian Gold Industrialists' Union said Monday.
The union had earlier expected output to reach 205 metric tons last year after the launch of large projects in the Far East.
Output from deep mines and from placers — alluvial deposits — rose by 8.8 percent last year to 178.3 metric tons from 2008 volumes.
The union attributed the latest increase primarily to the launch of production at Kinross Gold's Kupol mine in the remote Chukotka region, as well as the Karalveyem mine in the same region.
Output of gold produced as a byproduct of other metals rose 16.8 percent to 14.5 metric tons in 2009, while output achieved by refining gold from scrap rose 52.4 percent to 12.4 metric tons.
Petropavlovsk's Pioneer project and High River Gold's Berezitovy mine in the Amur region and the Aginskoye project, run by Kamgold on the far eastern peninsula of Kamchatka, also contributed to the rise, the Union said.
The Olympiada mine run by Russia's top producer Polyus Gold in the Krasnoyarsk region, Sovietskoye run by Sovrudnik in the same region, Vorontsovskoye operated by Polymetal and some placers in the northern Urals completed the contributors' list.
The biggest producing region last year was Krasnoyarsk. Chukotka, a region governed until last year by billionaire Roman Abramovich, was the second, and the far eastern regions of Amur, Yakutia and Irkutsk were third, fourth and fifth respectively in terms of production, the union said.
Russia boosted gold output to 184.49 metric tons in 2008 after five consecutive years of decline following a rise in the precious metal's price.
Rencap: Mechel's 4Q09/FY09 operating results - good things in store for Mechel
Rencap
February 2, 2010
Yesterday (1 Feb), Mechel issued 4Q09/FY09 operating results, indicating that the company's coking and steam coal production volumes remained nearly flat QoQ. Iron ore production was down 15% QoQ, and FeSi and FeCr output advanced 4% QoQ and 2% QoQ, respectively, in 4Q09. Mechel reported a 3% QoQ increase in steel production. Long steel and billet volumes remained flat QoQ, and flat steel production showed a 15% QoQ increase.
Mechel continues to operate at a 100% utilisation rate in its steel division. The company posted maximum long steel output at its Chelyabinsk site in December over the last six months of 2009. Mechel is still benefiting from the strength of its sales arm (Mechel Service), and is planning a further enhancement of this division's distribution network in 2010. We note positive dynamics in the ferroalloys segment, where Mechel's capacity is also fully utilised. The 20% MoM increase in alloy surcharges on stainless bar in Europe announced yesterday look supportive for FeCr prices. We think Mechel's hard coking coal prices on domestic and international markets may reach $140-150/tonne EXW and $200-220 FOB, Far East, respectively, in 1Q10 - a level that would clearly secure healthy profit margins for Mechel in the coking coal segment, even if volumes remain relatively flat QoQ over 1Q10. We think Mechel could also increase its thermal coal sales through Far Eastern ports, as the market also faces a supply shortage in this segment. Demand here is being driven by the Chinese and Indian power sectors. Mechel expects production volumes at its mining division to recover to their pre-crisis level in 2010.
Given Mechel's currently positive price and volumes outlook for key operating segments, we expect the company to see steadily positive operating cash flow in 2010 and notable improvement in leverage ratios. However, we think the amount of debt on Mechel's balance sheet is very likely to stay high, as the company continues to finance its capex programme (the Elga project and construction of a rail mill). With debt redemptions of $1.5bn scheduled for this year, Mechel's ability to service debt in a timely manner remains critically dependent on its access to refinancing and the market dynamics of its key operating segments. We still prefer Sibmetinvest (Evraz) bonds, trading with a 12.5% yield to put in 2014, over Mechel bonds which are offering 13% to put in 2012.
Interfax: Interros still prepared to buy Rusal out of Norilsk Nickel – newspaper
MOSCOW. Feb 2 (Interfax) - Vladimir Potanin's Interros is still prepared to buy the blocking stake in MMC Norilsk Nickel (RTS: GMKN) owned by Oleg Deripaska's United Company Rusal (UC Rusal) if the aluminum giant decides to sell, Interros chief Vladimir Potanin said in an interview with the Financial Times.
"If Rusal someday decides to sell their Norilsk Nickel stake, I confirm that we are interested in it, ready to talk to Mr Deripaska about it and ready to buy it. Our partners have been informed of this," Potanin told the FT.
Potanin controls around 25% of Norilsk Nickel, and Deripaska a similar stake, official reports say. Rusal spent much of 2009 renegotiating its debt to banks, and rumors to the effect agreements with the lenders could force Rusal to sell the Norilsk stake circulated on the market from time to time. Interros has said unofficially that it was prepared to buy the stake, which is currently held by Vnesheconombank (VEB) as collateral for a $4.5-billion loan to Rusal.
Bloomberg: Deripaska May Exit Oil Industry, Sell Shares of Energy Company
By Yuriy Humber
Feb. 2 (Bloomberg) -- EN+, Russian billionaire Oleg Deripaska’s metals and energy holding company, may exit the oil industry after failing to win state approval to buy OAO Russneft, Chief Executive Officer Vladislav Soloviev said.
The Moscow-based company may sell its remaining oil asset, United Oil Group, should it receive an offer, Soloviev said in an interview in today’s edition of the Vedomosti newspaper. His comments were confirmed by EN+ spokeswoman Elena Rollins.
EN+ will also consider an initial public offering for the holding company, which includes electric utility EuroSibEnergo, or its units. One of those, the aluminum rolling mills division, might sell shares to finance improvements to its facilities, Soloviev said.
To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@
Last Updated: February 2, 2010 00:20 EST
: Potanin plans charitable legacy
By Catherine Belton and Charles Clover in Moscow
Published: February 1 2010 16:21 | Last updated: February 2 2010 09:06
Vladimir Potanin intends to hand his entire fortune to charity in 10 years’ time, as one of the founding fathers of Russia’s oligarchy seeks to follow in the philanthropic footsteps of the likes of Bill Gates.
The charitable intention, the first such move to be publicly announced by a Russian oligarch, indicates another shift in Russia’s business elite as the tycoons who made their fortunes in the turbulent 1990s continue an evolution from their “robber baron” days. While still known for their ruthless takeover tactics and complex relationships with the state, the oligarchs’ influence has waned, especially after the financial crisis saw many of them depend on government bail-outs for their survival.
Mr Potanin, who masterminded the loans-for-shares auctions of the mid-90s that saw Russia’s biggest industrial assets handed over to a clique of businessmen at a knockdown price, has led this gradual transition. He was one of the first Russian tycoons to engage in philanthropic activity early last decade and sought prestige in the west with annual $1m donations to the Guggenheim Foundation.
“There won’t be an inheritance of my fortune. My capital should work for the good of society and continue working for these social aims,” says Mr Potanin in an interview with the Financial Times. “My children are growing up, their father is a billionaire and a well-known guy. They, for one, are in my shadow, and secondly what motivation in life do they have to achieve something?
“In this sense, I consider it a very correct step to hand over one’s fortune for the service of society and not for inheritance. I am going to follow the example of [Bill] Gates and [Warren] Buffet.”
He says that in the meantime he intends to increase annual donations to his charitable fund from $10m to $25m for the next 10 years until he sets up a new fund to manage his fortune for charity. Mr Potanin’s current fund is a big sponsor of the Hermitage Museum in St Petersburg, and gives millions of dollars in grants and scholarships to students.
The move could put pressure on other oligarchs to follow suit. Many of Russia’s richest men have started engaging in philanthropic activity in recent years. Viktor Vekselberg, a co-owner of UC Rusal, the aluminium company, and TNK-BP the oil venture, spent about $100m on a clutch of Fabergé eggs to ensure they stayed in Russia. Alisher Usmanov, the metals tycoon who owns a stake in Arsenal Football Club, spent about $40m to buy the art collection of the late Mstislav Rostropovich for a state museum. Oleg Deripaska, main owner of Rusal, has spent about $190m on charitable projects in Russia on education, science and health.
Mr Potanin says he believes Russia was now over the worst of the crisis as commodity prices recovered from their plunge in autumn 2008. He says his Interros holding group has now reduced its debt burden from $7bn to a net total of $2bn after it was forced in autumn 2008 to seek a rollover of $3.2bn in loans from VTB, the state bank, or face an 16.8 per cent stake in Norilsk Nickel, the world’s biggest nickel miner, being seized as collateral.
He says Interros will soon be able to free its 95 per cent stake in Profmedia, the media group with assets including Rambler Media and MTV Russia, from being held as collateral by VTB. This is part of preparations for an initial public offering of the company that could raise up to $500m this year.
He denied that the state’s influence had grown over his biggest asset, Norilsk Nickel, as a result of the crisis. A representative of VTB was last year appointed to Norilsk’s board as a condition of the loan being extended, while Alexander Voloshin, a former presidential chief of staff, took over as chairman of the board as a result of a $4.5bn bail-out loan being extended to Oleg Deripaska, a co-owner of Norilsk. Vladimir Strzhalkovsky, a former KGB agent and close ally of Vladimir Putin, the powerful prime minister, was appointed chief executive of the company amid a destabilising shareholder battle between Mr Potanin and Mr Deripaska.
Mr Potanin says he has asked Mr Strzhalkovsky, the former head of the state tourism agency, to head the company in order to act as an arbiter in the shareholder dispute.
“You may consider him a representative of the state, or a personal friend of [Mr] Putin: he is a very effective manager who has solved many problems for his team, many of which the former management were frightened to deal with, such as preventing governance abuses ... and cutting back ... expenses. He is who he is. I am happy with the choice.
“The fact that he is a member of Putin’s team adds to his weight. It is not the reason for his appointment but a plus.”
Mr Potanin adds that Interros has given “exhaustive” answers to a probe launched by the influential deputy prime minister, Igor Sechin, last year into whether Mr Potanin had conducted a series of transactions via Norilsk Nickel for his own benefit and not the company’s.
“The results of Norilsk Nickel speak for themselves and show that the policies of the shareholders and management were aimed at strengthening the company and not the opposite,” he says.
But even though he says the state’s influence over the economy will eventually diminish as companies recovers from the crisis, he says it is vital for the government to consult big business more if Russia’s economy is to achieve sustainable growth.
“The dialogue at the moment is lower than it should be but there is an understanding that it should reach the necessary level and quality,” he says.
The tycoon adds, however, that it is vital for business to lobby its interests as an institutional group rather than reverting to the tactics of the 1990s when Russia’s richest men influenced legislation through individual lobbying.
“There has to be a mechanism which would determine to what extent corporate interests are in line with society’s interests. This is the sense in any developed democracy of any discussion.”
He says a small step towards improving the dialogue is a recent measure to allow representatives of the RSPP, Russia’s big business lobby group, to attend cabinet meetings.
Mr Potanin says one of the chief brakes to establishing a real democracy in Russia is the remaining Soviet-era mentality that means people still rely on the authorities to solve problems. He adds that the main problem hindering more independent thinking is education – and says this is one of the reasons why he has decided to hand over his fortune for philanthropic aims.
In spite of his announcement, it’s also clear that Mr Potanin has no intention of retiring from the cut and thrust of Russian business just yet. Referring to the IPO prospectus for Mr Deripaska’s UC Rusal, which states that the aluminium company could be forced to sell its 25 per cent stake in Norilsk Nickel should aluminium prices fall in order to pay its debts, Mr Potanin says he is ready to buy Mr Deripaska out.
“If Rusal someday decides to sell their Norilsk Nickel stake, I confirm that we are interested in it, ready to talk to Mr Deripaska about it and ready to buy it. Our partners have been informed of this.”
Personal portfolio in metals, banks, media and a resort
Vladimir Potanin, 48, president of Interros Holding, was a founding father of Russia’s oligarchy as author of the loans for shares privatisation of the crown jewels of Russian industry in the mid-1990s, writes Catherine Belton.
His fortune was shredded in the financial crisis. According to Forbes, his personal wealth fell from an estimated $22.4bn to $2.1bn by April 2009. But it is since likely to have climbed again as Russian share prices and commodity prices have recovered.
MAIN ASSETS
● Norilsk Nickel : 25 per cent plus 1 share (current market cap $26.9bn)
● Rosbank, one of Russia’s biggest private banks: 35 per cent (France’s Société Générale owns 65 per cent)
● Profmedia (media group which has stakes in TV, radio and internet assets including Rambler media, Afisha magazine, and MTV Russia): 100 per cent
● Rosa Khutor: $1.5bn Olympic ski resort in Sochi.
● Open Investments real estate group: 40 per cent
Barentsobserver: Post-crisis optimism on the Russian tourists market
2010-02-02
The Russian Minister of tourism forecasts growth of the tourism market and promises investments.
According to the Minister of sport and tourism of Russia Mr. Vitaly Mutko, who met the representatives of tourists businesses on January the 20th, the sales on the Russian outcoming tourism market in 2010 will increase from USD 7,7 to USD 7,9 billion.
Due to economic and financial crisis the number of foreign tourists visited Russia dropped down by 7 percent. Number of Russian tourists abroad fell by 17 percent.
Read also: Russians go abroad for the Holidays
The Norwegian tourists were among those who have most of all diminished their travels to Russia. For nine months of 2009 they were 16 percent less than in the same period two years ago.
At the same time the number of Swedish tourists to Russia increased by 18 percent. In the absolute figures the number of Norwegian and Swedish visitors became equal – around 24 thousand each for 9 months 2009. The Finns visited Russia 9 percent more than in 2008 and their number is almost 3 times higher than both Norwegians and Finns – over 124 thousand tourists.
The Russian Minister of tourism reported that during the next 5 years the federal budget will invest 96 billion rubles for tourism development in the country.
Read also: Less visas to Russia in 2009
Till 2016 the number of hotel beds will grow by 50% and the volume of tourists services will increase 5 times and make 400 billion rubles. Three billion rubles will be allocated for promotion of Russian tourists destinations abroad.
VTB: Russian Internet January Search: Tripled Over Two Years
VTB Capital
February 2, 2010
According to Liveinternet.ru, Runet's total number of search queries increased more than 4% MoM in January to almost two billion queries. The total number of search queries has increased 66% YoY and more than tripled over the past two years.
Since Rambler Media delisted, there has been no Russian public company focusing on Russian internet search queries. However, given that Russian internet growth is booming, we remain bullish on RBC (BUY, TP USD 2.6), Russia's only public stock with exposure to the rapidly growing domestic internet ad market.
In our view, the figures underpin our bullish view on the Russian internet ad market overall. We believe that it is likely to expand six-fold over the next five years on the back of Russian broadband penetration surging from 23% now to over 60% by 2014.
According to Liveinternet data, Yandex holds the leading positions in Runet's search, increasing its share to 60% (the highest result since December 2006), a solid improvement from 58.9% in December and 56.1% in January last year. Yandex strengthened its positions on the back of underperformance from Google (22.8%) and Mail.ru (9.9%), both of which were slightly down on the previous month (from 23.4% and 10%, respectively), and Rambler continuing to surrender market share to the three aforementioned players (it posted a share of only 3.2%, down from 3.4% in December and 6.6% a year ago).
In January, Yandex and Mail.ru outperformed the market, posting YoY growth of 76% and 78%, respectively, in the number of search queries, while Google's growth (63% YoY) was in line with the market and Rambler's search queries decreased 13% YoY.
Monetarily, Yandex boasts an even higher market share of 78%, according to the data released by iContext last week, with Google and Rambler (Begun) each accounting for only 11% of the 2009 context ad market.
Anastasia Obukhova
Activity in the Oil and Gas sector (including regulatory)
Reuters: Russia Jan oil output edges down, gas rises
Tue Feb 2, 2010 8:01am GMT
MOSCOW, Feb 2 (Reuters) - Russian oil production edged down to 10.04 million barrels per day in January 2010 from 10.05 million barrels in December 2009, an Energy Ministry official told Reuters on Tuesday. It was the fifth successive month when Russian oil production exceeded 10 million barrels per day.
Natural gas production rose in January to 2.06 billion cubic metres (bcm) per day from 2.02 bcm per day in December, the official said by telephone.
Russian natural gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) produced 1.64 bcm per day in January, up slightly from the 1.63 bcm per day that it produced in December. (Reporting by Gleb Gorodyankin, writing by Robin Paxton)
Prime-Tass: Russia’s natural gas output up 17% on year in January
MOSCOW, Feb 2 (PRIME-TASS) -- Russia’s natural gas output rose 16.9% on the year to 63.952 billion cubic meters in January, TsDU-TEK, an agency which provides data and analysis to the Energy Ministry, said Tuesday.
Of the total, Russian natural gas monopoly Gazprom produced 50.750 billion cubic meters of gas in the period, up 13.9% on the year, while the output of independent gas producer Novatek amounted to 3.492 billion cubic meters, up 22.4% on the year. The output of other independent gas producers was at 3.998 billion cubic meters, up 97.3% on the year, and the gas output of oil companies totaled 5.7 billion cubic meters, up 10.2% on the year, TsDU-TEK said.
In 2009, Russia’s natural gas output fell 12.5% on the year to 582.3 billion cubic meters, TsDU-TEK said earlier.
Interfax: Oil supplies to Russian refineries up 6% in Jan
MOSCOW. Feb 2 (Interfax) - Total supplies of oil to Russian refineries in January 2010 increased by 6% year-on-year to 20.149 million tonnes, the Fuel and Energy Central Dispatch Center said.
The Center said that total supplies of oil to Rosneft's (RTS: ROSN) refineries in January came to 4.437 million tonnes, Lukoil (RTS: LKOH) - 3.792 million tonnes, TNK-BP Holding (RTS: TNBP) - 1.879 million tonnes, Sistema (RTS: AFKS) - 1.543 million tonnes, Surgutneftegas (RTS: SNGS) - 1.795 million tonnes and Gazprom Neft (RTS: SIBN) - 1.458 million tonnes.
Total oil supplies to refineries in Belarus in January dropped by 61% year-on-year to 0.71 million tonnes and to Ukrainian refineries - 0.54 million tonnes (down 13.5%). Supplies of oil to refineries in Kazakhstan increased by 26.2% year-on-year to 0.633 million tonnes.
EasyBourse: BP's Russian JV TNK-BP Swings To Profit In 4Q
MOSCOW -(Dow Jones)- TNK-BP (TNBP.RS), BP PLC's (BP) Russian joint venture, swung to a profit in the fourth quarter of 2009, the British energy giant said Tuesday.
BP's share of TNK-BP's net income climbed to $536 million, from a loss of $682 million a year earlier. BP's share of the venture's profit was $732 million in the third quarter.
Oil production attributable to BP was flat at 852,000 barrels a day, compared with 850,000 barrels a day in the third quarter. BP's share in natural gas production expanded 18% in the quarter, to 654 million cubic feet a day, BP said.
Company Web site: tnkbp.ru
-By William Mauldin, Dow Jones Newswires; +7 495 232 9192; william.mauldin@
Publié le 02 Février 2010
Bloomberg: Novatek May Seek Shell, Exxon for Yamal LNG Project (Update1)
By Yuriy Humber and Anna Shiryaevskaya
Feb. 1 (Bloomberg) -- OAO Novatek, Russia’s second-largest gas producer, will seek partners among international producers such as Royal Dutch Shell Plc and Exxon Mobil Corp. for a liquefied natural gas project on Russia’s Yamal peninsula.
Novatek plans to select more than one partner this year to help develop the Arctic LNG project that could supply Asia, Europe and the U.S., Chief Executive Officer Leonid Mikhelson, 54, said in an interview at the World Economic Forum in Davos, Switzerland.
“Exxon Mobil, Shell, ConocoPhillips, Repsol have large LNG facilities and will be considered as candidates,” Mikhelson said in the interview on Jan. 28. “It’s not just Total that has this LNG technology.”
Novatek plans to break into foreign natural-gas markets with the Yamal LNG project as all of its production, about 5 percent of Russia’s total, is sold domestically. Gas fields on the peninsula may produce as much as 360 billion cubic meters a year, according to OAO Gazprom, the world’s biggest gas producer and owner of almost 20 percent of Novatek. That’s almost half of North American consumption in 2008, according to BP Plc data.
“We’re interested in the Yamal LNG project and are in discussions with the Russian side on it,” Vera Surzhenko, a Moscow-based spokeswoman for Shell, said by telephone today.
Intensify Efforts
Exxon spokeswoman Dilyara Sydykova declined to comment. Repsol YPF SA spokesman Kristian Rix had no comment. Total spokesman Paul Floren couldn’t immediately comment. Phones at ConocoPhillips’ Moscow office weren’t immediately answered.
Total SA is working with Novatek in the Arctic, where they plan to invest $900 million in the Termokarstovoye gas field, Prime Minister Vladimir Putin said in June. LNG is gas chilled to liquid form for transportation by ship to destinations not connected by pipeline.
The Yamal LNG project may be completed in as soon as five years “if we intensify our efforts,” Mikhelson said. It’s too early to estimate the cost, he said. The project will be financed with the partners’ own cash and bank loans, he said.
Novatek is holding talks with potential lenders, he said.
The Tarko-Sale, Siberia-based gas producer in May agreed to pay $650 million for its 51 percent stake in Yamal LNG, which holds the license to the undeveloped South Tambey field on the peninsula. Novatek has a call option to buy an additional 23.9 percent stake in Yamal LNG, which the producer may use in talks with strategic partners it plans to attract, CFO Mark Gyetvay said in August.
Northern Route
Gazprom, which holds licenses for neighboring fields, may team up with Novatek on LNG opportunities on Yamal, the two companies have said.
“Gazprom has an interest in seeing Novatek realize the construction of the LNG plant and develop the same essential infrastructure that is necessary for future LNG projects it is considering in the area,” Mikhelson said.
Putin invited heads of a dozen international oil companies, including Statoil ASA and Petroliam Nasional Bhd, to a Yamal meeting in September, where he ordered a development plan for Yamal to be prepared in the first quarter.
This year, Novatek and shipper OAO Sovcomflot will test the passage of tankers along the northern sea route to prepare for sales to Asia, Europe, and possibly the U.S, he said.
Shale Gas
Rising shale-gas production in the U.S. has lowered the need of the world’s largest energy consumer demand in prompted suppliers such as BG Group Plc to divert cargoes to other markets where prices for the fuel are higher. Shale gas may allow the U.S. to be self-sufficient for the next 5 to 10 years, Mikhelson said. “At the same time, the costs associated with developing shale gas are high and this motivates Novatek to increase its competitiveness.”
U.S. demand for gas may grow “sometime between 2016 and 2020,” he said.
Gazprom, which had expected to send as much as 90 percent of LNG from its Arctic Shtokman project to North America, may have to divert planned shipments elsewhere, Vladimir Dimitrov, chief technologist at Gazprom’s subsea division, said Jan. 27.
In 2010, Novatek plans to expand natural-gas output at a faster pace and boost gas condensate output by “about the same rate” as last year, Mikhelson said. Gas output increased 6.2 percent last year and liquids rose 18 percent, according to preliminary operating results the company published Jan. 19.
To contact the reporters on this story: Yuriy Humber in Davos via the Moscow newsroom at yhumber@; Anna Shiryaevskaya in Moscow at ashiryaevska@
Last Updated: February 1, 2010 09:11 EST
Upstreamonline: Rosneft pumps up Russia's output
Russia retained its position in January as the only country pumping more than 10 million barrels per day of oil, thanks largely to sector leader Rosneft, although output slipped marginally from December.
News wires Tuesday, 02 February, 2010, 08:40 GMT
Russia, which has eclipsed Saudi Arabia as the world's largest oil producer since Opec cut output, produced 10.04 million bpd in January, compared with 10.05 million bpd in December, Energy Ministry data released today showed.
It was the fifth successive month when Russian oil production exceeded 10 million barrels per day and the monthly total trumped the 9.7 million bpd produced in January last year, Reuters reported.
State-run Rosneft was the main driver of year-on-year growth. Russia's biggest oil producer extracted 10.26 million tonnes in January, or 2.43 million bpd - nearly a quarter of the Russian total and 6% more than in January last year.
Rosneft has enjoyed stellar production growth since last year's launch of the huge Vankor field in the Arctic, which is expected to produce about 3 billion barrels over the life of the field.
Rosneft's board chairman, influential Deputy Prime Minister Igor Sechin, said on Monday that Russian oil production would rise to about 500 million tonnes this year after growing about 1.5% last year after a fall in 2008.
Russia's natural gas production rose in January by almost 2% to 2.06 billion cubic metres per day from 2.02 Bcmd in December, the ministry's data showed.
Russian natural gas export monopoly Gazprom produced 1.64 Bcmd in January, up slightly from the 1.63 Bcmd it produced in December.
Published: 02 February 2010 08:40 GMT | Last updated: 02 February 2010 09:42 GMT
VTB: Rosneft: Waiting for Vankor
VTB Capital
February 2, 2010
Strong 4Q09 results, largely in line with our expectations. Rosneft has reported its 4Q09 results, which came in line with consensus on revenues, above consensus on EBITDA (+1%) and below consensus on net income (-7%). Revenues were at USD 14,567mn, up 35% YoY, while EBITDA came in at USD 3,950mn (up from USD 12mn in 4Q09) and net income surged 116% YoY to USD 1,674mn.
Healthy cost trends, supported by Vankor. Rosneft continued to demonstrate solid control over its operating costs, which led to 4Q09 EBITDA margin at 27%, only 1pp lower than in 3Q09. The company was able to limit the growth of lifting costs to 5% QoQ (from 2.62 USD/bbl in 3Q09 to 2.75 USD/bbl in 4Q09), compared to a nominal RUB appreciation of 6.3% QoQ. We believe the solid dynamics in lifting costs could continue in 2010 along with Vankor production growth.
Lower bottom line due to a one-off. The company's 4Q09 net income was below our estimates and consensus largely due to the loss on disposal of non-current assets at USD 256mn. The loss was caused by a transition from financial to operating leasing in railway functions.
Talks on zero export duty for Vankor in focus, operating performance in 2010 likely to be strong. As results came largely in line with expectations, the main topic remains the potential cancelation of Vankor export duty holidays. Although the company believes that tax breaks are unlikely to be lifted any time soon, we believe this risk will continue looming over the stock. At the same time, the situation is likely to be resolved this month. Furthermore, we believe the stock is already pricing in the potential 15% negative valuation effect of the tax holidays. Meanwhile, Vankor's operating performance could surprise on the upside, considering its strong well productivity.
We shall be looking forward to more details during the conference call, scheduled on Wednesday 3 February at 16:00 (Moscow time).
Lev Snykov
• FEBRUARY 2, 2010
WSJ: Russian Energy Earnings Increase
By JACOB GRONHOLT-PEDERSEN
MOSCOW—Russian state-controlled energy giants OAO Gazprom and OAO Rosneft Monday said quarterly earnings rose on higher global energy prices and increased exports.
Still, the outlook for this year remained uncertain for both companies because of weak European gas demand and possible changes in Russian taxes on oil exports.
Gazprom, the world's biggest producer of natural gas, said net profit for its fiscal third quarter, which ended September 30, rose to 174.63 billion rubles ($5.75 billion) from 131.65 billion rubles a year earlier. The increase was primarily due to foreign exchange gains and lower taxes.
Gazprom supplies about a quarter of Europe's gas needs, but the company's market share dropped last year due to increased European use of alternative energy sources, including liquefied natural gas. However, the company said third-quarter exports rose from the second quarter led by a slight increase in European demand.
Demand for Russian gas in Europe—the company's most lucrative market—plummeted last year amid the economic slowdown and as Europe consumed more Norwegian gas. Third-quarter sales dropped to 770.79 billion rubles from 839.16 billion rubles.
Last year, the U.S. overtook Russia as the world's biggest producer of natural gas, partly because of increased shale-gas output in the U.S. Russia accounts for around one-fifth of global gas output and 12% of the world's oil production.
Gazprom's shares climbed 1.8% to close at 189.85 rubles.
Rosneft—Russia's No. 1 oil company with a daily production of 2.28 million barrels—said Monday that fourth-quarter net income more than doubled to $1.67 billion because of higher oil prices and increased production at its key Vankor field in East Siberia.
Revenue increased 35% to $14.57 billion, as the average price of Brent crude rose to $75.72 a barrel from $57.01 a barrel.
The company's shares have lost close to a fifth of their value since reaching a one-year high of 271.7 rubles on Jan. 11, following a proposal by Russia's finance ministry to reverse no export duties on oil produced at some East Siberian oil fields, including Vankor.
But Rosneft Chief Financial Officer Peter O'Brien expressed confidence that the tax breaks will "remain in place for some time."
Rosneft's share price more than doubled last year, but is expected to stay under pressure until the government says the tax breaks will stay in place, analysts said. The company's shares sank 1.2% to 233.50 rubles on the Micex Stock Exchange in Moscow on Monday.
ISRIA: Russia - Prime Minister Vladimir Putin meets with LUKoil President Vagit Alekperov
Transcript of the beginning of the meeting:
Vladimir Putin: I would like to congratulate you on winning the bid for West Qurna 2, one of the world's largest oilfields.
I hope that work on this project will be carried out appropriately, bringing both your company and the Russian oil and gas industry in general the necessary advantages and the dividends you expect.
In 2004 and 2005 we began discussing the issue of writing off a large portion of the Iraqi national debt to the Russian Federation. We eventually came to an agreement with the Iraqi government and wrote off an unprecedented 90%, which is also a large amount in absolute terms, over billion.
Iraq is still in a predicament, but the situation was even worse at that time. Our efforts were meant as support and assistance for the new Iraqi leadership in their aspirations to restore the country's economy. From the very beginning we anticipated that the Iraqi government would welcome our oil and gas companies' entrance into the Iraqi oil market. What has happened is a positive result of this, a welcome event. And I congratulate you for this.
Vagit Alekperov: Thank you, Mr Putin. The agreement was signed in Bulgaria at 2 p.m. yesterday, thus bringing our project into effect.
Your proactive approach allowed our company, which has worked on this project for 13 years, to win the bid for this contract, against tough competition. Your message worked out well, and we committed ourselves to very tough terms on this project.
The scope of the project is extraordinary. It is the most recently discovered field of such capacity being developed, with reserves of over two billion metric tons. Oil production is expected to reach 95 million metric tons annually in the next ten years and the subsequent period. The agreement is valid for 20 years. Our company and our partners, specifically Statoil, plan to invest some billion in it, with .5 billion to be invested in the near future.
It is a truly large-scale project. We will involve Russian companies, including Volgograd Design and Gazprom, in developing the field's infrastructure. We will use Russian technology. We are selecting contractors and equipment. After our design estimates are approved, a large team of Russian experts will go to Iraq to work there.
We are very focused on security, and have consulted with our security experts on how best to provide it. Protecting our employees in Iraq is our top priority. It is one of the most important clauses of the agreement. Separate funds have been appropriated for security provisions. Our group visited Basra to tour the fields. We will not let you down; we will meet all the terms of the contract and we will meet all deadlines.
Vladimir Putin: Your partners are very reliable too. We are working closely with the Norwegians on many projects, including the Shtokman field in the Barents Sea, which is another joint project involving a Russian company that offers good prospects for resolving issues in northern Europe. We are still negotiating a number of provisions, and this project gives us another impetus for settling current problems.
Vagit Alekperov: We are involved in another major project, as I have reported to you. You promised to visit our cutting-edge oil rig in the Caspian Sea. We are planning to produce the first tons of Russian oil in Caspian waters in April. It will be our pleasure to welcome you to this rig to show you how cutting-edge technology has been applied there. The horizontal wellbore will reach five kilometres. You can count the number of such oil pumps in the world on the fingers of one hand.
Everything on the Caspian is being done by Russian companies. They have installed equipment and constructed the rig, which you saw at the Astrakhan shipyards. We are ready to work.
Vladimir Putin: Good. My congratulations.
Gazprom
Prime-Tass:
Feb 2: Gazprom to make presentation for investors in London
Feb 4: Gazprom to hold meeting with investors in New York
Feb 4: Gazprom board of directors to discuss preparations for AGM
Feb 5: Gazprom to hold meeting with investors in Moscow
Rencap: Gazprom 3Q09 IFRS results: Hardly an event
Rencap
February 2, 2010
Gazprom (Baa1/BBB/BBB) reported 3Q09 IFRS results yesterday (1 Feb), which were in line with both our and consensus forecasts on the operating line. We do not think the results are price moving, given the significant lag in reporting, and dramatic volatility in the company's production and sales patterns over 2009. In particular, 3Q09 marked one of the worst quarters in the company's history with the double hit of a sales volume reduction (down 4% YoY to 103bcm, negatively affected by a well-publicised reduction in domestic gas consumption and reduced gas off-take by the company's European customers) and a more dramatic 43% YoY collapse in the average export price ex FSU countries (which lags the oil price by six-to-nine months) to $250/mcm, both in line with our forecasts. Interestingly, on a QoQ basis, average selling prices to FSU countries posted a 2x larger decline in 3Q09 vs the European market (22% vs 11%). Gazprom attributed this to lower volumes of purchases by the Baltic countries, which are long on the full (no-discount) price formulas, giving more weight to still-discounted Ukrainian prices. The market situation seems to have improved since, with Oct-Dec 2009 statistics showing significant recovery in both domestic and European sales.
Reported revenues of RUB770.8bn exceeded our estimate by 2%, this was mostly driven by higher-than-expected trading volumes of gas and oil products. Total volumes of purchased gas were mentioned during the conference call at 106 bcm for 9M09 (+18% YoY), of which Gazprom-Germany contributed roughly 50bcm (+67% YoY). This is a very notable increase in trading, given that the Central Asian purchases were effectively discontinued following the Apr 2009 pipeline blast. This was offset by correspondingly higher purchase costs, and resulting in in-line reported EBITDA of RUB206.3bn (down 41% YoY), but already a little up QoQ. Driven by higher-than-expected currency gains and associates income, Gazprom reported 3Q09 PBT and net income of RUB216.7bn and RUB172.4bn respectively, outperforming our estimates by 34% and 37% YoY respectively.
In terms of cash flows, Gazprom posted a RUB193bn capex, higher than expected, which has sent its quarterly organic free cash flow into negative territory (for 9M09, in total, organic free cash flow was zero). Financed by new debt issuance and a reduction in its cash position, this sent total debt to RUB1762bn (+3% QoQ, without adjusting for a stronger rouble, or +29% YoY). We note, however, that although the balance sheet breakdown shows a QoQ increase exclusively in a short-term item, this does not mean Gazprom has been borrowing on short tenors - the cash flow statement clearly shows new borrowings were all long term, and the deterioration in the maturity profile was only due to 'old' debt approaching maturity and being reclassified. In addition to two eurobond issues in July ($1.25bn and EUR850mn), the accounts show Gazprom has also attracted new three-year loans from VTB and JPMorgan Chase for some $820mn in total. Petr Bakaev, head of Gazprom's capital markets, said, during the conference call, that Gazprom will have paid out some $4bn of debt on the holding company level in 4Q09 alone and - importantly - total debt will have been reduced by a corresponding amount, clearly driven by much stronger cash generation in 4Q09.
Overall Gazprom's total leverage increased to 1.7x vs 1.4x as of 1H09. In our view, this deterioration of the company's key credit metrics is expected and largely backward-looking. We therefore think the bond market will treat the results release as a non-event.
Petr Grishin
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