Russia
Russia 100303
Basic Political Developments
• Prime-Tass: Russian calendar: Key events for March 3
o Last day of Russian President Dmitry Medvedev’s visit to France
o Russian Prime Minister Vladimir Putin to hold meeting of government commission for high technologies
o Kazakhstan’s Prime Minister Karim Masimov to visit Russia
o Russian Deputy Prime Minister Igor Shuvalov to visit Azerbaijan
• Mar 5: Ukrainian President Viktor Yanukovich to visit Moscow
• Mar 8: Public holiday in Russia, International Women’s Day
• Mar 14–15: Russian economic and financial forum in Zurich
• Itar-Tass: Sanctions on Tehran aren’t on March agenda of UN Security Council – diplomat
• RIA: UN secretary general to attend Mideast Quartet meeting in Moscow
• Xinhua: UN says Mideast quartet to meet in Moscow on March 19
• RIA: No signal on Iran sanctions for Russia's UN mission – envoy
• News.az: UN General Assembly adopts resolution on cooperation with CSTO - UN will develop cooperation with the Collective Security Treaty Organization (CSTO), including in areas as combating terrorism and drug threat, according to the resolution adopted in UN General Assembly at Russia's initiative.
• Itar-Tass: UN GA adopts resolution on UN-CSTO cooperation development - “The new resolution will make it possible to really strengthen CSTO-UN interaction, to expand their mutual abilities to assist the efforts to ensure peace, security and cooperation on the regional and global scale,” Churkin said. The mechanism of CSTO peacekeeping activity “can be used in peacekeeping operations, including under the aegis of the United Nations,” he added.
• Gazeta.kz: Prime Ministers of Kazakhstan and Russia to discuss development prospects in space, transport branches
• The Georgian Times: Nino Burjanadze leaves for Moscow
• Aysor: Nino Burjanadze to pay a visit to Moscow
• Trend.az: EU delegation visits Upper Lars checkpoint on Georgia-Russia border
• RIA: No dispute with Russia on Afghan anti-drug policy - U.S. diplomat
• Interfax: Russian drug control chief criticizes U.S. decision to stop combating opium in Afghanistan.
• Bernama: Afghan Police Officers Start Anti-Drug Training In Russia - A group of eleven police officers from Afghanistan will be trained on how to effectively combat drug trafficking during a two-week OSCE-organised course that begins Wednesday in Domodedovo, outside Moscow, Russia's Itar-Tass news agency repored, citing the OSCE press service.
• Interfax: Moscow concerned about news of death of Russian boy adopted by Americans
• Itar-Tass: Medvedev ends state visit to France
• RIA: Russian, French presidents speak of "common values" at dinner
• Financial Times: Sarkozy shifts stance towards Russia - “Nicolas Sarkozy has got back on the traditional path of French diplomacy: speaking to Moscow to hold more sway in Europe and beyond,” said Thomas Gomart, analyst at the French Institute for International Relations.
• Dow Jones: Total CEO: In Talks On Projects In Russia
• Itar-Tass: Russia plane with humanitarian relief supplies flies to Chile
• The Moscow Times: Russia Sends Aid to Quake-Hit Chile
• RIA: Russia sends cargo plane with aid to quake-hit Chile
• The Local: Sweden sets sights on easing Russian relations - On Tuesday Fredrik Reinfeldt and Carl Bildt will head to Moscow to meet prime minister Vladimir Putin and president Dmitrij Medvedev.
• Radio Sweden: Reinfeldt and Bildt to Moscow - Sweden's approval of the Russian-led Nord stream pipeline to pass through their waters in the Baltic sea marked a thawing in relations.
• Euro Weekly News: Russian mafia case collapses - ANTI Corruption Prosecutors are seeing their two and a half year case against alleged Russian mob kingpin Gennadios Vasilievich Petrov collapse. Petrov, was arrested at his 20m euro mansion in Calvia (Mallorca) in June 2008 in the police ‘Operacion Troika’ accused of involvement in extortion, murder, tax evasion illicit association, falsification of documents and drugs trafficking, and was allegedly the boss of the feared Russian Tambovskaya-Malyshevskaya organised crime gang.
• Reuters: CORRECTED - UPDATE 1-Russia-U.S. talks on poultry continue-Vilsack
• Itar-Tass: Putin to hold meeting of govt comsn on high technology, innovation - During the meetings the heads of ministries, departments, state corporations, the Russian Academy of Sciences, business representatives will discuss methods of raising efficiency of the use of funds allotted for the innovation activity.
• RIA: Putin allocates $37 million to build supercomputers in Russia
• Interfax: Rosatom to get over 55 bln rubles for nuclear plant, supercomputers, medicine
• Itar-Tass: Russia to allocate 20 bln rbls for milk production this year
• The Moscow Times: Changes to Economic Crimes Bill Greeted by Business
• The Moscow Times: New State Auctions Web Site Planned
• The Moscow Times: Ban on Jury Trials to Be Considered by Courts
• RIA: Brutal Russian legal system will bring down state – Khodorkovsky
• Barentsnova: New Russian multiple-entries visa for foreigners - Russian Gvt introduced simpler visas for foreigners that are temporary residents in Russia.
• RIA: Russian investigators to thoroughly probe abductions in Chechnya
• Interfax: Chechen imams from now on bless marriages only with health certificate from AIDS Center
• RFE/RL: Reports Of Torture Trigger Protests In Daghestan - Between 500-1,000 people participated in a 17-hour demonstration in Makhachkala on March 1 to protest reports that five suspects in the June 2009 murder of Daghestan's interior minister, Lieutenant General Adilgirey Magomedtagirov, were subjected to torture so that they would confess to the murder.
• BarentsObserver: State sells out of Murmansk companies - As BarentsObserver has reported, also shipping major Sovcomflot is likely to be on the list of the companies for sale. In addition, the state has signaled a reduction of its control over oil company Rosneft
• BarentsObserver: Arkhangelsk opposition unites - The movement plans to arrange a large demonstration in the town center on April 4, newspaper Kommersant reports. The new movement is prepared to drop the use of political slogans in the demonstration to draw as many supporters as possible. In the demonstration in April only social and economic slogans will be used.
• Brahmand: India to buy 42 more Russian made Su-30MKI aircraft
• RIA: Russian Volga region moves to produce flying saucers - The first such aircraft, officially named "aerostatic thermoballasted vehicle" or simply "Locomoskayner" after its manufacturer LocomoSky, was presented MAKS-2009 air show. The prototype flying saucer was seven meters (23 feet) in diameter and was able to transport 20 kg (44.4 lbs) of cargo.
• Russia-IC: Tsar’s Medallion Stolen from Hermitage Returns from USA to Russia
• The Moscow Times: Today in Vedomosti
o Clubs Raise The Bar During Downturn
o Editorial: Petty State Cases Choking Arbitration Courts
o Customs Officer Who Sold Database Sentenced
o Debtors May Lose Driving License
• Russia Today: 03 March, 2010 in Russian Newspapers
o Izvestiya: A crossing of dead ends
o Rossiyskaya Gazeta: Kabul’s poppies
o Nezavisimaya: China plans to become top power
o Pravda: Ukraine Not Mischievous with Russia's Gazprom Anymore
National Economic Trends
• Bloomberg: Russian Service Industries Expanded at Slowest Pace Since July - The Purchasing Managers’ Index fell to 51 last month from 51.9 in January, VTB Capital said in an e-mailed statement today. The index, which is based on a survey of about 300 purchasing managers, shows expansion with a reading above 50.
• Prime-Tass: VTB Capital: Growth of Russian services sector further slows Feb
• Bloomberg: Russian Central Bank May Take New Measures to Stem Hot Money - Higher taxes on foreign borrowing by corporations and control of foreign borrowing by companies in which the state holds a stake are among “other measures under consideration,” Moscow-based Bank Rossii said. A return to capital controls isn’t being considered.
Business, Energy or Environmental regulations or discussions
• Reuters: Russian markets -- Factors to Watch on Mar 3: Russian energy giant Gazprom to swap its 10 percent stake in Russian largest non-state gas producer Novatek for 51 percent of small gas firm Sibneftegas, the daily Kommersant reports.
• Bloomberg: Silvinit, Uralkali, Sberbank, Gazprom: Russian Equity Preview
• Russia Today: IPO horizon opens up for Russian companies
• Bloomberg: Russian IPO Bets Are ‘Lamentable’ for Investors, Troika Says
• Steel Guru: Russia issues 2009 import and export data
• Steel Guru: EU quota utilization levels of Russia and Kazakhstan
• RBC: Chelyabinsk-based pipe plant and Metalloinvest ink cooperation deal
• Cbonds: S&P: Russian Group OJSC Novolipetsk Steel Outlook Revised To Stable On Likely Steady Performance; 'BBB-' Affirmed
• RenCap: Lucchini family exercises put option, sells 20% stake to Severstal
• Reuters: Russia's Evraz wins back Mezhegei coal field –source
• RenCap: Evraz wins Mezhegey coal deposit licence again
• RenCap: Renault ready to consider larger AvtoVAZ stake; AvtoVAZ needs EUR3bn for development
• Bloomberg: OAO Power Interested in Ansaldo Energia, Messaggero Says
• BusinessWeek: Siemens buys last 49 pct of Russian transformer JV
• Interfax: State Street Bank and Trust Co. doubles stake in Razgulay to 10.56%
• The Moscow Times: Rossia Bank Cleared to Merge With Gazenergoprombank
• Bloomberg: TUI, Mordashov to Invest $60 Million in Travel Unit (Update1)
• Banking Business Review: Renaissance Capital, Citadel Investment Form New JV
• Sys-con: Volga Resources to Acquire a Stake in one of the World's Largest Onshore Seismic Service Providers
• Blogs.reuters: The Russian Bear awakes - According to preliminary figures released by Russia’s Ministry of Economic Development and Trade, Russia’s GDP grew by more than 3% in the fourth quarter of last year. It could even reach 6.4% by year-end if oil reaches US$79 a barrel, Moscow-based brokerage Aton predicts. Already, the price of crude is approaching US$80.
Activity in the Oil and Gas sector (including regulatory)
• Bloomberg: China, Russia Reach Initial Gas Cooperation Agreement (Update1) - China, the world’s second-largest energy consumer, has reached an initial agreement on pricing and supply for natural gas from Russia, the official Xinhua News Agency reported, citing energy chief Zhang Guobao. China may start importing crude oil from Russia through a cross-border pipeline now being built, Xinhua quoted Zhang as saying. The country’s electricity imports from Russia may increase by 25 percent to 1 billion kilowatt-hours in 2010, according to Zhang.
Gazprom
• Reuters: Russia's Gazprom to halve its Novatek stake-report: Russian energy group Gazprom (GAZP.MM) plans to swap more than half of its holding in gas company Novatek (NVTK.MM) for 51 percent of a small natural gas firm, daily Kommersant reported on Wednesday.
• UpstreamOnline: Gazprom in Novatek swap - Russian energy group Gazprom plans to swap more than half of its holding in gas company Novatek for 5% of a small natural gas outfit.
• Africa Intelligence: Gazprom In Play for Kudu
• Today.az: SOCAR increases gas exports by 18% through supplies for Gazprom
• UpstreamOnline: Gazprom may pass EDF South Stream slice
• Reuters: Iran says to sign Gazprom deal on Azar oilfield
• Rencap: Ukraine is likely to request a lower gas price from Gazprom
• BNE: COMMENT: The EU needs to act at home to counter Gazprom's power
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Full Text Articles
Basic Political Developments
Prime-Tass: Russian calendar: Key events for March 3
• Last day of Russian President Dmitry Medvedev’s visit to France
• Russian Prime Minister Vladimir Putin to hold meeting of government commission for high technologies
• Kazakhstan’s Prime Minister Karim Masimov to visit Russia
• Russian Deputy Prime Minister Igor Shuvalov to visit Azerbaijan
Mar 5: Ukrainian President Viktor Yanukovich to visit Moscow
Mar 8: Public holiday in Russia, International Women’s Day
Mar 14–15: Russian economic and financial forum in Zurich
Itar-Tass: Sanctions on Tehran aren’t on March agenda of UN Security Council – diplomat
02.03.2010, 22.54
UNITED NATIONS, March 2 (Itar-Tass) -- The possible sanctions on Iran are not on the March agenda of the UN Security Council, Security Council President Denis Dangue Rewaka (Gabon) said on Tuesday.
He noted that the Security Council members were not prepared to discuss the issue so far. “We wait for the appropriate time for the discussion,” he added.
The sextet member countries (Russia, China, the United States, the United Kingdom, France and Germany) have not reached accord on the possibility of additional sanctions on Iran. China said that it was too early to take new measures because the UN Security Council had passed five resolutions on Iran, including three containing sanctions.
In the opinion of Western representatives, Tehran is developing a military nuclear program and refuses to abandon it. Iran claims that the program has an exclusively peaceful nature.
U.S. Secretary of State Hillary Clinton said on Monday that the UN Security Council might discuss new resolutions on Iran in several months, much later than the United States and some other countries would like to.
Iran will carry on peaceful atomic energy activity no matter what, Iranian Supreme leader Ayatollah Ali Hoseini-Khamenei told Foreign Ministry staff members on Sunday.
“Despite the pressure the Islamic Republic is experiencing, it has achieved impressive results in nuclear research. The research will continue regardless the slanderous speculations started by certain countries, among them the United States, the United Kingdom and the Zionist regime. The research will continue as long as it takes Iran to achieve complete and scientific self-sufficiency,” Khamenei said.
He criticized the International Atomic Energy Agency (IAEA), which condemned Iran last November for building a new nuclear site in Qum and recently expressed doubts about the peaceful nature of the Iranian atomic program.
“Some latest steps and reports of the Agency show that this international organization has a deficit of independence,” the Iranian supreme leader said. “The IAEA should not yield to the influence of the United States and some other countries, as this yielding does not add authority to the agency.”
The uranium enrichment in Iran causes serious concern about the actual target of the Iranian nuclear program, Russia, the United States and France said in a joint letter to Amano on February 16. Tehran said the letter did not any contain new proposals.
Russia will have a measured attitude to possible sanctions against Iran as long as the latter cooperates with the IAEA, Chairman of the Federation Council International Affairs Committee Mikhail Margelov told Itar-Tass on the same day.
“As long as Iran cooperates with the IAEA, our policy will be measured and cautious. I do not believe in the efficiency of sanctions. They do not work, as a rule,” Margelov said.
“The Russian stance is rather precise and clear. Being an Iranian neighbor, we want the Iranian nuclear program to be exclusively peaceful and strictly controlled by the IAEA. Not a single responsible politician in Russia is interested in the Iranian development of a bomb,” he said.
Russian Foreign Minister Sergei Lavrov said that Moscow opposed sanctions that might be harmful for the country but did not rule out the UN Security Council measures due to the Iranian unwillingness of closer cooperation with the IAEA. “We are absolutely positive that sanctions per se can hardly bring desirable results. If such a proposal is made at the UN Security Council, we will scrutinize it very carefully,” the minister said.
“Russia has no doubts that Iran shares the same rights with other non-nuclear members of the Nuclear Non-Proliferation Treaty, including the right to enrich uranium. However, Iran must comply with related commitments in order to use this right freely. In this case, it is necessary to answer all the remaining questions to the IAEA satisfaction,” Lavrov said.
“As no progress has been made and the Iranian administration has not responded to the constructive compromises, including the offer to supply fuel to the Tehran research reactor, I do not rule out that the UN Security Council may have to review the situation once again,” he said.
RIA: UN secretary general to attend Mideast Quartet meeting in Moscow
05:2103/03/2010
UN Secretary General Ban Ki-moon will visit Moscow in mid-March to attend a meeting of the Quartet of international mediators in Israeli-Palestinian peace talks.
"The Secretary General will attend the Mideast Quartet meeting in Moscow on March 19 and will set off on a Middle East tour," said Emanuel Issoze-Ngondet of Gabon, who holds the rotating Security Council's presidency for this month.
He added that the Secretary General would make a report to the Security Council on the results of his tour on March 24.
Russia, along with the UN, the United States and European Union, comprises part of the Middle East Quartet of intermediaries for peace efforts.
Talks between Israel and the Palestinian National Authority came to a halt in December 2008, when Israel launched an attack on the Gaza Strip in a bid to put an end to the firing of homemade rockets at southern Israel by Palestinian militants based in the enclave. The conflict left 1,300 Palestinians and 13 Israelis dead.
Settlement construction in the West Bank and East Jerusalem, both occupied by Israel since the 1967 Arab-Israeli War, has been the main obstacle to reviving peace talks.
Under the internationally agreed roadmap for Middle East peace, Israel is obliged to freeze all settlement construction activity, and remove unauthorized outposts built since 2001 from the Palestinian territories.
NEW YORK, March 2 (RIA Novosti)
Xinhua: UN says Mideast quartet to meet in Moscow on March 19
2010-03-03 05:37:57
UNITED NATIONS, Mar. 2 (Xinhua) -- The Mideast quartet for peace is set to meet in Moscow on March 19, the United Nations announced on Tuesday.
Martin Nesirky, the UN spokesman, told a news briefing that UN secreary-general is scheduled to attend the Moscow meeting.
Russian Foreign Minister Sergey Lavrov said in Moscow on Feb. 24 that the March 19 meeting will be held at the ministerial level.
The quartet, which is dedicated to search for peace in the Middle East, comprises Russia, the United Nations, the European Union and the United States.
The upcoming meeting will be convened after the UN General Assembly reiterated last week its calls upon both Israel and Palestine to "conduct investigations that are independent, credible and in conformity with international standards into the serious violations of international humanitarian and human rights law."
The UN fact-finding panel headed by Justice Richard Goldstone of South Africa, has presented a report, known as the Goldstone report, to accuse both Israel and the Hamas militants in Gaza of war crimes during the Gaza war, which began in late December 2008 and lasted 22 days.
Some 1,400 Palestinians and 13 Israelis were killed in the Israeli military offensive into Gaza, which followed rockets fired into north Israel from the Gaza Strip.
The General Assembly has adopted a resolution to call for those probes to be conducted by Feb. 5 this year, but Ban said on the eve of the deadline that their efforts had proved inconclusive.
Israel began a 10-month partial freeze of settlement construction in November last year under intense pressure from the United States. The moratorium on building which starts in the West Bank but not in East Jerusalem fell short of the Palestinian insistence that Israel halt all construction in the occupied territories before negotiations between the parties can resume.
Since November last year, opposition to the freeze has mounted from the political right in Israel, with a few clashes taking place between settlers and security personnel who were escorting government inspectors to settlements to enforce the construction ban.
RIA: No signal on Iran sanctions for Russia's UN mission – envoy
02:34
03/03/2010
The Russian permanent mission to the United Nations has not yet received any signal to start working on new sanctions against Iran, Russia's ambassador to the UN said on Wednesday.
Emanuel Issoze-Ngondet of Gabon, who holds the rotating Security Council's presidency for this month, said on Tuesday that the 15-member UN body might discuss the resolution later in March, though the issue has yet to be put on the agenda.
Vitaly Churkin told reporters on Wednesday that the Russian delegation to the UN "has not yet been instructed to start its work on a new [Security Council] resolution," which imposes the fourth set of sanctions against the Islamic republic over its controversial nuclear program.
Iran's recent move to begin enriching uranium to 20% sparked a new wave of international criticism, with the U.S. leading calls for new harsher sanctions against the Islamic Republic.
Russia and China, who are veto-wielding Security Council members, have so far been reluctant to the move. However, Russian President Dmitry Medvedev said on Monday he does not rule out sanctions, but they should be balanced and wise and not target civilians.
NEW YORK, March 3 (RIA Novosti)
News.az: UN General Assembly adopts resolution on cooperation with CSTO
Wed 03 March 2010 | 06:51 GMT
UN will develop cooperation with the Collective Security Treaty Organization (CSTO).
UN will develop cooperation with the Collective Security Treaty Organization (CSTO), including in areas as combating terrorism and drug threat, according to the resolution adopted in UN General Assembly at Russia's initiative.
CSTO, which has had observer status under UN as a regional organization since 2004, includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. All these countries have co-sponsored the resolution, according to gazeta.ru.
Russia has repeatedly called for a greater use of the CSTO potential in peacekeeping, as well as in the UN activity to solve the problems of Afghanistan, particularly in the fight against terrorism and the drug threat.
According to the resolution adopted on Tuesday, the Assembly offers the specialized organs of the UN system, such as the Department of Political Affairs, Office on Drugs and Crime, Terrorism Committee and its Executive Directorate, to cooperate and develop direct contacts with the Collective Security Treaty Organization for the joint implementation of programs to achieve their goals. In addition, the General Assembly calls upon the UN Secretary-General to conduct regular consultations with the CSTO Secretary General.
According to Russia's envoy in the UN Vitaly Churkin, the next step in the development of cooperation between the two organizations will be the preparation of a document to regulate the relations between the CSTO and UN secretariats.
Interfax-Azerbaijan
Itar-Tass: UN GA adopts resolution on UN-CSTO cooperation development
03.03.2010, 10.14
UNITED NATIONS, March 3 (Itar-Tass) - The UN General Assembly on Tuesday adopted a resolution aimed at the development of cooperation between the Collective Security Treaty Organisation (CSTO) and the United Nations. This document co-authors of which are all CSTO member states (Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) was presented at the UN General Assembly meeting by Russia’s delegation.
The document emphasises “the importance of the strengthening of the dialogue, cooperation and coordination between the UN system and CSTO.” It also contains an appeal to specialised bodies of the UN system, “such as the Department for Political Affairs of the UN Secretariat, UN Office on Drugs and Crime, Counterterrorism Committee and its Executive Directorate, to cooperate and develop direct contacts with the CSTO aimed at the attainment of their goals.”
Presenting the draft resolution Russian Permanent Representative to the United Nations Vitaly Churkin noted that since 2004 the CSTO has the status of observer in the UN General Assembly, and on January 16, 2008 the Agreement on the peacekeeping activity of this organisation came into force.
“The new resolution will make it possible to really strengthen CSTO-UN interaction, to expand their mutual abilities to assist the efforts to ensure peace, security and cooperation on the regional and global scale,” Churkin said. The mechanism of CSTO peacekeeping activity “can be used in peacekeeping operations, including under the aegis of the United Nations,” he added.
The Collective Security Treaty Organisation was founded on October 7, 2002, by the Presidents of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan, who signed a charter in Tashkent, founding the CSTO or simply The Tashkent Treaty. Nikolai Bordyuzha was appointed secretary general of the new organisation. On 23 June 2006, Uzbekistan became a full participant in the CSTO and its membership was formally ratified by its parliament on 28 March 2008. The CSTO is an observer organisation at the United Nations General Assembly.
The charter reaffirmed the desire of all participating states to abstain from the use or threat of force. Signatories would not be able to join other military alliances or other groups of states, while aggression against one signatory would be perceived as an aggression against all. To this end, the CSTO holds yearly military command exercises for the CSTO nations to have an opportunity to improve inter-organisation cooperation. The largest-scale CSTO military exercise held to date were the “Rubezh 2008” hosted in Armenia where a combined total of 4,000 troops from all 7 constituent CSTO member countries conducted operative, strategic, and tactical training with an emphasis towards furthering efficiency of the collective security element of the CSTO partnership.
The CSTO grew out of the framework of the Commonwealth of Independent States, and first began as the CIS Collective Security Treaty (CST) which was signed on May 15, 1992, by Armenia, Kazakhstan, Kyrgyzstan, Russian Federation, Tajikistan and Uzbekistan, in the city of Tashkent. Azerbaijan signed the treaty on September 24, 1993, Georgia on December 9, 1993 and Belarus on December 31, 1993. The treaty came into effect on April 20, 1994.
The CST was set to last for a 5-year period unless extended. On April 2, 1999, only six members of the CST signed a protocol renewing the treaty for another five-year period - Azerbaijan, Georgia and Uzbekistan refused to sign and withdrew from the treaty instead. At the same time Uzbekistan joined the GUAM group, established in 1997 by Georgia, Ukraine, Azerbaijan, and Moldova, and largely seen as intending to counter Russian influence in the region.
On October 6, 2007, CSTO members agreed to a major expansion of the organisation that would create a CSTO peacekeeping force that could deploy under a UN mandate or without one in its member states. The expansion would also allow all members to purchase Russian weapons at the same price as Russia.
On August 29, 2008, Russia announced it would seek CSTO recognition of the independence of Abkhazia and South Ossetia. Three days before, on August 26, Russia recognised the independence of Georgia's breakaway regions of Abkhazia and South Ossetia.
On February 4, 2009, an agreement to create the Collective Rapid Reaction Force (KSOR) was reached by five of the seven members, with plans finalized on June 14. The force is intended to be used to repulse military aggression, conduct anti-terrorist operations, fight trans-national crime and drug trafficking, and neutralize the effects of natural disasters.
CSTO Secretary-General Nikolai Bordyuzha said at a UN meeting devoted to UN-CSTO cooperation in January, in particular, that “We believe that countering of terrorism, fight against illicit production and trafficking of narcotic drugs, putting an end to the illegal arms trade, organized trans-national crime, prevention of and rehabilitation after emergency situations form yet an incomplete list of topics in providing regional and international security that require intensified cooperation of the UN with regional organisations and the enhanced interaction between the organisations themselves.”
Gazeta.kz: Prime Ministers of Kazakhstan and Russia to discuss development prospects in space, transport branches
[14:19] 03/03/2010, "Kazakhstan Today"
Almaty. March 3. Kazakhstan Today - The Prime Minister of the Russian Federation, Vladimir Putin, will hold on March 3, 2010 the meeting with the Prime Minister of Kazakhstan, Karim Masimov, who will visit Moscow, the agency reports citing RIA RosBusinessConsulting (RBC).
According to the press service of the Russian prime minister, during the negotiations, the officials will discuss the pressing questions of mutual relations of Russia and Kazakhstan, will sum up the results and will define prospects of their development in space, nuclear and transport branches, in the military-technical cooperation, fuel and energy complex, and rational use of water resources of the transboundary rivers.
The Prime Ministers of two countries will talk about the questions of functioning of the Customs Union and formation of the uniform economic space, cooperation within the Eurasian Economic Community, the Collective Security Treaty Organization and the Commonwealth of Independent States, and the joint celebration of the 65th anniversary of the victory in the Great Patriotic War.
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The Georgian Times: Nino Burjanadze leaves for Moscow
The leader of Democratic Movement – United Georgia Nino Burjanadze has left for Moscow this morning.
`I am going to Moscow to protect the interests of my people and my country,` Mrs. Burjanadze told reporters before the departure in Tbilisi airport.
She said, considering the fact that only by peaceful negotiations it is feasible to settle tension with Russia, because political dialogue with this country is vital for Georgia.
Burjanadze did not unveil the schedule of the meetings she is going to held in the Russian capital. She said she would sum up the visit after it is over.
After the visit to Moscow, Mrs. Burjanadze will hold meetings in Europe and the United States.
Rustavi2 2010.03.03 11:32
Aysor: Nino Burjanadze to pay a visit to Moscow
Georgia’s Democratic Movement United Georgia issued Tuesday a statement, announcing that Movement’s leader Nino Burjanadze is going to pay a visit to Moscow. Burjanadze is reported to visit Russia, standing from interests of Georgia.
“Political dialogue with Russia is a matter of life and death for Georgian unity,” said in the statement.
“Georgian society has no idea about real Georgian-Russian relations and it’s unclear what ways we have for reconciliation of the two countries’ relations.”
TODAY, 11:23
Aysor.am
Trend.az: EU delegation visits Upper Lars checkpoint on Georgia-Russia border
03.03.2010 12:32
Georgia, Tbilisi, March 3 / Trend News, N. Kirtskhalia /
The European Union's delegation, headed by Miguel Angel Moratinos, Spanish Foreign Minister, which currently holds the European Union`s rotating presidency has visited today Upper Lars checkpoint on the Georgia-Russia border. The delegation went to the checkpoint directly from the Tbilisi airport, where arrived this morning with a two-day visit.
"For us it is important to examine the situation on the border and see how the opening of the checkpoint contributes to improving the Georgian-Russian relations. We are all interested in this," Moratinos stressed in his interview to journalist on the border.
He met with EU monitors, which are monitoring the situation on the border and occupied territories of Georgia.
During the high-ranking EU delegation's visit issues connected with the Georgian security policy and the role of the EU Monitoring Mission (ECMM) in Georgia and the need to carry out its mandate in the territory of Abkhazia and South Ossetia will be considered.
During the visit to Georgia, the representatives of the delegation will meet with President Mikheil Saakashvili, Georgian Foreign Minister Grigol Vashadze, Parliament Speaker David Bakradze, State Minister for Reintegration Temur Yakobashvili, as well as representatives of political parties.
RIA: No dispute with Russia on Afghan anti-drug policy - U.S. diplomat
06:1503/03/2010
Despite minor disagreements, the U.S. and Russia are working "actively" to shape a common anti-drug policy in Afghanistan, the U.S. Special Representative for Afghanistan and Pakistan said on Wednesday.
In late February, Russia expressed its indignation over NATO's failure to limit opium cultivation in the world's largest heroin producer and criticized the international military contingent in Afghanistan for "practically guarding the fields where the drugs are grown."
"We are working as actively as we can with Russia to work out common policies... We don't always agree on every single detail, but we have the same objective, and so we work it through," Richard Holbrooke said.
He said he had "very extensive talks" on the issue with the head of Russia's anti-drug agency, Viktor Ivanov, last November.
"The Russians think that poppy crop eradication should be continued. We think it works against our larger purpose, and we're focusing on high traffickers' interdiction and destroying drug bazaars, but that's a tactical difference," he said.
Afghanistan produces more than 90% of the world's illegal opium, the main raw material for heroin and a major source of revenue for Afghan Taliban-led insurgency.
Afghan opium production increased dramatically after the U.S.-led invasion that toppled the Taliban in 2001, and Russia has been one of the most affected countries, with heroin consumption rising steeply.
Russia was the biggest consumer of Afghan heroin in 2008, accounting for 21% of Afghanistan's production according to the UNODC report "Addiction, Crime and Insurgency" released in February
Russia's envoy to NATO, Dmitry Rogozin, described "heroin aggression" as "the main threat to Russia," and Moscow urged NATO to prioritize the fight against drug trafficking in Afghanistan earlier this year.
WASHINGTON, March 3 (RIA Novosti)
March 03, 2010 11:36
Interfax: Russian drug control chief criticizes U.S. decision to stop combating opium in Afghanistan.
MOSCOW. March 3 (Interfax) - The U.S. decision to stop combating drug crops in Afghanistan has prompted a growth in heroin influx to Russia, said Viktor Ivanov, the chief of the Russian Federal Drug Control Service (FSKN).
"This is evident from the continuing growth in drug pressure on Russia. In particular, pressure on the North Caucasus increased eightfold last year. This is not surprising, because the U.S. administration‘s decision to stop destroying drug crops is being accompanied by a disastrous decline in the efficiency of international cooperation in destroying the Afghan drug production infrastructure," Ivanov said at a session of the State Anti-Narcotics Committee in Moscow on Wednesday.
David Johnson, U.S. assistant secretary of state for the Bureau of International Narcotics and Law Enforcement Affairs, said at a news briefing on Tuesday that the U.S. had decided to wind down a program for destroying opium poppy fields in Afghanistan, as it had not produced the desired results.
va mj
March 03, 2010 15:51 PM
Bernama: Afghan Police Officers Start Anti-Drug Training In Russia
VIENNA, March 3 (Bernama) -- A group of eleven police officers from Afghanistan will be trained on how to effectively combat drug trafficking during a two-week OSCE-organised course that begins Wednesday in Domodedovo, outside Moscow, Russia's Itar-Tass news agency repored, citing the OSCE press service.
The course is organised by the OSCE (Organisation for Security and Cooperation in Europe) Strategic Police Matters Unit in cooperation with the Russian Interior Ministry's Academy.
The participants will take part in practical exercises to learn how to plan and organise drug trafficking searches and investigations.
They will examine the entire process of prosecuting drugs-related criminal cases from the police investigation to court trials.
"There is a serious problem with drugs in Afghanistan and the menace of drugs goes far beyond the country's borders," said Maj Nezamuddin Nezam, the team leader.
"Drug trafficking fuels insurgency, hampers peace building and undermines the rule of law through violence and corruption in all countries along the trafficking routes."
Kevin Carty, Senior Police Adviser to the OSCE Secretary General, noted that "the illegal trafficking of narcotics constitutes a major threat to international security and stability."
"The OSCE is happy to facilitate this training course for Afghan officers at the Academy in Domodedovo as part of its ongoing support to Afghanistan," he said.
-- BERNAMA
March 03, 2010 11:16
Interfax: Moscow concerned about news of death of Russian boy adopted by Americans
MOSCOW. March 3 (Interfax) - The Russian Foreign Ministry was saddened to hear news about the death of another Russian child adopted by U.S. parents, an official said.
"Surely, we are concerned about these reports and about the fact that, unfortunately, such reports have become systematic as of late," Igor Lyakin-Frolov, a Russian Foreign Ministry spokesman, told Interfax on Wednesday.
It was reported earlier that the U.S. police had charged Michael and Nanette Craver, a couple from Pennsylvania, in the death of their seven-year old son, whom they had earlier adopted from Russia.
The couple is to stand trial for homicide.
"It is difficult to judge what happened at that moment, but we expect that an honest and fair investigation will be conducted and, if the suspects are proven guilty, they will be punished appropriately," Lyakin-Frolov said.
va mj
Itar-Tass: Medvedev ends state visit to France
03.03.2010, 00.29
PARIS, March 3 (Itar-Tass) - Russian President Dmitry Medvedev ends his state visit to France on Wednesday.
During his visit that began on Monday Medvedev had substantial talks with his French counterpart Nicolas Sarkozy. After the talks a range of documents was signed and the two countries’ leaders gave a news conference.
The Russian president also held talks with French Prime Minister Francois Fillon and the heads of the two houses of the French parliament.
Medvedev also met with the Paris city mayor and delivered a speech at the city hall. He laid flowers at the Tomb of the Unknown Soldier at the Arc de Triomphe.
Medvedev also had a meeting with Russian and French business people.
One of the central events of the visit is the opening of a unique Holy Russia exhibition in the Louvre Museum. This event gave the launch to a project entitled the Russia France Cross Year.
The second day of Medvedev’s visit ended with a state dinner hosted by President Nicolas Sarkozy and First Lady Carla Bruni.
RIA: Russian, French presidents speak of "common values" at dinner
02:0503/03/2010
The Russian and French presidents, Dmitry Medvedev and Nicholas Sarkozy spoke about "strategic partnership" and "common values" during the state dinner.
Sarkozy and his wife, the former supermodel Carla Bruni-Sarkozy welcomed Medvedev and his wife Svetlana in the Elysee Palace on the last formal event of Dmitry Medvedev's state visit to France which began on Monday.
"I raise my glass to our strategic privileged partnership, to the rise of the great Russian people, to friendship between Russia and France... You know that France is a big friend of Russia," Sarkozy said.
"Today we have special, privileged and close relations with France. Indeed, we have a common approach to current events... We share common values, at least as I see it, and we are open to friendship and cooperation," Medvedev said in his turn.
The visit marks the official start of the Year of Russia in France and France in Russia. Russia's first couple will return home on Wednesday.
PARIS, March 3 (RIA Novosti)
Financial Times: Sarkozy shifts stance towards Russia
By Ben Hall in Paris and Charles Clover in Moscow
Published: March 3 2010 01:36 | Last updated: March 3 2010 01:36
Nicolas Sarkozy’s decision to sell not one but four helicopter and troop-carrying ships to Moscow completes a remarkable turnround in his attitude towards Russia.
The announcement by the French president during a state visit by Dmitry Medvedev, his Russian counterpart, marked a shift from hostility to warm embrace.
Before his election victory in 2007, Mr Sarkozy distanced himself from Jacques Chirac’s pro-Russia stance, sharply criticised Moscow’s human rights record and its actions in Chechnya, and said he would rather shake the hand of President George W. Bush than that of President Vladimir Putin.
But in December 2007, following Mr Putin’s contentious victory in parliamentary elections, Mr Sarkozy was the first world leader to congratulate him. In 2008, he negotiated a ceasefire in hostilities between Russia and Georgia that allowed Russia to keep its troops inside Georgian territory.
Mr Sarkozy’s rapprochement with Russia has been driven by the calculation that France’s diplomatic and commercial interests are best served by friendly ties with Moscow.
Mr Sarkozy has watched Angela Merkel, German chancellor, nurture a special political and trade relationship with Russia, while Barack Obama, US president, has called for a new start in ties with Moscow. The French president wants to be part of the action.
“Nicolas Sarkozy has got back on the traditional path of French diplomacy: speaking to Moscow to hold more sway in Europe and beyond,” said Thomas Gomart, analyst at the French Institute for International Relations.
But, Mr Gomart added, this time Paris was not aiming at counterbalancing Washington. France was also aware that it had to keep on board its Nato and European Union partners in eastern Europe.
Mr Sarkozy implied that the defence sale was a quid pro quo for Russian co-operation in diplomatic efforts, of which Paris is the most vocal advocate, to stop Iran’s nuclear ambitions.
The west, he said alongside Mr Medvedev at the Elysée palace on Monday, could not ask Russia to act as a partner in global security issues and then treat it as an adversary in procurement questions.
“We cannot say in the morning, ‘Ah, I trust you, let’s vote together on a [UN] Security Council resolution’ and in the evening say ‘no, no, I will not sell you the [Mistral] ship’.”
Mr Sarkozy’s apparent strategic U-turn has raised few eyebrows in Russia, where foreign policy experts see France simply fulfilling its long-held role of being a strategic “balancer” on the continent, preserving its own interests while juggling those of other great powers.
“The French position has been very clear since ... de Gaulle,” said Fyodor Lukyanov, chief editor of the Moscow-based journal Russia in Global Affairs.
“They see the diversification of relations with the great powers as a guarantee of stability in Europe.”
MARCH 2, 2010, 7:27 A.M. ET
Dow Jones: Total CEO: In Talks On Projects In Russia
PARIS (Dow Jones)--French oil major Total SA (TOT) is in talks on potential projects in Russia, Chief Executive Christophe de Margerie said Tuesday in an interview with BFM Radio, but these discussions aren't sufficiently advanced to lead to a deal yet.
Margerie also reconfirmed his view that oil prices are likely to range between $60 and $100 a barrel in 2010.
In a January interview, de Margerie said the supply-demand balance is pushing prices down, but at the same time expectations are pushing them higher.
-By Elena Berton, Dow Jones Newswires; +33 1 40 17 17 65; elena.berton@
Itar-Tass: Russia plane with humanitarian relief supplies flies to Chile
03.03.2010, 10.35
MOSCOW, March 3 (Itar-Tass) - Russian Emergency Situations Ministry’s plane with humanitarian relief supplies for the Chilean quake-stricken population has flied to Chile, the ministry’s information department told Itar-Tass on Wednesday.
“The Ilyushin Il-76 transport plane took off from the Ramenskoye airfield outside Moscow at 09:15, Moscow time, today,” a ministry official said. “It took on board large tents, blankets, pumps. The total weight of the relief cargo is 28 tonnes,” he added.
Russia is providing humanitarian aid to Chile on instruction of the RF president. “On March 4, another plane of the Emergencies Ministry will fly to the affected area,” the ministry said.
On March 2, RF President Dmitry Medvedev instructed the Ministry for Emergency Situations to send relief supplies to Chile, which was hit by a strong an earthquake. “The president instructed the emergencies minister to send relief supplies to Chile,” the Kremlin press service said on Tuesday.
The Chilean authorities informed Russia about the country’s needs in relief supplies and the equipment for rescue operations in the districts hit by a strong earthquake, Russian Ambassador in Chile Yuri Filatov told Itar-Tass earlier. According to the ambassador, he met with Chilean First Deputy Foreign Minister Angel Flisfisch Fernandez. “We discussed Chile’s primary needs in the disaster area,” Filatov said. “It is the needs for search-and rescue teams, specialized equipment for accommodating people left without shelter and communications gadgets,” the diplomat said. He emphasized that “the concrete volume of relief supplies was coordinated between the Russian Emergency Situations Ministry and the Chilean corresponding services.”
According to latest data, the earthquake in Chile caused the death of 795 people. Rescuers are continuing the debris clearing efforts.
The 2010 Chile earthquake occurred off the coast of the Maule Region of Chile on February 27, 2010, at 03:34 local time (06:34 UTC), rating a magnitude of 8.8 on the moment magnitude scale and lasting for about three minutes. The cities experiencing the strongest shaking-VIII (Destructive) on the Mercalli intensity scale-were Talcahuano, Arauco, Lota, Chiguayante, Canete, and San Antonio. The earthquake was felt in the capital Santiago at Mercalli intensity scale VII (Very Strong). Tremors were felt in many Argentine cities, including Buenos Aires, Cordoba, Mendoza and La Rioja. Tremors were felt as far north as the city of Ica in southern Peru. Tsunami warnings were issued in 53 countries, and a tsunami was recorded, with amplitude of up to 2.6 m (8 ft 6 in) high, in the sea at Valparaiso, Chile. President Michelle Bachelet declared a “state of catastrophe.” She also confirmed the deaths of at least 723 people. Many more have been reported missing.
Seismologists estimate that the earthquake was so powerful that it has shortened the length of the day by 1.26 microseconds and moved the earth's axis of rotation by 3 inches or 2.7 miliarcseconds.
The epicentre of the earthquake was offshore from the Maule Region, approximately 8 km (5.0 miles) west of Curanipe and 115 km (71 mi) north-northeast of Chile's second largest city, Concepcion. The earthquake also caused seiches to occur in Lake Pontchartrain to the north of New Orleans, United States, located nearly 4,700 miles (7,600 km) from the epicentre of the quake.
The earthquake took place along the boundary between the Nazca and South American tectonic plates, at a location where they converge at a rate of eighty millimetres (about three inches) a year. This earthquake was characterized by a thrust-faulting focal mechanism, caused by the subduction of the Nazca plate beneath the South American.
The Chilean coast has suffered many megathrust earthquakes along this plate boundary, including the strongest earthquake ever measured. Most recently, the boundary ruptured in 2007.
The segment of the fault zone which ruptured in this earthquake was estimated to be 640 km (400 mi) long. It lay immediately north of the 1,000 km (620 mi) segment which ruptured in the great earthquake of 1960.
An aftershock of 6.2 was recorded 20 minutes after the initial quake. Two more aftershocks of magnitudes 5.4 and 5.6 followed. The USGS said that “a large vigorous aftershock sequence can be expected from this earthquake.” By 00:00 am UTC March 1, more than one hundred aftershocks had been registered, including eight above magnitude 6.0.
Damaged buildings and fires were reported in Concepcion. Rescue teams had difficulty accessing Concepcion because of the damaged infrastructure. The fifteen-storey residential building “Alto Rio” fell backwards, horizontally lay on the ground, and trapped many of the residents. As the building was newly completed, 19 of the apartments were occupied and 36 were unknown if there were inhabitants therein. A 2.34 m (7.68 ft) tsunami wave hit Talcahuano, a port city and part of the Concepcion conurbation. The tsunami caused serious damage to port facilities and lifted boats out of the water. In the Chilean fishing town of Dichato, which has 7,000 residents, it was the third tsunami wave that was the most damaging.
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The Moscow Times: Russia Sends Aid to Quake-Hit Chile
03 March 2010
The Moscow Times
President Dmitry Medvedev has ordered the Emergency Situations Ministry to send two cargo planes loaded with humanitarian aid to Chile after the South American country was rocked by a powerful earthquake last week, a Kremlin spokesman told reporters Tuesday.
The first Il-76 cargo plane carrying tents, blankets and electric power generators will arrive in Chile on Wednesday, and a second plane with other humanitarian aid will follow a day later, a ministry spokeswoman told The Moscow Times on Tuesday.
“No Russian rescue teams will be sent there, only the aid,” she said.
More than 700 people have died and about 2 million have been displaced after the magnitude-8.8 earthquake hit the Chilean coast last Friday. No Russian citizens were killed or wounded during the quake, but the Russian Embassy in the capital of Santiago was slightly damaged.
Russian rescue teams recently took part in a relief operation in Haiti after the Caribbean Island was devastated by a powerful earthquake in January.
RIA: Russia sends cargo plane with aid to quake-hit Chile
09:3903/03/2010
ZHUKOVSKY (Moscow Region), March 3 (RIA Novosti) - A Russian emergencies ministry's Il-76 plane took off on Wednesday for quake-hit Chile carrying some 28 tons of humanitarian cargo.
A devastating earthquake measuring 8.8 on the Richter scale struck near the coast of Chile on February 27, killing at least 800 people. The quake was followed by a series of aftershocks and tsunamis leaving some 2 million Chileans homeless and damaging about 1.5 million houses.
The humanitarian cargo on board the Russian plane includes tents, diesel generators, pumps, blankets and food.
A second emergencies ministry plane with more humanitarian cargo is scheduled to leave on Thursday from an airport in the Moscow Region.
The Local: Sweden sets sights on easing Russian relations
Published: 3 Mar 10 07:33 CET
A diplomatic thaw between Sweden and Russia appears to be imminent. On Tuesday Fredrik Reinfeldt and Carl Bildt will head to Moscow to meet prime minister Vladimir Putin and president Dmitrij Medvedev.
Sweden's prime minister Fredrik Reinfeldt intends to use the meeting to discuss continued climate negotiations and EU cooperation with Medvedev, and the Baltic Sea cooperation and environmental issues with Putin, according to the Dagens Nyheter daily.
Swedish-Russian relations have been in the doldrums since Sweden strongly criticised Russia in connection with the Georgian war in 2008. Reinfeldt has underlined the importance of existing peace agreements but feels that now is the time to work for an improvement in relations with the EU's oil and gas-rich neighbour.
The visit is Reinfeldt's first during his tenure as prime minister.
Bildt and Reinfeldt plan to spend some of their one-day visit in discussions with Swedish business people in Moscow as well as Russian human rights groups.
TT/The Local (news@thelocal.se/08 656 6518)
03/03/2010
|Radio Sweden: Reinfeldt and Bildt to Moscow |
| |
|The recent thaw in diplomatic relations between Sweden and Russia continues with prime minister Fredrik Reinfeldt and foreign |
|minister Carl Bildt announcing a state visit to Moscow next Tuesday to meet Vladimir Putin and president Dmitrij Medvedev. |
|Reinfeldt said talks with Medvedev will focus on climate change negotiations , EU cooperation and trade, while the meeting |
|with prime minister Putin will involve Baltic sea cooperation and environment questions. |
|Sweden, as president of the EU in the second half of last year, hosted an EU summit with Russia, beginning a fresh start in |
|relations which had detoriated in recent years. |
|Sweden has been critical of Russia's human rights record and the war in Georgia in 2008. |
|Sweden's approval of the Russian-led Nord stream pipeline to pass through their waters in the Baltic sea marked a thawing in |
|relations. |
Wed, 03 March 09:59 2010
Euro Weekly News: Russian mafia case collapses
SPAIN - ANTI Corruption Prosecutors are seeing their two and a half year case against alleged Russian mob kingpin Gennadios Vasilievich Petrov collapse. Petrov, was arrested at his 20m euro mansion in Calvia (Mallorca) in June 2008 in the police ‘Operacion Troika’ accused of involvement in extortion, murder, tax evasion illicit association, falsification of documents and drugs trafficking, and was allegedly the boss of the feared Russian Tambovskaya-Malyshevskaya organised crime gang.
Another 20 or so people were arrested in the across Spain, including the Costa del Sol, as part of Operacion Troika. Among them was Petrov’s alleged under-boss Alexander Malyshev, who was arrested at a luxury mansion in Malaga.
On February 9 Petrov went to Madrid with his lawyers to give evidence to Garzon, Anti Corruption and organised crime Prosecutor Jose Grinda and Balerarics prosecutor Juan Carrau. According to El Mundo, the case being mounted against Petrov is related to him having allegedly corrupted a Russian General called Nikolai Nikolaevich Aulov, a prosecutor called Igor Sobolevski and the Russian minister Vladislav Reznik, who used to work for former President Putin.
It is thought that a document later issued by Federal Security Service in Saint Petersburg (Russia) clearing Petrov from any suspicion of corruption and stating that he is not being investigated for anything may have played a part in the apparent collapse of the case.
It now seems the massive case, will leave Petrov with charges of money laundering, if that.
Reuters: CORRECTED - UPDATE 1-Russia-U.S. talks on poultry continue-Vilsack
Wed Mar 3, 2010 4:19am IST
* U.S. producers looking at processing alternatives
* USDA's Jim Miller to stay in Moscow to work on spat (Corrects seventh paragraph to show Russia took 26 percent of Tyson's chicken exports four years ago, not about 50 percent)
WASHINGTON, March 2 (Reuters) - Top U.S. and Russian officials are looking at poultry processing alternatives to chlorine in the hopes of finding a solution to a trade spat that has shut U.S. chicken out of its top export market, U.S. Agriculture Secretary Tom Vilsack said on Tuesday.
After two days of talks, Jim Miller, the USDA's undersecretary charged with trade matters, will remain in Moscow, Vilsack said.
"Hopefully, we get something done in the next couple of days," he told reporters on the sidelines of a hearing on Capitol Hill.
Russia suspended U.S. poultry imports on Jan. 19 because it says a chlorine wash routinely used in U.S. processing plants violates its food safety standards.
The United States says its poultry is safe. Talks last month in Moscow failed to resolve the issue.
Sanderson Farms Inc (SAFM.O), a major U.S. chicken producer, said last week it was trying a new rinse in some plants in hopes of winning back sales to Russia. [ID:nN2311280]
Tyson Foods Inc (TSN.N) said on Monday it had reduced the amount of chicken it exports to Russia to about 10 percent of its total exports, from 26 percent four years ago, as the company works to find other markets for the product. [ID:nN01113200]
The USDA is "very optimistic" it can resolve a separate issue that has stopped pork exports from most U.S. plants, Vilsack said. (Reporting by Charles Abbott; writing by Roberta Rampton; Editing by Walter Bagley)
Itar-Tass: Putin to hold meeting of govt comsn on high technology, innovation
03.03.2010, 09.31
MOSCOW, March 3 (Itar-Tass) - Russian Prime Minister Vladimir Putin on Wednesday will chair a meeting of the RF government’s Commission on high technologies and innovations, the government’s press service reported.
During the meetings the heads of ministries, departments, state corporations, the Russian Academy of Sciences, business representatives will discuss methods of raising efficiency of the use of funds allotted for the innovation activity.
The goals and tasks of the national innovation policy are formulated in the Concept of Long-Term Socio-Economic Development and Guidelines of the RF Government Activity for a period up to 2012. These issues are also reflected in the Strategy of the Development of Science and Innovations in Russia up to 2015 and the Complex Programme of Scientific-Technological Development and Technical Modernisation of the RF Economy up to 2015.
The level and efficiency of research and innovation activity in Russia is so far considerably behind the results of the countries leading in this sphere. Russia’s spending on research and development is estimated at 1.03 percent of the GDP (2008) against 2.3 percent GDP (2007) in countries of the Organisation for Economic Cooperation and Development (OECD) and 1.42 percent GDP in China (2007).
With the aim of more efficient implementation of the state innovation policy the Commission meeting participants intend to consider proposals on the ministries and departments concerned also on such issues as the development of long-term plans of state purchases with the mandatory innovation component, including the creation of new products and technologies; the financing of the innovation policy priorities for 2011-2012, including spending within the framework of federal targeted innovation programmes, capitalisation of development institutes and other spending; the formation of the package of tax stimuli, including accelerated depreciation of intangible assets, possibility of registration of intangible assets at the actual prime cost of their creation.
It is also planned to discuss ways of raising efficiency of state targeted programmes and projects, including by means of the formation of an efficient system of the science and technology expert examination; creation of conditions for the financial and economic independence of research institutions; ensuring information support for research projects.
One of the main mechanisms of the implementation of the state scientific-technical policy is the periodical adjustment of priorities of the development of science, technology, equipment and the list of critical RF technologies that is conducted at least once in four years. This makes it possible to timely update the priority spheres, promptly react to the tasks of technological development and demands of the scientific community.
On the results of the adjustment the Commission will consider at the meeting the specified priority spheres and critical technologies that then will be submitted to the RF president for approval.
The RF Government Commission on High Technologies and Innovations is a permanent body set up to coordinate the activities of federal bodies of executive authority and ensure their cooperation with regional executive bodies, public associations, and scientific and other interested organisations in making proposals concerned with the implementation of state policy on scientific and technological development and on the national innovations system, including scientific and technological activities and high tech sectors of the economy, it is said on the RF government’s website.
The Commission has the following responsibilities: to coordinate the activities of federal executive bodies in formulating and implementing a unified state policy on scientific and technological development, the national innovations system, and the sustainable renovation of the Russian economy; to make long-term scientific and technological forecasts; to develop nano-technologies and nano-industry; to establish a market for nano-products and nano-services.
The commission’s Members are, in particular:
Sergei Ivanov: Deputy Prime Minister (Chairman of the Commission);
Elvira Nabiullina: Minister of Economic Development (Deputy Chairman of the Commission); Andrei Fursenko: Minister of Education and Science (Deputy Chairman of the Commission); Igor Artemyev: Head of the Federal Anti-Monopoly Service; Igor Borovkov: Head of the Government Military-Industrial Commission's Executive Office, Deputy Chief of the Government Staff; Vladimir Dmitriyev: chairman of Vnesheconombank; Yevgeny Kablov: Director General of the All-Russian Research Institute of Aviation Materials; Anatoly Karachinsky: Chairman of the board of the Information Business Systems company (external advisor) Sergei Kiriyenko: Director General of the Rosatom State Nuclear Corporation; Andrei Klepach: Deputy Minister of Economic Development; Mikhail Kovalchuk: Director of the Shubnikov Institute of Crystallography of the Russian Academy of Sciences, Director of the Kurchatov Institute Russian Research Centre; Sergei Mazurenko: Head of the Federal Agency for Science and Innovation; Denis Manturov: Deputy Minister of Industry and Trade, and others.
RIA: Putin allocates $37 million to build supercomputers in Russia
04:1703/03/2010
Russian Prime Minister Vladimir Putin has allocated 1.1 billion rubles ($37 million) to develop supercomputer technologies in Russia.
The Russian government boosted funding for supercomputer researches after 2000.
Supercomputers perform mainly highly calculation-intensive tasks and used in areas like quantum physics and climate researches. Their speed is measured in FLOPS (FLoating Point Operations Per Second), most commonly used with a tera- prefix.
In 2004 Russia launched its fastest supercomputer, Lomonosov, in the Moscow State University's Research Computing Center. With the peak speed of 420 TFLOPS, it is ranked 12th the Top500 list of the world's fastest computers.
Eight of the top 10 computers in the list are U.S.-based, including the three fastest - Jaguar in the Oak Ridge National Laboratory (2,331 TFLOPS), Roadrunner in the Los Alamos National Laboratory (1375.78 TFLOPS) and Kraken in the National Institute for Computational Sciences (1028.85 TFLOPS).
MOSCOW, March 3 (RIA Novosti)
March 03, 2010 10:12
Interfax: Rosatom to get over 55 bln rubles for nuclear plant, supercomputers, medicine
MOSCOW. March 3 (Interfax) - State-run Rosatom will receive from the budget in 2010 more than 55 billion rubles for the building of an atomic power station, for other scientific research and design, under a resolution signed by Prime Minister Vladimir Putin on February 27.
Rosatom will also receive 53.2 billion rubles for nuclear power industry development this year.
It will receive 1.1 billion rubles for scientific research under the program "Developing supercomputers and grid technology, 430 million rubles for the creation of a transport-energy module based on nuclear-powered megawatt facility under the project "Cosmos and telecommunications".
And 400 million rubles will be used by Rosatom to organize the production of new radiopharmacological and medical substances, as well as putting together a services network for high-tech medical assistance
Itar-Tass: Russia to allocate 20 bln rbls for milk production this year
03.03.2010, 11.43
MOSCOW, March 3 (Itar-Tass) - Russia will allocate 20.6 billion roubles this year to fund the program to develop dairy farming, First Deputy Prime Minister Viktor Zubkov said at the first Congress of milk producers on Wednesday.
"The funding (to support this sector - eds Itar-Tass) reached some 13 billion roubles in 2009," Zubkov said.
"Stock breeding allocations from the budget have increased by more than 25 percent. They will amount to 53 billion roubles (which includes the funding of regional programs) this year, versus 40 billion roubles in 2009," he added.
He specially noted the subsidized investment loans to support the sector. They are prolonged by three years. In his opinion, further increase in the payback period is inexpedient. "It will only mothball debt problems and hamper the sector's development," the first deputy prime minister said.
Zubkov also said the government interventions on the market of milk are expected to facilitate the development of this sector.
"We're starting them for the first time this year," he said.
The producers and sellers of milk who gathered in Moscow for their first Congress are expected to arrive at one opinion regarding the fair price of this product.
The organizers of the congress - the national union of milk producers (SOYUZMOLOKO) - believe that they cannot boost the output without fair prices. To this end, their profits should increase to the "European level," i.e. from 30 percent to 40 to 45 percent.
However, this does not mean price hikes for the consumers, SOYUZMOLOKO chairman of the board Andrei Danilenko said.
"We wish to agree on eventual profitability for all: producers, processing companies and sellers. The main objective is to restore the level of milk consumption of Russia, which has plunged by 40 percent since the 1990s.
"Our producers' milk meets all the current world standards of quality. It’s wholesome," Danilenko said.
He also assured that the potential of this industry enables Russia to fully meet the domestic demand for milk by 2010, and also export milk.
The Congress will consider measures to stimulate the development of the sector in the next three years.
First Deputy Prime minister Viktor Zubkov, Agriculture Minister Yelena Skrynnik and chief sanitary office Gennady Onishchenko will read reports at the Congress.
The Agriculture Ministry, the Penza region administration and SOYUZMOLOKO are expected to sign an agreement on building the first regional dairy factory in the Penza region, while the FosAgro company and SOYUZMOLOKO are to endorse several joint document, including the terms of supplies of fertilizers for Union members.
Under the food security doctrine, adopted in January, the share of domestic dairy farms in the supplies of milk to the Russian market should be brought to 90 percent. By 2012, imports of milk may decrease to 16.6 percent, Agriculture Minister Yelena Skrynnik said earlier.
Russian milk producers find it difficult to compete with colleagues from Belarus and EU countries, despite a high quality of their products. The prices of imported milk are below the production cost thanks to state subsidies for dairy farms in Belarus and the EU.
Last week, purchase prices of raw milk increased by 3 percent and consumer prices of milk grew 0.4 percent. The price of butter and cheese increased 0.8 percent and 0.9 percent, respectively.
The imports of dairy products have increased, compared with the beginning of 2009. The world prices of skim milk, butter and cheese have shown a trend toward a decrease.
The Moscow Times: Changes to Economic Crimes Bill Greeted by Business
03 March 2010
By Vera Kholmogorova and Alexei Nikolsky / Vedomosti
President Dmitry Medvedev has decided to remove from the Criminal Code the article on false entrepreneurship, reduce prison terms for money laundering and increase the threshold for economic crimes to be treated as major and massive, Vedomosti has learned.
Medvedev carried through on his promise Saturday to business representatives, submitting to the State Duma on Monday a host of changes to the Criminal and Criminal Procedural codes that would liberalize how economic crimes are punished.
The bill, a copy of which was obtained by Vedomosti and made available on the newspaper's web site, would remove from the Criminal Code Article 173, on false entrepreneurship, and it would remove violations of licensing terms and conditions from Article 171, on illegal entrepreneurship, and Article 172, on illegal banking activity. The formulation was too vague and led to broad interpretations, according to explanatory notes accompanying the legislation.
Money laundering, covered under Article 174, Point 1, would now require the presence of a defining characteristic: The action must "give the appearance of legality to the ownership, use or distribution of the indicated funds." The change was needed to prevent someone charged, for example, with false entrepreneurship, from also facing laundering charges for making any purchase with the funds in question.
The punishment for money laundering would be reduced to between three and 10 years, from the current five to 15. Medvedev's bill also proposes increasing the levels of funds involved in economic crimes when determining whether an offense was "major" or "massive."
The planks would be raised sixfold to 1.5 million rubles ($50,000) for major offenses and 6 million rubles ($200,000) for the most serious economic crimes.
The liberalization of the money-laundering law will change how arrests are made, said lawyer Vladimir Zherebenkov. Now, suspects can be locked up while on trial for "serious" and "severe" crimes — carrying maximum sentences of five to 10 years and 10 years or more, respectively. The money-laundering charge is often tacked on to other crimes to make them more serious, he said.
Previously, the law had never included a clear definition of what constitutes money laundering, meaning that investigators were free to interpret it however they wanted. The president's proposals will help reduce the number of arrests, Zherebenkov said.
The bill would also establish minimum bail sizes. Suspects in minor and serious crimes would need to post at least 100,000 rubles, while suspects in severe crimes would be required to offer at least 500,000 rubles. Physical property, stocks and bonds will also be allowed to serve as bail.
On Feb. 1, a group of senior United Russia officials, led by Duma Speaker Boris Gryzlov, submitted changes to Article 108 of the Criminal Procedural Code that would prevent suspects accused of 33 economic crimes from being held in pretrial detention, as long as the charges did not fall under the serious or severe categories.
The president's changes would also ban pretrial detentions for the offenses listed in the earlier bill, and they add to the list fraud, embezzlement and causing material damages — as long as the crimes are related to business.
Pretrial detentions for economic crime will only be used in exceptional circumstances, according to the bill's explanatory notes. The majority of people accused of such crimes "do not pose a major threat to society if they remain free pending a verdict," and "the excessively harsh and not always justified practices of investigators and the courts" when choosing how to restrict a defendant's movement have led to a situation where 70,000 incarcerated suspects are not sentenced to prison terms.
Finally, Medvedev's changes would stiffen the repercussions for officials who try to interfere with business. For example, refusing to register an individual entrepreneur or to offer a license, as well as illegal interference in business activity, will be punishable by a fine of 500,000 rubles, up from 200,000 rubles now, or a ban on holding certain posts for three to five years.
The earlier amendments submitted by deputies will be recalled, and the president's bill will be passed through an expedited process, said Vladimir Gruzdev, first deputy chairman of the Duma's Legislation Committee.
Yana Yakovleva, chairwoman of the Business Solidarity partnership, said the bill would introduce major changes and that it would have been hard to believe that Medvedev would actually agree to all of the changes that had been discussed.
The clarification of what constitutes money laundering will finally bring that article into line with international practice, she said, adding that the other measures were also timely. But the move toward liberalization should come from both directions, with changes to the law that would fight corruption and lawlessness in law enforcement agencies, Yakovleva added.
Sergei Borisov, head of the Opora small and midsize business lobby, who attended the Saturday meeting with Medvedev, said he was more than pleased with the bill. The task now, he said, will be watching how the changes are enforced, since even some good rules are not always handled well. For example, very few cases are opened under the law against illegal interference in business activity.
A source in the central administration of the Interior Ministry said the body agreed that in economic crimes, where the priority is on recovering losses, it is better to release suspects on bail. The article on false entrepreneurship is rarely used, so its elimination should not lead to big changes, the source told Vedomosti.
But the proposed amendments to the money-laundering law could very well prevent it from being tacked on to other charges, the Interior Ministry source said.
The Moscow Times: New State Auctions Web Site Planned
03 March 2010
By Irina Filatova
The Federal Anti-Monopoly Service and the Economic Development Ministry plan to launch an electronic trading web site this month that will host auctions for property that the state intends to sell, the watchdog's head Igor Artemyev said Tuesday.
The web site, .ru, will host information on the sale and lease of federal property, he said at the annual meeting of the service's college.
The new site will function as an analog to .ru, an online clearing house for state purchases, said Irina Kashunina, a spokeswoman for the Federal Anti-Monopoly Service.
"The government will offer state property for sale through .ru. Entrepreneurs from all over the country will be able to take part in the auctions announced on the web site," she told The Moscow Times.
The state property offered on the web site will include seized property and land plots, Kashunina said.
The watchdog has been pushing for more transparency in state contracts and recently introduced regulations requiring all state purchases to be completed through a few online portals.
By July, all federal orders must go through the portal .ru, and auctions must be held on one of five electronic trading sites, while regional governments will have until January 2011 to transfer all their tenders onto the exchanges.
But when it comes to auctions in which the state is selling property, the large number of web sites that host the tenders makes it impossible to control the fairness and accessibility of the tender information, Artemyev said.
"In March, the site will start working in a test regime. It will be opened in 2010," he said.
Separately, Artemyev said in an interview that the Federal Anti-Monopoly Service had doubled the amount that it charged in fines for violating the law on competition, bringing in 28 billion rubles ($930 million) in 2009.
He added, however, that it was still necessary to retrieve some of the fines because lawsuits were ongoing in several cases.
The 800 million rubles paid by Mechel for setting monopolistically high prices for coal was the largest fine imposed by the Federal Anti-Monopoly Service last year, Artemyev told Vedomosti.
"But the biggest fines are ahead. The court battles about them are still not over," he said.
The Moscow Times: Ban on Jury Trials to Be Considered by Courts
03 March 2010
The Moscow Times
The Constitutional Court started hearing a case Tuesday over the disputed 2008 amendments that prevent suspected terrorists from receiving a jury trial.
The case was launched after petitions were filed by the Sverdlovsk Regional Court and five individuals suspected of terrorism.
"The plaintiffs claim that the right to a jury trial is fixed by the Constitution, which guarantees equality of rights and freedoms," the Constitutional Court said in a statement. “They believe that the ban on jury trials for terrorism charges violates the Constitution.”
In December 2008, President Dmitry Medvedev signed a law barring several categories of suspects, including those charged with terrorism and espionage, from being tried by a jury after several such trials in the North Caucasus failed to result in convictions.
Lawyers and human rights groups believe that jury trials are the fairest form of justice in Russia.
The court adjourned Tuesday and will resume the hearing next month.
RIA: Brutal Russian legal system will bring down state – Khodorkovsky
12:0903/03/2010
MOSCOW, March 3 (RIA Novosti) - Violence and corruption in Russia's legal system could ultimately spell the end for the Russian state as it is today, the jailed tycoon Mikhail Khodorkovsky said in a newspaper article published on Wednesday.
Khodorkovsky, the former head of Russian oil giant Yukos, is serving an eight-year prison term for tax evasion and fraud after a highly politicized trial seen by many in the West as part of a Kremlin drive to subdue politically ambitious business tycoons.
In the Nezavisimaya Gazeta article, Khodorkosvky wrote that Russia's legal system had in recent years become a "brutal assembly line," but one that could bury the current state by turning Russia's best and brightest against the authorities.
"It is possible to say with certainty that the brutal assembly line that has replaced the judicial system is the gravedigger of the modern Russian state," Khodorkovsky said. "With enviable regularity it turns many thousands of the most active, intelligent and independent citizens against the state. Those, on whose choices the fate of the state ultimately depends."
"It is strange that the Russian political elite... are not afraid of it, that their instinct for self-preservation doesn't work," he added.
Khodorkovsky described his experience of the judicial system over the past five years.
"You don't know anything about the system until you are gripped by it," he said. "The system is in fact a unified combine, whose business is justified violence."
"Different people toil away in this combine, both good and bad, but it is not about the quality of the human material, it is about the underlying principles of the system," he added.
"The system is the assembly-line of a huge plant... And if you have become the raw material for this assembly line... there will always be a guilty verdict at the end of it," he said, adding that the system's main aim is to never let go of you, because it works not to establish the truth but to achieve its own ends.
Khodorkovsky was moved in 2009 from prison in Siberia to Moscow's notorious Matrosskaya Tishina jail to face new charges of embezzling 350 million tons of oil. Since then, his stay in the pretrial detention center has been repeatedly prolonged despite complaints from his lawyers.
In February, a Moscow court authorized keeping Khodorkovsky in pretrial detention until May 17.
Russian officials have consistently denied any political motivation behind the tycoon's conviction, but Khodorkovsky's fate is still viewed by Russia-watchers abroad as an indicator of the state of Russia's judicial system.
Barentsnova: New Russian multiple-entries visa for foreigners
2010-03-03
Russian Gvt introduced simpler visas for foreigners that are temporary residents in Russia.
Russian Gvt simplified the procedure for issuing visas for foreign persons living temporarily in Russia. Ever since, this category of visas can be renewed and will allow multiple entries, informs Interfax.
Previously, visa of a temporary resident was issued to a foreigner who had a right for temporary stay in Russia; this type of visa used to open a single entry to Russia and was valid for 4 months. Now the visa can be prolonged with a multiple entries visa that will be valid within the whole period of the residence permit.
This is not the first recent step in simplifying migration routines introduced by the Russian authorities. Last week, the State Duma approved of the bill on labour for non-skilled immigrants coming from visa-free countries (mainly CIS). According to the bill, migration authorities would sell special patents to the labour migrants that will be able to work in Russia paying 1,000 RUB monthly fee.
The next step is simplification of visa routines for foreign investors.
Source:
RIA: Russian investigators to thoroughly probe abductions in Chechnya
07:5803/03/2010
The Investigation Committee at the Russian Prosecutor General's Office has set up a special department in Chechnya to investigate abductions in the volatile southern republic, Russia's top investigator said.
The Strasbourg-based European Court of Human Rights has to deal with numerous complaints from Chechens, whose relatives disappeared in the late 1990s-early 2000s during the two separatist wars.
Russia has lost the vast majority of cases so far. Court rulings often state that the Russian authorities failed to conduct effective investigations into disappearances in the North Caucasus.
"We still face numerous complaints to the Strasbourg court. People are not always satisfied with our work in that direction, so we should do our best to carry out proper investigations and to establish all circumstances surrounding cases of missing people," Alexander Bastrykin said.
He said that the department "will investigate such cases in close cooperation with the affected families."
"Only such approach will demonstrate to the world community the effectiveness of Russia's law enforcement and judicial systems," Bastrykin added.
Moscow formally ended its decade-long antiterrorism operation in the volatile North Caucasus republic in April 2009, but violence has been seen to have increased. Last August, Russia's main investigations agency said abductions and murders have again been on the rise in Chechnya.
GROZNY, March 3 (RIA Novosti)
02 March 2010, 14:09
Interfax: Chechen imams from now on bless marriages only with health certificate from AIDS Center
Stavropol, March 2, Interfax – The Muslim Spiritual Board of Chechnya says everyone who wants to marry should bring to mullah a medical certificate proving that couple do not have AIDS.
Such decision was taken after disclosing latest data about 1270 registered cases of “the 20th century plague” in the Republic. Each year this number is increasing by 90-100 people, the Stavropol edition of the Komsomolskaya Pravda daily has reported on Tuesday.
There are cases when a groom knowing about his illness conceals it and then infects his wife and future children.
RFE/RL: Reports Of Torture Trigger Protests In Daghestan
March 02, 2010
MAKHACHKALA, Daghestan -- Police today began detaining the leaders of people protesting the reported torture of five murder suspects in Makhachkala, the capital of Daghestan, RFE/RL's North Caucasus Service reports.
Between 500-1,000 people participated in a 17-hour demonstration in Makhachkala on March 1 to protest reports that five suspects in the June 2009 murder of Daghestan's interior minister, Lieutenant General Adilgirey Magomedtagirov, were subjected to torture so that they would confess to the murder.
The protesters dispersed after Gadzhi Makhachev, Daghestan's representative in the Russian government, assured them he would look into the reports and ensure that the men were not mistreated.
But the demonstration resumed early today.
Vladimir Markin, an investigator in the Russian Prosecutor-General's Office, denied on March 1 that the detained men were being mistreated during the investigation.
Islamic militants in Daghestan have posted a video on the Internet showing a sniper shooting Magomedtagirov as he left a Makhachkala restaurant after a wedding party.
BarentsObserver: State sells out of Murmansk companies
2010-03-02
The Russian state intends to sell its shares in a number of “strategic companies”, among them the Murmansk Shipping company (MSCO) and the Port of Murmansk.
As BarentsObserver has reported, also shipping major Sovcomflot is likely to be on the list of the companies for sale. In addition, the state has signaled a reduction of its control over oil company Rosneft
The state’s sale of the companies is part of a new wave of privatization. A total of 240 socalled “strategic companies” will get their state ownership either reduced or nullified, newspaper Vedomosti reports with reference to Reuters.
Five shipping companies and four ports are on the list.
BarentsObserver: Arkhangelsk opposition unites
2010-03-02
The opposition in Arkhangelsk has united in a new movement called “the non-indifferent”. The movement could become larger than any of the opposition parties, experts believe.
The movement plans to arrange a large demonstration in the town center on April 4, newspaper Kommersant reports. The new movement is prepared to drop the use of political slogans in the demonstration to draw as many supporters as possible. In the demonstration in April only social and economic slogans will be used.
New feature in Russian protest movement
Exports believe that the establishment of such a movement is a new feature in Russia, the newspaper writes. Until now, mostly people who have lost something as s result of concrete decisions made by local authorities have taken part in demonstrations. The union of "non-indifferent" can be seen as a sign that people have lost patience and hope of the future.
Authorities try to hinder demonstrations
The authorities are doing what they can to prevent large demonstrations in town centers. Already the day after the last demonstration in Arkhangelsk, were more than 3000 people gathered to demand that the tariff increase on public services is put on halt, town mayor Viktor Pavlenko signed a decree stating that the central square is off limits for mass protest meetings.
The same is the case in the northwestern city of Kaliningrad, where more than ten thousand people recently gathered in the streets to demand the resignation of the governor and protest against the ruling United Russia party. Here the local authorities have declared that the main square should only be used for trade and fairs until June 1.
Brahmand: India to buy 42 more Russian made Su-30MKI aircraft
Last Updated: Mar 03, 2010
NEW DELHI (BNS): India and Russia will sign a new contract for the delivery of 42 Russian-made Su-30MKI aircraft for Indian Air Force (IAF), a media report said.
"The new order is being placed due to the insufficient number of fighter squadrons in the Indian Air Force and would allow us to eliminate potential threats," RIA Novosti quoted a source in Indian Defence Ministry as saying.
According to the Russian news agency, the new deal is estimated to be more than $3 billion and negotiations on the contract have been continuing for several months.
India has purchased 50 Su-30MKI aircraft from Russia in 1996 and an additional 40 planes in 2007. India's Hindustan Aeronautics (HAL) has acquired a license to manufacture an additional 140 fighters.
Presently Indian Air Force (IAF) has 105 Su-30MKIs in its fleet mainly deployed at airbases close to the borders with China and Pakistan.
RIA: Russian Volga region moves to produce flying saucers
07:1303/03/2010
The government of the Ulianovsk Region in the Volga area has approved a five-year program to produce so-called "flying saucers" - a bizarre hybrid of a helicopter and an aerostat.
The first such aircraft, officially named "aerostatic thermoballasted vehicle" or simply "Locomoskayner" after its manufacturer LocomoSky, was presented MAKS-2009 air show. The prototype flying saucer was seven meters (23 feet) in diameter and was able to transport 20 kg (44.4 lbs) of cargo.
The company, however, plans to produce aircraft with a cargo-carrying capacity of up to 600 metric tons or a passenger capacity of up to 11,000 people.
It will be able to hover, perform a vertical landing, move in a straight line with speeds close to 100 kmph, turn around and will need no special ground-based facilities to land.
The flying saucer will have low fuel consumption as compared to ordinary aircraft due to its aerodynamic form and will be able to transport outsized cargoes to remote and inaccessible areas.
According to the regional government's estimates, the project will attract over $90 billion in investments. It will also create about 800 jobs in the region and bring some $4 million to the budget in tax payments.
LocomoSky has already started to build a production facility site in an industrial zone in the area.
ULIANOVSK, March 3 (RIA Novosti)
Russia-IC: Tsar’s Medallion Stolen from Hermitage Returns from USA to Russia
3.03.2010
The USA will hand over to Russia the silver medallion, which was stolen from the State Hermitage Museum, Saint Petersburg thanks to cooperation of law-enforcement agencies of the two countries.
The ceremony will be held in the Spaso-House residence of the US ambassador to RF.
In the past the medallion belonged to the family of the last Russian Emperor Nicholas the Second. It was found due to one of the internet auctions.
Source: interfax.ru
The Moscow Times: Today in Vedomosti
Clubs Raise The Bar During Downturn
By Yelena Vinogradova and Alexei Alexeyev
Despite a difficult year for the world economy, the most powerful soccer clubs in the world increased their revenues last season.
Editorial: Petty State Cases Choking Arbitration Courts
Petty cases brought by state bodies are clogging up the arbitration courts.
Customs Officer Who Sold Database Sentenced
By Alexei Nikolsky
A customs officer has been given a suspended sentence for selling his department’s information database.
Debtors May Lose Driving License
By Vera Kholmogorova
The Federal Court Marshal Service wants to obtain the authority to confiscate debtors’ driving licenses. Drivers will be banned from the roads for unpaid fines and other debts.
Russia Today: 03 March, 2010 in Russian Newspapers
Izvestiya: A crossing of dead ends
By Anatoly Vasserman
U.S. President Barack Obama’s recently announced new plan has already come into effect. American and allied forces are advancing on the Taliban’s key strategic positions. The goal, however, is not their complete destruction, but avoidance of blows backward at the time of the inevitable withdrawal from Afghanistan in the near future.
Similarly, in 1988-1989, Soviet forces crushed enemy strongholds while creating their own, but the strategic goal was to clean corridors for the withdrawal of manpower and equipment.
Rossiyskaya Gazeta: Kabul’s poppies
The White House will offer Afghan farmers to trade heroin for potatoes
By Evgeny Shestakov
The White House found a way to save several hundred million dollars, all the while looking “clean” in the eyes of the Americans. On Tuesday, U.S. Assistant Secretary of State for International Narcotics and Law Enforcement Affairs David Johnson announced what specific programs his agency plans to suspend.
As it turns out, the only thing with which the United States can painfully part with is the war against the narcotics trade in Afghanistan; and, more specifically, with its main component, the destruction of opium poppy.
Nezavisimaya: China plans to become top power
Chinese military officers are insisting on the creation of the most powerful military force in the world
By Vladimir Skosyrev
The Chinese military is playing a greater role in the country’s politics. Its representative has demanded that the Unites States act cautiously in the Taiwan Strait. At the same time, according to Beijing’s military analysts, in order to become the world’s leading power, China must create the most powerful army. Whether or not these hopes will be realized will be evident after the March release of the new defense budget.
China needs to create the most powerful armed forces and drive the United States from its position as the world’s leading power. This statement was made by a Senior Colonel of the People’s Liberation Army and a Professor at the National Defense University, Liu Mingfu. In his recently published book titled “China’s Dream,” he argues that if China does not become the world’s major power in the 21st century, then it will lose its direction and fall behind everyone else.
Pravda: Ukraine Not Mischievous with Russia's Gazprom Anymore
03.03.2010
Next week Ukraine will have to wire Gazprom the money for the Russian gas consumed in February. Yuriy Prodan, Ukraine’s Minister of Fuel and Energy stated today that despite the issues in the country, Naftogas will make a timely payment.
“Everything will be fine, as always. We will pay timely,” the Minister said as reported by RIA Novosti.
The minister gave an evasive answer when asked how Ukraine would fund the February gas payment. “With dollars,” he said jokingly.
According to Ukraine's Acting Finance Minister Ihor Umansky, Ukraine is to pay approximately $637.6 million for the February gas.
Under the gas supplies contract between Russian Gasprom and Ukraine’s Naftogas for 2009-2019, the Ukrainian party is obliged to transfer the funds for the consumed gas no later than the seventh day of each month following the delivery. In the event that this provision is violated, Russia may request a transition to the advance system of payments with 100% percent advance payment.
This year there were no issues with payments for the Russian gas. Yet, the ex-President Yushchenko has stated earlier that the country was on a verge of bankruptcy. One of the main reasons for it, he stated, was the fact that the country was using national reserves to make payments to Gasprom.
He also said that it was an intentional policy conducted by the Prime Minister Yulia Tymoshenko, who used it in exchange for the Kremlin’s support during her presidential campaign. Yushchenko believes that this policy leads to the loss of gas transportation system in Ukraine.
Ukraine first used the reserves of Ukraine’s National Bank for the December payment. It might have been the only chance to fulfill the obligations under the Gasprom contract because the situation in Ukraine was very intense.
At the end of last year, rating agency Fitch lowered Ukraine’s Sovereign rating from В to В -, as well as the ratings of other cities and banks of the country in the event that the negative forecast would linger. This means that the country is in a pre-default state.
At the end of September, Naftogas defaulted on Eurobonds. Then Ukraine State Railway failed to make $110 million payment, causing technical default.
Yet, the Ukrainian government continues to assure that everything is fine. For example, the head of the Ministry of Fuel and Energy rebuffed the statement that Naftogas was tittering on the brink of bankruptcy.
“These talks have been going around since 2008. They say that NAK Naftogas will be unable to make gas payments; that it is on the brink of bankruptcy. But you know that last year the international obligations of NAK Naftogas were restructured NAK Naftogas is not on the brink of bankruptcy,” Prodan announced.
At the same time, Naftogas stated the reasons that make accumulation of company funds for timely and complete payments for imported gas complicated.
In particular, the debt of Ukraine’s heat suppliers to Naftogas this heating season is $455 million, reports RIA Novosti Ukraine.
These heat suppliers have paid only 78% of their obligations to Naftogas for the previous heating season, and their debt amounts to $247 million.
Naftogas says that poor payments within the country complicate the situation with Ukrainian payments to Russia.
It was reported earlier that Ukraine made payment for the January Russian gas in full on February 4.
Russia and Ukraine have already been through a “gas war” over missed payments. In January of 2009, the EU consumers were not getting Russian gas for two weeks. In absence of the contract for 2009, Gasprom stopped supplying gas to Ukraine on January 1, and transit of gas through Ukraine to the EU was stopped on January 7. The transit was resumed only on January 20.
Last year, the European Union expressed its concerns about uninterrupted gas supply of Russian gas, asking the parties to settle the issues.
Ekaterina Yevstigneeva
Bigness
Read the original in Russian
Business/2010-02-24/gazprom-looks-regain-gas.html" target="_blank">Russia Today: Gazprom looks to regain gas buyers with greater pricing flexibility
National Economic Trends
Bloomberg: Russian Service Industries Expanded at Slowest Pace Since July
By Maria Levitov
March 3 (Bloomberg) -- Russian service industries from banks to food retailers expanded in February at the weakest pace since July as new business fell for a second month and companies fired staff.
The Purchasing Managers’ Index fell to 51 last month from 51.9 in January, VTB Capital said in an e-mailed statement today. The index, which is based on a survey of about 300 purchasing managers, shows expansion with a reading above 50.
“Total business activity rose, but new business fell for the second month running,” the VTB statement said. “This resulted in a sharp drop in backlogs and the fastest workforce contraction since last October.”
Declining bank lending to consumers accelerated and corporate loan books slid for a second month in January. Service industries’ expansion has also been constricted by unemployment, which climbed to 9.2 percent in January, almost matching a credit crisis peak of 9.4 percent a year ago. Employment in the sector has fallen every month since October 2008, VTB says.
While retail sales rose an annual 0.3 percent in January, the first increase in a year, the recovery remains fragile as companies trim costs and banks’ balance sheets are weighed down by delinquent debt, Finance Minister Alexei Kudrin said on Feb. 25. The economy is set to expand 3.2 percent this year, he said.
Retailers including OAO Magnit, Russia’s second-largest food retailer, are counting on higher sales. Magnit may increase sales by more than 20 percent as it adds stores and cuts prices, Chief Executive Officer Sergei Galitsky said on Feb. 4.
Growth of business activity among service industries was sustained largely because of companies’ clearing outstanding business, the VTB statement said.
Energy and utility costs provided a “modest” inflationary boost, prompting average input prices to rise at the slowest pace in three months, VTB said.
The seasonally adjusted services PMI, first compiled in October 2001, is a composite of five differently weighted indexes including business, employment and new, outstanding and future business, according to VTB.
To contact the reporters on this story: Maria Levitov in Moscow at mlevitov@
Last Updated: March 3, 2010 00:00 EST
Prime-Tass: VTB Capital: Growth of Russian services sector further slows Feb
MOSCOW, Mar 3 (PRIME-TASS) -- The growth of Russia’s services sector continued to slow in February, London-based VTB Capital said in its latest survey of the sector released Wednesday.
The seasonally adjusted Russian Services Purchasing Managers Index (PMI) was down to 51.0 in February from 51.9 in January.
Readings above 50.0 signal an increase on the previous month, while readings below 50.0 signal a contraction.
“In February, VTB Capital’s Russian Services PMI index declined further, to 51.0 (from the 51.9 posted in January), indicating a slower expansion of the sector on the back of the ongoing contraction in new orders,” Svetlana Aslanova, an analyst at VTB Capital, commented on the survey.
The key factor weighing on the service sector’s overall performance in February was a second consecutive monthly fall in incoming new business, with the pace of decline of new orders sharper than in January, VTB Capital said.
Average input prices rose at the slowest pace in three months, while charges increased at a modest rate. Where input prices increased, this was mostly attributed to higher energy and utility costs.
Service providers cut workforces on average in February. Employment in Russia’s private sector service economy has fallen every month since October 2008, and the latest rate of reduction was the fastest in four months, VTB Capital said.
With new business falling for a second successive month in February, service providers were less optimistic regarding the twelve-month outlook than in January. A majority of firms still expect growth of activity over the coming year, but the overall degree of confidence was the weakest since last July, VTB Capital said.
End
03.03.2010 08:00
Bloomberg: Russian Central Bank May Take New Measures to Stem Hot Money
By Maria Levitov
March 3 (Bloomberg) -- Russia’s central bank may institute new measures to dampen the inflow of “speculative capital” into the country.
Bank Rossii may raise capital reserve requirements for banks on foreign currency deposits and banks’ liabilities to non-residents, it said in a report published on its Web site earlier this week.
Higher taxes on foreign borrowing by corporations and control of foreign borrowing by companies in which the state holds a stake are among “other measures under consideration,” Moscow-based Bank Rossii said. A return to capital controls isn’t being considered.
“Excessive volatility of private capital flows poses a serious threat to the systematic stability of the Russian economy,” the report said.
Russia posted an estimated net capital outflow of $52.4 billion last year as the economy contracted a record 7.9 percent and foreign direct investment plummeted 41 percent. The biggest energy exporter saw a record net outflow of $130 billion in 2008, following a record net inflow of $83 billion a year earlier.
Russia posted a net outflow of $13 billion in January, although the trend may have reversed in February, Interfax reported on Feb. 18, citing Alexei Ulyukayev, the central bank’s first deputy chairman.
To contact the reporters on this story: Maria Levitov in Moscow at mlevitov@
Last Updated: March 3, 2010 03:44 EST
Business, Energy or Environmental regulations or discussions
(AFX UK Focus) 2010-03-03 07:28
Reuters: Russian markets -- Factors to Watch on Mar 3
MOSCOW, Mar 3 (Reuters) - Here are events and news stories that could move Russian markets on Wednesday.
You can reach us on: +7 495 775 1242
STOCKS CALL (Contributions to moscow.newsroom@):
OTP BANK: Today we expect the stock market to open with a slight decrease.
NETTRADER.ru: We expect shares to inch down as the U.S. markets declined due to a correction.
EVENTS (All times GMT):
PARIS - Russian President Dmitry Medvedev in third day of France visit.
KIEV -Ukraine's parliament will hold a vote of no confidence in the government of Prime Minister Yulia Tymoshenko.
MOSCOW - A forum 'Telecoms World Russia & CIS 2010'.
MOSCOW - Government briefing on its potential plans for the car making industry. 08.00.
MOSCOW - Government commission to hold a meeting on high technologies. 10.00.
MOSCOW - Sberbank to brief on retail deposit policies. 11.00.
MOSOCW - A court hearings on Stalin's grandson suit against Echo Moskvy radio. 13.00
IN THE PAPERS:
Russian energy giant Gazprom to swap its 10 percent stake in Russian largest non-state gas producer Novatek for 51 percent of small gas firm Sibneftegas, the daily Kommersant reports.
The newspaper also runs an interview with Alexander Izosimov, head of Russia's No. 2 mobile phone operator Vimpelcom after Norwegian company Telenor and Vimpelcom shareholder Alfa Group ended a protracted corporate conflict.
TOP STORIES IN RUSSIA AND THE CIS:
TOP NEWS: Ukraine coalition collapses
Six insurgents killed in Russia Ingushetia
Russia says still room for diplomacy with Iran
Tajik leader's party retains majority
COMPANIES/MARKETS:
Russian police open criminal probe into Auchan
PIK says to grow, wider house mkt to fall
ECONOMY/POLITICS:
Russia Feb services PMI falls to 51.0
Ukraine says needs billions
Court to hear $98 bln YUKOS claim against Russia
Russia c.bank lowers floating rouble band
ENERGY:
Russian Feb oil, gas output reach new peaks
Croatia joins Russia-led South Stream gas link
March crude exports via Gdansk, Yuzhny to fall
Azerbaijan may start gas supplies to Syria
Kazakhstan considers oil link across Caucasus
Turkmens see '10 foreign energy investment up
Iran says to sign Gazprom deal on Azar oilfield
Georgia Batumi ups Feb '10 oil loading 46 pct
COMMODITIES:
Russia export duty reports boost Potash Corp
Russia-U.S. talks on poultry continue
Russia sugar output from raws down 53 pct yr/yr
Evraz wins back Mezhegei coal field
MARKETS CLOSE/LATEST:
RTS 1,445.5 -0.01 pct
MSCI Russia 797.3 +1.3 pct
MSCI Emerging Markets 961.5 +0.2 pct
Russia 30-year Eurobond yield: 5.101/5.046 pct
EMBI+ Russia 187 basis points over
Rouble/dollar 29.8505
Rouble/euro 40.5600
NYMEX crude $79.76 +$0.08
ICE Brent crude $78.14 -$0.04
For Russian company news, double click on
Treasury news Corporate debt
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(vladimir.soldatkin@, +7 495 775 12 42, Reuters Messaging: vladimir.soldatkin.@)) Keywords: RUSSIA FACTORS/
Bloomberg: Silvinit, Uralkali, Sberbank, Gazprom: Russian Equity Preview
By Paul Abelsky
March 3 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.
The 30-stock Micex Index rose 0.9 percent to 1,368.09 at the close in Moscow for a fourth day of gains. The dollar- denominated RTS Index advanced 1.1 percent to 1,445.62.
OAO Silvinit (SILV RX) and OAO Uralkali (URKA RX): Several Russian ministries are discussing imposing a 15 percent tax on potash exports and the competition watchdog supports the plan, said Teimuraz Kharitonashvili, head of the Federal Anti-Monopoly Service’s chemical division.
Silvinit, Russia’s largest maker of the fertilizer ingredient, dropped 5.4 percent, the most since Oct. 28, to 20,995.39 rubles. Uralkali, Russia’s second-biggest potash producer, plunged 5.7 percent to 122.09 rubles, the lowest level since Oct. 7.
OAO Sberbank (SBER03 RX) and VTB Group (VTBR RX): The ruble gained 0.4 percent to 29.8530 per dollar, the strongest level since Jan. 22.
Sberbank, Russia’s biggest lender, rose 2.8 percent to 82.51 rubles. VTB, Russia’s second-biggest bank, added 0.9 percent to 7.63 kopeks. A stronger ruble discourages Russians from converting local-currency deposits, banks’ main source of funding.
OAO Gazprom (GAZP RX): Nord Stream AG, a Gazprom-led venture, will complete the financing this month to build a $10 billion natural-gas pipeline under the Baltic Sea from Russia to western Europe. Shares in the world’s biggest gas producer added 0.9 percent to 169.63 rubles.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@.
Last Updated: March 2, 2010 22:00 EST
Russia Today: IPO horizon opens up for Russian companies
03 March, 2010, 10:53
This year could see about 35 Russian companies raising money through IPOs, however the plan could be complicated by the strict Russian market regulations.
After two dry years in the Russian IPO market – share issues are about to come flooding back.
Tom Blackwell, Senior Vice President of communications company PBN, says 2010 may be the best year since 2007 when 33 Russian and CIS companies sold shares.
“You could see a lot of momentum created very quickly if the next 2-3 deals are a success because there're another 35 companies waiting in the wings to come to the market. “
But those plans are complicated by tough rules requiring most shares sold via IPOs to be listed on either the MICEX or RTS stock exchanges in Moscow, which boosts trading volumes on local bourses but limits the appeal for international investors.
“According to Russian laws only Russian companies can be traded directly. Western or global players must work through Russian firms,” says Sergey Golovanev, Head of Indices and Market Data at RTS.
That's why many companies that want to raise money by issuing shares to foreign investors do so by issuing them abroad, explains Blackwell.
“You've seen in the past Pyaterochka, Evraz, Rusal and other companies have chosen to list entirely abroad through structures registered outside of Russia. I think you could continue to see that happen as the restrictions get more intense."
President Medvedev says he wants Moscow to become a global financial centre. But Russia's regulatory regime will need a lot of reform, before it investors see Moscow as a true rival to London, Hong Kong or Amsterdam.
Bloomberg: Russian IPO Bets Are ‘Lamentable’ for Investors, Troika Says
By Brad Cook
March 3 (Bloomberg) -- Russian share sales have been “lamentable” for investors, with more than half of all stocks sold over the last decade underperforming the wider market by more than 10 percent, Troika Dialog said.
In only two years, 2000 and 2007, have stocks sold in initial or secondary public offerings outperformed the benchmark dollar-measured RTS Index, Russia’s oldest investment bank said in a report e-mailed today.
“Investors should be cautious about the upcoming wave of IPOs,” Troika analysts led by Chief Strategist Kingsmill Bond wrote in the report. “The evidence shows that equity placements have heavily underperformed the market.”
Troika expects about 30 companies to raise $20 billion in equity financing over the next 18 months. Billionaire Oleg Deripaska’s United Co. Rusal, which raised $2.2 billion in the first Russian IPO of the year, declined 30 percent from its sale price of HK$10.80 per share on Jan. 26 through yesterday’s close.
The dollar-measured RTS climbed eightfold from 2000 through 2009 as former President Vladimir Putin strengthened the state’s control over politics and the economy and oil prices advanced. Companies raised $79 billion selling stock in that period, with about a quarter of them, led by OAO Mobile TeleSystems and OAO VimpelCom, gaining more than the RTS, Troika said.
To contact the reporter on this story: Brad Cook in Moscow at Bcook7@
Last Updated: March 3, 2010 03:20 EST
Steel Guru: Russia issues 2009 import and export data
Wednesday, 03 Mar 2010
According to the data released by the Russian Federation's Federal Customs Service, in 2009 Russia exported 27.880 million tonnes of ferrous metals up by 3.9%YoY, 4.521 million tonnes of pig iron down by 14.2% YoY, 14.04 million tonnes of semi finished steel products down by 9.6% YoY, 20.483 million tonnes of iron ore and concentrate down by 9% YoY and 1.828 million tonnes of coke and semi coke down by 39% YoY.
In 2009, Russia registered increased of 33.3%YoY in its flat rolled product exports to 9.338 million tonnes and increased of 4.6%YoY in its ferroalloy exports to 786,400 tonnes.
On the other hand, in 2009, Russia decreased its ferrous metal imports by 29.7% YoY to 3.259 million tonnes and reduced its steel pipe imports by 38.5%YoY to 583,600 tonnes both compared to 2008.
(Sourced from SteelOrbis)
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Steel Guru: EU quota utilization levels of Russia and Kazakhstan
Wednesday, 03 Mar 2010
It is reported that in the first two months of 2010, Russia utilized 13.6% of its steel quota of 3,184,445 tonnes allocated to it by the European Union for the current year while Kazakhstan utilized zero percent of its allocated EU quota of 205,000 tonnes.
According to the latest figures, Russia exported a total of 433,980 tonnes of steel products to the EU in the first two months of the current year including 400,651 tonnes of flat steel products and 33,329 tonnes of long steel products.
Specifically, Russia used 27.3% of its hot rolled coil quota, 3.24% of its plate quota, 1.04% of its alloyed CR and coated sheet quota and 6.08% of its wire rod quota. On the other hand, in January to February 2010, Kazakhstan did not supply any steel products to the EU.
(Sourced from SteelOrbis)
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RBC: Chelyabinsk-based pipe plant and Metalloinvest ink cooperation deal
RBC, 03.03.2010, Moscow 10:55:46.Chelyabinsk Tube Rolling Plant (ChTPZ) and Metalloinvest Management Company have signed an agreement on strategic cooperation in 2010. According to the metallurgical company's press office, the document was signed as part of the long-term partnership agreement.
The parties also reviewed the results of work in 2009 and set forth the working plan for this year.
03.03.2010 - Standard & Poor's
Cbonds: S&P: Russian Group OJSC Novolipetsk Steel Outlook Revised To Stable On Likely Steady Performance; 'BBB-' Affirmed
MOSCOW (Standard & Poor's) March 2, 2010--Standard & Poor's Ratings Services said today it revised its outlook on Russia-based steel producer OJSC Novolipetsk Steel (NLMK) to stable from negative. The 'BBB-' long-term corporate credit and debt ratings were affirmed.
At the same time, the Russia national scale rating was raised to 'ruAAA' from 'ruAA+'. We have also rated the proposed Russian ruble (RUR) 10 billion Series 6 bond 'BBB-' in line with the corporate credit rating.
"The rating actions reflect our view that NLMK's operating performance will likely stabilize this year, albeit at a lower level than in 2008," said Standard & Poor's credit analyst Andrey Nikolaev. "We factor into the rating the assumption that steel prices will remain at least at the levels of the second half of 2009 and that the company will be able to ensure high capacity utilization, owing to its low cost position."
In addition, we believe that NLMK's financial performance will remain resilient in 2010 and the company will be able to maintain moderate leverage, reflected in a ratio of adjusted debt to EBITDA of about 1x and funds from operations (FFO) to debt exceeding 60%.
The ratings reflect our assessment of NLMK's business risk profile as "satisfactory" and its financial risk profile as "intermediate". NLMK's business risk profile benefits from a superior cost position, partial vertical integration, and the good diversity of export markets. NLMK's operating performance in 2009 was better than that of most its peers in Russia and the EU because it was already able to increase its capacity utilization to almost 100% in June 2009 and generated an EBITDA margin of 22.3% for the 12 months ended Sept. 30, 2009.
NLMK's business risk profile is constrained by the cyclicality of the global steel sector as well as remaining uncertainties about the growth rate of the global economy in the coming year and, consequently, steel market conditions. Further constraints, in our view, are NLMK's concentrated asset base, with the Lipetsk operations generating most of the EBITDA, and country risks in the Russian Federation (foreign currency BBB/Stable/A-3, local currency BBB+/Stable/A-2; Russia national scale 'ruAAA').
"The outlook is stable because we are of the opinion that NLMK will be able to adhere to its conservative financial policy of keeping the ratio of reported net debt to EBITDA at less than 1x, based on stabilizing steel prices, high capacity utilization, and the ability to decrease investments and dividends, if necessary," said Mr. Nikolaev.
RenCap: Lucchini family exercises put option, sells 20% stake to Severstal
Rencap
March 3, 2010
Event: According to Steel Business Briefing - citing Il Mond - the Lucchini family has exercised its put option, selling 20% of Lucchini to Severstal. Severstal has allegedly paid EUR100mn ($135mn), which is EUR60mn less than the option exercise price of EUR160mn. The parties reached an agreement prior to the option exercise date of 20 April. Severstal did not provide any comments on the situation.
Action: The news is neutral for Severstal.
Rationale: The existence of a put option in Severstal-Lucchini should not come as a surprise to the market. However, Severstal has previously confirmed a possible spin-off of Lucchini assets. In the media, ArcelorMittal, Baosteel and Metinvest were suggested as potential bidders. Based on the price paid to the Lucchini family, the equity value of the assets may be estimated at $675mn, but taking into account a possible debt burden related to Lucchini, the assets may be valued at approximately $2bn on an EV basis. Lucchini includes tow production sites with 2.5mnt BOF and 1.2mnt EAF capacity, respectively. Thus, the EV/t valuation of the asset may be estimated at $540/t, compared with a BOF capacity replacement cost of $800-900/t. However, Lucchini's operating costs may significantly exceed $500/t in both the BOF and EAF divisions, with scrap and iron ore prices reaching $400/t (FOB, US) and $140/t (cif, China), respectively. The loss-making nature of Lucchini's operations may result in a significant discount to EV/t-based valuations if the Lucchini assets are spun off. We expect Severstal to provide more details on the Lucchini situation during the FY09 results conference call on 9 Mar.
Boris Krasnojenov
Reuters: Russia's Evraz wins back Mezhegei coal field –source
Tue, Mar 2 2010
MOSCOW, March 2 (Reuters) - Russian steel producer Evraz has won back the licence to the Mezhegei coal field in Russia's Tuva Republic via a 950 million rouble ($31.70 million) bid at a government auction, a source told Reuters on Tuesday.
Evraz, part-owned by billionaire Roman Abramovich, bid $725 million for the field two years ago, but the licence lapsed after the company failed to develop the field.
In 2008, Evraz said annual output at the field could reach 10 million tonnes of raw coking coal.
(Reporting by Polina Devitt, writing by Alfred Kueppers)
RenCap: Evraz wins Mezhegey coal deposit licence again
Rencap
March 3, 2010
Yesterday (2 Mar) Evraz announced that it has won the auction for the Mezhegey coal deposit, with a bid of just RUB950mn for 213mnt of hard coking coal reserves. Severstal was Evraz's only competitor for the licence (click here to view Evraz and Severstal to compete for Mezhegey coal deposit in our 20 Jan 2010 Fixed Income Daily Snapshot). According to a statement by Evraz CEO Alexander Frolov, the company plans to cover the needs of Evraz's steelmaking facilities for high quality hard coking coal after the depletion of existing Zh-grade coal reserves and will also benefit from production and sales of additional volumes to the market. Due to the long-term nature of the project, it will not require substantial capital expenditures over the next two years, Frolov said. Evraz clearly purchased the licence cheaply, just RUB4.5 per tonne of reserves, or 5.6% of the amount it agreed to pay in 2008, which is positive. In our view, the company could benefit significantly if the coking coal market environment improves further and could walk away from the licence if it worsens again. In 2008 the company estimated required investments into the coal deposit at $1.5bn. Hence, we think at some stage the development of the Mezhegey coal deposit could require substantial capex spending.
Andrey Markov
RenCap: Renault ready to consider larger AvtoVAZ stake; AvtoVAZ needs EUR3bn for development
Rencap
March 3, 2010
Event: According to Prime-TASS yesterday (2 Mar), citing Renault-Nissan CEO Carlos Ghosn, Renault-Nissan is ready to consider increasing its stake in AvtoVAZ if the Russian government wants it to go further. Currently Renault-Nissan has a 25% stake in AvtoVAZ. Ghosn also said the alliance of Renault, Nissan and AvtoVAZ planned to increase its share in the Russian auto market to 40% (from the current 33%) in the coming five to 10 years. Reuters reported that AvtoVAZ CEO Igor Komarov said that AvtoVAZ needs EUR3bn (more than RUB120bn) for business development. Komarov said AvtoVAZ will be asking the government for "very serious support".
Action: Although the partnership with Renault-Nissan is positive for AvtoVAZ, we think the targets are too optimistic, and that the company needs substantial financing.
Rationale: In our view, a 40% market share in the coming five to 10 years implies that AvtoVAZ will maintain its current approximate 25% market share, which is likely to deteriorate, as the share of domestic vehicles and imports will increase over the mid-term. Comments made by Nissan Executive Vice President Colin Dodge indicate that Russia is normalising and bouncing back, and that people are buying cars again are positive for the broader passenger car market. Comments regarding Renault-Nissan's potential stake increase in AvtoVAZ have resulted in speculative buying in AvtoVAZ stock. However, we think it is too early to draw firm conclusions about what will happen to minorities. In light of the AvtoVAZ's substantial capex requirements, the company is likely to receive extensive state support, which could be dilutive for minorities.
Bloomberg: OAO Power Interested in Ansaldo Energia, Messaggero Says
By Lorenzo Totaro
March 3 (Bloomberg) -- Russia’s OAO Power Machines is interested in buying a stake in Ansaldo Energia SpA, the power- plant construction unit of Finmeccanica SpA, Il Messaggero newspaper reported without saying where it got the information.
Power Machines wants to become the main industrial partner of Ansaldo Energia and acquire 20 percent of the company, the Rome-based newspaper reported. The transaction may occur before Ansaldo Energia’s initial public offering, Il Messaggero said.
To contact the reporter responsible for this story: Lorenzo Totaro in Rome at ltotaro@
Last Updated: March 3, 2010 02:48 EST
BusinessWeek: Siemens buys last 49 pct of Russian transformer JV
The Associated Press March 2, 2010, 8:55AM ET
FRANKFURT
German industrial conglomerate Siemens AG says it has bought the last 49 percent stake of Siemens High Voltage Products OOO, of Russia, from Elektorzavod, the country's largest electrical transformer manufacturer.
The two companies founded the Siemens High Voltage Products joint venture in 2008 and Siemens already owned 51 percent of the company. Financial details were not disclosed.
Following completion of the acquisition, Siemens said Tuesday it wants to expand the production of circuit-breakers and disconnectors for high-voltage switchgear for the Russian market.
The unit's headquarters are in Ufa, in the Russian Republic of Bashkortostan.
March 03, 2010 11:59
Interfax: State Street Bank and Trust Co. doubles stake in Razgulay to 10.56%
MOSCOW. March 3 (Interfax) - State Street Bank and Trust Company has increased its common-share holding in OJSC Razgulay Group (RTS: GRAZ) from 5.27% to 10.56%, a statement from the Russian agri-holding says.
Razgulay learned of the change on March 2, when it received a list of shareholders ahead of a meeting. State Street Bank and Trust, part of the U.S. corporation State Street, bought into Razgulay in March of last year.
State Street manages investments and provides holding services for depository securities, brokerage services, and fund and investment-management services. It was founded in 1832 and is headquartered in Boston, Mass.
The Razgulay Group was founded in 1992 as a grain and sugar trading company. The group now has two holdings - grain and sugar - and produces, processes and sells agricultural products. Razgulay owns 36 grain, flour milling and cereal enterprises, 12 sugar mills and one canned dairy products plant. It has land in eighteen of Russia's regions.
Razgulay carried out an initial public offering in March 2006, from which it raised $144 million. In November 2007, it raised $66.5 million by placing 14 million supplementary shares in a secondary public offering. Existing shareholders used their preemptive rights to buy 87% of the shares.
Razgulay President Igor Potapenko is the company's main beneficiary.
Cf
The Moscow Times: Rossia Bank Cleared to Merge With Gazenergoprombank
03 March 2010
By Alexei Rozhkov / Vedomosti
The Federal Anti-Monopoly Service has given shareholders of the bank Rossia permission to expand their business by merging it with the Gazprom-controlled lender Gazenergoprombank.
The service announced the decision in a statement Monday without providing any other details.
In late January, Rossia confirmed that it was considering various options to enlarge its business. One of the possibilities would be a merger with another major bank, Rossia's press service said in response to questions from Vedomosti.
Rossia's largest shareholders are Yury Kovalchuk, with 30.4 percent, and Dmitry Gorelov, with 12.6 percent. The lender had assets of 111.7 billion rubles and capital of 7.6 billion rubles as of Jan. 1, according to its results to Russian accounting standards. Gazenergoprombank, whose largest shareholder is Gazpromregiongaz, had assets of 121.2 billion rubles and capital of 10.5 billion rubles as of Jan. 1, according to its results to Russian accounting standards.
Any decision about the possibility or terms of a merger between Gazenergoprombank and Rossia could only be made after Gazenergoprombank's board of directors considers the matter, said Maria Frolova, a spokeswoman for Mezhregiongaz, the fully owned Gazprom subsidiary that controls Gazpromregiongaz.
Rossia's board of directors will discuss the possible merger of the two companies, a spokesperson said, declining to elaborate.
Gazenergoprombank has one other banking asset. In the fall of 2008, it became the owner of Sobinbank, which encountered financial difficulties during the crisis.
There's an agreement that Mezhregiongaz would get a noncontrolling stake in the enlarged bank Rossia in exchange for shares in Sobinbank and Gazenergoprombank, a financier who works with shareholders of the banks told Vedomosti.
Rossia was only interested in Sobinbank, since it has a developed branch network and retail business, but the owner decided to bring both banks into the deal, a source close to Sobinbank said.
On Jan. 15, Sobinbank announced that it was appointing as its chief executive Yevgeny Stepchenko, who was leaving the same post in Rossia.
The merged bank could enter the top 15 in Russia by assets, according to Interfax's bank ratings as of Jan. 1. With assets of 282.4 billion rubles, it would reach 14th place — in between UralSib and Nomos-Bank.
Currently, Gazenergoprombank, Rossia and Sobinbank occupy 32nd, 35th and 68th place, respectively. Their merger could become the second-biggest banking deal this year — after the merger of Societe Generale's assets in Russia.
A spokesperson for Gazenergoprombank declined comment until the matter is considered by its board. Vedomosti was unable to get comment from Sobinbank and Gazprom.
In 2006, Gazprom reduced its stake in Gazprombank to below a controlling 50 percent. It is now controlled by the pension fund Gazfond, whose assets are managed by the company Lider, which in turn is controlled by Rossia. Rossia also received the insurer Sogaz from Gazprom.
Bloomberg: TUI, Mordashov to Invest $60 Million in Travel Unit (Update1)
By Maria Ermakova and Paul Abelsky
March 2 (Bloomberg) -- TUI AG, the German owner of Europe’s largest travel company, and billionaire Alexei Mordashov said they’ll invest $60 million in their Russian venture over the next three years to gain a larger share of the market.
The money will be spent on brand promotion and information technology, according to a joint statement released today. TUI and Mordashov’s S-Group said they expect to control about 10 percent of the Russian travel market this year.
Hanover-based TUI and S-Group agreed in April to form the venture to expand in the former Soviet Union. The partners each pledged to invest $20 million in 2009, including the acquisitions of assets from Russian tour operator VKO Group, Moscow-based Mostravel and Ukrainian travel company Voyage Kiev.
“Today, Russia is one of the top growth markets for travel,” Michael Frenzel, TUI’s chief executive officer, told reporters in Moscow, adding that the nation will become Europe’s fourth-largest travel market by 2020. “Russian consumers are becoming more and more sophisticated and selective.”
There is growing demand for destinations other than Turkey and Egypt, such as Spain, Italy, Cuba and Mexico, he said.
“We see that our competitors are not so successful on the travel market and we see a lot of blank spots that we will try to fill in,” said Vladimir Yakushev, managing partner of S- Group. “If there are opportunities for acquisitions, we surely will be considering those.”
The venture plans to start an advertising campaign in Russia on television, radio and online “over the next few weeks,” according to Richard Prosser, managing director for emerging markets at TUI Travel Plc. The new Web sites for Russia and Ukraine were launched today, he said.
To contact the reporters on this story: Maria Ermakova in Moscow at mermakova@; Paul Abelsky in Moscow at pabelsky@.
Last Updated: March 2, 2010 11:20 EST
Banking Business Review: Renaissance Capital, Citadel Investment Form New JV
Published: 02-Mar-2010
Renaissance Capital, a Russia-based investment bank and Citadel Investment Services Group, a Serbia-based investment bank, have formed an exclusive joint venture Renaissance Citadel to offer a full range of investment banking services in Southeastern Europe.
Renaissance Citadel will cover Serbia, Croatia, Slovenia, Bulgaria, Romania, Macedonia, Bosnia and Herzegovina, Montenegro and Albania. It will provide access for its clients to the full combined investment banking resources of Renaissance Capital and Citadel Investment Services.
The provided services will include equity and debt capital markets transactions (including initial public offerings, private placements of equity and debt, follow-on offerings, block trades, public and corporate debt offerings, equity-linked instruments) and advisory services such as mergers and acquisitions, divestitures, spin-offs and privatizations. In addition, the joint venture will provide research on the region.
Peter Vanhecke, CEO for Ukraine and Belarus at Renaissance Capital, has been promoted to cover the Central and Eastern European region as CEO. He will supervise Renaissance's operations in Ukraine, Belarus, Moldova and the Balkans. Mr Vanhecke will continue to be based in Kyiv and the Kyiv office will operate as a hub for the region.
Mr Vanhecke said: “Citadel is a strong partner with an impressive track record in the region. Their approach, expertise and long-standing client relationships are an ideal complement to Renaissance Capital's existing emerging markets platform. Our build-out into Central and Eastern Europe, following our recent entry into Belarus, is of strategic importance as we continue to grow our reach across the emerging markets from West Africa to the Russian far East.”
Milutin Nikolie, managing director and co-founder of Citadel Investment Services Group, said: “Through this joint venture with Renaissance Capital, Citadel can offer an even broader scope of services in a rapidly expanding market. We are especially excited that our clients will now have access to one of the leading capital markets' platforms.
“Renaissance Capital's unique commitment to emerging markets and in-depth approach is what makes it the right partner for Citadel and is fully in accordance with our goals and vision - to maximize value for all our current and future clients.”
Sys-con: Volga Resources to Acquire a Stake in one of the World's Largest Onshore Seismic Service Providers
LUXEMBOURG, March 3, 2010 /PRNewswire/ -- Volga Resources SICAV-SIF S.A. ("Volga"), the Luxembourg-based investment fund, announces that it has agreed to acquire, for an undisclosed sum, a stake of 25% in the share capital of Geotech Oil Services Holding Limited ("Geotech" or "the Company"), the leading onshore seismic provider in Russia and the CIS. The stake is being bought directly from Black River Asset Management, Farallon Capital Management, Geotech's senior management and also through the subscription to a new share issue.
Completion is expected within the first half of this year. Thereafter Geotech will have a strong shareholder base consisting of Farallon Capital Management, Pinebridge Russia Century Partners, L.P. (formerly AIG Russia Century Fund) and Volga Resources and management, who are committed to support the development of the Company as a market leader in Russia and the CIS.
Geotech is one of the largest onshore seismic service providers in the world, with its activities covering all types of complex seismic data acquisition. Geotech employs over 12,000 people, including highly qualified specialists in their various fields of expertise. The Company develops certain proprietary processes and technologies and manufactures globally recognised specialised equipment. Geotech is also active in exploration and development drilling and intends to expand this service offering further in the future.
Commenting on the acquisition, Chlodwig Reuter, Chairman of Volga Resources said: "This acquisition builds on our existing presence within the oil and gas sector and on our longstanding experience of the industry and its supply chain. Geotech has a long history in Russia and the CIS of being a well managed participant in the field of seismic data. We are excited about its growth and expansion potential."
Volga Resources' financial adviser for the transaction was Credit Suisse and legal adviser was Latham & Watkins.
Note:
Volga Resources SICAV-SIF S.A. is a private investment fund registered in Luxembourg in 2007. The Fund invests in projects in the oil & gas sector, infrastructure, development, financial services in Central and Eastern Europe, CIS, Russia and Turkey. More information is available at
Blogs.reuters: The Russian Bear awakes
Mar 1, 2010 13:53 EST
-The following was published in the March 1, 2010 edition of Acquisitions Monthly-
(Acquisitions Monthly) Last year, Russia was in the midst of its worst economic crisis for a decade, but with the return of growth and the successful debt restructuring of aluminium giant UC Rusal, recovery is just around the corner. M&A activity will, however, start slow.
Russia’s GDP plummeted by 7.9% in 2009, according to the government’s own statistics, mainly thanks to the global financial crisis that brought a crash in commodity prices – the current mainstay of Russia’s economy. It was the first time since 1998 that the Russian Bear had experienced a bear economy. The fact that Russian M&A was down almost 80% by value of deals came as no surprise.
It seemed that suddenly, when it came to the matter of diversifying Russia’s economy away from oil and gas, all those advocates for doing so – from Anatoly Chubais, who had overseen the privatisation of state assets in the 1990s, to German Gref, the former economy minister and head of Sberbank, the country’s biggest lender – had been proven right.
They had realised rightly that one of Russia’s greatest strengths was also one of her greatest weaknesses – her over-dependence on oil and gas revenues. (Commodity prices are determined by how well the global economy is doing, what geopolitical situation is unfolding in which part of the world, and speculative trading.) The years 2008 and 2009 saw dramatic volatility in wholesale prices, and Russia found herself spending significant amounts of her forex reserves as a result to prop up the rouble.
Because of the global financial crisis, it became more pressing than ever for Russia to speed up the diversification of her economy into a more post-modern, entrepreneurial one, the liberals pointed out. Both Prime Minister Vladimir Putin and President Dmitry Medvedev were acutely aware of this. Indeed, Medvedev has been pushing for more diversification.
However, with a stabilisation of commodity prices and a price increase in global crude during the latter part of last year, plus a massive governmental fiscal stimulus totalling about US$120bn, Russia’s economy is growing again.
According to preliminary figures released by Russia’s Ministry of Economic Development and Trade, Russia’s GDP grew by more than 3% in the fourth quarter of last year. It could even reach 6.4% by year-end if oil reaches US$79 a barrel, Moscow-based brokerage Aton predicts. Already, the price of crude is approaching US$80.
If growth had not returned in the US (at 5.7% between October and December 2009) and if there had not been a significant pick-up in Chinese exports, Russian and Western M&A bankers would have found themselves back at their desks after their long Christmas breaks twiddling their restructuring thumbs and wondering which major company would go under next.
Russian corporates had found themselves in the unenviable position of having to figure out how to refinance about US$500bn of international bank debt (not in default).
The situation had not looked particularly promising – not for Russia Inc in terms of its growth prospects and not for the big Western banks, which had seen their balance sheets decimated and exposed to Russia.
Hearts were racing; cardiac arrests were just around the corner. So too were more restructurings and distressed asset sales. Restructuring some US$16.8bn of debt held by UC Rusal, the world’s largest aluminium company, hung in the balance.
On entering the fourth quarter of 2009, it looked as though international capital was about to take flight from Russia, which would have seen Western banks having to unwillingly accept massive write-downs on their depleted balance sheets.
Fortunately, that Armageddon moment did not occur. Some bankers consider the prospect of it happening to have largely passed, with the multi-billion debt restructurings of Mechel and UC Rusal so far successful.
Mechel and UC Rusal get away
Mechel, the Moscow-based steelmaker run by billionaire Igor Zyuzin, had managed by July last year to agree with its international creditors a US$2.6bn refinancing. This was Russia’s first largest restructuring of corporate foreign debt since the start of the financial crisis (that date being July 31 2007, when two off-balance sheet subprime hedge funds belonging to Bear Stearns collapsed).
By December 2009, Mechel had secured a three-year extension to a Rbs15bn loan made to it by state bank VTB in 2008.
The same month, and in the run-up to Christmas, Rusal’s main owner and chief executive, oligarch Oleg Deripaska, had finally managed to negotiate the restructuring of US$16.8bn worth of debt in preparation for a main listing in Hong Kong.
That included the conversion of US$1.82bn of a total US$2.7bn owed to Russian oligarch Mikhail Prokhorov, in exchange for 6% of Rusal’s equity, bringing his total shareholding in Rusal to 20.4% in the run-up to the company’s IPO and, thereby reducing Rusal’s debt at that time to US$14.9bn.
By January, with the cornerstone support of Russian state bank VEB agreeing to take a 3.15% slice in Rusal as part of its IPO, the aluminium group successfully listed a 10.81% stake on the Hong Kong stock exchange for US$2.2bn at HK$10.80 per share, with a secondary listing in Paris.
As a result, the public offering diluted Deripaska’s stake to 47.59% from 54%, while Prokhorov now had a 17.09% stake, down from 20.4%.
Possibly because of his exposure to UC Rusal, Prokhorov had been knocked off his perch as Russia’s richest man. That accolade now goes to steel oligarch Vladimir Lisin, who owns most of NLMK.
Once Rusal’s shares started trading on January 27, they immediately tanked over concerns of a market slump in Asia; a US$1bn compensation claim made by the new government of Guinea against Rusal over the ownership of the latter’s bauxite and alumina assets in the West African country; a looming US$4bn litigation suit in London against Derispaska by his former business partner Mikhail Chernoy, who believes he still owns part of what is now UC Rusal; and the company’s debt position, although now much reduced to US$12.9bn thanks to US$2.14bn in proceeds from its IPO.
In effect, the Rusal restructuring has given the company a four-year breathing space to repay its debt and figure out its future. In the meantime, creditors will prevent the company from making acquisitions, although disposals are a strong probability.
There may be IPOs ahead
With the bond markets now wide open, some bankers do not see a spate of major Russian corporate distressed sales or restructurings for the year ahead. Finding liquidity is not as pressing as it was last year.
However, the bank loans market, including bridge loans, for acquisition finance, remains tight for all except the best Russian investment-grade corporates such as Lukoil.
Instead, it is likely that Russian companies will raise capital through IPOs, following Rusal’s example, or through private placements and secondary offerings, to make bolt-on acquisitions, or to reduce debt, or as opportune exits for their owners.
While certain other Russian corporates are keen to follow the Rusal IPO road, the London Stock Exchange remains their preferred route – and not Hong Kong. According to some bankers, there is no incremental demand if you list in China and, therefore the general trend will continue to be London.
But there is still much uncertainty in the global economy, with the eurozone in trouble and a tightening of lending among Chinese banks, plus the depressing fact that some economies are either still in recession, have flat growth, or face a double-dip.
It seems the small window of opportunity to IPO has for the time being closed, with several major London offerings, including those for New Look, Travelport and Merlin Entertainments, withdrawn or postponed in February. International fund managers want to invest in an organic growth story; they are not interested in deleveraging a company’s balance sheet.
Nevertheless, there remain plenty of Russian companies keen to list in London. Russian fertiliser maker Uralchem, run by majority-owner and oligarch Dmitry Mazepin, wants to raise up to US$600m for a 30% listing in order to help it pay down some US$867.5m worth of debt.
Coal producer Suek is also aiming to float a 10% stake worth US$1bn in London in the second quarter, after its tie-up with Gazprom failed in 2008. Steel firm Metalloinvest, which is half-owned by oligarch Alisher Usmanov, is seeking to raise as much as US$2bn through an IPO to help it to refinance debt.
Even Russian media group ProfMedia, controlled by Russian oligarch Vladimir Potanin, wants to list as much as 40% on the LSE in what could turn out to be a US$500m listing come April. That would release liquidity in the company for opportunistic acquisitions, specifically targeting those Russian media businesses under financial pressure.
Domestic tie-ups
In short, domestic consolidation is inevitable as companies seek to strengthen their financial positions through cost-saving synergies and opportunities to scale up the business. Media is one sector already mentioned; banking is another.
Now, Russian state development bank VEB is trying to find a strategic partner to take up to 50% for US$1bn-plus in a planned federal postal bank, which will combine subsidiary Svyazbank with Russian Post, to compete against Sberbank’s network of branches. VEB has set a March 18 deadline for bid proposals.
Meanwhile, Mikhail Prokhorov has invited other oligarchs to pool resources and use his MFK Bank as a platform to buy distressed banking assets.
That leaves open the question of what Western banks are going to do with their retail networks.
“A lot of the foreign banks – in part because they have their own liquidity problems back home – are losing their taste for Russian retail risk, so they’ve got to figure out what to do with their networks,” says Matthew Roazen, a partner with law firm Akin Gump in Moscow, “and I think you’re seeing them looking at each other hoping somebody else is going to buy them, but I don’t know if you are going to have buyers or a whole bunch of sellers.”
Belgian bank KBC, which received a €7bn state bailout, has put its Russian bank Absolut on the market, although no sale process will begin until after 2011, it says. Back in 2007, KBC trumpeted its US$1.01bn acquisition of Absolut just as the market was about to crash.
“KBC is quite keen to get out [of Russia],” as one FIG adviser based in London succinctly describes the situation.
“What we will see is that some foreign banks will have made the decision to offload over the coming quarters of 2010 some parts of their portfolios here,” continues Roazen, “so I think you will see M&A between foreign banks regarding the transfer of Russian banking assets from one of them to the other”.
Another sector is airliners. The Kremlin has abandoned its plan to set up a competing national airline to Aeroflot and, instead will privatise and merge six flagging regional airlines into Aeroflot itself. The move comes after aspiring media tycoon Alexander Lebedev agreed to sell his 25.8% stake in Aeroflot to the state for about US$400m at an 18% market discount.
Lebedev, who has always been critical about the way Aeroflot has been run, seems these days to be much more interested in beefing up his UK newspapers empire and is keen to buy the Independent titles.
The telecoms sector is also heating up, this time to create a more competitive environment against the dominance of oligarch Mikhail Fridman. With the closure of the merger imminent between Ukraine’s Kyivstar and Russia’s Vimpelcom, the number two mobile operator, and with the proposed JV between Fridman and TeliaSonera to combine their Russian and Turkish mobile assets, Fridman would effectively control even more of the Russian mobile communications market.
The Russian government does not want that. It wants state-controlled Svyazinvest to merge with MegaFon, and for TeliaSonera, Fridman, and Alisher Usmanov to sell their equity in Russia’s number three mobile operator to, or merge it with Svyazinvest in what could be a US$19bn deal. Talks are understood to be ongoing.
When it comes to the energy sector, Bashneft, which groups together Sistema’s oil assets, has applied to Russia’s regulatory authority, the Anti-Monopoly service, to buy 49% of mid-sized oil producer Russneft. The latter had been under the stewardship of Oleg Deripaska, until he reportedly sold back control of the business to its controversial founder Mikhail Gutseriyev.
Russia Inc abroad
While many Russian companies will stay at home to digest previous acquisitions, or sell assets (because of their financial predicaments), those with reasonably healthy balance sheets will look abroad to do deals.
To this effect, Sistema has signed a memorandum of understanding with India’s state-owned ONGC Videsh Limited (OVL) “to explore the possibilities of jointly studying, and if mutually agreed, to participate in attractive oil and gas assets in Russia and third countries”. OVL already owns 20% of Sakhalin 1 – the huge oil and gas project in Russia’s far east.
“My view is that the downstream part of Bashneft is pretty good and I think from a strategic perspective it makes sense for the company to beef up its upstream portfolio, so I think all its strategy will be driven by that,” says Stanislav Song, the head of M&A for JP Morgan in Russia/ CIS.
Meanwhile, Lukoil, Russia’s second largest oil producer, may have seen its net income for 2009 dive by 23% to US$7bn, in line with a drop in oil prices, but that will not stop it making acquisitions abroad both at the downstream and upstream level. Its next move could be in Uganda as it seeks to strengthen its oil reserves.
And, despite the contested presidential election in Ukraine, there is no doubt that president-elect Viktor Yanukovych will court major Russian investment into his country, which is dogged by a crippling economy and a massive IMF bailout.
Attracting FDI
When it comes to foreign investment into Russia, the situation is fairly sluggish. With the near-resolution of the five-year spat between Fridman’s Alfa and Telenor over the control and strategy of Vimpelcom and Kyivstar, in addition to the restructuring of UC Rusal, it is hoped that Western capital flows will be attracted back into Russia.
The international bank lending market is only now beginning to open up, after a lot of major bulge-bracket banks got burnt with Russian restructurings and bad loans. Because overall the European loans market remains quite tight, Western banks will only start lending to Russian investment-grade borrowers.
So far this year, the biggest Western potential deal into Russia could be Coca-Cola acquiring Russia’s fourth-largest juice maker Nidan Soki from US private-equity group Lion Capital for US$500m-plus. The days of the mega deal are not yet back.
“Certainly, there is an interest from outside investors to invest in Russia, but the interest is fairly selective, I would say. Those people who are interested, they are really targeting the best companies and they’re not just buying because it’s Russia – they want to see strong fundamentals behind the business they’re buying,” says Song.
John Goodwin, managing partner for Linklaters in Moscow, agrees. He says: “The real buyers from abroad coming into Russia are those who have been looking at it for a while and want to take an opportunity . . . they’ll be strategic buyers, buying in the same industry as themselves and buying for effectively a bolt-on or a strategic reason.”
But with moves afoot to strip TNK-BP, Russia’s third largest oil company, of its licence to exploit the huge Kovykta gas field on China’s border, all that good PR – which the Russian government has been trying of late to disseminate to the Western investment community – could be put on a back foot.
The dispute is linked to a 2007 agreement for TNK-BP to sell its stake in Kovykta to Gazprom, but the two parties have continued to haggle over the sale price. The showdown comes at exactly the same time that TNK-BP has announced that it will invest US$1.7bn in two oil and gas greenfield sites in Siberia.
The oil and gas sector in Russia has always been strategic to the Russian state, but other areas are not so risky for foreign investors. Even then, they are mitigating risk through joint ventures.
Italy’s Fiat and Russian automaker Sollers are establishing a €2.4bn 50/50 joint venture to make 500,000 Fiat cars annually. Durex maker SSL is forking out no more than £140m to increase its stake in Russian condom distributor BLBV from 50.6% to 75%. In 2011, SSL can exercise an option to take 100% control of BLBV, which it is likely to do since it sees Russia as its biggest single market going forward. Even eBay’s chief executive John Donahoe would consider JVs to gain a foothold in Russia’s estimated US$5bn online retail market.
Healthcare will also continue to be an important area for foreign investment. In October last year, France’s Sanofi-Aventis bought a 74% stake in Russian pharmaceutical products manufacturer Bioton Wostok. Then in January this year at Davos, the chairman of Novartis, Daniel Vasella, said he saw Russia as one of his strategic goals over the next two to three years, because of the country’s strong R&D and its 140m people population.
As for sovereign wealth funds from Singapore, China, and Libya, they are scouting for deals in Russia and the wider CIS, but none of them have so far worked out.
“I think there will be modest growth compared with 2009, I think there will be foreign investment into Russia, but they will be strategic acquisitions of mid-size,” says John Goodwin. “I think we will not see very much by way of external investment by Russian corporates, with the exception of the energy sector, and I think liquidity will remain tight.”
-Read more from Acquisitions Monthly here.
Activity in the Oil and Gas sector (including regulatory)
Bloomberg: China, Russia Reach Initial Gas Cooperation Agreement (Update1)
By Bloomberg News
March 3 (Bloomberg) -- China, the world’s second-largest energy consumer, has reached an initial agreement on pricing and supply for natural gas from Russia, the official Xinhua News Agency reported, citing energy chief Zhang Guobao.
China will boost the use of the cleaner fuel and the development of new energy in its five-year plan through 2015, Zhang was quoted as saying in an interview with Xinhua late yesterday. The country will improve energy cooperation with foreign countries, it said.
The Chinese economy, which expanded at the fastest pace in the fourth quarter since 2007, will grow four times faster than the U.S. in 2010, the United Nations said in December. China agreed in February last year to provide Russia with $25 billion of loans in return for 20 years of crude oil supplies as domestic energy demand rises.
China may start importing crude oil from Russia through a cross-border pipeline now being built, Xinhua quoted Zhang as saying. The country’s electricity imports from Russia may increase by 25 percent to 1 billion kilowatt-hours in 2010, according to Zhang.
The country will continue to import liquefied natural gas to the southern province of Guangdong as demand of the cleaner- burning fuel rises, Zhang said.
The government will add to its emergency stockpiles of crude oil to ensure energy security, he said. The country has started building tanks as the second phase of a project in Xinjiang and Lanzhou in the northwest, according to Zhang.
Construction of stockpiling facilities in other places will begin in the next two years, Zhang said, without elaborating.
To contact the reporter on this story: Ying Wang in Beijing at ywang30@
Last Updated: March 2, 2010 21:11 EST
Gazprom
Reuters: Russia's Gazprom to halve its Novatek stake-report
Wed Mar 3, 2010 7:30am GMT
MOSCOW, March 3 (Reuters) - Russian energy group Gazprom (GAZP.MM) plans to swap more than half of its holding in gas company Novatek (NVTK.MM) for 51 percent of a small natural gas firm, daily Kommersant reported on Wednesday.
The 51 percent stake is currently owned by Gazprombank.
"We decided that we will give away around half of our stake in Novatek (to Gazprombank) for 51 percent of Sibneftegaz," Kommersant quoted a Gazprom source as saying.
He added the deal could be clinched in June.
The move will make Russian oil trading heavyweight Gennady Timchenko Novatek's biggest shareholder with 18.2 percent of the shares. Gazprom currently holds 19.4 percent of the compamy.
In February, Kommersant said Gazprom might get control of a new gas company to be created out of three already existing firms.
The new company's annual gas production would match that of Novatek, Russia's largest non-state gas producer, and would be established on the basis of Gazprombank-owned Sibneftegaz as well as Purgaz and Nortgaz companies. (Editing by David Holmes)
UpstreamOnline: Gazprom in Novatek swap
Russian energy group Gazprom plans to swap more than half of its holding in gas company Novatek for 5% of a small natural gas outfit.
News wires 03 March 2010 08:13 GMT
The 51% stake is currently owned by Gazprombank, Reuters reported citing daily Kommersant.
"We decided that we will give away around half of our stake in Novatek (to Gazprombank) for 51% of Sibneftegaz," Kommersant quoted a Gazprom source as saying.
He added the deal could be clinched in June.
The move will make Russian oil trading heavyweight Gennady TimchenkoNovatek's biggest shareholder with 18.2% of the shares. Gazprom currently holds 19.4% of the company.
In February, Kommersant said Gazprom might get control of a new gas company to be created out of three already existing firms.
The new company's annual gas production would match that of Novatek, Russia's largest non-state gas producer, and would be established on the basis of Gazprombank-owned Sibneftegaz as well as Purgaz and Nortgaz companies.
Published: 03 March 2010 08:13 GMT | Last updated: 03 March 2010 08:13 GMT
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Today.az: SOCAR increases gas exports by 18% through supplies for Gazprom
02 March 2010 [15:54] - Today.Az
This January the State Oil Company of Azerbaijan (SOCAR) increased volumes of gas exports from the country by 17.9 percent against last December when export rose by 57.1 percent compared with November of 2009.
The Company said that in January 2010 gas exports totaled 172.8 million cu m versus 146.58 million cu m in December and 167.32 million c.m. in January of 2009.
Exports for December 2008 (178.45 million c. m.) still remain a record indicator for SOCAR.
In 2009, it was exported 1.03 bn c. m. versus 818.93 million c. m. in 2008.
Last year SOCAR increased gas export by 25.9 percent.
In January 2010, SOCAR launched gas supplies for Russia’s Gazprom but that did not tell drastically on export volumes.
UpstreamOnline: Gazprom may pass EDF South Stream slice
Russian monopoly Gazprom, an equal partner with Italy’s Eni SpA in the South Stream natural-gas pipeline project, may reduce its stake to allow Electricite de France to buy shares in the venture.
Upstream staff 02 March 2010 19:21 GMT
Gazprom and Eni agreed last year to allow EDF to buy an interest of 10% to 20% in South Stream, the operator of the planned offshore section of a pipeline under the Black Sea.
No deal has yet been signed and neither partner has said which will reduce its holding to allow EDF’s entry.
“We allow for the possibility that our part can be cut,” Gazprom executive Alexander Medvedev told Bloomberg today in an interview in Paris.
He did not say by how much Gazprom may trim its holding, or how much Rome-based Eni may also sell.
The 900-kilometre (560-mile) pipeline, due to open at the end of 2015, is designed to connect Russia to the Balkans, where it will split into northern and southern routes.
The link will bypass Ukraine, helping avoid a repetition of the gas disputes that have curbed supplies to Europe in the past four years.
EDF, which may get as much as 6 billion cubic metres of gas a year under the agreement struck last year to join South Stream, needs gas to fuel planned power plants in France, Belgium, the Netherlands and the UK that will in part replace coal-fired generators.
Medvedev said it is not the division of stakes that matters but corporate governance rules, which will allow the partners to feel “comfortable” in decision-making.
“The magic of figures shouldn’t mislead anyone,” he said.
The executive plans to meet with EDF management tomorrow to discuss the transaction. The Gazprom delegation, headed by boss Alexei Miller, is accompanying Russian President Dmitry Medvedev on his visit to Paris this week.
The decision on selling shares to EDF will depend on Eni, Gazprom’s Medvedev said, adding that “up to 20% is realistic and corresponds to the interest of EDF.”
Published: 02 March 2010 19:21 GMT | Last updated: 02 March 2010 19:21 GMT
Reuters: Iran says to sign Gazprom deal on Azar oilfield
Tue Mar 2, 2010 5:13pm IST
* Report comes after tougher Russia sanctions stance
* Gazprom confirms talks, does not mention deal date
TEHRAN, March 2 (Reuters) - Iran is to sign a contract with Russia's Gazprom (GAZP.MM) this month on developing the Azar oil field, a business daily said on Tuesday.
Russia has taken a tougher line on Iran in recent months, supporting United States' efforts to get new sanctions from the U.N. Security Council. [ID:nLDE6202IB]
A Gazprom spokesman confirmed talks were under way but did not comment on the timing of any deal.
"We will continue negotiating over the field's master development plan until the end of March," the spokesman said.
"The contract on the development of Azar oil field will be signed later this (Iranian) month with an Iranian-Russian consortium," Iranian paper Poul quoted Bahman Soroushi, director of the Oil and Gas Control unit at the National Iranian Oil Company (NIOC) as saying.
"The contractual details on the development of this oil field were finalised in the course of negotiations between an Iranian NIOC delegation to Russia and Gazprom earlier this year." March 20 is the last day of the Iranian year.
Gazprom signed a memorandum of understanding with NIOC in December to study development of two oilfields in Iran, Azar and Shangule.
Iran is one of the world's biggest oil and gas exporters but its economy, heavily dependent on energy revenues, is suffering amid the global financial crisis and international ostracism over its nuclear energy programme.
The Islamic republic has struggled to find the cash and technology to develop its energy sector as sanctions and political pressure have kept foreign firms away.
Iran says it is pursuing nuclear energy for its electricity needs while Washington and its allies fear an agenda to acquire nuclear weapons capability.
(Reporting by Hashem Kalantari, additional reporting by Dmitri Zhadannikov in Moscow; Writing by Andrew Hammond, editing by William Hardy)
Rencap: Ukraine is likely to request a lower gas price from Gazprom
Rencap
March 3, 2010
Event: RBC Daily reported today (3 Mar) that newly elected Ukrainian President Viktor Yanukovich, who is visiting Moscow on Friday (5 Mar), will be requesting a review of the gas price that Gazprom charges on Ukraine exports. He was quoted by the BBC as saying that a price close to $168/mcm, which is the price paid by Belarus, is more fair (compared to the previously reported 1Q10 price of $306/mcm). He also mentioned the possibility of creating a consortium to manage the gas transportation system of Ukraine, and he expressed interest in gaining access to upstream assets in Russia and Central Asia and participating in the construction of pipelines to Europe that are being built outside Ukraine.
Action: We retain our BUY rating for Gazprom.
Rationale: We believe it is unlikely that Russia will agree to amend its terms of sale to Ukraine, as we believe Yanukovich's position on this issue is weak, for three reasons. Firstly, our macro team believes that neither Ukraine's current account nor UAH seem to be experiencing any pressure now, and capital account issues are likely to be resolved when the IMF program resumes. Secondly, Russia has already granted material concessions to Ukraine under the existing contracts (i.e. no fines for low off-take in 2009). Finally, the beginning of Yanukovich's presidency has already been marked by a bitter controversy over whether his first visit should be to Brussels or Moscow. Following Yanukovich's decision to visit Brussels, both President Medvedev and Prime Minister Putin canceled their planned visits to his inauguration ceremony. Even in the unlikely scenario that the gas price is reduced, we do not expect a material negative impact on Gazprom's financials. We currently assume in our model that Gazprom is making no margin on the re-export of Central Asian gas to Ukraine. If the Ukraine pricewere reduced, we would expect Russia to negotiate better terms with Central Asian producers as well.
BNE: COMMENT: The EU needs to act at home to counter Gazprom's power
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Iana Dreyer of the European Centre for International Political Economy
March 3, 2010
There is a clear link between most Central and Eastern European gas markets still being government-run and/or fully monopolized, and Europe's vulnerability to decisions by Gazprom, with its considerable investments in the region, to turn off the gas tap. There have been many calls to unify the EU's gas markets in response, but no concrete proposals on how exactly to go about it. Yet a few antitrust cases in the new member states such as those launched in Western Europe against giants such as Gaz de France or ENI could do a big part of the job.
Well-established monopolies end up being swayed by the tides of economic or technological progress and smart competitors. Once they have been weakened, regulatory reform gives them the final shove. The rise of American cotton and English industrialisation in the 18th century forced the British East India Company to switch its core business from Indian calicoes trade to tea and opium, only to be brought down by shrewd drug smugglers on ever-quicker sailing ships, and the ultimate lifting of its trading monopoly by the Crown in the 19th century. Is a similar fate awaiting Gazprom?
Nobody wishes a vital company for both Russia and Europe to actually disappear, but everyone would gain from it acting on purely competitive and non-politicised grounds. Gladly, important ingredients for a decline of Gazprom's current business model with Europe have started coming together: technological progress embodied in liquid natural gas (LNG), and its main champion, the Qataris. The regulatory coup-de-grace, however, lags behind. The latter could come from the EU – if the bloc only seriously wanted to.
In thrall to the giant
Gazprom, the public-private behemoth with exclusive rights to control an antiquated Soviet pipeline system, holds Europe and Central Asia in thrall. Gazprom has not dared to shut the gas taps to its west so far this winter due to various circumstances that have temporarily weakened it. Even if the danger seems to have been averted, there hasn't been enough change in the structure of European markets since the last gas crisis of January 2009 to stop another gas cut-off occurring again. The psychological and political sway Gazprom – and by extension Russia - holds in Europe is quite rightly attributed to the excessive dependency on the Russian company of the small and mutually isolated markets of former members of the Soviet bloc on the one hand, and the unconditional willingness of the big players in the West to do business with the Russian giant on the other.
Many experts and policymakers have called for the unification of the EU gas market to put an end to the incentives that undermine any attempt of the EU to deal with Russia in a coherent way. But nobody has proposed how exactly to go about this. Yet a solution is quite straightforward when reasoned in the following way: first, as will be shown below, there is a clear interaction between the fact that the gas markets in Central Europe and the easternmost flanks of the EU are fully government-run or run by private monopolies, and their exclusive dependency on Gazprom for their gas deliveries. Second, regulations issued by the EU to remedy the situation have not worked. All these markets are either fully exempted or have refused to implement EU Directives aimed at opening them up to competitors. This exemption can be attributed to the fact that Gazprom, on top of delivering most of the gas, is directly invested in those markets. It is either the dominant intermediary trader or a major shareholder in the local gas monopolies. Under these circumstances, if anything is to be done quickly enough to address this imbalance in the relationship between European gas markets and Gazprom, the EU has no choice but to act forcefully and locally with its already existing market-integrating tools, including antitrust policy. This is why.
A new "Index of Vulnerability to Gazprom Supply Cuts" developed by ECIPE confirms what many an analysis has found, which is that the more the domestic national markets are closed and monopolized, the more they are exposed to supply cuts from Gazprom, and the less able they are to respond to delivery disruptions.
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A quick glance at the scores of EU member states is revealing. Bulgaria scores first, and Slovakia third. These are the two countries that have suffered most during the January 2009 gas crisis: they were utterly unprepared, and the fact that they had not invested in interconnecting infrastructure with their neighbours meant they couldn't be helped out.
A quick glance at their market structure speaks volumes. Bulgaria has a state-controlled gas sector that is fully dependent on imports from Russia. The intermediary in the market (ie. between Gazprom and the local gas monopoly) is Topenergo, which is a subsidiary of Gazprom. Slovakia is also 100% dependent on imports of Russian gas. The Slovakian market is dominated by the monopoly distributor and network company SPP, a joint venture between the Slovak government and Slovak Gas Holding. The latter is a Netherlands-based consortium co-owned by E.On Ruhrgas (in which Gazprom has a 6.4% share) and Gaz de France. Both local players are locked into long-term supply contracts with Gazprom.
The Baltic States, which score very high in the Index (#2 for Latvia and #3, along with Slovakia, for Estonia), have also been victims of gas supply disruptions in the past. Here too, the incentive structure in their small isolated markets is biased in favour of Gazprom. In Estonia, Gazprom holds a 37% stake in Estonia's national gas monopoly Eesti Gaas. Other shareholders include Gazprom-partner E.On Ruhrgas (33.66%), Itera (9.85%), which also has links to Gazprom, and Finland's Fortum Oy. A similar pattern can be found in Latvia: 34% of the national gas monopoly Latvijas Gaze is owned by Gazprom, whilst the rest of the company is co-owned by the same E.On Ruhrgas and Itera. Obviously the local governments don't act themselves to roll back the excessive grip of such a dominant player. And EU regulations have proven useless. So what can be done?
An answer would be to look at the existing Single Market competition toolkit in the EU and at what has recently happened further west. The powerful competition authorities in Brussels have launched widely publicized antitrust cases for abuse of market dominance against the big gas players in Germany, France and Italy. The cases reveal that these companies foreclose their markets to other European players and by extension endanger security of gas supplies. GDF Suez stands accused of denying competitors access to gas import capacity into France. ENI is suspected of capacity hoarding in Italy and strategic underinvestment in its international pipeline system. It is very likely that similar behaviour can be found in CEE. Brussels would be well advised to act in the same way there too.
There, an ENI- or GDF-style case would discourage a company like Gazprom from using the gas tap as a means to further its interests. It must bear in mind that even when it's not targeting directly an EU member, but say, Ukraine or Belarus, cutting off the gas would have implications further down the pipeline road and so couldn't be justified to its clients, thus making it costly. Such cases would ultimately force the local national monopolies to grant competitors access to import pipelines or national distribution grids. This would help increase supply in the local markets and diversify sources of imports via interconnecting pipelines with the other EU member states. This would provide a country with more alternatives to Gazprom as gas supplier, and therefore force it to improve customer service. Furthermore, in many cases, the threat of fines on local players is likely to affect Gazprom itself, given that it holds shares in many of the companies. This too will force it to think twice before shutting off the gas tap again.
Brussels so far has been timid in launching antitrust cases in the new member states. Whilst it has started acting in some areas, such as telecommunications and even in the electricity sector, there has been a taboo as to the gas markets, although these are among the least integrated of all. This taboo must now go. None of the new foreign policy powers granted to Lady Ashton under the Lisbon Treaty will be of any use in the EU's dealings with Russia if its gas markets continue to be as vulnerable as they are to such an outdated monopolist as Gazprom.
Iana Dreyer is Trade Policy Analyst at the European Centre for International Political Economy (ECIPE)
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