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Basic Political Developments
• : EU welcomes end to Ukraine-Russia oil transit row
• Warsaw Business Journal: Recently agreed gas deal with Russia hangs in the balance - Poland's gas supplies through 2037 may depend on whether it forgives Gazprom's zł.230 billion debt
• Bloomberg: India, Russia to Build Military Transport Planes, PTI Reports
• Civil.ge: Man Sentenced in Russia for Spying for Georgia
• RFERL: Georgia Denounces Energy Pact Between Rosneft, Abkhazia
• Itar-Tass: Lukashenko adopts draft agreement on construction of Belarus NPP - Belarusian President Alexander Lukashenko has generally approved a draft of the Russian-Belarusian agreement on the construction of Belarus’ first nuclear power plant, the presidential press service said on Tuesday.
• Itar-Tass: 3 crewmembers, including captain, of pirates-seized ship are Russian
• Vesti.ru: Nurgaliev: white-collar crime - a serious threat
• RIA: About 40% of defense enterprises of Russia ineffective - Deputy Prime Minister Ivanov
• Itar-Tass: Russian President to join this year's last session of cabinet
• RIA: Medvedev says no more than three terms for most province heads
• RFERL: No End In Sight To Daghestan Presidential Cliff-Hanger
• The Georgian daily: Russia’s Muslims No Longer Need to Study Abroad, Medvedev Aide Says
• Reuters: Russia bans pre-trial jailing of tax evasion suspects
• RIA: Medvedev signs law on first time tax evaders
• RIA: Medvedev signs off on retail trade law
• Bloomberg: Russian Retail Trade Law Limiting Expansion Signed by Medvedev
• Interfax: Patriarch Kirill listed among top five best Russians 2009 – poll
• Interfax: State should back up religious communities in proportion to their role in social life - Patriarch Kirill
• RIA: Putin at the auto plant: Russian Prime Minister drives Berlusconi’s car
• TimesOnline: Silvio Berlusconi drives hard bargain in Russian car deal with Putin
• Reuters: Russian oil firm security chief shot dead
• RIA: Man from Ghana stabbed to death in St. Petersburg
• Russia Today: Sine wave between Russia and US will stay in the past - Sergey Ryabkov - US-Russian relations this year have been dominated by talks over a new arms reduction treaty, and Iran's nuclear ambitions. RT discussed these issues with Sergey Ryabkov, Russia's deputy foreign minister.
• Russia Profile: Unwelcomed Missiles - Washington May Have Compromised with Moscow over the MDS in Czech Republic and Poland, but Russia Is Not Fully Backing an Alternative MDS in Turkey
• Russia Profile: Back in Small Business? - Increasing State Support for SMEs Has Helped Smaller Businesses, but Red Tape and Corruption, As Well As Difficulties With Securing Finance Continue to Blight the Sector
• WSJ: Once-Jailed Russian Executive Pushes Law Changes - Yana Yakovleva says her career is pretty standard for Russia's new business class. She helped start a chemical company, rose to finance chief, then spent seven months awaiting trial in a Moscow jail for white-collar crime charges. What happened next was less typical: Her case dropped, the 38-year-old is now campaigning to change a Russian justice system she says let bribe-seeking officials pressure her and other executives by throwing them in jail.
• Russia Today: World financial turmoil hits Russia’s oldest cities
National Economic Trends
• RBC: Russia's GDP up 1.9% in Q4
• Bloomberg: Russia Unbeatable to Stock Funds as Kudrin Says Prices Too High
• : Expert says economic growth in Russia needs to become large-scale
• Prime-Tass: Kudrin: Russia to spend entire Reserve Fund in 2010
• : Kudrin: Russian budget deficit to equal 6.3—6.4% of GDP in 2009
• : Rouble falls on Putin's inflow warning
Business, Energy or Environmental regulations or discussions
• Bloomberg: Mobile TeleSystems, Polyus, Rosneft: Russian Equity Preview
• RBC: Profit of 30 largest banks 3 times lower than in 2008
• RBC: MTS to float 3 bond issues
• Plastemart: Linde to build two olefin plants in Western Siberia (30-12-2009)
Activity in the Oil and Gas sector (including regulatory)
• Itar-Tass: Putin signs decree on oil export duty reduction - Russian Prime Minister Vladimir Putin has signed a decree on the reduction of a crude oil export duty from 271 U.S. dollars to 267 U.S. dollars as of January 1, 2010.
• RBC: Rosneft posts higher oil exports
• Dow Jones: Rosneft: Sees 2010 Oil And Gas Condensate Output At 117.6M Tons
• Reuters: Russia's Rosneft plans to up oil output 4 pct in '10
• Reuters: UPDATE 4-Russia, Ukraine agree oil deal to avert supply cut
• Itar-Tass: Gas pipeline ruptures in Kransnodar territory
Gazprom
• Steel Guru: Gazprom and CNPC ink agreement on gas supply
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Full Text Articles
Basic Political Developments
: EU welcomes end to Ukraine-Russia oil transit row
LEIGH PHILLIPS
Today @ 09:16 CET
Brussels has welcomed assurances from Moscow of an agreement between Russia and Ukraine that will avoid any disruptions to the transit of oil to the European Union.
On Tuesday (29 December), the two sides signed a fresh pact for the transit of oil via Ukraine to Europe, with Moscow acceding to a 30 percent increase in fees imposed on the passage of the fuel to EU destinations.
The European Commission was informed by the Russian government that there was no longer a risk of disruption of oil supplies.
The previous day, Moscow triggered the Early Warning Mechanism, which was usedby the Kremlin for the first time since its adoption in November 2009, following Ukrainian demands for an increase in transit charges for Russian oil destined for Europe.
The Ukrainian tariff demands were in conflict with a 2004 contract and could have provoked another fuel row between Kiev and Moscow, increasingly becoming something of a New Year's tradition.
The EU countries highly dependent on such supplies for the most part lie in the east, principally the Czech Republic, Hungary and Slovakia.
The mechanism is intended to raise alarm bells in Brussels long before any disruption could affect eastern households, and allow for both dialogue and emergency preparations to be made.
"I am glad to see that the newly agreed Early Warning Mechanism has been used by the Russian side to inform us about a possible supply disruption," said EU energy commissioner Andris Piebalgs. "The Mechanism has proven to be a useful communication tool."
"I am also very glad to note that the Russian and Ukrainian sides have meanwhile found an agreement avoiding a disruption of oil supplies to the EU," he added.
Warsaw Business Journal: Recently agreed gas deal with Russia hangs in the balance
30th December 2009
Poland's gas supplies through 2037 may depend on whether it forgives Gazprom's zł.230 billion debt
Russian giant Gazprom, supplier of a quarter of the European Union's gas needs, wants its debts to EuRoPol Gaz for gas transit through Poland forgiven. Gazprom's debts to the firm, the operator of the Polish section of the Yamal pipeline, exceed zł.230 million, and Treasury Minister Aleksander Grad isn't budging.
However, Poland's recently agreed natural gas deal with Russia, which was to ensure supplies to Poland through 2037 depends on whether Poland is willing to forgive Gazprom's massive debts.
“As this issue [of Gazprom's debts] was not resolved, one cannot say negotiations have ended, or of an agreement,” said Deputy Treasury Minister Mikołaj Budzanowski.
The issue is to be discussed in the middle of January between he representative of PGNiG and Gazprom. If the companies fail to reach an agreement, then government representatives will have to return to the negotiating table.
Source: Rzeczpospolita
Bloomberg: India, Russia to Build Military Transport Planes, PTI Reports
By Natalie Obiko Pearson
Dec. 30 (Bloomberg) -- India and Russia plan to invest $300 million each in a joint venture to build military transport planes for their armed forces, the Press Trust of India reported, citing Voice of Russia radio.
India’s state-owned Hindustan Aeronautics Ltd. and Russia’s United Aircraft Corp. expect to begin producing medium-lift transport planes by 2017, the agency said yesterday.
To contact the reporter on this story: Natalie Obiko Pearson in Mumbai npearson7@.
Last Updated: December 29, 2009 22:32 EST
|Civil.ge: Man Sentenced in Russia for Spying for Georgia |
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|Civil Georgia, Tbilisi / 30 Dec.'09 / 00:17 | |
Court in Russia’s North Ossetian Republic found a 55-year-old Russian citizen of Georgian origin guilty of spying in favor of Tbilisi and sentenced him to eight years in prison, the Russian news agencies reported on Tuesday.
A local prosecutor in North Ossetia said that Badri Kurashvili, a construction worker at military facilities, was passing to the Georgian intelligence sensitive information about the military units in North Caucasus starting from October, 2007 till the end of 2008.
The official said that Kurashvili was sending the information via “encrypted SMS”.
This is the third case this year when a court in North Ossetia sentences Russian citizen for spying in favor of Georgia.
A serviceman of the Russian armed forces, Jemal Nakaidze, was sentenced to nine years in prison in October and in August a former deputy commander of one of the Russia’s military units of North Caucasus Military District, Mikhail Khachidze, was sentenced to six years in prison.
RFERL: Georgia Denounces Energy Pact Between Rosneft, Abkhazia
December 29, 2009
TBILISI -- The Georgian Foreign Ministry says an oil agreement between Russian oil company Rosneft and the separatist region of Abkhazia is a violation of Georgian and international laws, RFE/RL's Echo of the Caucasus reports.
The ministry said in a statement today that according to a law on occupied territories adopted by the Georgian parliament in September, foreign companies are forbidden access to develop oil fields in the breakaway Georgian territories of Abkhazia and South Ossetia without the authorization of the Georgian government.
The Foreign Ministry also referred to the 1982 UN Convention on the Law of the Sea, which obliges foreign companies to obtain the permission of sovereign state authorities to engage in economic activity in its marine areas.
On May 26, Abkhaz Economy Minister Kristina Ozgan and Rosneft President Sergei Bogdanchikov signed an agreement in Sukhumi under which Rosneft acquired the rights for a period of five years to prospect for oil and natural gas off Abkhazia's Black Sea coast.
Rosneft is also to build a chain of gas stations in Abkhazia and sell gasoline, diesel, and heating oil.
Abkhazia declared its independence from Georgia in August 2008 after a five-day war between Georgian and Russian forces in the second breakaway Georgian republic of South Ossetia. But its independence, and that of South Ossetia, is recognized only by Russia, Venezuela, Nicaragua, and the Pacific island of Nauru.
Itar-Tass: Lukashenko adopts draft agreement on construction of Belarus NPP
29.12.2009, 23.29
MINSK, December 29 (Itar-Tass) -- Belarusian President Alexander Lukashenko has generally approved a draft of the Russian-Belarusian agreement on the construction of Belarus’ first nuclear power plant, the presidential press service said on Tuesday.
The document can be laid as the basis of bilateral talks on the issue, the press service said.
“Belarusian Energy Minister Alexander Ozerets was appointed to hold talks on the draft agreement. If needed, he can make changes and amendments, which are not of principled importance. He can put his signature to the document, when an accord is reached in the format of the adopted draft,” the press service said.
The nuclear power plant will be located in the Ostrovetsky district of the Grodno Region.
Under the project, the nuclear power plant with two 1,000-megawatt reactors will be built in Belarus. The construction process is scheduled to start in 2010. The first power unit will be commissioned in 2016, the second – in 2018. The plant’s capacity is projected at 2,400 megawatts.
Russia’s Atomstroiexport company will be the project’s general contractor. Belarus had asked the Russian government to grant a 9-billion-dollar credit for the construction of the two power units of Belarus’ first nuclear plant and for the creation and development of necessary infrastructure.
Itar-Tass: 3 crewmembers, including captain, of pirates-seized ship are Russian
29.12.2009, 21.38
MOSCOW, December 29 (Itar-Tass) -- There are three Russian citizens, including the captain, onboard the St James Park vessel seized by Somali sea pirates on Tuesday, Andrew Mwangura, coordinator of the Seafarers’ Assistance Program, told Itar-Tass.
“In all, the chemical tanker en route from Spain to Thailand has 26 crewmembers, among them three Russians, six Indians, five Bulgarians, three Filipinos, three Turks, two Ukrainians, two Romanians, one Georgian and one Pole,” he said.
The vessel was captured this morning while passing through a transit corridor recommended for civilian vessels in the Gulf of Aden.
The ship carries 13,000 tonnes of chemicals in plastic packing. The chemicals do not require special transportation conditions. The ship made its latest stop in Jeddah in Saudi Arabia on December 24 for fueling and replenishing food and drinking water reserves.
December 30, 2009 11:30
Vesti.ru: Nurgaliev: white-collar crime - a serious threat
/GOOGLE TRANSLATION/
One of the new types of crime in modern Russia, representing a serious threat - is a smart white-collar crime. So says the head of Russia's Interior Minister Rashid Nurgaliyev.
Summing up 2009, Rashid Nurgaliyev noted the growth of crime in the sphere of high technology and high technology, especially in the field of virtual economics and finance. "These new threats - a serious challenge," - he said. However, these crimes successfully detected specialists operative technical units MVD of Russia.
"The work of employees use the most modern and sophisticated mathematical, analytical, economic and statistical and computer models - the minister said. - This is a favorable impact on the crime situation, the identification, disclosure and evaluation of crime."
According to Interfax, Nurgaliyev added that this process is the Ministry of the Interior under special control. Nurgaliyev also said that talk about predolenii corruption in the Interior Ministry is still too early.
According to preliminary results, the overall crime rate in Russia declined by 20% to 10 thousand decrease in the number of juvenile delinquents. According to the Minister of the Interior, 18% less than recorded serious crime, particularly serious - more than 20%. He noted that the final results of the year will be concluded in January 2010, but "positive trend persists.
RIA: About 40% of defense enterprises of Russia ineffective - Deputy Prime Minister Ivanov
/GOOGLE TRANSLATION/
08:53 30/12/2009
MOSCOW, December 30 - RIA Novosti. Only about 60% of the enterprises of Russia military-industrial complex (MIC) cost-effectiveness, said Deputy Prime Minister Sergei Ivanov, who took over in December, the newly created inter-ministerial working group on the modernization and the innovative development of OPC.
"About 60% of defense enterprises economically successful and do not make the government a headache, and most of these enterprises has become, since 2007, in the large, vertically integrated structures (eg, KLA, USC)," - said Deputy Prime Minister in interview " Vesti.
Other companies, he said, raise questions. "It's inefficient production, laid under the products that consume another Soviet army in the 5 million people. We have so many businesses and this quality does not need," - said Deputy Prime Minister.
In his view, such enterprises can convert, convert to civilian production. At the same time, Ivanov admitted, for those of defense enterprises, which managed to go to the "civil" proceedings have hurt the economic crisis, to reduce consumption.
Earlier, Deputy Prime Minister reported that the overall defense industry enterprises because of the crisis reduced the share of civilian products manufactured by them to 30% to 40%.
As part of anti-crisis measures for grants defense enterprises was planned 70 billion rubles, of which 65 billion were allocated by mid-year.
Itar-Tass: Russian President to join this year's last session of cabinet
30.12.2009, 06.11
MOSCOW, December 30 (Itar-Tass) - Russia's President Dmitry Medvedev is expected on Wednesday to visit the Russian ‘White House’ – the government’s central office where he will take part in the last regular session the presidium of the cabinet of ministers holds this year.
The presidium includes Deputy Prime Ministers and key cabinet ministers.
The head of state comes to the government headquarters once a year as a minimum to sum up the results of the ministers’ performance in an outgoing year.
For President Medvedev, this will be the first appearance in the White House in the outgoing year. He will take a seat in the chair usually occupied by the Prime Minister and will congratulate the ministers on the occasion of the New Year.
Medvedev is due to assess the government’s activity this year and to the map out the tasks the executive branch of state power will face next year.
RIA: Medvedev says no more than three terms for most province heads
19:3929/12/2009
Russian President Dmitry Medvedev warned the country's governors on Tuesday that most provincial heads would be able to hold office for three terms in the future.
"A fourth term will be a rare exception," the president said during a live video link-up with Yoshkar-Ola, the capital of the Russian Volga republic of Mari El.
Out of Russia's 83 regional leaders, 29 have held their posts since the last century. Mintimer Shaimiyev, the president of another Russian Volga republic, Tatarstan, Yugra (West Siberia) governor Alexander Filipenko, the heads of west Siberia's Omsk and Tomsk regions, Leonid Polezhayev and Viktor Kress, and Rostov Region governor Vladimir Chub came to power in 1991.
Moscow Mayor Yury Luzhkov, Belgorod Region governor Yevgeny Savchenko, Kalmyk President Kirsan Ilyumzhinov, Bashkir leader Murtaza Rakhimov and Chuvash President Nikolai Fyodorov have also been in office for more than a decade.
Governors are appointed by presidential decree.
Medvedev said last week new governors were appointed in about a fifth of Russia's regions over the last year and a half.
GORKI, December 29 (RIA Novosti)
RFERL: No End In Sight To Daghestan Presidential Cliff-Hanger
December 29, 2009
Some commentators have construed Russian President Dmitry Medvedev's December 24 assertion that new elections will take place in several municipalities in Daghestan as setting a laudable precedent for annulling the outcome of regional ballots that were openly and blatantly rigged.
But it is equally likely that Medvedev's public endorsement of the ruling the previous day by Daghestan's Supreme Court upholding the Derbent City Court's decision to annul the results of the October 11 ballot for city mayor was part of a carefully constructed rationale not to appoint incumbent Mukhu Aliyev to serve a second term as Daghestan's president.
Aliyev mobilized virtually the entire republican leadership to campaign on behalf of incumbent Derbent Mayor Feliks Kaziakhmedov, who was duly proclaimed the winner with 67.5 percent of the vote, compared with 28 percent for his closest challenger, former republican prosecutor Imam Yaraliyev.
Aliyev, whose term expires in February, was one of five potential presidential candidates on a list presented to Medvedev last month by the presidium of the ruling United Russia party. That list did not include influential Makhachkala Mayor Said Amirov, who many observers believe has for years aspired to the presidency. Amirov is a Dargin, while Aliyev and three of the other five candidates on the list are Avars. The fifth, Magomedsalam Magomedov, the son of Aliyev's predecessor as president, is also a Dargin.
Eight Russian State Duma deputies from Daghestan had earlier written to Medvedev and to United Russia Chairman Boris Gryzlov arguing that Amirov was the best-qualified candidate to take over from Aliyev as president. Medvedev nonetheless endorsed the list of five names on December 16.
On December 25, seven of the eight State Duma deputies who originally lobbied Medvedev and Gryzlov on Amirov's behalf reportedly sent an official request to Russian Prosecutor-General Yury Chaika to open an investigation into the deployment to Derbent during the mayoral election campaign of "armed groups of state bureaucrats" who, the signatories alleged, surrounded polling stations and terrorized voters, creating an "unbearable situation."
But several of the purported signatories told the website "Kavkaz-uzel" on December 27 on condition of anonymity that the appeal was never sent, and one of them, Rizvan Isayev, denied on December 28 that he ever signed it. A second deputy identified as having signed the appeal, Magomed-kadi Gasanov, confirmed, however, both that he had done so, and that the appeal was indeed sent to Chaika.
Some observers interpreted the appeal to Chaika as a further attempt to discredit Aliyev, who responded by accusing the "opposition" of terrorizing and attempting to bribe voters and of seeking to destabilize the political situation in order to secure the appointment as president of a "puppet" whom they could "manipulate."
Aliyev did not, however, attend a parliament session on December 29 at which deputies were scheduled to endorse his grandiose 10-year social and economic development program, and many of the deputies who constitute his support base reportedly staged a walkout, thereby thwarting a vote. One deputy told "Kavkaz-uzel" that "many" of his fellow deputies offered congratulations to Magomedov, who was visibly in excellent spirits. But another commentator construed the walkout as a warning signal to Moscow that the parliament would reject any proposed presidential candidate except Aliyev.
The Georgian daily: Russia’s Muslims No Longer Need to Study Abroad, Medvedev Aide Says
December 29, 2009
Paul Goble
Russia has established a system of Islamic training center that eliminates the need for Muslims from that country to travel abroad to study, thus eliminating one of the major channels for the introduction into the Russian umma of radical Islamist ideas, according to a Kremlin aide.
In a report to a meeting with Islamic specialists in Kuwait this week, Aleksey Grishin, the official of the Presidential Administration who oversees relations with Muslims, said that these efforts, undertaken both by the Islamic community in Russia and by the Russian government, enjoy the support of Arab governments (islamnews.ru/news-21943.html).
Because of the Soviet regime’s anti-religious efforts, there were only two Muslim educational institutions in the USSR – one in Bukhara and another in Tashkent – which even together were not able to provide the amount of training necessary for the explosive growth of Islam in the Russian Federation after 1991.
As a result, more than 22,000 Muslims from Russia travelled abroad for study in the years after the collapse of the Soviet Union. Because they were often supported by and thus attracted to more radical institutions in the Middle East and South Asia, these students often returned home with radical ideas.
Consequently, beginning in the mid-1990s, first the leaders of the Muslim Spiritual Directorates (MSDs) and then the Russian government began to press for the opening of Muslim training centers within the Russian Federation in order to block what they view as a destabilizing outside influence.
Grishin’s report in Kuwait shows just how much progress Russia’s Muslims and the Russian government have made. Over the past few years, he said, “96 Islamic educational institutions have opened, including seven Islamic universities, about 20 higher medressahs, and about 70 educational institutions which provide mid-level training.”
In addition, the Kremlin aide said, attached to mosques in the Russian Federation “are more than 400 religious courses for believers, which provide primary education about Islam.” In most but not all cases, these institutions are closely supervised by the MSDs and by Russian officials from one or another agency.
“Parallel to this,” Grishin said, training for Muslims is now taking place in eight government higher educational institutions, where the government is financing instruction in Arab language and Islamic theology in order to provide future leaders for the MSDs and for domestic Islamic educational institutions.
While he did not provide details, the Kremlin aide said that the Russian government has adopted a special “state standard for higher professional education in Islamic theology” and that “at present, more than 320 students” are enrolled in such courses in government higher educational institutions.
Grishin stressed that Russian officials now believe that the government and the MSDs must expand their cooperation in this area in order to ensure that Islamic education will develop in an appropriate way, and he said that Russia’s experience in this regard could be useful for countries “of the near and even far abroad interested in the resolution of analogous problems.”
The rise of this new Russian Islamic educational system in such a short time is impressive and undoubtedly will fill the needs of most of Russia’s Muslims seeking training in the faith, but it is unlikely to eliminate entirely the interest or even need of some interested in advanced training from going abroad.
On the one hand, the system Grishin sketched out may help Moscow to block the flow of students to radical Islamic medrassahs abroad. But on the other, whatever Grishin may think, it will do little or nothing to eliminate the desire of at least some to study at the centers of Islamic learning in Cairo and elsewhere and thus engage in dialogue with the Islamic educational elite.
Reuters: Russia bans pre-trial jailing of tax evasion suspects
Wed Dec 30, 2009 1:52am IST
MOSCOW (Reuters) - Russian President Dmitry Medvedev on Tuesday banned the pre-trial jailing of suspects in tax evasion cases weeks after the death in prison of a tax lawyer awaiting trial drew international condemnation.
Sergei Magnitsky, a 37-year-old lawyer for Hermitage Capital Management, once Russia's biggest equity fund, died on Nov. 16 in a Moscow prison hospital while awaiting trial for tax evasion. His relatives say he was denied medical treatment.
Critics have accused the Russian authorities of using tax charges as a weapon against political opponents, specifically in the 2003 arrest of oil tycoon Mikhail Khodorkovsky.
A Kremlin statement on Tuesday said Medvedev had signed a law banning pre-trail jailing of tax evasion suspects while moving responsibility for criminal probes into tax evasion from the Interior Ministry to the Prosecutor General's Office.
Under the law, first-time tax evaders who then pay their back taxes will be exempt from criminal prosecution.
Medvedev, who has described the fight against what he calls Russia's "legal nihilism" as one of his main priorities, has called for the wide-scale reform of the Russian law-enforcement and judicial systems.
RIA: Medvedev signs law on first time tax evaders
22:0129/12/2009
Russian President Dmitry Medvedev signed a law on Tuesday making first time tax evasion a civil rather than a criminal offence.
The president signed another law amending the country's Tax Code to outlaw custody for suspects in tax evasion cases.
However, "amnesty" will be possible only if tax evaders pay their debts and fines under current tax legislation.
Both houses of Russia's parliament passed the bill, drafted by members of the ruling United Russia party, last week. Earlier in December, the Russian Prosecutor General's Office and the Interior Ministry protested against the law.
In a live interview with three national television channels last Thursday, Medvedev said pre-trial custody on tax-evasion and related charges was unnecessary since suspects in such cases were often released later anyway.
MOSCOW, December 29 (RIA Novosti)
RIA: Medvedev signs off on retail trade law
16:4729/12/2009
Russian President Dmitry Medvedev has signed into law a bill on state regulation in retail trade, setting tougher antitrust requirements, the Kremlin website said on Tuesday.
The bill was passed by the lower house of parliament on December 18 and by the upper house seven days later.
The law is also aimed at creating transparent conditions of cooperation between suppliers and retailers. It also imposes infrastructure limitations on companies already holding a 25% share on the local market.
The bill fixes terms of payment for delivered goods, with restricted payment delays. In essence, goods due to go out of date in less than 10 days should be paid off no later than within 10 days of the delivery date. Retailers should also pay for domestic alcoholic products at least within 45 days.
Retailers repeatedly expressed worries over regulation of commerce. After the law was passed in the second reading, the ACORT Retailers Association pointed to the risk of a hike in prices and a sharp decrease in the assortment of foodstuffs in Russia.
Experts also warned restrictions on payment delays would make retailers more dependent on banking loans and increase expenses on the payment of interest.
The law will come into force on February 1, 2010.
MOSCOW, December 29 (RIA Novosti)
Bloomberg: Russian Retail Trade Law Limiting Expansion Signed by Medvedev
By Maria Kolesnikova
Dec. 30 (Bloomberg) -- Russian President Dmitry Medvedev has signed a law to limit the expansion of retail chains, a measure lawmakers said will promote cheaper prices for customers.
The law, published today in the official bulletin Rossiyskaya Gazeta, takes effect Feb. 1.
Chains with more than 25 percent of their sales in a particular region will be banned from acquiring additional retailing space, according to the regulation.
Those operating nationwide will be subject to the restrictions as of Feb. 1. For chains operating in a certain city or a municipal district, including Moscow and St. Petersburg, the law will take effect as of July 1.
To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@,
Last Updated: December 30, 2009 00:41 EST
Interfax: Patriarch Kirill listed among top five best Russians 2009 – poll
Moscow, December 29, Interfax – Patriarch Kirill of Moscow and All Russia was listed among five best Russians of the expiring year.
According to the poll conducted by the Russian Public Opinion Research Center in 140 Russian towns and cities on December 19-20, Prime Minister Vladimir Putin as before holds the first place in rating of Russian elite: 67 percent of Russians included him in elite in 2009.
Russian President Dmitry Medvedev has strengthened his positions among Russian elite as his rating has increased up to 50.64 percent.
Popular singer Alla Pugacheva occupies the third place, the poll says.
Russian elite top ten also includes Patriarch Kirill of Moscow and All Russia (15.12 percent), head of the Emergency Situations Ministry Sergey Shoygu (15.12 percent), Liberal Democratic Leader Vladimir Zhirinovsky (10.75 percent), film director Nikita Mikhalkov (8.74 percent) and others. Moscow Mayor Yury Luzhkov (6.47 percent) rounds up the top ten.
The Russian elite first quarter includes football player Andrey Arshavin (5.92 percent), Communist leader Gennady Zyuganov (5.19 percent), businessman Roman Abramovich (3.83 percent), St. Petersburg Mayor Valentina Matviyenko (3.64 percent) and other renowned compatriots.
Interfax: State should back up religious communities in proportion to their role in social life - Patriarch Kirill
Moscow, December 30, Interfax - Patriarch Kirill of Moscow and All Russia speaks for the principle of selective state support to religious communities.
"It's quite possible, creating conditions for realization of each citizen's religious freedom , to develop relations with certain religious organizations in proportion to their presence in society," Patriarch Kirill said speaking in the Russian Presidential Academy of State Service.
The Patriarch called such principle as "concretization of constitutional and legislative provisions" and noted this was the way state and Church relations developed in many European countries and in the whole world.
He cited statistical data of the American Pew Research Center, which shows that 86 percent of world states extend financial and other support to religious organizations, while 76 percent of countries give preference to certain religious groups when extending such help.
"General attitude to relations between state and religious communities is being gradually formed in countries of our canonical space when with their main rights equal, society selectively determines the level of cooperation with various religious organizations," the Patriarch said.
According to him, the criteria of selection is usually number of believers in religious organizations, their contribution in a country's national culture and period of presence in its territory.
RIA: Putin at the auto plant: Russian Prime Minister drives Berlusconi’s car
Russian Prime Minister Vladimir Putin took part in the opening ceremony for a new Sollers automobile plant and drove a car made for Italian Prime Minister Silvio Berlusconi.
December 30, 2009
TimesOnline: Silvio Berlusconi drives hard bargain in Russian car deal with Putin
Silvio Berlusconi, the Italian Prime Minister, has bagged himself a bargain with 10 per cent off a new Russian-built 4x4 vehicle.
The UaZ is built by the carmaker Sollers in eastern Russia. Vladimir Putin, the Russian Prime Minister, let slip news of Mr Berlusconi’s discount as he test-drove one of the new cars in Vladivostok.
He said: “I told [the Italian Prime Minister] that we would start production here. Berlusconi didn’t believe me.
“We will give him a 10 per cent discount. We won’t give him the first car free; we will sell it to him. That’s business.”
Reuters: Russian oil firm security chief shot dead
Wed Dec 30, 2009 12:19am IST
MOSCOW (Reuters) - A senior security official at Russian oil firm Bashneft was shot dead close to his home on Tuesday, investigators said.
Vladimir Butorin, 57, who was in charge of protecting industrial secrets for the mid-size oil producer was found dead with five gunshot wounds, investigators from the Prosecutor General's office said in a statement.
The statement said a murder investigation had been launched, but did not mention a motive. State news agency RIA Novosti cited investigators as saying the killing could have been linked to Butorin's work at Bashneft.
Bashneft offered a 100,000 rouble ($3,355) reward for information on the killing, which took place in the city of Ufa in the Urals Mountains region of Bashkortostan, Interfax news agency reported.
Contract killings plagued Russia's oil industry in the early 1990s but have been relatively rare in recent years.
Bashneft is controlled by Russia's oil-to-telecoms group Sistema.
RIA: Man from Ghana stabbed to death in St. Petersburg
03:4330/12/2009
A group of unidentified attackers has stabbed to death a national of Ghana in Russia's second largest city of St. Petersburg, the fontanka.ru news website has said.
The 25-year-old man was taken to hospital in critical condition, with some 20 injuries to his head, neck, chest, kidneys, stomach and limbs. He died several hours later.
A probe into the attack has been launched.
Russia has seen a wave of racially motivated crime since the collapse of the Soviet Union in 1991. Attacks by gangs of youths on foreigners and people with non-Slavic features are a routine occurrence in Moscow, St. Petersburg and Voronezh, which hosts many foreign university students.
MOSCOW, December 30 (RIA Novosti)
Russia Today: Sine wave between Russia and US will stay in the past - Sergey Ryabkov
29 December, 2009, 17:35
US-Russian relations this year have been dominated by talks over a new arms reduction treaty, and Iran's nuclear ambitions. RT discussed these issues with Sergey Ryabkov, Russia's deputy foreign minister.
RT: Russia’s relations with the US have traditionally developed like a sine wave. What should we do to avoid such big ups and downs, what do we need to reach stability?
Sergey Ryabkov: You know a sine wave is a dynamic wave that can describe many different things in politics and society. But it is not and cannot be consistently present in our relations with the US. Yes, the past tells us that this is how we have been going for many years and decades – up and down, like a swing. We may experience something similar in the future. But I would like to emphasize that from a political standpoint we have every reason to believe that it is possible to take relations on a steady movement upward. It has been almost a year since Obama came to power, and this year confirmed that at least the tone of relations has changed. And there have been results.
RT: And what prevents relations between the two becoming stable? What are the main obstacles?
SR: Stereotypes really get in the way. In the US, many see Russia as the heir of the Soviet Union – from the viewpoint of certain political aspirations, which in my opinion, are in the past. Some difficulties arise due to the fact that officials and political elites have a distorted view of each other. This is partly true of our country. I am not going to lie here. But the Russian President, the government are united in their opinion that it is to our benefit to strengthen partnership with the USA, to work pragmatically on the basis of a balanced approach to a very complicated agenda which exists in our relations. And in that case, I am convinced this sine wave will stay in the past.
RT: Let’s talk about the START treaty. In the recent interview President Dmitry Medvedev said that every detail of the treaty – up until the last comma – should be agreed with the US. Some claim that the main controversy is about tracking Topol-M missiles and submarines. Is that true?
SR: I support the classic approach to any negotiations – "Nothing is agreed upon until everything is agreed upon". Almost everything that separated the sides at the time when the talks began has now been worked through. The sides have been able to balance their interests, which is reflected in the text of the agreement. There are several issues… I would not single out the issue of delivery vehicles that you mentioned, although I will admit during the whole process of talks it has been a major issue. Now the main themes are a little different. Our leaders say that these are more technical things that are being discussed. They can be solved in a very short period of time.
RT: And what is the difference between the new START from its predecessors?
SR: The agreement that we are working on at the moment is the first agreement of this sort in the history of the Russian Federation. It is no secret that SORT was a lot simpler from the standpoint of its provisions, if we compare them with the agreement which expired at 11:59pm on December 4th. The new agreement will be based on the mutual balance of interests. It is free from the expensive elements of the verification regime, present in the previous agreement. The old agreement was rooted in the Cold War. But now we have reached a completely different level of trust and mutual understanding. Moscow and Washington are not as suspicious of each other. All of this is now being transferred into the agreement. We will have a serious document, promoting disarmament. But at the same time it is not as cumbersome and difficult in terms of implementation as the previous agreement. It is going to be something completely new in the area of disarmament.
RT: In 2010 the US plans to campaign for a new round of sanctions against Iran. Will Russia support those sanctions if for instance Iran refuses to cooperate with IAEA?
SR: We are still convinced that the only realistic way of solving the Iran nuclear problem is the political and diplomatic settlement of widely-known problems which have gone unsolved for a really long time. But there is no alternative; we just need to continue to search for formulas acceptable to both Iran and the international community. As far as the sanctions go, Russia has always been for the so called two-track approach. The Russian President has spoken on the issue several times, confirming our position – usually sanctions don't work, but at some point they may become inevitable. There is certain irony in that, but we have to state that in the process of trying to solve the problem, a number of our partners have brought up the sanctions issue. We have to consider them, even though, as I said already, we have serious doubts about sanctions being effective. And we are deeply convinced that only a political process, dialogue, can bring about the desired outcome.
RT: So Russia believes in the sincerity of Tehran’s intentions?
SR: Tehran is a difficult partner for the six countries, it is a well-known fact. But for Russia it is a close neighbor, a friendly state with many centuries of close ties. Russian-Iranian relations have gone through different periods. There were times when these relations were far from being good. But that's true of any country. We should focus on the things that are stable in our relations. We have great co-operation in regional affairs. We have serious economic ties. We cannot dismiss that, we treasure that. And we need to constantly remind our partners, including our Western partners, that there are certain aspects of the Russian-Iranian partnership that cannot be dismissed, and we are not going to do that.
RT: Iran was offered an opportunity to process low-enriched Uranium abroad. Why do you think Tehran turned it down flat?
SR: First of all, Tehran did not refuse – they just did not say they were ready to follow the system proposed by the IAEA after the failure of consultations, where Russia was one of the participants. Secondly, we still think that it is not too late. There is still time, and we call on our Iranian friends to focus on the positive aspect of the proposed scheme. As a result, they will be able to move forward in other areas of the nuclear program settlement. And thirdly, we hope that our partners will not stop trying to find common grounds on the issue. Russia continues to work in this direction.
RT: Former US Secretary of Defense William Perry recently claimed that Iran’s ultimate goal is to produce Atomic weapons within a month. Do you believe that forecast? How dangerous is Iranian nuclear program?
SR: Despite all my respect for him, I cannot agree with that. We have no reason to believe that Iran plans to move in this direction. Although I will be honest with you – we have concerns about the research that is possibly going on. This has been reflected many times in IAEA documents and reports. IAEA representatives discussed the issues with Iranian officials. The sooner these questions are answered the sooner the international community will be able to trust Iran and its claims about the peaceful nature of their nuclear program. But we cannot agree with the speculation of those who say that Iran will have nuclear weapons in several months or years. Nuclear weapons are a very complicated set of technological developments. Without serious proof that this is really taking place it is irresponsible to pose such accusations.
RT: Apart from economic sanctions, Iran has been permanently threatened with a possible air-attack by Israeli forces. Could this play a negative role and influence around the decision to stand firm on its nuclear program?
SR: Any time force is applied in the Middle East, there are grave results. We call on our Israeli friends to handle the situation responsibly. Of course we know that Israel is concerned about the difficulties the international community faces trying to work with Tehran on its nuclear program. But in any case, I don't see any reason to start thinking about using force. It is obvious to us that this would be catastrophic. We need to have a balanced and highly responsible approach. I think in the coming year we will have opportunities to make progress in finding a political solution to the Iranian nuclear problem. It is partly true that negotiations reached a dead end, because of such threats. Of course, our Iranian friends are not thrilled that Israel keeps mentioning it.
RT: The G8 has often been criticized for its ineffectiveness. Many say the number of members of the summit should be increased. What do you think of this proposal? What are the pros and cons?
SR: The G8 is evolving already. This process is related to the formation of the G20, where global economic, financial and other problems are discussed. It is a healthy natural process, connected with the change in the world moving towards a polycentric model. New influential centers are being formed, rapidly developing economies now have a say on the political arena. So G8 now has a somewhat different political and economic position than 10 years ago for example. But we don't know yet how the G20 will evolve and what it will turn into. The G20 appeared as a means of dealing with the international financial crisis. The crisis is slowly passing, and we will have to see if this format will be needed. But the G8 is still valuable as a mechanism of informal comparison of strands and coordination on many issues in the area of politics, security, counteracting new challenges, such as piracy. The G8 has its own way of working with different countries. The fact that the G8 is changing is not its weakness, but its strength. This year Canada will chair, and we expect to see a new creative approach to different things, including co-operation between the G8 and the G20. This year's G8 and G20 meetings will be back to back, which is a good new initiative.
December 29, 2009
Russia Profile: Unwelcomed Missiles
By Feryaz Ocakli and Yelena Biberman
Special to Russia Profile
Washington May Have Compromised with Moscow over the MDS in Czech Republic and Poland, but Russia Is Not Fully Backing an Alternative MDS in Turkey
In the latest chapter of the U.S. missile defense system (MDS) saga, Turkey has rejected U.S. President Barack Obama’s proposal to deploy missile shield elements on its soil for fear of Russian retaliation. The twist is that it was Russian President Vladimir Putin who, back in June 2007, suggested Turkey as an alternative site for MDS interceptors. It is unclear whether Russia serves as an excuse or the real reason for Turkey’s reluctance to get into the MDS business. In other words, it is unclear who is wagging Washington: Moscow or Ankara? The answer is – both.
This is not the first time Ankara is involved in a missile dispute between Washington and Moscow. The escalation of events that ultimately led to the 1962 Cuban Missile Crisis began in Turkey. Missiles stationed there boosted American nuclear capabilities at the expense of the Soviet Union. Only when Moscow responded in kind by attempting to install its own nuclear missiles in Cuba did Washington agree to dismantle its arsenal in Turkey.
The George W. Bush administration proposed to install the MDS in Poland and the Czech Republic in 2007. The White House declared that the missile defense system would help to counter a possible Iranian missile threat. The Kremlin responded by signaling that it would station short-range Iskander missiles in Kaliningrad, a Russian exclave bordering Poland, and accused the White House of using Cold War tactics against a rejuvenating Russia. Putin hinted at Turkey, Iraq, and Israel as potential, non-threatening locations for the defense system instead of Russia’s western border with the European Union. When the Obama administration decided to drop Warsaw and Prague off the agenda, Washington returned to Ankara.
Obama first voiced the possibility of installing the MDS in Turkey during Turkish Prime Minister Recep Tayyip Erdogan’s visit to Washington on December 7. Turkish daily Milliyet soon quoted a Turkish military source claiming: “both Russia and Iran [would] perceive that as a threat.” Several days before Erdogan’s Washington trip, Russia’s ambassador to Ankara Vladimir Ivanovskiy told Turkish daily Aksam that Russia would approve of an MDS in Turkey if Turkey, the United States and Russia act as “partners” to the project. Why, then, is Ankara turning down Washington’s request?
The first plausible explanation for Turkey’s puzzling behavior is that it is an attempt to please Russia by helping it get a larger role in the missile defense project. After all, Russia is Turkey’s largest trading partner, and Turkey depends on Russia for 65 percent of its natural gas and 40 percent of its oil imports. There are some signs that the United States is at least considering bringing Russia into the project, at least as long as Iran remains the bigger threat. NATO’s new Secretary General Anders Fogh Rasmussen called for “linking the United States, NATO and Russia missile defense systems at an appropriate time.” Associated Press reported Russian envoy Dmitry Rogozin responding by calling cooperation with Russia “not a matter of choice but of necessity.”
The second explanation lies in Turkey’s recent shift in foreign policy. Since the Turkish Parliament rejected the Bush administration’s plan to open a northern front in the invasion of Iraq in 2003, Turkey has increasingly asserted itself as a diplomatic force in the Middle East, Eastern Europe, and the Southern Caucasus. Ankara has turned to a policy of “zero problems” with its neighbors. Surrounded by countries historically seen as rivals at best, Turkey has traditionally oriented itself towards the United States and Western Europe at the expense of closer relations with its neighbors.
Still, Turkey’s recent shift in foreign policy should not be confused with a turn away from “the West.” Ankara misses no opportunity to reassert its intentions to join the European Union, and to remain a “strategic partner” to the United States, even when the latter seems less than enthusiastic to establish the relationship as such. Turkey’s new foreign minister, Ahmet Davutoglu, symbolizes the shift in policy orientation. As a chief advisor to the prime minister before his new appointment, he is credited with masterminding Turkey’s shift toward the “zero problems with neighbors” approach.
Ankara’s unwillingness to accept Washington’s missiles on Turkish soil reflects Turkey’s new foreign policy line. While striving to maintain its close strategic ties with the United States, Turkey is also juggling newly improved relations with Moscow and Tehran. Iran is Turkey’s second biggest supplier of gas and oil, after Russia, and trade between the two countries is steadily increasing. Ankara is also taking a cautious approach toward Iran’s nuclear program, frequently voicing its disapproval of sanctions against Tehran.
Moreover, Ankara is concerned about becoming a front against Iran. Installation of an American MDS in Turkey would inherently be perceived as an offensive move by Tehran, and Turkey wants to avoid becoming a target for Iranian missiles – a possible byproduct of a defense system intended to improve security against this threat. On the other hand, Turkey is considering acquiring its own MDS from either the United States, Russia, or China. The details of this purchase have yet to be worked out.
As the issue stands today, Turkey will not want to take part in a future standoff between neither Washington and Tehran nor Washington and Moscow. The United States would therefore find it difficult to compel Turkey to redefine its foreign policy in a way that would directly compromise Ankara’s relations with its neighbors and, especially, Russia.
Feryaz Ocakli is a doctoral candidate at Brown University specializing in Turkish politics.
Yelena Biberman is a doctoral candidate at Brown University specializing in post-Soviet politics.
December 29, 2009
Russia Profile: Back in Small Business?
By Rose Griffin
Special to Russia Profile
Increasing State Support for SMEs Has Helped Smaller Businesses, but Red Tape and Corruption, As Well As Difficulties With Securing Finance Continue to Blight the Sector
The Russian government is implementing a range of anti-crisis measures designed to help the economy. But when can small and medium enterprises (SMEs) expect to reap the benefits of this support? SMEs account for 20 percent of Russia’s GDP, but despite their cry for help, the government has often focused on larger enterprises. It remains to be seen whether the limited support measures will be enough to help SMEs survive until finance from commercial banks becomes available.
At the beginning of the financial crisis, the Russian government prioritized shoring up large companies which account for the majority of Russia’s GDP and provide the most jobs. “When the crisis first hit, a lot of effort was made to support major business because that’s where the jobs are. The first thought was to help large enterprises that employ practically entire cities, and little attention was paid to SMEs,” said Laura Brank, a managing partner at Dechert Russia law firm. But “once people had had time to think, there was recognition that those businesses are a dying breed and more should be done to support SMEs,” she said.
Now, SMEs are a priority for the government and there has been a shift in emphasis, said Sergei Krjukov, the chairman of the board at the Russian Bank for Development, part of Vnesheconombank (VEB). “Small businesses are very important; they have innovative ideas but often lack the resources to implement them. They may have no assets, no credit rating. We think that these companies should be supported by our program,” he said, speaking at the Adam Smith Russian Banking Forum held in London in December
The state sponsored program is available to SMEs through two channels – from the federal budget and from regional budgets. Special bureaus are being introduced which support SMEs in law and also in practice through regional governments, said Brank. The government assistance program takes various forms, including loans, provisions for leasing equipment, and support with transport equipment and costs. Loans available to SMEs through the program start at 7,000 rubles with an upper limit of 60 million rubles and last for 2 to 3 years. “If we look at the development of the production facilities of SMEs, the main expenditure is property and essential equipment,” said Krjukov. Although many important pieces of equipment are not expensive or difficult to operate, they still remain beyond the budget of many SMEs.
The whole SME support program will be implemented by VEB, working through regional bank partners. Priority is given to SMEs with the potential to provide the most jobs and have the biggest impact on a region’s GDP growth. Regional banks are only eligible to lend as part of the program if at least one agency has given them a rating.
The government measures have enjoyed success. “Generally the situation has improved compared to five, ten years ago. It is an objective of the highest institutions, the president and the government, to take care of small businesses,” said Hubert Pandza, Member of the Supervisory Board of TransCreditBank.
However, there is consensus that more needs to be done as many problems remain. Larger businesses are, for instance, draining resources from SMEs. “A year and a half ago the larger companies were receiving hard currency loans from foreign banks, even some medium-large companies were obtaining such loans,” said Brank. As a result, large enterprises struggle to acquire financial support from foreign banks and therefore need more government backing than before, which comes at the expense of SME support.
One of the main problems facing SMEs is the disparity between the support available in major cities and the provinces. Access to resources is most readily available in certain hotspots in Russia that already have a large number of SMEs, support organizations and effective regional government. “Moscow and Tatarstan are leading the way; they have a good structure of support for SMEs in place. This should be duplicated in other regions,” said Krjukov.
“I would assume that it is more challenging outside Moscow or St. Petersburg,” said Pandza, “outside the major cities you are probably required to do more for yourself, to take more initiative.” Brank agreed but said it was still hard in the big cities. “By and large Moscow and St Petersburg appear to be doing more, but they also have more SMEs to support,” said Brank.
Government measures to support SMEs are improving the overall business climate, but companies continue to battle with a number of barriers to survival and further growth. “What is probably ongoing is the fight with bureaucracy, the fight against corruption and of course the fight for financing. These probably have been, still are and will remain the three major issues facing SMEs,” said Pandza
Finance available to SMEs is currently provided almost exclusively by VEB and it seems unlikely that commercial banks will start lending to SMEs in the near future. Banks continue to feel nervous about borrowers’ ability to repay loans, while a large majority of their loan allocations has gone to support large companies. Brank said the situation would not improve for SMEs, until it does for larger companies. “Unfortunately SMEs will most likely only start to do better as more cash goes to larger enterprises,” she said. “One reason the US economy is coming out of recession is the increasing strength of SMEs. In Russia, they account for such a small percentage that they can’t move the market or create new jobs in the same manner.”
In spite of government efforts to cut bureaucracy, there is still little distinction between the laws that apply to small businesses and large businesses. “I still don’t think it’s easy enough for SMEs to deal with Russian bureaucracy. I wouldn’t say that they’re having no impact at all, but there’s still a way to go, it simply needs more time,” said Brank.
One gets the overwhelming feeling that more needs to be done, which begs the question: what long-term impact will the crisis have on SMEs? When conditions improve and access to finance increases, will Russia manage to develop a strong SME sector? Krjukov said that providing effective support to innovation-based companies is crucial if Russia is to achieve this. “Current issues such as nonperforming loans and lack of capital are drawing a lot of resources away from innovation-based companies. We really need to overcome this,” he concluded.
DECEMBER 30, 2009
WSJ: Once-Jailed Russian Executive Pushes Law Changes
By GREGORY L. WHITE
MOSCOW -- Yana Yakovleva says her career is pretty standard for Russia's new business class. She helped start a chemical company, rose to finance chief, then spent seven months awaiting trial in a Moscow jail for white-collar crime charges.
What happened next was less typical: Her case dropped, the 38-year-old is now campaigning to change a Russian justice system she says let bribe-seeking officials pressure her and other executives by throwing them in jail.
Ms. Yakovleva's experience shows that while much of civil society has been squeezed by the Kremlin in recent years, some elements are having a measure of success.
On Tuesday, President Dmitry Medvedev signed a law banning pretrial jailing of suspects in first-offense tax cases. The move is the latest legal change that removes one of the levers that critics say police and regulators have used against executives. Russia has also recently made it more difficult for investigators to call surprise audits of businesses or bring criminal charges against tax offenders who have already paid their debts.
The campaign against official pressure on businesses has received fresh urgency following the jailhouse death last month of Sergei Magnitsky, an investment-fund lawyer who had sought to blow the whistle on what he said was major police corruption. On Monday, the independent Moscow Public Oversight Commission characterized Mr. Magnitsky's pretrial detention as a campaign of neglect and torture by police and jailers.
Russian regulators, police and prosecutors have long been criticized for threatening legal action as a way to extort money or seize a business on behalf of competitors. These officials say the problem isn't widespread. But the issue has gained the attention of lawmakers and other top officials. Mr. Medvedev, using a word borrowed from criminal slang, has repeatedly called on the government to stop "nightmaring" businesses.
Change has been slow, however, and it is unclear how much momentum remains. Ms. Yakovleva and other activists estimate that tens of thousands of people in pretrial detention are charged with white-collar crimes, though official statistics aren't available. Almost none are acquitted, but many receive sentences that don't involve prison time.
"It's an assembly line," Ms. Yakovleva says, joking darkly that the large number of business people in jail now bears parallels to how Soviet strongman Josef Stalin built a virtual shadow economy with specialists held in his labor camps.
Ms. Yakovleva splits her days between her chemical-company post and her work for Business Solidarity, the group she set up to help pressured businesspeople and lobby for legal changes.
She has gained an unusual mix of allies, from Lyudmilla Alexeyeva, a Soviet-era dissident who now heads the Moscow Helsinki Group, to Mikhail Grishankov, a former officer of the Federal Security Service who is deputy chairman of the Security Committee in the Duma, Russia's lower house of parliament.
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"She's very effective," says Mr. Grishankov, a member of the ruling United Russia party, crediting Ms. Yakovleva's businesslike approach for drawing attention to clauses in the law that could lead to official abuse. "The development of this country depends on this."
Ms. Yakovleva says her own problems with the law started in 2006, after she and her partner turned down an offer from an officer of the antidrug police to pay kickbacks on sales of diethyl ether, an industrial solvent that can also be used in illicit-drug production.
About two weeks after they rejected the offer, she says, the antidrug police opened a criminal case into their company for selling the chemical without necessary licenses, using laws against "illegal entrepreneurship" and money laundering.
Ms. Yakovleva says she was arrested as she left her health club. "It's so nice to detain decent people," she recalls one officer telling her.
She awaited trial in a Moscow jail for women, where her cellmates included both white-collar suspects and women pulled in on petty crimes. She led cellmates in an exercise class, she says.
As she waited nearly six months for trial, her lawyers started to draw attention to the case, winning support from activists like the Helsinki group's Ms. Alexeyeva.
Officials at the antidrug police publicly defended the prosecution. But ultimately they dropped the charges when a court struck down the rule that had made ether a controlled substance. Ms. Yakovleva filed a complaint alleging official corruption. Officials denied the allegations. No charges were filed.
Out of jail, she began working with chemical-industry officials caught up on various charges, then formed Business Solidarity to help jailed entrepreneurs.
Other business groups shied away from such controversial cases.
"In Russia, entrepreneurs are a high-risk group," says Ms. Alexeyeva, noting that she tried for years to find someone from business to work on the issue but couldn't find anyone willing to take the risk.
"I don't want to be a human-rights activist," says Ms. Yakovleva, looking every bit the executive in her grey-plaid pantsuit and designer bag. "But I got offended."
She says the public attention brought by her group helped get several businesspeople out of jail. She also started working with legislators to change laws to make it harder to put those accused of white-collar crimes in jail before trial. Last week, she attended hearings in Russia's lower house of Parliament on changes to the "illegal entrepreneurship" and money-laundering articles under which she was charged.
Officials say changing the culture will be much harder. "For certain people in law-enforcement, businessmen are a priori not law-abiding," says Mr. Grishankov.
Ms. Yakovleva, who also writes columns on business for several Moscow newspapers, is cautious. "They all say the right things," she said as she left the parliamentary hearings. "We'll see what actually happens."
Write to Gregory L. White at greg.white@
Russia Today: World financial turmoil hits Russia’s oldest cities
30 December, 2009, 09:37
The Vladimir region, home to the Golden Ring cities of Suzdal and Vladimir has not been left untouched by the crippling economic crisis. The ancient cities are also facing tough challenges amid the financial turmoil.
The Vladimir draft horse is a breed which traditionally gives sleigh rides during the Russian Christmas holiday. For generations, its wide, sturdy body and strong legs helped villagers survive by providing transportation, pulling heavy loads and plowing rocky soil.
With time and technological advances, the role of draft horses has diminished and so has their population. Now fewer than 300 of them remain.
”Vladimir breed of draft horses is like a trademark of Yuriev Polsky district and a reason for pride for the Vladimir region,” said horse breeder Olga Evseeva.
”The breed was selected in 1946. The city of Vladimir is the birthplace for this breed of draft horses,” she added.
Olga is the managing director of the Monastyrkoye Podvorye horse farm in the Vladimir region. It is one of three farms in all of Russia working to preserve this local and Scottish mix.
In addition to increasing numbers, the company also markets the horses for other uses, including milk production. However, so far even with government support profits and sales are on the decline.
The crippling global economic crisis has threatened another regional traditional industry.
The Gus Khrustalny factory is one of the prides of the region. Since the mid-18th Century craftsmen and women have made artistic and intricate glassware here. Tourists from Russia and abroad come to what is called the “Crystal City” for the hand-made home wares and trinkets.
The business has been operating since 1756, and essentially using the same technique all these years – rolling crystal concoctions on metal rods and putting products, whether they are bowls or vases, into hot ovens. However, what has cooled is the demand for these products. As demand dipped, the company’s owners considered closing down the plant.
“It was a very difficult period and we did have to downsize staff. The first ones were those who had already reached retirement age. We reduced the number of employees from 500 down to 320, but in most cases these were people who agreed it was time to leave,” said the Gus Khrustalny factory CEO Svetlana Parshina.
To tackle job losses in the region, the government introduced programs to attract the attention of foreign companies. It has also instituted programs to retrain the unemployed.
Vera Shamota is the head of the External Economic Relations Department for the Vladimir region. It is her job to lure and to retain foreign companies and investors.
“Some companies who negotiated with us before the crisis stopped the negotiations, but it is not that they did not like the Vladimir region or the situation in our region. The main reason was the position of the company on the world market,” she told RT.
Shamota added, however, that eight foreign companies decided to go ahead with plans to relocate to the region in the last year.
They say that is more profitable to build during a financial crisis because the cost of the labor and the cost of materials are lower.
Vera Shamota hopes this positive approach to business, along with the region’s courting of foreign companies, will provide greater stability for the area.
National Economic Trends
RBC: Russia's GDP up 1.9% in Q4
RBC, 30.12.2009, Moscow 11:50:05.According to preliminary data, Russia's GDP increased 1.9 percent in the fourth quarter of 2009 compared to the same period of the previous year. This information, based on the Economic Development Ministry's report, is contained in the government's documents prepared for the cabinet meeting. According to the document, GDP rose 1.1 percent in Q3 and 1.9 percent in Q4 2009. Meanwhile, the country's GDP inched up 0.8 percent against October of this year thanks to the seasonal and calendar factors.
As reported earlier, deputy Economic Development Minister Andrei Klepach announced that the ministry expected GDP to rise 3.1 percent in 2010, 3.4 percent in 2011, and 4.2 percent in 2012.
Bloomberg: Russia Unbeatable to Stock Funds as Kudrin Says Prices Too High
By Michael Patterson
Dec. 30 (Bloomberg) -- Russia is the top investment pick for the biggest emerging-market stock funds in 2010, even after the RTS Index’s world-beating 129 percent rally prompted Finance Minister Alexei Kudrin to say shares are too expensive.
Russia is the leading “overweight” holding among the world’s largest developing-nation mutual funds, EPFR Global data show. More than 95 percent of analyst ratings on Russian stocks are “buy” or “hold,” the highest level since Bloomberg began tracking the data in 1997. Goldman Sachs Group Inc. says Russia is the most attractive emerging market for 2010 and Troika Dialog, the nation’s oldest investment bank, predicts equities will climb about 40 percent.
While Kudrin said at a Nov. 25 conference in Moscow that “speculative capital” led to “overheating” in the market, the RTS trades at 9 times estimated profits, a 30 percent discount to the MSCI Emerging Markets Index. Earnings will surge 43 percent next year, almost twice the gains in China, India and Brazil, as a rally in oil lifts Russia’s economy from its worst recession in a decade, forecasts compiled by Bloomberg show.
“People are waking up to the fact that here’s a place you can’t overlook,” Mark Mobius, who oversees more than $30 billion as the chairman of Templeton Asset Management Ltd., said in an interview. “If you compare Russian valuations now with other major countries, it’s not overpriced. There are still opportunities there.”
2010 Rally
Mobius’s Templeton Emerging Markets Investment Trust rose 104 percent in dollar terms this year through Dec. 18, compared with a 67 percent gain in Bloomberg’s index of the biggest emerging-market mutual funds. The Singapore-based investor, who predicted this year’s rally in developing-nation stocks in December 2008 after a 56 percent loss to his main fund, said he will probably hold more Russian shares than are represented in benchmark gauges in what will be a “very, very good” year for emerging markets.
Adrian Mowat, JPMorgan Chase & Co.’s 43-year-old chief emerging-market strategist, expects a 34 percent rally in the MSCI emerging index in 2010 following this year’s 72 percent advance, while Morgan Stanley’s Jonathan Garner forecasts a 23 percent gain. Credit Suisse Group AG’s Andrew Garthwaite, 47, says the gauge will rise 18 percent by mid-2010.
All three strategists predicted emerging-market stocks would climb this year, though they underestimated the rally. Mowat said in April that the MSCI index would rise to 900, while Garner predicted in December 2008 the gauge would advance to 810. Garthwaite’s estimate in January was 630, compared with the index’s closing level of 980.79 yesterday.
Writedowns
The MSCI gauge posted its best performance this year since its inception in 1987, as developing nations accounted for the top 12 gains among the world’s benchmark equity indexes. Emerging markets surged after banks avoided most of the $1.7 trillion of the credit losses and writedowns worldwide and investors speculated economic growth would outpace advanced countries.
Developing-nation economies will expand 5.1 percent as a group next year, compared with 1.3 percent in developed nations, according to the Washington-based International Monetary Fund.
The Shanghai Composite Index in China, the biggest emerging market, advanced 76 percent this year while Brazil’s Bovespa and India’s Bombay Stock Exchange Sensitive Index climbed 81 percent. The MSCI World Index of advanced-nation shares rose 28 percent.
Company analysts estimate Russian shares will increase an average 21 percent in the next 12 months, led by gains of at least 30 percent in Moscow-based oil producer OAO Rosneft and cellular provider OAO Mobile TeleSystems, according to forecasts compiled by Bloomberg. That compares with an average projected advance of 18 percent in Brazil and 13 percent in China, and a 0.4 percent loss in India, the estimates show.
1998 Default
Twelve months ago, the biggest emerging-market mutual-fund managers ranked Russia as the least attractive of the largest developing economies.
Investors pulled at least $290 billion from Russia, the world’s biggest energy exporter, between August 2008 and February 2009 as the economy sank into its worst financial crisis since the government’s 1998 default on $40 billion of domestic debt. Russia’s dollar-denominated RTS Index tumbled 63 percent in 2008 and the ruble-based Micex Index tumbled 67 percent, the biggest decline among benchmark indexes in the 30 largest stock markets. The Micex rallied 121 percent this year.
Investors are returning to Russia after the government pledged more than $100 billion in emergency aid, mainly for banks, and oil prices rallied 71 percent this year. Oil and gas production accounts for about 30 percent of Russia’s gross domestic product, according to the country’s energy ministry.
Falling Yields
Borrowing costs have plunged as the yield on the government’s benchmark dollar bonds maturing in 2030 almost halved to 5.4 percent yesterday from this year’s peak of 10 percent on March 3. Yields on $1.25 billion of five-year notes sold by OAO Gazprom, the country’s biggest company, have dropped to 6.4 percent from 8.125 percent when they were sold in July this year. The average price of ruble-denominated corporate bonds is the highest since October 2008, according to the Micex Corporate Bond Index of securities traded on the Micex Stock Exchange, recovering from an all-time low of 78.3 in January.
The prospects for a retreat in Russian stocks are growing because the market is a “consensus trade” and gains in the U.S. dollar may derail this year’s rally in oil, Russia’s biggest source of export revenue, according to JPMorgan’s Mowat. The Hong Kong-based strategist downgraded Russian shares to “neutral” from “overweight” in a report this month.
‘Weak Link’
Kudrin, 49, said on Dec. 8 that Russia is a “weak link in global finance” and the economy still isn’t strong enough to attract investment when the U.S. and Europe start raising interest rates. GDP will probably contract 8.7 percent this year and a recovery may spark faster inflation, Kudrin told reporters in Moscow on Dec. 23.
Carret & Co.’s Don Gimbel said he’s wary of investing in Russian stocks because the government is too unpredictable. The Micex tumbled 23 percent in July and August of 2008 as Prime Minister Vladimir Putin accused Moscow-based steelmaker OAO Mechel of price fixing and waged a five-day war with Georgia. OAO Yukos Oil Co. was bankrupted during Putin’s presidency in 2006 after the government claimed more than $30 billion in back taxes.
“My faith in the government in Moscow is almost zero,” said Gimbel, who helps oversee about $1.5 billion as a senior managing director at New York-based Carret and has no Russian holdings.
Russian President Dmitry Medvedev said last month the country needs to improve the “primitive structure” of the economy and pledged to “reduce corruption and to punish those responsible for it.”
‘Law and Order’
“There is a debate within Russia about how to go forward, but statements from Medvedev are quite encouraging in the sense that they want to move towards a market economy, want to emphasize law and order,” said Templeton’s Mobius, 73.
The lack of transparency in corporate governance is already reflected in equity valuations, said Antoine van Agtmael, who oversees about $12.5 billion as the chief investment officer of Arlington, Virginia-based Emerging Markets Management LLC.
“We are investors in Russia, and we are on the whole overweight,” said Agtmael, who coined the phrase “emerging markets” in 1981.
Nineteen of the 48 largest emerging-market mutual funds have boosted Russian stock allocations to more than 2 percent above their benchmark, JPMorgan’s Mowat wrote in a Dec. 4 research report, citing data from Cambridge, Massachusetts-based EPFR Global. Developing-nation funds attracted more than $75 billion this year, set for a record, according to EPFR.
‘Marginal Money’
Money is likely to keep flowing into Russian stocks as investors shift some of the $3.3 trillion they stashed in U.S. money-market mutual funds into equities, according to Gareth Morgan, an emerging markets money manager at F&C Asset Management in London, which oversees about $150 billion. Investors fled to the safest assets last year as the global economy had its worst recession since World War II and the Standard & Poor’s 500 Index sank the most in seven decades.
“At some point next year it will be difficult to see where the marginal money comes from, but we don’t think we’ve reached that point yet,” said Morgan, whose Russian Investment Company SICAV fund returned 139 percent this year according to data compiled by Bloomberg, beating the Micex by 19 percentage points.
China’s Shanghai index is twice as expensive as the Micex at 19 times estimated 2010 earnings, while India’s Sensex is valued at 17 times and Brazil’s Bovespa trades for 14 times, according to data compiled by Bloomberg. The MSCI emerging index trades at 13 times.
‘Unfairly Cheap’
Russia’s “market is unfairly cheap, one of the cheapest in emerging markets,” said Sam Vecht, a London-based money manager at BlackRock Inc., which oversees about $3.2 trillion and has Russia as the biggest overweight holding in emerging-market stocks. “The country can grow a lot faster than people think,” said Vecht, whose Emerging Europe Fund climbed 85 percent this year, beating 88 percent of its peers.
Russia’s economy will expand 3 percent next year after a 7.7 percent contraction in 2009, the widest swing in gross domestic product worldwide, according to the median of economists’ estimates compiled by Bloomberg. The last time Russia began recovering from a recession as deep, in 1999, the Micex surged 235 percent during the year.
Sberbank
OAO Sberbank, Russia’s largest lender, is poised to extend this year’s 253 percent advance in Moscow trading as a peak in bad loans near the middle of 2010 and rising demand for credit boost earnings, Morgan said. Profit at Moscow-based Sberbank may surge more than sevenfold next year, compared with a 30 percent increase for companies in the MSCI Emerging Markets Financials Index, analysts’ estimates compiled by Bloomberg show.
Moscow-based Mobile TeleSystems, Russia’s largest cellular company, is one of the most attractive stocks in emerging markets because it’s adding revenue faster than peers and trading at a discount relative to earnings, according to Garner, Morgan Stanley’s chief emerging-market strategist in London. He cites cheap valuations and rising commodity prices for an “overweight” rating on Russian shares.
Goldman’s global strategy team led by London-based Jim O’Neill, who coined the BRIC moniker in 2001, predicts buying Russian stocks will be one of the “top trades” of 2010 as earnings grow an above-consensus 60 percent next year.
Troika’s Kingsmill Bond, the top-ranked Russian stock strategist in this year’s Thomson Extel survey, expects the rally to be driven by slowing inflation and oil prices near $70 a barrel. Oil closed at $76.95 a barrel yesterday.
“Russia is our top bet for 2010,” said Marcus Svedberg, who helps manage about $4 billion as the chief economist at East Capital in Stockholm. “Growth will surprise on the upside.”
To contact the reporter on this story: Michael Patterson in London at mpatterson10@.
Last Updated: December 29, 2009 19:01 EST
30.12.2009 - VEDOMOSTI via Banki.ru
: Expert says economic growth in Russia needs to become large-scale
Russia’s economic expansion should be made broad-based, involving midsized and small enterprises, thinks Troika Dialog chief economist Evgeny Gavrilenkov, Vedomosti business daily wrote Wednesday.
The mandatory requirement for this is low inflation which could be achieved in 2010, this will simplify operations of businesses and lower the cost of borrowing. Also of need are investments in human resources and economic freedom so that educated and adventurous people are not afraid of doing business, he concluded.
Director of the Columbia University’s Center on Capitalism and Society and the winner of the 2006 Nobel Memorial Prize in Economic Sciences Edmund Phelps suggests that governments of all countries should contribute to establishing banks specialized in financing innovative private concerns in the business sector. Banks of this kind assisted burgeoning expansion of industrial production and technologies in the 19th century, he specified, and calls such enterprises “the proven method of achieving prosperity”.
A contraction in consumer spending could be compensated by bigger cash injections into green technologies and governments should offer incentives for this process, thinks Jeffrey Sachs, Professor of Economics at the Columbia University.
In different countries the economic stimulus model could be various. China needs to create high-quality social, healthcare and pension systems, said publisher of Fullermoney investment newsletter David Fuller. This will make it possible to unfreeze savings of Chinese citizens (over $3 tln) who presently put aside cash for pension and healthcare, and also boost consumer demand.
Prime-Tass: Kudrin: Russia to spend entire Reserve Fund in 2010
MOSCOW, Dec 29 (PRIME-TASS) -- Russia plans to spend its entire Reserve Fund which contains 1.86 trillion rubles, as well as make borrowings in 2010, Deputy Prime Minister and Finance Minister Alexei Kudrin told President Dmitry Medvedev Tuesday, ITAR-TASS reported.
“Next year we plan to spend 1.86 trillion rubles from the Reserve Fund. We are likely to spend the entire Reserve Fund and, furthermore, we will make borrowings,” Kudrin said.
This year, the government spent 2.655 trillion rubles from the Reserve Fund, Kudrin said.
If the Russian government makes all the domestic borrowings it has planned for 2010, its debt is expected to increase over the year to 12.8% of gross domestic product (GDP) from 9.8% of GDP currently, Kudrin said. He added that the size of the debt would still be at a safe level.
(29.5952 rubles – U.S. $1)
30.12.2009 - RIA NOVOSTI via Banki.ru
: Kudrin: Russian budget deficit to equal 6.3—6.4% of GDP in 2009
A deficit of the Russian federal budget will amount to 6.3—6.4% of GDP in 2009, vice PM and finance minister Alexei Kudrin reported to Russian President Dmitry Medvedev Tuesday. Earlier he mentioned 6.9% of GDP, while the Ministry for Economic Development named 6.2% of GDP. “We’ll see an adjusted deficit number which will be lower than we projected, approximately 6.3—6.4% of GDP,“ the vice prime minister said. “This is quite an acceptable deficit figure for the year,” he added.
He noted that the 2009 budget will be updated in April 2010. “Budget revenues declined by 25%, but it was decided to preserve earlier projected spending, spending grew 28.4% on the year," the prime minister pointed out. According to him, “from now on oil export revenues will be slightly higher than we expected two or three months ago”. Therefore “we’ll get a new deficit figure”, the finance minister concluded.
: Rouble falls on Putin's inflow warning
By Anjli Raval
Published: December 30 2009 02:00 | Last updated: December 30 2009 02:00
The Russian rouble was the main loser on currency markets yesterday after Vladimir Putin, prime minister, pledged to increase efforts to curb inflows of speculative capital.
Mr Putin said Russia would aim to make it less attractive for speculators to make short-term bets on the rouble and encourage them to favour longer investments instead.
Traders viewed his comments negatively, causing the rouble to slide 1.4 per cent to Rbs30.154 against the US dollar and fall 1.2 per cent against the euro at €43.2592.
The decline came in spite of relatively strong prices for crude oil, Russia's top export, usually an indicator of the rouble's strength.
Meanwhile, the euro fared well although trading volumes were thin in a calmer year-end market. The eurozone currency advanced 0.3 per cent against the dollar to $1.4356 and added 0.5 per cent against the pound at £0.9027. Sterling fell 0.7 against the dollar to $1.5884.
Higher-yielding currencies rose against the dollar as risk appetite continued to improve and commodities regained some strength.
The Australian dollar rose 0.9 per to $0.8951, while its New Zealand counterpart climbed 1.4 per cent to $0.7179.
Analysts at Action Economics said: "The commodity market complex rose amid increasing expectations of China demand after it revised up its growth forecast last week, and this should underpin commodity bloc currencies generally."
Among other commodity currencies, the South African rand added 0.9 per cent at R7.413. The Canadian dollar rose 0.1 per cent at $1.0428, after hitting a two-and-a-half-month intraday high as prices for oil and metals gained. Merger and acquisition activity also boosted the currency during afternoon trade after a deal in the mining sector.
The Norwegian krone was flat at NKr5.8106 while Sweden's krona increased 0.2 per cent against the dollar to SKr7.2086 in spite of the release of softer-thanexpected retail sales data.
Elsewhere, the Swiss franc traded firmer against both the US currency and the euro. The Swiss franc, which is regarded as a haven currency, advanced 0.3 per cent to SFr1.0377 against the dollar and increased 0.1 per cent against the euro to 1.4880.
But the dollar stayed supported against the yen, reaching a two-month high of Y92.03, on the view that the US economy was recovering well.
According to data from the Commodity Futures Trading Commission on Monday, speculators are taking a long position on the dollar for the first time since May, and expect the currency to rise in value.
At the end of trade in London, the dollar was 0.4 per cent higher against the yen at Y92.00.
Business, Energy or Environmental regulations or discussions
Bloomberg: Mobile TeleSystems, Polyus, Rosneft: Russian Equity Preview
By Denis Maternovsky
Dec. 30 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.
The 30-stock Micex Index added 0.5 percent to 1,368.51. The dollar-denominated RTS Index declined 0.4 percent to 1,445.17.
OAO Mobile TeleSystems (MTSI RX): Russia’s biggest mobile phone company said in regulatory filings its board of directors approved the sale of as much as 35 billion rubles ($1.16 billion) of new domestic bonds. Company shares declined 0.4 percent to 221.58 rubles, a monthly low.
OAO GMK Norilsk Nickel (GMKN RX): Copper rose to its highest level in 15 months in London, touching $7,280 a metric ton, the highest price since Sept. 23, 2008, as workers at the world’s second-biggest mine, Codelco’s Chuquicamata in Chile, voted to go on strike. Russia’s largest producer of nickel and copper gained 1.4 percent to 4,263 rubles, its strongest closing level since Dec. 16.
OAO Polyus Gold (PLZL RX): Gold prices fell in New York, halting a three-session advance, with futures for February delivery declining 0.9 percent to $1,097.70 an ounce, on speculation that gains by the dollar may erode demand for the metal as a hedge against weakness in the currency. Shares in Russia’s largest gold miner dropped 0.5 percent to 1,582.38 rubles.
OAO Rosneft (ROSN RX): Russia’s largest oil company plans to complete construction of several refining units and will upgrade a reforming unit at its Syzran refinery, which has the capacity to process 167,000 barrels of oil a day, in 2010 to meet stricter environmental regulations, the company said in an e-mailed statement. Rosneft shares declined 0.5 percent to 252.53 rubles.
To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@
Last Updated: December 29, 2009 22:00 EST
RBC: Profit of 30 largest banks 3 times lower than in 2008
RBC, 30.12.2009, Moscow 10:47:30.The profit of Russia's 30 largest banks amounted to RUB 99.428bn (approx. USD 3.33bn) as of December 1, three times less than the figure as of December 1, 2008 when the profit stood at RUB 295.335bn (approx. USD 9.89bn), the aggregated balance sheet of the 30 largest banks, published by the Bank of Russia, states.
Meanwhile, the total profit of all lending institutions amounted to RUB 96.371bn (approx. USD 3.23bn) as of December 1, 2009. With this in mind, the total profit of all operating banks in Russia was less than that of the 30 largest banks.
The assets of the leading 30 banks, according to the Central Bank data, stood at 20.868 trillion (approx. USD 699.09bn) as of November 1, 2009, having jumped 12.8 percent over the last year.
RBC: MTS to float 3 bond issues
RBC, 30.12.2009, Moscow 09:45:55.The board of directors of Mobile TeleSystems (MTS) has passed a decision to place series 06-8 bonds for a total of RUB 35bn (approx. USD 1.17bn), the Russian mobile operator announced in its official documents.
The series 06 issue is expected to consist of 10m bonds with a par value RUB 1,000 (approx. USD 33.5) and the maturity on the 1,820th day from the flotation date. Similarly, the series 07 issue will consist of 10m 7-year bonds worth RUB 10bn (approx. USD 335m), while the series 08 bonds will be issued in the amount of 15m and the maturity date on the 3,640th day from the flotation.
As reported earlier, MTS is expected to refinance its liabilities worth USD 1.6bn in 2010. It must also repay its foreign currency loans worth USD 780m. According to the company's press secretary Irina Osadchaya, the issuing of ruble-denominated bonds is in line with MTS's strategy providing for an increase in the share of long-term ruble liabilities in the company's loan portfolio, which will allow to decrease currency risks.
Plastemart: Linde to build two olefin plants in Western Siberia (30-12-2009)
The Linde Group has won several key contracts for plant engineering and gas supply projects in Russia. Under the terms of these unrelated deals, Linde is building two olefin plants for two chemical customers in Western Siberia. In addition, the company will be building an air separation unit (ASU) to ensure the long-term on-site supply of industrial gases to a steel company in the Moscow region. The combined value of these new contracts is estimated in excess of €530 mln. Linde-KCA-Dresden GmbH, member of The Linde Group, will construct a polypropylene plant with an annual capacity of 500,000 tons in Tobolsk, Western Siberia, for Tobolsk-Polymer LLC, a wholly owned subsidiary of the Russian company SIBUR Holding JSC. This will be integrated into SIBUR's new complex to dehydrogenate propane and manufacture polypropylene in Tobolsk. LKCA has already started engineering work. The company plans to deliver large parts of the new plant to Tobolsk in 2010 and 2011 and to go on stream some time mid 2012. Valued at around €450 mln, this plant currently ranks as one of the defining investments in the Russian petrochemical industry. Linde will also be planning and overseeing construction of a gas separation and ethylene plant in West-Siberian Novy Urengoy for the chemicals company Novy Urengoy Gas and Chemical Complex (NGCC), a wholly owned subsidiary of the Russian company Gazprom in a project worth around €47 mln for Linde. The ethane cracker will have an annual capacity of around 420,000 tpa of ethylene. Construction work is already underway here. NGCC is currently building a chemical complex in Novy Urengoy, where the ethylene generated at the Linde plant will be used to make polyethylene.
Activity in the Oil and Gas sector (including regulatory)
Itar-Tass: Putin signs decree on oil export duty reduction
30.12.2009, 08.55
MOSCOW, December 30 (Itar-Tass) - Russian Prime Minister Vladimir Putin has signed a decree on the reduction of a crude oil export duty from 271 U.S. dollars to 267 U.S. dollars as of January 1, 2010.
Export duties on light oil products will reduce from 194.9 U.S. dollars per tonne to 192.2 U.S. dollars per tonne and dark oil products – from 105 U.S. dollars to 103.5 U.S. dollars per tonne.
Export duties on propane, butane, ethylene, propylene, butylene, butadiene and other liquefied gases will comprise 46 U.S. dollars per tonne.
Zero export duties were imposed on calcinated petroleum coke.
Moreover, Russia’s government introduced a zero export duty on Eastern Siberian oil as of December 1, 2009.
Average oil prices in the monitoring period from October 15 to November 14 comprised 75.1313 U.S. dollars per barrel, the head of the Finance Ministry’s analytical department, Alexander Sakovich, was quoted by the Prime Tass business news agency as saying. Thus, under the formula set by the law on customs and tariff regulation, the upper limit of the oil export duty will total 267.07306 U.S. dollars per tonne.
RBC: Rosneft posts higher oil exports
RBC, 29.12.2009, Moscow 18:12:25.According to preliminary data, Rosneft exported 59.2m tonnes of oil in 2009, 9.2 percent greater than in 2008, the Russian oil company's press office reported today following the meeting of the board of directors. The meeting's agenda included an item on the approval of Rosneft's preliminary performance results for this year. Rosneft exported 26.5m tonnes through the Primorsk seaport, and another 8.9m tonnes supplied to China by railroad.
The company's oil products exports amounted to 28m tonnes, 8 percent more than in the previous year.
In 2009, Rosneft increased its oil exports to countries outside the CIS by 5.5 percent to 37.99m tonnes.
DECEMBER 29, 2009, 9:31 A.M. ET
Dow Jones: Rosneft: Sees 2010 Oil And Gas Condensate Output At 117.6M Tons
MOSCOW (Dow Jones)--Russian state-controlled oil major OAO Rosneft (ROSN.RS) said Tuesday its business plan sees crude oil and gas condensate production in 2010 at 117.6 million metric tons up from an estimated 112.6 million tons in 2009.
Rosneft, Russia's largest oil producer, said that according to the plan approved by its board Monday, natural gas production in 2010 is seen at 10.9 billion cubic meters down from an estimated 11.7 billion cubic meters in 2009.
Crude throughput in 2010 is planned to reach 50.3 million tons up from 49.9 million tons in 2009, while petroleum product output for 2010 is expected to reach 48.4 million tons up from 47.9 million tons in 2009.
Rosneft also said its geological explorations allowed it to achieve full reserve replacement in 2009. The company said its 2010 plan envisages a "substantial increase in geological exploration".
-By Alexander Kolyandr, Dow Jones Newswires; +7 495 232 9192; Alexander.Kolyandr@
Reuters: Russia's Rosneft plans to up oil output 4 pct in '10
Tue Dec 29, 2009 2:17pm GMT
MOSCOW, Dec 29 (Reuters) - Rosneft (ROSN.MM: Quote, Profile, Research), Russia's No.1 crude producer, plans to increase oil and gas condensate output by around 4 percent to 117.6 million tonnes in 2010, the company said on Tuesday.
The business plan was approved by Rosneft's board of directors. The company said it sees oil and gas condensate production rising from 112.6 million tonnes projected for the current year, when oil extraction is expected to go up by some 2.3 percent.
"The production increase was mainly driven by increased drilling and other geological and technical works at producing fields as well as by the start of commercial production at the Vankor field in Eastern Siberia," the company said in a statement.
(Reporting by Vladimir Soldatkin; editing by Dmitry Sergeyev)
Reuters: UPDATE 4-Russia, Ukraine agree oil deal to avert supply cut
Wed Dec 30, 2009 12:40am IST
* Ukraine says Russia agrees to a 30 percent tariff rise
* Russia confirms agreement, basic fee
* EU says no more risk of supply cuts
* Putin criticises energy transit states
(Adds Russian Energy Ministry comment on fee)
By Pavel Polityuk and Anton Doroshev
KIEV/MOSCOW, Dec 29 (Reuters) - Ukraine and Russia have signed a deal on oil transit for 2010, allaying fears of supply cuts to Europe, in a deal Ukrainian state energy firm Naftogaz says will require Moscow to pay 30 percent more in transit fees.
Russia said on Monday it had agreed terms for a new oil deal with Ukraine a few hours after spooking Europe with a warning the continent could face oil supply cuts because of a dispute between Moscow and Kiev. [ID:nLDE5BR0RM]
"The rate has been increased by 30 percent," a Naftogaz spokesman said on Tuesday. "There will be no crisis. We signed an agreement last night."
Russian Energy Ministry spokeswoman Irina Yesipova confirmed that a deal had been struck providing for four potential tariff rates. "The basic one is 6.6 (euros per tonne)," she said.
Europe, which receives much of its oil and gas from Russia, has closely tracked disputes between Russia and its neighbours after EU gas supplies were cut in the dead of winter in 2006 and 2009 due to rows between Russia and Ukraine.
"I am also very glad to note that the Russian and Ukrainian sides have meanwhile found an agreement avoiding a disruption of oil supplies to the EU," EU Energy Commissioner Andris Piebalgs said in a statement.
Naftogaz did not specify the oil tariff that Russia had agreed to pay. A Ukrainian government source also told Reuters the tariff would be 6.6 euros ($9.50) per tonne of oil for the entire journey through Ukraine in 2010 against $7.8 this year.
This would be a 21.8 percent increase in dollar terms. Ukrainian officials were not able to explain the discrepancy between the two percentage figures, which may be due to currency conversions.
Ukrainian officials have said switching to euro payments from the dollar had been one of their demands.
NEW ROUTES
Russian Prime Minister Vladimir Putin, in the Far East to open a new Pacific oil terminal, said Moscow was seeking to diversify its export channels in a bid to avoid problems with transit states, including Ukraine.
"We have long argued about the problems of gas supplies via Ukraine and other transit countries. We understand very well and now all our main consumers have also understood where the problem lies," Putin told reporters in the city of Vladivostok.
"The problem lies in the fact transit countries abuse their position," he said. "They create a grey market for re-sale, for re-export of our energy resources."
His comments were aimed mainly at gas transit. Asked specifically about oil, Putin said: "We have a contract. We hope it will be fulfilled."
The Ukrainian government source said Kiev and Moscow had agreed that the volume of oil -- going amongst others to Slovakia, the Czech Republic and Hungary -- would be 15 million tonnes next year.
Russia transported 17.1 million tonnes of oil in 2008. The figure for this year is as yet unknown. (Additional reporting by Gleb Bryanski in Vladivostok, writing by Sabina Zawadzki and Robin Paxton; editing by Anthony Barker)
Itar-Tass: Gas pipeline ruptures in Kransnodar territory
30.12.2009, 10.52
ROSTOV-ON-DON, December 30 (Itar-Tass) - A gas pipeline rupture occurred in the Krasnodar territory, spokesman for the southern regional centre of the Russian Emergencies Ministry, Oleg Grekov, told Itar-Tass on Wednesday.
The Anastasyevsk-Novorossisk gas pipeline ran at the depth of 1.5 meters underground.
“Gas inflammation was registered at the point of rupture. The height of the flame is 40-50 centimetres,” he said.
“The ruptured section of the pipeline was closed. There is no threat to the population and environment,” Grekov said.
Fire-fighting units and repair teams of Kuban Gazprom are working on the site of the incident.
Gazprom
Steel Guru: Gazprom and CNPC ink agreement on gas supply
Wednesday, 30 Dec 2009
Gazprom’s delegation led by Mr Alexander Medvedev held in China the year’s final round of commercial talks with the China National Petroleum Corporation relevant to arranging Russian gas supplies to China via the western and eastern routes.
Based on the negotiation results and in compliance with the previously reached agreements between Gazprom export and a subsidiary of CNPC, PetroChina International, an Agreement was signed on major terms and conditions for natural gas supplies from Russia to China.
The Agreement defines the basic commercial and technical parameters of Russian gas supplies to Chinese consumers.
The parties also agreed on furthering active cooperation in the first quarter of 2010 to come to understanding on other terms and conditions that would subsequently lay the foundation for entering into contracts on gas supply from Russia to the People’s Republic of China via both routes.
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