Russia



Russia 110524Basic Political DevelopmentsItar-Tass news outlook for Tuesday, May 24MOSCOW—President Dmitry Medvedev holds a meeting of the Commission on Modernisation and Technological Development of the Russian economy. The topic of the meeting is “Innovation technologies in children’s health”. MOSCOW – Russian and Bolivian foreign ministers Sergei Lavrov and David Choquehuanca discuss ways of expanding and diversifying cooperation between Russia and Bolivia. MOSCOW -- The Moscow City Court examines a cassation complaint at the sentence on the second criminal case of YUKOS ex-head Mikhail Khodorkovsky and former head of the MENATEP Company Platon Lebedev, sentenced to 14 years behind bars. KOROLYOV – The descent capsule of the Soyuz spaceship smoothly landed in the Kazakh steppe with three cosmonauts from the ISS-26/27 crew – Dmitry Kondratyev, Catherine Coalman and Paolo Nespoli. RABAT -- Casablanca is the venue for the 10th session of the Rrussian-Arab business dialogue whose participants are to discuss the state of and prospects for cooperation between Russia and the Arab world in the trade, economic, innovation, scientific and technical spheres. LAPPEENRANTA, Finland – The exhibition of innovation Russian projects, developed by business incubators and innovation centres, opens in Finland on the eve of the second Russia-EU Innovation Forum. ROME – An orthodox liturgy is to be held for the first time at one on the main Roman Catholic cathedrals – Saint Mary Major – on the Memorial Day of Sts. Cyril and Methodius. Russia to back Palestine’s call for independence – Fatah repMoscow will back Palestinian statehood bid at UN - Fatah officialHamas says will not recognize Israel - The movement Hamas will not recognize the state of Israel, said Hamas Deputy Political Director Mousa Abu-Marzouk.G8 to discuss Russia's proposal to review nuclear security conventions – Dvorkovich - Russia's initiatives on nuclear security will be discussed at the start of the G8 summit in Deauville, said Russian Presidential Aide Arkady Dvorkovich.Russian, Japanese leaders to discuss territorial issue in DeauvilleRussia to suggest new ways of fighting cybercrime at G8 summitKremlin says political uncertainty drives outlfowsUPDATE 1-Kremlin says political uncertainty drives outflows - Political uncertainty ahead of the 2012 presidential election is partly to blame for money leaving Russian assets, the Kremlin's chief economic adviser said on Tuesday.Indexation of natural monopolies tariffs 2012 reasonable - view. Russia to join OECD anti-corruption conventionMedvedev and administration expect detailed proposals for developing Russia's electricity and utilities market - Dvorkovich (Part 2)Dramatic increase in imports from Belarus not expected - aide. Pre-election spending destabilized Belarusian finances - Kremlin aideRussia to station S-400 anti-aircraft missile complexes in Belarus – officialRF, Bolivia FM's to discuss ways to widen, diversify coop'n. - — Ways to widen and diversify cooperation between the Russian Federation (RF) and Bolivia will be discussed here on Tuesday by the Foreign ministers of the two countries, Sergei Lavrov and David Choquehuanca. Syria wants Russian protection - Syria expects political support from Russia, Syrian Foreign Minister Walid Muallem said in an interview with the state TV channel, RIA Novosti reports.What's Indian Air Chief PV Naik doing in Russia? - Besides the flight demonstration of one of the two prototypes of PAK-FA T-50 (FGFA) fighter, the Indian Air Chief also watched the flight of modernised MiG-29UPG of the ?Indian Air Force at the airfield of M M Gromov Flight Research Institute in Zhukovsky town.Russian Helicopters to be assembled in India - The helicopter builders are thus trying to gain the upper hand in three tenders for supplying the Indian Air Force with light highlander choppers, cargo carriers, and assault helicopters worth more than $4 billion in total.India, Russia bond over Afghan concerns – by Akhtar Ali HyderEDF, Enel in talks with Rosatom on nuclear plant - EDF, Enel among at least three in talks on Kaliningrad; Rosatom certain to maintain 51 pct stake in project; Rosatom eyes Poland, no decision to bid yetRussia Seeks to Invest in Ukraine’s Turboatom, Izvestia SaysArmenian migration chief blames media for “advertising” Russian naturalization programArgentina and Russia sign deal to boost trade - Argentina has asked Russia to bump up the quota for poultry and fruit imports from the South American country, amid a trade mission to Russia designed to raise commerce between the two countries. Deputy Minister of Foreign Affairs/State Secretary Grigory Karasin Meets with US Deputy Assistant Secretary of State for South and Central Asian Affairs Susan Elliott - Karasin and Elliott devoted special attention to developments in Kyrgyzstan and discussed joint steps to give that republic necessary assistance. Deputy Foreign Minister visits Russia - Deputy Foreign Minister and Chairman of the State Committee for Overseas Vietnamese Affairs, Nguyen Thanh Son, visited Russia from May 18-25. Question about Israeli spy incident should be put to defense ministry – ambassadorRF-Israel relation develop dynamically, potential – huge - view. : Nowadays, relations between Russia and Israel are developing quite dynamically and first of all in the sphere of the economy, Israel’s Foreign Minister Eliyahu Yishai told in an exclusive interview to Itar-Tass during his brief visit to Moscow. RF, Israel have preconditions for mutual fighting terrorism - view. Visa abolishment gives expected economic effect – Israel FM. Israeli Minister Visits Shaarei Tsedek CenterRussian innovation projects on show in Finland. Days of Russian Culture in LatviaMilitant destroyed in special operation in Ingushetia. Policeman wounded in stun grenade blast in BashkortostanPoliceman killed at police station in Orenburg region. Khodorkovsky lawyers bid to overturn guilty verdictCourt to review former Yukos CEO's appeal. One-Fifth of Russian Military Procurement Cash Stolen, RG SaysDemobbed Russians soldiers ‘take hostages’International space crew lands in Kazakhstan – NASAISS program prolonged until 2020 (Part 2) -"The [use of the] International Space Station has been prolonged until 2020, and the funds needed to maintain its operations will be provided," Krasnov said at a news conference at the Mission Control Center outside Moscow.Russia develops new spacecraft - The lighter craft will take about 24 hours to ferry crews to the international outpost, down twice from 48 hours now.? Russia, Belarus to conduct joint electronic warfare - The agreement was signed in Moscow on December 10, 2009. The document establishes a legal framework for the Russian-Belarusian cooperation in electronic warfare for the purpose of providing military security in the region.Krasnoyarsk wildfire area grows overnight to four thousand hect. Wildfires area in Yakutia is growing. Wildfires situation in Siberia stabilises – local administration. Russia marks Day of Slavic Alphabet and Culture Six injured in Krasnoyarsk enterprise explosion. - The mining and chemical works is part of the Rosatom state corporation. President's and Prime Minister's approval ratings stabilise in May - The May batch of political polls from both Levada Center and FOM suggest that the public opinion backdrop has, on balance, remained stable since April.Moscow mayor orders to stop trade in nationalist symbols. RIA Russian Press at a Glance, Tuesday, May 24, 2011ITAR-TASS Russian press review. A Scarlet Letter for drug dealers - Although Russian authorities are stepping up the war on drugs – for some progress has been lagging. Activists have taken the fight into their own hands – marking “sellers of death” with scarlet paint to serve as a warning to drug dealers.Dangerous “Standards” - Russia is ready for a constructive dialogue on the anti-missile system in Europe Yury Gavrilov Moscow museum puts Lenin's Jewish roots on displaySwapping Jackson-Vanik for Magnitsky - By Vladimir RyzhkovNational Economic TrendsDollar's weighted mean rate up against rouble in "tomorrow" deals. Foreign investment triples in Q1 - Foreign investment in Russia more than tripled year-on-year to $44.3bn in the first quarter of 2011, the Federal State Statistics Service reported today.Finance Ministry expects budget deficit of 1.0-1.4% of GDP this yearRussia seeks control of corporate foreign debt Capital Outflow: 2Q11 Unlikely to Bring ReliefGrain bans could be lifted in July: Mildly supportive for NCSPBusiness, Energy or Environmental regulations or discussionsState may enter companies following new price caps Severstal seeks USD 5bn debt financing; might be for Raspadskaya dealYandex Said to Raise $1.3 Billion as Public Offering Prices Above RangeOGK-2's IFRS net profit up 40% in Q1Gazprom's power unit OGK-6 Q1 net income up 9 pctRussia's Cherkizovo Q1 net profit falls 42 pctJ&J to Buy JB Chem's Russian brands GM to Increase Production in RussiaGM Sets Russia Strategy Inter RAO names shareholders post-issueGoldman Finding Third Time a Charm as Blankfein Courts KremlinActivity in the Oil and Gas sector (including regulatory)Russia to Ask EU to Consider South Stream Extension of its Pipeline –ShmatkoZaruvezhneft, Janaf Set Up JV for Croatian Geological Surveys on Adriatic ShelfChTPZ supply 25000 tonnes of steel pipes for Caspian pipeline in April-JulyGazpromGazprom agrees on slower rise in gas prices------------------------------------------------------------------------------------------Full Text ArticlesBasic Political Developments11:00?24/05/2011ALL NEWSItar-Tass news outlook for Tuesday, May 24. Tass 108 Telephone: 8 (499) 791-00-18 Fax: 8 (499) 791-00-19. PRESIDENT-CHILDREN-HEALTH MOSCOW—President Dmitry Medvedev holds a meeting of the Commission on Modernisation and Technological Development of the Russian economy. The topic of the meeting is “Innovation technologies in children’s health”. LAVROV-BOLIVIA MOSCOW – Russian and Bolivian foreign ministers Sergei Lavrov and David Choquehuanca discuss ways of expanding and diversifying cooperation between Russia and Bolivia. JUSTICE-KHODORKOVSKY MOSCOW -- The Moscow City Court examines a cassation complaint at the sentence on the second criminal case of YUKOS ex-head Mikhail Khodorkovsky and former head of the MENATEP Company Platon Lebedev, sentenced to 14 years behind bars. SPACE EXPLORATIONS-SOYUZ KOROLYOV – The descent capsule of the Soyuz spaceship smoothly landed in the Kazakh steppe with three cosmonauts from the ISS-26/27 crew – Dmitry Kondratyev, Catherine Coalman and Paolo Nespoli. BRITAIN-US LONDON – US President Barack Obama arrived in Britain at the invitation of Queen Elizabeth II on the first state three-day visit. The White House head and his wife Michelle live at Buckingham Palace, the London residence of the British monarch who will give an official banquet in their honour. NORH KOREA-US PYONGYANG – A delegation of US experts comes to the North Korean capital to study the food situation in the country. LIBYA-OPERATION CAIRO – Several powerful explosions ripped the air in the Libyan capital last night. The Al-Arabia TV channel reports that NATO air strikes were levelled at some projects, including the living compound of Muammar Gaddafi. MIDDLE EAST-SANCTIONS BEIRUT – Syria will rely on partnership with Russia and China in response to EU sanctions, reported Syrian Foreign Minister Valid Muallem. MIDDLE EAST-SITUATION CAIRO – The political situation in the region, the process of a Middle East settlement and development of bilateral relations are to be discussed in Cairo by King of Jordan Abdullah II and head of the Supreme Council of Egyptian Armed Forces Husein Tantaui. LATVIA-ELECTIONS RIGA – The time of nominating candidates for the presidency in Latvia is nearing completion. The elections are to be held on June 2. JAPAN-NUCLEAR PLANT TOKYO – The partial meld-down of nuclear fuel took place not only at the first, but also at two other crippled reactors of the Fukushima-1 nuclear plant. However, this happened at the initial stage of the disaster, said on Tuesday its operator, Japan’s largest energy company Tokyo Electric Power. TOKYO – A rise in the Japanese GDP will total only 0.6-0.7 percent over the natural calamities; earlier it was forecast at 1.7 percent, said Minister of State for Economic and Fiscal Policy Kaoru Yosano. US-RUSSIA NEW YORK – Yandex starts initial floating shares at the New York Nasdaq Exchange. MOROCCO-RUSSIA RABAT -- Casablanca is the venue for the 10th session of the Rrussian-Arab business dialogue whose participants are to discuss the state of and prospects for cooperation between Russia and the Arab world in the trade, economic, innovation, scientific and technical spheres. LAPPEENRANTA, Finland – The exhibition of innovation Russian projects, developed by business incubators and innovation centres, opens in Finland on the eve of the second Russia-EU Innovation Forum. KAZAKHSTAN-BELARUS ASTANA – Belarussian President Alexander Lukashenko discusses bilateral cooperation in the trade, economic and humanitarian spheres with his Kazakh counterpart Nursultan Nazarbayev. ITALY-ORTHODOXY ROME – An orthodox liturgy is to be held for the first time at one on the main Roman Catholic cathedrals – Saint Mary Major – on the Memorial Day of Sts. Cyril and Methodius. Russia to back Palestine’s call for independence – Fatah rep RT News line, May 2411:42If? Palestinian authorities file a request for independence at the United Nations, Russia will support the initiative, Fatah representatives stated on Tuesday during a visit to Moscow. Fatah previously declared that they will not seek a unilateral call for independence at the UN. Representatives from Palestinian movements Fatah and Hamas said that they appreciated the support of Russia in their efforts to reach national reconciliation and establish a sovereign Palestinian state. Representatives of both movements, who signed a reconciliation agreement in Cairo in early May, arrived in Moscow last Friday.? Subsequently, their leaders as well as representatives from the Democratic Front for the Liberation of Palestine and the Palestinian People’s Party, Al-Shaabare, met with Russian Foreign Minister Sergei Lavrov on Monday and agreed to a joint statement with Russia.May 24, 2011 12:16Moscow will back Palestinian statehood bid at UN - Fatah official. May 24 (Interfax) - Russia will support the Palestinian request to the United Nations to recognize the independence of the Palestinian state, said Azzam Al-Ahmad, a representative from the Fatah movement's central committee."At our meeting yesterday, Russian Foreign Minister Sergei Lavrov reaffirmed Russia's support for this process [the request to the UN to recognize the Palestinian independence]," he told a press conference in Moscow. kk jv(Our editorial staff can be reached at eng.editors@interfaxMay 24, 2011 12:40Hamas says will not recognize Israel. May 24 (Interfax) - The movement Hamas will not recognize the state of Israel, said Hamas Deputy Political Director Mousa Abu-Marzouk."We cannot recognize Israel," he said at a press conference in Moscow.Sd jv(Our editorial staff can be reached at eng.editors@interfax.ru) May 24, 2011 10:48G8 to discuss Russia's proposal to review nuclear security conventions – Dvorkovich. May 24 (Interfax) - Russia's initiatives on nuclear security will be discussed at the start of the G8 summit in Deauville, said Russian Presidential Aide Arkady Dvorkovich."There will be detailed discussion of nuclear security issues," he told a press conference in Moscow on Tuesday.The subject will be on the agenda of the first summit session, he said."Russian initiatives will also be discussed at this session," he said.In particular, the leaders plan to discuss the possibility of reviewing international conventions on nuclear security, the presidential aide said.kk jv(Our editorial staff can be reached at eng.editors@interfax.ru)05/24 11:17 ? Russian, Japanese leaders to discuss territorial issue in Deauville to suggest new ways of fighting cybercrime at G8 summit 24/05/2011MOSCOW, May 24 (RIA Novosti) - Russia will offer new ideas on how to fight cybercrime at the G8 summit in Doville, northwestern France, on May 26-27, a Russian presidential aide said on Tuesday.Cybercrime can take place in the criminal, terrorist and military spheres, Kremlin aide Arkady Dvorkovich said."We are discussing specific mechanisms with our partners on how to address these threats," he said. "Our experts have suggested a few new approaches.... which are not included in the International Convention on Cybercrime."Dvorkovich said these new ideas would be laid down in the summit's final declaration.The Kremlin aide also said presidents Dmitry Medvedev and Barack Obama would discuss U.S. plans to deploy a missile shield over Europe, which has aroused concern in Moscow, and Russia's long-time bid to join the World Trade Organization.Kremlin says political uncertainty drives outlfowsToday at 10:14 | Reuters MOSCOW, May 24 (Reuters) - Political uncertainty ahead of the parliamentary and presidential elections is partially to blame for net capital outflows, the Kremlin's chief economic adviser said on Tuesday. Kremlin aide Arkady Dvorkovich said Russia was unlikely to see a net capital inflow in 2011, although he added that an expected influx of money in the second half of the year could compensate for some of the outflows in the first half. Russia holds a parliamentary election in December and a presidential election in March 2012. President Dmitry Medvedev and Prime Minister Vladimir Putin have both refused to say which of them will run in the election. Read more: 1-Kremlin says political uncertainty drives outflows EDT(Adds quote, context, recasts)MOSCOW, May 24 (Reuters) - Political uncertainty ahead of the 2012 presidential election is partly to blame for money leaving Russian assets, the Kremlin's chief economic adviser said on Tuesday.President Dmitry Medvedev and Prime Minister Vladimir Putin have both refused to say which of them will run in the March 2012 election, which follows a parliamentary election this December.With oil prices above $100 a barrel, Russia's central bank has registered $50.6 billion in net capital outflows over the past seven months for which data is available."I don't think we will get (net) capital inflow this year," Medvedev's chief economic aide, Arkady Dvorkovich, told reporters."Unfortunately, the lack of political clarity partially affects that, the election year is not easy in any country," he said. "We are hopeful that there will be no capital outflow in the second half, but risks remain."He said that an expected inflow of money in the second half of the year could compensate for some of the outflows in the first half. (Reporting by Alexei Anishchuk; Writing by Lidia Kelly; editing by Guy Faulconbridge) 12:28?24/05/2011ALL NEWSIndexation of natural monopolies tariffs 2012 reasonable - view. Tass 152 MOSCOW, May 24 (Itar-Tass) —— Russia’s Presidential Aide Arkady Dvorkovich believes as reasonable indexation of tariffs for services of natural monopolies in electric energy and housing maintenance on the level of inflation in 2012. At the same time, he called it insufficient for the future. “Possibly, the indexation of tariffs for the coming year is reasonable, but the president and the administration are expecting /from the government/ detailed suggestions on development of electric energy and housing maintenance markets,” he told reporters on Tuesday. “We hope that implementation of the decisions, the government will initiate, will develop a civilised market of natural monopolies’ services,” he added, explaining that he is against permanent indexation of tariffs as “this way, we shall never be able to stop.” An optimal decision is a gradual refusal from this measure along with aid for unprotected citizens and small businesses, he said. Russia to join OECD anti-corruption convention 24, 2011 10:40 Moscow TimeBest Approaches for a Better Life – that the motto of the 50th anniversary meeting in Paris of the Organization for Economic Cooperation and Development. The forum is being held in the walkup to the? May 26 G8 summit in Dauville where Russia will officially sign up to the OECD’s Anti-Corruption Convention, seen as yet another step in this country’s planned joining the organization that brings together 34 countries, which together account for almost two-thirds of the global GDP. May 24, 2011 11:37Medvedev and administration expect detailed proposals for developing Russia's electricity and utilities market - Dvorkovich (Part 2). May 24 (Interfax) - Russian President Dmitry Medvedev and his administration expect the government to present detailed proposals for developing electricity and utilities services, Presidential Advisor Arkady Dvorkovich told journalists on Tuesday."It is possible that a decision for 2012 [for indexing tariffs of natural monopolies according to the inflation rate] would be reasonable but the president and the administration expect real proposals for developing the electricity markets and the utilities sector," he said.Dvorkovich added that priority decisions should be made for the electricity and utilities sectors, which would help develop a civilized market."If we will gradually index tariffs, we won't be able to stop. Only the introduction of market mechanisms could stabilize prices and allow us to stop indexation efforts," he said, adding that the introduction of market mechanisms should include the development of ways to protect the lower and poorer rungs of society, as well as small businesses.Ih(Our editorial staff can be reached at eng.editors@interfax.ru)11:38?24/05/2011ALL NEWSDramatic increase in imports from Belarus not expected - aide. Tass 148 MOSCOW, May 24 (Itar-Tass) — Presidential aide Arkady Dvorkovich said Russia does not expect a dramatic inflow of imports from Belarus after the devaluation of the Belarussian rouble by 55 percent. "It will affect its (Belarus') trade with other countries, but not with Russia," Dvorkovich said. He explained that the two countries have established export/import flows whose structure should not change now. The presidential aide also said he hoped the Belarussian economy would benefit from the Russian loan. "I believe the assistance Russia is going to provide will help stabilize the situation, but much will depend on the domestic policy. The election in Belarus unsettled the situation," the presidential aide added. Pre-election spending destabilized Belarusian finances - Kremlin aide 24/05/2011MOSCOW, May 24 (RIA Novosti) - Finances of Belarus, which on Monday devalued its currency by more than a half, was destabilized by December presidential polls, when President Alexander Lukashenko won his fourth term, Russian Presidential Aide Arkady Dvorkovich said on Tuesday."Elections in Belarus have led to decisions which also destabilized the financial situation," Dvorkovich told journalists.In the first quarter of this year, the Belarusian ruble experienced pressure from a large trade deficit, generous wage increases and loans granted by the government ahead of presidential elections, which spurred heavy demand for foreign currency.Belarus has applied for a $1-billion loan from Russia and a $2-billion loan from regional organization EurAsEC to stabilize the currency market with many exchange rates.VTB Capital said it was hard to estimate the impact of devaluation on the economy at the moment but in the near term Belarus is likely to see inflation spiking, the budget performance deteriorating, many imports-dependent businesses, which are focused on domestic consumption, being wiped out resulting in higher unemployment and gross domestic product growth slowing down.After the sudden devaluation of the national currency and a surge in exchange rates Belarusian cash exchange bureaus ran out of foreign currency.The National Bank of Belarus devalued the national currency on Monday by 56 percent against the U.S. dollar. The official Belarusian ruble rate for May 24 has been set at 4,930 to the dollar.Almost all exchange offices in the country have set the same rates of 5,000 Belarusian rubles to the dollar, 7,000 to the euro and 175 to the Russian ruble.The Belarusian National Bank said on Monday it would regulate the exchange rate, banning other banks' currency exchange offices from selling or buying the Belarusian ruble at rates more than two percent above the rate established by the National Bank.Russia to station S-400 anti-aircraft missile complexes in Belarus – official News line, May 24Russia is going to station its latest anti-aircraft missile complexes, the S-400 Triumphs, in Belarus, says state secretary of the Union State of Russia and Belarus, Pavel Borodin. "They will be stationed in Russian and Belarusian territory. We have one territory, we have no border," Borodin said as Minsk prepares to host the MILEX-2011 international arms show. Ties between the defense industries of Russia and Belarus, nearly destroyed after the collapse of the Soviet Union, are now quickly recovering, the official observed.01:04?24/05/2011ALL NEWSRF, Bolivia FM's to discuss ways to widen, diversify coop'n. Tass 5 MOSCOW, May 24 (Itar-Tass) — Ways to widen and diversify cooperation between the Russian Federation (RF) and Bolivia will be discussed here on Tuesday by the Foreign ministers of the two countries, Sergei Lavrov and David Choquehuanca. Russian Foreign Ministry spokesman Alexander Lukashevich said earlier, "We regard this visit as an important step in futher development of the political dialogue". He said, "A Joint ministerial statement is to be signed as a result of the talks". Experts believe that there are substantial prospects for interaction between the two countries, in the gas sector, in particular. A Memorandum of Understanding was signed in February 2007 between Gazprom and the State Oil and Gas Company of Bolivia. The Memorandum envisages cooperation in the the field of prospecting for, production and processing of hydrocarbons. In September 2008 Gazprom acceded to the agreement on joint geological prospecting work at Bolivia's oil and gas fields. The Russian Ministry of Energy and the Bolivian Ministry of Oil and Gas Resources signed a memorandum on mutual understanding and cooperation in the gas sector. Analysts do not rule it out that at the upcoming talks in Moscow the Ministers will discuss further steps to invigorate the dialogue on energy. Lukashevich said, "Apart from a bilateral agenda, the Ministers will also discuss prospects for broadening versatile cooperation between Russia and the integrational institutions of Latin America and the Caribbean, to which Bolivia is a party and with which the RF develops contacts (MERCOSUR, UNASUR)". The programme for Davis Choquehuanca's visit also provides for meetings in the committees on international affairs of the Federation Council and the State Duma upper and lower houses of the Russian parliament. Syria wants Russian protection expects political support from Russia, Syrian Foreign Minister Walid Muallem said in an interview with the state TV channel, RIA Novosti reports.He believes that Russia may veto a vote on a UN Security Council resolution against Syria.The minister called sanctions taken by the EU against Assad and other Syrian authorities a mistake. He believes that Western states want to weaken Syria. Muallem underlined that Syria will not give in to pressure.Syria will strengthen ties with Russia, China, Venezuela and Asian states.The EU expanded sanctions against Syrian functionaries by adding President Bashar Assad to the list. The USA took such measures earlier.What's Indian Air Chief PV Naik doing in Russia? updated on: May 24, 2011?09:09 ISTIndian Air Chief PV Naik watched the demonstration flight of the prototype of fifth generation fighter aircraft (FGFA) at a Russian airbase near Moscow on Monday, which will be jointly developed and produced by the two countries under an inter-governmental agreement signed in October 2007.Besides the flight demonstration of one of the two prototypes of PAK-FA T-50 (FGFA) fighter, the Indian Air Chief also watched the flight of modernised MiG-29UPG of the ?Indian Air Force at the airfield of M M Gromov Flight Research Institute in Zhukovsky town.Under a multi-million dollar contract signed in 2008, Russia's MiG Aircraft Corporation is upgrading six of the IAF's fighter MiG-29 fleet, while rest will be modernised in India for which the Russian aircraft maker will supply kits. In the course of upgradation the MiG-29 fighters in service with IAF their avionics will be unified with the MiG-29K deck based fighters for the Vikramaditya aircraft carrier (former Gorshkov), including systems developed by HAL and Bharat Dynamics and French companies, according to a United Aircraft Corporation (UAC) release, the umbrella organisation of Sukhoi and MiG Corporations.President of UAC and simultaneously? CEO of Sukhoi and MiG corporation, Mikhail Pogosyan, officials of Rosoboronexport state arms exporter and Russian Air Force also present at the airfield during the demonstration of the fighter jets.Russian Helicopters to be assembled in India 24, 2011Alexei Usov, Noviy RegionThe MiG setback has been a humbling experience for Russian defence contractors. Now, the Russian Helicopter company is sweetening the deal by offering local production in the race for three Indian tenders worth $4 bn.The Russian defence contractors have been trying to rid themselves of the arrogance that cost them major tenders for supplying MiG-35 fighters to India and T-90 tanks to Thailand.In a move unprecedented in the country’s history, the Russian Helicopters, JSC?announced it was ready to establish manufacturing of military equipment in India with the right to re-export to third countries. The helicopter builders are thus trying to gain the upper hand in three tenders for supplying the Indian Air Force with light highlander choppers, cargo carriers, and assault helicopters worth more than $4 billion in total. “We may do the final assembly in India and enter other markets from the Indian market base,” Andrei Reus, CEO of United Industrial Corporation Oboronprom, said. The Russian Helicopters, JSC, an Oboronprom subsidiary, is responsible for the design and manufacturing of all helicopters in Russia.India’s market is of strategic importance for Russian Helicopters?Andrei Reus added: "This is a strategic market for us and the most dense in terms of the number of tenders in which we compete”, he noted.Reus believes that the chances of the Russian company winning all those tenders are quite high, because their equipment meets the Indian party’s requirements. He also pointed out that India had the necessary infrastructure and trained personnel for operating Russian-made helicopters.Rosoboronexport, Oboronprom’s parent company, is participating in three tenders organised by India’s Ministry of Defence for supplying helicopters of various classes. The biggest one, for light helicopters to be used in high-altitude mountain areas, envisages supplying the Indian Air Force with 197 helicopters worth $2 bn. Kamov’s Ka-226Ts are competing there against the AS-550 from Eurocopter, as well as the A-109 and A-119 from Augusta Westland. In another tender, for 22 assault helicopters valued at $1.4 bn, the Russian-made Mi-28NE is bidding against the American AH-64D Apache Longbow Block III. Finally, a $700 mn contract for 15 heavy cargo helicopters is up in the air between the Mi-26T2 and the CH-47F Chinook from the US competing for it.The tenders were announced in 2008–2009 and the results are expected in 2011. With this sort of competition, it is only natural for the Russian company to want to better its chance by offering the customer joint production and sweetening the deal with the right to export the output to third countries.?This is unprecedented for Russia. In Soviet history, there was only one instance when, in 1964, Poland received a licence for Mi-2 production. Russian defence industrialists believe the plans to establish production in India with the right to re-export should be a substantial argument in favour of the Russian machines participating in the tender.It was aircraft makers, namely RSK MiG, that suffered the latest major defeat on Russia’s biggest equipment export market. They presented their most advanced generation 4++ MiG-35 fighter jet for an Indian tender. Throughout the years of selection, Moscow exuded total confidence that the MiG-35 was a sure bet in the competition for the over $10 bn contract. They were so smug that the MiG-35 was the only competitor not even to attend the purchasing country’s main aviation show, Aero India-2011 in Bangalore. Indian government representatives officially stated that not only had they tried to discover, through their ambassador in Moscow, the reasons for the no-show, but had also attempted to persuade Russia to send the plane, but all in vain. Eventually, the MiG-35, which had the advantage of a lower price than its competitors, lost to the European-made Eurofighter Typhoon and Dassault Rafale.At the same time, the Indian Armed Forces have become virtually the main export market for Russian military equipment, especially since the Chinese customers, having copied numerous models, have switched from purchasing Russian machines to producing their own. According to the Centre for Analysis of the World Arms Trade, the ability to market their equipment abroad gives Russian defence contractors an opportunity to manufacture the most advanced tanks, helicopters, and aircraft to meet their own army’s needs. For example, a contract with New Delhi for 126 MiGs would have permitted a significant reduction in the fighter’s domestic price thanks to economies of scale in production. Now the manufacturing of a relatively small number to meet the Russian Air Force’s needs has become economically unfeasible and those plans are likely to be scrapped.The Indian customers’ choices are also heavily influenced by a desire to diversify the sources of their weapons supplies; at present, India already receives a significant portion of its military equipment from Russia. In addition, the results of the three tenders may also be affected by a certain change in the Indian Armed Forces’ equipment priorities. In the past, New Delhi was pursuing a technologically “cheap” military. As a supplier, Moscow fit the bill ideally, as it always offered the simplest and cheapest weapons around. The Indian military has now realigned itself towards the most expensive and technologically advanced offerings. That said, the Moscow Centre for Strategic and Technology Analysis believes that it is impossible to predict exactly how the offer of local production of Russian Helicopters, JSC?will affect the chances.In 2010, Russian Helicopters, JSC?factories manufactured 214 helicopters; plans for 2011 include 267 machines and, in 2012, the number is expected to exceed 300 units."Currently, Russian Helicopters?has government orders for 461 machines. There are also, however, so-called quasi-hard contracts, i.e., ones that have not yet been signed for a complete armaments programme. Once all contracts are signed, the orders will top 1,500", the Oboronprom CEO said.He added that the potential order portfolio was already six times the 2010 level, when 214 helicopters were built.Dmitry Petrov, the CEO of?the Russian Helicopters, JSC?says that, in 2010, his company produced up to 10% of all helicopters manufactured worldwide. The same year, the holding’s companies brought Russia’s share up to 14% of the helicopter market in dollar terms, while Russian-made helicopters account for approximately 13% of the total global helicopter fleet, the CEO pointed out.?He added that his holding was the number one supplier to the markets of Russia, the CIS, India, and China. On the Russian and CIS markets, domestically manufactured helicopters account for 87% of the fleet in dollar terms.India, Russia bond over Afghan concerns , Published By : Akhtar Ali HyderBy Manish Chand | indrus.in : Indian Prime Minister Manmohan Singh’s visit to Kabul in May, his first since he went there six years ago, underscored India’s unflagging resolve to stay firmly engaged with Afghanistan amid the unfolding ‘endgame’ in that country. The visit, coming as it did close on the heels of the killing of 26/11 terror architect Osama bin Laden May 1 in the Pakistani garrison town of Abbotabad by US forces, also underlined India’s fresh assertion of its strategic interests in a country Pakistan has long regarded and tried to project to its American interlocutors as “strategic depth.” Manmohan Singh announced a fresh pledge of $500 million, making India one of the largest international donors to Afghanistan with a total aid assistance of $2 billion. In a clear message to the international community that it is India, not Pakistan, which is a key partner for the Afghan resurgence, Manmohan Singh told the Afghan parliament May 12: “India is ready to partner the Afghan people, as they rebuild their country, in accordance with their own priorities and national circumstances.”The Indian prime minister’s visit was being watched keenly in key world capitals, especially in Moscow which not only shares New Delhi’s concerns about the potential Taliban ascendance but is also worried about a dangerous power vacuum that could follow after a drawdown of US and Nato troops, plunging the entire region into turmoil. Moscow remembers all too well the catastrophe that ensued after it scripted its exit policy in the late 1980s, leading eventually to the usurpation of power by the Taliban regime in Kabul in 1996, and, therefore, would do anything to prevent a repeat of the same nightmare scenario that stoked Islamist militancy in its southern regions. Moscow has never forgotten that the Taliban regime was the only one that recognised Chechnya as an independent republic in 2000. Russia has always felt a deep sense of unease about the growing influence of radical Islam on its southern borders that forms an arc stretching from Agediye via Chechnya and Dagestan in the northern Caucasus to Kazakhstan and beyond to Tatarstan and Bashkorotostan. The recent bombings at Moscow’s Domodedovo airport, allegedly plotted by North Caucasus separatists, once again brought home to the powers-that-be in Moscow the dangers of radical Islamist extremism and terrorism.While security concerns are overriding factors driving India and Russia closer in quest of a congenial resolution of the Afghan crisis, there are also additional factors like the Afghan drug problem propelling the two countries to seek a closer strategic alignment in the region. Nearly 25 per cent of all Afghan heroin reaches Russia through Central Asia, spawning nearly 3 million addicts. The incestuous linkage between the Afghan opium trade, militancy and warlordism is a source of deep anxiety for both countries. New Delhi feels that the Afghan opium is what is keeping anti-India terror outfits in Afghanistan like the Haqqani network in business. Both New Delhi and Moscow want Afghanistan to realize its economic potential as a hub linking South Asia and Central Asia. Moscow is keen to join the proposed TAPI gas pipeline that seeks to bring Turkmen gas via Afghanistan to Pakistan and India.India and Russia, key partners in propping the Northern Alliance that ousted the Taliban regime in 2001, therefore, are natural allies in ensuring a positive outcome in Afghanistan that safeguards their own interests amid competing agendas and geopolitical rivalries festering in the region. For one thing, Russia shares India’s formulation that there are no good or bad Taliban just as there are no good or bad terrorists. Moscow also agrees with New Delhi about ‘red lines’ which should be followed in any viable power-sharing arrangement between the Taliban and the Afghan government. These red lines, among other things, entail the Taliban cutting off all links with al-Qaeda and accepting the Afghan Constitution. There is, however, a difference in priorities. Whereas Moscow’s primary concern is to prevent the spillover of Islamic militancy, aided by the Taliban, into Central Asia and its southern regions, New Delhi has resolved to deny Pakistan ‘strategic depth’ its military-intelligence establishment covets badly as it would expose India to more cross-border terror attacks. This is why New Delhi has repeatedly espoused a democratic, modern and pluralistic Afghanistan free from external interference and extremist elements – a vision Moscow shares and encourages.?? This also explains why New Delhi and Moscow are fiercely opposed to the withdrawal of western troops from Afghanistan as they dread the ascendance and re-emergence Taliban-allied radical Islamist network in the region.?? Violence will erupt in Afghanistan once NATO-led forces complete their planned pullout, Frants Klintsevich, the head of Russia's Union of Afghan Veterans, has warned in an interview.The killing of Osama bin Laden, the paterfamilias of the Al-Qaeda global terror network, by the US forces in Abbotabad has provided a new opportunity for configuring the region anew and freeing it from virulent strains of Islamist extremism.? India has hailed it as “a shining moment” in the region’s history, and Russia has called it “serious success” in the war against terrorism. But both countries realise that the death of bin Laden is by no means the end of terror in the region. On the contrary, the Afghan Great Game has now acquired a new twist, creating new realignments among key players in the region. It may be coincidental that Pakistan President Asif Ali Zardari was in Moscow on the same day the Indian prime minister was in Kabul, vowing to jointly combat terror. A pragmatic Moscow may be seeking to engage Pakistan to influence the power-sharing deal in Kabul, but Moscow knows it’s long-term interests in Afghanistan converge with that of India, which has been engaged in a raft of activities ranging from the building of the Afghan parliament to roads, dams and power stations, earning it huge goodwill among Afghans.Against this backdrop, the two time-tested partners are poised intensify their consultations in days to come to ensure that safe havens of terror in Afghanistan-Pakistan region are eliminated for the sake of shared prosperity.? A day after the killing of bin Laden, India underscored that the world “must not let down its united effort to overcome terrorism and eliminate the safe havens and sanctuaries that have been provided to terrorists in our own neighbourhood.” “The struggle must continue unabated,” said India’s External Affairs Minister S.M. Krishna. Russia and India, along with all countries which sincerely desire Afghan renaissance, are?? partners in this struggle.EDF, Enel in talks with Rosatom on nuclear plant EDT* EDF, Enel among at least three in talks on Kaliningrad* Rosatom certain to maintain 51 pct stake in project* Rosatom eyes Poland, no decision to bid yetWARSAW, May 23 (Reuters) - France's EDF (EDF.PA: Quote, Profile, Research, Stock Buzz) and Italy's Enel (ENEI.MI: Quote, Profile, Research, Stock Buzz) are among companies in talks with Russia's Rosatom on a stake in its planned nuclear power plant in Kaliningrad, Rosatom official said on Monday.Head of Rosatom's marketing and business development department Alexei Kalinin said on the sidelines of the Nuclear Energy Congress in Warsaw that Rosatom will certainly maintain at least 51 percent stake in the power plant."We are in talks with at least three potential strategic investors for this plant, inluding EDF and Enel," Kalinin said."We will for sure maintian at least 51 percent stake in the project (...) for the remaining 49 percent all scenarios are possible. We could have more than one partner."Construction of a first 1082 megawatt unit is scheduled to finish in 2016 and a second unit is slated for two years later.Rosatom's representatives came to Poland to present and discuss a environmental study of the Kaliningrad power plant but were also interested in Poland's plans to build two nuclear plants."The decision to bid in Poland has not been made yet, but obviously we are keeping an eye on the process. We are a regional player that wants to develop in the region," Kalinin added.Poland wants to build two nuclear power plants by 2030 with a total capacity of 6,000 megawatts in order to break its dependence on highly polluting coal.An official tender for technology supplier for the plants is expected to open later this year.PGE's representatives said they expected to draw better offers from suppliers after nations rething their nuclear plans following the Japanese disaster. [ID:nLDE74M0SK] (Reporting by Patryk Wasilewski) Russia Seeks to Invest in Ukraine’s Turboatom, Izvestia Says Kateryna Choursina - May 24, 2011 7:57 AM GMT+0200 Russia is prepared to invest in Ukraine’s state-owned VAT Turboatom (TATM), Ekonomicheskie Izvestia reported, citing Sergei Kiriyenko, who heads Rosatom Corp., a Russian holding company that’s also state-owned. Russia seeks to create a joint venture with Turboatom to produce turbines, the newspaper said. -- Editor: Alan Purkiss To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@ To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@. Social | 24.05.11 | 12:07 Armenian migration chief blames media for “advertising” Russian naturalization program of Armenia’s State Migration Service Gagik Yeganyan has denied media reports claiming that emigration from Armenia is taking place at a rate of 70,000 people a year, at the same time pointing out media’s negative role in what he described as “advertising” a program of the Russian Federation offering naturalization to citizens in former Soviet republics. At a news conference in Yerevan on Monday, Yeganyan said that in 2008 the negative balance of migration made 23,059 citizens, in 2009 – 24,978, and in 2010 – 29,860. These figures contradict a number of newspaper and online media reports claiming that up to 70,000 people emigrate from Armenia every year, based on the perception of the negative balance of incoming and outgoing citizens. “In these conditions, it is impossible to speak of mass emigration,” the State Migration Service head stressed, according to the Mediamax news agency.Yeganyan also noted the negative role of the media in “advertising” the “Relocation of Compatriots” program being implemented by the Russian government. According to him, in legal terms, the authorities of Armenia cannot oppose the implementation of the given program.“In four years, 26,000 citizens of Armenia turned to the Embassy of Russia in Armenia within the framework of this program, and only 2,919 of them expressed a wish to participate in the project and filled in the documents, and the status of a migrant was granted to 822 citizens. As a result, 622 families, or 1,508 people, moved to Russia,” Yeganyan said, as quoted by the news agency. He urged the media to get familiar with the conditions of the program and present the public with balanced and reliable information in order “not to cause interest of the citizens to the program and avoid forming queues at the Embassy.”May 23, 2011, 2:53 p.m. EDT Argentina and Russia sign deal to boost trade Shane Romig BUENOS AIRES (MarketWatch) -- Argentina has asked Russia to bump up the quota for poultry and fruit imports from the South American country, amid a trade mission to Russia designed to raise commerce between the two countries. Russia is already the top destination for Argentine beef exports and is one of the leading markets for fruit shipments. Argentina's foreign minister and agriculture minister reached an accord with their Russian peers in Moscow over the weekend to work toward increasing bilateral trade, according to a statement from Argentina's agriculture ministry. The agriculture minister asked Russia to allow the import of an additional 30,000 metric tons of poultry each year, more than tripling last year's shipments, according to the statement. Argentina exported just over 8,000 tons of poultry to Russia last year, making it the seventh-largest market for Argentine shipments, according to Argentina's animal sanitation service Senasa. Venezuela took the most birds from Argentina, at almost 70,000 tons, followed by Chile, China, South Africa, Vietnam and Hong Kong. Russia led Argentina's fresh beef exports last year, buying almost 36,000 tons. The next largest export market was Israel at about 27,000 tons.PRESS RELEASE Deputy Minister of Foreign Affairs/State Secretary Grigory Karasin Meets with US Deputy Assistant Secretary of State for South and Central Asian Affairs Susan Elliott meeting took place on May 23 between State Secretary and Deputy Minister of Foreign Affairs of the Russian Federation Grigory Karasin and US Deputy Assistant Secretary of State for South and Central Asian Affairs Susan Elliott. In the context of a regular exchange of views they discussed the situation in the countries of Central Asia and matters relating to Russian-US interaction in this sector. Karasin and Elliott devoted special attention to developments in Kyrgyzstan and discussed joint steps to give that republic necessary assistance. US Ambassador to Russia John Beyrle took part in the conversation. May 23, 2011Deputy Foreign Minister visits Russia Deputy Foreign Minister and Chairman of the State Committee for Overseas Vietnamese Affairs, Nguyen Thanh Son, visited Russia from May 18-25. The deputy Minister met with his Russian counterpart, Grigory Karasin, who is in charge of Russians living abroad, to learn from Russia ’s experience in supporting their people in foreign countries. Son asked Russia to help Viet Nam and Vietnamese Embassy in works related to the Vietnamese community in Russia to help them develop dynamically and sustainably in accordance with local laws, contributing to increasing traditional friendship and strategic partnership between the two countries. He also planned to meet leaders of local agencies in migration, labour and employment and guest worker affairs to learn about the situation of the Vietnamese community in Russia and discussed cooperative measures between relevant agencies of both countries. Deputy Minister Son also met with representatives of overseas Vietnamese in Russia on May 22. On the occasion, the diplomat presented an insignia “For the Cause of Sea and Island Sovereignty Protection” of the Viet Nam Naval High Command to Do Xuan Hoang, Chairman of the Vietnamese Association in Russia. /.May 24, 2011 12:00Question about Israeli spy incident should be put to defense ministry – ambassador. May 24 (Interfax) - The Israeli Embassy in Russia is not concerned with issues regarding the appointment of a new military attache in Russia and further military-technical cooperation between the two countries, Israeli Ambassador to Russia Dorit Golender told journalists in Novosibirsk on Tuesday."All these issues should, certainly, be referred to the Israeli Defense Ministry, to the Israel Defense Forces. We, the Embassy, do not respond to detention and expulsion of military attaches. This is the answer I can give to you," the ambassador told journalists.At the same time, the development of the Russian-Israeli cooperation is important, primarily, in the scientific sphere, the Israeli diplomat said.It was reported earlier that Russia has recently expelled Israeli military attache Vadim Leiderman accused of espionage.Leiderman was caught red-handed in Moscow on May 12 while obtaining secret information from a Russian citizen, the Russian Foreign Ministry said.kk jv(Our editorial staff can be reached at eng.editors@interfax.ru)09:28?24/05/2011ALL NEWSRF-Israel relation develop dynamically, potential – huge - view. Tass 93 MOSCOW, May 24 (Itar-Tass) —— Nowadays, relations between Russia and Israel are developing quite dynamically and first of all in the sphere of the economy, Israel’s Foreign Minister Eliyahu Yishai told in an exclusive interview to Itar-Tass during his brief visit to Moscow. “Two years ago I was Minister of Industry and Trade, and while in that position I made maximum efforts to intensify and strengthen trade and economic relations with Russia,” he said. “I am sure that there is huge potential for activation of the cooperation in various spheres of the economy, in tourism, and that between law enforcement authorities.” “Our countries share common values, for example, the Victory Day, which signifies the defeat of Nazism,” Yishai said. “And our countries apply every effort to keep this phenomenon in the past and have it never come back.” “Mind, that many Jews living in Israel come from the USSR and Russia, they know the Russian language, traditions and culture, thus Russian tourists do not have problems communicating with the locals,” he continued. “Believe me, this is another reason, why the flow of Russian tourists to Israel is growing, there is no language barrier for them there.” “Thus the abolishment of visa requirements has given additional impetus for the development of our relations and strengthening of cooperation in various directions,” Yishai said. “It is also a practical platform for development of business between the states.” He thanked Russia’s authorities for the assistance in development of the Jewish religious community. “Honestly speaking, everything I have heard and seen /in Moscow – Itar-Tass/ cannot leave unmoved,” he said. “It is positive that Russia’s authorities do not impede development of the Jewish religious community, provide every necessary support, thus it is growing and is actively involved in the spiritual education of the growing generation.” “I would like to express my gratitude to Russia’s President Dmitry Medvedev and Prime Minister Vladimir Putin for the support in your country of the Jewish community and the assistance in free development of the Jewish spiritual direction,” he concluded. 12:00?24/05/2011ALL NEWSRF, Israel have preconditions for mutual fighting terrorism - view. Tass 91 MOSCOW, May 24 (Itar-Tass) — Russia and Israel have every precondition for expanding the cooperation in fighting terrorism, Israel’s Foreign Minister Eliyahu Yishai told in an exclusive interview to Itar-Tass during his brief visit to Moscow. “Sure,” he said. “In fighting terrorism, which has become international already, all world countries should unite their efforts.” “Nowadays, it is not a problem of one or two countries, it is a common problem.” “As you well know, in Israel the problem of terror is very pressing, but our law enforcement authorities undertake all measures to lower the level of terrorist threat, and the main focus is made on preventive activities,” Yishai said. “Of course, we cooperate with our Russian counterparts in fighting terrorism and extremism,” he continued. “This cooperation is organised by official channels and includes, among others, exchange of strategic information.” “I believe that today we have every precondition to strengthen and expand this cooperation,” he said. “My country will be happy to have it.” “It is possible to overcome terrorism by mutual effort only, one county is unable to cope with it,” the minister said. “We are happy that together with Russia and our other partners we are on the side of the light world which opposes terror.” Yishai said that over the visit he had a meeting with Acting Speaker of Russia’s Federation Council Alexander Torshin. “During the meeting we also touched upon fighting terrorism and once again we asked for assistance in liberation of Israel’s soldier Gilad Shalit who has been in captivity by the Hamas in Gaza Strip,” Yishai said. 08:55?24/05/2011ALL NEWSVisa abolishment gives expected economic effect – Israel FM. Tass 94 MOSCOW, May 24 (Itar-Tass) —— The flow of Russia tourists to Israel’s resorts has grown following the abolishment of visa requirements. Tourists do not cause problems either to the locals or law enforcement authorities, Israel’s Foreign Minister Eliyahu Yishai told Itar-Tass in an exclusive interview during his brief visit to Moscow. “Realistically, the abolishment of visa requirements between our countries has a major positive effect,” he said. “From our side, we see a growth of tourists from Russia, who used to be interested in Israel’s resorts.” “The abolishment of visa requirements has removed administrative barriers and, of course, the number of tourists from Russia has grown manifold.” “We have not made a general analysis, but it is clear anyway that the abolishment has proved its value and brought the expected economic effect,” Yishai said. “Honestly speaking, during the discussions about the abolishment, there were many fears, but, luckily, they have not come true,” the minister said. “Russians who come to visit us behave well, correctly, and we do not have special problems with them.” Israeli Minister Visits Shaarei Tsedek Center, May 23 2011MOSCOW, Russia — The Jewish community of Moscow hosted a visit by Eli Yishai, the Minister of Internal Affairs and Deputy Prime Minister of Israel, who is also the head of the Shas party.Minister Yishai was on an official visit to Moscow from May 17-19, dedicated to formal negotiations with the Russian authorities and meetings with diplomats at the Israeli Embassy. During his brief stay he took time out from his very busy schedule to become acquainted with the life of the Jewish community of Moscow.The Planet of Good Charitable Foundation, headed by Georgiy and Merab Elashvili and Roman Shamilashvili, held a reception in his honor. The reception was timed to coincide with the 63rd anniversary of Israel’s independence and the 20th anniversary of the restoration of diplomatic relations between Israel and Russia.On the morning of May 18, MK Yishai came to the Beit Menachem Synagogue in the Marina Roscha neighborhood for prayers. He met with Chief Rabbi of Russia Berel Lazar, who showed him the Beit Shvidler Education Center and the Shaarei Tsedek Charity Center.They were also accompanied by Ohr Avner Foundation Director David Mondshine and leaders of Jewish organizations in Moscow. Mr. Yishai was told about the various programs run by the center, and paid attention to the work carried out by the food pantry. Finally, he made an entry in the book of honorable guests of the Shaarei Tsedek Charity Center.The Deputy Prime Minister’s visit to Moscow concluded with a visit the Shater Yitzhak Synagogue for Georgian Jews.07:26?24/05/2011ALL NEWSRussian innovation projects on show in Finland. Tass 13 HELSINKI, May 24 (Itar-Tass) — An exhibition of Russian innovation projects opens in the Finnish city of Lappeenranta on Tuesday. It will introduce a wide spectrum of various technologies and solutions developed in business incubators and innovation centers. The exhibition opens ahead of the second Innovation Forum of Russia and the European Union (EU), the sessions of which are to be held here from May 25 to 26. An official at the Lappeenranta city council has told Itar-Tass, "participants in the exhibition, which got the name of 'Partnership for Innovations', were selected on the strength of the results of a contest carried out among twenty companies and organizations which developed innovation products of current importance". Simultaneously with the exhibition, preliminary conferences are to begin at the Finnish-Russian innovation university. The holding of the conferences is also timed to coincide with the opening of the Innovation Forum: they are dedicated to cooperation in information and communication technologies, energy efficiency and the generation of renewable energy, the protection of intellectual property and other problems of current concern. A separate conference will introduce possibilities for the transaction of business in Murmansk Region. The Russia-EU second Innovation Forum has drawn over 500 representatives of business, science, public organizations, and officials of the executive and legislative branches of power. Businessmen participating in the forum represent 120 companies operating in various sectors. The forum is held within the framework of the implementation of the international Europe-Russia innovation corridor (ERICO) project the purpose of which is to further innovation cooperation between Russia and the EU on the basis of experience gained in the interaction between St Petersburg and Southeastern Finland. Organizers of the forum in Lappeenranta emphasize, "ERICO is viewed as an important instrument in a future 'common space of Russia and the EU. promoting free exchanges of information, interpenetration of technologies, and successful introduction of innovations". Days of Russian Culture in Latvia 24, 2011 11:25 Moscow TimeThe Days of Russian Culture have got under way in Latvia. More than 70 various cultural events are due in the capital Riga and other cities. A concert of Russian folk song and dance ensembles from Latvia and a fair of craftsmen are due in downtown Riga on the 4th of next month. The Days of Russian Culture are due to last until June 6th.10:15?24/05/2011ALL NEWSMilitant destroyed in special operation in Ingushetia. Tass 129 NAZRAN, May 24 (Itar-Tass) —— A militant was destroyed during a special operation conducted in the municipal district of Gamurziyevsky of Ingushetia’s city of Nazran at 08.30 Moscow time, ITAR-TASS learnt at the Interior Ministry of the republic. He was identified as Vakha Machukiyev, a resident of Nazran. According to the ministry, Machukiyev, he was offered to stop his car, however, he opened fire at police officers and was killed during an armed clash. 11:35?24/05/2011ALL NEWSPoliceman wounded in stun grenade blast in Bashkortostan Tass 101 UFA, May 24 (Itar-Tass) — A policeman has been wounded in a grenade blast at exercises in Bashkortostan, the republic’s law enforcement bodies told Itar-Tass on Tuesday. Special tactical exercises were conducted near the village of Beketovo in the Karmaskalinsky district at a range of a military unit of the Interior Troops on Monday. “An engineer-sapper of the OMON police special task force of the main Interior department for the Perm Territory, police major used the Fakel-S sound-and-flash hand grenade. A policeman who stood in the cordon got a mine-blast trauma as a result,” the source noted. The blast victim was hospitalised. A service check is conducted into the incident. 11:35?24/05/2011ALL NEWSPoliceman killed at police station in Orenburg region. Tass 102 ORENBURG, May 24 (Itar-Tass) — A policeman has been killed in the premises of a police station in the Orenburg region, the regional law enforcement agencies told Itar-Tass on Tuesday. “The body of a policeman who was on duty was found with stab wounds in the stomach inside a police office at the Burguruslan railway station in the Buguruslan district,” the source said. “A Makarov service pistol with eight cartridges was stolen from him. The circumstances of the death of the police officer are being investigated. Khodorkovsky lawyers bid to overturn guilty verdict 24/05/2011Lawyers for jailed former Russian oil tycoon Mikhail Khodorkovsky and his business partner Platon Lebedev on Tuesday asked a Moscow court to overturn a recent guilty verdict on a second set of charges against them.The Moscow City Court is currently hearing an appeal against the conviction.Already in detention since 2003, Khodorkovsky and Lebedev were sentenced to a further six years in prison in December for embezzlement and money-laundering in a trial that was widely seen as politically motivated.In February, an aide to Judge Viktor Danilkin, who convicted the two men at their second trial, said her boss was acting under orders from the Moscow City Court.MOSCOW, May 24 (RIA Novosti)09:55?24/05/2011ALL NEWSCourt to review former Yukos CEO's appeal. Tass 3 MOSCOW, May 24 (Itar-Tass) — The Moscow City Court on Tuesday will review an appeal against the verdict for former Yukos CEO Mikhail Khodorkovsky and former MENATEP director Platon Lebedev, sentenced to 14 years in jail. The court was to have convened on May 17, but the hearing was postponed as Khodorkovsky and Lebedev's lawyers lodged more appeals. Explaining the reasons behind the postponement, the judge said the new appeals were "voluminous," and that the court would need time to examine them. On December 30, 2010, Moscow’s Khamovniki district court sentenced former Yukos CEO Mikhail Khodorkovsky and his business partner, head of the Menatep company Platon Lebedev, to 13.5 years in jail within the second criminal case, finding them guilty of oil theft and money laundering. The next day, their lawyers appealed the verdict at the Moscow City Court. In May 2005, Moscow's Meshchansky district court found Khodorkovsky and Lebedev guilty under several counts, including fraud and tax evasion and sentenced them to nine years in prison. Later the Moscow City Court reduced the term to eight years. The new sentence extends the jail term for Khodorkovsky and Lebedev until 2017. Khodorkovsky and Lebedev were found fully guilty of theft and money laundering within the 2nd criminal case. The court classified the indictment under the 2010 amendments, which softened punishment for economic crimes. Handing down the verdict, judge Danilkin underlined that the business persons had sold the stolen oil in domestic and foreign markets at a much higher price than the producers' selling price. "The bulk of profits was expatriated and used to the benefit of the participants in the organized group," Danilkin said. He denied the defendants' claims that they were being tried twice for the same offense, because the crimes reviewed by the Meshchansky court were classified under other Criminal Code articles and transpired within a different timeframe. "Khodorkovsky and Levedev guilt was fully proven by the whole body of evidence examined by the court," according to the verdict. Meanwhile, the court dropped criminal prosecution against the defendants on charges of stealing shares of "Eastern Oil Company," due to the statute of limitations. In February, Khamovniki court spokeswoman Natalia Vasilyeva stated that the guilty verdict for Khodorkovsky and Lebedev had been written at the Moscow City Court, and that Danilkin had never drawn it. Vasilyeva also claimed pressure on Danilkin, during the trial and deliberation in the conference room. According to Khodorkovsky and Lebedev's lawyers, the content of the verdict gives valid reasons to claim that it was drawn by not the presiding judge, but persons who were not directly involved in the trial. Danilkin made assurances that he had written the verdict by himself, while adhering to all the norms of the law. The Moscow City Court called Vasilyeva's statement "provocation." Vasiyeva resigned soon thereafter. In ther latest complaints, Khodorkovsky and Lebedev's lawyers forwarded a statement to Investigation Committee chairman Alexander Bastrykin demanding that the SK open a criminal case against Khamovniki court judge Viktor Danilkin for wrongful sentencing. In April, an independent expert examination of the Yukos case verdict began. It was conducted by experts enlisted by the council for developing the civil society and human rights under the Russian President. Former Constitutional Court judge Tatyana Morshchakova, a Council member, said some 18 people were taking part in the expert examination. They are specialists in various fields of law. Some foreign lawyers had been invited, too. Morshchakova underlined that after the verdict came into effect, the experts' conclusions would be forwarded to the Russian president. One-Fifth of Russian Military Procurement Cash Stolen, RG Says Denis Maternovsky - May 24, 2011 6:34 AM GMT+0200As much as 20 percent of cash allocated for military contracts in Russia is stolen, the country’s chief military prosecutor Sergei Fridinsky told Rossiyskaya Gazeta in an interview. Fridinsky blamed poor existing legislation and ineffective government controls for the situation, the state-owned newspaper reported. To contact the editor responsible for this story: Denis Maternovsky at dmaternovsky@ Demobbed Russians soldiers ‘take hostages’ 24/05/2011A group of recently discharged, drunken Russian soldiers took passengers hostage on a train in east Siberia on Tuesday, a police official told RIA Novosti.The incident took place near Abakan, city police official Alexander Masterskikh said. He also said all the hostages were released without harm.He added that train personnel had been forced to seal the carriage the soldiers were travelling in until the train had arrived in the city. Transport police subsequently made a number of arrests.An investigation is ongoing.ABAKAN, May 24 (RIA Novosti)International space crew lands in Kazakhstan – NASA ISTALMATY (Reuters) - A Russian Soyuz spacecraft with three astronauts on board landed safely in Kazakhstan on Tuesday, NASA TV reported.Russian cosmonaut Dmitry Kondratyev and astronauts Catherine "Cady" Coleman, an American, and Italian Paolo Nespoli arrived aboard the Soyuz TMA-20 craft at 0827 local time (0227 GMT), after spending six months in space.(Reporting by Robin Paxton, editing by Mark Trevelyan)May 24, 2011 09:54ISS program prolonged until 2020 (Part 2), Moscow region. May 24 (Interfax) - The participants in the International Space Station (ISS) program have approved a plan to prolong the functioning of the orbiting outpost until 2020 and have already secured the funds needed for it, Alexei Krasnov, director of the manned spaceflights program of the Russian Federal Space Agency (Roscosmos), said."The [use of the] International Space Station has been prolonged until 2020, and the funds needed to maintain its operations will be provided," Krasnov said at a news conference at the Mission Control Center outside Moscow.No additional agreements are needed to extend the station's functioning until 2020, he said."The existing intergovernmental agreement does not include any requirement to wrap up the project. We intentionally structured this intergovernmental agreement in a way that allows us to continue working if we exceed the initial timeframe," Krasnov said.The participants in the ISS program were given five years to assemble the station and ten years more to use it, he said.This timeframe expires in 2016, Krasnov said."All of the countries have already confirmed that they have conducted internal procedures with their governments to secure their agreement to continue funding this project," he said.tm(Our editorial staff can be reached at eng.editors@interfax.ru)Russia develops new spacecraft 24, 2011 11:18 Moscow TimeRussia is developing a manned spaceship to fly by itself for 30 days and nights. To come in heavy and light versions, the craft will be able to deliver several times more cargos to the ISS and perform special mission in automatic mode. The lighter craft will take about 24 hours to ferry crews to the international outpost, down twice from 48 hours now.? After NASA grounds its fleet of space shuttles in June and until 2016 Russia’s Soyuz spaceships will serve as the only means of delivering cargoes and crews to the ISS. Russia, Belarus to conduct joint electronic warfare & CIS General NewswireMay 22, 2011The State Duma has ratified a Russian-Belarusian agreement on cooperation in electronic warfare (EW).The agreement was signed in Moscow on December 10, 2009. The document establishes a legal framework for the Russian-Belarusian cooperation in electronic warfare for the purpose of providing military security in the region.The two countries plan to cooperate in creating, and ensuring the functioning of, a unified electronic warfare system of the regional grouping of Russian and Belarusian troops.The agreement involves cooperation in training military command bodies, military units and EW subdivisions of both countries' armed forces for joint operations as part of the regional grouping of troops.Another area of cooperation will be the coordinated use of the radio spectrum by EW for defense purposes and providing electromagnetic compatibility of military EW systems.The agreement also involves joint EW research, creating a new and upgrading of the existing special EW equipment for the regional grouping of troopsThe two countries will hold consultations and exchange information on EW organization to support the operations of the regional grouping of troops.The parties are planning to use the unified EW system. To maintain the necessary level of combat readiness they will hold joint operational and tactical training of military command bodies, military units and EW subdivisions.Kk08:36?24/05/2011ALL NEWSKrasnoyarsk wildfire area grows overnight to four thousand hect. Tass 85 KRASNOYARSK, May 24 (Itar-Tass) —— The situation with wildfires in the Krasnoyarsk Territory has aggravated. On Monday enening, there were 45 fire at 139 hectares, but during the night the area grew to 4,045.5 hectares, where 1.127.5 hectares are in forests and 2,927 are outside forests. “The most dramatic situation is in the Boguchansk District, where the first in the current season major wildfire in the forest occurs,” press service of the local branch of Russia’s EMERCOM said. “The fire is blazing at 2,700 hectares, and the reasons of it are being investigated now.” Over the past day, 704 firefighters using 111 vehicles extinguished 31 fires at 515.9 hectares. From the beginning of this year’s wildfire season, the territory has 587 fires at 10,696.89 hectares. Over the previous year, they made 155 at 1,538.34 hectares. The local administration has allocated 193 million roubles for firefighting in the current year, and additional 234 million came from the federal budget. 50 million roubles are for new vehicles, which have been bought and transported to the regions, including a pilotless vehicle to monitor the fire situation. A group of 15,000 firefighters is ready to start extinguishing fires. A part of the Krasnoyarsk Wildfire Centre are involved in extinguishing wildfires in Yakutia. 07:36?24/05/2011ALL NEWSWildfires area in Yakutia is growing. Tass 76 GORNO-ALTAISK, May 24 (Itar-Tass) —— The area of wildfires in Yakutia grew over the past day to over 95,000 hectares against the earlier 62,500 hectares, the republic’ s Department of Forestry said on Tuesday. From the beginning of the fire hazardous season, there have been over 170 wildfires in Yakutia. They occupied over 120,000 hectares. Most fires were caused by burning of last year’s grass and by fires made by tourists and hunters, or by a burning match or cigarette. 07:54?24/05/2011ALL NEWSWildfires situation in Siberia stabilises – local administration. Tass 54ULAN-UDE, May 24 (Itar-Tass) ——Wildfires situation in Siberia has stabilised, the local administration said on Tuesday.Deputy Prime Minister of the Transbaikalia Region Evgeny Vishnyakov thanked paratroopers from Irkutsk, Toms and Krasnoyarsk for their assistance in extinguishing the wildfires.“Well organised and timely actions of the groups extinguished the complicated wildfires, which occupied the aviation protected zone of the forests,” press service of the local administration said.There are still three wildfires in the Transbaikalia Region, which occupy slightly over 23 hectares. 105 firefighters, 29 vehicles and one plane continue to extinguish the fires, the local branch of Russia’s EMERCOM said.In Buryatia, which neighbours the Transbaikalia Region, the number of wildfires is falling, too, though they still occupy 480 hectares.“The fires at 460 hectares are localised,” Buryatia’s branch of EMERCOM said. “Over 80 firefighters, 17 vehicles and three planes continue working there.”Russia marks Day of Slavic Alphabet and Culture to Orthodox Calendar, May 24 is Saints Cyril and Methodius Day. Cyril and Methodius are famous for translating the Bible from Greek into the Old Slavonic language. The invention of the Slavonic alphabet is attributed to Cyril.Dozens of events are planned in Moscow today to mark Saints Cyril and Methodius Day – conferences, exhibitions, youth actions, and a concert in the Kremlin Concert Hall.At the moment, Uspensky Cathedral of Kremlin is hosting a Liturgy Service. ?TODAY, 11:33Aysor.am11:29?24/05/2011ALL NEWSSix injured in Krasnoyarsk enterprise explosion. Tass 97 KRASNOYARSK, May 24 (Itar-Tass) — Six people were injured in an explosion at the Zheleznogorsk mining and chemical works in the Krasnoyarsk territory, the press service of the regional department of the Investigation Committee (SK) told Itar-Tass. "The explosion occurred on Monday evening in a shaft of the reactor factory located on the premises of the mining and chemical works," the SK said. "It has been ascertained that during the preparation for dismantling by a sub-contractor organization that used gas welding, a cylinder with compressed acetylene exploded. As a result, six workers were injured and suffered burns of various severity," an SK officials said. SK personnel are running a pre-investigation check into a possible violation of labor protection norms. The mining and chemical works is part of the Rosatom state corporation. President's and Prime Minister's approval ratings stabilise in May CapitalMay 24, 2011News: The May batch of political polls from both Levada Center and FOM suggest that the public opinion backdrop has, on balance, remained stable since April. Our View: As a reminder, the two polls differ in the question asked. It is "Do you approve in the general activities of ...?" in Levada Center's poll, while FOM asks "Do you trust ...?". Historically, FOM's polls carries a lesser proportion of positive responses than Levada's (which must be a manifestation of the fact that 'trust' is conditional on a greater degree of empathy than 'approval'). Both polls took a downward turn from the start of the year, below the lows of the 2009 economic crisis, with the 'trust' ratings declining more sharply (10-12pp below the 2010 averages) than the 'approval' ones (6-9pp below). It goes without saying that in absolute terms the readings remain high by any standard: approval ratings at 69% for both leaders and trust ratings at 45-54%. May, however, revealed no further deterioration, in line with the opinion we expressed last month that the additional fiscal outlays on social policy highlighted by Putin in his address to the State Duma in April were likely to nudge public opinion higher in the coming months. We also note that both polls were taken prior to President Medvedev's 18 May press conference (FOM is due to report its next weekly docket later this week). That said, we are reiterating the view, expressed a month ago, that were public opinion to become more critical, that might act to accelerate the resolution of the lingering uncertainty over the 2012 political outcomes and the presentation of the administration's policies for the next political cycle.12:35?24/05/2011ALL NEWSMoscow mayor orders to stop trade in nationalist symbols. Tass 146 MOSCOW, May 24 (Itar-Tass) — Participants in a coordinating conference over law and order in Moscow decided to take measures to stop illegal activities of and tighten control over radical and ethnic groups, including on the Internet. Moscow mayor Sergei Sobyanin signed the relevant document. He also ordered to stop trade in nationalist symbols in one of the city markets, a Town Hall official told Itar-Tass. Police, together with the department of regional cooperation, national policy and relations with city's religious organizations, were instructed to arrange meetings with religious leaders and ethnic communities with the view of preventing ethnic and religious conflicts. Police will be responsible for obtaining information on upcoming extremist actions in advance, and informing the Moscow authorities so that they could take timely measures to contain or prevent such actions. City authorities must have timely repots about "illegal actions involving ethnic groups and members of Russian nationalist organizations, as well as the violations, committed in Moscow City that fuel ethnic conflicts." The document pays special action to exposing hate materials on the Internet and online calls for ethnic crimes. Moscow region's provider companies will use the available opportunities to remove such materials, and identify the persons involved in placing them, Town Hall said. Police and the city agencies concerned have been ordered to expose and stop the actions by public associations and individuals to involve youths and students in anti-Constitutional activities. The authorities will step up an awareness campaign among students to prevent their participation in extremist actions. Sobyanin ordered the eastern administrative district prefect Nikolai Lomakin to stop the trade in nationalist and nazi symbols in the Vernisazh market in Izmailovo. On Monday, Russian President Dmitry Medvedev ordered law-enforcement bodies to combat extremists, in the first place those who hide behind pseudo-patriotic slogans. He called for paying more attention to the patriotic education of young people. Russian Press at a Glance, Tuesday, May 24, 2011 24/05/2011POLITICSRussian Foreign Minister Sergei Lavrov met in Moscow with representatives of the Palestinian factions Fatah and Hamas and said that their reconciliation deal would help advance the Middle East peace process(Nezavisimaya Gazeta)A week after talks with an envoy for Libyan leader Moammar Gadhafi, Foreign Minister Sergei Lavrov held talks with representatives of the country's opposition.(Nezavisimaya Gazeta, Izvestia)Four liberal opposition politicians asked the Justice Ministry to register a new political party that would seek to revert the presidential term to four years, free jailed former Yukos CEO Mikhail Khodorkovsky and ease the rules for registering parties.(Kommersant)Participants of the Russia-EU summit in June are unlikely to adopt a plan for the mutual annulment of visas. Moscow is however still not ready meet some of the EU demands, including the abolishment of temporary registration for foreigners and compliance with EU anti-corruption requirements(Vedomosti)ECONOMYIllegal capital exports from Russia stood at $37.6 billion last year, Customs Union Commission Executive Secretary Sergei Glazyev said in a report posted on the commission's web site(The Moscow Times, Kommersant)Belarus's National Bank has devalued the national currency by over 30 percent(Vedomosti, Kommersant, Izvestia)?METALS & MININGRussian steel giant Severstal mulls attracting a $5-billion loan to buy 80% in Raspadskaya, Russia’s largest coalmine, which has been out of operation for more than a year after two deadly methane blasts(Vedomosti)?OIL & GASThe collapse of BP's talks on the share swap with Rosneft limits strategic options for the British company and its Russian venture, TNK-BP, and will have a negative impact on credit, Moody's Investors Service said(The Moscow Times)?AEROSPACERussian prosecutors have opened a criminal case on charges of negligence that led to the loss of three Glonass satellites late last year?(Kommersant, Rossiiskaya Gazeta)?VEHICLES & ENGINEERINGGeneral Motors approved its strategy for Russia, which includes investments of more than $1 billion over the next several years, said GM Russia and CIS general manager Jim Bovenzi.(The Moscow Times)?TELECOMS & ITRussia’s most popular search engine Yandex has increased its price guidance for its New York IPO scheduled for Tuesday, with the possibility to raise up to $1.4 billion, which would make it the world’s largest tech IPO this year.(Vedomosti, Kommersant, Rossiiskaya Gazeta, Izvestia)?BANKING & FINANCEA former Central Bank head, Sergei Dubinin, is likely to become the new chairman of the supervisory board at state bank VTB as part of the Kremlin's measures to improve the investment climate, a presidential adviser said(The Moscow Times)?SOCIETYOscar-winning film director Nikita Mikhalkov will have to navigate Moscow's notorious traffic jams as a regular motorist now that he has lost his much-lambasted road privileges provided by the Defense Ministry.(Kommersant, Izvestia)An Altai court cleared three men of poaching charges Monday, ruling that their presence on a helicopter that crashed while carrying senior officials on an illegal hunting trip was insufficient proof that they had participated in it.(Vedomosti, Kommersant)The Russian government approved a list of professions from which drug addicts are banned. Applicants for those jobs will likely have to undergo compulsory drug testing(Rossiiskaya Gazeta)11:44?24/05/2011ALL NEWSRussian press review. Tass 109 MOSCOW, May 24 (Itar-Tass) —— President urges for prevention of extremism with the youth Russia’s President Dmitry Medvedev chaired a meeting at the Moscow police on Monday, to which he had invited management of law enforcement authorities, envoys to the federal districts, and heads of several territories. The meeting discussed prevention of extremism. The head of the state is especially worried about growth of extremism with the youth. Russia's Interior Minister Rashid Nurgaliyev reported that over 90 percent of extremist organisations, including those illicit, are the youth under 30, the Rossiiskaya Gazeta writes. It is them who commit 80 percent of crimes of that kind. Some measures to counteract the threat had been undertaken. For example, there is a plan for 2010-2012 to counteract extremism, and regions have organised coordinating meetings under local heads of the territories. Dmitry Medvedev urged the law enforcement and local authorities on Monday to fight extremism more actively, the Kommersant writes. “Prevention” of extremism, he said, should be organised first of all at schools and universities. “We all are fed up with all sorts of formal suggestions about patriotism education,” he said. “They are nationalists and radicals who try to use the pseudo patriotic moods” and fighting it is a political task for the regional authorities. Dmitry Medvedev said that following the meeting of the State Council’s presidium in Ufa on February 11, he ordered to work out a bill “to limit rights for state service and work in education and upbringing for those having previous convictions for extremism.” On Monday, the president said that that he was expecting addendums to raise the time, during which extremists would be unable to work at certain positions. The State Duma approved the addendums in the first reading on Friday. “Administrative measures” are not enough to overcome extremism, a member of the presidential council on development of the civil society Dmitry Oreshkin told the newspaper. “There exists a difference” between a ban on work for “unhealthy people”, i.e. paedophiles, and for extremists, especially Islamic ones, who would propagate and not at schools. At the same time, the measure may become “an additional reason for violations,” the expert said, especially on the eve of the elections. “If Islamic extremists are dozens, those who stir up hatred for the State Duma deputies make hundreds and hundreds.” X X X Vladimir Putin continues working on All-Russia People's Front Prime Minister Vladimir Putin visited on Monday a public reception office of the United Russia Party in Pskov, where he met with activists of the city’s civil organisations who chose to join the All-Russia People’s Front. At the public reception office, Vladimir Putin shared with the activists that the idea to organise the Front occurred to him in connection with the elections to the State Duma, but later on the idea turned out to be much more serious and vast, than he had expected, the Kommersant writes. The Prime Minister wants the people’s front to be associated not only with the United Russia, but with organisations, which are free from cooperation agreements with it. He stressed that when speaking about the Front, he meant, besides the rest, that it should not be bureaucratic. Over the meeting there was a question about opposing parties which had started organising their fronts. Putin said that all new fronts will be mere replicas, and called the opposition “mockingbirds.” Civil organisations whishing to use the Front took a bow, the Moskovsky Komsomolets writes. Among those who rubbed shoulders were former oppositionists from the Internet community called Pskov’s Dead Roads, who used to organise Marches of Empty Canisters and later on, all of a sudden, became very friendly with Governor Andrei Turchak. He allowed the Internet users to participate in design of road repairing. Former oppositionists asked prime minister about two things: first of all to order finalising construction of the circle road and secondly, to let them and their colleagues to join the people’s front coordination council. The United Russia experienced difficulties without the front, the Novye Izvestia refers to political analysts, as the emerging situation resembles the one before the parliamentary elections of 2007. “Now, like it was in 2007, the task to be solved is the same: how to focus the voters not on the contradicting brand of the United Russia, which reputations is not straightforward, but on the “Putin” project. In 2007, there was a movement For Putin headed by lawyer Pavel Astakhov, which were to add votes for the United Russia. And now there is some nominal above-the-party quasi structure, which should make it clear to anyone: even if you do not like the United Russia, you should anyway vote for it, as thus you vote for Putin and the Front,” Head of the National Strategy Institute Stanislav Belkovsky says. The experts believe that the Front will provide not many additional votes, but, should it be necessary, will explain many falsifications during the elections. X X X Russian investments fail to rescue Belarus rouble Belarus National Bank on Monday announced about a formal exchange devaluation of Belarussian rouble. The country’s authorities lowered the official rate of the local currency by about a third, and yet it remained higher than the /market/ one. Refusal from implementation of the IMF recommendations has cost unexpectedly much for Belarus, analysts say. The Kommersant writes that from early 2011 Belarus had two exchange rates – the official rate of the National Bank has remained until last day at 3-3.1 thousand Belarussian roubles for a dollar and devaluated gradually; the second one was formed in the inter-bank market and due to the shortage of currency and the National Bank’s refusal to sell it to banks, dropped to 8-9 thousand Belarussian roubles for a dollar. As of May 24, the National Bank nominated the rate of 4,930 Belarussian roubles for a dollar, and the rate of Belarussian rouble for Russian rouble was lowered – from 113.02 to 173.95. thus, refusal from following the January recommendations from the IMF mission in Minsk costs unexpectedly much for Belarus: IMF suggested to the National Bank devaluating Belarussian rouble by 20 percent, while the one-day devaluation of May 24 made 53 percent, and against the January 2011 rates of Belarussian rouble – by over 70 percent. The National Bank set a new “floating corridor” for Belarussian rouble – within twelve percent both ways from today’s rate. Anyway, as yet there are no grounds to suppose that the rate would stabilise soon. The National Bank’s refusal to support the rate followed the failure talks Belarus had on borrowings for the local economy from Russia: after the talks, Belarus’ government acknowledged that the nearest aid tranche from the EURASEC Fund the National Bank may hope for is 800 million dollars in June of 2011, but in any case this could not help the regulator. Earlier, Belarussian authorities said that they intend to make vital decisions regarding the foreign exchange market on Monday-Tuesday, the Vedomosti writes. At the same time, Minsk negotiated with Russia a loan of over three billion dollars from the EURASEC Anti-Crisis Fund. Belarus’ Prime Minister Mikhail Myasnikovich said that Minsk may receive the loan’s first tranche of 800 million dollars in summer, and the second one of over 400 million dollars – in autumn. Besides, Belarus hopes to earn 2.5 billion dollars from selling to its remaining share of 50 percent in Beltransgaz to Gazprom. X X X Barack Obama corrects his position regarding Israel The attempts to bring back the Jewish state within the borders of 1967 may cause a new war in the region, Russia’s media write, adding that anyway the US president had recouped himself already and reconciled with Israel. The scandal in relations between the USA and Israel which outburst following the president’s Arab Spring speech, which he delivered on Thursday, was put out by Barack Obama himself, the Kommersant writes. To do so, he used another speech – at the annual forum of a respected American-Israeli organisation, the AIPAC (The American Israel Public Affairs Committee), where he was present on Sunday. Barack Obama explained what he meant as he urged Israel to go back to the borders, which existed till the six-day Arab-Israel war of 1967. His initiative was misinterpreted both in the USA and Israel, he said, while his main message was that going back to the basic borders of 1967 may be made only “ by mutually agreed land swaps.” "By definition, it means that the parties themselves — Israelis and Palestinians — will negotiate a border that is different than the one that existed on June 4, 1967," Barack Obama said. Analysts say that different focuses made by President Obama in his last speeches on the Middle East, let every side in the conflict to interpret in future independently the initiative of the White House head. At the same time, the practical value of President Obama’s suggestion being questionable, he managed to keep his reputation both with Israel and Palestine. The old joke saying that the best remedy from a headache is a guillotine illustrates the best way the variant suggested by the USA President Barack Obama on the settlement of the Middle East conflict, the governmental Rossiiskaya Gazeta writes. Obama suggested to Tel Aviv using a centuries old option, which is fixed in many resolutions, adopted earlier by the UN Security Council and General Assemblies. Nevertheless, until now not a single American leader did not dare urge publicly to such a radical “circumcision” of Israel’s territory not to conflict the influential Jewish lobby in the United States. Obama did not fear a possible quarrel. Though, he might have no other choice. The situation in the Middle East is so changing by leaps and bounds that any delays with settlement of the Palestine-Israel conflict and organisation of a Palestinian state may cause most unpredictable consequences. The so-called democratic revolutions in Egypt and Tunisia, where new leaders’ elections are coming, most probably will emerge distinctive changes in foreign policies of those countries. And they will make a realistic threat for Israel’s security. If, sure, nothing is changed in the existing status-quo in the region. From the point of view of political PR, Obama has made a major move. But from the point of view of real politics – he suggested a settlement, which would not satisfy either of the conflicting sides. Neither the Jews or the Palestinians, the newspapers concludes. A Scarlet Letter for drug dealers: 24 May, 2011, 09:02Edited: 24 May, 2011, 11:44 Although Russian authorities are stepping up the war on drugs – for some progress has been lagging. Activists have taken the fight into their own hands – marking “sellers of death” with scarlet paint to serve as a warning to drug dealers.However, the vigilantes say the ends justify the means if it helps to save lives.It’s said that all is fair in love and war, and perhaps even more so in the war on drugs.Drugs kill 2.5 million people every year across the globe and almost 250 men, women and youngsters every day in Russia alone. Some are fighting their own controversial battle against the threat.Posing as customers, they arrange to meet drug dealers and, once they are satisfied that the suspect is a drug pusher?– they serve them with what is known as a “black mark,” something of a misnomer since the act of throwing a water-proof red dye in the individuals face leaves it red for three weeks. ?“People have to know their enemies, what they look like. Moreover, these people will be afraid to go out next time, because next time the police might be there, not just a “dye-attack”,” says anti-drug activist Daniil Shamanov. These activists are not alone in their unconventional methods of fighting against drugs in Russia.Their “colleagues” from the “Drug Free City” movement have been accused of torturing addicts after they used handcuffs to force them to kick their habit.? They have also been known to mark suspected drug dealers houses to shame them in the community. ?“It is our uprising against drug dealers. Do you think it’s better to sit at home and watch how the drug dealers are killing you? We managed to unite our forces and declare war on drug dealers,” says Evgeny Malyonkin from the “Drug Free City” movement. Sociologists say mob justice occurs when people become disillusioned with official efforts.? But the public taking the law into its own hands is an unwelcome trend.“There are a lot of enthusiasts, who are striving to eradicate this horrible evil by any means possible. But when their actions don’t comply with the law, the law is against them. For sure, we can eradicate this evil, but only by legal methods,” says Nikolay Kartashov, an official from the Federal Drug Control Agency. According the report by the International Narcotics Control Board, there are currently over five million drug users in Russia. This number has almost doubled in the last decade alone.Vast amounts of money is being blown on stemming the demand for drugs and treating addicts?– but statistics are gloomy to say the least. ?Moscow activists will continue to throw red dye into their “foes” faces – marking them?– to stop the menace which is threatening their country. The “marked” dealers, they say, will have to hide from the public for at least 3 weeks. Some are skeptical about their methods, others even accuse them of hooliganism, but the anti-drug vigilantes argue that their form of justice is worth it if it helps save even one life.Dangerous “Standards”: 24 May, 2011, 02:36Edited: 24 May, 2011, 02:36 Russia is ready for a constructive dialogue on the anti-missile system in Europe Yury Gavrilov The Russian General Staff is considering various counter-measures, in the event that the talks on the creation of anti-missile defense in Europe fail to yield any results.? The architecture of the future continental anti-ballistic missile (ABM) defense continues to be the stumbling block in the dialogue with NATO. Our proposal to legally guarantee that the system does not target Russia and other states involved in its creation still fails to find understanding among the alliance members.?? “First, an announcement was made about the development of the architecture of the ABM defense. At the same time, they are placing anti-missile facilities in Poland and Romania,” said Chief of the General Staff, Nikolay Makarov. “It seems that the ABM defense architecture has already been created and is being implemented as part of the global anti-missile defense of the United States. Then, what other ABM defense are we talking about? Statements that the Euro-ABM will not pose a threat to Russia do not make sense.”? According to some reports, the US AMB defense system currently incorporates more than 900 counter-ballistic missiles of various types. Our specialists argue that these interceptors are enough to repel any and all attacks coming from the so-called rogue states. However, the US is choosing to further develop the combat power of its anti-missile defense. Experts are drawing the conclusion that at this rate the US ABM defense arsenal could exceed the START-3 limitations within a few years.??????? The most dangerous fact is that the US and Europe’s planned deployment – particularly in the Baltics – of anti-missile Standard-3 systems and the creation of space infrastructure for their support, threatens the security of our strategic shield. The US will have a real chance to shoot down Russia’s inter-continental ballistic missiles. Clearly, that is something we cannot allow.? For obvious reasons, the General Staff is not disclosing any information regarding any counter-measures, especially because our military officials believe that the possibilities of the negotiations process have not been exhausted. Russia’s proposals for the construction of the Euro-ABM based on a sector principle and joint usage of some of the military facilities remain in effect.?? When President Dmitry Medvedev for the first time announced the idea of the sector construction of the Euro-ABM system, some suggested that he was referring to Russia’s willingness to shoot down all missiles that fly over our territory to Western and Eastern Europe, and NATO’s retaliatory obligations. For both parties, this suggestion seems, to put it mildly, rather strained. The fact is that any country which has missile defense forces will shoot down missiles as they approach their borders without any international agreements. National anti-missile systems were created precisely for this reason – to prevent such attacks, especially considering that determining whether the “blank” is aimed for your country or simply passing through is impossible. It would be another thing if the ABM systems of various countries were integrated into a single scheme. Then, there would be an exchange of information about missile launches from the territories of third countries and a general response algorithm. In this case, the principle of sector responsibility looks promising. It does not mean that each party will have two keys – one to its own systems, and another to the partner’s weapons. The means of destruction will remain in the sole jurisdiction of Russia and NATO. However, according to General Makarov, the Euro-ABM arsenal could be controlled from a single location.??? According to the former head of the General Staff of the Strategic Missile Forces, Viktor Yesin, the alliance could assume the responsibility of covering Western and Central Europe, and our country Eastern Europe. The general contribution towards peace in the continent will be the information received from satellites and radar stations that will warn of missile attacks. We have them in various parts of the country. For example, the radar system near St. Petersburg is able to monitor launches of inter-continental, operational-tactical, and tactical missiles from Spitsbergen to North Africa.????? The radars in Armavir and Gabala, Azerbaijan are able to detect launches 6,000 kilometers to the south. Not only is Iran in their field of view, but so is the vast territory stretching to Africa and the Indian Ocean. Clearly, the sectors of responsibility can only be demarcated on military maps. Hypothetically, there may be situations when it is easier to shoot down a foreign missile in the Polish skies with a Russian system, and a “bank” in our border region with NATO’s system. If it is decided to create a joint ABM defense system, military officials will be forced to consider such options as well.?? According to the head of our General Staff, Russia “is ready to go as far in discussing [the future architecture and issues regarding the management of the European anti-missile defense] as NATO is ready to do so.”Moscow museum puts Lenin's Jewish roots on display(AP) – 5 hours agoMOSCOW (AP) — For the first time ever, ordinary Russians can now see documents that appear to confirm long-standing rumors that Vladimir Lenin had Jewish heritage.In a country long plagued by anti-Semitism, such heritage can be a significant taint, especially for the founder of the Soviet Union who is still revered by many elderly Russians.Among dozens of newly released documents on display at the State History Museum is a letter written by Lenin's eldest sister, Anna Ulyanova, saying that their maternal grandfather was a Ukrainian Jew who converted to Christianity to escape the Pale of Settlement and gain access to higher education."He came from a poor Jewish family and was, according to his baptismal certificate, the son of Moses Blank, a native of (the western Ukrainian city of) Zhitomir," Ulyanova wrote in a 1932 letter to Josef Stalin, who succeeded Lenin after his death in 1924."Vladimir Ilych had always thought of Jews highly," she wrote. "I am very sorry that the fact of our origin — which I had suspected before — was not known during his lifetime."Under czarist rule, most Jews were allowed permanent residence only in a restricted area that became known as the Pale of Settlement which included much of present-day Lithuania, Belarus, Poland, Moldova, Ukraine and parts of western Russia.Many Jews joined the Bolsheviks to fight rampant anti-Semitism in czarist Russia and some were among the leaders of the Communist Party when it took power after the 1917 Revolution. Most prominent among them was Leon Trotsky, whose real name was Bronstein.But Lenin, who was born Vladimir Ilych Ulyanov in 1870, identified himself only as Russian. He took Lenin as his nom de guerre in 1901 while in Siberian exile near the Lena River.A brief period of promotion of Jewish culture that began under Lenin ended in the early 1930s when Stalin orchestrated anti-Semitic purges among Communists and hatched a plan to relocate all Soviet Jews to a region on the Chinese border.Ulyanova asked Stalin to make Lenin's Jewish heritage known to counter the rise of anti-Semitism. "I hear that in recent years anti-Semitism has been growing stronger again, even among Communists," she wrote. "It would be wrong to hide the fact from the masses."Stalin ignored the plea and ordered her to "keep absolute silence" about her letter, according to the exhibition's curator, Tatyana Koloskova.Lenin's official biography, written by his niece Olga Ulyanova, said his family had only Russian, German and Swedish roots.The letter from Lenin's sister became available to Russian historians in the early 1990s, but its authenticity was fiercely disputed. It was chosen for inclusion in the exhibit by Koloskova, who as director of the State History Museum's branch dedicated to Lenin is one of the most authoritative scholars on his life.The exhibition in the museum on Red Square, near the mausoleum where Lenin's body still lies, also discloses that he was in such misery after suffering a stroke in 1922 that he asked Stalin to bring him poison."He did not incidentally pick Stalin to fulfill this request," Lenin's youngest sister, Maria Ulyanova, wrote in a 1922 diary entry. "He knew Comrade Stalin as a steadfast Bolshevik, straight and devoid of any sentimentality. Who else would dare to end Lenin's life?"Initially, Stalin promised to help Lenin, but other Politburo members decided to turn down his request, the letter says. Trotsky, whom Stalin forced out of the Soviet Union, claimed in his memoirs that Stalin had poisoned Lenin.The 111 documents on display, many of them only recently declassified and all of them open to the public for the first time, give surprising insights into top figures of the Soviet Union. Men usually portrayed as stern and fearless are seen as sometimes whimsical, frightened and even despairing.One of the documents contains a desperate plea that Stalin received in 1934 from an arrested Communist leader, Lev Kamenev, whose real name was Rosenfeld."At a time when my soul is filled with nothing but love for the party and its leadership, when, having lived through hesitations and doubts, I can boldly say that I learned to highly trust the Central Committee's every step and every decision you, Comrade Stalin, make," Kamenev wrote. "I have been arrested for my ties to people that are strange and disgusting to me."Stalin ignored this letter, too, and Kamenev was executed in 1936.A slightly more humorous — but no less macabre — aspect of the exhibition is caricatures drawn by Politburo members.Nikolai Bukharin, a leading Communist ideologue, depicts Stalin with a giant, exaggerated nose and his trademark pipe. His portrayal of other Communists is also unflattering — one is shown as a White Army officer. The anti-Communist White Army, which was backed by Western powers, unsuccessfully fought Lenin's Red Army in a civil war from 1917-23.Prominent economist Valery Mezhlauk ridicules Trotsky as a Wandering Jew and depicts a finance minister hanging in an awkward position. In a handwritten note under the latter caricature, Stalin recommends that the minister be hanged by his testicles.The minister and both cartoonists were arrested and executed in 1938.The exhibition, which opened last week, runs through July 3.Swapping Jackson-Vanik for Magnitsky May 2011By Vladimir RyzhkovLast week, a group of 15 U.S. senators formally introduced a bill targeting Russians for human rights violations and corruption, including 60 officials connected to the jail death of Hermitage lawyer Sergei Magnitsky. The bill would ban them from entering the United States and freeze any U.S.-based assets.Chances are high that the bill will be passed. The sanctions against corrupt officials and criminals-cum-politicians could serve as a replacement for the Jackson-Vanik amendment that has long been in need of repeal. When U.S. Vice President Joe Biden met with Russian opposition leaders during his visit to Moscow in March, he told us that support was growing on Capitol Hill for new sanctions against Russian crooks and thieves that could replace the old Cold War-era law. An important precedent of this type was recently enacted in Europe. Swiss authorities froze a bank account and started an investigation into a former Russian tax official implicated in Magnitsky’s death. Relatively new anti-corruption legislation in the United States, Britain and a number of other European Union countries that are now in the early stages of implementation open up new opportunities for prosecuting Russians involved in corrupt dealings. It is inevitable that a conflict will erupt late this year or in early 2012 between Russian authorities and the Organization for Security and Cooperation in Europe — and in particular with its Office for Democratic Institutions and Human Rights. Four years ago, the OSCE refused to send observers to the 2007 State Duma elections because of conditions set by the Russian side. The Kremlin, the Foreign Ministry and Central Election Commission chief Vladimir Churov created obstacles like reducing the number of observers from 450 to 70 and prohibiting Russian citizens from acting as observers. Although United Russia swept the dubious elections, the party’s popularity now has fallen to a record low. That means the ruling authorities will have to resort to even greater shenanigans this year to ensure the same landslide results. They will most likely keep international election observers out again or make it impossible for them to ascertain what is really happening at the ballot boxes. A conflict is also brewing at the Council of Europe over Russia’s open non-compliance of commitments it undertook when it ratified European democracy and human rights conventions. The Russian government has recently suffered a series of highly embarrassing defeats in the European Court of Human Rights, including cases concerning former arms control researcher Igor Sutyagin and my disbanded Republican Party. In the near future, the court might make a ruling on the case concerning former Yukos CEO Mikhail Khodorkovsky. Considering that the Russian government loses almost all of the cases that come before the court, the outcome of this one is obvious. A defeat could lead to defeat in European arbitration courts, forcing the Kremlin to pay billions of dollars in fines and damages. The Russian government behaves like a hardened offender, paying fines to its citizens based on European court rulings and yet repeating the same offenses and refusing to change the law or its practices. The Council of Europe requires that court rulings be implemented and that poor laws and practices be changed.But Russian leaders like Constitutional Court chief justice Valery Zorkin have increasingly spoken of a “threat to Russian sovereignty” posed by the rulings and even of the possibility of withdrawing from the Council of Europe. They have voiced outrageous proposals to impose fees on filing appeals to the European court and prohibit appeals until after a ruling by Russia’s Supreme Court. Meanwhile, with 33,000 appeals pending, Russia leads all other countries in the number of cases put before the European court.Whether it comes through a new U.S. law, the OSCE or the Council of Europe, corrupt Russian officials are being served notice that the world is becoming less inclined to close its eyes to criminal activity in Russia. The rug is being pulled out from under their feet both in Russia and abroad.Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvy radio and is a co-founder of the opposition Party of People’s Freedom.National Economic Trends’11:34?24/05/2011ALL NEWSDollar's weighted mean rate up against rouble in "tomorrow" deals. Tass 105 MOSCOW, May 24 (Itar-Tass) The US dollar's mean weighted exchange rate against the Russian rouble in "tomorrow" deals climbed by 9.52 kopecks to 28.4370 roubles per one U.S. dollar in Tuesday’s unified trading session as at 11.30 Moscow time, the economic news agency PRIME-TASS reports. Since April 15, 2003 the Bank of Russia has set the dollar's official exchange rate against the rouble for "tomorrow" delivery on the basis of the weighted mean rate shown in the unified trading session (UTS) at 11.30 Moscow time. Foreign investment triples in Q1 , 24.05.2011, Moscow 12:29:05.Foreign investment in Russia more than tripled year-on-year to $44.3bn in the first quarter of 2011, the Federal State Statistics Service reported today.??????Cumulative foreign capital in the Russian economy stood at $301.1bn as of the end of March, which is 13.3% more than in the same period of the previous year. The share of direct investments and portfolio investments stood at 39.9% and 3%, respectively.??????The amount of Russia's cumulative investment in foreign countries amounted to $89.6bn at the end of March. The country allocated a total of $29.3bn in investments in Q1, up 29.3% year-on-year. The Netherlands, Cyprus, the USA, Switzerland, the Virgin Islands, the UK, Belarus, Hungary, Austria, and Armenia were among the key recipients of Russia's investments. Finance Ministry expects budget deficit of 1.0-1.4% of GDP this year BankMay 24, 2011According to Finance Minister Alexei Kudrin, this year's budget deficit is expected to reach 1.0-1.4% of GDP. This figure implies the government is projecting a breakeven oil price of $115-119/bbl, almost the same as our view.While the deficit range projected for this year is much better than the initially planned 3.6% of GDP, the breakeven level indicates the budget has become more sensitive to the oil price. The previous budget-deficit target for 2011, drafted under a $75/bbl oil price scenario, assumed a breakeven of $111/bbl, almost in line with last year's $109/bbl. The new range of 1.0-1.4% under an average oil price of $105/bbl for 2011 suggests a higher breakeven oil price of $115-119/bbl.Thus, the government has de facto confirmed our longstanding view that the budget breakeven oil price could reach $120/bbl this year. This assumes pensions will rise 20% rather than the originally approved 10%.Natalia OrlovaRussia seeks control of corporate foreign debt NovostiMay 23, 2011The Russian government, which provided some companies with financing to avoid losing assets used as collateral during the international financial crisis, has to find a way to curb private sector foreign borrowing, Deputy Finance Minister Sergei Storchak said on Saturday. "Efforts to solve the problem through managing (directors) at companies with state participation showed that this measure is not working," Storchak told a news conference. "Maybe because the official is alone and opposed by five, 10, 20 corporations, and it is impossible to solve the problem by direct measures. This is methodologically wrong,"Storchak said. The Finance Ministry wants to find a way to influence the situation in general, he said. "This could be reserve elements, or measures to make it less attractive for the corporate sector to raise loans abroad," Storchak said.Capital Outflow: 2Q11 Unlikely to Bring Relief BankMay 23, 2011The capital account revision in March from minus $4bn to minus $6bn and the disappointing $7.8bn outflow in April thwarted our previously positive BoP outlook for 2Q11. We see post-election policy risks as the key reason for the persistent outflows. Moreover, given the recent decline in oil prices and deterioration of global market sentiment, we expect the capital account to stay negative in 2Q11 and see considerable risks to our projections of a $5bn capital account surplus for the full year and YE11 RUB/$ rate of 29/$. April's $7.8bn capital outflow negative surprise Contrary to our expectation, high oil prices in April failed to translate into an improvement in the capital account. In addition to the $7.8bn capital outflow in April, the revision of 1Q11 is also negative. Given the downgrade of the March capital account figures from minus $4bn to minus $6bn, it now appears that in the last three months the capital outflow hovered at around $7bn a month. Surge in CBR reserves due to $9bn reserve repoOne of the reasons for our optimistic capital account forecast for April was the strong $21.5bn CBR reserves growth. However, the bank recently stated that $9.0bn of this was reverse repo operations. Together with the $3.7bn in CBR interventions and a likely $8.8bn revaluation effect, the reverse repo explains the reserves growth. Import growth remained strong in April at 44% y/yWe continue to see rapid import growth as a key risk to the current account. Imports rose 41% y/y in 1Q11, and the rate accelerated to 44% in April. We believe there is a high risk the current-account breakeven oil price will climb to $75/bbl this year from $50/bbl only a year ago. Oil price volatility in May hindering improvement in capital accountGiven the recent drop in commodity prices and deterioration in global market sentiment, we believe April's negative capital account does not bode well for 2Q11. We thus expect a capital outflow of at least $15bn in Q2 and see risk to our $5bn FY11 capital account forecast and YE ruble expectation of RUB29/$. Non-oil capital outflow key explanation, in our viewWhile other commentators believe that non-repatriation of oil revenues has been the key source of capital outflow, we do not share this view. First, the non-repatriated oil revenues of $7bn in 1Q11 are not higher than in 1Q10. Second, non- repatriated revenues would be reflected in higher tax arrears, which we do not see. Thus, we believe concern over tax policy and general economic trends are the main motives for non-oil businesses to move money abroad. Government intends to keep 34% payroll tax post-electionThe government recently stated it would leave the payroll tax unchanged for the majority of companies, a strong hint that budgetary issues are deepening. Given the budget breakeven oil price of $120/bbl, we believe the tax is unlikely to be lowered. The government's announcement contradicts President Dmitry Medvedev's request, and we believe business will remain wary of future tax trends. Import growth is still suspiciously highWhile we interpret the 44% import growth as corroborating the rapid 5.6% retail trade growth in April, we still have concerns over the quality of imports. While before 2008, imports accounted for 20-40% of the annual increase in consumption, in 1Q11 they accounted for 51%. We therefore still suspect that at least part of this import growth can be explained by capital outflow.Grain bans could be lifted in July: Mildly supportive for NCSP CapitalMay 24, 2011Event: Interfax reported yesterday (23 May) that grain export bans from Russia, which have been in force since August 2010, may be lifted on 1 July.Action: Potentially positive for Novorossiysk Commercial Sea Port (NCSP), in our view, but unlikely to be a major catalyst for the stock.Rationale: Before the export bans were introduced, grain volumes accounted for 10% of NCSP's turnover on a standalone basis. NCSP's volumes have continued to show negative growth YoY since the beginning of the year, depressed by low grain volumes, as well as weak crude oil prices (which continue to decrease, despite management's flat forecast for FY11) and a decrease in transport volumes for ferrous metals. If grain export bans are indeed lifted on 1 July (we note there has been some media speculation they will remain in force until the autumn), the increase in grain turnover should be supportive for NCSP's operations in 2H11, although we do not expect the stock to rebound significantly until uncertainty surrounding the sale of a 20% state-owned stake in NCSP is resolved. We believe this sale will be the main catalyst for the stock.Ivan KimBusiness, Energy or Environmental regulations or discussionsState may enter companies following new price caps 24, 2011Companies earn too little to finance capex. Energy Minister Sergey Shmatko has said that the government is concerned that utilities companies may not manage to finance capex requirements for asset upgrades, Interfax reported. The ministry plans to complete analysis of the situation by the end of the year, and may then request state support, as the state currently has cash, ac- cording to Shmatko. Follow-up tariff revision. As an example of companies not being able to cover their capex requirements, Shamatko cited MRSK Holding's RUB2.8 tln ($98 bln) renovation program, which is short of RUB500 bln ($17.5 bln). The deficit issue is made more pressing by the government's decision to limit end-user electricity tariff growth this year via the revision of tariffs for generation companies, distribution companies, and transmission companies. More risks across sector. The government's plans to limit utilities-sector tariff growth should result in shortfalls in companies' capex financing. To maintain the sector's reliability, state ownership may increase. In other words, there is a risk that while the state will provide companies with investment, it will also keep tariffs low. We see such state involvement as a potential risk to mi- nority shareholders.Severstal seeks USD 5bn debt financing; might be for Raspadskaya deal CapitalMay 24, 2011News: Vedomosti and RBC-Daily report today that Severstal is seeking USD 5bn debt financing, with part of it possibly needed to buy an 80% stake in Raspadskaya. According to Vedomosti, Severstal does not intend to buy the asset at a premium.Our View: Purchasing an 80% stake in Raspadskaya would be logical from the strategic point of view. It would allow Severstal to shift coking coal consumption from the high cost Vorkuta (cash costs well above USD 80/t in 1Q11) to the low cost Raspadskaya (estimated to average USD 30/t in 2011), although the latter would nevertheless need several years to recover.The short-term implications for Raspadskaya depend on the price that Severstal is ready to pay for the stake (as yet unclear). The entrance of an integrated steelmaker into Raspadskaya poses consolidation risks and the company's disappearance as a market story in the longer term. While Raspadskaya remains fundamentally attractive (and should the deal take time and the recovery go according to plan), the market will still have to recognise the earnings growth. However, that is not likely to happen until the 2Q11 trading update (July at the earliest).Yandex Said to Raise $1.3 Billion as Public Offering Prices Above Range Lee Spears and Justin Doom - May 24, 2011 6:01 AM GMT+0200 Yandex NV, the owner of Russia’s most popular Internet search engine, raised $1.3 billion in a U.S. initial public offering, pricing its shares above the sale’s marketed range, said a person with knowledge of the situation. The Moscow-based company sold 52.2 million shares at $25 each, said the person, who declined to be identified because the details aren’t public. Yandex had offered the shares for $20 to $22, according to a filing with the U.S. Securities and Exchange Commission. Yandex, whose IPO valued the stock at about twice that of Google Inc. (GOOG) relative to earnings, met increased demand as companies file for U.S. IPOs at the fastest pace in seven years. The offering also comes less than a week after Mountain View, California-based LinkedIn Corp. raised $405.7 million in its IPO, including an overallotment option. “Yandex has picked a great time for an IPO for a tech company,” said Anthony Moro, managing director and head of emerging markets at Bank of New York Mellon Corp., which has about $1.1 trillion in assets under management. “For the longer term, they’re in the right spot. They’re the Google of Russia.” Google trades at 13 times expected 2012 earnings, while Yandex’s shares were to be sold at a price equivalent to at least 23 times next year’s earnings, two people involved in the sale said this week. At least 230 companies have announced plans for U.S. IPOs so far this year, more than the same period in any other year since 2004, when 232 companies were on file, data compiled by Bloomberg show. Yandex, whose registered address is in The Hague, will list it shares on the Nasdaq Stock Market under the symbol YNDX. Morgan Stanley (MS), Deutsche Bank AG (DBK) and Goldman Sachs Group Inc. (GS) led the offering. To contact the reporters on this story: Lee Spears in New York at lspears3@; Justin Doom in New York at jdoom1@. To contact the editor responsible for this story: Jennifer Sondag at jsondag@. May 24, 2011 10:22OGK-2's IFRS net profit up 40% in Q1. May 24 (Interfax) - Generating company OJSC OGK-2 (RTS: OGKB) increased its IFRS net profit by 40% to 2.09 billion rubles in the first quarter of 2011 from 1.47 billion rubles posted for the same period of 2010, the genco said in its financial reporting.Ih(Our editorial staff can be reached at eng.editors@interfax.ru)Gazprom's power unit OGK-6 Q1 net income up 9 pct May 24, 2011 6:22am GMTMOSCOW May 24 (Reuters) - Gazprom (GAZP.MM)-controlled electricity producer OGK-6 (OGK6.MM) said on Tuesday its first-quarter net income increased 9 percent, year-on-year, to 982 million roubles ($34.49 million).Revenue rose 21 percent to stand at 14.6 billion roubles, with growth fuelled by an increase of the share of liberalised electricity market and higher average prices in the wholesale sector. (Writing by Lidia Kelly; Editing by Maria Kiselyova) ($1=28.47 Rouble) Russia's Cherkizovo Q1 net profit falls 42 pct May 24, 2011 6:07am GMTMOSCOW May 24 (Reuters) - Russian meat producer Cherkizovo (CHEq.L) (GCHE.MM) said on Tuesday its first-quarter net profit fell 42 percent, year-on-year, due to low prices following increased imports and a sharp rise in input costs. Net profit fell to $18.4 million from $31.9 million a year ago, despite a 16 percent increase in revenue to $308.2 million, the company said in a statement. (Reporting by Maria Kiselyova; editing by Lidia Kelly) MAY 23, 2011, 11:19 P.M. ETJ&J to Buy JB Chem's Russian brands DOW JONES NEWSWIRES STAFF Johnson & Johnson's Cilag GmbH International unit has agreed to acquire the over-the-counter brands of India's J.B. Chemicals & Pharmaceuticals Ltd. for about $260 million. The deal would see J&J boost its presence in Russia, the eighth-largest over-the-counter market, as it adds offerings such as Rinza, Russia's leading multi-symptom cough and cold brand, and Doktor Mom, Russia's No. 2-selling cough brand, it said. J&J will market the products in Russia and former Soviet republics and other countries. "Emerging markets continue to be an important growth opportunity," said Jesse Wu, worldwide chairman of the Johnson & Johnson consumer company group. The deal is expected to close by the middle of this year. The health-care conglomerate reported last month its first-quarter earnings fell 23% from a year-earlier period that was boosted by a litigation gain, while a series of product recalls continued to hamper sales growth. It also agreed to acquire medical-device maker Synthes in a $21.3 billion deal.23rd of May 2011 | 16:40 GMT | Daniel PatrascuGM to Increase Production in Russia the Russian automotive industry is proving that the predictions made about its evolution were not mere hearsay, the carmakers who are conducting business there are doing their best to keep up the pace with the booming market.Building on those predictions, big names of the industry, like American giant GM, are beginning to make audacious plans for the future, plans that no more than two years ago would have seemed like the insane gamble of an addict.By end of the decade, GM wants a considerable size of the Russian market share, so it now plans an increase in production in the country more than twice, to a total of 350,000 units each year. And it will do that, says GM, by only using the production lines and joint ventures it currently has in Russia.GM's main plant in the country, the one in St. Petersburg, will become the spearhead of the GM offensive, with a huge increase in production from 60,000 units to 230,000. The joint venture GM operates together with AvtoVaz will make up for the difference, increasing its output from 90,000 units to 120,000.According to Jim Bovenzi, GM Russia's managing director, despite the fact that the automaker has been looking into ways to boost its output, no other viable joint venture opportunities have been found (GM has some type of tie-up or another with Avtotor and GAZ as well). Also, in order to reduce the cost of the expansion plans, GM intends to buy no other operation in Russia.?GM Sets Russia Strategy May 2011VedomostiGeneral Motors approved its strategy for?Russia, which includes investments of?more than $1 billion over the?next several years, said GM Russia and?CIS general manager Jim Bovenzi.The?company will reach output in?the next few years of?up to?350,000 cars, most of?which will come from?its existing factory in?St. Petersburg. That factory has seen $300 million in?investment so far.GM currently has ventures with AvtoVAZ, where it makes the?Chevrolet Niva, and?GAZ, where it will make the?Aveo model. The?company said no new joint ventures are planned.Inter RAO names shareholders post-issue & CIS Energy NewswireMay 23, 2011The Federal Grid Company (RTS: FEES) (FGC) has become the biggest shareholder in Inter RAO (RTS: IRAO) following the latter's additional share issue with 20% of the shares, Inter RAO said in a presentation.The share issue was rounded off last week.The share issue diluted the stake owned by Rosatom from 45.1% to 13.4%. Vnesheconombank (VEB), which received 18.3% of Inter RAO in 2010, now owns 5.4%. The Russian Federal Property Agency (Rosimuschestvo) owns 14.8%.RusHydro (RTS: HYDR) which, like FGC, was snot a shareholder prior to the share issue, now owns 5.3%.Inter RAO subsidiary CJSC Inter RAO holds 30% temporarily, but this includes the 14.2% that MMC Norilsk Nickel (RTS: GMKN) is due to receive in the electricity company in exchange for the OGK-3 generating company.Inter RAO still has a number of deals to close for OGK-3 and some other assets, for which talks are ongoing. The closure of these deals will not affect the stakes now owned by the aforementioned shareholders, but the stakes of other minority holders will rise from 11.1% to 26.9%. Prior to the share issue, minority shareholders owned 30.1%, including Gazprom (RTS: GAZP) with 6.5%.Gazprom's stake falls to 2% post-issue, however it could rise back to 5%-6% after the holding has used its own shares to pay for a new generating unit that Gazprom has built at the #2 Kaliningrad CHP plant, where Inter RAO already owns the first unit, Ilnar Mirsiyapov, Inter RAO's deputy chief executive, told a press conference.It was thought Gazprom's investment would be converted into a loan and that that Inter RAO would receive ownership of the unit once this had been paid off. Not the loan is off the agenda, and Gazprom will receive Inter RAO shares instead of cash, which will boost its stake in the company, Mirsiyapov said.As for RusHydro, Mirsiyapov said it and Inter RAO may swap their stakes back in time. He said Inter RAO would get around 10% of RusHydro by contributing 40% of Irkutskenergo to its charter capital. The holding is prepared to swap its own shares for shares in RusHydro, but RusHydro will be able to use cash in this transaction if the stake it receives will cost less than the Inter RAO shares.Inter RAO placed 6,822,972,629,711 new shares in order to consolidate assets in the power sector. This represents 49.44% of the total issue, or 13.8 trillion shares, at 0.0535 rubles per for a total of 365 billion rubles worth.As a result of the placement, Inter RAO share capital has increased 136% from 2,893,027,370,229 ordinary shares to 9.716 trillion (par value 0.02809767 of a ruble). Charter capital stands at 272,996,961,720 rubles.The additional placement began on February 3 this year and wrapped up on May 17. The bulk of the issue - more than 283 billion rubles - was paid for not with money, but with assets.The issue was placed in closed subscription, and the participants were Rosimuschestvo, FGC and RusHydro, which operates the majority of Russia's hydroelectric power plants, which gave Inter RAO stakes in power companies that were not sold off during the privatization of the old power monopoly RAO UES of Russia. Inter RAO subsidiaries were also involved in the additional issue, through which companies not on the closed-subscription list might take part in the issue.Inter RAO's major acquisitions resulting from the share issue were 82% of the OGK-3 (RTS: OGKC) genco, 72.45% of OGK-1, 58% of TGK-11, 32.44% of Volga Territorial Generating Company (RTS: TGKG), 26% of TGK-6 (RTS: TGKF), blocking stakes in Bashkirenergo (RTS: BEGY) and Enel OGK-5 (RTS: OGKE), 40% of Irkutskenergo (RTS: IRGZ) and controlling stakes in five power sales companies, among them Mosenergosbyt (RTS: MSSB) and Petersburg Sales Company (RTS: PBSB).But Inter RAO wanted more. The holding's management has spoken about its intention to consolidate assets worth $9-$15 billion. Negotiations have been held over the purchase of 96% of OJSC Novosibirskenergo (RTS: NVNG) from businessman Mikhail Abyzov, 50.5% of RusEnergoSbyt LLC from Grigory Berezkin's ESN Group, and 49% of CJSC Northgas from Farkhad Akhmedov. Until recently, negotiations were being held for 50% plus one share in EnergoMashinostroitelny Alliance (EMAlliance), one of Russia's largest power-machine building companies, but that deal has fallen through. It was reported recently that head of the group Onexim Mikhail Prokhorov might sell Inter RAO a stake in OJSC Quadra (RTS: TGKD), but that was not confirmed. Inter RAO is offering to pay for the assets with its own additional shares, but that is not to the liking of many of the sellers.Boris Kovalchuk, the chief executive of Inter RAO, told reporters on May 23 that the company had now decided against buying the shares in Novosibirskenergo, Rusenergosbyt and Rusenergoresurs.Inter RAO has also decided not to buy TGK-14 as besides EMAlliance, he said.The deals fell through because a price could not be agreed for the assets.Inter RAO is thinking of buying Yantarenergo, which operates in the Kaliningrad region's isolated grid, from the Inter-District Grid Company Holding (IDGC Holding). "We can own the networks because this is an isolated grid," Kovalchuk said, recalling the legislative ban on combining power generation and distribution.IDGC Holding is spinning Yantarenergo's power sales division off and the deal to acquire the asset could be closes in three or four months. Kovalchuk said Yantarenergo also ha some generating capacity and that this could also be consolidated in time. He said Inter RAO's interest in the company was due to its considerable presence in the region.Pr(Our editorial staff can be reached at eng.editors@interfax.ru)Goldman Finding Third Time a Charm as Blankfein Courts Kremlin, May 23, 2011May 24 (Bloomberg) -- Goldman Sachs Group Inc. is making a third attempt in 17 years to crack the Russian market, this time by leveraging a $1 billion private-equity bet to win deals and wooing the Kremlin for roles in asset sales.The effort is paying off. The firm has jumped to second place in advising on Russian mergers and acquisitions this year, behind Morgan Stanley, after failing to make the top three for more than a decade, data compiled by Bloomberg show. It has also secured pledges from companies including Mail.ru Group Ltd. and Tinkoff Credit Systems to arrange equity and Eurobond deals in return for investing more than $1 billion of its own money.The bank, led by Chief Executive Officer Lloyd Blankfein, who visited Russia twice in the past year, struggled after opening its first office in Moscow in 1994. It scaled back soon after as part of a worldwide retrenchment, returned in 1998 weeks before Russia defaulted, withdrew almost entirely after the crisis and ramped up again in 2006. Since then, the firm has more than tripled its workforce in Moscow to 150."The old perception of Goldman Sachs in Russia is that we haven't been consistent in our efforts in this country," said Christopher Barter, co-head of Goldman Sachs in Russia, in an interview in Moscow May 12. "This is not the reality today."Advising MedvedevGoldman Sachs, the fifth-largest U.S. bank by assets, jumped to fourth place in handling equity sales for Russian companies last year, its highest position ever, behind VTB Capital and Renaissance Capital, both based in Moscow, and Morgan Stanley. The company has underwritten the third-largest amount of foreign debt this year, up from 13th place in 2010.While Goldman Sachs has been slower to expand in Russia than rivals such as Deutsche Bank AG and Credit Suisse Group AG because of concerns about the integrity of financial markets, it may become a co-investor alongside a new $10 billion state-owned private-equity fund, according to two sources familiar with the matter. Blankfein, 56, who along with other bank executives is advising Russian President Dmitry Medvedev on transforming Moscow into a global financial center, is also pushing to win mandates for the Kremlin's $30 billion privatization program.The key to success has been private equity, according to Barter, who called it "a major differentiator."Goldman Sachs, based in New York, has made more direct investments in privately held Russian businesses than any foreign bank, buying stakes in 15 companies totaling more than $1 billion since 2007, Barter said. The firm's four private- equity bankers in Moscow made the purchases on the condition that Goldman Sachs get mandates later, according to a person familiar with the deals who asked not to be identified because he wasn't authorized to speak about them.Mail.ru Stake"That has been a magnet for companies wanting pre-IPO financing," said Barter, who has worked for Goldman Sachs since 1993 and became co-head of the Moscow office in 2007. A Russian speaker, he shares the job with Jean Raby, a French-Canadian who relocated to Moscow in January from Paris, where he headed operations, and is just learning the language.Goldman Sachs's investment in Moscow-based Mail.ru helped the bank score a role in the Russian internet company's $912 million initial public offering in London in November. The stock surged as much as 41 percent on its first day of trading as the IPO was more than 20 times oversubscribed. Goldman Sachs has since helped Mail.ru founder Yuri Milner, CEO of Russian venture-capital firm Digital Sky Technologies, and his partner, Alisher Usmanov, raise $1 billion to finance future investments.'Global Behemoth'"DST is an amazing case study," said Barter, whose first client in Russia was Milner, 49. "Something really small and unknown in Russia that develops into something truly entrepreneurial, and then grows into a global behemoth by focusing on the Internet and not the commodity space."DST Global, Milner's first fund, owns about 10 percent of social-networking company Facebook Inc., based in Palo Alto, California. He and Usmanov have backed some of Silicon Valley's fastest-growing businesses. They led a $135 million investment last year in Groupon Inc., the largest provider of online daily deal coupons, and were part of a group that put $180 million into Zynga Game Network Inc., a social-gaming service, in 2009.Goldman Sachs raised $1.5 billion for Facebook in January in a round of financing that valued the firm at $50 billion.Along with Deutsche Bank and Morgan Stanley, Goldman Sachs is also managing this week's IPO on the Nasdaq Stock Market for Yandex NV, the owner of Russia's most popular search engine.Private-Equity Fund"Goldman is a credible player in Russia, and now it has individual success stories like Mail.ru to showcase," said Kirill Dmitriev, a former Goldman Sachs banker appointed May 18 to run the government's $10 billion private-equity fund.The bank also acquired a stake in Tinkoff, a Moscow-based credit-card issuer, in 2007, according to two people familiar with the matter. Goldman Sachs and Citigroup Inc. managed the sale of $175 million of Tinkoff bonds in April. Barter declined to discuss the firm's clients, and Oleg Tinkov, the owner of the company, couldn't be reached for comment.The same month Goldman Sachs also managed the sale of $1 billion of 10-year bonds for Alfa Bank, Russia's biggest private lender, and $850 million of Eurobonds for Evraz Group SA, the country's second-largest steelmaker.Foreign private-equity companies, except Forth Worth, Texas-based TPG Capital, have avoided Russia, which remains a difficult place to do business. The country is the world's most corrupt major economy, according to Berlin-based Transparency International's 2010 Corruption Perceptions Index. It ranked 154th among 178 countries, tied with Tajikistan and Kenya.Investor 'Uncertainty'"There's political uncertainty for investors ahead of next year's presidential elections, but also uncertainty about reasonable investor interests being upheld in many cases," said Richard Hainsworth, CEO of RusRating, an independent credit- ratings firm in Moscow.David A. Viniar, Goldman Sachs's chief financial officer, expressed similar concerns to investors in February 2006, four months before Blankfein was appointed chairman and CEO, saying it isn't "clear to us that the Russian authorities are as set on turning the financial markets into modern financial markets with the rule of law as the Chinese authorities are."Goldman Sachs first did business in Russia in 1926, when Western banks, including many from the U.S., helped the Communist government raise cash for rural electrification and other projects. The window closed in 1929 when Josef Stalin consolidated power and the U.S. stock market crashed.1994 OpeningThe 142-year-old firm didn't open an office in Russia until 1994, after the collapse of the Soviet Union, only to pull back in a global retrenchment. The bank returned in June 1998, weeks before the Russian government defaulted on ruble debt, causing hundreds of millions of dollars in trading losses for securities firms worldwide. While the company maintained a representative office in Moscow after the default, it significantly scaled back operations, according to a person familiar with the matter."They didn't see how they could make money then," said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow. "Goldman has been accused of many things, but it has never been confused with a charity. It's always all about making money, and Russia is no different."Not long after Blankfein took over in June 2006, he sent David Schwimmer, his Russian-speaking former chief of staff, to Moscow to help run investment banking. The firm won approval that year to become a stand-alone broker-dealer and opened an office in 2007 to accommodate securities sales and trading. In 2008, it got permission to set up a bank.Letter to PutinBlankfein has been courting the Kremlin since at least April 2007, when he wrote to then-President Vladimir Putin seeking a meeting to discuss expanding operations. He told investors in New York in June 2007 that the firm couldn't afford to miss opportunities in Russia and other developing economies."If you forgo the opportunities in emerging markets, you're putting your global franchise at risk," Blankfein said at the time, acknowledging that he had built his career "in part on not being seduced by certain fads of people investing in emerging markets."The bank's board of directors travelled to Russia in June 2008 for a four-day meeting split between St. Petersburg and Moscow. The trip included a tour of the State Hermitage Museum, a private session with Putin and a speech by former Russian leader Mikhail Gorbachev, according to an account in Andrew Ross Sorkin's book about the 2008 global financial crisis.BRIC CapitalToday, deploying capital to the so-called BRIC countries -- Brazil, Russia, India and China -- is a priority for Goldman Sachs's securities division, Barclays analysts wrote in a research note on May 11 after meeting with Viniar and David B. Heller and Harvey M. Schwartz, two of four co-heads at the bank's securities unit.Part of the allure for foreign investment banks is advisory work on the government's plan to sell $30 billion of assets by 2015 to replenish state coffers and improve corporate governance. The Kremlin is auctioning companies including OAO Sovcomflot, Russia's biggest shipper, and OAO Russian Railways, the rail monopoly, to help cover a budget shortfall it sees at about 1 percent of gross domestic product this year. It expects privatizations to generate about 1 trillion rubles ($32 billion) in the next three years.Russia's last major IPO of a state-owned company was in 2007, when VTB Group, the country's second-biggest lender, raised $8 billion. Goldman Sachs, which worked alongside Deutsche Bank and New York-based Citigroup on the offering, was selected with 22 other lenders to be an adviser on the new round of asset sales.'Greater Opportunity'"Banks, such as Goldman, will have a considerably greater opportunity to earn fees from deals and advisory work than was the case over the past 10 years," said UralSib's Weafer. "The next government will have to accelerate efforts to make the economy more efficient and to raise investment spending to create new industries and to improve infrastructure. Otherwise the country faces a much slower growth outlook and, potentially, a risk of social instability."Russia will emerge from the global financial crisis by 2012 and must double productivity over the next decade to achieve its goal of becoming one of the top five economies, Putin, now prime minister, said on April 20. The economy expanded 4 percent last year, rebounding from the worst recession since the Soviet era. It contracted 7.8 percent in 2009, in the wake of the global credit crunch, after posting an average annual growth rate of almost 7 percent from 1999 to 2008.Deutsche Bank FaltersWhile investment-banking competition has stiffened with the emergence of domestic players such as VTB, Goldman Sachs is doing better than Deutsche Bank, which has regressed since 2007, when it was the top manager of equity sales in Russia, second in M&A and third in Eurobonds. VTB, which created a brokerage in 2008, has hired more than 100 people from its German rival. Last year, Frankfurt-based Deutsche Bank was sixth in equities and M&A and seventh in Eurobonds.Andrew Chulack, head of global banking at Deutsche Bank in Russia, said his company is "well-positioned" and had regained momentum following the financial crisis. Deutsche Bank is the second-biggest manager of equity deals this year, having worked on a $640 million IPO for Nomos Bank and VTB's $3 billion share sale. In the Eurobond market, its bankers are in seventh place.VTB's emergence hurt domestic banks more than foreign ones, Chulack said.'Good Niche'"VTB has a good niche, is very well-positioned locally, but is not a direct competitor to us or other foreign investment banks on deals," he said.Renaissance Capital, a Moscow-based investment bank half owned by billionaire Mikhail Prokhorov, declined to comment, as did Troika Dialog, Moscow's oldest brokerage, which is being acquired by OAO Sberbank, Russia's largest lender."The independent banks were under pressure because they didn't have big balance sheets," said Rustam Botashev, deputy head of research at UniCredit SpA in Moscow.Morgan Stanley and Zurich-based Credit Suisse have both profited in Russia because of consistent commitment and strong leadership, RusRating's Hainsworth said."A great deal of work here is down to relationship with the company or the oligarch," he said.Last year was the biggest for Russian M&A since 2007, helped by 96 deals worth $50.9 billion in the fourth quarter alone, according to Bloomberg data. Goldman Sachs, second to New York-based Morgan Stanley last year, advised on 21 deals worth $36 billion, including Wind Telecomunicazioni SpA's $6.5 billion merger in April with VimpelCom Ltd., Russia's third-largest mobile phone operator.The bank is currently advising Russian potash producer OAO Uralkali on its $7.8 billion acquisition of rival OAO Silvinit.Bond-Sale FeesManaging bond sales helps banks to increase their role in other revenue-generating businesses, including trading the debt and providing borrowers with hedging instruments and loans. Fees from debt origination account at most for about 2 percent of banks' revenue, according to Mark Rubinstein, deputy head of research at IFC Metropol in Moscow.Banks get lower fees for underwriting ruble bonds compared with sales in the U.S. Underwriters charge between 0.05 percent of the issue and 0.15 percent for the most creditworthy issuers, and as much as 0.2 percent for "second-tier" companies, said Evgeny Vorobyev, a fixed-income analyst at Otkritie Financial Corp., a brokerage in Moscow partly owned by VTB. The rates compare with average fees of 0.593 percent for U.S. corporate bonds sold this year, data compiled by Bloomberg show.Goldman Sachs, which has an offshore Russian wealth- management unit in London, plans to hire more personnel in the Russian capital, according to Raby, co-head of the office there.Hainsworth, a former Renaissance Capital banker who has worked in Russia since 1981, remains skeptical about the bank's prospects, notwithstanding its recent advances."Each time, Goldman has come with a big fanfare and said they were committed before turning on their tails and running," he said.--With assistance from Brad Cook in Moscow, Anne-Sylvaine Chassany in London and Christine Harper in New York. Editors: Robert Friedman, Peter EichenbaumActivity in the Oil and Gas sector (including regulatory)24.05.2011Russia to Ask EU to Consider South Stream Extension of its Pipeline –Shmatko will propose that the European Union consider the South Stream pipeline to be an extension of Russian international pipelines, which will make it possible to avoid allowing third parties to access to it, Russian Energy Minister Sergey Shmatko told journalists. He noted that a presentation of the South Stream pipeline will be held on May 25 in Brussels at the European Commission. He stressed that Russia intends to achieve the status of a European project for the pipeline and resolve a number of issues within the framework of the third energy package for the EU. Shmatko explained that Russia will find a way to fulfil the conditions of the third package on separating the owners of raw materials and the infrastructure used to transport them."We are mostly concerned by the fact that we are building large international gas pipelines but are unable to sign long-term contracts even though the Europeans themselves are interested in long-term contracts", eh said. Copyright 2011, 1news.az. All rights reserved.24.05.2011Zaruvezhneft, Janaf Set Up JV for Croatian Geological Surveys on Adriatic Shelf and the Croatian company JAnaf have signed a memorandum to set up a joint enterprise to conduct geological surveys and produce hydrocarbons in Croatia, the Russian Energy Ministry has reported. The document envisions the sides cooperating to conduct geological studies and carry out projects invaliding crude production in Croatia both on-shore and off-shore on the ADriatic shelf.Russian Energy Minister Sergey Shmatko said, "In light of the large significance that Russia give the development of cooperation in gas with the European Union, as well as to improving reliability and diversifying gas supply routes, Russia is interested in building a gas terminal on Krk island. This project would make it possible to establish a new centre of gas in the south of Europe".Zarubezhneft currently uses Janaf pipelines to pump oil through the Omishal port to its Bosanskiy Brod refinery.Copyright 2011, Oil and Gas Information Agency. All rights reserved.ChTPZ supply 25000 tonnes of steel pipes for Caspian pipeline in April-July, 24 May 2011In the April and July period of the current year, Chelyabinsk Tube Rolling Plant, a leading Russian producer of welded and seamless steel pipes and tubes will supply 25,000 tonnes of large diameter pipes to Caspian Pipeline Consortium.In particular, steel pipes of 1,020 mm diameter with 10.6 mm and 12.5 mm wall thicknesses of X65 steel grade produced by ChTPZ will be supplied according to the contract which was signed at the end of last year. In the April-May period of the current year, ChTPZ has already shipped 5,400 tonnes of large diameter pipes to the customer in question.(Sourced from Steel Orbis)Visit for moreGazpromGazprom agrees on slower rise in gas prices 24, 2011Russia's Energy Minister Sergei Shmatko stated yesterday that Gazprom had agreed to slow the rate of conversion of Russian domestic gas prices with European prices on a netback basis, saying it should depend not upon external factors, but Russia's economic situation. No further details were provided. The target date for netback parity has been moved back repeatedly over the years: In 2007 the target was 2011, but moved to 2014 after oil prices (and the parity level) rose sharply. This year the 2014 date was moved to 2015.Our take: While the target date has moved repeatedly, the absolute level has climbed inexorably (in ruble terms), and nearly so in dollar terms (the exception being 2008-09 when ruble weakness set back the dollar equivalent for a while). It seems that Mr. Shmatko is indicating it may have been moved another year or two. However, with oil prices at $100/bbl, the netback parity target is harder to hit. We are also in the run-up to a major election, set for the spring of 2012. Therefore, issues such as inflation are getting more than the usual amount of attention. We expect tariff growth to return to robust levels, if less than the previously planned 15% annual rate, next year after the election has passed.Ron Smith ................
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