Russia - WikiLeaks
Russia 100218
Basic Political Developments
• RIA: France expects Russian decision soon on buying Mistral warship - "The company is interested in cooperation with Russia. Now we are waiting only for a political decision. We believe we'll receive an answer from Moscow soon," Benoit de la Bigne, a DCNS executive, said.
• Focus: Missile defense not a threat to U.S.-Russia "reset" [pic][pic][pic]- "We still have a long way to go. Skepticism in Russia is still deeply entrenched. And we've seen it in public statements in recent weeks. But we'll continue to engage," Vershbow said.
• Reuters: Missile defense not a threat to U.S.-Russia "reset" - Alexander Vershbow, assistant defence secretary for international security affairs, said that Washington had not asked Bulgaria to host any missile shield elements so far. He added that Moscow knew last year Romania was a possible site.
• Itar-Tass: Russia-US START talks enter home stretch – Tauscher: Speaking at a disarmament conference in Alexandria, Virginia, on Wednesday, she said some “principles and elements” remained to be agreed. Russian Ambassador to the United States Sergei Kislyak, who spoke after Tauscher, said he agreed “almost with every word” she had said.
• The Hill: START is key to reducing the nuclear threat - By Matthew Rojansky and James. F. Collins
• Kyiv Post: Belarus waiting for Russia's decision on low altitude radar system - "The program was drafted as a follow-up to documents on the establishment of a common air defense system of the union state," Anatoly Vankovich, head of the security, defense and crime resistance commission of the Parliamentary Assembly of the Russia-Belarus union, told the press in Minsk on Feb. 17.
• Russia Today: Countries look to benefit from Customs Union - Slowly but steadily the Customs Union between Russia, Kazakhstan and Belarus is taking shape. In addition, it is becoming an attractive trade zone for its neighbors, including Tajikistan, Kyrgyzstan and Ukraine.
• Ferghana.ru: Russian diplomat: The loan, allocated to Kyrgyzstan, is not used according to its purpose - $450 million loans, provided to Kyrgyzstan by Russia under the agreements, reached in February of 2009, have not been used according to its purpose, Vitalyi Skrinnik, the first secretary at the Russian Embassy in Bishkek, informed Eurasianet.
• RIA: U.S. okays Russia's intention to help Mexico fight drug criminality
• Sakaal Times: MiG 29 to be inducted today - The fourth generation Russian-origin jet fighter aircraft, MiG-29K, which would be used for carrier-based operations, would be formally inducted into the Indian Navy on Friday in presence of Defence Minister A K Anthony on Friday.
• Interfax: Primorye sanitary services reject poultry shipment from U.S.
• President.lt: Russian President Medvedev speaks out for closer relations with Lithuania - "I am grateful for the invitation to the celebrations of the 20th Anniversary of the Reestablishment of Independence of the Republic of Lithuania. I would like to extend my congratulations on this anniversary and to wish you and the people of Lithuania every success," President Medvedev wrote in his message of congratulations.
• News.az: NATO slams Russia-Akhazia agreement - “We insist that Russian military troops pulled back to the territory they occupied before August 8, 2008. Besides, international observers should be admitted into the conflict zones,” Romero said.
News.az: Georgia to demand billions from Russia for Abkhazia, South Ossetia
• Financial Times: Moscow tightens grip on Abkhazia
• Expert Club: Abkhazia removes restrictions for Russians to buy real estate
• The Moscow Times: Government Raises Foreign Aid 4-Fold - "Russia allocated $800 million from the federal budget, according to preliminary estimations, in order to provide aid to developing countries," Kudrin said Wednesday. "Meanwhile, $220 million were allocated for these purposes a year earlier."
• Interfax: Russian religious organizations likely to gain right for state help
• The Moscow Times: Kremlin Hosts U.S. Innovation Team
• Itar-Tass: US authorities file new charges against RF citizen Viktor Bout
• CBS: New Charges for "Merchant of Death"
• Interfax: Christopher Bryant: Our intent towards Russia is entirely peaceful - British Minister of State for Europe Christopher Bryant has given an interview with Interfax in which he discussed EU-Russian and British-Russian visa arrangements, criticized Russia’s new military doctrine, and pledged not to stand in Ukraine’s way to the European Union.
• Interfax: Russian Muslims set up Supreme Coordinating Council
• RFE/RL: British Lawmaker Praises Human Rights Groups In Chechnya
• The Moscow Times: Yamal Governor To Leave Office
• Russia Today: Climate chaos continues: who’s at fault? - “Russia is not an environmentally friendly country at all. Polls have shown that most people – 60% – agree with us, which means it's important to understand that every environmental initiative has a price. I asked whether they are ready to pay, let's say a thousand dollars a year, for a better environment, and most people say no.”
• Reuters: At least one dead in Russia mine collapse - One person was killed on Thursday when part of a potash mine collapsed near the Urals mountains city of Perm, said a spokesman for the mine's owner, Uralkali
• AP: Quake rocks China-Russia-North Korea border region
• Reuters: Powerful quake hits near China-Russia border
• Wharton.upenn: Taking the 'R' out of BRIC: How the Economic Downturn Exposed Russia's Weaknesses - The shortcomings of Russia's ruling political and business elite are by now well known. What's more, the warning signs of more economic trouble ahead are growing -- for example, the increasing rate of non-performing loans on Russian banks' balance sheets. Experts say that strong leadership would be required now to stabilize the financial situation and, more than anything, to encourage foreign investment and management expertise to help steady Russia's economy. But the prospects of that happening soon are slim. For the time being, according to Henisz, "the path forward is looking a little darker" for Russia.
• Russia profile: The Villain of the Villa - Is the Latest Attack on Moscow’s “Illegal” Construction Conscientious Enforcement of the City Laws and Protection of the Urban Environment or a Cynical Land Grab?
National Economic Trends
• BNE: Central Bank considering interest rate cut - CB First Deputy Chairman Alexei Ulyukayev in an interview with Interfax today February 18, 2010 said that Russia's stable macroeconomic situation may permit the Central Bank to cut its refinancing rate.
• Reuters: Russia c.bank buys $1.4 bln as rouble firms-dealers
• Reuters: Russia c.bank moves floating rouble band to 34.95
• Cbonds: Moscow set to review Eurobond placement option no earlier than 2011
• Market Watch: Russia gears up for its first foreign bond sale since 1998
• Interfax: Banks have 525.0 bln rbs on CBR correspondent accounts on February 18
• The Moscow Times: No More Bailouts for Banks
Business, Energy or Environmental regulations or discussions
• Bloomberg: Gazprom, Norilsk Nickel, Polyus Gold: Russia Stock Preview
• Bloomberg: Hong Kong’s Exchange Sees Up to 10 Russian IPOs in Coming Years
• Bloomberg: Rusal Falls for Fourth Day, Declines 30% Since Hong Kong IPO
• VTB: RusHydro prepares to re-launch two units at Sayano HPP as early as next week
• RenCap: Alfa Bank agrees GAZ Group debt restructuring
• Bloomberg: PPF Buys 50% of Eldorado From Founder Yakovlev, Vedomosti Says
• Prime-Tass: INTERVIEW: Euroset aims for higher margins, stronger customer loyalty
• VTB: Russian government to consider tax benefits for Russian software producers
• Trading Markets: Rosbank-Societe Generale Vostok merger agreed upon
• Fitch Ratings Upgrades Russian Diamond Producer ALROSA to ‘B+’
• The Moscow Times: Polyus’ Capital Spending
• Alfa: Polyus seeks partners for Yano-Kolimskaya
• PR Log: Eight Russian Brands Included In World’s 500 Most Valuable Brands - Sberbank has reinforced its position as Russia’s Most Valuable Brand according to an annual survey of the world’s 500 most valuable brands published by Brand Finance plc, the world’s leading brand valuation consultancy.
• Reuters: EBay CEO says open to Russia JVs, acquisitions
• The Moscow Times: Sberbank’s Kyoto Tender
• Bloomberg: Russian Investor Barred From Saab Provides Financing for Spyker
• Bloomberg: Firestone Flees Moscow ‘Mafia’ Police as Browder Affair Widens
• The Moscow Times: RenCap Taps Blackrock Exec for Funds
• Stuff.co.nz: Kiwi returns to revive his Moscow bank
Activity in the Oil and Gas sector (including regulatory)
• VTB: Federal Anti-Monopoly Service develops new rules for accessing crude pipelines
Portfolio.hu: Surgut receives bid for 21% stake in Hungary's MOL – paper
• Financial Times: Moscow raises environmental heat on TNK-BP
• Telegraph: Russia to seize Kovytka gas field from BP venture
• UpstreamOnline: TNK-BP to invest $180m in Venezuela
• Reuters: Novatek plans to ship LNG via Arctic Ocean
• BarentsObserver: Timan-Pechora oil more important for Lukoil
• WSJ: Russian Pipeline Raises Competition in Asia - Newly Built ESPO Feeds Siberian Crude to Growing Markets in the East, Putting Arab Producers on Defensive
• Rigzone: Matra Recommences Appraisal Drilling in Russia
• Rigzone: Tatneft Implements Corrosion Protection Project
Gazprom
• Novinite: Romania Tells Russia It Wants to Be Part of South Stream
• RIA: Gazprom receives South Stream documents from Romania
• Reuters: More Romania, Gazprom gas storage talks in March
• Barentsobserver: Shtokman LNG can be re-routed to Europe
------------------------------------------------------------------------------------------
Full Text Articles
Basic Political Developments
RIA: France expects Russian decision soon on buying Mistral warship
12:0918/02/2010
French naval shipbuilder DCNS said on Thursday it expected to receive a final answer from Russia soon on buying a Mistral-class helicopter carrier.
"The company is interested in cooperation with Russia. Now we are waiting only for a political decision. We believe we'll receive an answer from Moscow soon," Benoit de la Bigne, a DCNS executive, said.
The Russian military earlier announced that it was considering buying one of the Mistral-class amphibious assault ships, worth 400-500 million euros (around $540-$675 mln), and potentially building three or four vessels of the same class in partnership with the French naval shipbuilder DCNS.
A Mistral-class ship is capable of transporting and deploying 16 helicopters, four landing barges, up to 70 vehicles including 13 battle tanks, and 450 soldiers. The vessel is equipped with a 69-bed hospital and can be used as an amphibious command ship.
Many Russian military and industry experts have questioned the financial and military sense of the purchase.
Russia's current arms procurement program through 2015 does not provide for the construction or purchases of large warships, so the acquisition of a French warship is more likely under a new program, through 2020, which has yet to be developed.
The executive also said that India was displaying interest as well in buying a Mistral-class warship.
NEW DELHI, February 18 (RIA Novosti)
Focus: Missile defense not a threat to U.S.-Russia "reset" [pic][pic][pic]
18 February 2010 | 09:07 | FOCUS News Agency [pic][pic][pic]
Washington. Alexander Vershbow, assistant defense secretary for international security affairs, said that Washington had not asked Bulgaria to host any missile shield elements so far. He added that Moscow knew last year Romania was a possible site.
"So we don't believe that this was as big a surprise as it has sometimes been portrayed," he told Reuters.
Vershbow said Washington would continue to "lay down the facts" to convince Moscow that its missile defense plans were not aimed at Russia, and instead focused on countries like Iran.
"We still have a long way to go. Skepticism in Russia is still deeply entrenched. And we've seen it in public statements in recent weeks. But we'll continue to engage," Vershbow said.
Reuters: Missile defense not a threat to U.S.-Russia "reset"
Thu Feb 18, 2010 5:10am IST
By Phil Stewart
WASHINGTON (Reuters) - The United States has a long way to go before Russia overcomes deeply entrenched scepticism of its missile defence plans, but that does not threaten efforts to "reset" relations, a Pentagon official said on Wednesday.
Moscow has repeatedly demanded clarification from Washington as U.S. missile defence plans in Europe take shape, voicing surprise at Romania's February offer to host interceptor missiles.
News that Bulgaria expressed a willingness to also play a role further raised alarms.
Alexander Vershbow, assistant defence secretary for international security affairs, said that Washington had not asked Bulgaria to host any missile shield elements so far. He added that Moscow knew last year Romania was a possible site.
"So we don't believe that this was as big a surprise as it has sometimes been portrayed," he told Reuters.
Vershbow said Washington would continue to "lay down the facts" to convince Moscow that its missile defence plans were not aimed at Russia, and instead focused on countries like Iran.
"We still have a long way to go. Scepticism in Russia is still deeply entrenched. And we've seen it in public statements in recent weeks. But we'll continue to engage," Vershbow said.
Asked what the U.S. might be able to do differently to assuage Russia, Vershbow said: "I don't think we have any new techniques. We will continue to engage, lay down the facts, try to address the Russian arguments on a substantive basis."
U.S. President Barack Obama rolled out a revised European missile defence strategy in September that focuses more on Iranian short- and medium-range missiles. U.S. officials have expressed hope that Russia might eventually play a role in the strategy.
Russia's most powerful politician, Prime Minister Vladimir Putin, and other officials have questioned the strategy and called it an obstacle to a successor to the 1991 START nuclear arms reduction pact, under negotiation for months.
COOPERATION ON IRAN
Vershbow rejected the argument, advanced by some analysts, that tensions over Obama's anti-missile system jeopardize efforts to reset relations with Moscow that were often strained under the Bush administration.
"While I think there are concerns that the Russians may raise going forward ... we don't think this is a threat to the reset," he said.
"There is a lot of good things going on in the bilateral relationship. So it's still a work in progress. But I think the reset worked and now we're trying to build a more cooperative, substantive relationship," Vershbow said.
He pointed to increased cooperation in a number of areas, including Iran, as Washington pushes for tough new sanctions over Tehran's nuclear program.
Russia -- which wields a veto in the United Nations Security Council -- has been deeply disappointed by Tehran's refusal to send uranium abroad for enrichment in Russia. The Kremlin said on Tuesday that Iran could face harsher measures if it failed to dispel fears about its nuclear program.
The United States has expanded land- and sea-based missile defence systems in and around the Gulf, in what Vershbow called "a deterrent, a potential defence against Iranian attacks."
"And I think this takes on new importance as the international community's efforts to persuade Iran to accept a political solution to the nuclear issue are running into difficulties and we're moving toward the pressure track, and in particular towards the preparation of (sanctions)," he said.
(Editing by Philip Barbara)
Itar-Tass: Russia-US START talks enter home stretch – Tauscher
17.02.2010, 22.00
WASHINGTON, February 17 (Itar-Tass) -- The U.S.-Russian talks on a new strategic arms reduction treaty (START) have entered the home stretch, Undersecretary of State for Arms Control and International Security Ellen Tauscher said.
Speaking at a disarmament conference in Alexandria, Virginia, on Wednesday, she said some “principles and elements” remained to be agreed.
Tauscher said the talks were on the home stretch and expressed confidence that the negotiating teams were working hard.
Russian Ambassador to the United States Sergei Kislyak, who spoke after Tauscher, said he agreed “almost with every word” she had said.
“Mind you, the nearer the talks to the end, the more significant every little detail becomes,” he said.
The Hill: START is key to reducing the nuclear threat
By Matthew Rojansky and James. F. Collins - 02/16/10 04:55 PM ET
The debate about a new nuclear arms control agreement between the United States and Russia has devolved into a tug-of-war in Washington between those who call it an essential first step toward global nuclear disarmament, and others who fear constraining American capabilities in a dangerous world.
With Presidents Barack Obama and Dmitry Medvedev expected to sign a final document within weeks, and ratification required to bring the treaty into force, the U.S. Senate is set to become ground zero in a contest between those on opposite sides of the administration’s broader nuclear agenda.
But arguments from both hawks and doves have missed an urgent point: that without a new treaty, Washington will be unable to manage the risks associated with Russia’s vast nuclear arsenal, which still poses the single greatest existential threat to the United States.
With around 4,000 deployed nuclear warheads, a staggering 1,000 tons of weapons-grade nuclear material, hundreds of deployed ballistic missiles and thousands of experts with the knowledge to construct such systems from scratch, Russia is still potentially the world’s nuclear supermarket. Agreements governing these arsenals are essential to preventing the many national security nightmares of nuclear proliferation to rogue states and terrorist groups from becoming realities. To protect America, we must agree to, and verify, limits on what the Russians have, know how they are using it, and take adequate steps to ensure that devastating weapons and dangerous materials remain safe from terrorist theft.
As of Dec. 5, 2009, when the 1991 START agreement expired, we lack any enforceable, verifiable treaty to provide that level of information. We need a new treaty in force not only to plug holes left gaping by the old treaty’s expiration, but also to increase our security by imposing further limits on what new nuclear weapons the Russians can develop and deploy.
A successor to START would likely lower the maximum number of deployed strategic nuclear warheads allowed to between 1,500 and 1,675 on each side — still enough to destroy the world many times over, but far below the 6,000 allowed under the old treaty. Strategic delivery vehicles — missiles, bombers and nuclear missile submarines — will be further cut from 1,600 to around 800. Reducing Russia’s nuclear arsenal and taking missile launchers in both countries off alert reduces the likelihood of accidental nuclear war, keeping Americans safer.
Verified and permanent reductions in the Russian nuclear arsenal will dramatically reduce the number of targets for potential theft or diversion of nuclear technology to terrorists. Over the past two decades, the U.S. has invested at least $10 billion to ensure security for Russian and former Soviet nuclear material, technologies, facilities, and individual experts under the auspices of the “Nunn-Lugar” Cooperative Threat Reduction and other bilateral and multilateral programs.
These programs have helped to deactivate over 7,500 former Soviet nuclear warheads, destroy over 2,000 missiles, and eliminate over 1,100 missile launchers. But without a comprehensive U.S.-Russian arms control agreement in place, steps like these could be totally nullified by production of new nuclear materials, weapons and launchers without any U.S. or international monitoring.
Even after a new treaty enters into force, the U.S. and Russia will possess the world’s largest nuclear arsenals by a wide margin. And as long as nuclear weapons exist, leaders across the political spectrum concur, the U.S. must maintain the world’s strongest, safest and most reliable arsenal. Yet in addition to reducing the size of the threat itself, a new agreement would be beneficial for increasing regular engagement between the U.S. and Russia on strategic issues, which will help build mutual understanding, and avert needless suspicion and conflict.
Two decades after the end of the Cold War, Americans and Russians are increasingly intertwined in global financial and energy markets, and we share immediate and vital national security interests in preventing terrorism, state failure and drug trafficking throughout the Eurasian region.
Yet our communication on security issues has been in dangerous decline for the past decade. In a sense, this should come as no surprise, since the most recent comprehensive U.S.-Russian security treaty was actually signed by the United States and the Soviet Union, which no longer exists.
Any “reset” that puts U.S.-Russian relations on a more productive footing will depend first and foremost on forging a durable bilateral agreement to replace START. Arms control is not in itself a solution to U.S.-Russian tensions, or a guarantee of security from the nuclear terror threat, but if history is any guide, it is where we must begin.
Rojansky is executive director of the Partnership for a Secure America. Collins is director of the Russia and Eurasia program at the Carnegie Endowment for International Peace, and served as U.S. ambassador to Russia from 1997 to 2001.
Kyiv Post: Belarus waiting for Russia's decision on low altitude radar system
Today at 10:03 | Interfax-Ukraine
Moscow, February 18 (Interfax-AVN) - The draft program of building a low altitude radar system on the western border of the Russia-Belarus union state has been okayed by the Belarusian side and submitted to the Russian Defense Ministry for consideration.
"The program was drafted as a follow-up to documents on the establishment of a common air defense system of the union state," Anatoly Vankovich, head of the security, defense and crime resistance commission of the Parliamentary Assembly of the Russia-Belarus union, told the press in Minsk on Feb. 17.
He said that by now the draft program has been coordinated with the Belarusian side. Vankovich voiced hope that its authorization by Russian colleagues and adoption by the union Cabinet will not take much time.
Meanwhile, chief of the radio-radar troops of the Air Force and Air Defense of Belarus Igor Nasibiants said: "The question [of drafting the program] was thrashed out at the recent Moscow meeting of the defense ministers of Belarus and Russia."
He said that a joint team of Belarusian and Russian experts worked on the issue in Belarus this month. "The draft program has been submitted to the Russian defense minister for consideration," he said.
Russia Today: Countries look to benefit from Customs Union
18 February, 2010, 10:51
A new common market is forming on Ukraine's borders and those of the EU. A customs union between Russia and its neighbors will cut business costs and make the region more attractive to investors.
Slowly but steadily the Customs Union between Russia, Kazakhstan and Belarus is taking shape. In addition, it is becoming an attractive trade zone for its neighbors, including Tajikistan, Kyrgyzstan and Ukraine.
Yaroslav Lissovolik, Chief Economist at Deutsche Bank, said the union is based on existing unions.
“Essentially, I think Russia’s efforts in terms of the formation of the Customs Union, in terms of building this single market with some of the CIS, are meant to replicate the experience with the EU.”
Central to Russia's trading relationship with Ukraine is gas. The country is one of the biggest importers of Russia’s blue fuel, and the transit of Russian gas through Ukraine would be one of the trickiest issues on the negotiating table.
Russia might offer Ukraine cheaper gas under a customs union which could bring benefits for Russia too, says Aleksandr Nazarov, an analyst at IFC Metropol.
“It’s just the diminishing of risks about transit through Ukraine. Probably it would lead to the cancellation of the construction of the South Stream pipeline, because Russia, Gazprom will think that transit risks are minimal.”
Apart from gas, it would open the Russian market to Ukrainian goods and encourage foreign investment, says Deutsche Bank Chief Economist Lissovolik.
“For a lot of the international majors, for a lot of the large foreign companies, Ukraine is seen not just as a very large market to explore and to develop, but also as a springboard for penetration into the even larger Russian market.”
An expanded and integrated single market with a combined population well over two hundred million would be of great interest to the EU and China and would change the existing import-export patterns.
If successful, the union could provide a platform for another of Moscow’s long-cherished desires: to make the rouble the regional currency – similar to the euro.
Ferghana.ru: Russian diplomat: The loan, allocated to Kyrgyzstan, is not used according to its purpose
18.02.2010 12:24 msk
Ferghana.Ru
$450 million loans, provided to Kyrgyzstan by Russia under the agreements, reached in February of 2009, have not been used according to its purpose, Vitalyi Skrinnik, the first secretary at the Russian Embassy in Bishkek, informed Eurasianet.
According to Skrinnik, Kyrgyz authorities used money to establish a fund, "issuing credits to others to make money". He did not specify the manager of this fund. "Here we had misuse of the money, of $450 million," he said. Perhaps, the diplomat is speaking about Kyrgyzstan’s Development Fund, the structural unit of Central Agency for Development, Investment and Innovation (CADII), headed by Maxim Bakiev, the son of Kyrgyz President.
Victor Kharchenko, the press-secretary of Russian Embassy in Kyrgyzstan, informed Ferghana.Ru that the statement of Skrinnik was his personal opinion. "Vitalyi Mikhailovich manages the cooperation programs with compatriots; therefore, I am not going to confirm his viewpoint", Kharchenko said. He also informed the session of Kyrgyz-Russian intergovernmental commission will be held soon that will consider issues, related to the loan, and make decisions on economic component of the partnership.
We were not able to reach Skrinnik since he is currently not in Kyrgyzstan.
It has to be mentioned that the decision to offer financial aid to Kyrgyzstan was announced on February 3, 2009 in Moscow by the leaders of two countries: Kurmanbek Bakiev and Dmitry Medvedev - $150 was allocated to support state budget, $300 million was offered as preference loan and over $2 billion was offered for joint investment project in hydropower sector. On March 30 Kyrgyzstan received $150 million. On April 30 Ferghana.Ru reported the transfer of another $300 million to the National Bank of Kyrgyzstan.
Russia promised to supply $1.7 billion lax credit to Kyrgyzstan at 0.75% per year for the construction of Kambarata-1 hydropower plant. In August the parties established joint stock company that would receive funds from Russia. According to the plan, Kyrgyz side should have prepared the feasibility study of the project by the end of 2009 that would ensure not only energy security of Kyrgyzstan but also net export of electricity. During October visit to Bishkek Sergey Naryshkin, the Head of Russian Presidential Administration, said that Kyrgyzstan was not catching up on Kambarata-1 project implementation terms.
Signing $2 billion agreement with Russia, Kyrgyz leader Kurmanbek Bakiev promised to shut down the US airbase in Kyrgyzstan. The observers reported Russian lobby although Kyrgyzstan said it was independent in such decision making. Half a year later, the airbase was renamed into Transit Shipment Center to support anti-terrorist operations in Afghanistan. Therefore, American soldiers remained in Kyrgyzstan. Allegedly, the reason is that Russian government is being slow in transferring the promised money. Another reason could the fact that Uzbekistan strongly opposes the construction of Kambarata-1 hydropower station.
Meanwhile, in December of 2009 Russia’s envoy to Kyrgyzstan, Valentin Vlasov, informed Komsomolskaya Pravda that all arrangements on $1.7 billion loan remain in force.
RIA: U.S. okays Russia's intention to help Mexico fight drug criminality
03:5618/02/2010
The United States has no objections to Russian-Mexican joint efforts to fight drug trafficking in the Latin American state, US State Department spokesman Mark Toner has said.
Russia has reiterated its readiness to help Mexico fight the drug criminality, a major woe for the U.S. neighbor. The joint U.S.-Mexican Merida Initiative with the same goal has been widely criticized. Critics say the project has yielded no significant results despite huge investments.
Answering the journalist's question on how the U.S. views Russia's initiative, Toner said there were no grounds for anxiety.
"I mean, Mexico is a close neighbor, friend, partner with the United States. I would just say it's welcome to pursue bilateral relationships with any country it wants to, including Russia," he said.
When asked on whether the strengthening of ties between Russia and Mexico would affect U.S.-Russian relations, Toner said "no, I don't believe so."
Merida Initiative is a security cooperation between the United States, Mexico and Central American states aimed at combating the drug trafficking, transnational crime and money laundering. The assistance includes training, equipment and intelligence.
Mexico has been the main hub for drug trafficking from Latin America to the U.S., with annual drug supplies estimated at around $40 billion. Some 45,000 servicemen have been involved in anti-drug operations at the border between the two countries.
In his New Year's speech, Mexican President Felipe Calderon declared fighting drug crimes in Mexico the government's top priority for 2010.
WASHINGTON, February 18 (RIA Novosti)
Sakaal Times: MiG 29 to be inducted today
Special Correspondent
Thursday, February 18, 2010 AT 02:25 PM (IST)
MUMBAI: The fourth generation Russian-origin jet fighter aircraft, MiG-29K, which would be used for carrier-based operations, would be formally inducted into the Indian Navy on Friday in presence of Defence Minister A K Anthony on Friday.
The induction ceremony would be held at INS Hansa, Dabolim, Goa, Defence Ministry officials said on Thursday. These aircraft would now be based in INS Hansa and would be used on board Admiral Gorshkav, the Soviet-era aircraft carrier, which is expected in more than a year's time. The carrier would subsequently be named Vikramaditya.
The first batch of three MiG-29K aircraft of the Indian Navy were received in December at INS Hansa Goa. A total of 16 aircraft have been contracted from MiG RAC.
The presence of an aircraft carrier in the inventory of any Navy provides tremendous reach, flexibility and certainly power. Its ability to cover vast distance with its integral air helps it to exercise sea control whilst at the same time it ensures air cover to the other units in company. The aircraft carrier is certainly an instrument of diplomacy as well.
Interfax: Primorye sanitary services reject poultry shipment from U.S.
VLADIVOSTOK. Feb 18 (Interfax) - The Primorye veterinarian and phytosanitary control authorities have returned to the United States 47.2 tonnes of poultry of uncertain quality supplied to an Ussuriysk company, assistant head of the territorial veterinarian and phytosanitary control department Viltay Salenko told Interfax on Thursday.
"Veterinarian certificates confirming the origin, quality and safety of the poultry did not have the exports stamp of the U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS)," he said.
"The two containers of chicken quarters were returned from the Vladivostok seaport to the exporter," he noted.
It is prohibited to import food of uncertified quality to Russia in keeping with the Federal Law on Food Quality and Security, Salenko said.
te ap
President.lt: Russian President Medvedev speaks out for closer relations with Lithuania
Thursday, February 18, Vilnius - Russian President Dmitry Medvedev congratulated President Dalia Grybauskaitė on the approaching 20th Anniversary of the Reestablishment of Lithuanian Independence and invited her for a bilateral visit to Russia at a time convenient to her.
"I am grateful for the invitation to the celebrations of the 20th Anniversary of the Reestablishment of Independence of the Republic of Lithuania. I would like to extend my congratulations on this anniversary and to wish you and the people of Lithuania every success," President Medvedev wrote in his message of congratulations.
The Russian president expressed his regrets that he would not be able to participate in the March 11 festivities in Vilnius due to his pre-arranged international engagements. He delegated Mr. Igor Levitin, Russian Transport Minister and Russian Co-Chairman of the Lithuanian-Russian Intergovernmental Commission, to represent Russia at the commemorative events.
"It is with warmth that I recall our short but fruitful conversation in Berlin. I hope to meet you in the near future and I invite you to visit the Russian Federation at a time convenient for you. I believe that we will be able to discuss a whole range of issues topical for Lithuanian-Russian relations and project the ways to making our bilateral cooperation more dynamic," President Medvedev wrote.
Commenting on Dmitry Medvedev's letter of congratulations on the anniversary of Lithuania's re-independence, President Dalia Grybauskaitė said that it was an important step made by Russia in shaping good neighborly relations with Lithuania.
"I favorably assess the fact that Russian President Dmitry Medvedev extended congratulations to Lithuania on both the Restoration of Lithuanian Statehood of February 16 and the Reestablishment of Lithuanian Indpendence of March 11. Lithuania's interest is to maintain well-wishing relations based on mutual benefit and respect with all the neighboring countries. A bilateral working visit would present a good opportunity to discuss issues of importance to Lithuania with the President of Russia and possible options for the development of bilateral economic and cultural cooperation," President Grybauskaitė said.
Press Service of the President
News.az: NATO slams Russia-Akhazia agreement
Thu 18 February 2010 | 07:11 GMT
NATO slams agreement signed between Medvedev and Baghapsh.
The North-Atlantic Treaty Organization (NATO) has slammed the agreement signed on February 17 between Dmitry Medvedev, Russian Federation’s President and Sergey Baghapsh, separatist leader of Georgia’s one of two breakaway regions of Abkhazia on stationing of Russian military bases across Abkhazia’s territory.
Carmen Romero, Deputy NATO Spokesman claimed that the transatlantic military alliance considered the document as illegal. Romero added that the NATO’s attitude remained unwavering regarding the issue.
“We insist that Russian military troops pulled back to the territory they occupied before August 8, 2008. Besides, international observers should be admitted into the conflict zones,” Romero said.
1TV.GE
News.az: Georgia to demand billions from Russia for Abkhazia, South Ossetia
Thu 18 February 2010 | 06:26 GMT
Georgia intends too sue Russia for dozens of billions of damage.
Georgia intends too sue Russia for dozens of billions of damage, which, as Tbilisi believes, Moscow inflicted with its actions in Abkhazia and South Ossetia in 1990s and later.
The guilt of Russia of not only August 2008 events, but also provoking Georgian-South Ossetian and Georgian-Abkhazian conflicts after disintegration of the USSR, is planned to be proved in international courts.
The amount of the damage is ordered to be calculated by the parliamentary Commission for Territorial Integrity Restoration, headed by Shota Malashkhia - The Vremya Novostey. He says that a state commission will be established soon to check the calculations and then submit claims and deal with the due intentional organisations.
According to the MP, the tentative sum for damage up to 1998 amounts USD 20 bn. "For the later period, up to nowadays, the additional sum will be no less," Malashkhia said. The sum of compensation includes supposed damage from activities of Russian companies in Abkhazia and South Ossetia. Claims on the loss of property by Georgian refugees will be sent to the European Court for Human Rights.
Georgia Times
Financial Times: Moscow tightens grip on Abkhazia
By Isabel Gorst in Tbilisi
Published: February 17 2010 23:07 | Last updated: February 17 2010 23:07
Russia signed a package of military and economic deals with Abkhazia on Wednesday that will tighten Moscow’s grip on Georgia’s breakaway region
Georgia said the agreements were “illegally signed by an occupying power and a puppet regime”.
Russia’s defence ministry signed an agreement to build a military base in Abkhazia, formalising the presence of troops stationed in the region after a five-day war with Georgia in August 2008.
The Kremlin recognised Abkhazia and South Ossetia, Georgia’s other rebel region, as sovereign states after the war, drawing international condemnation.
Abkhazia and South Ossetia have been internationally isolated since the war, and dependent on Russia for economic aid and security.
Speaking at the signing ceremony on Wednesday, Dmitry Medvedev, the Russian president, said the agreement “laid the foundation for Abkhazia to develop as an independent state”.
Sergei Bagapsh, the Abkhaz leader, said Russia was Abkhazia’s “closest partner”.
Russia also agreed a package of economic deals with Abkhazia that pave the way for Russian companies to take control of strategic transport infrastructure on the region’s Black Sea coast.
State-owned Russian Railways plans to lease the Abkhaz railroad, providing a crucial link between stone mines and tourist resorts in the region and southern Russia. Other Russian companies are negotiating to take control of a port and airport near Sukhumi, the Abkhaz capital.
The Kremlin said Russia would modernise a Soviet-era military facility at Gudauta in Abkhazia and deploy 1,700 soldiers at the base. Russia also agreed on Wednesday to step up naval co-operation with Abkhazia to improve security and communications in the Black Sea.
Russia’s navy began patrolling the Abkhaz coast last year after Georgia captured a Turkish cargo vessel approaching the Abkhaz port of Sukhumi.
Eka Tkeshelashvili, the head of Georgia’s Security Council, said the agreement was a “dangerous signal that Russia was very seriously planning to bolster its military presence in Georgia and the Black Sea region”.
Russia is expected to sign a deal to build a military base in South Ossetia, Georgia’s other breakaway region, next month.
Mr Medvedev said Moscow would eventually restore relations with Tbilisi, although not while Mikheil Saakashvili, the Georgian president, was in power.
Mr Bagapsh said Mr Saakashvili’s “arms were up to the elbows in blood”, and that he should be punished for war crimes.
Expert Club: Abkhazia removes restrictions for Russians to buy real estate
18/02/2010 11:27
The puppet authorities in Abkhazia have decided to amend the law on real estate, which will allow citizens of Russia to buy land and buildings in Abkhazia on the same conditions as nationals of this region. That was reported by Kommersant newspaper with reference to the head of economic department of Abkhazia Kristina Ozgan.
It is planned to introduce this law into the Parliament in the coming months. Earlier Russians could only register a house or apartment on the Black Sea in the name of a "citizen of Abkhazia", which often led to property-related conflicts.
We should remind that we have already written on the pressure of the Kremlin to repeal this law when articles aimed at "protecting the property rights of Russians" appeared. In his article "Georgian fate of Russians in Abkhazia" representative of the Club of Experts Irakli Tskitishvili noted appearance of publications in the Russian media about violations of property rights of the Russian population of Abkhazia. "Taking care of Russian citizens' properties is one the components of this policy. The Kremlin will try every way to force Bagapsh to repeal the law that prevents Russian citizens from taking roots in Abkhazia. This is a purpose the articles published in Russian press serve". In the same article, the author suggested that articles in the Russian media had been written in order to put pressure on Abkhazian leader Bagapsh ahead of his visit to Moscow and that the matter would be discussed at his meetings with Russian leadership. Today's information of Kommersant newspaper absolutely confirms the above suggestion.
Thus, we can say that with authorization given to citizens of Russia to buy property in Abkhazia begins era of ousting of Abkhazian ethnic group from this territory and their complete extermination that has been a goal of the Russian Empire for centuries.
The Moscow Times: Government Raises Foreign Aid 4-Fold
18 February 2010
By Alex Anishyuk
The government nearly quadrupled the amount of aid that it gave to poor countries in 2009, Finance Minister Alexei Kudrin said Wednesday, bringing Russia closer to its OECD peers in terms of foreign development assistance.
"Russia allocated $800 million from the federal budget, according to preliminary estimations, in order to provide aid to developing countries," Kudrin said Wednesday. "Meanwhile, $220 million were allocated for these purposes a year earlier."
In 2007, then-President Vladimir Putin signed a framework document that called for the country to increase its participation in international development assistance programs and outlined several key points that the country intended to follow.
According to the document, Russia's policy on international development assistance was to be carried out through grants, debt relief, loans and technical assistance for countries developing national institutions such as health and education.
In 2007, Russia wrote off 90 percent of $11.3 billion of Afghanistan's Soviet-era debt and more than $20 billion of debt from poor African countries.
Although not all sovereign donors managed to maintain their level of foreign aid during the last year and a half, "the world managed to keep financing in accordance with the approved indices," Kudrin said.
In 2008, international donors spent $119.7 billion on aid programs, according to the Organization for Economic Cooperation and Development.
Kudrin said international aid has more than doubled since 2003, growing from $53 billion to $121 billion in 2009.
The UN Millennium declaration, a protocol of intentions behind international donation programs, aims to halve the proportion of those who suffer from hunger and those with incomes below $1 a day by the year 2015, as well as to achieve a significant improvement in the lives of at least 100 million people who live in slums by 2020.
Although Russian assistance through international financial institutions and UN agencies increased almost 20-fold to an estimated $800 million in 2009 from $47 million in 2003, the country still falls short of the sums donated by other developed countries.
According to OECD data, the top five donors in 2008 were the United States, which gave $26 billion or 0.18 percent of gross national income; Germany ($13.9 billion or 0.38 percent of GNI); the United Kingdom ($11.4 billion or 0.43 percent of GNI); France ($10.9 billion or 0.39 percent of GNI); and Japan ($9.3 billion or 0.18 percent of GNI). The $800 million Russia donated in 2009 would put it at an estimated 0.05 percent of GNI.
Interfax: Russian religious organizations likely to gain right for state help
Moscow, February 17, Interfax – The United Russia members introduced amendments to the presidential draft on NGOs support to secure right of religious organizations for state help.
Religious organizations will also obtain the socially oriented status. The State Duma Committee on Public Associations and Religious Organizations will consider amendments on February 19, the second reading is planned for February 26, the Vedomosti paper reported on Wednesday.
The amendments aim at stimulating charitable activities of religious organizations. Having them adopted, parishes of the Russian Church would be able to get money allocated by the government for prevention of abortions and support of young families on priority basis, it would be easier for them to get premises, member of the United Russia parliament faction Sergey Markov said.
The law did not envisage privileges for all religious organizations, the Patriarchate’s legal adviser Ksenia Chernega stressed. According to her, parishes involved in charities, helping the poor and homeless are first to get support.
The Moscow Times: Kremlin Hosts U.S. Innovation Team
18 February 2010
By Rachel Nielsen and Anatoly Medetsky
A U.S. delegation of White House officials, technology executives and social media enthusiasts arrived in Moscow on Wednesday for a weeklong visit with their Russian counterparts to discuss innovation.
Formally, the meetings are an extension of the Bilateral Presidential Commission, created by the Kremlin and the White House in July. The “Innovation Delegation” — including the heads of Internet powerhouses Twitter and eBay — is here to speak with government, corporate and civic leaders about social media and civic issues, said a spokesman for the U.S. Embassy in Moscow.
“That’s what this group is all about — using social media for the public good,” said Jonathan Korach, deputy press attache at the embassy.
But the high-power group arrives just as Russian officials are revving up efforts to bring in foreign investment, technology and brainpower.
No less a figure than Prime Minister Vladimir Putin has taken over the government’s commission on modernization, Vladislav Surkov, the Kremlin’s first deputy chief of staff and a longtime advocate of modernizing the economy, said in an interview to Vedomosti published Tuesday.
Additionally, President Dmitry Medvedev hosted a meeting in Tomsk last week with some of Russia’s top business leaders, whom he called on to invest in new technology.
The 13-member U.S. delegation met top Kremlin officials including Surkov on Wednesday and was slated for a host of meetings throughout the coming week.
Communications and Press Minister Igor Shchyogolev will meet the group Thursday, along with Yandex chief executive Arkady Volozh and Valery Zubakha, head of the Electronic Government project at state telecoms operator Rostelecom, ministry spokeswoman Yelena Lashkina said.
Korach, the U.S. Embassy spokesman, said the delegation would also meet officials from the Education and Science Ministry and the Health and Social Development Ministry.
Delegation member Jason Liebman, the chief executive of how-to video company Howcast Media, wrote on his Twitter page Wednesday evening that he was “just leaving kremlin after a great two hour brainstorm with vladislav surkov and arkady dvorkovich.”
In his interview with Vedomosti, Surkov made waves with his statement that “consolidated power is the instrument of modernization.” Dvorkovich is Medvedev’s top economic aide and another prominent modernization advocate in the Kremlin.
The visit is being spearheaded by Jared Cohen, a technology whiz with Secretary of State Hillary Clinton’s policy planning staff, and Howard Solomon, the Russia director for the National Security Council.
Executives in the group include Jack Dorsey, founder of the microblogging web site Twitter; Padmasree Warrior, chief technology officer at networking giant Cisco Systems; and John Donahoe, CEO of eBay, whose arrival coincided with a Kommersant report that the Internet auction site was launching a Russian-language version.
The delegation also includes officials from Mozilla, EDventure, the Social Gaming Network and the New York Academy of Sciences.
Another delegation member — the world’s most-followed Twitter user, Ashton Kutcher — asked his 4.5 million fans what Russian phases he should know for the trip.
One user suggested the Russian Internet meme “Preved Medved,” which is based on a picture of a bear interrupting a love-making couple in the wilderness.
The phase, a distorted version of “Hello Bear,” has enjoined added success since the tech-savvy Medvedev — who has his own video blog — took office in 2008.
The U.S. delegation is scheduled to fly to the Siberian city of Novosibirsk on Thursday night, said Yevgeny Savin, director of the Unova.ru, an innovation news web site, who is familiar with the group’s itinerary.
The Novosibirsk leg will probably to include meetings with Kendrick White, general director of venture investment firm Marchmont Capital Partners, which is based in Nizhny Novgorod. White told The Moscow Times that he planned to tell the delegation that “there is tremendous technology opportunity here, but there’s very little smart money.”
He will also recommend that Russia develop a number of “innovation clusters,” such as his adopted town of Nizhny Novgorod.
The idea has long been kicked around in the government, but previous efforts have had little success. Medvedev disbanded the Federal Agency for Special Economic Zones in October, just three years after its creation.
But the Kremlin is planning to create a new research and development center, which it has dubbed the Russian Silicon Valley.
During his meeting with business leaders last week, Medvedev said it would be a “city of the future, which must become the largest test site of the new economic policy.” Surkov said in his interview that it would need to attract the best of the best, like Soviet-era scientific centers.
State Duma Deputy Ilya Ponomaryov, a member of the Duma’s Information Policy Committee, said on his blog that the world’s “IT gurus” would meet with Novosibirsk regional officials, stop by an advanced secondary school and spend an evening at the city’s drama theater.
They also will get together with young innovation companies based in a research center outside the city, including the Siberian Center for Pharmacology and Biotechnology, Uniskam, Alekta and Data East, Ponomaryov said. They will also hold a round table with the regional entrepreneurs.
Unova’s Savin said the U.S. officials and business leaders would return to Moscow on Sunday for meetings with Russian businesspeople and social-networking web sites.
Savin said he was organizing a round table discussion Monday at the request of the delegation, with the session to be dedicated to venture funding.
Russian Venture Company director Igor Agamirzyan will take part with representatives of web projects such as , Iii.ru, Tutu.ru and Kupivip.ru, Savin said.
“These kind of visits are not for immediate goals,” Savin said. Business executives “will make their own judgments and will build their Russia-related business based on what they saw.”
Itar-Tass: US authorities file new charges against RF citizen Viktor Bout
18.02.2010, 04.27
NEW YORK, February 18 (Itar-Tass) - The US authorities have filed new charges against Russian citizen Viktor Bout whose extradition to the United States from Thailand they are seeking. Attorney of the US Southern District of New York Preet Bharara said on Wednesday that the charges are brought against Bout and his “accomplice” Richard Ammar Chichakli for “conspiring to violate the International Emergency Economic Powers Act (IEEPA) stemming from their efforts to purchase two aircraft from companies located in the United States, in violation of economic sanctions which prohibited such financial transactions.” The indictment unsealed also charges Bout and Chichakli with “money laundering conspiracy, wire fraud conspiracy and six separate counts of wire fraud, in connection with these financial transactions.”
The indictment says that In connection with the purchase of these aircraft and services relating thereto, Bout and Chichakli electronically transferred more than 1.7 million US dollars through banks in New York and into bank accounts located in the United States. They did so through a number of front companies, whose assets were also owned and controlled by Bout, in order to evade the UNSC’s sanctions regime and the IEEPA prohibitions. Upon the discovery that Chichakli was connected to Samar Airlines, the US Treasury Department blocked the funds that had been transferred into the bank accounts of the US aviation companies.
On Tuesday, Bangkok's criminal court finished an additional hearing of the case over extradition to the United States of Viktor Bout. Thai judges denied the opportunity to the United States to attach to the case the letter from Colombia’s Foreign Minister Jaime Bermudez.
[pic]
NEW YORK, Feb. 17, 2010
CBS: New Charges for "Merchant of Death"
Federal Prosecutors File New Charges against Suspected Notorious Arms Dealer held in Thailand
By Pat Milton
(CBS) A Federal grand jury in New York has indicted Viktor Bout, a Russian businessman accused of being the world’s most prolific arms dealer on new charges stemming from his alleged operation to sell weapons to terrorist organizations.
The updated indictment against Bout, dubbed the “Merchant of Death” follows a Thai court’s decision last year to reject a request by the United States to extradite Bout to face gun running charges in New York’s Southern District. Bout remains in a Bangkok prison pending an appeal by the Thai government of the court’s ruling which would allow Bout to walk free.
“Viktor Bout allegedly made a career of arming bloody conflicts and supporting rogue regimes across multiple continents, even using the U.S. banking system to secretly finance a private fleet of aircraft,’’ said Manhattan U.S. Attorney Preet Bharara, in announcing the new charges including money laundering and wire fraud.
Bout who was sought by U.S. officials for more than a decade was arrested in a Bangkok hotel in 2008 allegedly while brokering a multi-million dollar deal to sell weapons to Colombian rebels to kill Americans in what turned out to be a sting operation masterminded by agents of the U.S. Drug Enforcement Administration. Bout is suspected of supplying guns to fuel just about every military conflict in the world since the 1980s, from Colombia to Iraq.
The latest indictment by a New York grand jury unsealed Wednesday charges Bout and an American associate, Richard Chichakli, with conspiring to violate international sanctions aimed at stopping the flow of weapons to armed conflicts in Africa. Chichakli’s whereabouts is unknown.
The 43-year-old Bout allegedly emerged as an international weapons trafficker following the collapse of the Soviet Union in the 1990s. As part his alleged illegal operation, he assembled a huge fleet of air cargo planes capable of transporting weapons and military equipment across the globe. His air cargo company had a reputation of flying almost anything anywhere.
Bout is believed to have been the inspiration for the 2005 movie “Lord of War” starring actor Nicholas Cage who played a charismatic and dangerous Russian arms dealer. He reportedly rented his planes to the movie’s producers for use in the film.
Bout has repeatedly denied the allegations against him and has vehemently fought extradition to the United States.
DEA Acting Administrator Michele Leonhart said the new indictment illustrates “the extraordinary breadth of Bout’s deadly criminal enterprise.’’
February 17, 2010
Interfax: Christopher Bryant: Our intent towards Russia is entirely peaceful
British Minister of State for Europe Christopher Bryant has given an interview with Interfax in which he discussed EU-Russian and British-Russian visa arrangements, criticized Russia’s new military doctrine, and pledged not to stand in Ukraine’s way to the European Union.
Question: Let me ask you quite a general question. How would you describe the current state of relations between the UK and Russia. What steps have the two countries yet to make towards each other after the Litvinenko affair?
Answer: Well, we have had an embassy here for nearly 500 years, and it has been a very long relationship with Russia, and very strong trading links for many centuries as well. So, I think though there are a couple of issues which are difficult between us, nonetheless Russia and the UK are both on the Security Council of the United Nations and are key, major economies of the world, and on the whole range of issues it is important that we work together. And we do work together. And for stability, for economic prosperity and for ensuring that there is a peaceful world. So, I feel [we have strong relationship] as it happens. This is not my first visit to Moscow, I’ve twice before. I came in 1987 and 1997 and now. So, I seem to come to Russia every ten years.
Q.: So, in ten years we will have a chance to see you again.
A.: Well, I hope that we are going to win the general election in the UK and in which case I’d like to come much more regularly. I think that part of my job as minister for Europe, which includes Russia, and I think we should hope to have, you know, annual meetings really. In fact, some of you that I might be seeing in Moscow this time I’ve already met in the UK, we had meetings before Christmas, and the London Afghanistan conference as well.
Q.: Mr. Bryant, how will you characterize the coordination of Britain and Russia efforts to overcome the economic crisis?
A.: Well, this has been one of the things where we have worked very closely together and Gordon Brown last year in the G20 conference in London was very keen to work with Russia to make sure that we had similar packages, because we knew that with each of the countries in the world, all the major economies suffering some of the same problems. We needed to have what we call a fiscal stimulus in the UK, you called it something slightly different, but basically it was the same thing which is putting money into the economy and to protect people from unemployment and further collapse of the economy.
The challenge now is both in the UK and in Russia to see what exit strategy we have, because we put all this extra money in big deficits in Russia and in the UK. And we are going to have to start cutting that deficit we would have halved it in the next four years. But I think if all the countries in the world can coordinate their actions to cut those deficits then that would be more effective.
Q.: And would you assess the current investment climate in Russia? Do you think there are some restrictions here against foreign businesses?
A.: Lots of British businesses do a lot of work here, and not just in oil and gas, though that’s a large part what we do: BP, Shell and others. A lot of law firms do business here as well. And I met with the managing director of JCB the other day, the construction firm, and they do a lot of business here as well. But I think there is an issue for Russia about, if you want to make an investment in a country you want to make sure that you’re not going to have to pay bribes to people, and that if make you that investment it is yours and that you not going to suddenly have it taken off you by the government, and that the staff who are working for you are going to be safe and secure, and that the criminal justice system is fair and decent. And there are challenges. I think that everybody accepts that, President Medvedev said himself that these are areas Russia needs to change. Not least because otherwise there is a danger that Russia will rely more and more and more on one industry which is oil and gas.
Q.: And if I am not mistaken there is an issue now whether license for the Kovykta field, which BP controls, will be renewed. What you heard about this?
A.: That one is new to me. Sorry, no I don’t know about that. Nobody’s mentioned it to me.
Q.: Mr. Trutnev from the ministry which is responsible for oil, gas and other mineral resources is going to recall the license.
A.: Well, when it feels to investors that government is making capricious decisions, then investors get very worried about making future investments. That is very true. And you have many natural resources in Russia. But you can’t get them out and sell them to people without investment from the rest of the world. And that is a really important part of making sure that Russia’s economy survives.
Q.: What are British companies’ capabilities at the Shtokman field?
A.: The Shtokman field. Again I don’t know about the Shtokman field. I am not an expert on oil and gas. The department that works most closely between the UK [and Russia] on all of these issues is the energy department in the UK and the department for business with Peter Mandelson. He paid a visit here last year. I think he is quite well-known here.
Q.: Ok, so, let me ask you another question about visa regime between Britain and Russia. Does Britain plan to restart the talks on visa-facilitation regime between our two countries. Because if I am not mistaken a lot Russian citizens, especially businessmen have problems with getting British visas, as well as Britons who work here and have business have problems extending their work visas. So what do you think about this?
A.: I am not sure there is that much of a problem. 130,000 Russians get visas to come to the UK every year. We do not say ‘no’ to a higher number here than anywhere else in the world. We don’t have lots Russian hanging around in Britain at the end of their visas and not coming back. But I can’t see us [Britain] changing the visa regime at the moment.
Q.: Why? What is the reason?
A.: Because I think it works quite well as it is. I think that’s we’ve not detected any major problems for business at either end. There are lots, as I’ve said already, lots of Russian coming to the UK, there are lots of British people coming to Russia. And I know there is one element that Russia changed first, and we matched it, which was in terms of official visits and it is just a single-visit visa that we provide, but it was Russia to decide that first, and so now we mirror that.
Q.: How soon in your opinion would Russia and the EU switch to visa-free travel?
A.: I think it will take quite a long time myself. I know that my Spanish colleagues are keen to have talks with Russia at the moment and that’s excellent but you know there are issues with organized crime in Russia and the last thing we want to do in the European Union or in the UK is make it easier for organized crime to flourish because there is an open visa arrangement. And I think while the Spanish want to move fast some other countries will want to move much more slowly on these issues. And if Russia could prove that it didn’t have these issues with organized crime then that would make life much easier.
Q.: But not in the nearest future?
A.: I can’t see it happening. But, as you know, Britain has a slightly different [regime], we are not in the Schengen zone within the European Union, so the Schengen countries take a slightly different attitude. I know that several European countries are much more reluctant to have an open visa arrangement with Russia than for instance Spain is.
Q.: In this connection I would like to go to Ukraine. How do you assess the election campaign there? Do have some questions related to this? And do you still advocate Ukraine’s membership in the EU and NATO?
A.: It seems to be an open election, hotly contested. And we would be perfectly happy to work with whoever won in Ukraine. Our Prime Minister Gordon Brown has already congratulated Mr. Yanukovych. And it’s a very interesting turnaround for him personally over the last 10 years. And I’ve met several politicians from Ukraine. And it is clear that a lot of have an ambition to join the European Union, and we wouldn’t stand in their way. But in the end it will be a choice for Ukraine, whether it wants to make all the changes that it has to. My biggest worry is actually about the economy in Ukraine, because they are going to need an IMF loan, they have made some rash promises about they’re going to increase expenditure on the public sector and they are going to have to sort these issues out before the world can look to an IMF fund. I think that it was good that Russia and Ukraine this year came to a better understanding over gas, so we didn’t have gas switched off all over Europe. And we need to maintain those kind of strong links.
Q.: Do you think Ukrainians should have a referendum on Euro-Atlantic prospects?
A.: Well that’s for Ukraine to decide. But the one thing I would say to Russia is just because a country like Ukraine has an ambition to join the European Union or join NATO doesn’t mean that it is suddenly becoming anti-Russian. It is not a choice. I think you can be pro-Russia and pro-Europe. And if there is one thing I wish my Russian counterparts understood better it was that we have no intent against Russia, and the European Union doesn’t. We want to work with Russia. It is one of the things that we talk about, foreign affairs, with all my other counterparts in the EU. We talk about how we can improve our relations with Russia all the time.
And so, for instance, when recently the Russian cabinet produced a new military doctrine, which said that the biggest threat to Russia was NATO and the lowest threat was international terrorism. But this is clearly untrue; NATO has no intent against Russia. I don’t think any Russian soldier has been involved or will be involved in any action against NATO, whereas, you know, Russians have died from international terrorism. There have been many incidents in the last few years. So, I would challenge Russia and say: no, you are wrong on this.
Q.: How would you comment on the recent news items concerning Romanian and Bulgarian desire to have elements of the American anti-missile system?
A.: Well, I think that it is a decision for them. But again I say, I know it is very cold here, but I don’t believe in a Cold War. The Cold War is long dead. And the United Kingdom was the first country to recognize Soviet Russia, and I think it was in 1924 when we had a very brief labor government in 1924, it only lasted seven or eight months, but our intent towards Russia is entirely peaceful. We want to trade with Russia, we want to be good friends, we want to cooperate on international issues. One of these is coming up is Iran, where I think a lot of people here are as just worried about the Iranian intent as we are.
Q.: Will Britain call to sanction against Iran in the nearest future in the Security Council?
A.: Yes. I mean, the European Union already has a series of sanctions against Iran, and we’ve worked very closely with Russia and the E3+3 group. And I am sure that there will be a move for further sanctions in the near future through the UN. Some of the things we’ve heard again in recent weeks in Iran are very worrying. I fully support Iran’s right to have a nuclear energy program, but I don’t want any more countries to have a nuclear weapon. We should in business in trying to limit the number of nuclear weapons in the world and limit the number of countries with nuclear weapons, and that’s one of the things the Americans and Russians are trying to work together on. And so are we as another nuclear power.
Q.: What do you expect from Russia in this connection?
A.: To agree with me.
Q.: Will you try to talk about this issue…
A.: Well I’m not seeing the ministers here who are in charge of Iranian policy. But I know that is one of the things that is ongoing discussion between the UK and Russia. As [UN] Security Council members we would bound to be amongst the countries that are most significant in making that decision.
Q.: Let me ask you about Georgia. Will Britain continue giving economic and military aid to the current Georgian leadership? And has London changed its position towards the conflict in the Caucasus in August, 2008?
A.: No. We saw the Tagliavini report, as confirming what we believed which was that there had been some initial problems on the Georgian side, but that Russia overreacted. And we believe that the Sarkozy-Medvedev agreement should be fully implemented, and that means that Russian troops should be withdrawing, they should already have withdrawn. I will be urging my counterpart for that to happen as soon as possible. We don’t support Abkhazia and South Ossetia splitting off from Georgia, we believe in the geographical integrity of Georgia. And I will be urging my Russian counterparts to support that. We will see where I get.
Q.: Good luck.
Interfax: Russian Muslims set up Supreme Coordinating Council
Moscow, February 18, Interfax – Representatives of three centralized Islamic organizations of Russia agreed to establish the Supreme Coordinating Council of Russian Muslims.
Representatives of the Central Muslim Board of Russia, the Council of Muftis of Russia and Coordinating Center of Muslims of the North Caucasus at the session of joint working group in Moscow chaired by Petersburg Mufti Jafar Ponchayev unanimously supported CMBR head Talgat Tajuddin as he proposed setting up the Supreme Coordination Council of Russian Muslims without forming a legal entity, an Interfax-Religion correspondent reports.
“Recognizing absolute necessity to unite Muslim Ummah (community – IF), the working group considers inacceptable and impossible to set up a one religious Muslim organization at the present moment,” the working group said in its statement conveyed to journalists.
The participants unanimously rejected the idea of convening All-Russian Muslim Congress and electing a “Muslim Patriarch.”
The working group recommends that the Supreme Council should be co-chaired by four persons from each centralized Islamic organization. At the same time, three co-chairmen will chair the proposed Council. The participants mention that three Islamic leaders: Mufti Tajuddin, head of Russian Council of Muftis Ravil Gainutdin and CCMNC head Ismail Berdiyev would be appointed now. However, other muftis can be elected to these posts in the future.
The working group participants recognize as non-legitimate the session of another working group on uniting Muslims held in the Council of Muftis on February 2, 2010.
RFE/RL: British Lawmaker Praises Human Rights Groups In Chechnya
February 17, 2010
GROZNY, Chechnya -- A British member of Parliament on a fact-finding trip to Chechnya has praised the work of Russian human rights groups and Chechen NGOs investigating disappearances and abductions, RFE/RL's North Caucasus Service reports.
Lord Frank Judd told RFE/RL the purpose of his visit is to evaluate the situation in Chechnya in terms of freedom, human rights, and "accountable democracy." He declined to comment on the political situation in the republic but did say that people who are "disillusioned, oppressed, and disgruntled" because of the way they are treated by their government are potential recruits for the Islamic insurgency.
Judd described the reconstruction of Grozny's infrastructure as "very impressive," but added that thousands of Chechens remain homeless.
Judd served for years as the rapporteur for Chechnya for the Parliamentary Assembly of the Council of Europe (PACE). He resigned that position in March 2003 to protest the referendum on a new Chechen Constitution, which he argued was premature.
Russian NGOs that monitored the vote estimated turnout at around 10 percent.
The Russian authorities claimed that 85 percent of voters took part.
Judd's British delegation is scheduled to meet today and February 18 with Chechen government officials, possibly also with Chechen Republic head Ramzan Kadyrov.
The Moscow Times: Yamal Governor To Leave Office
18 February 2010
The Moscow Times
The governor of the gas-rich Yamal-Nenets autonomous district, Yury Neyelov, said Wednesday that he would step down after his third term ends in March.
Neyelov, 58, who has run the region in Western Siberia since 1996, told reporters Wednesday that he has already asked President Dmitry Medvedev not to submit his candidacy for another term.
“I have made a deliberate decision not to wait until my fate is decided,” Itar-Tass quoted Neyelov as saying.
“On Feb. 12, it was exactly 16 years that I have led the district. That’s more than three terms. The president of Russia made a fundamental decision to renew the governors corps, so that governors don’t lead the regions for more than three terms,” Neyelov said, Interfax reported.
Neyelov’s name was earlier included on a list, compiled by ruling party United Russia, of potential governors for the region following the end of his term next month. The list, which was submitted to Medvedev for review, includes Neyelov's deputy, Viktor Kazarin; a local district head, Dmitry Kobylkin; and the head of a Gazprom partner company, Igor Fyodorov, who studied law with Medvedev at the same university in Leningrad.
Meanwhile, regional parliaments in Krasnoyarsk and the Jewish autonomous region confirmed new governors Wednesday, the regional governments reported on their respective web sites.
Lev Kuznetsov, a 44-year-old former executive at Norilsk Nickel, was confirmed as the Krasnoyarsk governor, while Alexander Vinnikov, 54, was approved as the Jewish autonomous region's new governor. Vinnikov had previously served as mayor of the regional capital, Birobidzhan.
Medvedev proposed the candidacies of both men.
Kuznetsov replaces former Norilsk CEO Alexander Khloponin, whom Medvedev promoted last month to head the newly created North Caucasus Federal District, while Vinnikov replaces Nikolai Volkov, 58, who had held the post since 1991.
Russia Today: Climate chaos continues: who’s at fault?
18 February, 2010, 07:14
As the debate over climate change heats up and some scientists continue to maintain that global warming is caused by humans, others are claiming it is all part of a clever marketing scheme.
Head of National Energy Security Fund Konstantin Simonov said to RT, “The global warming theme is a fine opportunity to sell goods with an ecological margin. I mean you come to a shop and see expensive merchandise. You ask: Why so expensive? They reply: Friend, it's ecologically clean merchandize. Purchase it and you will save the planet. And this sort of thing is happening everywhere.”
He also believes that much of the greenhouse gas debate is just that – hot air – with governments posturing in one direction, but acting in another.
“Take the US position: We have a new administration and we will work for ecology. Where is it? Have they joined the Kyoto Protocol? No. Did they save the Copenhagen summit? No. Obama took the PR cream off, but the paper remained unsigned,” Simonov adds.
However, people who are for clean energy say that pursuing green technology such as wind farms is more important now than ever.
Valery Vasilyev, head of Eco-friendly Company, notes that the existing installations make it possible to save electric power and “teach people how to use power the right way.”
“If they save, then less thermal-plant production is needed. This kind of symbiosis, the use of several sources of power – wind, solar, atomic, thermal, hydro – is rather effective and makes it possible to save fuel and natural resources,” Valery Vasilyev added.
Whether or not green technologies are developed, the argument still remains as to whether humans have actually had a major impact on the climate in general or if it's just a naturally re-occurring phenomenon which has happened throughout the ages.
John Christie, climatologist from the University of Alabama says human activities “really don’t change the entire global climate.”
On the other hand, Valery Kokorin, WWF representative, believes man is responsible for huge increases in carbon-dioxide gas – the driver of global warming.
“The temperature is just a symptom of illness. The main reason is CO2 concentration; the anthropogenic increase of CO2 concentration. It is completely proven!" insists Valery Kokorin.
Scientists may argue, but the question remains: Is the general public ready to change their lifestyle simply for the idea of a cleaner planet?
Russian TV producer Sergey Nadezhdin has his own view on the matter:
“Russia is not an environmentally friendly country at all. Polls have shown that most people – 60% – agree with us, which means it's important to understand that every environmental initiative has a price. I asked whether they are ready to pay, let's say a thousand dollars a year, for a better environment, and most people say no.”
Reuters: At least one dead in Russia mine collapse
Thu Feb 18, 2010 12:07pm IST
YEKATERINBURG, Russia, Feb 18 (Reuters) - One person was killed on Thursday when part of a potash mine collapsed near the Urals mountains city of Perm, said a spokesman for the mine's owner, Uralkali (URKA.MM).
One person died in the accident and the mine has been evacuated, spokesman Alan Basiyev told Reuters. The accident is not expected to have any significant effect on production, he said. (Reporting by Natalya Shurmina; Writing by Conor Humphries; Editing by Guy Faulconbridge)
AP: Quake rocks China-Russia-North Korea border region
(AP) – 3 hours ago
BEIJING — A magnitude 6.7 earthquake rocked the region where China, Russia and North Korea meet Thursday, the U.S. Geological Survey said. There were no immediate reports of damage or injuries.
Though area residents said they did not feel the quake, office towers in Beijing — about 770 miles (1,240 kilometers) away from the epicenter — swayed slightly for about a minute.
The quake occurred 335 miles (540 kilometers) below the earth's surface.
With earthquakes centered deep underground, sometimes those close to the epicenter don't feel it while people further away notice some shaking, said the duty officer at the Seismological Bureau of Yanbian Korean Autonomous Prefecture in northeast China's Jilin province. He refused to give his name as is common among Chinese officials.
The Korea Earthquake Research Center said there was no damage in North or South Korea and that quakes occur in that region about once a year.
The USGS said the epicenter was on the Russian coast along the Sea of Japan, 61 miles (98 kilometers) west-southwest of Vladivostok, about 70 miles (110 kilometers) east of China's Yanji city in Jilin province.
Reuters: Powerful quake hits near China-Russia border
Wed, Feb 17 2010
SINGAPORE (Reuters) - An earthquake of magnitude 6.7 hit near the China-Russia border on Thursday, but its epicenter was extremely deep and there were no immediate reports of casualties or damage.
The quake, which occurred at 0113 GMT, was centered midway between the Russian city of Vladivostok and Chongjin, North Korea's third largest city. It struck at a depth of 563 km (350 miles), the U.S. Geological Survey said.
The Pacific Tsunami Warning Center put the coordinates at 42.7 north and 130.9 east. It said there was no danger of a tsunami.
Early estimates put the magnitude at 6.9. The USGS later put the figure at 6.7, a powerful quake but one with effects on the surface likely to be minimized by the extreme depth.
"As far as we know, there have been no reports of damage," an official at China's national seismological bureau told Reuters.
"There have been no reports of any damage here. Everything is calm," a spokesman for Russia's Emergencies Ministry in the Far East city of Vladivostok said by telephone.
"Since the earthquake was 560 km underground, there shouldn't have been much damage," Ham Young-mo at South Korea's National Earthquake Center said.
North Korea's official news agency carried no immediate reports on the quake.
(Additional reporting by Reuters Moscow, Beijing, Seoul and Tokyo bureaux; Writing by Nick Macfie; Editing by Jerry Norton)
Wharton.upenn: Taking the 'R' out of BRIC: How the Economic Downturn Exposed Russia's Weaknesses
Published: February 17, 2010 in Knowledge@Wharton
Last June, when Russia's president, Dmitry Medvedev, gathered fellow BRIC heads of state -- Brazil's President Luiz Inácio Lula da Silva, India's Prime Minister Manmohan Singh and China's President Hu Jintao -- in the central Russian city of Yekaterinburg for the group's first-ever leaders summit, he called for those present to "create the conditions for a fairer world order ... a multi-polar world order."
Medvedev's rhetoric is a giveaway to how, at least in some quarters, the BRIC concept, first put forward in 2003 by analysts at investment bank Goldman Sachs, has evolved from one of economic shorthand to one of political posturing, primarily against American superpower dominance. In a similar gesture, Medvedev dedicated significant air time at the summit to calling for a diversification of world reserve currencies away from the dollar -- a point about which China, which holds some $2 trillion in dollar-denominated reserves, remained silent.
Ever since BRIC was first postulated as a way to group those large, fast-growing emerging markets that, at the time anyway, were expected to be the main engines of world economic growth in coming years, observers have wondered which other countries might have BRIC characteristics. Certainly, there is an ever-growing list of countries being promoted for their BRIC-like qualities to attract international business and investment interest. Goldman Sachs, in a 2005 follow-up to its first BRIC report, put forward its so-called "N11" -- or Next 11 -- group of BRIC aspirants, including Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.
But now many experts question whether the once promising BRIC label has begun to lose its luster -- especially in the case of Russia. Last year, Russia's economic performance was the worst among the BRIC economies by a large measure: For the whole of 2009, its real GDP is expected to have declined by at least 8% and some quarters by more than 10%. That compares to Brazil's smaller real GDP decline of 5.5%, while China's and India's GDPs grew by 8.3% and 6.5%, respectively. Russia's performance is even worse when compared to 2008, which takes into account the bursting of the oil-price bubble in the middle of that year.
Oil and Other Risks
Russia is the world's largest producer of oil and gas, which is the primary source of its power but also a significant source of economic risk. According to Witold Henisz, a management professor at Wharton, oil and gas are "both a blessing and a curse" for the country. Unlike other major emerging economies, such as Korea, Russia hasn't had to aggressively seek its revenue. And because it has never made a clean break from its feudal past, economic -- and political -- power lies in the hands of a few. This has reverberated throughout the country, Henisz says, bringing with it a "tendency toward centralization, control and coercion."
Although the severity of Russia's economic decline has been due to several factors, Ira Kalish, director of global economics at Deloitte Research, says that the obvious beginning was the bursting of the oil-price bubble in mid-2008. This sharply curtailed export revenues and made the country's foreign debt obligation loom much larger than it had when oil prices where heading toward $150 a barrel. Then the worldwide credit crunch squeezed the government's debt position even further and, in turn, percolated into Russia's domestic financial sector, leaving several large institutions in need of bail-outs. Rising interest rates to support a collapsing ruble completed the vicious cycle, leading to even tighter credit and further declines in foreign currency reserves.
Still, while oil prices fell by more than 70% from their 2008 peak, they recovered during 2009 to an average price for the year that was above that of 2007 and well above the average of most of the last decade, when Russia's economy was still growing at a healthy clip. Furthermore, although about 65% of Russia's export earnings come from oil and gas, the sector accounts for only about 20% of overall GDP. Other more oil-dependent economies, such as Kazakhstan or Saudi Arabia, suffered much smaller GDP declines over the same period.
So why has Russia done so poorly compared with its BRIC counterparts, as well as other oil-rich emerging economies?
The reason is "a combination of corruption, poor governance, government interference in the private sector, and insufficient investment in the oil and gas sector," says Kalish. These problems and others -- such as erosion of civil liberties -- will continue to stymie growth unless they are tackled aggressively, according to experts.
Even if there were the will to change, solutions are not obvious, says Wharton professor of legal studies and business ethics Philip Nichols. Consider corruption. "In most countries, the mistrust generated by corruption leads to disengagement from government institutions and the creation of relationship-based networks," he says. "In Russia, you do find these networks and they are quite strong, but they are not as pervasive as in the other BRIC countries. In fact, [in Russia,] in the absence of trust it seems that people often turn to the government for direction. And so it seems that corruption … has the odd, and indirect, effect of further concentrating power in the government."
Nonetheless, Nichols also sees some change in the right direction, including among the country's small and mid-sized enterprises (SMEs), which he has been studying over time. "In the early 1990s, [SMEs] mostly talked about the deal they were working on and maybe the next deal, but rarely looked ahead," he notes. "Now, they talk about their businesses in terms of years. They understand that this requires a sustainable, trustworthy business environment, and that they themselves need to act in trustworthy ways."
More Red Flags
As for the future business environment, Russia's Ministry of Economic Development put forward some fairly optimistic economic growth forecasts at the end of 2009 for the 2010-2012 period. Growth in GDP would be as high as 3.1% in 2010 and 3.4% in 2011, assuming oil prices continue to climb, and GDP growth would rise back to pre-crisis levels by 2012 as foreign investment returns and the domestic economy rebuilds stocks.
The forecasts were quickly dismissed by others, including leading Russian economists. The immediate prognosis for the economy is highly dependent on external factors, argues Sergey Aleksashenko, director for macroeconomic studies at the State University-Higher School of Economics in Moscow. Furthermore, too rapid a recovery -- which might occur if there is another oil price surge -- would be bad for the Russian economy, he says. That would lead to a strengthening of the ruble and foreign currency reserves, an influx of speculative capital, inflation and the strong likelihood of another collapse and an even more severe recession than the one that took place in 2009.
Another red flag that Aleksashenko raises is that Russia's government could be disinclined to follow the healthiest path for recovery -- that is, a long steady one -- ahead of presidential elections in 2012, when former President Vladimir Putin (currently prime minister) is hopeful of a return to the top job.
This highlights the most persistent problem for Russia: its institutional weakness, something that was evident in the dithering over last year's stimulus package, which at 4% of GDP was large by international standards but which was not implemented until late spring because of worries about stoking inflation further. Thus, in the first half of 2009, according to a report by the Economist Intelligence Unit (EIU), Russia had the humiliating distinction of joining the Ukraine and Zimbabwe as the only countries suffering from both a double-digit output decline and double-digit inflation.
Since the fall of communism two decades ago, the Russian business landscape has gone through a turbulent transition that is still nowhere near complete. Corruption, bureaucratic morass and the often arbitrary enforcement of rules have taken their toll. Yet its oil and gas riches are so vast that very large companies still are willing to pump in billions in foreign capital for huge projects -- including BP, Exxon Mobil and Royal Dutch Shell -- despite having been burned on several occasions. "Just by virtue of its size, it deserves continued attention from the investment community," says Henisz.
Inflows, Outflows
But Western companies, on the whole, are wary and have been more inclined to seek less volatile environments for their investments, as was especially evident during the downturn. A case in point: Carrefour. In October, the French retailer -- the second largest in the world after Wal-Mart -- pulled up stakes in Russia, citing bleak short- and medium-term prospects for growth. The move was a surprise given that just months before in June, it had cut the ribbon on its first hypermarket in the country.
That episode underscores not only the fragile investor confidence in the country, but also the difficulty that Russia faces in developing other industries that can reduce its heavy reliance on oil and gas. Outside that sector, the opportunities are "very limited," Henisz notes. "Russia does have the capacity [to develop other sectors] -- there are a lot of engineers and the education level is high. But we're not seeing many entrepreneurs who can develop large service or manufacturing companies. There's a massive gap between the small entrepreneurs -- who want to stay off the tax and political radar screens -- and the oligarchs."
With oil and gas clearly continuing to be a dominant force, Medvedev's new world order for BRICs is perhaps best illustrated in early 2009 by the "oil-for-loans" deal between Russia and China, when the latter arranged for its China Development Bank to lend $25 billion to Russia's Rosneft and Transneft oil companies to build pipelines and secure oil deliveries for the next couple of decades. Russia has been looking to diversify its markets away from the West, while China has aggressively sought to secure energy resources from as many sources as it can.
The oil-for-loans deal also underlines the potential for friction between these two BRIC members. While the BRIC summit was getting under way in Yekaterinburg in June, there was a simultaneous gathering in the same city of the Shanghai Cooperation Organization, made up of Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan, as well as China and Russia. While the meeting may have been billed as a further display of independence from the West, Russia and China have competing interests in how these energy-rich countries bring their oil and gas to market. China -- which pledged $10 billion in economic stabilization loans for the Central Asian countries at that meeting -- has the upper hand.
Another destabilizing factor is the effect of concentrated ownership in the hands of a few billionaires, and the risk of capital flight from this small group, which has happened on more than one occasion and leaves the economy open to sharp and volatile outflows of capital during hard times. In the final quarter of 2008, as the financial crisis deepened after the collapse of Lehman Brothers, $164 billion flowed out of Russia's capital account.
The shortcomings of Russia's ruling political and business elite are by now well known. What's more, the warning signs of more economic trouble ahead are growing -- for example, the increasing rate of non-performing loans on Russian banks' balance sheets. Experts say that strong leadership would be required now to stabilize the financial situation and, more than anything, to encourage foreign investment and management expertise to help steady Russia's economy. But the prospects of that happening soon are slim. For the time being, according to Henisz, "the path forward is looking a little darker" for Russia.
February 17, 2010
Russia profile: The Villain of the Villa
By Roland Oliphant
Russia Profile
Is the Latest Attack on Moscow’s “Illegal” Construction Conscientious Enforcement of the City Laws and Protection of the Urban Environment or a Cynical Land Grab?
It has been almost a month since police turned residents out of their homes in the middle of the night and the bulldozers moved in to flatten the “illegal” community of Rechnik in the West of Moscow. That demolition was frozen on February 5 pending an investigation by the Prosecutor General’s office, but the Moscow City authorities have continued their zealous crusade against supposedly illicit developments elsewhere. Professionals working in construction and real estate often note that it can take years to obtain all of the necessary permits to build something in the Moscow area. So could all these buildings really be illegal?
On January 27 Moscow Mayor Yuri Luzhkov told the Moskovsky Komsomolets daily that he would move against the neighboring Fantasy Island luxury village. On February 3, Oleg Mitvol, the head of the Moscow’s northern prefecture, asked prosecutors to examine the legality of several buildings in the artists’ community at Sokol in northwestern Moscow; and on February 17 city bailiffs said they were preparing to destroy a yacht club on the banks of the Moscow River.
Yuri Luzhkov is the kind of Mayor who gets things done – when he became mayor in 1992 he was welcomed as an antidote to his predecessor, the ineffectual Gavriil Popov, and his hands-on style got him re-elected three times before Vladimir Putin cancelled gubernatorial elections in 2004. But he has never had the cleanest of reputations in Moscow. A January survey for the Levada Center, an independent pollster, confirmed what everyone who has ever had a conversation with a Moscow cab driver already knows: that most Muscovites (57 percent) have no doubt that their mayor is corrupt, and specifically that he promotes the business interests of his wife, Elena Baturina.
Baturina is Russia’s richest woman and the founder and president of Inteko, a construction company that – according to many a rumor – has done suspiciously well out of city contracts. But the Levada poll does journalists the service of showing just how widespread that hearsay is – something that could only otherwise have been reported in the most anecdotal terms. The gubernatorial couple may take some comfort from the fact that Muscovites do not necessarily disapprove – or not that much, anyway. The same poll found that more think he is a good (34 percent) rather than bad (19 percent) mayor. Most, however, are simply indifferent (42 percent).
None of this is especially secret; wisdom about the mayor’s perceived corruption is often followed with a shrugged “well, he gets things done.” But the relationship between the city authorities and the real estate business has been brought into the limelight in the recent weeks by a sudden – and somewhat brutal – campaign against “illegal” housing developments.
It all began in the early hours of January 21, when court marshals backed by bulldozers and police arrived to serve eviction notices on the residents of Rechnik, a community of luxury (and not-so-luxury) homes on the banks of the Moscow River just west of the city center. It was dramatic – Russian and foreign media delighted in detailing how the authorities arrived at three a.m. in an attempt to bypass protesting residents, turned the “refuseniks” onto the street in temperatures of negative 20 degrees Celsius and began the demolition immediately.
The authorities said the 42 houses on the demolition list had been built illegally inside a national park with strict environmental protection laws, and that they were acting on a court order to bring them down. And it is true that Rechnik had been at the center of a legal battle for some time. Oleg Mitvol, then-deputy head of the Federal Service for the Oversight of Natural Resources, an environmental watchdog, found the development was illegal as early as in 2006. So the writing has been on the wall for some time.
But there are still some straws of hope left for the residents. On February 6, Russian President Dmitry Medvedev waded into the feud, ordering a stop to the demolitions until the Prosecutor General’s office could complete a report.
It soon became clear that Rechnik was only the beginning. On January 27, the day after the demolitions at Rechnik began, Luzhkov told the Moskovsky Komsomolets daily that he would move against the neighboring Fantasy Island luxury village. On February 3, Mitvol, now head of Moscow’s northern prefecture, asked prosecutors to examine the legality of 30 developments in the artists’ community at Sokol, for which “it is unclear who gave permission;” and on February 17 city bailiffs said they were preparing to destroy a yacht club on the banks of the Moscow River.
But could all these buildings really be illegal? Maria Asestrova, an architect at the Soprikin&Puzireva architectural bureau who has worked on two of the developments in Sokol that Mitvol has raised questions about, is livid at the suggestion. “In the 1990s things could have been built illegally because everything was in complete chaos. But at least since the end of the 1990s, since 1998 to 2000, everything has been built legally,” she said. “We had two projects there, built in 2004 and 2006 respectively, and they had planning permission; we had meetings with local residents, who approved the project; the Moscow Heritage Committee approved it; the utilities companies approved it. You can’t say anything here was unauthorized.”
It’s a different point that when the owners of the two properties went to the Moscow Heritage Committee to retrieve archived copies of the approvals they were told that the documents were nowhere to be found. “They’ve been moved – the question is, where?” Asestrova said.
It doesn’t take a real estate professional like Asestrova, or even a Moscow taxi driver, to make the point that all of these places – Rechnik, Fantasy Island, Sokol, and the yacht club on Karamyshevskaya embankment – are prime real estate worth billions. As one Rechnik resident told Radio Liberty, “we weren't bothering anyone…and then some kind of oligarch, a very big one, needs this land. This land is worth approximately $1 million per 100 square meters.”
The implication, should it need spelling out, is that the land is being cleared not for a park, as City Hall insists, but for the benefit of some influential property developer. The residents of Rechnik pointed to the supposed connection with Luzhkov and his wife, according to the Moscow Times, filing claims for compensation not only against the mayor, but Baturnia and her brother, Victor Baturin (the Moscow City Court, however has frozen the hearing of those claims until the outcome of the Prosecutor General’s investigation).
But that may suit one man very well. Relations between the Kremlin and Luzhkov, the most entrenched and easily the most defiantly independent governor in Russia, have never been easy. Recent moves have made it look like the Federal Center is looking to finally oust him, and the Rechnik controversy will “without question” be used against him, said Alexei Mukhin of the Center for Political Information. “Luzhkov is to Medvedev what Mikhail Khordokovsky was to Former President Vladimir Putin,” said Mukhin. “And there is definitely a move to demonize him in the media.”
National Economic Trends
BNE: Central Bank considering interest rate cut
bne
February 28, 2010
CB First Deputy Chairman Alexei Ulyukayev in an interview with Interfax today February 18, 2010 said that Russia's stable macroeconomic situation may permit the Central Bank to cut its refinancing rate.
"I consider that the situation still does not carry excess inflationary risks, and enables us to consider a refinancing rate cut," Ulyukayev said, as quoted by Interfax.
Ulukaev also said that it was too early to think about privatising Sberbank, and that state-owned Sberbank and VTB should not raise dividends, but maintain them at same level.
Reuters: Russia c.bank buys $1.4 bln as rouble firms-dealers
MOSCOW, Feb 18 (Reuters) - Russia's central bank has most likely bought as much as $1.4 billion in early Thursday interventions, as the rouble keeps firming, local dealers said.
The amount of interventions means the regulator has shifted the floating rouble band boundary in two 5-kopeck steps to 34.90 versus the dollar-euro basket from 35.00 previously.
The rouble, however, has not touched the lower edge of the boundary, dealers said, trading at 0808 GMT at 34.93 against the basket by 0815 GMT.
In the past, the central bank has shifted the rouble's floating corridor by 5 kopecks for each $700 million in interventions.
Analysts said the tactic should prevail for the time being. (Reporting by Andrei Ostroukh; writing by Lidia Kelly) Keywords: RUSSIA/ROUBLE
(lidia.kelly@; +7 495 775 1242)
Reuters: Russia c.bank moves floating rouble band to 34.95
MOSCOW, Feb 18 (Reuters) - The Russian central bank has on Thursday moved the floating rouble band boundary to 34.95 versus the dollar-euro basket from 35.00, after purchasing $700 million worth of foreign currency, local dealers said.
The move has been expected as the rouble has strengthened in recent days, propelled by relatively strong crude prices and high demand for the currency due to monthly tax payments.
The rouble hit a fresh 13-month high of 34.93 against the basket, according to Reuters data.
(Reporting by Andrei Ostroukh; writing by Lidia Kelly) Keywords: RUSSIA/ROUBLE XX:SU:REUTERS#SN:nLDE61H0BX#XX:1105731.0#HS:RAMSTXT_9088_2010-2-18_072231_4_48#DU:bdeal+lanreunxd1+lanreznxd1+rekwire+reawire+rexwire#XN:##XP:tfukfipdista. ~ (lidia.kelly@; +7 495 775 1242)
18.02.2010 - RIA NOVOSTI via Banki.ru
Cbonds: Moscow set to review Eurobond placement option no earlier than 2011
The government of Moscow will review plans to issue Eurobonds no earlier than 2011, chairman of the City Hall’s committee for state borrowings Sergei Pakhomov told the media.
In the fall of 2010 Moscow is to redeem the €374 mln Eurobond, he reminded reporters. In addition, starting January 1, 2011 Russia’s regions will be able to float Eurobonds both to refinance current obligations and plug a budget deficit. Therefore, Moscow’s Eurobond placement will be considered no earlier than 2011 and, in addition, there is no understanding in which currency the instrument will be denominated.
Pakhomov noted that it costs the city more to issue ruble-denominated Eurobonds and this relates to both specific features of Eurobond placement and expenses potential foreign buyers incur to insure risks.
Moreover, the Eurobond issue depends on the success of the Eurobond placement, which will “become a starting point for our loans”, Pakhomov said. In 2009 currency loans accounted for 14% of the city’s debt portfolio, this year this portion will be reduced, while that of ruble-denominated liabilities will be rising.
Feb. 17, 2010, 6:00 p.m. EST
Market Watch: Russia gears up for its first foreign bond sale since 1998
The nation's deficit may rise to 7.2% of gross domestic product this year
'The key is that the government, by the placement of long-term sovereign Eurobonds, will set a proper benchmark for the borrowing of private corporations.'
Alexander Kudrin, Troika Dialog
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) -- Oil-rich Russia is gearing up to tap the international bond markets for the first time since 1998, just as the debt woes of Greece and other European countries continue to rattle confidence on trading floors across the continent.
Russia is betting that investors will line up to buy its bonds, reassured by its chest of international reserves and low debt levels. The message to the markets is clear: "We're no Greece."
"Russia is structurally not indebted," said Marcus Svedberg, chief economist at East Capital Asset Management AB in Stockholm. "Most people remember 1998 when they defaulted on their debt."
The return to the bond markets is "an important signal," Svedberg said. "The Russian economy is back on its feet. It was hit hard by the crisis, but it's recovering very quickly."
Last year was turbulent for Russia. The economy contracted sharply, as the price of oil, its main export and major source of budget revenue, collapsed. As a result, the country posted its first budget deficit in a decade.
This year's deficit may grow to 7.2% of gross domestic product and the government plans to raise money to fill that hole.
Russia may raise up to $17.8 billion this year, though the exact amount and timing of the bond sale is unclear. The finance ministry recently hired Barclays Plc, Credit Suisse Group, Citigroup Inc. and Moscow-based VTB Capital to organize the sale.
Setting a benchmark
"The key is that the government, by the placement of long-term sovereign Eurobonds, will set a proper benchmark for the borrowing of private corporations," said Alexander Kudrin, head of fixed-income research at Troika Dialog in Moscow.
"If Russian corporations need to tap the long end, they need a more reliable benchmark" than the Russia 2030 Eurobond, which is more of a medium-term bond, Kudrin said. That bond currently yields around 5.5%.
This year's deficit is likely to be lower than the government is forecasting because of higher prices for Urals crude oil, he added.
"I don't think that Russia will issue more than $3 billion or $5 billion [in bonds]," Kudrin said. "I think the demand will be huge."
Analysts said that investors are likely to show strong interest in Russia's upcoming bond issue, because its financial indicators are much better than those of Greece, Portugal or other debt-laden European nations.
"I think there will be a lot of interest in this," Svedberg said. "We will see where the price is. That we don't know. They are expecting a fairly good price given that fundamentals are quite strong."
Russia boasts the world's third biggest international reserves, which amounted to over $430 billion in early February. Its sovereign debt is at around 8% of GDP, a ratio that is dramatically higher in several euro-zone countries. The Russian economy is projected to expand at around 3.5% this year, with more optimistic estimates calling for 5% growth.
What about the local market?
Alexei Moisseev, head of fixed-income research at Renaissance Capital in Moscow, said that if Russia conducts the proper procedures to include its new sovereign bonds in benchmark indexes and register them with the U.S. Securities and Exchange Commission, there will be a lot of interest from investors.
Moisseev believes, however, that Russia should have taken this opportunity to develop the domestic bond market, which is small by Western standards, instead of tapping the foreign markets.
"Unfortunately, the government has decided to go down the easy route," Moisseev said. "It still looks like it will be a good year for Russia. The conditions are perfect to start working on the domestic market, [but] it requires work and effort as opposed to calling up a couple of banks [to arrange an international placement]."
The government should work on building infrastructure to make the local government bond market more acceptable to foreign investors, according to Moisseev.
"If they were to work on infrastructure, they [the government] could have doubled or tripled the amount they can borrow domestically," Moisseev said.
The size of the domestic sovereign bond market is 1.32 trillion rubles ($44 billion), while the domestic corporate bond market is worth 2.4 trillion rubles.
Kudrin of Troika Dialog agreed that Russian authorities should do more to develop the local bond market.
"The key thing is to create the proper infrastructure," Kudrin said, adding that a low-inflation environment is also very important. The inflation rate is currently around 8%.
Interfax: Banks have 525.0 bln rbs on CBR correspondent accounts on February 18
MOSCOW. February 18 (Interfax) - Russian banks have 525.0 billion rubles on correspondent accounts in the Central Bank as of February 18 including 355.8 billion rubles for Moscow banks.
The balance on February 17 was 511.9 billion rublesand 362.1 billion rubles, respectively.
Banks had 429.8 billion rubles on deposit accounts in the Central Bank on February 18 against 405.0 billion rubles on previous day.
The Moscow Times: No More Bailouts for Banks
18 February 2010
The Central Bank and the Deposit Insurance Agency said the Russian banking system has strengthened to the point where large-scale bailouts are not necessary, Central Bank Deputy Chairman Gennady Melikyan said in an interview.
Melikyan said not even the top 50 banks would be assured a bailout, since there was no longer a threat of total collapse.
(Vedomosti)
Business, Energy or Environmental regulations or discussions
Bloomberg: Gazprom, Norilsk Nickel, Polyus Gold: Russia Stock Preview
By Lucian Kim
Feb. 18 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.
The 30-stock Micex Index fell 0.5 percent to 1,354.09 at the close in Moscow. The dollar-denominated RTS Index gained 0.3 percent to 1,421.97.
OAO Gazprom (GAZP RX): Romania provided information to Russia’s largest energy producer on joining the South Stream pipeline project. Gazprom slipped 0.2 percent to 171.55 rubles.
OAO GMK Norilsk Nickel (GMKN RX): Copper prices climbed to a three-week high after reports showed U.S. housing starts and industrial production in January rose more than analysts forecast. Shares in Russia’s largest miner dipped 0.5 percent to 4,599.86 rubles.
OAO Polyus Gold (PLZL RX): Gold fell from the highest price in four weeks as a stronger dollar cut demand for the precious metal as an alternative investment. Shares in Russia’s biggest gold producer rose 0.1 percent to 1,453.96 rubles.
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
Last Updated: February 17, 2010 22:00 EST
Bloomberg: Hong Kong’s Exchange Sees Up to 10 Russian IPOs in Coming Years
By Hanny Wan and Haslinda Amin
Feb. 18 (Bloomberg) -- Hong Kong Exchanges & Clearing Ltd. expects five to 10 Russian companies to seek listings in the city in the “next couple of years” even after United Co. Rusal’s 29 percent plunge since its January debut.
“I’d like to see five, 10 companies from Russia list here,” Hong Kong Exchanges’ Chairman Ronald Arculli told Bloomberg Television. “That’s probably being a bit overly optimistic, but it won’t surprise me if it happens.”
Rusal, the world’s largest aluminum maker, dropped 4.5 percent to HK$7.65 as of 11:19 a.m. in Hong Kong trading, widening the losses since its Jan. 27 debut to 29 percent. That lagged behind the 1.9 percent gain in the city’s benchmark Hang Seng Index. The company raised $2.2 billion last month in a Hong Kong initial share sale.
Rusal’s Chairman Oleg Deripaska is expected to list the company’s power-generation subsidiary EuroSibEnergo on the Hong Kong exchange this year, raising between $1 billion and $2 billion, the South China Morning Post reported, citing unidentified bankers who worked on the Rusal share sale.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@.
Last Updated: February 17, 2010 23:00 EST
Bloomberg: Rusal Falls for Fourth Day, Declines 30% Since Hong Kong IPO
February 18, 2010, 03:54 AM EST
By Emily Chan
Feb. 18 (Bloomberg) -- United Co. Rusal Plc, the world’s largest aluminum producer, declined for the fourth straight trading day in Hong Kong, extending losses since its debut to more than 30 percent.
The shares fell 6.7 percent to HK$7.47 at the close of trading today on the Hong Kong stock exchange. The city’s key Hang Seng Index fell 0.6 percent. Rusal, controlled by billionaire Oleg Deripaska, raised $2.2 billion last month in an initial share offer, selling shares at HK$10.8 each.
“The main problem with Rusal is its debt,” said Kenny Tang, an analyst at Redford Assets Management in Hong Kong. “It relies on the short-term funding and facilities from the banks for its operation, which might be a concern for investors. They are worried about Rusal’s cash flows after the listing.”
Rusal, barred from marketing to retail investors because of that concern, won investments from Hong Kong billionaire Li Ka- shing and New York hedge-fund manager Paulson & Co.
The company, which signed an accord in December with 70 creditors in Russia’s biggest corporate loan restructuring, cut its debt this month after paying $2.14 billion to banks and billionaire shareholder Mikhail Prokhorov from the cash raised by the initial share sale.
The Moscow-based company’s debt declined to $12.9 billion, according to a Feb. 4 statement. It gave overseas lenders $1.46 billion, Prokhorov $278 million, Russian banks $253 million, and paid $152 million in fees.
Rusal shares fell 5.4 percent yesterday. The stock is the biggest loser among the five companies that debuted in Hong Kong this year and is set to record the worst first month return of any new offering since China South City Holdings Ltd. That stock fell 34 percent in the month after it debuted on Sept. 30, according to data on the Bloomberg.
Rusal is expected to list the company’s power-generation subsidiary EuroSibEnergo on the Hong Kong exchange this year, raising between $1 billion and $2 billion, the South China Morning Post reported today, citing unidentified bankers who worked on the Rusal share sale.
Trading in shares of Moscow-based Rusal, the first Russian company to list in Hong Kong, will be key to Asian investors’ perception of further share sales from companies located in Russia, Reinout Koopmans, Deutsche Bank AG’s head of equity capital markets for emerging Europe, said earlier this month. State-run OAO Russian Railways is among companies from the nation seeking to tap the Hong Kong market as early as this year.
Investors bought and sold 22.2 million Rusal shares today, about 12 percent of the 188.2 million shares traded when the stock debuted on Jan. 27.
--Editors: Indranil Ghosh, Aaron Sheldrick.
To contact the reporter on this story: Emily Chan in Hong Kong at +852-2977-6026 or echan107@
To contact the editor responsible for this story Darren Boey +852-2977-6646 or dboey@
VTB: RusHydro prepares to re-launch two units at Sayano HPP as early as next week
VTB Capital
February 18, 2010
intends to bring 2.5GW on line by the year end - positive
News: RusHydro is almost ready to put two units (1.4GW) back into operation at the damaged Sayano-Shushenskaya HPP, Kommersant reports this morning citing the company's press office. The article says that while one unit is officially scheduled to restart production at the end of February and the other at the end of March, these dates could be brought forward. Indeed, the paper speculates that production might be re-launched as early as next week, when Prime Minister Vladimir Putin is planning to visit the station. However, his site visit has not yet been officially confirmed. Overall, RusHydro plans to bring 2.5GW (roughly half of working capacity, or 40% of total installed capacity) on line by the end of this year. This would imply another two units being re-launched.
Our View: The news is positive for RusHydro. In our model, we estimate that only two units will be restored this year. Accelerating the reconstruction process means that the company might be able to secure electricity deliveries under take or pay contracts and possibly earn higher profits this year than we assume in our model. The news will in our view improve sentiment over RusHydro. Were the two units to be launched.
Dmitry Skryabin
RenCap: Alfa Bank agrees GAZ Group debt restructuring
Rencap
February 18, 2010
Event: According to Prime-TASS yesterday (17 Feb), Alfa Bank has agreed to restructure GAZ Group's debt, with Alfa having insisted on restructuring all the debt owed by Oleg Deripaska's Russkie Mashiny, the automaker's major shareholder. GAZ Group's debt to Alfa Bank stands at RUB3.12bn and Russkie Mashiny owes Alfa RUB4bn in total. Russkie Mashiny received a RUB5.8bn loan from VTB to refinance its debt to Alfa Bank.
Action: Positive for GAZ stock, in our view.
Rationale: We think GAZ's major share-price catalyst is its debt restructuring, and Alfa Bank was previously the major obstacle to this. The restructuring of about RUB40bn implies the issuance of a new five-year syndicated loan covering the entire amount, with RUB20bn (about $0.65bn) covered by state guarantees. The initial interest rate is likely to be 17%. With a grace period on the principal of 2-2.5 years and on interest of six months, the conditions seem relatively benign to us.
Ivan Kim
Bloomberg: PPF Buys 50% of Eldorado From Founder Yakovlev, Vedomosti Says
By Maria Ermakova
Feb. 18 (Bloomberg) -- PPF Group NV agreed to acquire 50 percent minus one share of Eldorado Group, Russia’s largest electronics retailer, increasing its stake to 89 percent, Vedomosti reported.
PPF, the Czech Republic’s largest closely held financial company, will buy the holding from Igor Yakovlev, Eldorado’s founder and president, the newspaper said, citing unidentified people close to PPF and Eldorado’s management.
PPF will pay $100 million for the stake and give up some real-estate development projects that it had accepted from Yakovlev as loan collateral, Vedomosti said.
Yakovlev couldn’t be reached for comment and PPF officials declined to comment, the newspaper added.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@
Last Updated: February 18, 2010 00:07 EST
Prime-Tass: INTERVIEW: Euroset aims for higher margins, stronger customer loyalty
Interview with Euroset President Alexander Malis
MOSCOW, Feb 17 (PRIME-TASS) -- Alexander Malis, the president of Russia’s largest cell phone retail chain Euroset, said that his company was focused on increasing margins as well as on strengthening customer loyalty in order to ensure stable profits.
“I would say that we have two main aims – profit today and profit tomorrow. Profit today is an increased margin. Profit tomorrow is customer loyalty,” Malis said in an interview with PRIME-TASS.
When asked how a retail company can attain high margins in a sector that is traditionally considered a low-margin business, Malis said the key to success was to avoid unjustified expenditures. A company can then sell its products at lower prices and gain more revenue, he added.
“(The retail business) was low-margin for a simple reason – most players did not care how much they made. They did not care about efficiency, they did not need to pay attention to prices, to the range of goods, they hardly ever sought out bonuses from suppliers,” Malis said, adding that such market players spent loans taken from banks for personal needs rather than on business development.
Speaking about the outlook for the monobrand retail businesses of mobile operators, Malis said monobrand retail chains also did not care about profit. “This is, from my point of view, a threat to the market. The question is how long cell operators will be ready to record losses.” Monobrand retail chains require a lot of investments, which are not recouped, according to Malis. “It would be better (for mobile operators) to spend, let’s say, the U.S. $700 million needed to create a retail chain on a more appropriate business for operators, for instance, on building third generation (3G) or fourth generation (4G) mobile networks,” he noted.
As for independent retailers, such companies are interested in generating profit, that is why they are ready to serve customers of all mobile operators, Malis said. “We will do all that is needed more professionally and cheaper than nonprofessionals.”
Separately, Malis said Euroset planned to complete integration of its retail subsidiaries and affiliates into a single company called Euroset-Retail by the end of March. Euroset has already reduced the number of its subsidiaries to four legal entities in order to streamline its business and it plans to have only two legal entities after the reorganization is completed.
The company does not plan to return in 2010 to those countries of the former USSR where it has closed its operations, Malis also said, adding that it was not clear if the company would do so in the coming years. “We have left all the countries where violation of laws is the norm of (doing) business,” Malis said. Euroset has shut down its operations in Armenia, Uzbekistan, Moldova, Estonia, Lithuania, and Latvia over the past few years.
Speaking about Euroset’s plans for 2010, Malis said the company expected its revenue and the number of mobile handsets sold to increase 10% to 12%. In 2009, Euroset sold 9.381 million mobile handsets and posted revenue of 55.524 billion rubles.
Malis also said Euroset’s owners were in talks to sell a stake in the retailer. “Among (investors) interested in buying shares in Euroset there are two foreign banks, one foreign strategic investor and two large Russian investors,” he said, adding that Euroset is presently valued at between U.S. $1.6 billion and $2 billion, up from $300 million to $450 million as of March–May 2009. “That is why those who were ready to buy our shares in June–August 2009 see now that the price has changed and negotiations are starting over again,” Malis added.
Malis did not specify the size of the stake that may be sold. In late 2009, the retailer’s majority shareholder, tycoon Alexander Mamut, was reportedly in talks to sell a 25% stake in Euroset. Mamut presently owns a 50.1% stake in Euroset, while the other key shareholder, major telecommunications operator VimpelCom, holds a 49.9% stake in the retailer.
(30.1176 rubles – U.S. $1)
End
17.02.2010 19:58
VTB: Russian government to consider tax benefits for Russian software producers
VTB Capital
February 28, 2010
could be positive for Armada - but impact is unlikely to be soon as terms and timing are unclear
News: Vedomosti has this morning quoted Deputy Minister of Finance Sergei Shatalov as saying that on 4 March the government is to consider tax benefits for Russian software developers. He added that the key task was to determine the legislative definition of such companies and that the Ministry for Industry and Trade and the Ministry for Mass Media and Communications had been charged with this task. According to a representative of the latter, IT companies which derive not less than 90% of their revenues from developing and maintaining software will be eligible for such benefits.
Our View: Although the news could clearly become a major positive driver for public Russian IT company Armada (which focuses on developing and maintaining software), it is unclear i) when the amendment to the law might be adopted; ii) how long it will take to work out the criteria; and iii) how the revenue ratio would be calculated. Nevertheless, the fact that the government has started to study the tax exemption issue for IT service companies is positive and might trigger positive changes to the tax system (and thus an improvement in the margins of Russian software producers). Anastasia Obukhova
Trading Markets: Rosbank-Societe Generale Vostok merger agreed upon
Posted on: Thu, 18 Feb 2010 03:11:23 EST
Moscow, Feb 18, 2010 (RosBusinessConsulting via COMTEX) --
International banking group Societe Generale and Russia's Interros have reached an agreement on the merger of Rosbank and other Russian subsidiaries of Societe Generale, the joint press release reads. Societe Generale has four subsidiaries in Russia operating on the banking and financial services market. According to the press release, both Interros and Societe Generale are confident that the merger will prove to be lucrative and result in a synergistic effect by strengthening operating efficiency. Rosbank and Societe Generale Vostok will be united in a single structure, but each will retain its independent brand. Once all the necessary approvals have been secured, Societe Generale will own an 81.5-percent stake in the new bank. The remaining shares will be owned by Russian businessman Vladimir Potanin's Interros.
For full details on (SCGLY) SCGLY. (SCGLY) has Short Term PowerRatings at TradingMarkets. Details on (SCGLY) Short Term PowerRatings is available at This Link.
Fitch Ratings Upgrades Russian Diamond Producer ALROSA to ‘B+’
Fitch Ratings has upgraded Russian diamond producer ALROSA Company Limited’s (ALROSA) Long-term foreign currency Issuer Default Rating (IDR) to ‘B+’ from ‘B’, removed it from Rating Watch Negative (RWN) and assigned a Stable Outlook. Fitch has also upgraded ALROSA’s senior unsecured rating to ‘B+’ from ‘B’ and removed it from RWN. ALROSA’s Short-term IDR is affirmed at ‘B’. The Recovery Rating for the senior unsecured debt is ‘RR4′.
The upgrade of ALROSA’s ratings reflects improvements in its stand-alone credit profile due to reduced operational and financial risks in addition to the expected growth of the global raw diamond mining industry. The new management’s measures taken in H2 2009 included RUB8.9bn (USD300m) of cost savings in 2009 (USD118m of which are permanent), more than RUB6.4bn (USD220m) of capex reduction, and the sale of non-core oil and gas assets worth USD620m which have been used to reduce debt levels. The company’s goal is to increase the number of long-term contracts with major international clients by three times to 70% of total sales in 2010. This would improve the stability of the company’s performance in market downturns. ALROSA also completed the refinancing of debt facilities, which were at risk of breaching covenants, and the reduction of the company’s absolute debt level by 15% y-o-y by end-December 2009.
Fitch expects 2010 global diamond jewellery consumption and prices to stabilise at H209 levels. The agency further expects restocking to continue, which may result in an increase in apparent demand for raw gemstones by 25%-40% y-o-y in 2010. Fitch forecasts an improvement in ALROSA’s financial performance in FY10 which may result in revenue and EBITDAR growth of 20-25% y-o-y. The agency also expects ALROSA’s EBITDAR margin in 2009 and 2010 to be 30%-34% (FY08: 26.2%). Nevertheless, Fitch does not expect diamond demand and prices to return to 2007 levels until at least 2012.
ALROSA’s stand-alone credit profile continues to be driven by its strong market position as one of the leading global producers in the highly consolidated diamond industry, together with significant mining reserves and a low cost base. Rating constraints include ALROSA’s high level of leverage, its exposure to possible downturns in diamond market cycles and related uncertainties regarding the long-term development of the diamond market and macroeconomic variables such as exchange rates and mining cost inflation. Fitch also notes that the continued switch to underground mining operations may increase pressure on ALROSA’s costs and EBITDAR.
ALROSA’s ratings continue to be driven by its legal, operational and strategic links with its ultimate parent, the Russian Federation (’BBB’/'F3′/Stable), which directly owns 50.9% and controls more than 90% of the company and provides support to ALROSA. Fitch continues to apply its parent and subsidiary rating linkage criteria to ALROSA’s rating (for further information, please see the 19, June 2007 criteria report, entitled ‘Parent and Subsidiary Rating Linkage’, which is available on the agency’s website, .). Fitch continues to believe there is a weak relationship between ALROSA and its shareholder because of the absence of formal state guaranties or cross-default provisions, operational integration, and the direct financing of ALROSA’s operations by the state. State support has nonetheless provided a two-notch uplift enabling a ‘B+’ rating. The factor which supports a two-notch uplift is timely, ongoing extraordinary government support in the form of procurement of the company’s output through Russia’s Ministry of Finance acting through the State Depository (Gokhran).
Fitch’s estimates ALROSA’s 2009 gross leverage (gross debt/EBITDAR) at 4.8x-5.2x, net leverage (net debt/EBITDAR) at 4.3x-4.8x, and 2010 gross and net leverage at 3.5x-3.7x and 3.0x-3.4x, respectively. Additionally, Fitch is concerned about low projected coverage ratios and expects the funds from operations (FFO)/fixed charges coverage ratio will be below 2.5x in 2009 and 2010. The agency expects Alrosa will be in compliance with its maintenance debt covenants in FY2009 and 2010. Fitch also notes that the list of permitted indebtedness of eurobond is quite broad and therefore ALROSA may be able to incur a required amount of debt without breaching its bond terms.
Fitch expects ALROSA to be free cash flow (FCF) break-even in 2009 and 2010 due to its reduction of capex. The Stable Outlook reflects Fitch’s expectation regarding a ongoing stabilization and gradual recovery of the diamond industry and that ALROSA will be able to roll-over maturing debt in 2010, either by refinancing existing short-term debt or by continuing support from state banks.
The Moscow Times: Polyus’ Capital Spending
18 February 2010
Polyus Gold plans to almost double capital spending to a record $600 million this year as it boosts production to take advantage of surging prices, the company said Wednesday.
The company, which spent $326 million on capital last year, may also bid for Kyrgyzstan’s Jerooy deposit, site of the country’s second-largest reserves, CEO Yevgeny Ivanov said.
(Bloomberg)
Alfa: Polyus seeks partners for Yano-Kolimskaya
Alfa
February 28, 2010
Polyus announced it is seeking partners to co-develop the Yano-Kolimskaya area, which contains an estimated 230 mln oz of gold, according to the company. Polyus would seek $500 mln from a consortium for exploration work; the consortium members would each have separate and defined exploration rights within the territory.
We believe the project could be of interest to global miners, but because of its scale, it is unlikely to interest Petropavlovsk or Polymetal. Polymetal's CEO has already said his company will not participate in the project.
We believe this announcement should be viewed in light of Polyus's current Natalka development project, which is in the same region and possibly as close as 200 km from Yano-Kolimskaya. If the partners are sharing exploration expenses on such a large scale, they would naturally share infrastructure costs once they enter the development stage.
The good news is that some investors may attribute positive value to this announcement, as Polyus may have additional optionality on a large reserve in a region where it is already operating, even if it is a very long-dated option.
However, this announcement could also signal that Natalka's development costs - especially for the second and third stages, which require additional infrastructure investment - are too high, and that the company needs partners to share some of these costs in order to make the project attractive.
We believe the news is NEUTRAL, as at this point the implications are unclear.
Barry Ehrlich
PR Log: Eight Russian Brands Included In World’s 500 Most Valuable Brands
|Sberbank has reinforced its position as Russia’s Most Valuable Brand according to an annual survey of the world’s |
|500 most valuable brands published by Brand Finance plc, the world’s leading brand valuation consultancy. |
PR Log (Press Release) – Feb 17, 2010 – • Impressive performances by Sberbank, Gazprom and Beeline
• Three new Russian brands make world’s 500 most valuable brands
Sberbank, which has posted a 159% increase in the value of its brand, has reinforced its position as Russia’s Most Valuable Brand according to the BrandFinance® Global 500 brand index, an annual survey of the world’s 500 most valuable brands published this week by Brand Finance plc, the world’s leading brand valuation consultancy.
Sberbank keeps top spot in Russia, climbing 92 ranking places overall from 149 to 57 after increasing its brand value to US$11,729 million. Gazprom maintains its position as the second most valuable Russian brand, climbing 138 places in the Global 500 from 282 to 144 on the back of 133% increase in brand value this year.
It has also been an impressive year for telecoms company Beeline, which is Russia’s third most valuable brand after posting a 74% increases in brand value. Beeline’s brand is now valued at US$4,116 million.
Overall there are eight Russian brands that make the Global 500 this year. Appearing for the first time this year are Lukoil (4th in Russia, 286 overall), retailer Magnit (7, 462) and iron and steel producer Severstal (8, 469). MTS and Rosneft complete the Russian representation, rising from 426 to 317 and from 438 to 403 in the Global 500 on the back of an 88% and a 57% increase in brand value respectively.
Elsewhere in the survey, retail giant Walmart, whose brand value increased 2% this year, retains top spot. Google has risen in the table the first to the second, whilst Coca-Cola enjoys a 4% increase in its brand value, extending its advantage over main rival Pepsi. Top ten status is also given to technology brands including IBM (4), Microsoft (5) and hp (9). GE and Toyota complete the top ten.
Suffering most were non-essential sectors like airlines and retail. Of the Top Five airline brands, only Singapore Airlines, which came out top in that sector, climbed the table. The biggest airline ‘fallers’ were Japan Airlines, American Airlines and British Airways, down 181, 169 and 117 places respectively.
In the retail sector, excepting Walmart, the picture is grim. The only other retailers to climb in the top ten retail brands were Walmart-owned ASDA, up from 107 to 80; H&M, which rose from 146 and 93 and Home Depot, which is up from 24 to 21 in the overall Global 500. McDonald’s remains the second most valuable retail brand, despite slipping from number 12 to number 17 in the Global 500.
Tesco, which has aspirations of international expansion itself, saw its brand value rise by a significantly higher rate than Walmart – up 26% to US$20,654 million, though its brand value remains only half that of its American rival.
Of the ‘new’ iconic brands, every businessman’s favourite accessory, Blackberry, appears in the Global 500 for the first time whilst Apple has climbed from number 27 to 19 with a 45% increase in its brand value. Santander, the Spanish banking group, rise from 41 to 12 due to their UK major banking acquisitions.
Reuters: EBay CEO says open to Russia JVs, acquisitions
Thu Feb 18, 2010 1:19am IST
MOSCOW, Feb 17 (Reuters) - EBay (EBAY.O) would consider making acquisitions in the Russian online retail sector to help maintain a foothold in the fledgling market, Chief Executive John Donahoe said on Wednesday.
"If the right opportunity presents itself, we will be open to acquisitions (in Russia)," Donahoe told Reuters during a reception held by the U.S. embassy in the Russian capital. He added that joint ventures were also under consideration.
Donahoe said Russia's e-commerce market was currently worth $5 billion a year -- compared to $150 billion in the United States -- but could grow rapidly to $20 billion.
"Our goal.. is to have a small percentage of that," he said.
EBay said on Tuesday it would launch a new online retail platform in five European countries and Russia by the end of March to drive cross-border transactions. [ID:nN16240275] (Reporting by Maria Kiselyova and John Bowker, editing by Leslie Gevirtz)
The Moscow Times: Sberbank’s Kyoto Tender
18 February 2010
Sberbank started soliciting bids from clean energy project developers this week for 30 million Kyoto Protocol carbon credits, the bank said Wednesday on its web site.
The state-controlled bank was appointed last November as the operator for a scheme to trade carbon emission rights under Kyoto, and the tender proposes more than 350 million euros ($480 million) worth of offset credits, based on current market rates.
(Reuters)
Bloomberg: Russian Investor Barred From Saab Provides Financing for Spyker
February 17, 2010, 12:07 PM EST
By Ola Kinnander
Feb. 17 (Bloomberg) -- Vladimir Antonov, the Russian investor forced to give up his Spyker Cars NV holding before the company buys Saab Automobile from General Motors Co., said he supplied the first $25 million paid toward completing the deal.
“The first installment was provided by our banks,” Antonov said today by telephone from Courchevel in the French Alps, where he is vacationing. “I can confirm that $25 million will be used for the acquisition costs.”
GM’s agreement to sell Saab to Spyker calls for Antonov to sell his Spyker shares and resign as chairman when the transaction closes, which may occur next week. The demand from GM came after concerns arose in December about Antonov’s past, people familiar with the situation have said.
Spyker, the Dutch maker of the C8 Aileron sports car, agreed last month to purchase Trollhaettan, Sweden-based Saab for $74 million in cash and $326 million in preferred shares. All major stakeholders, including GM and the Swedish government, are aware that Antonov is funding Spyker’s first payment, the investor said.
Antonov said the money is coming from Convers Group, a banking consortium that includes Lithuania-based AB Bankas Snoras. The company is lending money to Tenaci Capital BV for the deal, he said.
Spyker has said it’s funding the first installment with a loan from Tenaci and that the firm is controlled by Victor Muller, chief executive officer of the carmaker.
Muller declined to comment on Tenaci’s funding and GM spokesman Tom Wilkinson also declined to comment.
Money in Escrow
Spyker has put $25 million into escrow with Detroit-based GM. Another $25 million is due on closing and the rest of the $74 million in cash is due July 15.
Antonov, who owns 29.9 percent of Spyker, said he would be “happy” to return to the carmaker and the new company, likely to be called Saab Spyker Automobiles.
“I still don’t know the reasons” behind GM’s concerns, Antonov said, adding that he has hired an investigative firm to produce evidence that he has no criminal background. “I don’t have any connection to any criminal people, no way,” he said.
Antonov, a 34-year-old Russian who resides primarily in London, is barred from Spyker until 2016, when GM’s preferred shares are scheduled to be redeemed, a person familiar with the situation has said.
“If he could ever come back as a shareholder we would welcome him with open arms,” Muller said in an interview.
Russian Relations
Antonov wrote in a New York Times opinion piece last week that he was pushed out because of his nationality.
“There is a fear of Russia itself, of the increase of the influence of Russian businesses in the international marketplace,” he wrote. “Out of economic self-interest, the United States wants to bar Russia from participating in enterprises involving advanced technologies.”
Antonov’s exclusion from ownership “is a matter strictly between him and GM,” Muller said. “He’s a wonderful person to work with and he will be deeply missed as a shareholder.”
--Editors: David Risser, Tom Lavell.
To contact the reporter on this story: Ola Kinnander in Stockholm at +46-8-610-0714 or okinnander@.
To contact the editor responsible for this story: Kenneth Wong at +49-30-70010-6215 or kwong11@.
Bloomberg: Firestone Flees Moscow ‘Mafia’ Police as Browder Affair Widens
By Tom Cahill
Feb. 18 (Bloomberg) -- Jamison Firestone, who spent 18 years helping U.S. companies navigate Russia’s legal system, said he fled the country because he’s the next target of “mafia” law-enforcement officials he says were responsible for the death of his colleague Sergei Magnitsky.
Firestone, 44, a U.S. citizen and former board member of the American Chamber of Commerce in Russia, said Interior Ministry officials made two attempts to obtain $21 million in taxes that a company he’s a director of paid to the government. He said the perpetrators forged his signature and corporate seals to seek tax rebates, similar to the $230 million in claims made by funds expropriated from Hermitage Capital Management, a $1 billion investment firm run by his client William Browder.
The alleged fraud underscores Russian President Dmitry Medvedev’s challenge reining in what he has called “legal nihilism.” Perceived lack of law is one reason Russia has attracted less than one-fifth the investment in China and Brazil and half of what’s invested in India, its fellow members of the so-called BRIC group of emerging nations, according to three years of data compiled by Cambridge, Massachusetts-based fund- tracker EPFR Global. The nation’s economy shrank the most on record in 2009.
“Corrupt law enforcement is the single biggest risk to business in Russia,” Firestone, co-founder of law firm Firestone Duncan, said in an interview in London, where he is looking for temporary office space. “Police have to stop being the mafia. These people are stealing the country.”
Magnitsky Death
Since Magnitsky’s death in November after a year in pre- trial detention and incidents such as a Moscow police officer beating a man to death, Medvedev has proposed reforms of law- enforcement agencies. The head of the Moscow police’s tax-crimes department, Maj. Gen. Anatoly Mikhalkin, and the chief of the Moscow prison division were fired.
Justice Minister Alexander Konovalov said at a press conference on Feb. 16 that the Russian government “is taking certain steps to ensure that the situation with Magnitsky will never be repeated.”
That’s not enough, said Browder, the 45-year-old U.S.-born founder of Hermitage, once Russia’s largest foreign investor.
“Those who have been fired were the least important part of the conspiracy to steal tax money and kill Sergei,” said Browder from London, where he has been based since Russia refused him entry in 2005. “We’ve written well-documented complaints to the top law-enforcement officers in the country that a number of police officers, judges, organized criminals and businessmen have been involved in the theft of almost $500 million from the state, and were involved in imprisoning Sergei Magnitsky. So far there have been absolutely no consequences for those people.”
‘Goons in Uniform’
Firestone’s troubles began on June 4, 2007, when 25 officers from the Interior Ministry raided his Moscow office and Hermitage’s, seizing enough documents, corporate seals, computers and servers to fill two vans, he said. When one of his employees objected that documents taken were out of the scope of a warrant, he was beaten and hospitalized for three weeks, Firestone said.
“A bunch of goons in uniform came to my offices, beat the hell out of one of my attorneys and took documents used in a theft,” said Firestone, who was corralled in a conference room during the raid. “The police raided my office to commit a crime.”
The seized Hermitage documents were later used to gain control of three funds that obtained $230 million in tax refunds from the Russian government, Browder said.
Mistreated in Prison
Magnitsky, head of Firestone Duncan’s tax and audit department, complained about the fraud to Russia’s State Investigative Committee, the equivalent of the U.S. Federal Bureau of Investigation, on Oct. 7, 2008. He said the officers involved in the raid, Lieutenant Colonel Artem Kuznetsov and Major Pavel Karpov, may have been linked to the fraud, according to a transcript of his testimony.
A little more than a month later, on Nov. 24, five officers arrived at Magnitsky’s home at 7 a.m. and took the lawyer in for questioning, according to his testimony. The officers were direct subordinates of Kuznetsov and Karpov, said Browder.
Magnitsky was denied bail, accused of involvement in a tax fraud perpetrated by Hermitage and mistreated in prison to pressure him to withdraw his testimony and implicate Browder, according to petitions he filed with the Interior Ministry’s investigative committee and reviewed by Bloomberg News.
“The investigators repeatedly proposed that I testify against William Browder in exchange for a sentence to be suspended during the trial and freedom,” Magnitsky wrote in a Sept. 11, 2009, filing obtained by Bloomberg News. “Every time, when I repeatedly rejected these propositions by the investigators pushing me to commit such a base act, the conditions of my detention become worse and worse.”
Anrider Taxes
Documents taken from Firestone’s office in the raid involved a company called OOO Anrider, an investing unit of a U.S. based hedge-fund firm, showing it had paid $21.6 million in taxes in 2006, according to Firestone. He declined to provide the name of the firm.
A filing with Russian tax authorities dated April 24, 2009, claimed that Anrider overpaid taxes by $21 million and was entitled to a refund, according to documents reviewed by Bloomberg News. Firestone said he learned of the filing after the claim was rejected and copies of the papers were sent to him three months later. The documents included what Firestone said were forgeries of his signature and Anrider’s seal.
‘Perversion of Justice’
Firestone, a native New Yorker who began studying Russian in high school and speaks it fluently, alerted tax authorities that the claim was bogus on Aug. 10 and tried to get police to open an inquiry on Aug. 15, according to the documents reviewed by Bloomberg News. The tax office didn’t respond, he said, and the police declined to investigate, according to the documents.
The lawyer filed another complaint on Oct. 8, 2009, this one with the General Prosecutor’s office, which also included details about the alleged Hermitage tax fraud and Magnitsky’s detention. John Beyrle, the U.S. ambassador to Russia, met Oct. 26 with Alexander Bastrykin, head of the investigative committee of the General Prosecutor’s office, to raise those same issues, calling them a “perversion of justice,” Firestone said.
The embassy didn’t respond to repeated requests for comment on the meeting. Bastrykin’s office said spokesman Vladimir Markin would only reply to faxed questions. The fax number provided didn’t work. Irina Dudukina, a spokeswoman for the investigative committee of the Interior Ministry, wouldn’t comment on the roles of Kuznetsov and Karpov, saying the names were common in Russia. She said the committee was still investigating Browder for tax fraud.
‘Give Evidence’
“He’s screaming that they stole his companies, but he’s not talking about the tax he didn’t pay,” said Dudukina in a telephone interview on Feb. 12. “If he thinks he’s innocent, then he should give evidence.”
Browder, who is on the Interior Ministry’s international wanted list, said his companies have all been audited and that no tax claims have been filed against them.
“They’re trying to cover an enormous crime against the budget with fabricated allegations by the people in the Interior Ministry who participated in the crime,” Browder said.
Magnitsky, a 37-year-old father of two, died Nov. 16 from toxic shock and heart failure after being held for 358 days, according to a statement from the Foreign Ministry posted on the American Chamber of Commerce in Russia Web site. He suffered from gallstone disease, and “his rights to timely medical attention were violated,” the statement said.
‘They’re Untouchable’
He wound up in Butyrskaya prison, a Moscow maximum-security facility, where he shared an 8-square-meter (86-square-foot) space with three other inmates and was pressured to withdraw testimony against officers involved in the tax-refund case, according to Firestone.
“He was being actively tortured in prison, and he cracked in a different way than expected,” said Firestone.
Even after Magnitsky’s death prompted a presidential investigation and a finding by a deputy head of the Federal Penitentiary Service that the lawyer’s rights had been violated in prison, attempts to obtain an Anrider tax rebate didn’t stop.
Firestone on Dec. 18 received documents from Russian tax authorities showing that a second effort had been made to forge his signature for a tax refund on Dec. 1, according to the documents reviewed by Bloomberg News.
“When you see corruption on this scale at the same time as the president is demanding investigations and cracking down, it’s brazen,” said Firestone. “It’s ballsy -- they are showing they’re untouchable.”
Leaving Moscow
Firestone, a graduate of Tulane University and Tulane Law School in New Orleans, said he “miscalculated.” He thought he would be safe because arresting a U.S. citizen and board member of the American Chamber of Commerce could create what he called an “international incident.” The second fraud attempt, which occurred after Magnitsky’s death, convinced him he was wrong and that he could be framed or imprisoned for reporting the crime, he said.
He left his apartment in Moscow before Christmas, as if going away for the holiday, and hasn’t been back, he said.
“Sooner or later they were going to do to me what they did to Sergei,” said Firestone. “Everything is repeating itself. It’s the same technique.”
Russia ranked 146th in Transparency International’s 2009 Corruption Perception Index, tied with Zimbabwe and Sierra Leone. The Berlin-based group’s Global Corruption Barometer suggests “endemic” corruption among public officials and civil servants in the country, with one-third of Russian respondents reporting paying a bribe in the past 12 months.
YouTube Arrest
Alexei Dymovsky, a police officer in the Black Sea port of Novorissiysk who posted a YouTube video saying he could no longer shake down and arrest innocent people, was himself arrested on Jan. 22 for fraud, according to the Web site of the investigative committee of the Prosecutor General’s office, the BBC and Transparency International.
“The people Russia needs the least are attacking and killing the ones Russia needs the most,” said Firestone.
Even after the Russian Trading System Index surged 127 percent in 2009, the biggest gain in the world, stocks still trade at a discount to other emerging markets. The RTS Index trades at 7.6 times estimated profits, almost two-thirds of the MSCI Emerging Markets Index. Brazil’s Bovespa Index trades at 13 times 2010 earnings estimates, the Shanghai Composite Index at 17 times and India’s Sensex Index at 20 times.
The RTS Index would add about $90 billion in market value if it traded at the same 12 times expected profits as the MSCI index, according to Bloomberg calculations.
‘Russian Risk’
“There is a ‘Russian risk’ that’s part of that discount,” said Gareth Morgan, who helps manage $2.5 billion in emerging- market investments, including a Russia fund, at F&C Asset Management Plc in London. “Some investors shy away from investing in Russia because the environment hasn’t changed enough.”
Browder, one of Russia’s staunchest defenders when Mikhail Khodorkovsky was arrested in 2003 and his oil company OAO Yukos dismantled, now says the risks are too great.
“Our experience has shown that investing in Russia there’s not just the risk of losing your money, there’s a serious risk of losing your life,” said Browder. “If I had known then what I know now, I wouldn’t have gotten involved with Russia.”
For some investors, Russia is a bargain. Goldman Sachs Group Inc., whose chief global economist Jim O’Neill coined the term BRIC for the fastest-growing emerging-market nations, said Russia is the most attractive emerging market for 2010.
Friend Shot
“Rule-of-law issues in Russia are not new, but the trend is an improvement rather than a deterioration,” said Agnes Belaisch, an emerging-market strategist at Threadneedle Asset Management Ltd. in London. “The balance sheet of the government is very sound; whether Russia is going to pay its debt and where the oil price is going is what’s on my radar screen.”
Firestone moved to Moscow four days after passing the New York bar exam. He gave up early businesses importing cars when he realized his legal background could be of use to foreign companies trying to open Russian operations.
His law firm, founded in 1993, “maintains one of the largest operations for registering foreign-owned firms in Russia,” according to its Web site. He declined to identify any of his clients.
Firestone, who obtained permanent residency in Russia, said he had been tempted to leave the country before, after Terry Duncan, his friend and co-founder of the firm, was killed by a shot to the head on Oct. 3, 1993. Duncan had been evacuating wounded at the Ostankino TV center during Russia’s so-called constitutional crisis against President Boris Yeltsin.
‘Poodles and Yorkies’
“It went from being one of the most exciting things you can do, other than maybe being an astronaut or racing cars, to something dangerous and scary,” Firestone said of being a lawyer in Moscow. “I’m not supposed to be in a life-risking position -- that’s not what I signed up for.”
While Firestone steers clear of Russia, the 20 attorneys and accountants who work for him have stayed with the firm. Most continue to work out of its office on Krasnoproletarskaya Street. Firestone said he can operate from London and will continue to battle those who killed his friend and colleague.
“People don’t want poodles and Yorkies for lawyers, they want people who can fight,” said Firestone, who carried a paperback edition of Leo Tolstoy’s “Anna Karenina” for his subway ride to a breakfast interview. “When I can’t do that anymore, we’ll close our doors.”
To contact the reporter on this story: Tom Cahill in London at tcahill@
Last Updated: February 17, 2010 19:01 EST
The Moscow Times: RenCap Taps Blackrock Exec for Funds
18 February 2010
Bloomberg
Renaissance Group, the parent company of the brokerage half-owned by billionaire Mikhail Prokhorov, hired former BlackRock manager Plamen Monovski to revive its fund business.
Monovski, who co-managed as much as $9 billion at BlackRock’s Emerging Europe fund until last May, said he was named chief investment officer-designate of Renaissance Asset Managers following a decision to split Renaissance Investment Management into a fund manager and a wealth-advisory unit.
“Our aim is to build the leading emerging markets asset management business,” Monovski said late Tuesday. “It is an ambitious goal, but we have the strategy and team in place to achieve it.”
Monovski’s hiring comes a week after Stephen Jennings, the New Zealander who co-founded Renaissance Capital in 1995, returned as chief executive officer to guide the investment bank’s expansion into Asia and sub-Saharan Africa. Jennings, who remains CEO of Renaissance Group, also hired four senior managers, including Nick Andrews from JPMorgan Chase, as global head of equities.
Jennings, 49, is rebuilding RenCap after the record rout in Russian stocks in the fourth quarter of 2008 forced the brokerage to fire 40 percent of its staff and sell half the business to Prokhorov for $500 million.
Monovski, a native Bulgarian based in London, said he would create a flagship Eastern Europe fund that will comply with the European Union’s UCIT standards to reach investors seeking easier trading, transparency and regulatory protection. Renaissance Investment Management’s existing Cayman Islands-registered funds will be moved to Luxembourg, which will boost transparency and liquidity for investors, he said.
“We will be rolling existing Caymans-registered RIM funds into UCIT structures and moving to an environment that is more transparent, more liquid and more regulated,” Monovski said.
The value of assets managed by RIM, which Jennings started with Andrei Movchan in 2003, peaked in September 2008 at $7 billion and then halved over the following four months as stock prices tumbled and clients pulled out. RIM oversaw $3.6 billion as of Jan. 16, 2009, the last date for which Renaissance would give a figure.
Movchan said by phone that he quit as co-CEO of RIM last February after he and Jennings failed to agree on how to develop the company. Movchan has since founded his own wealth management business, Third Rome, hiring 23 people from RIM. It has $300 million in assets under management, mainly from corporate clients, Movchan said.
Stuff.co.nz: Kiwi returns to revive his Moscow bank
NZPA
Last updated 12:50 18/02/2010
New Zealand multi-millionaire Stephen Jennings has taken the reins again at the private Moscow bank he founded 15 years ago.
Mr Jennings created Renaissance Group in 1995 and built the Renaissance Capital bank after originally going to Russia in 1992, aged 32, to privatise the Bolshevik Biscuit Factory.
The former Treasury official's personal stake in the bank was at one stage estimated by Forbes magazine at $US5.2 billion, but the credit crunch reportedly saw his wealth drop to about $US800m. In 2008 he sold half his bank to Russian metals oligarch Mikhail Prokhorov $NZ725m.
Just a year earlier, Mr Jennings had rejected a $US4b offer for Renaissance Capital, shortly before a group of Western investment banks, including Goldman Sachs, Morgan Stanley and UBS, valued the company at up to $US10b.
Mr Jennings, 50, who grew up in New Plymouth, has now returned as chief executive of the bank, after three years working in its parent company.
He has hired a noted investment banker, Plamen Monovski, as chief investment officer and rebranded the bank Renaissance Asset Managers.
It is now targeting $US10b assets under management within five years, a more than fivefold increase from a current sum in excess of $US1.5b, Reuters reported. Mr Jennings is splitting the bank's asset management arm from the wealth management division - until now under the same umbrella.
Mr Jennings has also hired Nick Andrews, formerly with J.P. Morgan and Credit Suisse First Boston in Hong Kong, as global head of equities to establish a secondary market trading and distribution platform to go hand-in-hand with as bid to bring capital-hungry companies from Russia -- and potentially other former Soviet states like Kazakhstan - to Asian investors.
The bank already has a well-established onshore presence in several markets in Central Asia, Eastern Europe and Africa including Nigeria, Kenya, Zimbabwe and CIS (Commonwealth of Independent States, which is comprised of former Soviet states).
"Renaissance Capital has set itself the strategic goal of becoming the premier full service investment bank in the emerging markets time zone from the Russian Far East to West Africa, building on its market-leading positions in the CIS and Africa," Mr Jennings said in a statement.
"We are putting in place a world class management with a track record of managing global scale businesses and an entrepreneurial drive to build businesses."
Activity in the Oil and Gas sector (including regulatory)
VTB: Federal Anti-Monopoly Service develops new rules for accessing crude pipelines
VTB Capital
February 18, 2010
domestic supplies are a priority over exports - no major effect for oil companies
News: Vedomosti reports that the Federal Anti-Monopoly Service (FAS) has drawn up the rules for non-discriminatory access to crude pipelines. The draft regulation has been sent to the other authorities. According to the paper, the new rules suppose non-discriminatory access to the pipeline not only for export supplies, but also for domestic supplies, making the latter a priority. Moreover, oil companies signing a long-term agreement with Transneft (for more than one year) would get priority for crude transportation. The new rules will not apply to government supplies and/or supplies to fulfil international state agreements.
Our View: We do not see the new regulations, if implemented, as a major reform in Russian crude transportation. Russia is currently running sufficient capacity to accommodate all export and domestic volumes. At the same time, we are unlikely to see any major boost in production volumes in the coming years, and therefore no bottleneck is likely to occur. Importantly, though, the proposal emphasises domestic supplies, which underpins the increasing role of refining in the Russian oil business.
Lev Snykov
Portfolio.hu: Surgut receives bid for 21% stake in Hungary's MOL – paper
February 18, 2010, 8:58 am
A Russian-British businessman has once already made a bid to Surgutneftegaz to buy its 21% package in Hungarian fuels group MOL, Hungarian daily Népszabadság reported on Thursday. This person is Kirill Kasatkin whose name has also come with relation to local energy and gas trading company Emfesz.
Kirill Kasatkin, a representative of Sinocor, an international energy company with main offices in London and Geneva, has recently offered shares of UK-based Ineos, the world’s third largest chemical company, for Surgut’s stake in MOL, the paper said. The parties have finally dropped the idea and the deal fell through. This still shows, though that Russian companies have developed a serious interest for Hungary’s energy sector.
Surgut’s 21% MOL package has been a subject of heated debate for months. MOL has first been at loggerheads with Austrian oil and gas group OMV that accumulated a 21.2% stake in MOL through several years. Then it was infuriated, along with the Hungarian government, when it learned that Surgut bought this package from OMV for EUR 1.4 bn, double the market price, in Mach 2009.
Last week, Russian daily Vedomosti said MOL was in talks with Surgut on buying back the 21% stake. The Finance Ministry denied the report on Hungary being in talks with Russia at a government level to have this deal realised and MOL also said it had no delegation in Moscow talking with Surgut about the transaction.
Financial Times: Moscow raises environmental heat on TNK-BP
By Catherine Belton in Moscow
Published: February 17 2010 23:23 | Last updated: February 17 2010 23:23
Russia on Wednesday moved closer to stripping BP’s Russian oil venture of its licence to develop a huge east Siberian gas field, ahead of negotiations on a potential sale of the field to a state-controlled rival.
Russia’s environmental watchdog, Rosprirodnadzor, said it was recommending that TNK-BP be stripped of its licence to develop the Kovykta field in east Siberia. Rosnedra, the state agency responsible for licences, has yet to say when it will make a decision.
The new threat risks further denting Russia’s image when it is seeking to improve its reputation with investors. Viktor Vekselberg, one of the Russian billionaire owners in the 50:50 joint venture with BP, last week warned the Kremlin that the new state probe into the field could damage the investment climate.
TNK-BP’s Kovykta field, which contains 2,000bn cubic meters of gas, has been in limbo for years amid a standoff with Gazprom, the state gas export monopoly. TNK-BP agreed more than two years ago to sell control of the field to Gazprom for $700m-$900m, with an option to take a minority stake, following a wave of similar threats to its licence. But the deal has been stalled ever since, initially due to a disagreement over price.
The new pressure could signal that the Russian government is preparing finally to make a decision on Kovykta’s future, analysts said. “This is a sign they want to make progress,” said Chris Weafer, chief strategist at Uralsib, a Moscow investment bank. “It follows a familiar pattern of putting pressure on the other side to force them to make concessions. It is pretty much the modus operandi we saw in the other energy disputes of previous years,” he added, referring to a similar wave of threats that led to Royal Dutch Shell selling control of its Sakhalin 2 oil venture to Gazprom in 2006.
Gazprom has insisted it is no longer interested in Kovykta. But Russia is under increasing pressure to clinch a gas supply agreement with China, which is already signing up alternative supplies from Central Asia and potentially from Qatar.
Even as Gazprom has dragged its feet on Kovykta, its rival Rosneft, the state oil group, has been eyeing the field. Rosneftegaz, a Rosneft vehicle, is due to table a proposal on buying the field from TNK-BP in March, people close to TNK-BP said.
BP sees the field as a long-term prospect and has not booked the gas to its reserves.
Telegraph: Russia to seize Kovytka gas field from BP venture
Russia is poised to seize control of Kovytka, one of the world's largest gas fields, from TNK-BP, a joint venture between BP and four Russian oligarchs.
By Rowena Mason, City Reporter (Energy)
Published: 6:00AM GMT 18 Feb 2010
The move would mark a shift in the 10-year battle over the Kovytka field in east Siberia, where a $20bn (£12.8bn) development project is underway. It is one of Russia's key energy assets and has the potential to be a major earner, but production has never got off the ground for the Anglo-Russian consortium.
Russia's environmental watchdog, RosPrirodNadzor, yesterday recommended that TNK-BP's licence should be stripped because it has failed to develop the prospect. A final decision lies in the hands of the oil and gas licensing regulator, Rosnedra.
Sources close to BP sought to play down the significance of the development, saying City analysts and investors have already removed the field from their calculations of the company's growth.
"We've been expecting something like this for a long time," the source said.
However, the move does represent a tougher line towards the British joint venture, which has endured a torrid few years at the hands of the Russian authorities.
Viktor Vekselberg, one of Russia's richest men and one of the four billionaire investors, told the country's President Dmitry Medvedev on Friday that a state inspection at Kovykta was "clearly not supportive for the investment climate in our country."
He warned that revoking its licence to develop the field, which has 2 trillion cubic metres of gas, will only damage the reputation of Russian in the eyes of foreign investors, whom the Kremlin is trying to attract.
But Russia's Natural Resources Ministry has consistently warned TNK-BP to speed up development or lose the rights to Kovykta.
The joint venture has argued that it cannot ramp up output to the required levels because Gazprom has a monopoly on exports to nearby China. It would need to build pipelines costing billions of dollars to reach its Asian markets.
TNK-BP was originally asked to sell its stake in Kovytka to Gazprom, the Russian state energy monopoly, in 2007 but talks stalled after years of wrangling on price.
Because Kovytka is a designated "strategic field", it could fall automatically to Gazprom if TNK-BP is stripped of its licence as expected. TNK-BP and BP declined to comment.
Losing Kovtyka would mark another setback for BP in Russia, after a long battle with its co-investors for control of the joint-venture in 2008.
An acrimonious row between the Russian investors and the former chief executive, Robert Dudley, led British management to accuse Russian authorities of harassment and flee the country.
Relations appeared to have settled down with the appointment of Maxim Barksy, the choice of TNK-BP's Russian investors, as the new chief executive from 2011. The interim boss is Mikhail Fridman, one of the four key Russian shareholders.
UpstreamOnline: TNK-BP to invest $180m in Venezuela
Russian oil player TNK-BP plans to invest around $180 million within three years in the development of the Junin-6 Block in Venezuela, as part of the agreement between the two countries to tap the huge oil deposit.
News wires 17 February 2010 17:56 GMT
The oil producer also said that it will invest $1.7 billion in two key Siberian projects over the same period.
The company has reported a higher capital expenditure this year as it seeks to speed up output growth, Reuters reported.
The future chief executive of the oil venture, Maxim Barsky, told Reuters in December that the company, half-owned by BP, would cut previously generous dividends to find the billions of dollars needed to tap huge new deposits, El Universal reported.
Barsky added that the shift from the previous strategy showed that hostilities between BP and Russian-related co-owners, which hit investor confidence in Russia, had now been left behind.
Published: 17 February 2010 17:56 GMT | Last updated: 17 February 2010 17:56 GMT
Reuters: Novatek plans to ship LNG via Arctic Ocean
NOVATEK-ARCTIC
* Novatek produces 5 percent of Russia's gas
* Expects output of 36-38 billion cubic metres in 2010
* Northern Arctic Route would cut transport by 30 percent
By Chris Baldwin
London, Feb 16 (Reuters) - Russian gas producer Novatek said on Tuesday it plans to test shipping liquefied natural gas via the Northern Arctic Route to Asian markets from its fields on the Yamal Peninsula.
The Northern Sea Route through the Arctic Ocean along the coast of Siberia opens for six to eight weeks a year, but Russian vessels have traversed the passage with expensive icebreaker escorts many times in the past.
Novatek Chief Financial Officer Mark Gyetvay told an audience at the International Petroleum Week conference in London that the company, Russia's second-largest gas producer, would seek subsidized assistance from state oil-shipper Sovkomflot.
"We are planning to send a very large tanker to the Asian market via the northern route," Gyetvay said.
The Northern Sea Route trims 4,000 nautical miles (7,400 km) off the usual 11,000-mile journey via the Suez Canal, which yields big cuts in fuel costs, time and CO2 emissions.
"If we're able to do that successfully in conjunction with Sovkomflot this potentially reduces the transport by about 30 percent to the Asia-Pacific market," he said.
"It's kind of preparatory at this point given the economics, but we're still in discussions with Sovkomflot."
CLIMATE CHANGE
Last September two German cargo ships successfully navigated across the Arctic-facing northern coast from South Korea to Siberia without the help of icebreakers.
Last year the Arctic's sea ice pack thawed to its third-lowest summer level on record, continuing an overall decline symptomatic of climate change, U.S. scientists said in a report in September.
"There is a seasonality involved, and we will probably only be able to do this on a three-four month basis," said Gyetvay.
Russian Prime Minister Vladimir Putin has called for foreign energy majors to enter "stable and long-term partnerships" to develop gas deposits on the Arctic peninsula of Yamal, a region with enough gas in the ground to satisfy world demand for five years.
But a wave of resource nationalism that marked Putin's eight years as president spooked foreign investors and led to Royal Dutch Shell ceding control of its Sakhalin-2 project.
Russian gas export monopoly Gazprom this month said it had agreed with partners Total and Statoil to delay pipeline gas production from their Shtokman field in the stormy Barents Sea by three years to 2016 after its gas demand slumped in Europe.
MARKET SLUMP
Gyetvay said a recent Russian LNG production slowdown following a global price slump would likely reverse once Chinese energy users began to seek beyond their own coal-fired plants.
"China will probably grow significantly more than what anybody is forecasting," Gyetvay said.
"China will eventually move away from coal, to a market rate that might not be more than 10 percent (of energy derived from natural gas), but that movement divided by the population will be a very large increase."
"Novatek pegs the Asia Pacific as being the most significant break in the natural gas market," Gyetvay said. (Additional reporting by Alla Afanasyeva; editing by Sue Thomas)
BarentsObserver: Timan-Pechora oil more important for Lukoil
2010-02-17
The Naryanmarneftegaz company last year produced more than 7,5 million tons, making it the fourth most-producing subsidiary in the Lukoil group.
Naryanmarneftegaz, which is owned 70 percent by Lukoil and 30 percent by ConocoPhillips, in 2009 produced a total of 7,576 million tons, General Director of the Company Albert Isangulov said in a press conference in early February, a press release from the company reads
The past year turned out to be a technological break-through year with full-scale production operations run in both phases of the unique Yuzhno-Khilchuyu field, Mr Isangulov said.
As reported by BarentsObserver, the Yuzhno-Khilchuyu field is not the by far biggest field in the Nenets Autonomous Okrug. The extracted oil is all pipelined to the Varandey terminal on the Barents Sea coast.
Another important and pleasant event for the company was that it in 2009 received an honored international award of the Best Company of the Year and an honored title of the Social Responsive Company based on the results of the Contest organized by the two Russian parliament champers along with several federal ministries, General Director Isangulov highlighted in his presentation.
FEBRUARY 18, 2010, 1:42 A.M. ET
WSJ: Russian Pipeline Raises Competition in Asia
Newly Built ESPO Feeds Siberian Crude to Growing Markets in the East, Putting Arab Producers on Defensive
By GUY CHAZAN
Middle Eastern oil producers are scrambling to protect their market share in Asia amid rising competition from a new source of supply—an oil blend from Russia called ESPO.
Gulf states have been reviewing their export strategies and pricing policies since the launch of the blend, named for the newly inaugurated East Siberia-Pacific Ocean pipeline through which it is delivered to Asian markets, traders and analysts say.
At issue is who will dominate the world's fastest-growing energy market. Oil consumption in the West is widely believed to have peaked, damped by economic recession, a shift to more-efficient vehicles and the growing use of biofuels. But demand is still growing in China. Producers are responding to that by shifting their attention away from their traditional export markets in the U.S. and Europe and towards the east.
Saudi exports to the U.S. fell to 745,000 barrels a day last August, the lowest level in almost 22 years, according to Platts, the energy information service. Meanwhile, so much Saudi crude is now flowing toward China that the country may soon replace the U.S. as the main market for Saudi Arabian crude.
Reflecting the Saudis' waning commitment to the U.S., state-owned oil giant Saudi Aramco last December gave up its lease on an oil storage facility on the Caribbean island of St. Eustatius, which fed U.S. markets. It had held it since the mid-90s.
At the same time, Saudi Aramco and Abu Dhabi have signed deals to store stockpiles of oil in Japan, making it easier for them to supply Asia.
"Producers that supply the market on long-term contracts are taking steps to counter ESPO," said Jorge Montepeque, global director of market reports at Platt's.
Iran and Iraq have also taken steps to attract Asian customers by changing the way they sell their crude, he said. Currently, both countries trade on a "Free on Board" or FOB basis, meaning the buyer covers the cost of delivery. He said they are considering switching to a CIF, or cost, insurance and freight price, where the seller pays transportation costs to the importing country as well as insurance charges. This allows them to compete better with ESPO, Mr. Montepeque said.
Saudi Arabia also surprised the market this month by unexpectedly cutting the official selling price of its Arab Light blend of crude in March to customers in Asia. Some traders said the move was a response to the challenge from ESPO.
ESPO blend was launched last December with the opening of Russia's new pipeline, a pet project of Russian prime minister Vladimir Putin. Before then, almost all of Russia's oil flowed westward.
The pipeline brings crude produced by companies like OAO Rosneft, TNK-BP Ltd. and OAO Surgutneftegaz in new oilfields in East Siberia to Skovorodino near the Chinese border, from where it is sent by rail to Kozmino, Russia's new export terminal on the Pacific Ocean. An offshoot to China will be completed this year.
ESPO's current capacity of about 600,000 barrels of oil a day will rise to 1 million barrels a day in coming years as the pipeline is extended all the way to Kozmino.
Although the quality of ESPO's crude is still largely untested, cargoes are finding plenty of willing buyers in Japan and South Korea, such as SK Energy Co., a Seoul-based refiner. Kozmino is some three to four days' sailing time from North Asian refineries, while oil from the Gulf takes three weeks.
Critically, some cargoes are also finding their way to U.S. markets. Traders say U.S. refiner Tesoro Corp. and oil giant Exxon Mobil Corp have both bought ESPO crude. Exxon declined to comment; Tesoro wasn't immediately available to comment.
The Russian government has encouraged producers to use ESPO by exempting East Siberian crude from oil export duties. That has allowed the blend to be more competitively priced than some Middle Eastern grades.
However, some Russian officials have questioned the wisdom of the tax breaks, saying they will blow a hole in Russia's fragile public finances and should be abolished.
Write to Guy Chazan at guy.chazan@
Rigzone: Matra Recommences Appraisal Drilling in Russia
Matra Petroleum plc 2/17/2010
URL:
Matra has provided an update on appraisal well-13 on the Sokolovskoye field, in the Orenburg region, Russia.
Further to our announcement on January 26, 2010, Matra reported that the handover of drilling operations to the new drilling contractor, Siberian Service Kompania (CCK), has been completed. Furthermore, the Nitrogen influx has now been controlled and the Blow-Out-Preventers (BOP's) opened. Full mud circulation has been restored, drilling has recommenced and the depth at 9.00am this morning was 987m. (Projected total depth is 3850m)
Matra's Managing Director, Peter Hind said, "We are pleased to be drilling again and to have the new contractor fully onboard. The immediate aim now is to complete this section of the well and cement the casing to fully isolate the Nitrogen zone and avoid further difficulties. The wellbore appears to be in good condition and we hope to make better progress towards our target depth. Importantly, the cost impact of these remedial operations has not been significant and the company remains well funded to complete the well and other anticipated activities. We will report further progress of the well as appropriate."
Rigzone: Tatneft Implements Corrosion Protection Project
OAO TATNEFT 2/17/2010
URL:
In the framework of the large-scale effort to ensure environmental safety during crude oil production OAO TATNEFT is implementing a number of promising projects, including the one for corrosion protection of pressure maintenance oilfield equipment for the purpose of minimizing the rate of is failures.
To this effect a program of running the anticorrosive performance tubing into of injection wells is implemented in the Company, which allows increasing the tubing service life in the wells by 2-2.5 times. As a result of the work during the period of 2004-2009 protection of existing active injection well stock through application of anticorrosive performance tubing used for injection of effluent water exceeded 77%.
At the same time the program provides for introduction of highly reliable M1-X packers into the injection wells, which taken together with application of the anticorrosive performance tubing ensures reliable protection of the well production casing the from high pressure and corrosion. Described packers were installed in more than 2 thousand injection wells.
Implementation of these programs will reduce the cost of wells repair with concurrent reduction of polluting the bottomhole zone with corrosion products, as well as reduce the costs of the well survey. The total cumulative estimated economic effect of implementing these programs will exceed 900 million rubles for the period of 2004-2009.
Gazprom
Novinite: Romania Tells Russia It Wants to Be Part of South Stream
Energy | February 18, 2010, Thursday
Romania has confirmed its interest in participating in the Russian natural gas pipeline project South Stream.
This has been announced by the Gazprom press center after a meeting between the Vice President of Gazprom, Alexander Medvedev, and the Romanian Economy and Energy Minister Adrian Videanu.
During the meeting, Medvedev and Videanu discussed the cooperation in the sector of natural gas supplies, storage, and transit, as well as electricity production.
Medvedev has expressed his opinion that the energy cooperation between Russia and Romania would deepen; he pointed out that in 2009, the two countries marked 30 years since the first Russian natural gas supplies to Romania. In 2009, Russia sold to Romania 2,04 billion cubic meters of gas.
The South Stream natural gas transit pipeline is supposed to go from Russia to Bulgaria via the Black Sea proceeding to Italy and Greece.
Various reports have raised alarm that Romania might replace Bulgaria as part of the South Stream pipeline as the Bulgarian government of Boyko Borisov decided to review the project.
RIA: Gazprom receives South Stream documents from Romania
23:5217/02/2010
Gazprom has received documents for a feasibility study of the South Stream gas pipeline's Romanian section, the Russian energy giant said Wednesday.
"The Romanian side has confirmed interest in participation in the South Stream project and passed on to the Russian side the earlier requested data necessary to draft a feasibility study of the gas pipeline's route via Romania," Gazprom said.
The South Stream project, designed to annually pump 31 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, involves Bulgaria, Serbia, Hungary, Italy and Greece.
The pipeline's capacity could be eventually increased to 63 billion cubic meters annually. The gas pipeline is expected to start operating in late 2015. The project is part of Russia's efforts to cut dependence on transit nations. It is a rival project to the EU-backed Nabucco, which would bypass Russia.
Gazprom said Tuesday that it is set to sign an agreement with Bulgaria on a joint venture that will clear the way for the construction of the South Stream gas pipeline across the southeast European state.
Russia signed an intergovernmental agreement on the South Stream gas project with the Socialist-led Bulgarian government in January 2008.
MOSCOW, February 17 (RIA Novosti)
Reuters: More Romania, Gazprom gas storage talks in March
Wed Feb 17, 2010 12:55pm GMT
BUCHAREST, Feb 17 (Reuters) - Romania will have further talks in March with Russian gas giant Gazprom (GAZP.MM) to form a joint venture to build underground gas storage in the Black Sea state, the head of state-owned Romgaz said on Wednesday.
The plan was discussed in a meeting with Gazprom deputy chief Alexander Medvedev, and the Russian firm will send a team of experts to Bucharest next month to assess possible locations for the facility.
Romania, which is less reliant on Russian gas than other ex-communist European states, produces around 70 percent of its annual domestic consumption from local fields and imports the rest from Russia.
However, experts have said its underground storage facilities are insufficient to make up for a prolonged disruption in gas flows and need to be expanded.
Bucharest and Gazprom first announced plans to jointly build gas storage facilities in Romania last year. Local media have quoted Romanian Economy Minister Adriean Videanu as saying the two firms could store 5-6 billion cubic metres of natural gas.
"A Russian technical team will pay us a visit in March," Romgaz head Marcel Piteiu told reporters before meeting Gazprom.
"(When the company will be set up) depends on what the technical team decides. The condition is to find an adequate storage deposit."
The economy ministry said in a statement on Wednesday the meeting also included talks with gas pipeline operator Transgaz TGNM.BX to expand the transit grid and renegotiate transit contracts that expire in 2011.
Medvedev and Videanu also discussed potential cooperation in electricity production but no details were disclosed. (Reporting by Luiza Ilie; editing by James Jukwey)
Barentsobserver: Shtokman LNG can be re-routed to Europe
2010-02-17
Gazprom is still eyeing LNG production and sale from the Shtokman project, despite the dramatic change in the US gas marked. - The LNG business will develop in Europe, says Yuri Komarov, Chief executive of Shtokman Development AG, speaking at a conference in Arkhangelsk.
The main reason why Gazprom keeps to its plan to produce liquefied natural gas (LNG) from the Shtokman-field in the Barents Sea is because Russia considers it important to be able to shift its gas flows depending on market situations, according to Yuri Kamarov quoted by Bloomberg.
Gas sent via pipelines is difficult to redirect, while a tanker with LNG in principle can be sent anywhere in the world, with a destination agreement made when the tanker leaves the LNG-plant port.
On February 5th, the board of directors in the Shtokman Development AG decided to postpone the huge Barents Sea gas field with three years, as reported by BarentsObserver. It was said that the investment decision on the LNG part will be taken before the end of 2011, with earliest possible LNG production at the Teriberka site on the coast of the Kola Peninsula in 2017.
This week’s Arkhangelsk conference is organized by Sozvezdie, the association of oil-and-gas suppliers in the Arkhangelsk region. Speaking at the conference, Yuri Kamarov said Gazprom and its partners Total and Statoil could redirect some LNG to Europe until the US market change again.
- Some LNG volums can go to the European market, first of all, the United Kingdom, Italy and France, Kamarov said according to Bloomberg.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- 10 facts about russia s history
- facts about russia for kids
- videos about russia for kids
- learn about russia for kids
- map of russia for kids
- russia kids learning tube
- russia for kids printables
- information about russia for kids
- russia and central asia map
- german soldiers in russia ww2
- china and russia warn us
- iran china russia news