Russia



Russia 101025

Basic Political Developments

• President of Finland Tarja Halonen will visit Russia on a state visit from November 8-11 - On November 9 Tarja Halonen will hold talks with Dmitry Medvedev in Moscow.

• Russia, Greece to hold talks on Burgas-Alexandroupolis pipeline before year end - "We have decided to set up a working group, which will discuss a joint position on the Burgas-Alexandroupolis project at its first meeting," Shmatko said, adding that Moscow respected the position of Bulgaria, which wanted to assess ecological risks of the project.

• Russia plans to build up Black Sea Fleet-Interfax

o Over a dozen new ships to enter service in Black Sea Fleet - "Under the 2011-2020 government armament program, the Russian Black Sea Fleet will get 18 new ships, including six Project 22350 frigates, six Project 677 diesel submarines and two Project 11711 large landing ships," an official said.

• Russian, Ukrainian prime ministers to meet Oct. 27 in Kyiv - Putin's website says that during the course of the talks, which will be carried out under the framework of the Cooperation Committee of the Russian-Ukrainian Interstate Commission, the sides will discuss "a wide array of economic, energy and investment cooperation issues." As of 9:00 a.m. on Oct. 25, Azarov's press service had released no information about the visit.

• Government seeks "single package" deal with Russia - The Hungarian government wants to reach an agreement with Russian leaders on questions of bilateral cooperation in a single package, National Development Minister Tamas Fellegi said at a press conference on Friday.

• WikiLeaks has dirt on Russia - Internet resource WikiLeaks, which specializes in information leakage, compromising features and Russia. This was told founder Julian Assange resource in an interview with the Izvestia newspaper.

o Wikileaks admits it has material on Russia - “We have material on Russia, but not as much as we would like,” Assange told the newspaper. “The fact that most of your sources only have Russian-language information limits our options. “However, we are helped by the Americans. They pass on a lot of material about Russia.” The interview gave no indication of what type of material might be held on Russia.

• Internet still subject to degree of monopoly – Communications minister: Russia’s Communications Minister, Igor Shchegolev, talked to RT about the Internet – an umbrella structure that embraces the entire world, but which was first designed to serve US interests.

• Rosatom to train staff for IAEA - Under the agreement, Rosatom will train junior staff, not older than 32 years old, and send them to the IAEA.

• Dmitry Medvedev to look into problems of the elderly

• Medvedev to finalize instructions to improve life of pensioners - The president handles actively the problems of pensioners in the past four weeks. He held about ten meetings on pressing problems for elderly people. Medvedev explained his attention to this problem by the fact that about 40 million pensioners live in Russia.

• Hundreds Demand Putin's Ouster - A crowd of up to 2,000 gathered on Pushkin Square on Saturday to demand the ouster of Prime Minister Vladimir Putin and his Cabinet — just as the State Duma tightened the screws on legislation on protests.

o Protesters demand Putin's ouster - Up to 500 protesters from Left-wing and liberal opposition groups gathered on Pushkin Square to call for Putin's resignation.

• Russian environmentalists protest lakeside factory, highway - Around 200 activists gathered Sunday in the centre of the Russian city of Saint Petersburg to protest the impact on the environment of a series of government projects.

• One of seized freighter crew is Russian - According to the Maritime Bulletin, one of the crewmembers of the German bulk-carrier Beluga Fortune, seized by Somali pirates, is a Russian national.

• Russia schedules session of intergovernmental commission with Azerbaijan for this November

o Armenia and Russia considering possibilities for supply of modern Russia-manufactured aircrafts to Armenia

o Yerevan and Moscow confirm interest in development of nuclear energy in Armenia

o Armenia asks for Russian assistance in renting ferryboat to transport from 30 to 50 trucks

o Armenia Seeking to Increase Rough Diamonds from Russia

• “Rossiya” icebreaker returns to Murmansk

• Russia's Progress craft to be undocked from ISS

• Russian “Progress” spacecraft to be used as lab

• Ingushetia looks for Chinese investors - Ingush President Yunus Bek-Yevkurov invited Chinese investors to set up a car manufacturing plant in the North Caucasus republic while presenting Ingushetia's investment projects at Russia's pavilion at the Shanghai Expo 2010.

• Blast in Kabardino-Balkaria school hurts nobody - A source in law enforcement agencies told Itar-Tass that experts have ruled out a household gas explosion version. The investigation is in progress.

• Explosions in Ingushetia: Seven people injured

• Caucasus 'Part of Russia' - Senior Kremlin aide Vladislav Surkov dismissed speculation Friday about the possible secession of the volatile North Caucasus from Russia, calling the region “an integral part” of the country, Interfax reported.

o Top Kremlin ideologue visits Chechnya as violence mounts - Kremlin's top ideologue Vladislav Surkov paid a rare visit to Chechnya where he said the insurgency-plagued North Caucasus would remain part of Russia as he sought to dissuade youth from joining militants.

• ‘I Do Not Want Independence’ - Kadyrov spoke to NEWSWEEK’s Anna Nemtsova at his heavily fortified residence in Gudermes

• International Quran Reciting Competition in Moscow - The competition is held under the supervision of Russia’s Mufti Rawi Ain Al-Din and sponsored by Ekmeleddin Ihsanoglu secretary general of the Organization of Islamic Countries.

• Moscow Officials Decide Not To Build Mosque In Park

• Census draws to a close in Russia - Preliminary results are due to be made public in April, while the final returns are not expected before the end of 2012.

• Russian census to find large Jewish drop, expert predicts - The Russian census under way  will show a Jewish decline of as much as 25 percent, a specialist on Russian Jewish demography predicts.

• Work on Bolshoi Theater nearing end - Restoration work on the facades of Moscow's Bolshoi Theater will be done by the end of November, and it will reopen next year, officials said.

• Not worried over India buying arms from US, says Russia - Describing India as a “super power in the making”, Russia on Sunday said that it was “not worried” over Indian armed forces buying military equipment from the US and pledged its support to see the Asian giant “strong militarily” apart from economically.

''Delays in Indo-Russian defence projects must be excused''

• Akula or no Akula? What’s the story about Russian Subs to India

• The NATO and Russia Embrace - By Anders Fogh Rasmussen

• Bullish on the Bear - Russian policy is now driven by two factors: the imperative to modernize and the fear of China. Both dictate a move to the West, which is now well under way. By Richard Lourie

• Don’t Oversell an EU-Russia Reset - By Calvin Garner

• Russia In Moldova – Soft Power Or Soft Force? - By Irina Severin

• Russia Profile Weekly Experts Panel: Is Russia Engineering a Regime Change in Minsk? - The Kremlin’s relations with Belarusian President Alexander Lukashenko, also known as the “last dictator of Europe,” appear to have reached the point of no return. On October 3, president Dmitry Medvedev recorded a video message to the Russian and Belarusian people, in which he made it clear that the Kremlin no longer views Lukashenko as Russia’s strategic partner and for all intents and purposes wants “regime change” in Minsk. What does this mean for Belarus ahead of its presidential elections this December?

• Moscow new mayor faces task of preparing city for winter - Sergei Sobyanin will begin his first working week as the mayor of Moscow with an urgent issue of the city's preparation for the winter. Inaugurated on October 21, the new head of Moscow Monday will hold a meeting with members of the previous government of Moscow, now staying in the status of acting.

• Trash staring Muscovites in the face - Moscow knows it lags behind many other capitals when it comes to taking out the trash. But a lack of recycling infrastructure is forcing environmental protection up the priority list.

• A Wayward Son Checks in With Mother Russia - On this trip, sponsored by the State Department, Mr. Shteyngart also gathered material for a memoir that is to be his next work. And he showed his fiancée, who is of Korean descent, the nostalgic sites of his St. Petersburg childhood.

• video news goes live on newstube.ru - News video content from the website of BBC Russian, , will now be published on newstube.ru, the Russian video news portal, following a syndication agreement between the BBC and newstube.ru.

• PRESS DIGEST - Russia - Oct 25

o Russian President Dmitry Medvedev ordered to create before the end of 2010 twenty draft laws to eliminate ecological harm and minimize the load on environment, the paper writes.

o Around fifteen percent of management in Russia's largest lender Sberbank's (SBER03.MM) do not meet requirements of the new workers appraisal system, and they may be replaced, the daily says.

o The daily runs an interview with Vladimir Potanin, co-owner of metals giant Norilsk Nickel (GMKN.MM).

o Russia extended grain export ban starting January 2 of 2011. Previous ban ends December 31 so theoretically grain may be exported from Russia on January 1, the paper writes citing experts.

o Russian lower house of parliament suspended the adjustment of state officials' salaries for inflation for three years until 2014, the daily says.

o Around a thousand people gathered in the centre of Moscow on Saturday to protest against government. More people were trying to join the rally but police did not allow them, the daily says.

o Russians in social networks and blogs complain that the people who work for state statistics did not come to their houses to record information for the nationwide census, the paper reports.

• Russian Press at a Glance, Monday, October 25, 2010

Kremlin deputy chief of staff Vladislav Surkov held talks on Saturday with members of Russia’s United Russia ruling party in Chechnya

(Kommersant, Nezavisimaya Gazeta)

Moscow’s new Mayor Sergei Sobyanin toured the Russian capital to see what could be done to solve the problem of traffic jams in the city

(Rossiiskaya Gazeta)

Russian billionaire Vladimir Potanin, head of Interros and a key shareholder in Norilsk Nickel, proposed the world's top aluminum producer RusAl to sell its stake in Norilsk Nickel

(Vedomosti, Vremya Novostei, Kommersant)

Poland began the trial of a Russian citizen who was arrested last year on espionage charges

(Vremya Novostei)

Russian prosecutors demanded 14 years in prison for former Yukos oil major CEO Mikhail Khodorkovsky and his business partner Platon Lebedev in the second set of charges against the businessmen.

(Vedomosti)

President Dmitry Medvedev attended a banquet dedicated to the 65th anniversary of Russian Oscar-winning film director Nikita Mikhalkov

(Kommersant)

The Kremlin Cup tennis tournament ended in the Russian capital with Russia’s Maria Kirilenko ceding to Belarusian Viktoria Azarenka in the women’s final

(Kommersant)

National Economic Trends

• Ruble Gains Third Day Versus Dollar, Weakens Against Euro

• BRIC: Russian Central Bank supports Ruble-Yuan direct currency exchange

• CBR announced changes to RUB basket regime

Business, Energy or Environmental regulations or discussions

• Magnitogorsk, Cherkizovo, Norilsk Nickel: Russia Equity Preview

• Duma passes bill to help small business compete for government contracts

• Moscow City hall might have lost control over BoM

• VSMPO-Avisma looks to grow 2010 net profits 250%

• Arkady Rotenberg bought 25% of Mostotrest common equity

• Deal snapshot: RUSSIAN TGK-9 BUYS 75% OF PERM GRID

• Metalloinvest may sell minority stake to Mitsui – Independent

• Russian Facebook Investor Mail.ru Seeks $876 Million in IPO

• Top Turkish lender Isbank buys small Russian bank

• Russia - Wal-Mart bid for 500 stores

• Interros head does not rule out merger between Russia's largest miners

• RusAl Rejects $9Bln Offer From Potanin

• Potanin’s Offer to Buy Out Rusal Is ‘Beginning of End’ to Feud

• KT Corp plans $500 mn Russian unit sale

• MOSCOW BLOG: Quality versus quantity and the cost of shoes - Consider some different figures: Russia's middle class makes up 68% of the population, according to investment bank Troika Dialog (a high estimate, according to other analysts), whereas China's constitutes just 13%. Russia's per-capital income is around $12,000 per year, whereas China's is around $4,000. The poverty rate in Russia is 13% (or about 18.5m people), whereas poverty in China is a massive 50% (or 600m people), according to some estimates.

• Putin Ports Grab Hurts Novorossiysk Bondholders: Russia Credit

• AAA Auto Group, a Czech used-car dealer, said Friday that it was considering an expansion to Russia and may enter talks with potential local partners after delaying the plan in 2008 because of the global financial crisis.  (Bloomberg)

• Russia may sell 55 coal deposits with 11.5 billion tons of reserves in the next five years, Vedomosti reported Friday, citing Natural Resources and Environment Ministry proposals.  (Bloomberg)  

• Russia is halting pork imports from two U.S. plants owned by a unit of JBS and Smithfield Foods, the U.S. Department of Agriculture said Friday.  (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

• Hungary's MVM may buy Surgut's stake in MOL –paper

• Putin seeks transparency from Transneft

• Putin Orders Openness at Transneft

• Integra, Schlumberger Seismic Unit Establish Joint Venture

• China, EU Complicate Gas Talks - Turkmenistan and Russia bolstered their natural gas relationship on Friday during a visit by President Dmitry Medvedev to his counterpart Gurbanguly Berdymukhammedov, with both sides hedging their bets as the Chinese market grows and the European one shrinks.

• LUKoil subsidiary starts to develop deposit near Volga

Gazprom

• Albania Talks on South Stream - Deputy Foreign Minister Vladimir Titov said Friday that Moscow might include Albania in the South Stream gas pipeline, which will carry Russian gas to southeastern Europe.

• Gazprom launches feasibility studies in Bulgarian section of South Stream project

• Gazprom to Study Bulgaria Pipe Segment

• Gazprom Considers Joining Turkmenistan-To-India Pipeline Project

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Full Text Articles

Basic Political Developments



President of Finland Tarja Halonen will visit Russia on a state visit from November 8-11

October 25, 2010, 12:00

November 8-11 at the invitation of Dmitry Medvedev, President of the Republic of Finland Tarja Halonen will visit the Russian Federation on a state visit. On November 9 Tarja Halonen will hold talks with Dmitry Medvedev in Moscow.

October 25, 2010, 12:00

Russia, Greece to hold talks on Burgas-Alexandroupolis pipeline before year end



11:46 25/10/2010

Russia and Greece will hold talks to work out a joint position on the Burgas-Alexandroupolis oil pipeline project before the end of the year, Russia's Energy Minister Sergei Shmatko said on Monday.

"We have decided to set up a working group, which will discuss a joint position on the Burgas-Alexandroupolis project at its first meeting," Shmatko said, adding that Moscow respected the position of Bulgaria, which wanted to assess ecological risks of the project.

In 2007, Russia, Greece and Bulgaria signed a contract on a joint construction of the Burgas-Alexandroupolis oil pipeline to bypass the busy Black Sea. The project's capacity amounts to 35 million tons per annum with a possible expansion to 50 million tons.

Construction was delayed after Bulgaria formed a new cabinet headed by Boyko Borisov, who has made contradictory statements on energy projects with Russia, including a rejection of plans to participate in the construction of the Burgas-Alexandroupolis pipeline.

In July, Bulgaria agreed to pay a 6.5 million euro contribution to operating costs for the project, but its participation is still uncertain.

 MOSCOW, October 25 (RIA Novosti)

Russia plans to build up Black Sea Fleet-Interfax



12:52pm IST

MOSCOW, Oct 25 (Reuters) - Russia plans to add 18 new vessels to its Black Sea Fleet within the next decade after a landmark deal with Ukraine to extend the lease on the fleet's base, a navy source was quoted by Interfax as saying on Monday.

Ukraine agreed in April to extend the Russian fleet's Sevastopol base lease by 25 years in return for a 30 percent cut in gas prices, a step that underlined Kiev's shift back towards Moscow after the election of President Viktor Yanukovich.

The fleet has fallen into disrepair in recent years, but Russia plans to add 18 new vessels, including at least six frigates and six diesel-powered submarines, Interfax news agency cited a source in Russia's naval command as saying.

A spokesman for the navy declined to comment on the Interfax report. (Reporting by Guy Faulconbridge, editing by Thomas Grove)

Over a dozen new ships to enter service in Black Sea Fleet



Today at 10:05 | Interfax-Ukraine

The Russian Black Sea Fleet will receive new ships and upgraded bombers before 2020, the Navy central headquarters told Interfax-AVN on Monday.

"Under the 2011-2020 government armament program, the Russian Black Sea Fleet will get 18 new ships, including six Project 22350 frigates, six Project 677 diesel submarines and two Project 11711 large landing ships," an official said.

The Russian naval aviation is due to replace before 2016 its Sukhoi Su-24M bombers with an upgraded version and Beriev Be-12 amphibious aircraft with more modern Ilyushin Il-38 anti-submarine aircraft, he said.

Read more:

Russian, Ukrainian prime ministers to meet Oct. 27 in Kyiv



Today at 08:20 | Staff reports

Russia's government site reports that Russian Prime Minister Vladimir Putin is expected in Kyiv at 2 p.m. on Oct. 27 for talks with his counterpart Mykola Azarov on economic cooperation.

Putin's website says that during the course of the talks, which will be carried out under the framework of the Cooperation Committee of the Russian-Ukrainian Interstate Commission, the sides will discuss "a wide array of economic, energy and investment cooperation issues." As of 9:00 a.m. on Oct. 25, Azarov's press service had released no information about the visit. [pic]

The announcement of the visit by the Russian prime minister's website is here.

The Russian-language results of Putin's last April 26 working visit to Ukraine are available here.

October 25, 2010, 9:42 CET

Government seeks "single package" deal with Russia



By MTI-ECONEWS

The Hungarian government wants to reach an agreement with Russian leaders on questions of bilateral cooperation in a single package, National Development Minister Tamas Fellegi said at a press conference on Friday.

The package, on which talks are ongoing, includes the issues of energy policy, Malev, Russia's participation in later construction of Budapest's underground, cooperation in the farm sector, scholarships for researchers and the extension of broad-gauge railway.

If talks progress well, they could be closed at a meeting of the two countries' prime ministers in November, Mr Fellegi said.

Mr Fellegi again denied that the government was in talks with Russia's Surgutneftegas on buying its stake in Hungarian oil and gas company MOL. He said the government's position on the matter was unchanged: it does not want to see a big stake in a Hungarian company of strategic importance in foreign hands. It would be advantageous for MOL and make the market more predictable if the state were to acquire a stake in the company, he said. If the government take such a decision, financing would have to come from the market, he added.

Mr Fellegi said "serious, forward-moving" talks were underway with a strategic investor on Hungarian airline Malev. The investor has the strategic means and the necessary assets to make developments at Malev, he added. The government wants to reach a speedy and decisive solution for the national carrier, which could break even in the mid-term, he said.

Russia's state-owned Vnesheconombank holds a 5pc stake in Malev's parent company.

Mr Fellegi confirmed that his ministry would soon oversee the entire energy sector in Hungary. A political decision has been taken to make Janos Bencsik, currently at the National Economy Ministry, state secretary in charge of energy and climate affairs, he added.



WikiLeaks has dirt on Russia

Internet resource WikiLeaks, which specializes in information leakage, compromising features and Russia. This was told founder Julian Assange resource in an interview with the Izvestia newspaper.

He said that the majority of Russian sites offer information only in Russian and it severely limits the possibility of the portal, but they help to Americans who send a lot of material about Russia. True, J. Assange did not specify exactly what information he had in mind and whether they will be made public.

Recall the other day the site WikiLeaks has published about 392 thousand documents on the war in Iraq. Declassified secret documents dated from January 2004. December 31, 2009. (Except May 2004. And March 2009.)

The document says that during the aforementioned period of time in Iraq killed at least 109 thousand people. On average, in Iraq every day perished in 1931 civilian. These figures are considerably higher than official statistics.

In July of 2010. WikiLeaks has published about 77 thousand documents on military operations in Afghanistan. They were mostly intelligence data and reports on the progress of military operations.

In addition, WikiLeaks has announced the publication of another 15 thousand documents.

25 October 2010

Wikileaks admits it has material on Russia



by Andy Potts at 25/10/2010 11:09

Russia could find itself on the end of a set of damaging Wikileaks, according to the organisation’s editor Julian Assange.

The online source of confidential – and often controversial – information hit the headlines again this weekend with another round of damaging revelations about the on-going war in Iraq.

But any Russian politicians hoping to make political capital from this public airing of the dirty linen of the US might want to think before gloating too publically.

For it appears that, up to now, only the language barrier has spared Kremlin blushes over any skeletons in Russia’s closet.

 

Rummaging in Russia's rubbish

Speaking to Izvestia, Assange said there was a database of compromising material about Russia, as well as the headline-grabbing stuff about the wars in Iraq and Afghanistan.

And while the US has been quick to complain about seeing its sensitive data exposed, it appears there are many who are less squeamish about dishing the dirt on other states.

“We have material on Russia, but not as much as we would like,” Assange told the newspaper. “The fact that most of your sources only have Russian-language information limits our options.

“However, we are helped by the Americans. They pass on a lot of material about Russia.”

The interview gave no indication of what type of material might be held on Russia.

 

Iraq rage

Assange added that he had been “threatened” by the US authorities over his provocative publications.

“I have received several ‘warnings’ in private from the American administration,” he told Izvestia, adding that the web portal employs a security service to protect its five permanent staff.

He also dismissed suggestions that Wikileaks is putting people’s lives at risk.

“I carefully study the materials before publication,” Assange added. “On that basis I can say no, it doesn’t endanger lives.”

 

Latest revelations

Wikileaks’ latest brush with the headlines has nearly 400,000 American military reports on the progress of the war in Iraq.

Among the most damning allegations are evidence of institutionalised torture, backed by Iraq’s prime minister Nouri al-Maliki and tacitly supported by the international community.

Both al-Maliki and US Secretary of State Hillary Clinton have condemned the publication of the reports.

Internet still subject to degree of monopoly – Communications minister



25 October, 2010, 09:44

Russia’s Communications Minister, Igor Shchegolev, talked to RT about the Internet – an umbrella structure that embraces the entire world, but which was first designed to serve US interests.

Russia Today: Mr. Shchegolev, thanks for your time. The Internet is a global resource that embraces government, NGOs and the private sector. How come the administration of such a global structure is still in the hands of one private American company, ICANN, which co-operates closely with the US government, particularly the Department of Defense? It almost seems as if the Pentagon has patented the Internet’s management.

Igor Shchegolev: It mainly co-operates with the Department of Commerce; but the fact is that a certain monopoly is present in the world. This technology was invented to meet the interests of the US but then it expanded around the world. It’s been developing very rapidly, truly embracing all levels of our life. People make money on the Internet, and for the Internet. Even government systems now use these technologies. Nonetheless, the corporation has still been deciding everything. It is aware of changes taking place worldwide; and it makes certain concessions to the international community. It has good relations with Russia in this area, which is proved by the fact that our country was the first to get the right to create a national domain of the top level, dot RF. Within the present framework of co-operation, we can hardly complain about the Americans. We have a very good dialogue – we hear each other.

But some threats are arising for the Internet and Internet technologies. These threats can only be responded to internationally. This technology, the worldwide web does embrace the entire world; therefore, governments and even more so corporations simply cannot resolve internet-related problems. Therefore, Russia among a number of other countries is proposing the development of international mechanisms that would help fight the problems that even the Americans are concerned about.

RT: Our American colleagues, the current administration in particular, have been telling us that we should be working together against these threats, opening our borders, taking part in international forums, and so on. So how does the U.S. explain its own refusal to expand international participation in the Internet’s administration?

IS: Their key argument is that this is a very dynamic resource; therefore any attempt to bureaucratize this technology within an international structure would slow down the Internet’s development, and hinder efficient response to new technologies arising at least every 6 months, if not every month. Moreover, they reason that so far, this resource has been developing successfully without international involvement. They’re willing to co-operate bilaterally, at the non-governmental level, to tackle specific issues that arise. But they contradict their own position. One of the main concerns that the U.S. government has in telecommunications and CT is the threat to what they call cyber security. How can one fight such threats, unless they find a mechanism to enforce resolutions? In a corporation, as long as things keep developing according to commercial law, we won’t be able to fight technological risks, or extremism, terrorism and other things that the international community believes are unacceptable on the Internet. A commercial corporation, in spite of all the U.S. power, will not be able to cope with these problems, even at a bilateral level. Therefore Russia believes that we need an international institution that would respond to such issues. And we believe that the International Telecommunication Union would be the best institution for the job.

RT: This International Telecommunication Union that includes 192 countries intends to take over the Internet’s administration, and by doing so to end the American monopoly here. What are the benefits of devolving power from one state to a group of states?

IS: We aren’t saying that the ITU should take up all areas of the Internet’s development. We believe that some aspects should be regulated internationally. This organization was formed in 1865 when the UN was non-existent. It was founded by 20 countries including Russia. Consequently, it became one of the UN’s special-purpose organizations. It does bring together practically all countries in the world; and communications exist in all countries as well. Some technological communications-related issues arising between one state and another; or between a state and a group of states, are perfectly regulated by this organization. I’ll go so far as to say that this is one of the most efficient special-purpose organizations, if not the most efficient, that has an excellent reputation and great experts and well-established mechanisms, and that knows how to respond to all problems. Its response is probably not as efficient as modern technology requires; nonetheless, communications work in all countries; operators maintain their relations in spite of different levels of development and types of technology. One way or another, they manage to find compromises and technical and technological solutions that enable communications to function properly.

RT: How will it happen from the practical point of view? If the ITU gets this power, how will its almost 200 countries agree in spite of their different opinions?

IS: That’s something we mentioned in the beginning: it takes a consensus to oppose certain issues. Our American colleagues are proposing bilateral agreements on fighting these problems and are thus countering the various negative issues. Now if we ask mathematicians to calculate how many bilateral agreements between the 192 ITU member states it would take, we’d realize this number is almost endless, not even mentioning the time it would take to sign all those documents. Provided that all states agree on a small number of issues that should definitely be regulated internationally, we could spend 12 or 18 months developing mechanisms of tackling those issues, and then start fighting them by means of the ITU.

RT: As for Russia, what concrete proposals has it made?

IS: We suggest precisely this model. We say that it’s necessary to define a set of issues falling under ITU regulation, to set up mechanisms of regulation and try to apply them in practical life. For that, we also support a reform of documents of the International Telecommunication Union. Under the ITU charter, all underlying principles should first be approved at plenipotentiary conferences and later submitted for ratification to national governments. Naturally, this bureaucratic process can go around in circles infinitely. This is how things stand now. We suggest revising the charter so that it reflects only cornerstone issues. We want this document to be untouchable like national constitutions, and be subject to occasional change only, while the current issues could be solved without interference from national parliaments and without creating an excessively difficult procedure. That would have been our response to the concerns of our American partners – that the mechanisms we are suggesting will get stuck in red-tape.

RT: What about fighting cyber crime? How could the shifting of ITU powers help solve this problem?

IS: That would only contribute to fighting cyber crime. For example, we agree that child pornography is an absolute evil, inadmissible in any form. We would have signed an international treaty within the ITU that would oblige all signatories to agree on mechanisms of notification and technical measures allowing for the removal of this kind of information from the Internet. This mechanism would have started working following agreement and approval by all states. At the moment, some countries classify child pornography as a crime, and stipulate prosecution against those who distribute it on the Internet. But as you know, a pornographic website can easily be registered in countries that don’t consider this kind of information to be an offence and spread child pornography on the worldwide web. So until we define a range of joint problems that we are ready to fight together and mechanisms to do it, our efforts are not going to be effective. 

RT: The political issues related to the Internet’s international management are still being studied. But there’s no doubt that there are some principles that are supported by most states. What are the differences among the main participants? In what do they agree?

IS: So far, we haven’t got down to any concrete discussion. This conference has become a milestone event. It adopted a resolution confirming the ITU’s application for international management of the Internet. Participating countries have confirmed their intention to assume certain powers and responsibilities in order to solve a whole number of issues. Now, we’ll have to agree on ways of implementing this application. To be frank, the Americans have a monopoly over the Internet, and it’s only natural that they should wish to take advantage of this situation, to set certain standards and ensure the participation of primarily U.S. IT companies in advancing those technological standards, technologies and products. It’s clear that the Americans are in no rush to share their influence on the Internet. But since they are also confronting certain threats and understand that too many resources are now linked to the Internet, they know that if no one handles these threats properly, this technology will become more and more vulnerable. And here Russia and the United States have a mutual understanding. I think that they can continue this dialogue and as the first step could start looking for small points of convergence and gradually expand this sphere of co-operation as new mechanisms start proving their efficiency.

RT: Mr. Schegolev, could this process of transition of power on the Internet be endless, or have preliminary dates been set?

IS: In the early 2000nds a summit was held in Tunisia on the development of an information society. Responsibility was placed on the International Telecommunication Union (ITU) which had organized the conference. In 2010, the ITU will have to report on how it has implemented the decisions of the Tunisia summit on the development of an information society. This is exactly the cycle that exists within the framework of the International Telecommunication Union. Plenipotentiary conferences like the one held this year convene every four years. So there’s plenty of time before the next conference to work out new mechanisms, think how to carry out decisions made this year, and fill new proposals with concrete content.

RT: What are the potential difficulties of changing the model of running the Internet?

IS: The potential difficulty consists in the fact that the Internet is a fast-changing technology. And constantly trying to gain in something is not the best solution even if an international regulatory body is set up, but there’s little we can do about that because this is a condition dictated by the high speed of development of modern technologies. I see the main problem in the ability to react promptly to new technologies, new notions, new terms and new legal relations. That is why we are talking about the need to reform the governing procedures in the International Telecommunication Union and to make it more flexible and dynamic.

RT: Mr. Shchegolev, thank you very much for this interview.

IS: Thank you very much.

Rosatom to train staff for IAEA



10:07 25/10/2010

Russian state nuclear corporation Rosatom will train staff for work at the International Atomic Energy Agency (IAEA) under an agreement signed on Monday.

The deal was signed by IAEA Director General Yukiya Amano and Rosatom head Sergei Kiriyenko.

Under the agreement, Rosatom will train junior staff, not older than 32 years old, and send them to the IAEA.

The personnel will become regular staff in the IAEA. Russia will cover all expenses for the personnel, including wages, allowances, insurance, and travel expenses.

The standard period of work in the IAEA will be up to 12 months.

 

MOSCOW, October 25 (RIA Novosti)

Dmitry Medvedev to look into problems of the elderly



|Oct 25, 2010 04:34 Moscow Time |

Russian President Dmitry Medvedev today holds a meeting of the State Council Presidium to look into the socio-economic situation of the elderly. Over the last month the subject has already been discussed at meetings in Kursk, Moscow and Kozielsk, highlighting, in particular, pensions, medical and pharmaceutical supply.    Medvedev urged to rethink the whole approach to solving problems of the elderly in the country. The head of state said that this topic should be a government priority, pointing out that Russia has some 40 million retirees.   

Medvedev to finalize instructions to improve life of pensioners



25.10.2010, 01.02

MOSCOW, October 25 (Itar-Tass) -- Russian President Dmitry Medvedev will hold a meeting of the State Council presidium devoted to improving the life of elderly people on Monday.

The president handles actively the problems of pensioners in the past four weeks. He held about ten meetings on pressing problems for elderly people. Medvedev explained his attention to this problem by the fact that about 40 million pensioners live in Russia.

On September 20, the president instructed Minister of Health and Social Development Tatiana Golikova “to set the priorities to improve the life of pensioners, examine the financial component, and to give close attention to pensions, medical services, medicine supplies and related issues.”

“The life quality in the country is showed by the life level of elderly people,” the president said with confidence. Therefore, Medvedev believes that the scope of basic approaches to the pension problem, including the retirement age, should be revised, but there are no ready answers yet.

“Our country is turning into a state of elderly people. There is nothing bad about it, this means that we live longer,” the president pointed out. “Anyway, it is a positive process, but we should prepare for it,” Medvedev remarked.

On International Day of Older People marked on October 1, Medvedev stated in his video blog that the care of older people is the top priority for the state and the whole society.

The president also noted that a considerable part of addresses to him are made from elderly people. “They are writing about their problems related with medical services and medicines, some difficulties to pay utility bills and about pensions. They are writing how difficult to find a job for them and about a lack of demand for them,” Medvedev said.

Hundreds Demand Putin's Ouster



25 October 2010

By Alexander Bratersky and Natalya Krainova

A crowd of up to 2,000 gathered on Pushkin Square on Saturday to demand the ouster of Prime Minister Vladimir Putin and his Cabinet — just as the State Duma tightened the screws on legislation on protests.

The rally, staged two days after Mayor Sergei Sobyanin took office, became one of the largest political rallies to be sanctioned by city authorities in recent years.

“Demands for Putin's resignation have been voiced at rallies before, but this time it was the main slogan,” rights champion Lev Ponomaryov, who took part in the event, told The Moscow Times on Sunday.

The protesters accused Putin's government of having a poor record on social policies and preserving political freedoms, as well as failing to prevent last summer's devastating wildfires. They also demanded the release of jailed former Yukos CEO Mikhail Khodorkovsky and his business partner Platon Lebedev.

Chess champion-turned-opposition politician Garry Kasparov and Khimki forest defender Yevgenia Chirikova were among the speakers at the rally, which was staged by a recently created union of Kasparov's United Civil Front and several leftist public groups.

Moscow police said only 300 people took part in the rally, RIA-Novosti reported. But photos from the site challenged the figure, and Ponomaryov put the number of participants between 1,500 and 2,000.

He also said he suspected that the rally had been authorized because the new mayor was seeking a temporary “compromise” that would allow him to judge the strength of the opposition.

“This was their wait-and-see moment. They wanted to see how many people would come in order to decide what further actions to take,” Ponomaryov said about the city authorities.

Sobyanin made no public comments about the rally while taking a Saturday tour of the city's construction sites — all of them at a considerable distance from Pushkin Square.

Sobyanin upheld the tradition of his predecessor, Yury Luzhkov, in using the weekend to visit construction sites, although media broke with tradition by not following him on his trip.

Analysts say Sobyanin is likely to wait several months before gradually implementing a hard-line policy on public protests in line with the Kremlin's general negative stance on the opposition.

Paving the way for possible crackdowns, the State Duma approved in a key second reading Friday a bill that would ban individuals convicted of administrative offenses from staging rallies for a year, Interfax reported.

The list of administrative offenses includes speeding, traveling on public transportation without a ticket and minor fire safety violations, as well as a broad range of offenses related to elections and organizing public gatherings.

The bill also allows authorities to change rally venues over traffic safety concerns, Interfax said.

The draft approved Friday is more lenient to protesters than the initial version passed in a first reading in July, bill co-author Sergei Markov of United Russia said by telephone.

The second draft excludes legal bodies, including political parties, convicted of administrative offenses from the rally ban, limiting it to individuals.

It also allows rally organizers to inform the public about their plans before local authorities even approve the date and place of the event.

Protesters demand Putin's ouster



 

By Andrew Osborn, The Daily Telegraph October 25, 2010 2:05 AM

 

A rare rally demanding the removal of Vladimir Putin, the Russian prime minister, has been held in central Moscow.

Up to 500 protesters from Left-wing and liberal opposition groups gathered on Pushkin Square to call for Putin's resignation.

"Our task is to free Russia from this awful regime," Garry Kasparov, a former world chess champion turned opposition leader, told the crowd. "Putin is Russia's disgrace."

The protesters, who began an online petition to remove Putin earlier this year, said they were targeting him because he was the key figure in a political system that worked "only in the interests of a small group of officials and oligarchs and had led the country to a dead end."

Speakers complained that elections were always rigged. Ilya Yashin, an opposition leader, said of the country's leadership: "They appoint themselves. Putin appointed Dmitry Medvedev as president and Medvedev appointed Putin as prime minister."

Such rallies are rarely allowed in Russia and are often broken up by force. But the event passed off peacefully with riot police looking on.

The rally was held as speculation mounted that Putin would run for the presidency in 2012.

© Copyright (c) The Ottawa Citizen

Russian environmentalists protest lakeside factory, highway



(AFP) – 15 hours ago

SAINT PETERSBURG — Around 200 activists gathered Sunday in the centre of the Russian city of Saint Petersburg to protest the impact on the environment of a series of government projects.

Among the schemes at the centre of the protest organised by Greenpeace was a plan to reopen a cellulose factory on the shores of Lake Baikal in Siberia as well as a stalled project to build a highway through a forest near Moscow.

The cellulose factory had closed in October 2008 but Prime Minister Vladimir Putin approved its reopening earlier this year despite warnings by ecologists of its impact on the lake's eco-system and the development of tourism.

The highway project, which forms part of a road linking Moscow with Saint Petersburg, is to cut through the Khimki forest, although it was put on hold by President Dmitry Medvedev over the summer following widespread protests.

Despite Medvedev's order, many environmentalists fear that the project will be resumed at a later date.

One of seized freighter crew is Russian



|  |Oct 25, 2010 10:46 Moscow Time |

According to the Maritime Bulletin, one of the crewmembers of the German bulk-carrier Beluga Fortune, seized by Somali pirates, is a Russian national. Other crewmembers could be three Ukrainians and eight Filipinos. The bulk-carrier, en route from the Untied Arab Emirates to South Africa, was captured off Kenya’s coast on Saturday night.

Russia schedules session of intergovernmental commission with Azerbaijan for this November



Baku, Fineko/abc.az. Preparation for the eighth meeting of the Azerbaijan-Russian intergovernmental commission on economic cooperation has not been finished.

The Azerbaijani government informs that that the sides have not launched discussing future session’s agenda.

“We expect from Russia as hosting country the draft documents to be considered by the commission. At the same time Russia points out that it is ready to conduct the session next month,” a government source said.

In August Russian trade representative in Azerbaijan Yuriy Schhedrin stated of the beginning of preparation for Commission’s regular meeting in Moscow and parallel conference on co-operation between businessmen of Russia and Azerbaijan.

“Terms of the meeting will be fixed in accordance with a relevant decision of the Commission’s co-chairs (Azerbaijani first vice premier Yagub Eyubov and Russian energy minister Sergey Shmatko) but currently October or in extreme case November of 2010 are being considered,” he said then.

Before that Russia asked to postpone the meeting for September or October.

25.10.2010 09:30

Armenia and Russia considering possibilities for supply of modern Russia-manufactured aircrafts to Armenia



YEREVAN, October 25, /ARKA/. Armenia and Russia are considering possibilities for supply of modern Russia-manufactured aircrafts to Armenia, says a protocol adopted at the end of  the recurrent meeting of Armenian-Russian intergovernmental commission held last Saturday in Russia’s city of Yekaterinburg. The meeting was chaired by Armenian prime minister Tigran Sarkisian and Russian transport minister Igor Levitin.

The sides express their readiness to discuss all issues related to possible supply of modern aircrafts to Armenia, including passenger  aircrafts Sukhoi Superjet  100, AN-148  and  MC-21,  transport aircrafts IL-96, TU—204C  and MTC as well as  unmanned aviation systems for civic purposes, the protocols says.

It says also Yerevan and Moscow are ready to discuss the possibility of setting up joint service centers for maintenance of aircrafts. M.M. -0-

25/10/2010 11:26

Yerevan and Moscow confirm interest in development of nuclear energy in Armenia



YEREVAN, October 25, /ARKA/. Yerevan and Moscow  have confirmed their interest in cooperation for development of nuclear energy  in Armenia, says a protocol adopted at the end of  the recurrent meeting of Armenian-Russian intergovernmental commission held last Saturday in Russia’s city of Yekaterinburg. The meeting was chaired by Armenian prime minister Tigran Sarkisian and Russian transport minister Igor Levitin.

‘The two sides note successful cooperation between Russia and Armenia  in the area of peaceful use of nuclear energy. The sides have confirmed their interest in cooperation for development of nuclear energy  in Armenia, including construction of new nuclear power units,’ the protocol says.

It says Armenia and Russia signed an arrangement to cooperate in construction of a new nuclear power unit in Armenia during Russian president Dmitry Medvedev’s visit to Armenia in August. The commission has ordered the Russian Rosatom nuclear agency and Armenian ministry of energy and natural resources to continue  cooperation programs in the area of nuclear power energy and in accordance with reconciled directions as well as to work out a plan of actions to raise the safe operation of the operating Armenian nuclear power  plant in Metsamor.-0-

25/10/2010 11:21

Armenia asks for Russian assistance in renting ferryboat to transport from 30 to 50 trucks



YEREVAN, October 25, /ARKA/. The Armenian government has asked the Russian side for assistance in  leasing a ferryboat that is able to transport from 30 to 50 trucks, says a protocol adopted at the end of  the recurrent meeting of Armenian-Russian intergovernmental commission held last Saturday in Russia’s city of Yekaterinburg. The meeting was chaired by Armenian prime minister Tigran Sarkisian and Russian transport minister Igor Levitin.

‘The Armenian side notes that a regular ferryboat link between the Georgian seaport of Poti on the Black Sea and Russian Novorossiysk  is necessary to implement regular cargo transportation between Armenia and Russia by trucks. To be profitable the ferryboat must have capacity to transport 30-50 trucks,’ the protocol says.

The Armenian side said it was ready to rent such a ferryboat and turned to the Russian side to seek its assistance in this issue, the protocol says. -0-

25/10/2010 11:18

Armenia Seeking to Increase Rough Diamonds from Russia



[pic]25.10.10, 10:00 / World

Diamond cutters in Armenia's diamond industry would like to increase the country's imports of rough diamonds from Russia to $100 million a year and sign contracts with as many diamond suppliers on Alrosa's customer list as possible, the Arka News Agency reports.

 

In September of this year, Armenia agreed to sign long-term supply agreements with Alrosa. And last week, members of an Armenian-Russian commission on international cooperation met and adopted a protocol on diamond supply, under which Alrosa will over $20-30 million worth of rough diamonds to Armenian diamond companies in 2011.

 

Data published by the Armenian government states that in 2009, Armenian diamond companies cut just under 50,000 carats of diamonds – a year-on-year decrease of 50.9%.

“Rossiya” icebreaker returns to Murmansk



|Oct 25, 2010 01:43 Moscow Time |

   The nuclear-powered icebreaker "Rossiya" which delivered a new drifting scientific station “North Pole-38” to the Arctic , has returned to Murmansk. The journey, which started on October 2nd, lasted 23 days and passed successfully. On October 10th the icebreaker was in the Chukchi Sea. The equipment of the research station SP-38 was unloaded on a huge ice-field,  2-meter thick and measuring 8 by 12 kilometers.  The next day witnessed the first testing of scientific equipment. On the return journey research staff monitored the atmosphere and ice conditions along the route. 

 

Russia's Progress craft to be undocked from ISS



09:50 25/10/2010

MOSCOW, October 25 (RIA Novosti) - The Progress M-05M cargo spacecraft will be undocked from the International Space Station (ISS) on Monday, a spokesman for Mission Control Center said on Monday.

The freighter will then be "buried" at a "spaceship cemetery" in the southern Pacific in mid-November.

A new Progress M-08M cargo ship will be launched from the Baikonur space center on October 27.

Progress cargo spacecraft are used for supplying the ISS with fuel, as well as water, air and food for astronauts.

Russian “Progress” spacecraft to be used as lab



|  |Oct 25, 2010 11:10 Moscow Time |

The Russian cargo spacecraft “Progress” will be used for a while as an orbital lab, following its undocking from the International Space Station. The spacecraft, which docked with the orbital complex almost six months ago, will not be drowned in the Pacific at once, but will be moved to a safe distance from the ISS and turned into an orbital lab to carry out a geophysical experiment at. The forthcoming experiment will amount to research into reflectance characteristics of the cargo spaceship’s hull, and into the transparency of the earth’s atmosphere. On November 15th “Progress” is due to be taken off its orbit and drowned in a designated area of the Pacific.  

Ingushetia looks for Chinese investors



12:14 25/10/2010

SHANGHAI, October 25 (RIA Novosti) - Ingush President Yunus Bek-Yevkurov invited Chinese investors to set up a car manufacturing plant in the North Caucasus republic while presenting Ingushetia's investment projects at Russia's pavilion at the Shanghai Expo 2010.

"Chinese business should go beyond market trading since we are interested in it taking up the development of the fuel-energy, agro-industrial complex, as well as house building and automobile manufacturing. We are also interested in creating jobs for women, especially in clothing manufacture," he said.

Ingushetia presented a variety of projects at the Expo-2010. Yevkurov plans to establish ties with Chinese partners that will allow for cheaper imports into the region and create new jobs.

"Come and we will provide you with total security," Yevkurov said, commenting on Chinese journalists' questions about the security aspects of running business in the volatile republic.

The 2010 World Expo is being held in Shanghai until October 31. Up to 70 million people are expected to visit the city for the event, which has seen investment of up to $4 billion. Over 200 countries, corporations and international organizations are taking part.

Moscow constructed a pavilion at the exhibition for the first time in 30 years. The Russian pavilion is considered one of the most popular and innovative at the Expo.

Blast in Kabardino-Balkaria school hurts nobody



25.10.2010, 09.43

NALCHIK, October 25 (Itar-Tass) - There was an explosion in a school in the village of Zaragizh of the Cherek district of Kabardino-Balkaria overnight, spokesman for the RF Emergency Situations Ministry’s main department for the republic Kantemir Davydov told Itar-Tass on Monday.

“The school’s principal made a call at 04:00, Moscow time, to the “01” fire emergency service reporting about a loud bang in the school’s canteen,” Davydov said. The blast knocked out the windows and doors and damaged the internal partitions of the building’s extension, in which the canteen is located.

Fire fighters who arrived at the scene called an operational investigation group.

A source in law enforcement agencies told Itar-Tass that experts have ruled out a household gas explosion version. The investigation is in progress.

There were no people inside the building at the moment of the incident.

GOOGLE TRANSLATION

Explosions in Ingushetia: Seven people injured



Last Updated: Monday, October 25, 2010, 05:35 GMT 09:35 MCK

Six policemen and a local woman injured in an explosion at the post of DPS in Ordzhonikidzevskaya in Ingushetia Interior Ministry spokesman in the region.

Power device was 200 grams of TNT. According to this criminal case, said a Ministry of Interior.

In addition, an improvised explosive device went off at a grocery store in the town of Malgobek. As a result of the explosion no one was hurt.

Caucasus 'Part of Russia'



25 October 2010

Senior Kremlin aide Vladislav Surkov dismissed speculation Friday about the possible secession of the volatile North Caucasus from Russia, calling the region “an integral part” of the country, Interfax reported.

The first deputy chief of the Kremlin staff made the statement at a meeting with leaders of local youth groups in Grozny. Surkov, whose father was an ethnic Chechen, also met with representatives of United Russia’s local branch the same day.

(MT)

Top Kremlin ideologue visits Chechnya as violence mounts



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Monday, October 25, 2010

MOSCOW - Agence France-Presse

Kremlin's top ideologue Vladislav Surkov paid a rare visit to Chechnya where he said the insurgency-plagued North Caucasus would remain part of Russia as he sought to dissuade youth from joining militants.

Russian authorities are battling a Muslim insurgency in the North Caucasus where attacks on officials have become daily occurrences as security analysts say the Kremlin is losing its grip over the region.

Surkov, the Kremlin's first deputy chief of staff, said on Friday during a visit to Chechnya, site of two wars with separatists in the 90s, that the country's political leadership would never agree to let the Caucasus become independent.

"The Caucasus is the foundation on which the whole of Russia stands," Surkov told youth activists in comments released by the Chechen government.

"There are different people in Russian politics. And there are unfortunately those who believe that state policy in the Caucasus is doomed to failure, that it is not effective.

"No doubt, the country's political leadership proceeds from absolutely different messages," he said, adding the ruling tandem of President Dmitry Medvedev and Prime Minister Vladimir Putin never questioned the country's territorial integrity.

Putin in July said time was running out for militants as he unveiled an ambitious economic drive to bring prosperity to the violence-torn region by enticing investors there.

Sceptics scoff at those plans as they point to an increasing number of attacks on officials and key infrastructure sites in the region. Widespread unemployment, especially among young adults, is the region's most acute problem and helps militants recruit new fighters, analysts say.

Surkov sought to dissuade local youth from taking up arms, calling on them to grow up.

"Youth is always prone to extreme activities. The very physiology calls for it at a certain age," he said, noting however that "we can't allow ourselves to be children all our life."

Surkov, who is credited with coining the phrase "sovereign democracy," praised Chechnya's 34-year old leader and former rebel Ramzan Kadyrov, who in turn called Surkov "the most respected Chechen."

The Russian-language edition of Newsweek, whose closure was announced this week, has reported that Surkov's father was of Chechen heritage; a fact the Kremlin's secretive ideologue does not like to publicize.

‘I Do Not Want Independence’



by Anna NemtsovaOctober 24, 2010

(Page 1 of 2)

In 2004, Chechnya’s president, Ahkmad Kadyrov, the face of the Kremlin Chechenization project, was assassinated and his son Ramzan took power. Ramzan went much further than his father: human-rights groups have accused him of ordering torture, abductions, and killings, both inside Chechnya and on dissidents abroad. At the same time he has brought a brutal peace to his troubled republic, introducing morality police and strict Islamic dress codes. Kadyrov spoke to NEWSWEEK’s Anna Nemtsova at his heavily fortified residence in Gudermes:

Chechen religious figures see you as their imam, their spiritual leader. Who finances the revival of Islam in Chechnya?

Me, my friends, people we know—we all put together money. Businessmen help. Moscow gives us some money for muftis’ salaries. This is necessary for Chechnya, as without Islamic teachers we would never have managed to bring order here. Our military units would never be able to win against terror without religion.

Are you happy with [the Kremlin’s] plans to reform Islam in Russia?

In Moscow, if a woman is all covered, as a religious Muslim should be, she is immediately suspected of being a terrorist or a suicide bomber. [Police] check these women’s documents and harass them. That is wrong. The authorities should find loyal imams to conduct propagandist preaching.

You recently created a morality police to instruct people how to live according to Sharia.

It is called the Center of Spiritual and Moral Development. We hired men with higher education. They do not beat or scold anybody—they simply warn people against extremism and drug addiction.

Did you instruct your people to shoot paintballs at women who do not wear headscarves?

Many women walk around Grozny today without covering themselves with scarves! If we were beating or shooting at them, they would not be doing that. Somebody who wants to blacken my politics is behind the paintball attacks.

Do you think that the Russian state education is too liberal?

Russian Duma deputies say that children should be given condoms in school! What do we need such democracy for? We send our children to school to study. And in Russian universities children are officially allowed to smoke! I say that a university is a house of knowledge, not for showing off Dolce & Gabbana bags. Students should go to university in uniform.

What do you consider appropriate dress for Chechen women?

I always remind women what Allah said—it is simple for a woman to get to paradise: she has to cover herself, her hair and her arms, wear a long skirt, fast, pray, and be faithful to her husband. My dream is that all Chechen women should wear headscarves.

How independent are you from Moscow?

Being independent caused us nothing but trouble. I do not want Chechnya to be independent from Russia. The only thing I am asking [Moscow] for is to allow me a free hand to fight bandits. They are the enemies of people and the enemies of Islam. I want to fight them and finish the war.

What solutions do you have for Russian problems?

Alcoholism is a terrible problem in Russia. The birth rate is also very low. Imagine, China does not allow its citizens to give birth [to more than one child], while in Russia authorities pay women to have more children. Where are we heading? Show business has become the state’s culture policy. I say that [Russia] should ban alcoholism, but then I immediately hear complaints that Kadyrov wants to declare Sharia law?.?.?.?But we [in Chechnya] have the lowest crime rate in Russia, thanks to our beliefs. A good Muslim first of all thinks about tomorrow. He can steal a car, but he knows that up there [points to heaven] he will have to answer for it.

Your fans want you to run as Russia’s next president—who would you like to see as president in 2012?

My idol, [Vladimir] Putin. I want him to be the president as long as he lives. I love him very much, as a man loves a man. He is a man of his word; he brought peace to Chechnya. We were in the hands of bandits, and the alcoholic [Boris] Yeltsin bombed us. Those who criticize Putin are not human, they are my personal enemies. As long as Putin backs me up, I can do everything—Allahu akbar!

International Quran Reciting Competition in Moscow



The final round of the 11th International Quran Reciting Competition in Moscow began this morning at Cosmos Hotel in Russia’s Capital, Ria Novosti reported.

(AhlulBayt News Agency) - The final round of the 11th International Quran Reciting Competition in Moscow began this morning at Cosmos Hotel in Russia’s Capital, Ria Novosti reported.

The competition is held under the supervision of Russia’s Mufti Rawi Ain Al-Din and sponsored by Ekmeleddin Ihsanoglu secretary general of the Organization of Islamic Countries.

In the first round of the contest which was held yesterday, October 23, representatives of 26 countries including the Islamic Republic of Iran competed in the category of recitation of the holy Quran and the best among them made it to the final round.

According to Rushan Abbasov, chair of the organizing committee and head of the international relations committee of Russia’s Council of Muftis, the competition is very important for the Russian society and is exceptional in Europe.

The Islamic Educational, Scientific and Cultural Organization (ISESCO) has praised the organizers and recognized the competition as a great Quranic event.

The Quran Reciting Competition of Moscow began in the year 2000 with the presence of the students of madrasas and maktabs of Moscow.

End item/ 129

Moscow Officials Decide Not To Build Mosque In Park



October 24, 2010

MOSCOW -- Moscow's Southeastern District has decided not to build a new mosque in a park after numerous complaints by local residents concerned about the potential increase in traffic and loss of green space, RFE/RL's Russian Service reports.

"We have looked through the petitions sent by residents and came to the conclusion that there's a possibility to relocate the [location of the planned] mosque," Maria Yermakova, spokeswoman for Moscow's Southeastern District, told RFE/RL. "There's still no information about how and when -- a final decision about the construction of the mosque will be made following public hearings."

Yermakova said the decision on a new location for the mosque has been returned to the Moscow city administration for review, which includes the mayor's office.

The planned site for the mosque -- in a park in the Tekstilshchiki neighborhood -- was designated by the Moscow administration's architectural commission, Moskomarkhitektury.

Previous plans to build a Russian Orthodox Church on Tekstilshchiki's Volzhsky Boulevard were also opposed by residents for similar reasons.

Census draws to a close in Russia



Oct 25, 2010 10:45 Moscow Time

Today is the last day of the census of population in Russia.

The census has been on since the 14th of this month, save for remote and hard-of-access areas where it got under way in March to last until December this year.

Preliminary results are due to be made public in April, while the final returns are not expected before the end of 2012.

According to the previous All-Russia census in October 2002, the Russian population strength stood at 145.2 million people.

Russian census to find large Jewish drop, expert predicts



October 24, 2010

MOSCOW (JTA) -- The Russian census under way  will show a Jewish decline of as much as 25 percent, a specialist on Russian Jewish demography predicts.

The estimate by Mark Kupovetsky, director of biblical and Judaic studies at the Russian State University for the Humanities, for the 2010 census  is based on the stable decline of the Jewish population in Russia over the past years, as death rates rise and birthrates fall.

Kupovetsky told the Russian news agency RIA Novosti at a news conference last week that he believes the current census will show 40,000 to 60,000 fewer Jews than the 233,000 Jews from the most recent Russian census, in 2002. The first post-World War II census, in 1959, revealed 875,000 Jews.

Census workers frequently fail to ask respondents to declare their ethnic origins, Kupovetsky said.

Evgenia Mikhalyova, head of the Federal Jewish Cultural Autonomy, told JTA that she declared herself Jewish only to be asked by the interviewer, “Are you positive?”

Kupovetsky said the Jewish birthrate is dropping because the majority of the Jewish population is urbanized and families have one or two children.

According to the demographer, half of the Jewish population in Russia lives in Moscow and its suburbs, and 20 percent lives in the St. Petersburg area. The rest reside in

cities with populations over 1 million.

Ongoing assimilation is another reason for the decline of the Jewish population in Russia, according to Kupovetsky.  Up to 90 percent of Russia's Jewish children now come from mixed marriages, he said.

In addition, between the census of 1989 and that of 2002, about 40 percent of the Jewish population left the country.

Emigration does not play a significant part in the Jewish population numbers, since it is counterbalanced by re-immigration, Kupovetsky said.

Berel Lazar, one of the two chief rabbis of Russia, recently told the German President Christian Woolf that the Russian Jews who left for Germany in the 1990s are now streaming back to Russia.

The potential inaccuracies notwithstanding, the census will serve as the only source of information about the numbers of the Jewish population in Russia because since the 1990s, no statistical data on mortality, marriages and birth have been collected based on ethnic groups. 

Work on Bolshoi Theater nearing end



Published: Oct. 24, 2010 at 1:28 PM

MOSCOW, Oct. 24 (UPI) -- Restoration work on the facades of Moscow's Bolshoi Theater will be done by the end of November, and it will reopen next year, officials said.

While exterior work is winding up, contractors are installing a ventilation system and power supply in the famed theater's basement, RIA Novosti reported Sunday.

The theater was built in 1825. Reconstruction efforts were launched in 2005, but the project has been marred with repeated schedule delays and a misspending scandal, the report said.

"All work on the reconstruction of the Bolshoi Theater is being carried out according to plan," said Alexander Levchenko, acting head of Moscow's construction department.

When complete, the theater will have a back stage, extra foyers and cafeterias, and the underground area will have space for storing stage decorations. The work is expected to increase the theater's size by about 150,000 square feet.

Russian prosecutors opened an investigation last year into the suspected embezzlement of millions of dollars during the renovation.

Moscow officials said the theater would officially reopen in October 2011.

Not worried over India buying arms from US, says Russia



Posted by amitk on 25 October 2010, 7:44 am

Uttarakhand, October 24, 2010: Describing India as a “super power in the making”, Russia on Sunday said that it was “not worried” over Indian armed forces buying military equipment from the US and pledged its support to see the Asian giant “strong militarily” apart from economically.

Apart from expressing surprise over US sanctioning Pakistan with a $2- billion military aid just ahead of US President Barack Obama’s visit to India in early November, Russia also promised that it would give the best military equipment it has to New Delhi.

“We understand India is a super power in the making and India can choose which better equipment that suits her. We do not think in terms of fighting for India’s (defence purchase) orders… fighting with Americans… no. So if you want those huge cargo planes you can buy them from Americans.

Maybe they are better. We are not worried,”Russian Federation Ambassador to India Alexander M Kadakin said here. He was interacting with a group of Indian journalists on his visit here to witnesses the Indo – Russian army exercise Indra – 2010. “But you are aware that Russia has a multi – faceted and diverse cooperation in the military field with India. It is not a secret that in cooperation with India we are producing the best, supersonic, cruise missiles in the world, the BrahMos. “It is not a secret that your submarine fleet is equipped with Russian submarines.

It is not a secret that you fly our airplanes… not only the old ones, which you are producing, but also the new razor- edge technologies,” he said, pointing out that his country had chosen India to codevelop the fifth generation stealth supersonic fighter jets.

Referring to the bilateral agreement for the Fifth Generation Fighter Aircraft (FGFA) signed between Russian Defence Minister Anatoly Serdyukov and his Indian counterpart A K Antony in Delhi earlier this month, Kadakin said, “Ask the American if they will sell F – 35s to India.” He said, the FGFA would be “designed by both India and Russia and produced in India also,” he said it was not just in fighter aircraft, any other military technology that India wanted, Moscow was cooperating fully.

''Delays in Indo-Russian defence projects must be excused''



PTI | 02:10 PM,Oct 24,2010

N C Bipindra Chaubattia (Uttarakhand), Oct 24 (PTI) Russia today defended the delays in joint defence projects with India, including the Admiral Gorshkov aircraft carrier, saying it should be "excused" if sophisticated and modern weapons systems was what New Delhi wanted.Though time overruns were "unfortunate," Russian Federation Ambassador to India Alexander M Kadakin said it was the experience in both countries when it came to latest technology defence equipment projects."As far as Admiral Gorshkov is concerned, Indians asked us for a state-of-the-art warship and for such a warship, there is a cost. For a cheap price, you can only purchase a 3-carat diamond."Now it will be a modern aircraft carrier and if there is a delay of two or three months for delivery, what difference would it make. If you need a potent warship, these delays have to be excused," Kadakin told reporters on the sidelines of an Indo-Russian army exercise that ended here.India had flagged the delays in critical defence projects such as Gorshkov during the recent bilateral Military Technical Commission meeting between the Defence Ministers of the two countries in New Delhi.Admiral Gorshkov, which India bought from Russia in 2004, is already behind schedule by two years, having been originally scheduled to be delivered after a refit at the Sevmash naval shipyard in Russia in 2008.Now the 45,000-tonne warship is rescheduled for delivery in end of 2012 or early 2013, though India coughed up USD 2.33 billion earlier this year after it had bought it for a price of USD 974 million under the original contract.Kadakin said such experiences existed in both countries and that it should be excused when the project involved sophisticated systems."Both countries have this experience that without delays we will not get such sophisticated systems. That is why sometimes this kind of delays do happen. It is unfortunate," he said.He was replying to a query on delays in major defence projects between India and Russia such as the Admiral Gorshkov, which has been rechristened by Indian Navy as INS Vikramaditya.The Ambassador, however, refused to talk about India getting the Akula-II nuclear-powered submarine from Russia on a 10-year lease."Akula, I do not know anything about it. Lets talk about any other submarine, I do not know anything about this particular submarine. India, I know, is also constructing a (nuclear-powered) submarine. About this submarine (Akula), do not ask me anything, I do not know anything," he said.

Akula or no Akula? What’s the story about Russian Subs to India



Posted on24 October 2010.

The Bharati establishment had thumped their chest about acquiring a Russian Nuclear Subamirine Akula. It now turns out the “Russia’s best friend” has either reneged on the deal or Delhi had exaggerated the claim about the acquisition. IBM Live from Bharat reports:

The Ambassador, however, refused to talk about India getting the Akula-II nuclear-powered submarine from Russia on a 10-year lease.”Akula, I do not know anything about it. Lets talk about any other submarine, I do not know anything about this particular submarine. India, I know, is also constructing a (nuclear-powered) submarine. About this submarine (Akula), do not ask me anything, I do not know anything,” he said.”Delays in Indo-Russian defence projects must be excused” PTI | 02:10 PM,Oct 24,2010

The lies out out the Delhi Military Industrial Complex have no bounds. The don’t just bend the truth, they blatantly lie about it.

• “If any of you are under the impression that it made contact with water with an actual reactor fitted inside its hull you are mistaken,” the scientist told a media service.

• The scientist echoes a report in Defence Professionals Daily, a German online publication, which says Arihant “currently is little more than a floating hull” without nuclear propulsion or weapons systems.

The much heralded rust bucket made from a Russian kit was announced as an ingeniously built submarine. It is an Akula class sub whose design is very similar to the Russian Akula class subs. Rust bucket Arihant: Delhi’s clunky, noisy Soviet era Charlie class tub assembled from Russian submarine kit

…graphics of the Arihant published in India Today and TOI show a similarity to the Akula. For example, the towed array on the aft sail is like that of a Akula. The Arihant is reported to displace 6,000 tons which is assumed to be the submerged displacement. If it is the surfaced displacement it would match that of the Akula.

There were several articles and a lengthy interview by the head of the Indian Navy who went into considerable detail about how difficult it was to miniaturize the reactor. In another interview with Dr Anil Kakodkar, the Indian scientist told the reporter to listen to the reactor on board–knowing fully well that there was no reactor on the ship. When repeatedly cornered by the Indian journalist, he repeatedly lied about the submarine. He  referred to the engine noise and told the reported how quiet the sub was.

Dr Anil Kakodkar did “admit” that there were Russian consultants and they helped with the reactor. However all this is total nonsense, as the new reports about the Sub show.

Reports of the lies are now permeating the international news media. The Strategy Page reports that the “Nuclear Submarine” was not nuclear at all. The the INS Arihant sailed without a Nuclear reactor. The Nuclear Submarine reactor is the first part of the sub that is built. Actually there is no way a nuclear reactor can be installed into a submarine that has already sailed and left the dry-dock.

Sending the Arihant for a retrofit on a nuclear reactor is the most stupid thing anyone has heard. Not to mention the cost. No Marine Engineer or Naval Architect worth his salt would ever think of this sort of nonsense. It simply cannot be done. The assanine engineering  of ripping the entire submarine and then putting it back together would be such a waste of time and effort that one might as well build a new submarine.

The NATO and Russia Embrace

25 October 2010

By Anders Fogh Rasmussen

When I gave my first public speech as secretary-general of NATO just over a year ago, I focused on the NATO-Russia relationship because I believe that it is crucial for global, not just European, security. At that time, I thought the relationship to be in urgent need of repair and that NATO and Russia should make a “new beginning.” So I made several specific proposals for laying the foundations of a far more productive future relationship. A year on, how do we measure up?

We have, first of all, reinforced our practical cooperation in a range of areas.

• Fighting terrorism. Because terrorism is a transnational scourge, we can defeat it only if we work together. NATO and Russia have agreed on a joint assessment of terrorist threats, and we are already making considerable progress on a number of concrete projects. We are working together, for example, to counter the threat of attacks on mass transport and other public gathering places. Under a joint program called Stand-Off Explosives Detection, we have brought together leading research institutes and laboratories in NATO countries and Russia to integrate various technologies into a single system for detecting explosives and identifying potential attackers.

• Preventing proliferation. The proliferation of nuclear capabilities and ballistic missiles is a major concern for the international community as a whole and a grave and growing threat to NATO countries and Russia. Experts from NATO and Russia have met several times to discuss how their countries can best address this threat together, and a working group on arms control, disarmament and nonproliferation is now taking this cooperation forward.

• Stabilizing Afghanistan. Russia’s interest in a stable Afghanistan is as strong as NATO’s. In spring 2010, the first cargo containers reached the NATO-led International Security Assistance Force via Russian territory, opening an important additional line of communication. The NATO-Russia project to provide counter-narcotics training to personnel from Afghanistan and Central Asia has produced more than 1,300 graduates, many of whom have already used their new skills to intercept some of the largest heroin shipments in the region. In addition, following suggestions that I made in Moscow in December, Russia’s leaders are considering additional contributions of helicopters and training to the Afghan National Army.

Beyond increasing our practical collaboration, we have rejuvenated the NATO-Russia Council and have broadened and deepened our dialogue over the past year. We have held open, frank and constructive discussions on a broad range of Russian and allied security concerns and on proposals to address them. While these discussions have not led us to see eye-to-eye on all issues, they have certainly helped build a greater degree of mutual trust and confidence, which will certainly benefit our future cooperation.

The same is true of our joint review of common security challenges, which has progressed extremely well, with agreement on five threats and challenges that call for enhanced cooperation: terrorism, Afghanistan, piracy, proliferation of weapons of mass destruction, and natural and man-made disasters. We are already fleshing out the details on appropriate practical projects to be undertaken together.

In addition, NATO has been fully transparent with Russia on the development of the alliance’s new strategic concept, which I hope will encourage similar transparency from our Russian partners as they develop their own strategic documents.

Taken together, these achievements show that a new beginning in NATO-Russia relations has indeed been established. But my optimism about the future of our relationship does not blind me to the difficulties that remain. NATO allies still have concerns about Georgia, where fundamental differences of principle are at stake. Russia, too, continues to have concerns — for example, over NATO’s open door policy. I believe that these worries are misplaced and that NATO enlargement has enhanced security and stability for Russia.

Despite these remaining differences, we should have enough confidence to set out an ambitious agenda for the future. One of our priorities should be to enhance our operational cooperation. Back in the 1990s, we worked together with great success to stabilize the Balkans. I would like to see more joint peacekeeping operations, not only on land, but also at sea to enhance maritime security — in particular, greater cooperation in our efforts to combat piracy in the Gulf of Aden. Moreover, our operational cooperation in Afghanistan could be stepped up. Russian donations to the Afghan National Army could make a huge difference to the Afghans’ ability to ensure their own security, which is in the interest of us all.

But missile defense, in my opinion, offers the greatest potential for enhancing the NATO-Russia relationship. Earlier this year, in light of the growing threat of proliferation of nuclear capabilities and ballistic missiles, I proposed a common “security roof” stretching from Vancouver to Vladivostok. I hope that in the coming months and years we will have the political will to make this a reality — a reality underpinned by NATO-Russia cooperation on missile defense.

A healthy NATO-Russia relationship is vital to the security of us all. Now that a solid foundation for it is in place, together we can look to the future with renewed confidence and ambition. I will do everything in my power to ensure that we fulfill the tremendous potential that the NATO-Russia relationship holds, and I count on the support of all members of the NATO-Russia Council to achieve this goal.

Anders Fogh Rasmussen is secretary-general of NATO. © Project Syndicate

Bullish on the Bear



25 October 2010

By Richard Lourie

Russian policy is now driven by two factors: the imperative to modernize and the fear of China. Both dictate a move to the West, which is now well under way.

On Oct. 18, President Dmitry Medvedev met with German Chancellor Angela Merkel and French President Nicolas Sarkozy in France to formalize Russia’s relations with the European Union in security matters. Medvedev will also attend the NATO summit in Lisbon on Nov. 19 to 20. That was only possible because Russia had announced it was withdrawing its troops from Perevia, a Georgian town it had occupied in the 2008 war that had become a sticking point in negotiations with NATO. This comes after a significant concession by the Kremlin when it canceled the sale of S-300 anti-aircraft missiles to Iran.

Of course, none of this means that Russia is about to become the West’s lackey. For example, on Oct. 15 Medvedev and Venezuelan President Hugo Chavez signed a deal for Russia to build Venezuela’s first nuclear power plant. Russia has also sold Venezuela more than $4 billion in weaponry over the past five years. None of these transactions were designed to curry favor with Washington. Medvedev, however, termed the nuclear power plant deal strictly business. The little matter of Chernobyl aside, Russia offers a very good value proposition on nuclear energy. It will build the reactors, supply the energy at an attractive price and dispose of the waste — a decision, as one commentator remarked with mock wistfulness, that could not have been made quite so easily in a more democratic country.

But Russia has been losing ground in some of its traditional core competencies, including arms sales. Though still second to the United States, Russian sales have been hurt by Chinese “knockoffs at bargain prices.”

China became more assertive the moment it passed Japan to become the world’s No. 2 economy. This was displayed in its recent clash with Japan over a Chinese trawler captain held by Japanese authorities, its reaction to the Nobel Peace Prize being awarded to dissident Liu Xiaobo and in the recent embargo of rare earth minerals both to Japan and to the United States. Russia’s economy would not, of course, be much affected by an embargo of this sort, but many Russians will see these as the opening salvos in what former Mayor Yury Luzhkov once told me would be “the resource wars of the future.”

Coincidentally, the coming world water shortage was the cover story — “The New Oil” — of Newsweek’s Oct. 18 issue. It calls Russia, along with Canada and Alaska, one of the “winners” in the world of the “new oil,” seeing Siberian entrepreneurs selling water to an increasingly parched China. But those same resources also make Russia more attractive for a takeover, especially since the eastern reaches of the country are sparsely populated — 7 million Russians compared with 100 million Chinese on the other side of the border. Territorial disputes, although quiet for the time being, can always come back to life. Historically, China has always considered itself the injured party, its territory seized by “unequal treaties.”

Russia is interested in Western capital, know-how and security pacts but not Western values. A few concessions might be made, like a reduced sentence for former Yukos CEO Mikhail Khodorkovsky. But Russia will definitely improve economic and legal conditions to attract capital. The coming decade should be good for investment in Russia. For the first time in quite a while, I am bullish on the bear.

Richard Lourie is author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”

Don’t Oversell an EU-Russia Reset



Posted by Managingeditor on Mon, 10/25/2010 - 05:19 in Europe and Eurasia, Security Policy

By Calvin Garner

Staff Editor

October 25, 2010

On October 18-19, French, German, and Russian heads of state met at the Deauville Summit to discuss future military and economic cooperation between the EU, NATO, and Russia. Some observers in the U.S. and European media have likened the meeting and the promise of future cooperation to the start of an EU-Russia reset, similar to the US strategy that started in March 2009. Advocates of the reset point to a string of policy successes and a general trend of moderation in Russian foreign policy over the last 20 months as reasons why a similar policy would be good for Europe.

Since Russian Prime Minister Vladimir Putin ascended to the presidency in 1999, the main goals of the Russian state have become clear: reverse the privatization and decentralization of power that occurred in the 1990s and consolidate political control within the Kremlin; reclaim Russia’s role as a major player on the world stage; and reassert dominance over the states of the former Soviet Union. Both the EU and the U.S. find all of these goals problematic.

While the U.S. reset policy has produced some successes, EU leaders should be very clear about what a Russia-reset can and cannot do for Europe. The EU should not expect that Russia, if engaged by an EU policy reset, would come to view its strategic objectives any differently. An examination of the basis for U.S.-Russia reset and what it has accomplished shows why.

The U.S.-Russia reset was based on reducing the acrimony between the two countries, whose diplomatic relationship was at a post-Cold War nadir, and identifying areas of mutual interest. These objectives represent the low-hanging fruit of international diplomacy. Moreover, Russian and U.S. political elites implicitly accept that there are some very big areas of policy difference, but that both sides are best served by focusing on other issues for the time being.

How has the policy been successful? Russia has signed the new START Treaty, which will renew the US-Russian nuclear arms reduction regime, allowed the passage of NATO troops and materiel over and across its territory, begun to participate in international efforts to isolate Iran, and indicated that it may support an anti-ballistic missile system in Europe. These developments benefit U.S. interests and, as such, should be viewed as wins for the Obama administration. But when weighing the benefits of the reset, Europe should bear in mind that none of the US policy victories of the last 20 months undermine or suggest a change in the fundamental Russian interests outlined above. There is no evidence to suggest, for example, that Russia would not favor another gas war with Ukraine, shooting war with Georgia, or vitriolic anti-Western rhetoric if it thought it would serve its core interests.

What have been the failures of the reset policy? Perhaps most significantly, the reset has been unable to slow the marginalization of opposition parties or the silencing of dissenting voices within Russia. Former Russian Prime Minister Mikhail Kasyanov is currently touring the US trying to spread this message. Making a policy “reset” the cornerstone of EU-Russian relations threatens to leave out the important issue of human and civil rights abuses that are perpetrated or condoned by the Russian government. If Europeans care about moving Russia closer to liberal democratic norms, they need to understand that “reset” has not been an effective way to do so.

Reset proponents often identify a general moderation in Russian behavior on the international stage over the last two years. But there are two reasons why this period of moderation should not be misinterpreted. First, two years is a very short time to draw conclusions about efficacy of policy or to predict future behavior in international relations. In fact, two years ago the shooting in Georgia had just barely stopped; indeed, Russia continues to station troops in the Georgian separatist regions of South Ossetia and Abkhazia, thus violating the territorial integrity of a sovereign state. Second, there are compelling reasons other than US action that explain why Russian policy has moderated in the past few years.

Lower commodity prices have resulted in a weakened financial position for Russia, an exporter of oil and natural gas, limiting its ability to throw its weight around internationally. Additionally, Russia no longer faces an openly hostile government in Ukraine and trounced Georgia, a Western ally and anti-Russian government, in the 2008 war. Finally, with each passing year, dissent is further extinguished in Russia and opposition parties have less chance to mount anything but token resistance to Putin’s policies. If any of these developments were to be reversed, there is no reason to think that the moderation trend would not be immediately reversed as the Kremlin turned to its previous tactics to protect core interests.

There is always a case to be made for improving the tone of diplomatic relations and finding areas of compromise, and an EU-Russia reset may do just that. Such steps may even lead to resolution of thornier issues. But neither the Europeans nor the Americans should think that the fruits of a “reset” policy mean that Russia has changed its goals or its tactics in a fundamental way.

This image is being used under Creative Commons licensing. The original source

can be found here.

Russia In Moldova – Soft Power Or Soft Force?



October 24, 2010

By Irina Severin

Depictions of the election campaign in Moldova as “a war between East and West” for influence in the tiny country (such as a recent analysis by the U.S. geopolitical research firm Stratfor) are mistaken if only for the simple reason that just one side is fighting this war. But to understand what I mean, it is important to look at the different ways the concept of “soft power” is understood by Russia and the West.

The term “soft power” came into widespread use in the 1990s in the West to signify “the attraction of a positive example.” This is the kind of “soft power” that the European Union exerts in Moldova. The bloc does nothing to force Moldova to cooperate or integrate with it; on the contrary, it has established a mass of difficult conditions that limit the opportunities for rapid integration.

The EU’s message to Moldova is simple: The more you are like us, the faster integration will proceed, not sooner and not later. It is therefore not surprising that as soon as Moldova elected a government that espoused a European path of development, Europe opened up to Moldova to a degree that previously no one had dared dream of.

Russia in recent years has also taken up the banner of “soft power,” but it understands this term as the cloning of the outward manifestations of Western soft power. Russia has begun financing “nongovernmental” organizations and “independent” mass media outlets that are willing to advance the Kremlin’s understanding of Russian interests (interests that, as a rule, contradict the interests of Moldova itself).

Nothing Attractive

In particular, Russia is pushing the idea of an “Eastern vector” of development for Moldova, at a time when the overwhelming majority of Moldovans support further European integration. The problem, though, is that Russia has no universal idea that might be attractive to other countries. The communist ideology that it offered in the 20th century has been nearly completely marginalized now. In the meantime, the West is attractive to Moldova because of the practical results of the idea of democracy, which has demonstrated itself as the most effective means of social organization. Those results are beneficial most of all to those countries that are trying to imitate the West and so there is no reason to compel anyone in any way.

But Moscow is inclined to see democracy as a hostile ideology that is being spread by the West in order to increase its own influence in Russia’s neighborhood. And this particular interpretation can’t help but color Russia’s actions in the region. Moscow really is battling against the West for influence in the region, while the European Union is content with merely remaining a positive example that is attractive to Moldova mainly through its pragmatism and the mere fact of its existence.

Russia, unfortunately, in its virtual isolation so far has nothing to offer in competition against the West (or to attract Moldova). It cannot boast of an effective system of government or a high standard of living or an active citizenry whose rights are protected. Instead, what Russia is presenting in Moldova (and other countries) as “soft power” -- in contrast to the natural attractiveness of the West -- is highly reminiscent of the old Soviet joke “everything they try to build turns out to be a Kalashnikov.”

'False-Flag Operation'

Russia’s social engineers understand the term “soft power” as a synonym for “information war.” The idea of an information war is simple – it is a complex of measures designed to prompt the population of the target country to begin to act contrary to its own interests and in support of Russian interests without even realizing it. Political campaigns and campaigns in the media targeting political leaders and forces that Moscow opposes have become the norm in Moldova.

But all of Russia’s efforts to employ soft power inevitably end up turning into the use of “hard power” – that is, the use of direct force or economic power against another country. No one in Moldova is surprised by the periodic introduction of undeclared trade embargoes against Moldovan goods. While the Kremlin elegantly shifts the blame for these embargoes on chief Russian health inspector Gennady Onishchenko, when it comes to it political and media campaigns, Moscow prefers to act through intermediaries, taking advantage of political or geopolitical actors that have some credibility with the target audience for its political message.

This is the tried-and-true “false-flag operation.” It is no secret that Russia still has serious levers of influence within Romania left over from the days of socialist brotherhood. Moscow’s influence has only been bolstered by the global economic crisis. Of course, Moscow prefers not to advertise these levers but rather to use them to guide events in the “proper” direction. In particular, it is unlikely that Russian media would have any significant influence on Moldova’s pro-Western (pro-Romanian) electorate, while Romanian information sources are highly regarded.

In this context, it is hard not to be skeptical of the unsubstantiated claim in the Stratfor report that the United States has asked Romania to set up nongovernmental organizations, media outlets, and investment funds in Moldova. True soft power does not need to resort to irrational or covert methods. The genuinely interesting thing about this claim is how widely it has been re-reported in recent days throughout the region.

The very idea that there is a standoff between East and West in Moldova is itself an artificial idea that has been imposed from the outside. The majority of Moldovans long ago made their choice in favor of European integration. There is not a single serious political force in the country now that would not espouse European integration, if only because that position wins votes.

But that position does not suit Moscow, so it keeps on fighting.

Irina Severin is a journalist and political analyst based in Chisinau. The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL.

October 22, 2010

Russia Profile Weekly Experts Panel: Is Russia Engineering a Regime Change in Minsk?



Introduced by Vladimir Frolov

Russia Profile

Contributors: Vladimir Belaeff, Ethan Burger, Alexander Rahr, Alexandre Strokanov & Vitaly Strokanov

The Kremlin’s relations with Belarusian President Alexander Lukashenko, also known as the “last dictator of Europe,” appear to have reached the point of no return. On October 3, president Dmitry Medvedev recorded a video message to the Russian and Belarusian people, in which he made it clear that the Kremlin no longer views Lukashenko as Russia’s strategic partner and for all intents and purposes wants “regime change” in Minsk. What does this mean for Belarus ahead of its presidential elections this December?

On October 13 Presidential Chief of Staff Sergei Naryshkin met with members of the Belarusian media, including opposition media outlets, to deliver a blunt message – that Russia might not recognize the results of the Belarusian presidential elections next month if they are not held in full compliance with Belarusian laws and international criteria for free and fair elections.

Naryshkin also made it clear that Moscow has a problem only with Lukashenko personally, and were that problem to be somehow removed (were Lukashenko to retire from the scene or suddenly come to his senses), wants to return to normal relations with Belarus.

Lukashenko, who is running for his fourth five-year term, responded to the Russian threats of not recognizing the legitimacy of his likely reelection by threatening to pull Belarus out of all integration projects with Russia and the CIS bodies. He also made the bad move of holding a meeting with Russian regional media on October 1, where he permitted himself some very humiliating and disparaging comments about president Medvedev personally and about his recent firing of ex-Moscow Mayor Yuri Luzhkov, crossing the line by meddling in Russia’s internal affairs.

The Kremlin seems to be signaling to Belarusian elites that it wants Lukashenko out of the way and is prepared to deal with almost any other Belarusian leader. It is, however, somewhat less clear if Moscow has a viable strategy to deal with Lukashenko after his almost assured reelection.

Not recognizing the election results opens a host of touchy issues, especially with Russia’s own less-than-immaculate record on elections. This could also deal a mortal blow to some high profile integrationist projects in the former Soviet space, particularly the Russia-Belarus Union State, the Customs Union, etc.

Allowing Lukashenko a victory despite the Russian counter-effort would be too humiliating for Medvedev internationally and would make Moscow look very weak. The strategy seems to be to maintain economic and psychological pressure on Lukashenko to prevent him from savoring the fruits of his likely electoral victory, and to keep telling the Belarus elites that they would be better off without Lukashenko at the helm, thus encouraging conspiracy scenarios in Minsk.

Is Russia engineering regime change in Belarus? Could such a strategy, if this qualifies as a strategy, be successful in Belarus? Were it to prove successful and were Lukashenko to go under Russian pressure, what would this say about Russia’s ability to affect democratic regime change in the CIS? What would be the likely consequences of Russia not recognizing the results of the Belarusian presidential vote in December? What would the United States and the EU do in such a scenario? Would they present a united front with Russia, or would they seek to play Lukashenko against Russia? Could this be another tangible deliverable of the Obama-Medvedev reset? How would Belarusian people react to Moscow’s pressure to remove Lukashenko? Would they rally behind their leader or would they shun him? Do Belarus opposition candidates have a better chance of unseating Lukashenko with Russian pressure on? What does the Lukashenko spat say about Medvedev’s qualities and inclinations as president?

Alexander Rahr, Director of the Berthold Beitz Center for Russia, Ukraine, Belarus and Central Asia, Berlin, Germany:

The quarrel between the Kremlin and Belarusian leader Alexander Lukashenko is not new. It has been going on since the beginning of Vladimir Putin's first presidential term, when the latter bluntly told Lukashenko to give up his country's sovereignty and join Russia.

The quarrel reached a head during the energy conflict at the beginning of 2007, when Moscow raised the gas prices for Belarus and introduced import tariffs for Russian oil.

The current militant rhetoric is a culmination of the worsening relations between both countries. Dmitry Medvedev actually used the same methods to attack former Ukrainian President Viktor Yushchenko for the latter's anti-Russian stance in the summer of 2009.

But while Yushchenko is out and Ukraine is now closer to Russia, Lukashenko will not share Yushchenko's fate. There is no Belarusian Viktor Yanukovich around who could replace him. So, indeed Russia must think twice before accelerating its attacks on Lukashenko.

If he is reelected and Russia decides to treat him like an outcast – what this will mean for future reintegration processes on the post-Soviet space? Probably the end.

But at the same time, how can the Kremlin and Minsk come to reconciliation after the recent verbal attacks against each other? Will Putin become the mediator between Medvedev and Lukashenko? Or is Putin the real architect of the split?

Ethan S. Burger, Senior Lecturer, Centre for Transnational Crime Prevention, Faculty of Law Innovation Campus, University of Wollongong, Australia:

It would be overly simplistic to believe that, having recently fired Luzhkov as Moscow’s mayor (following the dismissal of several other heads of the Russian Federation’s political subdivisions) and participated in efforts to create an environment that made possible the election of Viktor Yanukovich as Ukraine’s president, Russian President Dmitry Medvedev is actually intent on devoting considerable efforts toward “regime” change in Minsk.

Even if Medvedev genuinely wanted to promote political change in Belarus, he will have to do considerably more than post a video message hostile to Lukashenko on his blog, or give his blessing to the recent Russian media interest in reporting Belarusian political developments and buried skeletons. While the Russian political leadership may have reached a consensus on whether it is now desirable to “replace” Lukashenko as the Belarusian head of state, it knows that its tools are limited and that it lacks a credible replacement.

I doubt the Russian political leadership is eager to see Andrei Sannikov (European Belarus) or Anatoly Lebedzko (United Civic Party) as the next Belarusian president.  As long as Lukashenko remains Belarusian president, his grip on power is sufficiently strong that I find it inconceivable that he will lose an election when he determines who counts the ballots.

Undoubtedly, both Medvedev and prime minister Putin find the mercurial and ruthless Lukashenko to be an annoyance. Nonetheless, he does not represent a real threat to their domestic and foreign policy agendas. Lukashenko’s flirtation with the EU countries is a unilateral infatuation that offers him no real alternative to finding working solutions to bilateral disputes with Russia.

While Medvedev and persons involved in the conduct of Russian foreign policy may believe there might be tangible benefits from distancing themselves from Lukashenko, any gains will be ephemeral.

Any Belarusian president who enjoys genuine support among the segment of the Belarusian elite that longs for closer relations with the EU and the United States is unlikely to have warm feelings toward those exercising power in Moscow.

Several days ago, the Russian president and Venezuelan President Hugo Chavez observed the signing of a series of contracts, pursuant to which Rosneft acquired Petroleos de Venezuela’s oil refining capacities in Germany, which represents approximately ten percent of German refining capacity, increasing Russian control over Germany’s energy supply. The financial terms are apparently very favorable for Rosneft. In addition, Rosatom agreed to construct Venezuela's first nuclear power plant. Chavez’s popularity continues to decline at home as his relations with his neighbors remain fairly tense, so for him to have a Russian shoulder to lean on is critical to his survival.

The Russian leadership’s willingness to extend a hand to a friend at such a time (although at a price), casts a shadow of suspicion over the motives behind Russian foreign policy. Russia’s assertive foreign policy with respect to Venezuela weakens the credibility behind claims that it has abandoned its “zero sum game” approach. In any case, Lukashenko will almost certainly remain Belarusian president for the foreseeable future because he has atomized the political opposition through political repression, allowing many of those unhappy about conditions in Belarus to leave the country so long as they have been restrained in acting upon their sentiments.

Alexandre Strokanov, Professor of History, Director of Institute of Russian Language, History and Culture, Lyndon State College, Lyndonville, VT, and Vitaly Strokanov, Senior Lecturer, Izhevsk State Technical University, Chaikovsky, Russia:

Nobody would deny that the President of Belarus Alexander Lukashenko is not an easy partner, and that he deserves to be criticized for much of his action inside his country as well as in his foreign policy.

His desire (if it actually exists) to be liked and supported by the West in return for shunning Russia is nothing but naпve. That said, all or at least most of the accusations directed at Lukashenko for his “games with the West,” “links to Boris Berezovsky”, and “anti-Russian rhetoric” may be nothing more than the “creativity” of the Kremlin’s propaganda masters, who want to distort the understanding of the real nature and causes of Lukashenko’s recent actions.

It is quite obvious today that the Union State of Russia and Belarus is just a virtual project that will never materialize into anything serious. The leadership in both counties can be blamed for it, but as it becomes clearer now, it was actually never supported by the elites in the two countries. One of the parties was quite surprised when this truth was stated to him very bluntly by a Belarusian official many years ago. Today only blind people can’t see this reality. There are many explanations for it, and this is probably not the place to address the question in detail.

We will provide only one example. What was the point of the North Stream pipeline if it was clear that it would at the very least significantly limit the flow of revenue into the Belarusian budget from the transit of Russian natural gas to European markets? In our understanding, a Union State should act in favor of both partners in it and not just one. Today a significant part of the Belarusian budget is filled by transit fees on the existing Yamal-Europe and Northern Lights pipelines. What is going to happen to the country’s budget when North Stream will begin to operate? Obviously, the Russian leadership decided that the economic interests of Russia and Gazprom are above the interests of the Union State and their partner in this case.

Lukashenko understands perfectly that the Russian leadership does not treat him as an equal. However, he is the president of his own independent country and expected to defend the interests of those who elected him to his position. Everybody, even his opponents in Belarus, will probably agree that he works really hard to defend the interests of the Belarusian people and his state.

The post-Soviet model in Belarus is quite interesting and has at least a few attractive aspects in comparison to Russia today. Belarus has much less corruption, a much smaller gap between rich and poor, and did not experience a near collapse of state and social infrastructure in the 1990s. This is exactly why people in Belarus still support their leader and will vote for him in December 2010 election, despite the Kremlin or the European Union’s displeasure.

The problem for Lukashenko is that he is not needed by or even of interest to anybody in the European Union, except perhaps for Belarus’ neighbors. It is unlikely that European leaders after the December election will begin to support Lukashenko’s Belarus. The country is not going to fit into the European Union; neither can it be saved by China, Venezuela, etc. Belarus (with or without Lukashenko) will have to continue to live with two giants as its neighbors: the EU and Russia, and to balance between them.

Of course, Russia for Lukashenko is a more preferable partner than bureaucrats from Brussels, even taking into account all the Russian selfishness. That is why after the elections Lukashenko should correct his major foreign policy error and recognize the independence of South Ossetia and Abkhazia. This will be a good sign that he is ready for reconciliation with the Russian leadership. The Kremlin, in its turn, should stop the smear campaign on Russian television against him. The Russian leadership should also learn from its own mistakes and not consider the willingness of Lukashenko to recognize South Ossetia and Abkhazia as his defeat and capitulation. It is unlikely the smear campaign and Medvedev’s video blog have played any positive role in the development of relations with Belarus, and they still will leave a bad aftertaste for people in both countries, further increasing the vision of politics, even between brotherly people, as an exercise in cynicism and hypocrisy.

All of these things also suggest that the political arsenal of the Kremlin is rather poor, since in fact the same methods were applied in very different situations: in Ukraine under Yushchenko and in Belarus under Lukashenko. Many of the critical statements against Lukashenko made by Medvedev in his video blog could easily be addressed to the Russian president himself.

Vladimir Belaeff, Global Society Institute, Inc., United States:

Lukashenko's record as a reliable partner is less than stellar. This would be a frank assessment not just from Russia, but also from Brussels and Washington. It should be remembered that Lukashenko and his entourage have been subject to restrictions of a very personal nature imposed by the West. The designation "last dictator of Europe" is not of Russian coinage; for the United States or the EU to get involved, the "dictator" label must be nullified, and this is not an easy volte-face to accomplish.

Lukashenko's foreign policy gyrations over the past two decades would try the patience of a saint – it was notable that the Russian government has put up with such a roller-coaster. Evidently Lukashenko was (and remains) the "only game in town" for Russia regarding several foreign policy initiatives. One must wonder whether the recent pronouncements from Moscow may not indicate a substantial revision of these objectives. It is notable also that very recently there were overt discussions in Moscow with at least one prominent Minsk politician (and there may have been other, more discreet conversations.)

No elections in any country today are free from the suspicion of minor or major manipulation. After all, political campaigns are in fact themselves legally sanctioned attempts to manipulate voter opinions in favor of one candidate or another. Nevertheless, Lukashenko may win re-election even in mostly clean elections – voters are funny like that, and bizarre outcomes have been observed in other countries. The real difficulty of course is the lack of term limits and of viable opponents to the incumbent in this election.

Therefore, one does wonder how Moscow plans to continue working with Lukashenko after his expected reelection. There is another hidden consequence of the recent demarches against the gentleman from Minsk. Should he fail in his reelection bid, he might vociferously accuse Moscow of having interfered with the politics of Belarus and claim to be a victim of imperialism.

So in a sense Moscow appears to be in a bit of a dead-end, "damned if you do, damned if you don't" kind of situation. In light of this, one notes that Lukashenko must have truly irritated the Kremlin beyond all realistic boundaries.

But Lukashenko is in a dead end of his own. He has burned the bridges in his only valuable foreign relationship. The West long ago declared him persona non grata; now Russia appears to be doing the same. And Belarus is not North Korea – self-isolation and autarky are not viable options. Of course, a kind of informal axis of marginal and outcast rulers may form, but the ability of such a network to even function is highly debatable.

Moreover, the evident relative success of Russia in comparison with its northwestern neighbor cannot be hidden from the Belarusian electorate. Lukashenko's attractiveness to his voters is predicated in a significant degree on his ability to tap into Russian wealth and Russian opportunities. The word from Moscow is that now Lukashenko is no longer welcome as a partner, and this time amends apparently will not be accepted.

A sophisticated politician in Lukashenko's place would seek a graceful personal exit. Smart poker players know "when to hold'em and when to fold'em." But a sophisticated politician would not have placed himself in Lukashenko's predicament in the first place.

Finally, Russia has other constructive prospects on its Western flank – Poland, Finland, the Baltics, Ukraine. Lukashenko lacks such luxuries.

Indeed, the near future will be interesting in Minsk.

Moscow new mayor faces task of preparing city for winter



25.10.2010, 09.30

MOSCOW, October 25 (Itar-Tass) - Sergei Sobyanin will begin his first working week as the mayor of Moscow with an urgent issue of the city's preparation for the winter. Inaugurated on October 21, the new head of Moscow Monday will hold a meeting with members of the previous government of Moscow, now staying in the status of acting.

A sources in the mayor’s office told Itar-Tass that the meeting to attend which prefects were also invited, will be visiting and will be held in the south of the city – at the Chertanovo district heating station.

Sobyanin devoted his first three days in office to the study approaches to solving one of the priorities set by President Dmitry Medvedev – the transport issue. The new mayor has already taken part in an enlarged meeting at the RF Transport Ministry on Moscow's traffic jams, in which governor of the Moscow region Boris Gromov also took part. Sobyanin’ s first tour of construction sites on Saturday also focused on the traffic jams, exactly – search for ways to cope with. The new mayor intends to concentrate its resources for the settlement of this problem, at the same time he stressed that “it is inadmissible to “dissipate strength in the road construction work.” He intends to establish next year a special road fund, and several times increase the city budget spending on transport in 2011, since it “does not correspond to the scope of problems the city is facing.”

In the view of Sobyanin, at present the city “needs to concentrate efforts on several specific facilities as soon as possible.” He has inspected the supply lines in the area of the “island of skyscrapers” – a yet unfinished Moscow City business centre.

Sobyanin, who called its construction in the heart of Moscow “a mistake in the city development,” has admitted that there is no turning back now and it only remains to minimise the consequences of this mistake - especially for the efficient organisation of transport flows. In this regard, the mayor came to the conclusion on the results of Saturday's meeting that the system of road junctions around the business centre needs considerable improvement.

At a meeting of the city government on Tuesday, which will also be the first for Sobyanin, the government members will consider the issue of Moscow’s electric power supply scheme for a period up to 2020. Sobyanin has already said that the issue of energy efficiency, including in the construction sphere, is also a priority. Starting next year the new mayor intends to take up the introduction of new construction standards in which “the energy saving share should be 20 to 30 percent.” The city’s housing and public utilities are rather acute, especially regarding the creation of management companies and homeowners’ associations. Sobyanin instructed officials to work out by Monday specific measures to settle the problems with homeowners’ associations and demanded from prefects to “personally” deal with these problems, in order to relieve the city dwellers of them as early as by the middle of December.

In the view of the mayor, the campaign for the creation of homeowners’ associations in Moscow has already created a situation in which not citizens, but some organisations “that are cut off from the tenants” manage their houses. Therefore, officials were instructed to control in the future the relations of homeowners’ associations with the tenants, also the tariff policy and quality of provided services. Sobyanin believes the housing and public utilities sphere in the RF capital is one of the most obscure corrupt. He has already warned the city officials about personnel reshuffles that may follow after “the first signal” about extortions in that or other departments. “Please listen to my words, in order not to regret in the future, I ask you to ensure control over your departments and institutions entrusted to you,” he told the officials. “Make sure that there are no extortions or some kind of informal payments.” “This must be ruled out either directly or through some sort of shady offices, agencies or expert bodies; decisions, also on personnel, will be made on the first signal,” the mayor said. He also gave an instruction to officials: “Keep that in mind, we can not assume that this work will be done by someone, it is you who should do this work in the first place.” “The better you do it, the better your performance will be assessed,” said Sobyanin.

The Moscow ministers have already been working in the status of “acting” for nearly a month. Sobyanin so far extended these powers of the city government until a new Cabinet is formed. The new mayor also thanked the ministers for their “fruitful” work with the “acting” prefix. However, he did not rule out “rotations” in the government and suggested giving maximum authority to local self-government bodies.

The Moscow City Duma last Thursday vested Sobyanin with the powers of the capital’s mayor. The candidate, proposed by the RF president, gained support from 32 legislators of the 35 having seats in city Duma (32 of the United Russia party and three from the Communist Party). Two ballots were cast against. The meeting was attended by 34 deputies. One Communist MP is away on a sick leave. Before the voting procedure the Communists said they would vote against Sobyanin. The voting was held by secret ballot.

Sobyanin’s term of office is five years.

Trash staring Muscovites in the face



25 October, 2010, 08:47

Moscow knows it lags behind many other capitals when it comes to taking out the trash. But a lack of recycling infrastructure is forcing environmental protection up the priority list.

When Ilya Voskresensky bought a flat in a new apartment block right outside Moscow, he knew the hill next to the house was an old waste yard, covered with soil.

But when he began seeing fresh piles of rubbish appearing and disposal trucks coming and going at night that he became suspicious, and then furious.

“We're all shocked! Officially the waste yard is closed, but I can assure you it isn't! Our apartment buildings are just around 20 meters away. It's a direct violation of the law. If I gave a good throw, I could get rid of my trash right out the window!” Voskresensky says.

Under the law, dumps can not be closer than 500 meters from a residential area. But unfortunately, this and many other rules on waste disposal are often trashed.

Like in the town of Korolyov, not much further away from the capital, in an area used for garages. Since some of them were built illegally, they had to be dismantled. In their places, piles of waste have grown all around the area.

Deeper into the area the picture becomes even worse. There is an area disputed between the town and local forestry officials, and neither wants to take responsibility for the mess.

Environmental inspector Nadezhda Golosova says she is helpless – even fining the officials has not helped, since the biggest penalty is only around US$200.

“Environmental consciousness is very low. People just don't care. For many it's much easier to come here and just dump their trash right here. And bureaucracy is making it even worse. There's simply no one to clean this up,” Golosova says.

But Vladimir Zakharov from Moscow’s Center of Ecological Policies believes there is still a way to fix things.

“We have to get people interested. And the best way to do it is by giving them money. Each bottle has to have a good return price. Who is ever going to throw out an empty bottle if they could get at least one third of the money back for it?” Zakharov asks.

Perhaps a law increasing the return price for different packages may improve the situation, at least partially. But that may lead to a new riddle – building the necessary infrastructure either to recycle or resell used bottles.

Moscow alone produces at least 5.5 million tonnes of waste per year. And less than 15 per cent is recycled.

This a situation that is hard to believe in many Western countries, where from a young age people are taught to recycle.

A Wayward Son Checks in With Mother Russia



By CLIFFORD J. LEVY

Published: October 24, 2010

MOSCOW — It was late in the Brezhnev era when a boy named Igor Semyonovich Shteyngart took up writing at the urging of his grandmother, who rewarded him for his labors with bits of cheese. Inspired by a statue of Lenin near his home, he scribbled a fairy tale called “Lenin and His Magical Goose.” Perhaps you will read it someday. The title characters meet, become friends and decide to invade Finland together to set up a glorious Soviet republic there.

But the two squabble, and Lenin eats the goose.

The boy soon emigrated — Igor of Leningrad became Gary of Little Neck, Queens — but he never lost his zeal for rummaging through the recent history of his motherland for material, and then recasting it as farce. So it was that Mr. Shteyngart, now a widely praised author in the United States, returned this month to Russia to do an informal book tour and, notebook in hand, look for inspiration.

“The thing about Russia is that, for a satirist, it’s almost too easy,” he told an audience in Moscow after reading from his new novel, “Super Sad True Love Story,” which revolves around the relationship between Lenny, a son of Soviet immigrants, and Eunice, daughter of Korean ones. The setting is a futuristic America in bedraggled decline, but, as Mr. Shteyngart points out, he learned everything that he needed to know about decaying superpowers from the collapse of you know what. “Having Russia and America — these two giant empires — under your belt, as a writer, you can’t ask for anything better,” he said.

While Mr. Shteyngart is a rising literary star in New York, he is a nobody in Russia, selling fewer translations of his books here than in Belgium. It may be that Russians don’t quite get his three-ring circus narratives, or are not amused by his caricatures of post-Soviet life. But Russia has a splendid tradition of satire, and current writers like Viktor Shenderovich, whose wit has been compared to Jon Stewart’s, have followings. (As well as the disapproval of the Kremlin.)

Maybe, then, it is something deeper: Russia does not like to celebrate the achievements of its wayward sons, often eyeing them with suspicion and even envy. Mr. Shteyngart said that some of the reviews of his work by Russian critics could be summarized as “Balding traitor betrays homeland.”

Yet if his Russian audiences were unfamiliar with his prose, they were nonetheless curious about how Americans perceive an author who moved to New York when he was 7 though is still defined by his Russianness. At Moscow State University a senior lecturer, Maria Soukhotina, asked him whether this reputation was a burden or an asset.

“I really don’t care about the label, as long as people read the work,” Mr. Shteyngart said. “In the ’60s I remember that Philip Roth was very angry at being called a Jewish writer. He said, ‘No, I am an American writer.’ These days, you can call me a Russian writer, American writer, Jewish writer, lefty writer. I don’t care. Anything is good, as long as it’s part of the big soup of literature.”

Mr. Shteyngart, 38, recalled that his own perception of his identity had starkly evolved. As a greenhorn at a Jewish day school in New York, he used to say that he was — of all things — from Germany because during the Reagan era no one wanted to be an interloper from the Evil Empire. He practiced English in front of a mirror to banish his accent. But at Oberlin College he discovered that it was cool to be from another country. And he has blossomed as a writer at a time when the literature of the immigrant experience is more than fashionable.

He also emphasized that his new novel represented a broadening of his literary canvas because its focus is the United States.

“A book like this may appeal to Russians more — it’s about the collapse of the United States,” he said to chuckles, drawing a contrast with his last one, “Absurdistan,” which needled the countries of the former Soviet Union.

While in Russia Mr. Shteyngart spoke in English and Russian in public and in interviews, though English is more comfortable for him these days.

A Russian-language translation of “Super Sad True Love Story” is being published soon. Still, Mr. Shteyngart is not holding out hope for sudden popularity in the salons of Moscow and St. Petersburg. It is not that American writers are scorned in post-Soviet Russia. Authors like Mark Twain have long been read, even way back when. (The Communists endorsed Twain’s depiction of racism.) A statue of Walt Whitman was unveiled in Moscow last year.

But literature here has usually been rigidly labeled as Russian or foreign.

“There is this basic split in people’s minds — you are either here or there,” said Tatyana Venediktova, a professor at Moscow State who specializes in American literature and helped organize Mr. Shteyngart’s talk on campus. “This split identity — Gary’s — is taken as a wound to be healed rather than a resource to be used.”

Actually Mr. Shteyngart’s identity spans three worlds, if you include the Soviet Union, which had an enormous influence on him through his parents.

Mr. Shteyngart’s parents decided to leave Leningrad as part of a wave of Soviet Jewish immigration. He described his parents’ profound ambivalence toward the old country. They resent its treatment of Jews but venerate its language and culture. After their arrival in the United States they banned English from their household and fed the newly renamed Gary a diet of Chekhov, Turgenev and Tolstoy in the original Russian. Yet they have never once returned to Russia.

“I started coming here, and I started writing my books, in a sense, to try to understand who my parents were,” Mr. Shteyngart said. “They were the big mystery to me. Why did they end up the way they did? They more or less succeeded in America, but they had a kind of price to pay emotionally.”

Mr. Shteyngart has returned to Russia every year or two since graduating from college, though it may be hard to say exactly as what. He is not a tourist, but not a native either. He is a New Yorker with a newly purchased Manhattan apartment in Gramercy Park who is quite comfortable on Nevsky Prospekt, the main boulevard in St. Petersburg, made famous in a 19th-century short story by Nikolai Gogol.

“What’s nice is to hear Russia being spoken,” he told a Moscow State student named Valeriya Minakova. “When I write, I obviously write in English, but especially when dialogue comes in, there is always an undercurrent of Russian. And I love to interact with that.”

On this trip, sponsored by the State Department, Mr. Shteyngart also gathered material for a memoir that is to be his next work. And he showed his fiancée, who is of Korean descent, the nostalgic sites of his St. Petersburg childhood.

He tried to gain access to his family’s old apartment near Moscow Square, without success. But he had no trouble bringing her to see the statue of Lenin that caused the first literary stirrings in little Igor more than three decades ago.

video news goes live on newstube.ru



WEBWIRE – Saturday, October 23, 2010

News video content from the website of BBC Russian, , will now be published on newstube.ru, the Russian video news portal, following a syndication agreement between the BBC and newstube.ru.

Thanks to the new partnership, BBC Russian video content will also appear on the newstube.ru partner network, including leading online news websites such as gazeta.ru, kommersant.ru and mail.ru.

BBC Russian produces about 40 news video clips a week, including daily one-minute video news bulletins. The partnership with newstube.ru will make this BBC content available to a potential new audience of millions of users per week.

Sarah Jones, Head of Business Development, Europe, at BBC World Service, says: "We are thrilled that visitors to the newstube.ru portal will now have direct access to the BBC Russian video material. Our new partnership also means that BBC Russian-branded video clips will be made directly available to the users of other leading Russian news websites.

"This is a very welcome development, further extending the reach of our content and delivering to audiences the best of BBC news"

Sarah Gibson, Head of BBC Russian, comments: "Video is taking centre-stage in our multimedia offer for Russian-speakers, wherever they are. We produce high-quality videos for the Russian audience on Russian and global stories.

"Our website, , is the only Russian-language news website to offer a one-minute news bulletin in a mobile format, also available on a website. We are pleased that this product is now reaching even wider audience through partnerships with highly-regarded online sites"

Marina Kotova, Director-General, newstube.ru, adds: "Co-operation with one of the world’s best broadcasters is a very important step forward for our project. Our mission is to give users an opportunity to view developments from various viewpoints.

"The BBC’s unique reports expand the spectre of information and allow people to see world events in their diversity. We are very happy to see the BBC among our partners and hope that our cooperation will be mutually beneficial and long-term"

BBC World Service International Publicity

PRESS DIGEST - Russia - Oct 25



Mon Oct 25, 2010 6:42am GMT

MOSCOW Oct 25 (Reuters) - The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

kommersant.ru

- Russian President Dmitry Medvedev ordered to create before the end of 2010 twenty draft laws to eliminate ecological harm and minimize the load on environment, the paper writes.

- Around fifteen percent of management in Russia's largest lender Sberbank's (SBER03.MM) do not meet requirements of the new workers appraisal system, and they may be replaced, the daily says.

- The daily runs an interview with Vladimir Potanin, co-owner of metals giant Norilsk Nickel (GMKN.MM).

VEDOMOSTI

vedomosti.ru

- Russia extended grain export ban starting January 2 of 2011. Previous ban ends December 31 so theoretically grain may be exported from Russia on January 1, the paper writes citing experts.

NEZAVISIMAYA GAZETA

ng.ru

- Russian lower house of parliament suspended the adjustment of state officials' salaries for inflation for three years until 2014, the daily says.

- Around a thousand people gathered in the centre of Moscow on Saturday to protest against government. More people were trying to join the rally but police did not allow them, the daily says.

VREMYA NOVOSTEI

vremya.ru

- Russians in social networks and blogs complain that the people who work for state statistics did not come to their houses to record information for the nationwide census, the paper reports.

Russian Press at a Glance, Monday, October 25, 2010



08:52 25/10/2010

POLITICS

Kremlin deputy chief of staff Vladislav Surkov held talks on Saturday with members of Russia’s United Russia ruling party in Chechnya

(Kommersant, Nezavisimaya Gazeta)

Moscow’s new Mayor Sergei Sobyanin toured the Russian capital to see what could be done to solve the problem of traffic jams in the city

(Rossiiskaya Gazeta)

BUSINESS

Russian billionaire Vladimir Potanin, head of Interros and a key shareholder in Norilsk Nickel, proposed the world's top aluminum producer RusAl to sell its stake in Norilsk Nickel

(Vedomosti, Vremya Novostei, Kommersant)

SOCIETY

Poland began the trial of a Russian citizen who was arrested last year on espionage charges

(Vremya Novostei)

Russian prosecutors demanded 14 years in prison for former Yukos oil major CEO Mikhail Khodorkovsky and his business partner Platon Lebedev in the second set of charges against the businessmen.

(Vedomosti)

CULTURE

President Dmitry Medvedev attended a banquet dedicated to the 65th anniversary of Russian Oscar-winning film director Nikita Mikhalkov

(Kommersant)

SPORTS

The Kremlin Cup tennis tournament ended in the Russian capital with Russia’s Maria Kirilenko ceding to Belarusian Viktoria Azarenka in the women’s final

(Kommersant)

National Economic Trends

Ruble Gains Third Day Versus Dollar, Weakens Against Euro



By Alex Nicholson

Oct. 25 (Bloomberg) -- The ruble gained for a third day versus the dollar, strengthening 0.7 percent to 30.1700 as of 10:05 a.m. in Moscow. The currency was 0.3 percent weaker against the euro at 42.4350.

To contact the editor responsible for this story: Alexander Nicholson at anicholson6@

Last Updated: October 25, 2010 02:07 EDT

By Paul A. Ebeling, Jnr. | October 24, 2010 16:25 GMT

BRIC: Russian Central Bank supports Ruble-Yuan direct currency exchange



Russian Central Bank is willing to cooperate with China to push forward the realization of direct currency exchange between ruble and Chinese yuan, Victor Melnikov, deputy head of the central bank, told Chinese ambassador Li Hui on Friday. During the talks between Li and Melnikov, where they exchanged views on current world economic situation and Sino-Russian financial co-operation, the bank director said Russian Central Bank would like to continue active dialogues with Chinese side so as to deepen financial coordination and mutual investment.

He especially mentioned the issue of Ruble-Yuan direct exchange, noting that the move, once realized, would bear both economic and strategic significance for the two countries.

The Chinese ambassador said the Chinese and Russian leaders have achieved consensus on further promoting bilateral pragmatic coordination in financial sphere during Russian President Dmitry Medvedev's recent visit to China.

The Chinese embassy is willing to keep close and cooperative tie with Russian Central Bank, to better implement relevant agreements between the two economies together, as well as to offer sufficient supports to the Sino-Russian cooperation projects in economic, energy and science sectors, Li said.-Paul A. Ebeling, Jnr.

CBR announced changes to RUB basket regime



VTB Capital

October 25, 2010

News: Last Friday, the Head of the CBR's Open Market Operations Department, Sergey Shvetsov, provided details on the RUB basket regime:

CBR uses targeted daily interventions and the so-called 'boundary' interventions, which can trigger a shift in the floating band. The daily amount of the targeted interventions depends on where the rouble is trading against the basket (the closer the rouble/basket exchange rate is to the floating band boundary, the larger the daily intervention). However, if daily interventions exceed the limit but the CBR wants to further curb rouble/basket volatility, additional 'boundary interventions' are conducted. As soon as the accumulated boundary interventions reach USD 650mn, the CBR shifts the floating band.

Our View: The CBR's new interventions mechanism reduces the importance of the floating band and it might ultimately be cancelled. While creating ground for higher medium-term rouble volatility, the CBR aims to control the rouble's intraday volatility. The CBR appears to have moved completely away from targeting any particular nominal exchange rates, and even in the event of a massive FX adjustment it would not prevent long-term volatility. Instead, the CBR will limit short-term volatility more actively than the market believed before. Thus, it will aim to curb volatility driven by speculative activity but will not obstruct fundamentally driven adjustments.

Business, Energy or Environmental regulations or discussions

Magnitogorsk, Cherkizovo, Norilsk Nickel: Russia Equity Preview



By Paul Abelsky

Oct. 25 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s ruble-based Micex Index snapped two days of gains, retreating 0.6 percent to 1,519.30 in Moscow.

OAO Magnitogorsk Iron & Steel (MAGN RX): Russian billionaire Viktor Rashnikov’s steelmaker is due to report its third-quarter trading update. Magnitogorsk, the country’s fourth-biggest steelmaker, rose 0.03 percent to 29.148 rubles.

OAO Cherkizovo Group (GCHE RX): Russia is halting pork imports from two U.S. plants owned by a unit of JBS SA and Smithfield Foods Inc., the U.S. Department of Agriculture said. Cherkizovo, Russia’s largest meat producer, added 0.3 percent to 903 rubles.

OAO GMK Norilsk Nickel (GMKN RX): United Co. Rusal rebuffed a $9 billion offer from billionaire Vladimir Potanin to buy its stake in Norilsk Nickel, said Nathaniel Rothschild, chairman of EN+ Group, billionaire Oleg Deripaska’s investment company which controls Rusal. Norilsk, Russia’s largest mining company, dropped 1.6 percent to 5,462.74 rubles.

OAO Gazprom (GAZP RX): Russia’s natural-gas export monopoly agreed to carry out a feasibility study of the Bulgarian segment of the planned South Stream pipeline. The stock gained 1.5 percent to 168.35 rubles.

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@.

To contact the editor responsible for this story: Willy Morris at wmorris@.

Last Updated: October 25, 2010 00:00 EDT

Duma passes bill to help small business compete for government contracts



bne

October 25, 2010

The State Duma passed the final reading of a bill that aims to help small businesses compete for government tenders on Friday, reports Prime Tass. The draft bill, submitted by the government, seeks to lower the tender security for small businesses to 2% of the maximum price of a contract or a lot put up at a government tender. From the current 5%.

The bill now needs to be approved by the upper legislative house - the Federation Council - before it can be signed into law by the president.

Moscow City hall might have lost control over BoM



VTB Capital

October 25, 2010

News: Today's Vedomosti runs a big article on BoM shareholding structure speculating two major points:

- Bank of Moscow President Andrey Borodin could be already holding the controlling blocking stake in BoM of 26.73% (via a GCM offshore controlling 6.41%) in contrast to the officially acclaimed 20.32%.

- the 75% stake in the Insurance Group (which holds the Capital Insurance Group's 17.32% controlling stake in BoM) is owned by the Bank of Moscow itself. Should this statement turn out to be true it would imply that the Moscow City Hall has ceased to exercise direct control over the bank, with voting rights effectively passed over to the BoM itself along with management.

Our View: We take a negative stance on the stock. The quasi-sovereign status on Bank of Moscow has always been an integral part of its investment story, and in light of the change in the city's mayor, should Vedomosti turn out to be correct, uncertainty would weight down on the stock. Moreover, since BoM is an active borrower on the external markets, the loss of effective control by Moscow City Hall could push up the cost of borrowing and/or put pressure on credit ratings. We are reiterating our Hold recommendation on the stock.

Dmitry Dmitriev

October 25, 2010 12:19

VSMPO-Avisma looks to grow 2010 net profits 250%



YEKATERINBURG. Oct 25 (Interfax) - The corporation VSMPO-Avisma (RTS: VSMO), Russia's monopoly producer of titanium and manufactures and the world's largest producer of the metal, is looking to increase net profits 250% this year to 600 million rubles from last year's 172.889 million rubles, the corporate newsletter Novator writes, citing the company's deputy general director for economics and finance, Alexei Mindlin.

VSMPO-Avisma is also targeting sales revenues of about 25 billion rubles, which would be 7.7% less than last year's 26 billion rubles.

However, Mindlin said, those would be scanty profits compared to 2008's 2.668 billion rubles.

The company's debt burden currently weighs in at around $600 million, he said.

The VSMPO-Avisma press service told Interfax that as of October 25 the corporation's loan portfolio topped $500 million, but had contacted from around $700 million at the start of the year.

The state-run corporation Russian Technologies is VSMPO-Avisma's main shareholder with a 66% stock interest.

Arkady Rotenberg bought 25% of Mostotrest common equity



Metropol

October 25, 2010

Today Vedomosti newspaper reports that Arkady Rotenberg, president of SMP Bank's board and the owner of Stroygazmontazh, bought 25% of Mostotrest common stock from RU-COM, controlled by Michael Abyzov. The value of the deal was not disclosed, but given the latest market capitalization of USD 1,570mn, the blocking stake should be worth USD 393mn.

We assume that the sides did not disclose the deal's value because investors could become nervous if they think the price was below market value, although we admit that the deal was prepared several months ago and the valuation did not depend on the current market.

Mostotrest could benefit from the deal due to Rotenberg's lobbying, which may help the company win large projects, in particular, the Kurortniy prospect project in Sochi, which is worth around RUB 60bn and should be awarded by the end of the week. On the other hand, Abyzov had made great efforts towards an IPO, increasing the efficiency of the company's operations and making the stock attractive for investors, something that Rotenberg has less of a notable track record in, in our view. This suggests that the news that Abyzov is potentially leaving the company could be negative for Mostotrest shares. However, we expect only a moderate negative impact on the shares in the short-term.

We reiterate our BUY recommendation for the stock. Our fair value for the shares is USD 7.14.

Deal snapshot: RUSSIAN TGK-9 BUYS 75% OF PERM GRID



Posted on: Mon, 25 Oct 2010 03:15:36 EDT

Oct 25, 2010 (MANAVIGATOR via COMTEX) --

Russian regional utility TGK-9 (MCX:TGKI) said it had purchased a 75% interest in sector player Perm Grid Company for an undisclosed amount. Country: , Russia Sector: Utilities Target: Perm Grid Company Buyer: TGK-9 OAO Type: Corporate acquisition Status: Closed

October 25, 2010 10:57

Metalloinvest may sell minority stake to Mitsui – Independent



MOSCOW. Oct 25 (Interfax) - Mitsui may acquire a minority stake in Alisher Usmanov's Metalloinvest holding ahead of a listing in London next year, the Independent reported on Sunday, citing informed sources.

Metalloinvest "wants to secure Mitsui as a cornerstone investor so as to provide 'a benchmark' for the value of the flotation," the Independent said, citing a source close to Metalloinvest.

"For example, selling a 10 per cent stake at $1.5 billion-$2 billion would value the group at $15 billion-$20 billion - though some experts believe that Metalloinvest could be valued as high as $30 billion when it joins the London Stock Exchange in 2011," it said. Sale of a minority stake would give investors confidence Metalloinvest deserves the high valuation, the Independent said.

"The deal is expected to give Mitsui rights to be the agent to sell Metalloinvest's products, such as iron ore and steel, into Asia," it said.

"It is hoped a deal will be struck by Christmas."

Metalloinvest controls steel producers Urals Steel and Oskol Electrometallurgical Combine (OEMK) (RTS: OAMK) and iron ore producers Mikhailovsky GOK (RTS: MGOK) and Lebedinsky GOK (RTS: LGOK).

RTS$#&: LGOK, MGOK

Russian Facebook Investor Mail.ru Seeks $876 Million in IPO



By Zijing Wu

Oct. 25 (Bloomberg) -- Mail.ru Group Ltd., a Russian internet company with stakes in Facebook Inc. and Zynga Game Network Inc., is seeking as much as $5.7 billion in an initial public offering in London.

Mail.ru, partly owned by billionaire Alisher Usmanov and South Africa’s Naspers Ltd., is offering 31.62 million shares shares in the form of global depository receipts for $23.70 to $27.70 each, according to a regulatory filing today. The sale would total $876 million at the top end of the range, according to Bloomberg calculations.

Russian companies are planning the biggest wave of IPOs since before the credit crisis as record-low bond yields stoke investor appetite for higher returns from equities. O’Key Group SA, Russia’s third-biggest food retailer, is seeking to raise $540 million in London this year, while Severstal’s gold unit, Nord Gold NV, may seek $1 billion, three people familiar with the talks said Oct. 19.

Mail.ru revenue may jump 51 percent this year to $301 million, according to Goldman Sachs Group Inc., one of the IPO managers. Earnings before interest, tax, depreciation and amortization are likely to rise 70 percent to $104 million, according to Goldman Sachs, which owns 1 percent of Mail.ru.

Moscow-based Mail.ru holds 2.4 percent in Facebook, 5.1 percent in Groupon Inc. and 1.5 percent in Zynga Game Network, according to an Oct. 11 statement. The three stakes may be worth a total of $900 million, more than double their combined book value of $340 million, Goldman Sachs analysts estimated.

JPMorgan Chase & Co., Morgan Stanley and Russia’s state-run VTB Capital are also managing the IPO.

To contact the reporter on this story: Zijing Wu in London at zwu17@;

To contact the editor responsible for this story: Daniel Hauck at dhauck1@

Last Updated: October 25, 2010 02:07 EDT

Top Turkish lender Isbank buys small Russian bank



1:21am EDT

MOSCOW, Oct 25 (Reuters) - Turkey's largest listed lender Isbank (ISCTR.IS: Quote, Profile, Research, Stock Buzz) is finalising a deal to purchase a small Russian commercial bank Sofia, the daily Kommersant reported on Monday, citing unnamed sources in the banking sector.

The price of the deal hovers around 1.5 times of the bank's capital, which as of Sept. 1 stood at 803 million roubles ($26.30 million), according to the newspaper.

The deal would be the first acquisition by a strategic investor of a Russian bank since the 2008/2009 financial crisis.

Russia - Wal-Mart bid for 500 stores



25 Oct 2010

SPECULATION is mounting in Russia that Wal-Mart could compete with the country's retail leader, X5 Retail, to buy local discount chain, Kopeika, which operates over 500 stores in the country.

However, rumours of Wal-Mart could be gearing up for a move into Russia are nothing new. Indeed, according to recent reports in Russian business daily, Vedomosti, talks with Kopeika have been on and off since 2002.

Interros head does not rule out merger between Russia's largest miners



11:34 25/10/2010

MOSCOW, October 25 (RIA Novosti) - Russian billionaire Vladimir Potanin, one of the core shareholders of the world's top nickel producer Norilsk Nickel, says creation of a large mining company by a merger of the country's largest miners could still be on the cards, Kommersant business daily reported on Monday.

"The companies include Norilsk and Novolipetsk Steel ... Evraz Group, where shareholders helped the company including with capital investment, Severstal and Metalloinvest, whose shareholders have also led their firms through the crisis successfuly. Many of the companies are potentially interesting for the establishment of a larger company," said Potanin, head of the Interros investment firm

Potanin added that he did not rule out partnership with Metalloinvest owned by billionaire Alisher Usmanov, with whom he had held talks before the 2008 financial crisis.

"Metalloinvest is working successfully, Alisher Burkhanovich (Usmanov) has managed to solve problems he faced when the crisis started," Potanin told Vedomosti

Potanin did not mention the world's largest aluminum producer RusAl, the other Norilsk Nickel core shareholder, among companies he would want to merge Norilsk with.

RusAl and Interros, both holders of a quarter of Norilsk's shares, have been embroiled in a shareholder row after RusAl has lost one seat on Norilsk's board at a June annual general meeting, while Interros increased its representation. RusAl has accused Interros of ruining the parity and the board of directors of a vote fraud.

RusAl initiated an emergency shareholders' meeting to contest the AGM results, but shareholders voted against board re-election on October 21.

On Friday, Interros sent a letter to RusAl proposing it buy its stake in Norilsk for $9 billion. RusAl rejected the idea, saying its interest in Norilsk was strategic.

Kommersant said that Potanin and RusAl's owner Oleg Deripaska would meet to discuss the issue on Monday.

RusAl Rejects $9Bln Offer From Potanin



25 October 2010

Combined Reports

United Company RusAl on Friday rebuffed a "derisory" $9 billion offer from billionaire Vladimir Potanin to buy its 25 percent stake in Norilsk Nickel.

RusAl's investment "is not for sale at any price and is viewed as a critical component of RusAl's future strategy of diversification," said Nathaniel Rothschild, chairman of En++ Group, billionaire Oleg Deripaska's investment company that controls RusAl.

Potanin's offer "is derisory," Rothschild said in an e-mailed statement.

Based on Friday's close in London, Norilsk had a capitalization of $35.2 billion, which would suggest a market price of $8.8 billion for RusAl's stake.

Potanin said he wrote to RusAl chairman Viktor Vekselberg urging him to discuss selling RusAl's interest in Norilsk, Russia's biggest mining company.

Potanin, whose Interros Holding also owns 25 percent of Norilsk, told reporters in Moscow that RusAl should either sell out or merge with Norilsk.

"About $9 billion, that's the starting point for the talks," he said.

Norilsk fell 90.34 rubles, or 1.6 percent, to close at 5,462.74 rubles in trading on the MICEX exchange, its biggest drop since Sept. 15. The MICEX Index finished Friday 0.6 percent lower, closing at 1,519.3.

A feud between Potanin and Deripaska's RusAl, dating back to 2008, reignited after a June election of the Norilsk board that gave RusAl three seats to Potanin's four. Norilsk's investors on Thursday voted against RusAl's motion to re-elect the board in a blow to Deripaska's ambitions to boost his influence.

Potanin has clashed with Deripaska over how Norilsk manages cash and operations. Deripaska wants bigger dividends to help RusAl, the world's largest aluminum company, pay off about $13 billion of debt and a management overhaul. He has also offered to buy Potanin's Norilsk stake.

Potanin said Interros, Norilsk and the mining company's pension fund were among investors were willing to work together on the buyout — an offer that indicates Potanin has taken the shareholder decision as a vote of confidence that he will leverage to push out RusAl.

"I sent this letter on behalf of Interros, but of course there will be a pool of investors with financing from banks," he said, adding that Western banks could participate in the funding, and that Norilsk Nickel's pension fund and unnamed financial investors would be part of the bid.

Russian officials have said the government would intervene should the shareholder conflict threaten operations at Norilsk, which is the world's biggest nickel and palladium producer.

The two sides should agree "between themselves," Deputy Prime Minister Igor Sechin said Aug. 31 after a meeting hosted by Prime Minister Vladimir Putin and attended by Potanin and Deripaska in the Arctic city of Norilsk.

"If the dispute affects the socioeconomic sphere in Norilsk, then the state may interfere," Sechin said.

(Bloomberg, Reuters, MT)

Potanin’s Offer to Buy Out Rusal Is ‘Beginning of End’ to Feud



By Maria Kolesnikova

Oct. 25 (Bloomberg) -- Russian billionaire Vladimir Potanin’s offer to buy United Co. Rusal’s stake in OAO GMK Norilsk Nickel for $9 billion is “the beginning of an end” in a feud between the company’s two largest shareholders, UralSib Financial Corp. said.

“One of the two sides has to leave,” said Chris Weafer, chief strategist at the Moscow-based brokerage. “There is no other solution available. We have now clearly entered a more proactive phase in this conflict.”

Potanin wrote to Rusal Chairman Viktor Vekselberg Oct. 22 urging him to discuss selling Rusal’s 25 percent in Russia’s biggest mining company. Rusal said in an e-mailed statement it won’t sell its “strategic” investment. Potanin, whose Interros Holding Co. holds 25 percent of Norilsk, said he viewed Rusal’s statement as “taking a pause” to consider it.

A feud between Potanin and Oleg Deripaska’s Rusal dating back to 2008 reignited after a June election of the Norilsk board that gave Rusal three seats to Potanin’s four. A majority of Norilsk investors on Oct. 21 voted against Rusal’s motion to re-elect the board in a blow to Deripaska’s ambitions to boost his influence.

Potanin has clashed with Deripaska over how Moscow-based Norilsk manages cash and operations. Deripaska wants bigger dividends to help Rusal pay off about $13 billion of debt and a management overhaul, and has offered to buy Potanin’s Norilsk stake.

“Rusal’s debt position remains critical,” UralSib’s Weafer said by telephone from London today. “Potanin expects that the offer of this size will put pressure on Rusal from its creditors to consider it seriously.”

Binding Offer

Interros will be ready to make a binding offer to prove its intentions are “serious,” Potanin told reporters Oct. 22. Interros offered to start talks at a $9 billion valuation for Rusal’s stake in Norilsk, more than the $8.5 billion Rusal paid for it in 2008, Potanin said.

Rusal’s investment “is not for sale at any price and is viewed as a critical component of Rusal’s future strategy of diversification,” said Nathaniel Rothschild, chairman of EN+ Group, billionaire Deripaska’s investment company ,which owns 47 percent of Rusal. Potanin’s offer “is derisory,” while EN+ is “open to a merger in the future,” according to a statement distributed by EN+ Oct. 23.

“If Rusal insists that it’s their strategic investment, then I expect a merger offer,” Potanin told reporters in Moscow Oct. 22. “I don’t understand why it’s been more than two years after the purchase, but there is no offer.”

Potanin backs Norilsk Chief Executive Officer Vladimir Strzhalkovsky’s team and wants to curb Rusal’s control. Interros, which won’t seek more than 30 percent of voting interest, Norilsk and the mining company’s pension fund were among investors willing to work together on the buyout, Potanin said.

“Using Norilsk’s balance sheet is effectively a buyback,” and minority investors should have an opportunity to tender their stock, Potanin said, adding that Interros could abstain from tendering shares in these circumstances.

Russian officials have said the government would intervene should the shareholder conflict threaten operations at Norilsk, which is the world’s biggest nickel producer.

“I wouldn’t be surprised if Rusal came back with some counter-offer,” UralSib’s Weafer said. “But the bottom line is: the government will have to decide who will stay.”

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@

To contact the editors responsible for this story: Claudia Carpenter at ccarpenter@.

Last Updated: October 24, 2010 16:00 EDT

KT Corp plans $500 mn Russian unit sale



To sell 80 pct stake in New Telephone Company

Michael Flaherty and Victoria Howley

Saturday, October 23, 2010

HONG KONG/LONDON: KT Corp, South Korea's top fixed-line and No.2 mobile company, is considering selling its 80 per cent stake in Russia's New Telephone Company, three people familiar with the matter said on Friday.

KT Corp is close to auctioning off the business, worth around $500 million, but has not yet mandated a bank to run the process, one of the people said.

NTC is Russia's 10th-largest mobile operator, with 1.44 million subscribers at the end of August.

Kim Han-suk, vice president of KT's overseas operation, declined to comment. NTC was not immediately available for comment.

Russia's Vimpelcom, which is looking to become the world's fifth-largest mobile company in a $6.6 billion deal to buy assets from Egyptian billionaire Naguib Sawiris, said it would be interested if NTC were put up for sale.

"On the whole, we are interested in consolidation in markets where we operate only 3G networks," a Vimpelcom spokeswoman said.

Tibor Bokor, an analyst at Moscow investment bank Otkritie, said a purchase of NTC would make sense for Vimpelcom, which does not have a presence in the Primorsk region of far eastern Russia, where NTC is focused.

"NTC operates in the only region in Russia where Vimpelcom does not have a presence; they have all the rest of Russia covered. There's no hurry, though, so they should wait for a good price -- six times EBITDA or less," Bokor said. NTC's net income fell to 820 million roubles in 2009 on revenue of 3.2 billion roubles, according to its website.

©Reuters

MOSCOW BLOG: Quality versus quantity and the cost of shoes



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Ben Aris in Moscow

October 25, 2010

When I first arrived in Russia in 1993, everyone knew I was a foreigner - thanks to my shoes. At that time, most Russians still wore shoddy plastic slip-on shoes that had dominated Soviet foot fashion, but they have since moved rapidly up the footwear food chain.

Good shoes were amongst the very first things the newly spawned traders imported to Russia, along with the more obvious items like toilet paper and jeans. Computers and luggage were also very early arrivals after the fall of the Iron Curtain. Russia was well behind in the technology race and imported container loads of computers as soon as they could. A representative of luxury luggage company Delsey explained his arrival in the early 1990s like this: "People usually buy luggage once in their life, so we have to move fast."

After Vladimir Putin took over in 2000 things really took off, as incomes soared 10-fold, whilst the advent of consumer credit in 2001 meant that Russians could multiply their salaries by buying on the never-never. They went on a shopping binge, loading up on the huge plasma TVs and tiny mobile phones they had been lusting after for years.

The game has already moved on to the big ticket items. Car purchases have exploded, and leading car-dealership Rolf (a $6bn company) says sales have already recovered to pre-crisis levels. More recently, the volume of mortgages taken out has been doubling every month since the summer.

Thanks to the crisis, investor attention has turned increasingly to the emerging markets, with China attracting most of it. That's not without justification; China beats all comers on a simple like-for-like comparison. Russia is the third-richest country in the world with $480bn of cash in the central bank, but this pales against China's $2.5 trillion. But what really catches business people's attention is the population of 1.3bn (Russia has just 142m people) and GDP growth of 10% per year (Russia will put in about 4.5% this year).

However, this broad brushstroke comparison misses a crucial point: China has the most people, but how many are actually consumers?

Behind the numbers

Consider some different figures: Russia's middle class makes up 68% of the population, according to investment bank Troika Dialog (a high estimate, according to other analysts), whereas China's constitutes just 13%. Russia's per-capital income is around $12,000 per year, whereas China's is around $4,000. The poverty rate in Russia is 13% (or about 18.5m people), whereas poverty in China is a massive 50% (or 600m people), according to some estimates.

The exact percentages of the middle class and poverty-stricken are disputed, but irrelevant (for our purposes at least). The point is that Russia clearly has a large consumer class on a par with China's, but more importantly, the growth of Russia's per-capita income is well over two to three times faster than its closest rival (Brazil) and streets ahead of China and India.

In simpler terms: Russia is an industrialised country of well educated people that is rapidly converging with its European peers, whereas China (as well as India, and to a lesser extent Brazil) is a largely agricultural society beset by massive poverty. The reason China and India are growing so fast now is that they are still at the very beginning of the catch-up process, whereas Russia is in the middle of it: the majority of Chinese are still wearing flip flops, while most Russians are trying to buy a new apartment.

Of course, China's size should mean it will win out in the long run, as most of those farmers will become phone-using, car-driving, TV-watching city dwellers eventually. Yet for the moment, if you want to sell something more expensive than shoes, Russia's relatively wealthy middle class can match or beat China. It will take generations for the Chinese to close this income gap - the average Russian will still be twice as rich as the average Chinese person in 2050, according to the World Bank.

Whilst commentators are focused on the macroeconomic numbers coming out of the emerging world, for business it's the microeconomic numbers that are important. What should really shock is that the Russian consumers are already starting to compete with their counterparts in the West.

The Moscow flagship stores of Sweden's furniture maker Ikea and French supermarket chain Auchan are already both the highest grossing and most profitable for their parent companies' in the world, according to AC Nielsen. Looking at the other end of the scale, the US now has more people living in poverty than Russia: poverty in Russia fell to 13.7% of the population as of June and is on a downward trend, while 14.3% were living in poverty in the US at the end of 2009, and this number is still rising. If you were a businessman, in which market would you invest?

Putin Ports Grab Hurts Novorossiysk Bondholders: Russia Credit



October 24, 2010, 4:22 PM EDT By Paul Abelsky

Oct. 25 (Bloomberg) -- Russia’s push to extend state control over oil shipments is hurting investors as the country’s biggest port increases its debt fivefold to fund expansion.

OAO Novorossiysk Commercial Sea Port bonds tumbled eight of the past nine days, sending yields to the highest level over sovereign debt since May. The Black Sea terminal will request shareholder consent to borrow $1.95 billion to help finance the $2.15 billion purchase of Primorsk Port in the Baltic Sea, Novorossiysk said in an Oct. 18 statement. Once the deal is complete, OAO Transneft, the state-owned pipeline monopoly will partner with Primorsk’s shareholder, Ziyavudin Magomedov, to buy a 50.1 percent stake in Novorossiysk, the port operator said.

The transaction “raises worries about an opaque non-listed state company taking over a privately owned and efficiently run operation,” said Chris Weafer, chief strategist in Moscow at UralSib Financial Corp.

Prime Minister Vladimir Putin’s government cut the energy shipments industry from its $59 billion asset sale program announced last week, after Finance Minister Alexei Kudrin said on Oct. 10 the state will keep control of industries linked to national security. The price Novorossiysk is paying for Primorsk, Russia’s largest oil terminal, is 25 percent above the valuation for its global peers, VTB Capital said in a report last week, citing enterprise value, or the sum of stock and debt minus cash, relative to earnings.

Novorossiysk’s $300 million of bonds due in May 2012 dropped to a three-month low on Oct. 21, increasing the yield by 33 basis points, or 0.33 percentage point, since Oct. 12 to 4.93 percent, prices compiled by Bloomberg show. The yield is heading toward the level of Dubai-based DP World bonds that mature five years later in 2017, with the gap shrinking to 209 basis points on Oct. 22 from 358 basis points three months ago.

DP World

Borrowing for the acquisition will increase Novorossiysk’s total debt to $2.5 billion from about $50 million now, resulting in net debt after cash reserves of about 4 times Ebitda, according to Deutsche Bank AG. The multiple is about the same as China Merchants Holdings International Co., which owns stakes in ports that move a third of the China’s cargo containers, and is lower than DP World’s ratio of 5 times earnings before interest, tax, depreciation and amortization, Frankfurt-based Deutsche Bank data show.

The company faces potential credit rating downgrades because of the additional debt, Standard & Poor’s and Moody’s Investors Service said. Novorossiysk is rated Ba1 by Moody’s, one level below investment grade, and the same as DP World. S&P assigns an equivalent rating of BB+ to Novorossiysk.

Two-Part Deal

“The acquisition could have a very substantial impact on NCSP’s financial profile if it’s debt-financed,” S&P said in a report on Sept. 17. “Our ratings could be lowered if NCSP’s financial profile deteriorates significantly because of the transaction.”

The acquisition is conditional on more than 50 percent of Novorossiysk being sold to Transneft and Summa Capital, a Moscow-based holding company controlled by oil and mining businessman Magomedov, according to the company’s Sept. 15 statement. Magomedov owns 50 percent of Primorsk.

Putin said Novorossiysk will benefit from Transneft’s takeover, in an answer to questions from investors at a conference in Moscow on Oct. 5. The deal doesn’t imply “nationalization or any other aggression” from the government, said Putin. He said he had tried to talk Novorossiysk ‘s owners out of selling their holding. The government owns a 20 percent stake in Novorossiysk, which it intends to sell as early as next year as part of its privatization program, according to First Deputy Prime Minister Igor Shuvalov.

‘Transformational’

The Primorsk purchase will be a “transformational transaction” for Novorossiysk, making it one of the biggest port operators in Europe, the company said an Oct. 18 statement.

Novorossiysk Chief Executive Officer Igor Vilinov declined to comment on the effect the deal would have on the company’s financial standing, during a conference call with analysts and journalists on Sept. 29. Mikhail Schur, investor-relations manager in Moscow for Novorossiysk, declined to comment beyond citing company statements. Transneft spokesman Igor Dyomin in Moscow declined to comment.

The yield on Russia’s dollar bonds due in 2020 fell 1 basis point on Oct. 22 to 4.30 percent, 15 basis points short of a record low. The yield on the country’s ruble notes due in August 2016 was unchanged at 7.14 percent.

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries fell 1 basis point to 211, according to JPMorgan’s EMBI+ indexes. The difference compares with 145 for debt of similarly rated Mexico and 183 for Brazil, which is rated two steps lower at Baa3 by Moody’s, 174 for the Philippines and 152 for Colombia.

Default Swaps

The so-called yield spread on Russian bonds is 55 basis points below the average for emerging markets, down from a 15- month high of 105 in February, according to JPMorgan indexes.

The cost of protecting Russian state debt against non- payment for five years using credit-default swaps fell 3 basis points to 133.5, down from this year’s peak of 217, according to prices from CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Credit-default swaps for Russia cost 2.5 basis points less than contracts for Turkey, which is rated four levels lower at Ba2. Russian swaps cost as much as 40 basis points less on April 20.

Downgrade Threat

While Novorossiysk may be downgraded one level at most, bondholders will need to give consent for the transaction to go ahead, Cornel Bruhin, who helps manage $3.5 billion of emerging market assets at Swiss private bank Clariden Leu AG.

The acquisition may be “even positive when you take the consent into account,” Bruhin, who holds Novorossiysk bonds, said in a telephone interview from Zurich Oct. 22. “Generally in Russia you want to move with the government not against the government. The government involvement via Transneft increases the appeal rather than decreases it.”

Putin’s government has been increasing state influence in the oil and gas industry, which accounts for about 25 percent of the country’s gross domestic product, while reducing dependency on neighboring countries for energy exports.

OAO Rosneft, chaired by Deputy Prime Minister Igor Sechin, became the country’s largest oil producer by purchasing the production and refining assets of Yukos Oil Co. when it was broken up and sold after Mikhail Khodorkovsky’s arrest in October 2003. Royal Dutch Shell Group Plc was forced to sell control of its $22 billion Sakhalin-2 venture in 2006 to state- run OAO Gazprom after regulatory threats to shutter the project on environmental grounds.

Export Routes

The Novorossiysk deal will give the government control of more than 60 percent of seaborne crude and oil product exports, according to Troika Dialog.

The world’s largest energy exporter is seeking to diversify its export routes. Russia has about 80 percent of its oil products going through ports in the Baltic countries, according to Transport Minister Igor Levitin.

The government is developing pipelines and ports to enable deliveries of crude and oil product exports to bypass the Baltics and Belarus. Transneft aims to complete construction of a link bypassing Belarus to the Baltic Sea port of Ust Luga next year, sooner than planned, Chief Executive Officer Nikolai Tokarev said last month.

The state’s increased role in the energy shipment industry contrasts with steps to sell stakes in 900 companies including OAO Rosneft, Russia’s largest oil producer, and the country’s two largest banks. The announcement spurred the biggest bond gains in three months for Moscow-based VTB Group, Russia’s second biggest lender, based on its dollar notes due 2018.

‘Excessive’ Price

Novorossiysk’s bond price fell the most in four months on Oct. 19, the day after Primorsk’s valuation was announced.

The price “we don’t think is justifiable given that the business is stable rather than growing,” said Elena Sakhnova, an analyst at VTB Capital in Moscow.

The price for Primorsk is “excessive” and may be “value dilutive” for Novorossiysk minority shareholders, said George Buzhenitsa, a transport and metals and mining analyst at Deutsche Bank in Moscow. “We expect markets to attribute a higher risk premium to the combined entity in the future.”

Novorossiysk bonds are underperforming Russian corporate notes, losing 0.3 percent this month as prices for company debt climbed by an average 1.5 percent, according to JPMorgan Chase & Co. indexes. The yield on Novorossiysk’s 2012 dollar bonds was 259 basis points higher than similar-maturity notes from Transneft on Oct. 21, the biggest gap since May 21.

‘Fair Premium’

The “fair premium” is “no more than” 150 basis points, Sergey Goncharov, an analyst at Trust Investment Bank in Moscow said by phone on Oct. 22. The spread was at 247 basis points on Oct. 22 compared with as little as 149 on Sept. 22.

Novorossiysk’s borrowing to buy Primorsk would justify the “perception of higher risk” associated with Russian assets and “the very cheap discount” relative to emerging-market peers, UralSib’s Weafer said.

--With assistance from Emma O’Brien and Denis Maternovsky in Moscow. Editors: Alex Nicholson, Gavin Serkin

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@.

To contact the editor responsible for this story: Gavin Serkin at gserkin@.

For the Record



25 October 2010

AAA Auto Group, a Czech used-car dealer, said Friday that it was considering an expansion to Russia and may enter talks with potential local partners after delaying the plan in 2008 because of the global financial crisis.  (Bloomberg)

Russia may sell 55 coal deposits with 11.5 billion tons of reserves in the next five years, Vedomosti reported Friday, citing Natural Resources and Environment Ministry proposals.  (Bloomberg)  

Russia is halting pork imports from two U.S. plants owned by a unit of JBS and Smithfield Foods, the U.S. Department of Agriculture said Friday.  (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Hungary's MVM may buy Surgut's stake in MOL –paper



11:51am IST

BUDAPEST, Oct 25 (Reuters) - Hungarian state-owned electricity wholesaler MVM could buy a 21.2 percent stake in oil group MOL MOLB.BU from Russia's Surgutneftegaz (SNGS.MM: Quote, Profile, Research), daily Nepszabadsag said on Monday, citing unnamed sources.

Hungary's Development Ministry said last week that the government's buying out Surgut would be a possible solution to the stalemate caused by the Russian company's stake in MOL. [ID:nBUD005560]

Surgut bought the stake from Austria's OMV (OMVV.VI: Quote, Profile, Research) last year for 1.4 billion euros, saying it wished to be a strategic investor.

MVM's communications director Gyorgy Felkai told Reuters that MVM had no comment on the newspaper report, and it was for the development ministry to comment.

MOL Chairman Zsolt Hernadi said on Friday that the Hungarian government's buying Surgut's stake would boost stability.

"That would mean a more stable situation by all means," Hernadi told public broadcaster m1. "It would be more reassuring to the state as well, as it would become clear to everyone that MOL is not an acquisition target."

MOL has said it regarded Surgut a financial investor, and described Surgut's buying the stake in MOL as a hostile takeover attempt.

The Development Ministry -- which has been in talks with Russia's government about a range of issues including Surgut's stake in MOL -- said last week that Hungary and Russia wished to treat energy issues as a complex package. (Reporting by Krisztina Than; Editing by Will Waterman)

Putin seeks transparency from Transneft



Russian Prime Minister Vladimir Putin has ordered state oil pipeline monopoly Transneft to improve transparency and disclose more information about its financial accounts and operations.

News wires  25 October 2010 01:37 GMT

In a rare move directed to more openness at the world's largest oil pipeline operator, once a privatisation target, Putin told the company to be more cooperative on dealing with requests from individuals and corporates about its activity, Reuters reported.

Trananeft, which owns and operates most of the oil and refined product pipelines in Russia, was initially included in a list of companies in which the state would sell some of its shares over the next few years.

Preferred shares in the company dived last week after government officials said it had been removed from a list of companies the state would sell shares in as part of a wider $59-billion privatisation plan.

The shares had risen by more than 50% on expectations its privatisation would provide hefty returns and improve management of Transneft, which pumps the lifeblood of Russia's $1.2 trillion economy from oilfields in Siberia to markets in Europe and Asia.

On Saturday, Putin signed an order, which forces the oil pipeline monopoly and its subsidiaries to publicly disclose data on shipping tariffs, financials, investment programmes, services, and spare shipping capacity.

The order also makes Transneft, which oversees 30,000 miles of oil pipeline, to provide information about shipped oil and oil product quality, and how it review requests on using its shipping capacity from its clients.

The wisdom of corporate governance at Transneft, often engaged in costly and politically-motivated projects, has long been questioned by investors and industry experts.

Its policy of imposing oil shipping tariffs, the only source of profit for the pipeline monopoly, has also remained unclear.

Published: 25 October 2010 01:37 GMT  | Last updated: 25 October 2010 01:37 GMT

Putin Orders Openness at Transneft



25 October 2010

By Roland Oliphant

Prime Minister Vladimir Putin on Saturday ordered state-owned oil pipeline monopoly Transneft to improve transparency and disclose information about pricing policy and investment programs.

The move comes amid mounting frustration of oil companies, who have to deal with the monopoly's habit of increasing tariffs to cover project costs, and coincides with efforts by the Finance Ministry to seek tighter control over state-owned firms' borrowing and investment plans.

"We are monitoring the situation … but here the issue is the next step … the possibility of some kind of control, to say, 'look, guys, this is excessive,'" Deputy Finance Minister Dmitry Pankin told reporters on Saturday, on the sidelines of a G20 finance ministers meeting in South Korea, Reuters reported.

The order, which does not mention Transneft by name but refers to “natural monopolies supplying services of transportation of oil and derivative products through pipelines,” introduces standards of disclosure that will effectively force the firm to publicize information on its shipping tariffs, financial affairs, investment programs, services and spare shipping capacity.

The decree requests the Federal Anti-Monopoly Service and the Federal Tariffs Service to approve “the form, timing and frequency” of disclosures relating to pricing and market access within three months.

The government owns 78 percent of Transneft's equity capital but 100 percent of the voting shares. The company pumps 93 percent of Russia's crude oil and controls 60,000 kilometers of pipeline. Its growing transit tariffs are a cause of complaint by oil companies, who say opaque pricing policies prevent them from reliably forecasting long-term spending — a must for planning investment in new projects.

“That's why the market will see it as positive news. Shareholders want higher dividends and higher transparency from Transneft,” said Valery Nesterov of Troika Dialog.

Repeated calls to Transneft went unanswered Sunday.

Oil companies have complained for many years that ongoing increases of transit tariffs are having a noticeable impact on their balance sheets. Transneft announced last month that it would raise fees by 9.9 percent in December but promised that they would remain at that level next year.

The company has borrowed extensively to fund new projects, including the East Siberian-Pacific Ocean oil pipeline to China, Japan and South Korea, and has raised transport tariffs to cover its costs. Other current projects include the second phase of the Baltic Pipeline System, or BTS-2, and a projected 60 billion ruble ($2 billion) pipeline in the Arctic that it plans to build with TNK-BP, LUKoil and Gazprom Neft.

In May, minority investor Alexei Navalny won a court order forcing police to investigate the undisclosed beneficiaries of Transneft's charitable donations, which totaled nearly 15 billion rubles ($494 million) between 2005 and 2008.

Uncertainty about Transneft's investments and how it plans to reduce debt makes its tariff policy “a very big question mark for Russian oil companies' future cash flows and revenues,”  Nesterov said.

“The principle of the tariffs is cost-plus, but you need to know what the costs are,” Nesterov said. “You can buy a kilometer of pipeline for $1 million, or you could spend double or triple that.”

Preferred shares in Transneft plummeted last week after the government made it clear that the company would not be part of the planned $59 billion dollar privatization program, even though the Finance Ministry included the company on the initial list in July.

The proposal to sell the government's stake was backed by minority shareholders but loudly opposed by the company's management. Transneft president Nikolai Tokarev said in September that privatizing would the “the worst thing” that could be done to the company.

Prosperity and Eastern Capital, two portfolio fund managers that together with commodity investment manager Vostok Nafta hold 21 percent of the company's preferred shares, wrote to Putin in August urging him to push ahead with a sale of 25 percent of the company.

Integra, Schlumberger Seismic Unit Establish Joint Venture



Integra and WesternGeco, a Schlumberger seismic unit, have completed setting up an exclusive joint venture to collect, interpret and process seismic data in Russia, Kazakhstan, Uzbekistan and Turkmenistan both on land and in transit zones. The JV has already begun carrying out successful projects in Russia and Kazakhstan and received orders for this winter.

By Integra

The joint venture is called IG Seismic Services Limited. Integra, which is managing the new company will own 75 percent of the authorized capital while WesternGeco will own 25 percent. The JV's combined capacity will cover the seismic and interpretation assets and as well as the patented "Q" technology and the Omega computer program to process the data. WesternGeco also transferred Integra $48 million as part of the JV contract.

In announcing the deal, Integra Executive Director Antonio Campo said, "We are very happy that in uniting the efforts of WesternGeco and Integra will have many opportunities open before them. This agreement will make it possible to expand the range of our services and strengthen and consolidate our presence on the market in the seismic sector which is key for us. By attracting personnel and technology from WesterGeco, the new enterprise will make it possible to effectively develop our joint activities.

Joining our centers for processing data n Russia and Kazakhstan will significantly increase our potential for 2010-10-22a interpretation. We are convinced that this is a step forward in the framework of our strategy to enlarge our business in terms of added value and further perfecting our technologies.

Integra is an independent diversified land-based oil field services company and also manufactures equipment for oil and gas exploration and production. The company is present in all of Russia's main oil and gas regions.

China, EU Complicate Gas Talks



25 October 2010

By Olga Razumovskaya

Turkmenistan and Russia bolstered their natural gas relationship on Friday during a visit by President Dmitry Medvedev to his counterpart Gurbanguly Berdymukhammedov, with both sides hedging their bets as the Chinese market grows and the European one shrinks.

Berdymukhammedov was clear in his welcoming comments to Medvedev, in the port city of Turkmenbashi, that his country would like Russia to consider taking more gas.

“We are ready to expand the volume of [gas] exports,” he said, according to the Kremlin’s web site.

Medvedev allowed his energy tsar, Deputy Prime Minister Igor Sechin, to respond in detail. Sechin said Gazprom may consider upping its purchase of Turkmen gas from the current 10 billion to 12 billion cubic meters.

“These volumes will stay … and, if opportunity permits, Gazprom will take into consideration our partner’s request. But this is a matter of corporate agreements,” Sechin said.

The current volume is still about 20 percent of what Russia was buying from Turkmenistan prior to the April 2009 pipeline explosion that halted deliveries for nine months and highlighted disputes about volume and pricing. By December 2009, Turkmenistan had commissioned a new pipeline and rerouted to China the volume of gas that Russia was no longer taking — while Russia carried on with negotiations with China to become a major gas supplier.

Sechin described the differences between the two countries’ approach to the Chinese gas market.

Gazprom is “working on different terms, since Chinese companies are lending money to Turkmenistan and participating in pipeline construction there. But we aren’t competing,” he said.

Analysts say Sechin's comments were focused much more on politics than business.

Sechin reconfirmed Russia's interest in a project aimed at delivering Turkmen gas via Afghanistan and Pakistan to India, known as TAPI.

“Gazprom may participate in this project in any role: builder, designer, partner or other,” Sechin told reporters, Bloomberg reported.

Sechin, who is also Rosneft's chairman, said the company's participation in energy exploration on Turkmenistan's Caspian shelf is being discussed.

"And now … we are talking about Rosneft joining the project. That could reduce the amount of time needed to bring the field on-stream by a couple of years," he said.

Sechin also took a shot at Nabucco, the pipeline planned to reduce Europe's reliance on Russian gas, which is in competition with the Russian-driven South Stream project.

"Taking into account the estimates by the Turkmen side and European experts, as well as world experts, the current market situation on the gas track allows us to say, and I am saying this without sarcasm, that Nabucco has no future,” he said.

Turkmenistan's role in the Nabucco project was called into doubt earlier this month when the German utility responsible for planning said it is in talks to get gas from northern Iraq and Azerbaijan, and “if those materialize, there will be no room for Turkmen gas anymore," Bloomberg reported.

Nabucco's spokesman Christian Dolezal declined to react to Sechin's comment, but said in a statement to The Moscow Times that "the project will be realized … the financing is on track," with 4 billion euros ($5.6 billion) lined up, environmental and social impact studies underway, country support agreements to be signed this year and gas supply contracts under negotiation.

Analysts are less certain about Nabucco's future and say that South Stream definitely has a speed advantage.

“I would not state with 100 percent certainty that attempts to move ahead with the Nabucco project are devoid of perspectives, but it will definitely go forward slower than Russia's South Stream,” Valery Nesterov, a Troika Dialog oil and gas analyst, told The Moscow Times.

This is due, in part, to the fact that political will in Europe, though present, is relatively weak, he said.

While increased gas exports to Russia are beneficial for Turkmenistan, they make more political than business sense for Russia, Nesterov said.

“We do not need [Turkmen] gas in principle. … It will probably go on the shelf,” he said.

Both Sechin and analysts predict a decreased European demand for gas, but by purchasing “unnecessary” gas from Turkmenistan, Russia leverages its position and prevents European demand for Russian gas from dropping significantly.

“Maintaining the existing relationships is important for future infrastructure and other projects,” Nesterov said.

LUKoil subsidiary starts to develop deposit near Volga



RIA Novosti

October 24, 2010

LUKoil-Perm, a subsidiary of Russia's largest private oil company LUKoil, started developing the Preobrazhenskoye oil deposit near the Volga with reserves of 200,000 tons, LUKoil-Perm said on Friday.

"The first batch of crude hydrocarbons was extracted from pioneer well number 265. Now the well is producing about 23 tons of oil a day," the company said in a statement.

This is the second deposit launched by Lukoil-Perm in 2010. This summer, the company launched the Sharonovskoye deposit, with oil reserves of over one million tons.

Gazprom

Albania Talks on South Stream



25 October 2010

The Associated Press

TIRANA, Albania — Deputy Foreign Minister Vladimir Titov said Friday that Moscow might include Albania in the South Stream gas pipeline, which will carry Russian gas to southeastern Europe.

Titov said Russia would consider extending the planned pipeline to the small Balkan country, according to an Albanian government statement. Albania is not currently linked to any international gas pipelines.

Titov spoke after talks Friday with Albanian Prime Minister Sali Berisha.

South Stream will deal a blow to the rival Nabucco pipeline, which is supported by the United States and the European Union.

Austria, Serbia, Hungary, Slovenia, Greece, Italy, Bulgaria and Croatia have signed on to South Stream, which will lead under the Black Sea to Bulgaria. The joint venture between Gazprom and Italy's Eni will open in 2015.

Gazprom launches feasibility studies in Bulgarian section of South Stream project



25 October 2010 | 08:23 | FOCUS News Agency

Home / World

Moscow. Russian gas giant Gazprom announced on Friday about the agreement made between the company and Bulgarian Energy Holding for the initiation of feasibility studies in the Bulgarian section of South Stream energy project, Moscow Times announced. The company promised that the study would be made fast.

“In the first half of 2011 we will have the chance to take a decision for the optimal route of the pipeline in Europe, as taking into account all opinions”, chairman of the management council of Gazprom Alexey Miller said in a press release.

Gazprom to Study Bulgaria Pipe Segment



25 October 2010

Bloomberg

Gazprom said Friday that it agreed to carry out a feasibility study of the Bulgarian segment of the planned South Stream pipeline.

The company signed the agreement with Bulgaria's energy holding and pledged to carry out the feasibility study quickly, it said in an e-mailed statement.

"In the first half of 2011, we will be able to make a decision about the optimal route of the pipeline in Europe, taking all the options into account," chief executive Alexei Miller said in the statement.

Gazprom plans to build the pipeline to supply Eastern, Central and Southern Europe, bypassing transit states such as Ukraine. The construction is planned to start in 2013, with the first gas deliveries at the end of 2015.

Romania signed an accord with Gazprom earlier this month about the possible construction of South Stream across its territory. Gazprom has not made a final decision on the route.

Gazprom Considers Joining Turkmenistan-To-India Pipeline Project



October 22, 2010

Russian Deputy Prime Minister Igor Sechin has said in Turkmenistan that the Gazprom gas giant could join in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas-pipeline project.

Sechin, who is accompanying President Dmitry Medvedev on a visit to Turkmenistan, said Gazprom officials are in talks with Turkmenistan about possibly participating in building the nearly 1,700-kilometer pipeline that would carry some 33 billion cubic meters (bcm) of gas from Turkmenistan to Multan, Pakistan, and then further to Fazilka, India.

Turkmenistan's President Gurbanguly Berdymukhammedov met with Medvedev today at the Caspian port city of Turkmenbashi to discuss gas exports to Russia and the Caspian summit coming up in November.

The leaders of Azerbaijan, Kazakhstan, Iran, Russia, and Turkmenistan are due to meet in Baku to discuss the legal status of the Caspian Sea, which sits on huge deposits of natural gas and oil.

Medvedev said the five littoral states were able to work out the details of use of these resources without the participation of any other countries.

"The Caspian Sea is our treasure and we are capable ourselves of resolving all problems and developing cooperation in the Caspian region," Medvedev said. "And it is the responsibility of the five nations themselves to develop the legal regime with regard to natural resources."

Comments from Sechin and Medvedev indicated Russia is not interested in purchasing more Turkmen gas than it is already this year.

A price dispute led Russia to reduce its imports of Turkmen gas from more than 40 bcm to about 11 bcm in 2010.

compiled from agency reports

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