Russia - WikiLeaks
Russia 100204
Basic Political Developments
• RIA: Poland hails Russian plans to commemorate WWII Katyn massacre
• Warsaw Business Journal: Putin to be first Russian leader to honor Katyń dead
• Dow Jones: Argentina, Russia Looking To Cooperate On Nuclear Technology - The MOU was signed by Argentine Planning Minister Julio De Vido and Nikolay Spasskiy, deputy director general for international cooperation at Russia's state atomic energy corporation, Rosatom, the Planning Ministry said.
• RIA: Situation in Afghanistan creates risks for neighbors - CSTO head - "We don't predict any military conflict in CSTO member-states any time soon," Nikolai Bordyuzha said in an interview with a Tajik newspaper. "However, the situation in Afghanistan, which borders on CSTO members Tajikistan and Uzbekistan is, I repeat, very strained and dangerous," he said.
• RIA: Russia, U.S. to discuss anti-drug efforts at Moscow meeting
• Russia Today: America’s “honest disagreement” with Russia over Afghan drugs
• : US disagrees with Russia on Afghan drugs - “We had an honest disagreement about poppy eradication,” Richard Holbrooke, the US special envoy for Afghanistan and Pakistan, told a news conference. “The Russian government thinks that poppy eradication is the key; we think it was creating opportunities for the Taliban to recruit farmers,” he said.
• MID.ru: Russian MFA Spokesman Andrei Nesterenko Interview to RIA Novosti on the Upcoming Visit to the FRG by Russian Minister of Foreign Affairs Sergey Lavrov - Naturally, the focus of reciprocal attention will be WMD nonproliferation, including a political and diplomatic settlement to the Iran nuclear problem; advancing the Middle East peace process; assistance to stabilization and reconstruction in Afghanistan, and improvement of the situation in other hot spots and areas with high crisis potential.
• PTI: BRIC's 2nd summit to be held in Brasilia in April
• CNBC: Inside the BRIC's Enigmatic 'R' - The Russian economy, which had been worth $1.7 trillion in 2008, slipped to $1.2 trillion as a result of the crisis. Despite criticisms of the lack of diversity in the economy, early economic statistics for 2010 look encouraging, with GDP seen bouncing back with 3 percent-plus growth this year.
• People’s Daily: Chubais: Russia hopes for high-tech co-op with China
• Haaretz: [pic]Moscow cancels Jewish Agency meet over presence of Putin adversary
• EU-Russiacentre: EU-Russian relations in January 2010 - A few important issues dominated the EU-Russian relations agenda in January 2010: the Ukrainian elections and future gas transit, the beginning of the Spanish EU presidency, some progress in Russia’s support for the “South Stream” gas project and issues surrounding with European security.
• The Moscow Times: RZD to Move Estonian Oil by Year-End, Yakunin Says
• RBC: Russian Railways secures RUB 50bn in subsidies
• DefenseNews: Norway: Costs To Cool Russian Air Force Activities
• Eurasianet: Georgia: Russian Nationalist Group Wants Georgian Foreign Minister Prosecuted
• Politicom.moldova: Moldovan NGO: Ukraine-Russia spy scandal bad sign for Transnistria
• : Medvedev may attend Vancouver Winter Olympics
• The Globe and Mail: Good night, Vancouver; good morning, Moscow - Every evening, oldies station CISL-650 will become Autoradio, a Russian-language station with simultaneous broadcasts in Vancouver and more than 300 cities in Russia.
• People’s Daily: Rogge: No worry on preparations of 2014 Sochi Olympics
• Itar-Tass: Putin, Sidorsky discuss cooperation in energy, construction, chemical industries
• RIA: Kazakh parliament ratifies deal on post-Soviet rapid reaction force
• Itar-Tass: Sergei Darkin enters third term of governorship Thurs
• The Moscow Times: Putin Friend in Football Job
• Russia Today: New Russian football boss says Hiddink will stay until contract expires
• RIA: Russia plans massive Victory Day display of military might
• 24.kg: CIS to take Victory lessons by May 9
• Itar-Tass: Tatarstan’s parliament to consider candidate for presidency - Parliament of the Republic of Tatarstan on Thursday will consider candidacy of Rustam Minnikhanov to the presidential seat in the republic. Minnikhanov’s candidacy to this post was nominated by President Dmitry Medvedev on January 27.
• Kremlin: Dmitry Medvedev had a meeting with Governor of Chelyabinsk Region Pyotr Sumin to discuss the region's social and economic situation.
• Kremlin: Opening Remarks at Meeting on Reforming the Interior Ministry
• Reuters: Russia says killed top local al Qaeda militant
• Interfax: Police detain Karachayevo-Cherkessia Muslim leader murder suspect in Moscow
• RIA: Six killed in bus-truck collision in S.Russia - Six people were killed when a bus crashed into truck in Russia's North Caucasus Republic of Dagestan early on Thursday, regional emergencies officials said.
• Itar-Tass: Six killed in Dagestan road accident, nine hospitalized
• Itar-Tass: Medvedev hopes to reduce “exorbitantly high” corruption in N Caucasus
• Itar-Tass: Govt to consider creation of commission for IT in govt agencies
• Russia Today: Russia to protect children from Internet risks - “The law should be improved,” said Vladimir Ovchinsky, Constitutional Court advisor. “Russia has not yet ratified two fundamental conventions of the Council of Europe, coordinating the fight against human trafficking, including child pornography. I have no idea why our country has not joined these conventions.”
• Itar-Tass: Mandatory health insurance reform to improve quality of medical services
• Itar-Tass: Russian doctors call for raising awareness of cancer prevention
• : Experts map route to disarmament - A group of leading arms-control experts will set out a route today by which the big nuclear powers could agree to abolish all atomic weapons by 2030. At a Paris conference, a group calling itself the Global Zero Commission - comprising several Russian and US arms-control policy-makers of recent decades - will outline a four-stage plan.
• The Local: Russian nuclear waste dumped off Sweden - The Russian military is suspected of having dumped chemical weapons and radioactive waste off the Swedish island of Gotland in the beginning of the 1990s, according to Sveriges Television (SVT).
• Xinhua: Russia Ready for Dialogue with EU over Tactical Nuclear Weapons
• The Moscow Times: Time for TART - After the follow-up agreement to the START is signed, Moscow and Washington should make a firm commitment to begin “TART” negotiations on reducing tactical nuclear weapons in Europe.
• : Russia-India's strategic reserve plan for wheat
• The Moscow News: Regional train fares reviewed
• Russia profile: Kaliningrad Rising - A Rare Show of Unity Amongst the Opposition Parties, the Largest Anti-Government Protest in Years, and a Governor in Trouble – Is There Something Different About Kaliningrad?
• Russia profile: Outdated Paperwork - With the Arrival of the Apple iPad and Other Electronic Readers, Re-Opening the Baikal Cellulose Paper Mill Seems Absurd
• The Moscow Times: A Mass Mailing of Khodorkovsky Chocolate and Mittens
• Aysor.am: Georgia denies it supports terrorism in the North Caucasus
• The Jamestown Foundation: Au Pays des Lumieres: Gazprom’s Partner Eutelsat Disconnects Georgian TV Channel
• The Moscow news: State birth-raise program bails out mortgaged families
National Economic Trends
• Bloomberg: Russian Economy Shrinks at Slowest Pace in 13 Months, VTB Says
• Reuters: TABLE-Russia Jan GDP -0.3 pct y/y - VTB indicator
• Itar-Tass: Influx of foreign direct investments in Russia exceeds $40 bln –PM
• : A volatile oil price is the only serious risk for Russia - The main issue that should concern investors is the oil price, given that the rouble, government finances, and profits are heavily dependent upon this. Below $60 a barrel the market gets nervous, and more than $30 a barrel the whole macroeconomic framework looks fragile. This is the main tail risk.
• Bloomberg: Russia Should Be More Rigorous in Monitoring Banks, IMF Says
Business, Energy or Environmental regulations or discussions
• Bloomberg: Norilsk Nickel, Polyus Gold, Rosneft: Russian Equity Preview
• The Moscow Times: VEB Hires Bond Managers
• MarketWatch: Russia's Uralkali raised to buy at Citigroup
• Interfax: TMK placing $350 mln in convertible bonds
• EmergingMarkets.me: TNK-BP $1bn Eurobond shows the way for sovereign issue
• Interfax: VTB could unveil 2009 IFRS results in March, bring AGM forward
• VTB Capital: Vedomosti speculates that Sberbank has created an investment banking department
• Rencap: Sberbank CEO expects margins to fall in 2010
• Steel Guru: Russia Chelyabinsk zinc Q4 2009 output up
• AFP: Rusal pays creditors 2.14 billion dollars: company
• Reuters: Russia RUSAL repays creditors $2.143 bln
• Bloomberg: Rusal Cuts Debt to $12.9 Billion After Payments From IPO Cash
• Bloomberg: Renaissance to Buy Leadbank, Names Gruzglin Head of Fixed Income
• FinancialMirror: Bank of Cyprus sells Russian Leadbank to Renaissance Capital
• AP: MDA signs two contracts with Russian firm worth a total of more than $60M
• The Moscow Times: Proposal to Integrate National Payment System With Cell Phones
• The Moscow Times: Alfa, Telenor Asset Merger Approved
• PR Web: RT Gains Popularity On YouTube
• The Financial: Aeroflot's enlargement designed to boost air safety, but carries risk
• Bloomberg: Billionaire Blavatnik Said to Join Bidding for MGM (Update3)
• : The call of the Russian investor - Most financiers have little stomach for technology investing in Russia, which is surprising, given the Soviet legacy of high-tech successes. In spite of the potential of a large pool of maths and science talent, most consider it too much of a risk.
• The Moscow Times: Crisis Taught Firms About Consumers - Executives at some of the country's top consumer goods companies said Wednesday that while the crisis took a toll on their business, it also provided a number of valuable lessons about Russian consumers.
Activity in the Oil and Gas sector (including regulatory)
• RIA: Oil leaks from recently launched Pacific oil pipeline
• The Moscow Times: State to Give Rosneft New Sakhalin Fields
• BusinessWire: NOVATEK and TOTAL close transaction for establishment of joint venture
• WSJ: Novatek, Total To Develop Field In Russia's Yamal Region
• Oil and Gas Journal: Output up at Russia's Verkhnechonskoe field
• WSJ: Russia OKs $400 Mln Budget For Kharyaga Oil Field - Prime-Tass
• WSJ: Rosneft Exec: Profit-Based Oil Tax Unlikely Before 2012
Gazprom
• WSJ: UPDATE: Gazprom Sees Europe Gas Demand Rising In Decade
• Bloomberg; Gazprom Expects Gas Exports to Asia to Reach European Levels
• Reuters: Gazprom sees Europe gas use up 70 bcm by 2020
• Oilprice: Gazprom: Angel or Demon? - Gazprom faces regular opprobrium for its bullying ways of using energy as a pressure and political tool. Seen by some, mostly Russians, as the symbol of a successful and strong Russia, others see it as a dominating juggernaut, economic right arm of the Kremlin implementing, or should we say, imposing its policies by using energy as a weapon.
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Full Text Articles
Basic Political Developments
RIA: Poland hails Russian plans to commemorate WWII Katyn massacre
11:5104/02/2010
WARSAW, February 4 (RIA Novosti) - The Kremlin's invitation to Poland's premier to attend events to mark the massacre of thousands of Polish POWs by Soviets forces in WWII is an important step in the improvement of bilateral ties, the senate speaker said on Thursday.
Russian Prime Minister Vladimir Putin invited his Polish counterpart Donald Tusk on Wednesday to attend a memorial service in April to mark the 1940 massacre. Tusk confirmed his participation in the event later in the day.
Bogdan Borusewicz said it was "an important signal from the Kremlin," and complicated bilateral ties "are increasingly improving." Borusewicz will visit Moscow on February 9 at the invitation of his Russian counterpart, Sergei Mironov.
Over 20,000 Polish officers, police and civilians taken prisoner during the 1939 partitioning of Poland by the Soviet Union and Nazi Germany were killed in western Russia's Katyn forest, as well as in prisons and other locations, by the NKVD, the forerunner of the KGB.
The Soviet Union acknowledged the massacre in 1990. Modern Russia also recognized Soviet responsibility for the mass shooting, but has not classified it as a war crime, something Warsaw has demanded.
The two Slavic nations have recently been at odds over Soviet leader Joseph Stalin's 1939 deal with Nazi Germany, which Warsaw says triggered the invasion of Poland and the start of WWII.
Putin moved to heal the rift over the massacre and the 1939 deal when he visited Poland in September to mark the 70th anniversary of its invasion. He called the killings "a crime" but urged "forgiveness." He said all European countries bear their share of responsibility for the outbreak of the war.
Warsaw Business Journal: Putin to be first Russian leader to honor Katyń dead
4th February 2010
Donald Tusk will join Russian PM in an event to commemorate victims of Stalinist massacre
In an historic move, Russian Prime Minister Vladimir Putin has invited Polish counterpart Donald Tusk to a joint Polish-Russian commemoration of the Stalinist massacre of Polish prisoners at Katyń.
Mr Putin will be the first Russian leader to visit the cemetery at the site.
The crime has cast a shadow over Polish-Russian relations for decades. After years of Soviet denials, Mikhail Gorbachev and Boris Yeltsin admitted that the massacre was carried out by Stalin's forces.
Even so, some in Russia still insist that it was Germany that carried out the mass murder.
"The invitation has a symbolic dimension," said Mr Tusk. "For the first time the premiers of Poland and Russia will jointly commemorate the anniversary of the Katyń atrocity. the participation of Premier Putin in the ceremonies for the anniversary of the outbreak of World War II, and now this invitation generate hope that our discussion about the history of Poland and Russia will slowly but consequently continue. And also that Polish-Russian relations will improve."
Source: Gazeta Wyborcza
Dow Jones: Argentina, Russia Looking To Cooperate On Nuclear Technology
Feb 3, 2010
BUENOS AIRES -(Dow Jones)- Argentine and Russian leaders on Wednesday pledged to share technical information related to the construction of nuclear power plants.
The two countries signed a memorandum of understanding aimed at helping Argentina examine the possible use of Russian nuclear reactor technology to build power plants in Argentina.
The MOU was signed by Argentine Planning Minister Julio De Vido and Nikolay Spasskiy, deputy director general for international cooperation at Russia's state atomic energy corporation, Rosatom, the Planning Ministry said.
Argentina has two operating nuclear power plants, Atucha I, in the province of Buenos Aires, and Embalse in the province of Cordoba.
The 360-megawatt Atucha I came online in 1974, while the 650 MW Embalse began operating a decade later. Nuclear power usually accounts for around 5% of Argentina's electricity.
Argentina relaunched its nuclear power program nearly three years ago as the nation's energy woes began to worsen amid growing demand for power and a lack of private-sector investment.
The government plans to open a third nuclear plant, Atucha II, sometime in 2011.
The plant, which will generate around 700 MW, will provide about 3% of Argentina's total power output.
Atucha II was originally slated to come online in 1987. The project was stalled for 14 years because of "inexplicable" political and economic reasons, De Vido said in August.
-Taos Turner, Dow Jones Newswires; 5411-4103-6728; taos.turner@
RIA: Situation in Afghanistan creates risks for neighbors - CSTO head
11:5404/02/2010
The rapidly deteriorating situation in Afghanistan creates security risks for bordering Central Asian states, the head of the Russian-led Collective Security Treaty Organization (CSTO) said on Thursday.
"We don't predict any military conflict in CSTO member-states any time soon," Nikolai Bordyuzha said in an interview with a Tajik newspaper.
"However, the situation in Afghanistan, which borders on CSTO members Tajikistan and Uzbekistan is, I repeat, very strained and dangerous," he said.
The CSTO also includes Armenia, Belarus, Kazakhstan and Kyrgyzstan. Russia's security strategy until 2020 envisions the CSTO as "a key mechanism to counter regional military challenges and threats."
Russia backed the 2001 U.S.-led military operation in Afghanistan to topple the radical Islamic Taliban. But in the past few years, Russia has grown increasingly alarmed about political instability in Afghanistan, where the Taliban has regained influence, defying in the process the Western-backed government and the presence of a powerful international force.
The Kremlin says that apart from the renewed threat from radical Islam, instability in Afghanistan has led to the sharp growth of heroin production in the country, trafficked to the West through the ex-Soviet Central Asian states and Russia. The Kremlin has described the growth of heroin use in Russia as a national security threat.
Russia has vowed to assist U.S. President Barack Obama in tackling the Afghanistan problem and has allowed the transit of NATO military goods through its territory. But Moscow insists that military efforts cannot stabilize Afghanistan.
"Only political measures can solve conflicts," Bordyuzha said.
Bordyuzha said the lack of cooperation between the CSTO and NATO has hampered efforts to reduce regional threats arising from Afghanistan's instability.
"We have repeatedly offered to set up cooperation on drug trafficking and anti-terrorism issues in Afghanistan," Bordyuzha said. "We hope that after the recent change of leadership in the alliance, Brussels will take a fresh look at CSTO-NATO relations."
DUSHANBE, February 4 (RIA Novosti)
RIA: Russia, U.S. to discuss anti-drug efforts at Moscow meeting
01:3004/02/2010
The Russian-U.S. Drug Trafficking Working Group will hold its first session on Thursday in Moscow, Russia's Federal Drug Control Service said.
The co-chairmen of the group are Gil Kerlikowske, Director of U.S. National Drug Control Policy and his Russian counterpart, the head of the Federal Drug Control Service, Viktor Ivanov. The two officials have already met in Washington in September 2009.
Kerlikowske earlier told RIA Novosti that situation in the world's largest heroin producer, Afghanistan, will be one of key issues on the meeting's agenda.
Russia is one of the main markets for drugs from Afghanistan, with at least 12 tons of pure heroin smuggled into the country each year.
Drug use is a growing problem in the country, particularly involving heroin smuggled via the former Soviet states in Central Asia, including Tajikistan and Kazakhstan. About 90% of drug users in Russia are heroin addicts.
In late January Russia's envoy to NATO, Dmitry Rogozin, urged NATO to prioritize the fight against drug trafficking in Afghanistan, saying that "heroin aggression" was "the main threat to Russia."
The working group operates within the framework of the Russia-U.S. Bilateral Presidential Commission, established by the Russian and U.S. leaders during their meeting in last July.
MOSCOW, February 4 (RIA Novosti)
Russia Today: America’s “honest disagreement” with Russia over Afghan drugs
04 February, 2010, 10:13
While the US intensifies its crackdown on Islamist militants in Afghanistan, the country's government is considering peace talks with the Taliban.
President Hamid Karzai wants the international community to help him reconcile with insurgents by offering them money and jobs.
However, investigative journalist Gareth Porter says Washington is still uncertain about supporting the project.
“The Obama administration really wants to have no negotiations with Taliban for quite a while – by that I mean at least mid-2011, when the period of the troops surge in Afghanistan has run its course and supposedly some troops withdrawal is taking place.”
Porter calls this stance “a strategic mistake” because later it could be more difficult to seal a deal with the Taliban.
While the Afghan president envisages negotiations with the militants, Moscow believes that an efficient fight against the Taliban and terrorism in the world without tackling drug producing and trafficking is impossible.
Deputy Head of Russia’s Federal Service for Control of Drugs and Psychotropic Substances Circulation Vladimir Kalanda told Ekho Moskvy radio station on Wednesday that the drug problem is closely related to acts of terror in Afghanistan and other countries:
“We are trying to convince our partners that there could be no efficient fight against, as they say, the Taliban and Al-Qaeda on the territory of Afghanistan without a comprehensive fight against drug production in Afghanistan.”
Washington, however, is of the opposite opinion on the issue.
On Tuesday, speaking to journalists, US Special Representative for Afghanistan and Pakistan Richard Holbrooke said the United States has an “honest disagreement” with Russia over eradicating poppy fields in Afghanistan.
“The Russian government thinks that poppy eradication is the key; we think it was creating opportunities for the Taliban to recruit farmers,” he said.
Instead, Washington wants to put greater emphasis on interdiction and destroying drug bazaars.
: US disagrees with Russia on Afghan drugs
Thursday, 04 Feb, 2010
WASHINGTON: The United States has an “honest disagreement” with Russia over fighting drugs in Afghanistan but is cooperating with Moscow in other areas, a US official said Wednesday.
President Barack Obama after taking office last year made a major policy shift by ending a military drive to destroy poppies, believing it alienated Afghanistan's poorest who only grew the crop to make money, reports AFP.
“We had an honest disagreement about poppy eradication,” Richard Holbrooke, the US special envoy for Afghanistan and Pakistan, told a news conference.
“The Russian government thinks that poppy eradication is the key; we think it was creating opportunities for the Taliban to recruit farmers,” he said.
Holbrooke said the new emphasis on interdiction and destroying drug bazaars instead of crops was yielding “much greater success.”
“We have done more damage to the drugs by this policy and we're no longer giving the Taliban a free recruiting tool,” he said.
But he denied that the disagreement was impeding Russian involvement in Afghanistan, saying that Moscow and Washington were pursuing “a wide range of areas of cooperation.”R
Russia's ambassador to Nato, Dmitry Rogozin, told AFP last month that Moscow had complained to the alliance about its attitude to fighting opium production, insisting it should be a higher priority.
“Thirty-thousand young Russians died last year because of their consumption of heroin produced in Afghanistan. That's twice the number of Soviet troops who were killed in Afghanistan in a decade,” Rogozin said.
In 2009 the potential gross export value of opium from Afghanistan was 2.8 billion dollars, or about a quarter of the country's gross domestic product, according to the UN drugs agency.
MID.ru: Russian MFA Spokesman Andrei Nesterenko Interview to RIA Novosti on the Upcoming Visit to the FRG by Russian Minister of Foreign Affairs Sergey Lavrov
103-03-02-2010
Question: Minister of Foreign Affairs Sergey Lavrov will make a visit to the FRG at the end of this week. What is the main program of the visit?
Answer: Minister of Foreign Affairs Sergey Lavrov will pay a working visit to the Federal Republic of Germany on February 5-6. He will hold talks with German Vice Chancellor and Foreign Minister Guido Westerwelle in Berlin on February 5.
On the same day, in a ceremony at the Russian Embassy in Berlin, Sergey Lavrov will present Jubilee Medals of 65 Years of Victory and Russian MFA Badges ‘For Contribution to International Cooperation’ to a group of German anti-fascist veterans who fought in the Red Army ranks during the Great Patriotic War.
The main highlight of the program in Munich on February 6 will be Lavrov’s speech at the 46th Munich Conference on Security Policy. During a plenary session on the theme of “The Future of European and Global Security,” in which the Minister will take part, discussion will be focused on the Russian initiative for a European Security Treaty. His contacts with a number of foreign partners are likely on the sidelines of the Forum.
In addition, the Minister plans to visit Russian bobsleigher Irina Skvortsova on treatment in Munich, who was seriously injured during competitions in Bavaria on November 23, 2009.
Question: What questions will be discussed at the Minister’s talks with his German counterpart?
Answer: During the talks with German Foreign Minister Westerwelle the main attention in the context of deepening the Russian-German strategic partnership will be devoted to an intensive 2020 schedule for bilateral political dialogue as well as to the preparation and content of the 12th round of Summit-Level Interstate Consultations planned in Yekaterinburg in the summer. In view of this the state of cooperation between the two countries in various fields is to be comprehensively assessed to provide new impetus for its growth. Among important priorities is coordination of the program of measures timed to the 65th anniversary of Victory and the defeat of Nazism, the 20th anniversary of Germany’s reunification, and this year’s other round numbered dates of shared history.
The Ministers will examine important issues on the extensive cooperation agenda for Russia and Germany in the international arena, with the main emphasis to be laid on the task of strengthening and renewing the security architecture in the Euro-Atlantic space in the context of promoting the Russian-proposed Draft European Security Treaty. They will also exchange views on wide-ranging issues related to the Russia-EU and Russia-NATO Council dialogue.
In reviewing the situation of disarmament and arms control, the parties are expected to talk about reducing offensive nuclear arms, restoring the CFE regime and streamlining the system of transparency and confidence-building measures in the military sphere.
Naturally, the focus of reciprocal attention will be WMD nonproliferation, including a political and diplomatic settlement to the Iran nuclear problem; advancing the Middle East peace process; assistance to stabilization and reconstruction in Afghanistan, and improvement of the situation in other hot spots and areas with high crisis potential.
An important subject for discussion will also be giving Russia-EU cooperation the “partnership for modernization” quality, which is already being quite successfully effected in the Russian-German format. The essence of this strategy is to launch and implement forward-looking ambitious projects in trade, economic, scientific, technological, cultural and humanitarian fields, including civil society dialogue, in development of the goals set forth in the Four Road Maps for Russia-EU interaction.
February 3, 2010
PTI: BRIC's 2nd summit to be held in Brasilia in April
STAFF WRITER 2:4 HRS IST
Brasilia, Feb 3 (AFP) The world's main emerging economies of Brazil, Russia, India and China - known as the BRIC countries - are to hold their second summit in Brasilia on April 16, Brazilian officials said today.
The leaders of the informal group first met under the BRIC banner in June 2009 in Yekaterinburg, Russia. During those talks, they expressed reservations over the US dollar remaining the world's de facto reserve currency.
The Estado de Sao Paulo newspaper reported that Chinese President Hu Jintao would likely continue to Brazil from the BRIC meeting for an official visit.
The BRIC summit in Brasilia is to be preceded on April 15 by a meeting between the leaders of Brazil, India and South Africa called to boost political and trade ties, a foreign ministry official said.
CNBC: Inside the BRIC's Enigmatic 'R'
Published: Thursday, 4 Feb 2010 | 3:20 AM ET
By: Steve Sedgwick
CNBC Anchor
If the truth be known, few things in life shut me up. I know, that's not much of a revelation for SquawkBox Europe viewers.
However, one thing that does quieten me for an hour or so every day is The Daily Telegraph's cryptic crossword. On the flight to Moscow I tackled Wednesday's puzzle.
The clue for 10 across was 'mysterious magnetic flows around island', (nine letters). The answer was an easy anagram of the word 'magnetic' combined with the 'I' from island - 'enigmatic'. For those of you who prefer your crosswords a little more straightforward, the clue could just have been 'overused adjective to describe Russia'.
For Russia is still one of the most enigmatic, complex and confusing countries on this planet. It is a country that ever since the break down of the Soviet Union in 1991 has been promising modernization, promising to invest in new technologies and promising to reduce its economic dependence on its vast natural resources.
By and large, it is still promising a lot and struggling to deliver. Jim O' Neill of Goldman Sachs still maintains he was right to place the country in the BRIC acronym - symbolizing high growth emerging economies - eight years ago, but the recent global economic crisis has shown that the country is still as dependent as ever on commodities.
Last year saw the Russian gross domestic product contract around 8 percent, the worst figure since 1994. In comparison China grew over 9 percent, India still had a growing economy and Brazil just about avoided any meaningful contraction.
The Russian economy, which had been worth $1.7 trillion in 2008, slipped to $1.2 trillion as a result of the crisis.
The President, Dmitry Medvedev has promised modernization, stating that without it, the economy has no future, despite its natural riches. High technology sectors are just one of the areas he is keen to promote.
Between Perestroika and Modernization
But critics say there is little real action in this direction. The Economist analyzed Medvedev's 'Building Project' in its November 26th, 2009 edition, drawing parallels with the perestroika era of the 1980s:
"At times, Mr Medvedev's speeches sound uncannily like postmodern renditions of Mr Gorbachev's. His diagnosis is relentless: a primitive, commodity-based economy cannot create prosperity….And his vision of the future is charged with excitement: a Russia bursting with nanotechnology and nuclear-powered spaceships. Yet ultimately his recipe for change is implausible," the Economist wrote.
Despite criticisms of the lack of diversity in the economy, early economic statistics for 2010 look encouraging, with GDP seen bouncing back with 3 percent-plus growth this year.
Rail freight, seen as a key measure of economic health, rose 17 percent in January, the third month in a row of year-on-year gains, and manufacturing also showed a monthly expansion.
Liquidity crises which preyed upon Russian companies in 2008 and 2009 may also be consigned to memory, with deputy central bank chairman Alexei Ulyukayev forecasting loan portfolios growing 20 percent in 2010.
And the oil and gas sector is powering ahead, with the country producing more than 10 million barrels a day of oil in January, significantly more than the next biggest producer Saudi Arabia.
The Russian conundrum though goes right to the top, and the relationship between Vladimir Putin and Dmitry Medvedev typifies this. Is the former just playing 'good cop' to the latter's 'bad cop'? Are they bitter rivals? And just what are their intentions towards the oligarchs who still control so much of Russian industrial capacity?
No-one has to date offered conclusive answers to any of these questions.
The Wall Street Journal delved into this issue last month, pointing out that if the Russian government still wanted to get rid of the power wielded by billionaires such as Oleg Deripaska, then why was the owner of great swathes of assets, including aluminum giant RUSAL, given such official support to help him avoid falling victim to the global financial crisis?
The Journal attempts to answer its own question stating: "Before the crisis, the most dynamic players, like Mr Deripaska, became ambassadors for Russia's economic expansion, gobbling up assets overseas. Since then, the tycoons have provided the capitalist engine driving Mr Putin's Kremlin-dominated system."
History and Mystery
Even central bank decisions are shrouded in mystery. There are no set public dates for rate-setting meetings. In fact, it's only been six months has the central bank has even bothered to explain to the markets why it has changed rates.
This from a body that cut rates ten times and by 425 basis points in the current cycle, down to the present refinancing rate of 8.75 percent.
For outside investors the challenges are many but not insurmountable.
A case in point as to the complexity of doing business in Russia is the experience of BP [BP.L 576.9 [pic] 2.60 (+0.45%)]. The UK oil major has had more than its fair share of ups and downs in the country and only now, after years of tensions surrounding the management of its massive TNK-BP joint venture, has peace broken out between the BP and its Russian billionaire partners.
Earlier this week I asked Tony Hayward of BP why doing business in Russia was so very different from elsewhere?
"I think it's probably the history. The history of Russia over the past twenty years has been very challenging. It went from a Communist state to completely uncontrolled free-market capitalism, which was actually a mistake. The pace of transition was too fast. It then went back to a quasi-state run economy," Hayward said.
And yet international oil companies such as BP are compelled to do business against this ever-evolving political backdrop. Quite simply they are desperate for the reserves. Hayward believes unequivocally that the TNK-BP experience has been a positive one for BP, despite the roller-coaster ride.
"Russia's been a great place to do business. We've done very well out of TNK-BP and so have our partners. By and large everyone is pretty satisfied," he said.
I pushed a little further and asked him if the Russians had used undue pressure to get what they wanted from the joint venture. Hayward's reply was as cryptic as you would expect when talking Russia: "I think they fought the Russian way."
Perhaps Winston Churchill summed up the questions over what drives Russia better than most 70 years ago, in a remark that remains true even today:
"I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma."
People’s Daily: Chubais: Russia hopes for high-tech co-op with China
11:14, February 04, 2010
Russia and China have great cooperation potential in the high-tech sector, and enhanced cooperation will create new opportunities for both sides, the head of the Russian Nanotechnology Corp. said Wednesday.
Russia is closely following China's achievements in the high-tech sector, particularly in nanotechnology, said Anatoly Chubais, a former first deputy prime minister under late Russian president Boris Yeltsin.
Chubais hailed China's big investment in innovation and expressed the hope that Russia and China will reach consensus on cooperation projects.
Russia will improve its investment climate and provide unique financial services in a bid to attract foreign investment and cooperation projects, he told Xinhua while attending the Troika economic forum in Moscow.
Chubais said Russia's heavy dependence on energy is not standing in the way of building an innovative economy.
Chubais believed that the reliance on natural resources is not so harmful because many countries with distinctive raw materials are able to establish an innovative economy within 15 to 20 years.
He stressed that traditional oil and natural gas businesses should not be grounded in the pursuit of an innovative economy. On the contrary, special natural resources could become major driving forces in the process, he said.
Chubais admitted that Russia has lagged behind in fostering an innovative economy in recent years. However, given its enormous human capital and resources, Russia has a good chance of changing the status quo and nurturing a first-class innovative economy through technological innovation and increased investment in the transformation of science.
Talking about Russia's ongoing innovative projects, Chubais said Russian nanotechnology has more than 60 cooperation projects on the table, and some of them will be put into practice in the near future.
In particular, Russia is building its largest solar panel factory, he noted.
He added that dozens of new nanotechnology factories are being built with sponsorship from Russian Nanotechnology. The factories, which will work on national innovative projects, are expected to number more than 100 by 2015.
Russian Nanotechnology, a state-run company, was established in 2007 to oversee nanotechnology research and implement policies related to nanotechnology.
Source:Xinhua
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Haaretz: [pic]Moscow cancels Jewish Agency meet over presence of Putin adversary
By Anshel Pfeffer
The Jewish Agency canceled a board meeting planned for St. Petersburg, Russia, later this month, after Moscow yesterday told the Israeli embassy that it would not allow it to take place.
Agency sources attributed the diplomatic row to the presence on the board of businessman Leonid Nevzlin, who is a political enemy of Prime Minister Vladimir Putin.
The agency's board meets three times a year to determine policy. The meeting was scheduled to be in two and a half weeks in Russia, where agency chairman Natan Sharansky was born. It had been planned for months and was promoted as an historical event. It was to be attended by hundreds of Israeli and Jewish delegates from all over the world.
Sharansky announced officially that the St. Petersburg convention was canceled and would take place in Jerusalem instead. An agency spokesman said preparations took some three months and coordinated with the Israeli Foreign Ministry and the St. Petersburg governor.
In the last two weeks the agency and the Israeli embassy in Moscow received messages from Moscow objecting to the gathering. The official reason was that the agency, acting in Russia legally as a local NGO, could not hold an international conference.
An agency source said the Kremlin's real objection stems from Nevzlin's membership on the board. The Russian-born Nevzlin, who made his fortune as a high-ranking executive in the former Russian oil firm Yukos, settled in Israel six years ago after business partner Mikhail Khodorkovsky was arrested.
Nevzlin and other Yukos executives paid a heavy price for supporting some of Putin's political rivals, as Russia issued arrest warrants against them. Russia is seeking Nevzlin on allegations of attempted murder and corruption.
The Israeli Supreme Court has rejected the extradition requests, citing insufficient evidence.
"Obviously Nevzlin himself wouldn't have come to the meeting," an agency source said. "He wouldn't want to be arrested and end up like Mikhail Khodorkovsky in prison. But the fact that he's a member of the board is a red flag to the Russians."
A senior official blasted the agency yesterday for inviting hundreds of people to the event before making sure the Russian government would allow it to take place. The source said the agency's management was "amateurish."
"Someone probably didn't notice that Nevzlin's name appears on all the lists of governors' names passed on to the Russians. They should have known it would infuriate the Russians," the source said.
Agency officials also slammed the Foreign Ministry and especially Foreign Minister Avigdor Lieberman, who boasts of his close relations with the Russian administration.
Had they acted in time they could have avoided the embarrassment to the most active Israeli body operating in Russia, they said.
The Foreign Ministry and Lieberman's office refused to comment. Nevzlin's spokesman said, "we are not familiar with the case."
EU-Russiacentre: EU-Russian relations in January 2010
03 Feb 2010 — by George Bovt
A few important issues dominated the EU-Russian relations agenda in January 2010: the Ukrainian elections and future gas transit, the beginning of the Spanish EU presidency, some progress in Russia’s support for the “South Stream” gas project and issues surrounding with European security.
Russia, Europe and Ukraine In-between
In the first round of the presidential elections on January 17, Ukrainian voters delivered a stunning defeat to one of the prominent leaders of the Orange Revolution of 2004, Victor Yushchenko. His presidency had almost failed having given a commanding lead in the first round to Viktor Yanukovich, leader of the Party of Regions, and Yushchenko’s 2004 opponent. For most observers this defeat clearly demonstrated the failure of Yushchenko’s anti-Russian course as a means of strengthening Ukrainian sovereignty. He had wasted time and effort in pursuit of strategic goals, like membership of NATO and the EU, which ordinary Ukrainians did not see as goals that were relevant to their day to day needs. Meanwhile, corruption and economic mismanagement have brought Ukraine to the brink of bankruptcy, with the IMF suspending the disbursement of its $16 billion loan last November to prop up Kiev’s finances. These finances had been devastated by the perpetual political fighting between Yushchenko and Prime Minister Yulia Tymoshenko, who won second place during the first round of the elections, lagging more than 10% behind Yanukovich.
In 2010, Ukraine faces a $10 billion deficit in servicing its $33 billion plus external debt, with projected deficits growing to $20 billion in 2012. The question is, whether Ukraine will have to be bailed out by its neighbour Russia, and what price Russia might ask for that level of assistance.
Whoever wins the elections on February 7, they will be a much more comfortable partner for Moscow than Yuschenko. The new president will be more Russia-friendly, will stop talking about NATO membership, or at least speaking about it in the near future and will consider extending the lease on the Russian Black Sea Naval base at Sebastopol. But this new president will not become a Russian puppet who will obey “orders” from Moscow. The new president will definitely continue the course which aims to strengthen Ukrainian sovereignty. It would appear that the vast majority of the Ukrainian political and economic elite will adhere to a policy of further integration with the European institutions. Russia is considered as a possible economic partner, but not as an example of a society to be followed as a model.
A key question is whether both countries will succeed in preventing “gas wars”, which have been so harmful for Europe. Although the two countries avoided a “gas war” this year, the underlying problems that caused previous gas conflicts remain unresolved. “Naftogaz Ukrainy”, the country’s heavily taxed national oil and gas company, will struggle to pay for its imports. Ukrainian industry, battered by the world economic crisis, will struggle to pay higher prices. And Russian, Gazprom will not be inclined to offer concessions. The IMF has estimated Naftogaz’s operational deficit at just under $3 billion. Without the fund’s acquiescence, Naftogaz could never have paid last year’s gas import bills of more than $6 billion. The Central Bank had shifted money from Ukraine’s foreign exchange reserves into Naftogaz’s accounts to make sure that no payments were missed.
This year, European gas prices will come down a little, following the price of oil. But if oil is about $70 per barrel, Ukraine’s gas imports will probably cost more than $9 billion. Where will the money come from to pay for them?
Viktor Yanukovych has already called for the January 2009 gas contract to be renegotiated. The “base price” used in the contract, which is supposed to reflect European border prices, appears to be about ten per cent higher than it should be. Last year, Prime Minister Vladimir Putin waived the penalties Ukraine owed Russia for missing payments and gas consumed. Might they be waived in future and, if they were, what would Russia demand in exchange? For Gazprom, discounted sales to Ukraine and Belarus (the latter is a member of the newly formatted Customs Union with Russia and Kazakhstan, as well as a member of the Union State with Russia) carry heavy implied losses. Having tied Ukrainian import prices to European levels, Gazprom will surely fight to keep them there. The company, with its European customers, will also press on with the Nord Stream pipeline — which is not a substitute for transit pipelines across Ukraine, but would mitigate any impact on Gazprom from supply interruptions. This will reduce Ukraine’s ability to use gas transit as a bargaining chip. The Ukrainian elite clearly understands that kind of vulnerability and under the new president, who will be more friendly towards Russia, will try to repair Ukrainian gas relations with Russia in order to discourage Moscow from building pipelines which would bypass the country.
“Nabucco” vs “The South Stream”
By the end of 2009 Russia had almost finalised preparations for building the “South Stream” pipeline which would bypass Ukraine. The project appeared to develop even more successfully than the earlier “North Stream”. Even when former French President Jacques Shirac rejected the proposal made by Vladimir Putin to head the project it, this was only a minor blow. The biggest success had been not only clearing all the judicial formalities with the participating countries, but gaining the consent of Azerbaijan to act as the key supplier to “South Stream”. From the beginning of this year Azerbaijan starts to supply Gazprom with 1 billion cubic metres of gas per year from the Shah Deniz II field in the Caspian Sea, promising to increase this amount in future. Potentially, this could be a severe blow for Nabucco.
The EU made an attempt to diversify Nabucco’s gas supply by signing an agreement in January to develop gas reserves in Iraq. The agreement sets out cooperation in principle to develop natural gas, but does not include any details about specific investments or developments. Iraq has considerable reserves of natural gas but only a fraction of them have been developed. In the case of a substantial expansion of gas production in Iraq, Europe would gain an important alternative source of gas for the Nabucco pipeline.
The other important player in this geopolitical game is Turkey. So far, Azerbaijan has failed to reach an agreement with Turkey over transit fees and conditions were Turkey to become a transit country for Azeri’s gas supplied to the Nabucco pipeline. Russia, in turn, has succeeded in strengthening its ties with Ankara, including energy cooperation. Putin’s visit to Ankara in January was very successful, delivering a flurry of promises on energy cooperation between Russia and Turkey, signalling that the countries are getting closer through their partnership. It has been announced that Moscow will soon gain formal consent to build a section of the South Stream gas pipeline on Turkish territory.
Ankara has always cautiously backed both Nabucco as well as South Stream, now it appears that Turkey has decided to cooperate with Russia more closely. Some experts have even suggested that Turkey could join Italy and Germany as Russia’s “strategic partner”. Italy’s ENI is co-funding the South Stream project, and late last year Germany gave its final approval for Nord Stream, sparking discontent on the part of its East European neighbours.
European Security
At the end of January 2010, the United States agreed to station Patriot missiles in Poland only 100 kilometres from Russian soil, in order to bolster Polish air defences. Surprisingly, this move has elicited an uncharacteristically indifferent reaction from Russia. Previously the had been reminiscent of the fiasco surrounding the proposed U.S. missile defence system in Poland and the Czech Republic, when Russia said it would install Iskander ballistic missiles in Kaliningrad in response. Washington then tried to calm a nervous Poland by offering to deploy Patriots close to Warsaw to offset this second threat. However, this time the plans to deploy the missiles did not stimulate aggressive rhetoric from Moscow. It appears that Russia is trying to follow the course of “resetting” relations with the US, and thus “forgiving” its East European neighbours some of their military gestures. At least there were no more threats to deploy Iskanders. The Foreign Ministry’s response has been surprisingly muted. Speaking at a press conference to review the results of foreign policy in 2009, Russian Minister, Sergey Lavrov said: “incidentally, I haven’t heard all the information on it yet, but if what I’ve heard is correct, then it raises the simple question: why is it necessary to do something that creates the impression that Poland is strengthening itself against Russia? That, I don’t understand.” Evidently, Russia doesn’t want things to escalate as a result of this issue.
However, there is still lack of progress in the development new system of European Security, proposed by President Dmitry Medvedev last year.
Visa Regime
The beginning of the Spanish presidency in the EU was marked by statements which were welcomed by Russia’s mass-media as a hint that a visa-free regime could be introduced for EU and Russian travellers. Politicians had to calm these expectations by clarifying that this was not likely to happen in the near future. But a roadmap was announced for the introduction of visa-free travel. While Sergey Lavrov expressed hope that the roadmap, which will include a timeline for the introduction of the new travel regulations, would be developed in the course of the Spanish presidency of the EU Council, his Spanish counterpart, Miguel Ángel Moratinos Cuyaubé, stated: “We have to continue to create conditions for the future introduction of a visa-free regime. The terms and timelines will be subject for discussions with EU member countries, as well as with the Russian side”.
Both sides publicly support the idea of visa-free travel, but so far the process of negotiations has become bogged down in technical details, such as the rules of extradition, issuing multiple visas for Europeans and the rules of temporary registration for travellers in Russia. Many Russian bureaucrats are not very keen on the idea of opening the country up to foreigners. Thus, the prospects of visa-free travel are gloomier than might appear from the politicians’ public statements.
The Moscow Times: RZD to Move Estonian Oil by Year-End, Yakunin Says
04 February 2010
Reuters
TALLINN, Estonia — Russian Railways head Vladimir Yakunin hopes to move oil-product shipments from neighboring Estonia to Russian ports by the end of 2010, Estonian daily Eesti Paevaleht reported Wednesday.
Diplomatic spats between the two countries play a significant role in deliveries to Baltic ports, he said. Estonia and Russia in 2007 fell out after Estonia moved a Red Army World War II monument from the center of its capital city.
"We hope that by the end of 2010 the export of petroleum products will go through Ust-Luga [in Russia]," Russian Railways chief executive Vladimir Yakunin told the newspaper, adding that there was also close cooperation with the port of Murmansk.
"It is difficult to answer unequivocally as I am not an oil trader, but as a railway man I think, yes, this will bring significant reductions in oil transit to Estonia," he said, though noting that this would be up to the oil trading companies.
Estonia's ice-free port of Muuga shipped 23 million metric tons of Russian oil products in 2009 and has been an important outlet for Russian refineries.
After the 2007 dispute, oil product loadings slipped to 20 million metric tons in 2008 from highs of 26 million metric tons in 2005.
Coal loading was halted and redirected from Tallinn to the neighboring Riga port in Latvia.
"If access to the sea through ports is based on good neighborly relations, then it is good for all, but if these relations worsen, then, of course, countries that depend on the transit of its goods through another country feel discomfort and may be pushed to create their own opportunities," he added.
Russia has also said Estonia discriminates against its large population of ethnic Russians, and talks about a formal border agreement, almost 20 years after the fall of the Soviet Union, remain stalled.
RBC: Russian Railways secures RUB 50bn in subsidies
RBC, 04.02.2010, Moscow 11:26:52.The decision on the allocation of RUB 50bn (approx. USD 1.67bn) as subsidies to Russian Railways has been finalized, the company's President Vladimir Yakunin told journalists during a meeting with Russian Prime Minister Vladimir Putin on Wednesday. He explained that the matter had been discussed at a meeting with First Deputy Prime Minister Igor Shuvalov, who commissioned the allocation of this sum to the company.
As reported earlier, the money is being extended to Russian Railways to compensate for lower tariffs on cargo transportation.
DefenseNews: Norway: Costs To Cool Russian Air Force Activities
By GERARD O'DWYER
Published: 3 Feb 2010 18:18
HELSINKI - The Russian Air Force's activities in northern Europe are being influenced by budget cuts affecting jet fuel supplies and the reorganization of Air Force and Navy unit structures on the heavily militarized Kola Peninsula, according to reports from Etterretningstjenesten, Norway's National Intelligence Service (NIS).
The intelligence data in the reports, which is compiled by the NIS' Arctic-based monitoring stations, suggests a potential fall-off in training and joint naval and air exercises by Russia's military in the country's northern territories in 2010, including the North Atlantic and Barents Sea.
Although Russian military spending is being cut as part of anti-recessionary countermeasures, the savings now sought are not expected to affect weapon purchases, according to the NIS.
The NIS reported that the cutbacks have affected raw material supplies to bases in the Murmansk region, with air units being requested to limit flights in training and exercise programs.
Norwegian F-16 fighter jets scrambled 39 times in 2009 in response to Russian Air Force activities close to Norwegian airspace. NIS monitoring stations registered a total of 77 Russian Air Force aircraft, mainly strategic bombers.
An additional 40 aircraft were registered but not identified by Norwegian fighters, raising the total number of westbound Russian military flights to 120 in 2009. The most common identified bombers included Tu-95 Bear and Tu-160 Blackjack aircraft operating from the Engels air base in Saratov, south of Moscow.
The most recent scrambling took place Jan. 19, when six NATO combat planes shadowed two Tu-95 bombers, operating from Engels, which flew close to Norwegian airspace en route to the Barents Sea. The shadowing NATO aircraft included four Norwegian Air Force F-16s and two British Royal Air Force Tornado aircraft.
Eurasianet: Georgia: Russian Nationalist Group Wants Georgian Foreign Minister Prosecuted
2/03/10
Prosecutors in Russia are investigating allegations that Georgian Foreign Minister Grigol Vashadze, who holds Georgian and Russian citizenship, fomented racial, religious and ethnic hatred following the 2008 Georgian-Russian war.
The complaint against the Georgian diplomat was filed by the Union of Eurasian Youth, an ultra-nationalist youth group led by Alexander Dugin, a far-right ideologue who reportedly enjoys good connections with the Kremlin, the Rusbalt news agency reported on February 3. The group claims that Vashadze repeatedly violated Russian law on hate-speech, but details have not been published.
Tbilisi, which severed diplomatic relations with Moscow after the 2008 Georgian-Russian war, expressed bewilderment over the accusations. Georgian officials insist that Vashadze had always been tactful in his references to Russia, the GHN news agency reported. Vashadze mailed his Russian passport to Russian Prime Minister Vladimir Putin in November 2009, but reportedly still remains a Russian national.
Politicom.moldova: Moldovan NGO: Ukraine-Russia spy scandal bad sign for Transnistria
February 04, 2010
A Moldovan NGO says a spy row between Ukraine and Russia shows that Moscow's peacekeepers in Moldova's separatist Transdniester region "have other duties" than keeping the peace, RFE/RL's Moldovan Service reports.
Ukraine's intelligence service said on February 2 that some of the five Russians arrested in the Odesa region last week on espionage charges were Russian officers who are stationed in Transdniester.
Ion Manole, chairman of the Association for Human Rights Promo-LEX, said in Chisinau today that the espionage controversy should be one more reason for Moldova to demand the quick withdrawal of Russian troops from Transdniester.
Transdniester is Moldova's easternmost region and is dominated by Russian speakers. It declared independence during the collapse of the Soviet Union in 1990 and fought a short war against the army of the pro-Romanian government in Chisinau two years later.
The cease-fire that ended the fighting has been monitored by several hundred Russian troops and local Transdniestrian forces on one side and Moldovan soldiers on the other.
Moldovan officials have requested several times that all Russian forces leave Transdniester and take their large weapon stockpiles with them.
Moscow committed itself in the OSCE 1999 summit declaration to withdraw all of its troops by the end of 2002. There are still some 350 Russian troops in Transdniester.
Radio Free Europe/Radio Liberty (RFE/RL)
: Medvedev may attend Vancouver Winter Olympics
Published: 11:35 a.m., Wednesday, February 3, 2010
MOSCOW (AP) — Russian news agencies have reported that President Dmitry Medvedev may attend part of the Vancouver Olympics.
The ITAR-Tass and RIA Novosti agencies said Medvedev dropped hints during a meeting Wednesday with sports and Russian Olympic Committee officials that he may visit Canada.
Olympic Committee president Leonid Tyagachev invited Medvedev to attend the Russian women's snowboard finals, and Medvedev said "it would be great to watch the ice hockey finals as well."
Some of the Vancouver venues are troubled by a lack of snow and Medvedev said "we can deliver some from Sochi," the Russian city that hosts the next edition of the Winter Games in 2014.
The Globe and Mail: Good night, Vancouver; good morning, Moscow
SUSAN KRASHINSKY
From Thursday's Globe and Mail Published on Thursday, Feb. 04, 2010 12:00AM EST Last updated on Thursday, Feb. 04, 2010 3:04AM EST
MEDIA REPORTER
Vancouver's radio dial is about to get a bit more bolshoy.
As the athletes, media and throngs of tourists gather, a small contingent of Russians armed with microphones and headsets will soon invade the Vancouver airspace. Astral Media Inc. has sold airtime on one of its Vancouver radio stations to Russian media group ProfMedia for the Olympic Games[pic]. Every evening, oldies station CISL-650 will become Autoradio, a Russian-language station with simultaneous broadcasts in Vancouver and more than 300 cities in Russia.
Even though the programming will go live at 8 p.m. each night, it begins with a morning show - a bit of a disconnect for Vancouver listeners, but perfect for those just waking up in Russia, who will hear the broadcast over Autoradio's regular over-the-air signals. The stations will pick up the Canadian broadcast through a high-level VoIP (voice over Internet protocol) system.
"They approached us," said Astral Media Radio vice-president Brad Phillips, who just returned from Moscow where he met with ProfMedia executives and finalized the details of the deal. "We started discussions in November ... It started to sink in that this would be a way for our station to participate in everything that's going on in this town in February ... and would be a cool thing to do."
The only problem facing the deal is that the federal broadcast regulator limits the amount of third-language programming radio stations are allowed to put on the air during peak hours. To get around the licence restrictions, the station will air the bulk of the Russian programming between midnight and 6 a.m.
Earlier in the evenings, between two and four hours will be hosted by Autoradio's Russian-speaking personalities.
To meet content rules, Canadian music will also be broadcast during the Russian airtime, meaning listeners in Moscow, St. Petersburg and across the country will soon rock out to the likes of Avril Lavigne and Bryan Adams.
"It's a unique opportunity for us to do what we think the Olympics[pic] is supposed to be about, which is an exchange of culture," Mr. Phillips said. "This is an innovative way to bring a little bit of Russia to Vancouver and bring a bit of Canada back to Russia."
The last time most people might recall the Russians taking over Canadian airwaves was the classic episode of sketch comedy show SCTV where Soviet station CCCP-1 steals the fictional television station's signal. The Canadian show used the plotline to poke fun at Cold War paranoia. Luckily, episodes of Tibor's Tractor and Hey Giorgy! will be absent from this real-life Russian-Canadian broadcast.
There are about 48,000 people who claim Russian origins living in Vancouver, according to the 2006 Census. With an added population of visitors, athletes and delegates, Astral estimates its Russian programming will serve about 60,000 people in Vancouver - and millions more in Russia.
Because Astral is not part of the CTV-Rogers consortium that has the Canadian broadcast rights for the Olympics, Autoradio will not air live events coverage; programming will include music, and interviews with athletes, Olympic Committee members, locals, and international guests.
Although the consortium will cover the events in 22 languages - including Mandarin, Cree and Ukrainian - it has not announced plans to broadcast in Russian on any of its stations.
For their part, Rogers Media and Corus Québec - the official radio partners of the consortium - will be offering coverage of the opening and closing ceremonies, live hockey coverage and updates about the Games.
"There's an energy that's building in the city," Astral's Mr. Phillips said. "We're just proud to be doing our part."
The transformation of AM 650 All-Time Favourites will last 19 days, starting next Wednesday and ending with the closing ceremonies on Feb. 28. The Canadian Radio-television and Telecommunications Commission approved Astral's application last week. Autoradio will be paying for the airtime, but Astral would not disclose the financial terms.
"This isn't something we would do as a regular part of our station," Mr. Phillips said. "But this is a once-in-a-lifetime opportunity for the country and the city, and our station ... it's a great thing."
People’s Daily: Rogge: No worry on preparations of 2014 Sochi Olympics
20:51, February 03, 2010
Chief of the International Olympic Committee (IOC) Jacques Rogge told Russian media on Wednesday that he had no worry on the preparations of the 2014 Sochi Winter Olympics.
"There is nothing to worry about. The construction is on schedule, but we are constantly telling the organizers: 'do not waste time!'" said Rogge as cited by Russian newspaper daily Vedomosti.
Rogge also paid tribute to the result that the organizing committee of the Sochi Winter Olympics has so far signed sponsorship contracts with a total worth exceeding one billion U.S. dollars.
"Process (of attracting sponsors) is not stopped, it will continue, but this is very, very good result," he said.
The IOC president also envisioned a great potential for the Russian Black Sea resort of Sochi to develop winter sports.
"Sochi is a unique location: you can be on the beach and see snow-capped peaks, while passing 30 km, you can practice winter sports," he said.
Sochi won the rights to hold the 2014 Winter Olympics in July, 2007, the first ever for Russia.
Source: Xinhua
Itar-Tass: Putin, Sidorsky discuss cooperation in energy, construction, chemical industries
03.02.2010, 22.37
MOSCOW, February 3 (Itar-Tass) -- The Russian and Belarusian prime ministers, Vladimir Putin and Sergei Sidorsky, had a telephone conversation on Wednesday to discuss the most pressing issues of economic cooperation between the two countries, Press Secretary of the Russian Prime Minister Dmitry Peskov told reporters.
“During the telephone conversation, Putin and Sidorsky focused on bilateral cooperation in the energy and construction sectors, as well as in the chemical industry,” the press secretary added.
RIA: Kazakh parliament ratifies deal on post-Soviet rapid reaction force
09:2104/02/2010
Kazakhstan's parliament ratified an agreement on Thursday on establishing a post-Soviet security group's rapid reaction force.
The creation of a powerful military contingent in former Soviet Central Asia by members of the Russian-dominated Collective Security Treaty Organization (CSTO) is seen as Moscow's bid to counterbalance NATO. But its formation has run into problems caused by the regional rivalries of some members.
Speaking at a plenary session, the Central Asian state's defense minister, Bolat Sembinov, said the rapid reaction force is designed "to improve the security of the CSTO members against the backdrop of existing and potential threats," including terrorism, extremism, drug trafficking, natural disasters and to enhance the organization's role in ensuring international security.
The CSTO comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Uzbekistan and Tajikistan. Observer status is enjoyed by Iran, India, Mongolia and Pakistan.
Five of the seven members signed the agreement in February 2009. Belarus, which initially refrained from signing the deal because of a trade dispute with Russia, joined it later last year.
Uzbekistan has so far refused to join the force, saying it opposes stronger Russia's role in Central Asia. Uzbekistan is also at odds with regional neighbor Kyrgyzstan, which hosts a Russian airbase.
The Collective Rapid Reaction Force held two-week military exercises in southern Kazakhstan in October 2009, with more than 7,000 personnel from Armenia, Kazakhstan, Kyrgyzstan, Russia and Tajikistan taking part.
Russia's security strategy until 2020, recently approved by President Dmitry Medvedev, envisions the CSTO as "a key mechanism to counter regional military challenges and threats."
ASTANA, February 4 (RIA Novosti)
Itar-Tass: Sergei Darkin enters third term of governorship Thurs
04.02.2010, 09.53
VLADIVOSTOK, February 4 (Itar-Tass) - A ceremony marking Sergei Darkin's entering a third term of governorship in Russia's Primorsky (maritime) Territory was held here on Thursday. His second term expired today. His nomination as Governor for a third term had been confirmed by the members of the Territorial Legislative Assembly on January 11.
In accordance with the Charter of the Primorsky Territory, Darkin took an oath of office and will govern the Territory in the next five years.
Among the guests of honour present at the ceremony were Viktor Ishayev, presidential plenipotentiary representative in the Far Eastern Federal District, Vyacheslav Fetisov, Member of the Federation Council upper house of the Russian parliament, Elmira Glubokovskaya, Member of the State Duma lower house of parliament, and His Eminence Sergiy, a representative of the Moscow Patriarchate.
Sergei Darkin was born in the town of Bolshoi Kamen, Maritime Territory, on December 9, 1963. In 1985 he graduated from the Far Eastern Higher Nautical Engineering School named after Admiral Nevelskoy, and then worked there as a teacher. In the1990s he did business, heading a number of industrial enterprises in the Far East. In1999 he graduated from the Far Eastern State Academy of Economics and Business. After completing a post-graduate course, he worked at the Vladivostok merchant seaport as stevedore and a shift superintendent if the first cargo handling district.
In 2001 Darkin was elected Governor of the Primorsky Territory for the first term. He polled slightly more than 40 percent of the vote. In February 2005, Darkin became the first regional governor confirmed in his capacity in accordance with a new procedure. At that time, 35 out of 36 members of the Territorial Legislative Assembly voted for his confirmation.
The residents of the Territory remember the second term of Darkin’s governorship for the start of the implementation of large-scale projects. Thus, preparations began in Vladivostok for a 2012 summit of the Asia-Pacific Economic Cooperation forum. The city began to build a Far Eastern Federal University on the Russkiy (Russian) Island, new roads and two gigantic bridges. A new port, Kozmino, was built near Nakhodka to become the end point of the Eastern Siberia--Pacific Ocean oil pipeline transportation system, and a car assembly plant, the first one in the Far East, emerged in the Territorial center. The immediate plans are to build oil and gas industry enterprises and install a gas supply service in the region.
The Moscow Times: Putin Friend in Football Job
04 February 2010
Sergei Fursenko, a brother of the education and science minister and an old friend of Prime Minister Vladimir Putin, has been elected president of the Russian Football Union.
Fursenko, a former head of a division of Gazprom, overwhelmingly won a vote by the Russian Football Union at a Wednesday meeting.
His only opponent was businessman Alisher Aminov.
Fursenko, 55, replaces Vitaly Mutko, who resigned in November after four years in the position.
Fursenko, a former president of the Zenit St. Petersburg football team, promised Russia will win the World Cup in 2018.
Russia Today: New Russian football boss says Hiddink will stay until contract expires
03 February, 2010, 18:25
Sergey Fursenko, who was elected as the new head of the Russian Football Union (RFU) on Wednesday, says urging Guus Hiddink to stay on as Russia’s coach will be his primary task.
Hiddink's current contract ends after this summer’s World Cup, which Russia failed to qualify for, but he has been offered a new deal to lead the country to the 2012 European championships.
The 63-year-old Dutchman is considering the offer and will meet with the newly-elected president later this week.
“In any case, we don’t need to make any harsh decisions. The Dutchman currently has a contract with the Russian Football Union. I think that he should carry on with his duties until its end. During the period before the expiration of the agreement, the president and the RFU executive committee will decide his fate,” Sportbox.ru cited Fursenko.
Fursenko has said he will meet Hiddink on Thursday. In the meantime, the Dutch specialist has been linked with a number of new national coaching jobs – China and Turkey being the latest.
Turkish media are claiming Hiddink will take over their team on Friday, just in time for the Euro 2012 qualifying draw on February 7 in Warsaw.
In his speech before the RFU congress delegates, Fursenko also promised that under him Russia will win the 2018 Word Cup.
“I really believe that the goal set by me in the election program is achievable. At the same time, it should give impetus to the development of football in the country, increasing the number of talented young players and the replenishment of the coaching department with qualified personnel,” the new RFU president explained.
Fursenko, who is from St. Petersburg, is 55 years old. He was the president of Zenit from 2005–2008, and occupied a top-level position in Gazprom in previous years.
RIA: Russia plans massive Victory Day display of military might
11:0204/02/2010
MOSCOW, February 4 (RIA Novosti) - Russia will mark the 65th anniversary of victory over Nazi Germany with its biggest ever post-Soviet demonstration of military hardware, a respected daily said on Thursday.
On May 9, 165 combat aircraft will fly over Red Square, with some of them grouping to form the number 65, Kommersant said, referring to a Defense Ministry official. Preparations for the event have already started.
The aircraft will include Tu-95MS Bear strategic bombers and supersonic Tu-160 Blackjacks, Tu-22M3 Backfire long-range bombers and Il-78 Midas aerial tankers from airbases from across Russia, the paper said, citing Col. Alexei Kuznetsov, head of the ministry's press service.
Kuznetsov also said there would be more ground-based military hardware in the parade this year than at previous events.
Col. Oleg Storozhuk, a military pilot who holds the title of Hero of Russia, confirmed the figures, saying the aircraft would also include new Su-34 Fullback fighters, which are still to enter service, as well as helicopters, the paper reported.
This year will see "the most spectacular and captivating air show," the pilot told the paper.
Parades to mark victory in WWII, referred to as the Great Patriotic War in ex-Soviet states, are accompanied by a large military orchestra and comprise a personnel march pass, followed by sophisticated hardware, and a fly over by combat aircraft.
The revived tradition of massive military Victory Day parades with tanks and other hardware rolling through the center of Moscow has been seen by some in the West as a sign of Russia's growing militarism.
Moscow has resisted attempts to challenge the Soviet Union's role in World War II, which claimed the lives of 27 million Soviet nationals, according to official figures. Ex-Soviet republics and satellite states, including Ukraine, the Baltic countries and Poland, have seen Stalin's Russia as an aggressor.
24.kg: CIS to take Victory lessons by May 9
03/02-2010 13:49, Bishkek – News Agency “24.kg”, By Eliza BOTALIEVA
The Commonwealth of Independent States plans to conduct Victory lessons all over its territory by May 9, Vladimir Posokhin, Temporary Chargé d'affaires of Russia to Kyrgyzstan told the press conference at the news agency 24.kg Wednesday.
The initiative was voiced by Kurmanbek Bakiev the President of Kyrgyzstan during a visit of Igor Shuvalov, First Deputy Prime Minister of Russia to Kyrgyzstan. “Russia supported the suggestion which will contribute to strengthening of ties between generations. Youth should commemorate forefathers who gave them not only birth but freedom. Nobody doubts success of the campaign,” Posokhin said.
At least 10 best movies about the Great Patriotic War and war time will run for free at cinemas before and after the 65th anniversary of Victory.
Itar-Tass: Tatarstan’s parliament to consider candidate for presidency
04.02.2010, 04.44
KAZAN, February 4 (Itar-Tass) - Parliament of the Republic of Tatarstan on Thursday will consider candidacy of Rustam Minnikhanov to the presidential seat in the republic.
Minnikhanov’s candidacy to this post was nominated by President Dmitry Medvedev on January 27.
In his candidacy is approved, Minnikhanov will replace Mintimer Shaymiyev, 73, who has been ruling the region for 21 years.
On January 22, the republic’s incumbent president Mintimer Shaymiyev addressed Medvedev with a request not to extend his powers.
“I will in any form support the republic’s new president and the traditions he supports to strengthen the republic,” he said adding that “it is important to value constructive processes in the economic and social sector as well as interconfessional peace in the republic.”
Local politicians describe the era of Shaymiyev’s rule as “the time of consecutive development.” Over these years Tatarstan turned into one of Russia’s economic leaders. Large oil company Tatneft, truck maker Kamaz and the flagship of the petrochemical industry Nizhnekamskneftekhim export its goods to many countries.
The republic is building Russia’s biggest petrochemical complex that will refine 14 million tonnes of local high-sulphur oil. Tatarstan was the first in the country to create special economic zone Alabuga, where nine resident companies launch their newest production facilities.
Despite severe weather conditions Tatarstan ranks Russia’s second in the agricultural production after the Krasnodar territory. Tatarstan can boast a strong research and intellectual potential. Kazan, the republic’s capital, turned into the country’s sports centre and will host the Universiade in 2013.
The candidate to the republic’s presidency, Rustam Minnikhanov, “is faithful student of Shaymiyev’s human resource school” and can pursue his constructive policy, parliamentarians said.
Minnikhanov was born on March 1, 1957. He graduated from the Kazan Agricultural Institute and began his career as an engineer. From 1996 to 1998 he served as Finance Minister of the republic. Since 1998 he has been Tatarstan’s Prime Minister. Minnikhanov holds the Doctor of Economics degree.
|February 3, 2010 | |
|14:00 | |
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Kremlin: GORKI, MOSCOW REGION.Dmitry Medvedev had a meeting with Governor of Chelyabinsk Region Pyotr Sumin to discuss the region's social and economic situation.
The conversation took place via videoconference.
The subjects of discussion included the employment situation, measures to reduce wage arrears, and the investment climate in the region.
The Governor briefed Mr Medvedev on the operation of the recently opened Presidential Reception Office in Chelyabinsk, to which local people can come with their requests and complaints. The President suggested that in cases where the issues raised by citizens lie outside the regional authorities' powers, the matters in question can be referred to the Presidential Central Reception Office in Moscow.
During the videoconference, Mr Medvedev read on the screen Mr Sumin’s appeal regarding cleanup efforts following the 1957 accident at the Mayak nuclear facility, which caused radioactive contamination of a large area of land, resulting in problems that have still not been entirely resolved to this day. Upon learning that a draft law on social provisions for those affected by the accident has already been prepared but not yet examined by the Government or submitted to the State Duma, President Medvedev said he will instruct the Government to get the process moving.
The Mayak production enterprise is part of ROSATOM State Atomic Energy Corporation with priority operations in supplies under defence industry orders, regenerating irradiated nuclear reactor fuel, and manufacturing radioactive isotopes.
|February 3, 2010, | |
|Gorki, Moscow Region | |
Kremlin: Opening Remarks at Meeting on Reforming the Interior Ministry
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PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Colleagues, we are here to discuss one of today’s biggest tasks – how to improve the Interior Ministry.
On December 24, 2009 I signed the Executive Order On Improving the Interior Ministry’s Work. This order outlines a whole number of procedures now under discussion. The Minister has presented his proposals and I have given the instruction to study them. This does not mean that we will make all the necessary decisions today, but these are matters that we need to discuss in order to develop the model we will use to modernise the ministry’s operation.
These proposals are based on the Executive Order I signed and concern the status of Interior Ministry officers, the ministry’s powers and the distribution of these powers and those of other agencies, the ministry’s procedural authority, the system of financial incentives for ministry staff, and also questions of liability and responsibility, as well as organisational issues, in other words, practically every aspect of the ministry’s operation. This is a serious undertaking.
As I said, we are not here to make the final decisions today, but I want to hear at this meeting, an internal meeting for now, a report on which of the proposals presented by the ministry and the minister can be used, and which require further elaboration.
I am therefore expecting a serious discussion of all of these different issues. I make a point of saying this publicly, because the ministry’s work has come in for a lot of public scrutiny of late. Voices have been raised in all manner of calls and appeals, some of which are nonsense, but there is no doubt in anyone’s mind that the ministry’s operation is in need of serious reform, and this is precisely the aim of the proposals made by the minister and other colleagues, who all have an interest in participating in the discussions on these matters. So, let’s begin work.
I also want to bring to your attention one issue that I think is particularly topical just now, although it is perhaps more of a private matter. This is the use of less-lethal weapons. Less-lethal weapons have been involved in a number of recent crimes.
Sale of these weapons is not subject to any real control in our country: all that is done is to simply record the purchaser’s passport details. What the weapon is then used for, where it is used, and with what consequences, is anyone’s guess. These weapons are sold to anyone and everyone: people with criminal records or who have already faced criminal charges in the past, people with mental problems. Even the rules enforced in the 1990s for gas pistols, which, by the way, are a lot less dangerous than many of the weapons classified as less-lethal today, are no longer being applied.
I therefore instruct the ministry to draw up rules on the sale and circulation of less-lethal weapons. If required, make the necessary amendments to the laws on arms sale and possession in order to bring the acquisition and subsequent use of these weapons under stricter regulation. Other kinds of weapons come under special regulations in our country, but our laws provide only minimum regulation for this category of potentially harmful weapons, which in practice often do cause injury or death. We need to put this situation in order.
Draft your proposals and report back to me within 10 days.
INTERIOR MINISTER RASHID NURGALIYEV: Yes.
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Reuters: Russia says killed top local al Qaeda militant
Thu Feb 4, 2010 3:12am IST
MOSCOW (Reuters) - Russia said on Wednesday its forces had killed an Egyptian militant in Dagestan who had set up a faction of al Qaeda in the volatile southern region.
"One of the founders of the al Qaeda network in the North Caucasus... and a gunman accompanying him were eliminated as they put up an armed resistance," state TV channel Vesti-24 showed Vyacheslav Shanshin, head of the local FSB, as saying.
State-run RIA news agency, quoting the FSB, the successor to the KGB, said 49-year-old Makhmoud Mokhammed Shaaban had been aided by Georgia, a charge Tbilisi swiftly denied.
Factions of the FSB have repeatedly linked the Islamist insurgency raging along Russia's turbulent, Muslim-dominated southern flank to al Qaeda, and have accused neighbouring Georgia of aiding the militants.
Media identified Shaaban as an Egyptian native who was nicknamed Seif Islam, or Sword of Islam. RIA said he had been active in Sudan, Afghanistan, Libya and Georgia.
Quoting the FSB, RIA said Shaaban had masterminded acts of sabotage to blow up railway tracks, electricity lines and energy pipelines at the instructions of Georgian secret services. Georgia's Ministry of Internal Affairs denied the allegations.
Vesti-24 television showed footage of Shaaban sporting a thick black beard and green camouflage alongside other, heavily armed rebels in Chechnya and Dagestan.
Unofficial Islamist website said Seif Islam had been "participating in the jihad in Chechnya and the Caucasus for more than 15 years".
Political analysts say the Kremlin is losing control over the North Caucasus as violence escalates, mainly in Chechnya, site of two separatist wars since the mid-1990s, and nearby Ingushetia and Dagestan.
In its latest attempt to tighten its grip over the turbulent region, last month the Kremlin appointed outsider and businessman Alexander Khloponin to oversee it.
Relations between Moscow and Tbilisi remain fraught after their brief August 2008 war.
03 February 2010, 14:54
Interfax: Police detain Karachayevo-Cherkessia Muslim leader murder suspect in Moscow
Moscow, February 3, Interfax - Moscow law enforcement officers have detained a militant from Cherkessk, a source in law enforcement authorities told Interfax on Wednesday.
The suspect is involved in the murder of the deputy chairman of the Spiritual Authority of Muslims of Karachayevo-Cherkessia on September 20, 2009, the source said.
No formal confirmation of this information has been made available to Interfax.
RIA: Six killed in bus-truck collision in S.Russia
05:4004/02/2010
Six people were killed when a bus crashed into truck in Russia's North Caucasus Republic of Dagestan early on Thursday, regional emergencies officials said.
A Moscow-bound Ikarus coach collided with a Kamaz truck at about 3:00 Moscow time [00:00 GMT].
"Three people died immediately, three more on their way to hospital," a spokesman for the Southern Russian emergencies center said, adding that 15 people were injured.
A source in the republic's emergencies service confirmed the death toll, but said nine people were injured.
ROSTOV-ON-DON, February 4 (RIA Novosti)
Itar-Tass: Six killed in Dagestan road accident, nine hospitalized
04.02.2010, 05.35
ROSTOV-ON-DON, February 4 (Itar-Tass) - Six people were killed and another nine were hospitalized as a result of a road accident near the village of Kochubei in Dagestan, the southern regional department of the Russian Emergencies Ministry told Itar-Tass on Thursday.
The accident took place at 03:00 Moscow time at the federal highway Kavkaz, where a passenger bus and a Kamaz truck collided.
The bus went en route Makhachkala-Moscow.
According to preliminary information, a Kamaz driver crossed into the oncoming lane. Three people, including two drivers, died at the site of the accident, another three passengers died in the hospital.
The circumstances of the accident are being investigated.
Itar-Tass: Medvedev hopes to reduce “exorbitantly high” corruption in N Caucasus
03.02.2010, 22.02
MOSCOW, February 3 (Itar-Tass) -- Russian President Dmitry Medvedev hopes that the “exorbitantly high” level of corruption in the North Caucasus will be reduced already this year.
“The majority of problems in the region are rooted in a weak economy and the absence of prospects for the people who live there,” he said.
Medvedev recalled that the new North Caucasian Federal District had been created pursuant to this Address to the Federal Assembly, and “the newly appointed presidential representative [Alexander Khloponin] will get broad powers, the broadest powers, concentrating in his hands the position of vice-prime minister as well”.
“I do hope that this will also help reduce the level of corruption, which is exorbitantly high, already this year,” the president said. “The situation is quite bad in the country as it is, but it’s exorbitant over there, and we must bring order to the work of regional and local authorities.”
Medvedev stressed the need to “exercise strict control over the proper use of budget funds”. “Huge sums are disbursed, but you know what their effectiveness is,” he said. “I, too, will make decisions regarding governors and power-wielding bodies,” the head of state vowed.
Itar-Tass: Govt to consider creation of commission for IT in govt agencies
03.02.2010, 21.46
MOSCOW, February 3 (Itar-Tass) --The Russian Government will consider the question of creating a government commission for the introduction of information technologies in federal, regional and local executive bodies, according to the documents prepared for the meeting.
It has been proposed that the new commission should coordinate the work of federal and regional executive bodies in respect of the following: determining a unified policy of developing and using information technologies in public governance, industries and the social sphere; devising and implementing measures aimed at expanding the use of information technologies in order to improve the quality and availability of public and municipal services rendered to organisations and the population; making the use of information technologies in the work of government agencies more effective; improving the effectiveness of inter-agency interaction and internal organisation of government bodies through the use of information and telecommunication technologies.
The resolution was drafted in order to optimise the federal government’ s coordination in the creation, use and development of information technologies in federal, regional and municipal governance, and development of e-government.
Pursuant to Russia’s information society and e-government concepts up to 2010, the development and use of information technologies have been declared priority tasks for the government.
Currently, all issues pertaining to the use of information technologies in the work of government bodies in Russia are solved only at the federal level by several governmental inter-agency bodies, including the government Commission for Federal Communications and Information Technologies, the Council of Chief Designers for the Use of Information and Communication Technologies in the Work of Federal Executive Bodies, and the government Commission on Administrative Reform. The president has also ordered the creation of the Council for Regional Informatisation.
The abovementioned coordination bodies regulate the use of information technologies, and their competences frequently coincide. As a result, their decisions are often uncoordinated or duplicate each other. This causes delays in the implementation of instructions and creates uncertainty in determining the persons responsible for their implementation. In addition, the current situation leads to duplication of work at federal executive bodies and consequently to ineffective use of available resources.
Information technologies are one of the key priorities for the development of Russia, President Dmitry Medvedev said earlier and suggested giving special attention to the use of information technologies in public administration.
"This work is proceeding in accordance with the e-Government concept adopted in May of last year, and a plan of transition to electronic public services approved by the government in October. In accordance with the information society strategy, we must convert all public services into electronic form by 2015. I repeat, all, not some of them," Medvedev said.
According to the president, the number of services rendered by federal, regional and municipal authorities exceeds 1,500, but "people continue to stand in lines for documents and approvals, and have to visit government offices several times with the same issue and often can't get information about the services or where they can receive them".
"The time during which services are rendered is a separate big problem," he said and cited the registration of ownership rights and financial aid as an example. He said these procedures took more than a month.
"And it takes years to obtain a construction permit. Experts say that about a million people have to resort to the services of go-between every year in order to register their cars," the president said.
"Obviously, a transition to electronic services will resolve many of these problems. And some progress has already been made. But no radical changes have occurred yet. The unified portal of public services has been launched in December. But it is working as a reference site at this point, which is not bad, but not enough. Much has yet to be done before citizens can use the portal to order and receive various certificates, pay state duties and levies and before it can start working at full capacity," Medvedev said.
The e-Government portal started providing 74 priority electronic public services on December 15, 2009.
Russia Today: Russia to protect children from Internet risks
03 February, 2010, 19:13
This week has been declared as “Safer Internet Week” by Russia, coinciding with the global “Safer Internet Day” which falls on February 9.
Initially a puzzling entity in the early 1990s, the Internet has changed unrecognizably over the past decade. While it has brought revolutionary ways of interaction, it has also created a whole new set of risks – especially for children.
The aim of the Safer Internet Week events is to promote a safer and more responsible use of online technology by today’s youth by educating children on the risks of child pornography, dangers of drug use, which is often promoted online, and threats of sites promoting violence.
Another risk factor is social networking, represented by such websites as Facebook, Myspace, and Russia’s Vkontakte.ru.
“Anyone can publish anything – that, I would say, is one of the biggest risks,” Janice Richardson, InSafe network and European Schoolnet coordinator, told RT. “Young people don’t understand which data has real value and which does not.”
“One more major risk is self-disclosure. Young people tend to say too much, to do too much, to give away too much information,” she added.
Nowadays the Internet is obviously a very important part in every schoolchild’s daily routine.
“I use the Internet every day to check my e-mail and my Vkontakte account,” said Marina, a student. “I spend about three hours a day on the Internet at weekends, and about an hour on schooldays.”
Government statistics show that about 50% of children spend on the Internet up to three hours a day, and 9 out of 10 have access to online technology.
For most of this time, parents are unable to monitor the sites their children visit or what sort of things they download or upload.
What is more, Russian legislation does not help to make the Internet safer for children to use.
“The law should be improved,” said Vladimir Ovchinsky, Constitutional Court advisor. “Russia has not yet ratified two fundamental conventions of the Council of Europe, coordinating the fight against human trafficking. including child pornography. I have no idea why our country has not joined these conventions.”
Meanwhile, Russia boasts one of the fastest growing Internet populations in the world. In June 2009, 32% of Russians were online, and this figure is going up all the time.
Therefore, once there is room for improvement regarding legislation in particular, Russia is very serious about Safer Internet week, so that children can go about online business safely.
Itar-Tass: Mandatory health insurance reform to improve quality of medical services
03.02.2010, 22.17
MOSCOW, February 3 (Itar-Tass) -- A mandatory health insurance reform should improve the quality of medical services because this becomes the main funding criterion, Prime Minister Vladimir Putin said, promising that the government would pay insurance expenses.
“We are facing a very ambitious task of reforming the mandatory health insurance system,” Putin said.
He recalled the decision of several years ago to support primary healthcare institutions and raise the salaries of their personnel.
“But it’s absolutely obvious that we will have to use new forms, and these forms of medical services should be based on the fact that healthcare institutions get money not just for their existence but for the volume and quality of services they provide,” Putin said.
“This is a painful process, because those who do not work as well as people would like them to will have to wind down and leave the market. You know that we have very many hospital beds, just as many as in European countries. But quality is not the same,” the prime minister said.
He blamed this on the fact that healthcare institutions get funding for the very fact of their existence rather than for the number of people they have cured.
When visiting Chuvashia last week, Putin urged all other regions to catch up with the republic that has gone further and set a good example for others to follow.
When asked whether mandatory health insurance would mean that people would have to pay for medical services, Putin said, “No, this should be done at the expense of primary government resources, which, if used properly, should generate a sufficient amount of money in the system.”
Itar-Tass: Russian doctors call for raising awareness of cancer prevention
04.02.2010, 02.25
MOSCOW, February 4 (Itar-Tass) - People are urged to consult a physician about cancer risks to prevent the disease at an early stage.
Every year 460,000 new cancer cases are registered in Russia, of them one third are diagnosed at a later stage. This statistics is cited by the Russian Health and Social Development Ministry on the eve of the World Cancer Day that is marked on Thursday.
Finding cancer early is the main task of the cancer prevention program launched in the country in 2009. This year twenty-two regions joined the project.
According to the Gersten Cancer Research Institute in Moscow, 290,000 Russian citizens die of cancer every year.
Late last year the Ministry adopted a special program of medical assistance to cancer patients and launched a hotline to provide psychological support for people affected by the disease and their relatives.
The World Health Organization forecasts that there will be 15 million cancer patients in the world by 2013.
: Experts map route to disarmament
By James Blitz in London and Daniel Dombey in Washington
Published: February 4 2010 02:00 | Last updated: February 4 2010 02:00
A group of leading arms-control experts will set out a route today by which the big nuclear powers could agree to abolish all atomic weapons by 2030.
The plan envisages an international accord to ensure that no state can develop or possess such arsenals again.
At a Paris conference, a group calling itself the Global Zero Commission - comprising several Russian and US arms-control policy-makers of recent decades - will outline a four-stage plan.
The move comes at a time of mounting scepticism over nuclear disarmament.
Despite progress in arms talks with Russia, President Barack Obama's weapons-control agenda is encountering increasing difficulties, with many measures the US administration had initially sought appearing out of reach.
The Global Zero group will explain today that the first stage would be for the US and Russia - which possess 95 per cent of the world's nuclear weapons - to agree an accord to replace the Strategic Arms Reduction Talks (Start) treaty in the next few weeks. The agreement would reduce the ceiling for deployed nuclear weapons to between 1,500 and 1,675 per side.
This would need to be followed by a further accord by 2013 for both countries to reduce their total warheads to 1,000 each, while all other nuclear states freeze their arsenals. The group includes Richard Burt, the US chief negotiator in the original Start meetings with the former Soviet Union, and Mikhail Margelov, chairman of the foreign affairs committee of the Russian parliament.
They argue that plans to eliminate nuclear arms face huge political and technical hurdles, but give warning that the use of such weapons in the next few years is a growing threat.
Talks are not going smoothly. Mr Obama contacted Dmitry Medvedev, Russia's president, last month in an attempt to finalise negotiations over the post-Start treaty, and Washington hopes a text can be agreed in the coming weeks. But the treaty is already behind schedule. The US administration had hoped to agree if not ratify it by early December, when the old agreement expired.
"There's a sense that the administration overestimated Russia's eagerness for a deal," said Jeffrey Lewis, a nuclear expert at the New America Foundation think-tank, who said US forces were now much more capable than Russia's.
Furthermore, successor measures are now in doubt, including US ratification of the Comprehensive Test Ban Treaty, long sought by arms-control advocates.
Mr Lewis said it would be hard to ratify the deal currently being negotiated before US mid-term elections in November. Ratification requires 67 votes in the 100-seat Senate. With an eye to Mr Obama's domestic political troubles, he added: "That's likely to mean that CTBT ratification is pushed off until later, when the Democrats could have a lot fewer votes."
The Local: Russian nuclear waste dumped off Sweden
Published: 4 Feb 10 07:44 CET
The Russian military is suspected of having dumped chemical weapons and radioactive waste off the Swedish island of Gotland in the beginning of the 1990s, according to Sveriges Television (SVT).
The Swedish government was informed of the incident around ten years ago - but no action was taken.
SVT's Uppdrag granskning programme reports that there exist three top secret files detailing the incidents held within the military security services MUST.
The reports - from November and December 1999 and June 2000 - state that the Russian military is suspected of dumping sensitive material overboard on repeated occasions between 1991 and 1994.
The chemical weapons and radioactive material is reported to have come from the vast Karosta naval base in the Latvian city of Liepaja.
The Swedish defence forces informed the government about the suspected dumping at a security meeting with representatives for the Swedish security services (Säpo), the National Defence Radio Establishment (Försvarets radioanstalt – FRA), Swedish Customs Agency (Tullverket), the Swedish Agency for Non-Proliferation and Export Controls (ISP) and MUST.
The information did not lead to any follow up action.
Neither the Ministry of Defence, the Ministry of Foreign Affairs nor the Prime Minister's Office retains reports of the dumping.
According an SVT source, Bertil Lundin, one of Sweden's most prominent spies, passed the information on to the Ministry of Foreign Affairs informally.
Sven Olof Pettersson was the then foreign minister Anna Lindh's political advisor. The programme asked Pettersson what Lindh was told.
"That the Russians had dropped ammunition and chemical weapons into the Baltic sea in modern times," he replied.
According to Sven Olof Pettersson she became "very angry" and wanted the matter investigated. But she was told by the Ministry of Defence that without knowing the exact position it would be too expensive to search a large expanse of the Baltic Sea.
"That this was done in the 1990s is something quite distinct from if it had occurred in the 1940s or in the beginning of the 1950s. Then there were no international regulations, international environmental issues did not have at all the same focus as as they did in the 1960s and 70s," according to Jonas Ebbesson, professor in environment law at Stockholm University, to the programme.
"The most important thing now is not to find someone to blame. The most important thing is locate the dumped barrels and identify their contents," Rolf K. Nilsson, Moderate MP for Gotland, said in a press release.
Nilsson argues that it is not just a Swedish matter, even if the barrels were dumped in the Swedish economic zone of the Baltic Sea.
"If the details of the dumping are correct then it is something that affects all of the Baltic Sea states," Rolf K.Nilsson says, adding that it is now a very good opportunity for Russia to demonstrate its good will.
Anatolyji Kargapolov, the press officer at the Russian embassy in Stockholm was unwilling to comment on the reports until the matter had been thoroughly investigated in Moscow.
TT/The Local (news@thelocal.se/08 656 6518)
Xinhua: Russia Ready for Dialogue with EU over Tactical Nuclear Weapons
| 2010-02-03 23:31:29 Xinhua Web Editor: Zheng Zhi |
Russia was ready to engage in dialogue over security issues with the European Union (EU), including tactical nuclear weapons, Russian Foreign Minister Sergei Lavrov said on Wednesday.
"We've been unable to get through to our partners in this issue in order to at least start talking," Lavrov told a press conference after meeting with his Norwegian counterpart Jonas Gahr Store.
"Our position is well known. I repeat: we're open for direct dialogue over any issue, not through the mass media," Lavrov said.
He was responding to the call from Poland and Sweden for Moscow and Washington to slash their tactical nuclear weapons deployed in Europe.
"As part of efforts to further reduce nuclear weapons in general, as well as to build confidence in a better order of security in Europe, we today call on the leaders of the United States and Russia to commit themselves to early measures to greatly reduce so-called tactical nuclear weapons in Europe," said the Polish and Swedish Foreign Ministers in a joint article published Tuesday in U.S. papers.
They also called on Moscow to remove the nuclear weapons it deployed near the border with the EU, such as in the Kaliningrad region and on the Kola Peninsula.
Lavrov said, "Russia has been calling for many years to make the first move, including removal of all the tactical weapons in the territory of the state to which it belongs."
The Moscow Times: Time for TART
04 February 2010
By Vladimir Kozin
The first suggestion made by Swedish Foreign Minister Carl Bildt and Polish Foreign Minister Radek Sikorski for both Moscow and Washington to reduce and subsequently eliminate tactical nuclear weapons based in Europe was well-grounded.
Their second suggestion was exclusively addressed to Moscow. The authors called on Russia to withdraw its nuclear warheads from areas adjacent to European Union member states — particularly in the Kaliningrad region and on the Kola Peninsula. But there are no nuclear warheads in Kaliningrad; they were all destroyed under the provisions of the Intermediate-Range Nuclear Forces Treaty, or INF, signed between the United States and the Soviet Union in 1987.
The INF and Strategic Arms Reduction Treaty and its follow-up are all very important contributions toward nuclear arms reduction and, hopefully, a nuclear-free world, as the Nuclear Non-Proliferation Treaty envisions. But there is one large gap that remains in the nuclear disarmament structure: There is no treaty that limits tactical weapons.
After the follow-up agreement to the START is signed, Moscow and Washington should make a firm commitment to begin “TART” negotiations on reducing tactical nuclear weapons in Europe.
Any tactical arms reduction treaty needs to address geographical equilibrium in tactical weapons. While Russia has transferred all tactical weapons to its territory from former Soviet republics, the United States is still holding them in five European nations and Turkey, which is in violation of Articles I and II of the Nuclear Non-Proliferation Treaty that prohibits storing nuclear weapons in non-nuclear states. Thus, the United States has to remove all tactical weapons from Europe before any negotiations begin on reducing tactical nuclear arms.
The authors’ second suggestion — to make unilateral “nuclear-free zones” by Russia along the EU borders — is flawed. Russia has the right to deploy on its own territory all kinds of forces needed to protect its population and infrastructure. Russia cannot close its nuclear naval bases built on the Kola Peninsula, just like the United States cannot close its nuclear naval base in San Diego.
Russia insists that there is a direct link between missile defense and strategic offensive weapons, and this link must be included in the START follow-up agreement. This is particularly important considering that Poland will soon deploy U.S. Patriot missiles on its soil. The United States would also like to place sea- and land-based SM-3 interceptors in the Black Sea and surrounding areas.
Russia, which does not have any missile defense installations in foreign countries, has solid grounds to protest U.S. missile defense facilities that are placed near Russia’s borders. Washington claims that these installations are needed to contain Iranian or North Korean missile threats, but even if there were a threat from these countries, that would not justify placing interceptors and radar facilities within 100 kilometers of Russia’s border.
No U.S. missile defense systems should be placed in Europe. If they are, Russia will have to return to President Dmitry Medvedev’s response, which he articulated on Nov. 5, 2008, in his first state-of-the-nation address: to deploy Iskander conventional and nuclear-tipped missiles in Kaliningrad. Other measures will be needed as well because the “revised” U.S. missile defense program in Europe will be even more formidable and dangerous to Russia than the system that he cancelled for Poland and the Czech Republic.
Russia has always insisted on a direct link between strategic offensive arms and strategic defensive arms, and this link should be clearly reflected in the follow-up agreement to START.
Vladimir Kozin is head of the analytical section of the Asia-Pacific department at the Foreign Ministry. The views expressed in this comment are his own.
: Russia-India's strategic reserve plan for wheat
Published on Thu, Feb 04, 2010 at 12:10 | Updated at Thu, Feb 04, 2010 at 12:38 | Source : Forbes India
In June, 2009, at the World Grain Forum, organised by the Food and Agriculture Organization (FAO) in St. Petersburg, Russia, Viktor Zubkov, the first Deputy Prime Minister of Russia, made an announcement. He stated that he was in consultations with the governments of India, China and Turkey to build wheat reserve stocks in their respective countries, as a move towards providing food security. He also said that he was keen to promote joint ventures with overseas investors to develop the 20 million hectares (2.47 acres to a hectare) of unused arable land available with Russia. This offer was reiterated in September at the FAO summit.
Russia’s wheat production had crossed 63 million tonnes and it was looking to produce 100 million tonnes in 2010. Ramping up production faced two major challenges. One was: How to increase production? Second: How to prevent a collapse in prices thanks to overproduction? The first challenge was not a big one for Russia to surmount — it had the largest reserves of land and water compared to any other country in the world. It could ramp up production easily if it could get the right technology, labour and investments in place.
The second was a bit trickier. The last thing any farmer wanted was a collapse in prices. That is where the largest wheat consuming countries — India, China and Turkey — had to be roped in as partners. If this could be done, Russia could not only become the biggest grain producer in the world, but could also blunt the US’ constant use of the wheat diplomacy card with developing nations (Indians are still upset about the PL-480 deals that the US forced on India in the 1960s and ’70s).
India is at a crossroads now. Should it join hands with Russia or should it partner with the US? “Logically, India should opt for the best deal, without being tied down to any one player,” says a former ministry of external affairs diplomat who prefers anonymity on this issue. Russia is making an offer which the US hasn’t. If the terms are right and the long-term price commitments attractive, India should tie up with both countries thus preventing a situation where India would have to import wheat at astronomical prices.
That India will have to import food grains is evident to everyone. The fields of Punjab — the grain basket of India — are getting less fertile with salinity because of the excessive use of fertiliser and rapid depletion of ground water reserves. Rice that should have been grown extensively in the North-East is instead being grown in Punjab and Haryana. Water scarce Maharashtra grows sugarcane — a water intensive crop.
The case is even more critical in the case of pulses, which provide most Indians their protein component in their food. These pulses are consumed almost nowhere in the world except in India, Pakistan, Bangladesh, Nepal and Sri Lanka. Official estimates expect the country’s pulses production to increase from around 14.86 million tonnes in 2009-10 to around 15.73 million tonnes in 2011-2012 (a 6 percent increase). But, demand for pulses is expected to rise faster from 18.29 million tonnes in 2009-10 to around 19.91 million tonnes in 2011-2012 (9 percent). Increasing population and reduction of poverty are both likely to see demand rise faster than official estimates. Today, India imports pulses from Malaysia, Brazil, Argentina and Indonesia.
Unfortunately, when India or China — large consuming markets — decides to purchase anything from spot markets, prices tend to zoom by 25 to 50 percent. In case both decide to purchase anything — be it oil, oilseed, cement, fertilizers, or food grain — at the same time, prices may shoot up by even 100 percent. That is why long-term contracts and buffer stocks are critical to the country’s food situation.
Sadly, the government does not pay attention to this, says an executive from the Central Warehousing Corporation (CWC), which stores much of the grain that the government procures either from domestic markets or from overseas. In July 2009, a leading publication (India Today) secretly filmed how 300,000 tonnes of pulses that “were imported from the international market using taxpayers’ money … are lying [to rot for several months] at Tuticorin port . . . and in the warehouses of CWC.”
“In fact, there is a general destruction of value in all our food grain and vegetables, at multiple levels, and the government isn’t even bothered about it,” says an industrialist engaged in providing refrigeration services to agro-producers.
First there is a destruction of value in perishables not being stored, or being destroyed on the way to the markets. Then comes the procurement process. When support prices are announced for wheat or rice, the procurement is actually done by the state government and stored in state warehouses which are neither temperature- or humidity-controlled, nor protected from insects and rodents. This grain lies with state governments for a few years before being transferred to the central government at a loss because of the destruction (or theft) of the food grain. That is one reason why losses running into thousands of crores of rupees can be seen on the books of almost every state government which procures food grains. The central government too puts this grain in CWC warehouses which are similar to state government warehouses, exposed to rodents, humidity and pests.
That is why, in 2000, the ministry of agriculture and food floated a global tender for scientifically designed silos and warehouses. Adani Logistics Ltd. (ALL) won the global tender to build as a pilot project silo storage units with a total capacity of 600,000 tonnes at seven centres in India. “We think this is critically important if India has to manage its food security, and are waiting for the pilot project to be converted into a bigger full-fledged storage plan,” adds, Pranav Adani, director, ALL.
Alok Sinha, former chairman, Food Corporation of India, is on record stating that “without such storage facilities, India will continue to lose out on the food front”. Whether India grows its own food, or imports it, if it is not stored properly, there will be degradation in quality and losses as well.
“The urgent need of course is to find countries where India can grow its pulses and its grain because India’s farms may just not be enough,” adds Adani.
By RN Bhaskar/Forbes India
03/02/2010 |
The Moscow News: Regional train fares reviewed
Evgeniya Chaykovskaya
The tariffs for electric trains rose sharply on Jan. 1 with the the passengers forced to pay a fare of 16.5 roubles per zone up from 14 roubles. On top of that passengers had to pay 26 roubles for crossing the city borders. As a result, an eight-minute ride from Lyubertsy, a twon 2 km east of Moscow, to Vykhino metro station inside the city borders rose from 14 to 42.5 roubles.
The move fuelled an outrage among passengers, most of whom travel daily from their suburban homes to work in Moscow and find it hard to affort tripled fairs. The number of passengers fell significantly after the price hike, while the number of free-riders rose.
The Society for the Protection of the Consumer Rights has sued the Russian railways claiming that the hike in tariffs was illegal and affected more than 3 million people.
Moscow authorities, the federal tariff regulator and railway officials gathered on Jan. 29 to discuss the problem..
On Feb. 2 they announced that the the 26 roubles charge for crossing the city border was scrapped. The ticket for travel within one zone will now cost 16.5 roubles, which is 18% more than the previous 14. A train ride incide Moscow will cost 26 roubles. The changes should come into effect by Feb 15.
February 3, 2010
Russia profile: Kaliningrad Rising
By Roland Oliphant
Russia Profile
A Rare Show of Unity Amongst the Opposition Parties, the Largest Anti-Government Protest in Years, and a Governor in Trouble – Is There Something Different About Kaliningrad?
The horror of Kaliningrad is its Baltic temperatures. But that didn’t stop some 10,000 people from showing up for a rally to protest a hike in transportation tax and import duties. Organized by an unlikely alliance of opposition parties ranging from the Communist Party (KPRF) to the ultra-nationalist Liberal Democratic Party (LDPR) and the pro-democracy Solidarnost movement, the protest was the largest in Russia in the past ten years.
The size of the demonstration was unprecedented. While the police estimated the crowd at around 7,000, the organizers cited a figure of anything from 10,000 to 12,000 people. Konstantin Doroshok, the leader of the Kaliningrad branch of Solidarnost, one of the opposition movements which helped to organize the demonstration, said the real number could have been higher, had it not been for hedging by the authorities and the Baltic enclave’s notoriously harsh weather. “When we first applied for the demonstration we estimated that about 15,000 people would attend,” said Doroshok. “But the authorities fenced off the area to restrict numbers. Then there’s the weather – there was snow, frost, wind – lots of people have said they wanted to go but decided not to come because of the weather, especially if they had children.”
United against United Russia
The organizers from the official opposition parties like the KPRF and LDPR that have factions in the State Duma, to the more marginalized Solidarnost, whose leaders include Boris Nemtsov and Gary Kasparov, are all political movements with their own ideological agendas. But the protestors they attracted to the streets were motivated by that perennial and most mundane of grievance of malcontented publics everywhere and in all ages – money.
The straw that broke the camel’s back was a decision by Georgy Boos, the governor of the Kaliningrad Region since 2005, to use powers granted him under an amendment to the tax code to set the base rate of transport tax in his region. Apparently sensing the public mood, he cancelled that plan two days before the protest, but it was too late – and while it was the catalyst, it was far from the only grievance.
A resolution drawn up at the end of the demonstration centered on the cancellation of the transport tax hike and called for the law (clause 2, article 31 of the tax code) that allows regional governments to set the base tax rate to be repealed. But it also included demands that the transport tax be included in the price of petrol; that fuel costs be reduced (and the dependency of domestic prices on the oil price in foreign exchanges be ended); that customs barriers on importing used cars should be dropped (like Vladivostok in the Far East, Kaliningrad does a brisk trade in importing second-hand cars from abroad); that taxes be frozen until the end of the economic crisis; that Kaliningraders’ pensions be increased; and, of course, that Georgy Boos resign.
The Kaliningrad region is small by Russian standards – with a population of around one million, about half of whom live in the city of Kaliningrad – it is a fraction the size of the Moscow or Leningrad Regions. The fact that it produced the largest demonstration for the best part of a decade is above all “indicative of the level of discontent with the activities of the authorities,” said Doroshok.
Kaliningrad, of course, is not quite Russia. Sandwiched as it is between Poland and Lithuania, regional political parties receive “about half the attention from the federal authorities” as their counterparts do in the rest of the country, reckons Doroshok. And like Vladivostok, which has also seen anti-government demonstrations in the past couple of years, its proximity to other countries allows its citizens to see that another life is possible. “We can see that groceries are half the price and wages are twice as high over the border,” he added.
But those factors were helped along by an unusual level of unity displayed by the usually fractious opposition groups. According to Doroshok, the cooperation was born of a common understanding that United Russia is exploiting their divisions. The parties agreed to put their political differences aside to back a non-political movement called Spravedlivost (“Justice”) that took on the organization of the meeting. In this sense, focusing on near-universal concerns about taxes, rather than ideology, paid off. Banners with slogans like “United Russia – United against Russians!” left little doubt as to who the demonstrators blamed for their troubles.
But despite openly anti-government sentiment, including placards calling on President Dmitry Medvedev to fire Prime Minister Vladimir Putin, the crowd’s real ire was reserved for its governor.
Its not just ordinary citizens who have an axe to grind. “He came from Moscow, and was pretty aggressive with regard to regional political and business elites,” said Nikolai Petrov, an expert on regional affairs at the Carnegie Moscow Center. The size and timing of the protest – not long before Boos’ first term as governor ends in September 2010 – may indicate that the organizers had powerful backers, suggested Petrov. “A massive demonstration of this scale would only be possible if some members of the regional political elite are participating in or at least backing it,” he said.
Petrov did not elaborate on what form such “inspiration” from members of the political elite might have taken, but it is a charge Doroshok denies. “There might be political clans in United Russia, but we had no contact with them. We just raised economic questions, and people came to protest. It was entirely about social and economic policies,” he said.
Either way, the obvious antipathy toward Boos on behalf of a large portion of the Kaliningrad public and his failure to prevent the largest anti-government demonstration has raised questions about his political future. The president’s envoy to the North Western Federal District flew to the region on Sunday, swiftly followed by a high-ranking delegation from United Russia. An apparent attempt by Boos to assuage the protestors by suggesting to put an “against all” option on electoral ballots, released in a statement on Monday, was quickly stamped on by the party leadership. Boos’ office retracted it and the Untied Russia denied such a suggestion had even been made (“it’s expensive and leads nowhere,” wrote Boos in a retraction posted on the United Russia Web site).
All that may make him political toast. But his future is in the hands of President Dmitry Medvedev, rather than the voters of Kaliningrad (the abolition of gubernatorial elections in 2004 was another of the grievances voiced on Saturday), and Boos has so far been a rising star in the United Russia fold. “He’s strongly supported by United Russia, and there were rumors that there might be a job for him in Moscow if Mayor Yuri Luzhkov is replaced,” said Petrov. “The question is whether and how he can reach an agreement with the protestors and avoid a repetition, and above all, avoid creating a precedent for taking to the streets against unpopular governors.”
February 3, 2010
Russia profile: Outdated Paperwork
Comment by Alexander Arkhangelsky
Special to RIA Novosti
With the Arrival of the Apple iPad and Other Electronic Readers, Re-Opening the Baikal Cellulose Paper Mill Seems Absurd
The decision to put the paper and pulp mill at Lake Baikal back in operation, which has led many people to pen their signatures on letters of protest, makes one remember the past and think about the future. In the past we have heard all the arguments that cellulose production is safe for the environment and that people need the jobs it creates. But our future seems to be going further away from needing paper and into a realm that our country is yet to contemplate.
In the days of my literary youth, when writers were at war with each other, there were two key points that everyone agreed on, both the Westernizers and the Slavophiles, the anti-Semites and the sons (and daughters) of Zion, the successful and those who have been pushed to the sidelines, the Soviets and the anti-Soviets. There was the diversion of the northern rivers away from Siberia to Uzbekistan and beyond. And there was the threat posed to Lake Baikal by the paper producing mill.
No matter how much the authorities tried to convince the public that, once reversed, the northern rivers would unite the country with their irrigative force without any harm being done to the inhabitants of Siberia, nobody believed them. And no matter how hard they tried to convince the intelligentsia that cellulose production is completely safe, nobody listened. But everyone listened to the writer Valentin Rasputin who defended Baikal, and the writer Sergey Zalygin who was irreconcilably opposed to the turning of the rivers.
Back then, nobody thought that the battle over the Siberian rivers and the great Baikal had anything to do with politics – that just seemed too preposterous. But this fight over nature was merely a rehearsal for the orchestra; it was a mild expression of the people’s brewing discontent with everything from the omnipotence of the Communist Party of the Soviet Union to the distributive economy. The fact that the system shuddered and recoiled, and the Soviet ministers were forced to hear out the environmental activists and conjure up excuses, look for compromises, pull back and give up, pointed to an inner weakness that would soon lead to the system’s speedy demise.
Thankfully, today nobody brings up the Siberian rivers anymore, except for Mayor Yuri Luzhkov who some time ago called for the old project to be brought back, and for a rejection of dissident stereotypes. But who listens to Luzhkov beyond Moscow’s ring road, except maybe Ukraine? Now the cellulose mill is making headlines once again, and the arguments in favor of putting it back in operation are all too familiar. The first claim is that Baikal is clean. Nobody is polluting it anymore, many years have passed; nowadays waste is filtered and does little harm. The second claim is that people need to work somewhere. We cannot take potential jobs away from the local inhabitants. The ecology is important, but salaries are salaries.
And here we have to leap from the past to the future. The moment that computer network technology appeared, large companies started foregoing paperwork. Economy, convenience, hygiene. And with the appearance of magnetic ink, which erased the fundamental difference between a paper book and an e-reader, a reverse and expedited countdown of historic time began for the print industry. It is completely obvious that in the next few years these appliances will become thinner, softer and more pleasant, that the size of the screen will be increased from today’s six inches to a new standard of nine, that bookstores will turn into mass exhibitions of sample print editions meant to help us decide what text we want to purchase and download on to our electronic book. Only expensive, custom-made editions will be sold on paper, and as a rule these will be printed not on cellulose, but on flaxseed and other sophisticated paper.
As for newspapers, their print runs have long since stopped growing. More and more often, respected publications are replacing their usual paper editions with online issues: the former are becoming just an addition, a supplement, a complimentary service at a café. But in two or three months, the Apple tablet computing device, the iPad, will hit the world markets. This appliance is not very useful as a computer, but it is perfect as a “newspaper carrier.” In reality, it is a prototype of the future “newspaper e-reader, the swallower of voids,” as the poet Marina Tsvetaeva would have put it. It too will become thinner, softer and more convenient; as for the price, even today it is supposed to cost less than an iPhone, and that means that the day after tomorrow it will be even cheaper.
So the question is, who predicted a growth in mass demand for celluloid products? What market conjuncture will the Baikal mill fit into when it reopens? What will happen to its workplaces? Maybe it is better to turn the situation around and face it? To use Russia’s long-term advantages and not manufactured, quick projects? Maybe money should be spent not on re-launching a doomed project, but on developing tourism? And employ people in this area? Obviously there is no need for administrative resource for this, but for political will; you can’t make guests come over with an order from the Council of Ministers, they should be lured by the country’s extraordinary image. This country should be open to the world and smiling. It should rebuild itself and develop for others.
Mikhail Chekhov once came up with a brilliant formula for development: there is a need for a big aim, big hurdles and a big example. We already have one of these elements. We will probably have to look for a big example beyond the borders of our beloved motherland – we are neither the first nor the last to have to learn to present our country in a new light.
But we have an enormous problem with a big aim. Instead of this, we have momentary thinking, short-term solutions, forgetfulness for the lessons of the past and an inability to think about the future.
The Moscow Times: A Mass Mailing of Khodorkovsky Chocolate and Mittens
04 February 2010
By Alexander Bratersky
Mikhail Khodorkovsky chocolate bars and coarse brown mittens that he could have knitted in prison were delivered to 1,000 celebrities and journalists around the country Wednesday by an painter who said she wanted to highlight his plight.
Yekaterina Belyavskaya, the 29-year-old Moscow artist behind the initiative, said she did not want people to forget the former Yukos billionaire and had included him on her mailing list.
“This is a purely artistic project without any political meaning. We just wanted to remind people about his fate,” Belyavskaya told The Moscow Times.
Belyavskaya said she had decided to send the Khodorkovsky memorabilia to “friendly people,” including novelist Georgy Chkhartishvili, film director Sergei Solovyov and Federation Council Speaker Sergei Mironov.
Chkhartishvili, better known by his pen name Boris Akunin, has interviewed Khodorkovsky for the Russian edition of Esquire magazine, while Solovyov was among dozens of intellectuals who signed a letter to President Dmitry Medvedev to free former Yukos employee Svetlana Bakhmina from prison.
Khodorkovsky spokesman Maxim Dbar said the tycoon's defense team was not involved in the project. Still, he gave his blessing to it. “We support any means of bringing attention to the case,” he said.
Belyavskaya's artwork arrived in brown envelopes emblazoned with an Andy Warhol-style painting of Khodorkovsky.
“This is a unique gift set that contains a super glove from Khodorkovsky and the world's first chocolate with a taste of politics,” says a letter accompanying the packages.
The chocolate bar's wrapping, which features a picture of Khodorkovsky, describes its contents as “very bitter chocolate."
The plain mitten has a designer label bearing Khodorkovsky's signature.
Khodorkovsky worked in a Chita prison sewing shop after being sentenced in 2005 to eight years on fraud and tax evasion charges that he calls politically motivated. He and his former partner, Platon Lebedev, are now being tried on embezzlement and money-laundering charges at a second trial in Moscow.
Belyavskaya's letter is prepared to look like a ransom note, with words cut out of newspapers and pasted to a piece of paper, and it contains drawings of Khodorkovsky and Lebedev.
“We are not asking you to change your view toward those people. We just want you to remember them,” the letter says.
Belyavskaya said she became interested in the Khodorkovsky case after participating in a competition to draw the second trial last year. The contest, arranged by Khodorkovsky's supporters, was an attempt to cheer him up, and the best drawings were hung in Moscow’s Central House of Artists.
Belyavskaya is not the only artist who has found inspiration in Khodorkovsky. Rock musician Sergei Shnurov dedicated a cover version of his popular rock ballad “I Am Free” to the businessman, while novelist Lyudmilia Ulitskaya wrote a book of prison correspondence with Khodorkovsky last year.
Belyavskaya said she also planned to send a package to President Dmitry Medvedev. “I want to raise his spirits, but I doubt that he would accept it,” she said.
She added that she had decided against contacting Prime Minister Vladimir Putin in order not to “upset” him. Putin bluntly called Khodorkovsky a criminal in a televised call-in show in December.
Aysor.am: Georgia denies it supports terrorism in the North Caucasus
Thursday,February 04
Director of the Analytical Department of Georgian Interior Ministry, Shota Utiashvili, said all statements by Russian Federal Secret Service that Georgia supports terrorists in the North Caucasus are false information.
“Georgia’s society believes that the country has nothing to do with tragic developments occurred in the North Caucasus,” he said pointing that all those statements are just part of anti-Georgian propaganda and are aimed at attempts to justify Russia’s failure there.
Georgian Deputy Nikoloz Laliashvili, in his part, said that Russia is blaming Georgia just to prepare basis to attack the country under color of ‘they support terrorists’. “That is exactly Russia guilty in the problems that it has in the North Caucasus,” said Nikoloz Laliashvili.
TODAY, 12:26
The Jamestown Foundation: Au Pays des Lumieres: Gazprom’s Partner Eutelsat Disconnects Georgian TV Channel
[tt_news]=35997&tx_ttnews[backPid]=7&cHash=a22910f7ed
Publication: Volume: 7 Issue: 23
February 3, 2010 04:19 PM Age: 9 hrs
Category: Eurasia Daily Monitor, Vlad’s Corner, Home Page, Energy, Russia, Europe, Georgia
By: Vladimir Socor
On February 1, the Paris-based Eutelsat, Europe’s number one satellite television operator, disconnected Georgian Public Broadcaster’s First Caucasus TV Channel from its satellite, after a one-week successful transmission test. Eutelsat also declared that it was backing out of its own contract offer to the Georgian channel, which the latter had already signed. Eutelsat’s satellite was beaming Georgian First Caucasus TV’s broadcasts to Russia’s North Caucasus territories.
Eutelsat says in justification that it has signed a more profitable contract for the same spectrum of frequencies with Russia’s Intersputnik, to transmit television programs for Gazprom Media, a subsidiary of the Russian gas monopoly (Le Figaro, January 27; Agence France Presse, February 1).
First Caucasus (Pervyi Kavkazsky, or “1-K”) is the first TV news channel attempting to dent the monopoly of Russian state-controlled television in the North Caucasus. It would seem that Eutelsat helps Russia’s gas monopoly to help the Russian authorities’ TV monopoly in the country. Conversely, satellite transmissions of Russian state-controlled television channels have all along been available in Georgia without restrictions.
A project of Georgian Public TV in Tbilisi, First Caucasus TV employs journalists with roots in North Ossetia, Dagestan, Chechenia, Ingushetia, and other North Caucasus territories, as well as Russians. Broadcasting in Russian, the channel operates on a shoestring funding of $1.5 million, authorized for 2010, out of the Georgian public broadcaster’s budget. First Caucasus TV’s star attractions include Oleg Panfilov, the internationally respected head of the Center for Journalism in Extreme Hardship Conditions (formerly based in Moscow) and Alla Dudayeva, widow of the late Chechen leader Jokhar Dudayev, herself an artist, who draws the interviewees’ portraits during talk shows and displays the portraits at the end.
First Caucasus TV had started experimental broadcasts on January 15 and was scheduled to start the regular broadcasts via satellite on February 1 (Civil Georgia, January 29-31). The channel’s parent company, Georgian Public Broadcaster, is now suing Eutelsat in commercial court in Paris.
Eutelsat was transmitting First Caucasus TV programs through the W-7 satellite during the week-long successful test. Eutelsat’s final contract offer, officially accepted by the Georgian side, presupposed continued use of the same satellite for at least one year. Immediately afterward, however, Eutelsat claimed that it had contracted with Intersputnik for transmission of Gazprom Media programs over a wide spectrum of frequencies, for the next fifteen years –the satellite’s service lifetime. While Eutelsat claims that it signed the Russian contract on January 15 (the day after the official acceptance from Tbilisi), Gazprom Media claims that it had contracted for those frequencies in March 2009 on the W-7 satellite, which started operating in November 2009.
According to the Georgian side, Eutelsat invoked other excuses (first the programs’ content, then the risk of hacking) before canceling outright in favor of Gazprom. Whichever is true, Eutelsat now claims that its arrangement with Gazprom Media has left insufficient satellite capacity to service the First Caucasus Channel, Eutelsat claims (Interfax, February 2; Sophie Shihab, La television georgienne et les diktats de la censure russe [Georgian TV and the orders of Russian censorship],” Le Monde, February 3).
Apparently contrary to its own prior commitment, Eutelsat now offers to transmit First Caucasus TV programs through the W-2a satellite. However, this satellite covers the North Caucasus only partially. Moreover, the W-2a does not carry the most popular international channels, which means that very few, if any, North Caucasus residents possess or might buy the necessary satellite dish and antennae. And anyone having that equipment installed would risk being quickly indentified by local Russian security services as a viewer of the “dissident” First Caucasus TV.
The issue of First Caucasus Channel’s access to Russia in the television age recalls the issue of Radio Liberty’s access to Soviet audiences during the radio era. In both cases, the offer involves an alternative to Kremlin-controlled, censored and biased media. Audiences are offered a choice while the authorities struggle to maintain a monopoly on news and interpretation. In both cases again, the authorities sponsoring alternative broadcasting are concerned with the international security implications of Kremlin control over public opinion and enemy-image formation. This generates internal public support for Moscow’s conflict undertakings abroad. Prior to the August 2008 war, Georgia (along with the Baltic States) topped the list of countries viewed negatively by a Russian public under the impact of state-controlled television.
Soviet authorities had jammed Radio Liberty overtly and defended the jamming officially. Russian authorities, it seems, can resort to more sophisticated methods with the help of commercial partners, Western ones apparently in this case.
04/02/2010 |
The Moscow news: State birth-raise program bails out mortgaged families
Alyona Topolyanskaya
Thirty-seven year old Maria is excited that she will soon receive a voucher to help pay for her son's college tuition. The voucher comes from Russia's family incentive program, the Maternity Fund. Maria earned this financial reward for having a second child, her younger son, Misha. As she explains, "It's like the little one is giving a present to his older brother."
The government initiative, which was announced in the spring of 2006 by then-President Vladimir Putin, promises nearly $10,000 (300,000 rubles) to each woman who gives birth to her second, (or consecutive) child between 2007 and 2016.
The money, which is distributed after the child's third birthday, may be spent three ways - 1) apply it towards a home loan, 2) pay for the child's education, or 3) add it to the mother's pension fund.
Since Maria's family already owns a flat, and she is nearly twenty years from retiring, she chose the third option - paying for education.
Last fall, amidst the financial crisis, Prime Minister Putin allowed for the voucher to be used before the child's third birthday, so long as the money is spent on property purchases. He also allowed a small sum - $400 (12,000 rubles) - to be taken out in cash, for so-called "urgent needs."
Twenty-seven year old Svetlana was able to immediately take advantage of that provision, just a few months after giving birth to her twin daughters. Her family needed exactly 300,000 rubles to pay off their mortgage.
The original sum promised to mothers had been 250,000 rubles, but it was adjusted at the end of 2008 to account for inflation. Each family is eligible for only one voucher.
The idea for these maternity fund vouchers was the result of a series of social welfare committee meetings, during which it was decided that women across the country need a financial incentive to have more children.
At the beginning of this century, Russia's birthrate was alarmingly low - with the average family only having one child. Russia's demographic crisis has been exacerbated, not only because of low birth rates, but also high death rates. According to Russia's National Census, in 2004 there were, on average, three live births and four deaths every minute.
In 2002, scientists studying population patterns announced that Russia as a nation was dying out. The death rate that year was nearly twice as high as the birth rate: 232,200 deaths to only 139,700 live births.
In September of last year, Tatiana Golikova, Minister of Health and Social Development, said that for the first time in 15 years, Russia experienced a natural population increase of 1,000 people the previous month. It may be overly optimistic to say that this slight population growth is linked to the federal program. True data will not be available for several more years.
So how does a family go about getting that money?
Officials say the process for receiving the vouchers is not overly bureaucratic. According to the website for the Department of Youth and Social Policy, a mother must simply go to her local pension fund office with her child's birth certificate, her passport, and a written request to receive the voucher. Within one to two months, the money should arrive.
Parents living in Moscow agree the procedure is not complicated. Thirty-five year old Alexei Shmitov is a father of two. "The money was in our Sberbank account a little less than two months after we filed the necessary paperwork." Alexei's family took 12,000 rubles in cash, while using the rest to pay off their mortgage.
There are some families still unsure of how to use the money. Thirty-three year old Oksana is one of them. "Our flat is paid off, I don't have much faith in the pension system, and what it will have to offer in over 20 year. My kids' schooling doesn't cost anything yet, so, I'm a bit at loss."
Despite the government's assurances that the process would be speedy and the bureaucracy would be minimal, some parents outside of Moscow have encountered problems with their local banks. Lilya Ushakova, a Samara resident is a mother of two children under the age of five. She is struggling with her local lender, Delta Credit bank, to accept her maternity capital voucher. She says she's been told by the bank that they have not received proper instructions from the Central Bank on how to accommodate her.
Delta Credit representative declined to comment on an individual case, but stated that the bank follows the official procedures when handling maternity fund issues.
The maternity fund measure was developed well before the financial crisis, and also well before the federal budget went into the red. One question now worth asking: will the Russian government be able to sustain this program for the entire nine years?
According to the Health and Social Development Ministry, there were just over 1.6 million children born in 2007. And in 2008 that number went up by 6% to 1.7 million. RIA Novosti reports that is the highest birth rate in all the post-Soviet years.
If even we assume that half of those babies were second (or subsequent) children in the family, this program would set the federal government back $8 billion in the first year of the program alone.
The federal budget earmarks $4.4 billion (132 billion rubles) for the maternity payments, so the money exists - at least on paper - to fund this program for the time being.
National Economic Trends
Bloomberg: Russian Economy Shrinks at Slowest Pace in 13 Months, VTB Says
By Lucian Kim
Feb. 4 (Bloomberg) -- The Russian economy contracted last month at the slowest pace since December 2008, raising expectations that growth will return in the first quarter, VTB Capital said.
Gross domestic product shrank 0.3 percent in January from a year ago, compared with a decline of 1.3 percent in December, VTB Capital, the investment banking unit of Russia’s second- biggest lender, said in a report released today.
“Job-shedding continued in January, albeit at a very moderate rate,” Aleksandra Evtifyeva, VTB Capital’s senior economist, said in the report. “Inflation remained subdued amid competitive pressures.”
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
Last Updated: February 4, 2010 00:00 EST
Reuters: TABLE-Russia Jan GDP -0.3 pct y/y - VTB indicator
Feb 4 (Reuters) - The Russian economy posted its smallest annual fall in a year in January, VTB bank's GDP indicator showed on Thursday, potentially paving the way for a return to growth in the near future.
The GDP indicator -- derived from VTB's surveys of manufacturing and service sector purchasing managers (PMIs) -- fell 0.3 percent year-on-year in January after a 1.3 percent contraction the previous month.
"The latest (move) in the indicator will raise hopes of a return to year-on-year growth of GDP during the first quarter of 2010," VTB Capital said in a statement.
The improvement comes as PMIs showed tentative growth in both the manufacturing [ID:nLAG006073] and the services [ID:nLAG006087] sectors last month as a recovery in oil and commodity prices and stronger global demand helps Russia clamber out of its first recession in a decade.
"Interestingly, the contribution from the manufacturing sector to the headline activity index was bigger than that from the services sector for the first time since September 2009, indicative of a recovery in the sector from the temporary setback witnessed in the middle of the fourth quarter of 2009," said Aleksandra Evtifyeva, Senior Economist at VTB Capital.
GDP y/y growth GDP index
according to
VTB index
y/y 2009 Jan -0.3 52.0 2010 Dec -1.3 52.4 Nov -2.5 52.8 Oct -4.0 54.2 Sept -6.5 54.0 Aug -9.0 52.2 July -10.7 48.6 June -10.8 48.4 May -10.1 44.5 April -8.9 42.6 March -7.3 42.1 Feb -5.4 38.8
Itar-Tass: Influx of foreign direct investments in Russia exceeds $40 bln –PM
04.02.2010, 01.43
MOSCOW, February 4 (Itar-Tass) - The influx of foreign direct investments in Russia exceeded 40 billion U.S. dollars in 2009, Prime Minister Vladimir Putin said at the meeting of the commission for control over foreign investments.
“Last year turned out to be not easy for us and our partners. All of us faced serious difficulties, but irrespective of this fact the influx of foreign direct investments in Russia did not stop. According to preliminary estimates, it even exceeded 40 billion U.S. dollars in 2009,” he said.
“I believe that in general we managed rather successfully to cope with the most acute impacts of the global crisis, keep our key competitive advantages and regenerate the GDP growth,” Putin said.
“We should think over how to create maximally favourable conditions for foreign investments bearing in mind that amid the crisis a rather tough competition for attraction of these investments begins,” he said.
: A volatile oil price is the only serious risk for Russia
By Kingsmill Bond
Published: February 4 2010 02:00 | Last updated: February 4 2010 02:00
Since the middle of 2008 the Russian market has tracked the oil price. The rule of thumb that the Russian RTS index is the oil price times 20 has been the somewhat uninspiring reality.
Given that both price/earnings multiples and index earnings are oil-price dependent, there were good reasons for this link in a world where oil prices and markets were volatile. But greater oil price stability should encourage investors to look afresh at Russian markets as a high-growth, low-debt story, linked to the Asian boom. Provided oil stays near current levels, we expect the RTS index to end the year at 2,000, up nearly 40 per cent from today and still 20 per cent below its peak.
A good starting point is that the market and the currency are cheap. When oil was $70 a barrel, we forecast a 2010 price/earnings ratio of 8.4, and a price to book ratio of 1.1; across a series of sectors from oil to base metals to retail, Russian stocks trade at a 20-30 per cent discount to their emerging market peers. It was not always thus. The market has in the past traded at a premium to emerging markets and at p/e multiples in the low teens. Meanwhile, the rouble trades at two-thirds of its purchasing power parity fair value, and the country runs a large current account surplus.
Russia has tremendous growth potential, as penetration levels for most goods and services are well under half those in western Europe; mortgage penetration for example is 3 per cent of GDP and only 20 per cent of people have cars. For those companies that have been able to seize the opportunity, the rewards have proven tremendous, and Russia now boasts the largest markets in Europe for mobile subscribers, beer and white goods. Meanwhile Russia is the world's greatest repository of natural resources, and Russian companies are blessed with colossal amounts of commodities, valued at a fraction of their global peers.
Lacking as it is in capital, Russia is a high return market, with returns on equity (ROE) before the crisis of nearly 20 per cent, and an ROE over the cycle that we estimate at 16 per cent. This has been one of the foundations for the superb performance over the last decade, when the Russian market was up eightfold, the best performer among major markets.
Contrary to the various scare stories you may have heard during the crisis, debt levels are low in Russia. Government debt and household debt are both under 10 per cent of GDP, bank loans to GDP are 39 per cent, and in the recent McKinsey study of the global credit bubble, Russia stands out for its extremely low level of total debt to GDP (71 per cent), half that of China and a quarter that of developed markets. Consequently, Russia will not be held back by the deleveraging facing other markets.
And into this relatively benign mix comes a catalyst that we believe will electrify the story in 2010 - disinflation. For the first time since the end of the Soviet Union, inflation has now fallen into single digits for an extended period. From 13 per cent in 2008, inflation fell to 9 per cent in 2009 and is currently running at about 6 per cent, where we think it will end the year. The government will thus be able to continue to cut the cost of money, and we anticipate a further 150 basis points of rate cuts this year. All of this leads to growth: in 2010, we expect loan growth of 20 per cent, GDP growth of at least 5 per cent, and earnings growth of 41 per cent.
There are a number of other factors that we believe will help the story. The modernisation programme being pushed by both President Medvedev and Prime Minister Putin will, over time, yield results in economic diversification, greater power for the courts, and a more modern administration; Russia continues to shift its centre of gravity to the growth markets of the east with the building of pipelines and infrastructure; and relations with the west continue to improve.
The usual counter to a positive stance on Russia is to cite transparency, corporate governance, and corruption. On transparency, the environment has changed radically in the last few years, with Russian companies adopting international accounting standards and disclosure. On corporate governance, a number of high-profile cases such as Mechel, Vimpelcom or Uralkali were favourably resolved over the last year; in a world of Madoffs and Enrons, Russia is perhaps no worse than its peers. Corruption remains a problem and a drag on growth, albeit an issue that the government is seeking to address.
Fears of a new cold war were always far-fetched given Russia's new capitalist direction, and we are likely to see much less concern about this given a new government in Ukraine and more accommodating US policy.
The main issue that should concern investors is the oil price, given that the rouble, government finances, and profits are heavily dependent upon this. Below $60 a barrel the market gets nervous, and more than $30 a barrel the whole macroeconomic framework looks fragile. This is the main tail risk.
Kingsmill Bond is chief strategist at Troika Dialog
Bloomberg: Russia Should Be More Rigorous in Monitoring Banks, IMF Says
By Alex Nicholson and Paul Abelsky
Feb. 3 (Bloomberg) -- Russia needs to do more to ensure its banks are sound, the International Monetary Fund said, signaling the country’s efforts last year to stress test its financial industry weren’t sufficient to renew confidence and credit flows.
“What we have recommended is for the central bank to make a comprehensive assessment of the status of the banking system,” Odd Per Brekk, the IMF’s Russia representative, said in an interview yesterday. “What’s important here is to lay the basis for the banking system to restart credit expansion, because that has not really happened yet.”
Russia stress-tested all its banks last year and a number of the 100 biggest lenders fell short of capital adequacy requirements, Bank Rossii First Deputy Chairman Gennady Melikyan said in October, adding that capital shortages may start to appear by April. The test results weren’t made public beyond policy maker comments. Fitch Ratings on Jan. 22 raised its outlook on Russia’s BBB grade, in part because bank risk had receded, though the service warned of “uncertainty” over banks’ ability to provide adequate credit.
Delinquent debt in the world’s biggest energy exporter may climb to 20 percent of total lending this year, based on international definitions of non-performing assets, Deutsche Bank AG analyst Bob Kommers said on Jan. 28. He says investors are “underestimating the risks and overstating the recovery potential.” Delinquencies could peak at about 25 percent of total lending this year, Fitch estimates.
‘Big Issue’
VTB Group, Russia’s second-largest lender, is among banks that have a “big issue with asset quality,” according to Kommers. Russian bank lending grew 0.2 percent last year, Bank Rossii First Deputy Central bank Chairman Alexei Ulyukayev said last month. He forecast growth of 20 percent this year.
Banks’ non-performing consumer loans were at 6.4 percent as of November, according to Bloomberg calculations based on data from the central-bank, which Kommers says uses a more narrow definition for bad loans and doesn’t take into account restructured debt. Central bank Chairman Sergey Ignatiev said on Nov. 18 banks’ non-performing loans were “near the peak.”
The economy is showing signs of recovering from a record 7.9 percent contraction last year as demand for its commodities rebounds. Policy makers are trying to extend that growth to the domestic economy, to ensure the recovery lasts.
Sustainable Recovery
“What you want to see is that private sector demand picks up in Russia, to actually take over the lead in sustaining the recovery,” Brekk said. “The net export numbers for 2009 were encouraging in terms of external demand, but the private domestic sector also needs to come in so that you can sustain the recovery.”
The State Statistics Service estimates that net exports, or exports minus imports, grew 58 percent last year while household spending fell 8.1 percent.
Russia’s recovery is “fragile,” Deputy Economy Minister Andrei Klepach said yesterday. “The quality and stability of the revival raises questions,” he said.
For Related News and Information: On Russian banks: TNI RUSSIA BNK Russian loans stories: TNI RUSSIA LOANS Russian economic statistics ECST RU Emerging-markets monitor: EMMV
Last Updated: February 3, 2010 03:26 EST
Business, Energy or Environmental regulations or discussions
Bloomberg: Norilsk Nickel, Polyus Gold, Rosneft: Russian Equity Preview
By Lucian Kim
Feb. 4 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.
The 30-stock Micex Index fell 0.4 percent to 1,431.08. The dollar-denominated RTS Index rose 0.6 percent to 1,507.15.
OAO GMK Norilsk Nickel (GMKN RX): Copper prices dropped, halting a two-day rally, after the rebounding dollar curbed demand for commodities as an alternative investment. Shares in Russia’s largest mining company dropped 0.8 percent to 4,734.16 rubles.
OAO Polyus Gold (PLZL RX): Gold fell for the first time this week in New York on a rebounding dollar. Shares in Russia’s largest gold miner slipped 0.1 percent to 1,496.46 rubles.
OAO Rosneft (ROSN RX): U.S. gasoline inventories unexpectedly dropped 1.31 million barrels as stockpiles of distillate fuel slipped 948,000 barrels. Shares in Russia’s largest oil company fell 1.7 percent to 237.70 rubles.
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
Last Updated: February 3, 2010 22:00 EST
The Moscow Times: VEB Hires Bond Managers
04 February 2010
Vneshekonombank said Wednesday that it hired Barclays Capital, Citigroup, HSBC Holdings and Societe Generale to arrange its first international bond sale.
VEB also named ING, Troika Dialog and VTB Capital co-managers of the medium-term notes, the state-run development bank said.
(Bloomberg)
Feb. 4, 2010, 2:30 a.m. EST
MarketWatch: Russia's Uralkali raised to buy at Citigroup
FRANKFURT (MarketWatch) -- Uralkali (OTHER:URAL.Y) , a Russia-based producer of potash fertilizers, was upgraded on Thursday to buy from sell at Citigroup, which expects a recovery in potash prices and production increases at the company. "We raise our rating to reflect the forecast volume increase and the recovery which we see happening in the first quarter," the bank said.
February 04, 2010 10:42
Interfax: TMK placing $350 mln in convertible bonds
MOSCOW. Feb 4 (Interfax) - Russia's TMK (RTS: TRMK), one of the world's top-three oil and gas industry pipe producers, is starting to place $350 million in convertible bonds maturing in 2015, the company said in a statement.
Proceeds form the placing will be used to refinance short-term debt.
EmergingMarkets.me: TNK-BP $1bn Eurobond shows the way for sovereign issue
by admin on February 4, 2010
By Ivan Anderzhanov in Moscow
TNK-BP, the Anglo-Russian petroleum joint venture, yesterday mandated British banks Barclays Capital and Royal Bank of Scotland, along with France’s Calyon to manage the issue of Eurobonds worth $1bn.
The Russian state is expected to shortly name a roster of banks to manage the issue of $3-5bn in Eurobonds in its first foray into the Eurobond market in over a decade.
Energy export monopoly Gazprom is expected to follows as Russian blue-chips become increasingly active in the Eurobond markets after international credit lines were shut down in the wake of the financial crisis.
Deputy Finance Minister Dmitry Pankin yesterday told Russia state-controlled corporates to hold fire for the sovereign issuance before going ahead with their own. “It would be logical for Russia to come to the market first, before state corporations,” Pankin told reporters at the Troika Dialog Russia Forum.
Demand for the TNK-BP bonds exceeded the supply, according to a statement from the company.
The 5-year $500m tranche was priced with a coupon of 6.250% and the 10-year $500 m tranche was priced with a coupon of 7.250%.
TNK-BP’s chief financial officer Jonathan Muir said that the company may use proceeds from the issue to finance day-to-day operations, including the capital investment programme and the refinancing of its short-term debt.
February 04, 2010 12:01
Interfax: VTB could unveil 2009 IFRS results in March, bring AGM forward
MOSCOW. Feb 4 (Interfax) - VTB (RTS: VTBR) could unveil its 2009 financial results to International Financial Reporting Standards (IFRS) in March, the bank's deputy president, Herbert Moos, told reporters.
Russia's second largest bank usually publishes its annual figures in April, but it plans to do so in March this year, Moos said.
VTB might also bring its AGM forward this year. We expect it to take place earlier, not at the end of June, like it usually does," Moos said.
VTB Capital: Vedomosti speculates that Sberbank has created an investment banking department
VTB Capital
February 4, 2010
planned headcount is 30 people - in line with strategy - insignificant vs. Sberbank's size - complement product offering for corporates - synergies with Sber Cap are evident - neutral for the stock
News: Vedomosti speculates that Sberbank has started to develop its own investment banking business. At this stage, it is being created as a department of Sberbank, with Sberbank Capital continuing to focus on restructuring 'problematic' assets and private equity. According to the paper, Sberbank plans to create a fully-fledged investment business ranging from M&A consulting to syndicated loans origination. The planned headcount is 30 people, with half of them hired so far. At this stage, the project is headed by Alexander Bazarov, who joined Sberbank from Deutsche Bank a while ago.
Our View: This news is neutral for Sberbank's stock. Sberbank has always stated its intention to develop investment banking, as stipulated by its strategy, and is now taking the first steps in that direction. However, it is worth remembering that given Sberbank's size, the possible contribution to revenues is not likely to be significant, and so this is neutral for the valuation. At the same time, investment banking would complement the product range offered for large corporates, as a number of them are now turning to cheaper capital markets financing (e.g. RUB bonds). In addition, there are clear synergies with Sberbank Capital over a two-three year horizon as the latter starts to dispose of assets acquired during the crisis.
Dmitry Dmitriev
Rencap: Sberbank CEO expects margins to fall in 2010
Rencap
February 4, 2010
Event: According to Dow Jones yesterday (3 Feb), citing Sberbank CEO German Gref, while Sberbank's net profit in 2010 will be larger than last year, the bank's margins will contract. Gref also warned against being too optimistic on banks' performances this year and said 2010 would be a normal year as banks recover from the crisis.
Action: Neutral for Sberbank, in our view.
Rationale: Sberbank management already mentioned, during a recent conference call, that the bank's margin after peaking in 3Q09 at 7.9%, the bank's margin would margin would be under pressure in the next quarters owing to a changing interest rate environment. Aiming to defend its margins, last month Sberbank reduced deposit interest rates to pre-crisis levels.
Armen Gasparyan
Steel Guru: Russia Chelyabinsk zinc Q4 2009 output up
Thursday, 04 Feb 2010
Reuters reported that Chelyabinsk Zinc Plant had increased output in the last quarter of 2009, although in the full year output fell.
It said in a statement that output of zinc and its alloys rose by 14.1% YoY in October to December 2009, but in the 12 months of last year output fell by 20% to 119,900 tonnes.
Chelyabinsk had to cut output last year along with other Russian metal producers because of the economic crisis, which reduced demand and lowered metals prices. But from the end of 2008 Chelyabinsk has implemented a series of cost cutting measures, which helped it to swing into profit in the first 9 months of 2009.
Russia's Urals Mining and Metals Company and the Russian Copper Company own a controlling stake in Chelyabinsk Zinc. UMMC has pledged to restore output at Chelyabinsk to pre crisis levels.
Chelyabinsk said that it sold domestically 64% of the metal produced last year. Its Kazakh subsidiary, Nova Zinc LLC processed 1.19 million tonnes of ore in January to December 2009, 10.4% less than in the same period of 2008.
(Sourced from Reuters)
AFP: Rusal pays creditors 2.14 billion dollars: company
(AFP) – 1 hour ago
MOSCOW — Russian metals giant Rusal has paid Russian and international creditors 2.14 billion dollars from the proceeds of its share listings on the Hong Kong and Paris stock exchanges, the company said Thursday.
"The company has paid its creditors 2.143 billion dollars from the proceeds of its share listings on the Hong Kong stock exchange and NYSE Euronext in Paris," the company said in a statement.
The repayments reduce Rusal's total outstanding debt to 12.9 billion dollars. The largest share of the repayment, 1.46 billion dollars, went to international lenders, the company said.
The economic crisis has left Rusal,the world's largest aluminium producer, billions of dollars in debt and it has been in complex talks with its creditor banks to restructure the debts.
In December it managed to trim its debt to 14.9 billion dollars (10.6 billion euros) through an agreement with its creditors.
The company, whose majority shareholder is Oleg Deripaska, last month launched an IPO on the Hong Kong and Paris bourses. It was the first Russian company to list on the Hong Kong stock exchange.
Reuters: Russia RUSAL repays creditors $2.143 bln
Thu Feb 4, 2010 11:26am IST
MOSCOW, Feb 4 (Reuters) - Russia's UC RUSAL said on Thursday it has repaid $2.143 billion owed to creditors, reducing its total debt to $12.9 billion.
The aluminium giant raised the funds via an initial public offering on the Hong Kong and NYSE Euronext Paris stock exchanges last month.
The funds were repaid to several international and Russian lenders, as well as the Onexim Group.
RUSAL did not repay any of its debt to state-owned Russian bank VEB. (Reporting by Alfred Kueppers)
Bloomberg: Rusal Cuts Debt to $12.9 Billion After Payments From IPO Cash
By Maria Kolesnikova
Feb. 4 (Bloomberg) -- United Co. Rusal cut its total debt to $12.9 billion after paying banks and billionaire shareholder Mikhail Prokhorov $2.14 billion with the cash it raised from its Hong Kong share sale last month.
Rusal paid international lenders $1.46 billion, Prokhorov $278 million and Russian lenders excluding VEB $253 million, as well as $152 million in fees, the Moscow-based company said in an e-mailed statement today.
To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@
Last Updated: February 4, 2010 00:50 EST
Bloomberg: Renaissance to Buy Leadbank, Names Gruzglin Head of Fixed Income
By Maria Ermakova
Feb. 4 (Bloomberg) -- Renaissance Capital, the Russian investment bank part-owned by billionaire Mikhail Prokhorov, said it will buy Leadbank LLC from Bank of Cyprus to help expand its foreign exchange products.
Renaissance named Yury Gruzglin global head of fixed income, currencies and commodities, the Moscow-based bank said in an e-mailed statement today.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@
Last Updated: February 4, 2010 01:41 EST
FinancialMirror: Bank of Cyprus sells Russian Leadbank to Renaissance Capital
February 04, 2010
Bank of Cyprus Public Company Ltd announced that it has signed an agreement to sell 100% of the share capital of Leadbank LLC (former Bank Kypra LLC), one of its two Russian banking subsidiaries, to CJSC Renaissance Capital.
The sale will be at a premium to the net asset value of Leadbank LLC. It is noted that as at 31 December 2009, Leadbank LLC had net assets of around EUR11.7 mln. Τhe transaction will not have any significant financial or operational impact on the Group.
The transaction is subject to the satisfaction of certain conditions, including approval by the Central Bank of Russia.
Leadbank LLC was established in April 2007 as Bank Kypra LLC and operates through one branch in Moscow.
During 2009, Bank of Cyprus completed the operational merger of its Russian operations by selling the loan portfolio of its 100% subsidiary Leadbank LLC to its 80% subsidiary Uniastrum Bank, acquired in October 2008. As a result the Group's strategy and operations in Russia are carried out through its subsidiary Uniastrum Bank which operates a network of 220 branches throughout the Russian Federation.
AP: MDA signs two contracts with Russian firm worth a total of more than $60M
By The Associated Press
Wednesday, February 03, 2010
MacDonald, Dettwiler and Associates Ltd. (TSX:MDA) said Wednesday it has signed two contracts with the Russian Radio Research and Development Institute worth a total of more than US$60 million.
The Vancouver-area company said it will provide key sub-systems for the Express AM5 and Express AM6 satellites in a contract worth more than $45 million.
MDA also said it won a contract worth more than $15 million in connection with the Lutch-M weather satellite.
The Russian Federal Service on Hydrometeorology and Environmental Control will use the satellite for monitoring weather patterns over Russia.
About 35 per cent of MDA's roughly $1 billion in annual revenues come from its Space Division, also known as the information services. The rest comes from Information Products, which is the real estate services it provides.
MDA employs more than 3,200 people in the United States, the United Kingdom and Canada.
The Moscow Times: Proposal to Integrate National Payment System With Cell Phones
04 February 2010
Alfa Group co-owner Mikhail Fridman is hoping to convince President Dmitry Medvedev at an upcoming meeting that banks need access to cell phone operators' client information to provide Russians with payment cards.
The government is preparing to submit to the State Duma legislation to create a national payment system, and state lenders Sberbank and Vneshekonombank have already offered to help provide cards. But Fridman will propose an alternative project at Medvedev's Feb. 11 meeting on modernization in Tomsk, a source close to the businessman told Vedomosti.
Deputy Prime Minister Sergei Sobyanin, who heads the government administration, has taken an interest in the project and asked Fridman to propose it to the president, a source in the Russian Union of Industrialists and Entrepreneurs said.
"We're suggesting that mobile operators' data on clients be used to produce and offer them bank cards," a source in Alfa Bank's management said.
Under the plan, a bank would ask an operator to collect data from certain customers — for example, their gender, age and money spent on communications. For those clients whom it deems reliable, the bank would send by mail a not-yet-activated card or an offer to visit a bank branch and pick one up. The card could be real or virtual, using a password for access to Internet payments.
The bank would then open an account for the client, through which all of the transactions would be conducted, but "the possibility of moving funds between bank accounts and cell phone accounts is being discussed with mobile operators," the Alfa Bank source said. They are also discussing an option to allow clients to pay for goods and services from the bank account through Bluetooth-equipped mobile phones.
If the program were started now, people could begin using it much sooner than the costly national payment system, the source in Alfa Bank said.
A source in the government agreed that those were the project's main advantages.
As of Dec. 31, 2009, 207.91 million SIM cards were registered in Russia, according to AC&M-Consulting. Central Bank data shows that as of Oct. 1, 2009, more than 121 million bank cards had been issued in Russia. But the percentage of people who own a bank card is far lower — a VTsIOM poll in 2007 found that just 32 percent of respondents said they had one.
People discussing the national payment system have not been thinking about how to make the project profitable or how to create the infrastructure to accept cards, not to mention whether the system will eventually become profitable, said Georgy Gorshakov, a member of the management board at VTB 24.
He said he was unaware of Fridman's proposal. "Our bank thinks more about traditional ways to attract clients," Gorshakov said.
Banks are already discussing the idea with operators. The Alfa Bank source said the lender was in talks with VimpelCom and MegaFon, in which Alfa Group holds stakes. Mobile TeleSystems "is holding talks with a series of banks about the possibility of issuing cards to network clients," a spokesperson said.
MegaFon has discussed the idea with banks, spokeswoman Tatyana Zvereva said.
Fridman was not available for comment, and spokespeople for Alfa Bank, VimpelCom, Sberbank and VEB declined comment.
For the system to work, it would require changes to the law on personal information. The legislation will be seriously reworked in favor of mobile operators, a source close to the Duma's leadership said. But "there are no concrete proposals in the Duma yet," the source said.
The government source said Alfa's proposal was timely, since the idea of an electric citizens' card is being discussed and it could just as easily be electronic.
The Moscow Times: Alfa, Telenor Asset Merger Approved
04 February 2010
A commission chaired by Prime Minister Vladimir Putin on Wednesday approved a deal between Alfa Group and Norway’s Telenor to merge their telecommunications assets in Russia and Ukraine, opening the way for $4.5 billion in investment over the next four years.
“This will lead to a very big impulse for the development of these assets in Russia and Ukraine,” Federal Anti-Monopoly Service chief Igor Artemyev said while announcing the commission’s decision.
The commission on foreign investments was meeting to discuss an array of deals involving companies registered abroad, and it followed a meeting hosted by President Dmitry Medvedev a day earlier on how to lure back foreign capital after a 41 percent decrease last year.
Artemyev did not give a breakdown for how much Alfa and Telenor would invest or where the money would go, saying only that the total would amount to 137 billion rubles, or $4.5 billion, from 2010 to 2013.
The companies agreed to merge their stakes in VimpelCom and Kyivstar in October after a protracted legal battle, triggered by Telenor’s refusal to approve the expansion of VimpelCom into Ukraine, where it would compete with their other jointly owned operator, Kyivstar.
New York-listed VimpelCom, Russia’s second-biggest mobile operator, operates under the Beeline brand.
Under the deal that ended the standoff, Alfa and Telenor agreed to merge their stakes into a Dutch-registered and U.S.-listed company called Vimpelcom Ltd. Alfa Group's telecoms arm, Altimo, and Telenor will hold almost equal stakes in the new company, with 38.84 percent and 38.46 percent, respectively.
Alfa will own more voting stock, with 43.89 percent, than Telenor's 35.42 percent. Even so, the companies will wield equal voting power in the board of directors, each having three directors to represent them on the nine-member board. The remaining three seats will go to independent directors.
Former VimpelCom chief Alexander Izosimov was tapped to head Vimpelcom Ltd.
But the deal still requires anti-monopoly approval in Ukraine, as well as agreement from minority shareholders. Altimo and Telenor have said they would start an offer to VimpelCom minorities in February.
Shares in Telenor jumped as much as 5 percent on the news and settled with a gain of 2.8 percent in Oslo. VimpelCom's shares in New York were down 2.3 percent.
Approval of the merger could also put new pressure on Alfa to divest its stake in rival mobile operator MegaFon. The government has indicated that it would like to buy control of the country's No. 3 mobile company as part of its reorganization of state-run Svyazinvest, and it is already in talks with another major shareholder, Alisher Usmanov.
Altimo says its blocking stake in MegaFon does not present a conflict of interest. Altimo and Sweden's TeliaSonera are looking to merge their joint telecoms holdings — in MegaFon and Turkish operator Turkcell — in a deal similar to the one approved Wednesday.
The IT and Communications Ministry, which is overseeing the Svyazinvest reorganization, opposes the deal, and Artemyev indicated that he was also less than enthused.
"It would be a dream come true for the Federal Anti-Monopoly Service if Alfa did this," he said in response to a question about whether Alfa would have to abandon the TeliaSonera deal.
The service will look into the planned merger, he said during a news conference, without elaborating.
The government commission on foreign investment, which was set up to regulate purchases in strategic industries, also approved a deal to fold two television media assets owned by Usmanov — 7TV and 75 percent of music channel MuzTV — and regional media outlets owned by Ivan Tavrin into a single UTV Russia Holdings company, Artemyev said.
In addition, the commission backed several “technical” deals that remove a handful of links in the chain of offshore companies that Russian businessmen use to control their assets in Russia. In one of these deals, Mikhail Prokhorov will straighten up his hold on a stake in miner Polyus Gold, Artemyev said.
Despite the commission's name, the majority of its hearings focus on deals involving Russian businesses owned through offshore holding companies.
The body also asked Oleg Deripaska to formally revoke his request to buy Russneft because it had learned that the deal to buy the oil producer from Mikhail Gutseriyev was reversed, Artemyev said.
The anti-monopoly service, he said, will also look into a planned merger of aviation assets that would see state-run Aeroflot double in size. Putin agreed on a plan proposed Tuesday by Transportation Minister Igor Levitin to have state corporation Russian Technologies hand over several airlines to Aeroflot instead of creating a rival carrier with the Moscow city government.
Levitin had told Putin that the arrangement, which could see Aeroflot's share of the domestic market rise to between 30 percent and 35 percent, could be accommodated within the existing anti-monopoly law.
The service will issue instructions to Aeroflot to allow more competition on certain flights if the deal goes through, Artemyev said.
He also said amendments to the law on foreign investments were presented to foreign investors for study last month and that his service was taking recommendations on how to improve them.
The government frequently meets to discuss ways to encourage foreign investment, although perceived political interference in business — most recently the seizure by court bailiffs of Telenor's $1.4 billion stake in VimpelCom before a settlement was reached with Alfa — has hurt the investment climate.
Putin said foreign investment in Russia amounted to more than $40 billion last year. "We need to think about how to create the most favorable, maximally favorable conditions for foreign investments, and for all investments into our economy," he told the meeting, proposing tax cuts to stimulate innovation and also removing bureaucratic barriers.
Speaking at Troika Dialog's annual Russia Forum, Finance Minister Alexei Kudrin said foreign direct investment fell by $30 billion last year and that the country had a net capital outflow of $52 billion. But he also said foreign investment could jump to between $60 billion and $70 billion in the next two to three years as the global economy improves.
Medvedev said Tuesday that foreign investment fell by 41 percent last year and that at least half of what was invested came from Russian-owned companies registered abroad. He also appointed First Deputy Prime Minister Igor Shuvalov to oversee Russia's investment climate, saying he would have the authority to seek cancellation of decisions by state agencies that would make life harder for investors.
PR Web: RT Gains Popularity On YouTube
In December 2009 RT ranked among the top 20 most popular channels on YouTube. In the past three months RT’s video materials on YouTube had more than 200,000 views a month on average (). By early December, RT became the most viewed channel in the international YouTube and held its top position nearly 48 hours.
MOSCOW (Vocus/PRWEB ) February 3, 2010 -- In December 2009 RT ranked among the top 20 most popular channels on YouTube. In the past three months RT’s video materials on YouTube had more than 200,000 views a month on average (). By early December, RT became the most viewed channel in the international YouTube and held its top position nearly 48 hours.
The overall number of videos viewed has exceeded 70 million which let RT enter the top most viewed channels in YouTube’s history in the Directors news category.
Google, the owner of the world’s most popular video hosting site, did not leave these results unattended – in 2010 the Internet search engine flagship is going to expand its co-operation with RT by placing its partner network’s ads on the RT channel page on YouTube.
“We are glad that our partnership has reached a new level, and now the videos published on RT will be not only a source of information for its numerous visitors but also a source for income – for Russia Today itself. We hope that other companies will follow suit,” – Vladimir Dolgov, Head of Google Russia, said.
“The interest in RT has been growing exponentially, literally speaking. I think it is due to our offering an alternative view on the news. We provide stories you will never find in the mainstream media, therefore our viewers from the USA write in their feedback comments: “If you want to know the truth about America, watch the Russian channel RT,” – Margarita Simonyan, Editor-in-Chief, RT, said.
In the US, RT TV English is available in select markets: MhZ in Washington, D.C. Metro area; in New York, NY it is carried by Time Warner; FIOS, and Dish Network elsewhere. Its webcast is available at live .
In addition to the 24/7 TV newsfeed in English, RT has feeds in Arabic and a newly-launched feed in Spanish, all distributed via satellite from Moscow, Russia, as well as online, at .
|The Financial: Aeroflot's enlargement designed to boost air safety, but carries risk |
| |
|04/02/2010 10:18 (00:41 minutes ago) |
|The FINANCIAL -- Russia's plans to integrate six smaller airlines into the country's flagship carrier Aeroflot is aimed at |
|improving air safety and modernizing the domestic air fleet, but was likely to create one more monopolist, an expert said on |
|February 3, according to RIA Novosti. |
Russian Prime Minister Vladimir Putin agreed on February 2 with proposals to merge the airlines, currently under the control of state-owned hi-tech corporation Russian Technologies, into Aeroflot. Before the merger, the Rossiya air company, the largest of the six, will have to be privatized.
Boris Shmelyov, head of the Center for Political Studies at the Russian Academy of Sciences' Economy Institute, welcomed the government's decision, saying the move would help Russia solve a large number of problems on the domestic air carrier market.
"After the breakup of the Soviet Union, a host of small airlines emerged," he said. "But life has shown that these companies are weak, noncompetitive and unable to ensure a high level of operations."
Shmelyov said the biggest problem of the small carriers, known in 1990s as "babyflots" was to provide for the repair and maintenance of aircraft.
The decline of air safety in the post-Soviet years has led to dozens of major air crashes which have claimed thousands of life. A series of recent checks have shown that small companies tend to save on quality spare parts and maintenance work creating additional risks.
The decision to merge Aeroflot with six smaller companies contradicted previous plans by the government to consolidate small regional air carriers into a large state-owned company Rosavia to create a competitor for Aeroflot.
The plans emerged after dozens of small regional airlines, burdened with heavy debts and hit by ineffective management, failed to provide quality services, canceling flights and leaving passengers stranded at airports without any compensation.
Tuesday's move will increase Aeroflot's domestic market share from 15-20% to 30-35%. Critics argue that the decision could turn Aeroflot, the sole air carrier during the Soviet period, into a monopoly on the domestic market and make it less competitive.
Shmelyov said the concentration of the market in these conditions was a natural process as three to four big air companies instead of dozens of small airlines would be enough to deal with international and domestic demand.
"To avoid collusion, there is the anti-trust body to keep an eye on this process. I believe that Aeroflot's enlargement is a normal and natural process in line with current trends and the logic of economic development," Shmelyov said.
Bloomberg: Billionaire Blavatnik Said to Join Bidding for MGM (Update3)
By Ronald Grover and Michael White
Feb. 3 (Bloomberg) -- Billionaire Len Blavatnik is among the second-round suitors for Metro-Goldwyn-Mayer Inc., distributor of the James Bond movies, two people with knowledge of the situation said.
Lions Gate Entertainment Corp., Time Warner Inc., Liberty Media Corp. and Elliott Management Corp., working with Hollywood financier Ryan Kavanaugh, also are in the bidding, according to people close to the process who sought anonymity because discussions are private. They declined to discuss amounts proposed in the non-binding first round.
Advancing to the second round gives suitors access to more detailed information before making a formal bid for the Los Angeles-based studio, which owns a 4,100-film library and is exploring a sale after failing to make payments on $3.7 billion of debt. Last week, lenders extended a moratorium on interest payments to March 31, allowing more time for negotiations.
“The price has come down so far that it’s attracting non- studio bidders,” said David Davis, managing partner at the entertainment advisory firm Arpeggio Partners in Santa Monica, California.
Matthew Harrigan, an analyst with Wunderlich Securities, estimated last month the company is worth $1.6 billion to $1.7 billion. When the studio put itself up for sale in November, MGM creditors sought at least $2 billion, people with knowledge of the situation said then.
Tough to Compete
Blavatnik may be at a disadvantage because he doesn’t own a film distribution business, Davis said in an interview. Studio bidders would likely plan to close MGM’s distribution unit to reduce costs, he said.
“I don’t see how companies that don’t own motion-picture distribution systems can compete on bidding,” he said. “You have big overhead savings.”
Blavatnik’s bid marks an effort by the Ukrainian-born industrialist to expand in the U.S. Blavatnik, a U.S. citizen, is chairman of New York-based Access Industries Holdings LLC, which owns a stake in Top Up TV, a U.K. pay television service, and in 2008 acquired control of the U.K. arm of actor/director Mel Gibson’s Icon Productions Inc., the U.K.’s Daily Telegraph reported at the time.
A spokesman for Blavatnik declined to comment, as did Susie Arons, an outside spokeswoman for MGM. Ed Adler, with New York- based Time Warner, and Courtnee Ulrich of Liberty Media also wouldn’t comment.
The Wall Street Journal reported today that Time Warner offered less than $2 billion in cash for MGM, citing people familiar with the matter.
Other Suitors
In addition to those bidders, News Corp., parent of Twentieth Century Fox, and Qualia Capital LLC, led by Amir Malin and Ken Schapiro, have each proposed restructuring the debt and injecting cash to recapitalize the company, people with knowledge of the process said last week. Both companies are based in New York.
News Corp. is unlikely to win the bidding because others are more interested, Chairman and Chief Executive Officer Rupert Murdoch said on a conference call yesterday.
MGM will probably seek a so-called pre-packaged bankruptcy to complete a sale, said Clark Hallren, managing director at the Los Angeles-based entertainment advisory firm Clear Scope Partners. The move would eliminate the need for MGM’s owners to get approval from each of the company’s 140 creditors, he said.
“You’ve got to have a bankruptcy as a matter of process,” said Hallren, who worked for 23 years in JPMorgan Chase & Co.’s entertainment banking division. “There’s no way you’re going to get 140 people to agree to anything.”
Lions Gate
Lions Gate is talking with One Equity Partners, a private equity investment arm of JPMorgan Chase, about becoming a partner in its bid, according to a person with knowledge of the talks. In May 2008, Lions Gate agreed to sell a 49 percent stake in its TV Guide Network to One Equity for $123 million.
Tasha Pelio, a spokeswoman for New York-based JPMorgan, declined to comment on any role the bank may have in the MGM deal. Peter Wilkes, a Lions Gate spokesman, wouldn’t comment on MGM or JPMorgan.
Blavatnik, 52, was ranked 44th on Forbes magazine’s 2009 list of the 400 richest Americans with a $5 billion fortune made in oil and gas. He emigrated to the U.S. from the former Soviet Union in 1978 and studied at Columbia University and Harvard Business School before founding Access Industries in 1986, according to the magazine.
In June, Blavatnik offered $33 million in an unsuccessful bid for a stake in Irish broadcaster Setanta Sports, BBC News reported at the time.
Lyondell Link
MGM Vice-Chairman Stephen F. Cooper, who is leading the studio’s restructuring, also serves as supervisory board vice chairman and head of the restructuring committee at LyondellBasell Industries, partly owned by Blavatnik’s Access Industries. The company’s U.S. operation, Lyondell Chemical Co., filed for bankruptcy protection in January 2009.
With backing from New York-based Elliott Management, Kavanaugh, 35, finances movies for Sony Corp. and NBC Universal’s Universal Pictures and produces films through his Relativity Media LLC, based in West Hollywood, California. Relativity Media and Elliott Management declined to comment, according to Scott Tagliarino, a spokesman for both.
Relativity has helped finance movies including “Fast and Furious,” “Hancock” and “Mamma Mia!” according to a July 2009 statement from the company.
MGM, created in 1924, made films including “The Wizard of Oz” and “Ben Hur.” The company sold many of its early pictures prior to its 2005 buyout by a group led by private equity firms Providence Equity Partners and TPG. It released one picture in 2009 and has a co-production deal with Warner Bros. on the planned film “The Hobbit.”
To contact the reporters on this story: Ronald Grover in Los Angeles at rgrover@; Michael White in Los Angeles at mwhite8@
Last Updated: February 3, 2010 20:28 EST
: The call of the Russian investor
By Charles Clover
Published: February 3 2010 23:59 | Last updated: February 3 2010 23:59
When Sergei Kalugin, a Russian businessman, cashed out of some telecom projects he was managing a little over a year ago, he began casting around for other business pursuits.
In terms of the “next big thing”, there was one crucial limitation. As he puts it: “I didn’t have enough money to buy an oil company.” But he adds, he wanted to do something “creative and entrepreneurial”. That is when the internet beckoned.
He is now chairman of Web Media Group, which has invested about $20m (€14.4m, £12.5m) in a number of Russian internet start-up projects. In the process, he has become something rarely found in Russia: a swashbuckling, Silicon Valley-style venture capitalist.
Most financiers have little stomach for technology investing in Russia, which is surprising, given the Soviet legacy of high-tech successes. In spite of the potential of a large pool of maths and science talent, most consider it too much of a risk.
“Venture capital is the most risky sector, and Russia is a risky country. So you’re really double-dipping on the risk,” says Dmitry Krukov, who runs a private equity fund for Renaissance Capital, a Moscow investment bank.
As a result, Russia, once the country of Sputnik and Yuri Gagarin, has now faded from the forefront of global technology development, as the Soviet state-sponsored infrastructure of research institutes atrophies and universities remain badly underfunded. Meanwhile, the private sector has not made up the difference.
Alexandra Johnson, managing director at Draper Fisher Jurvetson, the Silicon Valley venture capital company, specialises in Russia. She believes technology underdevelopment is mainly due to the lack of good managers. “There is a lot of money [in Russia], and a great science and engineering base, but not enough talented entrepreneurs and managers to run these companies,” she says.
The unpopularity of high-risk investment in technology is an advantage, however, for those who dare. Yuri Milner, head of another VC company in Russia, Digital Sky Technologies, which recently bought 2 per cent of Facebook, says the lack of competition does not trouble him too much.
“If you’ve got a great project, sooner or later you’ll wind up in this office,” he winks, from his eyrie on the 50th floor of a chrome and glass tower high above the Moscow River. For, whereas internet entrepreneurs in Silicon Valley have dozens of VC companies to choose between, in Russia, there are no more than a handful.
Mr Kalugin hopes more people follow in his footsteps. “There has never been a huge market for these projects here, until very recently. Internet in Russia is a serious business, and people are slowly catching on,” he says.
Without Soviet-style state support, or developed private-sector sources of capital, Russian technology remains stunted. Most talented programmers leave to work abroad, rather than stay to try to set up their own companies.
Dmitry Loschinin, head of Luxoft, Russia’s largest software offshoring company, identifies the lack of investors willing to invest in budding technologies as the biggest problem facing innovation in his country.
Comparing the west to Russia, he says: “To bring projects along, you need three types of investors. The first ones, who invest in the beginning, are the so-called ‘three Fs’ – friends, family and fools. At the last stage you need the strategic investors: the initial public offerings, the Googles, that sort of thing.
“In between, you have the so-called angel investors [individuals who invest] and the venture capitalists, who take a project and move it to the next level, to the strategic investors. It’s the highest risk, highest reward. That is what is totally missing in Russia.”
Ms Johnson argues that much of the problem is due to the availability of other profitable investment opportunities. “It’s hard to get sophisticated investors to put money into tech when they could make fabulous returns on oil and other sectors,” she says. She adds that the Russian market does not have the kind of prerequisites for the fabled “big exit” – the holy grail for venture capitalists, when the investors cash out, usually with an IPO.
There is no tech-friendly stock exchange in Moscow, although there is an attempt under way to mimic London’s Aim exchange, for alternative investments. There are also no stock options, the key ingredient for the high pay-outs of Silicon Valley.
Nonetheless, Mr Kalugin is undaunted. Having invested $20m in Web Media Group, according to the company’s statistics, he says he is busy developing internet projects or buying them. There are 11 in the portfolio, in various stages of development, and most are tried and tested Russian versions of successful western formulas.
Photosight.ru, for example, is similar to the photosharing website Flickr, while Medsputnik.ru is a close approximation of , the health information site, right down to the diagnostic tools for the hypochondriac in all of us. Dostavka.ru is similar to , and despite the obstacles in Russia to e-commerce – such as lack of credit cards or reliable delivery – it has grown 50 per cent in the past year, according to Mr Kalugin.
Russian internet companies are successful in their market niche, and Russian internet usage rates are some of the fastest growing in the world. The country’s biggest search engine, Yandex, grew at 94 per cent in the year to August 2009, the fastest rate in the world for a search engine, according to a survey by ComScore, the internet research firm – albeit from a low base. According to Web Media Group statistics, it has 4m unique users and 40m monthly page views.
There are many other high-technology areas for investors with a big appetite for risk, ranging from wimax, a type of wireless network, to artificial intelligence, to nanotechnology.
Russia’s political leaders are discovering that as their country increasingly lags behind the world’s elite knowledge economies, they need to boost the sector.
To that end, the government created a state corporation in 2007 to fund innovation, Rusnano, based in Moscow, which specialises in nanotechnology and plans to spend hundreds of millions developing and licensing technologies over the next few years.
“Rusnano is not backing ideas but actually proven technologies,” says Vladimir Bernstein, managing director of Moscow-based Icon Private Equity, an investment firm not affiliated with Rusnano. “It’s about creating whole ecosystems, producers, services, whole groups of companies, and there will be opportunities for venture capitalists around those ecosystems,” he says.
Part of this initiative will involve the creation of a $100m venture capital fund, established by Rusnano in partnership with VTB Group, Russia’s second-largest state-owned bank, and Draper Fisher Jurvetson.
Just as Mr Kalugin hopes other investors follow in his footsteps, so the Russian government hopes that by acting as a funder itself, it can be a model to help spur the sector, too.
A high-tech legacy
The twin Soviet achievements of launching Sputnik 1, the world’s first artificial satellite, and putting the first human, Yuri Gagarin, into space placed the Soviet Union at the forefront of technological innovation. The edge that Russia inherited from its Soviet legacy has diminished, but venture capitalists such as Sergei Kalugin hope to spur renewed success.
The Moscow Times: Crisis Taught Firms About Consumers
04 February 2010
By Alex Anishyuk
Executives at some of the country's top consumer goods companies said Wednesday that while the crisis took a toll on their business, it also provided a number of valuable lessons about Russian consumers.
But a panel at Troika Dialog's annual Russia Forum found that the lessons learned were as varied as the goods they sell.
The recession taught businesses to look at their products more precisely, said Stefan de Loecker, CEO of Nestle for Russia and the Eurasia region.
“Many businessmen blamed the crisis for the sales drops, but it was not always the case,” he said. “The crisis showed weakness of some brands and products. It revealed that some goods don’t offer enough value for money to the consumer and made businessmen improve their assortment.”
Consumers here are quite quality-dependent and will not switch to cheap brands so easily, said Mikhail Kusnirovich, chairman of the board at Bosco di Ciliegi, a major sports clothing manufacturer and retailer.
“In this country, people have a sane consumer mentality, and their consumption depends on the overall mood,” he said. “As you can see, people have not switched from toothpaste to dental powder.”
The key for building a successful business, then, while demand is floating near bottom is to enhance your offer, Kusnirovich said.
“Imagine that you are a restaurateur and you have fewer clients, and all of a sudden you decide to cut 70 percent of the items on your menu. You may well guess what business results you'll achieve,” he said. “You need to dance before your consumer. You should make the consumer fall in love with you. Only then will you be a success!"
Others on the panel said they learned that even emerging markets could some day retreat.
“I remember sitting in my office 18 months ago, with oil prices at $150 per barrel and the ruble feeling historically strong against the dollar,” said Richard Smyth, president of Mars for Europe and the CIS. “We had a ninth year of consecutive growth, and I could never believe things would go as wrong as they did.”
The recession made plenty of businessmen think of closing up shop, said Rostislav Ordovsky-Tanayevsky Blanco, president of Rostik Group, which owns and operates a number of restaurant chains.
“In March [2009], we all thought we're going to die,” he said. “The crises in Russia have a national peculiarity: They are much stronger and much shorter, and on top of that we all have a short memory.”
Alcohol — and especially the vodka market — fell amid the recession as the share of counterfeit trade increased, said Alexander Mechetin, chairman of Synergy, a major vodka producer.
“Sales of cheaper vodka brands fell most significantly, as more low-income consumers preferred to buy counterfeit vodka and save money,” he said. “As for premium-priced vodkas, our company had a surprise sales upturn of 20 percent for our Beluga premium brand.”
He attributed the growth to middle-class consumers who used to drink imported whisky or cognac before the crisis but switched to high-end domestic brands. The swap allowed them to feel like they were maintaining their quality of life while saving money, especially as import prices rose because of the ruble devaluation, he said.
But cutting prices, a tactic used by many Russian clothing retailers in 2008 and 2009, drastically decreases the goods' perceived value for consumers and the image of retailers, said Kusnirovich, of Bosco.
“Those who could buy a jacket for full price want to feel they can afford it at 100 percent and not at a 70 percent discount,” he said. “Consumers who only can afford quality clothes at 70 to 80 percent discounts, will think: Look how much these retailers overpriced their stuff during good times — even with these discounts they make fair margins!”
On the whole, retailers are optimistic about the Russian market, said Synergy's Mechetin.
“A man stays a man, and a consumer stays a consumer. People will keep on buying premium-priced goods and going to restaurants,” he said. “And as long as they do so, we will have high margins.”
Activity in the Oil and Gas sector (including regulatory)
RIA: Oil leaks from recently launched Pacific oil pipeline
05:0004/02/2010
An unknown amount of oil leaked from the East-Siberia - Pacific Ocean (ESPO) oil pipeline, launched about a month ago, a source in the regional emergencies service said on Thursday.
The leak occurred late on Wednesday, near the final point of the pipeline, the town of Skovorodino in the Amur Region.
"The amount of leaked oil and the area of pollution are being established," the source said.
He added that the leak poses no serious threat to the environment as snow and temperatures below -30 degrees Celsius (-22 degrees Fahrenheit) prevent soil pollution.
Works to clean contaminated snow are already underway.
The pipeline was apparently damaged during construction works.
Transneft, the pipeline's operator, was not immediately available for comment.
The ESPO project is designed to pump up to 1.6 million barrels (220,000 tons) of crude per day from Siberia to Russia's Far East and then on to China and the Asia-Pacific region. The first leg of the pipeline was launched by the Russian Prime Minister Vladimir Putin on December 28, 2009.
On January 20, about 450 cubic meters of oil leaked from the pipeline in Sibria's Yakutia during maintenance works, polluting the area of over 20,000 square meters (over 215,000 square feet).
VLADIVOSTOK, February 4 (RIA Novosti)
The Moscow Times: State to Give Rosneft New Sakhalin Fields
04 February 2010
Combined Reports
The Natural Resources and Environment Ministry said Wednesday that it may extend several no-bid licenses to Rosneft for development on the Sakhalin shelf, where Rosneft has tried to build a presence for years.
"The ministry is preparing such a decision. It's possible that it will happen in the first half of 2010," said Denis Khramov, a department head at the ministry, Interfax reported.
In order to approve no-bid licenses, the government must first include them on a no-bid list and then approve the transfer of the licenses. Khramov said the government had not yet finalized which licenses the oil major would receive. Rosneft vice president Peter O'Brien expressed interest last year in the Nekrasovsky-Astrakhanovskoye More field and the northern part of the Chaivo More field.
Rosneft hasn't had much luck with Sakhalin developments. In 2007, Rosneft and partner British Petroleum gave up drilling on the Sakhalin-4 development when it came up empty.
In 2008, the government rejected Rosneft and Korea National Oil’s request to extend their rights to offshore resources in West Kamchatka, later transferring the license to Gazprom.
The government also granted Gazprom the Kirinsky block, which is part of the Sakhalin-3 project, and the Chayanda field in eastern Siberia without competitive tenders, among at least 10 licenses that the gas export monopoly gained in 2008.
Rosneft spokesman Nikolai Manvelov declined to comment on licenses Wednesday.
The government now only allows Rosneft and Gazprom to develop marine fields. Under current legislation, the license holder must be state-controlled and have experience working offshore.
The Natural Resources Ministry has proposed changes in the laws to stimulate investments in offshore fields, such as expanding the list of eligible companies and granting separate licenses for wildcat drilling, Khramov said. Russia now issues joint licenses for exploration and production on offshore blocks.
The ministry also wants the state to play a larger role in shaping groups that operate offshore projects, to increase financing and ensure compliance with license terms, he said.
The changes would help Russia retain its “advantage” in the Arctic and other offshore areas, currently jeopardized by lack of investment and slow pace of work, Khramov said.
Last year’s budget investments in offshore fields were cut to 24.6 billion rubles ($823 million) from 29.9 billion rubles in 2008, Khramov said. License holders invested 800 million rubles, down from 1.2 billion rubles.
Producing offshore fields in the Far East yielded 11.8 million tons of crude, 1.6 million tons of condensate and 10.3 billion cubic meters of gas last year, Khramov said.
(MT, Bloomberg)
February 04, 2010 02:46 AM Eastern Time
BusinessWire: NOVATEK and TOTAL close transaction for establishment of joint venture
MOSCOW--(BUSINESS WIRE)--
NOVATEK AND TOTAL CLOSE TRANSACTION FOR ESTABLISHMENT OF JOINT VENTURE
Moscow, 4 February 2010. OAO NOVATEK (“NOVATEK” and/or the “Company”) has today announced that the Company and Total Termokarstovoye B.V., an affiliate of Total SA (“Total”) have closed the transaction for the establishment of a joint venture for exploration and development of the Termokarstovoye gas condensate field (the “Field”) in the Yamal-Nenets Autonomous Region.
The exploration and production license for the Field is currently held by ZAO Terneftegas (“Terneftagas”), NOVATEK’s wholly-owned subsidiary. Total’s share in Terneftegas will increase to a total of 49% by the end of 2010. A Final Investment Decision will be made in late 2011 upon the successful completion of the first stage of the project.
The transaction has received approval from the Federal Anti Monopoly Service of the Russian Federation.
Note:
The Termokarstovoye field’s reserves are estimated at 396.8 million barrels of oil equivalent (47.3 billion cubic meters of natural gas and 10.3 million tons of liquid hydrocarbons) according to Russian reserve classification ABC1 + C2 as at 31 December 2008
• FEBRUARY 4, 2010, 3:38 A.M. ET
WSJ: Novatek, Total To Develop Field In Russia's Yamal Region
MOSCOW (Dow Jones)--Russian natural gas producer Novatek (NVTK.RS) and French oil and gas company Total SA (TOT) have created a joint venture for exploration and development of the Termokarstovoye gas condensate field in the Yamal-Nenets Autonomous Region, Russia's Arctic region, Novatek said Thursday.
Total's share in Novatek's subsidiary, which holds the exploration and production license for the field, will increase to a total of 49% by the end of 2010, Novatek said.
The deal has been approved by Russia's Antimonopoly Service.
The Termokarstovoye field's reserves are estimated at 396.8 million barrels of oil equivalent, consisting of 47.3 billion cubic meters of natural gas and 10.3 million tons of liquid hydrocarbons according to Russian reserve classification.
-By Alexander Kolyandr, Dow Jones Newswires; +7 495 232 9192; Alexander.Kolyandr@
Oil and Gas Journal: Output up at Russia's Verkhnechonskoe field
Feb 3, 2010
By OGJ editors
HOUSTON, Feb. 3 -- The Vercknechonskneftegas (VCNG) combine produced 1.181 million tons (23,500 b/d) of oil in 2009, 30% above plan, the organization said.
The group drilled and prepared for operation 41 wells in giant Verkhnechonskoe field in 2009. The field, in Kataganskiy District, Irkutsk Region, is considered Eastern Siberia Russia’s largest oil field.
Verkhnechonskoe field reservoir pressure maintenance is a prerequisite for efficient use of the hydrocarbon reserves, the combine said.
The field has C1+C2 reserves of 201.6 million tons of oil, 95.5 billion cu m of gas, and 3.4 million tons of condensate. Oil and condensate are to be shipped on the East Siberia-Pacific Ocean pipeline, the first phase of which opened at the end of 2009 (OGJ Online, Dec. 29, 2009).
The major shareholders in VCNG are TNK-BP Holding 68.51%, Rosneft 25.94%, and East-Siberian Gas Co. 5.48%.
• FEBRUARY 3, 2010, 12:47 P.M. ET
WSJ: Russia OKs $400 Mln Budget For Kharyaga Oil Field - Prime-Tass
MOSCOW (Dow Jones)--A Russian government committee has approved the Kharyaga oil project's $400 million budget for 2010, the Prime-Tass news agency reports citing Pierre Nerguararia, chief executive of Total Russia.
He said daily oil output at the Kharyaga field was projected at 30,000 barrels in 2010. No comparisons were provided.
The Kharyaga field, located in the Nenets Autonomous District, has oil reserves of 160.4 million metric tons, including 97 million tons in the area developed under the Kharyaga production sharing agreement.
French oil company Total SA (TOT) holds 50% in the PSA, while Norwegian oil company Statoil ASA (STO) holds 40%, and the Nenets Oil Co., which is controlled by the Nenets Autonomous District's government, has a 10% stake.
Agency Web site: prime-
• FEBRUARY 3, 2010, 8:49 A.M. ET
WSJ: Rosneft Exec: Profit-Based Oil Tax Unlikely Before 2012
MOSCOW (Dow Jones)--Russia is unlikely to switch to a profit-based oil taxation system before 2012, Peter O'Brien, chief financial officer at state-controlled oil major OAO Rosneft (ROSN.RS), said Wednesday.
Russia's Finance Ministry said last month Russia should move to a profit-based oil tax system and abandon tax breaks for East Siberian oil fields to avoid fiscal risks.
"A profit-based tax system will create clarity for everybody," O'Brien said.
State-controlled companies like OAO Rosneft (ROSN.RS) and Surgutneftegaz (SNGS.RS) are benefitting from zero export duty on newly developed fields in East Siberia. But Russian oil majors have argued for a profit-based tax.
Company Web site:
-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; jacob.pedersen@
Gazprom
• FEBRUARY 4, 2010, 3:53 A.M. ET
WSJ: UPDATE: Gazprom Sees Europe Gas Demand Rising In Decade
(Adds more comments, details and background)
By Jacob Gronholt-Pedersen
Of DOW JONES NEWSWIRES
MOSCOW (Dow Jones)--Russian gas giant OAO Gazprom (GAZP.RS) said Thursday it expects an increase in European gas consumption during the coming decade, contradicting the view of some industry observers who predict a gas glut.
State-controlled Gazprom said demand for natural gas will rise 70 billion cubic meters by 2020, Sergei Komlev, head of contract strategy and pricing at Gazprom Export, said at an investment conference in Moscow.
Yet experts, including Fatih Birol chief economist at the International Energy Agency, foresee low demand for gas in the coming five years.
"I have no good news for Russia, I'm afraid," Birol said. "I see a global gas glut hitting until 2015."
Demand for Russian gas in Europe--Gazprom's most lucrative market--plummeted last year amid the economic slowdown and as Europe consumed more Norwegian gas and increased the use of alternative energy sources, including liquefied natural gas.
Gazprom Monday posted an 8% drop in sales for the third quarter, compared with a year earlier.
Birol predicted demand for conventional gas will be hit by shale gas--a new technology that allows producers to extract reserves that were previously unrecoverable through the use of sophisticated fracturing techniques.
Last year, the U.S. overtook Russia as the world's biggest producer of natural gas, partly because of increased shale gas output in the U.S.
"There is a silent revolution taking place in the U.S.," he said.
Gazprom supplies about a quarter of Europe's gas needs, but its market share dropped last year, partly because of a pricing dispute with neighboring Ukraine in January, which resulted in an almost three-week shutoff of Russian supplies to Europe through Ukraine.
Gazprom's Komlev said 2009 was a difficult year and that this year will be equally challenging.
"But we aren't as pessimistic about gas demand as some commentators," Komlev said. "We don't see a catastrophic decline in demand."
Company Web site: gazprom.ru
-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9192; jacob.pedersen@
Bloomberg; Gazprom Expects Gas Exports to Asia to Reach European Levels
By Maria Ermakova
Feb. 4 (Bloomberg) -- OAO Gazprom, Russia’s gas exporter, expects its shipments to Asia eventually to reach the same level as those to Europe, where it has a quarter of the market, Chief Executive Officer Alexei Miller said.
State-run Gazprom in 2012 will begin building a pipeline that will stretch from the Yakutia region of Siberia through Khabarovsk on the northeastern tip of China to the port of Vladivostok on the Sea of Japan, Miller said in a statement e- mailed late yesterday.
Construction of that link will follow one now being built from Sakhalin Island west to the far eastern mainland through Khabarovsk and on to Vladivostok, Miller said.
“Gazprom’s strong resource base in west Siberia and a new gas production center the company is setting up in Russia’s Sakha, or Yakutia, republic will satisfy the future demand for Russian gas from the Asia-Pacific Ocean countries,” Miller said in the statement.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@
Last Updated: February 4, 2010 00:25 EST
Reuters: Gazprom sees Europe gas use up 70 bcm by 2020
Thu Feb 4, 2010 6:37am GMT
MOSCOW, Feb 4 (Reuters) - Russia's gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) expects Europe's natural gas consumption to rise by 70 billion cubic metres by 2020, an executive said on Thursday.
"We are not that pessimistic about gas demand in Europe," Sergei Komlev, head of contract strategy at Gazprom Export told the Troika Dialog Forum. He also said Gazprom expects European gas demand to increase by another 40 bcm by 2030.
(Reporting by Dmitry Zhdannikov, Editing by Alfred Kueppers)
Published : 28th Jan 2010
Oilprice: Gazprom: Angel or Demon?
Gazprom faces regular opprobrium for its bullying ways of using energy as a pressure and political tool. Seen by some, mostly Russians, as the symbol of a successful and strong Russia, others see it as a dominating juggernaut, economic right arm of the Kremlin implementing, or should we say, imposing its policies by using energy as a weapon.
Just like Louis XIV used to say “L’Etat c’est moi” (I am the State), Gazprom could say the same in light of its commercial power and the unconditional governmental backing it enjoys. However, just like Monsanto generates passionate debates with its genetically engineered seeds, Gazprom’s activities cannot be simply labeled as right or wrong and subject to final judgments.
Though far from being an angel, Gazprom is not necessarily a demon either. It is easy to point fingers and to forget that oil & gas is a merciless sector where every major is trying to position itself for the next 20 to 30 years and secure predictable supply and demand at home and abroad. After all, large Western energy companies were not born nice and proper. It took decades for codes of conduct, tacit or written, to be adopted and enforced. It is also easy to forget that all energy companies have in mind the interests of the country they come from.
Why would it be any different for Gazprom? And why should Gazprom take upon itself to act differently if it can get away with what it does and not be sanctioned by its own government?
The main issue with Gazprom could be summarized by using the famous quote of U.S. Secretary of Defense Donald Rumsfeld who said about Iraq “there are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. These are things we do not know we don’t know.” Because of all the things we do not know about Gazprom, sensitivity to what Gazprom does is greater because ultimately what it decides to do today and how it does it will impact energy supplies for years to come and how the game is played.
The lack of information on the personal relationships between the business and political world, on its exact ownership structure, on the exact identity and role of business intermediaries, on the flow of money through a labyrinthine network of offshore and shell companies, and on the overall exact modus operandi of Gazprom is what leads Gazprom to be subject to greater scrutiny and interrogations. It efforts to maintain an export monopoly for gas flowing to Europe and Asia at a huge cost, possibly over-committing dwindling resources at a time of lower energy prices and lower needs from consumers is another concern as would happen if Gazprom was to fail?
Gazprom: The Lord of the Rings
Gazprom is a behemoth: it is Russia's largest company, state-controlled and the world’s largest gas producer. Engaged in gas exploration, processing, and transportation, it operates an extensive pipeline network stretching thousands of kilometers across Central Asia and Europe. Gazprom ranks #22 in the 2009 annual ranking of the world largest corporations published by Fortune magazine and has 456,000 employees. With close ties to the Kremlin - President Dmitry Medvedev used to be chairman of Gazprom’s board of directors - and accounting for about 25% of Russia’s federal tax revenues according to pre-crisis data, Gazprom has a unique leverage and has no qualm about flexing its muscles.
Gazprom has an uncanny ability to do things that are morally reprehensible by Western standards and to be oblivious to the critics that ensue. Image building and public relations are concepts that have not sunk in, even more so as Russians have the deep belief to be justified in their actions, be it with its dealings with Chechnya or Georgia, or when cutting gas to Europe in January 2009. Russians also like to push situations to the limits, just like driving without seatbelts and passing cars with incoming traffic on an icy road.
Gazprom and Ukraine: who’s bad?
Russians are full of contradictions, and so is Gazprom. One can only be amused to read its mission statement extracted from its Gazprom in Figures 2004 -2008 and 2008 Annual Report that state: “OAO Gazprom mission is to ensure an efficient and balanced gas supply to consumers in the Russian Federation and fulfill its long-term contracts on gas export at a high level of reliability.” That did not prevent Gazprom from bluntly cutting the gas supply to Ukraine in January 2009 over non-payment issues and quantities to be supplied, impacting 18 European countries in the mix in the midst of a cold winter.
The image of Russia as a reliable partner has been severely damaged, even more so as this was not the first time gas supply to Ukraine was cut like in January 2006. Even the Soviet Union did not tamper with gas supply, knowing how important the energy cash machine was to its economy and survival. Those cuts prompted (i) end-user countries to find alternative suppliers and (ii) producing countries that rely on the Gazprom pipeline network, to find alternative export routes for their existing clients, in addition to finding new clients.
In this context, the Nabucco Pipeline that bypasses Russia gains momentum while Turkmenistan can sigh with relief with the new Central Asia – China Gas Pipeline inaugurated in December 2009 that takes gas from the Caspian Sea via Uzbekistan and Kazakhstan to China.
Russia makes no efforts to work on its international public image but Russia and Gazprom would have benefited from elaborating over the payment mechanisms in place with Ukraine. For many years, Ukraine has enjoyed discounted prices, significantly below world market prices. It also has resisted price adjustments sought by Russia. Those sweet deals have been detrimental to Ukraine and to the competitiveness of its industry. According to the European Bank for Reconstruction and Development (EBRD) “Ukraine is one of the most energy-intensive countries in the world and is only one-third as energy efficient as the average European country.”
The following facts would have been good to communicate to show that Russia and Gazprom were sensitive to the challenges that gas price increases represent for Ukraine, both economically and socially. At the end of 2008, Ukraine was enjoying heavily discounted prices and resisted Gazprom’s price adjustment efforts, despite a very preferential rate being offered. Gazprom went as far as to lower its price offer from $418 to $250 for 1,000 cubic meters. When the Ukrainians made a counteroffer of $235, Gazprom reverted to if initial offer of $418. The lack of agreement over pricing by December 31, 2008 led to the January crisis. After the crisis, Ukraine still paid 20% less then European prices. Starting in January 1, 2010, a 10-year contract stipulates that Ukraine will switch to market prices.
Needless to say that the door was swung right back at Gazprom by the countries through which Gazprom’s gas transit. For instance, Ukraine raised transit fees by almost 60% from $1.70 per 1,000 cubic meters per 100 kilometers of transit to $2.70 in 2010. On top of this, Gazprom accuses countries like Belarus and Ukraine to “siphon” gas out of its pipelines, in other words to take gas out of the pipelines without having agreed to pay higher prices.
Russia would also have benefited from addressing the issue of the intermediaries involved in gas transactions such as RosUkrEnergo which according to its website “plays the role of a mediator of interests between Russia and Ukraine with regard to collaboration in natural gas issues. On the one hand, it acts as guarantor for natural gas deliveries to Ukraine at prices that are tolerable for the economy of that country and, on the other hand, RosUkrEnergo is financial guarantor for Gazprom, to which it makes the appropriate payments for natural gas supplied to Ukraine.” That mediation role, notably in paying Gazprom for gas going to Ukraine is where sand got into the mechanism as the money transfer seems to not have proceeded properly and in a timely manner, resulting in the January 2009 conflict. Middlemen need to be cut out of energy transactions and interestingly this was already agreed between Prime Minister Yulia Tymoshenko of Ukraine and Vladimir Putin in 2008.
Living dangerously but too big to fail?
In 2008 the company reportedly ended 2008 with about $50 billion in debt and its net profits fell by almost 50% in the first two quarters of 2009. With aging fields and equipment, ambitious development plans, numerous procurement contracts signed, 2010 will be the year of many challenges for Gazprom and anyone dealing with Gazprom, countries or companies.
Multiple issues should be kept on the radar screen:
- What is the financial situation of Gazprom? One may think that since an international auditing firm, namely PricewaterhouseCoopers (PwC), is the auditor of Gazprom, the books should be in order. That’s possible but one should not forget that PwC has recently been involved in multiple high profile scandals with over $1bn involved in each case. The question is then: how much credit can we give to PwC’s audits? These scandals involve the Satyam case in India, where a large IT outsourcing company cooked the books saying it had $1 billion when it fact it was lest than $78 million, and the Bernard Madoff Ponzi scheme as PwC was the auditor of Fairfield Sentry, one of the feeder funds that channeled $7.2 billion to Mr. Madoff which disappeared in the debacle.
- Economically sound deals? Gazprom agreed in December 2009 to buy up to 30 billion cubic meters (bcm) of gas a year from Turkmenistan. At a time where many wonder if there will be enough gas to fill the Western-endorsed Nabucco pipeline, such a large deal can be seen as an attempt to short circuit and challenge the viability of the Nabucco pipeline. Nabucco, a project supported by the United States and many European countries, is in direct competition with the Russian-endorsed South Stream pipeline and there are concerns that there may not be enough gas to supply both pipelines. Nabucco would ultimately have a capacity of 31 bcm per year and South Stream of 63 bcm/y. The South Stream website though uses sibylline statements saying that “If both South Stream and Nabucco are to be implemented, the South Stream consortium will closely cooperate with Nabucco in order to optimize gas flows and guarantee reliable supplies.”
The underlying question is what will Gazprom do with all this Turkmen gas at a time of diminishing demand from Europe, including Ukraine where a large proportion of Turkmen gas transited or ended. Payment issues are an additional headache and Alexey Miller, Chairman of the Management Committee of Gazprom even assessed in December 2009, “the situation with [Ukraine's] payment for Russian gas supplies in December as very alarming.”
- An evolving world: Gazprom and Russia may see the table turned on them. Despite repeated statements of its desire to be a reliable partner, the 2006 and 2009 events with Ukraine have forced dependent countries to find alternative gas providers and transit routes. For a while Gazprom may have thought its use of Liquified Natural Gas (LNG) would have enabled it to regain the upper hand by opening up new export markets and routes but many countries have significant experience in that technology such as Qatar, Algeria and Libya, while more countries are coming to the market such as Australia and Egypt. Furthermore, in 2009 the United States overtook Russia as the world’s largest producer of natural gas. This is concerning for Gazprom as it confirms a growing trend pushing for energy independence, vocally defended in the United States by U.S. billionaire T. Boone Pickens in his “Pickens Plan” that advocates for the use of renewable energy and American natural gas in addition to energy savings.
What is in the pipeline for 2010?
According to the U.S. Energy Information Agency, Gazprom was planning in 2008 to invest around $45 billion in 2010 just to maintain production at its top four gas producing fields has been declining. With a GDP contraction in Russia of nearly 9% in 2009, tumbling energy prices, lower international demand, and stricter borrowing requirements, 2010 will not necessarily be as ambitious as originally planned. This said, the year started well with the resumption of the gas flow from Turkmenistan after an eight-month hiatus.
For Alexey Miller, and as stated in his column “the beginning of 2010 was marked with a very important event – Gazprom has started up natural gas procurement from Azerbaijan for the first time ever. (…) Objectively, Gazprom offered the most competitive conditions of gas purchase from Azerbaijan since we had everything needed for that purpose: the common borders and the gas transmission infrastructure under operation.” All this comes as a result of intense efforts from Gazprom’s top executives that travelled the world in 2009, oftentimes with high-level Russian governmental delegations, to meet with world leaders to negotiate lucrative agreements.
Russia is often referred as the “Wild East” in a reference similar to the U.S. “Wild West” when people and companies operated in a semi-lawless environment. Russia has laws but its judiciary remains weak and corruption is deeply ingrained. The lack of accountability in Russia that permeates through the society enabling anyone to do as they please goes on par with the dismissive attitude towards the rule of law, which President Dmitry Medvedev calls “legal nihilism,” namely Russians’ tendency to disregard the law. That is unfortunate. In this context, it is not surprising to see Gazprom take advantage of the system, even more so as it enjoys the status of national champion.
For an analysis of the dark side of Gazprom, readers can read the well-documented work of Roman Kupchinsky “Gazprom’s European Web.” Those interested in Gazprom’s perspective and strategy can go directly to Gazprom’s website at: . As to finding an answer to the question: “Angel or Demon?,” it is a very subjective matter as it really depends on what is at stake for whom and on the criteria used to judge…
By Philip H. de Leon for
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