Russia - WikiLeaks
Russia 100401
Basic Political Developments
• Russian calendar: Key events for April 1 - CIS finance ministers, central bankers to discuss in Moscow implementation of joint plan to overcome global economic crisis
• CIS Ministers of Finance to meet in Moscow - The Ministers of Economy and Chairmen of the Central Banks of the CIS member-states will gather in Moscow, Sergey Lebedev, Chairman of the CIS Executive Committee, told ITAR-TASS.
• Foreign Ministry refrains from comments on reports that ex-Thai PM Shinawatra in Moscow - Kommersant reported earlier that Shinawatra, who had been deposed in a military coup in 2006 and later convicted in absentia for corruption, arrived in Moscow from Stockholm and spoke with his supporters through a video link on Wednesday.
• Washington summit to focus on vulnerability of nuclear materials - The summit, to gather over 40 heads of state, including Russian President Dmitry Medvedev, will be held in the U.S. capital on April 12-13. The official program of the summit is yet to be released.
• Russian-Venezuelan intergovernmental commission begins work - The seventh meeting of the Russian-Venezuelan high-level intergovernmental commission began in Caracas on Wednesday on the eve of Russian Prime Minister Vladimir Putin’s visit to the Latin American country.
• Russia, Venezuela sign deal to jointly develop Junin 6 oil field - Russia and Venezuela signed a deal to jointly develop the Junin 6 oil field in the Latin American state, the Venezuelan Energy Ministry said in a statement on Thursday.
• Venezuela, Russia to team up on heavy oil project - Venezuela's government said PDVSA officials signed a contract to form the company with a consortium of the Russian companies Rosneft, Lukoil, TNK-BP, Gazprom and Surgutneftegas. PDVSA owns 60 percent of the venture.
• Putin Visits Chavez in Russian Bid to Grow in Obama’s Backyard
• Putin Seeks Energy Deals on Venezuela Trip - Valery Nesterov, an analyst at Troika Dialog, said private Russian oil producers were struggling to expand on home turf because of limited access to big deposits and tax uncertainty."In Venezuela the geology is good, reserves are great. From that point of view, the conditions are ideal there, though this does not, of course, remove concerns about political risk."
• U.S. voices concern over Venezuelan arms purchases from Russia - The U.S. has reiterated its concerns over Venezuelan arms purchases from Russia, a U.S. State Department official has said.
• Medvedev to discuss domestic situation with party leaders - Among the invitees are the chairman of United Russia’s Supreme Council, State Duma speaker Boris Gryzlov, Just Russia leader and Federation Council speaker Sergei Mironov and leaders of the Communist Party and the Liberal Democratic Party – Gennady Zyuganov and Vladimir Zhirinovsky.
• Medvedev instructs to propose Skolkovo center special legal regime
• Russians to travel to Croatia without visas until October 31
• Kaczynski questions his participation in Moscow Victory Day - "Kaczynski will announce whether he will come to Moscow after the [Easter] holidays," the spokesman told journalists on Wednesday evening.
• EU Monitoring Mission welcomes release of six detainees by Tbilisi - EU Monitoring Mission in Georgia (EUMM) has welcomed release of four residents of breakaway South Ossetia and two Russian citizens by Tbilisi and called on Tskhinvali to reciprocate with release of Georgians held in the breakaway region.
• EU special representative advises Russia to refrain from premature declarations - EU Special Representative for the South Caucasus Peter Semneby has called on Russia to refrain from making premature declarations after Russian Security Council Secretary Nikolai Patrushev spoke of a possible "Georgian trace" in the terrorist attacks in the Moscow metro.
• Monument honoring Russians killed in Turkish wars to be erected in Armenia
• Special search operation for gunmen underway in Ingushetia - Ingushetia’s operative headquarters decided to expand the anti-terrorist operation zone on Thursday, the public relations group of the republican Federal Security Service department told Itar-Tass.
• In Dagestan, a permanent special group of investigators will act
• Two killed in car explosion in Russia's Dagestan - "According to preliminary information, an explosive device that was carried in the car went off," the press service said as quoted by the Interfax news agency.
• Two men killed, one injured in car blast in Dagestan - A VAZ-2199 car exploded in the Khasavyurt region of Dagestan on the outskirts of Toturbiikala overnight to Thursday. “Two men were killed, and one more was hospitalized with a grave wound after the car blast,” the press service of the Dagestani Interior Ministry told Itar-Tass on Thursday.
• The executors of the terrorist act in Kizlyar were two Dauds - Exploded "Niva" driven by 22-year-old suicide bomber, on record as Wahhabi militia
• Moscow holds funerals for victims of Metro attacks
• Three days after Moscow blasts, 88 remain in hospitals
• Two false bomb alarm callers detained in Moscow, Yuzhno-Sakhalinsk
• Chechen Group Claims Responsibility For Moscow Bombings - I promise you that the war will come to your streets and you will feel it in your lives: Chechen leader.
• Russia Ordered To Compensate Falsely Accused Chechen - A Moscow City Court ruled today that the Finance Ministry must pay the equivalent of $4,700 to a man falsely accused of attempting to assassinate Chechen President Ramzan Kadyrov.
• Russia's top forensics officer backs fingerprint, DNA database - "We are convinced that the universal compulsory fingerprint and DNA registration of citizens would be in the interest of the state and every citizen, and therefore has the right to exist," said Yury Lekanov, head of forensics at the Investigative Committee of the Prosecutor General's Office..
• Far Eastern Island to Become Special Economic Zone - The impoverished Russky island in the Far East will be developed as a special economic zone to promote tourism after it hosts the 2012 Asia-Pacific Economic Cooperation summit, Prime Minister Vladimir Putin said Wednesday.
• State Provides Guarantees on PPP Bonds - Prime Minister Vladimir Putin has signed a decree on the provision of state guarantees on corporate bonds that are issued to raise funds for major investment projects.
• President looks to PM for proposals on innovative center development - Furthermore, Putin, Deputy Prime Minister Igor Sechin and Economic Development Minister Elvira Nabiullina must appoint members of the governmental commission on fuel and energy complex and replacement of mineral resources, which will act as a liaison between federal executive authorities.
• Lavrov to take part in Yaroslavl reg economy presentation - The participants in the presentation will be able to familiarise themselves with the main lines of activities of the machine building and agricultural sectors, power and woodworking industries and scientific research organisations.
• Alexeyeva, Skipping Anti-Kremlin Rally, Is Struck in Head - Veteran human rights campaigner Lyudmila Alexeyeva was struck in the head as she laid flowers for bombing victims in the Park Kultury metro station late Wednesday instead of attending an anti-Kremlin rally.
• 50 Detained in Moscow Opposition Rally; Alexeyeva Violently Attacked
• Lenin statue to return to St. Petersburg year after the blast
• Magazine Accused of Disclosing Defense Secrets - A federal media watchdog said Wednesday that it had issued a warning to Kommersant Vlast, the influential news magazine, for divulging military secrets in a report about the Strategic Rocket Forces.
• Soyuz crew confirmed ready for launch to ISS
• New International Space Station crew approved
• Russians report snag in space safety system - Launch escape tower went awry last year; no big deal, NASA was told
• To the Moon and back - Russia is designing a new spaceship that will allow more space tourists to accompany cosmonauts on their missions. RT talked to the head of Russia's leading spaceship-manufacturer to learn more. In an interview to RT, Vitaly Lopota, director of the Energiya space corporation, also said Russia has some serious plans for Mars and the Moon.
• The Sochi Winter Olympics and the Caucasian Islamist cause - By Benjamin Shapiro, special to Prague Watchdog
• Immigrants Make Up 10% of Work Force - Foreign workers make up as much as 10 percent of the country's work force, a report published by the United Nations said Wednesday.
• Navigating Rumorville - Monday’s Attacks Remain Clouded in Rumor, Speculation, and a Growing Sense That the Authorities Have Let the Public Down
• The FSB Dropped the Ball - … it is possible that the authorities will use the Moscow blasts as a pretext for introducing new measures to increase control over society. This may include fingerprinting or creating a new DNA data base on all citizens, which the Investigative Committee suggested — again — within hours of Monday’s attack. Although this rhetoric sounds tough, it would be completely ineffective in preventing future terrorist attacks.
• Roman Abramovich fails to halt £2 billion Berezovsky lawsuit
• Clash of the oligarchs: the paper chase from the Kremlin to the High Court
• PRESS DIGEST – Russia – April 1
o KOMMERSANT
o Russia's leadership is linking blasts in Dagestan on Wednesday to suicide bombings in Moscow on Monday.
o Tycoon Gennady Timchenko's Swiss-based trader Gunvor, which accounts for 40 percent of Russian oil exports[pic], is launching gas purchases to implement its plans to become a big natural gas trader.
o Russia's major oil exporters could face high fines for raising petrol prices on the domestic market.
o VEDOMOSTI
o Co-owner of RUSAL Oleg Deripaska may raise the issue of merging with Norisk Nickel as he returns to the company's board of directors[pic], the daily says.
o State-controlled Vneshekonombank (VEB) may allow Russian steelmaker Evraz Group to postpone its $1 billion credit payments till November 2011.
o VREMYA NOVOSTEI
o Chechen rebel leader Doku Umarov has claimed responsibility for bombings in Moscow which killed at least 39 people on Monday, but did not mention a suicide attack with 12 deaths in Dagestan on Wednesday.
o Russian Gazprom gas export monopoly has raised its share in Belarusian Beltransgas to 50 percent from 37.5 percent.
o IZVESTIA
o Russia is seeking U.N. permission to expand its offshore borders in the Okhotsk Sea which will allow Moscow to claim a big chunk of Arctic natural resources. Russia will attract foreign investors[pic] to develop them, the daily writes.
o NEZAVISIMAYA GAZETA
The number of nuclear warheads to be cut by Russia and the United States under a new arms treaty is still unclear
o Plans to speed up modernisation and innovation of Russia's economy could be affected by falling birth rate in the next years, the daily reports.
• 01 April, 2010 in Russian Newspapers
o Trud: Suicide bombers are pursued based on composite sketch
o Izvestiya: Russia to step out of its borders - In the near future, Russia will submit an application to the UN Commission to expand the borders of its Okhotsk Sea shelf.
o Nezavisimaya: Ukraine proposed to combine preparation efforts with Russia for Euro-2012 and Sochi-2014
• Today in Vedomosti
o Commentary: Banks on Commission - In the heat of the crisis, banks vied with each other in offering extremely favorable terms on deposits, but now they are reneging on their promises.
o Hotline for Compaints Against Traffic Police
o Loose Laws Threaten Deals in Strategic Sectors - Any deal to buy a strategic enterprise by a Russian company that has foreign daughter companies may be declared null and void. Blame the broad interpretation by the Federal Anti-Monopoly Service and the courts for their elastic notion of what constitutes a group of persons. Even major Gazprom deals could be contested.
National Economic Trends
• In Russia pensions increase on April 1
• Russia Has Good Prospects for Ruble Bond Abroad, Storchak Says
• Russian Manufacturing PMI Shows ‘Sluggish’ Growth in March
• Weekly inflation slows with the return of warm weather
• Russia to increase grain export volumes
Business, Energy or Environmental regulations or discussions
• Russian markets -- Factors to Watch on April 1
o OTP Bank: Markets should open little changed from Wednesday's close. Declines on U.S. bourses during the previous session should be offset by strong oil prices.
o Veles Capital Research: The Russian markets will see a neutral opening after a release of "totally balanced block of stats" in the United States
o EVENTS (All times GMT):
o MOSCOW - Russian President Dmitry Medvedev meets representatives of parliamentary parties to talk about security issues in the aftermath of terrorist attacks. 1000.
o MOSCOW - Meeting of finance ministers and Central banks Chiefs of the CIS. 0500.
o MOSCOW - The Central Bank to offer 100 billion roubles of Series 13 OBR bills at a top-up auction.
o MOSCOW - Japanese clothing retailer Uniqlo opens a store in Russia. 0700.
o MOSCOW - Full Year NLMK earnings conference call
Billionaire and major shareholder of the world's top aluminium producer UC RUSAL, Oleg Deripaska, might return to the board of directors of Russian metals giant Norilsk Nickel, business daily Vedomosti reports. The move may signal Deripaska's renewed attempts to merge RUSAL and Norilsk, the paper writes.
o Interros eyes post-crisis acquisitions
o Russian cos eye stake in France's Altis Russia
o VEB shortlists partners for postal bank
o Vozrozhdeniye bank sees 2010 profit drop
o Cherkizovo '09 net up on more pork, lower costs
o Putin to meet top U.S. foes in Venezuela
o Russia eyes dollar bond issue after April
o Rouble weakens slightly, rally at halt
o Russia's TNK-BP triples 2010 exploration budget
o Evraz charts recovery after '09 loss
o E.Europe grain harvests seen flat to lower
• Steel recovery underway - Since the beginning of last week, foreign investors have been piling in to Russian steel producers. Mechel up by 6.8% in New York, while in London Evraz has risen 8.7% and Severstal 13.3%.
• Svyazinvest chief ups stake in VolgaTelecom
• UPDATE 1-Vimpelcom says aims to complete acquisition in Laos
• VEB Picks 3 Bids for Postal Bank Partner
• VEB Explores Options for Terminal D
• Ground Infrastructure Key Issue for Air Freight
• UPDATE 1-Oerlikon clinches restructuring deal - Oerlikon balance sheet to be boosted by up to 1.3 bln Sfr; Net debt to be cut by around 77 pct; Posts worse-than-expected net loss of 592 mln Sfr
• For the Record
o Continental Invest, controlled by businessman Nikolai Makarov, bought from Continental Management, a unit of Basic Element, a 25.07 percent stake in the Baikalsk Paper and Pulp Mills, Basic Element said Wednesday. (MT)
o KamAZ increased truck output 19 percent in the first quarter from a year earlier to 6,155 vehicles, with full year sales expected at 28,200 trucks, it said Wednesday. (Bloomberg)
o Nord Stream said Wednesday that it would mark the start of the gas pipeline’s construction with a ceremony April 9.(Bloomberg)
o Gazprom-controlled OGK-2 signed a 17.8 billion ruble supplement agreement to have Group E4 build capacity at its Serov power plant, the generator said Wednesday. (Bloomberg)
o Russian oil refining runs rose by 1.8 percent on a daily basis in February from January and by 2.9 percent versus February last year, marking the second straight monthly rise, Energy Ministry data showed Wednesday. (Reuters)
o TNK-BP said Wednesday that it would triple investments in exploration this year to $400 million. (Bloomberg)
o VEB had a profit of 31 billion rubles ($1.1 billion) last year, Prime Minister Vladimir Putin said Wednesday. (Bloomberg)
o LUKoil plans to spend $480 million developing its gas projects in Uzbekistan this year, the press service for its overseas arm said Wednesday. (Bloomberg)
• Russian online - Russia's internet is booming with the number of people online doubling every year in the last three years to reach 33m - and it shows no sign of slowing down.
Zvooq - music to the ears of Russians - In the West, setting up a successful online business is hard. You need to have a good idea, capture users, then find some investment and earn some money. But doing it in Russia seems to be nigh on impossible - entrepreneurs in Moscow have all these problems and more.
Activity in the Oil and Gas sector (including regulatory)
• Russia increases oil export duties from $253.6 per tonne to $268.9 per tone
• Russia Feb refinery runs up 1.8 pct month-on-month
• Russia's TNK-BP triples 2010 exploration budget
• TNK-BP might pay penalties for monopoly high oil product prices in 2008 “ if so, would be a precedent” - unlikely scenario, in our view
• Uzbekistan: Lukoil plans $480m investment in 2010
• LUKOIL Plans $480 Million Investment into Uzbekistan Gas
• Petroneft secures $5m credit line to speed up exploration in Siberia
• Research and Markets: An Essential Report on the Russian Oil and Natural Gas Industry
• Welcome to the Russian shelf - the Russian government signals that it is ready to change the rules of the game in order to step up shelf exploration and drilling. Deputy Minister of Natural Resources Sergey Donskoy yesterday confirmed that federal legislation needs to be adjusted in order to open up for the involvement of more companies, Vedomosti reports.
Gazprom
• SLNG breaks ground - Russia’s Gazprom is among the interested parties. Gazprom, which recently set up marketing and trading operations here, has already traded six spot cargoes of LNG here, and is targeting to trade 25 cargoes, or two million tonnes, this year, worth a total of $450 million, the Business Times report said.
• Top stories of the day: China oil, gas and petrochemicals-Apr. 1 - Gazprom may start natural gas supply to China from 2015, Russian media quoted Gazprom vice chairman Alexander Medvedev as saying. Alexander said Gazprom may start pumping natural gas to China as long as the company's plan for 2010-2015 is able to be smoothly carried out.
• Gazprom completes payment for stake in SeverEnergia
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Full Text Articles
Basic Political Developments
Russian calendar: Key events for April 1
CIS finance ministers, central bankers to discuss in Moscow implementation of joint plan to overcome global economic crisis
CIS Ministers of Finance to meet in Moscow
11:24 / 04/01/2010
At its 4th sitting in Moscow, Russia, the Permanent Conference of the CIS Ministers of Finance will focus its attention on the state of national economies and on a joint anti-crisis plan for 2009-2010. The Ministers of Economy and Chairmen of the Central Banks of the CIS member-states will gather in Moscow, Sergey Lebedev, Chairman of the CIS Executive Committee, told ITAR-TASS.
He stressed that the CIS Heads of State and Government “are giving close attention to the joint measures to overcome the global crisis, and the topic was also the focus of attention at the CIS Economic Forum in Moscow on March 5.” According to Lebedev, timely measures helped to overcome the most critical stage of the crisis. The CIS Statistical Committee reported economic growth in almost all the CIS member-states since this January as compared with last year. “Specifically, the GDP growth in Azerbaijan was 9.2%, in Armenia 2.4%, in Belarus 1.3%, in Tajikistan 4.2%, while an 8% average increase in industrial output was registered,” he said.
Lebedev also pointed out that, despite the upward economic trends, the crisis has not yet been overcome, and “combined efforts to tackle the crisis have to be continued now.”
T.P.
April 01, 2010 11:39
Foreign Ministry refrains from comments on reports that ex-Thai PM Shinawatra in Moscow
MOSCOW. April 1 (Interfax) - The Russian Foreign Ministry has refrained from comments on reports that former Thai Prime Minister Thaksin Shinawatra may be in Moscow.
"We are not commenting on these reports for the time being," the Foreign Ministry said.
Kommersant reported earlier that Shinawatra, who had been deposed in a military coup in 2006 and later convicted in absentia for corruption, arrived in Moscow from Stockholm and spoke with his supporters through a video link on Wednesday.
"I am in Moscow, Russia at the moment. I have a lot of friends here, and I am going to meet with one of them now. He is a billionaire and wants to invest a lot of money in Thailand," Kommersant cited Shinawatra as saying during the video link.
Russian law enforcement services said earlier they did not have information indicating that Shinawatra could be in Russia.
"According to our information, a man with such a name and surname has not crossed the Russian border," a police source told Interfax on Thursday.
Russia and Thailand have a visa-free travel agreement.
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Washington summit to focus on vulnerability of nuclear materials
06:2101/04/2010
The nuclear security summit to be held in Washington in mid-April will focus mainly on the vulnerability of nuclear materials, the U.S. presidential representative on non-proliferation matters said.
The summit, to gather over 40 heads of state, including Russian President Dmitry Medvedev, will be held in the U.S. capital on April 12-13. The official program of the summit is yet to be released.
"Nuclear security summit is focusing on a very narrow slice of the problem which is vulnerability of nuclear material and securing them against the threat of terrorists' acquisition," Susan Burk said.
Ahead of another major non-proliferation event, the Nuclear Non-Proliferation Treaty (NPT) review conference to be held in May at the UN Headquarters in New York, she said that her country was no longer seeking "universal adherence" to the treaty.
"I don't think that we are pushing countries to join the NPT. North Korea was a party to the NPT. As you know then they announced that they were withdrawing. U.S. has been engaged in negotiations with partners to see if North Korea can be persuaded to come back to full compliance with the Treaty," Burk said.
"The other three states [India, Pakistan and Israel] have never joined the treaty and I think as I said the U.S. supported the goal for very long time of universal adherence to NPT. We have abandoned that goal, three cases are not similar and we have to deal with each country on case-by-case basis," she added.
WASHINGTON, April 1 (RIA Novosti)
Russian-Venezuelan intergovernmental commission begins work
01.04.2010, 02.53
CARACAS, April 1 (Itar-Tass) - The seventh meeting of the Russian-Venezuelan high-level intergovernmental commission began in Caracas on Wednesday on the eve of Russian Prime Minister Vladimir Putin’s visit to the Latin American country.
The commission focuses on stronger cooperation in energy, exploration of natural resources, agriculture, financing, education, science, culture and tourism.
The meeting of the intergovernmental commission “will give a fresh impetus to trade and economic cooperation with Russia and strengthen the two countries’ strategic alliance,” Venezuelan Vice President Elias Jaua said in his opening remarks to the forum.
He pointed to “the results of joint projects in the oil, gas and mining industries” and mutually advantageous energy cooperation.
Jaua stressed importance of pending agreements on agriculture and on the creation of a joint venture between the Venezuelan Petroleum Corporation and the National Oil Consortium of Russian companies to develop the Junin 6 oil deposit in the Orinoco River Basin. The two countries also plan to set up an emergency management centre.
Russian Vice Premier Igor Sechin, who co-chairs the commission, underlined that he was making preparations for Putin’s visit to Venezuela.
“Russia attaches great importance to relations with Venezuela,” he said.
“Russian and Venezuelan companies are in talks on a wide range of projects that will soon boost supplies, services delivery and finally, will improve our citizens’ living standards,” Sechin said.
He expressed the hope that concrete contracts will be signed, including those on supplies of Russian cars and trucks to Venezuela.
Russia, Venezuela sign deal to jointly develop Junin 6 oil field
05:3501/04/2010
Russia and Venezuela signed a deal to jointly develop the Junin 6 oil field in the Latin American state, the Venezuelan Energy Ministry said in a statement on Thursday.
The proven reserves of the oil field, located in the Orinoco oil belt, are estimated at 53 billion barrels. According to the U.S. Geological Survey, Venezuela's Orinoco oil belt holds 513 billion barrels of recoverable heavy crude.
The joint venture plans to extract 50,000 barrels of oil per day this year, with a planned nine-fold increase to 450,000 barrels per day.
Last September, Venezuela's state-owned Petroleos de Venezuela (PdVSA) and the Russian Oil Consortium, comprising Rosneft, energy monopoly Gazprom, Lukoil, TNK-BP and Surgutneftegaz, signed a memorandum of understanding on the Junin 6 project.
The parliament of Venezuela approved the deal on March 10.
PdVSA will get a 60%-stake in the joint venture, with the rest owned by the Russian consortium.
Venezuela has the largest proven reserves outside of the Middle East.
MEXICO, April 1 (RIA Novosti)
Associated Press
Venezuela, Russia to team up on heavy oil project
By FABIOLA SANCHEZ , 03.31.10, 08:59 PM EDT
CARACAS, Venezuela -- Venezuela and Russia announced a joint venture Wednesday to drill for heavy crude oil in eastern Venezuela, saying they expect to start producing 50,000 barrels a day this year.
A new joint company will be run by state-owned Petroleos de Venezuela SA, or PDVSA, and five Russian companies, and will pump heavy crude in the Orinoco River basin, Oil Minister Rafael Ramirez said.
He told reporters the new mixed company will also build an upgrader facility to process about 450,000 barrels a day - a plan that would give a significant boost to Venezuela's oil output when completed.
The agreement was announced as officials in Caracas prepared for a visit by Russian Prime Minister Vladimir Putin, his first to the South American country.
Venezuela's government said PDVSA officials signed a contract to form the company with a consortium of the Russian companies Rosneft, Lukoil, TNK-BP ( BP - news - people ), Gazprom and Surgutneftegas. PDVSA owns 60 percent of the venture.
Ramirez said the project aims to be producing 50,000 barrels of crude a day by the end of the year. It's estimated that developing the oil project in the Junin 6 block of the Orinoco region could require $30 billion in investment.
President Hugo Chavez has forged close ties with Russia in recent years and has bought more than $4 billion in weapons from Russia, including assault rifles, helicopters, planes and missiles.
Ahead of Putin's visit, Venezuelan and Russian officials plan to finalize details on a series of agreements in energy, transportation, health, agriculture and more, Vice President Elias Jaua said at a meeting of officials from both countries.
Jaua said Russia also sent a water plane that will be used this week to douse wildfires that have raged through the forests of Venezuela's El Avila national park in the mountains that rise above Caracas. The blazes have blanketed the city with a smoky haze in recent days.
Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
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Putin Visits Chavez in Russian Bid to Grow in Obama’s Backyard
March 31, 2010, 8:22 PM EDT
By Lucian Kim
April 1 (Bloomberg) -- Prime Minister Vladimir Putin will pay his first visit to Venezuelan President Hugo Chavez tomorrow as Russia seeks to regain lost influence in Latin America through energy and arms deals.
The highlight of the one-day trip to Caracas may be the formation of a joint venture to pump oil from Venezuela’s Orinoco Belt. Putin also plans to meet Bolivia’s Evo Morales, who like Chavez opposes U.S. policy in the region.
Chavez, who visited Russia eight times during his decade in power, has wooed Putin by signing more than $4 billion in arms deals and inviting state energy companies OAO Gazprom and OAO Rosneft to explore for oil. Venezuela was a lone supporter of Russia during the five-day Georgian war in 2008 and hosted joint naval war games later that year.
“Chavez has already signed up for more weapons than he can buy, and Russian energy companies aren’t really interested in exploration and production in Venezuela,” said Pavel Baev, a professor at the International Peace Research Institute in Oslo. “It’s much more a political project.”
The two countries fed off each other’s anti-Americanism as oil prices hit all-time highs in the final year of the Bush administration. Now, under the conditions of the global financial crisis, Putin’s successor President Dmitry Medvedev is seeking a more “sober” foreign policy, Baev said.
Arms Customer
“Chavez isn’t the same as he was one or two years ago, but he still has money,” said Fyodor Lukyanov, editor of Russia in Global Affairs magazine. “Russia is trying to get out of it as much as it can.”
Venezuela turned into Russia’s largest Latin American arms customer after the U.S. suspended weapons sales amid a chill in relations. Chavez has placed orders for Sukhoi jet fighters, Russian-made helicopters and Kalashnikov rifles.
Venezuela also backed Russian encouragement for closer cooperation among producers of natural gas, with Energy Minister Rafael Ramirez calling for exporters of the fuel to follow the same principles as the Organization of Petroleum Exporting Countries.
Igor Sechin, Putin’s deputy for energy, has pushed for the formation of a venture between Petroleos de Venezuela SA and oil producers Rosneft, Gazprom, OAO Lukoil, OAO Surgutneftegaz and TNK-BP. The joint company may spend more than $20 billion pumping oil in the Orinoco Belt, Sechin said after meeting Ramirez in Moscow in February.
“In the present economic situation, Gazprom won’t be ready to invest serious money in Venezuela,” said Lukyanov. “It’s more symbolic, a reminder that Russia is still the biggest player on the hydrocarbon market.”
No Trespassing
Russia shouldn’t be seen as trespassing in America’s backyard because the U.S. itself reduced economic cooperation with Venezuela, said Vladimir Sudarev, deputy director of the Latin America Institute at the Russian Academy of Sciences.
“Putin feels he’s repaying a debt by going, since Venezuela opened the gates of Latin America to Russia,” said Sudarev. “Competition with the U.S. is pointless in Latin America, but Russia can look for niches.”
Medvedev is expected to visit Latin America later this month for a summit of the so-called BRIC nations: Brazil, Russia, India and China. He visited Venezuela in 2008 on a Latin American tour that included stops in Peru and Cuba.
--With assistance from Stephen Bierman in Moscow. Editors: Chris Kirkham
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
To contact the editor responsible for this story: Chris Kirkham at ckirkham@
Putin Seeks Energy Deals on Venezuela Trip
01 April 2010
Reuters
Russia will cement energy and arms ties with Latin America when Prime Minister Vladimir Putin travels to Caracas this week to meet two of the United States' biggest foes, Venezuelan and Bolivian Presidents Hugo Chavez and Evo Morales.
The two leftist leaders can view Putin's visit as a boost after U.S. Secretary of State Hillary Clinton said last month that Washington's critics were losing force in the region.
Kremlin watchers will be also tracking comments by Putin on ties with Washington and specifically on a landmark arms-control treaty that Presidents Dmitry Medvedev and Barack Obama have agreed to sign in April.
"It is always a good chance for Putin to show to the United States that we have a lot a friends all over the world," said Fyodor Lukyanov, editor of the magazine Russia in Global Affairs.
Caracas and Moscow said one-day talks between Putin and Chavez would focus on energy, agriculture and defense. Putin's office also said energy would be at the center of talks with Morales, who will meet Putin in Caracas, also on Friday.
Venezuela, South America's top oil exporter, is seeking funds and technology to help develop its oil deposits, as well as loans to buy Russian military hardware.
"We should expect a lot of big arms and energy contracts. When Putin has traveled recently to centers like India he brought back a lot," Lukyanov said.
Putin secured $10 billion in energy, nuclear and arms deals in India last month.
Chavez traveled to Moscow in September to receive more than $2 billion in loans for weaponry, including tanks and the S-300 advanced anti-aircraft missile.
During the trip, he announced that Venezuela recognized two pro-Russian rebel regions of Georgia as independent states, a rare diplomatic success for Moscow, which has tried unsuccessfully to persuade its allies to extend recognition to South Ossetia and Abkhazia.
Clinton expressed concern in September about Venezuelan arms purchases and their potential for triggering an arms race in the region.
Venezuela wants to beef up its arsenal to resist what Chavez terms U.S. imperialism in Latin America, though tensions have also been rising with neighboring Colombia, a close U.S. ally and historic rival of Venezuela.
"Russia sees the strengthening of its positions in this region as an extremely important and good answer to the widening U.S. influence in Central Asia," said Alexei Mukhin, who directs the Center for Political Information, a think tank.
In February, a consortium of Russian firms and Venezuela's state-run PDVSA agreed to set up a venture to tap the Junin 6 oil field in the Orinoco oil belt, which Venezuela says has the world's largest hydrocarbon reserves.
The development will require $20 billion in investments over 40 years to produce 450,000 barrels per day, or almost one-fifth of Venezuela's current oil production. It will involve state giant Rosneft and private major LUKoil.
Valery Nesterov, an analyst at Troika Dialog, said private Russian oil producers were struggling to expand on home turf because of limited access to big deposits and tax uncertainty.
"In Venezuela the geology is good, reserves are great. From that point of view, the conditions are ideal there, though this does not, of course, remove concerns about political risk."
U.S. voices concern over Venezuelan arms purchases from Russia
01:4501/04/2010
The U.S. has reiterated its concerns over Venezuelan arms purchases from Russia, a U.S. State Department official has said.
Prime Minister Vladimir Putin and Venezuelan President Hugo Chavez will discuss military and economic cooperation, including a $2.2 billion loan to buy Russian arms, during his first visit to the South American country on Friday.
During his visit to Caracas, Putin will also oversee the delivery of the last four Russian Mi-17 Hip helicopters out of the total of 38 under a 2006 contract.
"I think we've voiced our concerns, if you will, but our opinions about Venezuela's need for these kinds of defense systems previously from the podium," Acting Deputy Department Spokesman Mark Toner said.
"Beyond that, Venezuela, Bolivia, any country, is entitled to pursue its own bilateral relationship with any other country, clearly. So - but just beyond, kind of, questioning the need for Venezuela to have such a robust defense system, no comment," he added.
During his visit to Moscow in September, Chavez said Venezuela would buy 92 T-72 tanks and an unspecified number of Smerch multiple rocket launchers from Russia, among other military inventory.
Since 2005, Venezuela has bought $4 billion worth of Russian weaponry, including warplanes, helicopters, and Kalashnikov assault rifles.
WASHINGTON, April 1 (RIA Novosti)
Medvedev to discuss domestic situation with party leaders
01.04.2010, 00.32
MOSCOW, April 1 (Itar-Tass) - Russian President Dmitry Medvedev will hold a traditional meeting with leaders of the country’s parliamentary parties on Thursday.
Among the invitees are the chairman of United Russia’s Supreme Council, State Duma speaker Boris Gryzlov, Just Russia leader and Federation Council speaker Sergei Mironov and leaders of the Communist Party and the Liberal Democratic Party – Gennady Zyuganov and Vladimir Zhirinovsky.
The discussion will begin from analyzing the country’s situation following the blasts in the Moscow metro and Dagestan that killed dozens of people.
Medvedev instructs to propose Skolkovo center special legal regime
01.04.2010, 09.56
MOSCOW, April 1 (Itar-Tass) -- Russian President Dmitry Medvedev gave several instructions after a meeting of the Presidential Commission for Modernization and Technological Development of Russian Economy that was held on March 23, the Kremlin press service reported on Thursday.
Specifically, Prime Minister Vladimir Putin and Vladislav Surkov were instructed “to present proposals before May 1 on a legal regime for creating and operating a special center for the development of researches and innovations and the commercialization of their results, including the taxation, customs regulation and administrative (including migration) procedures.”
Dmitry Medvedev announced the plans to create a center of researches and developments in Russia last February. According to the president, a new innovation center should become the Russian counterpart of the U.S. Silicon Valley, some kind of a city of the future, a major testing ground of a new economic policy.
The construction of the center in Skolkovo outside Moscow may take from three to seven years, deputy chief of the presidential administration Vladislav Surkov, who heads the working group for center creation, said earlier.
Renova Group President Viktor Vekselberg was appointed as a supervisor of the project for creating a scientific and technological center to develop and commercialize new technologies.
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Russians to travel to Croatia without visas until October 31
01.04.2010, 05.17
MOSCOW, April 1 (Itar-Tass) - Russian citizens will be able to travel to Croatia without visas for no longer than 90 days as the visa-free rules enter into force on Thursday.
Such rules will be effective until October 31.
Croatia’s government took this unilateral decision on February 25, 2010.
“During this period Russian citizens will be able to go to Croatia on short-term trips for no more than 90 days and not to show visas, tourist vouchers, invitations or any letters of guarantee on Croatia’s state border,” a Russian foreign ministry official said.
“It will be enough to have a valid foreign passport and necessary funds for stay in the country,” the official said.
At the same time, those who would like to go to work or to do business in Croatia should apply for a visa.
Kaczynski questions his participation in Moscow Victory Day
03:5501/04/2010
Polish President Lech Kaczynski will decide next week on whether he will take part in Victory Day celebrations in Moscow in May, his spokesman said.
Kaczynski questioned his participation in the events after Moscow invited General Wojciech Jaruzelski, Poland's last communist leader, to take part.
"Kaczynski will announce whether he will come to Moscow after the [Easter] holidays," the spokesman told journalists on Wednesday evening.
Fourteen heads of state have already confirmed their participation in the May 9 celebration of the 65th anniversary of Nazi Germany's capitulation, including leaders from Armenia, France, Kazakhstan, Latvia, Germany, Moldova, Serbia, Ukraine and Vietnam.
General Jaruzelski, 86, is one of nine former heads of state who fought in World War II, including former U.S. president George Bush Sr. and ex-French president Valery Giscard d'Estaing.
Jaruzelski, Poland's prime minister from 1981 to 1985 and head of state from 1985 to 1990, resigned after the Polish Round Table Agreement in 1989 led to democratic elections in Poland.
In 2005, General Jaruzelski attended the Moscow celebrations of the 60th anniversary of the victory over Nazi Germany, together with then Polish President Aleksander Kwasniewski.
WARSAW, April 1 (RIA Novosti)
EU Monitoring Mission welcomes release of six detainees by Tbilisi
01 April 2010 [11:30] - Today.Az
EU Monitoring Mission in Georgia (EUMM) has welcomed release of four residents of breakaway South Ossetia and two Russian citizens by Tbilisi and called on Tskhinvali to reciprocate with release of Georgians held in the breakaway region.
EUMM said in a statement on March 31, that the move by the Georgian government was “an important step in resetting the overall detainee issue.”
“In order to de-escalate the situation on the ground and contribute to raising the confidence of the population living along the administrative boundary lines, the EUMM calls upon the de facto South Ossetian authorities to take similar action,” EUMM said.
The mission also called on Tskhinvali to resume its participation in Incident Prevention and Response Mechanism, a body designed for regular contacts between the sides. Tskhinvali is refusing to take part in meetings in frames of IPRM since last October, citing lack of information about several Ossetians, who are missing since the August, 2008 war.
EU special representative advises Russia to refrain from premature declarations
01.04.2010 12:11
Georgia, Tbilisi, Apr. 1 / Trend N.Kirtzkhalia /
EU Special Representative for the South Caucasus Peter Semneby has called on Russia to refrain from making premature declarations after Russian Security Council Secretary Nikolai Patrushev spoke of a possible "Georgian trace" in the terrorist attacks in the Moscow metro.
According to Semneby, the terrorist attack has not yet been investigated thoroughly, and it is too early to bring charges.
"I think there should be no hasty conclusions. The Russian side earlier also made a statement that Georgia was involved in crimes in Moscow. It was also said that there are terrorists in Georgia. We have repeatedly rechecked all of these statements and no facts have been found. Of course, the incident in Moscow is a tragedy. We offer our condolences to the families of the deceased. However, it is premature to charge someone until all the details have be examined," Semneby said.
Monument honoring Russians killed in Turkish wars to be erected in Armenia
|Apr 1, 2010 09:59 Moscow Time |
The first-stone-laying ceremony for a monument to Russian officers killed in the Russian-Turkish wars of 1855 and 1878 has taken place in the city of Gyumry in northwestern Armenia. The 13-meter Hill of Honor to be built on a site where 156 Russian servicemen were put to rest is the exact copy of an obelisk designed by sculptor Boris Mikeshin, which was erected in Turkey’s northeastern Kars province in 1910 and later destroyed after it was recaptured by Turks in 1918. The project was initiated by the Russian embassy in Armenia.
Special search operation for gunmen underway in Ingushetia
01.04.2010, 09.51
NAZRAN, April 1 (Itar-Tass) -- Ingushetia’s operative headquarters decided to expand the anti-terrorist operation zone on Thursday, the public relations group of the republican Federal Security Service department told Itar-Tass.
“The anti-terrorist operation regime was introduced as of 08.00 Moscow time in the Malgobek region on the area including Voznesenovskaya, Malgobek (the old city), Sredniye Achauki, Sagopshi, Zyazikov-Yurt, Aki-Yurt and Psedakh in order to detain gunmen and avert terrorist acts under preparation,” the public relations group said.
The army forces blocked the anti-terrorist operation zone. “Several restrictions are in effect for the period of the anti-terrorist operation in the designated area. The access of people and vehicles was restricted. Checkups of people and vehicles will be made there. The anti-terrorist operation regime introduced earlier in the Nazran region on March 2 remains in effect. The anti-terrorist operation regime introduced in the Sunzha region on January 27 in the highland woods, including such settlements as Alkhasty, Arshty, Dattykh, Verkhny Alkun, Nizhny Alkun, Muzhichi, Galashki is also in effect,” the public relations group said.
The decision to expand the anti-terrorist operation zone “was taken over the operative information that armed gunmen involved in heinous crimes are rampaging in the Malgobek region,” the republican FSB public relations group said.
GOOGLE TRANSLATION
01 апреля 2010 10:50 AM
In Dagestan, a permanent special group of investigators will act
In Dagestan, will create a permanent investigative task force to investigate the most serious crimes and crimes of terrorist orientation.
The group will consist of investigators of the Investigations Committee, the operational staff the FSB and MVD of the republic. The decision was taken at a meeting in Makhachkala, which is chaired by the Chairman of the Investigative Committee at the Prosecutor's Office (UPC) Minister Alexander Bastrykin. He heard reports on the initial investigation of the criminal case of terrorist attack committed on 31 March in Kizlyar.
Bastrykin informed about the identity of suicide bombers. According to assign all the necessary legal expertise. The meeting discussed and revised plan for further investigation. On Thursday, with the involvement of the central apparatus of the Investigative Committee conducted a further examination of the scene.
On the eve of Kizlyar there were two powerful explosions that produced suicide bombers. As a result, according to the Republican Center for Disaster Medicine, killing ten people, nine of them policemen. Various injuries were hospitalized 23 people, ITAR-TASS.
Two killed in car explosion in Russia's Dagestan
2010-04-01 13:42:52
MOSCOW, April 1 (Xinhua) -- Two people were killed and one more injured in an explosion overnight Thursday in Russia's Caucasus region of Dagestan, news agencies reported.
The explosion occurred at around 00:30 a.m. Moscow time (2030 GMT Wednesday) in a vehicle near the Toturbiikala village, said the regional interior ministry's press office.
"According to preliminary information, an explosive device that was carried in the car went off," the press service said as quoted by the Interfax news agency.
A day earlier, 12 people, including nine police officers, were killed in two blasts in the Dagestani town of Kizlyar.
The blasts came two days after two female suicide bombers killed 39 in attacks at the Moscow subway system which the authorities have linked to militants from the North Caucasus.
Two men killed, one injured in car blast in Dagestan
01.04.2010, 09.24
MAKHACHKALA, April 1 (Itar-Tass) -- A VAZ-2199 car exploded in the Khasavyurt region of Dagestan on the outskirts of Toturbiikala overnight to Thursday. “Two men were killed, and one more was hospitalized with a grave wound after the car blast,” the press service of the Dagestani Interior Ministry told Itar-Tass on Thursday.
“It is not ruled out that the car was carrying a homemade explosive device,” the press service said.
The Zhiguli driver and the passengers were identified. The killed men are residents from the Botlikh region of the republic, the injured man is from Khasavyurt.
The type and the power of the explosive device are under investigation.
Suicide bombers committed the blasts in the Dagestani city of Kizlyar on Wednesday. Ten people, including nine policemen, were killed, the republican disaster medicine center said. Some 23 people were hospitalized with various injuries after the Kizlyar blasts.
GOOGLE TRANSLATION
The executors of the terrorist act in Kizlyar were two Dauds
Exploded "Niva" driven by 22-year-old suicide bomber, on record as Wahhabi militia
Masha Gorelova - 01.04.2010 14:11
According to the Interior Ministry, to this point have identified the two suicide bombers, which lies on the conscience of yesterday's attack on Dagestan Kizlyar.
"Carrying out operational investigative measures the identity of one of the terrorists set as Dowd Bahtiyarovich Magomedov, born in 1988, a resident of the town of Kizlyar, supporter of extremist movements" Wahhabism, "which consisted of the operational account of ATS in the city of Kizlyar," - the press service of Ministry of Internal Affairs.
Magomedov was driving a bomb Niva, which exploded, leaving from prosecution of police officers. As a result, killing two policemen and one civilian, one person was wounded.
A second suicide bomber dressed in police uniform, blew himself up when the place of the first explosion were men. A few hours later it became known that the suicide bomber identified as a local resident Dowd Dzhabrailov.
The attack in Kizlyar killed 12 people, including nine policemen. Among them - the chief of Kizlyar Department of the Interior Vitali Vedernikov. In the hospital more than 20 people with injuries of varying severity.
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Moscow holds funerals for victims of Metro attacks
|Apr 1, 2010 09:16 Moscow Time |
Today Moscow holds funerals for the victims of Monday metro attacks. Eight of those who died in twin suicide blasts at the Lubyanka and the Park Kultury stations will be buried at Moscow cemeteries, while the funerals for 16 others will be held in other regions of Russia. Thousands of people came to the center of Moscow on Wednesday to remember the victims of the attacks, which killed 39 people and injured 95. A Chechen rebel leader Doku Umarov said his group was behind the attacks. In a video message posted on a Chechen rebel website, he said he had personally ordered the operation. Secretary of Russia’s National Security Council, Nikolai Patrushev, had earlier said that the main version of the investigation is that two female suicide bombers were linked to militants in the North Caucasus.
Three days after Moscow blasts, 88 remain in hospitals
07:3101/04/2010
Three days after the deadly twin bombings in the Moscow metro, a total of 88 people remain in the city's hospitals, an emergencies service source said on Thursday.
"A total of 95 people received injuries of varying degrees, 88 of them are hospitalized at present," the source said.
Two deadly suicide bombings hit the Moscow metro on Monday during the morning rush hour, killing at least 39 people and injuring dozens more. The attackers struck the Lubyanka and Park Kultury stations about 40 minutes apart.
MOSCOW, April 1 (RIA Novosti)
Two false bomb alarm callers detained in Moscow, Yuzhno-Sakhalinsk
01.04.2010, 10.24
MOSCOW, April 1 (Itar-Tass) -- Two women, who informed about terrorist acts allegedly under preparation at the airports, were detained in Moscow and Yuzhno-Sakhalinsk, a source in the Russian Interior Ministry told Itar-Tass on Thursday.
A female seller in a trading center called police in Yuzhno-Sakhalinsk. According to the woman, a terrorist act was under preparation at the city airport. “Since the search was made, the airport was suspended for an hour. It was found out that the bomb alarm call was false. The caller was identified shortly after that and was detained,” the source said.
A similar case occurred in Moscow. “On Wednesday morning a woman called the police alert force and informed about a terrorist act allegedly under preparation at the Sheremetyevo airport. The call was false too,” the source said. An unemployed woman turned out to be a false bomb threat caller.
Criminal cases were instituted against both false bomb threat callers. The women are facing up to three years in prison.
Chechen Group Claims Responsibility For Moscow Bombings
I promise you that the war will come to your streets and you will feel it in
your lives: Chechen leader.
April 01, 2020 () - Chechen group leader Doku Umarov calling himself as the ‘Emir of the Caucasus Emirate’, claimed responsibility for the twin bombings that ripped through Moscow’s famed subway stations killing 39 people.
Umarov said he ordered the bombings as revenge against Russian army’s military attacks on innocent civilians in Chechnya last month. ‘The war is coming to their cities" and that "the zone of military operations will be extended to the territory of Russia,’ Umarov said in a video posted on the groups website on Wednesday.
‘I promise you that the war will come to your streets and you will feel it in your lives, feel it on your own skin,’ the Chechen leader added. The Russians do the same operation in Chechnya; the people in Russia only watch these operations on TV and do nothing about it. But we live it as a reality in Chechnya.
Another person associated with the group, Shamsuddin Botokayov said the purpose of the bombings was to take the war to the streets and homes in Russia so they can taste what Chechen people are going through. Botokayov demanded Russian troops withdrawal from the Caucasus and warned that failure to do so would bring more devastating attacks on Russia in the future.
Russia Ordered To Compensate Falsely Accused Chechen
A Moscow City Court ruled today that the Finance Ministry must pay the equivalent of $4,700 to a man falsely accused of attempting to assassinate Chechen President Ramzan Kadyrov.
Thursday, April 01, 2010
By RFE/RL
MOSCOW -- A Moscow City Court ruled today that the Finance Ministry must pay the equivalent of $4,700 to a man falsely accused of attempting to assassinate Chechen President Ramzan Kadyrov, RFE/RL's Russian Service reports.
Ruslan Musayev, an ethnic Chechen, was arrested in May 2007 on suspicion of planning to assassinate Kadyrov. In April 2009, he was acquitted by a Moscow court.
Since then, Musayev has been engaged in a legal battle to get 3 million rubles (about $100,000) from the Russian authorities in compensation for the false charges made against him and his time spent in detention.
Russia's top forensics officer backs fingerprint, DNA database
10:0801/04/2010
Requiring every Russian to register his fingerprints and DNA in a national database would expand rather than violate citizens' rights, Russia's top forensics investigator told RIA Novosti.
"We are convinced that the universal compulsory fingerprint and DNA registration of citizens would be in the interest of the state and every citizen, and therefore has the right to exist," said Yury Lekanov, head of forensics at the Investigative Committee of the Prosecutor General's Office..
"We believe that such registration would violate no rights except the right to be buried anonymously ... or to commit a crime and go unpunished," he said in an interview.
A law on creating a DNA database in Russia came into effect on January 1, 2009, but only made it compulsory for some criminals. Private individuals have the option of registering their data.
Lekanov said that putting the personal information in a centralized database would in essence be the same as the internal passport or other forms of registration already in use, the only difference being that modern technology means fingerprint and DNA data can sometimes be used to identify an individual more accurately and quickly than a passport photograph.
He added that it was important to ensure the information would not be used against individuals.
Making a wider case for the state to gather the data, Lekanov said it could be used not just to track down criminals, but also to identify the victims of accidents, manmade and natural disasters, and military conflicts.
More than 50 people died this week in terrorist attacks in Moscow and Dagestan, and some of the victims have not been identified.
Lekanov admitted that creating a DNA database was currently prohibitively expensive for Russia, even though it would be more effective than a fingerprint record, but said it was just a matter of time.
"In just 10 years this problem will, I am sure, be eliminated, thanks again to scientific and technological progress," he said.
MOSCOW, April 1 (RIA Novosti)
Far Eastern Island to Become Special Economic Zone
01 April 2010
The Moscow Times
The impoverished Russky island in the Far East will be developed as a special economic zone to promote tourism after it hosts the 2012 Asia-Pacific Economic Cooperation summit, Prime Minister Vladimir Putin said Wednesday.
Preparations for the summit have turned Russky Island into the country's second-biggest construction project, following work for the 2014 Sochi Olympics. But the government has been struggling to find a use once the summit is over for the hotels, conference centers and other infrastructure being built on the lightly populated island.
Initially, the state considered locating one of four federal gambling zones there. In 2008, it was decided that Russky would be turned into a university center for the Russian Academy of Science's branch in the Far East.
Putin personally visited the island in October to inspect preparations, which have been plagued by delays and fears of cost overruns. He said at the time that the government would not cut the 202 billion rubles ($6.9 billion) in federal money allotted for APEC-related construction.
The single largest construction project for the summit is a 3.1-kilometer bridge connecting Russky, which is home to about 5,000 people, with the Primorye region capital of Vladivostok.
Speaking at a government meeting Wednesday, Economic Development Minister Elvira Nabiullina told Putin that the island — which was closed to visitors during the Soviet period — had "lots of potential for tourism [and] a spectacular location," according to a transcript posted on the government web site.
State Provides Guarantees on PPP Bonds
01 April 2010
By Maxim Tovkailo / Vedomosti
Prime Minister Vladimir Putin has signed a decree on the provision of state guarantees on corporate bonds that are issued to raise funds for major investment projects. Various projects will receive state support, including three public-private partnership projects in the country: a 43-kilometer section of the new Moscow-St. Petersburg Highway running from 15 kilometers outside the capital, the new Odintsovo Bypass where the Minsk-Moscow road joins the Moscow Ring Road, and the Western High-Speed Diameter, or WHSD, in St. Petersburg. All of these will be toll roads.
This is the first time the government has provided state guarantees for PPP infrastructure projects, said Natalya Modina, a spokeswoman for Dorogi Rossii, a state body. The total volume of state support, including state guarantees, should not exceed 75 percent of total expenditure on the project, and the value of guarantees on bonds should be no more than 50 percent of the total but no less than 1 billion rubles ($34 million), the government decree stated.
These are relatively beneficial conditions, said Ilya Rachkov, a partner at Noerr, and Yevgeny Trusov, a partner at Ernst & Young. It is key that the list of documents that the Finance Ministry requires — 13 in total — is exhaustive, said Rachkov. The state guarantees will be issued in rubles for 20 years, with the first redemption payment no earlier than 2014. The state will have secondary liability. Investors could experience problems if they request ahead-of-schedule repayment, said Olga Anikina, a lawyer at Baker & McKenzie. “State guarantees will function, but not in all circumstances.”
Currently the companies involved in these PPP projects are planning to attract 57.7 billion rubles using bonds. Glavnaya Doroga, the private partner in the Odintsovo Bypass project, will issue bonds with a total value of 8.2 billion rubles in a single issue maturing in 2027. The issue is planned for after April 15, said Sergei Kerber, head of investment projects at Lider, which holds the controlling stake in Glavnaya Doroga. “We consider the plan that the government has proposed to be well-thought-out, although the subsidiaries [not the firm state responsibilities provided by bonds] could create specific difficulties,” he said.
The private firm involved in constructing the section of the Moscow-St. Petersburg Highway, Severo-Zapadnaya Kontsessionnaya Kompania, will launch five bond issues for a total of 24.5 billion rubles, each with a 20-year maturity period. The Russian representative office of Vinci, the company’s owner, declined to comment. The WHSD project hopes to attract 25 billion rubles via bond issues, the first of which could be launched no earlier than August, said Vera Khaifets, a spokesperson for the St. Petersburg Investment Committee. “The participation of private investors in the construction is planned, but its exact form is still being worked out.”
The state has taken a large step toward meeting its private partners halfway, and now the projects will be more attractive for investors, while road construction will begin to pick up speed, said Trusov. A state guarantee is the right instrument, as such a support mechanism was lacking, said Rachkov. It is unlikely that the state will support its private partners to such a large extent in the future — it is not economically viable, said Trusov. One can only talk about separate risks, he said, such as the risks relating to traffic volumes, which could extend projects’ payback periods and disrupt bond redemptions. There are many possible forms of support, said Robert Vartevanyan, a partner at KPMG. In the United States, road infrastructure projects are traditionally financed by a combination of the federal and state budgets, as well as tax-free municipal bonds.
PPP Projects
43-Kilometer Section of the Moscow-St. Petersburg Highway
Private partner: Severo-Zapadnaya Kontsessionnaya Kompania, owned by Vinci and its subsidiary Eurovia
Estimated cost: 63.4 billion rubles
State financing: 23 billion rubles
Completion: 2013
Odintsovo Bypass
Private partner: Glavnaya Doroga, controlling share held by Lider
Estimated cost: 25.6 billion rubles
State financing: up to 11 billion rubles
Completion: 2012
Western High-Speed Diameter
Private partner: Tender won by a consortium of Hochtief, Strabag, Bouygues, Egis, Basic Element and Mostootryad No. 19
Estimated cost: 212.7 billion rubles
State financing: unknown
Completion: 2015
Source: Vedomosti
President looks to PM for proposals on innovative center development
RBC, 01.04.2010, Moscow 10:53:18.Russian President Dmitry Medvedev has commissioned Prime Minister Vladimir Putin and First Deputy Head of the Executive Office Vladislav Surkov to present proposals before May 1 on the legislative base for the creation and functioning of a complex for research, development and commercialization of its results, including in the sphere of taxation, customs regulations and administrative procedures. As reported earlier, the innovative center would be created in Skolkovo - a city in the Moscow region.
The government must also develop measures to promote the production of highly efficient energy equipment, present proposals on the creation of engineering centers to develop and implement new technologies, and ensure higher investments by power generation companies in projects aimed at boosting energy efficiency in the power industry (by using renewable energy sources), among other things.
Furthermore, Putin, Deputy Prime Minister Igor Sechin and Economic Development Minister Elvira Nabiullina must appoint members of the governmental commission on fuel and energy complex and replacement of mineral resources, which will act as a liaison between federal executive authorities.
Lavrov to take part in Yaroslavl reg economy presentation
01.04.2010, 10.50
MOSCOW, April 1 (Itar-Tass) - Presentation of the economic potential of the Yaroslavl region will be held in Moscow on Thursday with the participation of Russian Foreign Minister Sergei Lavrov. The region’s delegation led by governor Sergei Vakhrukov will present at the Foreign Ministry’s building in Spiridonovka Street the possibilities of the region in cooperation with foreign partners in the sphere of heavy and light industry, innovation technologies and tourism.
The participants in the presentation will be able to familiarise themselves with the main lines of activities of the machine building and agricultural sectors, power and woodworking industries and scientific research organisations.
According to experts, the Yaroslavl region is among the most developed subjects of the Russian Federation. “In terms of activity and profitableness of legislation for investors the region is in the country’s top three,” the governor is certain. “Products of Yaroslavl enterprises is exported to over 90 countries,” he noted. “However, we seek new cooperation spheres.”
More than 600 Yaroslavl enterprises and organisations were engaged in trade with foreign partners in 2009. The annual turnover reached 764 million US dollars. The region’s main partners are the Republic of Belarus, Ukraine, Kazakhstan, Germany, France, Hungary, Poland and China.
In the commodity pattern the chemical industry products have the largest share – 47 percent. Products of the machine building sector have a considerable proportion in the region’s structure of exports - 33 percent.
Most imports come to the region from the Commonwealth of Independent States (CIS), as well as the Czech Republic, Italy and Japan. The Yaroslavl region imports predominantly machine building products – 56 percent, petrochemical sector products – 14 percent, as well as food and raw materials – 12 percent.
According to Russian Deputy Foreign Minister Grigory Karasin, presentations of Russia’s regions in the Foreign Ministry are aimed at attracting the attention of foreign investors. “The events are aimed at the intensification and strengthening of international partnership ties,” he stressed.
Yaroslavl region’s favourable location at the intersection of water and land routes ensures stable domestic and foreign economic ties. The region’s figures for GDP, value of fixed capital assets, number of industrial production personnel, and scientific and technical potential are excellent. A highly effective system of market relations is forming: there is a well-developed financial system; a market infrastructure is developing; there has been success in attracting Russian and foreign investments; and joint ventures between industrial enterprises and foreign partners are being set up, creating new jobs and keeping unemployment levels low. The region has developed a diversified economic complex, in which the engineering, fuel, chemical and petrochemical, woodworking, light, food, and construction industries play a leading role.
The engineering and metalworking industry is the region’s primary industrial sector, which supplies Russia with a wide variety of products. This industry is actively involved in foreign economic relations with CIS and other foreign countries.
The chemical and petrochemical industry, made up of 17 companies, is one of the region’s oldest and most important industrial sectors. This sector accounts for 19% of commercial output. The chemical industry in the Yaroslavl region currently produces more than 73% of all tires, more than 50% of all synthetic rubber, and more than 38% of all paints and varnishes.
The oil refining sector is represented by three companies: AO Yaroslavnefteorgsintez, the Mendeleyev Oil Refinery (Yaroslavsky NPZ) in Yaroslavl, and a pilot plant of the All-Russian Petroleum Technology Research Institute (VNIINT). These companies refine 6% of the country’s oil and produce 5.7% of the gasoline, 5.7% of the diesel fuel, and 7.1% of the commercial fuel oil. They are also contributing to the development of Russia's foreign economic relations.
Small and private business is well developed in the region and makes a sizable contribution to the regional economy. Trade, purchasing, and transportation services and industrial production account for most of the activity in this sector.
Identifying the most effective projects and lines of activity and utilizing the region’s economic resources are the main objectives for economic success. Attracting extra-budgetary investment resources to the regional economy plays an important role in this respect. The Yaroslavl region is one of 16 regions included in the first implementation phase of this project.
The Yaroslavl region has a Chamber of Commerce and Industry, which is an independent, nongovernmental, non-commercial public organization. It promotes the creation of favourable conditions for business and the development of economic and scientific ties with foreign organizations and companies. Since the region is quite attractive for both Russian and foreign investors, the development and implementation of investment projects is a priority.
Yaroslavl region’s financial situation is directly dependent on the country’s economy; however, on the level of other regions, it is reasonably attractive.
Alexeyeva, Skipping Anti-Kremlin Rally, Is Struck in Head
01 April 2010
By Alexandra Odynova
Veteran human rights campaigner Lyudmila Alexeyeva was struck in the head as she laid flowers for bombing victims in the Park Kultury metro station late Wednesday instead of attending an anti-Kremlin rally.
The 82-year-old activist said the attacker — a young man — approached and asked, "Are you still alive?" before hitting her.
"I'm alive. Maybe I have got a slight concussion," Alexeyeva said shortly after the incident, Interfax reported.
The unidentified man was detained by the police, the report said.
Alexeyeva had decided to pay tribute to the 39 people who died when two suicide bombers blew themselves up in the Park Kultury and Lubyanka metro stations on Monday instead of joining opposition activists at a rally on Triumfalnaya Ploshchad.
The absence of Alexeyeva — as well as Solidarity opposition leaders Boris Nemtsov, Ilya Yashin and Vladimir Milov, who said in a statement that the time was not right for "bloody PR" — meant that plans for the rally fizzled.
It didn't help matters that about 3,000 young people crowded onto the square for a sanctioned concert organized by pro-Kremlin youth groups, and the 2,000 police officers guarding the area quickly detained Eduard Limonov, a leader of the Other Russia opposition group, and several dozen opposition activists who showed up.
Limonov said Tuesday that the rally had to go ahead despite the bombings. "The battle for freedom and the Constitution cannot be suspended for holidays or even a day of mourning," Limonov wrote in his blog. "Freedom is more important than grief."
Opposition politicians and human rights activists have gathered on the square on the 31st day of every month to call attention to Article 31 of the Russian Constitution, which provides the right of free assembly.
The activists say the authorities, who have refused to authorize the rallies, have violated the Constitution by not allowing them to protest. Previous protests have been broken up by police.
Several dozen Other Russia activists exited the Mayakovskaya metro station on Wednesday evening and were quickly detained by police, Interfax reported. The activists were whisked away as music blared across the nearby square from the pro-Kremlin youth concert, dubbed "Youth Against Terror," the report said.
City Hall, which authorized the concert, criticized the opposition's attempt to rally, saying in a statement that the opposition cared too much about "political ambitions."
Earlier Wednesday, the pro-Kremlin youth group Young Guard set up a mobile blood center on Triumfalnaya Ploshchad to collect blood for people injured in the bombings. Dozens of people lined up outside the van in the morning.
But not all people who wanted to donate blood are allowed to do so. The law requires that donors be Russian citizens with Moscow residency permits — a precaution in case doctors need to trace the donor at a later date.
"I tried to donate blood on Tuesday but was told that no foreigners are accepted — with no reason mentioned," said Francois Nonnenmacher, a French citizen who has worked as a consultant in Moscow for the past five years. "My blood is from a rare group and, besides, I have to take blood tests regularly to get a work permit."
50 Detained in Moscow Opposition Rally; Alexeyeva Violently Attacked
April 1st, 2010
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Filed Under: Other Russia • Repression
Tags: Eduard Limonov • Grigory Torbeyev • Heidi Hautala • Konstantin Kosyakin • Konstantin Pereverzev • Left Front • Lev Ponomarev • Lyudmila Alexeyeva • Moscow • Moscow metro bombings • Nashi • Sergei Udaltsov • Strategy 31 • Triumfalnaya Square
Approximately 50 activists were detained during Wednesday’s iteration of the opposition-led Strategy 31 rallies on Moscow’s Triumfalnaya Square, where between 500 and 1000 protesters gathered in defense of the constitutional right to freedom of assembly. The protests are traditionally held on the 31st of each month with that date, but given the suicide bombings on the Moscow metro earlier in the week, organizers decided to hold the event as a non-political memorial for the victims of the attack.
Nevertheless, police detained both protesters and independent observers for taking part in the unsanctioned event, reportedly employing extreme brutality against both detainees and journalists, including representatives from state-owned media sources.
“One of our activists, Grigory Torbeyev, was severely injured; his face is broken,” said opposition leader Sergei Udaltsov. “Nevertheless, he was dragged into an OMON police bus and is now being held there. He requires medical attention but the police are doing nothing.”
Both of the rally’s organizers, Left Front representative Konstantin Kosyakin and National Bolshevik leader Eduard Limonov, were among those detained, as were a number of activists from the Solidarity opposition movement. Chairman Lev Ponomarev of the Association of Russian Lawyers for Human Rights, who came to the event as an observer, was also detained.
As they have done for each of the Strategy 31 rallies since their inception last May, organizers had filed the required application with Moscow city authorities to legally hold the rally on Triumfalnaya Square. And as has been the case each of those times, the city denied the request on the premise that the space was already reserved for another event. While such events have usually consisted of various cultural festivities, March 31 was reserved for Generation Day, an event organized by and for a conglomeration of pro-Kremlin youth groups, including the notoriously Komsomolesque organization Nashi.
Limonov argued that the city’s actions showed that it had “cardinally altered its tactics and strategy” by allowing such an event to take place at the traditional place and during the traditional time of the Strategy 31 anti-government protests. In a similar vein, Heidi Hautala of the European Parliament’s human rights committee earlier called attention to “the particularly concerning trend that is newly appearing in the period prior to the demonstration on March 31.”
“I understand that the Russian authorities, it’s possible, are searching for ways to deny sanction to these demonstrations, as has occurred in the past,” said Hautala. “It can even happen that they simultaneously allow rival pro-Kremlin groups to hold demonstrations at the same time and in the same place. This would bring about the risk of creating clashes and excessive violence between the groups.” As it is, each of the Strategy 31 rallies have ended by being violently broken up by police.
One mainstay of the Strategy 31 demonstrations was absent on Wednesday night: 82-year-old former Soviet dissident Lyudmila Alexeyeva chose instead to attend a memorial at the Park Kultury metro station, where one of Monday’s two bombings took place. Noting that the decision had been difficult, Alexeyeva said on Tuesday that “I tried to convince myself that since the official day of mourning was declared to be March 30, I could go to Triumfalnaya Square on the 31st with my ‘Article 31 of the Russian Constitution’ badge. But I couldn’t bring myself to do anything when I imagined what the memorial rally that the pro-Kremlin youth are going to be holding at that time is going to turn out like.”
“I have no desire to be present at that orgy; I can bear neither to hear it nor see it,” she concluded.
That somber memorial at Park Kultury took a shocking turn when Alexeyeva was physically attacked by a young man identified as Konstantin Pereverzev. While the elderly activist addressed a crowd of reporters, Pereverzev approached her and asked “Are you still alive, b****?” before striking her across the head. He was immediately restrained by members the crowd and then detained by police, who said that the assailant “is in a state of extreme alcoholic intoxication.” Interfax reported that the man “frankly cannot put together a single word and is currently a state of unconsciousness,” although Alexeyeva herself and other eyewitnesses claim that Pereverzev was completely sober at the time of the attack.
“I’m an old woman. I behave in a law-abiding fashion. If a young man hits an old woman, it’s not normal,” said Alexeyeva. The elderly activist left for home immediately after the incident, having possibly suffered a slight concussion.
Lenin statue to return to St. Petersburg year after the blast
07:1101/04/2010
The monument to Soviet leader Vladimir Lenin, vandalized last April, will return to its place St. Petersburg's Finlyandsky railway station a year after the blast.
One of the Soviet Union's first monuments was badly damaged in the blast, which took place early on April 1, 2009. Russian police made no reports on any charges filed or arrests made in connection with the case so far.
The bronze monument to Lenin was unveiled on November 7, 1926 at the site where he made a prominent speech after returning from exile in 1917 to lead the October Revolution. The statue was later moved closer to the Neva River.
Authorities subsequently ordered the dismantling of the monument for restoration work, which cost 6 million rubles ($204,000). It is expected to be put back in place on April 20, two days before the Soviet leader's 140th birthday.
Numerous Lenin statues were torn down in Russia and former Soviet republics following the collapse of the U.S.S.R. Many remain, however, with each large town or city usually boasting at least one.
There were a couple of reports of Lenin statues being vandalized in Russia and ex-Soviet states in 2009.
The Lenin monument in the Ukrainian capital Kiev was vandalized on June 30 by a group of nationalists, who damaged the face and an arm with hammers. When the restored monument was unveiled last November, two nationalists daubed the restored monument with red paint during the ceremony.
Earlier that month, a monument to Soviet leader Vladimir Lenin has been daubed with orange paint in the Russian Baltic exclave of Kaliningrad.
MOSCOW, April 1 (RIA Novosti)
Magazine Accused of Disclosing Defense Secrets
01 April 2010
The Moscow Times
A federal media watchdog said Wednesday that it had issued a warning to Kommersant Vlast, the influential news magazine, for divulging military secrets in a report about the Strategic Rocket Forces.
The report, a reference guide published in December, contained technical data on Russian missiles, the locations of missile bases and biographical information about the forces’ commanders.
Vlast said it is accused of disclosing the classified locations of missile units and denied wrongdoing. It said in a statement that the information used in the report had come from public sources, including the Defense Ministry’s newspaper, Krasnaya Zvezda.
Under Russian law, a media outlet can be closed by a court if it receives two warnings within 12 months.
The Federal Press and Mass Communication Agency issued the warning in mid-March. “We received an expert evaluation from the Defense Ministry that part of the information published in the magazine contained state secrets, so we reacted according to the law,” spokesman Mikhail Vorobyov said.
Vlast vowed to challenge the watchdog’s decision in court.
The Defense Ministry’s press service declined immediate comment.
Vlast has published other reference guides, including on the branches of power in Russia and even on prisons around the world.
In 2002, prosecutors opened a criminal case against Vlast after the Defense Ministry accused it of divulging classified data in a reference guide on the army. A court later dismissed the case.
Soyuz crew confirmed ready for launch to ISS
09:1401/04/2010
Russia's Federal Space Agency gave final approval on Thursday to the crew of the next expedition to the International Space Station (ISS), which will be launched on Friday.
Russian cosmonauts Alexander Skvortsov and Mikhail Korniyenko and U.S. astronaut Tracy Caldwell Dyson are scheduled to take off from the Baikonur space center at 08:04 Moscow time (04:04 GMT) on Friday.
Their reserves - Russian cosmonauts Alexander Samokutayev, Andrei Borisenko and NASA astronaut Scott Kelly - will remain on the ground.
The Soyuz TMA-18 spacecraft will dock with the ISS on Sunday, where the crew will join Russian cosmonaut Oleg Kotov, U.S. astronaut Timothy Creamer, and Japanese astronaut Soichi Noguchi.
BAIKONUR (Kazakhstan), April 1 (RIA Novosti)
New International Space Station crew approved
2010-04-01 14:51:20
MOSCOW, April 1 (Xinhua) -- The 23rd crew for the International Space Station (ISS) was approved on Thursday, said Russia's Federal Space Agency.
The new expedition crew that will depart on Friday consists of Russian cosmonauts Alexander Skvortsov and Mikhail Korniyenko, as well as U.S. female astronaut Tracy Caldwell, according to the space agency's official website.
A Russian Soyuz TMA-18 spacecraft with the crew members aboard is scheduled to blast off from the Kazakh Baikonur cosmodrome early Friday, and dock with the ISS on Sunday.
Russians report snag in space safety system
Launch escape tower went awry last year; no big deal, NASA was told
By James Oberg
NBC News space analyst
Special to MSNBC
updated 7:10 p.m. ET March 31, 2010
| |
HOUSTON - When astronauts blast off to the International Space Station in a Soyuz spacecraft on Friday, they'll be relying on a safety system that failed in a still-unexplained manner less than a year ago, a top Russian space official said Tuesday.
A NASA spokesman told that the U.S. space agency's representatives in Russia had heard about the problem with the Soyuz's launch escape system — but were assured that it was no big deal.
Other NASA sources told that they hadn't been told that the system malfunctioned during a launch last May. And by all accounts, the cause of that malfunction has not yet been determined.
The latest spaceship in Russia's Soyuz series, Soyuz TMA-18, is due to lift off at 10:04 a.m. Friday local time (11:04 p.m. ET Thursday) with NASA astronaut Tracy Caldwell Dyson and Russian cosmonauts Alexander Skvortsov and Mikhail Kornienko.
During the first two minutes of ascent, the Soyuz crew is supposed to be able to blast free of a malfunctioning booster in an emergency, using a launch escape tower of a type first employed on NASA's Mercury capsules almost a half-century ago.
The Soviet space program copied the idea for its Soyuz vehicles several years later, and on one occasion in 1983, such an escape system was activated to save the lives of two cosmonauts.
This week, Russian press reports quoted Victor Volchkov, an official of the Iskra plant that produces these escape systems, as saying the system performed in an "off-nominal" fashion during the Soyuz TMA-15 launch last May. The tower is routinely jettisoned two minutes after launch when it is no longer needed, but on this occasion the central thrust chamber malfunctioned, and the discarded rocket landed far from its target area.
The Soyuz ascent continued normally, carrying a Russian cosmonaut and two astronauts from Canada and Belgium into space. They reached the space station without incident and raised the permanent crew size from three to six people.
But Western analysts worry that if the Soyuz's rocket booster malfunctioned, the escape system might not have provided adequate thrust to get the crew clear of the explosion, possibly resulting in their deaths.
Volchkov, who made his comments to journalists at Russia's Baikonur Cosmodrome in Kazakhstan during preparations for this week's launch, did not discuss this aspect of the failure. He acknowledged, however, that the Russian investigation board had not yet come up with a plausible explanation for the escape rocket’s malfunction. The board is still analyzing the failure, he said.
Concern about quality control
One disturbing possibility connects the reported malfunction with the significant industrial challenge of doubling the launch rate of Soyuz crew-carrying vehicles. For the first decade of space station operations, a permanent crew of two or three people has been supported by two launches per year for six-month duty tours. Last year, the crew capacity for the expanded station doubled, requiring the consequent doubling of the Soyuz production rate.
Soyuz TMA-15, the vehicle on which the malfunction occurred, was the first of the "extra" vehicles delivered as part of the production increase.
Another rocket project, also managed by the Russian Federal Space Agency, is facing eeriliy similar questions about quality control. This is the Bulava intercontinental ballistic missile, a solid-fueled rocket being built for installation on Russian nuclear submarines.
The missile’s chief designer, Yuriy Solomonov, has complained for years about the quality of engineering support from contractors. He recently told a reporter that a string of recent failures was “payback for technological imperfection and in a number of cases for overt slovenliness associated with non-compliance with technological discipline.”
The spectacular Bulava failure last Dec. 9, which painted a spinning spiral in the skies over Norway and sparked a wave of UFO reports, was traced to “unstable operation” of the rocket’s solid-fueled third stage. The stage was built in the Iskra plant in Perm, the same facility that produces the solid-fuel rockets for the Soyuz launch escape system.
In addition, several previous Bulava failures have been attributed to defective explosive charges (“pyrobolts”) for the separation of rocket stages. Likewise, malfunctioning separation pyrobolts were also responsible for two Soyuz landing emergencies in 2008 and 2009 when the still-attached service module pointed the unshielded end of the command module into the fiery re-entry plasma. The malfunctions could have led to fire damage and the potential loss of crew members, but instead the modules tore free after being scorched. In both cases, the Soyuz craft landed far off course.
A subsequent Russian investigation blamed those failures on electrical discharges from the newly added American power panels. But that failure mode was not reproduced in ground tests, and some NASA engineers remain skeptical of the investigation's findings.
Safety guru voices worries
Perhaps as a result of such incidents, the head of Russia’s independent space safety agency issued a warning to Russian lawmakers last September. Gennady Raykunov, the director-general of the Machine Building Central Research Institute, bluntly claimed that the space industry's product quality control system required fundamental improvement.
"The organizational and methodological management of quality and reliability services at rocket-and-space industry enterprises has broken down,” Raykunov was quoted by the Interfax news agency as saying. “The services are in decline."
He added that "the number of failures during flight testing and use of rocket-and-space hardware has increased substantially" in recent years, requiring urgent remedial steps.
Raykunov went on to point out that ground-based experimental work lay at the heart of establishing hardware reliability. "The majority of failures are associated with insufficient work on the ground, unjustified substitution of real testing with calculations," Raykunov said. He added that the Russian space agency’s departmental experimental base is "morally and physically outdated".
What did NASA know?
NASA astronauts have been riding Russian Soyuz vehicles into space safely since 1995, and beginning next year, such vehicles will be the only access to orbit for Americans for an extended period of time. Traditional concerns over crew safety motivate NASA managers to conduct regular safety reviews before each mission.
Kelly Humphries, a spokesman at NASA's Johnson Space Center in Houston, said last May's launch anomaly didn't come up during the readiness reviews that have been conducted since then. "It's never risen to the level of that discussion," he told .
But Bob Jacobs, a spokesman at the agency's Headquarters in Washington, said NASA personnel in Russia knew about the problem — even if workers back in the United States did not.
“While there was an anomaly, the issue did not affect its functionality,” Jacobs explained in an e-mail. “Our Russian partners didn’t notify us because it was not considered a safety of flight issue. Had the performance review shown otherwise, NASA would have been notified during the standard general design reviews or stage operation readiness reviews.”
Jacobs said that Russian engineers "have been very forthright in describing the anomaly and its resolution for future flights."
"Our Russian colleagues work problems with the same rigor and dedication as NASA engineers and will discuss any issues with us as they arise and affect joint operations or safety,” he said.
| |
During the shuttle-Mir program in the 1990s, the United States and Russia worked out an arrangement under which each side verified its own vehicles’ flight safety levels. The reasonable presumption was that if one side felt the vehicle was safe enough for its own crew members, the other side was justified in going along with that judgment.
So far, this arrangement has worked out: With more than 100 Soyuz crew launches on record, there has never been an in-flight failure that would have required the use of an escape tower. Cosmonauts did have to use the system to escape from a pre-launch fire on the pad, however — and going forward, the arrangement may have to change.
The burgeoning issue of deteriorating quality in the rocket and space industry, highlighted recently by top officials such as Yuri Solomonov and Gennady Raykunov, may be a warning to NASA. The future cannot be viewed simply as a linear extrapolation of the past — especially if there are fundamental negative trends in the condition of the industry, as described by these and other experts.
|The Sochi Winter Olympics and the Caucasian Islamist cause |
| |
|By Benjamin Shapiro, special to Prague Watchdog |
|April 1, 2010 |
| |
|In 2014 the Winter Olympics will be held in the Russian republic of Krasnodar Krai, a territory which Circassian groups |
|currently say is the very heartland of their unrecognized genocide. With an ethnic Circassian political movement on the rise, |
|Dokka Umarov, the self-proclaimed Amir of the Caucasus Emirate insurgent group, seems to be showing attempts at the exploitation |
|of this chain of events. With Monday’s suicide bombings circumventing Moscow’s security apparatus, one has to call into question |
|the authenticity of the Kremlin’s assurances that the Sochi winter games are indeed invulnerable to attack. |
|Nothing would suit the Emirate's interests more than to strike a blow at Moscow's already lagging build-up to the winter games. |
|It is a priority that fits both the insurgency's latest strategic framework for a campaign of economic sabotage, and the recent |
|outcry from Circassian rights groups. |
|Circassian nationalists are currently demanding from Moscow their own Circassian republic, which would combine the current |
|republics of Kabardino-Balkaria, Adgye and Karachai-Cherkessia into what in Soviet times was called "Greater Circassia". Many |
|Circassian groups are also calling for the cancellation of the Winter Olympics. "Circassians argue the Sochi Games are as |
|insensitive as hosting a sporting competition on the grounds of the Nazi death camp Auschwitz", according to Reuters. The |
|Circassians are attempting to push Moscow into officially recognizing Tsarist Russia's mass deportations of Circassian people as |
|genocide. 2014 will mark the 150th anniversary of the military operation in which Tsarist Russia forced 300,000 Circassians out |
|of the land in and around Sochi, the city that is to host the winter games. It seems that in this respect the Caucasus Emirate |
|shares the same priorities with many Circassians, though with a different agenda. |
|In his latest speech, Umarov emphasizes the importance of Krasnodar Krai, a region that does not currently feature in the |
|ultra-nationalists’ plans for a greater Circassian republic. "This is a policy of infidels (Russian politicians), a policy of our|
|enemy. But in this issue, I would like to stress one important thing. Through the creation of a ‘North Caucasus Federal District’|
|the Kremlin is trying to show that Krasnodar Krai is not part of the Caucasus," Umarov says. |
|Never before have the insurgents raised such a hue and cry about this region. Umarov praises it to the skies, declaring that |
|"Krasnodar Krai, as the infidels call it, is in fact the land of our brothers, the finest brothers and the finest Muslims in this|
|world. This is the land of the Adygs, the land of the Abazins, the land of the Circassians." |
|Historically, the southern half of the Krasnodar Krai region was part of ancient Circassia, the Circassians’ original homeland. |
|Today, however, Circassians account for only 0.31% of the population, while Russians make up around 86%. |
|Umarov has good reason for mentioning the Abazins. For a start, one of their two strongest population bases lies in the enclave |
|republic of Adygea, which is situated within the confines of Krasnodar Krai: these are borders which Umarov has made it clear he |
|does not recognize. The Abazins are also considered ethnic cousins of the Circassians (Adyg) and as belonging to the same tribe. |
|Some observers even consider them pure Circassians, similar to the Kabardins. |
|It is well known that Russia's centuries-old strategy of "divide and rule" included the creation of fictional or exaggerated |
|differences within ethnic groups in order to encapsulate them within different republics or administrative zones, especially in |
|the Caucasus and Central Asia. There is therefore much debate as to whether the name “Circassians” should include Kabardins and |
|Abazins as well. |
|The Abazins are also one of the ethnic groups with which the Circassians would like to unite in a single entity. If the three |
|republics were to be unified into one, this would give them a collective majority population base of over one third. Without such|
|unification, the Circassians would not obtain the same preponderance of numbers, and would be unable to consolidate their power |
|in southern Russia. |
|It is also unclear why Umarov distinguishes the Circassians as being separate from the Adyg people. “Circassians” is simply |
|another name for the Adygs. He is probably using the term in its broader and more generalized sense as a description of a |
|collective assortment of many peoples of the Northwest Caucasus and their ethnic cousins. It is very possible that Umarov may be |
|trying to spread the word that, indirectly at least, he supports their ethnically-driven cause as being part of his Islam-driven |
|cause, according to a rationale by which being Circassian also means being a good Muslim. In the Caucasus ethnicity still plays a|
|strong role alongside Islamic identity, even amongst the religiously inclined fundamentalists. |
|Also, in his rhetoric Umarov makes no direct link to a "Greater Circassia", as this would go against the Emirate's traditional |
|Salafist policy of not recognizing "man-made nation-states" (in this case, republics). However, his praise for Circassians and |
|his perception of the political tension that is clearly gaining momentum among them suggests that he may be attempting to show |
|that there are similar interests at stake here, and that both Islamists and Circassians have the same enemy: Moscow. |
|"So I want to state with full responsibility and I bequeath it to the Mujahideen who will come after us, and, God willing, they |
|will come, there is no doubt about it, that this is the land of our brothers (Circassians). And it is our sacred duty to liberate|
|these lands (Krasnodar Krai) from unbelief. And, God willing, we will do it, we will achieve that goal," Umarov concludes. |
|On December 24, 2009, Vladimir Ustinov, presidential plenipotentiary for the Southern Federal District, said in a public |
|statement that because of their impact on neighbouring areas and on the radicals, plans to create a “Greater Circassia” would |
|”add fuel to the flames” that are spreading across the North Caucasus. The creation of a destabilizing environment is not a new |
|strategy in modern Jihadism, especially when viewed in the context of Umarov’s new policy of military engagement, which calls for|
|a campaign of economic sabotage. Ustinov also said that such a move would be "a real danger" for Russia. |
|Moscow seems to be aware of the security situation and the need to win over, by the granting of concessions, those Circassians |
|who are presently caught up in the euphoria of Circassian nationalism and public protest. An ethnic Circassian, Dzhambulat |
|Khatuov, was recently appointed Sochi’s mayor. |
|A recent trip to Sochi by CBC journalist Bill Gillespie confirms a well-prepared presence of security around the Olympic sites as|
|well as the construction of concrete military bunkers on the surrounding hills. |
|For Umarov it is of critical importance to convince Circassians that Moscow is hostile to their interests. If the Circassians |
|have no one to turn to politically, Umarov would find it easy to persuade a handful of determined war-driven individuals to |
|carry out sabotage in the Western Caucasus. That would enable him to expand further west into Krasnodar Krai, as well as into |
|Karachayevo-Cherkessia and Kabardino-Balkaria – two republics which, while not totally asleep, have not been affected by the same|
|dramatic upsurge of violence that has been seen in Ingushetia, Chechnya and Dagestan in recent times. |
|It will also be interesting to see if Umarov has thought his ambitions through to any great extent, and whether such links to |
|Circassian demands may give the wrong message to other Muslim peoples, such as the Turkic ethnic groups that include the Karachai|
|and Balkars. They have recently been in political conflict with the Circassians and their ethnic cousins such as the Abazins and |
|Kabardins, all of whom are Muslims, and all of whom live in regions where Umarov has wider plans for recruitment to a united |
|North Caucasus insurgency. |
|After Moscow’s suicide attacks, along with an upsurge in violence in the past year, Russia and the International Olympic |
|Committee must face the grim reality that the security threat posed by the Caucasus insurgency bares frighteningly more danger |
|than it did in 2008, 2007 and arguably 2006. With the current evidence available, they must also be prepared for the possibility|
|that their gaming grounds may already be a high profile target for the insurgency’s ambitions. By recognizing this, it must be |
|accepted that nothing can guarantee safety at the Winter games other than denying the militias their logistical capability to |
|successfully launch attacks in the western Caucasus. |
|The author is a Caucasus research analyst who studied Islamic politics under Ivan Ivekovic, the former Russian Ambassador to |
|Egypt. |
|Immigrants Make Up 10% of Work Force |
| |
| |
|01 April 2010 |
|By Alex Anishyuk |
|Foreign workers make up as much as 10 percent of the country's work force, a report published by the United Nations said |
|Wednesday. |
|There were 2.4 million officially registered migrants in 2008, although the real figure is likely three times higher, according |
|to the report on Russia's demographic development, commissioned by the United Nations Population Fund. |
|"Taking into account the shadow component of labor migration, the average proportion of foreigners currently employed in Russia |
|may be around 10 percent," the report said. "Illegal migrants are basically employed in jobs the local population doesn't want." |
|The country's official work force stood at about 74.5 million people, or 52 percent of the population, as of February 2010, |
|according to the State Statistics Service. |
|The report praised authorities for better facilitating the registration procedure for migrants and improving border control but |
|said the country still lacked a systemic approach to immigration. |
|"Russia is still in search of an efficient migration policy that can tackle the future demographic situation," the report said. |
|"Meanwhile, both the work force shortage and the risks posed by illegal migration are underestimated." |
|A law regulating the status of foreign workers came into force in 2007, which requires candidates to present an identity document|
|and a migration card and to pay a fee to get a card. |
|The law allowed migrants to obtain a work permit and change employers freely, rather than depend on a specific employer to get |
|one as before. But in June, Prime Minister Vladimir Putin vowed to reverse the measure and link each migrant to a specific |
|employer so as to have more leverage on the number of foreign workers. |
|The initial steps were a good way for the country to generate more of a benefit from immigration, but the recession has made the |
|government rethink its strategy, said Nikita Mkrtchyan, a senior research fellow at the Higher School of Economics. |
|"Things have changed since the government realized it didn't need so many foreign workers in the recession-hit sectors like the |
|construction," he said. "The official quotas for migrants for 2010 were reduced, which pushed lots of foreigners out of the legal|
|framework." |
|The Federal Migration Service announced last November that quotas for guest workers this year would be reduced to 1.94 million |
|people from 3.97 million in 2009. |
|Although the exact number of economically motivated immigrants is hard to estimate, the figure revealed by the UN looks a bit |
|exaggerated, Mkrtchyan said. |
|"If you take [the UN's] percentage, you will see that there should be 7 million to 8 million foreign workers in Russia, which |
|isn't accurate," he said. "The recession made up to 20 percent to 30 percent of foreigners return home, so I would assume the |
|overall figure is now significantly less." |
|March 31, 2010 |
|Navigating Rumorville |
| |
| |
|By Roland Oliphant |
|Russia Profile |
|Monday’s Attacks Remain Clouded in Rumor, Speculation, and a Growing Sense That the Authorities Have Let the Public Down |
|Doku Umarov, the Chechen rebel leader who in February had threatened to bring “the war to Russian homes,” appeared to have |
|claimed responsibility for Monday’s double suicide bombing of Moscow’s Metro system late Wednesday. In a video released on |
|Youtube and the rebel KavkazCenter Website he said the attacks had been carried out on his orders in revenge for an FSB operation|
|on February 11. That will probably put to rest the wilder speculation circulating about the attacks, but it won’t assuage growing|
|criticism of the authorities’ response. |
|The official day of mourning was on Tuesday, but on Wednesday the stream of mourners at Lubyanka and Park Kultury metro stations |
|had not abated; the metro itself is running and in use, but it is still noticeably less crowded than usual; taxi drivers, |
|demonized for charging thousands of rubles for a ride in the immediate aftermath of the explosions, are now being feted for |
|giving free rides to those afraid of using the metro. Meanwhile, the capital’s newspapers are still dominated by Monday’s events |
|– the Wednesday edition of the Komsomolskaya Pravda daily devoted ten pages to the subject. |
|Amongst all the residual shock is a growing sense of anger at the security services for failing to stop the attacks; at the |
|Moscow authorities for not closing the metro after the first attack; at the state-owned central television channels that did not |
|interrupt their normal programming for hours after the attacks; and at the government of Prime Minister Vladimir Putin and |
|President Dmitry Medvedev for failing to end the North Caucasus insurgency that is almost universally assumed to have spawned the|
|attackers. |
|Veteran North Caucasus correspondent Vadim Rechkalov summarized the charge sheet in a 1,200 word salvo on the pages of the |
|well-connected Moskovsky Komsomolets tabloid. “Between the first and second bombings, the authorities had 40 minutes to try and |
|save more people. No such attempt was made,” he wrote. He went on to attack the “indifference of the special services toward |
|those they are meant to protect,” the main television channels for “waiting for a signal from above” and “forgetting how to cover|
|things properly,” before concluding that “the main lesson Russians should draw from this tragedy is that the authorities look |
|after themselves, and the people look after themselves.” |
|Rechkalov himself stopped short of blaming the authorities for anything more than callous incompetence, but signed off his column|
|with a warning to the authorities that they risked giving credence to versions of events “like those of [Alexander] Litvinenko |
|and [Boris] Berezovsky after the 1999 house bombings.” In other words, that Putin and the FSB organized the bombings for |
|political purposes. |
|But exactly that version of events – amongst others – is already circulating on the Internet. “So far, everything indicates that |
|the death of large numbers of people was not the main goal,” argued one blogger posting before Umarov’s apparent claim of |
|responsibility. “All this only confirms suspicions that it was not a terrorist attack by terrorists, but a simulated terrorist |
|attack to justify future actions of our ‘elected’ president-prime minister.” |
|“The sense in the forums is, ‘the 2012 election campaign just started,’” said one forum user who asked to remain anonymous. The |
|1999 apartment blasts preceded Putin’s first election as president. He was reelected in 2004, the year the last suicide bombing |
|campaign in the capital peaked and ended. |
|Most of the conspiracy theories circulating on the Web revolve around the choice of target. Why take the trouble to travel in a |
|wagon all the way from Yugo Zapadnaya (or Sportivnaya, or, according to a bus driver quoted by Interfax late Wednesday, Vorobyovy|
|Gory) only to explode oneself not in a tunnel, where the blast would have killed more, where help for the injured would have been|
|delayed, and where to the devastation in the carriage might have been added the carnage of collision with an oncoming train? |
|After all, that’s what the last suicide bomber to strike inside the metro did in February of 2004 – “extremely effective from the|
|point of view of maximizing casualties,” as Maksim Kononenko, a government-friendly commentator, put it on the Internet site |
|Vzglyad. |
|The answer was obvious to many bloggers: there were no suicide belts and certainly no deluded, drugged and/or vengeful young |
|women wearing them (the rumors of “suicide belts” have been further confused by a report in Kommersant that the explosives were |
|carried in the women’s “hand bags”). Rather, the bombs were exploded remotely, by mobile phone – for while there is no mobile |
|signal in the underground tunnels, “at both stations there is perfect mobile communication,” noted Rechkalov. And “at both |
|stations, there are pillars behind which a triggerman with a phone could take refuge from both the force of the blast and CCTV |
|cameras.” |
|It’s always possible. Though, as both Kononenko and Rechkalov both pointed out, it seems increasingly unlikely, since the |
|authorities have produced footage of the “suicide bombers” entering the metro at Yugo Zapadnaya, their bodies have been stitched |
|together (and grainy pictures of their dismembered heads circulated on the Russian Internet and were published in the tabloids), |
|and literally dozens of witnesses can testify that one of their fellow passengers blew herself up. The latest video from |
|KavkazCenter adds to that weight of evidence. |
|Meanwhile, the “Berezovsky and Litvinenko” theory has not been confined to the Internet. Early Wednesday it even seemed that |
|Umarov himself was pushing it, when the Russian language Georgian TV Channel First Caucasian reported the emergence of a |
|recording of his voice denying involvement in the atrocity and explicitly blaming “the Russian Special Services.” That followed |
|an equally bizarre suggestion in an interview with Kommersant by Nikolai Patrushev, head of the Russian Security Council, that |
|the Georgian Special Services might have been involved. |
|Earlier, Dukuvakha Abdurakhmanov, the speaker of the Chechen Parliament (a body, it should be said, that exists to rubber stamp |
|the decisions of Ramzan Kadyrov, whose rule has failed to quell the insurgency that apparently produced the bombs on Monday), had|
|said Tuesday that: “A strategically protected object like the metro should be safe. And if anything was taken there it is due |
|either to the negligence of the special services, or to the complicity of metro workers, or to the assistance of law enforcement |
|officers.” |
|That’s disingenuous, to put it politely. The truth is that like all public transport systems, the Moscow metro is almost |
|impossible to secure without exhaustive searches of passengers at every station. But to be fair, Abdurakhmanov was speaking in |
|response to the immediate assumption in the press and elsewhere of Chechen guilt – an assumption which, he rightly pointed out, |
|both President Dmitry Medvedev and Prime Minister Vladimir Putin had so far avoided in their public statements. |
|Those two have instead confined themselves to repeating variations of Putin’s 1999 line about wiping out terrorists, but have not|
|said where they intended to look for them – in the toilet or elsewhere. Putin this time spoke about “dragging them from the |
|sewers.” Medvedev mentioned “grinding them to dust.” |
|And it’s this belligerence, more than any wild conspiracy theory, which may cost the two leaders respect. For as Rechkalov |
|pointed out, the two suicide bombers represent a defeat for the authorities’ strategy. “I have a sense of dejа vu, I seem to |
|recall there was something about a toilet,” wrote another anonymous blogger. “And that is what they said in the first Chechen |
|War, and the second.” |
| |
| |
| The FSB Dropped the Ball |
| |
| |
|01 April 2010 |
|By Irina Borogan and Andrei Soldatov |
|Every explanation offered for Monday’s Moscow metro bombings is connected in some way with the North Caucasus. Most refer to the |
|fact that Federal Security Service commandos killed several well-known separatist leaders in the region over the past few weeks. |
|But despite what would seem to be a logical connection, the theory that the Moscow bombings were a revenge killing remains |
|extremely doubtful. |
|It surely took the terrorists more than a month to prepare for the metro bombings. After all, the organizers had to bring the |
|suicide bombers to the capital, obtain the explosives and select a secret apartment as a safe house. It thus seems clear that the|
|metro bombings were not a reaction to the March killings of separatist leaders as the FSB has claimed. |
|In fact, the militants began building up suicide bomber units as long as two years ago. Chechen militant leader Doku Umarov |
|announced in April 2009 that the Riyadus Salikhin battalion of suicide bombers created by Chechen warlord Shamil Basayev, who was|
|killed in 2006, had been fully restored. He then repeatedly warned that the jihad would spread to all of Russia. After suicide |
|bombings began in Vladikavkaz, it was clearly only a matter of time before they came to Moscow. |
|It would be a mistake to assume automatically that Chechens carried out Monday’s bombings. Recall that members of the |
|“Karachayevo-Cherkessia Jamaat” staged metro bombings in 2004. In February 2004, 20-year-old Anzor Izhayev, a Karachay from |
|Karachayevo-Cherkessia, blew himself up in a metro train car near the Avtozavodskaya metro station. And on Aug. 31, 2004, a |
|female suicide bomber standing near the Rizhskaya metro station blew herself up, along with her escort, Nikolai Kipkeyev — also |
|from Karachayevo-Cherkessia. Members of the same Jamaat also organized a series of terrorist attacks at bus stops in Voronezh and|
|Krasnodar. |
|In any case, Moscow bombings represent a fundamental failure of the Kremlin’s strategy for fighting terrorism. Contrary to |
|popular belief, these blasts cannot be attributed to foreign forces such as al-Qaida or other international terrorist |
|organizations. Terrorism in Moscow and the North Caucasus definitely has local roots. |
|Unfortunately, it is doubtful that Monday’s tragedy will force the government to change its approach to combating terrorism. |
|Although terrorism on Russian soil strikes fear and panic among the people, the same cannot be said for the country’s leaders. |
|Under a strategy that the Kremlin adopted in the mid-2000s for fighting terrorism, the main criteria for evaluating the severity |
|of an attack is the potential threat it poses to political stability, not the number of victims. |
|As a result, the focus of the government’s war on terrorism is, above all, to deny militants the ability to make the Kremlin look|
|weak. After video showing former Prime Minister Viktor Chernomyrdin and other leaders negotiating with Chechen terrorists in 1995|
|for the release of hostages in a Budyonnovsk hospital was shown all over the world, the Kremlin vowed not to make the same |
|mistake again. |
|Separatist leaders adopted a different tactic after the hostage-takings in Moscow’s Dubrovka theater in 2002 and at Beslan School|
|No. 1 in 2004. In the summer of 2004, a large group of militants invaded and temporarily seized control of an entire district in |
|Ingushetia, and a new strategy for combating terrorism was developed to combat this new “guerilla terrorism.” The focus of the |
|new strategy shifted toward preventing coordinated actions by large groups of militants, which requires using Interior Ministry |
|troops. This came at the expense of taking measures to prevent individual suicide attacks, which requires top-notch intelligence |
|and surveillance work — areas in which the FSB is either incompetent or simply has other priorities and doesn’t want to invest |
|its resources in developing these capabilities. |
|It is obvious that the bombings on the Nevsky Express train in November and the Moscow metro attack will have no impact on |
|political stability in Russia. That is why we can expect almost no substantive change in the Kremlin’s policy on fighting |
|terrorism. |
|At the same time, it is possible that the authorities will use the Moscow blasts as a pretext for introducing new measures to |
|increase control over society. This may include fingerprinting or creating a new DNA data base on all citizens, which the |
|Investigative Committee suggested — again — within hours of Monday’s attack. Although this rhetoric sounds tough, it would be |
|completely ineffective in preventing future terrorist attacks. |
|Irina Borogan and Andrei Soldatov are analysts with Agentura.ru, which tracks the security services. A longer version of this |
|article appears on EJ.ru. |
|From The Times |
|April 1, 2010 |
|Roman Abramovich fails to halt £2 billion Berezovsky lawsuit |
| |
|Alex Spence, Legal Correspondent |
|Roman Abramovich will be forced publicly to explain his business dealings and ties to the Kremlin after he failed yesterday to |
|strike out a £2 billion lawsuit brought by his former business partner Boris Berezovsky. |
|A trial was scheduled for October next year when the Chelsea Football Club owner, who rarely talks about his business activities,|
|will face cross-examination by a leading commercial barrister. The trial, which could last 11 weeks, will be the biggest in a |
|series of disputes between Russian oligarchs that have been fought in the English courts in recent years. Special security |
|measures are likely to include sweeping the court for bombs and ensuring that it is sniper-proof. |
|Mr Berezovsky, who spends millions of pounds on his personal protection, has in the past been the target of an assassination |
|attempt and he arrived at the High Court yesterday with a bodyguard. |
|Mr Berezovsky fled Russia in 2000 after falling out with President Putin and now lives in exile in Britain. He claims that after |
|leaving Russia, Mr Abramovich intimidated him into handing over a 21.5 per cent stake in Sibneft, the Russian oil company, for |
|substantially less than the shares were worth. Mr Abramovich sold Sibneft to Gazprom, the state-owned energy group, for $13 |
|billion in 2005. |
|Mr Berezovsky also alleges that Mr Abramovich breached an agreement by selling shares in the aluminium group Rusal without |
|telling him, causing a further loss of a “hundreds of millions” of dollars. |
|Mr Abramovich denies the allegations and disputes that Mr Berezovsky ever had an interest in Sibneft or Rusal. His lawyers |
|applied to have the case dismissed on the ground that it was “legally and factually incoherent”. However, Sir Anthony Colman, QC,|
|sitting at the High Court, refused to strike out the case. He said that although Mr Berezovsky might face “very formidable |
|difficulties” in proving his claim, it had enough credibility to merit a full trial. |
|The Kremlin, has so far failed in its attempts to extradite Mr Berezovsky from Britain to face fraud charges. |
|From The Times |
|April 1, 2010 |
|Clash of the oligarchs: the paper chase from the Kremlin to the High Court |
| |
| |
|Alex Spence, Legal Correspondent |
|In December 2000, two of Russia’s most powerful businessmen faced off at a villa at Cap d’Antibes on the French Riviera. Once |
|friends and business partners, Boris Berezovsky, who owned the villa, and Roman Abramovich were about to begin a lasting and |
|bitter rivalry that would end up being played out years later in the British courts. |
|According to Mr Berezovsky’s account, Mr Abramovich was there to deliver a message from the Kremlin to Mr Berezovsky and his |
|business partner, Badri Patarkatsishvili: surrender your business interests in Russia or they will be seized. |
|It was the first of several meetings at which Mr Berezovsky claims he was coerced to hand over shares in some of Russia’s most |
|valuable companies to Mr Abramovich at a substantial reduction to their value. He is now suing Mr Abramovich in the High Court in|
|London for more than £2 billion. |
|Mr Berezovsky, 64, was once regarded as the most powerful of Russia’s oligarchs. The son of Jewish intellectuals, he spent 25 |
|years as a mathematician before amassing vast business interests that included car dealerships, television stations, newspapers |
|and, by his account, a 21.5 per cent stake in Sibneft, one of Russia’s biggest oil companies. |
|He also had political power, playing a central role in helping Boris Yeltsin to retain power against the resurgent Communists in |
|1995. |
|Yet Mr Berezovsky’s fortunes had changed. He fled Russia in 2000 after falling out with Vladimir Putin, Mr Yeltsin’s successor, |
|and was in exile. By contrast, Mr Abramovich, his former protégé, enjoyed close ties to the Kremlin and was on his way to |
|becoming one of the richest men in the world. In 2009, The Sunday Times Rich List estimated Mr Abramovich’s wealth at £7 billion,|
|while years in exile had cut Mr Berezovsky’s to £450 million. |
|Mr Berezovsky’s mistake had been turning against Vladimir Putin soon after he came to power in July 2000. This reached boiling |
|point in August of that year, when the Kursk, a Russian submarine, was lost in the Barents Sea and all its crew were killed. A |
|television station controlled by Mr Berezovsky aired reports that were critical of the Government’s handling of the disaster. |
|In Mr Berezovsky’s account, he was summoned to a meeting at the Kremlin at which he was told of Mr Putin’s displeasure at the TV |
|station’s reports. Mr Berezovsky claims that he was told to surrender his holdings to the state or “end up like Vladimir |
|Gusinsky”, a Russian businessman who had been imprisoned on fraud charges several months earlier. Mr Berezovsky claims that the |
|threats were repeated by Mr Putin himself at a meeting the following day. |
|Mr Berezovsky fled to France in 2000 and later settled in exile in Britain. He claims that at the meeting in Cap d’Antibes he was|
|told to hand his Russian TV assets to the state for $175 million or they would be expropriated and a friend of his who was |
|imprisoned in Russia would not be released. |
|A further meeting took place at Munich airport in May 2001, Mr Berezovsky claims, attended by himself, Mr Patarkatsishvili and Mr|
|Abramovich. By his account, Mr Abramovich coerced them into selling their stake in Sibneft, the Russian oil company, for $1.3 |
|billion — far less than they believed it was worth. Mr Berezovsky argues that he had no choice but to sell his shares or they |
|would be expropriated by the Russian Government. |
|According to Mr Berezovsky, the three men had acquired control of Sibneft from the Russian Government during the privatisations |
|of the 1990s. They agreed to a split of half for Mr Abramovich and half for Mr Berezovsky and Mr Patarkatsishvili, although Mr |
|Abramovich would hold their shares in trust. |
|According to Mr Berezovsky’s claim, the payment was made through an offshore company and guaranteed by Sheikh Sultan bin Khalifa |
|bin Zayed al Nahyan, the Crown Prince of Abu Dhabi. He and Mr Patarkatsishvili instructed Stephen Curtis, a London lawyer |
|well-known for acting for Russian businessmen, to handle the transaction. Mr Curtis died in a helicopter crash near Bournemouth |
|in 2004. |
|Mr Abramovich disputes Mr Berezovsky’s account. According to yesterday’s judgment, he claims that the payment of $1.3 billion was|
|mooted at a meeting at St Moritz airport, not in Munich, and that he agreed to make the payment in recognition of Mr Berezovsky’s|
|“political assistance and protection” during the creation of Sibneft. He denies that Mr Berezovsky or Mr Patarkatsishvili ever |
|had an interest in Sibneft. |
|Mr Abramovich sold Sibneft for $13 billion to Gazprom, the Russian state-owned energy company, in 2005. |
|Another element of Mr Berezovsky’s claim relates to Rusal, the aluminium group. By the end of the 1990s, according to Mr |
|Berezovsky, he, Mr Patarkatsishvili and Mr Abramovich were partners in substantial aluminium holdings. They began negotiating |
|with Oleg Deripaska, a fellow oligarch, about pooling their assets. These discussions eventually led to the creation of Rusal in |
|late 2000. |
|In March 2000, according to Mr Berezovsky, he, Mr Patarkatsishvili and Mr Abramovich met Mr Deripaska at the Dorchester hotel in |
|Mayfair. There, he claims, an agreement was struck to divide up the new company: Mr Deripaska and his partners would receive 50 |
|per cent, while Mr Berezovsky, Mr Patarkatsishvili and Mr Abramovich would get the other half. |
|Mr Berezovsky alleges that he and Mr Patarkatsishvili agreed with Mr Abramovich that Mr Abramovich would hold their shares on |
|trust. In September 2003, Mr Abramovich sold 25 per cent of the shares to Mr Deripaska for $1.6 billion. Mr Berezovsky claims |
|that this was done without his knowledge or permission, in breach of their agreement. He claims that the sale caused losses of |
|“hundreds of millions” of dollars. This is denied by Mr Abramovich, who claims that no such agreement existed. |
|The Meetings |
|March 2000, Dorchester hotel Mr Berezovsky claims that he, Mr Patarkatsishvili and Mr Abramovich agreed to pool their aluminium |
|assets. They then entered talks with Mr Deripaska and his partners about merging them to create Rusal. Mr Berezovsky says that Mr|
|Abramovich agreed at this meeting to hold his shares on trust for him. He also claims that Mr Abramovich later sold a 25 per cent|
|stake in Rusal to Mr Deripaska for $1.6 billion without telling him, which subsequently cost Mr Berezovsky “hundreds of |
|millions”. |
|December 2000, Cap d'Antibes Mr Berezovsky has recently fled Russia after a falling out with Vladimir Putin. Mr Abramovich |
|allegedly tells Mr Berezovsky that he will have to surrender his television holdings in Russia or they will be expropriated. |
|May 2001, Munich airport Mr Berezovsky claims that Mr Abramovich met him and Mr Patarkatsishvili to discuss the sale of their |
|shares in the Sibneft oil company. Mr Berezovsky claims that Mr Abramovich demanded that the shares be handed to him and refused |
|to pay more than $1.3 billion. Mr Berezovsky claims he had to sell or the shares would have been seized. This is denied by Mr |
|Abramovich. |
|St Moritz airport 2001 Mr Abramovich claims that the $1.3 billion payment was in fact mooted in St Moritz, not in Munich. He |
|denies that Mr Berezovsky owned a stake in Sibneft and claims that the payment was in recognition of Mr Berezovsky's “political |
|assistance and protection” during the creation of Sibneft. |
| |
| |
|PRESS DIGEST – Russia – April 1 |
|Thu, 1st Apr 2010 07:45 |
| |
| |
|MOSCOW, April 1 (Reuters[pic]) - The following are some of the leading stories in Russia's newspapers on Thursday. Reuters has |
|not verified these stories and does not vouch for their accuracy. |
| |
| |
|KOMMERSANT |
| |
|kommersant.ru |
| |
|- Russia's leadership is linking blasts in Dagestan on Wednesday to suicide bombings in Moscow on Monday. |
| |
|- Tycoon Gennady Timchenko's Swiss-based trader Gunvor, which accounts for 40 percent of Russian oil exports[pic], is launching |
|gas purchases to implement its plans to become a big natural gas trader. |
| |
|- Russia's major oil exporters could face high fines for raising petrol prices on the domestic market. |
| |
| |
|VEDOMOSTI |
| |
|vedomosti.ru |
| |
|- Co-owner of RUSAL Oleg Deripaska may raise the issue of merging with Norisk Nickel as he returns to the company's board of |
|directors[pic], the daily says. |
| |
|- State-controlled Vneshekonombank (VEB) may allow Russian steelmaker Evraz Group to postpone its $1 billion credit payments till|
|November 2011. |
| |
| |
|VREMYA NOVOSTEI |
| |
|vremya.ru |
| |
|- Chechen rebel leader Doku Umarov has claimed responsibility for bombings in Moscow which killed at least 39 people on Monday, |
|but did not mention a suicide attack with 12 deaths in Dagestan on Wednesday. |
| |
|- Russian Gazprom gas export monopoly has raised its share in Belarusian Beltransgas to 50 percent from 37.5 percent. |
| |
| |
|IZVESTIA |
| |
|izvestia.ru |
| |
|- Russia is seeking U.N. permission to expand its offshore borders in the Okhotsk Sea which will allow Moscow to claim a big |
|chunk of Arctic natural resources. Russia will attract foreign investors[pic] to develop them, the daily writes. |
| |
| |
|NEZAVISIMAYA GAZETA |
| |
|ng.ru |
| |
|- The number of nuclear warheads to be cut by Russia and the United States under a new arms treaty is still unclear |
|- Plans to speed up modernisation and innovation of Russia's economy could be affected by falling birth rate in the next years, |
|the daily reports. |
| |
|Keywords: PRESS DIGEST Russia April 1 |
| |
|(--Writing by Tatyana Ustinova, Reuters Messaging: tatiana.ustinova.@, +7 095 775 1242) |
01 April, 2010 in Russian Newspapers
Trud: Suicide bombers are pursued based on composite sketch
Suicide bombers arrived by bus to blow up the subway.
Detectives investigating the terrorist attacks at the Lubyanka and Park Kultury subway stations learned how the female suicide bombers arrived in the capital and who accompanied them. A search for three of their alleged accomplices has already begun.
Izvestiya: Russia to step out of its borders
By Varvara Aglamishyan.
In the near future, Russia will submit an application to the UN Commission to expand the borders of its Okhotsk Sea shelf. As a result, Russia will be able to substantiate its right to a large portion of the Arctic natural reserves. However, they will be exploited with the participation of foreign partners.
Nezavisimaya: Ukraine proposed to combine preparation efforts with Russia for Euro-2012 and Sochi-2014
The UEFA is afraid Kiev will undermine the championship. By Tatiana Ivzhenko
Today, the COO of the Union of European Football Associations (UEFA), Martin Kallen, arrives in Ukraine. He will make arrangements for UEFA President Michel Platini’s visit, scheduled for April 7-8. Europe fears that Ukraine will undermine Euro 2012 because the dates of substantial completion have passed, and funding for construction is under question. The leadership of Ukraine promises to take appropriate measures, and counts on Russia’s help.
Today in Vedomosti
Issue 4362. Last Updated: 04/01/2010
Commentary: Banks on Commission
By Andrei Panov
In the heat of the crisis, banks vied with each other in offering extremely favorable terms on deposits, but now they are reneging on their promises.
Hotline for Compaints Against Traffic Police
By Anastasia Kornya
Numbers of “helplines,” which can be used for making complaints against staff of the traffic police will soon appear on the sides of patrol cars.
Loose Laws Threaten Deals in Strategic Sectors
By Maxim Tovkailo
Any deal to buy a strategic enterprise by a Russian company that has foreign daughter companies may be declared null and void. Blame the broad interpretation by the Federal Anti-Monopoly Service and the courts for their elastic notion of what constitutes a group of persons. Even major Gazprom deals could be contested.
National Economic Trends
GOOGLE TRANSLATION
In Russia pensions increase on April 1
post time: 09:32
Last update: 09:33
In Russia, from April 1, will increase the size of pensions: labor part is more on 6,3%, social increase by 8,8%. As RIA "News" in the Pension Fund, the monthly cash payments to be increased by 10%.
Earlier, promised Prime Minister Vladimir Putin, the indexation of pensions to happen, despite the budget deficit the Pension Fund. The Government will spend an additional 130-170 billion rubles.
Recall that from 1 January 2010 was established a new indexation of social pensions, which are 2,66 million Russians. By decision of the government were united base of employment and insurance old age pension.
The level of indexation of the social pension is now based on inflation. From 1 April it will grow by 8,8%, since the inflation forecast at 12% for the year 2009 did not materialize.
It is assumed that the 2010 pension in Russia will grow by 46,1%, including through the valorization - the recalculation of pensions accrued during the Soviet era. As a result of indexation to the end of 2010 the average labor pension will amount to 8.18 rubles.
Average old-age pension, which receive the majority of Russian pensioners, will be 8,4 thousand rubles. The social pension, taking into account all indexing, by the end of the year will amount to 4.6 thousand rubles.
Since 2010, Russia established social surcharge, which will bring the pension to the subsistence minimum for pensioners in each particular region. For federal supplements to pensions will be sent in 2010, about 29 billion rubles, about 8 billion rubles - for regional surcharges.
In 2010, the financing of pensions and other social payments in 2010, the state plans to spend about 10% of GDP. Also in April the 65 th anniversary of Victory in Great Patriotic War pension fund lump sum additional funds and disabled veterans at a rate of 1 to 5 thousand rubles. The budget for this purpose will be almost 11 billion rubles.
Such cash payment will be 4 million 229 thousand 424. Lump-sum payment of $ 5 thousand rubles will be 1.64 million.
Recall that, as recently noted by experts, valorization of pensions did not produce the desired effect, since the increase in their pensions "ate" utilities. The increase was 2-3 times smaller than planned before the crisis, and did not improve the quality of life of seniors. According to the Pension Fund, valorization passed without failures, the average labor pension in Russia increased by 13,8%. Utility rates have increased for the year by 15,1%.
Russia Has Good Prospects for Ruble Bond Abroad, Storchak Says
March 31, 2010, 10:06 PM EDT
By Maria Levitov and Denis Maternovsky
April 1 (Bloomberg) -- Russia may consider selling ruble- denominated bonds abroad in a bid to repeat the success of companies that have raised money from the securities, said Deputy Finance Minister Sergei Storchak.
“There are good prospects for the sovereign to issue a Eurobond in rubles,” Storchak said in an interview in Moscow on March 30. “The ruble has taken on a life of its own.”
Companies including Russia Post, VTB Group, the nation’s second biggest lender, and Russian Agricultural Bank have sold 166.6 billion rubles ($5.66 billion) of ruble bonds overseas since the lifting of capital restrictions in 2006, Bloomberg data show. That compares with 2.4 trillion rubles of domestic bonds and $86.7 billion of foreign-currency bonds sold by companies in the same period.
A sovereign Eurobond issue in rubles would create “a whole new brand of investors,” said Jeremy Brewin, who helps manage $2.2 billion as head of emerging-market debt at Aviva Investors Ltd. in London. “If Russia is deliberately trying to construct the ruble curve that isn’t subject to all the hassle involved in local debt, I think this is a very positive measure. Should they issue ruble bonds, we’d like to participate in that.”
Investors see ruble Eurobonds as a way to profit from the strengthening currency, analysts said. In the first two months of the year, the ruble strengthened 17.1 percent against the dollar and 12 percent against the euro, compared with the same period last year when the effects of inflation are stripped out, according to central bank data.
‘Maximum Comfort’
Investors “see the ruble’s strengthening trend and falling interest rates,” said Nikita Gusakov, head of debt capital markets at Citigroup Russia in Moscow “It’s a way to tap into this with maximum comfort, with instruments issued according to U.K. law and with a level of disclosure they are used to.”
Citigroup was among the organizers of Russian Agricultural Bank’s sale of 30 billion rubles ($1 billion) of three-year Eurobonds this month that were priced to yield 7.5 percent. The issue, which jumpstarted the ruble Eurobond market after nearly a two-year lull during the global financial crisis, drummed up demand for notes that was more than four times the original amount sought, according to Russian Agricultural Bank.
Government officials will meet bond investors in Asia and Europe before heading to the U.S. in April to wrap up the promotional tour for its first Eurobond sale since 1998, Finance Minister Alexei Kudrin said on March 31. Russia may borrow as much as $17.8 billion abroad this year and the first part of the sale will “most likely” be in U.S. dollars, he said.
Kudrin said Russia has no immediate plans to issue ruble- denominated Eurobonds, though the possibility exists. “For now, I think we will borrow in rubles on the Russian market, not on the European bourses,” he said. “In theory, we have an ability to do this.”
Moscow may sell as much as 30 billion ruble of bonds with a maturity of at least five years to diversify its investor base, Sergei Pakhomov, the city state debt committee chairman, said in a telephone interview on March 26. “This market has revived as the Russian Agricultural deal has demonstrated,” he said.
--With assistance from Anna Ulaeva and Lyubov Pronina in Moscow. Editors: Chris Kirkham, Gavin Serkin
To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@;
To contact the editor responsible for this story: Chris Kirkham at ckirkham@
Russian Manufacturing PMI Shows ‘Sluggish’ Growth in March
By Maria Levitov
April 1 (Bloomberg) -- Russian manufacturing growth was “sluggish” in March as a stronger ruble discouraged new export business and companies continued cutting jobs, VTB Capital said.
The Purchasing Managers’ Index stayed at 50.2 last month, unchanged from February, the bank said in an e-mailed statement today. The index, based on a survey of 300 purchasing executives, indicates contraction with a figure below 50 and growth with a figure above 50.
The “manufacturing sector continued to experience sluggish growth in March” with “a marginal rise in economic activity,” Dmitry Fedotkin, an economist at VTB Capital in Moscow, said in the statement. “A fall in new orders was offset by a slightly sharper rise in output” and “a weaker decline in employment.”
The central bank cut its main interest rates for the 12th time in less than a year last month as signs appeared that the economic recovery has lost momentum after a record contraction of 7.9 percent in 2009. Industrial production expanded at a slower pace in February and bank loans continued to shrink even as lending conditions eased last quarter.
Corporate loans contracted 0.7 percent in February and retail loans shrank 0.6 percent, according to the central bank. Economic growth slowed to an annual 3.9 percent in the month from 5.2 percent in January, Deputy Economy Minister Andrei Klepach said on March 22, citing preliminary estimates.
Ruble Impact
New orders Russian manufacturers received in March fell “slightly” with new export business posting a “sharp fall” because of a stronger ruble, according to the statement. The ruble strengthened 2 percent against the dollar since the beginning of this year, according to Bloomberg data.
Manufacturers continued to cut jobs, though at the slowest rate since last September, VTB Capital said. The unemployment rate slipped to 8.6 percent in February, the first decline in four months, according to the Federal Statistics Service.
The average costs for manufacturers “rose sharply in March, driven by higher prices for metals, energy and transportation, according to VTB Capital. Manufacturers increased charges to customers as a result, the bank said.
The PMI is derived from indexes that measure changes in output, orders, employment, suppliers’ delivery times and stocks, according to VTB.
To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@
Last Updated: April 1, 2010 00:00 EDT
Weekly inflation slows with the return of warm weather
Rencap
01/04/2010
Yesterday (31 Mar) Rosstat reported that during 23-29 Mar consumer prices rose by 0.1%. The current rate of YtD inflation is 3.2%, below the rate of 5.3% for the same period a year ago. The slower pace of food inflation reflects a positive seasonal effect from the very warm end of March. Nevertheless, we expect an end to the slowdown in inflation in April, when gas tariffs for households are scheduled to rise (gas tariff indexation by 15%).
Nevertheless, running annual inflation has dropped to 6.6-6.7% YoY. We think that no acceleration in price growth has occurred yet, and estimate that the seasonally-adjusted inflation rate for March may settle at 0.4-0.5% for the fifth month in a row. Moreover, running inflation may decline further in April, as the inflation rate was 1.4% MoM in Apr 2009 - significantly above the current level of monthly inflation.
Yesterday, the head of Russia's Federal Treasury, Roman Artyukhin, announced that in March the government withdrew about RUB170bn from the Reserve Fund. We had expected that the Ministry of Finance would use the Reserve Fund more actively in order to avoid temporary cash gaps in the unified federal budget account. Still, monetary easing via the federal budget was already de-facto re-launched in February (in the form of a massive injection of funds from the unified federal budget account as a result of unnecessary transfers from the Reserve Fund in the end of 2009) and the March transfer only indicates an official restart to government withdrawals from the Reserve Fund. However, this type of monetary emission is not accelerating excessive money supply growth, and given falling inflation and anaemic economic growth, we continue to expect a 50-75 bpts rate cut by 2H10.
Russia to increase grain export volumes
04/01/2010 10:32
Russia is the stable exporter of grains and does not plan to lower rates in the business sphere, declared Viktor Khristenko, the Minister of Industry and Trade of the Russian Federation.
Russia has all required abilities for providing of the stability of grain exports, including financial, organizational and administrative efforts of the government of the Russian Federation for support and development of the agro industrial complex of the country, explained V.Khristenko.
According to the Minister, Egypt is rather good and reliable market for export trading with Russian grains. Russia takes the third place in the world in the rate of grain export volumes, ceding to the European Union and the USA. Egypt, Turkey and Japan are the main consumers of Russian grains.
Business, Energy or Environmental regulations or discussions
2010-04-01 07:37
Russian markets -- Factors to Watch on April 1
MOSCOW, April 1 (Reuters) - Here are events and news stories that could move Russian markets on Thursday.
You can reach us on: +7 495 775 1242
STOCKS CALL (Contributions to moscow.newsroom@):
OTP Bank: Markets should open little changed from Wednesday's close. Declines on U.S. bourses during the previous session should be offset by strong oil prices.
Veles Capital Research: The Russian markets will see a neutral opening after a release of "totally balanced block of stats" in the United States
EVENTS (All times GMT):
MOSCOW - Russian President Dmitry Medvedev meets representatives of parliamentary parties to talk about security issues in the aftermath of terrorist attacks. 1000.
MOSCOW - Meeting of finance ministers and Central banks Chiefs of the CIS. 0500.
MOSCOW - The Central Bank to offer 100 billion roubles of Series 13 OBR bills at a top-up auction.
MOSCOW - Japanese clothing retailer Uniqlo opens a store in Russia. 0700.
MOSCOW - Full Year NLMK earnings conference call
IN THE PAPERS:
Billionaire and major shareholder of the world's top aluminium producer UC RUSAL, Oleg Deripaska, might return to the board of directors of Russian metals giant Norilsk Nickel, business daily Vedomosti reports.
The move may signal Deripaska's renewed attempts to merge RUSAL and Norilsk, the paper writes.
TOP STORIES IN RUSSIA AND THE CIS:
TOP NEWS:
COMPANIES/MARKETS:
Interros eyes post-crisis acquisitions
Russian cos eye stake in France's Altis Russia
VEB shortlists partners for postal bank
Vozrozhdeniye bank sees 2010 profit drop
Cherkizovo '09 net up on more pork, lower costs
ECONOMY/POLITICS:
Putin to meet top U.S. foes in Venezuela
Russia eyes dollar bond issue after April
Rouble weakens slightly, rally at halt
ENERGY:
Russia's TNK-BP triples 2010 exploration budget
COMMODITIES:
Evraz charts recovery after '09 loss
E.Europe grain harvests seen flat to lower
MARKETS CLOSE/LATEST:
RTS 1,571.0 -0.1 pct
MSCI Russia 848.9 +0.7 pct
MSCI Emerging Markets 1,018.5 +0.8 pct
Russia 30-year Eurobond yield: 5.010/4.979 pct
EMBI+ Russia 153 basis points over
Rouble/dollar 29.4956
Federal Grid Company posts net loss for 2009
RBC, 01.04.2010, Moscow 11:44:24.The Federal Grid Company's net loss under RAS amounted to RUB 59.87bn (approx. USD 2.03bn) in 2009 compared to a net profit of RUB 4.46bn (approx. USD 151m) in 2008, the Russian operator of the national power network indicated in its statement today. The company's net loss stood at RUB 72.51bn (approx. USD 2.46bn) in the fourth quarter of the year, while it registered a net profit of RUB 3.96bn (approx. USD 134m). The company attributes this loss in Q4 to the revaluation of its financial investments in shares at their current market price.
Considering this, the Federal Grid Company's assets dropped 13.6 percent to RUB 660.52bn (approx. USD 22.39bn).
Wednesday, March 31, 2010
Russia To Clarify Law On Strategic-Sector Investment –Vedomosti
DOW JONES NEWSWIRES
Officials in Russia have promised to close a legal loophole that some of the country's major companies say could be used to nullify their asset acquisitions, business daily Vedomosti reports Thursday.
A law on foreign investment in more than 40 government-defined "strategic sectors" of Russia's economy contains language about "groups" of foreign-registered entities that some complain is unclear and prone to misinterpretation.
The law, in effect since April 2008, considers a Russian company with subsidiaries in other countries to be a "group of entities," Igor Repin, deputy director of the Investor Protection Association, was quoted by Vedomosti as saying.
Repin, at a meeting of companies Wednesday, cited examples of deals involving a Russian corporate group with foreign ties. Among them: natural gas giant OAO Gazprom's (GAZP.RS) 2009 purchase of one-fifth of oil unit OAO Gazprom Neft (SIBN.RS) from Italy's Eni SpA (E: 46.88, 0, 0%) for $4.2 billion.
Minority investors have asked the Federal Antimonopoly Service to clarify the law's intent and whether major deals similar to Gazprom's must be approved be a special commission headed by Prime Minister Vladimir Putin.
The FAS recently accused about a dozen Russian and foreign companies of violating the law in certain deals and vowed to seek their invalidation in court.
Andrei Tsyganov, a deputy head of the FAS, said the law's language can be read to apply to any "group," regardless of status or the goal of a transaction. "If you interpret it literally, any Russian company with a foreign subsidiary and acquiring assets in strategic sectors should have to get approval from the government commission," he told Vedomosti.
Newspaper Web site: vedomosti.ru
-Dow Jones Newswires; 212-416-2900
Hardwood Exports Plunge
01 April 2010
CHICAGO — Hardwood log exports from Russia plunged 72 percent last year as domestic production dropped and demand from pulp mills in Finland slipped, industry consultant Wood Resources International said Wednesday.
Exports declined to 3.3 million cubic meters from 11.8 million in 2008, Hakan Ekstrom, president of Wood Resources, said in a report. Russia’s timber harvest probably fell about 20 percent, more than the 15 percent drop indicated from official statistics, he said.
(Bloomberg)
Russian government to control prices on medicines
|Apr 1, 2010 08:19 Moscow Time |
As of April 1, the Russian government introduces the state regulation of prices on the most essential medicines in Russia. According to Health care and social development minister Tatyana Golikova the list includes 500 international non-patented medicines, which is about 2,000 of commercial names. She stressed that such a large number of registered medicines should not cause their deficit. The Ministry will control prices on the medicines which were not included in the list to prevent a drastic price hike, she said.
2010-04-01 07:43
Deripaska may return to Norilsk board-report
MOSCOW, April 1 (Reuters) - Oleg Deripaska, Russian billionaire and major shareholder of UC RUSAL , may return to the board of Russian metals giant Norilsk Nickel, the business daily Vedomosti reported.
RUSAL's press office declined to comment.
The move would run counter to earlier agreements that the beneficial owners of the two companies are not to become members of the board.
The paper said the move might be pursued as part of Deripaska's renewed attempts to merge RUSAL, the world's top aluminium producer, and Norilsk, the paper said.
RUSAL'S officials talked about a possible merger after the company January's IPO.
RUSAL bought a 25 percent stake in Norilsk at the beginning of 2008.
(Editing by Simon Jessop) Keywords: RUSSIA DERIPASKA/NORILSK (Moscow Newsroom; +7495 775 1242;moscow.newsroom@)
Evraz Extends $1 Billion Loan From Russia’s VEB by One Year
By Ilya Khrennikov
April 1 (Bloomberg) -- Evraz Group SA, Russia’s second- largest steelmaker, extended a $1 billion loan from state development bank VEB by one year, to late 2011, Chief Executive Officer Giacomo Baizini said.
Evraz repaid an $800 million loan from VEB in December to free Canadian assets that were held as collateral, Baizini said in a conference call late yesterday, according to a transript.
To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@
Last Updated: April 1, 2010 00:44 EDT
April 01, 2010 11:22
Steel maker NLMK posts losses in Q4
MOSCOW. April 1 (Interfax) - Vladimir Lisin's Novolipetsk Steel (NLMK) (RTS: NLMK) closed the fourth quarter of 2009 with net losses of 4.015 billion rubles to Russian Accounting Standards (RAS), compared with profit of 9.57 billion rubles in Q3 2009, the steel major said in a statement.
The net loss was driven by an increase in valuation reserves by 11.96 billion rubles, while operating profit grew 2.246 billion rubles. Valuation reserves grew because provisions were created for the impairment of financial investments in NLMK International B.V. and OJSC Maxi Group in Q4 2009.
NLMK had net losses of 3.32 billion rubles in Q4 2008, caused by falling sales, prices and demand for steel due to the global financial crisis.
Pr
Steel recovery underway
01 April, 2010, 05:56
The Russian steel sector – a key sector for the domestic economy – is attracting renewed global investor interest with rebounding steel prices and growing demand underpinning its outlook.
When the global economy ground to a halt nearly two years ago, steel makers were among the worst hit as construction and manufacturing suffered a sharp slump. But it wasn't only falling revenue they had to contend with, there was also asset depreciation according to George Buzhenitsa, Metals and Mining Analyst at Unicredit.
“Revaluation losses, losses from fixed assets revaluation, from financial investment revaluation, good-will write offs, inventory write downs, doubtful debts provisions created – all this has been pressuring the bottom line.”
Russia's steel companies have recovered strongly in the last 6-9 months on the back of strong demand from export markets.
Since the beginning of last week, foreign investors have been piling in to Russian steel producers. Mechel up by 6.8% in New York, while in London Evraz has risen 8.7% and Severstal 13.3%.
The Chief Financial Officer of Evraz, Giacomo Baizini, says the market is coming back more quickly than expected and the indicators suggest the growth is sustainable.
“Steel is major input in any economic activity and therefore it should be sustainable with some volatility, but generally recovery should be there.”
And it's not just international demand. Economic growth has returned to Russia, construction projects put on hold at the beginning of the crisis have been restarted and, George Buzhenitsa adds, manufacturing activity is beginning to pick up.
“We see at the moment demand recovery in domestic market and this is very encouraging in our view, because historically more than 60% of the Russian steel was consumed locally, and that should underline the sustainability of the recovery in the steel sector.”
There is still concern about the possibility of a double dip recession. In addition the vast amount of liquidity pumped into the global economy in the form of stimulus packages will not last forever. And these two factors may serve to limit optimism in a sector that is once again finding its feet.
April 01, 2010 10:52
Svyazinvest chief ups stake in VolgaTelecom
MOSCOW. April 1 (Interfax) - Yevgeny Yurchenko, the general director of Svyazinvest, has increased his stake in VolgaTelecom (RTS: NNSI), one of the national fixed line holding's regional incumbents, to 2.67% from 2.57%.
VolgaTelecom said Yurchenko now owned 2.668669% ordinary shares and 3.390593% issued shares in the company. He previously owned 2.572154% ordinary shares and 1.929153% issued shares.
Yurchenko bought 4.34% ordinary shares and 3.483% issued shares in another Svyazinvest subsidiary, Southern Telecom (RTS: KUBN), in March. He has also emerged as a shareholder in CenterTelecom (RTS: ESMO), increasing his stake in that provider to 5.82501% from 1.57931% issued shares and to 7.41765% from 1.33079% ordinary shares. VolgaTelecom said a little earlier that Yurchenko had increased his stake there to 1.929153% from 1.463624% issued shares and to 2.572154% from 1.951461% ordinary shares.
Pr
UPDATE 1-Vimpelcom says aims to complete acquisition in Laos
3:43am EDT
* Agreed to buy Millicom's 74 pct stake in Lao unit in 2009
* Millicom says deal has not been completed
* Vimpelcom says delay caused by regulatory issues
(Releads with Vimpelcom comment, changes dateline)
MOSCOW/STOCKHOLM, April 1 (Reuters) - Russia's Vimpelcom said it aims to complete the purchase of a majority stake in Millicom's Lao operations, after the emerging markets telecoms firm said the deal had failed to complete.
"Vimpelcom continues to work toward completing the acquisition of Millicom Laos. We have not yet closed the transaction because we have not received approval from the Lao government," it said in emailed comments on Thursday.
Millicom agreed to sell its 74.1 percent stake in Lao Co to Vimpelcom, Russia's No.2 mobile operator, in September 2009 for around $65 million in cash. [ID:nLG232552]
The completion of the acquisition was subject to regulatory approval which was expected before the end of 2009.
"Millicom is reserving its rights under the terms of the agreement, including the right to seek compensation for any loss of value that arises as a result of Vimpelcom`s decision not to complete," Millicom said in a statement on Wednesday.
However, both Millicom and Vimpelcom confirmed their intention to proceed with the deal.
"We have a very constructive dialogue with the government and hope that we will be able to receive approval soon," Vimpelcom said. (Reporting by Maria Kiselyova; editing by Simon Jessop)
VEB Picks 3 Bids for Postal Bank Partner
01 April 2010
By Anatoly Medetsky
Two foreign banks and as many Russian lenders will continue a high-stakes race to become the state’s partner in a sprawling retail bank that officials want to rank as one of the country’s largest, a state bank chief said Wednesday.
Of the seven bids Vneshekonombank received to join its Postal Bank project, the state-owned development bank selected three. Italy’s UniCredit and domestic lender Russian Standard made independent bids, while the Czech Republic’s Home Credit and Finance Bank and domestic lender Nomos-Bank bid jointly, VEB chief Vladimir Dmitriyev said, following a VEB supervisory board meeting chaired by Prime Minister Vladimir Putin.
The bidders will submit proposals for a “financial model” of cooperation by July 1, which VEB will use to make a final choice. The partner will help VEB invest between $5 billion and $10 billion in the Postal Bank, Dmitriyev said.
VEB wants the new bank to challenge market leader Sberbank, at least in terms of the number of outlets. Sberbank has 20,000 offices around Russia.
Potential partners are invited to take a stake of 25 percent to 50 percent in the Postal Bank, which is expected to grow out of Svyaz Bank, a distressed lender that VEB acquired during the 2008 financial crisis.
The new lender will operate from offices of Russian Post, which more than double Sberbank’s number of locations.
UniCredit qualified because it helped turn around the postal service in Italy, Dmitriyev said.
Russian Standard passed the selection thanks to its extensive consumer loans experience and network, Dmitriyev said. He did not explain why VEB selected the third bid.
Mark Rubinstein, an analyst at Metropol, said Nomos did not suffer any major setbacks during the economic downturn and had the resources to expand. Home Credit specializes in consumer loans as well, he said.
The winning bid will secure a powerful ally in VEB to help it gain greater market exposure, Rubinstein said.
“State support means a lot in this country,” he said. “Wider penetration will increase the client base and therefore, profits.”
Russian Standard said in an e-mailed comment that it was grateful to the government for the initial approval, adding that the institution had the potential to create “the world’s best postal bank.”
Calls and e-mails to the press offices of the other banks went unanswered Wednesday evening.
By offering financial services, Russian Post would be following the global trend, as letter carrying volumes drop under pressure from e-mail.
The state has long been trying to boost Russian Post’s profile as a financial institution since at least 2007, when Sberbank president Andrei Kazmin was asked to lead the state-run post’s restructuring. He left in 2009.
Rubinstein said the Postal Bank was unlikely to rival Sberbank, but it could well become a medium-range lender.
“The market is highly competitive,” he said. “It’s difficult to grow there.”
VEB Explores Options for Terminal D
01 April 2010
The Moscow Times
Sheremetyevo's Terminal D will be managed along with the rest of the airport after Vneshekonombank picks the operator and develops a business model for the airport, VEB chief Vladimir Dmitriyev said Wednesday.
The new branch of the airport is owned by Terminal, a company controlled by VEB and Aeroflot. Terminal is unlikely to be able to pay the $100 million per year it needs to service its $1.2 billion debt to VEB, forcing the state-owned bank to come up with a plan for future development, Kommersant reported Wednesday.
The government is therefore looking at two options to avoid Terminal's imminent default. One option would see Terminal becoming a subsidiary of Sheremetyevo after the airport acquires a stake of 50 percent plus one share in an additional share issue. The other option would require converting Terminal's debt into equity and transferring Terminal D to Sheremetyevo. Terminal stakeholders would then get a stake in Sheremetyevo in return, the paper reported.
Aeroflot's stock gained 4.4 percent on the news that the airline might sell or decrease its stake in the new terminal. "[Either of the options] would significantly decrease Aeroflot's debt burden," VTB Capital analyst Yelena Sakhnova said in a note Wednesday morning. The construction of the terminal has exceeded $1 billion already and contributed significantly to Aeroflot's debt of $1.6 billion, the note said.
Dmitriyev offered few clues to which option the bank would pick on Wednesday, saying it was not yet clear whether VEB would become a stakeholder in Sheremetyevo.
The company Terminal is 22.2 percent owned by VEB and 52.8 percent owned by Aeroflot, while VTB holds a stake of 25 percent plus one share.
Ground Infrastructure Key Issue for Air Freight
01 April 2010
By Chris Willett
Last August, Lufthansa Cargo, the German flag carrier’s freight subsidiary, moved its stopover point on its Northeast Asia-to-Europe route from Astana, Kazakhstan, to Yemelyanovo Airport in Krasnoyarsk. The move followed a costly temporary ban on the company’s flights through Russian airspace, in what news agencies at the time reported as government intervention in the industry. After initial concerns, the transfer of the 22 flights from the Kazakh capital went smoothly. “There were no postponements during the process, and all issues were solved jointly,” said Christian Becker, Lufthansa Cargo's director for Russia and the CIS.
A runway upgrade was the company’s minimum requirement for the move. Yemelyanovo spent roughly $10 million on upgrading the approach system to CAT II, an investment that is likely to stand them in good stead for future business expansion. “It was a necessary investment in the future and will sooner or later attract other international carriers,” Becker said.
Tolmachyovo Airport, Novosibirsk’s international airport, is set to complete similar work on a second runway. “It will be certified at no less than CAT II, the International Civil Aviation Organization’s secondary category, and will be completed in the first half of 2010,” said Igor Leontyev, a spokesman for the airport’s marketing department.
As the industry picks up after a year on which the effects of the global downturn left their mark, runway infrastructure is not the key issue worrying airfreight carriers. “Infrastructure in regards to runways, taxiways and ground equipment is basically sufficient,” Becker said. “Infrastructure regarding cargo handling, however, needs major investments.”
The lack of development forces many carriers to use their own systems, Becker explained. This in turn drives up the cost for end users. “Airport infrastructure [in Russia] defines how much we can transfer between Asia and America, and Asia and Europe,” said Tatyana Arslanova, the recently appointed executive president of AirBridgeCargo, part of the Volga-Dnepr Group. At some Chinese airports, handling agents are able to complete the unloading process in about 2 1/2 hours, she explained. “In Moscow that can take 5 1/2 hours, although five planes can now be unloaded at once.”
Customs processing presents further problems for carriers. Freight handling in Russia remains unsuitable for many of the new procedures being introduced elsewhere, such as paperless e-freight systems. “Only in Russia did we need to set up a special documentation process, which is extremely costly and resource-intense,” Becker said, describing customs as the industry’s most critical issue today.
Despite this, the industry continues to develop in Russia. Novosibirsk’s Tolmachyovo Airport announced in mid-March that Air China Cargo would use the airport as its stopover point on the airline’s Shanghai-to-Frankfurt route. The first flight on this route, which is to be used three times a week, took place March 22.
The global economic downturn hit the airfreight industry, as many others in Russia, later than in other countries. “Factors relating to the economic crisis had the greatest effect in the period from April to October 2009,” said Andrei Romantsov, director of freight and postal services at Tolmachyovo, which saw a 30 percent drop in cargo turnover in the period.
However, a recovery gained momentum at the end of 2009 and the first two months of 2010. November and December saw an increase in the turnover of cargo flow, Romantsov said. “In total, we can talk of cargo turnover at the airport being comparable to cargo turnover in 2008,” he added. Cargo handling also increased at other Russian airports. In January 2010, Kazan International Airport reported a 33 percent rise in freight turnover compared with the same period last year, while cargo traffic at Domodedovo Airport grew by 24.4 percent in January and February compared with the first two months of 2009. “We are recovering from the crisis this year but less rapidly and obviously later than the rest of Europe,” Becker said.
UPDATE 1-Oerlikon clinches restructuring deal
Thu Apr 1, 2010 11:28am IST
* Oerlikon balance sheet to be boosted by up to 1.3 bln Sfr
* Net debt to be cut by around 77 pct
* Posts worse-than-expected net loss of 592 mln Sfr
(Adds details, background)
ZURICH, April 1 (Reuters) - Russian billionaire Viktor Vekselberg's debt-laden Oerlikon (OERL.VX) has clinched a deal to restructure its balance sheet, solving a financial migraine that pushed the company to the edge of bankruptcy.
The struggling technology group will boost its equity base by up to 1.3 billion Swiss francs ($1.22 billion) and slash net debt by around 77 percent under the plan, which was reached after months of talks between shareholders and lenders.
Vekselberg, who currently holds a 45 percent stake through his holding group Renova, is ready to inject 450 million francs in a capital hike, while the group's lenders will waive some of the debt and are willing to swap debt for equity as part of the restructuring plan.
"Oerlikon, Renova and the lenders strongly believe that the financial restructuring comprehensively addresses the group's financing situation and establishes a sustainable capital structure in a single step," Oerlikon said in a statement.
The new loan facilities will mature in June 2014, Oerlikon said.
Time had been running out for the group to repay the first tranche of the 2.5 billion syndicated loan it took on to refinance its buy of car parts and textile machinery maker Saurer nearly four years ago.
Oerlikon, which makes products including solar cells and coatings used in Formula One racing cars, posted a worse-than-expected net debt of 592 million francs for 2009 and said 2010 would be a year of both operational and financial restructuring, but it hoped to return to operating profitability in the second half of the year.
The over 100-year-old company has grappled with a sharp drop in demand in its key markets due to the most severe economic downturn in decades and recently named restructuring veteran Michael Buscher CEO as it tries to keep the operational side of its business on track. [ID:nLDE61903S] ($1=1.066 Swiss Francs) (Reporting by Katie Reid; Editing by Mike Nesbit)
For the Record
01 April 2010
• Continental Invest, controlled by businessman Nikolai Makarov, bought from Continental Management, a unit of Basic Element, a 25.07 percent stake in the Baikalsk Paper and Pulp Mills, Basic Element said Wednesday. (MT)
• KamAZ increased truck output 19 percent in the first quarter from a year earlier to 6,155 vehicles, with full year sales expected at 28,200 trucks, it said Wednesday. (Bloomberg)
• Nord Stream said Wednesday that it would mark the start of the gas pipeline’s construction with a ceremony April 9.(Bloomberg)
• Gazprom-controlled OGK-2 signed a 17.8 billion ruble supplement agreement to have Group E4 build capacity at its Serov power plant, the generator said Wednesday. (Bloomberg)
• Russian oil refining runs rose by 1.8 percent on a daily basis in February from January and by 2.9 percent versus February last year, marking the second straight monthly rise, Energy Ministry data showed Wednesday. (Reuters)
• TNK-BP said Wednesday that it would triple investments in exploration this year to $400 million. (Bloomberg)
• VEB had a profit of 31 billion rubles ($1.1 billion) last year, Prime Minister Vladimir Putin said Wednesday. (Bloomberg)
• LUKoil plans to spend $480 million developing its gas projects in Uzbekistan this year, the press service for its overseas arm said Wednesday. (Bloomberg)
Russian online
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bne
April 1, 2010
Russia's internet is booming with the number of people online doubling every year in the last three years to reach 33m - and it shows no sign of slowing down.
"Russians view the internet differently to people based in the West," says Greg Thain, head of IMS marketing company. "Even poorer families in the remoter parts of Russia quickly invest into a computer hooked up to the internet, as if you live in the middle of nowhere, the easiest way to show your kids the rest of the world is online. It's seen as an investment into children's education."
Russia's telecommunications sector was fully liberalised in 2001 and remains one of its most sophisticated sectors. And the internet is a must if your relatives are scattered around a country that spans 11 time zones. The number of Russians online has gone from 12m in 2007 to 33m at the end of last year and is expected to continue growing at this pace for several more years if it follows the rapid penetration of mobile phones, say analysts. The number of queries on RuNet (as the Russian-language internet is known) was up by half this March year on year to over 1.75bn questions and this figure has tripled in the last two years. Indeed, Russians spend more time online than any other nationality (up to eight hours a week) as well as boasting more bloggers per capita than any other country in the world. Even Russian President Dmitry Medvedev has his own personal blog.
All this is driving the growth of broadband, which has already increased to cover 20% of the population and is expected to reach 60% by 2014, according to Anastasia Obukhova a telecoms analyst with VTB Capital.
Money to be made
As more and more Russians move online, there is also money to be made: online advertising was the only segment of the advertising business that grew last year. The iContext agency estimated the Russian internet context market grew 13% year on year in January to be worth a total of $600m, against a fall of 30% in 2009 in spending for the sector as a whole.
Still, spending on online advertising still has a way to go: companies spend 9% of their marketing budget on internet ads on average against the 15-25% that is normal in the rest of Europe. And Russian internet companies dominate the business, with 80 kopeks out of every ruble going to the leading Russian search engine Yandex.ru, with Google.ru trailing in second place with 10 kopeks out of every ruble. "The internet is only just getting going. We believe that [revenues earned by online companies] are likely to expand six-fold over the next five years," says Obukhova.
Zvooq - music to the ears of Russians
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Ben Aris in Moscow
April 1, 2010
In the West, setting up a successful online business is hard. You need to have a good idea, capture users, then find some investment and earn some money. But doing it in Russia seems to be nigh on impossible - entrepreneurs in Moscow have all these problems and more.
That hasn't stopped British-born Simon Dunlop and his Russian partner Alexei Ostroukhov from teaming up to make arguably the first serious attempt by entrepreneurs to establish an online business of any scale. The idea is to launch a music, book and movie platform that will make money from catering to the huge pent-up demand from 65m online punters in the former Soviet Union.
The company faces every possible obstacle. There are almost no qualified or experienced software engineers in Russia to build the site. There are only five people in the whole country that are investing into TMT (technology, media and telecoms), estimates Dunlop, despite Russia's enormous oil wealth. As only one in four Russians have a bank account, let alone a credit card, it is extremely difficult to get paid even if your service is successful. And music piracy is so rampant that none of the international music companies have bothered to invest a penny. Even local artists regard their CDs as merely marketing tools that earn almost no profit; they make all their money on the concerts. Oh yes, and they set the business up in the middle of last year's crisis. "It sounds scary, but it makes sense. We are clearly at the bottom of the cycle now and last year it was better to build something new than to try and fix something that was clearly broken," says Dunlop, who has provided a big chunk of the initial start-up capital.
So why bother? Because the upside for any successful business in Russia is so enormous. Internet use in the region is growing exponentially (see story). The very underdeveloped nature of the retail sector means that if the site is successful, buying movies and music online will be the main distribution channel for these products rather than the add-on that it has been in the West. And while the internet space in the West is already crowded with successful businesses, firms like Dunlop's face almost no competition.
In Russia, start-ups face even bigger risks, but the rewards are huge if the business can be made to work.
The team and the site
The book website Bookmate.ru is already up and running and the movie platform will come next year. But the flagship music site Zvooq.ru will launch in a few months and will be the make or break of the venture.
Dunlop and Ostroukhov are about as well qualified to make this business work as anyone in Russia. Ostroukhov sports the de rigueur jeans, black t-shirt and two-day stubble of the programmer. He has no formal education, but stumbled across computers in the early 1990s shortly after the fall of the Iron Curtain and quickly became a hacker. He was so good that in the mid-1990s he was tracked down by a major US-based network security firm in London and persuaded to join their team fighting off hackers for large corporations. He was only 17 years old at the time.
Ostroukhov says that finding other people to work on the site has been extremely difficult. Russian President Dmitry Medvedev has launched a major offensive to "modernise" Russia and the state is pouring billions of dollars into things like a state-backed venture capital funds or the mooted high-tech park in Moscow's suburbs at Skolkovo. But there are still almost no institutes teaching computer science in Russia. Those that do have a very academic approach, says Ostroukhov, whereas in the West students also take business courses to prepare them for the world of fund raising and commerce. After qualifying, most young American software engineers would then get another three years of in-house training on the job. "There is only one company in Russia that invests into its programmers after hiring them – , the leading search engine," says Ostroukhov. "So almost all the best people in Russia are self taught."
Ostroukhov has scrapped together a "Wild Bunch" of Russia's best computer talent from wherever he could find them. One member of the team built the payment system for the National Bank of Uzbekistan. Another was working for the Russian oil and gas ministry where he developed software to analyse seismic survey data. The art director had the same job at Afisha, Russia's leading style and entertainment magazine. And several others were simply successful hackers. No one in the team has a formal computer science education.
Dunlop has an equally colourful story. He was sent to Moscow in 1992 while still in his 20s by UK company Lonrho with the first container of legally imported Malbroro cigarettes and told to set up a distribution company. It took a week to sell the container and get orders for 60 more. For the next few years, he helped build a multi-billion-dollar cigarette distribution business for Phillip Morris before leaving to become a serial entrepreneur. What Dunlop doesn't know about Russia's fast-moving consumer goods and distribution business is probably not worth knowing. Among the businesses he has founded are a snack food company, a spice factory and a chain of modern cinemas all located in Russia's far-flung regions.
Office space
Zvooq.ru offices are everything you'd expect from a high-tech start-up. Housed in a Tsarist-era building in Solyanak in downtown Moscow, the floors are made of highly polished wood and squashy sofas stand against the bare brick walls. Milky winter light streams in through the foot-and-a-half thick windows that are a hallmark of surviving pre-revolutionary buildings, while the programmers lounge in front of huge Mac screens building the sites.
The idea is to build a multimedia platform in three parts that delivers books, music and movies to consumers. There are already 33m Russians online, but the advantage of being on the Russian internet is you also capture the 15 newly created republics of the former Soviet Union, which all use Russian; today this market is 65m people and is growing exponentially as a middle class emerges across the entire region.
The site's concept is to move all your content – text, music and video – off your computer hard disk and onto a server, freeing yourself from devices in the process. "The only thing most people have on their computer is nothing more than a list of files. Zvooq.ru is all about how you interface with your music and freeing you from the devices you use to listen to it," says Ostroukhov.
Each of the three platforms has tens of thousands of titles that you can choose to listen to, watch or read. But as you don't buy the content, but pay a monthly subscription instead, you can flick through the whole catalogue to better find things you like. "Zvooq.ru is not a music store in the traditional sense. It is more like a library where you pay to come in, but once you are there you can stay as long as you like and take as many books off the shelf as you want to see if you like them," says Dunlop.
You can still download tracks if you want to, but as the site allows you keep up to 1,000 titles in a cache – so you can still listen to your music when you are offline - there is no need. If you don't download the files, then it makes no difference what device you use to look at your library. Reading a book on your home computer at breakfast? Simply set up your iPhone to login into your account and you can continue to read it, starting at the same page, on the train into work.
Bookmate.ru was already launched last year and concentrated on selling physical books, but the site has been revamped with an interface that allows you to read any one of its 20,000 titles in a user-friendly way. The movie site is still in development and will come next year. But the music site Zvooq.ru will launch this summer and be the make or break for the company, as it's the most attractive offering and the most obvious candidate for scaling up the site's usage into the tens of millions. One of the nicest features of the site is the ability to search for music by type and popularity. "It works a bit like an old school radio. You tune like a radio, flipping through songs to see what people have been listening to recently. It means you can search for music without knowing what you are looking for, but still be able to find it," says Ostroukhov.
The prototype site Ostroukhov launched several years ago already has 2m users, all of whom will be transferred to Zvooq.ru when it goes live this summer.
And it is all legal. The distribution of music in Russia is dominated by pirates. Recently, the Kremlin has been cracking down on intellectual property theft and many of the big outdoor CD and DVD markets have either been closed or the vendors forced to sell only licenced copies, but pirate CDs and DVDs are still widely available. "The site will be a revolution for the music industry, as for the first time they will have a legal channel to both distribute and promote their products across the entire former Soviet Union," says Dunlop. "And the artists are particularly keen, as with Zvooq.ru we will democratise the music business."
The site also allows both international music companies and local artists to tap a much bigger market. While sales of CDs and DVDs in Moscow are increasingly legal thanks to a Kremlin-ordered crackdown as part of its bid to join the World Trade Organisation, no one has yet bothered to develop a nationwide chain of music stores. "There is no distribution for anything in Russia that reaches right across the country or the 65m online consumers across the whole CIS. It is a huge untapped market. What we can do is skip over the phase of setting up physical shops and reach this market immediately by selling to them online," says Dunlop.
The next challenge will be to raise money to take the project up to the next level. And that won't be easy either. Oil means that Russia is awash in cash and the oligarchs had some $40bn of private equity money on the table before the crisis struck, but almost all that cash has disappeared over the last year.
Dunlop estimates there are a total of five professional investors in all Russia that are focused on high-tech business. As investors are able to make 30-50% returns on doing little more than putting German sausage equipment into Siberian meat factories, few are interested in the high risks and long payback terms most high-tech investments need to turn a profit. "There are other investors out there with a lot of money, but the trouble is that most of them don't understand this type of business," says Dunlop, who intends to go to international funds once the site is up and running. "But the internet is growing so fast here that all the logistics that are missing now are already starting to fall into place."
Activity in the Oil and Gas sector (including regulatory)
Russia increases oil export duties from $253.6 per tonne to $268.9 per tone
01.04.2010, 01.00
MOSCOW, April 1 (Itar-Tass) - Russia will increase oil export duties from $253.6 per tonne to $268.9 per tonne on Thursday.
Prime Minister Vladimir Putin signed the relevant decree.
Export duties for light petroleum products will grow from $183.2 per tonne to $193.5 per tonne and for dark petroleum products – from $98.7 per tonne to $104.2 per tonne.
At the same time a zero duty for oil exports from 22 fields in Eastern Siberia will remain unchanged in April.
The government introduced a zero export duty on December 1, 2009.
Energy Minister Sergei Shmatko said this mechanism should be applied for the whole period of intensive exploration of the region. However, he did not rule out an opportunity for imposing duties for oil export from certain fields in Eastern Siberia. The Finance Ministry also insists on this measure.
Earlier, Finance Minister Alexei Kudrin said the Ministry continues to study expediency of extending zero duties for these fields.
The Ministry “is actively studying economic efficiency of these fields,” he said stressing that zero duties will be scrapped at those fields that can turn profit-making and competitive even without them.
Russia Feb refinery runs up 1.8 pct month-on-month
Wed Mar 31, 2010 10:31am BST
MOSCOW, March 31 (Reuters) - Russian oil refining runs rose by 1.8 percent on a daily basis in February from January and by 2.9 percent versus February last year, marking the second straight monthly rise, Energy Ministry data showed on Wednesday.
Russian refineries processed 4.98 million barrels per day (bpd) in February, up from 4.89 million bpd in January and 4.84 million bpd in February 2009.
Russian production of gasoline, gas oil and fuel oil rose month-on-month, while jet kerosene production dropped, the data showed.
To see a table on Russia's refining runs in February, please click on [ID:nLDE62T13O].
Gasoline production in February rose by 4.8 percent month-on-month to 99,560 tonnes per day after a 3.6 percent drop in January caused by long winter holidays in Russia and cold weather across the country.
Russian exports of gasoline in February fell by 49.2 percent versus January, as domestic supplies rose by 13.2 percent month-on-month, preliminary data supplied by the Energy Ministry showed earlier in March. [ID:nLDE6290T3]
Gasoil output at Russian refining plants went up by 1.6 percent to 195,800 tonnes per day on the back of high local demand, which increased by 18.7 percent in February, while gas oil exports last month fell by 3.0 percent.
February fuel oil output ticked up by 0.6 percent from the previous month to 197,100 tonnes per day. Domestic demand for the fuel declined and was replaced by higher shipments abroad.
Jet kerosene production in Russia fell by 6.2 percent month-on-month as extended January holidays came to an end, resulting in lower activity in the aviation sector.
Refining runs at the Ufa group of plants rose sharply. Crude throughput went up by 14.3 percent, or by 52,200 bpd, to 417,900 bpd, the data showed.
Omsk Refinery, owned by Gazpromneft (SIBN.MM), increased runs by 10.1 percent to 377,600 bpd, while Moscow Refinery, controlled by the same company, boosted crude runs by 8.6 percent to 213,400 bpd.
LUKOIL (LKOH.MM), Russia's second-largest oil producer, trimmed runs at its plants by 1.6 percent on the back of a 22,900 bpd throughput decline at its Volgograd refinery. (Reporting by Gleb Gorodyankin; Editing by Amanda Cooper)
Russia's TNK-BP triples 2010 exploration budget
Wed Mar 31, 2010 9:13pm IST
* $400 mln earmarked for exploration in 2010
* Drilling volumes seen rising by 40 pct
MOSCOW, March 31 (Reuters) - TNK-BP (TNBPI.RTS), Russia's third-largest oil producer, will invest $400 million in exploration in 2010, a threefold increase on last year's budget, the company said in a statement on Wednesday. TNK-BP, half-owned by BP (BP.L), said it would focus its exploration this year on the Arctic peninsula of Yamal, the Uvat field in western Siberia and the Orenburg region at the southern end of the Ural mountains.
Exploration would also be carried out in the Timan-Pechora region of northwest Russia and the Astrakhan region bordering the Caspian Sea, TNK-BP said in the statement.
Drilling volumes are expected to rise by 40 percent in 2010. TNK-BP will allocate more than $190 million for seismic activities this year, covering a total area of approximately 12,500 sq km, nearly five times the size of Luxembourg.
TNK-BP said it had an exploration success rate in excess of 70 percent in each of the last three years. Investors pay close attention to oil companies' reserves replacement ratios for signs the firm is able to sustain output growth in the future.
TNK-BP said on March 1 that recoverable reserves under U.S. Securities and Exchange Commission methodology, which uses the year-end spot price and applies to the economic life of a field, rose in 2009 to 8.6 billion barrels of oil equivalent (boe) from 8.1 billion boe in 2008. [ID:nLDE62010L]
Under the less stringent criteria of the Petroleum Resources Management System (PRMS), formerly known as the Society of Petroleum Engineers (SPE), TNK-BP's reserves replacement ratio stood at 329 percent, as reserves rose to 11.7 billion barrels last year from 10.25 billion boe at the end of 2008. (Reporting by Robin Paxton; editing by James Jukwey)
TNK-BP might pay penalties for monopoly high oil product prices in 2008 “ if so, would be a precedent” - unlikely scenario, in our view
VTB Capital
01/04/2010
News: According to Kommersant, the Supreme Arbitration Court might reconsider the case about the fines imposed on oil majors (Rosneft, LUKOIL, TNKBP and Gazprom Neft) for monopoly high oil product prices. The paper speculates that the case regarding the possible RUB 1.1bn (USD 37mn) fines for TNK-BP has been transferred to the Supreme Arbitration Court for further consideration (the company had previously been successful on three occasions at the Tyumen Court (TNK-BP is registered in Tyumen)). To recap, FAS fined Russian oil majors Rosneft, LUKOIL, Gazprom Neft and TNK-BP a total of RUB 5.4bn (USD 180mn) in 2008 and RUB 20.7bn (USD 690mn) in 2009. These penalties are still being contested in various courts.
Our View: Should the Supreme Arbitration Court fine TNK-BP, that would be the first time that an oil company had actually had to pay penalties for monopoly high oil product prices. Considering the constructive dialogue between FAS and the oil major in 2H09 (with the consensus opinion being that a formula would be found to limit domestic oil product prices), we do not believe that oil majors will have to pay the fines for 2008 and 2009.
Even if they do have to pay the fines, it would still not have a significant influence over their financials. The 2008-09 fines amount to RUB 6.78bn (USD 226mn) for Rosneft, RUB 7.98bn (USD 266mn) for Rosneft, RUB 5.3bn (USD 177mn) for TNK-BP and RUB 6.03bn (USD 201mn) for Gazprom Neft. We note that hearing the case might take another 2-3 years, and so the payments might be distributed over a long period (making them immaterial for the oil majors).
Uzbekistan: Lukoil plans $480m investment in 2010
bne
April 1, 2010
Lukoil is planning to invest $480m on exploration and production in Uzbekistan during 2010, according to Russia’s Deputy Prime Minister Sergei Ivanov.
“We are actively cooperating in fuel and energy,” Itar-Tass quotes Ivanov saying during a visit to Tashkent March 21.
Analysts say that over the past few years only LUKOIL has invested several billion dollars in Uzbekistan.
Gazprom and Soyuzneftegas are also active in Uzbekistan, Ivanov added.
31.03.2010
LUKOIL Plans $480 Million Investment into Uzbekistan Gas
LUKOIL intends to invest $480 million into developing gas fields in Uzbekistan in 2010, Deputy Russian Prime Minister Sergey Ivanov told journalists today, RIA-Novosti reports.
“In 2010, LUKOIL has taken on the obligation to invest $80 million into development and geological studies”, Ivanov said.
He added that in recent years, the company’s accumulated investments in Uzbekistan have reached several billion dollars.
“You have to agree – that is a lot”, he said.
Earlier, LUKOIL Vice-President Leonid Fedun said the company planned to invest 8-8.5 billion a year, mot of which would be allocated to production projects.
Copyright 2010, Novosti Azerbaijan. All rights reserved
Petroneft secures $5m credit line to speed up exploration in Siberia
By Thomas Molloy
Thursday April 01 2010
PETRONEFT Resources, a Dublin-based oil explorer operating in western Siberia, has signed a $5m (€3.7m) credit line with Macquarie Bank to speed up its exploration programme.
The loan makes $2m available immediately, Petroneft said yesterday. It is in negotiations with banks for a bigger loan to provide capital to ramp up development of its two licences in Russia.
PetroNeft has found oil in Siberia, which recently overtook Saudi Arabia as the world's biggest oil producer, and is looking for further wells. Production is expected to be 4,000 barrels per day in 2010 growing to 12,000 barrels per day by 2012.
Shares in the company, which owns four proven oil and gas fields, as well as more than 25 prospects in the Tomsk Oblast region of Russia, have more than tripled in the past 12 months. It plans to drill nine production wells and complete construction of a 60km pipeline by the end of this year.
"This facility enables us to accelerate our exploration programme in the northern part of Licence 61 by drilling one high impact exploration well in 2010," chief executive officer Dennis Francis said.
Wells
"Two additional wells will be drilled in 2011, all of which, if successful, can be quickly brought into production, utilising the Lineynoye facilities."
The news was welcomed by analysts. Joe Langbroek of Davy Stockbrokers said it "firmly underpins our 'outperform' recommendation". Shares were little changed in Dublin and London yesterday.
- Thomas Molloy
Irish Independent
Research and Markets: An Essential Report on the Russian Oil and Natural Gas Industry
The oil and natural gas Industry in Russia is one of the largest in the world. The country accounts for around 20 percent of the world's production of oil and natural gas. The country holds the world's largest natural gas reserves and the eighth largest oil reserves. It is also the world's largest exporter of natural gas, the second largest oil exporter. The Russian oil industry is in need of huge investment. Strong growth in the Russian economy means that local demand for energy of all types (oil, gas, nuclear, coal, hydro, electricity) is continuing to grow. We have identified that the country can be a prominent market for petroleum products and natural gas. The objective of our study is to identify country's strength as a major natural gas and oil producer and to explore the opportunities for foreign investors to invest in the market.
The key questions answered in the report are as follows:
• What is Russia's profile in terms of oil and natural gas production?
• Which Russian regions have the potential reserves?
• What are Government regulations for price control and exports?
• Which countries are the trading partners?
• What is the export/import trend of the Russian oil and natural gas industry?
In addition, the report works as a complete investment guide for players looking to invest or venture into the Russian oil and natural gas Industry. This will give an edge in planning your future business strategies for decision making vis-a-vis the Russian oil and natural gas industry.
This report can be delivered in 3 business days.
Chapter 1: The report gives a review of the Russian Oil industry and Russian natural gas industry individually providing a clear picture of the Russian Oil and Natural gas industry in context of reserves base, production and consumption levels and analyses the import/ export trend. In addition to this, the chapter also provides the global ranking of the country in the respective benchmarking areas.
Chapter 2: Russian Oil and natural gas industry has many factors favoring the growth of the industry. Such drivers like the large oil and natural gas reserve base of Russia, European countries oil and gas dependence on Russia, the advanced distribution network, rising domestic demand and the flourishing global automobile industry, etc. have been highlighted in this chapter
Chapter 3: With the rise in global automobile industry and the auto ancillary industry, being the largest producer, demand for oil and gas has gained a good pace in Russia. This chapter highlights such opportunities lying with the industry which can be exploited for its further growth. The second section of the report focuses on the industry impediments which can hardly be ignored including high taxes, conservative FDI limit, development of cheaper and abundantly available sources of energy, unorganized legal structure and most importantly the introduction of carbon credits in the industry.
Chapter 4: Rosneft is the biggest Russian oil company followed by Lukoil, TNK-BP, Gazprom Neft and Tatneft. This chapter of our report covers all these key players business profile. The business profiles of all the major players of the Russian oil and natural gas industry have been discussed in this section. It also briefs upon the various growth and investment strategies followed by each player.
Chapter 5: Looking at the current performance of the industry, Russian oil and natural gas industry is expected to grow further in near future also. This chapter of the report covers the key factors indicating bright future growth and expansion including export volume, domestic consumption, independent players, oil and natural gas production, rise in overseas demand, carbon credits, and gas prices.
Key Topics Covered:
1. MARKET BRIEF
1.1 Oil Industry
1.2 Natural Gas Industry
2. GROWTH DRIVERS
3. OPPORTUNITIES & THREATS
3.1 Opportunities
3.2 Industry Threats
4. COMPETITIVE LANDSCAPE
4.1 Rosneft
4.2 Lukoil
4.3 Gazprom Neft
4.4 Tatneft
4.5 TNK-BP
5. FUTURE PROSPECTS
5.1 Export Volume
5.2 Domestic Consumption trends
For more information visit .
Research and Markets
Laura Wood, Senior Manager,
press@
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716
Welcome to the Russian shelf
2010-03-31
In a bid to speed up the exploration of the shelf, Russian authorities are ready to let in foreign companies.
Currently, only Russian state-controlled companies with experiences from shelf development are entitled to get offshore field licenses. That has given Gazprom and Rosneft a monopoly position on the country’s vast shelf.
Now, however, the Russian government signals that it is ready to change the rules of the game in order to step up shelf exploration and drilling. Deputy Minister of Natural Resources Sergey Donskoy yesterday confirmed that federal legislation needs to be adjusted in order to open up for the involvement of more companies, Vedomosti reports.
According to Donskoy, other Russian companies “with the necessary financial and technological potential” as well as foreign partners should be given access to the shelf oil resources. Foreigners should also be entitled to get stakes in offshore gas projects, but these should not exceed 50 percent, Donskoy said. Control stakes in the projects must med reserved Gazprom, the deputy minister adds.
The new approach makes it possible to attract funding and at the same time keep state control in the projects, he said.
Donsloy also proposes to give shelf exploration licenses to “any interested company”.
With the current monopoly situation on the shelf, Russia will hardly be able to meet its ambitious shelf development goals, according to which up to 120 million tons of oil and 270 billion cubic meters of gas should be produced in the area by year 2040. In order to achieve this, a total of 9.3 trillion RUB will have to be invested, Vedomosti writes. Meanwhile, in 2008, the two state-controlled companies invested only 56 billion RUB in the shelf.
Since the Russian government gave Gazprom and Rosneft carte blanche on the shelf about two years ago, the speed of exploration has stalled. The two companies have also displayed stongly diverging interests in shelf developments.
Gazprom
SLNG breaks ground
South Korea’s Samsung C&T has started construction on the the $1.5 billion Singapore liquefied natural gas terminal (SLNG), which will supply gas to six power generation companies on the island nation.
News wires 01 April 2010 01:44 GMT
South Korea’s Samsung C&T has started construction on the the $1.5 billion Singapore liquefied natural gas terminal (SLNG), which will supply gas to six power generation companies on the island nation.
The SLNG terminal is being constructed on a 30-hectare site at Singapore’s Jurong Island. The facility will have an initial capacity of 3.5 million tonnes per annum (mtpa) when completed in 2013, with future plans to expand to six mtpa.
The terminal is touted as Asia’s first open-access, multi-user terminal.
Six power companies have signed 10-year offtake agreements for an initial 1.5 mtpa of regasified LNG through BG Group, the appointed aggregator for SLNG.
The six buyers are: Lion Power-owned Senoko Energy, YTL-owned PowerSeraya and China Huaneng-owned Tuas Power, new player India's GMR-owned Island Power and Sembcorp Cogen and Keppel Merlimau Cogen.
Their combined offtake volume is equivalent to about one-quarter of the volume Singapore now imports via its pipelines, according to a Straits Times report.
SLNG Corporation, the terminal developer has also commenced discussions with several industry players interested to use the terminal capacity for storing and re-loading of LNG, Singapore’s Business Times reported.
Russia’s Gazprom is among the interested parties. Gazprom, which recently set up marketing and trading operations here, has already traded six spot cargoes of LNG here, and is targeting to trade 25 cargoes, or two million tonnes, this year, worth a total of $450 million, the Business Times report said.
SLNG Corporation’s executive director, Neil McGregor said Singapore has the potential to become the 'Henry Hub' of Asia, much the same as it has done for oil.
The SLNG project provides the opportunity to grow Singapore's talent base in this specialist area, he added.
Published: 01 April 2010 01:44 GMT | Last updated: 01 April 2010 01:44 GMT
Top stories of the day: China oil, gas and petrochemicals-Apr. 1
Posted on: Wed, 31 Mar 2010 22:59:00 EDT
… 3. Gazprom may start natural gas supply to China from 2015, Russian media quoted Gazprom vice chairman Alexander Medvedev as saying.
Alexander said Gazprom may start pumping natural gas to China as long as the company's plan for 2010-2015 is able to be smoothly carried out. (Edited by Qiu Jun, Qiujun@)
Gazprom completes payment for stake in SeverEnergia
Wednesday, March 31, 2010 2:53 PM
(Source: Datamonitor)[pic]
Enel and Eni have announced that Gazprom has paid $1.18 billion as the second and final instalment in respect to the sale and purchase agreement of a 51% participation interest in SeverEnergia, a company owned 60% by Eni and 40% by Enel.
SeverEnergia is a Russian-Italian hydrocarbon exploration and production company. The total consideration paid by Gazprom, including the first tranche paid on September 23, 2009, amounts to approximately $1.6 billion.
The parties are committed to producing first gas and condensates by 2011 from the Samburgskoye field and reaching a production level of about 150,000boepd within two years of the start of production. From that date, Enel will be able to meet with in-house gas resources approximately half the energy requirements of its Enel OGK-5 power plants, Enel and Eni said.
Following the sale to Gazprom, stakes of Enel and Eni in SeverEnergia reportedly amount to 19.6% and 29.4%, respectively.
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