wikileaks.org 1102…  · Web viewRussia 110214. Basic Political Developments. Iran gives a week to airlines to ban Tupolev flights - Iranian airlines have only less than one week

Russia 110214

Basic Political Developments Iran gives a week to airlines to ban Tupolev flights - Iranian airlines have only

less than one week to stop flying Russian-built Tupolev-154 following ultimatum of Head of Iranian Civil Aviation Organization Reza Nakhjavani.

UN High Commissioner for Human Rights Navanethem Pillay to continue visit to Russia, until February 19

o Feb 15: Russian President Dmitry Medvedev to hold meeting with UN High Commissioner for Human Rights Navanethem Pillay

Artur Chilingarov, special representative of the Russian president for international cooperation in the Arctic and Antarctic, will arrive on Monday to discuss Russian-Belarussian cooperation in the polar regions with Belarussian Deputy Minister of Natural Resources Vitaly Kulik and members of the Belarussian Academy of Sciences.

Lavrov heads to London to improve Russian-British relationso Lavrov begins visit to UK to strengthen positive trends in relations - In

general, the Russian diplomat plans to discuss a wide range of issues on the bilateral agenda and pressing international problems, in particular European security, cooperation in Europe’s missile defence project, Russia-EU and Russia-NATO relations as well as the situation in the Middle East and Afghanistan and Iran’s nuclear program.

o A telephone hotline linking the Kremlin and Downing St aims to ease tensions -  A better-encrypted telephone link will be provided for David Cameron and President Medvedev in an echo of the London to Moscow hotline used at the height of the Cold War.

o We are not safe doing business in Russia - Employees are in constant danger of being harassed, arrested and killed, writes William Browder.

o Russian diplomats win in friendly football match - Russian diplomats have beaten their English counterparts with a score of 6:4 in a friendly football match, which took place in London on Sunday.

o MP's Russian assistant accused of spying offered Kremlin TV role - An MP's assistant accused of spying for Russia is on course to follow in the footsteps of Anna Chapman after being offered a job at the Kremlin's English-language TV news propaganda channel.

Japanese opposition criticize government for anti-Russian rhetoric - "Due to the spontaneous statement by Prime Minister Naoto Kan, the foreign minister's visit to Russia which followed became absolutely pointless," said Shigeru Ishiba, a leader of Japan's major opposition party, the Liberal Democratic Party.

Some 400 kg hashish seized by Russia, Azeri anti-drug officers -"The three operations resulted in the total seizure of almost 390 kilograms of Afghan hashish, preventing 807,000 one-off doses of dangerous pot from reaching the consumer and the income of over 15 million narcodollars into the criminal world," the FSKN said.

Developments around Manas Transit Center from Russian journalist’s point of view

Barred British Reporter Allowed Back Into Russia Military satellite, "Geo-IR-2" could turn into space junk Medvedev to chair meeting on employment issues -   According to official

figures, Russia has registered more than a million and a half unemployed. The most difficult situation dates to 2009, when the total number of unemployed exceeded 9% of the working-age population.

Medvedev suggests tougher penalty for inciting ethnic and religious hatred Medvedev's visit to mosque will consolidate inter-religious peace in Russia -

Kadyrov Mufti denies Muslim clerics will be put through lie detectors - The interim mufti

of the Russian republic of Tatarstan denied as "a lot of lies and slander" allegations that Russian authorities plan to appoint senior Muslim clerics and put them to lie detector tests in fighting religious extremism.

Moscow court hears defamation case vs Putin - Before Monday's court hearing Nemtsov told the AP he doesn't expect to win but said the fact the suit was admitted is a victory. Russia's courts are notoriously loyal to the state and often used to bury Kremlin opponents.

Search continues for missing Russian trawler 23 fishermen missing in Russia: report Russian Railways install metal detectors at Moscow Station in St. Petersburg -

Employees of the Russian Railways have installed the first frame metal detectors at the Moscow Station in St. Petersburg. From now on, each passenger will have to pass through them to get to the platforms. If the detectors trigger alarm, policemen are going to check the contents of luggage and its owners. Russia’s Health Ministry reports 25% decline in tuberculosis cases

Canadian bison prepare for journey to repopulate Russia - As part of a conservation partnership with Russia, the animals will be flown to the Republic of Sakha, a huge, mountainous swath of Siberian land where the Communist party used to exile its opponents and temperatures can plummet to -60 C.

FACTBOX-Finans magazine's list of Russia's richest people Putin's judo partner jumps in Russia's rich list - Finans magazine said on Monday

that Arkady Rotenberg, 59, who as a teenager trained in judo with Putin in St. Petersburg, jumped 17 positions in the list to become Russia's 63th richest person with an estimated wealth of $1.75 billion.

FT: Record number of Russian billionaires Russian Village Is Angry, but Not With Bomber - Residents of this run-down

little settlement in the Caucasus Mountains, in the south of Russia, speak only kindly about the Yevloyevs, a tightknit family of six who lived in a one-story, red-brick home at the edge of the village. By ANDREW E. KRAMER

Reuters PRESS DIGEST - Russia - Feb 14 RIA Russian Press at a Glance, Monday, February 14, 2011 Russian cosmonauts imitate landing on Mars Two die after trying to ride roof of Moscow metro train

Al Jazeera English vs. Russia Today - Two takes on Egypt, but only one shown on American television. By Miriam Elder

The rake of multiculturalism - When resolving inter-ethnic problems, Europe has no authority over Russia Aleksandra Samarina

Moscow’s armada - Last week Prime Minister Vladimir Putin announced a whopping $678 billion package of new defence spending for the next decade, with a quarter of the money going to revamp Russia’s Pacific fleet. On the Kremlin’s shopping list: 20 new ships, including a new class of attack submarines, plus new missile subs, frigates, and an aircraft carrier. By Owen Matthews

Russia: The Non-Reluctant Arctic Power - By Dr. Richard Weitz

National Economic Trends Russian Growth May Accelerate to 6% as Oil Climbs, RenCap Says VTB 10% stake placement successful says Putin Putin decrees VTB bank stock privatization Russia Raises $3.3 Billion in VTB Sale, Biggest in Four Years Russia starts asset sale, gets $3.3 billion for VTB Russia to earn over RUR 95 bln in sale of 10% of VTB stock Capital inflows from VTB privatisation will not support the rouble 1.6 million people unemployed in Russia Sugar Import Tariffs to Fall Population Drop Could Put Debt at 585% of GDP

Business, Energy or Environmental regulations or discussions Rusal, Rosneft, Lukoil, VTB, TNK-BP: Russian Equity Preview Polish biggest utility PGE PGEP.WA along with PSE Operator are in talks with

the Russian Inter RAO about building an energy link with the Russian enclave of Kaliningrad and energy supplies from a planned nuclear power, daily Rzeczpospolita wrote quoting PGE Chief Executive Tomasz Zadroga.

o Poland to buy Russian nuclear energy? Crescent Investments and Inter Rao UES enter into regional partnership RusAl raises aluminum output 3% in 2010, plans further growth

o UPDATE 1-RUSAL sees steady 2011 aluminium output growth Russian iron firm plans London IPO - Metalloinvest, which is half-owned by

oligarch Alisher Usmanov, could be launched into the FTSE 100 by the listing. UPDATE 1-Indonesia says Russia to build $3 bln nickel smelter France's Alstom Signs $675M Turbine Joint Venture Vimpelcom Ltd changes key manager in Russia - needs to focus on Russian

operations Russian company invests in cold - Russian company MMG Production has

announced plans to create a Winter Park at Fisherman’s Wharf. The total investment is estimated at US$19 million (MOP152 million).

Russia’s Teleca acquires UK based SurfKitchen London snubbed by Russian Papa John’s

The rules of scavenging for gold - Private yellow metal recovery may be allowed in Russia before the summer Tatiana Zykova

Shaftan reaffirms her commitment to Russia as rising oil price drives growth - Elena Shaftan is the head of Jupiter’s emerging European team and manager of the £626m Emerging European Opportunities fund with Ingrid Kukuljan. Here she explains her fund positioning, why she does not subscribe to the ‘bigger fool’ theory, and why the Russian market is not for tourists.

Activity in the Oil and Gas sector (including regulatory) Russia should keep oil output at 2010 level of 505 million tonnes per year – Putin UPDATE 1-Exillon says oil reserves rise 74 pct Inter RAO may join oil shale project in Jordan (Part 2) Shotkman Profitable Without Regard to Tax Relief Rosneft deal has issues for BP - More details on the surprise tie-up between BP

and Russian behemoth Rosneft. This definitely looks like it is about both companies finding scale outside the U.S. sphere.

TNK BP unifies gas and energy divisions Tatneft registered the branch in Turkmenistan. RenCap: Oil and gas monitor

Gazprom Russia to start natural gas export to China in end-2015, report Gazprom Tells Investors Pipeline Costs are Cut: Vedomosti Says Gazprom Sees 15% Price Rise for Europe One-fourth of EU member states support South Stream: Gazprom Gazprom Neft Profits Up, Eyes Sibir Gazprom Neft presents 4Q10 numbers, gives views on taxation TNK-BP and Gazprom Neft buy operator of Yamal oil and gas deposits Gazprom: Ambitious plans disclosed during investor day Gazprom to help Poland reduce CO2 emissions? - Alexander Medvedev, the

president of Russia’s oil giant Gazprom has said that with the company’s help Poland could switch to gas for its electricity production, which would help reduce its reliance on CO2 emitting coal.

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Full Text Articles

Basic Political Developments

Iran gives a week to airlines to ban Tupolev flightshttp://www.isna.ir/ISNA/NewsView.aspx?ID=News-1715499&Lang=E

ISNA - Tehran Service: Industry

TEHRAN (ISNA)-Iranian airlines have only less than one week to stop flying Russian-built Tupolev-154 following ultimatum of Head of Iranian Civil Aviation Organization Reza Nakhjavani.

Tupolev jets were in service of Soviet airlines and then Russia's before being sold to countries such as Iran, China, and Central Asian states.

The biggest Russian airlines ended flights with its Tupolev-154 jets and replaced them with western built fleets.

Now it is Iran's turn to replace these aging aircrafts following the ultimatum given 6 months ago.

The scenario to omit the Russian Tupolev from Iranian air fleet was discussed after a Tupolev-154 belonging to Iranian Caspian airline collapsed in central city of Qazvin which led to death of 168 of the passengers and crews onboard.

"According to the latest investigation results on the incident of Caspian airline aircraft, we found out there were some problems in the engine of the craft and informed the Russian company of it," Reza Nakhjavani said.

The crashes continued when a Tupolev-154 belonging to the polish airline fell down near an airport in Russia because of thick fog and Polish President as well as some high-ranking officials were killed in the accident.

While the charter Tupolevs were out in the due time in Iran, a six time period was suggested to national airlines for dismissal of owned Tupolevs as well.

The due period was extended one more month by Nakhjavani who said that the national airline companies have to ban their flights by Tupolev by February 19.

In the recent seven years more than 3400 have been killed in the plane crashes in all over the world, 800 of whom were Iranians.

End Item

UN High Commissioner for Human Rights Navanethem Pillay to continue visit to Russia, until February 19http://www.prime-tass.com/news/calendar/_Russian_calendar_Key_events_for_February_14/-103/%7BD8EA38FD-2FDD-4CA6-BA6B-B34F29420788%7D.uif

Feb 15: Russian President Dmitry Medvedev to hold meeting with UN High Commissioner for Human Rights Navanethem Pillay

http://www.prime-tass.com/news/calendar/_Russian_calendar_Key_events_for_February_14/-103/%7BD8EA38FD-2FDD-4CA6-BA6B-B34F29420788%7D.uif

MINSK — Artur Chilingarov, special representative of the Russian president for international cooperation in the Arctic and Antarctic, will arrive on Monday to discuss Russian-Belarussian cooperation in the polar regions with Belarussian Deputy Minister of Natural Resources Vitaly Kulik and members of the Belarussian Academy of Sciences. (MT, Interfax)http://www.themoscowtimes.com/business/article/for-the-record/430932.html

February 14, 2011 09:35

Lavrov heads to London to improve Russian-British relationshttp://www.interfax.com/newsinf.asp?id=222034

MOSCOW. Feb 14 (Interfax) - Russian Foreign Minister Sergei Lavrov will for the UK for a two days' visit on Monday.

This will be the first visit to London by a Russian government official of this level since the relations between the two countries aggravated following the killing of former Federal Security service official Alexander Litvinenko in London in 2006.

"The minister will be the British government's guest," Russian Foreign Ministry spokesman Alexander Lukashevich said.

Lavrov is scheduled to meet with his British Prime Minister David Cameron and Secretary of State for Foreign and Commonwealth Affairs William Hague and is expected to make a speech in the London School of Economics.

"The upcoming contacts are expected to address a broad range of bilateral relations issues, including those related to the visit by the UK prime minister to Russia scheduled for this year, Lukashevich said.

The meeting will also address the steps aimed at strengthening Russian-British trade and economic cooperation, the development of political dialogue, a broad range of international and regional issues, including the situation in the Middle East, European security issues, European missile defense, dialogue in the format of Russia-EU and Russia-NATO, the Iranian nuclear issue, etc.

"Naturally, the ministers will also discuss the Middle east peace process, the situation in the Arab world in general, and the situation in Afghanistan," Lukashevich said.

"The negotiations will also address trade and investment cooperation," he said.

av

Lavrov begins visit to UK to strengthen positive trends in relations

http://www.itar-tass.com/eng/level2.html?NewsID=15950394&PageNum=0

14.02.2011, 01.36

MOSCOW, February 14 (Itar-Tass) - Russia’s Foreign Minister Sergei Lavrov begins his visit to London on Monday.

On February 15, he will meet with British Foreign Secretary William Hague to strengthen positive trends in the two countries’ relations.

Lavrov is also expected to meet with Prime Minister David Cameron and to speak at the London School of Economics and Political Science.

“Moscow hopes that the Russian foreign minister’s visit will allow to strengthen positive trends in relations with Britain,” Russian foreign ministry spokesman Alexander Lukashevich said. “Of late we register springs, elements and symptoms of their improvement, including that in the economic sector and at the level of political contacts.”

Expects say despite encouraging trends Lavrov’s visit will take place under difficult conditions. A recent scandal over expulsion of Luke Harding, a Moscow-based reporter for The Guardian, when he tried to return to Moscow, heavily troubled the relations that were not easy ones.

The Russian-British relations were strained by the closure of the British Council’s most offices in Russia in 2008 and by the murder of former Russian security officer Alexander Litvinenko, although positive trends have been reported in this case. In particular, Britain expressed its interest in resuming cooperation with Russia in security and the fight against terrorism that was disrupted four years ago over the Litvinenko case. It is expected that the proposal can be officially voiced during Lavrov’s visit.

In general, the Russian diplomat plans to discuss a wide range of issues on the bilateral agenda and pressing international problems, in particular European security, cooperation in Europe’s missile defence project, Russia-EU and Russia-NATO relations as well as the situation in the Middle East and Afghanistan and Iran’s nuclear program.

Experts reiterate that Russia is one of Britain’s main trade partners. Over 1,000 British companies are working in Russia.

According to experts’ estimates, the two countries’ trade exceeds 17 billion U.S. dollars.

Moreover, Britain is one of Russia’s largest foreign investment partners. Of late Britain’s accrued investments in Russia comprised 18 billion U.S. dollars, while Russia’s investments in Britain – 3 billion U.S. dollars.

Moscow and London jointly implement several economic projects, including the creation of the Skolkovo innovation hub. The first Russian-British venture fund is being created by Russia’s nanotechnology corporation Rosnano and Britain’s innovation company Celtic Pharma.

Stronger cultural relations will be high on the talks’ agenda as well. A series of events aimed at promoting Russia’s culture in Britain will give a fresh impetus to this sector in 2011. Among them are an exhibition devoted to the 50th anniversary of the first manned space flight and Russia’s participation as a special guest in the annual London Book Fair.

A telephone hotline linking the Kremlin and Downing St aims to ease tensions http://www.theaustralian.com.au/news/world/a-telephone-hotline-linking-the-kremlin-and-downing-st-aims-to-ease-tensions/story-e6frg6so-1226005593845

Sam Coates and Tony Halpin

From: The Times

February 14, 2011 10:39AM

DOWNING Street is preparing to install a new secure telephone hotline to the Kremlin in the latest "incremental" step forward in relations between Britain and Russia.

 A better-encrypted telephone link will be provided for David Cameron and President Medvedev in an echo of the London to Moscow hotline used at the height of the Cold War.

The "technical upgrade" will give the leaders a more secure channel to discuss sensitive issues such as al-Qa'ida and the war in Afghanistan.

"This is not as it was, to avert nuclear war, but to allow wider classified discussions between leaders on international issues," a government source said.

The go-ahead is due to be agreed tomorrow when Sergei Lavrov, Russia's Foreign Minister, has a rare meeting with Mr Cameron and William Hague. This is his first visit purely for direct talks since his appointment as Russia's top diplomat in 2004.

Mr Hague's first visit to Russia as Foreign Secretary was in October, when he was accorded the rare privilege of a meeting with President Medvedev at the Kremlin, a signal that Moscow was seeking a fresh start with the Conservative-Liberal Democrat coalition after years of strained relations with the previous Labour Government. Since then, however, British and Russian relations have been beset by problems involving spying.

In December there were tit-for-tat diplomatic expulsions when Britain requested the removal of a diplomat after the government claimed that there was evidence of Russian intelligence service activities against British interests. At the same time, it was claimed that Katia Zatuliveter, a researcher who worked for the Liberal Democrat MP Mike Hancock, was a Russian spy. She denies spying and is on bail, fighting a deportation order.

This week's visit is also likely to see agreement that British and Russian law enforcement agencies will be authorised for greater co-operation on counter-terrorism. However, direct intelligence-sharing between MI6 and Russia's FSB remains frozen after the murder in London of the dissident spy Alexander Litvinenko in 2006 using radioactive polonium-210.

This means that Britain will offer specialist advice on bomb-scene management and forensic science after the recent bombing at a Moscow airport.

Britain is keen to move on from some of the recent difficulties between the two countries - reciprocal expulsions took place as recently as Christmas - and has welcomed more positive statements by Mr Lavrov.

Russia removed one area of tension by reversing the expulsion of the Guardian's Moscow correspondent, Luke Harding. He was deported on arrival in Moscow from London last week, apparently after being blacklisted by the FSB.

Government sources insist Britain will "not give an inch" on areas of disagreement.

The London to Moscow hotline has caused difficulties in the past. Translation was no easy matter as was discovered when the hotline was discussed in 1966, according to historians. Translators had to be on call 24 hours a day, which meant they had to live close to Whitehall. This led to discussion about getting two bachelors to live in a local flat or hotel room.

In 1992 a direct communication link based on the latest technology at the time was installed as part of a friendship treaty between the two countries.

The Times

We are not safe doing business in Russia http://www.telegraph.co.uk/news/worldnews/europe/russia/8322514/We-are-not-safe-doing-business-in-Russia.html

Employees are in constant danger of being harassed, arrested and killed, writes William Browder.

By William Browder 7:21AM GMT 14 Feb 2011

Today, Sergei Lavrov, the Russian foreign minister, arrives in London to meet leading British politicians and officials in a bid to revive bilateral relations, increase business ties and attract UK investors to Russia. Doubtless, there will be a good deal of talk about modernising the Russian economy and extolling the virtues of investing in it. Reference will be made to large investments made by BP, Pepsico and other multi-nationals as evidence of the "improving investment climate".

But before anyone takes these representations at face value, they should hear my story.

For 10 years, I was the largest foreign portfolio investor in Russia, with 6,000 investors from 30 countries totalling $4.5 billion (£2.8 billion) under management. Our investment strategy in Russia was to improve rights of minority shareholders, promote good corporate governance and expose corruption.

The trouble began after my fund launched a campaign to clean up the multi-billion dollar corporate malfeasance taking place in the Russian state-owned gas monopoly Gazprom, and in Surgutneftegaz. After we named names and exposed the details of several enormous corruption schemes, the Russian foreign ministry declared that I was a "threat to national security". On November 13, 2005, I was deported and barred from re-entering the country.

My deportation was the beginning of an unimaginable nightmare. On June 4, 2007, the Russian police raided my offices in Moscow, seizing documents which were then used by Russian officials to expropriate our investment holding companies, forge billions of dollars of fake liabilities and embezzle taxes that we had paid to the Russian government the previous year. Incredibly, officials then approved – overnight – the largest fraudulent tax refund in Russian history, amounting to US$230 million. This was paid out two days later to a group of criminals working hand in hand with corrupt officials. Meanwhile, my employees and I received anonymous death threats.

So we hired a young Russian lawyer named Sergei Magnitsky to investigate. Working with lawyers and forensic investigators, he pieced together evidence of the criminal conspiracy and testified on the record against senior police officials, judges and criminals involved. Sergei was then arrested by the same police officers he had provided evidence against, locked away without bail or trial and shuffled between increasingly harsher detention centres for a year in an effort to get him to change his testimony. He was denied

medical care and family visits, and tortured. After 358 days in detention, he was found dead. The Wall Street Journal described his death as a "slow assassination".

What happened to Sergei was not a one-off. Neither is what happened to me, nor to many others. Mikhail Khodorkovsky is set to spend 14 years in a Siberian jail after his former company Yukos Oil was expropriated by the Kremlin following trumped-up charges. In 2006, Shell was forced to sell 50 per cent plus one share of its lucrative Sakhalin Island project under threat of serious criminal charges. BP was hit with a £148 million tax bill as well as having 148 employees expelled from the country. Telenor, Ikea, NewsCorp, Motorola and Nestle have endured similar illegal sanctions by the Russians.

It is a fact that there is no safety for people working in Russia and no protection of property rights. Local journalists have been attacked and killed in broad daylight, human rights activists and intellectuals are silenced, opposition leaders are detained, business competitors and professionals are wrongly accused and prosecuted, and foreign whistleblowers or international journalists are deported.

In today's Russia, British citizens are not safe to invest or do business. In fact, the more successful you are, the more likely you are to be targeted by the corrupt regime. Nor does it stop at money and assets, but extends to the horror of divided families, and physical violence. Turning a blind eye to this reality is not the answer.

It is time for the British Government to look after the interests of its people in its dealings with Russia. Just as the Foreign Office routinely issues warnings against visiting countries where the life and liberty of British citizens will be threatened, it has a duty to issue "business warnings" as well. The Government should advise companies against doing business in countries that do not promote a safe investment environment or guarantee the rule of law and safety of citizens. Russia is a country in which British companies are in constant danger of having their assets expropriated and their employees harassed, arrested and killed.

There are many attractive countries for British business to invest in – but Russia is not one of them. It's time to make that clear.

William Browder is the founder of Hermitage Capital Management.

Russian diplomats win in friendly football matchhttp://english.ruvr.ru/2011/02/13/44213323.html

Feb 13, 2011 23:19 Moscow Time

Russian diplomats have beaten their English counterparts with a score of 6:4 in a friendly football match, which took place in London on Sunday.

Rooting for the Russians was the new Ambassador of the Russian Federation Alexander Yakovenko.

The match was held on the eve of a visit to London by Russian Foreign Minister Sergei Lavrov.

MP's Russian assistant accused of spying offered Kremlin TV role http://www.telegraph.co.uk/news/worldnews/europe/russia/8321446/MPs-Russian-assistant-accused-of-spying-offered-Kremlin-TV-role.html

An MP's assistant accused of spying for Russia is on course to follow in the footsteps of Anna Chapman after being offered a job at the Kremlin's English-language TV news propaganda channel. By Andrew Osborn, Moscow 3:56PM GMT 13 Feb 2011

Katia Zatuliveter, a 25-year-old former parliamentary assistant for Mike Hancock, a Liberal Democrat MP, was arrested in December and ordered deported on MI5's advice after it was decided that her continued presence in Britain was a potential threat to national security.

She has since been released on bail and is living in London, with strict limits on her freedom of movement, until her appeal against her deportation can be heard in October.

However RT, the Kremlin's English-language TV news channel, has offered her an unspecified on-air role which could see her become a presenter in Moscow or even a London-based reporter.

"We are interested in working with Katia and she knows about it. I cannot say anything more now," Margarita Simonyan, RT's editor-in-chief, told Russian media. "We will only be able to give more detailed information once talks have been concluded with Ekaterina (Katia) herself."

The channel, which changed its original name, Russia Today, to RT, in order to try to appear more objective has a habit of slavishly following the Kremlin's preferred newsline on any given story, of pumping out lurid anti-American conspiracy theories, and of broadcasting sugary interviews with Kremlin insiders who do not do Western media.

If Miss Zatuliveter accepts the job offer it would not be the first time an alleged Russian spy whose cover has been blown had been rewarded with a TV job. Anna Chapman, the glamorous 28-year-old Russian spy deported from the United States last summer, has

since carved out a career for herself as a TV presenter on a show of her own called "Secrets of the World with Anna Chapman."

Miss Zatuliveter, who last week had her bail conditions eased so that she could negotiate with RT, has insisted she is not a Russian spy though security service sources have said there is no doubt she was working for the Kremlin as a "sleeper agent," either for its SVR foreign intelligence service or for its GRU military intelligence arm.

Japanese opposition criticize government for anti-Russian rhetorichttp://en.rian.ru/news/20110214/162588443.html

03:08 14/02/2011

Anti-Russian rhetoric by the Japanese premier made the foreign minister's recent visit to Moscow 'pointless,' a Japanese opposition leader said.

A week ago, on Japan's Northern Territories Day, Japanese Prime Minister Naoto Kan called an "inexcusable rudeness" Russian President Dmitry Medvedev's visit to Kunashir, one of four Kuril Islands disputed between Japan and Russia. The statement sparked an angry reaction from Moscow.

"Due to the spontaneous statement by Prime Minister Naoto Kan, the foreign minister's visit to Russia which followed became absolutely pointless," said Shigeru Ishiba, a leader of Japan's major opposition party, the Liberal Democratic Party.

A dispute over the islands, called the Northern Territories in Japan, has prevented Russia and Japan from signing a peace treaty to officially end World War Two hostilities. The islands were seized by Soviet forces at the end of the conflict.

Tensions have escalated since November, when Russian President Dmitry Medvedev made the first visit by a Russian leader to one of the islands, 7,000 km from Moscow.

The Japanese foreign minister, who paid a visit to Russia on Friday amid the growing row over the Kuril Islands, said the postwar period in the Japanese-Russian relations will end only when the peace treaty is signed.

Ishiba also criticized the foreign policy of Kan's administration, blaming the prime minister for worsening ties with the U.S. and no improvements in relations with Japan's major neighbors - Russia and China.

"For the first time, they [international relations states] are bad in all directions," he said.

A dispute over the islands, called the Northern Territories in Japan, has prevented Russia and Japan from signing a peace treaty to officially end World War Two hostilities. The islands were seized by Soviet forces at the end of the conflict.

Medvedev ordered last Wednesday the deployment of additional weapons on the islands, describing them as a "strategic region" of Russia. Maehara responded by saying that Tokyo's resolve "remains absolutely unwavering."

TOKYO, February 14 (RIA Novosti)

February 13, 2011 12:46

Some 400 kg hashish seized by Russia, Azeri anti-drug officershttp://www.interfax.com/newsinf.asp?id=222013

MOSCOW. Feb 13 (Interfax) - Nearly 400 kilograms of Afghan hashish have been seized during a joint operation conducted by the Russian Drug Control Service (FSKN) and Azerbaijan's National Security Ministry.

This year, the FSKN and the Azeri ministry have conducted a series of successful operations to close Afghan hashish supply channels to Russia, the FSKN told Interfax. In January, the FSKN received intelligence from its Azeri colleagues about plans to smuggle Afghan hashish to Russia via Azerbaijan.

"The three operations resulted in the total seizure of almost 390 kilograms of Afghan hashish, preventing 807,000 one-off doses of dangerous pot from reaching the consumer and the income of over 15 million narcodollars into the criminal world," the FSKN said.

kk

Developments around Manas Transit Center from Russian journalist’s point of view14/02-2011 08:49

There is nothing astonishing that developments in Kyrgyzstan attract attention of foreign journalists including Russian ones. One of them is Grigory Pasko who visited our republic many times and met with many counterparts, human right advocates, politicians, politologists and businessmen.

You can read his article about fuel supply to Manas Transit Center, a topic of hour today, here.

URL: http://eng.24.kg/biznes-info/2011/02/14/16226.html

Barred British Reporter Allowed Back Into Russia http://www.rferl.org/content/barred_british_reporter_allowed_back_into_russia/2308322.html

February 14, 2011 A British "Guardian" journalist barred from Russia last week after reporting on leaked U.S. diplomatic cables critical of Russian officials has said he had been able to return.

Authorities turned back Moscow correspondent Luke Harding citing administrative problems linked to his accreditation.

He told AFP news agency by e-mail on February 13 that he was back in Moscow.

The Foreign Press Association said he returned on February 12 with a new visa and his accreditation was ready.

"The Guardian" said the incident was believed to be the first removal of a British staff journalist from the country since the end of the Cold War.

compiled from agency reports

GOOGLE TRANSLATION

February 14, 2011 10:32 Military satellite, "Geo-IR-2" could turn into space junk

http://www.interfax.ru/news.asp?id=177347

Moscow. February 14. Interfax-AVN - Geodetic Spacecraft Military Geo-IR-2, descended February 1 unplanned orbit in the coming months may remain without power and damaged. "The spacecraft is designed for operation in orbit, where its solar panels would be constantly illuminated by the Sun, so powerful sources of autonomous power supply it is not available. Nonisobaric Being on the orbit, the satellite after a while, will increasingly fall into the shaded area of the world. A few minutes work on the dark side of Earth would be enough to fully discharge its power system and bring the machine out of action "- told Interfax-AVN," a source in the space industry. Once left without power, it is likely that the system does not re-turned on, and so he said, the spacecraft will turn into a "piece of metal worth millions of rubles."

Medvedev to chair meeting on employment issueshttp://english.ruvr.ru/2011/02/14/44215405.html

Feb 14, 2011 01:20 Moscow Time

 President Dmitry Medvedev today chairs a special meeting dealing with employment issues. Earlier, the head of state repeatedly addressed the issue, vowing to keep a close eye on it.

  According to official figures, Russia has registered more than a million and a half unemployed. The most difficult situation dates to 2009, when the total number of unemployed exceeded 9% of the working-age population.

  Medvedev instructed the government to specifically monitor the employment situation in the so-called single-industry towns. This year the cabinet plans to reduce unemployment in these cities to 2%.

14 February 2011, 10:08

Medvedev suggests tougher penalty for inciting ethnic and religious hatredhttp://www.interfax-religion.com/?act=news&div=8189

Ufa, February 14, Interfax - Russian President Dmitry Medvedev has urged prosecutors, investigators and judges to take into account aggravating factors when qualifying crimes of inciting ethnic hatred.

"One might consider toughening responsibility for inciting ethnic and religious hatred," Medvedev said at a meeting of the State Council presidium on ethnic issues.

"Often very strict sanctions do not work in our country simply because of such a penal policy," he said.

Therefore, "above all it is a matter of how such sanctions are being understood by prosecutors, investigators and judges."

14 February 2011, 10:01

Medvedev's visit to mosque will consolidate inter-religious peace in Russia - Kadyrov http://www.interfax-religion.com/?act=news&div=8188

Grozny, February 14, Interfax - Chechen leader Ramzan Kadyrov has said that the visit by Russian President Dmitry Medvedev to the Ufa Mosque should be seen as an exceptionally good sign for millions of Muslims.

"It is a big joy for Russian Muslims. It is an important event not only in the religious but also socio-political life of all Russians. Regardless of the religion of every one of them," Kadyrov told journalists.

"The head of state demonstrated to all citizens that he as a Constitutional guarantor supports all religions. Thus he drew a line under the desire by certain forces to expose Islam in a negative light," he said.

"The president is not visiting the mosque out of mere curiosity, just for the sake of sightseeing. He is doing so to show all the leaders what an attitude towards religion should be like. Now it is important for everyone in charge of building inter-religious and inter-ethnic relations in Russia to realize that," Kadyrov said.

14 February 2011, 11:12

Mufti denies Muslim clerics will be put through lie detectorshttp://www.interfax-religion.com/?act=news&div=8191

Kazan, February 14, Interfax - The interim mufti of the Russian republic of Tatarstan denied as "a lot of lies and slander" allegations that Russian authorities plan to appoint senior Muslim clerics and put them to lie detector tests in fighting religious extremism.

"It's a lot of lies and slander," Ildus Faizov told Interfax in comments on words by Gabdulla Galiullin, imam of the Nurullah mosque in Kazan, the Tatar capital.

"I believe that man just decided to hype himself up and wake up mobs in a bid to earn some political dividends for himself ahead of an election for the new mufti of Tatarstan," Faizov said.

Galiullin had organized a demonstration on Friday outside the Kazan Kremlin during which he disseminated leaflets claiming, in part, that imams in the Novosheshminsk district had had their homes searched because they were suspected of links to Islamist militants.

Law enforcement agencies said the demonstration had brought together about 20 people, mostly elderly women.

Galiullin also claimed that government officials, at a meeting with Novosheshminsk imams on January 25, warned that Muslims would have their rights restricted.

"I have contacted the muhtasib of the Novosheshminsk district and it turned out that Galiullin was not present at the meeting between the head of administration of that district and a representative of the office of the president of Tatarstan, on the one hand,

and imams, on the other, and that he effectively distorted their words," Faizov said.

Faizov said that, at the meeting, the officials had asked the clerics to explain to their congregations dangers of radical teachings and warn them against any forms of extremism.

"There were no bans on the wearing of the hijab [Muslim women's head cover] or any statements about the appointment of imams or putting them to polygraph tests. These are all lies," Faizov said.

Moscow court hears defamation case vs Putin

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/14/AR2011021400335.html

The Associated Press Monday, February 14, 2011; 2:33 AM

MOSCOW -- A Moscow court is hearing a civil defamation suit against Vladimir Putin after the Russian prime minister used a TV call-in show to accuse his political enemies of stealing from the state.

Putin claimed in December that a group of opponents once in the government or parliament took billions from state coffers in the 1990s.

He said former Deputy Prime Minister Boris Nemtsov, once-Deputy Energy Minister Vladimir Milov and ex-independent lawmaker Vladimir Ryzhkov had gone broke and were now seeking power again to fill their pockets.

Before Monday's court hearing Nemtsov told the AP he doesn't expect to win but said the fact the suit was admitted is a victory. Russia's courts are notoriously loyal to the state and often used to bury Kremlin opponents.

Search continues for missing Russian trawlerhttp://english.ruvr.ru/2011/02/14/44232841.html

Feb 14, 2011 10:20 Moscow Time

Gale force winds are preventing aircraft from joining the ongoing search and rescue operation for the Amethyst Russian trawler, which has gone missing in the Sea of Okhotsk.

Radio contact with the ship, with 24 people on board, was lost last Saturday. A military plane and a helicopter took off on Sunday to search for the missing trawler but failed to spot it.

All other vessels in the area are involved in the operation.

The Amethyst is owned by the Kamchatka Research Centre of the Russian Fisheries Sector.  

23 fishermen missing in Russia: reporthttp://www.google.com/hostednews/afp/article/ALeqM5hJt9EFb9gP0OFCPPa9evTzXwPYlQ?docId=CNG.64b40623ef755670eb1e7e108c8d3448.4c1

(AFP) – 36 minutes ago

MOSCOW — A Russian fishing trawler with at least 23 people on board has gone missing in the Sea of Okhotsk off the Kamchatka Peninsula, the ITAR-TASS news agency reported Monday.

The Ametist vessel stopped transmitting daily position reports on Friday, with the search mission being hampered by heavy storms and poor visibility, the news agency quoted rescue official as saying.

The Interfax news agency said the trawler had 24 crew members on board and enough fuel to last until Tuesday.

An Il-38 maritime patrol aircraft and a helicopter had been dispatched to the region to help locate the trawler, whose crew had been fishing for crab, news reported said.

But wind gusts of up to 55 miles (88 kilometres) per hour had forced officials to temporarily call off their search Monday evening.

"The search and rescue mission will resume as soon as weather conditions improve," Interfax quoted a local rescue official as saying.

The vessel did not issue a distress signal before losing radio contact with the ground, ITAR-TASS said.

The Sea of Okhotsk lies west of Russia's Kamchatka Peninsula and far north of Japan's Hokkaido Island.

Russian Railways install metal detectors at Moscow Station in St. Petersburghttp://www.newsbcm.com/doc/622

Employees of the Russian Railways have installed the first frame metal detectors at the Moscow Station in St. Petersburg. From now on, each passenger will have to pass through them to get to the platforms. If the detectors trigger alarm, policemen are going to check the contents of luggage and its owners.   "We understand that metal detectors are not enough for proper security, so we plan to install additional special-purpose means of vetting, which provide for inspection of baggage. The procedure of inspection is in fact the police authority. There are “a number of legislative obstacles, which do not allow the employees of railway stations to fully control the safety of passengers", said Deputy Chief of the North-West Directorate of railway stations, Alexander Kazansky.

Russia’s Health Ministry reports 25% decline in tuberculosis cases

http://www.itar-tass.com/eng/level2.html?NewsID=15950598&PageNum=0

14.02.2011, 06.20

MOSCOW, February 14 (Itar-Tass) - Russia’s Health and Social Development Ministry reports a 25 percent decline in tuberculosis cases.

“Over the past four years as a result of special measures the efficiency of basic course treatment of patients with newly diagnosed tuberculosis increased by 9.2 percent. The efficiency of in-patient recovery grew by 16 percent and hospital mortality reduced by one and a half times,” the ministry’s press service said.

“Efficiency of the measures taken is proved by the fact that over the past four years the spread of tuberculosis among population shrank by 25.3 percent,” the source said.

Canadian bison prepare for journey to repopulate Russiahttp://www.montrealgazette.com/travel/Canadian+bison+prepare+journey+repopulate+Russia/4275824/story.html By Ryan Cormier, Postmedia News February 14, 2011 12:01 AM

ELK ISLAND NATIONAL PARK — Next month, 30 young bison will catch a 10-hour flight from mild Alberta to roam one of the coldest corners of the planet.

As part of a conservation partnership with Russia, the animals will be flown to the Republic of Sakha, a huge, mountainous swath of Siberian land where the Communist party used to exile its opponents and temperatures can plummet to -60 C.

It is the second stage of the project, after 30 wood bison were sent to Sakha in 2006 to reproduce and replace Russia’s indigenous bison, which have been extinct for decades.

“We had our doubts, and there were surely some concerns, about how these animals would adapt in Sakha, given that the climate is much more severe than in Canada,” said Vladimir Gregoriev, Sakha’s minister of nature protection, through a translator. “The winter is long and very, very cold. We have three months of summer and the rest is winter.”

Edmonton sits at the southern border of the natural habitat of the threatened species.

The first herd of wood bison thrived in Sakha’s protected lands, producing 21 calves in five years. The second herd, 15 males and 15 females, is expected to raise the population while not exposing the animals to inbreeding. However, they first have to get to the Lenskie Stolby Nature Park.

At Elk Island National Park, east of Edmonton, the animals have already been penned separate from other animals. They will be tested for diseases such as tuberculosis this week, then held in quarantine for a month. The calves, roughly nine months old and waist-high, weigh anywhere from 350 to 500 pounds.

They will be loaded into three horse trailers, 10 animals each, that are modified with water pipes and have had any sharp edges or partitions removed.

“We’ll make sure they will be able to lie down, stand up, turn around and everything they need to,” said Darcia Nakonechuy, a veterinarian with the Canadian Food Inspection Agency. “Bison are shockingly good at being transported. The animals are very adaptable.”

Adult bison are not considered for the program because no one wants 15 grown males, at 2,100 pounds each, becoming territorial or frisky on an overseas flight. Younger animals are calmer and less likely to injure themselves.

The trailers will be driven to the Edmonton International Airport, then loaded onto a Ilyushin-76, a cavernous Russian transport plane that has its own crane and was made to transport military equipment. Two Canadian veterinarians will be on the plane, and can adjust temperature, food and water levels or air circulation, Nakonechuy said.

The bison will fly for 10 hours, then be transported by ground for several more to reach the protected park that will be their new home. In roughly two years, they will begin to reproduce.

Greg Wilson, a biologist with the Canadian Wildlife Service, thinks the second herd will complete the introduction of bison back into Sakha and Russia as a whole.

“I would think this would be all they need if they already have 21 calves,” he said. “In Canada, the wood bison do very well. The main barrier to them is places to put them.”

Elk Island has already distributed 1,000 wood bison, and the same number of plains bison, around the world for conservation programs. Bison first came to the park from a Montana rancher in 1907.

“Since its creation in 1906, Elk Island has played an important role in the conservation and survival of several species, such as bison and elk,” said Leon Benoit, MP for Vegreville-Wainwright. “We are contributing to the continued survival and well-being of an iconic and truly majestic animal that was once on the brink of extinction.”

Gregoriev said the Russian goals of the project are to increase bison numbers, encourage bio-diversity and to teach schoolchildren about the species itself and the wider concept of wildlife conservation.

The bison are expected to leave Canada on March 15.

There are about 400 wood bison in Elk Island National Park.

Edmonton Journal

© Copyright (c) The Edmonton Journal

FACTBOX-Finans magazine's list of Russia's richest peoplehttp://in.reuters.com/article/2011/02/14/russia-rich-idINLDE71C0B420110214

MOSCOW | Mon Feb 14, 2011 8:30am IST

MOSCOW Feb 14 (Reuters) - A former judo sparring partner of Prime Minister Vladimir Putin and his younger brother made new advances in Russia's list of richest people compiled by the respected national magazine Finans.

The top of the list saw very few changes in 2011 with steel tycoon Vladimir Lisin, an owner of Novolipetsk Steel (NLMK.MM), firmly in first place with a wealth pot which increased from $18.8 billion at the start of 2010 to $28.3 billion now.

For a story on the release, please, click [ID:nLDE71C02X]

Below is the list of Russia's ten richest people as well as top movers among 500 people on the list:

2010 CHANGE WEALTH NAME COMPANY

VS 2009 (BLN)

1 0 $28.3 Vladimir Lisin NLMK

2 0 $22.7 Mikhail Prokhorov Onexim

3 +4 $19.9 Alisher Usmanov Metalloinvest

4 +2 $19.0 Oleg Deripaska UC RUSAL

5 -2 $17.1 Roman Abramovich Millhouse LLC

6 +3 $17.1 Alexei Mordashov Severstal

7 -3 $16.9 Suleiman Kerimov Nafta Moskva

8 -3 $16.0 Mikhail Fridman Alfa Group

9 +1 $14.3 Vladimir Potanin Interros

10 -2 $10.9 Vagin Alekperov LUKOIL

17 +6 $8.9 Gennady Timchenko Gunvor

41 +47 $3.0 Ziyavudin Magomedov Summa Capital

63 +17 $1.8 Arkady Rotenberg SMP Bank

63 +17 $1.8 Boris Rotenberg SMP Bank

94 -47 $1.1 Yelena Baturina Inteko

115 +20 $1.0 Yuri Kovalchuk Rossiya bank

156 -67 $0.7 Kirill Pisarev PIK

184 +120 $0.6 Nikolai Shamalov Rossiya Bank (Compiled by Gleb Bryanski)

Putin's judo partner jumps in Russia's rich listhttp://in.reuters.com/article/2011/02/14/russia-rich-idINLDE71C02X20110214

* Leaps 17 positions as business empire expands

* Few changes at the top of the list

* Moscow real estate tycoons lose wealth

By Gleb Bryanski

MOSCOW, Feb 14 (Reuters) - A former judo sparring partner of Prime Minister Vladimir Putin and his younger brother have advanced up the list of Russia's richest people compiled by a respected national magazine.

Finans magazine said on Monday that Arkady Rotenberg, 59, who as a teenager trained in judo with Putin in St. Petersburg, jumped 17 positions in the list to become Russia's 63th richest person with an estimated wealth of $1.75 billion.

Rotenberg, who runs St. Petersburg's judo club Yavara-Neva, where Putin is an honorary president, controls energy service company Stroygazmontazh, which was contracted to build parts of the $12 billion Nord Stream gas pipeline through the Baltic Sea.

Rotenberg is also a shareholder in construction group Mostotrest (MSTT.MM), which raised $388 million in an initial public offering last year and has lucrative contracts in the Black Sea resort of Sochi ahead of the 2014 Winter Olympics.

Rotenberg's younger brother and business partner, Boris, also an avid judoist, shares the 63rd position with his brother. The two were in the 395th place in Finans' list of 500 richest Russians in 2009.

LITTLE CHANGE AT TOP

The top of the list saw very few changes with steel tycoon Vladimir Lisin, an owner of Novolipetsk Steel (NLMK.MM), firmly in first place with a wealth pot up from $18.8 billion at the start of 2010 to $28.3 billion now.

The change was broadly line with the increase in metals stock valuations and Russian stock indices. There were no new faces among the 10 richest Russians.

Another metals tycoon, Mikhail Prokhorov, worth $22.7 billion, retained his second position while metals-to-telecoms magnate Alisher Usmanov pushed billionaire Chelsea soccer club owner Roman Abramovich out of third position.

The magazine attributed Usmanov's advance to an upcoming float of his Metalloinvest company, expansion of mobile operator Megafon where Usmanov holds a 39 percent stake, and a $900 million London listing of his Mail.ru (MAILRq.L) Internet firm.

Yuri Kovalchuk, 59, a scientist-turned-banker who was Putin's country house neighbour in the 1990s, rose through 20 positions to become Russia's 115th richest person. Another neighbour Nikolai Shamalov rose 120 positions to 184th place.

Kovalchuk's National Media Group has rapidly expanded in recent months in what analysts see as a jostling for influential media assets ahead of the 2012 presidential election, in which Putin may stand as a candidate.

REAL ESTATE LOSERS

The group announced this month the acquisition of a 25 percent stake in Russia's most popular television station, Channel One, for $150 million from Abramovich, who is now number five on the list.

Oil trader Gennady Timchenko, who has repeatedly denied media speculation that he is a close friend of Putin and that this friendship was behind his business success, rose six positions to become Russia's 17th richest man.

Timchenko, co-founder of one of the world's largest crude oil traders, Gunvor, expanded in the gas sector to become the biggest shareholder in non-state gas producer Novatek NOT.MM. He has also just bought Murmansk Commercial Sea Port.

Analysts and opposition media have been closely tracking the rise of the Rotenbergs, Kovalchuk, Timchenko and Shamalov, who all keep low public profiles.

Real estate tycoon Irina Baturina, wife of Moscow's former mayor Yuri Luzhkov who lost his job after a public confrontation with President Dmitry Medvedev, was one of the biggest losers on the list dropping 47 positions to 94th place.

The dismissal of the veteran mayor who presided over Moscow's opaque real estate market also affected owners and shareholders of several construction firms with business interests in Moscow such as PIK (PIKK.MM) and LSR (LSRG.MM). (For a FACTBOX on Finans magazine list click [ID:LDE71C0B4] (Editing by Mark Heinrich)

Record number of Russian billionaireshttp://www.ft.com/cms/s/0/01862e52-3793-11e0-b91a-00144feabdc0.html#axzz1Duh0I2rv

By Charles Clover in Moscow and Neil Buckley in London

Published: February 14 2011 06:08 | Last updated: February 14 2011 06:08

Good news for art auctioneers, yacht brokers and Kensington estate agents: Russia’s oligarchs are bouncing back – and there are more of them than ever.

Russia boasted 114 dollar billionaires at the end of last year, according to an annual ranking of the country’s richest 500 published on Monday by Finans magazine.

The new record – the previous peak was in 2007, when there were 101 billionaires – represents a remarkable comeback for a breed that seemed endangered when Russia’s stock market hit rock bottom in February 2009. But the recovery is not entirely complete. The top 10 Russians in 2010 were together worth $182bn – up 30 per cent from $139bn in 2009, but still below 2007’s peak of $221bn.

Their resurgence is explained partly by a 20 per cent increase in the Russian stock market last year. It also reflects strong growth in Chinese demand for raw materials – still the root of the wealth of Russia’s richest.

The top of the list is dominated by Russia’s “steel kings” – owners, or sometimes ex-owners, of sprawling metals plants. Number one, as last year, is Vladimir Lisin, low-profile chairman of the board of NLMK Steel, based in Novolipetsk, with an estimated worth of $28.3bn.

Second is Mikhail Prokhorov, who sold his shares in Norilsk Nickel at the top of the market in spring 2008 – and thus was the only oligarch with any cash to spare when the markets collapsed.

Entering the top three is Alisher Usmanov, majority owner of Metalloinvest, another metals company, and a shareholder in London’s Arsenal Football Club.

Oleg Deripaska, head of aluminium company Rusal, which floated on the Hong Kong stock exchange last year, is fourth, with an estimated fortune of $19bn. That is a striking revival for an oligarch who entered the crisis particularly heavily leveraged.

Roman Abramovich, the Chelsea FC owner who sold his Sibneft oil company in 2005 but now has big steel holdings, was in fifth place – the first time Russia’s one-time richest man has been outside Finans’ top three since its rankings began in 2004.

Russia actually lost more billionaires than any other country during the financial crisis; the total, according to Finans, dropped to 49 at the end of 2008, before rising to 77 in 2009. This was mainly because of widespread use of shares as collateral for loans, which multiplied losses when the market soured.

The Finans list records one astonishing fall from grace: Elena Baturina, wife of former Moscow mayor Yuri Luzhkov, who was sacked from his post in September, fell farther than anyone – 47 places, to 94, with her fortune halved to $1.1bn.

Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

February 13, 2011

Russian Village Is Angry, but Not With Bomberhttp://www.nytimes.com/2011/02/14/world/europe/14russia.html

By ANDREW E. KRAMER

ALI-YURT, Russia — Residents of this run-down little settlement in the Caucasus Mountains, in the south of Russia, speak only kindly about the Yevloyevs, a tightknit family of six who lived in a one-story, red-brick home at the edge of the village.

The eldest son, Magomed, 20, did not smoke, helped out with the cows and always greeted adults respectfully. His sister Fatima, 22, was remembered as a good student, bringing home report cards of fives — the equivalent of straight A’s. Neighbors called the younger brother, Akhmed, 16, a “good boy.”

The villagers offered these opinions knowing full well what the authorities say of the three siblings: that they built a bomb, which Magomed took to Moscow and detonated in the international arrivals hall of the capital’s busiest airport last month, killing himself and 36 other people.

“I will never say one thing bad about that family,” Alik Ganizho, a neighbor, said in an interview on the muddy sidewalk of Proletarian Lane, a few doors down from the Yevloyevs’ home.

In this village in the restive region of Ingushetia, anger turns instead to the Russian security services: people are still seething over a violent raid four years ago that spawned allegations of human rights abuses by the military, which went nowhere in the Russian courts.

Nobody answered the door on a visit to the family’s home last week; melting snow dripped languidly from the roof, and white lace curtains were drawn over the windows.

The Yevloyevs’ father, Mukhazhir, now lives there alone. Neighbors have been bringing him hot meals, villagers say.

Another daughter, Aishat, 17, fell ill after the suicide bombing. Her mother, Miriam, is now staying with her in a hospital.

What motivated Magomed Yevloyev remains a mystery, and rights groups that documented what they said were abuses in Ali-Yurt emphasize that what happened here does not in any way justify the bombing in Moscow.

Mr. Yevloyev’s personal problems may have played a role. He had recently divorced, and last summer police officers killed his brother-in-law, Fatima’s husband, a suspected insurgent. Young marriages are common in Ingushetia, about 1,000 miles south of Moscow.

Alienated villages like this one pose a tremendous challenge for the Kremlin. A separatist insurgency has raged across the North Caucasus since the Soviet collapse nearly two decades ago, and the Kremlin has swung between crackdowns and efforts to improve economic conditions in this impoverished region.

Meanwhile, what began as a secular independence movement in one region, Chechnya, has metastasized into a loosely organized Islamic rebellion throughout the seven predominantly Muslim regions of the North Caucasus.

Under Vladimir V. Putin, the prime minister and former president, the government has often succeeded in bottling up the rebellion. It has continued, but Russians were generally able to ignore it because it had little if any impact on the rest of the country.

Over the last two years, though, insurgents have once again vowed to take their fight to the country’s major cities. In 2009, they blew up an express train between Moscow and St. Petersburg. In 2010, two suicide bombers attacked the Moscow subway system. Then, on Jan. 24, the authorities say, Mr. Yevloyev paid his deadly visit to the unsecured arrivals hall at Domodedovo Airport in Moscow.

The Russian police say they found traces of explosives on the hands of Akhmed and Fatima back in Ali-Yurt, suggesting they aided their brother in building the bomb; they were arrested on charges of abetting terrorism.

But government efforts to shame the family, including public criticism of the parents, for failing to alert the authorities to the intentions of their children, if they knew, seemed to have had little effect in Ali-Yurt.

The village is a picture of rural poverty. In backyards, laundry flaps in the freezing wind. Cows meander in deserted, snowy streets. The village has two mosques and an abandoned Soviet-era factory, adorned with a faded mural announcing “Glory to Labor.”

Ingushetia’s unemployment rate is 51 percent, the highest of any region in Russia.

From behind locked doors, residents watch a few cars skid and bump over the potholes. Of the half dozen or so willing to speak with a foreign journalist, most said one thing: they are angry, not with the Yevloyevs, but with Russian security forces.

“They broke into our homes, they beat us with their fists, they beat our women, and they beat an old man,” said one neighbor, who asked that he be identified only by his first name, Omar. “People complained to the police, of course, but it was like talking to a wall.”

On a July night in 2007, still-unidentified gunmen fired at a government building from a nearby forest, killing one soldier. Soldiers then entered the village and indiscriminately beat at least 30 people, including a pregnant woman and an 83-year-old man, according to a report by the Memorial human rights group.

“In all documented cases, the forces behaved in a standard way: They broke into the home, without introduction, fired into the air, swore and beat people without reason,” the report said.

Still, the Russian courts rejected efforts to compel prosecutors to open a criminal case against the military commanders who ordered the raid.

Memorial lawyers are preparing an appeal to the European Court for Human Rights, in Strasbourg, France. That legal process could take years.

“The events in Ali-Yurt could have driven some young men into the underground,” said Tamerlan Akiyev, the director of Memorial’s office in Ingushetia. He added, though, that members of the Yevloyev family were not among the victims of the raid.

PRESS DIGEST - Russia - Feb 14http://af.reuters.com/article/metalsNews/idAFLDE71D02R20110214

Mon Feb 14, 2011 7:57am GMT

MOSCOW Feb 14 (Reuters) - The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- Russia's state bank VTB (VTBR.MM) (VTBRq.L) is thought to be pricing its secondary public share offer at $6.25 per global depositary receipt (GDR), though officially it will be announced on Monday, the daily reports.

- Russia's state utility Inter RAO is planning to invest up to $500 million in Middle Eastern economies, the daily says.

VEDOMOSTI

www.vedomosti.ru

- VTB's support for the government during the global financial crisis has given the budget more than 45 billion roubles ($1.54 billion), the daily says in connection with the sale of a 10 percent stake in the bank.

- The former CEO of Uralkali and miner Norilsk Nickel (GMKN.MM), Denis Morozov, could be appointed by the government to represent Russia at the European Bank of Reconstruction and Development (EBRD), the daily says.

ROSSISKAYA GAZETA

www.rg.ru

- Russia could allow individuals to pan gold dust and possibly sell what they find, the daily reports, adding that the new bill will be passed by May or June.

IZVESTIA

www.izvestia.ru

- Russia is introducing drug testing in secondary schools from next year as part of a nationwide federal strategy to crack down on drug use in the world's top heroin consumer.

- Several thousand residents in the Krasnodar and Volgograd regions in Russia's south had an electricity blackout over the weekend after strong winds hit the region.

NEZAVISIMAYA GAZETA

www.ng.ru

- Russians are eagerly awaiting tax duties on foreign cars to fall to 25 percent from the current 30 percent from April, after Russia joints the World Trade Organisation.

- Russian gas export monopoly Gazprom (GAZP.MM) is forecasting a price rise on natural gas as well as an increase in export to its European consumers.

Russian Press at a Glance, Monday, February 14, 2011http://en.rian.ru/papers/20110214/162590846.html

08:51 14/02/2011

POLITICS

A "democratic" Egypt is the key to peace in the Middle East, President Dmitry Medvedev said. Egyptian President Hosni Mubarak ceded power to the military last week, toppled by a revolt after 30 years in charge of the Arab world's most populous state.

(The Moscow Times, Vedomosti, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Izvestia)

Tensions between Moscow and Tokyo over the disputed Kuril Islands, called the Northern Territories in Japan, continue to escalate

(Vedomosti, Nezavisimaya Gazeta, Rossiiskaya Gazeta)

The first authorized Day of Wrath rally was held in Moscow on Saturday. The event received permission from Moscow authorities after organizers agreed to an alternative venue. Some participants, however, were detained while trying to march to the presidential administration

(The Moscow Times, Kommersant, Nezavisimaya Gazeta)

ECONOMY

Sergei Mironov, speaker of the upper chamber of the Russian parliament, proposed to nationalize poorly managed companies, starting with Raspadskaya, Russia’s largest coalmine ,hit by a major blast last year, and Domodedovo, the country’s largest airport where a suicide bomber blew himself up last month

(Vedomosti, Nezavisimaya Gazeta)

The finance ministry plans to spend $113 million to educate Russians about economics in an attempt to protect their savings and encourage investment

(Vedomosti)

VEHICLES & ENGINEERING

Russia’s accession to the WTO may bring down duties on new imported cars. The customs duties may return to pre-crisis level starting from 2012 and drop to 15% by 2019

(Vedomosti, Nezavisimaya Gazeta, Izvestia)

POWER GENERATION

RusHydro and France's Alstom signed a deal Friday to build a 500 million euro ($677 million) turbine plant in the republic of Bashkortostan. The two companies will finalize the joint venture before the end of February, the companies' chief executives said

(The Moscow Times)

TELECOMS & IT

Nokia and Microsoft will develop new software for smartphones in an attempt to boost sales

(Vedomosti, Izvestia)

For the first time since VimpelCom lost its status of Russia’s second largest mobile operator, the company announced a major dismissal. The responsibility was placed on Dmitry Pleskonos, who lost his post of executive vice president in charge of mass market development

(Vedomosti)

Russia's most popular social network, VKontakte, had to restrict registration procedures in an attempt to curb spamming

(Vedomosti)

BANKING & FINANCE

Russia’s central bank may bar from banking business those found guilty of premeditated bankruptcy

(Kommersant, Vedomosti)

The 10% stake in Russia's second largest bank VTB was sold by the government at market price. Vedomosti and Kommersant say citing sources the stake was sold at $3.268 billion, though the official announcement is expected later on Monday

 (Vedomosti, Kommersant, Rossiiskaya Gazeta)

DEFENCE

Russia will cut funding of its federal target program to hire contract soldiers and sergeants by one third

(Kommersant)

SOCIETY

The latest surprise visit to a transport facility by President Dmitry Medvedev saw him popping up in Vnukovo Airport on Friday to discover that local police are understaffed, but passengers can not slip in without going through metal detectors.

(The Moscow Times, Vedomosti, Nezavisimaya Gazeta)

Russian ministries and departments were instructed to deal with misuse of flashing lights, which “provoke negative reaction from the population” amid several high-profile accidents involving cars with sirens

(Kommersant)

Russia should not adopt the defeatist stance on multiculturalism voiced recently by top European leaders, even despite a surge in ethnic tensions, President Dmitry Medvedev said

(The Moscow Times, Vedomosti, Nezavisimaya Gazeta, Rossiiskaya Gazeta)

Luke Harding, a British journalist expelled from Russia earlier this month, was allowed to return to the country on Sunday, Gazeta.ru reported, citing the head of the Foreign Press Association of Moscow, Adib Al Sayed. Vedomosti named Harding ‘person of the week.’

(The Moscow Times, Vedomosti, Kommersant)

Russian cosmonauts imitate landing on Marshttp://rt.com/news/mars-500-landing-imitation/print/

Published: 14 February, 2011, 07:49Edited: 14 February, 2011, 08:48

Almost nine months of isolation, training and preparation have finally paid off, as cosmonauts prepare to set foot on the Red Planet for the first time.

Mars 500 may be a simulated mission, with the planet's surface modeled in the Moscow region, but the 'space walk' will be monitored by Russia's real mission control.

Two of the six cosmonauts will take samples of Martian soil and rocks, as well as plant a flag and broadcast greetings in Russian and English.

This will be the first of three mock space walks performed by the crew.

The international team landed two days ago, and will take off again later in the month.

The 500-day experiment, which started last June, monitors the physical and psychological demands of deep space travel.

Two die after trying to ride roof of Moscow metro trainhttp://en.rian.ru/russia/20110214/162590940.html

09:01 14/02/2011

Two students died overnight in Moscow after they attempted to ride on the roof of a metro train, a police source said.

One of the bodies was found on the roof with “multiple fractures” while the other was found on the platform a short distance away, the source said.

They are believed to have died after being slammed into the roof of the tunnel.

Both the dead were teenage tourism students at a Moscow university. An investigation is underway.

MOSCOW, February 14 (RIA Novosti)

Al Jazeera English vs. Russia Todayhttp://www.globalpost.com/dispatch/egypt/110210/russia-today-al-jazeera-english

Two takes on Egypt, but only one shown on American television.

By Miriam Elder - GlobalPost Published: February 13, 2011 08:24 ET in Europe

MOSCOW, Russia — Anyone getting their information about Egypt from Russia Today would have learned that the United States orchestrated the uprising, the Muslim Brotherhood was formed by MI6 and opposition leader Mohamed El Baradei was a Free Mason.

Five years since its launch, the English-language channel has become home to fringe ideas and rabid anti-American rhetoric. At the same time, Qatar-based Al Jazeera English has proved itself indispensable, in a time of decreasing television budgets, to the coverage of global stories such as the Egypt uprising — bringing non-stop live coverage as the events unfolded and holding interviews with those most relevant to the story.

Another difference between the two? Russia Today is widely carried by major U.S. cable providers such as TimeWarner. Al Jazeera is not.

Al Jazeera English launched to suspicious fanfare in November 2006. Former U.S. Secretary of Defense Donald Rumsfeld had famously called the coverage of the Iraq War provided by its Arabic-language sister channel “vicious, inaccurate and inexcusable.” Former U.S. President George W. Bush reportedly mused about bombing its Doha headquarters (a report the White House denied).

Yet in four years it has grown into a respected news channel, watched by policymakers as it provides — by virtue of its budget, location and focus — incomparable breadth of coverage of the Middle East. What the 1991 Persian Gulf War was for CNN, so the ongoing crisis in Egypt may well be for Al Jazeera English.

“There’s been an incredible amount of interest in Al Jazeera English from around the world, and the U.S. in particular,” said Al Jazeera spokesman Osama Saeed, noting that nearly half of the channel’s website visits have come from the United States. As the channel began live-streaming the events on Tahrir Square and around Egypt, site traffic skyrocketed by 2,500 percent. The channel has launched a campaign, including an online petition and taking out full-page ads in major newspapers, to get on the air in the United States.

Meanwhile, U.S. viewers can tune in to Russia Today, also known as RT.

They would have seen a report called “Color Me Revolution” on Jan. 28, four days after Egyptian protesters first took to the street demanding a change in government. Rather than delving into Egyptians’ complaints about their government — or the state’s reaction — RT instead compared the uprising to failed uprisings in post-Soviet states such as Georgia and Ukraine. “Ultimately all aspirations came to nothing,” the reporter says. “Those false dawns and bitter lessons are far from the minds of those clamoring for change in North Africa,” he adds, before cutting to commentary from the editor of a Venezuelan state-run newspaper.

Two days later, on Jan. 30, viewers would have seen another report looking into the “real” reasons for the uprising. An anchor asks her guest, a blogger beamed in from Winnipeg, Canada: “What’s America’s real agenda here?” Henry Makow answers: “I think El Baradei is a Free Mason and the Zionists are Free Masons and the people who run the United States, the Illuminati, are Free Masons and this is about consolidating the Masonic new world order.” The anchor replies: “Alright, many thanks for those thoughts on what we’re seeing in Egypt at the moment.”

RT’s management admits mistakes were made, but stands by their coverage. The Jan. 30 interview was not re-aired and Makow has been banned from the channel. “Much to our regret, at the end of his interview, he started speaking total gibberish,” said Margarita Simonyan, RT’s editor-in-chief.

Yet often, far-out guests are given free rein to “speak total gibberish,” unquestioned by a corps of reporters that largely comprises recent journalism school graduates with little experience. (A recent favorite has been Colleen Thomas, an American woman who claims to be in on secret alien doomsday plans.)

“We believe our coverage of events in Egypt was quite successful,” said Simonyan. “While mainstream media found it possible to label the protesters 'pro-democracy,' even though what most of Mubarak's opponents were looking for on Cairo's streets was far from democracy, we were trying to cover the developments from a wider angle.”

Even current and former employees, who declined to speak ill on the record about a former employer, don’t necessarily agree.

“I liked RT when I first started working there,” said a former employee. “They were exposing stories on human rights violations, political activists under siege — stuff the U.S. media never touched on.” But the reporter soon grew disenchanted, saying editors often “added extreme opinion into the stories” without the reporter’s approval. “They over-exaggerate details and to a certain degree make up details — details that had no importance to daily news.”

Some reporters at the channel wondered why RT, normally so quick to criticize the United States, was relatively muted in its coverage of the BP oil spill last summer. One reporter wondered if BP were about to make a deal with Russia. “I thought he was being paranoid,” the former reporter said. “And that’s what happened.” In January, Russian state-run oil giant Rosneft announced a “strategic global alliance” with BP, including a share swap and the potential for Arctic exploration.

Russia Today is 100 percent owned by the Russian government, which maintains a stranglehold over television news at home, using it more as a tool of propaganda than information.

“It’s not really a news channel, even though it uses all the visual mechanisms of one,” said another former employee, one of several who left RT to join Al Jazeera English. “Its whole reason to be is very different.”

“It’s a form of PR, an extension of the government — but it’s done nicely and lightly and in a very entertaining way,” the former employee said.

And it does work. Citing Nielsen ratings, Simonyan says RT’s daily viewership outnumbers that of other English-language international channels in the United States, such as Euronews and France 24. It holds strong numbers in places like Germany and South Africa, as well as across central Europe and Asia. It has become particularly successful online, with its channel reaching 250 million views on YouTube (30 million views ahead, Simonyan notes, of Al Jazeera English).

“An awful lot of it is to do with filling a niche which hasn’t been filled,” said the former employee now at Al Jazeera. “I think they realize deep down they can’t keep up directly with the more broad networks and as a result what they’re trying to do is plug a gap in the market so what often results is a ludicrous attempt to gain as many viewers as possible.”

“It does fuel the conspiracy theorists,” the former employee said. “It’s capitalizing on curiosity more than anything.”

Current and former employees say they rarely — if ever — felt direct pressure to present a certain point of view or carry a certain party line. And the employee who used to work at RT and now works at Al Jazeera says that was the case at both channels. The

difference? “Al Jazeera is all about scrutinizing the status quo, RT seems more of a social experiment. You felt like you were part of an organization that didn’t quite understand what it was doing.”

Simonyan would not agree. “I would say we've achieved much more than we could have expected,” she said, when asked to look back at the past five years. The channel’s viewership is growing, as is its reach.

As for Al Jazeera, several reporters at the channel said they felt like they were on the cusp of something big, namely, being taken seriously in the United States.

“We’re even being watched in the White House,” the channel’s spokesman said.

The rake of multiculturalismhttp://rt.com/politics/press/nezavisimaya/ethnic-multiculturalism-medvedev-ufa/en/print/

Published: 14 February, 2011, 06:37Edited: 14 February, 2011, 07:28

When resolving inter-ethnic problems, Europe has no authority over Russia Aleksandra Samarina

Late last week, the State Council Presidium convened in Ufa to discuss problems related to inter-ethnic communication in the country. As expected, President Dmitry Medvedev used this opportunity to provide a detailed assessment of the sensational statements made earlier by some European leaders about the failure of “passive tolerance” and “multiculturalism” policies. Medvedev recognized this conclusion to be unsuitable for Russia. NG’s experts have varying assessments of the head of state’s speech and the measures, proposed by the State Council to resolve the problem.   

British Prime Minister David Cameron had made his speech before the start of the conference in Munich, and it immediately became a sensation. “The policy of multiculturalism,” complained the head of the British government, “has failed…we need a lot less of the passive tolerance of recent years and much more active, muscular liberalism”.

Medvedev decided to respond to the Europeans at an event, most suitable for such occasion. On the presidential agenda was the State Council meeting in Ufa, focusing on the struggle against nationalism. The gathered governors and ministers suggested various ways to resolve the problem. All these measures were fairly common and reduced to the simple models of the Soviet era: to create another state body, another person in charge, to write a request for more funds for another federal program.

In the end, the president did voice the decision to create a post of another deputy prime minister, responsible for inter-ethnic issues. And at the same time, during the discussion, he called the ideas of Chancellor Angela Merkel and Prime Minster David Cameron “a new fashionable trend”. The head of state cited Bashkortostan – a republic, “where the country’s major ethnic groups are equally represented” – as an example to show why these ideas are unsuitable for Russia.  

“Today, there are many new fashionable trends in the discussion of the ethnic-communication issues,” said Medvedev. “In Europe, it became fashionable to talk about a failure of the policy of multiculturalism. The argument is that this is not the policy that is aimed at a harmonious development of various cultures in one country, with a leading ethnicity; doing that is senseless; it’s better for all other cultures to develop strictly within the traditions and values of the leading ethnicity”. For Russia, argues Medvedev, “this would be a significant simplification, despite the colossal role of the Russian culture”. 

At the same time, the president reminded heads of the national republics about the importance of “a balanced personnel policy”: “It’s no secret that during the formation of regulatory bodies in the regions, there are unspoken limits for members of certain nationalities. This is an absolutely immoral situation”. The president instructed the government and the presidential envoys to analyze the problem and issue proposals on ways to eliminate such distortions, “even if it already has a historic character”. 

The president has some problems with the media which, according to him, incorrectly covers the state’s fight against terrorism: “It’s reported that ‘today, such and such emir from such and such organization was arrested’. But, what emir? What organization? We all perfectly understand that these are not faith advocates, but thugs and criminals. They don’t have organizations, but only dirty, smelly caves, where they hide; and they are no emirs, but simply monsters, who kill children and women. But no, they keep repeating: they are such and such.”

“There are some laws of public propaganda that, in the end, are again starting to work against us on the subconscious level,” underscored the head of state. 

The media was also criticized by the Regional Development Minister, Viktor Basargin, who set forth the idea of special federal programs during the meeting. He argues that, “today, the phrases ‘Chechen terrorism’ and ‘Russian fascism’ are equally unacceptable”. Meanwhile, Basargin did not explain what the press should use to replace the information, extremely important for the citizens, about the terrorists’ nationality. Instead, the official suggested developing a program to fight nationalism. However, it turns out that until the Federal Council meeting, the minister, who is in many ways responsible for handling inter-ethnic conflicts in the regions, was sure that everything is just fine in the country? And during the meeting with the president, he suddenly opened his eyes?      

Director of the Institute of Global Studies, Mikhail Delyagin, considers the problem of these clashes to be a common one for all countries that come to face it. However, notes the expert, the situation in Russia differs from that in the West: “The West has overestimated its integration abilities, and mainly – the desire for integration. They did not understand the cultural differences between representatives of their ethnicities and the vast masses of refugees, whom they welcomed with the best intentions. Thus, their integration policy was absolutely meaningless and without teeth”.

In Russia, indicates NG’s interlocutor, it is a completely different situation: “Our leadership is not even trying to work on inter-ethnic policies. It came to the point that the Ministry for Nationalities has been destroyed. In other words, this policy, as such, does not exist here”….When we see that the Ministry of Regional Development is urging to abandon such notions as ‘Chechen terrorism’ and ‘Russian fascism’ – it is one of the many examples of decay of Russian statehood,” argues NG’s interlocutor.      

The trouble, notes the expert, is the fact that the Russian authorities “have, in recent years, been conducting the policy of suppression of Russia’s indigenous population and promotion of various diasporas…..And the fact that the Tajik diaspora is not hated as much as some of the others, and that it is regarded with sympathy and compassion, is not the result of the state policy, but simply by the quality of the Tajik people, the Tajik culture”.

Suppression of the Russian peoples and Russians in general, and promotion of various diasporas, has been done unconsciously, says Delyagin, “according to the principle of ‘it’s business, nothing personal’….The corrupted part of the government, which has basically turned a significant element of Russian statehood into corruption structures, lives for the bribes. Diasporas are more eager to issue bribes than the indigenous population, and do so in a more clever way. Meanwhile, many representatives of the diasporas do not insist on their rights before the officials, because some believe that they will take these rights themselves, if not with money, then with a knife and a traumatic gun, and others understand that they don’t have any rights, because they are foreigners here”. 

Therefore, says Delyagin, “for a corrupted official, the indigenous population is an absolutely unacceptable social group”: “And it is in these conditions that the talks on multiculturalism begin. Tolerance, in today’s Russian language, means that if you are butchered by representatives of the diasporas, you don’t have the right to be unhappy, because otherwise, you are a Russian fascist, and must be jailed. I hope that Medvedev understands tolerance, not as it is defined in textbooks”.  

Director of the Institute of Anthropology and Ethnography of RAS, Valery Tishkov, disagrees with his colleague, and shares the presidential assessment: “We have our own policy of multiculturalism, which is called multi-ethnic and has existed since the Soviet times. Abandoning it, as some of our extreme nationalists-chauvinists would like, will be impossible as Russia is built on a multi-ethnic and multi-religious foundation. I prefer speaking about the multi-ethnic Russian people as a civil nation… The fact that during

the meeting of the Federal Council Presidium in Ufa President Medvedev had defended our own experience – is correct. Today, some of our politicians are showing an unfounded enthusiasm: ‘there you go, we have long been saying that it’s time to end with the republics’… However, I will acknowledge that, so far, nothing has collapsed in the West. Tolerance continues to be on the agenda both here and there”.

Member of the Science Council of the Moscow Carnegie Center, Aleksey Malashenko, has noted some pre-election rhetoric towards the end of the president’s speech: “The statements made by Medvedev regarding organizations and ‘smelly caves’ – is a copy of Vladimir Putin’s famous phrase about ‘wiping them out in toilets’”: “I believe that such stories need to be covered in a more balanced manner. Suggest instead of criticize, because otherwise, the question arises: 'What are you guys hiding? What are you really saying?’”   

Once the pre-election campaign and the psychological breakdowns related to the campaign are set aside, sooner or later the leadership will need to develop an inter-ethnic program, says Malashenko: “That, what was done here in this regard in the 1990s, but by far has not been exhausted. The ideas of introducing the term ‘Russians’ with the emphasis on citizenship continue to be relevant today. Changing concrete actions and decisions to loud rhetoric will lead to us seeing another explosion as a response to the ‘smelly organizations’”.

Moscow’s armada http://www.khaleejtimes.com/DisplayArticleNew.asp?col=&section=opinion&xfile=data/opinion/2011/February/opinion_February59.xml

Owen Matthews

13 February 2011 While much of Europe slashes spending to reduce deficits, surging oil prices are allowing Russia to splurge. The Kremlin’s choice of stimulus package is a bit of a throwback, though — among other things, a new fleet of warships to challenge China.Last week Prime Minister Vladimir Putin announced a whopping $678 billion package of new defence spending for the next decade, with a quarter of the money going to revamp Russia’s Pacific fleet. On the Kremlin’s shopping list: 20 new ships, including a new class of attack submarines, plus new missile subs, frigates, and an aircraft carrier.

Ostensibly, the point of all this spending is to show China that Russia’s still in on the great power game in the Pacific. But the Kremlin also needs to funnel money into the country’s sclerotic arms industry to keep it alive. Russia’s military-industrial complex employs close to 3 million people and accounts for 20 per cent of all manufacturing jobs. And though Russia is still the second-largest conventional arms exporter after the US, its defence industries are in serious trouble. Last year Russia sold about $10 billion worth of

arms — mostly bargain-basement conventional hardware — to foreign customers. But, says analyst Alexander Golts, as many as 25 per cent of Russia’s defence enterprises are facing bankruptcy and most are an inefficient “hangover from the Soviet-era military.” Even Russia’s own Defence Ministry has gone shopping abroad for the first time since World War II for equipment that Russia is incapable of making — for instance, two 20,000-ton Mistral helicopter carriers that the Kremlin has ordered from France for €1 billion apiece.

Russia’s army is in no better shape. Last month the Moscow-based Centre of Analysis of Strategies and Technologies published a report estimating that though the Russian Army, in theory, fields 1.1 million men, only two brigades, or 9,000 men, are actually deployable.  Throwing money at the problem may not make the Russian military a modern fighting force, but it will keep millions of Russian soldiers, sailors, and arms manufacturers employed. Most important, it will make many bureaucrats and defence contractors very rich. President Dmitry Medvedev himself estimated that in the last year Russia’s bureaucrats stole a trillion rubles, or $33 billion, from the state budget. The Kremlin even confirmed that it splurged on a new super-yacht for Medvedev — which, according to reports, cost a cool $35 million, even secondhand. Does that count toward Russian naval power?

© Newsweek

Russia: The Non-Reluctant Arctic Powerhttp://www.sldinfo.com/?p=14936

Russia’s Recent Arctic Moves

By Dr. Richard Weitz

02/12/2011 – On January 14, the Russian newspaper Rossiiskaya Gazeta published an interview with Nikolai Patrushev, the secretary of the Russian Security Council, on what he called an issue of “an enormous strategic and economic significance.” Patrushev stated that the Council had directed that the government approve a long-term program to extract the mineral resources, especially oil and natural gas, located on Russia’s Arctic shelf by the end of 2011.

That same day, two of the world’s giant oil companies, Russia’s Rosneft and BP, announced an unprecedented partnership that will see them exchange shares and expand their joint ventures, including launching a new Arctic oil drilling project. Both companies

bring important assets to their new alliance, but the deal has alarmed foreign governments and environments due to its potential commercial, security, and ecological implications.

The deal also raises interesting questions related to the Russian government’s economic modernization program. In terms of Arctic and energy security issues, the new partnership could mark the commencement of a major Russian government drive to develop the energy resources that fall within the boundaries of Moscow’s territorial claims in the Arctic.

In recent years, the Russian government has set forth ambitious territorial claims in the Arctic reinforced through recent scientific research expeditions and military measures. Despite losing considerable territory with the collapse of the Soviet Union, the Russian Federation still has the world’s longest Arctic border at over 17,500 kilometers, which amount to one-third of the entire length of Russia’s national frontiers. 

The Russian Federation also possesses several Arctic archipelagoes, including Franz Josef Land and Wrangel Island. Furthermore, the Russian government claims its continental shelf extends up to the North Pole—and is taking steps to strengthen and enforce this claim in the face of opposition from Canada, Denmark, Norway, and the United States. For example, the Russian government believes that the underwater Lomonosov Ridge, which lies on the North Pole’s seabed, along with the Mendeleev Ridge and Alpha Ridge, are part of Russia’s continental shelf.

As with the case with Canada and the Northwest Passage, Russia also seeks to exercise exclusive control over a burgeoning shipping lane of the Northern Sea Route (NSR). The NSR is a system of sea-lanes from the straits between the Barents and Kara seas (south of Russia’s Novaya Zemlya nuclear test site) to the Bering Strait, a distance of approximately 5,000 kilometers.

This route connects Asia and Europe, and when navigable, saves transportation time and costs as compared with using the Suez Canal. Russia’s Arctic policy defines the NSR as a core national interest. (The U.S. government considers the NSR as an international shipping route.)

In an effort to bolster its claims of ownership over the NSR, the Russian Ministry of Transport announced on March 18, 2010, that it is drafting legislation to define the Route’s precise dimensions and to create a federal agency that would regulate and collect fees from foreign vessels using the NSR.

During the Cold War, the Arctic region was a place of competition between the United States and the Soviet Union. Both operated nuclear vessels, long-range bombers, and tactical aircraft in the region. Following the USSR’s collapse in 1991, Russian government interest in the Arctic decreased considerably.

During the 1990s, Moscow’s concerns were maintaining the territorial integrity of the Russian Federation in the face of secessionist threats in the North Caucasus and

elsewhere. During the 1990s, Russian military overflights and naval patrols in the Arctic declined significantly as the Russian military faced drastic funding and fuel shortages. The Russian army withdrew from many Arctic bases. The inward concentration of the Russian government’s attention and resources hampered the development of a comprehensive policy toward the Arctic. Furthermore, the economic problems that Russia confronted in the 1990s also made it difficult for Russians to conceive of resource-intensive plans to exploit the Arctic region’s mineral wealth.

But the rise in world oil and gas prices that began in the late 1990s simultaneously provided the Russian government with increased revenue and renewed Russian interest in developing the increasing valuable energy resources in the Arctic region. The renewed attention was evident on September 18, 2008, when the Russian government issued a “Framework for the Arctic to the Year 2020 and Subsequent Perspectives.”

More recently, the “Russian National Security Strategy for 2020” illustrates the growing importance that Russian strategists attribute to exerting control over the maritime domains around Russia, especially the resource-rich Arctic Ocean, Barents Seas, and Caspian Sea.

After a series of incidents in the late 1990s, in which several foreign research ships allegedly trespassed into Russian territorial waters, the Russian government began taking steps to secure its northern border. In recent years, Russia has taken more concrete measures than any other country to assert its Arctic claims. Russian warships and warplanes have increased their military activities in the region. The Russian government also began sending more scientific research expeditions to the Arctic.

In the past, Russia relied heavily on military personnel and equipment in its Arctic expeditions, but now is using primarily civilian technologies since these can be more readily detailed to the United Nations and other international bodies to justify Russia’s Arctic claims. Russia’s earlier submission to the UN regarding its territorial claim to the Lomonosov Ridge was rejected due to a lack of supporting evidence, which Moscow declined to provide for fear of revealing military secrets.

The 2007 Arktika expedition represented a dramatic, high-profile assertion of Russian interest in the region. In August, the research expedition climaxed when ship Akademik Fedorov and icebreaker Rossiya sent two specially designed submersible vessels, Mir-1 and Mir-2, 4,300 meters deep to the North Pole seabed. After collecting soil samples and further mapping the Lomonsov Ridge, the expedition planted a Russian flag made of titanium on its floor. Reacting to foreign criticism of the flag ceremony, Foreign Minister Sergey Lavrov said, “The aim of this expedition is not to stake Russia’s claim but to show that our shelf reaches to the North Pole.

Russian government claims and actions regarding the Arctic stem not only from economic and domestic political considerations, but also from offensive and defensive strategic considerations that encourage a greater Russian military presence in the Arctic.

The Eurasian landmass of Russia is effectively “walled in” by Siberia and the Pacific to the east, Asia and the Middle East to the south, and Europe to the west.

The Arctic has for centuries served as the “fourth wall,” restricting Russian maritime activity to areas largely controlled by other powers. As the Arctic climate changes to open more waters to navigation and exploration, the Russian Federation can extend the range of its military operations. Russia’s Northern Fleet, the largest element of the Russian Navy, is based in the port city Severomorsk on the Barents Sea.

Although the Northern Fleet maintains year-round access to the North and South Atlantic, its mobility could be strictly limited to the Barents Sea by a Western naval power in the event of unrestricted warfare. An ice-free Arctic would negate this advantage, but also present new strategic challenges to Russia.

The opening of the Arctic Ocean makes vulnerable Russia’s northern ports, particularly those in the Kola Peninsula that house the majority of Russia’s ballistic-missile submarine fleet. Furthermore, the opening of the NSR could serve as a maritime link between the Atlantic and Pacific Oceans through which warships could pass. At present, warships in the NSR are susceptible to structural damage from floating ice, weather conditions, and icing. These conditions will become less severe on a seasonal basis as climate change progresses.

Russia is partly able to address the issue of Arctic maritime conditions by maintaining a fleet of icebreakers. There are 18 icebreakers of various sizes in Russia’s military fleet. Seven of these are equipped with nuclear reactors, rather than conventional diesel engines, allowing them to break through ice twice as thick as can be breached by standard icebreakers.

The most capable Russian icebreakers are operated not by the Russian Navy, but by privately-owned mining giant Norilsk Nickel. Its icebreakers can penetrate ice up to 1.5 meters thick. But Russia needs to recapitulate its icebreaker fleet since all the existing ships except one are scheduled for decommissioning in the next decade. Russia’s economic troubles have delayed the construction of new third-generation icebreaking vessels.

Russia must acquire at least three new vessels of this type in the next several years in order to maintain adequate icebreaking capabilities. Russia must also expand its Coastal Border Guard to better accommodate increased commercial and military traffic.

In addition to Arctic regions, the Coastal Border Guard patrols the Baltic, Black, and Caspian Seas, as well as Russia’s Pacific coast. Changing Arctic conditions could double this area of responsibility. The National Security Strategy of the Russian Federation until 2020 includes provisions to strengthen and upgrade the Coastal Border Guard. In 2009, border guard units based on the Barents Sea began patrolling the NSR for the first time since the Soviet era.

Russia is also expanding its military presence in the Arctic region. The Russian Presidential Security Council has called for establishing an military force and several new bases in the Arctic, while the Federal Security Service (FSB) will use its coast guard ships to collect maritime intelligence in the region.

The Russian government is moving swiftly to expand its sea, ground, and air presence in the Arctic. Russia has resumed air patrols over the Arctic, and, in June 2008, the Russian Defense Ministry stated that it would increase submarine operations if Russian national interests in the Arctic were ever threatened.

In October 2010, Navy Commander Adm. Vladimir Vysotsky said that Russian naval ships and submarines had already conducted about a dozen military patrols in the Arctic during the first three quarters of that year. Vysotsky explained that, “In accordance with the Russian Armed Forces’ plan of strategic deterrence we take measures aimed to demonstrate military presence in the Arctic.”

Russia’s strategic ballistic-missile launching submarines use the North Pole region because the ice helps shield them from U.S. space satellites and other overhead sensors. In addition, launching a missile from the Arctic can reduce the flight time to U.S. targets. In July 2009, the Russian Navy boasted that it had succeeded in launching two long-range ballistic missiles from under the Arctic Ocean without the Pentagon detecting their preparations.

Supposedly Russian attack submarines prevented U.S. surveillance ships from learning of the arrival of two Russian strategic submarines before the missile launches. The state-run RIA Novosti news agency quoted a high-ranking Navy source as saying that the successful drill disproved skeptics in Russia and elsewhere that the Russian Navy had lost its combat effectiveness: “We slapped these skeptics in the face, proving that Russian submarines are not only capable of moving stealthily under ice, but can also break it to accomplish combat tasks.”

Nonetheless, for the past year or so, Russian officials have sought to downplay the prospects of military conflict in the Arctic region. In late 2010, the special representative of President Medvedev, Anton Vasilyev, stated that “Russia does not plan to create ‘special Arctic forces’ or take any steps that would lead to the militarization of the Arctic,” which contradicts provisions stated in Moscow’s security doctrine.”

In his year-in-review press conference, Foreign Minister Lavrov said that all Arctic border disputes could be settled through negotiations and that ” rumors that a war will break out over the resources in the North are a provocation.”  Last year, after 40 years of negotiations, Russia and Norway signed a deal to delimitate their maritime border. The two countries have been disputing the 175,000 square km area in the Barents Sea and Arctic Ocean since 1970. The disputed maritime border has resulted in both parties seizing fishing vessels in the area. President Medvedev and Prime Minister Jens Stoltenberg signed an agreement dividing the contested area into two equal parts. Meanwhile, while Russia still contests ownership of the Lomonosov Ridge with Canada,

both countries have agreed that the United Nations would be the final arbiter of who owns title to the Ridge.

National Economic Trends

Russian Growth May Accelerate to 6% as Oil Climbs, RenCap Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=awNZQkwXyufc

By Scott Rose

Feb. 14 (Bloomberg) -- Russia’s economy may expand next quarter at the quickest pace since 2008 as companies boost investment and higher oil prices help the government ramp up spending before national elections, Renaissance Capital said.

Gross domestic product may grow an annual 6 percent in the second quarter, the Moscow-based investment bank said today in a report. That would be the fastest expansion since the third quarter of 2008. Growth in the first three months of 2011 may be 4.3 percent, down from a previous forecast of 4.7 percent, RenCap said.

Russia’s economy expanded 4 percent last year, beating estimates from both economists and the government, after shrinking 7.8 percent a year earlier. Rising energy exports and increasing domestic sales by manufacturers including automaker OAO AvtoVAZ prompted companies to boost investment, helping counter a record heat wave that triggered crop losses and crimped consumer spending.

“We believe that the Finance Ministry will boost spending in a pre-election year and because the budget outlook for 2011 is not so gloomy,” RenCap economists led by Anton Nikitin wrote in the report, which was co-authored by Moscow’s New Economic School.

If oil prices average $90 a barrel, the ministry has a “good chance” of ending the year with a deficit of less than 2 percent, according to the report. Finance Minister Alexei Kudrin said on Feb. 2 that economic growth this year may exceed last year’s 4 percent rate.

The economy will probably grow slower in the first three months of 2011 than previously estimated as “dormant” consumption threatens to stall the recovery, RenCap said.

Consumer spending has dropped off as the inflation rate quickened at the fastest pace in 15 months in January and unemployment jumped in December to a seven-month high.

“Personal consumption is currently dormant,” the economists wrote. “We believe that unless policy makers stimulate consumption, the shrinking foreign trade sector contribution will bring down headline economic growth.”

To contact the reporter on this story: Scott Rose in London at [email protected].

To contact the editor responsible for this story: Willy Morris at [email protected].

Last Updated: February 14, 2011 02:00 EST

VTB 10% stake placement successful says Putinhttp://en.rian.ru/business/20110214/162591736.html

10:26 14/02/2011

Russia's second largest bank VTB has successfully completed a sell-off of 10% of its shares , kicking off the government's $59 billion privatization program, Prime Minister Vladimir Putin said on Monday.

The sale of the 10% stake at $6.25 per GDR, and 9.1468 kopecks per share raised over 95 billion rubles ($3.22 billion).

"Today I have signed a resolution on the completion of this deal. According to preliminary estimates of experts, the work was successful and brought good results," Putin told VTB head Andrei Kostin.

Kostin said the shares were twice oversubscribed, while the price of the placement was in line with market estimates.

NOVO-OGARYOVO, Russia, February 14 (RIA Novosti)

Putin decrees VTB bank stock privatization

http://www.itar-tass.com/eng/level2.html?NewsID=15950795&PageNum=0

14.02.2011, 09.55

NOVO-OGAREVO, February 14 (Itar-Tass) -- Russian Prime Minister Vladimir Putin signed a decree on privatization of the VTB bank stock. Putin has made a statement at a meeting with Vneshtorgbank Chairman Andrei Kostin on Monday.

“I signed a decree for the deal closed,” he said. “The number of bids exceeded twice the supply that allowed reaching the highest price, which corresponds to the current market price,” Kostin underlined.

Russia Raises $3.3 Billion in VTB Sale, Biggest in Four Yearshttp://www.businessweek.com/news/2011-02-14/russia-raises-3-3-billion-in-vtb-sale-biggest-in-four-years.html

February 14, 2011, 2:53 AM EST

By Denis Maternovsky

Feb. 14 (Bloomberg) -- Russia raised $3.3 billion selling a stake in VTB Group in the largest state asset sale since the bank’s initial public offering almost four years ago.

Prime Minister Vladimir Putin’s government sold 10 percent of the state-run bank to a group of investors for 95.7 billion rubles, VTB said in a regulatory filing today. The per-share price of 9.1468 kopeks is 33 percent less than the 13.6 kopeks the government got in May 2007, when it raised $8 billion in that year’s biggest IPO.

The sale is the first major transaction in the government’s three-year privatization plan in which it aims to raise at least 1 trillion rubles to help plug its budget gap and lessen the state’s role in the economy. Three non-state companies, Nord Gold NV, OAO Koks and ChelPipe, all pulled their London IPOs this month, citing market conditions.

“This move to attract investors clearly demonstrates confidence in our financial system as well as in our economic policies,” Putin told VTB Chief Financial Officer Andrei Kostin at a meeting near Moscow today.

The shares gained as much 3.3 percent to 9.76 kopeks at 10.49 a.m. in Moscow, valuing the company at 1.02 trillion rubles.

Neither the government nor VTB identified the buyers of the stake. Transactions involving global depositary receipts, at $6.25 each, are scheduled to be completed Feb. 17, while those for ordinary shares are due Feb. 21. Deutsche Bank AG, Merrill Lynch and VTB Capital managed the sale.

--Editor: Brad Cook, Torrey Clark.

To contact the reporter on this story: Denis Maternovsky in Moscow at [email protected]

To contact the editor responsible for this story: Gavin Serkin at [email protected]

Russia starts asset sale, gets $3.3 billion for VTBhttp://www.reuters.com/article/2011/02/14/us-russia-vtb-putin-idUSTRE71D1AW20110214

MOSCOW | Mon Feb 14, 2011 2:19am EST

MOSCOW (Reuters) - Russia kicked off a massive privatization drive, with the country's second biggest bank VTB (VTBR.MM) raising 95.7 billion roubles ($3.26 billion) for the government via a secondary placement.

Russia's Prime Minister Vladimir Putin called the VTB (VTBRq.L) placement a success on Monday, after the bank sold its shares at $6.25 per GDR -- broadly in line with market levels.

"This is ... proof of the trust in the Russian financial system," Putin told VTB CEO Andrei Kostin on Monday.

Funds from the United States, Europe, Middle East and Asia showed interest to the bank's shares, the government said.

Kostin told Putin that that book for the secondary placement was twice oversubscribed.

VTB, a pioneer of Russia's three year massive three-year 1 trillion rouble privatization drive, on Friday closed the books on 10 percent of state-owned shares, with the price reflecting the market.

Italian insurer Generali (GASI.MI) and U.S. private equity firm TPG Capital TPG.UL were expected to buy VTB shares in total worth $400 million.

Sberbank (SBER03.MM), Russia's top lender, will follow VTB later this year or in 2012.

(Reporting by Denis Dyomkin, writing by Katya Golubkova, editing by Toni Vorobyova)

Russia to earn over RUR 95 bln in sale of 10% of VTB stock

http://www.itar-tass.com/eng/level2.html?NewsID=15950878

14.02.2011, 10.19

MOSCOW, February 14 (Itar-Tass) -- Russia will earn over 95 billion roubles in the sale of 10% of VTB stock, the governmental press service reported on Monday.

“The Russian government announced the VTB stock privatization deal closed. Thanks to a keen interest from Russian and international investors the number of bids exceeded twice the supply that allowed selling the stock package at the market price,” the press service reported. “The Russian state will earn over 95 billion roubles in the sale of 10% of VTB stock,” the press service reported, noting that “the sale of the bank stock package became the most successful stock placement on the Russian stock market in the post-crisis period.”

Capital inflows from VTB privatisation will not support the rouble http://www.bne.eu/dispatch_text14230

Renaissance CapitalFebruary 14, 2011

On Friday (11 February), the rouble strengthened to 33.99 from 34.09 against the dual-currency basket, dipping to 33.95 during the course of the trading day. Nevertheless, the rouble did not visibly appreciate against the dollar and closed at 29.32. Therefore, the rouble showed no tendency to fall below the level at which the Central Bank of Russia (CBR) doubles its daily interventions (34.00), and was largely driven by rather favourable euro-dollar exchange rate movements. The euro dropped to 1.3535 from 1.3650 by the end of the trading day.

We believe that FX selling should intensify today (14 February) on the back of tax payments, but that rouble appreciation will be slow.

Pension tax payments. Companies will pay RUB200bn of pension tax tomorrow (15 February). This will support the rouble at below 34.0 vs the basket, in our view.

CBR interventions will increase. The CBR will double its interventions when the rouble falls below 34.0 vs the basket and will buy approximately $300mn on a daily basis. Thus, rouble appreciation should be slow.

VTB private placement. There is a widespread view that government privatisation will attract capital inflows, which should strengthen the rouble. However, we do not believe the privatisation of 10% in VTB (we estimate it at $3.3bn) will provide support to the rouble. First, the SPO is being conducted abroad, so local players who may have participated boosted demand for FX, rather than the rouble. Second, the Ministry of Finance is the only beneficiary and will be able to sell FX revenues directly to the CBR or, more likely, will save those funds in the Reserve Fund. Therefore, we are unlikely to see reverse flows in the open market. Although fundamentals, including the balance of payments, will record an increase in FX reserves, we will not see any support for the rouble.

Anton Nikitin

1.6 million people unemployed in Russiahttp://news.oneindia.in/2011/02/14/16million-people-unemployed-inrussia-aid0126.html

Monday, February 14, 2011, 12:45 [IST]

Moscow, February 14 (Itar-Tass) Around 1.607 million unemployed people have been officially registered in Russia as of February 1 this year, prompting the President to hold a meeting on employment related problems.Over the past several weeks the head of state has repeatedly addressed this issue and promised to keep a close watch on unemployment rates.

"Of late we managed to reduce the unemployment rates and bring the employment dynamics to the pre-crisis level.

Nevertheless, a great number of people remain jobless. But the main thing is that it is necessary to learn how to manage these processes," Russian President Dmitry Medvedev said.

Deputy Prime Minister Alexander Zhukov briefed the president last week that the most difficult situation with unemployment was registered in 2009, when the total number of those jobless reached up to 9.2 per cent of the country''s active population.

Medvedev praised regional employment programs that helped 200,000 people to start their own businesses and use statesubsidies.

At present, such programs focus on self-employment, employment of disabled persons and vocational retraining.

Employment in the so-called one-industry towns that made up around 200 all over the country remains high on the agenda.

The head of state instructed the government to specially control the situation in this sector.

According to the Cabinet''s plans, in 2011 the unemployment rates in these towns should reduce to 2 per cent.

Earlier the Kremlin''s top economic adviser, Arkady Dvorkovich, stressed the need for drafting own development programs in one-industry towns. (Itar-Tass)

Sugar Import Tariffs to Fall http://www.themoscowtimes.com/business/article/sugar-import-tariffs-to-fall/430929.html

14 February 2011

Raw sugar imports are expected to decline in February, then rise after a cut in import tariffs, the Institute for Agricultural Market Studies said.

The think tank said in a monthly review Friday that 102,000 tons may be imported to Russia in February, down from 150,000 tons in January. "483,000 tons of Brazilian raws are set to be shipped to Black Sea [ports]. … The bulk of this volume, as well as no less than 150,000 tons of already unloaded raws, will be cleared by customs after the $50 per ton tariff becomes effective," the report said.

The government has proposed cutting the raw sugar import tariff in March to $50 per ton from $140.

(Reuters)

Population Drop Could Put Debt at 585% of GDP http://www.themoscowtimes.com/business/article/population-drop-could-put-debt-at-585-of-gdp/430910.html

14 February 2011Bloomberg

Russia's debt may surge to 585 percent of gross domestic product by 2050 as the population declines and the government ramps up spending, pushing the credit rating below investment grade, Standard & Poor's said.

The population will probably shrink to 116 million by 2050 from 140 million last year, forcing the government's age-related expenditures to rise to 25.5 percent of GDP from 13 percent in 2010 in the rating agency's "base-case scenario," S&P credit analysts led by Frank Gill in London said in a research note last week.

The demographic decline will lead to "prolonged fiscal imbalances," putting Russia's credit rating under "rising pressure" after 2015, according to S&P. The government's debt is rated BBB at Standard & Poor's, two notches above junk. The country's state debt made up 9.5 percent of GDP, Finance Minister Alexei Kudrin said Feb. 2.

"Russia's aging population will likely place substantial pressure on economic growth performance and public finances," the analysts wrote. "By 2035, we expect that Russia's fiscal indicators will have weakened such that they would be more in line with sovereigns currently rated in the speculative-grade category, because, in our view, the projected improvement in GDP per capita would not be able to offset the potential fiscal deterioration."

The government may be forced to raise the retirement age to cope with the crisis, Kudrin has said. Russia's population, which has posted 14 years of declines before rising by 23,300 to 141.9 million in 2009, will fall to 139 million by 2031 under the government's baseline forecast.

Pension Age

The pension age is now 60 for men and 55 for women. The country may have 112 working people for 100 pensioners in two years and reach parity by 2030, compared with the current ratio of 128 to 100, according to Kudrin.

The population shrank by 81,600 from the end of 2009 to 141.8 million on Dec. 1, according to latest data from the State Statistics Service published on Feb. 9. The average life expectancy for men is about 61.8 years and 74.2 years for women.

Prime Minister Vladimir Putin made tackling Russia's demographic crisis a priority during his eight years as president, starting payments to women for each second child. In 2007, he approved a long-term plan for halting the decline that aimed to stabilize the population at about 142 million by 2015 and to spur growth to 145 million by 2025.

'Moderate' Spending

The government's spending on its aging population will remain "moderate" until the early 2020s before pension outlays soar as more people approach retirement, S&P said. Spending on pensions is expected to increase to 18.8 percent of GDP by 2050 from 9.4 percent last year, the rating company estimates.

Pensions will rise 8.8 percent in 2011 after readjustment for inflation, following an increase of about 45 percent last year, Putin said during a meeting with Health and Social Development Minister Tatyana Golikova on Jan. 31. That increase amounts to 277 billion rubles ($9.4 billion) a year in additional government outlays, according to Golikova.

The country's old-age dependency ratio, defined as the number of people aged 65 and older divided by the number of those between the ages of 15 and 64, will increase to 39 percent by 2050 from 18 percent in 2010, S&P said.

The population aged 15 to 64 reached a maximum in Russia in 2005, Ivan Tchakarov, chief economist for Russia and the former Soviet Union at Bank of America Merrill Lynch Global Research in Moscow, wrote in a Jan. 21 research note. The age group will only peak in 2025 in China, 2030 in Brazil and 2045 in India, according to Tchakarov.

Labor Costs

The shrinking work force will increase labor costs, accelerating Russia's per capita growth to 4.9 percent this year from 4.4 percent in 2010, making it the richest of the so-called BRIC countries along with Brazil, Merrill Lynch estimates.

Russia's increasing wealth means that its debt rating will likely be raised three notches to A by 2015 before coming under pressure as a result of its demographic decline, S&P said.

Even so, the agency's base-case scenario is "not a prediction," the analysts wrote.

"Rather, it is a simulation that highlights the importance of age-related spending trends as a factor in the evolution of sovereign creditworthiness," according to the report. "Historically, once governments are confronted with unsustainably rising debt burdens, they usually react by tightening their fiscal stances or reforming their expenditure programs."

Business, Energy or Environmental regulations or discussions

Rusal, Rosneft, Lukoil, VTB, TNK-BP: Russian Equity Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aGxmw8UWMRT0

By Paul Abelsky

Feb. 14 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s ruble-based Micex Index added 2.2 percent to 1,713.93 in Moscow. The dollar-denominated RTS advanced 1.9 percent to 1,881.90.

United Co. Rusal (486 HK): The world’s biggest aluminum producer will consider a $12.8 billion cash offer from OAO GMK Norilsk Nickel for its 20 percent stake in Norilsk.

Rusal fell 2.7 percent to HK$12.48 in Hong Kong.

OAO Rosneft (ROSN RX) and OAO Lukoil (LKOH RX): Oil fell to a 10-week low in New York after Egyptian President Hosni Mubarak stepped down and handed power to

the military, reducing concern that crude shipments from the Middle East will be disrupted.

Rosneft, Russia’s biggest oil company, jumped 3.4 percent to 255.13 rubles. Lukoil, the second-largest producer, gained 1.9 percent to 1,927.29 rubles.

VTB Group (VTBR RX): Russia’s second-largest bank priced its share sale at $6.25 per global depositary receipt, RIA Novosti reported. State-run VTB will officially announce the pricing on Feb. 14.

VTB gained 1.4 percent to 9.47 kopeks in Moscow. Its GDRs were unchanged at $6.27 on the London Stock Exchange.

OAO TNK-BP Holding (TNBP RU): The oil producer’s billionaire shareholders will likely demand at a board meeting that the venture participate in BP Plc’s planned alliance with OAO Rosneft and may force a vote on the issue as early as Feb. 18, when the board is due to meet, the Financial Times reported.

TNK-BP climbed 3.4 percent to $3.03 on the RTS Index.

To contact the reporter on this story: Paul Abelsky in Moscow at [email protected].

To contact the editor responsible for this story: Willy Morris at [email protected].

Last Updated: February 13, 2011 22:00 EST

Mon Feb 14, 2011 7:14am GMT Polish biggest utility PGE PGEP.WA along with PSE Operatorare in talks with the Russian Inter RAO about building an energylink with the Russian enclave of Kaliningrad and energy suppliesfrom a planned nuclear power, daily Rzeczpospolita wrote quotingPGE Chief Executive Tomasz Zadroga. PGE expects to post a record net profit this year if it isable to unload its telecoms assets, its chief executive toldReuters in an interview. [ID:nLDE71A1WQ]http://uk.reuters.com/article/2011/02/14/idUKLDE71C0I120110214

Poland to buy Russian nuclear energy?http://www.wbj.pl/article-53183-poland-to-buy-russian-nuclear-energy.html?typ=wbj

14th February 2011Two Polish companies are reportedly trying to broker a supply agreement to this effect

Polish state-owned utility PGE and transmission system operator PSE Operator are in talks with Russian energy company Inter RAO about building an energy line from Kaliningrad to Poland, daily Rzeczpospolita reported PGE's CEO as saying.

The energy would be sourced from a nuclear power plant which is being built there, the daily wrote.

With the preliminary discussions now complete, the Polish side is waiting for the Russian party to estimate how much energy would in fact be available for purchase, the daily wrote. The concrete numbers are to be revealed by mid-2011. Preliminary calculations indicate, however, that the mooted supplies from the east would satisfy some eight percent of Poland's total demand for energy.

Tomasz Zadroga, PGE CEO, told Rzeczpospolita that the deal will not involve participating in Russia's nuclear energy program, but will instead only concern the purchase of energy.

“Our talks with the Russian partner are about a trade deal as we are looking for cheaper sources of energy,” Mr Zadroga said, adding that Poland will face an energy deficit in four or five years' time.

According to the newspaper, the Russian side has declared that the first of the nuclear reactors in the Kaliningrad region will be ready in 2016, while the second one will be operational in 2018.

Henryk Majchrzak, president of PSE Operator – the company that would be responsible for building the transmission line – told the daily that the line will be built only when it could potentially bring profits. According to Mr Majchrzak, the construction of the line could take some four years.

Poland AM

Crescent Investments and Inter Rao UES enter into regional partnership http://www.ameinfo.com/256510.html

Crescent Investments, a wholly owned subsidiary of the Crescent Group of companies, and Inter Rao UES, one of Russia's power generation and operating companies, have today announced the signing in Abu Dhabi of a Strategic Cooperation Agreement (SCA), by and between Badr Jafar, CEO of Crescent Investments and Executive Director of Crescent Petroleum, and Boris Kovalchuk, CEO of Inter Rao UES, reflecting a shared determination to jointly expand their activities in the Middle East and North Africa (MENA) region, one of the world's most lucrative markets for investments in power generation. Inter Rao is one of Russia's fastest growing power suppliers and has major distribution assets both inside and outside Russia. Crescent Investments, a subsidiary of the Crescent Group of companies, has interests and experience in various industries, including ports and logistics, aviation, healthcare, mineral processing and private equity. Crescent Petroleum, another wholly-owned subsidiary of the Crescent Group, has been operating as a regional upstream and midstream oil and gas industry player for over 40 years.

These two companies have seen a big future in power generation in the region, with consumption in the MENA growing by double digits per year.

Governments are pouring enormous amounts of capital into generation facilities to keep up with demand, including the region's second wave of IPP projects. The GCC countries alone will invest $160bn to develop 180GW of new capacity by 2019, and Iraq alone is expected to rebuild 14-16GW of capacity in the next five years at a cost of $25bn.

Badr Jafar, CEO of Crescent Investments, sees the right partnership as crucial to grasping these opportunities:"Working with Inter Rao is an important partnership for Crescent Investments, enabling us to catalyze private sector development of downstream gas utilization, supports our affiliate GASCITIES Ltd, and furthermore strengthens our already burgeoning ties with Russian partners in developing the region."

Inter Rao, with subsidiaries of 20 companies in 14 countries worldwide is putting in place an aggressive growth strategy by consolidating its position in commercially-attractive markets in Europe, the South Caucasus, the Far East and Central Asia, and leveraging its local and regional expertise.

Boris Kovalchuk, Inter Rao's CEO, said as much during the signing of the SCA. "For us, this is a key step. With our new and exciting partnership with Crescent, we can broaden our footprint through a series of projects in the MENA region which will be run out of a newly-opened office in Abu Dhabi. With Crescent, and its unmatched history in the region, we have found the right partner to help us continue to grow in this region".

RusAl raises aluminum output 3% in 2010, plans further growthhttp://en.rian.ru/business/20110214/162589396.html

05:23 14/02/2011

World's largest aluminum producer UC RusAl said on Monday it increased its aluminum output 3% in 2010, to more than 4 million metric tons, and plans further growth this year.

The Russian company said it planned a 2% increase in its aluminum output in 2011.

Rusal also said bauxite production grew 4% in the reporting period, to 11.8 million metric tons. Alumina production increased 8%, to more than 7.8 million metric tons.

MOSCOW, February 14 (RIA Novosti)

UPDATE 1-RUSAL sees steady 2011 aluminium output growthhttp://in.reuters.com/article/2011/02/14/rusal-idINTOE71D00O20110214

Mon Feb 14, 2011 7:54am IST

* RUSAL says sees aluminium output up 2 pct in 2011

* Board approves rouble-denominated bond issue

* Hong Kong-listed shares up 6 percent, outperform market (Adds details, quotes)

By Alison Leung

HONG KONG, Feb 14 (Reuters) - Russia's United Company RUSAL Plc, the world's largest aluminium producer, said on Monday that it sees steady output growth in 2011, driven by strong demand from China and a rebound in North America.

Hong Kong- and Paris-listed RUSAL (0486.HK)(RUAL.PA) said aluminium production was expected to grow 2 percent in 2011, roughly steady with last year's 3 percent rise to 4.08 million tonnes, with higher output seen at its Siberian smelters.

In Hong Kong, RUSAL's shares rose more than 6 percent in early trading after the company's output forecast, and also after an increased offer from Russian mining giant Open Joint Stock Co Mining And Metallurgical Co Norilsk Nickel's (GMKN.MM) to buy back the 20 percent stake in the nickel company held by RUSAL. [ID:nLDE71A1IO]

"Growth in aluminium demand in regions other than China is expected to be strong, indicating that Western markets appear to have rebounded positively from the financial crisis," RUSAL said in a statement to the Hong Kong stock exchange.

Global demand for aluminium, used in everything from soft drink cans to building construction, would increase 8 percent to 43.8 million tonnes in 2011, with prices expected to remain above $2,500 per tonne, RUSAL said.

Expected higher output at Rusal's Siberian smelters and the planned restart of the Windalco-Kirkvine Works Plant from July, which had been approved by the board of directors, would help lift production this year, it said.

Rusal also said it would increase alumina output, a key raw material in aluminium, by 8 percent this year, with increased production at its Windalco-Ewarton Plant Works in Jamaica, the producer said.

In 2010, alumina production rose 8 percent to 7.8 million tonnes, it said.

In the fourth quarter, Rusal produced 1.05 million tonnes of aluminium and 2.08 million tonnes of alumina 2010, based on Reuters calculations.

During Monday's announcement, RUSAL also said its board of directors had approved a bond issue of up to 30 billion roubles ($1.02 billion), but a final decision on the placement would depend on market conditions.

For statement please click here (Editing by Lee Chyen Yee and Chris Lewis)

Russian iron firm plans London IPOhttp://www.cityam.com/news-and-analysis/russian-iron-firm-plans%E2%80%88london-ipo

Monday, 14th February 2011 MINING RICHARD PARTINGTON

RUSSIA’S biggest iron ore producer is planning to sell 20 per cent of its shares on the London Stock Exchange, valuing the company at £12.3bn.

Metalloinvest, which is half-owned by oligarch Alisher Usmanov, could be launched into the FTSE 100 by the listing.

The company has appointed Deutsche Bank, Merrill Lynch and Credit Suisse to handle the offering.

Usmanov, who owns part of Arsenal football club, listed Mail.ru – the Russian social networking site – in London for £570m.

The move comes after a turbulent period for Russian companies looking to list in London.

Three initial public offerings by Russian-based firms were pulled last week as a result of tough market conditions.

Nord Gold, the mining unit of steel giant Severstal, was the biggest firm to scrap plans for an initial public offering (IPO) last week.

The miner, led by billionaire Alexay Mordashov, had been looking to raise up to $1bn (£622m) to pay down debt and make new acquisitions.

Steel pipe maker Chelpipe pulled the plug on a $688m IPO attempt whilst coking coal producer Koks cancelled a $500m effort.

Pump manufacturer HMS Hydraulic was forced to cut its price range in order to list in London.

It will now raise just $360m, as opposed to between $396m and $580m as originally planned.

Unrest in Egypt had hit emerging markets (EM) funds as investors pulled more than $7bn in the week to 2 February.

The firms had hoped investors in EM would become shareholders.

UPDATE 1-Indonesia says Russia to build $3 bln nickel smelterhttp://in.reuters.com/article/2011/02/14/indonesia-nickel-idINL3E7DE09J20110214

Mon Feb 14, 2011 11:43am IST

(Updates with details, quote)

JAKARTA Feb 14 (Reuters) - Russian investors plan to build a $3 billion nickel smelter in Halmahera island in eastern Indonesia, a sign of growing interest to invest in the country's mineral processing industry.

Indonesia, the world's top exporter of tin and thermal coal, is keen to increase revenue from the mining sector. Under a new mining and coal law, miners must by 2014 carry out a minimum of processing before exporting, including on nickel.

"There will be a $3 billion foreign direct investment from Russia to build a nickel smelter in Halmahera island," said chief economic minister Hatta Rajasa on Monday, adding groundbreaking will start in the first half of the year.

He did not give details on the Russian investors.

Russia's Norilsk Nickel , in which RUSAL owns a 25 percent stake, is the world's largest nickel miner.

French's Eramet , the world's sixth-largest nickel producer, has a nickel project on Halmahera in a joint venture with Indonesian state miner PT Aneka Tambang Tbk .

Indonesia currently produces ferro-nickel from three nickel smelters operated by Aneka Tambang and nickel-in-matte from smelters operated by PT Inco Tbk , a unit of Brazil's Vale .

Indonesia's mining sector attracted 53 trillion rupiah or $6 billion in bank financing up to September 2010, versus the 14 trillion rupiah that banks loaned to the industry in 2006, central bank figures show, despite uncertainties over the country's new mining law.

Foreign direct investment as a whole is growing into Southeast Asia's biggest economy, as investors eye its mineral wealth, booming domestic consumption and increased stability, despite concerns over rampant corruption, red tape and inadequate infrastructure. (Reporting by Rieka Rahadiana; Writing by Fitri Wulandari; Editing by Neil Chatterjee)

France's Alstom Signs $675M Turbine Joint Venture http://www.themoscowtimes.com/business/article/frances-alstom-signs-675m-turbine-joint-venture/430896.html

14 February 2011By Roland Oliphant

RusHydro and France's Alstom signed a deal Friday to build a 500 million euro ($677 million) turbine plant in the republic of Bashkortostan.

The two companies will finalize the joint venture before the end of February, the companies' chief executives said Friday.

RusHydro chief Yevgeny Dodd and Alstom head Phillipe Cochet inked the deal at a ceremony attended by President Dmitry Medvedev in the Bashkir capital of Ufa.

"Final conditions of the partnership will be agreed by the end of February," Dodd told reporters Friday.

Neither Dodd nor Cochet was prepared to reveal who would take the controlling stake in the new firm; asked by reporters about financing they responded that "each will finance his stake."

The two sides did not reveal any other financial details of the project.

"The factory will be oriented to the production of hydroelectric equipment for small hydro plants with a capacity of up to 25 megawatts, and also automatic control and complex security systems," RusHydro said in a statement.

Eventually, the plant will produce parts for 100 megawatt and 150 megawatt stations, according to the company's statement.

Construction work will begin in April 2011, and the plant will begin production in 2013, the two companies said. The first items off the line will be two turbine units for the Kubanskiye Cascade, a series of nine hydro electric stations on the Kuban river in the Karachayevo-Cherkessia republic and Stavropol region.

Alstom signed a deal to upgrade the Kubanskiye Cascade plants in December during a visit to Russia by French Prime Minister Francois Fillon.

The new plant will eventually turn out 12 sets of equipment for the Kubanskiye Cascade, Interfax reported.

Alstom, which regards itself a global leader in power generation and transmission and rail infrastructure, will bring cash, technology and know-how to the new venture, Cochet said.

Dodd said he believed that the management side of the business should be run by Alstom, "because they are builders — we have more operators and marketers."

The two sides eventually hope to sell production from the new plant to customers across the former Soviet Union.

Alstom has been actively expanding its operations in Russia. At the same time it signed its strategic agreement with RusHydro in December, the company reached an agreement to upgrade power stations belonging to Mosenergo, as well.

Alstom's joint venture, Alstom-Atomenergomash, agreed with Rosatom to produce nuclear turbines.

In the field of electricity transmission, Alstom Grid and FSK, the federal operator of the country's unified electrical grid system, signed an agreement to establish a joint research project in the Skolkovo technology zone outside Moscow, focusing on a variety of tasks intended to increase the efficiency, reliability and security of electrical grids.

RusHydro characterized the latest Alstom deal as a pilot project for a future "industrial technopark" in Bashkortostan that the energy company has agreed to build with the republic's government.

Dodd also signed a deal Friday with Bashkir President Rustem Khamitov to set up a 67-hectare industrial and technology park to give the republic's small and medium-sized businesses a boost.

Medvedev told Khamitov to boost employment in the region, at a meeting earlier in the day.

The new park will include production, business and service sectors, and a "small business incubator" where new ventures will receive tax perks.

The goal of the park is to create 10,000 jobs, RusHydro's press release said.

The renewable energy giant and the republic's government have also agreed to establish a multibillion-ruble energy efficiency fund.

The new fund will start with 2 billion rubles ($68.2 million), later increasing to 4 billion rubles, Interfax reported.

Vimpelcom Ltd changes key manager in Russia - needs to focus on Russian operations

http://www.bne.eu/dispatch_text14230

VTB CapitalFebruary 14, 2011

News: Vedomosti quotes a Vimpelcom statement this morning as saying that Dmitry Pleskonos, Executive Vice President of Vimpelcom Russia responsible for mass market operations, is to leave the company.

Our View: This resignation is clearly linked to Vimpelcom's loss of revenue market share in Russia and pressure from the shareholders and top management of Vimpelcom Ltd over this. However, we think that the major reasons for Vimpelcom's underperformance are i) greater cost cutting and price lifting in 2009-early 2010 than at MTS and Megafon; ii) Vimpelcom Ltd's focus on the merger with Wind Telecom; and iii) the unclear situation with capex while its major rivals are spending significantly more to develop 3G networks (and Vimpelcom has higher prices but poorer service).

In this situation, we think that Vimpelcom Ltd needs to focus on Vimpelcom Russia's

overall strategy and operational measures to correct the situation, including a radical capex increase (so that it does not continue to lose customers).

Russian company invests in coldhttp://www.macaubusiness.com/news/russian-company-invests-in-cold/7538/

Posted: 2/14/2011 2:34:52 PM

Russian company MMG Production has announced plans to create a Winter Park at Fisherman’s Wharf.

The total investment is estimated at US$19 million (MOP152 million).

The first stage of the project will open next Friday (February 18), including an ice rink and an ice sculpture gallery.

For this 300-square metre initial phase, the company has invested US$3 million and it will charge a MOP65 entry fee.

The second phase will include an indoor winter city built on an area of 3,000 square metres, with walking and skiing tracks, and a food court.

After getting all the approvals, the MMG Production expects to take 18 months to have the second phase ready.

When the Winter Park is fully developed, the company expects to receive about 20,000 visitors per day.

“We want to take advantage of Macau’s huge touristic potential to offer a new entertainment proposal,” MMG Production financial director, Dmitriy Shport told reporters.

Russia’s Teleca acquires UK based SurfKitchenhttp://www.investinuk.net/news/russia%E2%80%99s-teleca-acquires-uk-based-surfkitchen-98b5

Teleca has acquired the UK’s SurfKitchen, effectively adding mobile internet solutions for operators to its wide portfolio. The UK investment further expands Teleca’s portfolio to include persuasive offerings for the mobile operator sector. Teleca believes customers

will significantly benefit from the unique combination of SurfKitchen’s strong operator offering, combined with Teleca’s deep relations and skills for the mobile device sector.

Teleca is a world-leading supplier of solutions and services to the mobile and connected industries. SurfKitchen has approximately 55 employees and helps mobile operators and their partners overcome the discoverability, usability and fulfillment challenges associated with the delivery of mobile applications and services.

Michel Quazza, Chairman and CEO of SurfKitchen, said the acquisition brings together two companies with very complementary skill sets. SurfKitchen will get access to Teleca’s strong presence in the connected devices industry and its extensive partner network, while Teleca can offer its deep knowledge of embedded systems to SurfKitchen’s operator customers.

The result is true end-to-end services that benefit the whole industry and will provide unique differentiation, said Quazza.

René Svendsen-Tune, CEO at Teleca, noted that the mobile and connected devices industries are moving from software enabled hardware businesses to hardware enabled software businesses. As such, Svendsen-Tune noted that there will be rapid growth in the overall market of content and application consumption. Through this acquisition, the firm can offer mobile operators, platform providers and other layers in the mobile industry complete solutions for applications and content delivery, he said.

The acquisition strengthens Teleca’s ability to offer its products and solutions to the operator market, while SurfKitchen gains access to Teleca’s global reach, customer portfolio, cost effective services and scale.

SurfKitchen will stay as an independent business unit within the Teleca organization. The company will focus globally on the operator segment, concentrating on business development, sales & product R&D. SurfKitchen will leverage Teleca’s extensive global services for its customer deployment.

The acquisition fits well into Teleca’s strategy of expanding its mobile software outsourcing services to all relevant industries. In 2009, Teleca created a unit to deliver mobile apps, which has already achieved significant customer wins in the media and entertainment industry. Through SurfKitchen, Teleca can offer the operator segment significant advantages, including complete end-to-end apps solutions, full content and subscriber management services, more than 80% market coverage, a first-rate partner network and increased competitiveness. SurfKitchen is uniquely focused on providing mobile operators and their partners with the ability to deliver the optimum mobile user experience for mobile Internet applications and services.

13 Feb 2011.

London snubbed by Russian Papa John’shttp://www.cityam.com/news-and-analysis/london-snubbed-russian-papa-john%E2%80%99s

Monday, 14th February 2011 RETAIL RICHARD PARTINGTON

THE RUSSIAN franchise of Papa John’s, the global pizza chain, has snubbed London to list on the Frankfurt Stock Exchange.

Worldwide Papa’s, which operates four outlets in St. Petersburg under the American brand Papa John’s, will today begin trading in Germany.

The development comes after a slew of Russian companies pulled plans to list in London.

The company considered London for the listing, as well as Hong Kong, although chose Frankfurt due to its strong ties to Russia.

A total of 66 firms from the country are now listed in Frankfurt, catching up on the 100 companies on the London Stock Exchange.

Worldwide Papa’s has issued 80 million shares for 100 per cent of the company in an effort to raise €5.6m (£4.7m), valuing the firm at €56m.

One of the firm’s outlets in St Petersburg is amongst the top three Papa John’s pizza chains out of more than 3,300 worldwide.

The company hopes to use the share issuance to expand, with plans for more than 200 restaurants.

The rules of scavenging for goldhttp://rt.com/politics/press/rossijskaya-gazeta/http-www-rg-ru-2011-02-13-gold-html/en/

Published: 14 February, 2011, 02:41Edited: 14 February, 2011, 02:41

Private yellow metal recovery may be allowed in Russia before the summer Tatiana Zykova

A sole proprietor will be able to earn more than 2 million rubles a season, if he washes out 2kg of gold, estimated Chairman of the Federation Council Committee on Natural Resources and Environmental Protection, Viktor Orlov.

Meanwhile, the startup expenses for the necessary tools and equipment, including a wheelbarrow, a pickaxe, a shovel and a pump, won’t exceed 50,000 rubles – the senator described the attractive prospects of privately scavenging for gold on the eve of the second reading of the amendments to the Law “On Mineral Resources”.

For more than 10 years now, senators and deputies of the Northern and East Siberian regions, rich in gold reserves and, mainly, abandoned gold-mines that are of no interest to industrialists, have been trying to bring back “free metal recovery on unoccupied sites” to Russia, which was banned in the 1950s.

And now, the wheels have been set in motion. In its first reading, the bill was supported by a record number of deputies – a total of 411 lawmakers.

According to the head of the Federation Council Committee on the North and Indigenous Peoples, Aleksandr Matveev, all that remains to be done is work on some minor details, so that already by the beginning of the gold washing season, May-June, the law will be in effect.     

RG had already reported on this piece of legislation in the past—namely, about the fact that only the Russian citizens, registered as sole proprietors, will be able to collect stream gold. They will have to receive a free license for the use of a specific site of subsurface resources, believed to hold no more than 10kg of yellow metal in the simplified regime – without competitive tenders and auctions. Meanwhile, no one will guarantee that gold is present on the sites. Entrepreneurs will work at their own risk. The goal is to create up to 10,000 new jobs without attracting investment and save many villages of Siberia, the Far East and Far North from poverty.

Viktor Orlov stressed that free yellow metal recovery will be allowed for the local population, familiar with the basics of geology and manual extraction methods of the resources at abandoned “golden fields”, rather than newcomers.    

According to the chairman of one of the co-operative associations of gold prospectors (Tuva Republic) Aleksandr Nevolin, the “monetary product” will attract tens of thousands of people, hoping to make some easy money. Meanwhile, coming to the Taiga or getting lost there by not having any knowledge or expertise won’t be hard. Moreover, the physically untrained individuals, without the necessary tools and food supplies, will quickly turn from gold scavengers into food scavengers – or vagabonds. “People will stop hiking, picking mushrooms and berries, and Taiga will turn into a source of increased danger,” says Nevolin. Also, he continues, a struggle for production sites is possible. Moreover, sites that are allocated under licensing agreements will be hard to monitor: where was the gold washed out, to whom was it given, was any additional gold, or any gold at all, recovered. Local authorities, who issue the licenses, together with the law

enforcement agencies, will be the ones to answer all these questions. And it’s hard to say if, as a result, there will be more gold recovery or crime in the country. 

However, according to the Union of Gold Industry Entrepreneurs, the new law will make it possible to legalize only 5 tons of the gold, recovered in the country. Experts estimate the amount of gold that can be annually added to Kolyma’s total gold recovery is about one ton. Meanwhile, a total of 205 tons of gold is currently being annually recovered in Russia. With the modern technologies, say experts, at least 15% of gold is left behind in the exhausted minable deposits. At the same time, the global price of gold, of more than $1,300 per troy ounce, is breaking all the records. The idea of allowing private parties to recover gold is also approved by the Russian jewelers, who are ready to increase raw material processing by more than 5%.     

A number of other practical questions continue to exist, which even the authors of the draft law are having a hard time answering. Gold purchasing stations, where gold will be bought at the state-regulated price, will need to be set up in the regions. But, does this guarantee that, after washing out gold, licensed individuals won’t simply sell it to the highest bidder? What will be the responsibility of private gold miners? Then, how will the metal be transported to the gold purchasing stations? And, God forbid, coming across those looking to make easy money (today, there are many of them in the Taiga) while there is no one else around.       

There is another question that hasn’t been fully considered – concerning the payment of taxes of the individual free gold scavengers. Authors of the draft law are suggesting applying the simplified tax model and even a zero income tax, citing the difficult manual labor conditions. But the Finance Ministry categorically objects to this much freedom. Another question is – hired labor. Mining for gold alone is impossible. There is only one solution – to unite with other licensed individuals or work with the family. Hiring employees is strictly prohibited for private gold miners. And the last issue: illegal gold recovery in Russia is estimated at more than 10,000 tons a year – that’s almost 10% of total production. Where will all those, who buy this gold, disappear? This is an entire illegal industry, with its own infrastructure, airplanes, and international syndicates.

Shaftan reaffirms her commitment to Russia as rising oil price drives growthhttp://www.investmentweek.co.uk/investment-week/interview/2025922/shaftan-reaffirms-commitment-russia-rising-oil-price-drives-growth

14 Feb 2011 | 08:00

Hannah Smith

Investment Week - News and analysis for investment advisors and wealth managers.

Elena Shaftan is the head of Jupiter’s emerging European team and manager of the £626m Emerging European Opportunities fund with Ingrid Kukuljan. Here she explains

her fund positioning, why she does not subscribe to the ‘bigger fool’ theory, and why the Russian market is not for tourists.

What is the starting point for you in selecting stocks?There are plenty of places you would start but you always come back with a cocktail of requirements that have to be met.

It almost does not matter which way you started, you would tend to come back to ticking the same boxes. For example, the starting point can be ‘I think this is a very exciting sector’.

Last year the Russian consumer was a very exciting sector, so let us have a look what is there. What do we think are the best opportunities? How do we define those opportunities as best? A very necessary ingredient first of all is not just a strong, dedicated management team, but a situation where the management and the majority shareholders’ interests are aligned.

All the talk about corporate governance in Russia can only be mitigated by picking stocks where you are not in conflict with the people who run the business.

You need to understand the motivation of the management and the shareholders, the dynamic between the two, and of course their ability to run the company. That is one of the important things we look at. We would never invest in a company if we had not seen them.

Equally important would be simply the quality of the business – are there high barriers to entry? Does it have high enough margins not to see them eroding if the environment changes rapidly? A strong balance sheet is incredibly important for us.

And then valuations. Seeing markets going up and down like a yo-yo over the last 15 years, the one thing I am very clear about is there is no need to overpay for anything. We are quite strict on valuations.

Does valuation also drive your sell discipline?It is a combination of factors. We run our own models for all the stocks we look at, factoring in our own assumptions and our conversations with the management. We talk to management every six to eight weeks, probably more than most of our competitors, and more often than many sales analysts. What we are trying to see is if there is a gap between what our model suggests and what the sell side suggests and utilise this gap.

So valuation is important on the way in and it is equally important on the way out. If we find a stock we absolutely love, but we think it is expensive, we would be selling it. But that is just one of the ingredients in the sell discipline.

We often joke that we run the portfolio like I would run my wardrobe, which means everything you have not worn for a year, you chuck. Things that do not quite work out, you need to examine the reasons why. Are the original reasons for buying it still there? Has the operating environment changed? Has the management disappointed?

Or has the stock become too expensive? Has it gone out of fashion? I do not believe in the ‘bigger fool’ theory – if I do not want to buy it, why would someone else buy it? Why would it go up? I would rather chuck it and put the money somewhere else. That makes it a very concentrated portfolio – more concentrated than some of our competitors, with only 30 stocks.

So what is turnover like in the fund? Do the opportunities you find in the region tend to be longer-term holdings?We do not see ourselves as traders – we do not think our strength is in daily trading. When we find good companies we buy them on the basis of their two- to three-year earnings outlook, and we will sell them if the outlook changes or the valuation changes.

So the starting point is always a long-term proposition, but of course things change, and our turnover during the crisis and coming out of the crisis was much higher because we completely changed the portfolio stance.

For example, in June 2008 we had 70% in Russia. By the end of the year we had 30% in Russia, and we completely changed the composition of the fund in terms of sectors. We had 20% in cash; we had very defensive stocks.

Six months later, by the summer of the next year, we had rotated the portfolio again to focus more on consumer stocks and reinvest the cash. So when the environment changes rapidly, we would react to it, but when we make investments in particular companies, it is based on the long-term trends.

At the moment you are fully invested. What have you been adding to recently?We have been adding aggressively to Russia again, moving back to 70%, and remaining fully invested.

Having been very underweight oil & gas last year, which was the right thing to do because the sector underperformed, we have added to it very considerably because we took a view with an increase in the oil price and without corresponding strength in the rouble, the profitability of those companies was set to improve this year, and it is quite important because one of the reasons we did not like oil companies in the past was because any increase in the oil price would be offset by the appreciating rouble.

This time around, there is an interesting situation because the oil price is rising but the rouble is not catching up with it yet.

Secondly, the reason the oil sector did not perform well last year was there was a lot of negative news on taxation, which is a trend we feel is reversing. Also, there is

overwhelming value in the sector, with some companies trading on four and a half to five and a half times earnings. So that was an area of very considerable addition weight.

We have also been adding to some of the infrastructure-related plays in Russia, having taken some of the profits in consumer names when we felt they had become too expensive. We added again to retail banks in Russia.

The view we take is this year Russia is in a good position to benefit from quite a few factors that were against it in the previous two years. The global picture for emerging markets is more supportive, with the liquidity injection China and India do not particularly want and Russia does.

One of the reason the Russian market was so unloved over the past few years was the economic performance was lacklustre.

We feel this is accelerating. Corporate governance is often talked about. We are convinced there is real momentum for reform taking place in Russia. The credit crunch was the wake-up call for the authorities when they realised how fragile and inefficient the economy is. They are really trying to take steps towards improving corporate governance and the international perception of Russia.

The oil price is picking up after it was static last year. This made the Russian market less inspiring, but this year it is catching people’s attention. Russia was such an underloved, underowned market, but now, with other emerging markets hitting problems, it is clear Russia does not have any significant structural problems, and it is trading on a significant discount to emerging markets on the whole.

What about your allocation to other markets besides Russia?We have taken some money off the table in Turkey. It did fantastically well last year, and we felt in the short term there were headwinds as the regulator tried to take some momentum out of lending growth. While it is adjusting, the market might be a little bit unsettled, but on a longer-term view, it is an absolutely fantastic market that is going through a qualitative transformation.

Now we have a government that has been in place for eight years, coherent economic policy, inflation down, and a real structural change. Banks are still cheap, and are likely to grow their book by 20% year on year, and they are something the market will want to own. There we own a combination of banks and consumer-related stocks.

Poland had been a very stable economy, the only European economy that did not slide into recession in 2008, propped by significant EU transfers, about 3% of GDP per year, and robust domestic demand.

A theme across Russia, Turkey and Poland is they have very large domestic markets – they have relatively closed economies, so they are not dependent on what happens in

Europe, for example, so the economies are driven by domestic momentum. They are also very underleveraged – households have very low debt. That is what attracts us to those three markets.

Returning to the structural issues, there is endemic corruption in Russia. How can you do due diligence to be able to invest in these markets? All emerging markets have some degree of corruption – Russia is not for tourists. You need to do your work and understand how corruption works.

Corruption is a very big word which covers a multitude of sins. To understand the systemic risk, to understand how the government works is fairly easy in Russia, and that is why we have never been involved in any big corporate governance scandal.

There is one wonderful thing about the Russian government – they tell you what they are going to do and then they do it. You have to know who to listen to, and understand whose interests are in what sectors. What you should not do is come in as an arrogant foreign investor into a venture relying purely on his position being protected by law.

The key is understanding how the system works. I have been covering this market for 15 years. Being Russian and having contacts in Russia probably helps, and being able to find out the backgrounds of people you are dealing with. I find it easier to judge the people sitting across the table from me.

Especially in this country, there has been such an unbelievable amount of negative press on Russia, which I am sure goes back to James Bond movies. It is not easy to do business in Russia, but there is also a fair amount of exaggeration, I think.

Is there likely to be any ripple effect or contagion effect from the European sovereign debt crisis on emerging European economies?If you looked at what happened in February 2009 when there were ripples in the European debt market, bond spreads for eastern Europe blew up really wide as well.

Since the Greek crisis began, spreads on the core eastern European markets stayed very tight – they have not budged; there have been no ripples. Why? Because the investor base recognises those economies are in much healthier shape than the southern European economies that are in trouble.

Most eastern European countries, except Hungary, have debt-to-GDP ratios below 60%, and have reasonably low budget deficit numbers, so they are not in the same position as the other European countries we are worried about.

Yes, we have seen some small ripples at some point in the past but the markets were very quick to recover. Having said that, if there is a very significant economic collapse in Europe, eastern European countries still export to Western Europe – Turkey, Poland export 30% of their GDP there, so that would slow down, but the domestic economy should not be affected.

Because China and India are suffering from inflation worries, there may be a slowdown in the flows into those economies. Could Eastern European countries stand to benefit from this?This is why I think the region is in a good place this year. The torrent of fund flow that was going to China and India in the last year, part of it I think will be redirected to those markets, because they do not have the same problems with inflation.

What is the greatest threat to European emerging markets this year? For Russia, the obvious risk is always a significant collapse in the oil price. If the oil price goes below $60, the Russian economy and market suffers.

To see that happening we would be talking about a very significant global shock in which most markets would not do all that well. That is always the risk one needs to bear in mind when investing in Russia. Other risks? There is always some degree of political risk for any emerging market. Both Russia and Turkey have elections coming up.

Turkey is a much better functioning democracy than Egypt. Over the past years, we have had a stand-off between the military and the government quite a few times, and all it caused was a slight ripple in the market, because both sides are interested in preserving stability.

One can never rule out some political events, but it is probably true for any other country. There is nothing in the region politically that causes me a significant worry.

In Russia, there is plenty of negative commentary about the Putin regime, understandably, but the good news about that regime is it is predictable.

What we do not have, which is the curse for any emerging market, is the sharing of assets.

After an election when the new ruling party comes and assets are back up for grabs, that is the most dangerous situation for an outside investor. The likelihood is we are not going to have that.

Activity in the Oil and Gas sector (including regulatory)

14.02.2011

Russia should keep oil output at 2010 level of 505 million tonnes per year – Putinhttp://www.oilandgaseurasia.com/news/p/0/news/10575

Interfax cites Russian Prime Minister Vladimir Putin as saying that Russia should keep oil production at the 2010 level of 505 million tons in the years to come.

He said that this is the ideal volume, which covers both internal and export needs. He added that "We need to keep to this level of production in the coming years."

The Central Dispatching Department of the Fuel and Energy Complex has said Russia produced 505.193 million tons of oil and gas condensate in 2010, 2.2% more than in 2009. Gas production rose 11.6% to 650.311 billion cubic meters.

Copyright 2010, Steel Guru. All rights reserved.

UPDATE 1-Exillon says oil reserves rise 74 pcthttp://www.reuters.com/article/2011/02/14/exillon-energy-idUSLDE71D08Z20110214

Mon Feb 14, 2011 2:46am EST

* Proved plus probable reserves up to 239 mln barrels

* Believes there could be more oil at Western Siberian field (Adds detail)

LONDON Feb 14 (Reuters) - Russia-focused oil producer Exillon Energy (EXIL.L) raised estimates for its oil reserves by 74 percent and said there could be more oil at one field in Siberia.

Exillon said on Monday an independent study of its assets by oil and gas consultants Miller & Lents resulted in a 74 percent increase in group proved plus probable reserves to 239 million barrels.

Reserves at the company's assets in Western Siberia were boosted by the fact that the company can now produce oil throughout the year and due to an improved plan for developing the field.

The company said the higher reserve estimates did not take account of its belief that the boundaries of its Western Siberian oil field could stretch further north, meaning reserves could be larger than current assessments.

(Reporting by Sarah Young; Editing by James Davey)

February 13, 2011 20:19

Inter RAO may join oil shale project in Jordan (Part 2)http://www.interfax.com/newsinf.asp?id=222024

ABU DHABI. Feb 13 (Interfax) - Russia's Inter RAO is considering possible involvement in the construction of a $250 million complex for processing oil shales in Jordan, company CEO Boris Kovalchuk said at the opening ceremony of a Middle East representative office.

He said Inter RAO would set up a joint venture with an investor from Saudi Arabia with the sides getting 33% and 67% respectively.

He said the complex will include a power plant with the capacity of 90-150 MWt.

Kovalchuk said that the electricity from the plant will be sold to the Jordanian state company NEPKO and the synthetic oil - to the state oil refining company ZAPKA.

The partners are expected to make a feasibility study of the project by the end of the year. Currently geological prospecting at the field continues.

Kovalchuk said that the field extends to Israel and his company plans to hold talks with Israel on its possible involvement in the project.

Speaking of other Inter RAO power engineering projects in the Middle East he said that an SPV is being set up with the government of Yemen to upgrade and operate Al Hiswah thermal power plant in that country. Investment in the project is estimated in $100 million. The company plans to upgrade three power units raising their capacity from 50 to125 MWt.

One more project in the Middle East is the construction of Al Kamsha wind farm. The energy from it will be sold at a fixed price to NEPKO. The project is estimated at $105 million. It will be co financed by an investor at the ratio of 51% to 49%.

Inter RAO also shows interest in the restoration of the Dokan and Derbandikhan HPP in Iraq with a combined capacity of 670Mwt.

The energy holding is considering the possibility of setting up two JVs for electricity deliveries to Turkey and Syria but no understandings have been reached yet.

Speaking of general plans for the Middle East Kovalchuk said that his company plans to expand its presence through privatizing the energy assets in several countries. This will allow Inter RAO boost its energy deliveries to neighboring nations.

14.02.2011

Shotkman Profitable Without Regard to Tax Reliefhttp://www.oilandgaseurasia.com/news/p/0/news/10577

The Shtokman project is feasible and profitable in any case, but tax reductions will be appropriate, a source in Shtokman Development says.

As an answer to Statoil’s statement that the Shtokman project is not economical justifiable with today’s Russian tax policy, a source in Shtokman Development says to Russian Business Consulting that the project feasibility study shows that a development of the Shtokman gas condensate field is technically feasible and profitable.

The representative from the development company added that such a large project will need special framework conditions and that tax relief from the Russian Government is expected to come.

"It would be appropriate to give additional benefits to Shtokman, directed at compensating the involved companies’ expenses for development of infrastructure that will benefit the whole region, make future shelf projects easier and act as stimuli for the development of the Murmansk region", the source says.

As Barents Observer reported, President of Statoil Russia Jan Helge Skogen last week said that a realization of the Shtokman project will require considerable tax relief from the Russian Government and that the investments needed in infrastructure makes the project economic unjustifiable in combination with Russian tax policy.

Copyright 2010, Barents Observer. All rights reserved.

Rosneft deal has issues for BPhttp://community.nasdaq.com/News/2011-02/rosneft-deal-has-issues-for-bp.aspx?storyid=57463

Posted 2/13/2011 7:51 PM

More details on the surprise tie-up between BP and Russian behemoth Rosneft. This definitely looks like it is about both companies finding scale outside the U.S. sphere.

BP   (quote) is issuing $7.8 billion in its own shares to Rosneft, which trades extremely thinly in ADR form as  RNGZY   (quote). This makes the Russians a 5% shareholder in the entire BP operation.

In return, BP gets a 9.5% stake in RNGZY and the right to team up on the company's three Arctic fields.

What this is about is a pivot away from U.S. interests. It is almost as if Congress deliberately wants to go after BP after the Gulf disaster, and now it is quickly becoming a political issue in Washington.

The company is a punchline for American kids -- and still has the $150 billion market cap heft that it can take its toys and go home, so to speak.

A win-win scenario?

Those toys include a lot of world-leading technology for exploring and producing in extreme Arctic climates. After all, BP learned how to drill ultra-deep wells in the North Sea, so Rosneft's fields will be relatively straightforward for it to unlock. And despite the jokes, its management is still world-class.

BP, of course, gets access to those vast fields. Ultimately, early action seems to indicate that the market thinks this is a spectacular deal for BP and a so-so arrangement for Rosneft.

But ultimately, what may be happening is that foreign capital has a hard time buying Rosneft outside Russia anyway. BP is more liquid on a global basis, so may be the only way for many people to trade this story.

Two other threads to watch:

1. Teaming up with Rosneft gives BP a straight line of communication straight up to the Russian government, so TNK-BP, its existing toehold in Russia, may now be a third wheel.

2. The Kremlin was looking for a strategic investor to take about 10% of Rosneft. This satisfies that goal and may make its proposed IPO of another 15% of the company sweeter to Western investors.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

TNK BP unifies gas and energy divisionshttp://www.steelguru.com/russian_news/TNK_BP_unifies_gas_and_energy_divisions/190866.html

Monday, 14 Feb 2011

Interfax citing Mr Mikhail Slobodin the company executive vice president for gas and electricity supply as saying that TNK-BP has unified its gas and energy divisions.He said that "The company made this decision since these two divisions, gas and electricity are interrelated. TNK-BP currently has projects for developing gas operations, as well as projects for expanding generation. It is entirely logical that these two areas would be connected."

Mr Slobodin said this would help boost the company's energy efficiency.

TNK-BP merged its gas and electricity divisions at the start of February. Slobodin now heads this area of operations.

Tatneft registered the branch in Turkmenistan.http://www.steelguru.com/russian_news/Tatneft_registered_the_branch_in_Turkmenistan_/190865.html

Monday, 14 Feb 2011

It is reported that Tatneft registered its branch in Turkmenistan.It should provide the realization of the contract signed with Turkmenneft in November 2010 on the Goturdepenebit sector servicing. The parties developed the 1st year production program which should be carried out under Elkhovneft control.Tatneft is ranked as the 6th oil producer in Russia. It has 790 million tonnes in proved reserves. In 2008 25.766 million tonnes were gushed out, revenues are assumed to gain 217 billion, operating profit RUB 49 billion. The share capital is worth RUB 2.33 billion split in 2178690.7ths common and 147,508,500 preferred stocks of RUB 1 par. The major holder is Svyazinvestneftekhim.

Oil and gas monitor http://www.bne.eu/dispatch_text14230

Renaissance CapitalFebruary 14, 2011

No signs of improving corporate governance at Gazprom...yet. Last Friday (11 February), Gazprom held its annual investor day. One of the key topics of the day's Q&A session was the sale of 9.7% of Novatek to Gazprombank, which has raised concerns about a continued worsening of corporate governance at Gazprom. According to Gazprom's 3Q10 financial statements, the stake sale price was RUB57bn, or about RUB195/share, representing a 36% discount to the share price on 20 December, when the deal was completed. We were somewhat confused that Gazprom spokesman Sergey Kupriyanov provided an explanation of the transaction in the presence of the company's CFO - who we think would have been better suited to addressing such questions. While formal arguments from Gazprom about low liquidity in Novatek shares, the need for cash rather than options, and previous agreements reached before Novatek's share price had reached its all-time high, might have some merit, we doubt they will soothe deep investor disappointment about the way this transaction was handled. As a result, we think Gazprom's share price performance may lag the market for the next few weeks. That said, Gazprom remains our top sector pick for 2011, due to improving gas industry fundamentals coupled with very low valuations and the remaining possibility of improving corporate governance as a result of management changes and/or government actions.

Performance and ratings update. EMEA oil and gas stocks were flat, on average, last week, outperforming the Brent price (down 0.8%), the Bloomberg World Oil and Gas Index (down 1.9%), the MSCI Renaissance Index (down 2.9%) and the MSCI Emerging Markets Index (down 3.6%). The best performers were Tatneft (pref), Gazprom and TNK-BP Holding which were up 8.8%, 7.7% and 3.4%, respectively. Surgutneftegas (pref), Transneft (pref) and Surgutneftegas (common shares) demonstrated the worst performance, down 6.4%, 3.9% and 3.3%, respectively.

Our watch list for the current week includes Rosneft's and LUKOIL's annual reserves update.

Chart of the week. At a government meeting in St Petersburg on 9 February, Russian Prime Minister Vladimir Putin called for faster oil taxation changes, discussions on which have been dragging on for too long, according to Putin. While at the end of last year we were less confident that any material changes will be approved, we now see real signs that a new tax system could become effective from 2012. If approved, the proposed new system will immediately boost EBITDA at Tatneft by 12%, making it the biggest likely beneficiary of the new framework. However, if tax benefits for greenfield projects are included, Rosneft and TNK-BP also stand out as the biggest potential beneficiaries. We also view the forthcoming changes as an important catalyst for the whole sector, which could lead to its outperformance against the broader market.

Gazprom

Russia to start natural gas export to China in end-2015, reporthttp://www.istockanalyst.com/article/viewiStockNews/articleid/4886378

Monday, February 14, 2011 1:35 AM

BEIJING, Feb. 14, 2011 (Xinhua News Agency) -- Russia is to start natural gas export to China in the end of 2015, according to Russian media reports reaching here on Monday.

Russian RBC newspaper quoted a source with Gazprom as saying that the Russian natural gas monopoly has planned to sign a natural gas supply agreement with Chinese counterpart in 2011 and is set to begin the gas export in the end of 2015.

Marina Surzhenko, an official in charge of Gazprom Export, said earlier that the Russian gas giant planned to strike a deal with China National Petroleum Corporation (CNPC) in July 2011.

CNPC, the parent company of PetroChina (PTR.NYSE; 601857.SH; 0857.HK), has been in talks with the Russian natural gas producer on building pipelines and LNG supply for

several years. But the two sides have not reached substantial deal by now due to disagreements on natural gas price. (Edited by Qiu Jun, [email protected])

Gazprom Tells Investors Pipeline Costs are Cut: Vedomosti Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQIvI7LoMg.Q

By Henry Meyer

Feb. 14 (Bloomberg) -- OAO Gazprom told investors it cut pipeline costs on major projects 38 percent between 2006 and 2009, Vedomosti reported.

The company said in an investor presentation Feb. 11 that construction costs fell to 95 million rubles ($3.2 million) per kilometer (0.6 mile), the newspaper said.

The costs refer to large diameter pipes and include only the actual pipeline and not compressor stations and other facilities, the newspaper said.

Gazprom, a state-run gas export monopoly and the largest natural gas producer in the world, reported the data after Prime Minister Vladimir Putin ordered it to cut spending on pipelines in October, Vedomosti said.

To contact the reporter on this story: Henry Meyer in Moscow at [email protected]

To contact the editor responsible for this story: Willy Morris at [email protected]

Last Updated: February 14, 2011 00:23 EST

Gazprom Sees 15% Price Rise for Europe http://www.themoscowtimes.com/business/article/gazprom-sees-15-price-rise-for-europe/430909.html

14 February 2011Bloomberg

Gazprom expects European gas prices to rise 15 percent and supplies about 9 percent this year, as demand recovers in the Russian exporter's biggest market by revenue.

The average price will probably rise to $352 per 1,000 cubic meters this year from $306 last year, according to a presentation to analysts and investors Friday. Gazprom's prices are linked to oil prices. Brent has risen 39 percent in the past year.

Exports to Europe are planned at about 152 billion cubic meters of gas this year, compared with 139 bcm last year, according to the materials. Gazprom said it had 23 percent of the market in 2010.

"This year, Gazprom expects growth because of rising demand in Europe and increasing spot prices in Europe, which make Russian gas competitive," said Svetlana Grizan, an analyst at VTB Capital.

European sales accounted for 52 percent of Gazprom's revenue last year, according to the presentation. Deliveries may return to pre-crisis levels this year after spot prices increased, deputy chief executive Valery Golubev said last week in St. Petersburg. Supplies, mostly shipped under long-term contract via pipeline, will face less pressure than last year, he said.

Gazprom's shipments to Europe slumped to 140.6 billion cubic meters in 2009, from 158.8 billion cubic meters in 2008, as the financial crisis eroded demand and some of the Russian company's customers shifted purchases to cheaper liquefied natural gas cargoes. Exports were 150.5 billion in 2007.

Gas for next-month delivery in Britain, Europe's most liquid market, has risen about 57 percent in the past year, according to broker prices compiled by Bloomberg.

Gazprom, which has depended on pipeline supplies to Europe for decades, plans to build a link to China and increase LNG trade, according to the presentation.

"Gazprom has made LNG a priority," Grizan said.

LNG is chilled to a liquid for shipment by tanker to remote markets, such as Asia, and doesn't pass through transit countries.

The producer, which agreed to gain control of Royal Dutch Shell's Sakhalin-2 LNG project in 2006, plans to carve out as much as 14 percent of global LNG trade by 2030, according to the presentation. Its share didn't exceed 2 percent last year.

Gazprom is selecting LNG projects outside Russia for potential participation, which could add as much as 25 billion cubic meters of gas to the company's portfolio annually by 2030.

Gazprom expects total debt to drop to $43 billion at the end of this year, compared with $44.1 billion at the end of 2010, according to the presentation. That would be a decline of about 2.5 percent.

One-fourth of EU member states support South Stream: Gazprom http://www.focus-fen.net/index.php?id=n242080

12 February 2011 | 21:06 | FOCUS News Agency

Home / WorldMoscow. South Stream project enjoys the support of a quarter of the EU member states, said the chief of the legal affairs department in Gazprom Ivan Gudkov at a meeting of the supervising council of the Russian Gas Society, UNIAN news agency reported.“About one-fourth of the EU member states have expressed directly or indirectly support for South Stream project, which is a strong argument in favor of giving it a status not worse than the one of South Corridor project.” said Gudkov.

Gazprom Neft Profits Up, Eyes Sibir http://www.themoscowtimes.com/business/article/gazprom-neft-profits-up-eyes-sibir/430914.html

14 February 2011Bloomberg

Gazprom Neft, the oil arm of natural gas exporter Gazprom, may buy the remaining shares of Sibir Energy from the city of Moscow as early as this month.

The company may buy the 22.4 percent stake in February or March, Yekaterina Stenyakina, a Gazprom Neft spokeswoman, said Friday. She didn't say a price.

Sibir Energy owns half a Siberian oil production venture with Royal Dutch Shell that last year supplied Gazprom Neft with more than 80,000 barrels per day, according to the company.

Gazprom Neft and Sibir also control the Moscow Refinery, which processed 10.15 million tons of crude last year.

Gazprom Neft spent $2.51 billion in building up a stake of about 80 percent in the company between April 2009 and May last year. In July, it sold about 3 percent to Moscow, the oil producer said in its third-quarter financial statement.

Gazprom Neft plans to boost oil and gas output about 7.6 percent, and increase capital expenditures, according to a company presentation to analysts Friday.

The oil producer plans to produce 56.8 million tons of oil equivalent (1.14 million bpd) this year, compared with 52.8 million tons last year.

Investments may decline as Gazprom Neft boosts capital expenditures about 15 percent to $3.8 billion and cuts planned "new projects" by half to $800 million, according to the materials.

Gazprom Neft increased total proved oil and gas reserves by 0.9 percent last year based on the standards of the Petroleum Reserves Management System.

Total proved reserves rose to 7.53 billion barrels of oil equivalent at the end of 2010, compared with 7.46 billion a year earlier, the Russian producer said Friday on its web site. Crude reserves accounted for 6.44 billion barrels of that.

Gazprom Neft said fourth-quarter profit rose about 1 percent to $873 million from $869 million in the previous three-month period.

Sales advanced 8 percent to $9.06 billion, Gazprom Neft said on its web site. Gazprom Neft will cut the price of winter diesel sold at its stations by 1 ruble per liter starting Saturday, the company said Friday in an e-mailed statement.

The Federal Anti-Monopoly Service last week opened an investigation into diesel and jet fuel price increases by Gazprom Neft, Rosneft and LUKoil. Prime Minister Vladimir Putin said the same day that oil company executives hadn't responded to previous inquiries from the government.

Gazprom Neft presents 4Q10 numbers, gives views on taxation

http://www.bne.eu/dispatch_text14230

Troika DialogFebruary 14, 2011

Gazprom Neft on Friday released its headline 4Q10 and 2010 US GAAP figures, while the company's CFO, Vadim Yakovlev, made a presentation during Gazprom's Investor Day. The results themselves were largely in line with our projections, with 4Q10 EBITDA of $1,841 mln coming in slightly better, buoyed by a strong pricing environment. The company booked $107 mln in provisions against a Federal Antimonopoly Service (FAS) fine, which led to weaker net income. We were surprised at the very low level of operating cash flow in the quarter of just $1,073 mln, against the $1,600 mln we had expected; we believe this could only have been attributable to a major reversal in working capital, though we will not know for sure until the full set of results is published.

Yakovlev made several interesting points during his presentation. He said that the company has been able to pass the entire increase in diesel excise taxes onto the final consumer, but has had less luck in doing so with gasoline, where the market has been more saturated lately. This, coupled with recent calls by the FAS and Prime Minister Vladimir Putin to reduce prices at the pump, could lead to lower margins for Gazprom Neft, which is more reliant on domestic gasoline sales than its peers (about 11% of total revenues in 4Q10, we estimate). The CFO also said that the switch to the 60/66 taxation system would be net positive for profitability, based on the company's estimates. On our numbers, it would be neutral in the best case, but Gazprom Neft would gain less than any other integrated major apart from Bashneft regardless.

Finally, the company expects organic (consolidated) capex to increase by about $500 mln in 2011 to $3.8 bln, which is above our flat projection and may imply a necessary step up in drilling in order to support declining production, something we may have already spotted in January output numbers.

TNK-BP and Gazprom Neft buy operator of Yamal oil and gas deposits

http://www.bne.eu/dispatch_text14230

RIA NovostiFebruary 11, 2011

Russian-British joint venture TNK-BP and Gazprom Neft, the oil arm of the country's energy giant Gazprom, have bought equal stakes in Messoyakhaneftegaz, operator of the Messoyakh oil and gas deposits, from their subsidiary Slavneft, Slavneft said on Friday.

Gazprom Neft and TNK-BP said in January that their investment in the development of the deposits might amount to $15-18 billion.

Reserves of the Messoyakh deposits, located in the oil and gas rich Yamal peninsula in Russia's north, are estimated at 560 million tons of oil and 230 billion cubic meters of gas under C1+C2 category.

Gazprom: Ambitious plans disclosed during investor day

http://www.bne.eu/dispatch_text14230

UralSibFebruary 14, 2011

Maintaining high output and exports against market expectations. Last Friday, Gazprom (GAZP - Hold) held an investor day in Moscow. Despite the gloomy forecasts, Gazprom is confident it will continue to increase deliveries to the EU and expects them to go up 9% to 165 bcm in 2011. According to the company, the export price should increase 15% to $352/bcm. By 2030, Gazprom plans to have a 32% share in EU gas market, 33% in the CIS gas market, 13% in the Asian gas market and 14% in the global LNG market. At the same time, Gazprom admits that its share on the domestic market will shrink, which, however, will be offset by further business diversification with new Asian markets and the increased sale of LNG. Production plans for 2011 stand at 508 bcm (al- though this is a conservative, low-range estimate) and 640 bcm in 2030, keeping the reserves recovery ratio at 1. Gazprom plans for capex of $23-30 bln/annum, up from current levels due to a number of large projects such as Shtokman and Yamal.

Gain from the sale of NOVATEK will be in dividends. Gazprom plans to make further progress in a deliveries agreement with China, which was finally achieved in the middle of 2010, with actual deliveries to begin in late 2015. Regarding the low price of its stake in NOVATEK sold to Gazprombank, the company's management claimed that the price was set sometime at the end of the summer or the beginning of autumn 2010 when NOVATEK's market value was lower than now, and that it is inappropriate to compare the market price with the price of such a large deal. Gazprom assured investors that the gain from this deal will be added to net income and allocated to dividends.

We are not overly optimistic. Gazprom's production and export targets seem slightly unrealistic in our view. We forecast 149 bcm for EU exports this year, 9.7% below the company's expectations. We also believe Gazprom will have to go for further price discounts with its European customers, which will reduce its free cash flow. We have made no changes to our model and retain our cautious view on Gazprom, reiterating our Hold recommendation and a price target of $5.9/share.

Gazprom to help Poland reduce CO2 emissions?http://www.thenews.pl/business/artykul149278_gazprom-to-help-poland-reduce-co2-emissions.html

14.02.2011 07:21

Alexander Medvedev, the president of Russia’s oil giant Gazprom has said that with the company’s help Poland could switch to gas for its electricity production, which would help reduce its reliance on CO2 emitting coal.

“If I'm not mistaken, Poland produces over 90 percent of its electricity from coal,” Medvedev told the Puls Biznesu daily.

“If that energy was produced from natural gas then Poland could reduce its carbon dioxide emissions by more than 50 percent. The EU plans to reduce CO2 emissions by 20 percent, compared to 1990 levels. But Poland could achieve this much faster by replacing coal with natural gas for electricity generation,” he said.

Gazprom is looking for further opportunities to invest in Poland, says Medvedev, particularly in the electricity generating sector.

“Our cooperation with Polish companies has been very successful and we are looking for opportunities to further develop this,” he said.

It was announced last week that Poland's state gas delivery monopoly Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) and Gazprom are planning joint energy and mining projects. Working groups are to discuss the construction of gas power stations in the south-east of Poland, according to media reports. (pg)