Russia 100715

Basic Political Developments 12TH RUSSIAN–GERMAN GOVERNMENT CONSULTATIONS

o Earthtimes: Business leaders open German-Russian dialogue as Merkel visits

o RIA: Merkel hopes Russia's WTO accession not hampered by Customs Union - "We want Russia's accession to the WTO to be completed and hope the Customs Union will not make the situation more complicated. We want to see transparent investment conditions," Merkel said.

o Itar-Tass: 2011 to be Russia-Germany Scientific Achievements Year – Medvedev

o Itar-Tass: RF-EU visa-free regimen depends on EU political will – Medvedev: “A visa-free regimen should help youth exchange programmes and will be useful in general contacts,” Medvedev said at the Russian-German business forum, which he attended together with Germany’s Chancellor Angela Merkel.

o RIA: Russia's Medvedev discusses Customs Union, visa regime with EU - The chairman of the Eastern Committee of German Business, Klaus Mangold, said particular attention should be paid to the opportunity of continuing work with Russia in beneficial conditions within the Customs Union.

o RIA: Medvedev says no need to get rid of state-run media - The president also said that the transition to digital technology and the development of the Internet have blurred the boundary between state and private media.

o RIA: Russia has no plans for large-scale renewable energy projects - energy minister : "We are going to expand a proportion of renewable energy sources," he said. "We can apply this technology locally, but we will never use it on a large-scale basis."

o Itar-Tass: Medvedev, Merkel to attend final session of Petersburg Dialogue

o Itar-Tass: Russia, Germany to sign cooperation agreements in Yekaterinburg

o RIA: Medvedev, Merkel to discuss Nord Stream project, visa regimeo Moscow News: Medvedev hints at visa change - Foreign investors

planning to work within the Customs Union of Russia, Kazakhstan and Belarus can look forward to comfortable conditions, President Medvedev announced on Thursday.

o AFP: Merkel to oversee economic deals on Russia visito Russia Today: Merkel-led German delegation arrives in Russia for talkso Moscow Times: Medvedev to Modernize Germany Forum - The economic

panels will focus on Medvedev and Putin's modernization program, said Klaus Mangold, the chairman of Germany's Committee on East European Economic Relations.

o Bloomberg: Rosatom May Work With Siemens In Areas Where Areva Isn’t Present

o Bloomberg: Siemens to Produce 1,200 Railway Cars in Russia This Decade

o RIA: Russia requests Dreamliner jet delivery before Winter Olympics - Transport Ministry - "I have met with the company`s president and asked him to change the deadline. It was moved to 2016 and we are asking to bring it forward to 2014," Levitin told reporters.

o Bloomberg: Airbus May Expand Russia Partnership Into Aircraft Development - Enders was in Yekaterinburg, a city in Russia’s Ural Mountain region, as part of a delegation with German Chancellor Angela Merkel.

Bloomberg: Russian Government Earmarks $5.6 Billion for Technology Hub Interfax: Russian weapons contract with Iran still on – official: An $800 million

deal to sell S-300 air defense missiles to Iran has not yet been cancelled, Sergei Chemezov, the head of the Russian Technologies state corporation, told journalists in Yekaterinburg on Thursday.

Itar-Tass: President signs decree on four joint strategic commands in Russia PTI: Russia reorganises Soviet-era military structure - According to local defence

expert Konstantin Makiyenko, the new command structure was successfully tested during the recent “Vostok-2010” war games in the far east of the country, when thousands of men and machines were swiftly redeployed from the central parts of the country to remote areas in the east for practicing offensive and defensive combat.

RIA: Russia Pacific Fleet warships return from U.S. VOR: Russia further claims its territorial rights in the Arctic - The Polar fleet

flagman “Akademik Fyodorov” is off from St. Petersburg to the Arctic. Among other things, during its 75-day voyage “Akademik Fyodorov’s” crew will establish the exact position of the edge of the Russian continental shelf. Itar-Tass: Medvedev urges parliament to impose bigger penalties for corruption

RIA: Turkish parliament ratifies Russian-Turkish NPP agreement - The plant is expected to be built by Atomstroyexport near the Mediterranean port of Mersin in the Akkuyu area and put into operation in 2016-2019. Russia will build four nuclear power units for the plant, each with a capacity of 1.2 GW.

VOR: New details on Kaczynski air crash - “If we don’t land, they will kill me”, according to the Polish media. The report has not been immediately confirmed by the Military Prosecutor’s Office.

Prague Monitor: Russian daily: Czech govt to skip Russia in privatisation, Temelín - Russia is faced with "a loss of very promising contracts" now that a new centre-right coalition government has assumed power in the Czech Republic, Russian daily Kommersant writes Wednesday.

Moscow Times: Moldovan Wine Ban to Stay in Place After Talks Collapse Vedomosti/Russia Today: The butter is churned - Yesterday evening,

Rosselkhoznadzor announced a temporary suspension on food supplies, starting July 9, from 14 of Finland’s companies; the reason – violation of Russia’s

sanitary requirements. The statement does not specify what specific rules the Finnish companies broke; Rosselkhoznadzor representative could not be reached.

Radio New Zealand: Nauru expects to earn more from exports after port upgrade with Russian aid

Centralasiaonline: Tajiks, Kyrgyz request end of Russian duties on gasoline VOR: Immigrant descendants on memorial voyage Trend.az: Blast in Russian railway did not reflect movement of trains from

Azerbaijan - A locomotive and two wagons with sand were undermined on the Tarki-Manas crossing in Dagestan. The blast occurred at 4:50 Moscow time. An explosive device went off during the passage of the buffer trains, consisting of a locomotive and two wagons with sand, Interfax reported.

Itar-Tass: In Dagestan, a train was damaged, no victims and survivors Rosbalt: Unknown engine blew up in Dagestan RIA: Amnesty urges justice for human rights activist Estemirova year after her

death Amnesty USA: Justice urged for Russian human rights defender's murder Russia Profile: Grown-Up Country - Russians Are Gradually Becoming Aware of

the Concept of Volunteerism and Beginning to Trust Social Organizations US-RUSSIA SPY PROBE

o RIA: Freed Russian spy Sutyagin receives British residence permito Washington Post: Medvedev pardoned petty criminals, corrupt officials

along with spiesBoston.com: Russian spies left behind soda cans with fake bottoms, and plenty of pills Russia Today: “Solution to spy scandal unbelievably quick” – former KGB officer: What could be happening behind the scenes of the latest spy saga between Moscow and Washington? Former KGB officer Oleg Nachiporenko shared his views with RT, saying it used to take years to prepare such swaps.

Russia Today: US and Russia mark anniversary of first joint space flight - Thirty-five years ago Russia and the US took a giant leap for mankind with the launch of their first joint space mission, Apollo-Soyuz, which marked the beginning of an era of space cooperation between the two countries.

NDTV: Putin meets Van Damme at mixed fight championship - Russian Prime Minister Vladimir Putin met with Hollywood star and martial arts expert Jean-Claude Van Damme at a mixed fight championship which kicked off on Wednesday in Russia's southern city of Sochi.

National Economic Trends Interfax: Russia may revise GDP growth forecast upward – Nabiullina - The

forecast, currently about 4%, will be reviewed at the end of August, she said. "We will give a new version of the forecast. We hope it is upward because in principle the economy is growing pretty well," she said.

Prime-Tass: Econ ministry to raise Russia’s 2010 GDP growth forecast in Aug VOR: Wheat prices soar worldwide - Severe drought in Russian provinces will

irreversibly affect crop yields, which is expected to fall by 14, 18 and 19 percent in Russia, Kazakhstan and Canada respectively, as compared to the last year.

Bloomberg: Russia Banks Cut Bonds for First Time Since ‘08 to Fund Lending

Xinhua: Half Russians have no savings for rainy day

Business, Energy or Environmental regulations or discussions Bloomberg: Novolipetsk, Veropharm, MTS, Rosneft: Russian Equity Preview Reuters: Russian grid firm says pricing reform on track DJ: Novolipetsk 2Q Steel Output 2.9 M Tons, Sees Price Drop In 3Q Interfax: Evraz boosts steel production 26% to 4.3 mln tonnes in Q2 Reuters: Evraz says Q2 crude steel production up 25.8 pct Bloomberg: Magnitogorsk First-Half Steel-Products Output Increases 32% Reuters: Russian UMMC to finish 2nd copper refinery in Q4 2011 RIA: Leading Russian coal company to invest up to $700 mln on development,

railway - Russia's leading mining company Mechel intends to spend $650-700 million on the development of a giant coal field in the Republic of Yakutia in northeast Russia by the end of this year, a company senior executive said on Thursday.

Steel Guru: Cost for Raspadskaya recovery an estimated RUB 9 billion Moscow Times: Raspadskaya Says Mine Repairs to Cost Less Reuters: Russia rail sale to shrink coal margins-exporters Businesswire: SISTEMA ACQUIRES 51% STAKE IN M2M TELEMATICS Businessday: Renaissance to bed down BJM purchase Reuters: Rosinter H1 sales boosted by growing demand Moscow Times: For the Record

o Vneshekonombank is adding $600 million to its July 2020 loan participation notes, according to three people with knowledge of the sale. The additional notes will be priced to yield 6.6 percent, the people said. (Bloomberg)

o Razgulyai Group appointed Viktor Sukhinov as chief executive, the company said Wednesday. Sukhinov, a former head of agricultural company Prodo, replaces Dmitry Tyukhtenko at Razgulyai, it said. (Bloomberg)

o Zarubezhneft plans to start drilling for crude in Cuban waters next year, chief executive Nikolai Brunich said Wednesday.(Bloomberg)

Activity in the Oil and Gas sector (including regulatory) Reuters: Russia's oil export duty to rise by 6 pct in Aug Gazeta.ru: The export duty on oil in Russia from August 1, could grow to $ 263.8

per ton Interfax: Oil duty set to rise to $263.8 per tonne on Aug 1; E. Siberian oil - $80.3 RIA: Transneft to discuss Burgas-Alexandroupolis oil pipeline with Bulgaria -

Russia's state-controlled oil producer Rosneft, Transneft, and energy giant Gazprom will hold a total of 51% in the project, while Greece and Bulgaria will control 24.5% each. Tokarev said Bulgaria does not intend to repay the construction expenses it owes if it withdraws from the project. The country, owes $7 million for its part in the joint venture and an additional $12 million for preparations for the project.

Reuters: UPDATE 1-JKX says Russian well test results far exceed own view

Reuters: Novatek eyes 49 pct in Yamal for foreigners-paper RIA: Russia's Novatek ready to sell 49% stake in Yamal gas project - paper Guardian: Russia urged to halt oil survey during rare whale's breeding season Bloomberg: BP Future in Russia Looks ‘Good,’ Energy Minister Shmatko Says -

“Russia is attractive for them,” Shmatko told reporters in Yekaterinburg in the Ural Mountains late yesterday. “I don’t think they’ll leave.”

Bloomberg: Putin Gives BP Investor Haven as TNK-BP Yields Fall (Update2)

Gazprom Moscow Times: Gazprom Drills Off Vietnam Reuters: Sinergie Italiane extends Gazprom gas supply deal Jamestown: Gazprom Counters Nabucco’s Advancement by Lobbying for South

Stream Alaska Dispatch: Natural gas two-fer, Gazprom and TransCanada - According to

the U.K.'s Telegraph, Russian natural gas giant, Gazprom, has no plans to abandon its practice of tying prices for its gas to oil prices even after going through a crisis recently where very low European spot prices undercut that model.

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Full Text Articles

Basic Political Developments

12 TH RUSSIAN–GERMAN GOVERNMENT CONSULTATIONS

Earthtimes: Business leaders open German-Russian dialogue as Merkel visits http://www.earthtimes.org/articles/news/334931,german-russian-dialogue-merkel-visits.html

Posted : Thu, 15 Jul 2010 05:58:58 GMT By : dpaEkaterinburg, Russia - German Chancellor Angela Merkel and Russian President Dmitry Medvedev met Thursday with top business leaders ahead of talks between their two governments while Merkel was on a two-nation trip to drum up business for German exporters.Germany's Siemens AG signed a train order at the meetings in Ekaterinburg. Talks were also held on supplying 11 Airbus A330s to Russia for 2.2 billion euros (2.8 billion dollars).Later in the day, top officials from the German and Russian governments, including Merkel and Medvedev, are to meet in the Ural Mountain city before Merkel continues Friday to China.The German and Russian leaders were expected to discuss Iran's nuclear programme, the conflict in Afghanistan, political turmoil in Kyrgyzstan and the Middle East, climate change and energy security.

Merkel was also expected to raise human rights in her talks with Medvedev and question him about the investigation into the killing of human rights activist Natalya Estemirova, who was shot July 15, 2009, in Ingushetia and whose killing remained unresolved.In the meeting with the business leaders, the lack of visa-free travel between Russia and the European Union caused friction.Medvedev, whose government has been pushing for an end to visa restrictions, spoke out for the rules to be relaxed, Merkel also supported such a move but added it wouldn't happen overnight.Klaus Mangold, chairman of the Federation of German Industry's committee on Eastern Europe, called obtaining visas "extremely aggravating" for businesses.The EU-Russia summit in June failed to pave the way for visa-free travel, and Mangold said Merkel and Medvedev should made a new push for it.

RIA: Merkel hopes Russia's WTO accession not hampered by Customs Union http://en.rian.ru/russia/20100715/159819449.html

10:34 15/07/2010

German Chancellor Angela Merkel said on Thursday she hoped the recently formed Customs Union between Russian, Kazakhstan and Belarus will not hamper Russia's accession to the World Trade Organization (WTO).

Russian President Dmitry Medvedev and Angela Merkel arrived in the Urals city of Yekaterinburg on Wednesday for the Russian-German interstate consultations.

"We want Russia's accession to the WTO to be completed and hope the Customs Union will not make the situation more complicated. We want to see transparent investment conditions," Merkel said.

Medvedev said that Russia is making progress towards WTO accession and has held talks with the United States on the issue.

"Our entry into the Customs Union has not halted our efforts towards WTO membership," he said. "I think that this year we will make significant progress in this direction."

Russia has been in negotiations for WTO membership for 17 years and is the only major economy outside of the global trade body.

Russian President Dmitry Medvedev said on Tuesday he hopes that Russia will complete negotiations on its accession by yearend.

Medvedev and Merkel are also expected to discuss bilateral trade, economic, cultural and humanitarian ties, as well as international affairs.

A total of 10 bilateral documents are expected to be signed, including a memorandum of understanding between the Skolkovo foundation, which supervises the eponymous innovation hub outside of Moscow, and Germany's Siemens AG.

The Russian companies Rostekhnologii (Russian Technology) and RusHydro will sign a partnership agreement with Siemens AG to establish a joint venture manufacturing hydroelectric power units.

Russian railway monopoly RZD will also sign a memorandum with Siemens AG to establish a joint venture for the supply and maintenance of high-speed trains.

YEKATERINBURG, July 15 (RIA Novosti)

Itar-Tass: 2011 to be Russia-Germany Scientific Achievements Year – Medvedev

http://www.itar-tass.com/eng/level2.html?NewsID=15320539

15.07.2010, 11.17

YEKATERINBURG, July 15 (Itar-Tass) -- The year 2011 will be announced as the Year of Russian-German Scientific Achievements, Russia’s President Dmitry Medvedev said at the opening of the Russian-German intergovernmental consultations on Thursday.

“We agreed yesterday to announce the coming year as the Year of Russian-German Scientific Achievements and the Development of Russian-German Science,” he said. “I believe this is a very good idea, which will favour the achievement of our goals.”

Itar-Tass: RF-EU visa-free regimen depends on EU political will – Medvedev

http://www.itar-tass.com/eng/level2.html?NewsID=15320529&PageNum=0

15.07.2010, 10.49

YEKATERINBURG, July 15 (Itar-Tass) -- Russia’s President Dmitry Medvedev is convinced that Europe’s political will may make a decision on a visa-free regimen with Russia.

“There are topics, where we shall continue our cooperation,” he said on Thursday. “The topic of visas has been raised here already: both businesses and civil societies of our countries speak about it.”

“A visa-free regimen should help youth exchange programmes and will be useful in general contacts,” Medvedev said at the Russian-German business forum, which he attended together with Germany’s Chancellor Angela Merkel.

A visa issue is not a problem of exclusively Russia and Germany, he said.

“This is a problem of Russia and the EU, but I am convinced that, with good will and desire to cooperate, we shall be able to achieve a visa-free regimen in the long run,” Medvedev said.

“The visas problem affects various contacts,” Merkel said. “We shall deal with this matter surely.”

RIA: Russia's Medvedev discusses Customs Union, visa regime with EU http://en.rian.ru/business/20100715/159819527.html

10:38 15/07/2010

Foreign investors planning to work within the Customs Union of Russia, Kazakhstan and Belarus will be given comfortable conditions, Russian President Dmitry Medvedev said on Thursday.

President Medvedev and German Chancellor Angela Merkel are attending sessions of the Russian-German forum St. Petersburg Dialogue currently underway in Yekaterinburg, which has brought together politicians and businessmen from both countries.

"In regard to the Customs Union, we will of course do everything that is needed so that investors feel comfortable within the framework of the Customs Union of Russia, Belarus and Kazakhstan...everything will be done," Medvedev said.

The chairman of the Eastern Committee of German Business, Klaus Mangold, said particular attention should be paid to the opportunity of continuing work with Russia in beneficial conditions within the Customs Union.

Mangold also touched upon the issue of simplifying the visa regime between Russia and the European Union. Medvedev gave his support to Mangold's suggestion.

"We have been discussing this topic. It is of course not a simple issue, but it is clear that a high-quality partnership between Russia and the European Union and Russia and Germany as a member of the European Union would be impossible [without solving this issue]," Medvedev said.

YEKATERINBURG, July 15 (RIA Novosti)

RIA: Medvedev says no need to get rid of state-run media http://en.rian.ru/russia/20100715/159819900.html

11:02 15/07/2010

Russian President Dmitry Medvedev said he does not deem it necessary to get rid of state-run media in Russia.

"I am not sure that we need to be running away from state-run media," Medvedev said at the Russian-German forum St. Petersburg Dialogue, which is currently underway in Yekaterinburg.

He said that there was room for the media to be run both privately and by the state.

"There is no point in setting the task of discarding state media when both [private and state-run] can exist side by side," Medvedev said.

The president also said that the transition to digital technology and the development of the Internet have blurred the boundary between state and private media.

YEKATERINBURG, July 15 (RIA Novosti)

RIA: Russia has no plans for large-scale renewable energy projects - energy minister http://en.rian.ru/russia/20100715/159820652.html

11:39 15/07/2010

YEKATERINBURG, July 15 (RIA Novosti) - Although Russia plans to increase sources of renewable energy, the country will never implement large-scale projects in the field, Russia's Energy Minister Sergei Shmatko said.

"I am wary of the idea of implementing large-scale [renewable energy projects] and think that this is not really relevant for Russia," Shmatko said at the Russian-German St. Petersburg Dialogue forum, currently underway in the Russian city of Yekaterinburg.

He said that although Russia currently has very few sources of renewable energy, by the 2015 the country plans to increase the proportion to 4.5%.

"We are going to expand a proportion of renewable energy sources," he said. "We can apply this technology locally, but we will never use it on a large-scale basis."

The Russian companies Rostekhnologii (Russian Technology) and RusHydro will sign a partnership agreement with Siemens AG at the forum on the establishment of a joint venture for manufacturing hydroelectric power units.

Itar-Tass: Medvedev, Merkel to attend final session of Petersburg Dialogue

http://www.itar-tass.com/eng/level2.html?NewsID=15319695&PageNum=0

15.07.2010, 02.33

MOSCOW, July 15 (Itar-Tass) -- Russian President Dmitry Medvedev and German Federal Chancellor Angela Merkel will attend the final session of the forum of Russian and German civil societies, known as Petersburg Dialogue.

This will be their third meeting within the framework of the forum.

According to presidential aide Sergei Prikhodko, “Cultural and humanitarian cooperation between Russia and Germany is steady and multi-level.”

“Broad contacts have been established between public organisations, parliaments and regions. This cooperation is a cornerstone of the Russian-German strategic partnership,” he said.

The Petersburg Dialogue will hold its tenth meeting on the sidelines of the Russian-German Yekaterinburg summit and focus on the Russian and German societies in the coming decade. There will be eight working groups dedicated to politics, economy, civil society, education, science and healthcare, culture, media and churches in Europe, Prikhodko said.

The first events of the forum began in July 13. On Wednesday, July 14, its participants discussed the main topic of the session. The discussion was started by First Vice Prime Minister Viktor Zubkov, who is the chairman of the Russian Coordination Committee.

Russia and Germany in the next millennium is the topic of this jubilee session. Over 300 Russian and German politicians and businesses came to participate in the forum.

“The event has become an important factor for the development of partnership between Russia and Germany,” Zubkov said.

“Globalisation removes borders between nations and countries, and Russia and Germany share many joint interests,” he said.

Misharin said that it had been Germany that became the Sverdlovsk Region’s first partner back in the 1990s. He spoke about the cooperation with Baden-Virtenberg and Saxony,

about the partnership with German enterprises in energy saving technologies, machine building and metal processing.

The Petersburg Dialogue was organised at the initiative of Vladimir Putin and Gerhard Schroeder after their meeting on September 25, 2000 in Moscow. The purpose of the event is to bring closer the two countries, to overcome existing prejudices and to develop mutual understanding between Germany and Russia.

The representatives of the CIS, Russia and Germany take part in the forum. Russia and Germany host the annual event in turn, and usually the forums are timed to coincide with the German-Russian intergovernmental consultations. Russia’s president and Germany’s chancellor usually take part in the meetings (Vladimir Putin in 2001-2007, since 2008 – Dmitry Medvedev; Gerhard Schroeder in 2001-2003, since 2006 – Angela Merkel).

Medvedev and Merkel arrived in Yekaterinburg on Wednesday and had an informal dinner. Their schedule for Thursday is quite busy and includes consultations, a meeting with Russian and German businesspeople, participation in the Petersburg Dialogue, and a one-to-one meeting.

A set of documents will be signed after the talks. Medvedev and Merkel will then give a joint press conference.

Germany remains one of the main economic partners of Russia, and this cooperation persevered through the turmoil of the global crisis. After a decline by 40.6 percent in 2009, bilateral trade stabilised in the first quarter of this year.

In the first four months of 2010, trade turnover increased 1.5 times to 15.2 billion U.S. dollars.

Investment cooperation is also on the rise. As of the end of March, the overall volume of accumulated German investments in the Russian economy had exceeded 20.2 billion U.S. dollars.

Prikhodko said the two leaders would “compare positions on economic affairs, including large joint projects, the construction of the Nord Stream pipeline and strategic alliances of Russian and German companies.”

“The efforts targeted for an upgraded model of business interaction are consonant with the Russian modernisation policy and imply diversification of relations, production localization and Russian investments in German companies with the goal of industrial and technological cooperation,” he said.

“Strategic partnership between Russia and Germany is characterised by a close and frank dialogue held at different levels and a mutual wish for rapprochement,” Prikhodko said, adding, “The annual interstate consultations held at the top level since 1998 are fundamental for the bilateral relations.”

“The Yekaterinburg summit, which will be the first full-scale intergovernmental meeting since the German parliamentary elections 2009, is bound to strengthen the potential of Russian-German relations with the emphasis on the fulfilment of the Modernisation Partnership strategy, to give a boost to economic and investment aspects of the bilateral cooperation and constructive interaction in the international arena,” he said.

Medvedev and Merkel will also meet with Russian and German businessmen on the summit sidelines.

“The regular and fruitful dialogue between the Russian president and the German federal chancellor is the solid foundation for the sustainable development of Russian-German cooperation,” he said.

The Eastern Committee of German Economy expects concrete results from the Russian-German consultations. The talks should be used to advance modernisation through Russian-German efforts and to coordinate joint projects, the committee said in a statement.

Germany as the major industrial nation remains Russia’s partner in upgrading its industry, the chairman of the Eastern Committee of German Economy, Klaus Mangold, said. He described the Russian-German cooperation in creating an innovation centre in Skolkovo near Moscow as “an important signal.”

The Eastern Committee of German Economy supports Russia’s soonest possible accession to the World Trade Organisation.

“After the sixteen-year talks on the WTO accession at last it is necessary to have a final political say both in the United States and in Russia,” Mangold said.

Yekaterinburg will become the first leg of Merkel’s foreign tour. The Chancellor will also visit Beijing to meet with the Chinese authorities. On July 18 she will visit Astana, Kazakhstan.

Itar-Tass: Russia, Germany to sign cooperation agreements in Yekaterinburg

http://www.itar-tass.com/eng/level2.html?NewsID=15319989

15.07.2010, 08.19

MOSCOW, July 15 (Itar-Tass) -- The Russian-German intergovernmental consultations in Yekaterinburg on Thursday will result in signing of a set of documents on cooperation in various sectors, Russia’s presidential aide Sergei Prikhodko said.

“Signing of a set of documents will be a ‘visible’ result of the 12th round of the intergovernmental consultations,” he said. “Russia’s President Dmitry Medvedev and Germany’s Chancellor Angela Merkel will witness the signing procedure.”

“The set of documents will reflect the ongoing partnership with Germany on various topics – from management training programmes and large-scale cultural events to joint production of wind power stations,” Prikhodko said.

Russia’s Minister of Economic Development Elvira Nabiullina and her German counterpart will sign an Intergovernmental memorandum on management training programmes, he said. Russia’s minister of culture and Germany’s governmental representative will make a joint statement on the preparations for 2011-2013 exhibitions – The Bronze Age – Europe without Borders and Russian Germans: a Millennium of History, Culture and Arts.

The two governments will sign agreements on cooperation in physical culture and sports, health care, a document on programmes for small and medium businesses, a memorandum on mutual understanding between the Skolkovo Foundation and the Siemens Company. Russia’s Railroads Company /RZD/ is expected to sign a document on a joint venture to produce, supply and service modern trains and on mutual understanding in cargo sorting.

Traditionally, Russia’s and German’s members of the governments will make reports on the work done, on the achievements and will outline further directions for the cooperation.

The following members of the Russian government take part in the intergovernmental consultations in Yekaterinburg: Foreign Minister Sergei Lavrov, Minister of Culture Alexander Avdeyev, Minister of Healthcare and Social Development Tatiana Golikova, Interior Minister Rashid Nurgaliyev, Minister of Transport Igor Levitin, Minister of Economic Development Elvira Nabiullina, Minister of Education and Science Andrei Fursenko, Minister of Nature Yuri Trutnev, Minister of Industry and Trade Viktor Khristenko, Minister of Energy Sergei Shmatko, Presidential Aide Arkady Dvorkovich, Presidential Special Envoy for Cultural Cooperation Mikhail Shvydkoi.

Russia’s business community is represented by the head of Russia’s Union of Industrials and Entrepreneurs Alexander Shokhin, Renova’s CEO Viktor Vekselberg, RZD’s President Vladimir Yakunin, Severstal’s CEO Alexei Mordashov, the head of Rostechnologii state corporation Sergei Chemezov, VEB’s CEO Vladimir Dmitriyev.

RIA: Medvedev, Merkel to discuss Nord Stream project, visa regime http://en.rian.ru/russia/20100715/159817552.html

04:24 15/07/2010

The Russian president and German chancellor will meet on Thursday in the Urals city of Yekaterinburg for a top-level discussion on a wide range of issues — from the Nord Stream gas pipeline project to simplified visa regime.

Dmitry Medvedev and Angela Merkel will meet at a working breakfast on Thursday morning, followed by a meeting with Russian and German businessmen. The two leaders will later attend a session of a Russian-German forum St. Petersburg Dialogue currently underway in Yekaterinburg.

The Russian-German interstate consultations will begin at noon. Trade and economic relations, the Nord Stream gas pipeline project, simplified visa regime between Russia and the European Union, cooperation between Russian and German regions are on the agenda.

An aide to the Russian president, Sergei Prikhodko, earlier said that the two leaders will also address international issues, including violence in Kyrgyzstan, North Korea's nuclear program and situation in de-facto independent republics of Nagorny Karabakh and Transdnestr.

A total of 10 bilateral documents are expected to be signed, including a memorandum of understanding between the Skolkovo foundation, which supervises the eponymous innovation hub outside of Moscow, and Germany's Siemens AG.

The Russian companies Rostekhnologii (Russian Technology) and RusHydro will sign a partnership agreement with Siemens AG to establish a joint venture manufacturing hydroelectric power units.

Russian railway monopoly RZD and Siemens will sign a memorandum to establish a joint venture for supply and maintenance of high-speed trains.

MOSCOW, July 15 (RIA Novosti)

Moscow News: Medvedev hints at visa changehttp://www.mn.ru/politics/20100715/187929747.html

Source Tom Washington at 15/07/2010

Foreign investors planning to work within the Customs Union of Russia, Kazakhstan and Belarus can look forward to comfortable conditions, President Medvedev announced on Thursday.

And that could mean relaxations in visa regulations between Russia and the Schengen countries in due course, RIA Novosti reported.

The issue arose during the Russia-Germany dialogue in Yekaterinburg this week, and Medvedev said: “We have been discussing this topic. It is of course not a simple issue, but it is clear that a high-quality partnership between Russia and the European Union and Russia and Germany as a member of the European Union would be impossible [without solving this issue].”

AFP: Merkel to oversee economic deals on Russia visithttp://www.google.com/hostednews/afp/article/ALeqM5ie45bTpuD6LD9PhRqCxIUOjCEX5w

(AFP) – 3 hours ago

YEKATERINBURG, Russia — Russian President Dmitry Medvedev and German Chancellor Angela Merkel were set on Thursday to oversee a flurry of economic deals to further cement the Moscow-Berlin relationship.

German government sources say Siemens will sign 2.2-billion-euro (2.8-billion-dollar) order to supply Russian Railways with more than 200 trains for its regional network at the meeting in the Urals city of Yekaterinburg.

Siemens chief executive Peter Loescher will be one of the 25 business leaders accompanying Merkel to Russia and on to China and Kazakhstan.

While a spokesman for Russian Railways declined comment to AFP ahead of the signing, a Moscow-based spokesman for Siemens, Denis Perkin, confirmed the two companies would sign a contract but declined details.

He added Siemens also planned to ink an agreement to help Russia develop the Skolkovo high-tech hub outside Moscow -- Russia's answer to Silicon Valley -- and another deal with state conglomerate Russian Technologies and RusHydro utility company.

During the summit -- the leaders' fifth encounter this year -- Medvedev and Merkel will discuss the setting up of "strategic alliances" between Russian and German companies in railway, aviation and energy industries, the Kremlin said.

"The common aim of the efforts being undertaken -- a quality improvement of business cooperation -- is in line with the modernization tasks Russia faces," the Kremlin said ahead of the bilateral summit.

Talks were to get underway at around 0330 GMT, followed by a news conference at 0730 GMT.

Medvedev this week told Russian diplomats that one of their top tasks was to help businesses forge economic alliances with the West as the Kremlin seeks to wean the country off oil and gas exports as its main economic motor.

"We need special modernization alliances with our main international partners," Medvedev said. "First and foremost with countries such as Germany, France, Italy, the European Union on the whole, (and) with the United States."

In Yekaterinburg, Medvedev and Merkel will also discuss Iran's controversial nuclear programme, the Afghanistan conflict and Russia's relations with the European Union.

Merkel, who nothetheless is considerably less cosy with Moscow than was her predecessor Gerhard Schroeder, may also raise the issue of human rights.

Thursday will be the first anniversary of the murder of journalist and human rights activist Natalya Estemirova, whose body was found in Ingushetia hours after she was abducted from Chechnya, in the Caucasus.

-- Dow Jones Newswires contributed to this report –

Russia Today: Merkel-led German delegation arrives in Russia for talkshttp://rt.com/Top_News/2010-07-15/russia-germany-delegation-dialogue.html/print

15 July, 2010, 08:51

A large number of German politicians and business chiefs led by Chancellor Angela Merkel arrived in Russia to meet with President Dmitry Medvedev to discuss European security, energy issues and civil society.

After meeting in the Russian city of Yekaterinburg to discuss Russian-German relations, the two leaders will also participate in the Petersburg Dialogue – an event, which for ten years has focused on the development of civil society in both Germany and Russia.

Business talks are also on the agenda, with a number of multi-million dollar investment deals due to be signed between Moscow and Berlin.

Russia is the first stop on Angela Merkel's foreign tour, which will also include visits to China and Kazakhstan.

Moscow Times: Medvedev to Modernize Germany Forum http://www.themoscowtimes.com/business/article/medvedev-to-modernize-germany-forum/410433.html

15 July 2010

By Irina Filatova

President Dmitry Medvedev's agenda of economic modernization will play a prominent role in two days of meetings with German Chancellor Angela Merkel, who arrived in Yekaterinburg on Wednesday evening for the 10th meeting of the St. Petersburg Dialogue.

The forum, created in 2001 to boost bilateral ties, touches on everything from politics to culture, science, media and trade. This year, business leaders will sign at least seven deals on the sidelines of the meeting, forum participants said.

Merkel and Medvedev met for an informal dinner late Wednesday ahead of the forum's main events Thursday. The leaders will meet with the representatives of the Russian-German business community and take part in the intergovernmental consultations.

Germany has "very tight economic relations with Russia," Merkel said late last week.

"Russia is an important energy supplier for Germany, and Germany is an important economic partner for Russia," she said in a video on her web site. "We will be able to intensify German-Russian cooperation even further at the meeting with business representatives."

German technology giant Siemens is expected to sign deals with three state-run companies: Russian Railways, RusHydro and Russian Technologies.

The company plans to sign a memorandum with Russian Railways and Aeroexpress — the commuter train service running to Moscow's three airports — to supply 240 Desiro Rus electric trains over the next decade, a spokeswoman for Siemens said, declining to provide other details.

Siemens will also create a joint venture with RusHydro and Russian Technologies to produce wind turbines as part of the Russian government's policy to increase energy efficiency, she said. The company plans to sign an agreement on joining the Skolkovo innovation hub, as well.

"St. Petersburg Dialogue provides an opportunity for business, and for Siemens' business in particular, to jointly implement various projects aimed at modernization," Sergei Krylov, vice president of Siemens in Russia, said in an e-mailed statement.

He mentioned transportation, energy and health care as possible areas for cooperation.

Another deal likely to come up is interest from Vladimir Yevtushenkov's Sistema holding in acquiring a stake in German semiconductor company Infineon. Medvedev and Prime Minister Vladimir Putin have been dropping hints about the deal to Merkel, Financial Times Deutschland reported last month, without specifying a source.

The economic panels will focus on Medvedev and Putin's modernization program, said Klaus Mangold, the chairman of Germany's Committee on East European Economic Relations.

"The focus is … how to improve Russia's technological base and especially how to improve its competitiveness, because Russia has lost its competitiveness over the last few years during the crisis," he said.

Energy efficiency, in particular, will be a top issue, taking over from natural resources exports, said Michael Harms, chairman of the Russian-German Chamber of Commerce.

The Kremlin had said construction of the Nord Stream pipeline would be among the issues discussed at the forum. Work on the gas pipeline from Russia to Germany began in April after a protracted debate.

"All the obstacles for the pipeline have been removed. … It will be operating next year. So I think in this case everything is rather clear," Harms said by telephone from Yekaterinburg.

Gazprom, which leads the Nord Stream consortium, is also lobbying German electric and gas utility RWE to join its South Stream gas pipeline. RWE said Monday that it would "look into the offer" although the competing Nabucco pipeline would remain its priority, Bloomberg reported.

Analysts also said the forum would be a good chance to prove that trade relations have not stagnated after the economic crisis and last year's failed bid to sell German carmaker Opel to a consortium of Sberbank and Magna International.

Merkel lobbied heavily for the deal, as did Medvedev and Putin, but General Motors eventually scrapped the sale of its European unit.

Alexander Rahr, a Russia expert at the German Council for Foreign Relations, said the forum would seek to dispel the impression of a "pause" in bilateral relations after the Opel deal collapsed.

"It's a good chance for new discussions and maybe a breakthrough," he said.

Russia and Germany had $15.2 billion in trade during the first four months of 2010, a 50 percent increase from a year earlier, the Kremlin said in a statement Tuesday. Their trade volume fell 40.6 percent in 2009, it said.

But the forum — which helped then-President Vladimir Putin and then-Chancellor Gerhard Schroeder develop a close relationship — is above all a place to improve social dialogue, Harms said, and business will only be part of the agenda.

Medvedev and Merkel will also discuss Iran's nuclear program, Russia's relations with the European Union and European security, as well as control over weapons of mass destruction, the Kremlin statement said.

Medvedev also plans to discuss easing the visa policies between Russia and Germany, Sergei Prikhodko, the president's foreign policy adviser, told reporters Wednesday.

Bloomberg: Rosatom May Work With Siemens In Areas Where Areva Isn’t Present http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aRMRbM9pKo2E

By Lyubov Pronina

July 15 (Bloomberg) -- Rosatom Corp., Russia’s nuclear power company, may begin work with Siemens AG in atomic energy fields where the German company’s former partner, Areva SA, isn’t competing, Russian Energy Minister Sergei Shmatko told reporters in Yekaterinburg today.

Rosatom and Siemens are “fully resolute” to partner in building nuclear power plants and are waiting for Siemens’ court action with Areva to resolve, Shmatko said.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

Last Updated: July 15, 2010 02:02 EDT

Bloomberg: Siemens to Produce 1,200 Railway Cars in Russia This Decade http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aq5wqHjosE3M

By Lyubov Pronina

July 15 (Bloomberg) -- Siemens AG, the German maker of the ICE high-speed train, will produce 1,200 railway cars in Russia this decade as President Dmitry Medvedev seeks to modernize the country’s infrastructure, OAO Russian Railways Chief Executive Officer Vladimir Yakunin said.

Russian Railways, the country’s rail monopoly, will sign the purchase agreement with Siemens today, during talks between German Chancellor Angela Merkel and Russian President Dmitry Medvedev, Yakunin said in an interview late yesterday.

Russia, the world’s largest energy exporter, is seeking help from western companies to upgrade its sprawling but worn out infrastructure and diversify the economy. Medvedev said July 12 that Russia should create “modernization alliances” with countries such as Germany, France, Italy and the U.S., putting its foreign policy on a more pragmatic footing.

To contact the reporters on this story: Lyubov Pronina in Moscow at

Last Updated: July 15, 2010 02:00 EDT

RIA: Russia requests Dreamliner jet delivery before Winter Olympics - Transport Ministry http://en.rian.ru/business/20100715/159820611.html

11:36 15/07/2010

The Russian Transport Ministry has requested Boeing, the world's top aerospace company, to deliver Boeing 787 Dreamliners to the country's flagship carrier Aeroflot two years ahead of schedule by 2014, Minister Igor Levitin said on Thursday.

"I have met with the company`s president and asked him to change the deadline. It was moved to 2016 and we are asking to bring it forward to 2014," Levitin told reporters.

The planes are needed for the 2014 Winter Olympic Games which will take place in the city of Sochi in the south of Russia. "We want the official carrier of the Olympic Games to use the planes during the Games," he said without specifying the number of planes.

Aeroflot General Director Vitaly Savelyev has said that the company planned to get 22 Boeing 787 Dreamliner planes to upgrade the company's fleet.

The Boeing 787 Dreamliner is Boeing's new project. The new plane can carry 250-300 passengers at a distance of 16,299 kilometers.

YEKATERINBURG, Russia, July 15 (RIA Novosti)

Bloomberg: Airbus May Expand Russia Partnership Into Aircraft Developmenthttp://www.businessweek.com/news/2010-07-15/airbus-may-expand-russia-partnership-into-aircraft-development.html

July 15, 2010, 12:27 AM EDT

July 15 (Bloomberg) -- Airbus SAS, the world’s largest planemaker, said it may expand its partnership in Russia by jointly developing a future aircraft, not the 150-seat jet now planned by a Russian state-controlled company.

It will take time to move beyond an existing alliance in Russia that creates freighters from A320 single-aisle passenger planes, Airbus Chief Executive Tom Enders said yesterday in an interview in Yekaterinburg. Russia’s OAO Irkut Corp. will develop the MC-21 on its own, Enders said.

“We have always said this is a long-haul strategy,” he said. “We start small then we go to bigger projects like the freighter conversion. And then maybe, some day, we will be able to also develop aircraft together.”

Irkut has said it intends to develop a 150-seater that would challenge Airbus’s own single-aisle A320 as well as Boeing Co.’s 737 series. The plane is in a preliminary design phase and management will give further details about planned development at the Farnborough International Airshow next week.

“Russian colleagues have already decided on the MC-21,” Enders said. “I think the development has started. We don’t see a replacement of our very successful single-aisle family A320 family for the next 15 years or so.”

Enders was in Yekaterinburg, a city in Russia’s Ural Mountain region, as part of a delegation with German Chancellor Angela Merkel.

Enders said Airbus, based in Toulouse, France, is seeing signs of a nascent recovery in the commercial aircraft business following a recession in 2009.

“We saw signs of it at the Berlin air show” in June, he said, and he is “cautiously optimistic” that the recovery will be evident at Farnborough.

Airbus is owned by European Aeronautic, Defense & Space Co.

--With assistance from Andrea Rothman in Toulouse, France. Editors: Elizabeth Wollman, Romaine Bostick

To contact the reporters on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

Bloomberg: Russian Government Earmarks $5.6 Billion for Technology Hubhttp://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ad1zieSU0q1s

By Lyubov Pronina

July 15 (Bloomberg) -- Russia’s government will set aside 170 billion rubles ($5.6 billion) for the construction of a technology hub in the Moscow suburb of Skolkovo, President Dmitry Medvedev said today after meeting with German Chancellor Angela Merkel.

Medvedev invited Germany to invest in “non-strategic” Russian companies, the leader said after talks in Yekaterinburg today.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

Last Updated: July 15, 2010 01:10 EDT

July 15, 2010 12:00

Interfax: Russian weapons contract with Iran still on – officialhttp://www.interfax.com/newsinf.asp?id=177383

YEKATERINBURG. July 15 (Interfax) - An $800 million deal to sell S-300 air defense missiles to Iran has not yet been cancelled, Sergei Chemezov, the head of the Russian Technologies state corporation, told journalists in Yekaterinburg on Thursday.

Asked whether the contract will be closed, Chemezov said, "This should be a presidential decision."

"The contract has not been annulled so far," he said.

va ap

(Our editorial staff can be reached at eng.editors@interfax.ru)

Itar-Tass: President signs decree on four joint strategic commands in Russia

http://www.itar-tass.com/eng/level2.html?NewsID=15319753&PageNum=0

15.07.2010, 03.33

MOSCOW, July 15 (Itar-Tass) -- President Dmitry Medvedev on Wednesday on Wednesday signed a decree ordering the creation of four joint strategic commands in Russia.

The same decree also ordered the creation of a unified logistical system, chief of the Russian Army General Staff, General of the Army Nikolai Makarov said.

Under the decree, four military districts and four joint strategic commands will be created.

The Moscow and Leningrad military districts will form the Western Military District (Joint Strategic Command Zapad, or West) that will incorporate the troops of the two previous military districts, the Northern and the Baltic fleets.

The North Caucasian Military District will be reorganised into the Southern Military District (Joint Strategic Command Yug, or South), incorporating the Black Sea Fleet.

The Volga-Urals Military District and the western part of the Siberian Military District will make up the Central Military District (Joint Strategic Command Tsentr, or Centre).

The remaining part of the Siberian Military District and the Far Eastern Military District will form the Eastern Military District (Joint Strategic Command Vostok, or East), incorporating the Pacific Fleet.

PTI: Russia reorganises Soviet-era military structurehttp://www.brahmand.com/news/Russia-reorganises-Soviet-era-military-structure/4456/1/10.html

Last Updated: Jul 15, 2010

MOSCOW (PTI): Russian President Dmitry Medvedev has ordered a radical restructuring of the country’s armed forces command system with an aim to reform the Soviet-era military behemoth into a ‘lean but mean’ force capable of fighting the modern network centric warfare.

The decree signed by Medvedev also aims to reform the logistic support system of the armed forces.

“Under the Presidential decree existing six military districts will be reorganised into four united strategic commands (USC) and an integrated logistic support system,” Chief of the General Staff, Army General Nikolai Makarov announced Wednesday.

Under the reformed command structure The Moscow and Leningrad military districts will be merged into the Western Military District (USC 'West') and will now also include the Northern and Baltic Fleets.

The North Caucasus Military District will be changed to the South Military District (USC 'South') and will include the Black Sea Fleet.

The Volga-Urals Military District and the western part of the Siberian Military District will be merged to form the Central Military District (USC 'Centre').

The remaining part of the Siberian Military District will be merged with the Far East Military District into the East Military District (USC 'East') and will include the Pacific

Fleet.

Deputy Defence Minister Col Gen Dmitry Bulgakov will be chief of the Integrated Logistic Support System, while former Chief, Gen Vladimir Popovkin will control the production and acquisition of weapons under the government programmes.

“In the past, two deputy defence minister level officials used to look after the logistics, of which one had the means of transportation, while another had the weapons and they could not work independently,” Gen Makarov was quoted as saying by Itar-Tass.

Gen Makarov said that earlier, 11 levels of command have been abolished to accommodate the new three-level system comprising of United Strategic Command, Operational Command and Brigade.

According to local defence expert Konstantin Makiyenko, the new command structure was successfully tested during the recent “Vostok-2010” war games in the far east of the country, when thousands of men and machines were swiftly redeployed from the central parts of the country to remote areas in the east for practicing offensive and defensive combat.

RIA: Russia Pacific Fleet warships return from U.S. http://en.rian.ru/mlitary_news/20100715/159819086.html

09:39 15/07/2010

VLADIVOSTOK, July 15 (RIA Novosti) - A group of Russia's Pacific Fleet warships led by the missile cruiser Varyag on Thursday returned from the United States to the Russian port of Vladivostok.

The group, including the missile cruiser Varyag, the rescue tugboat Foty Krylov and the tanker Boris Butoma commanded by Rear Admiral Vladimir Kasatonov, visited San Francisco, California, on June 21 -July 26.

The voyage to California and back was held as part of an effort to promote U.S.-Russian military cooperation. On June 23, Russian President Dmitry Medvedev visited the missile cruiser Varyag in San Francisco when he was on an official visit to the United States. He met with California Governor Arnold Schwarzenegger and visited the Silicon Valley before heading off to Washington, DC, to meet with President Barack Obama.

The sailors were met in Vladivostok by the fleet commander, relatives, friends and military musicians.

"The friendly visit to San Francisco was a success," Adm. Konstantin Sidenko, commander of Russia's Pacific Fleet, said and welcomed the sailors home with the Russian tradition of three roast piglets symbolizing a successful mission.

Russia's Pacific Fleet press service said that mutual friendly visits and joint Russian-U.S. visits have become common.

VOR: Russia further claims its territorial rights in the Arctichttp://english.ruvr.ru/2010/07/15/12368398.html

Jul 15, 2010 05:54 Moscow TimeThe Polar fleet flagman “Akademik Fyodorov” is off from St. Petersburg to the Arctic. Among other things, during its 75-day voyage “Akademik Fyodorov’s” crew will establish the exact position of the edge of the Russian continental shelf.

The expedition is to gather enough judicial evidence to prop up its case in court.

Once the negotiations with adjacent to the Arctic and all experiments are finalized and have enough prove for Russia’s claims on the territory, this country will file the plea to the border regulations body at the UN. 

Itar-Tass: Medvedev urges parliament to impose bigger penalties for corruption

http://www.itar-tass.com/eng/level2.html?NewsID=15319792&PageNum=0

15.07.2010, 04.33

MOSCOW, July 15 (Itar-Tass) -- President Dmitry Medvedev has urged the Federal Assembly to consider the possibility of imposing multiple penalties for corruption offences.

“Penalties for a corruption offence should match the severity of the offence, and such offences are mainly grave ones and should entail real punishment that will create an appropriate atmosphere and deter from new such offences,” Medvedev said at a meeting of the Council of Legislators on Wednesday, July 14.

At the same time, he said, “We do not want to increase the total number of prisoners. It is beyond all reasonable limits as it is.”

“So apart from imprisonment, which should be used in certain situations for gross corruption offences, we should go back to the ideas that we discussed some time ago, including at the meetings of the Anti-Corruption Council.”

“It was proposed to use so-called multiple penalties for corruption offences. It met a controversial reaction, but I suggest that our parliament – the Federation Council and the State Duma – think about this,” the president said.

“The idea is to make a person who has committed an corruption offence pay a fine multiple of the bribe. This may be a very harsh penalty that will run into millions, dozens or hundreds of millions of roubles and that will have to be paid over a long period of time. Even if a person remains at large, he will suffer financially,” Medvedev said.

“There are also other forms of punishment that should be used more actively as well, such as corrective labour or a ban on senior positions in various bodies,” he added.

Earlier, the Russian government submitted to the State Duma a draft law authorising confiscation of property for money laundering.

The draft law suggests amending Article 104.1 of the Criminal Code to include a provision on confiscation of money, values and other property obtained through money laundering.

The main purpose of the draft law is to prevent money laundering and make the right against economic crimes more effective.

The Russian Interior Ministry has also suggested enlarging the list of grounds for the confiscation of property from government officials charged with corruption.

“As a follow-up to the declaration of incomes, it would be advisable to upgrade Russian legislation by enlarging the list of grounds for the confiscation of illegally-obtained property,” Deputy Interior Minister Yevgeny Shkolov said.

“A disproportion between the assets owned by some officials and their official salary raise justifiable indignation in society,” Shkolov said.

He stressed that an effective fight against corruption depended directly on the possibility to seize ill-gotten property in favour of the budget.

Meanwhile, the Russian presidential administration is stepping up the fight against corruption. Sergei Naryshkin has instructed the Justice Ministry and other agencies to draft a new package of anti-corruption laws as soon as possible, an official close to the Justice Ministry said. A Kremlin official confirmed this.

The Justice Ministry drafted amendments to Article 104 of the Criminal Code to broaden the use of confiscation for all corruption offences, draft, together with the Ministry of

Health and Social Development, amendments to Article 575 of the Civil Code forbidding government officials to accept presents by May 30, and draft a law reducing the number of persons entitled to special criminal procedures (special subjects) by June 1. The Justice Ministry official neither confirmed, nor denied this information.

The State Duma is aware of Naryshkin's initiative. First Deputy Prosecutor General Alexander Buksman has asked the deputies to organize a roundtable discussion in order to assess the consequences of confiscation in rem (if there are suspicions of a corruption offence, the owner of property bears the burden of proving its origin), a Duma secretariat official said. In a letter to State Duma Chairman Boris Gryzlov, Buksman referred to a decision of the presidium of the presidential anti-corruption council of April 28 (chaired by Naryshkin) which had reviewed the Prosecutor General's report on Russia's compliance with the recommendations of the Council of Europe's Group of States against Corruption (GRECO).

A recent poll showed that the average bribe in Russia had almost doubled over the past four years from 5,048 roubles in 2006 to 8,887 roubles in 2010. The number of bribe takers has increased over the same time from 27 percent to 31 percent of those polled. Registering a business and obtaining permission for entrepreneurial activities proved to be the most corrupt sphere. Of those who tried to obtain necessary documents, 92 percent gave bribes, according to a poll conducted by Levada Centre.

In 2005, only 19 percent of businessmen had to give bribes when applying for documents, sociologists say. Another 65-67 percent of those polled, just like five years ago, gave bribes when violating traffic rules and detained by a traffic police inspector.

Some 43-45 percent of Russians said they had given bribes when “going through criminal proceedings in court” (32 percent in 2005) or when “receiving a driver's license, registering an automobile or undergoing a motor vehicle inspection” (26 percent). And 38.5 percent of Russians gave bribes when “facing criminal charges” (less than 1 percent in 2005).

RIA: Turkish parliament ratifies Russian-Turkish NPP agreement http://en.rian.ru/business/20100715/159820318.html

11:13 15/07/2010ANKARA, July 15 (RIA Novosti) - The Turkish parliament on Thursday ratified a cooperation agreement with Russia on the construction of Turkey's first nuclear power plant, the parliament's press service said.

The plant is expected to be built by Atomstroyexport near the Mediterranean port of Mersin in the Akkuyu area and put into operation in 2016-2019. Russia will build four nuclear power units for the plant, each with a capacity of 1.2 GW.

Rosatom CEO Sergei Kiriyenko earlier said Russia would hold the controlling stake in the $18-20 billion project. He said the project was not going to be limited to construction but would also include the creation of a nuclear engineering company, which would be owned by Russia in the initial phase.

The deal on the construction of the plant was signed during Russian President Dmitry Medvedev's official visit to Ankara in mid-May.

Russia and Turkey have already undertaken several joint projects in the energy sphere, including the Blue Stream gas pipeline, the South Stream gas pipeline and the Samsun-Ceyhan oil pipeline.

VOR: New details on Kaczynski air crashhttp://english.ruvr.ru/2010/07/15/12376223.html

Jul 15, 2010 09:49 Moscow TimePolish experts have been able to decipher more fragments on the voice recorder retrieved form the Polish president’s Tu-154 airliner that crashed near Smolensk on April 10, killing President Lech Kaczynski, his wife and more than 90 Polish officials.  The captain of the plane, Arkadiusz Protasiuk apparently said seconds before the tragedy: “If we don’t land, they will kill me”, according to the Polish media. The report has not been immediately confirmed by the Military Prosecutor’s Office.

Prague Monitor: Russian daily: Czech govt to skip Russia in privatisation, Temelínhttp://www.praguemonitor.com/2010/07/15/russian-daily-czech-govt-skip-russia-privatisation-temel%C3%ADn

ČTK | 15 July 2010

Moscow, July 14 (CTK) - Russia is faced with "a loss of very promising contracts" now that a new centre-right coalition government has assumed power in the Czech Republic, Russian daily Kommersant writes Wednesday.

It says the government of Petr Necas (Civic Democrats, ODS) will do everything to prevent Russia from gaining state property, and it will also do its utmost to eliminate the Russian firm Atomstroyexport from the completion of the nuclear power plant in Temelin, south Bohemia.

"The previous centre-right government of Mirek Topolanek (ODS) bet on the prospective development of nuclear energy already, fearing for the country's energy security. The

Czech leaders say dependence on Russia in this field has assumed alarming proportions," the paper writes.

It writes that the Czech Republic covers two thirds of oil consumption and four fifths of natural gas with imports from Russia.

Russian Lukoil concern, that is seeking control of Czech refineries, serves planes at Prague's Ruzyne airport, the paper writes.

It recalls that since the beginning of the year, Temelin has used Russian fuel supplied by TVEL firm that wants to build in the Czech Republic a fuel production capacity that would serve whole Europe.

"However, the main issue is probably the fact that Russians may play the key role in the tender for the construction of new nuclear capacities," Kommersant writes.

It says Temelin is sought by three bidders: the Russian Atomstroyexport, the U.S. Westinghouse and the French Ariva.

"Formally, the tender decision is to be made by CEZ management...In fact, however, the decision will be strongly influenced by the Czech government as in any other European country," the paper writes.

The state has a majority stake in the energy company CEZ that operates Temelin.

Kommersant writes that Necas's government, in an effort to secure billions of crowns for the state treasury, is going to consider soon the full or partial sale of many large state-controlled firms, such as the CSA air carrier, Budvar brewery, Czech Post, Czech Rail and the forest company.

However, the government only wants to sell 7 percent of shares of CEZ, one of the biggest firms in central and east Europe, in order to keep its control of the company and a maximal possible influence on its projects.

These include the completion of Temelin and upgrading the older nuclear powers plants in Dukovany, south Moravia, and Jaslovske Bohunice, west Slovakia, Kommersant writes.

Copyright 2009 by the Czech News Agency (ČTK). All rights reserved.Copying, dissemination or other publication of this article or parts thereof without the prior written consent of ČTK is expressly forbidden. The Prague Daily Monitor and Monitor CE are not responsible for its content.

Moscow Times: Moldovan Wine Ban to Stay in Place After Talks Collapse http://www.themoscowtimes.com/news/article/moldovan-wine-ban-to-stay-in-place-after-talks-collapse/410409.html

15 July 2010The Moscow Times

Russia broke off talks with Moldova about lifting a ban on imports of the country's wine after a Moldovan minister said there was nothing dangerous about its wine, a senior health official said Wednesday.

The Federal Consumer Protection Service banned wine imports from Moldova earlier this month after Chisinau introduced a national day of mourning called "Soviet Occupation Day."

The service, which has regularly banned countries' top food exports amid political tensions, cited the wine's substandard quality.

Gennady Onishchenko, the service's director, said the talks were cut off because the Moldovan agriculture minister denied that the country's wine contained harmful substances.

"He denied everything and said that everything was fine. … The lack of understanding of this move is making us take an indefinite break in the consultations that were just beginning," Onishchenko told Interfax.

Moldova's Constitutional Court rejected the day of mourning on Monday.

Vedomosti/Russia Today: The butter is churnedhttp://rt.com/Top_News/Press/eng.html

Yulia Shmidt, Anfisa Voronina

Finland became the new country on the list of states that do not abide by Russia’s sanitary requirements. Rosselkhoznadzor (Russia’s Agriculture Ministry) has blocked the supplies of 14 Finnish enterprises, including Valio, a well-known company in Russia.

Yesterday evening, Rosselkhoznadzor announced a temporary suspension on food supplies, starting July 9, from 14 of Finland’s companies; the reason – violation of Russia’s sanitary requirements. The statement does not specify what specific rules the Finnish companies broke; Rosselkhoznadzor representative could not be reached.

On Wednesday, the trucks of several producers of meat and dairy products were sent back at the Russian border, reports the Finnish newspaper, YLE. According to the publication, in May, Russian officials had inspected 23 Finnish factories and decided that their production does not meet their requirements. An employee of the Finnish Food

Safety Authority told YLE that his office was not provided specific information on what types of violations were recorded by the representatives of Russia’s Rosselkhoznadzor. The Finnish newspaper reports that, among others, the ban was applied to four Valio factories, as well as Atria and HK Ruokatalo facilities.

Valio representatives were not available to comment yesterday evening; meanwhile, a staff member of the Valio office in Russia confirmed that problems do exist, but did not specify any details. A representative of the Atria office in St. Petersburg said that there are no problems in crossing the border.

An employee of one Russian food company, working with some major networks, said that St. Petersburg’s retail networks, including Lenta and O’Key, are aware of the problems with butter and cheese supplies from Finland. O’Key spokesperson said that the retailer does not comment on supplier relations; Lenta did not comment.

Last year’s total sales of the Russian subsidiary of Valio amounted to 71.6 million tons. Valio has an 18% share in the processed cheese segment of the Russian market (34% in Moscow, and 43% in St. Petersburg), in the butter segment – 14% (23% in Moscow, 52.5% in St. Petersburg), the company had previously reported, while citing Nielsen.

Valio produces some of its products in Russia: in December of last year the company began producing yogurt drinks at the Galaktika dairy plant in the Leningrad region, and reported that it intends to further develop local production.

“Consumers do not feel the lack of supplies, due to the ban. In the summer months, Russian companies are at the peak of production,” says Vladimir Labinov, executive director of the Dairy Union. “And, if the conflict with the Russian authorities is prolonged, the production of the Finnish companies could very well be replaced by other importers.”

Heads of the two countries will soon have the chance to discuss the problem: President Dmitry Medvedev’s visit to Finland has been scheduled for July 20-21. So far, the agenda includes issues concerning cooperation in the field of wood processing, says a source, close to the Russian presidential administration.

Read the article on the newspaper's website (in Russian)

Radio New Zealand: Nauru expects to earn more from exports after port upgrade with Russian aidhttp://www.rnzi.com/pages/news.php?op=read&id=54715

Posted at 05:06 on 15 July, 2010 UTC

The Nauru Government hopes to get the bulk of a port refurbishment completed within six months.

It has just announced that repairs to the port and moorings can begin with nearly nine million US dollars of aid from Russia.

Nauru’s caretaker Finance and Foreign Affairs Minister, Dr Kieren Keke, says the grant’s an indication of Russia’s confidence and support for his government.

He says the work will mean a boost in revenue from phosphate exports because the port will be more efficient.

“We’re hoping that we can get the majority of the work in terms of relaying the moorings done within about three months. The port buildings will take a little bit longer, and we’re hoping we can complete that within six months. And the construction of the barge would be done somewhere between that, certainly within six months.”

Dr Keke says it’s the first phase of a deal signed last year with Russia.

The aid arrangements follow Nauru joining Russia in recognising the independence of the breakaway Georgian territories of Abkhazia and South Ossetia, but Dr Keke says there’s no link.

News Content © Radio New Zealand International

Centralasiaonline: Tajiks, Kyrgyz request end of Russian duties on gasolinehttp://centralasiaonline.com/cocoon/caii/xhtml/en_GB/features/caii/newsbriefs/2010/07/14/newsbrief-08

By Stan RogersFor CentralAsiaOnline.com2010-07-14

MOSCOW -- Tajikistan and Kyrgyzstan are requesting exemption from Russian export duties on gasoline, media reported July 13.

Those countries can obtain relief from the export duties only by joining the Russian-Kazakhstani-Belarusian customs union, Russian prime ministerial spokesman Dmitry Peskov said, according to Vedomosti.

Tajikistan and Kyrgyzstan received Russian fuel duty-free f rom 1995 until this spring. Russian imposed duties on gasoline exports to Kyrgyzstan and Tajikistan April 1 and May 1, respectively, in accordance with customs union rules.

VOR: Immigrant descendants on memorial voyage http://english.ruvr.ru/2010/07/15/12379767.html

Jul 15, 2010 10:14 Moscow TimeOver 60 descendants of the first wave of Russian immigrants are taking part in the memorial sea voyage to celebrate the 90th anniversary of White Army’s leaving Russia. On Wednesday, Russian foreign compatriots gathered on board a motor vessel in Venice heading for the port of Bizerte, Tunisia. Participants in the voyage will follow the reverse route of Russian immigrants, who left the Crimea in 1920. After visiting Mediterranean and Black Sea ports, descendants of Suvorov, Kutuzov and several noble families will arrive in the city of Sevastopol.

Trend.az: Blast in Russian railway did not reflect movement of trains from Azerbaijanhttp://en.trend.az/capital/transport/1720990.html

15.07.2010 11:33

Azerbaijan, Baku, July 15 / Trend /

Blast in the railway line in Dagestan did not caused problems in the movement of trains from Azerbaijan in the direction of Russia, CJSC Azerbaijan Railways Spokesman Nadir Azmammadov said.

The Baku-Tumen and Baku-Rostov trains were sent in accordance with the schedule. One line of the road is working in the scene.

"When Baku-Tumen and Baku-Rostov trains will reach the blasted area (at about 12:00 Baku time), traffic on it will already be restored," Azmammadov said.

A locomotive and two wagons with sand were undermined on the Tarki-Manas crossing in Dagestan. The blast occurred at 4:50 Moscow time. An explosive device went off during the passage of the buffer trains, consisting of a locomotive and two wagons with sand, Interfax reported.

The Makhachkala Interior Transport Management's representative also confirmed the blastadding that it was locomotive with two platforms, loaded with sand.

Itar-Tass: In Dagestan, a train was damaged, no victims and survivorshttp://www.itartass-sib.ru/index.php?option=com_content&view=article&id=21300:v-dagestane-podorvali-bronepoezd-zhertv-i-postradavshix-net&catid=37:russia&Itemid=82GOOGLE TRANSLATION

15.07.2010 10:50 | MAKHACHKALA, July 15. Itar-Tass Yuri Safronov. In Dagestan, the North-Caucasian railway unknown damaged train. According to Itar-Tass in Makhachkala * Department of Internal Affairs on transport, "The incident occurred at 04:55 Moscow time on the 2,316-m km North-Caucasian on the line Tarkio Manas. According to the source, "train consisted of a locomotive and two platforms. Victims and injured among the drivers there.

Currently working on site operational and investigative team and the engineers who are testing to detect explosive devices.

Rosbalt: Unknown engine blew up in Dagestan http://www.rosbalt.ru/2010/07/15/753775.htmlGOOGLE TRANSLATION

MAKHACHKALA, July 15. Unidentified damaged locomotive with two cars, carrying sand in Dagestan. As told Rosbalt source in the Interior Ministry in Dagestan, the incident occurred at 2316-m km North-Caucasian on the line Tarki-Manas. Victims and survivors there. Traffic on the site where the explosion occurred, suspended. Currently, the line going repairs, working quickly investigation team. Recall that in early July, unknown damaged freight train, en route towards Derbent. Sabotage has occurred at the railway station Manas - Achisu. The blast injured train driver and his assistant. Derailed 13 cars to construction materials, 10 of them - overturned.

RIA: Amnesty urges justice for human rights activist Estemirova year after her deathhttp://en.rian.ru/world/20100715/159817855.html

05:42 15/07/2010

One year after the brutal murder of human rights activist Natalya Estemirova, Amnesty International urged Russia to show political will in investigating her death.

Estemirova, a leading researcher for the Memorial human rights group in Chechnya, was abducted outside her home in Grozny, Chechnya's capital, on July 15, 2009, and found shot dead in the neighboring republic of Ingushetia later the same day. In February 2010 investigators said they had identified the suspect, but no arrests were made so far.

"Despite official declarations, the authorities have yet to ensure that the investigation into the murder of Natalia Estemirova is timely, effective and impartial and that it can establish the truth beyond any doubt," said Nicola Duckworth, Amnesty International's Europe and Central Asia Program Director.

"Anything less raises concerns that there is no political will to identify the perpetrators and bring them to justice," she said.

Amnesty International said the Russian authorities should "send a clear message" that frequent attacks on independent journalists and human rights activists in Russia will be dealt with harshly.

"President Medvedev and Prime Minister Putin should make the investigation into the murder of Natalia Estemirova and her colleagues a high priority. This will send a clear message that attacks against human rights defenders, independent lawyers or journalist will not be tolerated," Duckworth said.

Chechen President Ramzan Kadyrov, who had called Natalia Estemirova, a "woman without honor and shame," said recently during a televised interview that journalists and Memorial activists who criticize his policies are well-paid by the West and are "enemies of the people, enemies of the law, enemies of the state."

The head of Memorial, Oleg Orlov, said the group could close its branch in Chechnya as Kadyrov's statement might be interpreted by the republic's security forces as a call to action against human rights activists.

LONDON, July 15 (RIA Novosti)

Amnesty USA: Justice urged for Russian human rights defender's murderhttp://www.amnestyusa.org/document.php?id=ENGNAU2010071517677&lang=e

15 July 2010

One year after the murder of human rights defender Natalia Estemirova, Amnesty International has called on the Russian authorities to stop the harassment and intimidation of her colleagues and to bring those responsible for her murder to justice in an open and fair trial.

"The murder of Natalia Estemirova highlights the very real threat which human rights defenders are facing in the course of their legitimate activities in the Russian Federation,"

said Nicola Duckworth, Amnesty International's Europe and Central Asia Programme Director.

"They must be able to carry out their important work without fear and without facing harassment."

On 15 July 2009, Natalia Estemirova from the Russian Human Rights Centre Memorial was abducted outside her home in Grozny in the Chechen Republic and killed. Her body with bullet wounds was found on a roadside in neighbouring Ingushetia.

Russian President Dmitrii Medvedev condemned the murder and ordered a high-level investigation. In a statement he linked Natalia Estemirova's murder with her activities as a human rights defender. The activist took great risks researching some of the most serious human rights violations in Chechnya and made the information public.

In January 2010, Russian Prime Minister Vladimir Putin called on the local authorities to ensure safe conditions for the work of human rights organizations in the North Caucasus.

"Despite official declarations, the authorities have yet to ensure that the investigation into the murder of Natalia Estemirova is timely, effective and impartial and that it can establish the truth beyond any doubt," said Nicola Duckworth.

"Anything less raises concerns that there is no political will to identify the perpetrators and bring them to justice."

Like Natalia Estemirova, her colleagues from Human Rights Centre Memorial and other activists in the North Caucasus continue to provide essential support, legal and humanitarian aid to those in the region whose rights have been violated.

However, government officials in the Chechen Republic continue to put pressure on regional human rights NGOs and to denounce their work.

Chechen President Ramzan Kadyrov, who had called Natalia Estemirova in an interview given in August 2009, a "woman without honour and shame", further alleged on 3 July 2010 that staff members of Memorial were traitors and only worked in the interest of Western donors.

Natalia Estemirova's murder followed the killings in Moscow of human rights lawyer Stanislav Markelov and journalist Anastasia Baburova in January 2009, and of journalist Anna Politkovskaya in October 2006.

In Chechnya, human rights activist Zarema Sadulayeva and her husband Alik (Umar) Dzhabrailov were killed only four weeks after the murder of Natalia Estemirova.

"These human rights activists spoke up in the name of victims of serious human rights violations. Their work continues to be essential," Nicola Duckworth said.

"President Medvedev and Prime Minister Putin should make the investigation into the murder of Natalia Estemirova and her colleagues a high priority. This will send a clear message that attacks against human rights defenders, independent lawyers or journalist will not be tolerated."

July 14, 2010Russia Profile: Grown-Up Countryhttp://www.russiaprofile.org/page.php?pageid=Culture+%26+Living&articleid=a1279134793

By Elizabeth ShockmanSpecial to Russia Profile

Russians Are Gradually Becoming Aware of the Concept of Volunteerism and Beginning to Trust Social Organizations

While official statistics look grim for the volunteer movement in Russia, a closer look reveals some reasons for optimism. Studies and observations show that gone are the days of Soviet-era government-enforced labor, or post-Soviet Western-founded, Western-funded charity organizations. Russia’s volunteers and Russian charity organizations are growing in number, scope, and innovation. In short, Russian volunteerism is coming of age.

The numbers indeed look discouraging. The latest figures from the School of Economics at Russia’s State University show that only 3.02 percent of Russia’s economically active population currently dedicate any of their time to volunteering. In the United States, over a quarter of the population volunteers – in 2009, this number was 26.8 percent, the Corporation for National and Community Services reported. Russians, it seems, are just not willing to give any of their time to help their fellow citizens.

“Why is this number so little? Is it really possible that so few of us are charitable and kind?” wrote Anastasia Karimova, a volunteer and the coordinator of the “Dobrovolets” project, in response to the depressing statistics on the Dobrovolno.ru Web site.

To Russians, volunteering is not an alien activity. “To be kind, to help another person has never been outstanding in Russia. As cultural traditions, Russian volunteerism, philanthropy and charity date back to the times of ancient Rus,” said Galina Bodrenkovo, a national representative at the International Association for Volunteer Efforts (IAVE).

But regardless of how far back the tendency to volunteer may go in Russia, the country is still lacking in present-day volunteer activity. “People do really want to help,” said Elena Alshanskaya, the founder of a Russian charity and volunteer organization “Otkazniki,”

which works with abandoned children. “It’s a normal human desire to help another person. Another issue altogether is that this sphere isn’t developed.”

There are various reasons for the lack of willing and eager volunteers in Russia. Alshanskaya pointed first to the years of enforced collectivism in the Soviet Union, which backfired with strong individualistic currents. “We have fewer volunteers than in the rest of the world, firstly because of enforced collectivism and secondly because there was a very strong Soviet socialist government. It took on all the functions that the community is normally responsible for. It took them all on, and then just dropped them. And people are completely unprepared to take these functions upon themselves, to set up connections on a ‘neighbor-to-neighbor’ level. We have to build this entire system from scratch. We need to learn to organize help for each other on our own, and not to wait for the government to do everything for us,” she said.

But the 20 years that the new Russian volunteer movement has so far had to develop have been propitious. Alshanskaya noted many positive trends in Russia’s volunteer movement over the past few years. The number of organizations and scope of their work has expanded. “If when we started ‘Otkazniki’ in 2004 there were very few similar organizations, now we see that more are springing up every year. Five or six years ago, the majority of organizations involved in helping children just visited orphanages – meaningless, useless help. Now more organizations are starting to do some real things – socially, educationally, in working with families.”

Furthermore, if ten to 15 years ago many organizations were incompetent and inexperienced, perceived with suspicion as “Western spies doing something with Western money,” the tables have turned. “Organizations have started to approach their work professionally – to research, to learn and to organize their work on their own. Now there’s more trust toward them in society than there was in the 1990s. But that doesn’t mean that everyone trusts or that everything is perfect. There’s just more of it,” Alshanskaya noted.

Bodrenkovo’s research has shown that Russians are now presented with an ever-increasing number of opportunities to freely donate their time and energy to non-profit organizations. Furthermore, there is obvious growth in programs and work designed to raise and support volunteers – from new volunteer centers to programs combining education with volunteer activity and prizes acknowledging and encouraging volunteerism.

Many have noted a positive shift in Russian mentality when it comes to volunteerism. “The role of volunteerism is now more often associated with opportunities for individual, leadership, career, and organizational growth,” Bodrenkovo noted. Vladimir Khromov, the head of the volunteer program at the “Podari Zhizn” foundation, put it simply: “I think that in 2005 to 2006 there was a breaking point in people’s consciousness. They understood that they need to change their lives for the better through helping their neighbors.”

The Russian government has likewise begun to recognize the vital importance of volunteerism to the development of the country. But while Bodrenkovo and others assert the importance of the state’s involvement, still others point out that Russia’s new volunteer movement has been, and still remains, a grassroots movement. “Volunteerism is clearly gaining strength,” Khromov said. “But it doesn’t depend on the government. More likely, the opposite is true: the government is trying to use this social activism to do its work.”

Alshanskaya likewise argues the need for grassroots activism. It may be that Russia’s budding volunteer movement is a sign of the country’s coming-of-age. “The government needs to leave paternalism behind,” Alshanskaya said. “It needs to stop thinking that it has to control everyone. And we need to stop waiting for it to do something for us. In a word, to do it all ourselves. And volunteers are the beginning of that movement. Of course, compared to America, unfortunately this movement is still very small. But I hope that it’s just a matter of time.”

US-RUSSIA SPY PROBE

RIA: Freed Russian spy Sutyagin receives British residence permit http://en.rian.ru/world/20100715/159819589.html

10:46 15/07/2010

MOSCOW, July 15 (RIA Novosti) - Scientist Igor Sutyagin, who was one of four Russians exchanged last week as part of a Russian-U.S. spy swap deal, has received a residence permit, Sutyagin's lawyer told RIA Novosti on Thursday.

"Yesterday, he congratulated his mom on her birthday in a phone conversation and said he has received a passport and a document he translated as a residence permit," Anna Stavitskaya said.

Sutyagin is still living in a provincial British town, Sutyagin's lawyer said. "He said he needs some time for adaptation," she added.

Sutyagin has denied information that intelligence services officers are working with him, Stavitskaya said.

In April 2004, Sutyagin, a Russian arms control and nuclear weapons specialist, was sentenced to 15 years in prison in Arkhangelsk, northwest Russia, for sharing state secrets with U.S. military intelligence.

Under the spy exchange deal, which took place in Vienna on July 9, Russia pardoned and released four prisoners jailed for spying for the United States in exchange for ten people accused by the United States of spying for Russia.

Washington Post: Medvedev pardoned petty criminals, corrupt officials along with spieshttp://www.washingtonpost.com/wp-dyn/content/article/2010/07/14/AR2010071405516.html

By Julia IoffeThursday, July 15, 2010; A08

MOSCOW -- At midnight last Thursday, Russian President Dmitry Medvedev signed a decree pardoning four Russians jailed for years because of their contacts with the West. The group was swiftly flown to Vienna and exchanged for 10 spies arrested in the United States just days earlier.

In far less dramatic fashion, and with none of the Cold War intrigue, Medvedev also pardoned 16 other people that night, most of them obscure petty criminals or corrupt local officials.

One was the director of a machine-tool plant who was removed from his post in May for failing to pay his employees. Another was a 25-year-old doing time for theft. Another was the deputy head of a committee overseeing local federal property who received six years of probation on July 8, 2004, for fraud and abuse of power -- a sentence that ran out just as Medvedev signed his pardon.

This group had little in common with the Russian intelligence officers accused of selling state secrets to the CIA, and that might have been the point. Pardoning the seemingly random convicts along with the higher-profile group seemed to be an important tactical maneuver by the Kremlin to play down the spy incident and deflect accusations that the law was being applied selectively.

"This was the president showing that he is ready to pardon not only under extraordinary circumstances but is also willing to exercise his constitutional power," said Alexey Makarkin, a political analyst with the Center for Political Technologies. "It was designed to show that any Russian can count on this option, not just a person for whom the U.S. asks."

More complex cases were also in the mix, but none had anything to do with espionage. Sergey Ananyev of Smolensk, for instance, was hastily sentenced in 2003 to 15 years in jail for murder. He maintained his innocence after a trial that he was not allowed to attend. Last July, the European Court of Human Rights ruled in Ananyev's favor and awarded him 2,000 euros.

Then there is the case of Ivan Vinogradov, a former paratrooper who was held in Butyrka, one of Moscow's most notorious prisons, for shooting a police officer who wouldn't accept a $2,000 bribe.

One day in October 2001, when his mother came to visit, Vinogradov approached a guard at the entrance to the visitors' room, handed him a false ID and, wishing him a good day, walked out. He was caught three months later after a shootout with police and a foiled suicide attempt.

"They combined the cases in order to demonstrate that this is a normal pardon," said Sergei Markov, a member of the lower house who chairs the parliament's council on global politics. "They didn't want to make this into a special case."

According to Article 71 of the Russian constitution, the president has the power to grant pardons to citizens who appeal to him for clemency. During Boris Yeltsin's presidency, a panel of rights activists and independent lawyers recommended cases for pardons or commutation of death sentences (Russia now has a moratorium on the death penalty). By the time he stepped down in 1999, Yeltsin had pardoned about 50,000 people.

Vladimir Putin, Yeltsin's successor, briefly continued the practice but disbanded the panel in 2001 to stanch the torrent of pardons.

Today, pardons are granted to prisoners who have admitted guilt, served most of their sentence, exhibited good behavior or are somehow exceptional -- a mother of many children, say, or a veteran (such as Vinogradov, who served in Afghanistan).

The prisoners appeal to the president through a regional committee, which passes its candidates for clemency up to the Kremlin. There, presidential advisers examine the materials and make nonbinding recommendations to the president.

"This is done on a regular basis," said Lev Ponomaryov, a human rights activist with the Moscow Helsinki Group. "It is a necessary and important practice."

Ioffe is a special correspondent.

Boston.com: Russian spies left behind soda cans with fake bottoms, and plenty of pills http://www.boston.com/news/local/breaking_news/2010/07/by_shelley_murp_4.html

July 14, 2010 06:30 PM

By Shelley Murphy,Globe Staff

FBI searches of the Cambridge home and a safe deposit box belonging to a couple of Russian spies turned up some interesting tools of the trade: a Dr. Pepper can with a fake lid; a Coke can with a fake bottom; foreign currency from Europe and Asia; and various identification cards.

Documents unsealed yesterday in US District Court in Boston detailed the items that were seized during searches of 35B Trowbridge St. and a safe deposit box at a Bank of America in Harvard Square shortly after the June 27 arrests of the married couple who passed themselves off as French Canadians Donald Howard Heathfield and Tracey Lee Ann Foley.

Many of the items seized from the home the couple shared with their two sons, ages 16 and 20, included electronics, computer equipment and other gadgetry. A Sony Playstation and games; a Toshiba Satellite computer; cellphones, cameras, laptops, hard drives, memory sticks, credit cards, photos, documents, and files were seized.

The raids also netted numerous unidentified pills and capsules in a variety of colors.

"The pills and vitamins indicate to me that they were well integrated into the Cambridge social scene,'' said Boston attorney Robert Sheketoff, who represented Foley, adding that the unidentified pills were probably vitamins and anti-oxidants.

An FBI affidavit filed in support of the search warrants also revealed that FBI agents seized a bottle of invisible ink in 2006 when they conducted a secret search of an apartment on the same street that the couple lived in before buying the townhouse at 35B Trowbridge St. last month.

The Cambridge couple revealed their true identities as Andrey Bezrukov and Elena Vavilova on Thursday while pleading guilty in federal court in Manhattan to being unregistered agents of a foreign government.

They were among 10 Russian spies who were sent back to their homeland last week in one of the most dramatic spy swaps in US history.

The FBI filed an 73-page affidavit outlining why they wanted to search the Trowbridge Street home that included the criminal complaint that has already been made public. The entire package can be found here.

After the search of the Trowbridge Street residence, the FBI filed a document called a return, which is an inventory of the items seized from inside the spies' home. That document, which includes the reference to the soda cans with fake bottoms, can be found here.

The FBI filed a much smaller, separate package of paperwork, when they sought court permission to search a safe deposit box rented by the spies at the Bank of America branch in Harvard Square. The application for that search warrant can be found here.

The return, which is handwritten by an FBI agent, can be found here.

Russia Today: “Solution to spy scandal unbelievably quick” – former KGB officerhttp://rt.com/Top_News/2010-07-15/oleg-nachiporenko-spy-scandal.html/print

15 July, 2010, 11:28

What could be happening behind the scenes of the latest spy saga between Moscow and Washington? Former KGB officer Oleg Nachiporenko shared his views with RT, saying it used to take years to prepare such swaps.

RT: Just days after the fuss over the Russian-American spy scandal seemed to have faded away, the story's taken another turn. The US detained another person who could be implicated in the spy ring. The saga is certainly far from over. Will we see more arrests and what will the future hold for those already disclosed? And will it affect the 'reset' in relations between Russia and the US? To discuss the issues with RT is former KGB officer Oleg Nachiporenko.

Oleg Nachiporenko: Thank you for having me.

RT: Ten people have already pleaded guilty to being agents for Russia, one more has just been detained. How come so many were caught at once? Were they just not very good at their job?

O.N.: It’s hard for me to answer this question, as I have no direct connection to this case or its data. I can only use data from the US Department of Justice that was published, and posted on the Internet. It was used as grounds for arrests. This report has some information on what this group had been working on over the ten-year period.

I certainly do have many questions about some of the things I saw in that report. I mean, the safety of people working in that group; and work principles for any intelligence agent, such as conspiracy principles.

For ten years, their homes were secretly searched. This is something one should be able to detect. Staying in opponent territory, any secret agent understands their opponents. He should be able to detect signs of such activities, like whether he’s under surveillance. I think during these ten years, they would’ve noticed suspicious signs of someone watching over them.

RT: Can we suggest that someone has betrayed them? And if so – who could be behind it?

O.N.: I believe the chances are that the information leak took place as a result of possible treason that happened at about the same time as their work started.

All I can do is make suggestions. It could’ve been treason by members of this group or others involved in this work. Or an information leak as a result of negligence in regards to conspiracy and safety principles.

RT: Usually, what happens to spies that have been disclosed? How are their careers and their lives shaped after the disclosure?

O.N.: It depends on their status, whether they are regular intelligence officers, or whether they are just assisting persons involved in this service. The analysis of the reasons for the failure of an agent or an assistant also affects what happens after. This analysis can reveal low professionalism, or unforeseen circumstances, such as another individual’s treason, which means that it wasn’t the agent’s fault.

I myself was affected by the opponent like that. I was working under the so-called legal cover of a USSR embassy worker in Mexico. As a result of a political campaign, five of us were declared persona non grata and thrown out of Mexico. A swap didn’t happen then. How did that affect my life in particular? To some extent, my further business travel opportunities were limited. I wasn’t allowed into a number of the so-called Main Adversary countries. On the other hand, I was transferred to another category of the ‘call spies’. Intelligence needs such blown agents for assignments in situations where they don’t want to risk non-blown agents. So I started working in this area.

Therefore, when experienced agents who’ve worked for a long time fail for various reasons, they can then be used in all kinds of areas. Intelligence has a very wide range of working areas. Intelligence can keep regular workers and use them in the field of training and education, for instance.

RT: US secret services say they’d been on the tail of the Russian agents for almost a decade. Why did it take so much time for them to bust the spy-ring? It’s been described by many experts as amateur!

O.N.: When secret services get signs that certain individuals may be suspected of being involved in unacceptable activities, such as intelligence work, they start deploying an entire range of operational tools at their disposal. This is done in order to determine whether these individuals are really able to damage the national security of the country where they are stationed. They don’t just have to determine that such activities were performed. They have to record these facts in order to present them to the relevant judicial authorities. Proving someone is a spy isn’t an easy task. In any case, intelligence doesn’t decide this. They report to higher state officials.

RT: Anyway, Oleg, it’s a complicated process – but 10 years! Isn’t that too much?

O.N.: Indeed, it may be a little bit too much… But there’s another thing we’re dealing with, I call it the paradox and drama of intelligence. When intelligence receives an assignment, it all happens in a particular setting, a particular political situation. While the secret service is doing its work, the setting can change. On the political level those who assigned the task may now have completely different relations with a country involved. Therefore, even though the secret service did manage to prove something, the political landscape requires a different attitude and a different implementation of this data. Let’s use Iraq as an example. The CIA knew for sure that Saddam Hussein’s regime didn’t own weapons of mass destruction. But they received an assignment from higher political state authorities to provide the documents proving otherwise. Therefore, they started working to obtain such data, even though they knew it wasn’t anywhere to be found. Nonetheless, in the course of this work, an image of Saddam Hussein as the national and then the international enemy was used to fulfill higher political tasks. But when it all happed, and they realized there really were no weapons of mass destruction, the secret service was portrayed as the guilty party initiating the entire search for proof. And they were punished for it too.

RT: So do you mean something has changed in Russian-American relations?

O.N.: Considering this work started ten years ago, at that time our relations were different; and the American state authorities had a different attitude toward such actions. The secret services were doing their job. Whether they found evidence of illegitimate actions or not, everything points to the fact that they didn’t find any. So it’s either they were doing a bad job, or they were doing a very good job, or those who were under their surveillance weren’t working at all. The political situation has changed. I believe the recent visits and top level meetings are a step towards an era of recovering the kind of relations the US and the USSR used to have during, say, WWII. What should we do in the present situation? Should we keep working even though we know there’s nothing to be found there?

In these 12 days that shook the world, we thought our relations were about to explode again, in spite of the recent warming. A rapid development and an almost theatrical solution and epilogue, a happy ending for both countries, everybody’s happy – relations seem even stronger now – and a compromise found. The solution was found unbelievably quickly.

These events are the top level of intelligence work. During the Cold War, it used to take years to prepare such swaps. As it turns out now, to some extent the foundation was laid even before this issue was made public – because one side was already prepared for it, and the other was interested in doing it smoothly. In the current situation, neither one wanted to use this opportunity to gain its grain of gold. This would beat the purpose of all previous achievements, I mean the summit during the Russian President’s visit to the US.

RT: What do you think – were these people really in a position to threaten US national interests?

O.N.: I didn’t see it in the information that I came across.

RT: Russia and the US have swapped their agents – is this how these kinds of stories usually end?

O.N.: Every situation is unique; therefore I cannot give you a general answer. Actions on both sides in similar cases have certain principles. But this can all change depending on a situation at a given moment. A case could be suspended in order to wait for something to make a solution easier; or it could be better to resolve it immediately, like in this case.

Even during the Cold War, there were channels enabling one side or another to initiate a swap. This is a very delicate matter, as it has to meet the interests of both sides and to bring three main aspects together: political, operational and legislative. Legislative points or political goals can differ between two counties at one time or another. Also, they have to consider whether this could have a negative effect on the operational aspect of the matter. Therefore, this used to take a long time.

For example, the swap of Abel. He was arrested in 1957, and the swap for Powers, who had been shot down in 1960 and put in jail, took place in 1962. This means he spent five years in jail. The swap of Konon Molody for a UK citizen, Wynne, regarding the case of Penkosvky also took a long time. He was arrested in 1961 and I think he was released in 1964. Another couple of illegal agents were arrested regarding the case of Wynne; they returned to Moscow in 1969. These were the terms of negotiating and approving those swaps. You can understand that things were changing during that time. Whereas in this case, I repeat, these were 12 days that shook the world. It fired up swiftly and ended happily.

RT: This case is extraordinary – Russians have been swapped for Russians! And ten for four! Do you think this is a fair swap deal?

O.N.: The thing is, I was very much surprised. I come from the Cold War. There were no precedents where Russians were exchanged for Russians. But now, as we can see from statements by administration officials and from the media, this unequal exchange was instigated by the US side that wished to receive the persons they had named. The result is a consensus and a compromise. Both sides are satisfied and the problem’s solved.

RT: How do you think this case will affect Russian-US efforts to reset relations?

O.N.: If we take the broad aims, any such swap offers chances for warming. We can see it, I believe, as a first step to revival. But others say it’s a time bomb under good relations. It’s hard to judge. I told the media that the swap should be followed with a joint postmortem involving spy-hunters on both sides.

We all talk about some political consequences but we don’t talk about peoples’ fates. These people have picked a lucky ticket. They were not convicted of spying in the United States. But in a different situation the political decision-making would have been

different. And then this evidence might have entailed some serious consequences in court. And these people would have for years or even decades found themselves in a situation with terms much worse than what they got as a result. And the other men had their prison terms reduced too.

RT: Which side has benefited more?

O.N.: Judging by the reactions, both sides are satisfied by this outcome. It’s a happy ending and both sides demonstrate as much.

RT: Why do Americans need Mr. Sutyagin who is already serving his sentence?

O.N.: This question should be posed to the Americans. I only know the open charges against Sutyagin. Some say he was feeding open stuff that he had summed up with the effect that it became secret. Others say he was feeding nothing at all. Still others say he had meetings with spies. How can I make any assumptions on the basis of all this? Why did they want him out of prison?

RT: The Wall Street journal wrote recently that the historical swap will allow Russian leaders to feel like they're back in the time of US-Soviet parity. Do you agree with that?

O.N.: This particular conclusion doesn’t follow from this event. It’s comical, in my view. In principle, these are side effects. These kinds of events do happen periodically in interstate relations. National interests do diverge. And after the USSR ceased to exist, it was claimed that the intelligence service no longer had friends or foes and began minding national interests. The US secret services are always guided by US national security interests. If something cropped up in US territory, they sought to neutralize it, while outside US territory they viewed threats globally no matter where they emerged and took steps to neutralize them as well.

RT: Do you think the countries still need spies? Or is spying a kind of a bad habit dating back to the Cold War, one we rather need to get rid of?

O.N.: As long as the institution of the state is in existence within the human community, intelligence services will exist. Methods change but principles, as described in the Bible, persist to this day. But the information revolution does affect intelligence priorities, of course.

Russia Today: US and Russia mark anniversary of first joint space flighthttp://rt.com/Top_News/2010-07-15/apollo-soyuz-project-anniversary.html/print

15 July, 2010, 09:09

Thirty-five years ago Russia and the US took a giant leap for mankind with the launch of their first joint space mission, Apollo-Soyuz, which marked the beginning of an era of space cooperation between the two countries.

It was also a turning point that launched the keenly fought Cold War space race into new heights.

Two rockets, blasting off half a world away from each other, would bring the Soviet Union and the United States into the same orbit.

When Soyuz-19 and the Apollo craft docked, the event ushered in a whole new chapter in space exploration – the first-ever joint project between two bitter rivals.

It was a giant leap for the men on board too – like cosmonaut Valery Kubasov, the second pilot in the Soyuz crew.

“When we docked with Apollo, it was one of the most significant moments in history for Russia and the US,” Kubasov says. “Before, everything was secret, all the details of our space programs – every detail. With the Soyuz-Apollo project, we could finally pass that barrier.”

Valery still remembers all the details of that flight, from the technical side to the happy banter between Russian and American astronauts.

“We were showing the guys different cities and places in Russia, and when we were flying over the US, Vance D. Brand was showing us Florida. I remember, he said 'this is where all the pensioners go to live',” Kubasov recalls.

Thirty-five years on, most of those men will once again get the chance to meet and share memories of their historic link-up.

Aleksey Leonov, the Soyuz commander, is in the United States for the big day.

“The launch was during the height of the Cold War. So this project wasn't just of technical and scientific importance, it was also a great step towards cooperation between Russia and the US. There were no losers,” Leonov says.

There are plans for Aleksey and his Apollo counterpart, Thomas Stafford, to meet President Obama – but not until the friends have had a chance to catch up with each other.

“It was a very meaningful symbol to the people of the world – when we opened the hatch and Aleksey and I shook hands. That showed the world that the space race has ended in a way,” Thomas Stafford says.

The joint space project had a huge impact on both sides of the Atlantic – as it was a time when rocket launches captured millions of imaginations worldwide.

Dmitry Akinfeev was a teenager when he watched the Soyuz launch into the sky – and vividly remembers every emotion it stirred.

“I remember the day perfectly. I was in the 4th grade, and it was a huge celebration, not just for the school, but the entire city,” he recalls. “We got handed balloons, flags – and went to meet the cosmonauts. We were quite little, so of course, we couldn’t understand all the implications of this flight – but we felt the excitement. And then later on, we were all outside again to watch the actual launch. I remember my dad, who worked at the launch pad; he told me this was the most important event of the century.”

Thirty-five years later, the Apollo-Soyuz project still fires people's feelings, and some are even banking on it.

Both crews were equipped with special watches designed by Omega. Now the company has released a limited anniversary edition of the timepiece.

NDTV: Putin meets Van Damme at mixed fight championship http://movies.ndtv.com/movie_story.aspx?Section=Movies&ID=ENTEN20100146625&subcatg=MOVIESINDIA&keyword=hollywood

Indo-Asian News Service Thursday, July 15, 2010 (Moscow)

Russian Prime Minister Vladimir Putin met with Hollywood star and martial arts expert Jean-Claude Van Damme at a mixed fight championship which kicked off on Wednesday in Russia's southern city of Sochi.

"Putin met during lunch with the famous sportsman and actor Jean-Claude Van Damme, who arrived as a guest at the Mixed Fight European Championship, as well as with well-known Russian sportsman Fyodor Yemelyanenko," said Dmitry Peskov, the prime minister's spokesman.

This is not the first time the star of blockbusters such as Blood Sport and Kickboxer have come to Russia for the Mixed Martial Arts Championship.

In 2007, Van Damme attended the Mixed Fight Championship between teams from Russia and the United States in St Petersburg's Ledovy Dvorets Arena (Ice Palace

Arena), where he sat together with then-Russian president Putin and Italian Prime Minister Silvio Berlusconi.

Putin is a judo black belt and an honorary president of the European Judo Union. He is also a co-author of book Let's Learn Judo with Vladimir Putin.

Russian heavyweight mixed martial arts (MMA) fighter Yemelyanenko is the current World Alliance of Mixed Martial Arts (WAMMA) champion.

The ongoing championship will see fighters from Russia's M-1 Global and Sambo-70 clubs go up against the best European contenders.

The organisers of the event said that the tournament will see five fighters from each team in the heavyweight categories of 93 kg (205 lbs) and over.

National Economic Trends

July 15, 2010 10:56

Interfax: Russia may revise GDP growth forecast upward – Nabiullinahttp://www.interfax.com/newsinf.asp?id=177363

YEKATERINBURG. July 15 (Interfax) - The Economic Development Ministry plans to revise the GDP growth forecast upward this August, Economic Development Minister Elvira Nabiullina said.

"We haven't reviewed it yet, but that is a real possibility," Nabiullina said in Yekaterinburg on Thursday.

The forecast, currently about 4%, will be reviewed at the end of August, she said. "We will give a new version of the forecast. We hope it is upward because in principle the economy is growing pretty well," she said.

jh

Prime-Tass: Econ ministry to raise Russia’s 2010 GDP growth forecast in Aughttp://www.prime-tass.com/news/show.asp?topicid=68&id=482554

MOSCOW, Jul 15 (PRIME-TASS) -- The Economic Development Ministry in August plans to raise its forecast for Russia’s gross domestic product (GDP) growth in 2010 from the current forecast of about 4%, Economic Development Minister Elvira Nabiullina said Thursday, ITAR-TASS reported.

The ministry plans to revise the forecast by the end of August, she said without elaborating further.

The International Monetary Fund (IMF) recently raised its forecast for Russia’s economic growth in 2010 to 4.3% from 4.0% forecast in April.

In 2009, Russia’s GDP fell 7.9% on the year.

End

15.07.2010 11:59

VOR: Wheat prices soar worldwide

http://english.ruvr.ru/2010/07/15/12376282.html

Jul 15, 2010 09:54 Moscow TimeThe world market is suffering from skyrocketing wheat prices caused by unfavorable weather conditions in Russia, Kazakhstan and Canada. In the last six months, the price of grain has been edging towards the maximum, following a reduction of crop forecast in the main producing countries. Severe drought in Russian provinces will irreversibly affect crop yields, which is expected to fall by 14, 18 and 19 percent in Russia, Kazakhstan and Canada respectively, as compared to the last year.

Bloomberg: Russia Banks Cut Bonds for First Time Since ‘08 to Fund Lending http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aKySXGis.iD8

By Paul Abelsky and Denis Maternovsky

July 15 (Bloomberg) -- Russian banks, the largest owners of domestic corporate bonds, are reducing holdings for the first time since 2008 to finance increased lending.

Banks, which hold about 40 percent of domestic company debt, trimmed government and corporate securities by 1.4 percent to 5.1 trillion rubles ($167 billion), a change from the past 19 months when investments more than doubled, according to the most recent data published by the central bank for May. MDM Bank, Russia’s second-largest private lender, cut bonds to 7 percent of total lending, Chief Financial Officer Vadim Sorokin said.

While lending in the second quarter rose at the fastest pace since 2008 as the economy rebounded from the biggest slump since the collapse of the Soviet Union, Bank Rossii Chairman Sergey Ignatiev said banks still preferred to “purchase securities and build up liquidity.” Now, bond yields may climb as loans increase an estimated 13 percent this year, said Clemens Grafe, chief economist at UBS AG in Moscow

“As demand for loans revives, some resources will be redistributed away from high-yielding liquid instruments and into loans to the corporate sector -- small and medium businesses and also retail consumers,” said Alexandra Volchenko, head of risk management and finance at OAO Promzvyazbank in Moscow. Russia’s third-largest private lender reduced securities holdings by 1.7 percent in June to help boost loans by at least 15 percent this year, Volchenko said in an e- mail response to questions.

‘Better Off’

The Finance Ministry expects the credit expansion to continue through the end of this year, Deputy Finance Minister Alexei Savatyugin said in an interview in Moscow yesterday. Banks are “better off” today than a year ago, he said.

Lending growth helped cut the annual cost for companies to borrow in rubles by 240 basis points, or 2.4 percentage points, between January and May to an average 11.4 percent, the lowest level since July 2008, according to the central bank.

The decline compared with the 70 basis-point drop in yields to 7.02 percent on Russia’s sovereign OFZ bonds due December 2014 for the same period. The yield on 2012 ruble bonds of Moscow-based OAO Gazprom declined 140 basis points to 6.9 percent between January and May, data compiled by Bloomberg show.

Russian banks are charging 2.74 percent to lend to each other overnight, a decrease of 321 basis points from Jan. 25. The so-called MosPrime rate peaked at 25.17 percent in January 2009 as lenders sought rubles after global credit markets seized up.

‘Less Risky’

Buying securities during the credit crisis “was a less risky strategy because demand for loans was low and securities with fixed yields carried a lot less risk than loans,” Rustam Botashev, the deputy head of research at UniCredit SpA in Moscow, said in an interview.

“Bank lending will expand this year, albeit at a weak pace,” Botashev said. “Banks’ holdings of securities will decline as a share of total lending.”

Bank Rossii cut interest rates 14 times between April 2009 and May this year to spur lending and help the economic recovery. The central bank is likely to keep rates unchanged in coming months, Ignatiev said in a June 30 statement. The government predicts the economy will grow 4 percent this year as oil, the country’s biggest export earner, rallies from a record decline in the second half of 2008.

Retail sales growth accelerated for a fifth month in May to an annual 5.1 percent while real wages rose 7 percent and disposable income climbed 2.8 percent. Investment in production capacity increased 5.5 percent for a third monthly gain, according to data compiled by the Federal Service of State Statistics in Moscow and Bloomberg.

‘Quality Borrowers’

The second quarter saw a “clear trend” toward reviving demand from “quality borrowers,” said Andrey Shalimov, the head of treasury at Moscow-based lender Bank Vozrozhdenie. “The most recent decrease in the refinancing rate and the central bank’s statement that further decreases are unlikely spurred many borrowers to seek new bank financing. Lower rates have made credit more accessible for a broader range of borrowers.”

The yield on Russia’s dollar bonds due in 2020 and sold in April fell for a third day, dropping by 7 basis points to 5.209 percent yesterday. The cost of protecting Russian debt against non-payment for five years with credit-default swaps declined 11 basis points to 169 on July 13, the lowest since May 18. The contracts, which investors use to hedge against losses on debt or speculate on creditworthiness, pay the buyer face value if a borrower reneges on its obligations.

Credit-default swaps on Russian debt, rated Baa1 by Moody’s Investors Service, cost the same as contracts for Turkey, which is rated four levels lower at Ba2. That difference has narrowed from 40 basis points more for Turkey on April 20.

Extra Yield

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries rose 1 basis point to 242, according to JPMorgan Chase & Co.’s EMBI+ indexes. The spread compares with 169 for debt of similarly rated Mexican debt and 215 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

The yield difference on Russian bonds is 60 basis points below the average for emerging markets, according to JPMorgan indexes.

Banks held 1.2 trillion rubles in corporate debt at the end of April, according to the most recent central bank data. The total amount of outstanding corporate debt is about 2.6 trillion rubles, according to UralSib Financial Corp. in Moscow.

‘Peculiar Market’

Yields on corporate bonds may climb as banks free up funds for lending, said Grafe at UBS, which forecasts a 13 percent jump in overall lending this year.

“The question is who’s ultimately going to be the owner of ruble securities,” said Grafe. “The outlook for that market is not such that I would really want to hold ruble securities. It’s a very peculiar market because the only buyer of corporate ruble bonds is essentially Russian banks.”

VTB Group, Russia’s second biggest bank, will “maintain a relatively stable securities portfolio,” Chief Finanical Officer Herbert Moos said in an e-mail response to questions.

ZAO Raiffeisenbank, the Russian unit of Raiffeisen International Bank Holding AG, said demand is still rising for corporate bonds even after the bank reduced holdings of securities to 15.2 percent of total lending at the end of May.

“We see increased demand for loans,” Chief Executive Officer Pavel Gurin said in an e-mail. “We still see a large demand for corporate bonds both from corporates to place and banks to purchase.”

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

Last Updated: July 14, 2010 23:07 EDT

Xinhua: Half Russians have no savings for rainy day http://english.peopledaily.com.cn/90001/90777/90853/7067006.html

09:33, July 15, 2010About fifty percent of Russia's residents spend their wages to the last ruble and do not save for a rainy day, Moscow's RBC Daily reported on Wednesday.

Only one quarter of the Russian population have sufficient savings, while eight percent of the respondents said they have enough savings to survive for a year in case they lose a job, according to a poll conducted by the National Agency for financial research.

According to the same research conducted in fall 2009, thirty percent of respondents said they kept some money "under futon."

The residents of the bigger cities are generally more well-to- do. Eighty percent of the residents living in the Russian cities with population over one million make savings.

Paradoxically, by the end of 2009 the amount of savings in the banks in Russia rose 26.7 percent against 2008 and exceeded the equivalent of 261 billion U.S. dollars by May 2010.

According to the RBC Daily, nearly 50 percent of all savings have been accumulated in Russia's biggest financial institution, Sberbank.

Source: Xinhua

Business, Energy or Environmental regulations or discussions

Bloomberg: Novolipetsk, Veropharm, MTS, Rosneft: Russian Equity Previewhttp://www.businessweek.com/news/2010-07-15/novolipetsk-veropharm-mts-rosneft-russian-equity-preview.html

July 15, 2010, 1:37 AM EDT

July 15 (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 dropped 0.7 percent to 1,358.60, its first loss in four days. The dollar-denominated RTS Index rose 0.2 percent to 1,412.14.

OAO Novolipetsk Steel (NLMK RX): Russia’s largest steelmaker by market value is scheduled to release a trading update. Novolipetsk fell 0.8 percent to 88 rubles.

OAO Veropharm (VFRM RX): The drugmaker unit of OAO Pharmacy Chain 36.6 is scheduled to report first-quarter earnings. Veropharm added 0.1 percent to 1,001.15 rubles.

OAO Mobile TeleSystems (MTSI RX): Russia’s largest mobile- phone company’s offer for OAO Comstar United TeleSystems is “unfair” and should be rejected, Prosperity Capital and East Capital, the two largest managers of Russia-focused funds, said. Moscow-based MTS, which owns about 62 percent of Comstar, dropped 1.2 percent to 239.73 rubles.

OAO Rosneft (ROSN RX): Crude oil rose to a two-week high after a U.S. government report showed that inventories declined three times as much as expected last week and

refineries bolstered operating rates. Russia’s largest oil producer fell 1 percent to 192.91 rubles.

--Editor: Glenn J. Kalinoski

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Reuters: Russian grid firm says pricing reform on trackhttp://af.reuters.com/article/energyOilNews/idAFLDE66D1MF20100714

Wed Jul 14, 2010 4:12pm GMT

* Economy Minister's statement rattled investors

* Grid holding CEO says no changes to RAB tariffs move

* Analysts welcome CEO statement

By Anastasia Lyrchikova and Ben Judah

MOSCOW, July 14 (Reuters) - Russian state-controlled regional grid holding firm MRSK (MRKH.MM) sought on Wednesday to calm investors' fears over possible changes to a grid pricing reform plan flagged by the economy minister.

Dozens of regional grid firms which require about $100 billion for equipment upgrades are currently moving to the Regulatory Asset Base (RAB) system, which will allow them to recover investment costs and make profit.

Under the system grid tariffs were due to rise up to 40 percent in some areas but Economy Minister Elvira Nabiullina said last month the government may cap tariff growth for the Federal Grid Company FSK and local grids by 15 percent in 2011.

Analysts have said Nabiullina's statement rattled investors, making them "fear the worst".

"I think that for those decisions that have already been taken changes are unlikely because loans have already been raised, business plans written and this (the changes) will be taken seriously," MRSK CEO Nikolai Shvets told reporters.

In 2010 MRSK is seeking about 30 billion roubles ($981.3 million) in loans and 12 billion roubles in bonds. The company also plans an additional share issue worth 8 billion

roubles which the state is expected to buy. The RAB system, which had been implemented in the European utilities sector in the 1990s, was piloted in nine Russian regions in 2009.

All Russian grid firms are due to move to the system, which links tariffs to capital investment and cost of capital, starting next year.

The government, which owns 55 percent of MRSK, plans to merge MRSK's assets into a single entity once the move is completed. MRSK also flagged plans to create a joint venture with France's utility firm EDF (EDF.PA).

Gas firm Gazprom (GAZP.MM) is the largest minority shareholder in MRSK with 10 percent.

The Russian power sector is chronically underinvested and is in dire need of investment to update Soviet-era equipement and improve safety conditions. Analysts estimate losses in the Russian grid at 8.7 percent.

"The (MRSK CEO) comments show that the government is still committed to the new regulatory regime and this is good for the market," said Deutsche Bank analyst Dmitry Bulgakov at told Reuters. (Reporting by Ben Judah and Anastasia Lyrchikova; editing by Keiron Henderson)

DJ: Novolipetsk 2Q Steel Output 2.9 M Tons, Sees Price Drop In 3Qhttp://www.automatedtrader.net/real-time-dow-jones/5146/novolipetsk-2q-steel-output-29-m-tons--sees-price-drop-in-3q

First Published Thursday, 15 July 2010 08:03 am - © 2010 Dow Jones

MOSCOW -(Dow Jones)- Russian steel producer OAO Novolipetsk Steel (NLMK.RS), or NLMK, Thursday said it produced 2.90 million metric tons of crude steel in the second quarter of 2010, a 26.5% increase from the same period of 2009.

The company said since mid-May an increase in the supply of steel products coupled with unstable demand from trading companies and end-consumers primarily in a number of export markets resulted in a price softening.

Russia's fourth-biggest steel producer by volume, said it expects its sales volumes to be comparable with that of the second quarter, but at prices between 10% and 15% lower.

Novolipetsk forecasts second-quarter revenue to have grown to about $2.2 billion, and earnings before interest, taxes, deprecation and amortization, or Ebitda, margin to be between 25% and 30%.

Novolipetsk said, that in the second quarter its high value-added product sales increased, with the largest growth accounted for by thick plates, color-coated and electrical steel.

The company said output of dynamo steel was up more than twofold while for transformer steel its was up 71.0%. Both products are used to make electricity plants and are priced at a premium.

-By Alexander Kolyandr, Dow Jones Newswires; +44 20 7842 9410; alexander.kolyandr@dowjones.com

July 15, 2010 10:14

Interfax: Evraz boosts steel production 26% to 4.3 mln tonnes in Q2http://www.interfax.com/newsinf.asp?id=177352

MOSCOW. July 15 (Interfax) - Evraz Group produced 4.282 million tonnes of steel in the second quarter of 2010, 25.8% more than in the same period last year.

Evraz produced 3.4 million tonnes of steel in the second quarter of 2009 and 4 million tonnes in the first quarter of 2010.

Output of rolled products rose 14.6% year-on-year to 3.736 million tonnes.

jh

Reuters: Evraz says Q2 crude steel production up 25.8 pcthttp://af.reuters.com/article/energyOilNews/idAFLDE66E0BK20100715

Thu Jul 15, 2010 7:15am GMT

The company, part owned by billionaire Roman Abramovich, reported the figure in a statement on Thursday, adding that quarter-on-quarter output was up 7.1 percent.

Evraz said in May it expected core earnings to nearly double in Q2 due to rising prices. [ID:nLDE64G1RW]

(Writing by John Bowker)

Bloomberg: Magnitogorsk First-Half Steel-Products Output Increases 32%http://www.businessweek.com/news/2010-07-15/magnitogorsk-first-half-steel-products-output-increases-32-.html

July 15, 2010, 1:52 AM EDT

July 15 (Bloomberg) -- OAO Magnitogorsk Iron & Steel, owner of Russia’s largest steel mill, increased production of steel products in the first half 32 percent compared with the same period last year to 5 million tons, Chief Financial Officer Oleg Fedonin told reporters today.

The company plans to spend $300 million over the next two years developing its coal assets, Fedonin said in Magnitogorsk, the Ural Mountains city where the steelmaker is based.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Brad Cook at bcook7@bloomberg.net

Reuters: Russian UMMC to finish 2nd copper refinery in Q4 2011http://af.reuters.com/article/metalsNews/idAFLDE66E08K20100715

Thu Jul 15, 2010 7:32am GMT

YEKATERINBURG Russia, July 15 (Reuters) - Russia's No.2 copper producer, Urals Mining and Metals Co (UMMC) plans to finish building its second refinery in the fourth quarter of 2011, UMMC's Chief Executive Andrei Kozitsyn said on Thursday.

Last year, UMMC said it had decided to postpone until 2012-2014 its plan to build the refinery, which would increase the firm's capacity by 37 percent to 500,000 tonnes per year. It had earlier planned to increase capacity by 2010.

Kozitsyn told Reuters UMMC planned to raise cathode copper output in 2010 by 20 percent from 2009 to 370,000 tonnes, in line with its earlier target of 356,918 tonnes. [ID:nLDE62315F]

Privately owned UMMC estimates its investments for 2010 at $1.6 billion, 70 percent of which will be channelled to develop copper and other metals deposits in the Urals and in Siberia. (Reporting by Natalya Shurmina, writing by Aleksandras Budrys)

RIA: Leading Russian coal company to invest up to $700 mln on development, railway http://en.rian.ru/business/20100715/159820723.html

11:44 15/07/2010

MOSCOW, July 15 (RIA Novosti) - Russia's leading mining company Mechel intends to spend $650-700 million on the development of a giant coal field in the Republic of Yakutia in northeast Russia by the end of this year, a company senior executive said on Thursday.

"This year we expect to invest $650-700 million in the development of the Elginskoye deposit, with the larger part of the funds to be spent on the construction of a railway," Mechel Senior Vice-President for Finances Stanislav Ploshchenko said during a conference call.

Mechel, which holds the license to develop the giant Elginskoye coal deposit with estimated reserves of 2.1 billion metric tons of coking coal, intends to put it into commercial operation in November this year.

The coal from the deposit is expected to be shipped through the port of Vanino in the Russian Far East to Asia-Pacific countries.

Steel Guru: Cost for Raspadskaya recovery an estimated RUB 9 billionhttp://www.steelguru.com/raw_material_news/Cost_for_Raspadskaya_recovery_an_estimated_RUB_9_billion/155335.html

Thursday, 15 Jul 2010

Interfax reported that the price tag for the recovery of the Raspadskaya coal mine is tentatively put at RUB 8.6 billion.

That figure is based on the company's plan for redressing the aftermath of the deadly methane mine blasts that left scores dead.

According to the protocol for a meeting with Mr Vladimir Putin Russian Prime Minister on June 24th, there will be discussion of allocating federal budget monies for building a scheme of grids for the external supply of electricity to the town of Mezhdurechensk and Raspadskaya.

The company is currently taking operational measures to increase output at its other enterprises with the aim of offsetting volume because of the disaster. It is mining and shipping K coal from the mine CJSC Koksovaya, acquired this past April.

(Sourced from Interfax)

Moscow Times: Raspadskaya Says Mine Repairs to Cost Less http://www.themoscowtimes.com/business/article/raspadskaya-says-mine-repairs-to-cost-less/410412.html

15 July 2010By Scott Rose

Costs to repair Raspadskaya's largest mine after fatal explosions earlier this year will likely reach 8.6 billion rubles ($281 million), the coal producer said Wednesday, scaling back a higher estimate from Prime Minister Vladimir Putin.

The sum includes expenses for social payments, extinguishing the fire, pumping water from the mine, and bringing the shaft back into working order, Raspadskaya said in a statement.

Production of coking coal, which is used in steelmaking, fell 42 percent in the second quarter compared with the preceding three months because all production is still halted at the damaged mine, the company said in a separate statement.

Raspadskaya's shares finished up 1 percent in Moscow, outperforming the benchmark MICEX Index, which closed down 0.7 percent.

Twin blasts ripped through Russia's largest underground mine on the night of May 9, killing 90 workers and rescuers, some of whom are still officially listed as missing. Restoring the mine, which employed about 4,000 people, could take 12 to 15 months, according to Energy Ministry estimates.

Putin traveled to the Kemerovo region mine on June 24 to discuss recovery efforts. He estimated that it would cost 10 billion rubles to restore the damaged mine, up from earlier estimates of 6 billion rubles.

The federal government could assist if needed, he said, but shareholders will have to bear the majority of the costs. Evraz Group and company management evenly own about 80 percent of Raspadskaya, Russia's largest producer of coking coal.

Separately, Russia's industrial safety watchdog said Wednesday that it would submit its preliminary report on the causes of the accident to the government on Friday.

"The reasons are clear — they were organizational shortcomings," said Nikolai Kutin, director of the Federal Service for Environmental, Technological and Atomic Inspection, Interfax reported.

The service's findings are still preliminary because it has not been able to investigate the site of the explosions, he said.

Reuters: Russia rail sale to shrink coal margins-exportershttp://in.reuters.com/article/idINLDE66C0W720100714

Wed, Jul 14 2010 * Private owners seen hiking tariffs * Even greater coal wagon shortage expected * Traders, others look at taking coal freight stakes By Jackie Cowhig LONDON, July 14 (Reuters) - The privatisation of Russianrail coal wagons may push operators to hike tariffs as subsidiesare removed, threatening to squeeze rail user margins and evenundermine coal exports, exporters said on Wednesday. Rising Russian coal rail tariffs have implications farbeyond Russia. Since 2004, whenever global prices have fallenbelow Russian costs, exporters have halted fresh sales. The current fine global coal supply and demand balance meansany threat to supply is significant. Russian railways (RzHD), the state monopoly, plans to handover control of its coal wagons to its subsidiary companiesFirst Freight Co and Second Freight Co. "Today the tariffs on coal shipments are regulated by thestate because these are socially significant cargoes," saidRZhD's spokesman Dmitry Pertsev. He declined to say how tariffs might change when the Firstand Second Freight Co are spun off from the rail monopoly. The First and Second Freight Co will end up with most ofRussia's rail cars for coal shipments. The government has saidit will keep a controlling stake in one of the two firms. "The rail costs for coal were going to rise in Januaryanyway but they will go up even more due to privatisation," asource at one of Russia's largest coal exporters said. Russian rail tariffs currently average $45 a tonne,inflating cash costs to $75.00-$80.00 and leaving a profitmargin of around $10.00 a tonne, exporters said. "Despite explaining for years that raising the tariffs hurtsthe coal industry, every year the tariffs go up," the sourcesaid. [ID:nLDE60E1LN]. Russia is one of the top five coal exporters globally,shipping around 67 million tonnes a year of thermal coal to theAtlantic and Pacific markets and is a key supplier to China,Japan, Britain, Germany and Scandinavia. The bigger Russian coal exporters have bought or rentedprivate rail wagons but they rely on RzHD for the majority. RzHD said in May that it was considering whether to sell 50

percent of First Freight Co in an initial public offering or tosell 25 percent via IPO and 25 percent to strategic investors[ID:nLDE64U02N]. EVEN LESS WAGONS "Whether they fully privatise or not, First and SecondFreight will be in effect owned by individuals who will controlall the rail cars and they can set the tariffs without having tojustify them in public as RzHD has to do," a coal executivesaid. "The tariffs are going to go up considerably, it will happenand it's a serious problem. By the end of the year there will beno coal wagons in the hands of RzHD," another senior coalexecutive said. "There will be even less availability of wagons and moredelays and problems with exports," another source at one ofRussia's largest coal exporters said. Even when their profit margins are healthy, exporters haveto devote considerable effort to solving the logisticaldifficulties of moving coal on time to ports. But potential investors outside the coal industry seeopportunities rather than problems. Rail freight is a massive business inside Russia -- RzHDmoves 1.1 billion tonnes a year of total freight. First FreightCo has been valued at $5 billion [ID:nLDE64U02N]. Vladimir Lisin, owner and chairman of Novolipetsk Steel(NLMK.MM: Quote, Profile, Research) wants a stake in First Freight [ID:nLDE64U02N]. International and Russian energy traders are also looking atstrategic rail stakes to give them greater access to the Pacificmarket for coal, sources in companies involved said. "We're looking at rail privatisations and other logisticalopportunities in Russia," one potential investor said. FACTBOXES Russia's coal restrictions by rail and port [ID:nLDE61L1S0] Russian companies line up IPOs in 2010 [ID:nRUIPOS] Key political risks in Russia [ID:nLDE65T2AK] (Additional reporting by Dmitry Zhdannikov in Moscow,editing by William Hardy)

Businesswire: SISTEMA ACQUIRES 51% STAKE IN M2M TELEMATICS

http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100714006336&newsLang=en

Moscow, Russia – July 15, 2010 – Sistema (the “Group”) (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, which invests in and is a major shareholder of companies operating in different industries, today announced that it has acquired a 51% stake in OJSC M2M Telematics (“M2M Telematics”). Sistema plans to acquire a remaining 49% stake in the next two to five years in accordance with the agreement between the companies.

Founded in 2005, M2M Telematics is the leader in the Russian market of transport monitoring, navigation and telematics based on GLONASS/GPS technologies. The company has a broad portfolio of products for multiple market segments which it sells through an extensive distribution network comprising 56 regional partners, to a large customer base.

Sergey Boev, Vice President and Head of the 'High Technologies and Industry' Business unit at Sistema, commented: “This acquisition will provide Sistema with additional expertise and know-how to assist the federal network operator OJSC Navigation Information Systems (NIS) in implementing a public-private partnership project to create a national traffic accidents emergency response system under the ERA GLONASS brand.”

Notes to editor:

OJSC NIS is owned by RTI Systems (25.5%), SITRONICS (25.5%) and Federal State Unitary Enterprise “Russian Institute of Space Device Engineering” (49%).

Businessday: Renaissance to bed down BJM purchasehttp://www.businessday.co.za/articles/Content.aspx?id=114797

SURE KAMHUNGA Published: 2010/07/15 07:53:41 AM

ACQUISITIVE Russian-based Renaissance Capital is to begin integrating BJM Securities into its global emerging business portfolio stretching from Russia to New York after the completion yesterday of the acquisition of the brokerage firm for R207m.

The acquisition, announced in May, has received regulatory approval. It is Renaissance Capital’s first investment in SA since it set up here in February.

Clifford Sacks, Renaissance Capital’s CEO for SA and head of pan-African equities, said yesterday the acquisition would provide BJM Securities with enough balance sheet strength to take on competitors in a market that is highly competitive and short of specialist skills.

“Now that the acquisition has received the necessary regulatory approvals, we can now start the process of integrating the business into our global structure.

“We have a big muscle emerging markets platform and our near-term objective is to be able to complete this integration process, especially now that we have added more specialist staff to the team,” Mr Sacks said.

BJM Securities had lacked the financial muscle and scale to attract bigger and global clients.

“If you want to bring it to basics, although BJM is the pre- eminent research firm in the industry, it lacked balance sheet strength and distribution. We now have that scale using our global offices and emerging markets presence,” he said.

BJM Securities had already recruited top analysts and investment bankers as Renaissance prepares to take on the local and African market.

“You might say we have hit the ground running,” Mr Sacks said. The opportunity to buy BJM Securities had come at the right time, he said, remarking how difficult it was to start a brokerage business from scratch, given the capital and skills required, and the time it took to establish scale and a strong brand.

Renaissance Capital’s staff in its African operations (Nigeria, Kenya, Zambia, Ghana and SA) had doubled to 110 with the acquisition of BJM Securities.

The acquisition would also boost revenue, he said.

Referring to financial performance, Mr Sacks said he would rather discuss numbers next year. Renaissance was convinced of the potential of Africa where it wanted to replace global competitors who were fond of sending in “briefcase bankers” who worked on deals and then went home.

Foreign investors were seeing Africa in a new light after the downturn in Europe and the US last year, he said. Yesterday, Thomson Reuters said the value of mergers and acquisitions in sub-Saharan Africa had doubled in the first half of this year.

kamhungas@bdfm.co.za

Reuters: Rosinter H1 sales boosted by growing demandhttp://www.reuters.com/article/idUSLDE66C1II20100715

3:28am EDT

* Same-store sales up 6 percent, vs 2.6 percent in Q1

* Number of bills up 6.8 percent

* Total sales grew 17 percent

MOSCOW, July 15 (Reuters) - Russia's biggest and only listed restaurant group, Rosinter Restaurants (ROST.MM: Quote, Profile, Research, Stock Buzz), said its same-store sales grew 6 percent in the first half on the back of a revival of consumer demand.

The result was boosted by a 6.8 percent increase in the number of bills, while the average bill edged down 0.7 percent, the company said in a statement on Thursday.

"In the first half of 2010 Rosinter effectively used a revival of consumer demand in the restaurant market, which led to improvement of the company's results," Chief Financial Officer Viktor Shlepov said. Rosinter owns chains such as Planet Sushi in Russia and in the Commonwealth of Independent States (CIS) and operates the Russian franchise of TGI Friday's. It also has a joint venture with Britain's Whitbread (WTB.L: Quote, Profile, Research, Stock Buzz) to develop the Costa Coffee brand in Russia.

The company did not provide separate second-quarter numbers. In the first quarter, sales in comparable restaurants were up 2.6 percent on the back of a 4.3 percent increase in traffic. [ID:nLDE63E09K]

Total first-half sales rose 16.9 percent year-on-year to 4.44 billion roubles ($145.2 million), and the number of restaurants increased to 356 from 348 in the first quarter. ($1=30.57 Rouble) (Reporting by Maria Kiselyova; Editing by Samia Nakhoul)

Moscow Times: For the Record http://www.themoscowtimes.com/business/article/for-the-record/410432.html

15 July 2010

Vneshekonombank is adding $600 million to its July 2020 loan participation notes, according to three people with knowledge of the sale. The additional notes will be priced to yield 6.6 percent, the people said. (Bloomberg)

Razgulyai Group appointed Viktor Sukhinov as chief executive, the company said Wednesday. Sukhinov, a former head of agricultural company Prodo, replaces Dmitry Tyukhtenko at Razgulyai, it said. (Bloomberg)

Zarubezhneft plans to start drilling for crude in Cuban waters next year, chief executive Nikolai Brunich said Wednesday.(Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Reuters: Russia's oil export duty to rise by 6 pct in Aughttp://af.reuters.com/article/energyOilNews/idAFLDE66E0G320100715

Thu Jul 15, 2010 7:55am GMT

MOSCOW July 15 (Reuters) - Russia is set to raise its oil export duty in August by 6 percent from $248.8 per tonne currently, tracking the recent rise in crude prices, according to Finance Ministry figures and Reuters calculations.

Taxes on crude from East Siberian fields, which the government reintroduced last month after a six-month respite, will rise by more than 12 percent to $80.3 per tonne, up from the July rate of $69.9.

The export duty, a major factor in the financial results of Russia's oil companies, is based on monitoring of international prices for Russia's benchmark Urals crude blend URL-E.

The August duty will be based on prices from June 15 to July 14. Finance Ministry official Alexander Sakovich told Reuters on Thursday the average price of Urals for that period was $74.45 per barrel.

Reuters calculations, based on custom tariff regulations and the average oil price estimate, show the August crude oil export duty is thus likely to be set at $263.86 a tonne, up 5.7 percent from the July level of $248.8.

The August duty was in line with the $262-$264 range forecast by the ministry on July 12, four days before the end of the monitoring period. [ID:nLDE66B0BL]

Export duties on light refined products, such as gasoline and gas oil, are to be set at $190 per tonne, up from the current level of $179.9 per tonne.

On heavy refined products, such as fuel oil, the August tariff will be set at around $102.4 above the current $96.9 per tonne.

Russia reintroduced a tax on crude from 22 East Siberian fields on July 1, with the duty set at reduced rate of 45 percent of the price in excess of $50 per barrel. (Reporting by Katya Golubkova; writing by Jessica Bachman; Editing by William Hardy)

15.07.2010 10:51

Gazeta.ru: The export duty on oil in Russia from August 1, could grow to $ 263.8 per ton

http://www.gazeta.ru/news/business/2010/07/15/n_1520675.shtml

The export duty on crude oil in Russia since August 1, 2010 increased to $ 263.8 per tonne against the current is now $ 248.8 per tonne. This is evidenced by preliminary calculations by the formula set by law on customs and tariff regulation. As the head of the summary and analytical department of the Ministry of Finance of Russia, Alexander Sakovich, the average price of oil, according to monitoring, from June 15 to July 14, 2010 amounted to $ 74.45455 per barrel. Accordingly, the rate should be set at $ 263.862 per ton. In the light oil export duty will amount to $ 190 per ton (now $ 179.9 per tonne), on heavy oil products - $ 102.4 per ton (now $ 96.9 per ton). Finally the rate of export duty on oil will determine the government of Russia in late July. Sakovich also said that the duty on oil from eastern Siberia will be August 1, 2010 $ 80.3 per ton (now $ 69.9 per ton). "Prime-TASS"

07/15 10:47   Oil duty set to rise to $263.8 per tonne on Aug 1; E. Siberian oil - $80.3http://www.interfax.com/

RIA: Transneft to discuss Burgas-Alexandroupolis oil pipeline with Bulgaria http://en.rian.ru/world/20100715/159819566.html

10:45 15/07/2010MOSCOW, July 15 (RIA Novosti) - Russia's oil pipeline monopoly Transneft is to hold talks with Bulgaria on Thursday on the Burgas-Alexandroupolis oil pipeline project.

Earlier Bulgaria said it may withdraw from the project because of environmental concerns and doubts about the project's profitability. The country has not invested in the project since the summer of 2009, when Boyko Borisov, the leader of the right-wing Citizens for European Development of Bulgaria party, became the country's prime minister.

In June Borisov said Bulgaria was withdrawing from the project, but later said the final decision had not yet been made.

Transneft CEO Nikolai Tokarev said that the company had not yet received any information on Bulgaria's decision to withdraw.

The Burgas-Alexandroupolis pipeline, a project between Russia, Greece and Bulgaria, is to pump Russian and Caspian oil from the Bulgarian Black Sea port of Burgas to the Greek Aegean port of Alexandroupolis. The three countries signed an agreement to build the 280-km (174 mile) Trans-Balkan pipeline in 2007, following several years of talks.

Russia's state-controlled oil producer Rosneft, Transneft, and energy giant Gazprom will hold a total of 51% in the project, while Greece and Bulgaria will control 24.5% each.

Tokarev said Bulgaria does not intend to repay the construction expenses it owes if it withdraws from the project. The country, owes $7 million for its part in the joint venture and an additional $12 million for preparations for the project.

Reuters: UPDATE 1-JKX says Russian well test results far exceed own viewhttp://af.reuters.com/article/energyOilNews/idAFSGE66E0A320100715

Thu Jul 15, 2010 7:14am GMT

* Well flows at 22.6 MMcfd gas

* Sees higher well productivity boosting project economics

* Shares up 2.6 pct (Adds details)

July 15 (Reuters) - Oil and gas producer JKX (JKX.L) said on Thursday test results from its second gas well in Russia's Koshekhablskoye field far exceeded its expectations.

The Russia- and Ukraine-focused company said Well 20 flowed at a stabilised rate of 22.6 million cubic feet per day of gas (MMcfd) and an estimated 25 barrels per day of condensate.

The increased productivity of the well would improve both economics and booked reserves of the Koshekhablskoye project, the FTSE 250 company added.

The company has 10 wells in the Koshekhablskoye field, which it acquired in 2007.

In October, JKX's first well in the area -- Well 27 -- was tested at 13 MMcfd, significantly ahead of the rates expected during its acquisition. [ID:nL6215829]

Shares of the company were up 2.6 percent at at 296 pence at 0711 GMT on the London Stock Exchange. (Reporting by Aditi Samajpati in Bangalore)

Reuters: Novatek eyes 49 pct in Yamal for foreigners-paperhttp://af.reuters.com/article/energyOilNews/idAFLDE66E05H20100715

Thu Jul 15, 2010 6:19am GMT

MOSCOW July 15 (Reuters) - Russia's largest independent gas producer Novatek (NOTK.MM) is looking to offer a 49 percent stake in developing the country's biggest liquefied natural gas (LNG) project to a foreign partner, Kommersant reported on Thursday.

"The following structure is planned -- 51 percent will belong to the Russian side, 49 percent to the three-four foreign partners, which will ensure the technical and financial support of the project," Evgeny Kot, Deputy chairman of the Management Committee and Director of LNG Project Department, was quoted as saying.

French oil major Total (TOTF.PA), Royal Dutch Shell (RDSa.L) and other international companies have expressed interest in joining the potentially lucrative Yamal LNG project.

Novatek's chief executive Leonid Mikhelson told Reuters in an interview earlier this month that the company can for now do without a foreign partner. [ID:nLDE66616N]

Novatek bought into Yamal LNG last year, when it acquired 51 percent of the company, which holds the right to develop Yamal's South Tambey fields, with resources estimated at 1.3 trillion cubic metres.

Volga Resources, a firm controlled by trader Gennady Timchenko, Novatek's biggest stakeholder, holds 24 percent of Yamal LNG, while Gazprombank holds 25 percent. (Writing by Toni Vorobyova)

RIA: Russia's Novatek ready to sell 49% stake in Yamal gas project - paper http://en.rian.ru/business/20100715/159819777.html

10:58 15/07/2010

MOSCOW, July 15 (RIA Novosti) - Novatek, Russia's largest independent gas producer, is ready to sell a 49% stake in the Yamal liquefied natural gas project in Arctic Russia to foreign partners, business daily Kommersant reported on Thursday.

Novatek, which holds the license to develop the giant South Tambei gas field on the Yamal Peninsula with reserves of 1.26 trillion cubic meters of natural gas and 51.6 million metric tons of gas condensate, confirmed to Kommersant that it was holding negotiations with all interested foreign companies.

"The project is expected to have the following structure: 51% will belong to the Russian side while 49% will be held by three or four foreign partners, which will provide financial and technological support to the project," the paper quoted Yevgeny Kot, director of the Novatek department for LNG projects, as saying.

Novatek intends to select two major foreign partners and one or two second-tier companies guaranteeing sales markets, an official of a foreign bidder in the project told Kommersant.

So far the British-Dutch energy giant Shell, U.S.-based ExxonMobil and ConocoPhillips, France's Total and GdF SUEZ, Japan's Mitsui and Mitsubishi, Spain's Repsol and India's ONGC have filed their bids for participation in the project, the paper said.

Novatek's shareholders Gennady Timchenko and Pyotr Kolbin intend to sell 25% and 23.9%, respectively, of their stakes in the project. After the sale, Novatek will retain a controlling 51% stake in the Yamal LNG project, which it purchased from Gazprom for $650 million last year, the paper said.

Guardian: Russia urged to halt oil survey during rare whale's breeding seasonhttp://www.guardian.co.uk/environment/2010/jul/14/russia-oil-whale

Seismic survey planned around Sakhalin island would affect a fragile population of western grey whales, marine experts warn

David Adam, environment correspondent

guardian.co.uk, Wednesday 14 July 2010 16.32 BST

The British government is pressuring Russia to postpone a controversial search for oil and gas because of the potential impact on endangered whales.

Rosneft, the Russian state-owned energy company, plans to conduct the seismic survey next week in the waters off Sakhalin island, in the far east of the country. Marine experts say they are extremely concerned about the possible impact on a fragile population of western grey whales. The next few weeks mark a critical time in the breeding season of the whales, and the survey is scheduled to take place when the highest number of animals are in the region, including mothers and calves.

A joint letter to Russia, coordinated by British officials and signed by representatives of 11 other nations, including France, Germany and the US, calls for the company to change its plans to protect the whales.

The letter, a copy of which has been seen by the Guardian, was sent last week to the Russian Ministry of Natural Resources. It says: "We note the planned seismic survey scheduled for July 2010 off Sakhalin island, coinciding with the criticial period in the western grey whales feeding season, and we welcome consideration of its postponement."

Only about 130 of the whales are thought to remain, of which barely two dozen are believed to be females of calf-bearing age.

Studies show that noise pollution in the sea reduces the area in which whales can feed, and hampers their ability to communicate. According to the International Union for the Conservation of Nature (IUCN), equipment used in seismic surveys can be so powerful that the resulting shockwaves can seriously injure whales.

The letter says: "We note with concern the critically endangered status of this population and welcome range states and companies continuing to... look at ways to mitigate anthropogenic disturbance to this population."

Russia has not yet responded to the letter, or to previous calls from scientists and conservationists to postpone the survey.

At last month's meeting of the International Whaling Commission, the body's scientific committee said it was "extremely concerned" about the impact on the whales and urged the Russians to postpone the survey until next year.

Julia Marton-Lefèvre, the head of the IUCN, wrote in May to Vladimir Putin, Russia's prime minister, to request a delay. The planned survey, she said, could wreck years of careful work to protect the whales by wildlife experts and a rival consortium of private energy firms that is also exploring the region.

Heather Sohl, species trade and policy officer with WWF-UK, said: "We cannot understand the decision to go ahead with a seismic survey at such a critical time to both the mothers and their calves. The survey could have a devastating impact on them, so we're really pleased that these governments have voiced their concern for the whales and we hope that Rosneft will take the decision to postpone it."

Bloomberg: BP Future in Russia Looks ‘Good,’ Energy Minister Shmatko Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a9RlK.iSY_NM

By Lyubov Pronina

July 15 (Bloomberg) -- BP Plc, the London-based company fighting the biggest oil spill in U.S. history, has “good prospects” in Russia, where its TNK-BP venture accounts for a quarter of total output, Energy Minister Sergei Shmatko said.

“Russia is attractive for them,” Shmatko told reporters in Yekaterinburg in the Ural Mountains late yesterday. “I don’t think they’ll leave.”

To contact the reporters on this story: Lyubov Pronina in Moscow at

Last Updated: July 15, 2010 02:00 EDT

Bloomberg: Putin Gives BP Investor Haven as TNK-BP Yields Fall (Update2) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=axWn_sG70kgo

By Stephen Bierman and Denis Maternovsky

July 14 (Bloomberg) -- The worst oil spill in U.S. history is proving a bigger risk to debt investors than Russian Prime Minister Vladimir Putin as BP Plc bonds yield more than those of its Moscow-based affiliate TNK-BP.

BP’s 5.25 percent dollar bonds due 2013 yield 117 basis points, or 1.17 percentage point, more than the 7.25 percent dollar notes due the same year from TNK-BP, according to data compiled by Bloomberg. That’s a turnaround from two months ago when TNK-BP debt yielded as much as 392 basis points more than BP.

Investors charged a 23 percentage point premium to buy TNK- BP notes at the end of 2008 as a battle for control between BP and its Russian billionaire partners led to employees being denied work visas, an industrial espionage inquiry and the ouster of then-Chief Executive Officer Robert Dudley, who fled Moscow citing security concerns. Now it’s London-based BP’s bonds that have the higher yield as the cost for cleaning up the April 20 spill in the Gulf of Mexico surpasses $3.5 billion.

“The risk of BP taking longer than planned to contain the oil spill is far greater than that of TNK-BP being taken over by the government,” said Sergey Dergachev, who helps oversee about $6 billion of emerging-market debt, including TNK-BP dollar bonds, at Union Investment in Frankfurt. “The latter would actually be credit-positive, essentially making TNK-BP quasi- sovereign.”

BP’s 2013 bonds have dropped as much as 20 percent since the explosion on its Deep Water Horizon rig sent up to 60,000 barrels of crude a day gushing into waters off the coast of Louisiana. The U.S. administration forced BP to set $20 billion aside to cover damage claims. The company has said it will seek to raise half that amount by selling assets, though it’s ruled out selling its 50 percent stake in TNK-BP.

BP Rally

BP installed a new cap on the leaking Macondo well and planned to start testing yesterday while continuing work on a permanent plug. The repairs helped lift BP shares 12 percent in the past two days and the 2013 bonds gained 3.2 percent to trade at 98.78 cents on the dollar yesterday, down 10 percent from before the spill. TNK-BP’s 2013 notes have fallen 2.9 percent in the same period and traded yesterday at 106.35 cents.

Moody’s Investors Service ranks BP at A2, its sixth highest investment-grade rating, and TNK-BP three levels lower at Baa2.

TNK-BP has generated more than $25 billion of net income and distributed over $20 billion in dividends since the tie-up began in 2003, Chief Executive Officer Tony Hayward said last year. The U.K. company, under its former Chief Executive Officer John Browne, paid $7.7 billion in cash to Siberian oil producer TNK’s shareholders, including Viktor Vekselberg and Mikhail Fridman, to pool their assets and create TNK-BP under 50-50 ownership.

‘Holy of Holies’

The transaction marked the last time a foreign shareholder gained more than 49 percent in a strategic natural-resources asset in Russia. Royal Dutch Shell Group Plc was forced to sell control of its $22 billion Sakhalin-2 venture in 2006 to state- run OAO Gazprom, ending regulatory threats to shutter the project on environmental grounds.

Russia won’t allow the European Union to interfere in the country’s energy industry unless Russian companies such as Moscow-based Gazprom get greater access to EU markets, Putin said at the time.

“If our European partners are expecting us to let them in to the holy of holies of our economy, in this case we demand reciprocity,” Putin said in May 2006, after meeting EU leaders in the Russian resort town of Sochi.

Spies Probe

Disagreements over expansion strategy and control in 2008 pitted BP against Vekselberg and Fridman, the country’s third and 16th richest men according to Forbes. TNK-BP’s offices were raided by Russian security services, foreign employees were denied work permits and an employee with dual U.K.-Russian citizenship was arrested and charged with industrial espionage as the conflict escalated. Former CEO Robert Dudley left Moscow in July 2008 and tried to run TNK-BP from outside the country before officially resigning in December five months later.

Hayward flew to Moscow last month to state BP’s commitment to TNK-BP. Briefing reporters before meeting with Hayward, Igor Sechin, Putin’s deputy in charge of the energy industry, said the executive may resign, according to a Sechin aide who declined to be identified because of government policy. BP spokeswoman Sheila Williams said later that day Hayward didn’t plan to resign. Sechin is also chairman of OAO Rosneft, Russia’s largest oil company.

BP put Dudley, an American citizen, in charge of the day- to-day cleanup effort in the U.S. last month.

‘Out of Sync’

Russia’s government is “monitoring” TNK-BP’s work and doesn’t expect any change in ownership, said Dmitry Peskov, Putin’s spokesman. BP’s relationship with Putin’s

government is “cooperative and constructive,” Andrew Gowers, a London-based spokesman for BP, said in a phone interview.

Russia may use BP’s travails to push for changes in TNK-BP to conform with rules that cap foreign ownership at 49 percent for “strategic industries,” said Chris Weafer, chief strategist at UralSib Financial Corp., the Moscow bank and brokerage controlled by billionaire Nikolai Tsvetkov.

“BP’s 50 percent holding in TNK-BP is out of sync with the so-called rules of the game for foreign investment in Russia’s strategic industries,” Weafer said.

Dollar Bonds

Russian government dollar bonds due in 2020 gained today, pushing the yield down 8 basis points to 5.194 percent, the lowest since April. The extra yield investors demand to hold Russian debt rather than U.S. Treasuries fell 4 basis points to 237, according to JPMorgan EMBI+ Indexes. That compares with 166 for debt of similarly rated Mexico and 213 for Brazil, which is ranked two steps lower at Baa3 by Moody’s.

The so-called yield spread on Russian bonds is 60 basis points below the average for emerging markets, according to JPMorgan Indexes.

Credit-default swaps linked to Russian debt fell 11 basis points to 169, near the lowest since May 18. The contracts, which investors use to hedge against losses on debt or speculate on creditworthiness, pay the buyer face value if a borrower reneges on its obligations. Russia credit-default swaps cost the same as contracts for Turkey, which is rated four levels lower at Ba2 by Moody’s. That difference has narrowed from 40 basis points on April 20.

Ruble Rises

The ruble gained 0.4 percent to 30.6000 per dollar in Moscow trading, its strongest close since May 18. Non- deliverable forwards, or NDFs, which provide a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a specific level in the future, show the ruble at 30.7350 per dollar in three months.

The yield on ruble bonds sold by Gazprom, Russia’s biggest company, is 201 basis points above the same-maturity Gazprom debt in dollars, down from a yield difference of 600 a year ago, data compiled by Bloomberg show. The spread narrowed to as little as 115 on June 11.

TNK-BP is BP’s “crown jewel,” accounting for more than a quarter of global production and providing steady dividends, said Mikhail Galkin, head of fixed-income research at VTB Capital in Moscow.

In the event of a sale by BP “it is logical to assume a Russian state company would be the buyer, which is definitely not bad from the credit perspective,” Galkin said. “The recent weakness in TNK-BP bonds is a good buying opportunity as the company is insulated from BPs woes.”

To contact the reporters on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net; Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net.

Last Updated: July 14, 2010 12:10 EDT

Gazprom

Moscow Times: Gazprom Drills Off Vietnam http://www.themoscowtimes.com/business/article/gazprom-drills-off-vietnam/410429.html

15 July 2010

Gazprom on Wednesday started exploratory drilling off Vietnam’s coast with its local partner Petrovietnam, the company said Wednesday.

Drilling at block 112 will take about three months, it said.

(Bloomberg)

Reuters: Sinergie Italiane extends Gazprom gas supply dealhttp://af.reuters.com/article/energyOilNews/idAFLDE66D0LS20100714

Wed Jul 14, 2010 10:04am GMT

* New deal extends contract to 2021, ups volume to 1.5 bcm

* Company looks at spot gas deal opportunities in Europe

MILAN, July 14 (Reuters) - Italian gas company Sinergie Italiane has signed a new gas supply deal with Russian gas giant Gazprom (GAZP.MM), boosting supply volumes to 1.5 billion cubic meters (bcm) a year and extending the contract to 2021, it said.

Sinergie Italiane, a joint venture between several Italian energy firms, is a rapidly growing player on Italy's gas market. It aims to close the second year of its activity in September with revenues of more than 1 billion euros ($1.27 billion).

Under a previous "take or pay" contract signed in August 2009, Gazprom was to supply Sinergie Italiane with about 1 bcm a year for three years from October 2009 and with 0.5 bcm for another seven years, the Italian company said in a statement.

Under the new deal signed with Gazprom's unit Gazpromexport, the total annual supply is raised to 1.5 bcm for 11 years, starting from October 2010, the company said on Wednesday.

"The additional supply stabilises the base supply portfolio, leaving wide capacity to exploit further opportunities within the spot market at European level which still shows good liquidity," Sinergie Italiane Managing Director Flavio Battista said.

The company has been awarded the first spot regasification slot at Italy's new liquefied natural gas (LNG) import terminal near Rovigo with the related LNG import from Equatorial Guinea.

Sinergie Italiane was established to create a common gas supply system and includes Ascopiave (ASCI.MI), Enia (now part of utility Iren (IREE.MI)), Blugas, Ambiente Energia Brianza, Aemme Distribuzione and Utilita Progetti & Sviluppo. ($1=.7869 Euro) (Reporting by Svetlana Kovalyova; editing by James Jukwey)

Jamestown: Gazprom Counters Nabucco’s Advancement by Lobbying for South Streamhttp://georgiandaily.com/index.php?option=com_content&task=view&id=19307&Itemid=132

July 15, 2010

Vladimir Socor 

Russia’s Gazprom has proposed to the German RWE company to join Gazprom’s South Stream pipeline project. According to German business press reports, Gazprom Vice-President, Aleksandr Medvedev, has approached senior RWE management with this proposal.

RWE, however, is a stakeholder in the EU-backed Nabucco project. Gazprom’s move is seen as “intensifying Russia’s fight against Nabucco.” RWE has withheld all but a tersely skeptical comment (Handelsblatt, July 11).

It might equally be described as a desperate move to stop Nabucco’s material progress by countering with a virtual project. With no identified gas volumes in Russia or elsewhere to supply its declared annual capacity of 63 billion cubic meters (bcm), and no financing anywhere for its declared cost of $25 billion to $30 billion, South Stream cannot be taken seriously as a gas supply and transportation project, nor as a bankable project. Its initial

planning assumption (2006-2007) had been the Russian monopsony on Turkmen gas, but Russia has clearly lost that advantage.

Russia currently promotes South Stream in Europe as a political and lobbying project: First, to discourage private-sector investment in Nabucco (or achieve a comparable result by making South Stream eligible for EU funding). Second, to threaten Ukraine with shifting Russian gas transit from Ukrainian pipelines into South Stream, unless Kyiv agrees to share control of its transit system with Gazprom. Third, by blocking Nabucco, to preclude Azerbaijan’s free access to European gas markets, compelling it to export its gas through Russia-approved pipelines. And fourth, to cut off Turkmenistan from accessing Nabucco and other planned pipelines in the EU’s Southern Corridor, thus regaining control over a portion of Turkmen gas production.

To create an appearance of forward movement, Moscow has multiplied invitations into the South Stream project, with corresponding gas supply offers, to countries and companies in recent weeks. In the process it constantly reconfigures the project’s geography –thus further sapping its credibility– while playing off the transit countries against each other. The Russian government and Gazprom are currently in talks with almost a dozen would-be partners in South Stream, without identifying any source of gas for the project (EDM, June 14, 18, 22, 23).

Gazprom’s approach to RWE, however, is qualitatively different. There, Moscow is targeting a supply source for the Nabucco and future Southern Corridor projects. RWE is the first major European company with a production-sharing agreement to develop offshore gas in Turkmenistan. The same company plays a lead role in devising a trans-Caspian transportation link from Turkmenistan to Azerbaijan, for feeding into the Nabucco pipeline. Turkmenistan last year committed 10 bcm annually to Nabucco from existing production, pending a transportation solution.

Azerbaijan has a comparable gas volume available for Nabucco’s first stage. The agreements on gas supplies and transportation, signed by Azerbaijan and Turkey in April and June, have finally opened the way for gas transit through the Nabucco pipeline to Europe. Thus, gas inputs into Nabucco’s first stage are assured, assuming construction starts in 2011 for completing the pipeline’s first stage by 2015. Nabucco’s second stage counts on Azerbaijani gas supplies from the Shah Deniz field’s second phase of development, as well as Turkmen gas from that country’s growing production.

In a potential breakthrough for the EU-planned Southern Corridor, Turkmenistan has just commissioned the East-West pipeline on its own territory, from gas fields in the country’s east to the Caspian coast. Financed by Turkmenistan from its own resources, the line should bring 30 bcm of gas annually to the coast, all available for transportation westward, subject to a European transportation solution by 2015 (EDM, June 2).

Kurdish authorities in northern Iraq are also interested in supplying the Nabucco pipeline. The regional administration’s head, Barham Ahmed Saleh, and other officials are cited as offering as much as 14 to 15 bcm annually from the Kurdish region’s future gas

production to supply the Nabucco pipeline. However, Regional Kurdish authorities and the central government in Baghdad have yet to resolve their differences over gas exports from northern Iraq (Frankfurter Allgemeine Zeitung, July 12).

Inputs of that magnitude from northern Iraq, combined with Azeri and Turkmen inputs, could ensure the operation of several pipelines in the Southern Corridor to Europe. On the other hand, field development in the gas producing countries must be stimulated through European commercial offers and transportation solutions.

Gazprom is attempting to block those offers and solutions by attempting to disrupt the Nabucco consortium. The proposal for RWE to join South Stream is the latest move in this regard. The Nabucco consortium is headed for the investment decision, to be announced before the end of the current year. As that date draws nearer, Moscow can be expected to obstruct it by lobbying for South Stream in Europe.

Source: http://www.jamestown.org/programs/edm/

Alaska Dispatch: Natural gas two-fer, Gazprom and TransCanada http://www.alaskadispatch.com/dispatches/alaska-beat/88-alaska-beat/6008-natural-gas-two-fer-gazprom-and-transcanada

According to the U.K.'s Telegraph, Russian natural gas giant, Gazprom, has no plans to abandon its practice of tying prices for its gas to oil prices even after going through a crisis recently where very low European spot prices undercut that model. The company is sticking with its coupled price structure because it says the spot market cannot yet guarantee a long-term, stable supply of gas. Also, in an effort to reduce its reliance on European markets, the company plans to aggressively pursue markets in the Asian Far East. Near its end, the report gives a brief run-down of Gazprom's plans to ramp up supply for Asia and the Pacific coast of North America, primarily focusing on liquefied natural gas from its Sakhalin II LNG plant in eastern Siberia, and its plans to build gas pipelines to China, Japan and South Korea. Read much more, here.

In North American gas news, according to Canada's Globe and Mail, TransCanada is in the middle of negotiations to decrease the cost of shipping natural gas across Canada, but to do that, it proposes to raise transportation costs in the western part of the country. The plan is attracting scorn from the Alberta gas producers who would be most affected, most prominently EnCana Corp. The Canadian Mainline, the pipeline at the center of negotiations, has suffered from precipitous reductions in flow recently, due mainly to shale-gas-induced price drops and subsequent production decreases. With production dropping, the gas costs more to ship, and TransCanada last year raised tolls on the line by 38 percent. That decision was criticised for possibly creating a "death spiral" by driving even more gas away and jeopardizing the pipeline itself -- hence the new proposal. TransCanada CEO Russ Girling told the Globe and Mail, "We need to bring our [Mainline] tolls down and there’s various methods by which we can do that. We need to

move our costs from those places where we’re not moving as much gas to those places where we are.”