Russia 090406

Basic Political Developments UPDATE: Russia Military: N Korea - No Satellite In Orbit China, Russia Rebuff U.S. at UN on North Korea Launch (Update1) Russia presidential representative for Sudan arrives in Egypt Abbas goes to Moscow to discuss Mideast situation Iraqi premier to visit Moscow on April 9-11 DR Congo FM to visit Russia on April 5-9 Slovenian FM to visit Russia April 7, 8 Berlusconi cancels trip to Moscow after powerful quake in Italy Italy prime minister cancels Moscow trip over quake Russian-Italian economic forum opens in Moscow Chavez Sides With Russia On North Korea Rocket Launch Details, but no devils yet on US-Russian slate - At their meeting in London, US

President Barack Obama and Russian President Dmitry Medvedev moved to establish a pragmatic relationship between the two countries by offering a balanced approach on a large agenda of contentious issues, Ambassador James Collins, director of the Carnegie Endowment’s Russia and Eurasia programme, told New Europe.

Middle East Times: Is a U-S.-Russian-Iranian Alliance in Afghanistan Possible? The Rasmussen crisis: the Russian angle Moscow’s rhetoric on rearmament not to prevent rapprochement of NATO and

Russia No Russian militarization in Arctic - Russia does not intend to build Arctic

military bases or establish an Arctic military district Belgade & Moscow step up co-operation - Serbian PM Mirko Cvetkovic and

Russian Minister of Emergency Situations, Sergei Shoigu, have agreed intensify bilateral co-operation within the areas of the economy, energy and culture.

U.S. spies on China from Kyrgyz base: Russian TV Putin appoints Okulov as deputy transport minister HIGHLIGHTS-Russia's PM Putin annual report to parliament Companies implementing restructuring programs will get state support –Putin Ruble fell smoothly, uncontrollable devaluation avoided – Putin Monetary allowances of Russian servicemen to grow by 2012 – Putin RF Duma starting work on new anti-crisis 2009 budget Putin to take part in 2009 budget debates in Duma on April 6 Putin to defend handling of Russian crisis Historic PM report to be made at State Duma Revised budget the key to Russian economy in global downturn Demands for Putin’s Ouster and Appeals to Medvedev Multiply FACTBOX-Russia's powerful prime minister, Vladimir Putin Ingush deputy interior minister dies, 3 injured in road accident Russian security forces in Dagestan searching for second suspect in attack on FSB

officer in Makhachkala MP Delimkhanov says he is ready top answer Dubai police questions (Part2)

Delimkhanov dismisses charges of Dubai police chief Russian MP ‘named in Chechen rebel’s murder’ Dubai Police Link Murder of Chechen to Russian Gulnews: Delimkhanov a Moscow loyalist Heroes in Need of Protection - Who Is Responsible for Preserving the Pro-

Russian Potential in the Caucasus? AP: Russian Orthodox Church a growing political force BBC: Russia to unveil spaceship plans Spring election fever hits Olympic city as democracy stirs in Russia Resetting Human Rights in Russia

National Economic Trends Russian Inflation Rate Hits Five-Month High on Import Prices Russian Economy Contracts at Record Pace in March, VTB Says Ignatyev Says Worst Of Bank Woes Over Small Banks Beg State for Respite Russian Economy: Signs of Thawing - Financial woes continue in Russia, but

there are glimmers of optimism, including a more buoyant ruble and an improving mood among businesses

Business, Energy or Environmental regulations or discussions VEB gets $180mln loan for Moscow airport terminal Prokhorov Gets Rusal Shares, Bonds in Debt Deal, Vedomosti Says MMK raising $155.5 mln in project financing from Czech Export Bank Mechel Unit Buys Out Share Issue Wal-Mart Renews Talks on Buying Russia’s Lenta, Kommersant Says Telenor officially served with claim to pay $1.7bln to VimpelCom Poultry Independence - First Deputy Prime Minister Viktor Zubkov said Friday

that Russia, the largest importer of U.S. chicken in 2008, would become self-sufficient in poultry and pork in 2011.

Russian beef consumption and imports to fall in 2009 INTERVIEW: Probusinessbank suffers from empty markets Multi-agency consortium launching Caspian environmental project

Activity in the Oil and Gas sector (including regulatory) CPC Says Loadings Up - The Caspian Pipeline Consortium said Friday that oil

loadings at its terminal on the Black Sea advanced 21 percent in the first quarter in comparison with the previous year.

Bulgaria's Petrol seeks Russian partner for EUR400m-600m property project TNK-BP to Invest $1B by 2012 for Samotlor Field Development Tatneft Seeks Cuts To Contract Costs

Gazprom Gazprom is forming an international alliance to oppose a March gas agreement

between Ukraine and the European Union On working meeting between Alexey Miller and Bernhard Reutersberg Gazprom May Spend $2 Billion on Sochi Olympics, Vedomosti Says

Gazprom to spend $2bln on Sochi Olympics – paper Moody's Cuts Gazprom to Match Russia UPDATE: Gazprom May Lower '09 Spending; Moody's Cuts Rating Update on Gazprom and KOGAS meeting On working meeting between Alexey Miller and Choo Kangsoo Nabucco consortium hurdles Gazprom roadblocks Gazprom hostage to European market and Ukrainian transit - analyst TURKMENISTAN: ASHGABAT SENDS SHOT ACROSS GAZPROM’S BOW Putin offers help to Gazprom - supports reduction of investment programme Russian PM Vladimir Putin had a working meeting with Gazprom CEO Alexei

Miller Gazprom to exercise its options in Gazprom Neft?

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Full Text Articles

Basic Political Developments

UPDATE: Russia Military: N Korea - No Satellite In Orbithttp://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20090406\ACQDJON200904060402DOWJONESDJONLINE000069.htm&&mypage=newsheadlines&title=UPDATE:%20Russia%20Military:%20N%20Korea%20-%20No%20Satellite%20In%20Orbit

MOSCOW (AFP)--A senior Russian military source Monday confirmed U.S. and South Korean reports that North Korea failed to place a satellite in orbit over the weekend, the Interfax news agency reported.

"Our space monitoring system didn't establish the placing into orbit of the North Korean satellite. According to our information, it's just not there," the source was quoted as saying.

China, Russia Rebuff U.S. at UN on North Korea Launch (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQuoqdwgSKG8

By Bill Varner and Jeff Bliss

April 5 (Bloomberg) -- China and Russia resisted a U.S. call for tougher sanctions against North Korea at an emergency meeting of the United Nations Security Council today after the communist country launched a rocket, prompting international condemnation.

Chinese and Russian envoys urged restraint, saying further study was needed to determine whether, as the U.S. asserts, the launch violated UN resolutions prohibiting North Korea from developing missile technology. The positions of the two nations, which

can veto any sanctions resolution, signaled the likelihood of protracted negotiations on a UN response.

The launch of the Taepodong-2 rocket represents an early test for Barack Obama’s young presidency and may complicate efforts to get North Korean leader Kim Jong Il to return to six- nation talks aimed at eliminating his nation’s nuclear weapons program. The U.S., Japan and South Korea have accused the reclusive country of developing long-range missile technology to carry a nuclear device.

“All countries concerned should show restraint,” and any response should be “cautious and proportionate,” Chinese Ambassador Zhang Yesui told reporters after the Security Council held a three-hour closed meeting.

“We think that we should take some time to understand the technical parameters of this launch,” Russian Deputy Ambassador Igor Shcherbak said. “Our technical experts are going to continue to study it.”

Council Statement

Division in the Security Council left Ambassador Claude Heller of Mexico, who holds the rotating presidency of the panel this month, to read a statement saying the council “regrets” that North Korea didn’t heed widespread requests not to go through with the launch.

U.S. Ambassador Susan Rice, asked about the Chinese and Russian call for further study, said “we think that what was launched is not the issue.”

“The fact that there was a launch using ballistic missile technology is itself a clear violation of the UN Security Council resolution which prohibited missile-related activity,” Rice said after the council meeting.

‘Provocation’

Obama earlier called North Korean’s action a “provocation” that “underscores the need for action -- not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons.” In a speech in Prague, Obama said “rules must be binding. Violations must be punished. Words must mean something.”

Obama administration officials “realize they need to lay down the line that’s tough even if does interrupt” diplomatic efforts, said Mike Green, a senior adviser at the Center for Strategic and International Studies, a Washington-based policy group.

While North Korea said it successfully launched the Kwangmyongsong-2 satellite, White House spokesman Robert Gibbs said stage one of the missile fell into the Sea of Japan, and the remaining stages, along with the payload itself, landed in the Pacific Ocean.

“No object entered orbit. No debris fell on Japan,” Gibbs told reporters in Prague. “The launch itself was the violation, not the fact the launch, we now see, was unsuccessful.”

The Security Council voted unanimously on Oct. 14, 2006, to adopt a resolution that punished North Korea for its nuclear- bomb test five days earlier. That measure demanded that North Korea “not conduct any further nuclear test or launch of a ballistic missile.”

Similar Technology

The technology for a space rocket and a ballistic missile are similar, so the resolution covers a satellite launch, State Department spokesman Robert Wood said last month.

The resolution also barred the sale or transfer of missiles, warships, tanks, attack helicopters and combat aircraft, as well as missile- and nuclear-related goods to the North Korean government. It called for UN member nations to conduct “inspection of cargo” going to or from North Korea.

While the launch was dubbed a failure by the U.S., it was an improvement over North Korea’s July 2006 test of the Taepodong-2, said Green of the Center for Strategic and International Studies. That missile disintegrated within 1.5 kilometers of the launch pad, according to reports.

“It was definitely better than last time, but it’s still not an operational system,” Green said.

Japan’s Concerns

Japan, which deployed missile-defense systems in advance of the anticipated launch, said it didn’t attempt to shoot down the rocket. North Korea had said it would respond to a Japanese interception attempt with a “thunderbolt of revenge.”

The launch is “extremely provocative,” Japanese Prime Minister Taro Aso told reporters in Tokyo. South Korea considers the launch a “serious threat,” presidential spokesman Lee Dong Kwan said in Seoul today. Both countries convened security groups to assess the North Korean action.

U.S. Secretary of State Hillary Clinton and Japanese Foreign Minister Hirofumi Nakasone discussed the matter by telephone, the Japanese government said.

Clinton also talked with Chinese Foreign Minister Yang Jiechi and Russian Foreign Minister Sergei Lavrov. They discussed preserving the six-party process as a way of resolving the nuclear issue on the Korean peninsula, the Russian Foreign Ministry said on its Web site.

The launch represents the latest escalation in North Korea’s long-running dispute with the international community over its nuclear and missile programs.

The Taepodong-2 has a range of at least 5,000 kilometers (3,000 miles), putting it within striking distance of Alaska and western parts of the U.S., according to the South Korean Defense Ministry. It can carry a payload of as much as 500 kilograms (1,100 pounds).

A successful missile test might have allowed North Korea to sell mid-range or long-range missiles, generating cash for the state. The rocket launch was monitored by at least four U.S. Navy warships equipped with Aegis air-defense systems, a defense official said.

To contact the reporters on this story: Bill Varner at the United Nations at wvarner@bloomberg.net; Jeff Bliss in Washington at jbliss@bloomberg.net

Last Updated: April 5, 2009 20:03 EDT

Russia presidential representative for Sudan arrives in Egypt

http://www.itar-tass.com/eng/level2.html?NewsID=13760426&PageNum=0

CAIRO, April 6 (Itar-Tass) -- Russian presidential representative for Sudan Mikhail Margelov arrived in Cairo on Monday to discuss with the Egyptian leadership the situation in Sudan and bilateral relations. In the Egyptian capital Margelov is to meet with Foreign Minister Ahmed Ali Aboul Gheit, Director of the Egyptian General Intelligence Services, General Omar Suleiman, Arab League Secretary General Amr Moussa.

Margelov told Itar-Tass that the Cairo meetings would highlight such issues as the results of the Arab League summit in Qatar in the context of a visit to Doha of Sudanese President Omar al-Bashir, as well as the reaction of the Arab world on an arrest warrant issued by the International Criminal Court in The Hague for the Sudanese leader.

Meanwhile, Mikhail Margelov, who heads the Russian society of solidarity with the peoples of Asia and Africa, will meet with the speaker of the National Assembly, Egyptian parliament, and the president of the Russia-Egypt Friendship Society, Fathi Surur, and the leadership of the Afro-Asian Peoples’ Solidarity Organisation (AAPSO) in order to discuss bilateral political and economic relations.

On March 4, the International Criminal Court in The Hague issued an arrest warrant for Omar al-Bashir. He is accused of crimes against humanity and war crimes in the western Sudanese province of Darfur. According to the United Nations, the armed conflict in Darfur flared up in 2003 killed about 400,000 people and turned 2.7 million people into refugees.

Abbas goes to Moscow to discuss Mideast situation http://en.rian.ru/russia/20090405/120925833.html

MOSCOW, April 5 (RIA Novosti) - Palestinian President Mahmoud Abbas is arriving in Moscow on April 5 on a four-day working visit to discuss the situation in the Middle East, a Kremlin source said on Sunday.

"One of the priority tasks at the current stage is to create conditions for the resumption of the negotiation process, which will be facilitated by an international conference on the Middle East intended to be held in Moscow this year," the Kremlin source said.

The parties will also discuss the prospects of restoring the Palestinian unity required for the success of the negotiation process and the establishment of Palestine as a viable independent and democratic state co-existing in peace and security with Israel, the Kremlin source said.

The Palestinian leader is arriving in Moscow at the invitation of Russian President Dmitry Medvedev.

Talks between Israel and the Palestinian Authority, launched by then-U.S. president George Bush in November 2007 at a conference in Annapolis, Maryland, stalled over outbreaks of violence in the Middle East, as well as long-standing disputes over the construction of Jewish settlements and the future status of Jerusalem.

Iraqi premier to visit Moscow on April 9-11

http://www.itar-tass.com/eng/level2.html?NewsID=13760890

MOSCOW, April 6 (Itar-Tass) -- Prime Minister Nuri al-Maliki of Iraq will visit Moscow on April 9-11 to discuss prospects for the resumption of Russian oil contracts in Iraq, ITAR-TASS learnt from informed sources on Monday.

The embassy of Iraq in the Russian Federation has confirmed the information that the Iraqi prime minister will visit Moscow this week within the framework of his European tour, during which he will visit France and Great Britain.

“In the Russian capital, Nuri al-Maliki will discuss prospects for the development of economic and political relations with Russia,” a representative of the embassy said. “Of course, the sides will discuss prospects for the resumption of Russian oil contracts, investments, as well as the possibility of work of Russian companies in Iraq.” “We plan to discuss how to finish the work which was suspended in 2003,” the diplomat said.

Congo FM to visit Russia on April 5-9http://www.itar-tass.com/eng/level2.html?NewsID=13755056&PageNum=0

MOSCOW, April 3 (Itar-Tass) -- Foreign Minister of the Democratic Republic of Congo Alexis Thambwe Mwamba will pay a working visit to Russia on April 5-9, spokesman for the Russian Foreign Ministry Andrei Nesterenko said on Friday. “This is the first similar visit since our countries established diplomatic relations in July 1960,” he said.

According to Nesterenko, the Congolese foreign minister and his Russian counterpart Sergei Lavrov will discuss “international problems, the situation in Africa, particularly the settlement of the conflict in the Great Lakes region, as well as the condition of relations; and will set the promising guidelines in the development of Russian-Congolese relations in various spheres.”

“Due to a difficult socio-economic situation in the country and the crisis in eastern Congo the Russian government decided to allocate 2 mln dollars worth of humanitarian aid to the Democratic Republic of Congo,” the Russian diplomat said. “Currently the Russian Emergency Situations Ministry is specifying the assortment of humanitarian supplies for the Congolese population and means of their delivery,” Nesterenko said.

During the visit of the Congolese foreign minister the Russian Commerce and Industry Chamber will hold a forum of Russian and Congolese businesspeople. Alexis Thambwe Mwamba will visit the Diplomatic Academy, the Russian University of Peoples’ Friendship. The Congolese delegation will meet with officials in several Russian agencies and organisations.

Slovenian FM to visit Russia April 7, 8 http://www.focus-fen.net/index.php?id=n176590

4 April 2009 | 15:24 | FOCUS News Agency Ljubljana. Slovenia’s Minister of Foreign Affairs Samuel Zbogar is to visit Russia on April 7th and 8th at the invitation of his Russian counterpart Sergey Lavrov, Slovenian Delo daily writes.The two ministers are to exchange opinions on bilateral and international issues. Zgobar is to present Russian Foreign Minister with Slovenia’s preparedness for its chairmanship of the Council of Europe, which starts on May 12th.

Berlusconi cancels trip to Moscow after powerful quake in Italyhttp://www.itar-tass.com/eng/level2.html?NewsID=13761032

ROME, April 6 (Itar-Tass) - In connection with a state of emergency declared in Italy following a powerful earthquake in the centre of the country, Prime Minister Silvio Berlusconi has cancelled his visit to Moscow.

On Monday, the prime minister will head for the calamity zone, the administrative centre of Abruzzo, and will personally monitor the situation, the ANSA news agency reported.

The quake struck at 3:30 am, local time (5:30 am Moscow time) on Monday. It measured 6.7 in the epicentre. L’Aquila and its environs were hard hit. According to latest reports,

at least 27 people were killed, including five children. Another 30 people are missing. Rescuers work in the calamity zone.

The prime minister was to have led the biggest in the history of Russian-Italian relations delegation of entrepreneurs. He was scheduled to meet in Moscow on Tuesday with President Dmitry Medvedev and Vladimir Putin. Most of the delegation has arrived in the Russian capital on Sunday.

Italy prime minister cancels Moscow trip over quakehttp://www.reuters.com/article/latestCrisis/idUSL6427722

Mon Apr 6, 2009 3:03am EDTROME, April 6 (Reuters) - Prime Minister Silvio Berlusconi has cancelled a trip to Moscow because of the quake that has hit central Italy, political sources said on Monday.

Russian-Italian economic forum opens in Moscowhttp://www.itar-tass.com/eng/level2.html?NewsID=13760588

MOSCOW, April 6 (Itar-Tass) -- An economic business forum, aimed at strengthening Italian-Russian trade relations, opens in Moscow on Monday. Russian Deputy Prime Minister, Finance Minister Alexei Kudrin and Italian Minister of Economic Development Claudio Scajola will take part in its work. On April 7 Russian Prime Minister Vladimir Putin and his Italian counterpart Silvio Berlusconi will attend the forum.

According to the organisers of the forum, its main purpose is to ensure the consolidation and expansion of economic and trade relations between Italy and Russia. The forum will devote special attention to the industrial and investment cooperation, as well as to the development of partner relations between individual enterprises of the two countries. Seminars on legal problems and on financial and investment instruments that may be used by Italian enterprises wishing to work in Russia, bilateral meetings of Italian and Russian industrialists, seminars for the development of cooperation in the sphere of machine building, metal working, construction, agriculture and consumer goods will be held within the framework of the forum.

The main events will take place in the Centre of International Trade on April 7. Bilateral meetings between representatives of Russian and Italian companies working in the following sectors: consumer goods, clothes, furniture, food, high technologies, logistics, construction, building materials, bio- and nano-technologies – are planned to be held on April 7.

Some 800 Italian economic operators, including individual enterprises, as well as associations, consortiums and organisations in individual industries, will take part in the economic forum. The forum will discuss the economic realities and other regions, which are far from Moscow, specifically, St.Petersburg, Yekaterinburg, Krasnodar and

Novosibirsk, which is going to be one of the interesting aspects of the forum. The importance of that initiative shows, that Italian-Russian economic cooperation, which has reached the all-time highest level, can be further developed and improved.

The indices of Italian-Russian economic cooperation over the past few years show that both countries are interested in its deepening. Italian exports to Russia grew by 15 per cent in 2008 as against 2007. At the same time, the growth rate in the second half of 2008 was affected by consequences of the global financial crisis. It is indicative that Italian exports (10.5 billion euros) showed a growth in comparison with 9.3 billion euros in 2007, while other European markets registered negative indices. Italian Prime Minister Silvio Berlusconi said recently that machinery and mechanical equipment, clothes, leather goods and furniture were the main Italian commodities exported to Russia, while oil and gas account for 70 per cent of Italian imports from this country.

The Italian-Russian economic forum will start its work in Moscow on April 6-7, 2009, and will continue its work in the Sverdlovsk Region, St.Petersburg, Sochi, Krasnodar and Novosibirsk on April 8-9. The mission has been organised by the Italian Institute for Foreign Trade (ICE), the Italian Association of Banks and the General Confederation of Italian Industry.

Chavez Sides With Russia On North Korea Rocket Launchhttp://www.foxnews.com/story/0,2933,512618,00.html

Sunday, April 05, 2009

CARACAS, Venezuela —  Venezuelan President Hugo Chavez on Sunday suggested the international community "avoid the winds of war" after a rocket launch by North Korea.

Chavez made the remark in an interview with Venezuela's state radio from Tokyo as he began a visit aimed at deepening ties with Japan.

"Due to the lack of information, and contradictory information ... I prefer to have a great deal of prudence as the Russian government has said," Chavez said in the radio interview. "And to avoid the winds of war. That's important."

The U.S. and its allies, including Japan, sought punishment, meanwhile, for North Korea's rocket launch, holding an emergency U.N. meeting in response to what some believe was a long-range missile test.

"It's an issue that's generating great concern in the world," Chavez said.

The Venezuelan leader has maintained friendly ties with North Korea, though his government in 2006 joined many other countries in condemning Pyongyang's

announcement it had tested a nuclear weapon. The North Korean government has congratulated Chavez on his past electoral wins, including in February when he won a referendum that eliminated term limits.

Details, but no devils yet on US-Russian slatehttp://www.neurope.eu/articles/93931.php

Author: Kostis Geropoulos6 April 2009 - Issue : 828At their meeting in London, US President Barack Obama and Russian President Dmitry Medvedev moved to establish a pragmatic relationship between the two countries by offering a balanced approach on a large agenda of contentious issues, Ambassador James Collins, director of the Carnegie Endowment’s Russia and Eurasia programme, told New Europe.“These two men went to great pains to suggest they are going to approach this relationship in a pragmatic way,” Collins, who was the US Ambassador to the Russia from 1997 to 2001, said in a telephone interview from Washington DC on April 3. “They are going to do business; they are going to look at issueby- issue and see where they can agree and where they can’t and manage the differences where they have to and cooperate or resolve differences where they can.There was none of this ‘looking into the eyes...,’” Collins said, referring to George W. Bush’s hapless remark when he looked into Vladimir Putin‘s eyes and said he saw his soul. “This was a meeting about two leaders with a lot on the plate and a very broad agenda and agreement that they need to get down to work,” Collins said. “The Obama administration pretty-much had decided that it was going to engage the Russian across the broad agenda and be quite pragmatic about this relationship and see what the Russians are prepared to do and how they are prepared to respond,” Collins said.

“It was a successful meeting. I don’t think there were many surprises from it if we had been following the broad signals and statements that one was hearing in Washington and also a lot of the work that was been done in what I would call the hard centre of the foreign policy establishment here in Washington,” the ambassador said.

At their meeting on April 1, Obama and Medvedev agreed to open talks towards a new deal that would replace the USRussian strategic weapons reduction programme (START), which expires at the end of 2009. “They were going to announce the beginning of START negotiations and so that’s happened and that is certainly all to the good,” Collins said, adding it was significant that as much attention was given to elements of the non-proliferation treaties and working to deal with the whole complex of issues surrounding preventing proliferation and developing a system for the what is seen as a coming expansion of nuclear power generation.“It suggests a strong commitment to take as a whole the entire nuclear complex from weapons to the non-proliferation treaty regime as a very serious set of issues where we have to get down to work and we have to make some serious progress. There is real commitment on the American side to get a follow on to the START agreement done by

before the other one expires,” Collins said. Asked if this opens a new chapter in relations, Collins said, “It puts back in play an issue in a way that is constructive rather than a source of friction, which it was always was for the Bush administration.Just because we and the Russians under the Bush approach to arms control never agreed on the basic premise of what we were trying to do so I think in that sense this seems to be of to a better start.” The director of the Carnegie Endowment’s Russia and Eurasia programme said that Washington and Moscow are at the beginning of a broad discussion of a large agenda and any issue that has been contentious is out on the table for further discussion and work. “I thought it was actually a very good beginning.

Do I think it resolved a lot of issues? No, but it put the issues on the table and there was some agreement about what the priorities seemed to be,” Collins said. He reminded that the two leaders’ discussions included missile defence, European security and regional conflicts. “It was a balanced approach. Medvedev agreed that the NATORussia Council was a good thing; he was glad it was back, it worked. Obama agreed that it was important to look at European security strategy broadly and have a discussion about that,” Collins said.

Russia is at odds with the US over Washington’s plans to install a missile defence system in Poland and the Czech Republic, under a programme initiated by Bush. But Collins said the US administration is prepared to explore cooperative work on missile defence. “They are going to look at offence-defence in the context of the arms negotiations although they are hoping not to have to with the specific START negotiations. They are going to look at missile defence in and of its own right in the way that Obama has phrased it: first of all, does it work and, second, is it cost effective?

That and the linkage to the Iran issue had been there as background to the meeting and I don’t think they actually moved anywhere on that issue,” the US ambassador said. Regarding EU-Russian relations, Collins said, “Obama and the administration are sensitive to the views of our European friends and they are sensitive to the complexities of the relations between Russia and Europe.”

He also said that the US and Russia “agreed to disagree” on Georgia’s breakaway regions. “What agreement would there be? We were not going to buy their story about the beginning of the war and they won’t buy ours. We weren’t going to recognise the two breakaway provinces and they weren’t going to give up recognising them,” Collins said. “But, what I took away from it also was that this was not going to be an issue that is going to be a major dividing point between us.” Obama and Medvedev also tiptoed around the issue of Ukraine’s possible entry into NATO.

“The issue of NATO membership really didn’t seem to come up or they didn’t want to make that the issue. European security and NATO-Russian Council are code words for all of this so clearly it’s there in the background,” Collins said. Asked if there were any diplomatic landmines that could possibly disrupt US-Russia future relations, Collins said there is the potential for an awkward situation. “If the Russians really do something quite

stupid on the (former oil tycoon Mikhail) Khodorkovsky’s case, for instance, it will complicate matters. But do I see imminent any kind of sort of Georgia-like event?

I can’t say that I do, but then nobody really saw what Georgia did either,” Collins said, laughing. “However, the key point here is that the Americans and the Russians both seem up to this point ready to engage and to approach it – certainly on the American side - quite pragmatically. I don’t think there is an Obama view about what Russia is as much as an Obama view about what we would hope we can do with Russia or how we can manage our differences and in that sense it is a different approach than we had in many other administrations.”

Is a U-S.-Russian-Iranian Alliance in Afghanistan Possible?http://www.metimes.com/International/2009/04/06/is_a_u-s-russian-iranian_alliance_in_afghanistan_possible/1974/

By CLAUDE SALHANI (Editor, Middle East Times)Published: April 06, 2009Throughout history no single power has managed to subdue the fiercely warrior people of Afghanistan for very long. In fact several Afghan kings declared war on neighboring Persia, invaded the country and captured some of its largest cities. Among the unsuccessful who tried to conquer Afghanistan were the Mongols, the British, who lost 16,000 men in a single battle in the Massacre of Elphinstone's Army, and more recently, the Soviets.

And for the past eight years joint U.S.-NATO forces have been trying to succeed where all others have failed. However, this time history may just be written differently if NATO works hand-in-hand with the Russians. The prospect of Russian cooperation in Afghanistan is not impossible and may well just happen, as is the possibility of, yes, the Iranians.

The fact that both Iran and Afghanistan's Taliban adhere to a conservative trend of Islam does not make them allies. The Iranians, the vast majority of whom are Shiites, do not look at the prospect of a strong, unified and militant Sunni Afghanistan next door to them very positively.

Russian participation in Afghanistan is closer than one might think. Russian President Dmitri Medvedev told the BBC in an interview a few days ago that Russia was willing to invest in helping NATO and the U.S. in Afghanistan. Of course Russia will demand something in return.

Still, for the Russians, the threat of an Islamist state right on their back door is not really something the Kremlin is overexcited about.

During his visit to Strasbourg, France, last week where he partook in celebrations marking NATO'S 60th anniversary, U.S. President Barack Obama said he wanted a closer working relationship with Russia. And despite Russia's overture to helping out in

Afghanistan, Obama did not shy away from criticizing the old Cold War foe, saying there was a need for a change in relations.

"We have to send a very clear message to Russia that we want to work with them," said Obama. "But we can't go back to the old ways of doing business," he added.

Obama criticized the Russians for their heavy-handed response in the Caucuses war last summer when Moscow threw its far superior military might into the offensive against the Republic of Georgia, which until the breakup of the Soviet Union in December 1991 was part of the USSR.

Since then, relations between the North Atlantic Treaty Organization and Moscow suffered to the point that NATO severed its relations with the Russians; and it was only last month that they were finally re-established.

Headquartered just outside Brussels, NATO was formed in the aftermath of World War II. Initially based in Paris until President Charles de Gaulle pulled France out of the military alliance, (although France remained an active partner in the political alliance), NATO was established to prevent the Soviet expansion into Western Europe.

In the spoils of WWII the USSR had already swallowed up much of eastern Europe, incorporating the satellite nations into its vast empire that included Romania, Bulgaria, Czechoslovakia (now the Czech Republic and Slovakia), Poland and half of Germany.

But the end of the Cold War did not mean the end of suspicion between the West and the former Cold War enemies. Additionally, some political quarters in Moscow never quite accepted the fact that Russia lost the Cold War.

Adding insult to injury, so to speak, was the fact that several former Soviet republics and one-time members of the Warsaw Pact, NATO's former nemesis, applied for membership and were admitted to the North Atlantic alliance.

If that were not sufficient to upset the Russians and take a stab at their pride, the former U.S. administration then proceeded with plans to install an anti-missile battery and radar station in Poland and the Czech Republic, a move that Moscow did not at all appreciate.

But at the same time the war in the Caucuses had a negative effect for the Georgians, whom Moscow accused of initiating the fight in South Ossetia. Tblisi's request for admission into NATO was placed on hold as NATO members declared that there was no room in the alliance for members who initiated such risks.

Although the West criticized the Russians, nevertheless, the alliance placed Tblisi's request for admission to the North Atlantic alliance on hold. And by the look of things, NATO is unlikely to change its views regarding Georgia's misplaced adventurism in the Caucuses. One of Moscow's requests for helping out in Afghanistan might well be to demand that NATO permanently rejects Tbilisi's request for admission.

As for Iran, it too, would have demands for any assistance it would offer the U.S.-backed coalition in Afghanistan. Unpleasant as a prospective cordial entente between Washington and Tehran may be to many, a coalition incorporating the Russians and the Iranians may be the only possible way to defeat the Taliban. A strange alliance? Perhaps. But history has seen stranger alliances.

The Rasmussen crisis: the Russian angle http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=171580&bolum=109

by Emre Uslu & Önder Aytaç*

After a short-lived veto by Turkey, Anders Fogh Rasmussen has finally become the new secretary-general of NATO. Experts remark that the election process of the secretary-general is one that requires the usual horse-trading.It seems that this time Turkey is on the winning side of the horse-trading; however, it has yet to be discussed why Mr. Rasmussen's election was so important, why Germany, France and the US insisted on Rasmussen's name.

Germany and France's reason for insisting on Rasmussen's election was primarily because of their relations with Russia. The other two candidates were Defense Minister Peter MacKay of Canada and Poland's foreign minister, Radek Sikorski. Sikorski's position toward Russia was considered to be antagonistic. Thus, Germany, France and Italy did not want Mr. Sikorski because they thought he was too anti-Russian. Mr. MacKay was not from a European country, and the secretary-general of NATO is usually a job for Europeans.

One key plus for Rasmussen was that he is known for his support of all actions and plans of the United States -- from the wars in Iraq and Afghanistan to Georgia's membership in the alliance. When it comes to his relationship with Russia, one could not argue that he is a friend of Russia. In fact, the Komsomolskaya Pravda daily calls him an anti-Russian politician who ruined his country's relations with Russia in 2002.

For instance, in one of his speeches, Rasmussen showed how he viewed NATO: "Terrorism, weapons of mass destruction and missiles are the new threats. We have to guard against that. NATO is the core of transatlantic relations. In a world where attacks on our societies can come out of the blue, the alliance must provide credible security to both Europe and North America. The cohesion of NATO is a reflection of our will to act."

Of course, considering missiles as a threat directly addresses Russia as a threat. On another occasion, Rasmussen openly criticized Russian authorities for denying a visa to Vibeke Sperling, a journalist for the independent Copenhagen daily, Politiken, who had criticized human rights abuses in Chechnya.

One of the main debates about NATO's role in the future was how to counter Russian policies in Eastern Europe. Some of the East European countries want NATO to expand eastward by admitting neighboring Ukraine and Georgia to prevent possible Russian aggression in this region.

In Komsomolskaya Pravda, special correspondent Elena Ovcharenko's article gives us an incentive to understand how Russians think about Mr. Rasmussen: "Danish prime minister ready to forgive terrorists for everything." In it, the author simply accused the Danish administration, Prime Minister Rasmussen and Danish society as a whole of supporting international terrorism. "But, luckily for the Danes, they took hostages in Moscow, eliciting an outburst of joy in Copenhagen among the fans of the Chechen Mujahids. The Danes were not observing their legislation or freedom of speech by allowing the World Chechen Congress [in 2002] to be held in Copenhagen and by refusing to extradite [Akhmed] Zakayev," she wrote.

By no means could Mr. Rasmussen be considered a friendly secretary-general to Russia. It was primarily because Russia's relations with NATO will be an issue in the near future that Mr. Rasmussen was considered to be the best candidate at this moment. On the one hand, he is not antagonistic toward Russia, but on the other, he is tough enough to stand against Russia's policies of aggression, especially in the Caucasus and Eastern Europe.

When we consider the Russian angel of NATO, Turkey's objections about the cartoon crisis and the pro-PKK Roj TV, which is broadcast from Denmark, are trivial arguments. The battle in NATO was over how the organization's relations with Russia will be shaped; it will be interesting to watch how Mr. Rasmussen proceeds. It may have a direct impact on Turkish-Russian relations because Turkey wants to improve its relations with Russia; if NATO prefers to have confrontations with Moscow, then Turkey's relations with Russia would become critical. If necessary, Russia would definitely want to use its influence over Ankara to deal with NATO.

*Dr. Emre Uslu is an analyst working with Washington-based think tank The Jamestown Foundation. Önder Aytaç is an associate professor in Gazi University's department of communications and works with the Security Studies Institute in Ankara.

Moscow’s rhetoric on rearmament not to prevent rapprochement of NATO and Russiahttp://news-en.trend.az/important/exclusive/1451261.html

06.04.09 10:50Azerbaijan, Baku, April 4 /Trend News, E.Ostapenko /

The rhetoric of Moscow regarding rearmament and modernization of army because of approaching of the North Atlantic alliance to the borders of Russia will not prevent the rapprochement in the position of NATO and Russia, since this rhetoric is only word. Even the question itself of the expansion of NATO left to the background in light of

strengthening of ties of the alliance with Moscow, expert says.

"Not always that or other rhetoric, including President Medvedev's rhetoric, can directly testify the real situation of matters," the independent Russian military analyst Sergey Markedonov told Trend News.

The discussions on further relations of Russia with the North Atlantic bloc are one of the basic themes at the NATO anniversary summit, which took place on Friday and Saturday in German Kell and in French Strasbourg.The relations between Russia and NATO aggravated after Georgia began military actions in South Ossetia on August 8, 2008. Russia introduced the troops into the republic and extruded Georgian servicemen from the region after five days of military operations. The countries of alliance accused Moscow of the disproportionate introduction of force and declared stopping meetings of the Russia-NATO Council at all levels. In response, Russia decided to freeze a number of joint programs with the alliance, especially stopped participation in the Partnership for Peace Program.However, the western experts consider that the technical processes do not have basic importance for the real relations of Russia with the alliance."We excessively dramatize the entire complex of Russian-Western relations and we sometimes connect rhetoric with the real things, while indeed it is necessary to divide these things," said Markedonov, director of department of ethnic relations problems at the Institute for Political and Military Analysis.

Anybody can state about some immense rearmament, but whether there are real monies to this and how the other side is ready to move to Russian boundaries is a larger question.The President of Russia Dmitriy Medvedev stated in March that Moscow intended to realize rearmament of army and increase its nuclear potential under the conditions of movement of the North Atlantic alliance to the Russian borders.Statements regarding rearmament are more symbolic gesture, said European expert on relations of NATO and Russia Sandra Fernandes. The readiness to modernize army and put huge investments in this was sounded by the Prime Minister of Russia Vladimir Putin already in 2007 when he was the President, said Fernandes.

"But no one saw special modernization.  I think that no one in reality attaches importance to these talks," Fernandes told Trend News in a telephone conversation from Lisbon. - 

Medvedev's words - this is the desire to say that Russia is still military power and the West has large neighbor as Russia, said Fernandes, expert of Centre for European Policy Studies.

Moreover, the expansion of NATO to the east, which Russia considers contradictory to its security interests, was removed from the agenda.

Expansion was positive for the alliance when the countries joining NATO did not have contradictions with the neighbors, said Markedonov. With regards to Ukraine and

Georgia, these are very serious contradictions - not only political questions, but also questions concerning identity and many difficult problems, he said.

"Therefore, I think that now the expansion will be somewhat frozen not only because of Russia, but also because of the internal considerations, connected also with the global economic crisis," said Markedonov. The problem, which does not make it possible for Georgia to join the alliance, is the unresolved territorial conflict with two separatist regions - Abkhazia and South Ossetia. Problem with Ukraine is similar - political instability.

During the meeting of the NATO Foreign Ministers on December 2-3 in Brussels, the alliance participating countries considered Tbilisi not ready to obtain NATO membership candidate status and postponed presenting NATO Membership Action Plan for an indefinite period.

The European expert Beata Kviatek-Simanska considers that however, it is not possible to build a good relationship with Russia while undermining NATO's main strategy of consolidating Europe as an undivided and democratic security space. "Therefore, the further enlargement of NATO in pursuing this security strategy is out of discussion," Kviatek-Simanska, Professor on International Relations at University of Groningen (the Netherlands), told Trend News via e-mail. When NATO started its enlargement process in the 1990s, there was also a lot of rhetoric that this will threaten Russia's security, she said. However, the fact is that Russia got democratic neighbors, as stable democracy is one of crucial criteria for NATO membership, Kviatek-Simanska stated.Two large stages of the expansion of the North Atlantic alliance after "cold war" occurred in 1999 and 2004. In March 1999 Hungary, Poland and Czech Republic joined NATO and in March 2004 Bulgaria, Estonia, Latvia, Lithuania, Rumania, Slovakia and Slovenia.

"It is obvious that it is important for NATO to have good relations not only with Russia, but also with all countries, which adhere to neutral positions," the permanent representative of Russia to NATO Dmitry Rogozin told Trend News formerly. However, in order to obtain this type of partnership, NATO must end acting against the interests of Russia and attempt to look at many processes in the world with "our eyes", Rogozin said. "Then they will understand our concerns over the actions of alliance and maybe will change their policy," said Rogozin.E.Tariverdiyeva and R.Agayev contributed to the article.

No Russian militarization in Arctichttp://www.barentsobserver.com/no-russian-militarization-in-arctic.4576566-58932.html

2009-04-03

Russia does not intend to build Arctic military bases or establish an Arctic military district. We are not talking about a Russian militarization of the Arctic, a representative of the Russian Security Council says.

As BarentsObserver reported last week, a new strategy called “Principles for Russian politics in the Arctic in the period to 2020 and in a further perspective” outlines an enhanced military presence in the Arctic.

However, these principles do not include a militarization of the region, a representative of the Security Council underlines to Rossiiskaya Gazeta.

The document , which recently was discretely published on the Security Council's website, reads that only general-purpose military forces should be kept in the region.

As highlighted by the Security Council representative, the document rather emphasizes the development of Arctic border infrastructure and places the FSB in the main position. The document underlines the need for the “optimization of the control system for the Arctic”. It also highlights the importance of international cooperation, peace and environment, RG.ru reports.

Natural resource development is central in the paper, which highlights the need for documentation of Russia’s right over the disputed Lomonosov Ridge. A number of studies are to be conducted in the area by 2010. Those studies will be vital in the country’s bid for the ridge areas.

Belgade & Moscow step up co-operation http://www.balkans.com/open-news.php?uniquenumber=24350526

Mark Pullen - 06.04.2009Serbian PM Mirko Cvetkovic and Russian Minister of Emergency Situations, Sergei Shoigu, have agreed intensify bilateral co-operation within the areas of the economy, energy and culture.   Speaking during the visit of a senior Russian delegation to Belgrade on Friday, Cvetkovic and Shoigu agreed that bilateral relations are traditionally satisfactory, which was confirmed by the two countries’ agreement over co-operation within the gas and oil industries.

Voicing his gratitude for Russia’s support to Serbia in its struggle to preserve its sovereignty and territorial integrity, Cvetkovic told press that a recently signed agreement envisaging the abolition of visas for Serbian citizens travelling to Russia, due to come into force soon, is the crowning of good relations between Serbia and Russia.   Following his meeting with PM Cvetkovic, Minister Shoigu discussed the further development of economic co-operation with Serbian First Deputy Prime Minister and Minister of the Interior, Ivica Dacic.

  Dacic and Shoigu are co-chairs of the Serbian-Russian committee for trade, economic, scientific and technical cooperation.   According to a statement issued by the Interior Ministry, the ministers signed a protocol agreement on the expansion of the goods list covered by the existing free trade agreement between Serbia and Russia.

U.S. spies on China from Kyrgyz base: Russian TVhttp://uk.reuters.com/article/gc07/idUKTRE5324TM20090405

Sun Apr 5, 2009 10:18pm BST

By Dmitry Solovyov

MOSCOW (Reuters) - Russian state television accused the United States on Sunday of spying on China and Russia after secretly turning its only remaining air base in Central Asia into a state-of-the-art surveillance center.

A U.S. defense official dismissed the allegations as ridiculous on Friday, when Rossiya television, widely seen as an official mouthpiece in Russia, released a clip of the documentary it aired on Sunday about the Manas base.

Kyrgyz and U.S. officials could not be reached for comment late on Sunday.

Kyrgyzstan told Washington in February to close the base near the capital Bishkek, used to send supplies to U.S. troops in Afghanistan, after it secured a $2 billion economic aid package from Russia. The Americans are due to leave in August.

Airing the documentary, called "Base," Rossiya showed a compound of two-storey windowless buildings, and said: "In one of the buildings ... there is a multi-channel, multi-functional system of radio-electronic surveillance.

"This station can eavesdrop the whole world -- every fax, every e-mailed letter. Every call from a mobile or landline phone is being recorded and processed. Billions of messages are being intercepted."

It said: "At Manas, the U.S. built a station which controls entire Central Asia, parts of China and Siberia. For Americans, the existence of the intelligence complex at the base is more important than the runway. It was done in a treacherous way, without being endorsed by the Kyrgyz authorities."

Airing the film just days after President Dmitry Medvedev's first meeting with U.S. President Barack Obama is likely to raise speculation of tensions within Russia's elite.

The U.S. official, who spoke on the condition of anonymity of Friday, noted the TV report surfaced just as U.S. and Kyrgyz officials had resumed dialogue over the base's future.

The film was made by Russian journalist Arkady Mamontov, who in 2006 provoked a spat between London and Moscow with a documentary showed that pictures of what Mamontov said were British spies using a fake rock to gather secrets electronically.

(Reporting by Dmitry Solovyov; Editing by Alison Williams)

Putin appoints Okulov as deputy transport ministerhttp://www.itar-tass.com/eng/level2.html?NewsID=13756148&PageNum=0

MOSCOW, April 3 (Itar-Tass) -- Prime Minister Vladimir Putin has appointed Valery Okulov as a deputy transport minister, the government press office said on Friday.

In the past 12 years Okulov had been the Director General of Aeroflot – Russian Airlines.

The new appointment “will be positively taken by the market, and vast professional experience of Okulov will help upgrade the aviation industry,” Transport Minister Igor Levitin said.

HIGHLIGHTS-Russia's PM Putin annual report to parliamenthttp://www.reuters.com/article/marketsNews/idUSPUTIN320090406

Mon Apr 6, 2009 4:40am EDT

MOSCOW, April 6 (Reuters) - Following are edited highlights of Russian Prime Minister Vladimir Putin's first annual report to parliament on Monday.

ON THE ROUBLE

"The current rate of the national currency considerably improves the competitiveness of Russian companies"

ON TARIFFS

"A complete freeze on tariffs (monopoly prices) is an eye catching but not always an efficient decision," said Putin, who added that monopolies would be forced to slash investments and reduce Russian equipment purchases if tariffs were frozen.

ON ECONOMIC CRISIS

"The problems have not arisen first with us, no one is disputing this"

"The situation in the Russian economy is not generally different from global trends," said Putin who added that the crisis had highlighted Russia's dependence on mineral resources and the need to diversify away from this.

ON MILITARY SPENDING

"During the current year, spending on defence will rise by 15 percent from the previous year".

(Moscow Newsroom, + 7 495 775 12 42, moscow.newsroom@reuters.com)

Companies implementing restructuring programs will get state support –Putinhttp://www.interfax.com/3/485467/news.aspx MOSCOW. April 6 (Interfax) - Companies that are implementingrestructuring programs will have the right to state support, RussianPrime Minister Vladimir Putin said in the State Duma on Monday. "State support will not substitute responsible business. Only thosewho can independently draw resources, service debts and implementrestructuring programs will have the right to state support," Putinsaid.

Ruble fell smoothly, uncontrollable devaluation avoided – Putinhttp://www.interfax.com/3/485440/news.aspx MOSCOW. April 6 (Interfax) - The ruble's exchange rate fellsmoothly and uncontrollable devaluation was avoided, Russian PrimeMinister Vladimir Putin said in the State Duma. The national currency had to be protected "and attacks on the rublerepelled" at a time when capital was flowing out of the country andexport revenue was falling, Putin said. "We managed to prevent uncontrollable devaluation. Some devaluationwas inevitable in that situation and it was, as we promised, smooth," hesaid, adding that this helped the economy and the public to adapt to thenew realities.

Monetary allowances of Russian servicemen to grow by 2012 – Putinhttp://www.interfax.com/3/485426/news.aspx MOSCOW. April 6 (Interfax-AVN) - A new system of monetaryallowances will enter into force by 2012, and incomes of Russianservicemen will increase substantially, Prime Minister Vladimir Putinsaid in a government report to the State Duma on Monday. "All servicemen of the armed forces will have new monetaryallowances by 2012. A platoon commander will receive about 50,000 rubles[per month]," he said.

RF Duma starting work on new anti-crisis 2009 budgethttp://www.itar-tass.com/eng/level2.html?NewsID=13760500&PageNum=0

MOSCOW, April 6 (Itar-Tass) - The State Duma lower house of Russia’s parliament on Monday will consider in the first reading a specified draft federal budget for 2009. It is factually a new draft of the country’s main fiscal document for the current year worked out by the government due to the need to implement anti-crisis measures. Apparently because of this the prime minister will for the first time in recent years present to the deputies the main parameters of the budget.

Prime Minister Vladimir Putin said that the “budget has anti-crisis nature – it takes into account the lowering of prices for the main items of our traditional export and correspondingly, the lowering of the budget revenue and additional expenditures for the anti-crisis measures are envisaged.” In this connection the 2009 budget differs in many things from documents of the kind of the past years. Thus, if previous budgets were formed for three years then it has been decided to make the current budget, due to the rather unpredictable financial-economic situation in the world, one-year again. Besides, for the first time in eight years the budget has been projected with deficit – the expenditures will exceed the revenues by 3 trillion roubles (7.4 percent of GDP) and will reach 9.7 trillion roubles (it was earlier planned 9 trillion roubles) and the revenues will amount to 6.7 trillion roubles. It is planned to cover the deficit using the Reserve Fund (2.7 trillion roubles).

The parameters of the budget adjustment have been calculated with the oil price of 41 US dollars a barrel (in the previous 3-year budget the government calculated that the oil price could drop to 72 US dollars a barrel only in 2011). Besides, the current budget also takes into account that the GDP decline in Russia will reach 2.2 percent and inflation will run at 13-14 percent.

At the same time the renewed 2009 budget preserves the financing of all the key social programmes in the sphere of education, healthcare, pension support, demography and innovation development. Moreover, it increases spending on the social sphere. Thus, with taking into account the implementation of the anti-crisis programme and fulfilment of social obligations it is planned to additionally allocate over 1.6 trillion roubles. In particular, 43.7 billion roubles will be added for the settlement of unemployment problems and at least another 130 billion roubles – for the indexation of social payments. Duma vice speaker Nadezhda Gerasimova noted that the basic part of the labour pension in 2009 will grow by 31.4 percent (to 2,562 roubles), the annual monthly payments to war veterans and the disabled will be increased by 13 percent (their earlier increase was planned at 8.5 percent) and the maternity capital and child allowances will be adjusted also by 13 percent.

Another priority of the renewed anti-crisis budget is the real sector of the economy. The allocations for the national economy on the whole are increased by more than half – by 51.5 percent or 553 billion roubles (up to 1.6 trillion roubles). A sum of 350 billion roubles will be provided for the support of RF subjects for levelling the fiscal capacity. The budget determines the additional support to the banking system at 300 billion roubles and 388 billion roubles will be provided in state support to extra-budgetary funds.

The budget’s national defence section preserves items linked with combat training and armaments. Mainly “technical expenditures” will be cut in it – for instance, for the maintenance of military camps and other items related to the current army maintenance. The spending for the purchase and repairs of armaments, research and development, as well as GLONASS satellite navigation system will practically not by cut. The spending for the payment of the internal debt and preparations for the 2014 Winter Olympics in Sochi will be kept at the same level. At the same time the government plans to cut spending on “officials and the state machine” by 38.7 billion roubles (22 percent).

The Duma committee on budget and taxes recommended passing in the first reading the renewed version of the 2009 federal budget. In the view of the committee, the new budget “will make it possible to provide with financial resources the measures of social support for the population, the labour market, sectors of the economy and the financial market, as well as additional support for RF subjects.” According to Duma speaker Boris Gryzlov, the deputies plan to complete the work on the budget on April 15, after which the document will be submitted to the Federation Council upper house. “We will not delay the consideration of the amendments to the budget,” he promised “and nine days is the minimal time for the discussion and introduction of amendments.”

Prime Minister Vladimir Putin earlier confirmed his intention to take part 2009 budget debates in the Sate Duma. He said that “…during budget debates in the State Duma on April 6, and during the subsequent discussions we shall closely study all priorities of that document and of the anti-crisis measures.”

Putin said at a meeting with the leaders of the United Russia party that the “budget and everything that it contains is of anti-crisis nature.” “A large sum – about 1.4 trillion roubles is to be disbursed directly to finance measures to ease the crisis effects. The main priority on the agenda is the unconditional compliance with the social liabilities to the citizens of Russia – wages, pensions, grants, and timely and full indexing.” Support for the real sector of the economy is another high priority of today’s budget policy.

“Special emphasis is placed on innovative development – nuclear power, space, aircraft- and ship-building, nano-technologies and other fields,” he said. “We also keep in mind support for the building sector – we have preserved major building projects of national importance, he noted. Also, said Putin, “we support and shall keep working on all of the existing plans for the development of housing and utilities system, we have preserved the housing and utilities fund, and we are using other instruments in supporting this sector.”

The head of the Cabinet drew special attention to the need for conducting explanatory work regarding the anti-crisis programme. He recalled that the creation of the anti-crisis programme was a sort of response to proposals from the United Russia party and other legislators for pooling anti-crisis measures into one plan. However, of no smaller importance is the explanation of what the government and parliament have been doing and will be doing within the framework of the anti-crisis programme.

Putin to take part in 2009 budget debates in Duma on April 6 http://www.focus-fen.net/index.php?id=n176773

6 April 2009 | 03:01 | FOCUS News Agency Moscow. Russian Prime Minister Vladimir Putin will take part today in the 2009 budget debates in the Sate Duma, ITARR-TASS reported. “In the course of today’s discussion and during budget debates in the State Duma on April 6, and during the subsequent discussions we shall closely study all priorities of that document and of the anti-crisis measures,” Putin said at a meeting with the leaders of the United Russia party. “The budget and everything that it contains is of anti-crisis nature,” the prime minister said. “A large sum – about 1.4 trillion rubles is to be disbursed directly to finance measures to ease the crisis effects. The main priority on the agenda is the unconditional compliance with the social liabilities to the citizens of Russia – wages, pensions, grants, and timely and full indexing.” Support for the real sector of the economy is another high priority of today’s budget policy. “Special emphasis is placed on innovative development – nuclear power, space, aircraft- and ship-building, nano-technologies and other fields,” he said. “We also keep in mind support for the building sector – we have preserved major building projects of national importance, he said. Also, said Putin, “we support and shall keep working on all of the existing plans for the development of housing and utilities system, we have preserved the housing and utilities fund, and we are using other instruments in supporting this sector.” The head of the Cabinet drew special attention to the need for conducting explanatory work regarding the anti-crisis program. He recalled that the creation of the anti-crisis program was a sort of response to proposals from the United Russia party and other legislators for pooling anti-crisis measures into one plan. However, of no smaller importance is the explanation of what the government and parliament have been doing and will be doing within the framework of the anti-crisis program. “These measures can be really effective only if an overwhelming majority of citizens agrees with us in the sense that the measures being taken are optimal ones and the taxpayers’ money is being spent in the best of ways with the aim to overcome critical phenomena, to ensure they benefit the people,” he said.

Putin to defend handling of Russian crisishttp://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL58984120090405

Sun Apr 5, 2009 6:24pm EDT

* Prime minister to defend record to parliament

* Putin likely to express hope for Russia's battered economy

By Guy Faulconbridge

MOSCOW, April 6 (Reuters) - Prime Minister Vladimir Putin will defend his handling of Russia's worst economic crisis in a decade on Monday and is likely to tell lawmakers there are signs the battered economy could be on the road to recovery.

Russia's $1.7 trillion economy is heading into recession after a decade of rapid growth. More than a million people have lost jobs since the start of December with unemployment rates at a five-year high. [ID:nLJ964299]

But officials say there are signs of hope after falling oil prices stabilised.

Putin, who as Kremlin chief from 2000 to 2008 presided over the longest boom Russians have seen for decades, is obliged to report to parliament annually under constitutional changes ordered by President Dmitry Medvedev.

But he is unlikely to face a grilling in a house controlled by the ruling party he heads and analysts said he would use the speech to underline his status as a leader with influence on a par with the Kremlin chief.

"There will of course be no dressing-down for Putin and do not expect lots of criticism of the prime minister," said Olga Kryshtanovskaya, a sociologist and expert on the Kremlin elite.

"It is more about PR (public relations) for Putin to show that he is a powerful leader who sees the light at the end of the tunnel. He wants to show the population that he is still a leader, an equal leader."

Medvedev has criticised the government several times for its slow response to the crisis, though he has stopped short of direct criticism of the man who groomed him to be president.

SOCIAL STABILITY

The lower house of parliament has set aside Monday afternoon for Putin to field questions on his anti-crisis plan which supporters say marks a move from fire-fighting immediate problems to policies aimed at a wider recovery.

"This will be Putin's consolidated anti-crisis plan," Andrei Vorobyov, head of the executive committee at the ruling United Russia party, told Reuters.

"Anti-crisis measures have been achieved that prevented the situation from spiralling out of control, unlike in some other states. Now we need a plan that ensures social obligations are met."

Russia's leaders are worried that wage cuts and job losses could undermine the social stability which Putin prided himself on achieving while Kremlin chief.

The rebound in oil prices has eased some of those concerns, at least in the short term. Russia's Urals blend of oil was trading at $49 a barrel on Friday, eight dollars higher than the $41 level factored into the revised 2009 budget.

But some economists are still warning that the economy could shrink by more than 8 percent this year, nearly four times worse than the government expects. [ID:nL3716292]

That could make 2009 the worst year for the Russian economy since the early 1990s, with a sharper contraction than 1998, when Russia defaulted on domestic debt.

"I doubt we have reached the bottom of the crisis yet as the bottom will be when people start selling their belongings to feed their families," David Yakobashvili, board chairman at Wimm-Bill-Dann, Russia's top dairy producer, told Reuters.

"I really hope we do not reach that bottom," he said.

Historic PM report to be made at State Dumahttp://www.russiatoday.ru/Top_News/2009-04-06/Historic_PM_report_to_be_made_at_State_Duma.html

06 April, 2009, 09:39

For the first time ever, a Russian Prime-Minister will be grilled by the Parliament. With unemployment rocketing and businesses crumbling, Vladimir Putin will face questions over the government's handling of the crisis.

This is the first time in Russian history that the head of government will report to the State Duma. Experts say it may prove to be a hard test. Given that the country is trying to recover from the global financial turmoil, Prime Minister Vladimir Putin definitely needs to say a lot to prove that his ministers are trying to resolve the turmoil.

Amendments to the Russian constitution introduced by President Dmitry Medvedev last year provide that, for now, the prime minister has to make annual reports to the State Duma. Analysts say that the timing for the first such speech is more than demanding.

Putin will introduce the government’s anti-crisis programme. If the proposal is accepted by the deputies, the Russian parliament will then make amendments to the state budget, which could mean an influx of around $20 billion into the state budget to revive the economy.

Some in the opposition have already described Putin’s address as a pure formality. Others say that the Duma could subject the prime minister to stinging criticism that would force

the president to reassess the government's performance, but where it will lead will be clear after the prime minister takes to the Duma’s rostrum on Monday.

Crisis victims await support

Experts describe the situation as not only already difficult, but also worsening – but acknowledge that something is being done to tackle the financial fallout.

Political analyst Igor Mintusov believes the government is doing the best it can to pull the country out of the crisis.

“The question is how efficient those measures are. But, on the other hand, it is naïve to think that we can escape the turmoil by our own actions. Russia will overcome the credit crunch only when major economies will,” he said.

A month ago Vera Dobrova lost her job at a factory. She’ll turn sixty in three years, so she is not entitled to receive a pension just yet, and she can’t find a new job either.

“It’s easier for a young person to find a job. I’m not saying that there are no jobs available in Moscow. There are some. But when I call the companies, I’m told that I’m too old for the job. There was nothing like that before,” Dobrova says.

Vera’s story would not surprise anyone in Russia nowadays. She’s just one of over six million victims of the credit crunch nationwide. Small businesses crumble, factories are closing, and desperate people go on sporadic strikes, demanding actions from the government.

Something Vera believes is that Putin’s anti-crisis programme, if approved, would help Russia and her personally.

“We’ve had some hard times before. I didn’t receive a salary for months. But we pulled out from it and I believe we will this time as well,” Dobrova maintains.

Revised budget the key to Russian economy in global downturnhttp://www.russiatoday.ru/Business/2009-04-06/Revised_budget_the_key_to_Russian_economy_in_global_downturn.html

06 April, 2009, 10:06

On Monday, Vladimir Putin will report to the State Duma on implementation of the government’s anti-crisis plan and announce amendments to the new budget. Experts say the new spending plan looks more realistic.

Planning against the crisis. Russia’s White House and the Parliament in a joint search for solutions. Vladimir Putin will address the State Duma with an anti-crisis plan and amendments to the budget.

Economic forecasts are gloomy – stubborn inflation and the economy stagnating by at least 7% – the worst of any G20 country. Vladimir Tikhomirov, Chief Economist at Uralsib, still sees risks for the Russian economy in the global outlook.

“If we are going to see a new wave of contraction in the global economy, falls in commodity prices, and as a result a new wave of capital outflow from Russia, that would put additional pressure on the Rouble rate and then we could see a weaker Rouble, and then a reappearance of the same inflation driver which is the devaluation driver.”

As a result of low commodity prices, higher spending and falling revenues the budget is facing a record 8% deficit – something Russia hasn’t seen since the 1990s. Sergey Aleksashenko, Head of Macroeconomic Research at the High School of Economics says the budget can help.

“The government has realized several significant changes in the budget, first of all they have cut a big amount of expenditure – capital expenditure and current expenditure and increased significantly expenditure for social security and assistance to the banking sector.”

Aleksashenko says, however, that there’s something else the government should understand. The trouble is not only falling oil prices.

“For example Saudi Arabia has no decline at all. It means there’s something wrong with our economic system and the government should recognise this and implement structural reforms.”

He says the country desperately needs new incentives to encourage not only big business but also small firms who get barely any attention from the government.

Demands for Putin’s Ouster and Appeals to Medvedev Multiplyhttp://georgiandaily.com/index.php?option=com_content&task=view&id=10915&Itemid=65

April 05, 2009

Paul Goble

Vienna, April 5 – Demonstrations yesterday in various parts of the Russian Federation called on President Dmitry Medvedev to dismiss Prime Minister Vladimir Putin and his government for their failure to cope with the deepening economic crisis, warning that there could be “a social explosion” if he is not ousted soon.

But perhaps even more indicative of the tragedy now engulfing many people in the Russian Federation was a demonstration in a small industrial center in the Far East where

people sought in the first instance food for their children, and even more indicative of the shift of public support from Putin to Medvedev was suggested by three open letters to the Russian President.

In Moscow, demonstrators led by the United Civic Front (OGF) not only held up signs demanding that Putin and his government be fired but also collected signatures on a petition to that effect which said that “the present government cannot offer effective measures for getting the country out of the crisis (www.sobkorr.ru/news/49D737FF02188.html).

Moreover, in an indication of the way in which the removal of Putin is becoming an increasingly central issue for a growing fraction of the opposition, the OGF called on “all opposition forces” to support the collection of signatures on similar petitions demanding that President Medvedev take that step.

Meanwhile, there were similar demonstrations elsewhere around the country. In the Mordvinia in the Middle Volga, approximately 500 people assembled to demand that Putin be fired. If that does not happen, speakers from the KPRF warned, the country will face further and increasingly serious turmoil (www.sobkorr.ru/news/49D77E64D8DA9.html).

And on the same day in Orenburg, 150 demonstrators, led by several different parties, marched through the city carrying signs reading “The RF Government Equals the Crisis” and also demanding that Putin and his government be fired. Similar protests with similar demands took place in St. Petersburg and Khakassia.

A more emotionally wrenching protest took place yesterday in the Svetlogor’ye settlement in Primorsky kray, where people demanded back wages and free food for their children because the factory there has not paid their wages for months and local stores have stopped providing food on credit (www.sobkorr.ru/news/49D73D06E96D5.html).

Meanwhile, three very different open letters were dispatched to President Medvedev at the end of last week, letters whose specific demands may ultimately prove less important for the future of the Russian political system that the decision of their authors to turn to Medvedev just now and the arguments they provide for doing so.

The first of these letters came from Boris Nemtsov, an opposition figure who is running for mayor of Sochi. He called Medvedev’s attention to the fact that the Russian interior ministry had illegally confiscated 125,000 of his campaign leaflets, which, given the authorities decision to keep all candidates off the airwaves, effectively deprived him of his ability to campaign.

Nemtsov said that the president should dismiss Krasnodar kray Governor Aleksandr Tkachev for his “illegal actions,” order the interior ministry to stop “illegal interference in the electoral process,” and thus ensure that the constitution and laws on elections will be fulfilled in Sochi (www.ej.ru/?a=note&id=8955).

The Russian politician said that “the shameful situation” in Sochi is affecting “not only Russia’s reputation and not only the site of the 2014 Olympic Games” but also the reputation of Medvedev “personally” because of the president’s responsibility to serve as “the guarantor of the [country’s] Constitution.”

The second open letter came from longtime human rights leader Sergey Kovalev who said that the recent attack on Lev Ponomarev bore every sign of being a “political” act. And that is especially unfortunate because “politically motivated force up to and including even murder has become for us something quite usual” (www.ej.ru/?a=note&id=8954).

What strikes any observer of these events, Kovalev continued, is that “when political motives are evident, the victim is always a critic or an opponent of the powers that be,” rather than one of their defenders. And even if the attackers are not special services but fascist bands, that raises the question as to why such groups are closer to the regime than to the opposition.

“Can it be,” he asked rhetorically, “that we are returning and quite quickly to the epoch of ‘socially alien’ and socially close’ groups” such as existed in Soviet times, with the new ‘socially alien’ category consisting of “liberals, the opposition, human rights activists, ‘dissidents,’ and independent activists’?”

Unless Medvedev takes action to block this development and to reverse the course that Russia apparently is now on, Kovalev warned, “Law will be associated with hypocrisy,” a linkage that is “catastrophically dangerous and something for which “the powers that be area always the guilty party.”

Kovalev concluded by saying that he did not hope his letter would “change something,” but he added that he thinks “simple things always should be discussed openly,” especially when the dangers of doing nothing for everyone concerned are so obviously great and so equally obviously already in evidence.

And the third open letter sent to Medvedev at the end of last week came from members of the Volya Political Party, individuals who described themselves as “simple citizens of Russia” who have been inspired by the Russian president’s call for ordinary people to help solve the country’s political problems (www.anvictory.org/index.php?name=pages&op=view&id=313).

In a clear reference to Putin, the writers said that they are “tired of beautiful speeches” in the newspapers and television about how “the financial crisis of the West will not be repeated in Russia,” especially since “the crisis in our country has turned out to be even more serious than in many other countries.”

Having detailed efforts by the powers that be to prevent their party from organizing, the Volya writers say that “we cannot have a conversation with our mouths gagged. Honest

discussion is a precondition for the rational and just administration of society. Administration without opposition creates illusions and leads to serious mistakes.”

“We turn to you as the President of Russia with the following request: defend our fights.” You, President Medvedev, have the power to make “extraordinary decisions -- use it. And then there will be a basis for trusting you. But until that happens, we do not know whom you serve – the people or someone else.”

FACTBOX-Russia's powerful prime minister, Vladimir Putinhttp://uk.reuters.com/article/oilRpt/idUKL424091520090405

Sun Apr 5, 2009 11:24pm BST

April 6 (Reuters) - Russian Prime Minister Vladimir Putin will defend his handling of the economic crisis on Monday when he takes questions from lawmakers in parliament.

Here are some key facts about Putin.

* Putin was born on Oct. 7, 1952 in St Petersburg, then called Leningrad. A former spy in East Germany, he rose to head the KGB's successor organisation, the FSB, before being chosen as prime minister by the late President Boris Yeltsin in August 1999.

* He became acting Russian president when Yeltsin stepped down on Dec. 31, 1999. He was elected president in March 2000 after a huge public relations campaign.

* During his eight years as Kremlin chief until 2008, he crafted a political system hugely dependent on his own personal authority. The opposition was sidelined and the Kremlin imposed tight control on the media.

* Putin presided over the longest Russian economic boom in a generation, helped by high prices for oil, gas and metals. Russian GDP totalled $1.7 trillion in 2008, up from less than $200 billion in 1999 and many millions of Russians saw their living standards rise.

Critics say Putin failed to use the boom to reform Russia and note that millions of Russians still live in poverty.

* Putin has prided himself on bringing stability to Russia after the chaos that accompanied the fall of the Soviet Union, an event he said was the "the greatest geopolitical catastrophe of the century".

Just months after Putin stepped down as president, Russia was hit by the worst economic crisis for at least a decade, raising concerns about the stability of the system he crafted.

* He named Dmitry Medvedev, a long-term ally, as his favoured candidate in December 2007, assuring the former lawyer of victory in March 2008 presidential elections.

* Medvedev appointed Putin as prime minister after his inauguration as president in May 2008. As premier, Putin played a central role in the 2008 war with Georgia and this year's gas dispute with Ukraine.

* As prime minister, Putin crafted government policy aimed at easing the economic crisis. He has said state efforts should focus on easing the social impact of the slump and his deputies have warned that oligarchs should not expect to be bailed out with state money.

* Medvedev has criticised the government several times for its slow response to the crisis, though he has stopped short of direct criticism of Putin.

Ingush deputy interior minister dies, 3 injured in road accident

http://www.itar-tass.com/eng/level2.html?NewsID=13759969

NAZRAN, April 5 (Itar-Tass) -- Ingush Deputy Interior Minister Ruslan Archakov died in a traffic accident in the city of Malgobek at about 8:20 p.m. Moscow time on Sunday. A 17-year-old son of the Ingush deputy interior minister and driver Ilez Archakov, 28 are in satisfactory condition, Archakov’s deputy Magomed Kukurkhayev is in severe condition, the Ingush republican investigation department of the Prosecutor General’s Office Investigation Committee (SKP) told Itar-Tass on Sunday.

A Lada-Priora carrying the 49-year-old deputy interior minister, Ruslan Archakov, his driver, son and his deputy collided with a KamAZ truck steered by local resident Magomed Gazikov at the crossroads of the Sagapshi-Malgobek-Nazran highways. All four Lada passengers were injured and hospitalized. Ruslan Archakov died at the hospital. The KamAZ driver was not injured.

Ingush investigators are examining the traffic accident site.

Archakov was put in charge of the ministry’s personnel department six months ago. Prior to that, he had been the chief of the Malgobek police department. An attempted murder was committed against him then.

Russian security forces in Dagestan searching for second suspect in attack on FSB officer in Makhachkala

http://www.axisglobe.com/article.asp?article=1793

According to sources from law enforcement agencies, unknown assailants have opened submachine gun fire at a vehicle of the Federal Security Service (FSB) of Russia Dagestan directorate officer last night in the capital city of Russia’s Dagestan, Makhachkal, news agency ITAR-TASS reported. The FSB officer has received heavy wounds, news agency notes.The employees of security forces of Russia’s Caucasian republic of Dagestan have been

conducting searching of the second suspect in the last night’s attack on the head of one of the FSB of Russia Dagestan directorate departments, Colonel Zulkand Kaidov, news agency RIA Novosti reports, referring to the directorate’s spokesman.Unknown persons opened gunfire at Colonel Kaidov kast night at 20.30 Moscow time on the corner of Dakhadayeva and Oscar streets, close to Lenin Square where buildings of the republican government, the Ministry of Interior, republican FSB directorate and city administration are located. With various wounds the Colonel has been delivered to hospital in grave condition. On suspicion in participation in the attack on the FSB Colonel Kaidov, the FSB directorate declared Murad Begov, a native of Khiv village, has been declared in search. His brother yesterday was detained on the site of crime, the agency’s source said. Affiliation of the brothers Begovs with illegal armed grouping under Shamil Gasanov has been checked, RIA Novosti adds.

MP Delimkhanov says he is ready top answer Dubai police questions (Part2)http://www.interfax.com/3/485341/news.aspx

MOSCOW. April 5 (Interfax) - Russian MP Adam Delimkhanov, who Dubaipolice suspects of the involvement in the murder of former Vostok (East)battalion commander Sulim Yamadayev, said that he is ready answerquestions investigators question provided that the question proceed fromobjective information. "I am ready to cooperate with the investigation. I am ready toanswer any objective and clear question if Dubai police has such,"Delimkhanov told Interfax by phone on Sunday, adding that such questions"should be based on objective information not suggestions." Delimkhanov also said that the statement by Commander-in-Chief ofDubai police Lieut. Gen. Dahi Khalfan Tamim that that he mastermindedthe murder of Yamadayev "is provocative and is aimed tat destabilizingthe Chechen community and the situation in Chechnya." "Obviously, Tamim's statement was ordered. It is not base on anyobjective information," the MP said. Dubai police has not made effort to search for real culprits of themurder, Delimkhanov said referring to reported UAE police statementsabout "Saudi trace in the murder and the revenge for destroying Abu Al-Valid." "Thus, police shows its incompetence, inability and unwillingnessto detain culprits," Delimkhanov said, adding that "now after the Dubaipolice chief made his statement it has become clear where the killer andabductors found refuge and who covered them."

Delimkhanov dismisses charges of Dubai police chiefhttp://www.itar-tass.com/eng/level2.html?NewsID=13759812

GROZNY, April 5 (Itar-Tass) -- State Duma deputy Adam Delimkhanov has dismissed charges brought by the Dubai police chief.

He said the charges were provocative and aimed to destabilize Chechnya.

“This statement was obviously made to order. It is based on a supposition of a killer, junky and abductor – brother of deceased Sulim Yamadayev, Isa,” Delimkhanov told Itar-Tass.

Sulim Yamadayev and his brothers perpetrated a series of felonies in Chechnya, Moscow and St. Petersburg, including attempts to raid a business, abduction and murder of the Arsamakov brothers, the Khambiyev brothers, builders from Dagestan, residents of the Borozdinovskaya village, an official from Moscow and some others, he said. Criminal cases were opened, and the Yamadayevs were announced wanted, he said.

In his opinion, the Dubai police have not tried to find the real killers but kept speaking of an alleged Saudi trace, a act of revenge and the killing of al-Walid and repeating statements of the wanted Isa Yamadayev. The Dubai police are unable to solve the crime but bring unfounded accusations, Delimkhanov said.

“The statement by the Dubai police chief shows where the killers and abductors stayed and who helped them to hide,” Delimkhanov said.

He said he was ready to cooperate with detectives and answer their questions but he would also demand punishment for slander.

April 6, 2009

Russian MP ‘named in Chechen rebel’s murder’http://www.timesonline.co.uk/tol/news/world/europe/article6041317.ece

Dubai has accused a close ally of Chechnya’s Kremlin-backed President of masterminding a brazen midday assassination of a decorated Chechen war veteran.

The allegation could have broad implications for President Kadyrov, a former rebel now closely allied with Moscow and its campaign to quell a 14-year insurrection in Chechnya.

Sulim Yamadayev, one of Mr Kadyrov’s bitter foes, was shot dead on March 28 outside a busy residential complex along Dubai’s shoreline. It was the latest in a string of assassinations targeting Chechen renegades in and outside of Russia. Many observers have linked the killings to Mr Kadyrov, who feuded with Mr Yamadayev.

An Iranian and a Tajik, who allegedly took part in the killing, were in custody and four others fled to Russia. One of the four suspects was Adam Delimkhanov, a Chechen

member of Russia’s lower house who is considered one of Kadyrov’s close friends. One of the suspects told authorities that Mr Delimkhanov planned the slaying. (AP)

April 6, 2009

Dubai Police Link Murder of Chechen to Russian http://www.nytimes.com/2009/04/06/world/europe/06chechnya.html?_r=1&ref=global-home

By ELLEN BARRY

MOSCOW — Authorities in Dubai said Sunday that they believed the murder of Sulim B. Yamadayev, a former Chechen general, had been planned by a member of Russia’s lower house of Parliament who is a well-known ally of the Chechen president.

At a news conference, Dubai’s chief of police, Lt. Gen. Dahi Khalfan bin Tamim, said that he would ask Interpol to arrest the member of Parliament, Adam S. Delimkhanov, and that it was “Russia’s responsibility in front of the world to control these killers from Chechnya.”

General Tamim’s allegation was striking because Mr. Delimkhanov is so close to Ramzan A. Kadyrov, Chechnya’s Kremlin-backed president. Mr. Yamadayev, who was shot in Dubai, in the United Arab Emirates, on March 31, was the latest in a series of Chechen figures to be killed after challenging Mr. Kadyrov.

Though the recent murders of Chechen dissidents have attracted wide attention, investigators had identified only low-level suspects — until Sunday, said Grigory Shvedov, the editor of the Web-based news service Caucasian Knot.

“Those were people no one knew,” Mr. Shvedov said of the suspects. “Today, we are talking about a person who is very well known, with a key position in the regional government and a very high position on the federal level.”

A person in the Russian prosecutor general’s office told the Interfax news agency that Mr. Delimkhanov could not be extradited under Russian law, but that prosecutors would consider pressing charges if they saw convincing evidence.

Mr. Delimkhanov vigorously denied the accusation, saying it was “a provocation and an attempt to destabilize conditions in the Chechen Republic.”

“I am a politician who has dedicated most of my life to the war against terrorism, and even in this case I am ready to help any justice system, among them Dubai’s,” Mr. Delimkhanov said in a statement released by his spokesman.

He also criticized the United Arab Emirates for giving an entry visa to Mr. Yamadayev, “a criminal who ran from the judicial system in his own country.”

“As regards the dead man, he had enemies all around the world,” the statement said.

Authorities in Dubai released new details about the murder.

General Tamim said the killer had surprised Mr. Yamadayev outside the Jumeirah Beach apartment complex and shot him in the head, then threw away the weapon not far from the crime scene. He said the weapon resembled guns carried by Mr. Delimkhanov’s bodyguards, and that a witness in police custody had said the weapon was given to assassins hired to kill Mr. Yamadayev.

The general was scathing about the spillover of violence outside Russia’s borders.

“Russia must take a strong and powerful step to stop this, to make sure that Chechen dirty payback doesn’t spread outside,” General Tamim said. “We will give Russian authorities the case file. It is up to Russia whether or not to hand” Mr. Delimkhanov to authorities in Dubai, he said.

The police arrested two suspects, an Iranian and a Tajik, shortly after the murder, and said four other suspects were in Russia, General Tamim said.

Mr. Delimkhanov, 39, rose under Mr. Kadyrov to become a top Chechen official. After heading the police division that protected Chechen oil facilities, he was appointed deputy prime minister overseeing security forces in 2006. The next year he was appointed to the Russian Parliament as a representative of United Russia, the party headed by Prime Minister Vladimir V. Putin. A spokesman for Mr. Delimkhanov described him as “a friend” of the Chechen president.

His name arose in written legal complaints by a Chechen exile, Umar S. Israilov, who was shot to death in Vienna in January. Mr. Israilov described a scene in which Mr. Delimkhanov beat him with a shovel handle in Mr. Kadyrov’s presence. Mr. Delimkhanov declined requests for comment on the allegation.

Michael Schwirtz contributed reporting from Moscow, and an employee of The New York Times from Dubai, United Arab Emirates.

Delimkhanov a Moscow loyalisthttp://www.gulfnews.com/nation/Police_and_The_Courts/10301643.html

By Abbas Al Lawati, Staff ReporterPublished: April 05, 2009, 23:01Dubai: The assassination of Sulim Yamadayev has been blamed on Adam Delimkhanov, an influential, but shadowy figure who is fiercely loyal to Chechen president Ramzan Kadyrov and, by extension, to Moscow.

A cousin and close associate of Kadyrov, Delimkhanov is expected to be the president's pick as his successor. The pro-Moscow Chechen is said to be very influential among Chechnya's pro-Moscow circles.Delimkhanov is Chechnya's representative in the State Duma (lower house of parliament) in Moscow. Like his cousin, Del-imkhanov shifted his alliance to Moscow after the Russian reinvasion of the republic in 1999, though it is not clear whether he was actively involved in fighting the Russians before, as did his president-cousin. Delimkhanov was born in 1969 in Chechnya's Nozhai-Yurtsky district, and according to his website, served in the Soviet Red Army in his early twenties. According to his official biography, Delimkhanov graduated from the Chechen State University in 1994.He is believed to be ruthless in eliminating threats to his cousin's legitimacy and rule, and often present them as deaths caused by "resisting arrest".Yamadayev had said he suspected his own death would be made to look like resistance to arrest. Delimkhanov is known to have been ruthless in pursuing his enemies and those of Kadyrov. Reports indicate that he tortured the father of one of his targets by gouging out his eyes to reach the target, and set an example.What divided Yamadayev and Delimkhanov is Yamadayev's opposition to Kadyrov's rule in Chechnya. Delimkhanov has described Yamadayev and his late brother Ruslan as agents of the West. Delimkhanov's appointment as deputy head of Chechnya's security committee gave him the autonomy to operate freely.Delimkhanov's rise in Moscow is seen as part of Kadyrov's affirmation of his power and influence when Dmitry Medvedev was going to take office. A Putin loyalist, Kadyrov's was said to have been concerned that his influence would wane with Medvedev's arrival.Unconfirmed reports have stated that Delimkhanov was once the driver of Salman Raduyev, the late Chechen separatist warlord.

April 3, 2009Heroes in Need of ProtectionComment by Sergei MarkedonovSpecial to Russia Profile

Who Is Responsible for Preserving the Pro-Russian Potential in the Caucasus?

http://www.russiaprofile.org/page.php?pageid=Politics&articleid=a1238770848

As of today, only the person who ordered the killing and the actual hit man know exactly what happened on March 29 in Dubai. But for expert political analysts, it is nonetheless important to examine the political consequences of this assassination, regardless of who ordered the attack on Sulim Yamadayev or who carried it out. After all, the fact that a separatist turned Hero of Russia is first wanted by the

authorities, then acquitted, and finally murdered in broad daylight is rather telling of the current state of affairs. 

Before talking about the political consequences of the recent attack on Sulim Yamadayev, I would like to note that it is not very productive for an expert to try to come up with a version of what happened in Dubai, primarily because any such version will not be supported by representative sources. Without any reliable evidence on hand, all the thoughts on the given topic will turn into idle speculation.

Sulim Yamadayev’s biography is typical of the “transitional” Chechnya. It is situational political behavior multiplied by principle. A businessman in Moscow in the early 1990s; then, during the first Chechen military campaign, a supporter of the separatists (in 1995, he was appointed the commander of the Gudermes front). In 1998 Yamadayev supported Akhmad Kadyrov, who was the mufti of Chechnya at that time, and the followers of Sufi Islam in their fight against the advocates of Salafi Islam (or, as the mass media calls them, the Wahhabis). Then there was a conflict with the President of the unrecognized Ichkeria Republic, Aslan Maskhadov, and an attempt at his life on January 6, 1999. During the second Chechen campaign, Sulim Yamadayev crossed over to join the Russian federal forces. In three years, the Vostok (“East”) Battalion under his command destroyed over 400 militant fighters, including the Arabian field commander Abu-al-Waleed. In 2005, yesterday’s separatist received the honorary title of Russia’s Hero, and in August of 2008 he participated in the “five-day war” in South Ossetia.

Yamadaev was not the only one to take the path from being a separatist to being a national hero (one of his brothers, Ruslan, was assassinated in September of last year). And he was also not the only one to clash with the Kadyrovs. However, the confrontation between the Yamadayev brothers and Ramzan Kadyrov (also known as the “road incident”) on April 14, 2008, received a lot of attention. Today, it would not be easy to paint an unbiased picture of the events in Gudermes at that time. But what ultimately matters most, though, are not the precise details of the incident. It is important to take note of the fact that such an incident happened, and to identify both of the forces that oppose each other.

This was a confrontation between the military forces under the jurisdiction of Russia’s Defense Ministry that are not directly subordinated to the republican authorities (although it would be a great exaggeration to call them “military servicemen” in the full sense) on one side, and law-enforcement authorities that report to the republican government on the other. In April, the “locals” won. At that time, Kadyrov’s campaign against Vostok was successful, and the brothers’ influence in the republic was minimized. In the end, Sulim Yamadayev was dismissed as the commander of Vostok, and was even put on the federal “wanted” list (however, on August 22 of 2008 this ruling was revoked and his name was taken off the list).

Today there are no structures or organizations in Chechnya that are not controlled by Ramzan Kadyrov in some way or another. Any active players who have political ambitions in the republic get “knocked out” of the game. And this is the objective result

of the April incident and its consequences, as well as of the murder of Ruslan Yamadayev on September 24, 2008, and the attempt on the life of his brother Sulim on March 29, 2009. No matter what was planned and no matter by whom – this is the resulting “final balance.” Even in the times of Ichkeria, Dzhokhar Dudayev and Aslan Maskhadov had opponents inside and outside the “rebellious republic.” Today, even Akhmed Zakayev pays homage to Ramzan Kadyrov.

Here, a few extremely serious problems arise, connected not only and not so much to the Chechen (or even the pan-Caucasian) context. Why is a Hero of Russia first put on the federal most-wanted criminals list, and then all investigation activity suddenly stopped (he is obviously determined to be not guilty), and he ends up outside the country? How did it happen that a participant of the “five-day war,” which became an important victory for Russia, not only in terms of the Southern Caucasus, but in terms of the entire CIS, doesn’t receive any honor or credit, but moreover, seeks refuge abroad?

Even outside of Russia, Yamadaev was unable to find refuge. What will the Chechens who have made the uneasy decision to fight on the side of the Russian Federation think if this state is not capable of protecting its own heroes (both Sulim and Ruslan were Heroes of Russia)? What will happen to those men who served under the Yamadayevs in the Vostok Battalion, which was officially disbanded on November 8 of last year? What new patrons will they look for? And this is not an idle question, considering the fact that these people have just one profession—the military. And they are not only very, very good at what they do (which was proven in South Ossetia, for example), but also have their own bone to pick with the militant fighters. How well are these people protected by the state? Who is responsible for preserving this pro-Russian potential?

So far, these questions have no answers. Until all of them are resolved, and until policy in the Caucasus stops being a simple collection of random reactions to separate events, we will have to keep coming up with our own versions about the new attacks, assassinations and acts of terror.

Sergey Markedonov, Ph.D., is the head of the Interethnic Relations Department at Moscow’s Institute of Political and Military Analysis.

Russian Orthodox Church a growing political forcehttp://www.google.com/hostednews/ap/article/ALeqM5gAlqcUIWlPnVufrI82PWk62ebz_AD97BQGC00

By MANSUR MIROVALEV – 1 day ago

MOSCOW (AP) — The glittering Christ the Savior Cathedral, a pale-white marble structure decorated with bronze statuary and swaths of gold leaf, is more than just Moscow's grandest and most opulent place of worship.

Built in the 1990s as a replica of a church dynamited by Communists in 1931, the cathedral symbolizes the Moscow Patriarchate's rising political influence — which may be greater today than at any time since the 17th century. It also serves as global headquarters of vast and expanding business operations that experts say are worth several billion dollars.

To tens of millions of Russian believers, the Orthodox Church is first of all a sacred institution, a pillar of the country's 1,000-year-old identity and culture.

The death of Patriarch Alexy II in December caused an outpouring of heartfelt grief, with crowds of people lining up to view his remains. On Feb. 1, top clerics enthroned Alexy's successor, Kirill — a towering figure with a gray-flecked beard and sonorous voice — in a cathedral filled with celebrities and political leaders. The first person to receive communion from Patriarch Kirill was President Dmitry Medvedev's wife, Svetlana.

These events would have been unimaginable in the Soviet era, when the officially atheist Communist government treated the devout like moral lepers and criminals, defrocking and imprisoning tens of thousands of clerics of all creeds. Now the church "has become a serious power in society," former Soviet leader Mikhail Gorbachev told The Associated Press in early March.

But critics claim that in the past decade the Moscow Patriarchate has sacrificed some of its spiritual authority in the pursuit of political power and commercial success. Some go as far as to compare the church to its former nemesis, the Communist Party's ruling Politburo. Roman Lunkin of the Keston Institute, which studies religion in the former Soviet Union, says the church has "turned into an authoritarian and totalitarian structure."

A priest who condemned the 2005 conviction and imprisonment of former oil tycoon Mikhail Khodorkovsky, a leading foe of then-President Vladimir Putin, was defrocked and appointed to guard a church store in 2006. Orthodox leaders said the decision was not political, but had to do with the priest's "discipline."

Bishop Diomid of Chukotka, who lambasted Alexy II's alleged subservience to the Kremlin, found himself demoted to the rank of a monk last year. The church accused Diomid's supporters of planning to seize power in the Patriarchate.

A church council excommunicated Gleb Yakunin, a priest and former lawmaker, in 1997 after he headed a government commission that concluded that most top clerics, including Patriarch Alexy and his future successor Kirill, were KGB informers.

The church has long denied these claims as "absolutely unsubstantiated" and said top clerics had to "communicate" with the Soviet Council on Religious Affairs, which forwarded their reports to the KGB. The church also claimed Yakunin worked for U.S. intelligence.

"Unfortunately, Orthodox Christianity is antidemocratic and hails authoritarian rule," said Yakunin, who spent years in the gulag for criticizing Soviet religious policies, during an interview in his Moscow office. Today, the 74-year-old priest leads the Apostolic Orthodox Church, a splinter group that is harassed by authorities in Russia and Belarus.

Despite the Russian constitution's legal separation of church and state, President Boris Yeltsin and his successor Vladimir Putin forged a political alliance with the Orthodox Church — an alliance that has continued under Putin's successor, Medvedev. Kirill is escorted around Moscow by a cavalcade of Kremlin security guards and was listed No. 6 on the government's list of state dignitaries.

Stanislav Belkovsky, a political analyst with close Kremlin ties, says the church has become "the Kremlin's Ministry for the Salvation of Souls."

Church leaders have blessed Kremlin plans to eliminate some social benefits for the elderly, called on Russia's youth to volunteer for military service in Chechnya and consecrated new warships and nuclear missiles, calling the latter "Russia's guardian angels." The church has also supported the Kremlin's official ideology, which asserts that Russia's unique historic role makes it unsuited for Western-style liberal democracy.

"The church is trying to offer a new anti-European Utopia," prominent writer Viktor Yerofeyev complained in a December article in the French newspaper Le Monde. "Its main principle: Russian values are different from Western values."

For the church, political loyalty has paid handsomely.

The State Duma, or lower house of parliament, is considering a bill to return to the church up to 7.41 million acres nationalized after the 1917 Bolshevik Revolution.

Both federal and local authorities have granted the church donations, tax breaks and broad immunity from government regulation of its businesses. Moscow officials, in particular, have helped the church raise money for favored causes — such as rebuilding the Christ the Savior Cathedral — by pressuring private business to contribute.

The cathedral itself reflects a dual focus on the spiritual and commercial. The structure has a dry cleaner, ATM machines, meeting halls for rent and convenient underground parking.

According to Nikolai Mitrokhin, director of a research institute that studies religions in the former Soviet Union, the church built its fortune starting in the 1990s through trade in tobacco and alcohol, through exports of oil and sturgeon, by the construction of shopping malls and hotels and by operating jewelry stores — allegedly with counterfeit bling. The church also runs book publishing concerns and organic farms.

A church spokesman, Father Vsevolod Chaplin, confirmed that the Patriarchate controlled many businesses. But Chaplin said neither the tobacco nor the oil business

proved profitable, and claimed the church is no longer involved in them. He also dismissed the notion that the church's commercial deals had undermined its spiritual mission.

"I don't see anything detrimental if the church can invest in this kind of work," he told AP.

The Patriarchate does not make its financial reports public, but Mitrokhin estimates the Orthodox Church's annual income at several billion dollars.

This secrecy has led to allegations — denied by the church — that it has engaged in money laundering. "All of their financial streams flow in the dark," said Sergei Filatov, a scholar of religion at Moscow State University.

Today, the church says nearly half of its income comes from the four-star hotel in the Danilovsky Monastery, a short walk from the Kremlin, and a factory outside the capital that produces icons and other religious items.

The church sells religious goods in places like the golden-domed Holy Trinity monasterial complex in Sergiyev Posad, 100 miles northwest of Moscow, where on a recent day pilgrims lined up in the cold to kiss the sarcophagus of St. Sergius, one of Russia's patron saints. Many of the pilgrims stopped by some of the dozen shops peddling icons, calendars and refrigerator magnets, or pricier goods such as jewelry with images of Jesus or the saints.

Some Sergiyev Posad residents grumbled about the commercial atmosphere. "It's like a supermarket," said Alexander Bekker, 38, a martial arts instructor and a devout believer. "What spirituality are you talking about among these merchants?"

Other believers say that the church's affluence has helped spread the gospel, aid the needy and restore thousands of churches and monasteries destroyed or desecrated during Communist rule.

"We still have to rebuild what Communist iconoclasts destroyed," said Father Vitaly, 51, a priest from the central city of Vladimir. "Funds won't fly down from the sky."

Top church officials may live amid pomp and splendor. But many priests scrape by selling candles and souvenirs, charging modest fees for performing wedding and funeral ceremonies and blessing new houses, offices or cars.

"We trust in God, but rely on ourselves," said Father Alexander, a smiling 37-year-old priest, who consecrated a new office in downtown Moscow for $140.

Some experts say that the Orthodox-led religious revival has made Russia's post-Soviet political leadership a kinder, gentler group than their Communist Party predecessors.

"In Communist times, authorities completely lacked human, moral principles," said church historian Andrei Zubov, of the Moscow State Institute for International Relations. "Now that many politicians are religious, they relate their lives to moral principles."

Russia to unveil spaceship plans http://news.bbc.co.uk/1/hi/sci/tech/7980824.stm

Friday, 3 April 2009 10:17 UKBy Anatoly Zak Science reporter

The Russian space agency is expected to unveil development plans for a next-generation manned spacecraft on Monday.

Roscosmos should name the ship's prime developer, which has competed to win government funds for the project.

The proposed new spacecraft should enter into service sometime towards the end of the next decade.

It will replace the venerable three-seat Soyuz capsule, which has carried Russian cosmonauts into orbit for more than four decades.

Although Roscosmos has remained tight-lipped about the upcoming presentation, the agency has quietly released its requirements for a future manned transport system to the Russian space industry.

In doing so, the agency has shed some light on the ship's likely design and its possible missions.

The spacecraft, currently known only by the Russian abbreviation PPTS, for Prospective Piloted Transport System, would be able to reach low-Earth orbit or to enter orbit around the Moon.

Several configurations

The Earth-orbiting version of the ship would have a mass of 12 tonnes, carry a crew of six, along with no less than 500kg of cargo; while its "lunar cousin" would weigh 16.5 tonnes, have four seats and be capable of delivering and bringing back 100kg of cargo.

The unmanned cargo version of the vehicle would be required to carry no less than 2,000kg to Earth orbit, and return at least 500kg back to the planet's surface.

Roscosmos has reserved the option of making the crew module of the spacecraft reusable, reckoning that a cone-shaped capsule could fly up to 10 missions during its 15-year lifespan.

In providing the technical specifications for the new spacecraft, the agency has also given a glimpse of its vision for the future of the Russian space programme.

Although the most capable version of the ship is meant to support expeditions to the Moon, "intermediate" configurations are intended for a variety of other tasks.

For example, the agency wants the future developer to evaluate the possibility of sending the ship into high-inclination orbits extending towards Earth's poles, usually frequented by Earth-observation and spy satellites.

While in Earth's orbit, the new spacecraft would have to be able to fly 30-day-long autonomous missions; or stay no less than a year in space when it is docked to the International Space Station, or to a possible future Russian space station. (Currently, Soyuz spacecraft, which serve as "lifeboats" for the International Space Station, have to be replaced roughly every six months due to potential deterioration of some of their systems, such as batteries and propellant).

Martian possibilities

In addition to docking to the station, the spacecraft would have to be able to conduct servicing of unmanned vehicles in space and even remove pieces of space junk from their orbits, as well as conduct unspecified military tasks.

The lunar version of the ship would be capable of flying no less than 200 days in space when docked to a space station in orbit around the Moon.

A number of Russian reports have described recent studies looking at the possibility of a lunar orbital station, LOS. Such an outpost would also serve as a hub for lunar modules, which would deliver crews from lunar orbit to the surface of the Moon.

The 200-day mission requirement probably provides some hint about Russian plans to eventually build a permanently occupied lunar outpost, similar to Nasa's lunar base developed under its Constellation programme.

In a recent interview with the ITAR-TASS news agency, Aleksei Krasnov, the head of the manned space flight directorate at Roscosmos, said that the future spacecraft could serve as the "core" technology for a future Martian mission.

This apparently referred to the role that the vehicle might play as a delivery and return craft for the large complex that would be needed to raise a manned assault on the Red Planet.

By the time the new Russian spacecraft could enter service around 2018, the Soyuz family will have logged more than half a century in service.

In recent years, Russia and Europe did look at the possibility of developing the next-generation vehicle together, but the two parties could not agree on the work share. Europe will now separately pursue the possibility of upgrading its robotic ATV space freighter to a manned ship, but still using some Russian technology.

Powerful launcher

As reported by BBC News last month, Roscosmos has already completed a tender for the new rocket that would carry the future manned vehicles into space.

Although the agency has delayed the announcement of the winner until at least 6 April, many unofficial sources in Russia maintain that TsSKB Progress, based in Samara, will lead the development of the new rocket.

It is believed that the launch vehicle will feature a three-booster first-stage, each booster equipped with powerful RD-180 engines, burning a mix of liquid oxygen and kerosene.

The engine was originally developed by Moscow-based NPO Energomash for the US Atlas 5 rocket and its performance to date has been impressive.

Ironically, Russian officials rejected a design of the yet-to-be flown Angara rocket that featured the RD-180. Now, the power plant, which has earned such a fine reputation across the Atlantic, could return vindicated to its native land

The second stage of the new manned rocket would probably sport a pair of RD-0124 engines, currently in use on the Soyuz-2 rocket. Thus, both stages of the future launcher would be equipped with the newest existing power plants, greatly reducing the cost and the risk to the overall project.

Spring election fever hits Olympic city as democracy stirs in Russiahttp://www.guardian.co.uk/world/2009/apr/04/sochi-winter-olympics-alexander-lebedev

Billionaire newspaper owner Alexander Lebedev is among candidates in rare ballot whose outcome is not certain

Luke Harding in SochiThe Guardian, Saturday 4 April 2009

The sea is a picture postcard blue. Down on the pebbly beach, tourists stroll along a wide promenade. Not far away middle-aged swimmers plough up and down the azure of an outdoor pool. And in the sunny tropical gardens, a pleasant breeze wafts through the magnolias and palms.

It is here on the Black Sea that the most bizarre election in Russia's recent history is taking place. Sixteen candidates are campaigning to become mayor of Sochi, the city which will play host to the 2014 Winter Olympics.

But this election differs from other polls in Russia in one vital respect: it is not entirely clear who is going to win.

One candidate is Alexander Lebedev, the billionaire and former KGB spy who now owns the Evening Standard newspaper in London. He arrived here yesterday afternoon. His chief opponent is Boris Nemtsov, a Kremlin critic and opposition leader aligned with the democratic movement Solidarity.

The Kremlin's candidate is Anatoly Pakhomov, a former tractor driver. Other would-be mayors include a ballerina, a pensioner, and Russia's chief freemason.

Last month Andrey Lugovoi, the former KGB agent accused of murdering Kremlin critic Alexander Litvinenko in London, announced that he too would stand. He later changed his mind.

The race is critical not just because of Sochi's prominence as an Olympic city, but because, for the first time since Vladimir Putin began to emasculate the electoral process, Russia is galvanised by the prospect of Sochi holding a proper election.

Analysts are divided on why the Kremlin has suddenly permitted a small democratic spring when standard procedure would be to banish opposition. Some believe there is a division between Putin and the president, Dmitry Medvedev, on tactics; others say the Kremlin remains confident that, despite the circus of opponents ranged against it, its man will win.

Lebedev for one is confident that the Kremlin will not have its way. "Definitely so," he said yesterday when asked if he could prevail. "Sochi is an independent-minded city, unhappy about quite a few things," he added. Nearby teenagers on roller-blades and mothers with small children sunned themselves in the gardens.

Lebedev also said he was thinking about unleashing a secret weapon in his campaign to be mayor: his new friend Boris Johnson, the mayor of London. "I'm thinking about issuing Boris a private invitation," Lebedev mused. "Do you think he would be interested in having a look at the local Olympic facilities?"

The newspaper proprietor said he intended to emulate some of the technological tactics used by Barack Obama in his successful US presidential campaign. But he conceded that not everybody in Sochi used the internet - a drawback. "I have lots of experience in running campaigns and working with the media," he said.

Lebedev is standing in Sochi because he has had no chance of running Moscow, he admits. He stood for Moscow mayor in 2003 but was steamrollered by the loyalist

incumbent Yuri Luzhkov. The two cities have similar problems, Lebedev said yesterday: "Ugly traffic jams, poor infrastructure, and a lack of affordable housing."

Earlier Lebedev's campaign manager, Artyom Artyomov, hinted that the Anglophile tycoon enjoys better-than-perceived relations with the Kremlin. "They are absolutely against Nemtsov. But they don't have anything against Lebedev being mayor," he said. Moreover, Lebedev was so rich he had no need for corruption, Artyomov pointed out. "The Kremlin is unhappy with the regional authorities and the way the Olympics is going. The corruption is disgusting," he said.

Other candidates, however, are scathing about Lebedev's ambitions, and accuse him of dilettantism. "He's a serious guy. But I don't think he's serious about this campaign," Nemtsov, a Sochi local, told the Guardian, as his minibus inched through Sochi's traffic. He joked: "Maybe the Standard can help him. If he prints his British newspaper here, he can get round Kremlin censorship."

According to the Nemtsov camp, opinion polls show Pakhomov in front with 35%, followed by Nemtsov on 20, and the Communists on 4 or 5%. Lebedev has 1%, Nemtsov says. Lebedev dismisses this figure as "unbelievable".

If no candidate gets more than 50% in the 26 April poll, there will be a run-off vote two weeks later. If this happens Sochi residents distressed by local bureaucrats might just elect Nemtsov or Lebedev.

The big question, though, is whether the local administration decides to cheat. Western observers complain repeatedly at the use of administrative resources in elections - a euphemism for bumping up the votes for the official candidate. With nothing less than Russia's first Winter Olympic at stake, it seems unlikely Sochi's regional rulers will leave things to chance.

The signs are so far ominous. TV stations have been instructed not to broadcast Nemtsov, while lavishing attention on the pro-government candidate. The dirty tricks started last month when an activist from the Kremlin youth group Nashi chucked ammonia over Nemtsov at a press conference. The assailant had disguised himself as a girl and, in a bizarre touch, carried a bunch of roses. Last week mysterious donors paid money into both Lebedev and Nemtsov's bank accounts, an infringement that could have seen them kicked off the ballot. In the end, they registered successfully.

Mayoral elections are the last forum in which opposition hopefuls can make a ballot-box impact, after Putin scrapped gubernatorial elections in 2004.

Some optimists believe Lebedev and Nemtsov have been allowed to stand because Putin and Medvedev could not agree what should happen in Sochi. The new mayor will be in power right up until the Olympics. He will have enormous sway over how federal money is used.

Last month Dmitry Peskov, Putin's spokesman, was politely dismissive of Lebedev's aspirations. "Some candidates are using the election for PR," he suggested.

Sochi has 400,000 inhabitants. It was a established as a resort in Soviet times and has remained popular. The sanatoria and hotels, their gardens neatly planted with rhododendrons and pines, are still a favourite with holidaymakers who spend their evenings drinking beer and wine in seafront cafes.

In the background are the snow-capped Caucasus mountains and Krasnaya Polyana, the mountain resort and host to skiing events in the 2014 games. Russia's jubilation at winning the Olympics has faded, however. Many of the oligarchs who agreed to upgrade Sochi's crumbling facilities are now broke. They include billionaire Oleg Deripaska, once Russia's richest man, who was supposed to build a new terminal for the airport; no work is going on. Other wealthy backers have also fallen on hard times.

When delegates of the International Olympic Committee came to inspect, local bureaucrats created a "Potemkin" airport terminal opening up the half-finished building and hiring teachers to pretend to be tourists. One tourist even told the delegates that she was en route to Bankgok - unlikely, since there are no flights from Sochi to Thailand. When the IOC departed, maintenance workers switched off the lights. The terminal has been dark ever since.

Understandably, the Olympics is a major issue in this month's election, with many voters now disillusioned by the project's implementation.

And there have been persistent questions over the environmental impact of the games. Last month Russia's ecology minister admitted that some of the building sites "looked ghastly". The local bear population has also suffered.

"At first everybody was glad we had the Olympics. But now most people in Sochi are fed up. Lots of people are being thrown out of their homes to make way for the Olympic village," a taxi driver, Ashot Nubaryan, told the Guardian.

But the name Alexander Lebedev mystified the driver.

"I've heard of Boris Berezovsky. But not Lebedev," he said. "Who is he?"

Resetting Human Rights in Russiahttp://www.huffingtonpost.com/neil-hicks/resetting-human-rights-in_b_182883.html

Neil HicksPosted April 3, 2009 | 01:15 PM (EST)

President Barack Obama's first meeting with his Russian counterpart Dmitri Medvedev on April 1, offered the world some insight into what shape the promised reset of U.S.-Russia relations will actually take. The apparent willingness to cooperate on areas of

mutual concern was matched with a stated willingness to speak frankly about differences, "even bringing up issues of human rights," according to unnamed senior administration officials.

Perhaps the new Obama administration's quest to rehabilitate the United States' reputation internationally as a leader on human rights dovetails with Russia's own new president's stated desire to put an end to the culture of "legal nihilism" in Russia, presenting an opportunity for constructive engagement in promoting human rights to the benefit of both countries, but it is far too early to claim any progress.

The meeting took place the day after the prominent human rights leader Lev Ponomarov, who is 67-years old, was brutally beaten by three unidentified men in Moscow. Such attacks on non-violent government critics in Russia are becoming so commonplace that President Obama cannot avoid realizing that the deteriorating human rights situation in Russia will be an unavoidable part of any new relationship with Moscow he might be able to forge.

There is no doubt that there are many pressing issues for the two countries to cooperate on, from Afghanistan to the financial crisis. It will therefore be tempting for President Obama to set aside the troubling and probably discordant subject of human rights in Russia. Yet President Obama should resist the false hope that he can have less stormy relations with Moscow by soft-pedaling or avoiding completely human rights. The quality of US-Russian relations is unavoidably and rightly affected to a significant degree by human rights conditions inside Russia. Simply put, an increasingly authoritarian Russia that menaces its own people and foments discord with its neighbors cannot be a reliable strategic partner for the United States.

There are few countries where U.S. global leadership on human rights is more needed than in Russia. With the Kremlin's foot on the neck of its neighbors in Central and Eastern Europe through its increasingly monopolistic control of vital natural gas supplies, the United States is one of the few countries in a position to speak plainly about violations that are legitimate issues of international concern. Russia's steady slide towards authoritarianism over the past ten years has coincided with a global pushback against human rights and democracy from entrenched autocratic ruling elites in many countries. Setting a positive tone on human rights in Russia would do much to reverse this negative global trend.

Some in Russia will quickly label criticism of Russia's human rights record as unwarranted foreign interference, but in doing so they will simply be parroting the hackneyed response of autocrats everywhere when called to account for their misdeeds. The Obama administration has already set a new tone that holds some promise for more constructive engagement on human rights with Russia. The introduction to the State Department's annual Country Reports on Human Rights Practices, issued in February, states: "We do not consider views about our performance voiced by others in the international community to be interference in our internal affairs ... nor should other governments regard expressions about their performance as such."

The recent experience of the United States with its highly publicized departures from respect for international human rights standards means that the United States is in no position to deliver moralistic lectures on human rights. Chastened by recent experience, President Obama can now look President Medvedev in the eye and acknowledge that the United States has made some serious mistakes, but that it has recognized them and is moving forward. President Obama can say that in correcting these mistakes it has welcomed and will need the advice and support of its friends. President Obama should take the opportunity of the reset to call on President Medvedev to reverse the "negative trajectory" in Russia's domestic human rights record reported by the State Department last month and propose cooperation on issues of shared concern.

Both Russia and the United States are members of multilateral organizations committed to human rights promotion through cooperation. As members of the Organization for Security and Cooperation in Europe, Russia and the United States are mutually bound by a wide range of commitments in the human rights field arrived at through consensus over many years of negotiations. There are many opportunities for the two countries to cooperate in protecting and promoting human rights at home and abroad.

President Medvedev has himself already acknowledged the need for legal reform with regard to human rights and has, for example, publicly recognized the growing problem posed by violent hate crimes, committed largely against Russia's migrant communities by loosely organized neo-Nazi groups. In the United States, thousands of bias-motivated incidents are registered annually by the FBI. This is just one practical example of the opportunities that exist for the two countries to build strong working alliances driven by mutual issues to protect and promote human rights at home and abroad.

The reset of U.S.- Russia relations will not automatically resolve old problems, but it does offer some promise of finding new ways to deal with them that could produce better outcomes.

National Economic Trends

Russian Inflation Rate Hits Five-Month High on Import Priceshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZ0UeCnE429E

By Alex Nicholson

April 6 (Bloomberg) -- Russia’s inflation rate rose to a five-month high in March as the weaker ruble nudged up import prices.

The rate rose to 14 percent from 13.9 percent in February, the Moscow-based Federal Statistics Service said in an e-mailed statement today. That matched the median forecast of 15 economists surveyed by Bloomberg. Consumer prices grew 1.3 percent in the month, compared with 1.7 percent in February.

Inflation was spurred at the start of the year by the weakening ruble, which pushed up import prices, helping the annual rate jump to 13.9 percent in February from 13.4 the month before. Russia was forced to abandon its defense of the ruble after the price of oil, the government’s biggest export earner, tumbled more than two-thirds from a July record in less than six months. The ruble has lost 29 percent against the dollar since August.

Central Bank chairman Sergei Ignatiev last week said that inflation could slow to less than 13 percent this year as the cost of raw materials, fuel and food decline and the impact of the ruble devaluation on imported goods ebbs.

Russia’s inflation rate was as high as 15.1 percent last June. Food prices gained an annual 15.8 percent in March, the statistics service said.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

Last Updated: April 6, 2009 04:00 EDT

Russian Economy Contracts at Record Pace in March, VTB Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=adJ8xCchAkmI

By Alex Nicholson

April 6 (Bloomberg) -- Russia’s economy contracted at a record pace in March as industry stumbled and job cuts climbed, VTB Capital said.

VTB’s indictator of gross domestic product showed economic output shrank 5.4 percent in March from the same period in 2008, the most since the survey began in May 1998. In the quarter the economy contracted by an annual 4.4 percent, the second-lowest quarterly average since the last three months of 1998, following the country’s debt default and ruble devaluation, according to VTB.

“The most significant warning sign in the latest survey is the record drop in employment. This suggests that the weakness in consumption, might be protracted,” Aleksandra Evtifyeva, a senior economist at VTB Capital, said in the report.

Russia’s economy grew at the slowest pace in almost a decade in the fourth quarter last year as the economic crisis and falling commodities prices brought the world’s biggest energy exporter to the brink of recession. Unemployment rose to a four-year high of 8.5 percent in February. Russia should brace itself for a “second wave of problems” as non-banking companies fail to repay loans, Finance Minister Alexei Kudrin has warned.

VTB Capital calculates the GDP Indicator by using output measures from its Purchasing Managers’ Indexes, which are surveys of business conditions in manufacturing and services industries.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

Last Updated: April 6, 2009 02:55 EDT

Ignatyev Says Worst Of Bank Woes Overhttp://www.themoscowtimes.com/article/600/42/375938.htm

06 April 2009 By Jessica Bachman / The Moscow Times

Central Bank Chairman Sergei Ignatyev said Friday that the worst of the crisis is over and the bank may soon be able to lower its refinancing rate for the first time since 2007.

Speaking to the Association of Russian Banks, Ignatyev echoed comments by his deputy that the 13 percent refinancing rate was too high.

"The rate is high. ... As long as inflation decreases, we will lower the refinancing rate ... from its current level of 13 percent."

Ignatyev also dismissed recent warnings by Finance Minister Alexei Kudrin, who was also at the meeting, that the increasing number of bad loans might bring on a second wave of hardship.

"The most painful phase of the crisis is behind us. I think that in the coming months, the economy will start to grow again, albeit slowly," he said.

Data supplied by Ignatyev at the conference seemed to confirm such fears.

The amount of overdue loans taken out by individuals reached 4.4 percent on March 1, compared with 3.2 percent on Sept. 1, Ignatyev said.

"The problem is serious, but I don't share the opinion that there will be a second wave of the crisis," he said, pointing to high levels of capital in the banking system as one positive indicator.

Both Kudrin and Ignatyev took aim at executive compensation, echoing President Dmitry Medvedev's call on Thursday for bonuses to be cut for state-owned companies receiving government aid in 2008 to 2009.

The pay cuts should last "at a minimum throughout the crisis, that is, for two years exactly," Kudrin said, adding that the Finance Ministry and Economic Development Ministry were working through the details of the plan.

VTB was quick to comply with the demands. "The president said to cut the bonuses --

that means that we will cut the bonuses," VTB chief Andrei Kostin said.

Kudrin also said the laundering of government money has increased as the state has doled out billions of dollars in aid to struggling banks.

"Our analysis ... shows that, especially during the crisis, money laundering is increasing. This is one of the ways of running off with assets or foreign money," he said, adding that most of the banks that had seen their licenses pulled were involved in money laundering.

Ignatyev rounded out the conference with a mixed bag of economic indicators, which showed slowing capital outflows and atrophied levels of trade.

Net capital outflows from Russia stood at $38.8 billion in the first quarter, down 71 percent from the fourth quarter of 2008, when the figure reached $130 billion, Ignatyev said. The price of the country's Urals crude leveled off at the beginning of the year after falling to a low of $32.34 per barrel Dec. 24 from $92.32 at the start of the quarter.

The country's trade balance also fell during that period, hitting $21.7 billion from $49.9 billion in the previous quarter. First-quarter exports were $60.1 billion, compared with $110.1 billion the quarter before, while imports fell to $38.4 billion from $60.2 billion, he said.

Small Banks Beg State for Respitehttp://www.themoscowtimes.com/article/600/42/375926.htm

06 April 2009By Jessica Bachman / The Moscow Times

The heads of hundreds of small banks flocked to Moscow on Friday to lobby against a new law that could force them to close by the end of the year, but Finance Minister Alexei Kudrin insisted that the government would not budge.

At an annual conference of the Association of Russian Banks, the small banks begged lawmakers and state officials to amend the law requiring them to increase their net worth to 90 million rubles ($2.6 million) by Jan. 1 and to 180 million rubles by 2012.

"Our colleagues have announced, and with good reason, that this law will lead to the closure of many successful small banks and bring harm to many honest small and medium enterprises," the association's president, Garegin Tosunyan, said in his opening remarks.

Small banks with less than 100 million rubles in capital make up 28 percent of the association's membership, which includes 760 of the country's 1,200 financial institutions.

"This strain is coming at a time of crisis ... and so our members propose that the time period for coming up with the minimal capital requirement is extended by two years," Tosunyan said.

The government has said Russia has far too many banks, and Pyotr Aven, head of the largest private bank, Alfa Bank, has predicted a wave of failures on bad assets several times in recent weeks.

At the conference, the chiefs of the biggest banks called for lower refinancing rates and more direct government support for banks. But the looming capital requirement was the main concern of most conference attendees.

The only speaker of the day who managed to draw midspeech applause from the banking crowd was former Economics Minister Andrei Nechayev, a sharp critic of the capitalization minimum.

"In the base-case scenario, it is stupid to require the banks to have 90 million rubles in capital by Jan. 1. In the worst-case, it is sabotage," Nechayev said. "Let the market dispose of these banks in market terms. ... Why should we do it artificially?"

Kudrin, who took the stage after Nechayev, said the law would weed out banks that contribute little to Russia's economic growth and criminally active banks that have increased their money-laundering operations during the crisis.

"We believe that is necessary to increase and consolidate banking capital to create developed institutes that are able to provide for economic growth," Kudrin said.

"What are 90 million rubles? Most of you in the crowd understand what this sum is worth. ... If a bank doesn't have 90 million rubles, it is a very small bank, rather, it is a minibank," Kudrin said.

Kudrin said that while there are still "honest" banks in this small-cap category, there are also many banks "engaged in money laundering," banks that exist not to lend but to "protect the owners' or someone else's money."

"This law will increase control over banks. There will be less banks but much more supervision," he said.

Kudrin predicted that about 150 banks would not have enough capital to meet the requirements by Jan. 1.

Kudrin's remarks did not sit well with bankers from turbulent Dagestan, where almost all of Russia's counterfeit currency operations are located.

"I want this law scrapped," said Magomed Abduchalikov, chairman of Inforbiznes Bank, which has a net worth of about 11 million rubles according to data on the Central Bank's

web site.

"This law means in eight months, Dagestan's small businesses won't have any access to credit. There is no way a Moscow bank will lend to shops in our villages and hamlets. Our small banks trust the local people," said Abduchalikov, speaking on the sidelines of the conference.

Ali Aliyev, chairman of the bank Caspian and vice president of the Association of Dagestani Banks, said the republic of 2.5 million people has 32 regional banks, with core capital amounts ranging from 10 million to 40 million rubles ($300,000 to $1.2 million).

"I don't understand why our local banks are hurting anyone. If they break the law, have the Central Bank take away their license," Aliyev said.

Banking experts cautioned, however, that banks with such low charter capital are suspect.

"A bank that can't even show such a low threshold like 90 million rubles begs you to ask, 'Why does this financial organization exist?'" said Mark Rubenstein, senior banking analyst at IFC Metropol.

"With legal lending limits at 15 percent of capital, a bank with 10 million rubles can only lend a little over 1 million rubles. That's $30,000. Naturally, the economic feasibility of this bank is suspect," Rubenstein said by telephone.

Maxim Osadchy, banking analyst at MDM-Bank, one of the country's biggest private lenders, said banks with such low capital should "not exist in a competitive environment."

"You can't set up a bank by putting two people together. You need offices, technology, good risk managers and other key people," he said. "If you have 50 million rubles on your books, it seems that you are not a bank but involved actively in some other business."

Russian Economy: Signs of Thawinghttp://www.businessweek.com/globalbiz/content/apr2009/gb2009043_884451.htm?chan=globalbiz_europe+index+page_top+stories

Financial woes continue in Russia, but there are glimmers of optimism, including a more buoyant ruble and an improving mood among businesses By Jason Bush

After the traditionally long and harsh Russian winter, spring is finally in the air in Moscow. And perhaps on the economic front, too, things may finally be looking up, after months of pain caused by the global financial crisis.

Russia is still hurting badly, of course. In recent months industrial production has been plummeting: down by 13% year-on-year in February, after a 20% plunge in January. This year the government expects Russia's gross domestic product will shrink by 2.2%, a significant turn for the worse following years of high growth, averaging 7% to 8% per annum. Many industrial enterprises are still in dire straits. A $1 billion bailout of Avtovaz (AVAZ.RTS), Russia's largest carmaker, on Mar. 30 was just one recent reminder of the huge social and economic challenges caused by this widespread industrial distress.

Yet despite these continuing problems, there are also some surprising signs of optimism. One rough-and-ready indicator of financial confidence, visible at exchange kiosks on every street corner, is the ruble exchange rate. Just a couple of months ago, the plummeting ruble was a phenomenon to behold. Despite pumping in around $200 billion to defend it, the Russian Central Bank was unable to prevent it from losing a third of its value.

Yet over the past couple of weeks the ruble has been firming up, gaining around 7% since its nadir in February. That's a vote of confidence in the central bank's new currency corridor. True, the ruble's recent buoyancy has a lot to do with the current weakness of the dollar. But the mood is noticeably calmer than a few weeks ago, when Russians couldn't rush fast enough to convert their savings and salaries into dollars. One result of this new financial stability is that the Russian central bank has hinted at cuts in interest rates.

A Lightening Mood

Of course, what matters even more is the performance of the real economy. But here, too, not everything may be quite as gloomy as recent production falls imply. Surveys of business confidence show that the mood among Russia's businesses is now slowly improving. One key survey, the VTB Capital Purchasing Managers Index, reached its highest level for five months in March.

True, at 42.0 points, the index is still below the 50 mark, which is the divide between contraction and expansion. But an industrial rebound may now be imminent, says Vladimir Salnikov, a researcher into industrial trends at Moscow's Centre for Macroeconomic Analysis & Short-Term Forecasting. "There are a lot of short-term factors which will probably stop acting in the next two to three months," he says. For example, many companies suspended production temporarily to clear surplus inventories.

Meanwhile, corporate announcements about acquisitions and expansion plans, conspicuously absent for many months, now seem to be returning to the news columns. A $1.9 billion acquisition by Russian oil company Surgutneftegaz (SNGS.RTS), which acquired 21% of Hungarian refiner MOL (MOLB.WA) on Mar. 30, is only the most high-profile example.

Foreign investors also appear to be once again setting their sights on the Russian market. On Mar. 31, French engineering concern Alstom (ALSO.PA) announced it was acquiring

a 25% + 1 share stake in Transmashholding, Russia's largest producer of railway locomotives. (The sales price will depend on Transmashholding's financial results over the next three years, but it is likely to be hundreds of millions of dollars.) Despite the economic contraction, Alstom evidently sees long-term opportunities in a country that has huge needs to upgrade its transport network. In terms of physical output, Transmashholding is already the largest rolling stock producer in the world.

Multinationals Marching In?

Meanwhile the Russian press reports the U.S. fast-food chain Burger King (BKC) is on the brink of entering the Russian market, where it is already actively recruiting staff. That's an especially bold step, when you consider that archrival McDonald's (MCD) already has a massive presence in Russia. Such rumors suggest that multinational investors, who had frozen their overseas expansion plans during the crisis, are now mulling the post-crisis opportunities in emerging markets like Russia.

It is, to be sure, very early days. There's still plenty that could go wrong. The most serious risks relate to the Russian banking sector, where the share of bad loans—already around 10% of banks' portfolios—is set to rise sharply. The result is likely to be a serious shakeout, with many smaller banks expected to fold. That process will need to be carefully handled, if it is to avoid sparking bank runs and a systemic financial panic.

Even more depends on what happens to the global economy, which is crucial for the recovery of Russia's commodity exports. The recent stabilization in Russia largely reflects the similar mood now observable in Western economies. But despite the first tentative signs of improvement, it would be hard to argue that anyone yet has a clear idea of how and when the global crisis will end.

Bush is BusinessWeek's Moscow bureau chief .

Business, Energy or Environmental regulations or discussions

VEB gets $180mln loan for Moscow airport terminalhttp://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL644125420090406

Mon Apr 6, 2009 4:14am EDT

MOSCOW, April 6 (Reuters) - Russian state-controlled bank VEB said on Monday it has borrowed $180 million from Sumitomo Mitsui Banking Corp. (SMBC) to finance the construction of a new international terminal at the Moscow Sheremetyevo airport.

Sheremetyevo, Russia's second biggest airport, is notorious for its hours-long queues and Soviet-style service -- which foreign investors say complicates doing business in Russia.

The new Sheremetyevo-3 international terminal to be launched this year should solve these problems, the authorities say.

The 10-year loan facility is secured under the guarantee of Nippon Export and Investment Insurance. (Reporting by Dmitry Sergeyev; Editing by Greg Mahlich)

Prokhorov Gets Rusal Shares, Bonds in Debt Deal, Vedomosti Says

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aP6rEt73suVg

Mikhail Prokhorov agreed to accept shares in United Co. Rusal and bonds from a unit of Russia’s biggest aluminum producer as part of a deal to restructure $2.8 billion of debt, Vedomosti reported.

MMK raising $155.5 mln in project financing from Czech Export Bankhttp://www.interfax.com/3/485364/news.aspx

MOSCOW. April 6 (Interfax) - Magnitogorsk Iron & Steel Works (MMK)(RTS: MAGN) signed a contract on Monday with Czech ALTA to deliver andinstall equipment under a project to rebuild MMK's 2500 mill and anagreement with Czech PSG International a.s. to complete construction andinstallation work. The project will also see construction of the N6 continuous castingmachine and a secondary refining facility under a contract MMK signedwith PSG International. MMK has concluded a credit agreement with CzechExport Bank on a loan to finance the projects totaling $155.5 million. MMK board chairman Viktor Rashnikov commented: "The Russian marketremains a priority for MMK. In the current conditions replacing importedproduction and raising the quality of our product is of great importancefor domestic enterprises. I am confident that implementation of theseinvestment projects will meet the demands of our customers andstrengthen MMK's competitive position." Construction of the continuous casting machine and the secondaryrefining facility are being implemented under the Mill 5000 project. The latter facility will make it possible to operate the continuouscasting machine to produce commercial steel plate with strengths up toX120 for production of large diameter pipe. The two facilities will supply the Mill 5000 with high quality slabin thicknesses of 190, 250 and 300 millimeters and a width of 2,700 mm,to produce steel plate for pipe, and bridge and ship construction, aswell as boiler plate and specialty steel.

Mechel Unit Buys Out Share Issue http://www.themoscowtimes.com/article/600/42/375940.htm

06 April 2009 Reuters

A subsidiary of Mechel bought all of the preferred shares it placed last week in a move that analysts said could facilitate the acquisition of U.S. rival Bluestone Coal, the Russian coal and steel producer said Friday.

On Wednesday, Mechel sold 138.8 million preferred shares at their face value of 10 rubles each, or about 1.4 billion rubles ($42 million) to Skyblock Ltd., and now they are effectively treasury shares, Mechel said.

The company, Russia's largest coking coal producer, was planning to use newly issued preferred shares to pay for the acquisition of Bluestone Coal, a source said in February.

In addition to the shares, Mechel was to pay $425 million to the owner of the miner, the James Justice family.

A Mechel spokesman declined to provide any additional details on the placement.

Troika Dialog metals and mining analyst Sergei Donskoi said there were a range of possible scenarios should Mechel ultimately complete the reported deal.

"My base case scenario is that they will issue 80 million shares to the James Justice family," Donskoi said.

He said the remaining preferred shares could be sold on the market at a later date or retained as treasury stock, though it was also possible that the Justice family could have renegotiated the deal to receive a larger stake.

Wal-Mart Renews Talks on Buying Russia’s Lenta, Kommersant Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWQ6GWgMOmOc

By Torrey Clark

April 6 (Bloomberg) -- Wal-Mart Stores Inc. has renewed talks on buying a controlling stake in Russian food retailer OOO Lenta, Kommersant reported, citing unidentified minority shareholders.

Wal-Mart is seeking to buy 51 percent of St. Petersburg- based Lenta, the Russian newspaper said. That includes acquiring founder Oleg Zherebtsov’s 35 percent stake; the European Bank for Reconstruction and Development’s 11 percent stake and 6 percent from another minority shareholder, Kommersant said.

All of the parties declined to comment, according to the newspaper.

To contact the reporter on this story: Bradley Cook in Moscow at bcook7@bloomberg.net.

Last Updated: April 6, 2009 00:39 EDT

Telenor officially served with claim to pay $1.7bln to VimpelComhttp://en.rian.ru/business/20090406/120931273.html

MOSCOW, April 6 (RIA Novosti) - Norwegian telecoms giant Telenor, which holds 29.9% of shares of Russian mobile operator VimpelCom, said on Monday it had been officially served with a claim to pat $1.7 billion to VimpelCom.

Following a lawsuit filed by Farimex, which is registered in the British Virgin Islands and holds 0.002% of VimpelCom's stock, Russia's 8th Arbitration Appeals Court in late February ordered Telenor, a core shareholder in VimpelCom, to pay $1.728 billion to the Russian operator VimpelCom.

The lawsuit accused the Norwegian telecoms operator of delaying a deal to purchase Ukrainian cell phone operator Ukrainian Radio Systems.

In 2004-2005, Telenor resisted VimpelCom's attempt to enter the Ukrainian market and buy into cell phone operator Ukrainian Radio Systems, as it put VimpelCom in direct competition with the Norwegian company's other interests in Ukraine.

Under the Russian legislation, Telenor is given five days to pay the sum voluntarily. Otherwise, Telenor's stake in VimpelCom may be sold on the stock exchange to secure the payment.

Telenor said, however, it would appeal the enforcement of the court ruling.

"We have no intention of honoring such a horrendous claim, which is based on an illegal Russian court ruling, still under appeal by us," said Jan Edvard Thygesen, head of Telenor's Central and East European operations.

Telenor's 29.9% stake in VimpelCom was seized in March by Russian bailiffs following a ruling on a lawsuit filed by Farimex.

Poultry Independencehttp://www.themoscowtimes.com/article/1009/42/375930.htm

First Deputy Prime Minister Viktor Zubkov said Friday that Russia, the largest importer of U.S. chicken in 2008, would become self-sufficient in poultry and pork in 2011.

"We will be quite capable of supplying ourselves fully with poultry meat and pork and will work actively to boost beef production," Zubkov told farmers in the southern Rostov region, a statement on the government web site said.

The country may boost poultry production by 386,000 tons and pork by more than 200,000 tons this year, he said. The country imported 1.8 billion pounds of chicken in 2008, down 3.8 percent from 2007. (Bloomberg)

Russian beef consumption and imports to fall in 2009http://sl.farmonline.com.au/news/nationalrural/livestock/news/russian-beef-consumption-and-imports-to-fall-in-2009/1478025.aspx#

5/04/2009 3:00:00 AMRussian beef and pork consumption is expected to fall by around 20pc in 2009, with imports expected to decline accordingly, according to the Russian National Meat Association.

Russian beef imports in January and February 2009 fell by more than 40pc on those of the previous year.

This trend contrasts with last year’s trade pattern when imports of unprocessed beef lifted to a record - 800,000 tonnes swt.

The fall in beef and pork consumption in Russia is expected to be replaced by cheaper meats, including chicken, with its production expected to grow by 12pc during 2009.

This continues the increasing trend of previous years reflecting, in part, the constant government subsidies and the imposition of import quotas.

If demand largely outweighs supply and poultry prices rise excessively, consumers are expected to switch to non-meat products.

Beef, poultry and pork import quotas were imposed in 2003 and were agreed until December 2009 to protect domestic producers (reaching 450,000 tonnes of frozen beef and 29,500

tonnes of chilled beef with preferential tariff rates in 2009).

Given the decrease in the Russian cattle herd and beef production, the National Meat Association forecasts that beef import quotas may need to increase by 20-25pc, from 2010 to satisfy demand.

INTERVIEW: Probusinessbank suffers from empty markets

http://www.businessneweurope.eu/storyf1540/INTERVIEW_Probusinessbank_suffers_from_empty_markets

Ben Aris in Berlin April 6, 2009

"Banking is like being a gambler at the moment. There are no serious projections of what is going to happen next. We haven't really changed our strategy because of the crisis; the only strategy you can have is to get to the end of the year and still be standing."

Sergei Leontiev, president of Probusinessbank, finds himself in an uncomfortable position. Unlike most of his peers, Leontiev saw the crisis coming and reorganised its funding two years ago, successfully switching from tapping international loans to drawing in domestic deposits, so the collapse of the global capital markets had no direct affect on the bank's business. Probusinessbank is now well funded. Leontiev's big problem is finding something to do with all his cash.

"At the lower end of the business scale, the economy is still partly frozen. The problem is not the banks, the lack of loans. The problem is the lack of consumption. We can't grow quickly as we can't find small businesses or entrepreneurs who need money. The market is completely dead and consumption is very low – sales volumes have fallen 10-fold or 100-fold. No one is expanding so no one is even thinking of taking a loan," he says.

Set up in the 1990s in anticipation of the rapid growth of small- and medium-sized enterprises (SMEs), the bank rode the wave of economic growth and has morphed into a financial group that caters to all the needs of these businesses.

Leontiev says that while retail sales were holding up reasonable well in the first two months of this year, a big chunk of those sales were Russians buying fridges and tellies as a hedge against more devaluation of the ruble. "The people want to protect their money, but they don't trust the ruble, they don't trust the dollar, so they buy things like washing machines," he says. "We see regional markets closing and they are not going to open again soon."

However, the pain is not uniformly spread and the non-performing loans (NPLs) vary widely from region to region and from sector to sector. "Small business are in the most trouble, however, the same happened in 1998 and small business was also the first to recover," says Leontiev. "But NPLs amongst the retail clients are not high – up a little bit, but not much. However, where the problems are worst are in the regions with a single big company that dominates the local economy. Once these big factories stop working, this immediately impacts the small businesses in the region. In regions where the local economy is more balanced the problems are much less."

The bigger they are…

Smaller banks are actually doing better than the large state-owned banks, argues

Leontiev, despite the latter's access to the state's reserves. Russia has over 1,100 banks, but only 50 can count on money from the central bank or the unsecured loans being distributed by the state-owned Vnesheconombank (VEB). Leontiev argues that the smaller banks have carved out high-margin niches for themselves and so have some leeway to absorb the rising bad debt levels. However, the big banks have mostly gone after mass market punters using much thinner margins – a strategy that is now coming back to bite them.

"The smaller banks have not got any of the bailout loans, but very few of them have gone bust. But if NPLs rise to 8-10%, it will destroy the major banks," says Leontiev. "The consumer finance retail banks are in a stronger position, as they have margins of 40-50% and can cope with NPLs of 10-15%, thanks to their margins. However, the traditional retail banks are in a worse position, as they have much lower margins. The result is it is some banks that had the most aggressive expansion policy in the retail segment are now in the most trouble."

Smaller banks get away with their fat margins, as consumers taking out, say, a $1,000 loan think less about the annual percentage rate and more about whether they can meet the monthly instalments. The bigger the loan, the more attention customers pay to the interest rate and so the thinner the margins. Leontiev argues that almost all of Russia's top-10 banks have fallen into this trap and would collapse if the state were not standing behind them

Indeed, Yulia Tsepliaeva, chief economist at Bank of America-Merrill Lynch, caused a small panic on March 27 by claiming that a 10th of Sberbank's loans have already gone bad, way over the official 2% or so the bank claims to have. If the hole in Sberbank's balance sheet is really that big, then the state would be forced to step in with hundreds of billions of dollars, which Tsepliaeva says could trigger a renewed attack on the ruble by currency speculators.

Leontiev criticises the state's rescue plans and talk of using the crisis to consolidate the banking sector as ignoring the realities of the market. "We don't need a top-down restructuring of the banking sector, as this would only be for the benefit of the oligarchs. We should have a bottom-up restructuring and consolidation of the banking sector, as the small banks are small, but many of them are doing real business. With valuations of one-times book, this is a good time to be buying small banks if you have the cash," he says.

Multi-agency consortium launching Caspian environmental projecthttp://www.interfax.com/3/485390/news.aspx

ASTANA. April 6 (Interfax) - A consortium of the United NationsOffice of Project Services (UNOPS), the United Nations DevelopmentProgram (UNDP) and the Global Environment Facility (GEF) are about tostart a new project called "The Caspian Sea: Restoring Depleted

Fisheries and Consolidation of a Permanent Regional EnvironmentalGovernance Framework Project (CASPECO)," the UNDP office in Kazakhstansaid on Monday. The agency explained the project with the increasing need toenhance the environmental protection of the Caspian Sea, whose statushad not been defined by Kazakhstan, Iran, Turkmenistan, Azerbaijan orRussia. The consortium will promote the protection of Caspian biodiversityon the basis of the Tehran Convention for the Protection of the MarineEnvironment of the Caspian Sea, the agency said. The project aims for sustainable fisheries and bio resources andstrengthened regional environmental governance. The monitoring system will be the core of early monitoring ofenvironmental threats and sensitive areas of biodiversity, the agencysaid.

Activity in the Oil and Gas sector (including regulatory)

CPC Says Loadings Uphttp://www.themoscowtimes.com/article/1009/42/375930.htm

The Caspian Pipeline Consortium said Friday that oil loadings at its terminal on the Black Sea advanced 21 percent in the first quarter in comparison with the previous year.

Loadings reached 8.77 million tons, the group, in which Chevron is the largest private shareholder, said in a statement. Deliveries in March gained 22 percent to 3.04 million tons. CPC transports oil produced at the Chevron-operated Tengiz oil field in Kazakhstan to the Black Sea for export. (Bloomberg)

Bulgaria's Petrol seeks Russian partner for EUR400m-600m property projecthttp://businessneweurope.eu/users/subs.phpbneApril 6, 2009

Bulgaria's Petrol Holding, the majority owner of the country's largest fuel retailer Petrol, seeks to team up with a Russian partner in a EUR400-600m real estate development project in the Black Sea country, the daily Standart reported quoting Nikola Krastev, representative of the holding's real estate developer Evrocapital Bulgaria.

The company seeks a partner for building a multi-use complex on a total built up area of 600,000 square metres in the Black Sea port city of Burgas, The complex will include a five-star hotel, three residential buildings with 1,000 luxury flats, a parking lot for 2,500 cars, two office buildings, conference halls, sports facilities and green areas, daily Standart said, SeeNews reported.

In early 2008, Petrol Holding said it will team up with US-based real estate developer and asset manager Federal Development for the development of mixed-use real estate projects in Bulgaria, planning investments of over $3.0 billion in ten years. The joint venture, FEDERAL Bulgaria Management, was planned to focus on converting and redeveloping approximately 50 sites, owned by different entities within the Petrol Holding group of companies. The sites should be converted from oil servicing facilities to mixed-use developments.

TNK-BP to Invest $1B by 2012 for Samotlor Field Development TNK-BP 4/3/2009URL: http://www.rigzone.com/news/article.asp?a_id=74724The Russian-British company TNK-BP is going to invest $1 billion by 2012 into development of the Samotlor field for maintaining oil production in it at the level of 30 million tons, informed the press service of TNK-BP.Commercial development of the Samotlor field turns 40 on Friday. The Samotlor gas and oil field lies in the Nizhnevartovsk Region of the Khanty-Mansi Autonomous Area, 750 northeast of the city of Tyumen, in 15 km from the city of Nizhnevartovsk. The field covers two license areas. The companies Samotlorneftegaz and TNK-Nizhnevartovsk, incorporated into TNK-BP, produce oil in this field. The field was discovered in 1965 and put into commercial development in 1969.The in-place oil reserves of the Samotlor field were equal to 55 billion barrels. Now, they are estimated at approximately 1 billion barrels, which means that the field is among the five largest fields in the world. The proven reserves of the field amount to approximately 4 billion barrels (according to the US Securities and Exchange Commission).In the 40 years of commercial development of the field, 2.554 billion tons of oil was produced in it. Oil production in the field reached its peak of 158.9 million tons in 1980. At that time, the Samotlor field accounted for nearly a half of all oil production in Russia. After the disintegration of the Soviet Union, the oil production in the field dropped to one eighth of its peak level. Now, the production of oil in the field has stabilized at the level of approximately 30 million tons a year. The average daily production of oil in 2009 is 77,700 tons.The annual production of oil in the Samotlor field is expected to remain at this level in the nearest five years. TNK-BP notes that this is a remarkable achievement in the conditions of natural decline of production from mature reservoirs."By 2012, annual investments into the field will be approximately $1 billion," said the press release of the company.The plan of Samotlor field development approved in the Federal Agency for Management of Subsoil Use (Rosnedra) implies production operations until 2099. By the end of this century, the well stock of the field, including 13,400 oil wells and 4,500 injection wells, will account for approximately 70% of production. Apart from that, oil production will be maintained by means of further geological exploration of the territories and use of advanced recovery technologies.TNK-BP is going to continue investing considerable sums into geological exploration works in its mature fields. The company intends to maintain the level of oil production in the Samotlor field in the years to come owing to the use of new exploration and

production technologies. TNK-BP is exploring and producing oil in Western Siberia, Eastern Siberia, in the Volga-Ural region, and on Sakhalin Island.In 2007, the company produced more than 78 million tons of oil. TNK-BP is now the third largest oil company in Russia. Currently, 50% of shares of TNK-BP is owned by BP and another 50% by the Russian shareholders of the company (25% by Alpha Group of Mikhail Fridman, 12.5% by Renova of Viktor Vekselberg, and 12.5% by Access Industries of Leonard Blavatnik).

Tatneft Seeks Cuts To Contract Costshttp://www.themoscowtimes.com/article/1009/42/375932.htm

06 April 2009 Bloomberg

Tatneft said Friday that it was seeking cheaper services from contractors building its Nizhnekamsk refinery after the Tatarstan-based oil producer canceled two agreements last week.

"In light of today's conditions, we think we should get a better price," said Vladlen Voskoboinikov, director of international financial reporting. The plant's financing is not in jeopardy, he said.

Tatneft terminated $1.2 billion worth of orders for the refinery's hydrotreating and aromatics units with Maire Tecnimont and GS Engineering & Construction, the companies said in statements Thursday. The cancellations will have no adverse effect on the project, Voskoboinikov said.

The Nizhnekamsk plant, Russia's first major oil refinery since the Soviet era, will have a capacity of 140,000 barrels of crude per day. Russia's three biggest oil producers have upgraded Soviet refineries to boost refining capacity.

Gazprom

Gazprom is forming an international alliance to oppose a March gas agreement between Ukraine and the European Union

http://www.reuters.com/article/rbssEnergyNews/idUSL634874820090406www.kommersant.ruGazprom (GAZP.MM) is forming an international alliance to oppose a March gas agreement between Ukraine and the European Union, the daily says, referring to last Friday's meeting between Gazprom chief Alexei Miller and executives from Germany's E.ON EONGg.DE and Italy's Eni (ENI.MI).

April 2 2009 20:25Moscow

On working meeting between Alexey Miller and Bernhard Reutersberghttp://www.gazprom.com/eng/news/2009/04/35649.shtml

The Gazprom Headquarters today hosted a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Bernhard Reutersberg, Chairman of E.ON Ruhrgas AG Board of Management.

The meeting deliberated on the prospects for bilateral cooperation paying particular attention to the current interaction between the companies on the international energy markets as well as to the execution of the agreements relevant to E.ON’s entry in the Yuzhno-Russkoye field development project.

In addition, Alexey Miller and Bernhard Reutersberg discussed the progress in constructing the Nord Stream gas pipeline and noted that the rapid project implementation would promote gas supply reliability both in Germany and in other EU states.

Background:

E.ON AG is Europe’s largest private electric power and gas concern. E.ON Ruhrgas AG (before July 1, 2004 Ruhrgas AG) since February 2003 has been a subsidiary of E.ON AG and is responsible for the group’s gas business in Europe, including production, sales, transportation and storage of natural gas.

E.ON Ruhrgas AG is the largest foreign shareholder of Gazprom.

Gazprom and E.ON Ruhrgas began cooperating in the early 1970s. Ruhrgas became one of the first largest buyers of Russian gas in Western Europe.

On February 29, 2008 Gazprom and E.ON AG signed the Memorandum of Understanding on the joint construction and operation of a gas turbine power station near Lubmin (Germany).

On October 2, 2008 Gazprom and E.ON AG signed the Agreement on joint participation in the project to develop the Yuzhno-Russkoye oil and gas field. According to the agreement, E.ON AG will receive 25 per cent minus one ordinary registered share in the charter capital of Severneftegazprom and thus take part in the development of the Yuzhno-Russkoye field. Gazprom will receive 49 per cent in Gerosgaz, which owns 2.93 per cent of the company, giving Gazprom the full property rights to this stake.

E.ON AG also partners with Gazprom to construct the Nord Stream gas pipeline.

Gazprom May Spend $2 Billion on Sochi Olympics, Vedomosti Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7Jd1T2tj.OE

By Torrey Clark

April 6 (Bloomberg) -- OAO Gazprom, Russia’s gas exporter, may spend at least $2 billion on the 2014 Winter Olympics in Sochi on the Black Sea coast, Vedomosti reported, citing the state-run company’s investment program through 2012.

Gazprom, the biggest investor in the preparation for the Olympic Games after the government, plans to invest about 28 billion rubles ($843 million) of that sum this year alone, the Moscow-based newspaper reported.

A skiing complex and four-star hotel with 600 rooms are the main projects Gazprom is undertaking in Sochi, Vedomosti said.

To contact the reporter on this story: Bradley Cook in Moscow at bcook7@bloomberg.net.

Last Updated: April 6, 2009 00:49 EDT

Gazprom to spend $2bln on Sochi Olympics – paperhttp://en.rian.ru/russia/20090406/120934310.html

MOSCOW, April 6 (RIA Novosti) - Russian energy giant Gazprom will invest at least 68 billion rubles ($2 billion) in the construction of facilities for the 2014 Winter Olympic Games in Sochi by 2012, a business paper said on Monday.

According to Vedomosti, of this sum, 28 billion rubles ($838 million) will be invested by Gazprom in 2009.

Gazprom's spending on preparations for the Sochi Olympics is the largest of all the investment plans for the 2014 Winter Games, excluding federal budget expenditures. Total investment in the Sochi Olympics is estimated at 206-218 billion rubles ($6.2-6.5 billion), the paper said, referring to Deputy Prime Minister Dmitry Kozak.

Gazprom's investment targets include a skiing complex, a four-star 600-seat hotel for skiers 1,500 meters above sea level and a new gas pipeline with an annual capacity of 3.27 billion cubic meters, Vedomosti said.

The skiing complex will comprise a stadium for 16,000 spectators. Gazprom also plans to build a two-lane 25-km (16-mile) highway to the Olympic camp, Vedomosti said.

However, the paper also reported that Gazprom CEO Alexei Miller had said the energy giant's investment program may be reviewed depending on the company's results in the first half of 2009.

Moody's Cuts Gazprom to Match Russiahttp://www.themoscowtimes.com/article/1009/42/375933.htm

06 April 2009 Bloomberg

Moody's Investors Service said Friday that it cut Gazprom's debt rating one level to Baa1, the third-lowest investment grade, to match Russia's sovereign rating.

"Movements in oil and gas prices and changes in the health of the Russian economy are factors similarly impacting the fortunes of both parties," Moody's said in a statement. "Moody's therefore no longer believes it is appropriate to assign a rating to Gazprom higher than that of the Russian Federation's rating of Baa1."

Moody's hasn't lowered Russia's rating since the global financial crisis reached the country.

Any change in Russia's rating would lead to a similar change in Gazprom's, Moody's said. The outlook for both Russia and the gas export monopoly is stable.

APRIL 3, 2009, 10:57 A.M. ET

UPDATE: Gazprom May Lower '09 Spending; Moody's Cuts Rating http://online.wsj.com/article/BT-CO-20090403-707762.html

By Jacob Gronholt-PedersenOf DOW JONES NEWSWIRES

MOSCOW (Dow Jones)--Russia's OAO Gazprom (GAZP.RS) Friday hinted it may trim investments due to falling demand for gas as ratings agency Moody's lowered the monopoly's credit rating on the basis its prospects are closely intertwined with those of the shrinking Russian economy.

Natural gas demand has crumbled in Gazprom's key markets, while gas export prices are set to decline significantly later this year.

The credit agency downgraded Gazprom to Baa1 from A3 to match that of Russia. Since November Russia's ruble currency has lost 30% of its value, as the price of oil - the country's main export - fell sharply.

"Movements in oil and gas prices and changes in the health of the Russian economy are factors similarly impacting the fortunes of both parties," Moody's said in a statement. The agency keeps outlook on the rating stable.

Gazprom may have to lower its investment plan for this year due to falling demand at home and in Europe - its key export market - the company's Chief Executive Alexei Miller said Friday during a meeting with Prime Minister Vladimir Putin.

Putin pledged financial aid to the gas giant should the need arise.

"Should it be necessary, we will search for possibilities to extend a helping hand and to support the company," Interfax cited Putin as saying.

In December last year, Gazprom's board approved a 920.44 billion ruble ($27.6 billion) investment program for 2009. But falling demand has forced the company to lower production by around 15% in the first quarter.

"There is no need for state funds today, but we will have to consider adjusting the investment program due to a drop in demand," Miller said.

A year ago, Miller forecast oil prices would hit $250 a barrel and voiced ambitions to boost the company's market capitalization to $1 trillion. Since then, the price of oil has plunged, taking Gazprom's share price with it. Friday, the company's market price was just below $100 billion.

Update on Gazprom and KOGAS meetinghttp://steelguru.com/news/index/2009/04/06/ODkwMDQ%3D/Update_on_Gazprom_and_KOGAS_meeting.html

Monday, 06 Apr 2009

Gazprom has announced that the company hosted a working meeting between Mr Alexey Miller Chairman of the Gazprom Management Committee and Mr Choo Kangsoo President of Kogas.

The parties discussed the prospects for cooperation development in the oil and gas sector, addressing in particular the issues with regard to implementing the provisions of the Memorandum of Understanding on natural gas supplies from Russia to Korea.

April 2 2009 20:30Moscow

On working meeting between Alexey Miller and Choo Kangsoohttp://www.gazprom.com/eng/news/2009/04/35650.shtml

The Gazprom Headquarters hosted today a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Choo Kangsoo, President of Kogas.

The parties discussed the prospects for cooperation development in the oil and gas sector, addressing in particular the issues with regard to implementing the provisions of the Memorandum of Understanding on natural gas supplies from Russia to Korea.

Background:

On May 12, 2003 Gazprom and Korean Kogas signed the five-year Agreement of Cooperation, which was extended for another five-year term in 2008. The Agreement embraces a wide spectrum of issues including the exploration of possible ways to supply Russian natural gas to Korea.

To implement the Agreement the parties set up the standing Joint Working Group.

On October 17, 2006 Seoul saw the signing of the Agreement of Cooperation in the Gas Industry between the Government of the Russian Federation and the Government of the Republic of Korea, pursuant to which Gazprom and Kogas were identified as authorized companies overseeing natural gas deliveries from Russia to the Republic of Korea.

On September 29, 2008 Gazprom and Kogas signed the Memorandum of Understanding on natural gas supplies from Russia to Korea.

Nabucco consortium hurdles Gazprom roadblockshttp://www.neurope.eu/articles/93935.php

Author: Kostis Geropoulos6 April 2009 - Issue : 828Nabucco is still counting on gas supplies from Azerbaijan despite a memorandum of understanding signed between Russia’s Gazprom and the State Oil Company of Azerbaijan SOCAR, Nabucco Gas Pipeline International GmbH spokesman Christian Dolezal told New Europe. “No, it does not change anything. We know and it’s not new that it (Russia) is of course a business partner of Azerbaijan, but it does not change anything about the plan to receive Azeri gas and we are convinced that Azeri gas will flow for Nabucco,” Dolezal said telephonically from Austria on April 1.But Ron Smith, chief strategist at Moscow’s Alfa Bank, said this is a strategic move by Russia to tie up Caspian energy supplies. For some time now, Russia has been trying to forestall any Central Asian gas getting to Europe except via Gazprom pipelines. “They do not want to be hitting that gas on head-to-head basis,” Smith told New Europe, reminding that first quarter export volumes for Gazprom have tumbled. “It doesn’t want Nabucco coming in. It would much rather have South Stream so it’s pulling all the strings to try to block it,” Smith said.Tatiana Mitrova, head of Moscow’s Centre for International Energy Markets Studies at the Russian Academy of Sciences, told New Europe that the Gazprom-SOCAR memorandum signed on March 30 clearly shows the growing interest of Azerbaijan in cooperation with Russia. “It seems to be very reasonable taking into account very low financial support allocated finally from EC to Nabucco and increasing tensions with Turkey concerning transit conditions. I would suppose that Azerbaijan decided not to wait for indefinite period until the project will find financial support and guarantees of gas supplies sufficient to fill the projected pipeline, and turned to the market that already exists near its borders,” Mitrova said.

But the Nabucco spokesman said that gas for the first stage of Nabucco would come from Phase 2 of Azerbaijan’s massive Shah Deniz field. “Shah Deniz is one of the sources that are most feasible. We have no information that this (the Gazprom-SOCAR deal) would have any impact and we also know that this is not actually Shah Deniz 2 gas which was somehow intended for Russia,” Dolezal said.

He also dismissed concerns that Nabucco would compete with Russia’s Blue Stream 2 pipeline. Gazprom CEO Aleksei Millertwo weeks ago visited Turkey and reached a preliminary agreement on building the second trunk of the Blue Stream pipeline. Turkey may also host Nabucco as Azeri gas passes through the pipeline en route to Europe. “(Blue Stream 2) will not compete with Nabucco. We know that Turkey has of course a peak need for gas and needs gas for its own market as well and this has nothing to do with our project,” Dolezal said. Negotiations with Ankara on prices and taxation have been difficult. Moreover, Turkey demands a pre-emptive right to buy some of the Azeri gas that will pass through Nabucco. The Nabucco spokesman said these issues would be part of the intergovernmental agreement, which is now under negotiations on the ministerial level.The shareholders of the Nabucco consortium are: Botas (Turkey), Bulgargaz (Bulgaria), MOL (Hungary), OMV(Austria), RWE(Germany) and Transgaz (Romania). There is also speculation that Gazprom – through an acquisition of 20 percent of MOL by Surgutneftegaz announced on March 30 – is trying to put up some roadblocks in Europe, Alfa Bank’s Smith said. MOL is Hungary’s leading oil and gas company, and that is the area through which Nabucco will have to run. OMV, MOL and Bulgargaz have also signed up to South Stream pipeline, which bypasses Turkey. “They are covering all their bases making sure they are not on the losing side of any of this,” Smith said. “I don’t think both South Stream and Nabucco will happen. They want to make sure at least one of them happens.”

Gazprom hostage to European market and Ukrainian transit - analyst

http://en.rian.ru/analysis/20090403/120909370.html

Gazeta.Ru

Russian energy giant Gazprom may reduce gas production by an unprecedented 16% (100 billion cubic meters) in 2009. Such plans are motivated by reduced domestic and European gas demand and by plunging gas prices.A possible production slump would force the company to cut back on its investment program and would impair its development. Analysts say Gazprom has to downsize gas production after missing a chance to enter Asian markets.Under the 2009 gas balance, corporate output is to plunge by 10% to 492 million cubic meters against 550 million cubic meters last year. Gazprom sources say production will slump by 16% to 470-460 million cubic meters.The Central Dispatch Control Office of the Fuel and Energy Sector said gas output had plunged by 15% (to 153.3 million cubic meters) in January-March 2009.

Analysts estimate average 2009 gas prices at $260-$280 per 1,000 cubic meters. Forecasts made in late 2008 put them at over $400. Although Gazprom is to spend $26.2 billion on its 2009 investment program, such plans can be revised. The corporate investment program could be trimmed by $4 billion, analysts say.Gallion Capital analyst Alexander Razuvayev said Gazprom had missed a chance to enter Asian markets, and that cheaper gas, investment-program and production cuts would therefore prevent it from supplying the required gas volumes in two or three years when fuel and energy prices are expected to rebound."Gazprom, which has missed its chance to earn super-profits, should have diversified supplies and should have developed Asian markets, primarily the Chinese segment. It should have built another pipeline parallel to the East Siberia - Pacific Ocean Oil Pipeline and a liquefied natural gas plant on the Russian-Chinese border," Razyvayev said.He said Gazprom had become a hostage to the European market and Ukrainian transits. "Gazprom, which in the context of recent events should think of entering Asian markets, can afford to invest in the development of this segment," Razuvayev said.

TURKMENISTAN: ASHGABAT SENDS SHOT ACROSS GAZPROM’S BOW

http://www.eurasianet.org/departments/business/articles/040309.shtml

4/03/09

In a development that may spell big trouble for Russia, Turkmenistan has expressed determination to diversify energy exports.

Ashgabat is indicating that it may use the so-called East-West gas spur -- which was originally envisioned as linking Turkmenistan into the Russian-controlled Prikaspiiski pipeline network - as a means to carry out its diversification plans.

A statement outlining Turkmenistan’s intentions, posted April 3 on the website of the state news agency, makes for uncomfortable reading for Gazprom, which currently enjoys a stranglehold on Turkmen natural gas exports. [For background see the Eurasia Insight archive]. Gazprom had originally said it would finance the East-West spur, but it backed out of the deal during Turkmen leader Gurbanguly Berdymukhamedov’s late March visit to Moscow. [For background see the Eurasia Insight archive].

Now Turkmenistan appears intent on carrying out an international tender for the East-West contract.

"The era of monopolies in this segment of the world economy is a thing of the past," the official Turkmen statement said. "Rapidly growing demand for energy [...] stimulates the search for new configurations, schemes and project models of alternative energy supply routes. Which [new configuration] is chosen is the sovereign right of the parties to a particular project."

The statement provided no specifics on Turkmenistan’s development plans. Ashgabat has expressed interest in participating in the US-supported trans-Caspian pipeline (TCP) project, which would become part of an export route to Europe that evades Russian control. But so far, Turkmen officials have made no firm commitments to the TCP route.

The East-West spur is estimated to cost about $1.5 billion to build. The April 3 statement took repeated swipes at Russia, but gave no indication that Turkmen leaders were ready to embrace the US-backed TCP route. In not so subtle terms, the statement accused Russia of trying to bully Turkmenistan on energy-related issues.

"The issue of sovereign rights of countries to choose the manufacturer of the supply routes of their energy is inextricably linked to the right to formulate prices for them," the statement said. "In this context, the only correct pattern for the formation for natural gas prices is direct agreements between the seller and buyer. In doing so, logically, that it is the country of production determines the price based on cost of gas production."

If Russia wishes to remain an influential player in the development of Turkmenistan’s energy resources, Ashgabat’s statement seemed to demand that the Kremlin undergo an attitude adjustment. The statement hinted that Russia’s approach to energy issues was "anachronistic" because it attempted to "politicize the problem of energy supply, to use them as a tool to achieve political goals or to satisfy corporate interests."

"The modern approach - an approach based on the interests of all participants in the energy market [is to] to protect energy supply from political and other risks," the statement added.

Turkmen officials indicated that they would explore diversification options an upcoming energy conference in Ashgabat on April 23-24.

Putin offers help to Gazprom - supports reduction of investment programme

http://businessneweurope.eu/users/subs.php

VTB CapitalApril 6, 2009

in line with previous indications - neutral News: Prime Minister Vladimir Putin said during his meeting with Alexei Miller, the Chairman of Gazprom's Board, that the government was ready to help Gazprom should the company experience funding problems, or that another solution would be to revise the current investment programme. Miller stated that Gazprom was not currently experiencing any liquidity problems but reiterated an earlier statement that the company might have to revise its investment programme, depending on the macro situation.

Our View: We currently model in 2009 capex of USD 17bn, which is below the company's official capex plan of USD 21bn. However, Gazprom previously guided for a

potential reduction of up to USD 6bn in capex this year, which we believe is a likely scenario (the decision might be implemented by May). In our view, a lower 2009 capex accompanied by a time shift in the company's major greenfield projects (Shtockman and Yamal) might be positive for the company's near-term cash flow profile. Nonetheless, we are concerned about Gazprom's operating performance for 2009. Considering the recent negative production statistics, we could continue to see pressure on the stock in the near term.

Russian PM Vladimir Putin had a working meeting with Gazprom CEO Alexei Miller

http://www.isria.info/en/4_April_2009_10.htm

The meeting discussed the gasification of Russia, in particular Kamchatka, the building of a new Sakhalin- Khabarovsk-Vladivostok trunk pipeline, diversification of hydrocarbon deliveries and the creation of a new pipeline system via Turkey to Israel.

Follows a transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon.

Alexei Miller: Good afternoon.

Vladimir Putin: How are things? What about the volumes procured and extraction volumes? How did the winter season go?

Alexei Miller: We went through the winter in normal working mode. The volumes are going down somewhat and that is of course due to the economic crisis. The volumes are going down in Russia and in Europe at about the same rate.

As for the plans for the current year, Gazprom has not revised its policy in spite of the decrease in volumes. It is of course premature to draw any conclusions about the situation in the market on the basis of the last three months. In fact gas prices in Europe were fairly high in the first quarter. This is because the first quarter captured the oil prices...

Vladimir Putin: Of the middle of last year.

Alexei Miller: Yes, of the middle of last year when oil prices were very high. It is possible that the downturn in gas consumption in the first quarter was due to the high prices. We are now into the second quarter and we see a slight rise in consumption volume in the very first days.

Vladimir Putin: Both here and abroad?

Alexei Miller: Yes, both in this country and abroad. As regards gasification this year we preserve the same pace as in 2008, and we have expanded the geography of the

programme, notably to the Far East and Eastern Siberia. The priority you have set regarding Kamchatka: we are keeping to the timetable, gasification of Kamchatka in 2010 and the construction of a new trunk pipeline Sakhalin-Khabarovsk-Vladivostok with a capacity of 30 billion cubic metres of gas. That project will spearhead the gas sector development in the region.

Vladimir Putin: What is the deadline for implementing the project?

Alexei Miller: 2012, in time for the APEC summit. We are planning to bring the pipeline to Vladivostok.

Vladimir Putin: From what place?

Alexei Miller: This is Sakhalin gas, it is the Sakhalin resource base.

Vladimir Putin: What is the name of the field?

Alexei Miller: At present the field is being developed by Rosneft. We expect that by that time Gazprom will also start offshore development on Sakhalin although there are still some questions concerning licensing.

Vladimir Putin: Have you obtained the license?

Alexei Miller: No, this is one of the issues I would like to discuss today. The issue is taking a little too long to resolve, we would like things to be speeded up. The resource base is a critical issue: the Kirinsky, Ayashsky and East-Odoptinsky blocks...

Vladimir Putin: Shall we treat it as a purely technical issue?

Alexei Miller: All right. But the resource base is a very important issue for Gazprom. We are beginning to develop Yamal. This year work will continue to develop the Bovanenko field and build a new transport corridor to take gas from Yamal. That includes the building of a trunk pipeline.

Vladimir Putin: What are the additional production volumes on Yamal and on other fields?

Alexei Miller: The production volume at the Bovanenko Field will be among the largest of all the Gazprom fields. It may produce perhaps 115 billion cubic metres of gas a year.

Vladimir Putin: What are the proven reserves?

Alexei Miller: More than 10 trillion cubic metres.

Vladimir Putin: That is over three times as much as the Shtockman.

Alexei Miller: Yes , it is a new Russian gas province. As the resources of the Nadym-Pur-Tazovsky field become depleted, and up until now it is the main gas province in Russia and will remain so for some time, Yamal will be a new gas province. We have started development and we are proceeding on schedule, we have started building the Bovanenkovo-Ukhta trunk pipeline.

As for work in the foreign market, the Nord Stream is being built on schedule. We have started the process of assessing the environmental impact together with the Balatic countries.

Work on the Southern Stream is also proceeding according to schedule. It is currently at the pre-project stage. By the mid-2010 we will complete the feasibility studies both for the marine stretch and the land route through the territories of transit countries.

Vladimir Putin: What do our main partners and consumers think about diversification of hydrocarbon supplies?

Alexei Miller: There was a meeting at Gazprom yesterday with our major European partners: E.ON Ruhrgas AG, ENI, Gaz de France. The meeting was held at the request of our partners. We discussed new gas transportation routes, Russian gas supplies to Europe and the Nord Stream and Southern Stream projects. We are one with our European partners that these projects are highly relevant for future Russian gas supplies to Europe. They have the full support of our partners.

Our partners also said that in their opinion the European Communities Commission, Brussels, should do more to assist these projects.

We also touched upon the issue of the declaration recently signed between Brussels and Ukraine. We have a consensus on that issue too: the document was developed without the key players in the European gas market. Neither Russia and Gazprom as the gas supplier nor the major consumers were involved. The common view is that this approach renders the document non-workable. It cannot be implemented in practice

We have agreed to create a working group which will meet at the same high level within four or six weeks to discuss how to make transit through the European countries more reliable and stable. I think the discussion at the corporate level will produce a concrete plan of activities to make our supplies and transit of Russian gas to Europe more reliable.

Vladimir Putin: No matter what, we must maintain contacts with the European Commission and develop relations with our Ukrainian colleagues. Such a dialogue is under way between energy ministers. The Russian and Ukrainian energy ministers met recently. These contacts must be continued at a corporate level. Ukraine is one of our major transit partners.We must give more attention to the task of diversifying [gas pipeline] routes. I talked recently with the newly elected Israeli Prime Minister. I reminded him of our joint plans

with the former government to build a new pipeline system supplying gas to Israel via Turkey. I think the new Israeli government will also support this project. Now I want to ask you about the results of your visit to Turkey.

Alexei Miller: Last week we had talks with our Turkish colleagues. Turkey supports the Blue Stream-2 project - to build a third pipeline section parallel to the two pipelines running across the Black Sea and delivering gas to Turkey.Turkey wants the projected capacity of the new pipeline to provide not only for gas transit via Turkey, in particular to Israel, but also for gas supplies to the Turkish domestic market. Gazprom enjoys a good reputation as a reliable supplier to the Turkish market; every year we help our Turkish partners in the event of regular disruptions of gas supplies from third countries during the winter season. Turkey would like to buy more Russian gas after 2015, including via the Blue Stream-2 gas pipeline. We have reached an agreement that, after the new Israeli government takes office, we will initiate, together with our Turkish colleagues at a corporate level, putting this project into basic documents which would allow us to launch it, if only at its pre-project stage.

Vladimir Putin: Please, tell in greater detail about gas supplies to the Russian regions.

Alexei Miller: In 2005, we adopted a programme of gas supplies to the Russian regions. We gradually increased the funding of this programme and expanded the geography of our work. We began implementing this programme on the basis of new principles. This concerns, in particular, our work to synchronise its financing by Gazprom and the regions. Gasification is not only up to Gazprom-it also concerns street and house network construction, and its financing from local budgets. We have signed project synchronization schedules with all constituent entities. Some regions are working ahead of schedule, and an approximately equal number according to it.

Vladimir Putin: How many regions are involved in the programme?

Alexei Miller: I cannot say it precisely but the gasification programme is underway wherever Gazprom is present. Ever new regions are joining the project-the Russian Far East and East Siberia. We are working in the Kamchatka and Khabarovsk territories, the Jewish Autonomous Area, and elsewhere.

Vladimir Putin: If we supply gas to Israel we would certainly find some for the Jewish Autonomous Area, too.

Alexei Miller: We would of course.

Vladimir Putin: How much did you intend to raise gas tariffs this year?

Alexei Miller: By 19%.

Vladimir Putin: But you were allowed only a 5% rise. Nevertheless, you are making only

minor changes in investment and gas supply plans. Where will you find necessary resources with prices and output shrinking?

Alexei Miller: That is so but Gazprom has no problems with current financing, as I have said. Prices were very high in the first quarter.

Vladimir Putin: So you are living off last year's revenues?

Alexei Miller: Last year's oil revenues, to be precise. They were huge, so the first quarter was beneficial to Gazprom, price-wise. However, if the present trends persist, we will have to amend the investment programme proceeding from our work in the first half-year. In that case, we will have to analyse setting priorities. We intend to keep the pace of the gasification programme at last year's level. But we have some medium- and long-term projects whose prepayment and financing we intended to start this year. Possibly, we should put those projects off with no damage to consumers and with due account for adjusting which, to all appearances, will be necessary according to Russian and European market demands.

Vladimir Putin: We should look at the Gazprom investment programme with greater attention so as to single out the essentials-to preserve the present load on Gazprom's Russian partners and help the gasification programme to survive. The investment programme for the second half-year also demands a closer look. You are right to say that we would look for the opportunities to give Gazprom a hand, if need be, and keep it afloat.

Alexei Miller: There is no such necessity now as far as government financing is concerned. As for the investment programme, I expect we will have to amend it because the demand is really shrinking. Market orientation is our corporate principle. We should sell gas before we produce and pump it.

Vladimir Putin: So if you adjust the programme, you will do it not because you are short of money-which you are not-but due to sales?

Alexei Miller: Yes, to the amount of sales.

Vladimir Putin: And the market volume?

Alexei Miller: Of course.

Vladimir Putin: Good.

Gazprom to exercise its options in Gazprom Neft?

http://businessneweurope.eu/users/subs.php

Rencap, RussiaMonday, April 6, 2009

This week will see the Mission of Italian Entrepreneurs in Russia (6-7 Apr), which coincides with the planned visit to Moscow of Italy's Prime Minister Silvio Berlusconi.

We expect this occasion will be used to announce a series of bilateral agreements, key among which is the likely exercise by Gazprom of its options to acquire 20% in Gazprom neft from Eni, and 51% in Severenergia (formerly, Enineftegas - an Eni/Enel JV set up for the acquisition of former YUKOS assets, Arcticgas and Urengoil, in 2007) from its current owners, Eni and Enel. It is notable that Gazprom CEO Alexei Miller has had meetings in the past weeks with Paolo Scaroni, CEO of Eni, and Fulvio Conti, CEO of Enel. Gazprom previously confirmed its plans to exercise both options.

__ An acquisition of a 20% stake in Gazprom neft will raise Gazprom's stake in the company to 95.68%. This may prompt the market's expectations that a buy-out offer for minority shareholders may be announced at the strike price (about $4/share, based on the $4bn valuation of the 20% stake, disclosed by Vedomosti on 25 Mar), which represents over 50% premium to the current share price. While the deal will undoubtedly increase the odds that the offer could be made, Gazprom will not be under the obligation to do so as the 95% stake will not have been reached as a result of a public offer.

Notwithstanding the legal side, we believe Gazprom will be interested in consolidating 100% of Gazprom neft so that it could properly restructure its liquids business. We would therefore view signing of the deal as a cautious positive for Gazprom neft minorities, but not a guarantee of a take-out, with significant risk remaining over the timing and the price of the possible offer.

__ An acquisition of a 51% stake in Severenergia by Gazprom would pave the way for the development of this asset, which has been constrained in the past by the lack of access to Gazprom's pipelines.

Severenergia boasts over 1tcm in gas reserves (C1 + C2 under Russian classification) and could be producing close to 30bcm pa, in our view, which is similar to Novatek's 2008 production level. Vedomosti reported that Gazprom will acquire the 51% stake for $1.5bn, which would be equivalent to an EV/reserves multiple of $0.5/boe vs current multiples of $1.0/boe for Gazprom and $1.7/boe for Novatek. We therefore expect this deal will be accretive for Gazprom, although the size of it is not material in the company's context