Russia 101026

Basic Political Developments Russian Interior Ministry confirms that Ded Hasan was selling arms to PKK -

While speaking to Russia Novaya Gazeta, spokesman for the Russian Interior Ministry said Ded Hasan (Aslan Usoyan) was selling arms to the Kurdistan Workers’ Party (PKK).

Europe should rely less on Russian energy-Lithuania: Europe needs to break its dependence on Russian energy by improving its internal gas market, Lithuania's prime minister said in an interview published on Tuesday in the Spanish newspaper El Mundo.

Medvedev has dismissed several top military - Russian President Dmitry Medvedev has made several personnel changes in the RF Armed Forces. It is reported by the Kremlin press service.

Russian defence reforms under fire - Pressure on Defense Minister Anatoly Serdyukov is increasing after the Kremlin told the former tax chief to get his act together after a cursing scandal broke out, drawing attention to an already unpopular military reform campaign.

o The Paratroopers' Attack - Behind all the commotion and burst of activity against Serdyukov is a new revolution that is brewing in the armed forces. For the first time, even the highest-ranking officers are being freed from the heavy burden of managing the expenditure of funds.

Medvedev to chair presidential modernisation commission meeting - Russian presidential aide Arkady Dvorkovich said on Monday that within the working trip Medvedev “will meet the management and workers of KAMAZ.”

Putin to chair conf on priority investment projects in Siberia - Sources expect that the conference will highlight the projects like the construction of a railway line between Kyzyl, the administrative center of the Tyva region, and the town of Kuragino in the neighboring Krasnoyarsk territory.

WikiLeaks to publish classified documents from Russia, China - This came in a statement by the site founder’s assistant Kristinn Hrafnsson in an interview with the Russian Kommersant daily.

o WikiLeaks to release secret Russia, China logs - paper : "Russians are going to find out a lot of interesting facts about their country," WikiLeaks spokesman Kristinn Hrafnsson told Kommersant.

Russian, Montenegrin ministers to discuss situations in Balkans - Russian Foreign Minister Sergei Lavrov is expected to receive his Montenegrin counterpart Milan Rocen at the Foreign Ministry’s house for official receptions Wednesday.

Russia's FM to visit Poland on bilateral cooperation - Rafal Sobczak of the Polish Foreign Ministry's press office told the PAP news agency that the committee will also refer to international politics, relations between Russia and the EU, as well as to possibilities of cooperation in respective fields, including the energy sector and foreign policy.

Ten agts on Russia-Ukraine economic ties to be signed in Kiev - Zurabov stressed that particular attention will be paid to energy cooperation. In particular, the sides

will consider their relations in the gas sphere. It is also expected that Prime Minister Vladimir Putin will attend a cadete ball on October 27.

Lytvyn to pay working visit to St. Petersburg on 27-28 October - Speaker of the Verkhovna Rada of Ukraine Volodymyr Lytvyn will pay a working visit to St. Petersburg on 27-28 October to participate in the measures of the Interparliamentary Assembly of the CIS Member States.

Naftogaz to take loan from Russian VTB Bank - Ukraine's oil and gas monopoly, NJSC Naftogaz of Ukraine, announced plans to take a USD 180 million loan from one of Russia's largest banks, VTB Bank, Naftogaz said in a statement.

Chinese to Lend $6Bln for Coal - The government will unveil coal deposits that Russian companies will develop using $6 billion in Chinese loans by the year's end, Deputy Energy Minister Anatoly Yanovsky said Monday.

o Chinese cash to power Russian coal - The deposits may include assets owned by Sakhalinugol on Sakhalin Island and the Elegest coal field in eastern Siberia, Yanovsky said. He added that it is for the Russian companies and Chinese banks to negotiate individual deals, and claimed that it's not for the Energy Ministry to make decisions. He declined to name the companies in talks with the Chinese.

Russian, Sudanese officials to meet in December - Russian presidential representative on Sudan Mikhail Margelov intends to meet with Sudanese top officials during a visit to Sudan in December.

o Russian and Sudanese presidents discuss referendum, bilateral relations o Russian, Sudanese leaders discuss referendum in Sudan o Telephone conversation with President of Sudan Omar Bashir - Dmitry

Medvedev and Omar Bashir discussed reconciliation in Sudan on the eve of a historically important stage in the nation’s development – Southern Sudan’s referendum on independence, scheduled for early January 2011.

Ethiopia praises Russia role in region, relations - MFA Tehran, Russia at odds over Iran’s nuclear program: ambassador Iran set to load fuel in Bushehr nuclear reactor - Under a bilateral agreement,

which has received IAEA approval, Russia will initially operate the plant, supplying its fuel and taking away all the spent fuel for the next two or three years, but will eventually hand over full control to Iran.

Fisheries Cooperation With Russia - The Islamic Republic of Iran and Russia signed an agreement to expand cooperation in protection of fish species in the Caspian Sea. The agreement was signed at the 6th meeting of Iran-Russia joint fisheries commission held this week in Tehran, Moj News Agency reported.

Israel, Russia prioritize economic cooperation - Israeli ambassador Medvedev submits Russian-French agreement for ratification - Russian President

Dmitry Medvedev has submitted the Russian-French intergovernmental agreement on air cargo transit to Afghanistan to the State Duma for ratification.

o Medvedev submits agt with on military transit to Afghanistan for ratification - The agreement creates a legal framework for air transit of French arms, military hardware and supplies, as well as troops and civilian personnel trough Russia’s airspace for participation in ISAF operations in Afghanistan.

Italy to get back 121 perished in WWII from Russia France ready to deliver helicopter carrier with transfer of technologies - France's

shipbuilder DCNS announced on Tuesday it is ready to deliver Mistral class helicopter carriers to Russia with built-in domestic navigation technologies.

Russia to announce helicopter carrier tender at Euronaval 2010 - Russia could announce a tender on the construction of two amphibious assault ships for the Russian Navy at the Euronaval 2010 exhibition, which opened on Monday in Paris, the Vedomosti daily said.

Russian space freighter departs ISS on scientific mission Fragment of space garbage approaching ISS Norway’s coast guard detains fish transport ship with Russian crew

o Norwegian Coast Guard detains cargo ship with Russian crew Partnership With Iceland in the Works - Shmatko said Iceland, which is a world

leader in renewable energy, considers partnering with Russia a priority, and that the sides were discussing construction of a new geothermal power station in Russia. He also said geothermal energy was one of the most promising renewable energy sources, with RusHydro, the country’s largest renewable energy producer, already operating several geothermal power stations.

Police defuse bomb in Chechen capital - Police defused a hand-made explosive device outside a concert hall in the Chechen capital of Grozny on Tuesday. It contained 6 kg of TNT, chipped iron rods, screws and a Nokia cell phone for shrapnel, a police spokesman said.

o Powerful explosive device found in Grozny Bomb-like object discovered near mosque in Dagestan - The homemade bomb

was equivalent to 1.5 kilograms of TNT. It was rendered safe with the help of a hydrodynamic destroyer.

Moscow remembering victims of Oct 2002 theater hostage taking Heat, smoke sent Russia deaths soaring in 2010 – govt Russian census held in strict compliance with schedule - Rosstat is confident that

the census has justified its motto: “Everyone is Important for Russia!” This is borne out by interim data announced by Rosstat officials in the middle of the campaign. As for October 19, around 70 million people had been registered, which is about half of the country’s population.

Trud/Russia Today: Mossad outdoes Anna Chapman - A trial against a Russian citizen, who is suspected by the local intelligence agencies in engaging in espionage for Russia, began in Poland. While concealing his real name, investigators gave the detainee a pseudonym of Tadeusz.

Memories of Newsweek - Independent Media Are Hard-Pressed to Find the Right Audience and Advertisers in Russia. By Svetlana Kononova

Former Putin prime minister talks about his former boss - Mikhail Kasyanov tells Americans how he traveled the road from prime minister to Vladimir Putin to an outspoken leader of the Russian political opposition. His story of life inside the Kremlin reveals much about the enigmatic Putin.

Elena Shaftan's letter from Moscow - Jupiter Emerging European Opportunities co manager Elena Shaftan (pictured) returns from Moscow with a fresh perspective on her native country. While she still has reservations over

Vladimir Putin's manners, she is generally more impressed by his leadership style.

Turkmenistan: Medvedev Comes Away from Ashgabat Empty Handed - by Sergei Blagov

Moscow’s Unwillingness to Support Russian Nation Reflects Its Own Imperial Agenda – by Paul Goble

Press forbidden from attending new Moscow mayor's first session - "We were told that journalists were not allowed in. It is still unclear whether this is a permanent measure or not," a RIA Novosti correspondent said.

Rally of 800 demonstrators on Triumfalnaya Square given go-ahead – source: The City Hall has received a written consent from Lyudmila Alexeyeva, the chief negotiator and first applicant for the rally in defense of Article 31 of the constitution [guaranteeing the freedom of assembly], to hold a rally of 800 demonstrators on Triumfalnaya Square," the source said.

o Sobyanin Allows Larger 31st Rally - Authorities have allowed 1,000 people to attend the Oct. 31 rally, veteran human rights activist Lyudmila Alexeyeva said, RIA-Novosti reported.

Report: Luzhkov Seeks U.K. Visa - Yury Luzhkov has applied for a British visa but has no plans to abandon Russia after being ousted as Moscow's mayor last month amid a flurry of state television reports linking him and his wife to possible corruption, Lifenews.ru reported Monday.

o Russian daily retracts corruption article on ex-Moscow mayor's wife - Vedomosti daily said the fact that Baturina "not always paid the city a percentage traditional for all developers" was incorrect as well as that the businesswoman's company, Inteko, "receded its obligations in a number of initial obligations for its own interest."

Berezovsky pledges assistance to Luzhkov - "If he finds himself in a crunch, and if he or his wife lacks money to hire defense lawyers in search of asylum, I will be ready to help," Berezovsky told Interfax by telephone from London.

Russian Press at a Glance, Tuesday, October 26, 2010 o Russia wants to expedite the delineation of the continental shelf in the

Arctic. The ownership of the large deposits of energy reserves is at stake. (Nezavisimaya Gazeta)

o The Russian government may soon have a political department to "strengthen ties" with political parties, social movements, election bodies and other political organizations. (Nezavisimaya Gazeta)

o Israel's new Ambassador to Russia says Tel Aviv and Moscow prioritize economic cooperation in bilateral relations (Kommersant)

o The Russian car industry plans to go into partnerships with foreign carmakers to manufacture automotive components. (Rossiiskaya Gazeta)

o The Russian government hopes that the second wave of privatization will encourage direct investment in the economy. (Vremya Novostei)

o Moscow's Vnukovo airport will stop receiving aircraft whose noise levels exceed the existing standards starting in March 2011. (Vedomosti)

o Sapsan is the only train operated by the Russian Railways company to have made a profit this year. The train, built for Russia by German

engineering giant Siemens, covers the distance between Moscow and St. Petersburg in the record time of 4 hours and 45 minutes. (Kommersant)

o Russian Deputy Defense Minister Nikolai Pankov outlined ongoing reforms of the country's military education system. (Rossiiskaya Gazeta)

o Russia may announce a tender on the construction of two helicopter carriers for the Russian Navy at Euronaval 2010, which opened on Monday in Paris. The French Mistral class ship is most likely to win the tender, experts believe. (Vedomosti)

o Russian President Dmitry Medvedev urges the government to draft a new law on the social welfare of elderly citizens. The Kremlin has not yet decided on changes to the retirement age. (Nazavisimaya Gazeta, Vremya Novostei)

o The Russian opposition received permission to carry out a mass protest rally in downtown Moscow on October 31 (Vedomosti, Kommersant)

o The Stockholm City Court has rejected Russia's appeal against the seizure of Russian state property in Sweden claimed by German businessman Franz Sedelmayer as compensation for business losses in 1990 when he had tried to open a company in St. Petersburg. (Kommersant)

PRESS DIGEST - Russia - Oct 26o www.kommersant.ruo The Chechen leader Ramzan Kadyrov has become Russia's first official to

ask openly Vladimir Putin to return to his Kremlin office in 2012 and remain there "forever".

o Moscow Mayor Sergei Sobyanin has closed a meeting of the city government to journalists.

o Russia's second biggest lender, VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), is considering a possibility of inviting minority shareholders to its supervisory board.

o www.vedomosti.ruo One of the major stakeholders in Russian steel and iron ore firm

Metalloinvest, Vasily Anisimov is mulling selling his 20 percent stake in the firm worth around $4 billion, the daily says.

o Moscow city authorities are planning to issue bonds to attract at least 15 billion roubles.

o Severstal (CHMF.MM: Quote, Profile, Research, Stock Buzz) and steel maker Evraz (HK1q.L: Quote, Profile, Research, Stock Buzz) could set up a joint consortium with Yenisei Industrial Company to build a new railway route linking Siberian Krasnoyarsk with the coal-rich Tyva region.

o www.rbcdaily.ruo Russia's Gasprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) is

planning to supply up to 180 billion cubic meters of natural gas to Europe by 2020, according to the company's officials.

o www.ng.ru

o Russia's government is considering setting up a special political department to monitor a forthcoming parliamentary election campaign, the daily says.

o Russia is speeding up its expansion in Arctic Ocean, the daily says in connection with Russia's scientific research works in the region.

National Economic Trends September GDP growth reported at 1.8% y/y MinFin closer to getting a tool which would help it control the borrowing

appetites of quasi-sovereigns

Business, Energy or Environmental regulations or discussions Norilsk Nickel, Rosneft, Sberbank: Russia Stock Market Preview Tenex could raise syndicated $500 mln loan Tomsk Distribution grids might be managed by EDF Domestic fertiliser producers to pay market price for potash starting in 2013 Gov't to eliminate potassium market regulation Export duty for cement abolished Consortium of Evraz, EPK and Severstal to build railroad Sapsan train races ahead in profitability for Russian Railways Yandex launches job aggregator Metalloinvest holder mulls selling stake –paper Anisimov May Sell $4 Billion Metalloinvest Stake, Vedomosti Says Turkey's Is Bankasi buys Bank Sofia in Moscow Moscow airport Vnukovo to impose noise restrictions in 2011 Vladimir Potanin owns “a small stake” in RusAl, and Gazprom, LUKoil and

Sberbank stock, Kommersant said, citing the businessman. (Bloomberg) Russian Railways valued the 75 percent stake it plans to sell in its Freight One

unit at $6 billion, Vedomosti reported Monday, citing chief executive Vladimir Yakunin. (Bloomberg)

Sberbank may replace 15 percent of its management staff under a new program to evaluate competency, Kommersant reported Monday, citing chief executive German Gref. (Bloomberg)

Bank of Moscow chief  Andrei Borodin and his partner may control 44 percent of the institution — which has $3.5 billion of the city’s money on deposit — enough to stop the city administration from implementing key decisions, Vedomosti reported Monday, citing unidentified sources. (Bloomberg)

Russia will lift a ban on flour exports from Jan. 1, while grain exports will be suspended until July 1, according to a decree published on the government web site Monday. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory) Bashneft makes advance payment to bid for strategic oilfields - Bashneft has

made an advance payment in the amount of RUB 18.171bn (approx. USD 601m) for participation in the tender for the development of Trebs and Titov strategic oilfields, the oil company's press office reported to RBC on Monday.

Shell to prospect oil and gas in Russia’s Astrakhan

Novatek acquires Novatek Ust Luga Another Chance for the Odessa-Brody Pipeline Lukoil Junk Threat Eases Before Eurobond Sale: Russia Credit

Gazprom Gazprom scouting Sakhalin sites for oil refinery Gazprom Seeks ONGC’s Sakhalin Stake, IANS Says Russia's Gazprom in talks over LNG supplies to India

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Full Text Articles

Basic Political Developments

Russian Interior Ministry confirms that Ded Hasan was selling arms to PKKhttp://news.az/articles/armenia/25325

Tue 26 October 2010 05:36 GMT | 7:36 Local Time

Ded Hasan (Aslan Usoyan) was selling arms to the Kurdistan Workers’ Party.

While speaking to Russia Novaya Gazeta, spokesman for the Russian Interior Ministry said Ded Hasan (Aslan Usoyan) was selling arms to the Kurdistan Workers’ Party (PKK).

While speaking to Novaya Gazeta, a representative of the Russian Interior Ministry, whose name is not specified, also said Ded Hasan was merely paying salary to militia and prosecution officials. In addition, he had very close ties with several Russian deputies, as well as officials of the federal security bodies of Russia.

Earlier, Turkish Milliyet, referring to Russian sources, said that Ded Hasan was selling arms to PKK.

A few weeks ago, the well-known criminal authority Aslan Usoyan (called Ded Hasan) was shot as he was approaching his son’s house at Tver street. Ded Hasan was wounded into the stomach and his bodyguard Artur Bagramyan was injured into a shoulder. Both were brought to hospital.

Tert.am

Europe should rely less on Russian energy-Lithuaniahttp://af.reuters.com/article/energyOilNews/idAFLDE69P05E20101026

Tue Oct 26, 2010 7:14am GMT

MADRID Oct 26 (Reuters) - Europe needs to break its dependence on Russian energy by improving its internal gas market, Lithuania's prime minister said in an interview published on Tuesday in the Spanish newspaper El Mundo.

"We depend on Russian gas supply 100 percent and on imported electricity 50 percent," Andrius Kubilius said.

"Alternatives need to be built to ensure Europe is not dependent on Russian energy, to ensure an internal gas market that ensures we feel safe in terms of supplies from Moscow."

Russia is currently Lithuania's only supplier of natural gas, and Lithuanian officials have complained repeatedly that the Baltic state is paying more for gas than Germany, which can also buy gas on a spot market.

Lithuania is implementing a new energy strategy to reduce its reliance on Russia that includes building a new nuclear plant. [ID:nLDE68D1XA].

The prime minister also reiterated the former Soviet republic's commitment to joining the euro in 2014. "It will bring stability in the long term," he said.

"Our currency is tied to the euro in such a way that the central bank cannot use devaluation during the crisis. So you could say we have the problems of the single currency but without the benefits for the moment." (Reporting by Sarah Morris; editing by Mark Heinrich)

http://www.pravda.ru/news/politics/26-10-2010/1054820-uvolil-0/Medvedev has dismissed several top military26.10.2010 | Source:RIA NovostiRussian President Dmitry Medvedev has made several personnel changes in the RF Armed Forces. It is reported by the Kremlin press service.So, Colonel Igor Afonin, who served as commander of the 8 th missile division, was appointed commander of the 14 th Missile Division. His place was taken by Colonel Leonid Miholap.Lieutenant-General Alexander Miroshnichenko appointed pomoschnikomglavy Defense Ministry. Maj. Gen. Yuri Parsley led the military branch of the Scientific-Research Center Air Force Air Force Academy in the town of Yeisk.In addition, the president fired several soldiers. Dmitry Yashin relieved as commander of the 138-th Guards separate motorized rifle brigade of the Leningrad military district. Discharged from military service, deputy chief of the Main control arms the Armed Forces Research and Development, Major-General Nikolai Vaganov, deputy chief of

staff of the Leningrad military district on the organizational and mobilization work, Major-General Alexander Ionov, Deputy Commander troops LenVO armament, Major-General Alexander Mazharov.

Russian defence reforms under firehttp://themoscownews.com/politics/20101025/188153606.html?referfrommn

by Anna Arutunyan at 25/10/2010 20:26

Pressure on Defense Minister Anatoly Serdyukov is increasing after the Kremlin told the former tax chief to get his act together after a cursing scandal broke out, drawing attention to an already unpopular military reform campaign.

Serdyukov reportedly received a telephone call from the Kremlin last week, ordering him to “conduct a balanced, thought-out development to form a positive image of the military reform that is being conducted by the leadership of the country,” Nezavisimaya Gazeta reported Monday, citing a Kremlin source.

The State Duma’s Defence Committee, meanwhile, has formed a commission to investigate the allegations against Serdyukov, Nezavisimaya reported on Monday.

A source at the Defence Committee confirmed the reports, but Mikhail Babich, the Duma deputy charged with heading the investigation, was unavailable for comment as of print time.

The Kremlin source told Nezavisimaya that President Dmitry Medvedev was “very concerned” about Serdyukov’s recent behaviour, when he cursed out the commander of a paratroopers academy in Ryazan and demanded the demolition of a church there. The Sep. 30 incident sparked outrage, with a video from Russia’s paratrooper’s association demanding Serdyukov’s resignation – and there were even rumours that Prime Minister Vladimir Putin had asked Serdyukov to resign.

The government has denied Putin’s involvement, saying the reports – which first appeared in Argumenty Nedeli newspaper – were “made for hire”.

The Paratroopers Union Of Russia – which released two video addresses last week demanding that Medvedev look into deliberate attempts to undermine Russia’s paratrooper force – still says it has not received an official response.

“We already had a provocation on Friday, and it turned out to be a fabrication,” a source at the Union who declined to give his name told The Moscow News in reference to rumors about Serdyukov’s resignation. “We have no knowledge that Medvedev has responded. Until we have evidence of a real investigation, we are not commenting.”

Unpopular minister

The Ryazan incident and the video address from the paratroopers union merely served as another trigger for a prolonged backlash against Serdyukov, seen as an outsider and disliked by top brass at the military. The former tax chief was appointed in February 2007 by then-President Putin in a bid to kick-start a much-needed reform process.

So far, that process has involved slashing the army down to 1 million people by 2011, from the current 1.2 million, sacking hundreds of generals and doing away with entire divisions. These plans, announced in the summer of 2008, have made the outsider Serdyukov – dubbed “the furniture man” by some in the military for his 10-year stint as a manager at a St. Petersburg furniture factory in the late 1980s – doubly unpopular.

This animosity is obvious, analysts say, since generals would fiercely resist anyone who so much as raises a finger against the status quo – particularly the military’s budgets.

“Serdyukov comes from a financial background. He understands where the money coming from the defence budget actually goes,” security analyst Yury Fyodorov, of Chatham House, told The Moscow News. “His first aim is to bring order to the financial flows. The generals don’t like that.”

As for the specific allegations against Serdyukov, Fyodorov called them “hypocritical”.

“Everyone in the army talks like that,” he said.

Another resignation?

Despite reports about Putin’s comments, it is far too early to talk about any potential resignation for Serdyukov in the near future, Fyodorov said, especially with the presidential elections of 2012 looming nearer.

Others said that deciding what do with Serdyukov and the reforms given the intensifying backlash would pose a major headache for both Medvedev and Putin.

A growing number of retired army officers are becoming potentially “explosive,” military expert Pavel Baev of the Oslo-based Peace Research Institute was quoted by The New Times as saying. “They are a serious political force capable of organisation. And this scenario would be very unwelcome for Putin and Medvedev.”

And bigger question being decided here, experts say, is not just Serdyukov’s fate, but whether the campaign against him could also sink the whole project to reform the military.

The Paratroopers' Attack http://www.themoscowtimes.com/opinion/article/the-paratroopers-attack/421044.html

26 October 2010By Alexander Golts

You may be surprised to learn that Russia’s paratroopers are the most pious of all military personnel. Last week, retired chiefs of the paratrooper corps asked President Dmitry Medvedev and Patriarch Kirill to evaluate what they considered to be the inappropriate behavior of Defense Minister Anatoly Serdyukov. The defense minister apparently flew into a rage when he discovered that there was a church on the territory of a paratrooper training center near Ryazan. He chewed out the center’s commander and reportedly issued an order to raze the church.

But there were several different versions of the story. For example, paratrooper commander Vladimir Shamanov said in a statement carried by Lenta.ru that Serdyukov had only suggested moving the church from the military compound — where it was apparently poorly attended — to a nearby village to give local residents access to the church. In addition, Deputy Defense Minister Grigory Naginsky said the cause of the conflict was not the church per se but that several buildings had been constructed at the training center without the proper permits.

There is another interesting aspect of this story. The church incident started on Sept. 30, but it was not publicized on the Internet until Oct. 14. This means that the offended paratroopers endured the insult a full two weeks before raising an outcry. In addition to questioning Serdyukov’s religious values and his alleged desecration of the church, the petitioners complained that he appointed the “wrong person” as director of the training center, lowered the status of the center and gave insufficient attention to the museum of the paratroopers.

Behind all the commotion and burst of activity against Serdyukov is a new revolution that is brewing in the armed forces. For the first time, even the highest-ranking officers are being freed from the heavy burden of managing the expenditure of funds. From now on, unit and district commanders will not have to answer for the condition of the boiler plant or the canteen or for getting electricity to the troop compound. Now every manner of supplies, from boots to bullets will be supplied by civilian agencies. Military reformers want to put an end to the system in which troop commanders are more concerned about running their own private “profit centers” than building able, qualified soldiers who are combat-ready.

For decades, commanders have been forced into a corner. They have had to devote most of their time and energy to making repairs and improvements to their military bases without relying on government funding. The only way they could pull this off was by inventing a barter system that relied on their only commodity available — unpaid laborers in the form of conscripted soldiers — in return for building materials or other goods.

During the Soviet era, the Communist Party kept the practice of “slave labor” more or less under control. But in the 1990s, when the government had almost no money to maintain the gigantic military machine, military units were forced to scrape by on their own. As a result, brigade and deputy army commanders have become better con artists than military commanders. That is more their misfortune than their fault. Realizing this, the Defense Ministry is creating a special system for retraining senior officers.

But few commanders are inspired by the prospect of working night and day to improve the preparedness of the armed forces and implementing new methods for bringing troops into battle readiness, particularly when their units are underfunded. Many have come to rely on the money they earn under the table as their primary source of income. They perceive Defense Ministry innovations as a threat to those vested interests.

After the paratroopers created a scandal over the church, they showed that they weren’t shy about expressing their grievances. This proves that Serdyukov has his work cut out for him.

The paratroopers — true to their reputation as being avant-garde — delivered the first blow to Serdyukov’s reforms. There could be many more where that came from.

Alexander Golts is deputy editor of the online newspaper Yezhednevny Zhurnal.

Medvedev to chair presidential modernisation commission meeting

http://www.itar-tass.com/eng/level2.html?NewsID=15623059&PageNum=0

26.10.2010, 08.58

MOSCOW, October 26 (Itar-Tass) - Russian President Dmitry Medvedev will hold in Naberezhnye Chelny on Tuesday a meeting of the Commission for Modernisation and Technological Development of Russia’s Economy. It will also examine the organisational and technical issues of implementing energy efficiency projects.

Russian presidential aide Arkady Dvorkovich said on Monday that within the working trip Medvedev “will meet the management and workers of KAMAZ.”

“This time the commission’s meeting will focus on improving energy efficiency of Russia’s economy - more precisely, regional programmes to improve energy efficiency,” the official said. “The issues that are priorities are linked with the introduction of new systems for measuring the consumption of electricity and other energy in budget organisations, by legal entities and subsequently in the housing sector,” the RF president’s aide specified. “There are many technical and organisational aspects of this process and the further action.” “We will see where the losses are, where the main sources of inefficiency are, and projects that need to be implemented in the coming years will become obvious,” he noted. “Accordingly, the financing issues will arise and also who will be responsible for projects’ implementation,” he added.

Putin to chair conf on priority investment projects in Siberia

http://www.itar-tass.com/eng/level2.html?NewsID=15622724&PageNum=0

26.10.2010, 03.17

MOSCOW, October 26 (Itar-Tass) – Russia’s Prime Minister Vladimir Putin is expected to chair a conference on the implementation of priority investment projects in the Siberian Federal District, which the government endorsed in the format of a strategy of Siberia’s social and economic development through to 2020.

The strategy was made public April 9, 2010 at an inter-regional conference of the ruling United Russia party in Novosibirsk, the government press service said.

The purpose of the strategy is to meet, first of all, the practical needs of people living in the Siberian regions, to improve their quality of life, as well as to promote the comprehensive development of the Siberian Federal District, including infrastructure, energy and transport components.

Sources expect that the conference will highlight the projects like the construction of a railway line between Kyzyl, the administrative center of the Tyva region, and the town of Kuragino in the neighboring Krasnoyarsk territory.

WikiLeaks to publish classified documents from Russia, Chinahttp://english.ruvr.ru/2010/10/26/28470150.html

Oct 26, 2010 09:36 Moscow Time

The WikiLeaks website, which provoked a scandal by posting the Pentagon’s classified documents about US military action in Iraq and Afghanistan, says it will gather and make public documents from Russia, China and other countries. This came in a statement by the site founder’s assistant Kristinn Hrafnsson in an interview with the Russian Kommersant daily. He said the site management spent much time on preparing documents form Iraq and Afghanistan, adding that work would soon resume on information form other regions. At present the Russian part of the site features no important documents. The latest scandal around WikiLeaks was triggered by the publication of its Iraq war file offering shocking figures for civilian losses.

WikiLeaks to release secret Russia, China logs - paperhttp://en.rian.ru/russia/20101026/161087816.html

11:13 26/10/2010

Whistleblower website WikiLeaks, which has published hundreds of U.S. war logs, is preparing to release secret files from Russia and China, a Russian newspaper said on Tuesday.

"Russians are going to find out a lot of interesting facts about their country," WikiLeaks spokesman Kristinn Hrafnsson told Kommersant.

The main goal of the project was the "despotic regimes in China, Russia and Central Eurasia," WikiLeaks founder Julian Assange wrote to potential investors when he launched the website in 2006.

WikiLeaks published some 400,000 secret U.S. military files revealing the truth about the conflict in Iraq. The documents suggest U.S. forces turned a blind eye to evidence of torture by the Iraqi authorities. Other files reveal that the number of civilian casualties was far greater than Washington admitted.

General George Casey, who was in charge of U.S. forces in Iraq from 2004 to 2007, rebutted the allegations of torture.

MOSCOW, October 26 (RIA Novosti)

Russian, Montenegrin ministers to discuss situations in Balkans

http://www.itar-tass.com/eng/level2.html?NewsID=15622675&PageNum=0

26.10.2010, 01.43

MOSCOW, October 26 (Itar-Tass) – Russian Foreign Minister Sergei Lavrov is expected to receive his Montenegrin counterpart Milan Rocen at the Foreign Ministry’s house for official receptions Wednesday.

Rocen is visiting Moscow to attend the fourth session of the Russian-Montenegrin intergovernmental commission for cooperation in trade, economy, science, and technologies.

"The heads of both ministries will discuss the state of and prospects for the development of bilateral ties, which traditionally have friendly character," Foreign Ministry spokesman Andrei Nesterenko said.

"They will be also map out a schedule of joint activities in the light of the upcoming 300th anniversary since the establishment of political relations between the countries, due in 2011,” he indicated.

“The side plan signing a joint plan for consultations between the two ministries for the years 2011 and 2012,” Nesterenko said adding that Lavrov and Rocen are expected to hold an extensive review of an international agenda, which includes the situations in the Balkans.

Russia's FM to visit Poland on bilateral cooperationhttp://english.peopledaily.com.cn/90001/90777/90853/7177164.html

08:48, October 26, 2010Russian Foreign Minister Sergei Lavrov starting a two-day visit to Warsaw on Wednesday will take part, together with Polish Foreign Minister Radoslaw Sikorski, in the 6th meeting of the Committee for Polish-Russian Cooperation Strategy, local media reported Monday.

The Committee, to meet on Thursday, will focus its debates on Polish-Russian bilateral cooperation.

Rafal Sobczak of the Polish Foreign Ministry's press office told the PAP news agency that the committee will also refer to international politics, relations between Russia and the EU, as well as to possibilities of cooperation in respective fields, including the energy sector and foreign policy.

The two ministers will present, for the first time, diplomas for outstanding contribution to the deepening of mutual understanding and rapprochement of Polish and Russian societies.

The Committee for Polish-Russian Cooperation Strategy has been set up following the January 2002 visit to Poland by then Russian President Vladimir Putin. Its task is the arrangement of various aspects of cooperation before meetings of representatives of both countries' top authorities.

Source: Xinhua

Ten agts on Russia-Ukraine economic ties to be signed in Kiev

http://www.itar-tass.com/eng/level2.html?NewsID=15623167&PageNum=0

26.10.2010, 09.30

KIEV, October 26 (Itar-Tass) - Ukraine and Russia plan to sign ten documents at the seventh session of the intergovernmental commission for economic cooperation that will be held in Kiev on October 27 with participation of the two countries’ prime ministers – Vladimir Putin and Nikolai Azarov, Russia’s ambassador to Ukraine told reporters here on Tuesday.

“We expect that five interstate agreements and five commercial agreements will be signed,” Ambassador Mikhail Zurabov said. He added that at the present moment the foreign ministries of Ukraine and Russia specify details of the agreements.

Zurabov stressed that particular attention will be paid to energy cooperation. In particular, the sides will consider their relations in the gas sphere. It is also expected that Prime Minister Vladimir Putin will attend a cadete ball on October 27.

26.10.2010 10:39

Lytvyn to pay working visit to St. Petersburg on 27-28 October http://www.unian.net/eng/news/news-402819.html

Speaker of the Verkhovna Rada of Ukraine Volodymyr Lytvyn will pay a working visit to St. Petersburg on 27-28 October to participate in the measures of the Interparliamentary Assembly of the CIS Member States.

The press service of the Verkhovna Rada of Ukraine disclosed to UNIAN that Volodymyr Lytvyn will participate in the sitting of the IPA CIS Council and international interparliamentary conference, dedicated to the presidency of the Republic of Kazakhstan in OSCE.

In accordance with the program of visit, V. Lytvyn will meet with Sergey Mironov, Chairman of the Federation Council of the Federal Assembly of Russian Federation, Boris Gryzlov, Chairman of the State Duma of the Russian Federation, Ural Mukhamedzhanov, Chairman of the Majilis of the Parliament of the Republic of Kazakhstan and Sergey Antufiev, Governor of the Smolensk Oblast of the Russian Federation.

Naftogaz to take loan from Russian VTB Bank http://bsanna-news.ukrinform.ua/newsitem.php?id=14490&lang=en

KYIV, October 26. /UKRINFORM/. Ukraine's oil and gas monopoly, NJSC Naftogaz of Ukraine, announced plans to take a USD 180 million loan from one of Russia's largest banks, VTB Bank, Naftogaz said in a statement.

The company announced a tender (with the procedure of procurement from one participant) for services on providing credit recourses in the form of a credit facility with the debt limit of up to USD 180 million.

The offer price from VTB Bank, according to an announcement, is UAH 152.136 million.

In September, Naftogaz announced a tender to attract a credit facility from VTB Bank totaling USD 400 million.

In mid-October, NJSC Naftogaz of Ukraine said it was planning take a loan at more than UAH 1 billion (USD 1 - UAH 7.91) from the state-owned Ukrgasbank and Prominvestbank (PIB).

In September, Naftogaz borrowed USD 50 million from PIB.

In mid-September, Naftogaz CEO Yevhen Bakulin said all funds attracted by the company would be used to purchase natural gas with further pumping into underground storages.

Chinese to Lend $6Bln for Coal http://www.themoscowtimes.com/business/article/chinese-to-lend-6bln-for-coal/421062.html

26 October 2010By Olga Razumovskaya

The government will unveil coal deposits that Russian companies will develop using $6 billion in Chinese loans by the year's end, Deputy Energy Minister Anatoly Yanovsky said Monday.

The deposits may include assets owned by Sakhalinugol on Sakhalin Island and the Elegest coal field in eastern Siberia, Yanovsky said on the sidelines of the annual International Energy Week conference.

The announcement comes as Russia and China have stepped up cooperation in developing trade in oil and gas. Russian oil is scheduled to start flowing across the Chinese border in a new pipeline in January, and the governments expect an agreement on gas sales by July so they can start building another pipeline.

Yanovsky said it was for the Russian companies and Chinese banks to negotiate the coal deposits and was not for the Energy Ministry to decide. He didn't name the companies that were in talks.

Russian coal producers will use the Chinese loans to finance investments in return for a guarantee to increase supplies to China, where demand is rising for coal used in making steel and fueling 80 percent of its power plants.

Federation Council member and businessman Sergei Pugachyov's United Industrial Corporation has the permit to the Elegest coal field with reserves of 946 million metric tons of coal. In early September, the company hired Credit Suisse Group to privately place 75 percent of its shares.

Another major player, Mechel, obtained local financing to develop coal deposits and won’t use Chinese money, Yanovsky said, Bloomberg reported. The company is currently developing the Elga mining project in eastern Siberia.

Nikolai Sosnovsky, a metals and mining analyst at UralSib Capital, said Evraz and Severstal might be vying to develop coal deposits if those sites held metallurgical coal.

He suggested that perhaps the government has to offer licenses in Tuva, where potential is high to discover coal reserves.

The loan is aimed at Russian — not Chinese — coal producers, in a diversion from China's traditional policy of giving loans to its own.

China, the world's biggest coal consumer, plans to increase its annual coal imports from Russia to 15 million tons in the next five years and raise that to at least 20 million tons in 20 years, according to the statement posted on the Russian Industry and Trade Ministry last month.

China presents itself as an increasingly attractive market for oil, gas and mining companies, especially after demand for fossil fuel on the European market decreased.

Gazprom appears to be moving forward in its bid to gain a larger footprint on the Chinese market, where it has been selling only scant shipments of liquefied natural gas from its Sakhalin project.

China is at the top of the strategic partners list in Asia for the company, Stanislav Tsygankov, Gazprom's head of international business, said during the conference.

“Today the European market is not the only market for us,” Tsygankov said.

Russia expects to sign a gas supplies agreement with China in 2011 and will be ready to begin deliveries in 2015, Tsygankov said.

China's yearly demand for gas in 2020 will be about 300 billion cubic meters, Tsygankov estimated. China now produces 80 bcm of gas domestically.

As for the traditional market — Europe — Gazprom is optimistic. According to the company's forecasts, Europe's interest in gas imports will gradually increase to the mark of 380 bcm by 2020 and 440 bcm by 2030, he said.

Chinese cash to power Russian coal

http://www.businessneweurope.eu/dispatch_text13308

bneOctober 26, 2010

Just as it is building pipelines to carry Russian oil and gas to its rapidly expanding economy, Chinese cash is ready to help Russian companies develop coal deposits in the east of the country in order to export it south, reports The Moscow Times.

Speaking at the International Energy Week conference yesterday, Deputy Energy Minister Anatoly Yanovsky said that by the year's end the government will unveil coal deposits that will be developed using $6bn in Chinese loans.

Russian coal producers will use the cash to finance investments, in return for a guarantee to increase supplies to China, where demand is rising for coal used in making steel and fueling 80% of the country's power plants.

The deposits may include assets owned by Sakhalinugol on Sakhalin Island and the Elegest coal field in eastern Siberia, Yanovsky said. He added that it is for the Russian companies and Chinese banks to negotiate individual deals, and claimed that it's not for the Energy Ministry to make decisions. He declined to name the companies in talks with the Chinese.

The announcement comes as Russia and China have stepped up cooperation in developing trade in oil and gas. Russian oil is scheduled to start flowing across the Chinese border in a new pipeline in January, and the governments expect an agreement on gas sales by July so they can start building another pipeline.

That the loans are aimed at Russian, not Chinese, coal producers, is a diversion from China's traditional policy of giving loans to its own, but this reflects deals in oil and gas over the past few years.

With China's economy so thirsty for energy, it is constantly looking to both expand and

diversify its energy supplies. It is about to reap some of the benefits of its Russian cooperation, with Transneft and Rosneft - who were handed tens of billions of dollars worth of loans - about to start delivering 15m tonnes of oil per year through the Chinese spur of the ESPO pipeline.

Russia also hopes that Bejing will agree to fund the Altai gas pipeline, which carry gas from Western Siberia, as the pair draw closer to finally agreeing on gas deliveries after years of disagreement over prices. China has successfully plugged itself into Central Asian hydrocarbons producers in the meantime, as well as seeing imports from the Middle East, Australia and South America boom.

Now the world's biggest coal consumer hopes to increase annual coal imports from Russia to 15m tonnes in the next five years, and raise that to at least 20m tonnes within the next 20 years, according to a statement from the Russian Industry and Trade Ministry last month.

October 26, 2010 11:19

Russian, Sudanese officials to meet in Decemberhttp://www.interfax.com/newsinf.asp?id=197852

MOSCOW. Oct 26 (Interfax) - Russian presidential representative on Sudan Mikhail Margelov intends to meet with Sudanese top officials during a visit to Sudan in December.

"During this visit, I will meet with representatives of the Sudanese government and will continue discussing the issues raised by the Russian president and the president of Sudan," Margelov told Interfax.

Margelov said Russian President Dmitry Medvedev and his Sudanese counterpart Omar Bashir have recently had a phone conversation.

"The Russian leader emphasized the main areas of the efforts taken by the international community in Sudan, which should be unbiased and should be carried out in constructive cooperation with Khartoum. The Sudanese leaders agree with that and highly appreciate Russia's contribution to the solution of difficult problems," Margelov said.

Margelov said Russian-Sudanese relations are developing in different areas, pointing out the high potential of the trade and economic relations between the two countries.

"At the same time, Russia and some other countries are actively participating in the resolution of the lengthy conflict in Sudan. The main task of the mediators is to promote the fulfillment of the agreements between the parties to the conflict in Sudan on the comprehensive peace settlement," he said.

Among these agreements Margelov mentioned the recent elections, which went satisfactorily given the current situation in Sudan, adding that the next step is a referendum on the self-determination of the southern part of the country.

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Russian and Sudanese presidents discuss referendum, bilateral relations http://www.sudantribune.com/spip.php?article36725

Tuesday 26 October 2010

October 25, 2010 (KHARTOUM) — Russia has showed today its interest to play a role in the resolution of the outstanding issues between the two Sudanese peace partners and organize a peaceful referendum that might affect the regional stability. Russian President Dmitry Medvedev discussed Monday in a telephone conversation with his Sudanese counterpart Omer Al-Bashir the ongoing efforts to settle the row between the National Congress Party and the Sudan people’s Liberation Movement.

President Al-Bashir briefed Medvedev on the preparations to hold the southern Sudan referendum and stressed Khartoum commitment to hold it as scheduled next January.

For his part, Medvedev reaffirmed Russia readiness to continue its active efforts in cooperation with the international community to facilitate it. He further stressed that these efforts should be "unbiased and balanced, in order to facilitate constructive interaction with Khartoum", the Kremlin said in a press statement.

The official SUNA in Khartoum said the Russian President called to write off Sudan’s debit.

Sudan demands to cancel its debit as this issue is one of the outstanding issues the two partners of the Comprehensive Peace Agreement failed to settle.

The two presidents also agreed to develop trade and economic relations between the two countries. Medvedev further pledged to increase Russian investments in agriculture, mining and oil.

The Russian special envoy to Sudan, Mikhail Margelov, will visit Sudan next December to follow up the implementation of the issue discussed today by the two presents.

(ST)

Russian, Sudanese leaders discuss referendum in Sudan

http://www.focus-fen.net/index.php?id=n233567

26 October 2010 | 02:25 | FOCUS News AgencyHome / WorldMoscow. Russian President Dmitry Medvedev on Monday discussed by phone with his Sudanese counterpart Omar al- Bashir the normalization of situation in this African country, Xinhua informed.The Sudanese president gave a high remark to Russia's efforts on finding a solution to the situation, said a statement published on the Kremlin website.In Jan. 2011, a referendum was planned in Sudan which would decide ways of further development for this divided nation.Medvedev reiterated Russia's readiness to keep working on the Sudanese issue "within the international community efforts, which should be unbiased and balanced, in order to facilitate constructive interaction with Khartoum," said the statement.The Russian president noted that the referendum would meet real interests of both Sudan and the entire region, while voicing support for al-Bashir's position on timely conducting of the poll.The two leaders also discussed trade and economic cooperation between Moscow and Khartoum during the conversation.A referendum on self-determination for southern Sudan was expected to be held on Jan. 9, 2011 to decide whether the region should remain united with north Sudan or secede and establish an independent state.

Telephone conversation with President of Sudan Omar Bashirhttp://eng.kremlin.ru/news/1192

October 25, 2010, 17:00

Dmitry Medvedev and Omar Bashir discussed reconciliation in Sudan on the eve of a historically important stage in the nation’s development – Southern Sudan’s referendum on independence, scheduled for early January 2011.

The President of Sudan gave a positive assessment of Russia’s efforts to promote finding a resolution to existing problems.

In turn, Dmitry Medvedev emphasised Russia’s readiness to continue working actively with Sudan within the framework of the international community’s efforts, which must be impartial, well-balanced, and based on constructive cooperation with Khartoum. At the same time, Mr Medvedev noted that timely elections serve the long-term interests of Sudan and the entire region, and in this regard, supported Omar Bashir’s repeated statements about holding the referendum as scheduled.

During the conversation, the presidents expressed their support for strengthening trade and economic ties between their nations and discussed specific areas for this kind of cooperation.

October 25, 2010, 17:00

Ethiopia praises Russia role in region, relations - MFA http://jimmatimes.com/article/Latest_News/Latest_News/Ethiopia_praises_Russia_role_in_region_relations_MFA/33811

Published 10/26/2010 - 12:50 a.m. GMT

SOURCE: Federal Democratic Republic of Ethiopia Ministry of Foreign Affairs

"Core principles of Ethiopia’s Foreign Policy: Ethiopia-Russia relations"

Ethiopia and Russia have longstanding historical relations going back to the period of the Russian Czar Machilovich, the father of Peter the Great, in the 17th century. It is also recorded that Alexander Pushkin, a renowned Russian writer, was a grandson of Abraham Hannibal,an Ethiopian who lived in Russia. Other early contacts between Russia and Ethiopia include the visit of an Ethiopian delegation sent by the Emperor Menilek II to Russia, and visits of several Russians to Ethiopia during Menilek’s reign, at least one of whom was given the title of Dejazmatch for his travels on behalf of the Emperor along Ethiopia’s southern boundaries. These contacts laid the foundation for the close relations of the two countries, based on mutual respect and friendship between the two peoples. And it is notable that regardless of the differing political systems that existed at various times, relations between them have continued close and friendly.

One demonstration of that friendship has been that Russia has always, and without fail, stood with Ethiopia whenever the sovereignty of Ethiopia was threatened. Russian solidarity with Ethiopia was first illustrated when the Russian Red Cross Society came to Ethiopia in 1896, at the time of the Battle of Adwa when Italy attempted to attack the country. It made an outstanding contribution in provision of medical supplies and care to the Ethiopian patriots on the battlefield and subsequently. Again, during the fascist invasion of Ethiopia in 1936, Russia was one of those countries which stood in solidarity with Ethiopia. It has done so on every occasion throughout the 20th century whenever Ethiopia faced challenges to its sovereignty and its core national security interests. In short, the bonds that exist between Ethiopia and Russia have stood the test of time and proven their strength time and again.

The most important historical landmarks of Ethio-Russia historical relations visible in Addis Ababa are the large plot of land granted for the construction of a Russian mission after the Battle of Adwa, where the Russian Embassy is still located, and the establishment of the Russian Hospital, now the Balcha Memorial Hospital. Diplomatic relations between Ethiopia and Russia were upgraded to Embassy level when both countries opened their respective embassies in Addis Ababa and Moscow in 1956. While relations between Ethiopia and Russia continued throughout the Imperial era, they were

much closer during the Marxist, military regime of the Derg when both counties belonged to same ideological camp. With the change of government in Ethiopia and the collapse of the Soviet Union, relations were placed on a different footing, but they remained warm and friendly. In recent years, there have been increased exchanges of visits of high level officials between the two countries. Major visits have included Prime Minister Meles’s trip to Moscow in December 2001 and Foreign Minister Seyoum in November 2007; former Russian Prime Minister, Mikhail Kasyanov came to Ethiopia in September 2002; and Russian Foreign Minister Sergey Lavrov came here in September 2006.

In order to strengthen their economic ties further, the two countries established a Joint Commission on Economic, Scientific, Trade and Technical Cooperation in 1999. The Commission held its first meeting in Moscow; and the second in 2002 in Addis Ababa. The third, in February 2008, was in Moscow and the fourth will take place in Addis Ababa at the end of this year. The main areas of cooperation covered under the Joint Commission include energy, mining, transport, agriculture, education, health, tourism and telecommunications. Although these meetings have taken place at both expert and ministerial levels, the results have not been as extensive as hoped. There is also considerable potential for enhanced trade and investment. Three major agreements, on Economic, Scientific and Technical Cooperation, Avoidance of Double Taxation, and Promotion and Reciprocal Protection of Investment have been signed.

The major commodities Ethiopia exports to Russia include coffee, leather and leather products, and flowers. It imports industrial products, machinery, chemicals, and other capital goods from Russia. The trade balance favors Russia and the total trade volume of the two countries was nearly 2 billion birr in 2009. Currently, there are 23 investment projects registered in Ethiopia by Russian investors; 21 are in the pre-implementation stage, while two are under implementation. Total Russian investment in Ethiopia amounts to just over a billion birr as of August last year. Measures to expedite Russia’s ratification of the agreements on Avoidance of Double Taxation and Promotion and Reciprocal Protection of Investment would help to further improve trade and investment relations. The priority areas of interest for Russian companies in Ethiopia include mining and mineral resources, oil and gas, gold, tantalum, heavy metals and platinum exploration as well as hydro and geothermal power generation. Russian companies have preferred to acquire mineral concessions rather than participating in international tenders. Given the long-standing relationship, and the priority that the RUS-AID program gives to ex-socialist countries, it is expected Ethiopia will be one of the priority countries for Russian development cooperation. The fight against terrorism is another area where the two countries do cooperate, and in this connection, Ethiopia is very appreciative of the highly effective cooperation in security areas which exists between the two countries. Equally, with the centuries of relationship, there is a lot more that can be done to further enhance our ties while fraternal relations between our two peoples continue to be anchored on a firm basis.

In the light of Russia’s historic interests in Africa, and its position in the UN Security Council, Ethiopia expects Russia to play an active role in issues relating to Africa in general and the Horn of Africa in particular. Indeed, Russian support for the Security

Council sanctions imposed on Eritrea last December was decisive. It is in fact appropriate to express appreciation for Russia’s interest in the Horn of Africa. The appointment of a Special Envoy to Sudan also demonstrates the level of attention Russia has given to the sub-region, and there is no doubt that Russia could play a significant role in providing peace and stability in Somalia as well as Sudan.

Print Date : Tuesday, October 26, 2010

Tehran, Russia at odds over Iran’s nuclear program: ambassador

http://www.tehrantimes.com/index_View.asp?code=229271

Tehran Times Political Desk

TEHRAN – Tehran’s ambassador to Moscow Reza Sajjadi has said Tehran and Moscow have serious disagreements over Iran’s nuclear issue.

“Our approach and Russia’s toward this issue are completely two different approaches,” Sajjadi told ISNA news agency in an interview published on Monday.

Unfortunately, Russia has made a big mistake concerning Iran’s nuclear issue because it was influenced by West’s propaganda, he noted.

Russia was made to believe that there is no peaceful purpose behind Iran’s nuclear program and that is why it has distanced itself from the Islamic Republic, Iran’s top diplomat in Moscow stated.

Sajjadi went on to say that Iran and Russia have many commonalities and it is not prudent for Russia to distance itself from Iran.

Today Iran is helping to prevent the spread of terrorism in the Caucasus region as well as smuggling drugs to Russia, the diplomat added.

Asked about the Russian president’s recent remarks that Moscow is interested to expand ties with Europe and the U.S., he said Russia is concerned about the future of its economy.

Moscow believes that if it cannot improve its economy, it will face serious security problems to the extent that Russia will disintegrate into more separate republics, Sajjadi added.

The ambassador said Russia has been infused with the idea that it has no choice to develop its economy other than reinforcing its relationship with the West

Iran set to load fuel in Bushehr nuclear reactorhttp://en.rian.ru/world/20101026/161085500.html

05:00 26/10/2010

Iran will start on Tuesday injecting fuel into the core of its first nuclear reactor at the Bushehr nuclear power plant, the local media said citing a senior Iranian lawmaker.

"The Bushehr [nuclear] power plant's fuel will be transferred to the core of the reactor tomorrow [on Tuesday]," Press TV quoted Alaeddin Boroujerdi, the head of the National Security and Foreign Policy Commission of the Iranian Parliament, as saying on Monday.

"Despite policies which the U.S. and certain European countries have adapted to impose sanctions against the Islamic Republic of Iran, we have been able to continue our development policies," the Iranian lawmaker said.

The Bushehr NPP in southern Iran was launched in August with the Russian assistance after decades of construction delays.

Under a bilateral agreement, which has received IAEA approval, Russia will initially operate the plant, supplying its fuel and taking away all the spent fuel for the next two or three years, but will eventually hand over full control to Iran.

Iran remains a target of criticism and sanctions over its controversial nuclear program, which the West claims could be an attempt to build a nuclear weapon.

However, as a member of the International Atomic Energy Agency and a signatory to the Nuclear Non-Proliferation Treaty, Tehran insists its nuclear program is aimed at electricity generation and medical research.

The UN Security Council has approved four rounds of sanctions against Iran over its nuclear program, including tougher financial controls and an expanded arms embargo, as well as an asset ban on three dozen companies and a travel freeze on individuals.

The Bushehr project does not fall under these sanctions.

MOSCOW, October 26 (RIA Novosti)

Fisheries Cooperation With Russia http://www.zawya.com/Story.cfm/sidZAWYA20101026044109/Iran%20Fisheries%20Cooperation%20With%20Russia

26 October 2010The Islamic Republic of Iran and Russia signed an agreement to expand cooperation in protection of fish species in the Caspian Sea.

The agreement was signed at the 6th meeting of Iran-Russia joint fisheries commission held this week in Tehran, Moj News Agency reported.

The two sides will cooperate in researches on Caspian Sea contaminators, fight against illegal fishing of sturgeons, facilitating aquatics imports and exports to and from the two countries, holding annual technical-scientific bilateral meetings on aquaculture and reviving aquatics resources in the Caspian Sea, and transfering know-how on sturgeon cultivation.

Russia will attend a meeting on Caspian Sea living resources on November 2-3, in Tehran. The meeting is aimed at expansion of regional cooperation in fighting against Red Tide in the Caspian Sea.

Russian side also should attend the commission's meeting on distribution of sturgeon exports quota to be held in Tehran on December 18-19, 2010.

Last week, Iranian Deputy Foreign Minister Amir Borqei said at a press conference in Astana that Iran could exchange its remarkable experiences in preserving sturgeon species with the Caspian Sea littoral states,

Iran has great experience in preserving sturgeon species and currently the work is being conducted to restore their population in the Caspian Sea, Borqei said.

"We have adopted a law to preserve sturgeon species. According to it, a six-month ban is imposed on fishing sturgeon", Trend News Agency quoted him as saying.

It should be noted that the sturgeon spawning occurs in the south of Caspian Sea, where people breed this fish.

Iran is making a great contribution to preserve ecology of the Caspian Sea, as a lot of rivers with clear mountain water run in it, he said.

There are no large industrial enterprises in the Caspian provinces of Iran, which would contaminate this part of the sea.

This is important given that sturgeon comes from the north to the south of the Caspian Sea.

According to the head of Iran's Fisheries Organization, Aminollah Taqavi Motlaq, Iran's sturgeon export quota in 2010 accounts for 45.01 percent of the five Caspian Sea littoral states' total quota and the country will export 38.744 tons of the sea food in the current year.

Iran has decided to decrease its quota by 8 percent, he added. Export quota is a restriction imposed by a government on the amount or number of goods or services that may be exported within a given period, usually with the intent of keeping prices of those goods or services low for domestic users.

© Iran Daily 2010

Israel, Russia prioritize economic cooperation - Israeli ambassadorhttp://en.rian.ru/world/20101026/161086379.html

07:02 26/10/2010

Israel and Russia give priority to the development of economic ties in their bilateral relations, the new Israeli ambassador to Russia said.

"The priorities are quite obvious and they mostly concern the development of economic cooperation," Dorit Golender said in an interview with Russia's Kommersant daily published on Tuesday.

According to the Israeli diplomat, bilateral trade in 2010 rose 70 percent year-on-year.

"We are primarily interested in natural resources, which we do not have," Golender said. "For instance, we buy diamonds from Russia and use the Russian technology to process them."

The Israeli ambassador also praised a 45-percent increase in the number of Russian tourists visiting Israel. About 380,000 Russians traveled to Israel in January-September 2010.

"I think it is a colossal achievement," she said.

Golender is a former journalist with more than 40 years of experience. She succeeded Ambassador Anna Azari, who worked in Russia for four years and went home on September 14.

MOSCOW, October 26 (RIA Novosti)

Medvedev submits Russian-French agreement for ratificationhttp://english.ruvr.ru/2010/10/26/28470798.html

Oct 26, 2010 09:41 Moscow Time

Russian President Dmitry Medvedev has submitted the Russian-French intergovernmental agreement on air cargo transit to Afghanistan to the State Duma for ratification. The news was posted Monday on the electronic database of the Russian Parliament’s lower house. Russia has signed similar agreements on cargo transit to Afghanistan with Germany and Spain.  

Medvedev submits agt with on military transit to Afghanistan for ratification

http://www.itar-tass.com/eng/level2.html?NewsID=15623308&PageNum=0

25.10.2010, 23.32

MOSCOW, October 25 (Itar-Tass) -- President Dmitry Medvedev has submitted to the State Duma the agreement with France on military air transit to Afghanistan for ratification.

The agreement creates a legal framework for air transit of French arms, military hardware and supplies, as well as troops and civilian personnel trough Russia’s airspace for participation in ISAF operations in Afghanistan.

Russia has similar agreements with Germany and Spain.

In July, chief of the Russian Army General Staff, General of the Army Nikolai Makarov said Russia would provide for the transit of military cargoes to the coalition force in Afghanistan.

Italy to get back 121 perished in WWII from Russiahttp://english.ruvr.ru/2010/10/26/28466189.html

Oct 26, 2010 02:50 Moscow Time

Tchkalovsky military airfield near Moscow will receive an Italian delegation on Tuesday.

It will collect and bring home the remains of 121 Italian soldiers who perished on the territory of the Soviet Union during WWII.

Six of the soldiers were identified.

Their families were informed of the findings.

Such ceremonies have been held in Russia since 1991.

Over the years, Italy acquired the remains of as many as 10542 soldiers 2799 of which were identified.

France ready to deliver helicopter carrier with transfer of technologieshttp://en.rian.ru/mlitary_news/20101026/161086955.html

09:29 26/10/2010

France's shipbuilder DCNS announced on Tuesday it is ready to deliver Mistral class helicopter carriers to Russia with built-in domestic navigation technologies.

"There are no restrictions [in the transfer of technology]," DCNS Director Pierre Legros told RIA Novosti.

The technology is French-made, a spokesman for the French Navy, Hugues du Plessis d'Argentre, said.

Russia and France are currently in talks on a so-called 2+2 scheme, whereby Russia will buy one or two French-built Mistrals and build another two at home. The contract is expected to be inked before the end of the year.

Legros said he did not rule out that Russia could build four Mistrals.

He added that the French-built Mistrals under the contract will be different from their domestic analogues.

They will have thicker take-off decks and firmer hulls so as to avoid breakage when navigating through ice.

The winner of a tender to deliver the Mistrals, which was called by Russia earlier this month, will be announced after November 4, Legros added.

"We are ready to receive the contract from November 4... and complete construction in 36 months," he said.

The Mistral class ship is capable of transporting and deploying 16 helicopters, four landing barges, up to 70 armored vehicles including 13 battle tanks, and 450 personnel.

LE BOURGET (France), October 26 (RIA Novosti)

Russia to announce helicopter carrier tender at Euronaval 2010http://en.rian.ru/mlitary_news/20101026/161085042.html

02:56 26/10/2010

Russia could announce a tender on the construction of two amphibious assault ships for the Russian Navy at the Euronaval 2010 exhibition, which opened on Monday in Paris, the Vedomosti daily said.

Vedomosti said citing Russian defense sources that invitations to participate in a closed tender had been sent out to "all interested parties" and the winner of the tender could be announced as early as by the end of this year.

According to the Vedomosti sources, the participants of the tender include Russia's United Shipbuilding Corporation in partnership with the French DCNS (Mistral class ship), the Nevski design bureau in St. Petersburg (Ivan Rogov class ship), S. Korea's STX company (Dokdo class ship), and Spain's Navantia company (Juan Carlos I class ship).

Experts believe that a French Mistral class amphibious assault ship is most likely to win the tender.

Moscow has been in talks with Paris on the purchase of a Mistral class warship on a 2+2 scheme whereby Russia will buy one or two French-built Mistrals and build another two under license domestically.

The two Mistrals built in France could cost Russia as much as 1 billion euros ($1.4 bln).

The Mistral class ship is capable of transporting and deploying 16 helicopters, four landing barges, up to 70 armored vehicles including 13 battle tanks, and 450 personnel.

The 22nd International Naval Defense & Maritime Exhibition and Conference (Euronaval 2010) is held at the Paris-Le-Bourget exhibition center on October 25-29.

MOSCOW, October 26 (RIA Novosi)

Russian space freighter departs ISS on scientific missionhttp://en.rian.ru/russia/20101026/161084447.html

00:34 26/10/2010

Russia's Progress M-05M cargo spacecraft was undocked from the International Space Station (ISS) on Monday to begin an independent scientific mission until November 15, a Mission Control spokesman said.

"The space freighter will continue an autonomous flight as a scientific laboratory until November 15 when it will be deorbited and 'buried' in a remote area in the southern Pacific," the official said.

The undocking of Progress M-05M clears the way for the launch of the Progress M-08M spacecraft on October 27 from the Baikonur space center in Kazakhstan.

On October 30, Progress M-08M is expected to dock with the Pirs docking module vacated by Progress M-05M.

Progress-family freighters have been the backbone of the Russian space cargo fleet for decades. In addition to their main mission as cargo spacecraft, they are used to adjust the ISS's orbit and conduct scientific experiments.

MOSCOW, October 26 (RIA Novosti)

Fragment of space garbage approaching ISS

http://www.itar-tass.com/eng/level2.html?NewsID=15623356

26.10.2010, 10.37

MOSCOW, October 26 (Itar-Tass) - A fragment of space garbage is approaching the International Space Station, and this, according to NASA specialists, may pose danger to the station and its crew.

“If specialists of the Russian Mission Control Centre (MCC) decide that the approaching has become dangerous, they will make an emergency correction of the ISS orbit,” centre’s spokesman Valery Lyndin told Tass on Tuesday. “The approach is called dangerous, if the possibility of a collision is 0.001 percent,” he added.

Although this percentage is very small, the ISS orbit will be corrected to avoid the dangerous object in order to ensure the safety of the station and the crew.

The decision on that will be made at about noon. In case it is necessary, MCC specialists will correct the orbit at about 14:25, Moscow time, on Tuesday.

Norway’s coast guard detains fish transport ship with Russian crewhttp://english.ruvr.ru/2010/10/26/28469703.html

Oct 26, 2010 09:26 Moscow Time

Norway’s coast guard has detained the Atlantic Lady fish transport ship with a Russian crew on board. On Monday the ship was taken to the Spitsbergen port of Longyear. The vessel is registered in the Central American state Belize, but the crew is all-Russian and the vessel was bound for Arkhangelsk. This came in a statement on Monday by an assistant to the Spitsbergen Governor Lars Fause. According to the official, the amount of fish on board was weighed after, rather than prior to splitting. It will most likely be unknown until Wednesday whether the Atlantic Lady has or has not violated the Norwegian law.    

Norwegian Coast Guard detains cargo ship with Russian crew

http://www.itar-tass.com/eng/level2.html?NewsID=15622809&PageNum=0

26.10.2010, 06.01

OSLO, October 26 (Itar-Tass) – Fish transport ship The Atlantic Lady was detained over the weekend by the Norwegian Coast Guard on suspicion of encroachments on the requirements for reporting.

Monday, the Coast Guard ship Barentshav convoyed The Atlantic Lady to the port of Longyearbyen on Svalbard.

The detained ship is registered in the Central American state of Belize but it has an all-Russian crew. At the time of detention, it was bound for the northern Russian port of Arkhangelsk, Svalbard governor’s aide Lars Fause said.

He indicated that most of the sea products in The Atlantic Lady’s holds were registered after fish splitting rather than prior to it as required, and according to the Norwegian side this means that the real weight of the catch has been understated by a few tons.

Fause said the ship’s captain has already been interrogated and the inspection will now embrace the trawlers that delivered fish to The Atlantic Lady for further transportation to Arkhangelsk.

Partnership With Iceland in the Works http://www.themoscowtimes.com/business/article/partnership-with-iceland-in-the-works/421076.html

26 October 2010By Irina Filatova

Russia plans to use Iceland’s experience to develop its market for renewable energy sources, Energy Minister Sergei Shmatko said Monday.

An agreement may be signed with the Icelandic government to cooperate in the field of geothermal energy, he told Prime Minister Vladimir Putin at the Presidium meeting.

Shmatko said Iceland, which is a world leader in renewable energy, considers partnering with Russia a priority, and that the sides were discussing construction of a new geothermal power station in Russia.

He also said geothermal energy was one of the most promising renewable energy sources, with RusHydro, the country’s largest renewable energy producer, already operating several geothermal power stations.

RusHydro currently operates two geothermal power plants on Kamchatka, with an overall capacity of 62 megawatts. Last month the company signed agreements to supply energy produced by one of the plants to mining operations in the region, it said in a statement.

“Geothermal energy is not very popular in Russia, taking into account it's geographically specific,” said UralSib analyst Alexander Seleznyov. He added that Iceland was likely to share technological developments in geothermal energy with Russia.

Shmatko reiterated the government’s plan to have 4.5 percent of energy produced in Russia by 2020 come from renewable resources.

He also said the government was discussing with Iceland the construction of an energy-efficient metallurgical plant on Kamchatka.

He didn’t specify when any of the agreements with Iceland might be signed.

“We are inspired,” Shmatko said, when asked by Putin whether he saw any prospects in this partnership.

“Good man,” Putin said, smiling.

Kamchatka is rich in nonferrous metal ores, silver, nickel, copper and platinum, and has good potential for metals production, said Andrei Tretelnikov, a metals and mining analyst at Rye, Man & Gor Securities. Gold, titanium and magnesium are also mined there, he said.

“So it makes sense to build a metallurgical plant in the region — from a logistics point of view,” he said.

Police defuse bomb in Chechen capitalhttp://en.rian.ru/russia/20101026/161087068.html

09:48 26/10/2010

Police defused a hand-made explosive device outside a concert hall in the Chechen capital of Grozny on Tuesday.

It contained 6 kg of TNT, chipped iron rods, screws and a Nokia cell phone for shrapnel, a police spokesman said.

The area around the concert hall has been targeted before. In June, a suicide bomber blew himself up in the parking lot, injuring five police officers and two passers-by.

Terrorist attacks and shootouts with police are common in Russia's troubled North Caucasus republics, especially in Dagestan and neighboring Chechnya and Ingushetia.

The Kremlin has vowed to clamp down on militant groups while stepping up efforts to boost the local economy.

MOSCOW, October 26 (RIA Novosti)

Powerful explosive device found in Grozny

http://www.itar-tass.com/eng/level2.html?NewsID=15623245

26.10.2010, 10.01

GROZNY, October 26 (Itar-Tass) -- A powerful explosive device was rendered harmless in Grozny, ITAR-TASS learnt the law enforcement bodies of Chechnya on Tuesday. It was found in Dagestan Street in the city’s Lenin district, 70 meters away from the State Theatre and Concert Hall.

“The explosive device was placed in a metal box and consisted of a plastic canister filled with six kilograms of TNT and pieces of steel wire, bolts and nuts,” a law enforcer said.

Suppers of the Federal Security Service Department destroyed in a safe place.

26 October 2010, 10:01

Bomb-like object discovered near mosque in Dagestanhttp://www.interfax-religion.com/?act=news&div=7845

Makhachkala, October 26, Interfax - An object which appears to resemble a bomb has been discovered on Monday near a mosque in Makhachkala in the Russian republic of Dagestan, police told Interfax.

"A box with wires attached has been discovered by a sniffer dog. Bomb experts are working at the scene. The area has been cordoned off," a spokesman said.

The homemade bomb was equivalent to 1.5 kilograms of TNT. It was rendered safe with the help of a hydrodynamic destroyer.

Moscow remembering victims of Oct 2002 theater hostage taking

http://www.itar-tass.com/eng/level2.html?NewsID=15622638&PageNum=0

26.10.2010, 00.57

MOSCOW, October 26 (Itar-Tass) – Tuesday, October 26 is an annual day of remembrance of the victims of a major terrorist act, in which a group of international terrorists took hostage almost a thousand people inside a Moscow theater and kept them virtually locked in their chairs for more than 60 hours.

A group of camouflaged men and women appeared on the stage of the Dubrovka theatrical center in downtown Moscow shortly after the beginning of the second act of the highly popular musical Nord-Ost. They made several shots in the air from submachine-guns, shouting: “Don’t you understand? That’s for real!”

The tragic day was Wednesday, October 23, 2002. The hostage-takers warned that the building had been heavily mined and that they would blow it up at the first signs of an attempt to free the hostages through the use of force.

The drama lasted through to the early morning of Saturday, October 26, when the Russian crack troops and riot police stormed the building after a knotty preparatory operation, which involved, among other things, making a hole in the wall of the ventilation shaft and pumping a potent gaseous anesthetic agent, phentanyl, into the theater’s ventilation system.

The spectators, actors and technical personnel servicing the Nord-Ost show were freed but 130 people lost their lives.

Heat, smoke sent Russia deaths soaring in 2010 – govthttp://in.reuters.com/article/idINIndia-52438220101025

12:47am IST

By Steve Gutterman

MOSCOW (Reuters) - A heat wave that fanned wildfires and blanketed Moscow with acrid smoke pushed up the number of deaths in Russia by nearly a fifth in July and August this year, according to a government report issued on Monday.

Nearly 56,000 more people died nationwide this summer than in the same period last year, said a monthly Economic Development Ministry report on Russia's economy.

"In connection with the unusual heat, forest fires and smoke, in July of this year 14,500 and in August 41,300 more people died than during the same period last year," a section of the report on demographics said.

Deaths from digestive and circulatory system diseases as well as from cancer had increased, according to the report.

Moscow and much of western Russia saw temperatures at nearly 40 degrees Celsius (104 degrees Fahrenheit). Forest fires spread fast in late July and peat fires covered the capital with smoke.

About 374,000 Russians died in July and August this year, up 17.5 percent from 2009, the report said. In August 2010 alone, about 192,000 died, up more than 27 percent from August 2009.

In August, Moscow's health department chief said deaths had nearly doubled in the city to about 700 a day.

There were fewer than 60 official deaths nationwide from the wildfires themselves.

Kremlin critics said legislation approved by Prime Minister Vladimir Putin during his 2000-2008 presidency gutted Russia's forest management system and slowed the response to the fires.

But Putin and President Dmitry Medvedev, have suffered little political fallout from the wildfires. Opinion polls have shown no significant dip in their approval ratings.

This summer's deaths contributed to a decline in population in the first eight months of 2010 which, despite the arrival of nearly 111,000 migrants, fell by 87,400 people to 141.8 million as of Sept. 1, the report said.

Putin and Medvedev have sought to reverse a persistent post-Soviet population decline, praising parenthood and providing subsidies for families with more than one child.

Russian census held in strict compliance with schedule

http://www.itar-tass.com/eng/level2.html?NewsID=15623307&PageNum=0

25.10.2010, 23.51

MOSCOW, October 25 (Itar-Tass) -- A population census ended in Russia on Monday, October 25.

The last of the 458,500 census stations closed at 22:00 Moscow time. Almost half a million people engaged by the State Statistics Agency (Rosstat) as census takers will return their bags, but will be allowed to keep the scarves, whistles and flashlights, the census press centre said.

The main phase of the census was held on October 14-25. “The census was conducted in strict compliance with the schedule,” Rosstat deputy head Irina Zbarskaya told Itar-Tass.

In some remote areas, the census started on March 1 and will continue till December. The census was also extended for several days in two districts of the Krasnodar Territory because of a devastating flood.

Rosstat is confident that the census has justified its motto: “Everyone is Important for Russia!” This is borne out by interim data announced by Rosstat officials in the middle of the campaign. As for October 19, around 70 million people had been registered, which is about half of the country’s population.

Trud/Russia Today: Mossad outdoes Anna ChapmanIgor Petrushov

Israeli spies are caught across the globe 10 times more often than the Russian agents.

In the center of the media attention is yet another Russian, who is being suspected in espionage. Following the scandal with Anna Chapman and her nine colleagues, it might have seemed that only Russian intelligence agents are caught, though in reality, Israeli agents are exposed most often.

A trial against a Russian citizen, who is suspected by the local intelligence agencies in engaging in espionage for Russia, began in Poland. While concealing his real name, investigators gave the detainee a pseudonym of Tadeusz.

In recent months, exposed Russian spies have numerous times found themselves in the center of media’s attention. Recall the scandal with the 10 agents, arrested in the Unites States, one of whom was Anna Chapman.

Due to this fact, many Russians now have the impression that our agents are most commonly exposed. As it turns out, however, the most active and, at the same time, most frequently caught, are the secret agents of Israel. In the last six months, a total of about

100 Israeli agents have been exposed across the globe in comparison to the 12 Russian agents.

27 killers

If the foreign media reports about a detained spy, most often, that spy is a staff member of the Israeli intelligence agencies. They are exposed throughout the entire world: in the United States, Canada, Saudi Arabia, Palestine and Lebanon.

The last major scandal, involving Israeli secret agents, was the story with the murder of Palestinian national Mahmoud al-Mabhouh. Recall that he was supplying arms to the Hamas movement, which Tel Aviv considers a terrorist organization.

Mahmoud was shot on January, 2010 in a Dubai hotel. According to a statement, made by the UAE authorities, the murder was organized by 27 Israeli intelligence officers. On October 20, Chief of the Dubai Police Force, Dahi Tamim, said that one of the persons involved in the murder of the Hamas leader, had been arrested in Canada. Ottawa, however, tried to deny this claim.

Spying on an ally

Israeli spies are regularly caught in the US. On October 7, it was discovered that the FBI had arrested Elliot Doxer, a Jewish American who was employed at a large IT company, Akamai Technologies.

He was accused of collecting information about clients, contracts, and staff members of well-known American firms, and then selling this information to interested parties in Israel. Among Doxer’s victims were such giants as Apple, Adobie, and Yahoo. Now, the corporate spy could face up to 20 years in prison.

Most often, the Israeli agents who are caught in the US, are engaged in collecting information about the American Armed Forces, as well as Washington’s contacts with other countries – and that is while the US and Israel are considered to be close allies.

According to Evgeny Satanovsky, president of the Middle East Institute, the US authorities quite frequently conceal information that is quite important for their Israeli colleagues. “For example, Washington is half-heartedly sharing information with Israel about its contacts with Iran,” says Satanovsky.

According to the expert, Israel usually uses the discovered information to later throw it on the table before the Americans and demand explanations.

Fear is the reason to spy

Israeli spies are arrested in Arab states only somewhat less frequently. As a rule, authorities report on exposing entire networks of agents and dozens of detainees. On

October 8, Palestinian authorities reported on a major success of their counterintelligence. Hamas announced that they had arrested about a hundred Israeli agents who spied on Palestinian militants for at least the last three years.

Moreover, on October 11, the Lebanese counterintelligence service reported on the arrest of nine Israeli agents. The spies were collecting information about Lebanese army maneuvers, as well as terrorist activity on the country’s territory.

According to Satanovsky, Israel is forced to engage in intelligence activity out of fear for its security.

“This county is the target for many extremist organizations from Arab countries, as well as of anti-globalists,” explains the expert. According to him, Israel takes the threats, coming from these organizations, about the destruction of its state – seriously.

Read on the newspaper's website (in Russian)

October 25, 2010Memories of Newsweek

http://www.russiaprofile.org/page.php?pageid=Culture+%26+Living&articleid=a1288009625

By Svetlana KononovaSpecial to Russia Profile

Independent Media Are Hard-Pressed to Find the Right Audience and Advertisers in Russia

Last week the German publishing house Axel Springer announced the closure of Newsweek Russia, a Russian-language magazine which had been licensed from Newsweek since 2004. This is just one of many instances of independent media disappearing in the country, but experts believe that the reasons behind the shutdown were for the most part financial, and not political.

In Russia, independent media outlets have been living under some cloudy skies lately.

Russian Newsweek has been closed, while another critical voice – the Novaya Gazeta daily, a paper renowned for its investigative coverage of Russian political and social affairs – might face closure after a Moscow court threw out its appeal over an extremism warning from the federal media watchdog. The fourth anniversary of the unsolved murder of Anna Politkovskaya, a reporter for Novaya Gazeta and outspoken critic of the Kremlin who was killed in the elevator of her apartment building in Moscow, coincided

with the journalism faculty of Moscow State University releasing a provocative calendar featuring half-dressed female students confessing their love for Prime Minister Vladimir Putin.

But in the case of Newsweek Russia, publishers say the closure wasn’t due to political pressure. “We are proud that Russky Newsweek has been prominent, award-winning and met the highest standards of journalistic work for six years. We thank editor in chief Mikhail Fishman and all journalists and employees of the editorial and publishing house for their excellent work. Unfortunately, we have failed to bring the magazine to a firm economic base and we could not create a prosperous perspective. With respect to these circumstances, we decided not to renew the expired license agreement with Newsweek Inc. Axel Springer Russia has an excellent market position thanks to its portfolio of numerous successful media brands and we will direct our efforts to further develop and acquire profitable business in the future,” a statement from the company said.

Axel Springer Russia, a wholly-owned subsidiary of German Axel Springer AG, currently publishes the Russian edition of Forbes business magazine, the OK!, GEO, GALA Biography magazines and several others titles. “This story probably has no political connotations,” said Ilya Yashin, a leader of the Solidarity opposition group, on the closure of Newsweek. “The decision to close the magazine was made in Germany, not in Russia. So the official version of economic reasons seems plausible. The crisis hit print magazines pretty hard.”

Milena Bakhvalova, the editor of the economic policy department at RBC magazine, believes that Newsweek could not find its niche audience in Russia. “Firstly, Russian Newsweek probably made a mistake when it decided to focus on a young audience and adapted its style to suit young and inquisitive readers. But very few people in their 20s in Russia are ready to buy such magazines. Most young people are not interested in profound analysis and even in business and politics at all. So Newsweek could attract a smaller audience than expected,” she said.

The second reason is that Russian advertisers have a different mentality than advertisers in the West, media experts believe, which explains why the traditional American concept of a weekly business magazine does not always work in Russia. “Russian advertisers prefer magazines that supplement direct advertisements with so-called ‘informational support,’ such as interviews, experts’ commentary, etc. This approach is very popular in Russia, but is prohibited in American licensed magazines. As a result, print titles that ban ‘PR support’ make much less profit than their competitors who allow it, while their expenses are the same,” Bakhvalova explained. “For example, it was one of the main reasons why the other American magazine – Business Week – was closed in Russia in 2008.”

Olga Vdovina, the deputy director at the MediaGuide.ru Internet portal that focuses on the publishing business and advertizing in the mass media, agreed that Newsweek Russia’s economic hardship was caused by its erroneous development strategy and the generally difficult conditions on the media market. “Newsweek entered the Russian

market too late, when the business magazine niche was already occupied by successful Russian brands. It had little time for promotion – just four years before the economic crisis hit Russia and less than two years before the crisis hit the United States. Newsweek’s marketing team was made up of professionals who did everything possible in such circumstances,” she said. “Generally speaking, Western print business media are hardly suitable for the Russian market. Many attempts to publish west European business magazines in Russia have failed.”

“Two thousand and ten was very difficult not only for print media, but for radio and outdoor advertising as well. The main reason is the redistribution of advertising budgets. Large international companies now spend most of their advertising budgets on television,” Vdovina continued. “As a result, many print media, especially glossy and business magazines, lost up to 60 percent of their advertising budgets. Many projects were closed. We can see that the publishing market is getting divvied up once again.”

Bakhvalova believes that Newsweek Russia had its golden age when Leonid Parfyonov, a famous Russian news anchor, journalist and author of some popular television shows, was its editor in chief. “In those times journalists traveled a lot and wrote lots of features. Therefore the content of the magazine was more interesting and of better quality than articles in other print media written by their colleagues, who used the Internet and phone to find information,” she said. Later Newsweek’s budget was reduced, and the number of reports decreased. At the same time, the Russky Reporter (Russian Reporter) weekly magazine entered the market and became Newsweek’s main competitor. It ran more interesting and up-to-date feature stories with more profound analysis.

“Newsweek became a victim of the modern profit-making approach to journalism. Many publishers now tend to cut down expenses on authors. They have few staff writers and pay them modest salaries. This is a general problem in the Russian mass media, and it was at Newsweek as well. In August and September several highly-paid Newsweek journalists were fired and replaced with ‘cheap’ recent college graduates,” Bakhvalova said. “Publishers expect a fast return on investment. But a lot of time and money is needed to attract readers and advertisers to a new project. Even the super-popular Kommersant newspaper was unprofitable for many years.”

Some experts also ascribe the death of Russian Newsweek to the development of electronic mass media. When all news, reports and analytics are available on the Internet, it makes no sense to buy print editions anymore, they say. But other experts disagree. “It is too early to say that electronic media can completely replace traditional print media. How can electronic media survive? It can’t make a profit from distribution, like print media, and now there are only four to six Web sites in the Russian Internet that make huge profits from advertising,” Vdovina said. “It is hard to believe that print media can die soon. IPads can’t compete with the pleasure of flicking through the pages of a magazine while drinking a cup of coffee.”

Former Putin prime minister talks about his former bosshttp://www.csmonitor.com/Commentary/Editorial-Board-Blog/2010/1025/Former-Putin-prime-minister-talks-about-his-former-boss

Mikhail Kasyanov tells Americans how he traveled the road from prime minister to Vladimir Putin to an outspoken leader of the Russian political opposition. His story of life inside the Kremlin reveals much about the enigmatic Putin.By Francine Kiefer / October 25, 2010

It was a good question to put to Russian opposition leader Mikhail Kasyanov as he made his rounds in Washington last week.

Mr. Kasyanov was once prime minister to former President Vladimir Putin. When Kasyanov visited with journalists and Russia experts at the German Marshall Fund on Oct. 19, he was asked what motivated him to become prime minister ... and what, later, convinced him that Russia was headed in the wrong direction.

The answer reveals as much about the enigmatic Mr. Putin, now in Kasyanov's old chair as prime minister to President Dmitry Medvedev, as it does about the frank-speaking Kasyanov, who is one of Russia's most prominent opposition figures.

Kasyanov explained that he and Putin struck a deal during the presidential election of 2000. If Kasyanov were to accept the premiership, he would want Putin's backing for major structural reforms – of the pension system, for instance, and the budget. Fine, agreed Putin. All Putin asked in return was for Kasyanov to stay out of his turf. No interference with the regions and their governors; no interference with security (Putin used to head the Russian security service, successor to the KGB).

All went swimmingly. But then Putin began to move on Russia's big businesses, including the October 2003 arrest of one of Russia's wealthiest men who also challenged the political status quo, Mikhail Khodorkovsky. Then came the winter 2004 cut-off of Russian gas supplies to neighboring Belarus, governed by autocrat Alexander Lukashenko.

"It was minus 25 degrees in Minsk and Putin gave instructions to just cut gas supplies," Kasyanov recalls. The cutoff, over a dispute about pipeline ownership and prices, also affected Poland and Germany. "All the prime ministers of Central Europe were calling

me," Kasyanov said. Putin "said to me, just, Lukashenko didn't respect him. That was the reason just of cutting gas for millions of customers.”

In the fall, the Beslan hostage crisis occurred, in which more than 300 people, including children, were killed. That resulted in political "reforms" that replaced elected regional governors with ones appointed by Putin.

Kasyanov continued: "I came up to him and I said, 'I cannot do anything more with you and your government'...He said, 'You're making a mistake. If the tax police comes to you, and you have problems, call me. But me, personally.' "

The tax man did come. So did thuggish pro-Kremlin youths when Kasyanov campaigned for president in the 2008 presidential election. He collected more than the requisite 2 million signatures to qualify for the ballot, but in the end, Putin's bureaucrats kept him off. After that, the youths left him alone.

"Putin believes that everything in this world can be purchased," said Kasyanov. And, being a former KGB man, Putin believes in the preservation of an iron-linked hierarchy. When Russian President Medvedev recently fired Moscow mayor and Putin loyalist, Yury Luzhkov, many in and outside of Russia wanted to believe it was a sign of independence on the part of the more liberally minded Medvedev.

But Putin was simply eliminating risk in a political relationship that was disturbing the chain of command, according to Kasyanov's interpretation. Luzhkov was lower in rank, and he had to go. Appearances sometimes to the contrary, Medvedev is not going to break from Putin, but is merely Putin's "senior assistant."

Of course, all of this is just one man's side of the story. Remember that Kasyanov used to be called "Misha 2 percent" for alleged kickbacks he took as Boris Yeltsin's finance minister – a charge he vigorously denies.

But who are you more inclined to believe? The former head of Russia's security services who has turned back democracy in that country? Or someone who campaigned in frigid weather, person to person, shut out from all major media, to collect a couple of million signatures so he could run for president?

Elena Shaftan's letter from Moscowhttp://citywire.co.uk/wealth-manager/elena-shaftans-letter-from-moscow/a443900

by Matthew Goodburn on Oct 26, 2010 at 00:01

Jupiter Emerging European Opportunities co manager Elena Shaftan (pictured) returns from Moscow with a fresh perspective on her native country. While she still has reservations over Vladimir Putin's manners, she is generally more impressed by his leadership style.

Here, in her own inimitable way, Shaftan discusses a new found confidence among its people, and why Russia is comparatively better placed than it has been for some time against many of its peers.

She sees a relatively healthy financial sector, a renewed focus on transparency and a determination to stamp out corruption. Above all, Shaftan sees an equity market that looks historically cheap next to many of its emerging market rivals and anticipates a healthy Q3 corporate results season.

Her letter follows:

On a business trip to Moscow 13 years ago, my suitcase disappeared from a hotel luggage room. The response from staff was surly and uncooperative and the suitcase was never found.

At the beginning of October, I took another business trip to Moscow and contrived to leave my suitcase in the boot of a yellow cab. On the basis of my previous experience, I assumed it would never be seen again. Nonetheless I mentioned its loss to the organisers of the conference I was attending. Within an hour the suitcase had been retrieved and returned to me. The question that presented itself was this: what had changed in Russia to produce such a different outcome 13 years on?

The answer is that Russians now value their jobs and see them as an opportunity to make steady, honest money. In my view, this is a sea change in attitudes whose significance cannot be underestimated. Previously, prospects were so flimsy that immediate advancement by any means possible (i.e. corruption and theft) was considered preferable to banking on future earnings from honest employment. Now there is simply greater confidence in the system. And, even if one doesn't like the regime, there is a greater degree of predictability in terms of what the future might hold. That means people and companies can make plans.

Taxi drivers are always my litmus test on arrival. Normally full of complaints and anecdotes, they give you a pretty clear view of the status quo. On this trip, three hours in heavy traffic duly gave rise to a barrage of complaints, but this time, they were not about Russia. They were about Germany and how boring it is, about Italy and how nothing works there, and how wonderful it was for my driver to come back from his three foreign trips a year to the comfort of Russia. “We drink, we fight, but we have fun here. I’d never want to live anywhere else,” he asserted.

It was my first trip to Moscow for a while, as my last few trips had all been to St Petersburg. I got a clear view of how much it has changed. The roads are better than in London or Paris, the streets are cleaner, there wasn’t a single visible beggar or drunk, people were well-dressed – almost too well-dressed – but the biggest change of all was that they looked happier and friendlier than ever before.

The investor conference I was attending was the largest of its kind ever to take place in Russia with over 1,000 participants. More than 700 of these came from domestic companies. Of the foreign investors, instead of a familiar crowd of London-based faces, there were a number of representatives from Asia and the Middle East including sovereign wealth funds and large US-based clients. It constituted a very different mix from what I had been used to.

The highlight of the event was the Iron Man himself – Mr Putin. He is clearly feared by most and has an arrogant and dismissive swagger about him. He read out a previously unseen script, after which he stayed for two hours to listen to other speakers and answer questions. His performance was enjoyed by the Russians as they appreciated his confidence and the impression he gave of being in charge. I sided with the foreigners, however, and found him rather obnoxious.

Having said that, he was there, he was making an effort and the bottom line of his message was this: Russia wants to modernise and re-build and strengthen the economy. For that it needs foreign capital, something it has frankly never needed before. Hence Russia is prepared to try harder to win this much-needed investment.

I spoke to a large number of influential people including high profile government officials, economists and former government grandees: all people who understand what is going on. These included Arkady Dvorkovich, an economic advisor to the Russian president, Alexei Kudrin, the finance minister, Andrei Klepatch, the economy minister, Aleksey Ulukaev, the deputy head of the central bank, Alexander Voloshin, former chief of staff for both Yeltsin and Putin and now in charge of the Financial Centre and Bella Zlatkis, who is on the board of Sberbank and the government audit committee. Some of these I met in big group meetings, some in more intimate discussions.

The hymn sheet that everybody was singing from was remarkably similar and it went like this: economic growth in the next two to three years will be to the tune of 4% at current oil prices (+/- 0.5% for every $10 of oil). Note this is a slower rate of growth than many had hoped for earlier in the year and half that of pre-crisis levels. Indeed pre-crisis levels of growth are now viewed as frothy, fuelled by unsustainably high commodity prices and high foreign capital inflows. The latter reached $80bn in 2007 or 4.5% of GDP, well above the global emerging market average.

In order for the economy to grow faster, Russia needs to undertake reform in order to attract more foreign capital (current levels stand at under $40bn) and for that it needs innovation, modernisation and better institutions. Those sentiments rang through every single speech at the conference. For example, Dvorkovich started by saying: “We don't want to rebuild the economy because much of it is not worth rebuilding. Our task now is to build a new kind of economy,” and finished with “we live in interesting times – times when we have a chance to change. And we must take personal responsibility for this change.”

How do they want to change? The big discussion in the government for the past couple of years has been innovation versus modernisation. Do they buy in Western technologies and modernise like the Chinese or do they invest in developing their own as the Soviet Union once did? They have taken a sensible middle-of-the-road decision, investing $3bn in nanotechnologies and spending another $3bn on creating a Russian Silicon Valley – a research centre where young brains will be provided with housing and decent salaries in order to work on new technologies and give them an appealing alternative to heading overseas. All of which comes alongside the purchase of technologies for areas that Russia realises it can’t compete in, e.g. auto and aircraft manufacturing.

Having enjoyed eight years of budget surpluses, the government is now planning to run a moderate deficit until 2015. This will be financed by some external borrowing (current levels stand at just 10% of GDP) and a big privatisation programme. This is where the need for foreign investment comes in. Previously Putin's government had made it clear that they didn't want to sell off the national family jewels and would rather go it alone at a slower pace. This turnaround in their thinking is a big change and will see the government selling stakes in large, nationally-owned companies while maintaining a 50%+ share in the early stages.

Another big topic at the conference was government corruption. One of the speakers said: “The number one task of the Russian government is to protect the Russian population from the Russian government”. The finance minister was very frank at a small group breakfast. He said: “Government corruption has got worse in recent years. Government expenditure is five times higher than it was ten years ago and there are now more large contracts for companies to lobby for in areas such as defence, transport and health.” (A three-year draft budget, which allows for a further increase in government spending, has just been submitted.) To cope with this, the government plans to introduce tougher measures and new institutions to ensure the effectiveness and fairness of government spending and the transparency of tenders.

Of course there is scope to be cynical about the government's ability to tackle corruption in an election year. However, some of those close to the finance ministry have suggested that if the higher accountability for spending ends up not being introduced next year, it will simply lead to a moratorium on actual expenditure, reducing the budget deficit and inflation. This is a compromise that Putin has managed to reach with his extremely conservative finance minister Alexei Kudrin. 

The rouble, meanwhile, is expected to carry on appreciating at 3%-5% p.a. and will continue to be free floating as it has been over the past 18 months.

Another big theme was taxation of the resources sector. It became clear that the cuts discussed no more than six months ago will not be forthcoming any time soon i.e. in the next two to three years. Commodities are going to be a cash cow used to finance reform and budget spending, effectively cross-subsidising the domestic economy. Hence we feel comfortable retaining our focus on domestic stocks over resources.

As for the banking sector – the government recently conducted stress tests. While they didn’t publish the results, they are taking immediate action. Of the top 100 banks, 18 failed. These will be bought for a rouble and restructured within the next fortnight. Other smaller banks stand to lose their licences. In a country where there were around 1,300 banks two years ago, there are now 1,000 and that number will be around 100 less in the near future. I consider all of this to be very healthy, long overdue and well-managed in that it has been conducted quietly in order to avoid panic.

As regards the next general election, absolutely everybody I spoke to expects Putin to stay in power one way or another, whether as president (“if he can be bothered dealing with foreign policy which he doesn't enjoy and knows he is not good at”) or prime minister. Ex chief-of-staff Alexander Voloshin, who understands Russian politics and personalities well, said that Putin and Medvedev need each other, that they work well in tandem and that they don't have alternative options. If a scapegoat is needed however, Medvedev is the disposable one.

On the Luzhkov affair*,  my worry was that his removal might lead to ugly public mud-slinging and a contested redistribution of assets controlled by him and his wife. However the consensus seems to be that is not likely to happen and that some sort of deal will be reached quietly. However, if Luzhkov decides to up the ante, it might indeed get ugly.

As for former Yukos chief Mikhail Khodorkovsky still languishing in jail, many continue to hope that he might be let out soon. This would send a big friendly signal to the market, but it looks very unlikely. When this issue was raised at the conference, Putin got very animated and emotional. He said he considered it a stand-alone criminal case involving a number of murders carried out by Yukos security officers whom he refused to believe were acting of their own free will and added that he did not wish to free a murderer. (A mayor of Yugansk was indeed killed on Khodorkovsky's birthday at a time when he (the mayor) stood between Yukos and its wish to consolidate assets.)

Somebody who knows Putin quite well commented on the rather arrogant stance he has adopted on economic matters, as he (Putin) feels that the Russian government’s management of the economy during the financial crisis was laudable. I would tend to agree with Putin on this. Russia avoided many of the problems that developed and indeed many developing countries suffered from, including huge debts and large budget deficits. It is understandable that Putin is fed up with being lectured by the Western investor community on what Russia should be doing.

On that subject, it was rather amusing to listen to the panel of independent economists.  They were effectively saying the same thing as the government officials – that without reform the economy would stagnate and inflation would pick up.  But they said it in such a finger-wagging manner that, if anything, it only served to underline the fact that the government has really understood what it needs to do to facilitate economic growth and is serious about it this time.

Any practical progress will of course take time.  For example, the reform of financial markets (now the responsibility of Alexander Voloshin) which is designed to make Moscow an “international financial centre” (as ridiculous as it sounds) is a great move forward. Currently, trade settlement in Russia is based on pre-delivery of cash for purchases and pre-delivery of stock for sales, rather than “delivery versus payment” as is standard in most international markets; this acts as a potential barrier to many investors. Our funds are among the few that do currently invest in Russian domestic shares and in order to do so we have to negotiate special dealing terms with major brokers under which they effectively underwrite the settlement risk. Changing the settlement process to fit with international standards will open the market to a much broader investor base. There is a real commitment to these reforms, but there is also an understanding that it will take one to two years to complete.

On the corporate side, one theme that came very strongly from all the domestically focused companies (from vodka to drugs, loans to transport and food retailers to electronics) was that there had been a very convincing pick-up in demand in the past two months. This was despite August being seasonally the quietest month and the horrendous fires that disrupted production and people’s lives in Moscow.  We should brace ourselves for very good 3Q results.

Overall, despite guidance for somewhat slower growth and higher inflation next year, I left Russia with a positive sense of the change that seems to be taking place on all levels – from taxi drivers to the government. There is now a fundamental understanding of the inevitability of reform and a genuine commitment to it. There is also a very robust near-term outlook for consumer-related companies. And of course, the market still looks cheap relative to other emerging countries.

*Mayor of Moscow Yuri Luzhkov was dismissed from his post at the end of September, with President Medvedev citing a ‘loss of confidence’ following alleged corruption and mismanagement.

Turkmenistan: Medvedev Comes Away from Ashgabat Empty Handedhttp://www.eurasianet.org/node/62237

October 25, 2010 - 1:49pm, by Sergei Blagov

Given the way things went during his recent visit to Turkmenistan, one has to wonder whether Russian President Dmitry Medvedev looks forward to talks with Turkmen leader Gurbanguly Berdymukhamedov as he would a visit to a dentist’s office for a root canal procedure.

Medvedev spent October 21-22 in Turkmenistan and came away with nothing. Just about the only thing that the two leaders agreed on was to formally suspend the Prikaspiiski natural gas pipeline project. When it was announced back in 2007, the Prikaspiiski route seemed destined to give Russia a dominant role over Caspian Basin energy exports. But since those heady early days, the pipeline project had remained at a standstill.

After his October discussions with Medvedev, Berdymukhamedov indicated that he was eager to see a revival of Turkmen natural gas exports to Russia. "Russia and Turkmenistan have mutual interest in partnership development,” the semi-official Turkmenistan.ru news website quoted Berdymukhamedov as saying. “Our relationship is noted for stability and mutual understanding on fundamental issues," he stressed.

Actually, Russian-Turkmen relations have been anything but stable since a mysterious pipeline explosion in April 2009. Over the past 18 months Russian imports of Turkmen gas have fallen off a cliff, due to continuing weak demand in Europe, as well as the relatively high price that Moscow pays to Ashgabat for gas.

In 2010, Gazprom planned to import 10-12 billion cubic meters (bcm) of Turkmen gas, a precipitous decline in the import level over previous years. Both Russian and Turkmen officials declined to reveal 2011 volumes.

Perhaps the only bright spot connected with Medvedev’s visit was the revelation that Moscow was interested in getting involved in the construction of a trans-Afghanistan pipeline that would carry Turkmen gas to India and Pakistan.

Russian Deputy Prime Minister Igor Sechin, as reported by the Russian business daily Kommersant, expressed Moscow’s readiness to participate in a variety of capacities -- whether financer, consortium member of construction contractor -- in the so-called TAPI pipeline.

Despite the unproductive visit, Medvedev said Russia would keep on trying to develop “promising areas of this cooperation in the field of energy," according to a report distributed by Turkmenistan.ru.

But as Russia looks for a way forward, China appears to be a big obstacle. In the immediate aftermath of the outbreak of the Turkmen-Russian gas row of the spring of 2008, Ashgabat turned to China as an export partner,and has not looked back. Exports via the Turkmen-China pipeline got underway in late 2009. An expansion, due to be completed in late 2011, would raise Turkmenistan’s export capacity to China to 40 bcm per year.

At the same time, the growth in Turkmen exports to China may be dampening Beijing’s interest in purchasing Russian gas. During Medvedev's visit to China in September, the Russian state-run conglomerate Gazprom and the China National Petroleum Corp. tentatively agreed that Gazprom would supply 30 bcm per year to China starting in 2015. But the two sides have struggled since then to settle on a purchase price.

Sechin, who accompanied Medvedev on the visit to Turkmenistan, went out of his way to downplay the notion that Moscow and Ashgabat were competing for Chinese gas purchases."We don't compete in the Chinese market," the Itar-Tass news agency quoted Sechin as saying.

Editor's note: Sergei Blagov is a Moscow-based specialist in CIS political affairs.

Moscow’s Unwillingness to Support Russian Nation Reflects Its Own Imperial Agendahttp://georgiandaily.com/index.php?option=com_content&task=view&id=20272&Itemid=72

October 25, 2010

Paul Goble

Staunton, October 25 – Like their Soviet predecessors, the current powers that be in the Russian Federation are quite prepared to sacrifice the national interests of the ethnic Russian people in the pursuit of an imperialist agenda, but this sacrifice will not serve either Russian national interests or Moscow’s imperial goals, according to a Kazan sociologist.

Aleksandr Salagayev further argues that “the legal vacuum which characterizes the situation of ethnic Russians in the Russian Federation and the position of the powers that be who are ignoring this contradiction is the source of inter-ethnic conflicts with migrants, the extremism of Russian organizations in Russia and the weakness of Russian diasporas abroad.

In a 3200-word essay posted on the Regnum.ru news agency, Salagayev, a specialist on social and political conflicts at the Kazan State Technological University, traces the long and complicated history of the relations between the ethnic Russian nation and the states within which it has existed (www.regnum.ru/news/1337042.html).

Prior to 1917, he notes, “Russians were an imperial nation.” The state’s slogan, “Orthodoxy, Autocracy, Nationality,” applied only to them, but the Russian nation included the Great Russians, the Little Russians (Ukrainians), and the Belarusians, as one might expect an imperial people, as opposed to a nation, to do.

The country’s nationality policy changed dramatically with the coming to power of the Bolsheviks. Their ideas about “proletarian internationalism,” Salagayev argues, instituted “a double standard” with the rights of the non-Russians being protected and the rights of the ethnic Russians as a community being ignored or at least slighted.

While that balance shifted over time, the Kazan scholar says, many now believe that “the main cause of the destruction of the USSR was the weakening of the Russian ethnos and the loss of its role in economic and state-political life which took place after the October 1917 coup” that brought the Bolsheviks to power.

In the first years of Soviet power, the communist tilt toward the non-Russians was most pronounced, with the non-Russians being given republics and the ethnic Russians, routinely denounced for “great power chauvinism,” being denied one repeatedly. Salagayev notes that efforts to form a Russian republic were blocked by Soviet leaders in 1922, 1923, 1925, and 1926.

After Stalin declared “the final solution of the nationality question in the USSR” in 1934, the Russian nation was redefined. No longer was it “the former oppressor nation” with a historic “debt” to the others, but rather the Russian nation became the elder brother – or as “Leningradskaya Pravda” put it in 1937, “the eldest among equals.”

But despite the rhetorical change, Russians were still expected to provide funding for the non-Russians to help them catch up with modernity, a policy that continued throughout the rest of the Soviet period and one that by “ignoring the interests of the Russian people [was] inevitably accompanied by Russophobia” on the part of the regime.

That is because this attitude “was expressed not so much in the denial of the ‘positive features of the Russian nation and its positive contribution to world history’ as in a fear of the Russian national factor … and the possible resistance from the side of the most numerous people of the communist reconstruction of the country and the world.”

Indeed, KGB and then CPSU leader Yuri Andropov famously observed, Salagayev recalls, that “the chief concern for us is Russian nationalism; as to the dissidents, we would take them all in one night.”

In short, “self-determination of the Russian people was assessed as chauvinism but the self-determination of other peoples was considered as a necessary condition of their national development,” Salagayev says. And as a result, “the national interests and the interests of Russians in autonomous formations were simply ignored.”

With the collapse of the Soviet Union, this policy continued. “Ethnic mobilization” seized “all the ethnic groups” of the country except the ethnic Russians “who despite the actual loss of their imperial status preserve the illusions about their imperial destiny, responsibility for the fate of Russia and other such myths.”

Ethnic mobilization among ethnic Russians thus has been dominated by marginal groups like the RNE and Primorsky partisans and by “the spontaneous ethnic mobilization of Russians” in relatively small cities such as Kondopoga. In his article, Salagayev lists 22 such cases of the latter since 1999.

None of these efforts can be called successful, he says, largely because Moscow opposed all of them. The 1996 law on national-cultural autonomy did not apply to Russians and efforts beginning in 2001 to adopt “a law on the Russian people” were blocked by the powers that be and have come to nothing.

“In thus preserving the imperial ambitions of Russians,” Salagayev continues, “the powers that be are not showing any interest in the fate of the Russian people and in fact are struggling against those who recognize the real situation, calling such people Russian extremists or Russian fascists.”

Moscow continues to subsidize the non-Russian republics at far greater rates than the predominantly Russian areas, but its failure to support the Russian nation is undercutting its own imperial strategy because it is leading ever more ethnic Russians to flee non-Russian areas back to the center of the country.

In Salagayev’s opinion, “the situation is very similar to the policy of support of the national borderlands of the Soviet Union at the expense of the central oblasts which are populated primarily by Russians, a policy which in the final analysis led to the collapse of the USSR. It is obvious that such a policy will preserve the territorial integrity of Russia.”

The Kazan scholar suggests that there are two possible solutions to this situation, a “radical” one in which ethnic Russian oblasts would be formed and non-Russian republics liquidated, and a “moderate” one in which ethnic Russians would gain the same right to form national cultural autonomies that other nations now have.

Salagayev adds that some combination is likely, and he concludes by suggesting that Moscow must address the Russian question at home if it is to have any hope of protecting compatriots abroad, many of whom have been reduced to the status of “second class citizens” there in a way paralleling that of ethnic Russians in the Russian Federation itself.

Press forbidden from attending new Moscow mayor's first sessionhttp://en.rian.ru/russia/20101026/161087800.html

11:16 26/10/2010

The media were prohibited from attending new Moscow Mayor Sergei Sobyanin's first session in the Moscow City Hall on Tuesday.

Security at the City Hall in downtown Moscow said they had been ordered not to allow media into the building as of October 26.

"We were told that journalists were not allowed in. It is still unclear whether this is a permanent measure or not," a RIA Novosti correspondent said.

Former Moscow Mayor Yury Luzhkov, sacked by the Russian president in September, usually permitted the media to attend his sessions, which he traditionally held at 10:00 a.m. Moscow time (6:00 GMT) on Tuesdays.

Sobyanin, who was sworn into office by President Dmitry Medvedev last week, is holding his first session at 11:00 a.m. Moscow time. The agenda includes discussion of Moscow's electricity supplies.

MOSCOW, October 26 (RIA Novosti)

October 26, 2010 12:12

Rally of 800 demonstrators on Triumfalnaya Square given go-ahead - source (Part 2)http://www.interfax.com/newsinf.asp?id=197877

MOSCOW. Oct 26 (Interfax) - Moscow authorities have given their official authorization to a rally of 800 civil rights activists on Moscow's Triumfalnaya Square, a source in the Moscow government told Interfax on Tuesday.

The City Hall has received a written consent from Lyudmila Alexeyeva, the chief negotiator and first applicant for the rally in defense of Article 31 of the constitution [guaranteeing the freedom of assembly], to hold a rally of 800 demonstrators on Triumfalnaya Square," the source said.

"It said in an official statement that the rally on Triumfalnaya Square, scheduled for October 31, has been authorized," he also said.

"No other documents have been received from other applicants," he said.

The organizers of the rally, the head of Moscow's Helsinki Group Lyudmila Alexeyeva and opposition leaders Eduard Limonov and Konstantin Kosyakin, met in Moscow on Monday evening to discuss the City Hall's proposed go-ahead for a rally of 800 demonstrators, not 1,500, as requested by civil rights activists.

Member of the Other Russia coalition Alexander Averin told Interfax that Alexeyeva had urged a compromise and agreed to a rally of 800 participants.

Limonov and Kosyakin continued to insist on 1,500, the number characteristic of such rallies, according to Averin.

"It's not a split, it's a disagreement. Disagreements sparked in the summer, but they were settled then and will be settled now," he said.

An application for a rally with 1,500 participants on Triumfalnaya Square on October 31 will be filed on Tuesday, he added.

"I hope the rally will be finally held on October 31," Alexeyeva told Interfax on Monday evening.

"I think the proposal for a 800-strong rally must be accepted. Limonov and Kosyakin sent a letter to the City Hall, requesting the go-ahead for a rally of 1,500 participants. I did not sign it. The authorities made a concession, while my colleagues keep insisting that their demand be fully met. When talks are held on a public action, both parties must make concessions, in my opinion, Alexeyeva said.

"It is a mistake, I think," she said in remarks about Limonov's rejection of the Moscow government's proposal

"If Limonov is positioning himself as a politician, he must be skilled in adjusting his position to the circumstances," she also said.

Alexeyeva said she has not made up her mind yet whether she will remain a co-organizer of rallies on Triumfalnaya Square.

In the past two years the square has been a scene of confrontation between civil society activists and police. Opposition figures and human rights activists - Eduard Limonov, Konstantin Kosyakin and Lyudmila Alexeyeva - have been applying to the city administration to permit Article 31 rallies, but every application has been turned down.

sd dp

Sobyanin Allows Larger 31st Rally http://www.themoscowtimes.com/news/article/sobyanin-allows-larger-31st-rally/421065.html

26 October 2010By Alexander Bratersky

New Mayor Sergei Sobyanin's administration on Monday made another conciliatory move toward the opposition by significantly boosting the number of people who will be allowed to rally on Triumfalnaya Ploshchad this weekend.

Authorities have allowed 1,000 people to attend the Oct. 31 rally, veteran human rights activist Lyudmila Alexeyeva said, RIA-Novosti reported.

Last week, the interim city government authorized the opposition to stage the rally but limited the number of participants to 200. It was the first time that City Hall had sanctioned the rally after denying 11 similar requests since 2009.

“This decision is a first step toward solving the situation under the new mayor,” Alexeyeva was quoted as saying.

The protests have been held on the 31st of every such month to draw attention to Article 31 of the Constitution, which grants freedom of assembly.

The activists had requested a protest with 1,500 participants. They will only be given a small part of the square because most of it was fenced off for construction work last month.

On Saturday, City Hall allowed another opposition rally on Pushkin Square, a gathering that human rights activist Lev Ponomaryov has called a “compromise” by City Hall.

Analysts say the softer stance on protesters was not introduced by Sobyanin but by the presidential administration.

Kremlin deputy chief of staff Vladislav Surkov spoke against the ban on Triumfalnaya rallies in a recent interview with Vzglyad.

"City officials are following precise signals from the Kremlin," Alexei Mukhin, an analyst with the Center for Political Information, said by telephone, referring to Surkov's interview.

But Sobyanin, who was inaugurated as mayor Thursday, sent more mixed signals Monday.

The first city government session to be chaired by him will be closed for the press, City Hall spokeswoman Galina Sugak told Gazeta.ru. The only media outlet allowed in will be TV Center, the City Hall-owned television channel, Sugak said, adding that reporters would be allowed at future sessions.

Sobyanin also delayed the start of city government's first session by one hour and reduced the items on the agenda from two to one. The government will meet Wednesday at 11 a.m. instead of 10 a.m. and will only debate the city's electricity supply through 2020, City Hall said on its web site.

Also Monday, Sobyanin ordered his subordinates to cut the number of days Muscovites have to spend without hot water during the summer, RIA-Novosti reported, citing an unidentified city official.

Hot water is switched off for 10 to 14 days in most parts of the city to allow for repairs to the aging plumbing system.

Separately, Sobyanin chaired a session on preparation for the winter, after which he said all departments should gear up for a cold one. He also made a suggestion regarding air

quality, telling City Hall that unlike roads, the air was full of dust and this should be fought with "vacuum cleaners," City Hall said in its web site.

But the very first decree Sobyanin signed Monday had nothing to do with water, television or vacuum cleaners. His first act was to sign a decree to confirm that he had taken up his new post, his press service said on its web site.

Sobyanin is expected to revise much of the work of his predecessor, Yury Luzhkov. Among other things, he has promised to fight the city's catastrophic traffic jams.

Yabloko leader Sergei Mitrokhin said Monday that he would continue a legal battle about the Genplan, a disputed plan for the city's development through 2025.

Mitrokhin said he had filed an appeal after the Moscow City Court rejected his plea to cancel the plan. Mitrokhin said the plan was not agreed upon with the federal authorities as required by law.

He also said Moscow's traffic woes were a direct consequence of the plan, which advocates more office construction in the city center. "If he does not revise it, Sobyanin will show that he is following Luzhkov's legacy,” Mitrokhin said.

Report: Luzhkov Seeks U.K. Visa http://www.themoscowtimes.com/news/article/report-luzhkov-seeks-uk-visa/421022.html

26 October 2010By Natalya Krainova

Yury Luzhkov has applied for a British visa but has no plans to abandon Russia after being ousted as Moscow's mayor last month amid a flurry of state television reports linking him and his wife to possible corruption, Lifenews.ru reported Monday.

Luzhkov wants to visit Britain with his billionaire wife, Yelena Baturina, but is not fleeing the country, the report said, citing a close friend, crooner and State Duma Deputy Iosif Kobzon.

Luzhkov, who has spent much of his time at his wife's chalet in Austria after being fired by President Dmitry Medvedev, applied for a visa at the British Embassy in Moscow because visa rules bar him from applying in Austria, an unidentified senior City Hall official told the web site.

Gennady Terebkov, a spokesman for Inteko, the construction giant owned by Baturina, called the Lifenews.ru report "another lie" amid the "information hysteria of recent weeks," apparently referring to the campaign against Baturina and Luzhkov on state television.

A British Embassy spokesman declined to comment on the visa report. “We do not comment on individual decisions, and I cannot even say if such an individual case exists,” spokesman James Barbour said.

Self-exiled tycoon Boris Berezovsky told Lifenews.ru that "asking for political asylum in Britain" was "the only way" Luzhkov could "avoid imprisonment in Russia."

Berezovsky said he was willing to meet with Luzhkov.

The City Hall official also said Luzhkov and Baturina own a mansion in Britain — a claim that Baturina has denied in the past. Baturina and Britain's Sunday Times are embroiled in a court battle over the claim.

Inteko reiterated the denial in an e-mailed statement Monday, saying Baturina, Inteko and its subsidiaries do not own a mansion in Britain. Inteko said Baturina spent the day in her office in central Moscow.

Meanwhile, leading gay rights activist Nikolai Alexeyev said he has asked Britain's Foreign Office to deny a visa to Luzhkov, who banned gay pride parades as mayor, Interfax reported.

Repeated calls to Luzhkov's office at Moscow's International University, where the former mayor now works, and to the university's press office went unanswered Monday.

Kobzon refused to comment.

Meanwhile, Luzhkov failed to appear in court Monday as a defendant in a lawsuit filed by A Just Russia demanding that the results of October 2009 elections to the Moscow City Duma be annulled because Luzhkov purportedly used his position to secure United Russia's victory, Interfax reported.

Russian daily retracts corruption article on ex-Moscow mayor's wife http://en.rian.ru/russia/20101026/161088903.html

12:19 26/10/2010MOSCOW, October 26 (RIA Novosti) - A Russian business daily issued on Tuesday a retraction to an article published on October 8, accusing Moscow ex-mayor's wife, Yelena Baturina, of receiving preferences in running her construction business under Luzhkov's mayoral tenure.

Vedomosti daily said the fact that Baturina "not always paid the city a percentage traditional for all developers" was incorrect as well as that the businesswoman's company, Inteko, "receded its obligations in a number of initial obligations for its own interest."

"The editorial staff of Vedomosti daily apologizes to Inteko, Ltd.," the newspaper's statement said.

Meanwhile, sacked Moscow mayor Yury Luzhkov on Monday came into the spotlight after being noticed in a line for a visa at the British Embassy in Moscow, reportedly to start living in exile in London.

Russian Internet tabloid lifenews.ru said Luzhkov had been standing in the line along with ordinary people to hand in his documents and have his fingerprints taken.

Baturina, Russia's richest woman, is reportedly already in Britain.

"Frankly speaking, it is not clear whether the ex-mayor will receive a visa," lifenews.ru quoted Luzhkov's backers as saying. "He may face serious problems with his documents. When he was mayor, he set many British diplomats against himself over his vociferous anti-homosexual statements."

Luzhkov was fired by President Dmitry Medvedev in late September after an 18-year tenure.

Berezovsky pledges assistance to Luzhkovhttp://www.kyivpost.com/news/russia/detail/87539/

Today at 10:45 | Interfax-Ukraine Businessman Boris Berezovsky who resides in London, said he will be ready to give support to ex-Moscow mayor Yury Luzhkov but does not want to cooperate with him.

"If he finds himself in a crunch, and if he or his wife lacks money to hire defense lawyers in search of asylum, I will be ready to help," Berezovsky told Interfax by telephone from London.

He said he was not ready to cooperate with ex-mayor of Moscow, but added that he would provide assistance if requested.

"Of course I will help, if he feels down. I am not ready to cooperate with him, but I will help, which does not mean cooperation," Berezovsky said.

Reports were circulated earlier, that Luzhkov had applied to the British embassy for an entry visa. It was also reported that his wife Yelena Baturina is in Britain already.

Meanwhile, Luzhkov's close friend singer Iosif Kobzon told Interfax that Luzhkov will not leave Russia under any circumstances, and he described speculation that Luzhkov may emigrate as "rubbish."

The press service of the Inteco company, led by Baturina, told Interfax on Monday that, "Yelena Baturina is now in Moscow."

Read more: http://www.kyivpost.com/news/russia/detail/87539/#ixzz13S5qYQtt

Russian Press at a Glance, Tuesday, October 26, 2010http://en.rian.ru/world/20101026/161087199.html

09:02 26/10/2010

A brief look at what is in the Russian papers today

POLITICS

Russia wants to expedite the delineation of the continental shelf in the Arctic. The ownership of the large deposits of energy reserves is at stake. (Nezavisimaya Gazeta)

The Russian government may soon have a political department to "strengthen ties" with political parties, social movements, election bodies and other political organizations. (Nezavisimaya Gazeta)

Israel's new Ambassador to Russia says Tel Aviv and Moscow prioritize economic cooperation in bilateral relations (Kommersant)

BUSINESS

The Russian car industry plans to go into partnerships with foreign carmakers to manufacture automotive components. (Rossiiskaya Gazeta)

The Russian government hopes that the second wave of privatization will encourage direct investment in the economy. (Vremya Novostei)

Moscow's Vnukovo airport will stop receiving aircraft whose noise levels exceed the existing standards starting in March 2011. (Vedomosti)

Sapsan is the only train operated by the Russian Railways company to have made a profit this year. The train, built for Russia by German engineering giant Siemens, covers the distance between Moscow and St. Petersburg in the record time of 4 hours and 45 minutes. (Kommersant)

DEFENSE

Russian Deputy Defense Minister Nikolai Pankov outlined ongoing reforms of the country's military education system. (Rossiiskaya Gazeta)

Russia may announce a tender on the construction of two helicopter carriers for the Russian Navy at Euronaval 2010, which opened on Monday in Paris. The French Mistral class ship is most likely to win the tender, experts believe. (Vedomosti)

SOCIETY

Russian President Dmitry Medvedev urges the government to draft a new law on the social welfare of elderly citizens. The Kremlin has not yet decided on changes to the retirement age. (Nazavisimaya Gazeta, Vremya Novostei)

The Russian opposition received permission to carry out a mass protest rally in downtown Moscow on October 31 (Vedomosti, Kommersant)

RUSSIA ABROAD

The Stockholm City Court has rejected Russia's appeal against the seizure of Russian state property in Sweden claimed by German businessman Franz Sedelmayer as compensation for business losses in 1990 when he had tried to open a company in St. Petersburg. (Kommersant)

PRESS DIGEST - Russia - Oct 26http://www.reuters.com/article/idUSLDE69P01Q20101026

3:38am EDT

MOSCOW, Oct 26 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- The Chechen leader Ramzan Kadyrov has become Russia's first official to ask openly Vladimir Putin to return to his Kremlin office in 2012 and remain there "forever".

- Moscow Mayor Sergei Sobyanin has closed a meeting of the city government to journalists.

- Russia's second biggest lender, VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), is considering a possibility of inviting minority shareholders to its supervisory board.

VEDOMOSTI

www.vedomosti.ru

- One of the major stakeholders in Russian steel and iron ore firm Metalloinvest, Vasily Anisimov is mulling selling his 20 percent stake in the firm worth around $4 billion, the daily says.

- Moscow city authorities are planning to issue bonds to attract at least 15 billion roubles.

- Severstal (CHMF.MM: Quote, Profile, Research, Stock Buzz) and steel maker Evraz (HK1q.L: Quote, Profile, Research, Stock Buzz) could set up a joint consortium with Yenisei Industrial Company to build a new railway route linking Siberian Krasnoyarsk with the coal-rich Tyva region.

RBK DAILY

www.rbcdaily.ru

- Russia's Gasprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) is planning to supply up to 180 billion cubic meters of natural gas to Europe by 2020, according to the company's officials.

NEZAVISIMAYA GAZETA

www.ng.ru

- Russia's government is considering setting up a special political department to monitor a forthcoming parliamentary election campaign, the daily says.

- Russia is speeding up its expansion in Arctic Ocean, the daily says in connection with Russia's scientific research works in the region.

National Economic Trends

September GDP growth reported at 1.8% y/y http://www.businessneweurope.eu/dispatch_text13308

Alfa BankOctober 26, 2010

According to Russia's minister of economic development, in September GDP increased by a mere 1.8% y/y, putting the 3Q10 figure at around 2-2.5% y/y vs. the 3.2% y/y we expected. This makes our FY10 3.6% y/y GDP growth forecast optimistic, as the latter now requires at least 3.5-4.0% y/y growth in 4Q10.

The very slow economic growth in 3Q10 is particularly surprising given the acceleration in fixed investments in August-September to 9-11% y/y vs. 1.3% y/y in 7M10 and relatively strong consumption, as demonstrated by the 5.9% y/y increase in retail trade in 3Q10 vs. 5.3% y/y in 2Q10. The GDP growth figures seem to have been negatively affected by net exports, as according to our estimates, real exports were flat in 3Q10 vs. the 4% increase seen in 2Q10, while real import growth accelerated to 27% y/y from the already high 21% y/y level in 2Q10.

Assuming no revisions to previous figures, the unspectacular 3Q10 GDP growth calls into question our full-year forecast of 3.6% y/y, as the latter would now require at least 3.5% y/y growth in 4Q10, which is a challenge given the unfavorable base effect of 4Q09. Should economic growth in 4Q10 be similar to that of the third quarter, the full-year result will not exceed 3%.

Natalia Orlova

MinFin closer to getting a tool which would help it control the borrowing appetites of quasi-sovereigns http://www.businessneweurope.eu/dispatch_text13308

VTB CapitalOctober 25, 2010

News: MinFin plans to move from monitoring the borrowings of state-controlled issuers to actually approving or vetoing those, according to Deputy Minister of Finance Dmitry Pankin. He said that MinFin wanted to get the point across that this excessive borrowing and we have to say 'No'.

According to Pankin, the respective draft legislation is being sent for concurrence to the Ministry of Economy (MinEconomy), but at the moment there appear to be a number of disagreements.

The Head of Department of MinEconomy Alexey Uvarov explained that the draft Decree of the Government envisages the MinFin as a party that should approve voting directives for the state representatives on the Board of Directors. MinEconomy is ok with MinFin approving the borrowings part, but against it getting involved into capex, dividends and other areas, according to Uvarov (Sources: Vedomosti, Interfax).

Our View: It is not the first time the MinFin has announced its intentions to control the borrowings of quasi-sovereigns. It appears that MinFin is now actively working on getting the respective tool.

In theory, once MinFin receives desirable powers, the risk of fast leverage growth of state-controlled corporates will diminish. However, in practice one need not forget remember about the vast "political weight" of respective management teams and also the

fact that not all financial transactions are subject to approval of boards of directors.

Anyway, the news should be welcomed by the holders of Russian quasi- sovereign bonds as it implies stronger control over leverage and FX risks as well as new debt supply in wholesale capital markets.

Mikhail Galkin

Business, Energy or Environmental regulations or discussions

Norilsk Nickel, Rosneft, Sberbank: Russia Stock Market Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ayN7xJv8Csko

By Yuriy Humber

Oct. 26 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s 30-stock Micex Index rose 0.6 percent to 1,528.24 at the close in Moscow.

OAO GMK Norilsk Nickel (GMKN RX): Copper rose to the highest price in 27 months in New York and London as the dollar weakened amid speculation the Federal Reserve will announce further bond purchases next week. The metal touched $3.8895 a pound on the Comex exchange. Norilsk, Russia’s biggest copper producer, rose 2.8 percent to 5,613.08 rubles in Moscow on the Micex Stock Exchange.

OAO Rosneft (ROSN RX): Crude oil rose for a second day as the dollar slumped to a 15-year low against the yen, bolstering the appeal of raw materials as an alternative investment. Oil futures in New York were 2.9 percent higher than a year ago. Russia’s largest oil producer fell 0.2 percent to 216.98 rubles in Moscow on the Micex Stock Exchange.

OAO Sberbank (SBER03 RX): The dollar dropped to a 15-year low versus the yen after a Group of 20 pledge to avoid “competitive devaluation” failed to dispel bets that the Federal Reserve will debase the greenback by announcing more bond purchases. Russia’s biggest bank and biggest stock by trading volume rose 0.4 percent to 102.36 rubles on the Micex Stock Exchange in Moscow.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net.

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

Last Updated: October 25, 2010 22:00 EDT

October 26, 2010 11:52

Tenex could raise syndicated $500 mln loanhttp://www.interfax.com/newsinf.asp?id=197865

MOSCOW. Oct 26 (Interfax) - Russian nuclear materials exporter Techsnabexport (Tenex) plans to raise a foreign syndicated bank loan of up to $500 million repayable in five years, the general director of the state Rosatom corporation, Nikolai Solomon, told reporters.

"I think we'll have an official statement by November 1 after we have signed the mandates [with the banks]," Solomon said.

Tomsk Distribution grids might be managed by EDF

http://www.businessneweurope.eu/dispatch_text13308

VTB CapitalOctober 26, 2010

News: MRSK Holding might pass management of Tomsk Distribution Grids (TORS RU) over to EDF, according to yesterday's Interfax, quoting Nikolay Shvets CEO of MRSK Holding. Currently, it is under MRSK of Siberia's management. He stressed that privatisation of grids was not on the agenda.

Shvets also stated that 8 regions might switch to RAB regulation from 1 November. He went on to say that all MRSKs would be able to shift over to RAB from early next year.

Finally, the CEO highlighted that the average interest rate for loan portfolio of MRSK Holding (RUB 123bn) had been reduced to 7.11% of late.

Our View: We believe that the news is generally positive for MRSKs. As we have continually reported, the appearance of foreign utilities in the management of distribution grids is likely to add to the investment case of the latter. We think that Enel, who also cooperates with MRSK Holding, might get managing control over some MRSKs.

We also welcome switch to RAB from 1 November should it to occur. We await more details regarding the move of all the other regions from 1 January.

Domestic fertiliser producers to pay market price for potash starting in 2013

http://www.businessneweurope.eu/dispatch_text13308

Renaissance CapitalOctober 26, 2010

Event: Today (26 Oct) RBC Daily reported that yesterday (25 Oct), at a meeting with First Deputy Prime Minister Igor Shuvalov initiated by Suleyman Kerimov, the government decided to set potash prices for domestic complex fertiliser producers at the market level from 2013. A transitional period in 2011-2012 will smooth out the sharp increase in prices. Until 2013, complex fertiliser producers will be able to buy potash at minimal export prices (currently RUB6,300/tonne [$210/tonne]) and may be eligible for compensation. Domestic farmers will pay a lower potash price of RUB4,200/tonne ($140/tonne) until 2013. Thereafter, the government plans to provide them with additional subsidies for the purchase of potash and complex fertilisers.

Currently, the potash price for domestic fertiliser producers is RUB4,300/tonne ($143/tonne). According to the government's guidance on nondiscriminatory access to the potash market, potash fertiliser producers have to supply 1.65mnt of potash per year to the domestic market at prices that are indexed to industrial inflation.

Action: In our view, the news is positive for potash fertiliser producers (Uralkali, Silvinit), which will benefit from a higher selling price, and negative for complex fertiliser producers (Acron, Dorogobuzh, EuroChem), due to higher costs.

Rationale: Silvinit and Uralkali supply about 17% and 12% of their potash output, respectively, to the domestic market. In 2009, Silvinit delivered 0.94mnt of potash to the domestic market, while Uralkali delivered 0.6mnt. The current netback average export price for potash is about $270/tonne, on our estimates. If domestic potash prices are set at the market level, we estimate that Silvinit and Uralkali will be able to increase their revenue by $120mn and $76mn, respectively, which will be fully translated into EBITDA.

Mikhail Safin

Gov't to eliminate potassium market regulation

http://www.rbcnews.com/free/20101026115542.shtml

      RBC, 26.10.2010, Moscow 11:55:42.Despite the fact that Russian businessman Suleyman Kerimov has only recently become a player in the Russian potassium business, he has already proven himself to be an efficient lobbyist. He managed to convince the government to abolish price regulations on potassium fertilizers.

According to the RBC Daily newspaper, this may put an end to long-term disputes regarding potassium prices for producers of compound fertilizers. At a meeting with First Deputy Prime Minister Igor Shuvalov, a decision was made that starting in 2013, potassium prices on the domestic market will become free market prices. For potassium companies, this means millions of dollars in additional annual revenue.

      Several sources close to the meeting with Shuvalov informed the publication that the meeting had been held at Kerimov's initiative and prepared within a short period of time. At the same time, they indicated that a transition period within the next two years would help prevent a drastic increase in prices. Furthermore, compound fertilizer producers will receive compensation for the period until 2013 in connection with the shift towards market prices. Uralkali and Silvinit, specifically, will be able to generate up to $220m in additional profit. Market participants expect the two companies to merge before the end of 2010.

Export duty for cement abolished

http://www.businessneweurope.eu/dispatch_text13308

MetropolOctober 26, 2010

The Russian government has cancelled the export duty for cement, lowering it to zero from the current 6.5%. The zero duty will be effective starting November 19.

We believe that no export duty could be beneficial to the Russian producers, since they could increase their exports from 0.6mn tones in 2009 to 3-3.5 mn tones in the next few years. However, the production increase could take place a couple of years later, since the current international market conditions are weak and not favorable for export increases. For example, cement price in Kazakhstan is about USD 60 per tonne, which is even less than USD 76 per tonne in Russia.

Zero export duty is more beneficial for the cement producers located in the Central part of Russia, where the transport cost is rather low for supplying cement to both Asia (Kazakhstan and Turkmenistan) and Europe (Azerbaijan, Belarus, Finland and Baltic states). At the same time, the Russian stocks we are covering (Sibcem, Iskitimcement, Gornozavodskcement) may not benefit as much from the zero duty, since their capacities are located far away from most cement consuming countries, except Kazakhstan.

Consortium of Evraz, EPK and Severstal to build railroad http://www.businessneweurope.eu/dispatch_text13308

VTB CapitalOctober 26, 2010

News: According to today's Vedomosti, the key holders of licenses in the Ulug- Khem basin are set to create a consortium in order to construct a railway to Transsib.

Our View: Insufficient infrastructure is the major issue which deters the development of new coal mining regions in Russia. Capex required for the construction of the Kyzyl-Kuragino railway with capacity of up to 15mtpa of coal totalling roughly USD4bn with the state fund financing one-third of it.

Based on our estimates, Ulug-Khem is to produce at least 30-40mtpa of coal and transportation capacity as a result has to at least double. Moreover, Transsib also has limited capacity which is a bottleneck for the project. Given our bullish view on coking coal and the current news coupled with China being ready to support development of coal mining in Tuva (as much coal as would be needed for exports) through special purpose credit lines (around USD 6bn), we see the news as another positive development for the industry as a whole.

Alexander Pukhaev

Sapsan train races ahead in profitability for Russian Railwayshttp://en.rian.ru/business/20101026/161088304.html

11:40 26/10/2010

The Sapsan high-speed train launched by Russian rail monopoly Russian Railways (RZhD) less than twelve months ago has proved to be the monopoly's sole profitable enterprise in the passenger transport sector, with its profit margin hitting 30 percent, RZhD President Vladimir Yakunin said on Tuesday.

"The other types of rail passenger transportation are loss-making," Yakunin said in an interview with Vedomosti business daily, adding that losses amounted to 34 billion rubles ($1.1 billion) from commuter train carriage and 36 billion rubles from long-distance train transportation.

Commuter train tariffs are regulated by regional authorities while rates for economy-class coaches are set by the Federal Tariff Service. These rates are lower than the economically justified level and therefore the government has to compensate the rail monopoly for its losses, an RZhD representative said. Tariffs for Sapsan fast-speed trains, however, are regulated directly by Russian Railways, which offers competitive rapid carriage services compared with other means of transport.

The demand for high-speed rail passenger carriage has proved to be so strong that the company is considering buying another eight Sapsan trains, Yakunin said, without specifying the terms of the expected deal.

The company plans to make a decision on the purchase by the end of 2010, Valentin Gapanovich, RZhD senior vice-president, said on Friday.

Russian Railways currently has eight high-speed Sapsans produced by the German engineering group Siemens. They run between St Petersburg, Moscow and Nizhny Novgorod. The Sapsan occupancy rate is 84.5 percent, according to RzHD.

The company's revenues from ticket sales may amount to 205 million euros annually at the current ticket price, while profits from the operation of these trains exceed 61 million euros.

MOSCOW, October 26 (RIA Novosti)

Yandex launches job aggregatorhttp://www.telecompaper.com/news/article.aspx?cid=764450

Tuesday 26 October 2010 | 08:32 CET  Yandex launched Yandex.Jobs, a job aggregator that enables job seekers to find information about employment opportunities in their area in Yandex's search results. Yandex.Jobs gathers various job offers posted on the largest recruitment websites in Russia, Ukraine, Belarus and Kazakhstan. At present, Yandex.Jobs shows 500,000 job offers from 121,000 employers. Users of the service can search for vacancies by specific parameters such as salary, working hours or education requirements. Employers interested in promoting their vacancies to Yandex users can place their offers on one of recruitment websites partnering with the Yandex.Jobs service. The list of partner websites currently includes HeadHunter, Rabota@Mail.ru, Rabota.ru, RosRabota, SuperJob, Zarplata.ru and several of regional job search resources. Yandex encourages recruitment websites to participate in its partner programme.

Metalloinvest holder mulls selling stake –paperhttp://af.reuters.com/article/metalsNews/idAFLDE69P01Z20101026

Tue Oct 26, 2010 4:47am GMT

MOSCOW Oct 26 (Reuters) - One of the major stakeholders in Russian steel and iron ore firm Metalloinvest, Vasily Anisimov, is mulling selling his 20 percent stake in the firm worth around $4 billion, the business daily Vedomosti reported on Tuesday.

Billionaire Alisher Usmanov, who controls Metalloinvest through his 50-percent ownership, is helping to find a buyer for Anisimov's stake, the newspaper reported, citing a source close to the company.

"As of today I don't have a definite decision regarding the Metalloinvest stake," the newspaper cited Anisimov as saying. "But I always think about next steps ... I'm 59 years old, and I work 18 hours a day. I would like to spend more time with my family."

Anisimov said that if it comes to him selling the stake, he will do so only for its maximum worth. (Writing by Lidia Kelly; Editing by Clarence Fernandez)

Anisimov May Sell $4 Billion Metalloinvest Stake, Vedomosti Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a1q64Dkwwyow

By Brad Cook

Oct. 26 (Bloomberg) -- Vasily Anisimov may sell his 20 percent stake in Russian billionaire Alisher Usmanov’s Metalloinvest holding company for $4 billion, Vedomosti reported, citing Anisimov and its own estimates.

Anisimov, 59, is discussing selling his stake with Usmanov and State Duma Deputy Andrei Skoch, owners of 50 percent and 30 percent of Metalloinvest, respectively, the Moscow-based newsaper said, citing Anisimov. Usmanov is helping Anisimov find a buyer if he chooses to sell, Vedomosti said.

Metalloinvest, the largest producer of iron ore in the former Soviet Union, plans to hold an initial public offering early next year, according to the newspaper.

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

Last Updated: October 26, 2010 00:33 EDT

Turkey's Is Bankasi buys Bank Sofia in Moscowhttp://www.worldbulletin.net/news_detail.php?id=65591

Turkey's Is Bankasi said that it signed an agreement in Moscow and purchased 100 percent of Closed Joint Stock Company Bank Sofia. Tuesday, 26 October 2010 10:12

Turkey's Is Bankasi said on Monday that it signed an agreement in Moscow and purchased 100 percent of Closed Joint Stock Company Bank Sofia.

According to a statement released by Is Bankasi, the purchasing transaction had taken place in return for 40 million USD, noting 36 million USD took place during the share transfer and 4 million USD would take place in one-year term.

The statement said Bank Sofia, with its 400 staff, was headquartered in Moscow. He said the bank had six branches and 7 representations in Moscow, Balakovo, Samara, Saint-

Petersburg, Saratov and Novosibirsk.

"As of December 31, 2009, Bank Sofia has around 127 million USD total assets and 28 million USD equity capital," the bank said.

Is Bankasi underlined that approval of Turkey's Banking Regulatory and Supervisory Agency, Russian Government Commission and Russian Central Bank was necessary for share transfer.

Moscow airport Vnukovo to impose noise restrictions in 2011http://en.rian.ru/russia/20101026/161085738.html

05:58 26/10/2010

Moscow's Vnukovo airport will stop receiving aircraft whose noise levels exceed the existing standards starting in March 2011, Russia's Vedomosti daily said Tuesday citing a senior airport official.

The list of aircraft slated for ban includes the Russian-made Tu-134, Tu-154B and Il-86 airliners.

"It is necessary to reduce noise levels because Vnukovo is the closest to the city among all major Moscow airports," Vedomosti quoted Vitaly Vantsev, first deputy general director of the Vnukovo airport.

Vantsev said that the measure would not affect the profitability of the airport because the Russian air carriers are gradually replacing these aircraft with new planes and their share in airport operations had dropped to 10-15 percent.

Vnukovo is one of Russia's largest air gateways handling more than 130,000 flights and about 8 million passengers annually.

MOSCOW, October 26 (RIA Novosti)

For the Record http://www.themoscowtimes.com/business/article/for-the-record/421073.html

26 October 2010

Vladimir Potanin owns “a small stake” in RusAl, and Gazprom, LUKoil and Sberbank stock, Kommersant said, citing the businessman. (Bloomberg)

Russian Railways valued the 75 percent stake it plans to sell in its Freight One unit at $6 billion, Vedomosti reported Monday, citing chief executive Vladimir Yakunin. (Bloomberg)

Sberbank may replace 15 percent of its management staff under a new program to evaluate competency, Kommersant reported Monday, citing chief executive German Gref. (Bloomberg)

Bank of Moscow chief  Andrei Borodin and his partner may control 44 percent of the institution — which has $3.5 billion of the city’s money on deposit — enough to stop the city administration from implementing key decisions, Vedomosti reported Monday, citing unidentified sources. (Bloomberg)

Russia will lift a ban on flour exports from Jan. 1, while grain exports will be suspended until July 1, according to a decree published on the government web site Monday. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Bashneft makes advance payment to bid for strategic oilfields

http://www.rbcnews.com/free/20101026105839.shtml

      RBC, 26.10.2010, Moscow 10:58:39.Bashneft has made an advance payment in the amount of RUB 18.171bn (approx. USD 601m) for participation in the tender for the development of Trebs and Titov strategic oilfields, the oil company's press office reported to RBC on Monday. The money was transferred to the bank account of the federal agency for subsoil resources (Rosnedra). As reported earlier, the deadline for making an advance payment was set for October 25.

      Bashneft is the only other company besides Surgutneftegas that has been admitted to participate in the bid for the two oilfields. The tender is scheduled for December 2, 2010, with the license for Trebs and Titov oilfields to be granted for 25 years.

Shell to prospect oil and gas in Russia’s Astrakhanhttp://english.ruvr.ru/2010/10/26/28466550.html

Oct 26, 2010 04:47 Moscow TimeThe world’s oil and gas giant Shell will use its cutting edge technology in prospecting oil and gas in Russia’s southern region of Astrakhan.

A relevant agreement was reached by Astrakhan’s governor Alexander Zhilkin and Shell representative Charles Watson. 

The known deposits of Astrakhan amount to 900 million tons of oil and 5 billion cubic meters of gas.

Novatek acquires Novatek Ust Lugahttp://www.steelguru.com/russian_news/Novatek_acquires_Novatek_Ust_Luga/171782.html

Tuesday, 26 Oct 2010t is reported that Novatek acquired 100% in Novatek Ust Luga. Earlier, it had none stakes in this Company.

Novatek is ranked as the second producer of natural gas in Russia after Gazprom. The fields are located in Yamalo Nenetsky region. The stocks are under trading on LSE. It managed to increase the proved reserves by 38.1% to 6.853 billion barrels.

In 2009 the gross output gained 32.78 billion cubic meters, hydrocarbons 3.049 million tonnes.

In Q1 2010 the output of gas rose 20.8% to 9.98 billion cubic meters in 2009 production reached 32.78 billion cubic meters. The fields and licensed sectors are located in Yamalo Nenetsky reg. The stocks are traded on LSE.

(Sourced from AK&M)

Another Chance for the Odessa-Brody Pipelinehttp://georgiandaily.com/index.php?option=com_content&task=view&id=20275&Itemid=141

October 26, 2010

Vladimir Socor

Using the Odessa-Brody oil pipeline as originally intended, south-north, is under active consideration again; this time, by the governments of Ukraine and Belarus.

The pipeline is being used since 2004 in reverse, north-south, by Russian oil companies, for exports out of Odessa. Such reverse-use blocks the access of non-Russian oil into the Odessa-Brody pipeline for supplying Ukraine and other countries in the region. These countries have sought unsuccessfully to correct the situation during the intervening years.

Four recent developments are spurring the same countries to re-open the issue:

1. Russia has imposed a steep price hike through export duties on crude oil to Belarus, compounded by taxation of Belarusian exports of oil products refined from Russian crude. This has compelled Belarus to seek non-Russian supplies for its massive oil-processing industry, so as to maintain operations and avert a Russian takeover of the assets.

2. The growing volumes of Venezuelan oil are potentially available for delivery at Ukrainian Black Sea and Baltic ports and onward transportation to the land-locked Belarus. While the cost-effectiveness of existing transportation by railroad is questionable, the Odessa-Brody pipeline would alleviate this problem, if used northward to Brody as originally intended.

3. Russian oil transit through the Druzhba pipelines via Belarus and, especially, via Ukraine to Europe is expected to decline in the years ahead, as Russia re-directs export volumes toward its own Baltic Pipeline System (BPS 1 and 2). This underscores the need for diversification of suppliers and supply routes, preeminently Odessa-Brody south-north.

4. Russian oil shippers are sharply reducing their export volumes through the Odessa-Brody pipeline north-south, thereby releasing Ukraine from contractual obligations on reverse-use, and freeing pipeline capacity for non-Russian oil to flow in the originally intended direction, south-north.

On October 17 in Minsk, the Belarus Oil Company (BNK) and Petroleos de Venezuela (PDVSA) signed an agreement for the delivery of 10 million tons of Venezuelan oil to Belarus per year, from 2011 through 2013. President Alyaksandr Lukashenka and his visiting counterpart, Hugo Chavez, witnessed the agreement’s signing (Interfax, October 18).

Belarus plans to access about half of that annual volume via Odessa and the remainder via Baltic ports. Belarus has already started significant imports of Venezuelan oil, with a planned volume of 4 million tons in 2010 (Belapan, October 13).

Among Baltic ports, Lithuania’s Klaipeda is the leading option for Belarus to import Venezuelan and other non-Russian oil. Lithuanian President, Dalia Grybauskaite, and accompanying officials, visiting Minsk on October 20, reached preliminary agreement with their Belarusian counterparts on oil transportation from Klaipeda. The agreement is expected to be finalized by November (Interfax, October 20).

On October 18 in Kyiv, President Viktor Yanukovych held talks with the visiting President Chavez regarding Venezuelan oil transportation via Ukraine for Belarus. According to Yanukovych, Ukraine has considerable spare capacity in its oil transit pipelines (Druzhba system) and is also keen to use the Odessa-Brody pipeline for inflow into the country (Interfax-Ukraine, October 18, 21). Yanukovych was alluding to the decline in Russian oil exports via Ukraine to Europe, as Moscow redirects oil volumes for shipment by tankers via the Baltic Sea.

The Odessa-Brody pipeline has been under-utilized continuously since 2004. TNK-BP and other Russian oil companies, using this pipeline in reverse, supplied far less than its

capacity volume of 9 to 12 million tons per year. This prompted suspicions that commerce was only one reason for Russian reverse-use, the other presumed reason being denial of access to non-Russian oil supplies for Ukrainian refineries. Meanwhile, the oil flow to Odessa has further declined in the second quarter of 2010 for unclear reasons, and is said to have practically stopped in October (Nezavisimaya Gazeta, October 20).

This situation allows the Ukrainian government to prepare for using this pipeline for inflow of oil from Odessa, instead of outflow. Once that happens, however, there is no optimal transport solution yet from Brody to Belarus.

Oil is being moved from Odessa by railroad at present. Belarus started imports of Venezuelan oil from Odessa’s Pivdenny terminal in April of this year. These imports hit the 1 million ton mark by mid-October and are planned at 1.5 million tons for 2010. The Ukrainian government has reduced taxes on oil transportation of oil bound for Belarus at the Pivdenny port and on Ukrainian railroads (Interfax-Ukraine, October 21).

On October 12 in Kyiv, First Deputy Prime Ministers Andriy Kliuyev of Ukraine and Uladzimir Syamashka of Belarus signed an inter-governmental agreement on oil transportation for the years 2011-2015. The agreement envisages transit of 4 to 5 million tons of oil per year, from Odessa/Pivdenny via Ukraine to Belarus (Interfax-Ukraine, October 21).

Also on October 12, the Ukrainian government approved the test-pumping of a consignment of 80,000 tons of Venezuelan oil through the Odessa-Brody pipeline, and onward through a section of the Druzhba pipeline, to the Mozyr refinery in Belarus. Proposed by Ukraine’s Fuel and Energy Minister, Yury Boyko, and scheduled for November, the move necessitates “batch-pumping” –a method to forward oil of different densities through a pipeline in separate batches, without mixing them. The amount of 80,000 tons corresponds with the capacity of tankers being handled at Odessa’s Pivdenny terminal (Interfax-Ukraine, UNIAN, October 12, 14; BELTA, October 13).

Russian Energy Minister, Sergei Shmatko, however warned publicly, while in Kyiv, that pumping Venezuelan oil via Odessa-Brody-Druzhba to Mozyr would necessitate Russian approval. Boyko retorted also publicly that Ukraine has a right to act in its national interest and that of its partner Belarus (Interfax-Ukraine, October 14, 15). The main technical issue is almost certainly the composition of Venezuelan oil.

Using the Odessa-Brody pipeline south-north, as originally intended, is also a matter of interest to Poland. The Sarmatia consortium, last restructured in 2007 with Polish, Ukrainian, and Lithuanian participation, had expected to import oil through this pipeline ever since Ukraine completed it in 2002. The Polish refineries at Plock and Gdansk were the designated customers, pending an optimal transport solution from Brody onward. Polish Prime Minister, Donald Tusk, recently urged the visiting Ukrainian Prime Minister, Nikolai Azarov, to consider this issue again (PAP, September 30), as did the Sarmatia consortium chief in a statement to the Ukrainian government (UNIAN, October 14).

These countries had intended to import Caspian oil through the Odessa-Brody pipeline and a northbound continuation route. From 2002 onward, however, Russia blocked the access of Kazakhstani oil via Novorossiysk to Odessa. Deliveries of Azerbaijani oil would have been feasible via Georgia’s Black Sea coast to Odessa, but Russian companies blocked the inland access into Ukraine through the Odessa-Brody pipeline, by using it in reverse. Venezuelan oil deliveries inland by railroad, or batch-pumped by pipeline, are temporary, emergency-dictated solutions. A real solution would have to start with the Ukrainian government regaining sovereignty over the Odessa-Brody pipeline, for northward use.

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

Lukoil Junk Threat Eases Before Eurobond Sale: Russia Credit http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ae3JSNkTvLpA

By Stephen Bierman and Jack Jordan

Oct. 26 (Bloomberg) -- Investors are growing more confident that OAO Lukoil will avoid having its credit ratings cut to junk as the oil producer’s debt yields approach those of higher- graded OAO Gazprom.

Lukoil’s $500 million of bonds due in 2022 yield 23 basis points more than state-controlled Gazprom’s $1.3 billion of notes due the same year, the smallest spread in a month, data compiled by Bloomberg show. Lukoil yields are falling as Russia’s largest non-state oil company meets bondholders in Asia, Europe and the U.S. this week to garner support for a dollar debt sale, said two people with knowledge of the offer.

While Standard & Poor’s said Oct. 22 it may cut Moscow- based Lukoil’s ratings to below investment grade, the bonds are outperforming debt from Petroleo Brasileiro SA, Brazil’s state- run oil producer, and Russian competitor TNK-BP. Chief Executive Officer Vagit Alekperov agreed to buy $1.4 billion of Lukoil’s shares with a group of investors and pledged $4.47 billion of his stock as collateral to back loans, according to regulatory filings this month, easing concern that the company would increase debt to buy back its own equity from ConocoPhillips.

“Lukoil is looking quite sound in terms of its credit quality” because the buyback was “funded by management, not the company’s balance sheet,” said Andrey Basatskiy, a Moscow- based fixed-income money manager at Third Rome, which oversees about $200 million of assets.

Bond Meetings

Lukoil hired Barclays Capital, ING Groep NV and Royal Bank of Scotland Group Plc to manage its sale of bonds, according to the two people with knowledge of the sale, who

declined to be identified because the deal hasn’t been announced. The maturity hadn’t been decided, they said on Oct. 21. Lukoil’s press service declined to comment on the bond offering.

The company probably will raise between $750 million and $1.2 billion, said Sergey Dergachev, who helps manage $6 billion of emerging-market debt at Union Investments in Frankfurt. The yield for 10-year bonds probably would be about 6 percent, he said.

Lukoil last sold international debt in October 2009, offering $900 million of five-year bonds and $600 million of 10- year dollar securities, data compiled by Bloomberg show. The yield on Lukoil’s 7.25 percent bonds due in November 2019 fell 7 basis points, or 0.07 percentage point, yesterday to 5.64 percent, down from the peak of 8.13 percent on May 25.

Yields Fall

The yield on Lukoil’s bonds due in 2022 fell 5 basis points to 5.92 percent yesterday, down from 6.23 percent on Oct. 1, Bloomberg prices show. The spread over Gazprom has narrowed from 54 basis points at the start of this month.

Lukoil’s dollar bonds due November 2014 yield 99 basis points more than Rio de Janeiro-based Petrobras’s September 2014 dollar notes, compared with a spread of 160 in August and 271 on May 25.

“Lukoil compares very well against similar companies like Petrobras,” Dergachev said in a phone interview. “The ConocoPhillips buyback was not hugely detrimental to the company’s standing.”

Lukoil’s bonds also outperformed those of TNK-BP, the oil producer that is owned by London-based BP Plc and a group of Russian billionaires. TNK-BP’s bonds due in 2020 are yielding 15 basis points more than Lukoil’s 2019 notes, a reversal from August when the notes sold by TNK-BP were yielding as much as 51 basis points more.

All three oil companies are rated BBB- by Standard & Poor’s. Gazprom, based in Moscow, is graded a level higher at BBB.

Extra Yield

The yield on Russia’s dollar bonds due in 2020 was little changed at 4.34 percent yesterday. The country’s ruble notes due November 2014 were unchanged, yielding 7.14 percent.

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries fell 2 basis points to 209, according to JPMorgan Chase & Co. EMBI+ indexes. The difference compares with 139 for debt of similarly rated Mexico and 181 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

The yieldspread on Russian bonds is 45 basis points below the average for emerging markets, down from a 15-month high of 105 in February, according to JPMorgan indexes.

Ruble Gains

The ruble gained for a third day against the dollar, strengthening 0.4 percent to 30.2475 per dollar in Moscow trading yesterday. Non-deliverable forwards, or NDFs, which provide a guide to expectations of currency movements and interest rate differentials and allow companies to hedge against currency movements, showed the ruble at 30.5138 in three months.

The cost of protecting Russian debt against non-payment for five years using credit-default swaps fell 1 basis point to 142, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Credit-default swaps for Russia, rated Baa1 by Moody’s Investors Service, its third-lowest investment grade, cost 6 basis points more than similar contracts for Turkey, which is rated four levels lower at Ba2. Russia swaps cost as much as 40 basis points less on April 20.

Moody’s rates Lukoil Baa2, its second-lowest investment- grade ranking, with a “stable” outlook.

Gazprom

Returns on Lukoil bonds had been underperforming Gazprom after S&P placed the oil company’s debt on “watch negative” on July 29 because of concern the company would increase debt to buy back shares. Lukoil agreed to buy 7.6 percent of its own shares for $3.44 billion on July 28 as Houston-based ConocoPhillips sold its stake to repay debts.

Alekperov, Russia’s sixth-richest man with a fortune of $10.6 billion according to Forbes magazine, was among a group of investors that helped buy an additional 5 percent stake with UniCredit Bank AG from ConocoPhilips for $2.4 billion under an option that expired Sept. 26, according to a regulatory filing on Sept. 27.

As part of the deal, Redruth Investments, a company linked to Alekperov, gained 2.9 percent of Lukoil for $1.4 billion on Sept. 28 and raised an undisclosed amount of money from a group of banks led by UBS AG after pledging 77 million shares as collateral a week earlier, valued at $4.5 billion based on the share price at the time. Lukoil paid $980 million for the other 2.1 percent, according to a regulatory filing.

“We view Lukoil’s liquidity management as less robust, historically, than that of its investment-grade peers,” S&P analysts including Andrey Nikolaev said in the Oct. 22

report. “We understand from management that it may take several actions in the coming weeks to strengthen its debt-maturity profile.”

Lukoil expects to have $5 billion in free cash flow by the end of this year and isn’t in danger of a rating cut because of the share buyback, Deputy Chief Executive Officer Leonid Fedun told reporters in Moscow on Oct. 6.

“Lukoil is a name we like, they’re much more conservative” in terms of debt compared with competitors, said Jerome Benathan, who manages the equivalent of about $1.5 billion of debt at Swisscanto Asset Management in Zurich. “They are moving from a shareholder-friendly attitude to a more opportunistic bondholder-friendly one before the new issuance.”

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Last Updated: October 25, 2010 17:05 EDT

Gazprom

October 26, 2010 10:29

Gazprom scouting Sakhalin sites for oil refineryhttp://www.interfax.com/newsinf.asp?id=197831

YUZHNO-SAKHALINSK. Oct 26 (Interfax) - Russian gas giant Gazprom (RTS: GAZP) has begun the legwork and investment studies for an oil refinery it might be building on Sakhalin, director of Gazprom's headquarters in the Sakhalin region Vladimir Kozlov told deputies from the regional Duma.

The work is being done in conjunction with related subdivisions in the regional administration. The general idea is that the refinery will be able to produce 4-5 million tonnes of oil products per year.

These new facilities will be some of the most modern in Russia's Far East, and will process gas condensate and oil produced by the Sakhalin-3 project.

"Whether the plant will be near to Sakhalin-3 facilities or a warm-water port in the island's south will be decided by specialists from OJSC Gazprom's scientific research institutions," Kozlov said.

Cf

Gazprom Seeks ONGC’s Sakhalin Stake, IANS Says (Correct) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aUhQ5ev6uNHk

By Amit Prakash

(Corrects second paragraph to show Rosneft owns project stake.)

Oct. 26 (Bloomberg) -- OAO Gazprom is considering supplying liquefied natural gas to India in exchange for the 20 percent stake in the Sakhalin-1 project held by state-owned Oil & Natural Gas Corp., the Indo-Asian News Service reported citing Stanislav Tsygankov, the head of foreign relations at the Russian company.

OAO Rosneft and India’s ONGC own 20 percent each of the project controlled by Exxon Neftegas Ltd. and Japan’s Sakhalin Oil & Gas Development Co., which hold 30 percent apiece, according to the IANS report.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

Last Updated: October 26, 2010 02:33 EDT

Russia's Gazprom in talks over LNG supplies to Indiahttp://www.southasiamail.com/news.php?id=86353

Moscow, Oct 25 (IANS/RIA Novosti) Russia's gas giant Gazprom is considering a possible supply of liquefied natural gas (LNG) to India in exchange for its 20 percent stake in the Sakhalin-1 project, a company official said Monday.

"It is one of the elements of the talks, though it is not yet being implemented," Gazprom's head of foreign relations Stanislav Tsygankov said of the possible trade-off of the Sakhalin-1 stake.

The Sakhalin-1 project includes reserves estimated at about 307 million tonnes of oil (2.3 billion barrels) and 485 billion cubic metres of gas.

The project is owned by Exxon Neftegas and Japan's Sodeco with 30 percent each, and Russia's Rosneft and India's ONGC with 20 percent each.