Russia 090825

Basic Political Developments  Russian and Mongolian presidents start talks in Ulan-Bator - The Russian leader agreed with the words of his Mongolian colleague on the development of cooperation between the two countries, noting that Russia and Mongolia – close neighbours – are linked by tight mutual relations. o Russia, Mongolia have political will to resolve problems – Medvedev o Russia and Mongolia sign uranium deal, settle debt - Joint venture to mine Dornod uranium deposit; Uranium reserves of 28,000 tonnes could be doubled; Investment of "hundreds of millions of dollars"; Khan Resources says still has 58 percent of license; Countries settle $150 mln Mongolian debt o Medvedev arrives in Mongolia - His visit will start with a meeting with his Mongolian counterpart Tsakhiagiin Elbegdorj during which a range of bilateral deals are expected to be signed, including a declaration on the development of strategic cooperation between Russia and Mongolia. o Russian president arrives in Mongolia - Medvedev's trip comes just three months after his Prime Minister Vladimir Putin visited the resource-rich former Soviet satellite, which has vast copper, coal and gold deposits, as Russia seeks to revive its influence here. o Russian President Arrives In Mongolia - The President of the Russian Federation D.A.Medvedev arrived Monday in Mongolia to pay state visit to the country at an invitation of the Mongolia's counterpart Ts.Elbegdorj. Medvedev to make official visit to Mongolia - “Russian-Mongolian relations are strategic, and it’s very important that we are not witnessing any pauses or intervals in our bilateral strategic partnership after the presidential election in Mongolia. The previously set plans in the trade and economic sphere and other branches and industries are being consistently implemented. We feel that the new Mongolian leadership is set to preserve all the achievements,” a Kremlin official said. o Russia's Medvedev to mark Soviet-era battle on Mongolia visit - His two- day trip to Ulan Bator comes as the world is gearing up to mark the 70th anniversary of the start of the world war in September and as Russia is seeking to revive its influence in former Soviet client states like Mongolia. o Major Mongolian coal project could begin next fall – newspaper: Development of the big Tavan Tolgoi coal field in Mongolia, in which some major Russian companies have expressed an interest, could begin next fall, the CEO of Erdenes MGL, which represents the Mongolian government in strategic mineral resources projects, told the Mongolia Today newspaper o Russia, Mongolia form Dornod uranium joint venture - Russian and Mongolian state-owned firms have formed a joint venture to exploit the Dornod uranium deposit, in a setback for a Canadian mining firm licensed to develop the area. o Medvedev to Negotiate Over Mongolia’s Mines - Priority in the talks will be given “to large projects in mining, transport and agriculture,” Medvedev’s aide Sergei Prikhodko told reporters Friday in comments embargoed until Monday. “After presidential elections in Mongolia, we do not see any pauses or interruption in our bilateral strategic relations. Earlier agreements continue as planned.”  Ukraine nationalists deny involvement in South Ossetia war - Ukrainian National Assembly-Ukrainian National Self-Defense (UNA-UNSO), a Ukrainian nationalist party, denied an allegation by a senior Russian criminal investigation agency on Monday that some of its members fought on the side of Georgia in the August 2008 Russian-Georgian armed conflict.  Ukraine: info on Ukrainians taking part in August 2008 war will exacerbate Russia-Ukraine relations - "We are surprised and concerned about the sharp statements made by the Russian investigations Committee on the involvement of Ukrainian troops in the conflict, which is not confirmed by any data," a Ukrainian diplomat told Interfax on Tuesday.  Fears of regime change add new dimension to Russia-Ukraine tensions: As Ukraine celebrates the 18th anniversary of its independence from Soviet rule, the shadow of its former Communist past still hangs heavy. Moscow still seems determined to have a say in how things are run in Kyiv.  Kazakh space agency chief: Russia, Kazakhstan to increase joint use of Baikonur Cosmodrome - Russia is Kazakhstan's strategic partner in the implementation of space programs, President of Kazakhstan National Space Agency Talgat Musabayev said at the opening of the sixth international aerospace congress in Moscow.  U.S. offers Russia to organize joint flight to Mars - The United States and Russia must accomplish a human expedition to Mars jointly, with other space agencies participating, Marc Bowman, director of the Human Space Flight Program -Russia, said on Tuesday.  Russian ship taking part in Coast Guard exercise - The Vorovskiy arrived at Port Angeles Sunday for the three-day Pacific Unity exercise. The Coast Guard says vessels from Canada and Japan also are taking part while China and South Korea are participating as observers.  Egypt Releases Russian Wheat Held For 3 Months - A shipment of 56,000 metric tons of Russian wheat has been released for re-export after being held for three months at the Egyptian Red Sea port of Safaga, Russia's second largest grain exporter told Dow Jones Newswires Monday.  Russian Sailors Return to Their Home Land from Vietnam - 26 Russian seamen were about to embark on a hunger strike to demand backpay and get opportunity to return to their home land  Relatives say Arctic Sea hijackers victims of 'political games' - "I think they were framed, and it is not just my opinion, everybody who knows them also thinks so. They were seeking a job and got involved in a political conflict, were made hostages of a political game," Alexei Bartenev, the brother of suspect, Dmitry Bartenev, told Estonian television.  Death toll from dam disaster rises to 71  Sberbank to provide up to Rbl 20 bln to RusHydro - Russia’s savings bank Sberbank said it would be prepared to provide up to 20 billion roubles to RusHydro for the reconstruction of the Sayano-Shushenskaya hydropower plant.  Human error not to blame for Russia dam accident - "I think that the accident was not due to human error, and experts are more and more inclined to this too," Vasily Zubakin said as quoted by the RIA Novosti news agency.  Prime Minister Vladimir Putin met with Sberbank President German Gref - Vladimir Putin: German Oskarovich, let's start with the Sayano-Shushenskaya hydropower plant. You know about the situation, and how much is necessary to finance the reconstruction work. How are your relations with RusHydro developing? What kind of arrangements have you made with the company?  GLONASS navigation system loses one satellite - One spacecraft has been withdrawn from the orbital group of the Russian navigation system, GLONASS.  Russia launches 20 carrier rockets since start of 2009 - Russia has launched 20 carrier rockets since the beginning of the year, which beats last year’s average monthly rate, the government press service said on Monday.  Russia to invest $143 mln in engines for new Angara rocket - Russia will invest about 4.5 billion rubles ($143 mln) by 2015 in the production of engines for a family of Angara carrier rockets, the Perm Territory's government said on Monday.  Putin to chair conference on aerospace industry restructuring - At present, Russia’s aerospace brings together 100 research and production organizations. More than half of them are federal state unitary enterprises or state-run companies. The share of joint stock companies where the state holds a controlling interest makes up 22 percent.  Suicide bomber in Chechnya kills four police officers, injures one - "A suicide bomber approached five police officers who were waiting for their vehicle to be cleaned at a carwash and activated a home-made explosive device, hidden under his clothing. Four police officers were killed on the spot," the source said. A fifth policeman has been hospitalized with severe wounds.  Chechen rebels order separatist leader death-website: Chechen rebels called on Tuesday for prominent separatist leader Akhmed Zakayev to be killed, saying he had abandoned Islam by recognising the legitimacy of the restive region's Kremlin-backed government.  One police officer killed, one injured in Chechnya - One police officer was killed and another injured in an attack by militants in the Vedeno District of the Russian North Caucasus republic of Chechnya early on Tuesday, a police source said.  Putin dashes to Chechnya, shows support for Kadyrov  Chechnya Rapidly Becoming Russia’s Algeria, Moscow Analyst Says - In an article in today’s “Yezhednevny zhurnal,” Mark Feygin argues that those who believe Chechnya will never seek independence because of the assistance Moscow provides to it understand neither the nature of Chechnya nor the way in which its leaders are pursuing independence (www.ej.ru/).  Explosive device goes off in Nazran, no victims - An explosion occurred in Moskovskaya Street in Ingushetia’s city of Nazran at about 09.10 Moscow time on Tuesday.  Ingush intervention may backfire - "It's traditional for Moscow to react by appointing people from Moscow," said Yury Fedorov, a security expert at the London-based think tank Chatham House. "But basically those people who are coming from Moscow have very little knowledge of the local situation, and cannot understand what is going on below the surface."  Building of city interior department fired on in Khasavyurt - Unidentified people fired a shot from an under-barrel grenade launcher in the direction of the building of the city interior department in Dagestan’s city of Khasavyurt.  Where Violence Flourishes - By rejecting responsibility for law and order in North Caucasus, the Kremlin has probably sought to avoid fomenting anti- Russian sentiments. Moscow is concerned about security in Russia at large, but its security priority for North Caucasus has been simply to contain violence so it would not spill outside the region. With no steady check on illegal behavior, it was only a matter of time before violence spun out of control.  Drug police in Tatarstan seize 13 kg of heroin  Black candidates stir up local elections in Russia - "The level of racism in Russia is pretty monstrous," said Galina Kozhevnikva, deputy director of Sova, which monitors xenophobic incidents. "We don't have data from Volgograd, but all anecdotal evidence suggests things are not good."  Blowing Aviation Smoke - As soon as a Russian military leader announces an ambitious weapons program for the next 10 or 15 years, you can be sure that it is little more than smoke and mirrors to create the impression that the military is modernizing its defense capabilities.  Buddhist Lamas to Serve in the Russian Army - Buddhist clergy will appear in the Russian army this year, said leader of the Russian Buddhist community, Head of the Traditional Sangha of Russia Pandito Khambo Lama Damba Ayusheyev. “Chaplains will serve in those units of the Russian army where at least 10 per cent of servicemen are Buddhists.”  ‘White Tara’ Medvedev Pledges Cash - Medvedev promised financial support to the Buddhist community and to place Buddhist chaplains in the military during a visit Monday to the monastery in Ivolginsky Datsan, 30 kilometers from Buryatia’s capital, Ulan-Ude.  Over 27 mln Russians to be inoculated against influenza - Both the vaccines contain actual strains of flu viruses and have been recommended by the World Health Organisation for the 2009-2010 period.

National Economic Trends  Russian Ruble Declines as Oil Price Drops on Growth Concern  Russia daily c.bank swap limit at 5 bln rbls  Russian household revenues and consumption in 1Q 2009  Russia’s unemployment rate continues to decrease on Aug 13-19  Russia Econ Min: Trade Surplus -56% In Jan-Jul - Prime-Tass  Medvedev sees mortgage rates falling to pre-crisis level in 2-3 yrs  Mortgage Recovery Seen in 2 or 3 Years  ‘Recession Over but Crisis Remains’ - First Deputy Prime Minister Igor Shuvalov, who has led the government’s anti-crisis committee since December, made the announcement first. Andrei Klepach, the deputy economic development minister who first said the country was in a recession, officially presented last month’s growth figures later in the day.  Rencap: Russian economy may be on the road to recovery  Troika: Russia's Spontaneous Stabilization  Russia increased agricultural products output by 0.3%

Business, Energy or Environmental regulations or discussions  Lukoil, Norilsk Nickel, Raspadskaya: Russian Equity Preview  Bill Proposes Making Execs Liable for Losses - The Federal Service for Financial Markets has proposed legal changes that would allow shareholders to punish a company’s management for unreasonable or unfair actions and legalize so-called golden parachutes for executives who have left.  FAS to investigate pricing for potash consumed in oil and gas; neutral for potash producers  Ukraine's Azovmash's Russian plant faces bankruptcy  Copper exports from Russia up in H1  Eurasian Development Bank could offer $500 mln in Eurobonds in fall  Vnesheconombank granted credit to the bank "St.-Petersburg"  Sberbank net profit falls 90 pct in Jan-July  Sberbank RF raises bonuses to employees to the pre-crisis level  Investor sells Sberbank stake for 118 euro/GDR  Vedomosti: KIT Finance buys Rub 22.7 bln bonds issued by RRC  AvtoVAZ President, Boris Aleshin, leaves the company  Rusnano Negotiates With AMD About Joint 65 nm Chip Production  AMD Reportedly in Talks with Rusnano Over Semiconductor Joint-Venture  Metalloinvest Names Two VTB Directors to Board After Debt Deal  Transstroi Misses Road Bid - Billionaire Oleg Deripaska’s builder Transstroi lost a competition for a St. Petersburg highway contract, Kommersant reported Monday.  Russian oligarch is Biopure's new owner- Sergei Pugachev, through a recently created U.S. subsidiary of his Luxembourgh-based OPK Luxadvor SA, acquired the lion's share of Biopure's remaining assets with a $4.05 million bid during an Aug. 18 bankruptcy court auction in Boston.  Export of Bulgarian wine to Russia down by between 25% and 30%  Canada to expand beef exports to Russia 25 Aug 2009 - Currently, 116 Canadian companies specialising in the production of pork, beef and poultry have the right to export their products to Russia.  Russia "Burying" Hydrogen Power - Ural Electrochemical Integrated Plant proposed organising mass production of hydrogen power sources by 2020 to the Government. Activity in the Oil and Gas sector (including regulatory)  Russian Jan-July Non-CIS Gas Exports Down 39% - Prime-Tass  Transneft lost 10,000 tons of crude oil as result of fire accident at oil storage facilities in West Siberia  Lukoil - Blast reported at North Buzachi oil field in Kazakhstan (25% interest held by Lukoil)  LUKoil Receives $1.2Bln Loan  Sibir Energy secures $200 mln loan from Sberbank - Sibir secures $200 mln loan for 2 years; Funds go to support company's operational activity  Russia's TNK BP Signs Pre-export Finance Facility - BP PLC's (BP) Russian joint venture TNK-BP Holding (TNBP.RS) has signed its latest pre-export finance facility with a group of banks, bringing total commitments to $600 million, one of the banks arranging the facility said in a press release Monday.  Samotlor oil field brings Russia to top  Novatek: expensive new office - We believe the price for this property is slightly higher than prices for the comparable properties recently purchased. The deals below indicate a sell price of $4,000-5,000/sqm is the norm for quality office space.

Gazprom  Russia's Gazprom Q1 net seen falling 69 pct - Q1 results due on Wednesday, Aug 26; Net profit seen down 69 percent to $2.5 billion  Gazprom to invest 4.4 billion EUR on Yamal next year - Russian gas major Gazprom plans to invest 4.4 billion EUR on the Yamal peninsula in 2010. 3.3 billion will go to development of the gas fields.  Gazprom, TAQA team up on Dutch gas storage

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Full Text Articles

Basic Political Developments

Russian and Mongolian presidents start talks in Ulan-Bator http://www.itar-tass.com/eng/level2.html?NewsID=14266384&PageNum=0

ULAN-BATOR, August 25 (Itar-Tass) - Russian President Dmitry Medvedev and his Mongolian counterpart Tsakhingiyn Elbagdorzh started talks in Ulan-Bator.

The Mongolian president started the meeting in Russian. "Highly esteemed Dmitry Anatolyevich, permit me to greet you and wish a pleasant stay in our country,” he said. “Thank you that you accepted the invitation to come to us, and now I switch over to Mongolian.” In the opinion of Elbagdorzh, the visit will serve the development of cooperation between the two countries at the level of strategic partnership. “The relations between Russia and Mongolia are of special nature,” he claimed.

In turn, Medvedev said: “Thank you Mr President. It’s a great pleasure for me to get acquainted with you.” “Thank you for the warm meeting in the direct and indirect sense,” the Russian head of state expressed gratitude, calling attention to the good weather in Mongolia: the sun is shining brightly in Ulan-Bator, and there is not a single cloud in the skies.

The Russian leader agreed with the words of his Mongolian colleague on the development of cooperation between the two countries, noting that Russia and Mongolia – close neighbours – are linked by tight mutual relations.

The two leaders are talking in a close format. The meeting is being held in a yurta on the fourth floor of the state palace. It was built in 1951 and reconstructed in 1987. An annex was built to the palace two years ago, housing the presidential office, the government and the Constitutional Court.

The yurta, the traditional living place for Mongols, was built at that time on the fourth floor. The president receives honorary guests there. For instance, the Mongolian head of state held meeting in the yurta with UN Secretary-General Pan Ki-moon and Russian Prime Minister Vladimir Putin.

There are two armchairs inside the yurta and a symbolic hearth. A portrait of Genghis Khan hangs from a wall. The flags of Russia and Mongolia stand behind the armchairs.

Following the meeting in the narrow format, the talks between the two presidents and their delegations will be held on the first floor of the palace.

The signing of joint documents and a press conference are planned by the results of the talks.

Russia, Mongolia have political will to resolve problems – Medvedev http://www.itar-tass.com/eng/level2.html?NewsID=14266180&PageNum=0

ULAN-BATOR, August 25 (Itar-Tass) - Russia and Mongolia have all resources and a political will to resolve all problematic issues, President Dmitry Medvedev said at the talks with his Mongolian counterpart Elbegdorj Tsakhia on Tuesday.

“We’ve discussed those problems that have to be lifted and I am confident that we have all resources for this and what is most important the political will which proved by the two presidents’ determination to dot the i’s for the most complicated remaining problems,” he said. Medvedev thanked Elbegdorj Tsakhia for the opportunity to jointly mark the 70th anniversary of the victory in the battle of Khalkhin Gol and invited him to visit Moscow.

UPDATE 1-Russia and Mongolia sign uranium deal, settle debt http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSPEK6399620090 825

Tue Aug 25, 2009 4:58am EDT

* Joint venture to mine Dornod uranium deposit

* Uranium reserves of 28,000 tonnes could be doubled

* Investment of "hundreds of millions of dollars"

* Khan Resources says still has 58 percent of license

* Countries settle $150 mln Mongolian debt (Adds quotes, details, comment from Khan Resources)

By Denis Dyomkin

ULAN BATOR, Aug 25 (Reuters) - Russia and Mongolia agreed on Tuesday to launch a uranium mining venture after settling a $150 million debt that will allow the Soviet-era allies to proceed with other projects in infrastructure and farming.

State-owned firms from both countries formed a joint venture to develop the Dornod uranium field in Mongolia's northeast. The 28,000 tonnes of reserves there could potentially be doubled with more exploration, Russia's state nuclear company said.

"We understand that Mongolia will cooperate not only with us," Rosatom head Sergei Kiriyenko said. "Russia will be the first. This is an important political signal."

Canadian-listed Khan Resources (KRI.TO: Quote, Profile, Research, Stock Buzz) still owns a 58 percent interest in the mining license to the Dornod deposit, president and CEO Martin Quick told Reuters from Ulan Bator.

Quick said the joint venture comprises the interests that AtomMon and AtomRedMetZoloto, Rosatom's mining arm, had previously held in the Dornod license. Each had held 21 percent.

"We are having a joint venture meeting tomorrow with our partners," Quick said.

"We will discuss the impact of the new Nuclear Energy law, becase it may have a detrimental impact on the project so we need to canvass our partners' thoughts on that." The joint venture comes after Mongolia's legislature in July passed a Nuclear Energy law that gave the state greater ownership over uranium deposits, especially those deemed strategic.

It is unclear whether the new law would require Mongolia to buy out part of the share owned by Khan Resources, which also holds a licence to explore near the Dornod area, the site of a former Russian-owned open-pit mine. The Mongolian state claims the right to 51 percent of any strategic uranium deposit.

"Hopefully we can come to some reasonable accomodation with our partners and the Mongolian government," Quick said.

"It is a democracy and hopefully the rule of law will prevail."

The Russian-Mongolian joint venture comes during a visit by Russian President Dmitry Medvedev.

He and his Mongolian counterpart, Tsakhiagiin Elbegdorj, settled a dispute over an unpaid Mongolian debt of $150 million in order to move ahead with joint investment projects.

"New infrastructure and energy projects, the development of atomic industries, processing uranium ore -- this is a future that looks extremely interesting to me," Medvedev said.

Russia had promised Mongolia a $300 million loan for agricultural development but the unpaid debt had emerged as a stumbling block.

Speculation in Mongolia that Russian interests would regain a greater influence over Mongolia's uranium wealth grew after the Mongolian Prime Minister, of the Mongolian People's Revolutionary Party, crossed the border for a quick visit in January.

Mongolia opened its uranium deposits to international prospectors after the collapse of the Soviet Union ended six decades as a satellite state, and forced Russia to abandon its uranium mining interests.

However, in the past three years the country has become increasingly concerned about re- exerting control over its own resources. (Additional reporting by Lucy Hornby in Beijing; Editing by Michael Urquhart)

Medvedev arrives in Mongolia http://en.rian.ru/russia/20090825/155916182.html ULAN BATOR, August 25 (RIA Novosti) - Russian President Dmitry Medvedev arrived in the Mongolian capital, Ulan Bator, on Tuesday on a two-day visit.

His visit will start with a meeting with his Mongolian counterpart Tsakhiagiin Elbegdorj during which a range of bilateral deals are expected to be signed, including a declaration on the development of strategic cooperation between Russia and Mongolia.

Later on Tuesday, the Russian leader will meet with Mongolian Prime Minister Sanjaagiin Bayar and national assembly representatives.

"The sides will discuss ways to assure the stable growth of bilateral turnover, which was over $1.3 billion last year," Kremlin aide Sergei Prikhodko told journalists.

He also said that Mongolia was interested in a discussion of Siberian farm production and an increase in bilateral agricultural cooperation.

Medvedev is accompanied on his visit by Foreign Minister Sergei Lavrov and the heads of a range of companies, including state-controlled civilian nuclear power corporation Rosatom, Russian Technologies (Rostekhnologii), and Russian Railways (RZD).

Russian Railways has pledged to modernize and build railways in Mongolia in return for development licenses for the Central Asian state's largest deposits, the Tavan Tolgoi coal deposit and the Oyu Tolgoi gold and copper field.

The second day of his visit will see Medvedev attend traditional Mongolian sporting festivities. He will also participate in events to commemorate the 70th anniversary of the Battle of Khalkhin Gol, where Soviet and Mongolian forces defeated the invading Japanese Kwantung Army in August 1939.

Russian president arrives in Mongolia http://www.google.com/hostednews/afp/article/ALeqM5hZoyXJAUu3_jpD4vZZXtpmJ6 XL3Q

(AFP) – 1 hour ago

ULAN BATOR — Russian President Dmitry Medvedev arrived in Mongolia on Tuesday for a two-day visit focused on sealing a series of investment deals including one on a joint venture in uranium mining.

Medvedev's trip comes just three months after his Prime Minister Vladimir Putin visited the resource-rich former Soviet satellite, which has vast copper, coal and gold deposits, as Russia seeks to revive its influence here.

The Russian president and his Mongolian counterpart Tsakhiagiin Elbegdorj on Tuesday were due to hold official talks and sign a series of agreements before addressing the press, the Kremlin said. Mongolian Foreign Minister Sukhbaatar Batbold said in an interview with local newspaper Mongolia Segodnya that the two presidents would sign an agreement to create a company to mine and process uranium.

Ahead of Medvedev's visit, Mongolian state television reported that Ulan Bator is also hoping to negotiate a cut in the price of oil and gas, almost of all which it imports from Russia.

During Putin's visit in May, the two sides reached deals on improving the efficiency of Mongolia's creaking rail network and cooperating on coal and copper prospecting, officials said.

Russian railways chief Vladimir Yakunin estimated the joint projects to be worth seven billion dollars.

Russian companies are seeking better access to the vast Tavan Tolgoi coal field and the Oyu Tolgoi copper and gold deposit near Mongolia's border with China.

Medvedev and Elbegdorj also will kick off two days of celebrations marking the 70th anniversary of a battle in which Soviet forces defeated Japanese troops on the eve of World War II.

"We will always remember that it is with the help of the Soviet soldiers that Mongolia asserted its freedom and independence back then," said Batbold.

The leaders will bestow medals on veterans from both countries, officials said.

According to official estimates, more than 18,500 Soviet and Mongolian soldiers died in a massive tank battle with the Japanese near the Khalkhyn Gol river in 1939. Japan lost about 60,000 soldiers.

In honour of Medvedev, Mongolia will also stage the Naadam festival featuring horse racing, wrestling and archery in the steppe outside the capital Ulan Bator.

Russian President Arrives In Mongolia http://www.montsame.mn/index.php? option=com_news&task=news_detail&tab=200908&ne=1210

2009-08-25 14:28:25 | Ulaanbaatar,/MONTSAME/ The President of the Russian Federation D.A.Medvedev arrived Monday in Mongolia to pay state visit to the country at an invitation of the Mongolia's counterpart Ts.Elbegdorj.

The delegation of the state visit of the RF President comprises Sergei V.Lavrov, Minister of Foreign Affairs of the RF; A.Avdeev, Minister of Culture; I.Levitin, Minister of Transport and head of the Russia-Mongolian Intergovernmental Commission for Russia's side; K.Kosachev, president of the State Duma committee for International Affairs; V.V.Nagovitsyn, President of the RF's Buryat Republic; K.N.Ilyumjinov, President of the RF's Republic of Kalmykia; V.Yakunin, chairman of the Russian Railways; D.Mezentsev, governor of Irkutsk region; V.Churov, head of the Central Electoral Committee of Russia; S.Kiriyenko, general director of the "Rosatom" state-owned corporation of atomic energy; S.Chemezov, general director of the "Rostechnology" state-owned corporation; V.Nikonov, an executive director of the "Russky Mir" foundation; and I.Finogenov, board director of the Eurasian Development Bank.

After landing of a special service airplane for the Russian delegation at 12:00 a.m in the "Chingis Khaan" international airport, the Presidential convoy left for the Sukhbaatar Square. In front of the Government House, the State Head Mongolia welcomed his Russian counterpart. In connection with arrival of the D.A.Medvedev in Mongolia, Guard of Honor of the Mongolia's Armed Forces played the anthems of the two states. After this, the RF State Head left his note in the book of guests of honor in the Government House. The dignitaries paid a courtesy call, and then were taken photos dedicated to media.

At the moment, negotiations are being made between the State Heads of the two countries. B.Khuder 14:22

Medvedev to make official visit to Mongolia http://www.itar-tass.com/eng/level2.html?NewsID=14265864&PageNum=0

MOSCOW, August 25 (Itar-Tass) - Russian President Dmitry Medvedev will make an official visit to Mongolia on August 25-26, at the invitation of his Mongolian colleague, President Tsahiagiyn Elbegdorzh.

The visit will coincide with the 70th anniversary of the victory in the Battle of Khalkhin Gol, named after a river of the same name, a Kremlin source told Itar-Tass.

The heads of the two states will attend the jubilee events and hand in Russian and Mongolian decorations to war veterans.

“This event fits well into the framework of the big work which is being carried out in our country and in other allied states in connection with the approaching 65th anniversary of the victory in WWII,” according to presidential aide Sergei Prikhodko.

“This visit will not only emphasize the Red Army’s role but will also underline the contribution of our Mongolian colleagues to the joint victory,” he said. Mongolian war veterans will receive commemorative medals and orders as part of the celebrations of the Khalkhin Gol victory. Wreaths will be laid to the monument to Soviet military leader Marshall Georgy Zhukov.

Medvedev and his Mongolian counterpart will deliver speeches at a special meeting devoted to the 70th anniversary of the victory in the Battle of Khalkhin Gol.

Top-level talks are scheduled for August 25. Medvedev also plans to meet with Mongolian Prime Minister Sanj Bayar and the leaders of the national parliament. Trade and economic cooperation are expected to dominate the talks.

“Russian-Mongolian relations are strategic, and it’s very important that we are not witnessing any pauses or intervals in our bilateral strategic partnership after the presidential election in Mongolia. The previously set plans in the trade and economic sphere and other branches and industries are being consistently implemented. We feel that the new Mongolian leadership is set to preserve all the achievements,” a Kremlin official said.

Priority during the talks will be given to trade, economic and investment cooperation, including the implementation of major joint projects in the mining industry, transport and agriculture,” he added.

The parties will discuss how to ensure sustainable growth of bilateral trade turnover that had exceeded 1.3 billion U.S. dollars last year.

“Mongolian partners are interested to increase the export of livestock products to neighboring Siberian regions and to expand cooperation in the agro-industrial sector in general, including supplies of Russian agricultural machinery, grain and mineral fertilizers to be financed out of a loan issued by Rosselkhozbank,” the official said.

The parties will also explore how to raise the efficiency of the Erdenet and Mongolrostsvetmet Companies that are the driving force of Russian-Mongolian cooperation. “After a new Russian shareholder, the state-owned corporation Resteknologii, has joined these companies, big investment programs are being considered,” he went on to say.

Other topics for discussion include transport cooperation. The Russian Railways open joint-stock company has recently been appointed a managing company of the Russian- Mongolian open joint-stock society Ulan Bator Railways. The sides will also consider plans of the state corporation Rosatom to establish cooperation with Mongolia in the prospecting, production and processing of uranium ores at the Dornod deposits in eastern Mongolia.

“The Russian side is planning to confirm all the trends in bilateral cooperation that have been secured in the last seven years. It will try to create additional conditions for more effective interaction on specific economic issues. This is particularly important in conditions of the global economic crisis when our Mongolian partners and we are facing hardships. But this is not the reason for interrupting or scrapping long-term mutually- beneficial projects,” the Kremlin official said.

The sides will also discuss intensification of cross-border and inter-regional ties, cultural exchanges and the training of Mongolian experts at Russian educational establishments, and the promotion of the Russian language in Mongolia. The Russian Center and a festival of Russian Culture in Mongolia will be opened in Ulan Bator during the visit.

When discussing geopolitical and regional issues, the parties will exchange views on the U.N. reform, integration in the Asia-Pacific Region and response to new threats and challenges, including climate changes.

The heads of state will discuss “the settlement of the situation on the Korean Peninsula and support to Mongolia as a state free of nuclear weapons”.

A declaration on the development of strategic partnership between Russia and Mongolia, and some other documents are expected to be signed.

Presidential aide Sergei Prikhodko told Tass that in the course of the visit, "Russia intends to confirm the trends in bilateral cooperation in the past seven years, and try and create additional conditions for more effective interaction in concrete economic themes."

It is particularly important because both Russia and Mongolia are having difficulties amidst the world economic crisis. But long-term mutually advantageous projects should not be scaled down, or take pauses or breaks because of this," he underlined.

Russia's Medvedev to mark Soviet-era battle on Mongolia visit http://www.google.com/hostednews/afp/article/ALeqM5i48X9zhwuxwOEI8BU10aaWas ZWJQ

By Anna Smolchenko (AFP) – 10 hours ago

MOSCOW — Russian President Dmitry Medvedev visits Mongolia Tuesday to celebrate the 70th anniversary of a battle in which Soviet forces defeated Japanese troops on the eve of World War II.

His two-day trip to Ulan Bator comes as the world is gearing up to mark the 70th anniversary of the start of the world war in September and as Russia is seeking to revive its influence in former Soviet client states like Mongolia.

According to official estimates, more than 18,500 Soviet and Mongolian soldiers died in a massive tank battle with the Japanese near the Khalkhyn Gol river in 1939. Medvedev and his Mongolian counterpart, Tsakhiagiin Elbegdorj, will kick off the celebrations and bestow medals on Soviet and Mongolian veterans, the Kremlin said.

All the festivities are expected to be confined to the Mongolian capital Ulan Bator as the Khalkhyn Gol river bed has dried up over the years, a Kremlin spokesman said.

"There is no river there" any longer, the spokesman said.

Medvedev?s two-day trip comes on the heels of Prime Minister Vladimir Putin?s visit to the steppe country rich in copper, coal and gold in May as the Soviet-era allies moved to reinvigorate long-standing ties.

At Putin's talks with his Mongolian counterpart Sanjaa Bayar in Ulan Bator, Russia sought large-scale trade and investment projects in Mongolia.

"The Russian-Mongolian ties have a strategic nature," the Kremlin said ahead of Medvedev's visit. Priority will be given to ramping up cooperation in trade and major projects in mining and transport, it said.

During Putin?s visit, deals agreed included aid from Russian Railways to improve the efficiency of Mongolia's ailing rail network and cooperation on prospecting for coal and copper, officials said.

Russian Railways chief Vladimir Yakunin estimated the joint projects to be worth seven billion dollars. One benefit will be to improve access to the vast Tavan Tolgoi coalfield for Russian companies.

Ahead of Medvedev's visit, state television reported that Mongolia is hoping to negotiate a cut in the price of its oil and gas, almost of which it imports from Russia.

Mongolia is also keen to speed up creation of a joint venture in uranium mining and increase military cooperation with Russia.

Observers said the May visit by Putin and Tuesday's Medvedev trip showed how much Russia was interested in the mineral reserves and other opportunities the country had to offer.

"The fact that the Russian leaders have started paying frequent visits to Mongolia is in fact the continuation and revival of long-standing ties," said Rustam Sabirov, a Mongolia expert at Moscow State University's Institute of Asian and African Studies.

"Apparently someone in Russia has realized that if we are not present in Mongolia that place will be swiftly taken by the Japanese, Chinese or Americans." Even the pro-Western Elbegdorj's victory at the presidential polls in May, soon after Putin's visit, would not threaten Russia's investment plans for Mongolia much, said Sabirov.

"He still understands he needs to maintain ties with Russia," he said of the new Mongolian president.

Major Mongolian coal project could begin next fall – newspaper http://www.interfax.com/3/512862/news.aspx

ULAN BATOR. Aug 25 (Interfax) - Development of the big Tavan Tolgoi coal field in Mongolia, in which some major Russian companies have expressed an interest, could begin next fall, the CEO of Erdenes MGL, which represents the Mongolian government in strategic mineral resources projects, told the Mongolia Today newspaper. "An investor and partner for this project could be selected this summer or fall. I think it might be possible to started developing Tavan Tolgoi by next fall," CEO Enebish told a special edition of the paper, published to coincide with Russian President Dmitry Medvedev's visit to the country. The investor will be selected by tender, the first round of which has taken place. A consortium of Russia's Basic Element, Renova and Severstal (RTS: CHMF) bid in the first round. However Severstal said just over a month ago that it was pulling out of the consortium. "I don't know for sure, but Russian Railways (RZD) (RTS: RZHD) will probably take its place," Erdenes MGL's Enebish said. The Russian consortium formed in November 2006, submitted its investment proposals to the Mongolian government in January this year. RZD is also interested in the project, and plans to form a joint venture in Mongolia to develop the coal deposit. Tavan Tolgoi is in southern Mongolia, 250 km from the Chinese border and 540 km from Ulan Bator. It is estimated to contain 6 billion tonnes of coal - 40% of it coking coal.

Russia, Mongolia form Dornod uranium joint venture http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSPEK4421720090 825

Tue Aug 25, 2009 1:18am EDT

ULAN BATOR, Aug 25 (Reuters) - Russian and Mongolian state-owned firms have formed a joint venture to exploit the Dornod uranium deposit, in a setback for a Canadian mining firm licensed to develop the area. The move comes after Mongolia's legislature in July passed a Nuclear Energy law that gave the state greater ownership over uranium deposits, especially those deemed strategic.

Mongolia's AtomMon and Russian state firm AtomRedMetGold will establish the joint venture Dornod Uranium, Mongolia Today, a Russian language newspaper in Mongolia, reported on Tuesday.

"Under this agreement both sides will put into circulation in Dornod region a deposit of 27.73 tonnes of uranium and will export the raw material for nuclear fuel," the paper said, without citing anyone.

Khan Resources (KRI.TO: Quote, Profile, Research, Stock Buzz), a Canadian mining firm, held exploration and mining licenses in the Dornod area in northeastern Mongolia, the site of a former Russian open pit mine. It said in July that it was seeking clarification on the impact of the Mongolian law.

Speculation in Mongolia that Russian interests would regain a greater influence over Mongolia's uranium wealth grew after the Mongolian Prime Minister, of the Mongolian People's Revolutionary Party, crossed the border for a quick visit in January.

Mongolia opened its uranium deposits to international prospectors after the collapse of the Soviet Union ended six decades as a satellite state, and forced Russia to abandon its uranium mining interests.

However, in the past three years the country has become increasingly concerned about re- exerting control over its own resources.

Executives from Khan Resources had also travelled to Mongolia, the paper said on Tuesday. They could not be immediately reached for comment. (Reporting by Denis Dyomkin and Lucy Hornby; Editing by Michael Urquhart)

Medvedev to Negotiate Over Mongolia’s Mines http://www.themoscowtimes.com/article/1009/42/381179.htm

25 August 2009By Lyubov Pronina / Bloomberg

Russia wants to accelerate plans for joint projects, including uranium mining and agricultural trade, with Mongolia’s new leadership when President Dmitry Medvedev arrives Tuesday in the capital, Ulan Bator, for a two-day visit.

Priority in the talks will be given “to large projects in mining, transport and agriculture,” Medvedev’s aide Sergei Prikhodko told reporters Friday in comments embargoed until Monday. “After presidential elections in Mongolia, we do not see any pauses or interruption in our bilateral strategic relations. Earlier agreements continue as planned.” Medvedev will negotiate with Tsakhiagiin Elbegdorj, who was elected president in May and is seeking $25 billion of overseas investment and expertise for the mining sector over the next five years. Russia wants to help tap Mongolia’s reserves of copper, coal, iron ore and uranium.

Before the election, Prime Minister Vladimir Putin agreed in May with his Mongolian counterpart, Sanjaa Bayar, not to delay setting up joint projects.

Prikhodko said Russia will continue talks to set up a joint venture on mining uranium in which Rosatom will participate. He wouldn’t say whether Russia expects to reach an agreement during Medvedev’s visit.

A uranium production and refining venture may get off the ground in “several weeks,” Putin said in his May visit.

Rosatom head Sergei Kiriyenko will accompany Medvedev to Ulan Bator, as will Russian Railways chief executive Vladimir Yakunin and Sergei Chemezov, CEO of Russian Technologies.

Russia is Mongolia’s second-largest trading partner after China. Trade between the two countries almost doubled last year to $1.2 billion, according to the Economic Development Ministry.

During Putin’s visit, Russian Railways agreed to create a joint venture with Mongolia’s railway company MTZ and state-owned miner Erdenes to upgrade rail links and lay new track to help develop deposits of natural resources in the south of Mongolia.

The Tavan Tolgoi coal deposit was among the projects Putin discussed. Located in the Gobi Desert, it contains 6.5 billion tons of coal used in steelmaking and may be the world’s biggest untapped deposit of its kind, according to the Business Council of Mongolia.

Billionaires Oleg Deripaska, Viktor Vekselberg and Alexei Mordashov made a joint bid for Tavan Tolgoi in January. The Mongolian government “reacted positively” to the proposal, a spokesman for Deripaska’s energy company EN+ Group, said at the time.

Prime Minister Bayar said July 17 that Mongolia needs $5 billion of investment to develop Tavan Tolgoi.

Russia and Mongolia will also discuss boosting agricultural trade, Prikhodko said. Mongolia is keen to increase exports of meat to Russia while importing more grain, fertilizers and agricultural equipment.

Business aside, Medvedev and Elbegdorj will take part in festivities to celebrate the 70th anniversary of a joint victory over the Japanese at Khalkhin Gol River. Ukraine nationalists deny involvement in South Ossetia war http://www.kyivpost.com/nation/47434

Today, 09:56 | Interfax-Ukraine

Ukrainian National Assembly-Ukrainian National Self-Defense (UNA-UNSO), a Ukrainian nationalist party, denied an allegation by a senior Russian criminal investigation agency on Monday that some of its members fought on the side of Georgia in the August 2008 Russian-Georgian armed conflict.

"No UNA-UNSO groups or individual members took part in the Georgian-Russian war," UNA-UNSO deputy leader Mykola Karpiuk told Interfax.

Karpiuk said allegations to that effect had repeatedly come from Russia but that no conclusive evidence had been found to support them.

Russia's Prosecution Service Investigation Committee said investigations of the 2008 conflict had proved that regular Ukrainian military personnel and UNA-UNSO members had fought in the Georgian ranks.

Ukraine: info on Ukrainians taking part in August 2008 war will exacerbate Russia-Ukraine relations http://www.interfax.com/3/512873/news.aspx

KYIV. Aug 25 (Interfax) - Ukraine has expressed surprise about the statements made by the Investigations Committee of the Russian prosecutor's office saying that Ukrainian troops and UNA-UNSO representatives took part in the attack against South Ossetia in August 2008. "We are surprised and concerned about the sharp statements made by the Russian investigations Committee on the involvement of Ukrainian troops in the conflict, which is not confirmed by any data," a Ukrainian diplomat told Interfax on Tuesday. "Such statements made from Moscow are likely to cause an increase of tensions in Russian-Ukrainian relations and a sharp rise in anti- Ukrainian hysteria in Russian society," the source said. "We are hoping that Russia will consult with Ukraine on such matters in the future, without unneeded noise and politicization," the source said. The Investigations Committee of the Russian prosecutor's office has recently announced that it has evidence that Ukrainian troops and UNA- UNSO representatives took part in the conflict on the Georgian side.

Fears of regime change add new dimension to Russia-Ukraine tensions http://georgiandaily.com/index.php? option=com_content&task=view&id=14193&Itemid=65

August 24, 2009

Nick Amies

As Ukraine celebrates the 18th anniversary of its independence from Soviet rule, the shadow of its former Communist past still hangs heavy. Moscow still seems determined to have a say in how things are run in Kyiv.

Despite leaving the shackles of the Kremlin's influence behind following the 1991 collapse of the Soviet Union, Ukraine has yet to find any real peace away from its former master. The relationship between Moscow and Kyiv has ebbed and flowed for centuries but tensions have increased in the years following independence when two sovereign and independent nations emerged from the wreckage of the Soviet superpower.

Since then, the two countries have argued about everything from the price of natural gas to the relationship between Kyiv and the United States, and the place of the Russian language in a country whose current leadership is seeking to develop Ukrainian.

Now, on the day Ukraine celebrates its freedom, it appears a new dimension has been added to the disintegrating trust and vengeful rhetoric between these two nations. Russia, it seems, has had enough of the constant bickering and wants to instigate a change in Ukraine, one which will play in its favor.

Russian President Dmitry Medvedev effectively broke off relations with Ukraine's pro- Western leadership last week and in the process signaled the Kremlin's intention to meddle in Ukraine's presidential elections to secure victory for the candidate most favorable to Russia.

"I do not see any prospects for re-establishing normal relations under the current political leadership," Medvedev declared after a recent meeting with German Chancellor Angela Merkel at his Black Sea retreat in Sochi. "I hope Ukraine's new leadership will have many chances of considerably improving relations... this is a top foreign policy priority for us."

Russia's favored candidate is Viktor Yanukovych, the former prime minister defeated in the 2004 election which Russia attempted to rig, a hamfisted operation which led to the now famous pro-West "Orange Revolution." That experience is unlikely to stop Russia exerting its influence again.

"Russia will try to influence the vote in a number of ways," Nicu Popescu, a Russian- Eurasia expert at the European Center for Foreign Relations, told Deutsche Welle. "As with elections in other former Soviet states, there will be meetings with various candidates which will show Moscow’s preferences and maybe at these meetings deals will be made."

"We may also see the influence of the Russian media which has a wide reach in Ukraine, especially in the east. In terms of action, we may see a new gas crisis which will try and undermine the current government and perhaps some event in the Crimea which will be aimed at mobilizing the more patriotic Russian voters there," he said.

No normal relations with current leadership, says Medvedev

Days before breaking off relations, Medvedev had denounced Ukraine's leader, President Yushchenko, the man at the center of many of the Russian-Ukrainian disputes in recent years, as anti-Russian in an open letter setting out a long list of grievances.

These included his "stubborn" pursuit of NATO membership, support for Georgia in the war over South Ossetia, and "incessant" interference with Russia's Black Sea fleet based at Ukraine's Crimean port of Sevastopol. Medvedev added that his country could not have normal relations with Ukraine unless there was a leadership change in Kyiv.

Yushchenko stated that he was "very disappointed by the openly unfriendly" comments and a top aide blasted Russia's "imperialist complex."

London's Times newspaper reported that Medvedev accompanied his letter with a video blog shot against the backdrop of the Black Sea with what looked suspiciously like a Russian warship anchored offshore.

While most of the focus in recent years has been on the annual gas disputes between the two countries, a gathering storm is developing over Sevastopol. The Russian fleet is required to leave Ukraine by 2017 but Russia does not want to go.

"Moscow naively believes that it has the leverage to influence the Ukrainian presidential election campaign," said Alexander Rahr, a Russia expert at the German Society for Foreign Affairs (DGAP). "This belief comes from nationalist powers in Russia who demand to keep the navy base of the Russian Black See fleet in Sevastopol beyond 2017 when the agreement for stationing the fleet in the Crimea runs out."

Crimea hot-spot raises fears of Georgia-style scenario

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Russian power is often on show in SevastopolCrimea is a particularly sensitive area, as many Russians regard it as historically their territory and many of Crimea's residents are sympathetic to Moscow. Sources in Kyiv have expressed concerns that the Kremlin could play the Crimean card in the coming presidential election or soon after to destabilize any regime considered insufficiently pro-Russian. Some even profess a fear that Russia, which showed its readiness to use force in Georgia last year, has now turned its attention to Ukraine and that a Georgian-style scenario, in which troops invade to "protect" Russian citizens, cannot be ruled out. These fears were heightened after Medvedev submitted legislation to parliament last week that will give him powers to deploy the military abroad "to defend the interests of Russia and its citizens."

Prime Minister Yulia Tymoshenko, a presidential candidate herself, responded to Medvedev's letter by saying Ukraine would not tolerate outside "interference" in its affairs.

"Ukraine will determine its foreign and domestic policies independently, with no outside interference," Tymoshenko said in a statement released by her press office. "We are ready to listen to the opinions of our partners in the east and in the west, to take account of their interests. But interference in our domestic affairs is unacceptable," she said.

On the surface, it may seem obvious why Russia wants a pro-Moscow goverment in power in Kyiv but Nicu Popescu believes its more complicated than just wanting a friendly leader next door.

"It’s really not clear what Russia wants," he said. "There are two schools of thinking in the Kremlin over Ukraine. One wants Moscow to push for a pro-Russia elite in Kyiv, one which is open to doing business with Russia, one which is loyal and reliable and which will honor and implement deals struck between the two countries."

"The other school would prefer to see Yushchenko stay in power as he is seen as incompetent," he added. "This stimulates chaos and uncertainty in Ukraine and makes it vulnerable to Russia’s wishes. This also serves the purpose of showing that post-Soviet states can’t work without Russia and that one day, they will have to come under the protection of some Russia-led bloc once again."

Russia unconcerned with potential European reactions

Any interference by Russia in January's presidential election or in its aftermath would bring Moscow once again into conflict with Europe and the United States.

Medvedev is unlikely to lose much sleep over any EU response should the Kremlin - one way or another - install its favored candidate in the Kyiv hot seat. The EU, currently hugely dependent on Russian gas, imposed no serious penalty on Moscow over the war with Georgia and recent signs hint that Russia will escape just as lightly if it succeeds in undercutting Ukraine's independence.

At their recent meeting Chancellor Merkel, standing beside Medvedev when he so publicly severed ties with Ukraine in Sochi, remained silent on the issue. Merkel, the head of the EU's largest country, offered no support for Ukraine as a democratic partner, nor defended the right of its people to choose their leaders for themselves, stunning Ukrainian officials with her reticence while presumably prompting quiet satisfaction in Moscow.

"We are unlikely to see any public challenge to Russia from the EU should Moscow interfere in Ukraine," said Nicu Popescu. "The EU avoids high politics when it can and works below the radar on technical and trade levels; providing credit, creating stability and promoting reforms. The EU will keep out of this election whatever happens and certainly won't favor any one candidate over another. Something major will have to happen for the EU to get involved."

Kazakh space agency chief: Russia, Kazakhstan to increase joint use of Baikonur Cosmodrome http://www.kyivpost.com/world/47433

Today, 09:54 | Interfax-Ukraine

Russia is Kazakhstan's strategic partner in the implementation of space programs, President of Kazakhstan National Space Agency Talgat Musabayev said at the opening of the sixth international aerospace congress in Moscow.

"Of all the countries the Republic of Kazakhstan is most friendly towards Russia. I believe that Kazakhstan is the closest and most reliable partner of the Russian Federation. Together with Russia we are developing Kazakhstan's own space industry and we certainly see Russia as the main strategic partner in this business," Musabayev said in his opening speech before the congress attendees.

Russia and Kazakhstan will continue to use jointly Baikonur Cosmodrome as they do now, he said. Subsequently, the joint use of the cosmodrome will only increase, he said. A new launch pad, Baiterek, being built by Russia and Kazakhstan on a par basis, will be designed for the launch of Russia's Angara carrier rocket," Musabayev said.

Baikonur was and remains the world's most intensely used cosmodrome, he also said.

At the same time, Kazakhstan is an independent state, which is why the country's National Space Agency has been tasked to cooperate in various directions, he said. In the space industry, in particular, Kazakhstan is cooperating with India, France and Israel, he said.

U.S. offers Russia to organize joint flight to Mars http://www.interfax.com/3/512885/news.aspx

MOSCOW. Aug 25 (Interfax) - The United States and Russia must accomplish a human expedition to Mars jointly, with other space agencies participating, Marc Bowman, director of the Human Space Flight Program - Russia, said on Tuesday. This spacecraft will be piloted by a multinational crew, Bowman told an international aviation and space conference in Moscow. Naturally, NASA and the Russian space agency Roscosmos must be in charge of the flight, he said. Bowman made a point that the crew that will fly to Mars must be multinational and that space agencies from other countries must be directly and actively involved in this project. Only if all countries work together, can the expedition to Mars be a success, he said. But prior to a flight to Mars the International Space Station project must be completed and manned flights to the Moon organized, he said.

Russian ship taking part in Coast Guard exercise http://www.seattlepi.com/local/6420ap_wa_coast_guard_exercise.html

Last updated August 24, 2009 12:35 p.m. PT

THE ASSOCIATED PRESS

PORT ANGELES, Wash. -- The Coast Guard says a Russian Border Guard vessel taking part in an exercise in Washington waters is the first visit by such a vessel to the Lower 48.

The Vorovskiy arrived at Port Angeles Sunday for the three-day Pacific Unity exercise. The Coast Guard says vessels from Canada and Japan also are taking part while China and South Korea are participating as observers.

The exercise involves simulated search and rescue, navigation and security operations.

The participating nations are members of the North Pacific Coast Guard Forum, which was formed in 2000 to improve cooperation against common threats on the high seas.

9.RIAS: Egypt Releases Russian Wheat Held For 3 Mos http://www.zawya.com/story.cfm/sidZW20090825000069

A shipment of 56,000 metric tons of Russian wheat has been released for re-export after being held for three months at the Egyptian Red Sea port of Safaga, Russia's second largest grain exporter told Dow Jones Newswires Monday.

By Sarah McFarlane and Shereen El Gazzar Russian Sailors Return to Their Home Land from Vietnam http://www.vostokmedia.com/n53663.html

26 Russian seamen were about to embark on a hunger strike to demand backpay and get opportunity to return to their home land

VLADIVOSTOK. August 25. VOSTOK-MEDIA – 26 Russian seamen, who intended to embark on a hunger strike to demand backpay and get opportunity to return to their home land, are expected to be repatriated from Vietnam before the 1st of September.

Earlier the Far Eastern regional organization of the Seafarers Union of Russia received a message, requesting to help Russian crews of the six fishing vessels, located at the Vietnam port of Ho Chi Minh, in their returning to Russia.

Nikolay Sukhanov, Chairman of the Far Eastern regional organization of the Seafarers Union of Russia told Vostok-Media that about 30 sailors from the Russian Far East are unable to go back to their native land for several months and that they don’t get their wages. The Seafarers Union intended to refer to the International Transport Workers' Federation for help in repatriation of the seamen. The Russian sailors planned to hold a protest rally and to declare an indefinite hunger strike in order to get their wages and to return to their home land. The sailors say they have not got their wages for five-eight months.

“A representative of the Consulate General in Ho Chi Minh stated that the ship promised to get the Russian sailors back before the 1st of September,” said Sukhanov. He also added that the air tickets for seamen have been already bought.

“Five sailors decided to stay on boards the ships to maintain the vessels and 26 crews’ members will return to Russia,” he said.

The crews, mostly consisted of Primorsky Krai sailors, were working on the following vessels: «Phuhai-1»,»Phuhai-2», «Phuhai-3», «Phuhai-5»,»Phuhai-7» and «Chukotka».

Relatives say Arctic Sea hijackers victims of 'political games' http://en.rian.ru/world/20090825/155916894.html

TALLINN, August 25 (RIA Novosti) - The suspected hijackers of the Arctic Sea merchant ship were the victims of "political games," a relative of one of the men in custody has said.

The Maltese-flagged vessel, which had been missing in the Atlantic for more than two weeks, was discovered off Cape Verde last Monday by the Russian warship, the Ladny. It was freed without a shot being fired. Last Friday, Moscow's Basmanny District Court remanded in custody eight unemployed residents of Estonia. All eight deny accusations of piracy and hostage-taking.

"I think they were framed, and it is not just my opinion, everybody who knows them also thinks so. They were seeking a job and got involved in a political conflict, were made hostages of a political game," Alexei Bartenev, the brother of suspect, Dmitry Bartenev, told Estonian television.

He gave no further details.

He also said the suspects should be tried in the European Union, where the alleged crime was committed.

Under international law, suspected pirates are tried in the country whose forces detained them. The men face up to 20 years in prison.

Death toll from dam disaster rises to 71 http://www.interfax.com/3/512906/news.aspx

KRASNOYARSK. Aug 25 (Interfax) - Two more bodies have been discovered at the scene of the accident at the Sayano-Shushenskaya hydroelectric power plant. "The bodies have been discovered today and they have been identified. Four employees remain unaccounted for," a spokesman for RusHydro (RTS: HYDR) told Interfax. The death toll from the disaster rose to 71 on Tuesday.

Sberbank to provide up to Rbl 20 bln to RusHydro http://www.itar-tass.com/eng/level2.html?NewsID=14265862&PageNum=0

MOSCOW, August 24 (Itar-Tass) -- Russia’s savings bank Sberbank said it would be prepared to provide up to 20 billion roubles to RusHydro for the reconstruction of the Sayano-Shushenskaya hydropower plant.

Sberbank CEO German Gref said on Monday that the bank would also repay over six million roubles worth of mortgage loans issued to the families that have lost breadwinners in the Sayano-Shushenskaya hydropower plant accident.

The death toll in the Sayano-Shushenskaya hydropower plant accident has risen to 69. The fate of six people remains unknown, it said. The accident at Khakassia's biggest hydropower plant happened early last Monday. As a result, one of the units was fully destroyed, another two were destroyed partly and three were damaged.

There are 10 units at the hydropower plant with a combined capacity of 6,500 megawatts. As a result of the accident, the power plant stopped operation.

The damage has not been estimated yet. RusHydro, which owns the plant, says the power plant will be rebuilt at the company's own expense.

The Sayano-Shushenskaya hydropower plant is located in Khakassia on the river Yenisei, 180 kilometres from Abakan and is the biggest hydropower plant in Russia. Its dam is 242 metres high and 1,066 kilometres long. Its rated capacity is 6,700 megawatts. The last unit was commissioned in 1978. The power plant's annual production is about 24 billion kilowatts/hour.

Human error not to blame for Russia dam accident http://timesofindia.indiatimes.com/news/world/rest-of-world/Human-error-not-to-blame- for-Russia-dam-accident/articleshow/4931330.cms

AFP 25 August 2009, 09:44am IST MOSCOW: Human error was not to blame for the accident last week at Russian hydroelectric power plant that killed up to 75 people, the acting chief of the station's owner company RusHydro said on Tuesday. "I think that the accident was not due to human error, and experts are more and more inclined to this too," Vasily Zubakin said as quoted by the RIA Novosti news agency.

Investigators said earlier that a technical fault caused the turbine room to flood at the Sayano-Shushenskaya dam on August 17, killing at least 69 people with six more still missing and presumed dead.

However the authorities have still not given a conclusive explanation of what happened, saying several theories remain

Russia - Prime Minister Vladimir Putin met with Sberbank President German Gref http://www.isria.com/pages/25_August_2009_6.php

Transcript of the beginning of the meeting:

Vladimir Putin: German Oskarovich, let's start with the Sayano-Shushenskaya hydropower plant. You know about the situation, and how much is necessary to finance the reconstruction work. How are your relations with RusHydro developing? What kind of arrangements have you made with the company? German Gref: Vladimir Vladimirovich, last week, we made a preliminary decision to finance RusHydro for the reconstruction in an amount up to 20 billion rubles.

Today, we already conducted preliminary negotiations with the company CEO, CFO and executive director, so we're ready to sign an agreement in August and start financing of up to 20 billion rubles on the most preferential terms.

Before the end of this year, we will be ready to open a credit line of up to about 10 billion rubles. Specific work and designation of funds are being coordinated. First and foremost, we discussed that development of a water drainage system could be subject to the availability of financing. We will decide on financing within two weeks.

Vladimir Putin: Good. You know that there are also many social issues. One of these issues is resolving the housing problems of victims and their families and families of the deceased and the missing. This includes families that took out mortgages.

German Gref: Today, we received a message from RusHydro management. It is a matter of people who took out mortgages and had dealings with our bank. We have 26 people among the deceased and disappeared who have more than six million rubles worth of outstanding mortgage loans.

We considered the request just today, and in the evening, we informed RusHydro that Sberbank would assume these loan repayments. This will be our contribution to the welfare of the families of the deceased and disappeared.

Vladimir Putin: Good. Thank you. Regarding other such issues, the company, the republic, and if need be, the federal government will resolve them. In general, how is work with the public going?

German Gref: Vladimir Vladimirovich, on our end, with regard to consumer loans, the situation is stabilizing compared to last year. We are seeing a restoration of demand for loan products. And if one is to speak of the number of loans disbursed, then from January to July, the number of loans tripled.

In January of this year, we disbursed 64,000 loans across the country, and in July disbursed 244,000 loans. In March, 17 billion rubles worth of loans were disbursed to physical persons, while in July it was 40 billion worth. In other words, we have seen growth over seven months in the monetary amount and the number of loans. Demand was restored almost in triplicate.

Vladimir Putin: Good. You already talked to me about new "instruments," new services that you plan to offer the public, and their introduction in the nearest future. What is being done on this front?

German Gref: We have launched a whole series of new projects. This has to do with both small businesses and loans to physical persons. We launched three such products for small businesses - we launched them as part of a so-called "loan factory." This is a very rapid credit financing process, loans for small businesses to buy real estate. This is a new product, which started working in August of this year.

And two more new types of loans are also new products for small businesses that are just starting out. For the moment, unfortunately, we only have these products running in "pilot" mode in three regions. Starting next year, we will launch them across the entire country. I think that lending to small businesses will increase considerably, specifically small businesses.

Vladimir Putin: You know, some time ago you decided to raise the ceiling on providing loans for auto purchases - now it is already in the 600,000-ruble bracket. Are you aware of what's going on in this sector?

German Gref: Vladimir Vladimirovich, today I dutifully collected the latest data. We see that the program of providing loans to support the auto industry was, in our view, one of the most effective anti-crisis measures. As of August 19, we have disbursed 22,104 loans to the tune of more than four billion rubles.

Vladimir Putin: How does this compare to previous programs?

German Gref: The new program, in which the cabinet approved raising the ceiling from 350,000 to 600,000 rubles, was launched on August 3 of this year. Since August 3, we have already disbursed more than 4,500 loans, which is more than the monthly disbursements for the previous four months.

The number of cars that citizens are buying increased considerably. While Lada's share was 93% before, it has now fallen to 85%. This is not because of a decrease in Lada sales, but because commercial vehicles, Gazelles manufactured by GAZ and other cars made by other plants also made the count. I think that growth in August will be about double what it was in previous months.

Vladimir Putin: German Oskarovich, one of the main issues is lending volumes. We had agreed - I met twice with your colleagues - on specific volumes, quite sizable volumes in August and September.

It's not a big secret if I tell you that I formulated these requirements for the country's major banks after appropriate consultations with the Central Bank of Russia. How is lending to the real-sector economy going in your bank?

German Gref: In July we disbursed, excluding the carryover of restructuring expenses, loans totaling 286.4 billion rubles. These were only those loans disbursed by Sberbank. All State banks disbursed a total of around 500 billion rubles.

We have almost the same kind of dynamics in August. In the first 19 days in August, our net disbursement was 195 billion rubles as of August 19. I must say that the trend we are now faced with is a large volume of loan repayment. A restructuring of our portfolios is taking place. If at the start of the year loans that we disbursed were...

Vladimir Putin: You're hard to please! First you say that there are major defaults, and now you're aggrieved because there are many repayments.

German Gref: On one hand, the repayments also continue. But the repayments are coming from major companies. Western markets have opened, and generally, this is a good opportunity. Our companies now have access to "cheap money" on western markets.

Vladimir Putin: But you should also lower interest rates. This is competition, after all. So lower interest rates. Then the companies will never leave you. I meet with them regularly, you know. They say, "What are we to do if ‘cheap' money is available?" I surely cannot force them and say, "No, keep borrowing from Sberbank and pay it high interest."

German Gref: That's true. It's good that they're looking for the best possible terms - this also spurs us on. We have reduced interest rates on ruble loans by 3.75 percentage points and three percentage points on dollar loans in the last two months. And more than 42% of our corporate portfolio was disbursed at a rate below that of the Central Bank, plus 3%.

Vladimir Putin: Good. This means that the total lending volume is what? After we just got done talking about the necessity of increasing lending volume?

German Gref: In July, we, Sberbank alone, disbursed 286 billion. It's hard to talk about the end of August; for the moment, we have big plans. Plus, today we finally coordinated all sues associated with state guarantees with the Finance Ministry. And we hope that by the end of the month, we will be able to disburse the first loans based on state guarantees.

Vladimir Putin: Understood. Are you now satisfied with the terms for providing state guarantees?

German Gref: Today we settled all of the issues that had been disputed. Late August and September, I think, will be very active from the point of view of aiding companies, both local economic mainstays and system-based companies, for which the government is ready to issue state guarantees. I think that we'll try to grant the large part of the loans in September. I think maybe 150 - 200 with state guarantees.

Vladimir Putin: Excellent. You have already started and are increasing the lending volume of loans to the public in foreign currency.

German Gref: Indeed, we have made this decision. Starting next week, we will start actual implementation of this decision. In autumn of last year, during the period when there was a threat of devaluation, we stopped lending in dollars. In addition, we offered the public the opportunity to convert dollar loans into ruble loans. Now we see that the situation has stabilized considerably, and devaluation risks are significantly lower, so we decided that we will reinstate lending to physical persons on in dollars on all loans except for mortgage loans.

We disbursed auto loans in dollars - more than 50% of them. Especially in the major cities, in Moscow and St. Petersburg - in dollars.

Vladimir Putin: In other words, Sberbank is returning to the practice of granting loans in foreign currency to physical persons?

German Gref: In any currency - dollars, euros...

Vladimir Putin: Good.

GLONASS navigation system loses one satellite http://www.interfax.com/3/512818/news.aspx

MOSCOW. Aug 24 (Interfax-AVN) - One spacecraft has been withdrawn from the orbital group of the Russian navigation system, GLONASS. On August 24, the group consists of 19 satellites, 18 of which are operating to their target designation, and one is temporarily withdrawn for maintenance, according to the information posted on the website of the Russian Space Agency's information analysis center. Until today the GLONASS system had 20 satellites. The first satellite withdrawn from the group was launched into orbit in December 2003 and started operating a year later. It was withdrawn for maintenance in early May 2009.

Russia launches 20 carrier rockets since start of 2009 http://www.itar-tass.com/eng/level2.html?NewsID=14265226&PageNum=0

MOSCOW, August 24 (Itar-Tass) -- Russia has launched 20 carrier rockets since the beginning of the year, which beats last year’s average monthly rate, the government press service said on Monday.

Prime Minister Vladimir Putin will chair a meeting on the restructuring of the rocket and space industry on August 25. The focus will be on the creation of an effective mechanism for improving the state of the rocket and space industry.

By 2016, an integrated research centre will be created in the industry and a corporation will be established to build automatic spacecraft and ground-based control systems. “After 2016, the structure of the rocket and space industry will comprise up to six big corporations, self-sufficient in the production of certain space equipment and competitive on the world space market,” the press service said.

Russia to invest $143 mln in engines for new Angara rocket http://en.rian.ru/russia/20090824/155911606.html

NIZHNY NOVGOROD, August 24 (RIA Novosti) - Russia will invest about 4.5 billion rubles ($143 mln) by 2015 in the production of engines for a family of Angara carrier rockets, the Perm Territory's government said on Monday.

The RD-191 is a high-performance single-combustion chamber rocket engine, which recently passed a series of benchmark tests at the Proton-PM company in the Perm Territory in the Urals, and will be soon certified for test flights.

Russia's Federal Space Agency Roscosmos and the Perm Territory signed an investment agreement last week during the MAKS-2009 air show near Moscow.

The environmentally-friendly Angara rocket, currently under development by the Khrunichev center, is designed to put heavy payloads into orbit. It is intended mainly for launch from the Plesetsk space center to reduce Moscow's dependence on Kazakhstan's Baikonur, the main launch facility for the current generation of Russian rockets.

The new line of rockets will complement, and eventually replace, the existing line of Rockot and Proton launch vehicles. It will be available in a range of configurations capable of lifting between two and 24.5 metric tons into low-earth orbit.

The Angara family will be used for military and civilian purposes, specifically to put into orbit satellites as part of the Federal Space Program, as well as joint international space projects.

The Khrunichev center recently asked the government to allocate additional 10 billion rubles (about $290 mln) over the next three years to finish the development of the Angara rocket.

Putin to chair conference on aerospace industry restructuring http://www.itar-tass.com/eng/level2.html?NewsID=14265858&PageNum=0

MOSCOW, August 25 (Itar-Tass) - Russian Prime Minister Vladimir Putin will chair a conference on Tuesday on restructuring of the aerospace industry, an official at the government press office said.

The key issue on the agenda is "to create an effective mechanism to implement a package of measures to improve the situation in the aerospace industry," the press office said. "One of the main tasks in structural changes is to form, under effective state management, the industry capable of developing aerospace equipment of world level, meeting all the requirements of the country, and needed on foreign markets," it noted.

At present, Russia’s aerospace brings together 100 research and production organizations. More than half of them are federal state unitary enterprises or state-run companies. The share of joint stock companies where the state holds a controlling interest makes up 22 percent.

Research organizations account for a considerable portion of the industry. Of those, 18 actually perform the functions of research institutes.

In the past three years, the number of enterprises with unstable financial position decreased four-fold (from 16 companies in 2007 to 4 at the present time).

Amidst the efforts to keep a rather high level of capital investment into retooling and restructuring of aerospace companies, special attention is paid to the preparation of the batch production of armaments and aerospace equipment.

"During the first eight months of this year, 20 launches of booster rockets were made, which exceeds the average monthly indicator of 2008," the press office underlined.

Optimization of the industry is part of permanent work; and procedures are underway to privatize companies in this sector. Special attention is paid to recruiting young skilled specialists and offering them attractive remuneration and benefits packages.

The plan of structural changes in aerospace aims to pool companies in the priority directions of aerospace activities. "Supposedly, seven large integrated organizations will be formed by 2013 in the sector," a government official said.

A number of corporations is being set up in the interests of enlarging the basis to develop and produce various kinds of spacecraft and avionics. The maintenance of launch pads and the development of their infrastructure will be handed over to the integrated organization "Center of Operation of Ground Aerospace Infrastructure."

In the period to 2016, the integrated organizations set up in the sector will be enlarged. A united research complex will be created, and a corporation will appear which will engage in developing unmanned spacecraft for various purposes and ground control equipment.

"After 2016, the structure of the aerospace industry will envision up to six large corporations, self-sufficient in the production of certain kinds of aerospace equipment, and, accordingly, competitive on the world market of aerospace products and services," the press office of the Russian government said.

Suicide bomber in Chechnya kills four police officers, injures one http://en.rian.ru/russia/20090825/155918091.html 2:5125/08/2009

MOSCOW, August 25 (RIA Novosti) - A suicide bomber killed four police officers and injured another in the Shali district of the Russian North Caucasus republic of Chechnya on Tuesday, a local police source said.

"A suicide bomber approached five police officers who were waiting for their vehicle to be cleaned at a carwash and activated a home-made explosive device, hidden under his clothing. Four police officers were killed on the spot," the source said. A fifth policeman has been hospitalized with severe wounds.

Chechen rebels order separatist leader death-website http://www.alertnet.org/thenews/newsdesk/LP194163.htm

25 Aug 2009 07:54:05 GMT Source: Reuters MOSCOW, Aug 25 (Reuters) - Chechen rebels called on Tuesday for prominent separatist leader Akhmed Zakayev to be killed, saying he had abandoned Islam by recognising the legitimacy of the restive region's Kremlin-backed government. Zakayev, who lives in London, represents the moderate wing of the separatist movement and has clashed with radical Islamist insurgents in Russia's southern republic of Chechnya. Islamist rebel website www.kavkazcenter.com said Zakayav had recognised the authority of Ramzan Kadyrov, the Kremlin-backed leader of the region. "Public remarks show that he (Zakayev) has fallen away from Islam," the website said, adding that Doku Umarov, Chechnya's most wanted separatist leader, was behind the order. "The court has ruled that the killing of this apostate is a duty for Muslims." It did not say what court had issued the ruling. Zakayev, 50, fought Russia as a senior rebel commander in two wars with Moscow in 1994-2000. After Russia regained control of the province, he fled to Europe and acted as an official rebel envoy until 2007. Russia has tried to extradite Zakayev for 13 alleged crimes including kidnapping and murder, but a British court rejected the request in 2003, causing a diplomatic row. Kadyrov said last month that he would welcome Zakayev's return and possibly offer him a job in the regional culture ministry. But there were no indications Russia was ready to drop charges against him. Kadyrov faces strong criticism from human rights bodies after kidnappings and killings of human rights and charity activists in Chechnya. He denies any link to the killings. (Reporting by Amie Ferris-Rotman, editing by Tim Pearce)

One police officer killed, one injured in Chechnya http://en.rian.ru/russia/20090825/155916238.html MOSCOW, August 25 (RIA Novosti) - One police officer was killed and another injured in an attack by militants in the Vedeno District of the Russian North Caucasus republic of Chechnya early on Tuesday, a police source said.

The officers were attacked while taking part in a special operation at about 03:00 a.m. (23:00 Monday GMT).

Late on Monday, in neighboring Dagestan, a police station in the city of Khasavyurt came under attack by militants armed with a grenade launcher. No casualties have been reported.

Russian Interior Minister Rashid Nurgaliyev has ordered a complete review of every Interior Ministry facility in the North Caucasus to assess their vulnerability to terrorist attacks.

His order came after a suicide bomber rammed a minivan laden with explosives into the gates of a police station in the North Caucasus republic of Ingushetia on August 18, killing over 20 officers.

Putin dashes to Chechnya, shows support for Kadyrov http://in.reuters.com/article/worldNews/idINIndia-41948420090824

Tue Aug 25, 2009 12:59am IST

By Dmitry Solovyov

MOSCOW (Reuters) - Vladimir Putin visited Russia's restive Chechnya region on Monday, showing support for a local leader accused by rights groups of abuses and demonstrating Moscow's presence in a mainly Muslim region racked by violence.

Central Russian channels showed Prime Minister Putin and Kremlin-backed regional chief Ramzan Kadyrov alighting from a military helicopter at Tsentoroi, the Kadyrov clan's home village in the southeastern Chechen foothills.

Putin launched a second war to crush Chechen rebels in 1999 that gained him widespread popularity and propelled him to the highest office. Violence has flared again in the past months, with attacks by militants seeking an Islamist state in the north Caucasus spreading to neighbouring Dagestan and Ingushetia.

Surrounded by heavily armed guards in camouflage and with sub-machineguns at the ready, the two men laid a basket of red and white roses at the tombstone of Kadyrov's father, Akhmad, who was killed in a bomb blast in 2004.

"It is thanks to this courageous man that the war ended. He gave his life for Russia and Chechnya," a sombre Putin said, to a roar of helicopter gunships patrolling the area. Kadyrov faces strong criticism from human rights bodies after kidnappings and killings of human rights and charity activists in Chechnya. He denies any link to killings.

His tough methods used in fighting the rebels are also under international scrutiny and have been blamed by critics for the spread of insurrection. Kadyrov has amassed enormous personal power in the region that some analysts say could eventually pose a renewed threat to Kremlin control.

In Moscow, some 50 human rights activists held a rally in heavy rain to commemorate Chechen activist Natalia Estemirova, killed 40 days ago. "Kadyrov resign!" they chanted.

"People have become truly afraid to report abuses in Chechnya," Allison Gill, Russia director at the New York-based Human Rights Watch (HRW), told journalists.

"It is clear that the situation there (in Chechnya) has gone out of control ... The government bears the responsibility for the security situation. Obviously there is a lot of fear of the security services and of Kadyrov," she said. "He has got to go."

VAST COUNTRY

Last Monday, a powerful truck bomb exploded at a police headquarters in Ingushetia, killing at least 25 people and dealing a humiliating blow to Moscow's authority in the region.

Ingush President Yunus-Bek Yevkurov, seriously wounded in a suicide bomb attack on June 22, resumed his duties at the weekend.

Suicide bombers on bicycles launched two separate attacks on Friday, killing at least four policemen, in the Chechen capital Grozny, newly rebuilt after two devastating secessionist wars.

Akhmad Kadyrov, like his son, was a rebel who fought against federal forces in the first Chechen war. He became Chechen leader after switching sides shortly after Putin launched the second war to crush the rebel government.

"His life was not lived in vain and he died for a cause," Putin said. "In fact, he saved ... the lives of a great many people, because he laid a foundation for peace in Chechnya. We will remember him forever."

Putin has taken a consistently tough line on secessionism -- a sensitive issue in a country that spans 11 time zones from the Baltic Sea to the Pacific Ocean and embraces dozens of ethnic and religious groups.

A worker at Russia's Memorial human rights watchdog, who had worked with Estemirova, told reporters on condition of anonymity: "The situation in Chechnya now, the atmosphere, is simply wretched. It is just awful." "Putin gave Kadyrov 'carte blanche' to act in whatever way he wants. What is in fact happening is this in turn creates new rebels, and creates militants, who are fighting for both sides".

(Additional reporting by Amie Ferris-Rotman)

Chechnya Rapidly Becoming Russia’s Algeria, Moscow Analyst Says http://georgiandaily.com/index.php? option=com_content&task=view&id=14189&Itemid=65

August 24, 2009

Paul Goble

Vienna – Chechnya is rapidly becoming Russia’s Algeria, according to a Moscow commentator, not only because most Russians see it as an inalienable part of their country that is nonetheless de facto separate but also because Chechen leader Ramzan Kadyrov is laying the groundwork now for the de jure independence of his republic.

In an article in today’s “Yezhednevny zhurnal,” Mark Feygin argues that those who believe Chechnya will never seek independence because of the assistance Moscow provides to it understand neither the nature of Chechnya nor the way in which its leaders are pursuing independence (www.ej.ru/).

And he suggests that the French experience in Algeria, a place many French people believed would always remain a department of Metropolitan France and one that divided the French elite even more than Chechnya has divided the Russian one, provides a suggestive analogy, albeit one whose outcome is something many Russians still say they oppose.

Despite the new wave of violence across the North Caucasus, many Russians in recent weeks have comforted themselves with the idea that however bad things there may be and however much that violence may spread into Russia proper, there is little or no chance that Chechnya or any of the other republics will seek to go its own way.

That is because, such Russians say, the North Caucasus republics cannot afford to do so because Moscow provides almost all the funding for the regimes there. But Feygin argues that such a self-serving conclusion is quite possibly wrong and that given the nature of the North Caucasus Moscow may unwittingly be financing the independence movements.

“For almost 200 years,” the Moscow commentator points out, Moscow has been involved in “pacifying” that region and has been “financing it without end.” But such financing has never been a means of winning over the North Caucasus but rather “has been and remains a means of freeing the central powers that be from the disturbing problems of the region.” “Today,” Feygin continues, “Chechnya de facto is not a full-fledged territory of Russia: the laws of the Russian Federation do not operate there, the military units of Kadyrov are not subordinate to the federal force structures, and the administrative leadership and the courts function outside of any ‘power vertical.’”

And “what then separates Chechnya and the Chechens from independence? Their own constitution? Given how little the Russian one means. The recognition of other states? Abkhazia and South Ossetia have not been recognized by others. The general election of the president of Chechnya? Even earlier Dudayev did not have that.”

But despite that, and more successfully than his predecessors, Kadyrov is “leading the republic to final legal independence, and as far as politics are concerned, he has already ensured” that outcome by promoting Islamic identity – the common glue of the region – and avoiding relying too heavily on his own clan, something that would alienate others.

For those in both Moscow and Chechnya itself who oppose Kadyrov, Feygin says, it is generally accepted that “the activization of terrorist attacks and individual clashes between the army and militia” elsewhere in the North Caucasus … have one and the same source – the Chechen separatist resistance.”

But if that is common ground, there is also a growing recognition that Moscow had only “a small number” of options after the end of the war and that “setting one group of Chechens loyal to the federal center against others … would lead to a new test of the firmness of the clan [taip] structure of traditional society in Chechnya.”

So far, Kadyrov has been able to promote Islam as a unifying factor of Chechen society and as a means for reaching out to Middle Eastern countries who might support him and thus play down the divisions in Chechen society itself, a strategy that is likely to work until the weakening of Russian power allows him to declare independence.

That is not something many Russians want to focus on and consider “the resolution of the problems of Chechnya through a ‘civilized divorce.’” But because the prospects of de jure as well as de facto independence for Chechnya are increasing, Feygin suggests, it would be good to explore the experience of other countries facing analogous challenges.,

The most obvious of these, he argues, is France’s experience with Algeria, a place that after 1848 the French did not view as a colony but as part of France. But after World War II, when other French colonies fell away, Algeria fought for independence for 17 years until at last Paris accepted its independence in July 1962.

And just as with Russia over the last two decades, France’s war with Algeria played a major role in the national life of France, leading to violence in the metropolitan country and forcing various political changes. Even today, the French continue to discuss whether General de Gaulle who returned to power to deal with Algeria acted correctly. According to Feygin, there are two aspects to France’s experience with Algeria that are especially relevant to Russian consideration of Chechnya: the question of immigration as a result of “a liberal migration policy” and “the extreme right attitudes in the military” that shook France and could shake Russia.

“Russia, balanced on the edge of a military coup and real disintegration, will,” the Yezhednevny zhurnal” writer says, have to take into consideration dissatisfaction in the military as a result of failures with ‘the pacification’ of the Caucasus and the consequences of an ineffective military reform.”

Consequently, “despite the differences between democratic France of the 1960s and authoritarian Russia of the 2000s,” Feygin says, Russians “have a chance to avoid the negative consequences of the possible separation of Chechnya and a number of other Caucasus republics, if[they] think about it in advance.”

If Russia itself liberalizes before the question of such separations occur, Feygin suggests, it is possible that they can be “resolved in a more civilized fashion” than otherwise would be the case. One possibility, he says, is a Russian-Federation wide popular referendum about this outcome.

Given the enormous problems Chechnya presents and will present to Russia for the foreseeable future, Feygin argues, “how Russians would vote” in such a poll remains “a very big” and, he implies, a very open question, one whose answer could well be very different than those who continue to talk about the inviolability of borders now assume.

Explosive device goes off in Nazran, no victims http://www.itar-tass.com/eng/level2.html?NewsID=14266149

NAZRAN, August 25 (Itar-Tass) -- An explosion occurred in Moskovskaya Street in Ingushetia’s city of Nazran at about 09.10 Moscow time on Tuesday.

“An explosive device was under the bottom of a car belonging to a worker of the republic’s gas economy. As a result of the blast, nobody was injured, the car was damaged,” ITAR-TASS learnt at the Interior Department of the republic.

An investigation team is working at the site of the incident.

Ingush intervention may backfire http://www.mnweekly.ru/comment/20090824/55386220.html

24/08/2009

Anna Arutunyan President Dmitry Medvedev is taking a tough line in the wake of the Nazran bombing on 17 August, firing the Ingush police chief and ordering a criminal investigation to punish those who failed to prevent the deadliest suicide bombing that the republic has seen in years.

But analysts are sceptical whether such direct federal intervention in a restive internal republic will yield positive results, even while a policy of transparency adopted by Ingush President Yunus-bek Yevkurov, who was nearly killed in a June attack, tragically appears to have backfired.

The Nazran attack was "slap in the face for Yevkurov," said Alexei Malashenko, a Caucasus expert at the Carnegie Moscow Center.

Yevkurov, he said, tried to get tough on the rampant corruption that was a legacy of his predecessor, former FSB general Murat Zyazikov, whom Medvedev sacked in October. In return, Yevkurov suffered an attempt on his life in June that killed four bodyguards, a spate of shootings, and now, just days after his recovery was announced, a bombing in Nazran.

Medvedev fired Ingush Interior Minister Ruslan Meyriyev immediately after the attacks and sent the federal deputy interior minister, General Arkady Yedelev, to personally direct all interior forces in the republic.

"We need to figure out what happened and respond to what it was - slovenliness, treason, or a combination of crimes that could not be affected," Medvedev told the Security Council in Sochi last week.

The next day the Investigative Committee for the Southern Federal District announced that it had launched a criminal investigation for negligence against top brass at the Ingush Interior Ministry - punishable by up to seven years in prison.

In a break from a common habit of blaming outside forces, Medvedev said much of the problem came from within the country: "You talked about the influence of a number of factors, including international ones, such as funding of terrorists [and] religious extremism. These external factors do exist - you are right - but the main cause is inside the country, however sad it sounds."

Investigators believe that police failed to track the GAZel even though there were reports two days before the attack that such a vehicle could be used for a suicide bombing.

"It's traditional for Moscow to react by appointing people from Moscow," said Yury Fedorov, a security expert at the London-based think tank Chatham House. "But basically those people who are coming from Moscow have very little knowledge of the local situation, and cannot understand what is going on below the surface." What all North Caucasus republics have in common, said Fedorov, is that they are dependent on the federal government for funding. "Local elites are dividing the money coming from Moscow - and one of the main sources of conflict within those elites is competition for budget money between different groups."

He suggested that this may have been an additional incentive for Chechen President Ramzan Kadyrov to try to get more involved in handling Ingushetia's security forces.

"After the attack on the Ingush president, Kadyrov wanted to infiltrate local security institutions with his own people," said Fedorov. "This hasn't happened. But the so-called Kadyrov model is very attractive for Moscow because it helps the Kremlin to put the main burden of responsibility on a local leader in return for demonstrative loyalty."

Yegelev, the new security chief responsible for Ingushetia, has excellent relations with Kadyrov and the two are apparently close, said Malashenko. "But that doesn't mean that [Yegelev] will let him [have free rein in] Ingushetia," Malashenko said. "If [federal forces] let Kadyrov in, they will regret it. I believe they are aware of this. If they are thinking logically, then they understand that this is dangerous."

Building of city interior department fired on in Khasavyurt http://www.itar-tass.com/eng/level2.html?NewsID=14266030&PageNum=0

MAKHACHKALA, August 25 (Itar-Tass) -- Unidentified people fired a shot from an under-barrel grenade launcher in the direction of the building of the city interior department in Dagestan’s city of Khasavyurt.

As ITAR-TASS learnt at the press service of the Interior Ministry for Dagestan, “the shot from an under-barrel grenade launcher was fired from side of Toturbiyev Street at about 23.30 Moscow time on Monday.”

“There are no victims among police. A shell-hole with a diameter of 10 centimetres appeared at the site of the blast, several police cars were damaged by shrapnel,” the ministry’s spokesman said. An alarm was raised. Criminal proceedings were instituted.

Where Violence Flourishes http://www.carnegieendowment.org/publications/index.cfm? fa=view&id=23690&prog=zru

Masha Lipman the Washington Post , August 24, 2009 Last Monday a truck loaded with explosives rammed the gate of a police station in Ingushetia, a tiny republic in North Caucasus. The suicide attack killed more than 20 police officers and injured a hundred civilians. Violence in Ingushetia and the region at large is rising, the result of incompetent local governance as well as the Kremlin's neglect.

North Caucasus presents a huge challenge to the Russian government. The territory stretches from the Black Sea to the Caspian Sea in European Russia and includes several republics, or ethnic administrative regions, all of which are weak or dysfunctional economies dependent on allocations from Moscow. It is home to poverty, extreme unemployment, rampant crime and corruption. The population is predominantly Muslim; locals cling to traditional practices and culture; and Russian laws are barely observed. Among its scores of ethnic groups, interethnic relations are often tense or hostile.

In recent years, the Kremlin has relied on handpicked leaders. Moscow funds them and turns a blind eye to the blatant embezzlement and corruption in the region as well as those leaders' heavy-handed governance. For their part, the politicians pledge loyalty to Moscow and deliver an overwhelming pro-Moscow vote during elections.

By rejecting responsibility for law and order in North Caucasus, the Kremlin has probably sought to avoid fomenting anti-Russian sentiments. Moscow is concerned about security in Russia at large, but its security priority for North Caucasus has been simply to contain violence so it would not spill outside the region. With no steady check on illegal behavior, it was only a matter of time before violence spun out of control. Consider developments in three places:

In Chechnya, where Russia had engaged in two atrocious wars against anti-Russian insurgents, the Kremlin has empowered Ramzan Kadyrov. Russian servicemen no longer fight in Chechnya, and until recently Kadyrov kept his territory reasonably peaceful. The Chechen terrorist attacks that began in the mid-1990s fell off after about 10 years. Kadyrov's highly valued service and his loyalty to Moscow earned him impunity; he's a brutal ruler, and his tenure has been marked with an abominable human rights record. In the past month alone, two human rights activists were killed. Kadyrov's rivals and enemies have been methodically eliminated; two assassinations -- in 2006 and 2008 -- took place in broad daylight in central Moscow. Today, Kadyrov is granted free rein; arguably, he enjoys more autonomy than his insurgent predecessors -- all killed in battles with Russia -- ever hoped to achieve. Lately, however, even Kadyrov's inhuman methods have failed to keep Chechnya under control. A number of deadly attacks on police and administrative officials have been reported this summer. Last week, at least four policemen were killed in the Chechen capital of Grozny by suicide bombers on bicycles.

For its part, Ingushetia was once blessed with a wise leader revered by his people, Ruslan Aushev. The Kremlin, wary of Aushev's popularity, which made him too independent, forced Aushev to relinquish his post to a loyal but incompetent president whose unlawful and ferocious methods antagonized many locals. Gradually, Ingushetia became home to a vicious circle of violence: The local government harshly persecuted anyone regarded as a challenge to its authority; the victims of brutal treatment sought revenge on the police, and more severe, punitive measures followed. When the Kremlin finally decided to replace its puppet leader, the situation was out of control. Desperate avengers, clannish feuders, religious radicals and criminal forces nurtured by corruption all battled their adversaries. The new Ingush leader appointed about a year ago tried a more reasonable approach to governance -- and was severely wounded in a June assault.

The situation in Dagestan is hardly better. A Newsweek reporter who traveled there this month noted that "police are blown up, shot on the side of the road, and killed in their beds as part of an ethnic battle" between the politically dominant ethnic group and dozens of the less privileged.

The upsurge of violence in North Caucasus is a consequence of outrageous abuses of authority by local leaders and the Kremlin's irresponsible policies. Politically, the Russian government has no worries; it has no political opposition to challenge its policies, and people at large wouldn't hold the Kremlin to account for the rising violence in North Caucasus. As long as the violence stays away from their homes, they pay little if any attention to developments in this restive region. In a sense, many Russians don't regard North Caucasus as part of their country, and it is not uncommon to hear people say on radio shows or in private conversations that the Caucasus republics should be let go.

That, of course, is not a solution. First, the North Caucasus republics are not seeking independence. Why would they, if allocations from the Russian budget sustain them? And, second, their location ensures that their countless problems are Russia's responsibility.

After the assault on the Ingush police station last week, President Dmitry Medvedev said in a statement that the roots of violence are "in the conditions of our life, in unemployment and poverty, in the clans that have no care for the people but are only concerned with cash flow." In fact, however, the Russian government does not appear capable of, or willing to seriously address these issues.

Drug police in Tatarstan seize 13 kg of heroin http://en.rian.ru/russia/20090825/155917437.html

MOSCOW, August 25 (RIA Novosti) - Drug police in the Russian Volga republic of Tatarstan have seized 13 kg of heroin from a group of Afghan drug dealers, the Russian drug control service said on Tuesday.

"The leader of a criminal group and two his accomplices have been arrested," the service said in a statement, without disclosing the time of the operation.

Two suspected drug dealers, a 50-year-old woman and a 35-year-old man were arrested upon their arrival in the Tatar capital, Kazan, by rail. Some 10 kg of Afghan heroin packed in seven plastic 1.5-liter bottles were seized from the woman, and a gun was seized from the man. Black candidates stir up local elections in Russia http://www.guardian.co.uk/world/2009/aug/25/vladimir-putin-russia

Joaquim Crima is a new face of Vladimir Putin's modernisation plans

The Guardian, Tuesday 25 August 2009

He grows watermelons, loves Vladimir Putin and is widely respected in his small rural community in southern Russia.

But Joaquim Crima – an aspiring politician standing in local council elections in October – differs from his Russian neighbours in one crucial respect: he's black.

In a country notorious for its deep-seated racism and skinheads, Crima's decision to run for his local council has prompted a storm of interest in the Russian media, with some rather predictably comparing him to Barack Obama.

It also appears to have rattled the local authorities. They have come up with a second candidate of African descent, Filipp Kondratyev, in an apparent attempt to split the pro- Crima vote.

Born in Guinea-Bissau, Crima told the Russian daily Kommersant he had dreamed of travelling to Russia since childhood, after meeting a Soviet military adviser who told him about the Russian cosmonaut and first man in outer space, Yuri Gagarin. Crima arrived in the Soviet Union 20 years ago, to study. He married an Armenian woman, and settled in Srednyaya Akhtuba district, near Volgograd.

He is building his own house, on the proceeds of his watermelon business. His neighbours speak highly of him, referring to him respectfully by his Russian patronymic, Vasily Ivanovich.

"I'm a Russian eagle, but with a suntan," Crima told Kommersant. After posing for campaign photos hoeing his garden, he said that he was keen to implement Putin's plan to modernise Russia by 2020.

Experts are sceptical, however, that Crima has much chance of success in a country where elections are fixed in advance. An independent, he has lambasted local officials, complaining that residents do not have water or gas.

Few believe his candidacy marks a breakthrough in race relations. Last year 102 people were killed in racial attacks in Russia, and 450 beaten or wounded. "The level of racism in Russia is pretty monstrous," said Galina Kozhevnikva, deputy director of Sova, which monitors xenophobic incidents. "We don't have data from Volgograd, but all anecdotal evidence suggests things are not good."

She added: "During the US presidential election the Russian media was overwhelmingly in favour of McCain, simply because he was white and not a woman." Asked whether Russia would ever see a non-Slav president, she said: "Nyet."

Blowing Aviation Smoke http://www.themoscowtimes.com/article/1016/42/381172.htm

25 August 2009By Alexander Golts

As soon as a Russian military leader announces an ambitious weapons program for the next 10 or 15 years, you can be sure that it is little more than smoke and mirrors to create the impression that the military is modernizing its defense capabilities.

On Aug. 11, one week before the 2009 MAKS International Aviation and Space Show in Zhukovksky, Air Force commander Alexander Zelin said during a news conference that “air forces of foreign states — primarily the United States — will gain an opportunity to make coordinated, high-precision strikes on a global scale at practically all targets on the territory of the Russian Federation.” Zelin was referring to next-generation hypersonic jets that he believes are capable of flying both in space and the air at 5 kilometers per second.

But don’t be alarmed. Zelin assures us that by 2020, Russia will already have a unified system of air and space defense system — the fifth-generation surface-to-air S-500 missile — that will be able to hit enemy aircraft in both the air and space. The only problem is that a unified system is technically impossible. It defies the law of physics, according to which objects fly differently through the air and space.

But Zelin made his announcement in early August, and as everyone knows August is a cursed month in Russia. True to this tradition, a week after the general’s premonitions, two Su-27 jets collided in midair during rehearsals for MAKS. Although the pilots, members of the elite Russian Knights, were truly some of the country’s best, they were flying old Su-27 jets that date back to the 1980s. This accident says a lot about the state of the country’s “modern” military aviation.

Zelin’s pet project, the S-500, hinges on supposed U.S. plans to militarize space. But U.S. President Barack Obama recently gave his full support to Defense Secretary Robert Gates’ proposal for cutting huge, expensive military projects, including not only the F-22 fighter jet but also the quixotic space-militarization program that some U.S. hawks (and their lobbyists) had been pushing for. In his Aug. 17 speech to the national convention of the Veterans of Foreign Wars in Phoenix, Obama criticized U.S. lobbyists and Congress for wasting tax dollars “with doctrine and weapons better suited to fight the Soviets on the plains of Europe than insurgents in the rugged terrain of Afghanistan. … Twenty years after the Cold War ended, this is simply not acceptable. It’s irresponsible.”

It seems that the fantasy about the U.S. ability to strike all Russian targets from space is needed only to justify spending billions of dollars in a huge, expensive air and space defense system.

As far as the MAKS air show is concerned, it seems on the surface that it produced some positive results. A contract was signed for the delivery of 64 fighters to the Air Force by 2015. Russia has decided to spend $2.6 billion on the modernization of its military aircraft. But this could hardly be called modernization. First, these fighter jets were designed in the 1980s, and they could be considered modern only in that they will be produced for the first time. But their technology and design are long outdated.

Then-President Vladimir Putin in 2006 created the United Aircraft Corporation, which combines all of the country’s civilian and military aircraft manufacturers under a government-controlled holding company, in an attempt to improve the quality and efficiency of Russia’s hobbling aircraft manufacturing sector. But during the MAKS show, Putin gave the country’s aviation industry poor marks. “Every single contract the United Aircraft Corporation has to supply aircraft to foreign and domestic customers has not led to profit, but losses,” he said.

The United Aircraft Corporation was doomed to fail from the start. Simply reshuffling a dozen or so unprofitable and highly inefficient aircraft manufacturers into one holding company alone does nothing to improve the individual enterprises within the group. It is like putting a fresh layer of paint on a decaying building. It is much easier to paint the outside of the building than to destroy the building and build a new, modern one in its place. By pitching his S-500 superproject, Zelin is just applying another layer of paint on the dilapidated building called the Russian armed forces.

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

Buddhist Lamas to Serve in the Russian Army http://vostokmedia.com/n53680.html

10:16, 25.08.2009

VLADIVOSTOK. August 25. VOSTOK-MEDIA - Buddhist clergy will appear in the Russian army this year, said leader of the Russian Buddhist community, Head of the Traditional Sangha of Russia Pandito Khambo Lama Damba Ayusheyev. “Chaplains will serve in those units of the Russian army where at least 10 per cent of servicemen are Buddhists.”

He also stated that a senior Buddhist clergyman will work with the Defense Ministry to help implement the military program. Ayusheyev confirmed that the issue concerning the placement of the Buddhist chaplains was discussed at the meeting between the Russian President and the Buddhist lamas.

‘ White Tara’ Medvedev Pledges Cash http://www.themoscowtimes.com/article/600/42/381174.htm

25 August 2009By Alexandra Odynova / The Moscow Times

Russian Buddhists revere Dmitry Medvedev as a deity, and the president seemed to live up to their expectations.

Medvedev promised financial support to the Buddhist community and to place Buddhist chaplains in the military during a visit Monday to the monastery in Ivolginsky Datsan, 30 kilometers from Buryatia’s capital, Ulan-Ude.

“We don’t need any support from abroad for that purpose. We will manage all the problems ourselves and find support to help people practicing Buddhism and to reconstruct palaces,” Medvedev said, according to a transcript of his remarks on the Kremlin’s web site.

“Russia is a special state, the only one in Europe where Buddhism is recognized as an official religion,” Medvedev said, adding that 203 Buddhist organizations are registered in the country.

He also said army units where at least 10 percent of servicemen were Buddhists would receive Buddhist clergy.

Buddhism — which together with Russian Orthodoxy, Islam and Judaism share the special status of “traditional” faiths under federal law — is widespread in the republics of Buryatia, Kalmykia and Tuva. Last month, Medvedev signed a decree supporting the study of religion in schools and the hiring of military chaplains from the four faiths. A senior Buddhist clergyman will work with the Defense Ministry to help implement the military program.

State television showed monks wrapped in yellow and red robes and holding blue and white silk scarves welcoming Medvedev, dressed in his trademark dark-blue suit, at the monastery.

Russia’s Buddhist leader, Pandito Khambo Lama Damba Ayusheyev, showed Medvedev around the monastery, the biggest Buddhism center in Russia, and they drank tea together.

“For many centuries we, the Buddhists of Russia, have backed our country’s government,” Ayusheyev said. Answering journalists’ questions about whether Russian Buddhists recognize Medvedev as White Tara, a top Buddhist goddess also known as the Wish-Fulfilling Wheel, Ayusheyev said that “this is a difficult thing to explain to non-Buddhists,” Interfax reported.

“The leader of this country is a man who bears a very serious responsibility for others,” Ayusheyev said. “The Buddhists must support him, identifying him as a deity.”

Nezavisimaya Gazeta reported Monday that the monks were planning to hold a special sacred ceremony for Medvedev that recognized him as the White Tara deity. The report said, citing monastery head Dagba Ochirov, a White Tara throne was constructed specially for Medvedev. It said details of the ceremony were secret.

The Kremlin had no immediate comment on the report.

Medvedev has said he is a fan of yoga, which is intimately connected to the religious beliefs and practices of Buddhism. He said in an interview before being elected president that he became interested in yoga with the encouragement of his wife, Svetlana.

Over 27 mln Russians to be inoculated against influenza http://www.ptinews.com/news/246668_Over-27-mln-Russians-to-be-inoculated-against- influenza Moscow, Aug 25 (Itar-Tass) Before the beginning of the autumn epidemiological season, 27.45 million Russians will be inoculated with national vaccines "Grippol" and "Grippol Plus" against influenza.

Both the vaccines contain actual strains of flu viruses and have been recommended by the World Health Organisation for the 2009-2010 period.

"Within the priority national project in the healthcare sphere, inoculation of the population from the 'risk groups' -- medical workers, school students, children attending preschool institutions, persons older than 60 years of age," the Russian Federal Consumer Protection and Human Welfare Service has said.

"On August 26, central staff members will be inoculated against influenza. The national vaccine Grippol will be used for immunisation," the agency added.

Meanwhile, the first case of the A-H1N1 type influenza has been registered in the capital of Russia's Tatarstan Republic -- Kazan, head of Rospotrebnadzor's epidemiological department for Tatarstan, Tatyana Makarova told Itar-Tass.

National Economic Trends

Russian Ruble Declines as Oil Price Drops on Growth Concern http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agS7M192e1rU

By Alex Nicholson

Aug. 25 (Bloomberg) -- The ruble snapped three days of gains against the dollar as oil prices dropped from a 10-month high.

The currency of the world’s biggest energy producer weakened 0.5 percent to 31.5589 per dollar at 10:21 a.m. in Moscow, after gaining 0.8 percent yesterday. The ruble was 0.3 percent weaker against the euro at 45.1167.

Crude oil for October delivery dropped as much as 70 cents, or 0.9 percent, to $73.67 a barrel on the New York Mercantile Exchange. It was at $73.86 at 1:34 p.m. in Singapore.

Oil fell on concerns that the global economy may be slow to come out of recession if Chinese banks curb new loans and after SunTrust Banks Inc. said that U.S. lenders face more credit losses and commercial real estate may falter through 2010.

Most Asian stocks declined, with the MSCI Asia Pacific losing 0.3 percent to 113.09 as of 2:39 p.m. in Tokyo. The index rallied 2.5 percent yesterday, the steepest advance since May 19. The movements against the dollar and the euro left the ruble down 0.4 percent at 37.6613 against the central bank’s target currency basket, which is used to manage swings that hurt Russian exporters.

The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together. The ruble remains within the 26 to 41 band the central bank pledged Jan. 22 to defend.

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

Last Updated: August 25, 2009 02:42 EDT

Russia daily c.bank swap limit at 5 bln rbls

25-AUG-2009 07:40

MOSCOW, Aug 25 (Reuters) - Russia set the daily limit for currency swap operations with the central bank at 5 billion roubles ($156.5 million) on Tuesday, the same as in the previous trading session .

Limits on how much foreign currency banks can swap for roubles in the central bank were introduced from Oct. 20 in a bid to hinder currency speculators. Operations which do not involve the central bank are unaffected. ($1=31.94 Rouble) Keywords: RUSSIA SWAP/

(Moscow Newsroom, +7495 775 12 42, [email protected])

Russian household revenues and consumption in 1Q 2009 http://www.businessneweurope.eu/dispatch_text9659

Citibank, Russia August 25, 2009

A few highlights from the review of household revenues and consumption in 1Q 2009, published by Rosstat on Monday.

_ The average volume of consumer spending per household member increased by 15%YoY from Rub 6972.3 in 1Q 2008 to Rub 8005.9 in 1Q 2009, while nominal GDP contracted by 4.5%YoY during the same period.

_ The share of savings and external financing in the total volume of resources available to households fell from 7.5% in 1Q 2008 to 6.2% in 1Q 2009. We believe this trend continued in the following quarters due to contraction of credit and exhaustion of savings. And in our view this is one of the factors limiting households' ability to smooth consumption at present. _ The level and the structure of household disposable incomes vary significantly across regions.

_ Income inequality became slightly less pronounced - the total share of the richest 10% in total household income decreased from 30.5% in 1Q 08 to 28.7% in 1Q 09.

_ The aggregated structure of household consumer expenditures changed only slightly despite major shifts in the economic conditions: _ The share of food and beverages remained almost unchanged at 30.7% of total spending (+0.2pp).

_ Consumption of non-food items lost 1.5p.p. descending to 38% of total spending with the share of consumer electronics decreasing by 1.8p.p. to 4%.

_ Spending on services gained 1.3p.p. - 26% of total consumption - mostly driven by utilities.

Interesting fact: The richest 10% consumed over 46% of "goods and services provided by the employer free of charge or sold with discounts", while the poorest 10% got only 1.2% of that.

Economics courtesy of Elina Ribakova and Natalia Novikova

Russia’s unemployment rate continues to decrease on Aug 13-19 http://www.itar-tass.com/eng/level2.html?NewsID=14265863&PageNum=0

MOSCOW, August 24 (Itar-Tass) -- The unemployment rate continues to decrease in 47 Russia’s regions, an official at the the Russian Ministry of Health and Social Development told Itar-Tass on Monday.

The total number of officially registered jobless people in the country decreased by 0.1 percent in the period from August 13 to 19 and stood at 2,132,713 as of August 20, the ministry’s official said, adding that the indicator went down by 0.4 percent over the week from August 6 to August 12.

“In the period under review, the decline of the officially registered unemployment rate was registered in 47 Russian regions, including the Chukchi Autonomous Area, the Leningrad region, the Republic of Altai, and the Stavropol territory,” the official said.

“At the same time, the total number of the officially registered jobless people remained unchanged in several territories of the country, including the Bryansk, Chelyabinsk, Saratov, and Yaroslavl regions, the republics of Dagestan and Chechen republics, and the St. Petersburg city,” the ministry’s official said. Besides, 25 Russian regions reported a slight growth in the officially registered unemployment rate, the official said, adding that adding that the Republic of Mordovia and the Smolensk region were among such territories.

The total number of the dismissed has reached almost 617,000 since the beginning of October 2008. As many as 170,000 of that number are employed, the ministry’s official said.

More than 1,633,000 employees are temporarily out of work, work part-time or have to go on forced vacations.

The ministry’s monitoring is based on official information about dismissals, received from 53,738 organizations in all Russian regions, the official said.

Russia Econ Min: Trade Surplus -56% In Jan-Jul - Prime-Tass http://www.easybourse.com/bourse/actualite/Russia-Econ-Min-Trade-Surplus-56-In-Jan- Jul-Prime-Tass-721344

Publié le 24 aoû 2009

MOSCOW -(Dow Jones)- Russia's trade surplus fell 56% on the year to $52.7 billion in January-July, the Economic Development Ministry said in a monitoring report obtained by Prime-Tass news agency Monday. Russia's exports decreased 47% on the year to $151 billion in January-July, while imports fell 40% to $98.3 billion, the ministry said. In July, Russia's exports were $25 billion, down 47% on the year, while imports were $16 billion, down 44% on the year, the ministry said. Russia's trade fell 44% on the year to $249.3 billion in January-July. In 2008, the country's trade surplus amounted to $179.3 billion, up 37% on the year, the ministry said earlier. Agency Web site: www.prime-tass.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=volVj0Da4Km1o4h%2FMmQEQA%3D %3D. You can use this link on the day this article is published and the following day.

Medvedev sees mtge rates falling to pre-crisis level in 2-3 yrs http://www.prime-tass.com/news/show.asp?topicid=68&id=462839

MOSCOW, Aug 24 (PRIME-TASS) -- Mortgage rates in Russia may fall to the pre-crisis level in two to three years, President Dmitry Medvedev said Monday during a visit to Ulan-Ude, the capital of the constituent republic of Buryatia, as cited by ITAR-TASS. "There won't be any miracles there but I think within two or three years we'll go back to the situation on the mortgage market (that existed before the crisis)," he said. "However even (that situation) doesn't satisfy us. The rates must be lower."

Medvedev said he believed the current mortgage rates of between 20% and 30% were too high and added he thought 6% to 7% was a "normal" mortgage rate.

He said, however, that Russia should not seek to push mortgage rates too low. Medvedev said he believed extremely low rates were the cause of the U.S. subprime mortgage crisis, which started in 2007.

In April, Medvedev said the government aimed to cut the average mortgage rate in Russia to 11.5-12%, which is close to the pre-crisis level. The financial crisis started in Russia last year.

Mortgage Recovery Seen in 2 or 3 Years http://www.themoscowtimes.com/article/1009/42/381190.htm

25 August 2009The Moscow Times

President Dmitry Medvedev said Monday that mortgage rates would return to pre-crisis levels in two to three years and that lenders could be giving new loans at 14 percent.

“There won’t be a miracle, but I think that in the next two to three years, no sooner, we’ll be back to where we were with mortgages,” Medvedev told workers at the Ulan-Ude Airplane Plant. Under normal circumstances, banks “would be gladly giving out loans at 6 to 7 percent,” he said.

Given a refinancing rate of 11 percent, banks could lend at 14 percent, Medvedev said. The Central Bank cut the refinancing rate from 11 percent to 10.75 effective Aug. 10.

The government has been looking for ways to stimulate the real estate industry to help related sectors, particularly steelmakers. Ruble rates for mortgages are often more than 20 percent

“The state will regulate the overall economy, and let’s say, calm the banks down, so that they will build up the corresponding reserves and aren’t afraid to give out mortgages,” he said. “But we can’t do what the Americans were doing. They were giving out loans at 1 percent, and their whole mortgage system collapsed.”

Nonetheless, keeping the current rates of “20 percent to 30 percent is absolutely unrealistic,” he added.

Average rates for a 30-year, fixed-rate loan fell to 5.12 percent last week, Bloomberg reported, citing U.S. mortgage buyer Freddie Mac. The Central Bank said July 26 that new mortgages in rubles fell 82 percent in June, year on year, while loans in foreign currencies were down 91 percent.

Medvedev said roughly 20 percent of people considering buying a home take out a mortgage. “At the very least, half of all people should be able to take out a mortgage and make payments on it. That’s the goal,” he said.

‘ Recession Over but Crisis Remains’ http://www.themoscowtimes.com/article/600/42/381189.htm

25 August 2009By Anatoly Medetsky / The Moscow Times

The economy posted a second straight month of tenuous growth in July, prompting two of the government’s top anti-crisis officials to say Russia was edging out of a recession, although both were quick to warn that it was a fragile progress.

First Deputy Prime Minister Igor Shuvalov, who has led the government’s anti-crisis committee since December, made the announcement first. Andrei Klepach, the deputy economic development minister who first said the country was in a recession, officially presented last month’s growth figures later in the day.

But they both cautioned that it was too early to celebrate a stable economic recovery after the Economic Development Ministry reported that the economy grew 0.5 percent in July versus the previous month.

Such an improvement — attributed to higher exports, investment and government support measures — signaled an end to the recession, Klepach said, but the economy remains feeble.

“The recession is over … but the crisis has yet to be overcome,” he said.

Normally, it takes at least six months of continued economic growth to pronounce a recession a matter of the past, Klepach said, adding that he was sure the economy would keep growing through the rest of the year.

Shuvalov, accompanying President Dmitry Medvedev on a tour of Buryatia, also said the economy was growing. It has to grow for at least three months in a row for the government to conclude that the trend is stable, he told Reuters.

The government reported that the economy first rebounded in June, posting a marginal growth of 0.1 percent.

The figures for both June and July were adjusted for seasonal factors, Klepach said. In year-on-year terms, gross domestic product contracted 9.3 percent in July, the smallest drop since February. The Economic Development Ministry expects an 8.5 percent fall in GDP this year.

Some economists cast skepticism on Klepach’s claim that the growth would continue throughout the rest of the year. Demand is still slowly falling, undermining any sustainable growth, said Yekaterina Lavrinenko, a macroeconomist at the Economic Experts Group, a think tank.

The economy has been lifted just by the need for companies across various industries to restock inventories because their production fell steeper than demand, Lavrinenko said.

“There will be improvements, but they’ll be the sort caused by temporary factors,” she said. “It doesn’t look like a full recovery has begun.”

Yet other economists described the government expectations as conservative.

“We are more optimistic than the Economic Development Ministry,” said Alexandra Yevtifyeva, an economist at VTB Capital who also said the recent growth was spurred by companies that were restocking their inventories. “We expect quite a strong economic recovery in the second half of the year.”

Industrial production, which has been posting month-on-month increases in the commodities export industries since May, expanded to the broader economy last month, Klepach said. Companies produced more food, textiles, shoes, machines and trucks, he said.

Klepach said companies produced more because they were able to cut costs and finally get hold of increased government contracts, a key part of the state’s anti-crisis program for the real economy.

Investment also grew by 0.3 percent in July, month on month, marking a turnaround since the economic slowdown began in the second half of last year, he said.

On the flip side, Klepach said retail trade slid a further 0.2 percent in July, compared with June, reflecting shrinking disposable incomes.

The industrial production rate may temporarily slip again in September, in part because of the deadly accident at the Sayano-Shushenskaya hydropower station last week, Klepach said.

Other electricity generators in the region have increased supplies to make up for the devastated station, but metals companies with facilities in the area — including aluminum giant United Company RusAl — have indicated that the accident could force them to curb production. Russian economy may be on the road to recovery http://www.businessneweurope.eu/dispatch_text9659

Renaissance Capital, Russia Tuesday, August 25, 2009

Andrei Klepach, deputy head of the Ministry for Economic Development, officially announced that the Russian economy has likely begun to emerge from the first recession since the 1990s. According to preliminary data for July, seasonally adjusted MoM GDP was 0.5%, indicating that the economy is on track for recovery, even though this growth may be very fragile.

Klepach supported our view that April was the worst month for Russian industrial production, which increased 0.4% in May and 1.3% in June. Fixed investment was up 0.3% in July, and there were indications that some of the capital flows are returning. Klepach also commented that the retail sector remains under considerable stress due to falling real disposable income, a drop in real wages and the unavailability of consumer credit.

In May rising commodity prices revived economic activity, which spread into other sectors. In our opinion, the fall of GDP and slowdown in industrial production was mostly driven by the huge disposal of inventories which had started in 4Q08 and came through in 1Q09. We reiterate that we think the retail sector is close to hitting its bottom, as seasonally adjusted real wages have stabilised and a huge portion of fiscal stimulus is expected to be implemented through to the year-end. Therefore, we continue to expect higher economic growth than the Ministry of Economic Development's latest forecast of 8.5%.

Anton Nikitin

Russia's Spontaneous Stabilization http://www.businessneweurope.eu/dispatch_text9659

Evgeny Gavrilenkov Chief Economist, Troika, Russia Tuesday, August 25, 2009

A growing number of countries are demonstrating either signs of stabilization or even recovery, so that not only did 2Q09 look much better than the first quarter for the entire global economy, but most recent leading indicators also provide some optimism. Even though news flow remains mixed, it now looks as if positive sentiment dominates, which is a stark contrast with what was seen several months ago, when the majority of forecasters kept downgrading their outlooks. Most recent leading indicators for Germany and France suggest that the service sector in the former and manufacturing in the latter expanded in August. Existing home sales in the US jumped 7.2% in July, pointing to a recovery in economic activity and improvements in the financial sector. It appears that government efforts in many countries to stimulate economies have had some results, even though the effect may be relatively short lived - the US government, for instance, announced that it plans to withdraw the "cash for clunkers" program and it is not completely clear how the advanced economies will develop after stimuli are withdrawn. Meanwhile, the "cash for clunkers" plan also worked well in many European countries where demand for vehicles kept the industry afloat, justifying the massive increase in government spending.

China's fiscal stimulus has already delivered positive results.

Russia's economic performance demonstrated signs of improvement in mid year as well. Industrial output, for instance, grew strongly in June and July (up a respective 4.5% and 4.7% m o m, non seasonally adjusted, while seasonally adjusted growth was also visible, albeit a bit slower). Investments and retail sales also showed signs of m o m stabilization.

However, as opposed to Western countries, Russia's stabilization originated not from the state's efforts, but largely on its own. The government did not directly stimulate consumers as in the West. In the case of the automobile industry, subsidies went directly to a producer (AvtoVAZ), which kept producing cars even though people displayed limited enthusiasm in purchasing, as the vehicles remain incorrectly priced.

As a result, stocks began to rise again even though production fell by around 60%.

In recent years, production and sales continued to rise amid soaring consumer lending, which together with ruble appreciation helped to over inflate domestic prices. Given that devaluation in November 2008 - January 2009 was rather modest so that domestic prices remained relatively high, it is not surprising that car production has been suspended several times (including in August 2009).

Meanwhile the Russian version of support for the automobile industry (with money going from the budget straight to the producer, and consumers omitted from this scheme so that prices remained too high for them) should be better interpreted as a "clunkers for cash" scheme. Even though it was budgetary money, it was eventually the taxpayers that paid for unsold cars.

The government announced that next year it would start subsidizing consumers instead of giving subsidies to producers, i.e. switch from "clunkers for cash" to a Western style "cash for clunkers" scheme (Russians are supposed to enjoy R50,000, or around $1,500 in this version of a trade in purchase). Even though it will probably not be very timely, it is better late than never. This scheme may boost industrial growth even more next year.

Russia is going to increase federal budget expenditures by around 30% this year, which is more or less in line with what other governments are doing, though the difference between Russia and other countries is that such increase in expenditures is "normal" for Russia, while for Western countries it is an exception. We have reiterated many times in the past that Russia's double digit inflation stems from a permanent "fiscal stimulus" so that budgetary expenditures have kept rising by around 25 40% every year and the economy has become used to it. That said, this year we see almost no increase in fiscal stimulus relative to previous years. Hence, it follows that Russia's stabilization and/or recovery this year looks more natural as it is more market based, meaning that it should be more sustainable than in other countries. Russia's recovery may be slower than was expected, but government stimulus can accelerate growth next year (if it is eventually targeted properly, i.e. directed toward consumers).

It appears that so far m o m recovery in industry in mid year (amid relatively stable domestic demand) was largely caused by increased exports, such as gas, not by internal factors. Next year, domestic factors will start playing a more important role.

There are certain risks to this scenario, and too much government spending (especially if it occurs "overnight") is one of them. In the previous Russia Economic Monthly we analyzed government draft budget proposals for 2010 12 and characterized state budgetary policy as "unsustainable" as expenditures look excessive and incorrectly allocated. How the budget is being executed this year gives another illustration of such inefficiency.

According to most recent amendments the government is going to spend around R10 trln from the federal budget in 2009, while only R4.7 trln was allocated in 7m09 (i.e. R670bn per month), meaning that R5.3 trln (around R1.1 trln per month) is going to be spent in the remaining five months. The fiscal deficit, which slightly exceeded R920bn in 7m09, is supposed to reach R3.4 trln by year end (thus the deficit should reach R2.5 trln in August December) meaning that the economy will be attacked by excessive government spending - most likely a major attack will come in late November or early December. Should the government keep spending in August - December by about say R0.7 trln per month as up till now, so that the economy was able to stabilize, then total expenditures would not exceed R8.2 trln, which means that the deficit would be under R1.6 trln.

Even though in reality the budget deficit may be smaller than the planned R3.4 trln (as revenues may be more than expected if the oil price remains at current highs) an enormous inflow of ruble liquidity is what one can expect at year end. This can obviously create a storm on the forex market and translate into high inflation in January February 2010, which is Russia's usual problem. It looks as if the economy will once again receive money at year end that it does not need, while the financial system (the forex market in particular) will experience volatility, which is also not needed.

Even though the ruble currently appears to be in equilibrium, as the balance of payments remains strong and there is no need for artificial appreciation or depreciation (as some commentators suggest), the massive inflow of ruble liquidity may fuel even more speculation and extra volatility as a result. This potential volatility, however, would be short lived and likely evaporate in mid 1Q10 as government spending will not be that generous next year. In the forthcoming Russia Economic Monthly we will broach this issue in more detail.

Russia increased agricultural products output by 0.3% http://www.agrimarket.info/showart.php?id=81633

08/25/2009 09:38 According to estimations, in July 2009, agricultural production volumes of all agrarian producers (agricultural organizations, farming economies, population) in Russia totaled 249.3 bln RUR in current prices, during January-July of 2009 - 919.2 bln RUR, declared the Federal service of state statistics (Rosstat). As of beginning of August, agricultural organizations harvested grains throughout the area of 9.4 mln ha (up 19.4% compared to the same period of the previous year), which totaled 27.1% of grain sowings. Grain production volumes totaled 27.8 mln tonnes in bunker weight, down 3.9% compared to the same period of the previous year, including wheat - 22.6 mln tonnes, up 2.2%). The average yield in Russia became higher compared to the level of the previous year.

Business, Energy or Environmental regulations or discussions

Lukoil, Norilsk Nickel, Raspadskaya: Russian Equity Preview http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXxwEiIi2wFI

By Lucian Kim

Aug. 25 (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. The 30-stock Micex Index rose 1.3 percent to close at 1,120.54 in Moscow, its third day of gains. The RTS Index added 4.2 percent to 1,094.

OAO Lukoil (LKOH RX): Crude oil rose to a 10-month high. Shares in Russia’s largest non-state oil producer advanced 1.8 percent to 1,619.53 rubles.

OAO GMK Norilsk Nickel (GMKN RX): Copper prices rose to a one-week high as comments by the world’s biggest central banks signaled optimism for a recovery by the global economy. Shares in Russia’s biggest mining company slipped 0.5 percent to 3,425.04 rubles.

OAO Raspadskaya (RASP RX): Siberian power plants will need an additional 6.5 million metric tons of coal this winter after an accident damaged a hydroelectric plant, Interfax reported, citing Russian Energy Minister Sergei Shmatko. Shares in Raspadskaya rose 1 percent to 90.93 rubles.

To contact the reporter on this story: Lucian Kim in Moscow at [email protected] Last Updated: August 24, 2009 22:00 EDT

Bill Proposes Making Execs Liable for Losses http://www.themoscowtimes.com/article/1009/42/381195.htm

25 August 2009By Dmitry Kazmin, Filipp Sterkin / Vedomosti

The Federal Service for Financial Markets has proposed legal changes that would allow shareholders to punish a company’s management for unreasonable or unfair actions and legalize so-called golden parachutes for executives who have left.

There have only been a handful of cases where managers have been sued in Russian courts for losses brought upon companies or shareholders, said Dmitry Stepanov, a partner at Egorov Puginsky Afanasiev & Partners. The law on joint-stock companies allows for such lawsuits, but it does not give specific conditions for a claim or means for calculating damages.

The service has published a bill on its web site that would help solve at least one of the problems: What would qualify as causing a loss. The bill proposes to hold executives accountable for unreasonable or unfair actions.

A manager who does not use information that was available or who failed to seek out information could be sued for acting unreasonably. There are four different actions that could be classified as unfair, from acting in one’s personal interest while voting to knowingly acting against the company’s interests.

The rules would introduce a presumption of guilt for executives, who would be required to prove that they acted reasonably and fairly. Under the proposed changes, shareholders with at least 1 percent of voting shares can file a complaint to the Federal Service for Financial Markets.

The service is also widening the list of conditions, to six from just one, according to which managers can be sued along with the company. Among them are violations related to paying dividends, redeeming bonds or determining the price for a share buyback.

Board members who vote for the disputed action can also be liable.

“The bill’s concept has been approved by the relevant government bodies, and we’re going to refine the wording,” said Vladimir Milovidov, the service’s chief. Changes making bank directors accountable during bankruptcy took effect in June.

The Economic Development Ministry supports the idea, but it needs to be revised, said Dmitry Skripichnikov, deputy head of the ministry’s corporate management department. Shareholders with high-value stakes — even if they are less than 1 percent of voting shares — should be allowed to file claims, said Stepanov, from Egorov Puginsky Afanasiev & Partners.

Magnit owner Sergei Galitsky said it was important that the understanding of unreasonable and unfair not be too wide, as shareholders could abuse their rights. The courts will determine whether the new rules will be allowed to become a blackmail tool for minority shareholders, said Andrei Sharonov, managing director at Troika Dialog.

The breadth of the formulations will allow them to take into account a wide array of circumstances, and they will become more concrete through the courts, said Milovidov, the service’s head.

The proposed changes would also add an amendment to the law on joint-stock companies that would allow for chief executives and board directors to be compensated, even if they no longer hold the positions.

Currently, the law only says compensation for the board of directors must be approved by shareholders, Stepanov said. It is unclear whether a former director can be paid, and legal practice on the matter has been contradictory, although most often the problem is the size of the parachute.

The economic crisis has led to an increase of conflicts over such payments. Earlier this month, Kores Invest — part of Sintez Group, which owns about 45 percent of TGK-2 — filed a suit in the Moscow Arbitration Court against TGK-2, its former chief Andrei Vagner and another six defendants for breaking contracts under which the directors received parachutes of nearly 100 million rubles ($3.16 million). The defendants earlier demonstrated their right to receive the payments in court.

Gazprom is trying to get back 446.5 million rubles that were paid to former OGK-2 directors in 2008. In July, the Stavropol Region Arbitration Court turned down two suits by Gazprom units seeking to recover the entire sum from former OGK-2 chief executive Mikhail Kuzichev.

FAS to investigate pricing for potash consumed in oil and gas; neutral for potash producers http://www.businessneweurope.eu/dispatch_text9659

Renaissance Capital, Russia Tuesday, August 25, 2009

Event: The FAS has released details of an investigation initiated on 20 Aug of Uralkali and Silvinit, which are both considered to have violated Russian competition law. The investigation was triggered by an appeal from TNK-BP and others. It was claimed Silvinit and Uralkali had fixed very high prices for potash, and pricing appeared to vary for different groups of customers. Both companies are dominant in the domestic market. The high monopoly price of the product, according to FAS, means the price of the dominant supplier exceeds the total cost of production and sales. Uralkali supplies below 0.1mnt and Silvinit 0.26mnt to oil and gas companies, which use potash in drilling. According to TNK-BP, the price for potash rose to over $363/tonne in 2H09. According to the price agreement achieved by the FAS and potash companies last year, industrial customers, including oil and gas companies, can fix the price as minimal export price ex- works (excluding transportation expenses). Farmers and NPK producers buy potash at RUB3,700/tonne and RUB3,995/tonne in 2009. The FAS says potash producers should not discriminate against customers in terms of pricing.

Action: Potash producers fixed prices in line with the agreement signed with FAS, making voluntary discounts for NPK producers and fixing a low level for farmers. We believe that potash companies did not violate the agreement and can't be asked to pay a penalty. The recommendation of FAS could be to reduce the price for all industrial customers in the worst case. We have RUB3,995/tonne as the 2009 price for all group customers, and believe this news is neutral for potash suppliers.

Marina Alexeenkova

Ukraine's Azovmash's Russian plant faces bankruptcy http://www.businessneweurope.eu/dispatch_text9659 Astrum, Kyiv August 25, 2009

A court in the Krasnodar Region (Russia) has commenced bankruptcy proceedings for the Armavir Heavy Machinery Plant, which belongs to the Ukrainian holding Azovmash. At the same time, the hearings have been delayed until September 7, 2009. This bankruptcy case is being considered on the basis of a lawsuit by Efko-market (Russia), to which the Armavir plant owes RUB 13m for materials. Another creditor of Armavir, which filed a lawsuit against the Company, is Marketservice-95 (Russia).

Astrum's perspective: We expect that Azovmash group will keep its Russian holding afloat.

According to the head of the UPTK Group, which owns a 50%-1 stake in Azovmash, the Company expects to sign a settlement agreement with the Armavir Heavy Machinery Plant's two creditors that filed the bankruptcy lawsuit. The news is NEUTRAL for Azovmash's two other holdings, Mariupol Heavy Machinery (MZVM: SELL) and Azovzagalmash (AZGM: SELL).

Igor Bilyk

Copper exports from Russia up in H1 http://steelguru.com/news/index/2009/08/25/MTA4NTY4/Copper_exports_from_Russia _up_in_H1.html

Tuesday, 25 Aug 2009

According to the statistics from Russian customs, Russia exported refined copper of 212,500 tonnes in the H1 of this year reaching USD 783.2 million in volume and enjoying a pick up of 160%. Russia exported copper to CIS of 600 tonnes with a volume of USD 2.2 million while to other countries 211,900 tonnes with a volume of USD 781 million.

During the same period, Russia’s nickel exports totaled 106,200 tonnes down by 9.5% compared to the same period in 2008. Russia exported nickel of 200 tonnes to CIS with a volume of USD 2.2 million while to other countries 106,000 tonnes with a volume of USD 1,185 million.

(Sourced from Wireworld.com)

Eurasian Development Bank could offer $500 mln in Eurobonds in fall (Part 2) http://www.interfax.com/3/512897/news.aspx

ALMATY. Aug 25 (Interfax) - The Eurasian Development Bank (EDB) is planning to offer $500 million in Eurobonds in September-October, a senior bank official told reporters in Almaty. "We're looking to place in September, or October at the latest, and for now we're talking about $500 million," said Yevgeny Vinokurov, head of economic analysis and consulting at the bank. He said "due diligence for the Eurobonds was performed last week." "It's not as if the international market has thrown its doors wide open for first-rate borrowers, but a small window is now open. Nearly all first-class Russian borrowers, including Gazprom (RTS: GAZP) and Lukoil (RTS: LKOH), have placed in the last two or three months, and the EBD ranks among such borrowers," Vinokurov said. The bank has a high rating, conservative liquidity management, well structured projects portfolio and sufficiently high level of risk management, he said. The EDB delayed a planned debut $300 million Eurobond placement indefinitely last year due to the financial markets uncertainty. The EDB said last week that it was preparing four bond issues each worth 5 billion rubles and each maturing in seven years. This will be the bank's first placement on the Russian market. In April and July of this year, the bank placed two bond tranches on the Kazakh debt market, which were denominated in tenge coming to a total of 20 billion tenge (around $133 million). The funds raised from the placement will be invested in infrastructure projects for the Kazakh economy. Russia and Kazakhstan established the EDB in 2006 with the purpose of facilitating the robust development of the two countries' economies, sustaining high rates of economic growth, expanding mutual trade, developing other forms of economic relations, and encouraging direct investment, including on the basis of private-public partnership. Russia's contribution to the bank's equity was $1 billion, and Kazakhstan paid in $500 million. In December 2008, the EDB accepted Tajikistan, Belarus and Armenia as members. At the start of April 2009, Armenia made an equity contribution of $100,000 to the bank. At the end of June 2009, the bank announced that Tajikistan had completed all the necessary measures for entry into the EDB and invested $500,000 in the bank.

Vnesheconombank granted credit to the bank "St.-Petersburg" http://www.akm.ru/eng/news/2009/august/25/ns2774605.htm

25/08/2009

Vnesheconombank on August, 21st, 2009 granted a loan to the bank "St.-Petersburg" in the volume of 1.466bln. It is spoken about in the report of the bank "St.-Petersburg". Granting of the credit has been approved by the Supervisory council of the Foreign trade and investment banc (Vnesheconombank) in April, 2009. The funded credit will allow to increase the size of the own capital of the bank. Means will be directed on crediting of priority branches of economy.

The state corporation "Bank of development and foreign trade activities" (Vnesheconombank) is created by reorganization in the form of transformation of Vnesheconombank the USSR. The authorized capital of the bank is formed by association of the property transferred during reorganization of Vnesheconombank, shares of the Russian bank of development being the federal property and Rosimpexbank, and also the property transferred by the Government. Thus the authorized capital is established by the Government and should make not less than 70bln rub.

Sberbank net profit falls 90 pct in Jan-July http://in.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idINB6248452009 0824

Mon Aug 24, 2009 7:43pm IST

MOSCOW, August 24 (Reuters) - Russia's biggest lender Sberbank (SBER03.MM: Quote, Profile, Research) posted a 6.8 billion rouble ($212.9 million) net profit at Russian accounting standards for January-July of 2009, a 90 percent decline from the same period of 2008, the bank reported on Monday.

Sberbank issues a monthly report on its results to Russian accounting standards and analysts use them as a guidepost to trends on the bank's performance to international accounting standards. Sberbank says it can remain profitable this year.

"The risk management let the bank keep the quality of its loan portfolio on a reasonable level. The share of overdue loans with the bank's total loan portfolio stays at 3.2 percent as of August 1," Sberbak said in a press release.

State-controlled Sberbank's first-quarter profit plunged 98 percent to international accounting standards as the bank booked losses on an expected wave of loan losses [ID:nLE295374]. ($1=31.94 Rouble) (Reporting by Dmitry Sergeev; Editing by Jon Loades-Carter)

Sberbank RF raises bonuses to employees to the pre-crisis level http://www.businessneweurope.eu/dispatch_text9659

Citibank, Russia August 25, 2009 (SBER.RU - 1H: Buy/High Risk, Target Price: USD1.38; Current Price: USD1.577)

The bank's management board has decided to resume the prior compensation coefficients for awarding bonuses starting from August 1, Interfax reports, citing a written statement of CEO German Gref. In June 2009, deputy chairman of the board Bella Zlatkis announced that bonuses to top managers were reduced by 20% in November last year.

In addition, the bank is switching to a 3-year business plan instead of a 5-year one as there is more visibility in the market. German Gref expects next year to be more stable despite the residual problems of 2009. For 2010, Sberbank sets 9 key objectives including stabilization of loan portfolio quality, increase of efficiency, work with problem assets, increase in net profit and market share, development of new businesses, international activity, and increase of commission income and share price.

Simon Nellis

Investor sells Sberbank stake for 118 euro/GDR http://in.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idINL0650110200 90824

Mon Aug 24, 2009 11:23pm IST

(Repeats to remove extraneous text from bottom of story)

MOSCOW, Aug 24 (Reuters) - Brokers sold a 95.6 million euro ($136.8 million) stake in Russia's top lender, state controlled Sberbank (SBER03.MM: Quote, Profile, Research), at a price of 118 euros per Global Depositary Receipt (SBERq.DE: Quote, Profile, Research) on Monday, market sources said.

The total number of GDRs placed was 810,000, market sources said. (Reporting by Olga Popova and Melissa Akin; editing by Dmitry Zhdannikov)

25.08.2009 - Vedomosti via Banki.ru

Vedomosti: KIT Finance buys Rub 22.7 bln bonds issued by RRC http://www.cbonds.info/all/eng/news/index.phtml/params/id/441558

RRC CEO Vladimir Yakunin gave notice that his company is not going to invest a kopeck from its coffers to save KIT Finance. This promise was even overfulfilled, the business daily wrote Monday. More precise, in July the lending institution acquired bonds for a record amount of Rub 22.7 bln, analyst Maxim Osadchy made calculations on the basis of the bank’s financials. Only Sberbank, which has not yet published its financials, could break this record. For the time being, KIT Finance is followed by Bank VTB (Rub 21.2 bln) and Gazprombank (Rub 9.6 bln). KIT Finance failed to meet its obligations last autumn. Its owners led by Alexander Vinokurov sold their equity stakes at a symbolic price to RRC and Alrosa, then the latter’s block of shares was assigned to a RRC-affiliated concern. It will cost Rub 135 bln to save the bank from bankruptcy. This amount consists of cash KIT Finance will receive from the sale of its Rostelecom securities, shareholders’ contributions, loans from CBR and the Deposit Insurance Agency (DIA). Specifically, in line with the approved rehabilitation scheme DIA should provide RRC with a Rub 22 bln loan which will be allocated “to execute measures to rehabilitate the bank”. The shareholders provided the lending institution with long-term financing equal to Rub 22 bln, a KIT Finance spokesman said.

In July KIT Finance invested Rub 22.7 bln in RRC bonds, a source close to the DIA supervisory board said in turn. In July the lending institution picked up blue-chip bonds, including those of RRC and received cash from RRC, the state-run company’s representative confirmed without specifying any amounts. The lender’s top manager also said that KIT Finance purchased RRC bonds in big amounts in July. For the record, in July RRC floated three bond issues worth Rub 40 bln.

AvtoVAZ President, Boris Aleshin, leaves the company http://www.businessneweurope.eu/dispatch_text9659

Alfa, Russia Tuesday, August 25, 2009

Information that Boris Aleshin is expected to leave AvtoVAZ appeared in Kommersant and Vedomosti yesterday along with news that Rostekhnologii will create a new auto holding by contributing its stakes to AvtoVAZ (25%), KamAZ (37.8%) and Avtodiesel (30%). The Head of the new auto holding is likely to be Sergey Kogogin, KamAZ CEO. Rostekhnologii has made Mr.

Kogogin an offer, but his answer is not yet known.

The market reacted very positively to the news of a new auto holding creation.

AvtoVAZ and KAMAZ rose 16.1% and 7.15%, respectively, on MICEX yesterday, despite the MICEX index closing 1.3% higher and the RTS Index rose 4.15%. However, we believe that the market overreacted to the news, because the sense of a new holding creation is disputable. First, it is hard to see any synergy from the unification of the passenger car producer and the heavy truck maker. Second, the decision making process in both companies may slow as the management structure gets more complicated. Third, judging from Kogogin's previous statements, he does not want to move away from direct management of the efficient KAMAZ to rule the problematic AvtoVAZ.

Georgy Ivanin Posted: August 25, 2009 Rusnano Negotiates With AMD About Joint 65 nm Chip Production http://www.nanowerk.com/news/newsid=12295.php

(Nanowerk News) Russian news site NanoNewsNet reports that Rusnano is negotiating with Advanced Micro Devices about launching a new Russian-American JV for 65 nm technology microchips production. According to RBC Daily the chips will be used in the new generation smartphones. Rusnano can invest up to $500 million into this project. According to the state corporation rules, one of the Russian business players in the microelectronics field would also need to participate in this jpint venture. There are only two manufacturers of integrated circuits in Russia – Micron and Angstrem. Both companies manufacture chips with 130–180 nm technology mainly for transport and bank cards, bio-passports, etc. Not long ago, Rusnano announced that they would invest in the new 90 nm manufacturing line from Micron.

Advanced Micro Devices Rumoured to Make Chips in Russia. http://www.xbitlabs.com/news/other/display/20090824031156_Advanced_Micro_De vices_Rumoured_to_Make_Chips_in_Russia.html

AMD Reportedly in Talks with Rusnano Over Semiconductor Joint-Venture

[08/24/2009 03:11 AM] by Anton Shilov

Advanced Micro Devices, the world’s second largest designer of x86 central processing units, is reportedly in talks with state-owned Rusnano company over a semiconductor manufacturing joint-venture in the Russian Federation. The details of the project are somewhat shady to say at least since the amount of investments that Rusnano is ready to provide is by far lower than the cost of a leading-edge chip fab.

A top manager of one of three semiconductor manufacturers in Russia said in an interview with RBCdaily news-paper that Rusnano was ready to invest up to $500 million into a joint-venture with AMD. The chip making facility is projected to make microprocessors for smartphones using 65nm manufacturing process. A source with knowledge of the matter has confirmed the media that Rusnano was negotiating with AMD, but did not provide a single detail. It is not clear when the potential fab may become operational.

“There are various options [for establishing a semiconductor joint-venture]. Chip manufacturing can be established in Russia, abroad or set up abroad, and then transferred to Russia. In any case, at present there are no production capacities [for making chips using 65nm process technology in the country],” a source with knowledge of the matter is reported to have said. Alexander Belenkiy, the head of AMD Russia, has confirmed that the chief executive officer of Rusnano, Anatoly Chubais, has met with executives from Advanced Micro Devices, but made no comments about possible chip making joint-venture.

It is noteworthy that AMD has been withdrawing from low-cost chips aimed at smartphones or PCs for emerging markets for several years now. Moreover, the company decided to spin-off its manufacturing operations into a separate company called Globalfoundries, a joint-venture between AMD and Advanced Technology Investment Company of Abu Dhabi, last year. The cost a leading-edge semiconductor manufacturing facility may be several billions of dollars, the sum that AMD may not be able to provide.

At present Zelenograd, Russia-based makers of semiconductors – Angstrem, Micron and Sitronics – concentrate on making rather simplistic logic chips, various SIM cards, RFID chips and so on. There is no market for smartphone chips in Russia simply because there is no cell phone manufacturing in the country.

In order to make money operating semiconductor fab that makes chips at 65nm node, the factory should be heavily utilized, at 100% in the best case scenario. Considering the lack of chip market in Russia, such utilization rate may be unachievable.

The Russian Corp. of Nanotechnologies (Rusnano) was established in 2007 with the aim to form nanotechnology infrastructure, which includes the nanotechnology centers of excellence, business incubators and early stage investment fund in Russia. Rusnano provides scientific and educational programs that are required for its investment projects to succeed, and also supports the popularization of various semiconductors.

Metalloinvest Names Two VTB Directors to Board After Debt Deal http://www.bloomberg.com/apps/news?pid=newsarchive&sid=adR97d4EGCps

By Maria Kolesnikova

Aug. 24 (Bloomberg) -- OOO Metalloinvest Management Co., which runs billionaire Alisher Usmanov’s iron ore company, named two directors representing VTB Group to the board after an agreement to borrow from the lender last week.

Metalloinvest named VTB’s Kirill Aladyshev and Andrei Musatov to the board, the Moscow-based company said in an e- mailed statement today.

The company agreed last week with its biggest creditor state-run OAO Sberbank to restructure loans by borrowing from VTB, Russia’s second-largest lender. VTB opened a 61 billion- ruble ($1.94 billion) credit line, for Metalloinvest, Moscow- based Vedomosti reported Aug. 19, citing unidentified people familiar with the plan.

To contact the reporters on this story: Maria Kolesnikova in Moscow at [email protected], Last Updated: August 24, 2009 11:02 EDT

Transstroi Misses Road Bid http://www.themoscowtimes.com/article/1009/42/381201.htm

Billionaire Oleg Deripaska’s builder Transstroi lost a competition for a St. Petersburg highway contract, Kommersant reported Monday.

St. Petersburg officials selected local contractors GSK and Pylon, which said they could complete the project for 11.6 billion rubles, compared with the city’s original estimate of 16.4 billion rubles ($519 million), the newspaper reported, citing city officials. (Bloomberg)

UPDATE: Russian oligarch is Biopure's new owner http://www.massdevice.com/news/update-russian-oligarch-biopures-new-owner

August 24, 2009 by MassDevice staff

A bankruptcy court approves Sergei Pugachev's $4 million bid through a Delaware-based stalking horse for the now-defunct blood substitute maker.

A Russian industrialist whose holdings include banks, mines, ships and the French gourmet emporium Hediard now owns the remains of Biopure Corp. too.

Sergei Pugachev, through a recently created U.S. subsidiary of his Luxembourgh- based OPK Luxadvor SA, acquired the lion's share of Biopure's remaining assets with a $4.05 million bid during an Aug. 18 bankruptcy court auction in Boston.

Included in the sale were patents and other intellectual property connected with the company's Hemopure artificial blood compound. According to court documents, OPK and BIPACO LLC — a Boston-based limited liability company created Aug. 6 by Wong Tak Lin, a Hong Kong businessman — traded bids across 10 rounds during the seven- hour auction last week. BIPACO's top bid was $4 million.

OPK Biotech, the Delaware-domiciled entity created in June to acquire Biopure's assets, also put in a $850,000 bid for the company's 50-percent stake in Eleven Hurley Street Associates, a real estate partnership that owns the Company’s principal office and research and development facilities. A hearing is scheduled Sept. 3 to finalize the EHSA sale.

Also bidding on the EHSA partnership was Cambridge, Mass.-based developer Varney Hintlian, through his Tarvis Realty Trust. Hintlian's top bid was $800,000, according to court documents. OPK Luxadvor was established by Pugachev as a holding company for several European luxury brands such as Luxe TV, Design Capital and Hediard, a chain of over 300 high- end stores, cafes and restaurants based in Paris. It's not apparent how Biopure's medical products would be merged within the existing Luxadvor properties.

Pugachev made his initial fortune in banking, launching International Industrial Bank, or Mezhprombank, in 1992 and building it into the third-largest financial institution in Russia. During his rise, he forged close ties with prominent political leaders in post- Soviet Russia and reportedly issued the first credit cards used by former Russian President Boris Yeltzin and his family.

Forbes magazine estimated that Pugachev's personal wealth tops $2 billion; he's one of 12 billionaires with seats in the Russian parliament, serving a district in southern Siberia since 2001. His tenure, however, has not been without controversy — including accusations linking Mezhprombank to a money-laundering scheme dating back to the 1990s with Bank of New York (now part of Pittsburgh-based Mellon Financial Corp.)

The Biopure sale, for a bargain-basement price, is bad news for the company's stockholders, according to a regulatory filing.

"Biopure does not expect that Biopure stockholders will receive any substantial distributions resulting from these transactions and expects that the bankruptcy proceedings will ultimately result in the cancellation of these equity interests," the company said in the filing.

Biopure settled a five-year-old shareholders lawsuit last week, in which former company leaders were accused of malfeasance in touting the company's stock.

Under the terms of the proposed settlement, the company will pay $600,000 to investors contending they were duped by Biopure executives who allegedly concealed negative news about the company's artificial blood products. Money for the settlement will come from a directors and officers insurance policy covering legal costs associated with management errors and omissions.

Export of Bulgarian wine to Russia down by between 25% and 30% http://www.focus-fen.net/index.php?id=n192139

25 August 2009 | 11:06 | FOCUS News Agency Sofia. The export of Bulgarian wine to Russia has gone down by between 25% and 30%, Natalia Kazakova, executive director of Vinprom Ruse and member of the Managing Board of National Vine and Wine Chamber, told FOCUS News Agency. The decline started in October 2008. However, not all plants are posting a drop; some register growth in export of wine to Russia, such as Vinprom Ruse, she added. Galina DIMOVA Canada to expand beef exports to Russia 25 Aug 2009 http://www.meatinternational.com/news/canada-to-expand-beef-exports-to-russia- id1763.html

Canada is planning to expand beef exports to Russia, in particular bone-in beef, said the Minister of International Trade of Canada Stockwell Day during his recent meeting with the Russian Minister of Agriculture, Elena Skrynnik. “We do not see any serious obstacles to this, we need only to agree some veterinary issues,” said Skrynnik.

According to Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), in 2007 the veterinary services of Russia and Canada signed a veterinary certificate for the supply of boneless beef and raw beef meat products from Canada.

Currently, 116 Canadian companies specialising in the production of pork, beef and poultry have the right to export their products to Russia.

Skrynnik also noted that livestock breeding continues to be one of the main priorities of the Russia-Canada relations in the sphere of agroindustrial complex.

Today, Canada remains one of the largest suppliers of high quality dairy and beef cattle breeds. Over the past three years, Canada has been able to supply more than 11,000 embryos to Russia.

Russia "Burying" Hydrogen Power http://www.rusbiznews.com/news/n478.html

25.08.2009 — Analysis

Ural Electrochemical Integrated Plant proposed organising mass production of hydrogen power sources by 2020 to the Government. There is still no established mechanism in Russia for the investment into promising knowledge-intensive projects. This, in experts' opinion, is one of the key reasons why the country misses the developments of global importance.

Russia has for a long time been working on hydrogen power engineering. The hydrogen- oxygen power generating system for a lunar craft had been created as long ago as 1971; it had been tested on Earth and was ready to go into space. It had stemmed from the uranium isotope separation technology, on the basis of which the Ural Electrochemical Integrated Plant (UEIP) specialists have developed nickel-hydrogen accumulators and electrochemical power generators. One of the accumulator models has been for 10 years and still is working in orbit, on the Yamal-100 satellite providing power for radio and TV broadcasts. Another one is installed on the Sterkh satellite in orbit since the end of July 2009. The advantage of these devices is in that they do not need any hydrocarbon fuel; they are environmentally friendly and demonstrate a higher performance factor than traditional electric energy sources.

UEIP sees the future application of these designs not only in space. In the nineties the specialists had modernised the electrochemical generator Photon designed for the Buran space craft and installed on a car. However, this has not gone any further than the demonstration of its capacities, the majority of Russians would not be able to afford this environmentally sound car. The cost of a kilowatt of power in such vehicle varies from 10 to 25 thousand Euro (as a rule the engine power would be 60 kilowatts).

Experts claimed that there are possibilities for the reduction of cost of the "hydrogen" car. These include the use of cheaper materials, making the design simpler, and using non- precious metals as catalytic agents. However, Boris Pospelov, the Chief Engineer of UEIP's Electrochemical Converter Plant, claims that the world's best minds have not managed to significantly reduce the cost per kilowatt. Moreover, there is not be enough platinum in the world for the mass production of electric cars. This is why, in the expert's opinion, the world is going in a wrong direction.

UEIP specialists calculated that generators working on alkaline fuel cells are about 20% cheaper than polymer which is currently the preferred type in the world. In the future alkaline generators will be able to work on catalysts without precious metals. The working life of this type of generator is five times longer than polymer. Calculations demonstrate that with the start of mass production of the new energy sources with the total output capacity of 5 megawatt per year the kilowatt cost may be reduced from ten to three thousand Euro. By 2020, according to Boris Pospelov's prediction, it will be possible, when mass producing, to reduce the cost to less than a thousand Euro per kilowatt.

The developers, however, are aware that the hydrogen car will not appear on our roads too soon. First of all, the cost per kilowatt must be reduced significantly; secondly, hydrogen car filling station network must be established, and thirdly, the issues of making and storing hydrogen must be resolved. Nikolai Batalov, the Head of Laboratory of the Institute of High Temperature Electrochemistry, says that the cheapest, although quite dirty, method of obtaining hydrogen is from natural gas. Electrolysis (water decomposition) is cleaner but more expensive.

Mikhail Bazhenov, the head of the engineering design bureau of UEIP's electrochemical converters plant, is convinced that these problems will be resolved in the future. Water, for instance, can be electrolysed employing solar cells installed on rooftops. Their power generating capacity will be enough to replenish hydrogen and oxygen stocks in emergency power supply systems which are indispensable in hospitals, computer installations etc. Large power plants could use the output for electrolysis during the night time (when the work load reduces). Leonid Solovyov, a Deputy Chief Engineer of the TGC-9 Sverdlovsk branch, presumes that the night time electrolysis at power plants is quite possible, providing there are large storage tanks for hydrogen and oxygen. The expert stresses that sooner or later the tanks will have to be built since power generation will have to make a fuel transition from mazut to liquefied gas in the foreseeable future. This will require tanks able to hold tens of thousands of cubic metres. It would be quite possible to build hydrogen storage tanks within the framework of this project, as, according to Nikolai Batalov, this gas is best stored in liquefied form.

Mikhail Bazhenov stressed that the economic indicators of the project will become acceptable sooner or later if appropriate research and experimental development work is carried out. The most important thing is that the customers are already there, waiting for the technology - an American company was interested in buying 5-kilowatt sources from UEIP for lifting and handling equipment working in indoor areas. The institute made calculations and established that the production will be profitable if a thousand units were made, and this will require certain outlay for the production lines. The Integrated Plant does not have the resources for this and the American customer was only prepared to pay for ready made units.

The developer tried obtaining governmental funds having submitted a 1.2 billion roubles request in 2008 to the Rosnano corporation since nanocatalysts are used in the fuel cell production. Experts already gave a positive conclusion for the UEIP design but later the generator's creators found out through unofficial channels that the scientific and technical council established in the corporation gave a negative assessment as the design "does not match the world class level". The irony is that the UEIP specialists created a device with electric characteristics and resources actually better than the world class, but formally the scientific and technical council was correct, this was not equal to the world class level.

Neither the developers were able to get any money from the Moscow government which started financing the development of an electrochemical generator to power environmentally sound vehicles. Mikhail Bazhenov says that the money never gets to the developers despite the fact that Moscow-based companies involved in the project already got it. All this forces the specialist to come to the conclusion that Russia is not ready to receive, in a befitting way, new developments promising high returns in the future. The red tape might result in the situation when out country will lose this technology and the decades spent on its development.

Serghey Shchekleyin, the Head of the Atomic Energy Department of the Ural State Technical University, is convinced that it is not the right time yet for a broad practical application of UEIP's brilliant design. Officials might come to their senses in a couple of decades when organic fuel becomes expensive. By that time Russians might get hopelessly behind; today, for instance, the production people have already no idea of what goes into making a TV set's innards. "I reckon that the UEIP's development must not be discarded", says the scientist. "Once upon a time we were ahead of everybody in hydrogen power engineering, but over the last 15 years we slowed down somewhat. It is very important not to fall too far behind the world trends, otherwise we'll get the situation like with TVs or cars, when we have no idea of what is inside them.

Mikhail Bazhenov is sure that it will not be possible to manage a push for this development "from below". The Buran programme for which the generator had been initially developed was adopted at the very top and because of that it had been implemented. Hydrogen generator for industry and for everyday life is a programme of no smaller scale and has to, therefore, be carried out by the Government. The most pressing issue here is the establishment of a comprehensible mechanism for the investment into promising developments which would enable getting practical benefits in a short timeframe.

Vladimir Terletski

Activity in the Oil and Gas sector (including regulatory)

Russian Jan-July Non-CIS Gas Exports Down 39% - Prime-Tass http://www.easybourse.com/bourse/actualite/Russian-Jan-July-Non-CIS-Gas-Exports- Down-39-Prime-Tass-721349

Publié le 24 aoû 2009

MOSCOW -(Dow Jones)- Russia's natural gas exports fell 36.7% on the year to 78 billion cubic meters in January-July, the Economic Development Ministry said in a monitoring report obtained by Prime-Tass Monday. Of the total, Russia's gas exports to countries outside of the Commonwealth of Independent States amounted to 61.4 billion cubic meters in the period, down 38.8% on the year, while gas exports to CIS-countries amounted to 16.6 billion cubic meters, down 27.7% on the year. Russia's gas consumption decreased 8.6% on the year to 248.8 billion cubic meters in the period. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=volVj0Da4Km1o4h%2FMmQEQA%3D %3D. You can use this link on the day this article is published and the following day.

Transneft lost 10,000 tons of crude oil as result of fire accident at oil storage facilities in West Siberia http://www.businessneweurope.eu/dispatch_text9659

Citibank, Russia August 25, 2009

(TRNF_p.RU - 2H: Hold/High Risk, Target Price: RUB19120; Current Price: RUB18614)

A fire has occurred at one of Transneft's pumping stations in West Siberia affecting 4 out of the 8 oil tanks with 20,000 cubic metres (cm) capacity each. The company has lost up to 10,000 tons of crude oil due to the accident, Interfax reports, while the four tanks will have to be replaced, possibly by two tanks with 50,000cm capacity. At this stage we estimate that the total impact from the accident is likely to be limited to around Rbl 300mn, or 0.2% of the company's FY09E earnings.

We view the news as neutral for the stock.

Alexander Korneev

Lukoil - Blast reported at North Buzachi oil field in Kazakhstan (25% interest held by Lukoil) http://www.businessneweurope.eu/dispatch_text9659

Citibank, Russia August 25, 2009

(LKOH.RU - 1L: Buy/Low Risk, Target Price: USD57; Current Price: USD51.5)

Yesterday a blast was reported at North Buzachi oil field in West Kazakhstan where Lukoil holds a 25% interest. The blast resulted in crude oil ignition in two 63cm tanks and one fatality, Interfax reports. The field's annual production is about 2mt and its contribution to Lukoil's total production is limited to 0.5%.

We view the news as neutral for Lukoil.

Alexander Korneev

LUKoil Receives $1.2Bln Loan http://www.themoscowtimes.com/article/1009/42/381197.htm

25 August 2009Bloomberg

LUKoil said Monday that it got a $1.2 billion loan arranged by 12 overseas and domestic banks.

The three-year loan will be used “for general corporate purposes, the refinancing of the current financial debt and funding of oil export operations,” LUKoil said in a statement.

The new loan is secured by proceeds from oil export contracts and will pay interest of 400 basis points above the London interbank offered rate, the statement said. LUKoil has borrowed in the past year to help fund refinery purchases in Italy and the Netherlands. It also aims to increase output through projects in the Caspian Sea.

LUKoil paid “a fair price” for the loans compared with its bond prices, said Mikhail Galkin, director of fixed income research at VTB Group.

UPDATE 1-Sibir Energy secures $200 mln loan from Sberbank http://in.reuters.com/article/oilRpt/idINLO50423520090824

Mon Aug 24, 2009 2:54pm IST

* Sibir secures $200 mln loan for 2 years

* Funds go to support company's operational activity

(Adds background)

MOSCOW, August 24 (Reuters) - Russia's biggest lender, state-controlled Sberbank (SBER03.MM: Quote, Profile, Research), said on Monday it had granted a $200 million loan to Magma, a subsidiary of mid-sized oil and gas explorer Sibir Energy (SBE.L: Quote, Profile, Research).

The facility is provided to finance the company's operational activity and has a maturity of two years.

Sberbank holds a minor stake in Sibir Energy which was pledged as loan collateral by troubled oil-to-property tycoon Shalva Chigirinsky, who faces several lawsuits in different jurisdictions to meet obligations on Western loans.

Sibir Energy has become an acquisition target for Gazprom Neft (SIBN.MM: Quote, Profile, Research), the oil arm of the world's largest gas company Gazprom (GAZP.MM: Quote, Profile, Research).

Gazprom Neft has amassed a stake of just under 49 percent in Sibir Energy in recent months. The Moscow city government, together with the Bank of Moscow, holds a 19.3 percent stake. (Reporting by Dmitry Sergeev; Editing by David Holmes)

AUGUST 24, 2009, 11:44 A.M. ET

Russia's TNK BP Signs Pre-export Finance Facility http://online.wsj.com/article/BT-CO-20090824-708843.html

LONDON (Dow Jones)--BP PLC's (BP) Russian joint venture TNK-BP Holding (TNBP.RS) has signed its latest pre-export finance facility with a group of banks, bringing total commitments to $600 million, one of the banks arranging the facility said in a press release Monday.

The deal, which was oversubscribed, marks the first syndicated pre-export loan transaction in Russia this year, Deutsche Bank AG's (DB) statement said.

Dow Jones Newswires reported in July that the company increased the amount of the three-year, facility to $600 million, having initially targeted a loan of around $300 million, as two more banks decided to join the loan syndicate.

Deutsche Bank, Bayerische Hypo-und Vereinsbank, Calyon and ING Bank NV acted as initial mandated lead arrangers and active bookrunners for the facility.

Societe Generale SA (SCGLY) and WestLB AG joined as mandated lead arrangers, while ABN Amro Bank NV was an arranger, the press release said.

Helaba, ZAO Banca Intesa and JSB Orgresbank, part of Nordea Bank AB(NDA.SK), joined as co-arrangers for the facility.

Proceeds from the loan will be used for general corporate purposes, the press release said.

Pre-export finance comprises loans advanced against confirmed orders from a foreign buyer or buyers to enable the exporter to make and supply ordered goods, in this case oil. This facility therefore is a more secure form of lending for banks.

For most of 2008 TNK-BP was locked in a bitter dispute between BP and its Russian partners over corporate governance and strategy. However, the parties resolved the dispute in September clearing the way for raising financing.

-By Clare Connaghan, Dow Jones Newswires; +44 (0) 20 7842 9496, [email protected]

(Carol Dean and Alexander Kolyandr contributed to this report)

Samotlor oil field brings Russia to top http://www.upi.com/Energy_Resources/2009/08/24/Samotlor-oil-field-brings-Russia-to- top/UPI-24091251127781/

MOSCOW, Aug. 24 (UPI) -- Russia ranked as the top oil producer in the world with contributions from the Samotlor field, which ranked fifth in terms of 2008 production levels. IHS Cambridge Energy Research Associates, an adviser to international energy companies and governments, announced its 2009 list of top oil producers as well as the world's largest oil fields.

The Ghawar oil field in Saudi Arabia maintained its position as the largest field in the world, with a production rate of 5 million barrels per day. The Burgan field in Kuwait produced 1.2 million bpd, earning it the second rank, while the Azeri-Chirag-Guneshli field in the Caspian Sea placed third with 850,000 bpd.

The Samotlor field, the largest oil field in Russia, tied for fifth with the Zakum oil field in Abu Dhabi, producing 750,000 barrels per day in 2008.

Samotlor joined the Priobskoye and Fedorovo-Surgutskoye oil fields to place in the Top 20 of the survey list. Russia placed first in terms of overall oil production with 9.76 million bpd of production in 2008.

Samotlor, which began production in 1969, is operated by the Anglo-Russian venture TNK-BP. Russian-language business daily Vedomosti reports the field is 80 percent depleted, though analysts expect production to continue for at least another decade.

Novatek: expensive new office http://www.businessneweurope.eu/dispatch_text9659

UralSib, Russia August 25, 2009

NOVATEK buys real estate from core shareholders. During NOVATEK's (NVTK - Not Rated) conference call last Thursday, the hottest topic was the acquisition of a piece of real estate from core shareholders. The asset in question is the development company for NOVATEK's new office building in Moscow, and which has no activities other than the management of construction and ownership of the constructed building, according to NOVATEK. The deal included the 17,596 sqm office building, which cost $62 mln, together with another $12 mln in net debt.

$5,400-5,600 per sqm is expensive. We view this transaction as negative for minority shareholders because it equates to an estimated price per sqm of $5,400-5,600 (which is above the current market level), including capex of $21-25 mln needed for completion of the building. This transaction is similar to Sibir Energy earlier this year, where core shareholders tried to sell their real estate assets to the company. While the case with NOVATEK may be different, Sibir Energy stands as a stark reminder to the market and is a cause for concern. In any case, 2009 dividends will be $62 mln lower because of this transaction.

CHEAP ON THE SURFACE BUT EXPENSIVE AT A CLOSER GLANCE Core shareholders sold real estate assets to NOVATEK for $62 mln. According to 2Q09 accounts, on 19 June NOVATEK acquired real estate company EkropromStroy from several members of the company's senior management for almost RUB2 bln ($62 mln). Of that, RUB1.3 bln ($40 mln) was paid in cash in July and the remaining RUB700 mln ($22 mln) is set to be paid by the end of the year. This compares unfavorably with a 1Q09 net income of just RUB 2.1 bln ($63 mln). Through this transaction, NOVATEK has also acquired EkropromStroy's gross debt to Cypriot company, SWGI (owned by the same shareholders), for RUB468 mln ($15 mln). According to the company, EkropromStroy is involved solely in the construction of a new office building for NOVATEK, which was supposed to be completed by the end of 2009.

__ Project description. The centrally-located building has a total area of 17,596 sqm, of which 4,866 sqm in underground parking. The project is at an advanced stage of development, as the two-storey underground parking lot, 10 out of 13 above-ground office floors have already been completed. (See pictures of the property below.) Full price not yet reached. The main problem with this deal is the price paid for the office building. Taking into consideration the building's $62 mln cost and the $12 mln in net debt, which now has to be paid by NOVATEK, the price for the whole project comes to $74 mln, which is roughly $4,200/sqm. The construction has not yet been completed: two floors and the roof remain to be completed, together with the facade, communications equipment and other facilities. We estimate it may require an additional $1,200- 1,400/sqm (based on total space) to be invested over the next six months. NOVATEK will need to spend another $21-25 mln in capex to complete the building, which brings the total price per sqm to $5,400-5,600 once the property is ready for use. It was announced the building would solely be used as NOVATEK's office. If this is the case, the company will need to complete the fit-out, which means that within the $1,200- 1,400/sqm range (see above) the higher figure is more probable.

High price compared to similar deals. We believe the price for this property is slightly higher than prices for the comparable properties recently purchased. The deals below indicate a sell price of $4,000-5,000/sqm is the norm for quality office space.

__ A 35,000 sqm centrally-located Class B+ office complex was purchased by INTER RAO UES in June 2009 for $140 mln, implying $4,000/sqm. This project has been completed with all communications equipment installed.

__ Secondly, in July Rosnano Corporation annouced a deal for a 15,000 sqm Class A office complex, which is located not too far from NOVATEK's project and is already operational, for $5,000/sqm.

__ We have also discussed this with several commercial real estate consultants and brokers who advised us that $4,000-5,500 per sqm is now reasonable for completed high- quality office space, depending on its location and other details. They also noted that $4,200/sqm appears more expensive than usual for an office building at such a stage of development, and believe a maximum price of $3,000/sqm would be in line with the market. Investment property: estimate of alternative value. If NOVATEK had purchased this project as an investment property, upon its completion they would have be able to lease it as an office space for a maximum of $250- 300/sqm per annum and $2,400 per parking space. Assuming all of the 12,730 sqm in above-ground space is leasable, together with another 4,866 sqm in underground area (a total of 190 parking spaces), the potential annual net operating income (NOI) could reach $3.2-3.8 mln for the office space and $0.45 mln for parking spaces. The total NOI in this case would reach about $4 mln. The multiplication of NOI by a yield rate of 13% (current yield rate for quality offices in Moscow) would indicate a sum of about $30 mln. This implies a cost of $1,700/sqm, which is much lower than both the acquisition price of $4,200/sqm and the total price of $5,400-5,600/sqm once the construction is completed. A price of $5,600/sqm for the completed operational building and an annual rental rate of $300/sqm gives a yield rate of 5%, which is certainly too low. This means such project cannot be considered a profitable investment, at least not before the real estate market returns to its pre-crisis levels.

Gazprom

Russia's Gazprom Q1 net seen falling 69 pct http://www.forexyard.com/en/reuters_inner.tpl?action=2009-08- 25T075735Z_01_LP96165_RTRIDST_0_RUSSIA-GAZPROM-POLL

* Q1 results due on Wednesday, Aug 26

* Net profit seen down 69 percent to $2.5 billion

MOSCOW, Aug 25 (Reuters) - Russian energy giant Gazprom is set to report a 69 percent fall in its net profit for the first quarter of 2009, when its financials were dealt a heavy blow after disruptions of gas supplies to Europe.

A row between Kiev and Moscow over payments in January cut supplies to Europe, which gets about 20 percent of its gas from Russia via Ukraine.

Goldman Sachs analysts said the financial decline would result from a 40 percent fall in shipments to Europe and a 50 percent fall in shipments to former Soviet states during the quarter.

A sharp rouble devaluation also had a negative impact on Gazprom's bottom line. JPMorgan analysts believe that the company had a $5 billion currency loss for the quarter on its foreign currency-denominated debt.

The average forecast given in the poll of nine analysts was for a net profit of 84.75 billion roubles ($2.5 billion) in January through March versus 273.44 billion roubles a year earlier. Following are results of the poll (in billions of dollars):

Revenues EBITDA net profit JPMorgan 28.086 8.505 1.253 Troika Dialog 23.758 8.424 1.187 Solid 19.700 7.800 5.500 Alfa Bank 27.557 9.338 2.484 Deutsche Bank 22.617 7.655 1.914 VTB Capital 27.353 9.908 3.063 *Uralsib 26.519 9.676 3.687 *UniCredit Securities 24.675 10.148 2.779 *Goldman Sachs 24.522 6.884 0.820 Average (USD, bln) 25.000 8.700 2.500 Average (RUB, bln) 847.500 249.930 84.750 Q1'2008 (USD, bln) 37.237 17.400 10.820 Q1'2008 (RUB, bln) 902.944 422.036 273.439

*These analysts gave forecasts in roubles, which were converted into dollars using the Russian central bank's average rate for the first quarter of 2009, which was 33.9 roubles per dollar. Gazprom reports its financials in roubles. (Reporting by Vladimir Soldatkin; Editing by Jon Loades-Carter)

Gazprom to invest 4.4 billion EUR on Yamal next year http://www.barentsobserver.com/gazprom-to-invest-4-4-billion-eur-on-yamal-next- year.4624599-16178.html

2009-08-24 Russian gas major Gazprom plans to invest 4.4 billion EUR on the Yamal peninsula in 2010. 3.3 billion will go to development of the gas fields.

It was Prime Minister Vladimir Putin who told Governor of Yamal-Nenets autonomous District Yury Neyelov about Gazprom’s investment plans at a meeting on Friday, Prime- TASS reports.

- Already in 2012 Gazprom plans to produce the first gas from the Bovanenkovo field, Neyelov said. - This will increase gas production on Yamal with 250 billion cubic meters.

In addition to this, oil companies plan to invest more than 2.2 billion EUR on building of oil pipelines that will increase oil delivery from Yamal with 20 million tons per year.

At the meeting Putin and Neyelov decided to work out a plan for setting mineral taxes on all gas fields on Yamal to zero. The governor acknowledged that this will lead to lower tax incomes for the region, but said that other incomes from the project would make up for this that the state would earn more on this arrangement.

Gazprom, TAQA team up on Dutch gas storage http://www.upi.com/Energy_Resources/2009/08/24/Gazprom-TAQA-team-up-on-Dutch- gas-storage/UPI-43881251130326/

AMSTERDAM, Netherlands, Aug. 24 (UPI) -- Russian energy giant Gazprom agreed with the Abu Dhabi National Energy Co. to work on a Dutch storage facility that will become the largest in Europe. Bergermeer Gas Storage consortium, represented by Energie Beheer Nederland, Dyas B.V., Petro-Canada and the Abu Dhabi National Energy Co., or TAQA, signed a deal with Gazprom for gas storage services and delivery.

The deal secures a December 2008 memorandum of understanding between Gazprom and consortium members.

Gazprom will deliver a certain amount of so-called cushion gas for injection into the reservoir associated with Bergermeer. In exchange, the Russian gas giant will receive participating interest in the facility.

"The commitment of the existing partners and the expertise of Gazprom, in its role as strategic participating customer, will ensure the success of this facility in securing Europe's energy supplies for decades to come," said Paul van Gelder, managing director of TAQA in the Netherlands.

The Bergermeer Gas Storage facility will contribute to the energy security in Dutch and European markets, TAQA said in a statement. Dutch consumers will receive 56.5 million cubic feet of natural gas from the facility when it goes into production in 2013.

The Bergermeer facility will be the largest gas storage facility in Europe. Construction is set to begin in 2010.