Russia 101202

Basic Political Developments  RUSSIA-EU RELATIONS o Russia hopes EU talks will provide support for WTO bid - By Toby Vogel o A simpler era in EU-Russia relations? - Greater understanding of several points would help the EU. First, Russia may claim Ukraine and Belarus as part of a “sphere of privileged interests”, but Belarus's Alyaksandr Lukashenka and Ukraine's Viktor Yanukovych prefer independence to dependence on Russia. Second, the EU needs Russian energy, but Russia needs the EU market. Third, a unified front matters. Still, there is a greater appreciation of these points now than in the past. o Italy, RF FMs to examine RF-EU relations, int'l issues - Meetings between Italian Foreign Minister Franco Frattini, Russian Minister of Foreign Affairs Sergei Lavrov, and Vice-Premier and Finance Minister Alexei Kudrin are held here on Thursday ahead of the 7th round of Russo-Italian enlarged interstate consultations at summit level. o Minister for Industry, Tourism and Trade announces a new "Made in/by Spain" Plan for Russia  Putin rearranges government personnel - Russian Prime Minister Vladimir Putin has rearranged government personnel by relieving Stanislav Naumov, State Secretary and Deputy Minister of Industry and Trade, and Vladimir Azbukin, Deputy Minister of Energy, of their duties at their request.  Medvedev approves new commemoration date - President Dmitry Medvedev signed a decree establishing the 15th of February the Day to commemorate Russians who served their professional duty abroad.  Sergei Ivanov appointed to co-chair RF-Sweden panel  Russian government to sell media outlets - All the newspapers, television channels and radio stations owned by members of the Russian government will be put up for sale.  Laws to bring Russian legislation into conformity with the legal framework of the Customs Union  Russian leader declines to back Caspian European Integration Business Club - “Yuri Schedrin, Russian Federation’s trade representative in Azerbaijan, declared this officially and noted that his response is considered to be an official reply to CEIBC’s letter addressed to Russian President Dmitry Medvedev. Schedrin assumed that this proposal probably was not of interest to the President of Russia,” it was informed.  Federation Council approves amendments to law on rallies - If adopted, they would have imposed severer penalties for violations of the law.  OSCE SUMMIT ASTANA o Slovenia President urges OSCE to focus on Russia’s common European security plan o Kazakhstan wants OSCE to put religious tolerance on its agenda o Turkey names candidate for OSCE secretary-general o Pravda: Historically meaningless summit of obsolete organization o Summit in Astana Seeks To Revitalize Role Of OSCE o Beginning of meeting with President of Kazakhstan Nursultan Nazarbayev o Beginning of meeting with Prime Minister of the Netherlands Mark Rutte  START TREATY o Republicans Signal Support for Russia Nuclear Treaty (Update1) o Former top US diplomats urge support for START o Why New START deserves GOP support - By Henry A. Kissinger, George P. Shultz, James A. Baker III, Lawrence S. Eagleburger and Colin L. Powell o Powell endorses Russian arms control treaty  Russia completes delivery of guaranteed nuclear fuel reserves  Rosatom sees orders to build 23-25 nuclear power plants abroad  Transcript of Vladimir Putin's interview with CNN's Larry King  Moscow media questions Putin's Zurich no-show - Russian media on Thursday questioned Vladimir Putin's decision to skip the World Cup announcement in Zurich, with one paper saying it had cost the country the favourite's mantle for the 2018 tournament. o Chances are high for Russia to host 2018 World Cup – Lavrov  Putin to address Kaliningrad Region's healthcare system problems o Putin to hold meeting on Kaliningrad reg healthcare modernization  Woody Allen monument in Russia - A monument to three-times Academy award- winning American actor and director Woody Allen was unveiled on Wednesday in Russia’s westernmost city of Kaliningrad on the Baltic.  Russia's first lady awards Azerbaijani musicians  India tests BrahMos cruise missile o India conducts BrahMos cruise missile test  Saudi MoDA, Rosoboronexport and military equipment - Russia’s arms exporter Rosoboronexport is said to have plans to provide the Saudi Ministry of Defence and Aviation (MoDA) with alluring offers for military equipment.  Insurgents In Daghestan Threaten Further Strikes On Russian Targets - The man named three months ago as commander of the Daghestan sector of the North Caucasus insurgency has warned that his group will continue to "inflict horrors" on Russian territory -- an allusion to the suicide bombings in the Moscow subway in which 40 people were killed.  WIKILEAKS o WikiLeaks cables allege rampant high-level corruption in Russia o WikiLeaks disclosures reveal U.S. frustration with Russian corruption o Julian Assange says WikiLeaks wants to expose China and Russia as much as US o Wikileaks: Russia branded 'mafia state' in recent cable o Wikileaks: Vodka made Serdyukov tell Abiev about Russian weapon transfer o WikiLeaks cables: Solzhenitsyn praise for Vladimir Putin o Embassy cables: Chatshow confirms Putin as the Kremlin supremo o US embassy cables: The Litvinenko affair: conspiracies abound o US embassy cables: Mayor transforms Moscow into glittering capital o US embassy cables: Russia is virtual 'mafia state', says Spanish investigator o US embassy cables: Spanish investigation exposes Russian mafia links o WikiLeaks cables claim Vladimir Putin has secret wealth hidden abroad o US embassy cables: Chris Patten remarks on Putin's 'killer eyes' o US embassy cables: Putin's links to Russia's oil trade o US embassy cables: Chechnya, the once and future war o US embassy cables: A wedding feast, the Caucasus way o US embassy cables: Miliband's trip to Moscow o US embassy cables: Brown and Medvedev initiate tentative thaw o WikiLeaks cables claim Russia armed Georgian separatists o US embassy cables: Russian mafia active in Thailand o WikiLeaks cables allege Russia bribed Viktor Bout witnesses o Viktor Bout: Weapons Smuggler May Be the Tip of the Iceberg o US embassy cables: Russia's growing clout in the global arms trade o WikiLeaks cables: Moscow mayor presided over 'pyramid of corruption' o WikiLeaks cables: Dmitry Medvedev 'plays Robin to Putin's Batman' o Embassy cables: Medvedev and Putin, the two heads of Russia o WikiLeaks cables: Roman Abramovich denies links with Vladimir Putin o WikiLeaks: Russian undercover agents hounded staff working at the British embassy in Moscow for visas  Russian Opposition Activist Speaks Out for Visa-Free Regime - Lev Ponomaryov, one of Russia's most prominent human rights and civil society activists, has expressed his support for visa-free travel between the EU and Russia, saying it would be a collosal victory for the democrats and opposition in his country.  Leaked U.S. document portrays Moscow as haven of corruption - By Will Englund  About Gagarin and About Myself - By Oleg Kashin A scramble for the Arctic - With one fifth of the world's oil and gas at stake, countries are struggling to control the once-frozen arctic.  Vladimir Putin: profile - Vladimir Putin is one of the world's most high-profile leaders.  Perminov Says Spaceship Fixed After Incident - A Russian spacecraft that suffered rough handling during transportation to the launch pad has been repaired and is safe to carry the next crew to the international space station, the nation's space chief said Tuesday.  PRESS DIGEST - Russia - Dec 2 o www.kommersant.ru o Russia is threatening the United States with a renewed arms race. o The Russian government refused on Wednesday to support a 23 percent increase in railways shipment fees in 2012. o Russia has launched public discussions of a new draft law on education. o www.vedomosti.ru o Russia's businessmen have no faith in the national economy, the daily says in connection with reports that businesses saved about 30 trillion roubles in bank accounts in 2010 instead of investing. o "We have survived the most critical period of the crisis but we have not yet eliminated its basic cause", the head of state lender Sberbank German Gref says in an interview. o www.rg.ru o Russian lawmakers will discuss amending criminal law to reduce the number of crimes foreseeing arrests and imprisonment, Supreme Court chairman Vyacheslav Lebedev says. o Russia may turn to the Australian dollar as an element of its national reserves, according to Alexei Ulyukayev, first deputy head of the central bank. o www.ng.ru o Russia's natural gas monopoly Gazprom (GAZP.MM) plans to spend up to 15.5 billion euro on building a pipeline to supply Europe with gas bypassing Ukraine. o Russia has made utopian forecasts for its economic development in 2011 according to the budget approved by parliament on Wednesday. o www.izvestia.ru o Russian Orthodox Church Patriach Kyrill, 64, would like to travel to space, the daily says. o Russia's top anti-drug watchdog Viktor Ivanov is urging the United Nations to define the threat of drugs spreading from Afghanistan as a global threat to international security. o Police have detained a lawmaker's aide who is accused of selling jopbs in parliament for up to $200,000.  Russian Press at a Glance, Thursday, December 2, 2010 o Russian Prime Minister Vladimir Putin gave a satellite interview to CNN's Larry King.(Vremya Novostei, Moscow Times, Vedomosti, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta) o Belarus said Wednesday that it would give up its stockpile of material used to make nuclear weapons by 2012.(Moscow Times, Vremya Novostei) o Trade unions refused to sign a general agreement with the government and employers.(Vremya Novostei) o The United States on Wednesday called on Europe's main security watchdog to lend more support to the war in Afghanistan and resolve "frozen conflicts" across the former Soviet Union.(Moscow Times, Vremya Novostei, Vedomosti) o Interpol joined the efforts to hunt down WikiLeaks founder Julian Assange. (Kommersant) o Russia is closer than ever to joining the World Trade Organization: an agreement on the completion of talks will be signed December 7 at a Russia-EU summit. (Rossiiskaya Gazeta) o RusAl said Wednesday that it chose Sberbank as the issuer and VTB Capital as its advisor for the first-ever Russian Depositary Receipts.(Moscow Times) o German energy concern E.On said Wednesday that it sold its 3.5 percent stake in Gazprom. VEB bought 2.7 percent, with settlement to come later this month. E.On has already sold the other 0.8 percent on the market and is earning 3.4 billion euros ($4.5 billion) on the entire deal, the company said.(Moscow Times, Vremya Novostei, Vedomosti) o Russia's hopes for winning the right to host its first World Cup were thrown into disarray on Wednesday, when Prime Minister Vladimir Putin said he wouldn't go to Zurich for FIFA's vote on the 2018 tournament.(Moscow Times, Vremya Novostei, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta) o Russian businessmen and State Duma deputy Ilya Ponomaryov have drafted amendments to the country's Criminal Code, proposing criminal responsibility for spamming.(Kommersant, Vedomosti) o President Dmitry Medvedev fired Krasnodar Territory police chief Sergei Kucheruk following a massacre in the village of Kushchevskaya.(Kommersant, Rossiiskaya Gazeta) o Russians will remember 2010 for the terrorist attacks in the Moscow metro, the record heatwave, and the dismissal of Mayor Yury Luzhkov, judging by the list of top search queries for the past year's events published by Yandex on Wednesday. (Moscow Times)  United Russia: Nine years later - December 1 of 2001 marked the day of birth of the Russian political party "Unity and Fatherland - United Russia." On the one hand, it is not an anniversary. On the other hand, the party has been around for a long time, taking the leading position in the Russian political system throughout the period of its existence.  Russia! presents a special business issue - A special edition of Russia! will hit bookstores on Dec. 1. Its cover story is the seizure of the Lenta retail chain by the U.S. fund TPG Capital and VTB, a major Russian bank.

National Economic Trends  Are Russia’s sovereign ratings holding corporates back?  Three pills to fight inflation and limits to RUB support

Business, Energy or Environmental regulations or discussions  Russian markets -- Factors to Watch on Dec 2  Gazprom, Rosneft, VimpelCom, VTB Group: Russian Equity Preview  Jan-Sept gold production down 3.2% in Russia  Golden moment: Russian gold miners set to benefit  Former Luzhkov press secretary Tsoi becomes new RusHydro exec  Chelyabinsk Tube posts 3 bln rbl half-year net profit  Russian govt. bans foreigners from working as salespeople at retail outlets  Visas for Skilled Workers Simplified  Uralkali, Polymetal Investor to Pay $1 Billion for Railcar Plant  UPDATE 1-VTB swings to Q3 profit, beats forecasts  Russia's VTB 9-mth IFRS net profit 38.8 bln rbls after loss  German Private Bank Launches New Russian Fund  Investors hope to build Europe's largest studio in St. Petersburg  AvtoVAZ said Wednesday that domestic sales rose 45.3 percent in the first 11 months from the same period last year to 467,550 vehicles as the government’s cash-for-clunkers program boosted demand. (Bloomberg)  The government plans to sell 7 percent of Sberbank next year, part on the open market and part to a strategic investor, chief executive German Gref said Wednesday. (Bloomberg)  Norilsk Nickel said Wednesday that its Tati Nickel unit got two exploration licenses in Botswana. (Bloomberg)  The inflation rate may be 8.4 percent this year, Economic Development Minister Elvira Nabiullina said Wednesday. (Bloomberg)  Russia won’t add the Australian dollar to its international reserves before mid-2011, Central Bank First Deputy Chairman Alexei Ulyukayev said Wednesday. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)  Russia's Nov oil output edges down to 10.25 mln bpd  Moscow Sweetens The Pot In Bid To Woo Foreign Investment For Upstream Arctic Activity  Rosneft Sells January East Siberian Crude to JX-Nippon, Conoco  Surgutneftegaz Sells East Siberian Crude Oil Cargoes to Itochu  Med Crude-Urals digests Shell tender win, freight jump  Russian oil flows to Central Europe 'to dry up' - Russia's growing oil exports to Asia and the Baltic have unsettled European traders and refiners, who fear shortages on the Black Sea and in Central Europe should Russian output stall or decline.

Gazprom  Gazprom May Be Interested in Poland’s Anwil, Ciech, Prawna Says  Gazprom creates two joint ventures with Ukraine  Gazprom, Namcor to Acquire Part of Tullow’s Gas Field in Namibia  Gazprom to start first offshore well on Libya’s shelf in 2011  Eon offloads its 3.5% stake in Gazprom  Burning need for gas production - As the days get shorter, the technicians at Urengoy Gazprom – the largest chunk of Gazprom’s vast gas production empire – know that with winter looming, they must work hard to meet increased demand… That is getting harder and harder to do, says Rustam Ismagilov, chief of the technical department of Gazprom Extraction Urengoy (Gazprom Dobycha Urengoy), the affiliate that manages the fields. He says many large gas field compressors need to be replaced.

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Basic Political Developments RUSSIA-EU RELATIONS

Russia hopes EU talks will provide support for WTO bid http://www.europeanvoice.com/article/imported/russia-hopes-eu-talks-will-provide-support-for- wto-bid/69590.aspx By Toby Vogel 02.12.2010 / 05:17 CET Tariff agreement paves way for trade support but there are differences over foreign policy and lifting of visas. Russia's bid to join the World Trade Organization (WTO) will be given a boost during a summit with the EU next week. Last week (24 November), Russia advanced its WTO bid by agreeing to phase out export tariffs on timber and other raw materials. The move has made it possible for the EU to support Russia's WTO application, and the two sides are expected to finalise their accord at next week's summit. Russia is the largest economic power that is not a member of the WTO, and hopes to join next year, according to Igor Shuvalov, first deputy prime minister in charge of trade. The EU has long wanted Russia to join the trade body as it believes this would improve bilateral business links. But accession will require further Russian concessions on agricultural trade, technical regulations, and investment rules in the automotive sector.

Neighbourhood concerns President Dmitry Medvedev will lead the Russian delegation at the summit in Brussels, alongside Sergei Lavrov, the foreign minister, and Elvira Nabiullina, the minister for trade and economic development. They will meet Herman Van Rompuy, president of the European Council, José Manuel Barroso, president of the European Commission, and other top officials. But there are significant differences in agenda. The EU has offered Russia co-operation on crisis management and broader foreign policy issues but wants to see progress on ‘frozen conflicts' in Russia's neighbourhood, above all in Transdniester, a Russia-backed breakaway region of Moldova. Russia wants a future partnership agreement with the EU to have a technocratic focus, while the EU wants a Russian commitment to reform governance and the judicial system. Russia also wants the EU to lift visa requirements for Russian citizens. But while the EU is prepared to discuss technical aspects, an official warned that a visa-free regime was unlikely in the near future. Vladimir Chizhov, Russia's ambassador to the EU, said that the technical requirements for lifting EU visa requirements could be met “in a matter of months”. “The final countdown depends on political will, and there is no lack of political will on the Russian side,” he said.

A simpler era in EU - Russia relations? http://www.europeanvoice.com/article/imported/a-simpler-era-in-eu-russia-relations-/69597.aspx

02.12.2010 / 04:37 CET Deep co-operation co-exists with deep differences. Little illustrates the seemingly unbridgeable differences between the West and Russia better than an image contained in the WikiLeaks file of US cables – the image of Chechnya's brutal president, Ramzan Kadyrov, dancing “clumsily with his gold-plated automatic stuck down in the back of his jeans”. And yet the leaked cables also reveal how deeply Russia is willing to co- operate with the West on Iran, for example, and in the ‘secret world' of the intelligence services. That deep co-operation can co-exist with deep differences is in part thanks to a willingness to put aside old differences and approaches. Both the US and Poland have ‘re-set' relations with Russia. Russia has reciprocated and is being more honest about history (most notably, about the Katyn massacres). It is also re-setting relations with, for example, Belarus and Ukraine, thinning out the privileges – chiefly, subsidies – that it grants them. This amounts to a simplification of relationships – and that simplification is aided by a loss of illusions and a shedding of pretence. Few in Europe, surely, have any illusions left about the rule of law in Russia or the prospects for democracy. When Mikhail Khodorkovsky is sentenced a second time, probably on 15 December, it will be seen for what it is: part of a transfer of assets from Russia's former richest man to the elite favoured by Prime Minister Vladimir Putin. Europe's leaders contributed much to the illusions. They overstated the prospects of change in Russia. Some may also have violated human rights in their pursuit of the ‘war on terror' and viewed violations in Chechnya as part of that war. Now, no EU leader, other than Silvio Berlusconi, is quite as friendly with or as enthusiastic about Russia as leaders were in the early 2000s. Greater understanding of several points would help the EU. First, Russia may claim Ukraine and Belarus as part of a “sphere of privileged interests”, but Belarus's Alyaksandr Lukashenka and Ukraine's Viktor Yanukovych prefer independence to dependence on Russia. Second, the EU needs Russian energy, but Russia needs the EU market. Third, a unified front matters. Still, there is a greater appreciation of these points now than in the past. Disingenuousness and hypocrisy continue to thrive, of course. Putin's suggestion last Thursday of a vast Lisbon-to-Vladivostok free-trade zone was an example of the former; an example of the latter was his claim on Friday that aspects of the EU's liberalisation of its energy market amount to “robbery”. But such ploys and words are now less likely to complicate the development of the relationship. The building site remains very messy, but a new order has largely been constructed: the EU and NATO have enlarged to Russia's borders, Russia now has a pact with NATO, and, at their summit on 6 December, Russia and the EU will sign agreements that should bring Russia very close to accession to the World Trade Organization. Pipelines for Russian energy are being built; and the EU has plans to bolster its energy security. There is, therefore, less justification for the EU to indulge Russian demands for a relationship of privileged interests as it pursues its new ‘partnership for modernisation'. The principal basis for that modernisation is very different in EU eyes (rule-based reform) and in Russian eyes (EU money and technology). Why should the EU allow Russia to sidestep questions about reform when, for example, Western companies were (like Khodorkovsky) burnt by the asset transfer? The challenges to modernisation are now primarily on Russia's side, and those challenges have been characterised best by Medvedev: “stagnation” and “legal nihilism”. There is little the EU can do about Russia's “stagnation”. But it can do something about its “legal nihilism”. First, it can avoid repeats of its own failings during the ‘war on terror'. And, second, it must – for its businesses, for its citizens and for Russia's – try to introduce as many rules and as much law into the relationship as it can. Law is Russia's bridge to Europe. Italy, RF FMs to examine RF-EU relations, int'l issues http://www.itar-tass.com/eng/level2.html?NewsID=15738150&PageNum=0 02.12.2010, 09.30 ROME, December 2 (Itar-Tass) - Meetings between Italian Foreign Minister Franco Frattini, Russian Minister of Foreign Affairs Sergei Lavrov, and Vice-Premier and Finance Minister Alexei Kudrin are held here on Thursday ahead of the 7th round of Russo-Italian enlarged interstate consultations at summit level. An official in the press service of the Italian Foreign Ministry has told Itar-Tass that Frattini intends to touch upon a number of key matters concerning both bilateral contacts and relations between the Russian Federation and the European Union (EU), including prospects for the liberalization of the visa regime. Besides, the upcoming talks with Lavrov will focus on international problems of current concern, such as the situation in Afghanistan, Iraq, Sudan, in the Middle East, and on the Korean Peninsula. Italian Foreign Ministry analysts recall that the present consultations are held immediately after the "breakthrough, epoch-making NATO summit in Lisbon, the Russia-NATO Council session, the summit of the Organization for Security and Cooperation in Europe in Astana, and in the run- up to a major session dedicated to relations between Russia and the EU" Frattini told Itar-Tass in an exclusive interview on the eve of his trip to Russia that "Italy is confident of the indispensability of the role of Moscow for the maintenance of European and global security. This is why the leadership of the country has been always coming out in favour of strengthening relations between NATO and Russia, which manifested itself at the first summit at Pratica di Mare in 2002 (The first Russia-NATO Council session at this military base on the outskirts of Rome--Note by Itar-Tass correspondent)". The economic aspects of bilateral relations will be discussed in Moscow at the forthcoming Dialogue Forum of members of Russian and Italian business communities. The Forum is to be co-chaired by Frattini and Kudrin. In response to a question as to whether any problem aspects remain in relations between the two countries, Frattini pointed out as follows: "One can speak, rather, not of problems but of the potential of our partnership, the potential that has not yet been realized in full." "Efforts to bring norms and standards closer together, for example, would be of benefit to both sides, and would stimulate cooperation for the good of our peoples and economies still further, " he went on to say. "Russia's accession to the World Trade Organization, as well as the conclusion of a new agreement between the EU and Russia, would be a great contribution in this respect." "Italy hopes for the earliest completion of both historic processes which it has been always supporting," Frattini said in conclusion. The Italian side emphasizes that Rome is interested in the development of cooperation with Moscow at all levels -- bilateral, European, Trans-Atlantic, and global -- regarding Russia as "an indispensable strategic partner in ensuring global security". Minister for Industry, Tourism and Trade announces a new "Made in/by Spain" Plan for Russia http://www.la- moncloa.es/IDIOMAS/9/Gobierno/News/2010/01122010_MinisterIndustryPlanRussia.htm Miguel Sebastián announced a new "Made in/by Spain" Plan for Russia during the 7th Mixed Hispano-Russian Committee being held on Wednesday in Moscow. The Plan, inspired by the successful "Made in/by Spain" project being developed in the US, is aimed at improving the perception of Spain in Russia through the increased promotion of the image of Spanish products, services, companies and brands and by supporting the market penetration strategy adopted by Spanish companies in Russia. he Government believes aiming this initiative at the Russian market is a good move because it is a region where Spanish companies and products have strong growth potential and where Spain has a long-standing image of a modern, industrialised country. Furthermore, the organisation in 2011 of the Year of Spain in Russia and of Russia in Spain (something that will foster the organisation of special events to increase mutual knowledge between the two countries) is an opportunity to increase the knock-on effect and profit from the actions contained within the "Made in/by Spain" Plan.

On 14 September 2009, the President of the Spanish Government, José Luis Rodríguez Zapatero, and the Russian President, Dmitri Medvedev, decided at a meeting held in Yaroslavl that 2011 would be the Year of Spain in Russia and of Russia in Spain.

The "Made in/by Spain" Plan for Russia which will be implemented between 2011 and 2012 includes more than 70 events over the twelve months in such sectors as the agro-foods, consumer goods and industry and technology and will involve cities such as Moscow and St Petersburg.

For 2011, participation at various trade fairs with official pavilions has been scheduled, more than twenty trade missions have been organised and several business meetings have been set up, as well as other events such as the Spanish gastronomy weeks, a Spanish fashion conference and the presentation of national business schools.

One of the pillars of the Plan's strategy is to involve companies, sectoral associations, the autonomous regions and other sectors in joint finance for these actions. The estimated budget amounts to 20 million euros in 2011 and 18 million euros in 2012, with financing from the central Government of 50% via the Spanish Institute for Foreign Trade (ICEX). The rest will be provided by the autonomous regions, companies and other institutions.

Russia, a market with strong potential Russia has all the ingredients required for the "Made in/by Spain" Plan to be a success: it is a very large market (140 million inhabitants), it has 12 cities with more than one million inhabitants, a population with a growing spending power (135,000 people have wealth in excess of one million euros) and holds the third largest reserves of natural resources in the world, quoted at 490,000 million dollars. Furthermore, the country presents good growth prospects for the future. According to IMF forecasts, its GDP will grow by 4% in 2010, by 4.3% in 2011 and by 4.4% in 2012.

The Russian Government has implemented plans aimed at modernising its economy that include new infrastructures, the stimulation of non-energy sectors and a renewal of the production fabric, as well as the sale of stakes in public companies over the next five years.

Spanish companies have a growing presence in Russia (direct foreign investment from Spain increased by 4.2% in 2009) and it is necessary to channel this interest in order to increase a level of bilateral trade that is still relatively low in volume.

Last year, the Spanish market share stood at 1.1% of Russian imports. However, by August 2010, the total amount of exports in the whole of 2009 had already been exceeded by 19%, which demonstrates the commitment by Spanish business in this market. Furthermore, the number of regular export companies (with exports over the last four years) has grown year by year and increased by 0.5% in 2010 despite the crisis.

From the political point of view, relations between Spain and Russia are very good and there is a mutual desire for cooperation between the two governments.

7th Mixed Hispano-Russian Committee and multilateral Partnership During his official trip to Russia, the Minister for Industry, Miguel Sebastián, presided over the 7th Mixed Hispano-Russian Committee for economic and industrial cooperation; a forum created to strengthen institutional and economic relations between the two countries.

The Mixed Committee discussed the main bilateral issues related to sectors such as transport, industry, naval construction, aerospace, tourism, energy and environment (Kyoto Protocol).

Within the framework of the Committee, a joint declaration was signed to foster cooperation on issues of trade, technology and investment along the lines of the agreement signed between the European Union and Russia at the Rostov Summit held in June 2010. The basic instrument for its development will be sectoral dialogue, which will provide a platform from which to draft plans of action for priority objectives.

In parallel to the Mixed Committee, a Hispano-Russian Partnership was also organised by the Economic and Trade Office of Spain with support from the Spanish Institute for Foreign Trade (ICEX). This event revealed the potential of Spanish companies in high added value sectors such as energy, transport and the environment.

Within the framework of this Partnership, a number of bilateral meetings were held between Spanish and Russian companies in order to explore possible joint participation options on various projects.

The multi-lateral partnerships are aimed at facilitating the entry of Spanish companies into markets that are traditionally difficult to access. Russia is a priority target for this strategy implemented by the ICEX due to the size of its market, its growth potential, the high demand for imports, the external solvency and positive business climate.

Working groups Prior to the Mixed Committee session, sessions were held by the sectoral working groups.

The Tourism Group discussed progress on the matter of speeding up visa issue to Russian tourists who visit Spain and agreed on the need to increase Spanish tourism promotion in Russia in 2011 with a view to attracting more Russian tourists to Spain. So far this year, more than 560,000 Russian tourists have visited Spain (41% more than last year).

A report was also given on the receipt by the Russian tour operator, Natalie Tours, of the Medalla al Mérito Turístico [Medal for Tourism Merit].

In terms of energy the working group has made progress on the relations between Spain and Russia within the framework of the Memorandum of Understanding (MOU) on Matters of Energy Cooperation that was signed on 3 March 2009, which already establishes the regular discussion of common issues related to the energy sector.

During the official visit by Minister Miguel Sebastián, the two countries signed a new agreement regarding renewable energies and energy efficiency between the Spanish Energy Diversification and Saving Institute (IDAE) and its counterpart institution in Russia, the Russian Energy Agency, a federal public company.

Furthermore, both sides believe it would be a good idea to set up a new working group for the construction sector aimed at focusing its activity on the industrialisation of homes and urban development. This will enable the construction materials sector to be included among its tasks, as well as the treatment of solid urban waste and water management. Spain has advanced technology in all these sectors.

Putin rearranges government personnel http://www.itar-tass.com/eng/level2.html?NewsID=15738556&PageNum=0 02.12.2010, 11.27 MOSCOW, December 2 (Itar-Tass) - Russian Prime Minister Vladimir Putin has rearranged government personnel by relieving Stanislav Naumov, State Secretary and Deputy Minister of Industry and Trade, and Vladimir Azbukin, Deputy Minister of Energy, of their duties at their request. Isaak Kalina has been also relieved of the duties of the RF Deputy Minister of Education and Science in view of his transfer to another post. Earlier Moscow Mayor Sergei Sobyanin appointed Isaak Kalina to head Moscow's Department of Education. This has been announced at the official website of the RF Government.

Medvedev approves new commemoration date http://english.ruvr.ru/2010/12/02/36102177.html

Dec 2, 2010 10:13 Moscow Time

President Dmitry Medvedev signed a decree establishing the 15th of February the Day to commemorate Russians who served their professional duty abroad. The decree was approved by the Duma on 24 November, the Kremlin’s press-service reports.

Sergei Ivanov appointed to co-chair RF-Sweden panel http://www.itar-tass.com/eng/level2.html?NewsID=15738253 02.12.2010, 10.25

MOSCOW, December 2 (Itar-Tass) - Russian Prime Minister Vladimir Putin has issued an executive order appointing Vice-Premier Sergei Ivanov as chairman of the Russian side of the Russo-Swedish supervisory committee on trade and economic cooperation. By the same order, Viktor Khristenko, RF Minister of Industry and Trade, has been relieved of the duties of the head of the Russian side of the Committee. This has been announced at the official website of the RF government.

Russian government to sell media outlets http://www.guardian.co.uk/media/greenslade/2010/dec/02/russia-press-freedom Posted by Roy Greenslade Thursday 2 December 2010 09.00 GMT guardian.co.uk

All the newspapers, television channels and radio stations owned by members of the Russian government will be put up for sale. Presidential aide Arkady Dvorkovich made the announcement following a speech by President Dmitry Medvedev in which he said that public figures should not be the owners of "factories, newspapers and steamships." "They are to be sold, but the date hasn't been established yet," Dvorkovich was quoted as saying. That would be some sell-off because it is estimated that around 80% of Russia's regional press is currently owned by the corresponding local authorities. Though Dvorkovich talked of the need to focus on nurturing an independent media, sales may be triggered because of the high cost of running papers and TV channels.

Laws to bring Russian legislation into conformity with the legal framework of the Customs Union http://eng.kremlin.ru/news/1394 December 1, 2010, 10:15 Dmitry Medvedev signed federal laws bringing Russian legislation into conformity with the legal framework of the Customs Union within the Eurasian Economic Community. The Federal Law On Customs Regulation in the Russian Federation is aimed at bringing Russian legislation concerning customs regulations and customs procedures into conformity with Russia’s international agreements that form the legal framework of the Customs Union within the Eurasian Economic Community. The President also signed two laws amending the Tax Code of the Russian Federation and the Law On Tax Authorities in the Russian Federation. In particular, the amendments concern bringing the applicable Russian Federation Tax Code terminology into conformity with the terminology used in the customs legislation of the Customs Union within the EurAsEC and the Russian Federation legislation on customs procedures. December 1, 2010, 10:15

Russian leader declines to back Caspian European Integration Business Club http://abc.az/eng/news_02_12_2010_49846.html Baku, Fineko/abc.az. President Dmitry Medvedev of Russia has refused to support by his participation the forthcoming Caspian European Energy and Caspian European Business Forums to be organized in Brussels in November 2011 by the Caspian European Integration Business Club (CEIBC). The CEIBC reports that a number of EU and CIS states’ presidents and prime ministers have already confirmed their participation in this activity. “Yuri Schedrin, Russian Federation’s trade representative in Azerbaijan, declared this officially and noted that his response is considered to be an official reply to CEIBC’s letter addressed to Russian President Dmitry Medvedev. Schedrin assumed that this proposal probably was not of interest to the President of Russia,” it was informed. Telman Aliyev, president and CEO of the Caspian-European Integration Business Club (CEIBC) noted that the forum would last for 2 days. Official meetings and speeches of Heads of State and Governments will be arranged on the first day. Top managers of state and trans-national energy companies will give reports on the second day of the forum.

Federation Council approves amendments to law on rallies http://www.itar-tass.com/eng/level2.html?NewsID=15737521&PageNum=0 01.12.2010, 23.49 MOSCOW, December 2 (Itar-Tass) -- The Federation Council approved new amendments to the law on rallies on Wednesday, December 1. The initial version of the amendments was rejected by President Dmitry Medvedev. He vetoed them on November 6. If adopted, they would have imposed severer penalties for violations of the law. “The federal law aimed at establishing order in the organisation and holding of public events at transport infrastructure sites, including the use of vehicles, contains provisions that impede the free exercise of the constitutional right of citizens to hold meetings, rallies, demonstrations, processions and pickets,” the head of state said in the letter. “The purpose of public events, as stipulated by the Federal Law 'On Meetings, Rallies, Demonstrations, Processions and Picketing' is free expression and formation of opinions, as well as the statement of claims on various issues of political, economic, social and cultural life in the country and foreign policy affairs. Thus, public events are one of the most effective forms of influence on the activities of governmental authorities and local self-government bodies through the expression of public opinion,” Medvedev said. “The right to hold public events is directly linked with the rights of citizens to participate in the management of public affairs, freedom of opinion and other constitutional rights, the restriction of which is allowed only for the purpose of protecting constitutional order, morality, health, rights and lawful interests of other persons, national defence and security of the state. It appears that the restrictions envisaged by the federal law do not fully correspond to the above objectives,” the president said. According to Medvedev, the rejection of the federal law does not mean that Russia's current legislation has resolved all issues relating to the order of organising and holding public events at transport infrastructure facilities. The federal law can be reworked subject to the suggestions made. The amendments to the law were adopted by the State Duma, the lower house of parliament, on October 22, 2010, and approved by the Federation Council, the upper house of parliament, on October 27, 2010.

OSCE SUMMIT ASTANA

Slovenia President urges OSCE to focus on Russia’s common European security plan http://english.ruvr.ru/2010/12/02/36099110.html

Dec 2, 2010 09:36 Moscow Time President of Slovenia Danilo Türk has called on the Organization for Security and Cooperation in Europe (OSCE) to pay attention to the initiative put forward by the Russian leader Dmitry Medvedev concerning a new European security architecture. Speaking at the OSCE summit in the Kazakh capital Astana, Mr. Türk said that he viewed Russia’s proposal as innovative approach to the issues of European and global security. “This initiative should be approached openly and creatively”, the Slovenian leader said.

02 December 2010, 10:02

Kazakhstan wants OSCE to put religious tolerance on its agenda http://www.interfax-religion.com/?act=news&div=7975 Astana, December 2, Interfax - Kazakh President Nursultan Nazarbayev proposed that the Organization for Security and Co-operation in Europe (OSCE) add religious tolerance to its key values usually referred to as the three "dimensions" - politico-military, economic and environmental, and human.

"We propose that religious tolerance be made a separate dimension. Today we need an honest, open inter-religious dialogue," Nazarbayev said at the OSCE summit in Astana, capital of Kazakhstan, the country holding this year's chairmanship of the organization.

He suggested that the OSCE use a planned congress of leaders of global and traditional religious communities in Astana as the floor for discussions on the religious tolerance issue.

"It is our trust that Christianity, Islam, Judaism and Buddhism have descended to us in order to create peace and not hostility," he said.

"I would also like to propose that we jointly develop a document on tolerance for the new decade," he added.

"Today rifts of mistrust in the OSCE space primarily manifest themselves within individual countries, and only afterward do they have negative effects on regional and global situations. Such practices include public attempts to insult religious values and other things we know about," he said.

He expressed approval of the U.S. position on religious tolerance as set forth at "the Cairo meeting of Barack Obama" and suggested that the OSCE work to put into practice the principles declared by Obama at the meeting.

Turkey names candidate for OSCE secretary-general http://www.worldbulletin.net/news_detail.php?id=66931

Gul said that Turkey nominated Ersin Ercin as candidate for Organization for Security and Cooperation in Europe

Thursday, 02 December 2010 09:47

Turkish President Abdullah Gul said on Wednesday that Turkey nominated Ersin Ercin as candidate for Organization for Security and Cooperation in Europe (OSCE).

"We received an important support on the matter," Gul said at a meeting with the Turkish reporters in Astana where he attended OSCE Summit.

"We have nominated Ercin as candidate for OSCE secretary-general. Ercin is also my special consultant for European security. I have been introducing Ercin to leaders during the international summits and meetings held in the recent months," Gul said.

Ercin currently acts as Turkey's ambassador in Brazil. Commenting of OSCE Summit, Gul said it was the first OSCE summit to be held 11 years after 1999 Istanbul summit.

Gul said OSCE had three essential principles, which were finding solution to problems on political and military issues, spread of democracy, law standards and respect to human rights as well as economic cooperation. "Political and military issues come forefront among those principles," Gul underlined.

Gul referred to active role of Turkey in OSCE, noting that Turkey assumed an important role particularly in solution of political problems in Europe through peaceful means.

Gul said the Caucasus, Upper-Karabakh problem and internal problems in Georgia and Moldova were among the important political and security matters OSCE deals with nowadays.

Turkish president said all the leaders attending the summit reaffirmed commitment to principles of OSCE and action plan.

"Meeting with Medvedev"

Gul said he had some bilateral meetings on the sidelines of the OSCE Summit held in Kazakhstan.

Turkish president said his meeting with Russian President Dimitry Medvedev mainly focused on the Caucasus and stability of the region.

Gul underscored that Russia was the most important actor in solution of problems in the Caucasus. "Medvedev and Russian Prime Minister Vladimir Putin have good-will in solution of problems. Talks regarding Turkish-Armenian relations and developments in Georgia speeded up during Medvedev's term in office.

"Of course, Turkey is also a very important actor in solution of those problems. I am considering the issue from a perspective including the problems in whole Caucasus. Problems interesting Turkey, Armenia and Azerbaijan should definitely be solved within a broad framework. I believe that overcoming the problems will be in the advantage of Turkey, Russia, Azerbaijan and Armenia," Gul said.

"Relations with Armenia"

Referring to normalization process in Turkish-Armenian relations, Gul said, "nothing died. We are resolved. We should carry out studies about the ways to achieve it. Difficult problems can not be solved immediately. We should work on them insistently. The problems should be solved in the interests of every party. I believe that this matter should not be retarded. Everybody should remember those experienced between Russia and Georgia two years ago." Historically meaningless summit of obsolete organization http://english.pravda.ru/world/europe/02-12-2010/116021-osce_summit-0/ 02.12.2010

On December 1 and 2 the Organization for Security and Cooperation in Europe is holding a summit in Astana, Kazakhstan. The last meeting of this organization was held 11 years ago in Istanbul. This makes the December OSCE summit in Astana a historic event both for Kazakhstan and for the entire world community. For the first time in the history of the organization it is headed by a CIS country, which reflects the recognition of the increasing geopolitical importance of Kazakhstan in the international arena. It was not an accident that Prime Minister Karim Masimov emphasized that the decision of the OSCE Ministerial Council to hold the supreme forum of the OSCE in the capital of his country was a historic success of Kazakhstan, which is especially noteworthy against the backdrop of the 11-year gap after the previous summit in Istanbul in 1999. Why such an important role was given to Kazakhstan? French Consul General in Alma-Ata, Guillaume Narzhole, explained the reasons. "It is Kazakhstan's chairmanship in the OSCE that made the organization transform from a field of conflict between East and West to the ground for a dialogue. In the past five or six years, the OSCE was just a hostage to the differences between East and West. Therefore, it first should be noted that it was under the chairmanship of Kazakhstan when a new impetus was given to the OSCE development," he said. In turn, the leaders of this country believe that ensuring the security of Europe is not solely the task of the European countries. As recently stressed by Prime Minister of Kazakhstan Karim Masimov, "We declare our intention to strengthen the organization's role in countering new threats and challenges, especially terrorism and drug trafficking." Yet, if we put lofty speeches aside, the reasoning behind holding the first summit of the OSCE in 11 years in Kazakhstan goes beyond the willingness to accept it as an equal European partner. As we know, this country has a special strategic position in Central Asia as well as the largest reserves of energy in the region. According to expert estimates, oil sales alone will bring Kazakhstan over $700 billion in the next 30 years. The enhanced use of these resources will help to significantly reduce the dependence of the West from oil and gas from Persian Gulf. In addition, according to some experts, another argument that affected Europe's decision to make Kazakhstan the OSCE chairman, is Astana's active participation in the Customs Union between Russia, Kazakhstan and Belarus. As noted by the OSCE Secretary General Marc Perrin de Brichambaut, "the Customs Union is a part of a globalizing world, the direction worthy of development. It will improve the stability and welfare of its members." In other words, we cannot rule out that the OSCE chairmanship was given to Kazakhstan in order to eliminate its excessive rapprochement with Russia. The OSCE used to play a prominent role in international affairs. For example, at the summit held in November of 1990 in Paris, the Charter of Paris for a New Europe which proclaimed the end of the Cold War was signed. The Treaty on Conventional Armed Forces in Europe was also signed there, and at the last summit in 1999 Russia pledged to withdraw troops from Georgia and Moldova. What should we expect from the OSCE summit in Astana? Alexander Rahr, director of Berthold Beitz Center at the German Council on Foreign Relations, shared his thoughts with Pravda.ru. "The level of significance of the OSCE today is clear from the fact that in his message to the Federal Assembly, Russian President Dmitry Medvedev did not even mention this organization. In other words, this structure is now of secondary importance compared to other institutions like NATO. The OSCE Summit will be held in the shadows of a recent meeting in Lisbon. That was the meeting where major international changes relating to security were discussed. Nothing like this will happen at the OSCE summit. The following will happen at the Astana summit: the leaders of former USSR countries will throw all issues in one basket, including unresolved conflicts in the Caucasus (along with the issues regarding Abkhazia and South Ossetia, Nagorno-Karabakh) and the situation in Kyrgyzstan. I will not even dwell on possible solutions. The question arises whether all the issues the participants of the summit are interested in can be simply put on the agenda of the meeting in Astana. The OSCE is an obsolete organization which was preserved only because it is seen as a platform for a dialogue with the Eurasian countries such as Russia and Kazakhstan that are not able to speak on equal terms with the European Union. The presence of the OSCE allows these states to not feel excluded from the participation in international affairs." Sergei Balmasov Pravda.Ru

Summit in Astana Seeks To Revitalize Role Of OSCE http://www.rferl.org/content/osce_summit_astana_kazakhstan/2235809.html? page=1&x=1#relatedInfoContainer

Last updated (GMT/UTC): 02.12.2010 06:26 By RFE/RL

The OSCE's first summit in more than a decade wraps up today in Kazakhstan, with Russian President Dmitry Medvedev saying that something should be done to prevent the organization from losing its "potential."

Government leaders from 68 countries have gathered in Astana to seek ways of restructuring the way the organization reacts to security crises.

Senior officials from 56 member countries of the Organization for Security and Cooperation in Europe (OSCE), along with 12 partner states, have been meeting in the Kazakh capital to discuss issues ranging from the war in Afghanistan, ethnic violence in Kyrgyzstan, nuclear nonproliferation, and regional conflicts like the dispute between Armenia and Azerbaijan over Nagorno-Karabakh.

It is the first time OSCE leaders have gathered since a meeting in Istanbul in 1999 -- a gap that has raised questions about the group's capacities in the 21st century. OSCE Secretary-General Marc Perrin de Brichambaut admitted today that some OSCE principles have "been neglected" in recent years and that a "lack of confidence between member states" had limited its ability to respond to crises. He told leaders in Astana that the OSCE "can only be as effective as you choose to make it."

Medvedev and U.S. Secretary of State Hillary Clinton both acknowledged that the OSCE needs to play a more dynamic role in preventing wars and resolving conflicts.

Clinton said recent conflicts in the Caucasus and Central Asia show that the OSCE needs to have its monitoring powers enhanced to deal with crises that involve member states.

"We believe the organization needs to be empowered to respond more effectively to crises within the OSCE itself," she said. "It is encouraging that Russia also recognizes the need to improve on our existing capacity, and we are working to find a framework that will allow for timely, impartial OSCE reporting during emergencies like those we have seen in Georgia and Kyrgyzstan."

But in a thinly veiled reference to Russia, Clinton chided the Kremlin's efforts to obstruct the placement of an OSCE mission in Georgia -- whose own territorial integrity has been undermined by Moscow's diplomatic and financial support for the breakaway regions of Abkhazia and South Ossetia.

Clinton told the gathering it is "regrettable that a participating state has proposed to host a mission and the OSCE has not been allowed to respond." Such disputes between member states have raised doubts about whether an agreement can be reached during the Astana summit on a strong action plan for the OSCE's future.

Meanwhile, top officials from the OSCE countries trying to mediate the long-running dispute between Armenia and Azerbaijan have urged renewed energy to achieve a resolution.

Clinton and Medvedev, together with French Prime Minister Francois Fillon, met with Azerbaijan's President Ilham Aliyev and Armenian President Serzh Sarkisian.

A joint statement after the talks said the leaders agreed "the time has come for more decisive efforts to resolve the Nagorno-Karabakh conflict." Their statement also says they agreed that a peaceful, negotiated settlement will bring stability and security and is the only way to bring "real reconciliation."

Clinton also called on members of the security organization to push for a greater OSCE engagement in Afghanistan. "The OSCE itself should play a greater role [in Afghanistan]. OSCE participating states have [1,900 kilometers] of borders with Afghanistan, and we should expect OSCE efforts to improve border security, counter illicit trafficking, boost legitimate trade, and promote economic development," Clinton said.

Although Afghanistan is not part of the OSCE, more than 40 OSCE members have been involved in military operations or civilian reconstruction efforts there since the collapse of the Taliban regime in late 2001.

In fact, Afghanistan's importance to regional security has been listed as a top agenda item at the Astana summit -- prompting host Kazakhstan to send an invitation to Afghanistan's President Hamid Karzai, who welcomed Clinton's call for greater OSCE engagement.

"Afghanistan shares common borders with three OSCE member countries," Karzai said. "While our region is exposed to international terrorist and criminal networks, we believe that in addition to the bilateral cooperation between Afghanistan and the three OSCE member states in our neighborhood, we need to bolster our regional cooperation in order to reach the OSCE objectives." Another troubled state that neighbors Kazakhstan and is high on the OSCE summit agenda is Kyrgyzstan, where the ouster of former President Kurmanbek Bakiev in April was accompanied by political violence and followed months later by deadly ethnic clashes.

Roza Otunbaeva, who was sworn in Kyrgyzstan's president in July after acting as interim leader following Bakiev's ouster, told the gathering today that Bishkek will do everything possible to establish interethnic dialogue, to push forward national reconciliation, and to strengthen the rule of law and democratic institutions.

"The Kyrgyz government understands well that many sensitive issues, especially in the area of human rights and ethnic relations, still exist and contain considerable destructive potential," she said.

Otunbaeva said authorities in Kyrgyzstan are convinced that the security of OSCE territory -- including countries in Central Asia -- must be "joint, united, and indivisible."

Meanwhile, Belarus announced today that it would eliminate its stocks of highly enriched uranium by 2012. Belarus Foreign Minister Syarhey Martynau made the pledge after talks with Clinton on the sidelines of the OSCE summit.

In a joint statement, Clinton said the United States intends to provide technical and financial assistance to support the effort as quickly as possible.

In its highly enriched form, uranium can be used to build nuclear weapons. There have been fears about the security of highly enriched uranium stockpiles in former Soviet republics like Belarus.

Clinton praised the decision as a "sign of progress in efforts to advance nuclear security and nonproliferation" of nuclear weapons. She also said Belarus would be invited to a 2012 nuclear security summit in South Korea.

On Iran, Clinton said she welcomed Tehran's decision to join talks in Geneva with EU foreign- policy chief Catherine Ashton on December 6-7, but stressed that the talks should focus "on the matters that are of concern to the international community: first and foremost: Iran's nuclear program."

Iran denies allegations that it is trying to secretly develop nuclear weapons and has said it would not discuss its nuclear program in Geneva.

Kazakhstan's 2010 chairmanship of the OSCE has been criticized by some activists who say the country's poor human rights record made it a poor choice.

The New York-based nongovernmental organization Human Rights Watch has described Kazakhstan's rights record as "stagnant," noting that Astana's promises to improve media freedoms during its OSCE chairmanship this year remain unfulfilled. written by Ron Synovitz, with agency reports

Beginning of meeting with President of Kazakhstan Nursultan Nazarbayev http://eng.kremlin.ru/transcripts/1392 December 1, 2010, 13:00 Astana PRESIDENT OF KAZAKHSTAN NURSULTAN NAZARBAYEV: Mr Medvedev, I want to thank you very much for finding the time to come to Kazakhstan once again straight after giving your Address to the Federal Assembly yesterday. I know what an important event this is, and what goes into it too, the preparations and the delivery. We all remember the speech you gave in the Kazakh language here on July 5. That truly was a unique occasion, addressing such a large public too. Some would have said just a word or two, ‘hello’, say, but giving an entire speech in generally decent Kazakh really was a mark of respect on your part. As far as our relations go, I think we have no problems. I am looking forward to the meeting in Moscow on December 9, 2010. We spoke about the fact that next year we will celebrate the CIS’ 20th anniversary. You have proposed holding the celebrations in Moscow, and I have no objection to this. PRESIDENT OF RUSSIA DMITRY MEDVEDEV: We will reach an agreement. Mr Nazarbayev, I simply want to express my respect and thanks to you for getting this summit organized. I know that this took a lot of selfless effort and it was not always easy finding compromises and getting everything agreed. This is indeed a big event for the whole Eurasian region. It was not a good thing that there had not been an OSCE summit for so long. Security issues on our continent are not being resolved in the best fashion, as we can see from the rather serious conflicts that have taken place over the last decade. The fact that you managed to get this summit organised and hold it in Asia for the first time, here in Kazakhstan, is therefore recognition of your state-building achievements and also recognition of the OSCE’s potential. We all criticised the OSCE today, I too in my speech, because we know we have the chance to make it stronger. But I think that holding this summit is a very important event, and so I want to thank you once more for the initiative and political will you have shown throughout this work. I think this is important for all countries, for Kazakhstan too, of course, as a young and fast- growing country. Our bilateral relations need no comment. They are very good. We have our traditional agenda to work on. I think there is not even really any need to go into these issues right now, as we will meet again in Moscow very soon. We will work on the Customs Union and the Common Economic Space. Almost all of the documents are ready now. I spoke with the [EurAsEC] Secretary General about this just before. I think that everything will work out. This is an important event in our countries’ lives, in the life of Russia, Kazakhstan, and Belarus. We will therefore continue to take this project forward. Thank you very much for the summit’s excellent organisation.

Beginning of meeting with Prime Minister of the Netherlands Mark Rutte http://eng.kremlin.ru/transcripts/1389 December 1, 2010, 11:30 PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Mr Prime Minister, I am pleased to have this first real meeting with you and make your acquaintance. I hope that this meeting will continue the fine tradition of meetings and partnership relations that bind our two countries together. Russia and the Netherlands are good partners and we have a large volume of trade cooperation. Looking through the figures for this year I see that the Netherlands is practically our top trade partner in terms of bilateral trade volume. PRIME MINISTER OF THE NETHERLANDS MARK RUTTE: Ok! Well, that’s good! That’s good news! DMITRY MEDVEDEV: Of course, there are other things to discuss too. We also have a good cultural and humanitarian partnership and we will talk about this too, and then are regional matters to discuss too, of course. So, we will talk about the situation in all different areas. Of course, this OSCE summit that has brought us all to Astana is an excellent event and we hope it will produce positive results, despite the fact that most of the European representatives are still rather sleepy, which is only natural, considering that it is still only 7 am in Europe. MARK RUTTE: Yes, that’s true. (Laughter.) Thank you so much, Mr President, for my having this chance to meet you. Our relationships are excellent. You have visited Holland. The Hermitage is now an official museum also in Amsterdam, which is beautiful. You have opened it yourself with the Queen. DMITRY MEDVEDEV: I took part in the opening. MARK RUTTE: Exactly. And also the business ties are good. I work with Unilever myself, which is a big company in Russia, but also Shell, of course, is a big company, so the trade relations and also investor relations are very important. START TREATY

Republicans Signal Support for Russia Nuclear Treaty (Update1) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=af90pWOfqgyg By Lisa Lerer and James Rowley Dec. 2 (Bloomberg) -- Several Senate Republicans signaled a willingness to support a new arms control treaty with Russia by the end of the year, even as their party vowed to block nearly all business in the chamber. “I’m open to it,” Senator Lamar Alexander of Tennessee said in an interview yesterday. “The administration has made some important steps in the right direction” toward resolving Republican concerns, he said. Republican leaders have stalled consideration of the new Strategic Arms Reduction Treaty, vowing to block passage of all bills until Congress takes up legislation extending the 2001 and 2003 tax cuts and passes a stopgap funding bill to keep the federal government operating until appropriations measures for fiscal year 2011 are enacted. Yesterday, some Republicans indicated that they would be open to supporting the agreement once those matters are resolved. “It’s a two-step process: We do taxes and then we do START,” said Senator Richard Lugar of Indiana, the top Republican on the Senate Foreign Relations Committee. Senate approval of a resolution supporting ratification of the accord would award a significant victory to President Barack Obama, who considers the treaty the top foreign policy priority of his administration for this congressional session. One-Third Reduction The START agreement, signed by Obama and Russian President Dmitry Medvedev in April, would cut each country’s deployed nuclear warheads by about a third, to a maximum of 1,550, and would allow both nations to resume on-site inspections. The previous treaty expired in December 2009. Senator Jon Kyl of Arizona, the chamber’s No. 2 Republican, has pushed the administration for assurances, including funding, that the White House is committed to modernizing the U.S. nuclear weapons infrastructure even as it cuts the arsenal. Several Republicans indicated this week that talks were progressing. “The administration has evolved in a really positive way as it pertains to modernization,” Senator Bob Corker of Tennessee said in an interview. Robert Bennett of Utah, who is retiring at the end of the year, said he wanted to see what “wrangling” over the ratification resolution produced before saying how he would vote. Still, he described himself as “generally disposed to” approve ratification of the treaty. ‘Move Forward’ “I believe we can move forward with the START treaty and satisfy Senator Kyl’s concerns and mine about missile defense and others,” Senator John McCain of Arizona said on ABC’s “Good Morning America” program. Two-thirds of the senators present and voting are needed to approve ratification. If all 100 senators are in the chamber, nine Republicans would have to join with Democrats to reach 67 votes. Three Republicans supported the treaty in a Sept. 16 vote in the Senate Foreign Relations Committee. So far, only Lugar has said he would definitely support the treaty in the full Senate. Ratification of each of the last three arms-reduction treaties was approved with more than 90 votes. Democrats suggested yesterday that the treaty’s chances for ratification in the next month were improving. “The START treaty will be done by Christmas,” White House press secretary Robert Gibbs said on CBS’s “Early Show.” Colin Powell’s Support Obama urged passage of the treaty yesterday in remarks after meeting with Colin Powell, a former secretary of State under President George W. Bush and a former chairman of the Joint Chiefs of Staff, to discuss the pact. “Now it’s time to get this done,” the president said. “It is important for us to make sure we complete the evaluation process, we finish the debate and we go ahead and finish this up before the end of the year.” In recent weeks, the White House has brought in officials from previous administrations, both Democratic and Republican, to endorse the pact. Last month, Obama met at the White House with James Baker, President George H.W. Bush’s secretary of State; Henry Kissinger, secretary of State under Presidents Richard Nixon and Gerald Ford; and Madeleine Albright, President Bill Clinton’s secretary of State. ‘Compelling Reasons’ In an opinion article in today’s Washington Post, Powell, Baker, Kissinger and two other secretaries of State in Republican administrations -- George P. Schultz, who served under President Ronald Reagan, and Lawrence Eagleburger, who also worked for President George H.W. Bush -- wrote there are “compelling reasons” for their party to approve ratification. At the White House yesterday, Obama and Powell said that a failure to ratify the treaty would hold up new verification procedures for the U.S. and Russia to monitor each other’s nuclear arsenals. Russia plans to build up its nuclear forces if the U.S. fails to ratify the treaty, Russian Prime Minister Vladimir Putin said in an interview on CNN’s “Larry King Live” yesterday. He said through a translator that if Russia’s proposals are “met with negative answers only,” and if “additional threats” are built near Russia’s borders, “Russia will have to ensure her own security through different means.” The U.S. and Russia must “agree on a joint effort,” he said. Senator John Kerry of Massachusetts, the chairman of the Foreign Relations Committee, said Democrats were eager to approve ratification. “There’s a very vocal group of senators who believe this needs to be taken up now,” Kerry told reporters Nov. 30. “What we need to do is carve out space to get it done even as we do some of the other business.” To contact the reporter on this story: Lisa Lerer in Washington at [email protected]; James Rowley in Washington at [email protected] To contact the editor responsible for this story: Mark Silva at [email protected]. Last Updated: December 2, 2010 02:08 EST

Former top US diplomats urge support for START http://in.reuters.com/article/idINIndia-53292020101202

11:09am IST By David Morgan WASHINGTON (Reuters) - Former secretaries of state for five Republican presidents urged Senate Republicans to back the New START nuclear treaty with Russia, suggesting failure to do so could affect Moscow's role on Iran, North Korea and Afghanistan. In an opinion piece published in the Washington Post on Thursday, top diplomats in Republican administrations from Richard Nixon's to George W. Bush's called on senators to set aside their domestic partisanship and ratify the treaty in U.S. national interests. "The most important thing is to have bipartisan support for the treaty, as previous nuclear arms treaties did," said authors Henry Kissinger, George Shultz, James Baker, Lawrence Eagleburger and Colin Powell. "We believe there are compelling reasons Republicans should support ratification." The strategic arms treaty, signed by President Barack Obama and Russian President Dmitry Medvedev in April, commits the two Cold War rivals to reduce deployed nuclear warheads to no more than 1,550 within seven years -- a cut of up to 30 percent. Obama has made ratification a top priority for the final weeks of the current Congress. But that has been thrown into doubt by Senator Jon Kyl, the top Republican negotiator on the issue, who does not believe there is enough time to resolve outstanding differences. Without Kyl's endorsement, Democrats might not be able to win enough Republican support to get the 67 votes necessary to ratify the treaty in the 100-seat Senate. Democrats are keen to ratify the treaty before the new Congress takes office in January, when the party's majority in the Senate will be narrowed by last month's election losses. Kyl and other Republicans are concerned about the need to modernize the U.S. nuclear arsenal and ensure the treaty does not interfere with development of U.S. missile defenses or conventional weapons systems. The former secretaries said the treaty addresses those concerns and praised Kyl for his vigilance in ensuring increased funding for modernization of the U.S. arsenal. "We have here an agreement that is clearly in our national interest," they wrote. But they also warned of potential implications for U.S.-Russia relations if the agreement is not ratified. "Russia's cooperation will be needed if we are to make progress in rolling back the Iranian and North Korean programs," the article said. "Russian help will be needed to continue our work to secure 'loose nukes' in Russia and elsewhere. And Russian assistance is needed to improve the situation in Afghanistan, a breeding ground for international terrorism." Some Republicans have said the New START treaty could be taken up if Democrats cut back their agenda in the so-called lame duck session. The agenda includes contentious issues including the extension of expiring tax cuts. "There are plenty of opportunities to battle on domestic political issues linked to the future of the American economy," the former secretaries said in their article. "With our country facing the dual threats of unemployment and a growing federal debt bomb, we anticipate significant conflict between Democrats and Republicans. It is, however, in the national interest to ratify New START." (Editing by Eric Beech)

Why New START deserves GOP support http://www.washingtonpost.com/wp-dyn/content/article/2010/12/01/AR2010120106292.html

By Henry A. Kissinger, George P. Shultz, James A. Baker III, Lawrence S. Eagleburger and Colin L. Powell

Thursday, December 2, 2010

Republican presidents have long led the crucial fight to protect the United States against nuclear dangers. That is why Presidents Richard Nixon, Ronald Reagan and George H.W. Bush negotiated the SALT I, START I and START II agreements. It is why President George W. Bush negotiated the Moscow Treaty. All four recognized that reducing the number of nuclear arms in an open, verifiable manner would reduce the risk of nuclear catastrophe and increase the stability of America's relationship with the Soviet Union and, later, the Russian Federation. The world is safer today because of the decades-long effort to reduce its supply of nuclear weapons. As a result, we urge the Senate to ratify the New START treaty signed by President Obama and Russian President Dmitry Medvedev. It is a modest and appropriate continuation of the START I treaty that expired almost a year ago. It reduces the number of nuclear weapons that each side deploys while enabling the United States to maintain a strong nuclear deterrent and preserving the flexibility to deploy those forces as we see fit. Along with our obligation to protect the homeland, the United States has responsibilities to allies around the world. The commander of our nuclear forces has testified that the 1,550 warheads allowed under this treaty are sufficient for all our missions - and seven former nuclear commanders agree. The defense secretary, the chairman of the Joint Chiefs of Staff and the head of the Missile Defense Agency - all originally appointed by a Republican president - argue that New START is essential for our national defense. We do not make a recommendation about the exact timing of a Senate ratification vote. That is a matter for the administration and Senate leaders. The most important thing is to have bipartisan support for the treaty, as previous nuclear arms treaties did. Although each of us had initial questions about New START, administration officials have provided reasonable answers. We believe there are compelling reasons Republicans should support ratification. First, the agreement emphasizes verification, providing a valuable window into Russia's nuclear arsenal. Since the original START expired last December, Russia has not been required to provide notifications about changes in its strategic nuclear arsenal, and the United States has been unable to conduct on-site inspections. Each day, America's understanding of Russia's arsenal has been degraded, and resources have been diverted from national security tasks to try to fill the gaps. Our military planners increasingly lack the best possible insight into Russia's activity with its strategic nuclear arsenal, making it more difficult to carry out their nuclear deterrent mission. Second, New START preserves our ability to deploy effective missile defenses. The testimonies of our military commanders and civilian leaders make clear that the treaty does not limit U.S. missile defense plans. Although the treaty prohibits the conversion of existing launchers for intercontinental and submarine-based ballistic missiles, our military leaders say they do not want to do that because it is more expensive and less effective than building new ones for defense purposes. Finally, the Obama administration has agreed to provide for modernization of the infrastructure essential to maintaining our nuclear arsenal. Funding these efforts has become part of the negotiations in the ratification process. The administration has put forth a 10-year plan to spend $84 billion on the Energy Department's nuclear weapons complex. Much of the credit for getting the administration to add $14 billion to the originally proposed $70 billion for modernization goes to Sen. Jon Kyl, the Arizona Republican who has been vigilant in this effort. Implementing this modernization program in a timely fashion would be important in ensuring that our nuclear arsenal is maintained appropriately over the next decade and beyond. Although the United States needs a strong and reliable nuclear force, the chief nuclear danger today comes not from Russia but from rogue states such as Iran and North Korea and the potential for nuclear material to fall into the hands of terrorists. Given those pressing dangers, some question why an arms control treaty with Russia matters. It matters because it is in both parties' interest that there be transparency and stability in their strategic nuclear relationship. It also matters because Russia's cooperation will be needed if we are to make progress in rolling back the Iranian and North Korean programs. Russian help will be needed to continue our work to secure "loose nukes" in Russia and elsewhere. And Russian assistance is needed to improve the situation in Afghanistan, a breeding ground for international terrorism. Obviously, the United States does not sign arms control agreements just to make friends. Any treaty must be considered on its merits. But we have here an agreement that is clearly in our national interest, and we should consider the ramifications of not ratifying it. Whenever New START is brought up for debate, we encourage all senators to focus on national security. There are plenty of opportunities to battle on domestic political issues linked to the future of the American economy. With our country facing the dual threats of unemployment and a growing federal debt bomb, we anticipate significant conflict between Democrats and Republicans. It is, however, in the national interest to ratify New START. The writers were secretaries of state for the past five Republican presidents. Powell endorses Russian arms control treaty http://edition.cnn.com/2010/POLITICS/12/01/obama.powell.start/

By the CNN Wire Staff December 1, 2010 -- Updated 2129 GMT (0529 HKT) Washington (CNN) -- Former Secretary of State Colin Powell on Wednesday joined a growing list of former GOP diplomatic and national security heavyweights endorsing the new Russian arms control treaty negotiated by the Obama administration. Meeting with President Barack Obama in the Oval Office, Powell said he "fully" supports passage of the New START treaty as a way to reduce the threat of nuclear proliferation. The accord is critical to maintaining the sort of "transparency" and "visibility" that helped promote trust and cooperation between the world's two nuclear superpowers in the past, he said. The START treaty would resume mutual inspections of U.S. and Russian nuclear arsenals, while limiting both nations to 1,550 warheads and 700 launchers each. Obama has called ratification of the treaty an immediate priority for the lame-duck Senate, saying it's critical to national security and a cornerstone of U.S.-Russia relations. Several GOP senators led by Arizona's Jon Kyl, however, have urged the Senate to delay considering ratification until the next Congress, due in part to concerns about the current Senate workload and the need to modernize the U.S. nuclear arsenal. Top Democrats fear that they will not find the 67 votes necessary to secure ratification in next year's more Republican Senate. Powell has joined George Shultz, Lawrence Eagleburger, Henry Kissinger and James Baker -- all former Republican secretaries of state -- in authoring an opinion piece in support of the treaty that is scheduled to be released Thursday.

Russia completes delivery of guaranteed nuclear fuel reserves http://english.peopledaily.com.cn/90001/90777/90853/7218434.html

09:07, December 02, 2010 Russia delivered all guaranteed reserves of nuclear fuel to the International Uranium Enrichment Center in Angarsk under the auspices of the International Atomic Energy Agency, the state- owned nuclear power corporation Rosatom said Wednesday.

Russia had produced guaranteed nuclear fuel -- 120 tons of low-enriched uranium with a uranium-235 purity of 2 to 4.95 percent, Rosatom said.

One third of the reserve is uranium enriched to 4.95 percent, Interfax news agency said, adding that the amount of Russia-made reserves is sufficient to make nuclear fuel for two 1000 megawatt light-water reactors.

The IUEC, which is located in Angarsk, near Irkutsk in Siberia, is a facility set up to provide international access to uranium enrichment services to all states planning to develop their nuclear energy.

Source: Xinhua

Rosatom sees orders to build 23-25 nuclear power plants abroad http://www.bne.eu/dispatch_text13802 VTB Capital December 2, 2010

News: Russia's state nuclear agency Rosatom plans to get orders to build at least 23-25 nuclear power plants (NPPs) abroad in the coming years, the agency's head Sergei Kirienko was quoted by Interfax as saying. These orders are likely to come from India, Turkey, China, Vietnam, Belarus, Ukraine, Armenia and some other countries, he said, adding that the risks to this forecast were on the upside.

Our View: This forecast bodes well for our projections for Power Machines, which imply that following the launch of the production of half-speed turbines for NPPs in 2013 (in addition to the full-speed turbines which it already produces) the company will supply three sets of equipment (turbines, generators and other equipment) for NPPs per year as part of both domestic and export projects. We note that, depending on the particular configuration of the equipment to be supplied, each contract could add some USD 200-500mn to the company's order book (which stood at USD 3.6bn at the end of 3Q10).

Power Machines remains Russia's only producer of turbines and generators for NPPs and we believe that the company will be the supplier of choice for Rosatom's projects to build NPPs at home and abroad. We are reiterating our Buy recommendation on Power Machines.

Transcript of Vladimir Putin's interview with CNN's Larry King http://en.rian.ru/interview/20101202/161586625.html Putin's satellite interview with Larry King as provided by the Russian prime minister's website http://premier.gov.ru Larry King (as translated): Good evening. This is a very special evening for the Larry King show and our guest in the studio is once again Vladimir Putin, the Russian prime minister and formerly president of the Russian Federation. It is a great pleasure for me to welcome him to the Larry King show. Vladimir Putin: Good evening. It's evening here and morning there. Good morning, Larry. It is very good to see you again. I remember our first meeting, our interview. Larry King: Mr Prime Minister, thank you for joining us. Let us start right off. You could run for president again in 2012? Are you thinking about doing that? Vladimir Putin: President Medvedev and I work together closely. We made up our minds long ago that we would take our decision concerning the 2012 elections in the interests of the Russian people. Larry King: So your answer is "maybe." Vladimir Putin: We'll see. The elections are still a long way away. They are slated for April 2012. I repeat, we will consult with each other and we will come to a decision that takes account of the economic, social and political situation in the country. Larry King: OK, let us get to current things. Vladimir Putin: By all means. Larry King: What do you think of the leak of military and diplomatic correspondence by the WikiLeaks group? Vladimir Putin: Some experts believe that somebody is deliberately "inflating" WikiLeaks. Building up the site's authority in order to use it to further their political ends. That is one possible theory, and this is the opinion of experts, which has some currency in our country too. I think that if this is not the case, it shows that the diplomatic service should be more careful with its documents. Such leaks have happened before, in the previous era. I don't see it as any kind of catastrophe. Larry King: What about the statement by the US Defence Secretary Robert Gates that Russian democracy has disappeared and that the government is being run by the security services? What is your response to the American secretary of defence's statement? Vladimir Putin: I am personally acquainted with Mr Gates, I have met him on several occasions. I think he is a very nice man and not a bad specialist. But Mr Gates, of course, was one of the leaders of the US Central Intelligence Agency and today he is defence secretary. If he also happens to be America's leading expert on democracy, I congratulate you. Larry King: So he is wrong in saying that your country is being run by secret security services? Vladimir Putin: He is profoundly wrong. Our country is run by the people of the Russian Federation through legitimately elected bodies of power and administration: through representative bodies (the parliament) and executive bodies (the president and the government of the Russian Federation). As for democracy, this is a long-running argument we have been having with our American colleagues. I would like to recall that twice in the history of the United States the presidential candidate who ultimately became president of the United States won more votes in the electoral college but lost the popular vote. What's democratic about that? And when we tell our American colleagues that there are systemic problems in this sphere we hear, "Don't poke your noses into our affairs. This is how things work here and this is the way it is going to be." We are not butting in, but I would also like to advise our colleagues not to poke their noses into our affairs. This is the sovereign choice of the Russian people. The Russian people unequivocally backed democracy in the early 90s. They will not be swayed from this path. No one should have any doubts on that score. This is in Russia's own interests. And we will definitely continue along this path. The issue Mr Gates raised in the course of this diplomatic correspondence is clearly related to his desire to bring some pressure to bear on the allies over concrete issues. There are many such issues. Russia is seen as deserving this pressure because it is undemocratic: these measures have to be taken because there is no democracy there. We have heard this a thousand times. We have stopped paying attention to it. But it is still being used as an instrument of US foreign policy. I think this is an erroneous approach to take in the building of relations with the Russian Federation. Larry King: How would you describe your relationship with President Medvedev? As you know, there are some who say that he is Robin and you are Batman, to refer to those all-American heroes. Or in fact, to get it straight, that you are Batman and he is Robin. Vladimir Putin: Well, you know when Mr Medvedev and I were considering how to structure our relations and how to run the election campaign, the 2008 presidential election campaign, we were very well aware that many would try to create a split in our common approach to the building of the Russian state and the development of our economy. Because our interaction is a considerable factor in the country's domestic policy. But it did not occur to us that it would be done in such an impudent, brazen and aggressive fashion. Such claims of course are aimed at insulting one of us, at damaging our sense of pride and at provoking us into taking steps that would destroy our effective interaction in running the country. I have to tell you that we have already grown used to this. I urge all those who are engaged in such attempts to calm down. Larry King: I hope to be able to visit your country someday soon and to meet you in person. Last time we met in New York, we were in the studio together, and now we are communicating via satellite. What is your assessment of the situation on the Korean Peninsula? You have said that there is a colossal danger that the conflict will intensify. Do you share that fear? Vladimir Putin: Yes, the situation is acute and very worrying. It cannot but worry us because everything that is happening is happening in the immediate proximity of our borders. But we sincerely hope that reason will prevail, that emotions will take the back seat and that a dialogue will begin. Reaching an agreement is impossible without dialogue. Alongside our partners, including the United States, we are working hard towards resolving the North Korean problems, those connected with nuclear programmes, the settlement of the situation between the two parts of Korea, and at various stages this work has yielded a range of results, some were quite impressive and positive. I very much hope that we will be back on track with this positive work. Larry King: China has proposed holding six-party talks: the two Koreas, China, Russia, Japan and the United States. Do you support this idea? Vladimir Putin: The president takes the lead on our foreign policy, and the question should, in the first place, be directed to him, but overall I think that Russia would like to see this dialogue continue. Larry King: Do you think that China should do more to resolve the situation, because it has great influence over North Korea? Vladimir Putin: This is the US State Department's position. But in principle we should do everything we can to normalise the situation. The People's Republic of China has leverage, especially in economic terms, but it should be remembered that we must respect the interests of the Korean people, both those in its Northern and Southern parts. We should be patient, get the tone of the dialogue right and formulate a common position for all the six states that are involved in this fairly complicated negotiating process. A common approach is a very important precondition for overall success. Larry King: You share other states' concerns that Iran is moving towards becoming a nuclear power. How does Russia feel about that? Vladimir Putin: Iran has been implementing its nuclear programme for twenty years now and of late, in recent years, Iran has in one way or another indicated its readiness to engage in dialogue with the international community and with the IAEA. Yes, we are aware that questions remain concerning the early stages of the programme and we share the IAEA's desire for exhaustive answers. You will, of course, know that we are concerned about any indication of proliferation, about any possibility, even if it is a theoretical possibility for the proliferation of weapons of mass destruction. This applies to absolutely all states, including Iran. At the same time we have no grounds for suspecting Iran of seeking to possess nuclear weapons. But we are cooperating with all our partners, including the United States, within the framework of the United Nations. As you know, so far we have managed to agree on the decisions taken. Our position is open and Iran is aware of it. We will continue to cooperate with all participants in this process until the problem is entirely resolved. I very much hope that this resolution will transpire. I think this is in the interests not only of Iran's neighbour, Israel, which has great fears about nuclear programmes, and the other parties involved in this process but also those of Iran and the Iranian people. I see nothing reprehensible, nothing that infringes upon Iran's national interests, in it opening up all its programmes and responding adequately to the legitimate interest that the international specialist agency, the IAEA, has taken in its work. I see nothing to fear here, but at the same time I am still of the opinion that Iran has the right to pursue nuclear programmes under the supervision of international organisations. Larry King: There's a lot of concern now about this new treaty. Your president, Medvedev, warned that there would be a new arms race if NATO and Moscow don't agree on a joint missile shield. And what happens to the relations between the two countries? Will there be another arms race if the United States doesn't ratify? Vladimir Putin: No. In his state-of-the-nation address to the Russian parliament earlier today, President Medvedev said only that we made a proposal concerning the shared problem of security. He said that through joint effort and shared responsibility, we can eventually solve this problem. But if there are only negative reactions to all of our proposals, and if a threat emerges on our borders in the form of a new incarnation of the Third Site programme, Russia will just have to protect itself using various means, including the deployment of new missile systems to counter the new threats to our borders and the development of new nuclear-missile technology. This is not our choice. We don't want this. It's not a threat. We are simply talking about what to expect if we can't agree to work together. That's all. Again, we don't want to see this happen. Larry King: Well, you're saying it's not a threat, but it does sound like a threat. The Wall Street Journal is reporting today that America believes that you're moving short-range tactical nuclear warheads near NATO allies, as recently as this spring. Was that true? Vladimir Putin: Larry, listen, I'd like to make this clear to you and to all Americans, or, at least, to the audience of your show today. It's not Russia that is moving missiles close to your border; it's the United States that is planning to deploy missiles near Russia's border. We keep hearing that the purpose is to protect yourselves from the threat of a nuclear missile attack by Iran, for example. But Iran poses no such threat at the moment. And if anti-missile and radar systems are set up near our border, even in 2015, they will undermine our nuclear capabilities. So it's only natural that we are alarmed by the prospect. And we are obligated to take some measures in response. This is a response; we are not making the first moves. While in Lisbon, President Medvedev put forward some concrete proposals about NATO and Russia sharing responsibility for security in Europe. We could reach an agreement with NATO and, by extension, with the United States, on information sharing and on jointly managing these systems. Military experts can do it, provided there is goodwill. But we continue to be told, "We don't want to take your interests into account, we are going to do whatever we want." So we'll just have to view it as a threat to our security, and we'll be forced to respond accordingly. That's what I'd like to get across to the American public. Larry King: What is your assessment of President Obama? Vladimir Putin: Assessing his performance is the responsibility of US voters, the people who voted him into office, and American citizens in general. But as an outside observer, I can say that President Obama has been faced with some formidable challenges, primarily economic and social. It's not my place to judge whether he did the right thing by pushing for the healthcare law in Congress. But there's no doubt, in my mind, that he did his best on this highly sensitive issue for Americans. He has done everything he can to respond to the aspirations of the American people, which he made the basis of his election platform. He made a promise, and he delivered. As for his foreign policy, we are grateful that he has softened the rhetoric in US-Russian relations, and that, in terms of practical achievements, he has delayed the implementation of the Third Site programme for a missile defence shield in Europe. This has created new opportunities for dialogue; and we've won some time to try to translate the plan President Medvedev put forward in Lisbon into reality. Larry King: Ten Russian sleeper agents were arrested in the United States earlier this year, then sent back to Russia in a spy swap. You met with them after their deportation. What was your impression? What was this all about? What did they tell you? Vladimir Putin: We talked business for a bit. The conversation was wide-ranging. Well, what can I say? These people deserve respect, I think. I said earlier, and I'd like to repeat this, that their activity in no way undermined the interests of the United States. As you know, these were deep-cover agents. This kind of agent has special objectives, and they are usually called on in times of crisis, for example when diplomatic ties are severed. Thank God this isn't the case in U.S.-Russian relations at the moment, and I hope it never will be. Larry King: So they do no spying under your direction. Vladimir Putin: They had their own assignments. Let me make it clear once again that we're dealing here with deep-cover agents, who only become active during crises and when diplomatic ties are severed, when other forms of intelligence become ineffective or impossible. Again, those agents have not harmed the national interests of the United States. But it's common knowledge that every country, including the United States, operates a foreign intelligence network of its own. By the way, the methods employed by our special services differ in a good way from those used by US special services. Thank God, neither the agents in question or any other Russian intelligence officers are known to have been involved in creating secret prisons, kidnappings, or torture. Larry King: The former USSR spent 9 years fighting in Afghanistan. In fact, I believe we discussed this the last time we were together ten years ago. Some call it the Soviet Union's Vietnam. Do you think the United States will do any better in Afghanistan? Vladimir Putin: First of all, I don't think the comparison is accurate. Our troops withdrew from Afghanistan in a calm and orderly manner, and after the pullout, the Soviet-backed government remained in power for another three years. The Taliban managed to overthrow it only after the USSR collapsed, when Soviet assistance was no longer an option. I believe the Soviet Union made a lot of mistakes in Afghanistan, the most serious being that we sent in troops. We should not have done this. This much is clear. The ongoing presence of US and coalition forces in Afghanistan is another matter. As I said, our campaign in Afghanistan can't be compared with the Vietnam War. Similarly, it would be wrong to compare the current US and international operations in Afghanistan to Russia's back in the 1980s. I believe that the coalition forces have an important and positive mission to accomplish in Afghanistan. We cannot and will not contribute militarily, but we are providing some non- military assistance to our partners from the United States and other coalition countries. We've agreed to allow transit (through our territory), both by air and over land, and we're doing just that. We also share important information, including intelligence obtained by our special agents, whom you mentioned a short while ago. These are all positive examples of cooperation, I think. There have been cases of Russian helicopter pilots rescuing US and Dutch troops under enemy fire. And there are other ways of contributing to international efforts in Afghanistan. Providing assistance to the Afghan government and armed forces, for example. There is a wide range of cooperative measures, and we hope they'll yield positive results. Larry King: Let's discuss the former president, George Bush. In his new memoir Decision Points, he describes you as a man who is sometimes charming, sometimes very serious, and cold- blooded. He said, when he first met you, that he looked into your eyes and saw your soul. How would you describe your relationship with the former president? Vladimir Putin: They were warm - good, cordial, human relations. He visited me at home, and I visited him. I stayed at his ranch. We take different views of many problems but I can say one thing with complete confidence: George Bush, Jr., is a man of great integrity and a pleasant opposite number to have. He has a lovely family, too. I really enjoyed my time at his father's home. Larry King: I gather from that - you really liked him. Vladimir Putin: I do like him as a person but, I repeat, we took different approaches to solving the same problems. Larry King: Will you read his book? Vladimir Putin: I have seen some extracts from it. I am not in complete agreement with everything he wrote, and I think there are some things he has forgotten about. I'll remind him of them if we meet again. Larry King: I know that's you're working on your English. You spoke in English at an International Olympic Committee meeting. You did an interview with Matthew Chance for CNN two years ago and spoke in English. Are you ready to start now, and address our audience in English? Vladimir Putin: My English is very bàd (in English). It is better to be precise speaking to you and avoid any mistakes. I am learning songs in English with my teacher, and we try to sing them together. It's more of a game. It is not like proper language classes, just taking the language up again, as a break. But if we meet when you come to Moscow, I will try to talk to you in English. I understand a great deal, of course. At any rate, I do not need an interpreter when I meet with my colleagues in a semi-official or semi-informal atmosphere. Larry King: OK. Later this week, FIFA will announce which country is to host the 2018 FIFA World Cup. Do you think you have a good chance of hosting it? Vladimir Putin: I think we are in with a chance. I base this on our rivals' emphasis that they have everything ready to host the World Cup. But why should a country that already has all the required facilities host the World Cup? FIFA's philosophy involves promoting international football and extending its global reach. Eastern Europe has never hosted a World Cup, which is why Russia is a natural contender. We have a problem, however. Mud has been thrown at FIFA members lately during this bidding race. Attempts have been made to discredit them in ways I think they really did not deserve. As an organisation, FIFA does not only arrange football matches. It is, today, performing a crucial role in the world: not only does it promote a healthy lifestyle - turning a huge number of people, particularly young people, away from drugs and alcohol. It also builds bridges between people, nations and countries. This is a crucial function. We are counting on FIFA members to make their decision in Russia's favour. Larry King: Who is acting like that? Vladimir Putin: Many people in the race are trying to do that. We know that a great deal of information has appeared on the BBC, but accusations are one thing and proof is another. So I think these tactics amount to unfair competition in the bid to host the World Cup. Larry King: Will you go to Zurich to make a personal appeal? Vladimir Putin: You know, that's something I thought about, of course. But I think that now, when FIFA members are coming under such pointed attacks and attempts to disgrace them, they need the space to make an objective decision without any external pressure. As you know, I've been keen on sport all my life, and I love football but I don't think I should appear there before the vote lest my presence be regarded as an attempt to exert some kind of pressure on the decision-making process. Larry King: Something, Mr Prime Minister, I don't think you've ever been asked. We have quite a dispute about it in America. What is the Russian policy towards gays and lesbians in your military? Vladimir Putin: I've tried to answer similar questions before. There is a rather acute demographic problem in Russia, as in the rest of Europe. We are making serious efforts to improve the situation, and we are having success. I think we have the best indicators in Europe in terms of the rate of improvement. For the first time in the last 10 to 15 years, we are seeing a sustainable trend of rising births, and the country's population has even increased somewhat this year. As for same-sex marriages, they do not produce offspring, as you know. So we are fairly tolerant toward sexual minorities, however we think that the state should promote reproduction, support mothers and children, and look after their health. Larry King: Are gays permitted to actively serve in your military and be able to say that they are gay? Vladimir Putin: There is no ban on it. Sodomy was a criminal offence in the Soviet Union. It's not a crime under current law. There are no prohibitions. Larry King: You recently took part in a summit in St. Petersburg on saving the tiger. You hailed the actor Leonardo DiCaprio for managing to attend that meeting despite a lot of obstacles. What is your interest in the tiger? Vladimir Putin: It's not just tigers. I love nature. Thank God there are a lot of people in the world who feel like I do. I am just one of many. As for tigers, my interest in them also has something to do with the United States, strange though it may seem. I once saw a news report on television about American and Russian experts working together in the [Russian] Far East to protect tigers. To be honest, I was ashamed in a way to see American experts helping their Russian partners to solve these problems. I went there and we developed a programme to protect tigers in the Far East. On the whole, everything done in the Soviet Union and Russia has brought about improvements. Several decades ago, we had just twenty to thirty tigers, while now there are more than 500 thanks to our targeted efforts. But tigers are not our sole concern. We protect other endangered animal species, too, and I'm counting on more and more people getting involved in the search for solutions to these problems because many people are eager to help. They just don't have the opportunity. I do, so I think it is my duty to help. Larry King: Some personal questions in our remaining moments, Mr Prime Minister. And again, I hope next year to visit and spend some time with you in Moscow, and bring the family as well. You seem to keep your family life private. Many of our viewers may not know that you have two daughters. Why do you tend to shield the family? Vladimir Putin: Unfortunately, Russia has many problems with terrorism, as you know. It is our duty to think about the safety of our family members and our children - especially our daughters. They live a normal, ordinary life. They go to university. They are content. They have friends. Everything is alright. But I don't think it's necessary to force them into the spotlight, and besides they don't want it. Larry King: Does your wife enjoy being a first lady? Vladimir Putin: She's not the first lady. The president's wife is the first lady in Russia. Larry King: Did she enjoy being the first lady? Vladimir Putin: Generally speaking, she does not enjoy publicity. I think she handled the burden with poise, and she certainly managed her responsibilities. Larry King: Do you plan a trip to the United States anytime soon? Vladimir Putin: There are no plans for a visit. The issue is the specific reasons for making the visit. Currently, I'm focused on the economy above all. If there are reasons requiring a visit in the future, I will be happy to come meet with my colleagues and discuss current issues and the prospects for our cooperation. Larry King: Do you keep in touch with Mr Gorbachev at all? Vladimir Putin: I meet with him, though very rarely. He calls me occasionally. So we keep in touch. Larry King: Mr Prime Minister, finally are you optimistic at all about the state of this world or pessimistic? Vladimir Putin: There are more problems today than ever before. But I am an optimist, and I think that we can reach agreements on even the most acute problems, which might seem irresolvable to us now. If we work together, we will ensure that our countries will continue to make progress, and we will solve key problems regarding security and development. Larry King: Mr Prime Minister, I thank you so much and look forward to seeing you again soon on your soil. Vladimir Putin: Larry, please do come to Moscow. I'd love to see you. You've never been to Moscow, and I'm sure you will like it here. Larry King: I thank you again so much, Vladimir Putin, prime minister of Russia. Thank you. Vladimir Putin: Can I ask a question? I'm not sure why, but the king is leaving us. There are many gifted and interesting people working in the American media, but there is only one King. I'm not asking why he's leaving us, but I want to know when we will be able to say, "Long Live the King!"? When will there be another figure as popular around the world as you are? Larry King: Thank you. I have no answer. Vladimir Putin: Thank you very much. Larry King: Thank you. I'll see you next year. Vladimir Putin: Goodbye.

Moscow media questions Putin's Zurich no-show http://timesofindia.indiatimes.com/sports/football/top-stories/Moscow-media-questions-Putins- Zurich-no-show/articleshow/7027946.cms

AFP, Dec 2, 2010, 12.53pm IST MOSCOW: Russian media on Thursday questioned Vladimir Putin's decision to skip the World Cup announcement in Zurich, with one paper saying it had cost the country the favourite's mantle for the 2018 tournament.

Russia's prime minister, seen here as the country's main selling card on the global arena, said on Wednesday he would stay away from Zurich, where FIFA executive committee members vote Thursday to determine the host city for the 2018 event and also for the 2022 edition. Putin said he did not want to put undue pressure on FIFA members whom he said had already come under a coordinated smear campaign by rivals England, keen to snatch victory from favorites Russia.

"Putin's appearance in Zurich was awaited like manna from heaven," the popular Moskovsky Komsomolets broadsheet wrote on its front page.

"Now we know for sure that Putin is not going ... and Russia is no longer the favourite."

Putin has spearheaded Russia's campaign to host the World Cup just as he had in case of the 2014 Winter Olympics, which were awarded against long odds in Guatemala to the Russian summer resort town of Sochi.

Russia was the bookies clear favourite to win the vote ahead of England before Putin's announcement

"Those who calculate the rivals' chances could not but have recalled that it was Mr. Putin's brief voyage to Guatemala that, in the opinion of many analysts, changed the situation with the Olympic selection in Russia's favor," the Kommersant business daily wrote.

The Vermya Novostei daily contrasted Putin's decision with the fact that a high-powered England delegation led by Prime Minister David Cameron and Prince William were in Zurich for the vote.

They met on their arrival in Zurich on Wednesday with FIFA President Sepp Blatter.

The daily pointed out that the world football chief holds the deciding vote in case of a tie decision, and that the English were keen to iron out any obstacles posed by the raging football corruption scandal.

"The president of FIFA values that sort of respect," the newspaper wrote.

Chances are high for Russia to host 2018 World Cup – Lavrov http://english.ruvr.ru/2010/12/02/36110798.html

Dec 2, 2010 11:50 Moscow Time Russia’s chances to host the 2018 World Cup are quite high, thinks the nation’s Foreign Minister Sergei Lavrov. In an interview released on his ministry’s website Mr. Lavrov admits that in case of success Russia will have quite a lot of tasks to cope with- first of all, to build roads, hotels and other facilities. “But the way we have been preparing for the 2014 Winter Olympics in Sochi shows that we are able to fulfill all our obligations on time”, Mr. Lavrov said. FIFA`s executive committee is meeting in Zurich today to decide on the countries that might host the 2018 and 2022 World Cup finals. Russia has submitted a bid to host the 2018 event and is rivaled by England and by joint candidacies of Portugal/Spain and Belgium/the Netherlands.

Putin to address Kaliningrad Region's healthcare system problems http://en.rian.ru/russia/20101202/161584383.html

03:14 02/12/2010 Russian Prime Minister Vladimir Putin will on Thursday pay a visit to the country's exclave on the Baltic Sea, the Kaliningrad Region, the government reported. Putin will chair a meeting on modernization of the region's healthcare system in 2011-2012. Up to 85% of healthcare-related buildings in the region need a major overhaul, and over 80% of medical equipment is worn-out and outdated. Besides, the number of doctors in the area is 40% below the average Russian level. MOSCOW, December 2 (RIA Novosti)

Putin to hold meeting on Kaliningrad reg healthcare modernization http://www.itar-tass.com/eng/level2.html?NewsID=15737560 02.12.2010, 02.18 MOSCOW, December 2 (Itar-Tass) - Russian Prime Minister Vladimir Putin on Thursday will visit the Kaliningrad region, where he will hold a meeting on the region’s health modernisation programme for 2011-2012, the press service of the RF government reported. The meeting will also be attended by Deputy Prime Minister Alexander Zhukov, Minister of Health and Social Development Tatyana Golikova, the leaders of RF subjects within the Northwestern Federal District, doctors and paramedical workers of the regional healthcare establishments. During his working trip Putin will visit the Central Clinical Hospital of Kaliningrad, as well as will get familiarised with the work of the public reception office of the chairman of the United Russia party. According to the Kaliningrad region administration, up to 85 percent regional health facilities’ buildings are in need of major repairs, more than 80 percent of medical equipment is worn out and obsolete. There is also difficult situation with the medical staff: as of 2009 there were 29 doctors per 10,000 of the population, which is 1.7 times below the national average level. The indicator of availability of nurse was 67 per 10,000 of the population – 1.6 times below the national average. Since early 2010, more than 87 million roubles were allocated for additional payments to doctors and nurses of the region’s primary healthcare and 25.9 million roubles - for employees of medical and obstetrical stations and ambulance institutions. The service of district doctors is 100 percent staffed. A total of four health centres has been created and 15 doctors trained for disease prevention. According to the regional healthcare modernisation programme, it is planned during 2011 - 2012s to complete the construction of a hospital in the town of Yantarny (readiness - 81 percent), to repair and overhaul 42 healthcare facilities, furnish with modern medical equipment 46 institutions, as well as 195 medical and obstetrical stations and 52 offices of general practitioners. The Central City Hospital of Kaliningrad has in its structure an in-patient clinic with 600 beds and an outpatient department for 1,371 visitors per shift, serving 94,0000 people. More than 7,000 surgeries are annually made at the Central City Hospital’s in-patient clinics, including 70 percent of emergency surgeries. A traumatology centre was created in the hospital within the framework of the national project Health, an anti-shock operating room organised, intensive care department repaired. In addition, a neurosurgical unit has been opened in the Central City Hospital to provide specialised and rehabilitative care to patients with acute cerebrovascular accident, neurotrauma, spinal column and cord disorders. The hospital introduced a modern information system that allows accounting of patients and administered drugs. In 2010, the hospital has received the status of the clinical base of the medical department the E. Kant Russian State University. However, 14 out of 20 inpatient units of the Central City Hospital require major repairs, as the deterioration of medical equipment is 85 percent. The regional public reception office of Chairman of United Russia Vladimir Putin in the Kaliningrad region was opened on September 5, 2008. Over two years of its work, over 4,000 people - an average of 151 a month – applied to the office. Positive decisions were taken on 19.4 percent of appeals. The Kaliningrad region is a federal subject of Russia (an oblast) situated on the Baltic coast. The oblast forms the westernmost part of the Russian Federation, but it has no land connection to the rest of Russia. Since its creation it has been an exclave of the Russian SFSR and then the Russian Federation. The fall of the Soviet Union left it isolated from the 'mainland'. It is surrounded by Lithuania, Poland, and the Baltic Sea. Borderless travel to the main part of Russia is only possible by sea and/or air. This political isolation became more pronounced when Lithuania and Poland both became members of the European Union and NATO, and entered the Schengen Zone, which means that the oblast is surrounded by the territories of these organisations as well. The oblast’s largest city and the administrative centre is Kaliningrad (formerly known as K·nigsberg), which has historical significance as both a major city of the historical state of Prussia and the capital of the former German province of East Prussia, partitioned after World War II between the USSR and Poland, and renamed after the Soviet Head of State Mikhail Kalinin. The territory of the Kaliningrad region coincides with that of the northern part of historical East Prussia, (German: Nord-Ostpreussen), which was a part of Germany until 1945. In that year, it was occupied by the Soviet Union, cleared of its original population, and officially annexed to Russia under the interpretation of the protocols of the Potsdam Conference. Currently it is one of Russia’s best performing regional economies, bolstered by a low manufacturing tax rate, as set by its ‘Special economic Zone’ (SEZ) status, given by Moscow. As of 2006, one in three televisions in Russia was made in Kaliningrad, and its population is one of few in Russia which is expected to show strong growth.

Woody Allen monument in Russia http://english.ruvr.ru/2010/12/02/36094784.html

Dec 2, 2010 04:27 Moscow Time A monument to three-times Academy award-winning American actor and director Woody Allen was unveiled on Wednesday in Russia’s westernmost city of Kaliningrad on the Baltic. The monument, whose opening was timed for the actor’s 75th birthday, features a bronze hand holding Woody Allen’s signature goggles. Woody Allen’s real name is Allen Stuart Konigsberg, just like Kaliningrad, formerly Konigsberg in Prussia. He plans to visit the city shortly.

Russia's first lady awards Azerbaijani musicians http://www.news.az/articles/culture/27575 Thu 02 December 2010 07:24 GMT | 8:24 Local Time The gala concert of the second International festival was held at the Big Kremlin Palace in Moscow. The gala concert of the second International festival "Emerging stars in the Kremlin" was held under patronage of Russian first lady Svetlana Medvedeva.

According to sources in the Ministry of Culture and Tourism, Azerbaijan was worthily represented by flute player Nijat Mammadov and Emil Bagirov (clarinet) among young performers of classical music.

The project has been implemented at the initiative of the spouse of the Russian president, president of the Fund of Social and Cultural Initiatives Svetlana Medvedeva. Other organizers of the festival are the International Charity Foundation of Vladimir Spivakov and the International Fund of Humanitarian cooperation of the CIS member-states.

After the concert the first lady of Russia Svetlana Medvedeva handed diplomas of gratitude and different awards and presents to musicians. Officials of the Azerbaijani embassy in Russia also attended the event.

2 Dec, 2010, 11.32AM IST,IANS India tests BrahMos cruise missile http://economictimes.indiatimes.com/news/politics/nation/India-tests-BrahMos-cruise- missile/articleshow/7027557.cms

BHUBANESWAR: India on Thursday test fired the supersonic cruise missile BrahMos from a military base in Orissa, defence sources said.

The missile was tested from the Integrated Test Range of Chandipur in Balasore, about 230 km from here, the sources said.

India and Russia are jointly designing the BrahMos missile, which is capable of carrying conventional warheads up to 200-300 kg and has a range of 290 km. The missile is named after the Brahmaputra (India) and Moskva (Russia) rivers.

India conducts BrahMos cruise missile test http://en.rian.ru/mlitary_news/20101202/161587362.html

09:58 02/12/2010 India successfully test-fired the BrahMos supersonic cruise missile from a military base in the northeastern coastal state of Orissa on Thursday, the Press Trust of India (PTI) said. The supersonic cruise missile with precision strike capability was test-fired from a mobile launcher at 11:00 local time (05:30 GMT) from the launch pad No. 3 of the Integrated Test Range at Chandipur. "The trial was successful," defense sources told PTI without elaborating. Defense authorities advised the local administration to temporarily shift 3,220 people living within the two-km radius from the launch pad as a safety measure. They were taken to nearby shelter centers ahead of the test. The previous BrahMos test took place on September 5 and saw a cruise missile tested at supersonic speed in a steep-dive mode for the first time. BrahMos Aerospace Ltd. is a Russian-Indian joint venture manufacturing supersonic cruise missiles. The BrahMos missile has a range of 290 km (180 miles) and can carry a conventional warhead of up to 300 kg (660 lbs). It can effectively engage targets from an altitude as low as 10 meters (30 feet) and has a top speed of Mach 2.8, which is about three times faster than the U.S.-made subsonic Tomahawk cruise missile. Established in 1998, BrahMos Aerospace manufactures and markets BrahMos supersonic missiles. Sea- and ground-launched versions have been successfully tested and put into service with the Indian Army and Navy. NEW DELHI, December 2 (RIA Novosti) Saudi MoDA, Rosoboronexport and military equipment http://tacticalreport.com/view_news/Saudi_MoDA_Rosoboronexport_and_military_equipment/1 507

(15$)

Posted on: Wed, Dec 01, 2010 Russia’s arms exporter Rosoboronexport is said to have plans to provide the Saudi Ministry of Defence and Aviation (MoDA) with alluring offers for military equipment. The following 244- word report sheds light on the subject and tells what these offers are for. It also tells what about the Saudi reaction to reactivate contacts with the Russians on arms deals.

Insurgents In Daghestan Threaten Further Strikes On Russian Targets http://www.speroforum.com/site/article.asp? id=44261&t=Insurgents+In+Daghestan+Threaten+Further+Strikes+On+Russian+Targets

The man named three months ago as commander of the Daghestan sector of the North Caucasus insurgency has warned that his group will continue to "inflict horrors" on Russian territory -- an allusion to the suicide bombings in the Moscow subway in which 40 people were killed.

Wednesday, December 01, 2010 By RFE/RL Israpil Velijanov (aka Emir Khasan), who was named three months ago as commander of the Daghestan sector of the North Caucasus insurgency, has warned that the Riyadus Salikhiin Battalion subordinate to him will continue to "inflict horrors" on Russian territory -- an allusion to the suicide bombings in the Moscow subway in late March in which 40 people were killed.

Those bombings were perpetrated by two women from Daghestan and masterminded by Velijanov's predecessor as emir of Daghestan, Magomed Vagabov (nom de guerre Seyfullakh Gubdensky). Vagabov was killed in a counterterror operation by security forces on August 21.

Speaking at a meeting with five lower-level commanders, including the masked leader of the "Azerbaijan jamaat," on October 19, Velijanov announced (in halting and not 100 percent grammatical Russian) the appointments of Khasan, emir of the northern sector, and Salikh, emir of the central sector, as his two naibs (deputies). He also named Essa, a masked and heavily armed fighter present at the gathering, to head the Riyadus Salikhiin Battalion. A seven-minute video clip of Velijanov's address was posted today on the insurgency website kavkazcenter.com.

Velijanov also renewed, on behalf of himself and his men, their oath of loyalty to North Caucasus insurgency commander Doku Umarov. Despite the defection in August of four respected and experienced senior commanders and their men, Umarov still commands a group of some 30-40 fighters, to judge from a 21-minute video clip shot last month before the group broke camp. That video too is available on kavkazcenter.com.

WikiLeaks

WikiLeaks cables allege rampant high-level corruption in Russia http://en.rian.ru/russia/20101202/161587795.html

10:39 02/12/2010 Corruption in Russia is widespread and involves the Kremlin and other leading officials, leaked secret diplomatic cables released by the WikiLeaks website allege. The main allegations are made by Spanish prosecutor Jose Gonzalez, an expert on Russian organized crime groups in his homeland. The cables, published by the British paper The Guardian, reveal that Gonzalez told U.S. officials at a briefing in January that Russia was a "virtual mafia state." “One cannot differentiate between the activities of the government and OC [organized crime] groups,” he said, adding that wiretaps complied over the course of a decade backed up his claims. A cable from the U.S. embassy in Moscow reports that Gonzalez also said that organized crime in Russia exercises “tremendous control” over the global economy. He went on to say that he believed the Federal Security Service (FSB) is “absorbing” organized crime. The cables also include statements by the U.S. ambassador to Russia, John Beryle, who quotes an unnamed source as saying "Everything depends on the Kremlin … [former Moscow mayor Yuri Luzhkov], as well as many mayors and governors, pay off key insiders in the Kremlin." "Luzhkov oversees a system in which it appears that almost everyone at every level is involved in some form of corruption or criminal behaviour,” Beryle told the U.S. State Department. In cables from the former U.S. secretary of state, Condoleezza Rice, an unnamed opposition leader is quoted as claiming that Russian Prime Minister Vladimir Putin appointed the current president, Dmitry Medvedev, as his successor to ensure he would not face prosecution over “alleged illicit proceeds.” The cable said Putin was “afraid” of Medvedev’s then rival for the presidency, Sergei Ivanov, and that he “needed a weaker figure to succeed him instead.” “Putin understands that under the system he has created there is no real rule of law and that at any time anyone can be arrested or businesses destroyed,” the opposition leader was also quoted as saying. MOSCOW, December 2 (RIA Novosti)

WikiLeaks disclosures reveal U.S. frustration with Russian corruption http://edition.cnn.com/2010/US/12/01/wikileaks/?hpt=T2 By the CNN Wire Staff December 2, 2010 -- Updated 0811 GMT (1611 HKT) (CNN) -- The United States scrambled to contain the fallout from the slow-motion leak of cables from its embassies worldwide Wednesday as new documents showed American diplomats casting a jaundiced eye toward corruption's grip on Russia. Secretary of State Hillary Clinton personally made "several dozen" calls to counterparts in other countries in an effort to mitigate the damage from WikiLeaks, a website that facilitates the anonymous leaking of secret information, a senior State Department official said. In a CNN interview Wednesday night, State Department spokesman P.J. Crowley called WikiLeaks founder and editor-in-chief Julian Assange an "anarchist." "He's trying to undermine the collaboration, the cooperation, the system by which we engage with other governments, cooperate with other governments and solve regional challenges," Crowley told CNN's "John King USA." But while Clinton is facing other world leaders, "trying to solve the world's challenges," Assange is in hiding, he said. Assange remains shadowed by an arrest warrant issued by Swedish authorities over allegations of sex crimes that his attorney called "positively surreal." Several American political figures have called for his prosecution, and online retailer Amazon kicked WikiLeaks off rented server space Wednesday after a complaint from a leading U.S. senator, the group told its followers on the microblogging site Twitter. "WikiLeaks servers at Amazon ousted. Free speech the land of the free," the site announced. "Fine -- our $ are now spent to employ people in Europe." Amazon had not responded to requests for comment Wednesday evening. WikiLeaks began releasing a quarter-million State Department diplomatic cables on Sunday, a process it said could take months to complete. Wednesday, it began posting a new string of documents from the U.S. Embassy in Moscow, including one that blasted the Russian capital as a "kleptocracy" under now-ousted Mayor Yuri Luzhkov. Luzhkov, who was fired by Russian President Dmitry Medvedev in September, "oversees a system in which it appears that almost everyone at every level is involved in some form of corruption or criminal behavior," the February document states. But the Kremlin tolerated him because he could deliver votes for the ruling party of Medvedev and Prime Minister Vladimir Putin, it continued. Another document described corruption as "pervasive and deep-rooted" in post-Soviet Russian society. While Medvedev announced an anti-corruption campaign in 2008, little had been done to implement it, the document stated. One Russian contact warned that Medvedev's plans were "hindered by an alliance between business and government bureaucracy -- business pays off the bureaucracy and bureaucracy defends business from real competition." Luzhkov, in previous interviews with CNN, has denied any wrongdoing. And Putin, who served as president for eight years before Medvedev took office in 2008, hit back at remarks in another embassy cable from U.S. Defense Secretary Robert Gates, who is quoted telling his French counterpart that "Russian democracy has disappeared and the government was an oligarchy run by the security services." In an interview airing Wednesday on CNN's "Larry King Live," Putin called Gates "deeply misled" and said the United States wasn't without its own flaws. "When we are talking with our American friends and tell them there are systemic problems in this regard, we can hear from them, 'Don't interfere with our affairs. This is our tradition and it's going to continue like that.' We are not interfering," he said. "But to our colleagues, I would also like to advise you, don't interfere either [with] the sovereign choice of the Russian people." In Washington and abroad, the senior State Department official said, that agency's staffers had reached out to 186 countries in an effort to control the damage from documents like those. And at the White House, the Obama administration on Wednesday tapped a career counterterrorism official to oversee the government's efforts to fix security gaps. But the the ranking Republican on the House Intelligence Committee said the announcement, that Russell Travers will serve as a senior adviser for information access and security policy, isn't enough. "I still don't sense an urgency to fix the problem," Michigan Rep. Peter Hoekstra said. The embassy papers mark WikiLeaks' third major disclosure of American secrets this year. It already has released U.S. military video of a 2007 helicopter strike in Iraq that killed two Reuters journalists and dumped tens of thousands of field reports from the war in Afghanistan along with a similar cache of documents from the Iraq war. Crowley said that government officials have determined that WikiLeaks has more documents -- but "We're not entirely sure what they are." Bradley Manning, a U.S. Army private first class, is a prime suspect in previous leaks. Before October's release of information on Iraq, Manning was being held in Quantico, Virginia, charged with leaking the video of the Iraq airstrike to WikiLeaks as well as removing classified information from military computers. U.S. officials say Manning was able to take advantage of a system put in place after the September 11, 2001, attacks on New York and Washington to share information between the military and civilian agencies like the State Department. "In light of what's happened here, across the government, we are stepping back and saying, 'OK, we've shared information, but what can we learn from this?' " Crowley said. "We have taken aggressive steps, and we'll take more steps as we work through how to achieve that balance -- how to share information but protect it at the same time." And Pentagon spokesman Geoff Morell told "John King USA" that numerous computer restrictions have been enacted "since we were first done wrong by these guys." "No longer can you write on to removable media," he said. "You can no longer move classified information onto an unclassified network, unless you are in a situation where it is monitored and where there are two people on hand to do it. So there have been a number of safeguards." CNN's Matthew Chance, Jill Dougherty, Doug Gross and Laurie Ure contributed to this report.

Julian Assange says WikiLeaks wants to expose China and Russia as much as US http://www.guardian.co.uk/world/2010/dec/02/julian-assange-wikileaks-china-russia In interview, Assange denies US focus and says WikiLeaks can be force for opening up closed countries like China and Russia guardian.co.uk, Thursday 2 December 2010 00.01 GM Jo Adetunji WikiLeaks founder Julian Assange wanted to expose China's and Russia's secrets as much as those of the US, and believes Hillary Clinton should resign if she ordered diplomats to engage in espionage. "[Clinton] should resign if it could be shown that she was responsible for ordering US diplomatic figures to engage in espionage of UN activities, in violation of the international covenants to which the US signed up," he said in an interview with Time magazine, published yesterday following the leak of secret US diplomatic cables that have caused huge embarrassment for the country. Assange gave the interview via Skype from an undisclosed location after a warrant was issued by Interpol following rape allegations in Sweden, which his lawyer said amounted to persecution and a smear campaign. While Assange has been accused by former members of the WikiLeaks project of obsessively focusing on the US, he said countries with less transparency, such as China and Russia, had the most potential to be reformed by whistleblowers. "We believe it is the most closed societies that have the most reform potential," he said. Assange said that while parts of the Chinese government and security services "appear terrified of free speech" he believed it was "an optimistic sign because it means speech can still cause reform." He added: "Journalism and writing is capable of achieving change which is why Chinese authorities are so scared of it." Assange argued that countries like China could be easier to reform than countries like the US and the UK, which "have been so heavily fiscalised through contractual obligations that political change doesn't seem to result in economic change, which in other words means that political change doesn't result in change." While secrecy was important, Assange said, in keeping the identity of sources hidden, secrecy "shouldn't be used to cover up abuses." He said that revealing abuses could lead to positive changes in countries and organisations. "They have one of two choices … to reform in such a way that they can be proud of their endeavours, and proud to display them to the public" or "to lock down internally and to balkanise, and as a result, of course, cease to be as efficient as they were. To me, that is a very good outcome, because organizations can either be efficient, open and honest, or they can be closed, conspiratorial and inefficient." Turning back to the US, Assange said he believed American society was "becoming more closed" and its "relative degree of openness … probably peaked in about 1978, and has been on the way down, unfortunately, since." Speaking about accusations that he had singled out the US as a force for harm in the world, Assange said the view lacked "the necessary subtlety". "I don't think the US is, by world standards, an exception; rather it is a very interesting case both for its abuses and for some of its founding principles." Assange said the media interest in the WikiLeaks cables had been tremendous. "The media scrutiny and the reaction are so tremendous that it actually eclipses our ability to understand it," he said, with "a tremendous rearrangement of viewings about many different countries". Assange also gave a glimpse into why WikiLeaks had chosen to partner with traditional media organisations to release the files, rather than, as might have been expected, amateur bloggers. In 2006, "we thought we would have the analytical work done by bloggers and people who wrote Wikipedia articles and so on," he said. But "when people write political commentary on blogs or other social media, it is my experience that it is not, with some exceptions, their goal to expose the truth. "Rather, it is their goal to position themselves amongst their peers on whatever the issue of the day is. The most effective, the most economical way to do that, is simply to take the story that's going around, [which] has already created a marketable audience for itself, and say whether they're in favour of that interpretation or not." Now, he said, the analytical work was "done by professional journalists we work with and by professional human rights activists. It is not done by the broader community." Social networks acted as amplifiers, he added – and, as WikiLeaks gained more publicity, an important supplier of source material.

2 December 2010 Last updated at 01:07 GMT

Wikileaks: Russia branded 'mafia state' in recent cable http://www.bbc.co.uk/news/world-us-canada-11893886

Kristinn Hrafnsson says people have a right to know what officials working on their behalf are doing. A senior Spanish prosecutor told the US Embassy in Madrid that Russia, Belarus and Chechnya had become virtual "mafia states", new disclosures of classified material by Wikileaks show. A cable also questions whether Russian Prime Minister Vladimir Putin is implicated in the Russian mafia. Another reveals that a powerful Ukrainian businessman told US officials he had ties to Russian organised crime. The documents are among hundreds being released by the whistle-blower website. On Wednesday the US online shopping giant Amazon reportedly blocked Wikileaks from its servers - a move welcomed by US officials. Mafia links? Access to Wikileaks' homepage was sporadic on Wednesday. The website had been using Amazon servers since its Swedish-based servers came under cyber-attack twice earlier this week. The cables, published by the Guardian newspaper, show that in January 2010, Spanish prosecutor Jose "Pepe" Grinda Gonzales claimed that in Russia, Belarus and Chechnya "one cannot differentiate between the activities of the Government and OC (organised crime) groups". Judge Grinda led a long investigation into Russian organised crime in Spain, leading to more than 60 arrests. A cable from the US Embassy in Madrid talks about the "unanswered question" of the extent to which Mr Putin is implicated in the mafia and whether he controls its actions. Judge Grinda reportedly said that former Russian security agent Alexander Litvinenko thought Russian intelligence controlled organised crime in Russia. Mr Grinda reportedly stated that he believed this thesis was accurate. In the cable, the judge is reported as saying he has information that certain political parties in Russia operate "hand in hand" with organised crime. The leaked cables also show that Washington believed Mr Putin was likely to have known about the operation to murder Mr Litvinenko in London in 2006. The Kremlin has denied any involvement. Wikileaks also released another cable, from the US Embassy in Kiev dated December 2008, which reveals that a Ukrainian businessman with links to the Russia state-run conglomerate Gazprom told the US ambassador he had ties to Russian organised crime. He said he had needed the approval of a gangster called Semyon Mogilevich to get into business. Mogilevich is believed by European and US law enforcement agencies to be the "boss of bosses" of most Russian Mafia syndicates in the world. BBC diplomatic correspondent Bridget Kendall says that neither Moscow nor Washington will be happy at being exposed by the latest Wikileaks revelations. She says the contents of the secret cables will place new strains on their relationship. In other developments, Interpol has issued a notice asking for information on the whereabouts of Wikileaks founder Julian Assange. Interpol said the Australian was wanted for questioning in Sweden over an alleged sex offence, which he has denied. On Wednesday the US appointed an anti-terrorism expert to lead efforts to tackle damage caused by the documents' release. Russell Travers will try to find out how thousands of secret files were taken from government internet files. The White House said he had also been tasked with tightening security inside the US government's computer network. Wikileaks has so far posted only 505 of the 251,287 messages it says it has obtained. However, all of the messages have been made available to five publications, including the New York Times and the Guardian. The US has condemned the disclosures as an attack on the world community.

Wikileaks: Vodka made Serdyukov tell Abiev about Russian weapon transfer http://times.am/2010/12/02/wikileaks-vodka-made-serdyukov-tell-abiev-about-russian-weapon- transfer/ By Times.am at 2 December, 2010, 11:05 am Here is another publication by Wikileaks. The summary of the document is following: Azerbaijani Defense Minister Safar Abiyev on March 14 told the Ambassador he did not object to exploration of joint U.S.-Russian use of the Gabala radar station, but was deliberately vague on whether the Russians’ lease would be renewed on its expiration in 2012. He also shared details of his recent visit to Moscow, which came at the Russians’ invitation amid the controversy over allegations of large-scale arms transfers by Russia to Armenia. Now by the details. The immediate reason for the Saturday morning meeting was to agree on a procedure for the quick negotiation of the Exercise Support Agreement (ESA) for the planned April-May bilateral exercise REGIONAL RESPONSE 09 (RR-09). While the MoD had been planning on postponing the exercise due to interagency differences in Baku – later shown to be political reservations held by the Foreign Minister personally about the international message sent by the exercise (Reftel), Abiyev was now determined to move forward after a lengthy after-hours meeting with Foreign Minister Mammadyarov after the latter’s meeting with Ambassador and DATT. Abiyev offered his full support to the exercise and a visit from a USEUCOM negotiator to finalize the agreement; adding, however, that he was in full agreement with the Foreign Minister’s desire to make the exercise appear as multilateral as possible to avoid raising the ire of Russia and Iran. Gabala Issues Responding to Ambassador’s question about Azerbaijan’s future intentions regarding Gabala, Abiyev replied that it was late in 2007 that Russian Defense Minister Anatoly Serdyukov approached him about extending Russia’s use of the site beyond 2012. According to Abiyev, he responded in surprise and asked Serdyukov to explain his request because then-President Putin had said before that Russia no longer needed the site. Serdyukov’s response was “(that was a long time ago.” Abiyev told the Russians that the time to discuss the renewal of the lease – or the expansion of the facilities or military contingent there – was 2012. Asked about the Armavir (“Voronezh”) station Russia recently put into operation in the Krasnodar region, Abiyev said that it is a relatively “weak” station with much less capability than Gabala, regardless of Russian claims about its effectiveness. He claimed this was obvious because Russia had put almost 1 billion USD into improvements at Gabala over the years and had only spent USD 70 million on Armavir; and furthermore the Armavir radar only has a range of 2,500 km compared to 8,500 for Gabala. (Note: Other sources give the cost of Armavir at 2.85 billion rubles, or USD 84 million at current rates, and a range of 4,000 km. Russia built the station to replace the radars at Sevastopol and Mukachevo in Ukraine, which it lost when the GOU refused to continue their leases. Conversations with Serdyukov Abiyev told the Ambassador about his late-January trip to Moscow to discuss Azerbaijan’s allegations that Russia had made extensive weapons transfers to Armenia throughout 2008. In formal meetings, Abiyev said, his Russian counterpart stuck to the talking points and denied any involvement. However, “after the second bottle of vodka,” that evening, he said, the Russians opened up and admitted to having transferred weapons to Armenia. In an interesting side note, Abiyev quoted Serdyukov as saying: “Do you follow the orders of your President?…Well, I follow the orders of two Presidents.” /Times.am-Armenian news/

WikiLeaks cables: Solzhenitsyn praise for Vladimir Putin http://www.guardian.co.uk/world/2010/dec/02/wikileaks-cables-solzhenitsyn-vladimir-putin

Embassy cables: Chatshow confirms Putin as the Kremlin supremo http://www.guardian.co.uk/world/us-embassy-cables-documents/238204

US embassy cables: The Litvinenko affair: conspiracies abound http://www.guardian.co.uk/world/us-embassy-cables-documents/87803

US embassy cables: Mayor transforms Moscow into glittering capital http://www.guardian.co.uk/world/us-embassy-cables-documents/116439

US embassy cables: Russia is virtual 'mafia state', says Spanish investigator http://www.guardian.co.uk/world/us-embassy-cables-documents/247712

US embassy cables: Spanish investigation exposes Russian mafia links http://www.guardian.co.uk/world/us-embassy-cables-documents/223012

WikiLeaks cables claim Vladimir Putin has secret wealth hidden abroad http://www.guardian.co.uk/world/2010/dec/01/wikileaks-cables-vladimir-putin-claims

US embassy cables: Chris Patten remarks on Putin's 'killer eyes' http://www.guardian.co.uk/world/us-embassy-cables-documents/16438

US embassy cables: Putin's links to Russia's oil trade http://www.guardian.co.uk/world/us-embassy-cables-documents/179661

US embassy cables: Chechnya, the once and future war http://www.guardian.co.uk/world/us-embassy-cables-documents/65802

US embassy cables: A wedding feast, the Caucasus way http://www.guardian.co.uk/world/us-embassy-cables-documents/76763

US embassy cables: Miliband's trip to Moscow http://www.guardian.co.uk/world/us-embassy-cables-documents/233391

US embassy cables: Brown and Medvedev initiate tentative thaw http://www.guardian.co.uk/world/us-embassy-cables-documents/161606 WikiLeaks cables claim Russia armed Georgian separatists http://www.guardian.co.uk/world/2010/dec/01/wikileaks-cables-russia-georgian-separatists

US embassy cables: Russian mafia active in Thailand http://www.guardian.co.uk/world/us-embassy-cables-documents/238045

WikiLeaks cables allege Russia bribed Viktor Bout witnesses http://www.guardian.co.uk/world/2010/dec/01/wikileaks-cables-viktor-bout-extradition

Viktor Bout: Weapons Smuggler May Be the Tip of the Iceberg http://blog.heritage.org/?p=47516

Posted December 1st, 2010 at 4:30pm Documents from WikiLeaks published in International Business Times disclosed that American officials warned Washington that the Russian intelligence services are working closely with organized crime. This did not come as a great surprise, as Viktor Bout, one of the most infamous alleged arms traders, was extradited from Thailand last month. The search for Bout took close to 10 years, and the excruciating extradition procedures took two more years. There were numerous court appeals and legal motions in the Thai courts, but Bout lost in the end. While there was also some political pressure from Russia and the U.S., Thailand observed the necessary legal procedures, and the extradition appeared to be legal.The U.S. legal system is impartial and treats even the worst criminals, American or alien, fairly. The legality of the extradition does not prevent Bout from challenging the jurisdiction of American courts or, for that matter, the extraterritorial application of the U.S. law that led to his arrest. And, provided Bout is adequately represented, he will have a fair trial. Surprisingly, however, Bout has an ally—the Ministry of Foreign Affairs of the Russian Federation. The ministry made numerous statements on Bout’s behalf, challenging the legality of his arrest and extradition—effectively, acting as his attorney. This is simply inexplicable for two reasons. First, Bout is alleged to be a major international criminal figure involved in weapons smuggling in Liberia, Angola, and Sudan, among others. Why is the Russian Federation—whose president says it needs to fight corruption, including within the ranks of its law enforcement authorities—interested in associating itself with such a character? If Bout is innocent, the U.S. courts will find him as such. Secondly, the government of Russia has major rule-of-law issues on its hands: The people who ordered the murder of crusading journalist Anna Politkovskaya have not been apprehended, nor have the murderers of Paul Khlebnikov, the U.S.-born editor of the Russian Forbes. Officials who allowed the death in detention of Sergey Magnitsky, the lawyer for Hermitage Capital (once the largest Western equity fund in Russia), were promoted. And prosecution asked for a 14-year sentence in the second trial of Mikhail Khodorkovsky, the businessman whose two cases are about politics and property expropriation, not the normal course of justice. So casting aspersions on the U.S. justice system appears both unfair and counterproductive. Still, the Russian Federation can do a lot for Bout: It can intervene by diplomatic channels to assure that Bout’s rights are observed—as are those of any other defendant. It can provide consular support, facilitate family visits, and help in selecting legal representation if necessary. However, there is no reason to believe that Bout lacks the funds to pay for the best lawyers money can buy. Anything beyond that should be seen as an inappropriate intervention in the U.S. court system. Finally, if Bout is found to be an agent of the Russian state, Moscow may offer to exchange him for individuals that represent a high value for the United States and are in Russian custody. This is what happened in the recent spy swap, and this is probably not the route that the Russian government would choose. Nor it is likely that the court proceedings are going to derail U.S.–Russian relations. The vast array of bilateral and multilateral issues is much broader than activities of one alleged weapons smuggler. The primary interest of the U.S. is to limit terrorists’ access to tools of mayhem or the illegal weapons trade in conflict areas—something Bout was allegedly involved in. It is not in the interest of the U.S.—or Russia—for terrorists, warlords, and drug dealers to have uncontrolled access to arsenals. The U.S. has acted against other prominent international weapons and drug smuggling figures, including in Latin America, Afghanistan, and Africa. The protection that some in the Russian Federation appear to provide to a criminal suspect such as Bout raises the question of how far his influence and connections go, how typical it is for organized criminals and the state to merge, and why the Russian Federation itself did not prevent these illicit weapons sales from happening.

US embassy cables: Russia's growing clout in the global arms trade http://www.guardian.co.uk/world/us-embassy-cables-documents/127252

WikiLeaks cables: Moscow mayor presided over 'pyramid of corruption' http://www.guardian.co.uk/world/2010/dec/01/wikileaks-cables-moscow-mayor-corruption

WikiLeaks cables: Dmitry Medvedev 'plays Robin to Putin's Batman' http://www.guardian.co.uk/world/2010/dec/01/wikileaks-cables-medvedev-putin-russia

Embassy cables: Medvedev and Putin, the two heads of Russia http://www.guardian.co.uk/world/us-embassy-cables-documents/247490

WikiLeaks cables: Roman Abramovich denies links with Vladimir Putin http://www.guardian.co.uk/world/2010/dec/01/wikileaks-roman-abramovich-vladimir-putin

WikiLeaks: Russian undercover agents hounded staff working at the British embassy in Moscow for visas http://www.telegraph.co.uk/news/worldnews/wikileaks/8175440/WikiLeaks-Russian- undercover-agents-hounded-staff-working-at-the-British-embassy-in-Moscow-for-visas.html Russian undercover agents hounded staff working at the British embassy in Moscow for visas, according to leaked cables sent to the White House. By Laura Roberts 6:30AM GMT 02 Dec 2010 Diplomatic officials from the US embassy in London, briefed by UK Foreign Office officials, reported that Russian espionage activities continued to exist in Britain since the fatal poisoning in 2006 of Alexander Litvinenko, a former Russian spy. The cable said: "According to the FCO, HMG (Her Majesty's government) has had good reasons to refuse many Russian visa requests. HMG officials see a real 'intelligence threat from' Russia (in addition to China) and regret a 'missed opportunity in the late 1990s and early 2000s to assess these intelligence threats'." The document went on to say that FCO officials told Washington they were imposing visa restrictions in response to the Russian government which was impeding UK diplomats entry into Russia. They also stated that the British government was unable to fully staff the British embassy in Moscow because the FSB was continuously harassing its "local Russian hires". One cable sent in 2008 reported that British officials thought that Gordon Brown's meeting with Dmitry Medvedev at the G8 summit in Japan had been positive. The Russia department of the Foreign Office (FCO) expressed hopes that Medvedev was a leader "more open to domestic liberalisation and co-operation with Britain" than Putin, his predecessor. Britain had proposed a deal to ease visa restrictions but Russia was insisted that the British government had to consult first with the FSB, the state security service. Richard LeBaron, deputy head of the US embassy in London, wrote: "HMG continues to refuse to engage directly with the FSB, pending resolution of the Litvinenko murder case." Michael Davenport, the FCO's then director of Russia, Caucasus and central Asia, reportedly admitted that there was a divide within government over how to deal with Russia, LeBaron said. The FCO director told LeBaron that the UK believed Russia's foreign policy goal was "to

Russian Opposition Activist Speaks Out for Visa-Free Regime http://news.err.ee/politics/b32048e3-300d-4b61-95de-98b0a7999619 Published: 09:55 Lev Ponomaryov, one of Russia's most prominent human rights and civil society activists, has expressed his support for visa-free travel between the EU and Russia, saying it would be a collosal victory for the democrats and opposition in his country. Speaking at a seminar entitled “Russian Voices” in Tallinn on December 1, the leader of the For Human Rights movement said that the visa question was one of the few issues where he agreed with Putin and Medvedyev, rus.err.ee reports. “Of course I understand that Europeans are afraid of it. But I think that it's a very important step for the future of Russia, though I don't know why the Russian government is insisting on it,” he said.

“Maybe there's something dangerous behind it [...] but I think that the resulting gain will be collosal for Russians, the Russian population, Russian democrats and the opposition. It seems to me that the sooner we change the visa regime, the better.”

Ponomarev agreed with skeptics in the audience who said that before the visas system can be liberalized, Russia has to ease current restrictions on foreigners' movements within the country. “There are already changes in that direction,” he said.

In addition to his role as head of For Human Rights, Ponomarev is a member of the Moscow Helsinki Group and was a member of the Russian parliament from 1993 to 1995.

Leaked U.S. document portrays Moscow as haven of corruption http://www.washingtonpost.com/wp-dyn/content/article/2010/12/01/AR2010120106146.html

By Will Englund Washington Post Foreign Service Thursday, December 2, 2010 MOSCOW - Control of the city is in the hands of a "kleptocracy," and it passes on a portion of the bribes and protection money it collects all the way to the Kremlin, the U.S. Embassy in Russia reported in a memo in February. Both the police and the Federal Security Service run huge protection rackets that help account for the high cost of living in Moscow, it said. They collect money not only from legitimate businesses but from organized criminal groups as well. Each layer of the bureaucracy - what Prime Minister Vladimir Putin has termed the "vertical of authority" - takes its cut as the money moves up the ladder. The memo, which was sent to Washington under the name of Ambassador John Beyrle, was posted by WikiLeaks on its Web site Wednesday. The memo is based on sources whose names have been redacted. It was written while Yuri Luzhkov was still Moscow's mayor, and it blames him for much of the corruption. He was fired in October by President Dmitry Medvedev, but there has been little evidence of a cleanup since then. Luzhkov and his wife, Yelena Baturina, who owns a prominent construction firm, have consistently denied corruption accusations over the years, and he has won several libel suits over such accusations. In September he told a Russian television station, when asked about a documentary suggesting he was corrupt: "It is mad, it is filth, it is a mess." Russians overwhelmingly believe that theirs is a corrupt society, polls have shown. But it is unusual to find the particulars spelled out as they were in the embassy's report, and it is unheard of that it should be diplomats from a foreign country doing so. "The Moscow city government's direct links to criminality have led some to call it 'dysfunctional,' and to assert that the government operates more as a kleptocracy than a government," the memo says. "Criminal elements enjoy a 'krysha' (a term from the criminal/mafia world literally meaning 'roof' or protection) that runs through the police, the Federal Security Service (FSB), Ministry of Internal Affairs (MVD), and the prosecutor's office, as well as throughout the Moscow city government bureaucracy. "Analysts identify a three-tiered structure in Moscow's criminal world. Luzhkov is at the top. The FSB, MVD and militia are at the second level. Finally, ordinary criminals and corrupt inspectors are at the lowest level. This is an inefficient system in which criminal groups fill a void in some areas because the city is not providing some services." The report says that the FSB rakes in money from the biggest firms, and that the police target small businesses. One source, it said, "explained that Moscow business owners understand that it is best to get protection from the MVD and FSB (rather than organized crime groups) since they not only have more guns, resources, and power than criminal groups, but they are also protected by the law. For this reason, protection from criminal gangs is no longer so high in demand." The memo notes that, while the collection of money is comprehensive, the protection itself can be spotty; even those who pay are sometimes subject to arrest. Those who do not pay quickly find their businesses shut down on one pretext or another. Medvedev has talked several times about fighting corruption but has admitted that he has made little headway. The embassy memo relays reports of men taking suitcases, presumably stuffed with cash, into the Kremlin itself. "In his fight against corruption, Medvedev has to rely on bureaucrats," Georgy Satarov, director of the Moscow think tank Indem, said in a recent interview. "But he is a part of this bureaucracy. He is not part of a political class, because a political class doesn't exist in Russia anymore." Without politics, without an opposition, without a separation of powers, he said, corruption is inevitable. Nationwide, Indem estimates that corruption costs Russia more than $300 billion a year. The country was ranked 154th in a recent survey on global perceptions of corruption by the nongovernmental organization Transparency International (countries are ranked from least to most corrupt). The disclosure of the U.S. Embassy memo, which didn't occur until late evening Moscow time, is sure to stir displeasure within the Russian government, although to the extent that Luzhkov can be blamed for Moscow's failings, it might be an opportunity for the Kremlin to argue that it is solving the problem. Interviewed for CNN by Larry King, Putin suggested that the WikiLeaks documents may be fabrications and reacted angrily to a disclosure that U.S. diplomats had called him Batman to Medvedev's Robin. "The truth of the matter is, this is about our interaction, which is an important factor of the domestic policies in this country," he said. "But to be honest with you, we didn't suspect that this would be done with such arrogance, with such a push and, you know, being so unethically done."

About Gagarin and About Myself http://www.theotherrussia.org/2010/12/02/about-gagarin-and-about-myself/ After spending nine days in a medically-induced coma and undergoing multiple operations, Kommersant journalist Oleg Kashin is thankfully on his way to a strong recovery. After a brutal beating on November 6 that left him with skull fractures, broken shins and a set of maimed fingers, Kashin is well enough to walk on crutches and joke about flirting with his nurses in Moscow Hospital No. 36. In an interview with television personality Leonid Parfenov, Kashin said he has no idea who ordered his beating, that his assailants said nothing during the attack, and that a variety of the topics of his articles could have been motivating factors. But which one it was – the Khimki Forest, Kremlin-sponsored youth groups, or insulted Russian governors – Kashin couldn’t say. An investigation under the supervision of prosecutor general is still ongoing. In his first article since the attack, Oleg Kashin reveals that, far from embodying the glorified image of a fearless crusader that developed while he lay unconscious, the Kommersant journalist wishes most of all to simply go on with his work as usual. That, and to get rid of the feeding tube stuck up his nose.

By Oleg Kashin November 29, 2010 Kommersant/Vlast An unfamiliar man in a white coat took an instinctive step to the side, and my hand, stretching towards his chest pocket, grasping only air, falls back again to the mattress. “What does he want?” asks the man, feeling his pocket. “The pen, probably,” posed a woman’s voice; and that woman, who I didn’t see, was right: the pen, of course, I needed the pen. The blue gel pen from the chest pocket of the white coat of that man. “A writer,” the man with the pen said respectfully – but he did not give me the pen. Discussing the amusing incident, the entire delegation took off, leaving me alone with the artificial ventilation lung that went through a special hole made in my throat. The hole was made lower than the vocal chords; therefore, even after regaining consciousness, I couldn’t speak. Seeing the pen in the doctor’s pocket, I would have been thrilled to take the pen and, at least on my own bandaged hand, write: “It itches under the cast!!!!!!” – they would read it and help, scratch it with something. And instead of that – the backs recede in their white coats, and there’s no help at all. At that point I still didn’t know that one of the backs belonged to a paid agent of the LifeNews publication – the resident resuscitation expert (I exposed him a week later), and who, several hours later and under the heading “Braveheart,” told how I demanded a pen and paper in order to begin, even while still attached to an artificial breathing machine, to write the horrible truth about the people behind the attack on me. In the resuscitation ward, wrapped in tubes and wires, I could sleep (and slept) as much as necessary in any form, whether artificially medicated or healthily and naturally. I could keep quiet, I could (from the ninth day onwards) speak and, even while I couldn’t talk, still resolved the communication problem: a childrens chalkboard, left behind by someone, was found, and by drawing a rectangle with my hands in the air – a conventional gesture that everyone immediately understood for some reason – I could write what I was concerned about and what I wanted on this board. Only, I didn’t need to write about the itchy cast; they removed it faster than the board turned up. Therefore, the main topics of my notes were complaints about the probe in my nose – they fed me through the nose with some kind of special food – and flirting with the nurses. My life in those days, any way you look at it, was interesting and fascinating. But aside from me personally – yes and the doctors and nurses as well – who knew about this life? Nobody knew. My real life was happening, maybe, a half-hour drive from the hospital. Outside of the police office at Petrovka, switching places with one another, my friends and former enemies stood in solitary pickets with posters of my name, having suddenly become friends (I say this without irony; enemies may sometimes seriously become friends). A newspaper called “Kashin,” completely devoted to me, was printed. On Pushkin Square, and afterwards on Chistie Prudy, rallies were held in my defense. “Do you want the classic Kashin or the one with his signature?” girls politely asked a line of pensioners waiting for my portrait, which they could attach to their chests. The term “Journalist Kashin” appeared in President Medvedev’s lexicon. When a group of students in the journalism department at Moscow State University, locked in a classroom with windows facing the Kremlin, hung a poster out the window reading “Who beat Kashin?” a joke started going around: Dmitri Medvedev barricaded himself in his office, with windows facing the journalism department, and hung a poster out the window: “It wasn’t me!” – the joke is from Twitter, but who could guarantee that it didn’t really happen? The events in the week after my beating proved it: anything is possible, anything in general. The universal childhood dream, not to die but to be at one’s own funeral and hear who says what and how, came true for me alone. “Oleg, you’re going to wake up and be stunned!” – a phrase from the book of honorable recordings from a routine Kashin rally. And it’s true, I woke up and was stunned. Journalist Kashin – that is to say, I – quietly came to in the resuscitation ward. A half-hour drive away from me, somebody was going on a rampage, somebody who even people who knew me personally were ready to take for Journalist Kashin, brave and uncompromising, personally presenting a threat to the Kremlin, as well as hope for freedom and happiness. “Kashin, get up! Kashin, write!” cried the square. The square didn’t know that I was already up in bed and was writing on the board: “I want to go to the bathroom.” The tabloids quoted Journalist Kashin (but not me): “They will not silence me!” – unfortunately, without indicating what topic Journalist Kashin wanted to have his say on. There was only one thing that interested me at the end of the second week after the attack. There was once a handsome young pilot named Gagarin. He was somehow chosen to be astronaut number one, and at the age of 27, or something, he flew into space for a bit more than an hour. He came back – and that was it, there was no more life, just presidiums, banquets, presentations that stamped the impending doom onto his handsome young face. This went on for seven years before he died for good. I lay in the resuscitation ward, flipped through the “Kashin” newspaper, and thought about Gagarin and how we are alike. But I have one important advantage over Gagarin. The New Year’s recess – a terrific, as I understand now, invention. December is now beginning, I’ll likely be ill the whole time, and then the country will start to drink. We’ll return to work together, the country after the holidays and myself after rehab. Nobody will remember. Nobody will notice. And it will be normal, like before, to work. After all, they will not silence me. Translation by theotherrussia.org

A scramble for the Arctic http://english.aljazeera.net/indepth/features/2010/11/20101130181427770987.html

With one fifth of the world's oil and gas at stake, countries are struggling to control the once- frozen arctic. Chris Arsenault Last Modified: 01 Dec 2010 16:26 GMT From her office in the frozen north, Delice Calcote has watched big powers vie for control over the Arctic with little concern for its original inhabitants. "This is our land," said Calcote, a liaison with the Alaska Inter-Tribal Council, an advocacy group representing the region's indigenous peoples. "We aren't happy with everyone trying to claim it." But as the planet warms, as northern sea lanes become accessible to shippers, as companies hungrily eye vast petroleum and mineral deposits below its melting ice, a quiet, almost polite, scramble for control is transpiring in the Arctic. "Countries are setting the chess pieces on the board. There are tremendous resources at stake," said Rob Huebert, director of the Centre for Military and Strategic Studies at the University of Calgary. The frozen zone could hold 22 per cent of the world’s undiscovered conventional oil and natural gas resources, according to the US energy information administration. Competing claims Canada, the US, Russia, Norway and Denmark have competing claims to the Arctic, a region about the size of Africa, comprising some six per cent of the Earth's surface. The 1982 United Nations Convention on the Law of the Sea is supposed to govern resource claims in the region. "At this point, everyone is following the rules and say they want cooperation; behind the scenes developments are happening that suggest it may not be so cooperative," Huebert said. Under maritime law, countries can assert sovereignty up to 200 miles from their coast line. Article 76 of the UN convention allows states to extend control if they can prove their continental shelves – underwater geological formations - extend further than 200 miles. Presently, the Lomonosov ridge, a 1,240-mile underwater mountain range, is testing the strength of the UN convention as Canada, Russia and Denmark all claim the potentially resource-rich region. "Russia recently submitted a claim [but] the UN didn’t buy it [on scientific grounds]," said Gilles Rhéaume, a public policy analyst with the Conference Board of Canada, who recently authored a report on Arctic sovereignty. "Will the legal means be used to determine claims? We don't know." A panel of elected geology experts rule on claims under the UN convention. They are mandated to make decisions based solely on scientific merit. New colonialism But polite conventions did not stop Russia from planting a flag more than 4,000 metres below sea level under the North Pole in 2007, in a flash-back to past imagery of colonial control. "This isn't the 15th century. You can't go around the world and just plant flags and say 'We're claiming this territory'," Peter MacKay, Canada's foreign minister, said at the time. But Canada, which prides itself on being the "great white north," is also seen as an aggressor by many analysts. The country plans to build at least five navy patrol boats to guard potential shipping lanes in the Northwest Passage, along with new Arctic military bases and a deep water port on Baffin Island. "Russia and Canada are the only two Arctic states who have ramped up the rhetoric on the military front," said Wilfred Graves, a researcher at the University of Toronto. Much of Russia's military capacity, especially naval power, rusted away with the collapse of the Soviet Union, while Canada – protected by the US defence umbrella - lacks powerful military hardware. Like small dogs with more bark than bite, or the impotent Hemmingway character sleeping beside a rifle, Canada and Russia are likely upping the rhetoric due to an inability to seriously project hard power. Domestic politics also loom large, as leaders posture to look strong on sovereignty issues, pledging to defend national interests from hostile outsiders. "The US, despite its military power, doesn't rattle swords in the same way," Graves said. The Norwegians are talking the most cooperatively, said Huebert, the University of Calgary professor, but "they are arming very assertively" recently buying at least five combat frigates with advanced AEGIS spying and combat capabilities. "The Danes are rearming too," he said. Indigenous concerns As big powers assert claims, wrangle over the geology of their respective continental shelves and stock up their militaries, indigenous peoples in the Arctic have faced a colonial scramble since Europeans first arrived. "Statehood happened without our consent," says Delice Calcote, the indigenous activist from Alaska. Russia first colonised the region, and then sold it to the US in 1867 for $7.2m. "It is our land and our water. They [the US] don't own it, it is ours," Calcote said, echoing the view of some indigenous peoples from Greenland, through Canada, Norway, and Siberia. While Sarah Palin, Alaska's former governor and current right-wing political star, won standing ovations for her chants of "drill baby drill", Calcote said her people rely on oil donated from Venezuela, despite the teritories’s vast petroleum wealth. "They [Venezuela’s leftist government] know about the horrible conditions in the villages: no running water, no sewers and the decline in our traditional food sources," Calcote said. The harsh divide between official state policy, and the conditions of people actually living in the Arctic, is not confined to the US. "The Canadian Arctic has some of the highest levels of poverty and substance abuse in the country," said Graves, who participated in a major conference linking northern communities with southern researchers and academics. "In [Inuvik] one of the larger communities in the Arctic, none of the indigenous people I met exhibited any concern with the military approach to the Arctic. "People were interested in unemployment, a lack of resources [and] climate change … in Greenland, the situation is probably similar, [Arctic residents] don't feel they have any voice in the south, with respect to climate change and policy." Melting ice Global warming, partially caused by burning fossil fuels, is largely responsible for the new scramble for the northern region, as once impenetrable ice blocks melt at an alarming rate. "It's a terrible irony that melting ice caps are allowing companies and even governments to open up the possibilities of new oil developments," said Ben Ayliffe, a senior climate campaigner with Green Peace in the UK. Cairn Energy, a corporation based in Scotland, recently began drilling oil wells in waters off Greenland's coast. "There are reasonable [environmental] concerns given the extreme nature of drilling in the Arctic," said Ayliffe who's organisation has tried to physically block drilling. "If something went wrong up there, the companies do not have the money to cover the cost of the spill," he said, adding that Cairn refuses to publish a spill response plan. Climate change concerns notwithstanding, a Gulf of Mexico-type oil spill in the Arctic would wreak havoc on what Ayliffee calls "an iconic area of the natural world." Cold Warning Global warming and the hunt for resources are not the only trends leading to the latest scramble. "During the Cold War, the Arctic was a buffer zone, insulating North America from the Soviets and vice versa," said Graves. "It served a valuable function and no one was willing to tamper with it too much." Like conflicts in the Balkans or the Democratic Republic of Congo, kept in check by Cold War politics, the end of the bi-polar world order transformed relations in the Arctic. That, onto itself, is not a recipe for a fight. "Conflicts exist, but there are so many mechanisms designed to deal with it that the likelihood for physical conflict is very remote," said Gunhild Hoogensen, a professor specialising in the Arctic at the University of Tromso in Norway. Perhaps new frigates and bases are merely political theatre, the war dance of international relations where countries can flex - before negotiating - without spilling blood. But with more than one fifth of the planet's energy reserves potentially on the line, the stakes couldn't be higher. The invasion of Iraq was "largely about oil," according to Alan Greenspan, the former chairman of the US federal reserve. And unenforceable UN conventions on conflict settlement might be insufficient to prevent the Arctic scramble from turning violent. "We are truly in a period of transition," Huebert said. "I could see us heading for either cooperation or conflict." You can follow Chris Arsenault on Twitter: @AJEchris

Vladimir Putin: profile http://www.telegraph.co.uk/news/worldnews/europe/russia/8173950/Vladimir-Putin-profile.html

Vladimir Putin is one of the world's most high-profile leaders. By Andrew Osborn in Moscow 2:52PM GMT 01 Dec 2010 Yet when he was gifted the presidency in 1999 it is easy to forget that he was virtually unknown, even inside Russia. The man who made Mr Putin's political career was Boris Yeltsin, Russia's erratic and gaffe- prone first post-Soviet president. Mr Yeltsin was in increasingly poor health and unexpectedly resigned on New Year's Eve 1999 appointing Mr Putin the country's acting president. Mr Putin, 58, has never looked back since. He quickly moved to establish himself as a tough- talking leader whose acerbic man-of-the-people comments have delighted ordinary Russians since. Backed by the Kremlin's powerful state machine, he convincingly won a presidential election in 2000 and again in 2004. In 2008 newly-elected President Dmitry Medvedev, a Putin loyalist, appointed Mr Putin as prime minister. Mr Putin is also leader of Russia's ruling United Russia party and remains, by most accounts, the country's most powerful politician. A former KGB spy who served in then East Germany in the 1980s, Mr Putin famously revels in his image as Russia's man of action. Popular with Russian women who admire his flinty personality, his fans have lost count of the number of extreme sports and other activities he has been filmed doing. He has piloted nuclear bombers, hung out with hard-core bikers, hunted for whales, tagged tigers, and earlier this year completed a long road trip across Russia's Far East. Married with two children, speculation about his personal life has been rife in recent years. Mr Putin is heavily associated with Chechnya's troubled modern history and was instrumental in launching the Second Chechen War in 1999 in order to crush growing Islamist extremism. His supporters believe that he saved Russia from anarchy and possible disintegration in the 1990s and gave ordinary Russians something to be proud about again. His critics in the West believe he has relentlessly rolled back democracy and turned Russia into a corrupt neo-Soviet police state run by its shadowy FSB security service.

Perminov Says Spaceship Fixed After Incident http://www.themoscowtimes.com/news/article/perminov-says-spaceship-fixed-after- incident/425462.html

02 December 2010 Associated Press A Russian spacecraft that suffered rough handling during transportation to the launch pad has been repaired and is safe to carry the next crew to the international space station, the nation's space chief said Tuesday. Federal Space Agency head Anatoly Perminov said the Soyuz TMA-20 was sent back to the manufacturer after the October incident. A thorough check revealed no damage to the ship's systems, he said, but some components were replaced to make it absolutely safe. "They replaced all equipment that might have suffered some damage, even though they performed fine during checks," Perminov told reporters. "After that, they checked it again and then sent the ship to the Baikonur cosmodrome." Soyuz spacecraft are assembled by state-controlled RKK Energia at a factory in Korolyov, just outside Moscow, then transported by rail to Baikonur — 2,000 kilometers southeast in Kazakhstan. The Soyuz TMA-20 is set to blast off Dec. 15 to ferry a crew of Russian Dmitry Kondratyev, U.S. astronaut Catherine Coleman and the European Space Agency's Paolo Nespoli to the orbiting outpost. Perminov also met with the crew members over tea. Coleman, a veteran of two U.S. space shuttle missions, said after the meeting that she was fully confident that the Russian engineers had made the ship safe to fly. "It's absolutely safe enough," she said. "I have worked here in Russia for a long time, and I trust them." The international space station marked its 10th anniversary on Nov. 20. The mammoth space lab consists of 10 modules built by the United States, Russia, Canada, Japan and the 18-state European Space Agency. Soyuz spacecraft will be the only link to the station after the planned retirement of the U.S. shuttle fleet next year. Coleman said that shouldn't create any problems. "When I look around at [Russia's space agency], at Energia, at all the different organizations here in Russia, the people who actually build hardware, put it together and the same thing in Europe, in Japan, in the United States … the people are the same," she said. "And they all have the same dream, and they all care about the crew who goes to space, and they want them to come home, and I trust that." Coleman said her 10-year-old son, Jamey, has closely followed her training and feels excited about her mission. "He has a small toy tiger, and I take this tiger with me all over the world," she said. "And I take pictures of what I'm working on with the tiger, and I think it makes him think: 'What's the tiger doing today? I wonder if that was difficult, I wonder what the tiger needed to know.'" During the meeting with Perminov, Coleman said the difference in weight between her and Nespoli, who is very tall, made her son ask whether he might squeeze in. "He might follow you later," Perminov said.

PRESS DIGEST - Russia - Dec 2 http://af.reuters.com/article/energyOilNews/idAFLDE6B103N20101202

Thu Dec 2, 2010 8:11am GMT MOSCOW Dec 2 (Reuters) - The following are some of the leading stories in Russia's newspapers on Thursday. Reuters has not verified these stories and does not vouch for their accuracy. KOMMERSANT www.kommersant.ru - Russia is threatening the United States with a renewed arms race. - The Russian government refused on Wednesday to support a 23 percent increase in railways shipment fees in 2012. - Russia has launched public discussions of a new draft law on education. VEDOMOSTI www.vedomosti.ru - Russia's businessmen have no faith in the national economy, the daily says in connection with reports that businesses saved about 30 trillion roubles in bank accounts in 2010 instead of investing. - "We have survived the most critical period of the crisis but we have not yet eliminated its basic cause", the head of state lender Sberbank German Gref says in an interview. ROSSIISKAYA GAZETA www.rg.ru - Russian lawmakers will discuss amending criminal law to reduce the number of crimes foreseeing arrests and imprisonment, Supreme Court chairman Vyacheslav Lebedev says. - Russia may turn to the Australian dollar as an element of its national reserves, according to Alexei Ulyukayev, first deputy head of the central bank. NEZAVISIMAYA GAZETA www.ng.ru - Russia's natural gas monopoly Gazprom (GAZP.MM) plans to spend up to 15.5 billion euro on building a pipeline to supply Europe with gas bypassing Ukraine. - Russia has made utopian forecasts for its economic development in 2011 according to the budget approved by parliament on Wednesday. IZVESTIA www.izvestia.ru - Russian Orthodox Church Patriach Kyrill, 64, would like to travel to space, the daily says. - Russia's top anti-drug watchdog Viktor Ivanov is urging the United Nations to define the threat of drugs spreading from Afghanistan as a global threat to international security. - Police have detained a lawmaker's aide who is accused of selling jopbs in parliament for up to $200,000.

Russian Press at a Glance, Thursday, December 2, 2010 http://en.rian.ru/papers/20101202/161587499.html 10:06 02/12/2010 POLITICS Russian Prime Minister Vladimir Putin gave a satellite interview to CNN's Larry King. (Vremya Novostei, Moscow Times, Vedomosti, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta) Belarus said Wednesday that it would give up its stockpile of material used to make nuclear weapons by 2012. (Moscow Times, Vremya Novostei) Trade unions refused to sign a general agreement with the government and employers. (Vremya Novostei) The United States on Wednesday called on Europe's main security watchdog to lend more support to the war in Afghanistan and resolve "frozen conflicts" across the former Soviet Union. (Moscow Times, Vremya Novostei, Vedomosti) Interpol joined the efforts to hunt down WikiLeaks founder Julian Assange. (Kommersant) BUSINESS Russia is closer than ever to joining the World Trade Organization: an agreement on the completion of talks will be signed December 7 at a Russia-EU summit. (Rossiiskaya Gazeta) RusAl said Wednesday that it chose Sberbank as the issuer and VTB Capital as its advisor for the first-ever Russian Depositary Receipts. (Moscow Times) German energy concern E.On said Wednesday that it sold its 3.5 percent stake in Gazprom. VEB bought 2.7 percent, with settlement to come later this month. E.On has already sold the other 0.8 percent on the market and is earning 3.4 billion euros ($4.5 billion) on the entire deal, the company said. (Moscow Times, Vremya Novostei, Vedomosti) SPORTS Russia's hopes for winning the right to host its first World Cup were thrown into disarray on Wednesday, when Prime Minister Vladimir Putin said he wouldn't go to Zurich for FIFA's vote on the 2018 tournament. (Moscow Times, Vremya Novostei, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta) SOCIETY Russian businessmen and State Duma deputy Ilya Ponomaryov have drafted amendments to the country's Criminal Code, proposing criminal responsibility for spamming. (Kommersant, Vedomosti) President Dmitry Medvedev fired Krasnodar Territory police chief Sergei Kucheruk following a massacre in the village of Kushchevskaya. (Kommersant, Rossiiskaya Gazeta) TECHNOLOGY Russians will remember 2010 for the terrorist attacks in the Moscow metro, the record heatwave, and the dismissal of Mayor Yury Luzhkov, judging by the list of top search queries for the past year's events published by Yandex on Wednesday. (Moscow Times)

United Russia: Nine years later http://english.pravda.ru/russia/politics/02-12-2010/116022-united_russia-0/

02.12.2010

December 1 of 2001 marked the day of birth of the Russian political party "Unity and Fatherland - United Russia." On the one hand, it is not an anniversary. On the other hand, the party has been around for a long time, taking the leading position in the Russian political system throughout the period of its existence. United Russia was the result of a merger of three socio-political groups - Unity, Fatherland and All Russia. The last two were headed by Yuri Luzhkov and Mintimer Shaimiev, respectively, and in 1999 participated in the Duma elections as a single block. Unity, however, won. Incidentally, considering the lifetime of the party, the United Russia is second only to the KPRF, LDPR and Yabloko. But over the last decade, all three parties were giving up their positions, while United Russia, on the contrary, was getting stronger. Yet, if we start listing all the "sins" United Russia is accused of by its opponents, it will take hours. Nevertheless, the results of the elections are the main indicator of the popularity of any political party and clearly show that the leadership of United Russia is not an accident. This, however, is the main problem of the party. The lack of real competition almost always leads to a certain complacency and arrogance. United Russia is no exception. Yet, as of today this party is the undisputed leader. And there are no objective reasons for it to be replaced by the Communists, the Liberal Democrats or Revolutionaries, not to mention such parties as Pravoye Delo, Yabloko, and Patriots of Russia. According to the head of the National Strategy Institute Mikhail Remizov, originally United Russia had several tasks to fulfill. "One of them is obvious - the consolidation of parliamentary support for the government in the parliament. The party coped with this task well, the analyst shared with Pravda.ru. "Another issue is the issue of consolidation of the political class. In addition to the political vertical, which includes governors, ministers and other officials, there must be a horizontal line of power, so to speak. This is a defined network of political relations between the representatives of the elite. And this trusted network of political ties is provided by the party as well. This task of the political class suggests the existence of a certain common value system and ideological framework for the elite. It implies an educational process and management training. This task was partially fulfilled by the party and there is still a great deal of work to be done," said Mikhail Remizov. In his opinion, this is one of the most urgent tasks for the party in terms of its development. However United Russia has an even more ambitious task. According to Mikhail Remizov, only the current President started calling United Russia a ruling party. "Yet, I think that this title was given as an advance," said the analyst. According to him, United Russia supports the executive branch, but it does not always fully forms and determines its course, at least at the federal level. "However, at the regional level the model of the party government is being formed and developed, the party becomes increasingly more responsible and gets more authority in the formation of the executive branch. Yet, again, it does not always happen in reality, because often the balance of forces and interests between the party and the governor's power center is strongly shifted toward the governor," said Remizov. In his opinion, this task remains a future goal of United Russia. "The fact that United Russia dominates the political arena is a problem for its competitors who cannot challenge United Russia," said Director General of National Energy Security Fund Konstantin Simonov. "United Russia is accused of monopoly, but you are welcome to put an end to this monopoly," the political analyst said, referring to the opposition parties. He said that the party faces two major tasks. First task is to become a full-fledged personnel reserve for the government. Second task is to not be afraid to offer bright ideas of the development of the state and have an intellectual program. "United Russia, of course, has the program, but it should not be afraid to be dominant not only in terms of participation in the government, in the Parliament, but also in intellectual areas. To do this, it should offer more vivid and meaningful intellectual products," said Konstantin Simonov to Pravda.ru. However, the second task has much to do with the monopoly situation Konstantin Simonov mentioned earlier. That is, the party does not have much external incentive to create "vivid intellectual products" in the absence of worthy opponents. This is certainly a problem for United Russia. Yet, this issue is not unique to United Russia. However, it is hardly likely that United Russia will include the task of growing its own opposition in its program. Oleg Artyukov Pravda.Ru

Russia! presents a special business issue http://readrussia.com/blog/media/00328/

A special edition of Russia! will hit bookstores on Dec. 1. Its cover story is the seizure of the Lenta retail chain by the U.S. fund TPG Capital and VTB, a major Russian bank. Having found itself in a land resembling a latter-day Wild West – where force rules, corruption is everywhere and immense riches are up for grabs - TPG quickly adopted the Russian way of doing business. Find out more about one of Russia’s most shocking corporate raids, involving grenades and machine guns, in our article “Wild East.” “The rules of doing business in Russia have changed yet again,” says Ilya Merenzon, the publisher of the magazine. “The new edition of Russia! is relevant as never before. Russian firms used to imitate the American way of doing things, but now Western companies are taking their lead from the Russians and have copied some of their ugliest practices. The last year has seen a number of major corruption scandals involving the Russian divisions of prominent corporations. The actions of TPG Capital, which form the theme of this issue, are unique among Western businesses. They behaved no differently to the bandits of the 1990s.” The article “Wild East,” available online, tells how TPG, a minority shareholder in a major Russian retail chain named Lenta, hoped to take control of the company by seizing its office with the help of a security force. TPG scattered $100 bills around the site to distract reporters and threatened employees with grenades containing tear gas. The special issue also includes a guide to the changing Moscow skyline (rising alongside the Kremlin and Stalinist skyscrapers is a new business district with dozens of towers); one of the most detailed chronicles of corruption at Russian companies ever compiled, by the rights activist Aleksei Navalny; and the story of an intelligence officer who builds some of world’s most expensive sound systems in his basement. Read the cover story from the Special business issue here.

National Economic Trends

Are Russia’s sovereign ratings holding corporates back? http://blogs.ft.com/beyond-brics/2010/12/02/161971/ December 2, 2010 5:00am by Charles Clover

Renaissance Capital, the Moscow investment bank, is going on the offensive over Russia’s sovereign bond rating, which it believes is too low and is holding Russia’s corporate issuers back. The bank believes that with Russia’s foreign exchange reserves the third-largest in the world and its very low debt-to-GDP ratio, the country deserves better than its BBB from Standard & Poor’s and Baa1 from Moody’s - ratings that Renaissance feels are keeping Russia’s borrowing costs artificially high. “It is quite intriguing to see that countries like Ireland are still rated above Russia, Brazil, and China”, said Renaissance Capital’s Plamen Monovski, CIO of Renaissance Asset Managers, in a recent research note. “Even the most perfunctory comparison of these two countries makes it clear that Russia is nowhere near default, while Ireland is going to be lucky to avoid it”. He points out that the market rated Ireland’s debt at near-default levels – its 5-year credit default swap spread stands at 587 – compared to Russia’s CDS spread of 154. Ireland, however, has a AA- rating from Standard & Poor’s, and a Aa1 rating from Moody’s, compared to Russia’s BBB and Baa1 respectively. The rating prevents US-based pension funds, one of the main movers of global credit markets, from buying Russian assets, said a senior banker in Moscow. It also holds down the ratings of other issuers in Russia, Renaissance believes, though a spokesman for one of the rating agencies said the notion that the sovereign rating was a “ceiling” for a country’s corporates was a myth. “Ratings are not meant to mimic bond spreads or CDS prices. If they did they would be bouncing around every day”, a manager at one of the rating agencies responded to the criticism. “A rating provides a long-term fundamental view of credit risk, not a short-term market- sentiment-driven view”, he said. He pointed out that prior to the eurozone crisis, market spreads for peripheral eurozone issuers were almost identical to that of German bunds, while their ratings were significantly lower. “Now market sentiment has veered to the other extreme, while ratings have been lowered only to a limited extent. That relative stability is what investors look for from ratings. ” he said. Russia’s sovereign rating rose from default in 1998 to B- in 2000, and hit S&P’s investment grade BBB- in 2005. At the end of last year, the outlook on its current BBB rating was raised from negative to stable. “I don’t think there is an issuer on the planet who doesn’t think their rating should be higher”, said one ratings agency analyst.

Three pills to fight inflation and limits to RUB support http://www.bne.eu/dispatch_text13802 VTB Capital December 2, 2010

According to Interfax, First Deputy Chairman of the CBR Alexey Ulyukaev stated at the annual Adam Smith Russian Banking Forum in London yesterday that i) the CBR continued to move towards greater rouble flexibility by reducing the size of its interventions; ii) the upper limit for monthly FX interventions was USD 6bn; and iii) inflation would moderate in 2Q11.

Later, in an interview with Bloomberg, Ulyukaev announced that the CBR had noticed monetary inflation and would use three pills to fight it: "First, the policy rate; second, the reserve requirements; and third, the exchange rate performance." When answering a question about the recent tight rouble liquidity, Ulyukaev stated that the CBR was not concerned about it now, but would become so if "the situation continued to be like that."

Limits to RUB support. We think the statement about the greater rouble flexibility, combined with the upper limit for FX interventions and possible concerns about a liquidity squeeze mean that the monetary authorities might allow somewhat faster rouble depreciation, were capital outflows to persist.

Less capital outflow in December, but RUB risk-reward profile unattractive. At the same time, the CBR expects capital outflows to moderate to zero in December and, hence, alleviate depreciation pressures on the rouble. Given the political nature of the recent outflows the CBR's expectations might be well informed. However, we think that part of the capital inflows was due to the RUB risk-reward profile being unattractive.

Three pills to fight inflation, a rate hike might be on the agenda. The CBR reiterated the view on the monetary nature of the recent pickup in inflation and even explicitly mentioned that it would use rates to fight it. This supports our view expressed in CBR "Frees up Hands" for a Rate Hike, of 30 November.

At the same time, it is not yet evident from Ulyukaev's comments that the CBR links the need to hike rates to curbing capital outflow. The monetary authorities seem to be continuing to talk up RUB volatility and deterring capital inflows.

Business, Energy or Environmental regulations or discussions

Russian markets -- Factors to Watch on Dec 2 http://af.reuters.com/article/metalsNews/idAFLDE6B101R20101202

Thu Dec 2, 2010 7:27am GMT MOSCOW, Dec 2 (Reuters) - Here are events and news stories that could move Russian markets on Thursday. You can reach us on: +7 495 775 1242

STOCKS CALL (Contributions to [email protected]): OTP Bank: The oil and gas sector were the growth leaders among blue chips yesterday -- Gazprom's stocks rose 4.76 percent. and LUKOIL's just slightly less, 3.17 percent. The MICEX index rose 2.81 percent to 1,601.76. A positive background is being formed now, and today we expect the market to open around the level it closed at during yesterday's session.

EVENTS [RU-DIA] (All times GMT): MOSCOW - Russia's Natural Resource Ministry to decide on outcome of Trebs and Titov Arctic oilfields, the country's last big non-allotted crude deposits. MOSCOW - Russia's Norilsk Nickel (GMKN.MM), the world's largest nickel and palladium producer, to decide on the sale of Russian power generator OGK-3 (OGKC.MM) at a board meeting.

IN THE PAPERS [PRESS/RU]: In an interview with Vedomosti, Sberbank (SBER03.MM) CEO German Gref said the Russian lender would need until 2018 to become competitive with major international banks. He also said that the economy is still in a "fierce" crisis, manifest in the growing debt levels in the private sector and the persisting refinancing of companies.

TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]: TOP NEWS: * Russia's Putin warns West over missile defence [ID:nLDE6B00C2] * Russian spies pour over leaked U.S. cables [ID:nLDE6B01MQ] * U.S. wants OSCE support for Afghan war [ID:nLDE6B00QP] COMPANIES/MARKETS: * Russian Railways to invest $11 bln in '11 [ID:nLDE6B01NS] * Russia's Nomos Bank plans 2011 IPO [ID:nWLA9665] * Russian agri holding Yug Rusi mulls IPO [ID:nLDE6B01FX] * Russia's Sberbank sees net profit up in 2011 [ID:nLDE6B015W] * E.ON sells Gazprom stake for 3.4 bln eur [ID:nLDE6B01GS] ECONOMY/POLITICS: * Russia leaves oil wealth fund untouched 7 [ID:nLDE6B01ZB] * Putin says not to attend World Cup ceremony [ID:nLDE6AT1NR]

ENERGY: * Gazprom Neft sees 2010 f'cast up 6 pct [ID:nLDE6B00ZX] * Gazprom to form gas joint ventures in Ukraine [ID:nLDE6B0227] COMMODITIES: * Russia SUEK sees coal output flat '10 [ID:n11LDE6B01XO] * RUSAL bullish on aluminium thanks to China [ID:nLDE6B01R5] * Russia '11 winter grain output-37.5 mln t [IDn:nLDE6B01CN]

MARKETS CLOSE/LATEST: RTS .IRTS 1,642.7 -0.55 pct MSCI Russia .MIRU00000PUS 862.6 +2.82 pct MSCI Emerging Markets .MSCIEF 1107.85 +0.94 pct

Russia 30-year EurobondRU011428878= yield: 4.826/4.770 pct EMBI+ Russia 11EMJ 256 basis points over

Rouble/dollar RUBUTSTN=MCX 31.3150 Rouble/euro EURRUBTN=MCX 41.1545

NYMEX crude CLc1 $86.73 -$0.02 ICE Brent crude LCOc1 $88.93 +$0.06

For Russian company news, double click on [E-RU] Treasury news [M-RU] Corporate debt [D-RU] Russian stocks [.ME] Russia country guide RUSSIA All Russian news [RU] Scrolling stocks news [STXNEWS/EU] Emerging markets top news [TOP/EMRG] Top deals [TOP/DEALS] European companies [TOP/EQE]

Gazprom, Rosneft, VimpelCom, VTB Group: Russian Equity Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aRSXUVR__KRY By Ilya Arkhipov Dec. 2 (Bloomberg) -- The following companies may be active in Russian trading in Moscow. Stock symbols are in parentheses and share prices are from the previous close of trading. Russia’s 30-stock Micex Index advanced 2.3 percent to 1,601.76. The dollar-denominated RTS Index gained 2.2 percent to 1,632.96. OAO Gazprom (GAZP RX): The world’s biggest gas producer agreed to form two joint ventures with NAK Naftogaz Ukrainy to produce gas at coal formations in Ukraine and to develop the offshore Pallas structure in the Black Sea. Gazprom’s shares gained 4.7 percent to 182.67 rubles in Moscow. OAO Rosneft (ROSN RX): Crude oil climbed after Chinese manufacturing expanded and on speculation the European Central Bank will act to prevent the spread of the region’s debt crisis. Shares in Russia’s largest oil company gained 2 percent to 212.44 rubles. VimpelCom Ltd. (VIP US): The owner of Russia’s second- biggest mobile-phone operator is expected to announce third- quarter operating and financial results today. The shares declined 1.7 percent to $15.41 at 1:54 p.m. in New York. VTB Group (VTBR RX): The country’s second biggest lender is scheduled to report third- quarter financial results today. Bank rose 1.8 percent to 10.2 kopeks in Moscow. To contact the reporter on this story: Ilya Arkhipov at [email protected]. To contact the editor responsible for this story: Willy Morris in London at [email protected]. Last Updated: December 1, 2010 18:00 EST ecember 02, 2010 11:10

Jan-Sept gold production down 3.2% in Russia http://www.interfax.com/newsinf.asp?id=206144 MOSCOW. Dec 2 (Interfax) - Russia mined 3.2% less gold year-on-year in January-October, producing 147,181 tonnes during the period, the country's Gold Producers Union said. Overall gold production - including secondary and associated production - came to 168,449 tonnes for the ten-month period, 1.6% less year-on-year. Cf

Golden moment: Russian gold miners set to benefit http://www.bne.eu/dispatch_text13802 UralSib December 2, 2010

Gold price has room for further growth. We reiterate our positive outlook on gold and the gold mining industry due to an increasing global shift to gold as a safe haven. Although the active phase of the global fi- nancial crisis is over, investors are still concerned about the fate of the dollar as a major reserve currency and increasing inflationary risks, and are looking for an ultimate store of value, which gold is. We believe that this process is far from over and that the gold price has not yet reached its peak. Gold-price growth will be intensified further by the limited gold supply from mines and active buying by emerging market central banks, as well as by sustainably strong investment demand and recovering jew- ellery demand from China and India. We expect an average gold price of $1,450/oz in 2011 and $1,500/oz in 2012.

Our top sector picks: the three Ps. Among Russian gold stocks, we have Buy recommendations on Polyus Gold (PLZL LI - Buy, $86/share target price or $43/ADR), as the name is set to benefit from rising output and improving costs next year; Petropav- lovsk (POG LN - Buy, $22/share target), which disappointed this year, but has a more achievable and less risky production plan for 2011 compared to the challenging 2010; and Polymetal which we upgraded from Hold to a Buy (PMTL LI - Buy, $20/share target), given its growth momentum in 2011E and strong silver prices. We remain cautious and have a Hold recommendation on Highland Gold (HGM LI - Hold, $3.2/share target) due to its uncertain long-term prospects, while we have withdrawn our rec- ommendation and target price for KazakhGold, as its share price currently has nothing to do with its fundamentals, but rather with the ongoing shareholder conflict. We initiated coverage on High River Gold (HRG CN) with $1.4/share target price and Hold rating due to the expected absence of output growth. 11:19 Former Luzhkov press secretary Tsoi becomes new RusHydro exec http://www.interfax.com/news.asp

Chelyabinsk Tube posts 3 bln rbl half-year net profit http://en.rian.ru/business/20101202/161588406.html

11:46 02/12/2010 MOSCOW, December 2 (RIA Novosti) - Russian pipe producer Chelyabinsk Tube-Rolling Plant made a 3.011 billion ruble IFRS first-half net profit, following a 2.840 billion ruble loss in the first half of 2009, the company said on Thursday. Chelyabinsk Tube's sales grew 35% year-on-year to 717,000 tons in the first half of 2010. Revenue rose 37% to 37.646 billion rubles in the same period. The company's ifirst half EBITDA rose 440% to 9.163 billion rubles, EBITDA margin to 24% from 6%. Pre-tax profit amounted to 4.372 billion rubles after a 2.894 billion ruble loss year-on- year. First half gross profit rose 57% to 11.791 billion rubles. The firm attributed the results to higher pipe sales and prices as demand from oil and gas, construction and energy firms resumed.

Russian govt. bans foreigners from working as salespeople at retail outlets http://en.rian.ru/russia/20101202/161584045.html

01:57 02/12/2010 The Russian government has banned foreigners from selling alcohol and drugs, as well as from working as salespeople at marketplaces and retail outlets outside of stores. The resolution will be effective from January 1, 2011. Russian residents have often complained that nationals of impoverished former Soviet republics arrive in the country in big numbers and take jobs depriving the Russians of a chance to earn money. MOSCOW, December 2 (RIA Novosti)

Visas for Skilled Workers Simplified http://www.themoscowtimes.com/news/article/visas-for-skilled-workers-simplified/425494.html

02 December 2010 By Howard Amos Federal Migration Service Director Konstantin Romodanovsky said Wednesday that the number of highly qualified foreign specialists who have received documentation to work in Russia since the introduction of eased restrictions in July has reached 2,610. Under legislation that took force on July 1, employers can apply for visas for highly qualified foreign specialists — defined as those who earn more than 2 million rubles ($63,500) per year — under a preferential work permit and work visa regime. “We receive almost 50 applications for this type of migrant every day,” Romodanovsky said. Romodanovsky said the types of firms using the new law varied widely, but singled out French companies and banking institutions as particularly active. The 2 million ruble salary threshold only exists “for the time being,” Romodanovsky said. He said his department is looking to differentiate further: both to widen the category of foreign specialists that the new law encompasses and increase the preferential nature of their immigration status. “We are moving in a direction where we can widen the circle of possible participants — companies working in Russia — to attract intelligent, talented and willing people,” he said. The Federal Migration Service’s role is to check that the applications meet the requirements. Romodanovsky encouraged employers to take advantage of the new system. “The rest is in your hands,” he said. Russia has traditionally fared poorly in comparison with the visa regimes for skilled workers of other emerging markets, which companies frequently site as an obstacle to investment and expansion. About 20,000 foreign specialists arrive annually, Romodanovsky said, but as part of the modernization drive, the migration service foresees a need for up to 46,000. Romodanovsky also touched on discussions with the European Union concerning a mutual relaxation of visa conditions — an issue that has been repeatedly raised by President Dmitry Medvedev and, more recently, by Prime Minister Vladimir Putin on a visit to Germany last month. “It is not a simple relationship,” Romodanovsky said, bemoaning the fact that while Russia was prepared for a “more intimate” interaction, little apart from reassurances were forthcoming from the EU. An announcement, however, of some positive steps forward could be expected before the end of the year, he said.

Uralkali, Polymetal Investor to Pay $1 Billion for Railcar Plant http://www.businessweek.com/news/2010-12-02/uralkali-polymetal-investor-to-pay-1-billion- for-railcar-plant.html December 02, 2010, 3:48 AM EST By Ilya Khrennikov Dec. 2 (Bloomberg) -- Russian billionaire Alexander Nesis, an investor in OAO Polymetal and OAO Uralkali, plans to spend $1 billion on a railcar-factory project to meet domestic demand for transporting raw materials from mines and smelters. “We reckon upon a simple thing,” he said in an interview. “Russia has one of the largest railcar fleets in the world and the majority of these are old and need to be replaced soon.” Nesis’s ICT Group will invest the money in the Tikhvin railcar factory that’s set to begin annual output of at least 10,000 vehicles from the second half of 2011. The plant in Tikhvin, in Leningrad region, northwest Russia, may sell shares through an initial public offering at some point, Nesis said. Russia has about 1 million railcars in operation, according to Brunswick Rail Leasing, while private cargo carriers are building up their own fleets. State-owned vehicles have a lifespan of about 20 years, according to OAO Russian Railways. The Tikhvin plant says it signed long-term contracts with Russian Railways subsidiaries and private operators including Transgarant. The factory will employ 3,500 people, about a quarter of the workers used in Russian facilities that have similar production volumes, Nesis said. The company built a new operation at the site of a Soviet-era producer of tractors using technology from Wabtec Corp. of the U.S. “We decided to spend $200 million on building apartments in Tikhvin to attract workers from other regions,” Nesis said in Moscow. “We are offering them houses, mortgage loans and the work that allows them to repay these loans.” --Editors: Tony Barrett To contact the reporters on this story: Ilya Khrennikov in Moscow at [email protected]. To contact the editor responsible for this story: Amanda Jordan at [email protected].

UPDATE 1-VTB swings to Q3 profit, beats forecasts http://www.reuters.com/article/idUSLDE6B108E20101202

2:29am EST * Q3 profit 13.7 billion roubles, vs forecast 13.4 billion * Says Russian economic growth remains fragile (Adds detail) MOSCOW, Dec 2 - Russian bank VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) swung to a 13.7 billion rouble ($435 million) third-quarter net profit, beating forecasts after strong growth in its corporate, retail and investment banking units. Russia's second largest lender said on Thursday it had achieved the turnaround in line with the Russian economy, adding growth remained fragile. VTB, which posted a 14 billion rouble loss in the 2009 period, had been expected to report a 13.4 billion rouble profit, according to a Reuters poll. [ID:nLDE6AS18H] The bank, 85 percent controlled by the government but set to be privatised further, said nine- month net profit came in at 38.8 billion roubles. VTB Capital, the investment banking division that dominates Moscow deal-making, made a pretax profit of 16 billion roubles during the nine-month period, up 55 percent. (Reporting by John Bowker; Editing by Dan Lalor) ($1 = 31.50 roubles)

Russia's VTB 9-mth IFRS net profit 38.8 bln rbls after loss http://en.rian.ru/business/20101202/161587698.html

10:31 02/12/2010 VTB, Russia's second largest banking group, posted an IFRS net profit for January-September of 38.8 billion rubles ($1.251 billion) following a net loss of 45.5 billion rubles in the same period last year, the group said on Thursday. The group's third quarter net profit amounted to 13.7 billion rubles after a year-on-year loss. The results slightly exceeded analysts' forecasts. MOSCOW, December 2 (RIA Novosti)

German Private Bank Launches New Russian Fund http://www.wealthbriefing.com/html/article.php?German%20Private%20Bank%20Launches %20New%20Russian %20Fund=German_Private_Bank_Launches_New_Russian_Fund&id=33842

Wendy Spires Group Deputy Editor in London December 2, 2010 Metzler, the German private bank, has launched a Russia Fund which will invest in around 50 companies which are based in Russia and the former CIS countries, or which make the majority of their income there. The fund, which is only available to German investors, will use the MSCI Russia 10/40 index as its benchmark. Run by Simone Beer, the fund will imitate the institutional version of the fund launched by the firm in the summer. While many investors are nervous about investing in Russia due to perceptions of political instability and the region’s patchy record for protecting shareholders’ interests, a number of Russian funds have generated seriously impressive returns over the last decade. For example, last year the Swedish-based asset manager East Capital announced that one of its Russian funds had returned 1,524 per cent in US dollars terms in the period from 2000-01 to to 2009. Those who are now looking towards Russia contend that the country’s equities remain undervalued compared to those in other emerging markets, and also point to the country’s relatively low degree of indebtedness. Commentators have commended owning Russian companies which are well-positioned to benefit from domestic growth, particularly in sectors such as consumer goods, construction, retail and banking. Investors hope to build Europe's largest studio in St. Petersburg http://www.screendaily.com/news/europe/investors-hope-to-build-europes-largest-studio-in-st- petersburg/5021145.article

2 December, 2010 | By Evgen Vorotnikov AFK Sistema, the largest diversified public financial corporation in Russia, is planning to establish the Europe’s largest film studio on the base of Lenfilm, one of Russia’s oldest and largest film studios, based in St.Petersburg. The project is expected to be go forward as a public-private partnership that will involve a complete reconstruction of “Lenfilm” studio with the goal of attraction of domestic andforeign filmmakers. AFK Sistema expects to get a controlling stake in the studio and guarantees of the return of its investment, however the final decision will depend on the Russian government. Vladimir Yevtushenkov, head of AFK Sistema said: “We want to make the biggest studio in Europe, where we can attract foreigners filmmakers from Romania, Bulgaria, Hungary, etc. This will not be a new business center, but a production studio.”

The volume of investments at the initial stage of the project is estimated at $10-15m, while total amount may reach $100m. Before the economic crisis, Lenfilm was valued at nearly $80m, however since that time these figures fell up to $50-60m. Prospects of the project remains a mystery. Some Russian analysts have already expressed their doubts over the ability of Lenfilm to become the Europe’s largest film studio, taking into account the fact that the number of films produced in Russia every year remains low, compared even with the European countries. AFK Sistema currently owns Russian World Studios (RWS), one of the largest film and television production companies in Russia, with one of Russia’s largest studio space. In this regard, some of Russian analysts believe that AFKSistema may consider the possibility of merger of Lenfilm with Moscow and St. Petersburg studios of RWS. Successful implementation of the project will make St. Petersburg one of the European centers of film production and strengthen the positions of AFK Sistema as one of the biggest holders of media assets in the Old World.

For the Record http://www.themoscowtimes.com/business/article/for-the-record/425481.html

02 December 2010 AvtoVAZ said Wednesday that domestic sales rose 45.3 percent in the first 11 months from the same period last year to 467,550 vehicles as the government’s cash-for-clunkers program boosted demand. (Bloomberg) The government plans to sell 7 percent of Sberbank next year, part on the open market and part to a strategic investor, chief executive German Gref said Wednesday. (Bloomberg) Norilsk Nickel said Wednesday that its Tati Nickel unit got two exploration licenses in Botswana. (Bloomberg) The inflation rate may be 8.4 percent this year, Economic Development Minister Elvira Nabiullina said Wednesday. (Bloomberg) Russia won’t add the Australian dollar to its international reserves before mid-2011, Central Bank First Deputy Chairman Alexei Ulyukayev said Wednesday. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Russia's Nov oil output edges down to 10.25 mln bpd http://www.reuters.com/article/idUSLDE6B101T20101202

2:37am EST MOSCOW, Dec 2 (Reuters) - Russia's oil output edged down to 10.2 million barrels per day (bpd) in November after hitting a record high of 10.26 bpd in the previous month, Energy Ministry data showed on Thursday. Daily gas output rose to 1.98 billion cubic metres (bcm) in November from 1.87 bcm in October along with the steady drop in temperature. (Reporting Jessica Bachman; editing by John Bowker)

Moscow Sweetens The Pot In Bid To Woo Foreign Investment For Upstream Arctic Activity http://www.oilandgasinsight.com/file/94507/moscow-sweetens-the-pot-in-bid-to-woo-foreign- investment-for-upstream-arctic-activity.html

December 2010 | Industry News BMI View: The enactment of proposed changes to the upstream regulatory framework will make Russia a more inviting investment destination, as Moscow eyes lucrative Arctic resources. The Russian government is planning changes to the upstream regulatory framework to attract foreign investors to its offshore Arctic region, where the state has traditionally been reluctant to loosen its grip. Under proposed laws, foreign companies that make commercial oil and gas discoveries will be either guaranteed a stake in their development or receive financial compensation comprising costs incurred and an additional 'reward' for exploration risk, Upstream reported on December 1 2010, citing Denis Khramov, the director of the Department for State Policy and Regulation of Russia's Ministry of Natural Resources. Additionally, Russia is looking to implement new regulatory procedures regarding drilling permits and the installation of offshore structures, artificial islands and subsea pipelines. No further details were made available. Landlubbers Currently, Russia's oil and gas output is sourced from onshore fields, located mostly in Western Siberia and the Volga-Urals region. Given that these onshore assets have sustained high production volumes, little investment has flowed to Arctic resource development. Khramov told Upstream that most of Russia's oil and gas resources are in the seabed

Rosneft Sells January East Siberian Crude to JX-Nippon, Conoco http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aWbhR6jnyRyg By Christian Schmollinger Dec. 2 (Bloomberg) -- Rosneft Oil Co. sold 200,000 metric tons of East Siberian Pacific Ocean pipeline crude, or ESPO, for loading in January to ConocoPhillips and JX-Nippon Oil & Energy Co., said three traders who participate in the market. Details of the sales are as follows:

------Crude: ESPO, Russia Buyers: Conoco, JX-Nippon Quantity: 100,000 tons (or 730,000 barrels) x 2 cargoes Loading: Jan. 6-9, Jan. 28-31 Port: Kozmino Bay Terminal, Russia’s Far East Price: Premium of between $2.70 a barrel and $2.80 a barrel to Dubai price published by Platts. ------To contact the reporter on this story: Christian Schmollinger in Singapore at [email protected] To contact the editor responsible for this story: Clyde Russell in Singapore at [email protected] Last Updated: December 1, 2010 23:13 EST

Surgutneftegaz Sells East Siberian Crude Oil Cargoes to Itochu http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aV1GOKfihW5w By Christian Schmollinger Dec. 2 (Bloomberg) -- OAO Surgutneftegaz, a Russian oil producer, sold 400,000 metric tons of East Siberian Pacific Ocean pipeline crude for loading in January and February to Itochu Corp., said three traders who participate in the market. Details of the sale are as follows: ------Crude: East Siberian Pacific Ocean pipeline crude Buyer: Itochu Quantity: 100,000 metric tons (730,000 barrels) x 4 cargoes Loading: Jan. 9-13, 20-24, 21-25, Jan. 21 to Feb. 4 Port: Kozmino Bay Terminal, Russia’s Far East Price: A premium of between $2.70 a barrel and $2.80 a barrel to the Dubai price published by Platts. ------To contact the reporter on this story: Christian Schmollinger in Singapore at [email protected] To contact the editor responsible for this story: Clyde Russell in Singapore at [email protected] Last Updated: December 1, 2010 23:02 EST

Med Crude-Urals digests Shell tender win, freight jump http://af.reuters.com/article/energyOilNews/idAFLDE6B022V20101201

Wed Dec 1, 2010 5:48pm GMT * Shell wins Rosneft Q1 tender ex-Primorsk * Primorsk freight rates jump on ice-class regulations

LONDON, Dec 1 (Reuters) - Urals crude weakened in the Mediterranean and was in limbo in northwest Europe on Wednesday as traders assessed the results of a large tender to sell crude by Rosneft and a jump in freight rates. Shell won the tender to buy Urals for the first quarter in northwest Europe by offering premiums that were slightly lower than it had to pay to win last time but still healthy, traders said. [ID:nLDE6B01DI] "The contango is flattening, and if it was 50-55 cents over the past year, now it is only 22-24 cents so obviously people are not offering such big premiums anymore," said a trader with a Russian firm. Shell emerged as a key player in the Urals market, the top export grade of the world's largest oil producer, several months ago by winning tenders by Russian producers Rosneft, TNK-BP and Surgut. It outbid previous market leader Gunvor by offering unusually healthy premiums to the big surprise of its rivals. In the window, Vitol sold a Dec. 11-15, 140,000-tonne cargo in the Mediterranean to ENI at minus $1.20 to dated, 10 cents weaker than prices indicated earlier this week, traders said. In the north, no deals have been done in the window, with traders pegging prices at minus $1.40 a barrel and saying the narrowing spread between the north and south meant the arbitrage between the regions was unlikely to work. In November two arbitrage operations for Urals between the south and north took place after prices in the Mediterranean strengthened due to weather-related delays in the Turkish waterways to a premium of around 80 cents versus the well-supplied Baltic. Also potentially complicating the arbitrage was a jump in freight rates at Primorsk on the Baltic as some traders said the outlet has introduced ice-class regulations, which would cut the number of tankers that can service the port. A tanker broker estimated that freight rates from Primorsk to the UK and Continental Europe jumped to W135 from W85 in the Worldscale measure, with average daily earnings for an Aframax tanker on the route rising to $36,000 a day from $7,000 a day on Tuesday. Urals margins for complex refineries in the Mediterranean edged up on Wednesday to $2.24 a barrel, nearly closing the gap with the averages of the past 15 days and the past year. In other grades, Glencore bid for Azeri Light at plus $2.10, which was much stronger than previous levels at around $1.60-$1.70, indicating strong appetite for light grades amid expected weather-related delays for Urals shipments. Russia's Surgut sold four cargoes to Japan's Itochu at a tender of East Siberian ESPO Blend crude for delivery in January-February [ID:nLDE6B01NY] (Reporting by Dmitry Zhdannikov and Gleb Gorodyankin; editing by Jane Baird)

Russian oil flows to Central Europe 'to dry up' http://www.euractiv.com/en/energy/russian-oil-flows-central-europe-dry-news-500199

Published: 02 December 2010 Russia's growing oil exports to Asia and the Baltic have unsettled European traders and refiners, who fear shortages on the Black Sea and in Central Europe should Russian output stall or decline.

Background Oil and gas reserves are unevenly distributed around the globe, and the largest reserves are situated in politically or economically insecure regions such as the Middle East and Russia. North Sea oil and gas fields have already been exploited beyond their peak and the EU's energy dependency on non-EU countries is expected to climb from 50% in 2000 to 70% in 2030. The EU-Russia Energy Dialogue was founded 10 years ago, at the EU-Russia Summit in Paris on 30 October 2000. Then-leaders of the EU and the Russian Federation recognised that energy relations - as one of the key areas of cooperation between the EU and Russia - had to be upgraded. Politicians in the European Union and the United States have repeatedly accused Russia of using its vast energy resources to bring its neighbours to heel, though Moscow says it is simply trying to bring market pricing for its energy supplies. In 2008, Germany received around 350,000 barrels per day (bpd) of crude, just under 15% of its total consumption, via the Druzhba pipeline running from Russia to the EU via Ukraine and Belarus. Refineries belonging to Total, Shell and BP are among the biggest buyers of crude from Druzhba. Poland imports around 400,000 bpd of crude via Druzhba for domestic refining, or more than three-quarters of its consumption, and exports another 90,000 bpd of Druzhba crude via the Baltic Sea port of Gdańsk. Although the world's largest oil producer has repeatedly said it has no plans to cut supplies to European markets, evidence is growing that it is focusing on supplying Northwest Europe, the Pacific and a soon-to-be-pumping pipeline to China to the detriment of Black Sea and Central European routes. This is not so much of a long-term problem for the Black Sea and Mediterranean markets, which will become less dependent on sour and heavy Russian Urals grades as production grows in Kazakhstan and Azerbaijan, whose sweet and light grades will become dominant, traders predict. But for Central Europe, the problem of dwindling Urals supplies may prove more difficult to tackle. German refineries rely on crude from the Druzhba pipeline to such an extent that the issue might ultimately become of major concern to German politicians. "We are witnessing a tectonic shift, and foreigners become very worried. It sounds crazy for now, but we may end up by having Germany and Poland importing crude from the Baltic Sea instead of Druzhba," one major Russian trader said. Ten years ago when Russia launched Primorsk, its first oil port in the Baltic, in order to cut reliance on transit via former Soviet Baltic republics, few traders would have dared to predict the route would replace the Black Sea as the main export channel. Plans for large exports to Asia by the then-President Vladimir Putin had seemed a dream if not a fantasy. Primorsk vs. Novorossiysk A decade later, Primorsk is now Russia's biggest port with exports of 1.55 million barrels per day (bpd), while Kozmino on the Pacific has ramped up exports to 360,000 bpd from scratch two years ago. Meanwhile, combined exports from Black Sea ports including Russia's Novorossiysk and Ukraine's Yuzhny and Odessa are running as low as 700,000 bpd during some months or less than half of combined capacity. In the long term, Russia plans to export as much as 1.6 million bpd to the Pacific and Asia, including through a newly built link to China, due on stream in January. Jonathan Kollek, vice-president for trading at TNK-BP, Russia's No. 3 oil firm, which is half- owned by BP, said the shift from the Black Sea and Druzhba to Asia and the Baltic would continue. "Novo(rossiysk) will dwindle, while the Baltic will pump at full capacity. Novo and Druzhba will be marginal plays to some extent, but you will see flows of products through Novo increasing," he told Reuters. Peter O'Brien, vice-president at Russia's largest oil producer Rosneft, said the extent to which flows will shift to Asia from Europe would depend on Russian tax policies on production and exports from different regions. "It is a function of which production you have in, say, five years," says O'Brien, whose company dominates East Siberian production and is pressing the government for more tax breaks to enable it to export more to Asian markets. O'Brien also noted that some of the proposed changes in taxation may discourage refining, which would free up more crude volumes for exports. Merkel 'should call Putin' Russian oil output has repeatedly pleasantly surprised markets in recent years. Traders say Moscow would have had enough crude for both Europe and Asia if it were not building a new major Baltic port at Ust Luga. Like Primorsk, Ust Luga is also located near St. Petersburg, the home town of Putin, now prime minister and still Russia's most influential politician. It is due to start next year and ultimately ship up to half a million barrels per day of crude to European markets. "With the Chinese pipeline due to start any day and the launch of Ust Luga, I'm wondering if we will witness the death of Druzhba. Merkel should call her 'friend' Putin to figure out what's going on," one trader with a Russian major said. Putin has repeatedly criticised the European Union's stated aim to diversify away from Russian oil and gas after disputes between Russia and its neighbours led to cuts in flows. Ust Luga and the Chinese pipeline are not the only factors affecting future exports as the country expands its refining capacity, despite the proposed changes in taxes. Oil firm Tatneft launched Russia's first major post-Soviet refinery and is seeking to regain control of Ukraine's Kremenchug, which now often sits idle. "If Tatneft gets Kremenchug, there will not be much volume left for the Black Sea. That will make Mediterranean markets very volatile and people will have to get used to constant arbitrage between the saturated Baltic and the hungry south," one major Urals trader said. (EurActiv with Reuters.)

Gazprom

Gazprom May Be Interested in Poland’s Anwil, Ciech, Prawna Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=arEX5hEtcQto By Maciej Martewicz Dec. 2 (Bloomberg) -- OAO Gazprom of Russia is examining the possibility of acquiring a Polish chemicals maker and may be interested in PKN Orlen SA’s unit Anwil SA, state- controlled Zaklady Azotowe Pulawy SA and Ciech SA, Dziennik Gazeta Prawna reported, citing a person it didn’t name. The Polish government aims to sell all of its stakes in chemical companies as soon as next year and Gazprom isn’t currently bidding to buy them, the Warsaw-based newspaper said. Click here for web link To contact the editor responsible for this story: Maciej Martewicz at [email protected] Last Updated: December 2, 2010 01:45 EST

Gazprom creates two joint ventures with Ukraine http://www.kyivpost.com/news/business/bus_general/detail/91891/

Yesterday at 21:29 | Interfax-Ukraine Russia's Gazprom has announced that Gazprom chief executive Alexei Miller and Ukrainian Energy Minister Yury Boiko reached agreements to set up two joint ventures to produce coalmine methane and develop the offshore Pallas natural gas field in the Black Sea.

The Ukrainian Fuel and Energy Ministry in turn confirmed that the creation of such joint ventures had been under discussion at a meeting in Moscow, yet, it did not report on the agreements on the JVs' creation.

"The sides have agreed to set up two joint ventures to produce coalmine methane from the coal- beds in Ukraine and develop the offshore Pallas natural gas field in the Black Sea," Gazprom said in a statement.

"The sides also touched upon other issues of strategic cooperation under the conditions of partnership enjoying equal rights in the framework of recent agreements reached between the presidents of Ukraine and Russia in Moscow on Nov. 26, 2010," reads a statement by the Ukrainian Energy Ministry.

Gazprom's announcement was more laconic – it said that Miller and Boiko had continued discussing issues of further development of strategic partnership between Gazprom and Naftogaz.

The Ukrainian ministry also reported that Naftogaz CEO Yevhen Bakulin was present at the meeting.

The ministry said in a comment to Interfax-Ukraine that its statement was correct and contained no mistakes.

As was reported, following a meeting with Ukrainian Prime Minister Mykola Azarov, Russian Premier Vladimir Putin suggested late in April that Gazprom and Naftogaz be merged. At the first phase a joint ventures was proposed to be created on a parity basis, which would include production and transport assets from the Ukrainian side and natural gas deposits of the same value from Gazprom's side.

Early in September Gazprom's head said that Ukraine had already listed a number of companies that could assess the Ukrainian gas transport system and Russian gas fields.

The Ukrainian leadership repeatedly stressed that it was ready to set up a gas joint venture only on equal conditions and saw no grounds for a hurry in those issues.

Pallas, which lies in the northeastern part of the Black Sea and has an area of 162 square kilometers, has forecast reserves of 157 billion cubic meters and recoverable reserves of 75 billion cubic meters.

In January this year the Ukrainian government issued Naftogaz a 30-year license to develop Pallas, where gas is believed to be obtainable from depths of between 3,000 and 5,200 meters.

Ukraine estimates that its Donets Basin alone contains 11.5 trillion cubic meters of coal-based methane.

Readiness to produce coalmine methane in Ukraine and invest funds in that business was officially announced by Russian-British TNK-BP and the Industrial Union of Donbass.

According to the Ukrainian Energy Ministry, among other potential investors are British-Dutch Shell and U.S.-based Chevron.

Gazprom, Namcor to Acquire Part of Tullow’s Gas Field in Namibia http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a4rVsLqyvV_Q By Anna Shiryaevskaya and Eduard Gismatullin Dec. 1 (Bloomberg) -- OAO Gazprom, the world’s largest natural gas producer, and Namibia’s state-owned oil company, Namcor, plan to buy part of Tullow Oil Plc’s Kudu field off the African nation’s coast. Gazprom and Namcor plan to set up a joint venture that will hold 54 percent in the gas field, Boris Ivanov, head of the Moscow-based company’s international exploration and production unit, said in Gazprom’s corporate magazine. Tullow will hold 31 percent and Itochu Corp. the remaining 15 percent, he said. Kudu “reserves may increase several times over with additional exploration,” Ivanov said in the issue of Gazprom magazine e-mailed today by the company. He estimated the field holds 50 billion cubic meters of gas (1.8 trillion cubic feet). Gazprom is in talks with Namibian and South African authorities about plans to build an 800 megawatt power plant. Some electricity will be supplied to the domestic market with the rest to be exported to Botswana, South Africa, Zambia and Angola, Ivanov said. Tullow, the U.K. explorer with the most drilling licenses in Africa, had examined plans to sell Gazprom, Russia’s state- owned gas monopoly, part of its 70 percent interest in the Kudu gas field to advance the project, Tullow Chief Operating Officer Paul McDade said in March. To contact the reporter on this story: Anna Shiryaevskaya in Moscow at [email protected] Eduard Gismatullin in London at [email protected] To contact the editor responsible for this story: Will Kennedy at [email protected]

Last Updated: December 1, 2010 11:45 EST

Gazprom to start first offshore well on Libya’s shelf in 2011 http://www.prime-tass.com/news/0/%7BB062ED9C-3816-4B3B-B3E8-1503238ACB87%7D.uif MOSCOW, Dec 1 (PRIME-TASS) -- Gazprom Libya B.V., an affiliate of Russian natural gas giant Gazprom, plans to start drilling from its first exploration well at offshore block 19 in Libya in 2011, Boris Ivanov, managing director of Gazprom EP International B.V., said in an interview with Gazprom’s corporate magazine seen by PRIME-TASS on Tuesday. Gazprom EP International B.V. is the parent company of Gazprom Libya B.V. Block 19 measures 10,300 square meters and is located on the shelf of the eastern Mediterranean Sea. The company has completed 3D seismic explorations of the block, and selected and prepared several sites for exploratory drilling, Ivanov said. The block has substantial potential in terms of volume of hydrocarbon reserves, he said. Additionally, Gazprom Libya B.V. has completed 3D seismic explorations of onshore block 64 located in the Ghadames basin in the northwest of Libya and is preparing for future drilling, Ivanov said. The company plans to drill 18 wells at block 64, he said, without providing a timeframe. End 01.12.2010 18:43

Eon offloads its 3.5% stake in Gazprom http://www.ft.com/cms/s/0/aa932fe8-fd52-11df-b83c-00144feab49a.html#axzz16vyq7tNA By Gerrit Wiesmann in Berlin and Isabel Gorst in Moscow Published: December 1 2010 14:21 | Last updated: December 1 2010 23:00 Eon is selling its remaining 3.5 per cent stake in Gazprom, the Russian gas producer, for €3.4bn ($4.5bn), reflecting a souring of relations between the two companies and the German utility’s plan to cut its debt load. The breakdown in relations is in part due to a dispute over gas pricing. Eon is one of the leading players among a group of European gas companies insisting that Gazprom abandons a formula linking gas prices with oil prices and instead trades more gas on cheaper spot markets. Jonathan Stern, head of gas research at the Oxford Institute of Energy Studies, said the price dispute was “boiling up to explosion point between Europe and Gazprom. It has all got horribly, horribly bad.” Western Europe depends on Russia for more than a fifth of its gas imports. But the move also closes a chapter in German energy policy, which began in 2002 when then chancellor Gerhard Schröder overruled the German cartel office and allowed Eon to buy German gas producer Ruhrgas, which had a stake in Gazprom. Eon increased the existing Gazprom stake to 6.4 per cent, enough for a German national to become the only foreign representative among the non-executive directors on the Russian gas monopoly’s supervisory board. Mr Schröder, a Social Democrat, hailed the move as a “milestone” on the road to deepening ties between Germany and Russia. However, since Angela Merkel, a Christian Democrat, became chancellor in 2005, the relationship with Moscow has cooled. Johannes Teyssen, Eon’s chief executive, said the deal would put Eon on track to realising its target of €15bn in asset sales by the end of 2013, announced as part of a strategic review last month. The proceeds are earmarked for paying down debt and investing in faster-growing markets beyond Europe. Eon executives insisted the partnership with Gazprom remained “solid”. Mr Teyssen said Eon would remain “an active investor in Russia” in both power and gas. The company became a junior partner of Gazprom’s in Russia’s Yuzhno-Russkoye gas field last year, when it swapped a 2.9 per cent stake in the Russian gas producer for a 25 per cent stake in the licence. It also has a controlling stake in power producer OGK-4. Klaus Schäfer, head of Eon’s gas unit Eon Ruhrgas, said the stake sale would “in no way alter the continued solid partnership” with Gazprom, which he says is cemented by gas exploration and planned Nord Stream gas pipeline between Russia and Germany. Eon has a 15.5 per cent stake in the pipeline, while Gazprom has 51 per cent. The Düsseldorf-based company said it planned to complete the sale of a 2.7 per cent stake to VEB, Russia’s state development bank this month, having sold the rest of the 3.5 per cent stake in the market. Mr Teyssen last month said he would give Eon a “more international foundation” by investing in energy markets beyond the company’s European core.

Burning need for gas production http://www.ft.com/cms/s/0/c3dff400-fbd5-11df-b7e9-00144feab49a.html#axzz16wCK0zQH By Charles Clover Published: December 1 2010 17:42 | Last updated: December 1 2010 17:42 Novy Urengoy, just a few miles south of the Arctic Circle, lies atop Russia’s vast gas deposits – the very ones that heat western European homes and keep their lights on. As the days get shorter, the technicians at Urengoy Gazprom – the largest chunk of Gazprom’s vast gas production empire – know that with winter looming, they must work hard to meet increased demand. That is getting harder and harder to do, says Rustam Ismagilov, chief of the technical department of Gazprom Extraction Urengoy (Gazprom Dobycha Urengoy), the affiliate that manages the fields. He says many large gas field compressors need to be replaced. “We used to be able to run them all year around,” he complains. “Now we have to give them a break during the summer, during the season of low demand, for maintenance.” Ismagilov estimates the cost of replacing them at billions of dollars. “Taking into consideration the vast modernisation and reconstruction of production, we do not have quite enough investment here. Fifteen of our 21 plants were in place by 1987, and only one is new – it’s six years old,” he adds. Gazprom is the engine of the Russian economy and accounts for 8 per cent of the country’s gross domestic product, but it is creaking under the demands placed on it by the state. With demand for gas in Europe down 13 per cent in 2009 following the global recession, and world gas markets transformed by investments in shale gas and liquefied natural gas, the seller’s market enjoyed by Gazprom just a few years ago has been transformed into a buyers’ market. The company is being forced to renegotiate its prices while scrambling to meet basic investment needs. Production at existing fields is already in decline, and Gazprom itself forecasts output will drop from a maximum capacity of 600bn cubic metres to 400bn cubic metres by 2020. Long taken for granted by the Kremlin as something akin to a giant wallet – one that could fund priority state projects such as the forthcoming Winter Olympics in Sochi – it was also made to bear the burden of the Kremlin’s geopolitical ambitions, becoming a chess piece in Russia’s energy diplomacy. In the process, Gazprom has spent a fortune pursuing political goals, sometimes at the expense of its balance sheet. The group, for example, lost billions as a result of Russia’s brief gas war with Ukraine in January 2009, which most experts saw as a politically motivated move intended to destabilise Ukraine and drive Viktor Yushchenko, its westward-leaning president, from office a year later. In another case, pushed through for the sake of Russia’s political relationship with Italy, Gazprom agreed to buy a 20 per cent stake in Gazpromneft, its oil subsidiary, back from Eni, the Italian oil group, for more than $4bn, well above its market price – even as its revenues were falling, and even though Gazprom already controlled the company. If Gazprom’s strength at the top of the oil and gas boom underpinned Russia’s hard-nosed energy diplomacy, as well as accumulating vast wealth for Gazprom and the state government, the optimism that accompanied the 2007 announcement by Vladimir Putin, prime minister and former president, that Russia was an “energy superpower” has all but vanished. The decline of the oil price from its peak three years ago means Gazprom is now under pressure to renegotiate its long-term gas contracts, which are linked to the oil price, to reflect sweeping change in the gas markets. Demand has fallen precipitously in Europe, so much so that some analysts question the logic of further large-scale upstream investments – some of which, such as the massive Shtokman field and another large field in the Yamal peninsula, have in any event been put on hold. Spot prices have fallen amid an influx of liquefied natural gas into European markets and the rapid development of alternative shale gas in the US. For the first time, Gazprom earlier this year renegotiated its contracts with European energy groups to allow for up to 15 per cent of the sales to be tied to spot prices. Today, Gazprom’s main investment objectives are the pipelines systems designed to feed the European market, whose objectives are as political as they are economic, and whose logic is being questioned. Indeed, it is open to question whether Russia will have enough gas to put in the pipelines, and even more questionable whether Europe will need it. Julia Nanay of PFC Energy, the Washington-based consultancy, says the various pipeline projects being discussed are aimed at solidifying Gazprom’s strategic position in Europe. “These projects all attempt to validate or ensure Gazprom’s European position, while bypassing unreliable transit countries and encouraging non-Russian gas to flow to markets other than Europe,” she says. The so-called North Stream is planned to carry gas directly to western Europe by way of a pipeline under the Baltic Sea. Consisting of two parallel pipelines, each with a capacity of 27.5bn cubic metres per year, the first gas is scheduled for delivery in late 2011. The South Stream, meanwhile, is set to deliver 63bn cubic metres of gas each year to southern Europe via a pipeline under the Black Sea. Yet the need for it is not obvious, say analysts, given that Blue Stream, the existing undersea pipeline to Turkey, may never run at full capacity. Both new pipeline projects increase Russia’s political clout, as they link Russia directly with European consumers and avoid Ukraine and Belarus, which in the past have used their power as pipeline transit countries to block Russian energy shipments. A proposed pipeline to China from western Siberia is also designed both to tap a new market and to increase Russia’s bargaining power with Europe. The silver lining in the global recession was that the drop in demand scuppered the pessimistic “gas gap” predictions of a few years ago that Gazprom would not be able to meet its European supply contracts. Alexei Miller, chief executive of Gazprom, optimistically said last summer that the company was on track to exceed pre-crisis levels of gas production by 2013. But Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies, says “there has been a complete change in the short-term outlook for Russia gas supply, which emerged due to the global recession”. He adds: “It is highly questionable whether Gazprom should be making substantial upstream investments in high-cost supplies until it is sure that demand for that gas will materialise at prices sufficient to provide an acceptable rate of return.”