Basic Political Developments s5

Russia 100802

Basic Political Developments  Marthinus and Zuma go to Russia - Tourism Minister Marthinus van Schalkwyk is off to Russia, along with President Jacob Zuma, the ministry says. The visit follows an invitation by Russian Federation President Dmitry Medvedev and a bilateral meeting between the two presidents would be held in Sochi on August 5.  Russia takes over UN Security Council presidency - On August 1, Russia took over the council’s rotating presidency. Kosovo, the Middle East, African woes, sea piracy and peacekeeping efforts will dominate August debates in the UN Security Council, Russia’s Deputy Foreign Alexander Yakovenko has told reporters.  Chief of Russian presidential administration visits Azerbaijan - Chief of the Russian presidential administration Sergei Narishkin will arrive in Azerbaijan on August 1.  Russian Defense Ministry confirms readiness to sell S-300 to Azerbaijan - Nezavisimaya Gazeta reports that the source in the Russian Defense Ministry confirmed Moscow’s readiness to sell two divisions of S-300 PMU-2 Favorit anti- missile complexes. The amount of the possible contract is at least $300m.  Brussels: South Stream not a priority - In an interview with Russian Kommersant daily, Energy Commissioner Günther Oettinger explained that the South Stream gas pipeline project could not possibly be considered a priority project for the EU. The statement was made in response to a joint appeal addressed by Bulgarian PM Boyko Borisov and Greek PM Georgios Papandreou that the project should be considered a top priority by the whole EU.  Russia's great gas game is a ploy to revive past power - By Joschka Fischer  Rospotrebnadzor did not ban Moldovan wine in Russia - Complete ban on the supply of wine from Moldova Russia has not been imposed.  Transaero air company resumes flights to Cuba  Video announces resignation of Chechen rebel - The leader of Chechnya's separatist militants, who claimed responsbility for the Moscow subway bombings that killed 40 people in March, has purportedly announced in a video posted on YouTube that he is stepping down. - Top Chechen rebel steps down, appoints successor - Chechen rebel leader Doku Umarov has stepped down and appointed Aslambek Vadalov as his successor to fight Moscow's central rule in the North Caucasus, the unofficial Islamist site kavkazcenter.com said Sunday. - Chechen warlord steps down - Chechen Islamist to step down as 'Caucasus Emir' - Report Claims Top Chechen Rebel Steps Down, Appoints Successor  Militant eliminated in Dagestan - An active member of an illegal militant formation was killed in an exchange of fire with the police in Kizlyar district of Dagestan on Sunday, Interfax was told at the Dagestani Interior Ministry on Monday.  Senior police officer shot dead in Russia's Dagestan - A police officer was killed in the Dagestani capital of Makhachkala Sunday, a spokesman for Dagestan's Interior Ministry told Interfax.  Russia keeps close watch on Amur water area - Russia is keeping a close watch on the Amur River water area, where Chinese barrels with chemicals could eventually make to. 7,000 barrels (of which 4,000 turned out to be empty) were washed into the Amur’s tributary, - the Sungari River, by a flood in China.  WILDFIRES IN WESTERN AND CENTRAL RUSSIA - Heat Will Persist in Central Russia Through Aug. 7, Center Says - Massive fires in Russia - Massive forest and peat fires broke out in Russia with a total area exceeding 120 thousand hectares, Lenta.ru reported. - Hundreds of new wildfires erupt in Russian forests - New Fires Strike Russia - UPDATE: Wildfires continue to rage across western Russia - Hundreds of new fires broke out Sunday in Russian forests and fields that have been dried to a crisp by drought and record heat, but firefighters claimed success in bringing some of the wildfires raging around cities under control... Fires have devastated the regions around Nizhny Novgorod, Russia's fifth-largest city, and the city of Ryazan, just southeast of Moscow. They also were moving into regions farther to the east such as Mordovia and Tatarstan. - Ukraine pres instructs govt to grant aid to fire-hit Russian reg - Yanukovych: Ukraine will help Russia fight forest fires - 34 people killed in woodland fires in central, Volga Reg - Official: Death toll from Russian wildfires reaches 34, but blazes shrinking by the day - Russian Patriarch: All pray for rain! - Donations, clothing and utensils will be accepted for the fire victims at all Russian Orthodox churches Greek Metropolitan donates to Russian fire victims - Metropolitan Nicholas of Mesogia and Lavreotiki (the Greek Orthodox Church) has transferred money to the Foundation of Fire Victims in Russia. Lethal heat: abnormally-high temperatures cause destruction in Russia - Russians raise funds, offer prime necessities for fire victims - 86,000 Russians rescued from wildfires in central Russia - Firefighters gain control over wildfires in Russia - "The most difficult situation with wildfires remains in the Nizhny Novgorod, Vladimir and Voronezh regions and the Republic of Mordovia, where fires threaten several populated settlements," the ministry's information department said.  Police reforms to cut economic crime departments, eliminate tax crime - departments - Russian President Dmitry Medvedev will sign an order on a new police structure reducing the number of economic crime departments and eliminating all together tax crime departments, a Russian respected business daily quoted a Kremlin official said.  Russian finance minister dives to bottom of Lake Baikal, takes soil sample  What is it with Putin and tigers? - Does Vladimir Putin have a cuddly side? It’s not been evident so far, but in September he will host a summit of world leaders aimed at saving the tiger. And on Thursday (World Tiger Day, as it happens, though it passed me by) he took steps to protect the forests of Korean Pine in the far east of his country, home to the rare Amur tiger. – by Geoffrey Lean  Losing an intermediary - Ella Pamfilova resigns as head of Presidential Human Rights Council  Officials argue with demographics - Predictions about Russia’s extinction are unfounded and must be reviewed  Russia Profile Weekly Experts Panel: Moscow’s Media War With Lukashenko  Sacred Ties - Russian Orthodox Patriarch Kirill is claiming his – and Moscow’s – “spiritual” stakes in Ukraine  4 Things Worth Talking About - As the second anniversary of the August 2008 war approaches this week, Georgians, Abkhaz, Ossetians and Russians are still recovering from the conflict’s terrible legacy - By Oksana Antonenko  Russian Airborne Troops celebrate 80th anniversary  CSIS: Russia Plans 60% Increase in Defense Budget by 2013  Oligarch accuses Russia of seeking revenge - In a recent interview, Mr Chichvarkin told the Financial Times that the hearing will allow him to expose the interior ministry in front of the British justice system. “In Russia, corruption is a disease,” he says. “The law is being violated by 20m people working in law enforcement who are not fulfilling their function and living off assets that are stolen from the nation.”  Polyus sues KazakhGold's former owners for $450m - Some of Kazakhstan’s most valuable gold fields have become the subject of a bitter $450m (£287m) High Court battle – pitting Russia’s second-richest oligarch against a powerful local family.  Russia lines up €20bn state sell-off but history illuminates the dangers – by DANIEL McLAUGHLIN  A new "army" of young people for the Russian Orthodox Church - An "army" of missionary specialists are ready to reconnect young people to religion. It is a project launched by the Moscow Patriarchate.  PRESS DIGEST - Russia - Aug 2 - Russia's economy lost 4.6 billion roubles ($152.1 million) over the last weekend due to the forest fires, the paper writes. - South Korean Hyundai Motor Co. (005380.KS: Quote, Profile, Research) will present new C-class sedan built specially for Russia at Moscow's international car show on Aug. 25-29, the daily reports. - Russia will lay off 20-25 percent of its Interior Ministry staff, with the major job cuts planned in the departments dealing with economic crimes, the paper writes. - Russia will spend 5 billion roubles ($165.3 million) to restore infrastructure destroyed by forest fires, the paper writes. - Russia is ready to sell to Azerbaijan two S300 missile defence systems for at least $300 million, the paper writes citing sources. - Russia's carmaker Avtovaz (AVAZ.MM: Quote, Profile, Research) has suspended production for August 2-8, the paper writes. National Economic Trends  Kudrin: Russia's GDP growth will come to pre-crisis level by the end of 2012  Russian Manufacturing Showed ‘Sustained’ Improvement, VTB Says  PMI: Gradual recovery in Russian manufacturing continues in July  Russian govt to sell state grain by quota to drought regions – Zubkov  State Grain Trader Keeps Export Plans  Wheat Surges on Speculation Drought-Hit Russia May Curb Exports  Wheat Jumps to 14-Month High as Heat Wave Parches Russian Farms  Russian Assets May Be Sold to China State Funds, Times Says

Business, Energy or Environmental regulations or discussions  Lukoil, Norilsk, Polyus, Rosneft: Russian Equity Preview  Peak time on Russia’s rollercoaster - Emily Whiting, a client portfolio manager at JP Morgan, is quick to acknowledge that Russia is perhaps the most volatile of the major emerging markets. She works with Oleg Biryulyov, the manager of JP Morgan Russian Securities, an investment trust with assets totalling £315m, but is part of a team that oversees $2 billion (£1.3 billion) in Russian equities. That makes it the biggest foreign equity investor in the country.  Federal Grid Company enjoys H1 net profit  OGK-2 genco ups Q2 earnings 15.9%  TMK reports slump in RAS-based net profit  VTB Capital races to the top in Russia - By Catherine Belton  Singapore Lures Russian Borrowers as VTB Doubles Debt Offering  Norwegian bank buys Russian bank - The North Norwegian bank Sparebank1 Nord-Norge has got license to buy 75 percent of the shares in the Russian bank North West 1 Alliance Bank. The new bank opens new possibilities for Nordic companies in North-West Russia.  Russia gives go ahead for poultry from more US plants  In Primorye, three terminals for the export of grain will be built  AvtoVaz suspends work due to heat wave  AvtoVAZ Suspends Car Production for Week on Record Russian Heat  Russia's Avtovaz valued at $2.4 bln before issue  RusAl, Partners Offer to Buy Potanin Out of Norilsk  New insider trading laws - what changes? - With the government introducing new insider trading laws Business RT spoke with Vladimir Milovidov, the Head of the Federal Financial Markets Service about the details and what is or isn't inside trading.  For the Record o VimpelCom said Friday that it acquired 100 percent of Foratek Communication, an operator in the Ural Mountains, for 1.4 billion rubles ($46.4 million). (Bloomberg) o Transaero became Russia’s second-largest airline in the first half of this year, overtaking S7 Group, according to company data and the Federal Aviation Agency. (Bloomberg) o Pharmacy chain 36.6 narrowed its net loss to 162 million rubles ($5.4 million) in the first quarter, from 648.5 million rubles a year earlier, the company said Friday. (Bloomberg) o Russian agricultural safety officials will lift a ban imposed on imports of Finnish dairy products next week, the Finnish Food Safety Authority said in a statement Friday. (Bloomberg) o Former Norilsk chairman Alexander Voloshin may become a board member at Yandex, Vedomosti reported Friday, citing Yandex chairman Alfred Fenaughty. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)  Russia July oil output hits new record - Daily oil output reaches 10.13 million bpd; Gas production falls to 1.42 bcm  LUKoil May Use Shares for M&A  Russia's Lukoil to acquire Croatia's Crobenz  BP's Dudley to Visit Moscow This Week  BP's Dudley to visit Moscow next week: source

Gazprom  Gazprom export revenues to continue rise - Export revenues are set to continue their rise after advancing to the predicted $45 billion this year, Gazprom deputy chief executive Alexander Medvedev told Reuters Insider TV.  Gazprom Sees 2011 Export Revenues Rising - Medvedev said in January that gas demand in Europe, Gazprom's main market outside Russia, would return to pre- crisis levels around 2012-13, which is close to the estimates of analysts, who expect power demand to have recovered by the middle of the decade.  Gazprom to switch over to flexible price policy on natural gas - Russia’s Gazprom is prepared to usher in a new system of payments for gas deliveries to foreign consumers. The gas giant may specifically offer discounts and change long-contract terms.  Gazprom London interested to buy surplus carbon credits from Romania

------

Full Text Articles

Basic Political Developments

Marthinus and Zuma go to Russia http://www.timeslive.co.za/local/article580088.ece/Marthinus-and-Zuma-go-to-Russia

Aug 1, 2010 12:21 PM | By Sapa Tourism Minister Marthinus van Schalkwyk is off to Russia, along with President Jacob Zuma, the ministry says.

“The Russian Federation is one of the fastest growing outbound tourist markets in the world," van Schalkwyk said in a statement.

"We would like to make sure that we extend our co-operation in the field of tourism."

Van Schalkwyk said he hoped to tackle issues such as direct air links, visa processes and the marketing of South Africa as a tourist destination.

Russia is bidding to host the soccer world cup in 2018 and South Africa would share its experiences with them.

South Africa and Russia signed a tourism co-operation agreement in 1998.

"The agreement was never implemented and as such, discussions will be held between the two countries on how to revive the signed agreement."

In 2009 South Africa saw 10,214 arrivals from the Russian Federation.

President Jacob Zuma will be in Russia from August 4 to 6.

The visit follows an invitation by Russian Federation President Dmitry Medvedev and a bilateral meeting between the two presidents would be held in Sochi on August 5.

Russia takes over UN Security Council presidency http://english.ruvr.ru/2010/08/01/14083187.html

Aug 1, 2010 10:31 Moscow Time

Kosovo, the Middle East, African woes, sea piracy and peacekeeping efforts will dominate August debates in the UN Security Council, Russia’s Deputy Foreign Alexander Yakovenko has told reporters.

On August 1, Russia took over the council’s rotating presidency.

The Russian Permanent Representative to the UN Vitaly Churkin replaced his predecessor, the Nigerian ambassador Joy Ogwu.

Chief of Russian presidential administration visits Azerbaijan http://en.apa.az/news.php?id=127156 [ 02 Aug 2010 10:57 ] Baku. Victoria Dementieva – APA. Chief of the Russian presidential administration Sergei Narishkin will arrive in Azerbaijan on August 1.

According to APA, Narishkin will hold meetings with the Azerbaijani authorities in Baku on August 2. Azerbaijan-Russian bilateral relations and preparation for the Russian president Dmitry Medvedev’s expected visit to Azerbaijan in September will be discussed at the meetings.

Russian Defense Ministry confirms readiness to sell S-300 to Azerbaijan http://www.news.az/articles/20195

Mon 02 August 2010 | 07:21 GMT

Russia launches a new, more active military policy on his South Caucasus partner- Azerbaijan.

Nezavisimaya Gazeta reports that the source in the Russian Defense Ministry confirmed Moscow’s readiness to sell two divisions of S-300 PMU-2 Favorit anti-missile complexes. The amount of the possible contract is at least $300m. Other facts also confirm the possible deals.

According to sources in the Russian defense ministry, Azerbaijani military students have been studying at the military academy of Airspace Defense in Tver also studying anti- missile S-300. The source considers that Rosoboronexport did it right to dismiss statements about the sale of Favorits to Baku. “This deal is just being negotiated but the government has already passed a principal decision on this issue”.

Chief of the Russian presidential administration Sergey Narishkin arrived in Baku yesterday. According to Azerbaijani sources, during the meetings he will discuss preparation for the upcoming September official visit of President Dmitri Medvedev to Azerbaijan. It is not specified whether the sides will the contract for purchase of S-300 PMU-2.

According to general-lieutenant Yuri Netkachev, who was once deputy command of the Group of Russian Troops in South Caucasus, formally there are no obstacles for the sale of new modern missile defense systems to Azerbaijan. He said the amount of the possible contract ($300m, almost 15% of Azerbaijan’s defense budget) for two divisions of Favorits proves that they will be supplied directly from the plant: “It will likely be the complexes which we prepared for supplies to Iran”.

Favorit is a targeted weapon for protection from possible airspace attack against big strategic and industrial establishments. Therefore, Russian complexes will locate in Absheron peninsula and likely protect oil terminals of the BTC pipeline and Baku itself”, Netkachev believes. He considers that the purchase of S-300 is just related to possible resumption of hostilities against Armenia.

1news.az

Brussels: South Stream not a priority http://www.focus-fen.net/index.php?id=n227112

02 August 2010 | 04:43 | FOCUS News Agency Home / European Union Sofia. In an interview with Russian Kommersant daily, Energy Commissioner Günther Oettinger explained that the South Stream gas pipeline project could not possibly be considered a priority project for the EU. The statement was made in response to a joint appeal addressed by Bulgarian PM Boyko Borisov and Greek PM Georgios Papandreou that the project should be considered a top priority by the whole EU. “South Stream is an interesting project, but nothing more. Some EU member states even intend to participate in it. On the other hand, we do not perceive it as a main route for gas deliveries from the Caspian region. We want to have a direct route between the region and Europe and for this reason Nabucco remains the priority project for the EU”, Oettinger was quoted as saying by the Dnevnik daily. Marlene Holzner, Spokesperson for Commissioner Oettinger, explained that in the case with South Stream there was no detailed information on the exact route of the pipeline or its gas sources. Holzner emphasized that in the frames of the Trans-European Energy Networks approved on September 6th 2006 South Stream was not specified as a priority project.

Russia's great gas game is a ploy to revive past power http://www.dailystar.com.lb/article.asp? edition_id=10&categ_id=5&article_id=117706#axzz0vQ5Y3Oc2

By Joschka Fischer Commentary by Monday, August 02, 2010

Russia and the European Union are geopolitical neighbors. Whether or not their relationship is in fact neighborly, rather than tense and confrontational, is of critical importance to both.

Unless it modernizes its economy and society, Russia can forget its claim to status as a world power in the 21st century and will continue to fall behind both old and newly emerging powers. Moreover, Russia needs partners for its modernization, because its population and economic potential are too small for it to play an important role by itself in the emerging new world order. Russia’s strategic nuclear weapons will be insufficient to ensure it a place among first-rank powers.

But where can Russia turn? Toward East Asia? To the south and the Islamic world? Neither of these is a serious option. As it is, Russia can turn only toward the West, and to Europe in particular.

For Europe, however, Russia’s role is of critical strategic importance. Even a partial revision of the post-Soviet order in the direction of an increased Russian grip on ex- Soviet states or satellites would drastically change the European Union’s strategy and security policy.

Both sides claim to want improved bilateral relations, but there is room for doubt about whether Russians and Europeans actually think about their relations in the same terms. A look beyond the cordial rhetoric reveals profound differences.

When Russia’s former president and current prime minister, Vladimir Putin, declared several years ago that the greatest disaster of the 20th century was the demise of the Soviet Union, he didn’t just speak for himself but arguably for the majority of Russia’s political elite. The overwhelming majority of Europeans, however, probably view the USSR’s breakup as a cause for celebration.

Indeed, today’s Russia avowedly seeks to reverse the post-Soviet order in Europe that emerged after 1989-1990, at least in parts of its neighborhood, while the Europeans and the West want to maintain it at all costs. So long as Moscow doesn’t understand these fundamental differences and draw the right conclusions from them, Europeans won’t view Russia’s opening toward the West as an opportunity, and Russia will always encounter deep mistrust in Europe. But this doesn’t preclude practical and pragmatic cooperation in numerous areas.

Russia today has retained its strength only as a supplier of energy and other natural resources. It is therefore no surprise that Putin has sought to use this lever to rebuild Russia’s power and to revise the post-Soviet order.

Russia’s natural gas supplies to Europe play a vital role in this regard, because here, unlike in the case of oil, Russia’s bargaining position is very strong. Even more importantly, its direct neighbors are either completely dependent on Russian gas supplies – Ukraine and Belarus – or, like Azerbaijan and Turkmenistan, are dependent on Russia’s pipeline system to sell their gas output.

Russia certainly pursues economic interests with its gas-export policy – all the more so when gas prices are trending down – and it wants to expand its role on the European gas market to intensify the dependencies that now exist. But this is unlikely: Russia’s disruption of gas supplies in January 2009 made clear to the EU in no uncertain terms what price might have to be paid. That is why “diversification of gas-supplier countries” has since been EU policy – including, first and foremost, the Nabucco pipeline project, which would open a southern corridor between the Caspian Sea, Central Asia, northern Iraq, and Europe. Nabucco would reach Europe via Turkey and would drastically reduce Caspian supplier countries’ dependence on Russia’s pipelines, and the new southeastern EU members’ dependence on Russian gas supplies. So it comes as no surprise that the Kremlin is trying to scupper Nabucco.

Two other developments promise to prevent increased European dependence on Russia: the massive expansion of liquefied gas imports into the EU and – linked to this and to deregulation of the European gas market – the transition from long-term supply agreements and the oil-price peg to market-dependent spot prices.

Nonetheless, the primary goal of Russian gas policy isn’t economic, but political, namely to further the aim of revising the post-Soviet order in Europe – a quest that is not about the EU as much as it is about Ukraine.

Ukraine’s new prime minister, Mykola Azarov, was stunned when Putin unexpectedly confronted him during a joint press conference with a suggestion to merge the Ukrainian and Russian gas companies. Unlike the Ukraine government’s assent to extending the Russian Black Sea fleet’s deployment in Crimea – a decision that led to physical violence in Ukraine’s Parliament – this was not a prolongation of the status quo, but a public demand for its revision.

With the Nordstream pipeline in the Baltic and the exorbitantly expensive South Stream pipeline in the Black Sea, Russia is not just trying to create direct gas connections between Russia and the EU that bypass Ukraine and undermine Nabucco. The main goal is to put pressure on Ukraine, as well as on Azerbaijan and Turkmenistan, which want to supply Europe with gas independently of Russia. Once those aims are achieved and Nabucco goes ahead, or goes ahead, South Stream will be shelved because it doesn’t make economic sense.

In Europe and the United States, this challenge has been understood. Now it is necessary to stand by those in Ukraine who see a European future for their country, to open the southern corridor via Nabucco, and to accelerate development of a common European energy market. A decisive European policy will improve, rather than strain, relations with Russia, because it will result in more clarity and predictability.

Joschka Fischer, Germany’s foreign minister and vice chancellor from 1998 to 2005, was a leader in the German Green Party for almost 20 years. He has been advising, among other clients, the Nabucco project since July 2009. THE DAILY STAR publishes this commentary in collaboration with Project Syndicate-Institute for Human Sciences © (www.project-syndicate.org). Rospotrebnadzor did not ban Moldovan wine in Russia http://tula.kp.ru/online/news/712567/ GOOGLE TRANSLATION

Gennady Onishchenko doubts as drink from Moldova

Yegor Arefiev - 08/02/2010 7:15

As the recognized leader Rospotrebnadzor, chief state sanitary doctor Gennady Onishchenko, the Russian side has questioned the quality of Moldovan wines, so their entry is restricted.

Complete ban on the supply of wine from Moldova Russia has not been imposed. To normalize the situation with the import of alcoholic beverage, the Russian side intends to hold talks with the Moldovan business, far from politics.

"We will seek real power, most likely in the Moldavian and business elite, which could affect the situation. Apparently, the contact with them might be more productive," - said the head of Rospotrebnadzor.

On the territory of Russia banned imports of Georgian wine, and imports of Moldovan wine is limited - it can come only through a checkpoint, Interfax reported.

Transaero air company resumes flights to Cuba http://www.itar-tass.com/eng/level2.html?NewsID=15366503&PageNum=0

02.08.2010, 04.45

HAVANA, August 2 (Itar-Tass) - Russian air company Transaero has resumed flights from Moscow to Varadero in Cuba, the Cuban media reported on Sunday.

The flights will be made twice a week on the Boeing-767 planes from August to October. A more spacious Boeing-777 will go into operation in November. Aeroflot is another Russian air carrier that makes regular flights to Cuba.

According to official reports, 22,900 Russians visited Cuba in the first six months of 2010, which is 24.9% up compared to the same period last year. Russia has outdone Argentina by the number of tourists to Cuba and is second only to Mexico (33,200 tourists).

Tourism is one of the main sources of revenues for the Cuban budget apart from exports of nickel ore and biotechnological products. More than 300,000 Cubans work in the tourist sphere. A record number of foreign tourists (2.42 million) visited Cuba last year. However, revenues from tourism have dwindled by 11%.

Video announces resignation of Chechen rebel http://www.washingtonpost.com/wp- dyn/content/article/2010/08/02/AR2010080200456.html

The Associated Press Monday, August 2, 2010; 3:15 AM

MOSCOW -- The leader of Chechnya's separatist militants, who claimed responsbility for the Moscow subway bombings that killed 40 people in March, has purportedly announced in a video posted on YouTube that he is stepping down.

Doku Umarov, regarded in the United States and Russia as a terrorist, says in the grainy footage that he is ceding leadership to a younger and more energetic deputy. The authenticity of the video could not be verified, and a website sympathetic to the rebels of the Russian province was down on Monday.

The 46-year-old Umarov took over as so-called Emir of the Caucasus Emirate - the separatists' top post in Russia's predominantly Muslim North Caucasus region - in 2006. The rebels seek an independent Shariah state.

Umarov has claimed responsibility for several recent terrorist attacks in Russia.

Top Chechen rebel steps down, appoints successor http://www.ynetnews.com/articles/0,7340,L-3928303,00.html

Published: 08.01.10, 23:52 / Israel News Chechen rebel leader Doku Umarov has stepped down and appointed Aslambek Vadalov as his successor to fight Moscow's central rule in the North Caucasus, the unofficial Islamist site kavkazcenter.com said Sunday. The United States has listed Umarov - Russia's most wanted guerrilla - as a terrorist, a step likely to have pleased the Kremlin and helped a "reset" of relations with the White House after chilly ties with the previous Washington administration. (Reuters)

Chechen warlord steps down http://www.presstv.ir/detail.aspx?id=137104§ionid=351020602

Mon, 02 Aug 2010 05:38:10 GMT Chechen rebel leader Doku Umarov has stepped down from his post and appointed a successor to fight Russia's central rule in the North Caucasus.

In a video released on the internet on Sunday, the 46-year-old said he was handing over his responsibilities to a younger comrade named Aslambek Vadalov.

He is "younger" and can lead "more energetically", Umarov said through the unofficial website kavkacenter.com.

However, the Chechen rebel, who claimed the Moscow Metro bombings in March that killed 40 people and wounded 100 more, stressed that his resignation does not mark an end to his fight against Russian rule in the Caucasus.

"I will do whatever I can by word and deed," he vowed in the video.

Umarov has been on Moscow's most-wanted list since 1994, for battling pro-Kremlin forces.

He is one of the few rebel leaders to survive the two separatist wars between Chechnya and Russia in the nineties. During years 1996 to 1999, he served as security minister in the separatist government.

In October 2007, Umarov named himself as head of the self-styled Caucasus Emirate - which is seeking control of the mainly Muslim territories in the Russian North Caucasus.

He assumed the rebel leadership after his predecessor, Abdul-Khalim Saydullayev, was killed in a police operation in June 2006.

FF/HRF

Chechen Islamist to step down as 'Caucasus Emir' http://www.google.com/hostednews/afp/article/ALeqM5gnYA1DWVA6G2e9bzZC5eBS 3_728Q

(AFP) – 3 hours ago

MOSCOW — Chechnya's guerrilla chief and self-proclaimed "Emir of the Caucasus" Doku Umarov announced he was stepping down in a video posted on YouTube.

"We have unanimously decided that I shall leave my post today," said the bearded rebel fighter who claimed to be behind the Moscow suicide attacks in March.

The new head of Islamist group "Caucasus Emirate" will be Aslambek Vadalov, who Umarov said was "younger and more energetic." But Umarov, 46, stressed that "this does not mean that I will withdraw from the jihad" and promised to do "all I can, in words and deeds," to help his successor.

US Secretary of State Hillary Clinton took action in late June to help stem the flow of funds and other aid to Umarov, on the eve of a visit to Washington by Russian President Dmitry Medvedev.

Clinton had "designated" Umarov under Presidential Executive Order 13224, Clinton's spokesman Philip Crowley said.

The order "targets terrorists and those providing support to terrorists or acts of terrorism. This action will help stem the flow of financial and other assistance to Umarov," Crowley said in a statement.

Umarov has evaded capture in the thickly forested valleys of the Caucasus mountains for almost two decades, although Russian authorities have several times prematurely announced his death.

The bearded rebel fighter had been on Russia's most-wanted list long before the bloody metro bombings that killed 39 people, for battling pro-Kremlin forces in two separatist wars in Chechnya since 1994.

But in October 2007, Umarov styled himself as head of the "Caucasus Emirate", uniting rag-tag rebel groups in several southern Russian regions in a drive to establish Sharia, or Islamic rule, in the North Caucasus.

In his claim for the Moscow strikes posted March 31 on a radical North Caucasus website, Umarov vowed more attacks on the Russian heartland: "The war will come to your streets, and you will feel it with your own lives and skins."

He was known as an ally of notorious rebel chief Shamil Basayev, who claimed to have led dozens of bloody attacks, including the infamous 2004 Beslan school hostage siege that killed over 330 people, most of them children.

Umarov became head of the Chechen guerrilla movement in June 2006 after Basayev was killed by Russian forces a month earlier.

The two rebels were at the forefront of the Chechen separatist struggle in which as many as 100,000 civilians, or about 10 percent of the region's mostly Muslim population, are feared to have been killed.

Report Claims Top Chechen Rebel Steps Down, Appoints Successor http://www.rferl.org/content/Report_Claims_Top_Chechen_Rebel_Steps_Down_Appoint s_Successor/2115894.html

August 02, 2010 An unofficial Chechen website claims that Chechen rebel leader Doku Umarov has stepped down and appointed Aslambek Vadalov as his successor.

The rebels say on www.kavkazcenter.com that Umarov announced his resignation "for health reasons."

The information has not been independently confirmed.

The site says Umarov "intends to continue to wage jihad and will do his utmost to help the new leadership."

Recently the United States has listed Umarov as a terrorist.

Umarov has claimed responsibility for several attacks in recent months, including the March 29 bombings of the Moscow metro that killed at least 40 and wounded 100 more.

Officials both in Moscow and Chechnya's capital Grozny could not be immediately reached for comment. compiled from Reuters reports

August 02, 2010 09:28

Militant eliminated in Dagestan http://www.interfax.com/newsinf.asp?id=180557

MAKHACHKALA. Aug 2 (Interfax) - An active member of an illegal militant formation was killed in an exchange of fire with the police in Kizlyar district of Dagestan on Sunday, Interfax was told at the Dagestani Interior Ministry on Monday.

A press officer said that the exchange occurred at 3 a.m. in the village of Bolshoi Bredikhin. "A police patrol stopped two pedestrians for an ID check. They opened automatic fire at the police. One attacker was killed and the second managed to escape. None of the police officers was hurt," the spokesman said.

The killed was identified as Yusup Suleimanov, born in 1987, a resident of Bolshezadoyevskoye and an active member of the Kizlyar terrorist group.

"He had been federally wanted for attempt on the life of a law enforcer and illegal possession of arms," the spokesman said. Senior police officer shot dead in Russia's Dagestan http://english.peopledaily.com.cn/90001/90777/90853/7088653.html

08:10, August 02, 2010 A police officer was killed in the Dagestani capital of Makhachkala Sunday, a spokesman for Dagestan's Interior Ministry told Interfax.

Yunus Khulatayev, a senior investigator with the Interior Ministry's Investigation Department, was shot at 1:20 a.m. Moscow time (2120 GMT Saturday), the spokesman said.

"Three assailants broke into the police officer's apartment, tied his wife and son up with duct tape, killed the police officer with three shots and escaped," he said.

An investigation was currently underway.

Violence is common in Russia's mainly Muslim North Caucasus republics, especially Chechnya, Dagestan and Ingushetia, with militants frequently targeting police and officials as representatvies of the Russian authorities. Source: Xinhua

Russia keeps close watch on Amur water area http://english.ruvr.ru/2010/08/02/14165395.html

Aug 2, 2010 10:08 Moscow Time Russia is keeping a close watch on the Amur River water area, where Chinese barrels with chemicals could eventually make to. 7,000 barrels (of which 4,000 turned out to be empty) were washed into the Amur’s tributary, - the Sungari River, by a flood in China. Experts are monitoring the environment in the Jewish Autonomous District and the Khabarovsk Territory on a daily basis. No excess of noxious substances was registered in the water on Monday morning. Meanwhile the Chinese authorities have offered assurances that all barrels have been taken out of the river, that the potentially hazardous substances will not make it to Russia and that all aftermath of the incident will be done away with on Chinese territory.

WILDFIRES IN WESTERN AND CENTRAL RUSSIA

Heat Will Persist in Central Russia Through Aug. 7, Center Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aqKQ0dcYPSAo By Maria Kolesnikova

Aug. 2 (Bloomberg) -- Hot weather that has damaged crops and caused wildfires across Russia will persist in central parts of the country and along the Volga at least through Aug. 7, the country’s weather center said.

Daytime temperatures will rise to as high as 42 degrees Celsius (107.6 degrees Fahrenheit) in central Russia and along the Volga, the Hydrometeorological Center of Russia said on its website today. Similar temperatures will persist in the southern Russia and the Caucasus through August 4, it said.

Russia is experiencing intensifying rural wildfires stoked by a heat wave and strong winds, the country’s Emergency Situations Ministry said yesterday. Fourteen regions have declared a state of emergency after wildfires engulfed entire villages, leaving 30 people dead and more than 2,000 homeless, according to RIA Novosti.

The government also declared emergencies in 27 crop- producing regions because of the worst drought in at least a decade.

To contact the reporters on this story: Maria Kolesnikova in Moscow at [email protected],

Last Updated: August 2, 2010 02:51 EDT

Massive fires in Russia http://www.aysor.am/en/news/2010/08/02/faire/

Massive forest and peat fires broke out in Russia with a total area exceeding 120 thousand hectares, Lenta.ru reported.

New 787 sites caught fire during the day. 387 out of them have been already extinguished and 400 with an area of 121 thousand 546 hectares still burn, Russian Ministry of Emergency Situations reported.

Fires broken out in areas that have been dried to a crisp by drought and record heat (Mordova, Tatarstan, Belgorod, Voronezh, Ivanov, Kirov and a number of regions) caused the most damage.

Some populated areas were burnt to the ground. The fire resulted in deaths of several dozens of people. Families of the casualties in Russian forest fires will receive one million roubles for each fire victim.

TODAY, 12:30 Hundreds of new wildfires erupt in Russian forests http://www.boston.com/news/world/europe/articles/2010/08/02/hundreds_of_new_wildfi res_erupt_in_russian_forests/

Associated Press / August 2, 2010 VORONEZH, Russia — Hundreds of new fires broke out yesterday in Russian forests and fields that have been dried to a crisp by drought and record heat, but firefighters claimed success in bringing some of the wildfires raging around cities under control.

The firefighters got much-needed help from residents desperate to save their homes, who shoveled sand onto the flames and carted water in large plastic bottles.

The wildfires that began threatening much of western Russia last week have killed 28 people and destroyed or damaged 77 towns or villages, the Emergencies Ministry said. Thousands of people have been evacuated from areas in the path of flames; no deaths have been recorded since late Wednesday.

Troops and volunteers have joined tens of thousands of firefighters in combating the fires, which blazed just outside Moscow and in several provinces east and south of the capital.

The region around Voronezh, a city of 850,000 people about 300 miles south of Moscow, has been one of the worst hit. Half of the 300 homes in the village of Maslovka were reduced to cinders.

Emergencies Ministry spokeswoman Yelena Chernova said fires in the Voronezh region were under control yesterday and no longer threatened any population centers.

But woodlands on the edge of the city, about a mile from some houses, continued to burn. Firefighters sprayed water from hoses and dumped it from the air, while local residents pitched in on the ground.

Some 320 new fires broke out yesterday, but 210 were extinguished, the Emergencies Ministry said, while the total territory ablaze shrank by thousands of acres to about 316,000 acres. No homes were damaged by fire during the weekend, it said.

Fires have devastated the regions around Nizhny Novgorod, Russia’s fifth-largest city, and the city of Ryazan, just southeast of Moscow. They also were moving into regions farther to the east such as Mordovia and Tatarstan.

Smoky air has settled over cities, already baking in the heat, and many residents are complaining of headaches and intestinal ailments. In Moscow, the smog has come mainly from fires in dried-up peat bogs. AUGUST 2, 2010

New Fires Strike Russia http://online.wsj.com/article/SB10001424052748704702304575403443959621082.html? mod=googlenews_wsj

VORONEZH, Russia—Hundreds of new fires broke out Sunday in Russian forests and fields that have been dried to a crisp by drought and record heat, but firefighters claimed success in bringing some of the wildfires raging around cities under control.

The wildfires that began threatening much of western Russia last week have killed 28 people and destroyed or damaged 77 towns or villages, the Emergencies Ministry said. Thousands of people have been evacuated from areas in the path of flames.

Some 320 new fires broke out Sunday, but 210 were extinguished, the Emergencies Ministry said, while the total territory ablaze shrank by thousands of acres to about 316,000 acres. No homes were damaged by fire during the weekend, it said.

Much of western and central Russia is suffering through a severe drought, thought to be the worst since 1972, in what has been the hottest summer since record-keeping began 130 years ago.

UPDATE: Wildfires continue to rage across western Russia http://www.kyivpost.com/news/russia/detail/76393/

Today at 05:46 | Associated Press VORONEZH, Russia (AP) — Hundreds of new fires broke out Sunday in Russian forests and fields that have been dried to a crisp by drought and record heat, but firefighters claimed success in bringing some of the wildfires raging around cities under control.

The wildfires that began threatening much of western Russia last week have killed 28 people and destroyed or damaged 77 towns or villages, the Emergencies Ministry said. Thousands of people have been evacuated from areas in the path of flames, but no deaths have been recorded since late Wednesday.

Troops and volunteers have joined tens of thousands of firefighters in combating the fires, which blazed just outside Moscow and in several provinces east and south of the capital. The region around Voronezh, a city of 850,000 people about 300 miles (475 kilometers) south of Moscow, has been one of the worst hit. Half of the 300 homes in the village of Maslovka were reduced to cinders.

Emergencies Ministry spokeswoman Yelena Chernova said fires in the Voronezh region were under control Sunday and no longer threatened any population centers.

But woodlands on the edge of the city, about a mile (1.5 kilometers) from some houses, continued to burn. Firefighters sprayed water from hoses and dumped it from the air onto the blaze, while local residents pitched in on the ground.

Some 320 new fires broke out Sunday, but 210 were extinguished, the Emergencies Ministry said, while the total territory ablaze shrank by thousands of acres (hectares) to about 316,000 acres (128,000). No homes were damaged by fire during the weekend, it said.

Fires have devastated the regions around Nizhny Novgorod, Russia's fifth-largest city, and the city of Ryazan, just southeast of Moscow. They also were moving into regions farther to the east such as Mordovia and Tatarstan.

Smokey air has settled over cities, already baking in the heat, and many residents complain of headaches and intestinal ailments. In Moscow, the smog has come mainly from fires in dried-up peat bogs in outlying regions. The peat, which is high in carbon, can ignite and smolder underground, giving off dangerous fumes.

Much of western and central Russia is suffering through a severe drought, thought to be the worst since 1972, in what has been the hottest summer since record-keeping began 130 years ago. This year's harvest was already in trouble, and the fires have finished off vast fields of golden wheat and other crops.

Temperatures have topped 95 degrees (35 Celsius) for much of the past three weeks, with an all-time high of close to 100 degrees (38 Celsius) recorded in Moscow last week.

Emergency officials said the heat and drought were the main cause of the fires, but they also blamed human carelessness and urged people to use extreme caution when walking or driving in the woods or countryside.

"Any source of fire, including a cigarette thrown from a car window, will ignite the dried grass," the emergency services said in a statement.

Read more: http://www.kyivpost.com/news/russia/detail/76393/#ixzz0vQN8vwCy

Ukraine pres instructs govt to grant aid to fire-hit Russian reg http://www.itar-tass.com/eng/level2.html?NewsID=15366640&PageNum=0

02.08.2010, 09.57

KIEV, August 2 (Itar-Tass) - Ukrainian President Viktor Yanukovich has given instructions to the government to render aid to the Russian regions that have suffered from woldland fires, the press service of the Ukrainian leader said on Monday after his telephone conversation on Sunday with Russian President Dmitry Medvedev.

The presidents “discussed a difficult situation facing some Russian regions as a result of large-scale woodland fires, and agreed that Ukraine would lend assistance with an aim to liquidate negative aftermaths of the natural calamity,” it said.

President Yanukovich instructed the government, the leadership of the Ministry for Emergency Situations, the Defence Ministry and some other central bodies of executive power, as well as the leadership of the regions bordering on Russia to take measures to render aid to Russia.

Yanukovych: Ukraine will help Russia fight forest fires http://www.kyivpost.com/news/nation/detail/76414/

Today at 09:44 | Interfax-Ukraine The presidents of Ukraine and Russia, Viktor Yanukovych and Dmitry Medvedev, have discussed the wildfires in Russia in a telephone conversation on Sunday.

"The heads of state have agreed that Ukraine will help Russia fight the fires and overcome their consequences," the Ukrainian president's spokesperson told Interfax.

Yanukovych also ordered to the Cabinet, the Emergency Ministry and the Defense Ministry, as well as other central executive authorities to take all necessary steps to help Russia overcome the natural disaster.

Read more: http://www.kyivpost.com/news/nation/detail/76414/#ixzz0vQlsIDho

34 people killed in woodland fires in central, Volga Reg http://www.itar-tass.com/eng/level2.html?NewsID=15366777&PageNum=0

02.08.2010, 10.22

MOSCOW, August 2 (Itar-Tass) - The death toll from woodland fires in Central Russia and the Volga Region has reached 34, the head of the National Centre for Crisis Situations of the Russian Ministry for Emergency Situations, Vladimir Stepanov, said at a session on Monday. “Owing to taken measures no residential houses have been destroyed in the past three days, and 265 settlements situated in the area of woodland fires have been saved,” he said.

Official: Death toll from Russian wildfires reaches 34, but blazes shrinking by the day http://www.google.com/hostednews/canadianpress/article/ALeqM5itTwFVQNcjH- YBqhrNHq-2xaa6Uw

By The Associated Press (CP) – 12 minutes ago

MOSCOW — Russia's Emergencies Ministry says 34 people are known to have died in the recent wave of wildfires, which have destroyed hundreds of homes but are thought to be slowly dying down.

Vladimir Stepanov, who heads the Emergencies Ministry's crisis response centre, said in televised comments that nationwide 500 new fires had been registered in the past 24 hours, but most of them were immediately doused.

Officials over the weekend said 28 people had died in the fires, which by Sunday were engulfing an area equivalent to 316,000 acres (128,000 hectares). Stepanov said Monday the number had shrunk by a further 7,000 acres.

About 1,500 homes have been wiped out as fires have torn through Central and Western Russia, boosted by a record heat wave that has dried forests and fields to a crisp.

02 August 2010, 10:42

Russian Patriarch: All pray for rain! http://www.interfax-religion.com/?act=news&div=7542

*** Donations, clothing and utensils will be accepted for the fire victims at all Russian Orthodox churches

Diveyevo, near Nizhny Novgorod, August 2, Interfax - Patriarch Kirill of Moscow and All Russia has urged believers to pray for rains.

"I am urging all the faithful sons and daughters of the Russian Orthodox Church to unite in one prayer to God that he send rains to our scorched soil," Patriarch Kirill told believers on the square in front of the Transfiguration Cathedral of the St. Seraphim Monastery in Diveyevo. The Patriarch said that the strongest prayers should be said on August 2, the Elijah the Prophet Day, whom people usually pray for rains in Russia.

Patriarch Kirill also urged all to aid the fire victims. Donations, clothing and utensils will be accepted for the fire victims at all Russian Orthodox churches in the coming three days, he said, adding that councils responsible for the consolidated raising of donations will be set up in each parish.

The current environmental disaster is God's reminder that people must reform and repent on their sins.

02 August 2010, 11:30

Greek Metropolitan donates to Russian fire victims http://www.interfax-religion.com/?act=news&div=7544

Moscow, August 2, Interfax - Metropolitan Nicholas of Mesogia and Lavreotiki (the Greek Orthodox Church) has transferred money to the Foundation of Fire Victims in Russia.

The hierarch donated his personal money to Patriarch Kirill. The Metropolitan heads a delegation of Greek Orthodox Church pilgrims to the Nizhny Novgorod Diocese, who came to commemorate St. Seraphim of Sarov, the Moscow Patriarchate official website reported.

Metropolitan Nicholas says Greece recently faced the same natural calamity so he knows from his personal experience the terrific outcome of the vast fires (extensive fires grasped Greece in August 2009, fires of 2007 were extremely intensive and destructive).

"I hope this symbolic sum of 200 thousand rubles will give a start to efficient, not symbolic, help the Russian Orthodox Church will give to fire victims," the Metropolitan said.

As was reported, the Russian Church started collecting donations and clothing for fire victims. According to the Patriarch, councils responsible for the consolidated raising of donations will be set up in each parish. The Department for Church Charities and Social Mission opened a special bank account for donations.

Lethal heat: abnormally-high temperatures cause destruction in Russia http://rt.com/Top_News/2010-08-02/russia-heatwave-fires.html/print

02 August, 2010, 08:01 The month-long heat-wave being experienced in Russia has caused destructive forest fires that have burnt down hundreds of homes in the country’s center. At least 30 people have been killed.

According to media reports with reference to the Emergency Ministry, the total area of forest fires has currently topped 110,000 hectares. Strong winds have been fanning the flames, forcing villages, summer camps and hospitals to be evacuated. Thousands of people have been left homeless. Many of them are staying in temporarily refugee centers.

Authorities are struggling to get the situation under control.

Specialist aircraft have been deployed there to battle wildfires.

President Dmitry Medvedev has instructed local authorities to provide people who lost homes with new housing.

“After this unusually hot summer will be a cold winter. So we need at least to provide people with temporary housing and immediately start the construction of permanent homes. Both the Russian government and the regional administrations should certainly reserve resources to finance these needs,” he said.

Prime Minister Vladimir Putin and the head of the Emergencies Ministry, Sergey Shoigu, are in the region of Nizhny Novgorod, one of the worst hit areas.

Vladimir Putin has talked to local residents and ensured them that the destroyed villages will be rebuilt.

"We will use heavy machinery to flatten the destroyed areas and build brand-new modern villages. The deadline is November 1, 2010," Putin promised.

Five billion roubles from the federal budget will be allocated to rebuilding regions that have been ravaged by fire.

Vladimir Markin from the Prosecutor's Office says the officials' handling of the situation will be investigated.

“Because forest fires have spread and killed people, destroyed and damaged buildings, the Central Investigation Committee at the Russian Prosecutor’s Office has instructed the heads of local investigation departments to assess the actions, or lack of action, of officials, which have resulted in such serious consequences,” he said. “Upon the result of these inspections, decisions will be made according to the Russian Criminal Procedure Code,” he added.

While firefighters are desperately seeking ways to contain the flames, Russian test pilot Aleksandr Akimenkov says the answer could be artificial climate change. Russia has used planes to disperse clouds for special occasions and emergency situations. He claims the method could help bring rain to help tackle the wildfires.

“Dispersing clouds may not really be a job for the air force, but aviation can provide a solution until we find another way. Regarding the Chernobyl explosion, our crews hampered the rains and helped stop the spread of radioactive substances throughout the Soviet Union. It could work well in the present draught,” he believes.

To help the fire victims, activists from the “Starost v Radost” movement are collecting bed clothing, mattresses, summer and winter clothes, towels, dishware, frying pans, kettles, household appliances, lamps, food, kit furniture, and any other things people might need in such a situation.

If you want to help, please leave donations at the concierge’s post at 5/13 Smolenskaya Naberezhnaya, first entrance from 8 a.m. till 11 p.m.

For more details, contact Liza Oleskina at +7-903-507-21-17.

Russians raise funds, offer prime necessities for fire victims http://english.ruvr.ru/2010/08/02/14163794.html

Aug 2, 2010 09:34 Moscow Time In Russia volunteers, public organizations and charities have started raising funds and collecting prime necessities for the fire victims. The first consignments of prime necessities are already on the way to the fire-hit Moscow, Ryazan, Voronezh, Nizhni Novgorod, Vladimir and Ivanovo Regions. The effort to collect offerings has been blessed by Patriarch Kirill of Moscow and All Russia.

86,000 Russians rescued from wildfires in central Russia http://english.ruvr.ru/2010/08/02/14162396.html

86,000 people have been rescued in fire-ravaged built-up areas in central Russia. According to the Emergencies Ministry, firefighters, as well as police units and Army servicemen are engaged in putting out the fires in the vast areas of the European part of Russia.

Not a single residential home has been affected by wildfires in the past two days. According to the latest reports, 2,200 people have been left homeless because of fires.

On government orders, they will have compensation money paid and new homes built. Prayers for rain are due to be conducted in all of Russia’s Orthodox churches today.

On August 2nd the Russian Church honours the Biblical Prophet Elijah, who is considered at the grass roots level to be in charge of both terrible and beneficial forces of nature, and has rain showers and thunderstorms at his disposal.

Firefighters gain control over wildfires in Russia http://edition.cnn.com/2010/WORLD/asiapcf/08/01/russia.wildfires/#fbid=2swt6olxu58

By the CNN Wire Staff August 1, 2010 -- Updated 2348 GMT (0748 HKT)

(CNN) -- With nearly 86,000 people evacuated from fire-ravaged regions, Russian authorities said Sunday that firefighters were gaining control over blazes sweeping across thousands of acres in western Russia.

"Despite complicated weather conditions, the situation is under control thanks to preventive measures and efforts taken by the Russian Emergencies Ministry," a spokesman for the ministry told the Itar-Tass news agency.

At least 28 people have been killed and thousands left homeless by the wildfires, which are among the worst ever to hit western Russia. No fire-related deaths were reported since Friday, officials said Sunday.

Two firefighters were among the dead, Itar-Tass reported, citing the Emergency Ministry.

Latest figures from the ministry showed that 128,500 hectares (317,530 acres) were burned or had burned, and 774 "hotbeds of wildfire" were counted as of 6 a.m. Sunday. About half the fires had either been extinguished or contained, the ministry spokesman said.

"The most difficult situation with wildfires remains in the Nizhny Novgorod, Vladimir and Voronezh regions and the Republic of Mordovia, where fires threaten several populated settlements," the ministry's information department said.

A hot, dry summer has been a key factor in the fires, drying out large parts of land and igniting the peat bogs that lie all over central Russia.

Moscow, Russia, hit a temperature of 39 Celsius (102 Fahrenheit) on Thursday, the highest temperature since records began in 1879. The fires have destroyed more than 1,200 homes, the ministry said, and nearly 5,000 people have been left homeless.

CNN's Matthew Chance reported from the village of Maslovka, Russia, near Voronezh, that almost every house in the village of 500 people had burned to the ground. All the residents of Maslovka had been evacuated to nearby hotels.

A resident of Maslovka named Nina told Chance she had returned to the village after the fire to sift through the rubble of the house where she was born.

For 50 years, she said, she lived under the same roof. A few days ago, the wildfires were swept by high winds to the village and quickly engulfed her house. Now there was nothing left.

Even the clothes she was wearing were not hers -- they had been given to her by a neighbor.

As Nina told her story, an elderly woman walked from behind a broken wall, wailing with tears. Nina said the woman was her mother, devastated she had lost the home where she raised her family.

Russia's government has vowed to compensate the more than 1,870 families whose houses have been burned down.

Amid complaints, Russian President Dmitry Medvedev has ordered regional governors to speed up the compensation process.

The Kremlin has called the wildfires a natural disaster of the kind that appear every 30 or 40 years. Critics, meanwhile, accuse local authorities of mismanaging the response.

Desperate to control the blazes, Russia says its deployed nearly a quarter of a million people to fight the fires. But around Voronezh, many of the firefighters that Chance saw were just volunteers with buckets.

Police reforms to cut economic crime departments, eliminate tax crime departments http://en.rian.ru/russia/20100802/160037508.html

11:26 02/08/2010

Russian President Dmitry Medvedev will sign an order on a new police structure reducing the number of economic crime departments and eliminating all together tax crime departments, a Russian respected business daily quoted a Kremlin official said.

The official said that Medvedev will hold a meeting on police reforms in Sochi on August 6 and sign the order on the new police structure, Vedomosti reported. Under the reforms, economic and tax crime department officials will take exams after which, a source close to police said, 20-25% of the personnel will be made redundant.

All tax crimes will be transferred to the Russian Investigative Committee.

The move comes as a response to a growing number of claims after investigation initiated by an economic crime department and a tax crime department opens an additional case based on the same evidence making entrepreneurs "suffer" twice.

A Russian lower house of parliament deputy, Vladimir Gruzdev, said that tax crimes were often opened to conduct corporate raids.

Last month, Medvedev signed five laws concerning Russia's police but said new legislation was still needed as part of ongoing reforms.

The president said the five bills, which improve existing legislation and toughen the requirements for future police officers, were about making sure past problems were not allowed to reemerge.

In July, the president said the amendments to the police legislation should help prevent corruption among officers and make it impossible for them to use their position to suppress citizens' rights and freedoms.

He also said police officials should be given wider social benefits, adding that perhaps a separate law should be drawn up for this goal.

The state of Russia's police has become a great concern after a number of high-profile police scandals, including the random shooting of several people in a supermarket by an off-duty police officer in April 2009.

In response to growing criticism, Medvedev ordered a large-scale reform of the police in December 2009, including cutting the officer numbers and increasing salaries.

MOSCOW, August 2 (RIA Novosti)

Russian finance minister dives to bottom of Lake Baikal, takes soil sample http://en.rian.ru/russia/20100802/160036568.html

10:09 02/08/2010

Russian Finance Minister Alexei Kudrin dove to the bottom of the world's deepest freshwater lake, Lake Baikal, and took soil samples, the Irkutsk regional government's press service said on Monday. Kudrin was accompanied on the three-hour dive on Sunday by Irkutsk Governor Dmitry Mezentsev on the Mir-1 submersible doing research work near the island of Olkhon.

Kudrin and Mezentsev dove down almost half a kilometer, where they studied the lake's fauna and took soil samples from the bottom of the lake.

"There is a feeling of pride and admiration that we have the ability to conduct such research," Kudrin was quoted by the press service as saying.

Two deputies from Russia's lower house of parliament Vladimir Gruzdev and Artur Chilingarov announced they would dive to the bottom of Lake Baikal in one of the two submersibles in order to locate the absolute deepest point.

Gruzdev said on his last dive, researchers fixed the maximum depth of the lake at 1.68 kilometers (5,511.81 feet), but wanted to find an even deeper spot.

Gruzdev said Russia's Mir-1 and Mir-2 self-propelled deep submersibles are exploring the bottom of Siberia's Lake Baikal for gas hydrates, an alternative energy source.

Gas hydrates are crystal-based solids which physically resemble packed snow. Scientists call them "the fuel material of the future" because they have a higher concentration of hydrocarbons and are considered to be a possible alternative to oil and gas.

The underwater expedition of Lake Baikal started in 2008. This summer, researchers searched for new species of flora and fauna, and dove down more than a mile (1.6 kilometers) to the deepest point of the lake, near Olkhon Island.

The mini-subs worked in the southern part of the lake, and in August 2009 the expedition moved to Baikal's north, where gas hydrates, crystalline solids, and large amounts of methane are trapped within a cage of water molecules, were found.

The total cost of the expedition is $8 million, with one dive worth 2 million rubles ($64,800).

Mongolian President Tsakhiagiin Elbegdorj became the first president to dive to the bottom of Baikal in the Mir-1 mini-submarine in mid-July.

Russian Prime Minister Vladimir Putin made a 4-hour dive in the Mir-1 mini-submarine to the bottom of Lake Baikal in August last year.

NOVOSIBIRSK, August 2 (RIA Novosti) Geoffrey Lean is Britain's longest-serving environmental correspondent, having pioneered reporting on the subject almost 40 years ago.

What is it with Putin and tigers? http://www.telegraph.co.uk/earth/earthcomment/geoffrey-lean/7919276/Vladimir-Putin- is-earning-his-stripes.html

By Geoffrey Lean World Last updated: August 1st, 2010

Does Vladimir Putin have a cuddly side? It’s not been evident so far, but in September he will host a summit of world leaders aimed at saving the tiger. And on Thursday (World Tiger Day, as it happens, though it passed me by) he took steps to protect the forests of Korean Pine in the far east of his country, home to the rare Amur tiger.

Once there were 100,000 tigers in the wild. Now, says WWF (formerly the World Wildlife Fund) there are more in America’s zoos than in all the forests of the globe. Three species – the Bali, Caspian and Javan tigers – are already extinct, with others struggling to survive. The summit, held in Vladivostok to mark the Chinese year of the Tiger, aims to double the animal’s numbers by 2022.

Putin has long liked tigers, which he sees as a symbol of Russia, and was given a cub for his 56th birthday in 2008 ("The most original present of my life," he said, unsurprisingly). That same year he reportedly saved the lives of a TV crew by shooting and tranquillising a charging Amur tiger.

All of which makes you wonder what animals other politicians might adopt. Gordon Brown could have the bear, seemingly abandoned by the Russian premier. I'm not sure about David Cameron, but the chameleon would do admirably for Nick Clegg. Something small, perhaps, for Nicolas Sarkozy – why does the gerbil spring to mind? And for Silvio Berlusconi, it would surely have to be a rabbit…

At last, good news from the Gulf

Back in 1976, a tanker discharged just five tons of oil into the Baltic – but long-tailed duck mistook the slick for a patch of calm water, and 60,000 died. That’s 50 times as many birds as are known to have been killed by the more than 250,000 tons that have gushed from BP’s well into the Gulf of Mexico.

In other words, it’s not the size of the spill as much as its place, timing – and just sheer luck. And, as Richard Alleyne showed on these pages yesterday, the Gulf seems to have got off lightly. At first it looked bad, as winds blew the slick at Louisiana’s wetlands. But then they turned, and held it offshore long enough for it to begin to break up.

There is more good news: there are signs that the grasses that hold the wetlands together are beginning to regenerate. However, Jane Lubchenco, the marine scientist who heads the US National Oceanic and Atmospheric Administration, warns against too much euphoria. “The sheer volume of oil has to mean there are some pretty significant impacts,” she says, adding that the place to look is not onshore, or even on the ocean floor – which also seems to have largely escaped permanent damage from the leak – but at the vast amount of oil suspended in droplets beneath the surface and being consumed by sea life. Still – so far, not so bad.

Losing an intermediary http://rt.com/Top_News/Press/eng.html

Ella Pamfilova resigns as head of Presidential Human Rights Council

By Ksenia Veretennikova

Last Friday, Dmitry Medvedev accepted the resignation of the head of the Presidential Council for Facilitating the Development of Civil Society Institutions and Human Rights. Her resignation was unexpected. Despite the fact that Ms. Pamfilova argues that this decision was motivated by personal reasons which she does not wish to discuss, a number of possible reasons for what happened have already surfaced.

For example, the German channel ARD/Das Erste suggested that the head of the Presidential Council is leaving as a way to show her disagreement with the expansion of power of Russia’s special services. Corresponding amendments to legislation were recently adopted by the State Duma and signed into law by the president on July 29. Now, as a “preventative measure,” FSB officers can issue citizens “official warnings on the inadmissibility of actions creating conditions for the committal of crimes.” Ella Pamfilova had repeatedly expressed concern about the new initiative, which, in her opinion, will give the authorities a tool for fighting dissidents. The bill was adopted last week, without an article on the responsibility citizens will carry for incompliance with these warnings.

Recently Ms. Pamfilova’s relations with the pro-Kremlin youth movement Nashi (Ours) became more tenuous. She harshly criticized celebrations, called “You are not welcome here,” on Lake Seliger, where the youth movement Stal (Steel) put swastika signs on photographs of people who, in their opinion, are enemies of Russia, including the head of the Moscow Helsinki Group, Lyudmila Alekseeva, rock musician Yury Shevchyuk, politicians Eduard Limonov, Boris Nemtsov, former Ukrainian president Viktor Yushchenko, and Georgian President Mikhail Saakashvili. Nashi, whom Ms. Pamfilova accused of authoring this political provocation, in return threatened with legal action. Recall that last fall, the human rights activist stood up for journalist Aleksandr Podrabinek when Nashi was holding protests in front of his house for a week.

“I think that everything is a lot more complicated: Pamfilova found herself trapped between two fires. This is a typical situation for a mediator,” Aleksey Makarkin, vice president of the Center for Political Technologies, told Vremya Novostei. “She tried playing the role of an intermediary between the government and the opposition – the real civil society and not a simulacrum. And the civil society is often an inconvenience; it sets forth demands to which the government is unaccustomed. On the other hand, opposition often views the government with distrust. As a result, in the government, Pamfilova was regarded as someone lobbying the ideas of the opposition, and the opposition thought that she was covering the government’s actions and improving its image.”

“There were many problems – take the FSB law as an example,” Makarkin continued. “Pamfilova’s council reacted objectionably, while the president supported the law and even said that he had initiated it. This is the same situation with the dispersal of protests that were held by Strategia 31 on Triumph Square. The council objects to dispersing of protests, but the government did not listen. The third problem: the Nashi youth movement. We don’t know what the last straw was. All of these factors together are important. And, most importantly, she was not accepted on both sides.”

It is still unknown who will take Pamfilova’s place. She endorsed Aleksandr Auzan, president of the Association of Independent Centers of Economic Analysis. Meanwhile, the Liberal Democratic Party of Russia faction in the State Duma has already nominated its candidate” the party’s leader, Vladimir Zhirinovsky.

“The faction finds that, considering the combination of personal, intellectual, and ethical and humanitarian qualities, there cannot be a better candidate for the newly available post than the leader of the party, Vladimir Zhirinovsky,” reads the announcement on the party’s website.

According to Mr. Makarkin, the future of the presidential council will depend on the decision of the head of state.

“If Auzan, or anyone else who is willing to continue this thankless job of an intermediary, is appointed, then the dialogue will continue,” he said. “If the council is liquidated, or headed by a person who does not connect with the real civil society, then the council will be impractical – after all, we already have the Public Chamber.”

Ella Pamfilova noted that she is planning to drastically change her career and is not planning on working in politics or state government.

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

Officials argue with demographics http://rt.com/Top_News/Press/eng.html

Predictions about Russia’s extinction are unfounded and must be reviewed

By Sergey Kulikov and Mikhail Sergeev The government has for the first time managed to stabilize the size of the population, which is why all the forecasts about Russia’s extinction are unfounded and must be reviewed. This announcement was made by Deputy Prime Minister Aleksandr Zhukov. However, the forecasts, made by Western analysts and Rosstat (Federal State Statistics Service), indicate a population decline in the next 10-20 years. The demographics argument is that economic growth is impossible with a declining population, and a reduced number of workers destabilizes the retirement system. The situation could only be offset by high immigration.

During last Thursday’s meeting of the Council on Priority Projects, Zhukov said that “in all the years of implementation of national priority projects, the birth rate has increased by 21%, the death rate decreased by almost 12%, and life expectancy rate rose to 69 years. For the first time ever, we have managed to stabilize the size of the population.”

Meanwhile, he referred to the forecasts of American analysts, who argued that the size of the Russian population will be reduced in the coming years, as “absolutely unfounded.”

Recall that, according to the latest report of the American research organization Population Reference Bureau, Russia’s population is expected to decline drastically. If today the number of Russians is approximately 142 million people, then by 2025 it is expected that it will be reduced to 133 million, and by 2050 to 117 million people.

Zhukov promises to “stabilize and gradually increase the population.” As proof, he cited the following encouraging statistics: “A 16.2% death rate decline by 2013 in comparison to 2009, a 9.5% increase in birth rate, and increased life expectancy by 2.3 years, to 71.3 years.”

However, experts say that there isn’t a single country in all of human history that developed at an annual rate of 7% for more than 15 consecutive years with only a 1% annual decline in thr employable population. Yet according to the existing predictive estimates, that is exactly what will be happening in Russia until 2020. It is incredibly difficult to perform the optimistic economic scenario in such an unfavorable demographic situation.

But the official statistical agency has its own demographic forecasts. Rosstat made three estimates for the population size until 2030 (low, medium, high), with consideration given to the Conception of Demographic Policy of the Russian Federation in the period until 2025. Rosstat’s low estimate for 2025 is 132.7 million; the high estimate is 146.6 million, and the medium one 140.9 million people. The high scenario assumes that each woman of reproductive age will have 1.8-2 children. Currently in Russia, however, this figure is 1.3.

According to the Deputy Director of the Institute of World Economics and International Relations (IMEMO), Evgeny Gontmakher, despite all of the authorities’ conjurations, the population decline will continue. “Today, an entire bouquet of forecasts exists, including three from Rosstat. And only one of them is optimistic,” he noted. “If the forecasts were split approximately 50/50, then we could say that the truth lies somewhere in the middle. But that is not the case; therefore, the officials need to regard science seriously.”

According to the expert, saying that the birth rate in Russia will increase is simply absurd.

“Yes, we were able to reduce the death rate in the recent years, which was thanks to the elementary improvement of the work of the ambulance service in the regions and an improved quality of healthcare from its absolute lowest level,” said Gontmakher. “However, increasing life expectancy to 70 years and higher, which Mr. Zhukov is suggesting, will require colossal investments – financial, as well as changing the population’s lifestyles.”

Of course, forecasts should sometimes be reviewed, which does happen when prices for oil, energy consumption, etc., are recounted. But, demographics is a science that is a lot more conservative, and does not have revolutionary changes, says the analyst.

Meanwhile, economists note that the only way to improve the demographic situation in Russia is through migration. In the next 20 years, the country will need about 25 million migrant workers. In the worst case scenario, due to the quickly reducing size of the employable population, Russia’s economy will face stagnation, and the pension system will head into decline. These conclusions were drawn in 2007 by the Institute for Economy in Transition (IET) in its review, titled “Economic-Political Situation in Russia in January 2006.” Since then, the situation has remained practically unchanged.

“We will not see population growth unless we see a rise in immigration,” said Gontmakher. “So, authorities should think about how they can ensure all the necessary conditions for this.”

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

July 30, 2010 Russia Profile Weekly Experts Panel: Moscow’s Media War With Lukashenko http://www.russiaprofile.org/page.php?pageid=Experts %27+Panel&articleid=a1280512335

Introduced by Vladimir Frolov Russia Profile

Contributers: Vladimir Belaeff, Ethan Burger Earlier this month Russia’s Gazprom-owned NTV aired a two-part documentary called “The Godfather” in which it compared Belarusian President Alexander Lukashenko to Hitler and Stalin, and accused him of authoritarianism and ordering the murders of his political opponents – an unprecedented move by Russian statecontrolled media. With Belarusian presidential elections looming this winter, what is the Kremlin’s real strategy on Belarus? Will Moscow pressure Lukashenko into not standing, or offer him a peaceful “transition” afterward? Could Russia join the EU and the United States in not recognizing the result if the elections are rigged? Or would that be too outlandish an option for President Dmitry Medvedev to consider?

In response to the NTV documentary, on July 15 Belarus' state-owned television aired an interview with Georgian President Mikheil Saakashvili in which he strongly criticized the Kremlin. On July 20, the official government newspaper in Belarus, “Respublika,” began publishing extracts from “Putin. Ten Years. The Results,” a pamphlet by Russian opposition figures Boris Nemtsov and Vladimir Milov.

Moscow is encountering strong resistance from Minsk in its campaign to advance political and economic integration in the post-Soviet space. Lukashenko refused - until the last moment - to sign the customs union agreement with Russia and Kazakhstan on the grounds that Belarus should not have to pay duties on Russian energy exports and should have a favorable price for natural gas - all key Russian subsidies for his bankrupt regime.

Lukashenko views Russia’s integrationist efforts and the ensuing end of economic subsidies to Belarus as a direct threat to his authoritarian rule, precisely at the moment when he seeks his fourth presidential term in early 2011.

The fracas is also driven by personal animosity between Lukashenko and Russia’s “tandem” rulers - President Dmitry Medvedev and Prime Minister Vladimir Putin – and both sides have come close to mutual character assassination.

While Moscow’s wrath over Lukashenko’s resistance to joining the Customs Union is understandable, a strategy that seeks to personally humiliate him and weaken his regime is unlikely to work. Although the Kremlin has long stopped pretending that it views Lukashenko as much more than an international embarrassment and would quite clearly like to see him move on, it has done nothing to prepare the ground for a political transition in Minsk that Moscow could control.

The Kremlin is unlikely to move to oust him unless they could put a more pliant president in his place. There is no one among the leading opposition figures in Belarus that Moscow can endorse as its candidate.

They all want Belarus to join the EU, and to a man are organizationally feckless and largely unknown outside Minsk. With his popularity ratings around 50 percent and all opposition candidates polling under 10 percent, Lukashenko is likely to win reelection next year. With this in mind, Moscow appears to be trying to intimidate Lukashenko with media attacks to make him more deferential to the Kremlin’s wishes. This course has its limits, however, and is difficult to reverse without losing face and leaving one’s opponent free to throw the mud back.

What is the Kremlin’s real strategy on Belarus? Will Moscow keep piling economic pressure on Lukashenko in the run up to the presidential election in early 2011? Will Russia demand that Lukashenko not run for reelection? Or will it offer him a “Rahimov style” transition afterward? Would Russia be prepared not to recognize the results of the presidential vote in Belarus, in careful coordination with Washington and Brussels, were Lukashenko to resort to his tried and tested methods of vote rigging? Or would this be too outlandish an option for Medvedev to consider?

Vladimir Belaeff, Global Society Institute, Inc., San Francisco, CA:

Alexander Lukashenko’s behavior has been erratic for many years. One must wonder how much of this instability is due to fluctuating pecuniary interests, mainly aimed at tapping the “Russian gold seam,” and how much of the unstable behavior is due to deeper, personal issues in Lukashenko’s mind.

It seems that Russian leaders (of all political persuasions) are reasonably taking a long- term look: people like Lukashenko eventually leave the political stage, but countries and nations remain. This is of course small consolation for the vexation of dealing with an erratic “partner.”

From a realistic perspective Belarus does not have significant leverage. The country has no unique or exclusive advantages either as a source of valuable products or critical-to- success geography. Its industrial base is aging, it is not unique as a route for transit of goods between Russia and her Western trading partners, and it depends on direct and indirect subsidies to make ends meet. In the present worldwide climate of scarce money, patrons with sufficient largesse are not so plentiful, and it is highly advisable not to abuse their kindness. This is the realistic dimension of Lukashenko’s condition. The fact that he (or his entourage) chooses to bite the hand that feeds him leads some observers to suppose a psychological aberration as the principal cause of his misbehavior.

Such erratic actions do not recommend president Lukashenko to any of the other few potential patrons. He does not have much to offer in exchange for support and forbearance of behavior that borders on the bizarre.

The exchange of media salvos between Russian and Belarusian broadcasters should also be considered in the context of summertime news doldrums. One cannot repeat ad infinitum the stories about “Russian spies” in America and the oil vent in the Gulf of Mexico. Therefore, stories about marginal “leaders” like Saakashvili and Lukashenko may be a way to maintain audience ratings. One should not necessarily attribute excessive significance to these broadcasts. Regarding Lukashenko’s political future, in the long term he does not have much to expect: his marginality has been irrevocably established. In the shorter term, he may survive additional electoral cycles, mainly because there are no credible and charismatic alternatives to his candidacy, and the expectations of the Belarusian electorate seem to be sufficiently low that even a low-level performing incumbent such as Lukashenko can obtain (or construct) the required plurality.

Will the Russian leadership tire of Lukashenko? It seems that the evidently pragmatic individuals in Russia’s executive ranks have learned to absorb and circumvent Lukashenko’s political gyrations. This need to absorb and circumvent is at present an acceptable price to pay for the Lukashenko “product” (whatever that is). Currently, it is not a question of being tired of Belarus’s leader, but of much broader policy horizons. However, Lukashenko should worry very much if a fresh, credible, charismatic, businesslike and pragmatic challenger appears on Belarus’s political stage. A workable alternative will receive a lot of pent-up political support and Belarus might finally see genuine movement into the 21st century.

Ethan S. Burger, Senior Lecturer, Centre for Transnational Crime Prevention, Faculty of Law, Innovation Campus, University of Wollongong, AUSTRALIA:

Approximately nine years ago, many, if not most, Belarusian citizens watched Russian television news on a regular basis. Consequently, it did not escape notice in Minsk, Brest, Vitebsk and elsewhere that during a month-long period prior to the September 2001 Belarusian presidential “election,” the tone of Russian television news coverage on Belarusian President Alexander Lukashenko turned generally negative.

In fact, NTV broadcast a videotape implicating Belarusian state-sponsored death squads in the “disappearance” of United Civil Party Leader and Deputy Chairman of the 13th Supreme Soviet Viktor Gonchar and former Belarusian Interior Minister Yuri Zakharenko, both potential challengers of Lukashenko, along with Gonchar’s colleague Anatoly Krasovsky and Russian cameraman Dmitry Zavadsky. It is doubtful that the Belarusian population did not take note of this.

Some speculated that the Kremlin’s patience with the mercurial Belarusian president had run its course and that it would support his challenger Vladimir Goncharik, the chairman of the Belarusian Federation of Trade Unions. It seemed that Goncharik, a Soviet-era functionary, was put forth by the anti-Lukashenko forces in the country precisely since he was someone that Putin and colleagues would find unthreatening, while at the same time end Belarus international isolation. Nevertheless, in an election judged by the OSCE to be neither fair nor free, Lukashenko crushed his two opponents.

As of late, Belarusian-Russian relations have not been smooth. As with Ukraine, Russia had a dispute with Belarus over financial arrangements in connection with Russian energy exports to Western Europe. While that controversy seems to have been resolved, considerable bad feelings remain. Lukashenko has shown his willingness to ruffle the Russian leadership’s feathers by meeting with Georgian President Mikheil Saakashvili and providing political asylum to former Kyrgyz President Kurmanbek Bakiev.

Furthermore, in recent years, Lukashenko has also made a concerted effort to reorient Belarusian trade away from Russia and toward the European Union, which cannot be to Moscow’s liking - except for those Russians who own or control Belarusian enterprises that now have better access to the EU market.

It has no doubt occurred to the Russian leadership that there would be distinct benefits having a Belarusian equivalent of Ukraine’s President Viktor Yanukovich as president in its Western neighbor. While many Russian citizens have never really accepted the idea that Belarus was a separate country, Belarusians of all political stripes have no desire to be incorporated into the Russian Federation (de jure or de facto). Why be a region – or even split up into a handful of districts - when you can be a country?

No doubt both Russian President Dmitry Medvedev and Prime Minister Vladimir Putin see significant benefits in Lukashenko’s removal from power. If they could play a constructive role in a non-violent “transition” process that put more “attractive” interim leaders in power until the holding of elections, and if the OSCE found those elections acceptable, it could lead the EU and the United States to view Russia in a more favorable light.

But it is not clear that Russia could make him an offer he could not refuse, even if it wanted to. Furthermore, it is not absolutely clear if the EU speaks with one voice about the desirability of Lukashenko remaining in power - it is easier to get economic concessions from a small country like Belarus, than it would be from Russia.

Thus, one should expect Lukashenko to wrap himself in the Belarusian flag and ensure his security apparatus can be relied upon. While not a place that most Western Europeans would want to go for a vacation, it is at least a buffer against Russian expansionism. With Russian influence in Ukraine growing, they would probably not relish a similar outcome in Belarus. The cost of Russia trying to impose its will on the Belarusian people is probably a decade overdue.

July 30, 2010 Sacred Ties http://www.russiaprofile.org/page.php?pageid=International&articleid=a1280466701

By Dan Peleschuk Special to Russia Profile

Russian Orthodox Patriarch Kirill is claiming his – and Moscow’s – “spiritual” stakes in Ukraine During Patriarch Kirill’s visit to Ukraine – the third in a year – he made sure to characterize it as a simple matter of spirituality. But the increasing frequency of his visits, especially in the midst of Moscow-friendly Ukrainian President Viktor Yanukovich’s election in February, sends signals that spirituality may not be the only priority on Kirill’s Ukrainian agenda.

Religion has always been messy business in Ukraine, especially when it comes down to past or present imperial dominations. The Russian religious influence is today perhaps the biggest thorn in Ukraine’s spiritual side, as it is one of the factors that splits Ukraine’s Orthodox majority into several groups. The largest of these are the Ukrainian Orthodox Church, which remains part of the Moscow Patriarchate, and the independent Kiev Patriarchate, which emerged as a result of a schism in 1992 and remains unrecognized by the world’s family of Orthodox Churches.

The Kiev Patriarchate’s claim to independence was intended to carve out for Ukraine an identity distinct from that of a Russian vassal, but it instead has provided fodder for Ukraine’s crippling ethno-territorial divide. Today, the conflict is among the most prominent in Ukrainian society: generally, the nationalists and independence-minded tilt toward the Kiev Patriarchate, while those who lament the break-up between Ukraine and Russia answer to the Moscow Patriarchate.

Enter Patriarch Kirill of Moscow and All Rus, who, unlike his predecessor, made Ukraine one of his priorities since his election in February last year. His July 20 arrival in Ukraine – the third over the past year - marked yet another milestone in rapidly warming relations between Russia and Ukraine. The articulate Russian church leader also happens to be the inventor and active proponent of “Russky mir” [“Russian world”], which has generated considerable controversy in Ukraine. In this concept, the divisions between Russia, Ukraine and Belarus, which all trace their roots back to the medieval Kievan Rus, are blurred and their historical ties played up. His statements – and actions – while in Ukraine, however, are bound to raise eyebrows at to where spirituality ends and politics begins.

"Let us pray for the prosperity of Ukraine and the entirety of historical Rus, that the Lord should keep the fraternal peoples in the unity of mind, make them cooperate like brothers, keep them aware of their community, and keep them in spiritual unity," he told a congregation in Dnipropetrovsk.

The patriarch’s summertime jaunt through Ukraine last year, which took him to the country’s east, west and south, was a crash-course of sorts: he was welcomed everywhere by thousands of followers, while the visit was met with minor, but well organized protests from nationalists. Former President Viktor Yushchenko tried to sell Kirill on the idea of an independent Ukrainian church answerable to Kiev, a proposition he firmly rejected. This year, however, with the openly pro-Moscow Viktor Yanukovich (and Moscow Patriarchate adherent) now in office, the going seems smoother, and the patriarch this year made visits to (besides Kiev) predominantly Russia-friendly Odessa and Dnipropetrovsk.

Yet the visit underscored exactly how close church and state remain in Eastern Europe today. Take, for example, Kirill presenting Yanukovich with the Order of St. Vladimir, the highest honor of the Russian Orthodox Church: he is the first Ukrainian leader to receive such recognition. The order was presented during Kirill’s surprise visit to Crimea, which coincided with those of Russian Prime Minister Vladimir Putin and Moscow Mayor Yuri Luzhkov. Although the patriarch took care not to meet with the Russian politicians on Ukrainian territory, the heavy concentration of Russian leaders on the Ukrainian peninsula – which is home to an ethnic Russian majority and has a track record of ethnic tension - was more than enough to stoke concerns among those wary of anything Russian.

What’s more, a spokesman for the Moscow Patriarchate told Ukrainian media this week that Kirill plans to head to Ukraine at least annually on such “pastoral visits,” an unprecedented routine for a Russian church head. Ever since last year’s visit, the patriarch’s aides have said that he wants to change the perception of himself in Ukraine from that of a “foreign leader” to that of the patriarch of the Ukrainian Church.

But a spokesman for the Russian Orthodox Church firmly denied this week that the visit was politically charged. Instead, he blamed Yushchenko for politicizing religion in Ukraine during his push for an independent Ukrainian Orthodox Church.

"This is not a political visit, but a strictly pastoral one," Archpriest Vladimir Vigilyansky, head of Patriarch Kirill’s press service, told the Ukrainian edition of Kommersant. "The Church does not strive to be engaged in politics, into which it is sometimes forcefully pushed. Unfortunately, under Viktor Yushchenko's presidency, religion was a major card for certain political forces."

The nationalists were among those who led protests against Kirill’s visit in Ukraine. Perhaps the most active and vocal detractors were members of All-Ukrainian Union “Freedom,” the foremost nationalist party in Ukraine, who accused the Russian patriarch of tightening his – and Russia’s – grip over Ukraine. Party leader Oleh Tiahnybok said that Kirill is an unwelcome guest on foreign territory, regardless of religious affiliation.

“This is a clear demonstration of the belittlement of the Ukrainian nation,” Tiahnybok said in an interview. “The arrival of foreign citizen Gundyayev [the patriarch’s lay name is Vladimir Gundyayev] as a representative of the Kremlin to declare his desire for a ‘Russian world’ laughs in the face of our culture and our faith on our own territory. This is a clear political move that offends the national consciousness of a great deal of Ukrainians.”

A look at the statistics, however, provides a different lens through which to assess Kirill’s visit. Religious conflict or not, Ukraine is still a key bastion for the Moscow Patriarchate. According to the Religious Information Service of Ukraine, the country has more than 11,000 parishes faithful to Moscow according to the Religious Information Service of Ukraine, which makes it the biggest religious group in Ukraine by the number of registered communities, and about a third of the church’s bishops are based in there. In this way, Kirill’s mission in Ukraine was to tend to his flock.

On the other hand, the Russian church leader has repeatedly emphasized the multinational character of his patriarchate, which runs contrary to the Ukrainian nationalist mantra that an independent nation is entitled to an independent church, and said that he doesn’t want to be seen as “the patriarch of the Russian Federation.” He even played with the idea of requesting dual Ukrainian citizenship – a proposal rejected by the Ukrainian government on the basis of the country’s constitution. To play up to the local sensitivities, the Moscow Patriarchate even launched the Ukrainian-language version of its official Web site in time for the visit.

Kirill’s repeated visits and the priority he attaches to Ukraine in his policies have raised concerns that the Moscow Patriarchate is edging to retract the autonomy it had granted to its Ukrainian branch in 1992. But speaking in the Monastery of the Caves on the day of St. Prince Vladimir during the open-air service attended by thousands of believers, the patriarch confirmed that the local church’s rights to appoint its own bishops and elect their own metropolitan are there to stay.

“The Church never breaks its word,” he said. “They say the patriarch comes to Ukraine to limit the rights of the primate of the Ukrainian Church. The patriarch comes to Ukraine not for this, but, together with the primate of the Ukrainian Church, together with the bishops of our entire church – Ukrainians, Russians, Moldovans and people of other nationalities – to bear witness to the world, including here, in Ukraine, about Christ crucified and resurrected, about Christ, capable of granting the power of resurrection even to the greatest of sinners.”

As a self-styled independent church for an independent Ukraine, the Kiev Patriarchate is on shaky ground. In the past years, its ups and downs have followed the degree of support it received from the Ukrainian government. As such, the election of Yanukovich, as well as a recent “reset” in relations between the leading Orthodox patriarchates of Constantinople and Moscow, on whose differences Ukraine’s pro-independence churchmen are trying to play, all look like bad omens for Patriarch Filaret of Kiev and his followers. The Synod of the Russian Orthodox Church, which met in Kiev on July 26, issued a renewed call to the “schismatics” to repent and “return” to the mother church – which was promptly rejected the following day by Filaret and his synod.

“Kirill’s visit shows us that unification is impossible,” said Taras Antoshevskiy, director of the Religious Information Service of Ukraine. “Because according to his idea, there is no independent Ukraine, so there is no reason for a Ukrainian independent church. It’s more a dictation of requirements, and requirements will always win.”

Other experts said that the patriarch isn’t necessarily to blame for the bad blood between the groups. Rather, it’s the crippling divide in Ukrainian society that creates room for conflict.

“Kirill is certainly not interested in unifying the two Ukrainian churches, but we really can’t even discuss this question to begin with,” said Viktor Yelenskyi, head of the Ukrainian Association for Religious Freedom. “This church in Ukraine is split because society is split. If Ukrainians were united in their geopolitical orientation and national plans, then there would be no split to speak of. This [conflict] is a reflection of society.”

Perhaps the largest question mark in Kirill’s visit was the culmination of his trip to Ukraine on July 28 - the Day of St Vladimir. The holy day, which is now established as a state holiday in both Ukraine and Russia, is meant to mark the unity of the two nations through acceptance of Byzantine Christianity in 988 by Prince Vladimir of Kievan Rus, the predecessor of modern East Slavic nations. But both Russians and Ukrainians claim their stake as “the first,” and it remains a hotly debated issue.

Shortly after Kirill presided over a service attended by a congregation of thousands in the Monastery of the Caves on July 28, thousands of Kiev Patriarchate followers marched in a show of strength and competition toward their own service at St. Vladimir’s Hill. Some wielded banners that read “For a single Ukrainian Orthodox Church with Kiev as its center,” or “Moscow Patriarch go home.” But perhaps the most telling comments came from bystanders gawking at the marchers from the sidewalk in disbelief.

“More than 1,000 years of history,” said one woman to her friend, “and this is what we come to?”

4 Things Worth Talking About http://www.themoscowtimes.com/opinion/article/4-things-worth-talking- about/411457.html

02 August 2010 By Oksana Antonenko

As the second anniversary of the August 2008 war approaches this week, Georgians, Abkhaz, Ossetians and Russians are still recovering from the conflict’s terrible legacy. On the one hand, there is a sense of exhaustion, hopelessness and cynicism on all sides. Restoring peace through a mutually agreed resolution today seems a very remote possibility — a task, perhaps, for the next generation of those who have lived side by side for centuries but will now have to endure decades of separation.

At the same time, the second anniversary is a good time to begin the long process of reconciliation that needs to take place on all levels between Georgia, Abkhazia, South Ossetia and Russia.

Georgia’s television network Imedi depicted a terrifying scenario on March 13 in which domestic political protests in Georgia escalated into a crisis triggering Russian military intervention. This broadcast caused widespread panic in Georgia, triggering security concerns along the cease-fire lines, eventually leading to strong protest from the United States, the European Union and several individual European states featured in the film. While the broadcast aimed to discredit Georgian opposition leaders who had traveled to Moscow to meet Russian leaders, it had the reverse effect. In graphic detail it demonstrated to ordinary Georgians — and the international community — the dangers of the current state of relations between Russia and Georgia. Although a new war is unlikely, the volatile status quo is likely to persist. Thus a serious dialogue is needed to begin developing ideas on how Russia and Georgia can peacefully coexist, while there is no agreed settlement of conflicts over the status of Abkhazia and South Ossetia.

This will not be easy. Diplomatic relations between Moscow and Tbilisi were severed after 2008. President Dmitry Medvedev and Prime Minister Vladimir Putin insist that they will not speak to the Georgian government as long as President Mikheil Saakashvili remains in power. Georgian officials have demanded that Russia withdraw its forces from the occupied territories as a precondition for any official talks.

In Georgia, many of those who openly advocate a dialogue are branded as traitors or enemies. In Russia, those wishing to speak with the current political elite in Tbilisi are criticized for being naive or foolish. Despite these reservations, Georgians and Russians are talking on many levels.

Both Russian and Georgian officials recently participated in the 11th round of the Geneva discussions under the dedicated co-chairmanship of the EU, the United Nations and the Organization for Security and Cooperation in Europe. These discussions are very valuable as the only channel for official dialogue, but achieving practical results with the Geneva discussions is painfully slow.

Proxy contacts, which were initially facilitated by Armenia and later taking place on the

Georgian-Russian border, brought the first major breakthrough in relations between the two states: the opening of the mountainous Verkhni Lars border in March.

In addition, several opposition figures have taken the initiative to enter into public dialogue. On the Georgian side, the former prime minister, Zurab Nogailedi, and the former parliamentary speaker, Nino Burjanadze, have traveled to Moscow to meet Putin. On the Russian side, opposition leader Garry Kasparov has traveled to Tbilisi and was received by Saakashvili. These were portrayed as public relations gestures and have won little support within their respective societies.

But all of these forms of contact are either too limited or too politicized to make a difference. What is required is a sustained dialogue between mainstream political elites on both sides, which could begin to build confidence and shape a new environment in which a peace process could one day emerge.

To begin with, the dialogue has to address the problem that each side no longer has a good understanding of what is happening on the opposite side. In Georgia, there is a belief that Russia could be made more vulnerable by its domestic problems — mainly the economy and separatism and terrorism in the North Caucasus — and by a change of policy in Washington if U.S. President Barack Obama fails to obtain tangible benefits from the “reset” initiative. This vulnerability, it is assumed, would make Russia more open to reconsidering its recognition of Abkhazia and South Ossetia.

In Russia, there is still a prevailing view that the current government in Tbilisi has lost its popular support and could be on the way out at any moment. Russian experts and politicians were surprised by the strong show of support for pro-government forces during Tbilisi’s mayoral election.

The prevalence of myths and the lack of communication between the two sides make it virtually impossible to prevent or manage any future crises. Therefore, a confidence- building process that enhances mutual understanding of each other and of the shared post-war security environment should be the most important task for the coming months and years.

The starting assumption of this new dialogue process should be that we are unlikely to see a change of the ruling elite in either country in the near future. Therefore, the process should engage those in power today, rather than exclude them.

Second, such a dialogue, while being sustained and representative, should be unofficial, flexible and forward-looking. It should include those members of the elite who can embrace such rules of engagement, while also being able to communicate their experience with the public back home. This dialogue should not be seen as undermining any official talks or contacts with nongovernmental organizations, but complement and reinforce them.

Third, the dialogue should go beyond a discussion of post-war challenges. It should also help exchange views on domestic modernization processes under way in both countries, on regional and global developments, and on common economic interests.

Finally, the dialogue should initially be facilitated by a neutral third party — be it a nongovernmental entity or an international organization. It might be even helpful to place it within a wider multilateral context involving various actors from across the Caucasus, Europe, the Black Sea region or other groupings to which both Russia and Georgia belong. But the ultimate goal of the process should be that, over time, Georgians and Russia are able to speak directly without any need for the involvement of a third party.

In an ideal world, such a contact would develop into a confidence-building process to help remove the possibility of dangerous miscalculations on both sides. Such a Georgian- Russian dialogue would not mean accepting a new status quo, nor would it symbolize the failure of one side or the other to achieve its strategic objectives. Instead, talks would demonstrate to the people in the region and the outside world that a new war is inconceivable and that peace can one day come to both sides of the Caucasus Mountains. Oksana Antonenko is a senior fellow and program director for Russia and Eurasia at the International Institute for Strategic Studies in London. She is currently directing the Georgian-Russian Dialogue on Post-War Challenges, an EU-supported project.

Russian Airborne Troops celebrate 80th anniversary http://www.itar-tass.com/eng/level2.html?NewsID=15366795

02.08.2010, 11.01

MOSCOW, August 2 (Itar-Tass) -- Russia marks the 80th anniversary of establishing the Airborne Troops, which are a mobile reserve of the Russian Supreme Commander-in- Chief. Over a million of Russians, who were wearing blue berets and sailor’s striped vests some time ago, as well as those who serve in “the guard on the wings” now will celebrate the Airborne Troops anniversary.

The Russian Airborne Troops date back to August 2, 1930, when a unit of 12 paratroopers was parachuted for the first time at the exercises of the Moscow military district outside Voronezh. The formation of airborne units was launched in 1932. The corps with the numerical strength of over 10,000 paratroopers each were formed from airborne brigades in 1941. The paratroopers showed mass heroism during the Great Patriotic War (1941-1945). By way of a joke the paratroopers call themselves “the troops of uncle Vasya” - named after General of the Army Vasily Margelov, one of the founders of modern Airborne Troops.

The guards of the Airborne Troops with honour performed combat missions in Hungary, the former Czechoslovakia, Afghanistan and in the North Caucasus. They put up repeatedly “the live barrier” in ethnic conflicts in the Transcaucasia, Central Asia and the former Yugoslavia, proving that they can perform any mission.

“The creation of a new image of the Russian Armed Forces is finalizing. Four United Strategic Commands have been formed recently. In a new form the Airborne Troops will remain independent, being the reserve of the Supreme Commander-in-Chief and a military force to reinforce the troops in selected directions,” Commander of the Airborne Troops Lieut. Gen. Vladimir Shamanov told Itar-Tass on the prospects to develop the Airborne Troops on the eve of the troops’ anniversary.

In reply to a question whether helicopter units will be formed in the Airborne Troops to make “the airborne infantry” more air mobile, Shamanov said, “We have formulated with the General Staff the ideology to form aviation brigades in the Airborne Troops of the future army.” The Command of the Airborne Troops and the Moscow government have prepared a vast program of celebrations in Moscow. Servicemen and veterans of the Airborne Troops will lay down flowers to the Monument to Paratroopers at the Central Museum of the Russian Armed Forces on Monday morning. Commemoration events will be held at the tombs of outstanding paratroopers at the Novodevichye, Troekurovskoye and Kuntsevskoye cemeteries. A religious procession will go in Ilyinka Street and festive prayers will be chanted on the Lobnoye Mesto, also known as the Place of Skulls on Red Square. Demonstration exercises of paratroopers with weapons will be held on Red Square. The squadrons of Airborne Troops’ cadets and other cadets will go in a festive march on the Russian main square. The Chamber of Commerce and Industry will give a festive reception on the occasion of the 80th anniversary of the Airborne Troops on Monday. The song and dance company of the Airborne Troops and popular singers will participate in festive concerts on the Vasilyevsky Spusk and the Poklonnaya Hill.

More than 100 paratroopers from Ulyanovsk and 30 paratroopers from Pskov, as well as foreign delegations from Belarus, Ukraine, Moldova, the Baltic States, Israel and Germany will participate in the Airborne Troops anniversary celebrations in Moscow.

CSIS: Russia Plans 60% Increase in Defense Budget by 2013 http://csis.org/blog/russia-plans-60-increase-defense-budget-2013

Jul 30, 2010

By Oliver Bloom

This morning, the Xinhua News Agency and RIA Novosti both cited reports from the Russian business daily Vedomosti that the Russian government plans large increases in defense spending by 2013. According to RIA Novosti,

Russian defense spending will increase by 60 percent, to more than 2 trillion rubles ($66.3 [billion]) by 2013 from 1.264 trillion ($42 [billion]) in 2010.

The spending will be spread out over three years. The largest increase will occur in 2013, when the budget is expected to jump by 500 billion rubles ($16.6 billion). According to RIA Novosti

Konstantin Makiyenko from the Russian Center for Analysis of Strategies and Technologies (CAST) told the paper that the government is likely to spend more on the Navy, as well as the aviation and space industries.

The Russians have planned expensive modernizations in these sectors. and are reported to have allocated funding for a variety of new naval vessels and aircraft. In the naval arena, the increased funds will go towards a whole scale modernization of Russia’s aging submarine and Black Sea fleets, including new Yasen and Borei class submarines, Bulava submarine-launched ballistic missiles, three new Talwar class frigates, three Improved Kilo class subs and up to four Mistral class amphibious assault ships. The Russian government plans to purchase two of the Mistral class amphibious assault ships/helicopter carriers from France and acquire the license to build two more of the vessels domestically. While the announcement of the Mistral class purchases is not new, they will likely continue to provoke worries in the United States and in NATO. When details of the specific purchase emerged earlier this month, the BBC explained that

The deal, which is the first of its kind between France and its Cold War enemy, has caused alarm in Nato, as there are fears it will give Russia more cutting-edge technology. In February a US official told reporters the US "had questions" for France about the order.

On the aviation side, the budget also leaves significant room for aircraft acquisitions. RIA Novosti explained

Russia planning to spend 80 billion rubles ($2.65 billion) on 60 Su-family fighter jets starting 2010, and buy 26 MiG-29K Fulcrum-D carrier-based fighter jets, with the expected contract estimated at about 25 billion rubles (more than $828 million), a military aircraft plant manager told the paper. The plans also include the purchase of 32 Su-34 Flanker fighter bombers under the 2008 contract (a single plane then cost more than 1.1 billion rubles ($36.4 million), he said.

Information has yet to emerge as to what portion of the new defense budgets will go towards the development of Russia’s fifth generation fighter—the Sukhoi PAK FA— which had its maiden flight back in January but does not expect to be put into service until 2013 at the earliest.

Whether the large increases in Russian defense spending will make a significant difference is still up for debate. Even at their proposed 2013 levels, Russian defense spending would be only around eight percent of current U.S. defense spending. What’s more, there’s no guarantee that Russia’s proposed expenditures are even feasible. Earlier this week the Russian government approved the sale of approximately $29 billion in minority stakes of state-owned companies in an effort to confront its large budget deficit. While Russia managed to harness its considerable oil and gas reserves for much of the last decade to generate budget surpluses, declines in the prices of oil and gas, along with the broader global economic contraction, resulted in a current budget deficit equivalent to 5.9% of GDP. While Russia does have $467 billion in foreign currency reserves, tapping into those quickly could spark domestic inflation and also leave the country exposed to a future dip in commodity prices. If Russia continues on its plans to reduce its deficit to 2.9% of GDP by 2013 (931 billion rubles), it’s unclear how a military spending increase of 500 billion rubles in that year alone will fit in. Maintaining, let alone increasing, discretionary spending at the same time it is attempting to cut its budget deficit (a quandary the United States also finds itself in) will either necessitate large increases in revenues (in the case of Russia, presumably through an increase in the prices of oil and gas), or large spending costs in other programs.

Thus, while the announcement of Russia’s spending increase is news, whether it actually comes to fruition is a much bigger question. While the Russian government certainly has made a point of trying to revitalize its military after years of decay, fiscal realities will ultimately take a toll. What’s more, while there may not be much domestic opposition to the increased defense expenditures, it is unclear what military utility they have. While Russia would certainly like to increase its regional power projection capabilities, the large sums spent on expensive fighters and submarines seem to have little value except in the extremely unlikely case of a conflict with the United States, NATO or China. It’s unclear what exactly drives the desire for these sorts of weapons systems; perhaps an industrial base that relies on them, a defense strategy that still envisions conflict with the West, or a desire to maintain competitiveness with the United States.

Interestingly, despite the “reset” in relations between Russia and the United States and two decades of hindsight on the Cold War, the two countries continue to expend vast sums of money on weapons systems designed for bygone conflicts. While defense hawks in the United States who see us still engaged in fierce competition with the Russians may see these increases as further signs of looming Russian aggression, taken in the context of the United States overall military budget, and the larger questions that remain over the feasibility of the proposed increases, the increases aren’t quite as alarming. Rather than worry, one might really wonder why the Russians want to spend so much more when they can’t even afford their current budgets (though the Russians are hardly the only country spending beyond their means at the moment). As more details emerge about the proposed budgets, and as the Russian government and defense ministry explain what the acquisitions are for, outside analysts can determine what, if any, new challenges the planned Russian capabilities may pose, but it seems likely that the Russians will be prioritizing projects and weapons systems that may have less relevance in the 21st century. Ironically, the Russian defense ministry should be looking to the actions of U.S. Defense Secretary Robert Gates in his attempts to reform and cut some of the U.S. acquisition projects for lessons on their own defense future.

Oligarch accuses Russia of seeking revenge http://www.ft.com/cms/s/0/c8d99926-9d8d-11df-a37c-00144feab49a.html

By Courtney Weaver in London

Published: August 1 2010 18:55 | Last updated: August 1 2010 18:55

In the Russian oligarch world of dark-suited industrialists and former spooks, Yevgeny Chichvarkin has always been something of an outsider.

Unlike most of his peers, who made their fortune during the turbulent consolidation of Russia’s resource sectors in the 1990s, Mr Chichvarkin made his on the Russian retail market, co-founding Yevroset, now Russia’s biggest mobile phone chain, at the age of 22.

Better known for his marketing antics, such as offering free phones to customers who came to Yevroset naked, Mr Chichvarkin is now wanted by Russian prosecutors for complicity in an alleged kidnap and extortion case dating back to 2003.

On Monday, the High Court will begin considering an extradition request for the businessman who has spent the past year and a half in London.

Mr Chichvarkin and his supporters say the interior ministry’s economic crimes division, Department K, is behind the charges, seeking revenge after the businessman dared to take it on and expose corruption.

Department K and the interior ministry did not respond to written request for comment.

While Dmitry Medvedev, Russian president, has since singled out the interior ministry in his anti-corruption campaign, firing 18 senior police officials earlier this year, critics say Mr Chichvarkin’s hearing reinforces old images of corruption and bureaucracy that continue to strangle Russian business.

In a recent interview, Mr Chichvarkin told the Financial Times that the hearing will allow him to expose the interior ministry in front of the British justice system.

“In Russia, corruption is a disease,” he says. “The law is being violated by 20m people working in law enforcement who are not fulfilling their function and living off assets that are stolen from the nation.”

Mr Chichvarkin says that when businesses in Russia become successful, they are at risk from these bureaucrats, as shown by the kidnap and extortion charges, which were also raised against nine other Yevroset managers who are currently on trial in Moscow.

Although the alleged kidnapping and extortion dates back to 2003, prosecutors began their investigation in September 2008, just as the oligarch and his business partner were in talks to sell Yevroset. Shortly thereafter, they sold the company for $1.3bn to Alexander Mamut, the Russian billionaire, who later sold it to Vimpelcom, Russia’s largest mobile operator. Three months later, charges of complicity in kidnap and extortion were made against Mr Chichvarkin, who was travelling outside Russia at the time.

“This was an investigation of specific people, people who had been in conflict with Department K,” says Yuri Gervis, Mr Chichvarkin’s lawyer in Moscow. “The allegations would not have taken the form they did if someone wasn’t out to get Yevgeny.”

According to Mr Chichvarkin’s peers in Russia’s mobile phone industry, it was the businessman’s insistence on not paying bribes that got him into trouble in the first place. Up until 2006, some Russian retailers imported phones illegally without paying customs: paid officials turned a blind eye. Mr Chichvarkin was the first to turn away from this practice as he sought to ready Yevroset for a London flotation.

His decision pulled the plug on a bribe scheme that totalled up to $1bn a year, according to analysts. Just a few months later, Department K officials seized a $20m shipment of Motorola phones headed for Yevroset stores.

The company was able to retrieve most of the phones, but people with knowledge of the incident and Mr Chichvarkin’s current case points to a connection between the two, naming interior ministry officials who worked on both cases.

During Mr Chichvarkin’s decade-long tenure at Yevroset, the businessman became a symbol for the brand, and something of a cult figure among his employees, friends recall.

A snappy dresser who kept his kid-off-the-street appeal, Mr Chichvarkin was treated like a rock star by employees, who would start screaming that they loved him and asking for his autograph when he came on stage at company events, a former colleague recalls.

In London, Mr Chichvarkin is harnessing that popularity, most recently in a public video appeal to Mr Medvedev, where he named the 13 interior ministry officials he believes are behind his case.

The businessman knows such declarations will not improve his chances of being welcomed back to Russia, but says he cannot stomach the price he would have to pay for his return.

“People think you have to spend all your time showing that you’re good, apologising, paying bribes, promising to follow the orders of bureaucrats on your return, and to be a quiet guy in a suit and a member of United Russia [the pro-Kremlin party],” he says. “For me that’s not just unacceptable, it’s disgusting.”

While Mr Chichvarkin is supportive of Mr Medvedev’s anti-corruption efforts, he doubts the president will have better luck than he has had.

“Mr Medvedev personally is sincere. But corruption is stronger,” he says.

Polyus sues KazakhGold's former owners for $450m http://www.telegraph.co.uk/finance/newsbysector/industry/mining/7921220/Polyus-sues- KazakhGolds-former-owners-for-450m.html Some of Kazakhstan’s most valuable gold fields have become the subject of a bitter $450m (£287m) High Court battle – pitting Russia’s second-richest oligarch against a powerful local family.

By Rowena Mason Published: 6:45AM BST 02 Aug 2010

The case centres around the $500m company KazakhGold. It is a tale likely to be alarming for investors holding its international shares, known as global depositary receipts (GDRs).

The dispute started last year after the founders of KazakhGold, a prominent family called the Assaubayevs, sold 50.1pc of the company. Polyus, a $10bn Russian gold giant chaired by Mikhail Prokhorov, the metals tycoon, bought the stake for $254m. The Russians are now claiming that they were deceived about the sale, according to a lawsuit filed in London by Jenington International, a subsidiary of Polyus, and KazakhGold.

In court documents seen by The Daily Telegraph, the claimants allege that KazakhGold’s ex-owners “substantially inflated” gold production figures from 2006 to 2008 and arranged a “diversion of funds [through] sham contracts” from 2007 to 2009. Arguing that they were misled, Polyus is seeking compensation of $450m. The Assaubayevs, who are now subject to an asset freezing order by the court, strongly deny the allegations and intend to dispute them.

The war over KazakhGold may have wider implications for its shareholders, among them big institutional investors including JP Morgan, BlackRock and Charlemagne, according to Bloomberg.

Earlier this year, KazakhGold unveiled an ambitious $10bn plan to create the largest gold miner on the London Stock Exchange, in a deal backed by Mr Prokhorov’s company.

It would take the form of a reverse takeover where the $500m KazakhGold would absorb the $10bn Polyus. The enlarged company would then be renamed Polyus International and potentially apply for a place in the FTSE 100. The deal would effectively use KazakhGold as a vehicle to secure the Russian gold giant a London listing.

However, the proposal – approved by shareholders last week – encountered problems soon after the claim was filed against the Assaubayev family. Bondholders have been given another month to consider the offer, after the Kazakh authorities suddenly withdrew permission for the Russians to own 50pc of the company. The country’s financial police have now begun a preliminary probe into the purchase price, although a KazakhGold spokesman said it had not received official notice of an investigation.

Opposition from Kazakhstan would throw the $10bn takeover off track. The Assaubayev family, who still own a minority shareholding, have accused the company of failing to update the market about developments. In particular, the family said new management did not disclose “the serious consequences which the actions taken by the Kazakh authorities may have on [its] business operations, particularly its licences to exploit subsoil assets”.

Kanat Assaubayev, the founder and former chief executive, said: “It is very disappointing that KazakhGold continues to avoid addressing critical issues for shareholders and their potential impact on the value of the business.”

Mr Assaubayev bought the gold mines from the Kazakh government in 1999 and built his company into a large miner. However, it ran into trouble in 2009, filing its accounts late at the London Stock Exchange.

The family declined to comment about the court case.

The Irish Times - Monday, August 2, 2010

Russia lines up €20bn state sell-off but history illuminates the dangers http://www.irishtimes.com/newspaper/finance/2010/0802/1224276042114.html

DANIEL McLAUGHLIN

TWO DECADES after embarking on perhaps the most dramatic – and chaotic – privatisation drive in history, Russia is planning to sell stakes in major state companies to help balance its budget and restructure its economy, reversing a recent policy of boosting Kremlin control over big business.

The economic crisis has forced Russia’s leaders to overcome their aversion to state sell- offs, but they will seek to ensure that the privatisation programme planned for 2011-13 will not weaken the power of central government or mimic the rampant corruption of its 1990s predecessor.

Faced with a growing budget deficit and a lack of funding for modernisation projects championed by president Dmitry Medvedev, Russia’s government has earmarked 10 big statecontrolled firms for partial privatisation, although details of the scheme are still being finalised.

The sales are expected to raise more than €20 billion for Russia, allowing Mr Medvedev and the ruling party of his mentor, prime minister Vladimir Putin, to avoid hiking taxes or slashing public spending ahead of parliamentary elections next year and a presidential ballot in 2012. Key firms slated for partial sale include Russia’s biggest oil company Rosneft, the Sberbank and VTB banks, hydroelectric power operator Rushydro, and Transneft, whose oil pipeline network is the largest in the world.

But while many of the companies may be attractive to investors, they will want to know how the firms will be sold, through open auction or choreographed deals with selected companies, and whether foreigners will even be invited to bid.

What is clear is that Russia will retain a controlling stake in all the listed firms, raising questions over how much influence new investors would have in the companies, and whether longstanding problems with Russian corporate governance and minority shareholder rights will sully the project.

The plan is considered to be a favourite of finance minister Alexei Kudrin, who is seen as a liberal in an administration filled with statists such as Mr Putin.

Mr Kudrin insisted that assets would “be valued publicly, in line with market prices and tenders will be open . . . We are fully ruling out a situation when somebody sells something to someone at an artificially low price.”

Rigged sales at knockdown prices characterised Russian privatisation in the 1990s, an extraordinary period of economic upheaval that saw the industrial giants of the old Soviet state snapped up by a coterie of young businessmen with ready cash and the right connections.

The creation of the now notorious “oligarchs” by president Boris Yeltsin – who took their money and political support in exchange for effective control of Russia’s vast mineral wealth – short-changed the state and made “privatizatsiya” a dirty word for a generation of Russians.

When Mr Putin replaced Yeltsin in 2000, he brought the oligarchs to heel, driving some of them out of the country, and set about restoring state domination of the Russian economy.

“In the past decade, the Russian government has been consolidating assets under its control, rather than privatising them,” said analyst Lilit Gevorgyan at IHS Global Insight. “So news of the government’s plans for large-scale privatisation is certainly a U-turn.”

Russia’s leaders hope their U-turn will help cut the country’s budget deficit from as much as 5.9 per cent of GDP this year to zero some time after 2015, while broadening its investor profile and attracting funds to modernise a heavily energy-dependent economy.

For anyone aware of Russia’s corporate history, however, the privatisation package will come bearing a large label reading “buyer beware”. 08/02/2010 09:37 RUSSIA A new "army" of young people for the Russian Orthodox Church http://www.asianews.it/news-en/A-new-army-of-young-people-for-the-Russian- Orthodox-Church-19089.html by Nina Achmatova

The Patriarchate finance formation courses for youth leaders for mission "on the streets among the young people, promoting Christian values against the" Western philosophy "of drugs, egotism and moral relativism”. Kirill’s project to modernize the Russian Church or a political move to give the Kremlin a softer version of politicized young Nashi?

Moscow (AsiaNews) - An "army" of missionary specialists are ready to reconnect young people to religion. It is a project launched by the Moscow Patriarchate. The aim is to "distance young people from drugs, alcoholism, sexual promiscuity” and organise events to communicate to society the Church's position on contemporary issues, explains Vladimir Batrakov, a former soldier now "enrolled" in the Patriarchate course which since May has involved 100 young members. The campaign promoted by Patriarch Kirill provides training for young adults who will then create youth groups throughout the Russian Federation.

Since 1991 there has been the "Orthodox Youth” movement in the Russian Orthodox Church, an organization that works primarily with children and adolescents. What differentiates the new youth group is that it is intended to promote, together with religious values, an "anti-Western philosophy”, politics and patriotism.

Some say the project is linked to Kirill’s "temporal" ambitions, who wants to join the Putin-Medvedev tandem as an ideological leader, while others forecast the failure of the plan due to lack of funds and the difficulty of coordinating the work. Meanwhile, a new group of youth leaders has already made its first appearance at summer camps held in June by the openly pro-Kremlin Nashi youth movement.

In December Kirill stressed, for the first time, the need to train leaders for the youth groups at a meeting with the leaders of the clergy. On that occasion he spoke of the importance of addressing young people in a society full of "moral relativism", "permeated by the cult of hedonism and personal success." The first step was the organisation of classes by the Synodal Department for Youth Affairs and the Patriarch's Center for Spiritual Growth of Children and Youth.

The courses, says Yulia Pavlyuchenkova - Deputy Head of the Synodal Department for Religious Affairs - give future leaders the ability to divert young people from "so-called European values” promoted by the mass media such as, free love, irresponsibility and egoism, which she said lead young people to drug abuse, alcoholism, promiscuity, early pregnancy and even imprisonment.

The future youth leaders are trained to " street missionary activity" by Boris Yakemenko, leader of the Orthodox wing of the Nashi youth group. Yakemenko said the youth leaders needed to understand that they had to “go out onto the streets to find young people, rather than waiting for them to come to church”.

The Church is funding the course and the work of youth leaders with money from the parishes and sponsors. The cost of a group of 30 to 70 people is about 300 thousand rubbles (7,600 Euros). There are more than 14,000 Orthodox churches in the country, but Pavlyuchenkova could not say whether every one of them will ever get its own youth leader.

Nikolai Mitrokhin, a researcher at the University of Bremen and financial expert of the Russian Orthodox Church, believes the effort economically unsustainable for the Patriarchate. He also notes that the Church is divided on an ideological level and this makes it impossible to standardize the ideals to be promoted among young people nationwide. However, he is not convinced that this is just an image boosting campaign for the Patriarchate, "Kirill is a mass media person who voices ideas for the church's modernization that are in tune with the times," Mitrokhin concludes. "The state needs less aggressive variants of Nashi".

PRESS DIGEST - Russia - Aug 2 http://in.reuters.com/article/rbssConsumerGoodsAndRetailNews/idINLDE671086201008 02

12:46pm IST

MOSCOW, Aug 2 (Reuters) - The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT www.kommersant.ru

- Russia's economy lost 4.6 billion roubles ($152.1 million) over the last weekend due to the forest fires, the paper writes. - South Korean Hyundai Motor Co. (005380.KS: Quote, Profile, Research) will present new C-class sedan built specially for Russia at Moscow's international car show on Aug. 25-29, the daily reports.

VEDOMOSTI www.vedomosti.ru

- Russia will lay off 20-25 percent of its Interior Ministry staff, with the major job cuts planned in the departments dealing with economic crimes, the paper writes.

- Russia will spend 5 billion roubles ($165.3 million) to restore infrastructure destroyed by forest fires, the paper writes.

NEZAVISIMAYA GAZETA www.ng.ru

- Russia is ready to sell to Azerbaijan two S300 missile defence systems for at least $300 million, the paper writes citing sources.

IZVESTIA www.izvestia.ru

- Russia's carmaker Avtovaz (AVAZ.MM: Quote, Profile, Research) has suspended production for August 2-8, the paper writes.

(--Writing by Ludmila Danilova, Reuters Messaging: [email protected], +7 495 775 1242)) ($1=30.24 Rouble)

National Economic Trends

Kudrin: Russia's GDP growth will come to pre-crisis level by the end of 2012 http://www.vedomosti.ru/finance/news/2010/08/02/1072223 GOOGLE TRANSLATION

Prime-TASS 02/08/2010, 09:11 Growth in gross domestic product in Russia will come pre-crisis level by the end of 2012 about this on July 31, deputy chairman of the government - Finance Minister Alexei Kudrin. Finance Minister recalled that the GDP in 2009 compared with 2008 decreased by 7,9%. "The country will recover only by late fall of 2012, and only at this time will overcome the failure, caused by the global economic crisis", - he stressed. Kudrin noted that 25% of GDP is created in the oil and gas industry and, accordingly, 40% of the federal budget are formed due to mining, processing and transportation of hydrocarbon raw materials. But by 2020 the share of GDP from this sector fell from 25 to 15%. The reduction will occur due to reducing the rate of oil and gas. The reason - "the fall production at older fields and new will be introduced with a delay," said Kudrin. The economy is, he says, "will grow by 4-5%, although it is desirable that grew to 7%.

Russian Manufacturing Showed ‘Sustained’ Improvement, VTB Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a.6abZtVYFXQ

By Maria Levitov

Aug. 2 (Bloomberg) -- Russian manufacturing expanded in July at the fastest pace since April 2008 as new orders grew and companies added more jobs, VTB Capital said.

The Purchasing Managers’ Index rose to 52.7 last month, for a seventh successive expansion, from 52.6 in June, the bank said in an e-mailed statement today. The index, based on a survey of 300 purchasing executives, indicates contraction with a figure below 50 and growth with a figure above 50.

The pace of expansion was sustained in the manufacturing sector,” Dmitry Fedotkin, VTB Capital’s economist in Moscow, said in the statement. “Underpinning the overall improvement in business conditions in July was a further strong rise in new work received.”

New orders supported output and employment growth among manufacturers resumed in July, according to VTB Capital. The overall jobless rate fell in June to 6.8 percent, the lowest level in 20 months, according to the Federal Statistics Service.

“Economic growth continues but it hasn’t become investment-oriented to the necessary extent,” Deputy Economy Minister Andrei Klepach said last week. “The sub-components of growth remain fairly fragile with the exception of consumer demand.”

Even so, the Economy Ministry will raise its forecast for growth this year from 4 percent, according to Klepach. The economy expanded an annual 5.4 percent in the three months through June, he said on July 27, compared with 2.9 percent in the first quarter, according to the Federal Statistics Service.

Positive Trends Bank Rossii, the central bank, kept its main interest rates unchanged for a second month in July after “positive trends were seen in macroeconomic indicators,” it said on July 30.

Bank lending expanded in June by the most this year, with corporate loans expanding 2.1 percent in the month and retail lending gaining 1.6 percent, according to central bank data. Annual inflation slowed to 5.8 percent in June from 6 percent the month before, the statistics office said.

Input-cost inflation in the manufacturing sector rose for the 13th month in a row, while output price inflation was “limited by competitive pressures,” according to VTB Capital.

The PMI is derived from indexes that measure changes in output, orders, employment, suppliers’ delivery times and stocks.

To contact the reporter on this story: Maria Levitov in Moscow at [email protected]

PMI: Gradual recovery in Russian manufacturing continues in July http://www.prime-tass.com/news/show.asp?topicid=0&id=483389

MOSCOW, Aug 2 (PRIME-TASS) -- PMI data from VTB Capital showed that a gradual recovery in Russian manufacturing sector continued in July, the London-based bank said in its latest survey released Monday.

Business conditions improved in the manufacturing sector for the seventh successive month, VTB Capital said.

The seasonally adjusted headline PMI, a composite index that reflects changes in new orders, output, employment, supplier performance, and input stocks in the manufacturing sector, rose to 52.7 in July, the highest reading since April 2008. The PMI changed little from 52.6 in June, the bank said.

“In July, the Russian Manufacturing PMI increased only marginally, to 52.7, suggesting that the pace of expansion was sustained in the manufacturing sector,” Dmitri Fedotkin, an economist at VTB Capital, commented on the survey.

“The employment sub-index bounced back above the no-change 50 level to 50.8, while inflationary pressures moderated with both input and output prices sub-indices declining for the second month in a row (to 63.7 and 54.9, respectively),” he said.

Production growth slowed since June but remained solid overall, the bank said. The VTB Capital Manufacturing PMI is derived from a monthly survey of 300 purchasing executives in Russian manufacturing companies and has been conducted since September 1997.

VTB Capital plc is a London-based subsidiary of Russia’s second largest bank, government-controlled VTB Bank. VTB Capital was previously known as VTB Bank Europe.

02.08.2010 08:00

Russian govt to sell state grain by quota to drought regions – Zubkov http://www.kyivpost.com/news/russia/detail/76405/

Today at 07:41 | Interfax-Ukraine Grain will be sold out of the Intervention Fund to drought-stricken regions not at auction, but by quota, First Deputy Prime Minister Viktor Zubkov said after a meeting he chaired in the Volgograd region on Friday.

Each region suffering from drought will get a quota that they will then distribute internally, Zubkov said, and a governmental resolution to this effect will be issued.

"The regions requested previously, and at the session today, for a government decision on that issue, so that each region has a quota it can use to support individuals with household plots, not just major enterprises," Zubkov said.

Zubkov had said previously that sale of grain from the intervention fund would begin after the Agriculture Ministry submits the grain balance to the government.

It was reported earlier that the Agriculture Ministry has announced commercial interventions on the grain market using an auction mechanism. They are scheduled to start on August 4. However, the dates - and now the mechanism - for the sales were changed in connection with the developments in the drought situation.

The intervention fund contains 9.5 million tonnes of grain.

Read more: http://www.kyivpost.com/news/russia/detail/76405/#ixzz0vQMwgbap

State Grain Trader Keeps Export Plans http://www.themoscowtimes.com/business/article/state-grain-trader-keeps-export- plans/411453.html

02 August 2010 Combined Reports State grain trader United Grain Company said Friday that it still aimed to export no less than 1 million tons of grain this year, despite a severe drought that has damaged crops.

UGC said it exported 300,000 metric tons of grain in May to July through the country's biggest Black Sea port of Novorossiisk, including 81,500 tons in May, 65,500 tons in June and 151,500 tons in July.

The grain was shipped to Egypt, Jordan, Yemen and Saudi Arabia, UGC said in a statement.

In April, the government allowed UGC to sell up to 1 million tons of grain this year, permitting part of its 9.5 million tons of stock to be exported. UGC has repeatedly said it exported grain from sources other than the government stocks.

Analysts have said Russia, which has been hit by the worst drought in decades, will use most of its intervention grain stocks domestically rather than export them.

The government has already announced plans to sell some 3 million tons of grain, mainly feed grain, to domestic animal breeders and flour millers.

The Agriculture Ministry planned to start grain sales Aug. 4 but later decided to delay intervention auctions, examining a possibility to distribute part of the grain without tenders among regions worst hit by the drought.

The ministry declared a state of emergency in four more crop-producing regions because of the drought, bringing the total to 27, Rossiiskaya Gazeta reported Friday, citing an Agriculture Ministry official.

September-delivery wheat gained as much as 1.6 percent to $6.375 per bushel on the Chicago Board of Trade, the highest price for a most-active contract since June 2009.

“Russia is spurring on the market,” said Maxime Jouenne, an analyst at Paris-based farm adviser Agritel. “The market is super-nervous, and operators are looking at the Russia situation,” including possible export restrictions, he said.

(Reuters, Bloomberg)

Wheat Surges on Speculation Drought-Hit Russia May Curb Exports http://www.businessweek.com/news/2010-08-02/wheat-surges-on-speculation-drought- hit-russia-may-curb-exports.html

August 02, 2010, 2:10 AM EDT By Luzi Ann Javier

Aug. 2 (Bloomberg) -- Wheat futures surged to the highest price since 2008 on speculation that a drought in Russia may force the country to curb exports, squeezing global supplies and boosting demand for U.S. shipments.

The September-delivery contract jumped as much as 2.7 percent to $6.795 a bushel on the Chicago Board of Trade, the highest level since Oct. 1 that year. Today’s rally extends the commodity’s 38 percent jump in July, making it the best performer over the past month on the UBS Bloomberg CMCI Index.

Authorities in Russia, the third-largest wheat shipper in 2009-2010, have been battling a heat wave that has scorched farmland and ignited wildfires. Although there’s no official statement about export restrictions, the market doesn’t rule out such a scenario, Phillip Futures Pte. said in note today.

“It’s very, very bullish and there’s no sign of it really stopping,” Peter McGuire, managing director at CWA Global Markets Pty., said by phone from Sydney. “I wouldn’t be surprised if it reaches $7 within the next two trading sessions,” said McGuire.

Wheat futures traded at $6.7925 a bushel at 1:58 p.m. in Singapore, while soybeans, rice and corn also climbed. Russia shipped 17.5 million metric tons of wheat in the 2009-2010 season, accounting for about 14 percent of global trade, according to the U.S. Department of Agriculture.

The wheat market had “exploded on fears about tightening global supplies,” the report from Singapore-based Phillip Futures said. Some investors were buying on “worries that Russia, a major force on the world wheat market, would ban exports,” the report said.

Supply Squeeze

Wheat futures have surged from this year’s low of $4.255 a bushel on June 9 on concern that the drought in Russia and other parts of Europe, including France, combined with excessive rains in Canada, will curb global supply.

World wheat stockpiles may decline 2.5 percent to 192 million tons by June 2011 as the “prolonged dry weather” hurts the outlook for crops in Russia, Kazakhstan, Ukraine and the European Union, the International Grains Council said on July 29, reversing a June forecast for higher inventories.

Russia’s wheat harvest may amount to 45 million tons, Anton Shaparin, a spokesman for the Moscow-based Russian Grain Union, said on July 27. That compares with a harvest of about 62 million tons last year.

Moscow has broken several heat records this season, while the drought has scorched more than 10 million hectares (24.71 million acres) of cropland. Temperatures of at least 36 degrees Celsius (96.8 degrees Fahrenheit) are forecast for the capital in the coming week, according to Gidromettsentr, the state weather service. Prime Minister Vladimir Putin is due to meet regional leaders in Moscow today to discuss the wild fires.

‘All Our Strength’

“We’re fighting the fires with all our strength,” Emergency Situations Ministry spokeswoman Irina Andrianova told state-run broadcaster Rossiya-24 yesterday.

The wheat harvest in Canada, the world’s second-largest exporter, may drop 17 percent to 15.6 million tons this year from a year earlier, after unusually wet weather prevented seeding in some areas, the Canadian Wheat Board said July 30.

Net-long positions in wheat futures, or the difference between bets on price gains and price declines, more than tripled to 7,212 contracts in the week to July 27, according to U.S. Commodity Futures Trading Commission data.

Corn for December rose as much as 1.3 percent to $4.12 a bushel, the highest price for the most-active contract since Jan. 12. November-delivery soybeans rallied as much as 1.4 percent to $10.19 a bushel, the highest price since April 26. Chicago rice futures surged as much as 3.3 percent to $10.90 per 100 pounds.

--With assistance from Ilya Khrennikov, Patrick Henry, Torrey Clark and Lucian Kim in Moscow and Jeff Wilson in Chicago. Editors: Jake Lloyd-Smith, Matt Oakley

To contact the reporter on this story: Luzi Ann Javier in Singapore at [email protected]

To contact the editor responsible for this story: James Poole at [email protected]

Wheat Jumps to 14-Month High as Heat Wave Parches Russian Farms http://www.businessweek.com/news/2010-08-02/wheat-jumps-to-14-month-high-as-heatwave-parches-russian-farms.html

August 02, 2010, 12:09 AM EDT

By Luzi Ann Javier

Aug. 2 (Bloomberg) -- Wheat futures advanced to the highest price in 14 months, extending the biggest monthly gain since August 1973, as investors speculated that drought in Russia may prompt the government to ban exports, curbing global supplies. September-delivery wheat jumped as much as 2.2 percent to $6.76 a bushel on the Chicago Board of Trade, the highest price for the most-active contract since June 1, 2009. It traded at $6.7525 at 11:15 a.m. Singapore time, rising for a fifth day.

Russian authorities have been battling a heat wave that has scorched farmland and ignited wildfires. Rainfall in Russia and Kazakhstan will continue to be “well below normal” in the 10 days from July 30, according to a Telvent DTN Inc. forecast on July 30. The country was the third-largest wheat shipper in 2009-2010, according to the U.S. Department of Agriculture.

Although there was “no official statement about export restrictions in Russia, the market” doesn’t rule out such a scenario, Phillip Futures Pte. said in note to investors today. “Wheat is likely to ride on the upward trend.”

Net-long positions in wheat futures, or the difference between bets on price gains and price declines, more than tripled to 7,212 contracts in the week ended July 27, according to U.S. Commodity Futures Trading Commission data.

Russia’s wheat harvest may drop 27 percent to 45 million metric tons this year, the nation’s Grain Union forecast last month. That compares with Institute for Agricultural Market Studies’s forecast for a 24 percent decline in harvest.

Net-Long Positions

Hedge-fund managers and other large speculators increased their long positions, or bets on price gains, for a third straight week to 102,938 contracts on the Chicago Board of Trade in the week ended July 27, from 99,665 contracts a week earlier, according to U.S. Commodity Futures Trading Commission.

Speculative short-positions or bets on price declines fell for a sixth straight week, declining to 95,726 contracts, the smallest volume since the week ended Jan. 5.

Corn for December delivery rose 0.8 percent to $4.10 a bushel at 11:15 a.m. Singapore time, while November-delivery soybeans added 1.1 percent to $10.16 a bushel.

Twenty-four of 31 traders and analysts surveyed from Chicago to Tokyo on July 30 said corn will rise and 23 predicted soybeans will advance on speculation that hot, dry weather in this month will reduce U.S. yields as drought cut crops in Russia and parts of Europe, shrinking global supplies.

--With assistance from Ilya Khrennikov in Moscow and Jeff Wilson in Chicago. Editors: Jake Lloyd-Smith, Richard Dobson

To contact the reporter on this story: Luzi Ann Javier in Singapore at [email protected]. To contact the editor responsible for this story: James Poole at [email protected]

Russian Assets May Be Sold to China State Funds, Times Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aUFp.FNknGPs

By Jonathan Browning

Aug. 1 (Bloomberg) -- Russia may sell some government-owned companies’ assets to Chinese state investment funds, the Sunday Times reported, citing Russian bankers it didn’t identify.

Preliminary talks have taken place with government officials from Russia and China, the newspaper said. Chinese state funds could act as investors in Hong Kong share sales of Russian companies, the Sunday Times said.

The government said last week it planned to sell holdings in OAO Rosneft, Russia’s largest oil producer, within three to five years to help narrow the budget deficit. The Finance Ministry also proposed selling minority stakes in companies including Russia’s two largest lenders, OAO Sberbank and VTB Group.

To contact the reporter on this story: Jonathan Browning in London [email protected].

Business, Energy or Environmental regulations or discussions

Lukoil, Norilsk, Polyus, Rosneft: Russian Equity Preview http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/08/01/bloomberg1376- L6GZ8E0YHQ0X01-3IEAAHU2EV6U66I969RKJ89FCN.DTL

Aug. 2 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The Micex Index of 30 stocks slipped 1.5 percent to 1,397.12 at the close in Moscow. The dollar-denominated RTS Index fell 1.6 percent to 1,479.73.

OAO Lukoil (LKOH RX): Crude oil increased, capping its biggest monthly gain since March. Shares in Russia's biggest non-state oil company fell 2.1 percent to 1,722.55 rubles. OAO GMK Norilsk Nickel (GMKN RX): Russia's largest mining company said second- quarter nickel output rose 7 percent on the previous three months. The shares declined 2 percent to 4,976.41 rubles.

OAO Polyus Gold (PLZL RX): Gold rose for a third day on speculation that the biggest monthly drop since December will encourage investors to stock up on the precious metal. Shares in Russia's largest gold miner slipped 0.4 percent to 1,380.53 rubles.

OAO Rosneft (ROSN RX): Russia's largest oil company is expected to discuss second- quarter earnings in a conference call on Aug. 2. Rosneft dropped 1.1 percent to 203.10 rubles.

--Editor: Steve Rhinds.

Peak time on Russia’s rollercoaster http://www.fundstrategy.co.uk/opinion/patrick-collinson/peak-time-on-russia %E2%80%99s-rollercoaster/1016086.article

2 August 2010 | By Patrick Collinson, Personal finance editor, The Guardian

There is an advert on television promoting Thorpe Park’s “Saw”. This horror movie- themed rollercoaster is billed as the “most terrifying ride in the world, testing the nerve of all who dare ride it.” That it may be, but it’s not as scary as investing in Russia.

During 2008 the Russian market collapsed faster and further than almost anywhere else. Those who bought at the peak of the market lost 80% of their money - and that’s if they could find anyone willing to take their shares off them.

Now the rollercoaster has climbed the other side, with values approaching their peak again. Should we be preparing for another plunge? Or is it different this time?

Emily Whiting, a client portfolio manager at JP Morgan, is quick to acknowledge that Russia is perhaps the most volatile of the major emerging markets. She works with Oleg Biryulyov, the manager of JP Morgan Russian Securities, an investment trust with assets totalling £315m, but is part of a team that oversees $2 billion (£1.3 billion) in Russian equities. That makes it the biggest foreign equity investor in the country.

“Russia is not a particularly well supported or advanced market, and there are not a lot of local investors,” says Whiting. “At any sign of trouble a lot of investors pull out. That 80% fall in 12 months is something the Russian market has done before. But since then it has pulled back by around 120%.”

Like Neptune’s Russia fund, the JP Morgan fund leaned heavily towards domestic consumption rather than the oil economy. Biryulyov is a relatively long-term (for Russia) stockholder, with a two-to-three year time horizon for most stocks. The MSCI index for Russia comprises 38% energy stocks and 22% materials, indicating just how much of a resource bias there is. Yet JP Morgan doesn’t hold a single share in Gazprom, the market’s biggest stock.

“We’re overweight in consumer stocks, staples and discretionary and underweight energy and oil. Indeed, many of the consumer discretionary stocks we invest in aren’t even in the index,” she says.

Gazprom is 9% of the market, but Whiting says: “It’s a stock we don’t like because of the level of state intervention.”

Despite the market’s recovery, Russia is still on most valuations cheap. It’s on a price/earnings (P/E) multiple of 6.5, up from the lows of 4-5 in 2008 but still a long way below the current emerging market average of 12.

However, one has to be cautious of these measures. India always looks expensive on market P/Es (it’s currently on 14.2 times 2011 earnings), while Russia always looks cheap. That probably says more about the level of local support than which direction the market is about to take.

The fund’s biggest holding is Magnit, Russia’s largest food retailer. It’s a remarkable growth story, having started life in 1998 in Krasnodar in south-west Russia. Now it’s a chain of more than 3,000 convenience stores and 25 hypermarkets with the slogan “Always Low Prices”, and in autumn is planning a £185m secondary share offering in London. It has more than doubled in price over the past year and has a market capitalisation of over £1 billion.

One concern about investing in consumer stocks is that visitors to Moscow will see a booming retail environment - but how far does it stretch through the income scale and across this vast and diverse country?

“Moscow is the leader, but what we like about retail is that it is broadening into second- level cities,” says Whiting. It is estimated that between 1999 and 2008, wages in Russia rose sevenfold in dollar terms.

This week HSBC Asset Management put out a glowing note on Russia, the largest overweight position in its Bric [Brazil, Russia, India, China] fund. “Russia is unloved and undervalued by the market at present,” says Nick Timberlake, the firm’s head of global emerging market equities. “There is a compelling story in terms of domestic consumption, which by global standards is still in its infancy. The evidence shows that consumer spending has been more resilient than the broad economy during the recent turmoil.”

The oil price remains a big driver in the Russian economy and is, of course, substantially below its $145 record in July 2008. But Whiting says that as long as oil is above $60-65 a barrel it is a strong contributor to growth. Unfortunately, much of the oil revenue that went into Russia’s stabilisation fund was subsequently squandered on defending the rouble, although it has also helped to plug a federal budget deficit. It means some of the more ambitious infrastructure projects drawn up during the oil boom have been halted or moderated. But Whiting says there is a “massive investment” going into the Sochi winter olympics in 2014. The resort town, near the Black Sea coast, will see construction on a scale not far off London’s 2012 effort - with a 69,000-seat main stadium, a 12,000-seat ice palace for ice hockey and a similar size venue for ice skating. Spending is pencilled in at $10 billion, but as everyone knows, that will soon rise.

Financial stocks are also a key part of the JP Morgan Russia portfolio. The biggest single holding is Sberbank, at 12% of the fund. “It has always been our largest holding,” says Whiting. “In some ways it’s part of the consumer story - Russia still has a very low penetration of retail financial products such as credit cards and mortgages. It’s not going to happen overnight, it’s a slow-burn story, but it will get there.”

During the financial crisis many regional banks came close to collapse, but consolidation has helped the sector.

MTS, Russia’s leading mobile phone operator, is the fund’s third-largest position. Whiting acknowledges that the days of super-growth are over, with mobile phone penetration in Russia similar to France, but she says there is still substantial revenue growth in prospect.

She also says management discipline in Russia has improved. But domestic politics will remain something that investors will need to be aware of.

“We are the top foreign investor and Oleg Biryulyov is a native Russian who has been managing money there for more than a decade. He gets invited to the Kremlin. The JP Morgan name means a lot of people want to work with us.”

Federal Grid Company enjoys H1 net profit http://www.rbcnews.com/free/20100802102041.shtml

RBC, 02.08.2010, Moscow 10:20:41.The net profit of the Federal Grid Company under RAS surged 1.5 times - from RUB 8.68bn (approx. USD 285m) in the first quarter of 2009 to RUB 13.13bn (approx. USD 435m) in January-June 2010, the Russian operator of the national power network indicated in its statement today. In the second quarter alone, the company's net loss stood at RUB 1.203bn (approx. USD 39.8m) against a net profit of RUB 14.334bn (approx. USD 475m) in Q1 of this year.

August 02, 2010 10:34 OGK-2 genco ups Q2 earnings 15.9% http://www.interfax.com/newsinf.asp?id=180570

MOSCOW. Aug 2 (Interfax) - Gazprom's (RTS: GAZP) OGK-2 (RTS: OGKB) wholesale generating company boosted net profit to Russian Accounting Standards (RAS) 15.9% year-on-year in Q2 2010 to 534.9 million rubles, the company said in materials.

This was 76.2% down on Q1 2010, as sales revenue plummeted 30.55% q-on-q due to lower sales on the wholesale market caused by a seasonal drop in electricity demand and prices.

Gazprom, the Russian gas monopoly, owns 54.9% of OGK-2, which controls the Pskov, Stavropol (RTS: STGS), Surgut-1, Troitsk and Serov state district power plants with combined capacity of 8,700 MW.

TMK reports slump in RAS-based net profit http://www.rbcnews.com/free/20100802114411.shtml

RBC, 02.08.2010, Moscow 11:44:11.The net loss of TMK under RAS amounted to RUB 1.21bn (approx. USD 40m) in the first half of 2010, having demonstrated a 4.3-time decrease from the corresponding period of the previous year, the top Russian pipe maker's press office announced today. Conversely, TMK registered a net profit of RUB 132.4m (approx. USD 4.39m) in Q2 against a net loss of RUB 1.343bn (approx. USD 44m) in January-March 2010.

VTB Capital races to the top in Russia http://www.ft.com/cms/s/0/6f30a4ac-9dbd-11df-a37c-00144feab49a.html

By Catherine Belton

Published: August 2 2010 02:09 | Last updated: August 2 2010 02:09

When VTB launched its investment banking arm more than two years ago, established local groups were sceptical of the Russian state bank’s ambition to become the market leader.

“People used to scoff at VTB Capital’s ambitions, but they aren’t laughing now – and their foreign competitors aren’t laughing now,” says one western banker in Moscow. “They are in every single deal.” VTB Capital has grown from nothing to become a leader in almost every market segment in Russia. While foreign banks cut staff and leading local investment houses such as Renaissance Capital were forced to speed up sales of stakes in their banks when the financial crisis struck, VTB Capital expanded, helped by $500m from the deep pockets of its owners.

With offices in London, Dubai and Singapore, the bank swiftly became the global leader in arranging Russian bond placements, and this year is so far ranking number two in organising Russian equity offerings, according to Dealogic, snapping closely at Renaissance Capital’s heels.

Today, foreign and domestic bankers complain that they are being squeezed on all fronts as VTB becomes the institution of choice for bond issues and initial public offerings – even as they face slimmer pickings because of continued global risk aversion.

Its competitors claim the bank’s rapid success is mainly because it is the Russian state investment bank – a status that was enshrined last year when Vladimir Putin, prime minister, attended its first investment conference.

“You almost have to have VTB because it is the government’s bank,” said one investment banker at a rival Russian institution. “They are automatically added to every deal.”

Its status as an arm of VTB, the country’s second-biggest lender, is also helping it gather more clients, especially after VTB became one of the few banks able to increase its lending portfolio last year thanks to 180bn roubles ($5.8bn) in capital injections from the state.

“VTB is really leveraging its position,” said one of the foreign bankers. “If a client comes and asks it to roll over a loan, they say OK but only if you give us all your investment banking business.” The banker added that VTB Capital’s competitors would do the same if they had the opportunity. “They have become the biggest local player. Now you can’t mention a private player in the same breath as a state player. It’s like a different league,” he said.

Yury Soloviev, VTB Capital’s chief executive, rejects the notion that its success stems from its association with the state, insisting that his bank has the best team.

“We are one of the world leaders in issuing Russian shares,” he told the Financial Times in an interview, pointing out that clients pick banks that are able to sell their company for more.

“No one – no state – can force a private shareholder to sell his company cheap. These connections are irrelevant when it comes to private shareholders. I think that people are making these remarks because of the professionalism of our team and the advantages with which we came to the market.” Mr Soloviev says the bank won a natural edge over its competitors by entering the market with a clean slate just as everyone else was being hit by losses incurred in the crisis.

VTB Capital also benefited from hiring most of the cream of the local investment banking team from Deutsche Bank.

Mr Soloviev says competitors are fuming because the majority of them have pursued the wrong strategy – hoping to survive without a link-up to a commercial bank, which he says forms the backbone of VTB’s advantage, giving it access to corporate clients.

“Universal banking for now is an unbeatable model. Globally, the banks that are winning are those that lend, issue cards, provide custody services, issue guarantees and arrange bond placements. We have one client, one relationship, one person answers for them – and there are many products and the synergies are enormous,” he said.

“This universalism is the reason why we are winning.”

Singapore Lures Russian Borrowers as VTB Doubles Debt Offering http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a8kPCNJ7n_7o

By Denis Maternovsky and Katrina Nicholas

Aug. 2 (Bloomberg) -- VTB Group, Russia’s second-largest bank, is pressing companies in the country to seek financing in Singapore after doubling its own bond sale in the Asian nation.

VTB of Moscow sold 400 million Singapore dollars ($294 million) of two-year notes on July 30 at a yield of 4.2 percent, according to data compiled by Bloomberg. The company’s U.S. dollar bonds due in 2012 yield 4.7 percent while the bank’s ruble debt due in 2013 yields 7.7 percent. VTB had initially sought 150 million Singapore dollars, said Andrey Solovyev, the London-based head of debt capital markets at VTB Capital, the investment banking unit that arranged the deal.

“We have already held preliminary talks with some companies and now, after such a successful placement, these talks are likely to be more active,” Solovyev said in a telephone interview after the sale.

Singapore dollar bond sales more than doubled this year to $9.8 billion from $4.5 billion in the same period of 2009 as issuers take advantage of tumbling borrowing costs, data compiled by Bloomberg show. Yields on the Singapore government’s benchmark 3.5 percent dollar bonds due 2012 dropped to a record low 0.39 percent from 0.82 percent in January. The yield on Singapore Airlines Ltd.’s 4.15 percent notes due December 2011 tumbled to a low of 1.22 percent July 30 from 3.459 percent a year ago and 2.655 percent in January, according to the data.

‘More Space’

“There is clearly more space to sell top-rated Russian corporate debt to the Asian institutional and retail client base in Singapore and Hong Kong, as spreads among top- rated Asian corporates trade lower and lower,” said Luis Costa, emerging- market debt strategist at Citigroup Inc. in London.

VTB’s sale is the first in Singapore by an issuer outside the Asia Pacific region since September when Rotterdam, Netherlands-based tank terminal operator Royal Vopak NV issued 210 million Singapore dollars of five-year bonds, data compiled by Bloomberg show. VTB’s is also the only Russian bond to target Asia investors other than a Japanese yen sale by Moscow-based gas company OAO Gazprom in 2007.

Singapore investors bought 82 percent of the VTB securities and Hong Kong buyers accounted for 7 percent, Solovyev said. Oversea-Chinese Banking Corp Ltd. in Singapore co-managed the sale with VTB.

‘Advantageous’

The sale was “advantageous not only from the point of view of widening the investor base, but from the standpoint of lower funding costs,” Solovyev said. “Other Russian issuers are likely to follow us.”

VTB debt is rated Baa1 by Moody’s Investors Service, its third-lowest investment grade rating, and one step lower at BBB by Standard & Poor’s, the same level as the Russian government.

“Clearly, this market is limited to investment-grade issuers, but there is no shortage of them in Russia,” Solovyev said.

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries fell 1 basis point to 230 on July 30, according to JPMorgan EMBI+ indexes. The difference is larger than the spread of 154 for debt of similarly rated Mexico and 206 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

The yield spread on Russian bonds over Treasuries is 50 basis points below the average for emerging markets, down from a 15-month high of 105 in February, according to JPMorgan indexes.

Default Swaps

The cost of protecting Russian debt against non-payment for five years with credit- default swaps was little changed at 164 basis points on July 29 and dropped 31 for the month, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

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

The ruble gained 0.4 percent to 30.2850 per dollar on July 30, trimming its monthly advance to 3.2 percent. Non-deliverable forwards, or NDFs, which provide a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a specific level in the future, show the ruble at 30.5088 per dollar in three months.

The yield on Russia’s dollar bonds due in 2020 fell 3 basis points to 4.879 percent, the lowest level since they were sold in April.

VTB has a branch in Singapore with more than 30 staff to serve Russian corporate clients, he said. The three-month Singapore interbank offered rate, or Sibor, fell to 0.47972 percent on July 30 from a 52-week high of 0.54667 percent on May 27, according to the city-state’s Association of Banks.

Rising Currency

The country’s relatively low costs may attract international borrowers, according to Thomas Harr, a Singapore- based currency strategist at Standard Chartered Plc. The Singapore dollar has climbed 3.3 percent against the greenback this year.

“For a foreign company with a representative office or operations here, issuing Singapore dollar bonds makes perfect sense from an asset or liability standpoint,” said Brayan Lai, a Hong Kong-based credit analyst at Credit Agricole CIB. “The Singapore government has been trying to deepen the Singapore dollar bond market to invite more capital inflows and to position Singapore as a financial center.”

To contact the reporter on this story: Denis Maternovsky in Moscow at [email protected] Katrina Nicholas in Singapore at [email protected]

Norwegian bank buys Russian bank http://www.barentsobserver.com/norwegian-bank-buys-russian-bank.4802960- 16180.html

2010-07-30 The North Norwegian bank Sparebank1 Nord-Norge has got license to buy 75 percent of the shares in the Russian bank North West 1 Alliance Bank. The new bank opens new possibilities for Nordic companies in North-West Russia.

The remaining 25 percents of the shares will be owned by the Norwegian bank’s Russian partner Bank Tavrichesky in St. Petersburg. The new bank’s main office will be in St. Petersburg and there will be a branch in Murmansk, Sparebank1 Nord-Norge writes in a press release.

Northwest Russia is a priority region for Sparebank1 Nord-Norge. The bank owns 10 percent of the shares in Bank Tavrichesky and already has an office in Murmansk.

- The license is a milestone in Sparebank1 Nord-Norge’s four years long struggle to get a foothold in Russia, says CEO Hans Olav Karde. – This opens up the possibility of attracting more Nordic companies to North-West Russia, he adds.

Sparebank1 Nord-Norge in October last year got permission from the Norwegian Ministry of Finances for acquisition of 75 percent of the shares in the Russian bank Agrokredbank in Cherepovets. The bank was renamed North West 1 Alliance Bank and moved to St. Petersburg, Fontanka.ru writes.

The North West 1 Alliance Bank has 37 employees, including three managers recruited from Sparebank1 Nord-Norge. The official opening of the North West 1 Alliance Bank is planned for September 16th 2010.

Russia gives go ahead for poultry from more US plants http://www.worldpoultry.net/news/russia-gives-go-ahead-for-poultry-from-more-us- plants-7757.html

//02 Aug 2010 More US processing plants have been given a green light in order to ship poultry to Russia. 39 US processing plants or storage facilities have been approved by Russian authorities for the acceptance of poultry into the country.

No chlorine The US and Russia has come to an agreement in June, whereby it was stated that chicken going from the US to Russia will not be treated with chlorine.

Earlier this Russia banned poultry from the US, citing that its food safety rules were infringed as a result of chlorine treatment.

Other treatments will now be used on the meat destined for Russia.

Russia was previously a top export market for US chicken- reeling in about $800 million worth per year.

August 2, 2010 8:00 In Primorye, three terminals for the export of grain will be built http://www.vesti.ru/doc.html?id=382420&cid=6

Primorye Governor Sergei Darkin said on Monday that the province will build three terminals for the export of grain - in the Vladivostok Commercial Sea Port, the port of East and in the Khasan region. "A grain terminals, - he said at a press conference - will be the export of grain in the Asia-Pacific region." Thus, the grain terminal capacity of 3 million tons will be built in the commercial port of Vladivostok. Already, a preliminary technical decision and rationale for investment, signed agreements on cooperation and collaboration with the Port Authority of Novosibirsk region and the largest market participants grain export. Now port of Vladivostok - the only Far Eastern port, which can provide transshipment of grain in all directions: the import, export, cabotage. For the six months of 2010 the port handled nearly 49,000 tons of grain cargoes, while the first half of last year - 26 thousand tons, ITAR-TASS.

AvtoVaz suspends work due to heat wave http://english.ruvr.ru/2010/08/02/14160820.html

Russia's flagship carmaker AvtoVaz has announced a weeklong suspension of production from Monday due to abnormally high temperatures in the urban district of Togliatti.

The measure concerns the entire staff engaged in basic and auxiliary production of vehicles and spare parts, as well as service staff.

AvtoVAZ Suspends Car Production for Week on Record Russian Heat http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ar6CaSgfjEZo

By Anna Shiryaevskaya

Aug. 2 (Bloomberg) -- OAO AvtoVAZ, Russia’s largest automaker, suspended production because of record heat in Togliatti, southern Russia, the carmaker said in an e- mailed statement late July 30. Production will remain suspended from today through Aug. 8, as temperatures are expected to exceed 45 degrees Celsius (113 degrees Fahrenheit), according to the statement.

“Despite significant demand for Lada cars, it is not possible to continue producing vehicles in such weather conditions,” the automaker said. “The shutdown for one week is an optimal way to keep the health and further the working efficiency of employees.”

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at [email protected]

Russia's Avtovaz valued at $2.4 bln before issue http://in.reuters.com/article/consumerproducts-SP/idINLDE67005W20100801

Sun, Aug 1 2010

MOSCOW, Aug 1 (Reuters) - Avtovaz (AVAZ.MM: Quote, Profile, Research) shareholders have valued Russia's biggest carmaker at $2.4 billion (74.4 billion roubles) before its additional share issue planned for the end of this year, a company shareholder told Reuters.

The shareholder declined to be identified.

This valuation puts the troubled manufacturer of Lada cars roughly 3.5 times higher than its current market price. At Friday's close of the MICEX exchange, Avtovaz was worth 21.02 billion roubles ($695.1 million).

France's Renault (RENA.PA: Quote, Profile, Research), which with its alliance partner Nissan (7201.T: Quote, Profile, Research) makes up the world's fourth-biggest carmaker, has said it signed a restructuring accord for Avtovaz, which nearly went bust in last year's industry crisis. Renault will pump 240 million euros ($313.2 million) into Avtovaz and keep its stake above 25 percent for at least two years, cementing its commitment to the volatile Russian market.

Russian state conglomerate Russian Technologies has said it will increase its stake in Avtovaz to 36.5 percent via the purchase of 730 million euros of new shares. Moscow investment bank Troika Gialog will retain a 25 percent stake.

Avtovaz shareholders are expected to approve the first additional share issue worth 17.5 billion -- to take place this year -- at a meeting set for Sept. 9.

In a second stage planned for 2011-12, shareholders want to issue an additional 19.3 billion worth of shares. (Reporting by Gleb Stolyarov; Writing by Dmitry Solovyov; Editing by Michael Shields)

(([email protected]; +7 495 775 1242))

($1=30.24 Rouble)

($1=.7664 Euro) Keywords: AVTOVAZ SHARES/

RusAl, Partners Offer to Buy Potanin Out of Norilsk http://www.themoscowtimes.com/business/article/rusal-partners-offer-to-buy-potanin- out-of-norilsk/411440.html

02 August 2010 Combined Reports

United Company RusAl is ready to buy out the stake in Norilsk Nickel held by Vladimir Potanin's Interros Holding to end a shareholder dispute and boost the value of Russia's biggest mining company, RusAl CEO Oleg Deripaska said Friday.

Norilsk would be able to "significantly" raise its market value in six months with more efficient management and by selling underperforming assets, Deripaska told reporters in his Moscow office. Such assets include U.S. precious-metals producer Stillwater Mining, utility OGK-3 and treasury stock, he said.

"The company is now worth $32 billion, but it could be worth significantly more, and competent management could achieve that in half a year," Deripaska said.

RusAl, which owns 25 percent of Norilsk, wants to replace the nickel producer's management, Deripaska said. The billionaire is challenging a June 28 election that gave board control to Interros and Norilsk executives.

"We disagree with these groundless accusations," Norilsk said by e-mail.

Interros has not received a proposal from RusAl offering to buy its stake in Norilsk, said a press official, who declined to be identified, citing company policy. Potanin's holding has said repeatedly that it could buy RusAl's stake but was not willing to sell its own.

Interros owns at least 25 percent of Norilsk after Potanin's former business partner Mikhail Prokhorov sold his stake to Deripaska in 2008. Interros gained control of Norilsk through state asset sales in 1995-97.

RusAl is disputing the board election, saying Interros had agreed in 2008 to support its nominee for board chairman, Alexander Voloshin, an ex-chief of staff to Presidents Boris Yeltsin and Vladimir Putin. Interros has said RusAl failed to garner enough votes to re- elect Voloshin.

Deripaska said he feared that the Norilsk board might prefer a new share buyback to a dividends payout. RusAl — struggling under $12.9 billion in debt — wants the cash-rich metal and mining giant to share its profits with shareholders.

Norilsk's last buyback was in 2008, when it purchased about 4 percent of its own shares on the market for about $2 billion.

Deripaska said he sought dividends of $3 billion for last year during discussions with Interros in April. The Interros official said different options had been discussed for distributing profits but declined to elaborate.

"Interros … believes that to distribute nearly half of profits to shareholders is not just, while we believe it is just," said Maxim Sokov, RusAl's head of strategy.

In May, when RusAl and Interros had the same number of board seats, the Norilsk board rejected RusAl's request to pay 110 percent of its profit, or some $3 billion, in a dividend for 2009 and approved a dividend payout of only $1.3 billion.

Deripaska said that under its 2008 truce agreement between RusAl and Interros, they had agreed that Norilsk should pay an annual dividend of about $2 billion.

RusAl will call an extraordinary meeting of Norilsk shareholders, seeking to re-elect the board as soon as it prepares legal documents to force Interros to vote in accordance with a 2008 shareholder agreement, Deripaska said. Restoring Voloshin to Norilsk's board will require approval of 50 percent of shareholders who attend, Sokov said.

"We have held in-depth talks with a large number of Norilsk minorities, investment funds and received their support," Deripaska said.

Re-electing the board will be the only question RusAl seeks to discuss at the shareholders meeting, he said, adding that the number of independent directors should rise to five or six, from three now.

(Bloomberg, Reuters, MT)

New insider trading laws - what changes? http://rt.com/Business/2010-08-02/new-insider-trading-laws.html/print

02 August, 2010, 08:47 With the government introducing new insider trading laws Business RT spoke with Vladimir Milovidov, the Head of the Federal Financial Markets Service about the details and what is or isn't inside trading.

For the Record http://www.themoscowtimes.com/business/article/for-the-record/411476.html

02 August 2010

- VimpelCom said Friday that it acquired 100 percent of Foratek Communication, an operator in the Ural Mountains, for 1.4 billion rubles ($46.4 million). (Bloomberg) - Transaero became Russia’s second-largest airline in the first half of this year, overtaking S7 Group, according to company data and the Federal Aviation Agency. (Bloomberg) - Pharmacy chain 36.6 narrowed its net loss to 162 million rubles ($5.4 million) in the first quarter, from 648.5 million rubles a year earlier, the company said Friday. (Bloomberg) - Russian agricultural safety officials will lift a ban imposed on imports of Finnish dairy products next week, the Finnish Food Safety Authority said in a statement Friday. (Bloomberg) - Former Norilsk chairman Alexander Voloshin may become a board member at Yandex, Vedomosti reported Friday, citing Yandex chairman Alfred Fenaughty. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

UPDATE 1-Russia July oil output hits new record http://af.reuters.com/article/energyOilNews/idAFLDE67108020100802

Mon Aug 2, 2010 7:23am GMT

* Daily oil output reaches 10.13 million bpd

* Gas production falls to 1.42 bcm

(Adds details)

MOSCOW, Aug 2 (Reuters) - Russian oil output reached a record-high level in July and stayed above 10 million barrels per day for the eleventh consecutive month, the Energy Ministry said on Monday. July oil output rose to 10.14 million barrels per day (bpd), up from the previous record of 10.13 million bpd in June, allowing Moscow to retain the world's top position ahead of Saudi Arabia, which edged its production up to 8.30 million bpd last month. [ID:nLDE66S182]

Production increased despite the reintroduction of export duty for far-flung East Siberian oil fields, although smaller than for the rest of the country.

The Finance Ministry also proposed hiking mineral extraction tax for gas firms by 61 percent from Jan.1. [ID:nLDE66K179]

Russia's natural gas production continued its decline amid falling demand in Europe and at home due to high summer temperatures.

Russia's overall gas output fell to 1.42 billion cubic metres per day in July from 1.49 bcm per day in June, while daily production at energy giant Gazprom (GAZP.MM) was cut to 1.08 bcm from 1.12 bcm.

Oil exports via Russian pipeline monopoly Transneft (TRNF_p.MM) rose to 4.53 million bpd from 4.22 million bpd in June.

(Reporting by Vladimir Soldatkin; editing by Dmitry Sergeyev)

LUKoil May Use Shares for M&A http://www.themoscowtimes.com/business/article/lukoil-may-use-shares-for- ma/411439.html

LUKoil, the country's second-largest oil producer, could use shares it is set to buy back from ConocoPhillips for mergers and acquisitions or simply annul them, vice president Leonid Fedun said Friday.

"We can keep the stock on our balance for quite a long time. One option is to keep the shares as reserve funds because they have potential to grow in value. When the time comes, we will take a decision, to annul them or use them for M&A activity," he said.

LUKoil's Moscow-traded shares fell 2.1 percent Friday, underperforming the benchmark MICEX Index, which finished the day down 1.5 percent. Conoco said Wednesday that it would sell its entire 20 percent stake in LUKoil, as the U.S. oil major looks to pay down debt and increase shareholder returns. The sale is not a part of Conoco's previously announced $10 billion asset divestiture program.

The U.S. oil producer also has a 30 percent stake in the Arctic oil and gas joint venture Naryanmarneftegaz, where LUKoil is majority owner.

"I don't think they have the intention of exiting. I don't think anyone would get out of a project that is making money," Fedun said.

LUKoil will buy back 40 percent of Conoco's 20 percent stake for $3.44 billion — using its own funds — with a 60-day option to buy back the remaining 11.61 percent that expires Sept. 26.

Conoco agreed to cap sales of stock in LUKoil so that third-party buyers do not accumulate more than 5 percent stakes, the U.S. energy company said in a Securities and Exchange Commission filing dated Wednesday.

Fedun said LUKoil valued Conoco's 11.61 percent share at about $5 billion and that several banks had already offered to help finance the deal.

"We are going to take a call at the last moment, at the end of September. If we think we should buy, we will. If the price doesn't work for us, we won't," said Fedun, who has a 9.27 percent stake in LUKoil.

LUKoil may have its long-term corporate credit rating cut one level to junk from BBB- should the company decide to buy more than 7.6 percent of its own shares, Standard & Poor's said Saturday.

"We expect a one-notch downgrade, if any, if LUKoil exercises the 11.6 percent buyback option, and likely an affirmation if the option is not exercised," the agency said in a statement.

S&P said it planned to resolve the credit-rating placement within three months as it evaluates additional information on the funding for those transactions and LUKoil's resulting liquidity.

Russia's Lukoil to acquire Croatia's Crobenz http://balkans.com/open-news.php?uniquenumber=66066 Igor Ilic in Zagreb - 02.08.2010 Russian oil firm Lukoil (LKOH.MM: Quote) won an approval from Croatia's anti-trust agency to buy small fuel retailer Crobenz from national oil and gas group INA (INA.ZA: Quote) (HINAq.L:Quote).

The anti-trust agency AZTN confirmed on Friday it had given the green light for the sale to Lukoil, which is already present in Croatia but has a small market share.

AZTN last year ordered INA to sell Crobenz, which owns 14 petrol stations in Croatia, after INA's biggest shareholder, Hungary's MOL (MOLB.BU: Quote), increased its stake to 47 percent. Source; Reuters; Balkans.com

BP's Dudley to Visit Moscow This Week http://www.themoscowtimes.com/business/article/bps-dudley-to-visit-moscow-this- week/411450.html

Incoming BP chief executive Robert Dudley will fly to Moscow this week to meet shareholders in its Russian joint venture TNK-BP, a source close to BP said Friday.

Dudley is expected to arrive in Moscow midweek, Viktor Vekselberg, one of TNK-BP’s billionaire shareholders, said Friday, according to Andrei Shtorkh, a spokesman for Vekselberg's Renova Group.

BP and its Russian partners in TNK-BP fell out in 2008 after a bitter dispute over control of the 50-50 venture, but relations have improved since then. TNK-BP accounts for about one-quarter of BP’s production and one-fifth of its reserves.

Dudley — who led TNK-BP at the time of the dispute and left Russia in 2008 because of what he called "sustained harassment" — will travel with Tony Hayward, BP's outgoing chief executive, the source said.

BP declined to comment on the possible visit.

The visit comes as BP is seeking to raise up to $30 billion from asset sales to help meet the cost of cleaning up the Gulf of Mexico oil spill, the biggest in U.S. history.

BP said Sunday that it had informed the governments of Vietnam and Pakistan that it put its production assets in the countries up for sale. The group has also earmarked assets in Colombia and Venezuela. BP spokesman Vladimir Buyanov said Wednesday that Hayward and Dudley would travel to Russia to meet government officials and business partners, with dates to be announced later.

Buyanov declined to comment on Vekselberg’s remarks.

Prime Minister Vladimir Putin’s spokesman, Dmitry Peskov, said he had no knowledge of a visit by Dudley.

TNK-BP is interested in purchasing BP assets in Central and Eastern Europe, Stan Polovets, chief executive officer of AAR, the consortium of Russian owners, told Russia Today television on Friday.

TNK-BP is looking at regions where the company has a “certain political advantage” and the government could help negotiate the deal, Polovets said. TNK-BP could be interested in BP’s downstream assets in Central and Eastern Europe and upstream assets in Central Asia and the Caspian region, the report said.

A company spokesman said Thursday that TNK-BP considered buying BP's Venezuelan assets.

"TNK-BP supports the intent of its 50 percent shareholder BP to strategically realign its asset base in Venezuela and is actively evaluating the opportunity to participate in the assets," the spokesman said.

BP is seeking to sell its German gas station chain Aral for about 2 billion euros ($2.6 billion), German magazine Wirtschaftswoche reported Saturday, citing investment bankers familiar with BP's plans.

Wirtschaftswoche said France's Total, Rosneft and Avia, an independent chain of filling stations, were among the possible buyers. Rosneft would also be interested in BP's two German refineries, it said.

BP and Rosneft declined to comment on the report.

BP's Dudley to visit Moscow next week: source http://in.reuters.com/article/GCA-GreenBusiness/idINTRE66T5DY20100802

LONDON | Mon Aug 2, 2010 11:05am IST

11:05am IST LONDON (Reuters) - Bob Dudley, BP Plc's newly appointed chief executive, will fly to Moscow next week to meet shareholders in its Russian joint venture TNK-BP, a source close to the company said on Friday.

The two groups fell out in 2008 after a bitter row over control of the venture but relations have improved since then.

Dudley will travel with Tony Hayward, BP's outgoing chief executive, the source said. BP declined to comment.

The oil giant said this week it sought to raise up to $30 billion from asset sales to help meet the cost of cleaning up the Gulf oil spill, the biggest in U.S. history. The group has earmarked assets in Vietnam, Colombia and Venezuela.

TNK-BP, in which BP has a 50 percent stake, said on Thursday it considered buying BP's Venezuelan assets.

"TNK-BP supports the intent of its 50-percent shareholder BP to strategically realign its asset base in Venezuela and is actively evaluating the opportunity to participate in the assets," a company spokesman told Reuters.

BP reported a second quarter loss of $17 billion after taking a $32 billion hit from the costs of cleaning up the Gulf spill.

(Reporting by Christina Fincher; Editing by Maria Golovnina)

Gazprom

Gazprom export revenues to continue rise http://www.upstreamonline.com/live/article224518.ece

Russia's gas monopoly Gazprom expects export revenues, one of the company's key earnings figures, to rise further next year.

News wires 02 August 2010 01:31 GMT

Export revenues are set to continue their rise after advancing to the predicted $45 billion this year, Gazprom deputy chief executive Alexander Medvedev told Reuters Insider TV.

"In 2011 we anticipate that there will be more gas sold and that the level of the price -- we are rather sure -- will not go down, in view of the situation with the spot market as well as the crude oil price situation," Medvedev said. The price for oil recovered to $77 a barrel on Friday in the United States, the world's largest market for the fuel, after reaching a low of under $65 a barrel in May.

Gazprom's total revenue is predicted to rise to $124.4 billion next year from an estimated $113.1 billion this year, according to Thomson Reuters StarMine.

StarMine gives more weight to more recent analyst estimates and to analysts who were more accurate in the past than their peers.

Medvedev said in January gas demand in Europe, Gazprom's main market outside Russia, would return to pre-crisis levels around 2012 or 2013, which is close to the estimates of analysts, who expect power demand to have recovered by the middle of the decade.

As Gazprom seeks to find new customers for its gas, Reuters reported negotiations with energy-hungry China were progressing.

The Moscow-based company expects to deliver gas to China from 2015 and it assumes the parameters of the contract, except for the price, with the China National Petroleum Company will be sealed in September, Medvedev said.

The two parties would probably agree on the price in the middle of next year, the deputy chief reiterated.

The "price should justify the investment on both Russian and Chinese territory," he said, without being more specific on whether the priced should reflect current market prices for the fuel.

Natural gas in the United States for the next month traded at $4.86 per million Btu on Friday.

The demand for natural gas is rising because the fuel when burned emits less carbon dioxide the coal, which reduces the charges companies incur for emissions.

Asked whether Gazprom might seek to acquire any of the assets British oil producer BP is planning to sell, Medvedev said it was an option.

"We are in regular contact with BP management and rather sure that if BP will be interested to sell part of the assets, we will consider. But as per today we didn't get any proposal from BP to look at any part of their portfolio," he said.

BP has launched a $25 billion to $30 billion asset sales program to pay damages caused by the massive oil spill it caused in the Gulf of Mexico.

Published: 02 August 2010 01:31 GMT | Last updated: 02 August 2010 01:36 GMT Gazprom Sees 2011 Export Revenues Rising http://news.google.com/news?client=firefox-a&rls=org.mozilla%3Aen-US %3Aofficial&hl=en&tab=wn&pz=1&zx=uc23my-lpeuce

01 August 2010 Reuters

BERLIN — Gazprom expects export revenues, one of the company's key earnings figures, to rise further in 2011, deputy chief executive Alexander Medvedev said Friday.

Export revenues are set to continue their rise after advancing to the predicted $45 billion this year, Medvedev, the gas company's export chief, said in an interview.

"In 2011 we anticipate that there will be more gas sold and that the level of the price — we are rather sure — will not go down, in view of the situation with the spot market as well as the crude oil price situation," he said.

The price for oil recovered to $77 per barrel Friday in the United States, the world's largest market for the fuel, after reaching a low of less than $65 per barrel in May.

Gazprom's total revenue is predicted to rise to $124.4 billion in 2011 from an estimated $113.1 billion this year, according to Thomson Reuters StarMine. StarMine gives more weight to recent analyst estimates and to forecasts by analysts who were more accurate in the past.

Medvedev said in January that gas demand in Europe, Gazprom's main market outside Russia, would return to pre-crisis levels around 2012-13, which is close to the estimates of analysts, who expect power demand to have recovered by the middle of the decade.

As state-run Gazprom seeks to find new customers for its gas, negotiations with energy- hungry China are progressing.

The company expects to deliver gas to China from 2015, and it assumes that the parameters of the contract — except for the price — with the China National Petroleum Company will be sealed in September, Medvedev said.

The two parties will probably agree on the price in mid-2011, he said.

Gazprom to switch over to flexible price policy on natural gas http://english.ruvr.ru/2010/07/31/14031094.html Jul 31, 2010 13:28 Moscow Time

Russia’s Gazprom is prepared to usher in a new system of payments for gas deliveries to foreign consumers. The gas giant may specifically offer discounts and change long- contract terms. The Voice of Russia has more.

Traditionally the gas price is tied to that of oil. Oil is an exchange commodity, while gas is not. This means that the current gas price is calculated on the basis of the cost of oil. Besides, all gas delivery contracts are long-term, and feature no exact price, but just the formula that’s used to calculate that price. The formula is based on what oil is assumed to sell at in a matter of six to eight months. But the change of the world economic situation couldn’t but affect Gazprom’s pricing policy, says an analyst with the Arbat Capital Company Vitaly Gromadin, and elaborates.

Judging by Gazprom officials’ statements and taking account of the situation on the gas market, Vitaly Gromadin says, it is safe to assume that Gazprom may either diminish contractual commitments for delivery amounts as regards the more reliable customers, or offer discounts, as was the case with gas supplies to Ukraine. The discount for Ukraine took the form of the abolition of the duty. It is therefore the government that took upon itself the burden of price reduction.

But however important the political aspects of the issue, economic considerations remain dominant. Therefore, if the gas price is low with regard to the oil price, discounts will become economically conditioned. It is not impossible that Gazprom will for some time continue to be geared by the spot price, that is the current market price that gas is sold here and now at, and supplied immediately. It is that price that Gazprom’s main consumers abroad, namely France, Italy, Germany and Turkey, proceed from in signing contracts with the Russian gas company.

But then, one shouldn’t expect Gazprom to drastically change its pricing policy; the current change should rather be seen as temporary. But when things get back in place some time in the future, Gazprom is likely to reemploy its system of long-term contracts, based on the cost of oil. But it is still possible that the company will agree to a change in contractual terms as regards some clients.

Gazprom London interested to buy surplus carbon credits from Romania http://www.steelguru.com/russian_news/Gazprom_London_interested_to_buy_surplus_c arbon_credits_from_Romania/157790.html

Sunday, 01 Aug 2010

NineO'Clock quoted Mr Adriean Videanu economy minister of Romania as saying that London branch of Gazprom is interested to purchase surplus carbon credits sold by Romania.

He added that several companies are interested to buy AAUs, including Mitsui, Sumitomo, Vitol, Nomura and Gazprom London. The government passed the state contract as basis of negotiation for the sale of AAUs. The minister of economy met representatives of the IMF, EC and WB, for talks over the income and expense budgets of companies controlled by the ministry, the targets set to curbing arrears and losses, privatizations and the sale of CO2 emissions.

Referring to privatizations, he said that, besides selling its minority stakes, the state also wants to privatize a number of companies: Avioane Craiova, IOR, the Mangalia Shipyards, Cuprumin and Moldomin. On the other hand, Videanu opened yesterday the construction works of the Cosmesti Marasesti Dam on the Siret River, Agerpres reports. The dam will have a dual purpose: while generating electricity, it will also protect downstream areas against floods.

(Sourced from www.nineoclock.ro)