Russia 101220

Basic Political Developments MAJOR EVENTS IN 2011

o Jan 1–10: New Year and Christmas holidays DPRK/ROK

o Moscow regrets UN failure to make statement on Korean Peninsula situationo MOSCOW THINKS SOUTH KOREAN MILITARY EXERCISE BLOCKS

STABILIZATION ON KOREAN PENINSULA - FOREIGN MINISTRY SOURCE

o Russian embassy in Pyongyang monitors situation on Korea Peninsulao UN Security Council fails to adopt statement on N.Korea o UN SC not approve statement on Korea situation yet – Churkino Russia's Diplomacy Moves in Mysterious Ways - After criticizing North

Korea repeatedly over the artillery attack on Yeonpyong, Russia on Saturday abruptly demanded an emergency meeting of the UN Security Council, taking issue with planned South Korean artillery drills on on Yeonpyeong Island that have been held annually for decades.

START TREATY o US Senate votes down another Republican attempt to amend new STARTo US-Russian nuclear treaty on verge of collapseo Senate Democrats Make Final Push to Ratify Nuclear Arms Treaty o Republicans fail to amend arms pact with Russiao GOP Senate leader opposes US-Russian arms deal

Medvedev, Latvian president to meet in Moscow - Russian President Dmitry Medvedev and his Latvian counterpart Valdis Zatlers will on Monday discuss the rights of Russians in the Baltic state and economic cooperation, the Kremlin said.

o Medvedev, Latvian leader to sit down for talks MEDVEDEV TO INDIA

o Russian President to pay official visit to Indiao Medvedev begins India visit todayo Briefing by Official Spokesperson and JS (ERS) on visit of Russian Presidento India and Russia to sign agreements during Russian Prez’s visito Kremlin to pitch fighters, nuclear deal in Indiao Dmitry Medvedev to head to India o Medvedev Joins Parade to India Chasing Weapons, Nuclear Deals o Indo-Russian trade set to touch $7b by FY11o The way ahead in Indo-Russian ties - Pallavi Palo India, Russia share privileged partnership, says Medvedev - Russian President

Dmitry Medvedev tells Times of India that Russia intends to keep its place among India's top partners. Russia says India's nuclear liability Bill not a hurdle to civil cooperation

o Medvedev: Russia to Study Participating in Building TAPI Gas Pipelineo UAC considers producing An-148 airliner in India

o Sistema India arm to get $200 mln from Gazprombanko Russia's Gazprombank says to raise $200 mln loan for Sistema's Indian

subsidiaryo Sistema Shyam Expects Russia Investment Next Quarter o SSTL's 20% stake sale to Russian govt in Q1 2011

Russian president coming to Lebanon in January Foreign Minister: Process of border demarcation with Russia becomes action-oriented

- The first meeting of the Joint Ukraine-Russia Demarcation Commission held in Moscow is a significant event for bilateral relations, Foreign Minister Kostiantyn Hryshchenko has said in his statement, placed on the MFA website.

Burjanadze, Nogaideli in Moscow - Nino Burjanadze, leader of opposition party Democratic Movement-United Georgia, and Zurab Nogaideli, leader of opposition Movement for Fair Georgia, will attend an opening ceremony of World War II memorial in Moscow.

Russian Azerbaijanis gather in Moscow - The annual meeting of the Central Council of the All-Russian Azerbaijani Congress dealing with the results of 2010 was held.

Putin to create unified information channel for courts Russia will continue to deploy SS-18 'Satan' until 2026 Russian security services mark professional holiday - Russia’s security services mark

their professional holiday on Monday Russian political and economic calendar: December 20 PRESS DIGEST - Russia - Dec 20

o Prime Minister Vladimir Putin could lead the United Russia party's candidate list in 2011 parliamentary election.

o Russia's Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz), the main creditor of IzhAvto, will sell assets of the indebted car maker to state-controlled Russian Technologies and Avtovaz (AVAZ.MM: Quote, Profile, Research, Stock Buzz).

o Co-owner of iron and steel firm Metalinvest and Coalco developer Vasily Anisimov could consider buying Inteko, the main asset of Yelena Baturina, wife of ex-Moscow mayor Yuri

o Yelena Baturina and magnate Vasily Anisimov seem to have failed to reach agreement on a price for Inteko, the daily says.

o Russia's second biggest lender VTB bnak (VTBR.MM: Quote, Profile, Research, Stock Buzz) has enough capital to absorb Transcredit bank (TKB) by the end of 2010 and Bank of Moscow in 2011, head of the board of VTB-24 Mikhail Zadornov says in an interview.

o Russia could propose that South Korea's Hyundai-Kia (000270.KS: Quote, Profile, Research, Stock Buzz) cooperate with GAZ group instead of IzhAvto, the daily says.

o VTB will sell its almost 12 percent stake in mid-size Rosbank (ROSB.MM: Quote, Profile, Research, Stock Buzz) to Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) in the next 18 months, according to head of VTB Andrei Kostin.

o Russian lawmakers will meet this week to denounce the European human rights court for political motives in decisions on Russia, a possible signal to

Europe ahead of a ruling on YUKOS shareholders' claims against Russia, the daily adds.

o Russian tycoon Roman Abramovich will run for a seat in the legislature of the polar region of Chukotka in March 2011, the paper reports.

o Russia and India are expected to sign a deal on joint works on launching the production of the fifth generation fighter, the daily says in connection with President Dmitry Medvedev visit to Delhi starting on Monday.

Russian Press at a Glance, Monday, December 20, 2010 o The United Russia ruling party collected 6 billion rubles ($195.6 million)

worth of private donations over the past five years. Who gives the party the money and why?(Vedomosti)

o At Russia's request, the UN Security Council met Sunday for an emergency session to cool escalating tensions on the Korean Peninsula that Moscow's UN ambassador warned affected his country's national security interests.(Moscow Times)

o Russian Prime Minister Vladimir Putin said he could lead the United Russia party list at the 2011 parliamentary election again.(Kommersant, Nezavisimaya Gazeta)

o A Kommersant correspondent comments on riots in Minsk that followed Sunday's presidential election in Belarus.(Kommersant)

o Health and Social Development Minister Tatyana Golikova speaks on modernization of healthcare in Russia.(Rossiiskaya Gazeta)

o Russia's second largest state lender VTB that is mulling over buying a stake in the Bank of Moscow, said the bank is not actually controlled by the Moscow government.(Vedomosti)

o Italian airline Alitalia has decided to drop Russian plane builder Sukhoi for a possible $500 million regional jet order, saying Friday that it could wait no longer for Sukhoi's delayed new Superjet 100 and would opt for planes from Brazil's Embraer instead.(Moscow Times, Vedomosti, Kommersant)

o Russia's Economic Development Ministry assesses the 2010 budget deficit at 3.5%, and the Finance Ministry at 4.3%. Prime Minister Vladimir Putin proposed waiting until the end of the year to see who is more exact.(Nezavisimaya Gazeta)

o The government released stronger than expected unemployment and wage statistics Friday, showing the economy on track and adding to the case for a rise in interest rates early next year.(Moscow Times)

o As unprecedented nationalist protests continued over the weekend, 2,000 people were detained to prevent violent clashes between Slavs and ethnic minorities.(Moscow Times, Rossiiskaya Gazeta, Nezavisimaya Gazeta)

o An Ivanovo doctor fears being fired or beaten after he told Prime Minister Vladimir Putin on a call-in show last week that a local hospital had faked a display for a visit by Putin, installing borrowed equipment, dressing up staff as patients and forcing nurses to lie about their salaries.(Moscow Times, Nezavisimaya Gazeta, Rossiiskaya Gazeta)

o Prosecutors have opened a criminal case against a deputy Pacific Fleet commander and two associates on suspicion of embezzling at least $1.2 million in government funds earmarked for vessel repairs.(Moscow Times)

o Muscovites have submitted 15,000 proposals to solve the Russian capital's transportation problems.(Rossiiskaya Gazeta)

Economic Glasnost - By Chris Weafer Russia Profile Weekly Experts Panel: The Significance of Khodorkovsky’s Second

Trial Prominent Muslim leader disagrees that Islam being suppressed in Russia Jewish religious leader accuses top mufti of besmirching Russia's "native population" Russia still “El Dorado” for illegal immigrants Schoolboys stopped - but Russian nationalists say they are biding their time: “The

adults are waiting for the moment when they see how the government is responding; the teenagers are eager to fight for themselves even if they don’t really understand why,” said one of the coordinators, said to be a student in Moscow.

Russia’s far right - Large, violent protests in Moscow are rare. So the sight of 6,000 ultranationalists this month close to the Kremlin walls, wielding knives and iron bars, shouting racist slogans and lashing out at non-white passers-by, was alarming… But it was also a show of strength by a Russian far right movement that experts estimate may number up to 70,000.

WIKILEAKS o US embassy cables: Tip-off in Portugal claims former Russian general is

trying to sell 'uranium plates' Reign of “Europe's last dictator” not about to end at 16 years - The counting of ballots

has been completed in Belarus, with preliminary results showing Aleksandr Lukashenko receiving almost 80 per cent of the votes in Sunday's election, which guarantees him yet another presidential term.

Belarusian elections spill into violence -“During his campaign [Sannikov] has said that Russia pretty well understands that Lukashenko is not a reliable partner for Russia…Everyone wants to have a good relationship with Russia,” Astroshchankov said.

National Economic Trends Russian banks' correspondent accounts down to 600.6 bln rbls, deposit accounts up to

352.3 bln rbls-cbank Kudrin Sees Deficit at 4.3% Finance Ministry's budget deficit forecast differs from Economy Ministry's Russia: grain selling from the intervention fund to stabilize grains market situation

Business, Energy or Environmental regulations or discussions KamAZ, VimpelCom, VTB: Russian Equity Market Preview Rusal may sell Norilsk stake for $12-15 billion: report Uralkali Agrees to Buy Silvinit for Shares, $1.4 Billion Cash Uralkali to merge with Silvinit, via $1.4 bln first stage deal Russia Silvinit shares fall 9 pct on Uralkali deal

Potash giants merger points to FTSE 100 listing - The £17bn merger of Uralkhi and Silvinit will be announced on Monday – creating the world's second biggest potash producer and paving the way for a FTSE 100 listing.

UPDATE 1-Vimpelcom shareholder Telenor not backing Weather deal BNP Leads Biggest Lending Push in Two Years as Rates Tumble: Russia Credit SuperJet Loses Alitalia - Italian airline Alitalia has decided to drop Russian plane maker

Sukhoi for a possible $500 million regional jet order, saying Friday that it could wait no longer for Sukhoi's delayed new Superjet 100 and would opt for planes from Brazil's Embraer instead.

Daimler Expands KamAZ Partnership AvtoVAZ to Acquire Izhavto Novartis To Invest $500 Million In Russia, Build Plant, Boost R&D UPDATE 1-Novartis to invest $500 mln in Russia over 5 years Chelyabinsk Zinc Plant nine-month net profit up 280% to 1 bln rbls Deutsche's Deal Pipeline - Deutsche Bank has mandates to help manage $7 billion of

share sales in Russia and other former Soviet republics next year as investor appetite grows for emerging market assets.

Metalloinvest plans to borrow $3.8 billion to fund the development of the Udokan copper deposit in Siberia, billionaire Alisher Usmanov said Friday, RIA-Novosti reported. (Bloomberg)

The St. Petersburg International Mercantile Exchange began trading deliverable futures contracts for Russian diesel Friday and plans to add similar instruments for gasoline and Urals crude oil next year, vice president Mikhail Temnichenko said. (Bloomberg)

Federal Grid Company, the country’s monopoly for high-voltage power transmission, approved a 952.4 billion ruble ($31 billion) investment program for the five years from 2010 to 2014, it said Friday in a statement. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory) Energy Minister Indicates Lower Investment Barriers - In another sign that Russia may

be willing to drop some barriers to the strategic sector, Shmatko reiterated that oil companies with ambitions to sell gas will enjoy greater access to infrastructure through “soft” liberalization of transport.

Russia's Novatek acquires 51% stake in West Siberian Sibneftegaz Russia Pipeline to Supply 15 Million Tons of Oil a Year to China East Siberia-Pacific Ocean Crude: A Boon for Japan

Gazprom Gazprom and GDF SUEZ summarize sci-tech cooperation results for 2010 Report: Helicopter crash kills 1, injures 15 - The helicopter crashed while approaching a

gas field that is under development by Gazprom, the Russian energy giant, state media said.

The corporate body of South Stream Bulgaria AD is officially registered - The elected board of directors includes Maya Hristova, Georgi Gegov, Boris Todorov, Alexander Medvedev and Vlada Rusakova

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Full Text Articles

Basic Political Developments

MAJOR EVENTS IN 2011

Jan 1–10: New Year and Christmas holidays

http://www.prime-tass.com/news/calendar/_Russian_calendar_Key_events_for_Dec_20/-103/%7BC111FDC9-E01E-4090-93FD-1CF02401DD4B%7D.uif

DPRK/ROK

December 20, 2010 11:32

Moscow regrets UN failure to make statement on Korean Peninsula situationhttp://www.interfax.com/newsinf.asp?id=210412

MOSCOW. Dec 20 (Interfax) - Moscow regrets the UN Security Council's failure to adopt a statement on the situation on the Korean Peninsula at the meeting held early on Monday morning, a source in the Russian Foreign Ministry told Interfax.

"Naturally, that is a pity," he said.

11:21MOSCOW THINKS SOUTH KOREAN MILITARY EXERCISE BLOCKS STABILIZATION ON KOREAN PENINSULA - FOREIGN MINISTRY SOURCE

http://www.interfax.com/news.asp

Russian embassy in Pyongyang monitors situation on Korea Peninsulahttp://english.ruvr.ru/2010/12/20/37218759.html

Dec 20, 2010 09:31 Moscow TimeThe Russian embassy in Pyongyang is in permanent contact with the North Korean authorities and is closely monitoring the situation on the Korea Peninsula, a situation that is likely to be aggravated shortly. This came in a statement for the ITAR-TASS news agency earlier today by the Russian ambassador to Pyongyang Valery Sukhinin. The official voiced hope that Russia’s moves would yield the required results, and that the situation on the peninsula would grow normal. Meanwhile Seoul has said that it is beginning the planned gunnery practice in the

Yellow Sea water area that’s disputed with Pyongyang, despite the tense situation. According to the Reuters news agency, one can hear artillery fire in the area around Yongpyeong Island. Pyongyang threatens with a “strike of retaliation”. The armed forces of both Koreas have been put on high alert.     

UN Security Council fails to adopt statement on N.Koreahttp://en.rian.ru/world/20101220/161850269.html07:37 20/12/2010

The UN Security Council failed to adopt a statement on North Korea on Sunday after nine-hour discussions due to diplomatic differences, Vitaly Churkin, Russia's envoy to the UN, said.

"Our draft to send the sides a seemingly evident signal [to show restraint] faced quite predictable diplomatic difficulties due to differences in understanding by a number of Security Council members of the reasons for tensions on the Korean peninsula," Churkin told journalists.

Tensions on the Korean peninsula are high since Seoul unveiled plans to hold exercises on Yeonpyeong Island on December 18-21. Pyongyang blasted the move saying its response would be "deadlier" than the shelling in November that killed four South Koreans on the island.

South Korea has postponed the drills until Monday citing poor weather conditions, but vowed to proceed with the planned exercises despite threats from Pyongyang and calls for restraint from Russia and China.

The key issue that prevented the UN from adopting a coordinated statement was the fact that the United States and China had different approaches. The U.S. refused to adopt any statement without a clear condemnation of the reclusive communist regime, whereas China was against blaming Pyongyang.

The Security Council held an emergency meeting on Sunday at Russia's request to address mounting tensions between the two Koreas. Participants discussed a Russian draft statement calling on North and South Koreas to refrain from escalating the conflict.

Churkin said discussions could resume Monday.

UNITED NATIONS, December 20 (RIA Novosti)

UN SC not approve statement on Korea situation yet – Churkin

http://www.itar-tass.com/eng/level2.html?NewsID=15796781&PageNum=0

20.12.2010, 03.48

THE UNITED NATIONS, December 20 (Itar-Tass) -- The U.N. Security Council could not approve a statement on the Korean Peninsula situation yet. “Several Security Council member-countries supported Russia’s idea to propose to the U.N. General Secretary to send his special envoy in the region,” Russian Permanent Representative in the U.N. Vitaly Churkin said after more than six-hour consultations at the U.N. Security Council on Sunday.

However, several delegations “need some more time” to negotiate the other provisions of Russia-initiated statement, he said. Russia offered to appeal to North Korea and South Korea to show restraint, the Russian diplomat recalled.

Russia's Diplomacy Moves in Mysterious Wayshttp://english.chosun.com/site/data/html_dir/2010/12/20/2010122001133.html

The diplomatic moves Russia made last week carried the classic signature of the Kremlin. The "citadel," as Kremlin literally translates, remains shrouded in a thick veil of secrecy, and its moves are difficult to predict. 

After criticizing North Korea repeatedly over the artillery attack on Yeonpyong, Russia on Saturday abruptly demanded an emergency meeting of the UN Security Council, taking issue with planned South Korean artillery drills on on Yeonpyeong Island that have been held annually for decades. Just a few days ago Russian Foreign Minister Sergei Lavrov sharply criticized the artillery attack when he met North Korean Foreign Minister Pak Ui-chun, and Russian Prime Minister Vladimir Putin also criticized North Korea's uranium enrichment program. Such contradictory behavior affirms Moscow's reputation for unpredictability. 

Following Russia's rare rebuke of the North, some South Korean diplomats got mistaken impression that they had gained a new ally. One South Korean diplomat even said, "Russia showed clear resolve not to protect North Korea any longer on the international stage." When it became clear that the North was solely responsible for the artillery attack, Russia could no longer remain silent on the issue and abandoned its amiable attitude to the North, the diplomat said. 

But that view quickly lost ground when Moscow began to take issue with the South Korean military exercises. It seems likely that the Russians consulted with Pyongyang before calling the UN Security Council meeting. This could help North Korea’s attempts to make the drills appear the source of the tensions. Perhaps that is why Pak declared there had been "fruitful results" to his Moscow visit. Russia experts call this "matroshka" diplomacy, referring to the Russian dolls that always have another doll concealed inside them. 

But there is one constant in Russia's policy toward the Korean Peninsula. Moscow fears being diplomatically isolated and is constantly trying to assert itself on the international stage. In the past, it was responsible for most of the leaks to the press about the latest developments in the six-party nuclear talks. That was the only way Russia had of demonstrating its diplomatic existence, since its contribution to the talks was otherwise negligible. 

Now, with China's rapid ascent on the diplomatic stage, fears have increased of Russia losing its status in Northeast Asian diplomacy, so it appears Moscow is trying to show its clout by other means. 

Russia cannot currently hope to gain the kind of influence that the U.S. and China have in Northeast Asia, but it believes it can keep a foothold by staying in the middle and siding with no one. That is why Russia's basic approach to North and South Korea has been "long-distance" diplomacy ever since Seoul and Moscow formed diplomatic ties in 1990. That was Russia's stance over the 10 years of the six-party process, and that was apparent in Moscow's silence after the sinking of the Navy corvette Cheonan. 

But surely Russia, like China, must be as fed up with North Korea by now. They may fear the possibility of regime collapse in North Korea greatly, but they cannot allow the North to become a nuclear power. As time goes by Russia will grow sick and tired of Pyongyang, but apparently not yet.

By Jung Byung-sun from the Chosun Ilbo's News Desk

START TREATY

US Senate votes down another Republican attempt to amend new START

http://www.itar-tass.com/eng/level2.html?NewsID=15796198&PageNum=0

20.12.2010, 03.33

WASHINGTON, December 20 (Itar-Tass) -- The U.S. Senate voted down another Republican attempt to amend a new START treaty on Sunday. The U.S. Senate turned down in a 60 to 32 vote an amendment to the START preamble moved in by Senator James Risch, Republican Idaho, after over three hours of heated debates.

The Republicans offered to recognize the linkage between strategic and tactical nuclear weapons.

US-Russian nuclear treaty on verge of collapsehttp://www.guardian.co.uk/world/2010/dec/19/us-russian-nuclear-treaty-collaps

Treaty may fall short of the two-thirds of support required from the 100-member SenateEwen MacAskill in Washingtonguardian.co.uk, Sunday 19 December 2010 20.19 GMTThe fate of the US-Russian treaty on reducing nuclear arsenals is in the balance after the Republican leader in the US Senate, Mitch McConnell, vowed today to vote against it. The treaty needs to be ratified by two-thirds of the 100-member Senate. The Democrats, though in control

of the Senate, will need the support of some Republicans. McConnell, interviewed on CNN, said that although the Senate foreign relations committee had studied the Strategic Arms Reduction treaty, other members of the Senate had not. "I don't think this is the best time to be doing this. Members are uneasy with it," McConnell said. The Senate was due to begin discussing the treaty today. Democrats predicted there will be a vote this week and claimed they had the necessary 67 votes. The White House is anxious to try to secure ratification before Christmas because the new Congress, scheduled to begin in January, will see even more Republicans in the Senate.

Senate Democrats Make Final Push to Ratify Nuclear Arms Treaty http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=auwB_c_tMMC0

By Mark Drajem and Ryan J. Donmoyer

Dec. 20 (Bloomberg) -- Supporters of a nuclear arms reduction treaty with Russia said they’re confident of having enough votes to ratify the accord, even as top Republicans said they will try to delay it until next year.

The Senate yesterday rejected a Republican-sponsored amendment that Senate Foreign Relations Committee Chairman John Kerry said would have scuttled the Strategic Arms Reduction Treaty. Lawmakers are scheduled to resume debate today on the treaty, one of their last major pieces of business before adjourning.

“I believe it will pass, and I believe there will be a vote” before the end of the year, Kerry said on ABC’s “This Week” program. His view was echoed by Vice President Joe Biden, Illinois Democratic Senator Richard Durbin and Indiana Senator Richard Lugar, the ranking Republican on the Foreign Relations panel and a treaty supporter.

Senate Republican leader Mitch McConnell said on CNN he’s decided to oppose the treaty, and asked the administration to put off a vote until next year. Arizona Senator Jon Kyl said on Fox he opposes holding the vote during the post-election lame- duck session of Congress. Senator Lindsey Graham, a South Carolina Republican on the Senate Armed Services Committee, joined in the calls for a delay.

“If you really want to have a chance of passing Start, you’d better start over,” Graham, a member of the Armed Services Committee, said on CBS’s “Face the Nation” program.

Obama’s Priority

President Barack Obama has made ratification of the treaty, known as Start, his top foreign policy priority during the post- election lame-duck session. Democrats, who now have 58 votes in the 100-member Senate, will have a narrower majority in the next Congress starting in January, which might make ratification more difficult. Ratification requires a two-thirds majority.

Senators yesterday voted 60-32 to reject an amendment from Republican Senator Jim Risch of Idaho to add language on tactical nuclear weapons to the treaty preamble, which would have reopened the agreement to negotiations.

Senate Majority Leader Harry Reid rejected Republican requests for more time and said a final vote on the treaty would be held before Congress leaves this week.

“The Obama administration has spent the past eight months working to address legitimate concerns and the Senate has conducted an extensive bipartisan review,” Reid said in a statement.

Missile Defenses

Among the issues raised by treaty opponents, including McConnell, is whether the accord would limit U.S. development of a missile defense. Obama sent a letter to McConnell Dec. 18 saying that the treaty won’t hinder the U.S. from deploying such a system in Europe.

“The New Start Treaty places no limitations on the development or deployment of our missile defense programs,” Obama wrote. “We are proceeding apace with a missile defense system in Europe designed to provide full coverage for NATO members on the continent, as well as deployed U.S. forces, against the growing threat posed by the proliferation of ballistic missiles.”

McConnell and Kyl said that letter doesn’t relieve their concerns, and appealed to Obama not to push for a vote this year.

“I don’t think this is the best time to be doing this, members are uneasy with it,” McConnell, of Kentucky, said on CNN’s “State of the Union” program.

Preamble Language

Kyl said the question is about what the Russians understand about the language in the preamble.

“Tell it to the Russians,” Kyl said on the “Fox News Sunday” Program. “In fact, change the preamble to the treaty, which would eliminate any doubt about this issue.”

Military commanders and defense and nuclear officials have testified that the accord doesn’t limit missile-defense options in the countries of the North Atlantic Treaty Organization and that it improves the ability to verify Russia’s adherence to agreed-upon weapons thresholds.

The accord has also been endorsed by former Republican President George H.W. Bush as well as current and former U.S. military commanders and Cabinet secretaries, including Henry Kissinger and Colin Powell.

The treaty, replacing an agreement that expired last December, limits each side’s strategic warheads to no more than 1,550, from 2,200 allowed previously, and sets a maximum of 800 land-, air- and sea-based launchers. Obama and Russian President Dmitry Medvedev signed the accord in April.

Moving on Debate

The Senate voted 66-32 on Dec. 15 to begin consideration of the treaty, highlighting how narrow a majority Obama and his Democratic Party may have for an accord that requires two-thirds of the senators present and voting -- 67, if all 100 are in the chamber -- for approval.

Lugar said the difficulty now will be working through Republican amendments so that a final vote on the treaty can be held before adjournment.

“Several Republicans will support it, and I join the chairman in believing that there are the votes” to ratify it, Lugar said on ABC’s “This Week” program. “The problem is really getting to that final vote.”

Biden, interviewed on NBC’s “Meet the Press,” said the Senate has had enough time and hearings on the treaty to move on to a vote. While some Republicans have raised “legitimate concerns” about treaty provisions, he said, many of the opponents are “just simply against any arms control agreement.”

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Last Updated: December 20, 2010 00:00 EST

Republicans fail to amend arms pact with Russiahttp://in.reuters.com/article/idINTRE6BD54220101220

7:58am IST

By David Alexander

WASHINGTON (Reuters) - Democrats moved on Sunday to bring President Barack Obama's strategic nuclear arms treaty with Russia to a final vote in the Senate this week but rising Republican anger over partisanship threatened to derail the accord.

Senate Majority Leader Harry Reid took steps to limit debate on the START treaty and force a vote by Thursday before lawmakers break for Christmas, a move that could further upset Republicans frustrated by the rush to push through bills in the final days of the legislative session.

Senate Republican leader Mitch McConnell and Senator Lindsey Graham announced on Sunday they would vote against the pact, in part because they feel the Democrats' crowded legislative agenda has left little room for debate.

"If you really want to have a chance of passing START, you'd better start over and do it in the next Congress because this lame-duck has been poisoned," Graham said, referring to the legislative session that followed the November congressional elections.

Graham, who joined Democrats in voting to bring the treaty to a debate in the Senate, told CBS's "Face the Nation" program "I'm not going to vote for START" in the current legislative session that ends in early January. He had been considered a potential supporter of the accord.

Democrats have been pushing to pass the treaty before the new Congress takes office because their Senate majority was reduced from 58-42 to 53-47. The treaty could also face weeks of delay as more than a dozen new lawmakers get up to speed on the issue.

The treaty needs 67 votes for approval in the 100-member Senate. It moved to the Senate floor for debate with a two-thirds majority that included Graham. The senator's decision to vote against it raised questions about whether Democrats could ultimately muster the votes for passage.

ENOUGH VOTES?

But Vice President Joe Biden and other top Democrats expressed confidence they would ultimately have the votes to approve the pact. Asked on NBC's "Meet the Press" program if Democrats had the votes, Biden said "I believe we do."

The New START treaty, signed by Obama and Russian President Dmitry Medvedev in April, would require the former Cold War adversaries to cut deployed strategic nuclear warheads to no more than 1,550 each within seven years.

It also would reduce the number of deployed strategic missiles and bombers to 700 for each side and establish a verification and inspection system to ensure they abide by terms of the agreement.

Debate on the treaty was expected to continue at least through Tuesday, with Republicans planning to seek additional changes to both the treaty and the accompanying resolution of ratification.

Republican Senators concerned about the large disparity in tactical, short-range nuclear weapons between Russia and the United States rallied behind a treaty-killing amendment on Sunday that would have inserted a reference to the issue in the preamble of the accord. The amendment was defeated 60-32.

Democratic Senator Robert Casey said members of both parties were concerned about Russian tactical nuclear weapons but there was a simple reason the New START nuclear treaty did not address them -- because it is an agreement dealing with strategic, or long-range, atomic arms.

Russia is believed to have about 2,000 deployed tactical nuclear weapons, versus 500 for the United States, according to the Federation of American Scientists. U.S. lawmakers fear the weapons are less securely stored and could fall into the hands of extremist groups.

They also fear the Russians are more likely to use them.

"To the Russians, tactical nuclear weapons are a battlefield weapon just like artillery," said Republican Senator Jon Kyl, who has been a critic of the START agreement. "Their military doctrine is to actually use those weapons."

Kyl said U.S. negotiators should have used Russian interest in a new treaty on strategic weapons as leverage to get them to commit to talks on shorter-range nuclear arms.

"I don't know whether it was because of a lack of direction from the commander-in-chief or poor negotiation, but one way or another we got snookered," Kyl said. "We got snookered on missile defense. ... We got snookered on tactical nuclear weapons. We got snookered on verification."

Democratic Senator John Kerry, who as chairman of the Foreign Relations Committee led the floor debate, said passage of START was a prerequisite for beginning talks on tactical nuclear weapons.

"If we don't pass the START treaty, if we can't reach a bilateral agreement on the reduction of strategic weapons, there will be no discussion about tactical weapons," Kerry said. "That's as plain as day."

(Additional reporting by Richard Cowan, John Crawley and Tabassum Zakaria; Editing by Mohammad Zargham and Eric Walsh)

GOP Senate leader opposes US-Russian arms dealhttp://www.boston.com/news/nation/articles/2010/12/20/gop_senate_leader_opposes_us_russian_arms_deal/?rss_id=Boston.com+--+Top+political+stories

Democrats try to secure votes for pactBy Donna Cassata

Associated Press / December 20, 2010

WASHINGTON — The Senate’s Republican leader said yesterday that he would oppose a nuclear arms treaty with Russia, damaging prospects for President Obama’s foreign policy priority in the final days of the postelection Congress. Top Democrats still expressed confidence the Senate would ratify the accord by year’s end.

Minority Leader Mitch McConnell, a Kentucky Republican, criticized the treaty’s verification system and expressed concern that the pact would limit US missile defense options even though Obama insisted Saturday that the treaty imposes no restrictions on missile defense.

“Rushing it right before Christmas strikes me as trying to jam us,’’ McConnell said on CNN’s “State of the Union’’ a few hours before debate on the treaty resumed yesterday, the fifth day of consideration of the pact. “I think that was not the best way to get the support of people like me.’’

Although McConnell’s opposition did not come as a surprise, proponents of the pact worried yesterday about how hard he would work to defeat the accord. Treaties require a two-thirds majority of those voting in the Senate, and Republican votes are critical to Obama’s success in getting the landmark agreement.

In response, White House spokesman Tommy Vietor said, “We respect Senator McConnell’s view, but we were not surprised by it, and certainly were not counting on his support to achieve Senate approval.’’

Majority Leader Harry Reid, a Nevada Democrat, expressed disappointment with McConnell’s opposition.

He suggested, however, in a statement that several Senate Republicans “share the belief that this treaty is too critical to our national security to delay, and I look forward to strong bipartisan support to pass this treaty before we end this session of Congress.’’ Reid set a vote for tomorrow to end the debate and move to a final vote.

Senators Dick Durbin of Illinois, the Democrats’ No. 2 leader in the Senate, and John Kerry of Massachusetts, the chairman of the Foreign Relations Committee, said in news show appearances that they believe they have the votes to ratify the treaty.

After several hours of debate yesterday, Democrats turned back an amendment by Republican Senator Jim Risch of Idaho that would have altered the treaty, effectively killing it.

By a vote of 60 to 32, the Senate rejected the measure to add language on tactical nuclear weapons to the preamble of the treaty.

Such a move would have forced it back to negotiations, dooming the accord.

It marked the second time in two days that Democrats had stopped GOP amendments.

Obama and Russian President Dmitry Medvedev signed the accord — it is known as New START — in April.

It would limit each country’s strategic nuclear warheads to 1,550, down from the current ceiling of 2,200.

The treaty would also establish a system for monitoring and verification. US weapons inspections ended a year ago with the expiration of a 1991 treaty.

Republicans have argued that the treaty’s preamble would allow Russia to withdraw from the pact if the US develops a missile defense system in Europe.

Democrats argued that the preamble reference to missile defense systems was nonbinding and had no legal authority.

“This treaty needs to be fixed,’’ said Senator Jon Kyl of Arizona, the No. 2 Republican in the Senate. “And we are not going to have the time to do that in the bifurcated way or trifurcated way that we’re dealing with it here, with other issues being parachuted in all the time.’’

Although Kyl did not predict whether the treaty would be rejected or ratified, he said gaining the two-thirds vote would depend upon whether senators would be able to consider the amendments Republicans wanted to offer.

“I predicted a couple of weeks ago that we would not have time to do this adequately, and I think my prediction’s coming true,’’ he said.

Senator Richard Lugar of Indiana, the top Republican on the Foreign Relations Committee and one who supports ratification, said more amendments to the treaty needed to be heard.

“Several Republicans will support it, and I join the chairman in believing that there are the votes there. The problem is really getting to that final vote,’’ Lugar said.

On Saturday, Senate Democrats deflected an initiative by Republicans that would have forced American and Russian negotiators to reopen talks.

The 59-to-37 vote against the amendment by Senator John McCain, an Arizona Republican, indicated the difficulty Obama is having in trying to win ratification of the treaty before a new, more Republican Senate assumes power in January.

Led by McCain, Obama’s GOP opponent in the 2008 presidential election, Republicans tried to strike the words from the treaty’s preamble that they say would allow Russia to withdraw from the pact if the United States develops a missile defense system in Europe.

Medvedev, Latvian president to meet in Moscowhttp://en.rian.ru/russia/20101220/161850577.html08:00 20/12/2010

Russian President Dmitry Medvedev and his Latvian counterpart Valdis Zatlers will on Monday discuss the rights of Russians in the Baltic state and economic cooperation, the Kremlin said.

After the talks the sides will sign a number of documents. Zatlers is in Russia on a four-day official visit as a sign of improving relations between the former Soviet republics.

The visit is the first trip to Russia by a Latvian president since the two countries signed an agreement in 1994 to withdraw Russian troops from the Baltic nation.

Moscow says the current Latvian leadership, unlike its predecessors, is set for normalizing relations with Russia, darkened over the status of the Russian language in the country and a number of other issues.

Zatlers, who is accompanied by some 100 Latvian businessmen, is expected to sign a host of agreements aimed at improving bilateral ties.

Russia has long been at odds with the Baltic states of Latvia, Lithuania and Estonia over perceived attempts to rewrite the history of World War II and diminish the Soviet role in the defeat of Nazi Germany.

Zatlers is also expected to meet with Prime Minister Vladimir Putin, Patriarch Kirill of Moscow and All Russia and Moscow Mayor Sergei Sobyanin.

MOSCOW, December 20 (RIA Novosti)

Medvedev, Latvian leader to sit down for talks http://english.ruvr.ru/2010/12/20/37218750.html

Dec 20, 2010 09:30 Moscow Time

Russian President Dmitry Medvedev meets his Latvian counterpart Valdis Zatlers in Moscow on Monday to discuss bilateral trade and economic cooperation plus the rights of Russians in the Baltic state, the Kremlin press service reported.

Zatlers’ current visit to Russia is his first since Latvia was recognized as an independent state in 1991.

Moscow says that the current Latvian leadership, unlike its predecessors, is poised to normalize relations with Russia.

MEDVEDEV TO INDIA

Russian President to pay official visit to India

http://www.itar-tass.com/eng/level2.html?NewsID=15796760&PageNum=0

20.12.2010, 07.34

MOSCOW, December 20 (Itar-Tass) -- Russian President Dmitry Medvedev will go on an official visit to India on Monday. For two days the president will visit New Delhi, Agra and Mumbai, where he will not only hold several negotiations, but will also visit the Taj Mahal mausoleum, which is one of the Wonders of the World and a UNESCO World Heritage site, and the Bollywood film industry.

This will be Medvedev’s second official visit to India after the first one in December 2008. Annual mutual visits of the leaders of the countries turned into a tradition in Russian-Indian relations. The major negotiations are scheduled for Tuesday, when the Russian leader will meet with Indian Prime Minister Manmohan Singh, Foreign Minister Somanahalli Krishna, President Pratibha Patil, Vice-President Mohammad Ansari, President of the Indian National Congress Party Sonia Gandhi and the opposition leader in the lower house of Indian parliament Sushma Swaraj. On the same day the countries are to sign several agreements, the leaders of the countries will give a press conference and will meet with Russian and Indian business quarters.

On Tuesday morning the Russian president will go to Agra, where he will visit a famous mausoleum Taj Mahal. Mughal emperor Shah Jahan has built the white domed marble Taj Mahal in Agra in memory of his third wife Mumtaz Mahal in the 17th century. Five million tourists visit the Taj Mahal mausoleum annually.

Then Medvedev will go to the Indian megapolis Mumbai. The Russian president will be received at the Indian Technological Institute and the Bollywood film industry. A world-wide known Indian film industry has brought about in Mumbai at the beginning of the 20th century and now turned in the Bollywood dream film industry.

“For the last ten years Russian-Indian relations were brought to an absolutely new level that can be described as privileged strategic partnership, and this formula will be fixed in a joint statement that is to be issued at the summit,” Russian presidential aide Prikhodko said. This level of relation “envisages close coordination, which is based on long-standing traditions of friendship, between the countries of their foreign political approaches on a broad range of international and regional problems, large-scale trade and economic cooperation, including the modernization and the introduction of high technologies, broader military-technical cooperation and intensive cultural ties and human contracts,” he noted.

“Russia and India traditionally attach major importance to bilateral cultural exchanges,” the Russian presidential aide said. He emphasized that during Medvedev’s forthcoming visit the countries “are to sign an agreement on the Festival of Indian Culture in Russia in 2011 and the Festival of Russian Culture in India in 2012.”

Deputy Prime Minister Sergei Ivanov, Foreign Minister Sergei Lavrov, Minister of Education and Science Andrei Fursenko, Central Elections Commission Chairman Vladimir Churov, Rostechnologii chief Sergei Chemezov, Rosatom chief Sergei Kiriyenko, director of the Federal

Service for Military-Technical Cooperation Mikhail Dmitriyev and chief of the Federal Migration Service Konstantin Romodanovsky will accompany the Russian president. The Russian delegation also includes RusHydro CEO Yevgeny Dod, RUSAL CEO Oleg Deripaska, AFK Sistema CEO Vladimir Yevtushenkov, Rosoboronexport chief Anatoly Isaykin, Sukhoi Company Director General Mikhail Pogosyan, RUSNANO chief Anatoly Chubais, KAMAZ Director General Sergei Kogonin, RENOVA Group Board Chairman Viktor Vekselberg and other officials.

Indo-Asian News ServiceMoscow, December 20, 2010First Published: 10:24 IST(20/12/2010)Last Updated: 10:30 IST(20/12/2010)

Medvedev begins India visit todayhttp://www.hindustantimes.com/Russian-Prez-Medvedev-begins-India-visit/Article1-640568.aspx

Russian President Dmitry Medvedev will on Monday begin an official three-day visit to India to discuss trade, economic, energy and cultural cooperation, as well as international issues.

During the visit, he will meet his Indian counterpart Pratibha Patil, Prime Minister Manmohan Singh and Foreign Minister SM Krishna.

A number of documents are to be signed following the Russian president's talks with the Indian leaders.

Relations between the two countries have blossomed in recent years, with India becoming one of the biggest importers of Russian military hardware.

In 2009, Russia-India trade reached the $7.5 billion mark. The countries plan to raise the figure to $20 billion by 2015.

Briefing by Official Spokesperson and JS (ERS) on visit of Russian Presidenthttp://meaindia.nic.in/mystart.php?id=190016900

December 19, 2010

Official Spokesperson (Shri Vishnu Prakash): A very good afternoon to all of you and nice to see you in numbers.

My colleague Mr. Ajay Bisaria, Joint Secretary (ERS) and I would like to brief you about the

most important official visit of President Medvedev who is arriving in the early hours on Tuesday, 21st of December.

New Delhi has played host to a number of high-level dignitaries in the course of this year, including from the P5 nations. But our ties with Russia have always stood apart. We now prepare to accord a very warm welcome to the Russian President who would be arriving on an official visit for the 11th India-Russia Summit meeting.

This would be President Medvedev’s and Prime Minister Dr. Manmohan Singh’s third standalone summit meeting, and overall the eleventh annual summit meeting. As such, it acquires a historical significance since it also marks the completion of a decade of our strategic partnership which was announced in the year 2000 during the visit of President Putin to India. So, we are really saving the best for the last.

Let me take you through the programme. On Tuesday, EAM Shri S.M. Krishna will call on the President. It be followed by a restricted meeting between President Medvedev and the Prime Minister of India. Next would be delegation-level talks, followed by signing of a number of agreements and a joint press interaction.

Prime Minister would be hosting a private lunch in the honour of the visiting dignitary. There will be calls on him by Leader of Opposition Shrimati Sushma Swaraj, the Vice-President of India, Chairperson of UPA Shrimati Sonia Gandhi. In the evening President Medvedev will call on Rashtrapatiji who would be hosting a banquet in his honour.

On Wednesday the 22nd, President Medvedev departs for Agra and then flies into Mumbai where he would visit IIT Powai, and also the Film City. In the evening of Wednesday the 22nd he emplanes for Moscow.

President Medvedev will be accompanied by a very important delegation that includes Deputy Prime Minister Sergei Ivanov who is also the co-chair of the India-Russia Joint Economic Commission; Foreign Minister Sergei Lavrov; Minister of Education and Science Andrei Fursenko; Minister of Energy Sergei Shmatko; Chairman of the Central Election Commission of Russia Vladimir Churov; Governor of St. Petersburg Ms. Valentina Matvienko; the Ambassador of Russia to India; Members of the Duma or Parliamentarians; Deputy Ministers; senior officials and a large business delegation.

We have a very special strategic partnership with Russia which has stood the test of time over the last half a century. In the preceding decade, our multifaceted bilateral cooperation and our political coordination at the international level have grown and deepened significantly. As such it has in a large measure fulfilled the vision of the declaration of strategic partnership in 2000, to raise ties to a higher and qualitatively new level. I would like to underline that our ties are founded on mutual trust, understanding and continuity.

Prime Minister Dr. Manmohan Singh had paid a visit to Moscow for the tenth India-Russia Summit in December 2009. At his invitation, Prime Minister Putin had visited India in March this year. Prime Minister Putin, then as the President, is the co-architect of India-Russia Strategic

Partnership. Year 2010 has also seen a number of other high-level exchanges from both sides which have given a qualitative boost to our ties. We have always had extensive defence cooperation limited not just to a buyer-seller relationship but extending to joint development and research in advanced defence systems. As importantly, we have several ongoing cooperation projects in the area of civil nuclear cooperation and space sectors, which will also be discussed during the visit of President Medvedev.

Both sides are exploring ways to expand cooperation in the important hydrocarbons sector. We are working on developing a roadmap for such cooperation. The energy security interests of India and Russia are very well matched. India is a large consumer of hydrocarbons and Russia is a large producer. Russia is looking for a assured market, and we for a stable supplier. Therefore, there is a natural synergy in this area between the two sides. Both sides see hydrocarbons as well as civil nuclear energy cooperation as the twin pillars for a long-term strategic energy partnership.

Our cooperation in the field of science and technology covers the full range of activities from basic scientific research to developing frontline technologies including industrial technologies in the fields of biotechnology, nanotechnology and bioinformatics. We are currently working on a new integrated long-term cooperation that will outline our collective vision for cooperation in this field in the next decade. The new mandate is for establishing an innovation-based technology partnership.

We are also focusing very strongly on further expansion of trade and economic ties which have yet to attain their potential. Bilateral trade was close to US$ 7.5 billion in 2009 and has registered a growth rate of 24 per cent in the first seven months of this year. We have a trade target of US$ 20 billion for the year 2015.

Investment cooperation is another area that will be discussed between the two leaders. Russia’s economic modernization and privatization programme offers unique opportunities to world-class Indian companies with frontline technologies and capacities. Similarly, India’s own economic transformation and our ambitious plans to expand our infrastructure offer very good opportunities for the Russian entrepreneurs. These matters will be discussed during the Indo-Russian Trade and Investment Forum which is likely to be held tomorrow at New Delhi. This Forum, established in 2007, is led by the Commerce Ministers from both sides. Hundreds of Indian and Russian businessmen are expected deliberate on specific projects at the Forum.

Already some US$ 4.25 billion of Indian investments have been made in Russia. More are in the pipeline. We have received about US$ 1 billion of Russian investments. Recent noteworthy investment agreements include a Memorandum of Understanding for cooperation signed on the 10th of December this year between NMDC and Severstal to establish a joint venture for setting up an integrated steel plant in Karnataka. We also expect a number of agreements to be signed by the private sector in the next few days including in the pharmaceuticals sector.

Prime Minister and President Medvedev will also focus on strengthening coordination on a number of regional and global issues. The issue of terrorism and the security situation in Afghanistan and Pakistan, amongst others, are likely to figure in the discussions. India and

Russia have a similar perspective on the problem of terrorism as both countries have enunciated on several occasions, including through the Moscow Declaration on International Terrorism, during the November, 2001 Summit.

India and Russia are both members of G20. We work closely bilaterally as well as through BRIC to push for reforms of the international financial system. Thus the canvas is large. I have only shared with you some facets of our cooperation but would like to add that adequate groundwork, as is the practice, has already been done for this very important visit. We have, as you are aware, two high-level Inter-Governmental Commissions which basically provide the framework for the entire range of cooperative endeavours – (i) The Sixteenth India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation met on the 18th of November in New Delhi. This is co-chaired by EAM and Deputy Prime MinisterSergei Ivanov who is a member of President’s delegation. (ii) The Tenth Meeting of the Inter-Governmental Joint Commission on Military Technical Cooperation was also held in New Delhi on the 7th and 8th of October this year. It is chaired the Defence Ministers of both countries.

As such we are quite satisfied that the first decade of our strategic partnership has imparted a qualitatively new character to our bilateral ties and has deepened cooperation in a vast number of areas which are vital to our relationship. The Eleventh Summit meeting will be a step towards developing a blueprint for the next decade. Several agreements and Memoranda of Understanding in diverse areas, are likely to be concluded during the visit both between the Governments as well as the private sectors.

The two leaders will review all facets of our bilateral cooperation and also have an exchange of views on regional and international matters of interest. Thank you. We will be happy to take your questions.

Question: The Russian Ambassador in a press conference the other day talking about the nuclear liability Bill said that while Russia awaits an explanation note from India as to how it would be applied for future projects, but he also expressed his view that the home laws in India should be married to international obligations in a way that international commitments dominate. Could you react to that? Also, could we know just some of the Bollywood celebrities that he is expected to interact with when he visits Film City?

Joint Secretary (Eurasia) (Shri Ajay Bisaria): On the nuclear issue, as is being talked about in the media, there is a discussion ongoing for the technical and commercial deal for Kudankulam-3 and 4. As you know, the nuclear cooperation has extended for the last ten years. Very soon Kudankulam-1 will go critical in the next few months. Soon after that, within a few more months, Kudankulam-2 will go critical. Both these nuclear power plants were based upon technical commercial agreements that were signed before they went on steam. Similarly, during the visit of Prime Minister Putin we have signed a framework agreement which determines nuclear cooperation across a whole range of sectors including the setting up of nuclear power plants and exchange of technologies. So, we see the current conversation on technical, commercial terms for Kudankulam-3 and 4 as part of a process. This is purely a technical discussion that takes place between experts on both sides, is currently taking place. It includes a

whole range of areas which includes cost and liability issues among them. I am sure we would reach a resolution to all the issues that are on the table.

Question: Sir, this is a follow-up on the liability issue. Do the Russians also have the same problems like the Americans or France or is it any different? Could you throw some light on if their problem also arises out of the supplier liability clause and Article 46?

Official Spokesperson: My colleague has already answered this question in great detail. Let me reiterate what I mentioned in my opening remarks that our cooperation in the energy sector, especially hydrocarbons and civil nuclear cooperation, are two important pillars of our cooperation. The civil nuclear cooperation is a very important sector. My colleague has already enumerated a number of steps that have been taken. We have the inter-governmental agreement which was concluded during the visit of Prime Minister Putin in March 2010, which provides a framework for active cooperation in this regard. We are two partners, we work together, and we are actively looking at all aspects to take this process of cooperation in this very important sector further.

Question: Sir, can you throw some light on the likely agreements on defence sector? The Russian Ambassador mentioned the fifth generation strike aircraft.

Joint Secretary (ERS): We are not right now speaking of outcomes naturally because this is a process of discussion. But overall in the defence relationship, you know that it is a continuous process and it is not really structured around the annual summit. There was a Military Technical Commission that met recently and a number of issues were discussed including agreements that had to be finalized. Even in the last annual summit where there was a very important agreement on after-sales services that was signed. There were a couple of agreements signed close to the visit of Prime Minister Putin, but agreements are signed even without the summit. You mentioned the talk of the fifth generation fighter aircraft. There is a discussion ongoing on that issue. But again that is a very long-term project for manufacture of advanced defence systems in India. It will have a number of milestones along the way and we do not know whether one or two of them will be achieved right now.

Question: We are not signing the agreement?

Joint Secretary (Eurasia): We are not saying that.

Official Spokesperson: We are saying precisely this that it is a very important sector and we are constantly discussing different facets of it, and it does not hinge on having a summit meeting. It is an ongoing process. We have had the meeting of the Military Technical Commission in October. We are actively looking at different facets.

Question: Do you expect some declaration or announcement on the next site for reactors for the Russians?

Joint Secretary (ERS): Again this is one of the nuclear issues that is being talked about and has been talked about for a while. But this is a very complex issue, the whole issue of sites for a

nuclear power plant. As you know, after Kudankulam Russia has been offered the site at Haripur. Various technical issues related to this continue to be discussed at the technical level. So, that is the situation. As of this moment there is no change in that.

Question: I would like to ask about the very important agreement on people-to-people contacts regarding the students. There are problems of the medical specialists …(Inaudible)… their diplomas from Russia are not being acknowledged in India. Can we expect that these discussions would result in any documents? Secondly, on the migration issues can we anticipate anything to be signed? And on the visa facilitation also.

Joint Secretary (ERS): On all the three very important areas you have mentioned there has been substantial progress. As you recall, this issue was discussed between Prime Minister Putin and Prime Minister Manmohan Singh of mutual recognition of degrees for higher educational degrees and for medical degrees. These are complex issues. They continue to be discussed and will be perhaps discussed at the summit as well. But we are not expecting any specific documents on these issues to be signed because particularly on medical issues there are complex issues of exchange of standards and exchange of details that are involved before we get down to signing a document. On other degrees, non-medical degrees, we already have a 1987 agreement with the USSR, and as you know Russia as the continuity state honours that agreement. So, we do have some legal framework in place. But we are continuing a conversation on this issue. On visa issues we have moved ahead and we are hopeful we will reach an understanding during the summit. On the issue illegal migration or the issue of migration in general there has been a lot of discussion and we are hoping to reach some understandings during the summit.

Question: In the year 2008 when our President made his first visit to India it was agreed that by the year 2013, the first Indian astronaut will go to the space from the Russian facilities in Kazakhstan …(Inaudible)… by Russia; and in the year 2015 with the help of Russian specialists the first Indian astronaut will be launched from the Indian space launch platform. At what stage is this project right now? Has there been any progress? Is any such kind of project going to be discussed in this summit?

Joint Secretary (ERS): On space, as you know, it is a continuing collaboration of many years. We signed an agreement on GLONASS, as you may recall, in 2004. And we have a whole range of follow-up agreements on that. The two projects you have mentioned are extremely important – (i) the Lunar Exploration as we call it and (ii) the Human Space Flight. I am not sure about the timelines of when specific subprojects would be executed. But these are extremely important projects. There would be a substantive discussion on cooperation in the space sector. We are very satisfied with the kind of progress that we have achieved in cooperation in the space sector.

Question: How many agreements are you going to sign and what are they? Also, could you tell us a little bit about the economic side of the summit? The figures that you have given us sound very low. What is the reason for that?

Joint Secretary (ERS): On the agreements, as we said a number of them are going to be signed, but as we speak some are being discussed. So, we can naturally not predict how many of them will finally be signed. For that you would have to wait for the outcome briefing of the summit.

But a number of agreements are expected in a whole range of areas including space, defence, and economic sectors. Coming back to economic issues, we do recognize that among all the strategic sectors in which this relationship spreads, the economic relationship continues to be somewhat weak. We have a strategic focus on trying to improve the level of trade and investment. That is the reason why a very ambitious target has been fixed of US$ 20 billion by 2015. The current statistics do show, the ones we have from the Russian side, that there has been a healthy increase in the trade levels over this year, 2010, as well of almost 20 per cent. But the short point here is that both sides recognize that trade is not commensurate to potential and we need to do a lot more to get the trade to a higher level. Two sectors which we have identified specifically are cooperation in IT and cooperation in pharmaceuticals and we expect some discussion to take place on both these sectors. In the IT sector there is huge opportunity also particularly in the Skolkova project that Russia has identified in Moscow, as well as in outsourcing, in telemedicine, and various identified sectors in Russia. Pharmaceuticals is also seen as a large US$ 15-16 billion market in Russia. That is again a huge opportunity. So, we have identified a number of sectors. Tomorrow the Trade and Investment Forum will meet. The primary purpose of that Forum is to develop more business-to-business contracts which we hope will be signed, and new directions to this particular aspect of the relationship.

Question: But why, what is the problem that it is so low?

Official Spokesperson: We have the figures for you for the last few years and I can take you through the figures. If you look at the graph, it points upwards. We find that there is an accelerating trend now. For example, this year the 24 per cent growth that we are seeing should take the bilateral trade close to US$ 10 billion. I think it marks a significant increase. And it is not a onetime thing; we expect this trend to continue. New areas are being identified, for example fertilizers. We are importing now large quantities of fertilizers from Russia. We are looking at taking this relationship even further. Not a buyer-seller relationship but we are even looking at joint ventures. We are looking at joint investments. The point that Ajay made was very significant. We are in fact now focusing very big time on B2B links. Hitherto it was more G2G. But through the Forum that is going to meet tomorrow, basically business people from both sides are coming together and looking at specific projects. Simultaneously a conducive environment is being created through facilitating or easing the visa process which has been a bit of a damper. Hopefully this should be behind us. The banking links, which were not very strong between the two countries, have been strengthened. I think we should look at the systematic manner in which we are addressing this aspect. Look at the Russian privatization programme for example. It is believed that something like US$ 32 billion worth of privatization opportunities would be available. There are business opportunities in India’s infrastructure development. So, you have a whole range of areas in which you can work together to try and develop synergies.

Question: Sir, two questions. One is this Nepa class boat which is supposed to be transferred from Russia to India. Can you tell us when it is likely to be coming in and if there will be discussions on the transfer during this visit? The other does not relate to Russia but if you can just give us an idea of why there is a discrepancy between the Chinese version of the LAC and the Indian, of 1500 kilometres, if it relates to the 1963 agreement between China and Pakistan?

Official Spokesperson: We will be very happy to take questions pertaining to the visit of

President Medvedev. On the first about cooperation in the defence sector, again we have taken you through various facets of it to the extent that we could. Obviously, the timelines and details, when they are being discussed, can not be shared with the media, which you can very well appreciate. But suffice it to say that we have robust cooperation. It is not just a buyer-seller relationship but we are looking at joint development, R&D and so on. As and when the initiatives fructify we will bring it into the public domain.

Thank you very much.

India and Russia to sign agreements during Russian Prez’s visithttp://www.newsonair.com/news.asp?cat=national&id=NN7050

Dec 20,  12:7 PMIndia and Russia are likely to sign a number of agreements in key areas of defence, civil nuclear cooperation, space and economy during the visit of Russian President Dmitry Medvedev beginning tomorrow. Talking to reporters in New Delhi yesterday, External Affairs Ministry Spokesperson Vishnu Prakash said the two sides will also look at ways to expand cooperation in the field of hydrocarbons. Enhancing economic relations will be another important aspect of the visit as both sides feel that business ties are yet to achieve their potential. Mr Medvedev, will hold talks with Prime Minister Dr Manmohan Singh tomorrow on a range of bilateral and regional matters, including situation in Afghanistan and Pakistan, apart from global issues. Our correspondent reports that both the countries have set a trade target of 20 billion US dollar in next five years.

Kremlin to pitch fighters, nuclear deal in Indiahttp://in.reuters.com/article/idINIndia-53672320101220

8:15am IST

By Alexei Anishchuk

MOSCOW (Reuters) - President Dmitry Medvedev will try to convince India to buy Russian fighter planes and seal a nuclear deal when he travels there this week for talks aimed at boosting ties with the second-fastest growing economy the world.

Russia was one of India's closest partners in Soviet days, but the Kremlin will have to convince New Delhi that Moscow can deliver on vast defence and nuclear orders in the face of competition from the United States, Europe and China.

Medvedev, who the Kremlin said will come with a large delegation of business leaders, is to hold talks with Prime Minister Manmohan Singh and President Prathibha Patil on Tuesday and visit Mumbai on Wednesday.

"Russian-Indian relations have moved to a completely new level which can be called a favoured strategic partnership," a Kremlin official told reporters on condition of anonymity.

But behind the rhetoric of expanding ties with its fellow BRIC economy -- the term used to group emerging powers Brazil, Russia, India and China -- bilateral trade is dwarfed by Russia's booming economic ties with the European Union and China.

The Kremlin said trade with India will total $10 billion this year while official statistics show Russia's trade with the European Union stood at $246 billion in the first 10 months of 2010, and trade with China was $47.5 billion in the same period.

India, watching neighbouring China's rapid strides in defence, wants to overhaul its mostly Russian-supplied air force and Moscow will lobby hard for India to select the Russian-made MiG-35 for an $11 billion contract for 126 fighter jets.

ECONOMIC PUNCH

French, U.S. and other European firms are also competing for the contracts, and U.S. President Obama is believed to have pushed for American planes manufactured by Boeing and Lockheed Martin Corp during his trip earlier this year.

Geopolitically, India sees Russia as a counterweight to China and a potential ally in Afghanistan.

"Russia has a major presence in Asia and if we look at our dangerous neighbourhood, including China, we need a counterbalance," former foreign secretary Lalit Mansingh said.

But Medvedev may have a tough task convincing New Delhi to strike more arms deals following delays on the delivery of some Russian projects, including the Admiral Gorshkov heavy aircraft carrying cruiser.

Moscow-based defence analysts Cast say Russia has nearly tripled the price and delayed delivery of the cruiser by four years since signing the original contract in 2004.

"We still have problems about military supplies," Mansingh said. "Schedules are not kept and prices are not stable. Russia needs to sort these out if it has to remain a big player in the Indian market."

The Russian president will also not be able to deliver the same economic clout his BRIC rival and Chinese counterpart promised when he went to India earlier in the month.

Chinese Premier Wen Jiabao agreed on an ambitious 2015 trade target of $100 billion between the two rising Asian powers, which have overshadowed Russia economically.

Russia will see gross domestic product (GDP) growth of 4 percent in 2010 while India's economy will grow by nearly 10 percent, according to IMF figures.

But Russia, the largest energy producer in the world, may be able to take advantage of Indian growth by boosting its market share in civilian nuclear energy projects.

India plans to add 63,000 megawatts of nuclear power by 2032 from a current nuclear capability of about 4,500 MW.

New Delhi is currently eyeing its nuclear pacts from competing French and U.S. companies, and Russia's nuclear agency Rosatom is trying to boost its profile in the Indian market with the help of local partners.

(Reporting by Guy Faulconbridge and C.J. Kuncheria; writing by Guy Faulconbridge and Thomas Grove; editing by Noah Barkin)

Dmitry Medvedev to head to Indiahttp://en.rian.ru/russia/20101220/161849819.html

06:04 20/12/2010

Russian President Dmitry Medvedev will on Monday start an official three-day visit to India to discuss trade, economic, energy and cultural cooperation, as well as international issues.

A number of documents are to be signed following the Russian leader's talks with the Indian leadership. Medvedev will arrive in New Delhi on Monday evening.

During the visit, he will meet with Foreign Minister Somanahalli Mallaiah Krishna, Prime Minister Manmohan Singh and his Indian counterpart Pratibha Patil.

Relations between Russia and India have blossomed in recent years, with India becoming one of the biggest importers of Russian military hardware.

In 2009, Russian-Indian trade reached the $7.5 billion mark. It grew 20% in the first nine months of 2010, and the countries plan to raise the figure to $20 billion by 2015.

The biggest joint projects today are the construction of the Kudankulam nuclear power plant in southern India and the exploration of the Sakhalin-1 oil and gas field with the participation of India's ONGC state-run corporation.

Indian Foreign Ministry spokesman Vishnu Prakash said Sunday his country's companies are ready to take part in the Russian privatization program for 2011-2013. The prospects will also be discussed during Medvedev's visit.

MOSCOW, December 20 (RIA Novosti)

Medvedev Joins Parade to India Chasing Weapons, Nuclear Deals http://noir.bloomberg.com/apps/news?pid=20601087&sid=aYjQDldgprTY&pos=9

By Ilya Arkhipov and Andrew MacAskill

Dec. 20 (Bloomberg) -- Russian President Dmitry Medvedev will seek arms and nuclear-power contracts during an Indian visit starting today that follows trips by U.S. President Barack Obama, Chinese Premier Wen Jiabao and French President Nicolas Sarkozy.

Medvedev’s two-day trip comes after Sarkozy spent four days in India earlier this month and Obama visited in November to promote trade. He will arrive with an $11 billion tender for 126 warplanes and as much as $100 billion in nuclear-power contracts up for grabs. Wen led a delegation that signed $16 billion of deals during a trip that ended Dec. 17.

India, Russia’s top arms customer, has tripled its defense budget over the last decade as it looks beyond a traditional military rivalry with Pakistan to counter China’s rising power. Prime Minister Vladimir Putin has spearheaded Russia’s efforts to fend off competition from the U.S. and Europe.

“Russia has always been a major player in India, but now it faces increasing competition in areas it traditionally dominated such as the arms trade as India tries to diversify its suppliers further to get the best price and quality,” Konstantin Makiyenko, deputy head of the Center for the Analysis of Strategies and Technologies in Moscow, said in a Dec. 17 phone interview.

OAO RSK MiG is bidding against Dassault Systemes SA, Boeing Co. and Lockheed Martin Corp, for the fighter-jets contracts. Indian plans to expand the country’s atomic capacity 10-fold by 2020 may net deals for Rosatom Corp., Areva SA, Alstom SA, or Westinghouse Electric Co.

Security Council Bid

Obama and Sarkozy during their visits backed India’s campaign for a permanent seat on the United Nations Security Council. Wen stopped short of those endorsements, saying in a joint statement with Indian Prime Minister Manmohan Singh that China “understands and supports India’s aspiration to play a greater role in the United Nations, including in the Security Council.”

Medvedev may also be supportive, said Fyodor Lukyanov, an analyst at the Council on Foreign and Defense Policy in Moscow, adding that Russia is “very cautious” about changes to the Security Council, looking to safeguard its role.

Russia, the U.S., France, China and the U.K. are the council’s permanent members at present. They hold veto power over any measure.

Putin’s Deals

Putin in March closed more than $10 billion in agreements with India, including the delivery of India’s second aircraft carrier in 2012 and 29 MiG-29 fighters. The two countries signed a “road

map” on nuclear energy that may net Russian companies a role in building as many as 16 reactors.

Medvedev’s delegation will include Mikhail Pogosyan, Moscow-based MiG’s chief executive officer, Sergei Kiriyenko, the CEO of Moscow-based Rosatom, Sergei Prikhodko, the president’s foreign policy aide, told reporters in Moscow on Dec. 17. Sergei Chemezov, head of Moscow-based Russian Technologies Corp., a holding that includes Rosoboronexport, the state arms exporter, will also accompany Medvedev.

Nuclear energy will be discussed “in detail” during the trip and the two countries will sign a cooperation agreement to open the door for future deals, Prikhodko said.

“We want to entrench ourselves in the market and we’re seeing serious movement forward,” he said. The joint production of a transport aircraft and a fifth-generation fighter jet will also be on the agenda, Prikhodko said. The new fighters are designed to offer better radar-evading stealth capability and an improvement in maneuverability and speed.

‘Most Important Issue’

Russia successfully tested a prototype of its fifth- generation PAK FA stealth fighter in January, one year behind schedule and 13 years after the first flight of its U.S. rival, Bethesda, Maryland-based Lockheed Martin’s F-22 Raptor. If an agreement is signed, the plane would be upgraded and refined for India, said a senior Indian official who declined to be identified, citing government rules.

“The fifth-generation fighter deal will be the most important issue,” and could be worth as much as $30 billion over the life of the agreement, because India may seek to deploy as many as 300 of the jets, Makiyenko said.

The fighter’s engine is a modification of the best currently available, though it’s not fifth-generation. Work on a new engine may be completed as soon as 2020, said a senior Russian military official, who declined to be identified in line with government policy.

Dassault is based in Velizy Villacoublay, France; Boeing in Chicago and Lockheed Martin in Bethesda, Maryland. Areva is based in Paris and Alstom in Levallois-Perret, France; Monroeville, Pennsylvania-based Westinghouse Electric Co. is a unit of Toshiba Corp. of Tokyo.

‘Significant’ Share

India’s nuclear expansion may cost as much as $100 billion, the Indian official said.

“I think this is the” minimum, Kiriyenko said on Dec. 14, when asked about the spending figure. “Judging by their plans that’s the least they’ll spend. It’s realistic. And our share will be significant.”

Kiriyenko said no concrete nuclear contracts are likely to be signed during Medvedev’s visit as companies negotiate the details of the deals, he said.

Competition is increasing on India’s nuclear market, said Brahma Chellaney, an analyst at the Centre for Policy Research in New Delhi.

“India is going from being non-aligned to being multi- aligned, so Russia is only one partner,” he said. “India now has strategic partnerships with all the major powers except China. This was unthinkable 10 years ago.”

To contact the reporters on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Andrew MacAskill in New Delhi at amacaskill@bloomberg.net; Lyubov Pronina in Moscow at lpronina@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net

Last Updated: December 19, 2010 16:00 EST

Indo-Russian trade set to touch $7b by FY11http://www.mydigitalfc.com/economy/indo-russian-trade-set-touch-7b-fy11-728

By Yogima Seth Sharma Dec 20 2010 , New DelhiTags: Indo-Russian trade, Economy

Trade experts see im mense bilateral trade oppor tunities between India and Russia ahead of Russian president Dmitry Medvedev's official visit to India between December 20 and 22.

"With higher purchasing power and extreme climatic conditions, Russia can be a big market for niche products like leather garments and footwear from India. There is tremendous potential of exports of pharmaceuticals also as currently Russia imports a huge part of its domestic demand from European countries," Ajay Sahai, director general of Federation of Indian Exporters Organisation said.

According to Sahai, issue of phytosanitary standards for agricultural commodities and cereals would also be addressed during the Russian president's visit to India.

In 2009-10 bilateral merchandise trade between India and Russia stood at $4.5 billion and industry estimates suggest that this could go up by a maximum of 50 per cent to $7 billion this year. Of this, exports from India stood at $980.69 million while India's import from Russia was $3.5 billion.

Raseeque Ahmed, trade expert of Ficci, however, points out that the two countries would have to concentrate on opening up of banking and financial institutions to smoother bilateral trade.

"Russia is growing at a much faster pace than either US and Europe and this makes it a potential market for Indian exports. However, we need a trade mission to help Indian exporters with banking processes there," he said. Apart from this, bilateral innovative cooperation in hi-tech areas would also be high on the agenda of Medvedev's India visit. Last month, Medvedev had expressed Russia's readiness for innovative partnership with New Delhi and Beijing for "modernisation" of the Russian economy.

"We see the possibility of innovative partnership with nations like China, India in the five priority areas of Russia's modernisation," Medvedev said during his annual state of the nation address before the federal assembly.

The way ahead in Indo-Russian tieshttp://www.idsa.in/idsacomments/ThewayaheadinIndoRussianties_ppal_201210

Pallavi PalDecember 20, 2010

Overview

Russia is one country that India cannot afford to sideline, as it is the only trusted partner with whom India has mutual compatibility and a close political, military and economic partnership for decades. Russia (and the Soviet Union) contributed to creating India’s key strengths and capabilities in the nuclear, defence, space and heavy industry sectors when no other country was willing to support India’s endeavours to modernise. Even today, despite the hype surrounding the visits of other members of the P-5, India’s relationship with Russia has brought it greater benefit than its ties with other major countries. With hopes high the questions now are: What has been achieved so far? What are the priorities? What we can expect from our trusted friend? What should we do to further consolidate this relationship?

The Path Covered

The Indo-Russian relationship has evolved over time. Russian foreign and security policy is based on the concept of a "multipolar" world, first formulated by former Foreign Minister and Prime Minister Yevgeni Primakov. It is in this context that Russia has its interest in the South Asian region where it gives primary importance to India.1 In October 2000 the “Declaration of Strategic Partnership between India and the Russian Federation” was signed in New Delhi since when there has been an all-round development in bilateral cooperation. In this declaration the system of Annual Summits was institutionalized. The previous or tenth summit was held in Moscow in December 2009 between Indian Prime Minister Manmohan Singh and Russian President Dmitry Medvedev. This year would be a very important stage in the development of bilateral relations, as it marks the tenth anniversary of the signing of the Declaration on Strategic Partnership between India and Russia.2

During Prime Minister Putin's visit in March 2010, deals worth US $10 billion were signed to further strengthen defence and economic relations. In addition, five agreements were also signed.

Prime Ministers Manmohan Singh and Putin held comprehensive and in-depth discussions on bilateral, regional and global issues. Cooperation in the area of atomic energy production for peaceful purposes and a roadmap for the construction of Russian designed nuclear power plants was agreed upon. A memorandum of understanding (MoU) for the production of satellite navigation equipment and services for civilian use and cooperation in the mineral fertilisers sector, 14 supplementary pacts on the Gorshkov aircraft carrier deal, and an additional agreement on military aviation ties were also signed. During Putin’s visit, Information technology and telecommunications were also identified as focus areas for future economic cooperation between New Delhi and Moscow.3

According to Indian Defence Minister Mr. A.K. Antony, Indo-Russian relationship has moved beyond buyer-seller to co-producer in the field of design development and scientific research. Almost 70 per cent of Indian military hardware is of Soviet/Russian origin. Russia is the only country with which India has established an institutionalized defence cooperation mechanism operating at the Defence Ministers level. In 2008 India and Russia agreed to extend the terms of the Indo-Russian Inter Governmental Commission for Military Technical Cooperation for another ten years till 2020.4 India and Russia are all set to sign their biggest ever defence deal pegged at $30 billion with the Cabinet Committee on Security giving a go ahead to a mega proposal for joint development and production of the fifth-generation fighter aircraft (FGFA).

In the field of Nuclear Energy, Russia is a long standing partner for India. Currently two nuclear power reactors are being supplied by Russia in Kudankulam and two more are planned. In 2009, India designated Haripur (West Bengal) as an additional site for the construction of nuclear power plants with Russian cooperation. An Inter-Governmental Agreement on broad based cooperation (cooperation in the field of use of atomic energy for peaceful purposes) and a Road Map for future cooperation was signed during the visit of Prime Minister Putin to India in March 2010.

Russia is the second most potent space power in the world. Russia's cooperation in India's Unmanned Space Flight project (Chandrayaan 2), the Human Space Flight Project and the development of Youthsat to be launched by India's GSLV are ongoing projects. In March 2010, a new area involving the joint manufacture of satellite navigation equipment for civilian users based on the Russian GLONASS system, commenced.5

The sixteenth session of the India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC) held in New Delhi on 18 November 2010 expressed satisfaction at the continuation of high level bilateral contacts. They welcomed the holding of the first-ever India-Russia Business Dialogue within the framework of the prestigious St. Petersburg International Economic Forum in June 2010 and expressed confidence that the MoU entered into by CII and SPIEF Foundation would pave the way for regular institutionalized B2B interactions and exchanges.6

The Working Group on Science and Technology (S&T) under the aegis of IRIGC-TEC, and the “Integrated Long Term Program (ILTP) are the two principal institutional mechanisms for S&T cooperation with Russia. The ILTP was recently extended for a further ten years beyond 2009 with a renewed mandate for “Innovation led technology growth”. The 'Working Group' focuses

on collaboration activities in mutually agreed priority areas. The ILTP programme focuses on collaborative research in basic sciences and in Inter-Academy exchange programmes.

There is great interest in Indian studies, dance, yoga and music in Russia. An India Cultural Festival will be held in Russia in 2011 and a Russian Cultural Festival will be held in India in 2012. The Russian side has also suggested timing the event with the 150th birth anniversary celebrations of Rabindranath Tagore which are scheduled for 2011.7

The Priorities

With Chinese defence procurements on the decline following the creation of its strong defence industrial base, India constitutes a major portion of Russian defence exports. Russia is also ready to supply India strategic platforms and technology that no other country will - such as nuclear submarine on lease.8

India and Russia have intensified their R & D collaboration and joint production. It is important that this spills over into other economic sectors in order to assist economic development and technological upgradation in both countries.

Trade and investment ties also need to be enhanced as these are very low. While India's imports from Russia in 2010 are US$ 1.642 billion, its exports are $0.399 billion (State Customs Committee of the Russian Federation: first quarter of 2010). There is a need to diversify the trade basket, both import and export. The business community in both countries is sceptical about its counterpart. The combination of Russian potential in high technology and availability of 30 per cent of world resources with India's standing in the fields of industry and engineering could result in major achievements. Economic cooperation is extremely important which if not strong would weaken the mutually beneficial ties.

Space exploration is another major priority area for India since it is a long term and ambitious endeavour and no state can embark upon it alone. The geopolitics of the 21st century dictate that there is a need to take Indo-Russian collaboration to greater heights and space collaboration could play a key role towards this end. Civil Nuclear Cooperation is another area of importance where there is vast scope for India-Russia cooperation.

Russia is not happy about India diversifying its sources of arms procurement. The issue of timely delivery of orders placed by India (for instance, aircraft carrier INS Vikramaditya or Gorshkov) is being addressed. Russia would have to resolve the internal issues that arise from its military industrial exports centring on Rosoboronexport. The two sides need to deepen their cooperation in this area and expand it to the more dynamic civilian sector.

India should participate in the Russian initiative to create a counterpart to Silicon Valley in Skolkovo, outside Moscow. The Russian IT and innovation sector is competitive and Russia enjoys enormous depth in scientific studies. India should enter into collaborative arrangements which would help the cause of innovation in both countries and their translation into concrete economic benefits.

India and Russia need to discuss how to enhance India’s participation in Central Asia and benefit from the China-India-Russia initiative. Russia has reached out to Pakistan at the Sochi Summit and strengthened its relations with China. India’s participation in forums like SCO, RIC and BRIC needs to be strengthened, through which India and Russia can work to maintain regional security as well as enhance cooperation in the sector of environment and disaster management, in pharmaceuticals, metallurgy, biotechnology as well as in tourism.9

India should promote a greater focus on Russia, and launch initiatives for the study of Russia in India. There should be greater effort in publicising the benefits of bilateral cooperation in both countries, for which there is very little visibility.

Final Analysis

The Russian President's visit is very important. India needs to keep in mind the fact that in this changing and complex global order preserving the trust of a consistent supporter is very important to meet the challenges that may arise in the future.

1. 1. Martin Malek, “Russian Policy toward South Asia: An Update,” Asian Survey, Vol. 44, No. 3, May-June 2004, http://www.jstor.org/stable/4128592

2. 2. Information and Press Department, Ministry of Foreign Affairs of The Russian Federation, 2 December 2010, http://www.mid.ru/brp_4.nsf/0/00CAD55F448593C0C32577EE00402175

3. 3. 3. Meena Singh Roy, “Putin's visit to India: Resetting the Indo-Russian Partnership,” Strategic Analysis, vol. 34, no. 4, 2010.

4. 4. Nivedita Das Kundu (ed.), India-Russia Strategic Partnership: Challenges and Prospects (Academic Foundation, New Delhi, 2010).

5. 5. 5. Embassy of India, Moscow, “India-Russia Relations,” March 2010, http://www.mea.gov.in/meaxpsite/foreignrelation/russia.pdf.

6. 6. Press Releases, “16th Session of the India-Russia Economic Joint Commission meeting,” November 2010, http://www.mea.gov.in/mystart.php?id=530216690.

7. 7. See Note 5.8. 8. Arun Sahgal, “Weary and Wise,” Focus, November 2010.9. 9. See Note 4.

India, Russia share privileged partnership, says Medvedevhttp://timesofindia.indiatimes.com/india/India-Russia-share-a-privileged-partnership-Medvedev/articleshow/7128742.cms

Indrani Bagchi, TNN, Dec 20, 2010, 12.20am IST

Ten years after India and Russia coined the term strategic partnership, Russia remains one of India's most steadfast partners, despite the fact that new geo-political realities draw both countries closer to other countries like US and China. In an exclusive interview before his annual summit with PM Manmohan Singh, Russian President Dmitry Medvedev tells Times of India that Russia intends to keep its place among India's top partners.

Q: What are the priorities in your country's relations with India? What will be the main subjects for your talks with PM Manmohan Singh?

A: The strategic partnership between India and Russia marked its tenth anniversary this year. Today, we can rightfully call it a privileged partnership, as it is characterised by our close interaction in international affairs as well as by largescale and multifaceted trade, economic, scientific, technological and humanitarian ties. High technology is at the top of our agenda. An integrated programme of cooperation in the areas of science, technology and innovation for the period till 2020 will be signed during the visit. Major cooperation areas include energy, including nuclear energy, metallurgy, oil and gas production, transportation and outer space exploration. We have identified a number of long-term projects in these areas.

Cultural and humanitarian exchanges are important as well. An Indian cultural festival is scheduled to be held in Russia in 2011, while a Russian cultural festival in India will take place in 2012. All the above subjects will be discussed with PM Singh.

Q: Taking into account Russia's current discussions with Pakistan and Tajikistan on possible ways of Afghan settlement, what do you think of their possible outcome? Will India play a part in addressing this issue? Will our deepening cooperation in combating terrorism make any sense in this regard?

A: You probably mean the Quartet comprising Afghanistan, Pakistan, Russia and Tajikistan, which was formed at the initiative of Tajik President Emomalii Rahmon in 2009. At the Quartet's summit which took place this August in Sochi (the second one), we decided to launch a mechanism for holding four-party inter-agency consultations in three sectors: those involving heads of foreign ministries, foreign trade and counter-narcotics agencies. During the past four months, the Quartet has held meetings on all three thematic areas and reconfirmed its commitment to continuing cooperation.

We believe that this format is primarily an element of cooperation within the SCO, possibly involving other important regional players with India being undoubtedly one of them. We expect that the Quartet meetings will result in agreements on specific projects. The CASA-1000 project can be one of them, it provides for the construction of electricity transmission lines from Tajikistan and Kyrgyzstan to Afghanistan and Pakistan. This work should be expanded in the future, involving our SCO partners in the four-party format.

Building a gas pipeline connecting Turkmenistan, Afghanistan, Pakistan and India also responds to the region's economic development needs. We are considering the possibility of Russia's participation in this project. In my opinion, this initiative fully corresponds with the spirit of the times and the priorities of regional cooperation. Russian companies working in this area have necessary expertise, logistical resources and highly skilled personnel to build this pipeline.

Settlement in Afghanistan is high on the agenda of the India-Russia Working Group on Combating International Terrorism and the Joint Coordination Group of the Security Councils of both states, which have recently held meetings in Moscow and New Delhi. These bodies regularly exchange information on Afghanistan and discuss issues such as combating terrorist

threats, illicit drug trafficking and money laundering. Almost all security agencies of our states participate in this work.

Anti-terrorist cooperation with New Delhi is advancing at international forums as well. We appreciate India's support for Russia's draft of the International Convention for the Suppression of Acts of Nuclear Terrorism, which entered into force in July 2007. In turn, we are doing our best to promote a comprehensive convention on international terrorism sponsored by India.

Q: Will the Civil Liability for Nuclear Damage Bill adopted in India impede further Russian-Indian cooperation on peaceful uses of nuclear energy? What are future plans for our cooperation in this area?

A: Nuclear energy cooperation is an important element of our relations. Russia has an established reputation in this segment of India's market. A solid legal framework for bilateral cooperation has been established. In particular, we are implementing the intergovernmental agreement on cooperation for the construction of additional nuclear power plant units at Kudankulam site, as well as for the construction of Russia-designed nuclear power plants at new sites which was signed in 2008.

As for civil liability for nuclear damage, it is regulated by Vienna Convention of 1963. And we seek to solve the relevant problems in a constructive way through negotiations with our Indian partners.

Q: India and Russia plan to jointly launch a spacecraft to the Moon. What progress has been achieved in that area of cooperation? When will the Chandrayaan-2 artificial lunar satellite reach the Moon's orbit?

A: Our cooperation with India in exploration and peaceful uses of outer space has a long history. Suffice it to recall the first Indian cosmonaut Rakesh Sharma made his spaceflight as a crew member of Soyuz T-11 as early as 1984. Our countries have come a long way since then. Today, India has its own space launch site and is able to launch artificial satellites all by itself. However, we continue to collaborate in this area. The Chandrayaan-2 spacecraft project that you mentioned is carried out in the framework of the agreement between the Indian Space Research Organisation (ISRO) and the Russian Federal Space Agency on joint lunar exploration. The parties have agreed recently to add an Indian mini moon rover to the spacecraft which is to be launched in 2013.

We continue to cooperate in the area of human space flights as well. As far as I know, the Indian side is particularly interested in the Russian components for life-support and thermal control systems of Indian spacecraft. As part of the agreement between ISRO and Roskosmos on cooperation in the area of solar physics, we last year launched the Coronas-Photon spacecraft.

The exploration of outer space makes it possible not only to carry out important scientific research but also to implement commercially viable programmes. The latter include undoubtedly joint use of the Russia-designed GLONASS satellite navigation system.

Q: Military and technical links between Russia and India are very important. Today, many Western countries seek to develop military and technical contacts with India. Do you think it will affect our cooperation?

A: Similar to Russia, India has been pursuing a multi-track foreign policy and has been maintaining ties with plenty of countries, including in the military and technical sphere. It is only natural that the Western producers of arms and military equipment are interested in cooperating with India as well. We treat this with serenity and pragmatism. We are ready to compete, the main point being that the fight for contracts is fair and according to the rules. In general, the military and technical cooperation between Russia and India has been developing progressively. Our long-term links in this sphere are maintained in strict conformity with the international obligations of both countries. They are transparent and aimed at ensuring India's defense capability without challenging the existing military and strategic balance in the South Asia region.

Cooperation between the armed forces is another important area. Our mutual interest in such cooperation was proved by the INDRA-2010 joint military exercise held in October 15-24 this year in the Indian state of Uttarakhand.

Russia says India's nuclear liability Bill not a hurdle to civil cooperationhttp://www.indiainfoline.com/Markets/News/Russia-says-Indias-nuclear-liability-Bill-not-a-hurdle-to-civil-cooperation/5024883017

MINT sourced by HT Media Ltd / 12:53 , Dec 18, 2010

Passed by Parliament in August, it empowers victims to seek compensation up to two decades after the accident.Russia said on Friday India's nuclear liability Bill-which sets rules for compensation if an atomic accident occurs-is not a barrier to civil nuclear cooperation. Russia is awaiting clarification on certain sections of the Indian law, but with the government signing an international law on compensation, it sees the global pact taking priority over India's domestic law, ambassador Alexander Kadakin said. A general framework agreement on the construction of two more atomic power units at Kudankulam in Tamil Nadu is among the 15-16 pacts expected to be signed during Russian President Dmitry Medvedev's 21-22 December visit, Kadakin said. Talks between Medvedev and Prime Minister Manmohan Singh will cover energy, bilateral trade and military cooperation, besides the situation in Afghanistan. Kadakin said India's nuclear liability Bill will not affect the two 1,000MW atomic power units already under construction at Kudankulam, but will cover future projects "like units three and four, the agreement for which we hope to conclude" during the visit.

He said Russia was waiting for more information on the Indian law that pins the onus for any accident on the supplier and operator of the plant. Passed by Parliament in August, it empowers victims to seek compensation up to two decades after the accident. Both provisions are seen as tough by countries such as France, the US and Russia, whose companies are keen to capture a

slice of India's huge civil nuclear power market. India signing the Convention on Supplementary Compensation in Vienna in October with less stringent provisions has somewhat reassured the suppliers. "So far, we are working on contracts which were signed before (India's) internal law was enacted," Kadakin said.

"We have not yet received precise explanation from our Indian partners on how this will influence future contracts. "We do not see it (the nuclear liability Bill) will be an impediment or hurdle in the way to expanding our cooperation, but we do hope India will be true to its international obligations and to the Vienna protocol which it signed," Kadakin said. "We perceive that international laws have supremacy over national laws." According to KPMG's India Energy Outlook, to meet power requirements to sustain economic growth, India has to build 250,000MW of nuclear capacity by 2050. The target is to achieve an installed nuclear capacity of 20,000MW by 2020 and 64,000MW by 2050. This will increase the share of nuclear energy in total power-generation to 10% in 2032 and 20% in 2050.

Kadakin recalled that Russia had set out a road map to build 14-16 nuclear power units in India when Russian Prime Minister Vladimir Putin visited New Delhi earlier this year. Russia was hoping India would indicate a second site for Russian plants-in Orissa or Karnataka-during Medvedev's visit, Kadakin said. Another deal Russia aims to conclude during Medvedev's visit is on the design of the fifthgeneration fighter aircraft, Kadakin said. India plans to buy 250-300 aircraft for its Air Force in a deal worth almost $30 billion ('1.36 trillion). India bought Sukhoi fighters in the mid 1990s from Russia, so procurement has continued even after the Cold War years. Discussions on boosting bilateral trade from $9.6 billion to $20 billion in the next five years will also be on the agenda, as would India's interest in bidding for oil and gas blocks. "We welcome Indian investment in Russia in the gas and oil sector," Kadakin said.

"The details and technicalities will be worked out by our leaders," he said, adding some blocks were reserved for Russian companies alone. India has been engaged in talks for several years to clinch oil and gas assets in Siberia and the Yamal peninsula, where key blocks such as Trebs and Titov are located. India's energy investments in Russia include a 20% stake in the Sakhalin-1 hydrocarbon block through stateowned ONGC Videsh Ltd and the 2008 buyout of Britain Imperial Energy with operations in Russia. A pact on easing visa rules for businessmen and another between the election commissions of both countries are among the pacts to be signed during Medvedev's visit.

20.12.2010

Medvedev: Russia to Study Participating in Building TAPI Gas Pipelinehttp://www.oilandgaseurasia.com/news/p/0/news/10044

Russia is reviewing the idea of participating in building the Turkmenistan-Afghanistan-Pakistan-India gas pipeline, Russian PResident Dmitriy Medvedev said in an interview with the India Times ahead of a visit to New Delhi, RBK reports.

Answering a question on regulating infrastructure in Afghanistan, Medvedev said, "I think that initiative fully reflects the spirit of the times and the priorities in regional development and cooperation. Russian companies in the industry have the experience, the material and technical base and highly-qualified personnel needed to lay the pipeline", he said.

Medvedev said Russia is also anticipating agreements on the CASA-1000 project which envisions setting up a system to deliver electricity from Tajikistan and Kyrgyzstan to Afghanistan and India. "In the future, we feel it would be expedient to give this work a wider range and invite our partners in the Shanghai Cooperation Organization to the four-way [TAPI] format", Medvedev said.

Copyright 2010, Oil and Gas Information Agency. All rights reserved.

UAC considers producing An-148 airliner in Indiahttp://en.rian.ru/business/20101220/161853475.html

11:49 20/12/2010

NEW DELHI, December 20 (RIA Novosti) - Russia's United Aircraft Corporation is in talks with Indian firms on production of the Antonov An-148 regional airliner in India in its passenger and cargo versions, UAC President Alexei Fyodorov said on Monday.

"The majority of Russian-Indian cooperation projects concern military aviation, however, it is time to cooperate in the field of civil aviation," Fyodorov told a Russian-Indian trade and investments forum.

India has been cooperating with Russia, and previously the Soviet Union in military aviation for decades. India currently produces the Su-30MKI Flanker-H multi-purpose fighters under a Russian licence.

In September, Rosoboronexport, Russia's state-owned arms seller, and state-run Hindustan Aeronautics Ltd signed an agreement to set up a joint venture to produce a Multirole Transport Aircraft (MTA).

UAC offered HAL cooperation in civil aviation two years ago, but HAL declined as its involvement with military orders left it with no spare capacity.

Sistema India arm to get $200 mln from Gazprombankhttp://in.reuters.com/article/idINIndia-53674320101220

9:32am IST

NEW DELHI (Reuters) - Sistema Shyam Teleservices, the Indian arm of Russia's Sistema, said on Monday it has signed a mandate letter with Russian lender Gazprombank for a loan of $200 million, the telecom firm said in a statement.

In a separate statement, Gazprombank said it has opened a representative office in India.

(Reporting by Bharghavi Nagaraju;Editing by Harish Nambiar)

Russia's Gazprombank says to raise $200 mln loan for Sistema's Indian subsidiaryhttp://en.rian.ru/business/20101220/161852126.html

10:38 20/12/2010

NEW DELHI, December 20 (RIA Novosti) - Russian Gazprombank and Sistema Shyam Teleservices Ltd. (SSTL), an Indian subsidiary of AFK Sistema, an oil to services conglomerate, signed a mandate letter to organize a $200 million syndicated loan, the bank said on Monday.

"The loan is meant to fund the investment program and will be secured by a letter of credit," it said in a statement.

SSTL General Director Vsevolod Rozanov told RIA Novosti that SSTL, which has been developing a CDMA mobile network since 2008, planned a total 2010 investment of $2.2 billion.

DECEMBER 20, 2010, 2:39 A.M. ET

Sistema Shyam Expects Russia Investment Next Quarter http://online.wsj.com/article/SB10001424052748703886904576030832892396712.html

By MUKESH JAGOTA and ROMIT GUHA

NEW DELHI -- Sistema Shyam Teleservices Ltd. said Monday it expects the Russian government's investment of around $600 million to come through in the January-March quarter, giving the mobile operator much-needed funds to expand its operations in India.

"All in-principle clearances have come [from the Russian and Indian governments]. Now only technicalities remain," Chief Executive Vsevolod Rozanov told reporters.

Sistema Shyam is 73.71% owned by Russia's Sistema JSFC, with India's Shyam Group holding about 23.79%. The Russian government planned to pick up the stake in the company by the end of 2009, but the plan was delayed as the country's economy ministry didn't approve the investment that had been included in Russia's 2009 budget.

Last December, Sistema Shyam had said it will issue 662.75 million shares, or a 19.8% stake, on a preferred basis to the Russian Federal Property Agency at 49.31 rupees and up to 228.55 million shares to its Indian founders at 10 rupees a share.

The deal will reduce Sistema's holding in the Indian company to about 54%. The share allotment to the Indian founders will, however, help Sistema Shyam keep the total foreign stake in it below the government-mandated limit of 74% for Indian telecom companies.

Since the collapse of the Soviet Union, Russia has held some deposits in rupees in India. Sistema JSFC has previously said the government is required to invest this cash in Indian projects and that the investment in Sistema Shyam would be a "financing arrangement" as it includes a pledge by Sistema to buy the shares in five years' time.

Sistema Shyam has licenses to provide services in all of India's 22 service areas but has so far started operations under the MTS brand in 13 areas. It has 8 million voice users and 400,000 broadband subscribers.

Earlier in the day, Sistema Shyam signed an agreement with Russia's Gazprombank for a $200 million loan to fund expansion. It also plans to launch an initial public offering in the second half of 2011, Mr. Rozanov said.

The company's expansion plan comes at a time when the world's fastest-growing telecom market has been plunged into turmoil following allegations of corruption.

The country's top investigative agency is scrutinizing the 2008 sale of licenses and bandwidth that critics alleged favored some companies. The telecom department is sending notices to some companies which received licenses in 2008, asking why their licenses shouldn't be cancelled. It is also sending notices to some companies which haven't met stipulated schedules of service roll outs.

A person familiar with the matter said Monday that Sistema Shyam has received a notice from the telecom department, claiming 110 million rupees ($2.43 million) as "liquidated damages" for the delay in roll out of services in 10 areas.

Chief Executive Rozanov said the company will reply to the notice within the stipulated time of 15 days. "This doesn't affect Sistema's plans in India...and at this stage, we continue to roll out our network," he said.

Write to Mukesh Jagota at mukesh.jagota@dowjones.com and Romit Guha at romit.guha@dowjones.com

SSTL's 20% stake sale to Russian govt in Q1 2011

http://www.business-standard.com/india/news/sstls-20-stake-sale-to-russian-govt-in-q1-2011/119662/on

Press Trust of India / New Delhi December 20, 2010, 12:55 IST

Russian government will complete the deal to pick up 20 per cent stake for $600 million in Sistema Shyam telecom joint venture by first quarter of 2011, a top company official said today.

Sistema-Shyam (SSTL) JV was one of the nine new telecom operators who were given licences in 2008. SSTL is a joint venture between India's Shyam Group and Russian conglomerate Sistema.

Besides, the company has today signed a letter of mandate with Russia-based Gazprombank for a loan of $200 million (about Rs 906 crore) which will be used for rolling out network.

"We will complete all the technicalities related with the $600 million loan from the Russian Government for a 20 per stake sale by the first quarter of next year and also for the bank loan," SSTL President and CEO Vsevolod Rozanov told reporters here.

In September, 2010, the government of the Russian Federation had approved an equity investment of $600 million in SSTL to pick up a 20 per cent stake, which will be in the form of Indian rupees held in accounts representing the Indian government's debt to the Russian Federation.

On the loan deal, the formal procedure of mandate letter was executed between Gazprombank and SSTL for raising of funds for the amount equivalent to $200 million.

"The signing of the mandate letter by Gazprombank for raising a loan of $200 million in favor of SSTL is very significant for us.

It further reinforces our commitment to roll out a world class telecom network in India by harnessing the power of CDMA technology. This is bound to benefit both our customers and also create value for all our shareholders," Rozanov added.

In the same event, Gazprombank unvelied its representative office in India. The main task of the representative office would be representation of the banks' interest and support of its products promotion in the Indian financial markets.

Currently, the bank representative office works with companies that deals with defence, nuclear power and telecom.

Russian president coming to Lebanon in Januaryhttp://www.yalibnan.com/2010/12/20/russian-president-coming-to-lebanon-in-january/

December 20, 2010 ⋅ 7:00 am

Russia’s President Dimitri Medevdev will head to Lebanon during the second half of January on an official visit , Al Liwa newspaper reported Monday morning

According to diplomats the purpose of the visit is to reiterate Russian support for stability in Lebanon and to further develop the relations between the 2 countries.

Prime Minister Saad al-Hariri said at the end of the talks that he held last month with Russian PM Putin that Russia has decided to donate to the Lebanese army six helicopters model MI 24, thirty one tanks model T-72 , thirty six cannons 130 mm , about half a million munitions for various weapons and thirty thousand artillery shells for the 130 mm cannons.

Russian Itar-Tass News Agency has reported that Putin has asked his Lebanese counterpart to support the participation of Russian companies in tenders in his country.

“We will seek your support in promoting Russian companies’ bids for tenders in your country,” Itar-Tass quoted Putin as saying during his meeting with Hariri on Monday.

Hariri has reportedly assured Putin that he would welcome any Russian company on the Lebanese market in such sectors as transport, energy, dam and railway construction.

Foreign Minister: Process of border demarcation with Russia becomes action-orientedhttp://bsanna-news.ukrinform.ua/newsitem.php?id=14977&lang=en

  KYIV, December 20. /UKRINFORM/. The first meeting of the Joint Ukraine-Russia Demarcation Commission held in Moscow is a significant event for bilateral relations, Foreign Minister Kostiantyn Hryshchenko has said in his statement, placed on the MFA website.

This event initiated the main stage in realization of the Agreement between Ukraine and Russia on demarcation of the Ukraine-Russia state border, signed in Kyiv on May 17, 2010. It became another proof of efficiency of the intergovernmental dialogue between Ukraine and Russia and testifies to the tune on the part of both states toward deepening of partnership, the statement says.

“A new atmosphere of constructiveness, mutual understanding and mutual respect that continues to gain a foothold in Ukraine-Russia relations, allows reaching practical results on important issues of the bipartite agenda, which over a continued period of time were considered as having no perspectives for settlement,” the Minister noted.

He believes that with the start of activities of the Joint Commission, a process of demarcation of Ukraine-Russia border became action-oriented. Successful completion of the started demarcation process will become a step on the way of enhancing reliability of the state border of Ukraine, as well as will make a considerable contribution to fighting illegal migration and transborder crime

in the region, and will strengthen positions of Ukraine in negotiations with other states on liberalization of the visa regime.

Hryshchenko underscored that demarcation of borders will not lead to new difficulties for development of interhuman contacts in relations between Ukraine and Russia. He reminded that in fulfillment of agreements of Presidents of the two states, the parties take measures to increase the number of checkpoints and practical mechanisms are developed for simplification of a procedure for border crossing.

Burjanadze, Nogaideli in Moscow

http://www.civil.ge/eng/article.php?id=22975

Civil Georgia, Tbilisi / 19 Dec.'10 / 23:52

Nino Burjanadze, leader of opposition party Democratic Movement-United Georgia, and Zurab Nogaideli, leader of opposition Movement for Fair Georgia, will attend an opening ceremony of World War II memorial in Moscow.

The memorial was ordered by the Russian authorities in response to demolition  of a similar memorial by the Georgian authorities in Kutaisi a year ago. A woman and her daughter died when the memorial was blown up on December 19, 2009 to make way for a new parliament building.

Opening ceremony of the memorial in Moscow was initially planned for Sunday, but it was rescheduled for December 20, according to the Russian media reports.

Both Burjanadze and Nogaideli, former parliamentary speaker and ex-PM of Georgia, respectively, were also attending a ceremony for laying a stone for the memorial  in Moscow in May, 2010, which was also attended by Russia's PM Vladimir Putin.

Before departure from Tbilisi, Burjanadze told Maestro TV, that it was "one of the most important priorities for any Georgian politician to settle relations with Russia and to really protect Georgia's interests."

"Through its irresponsible actions, including towards the North Caucasus, the Georgian government is putting the country in danger," she said. "I am convinced, that peaceful Caucasus is very important for Georgia and one should be reckless to on the one hand speak about the need to improve relations with Russia and on the other hand doing everything to irritate Russia over its most sensitive issue [North Caucasus]."

Movement for Fair Georgia said in a brief press release that it would be Nogaideli's eleventh visit to Moscow since the August war and it would last for "several days". Nogaideli's party has a cooperation agreement with Russia's ruling party, United Russia.

It is not yet clear whether the two Georgian opposition politicians are planning a meeting with the Russian officials in Moscow.

Russian Azerbaijanis gather in Moscowhttp://news.az/articles/society/28591

Mon 20 December 2010 05:40 GMT | 6:40 Local Time

The annual meeting of the Central Council of the All-Russian Azerbaijani Congress dealing with the results of 2010 was held.

President of AAC Mammad Aliyev addressed the Azerbaijani diaspora, telling about results of the activity of his organization and goals for the next year. The keynote speech was delivered by AAC Executive Director Eldar Kuliyev.

Deputy Executive Director Ilgar Hajiyev spoke about the activity of AAC regional branches and education projects.

The AAC representatives touched upon the operations of the organization`s newspaper 'Azerbaijani Congress'. The message to the Russian leadership was read out over the situation on ethnic relations. It expressed concern on the interethnic clashes taking place in Russia.

On behalf of AAC, Mammad Aliyev presented a medal to AAC Vice-President Aras Agalarov in connection with his 55th birthday. Mammad Alyev also awarded medals to heads of regional branches.

The meeting was attended by representatives of the Azerbaijan`s embassy to Russia, Heydar Aliyev Foundation`s Russia Office, State Committee for work with Diaspora and Azerbaijani youth.

AzerTAj

07:02

Putin to create unified information channel for courtshttp://rt.com/news/line/2010-12-20/#id536

RT News line, December 20

President Medvedev has charged Prime Minister Putin with creating a unified information space for the country’s courts “with an aim to raise openness and accessibility of the judiciary in the Russian Federation,” RIA Novosti news agency reports. Putin, along with high-ranking judiciary officials, is to present a developed plan by June 2011. The project should also include creation of an electronic copy of the judicial archives and full and timely publication of all court activities on their websites.

Russia will continue to deploy SS-18 'Satan' until 2026http://www.brahmand.com/news/Russia-will-continue-to-deploy-SS-18-Satan-until-2026/5849/3/13.html

MOSCOW (BNS): Russia will continue to deploy SS-18 Satan heavy intercontinental ballistic missiles (ICBM) as part of the country's nuclear arsenal until at least 2026, the commander of Strategic Missile Forces (SMF) said Friday.

According to a news report by RIA Novosti, the service life of the missile system equipped with SS-18 Satan missiles has been extended.

"The missile is routinely tested and currently there are no serious technical restrictions in the system to continue extending its service life," said Lt. Gen. Sergei Karakayev, commander of SMF.

Satan, which can carry 10 independently targeted nuclear charges, was designed at the Yuzhnoye Design Bureau in Dnepropetrovsk, in the south of central Ukraine.

The missile has a maximum range of 11,000 km with a launch mass of over 210 tonnes and a payload of 8.8 tonnes.

Russian security services mark professional holiday http://english.ruvr.ru/2010/12/20/37220234.html

Dec 20, 2010 09:51 Moscow Time

Russia’s security services mark their professional holiday on Monday, media reports said, citing December 20, 1995 when then-Russian President Boris Yeltsin signed a decree to this effect.

Earlier on Monday, President Dmitry Medvedev extended his congratulations on the occasion.

Actually, this country’s security services were formed in 1917 as the all-Russian Extraordinary Commission. Currently, the names of the Russian security services are the following: the Federal Security Service, the Foreign Intelligence Service, the Federal Protective Service and the Main Directorate of the President’s Special Programs.

December 20, 2010 05:00

Russian political and economic calendar: December 20http://www.themoscowtimes.com/opinion/article/economic-glasnost/427178.html

http://www.interfax.com/newsinf.asp?id=210358

MOSCOW. Dec 20 (Interfax) - The political and economic calendar in Moscow, Russia and Newly Independent States for December 20 is as follows:

*** Russian President Dmitry Medvedev will hold talks with his Latvian colleague Valdis Zatlers.

*** Russian President Dmitry Medvedev will pay an official visit to India on December 20-22.

*** Gazprom Neft board of directors will consider investment program for 2011.

*** Russian Uranium holding Atomredmetzoloto (ARMZ) will pay dividends to Uranium One shareholders at the amount of $1.06 per share.

*** Magnit shares are included into FTSE Russia IOB Index, at the same time Gazprom Neft shares are excluded from Dec 20, 2010.

*** Board of directors of Silvinit will consider company's reorganization in form of joining Uralkali.

*** Novolipetsk Steel (NLMK) will publish 9M 2010 US GAAP financial results and will hold a phone conference with management on 17:00 (Moscow time).

*** Home Credit and Finance Bank (HCFB) will begin the secondary placement of its 6-series bonds worth 5 billion rubles.

*** Severstal - EGM.

*** Aeroflot - EGM.

*** Alrosa-Nyurba - EGM.

PRESS DIGEST - Russia - Dec 20http://www.reuters.com/article/idUSLDE6BJ0DZ20101220

3:20am EST

MOSCOW, Dec 20 (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

- Prime Minister Vladimir Putin could lead the United Russia party's candidate list in 2011 parliamentary election.

- Russia's Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz), the main creditor of IzhAvto, will sell assets of the indebted car maker to state-controlled Russian Technologies and Avtovaz (AVAZ.MM: Quote, Profile, Research, Stock Buzz).

- Co-owner of iron and steel firm Metalinvest and Coalco developer Vasily Anisimov could consider buying Inteko, the main asset of Yelena Baturina, wife of ex-Moscow mayor Yuri Luzhkov.

VEDOMOSTI

www.vedomosti.ru

- Yelena Baturina and magnate Vasily Anisimov seem to have failed to reach agreement on a price for Inteko, the daily says.

- Russia's second biggest lender VTB bnak (VTBR.MM: Quote, Profile, Research, Stock Buzz) has enough capital to absorb Transcredit bank (TKB) by the end of 2010 and Bank of Moscow in 2011, head of the board of VTB-24 Mikhail Zadornov says in an interview.

RBK DAILY

rbcdaily.ru

- Russia could propose that South Korea's Hyundai-Kia (000270.KS: Quote, Profile, Research, Stock Buzz) cooperate with GAZ group instead of IzhAvto, the daily says.

- VTB will sell its almost 12 percent stake in mid-size Rosbank (ROSB.MM: Quote, Profile, Research, Stock Buzz) to Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) in the next 18 months, according to head of VTB Andrei Kostin.

NEZAVISIMAYA GAZETA

www.ng.ru

- Russian lawmakers will meet this week to denounce the European human rights court for political motives in decisions on Russia, a possible signal to Europe ahead of a ruling on YUKOS shareholders' claims against Russia, the daily adds.

IZVESTIA

- Russian tycoon Roman Abramovich will run for a seat in the legislature of the polar region of Chukotka in March 2011, the paper reports.

- Russia and India are expected to sign a deal on joint works on launching the production of the fifth generation fighter, the daily says in connection with President Dmitry Medvedev visit to Delhi starting on Monday.

Russian Press at a Glance, Monday, December 20, 2010http://en.rian.ru/papers/20101220/161851345.html

09:30 20/12/2010© RIA Novosti. Rybchinskiy

POLITICS

The United Russia ruling party collected 6 billion rubles ($195.6 million) worth of private donations over the past five years. Who gives the party the money and why?

(Vedomosti)

At Russia's request, the UN Security Council met Sunday for an emergency session to cool escalating tensions on the Korean Peninsula that Moscow's UN ambassador warned affected his country's national security interests.

(Moscow Times)

Russian Prime Minister Vladimir Putin said he could lead the United Russia party list at the 2011 parliamentary election again.

(Kommersant, Nezavisimaya Gazeta)

A Kommersant correspondent comments on riots in Minsk that followed Sunday's presidential election in Belarus.

(Kommersant)

Health and Social Development Minister Tatyana Golikova speaks on modernization of healthcare in Russia.

(Rossiiskaya Gazeta)

ECONOMY & BUSINESS

Russia's second largest state lender VTB that is mulling over buying a stake in the Bank of Moscow, said the bank is not actually controlled by the Moscow government.

(Vedomosti)

Italian airline Alitalia has decided to drop Russian plane builder Sukhoi for a possible $500 million regional jet order, saying Friday that it could wait no longer for Sukhoi's delayed new Superjet 100 and would opt for planes from Brazil's Embraer instead.

(Moscow Times, Vedomosti, Kommersant)

Russia's Economic Development Ministry assesses the 2010 budget deficit at 3.5%, and the Finance Ministry at 4.3%. Prime Minister Vladimir Putin proposed waiting until the end of the year to see who is more exact.

(Nezavisimaya Gazeta)

The government released stronger than expected unemployment and wage statistics Friday, showing the economy on track and adding to the case for a rise in interest rates early next year.

(Moscow Times)

SOCIETY

As unprecedented nationalist protests continued over the weekend, 2,000 people were detained to prevent violent clashes between Slavs and ethnic minorities.

(Moscow Times, Rossiiskaya Gazeta, Nezavisimaya Gazeta)

An Ivanovo doctor fears being fired or beaten after he told Prime Minister Vladimir Putin on a call-in show last week that a local hospital had faked a display for a visit by Putin, installing borrowed equipment, dressing up staff as patients and forcing nurses to lie about their salaries.

(Moscow Times, Nezavisimaya Gazeta, Rossiiskaya Gazeta)

Prosecutors have opened a criminal case against a deputy Pacific Fleet commander and two associates on suspicion of embezzling at least $1.2 million in government funds earmarked for vessel repairs.

(Moscow Times)

Muscovites have submitted 15,000 proposals to solve the Russian capital's transportation problems.

(Rossiiskaya Gazeta)

Economic Glasnost20 December 2010By Chris Weafer

Twenty years after Soviet leader Mikhail Gorbachev’s policy of glasnost brought about the end of the Soviet Union, the government of President Dmitry Medvedev and Prime Minister Vladimir Putin is again embarked on a strategy of openness. Only this time they are banking on economic glasnost to attract the investment flows that Russia needs to both create greater diversity in the country’s oil-dependent economy and to rebuild its aging infrastructure.

They are also hoping that the open door will swing both ways as Russia’s industries also need to create strategic links with established companies, especially in Europe. That is what is behind the government’s greater determination to improve how foreign investors, legislators and major corporations view Russia. It also explains why the country is so keen on attracting major sporting events such as the World Cup and a Grand Prix, and why, after 17 years of hesitancy, there is now greater urgency to be admitted into the World Trade Organization in 2011. Russia needs the investment capital and the expertise of Western companies if it is to break the stranglehold of oil. That is why the modern-day economic glasnost is real and will be sustained.

The $1.5 trillion earned from exporting oil and gas since 2000 certainly has taken Russia out of the chaotic 1990s and has created a strong domestic consumer-driven economy. Russians spend almost $50 billion each month on consumer goods, and that figure is again growing by more than 5 percent annually. In addition the country is on course to sell almost 2 million automobiles by the end of this year. But according to Finance Ministry projections, the federal budget now needs oil to average more than $90 per barrel to balance. Most of the budget’s spending commitment is for programs in social sectors — mainly health care and education — and to pay for pensions

and state employee salaries. No government anywhere can reduce this type of social spending without risking an increase in instability.

But at the current price of oil, there is no money left to fund many economic expansion programs or rebuild its infrastructure. The total cost of infrastructure spending over the next five years is conservatively estimated to be $500 million. The proceeds of planned privatization sales will only contribute less than 10 percent of that. The rest will have to come from an expansion of public-private partnership programs, from a very significant increase in foreign direct investment flows and from the debt market. All three categories are at a very low level today with, for example, foreign direct investment expected to reach not much more than 1 percent of gross domestic product this year. At the same time, however, Russia has plenty of scope to tap debt markets with a current debt-to-GDP ratio of less than 11 percent.

European legislators and investors who are not involved in Russia’s natural resource industries are skeptical of Russia, which is hardly surprising after the numerous events that generated negative headlines through much of the past decade. These are exactly the groups that now need to be convinced that Russia is changing and is becoming more open and welcoming for strategic investment, especially in the sectors that now need to be developed. As the recent huge

PepsiCo and Thomas Cook deals demonstrate, there are no barriers to entry, either legal or administrative, to deals in the consumer areas. That is not often the case in the country’s so-called strategic sectors, of which there are 42, or in infrastructure projects.

Equally, the government continues to be frustrated by what it sees as barriers to investment in Europe by Russian companies. Medvedev highlighted the issue in his speech at the recent Group of 20 summit. Creating strategic relationships is key to speedier improvements in the country’s industry — for example, the Renault-Nissan project with Russia’s largest carmaker, AvtoVAZ, is a good case in point. Russia wants to create more of these long-term strategic relationships via equity cross-holdings.

The government does have a tough battle to change the lingering negative perception of the country and to clear the legal and administrative obstacles that still make it difficult for direct investors. A softer foreign policy, WTO membership, hosting high-profile sports events and a better public relations campaign will surely help, but to achieve a significant, long-term change in how investors view Russia and its high risk factor there will also have to be very visible success in lowering corruption, cutting business red tape and improving the reliability of the legal system to give greater investor protection.

Thankfully, the government has started making this process — mainly because it has no other choice if it wants to survive. Since the oil advantage has been all but used up, Russia now needs investment flows. If the country fails to attract that capital and if it remains overly reliant on the price of oil and gas, that would lead to average annual growth in the range of only 2.5 percent to 3 percent. Russia needs to achieve average annual growth of at least 5 percent. That will only be achieved by attracting a large increase in investment spending.

Just as was the case 20 years ago, glasnost is not an option. It is a necessity.  

Chris Weafer is chief strategist at UralSib Capital.

December 17, 2010Russia Profile Weekly Experts Panel: The Significance of Khodorkovsky’s Second Trial http://www.russiaprofile.org/page.php?pageid=Experts%27+Panel&articleid=a1292605468

Introduced by Vladimir Frolov

Russia Profile

Contributors: Vladimir Belaeff, Andrei Liakhov, Alexandre Strokanov  

On December 27 Moscow District Judge Alexander Danilkin will start delivering a verdict in the second trial of Mikhail Khodorkovsky and Platon Lebedev, two former principal shareholders in the now extinct Yukos Oil Company, once Russia’s largest oil producer. Both men have been in jail since 2003 on charges of tax evasion. Their sentences are due to expire next year. Is Khodorkovsky’s fate critical to the state of Russian democracy? What is the real significance of his second trial?  In their second trial, Khodorkovsky and Lebedev are both being charged with massive fraud, and are alleged to have stolen all the company’s oil production. Many believe the new charges, filed almost two years ago and carrying a maximum penalty of 14 years in prison, are legally absurd and have been pressed merely to keep the two men behind bars for another decade or so. The court heard the testimony of former and current government ministers (German Gref and Viktor Khristenko), who all but dismissed the charges as absurd. The outcome of this trial and its potential impact on Russia’s political future has become a matter of intense speculation. As The Economist argued in its latest issue, “The chances that Khodorkovsky will be found not guilty are slim. If he were, it would be a sign that the system of Vladimir Putin, Russia's former president and current prime minister, was beginning to come apart.” Many believe that were Khodorkovsky and Lebedev to be acquitted of the second charges and freed next year, Russia could become a different sort of place and democracy would bloom. Others argue that Russians are largely indifferent toward Khodorkovsky’s fate, and that nothing dramatic would happen were he to go free. Khodorkovsky himself in a number of interviews has eschewed a political career for himself, stating his preference for spending time with his family and engaging in educational projects. Is Khodorkovsky’s fate critical to the state of Russian democracy? What is the real significance of his second trial? What would be the political consequences for Russia’s future of the two different outcomes that could emerge from the trial – a new prison term or freedom for Khodorkovsky? What would be the impact on President Dmitry Medvedev and his modernization agenda, were Khodorkovsky to receive a second prison term? Does it really matter? Where does it matter more – in Russia or in the West? Andrei Liakhov, Attorney at Law, London: 

I appreciate the inadequacies of the Russian judicial system, which was unable to prove its case beyond reasonable doubt in the first Khodorkovsky/Lebedev trial. However, based on the sum of my knowledge of the history and circumstances of Yukos’ “business model,” I am convinced that this pair should have been put behind bars long before 2003. In this, Russians followed (up to a point) the 1940s and 1950s American experience of prosecuting major gangsters (Al Capone, Lucky Luciano, etc). After all, Al Capone was jailed for tax evasion and fraud, not for racketeering and murder. The publicly available excerpts from the second indictment, in combination with other trial information leaked to the press (provided that these are all true and not doctored by each side of the process) do not give a clear picture of the nature of the indictments and of the evidence that the prosecution is using to support them. Some of the statements indeed (if true and not taken out of context) look very questionable, given the fact that Yukos was a private company, majority owned by the defendants. The nature of the charges in the second trial seems (if one assumes all leaks are correct) to be of a civil rather than a criminal nature. The totality of the circumstances surrounding the trial (which, by the way, does not have much national coverage) leads me to believe that the trial is an attempt by the group that orchestrated the first trial to force the defendants to take a certain course of action (or to refrain from doing so). The big question is whether the largest corporate raid/war in recent Russian history is blessed by the duumvirate and is deemed by the ruling clan important enough to throw its weight behind the prosecution no matter what.   It definitely seemed like neither. The reasons behind this thesis seem to be relatively low-profile coverage and a lack of open, high-profile international support for the defendants; relatively easily obtained witness statements by former and current cabinet members and other senior civil servants (Bogdanchikov), some of whom clearly support the defendants; a lack of comments by any senior member of the current administration on the trial, and some other Soviet-style hints (interestingly, commentators have to rely on the classic methods of Leonid Brezhnev’s era of “body movement” reading to understand what is really going on behind the scenes). Thus I believe that the most likely interpretation of the significance of the current trial is that it is an attempt to “tie up the lose ends.” It seems that the neo-Politburo has lost any interest in the defendants and the trial, and it is the exclusive responsibility of the group that orchestrated the first trial not to allow any of the defendants any place on the 2012 Russian political landscape. As such it has no significance for Russia’s political future and is viewed as an unpleasant, chilly and smelly blast from the past. Alexandre Strokanov, Professor of History, Director of Institute of Russian Language, History and Culture, Lyndon State College, Lyndonville, VT: In my opinion the majority of Russian people today are absolutely indifferent toward Khodorkovsky’s fate and many (in the provinces in particular) will have a hard time even identifying him as something other than “that rich guy who went to prison several years ago.” Among those who are still paying attention to this story and his trial, only some will see him as a hero and a fighter for democracy in Russia. Actually many more people will regret that not as

many oligarchs followed in his footprints to prison and will reasonably criticize the selectiveness of the Russian justice system toward the tycoons and criminals who robbed the country in the 1990s. Certainly, Khodorkovsky’s fate is absolutely not critical to the state of Russian democracy, and his second trial, regardless of its result, has very little significance for the country in general. Neither will it have any influence on the modernization agenda or the future of president Medvedev. For Russia and for Russians Khodorkovsky, his era and his political ambitions are in the long gone past and unlikely to come back. At the same time, because it is often late in its reaction to changes on the Russian political scene and probably because of serious investments made earlier into Khodorkovsky’s political future, the West still believes that this “project” may bring some dividends. I have no doubt that the West shows much more interest in Khodorkovsky’s fate than Russia or the Russians. You can see it in the number and character of publications in the Western media, as well as in different types of appeals to the Kremlin. Today the Russian political scene, despite a serious lack of competitiveness among major parties, is quite dynamic, and the speed of change in Moscow exceeds, for example, the same speed in Washington, despite promises of change made by Barack Obama during his presidential campaign. In the middle of the 1990s the major challengers to the newly established post-Soviet Kremlin regime were the communists and the so-called “patriots.” Later the major challenge came from the elite who began their carreers in the Soviet era, although they broke their ideological ties with the past. They were led by then-Mayor of Moscow Yuri Luzhkov, former Prime Minister Evgeny Primakov and some regional leaders, like the presidents of Tatarstan and Bashkortostan who were capable of building an alternative to Boris Yeltsin’s regime in 1999. Khodorkovsky and several other oligarchs, like Boris Berezovsky and Vladimir Gusinsky, who live outside Russia today, came into the limelight after Putin took control of the Kremlin. They were potential challengers or just irritants and obstacles for the new regime, which enjoyed the widespread public support that Yeltsin obviously lacked. Putin turned against these oligarchs because they probably attempted to privatize the state in the same way they acquired their financial fortunes in the previous decade. Yeltsin had to rely on their support and money in exchange for even more lucrative pieces of the state pie that they demanded from him. For Putin, these former supporters of the predecessor’s regime were more of a ballast and liability than an asset, and it was better to get rid of them since they became an obstacle on his way of empowering the state. Their fate is well known. Today, all these challenges and irritants are in the deep past, but new challenges appear quickly. I was quite surprised that the Western media almost ignored the signs of the arrival of new challenges: Russian youth and ethnic radical nationalism that in my mind will be playing the dominant role as the major headache for the Kremlin and for the Russian elite in the foreseeable future. I read several articles online from CNN and MSNBC, as well as in some Western newspapers, and I was shocked at how shallow their analysis was, explaining the events on the

Manezh Square on December 11 as simple soccer fan riots and clashes with the police.  At this point I only wanted to say that the attention of the Russian people in the long term will be given much more to radical nationalism and the ability of the Medvedev-Putin tandem to handle it, than to whatever verdict will be made in Khodorkovsky’s case. This verdict is going to be announced now right before the New Year, when the Russian people will have much more pressing issues to worry about: how to spend their long winter holidays, what to cook and what to wear on New Year’s Eve. Vladimir Belaeff, Global Society Institute, Inc., San Francisco, CA: Russia’s political future will not be defined by the outcome of the second Khodorkovsky trial. Khodorkovsky’s supporters, The Economist a prominent one among them, seem to be trapped in their own hyperbole. From the start, for reasons that they cannot clearly explain, they have attempted to make a cause célèbre from what is a rather banal case: a billionaire wheeler-dealer caught in schemes and webs of his own making. And in this season of economies and lives wrecked by billionaire wheeler-dealers, of worker protests on the streets of Paris, London and Athens, of double-digit unemployment rates and of sovereign debt measured in trillions of dollars, popular sympathy will be scarce for a former billionaire who in the opinion of many remains today a very wealthy person. Preoccupation with “l’affaire Khodorkovsky” in reality has a limited audience, primarily in circles that have decided a priori that their hero is blameless. They have not provided a single item of real, objective, unambiguous evidence to support their belief. All their statements are innuendo and ad hominem commentary. It seems by the logic of these advocates that Khodorkovsky’s innocence is proven simply by the fact that a government prosecutes him which his advocates abhor. Looking globally, today there are tens of prominent executives, senior government officials and other business people being convicted of crimes similar to the ones ascribed to Khodorkovsky, and are serving prison terms much longer than the harshest sentence the latter can expect. No one advocates leniency for Bernard Madoff, for example, nor is the fate of U.S. politics tied to the imprisonment of this individual, or of the ex-CEO of Enron, or many other crooked American businessmen currently in prison. There is also the matter of Russia’s legal zeitgeist. There have been major, rather spectacular recent scandals in the prosecution of crimes and corruption in Russia. These judicial failures caused a notable adverse reaction in Russian public opinion. One is reminded of the high-resonance case in 2010 of a politically well-connected young woman in Irkutsk who committed vehicular manslaughter, killing a female pedestrian and crippling her sister. The guilty driver received a light sentence, deferred for 14 years on the pretext that she has to raise a child, not yet born at the time of sentencing. This ridiculous sentence caused widespread anger and was overturned. Similarly, in Moscow, major ethnic clashes were triggered by the prosecutorial release of a suspect in a killing motivated by inter-ethnic hatred. 

In this atmosphere any leniency in the sentencing of a billionaire tax evader will further erode the public’s expectation of a justice system that is direct and punitive. Russia’s jurisprudence must demonstrate that it is consistent and equitable for all citizens – any appearance of favor toward a rich convict will not help to increase respect for law and justice among Russians. So the logic of the situation indicates a maximum stipulated sentence for Khodorkovsky in his second trial. There is another, ironic aspect to this whole affair. From a marketing perspective, Khodorkovsky’s advocates packaged their “product” in a format guaranteed to fail. Glamorous images of a buff younger man, smugly smiling in the courtroom dock, oozing an attitude suitable for an American glossy magazine, do not evoke sympathy in people who have a healthy disdain for the nouveaux-riches of the 21st century. Very stupid marketing

Prominent Muslim leader disagrees that Islam being suppressed in Russiahttp://www.interfax-religion.com/?act=news&div=8032

Moscow, December 20, Interfax - Talgat Tajuddin, the chairman of the Central Religious Muslim Board, categorically disagrees with remarks by Ravil Gainutdin, the head of the Council of Muftis of Russia, that Islam is being suppressed in Russia.

"It is stupid and blasphemous to talk about suppression of Islam in Russia. What Gainutdin has said is just untrue," Tajuddin told journalists.

"I have chaired the Central Religious Muslim Board for more than 30 years and can say how everything has changed in the past years. We, the Muslims of Russia, had only 94 mosques, and there were about 300 mosques in the entire USSR. Now there are more than 7,500 mosques here. This means more than seventy-fold growth. There used to be 16 mosques and there are 1,016 of them now in Bashkortostan alone. There were 15 mosques in Tatarstan and there are 1,300 now. What can you talk about here?" Tajuddin told journalists.

There are seven Islamic universities and dozens of madrasahs in Russia. Each mosque has a Sunday school teaching traditional Islam. With support from the presidential secretariat, the Fund in Support for Islamic Culture, Science, and Education has been set up, which provides enormous assistance to Muslims, Tajuddin said.

"By the way, the leader of one of them is [Alexey] Grishin mentioned by Gainutdin. He has been called an Islamophobe. I wish there were more such Islamophobes," he said. "Gainutdin has never had a monopoly to speak on behalf of all Muslims in Russia. He often travels abroad and tries to speak on behalf of all of our Muslims, although he heads only a small amount of communities," he said.

"Russia currently needs peace so much as never before. It is unacceptable to rock the boat in which the Most High has gathered us all. This is a sin and a crime in line with the law and the Sharia rule," he added.

All religious leaders bear huge responsibility for peace and order between peoples and adherents to this country's traditional religions, Tajuddin said. "These internal problems can be solved at home through dialogue and communication. The global community, especially the Muslim community, has enough of its own problems. Therefore, it is shallow and indecent to appeal to the global and Islamic community to resolve our internal problems," he said.

It was reported earlier that Gainutdin accused the state of thwarting the unification of Muslims and attempts to "suppress Islam in Russia," and called the members of a recently formed the All-Russian Muslim Board "puppets" and "sleazy people."

"In 2009, during the Kurban-Bairam (Eid al-Adha) mufti Talgat Tajuddin suggested a merger of three centralized Muslim organizations. After this proposal was studied, head of the Caucasus Muslims Berdiyev and I held a meeting with Talgat Tajuddin. We set up a working group and started the work of unification. However, the state did not like this decision. It was made known that the opinion of Tagat Tajuddin's proposal was not consistent with the state policy," Gainutdin said in an interview with the Tatar edition of Radio Liberty.

Ravil Gainutdin's criticisms against the state were also prompted by the recent formation of the fourth All-Russian Muslim Board - the Russian Association of Islamic Accord, aimed in particular to oppose the unification process.

"The newly made 'pocket' muftis, opposing the growth of Islam will become strident "puppets." These puppets who are working in the government, such as Islamophobe Grishin [Russian Presidential Administration Advisor in charge of liaisons with Islamic organizations], for instance, will no doubt try to suppress Islam in Russia, particularly being aware that currently Islam in Russia is a big factor, and focusing specifically on this will attempt to stop the growth of Islam. This has already started to materialize," Gainutdin said.

Commenting on the recent riots in Moscow motivated by ethnic animosity, Gainutdin said that a very strong pressure is being felt in the capital where more than 2 million Muslims live.

""Due to the lack of mosques Muslims have to perform festive prayers on the street, on tram rails, even at church courtyards. Thus, the humiliation of Muslims, the discriminating policy against civil rights continues. All Muslims, the whole Islamic world can see that," the Mufti said.

"The unrest in St. Petersburg, Moscow was prompted by attitudes towards Islam. One might say that the disaster as a result of which so many people ended up in hospitals, and the violent clashes were the result of efforts to belittle the role of Muslims in Russia," Gainutdin said.

Jewish religious leader accuses top mufti of besmirching Russia's "native population"http://www.interfax-religion.com/?act=news&div=8031

Moscow, December 20, Interfax - The head of a Russian Jewish association accused one of Russia's top Muslim clerics of making offensive statements about Russia's "native population."

"The negative statements by mufti [Ravil] Gainutdin about the native population of Russia, which is forever drinking, and 'hard-working migrants' are, of course, unfair. We resolutely reject this. All nations have different kinds of people in them but one must by no means make any generalizations," rabbi Zinovy Kogan, chairman of the Congress of Jewish Religious Organizations and Communities in Russia, told reporters.

"Today secular and religious leaders must be extremely careful in their formulations if they may damage ethnic peace in light of the latest events on Manezhnaya Square," Kogan said in reference to a violent riot on the square, which lies next to the Kremlin, on December 11.

"In the Interreligious Council of Russia and at bilateral level, we have very good, productive relations with the Muslims," he said.

On Thursday head of the Russian Council of Muftis Ravil Gainutdin argued at an Interreligious Council meeting that it is essential for Russia to have migrants, most of whom come from other parts of the former Soviet Union, mainly Central Asia, Azerbaijan and Armenia, and are often targeted in racist attacks.

"Today Russian villages are falling apart or disappearing. One must not blame the migrants - they are in effect our slaves, they come here to work for us. We must work ourselves and create wealth for our country," Gainutdin said.

"For 20 years we have raised a generation that doesn't like to work but likes to watch porno, drink alcohol, take drugs, hang out in clubs - none of them will go out into the field to sow or to harvest," he said.

"The nationalists who are insisting that all migrants, all those who are 'not our own people,' be driven out of Russia have started the job of ruining the Russian Federation," Gainutdin said.

Russia still “El Dorado” for illegal immigrantshttp://rt.com/news/russia-illegal-immigrants-life/print/

Published: 20 December, 2010, 10:00Edited: 20 December, 2010, 10:14

For many people in poor countries, especially Central Asian states, Russia is a land of opportunity. Millions of migrants flock in every year, in search of greener pastures. But many are forced to work illegally and their life is far from perfect.

The Russian Federal Migration Service comes knocking on the door at four o'clock in the morning.

Officers say they arrive at this early hour before the immigrants leave for work, which usually happens around 6am.

“Such raids are conducted in order to find illegal immigrants. Usually, we have about seven or eight such raids a month,” says Officer Aleksandr Kholodov from the Federal Migration Service.

Vietnamese 22-year-old Wu Wan Wy is one of those who the Federal Migration Service found without permission to work in the country.

“I don't have documents, I don't know Russian laws. I've been in Russia for about a year, and I don't understand the rules and customs of the country,” Wu Wan Wy says.

Wu is one of a dozen immigrants who were apprehended during the raid. But officials say there are millions more undetected in Russia.

“Currently, there are about five million foreign citizens working in the Russian Federation. A fifth of them work legally, the vast majority: illegally,” says Konstantin Romodanovsky, head of the Federal Migration Service.

So, why do Vietnamese, Chinese, and many from other Asian countries continue to flock to Russia?

“Although they get paid a lot less than native workers would be paid for the same job, it's still a lot more than they would've earned back home,” says economist Anatoly Vishnevsky. “Migrant workers are a very valuable resource for all countries with developed economies, as they do all the hard, low-paid jobs that no one in the country wants to do.”

Russia has the second-largest number of immigrants in the world after the US, and with plenty of jobs in industries such as construction and retail, the flow of migrant workers does not show any signs of drying up, even if the hours are long and the living conditions cramped.

Schoolboys stopped - but Russian nationalists say they are biding their timehttp://themoscownews.com/society/20101220/188292611.html?referfrommn

by Andy Potts at 20/12/2010 11:06

Schoolboy protestors were easily controlled by police at the weekend, but there are fears that the youngsters are being used as guinea pigs to test the authorities tactics during the current stand-off.

With Moscow’s police on heightened alert after riots on Dec. 11, and further clashes during the week, Saturday saw almost 1200 detentions across Moscow.

But according to a nationalist website the failure of the Ostankino rally, where more than 100 people were arrested, most of them minors, was merely a trial run.

And Kommersant quoted one of the demonstrators saying: “Everyone ran away because it was just a group of kids acting on their own.

“The adults are waiting for the moment when they see how the government is responding; the teenagers are eager to fight for themselves even if they don’t really understand why,” said one of the coordinators, said to be a student in Moscow.

A Moscow police spokesman acknowledged that many of those detained in Ostankino park were “boys and girls in eighth to tenth grade”, and added that they were collected by their parents from the police station.

Back to Manezhnaya

Around Manezhnaya, the epicentre of the rioting from the previous week, police were also clamping down on anyone who looked suspicious – whether nationalist or Caucasian.

But the enhanced presence hasn’t stopped nationalists plotting a repeat of the Dec. 11 violence.

A planned gathering under the slogan “Screw the Caucasus” is scheduled for 3 pm on Dec. 25.

And the website organising the rally insists that it will be more successful than the previous attempt because it will attract “more people who are calling for the abolition of censorship”.

Around Russia

Disturbances were not limited to Moscow, with more than 800 people detained at protests in the Moscow Region towns of Chekhov, Ramenskoye, Voskresensk and Pushkin.

In Samara about 100 youngsters were detained after attempting to stage a riot, while about a third of the 200 people arrested in Volgograd turned out to be high school students, Kommersant reported.

Localised violence

While the threat of major disturbances was prevented, with police using the same tactics which largely calmed Moscow on Wednesday evening, there was still isolated violence.

In south-east Moscow a 17-year-old newcomer from Central Asia was hospitalised with stab wounds to the chest, face, hands and feet, Interfax reported.

Before surgery he told the police that he was attacked by a group of young men who rushed him with cries of “Russia for Russians”.

And a Chechen resident, aged 19, was arrested outside Kievsky Railway Station after he attacked a policeman.

He was stopped and searched, and struck out at a female police major after officers attempted to confiscate his traumatic pistol.

Nashi and nationalists

Levon Arzoumanyan, a Nashi activist in the Sochi branch, has been identified by bloggers as one of the participants of Wednesday’s unrest – which some have claimed was staged by the government to boost the police’s reputation after the Manezhnaya riots.

Nezavisimaya Gazeta reported that the pro-Kremlin youth activist had even posted a photo of himself being led away by riot police on his own social network page.

Ironically for a supporter of a march calling for “Russia for Russians”, Arzoumanyan has an Armenian surname.

Earlier another Nashi activist, Tambov’s Nikolai Makarov, was identified as a participant in the disturbances but he later denied this on his Facebook page.

Russia’s far righthttp://www.ft.com/cms/s/0/d0506502-0b99-11e0-a313-00144feabdc0.html#axzz18dETVl3s

Published: December 19 2010 19:04 | Last updated: December 19 2010 19:04

Large, violent protests in Moscow are rare. So the sight of 6,000 ultranationalists this month close to the Kremlin walls, wielding knives and iron bars, shouting racist slogans and lashing out at non-white passers-by, was alarming. The spark for the biggest single outbreak of ethnic violence in the capital for 20 years was the shooting of a Russian football fan in a fight between Muscovites and migrants from Russia’s northern Caucasus. Or, more accurately, it was the temporary release of the suspected killers, by police who may have been bribed. But it was also a show of strength by a Russian far right movement that experts estimate may number up to 70,000.

The Kremlin itself must share the blame for the fact that it now faces such a sizeable core of ultranationalists. The Russian leadership, under Vladimir Putin, has long flirted with chauvinism and xenophobia. Putinism itself is built around soft nationalism. Mr Putin rode to power on the back of the second war against the separatist republic of Chechnya in 1999. The narrative of his decade as Russia’s pre-eminent political figure has been of Russia scrambling back to its feet after the humiliations of the 1990s, surrounded by hostile external forces determined to stop it from doing so.

The authorities have also shown a dangerous tolerance for far right groups. The motive seems to have been in part to use such groups as a safety valve, and in part an attempt to control them – turning a blind eye to their violence towards immigrants, provided they steer clear of politics.

Allowing such extremist groups, rather visibly, to exist, is hazardous. Russian society, for all its many attributes, has a propensity for racism. There is also the risk of losing control. The Moscow riot was a warning signal that that point may be close.

Mr Putin’s call last week for “tougher measures” against extremists was overdue – provided these are used against far right groups and not against all opposition. The Kremlin should cease, too, using nationalism as a means of political consolidation. The riots show Moscow needs to make developing coherent policies towards the many peoples that make up what Mr Putin called “multinational, multi-confessional Russia” as much a priority as economic development and political institution-building. Outside Chechnya, Russia avoided Yugoslav-style conflict after the Soviet collapse. But, with the economy stagnating, nationalism is a dangerous genie to let out of the bottle.

WIKILEAKS

US embassy cables: Tip-off in Portugal claims former Russian general is trying to sell 'uranium plates'

http://www.guardian.co.uk/world/us-embassy-cables-documents/163602guardian.co.uk, Sunday 19 December 2010 21.30 GMT

Reign of “Europe's last dictator” not about to end at 16 yearshttp://rt.com/news/belarus-votes-lukashenko-opposition/print/

Published: 20 December, 2010, 08:31Edited: 20 December, 2010, 11:54The counting of ballots has been completed in Belarus, with preliminary results showing Aleksandr Lukashenko receiving almost 80 per cent of the votes in Sunday's election, which guarantees him yet another presidential term.

The highest-ranking opposition competitor received less than three per cent of the votes. Six per cent were cast for the “against all” ballot option.

With the turnout exceeding 90 per cent, the Central Election Commission has pronounced the election valid.

It is the fourth consecutive victory for Lukashenko as president, after 16 years in power.

Thousands protest in Belarusian capital

On Sunday evening, thousands of opposition supporters flocked to the streets the Belarusian capital to protest the results of the election which they claimed was rigged.

Despite the efforts of the riot police to disperse the unsanctioned rally, Oktyabrskaya Square in the centre of Minsk was quickly flooded by people.

Later, the demonstrators managed to break the cordon, reaching the Government building. They smashed windows and attempted to break in, demanding that a second round of the election be held.

In an attempt to stop the protesters, riot police used stun grenades and batons. As a result, several opposition supporters and one of the opposition candidates were injured.

Vladimir Neklyaev was rushed to the hospital with a head wound.

With police not clearly distinguishing between protesters, passers-by and members of the media, several journalists did not manage to escape unscathed.

Among those injured were two of RT’s cameramen, who were hit with police batons.

Belarusian authorities reported that several policemen were also injured in the clashes.

Despite more than a hundred protesters being detained, including most of the opposition candidates, people vowed to continue their rally on Monday evening.

Aleksandr Lukashenko dubbed the opposition thoughtless

While this election saw the Belarusian opposition receiving an unusual degree of freedom to campaign, many opposition activists still believed Lukashenko is sure to win the election.

Some skeptics say that granting more freedom to the opposition is just a ploy by President Lukashenko to receive financing from the European Union: billions of euros have been promised to Belarus, should they conduct a fair and democratic election, along with signs of democratic changes in the country.

During a recent visit to Moscow, Lukashenko said Minsk might see some political change, but no change in power, indicating his determination to keep hold of the presidential post.

Kirill Koktysh, a political analyst from Russia's State University of International Relations, said the opposition may well protest against the results of the election, but none of the opposition candidates offered solutions to problems that were any different than those suggested byLukashenko.

“The problem is that the opposition produced no alternative program on how to deal with the economic problems, how to deal with the current economic crisis. Actually the program of the opposition candidates can be explained as, ‘I will be able to do what Lukashenko’s doing’, but without Lukashenko, that’s not very convincing,” he said.

Lukashenko also voted, thanking his rivals for increasing his chances of winning this election.

"Frankly speaking, the opposition also played into my hands.I thank them very, very much for their thoughtless speeches and thoughtless canvassing," he said on Sunday, talking to international monitors at a polling station in Minsk, Interfax news agency reports.

He also noted that Belarus is not going to seek international recognition of its presidential election.

"We are not going to crawl towards any international recognition," said Lukashenko "There is no need to set conditions for us all the time, we will sort everything out ourselves."

Who supports Lukashenko?

The lowest voter turnout has been registered in Minsk, where the opposition’s support is quite strong.

Political expert Anton Bespalov told RT he believes the success of Aleksandr Lukashenko is due to the support from voters, such as elderly people and the working class.

“Those who don’t want to vote for him simply don’t go to polls,” he said. “It’s [a] Belarus-type election, where the Western standards of fairness and freedom are not quite applicable, but it shows that Lukashenko is still supported by the majority of [the] population.”

Belarusian elections spill into violencehttp://themoscownews.com/politics/20101220/188292890.html?referfrommn

by Tom Washington at 20/12/2010 11:32

 Alexander Lukashenko may be back in his office for a fourth term, but mass demonstrations that gripped Minsk on Sunday have taken the shine off winning 79.67 per cent of the vote.

Thousands of demonstrators gathered in Minsk to protest what they said were fake elections, to be met with brutal reprisals by Belarusian security forces.

“Many people were beaten, you saw them with blood on their faces, lots of them were hospitalised,” Alexander Astroshcahnkov, opposition group Charter 97 press secretary, told The Moscow News.

Winds of Change

The landslide win was at least in part due to electoral fraud, Astroshchankov claims, and the widespread unrest is a sign that Lukashenko’s time is running out. “It showed that he is not a leader who is respected….he is like an African dictator,” he said by telephone.

Lukashenko’s nearest rival Andrei Sannikov, leader of Charter 97, won a mere 2.56 per cent of the vote, RIA Novosti reported. Exit polls suggested he would win 6 per cent, AFP reported.

Sannikov and his wife Irina Khalip were arrested as she was speaking to Ekho Moskvy, for their parts in the demonstrations.

“This was a violent action against people who were demanding a re-run of the election,” Astroshchankov said. “Not only opposition candidates but ordinary people gathered about 2 million signatures, and some of these people have been brutally beaten.”

Russia looks on

Minsk’s relationship with Moscow has deteriorated under Lukashenko’s tenure, something that Sannikov was keen to correct.

“There is something going wrong with the relationship between Russia and Lukashenko,” Sannikov told The Moscow News earlier this year. “There is a conflict and it is significant for the people of Belarus, who would like to have a decent economic situation,” he said.

“During his campaign [Sannikov] has said that Russia pretty well understands that Lukashenko is not a reliable partner for Russia…Everyone wants to have a good relationship with Russia,” Astroshchankov said.

National Economic Trends

Russian banks' correspondent accounts down to 600.6 bln rbls, deposit accounts up to 352.3 bln rbls-cbankhttp://en.rian.ru/business/20101220/161851562.html

09:47 20/12/2010

Russian banks' balances on correspondent accounts with the central bank fell to 600.6 billion rubles at the start of the business day on Monday from 634.9 billion rubles on Friday, while deposit accounts went up to 352.3 billion rubles from 296.9 billion rubles.

Credit institutions' balances on correspondent accounts in the Moscow region fell to 409.3 billion rubles from 432.8 billion rubles, the central bank said.

The balances of commercial banks on correspondent accounts with the central bank are intended for current transactions in the economy and are used as freely available deposits at the central bank. Their sufficient level allows commercial banks to carry out transactions within an acceptable timeframe and with acceptable risks.

The central bank takes the funds of credit institutions on deposit to regulate banking liquidity.

MOSCOW, December 20 (RIA Novosti)

Kudrin Sees Deficit at 4.3% http://www.themoscowtimes.com/business/article/kudrin-sees-deficit-at-43/427169.html

20 December 2010

Finance Minister Alexei Kudrin said Friday that the country’s 2010 budget deficit might be about 4.3 percent of gross domestic product, RIA-Novosti reported, citing a meeting with Prime Minister Vladimir Putin.

Kudrin said the Economic Development Ministry’s forecast of a deficit of 3.5 percent for this year was “a mistake,” the report said. (Bloomberg)

Finance Ministry's budget deficit forecast differs from Economy Ministry's

http://www.rbcnews.com/free/20101220112053.shtml

      RBC, 20.12.2010, Moscow 11:20:53.Russia's federal budget deficit is expected to reach 4.3 percent of GDP in 2010, Deputy Prime Minister and Finance Minister Alexei Kudrin announced during a working meeting with Russian Prime Minister Vladimir Putin on Saturday. According to the government's press office, the increase in additional revenue will allow for a reduction in the deficit from the Finance Ministry's last forecast of 4.6 percent of GDP to 4.3 percent. "At the same time, however, it will still be high," Kudrin stated.

      The minister believes that the Economic Development Ministry's more favorable forecast of 3.5-3.8 percent of GDP is erroneous. "We even thought that the deficit might reach 5.3 percent. Considering the rise in additional revenue, the final figure will be closer to 5 percent, but since the ministries and other official bodies are expected to demonstrate certain savings worth around RUB 180bn (approx. USD 5.87bn), our estimate is 4.3 percent of GDP," Kudrin explained. He also noted that additional budget revenue is estimated at RUB 225bn (approx. USD 7.34bn).

      Putin, in turn, indicated that only time would show which ministry's forecast is accurate.

Russia: grain selling from the intervention fund to stabilize grains market situationhttp://www.agrimarket.info/showart.php?id=102157 12/20/2010 10:00

While commenting the announcement of Vladimir Putin about selling of 1.3 mln tonnes of grains from the public intervention fund, Elena Skrynnik, the Minister of Agriculture of the Russian Federation, noted that it is the first stage, which will allow to stabilize the situation on the grain market. According to data of the center SovEcon, at the beginning of December 3-grade wheat cost totaled 6.9 thsd RUR/t, 4-grade wheat – 6.6 thsd RUR/t, 5-grade wheat – 6.3 thsd RUR/t. Milling rye price totaled 6.2 thsd RUR/t, feed barley – about 8 thsd RUR/t.

E.Skrynnik added that grain interventions will include feed grains distribution from the problem and bankrupted elevators. It is about 178 thsd tonnes. United Grain Company and the Russian Agricultural Bank (Rosselhozbank) are worried about the certain volumes saving from the Government grain stocks. According to their estimation, it is necessary to announce for selling of about 300 thsd tonnes of grains.

Meanwhile, the market is waiting for the beginning of the full-scale grain interventions. Previously, the authorities used to talk about selling of 3 mln tonnes of grains from the Government Fund.

On December 16, Vladimir Putin, the Prime-Minister, stated about signing of the agreement about selling of 1.3 mln tonnes of grains from the Intervention Fund. Milling grains will be sent to Moscow, St.Petersburg, Moscow and Leningrad oblasts, and feed grains - to the regions, needed for cattle-breeding development. When grain selling begins, and at what price is still not defined.

To date, the Government Fund stocks 9.6 mln tonnes of grains of 2005, 2008 and 2009 crops at the price level of 44.5 bln RUR. 466 enterprises and 56 regions of Russia stock the reporting grain volumes.

Business, Energy or Environmental regulations or discussions

KamAZ, VimpelCom, VTB: Russian Equity Market Previewhttp://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aO2G7jNP5ctU

By Lyubov Pronina

Dec. 20 (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 30-stock Micex Index rose 0.4 percent to 1,666.84. The dollar-denominated RTS Index was little changed at 1,743.87.

OAO KamAZ (KMAZ RX): Russia’s largest truckmaker that is partly owned by Daimler AG’s, signed a memorandum of understanding on a 50 million-euro ($66 million) axle-production partnership in Russia. KamAZ shares were little changed at 72.69 rubles.

VimpelCom Ltd. (VIP US): Russia’s second-biggest mobile network operator may struggle to get shareholder approval of a merger with Weather Investments SpA, the Financial Times said, citing unidentified people familiar with the matter.

VimpelCom’s board is due to meet in Amsterdam on Dec. 28 to approve the deal and some shareholders said the company may be overpaying for Weather’s assets, the newspaper said. VimpelCom shares added 1.9 percent to $14.84 in New York.

VTB Group (VTBR RX): Societe Generale SA isn’t planning to boost its holding in Russian unit Rosbank by buying VTB Capital’s 19.3 percent stake, the French lender said in an e- mailed statement. VTB Capital is VTB Group’s investment banking unit. VTB, the country’s second-largest bank, gained 0.67 percent to 10.34 kopeks in Moscow.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net

Last Updated: December 20, 2010 00:00 EST

Rusal may sell Norilsk stake for $12-15 billion: reporthttp://www.reuters.com/article/idUSTRE6BJ0UO20101220

1:19am EST

MOSCOW (Reuters) - The world's top aluminum producer UC RUSAL (0486.HK: Quote, Profile, Research, Stock Buzz) will eventually sell a blocking stake in Russia's metal giant Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz) for $12 billion to $15 billion, Rusal's co-owner told Vedomosti daily.

"They will agree on the price between $12 billion and $15 billion, I think," Mikhail Prokhorov, Russia's tycoon and the head of Onexim group, told the business daily in an interview, published on Monday.

Earlier in December Norilsk Nickel said it had offered UC RUSAL $12 billion for its 25 percent stake in Norilsk.

UC RUSAL, majority owned by tycoon Oleg Deripaska, has repeatedly said the stake was not for sale.

(Writing by Andrey Ostroukh; Editing by Jon Loades-Carter)

Uralkali Agrees to Buy Silvinit for Shares, $1.4 Billion Cash http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a7mGBl2uKiEM

By Ilya Khrennikov

Dec. 20 (Bloomberg) -- OAO Uralkali, Russia’s largest potash producer by market value, agreed to acquire domestic rival OAO Silvinit for cash and shares to form the world’s largest maker of the crop nutrient after Canada’s Potash Corp. of Saskatchewan, Uralkali said in a regulatory filing today.

The deal includes about $1.4 billion in cash.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

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

Last Updated: December 20, 2010 02:35 EST

Uralkali to merge with Silvinit, via $1.4 bln first stage dealhttp://en.rian.ru/business/20101220/161853116.html

11:13 20/12/2010

Uralkali, one of Russia's leading fertilizer producers, will merge with Silvinit, the country's top potash fertilizer producer, buying 20% of the company for $1.4 billion in the first stage of the merger, Uralkali said on Monday.

Shareholders will discuss the merger at a meeting on February 4, following approval of the deal by the board of directors, Uralkali said.

MOSCOW, December 20 (RIA Novosti)

Russia Silvinit shares fall 9 pct on Uralkali dealhttp://www.reuters.com/article/idUSLDE6BJ0AY20101220

2:58am EST

MOSCOW, Dec 20 (Reuters) - Shares of Silvinit (SILV.MM: Quote, Profile, Research, Stock Buzz), Russia's largest potash producer, fell by over 9 percent during early trade on Monday after its peer, Uralkali (URKA.MM: Quote, Profile, Research, Stock Buzz), said it offered to buy the firm for $1.4 billion. [ID:nWLA1349]

On Friday, Silvinit's shares rose by 13.72 percent on the news of the forthcoming deal. [ID:nLDE6BG0C7] (Reporting by Vladimir Soldatkin; editing by Andrey Ostroukh)

Potash giants merger points to FTSE 100 listinghttp://www.telegraph.co.uk/finance/newsbysector/industry/mining/8212820/Potash-giants-merger-points-to-FTSE-100-listing.html

The £17bn merger of Uralkhi and Silvinit will be announced on Monday – creating the world's second biggest potash producer and paving the way for a FTSE 100 listing. By Helia Ebrahimi, Senior City Correspondent 6:15AM GMT 20 Dec 2010

Uralkali, which already has a London and Moscow listing, will allow the combined group to re-list with an expanded presence on the London Stock Exchange.

A clutch of Russian oligarchs headed by industrial billionaire Suleiman Kerimov will own most of the new company, to be renamed Uralkali.

Mr Kerimov, who also owns stakes in Royal Bank of Scotland and Fortis, sold nearly all his Russian assets, including shares in Gazprom, government-owned Sberbank and a massive housing development in suburban Moscow prior to Russia's 2008 financial meltdown.

The Russian tycoon is understood to have embarked on a bid to build a national mining champion. In June he bought a stake in Uralkali while three businessmen close to him bought a stake in rival Silvinit with the aim of merging the two.

The 44-year-old Mr Kerimov, who also has a 37pc stake in Polyus Gold, has been viewed as a potential dealmaker in the long-running feud between Vladimir Potanin and Oleg Deripaska over Norilsk Nickel. Some insiders suggest the two groups could merge.

The enlarged Urakali will become a powerful rival to Canada's Potash Corporation of Saskatchewan, which recently fought off a £24bn takoever bid from BHP Billiton.

Demand for potash is driven by a world food system that is under unprecedented strain.

The growing global population and limited food stocks have made Potash an increasingly sought after commodity.

UPDATE 1-Vimpelcom shareholder Telenor not backing Weather dealhttp://af.reuters.com/article/egyptNews/idAFLDE6BJ0A820101220

Mon Dec 20, 2010 7:45am GMT

* Telenor says does not intend to support deal

* Vimpelcom board meeting on $6.6 billion deal Tuesday

(Adds detail, background)

MOSCOW, Dec 20 (Reuters) - Vimpelcom's (VIP.N) Norwegian shareholder Telenor (TEL.OL) said it would not back the Russian mobile phone group's $6.6 billion bid for Weather Investments citing available information and "recent developments".

"We do not believe this transaction makes strategic or financial sense for Vimpelcom's shareholders," the company said in a Monday statement.

Telenor holds a 36 percent voting right in Vimpelcom.

Vimpelcom and its other major shareholder Altimo were not immediately available for comment.

Vimpelcom's board is due to discuss the transaction at a board meeting on Tuesday.

Vimpelcom said earlier this year it wanted to buy Weather -- which includes control of Egypt's Orascom Telecom (ORTE.CA) and Italy's Wind from Egyptian tycoon Naguib Sawiris.

(Reporting by John Bowker, Editing by Maria Kiselyova)

BNP Leads Biggest Lending Push in Two Years as Rates Tumble: Russia Credithttp://www.bloomberg.com/news/2010-12-19/bnp-leads-biggest-lending-push-in-two-years-as-rates-tumble-russia-credit.html

By Karen Eeuwens and Denis Maternovsky - Dec 19, 2010 10:00 PM GMT+0100International banks led by BNP Paribas SA are lending the most in Russia since 2008, turning to companies in the world’s biggest energy exporting economy for higher returns as loan rates tumble in Europe.Russian companies borrowed $10.1 billion this month, taking the total this year to $39.6 billion, more than twice the amount in 2009, according to data compiled by Bloomberg. OAO Sberbank borrowed $2 billion last week in the largest syndicated loan for a Russian bank, paying annual interest at 150 basis points, or 1.5 percentage point, over the London interbank offered rate for three years. The rate compares with margins of at least 250 basis points for three-year loans provided to state-owned lenders Vnesheconombank and OAO Gazprombank this year.

Banks outside of Russia are looking east as improved corporate profits drives loan rates in western Europe to as little as 12.5 basis points over benchmark interbank rates for Nestle SA, the Vevey, Switzerland-based food manufacturer. Lenders are stepping up credit to Russia as a 21 percent gain in oil prices in the past four months boosts confidence in the economy’s recovery.

“The market is wide open for top quality Russian names,” said Mark Waters, the London-based head of loan syndication to energy and commodity companies at BNP Paribas. The Paris-based bank overtook Credit Agricole CIB as the biggest lender to Russia and the former Soviet Union this year, data compiled by Bloomberg show. “We’re still seeing pricing levels that are attractive to lenders” in Russia, he said.Syndicated loans to Russian companies climbed 140 percent from $16.7 billion last year. The market exceeded the equivalent of $28 billion raised from domestic bonds, a turnaround from last year when local debt was the bigger market.

Reduced Interest

“Issuers are adding loans to balance and optimize investor demand,” Herbert Moos, deputy chairman of VTB Group, Russia’s second-biggest lender, said by e-mail.Banks competing to lend in Russia have reduced the average interest margin by 19 percent to 350 basis points from 432 last year, data compiled by Bloomberg show. The decline in western Europe has been steeper at 37 percent, taking the average for loans to investment-grade borrowers to 109.3 basis points, the lowest since 2007, the data show.

Gains in Russian government dollar bonds due in 2020 pushed the yield 7 basis points lower to 5.086 percent on Dec. 17. The country’s ruble notes due August 2016 were little changed, leaving the yield at 7.58 percent.

Extra Yield

The extra yield that investors demand over U.S. Treasuries to hold Russian debt, rated Baa1 by Moody’s Investors Service, rose 8 basis points to 209, according to JPMorgan Chase & Co.’s EMBI+ Indexes. The difference compares with 147 for debt of similarly rated Mexico and 188 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

The yield spread on Russian bonds is 43 basis points below the average for emerging markets, near the smallest difference since September 2009 and down from a 15-month high of 105 in February, according to JPMorgan Indexes.The cost of protecting Russian debt against non-payment for five years using credit-default swaps was little changed at 142, down from this year’s peak of 217, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Credit-default swaps for Russia cost 10 basis points more than contracts for Turkey, which is rated four levels lower at Ba2. Russia swaps cost as much as 40 basis points less on April 20.Deal ‘Pipeline’

The ruble climbed less than 0.1 percent to 30.6890 per dollar, bringing its weekly increase to 0.8 percent. Non- deliverable forwards, or NDFs, which provide a guide to expectations of currency movements and interest rate differentials and allow companies to hedge against currency movements, show the ruble at 31.0600 per dollar in three months.

Borrowing costs in Russia are still higher than two years ago, when Sberbank, the country’s biggest lender, got a three- year loan paying interest 85 basis points above Libor, data compiled by Bloomberg show. Libor was WHAT on DEC 17

“There is good space for Russian top companies and banks to lower their borrowing costs, as banks return more heavily to emerging-market lending,” said Luis Costa, an emerging market credit strategist at Citigroup Inc. in London. “Russian borrowers are back in the pipeline even more than Latin American and Asian companies.”Sberbank may borrow from the syndicated loan market again next year, as well as issue Eurobonds “depending on market conditions,” Deputy Chief Executive Officer Bella Zlatkis told reporters in Moscow on Dec. 17. Sberbank’s loan was quoted at 98.75 percent of face value on Dec. 17, according to WestLB AG prices.Rusal Restructuring

United Co. Rusal, the world’s biggest aluminum producer, plans to begin discussions with banks early next year for $5 billion of new borrowing, including loans to refinance existing debt, Deputy Chief Executive Officer Oleg Mukhamedshin said in an interview in London on Dec. 1.

The Moscow-based company renegotiated $17 billion of loans to foreign and Russian lenders last year in the country’s biggest corporate restructuring.Banks reduced the interest Rusal pays over Libor to 450 basis points in September, from 550 in June and 700 in December 2009. The company expects to cut borrowing costs further next year, Mukhamedshin said.

The increase in Russian borrowing contrasts with other emerging markets in Europe, the Middle East and Africa, where lending declined 43 percent this year to $282 billion, data compiled by Bloomberg.

Russia’s economy is recovering from a 7.9 percent contraction last year, the country’s worst slump since the Soviet Union collapsed two decades ago. The government expects 3.8 percent growth in 2010 and 4.2 percent next year, compared with official forecasts of about 1.4 percent growth in the Eurozone.“We’ve seen a lot of banks move back into Russia,” said John Starling, a director for HSBC Holdings Plc’s loan syndicate in London.To contact the reporters on this story: Karen Eeuwens in London keeuwens@bloomberg.net;Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net.To contact the editors responsible for this story: Faris Khan at fkhan33@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net.

SuperJet Loses Alitalia http://www.themoscowtimes.com/business/article/superjet-loses-alitalia/427162.html

20 December 2010Reuters

ROME — Italian airline Alitalia has decided to drop Russian plane maker Sukhoi for a possible $500 million regional jet order, saying Friday that it could wait no longer for Sukhoi's delayed new Superjet 100 and would opt for planes from Brazil's Embraer instead.

The Superjet 100 is Russia's first newly designed passenger aircraft since the fall of the Soviet Union and is being developed and marketed with strong involvement from Italy, amid increasingly warm ties between the countries.

But flag carrier Alitalia, recently rescued by Italian investors at Prime Minister Silvio Berlusconi's insistence, said Friday that it could not afford to wait for the plane despite naming it as its first choice for a purchase of 20 planes.

"We would have preferred that option precisely because of the involvement of an Italian company and so we delayed our choice by six to 12 months," chief executive Rocco Sabelli told reporters. "But the fundamental problem is that as of today, Sukhoi has not taken to the skies."

The Superjet is designed to challenge Embraer and Canada's Bombardier in the market for regional jets and has the backing of Prime Minister Vladimir Putin.

The Russian plane made its maiden flight in 2008 but has not yet received full European safety certification, which is a necessary condition for selling it to Western airlines.

Alenia Aeronautica, a unit of Italian group Finmeccanica, holds a 25 percent stake in the Sukhoi project to build a 75- to 95-seat airliner with Western avionics and also owns 51 percent of a Venice-based marketing arm called Superjet International set up to export the plane.

French aerospace firms Thales and Safran are key suppliers on the project.

Sabelli said Alitalia was worried about making sure "it did not fall to us to launch a new airliner."

He added: "We couldn't procrastinate any longer on the choice, and it seemed to us that the airliner that has yet to fly was not compatible with our timeline."

But the decision looked set to trigger an internal dispute within Italy as the decision left Alenia fuming about the move.

A source close to Alenia said the company was "particularly surprised" by Alitalia's choice, saying the Superjet's schedule was compatible with requirements and the offer was more competitive.

Alenia "does not understand why Superjet International has not been involved in the final negotiation phase," the source said, adding that Aeroflot would be the launch customer rather than Alitalia.

Instead, Alitalia will take delivery of leased Embraer 170 and Embraer 190 jets between 2011 and 2012, Sabelli said.

Sukhoi and Superjet International declined to comment.

Earlier this month, Sukhoi confirmed that it was hoping to sell 20 to 24 aircraft to Alitalia, and analysts estimate the value of such an order at about $500 million. Russia is among a number of players building small jets as a possible dry run for taking on Airbus and Boeing in the market for bigger jets with more than 100 seats.

Daimler Expands KamAZ Partnershiphttp://www.themoscowtimes.com/business/article/daimler-expands-kamaz-partnership/427166.html

19 December 2010Reuters

FRANKFURT — German car and truck maker Daimler is strengthening its partnership with KamAZ after the two companies agreed to cooperate on axles for commercial vehicles, the companies said Friday.

"The joint venture will supply axles to KamAZ as well as to the joint venture Mercedes-Benz Trucks Vostok," said Stefan Buchner, responsible for procurement and global powertrain operations at Daimler Trucks, in the statement.

The two parties plan to invest 50 million euros ($66.6 million) in axle production in Russia.

KamAZ will supply individual axle components to the Daimler axle plant in Kassel, Germany, where they will be further assembled. Daimler, which owns an 11 percent stake in KamAZ, is keen on the Russian truck market but has greatly tempered its initial ambitions by keeping its stake in KamAZ far lower than what Moscow would like.

When Troika Dialog looked to further reduce its exposure in KamAZ by selling another 5 percent to Daimler, the German group went so far as to shift 4 percent of that to the European Bank for Reconstruction and Development.

Daimler Trucks chief Andreas Renschler had earlier insisted his company was not in any hurry to expand its then 10 percent stake.

AvtoVAZ to Acquire Izhavto http://www.themoscowtimes.com/business/article/avtovaz-to-acquire-izhavto/427165.html

20 December 2010Reuters

AvtoVAZ said Friday that it would buy smaller rival Izhavto, investing 7 billion rubles ($228 million) and working with its French and Japanese partners to modernize the indebted carmaker.

"We intend to acquire 100 percent of … [Izhavto] during the next year," AvtoVAZ president Igor Komarov said in a statement.

Izhavto came within a whisker of collapse during the economic crisis. Late last year, management of the company passed to key creditor Sberbank and the state-controlled lender has said it would like to sell to a strategic investor.

"The planned size of investment in the modernization of production at Izhavto is 7 billion rubles. The investment will be financed with credit resources from Sberbank with a maturity of up to 7 years," AvtoVAZ said in a statement.

AvtoVAZ, the country's largest carmaker and the beneficiary of government largess during the crisis, is looking to its partners — the Renault-Nissan alliance — to help with the project, in line with Moscow's drive to use foreign investors' know-how to revamp its auto industry.

Izhavto's factory, located in the city of Izhevsk in central Russia, will now assemble cars under the brands of Renault, Nissan and AvtoVAZ's Lada, while capacity will be increased by about a third from 220,000 to 300,000 cars a year by 2014.

Oksana Nazarova, a spokeswoman for Renault-Nissan, said the alliance planned to make cars at Izhavto's plant but added that no decisions had been made.

Prior to the memorandum of understanding with AvtoVAZ — signed in the presence of Prime Minister Vladimir Putin on Friday — South Korean automakers Kia Motors and Hyundai had been in talks with Izhavto about building cars at the plant.

"We held a closed tender of investors, and have decided on cooperation with AvtoVAZ," Sberbank chief executive German Gref said, Interfax reported.

Gref said AvtoVAZ offered the best options for localizing production, creating jobs and meeting the requirements of Izhavto's creditors.

"As for Kia, I want to say thank you to our Korean partners. … But they will … be offered an alternative," he added, without giving further details.

Novartis To Invest $500 Million In Russia, Build Plant, Boost R&Dhttp://english.capital.gr/News.asp?id=1105215

http://english.capital.gr/News.asp?id=1105215

By Goran Mijuk

Of DOW JONES NEWSWIRES

ZURICH -(Dow Jones)- Novartis AG (NVS) Monday said it will invest around $500 million in Russia over the next five years amid efforts to better tap into one of the world's fastest growing emerging markets.

As part of its efforts, Novartis struck a deal with the city of St. Petersburg to build a new manufacturing plant there and said it wants to spur research and development in the region and improve collaboration with the government.

The step comes after Novartis in November said it will cut some 1,400 jobs in the U.S. and reflects the increased efforts of pharmaceutical companies to tap fresh growth outside mature markets, where costs risk spinning out of control while growth is limited.

"Novartis is making a strategic investment in Russia for long term growth," said Novartis chief executive Joe Jimenez. "The ongoing partnership with Russia enables us to expand our commercial presence in a key emerging market," he said.

Russia, besides countries such as Brazil, Mexico and Turkey, is expected to grow at above-average rates in the next few years and substantially outstrip growth rates in markets such as the U.S. and Europe.

According to consultancy IMS Health, Russia's compound annual growth rate should reach up to 17% between 2010 and 2013. Only China, with annual growth rates of up to 23%, is set to grow faster, according to IMS Health.

Novartis said the St. Petersburg facility will produce pharmaceuticals as well as generic products and is scheduled to produce 1.5 billion units per year once the site will go online in 2011.

In parallel with the establishment of its own manufacturing facility, Novartis said it plans to continue to expand its investments in R&D and public health collaborations in alliance with the Russian government.

Novartis, which spends more than $7 billion annually for researching and developing novel compounds, didn't provide an absolute R&D figure for Russia.

Novartis said the deepened collaboration activities in Russia will include deals with both universities and academia, but also with emerging Russian private business in different areas of medical science.

The Swiss company added that the scope of these collaborations may include out-licensing of Novartis compounds to Russian companies and in-licensing and scouting for promising drug candidates from Russian scientists.

-By Goran Mijuk, Dow Jones Newswires, +41 43 443 80 47; goran.mijuk@dowjones.com

UPDATE 1-Novartis to invest $500 mln in Russia over 5 yearshttp://in.reuters.com/article/idINLDE6BJ06020101220

12:39pm IST

* To build new pharmaceutical plant in St.Petersburg

* Global pharma companies seen pouring cash into Russia

(Adds details, background)

ZURICH, Dec 20 (Reuters) - Novartis AG (NOVN.VX: Quote, Profile, Research) will invest $500 million in Russia over the next five years, strengthening its position in the country as it joins other rivals looking to get around tough rules on imported medicines.

The Swiss drugmaker plans to build a new pharmaceutical manufacturing plant in St. Petersburg as part of a the partnership, which will focus on local manufacturing, R&D partnerships and public health development, Novartis said.

"The ongoing partnership with Russia enables us to expand our commercial presence in a key emerging market," Novartis Chief Executive Joe Jimenez said in a statement on Monday.

The plant is set to be one of Novartis's largest investments in local manufacturing and is likely to make branded generics as well as pharmaceuticals, Novartis said.

Novartis said last month it was seeking to do acquisitions in countries such as China, Russia and Brazil, as it ramps up a group-wide drive to boost efficiency. [ID:nLDE6AG164]

Global drugmakers are seen pouring more than $1 billion into Russian manufacturing as they try to sidestep a tougher government stance on imported medicines.[ID:nLDE6570W4]

Several global companies have announced plans to start producing in Russia, which has a population of 140 million, including Nycomed [NYCMD.UL] and Novo Nordisk (NOVOb.CO: Quote, Profile, Research). (Reporting by Katie Reid; Editing by Louise

Chelyabinsk Zinc Plant nine-month net profit up 280% to 1 bln rblshttp://en.rian.ru/business/20101220/161852196.html

10:45 20/12/2010

Chelyabinsk Zinc Plant, Russia's largest maker of the anti-corrosive metal, posted a 280 percent increase year-on-year in its January-September net profit to 1.031 billion rubles ($33.25) to IFRS, Chelyabinsk Zinc said on Monday.

Chelyabinsk Zinc's revenues grew 34% to 8.732 billion rubles, the company said in a statement.

MOSCOW, December 20 (RIA Novosti)

Deutsche's Deal Pipeline http://www.themoscowtimes.com/business/article/deutsches-deal-pipeline/427172.html

20 December 2010

Deutsche Bank has mandates to help manage $7 billion of share sales in Russia and other former Soviet republics next year as investor appetite grows for emerging market assets.

“We have a big pipeline,” Russian chief country officer Igor Lojevsky said Thursday in an interview. “We have been hired for not less than 10 deals just on equity. This does not include privatization work.” (Bloomberg)

For the Record http://www.themoscowtimes.com/business/article/for-the-record/427173.html

20 December 2010

Metalloinvest plans to borrow $3.8 billion to fund the development of the Udokan copper deposit in Siberia, billionaire Alisher Usmanov said Friday, RIA-Novosti reported. (Bloomberg)

The St. Petersburg International Mercantile Exchange began trading deliverable futures contracts for Russian diesel Friday and plans to add similar instruments for gasoline and Urals crude oil next year, vice president Mikhail Temnichenko said. (Bloomberg)

Federal Grid Company, the country’s monopoly for high-voltage power transmission, approved a 952.4 billion ruble ($31 billion) investment program for the five years from 2010 to 2014, it said Friday in a statement. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Energy Minister Indicates Lower Investment Barriers http://www.themoscowtimes.com/business/article/energy-minister-indicates-lower-investment-barriers/427184.html

20 December 2010Reuters

Some elements of production sharing agreements, desired by investors in the energy industry but rejected by the government, may be included in new projects, Energy Minister Sergei Shmatko said Friday.

“If our companies propose specific projects in this area we wouldn’t rule out some elements of PSAs,” Shmatko told a news conference.

The energy minister’s comments are slightly more cautious than earlier media reports quoting him as predicting a “renaissance” in the agreements, which give investors the right to a share of the oil produced by their projects.

Production sharing agreements fell out of favor worldwide as resource rich countries sought to keep more of their oil for themselves in times of high oil prices.

In Russia, they acquired a bad name when Royal Dutch Shell was forced to give up its stake in the Sakhalin-2 project to state-controlled Gazprom after protracted arguments about the project’s budget.

Shmatko reiterated that the government felt early efforts at PSAs had failed to meet Russia’s national interests.

In recent months, however, Russian oil output has been running at or very close to peak levels of more than 10.2 million barrels per day, with much of the recent growth supplied by projects operated in the Pacific under PSAs.

ExxonMobil-led Sakhalin-1, pumping 155,000 bpd, was tied up over a year in negotiations over the project’s budget, leading to speculation that it might share Shell’s fate.

But Shmatko said earlier this month that the project’s budget was approved, and officials have been at pains to show Exxon is secure in Sakhalin.

“We don’t have any complaints against Exxon,” Shmatko said.

But whether they will be available for new offshore projects remains an open question, he said.

In another sign that Russia may be willing to drop some barriers to the strategic sector, Shmatko reiterated that oil companies with ambitions to sell gas will enjoy greater access to infrastructure through “soft” liberalization of transport.

But the country will stop short of breaking Gazprom’s iron grip on exports, he said. Russian companies could become exporters of gas, for example, by building their own infrastructure in Europe and contracting Gazprom to deliver gas.

Russia's Novatek acquires 51% stake in West Siberian Sibneftegaz http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8315405

Moscow (Platts)--17Dec2010/947 am EST/1447 GMT

Russia's largest independent gas producer Novatek has closed a deal to acquire a 51% stake in minor West Siberian producer Sibneftegaz from Gazprom's affiliated bank Gazprombank for Rb26.88 billion ($874 million), the company said in a statement Friday.

Novatek made an initial payment of Rb4.65 billion, with the remaining balance due by the end of 2011, the statement said. In addition to the payments, Novatek refinanced 51% of Sibneftegaz' total debt for an amount not exceeding Rb11 billion, the company said.

Sibneftegaz owns exploration and production licenses for the Beregovoye, Pyreinoye, Khadyryakhinskoye and West Zapolyarnoye gas fields in West Siberia's Yamal Nenets autonomous region, in the vicinity of Novatek's main assets.

The Beregovoye and Pyreinoye fields are in commercial gas production and produced 8.9 Bcm in January-November, while the remaining fields are in the early stages of exploration, Novatek said.

Sibneftegaz' total proved reserves as of December 31, 2009 were 290.4 Bcm of gas and 1.7 million mt of liquid hydrocarbons.

Analysts estimate that the Sibneftegaz stake will raise Novatek's proven and probable reserves by around 12%, and add some 14% to Novatek's total gas production.

The remaining 49% stake in Sibneftegaz is owned by another independent Russian gas producer Itera.

--Jake Rudnitsky, jake_rudnitsky@platts.com

Russia Pipeline to Supply 15 Million Tons of Oil a Year to China http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a3FrZ8AxvJnA

By Bloomberg News

Dec. 20 (Bloomberg) -- A crude oil pipeline between Russia and China suceeded in its trial run, China National Petroleum Corp. said in a statement on its website today. Russia will deliver 15 million metric tons of oil a year via the pipeline to China starting next year, it said.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net

To contact the editor responsible for this story: Jane, Ching Shen Lee at jalee@bloomberg.net

Last Updated: December 19, 2010 20:42 EST

№ 11 (November 2010)

East Siberia-Pacific Ocean Crude: A Boon for Japanhttp://www.oilandgaseurasia.com/articles/p/130/article/1388/

Japan is the world's third largest consumer of oil, following the United States and China. The average daily consumption of oil in Japan in 2009 was 4,400 barrels per day, or about 219 million tons for the entire year. Japan imports roughly 90 percent of this amount.

By Ivan Andreyevskiy - managing director, 2K Audit Business Consultants (Expert Portal VSTO)

Most of Japan's oil supplies come from the Middle East. According to data from October 2010, these deliveries are led by Saudi Arabia, the UAE and Qatar which supply about 26, 21 and 11 percent respectively.

Until recently, Iran was another large exporter of oil to Japan, but Tokyo is supporting the world community in enforcing economic sanctions against Teheran over the latter's nuclear ambitions. This policy has led Japan to trim the volume of its trade relations with Iran.

This change in Japan's political course caused it to cut purchases of oil from Iran by over 19 percent in the first eight months of the year; in August alone, purchases dropped 31 percent. While Iran was the third largest export of oil to Japan in June 2010, by August it was only in sixth place.

This sharp drop in oil purchases from Iran became possible thanks to the influence of another large supplier of oil to the Asian country. In 2010, Russian products began to squeeze out Iranian supplies. In August 2010, Russia became the fourth largest supplier of oil to Japan with its share rising to 9 percent. In terms of volume, Russia supplied about 9.9 million barrels (about 1.35 million tons) of oil to Japan in August. In September, this figure grew to 10.1 million barrels (1.38 million tons).  These figures are particularly interesting when compared to those of last year. In the second half of 2009, Russian supplied a fairly low volume of oil to Japan - about 3 to 5 million barrels a month (410,000 to 680,000 tons). In 2009, Russian oil supplied to Japan came mainly from fields in Sakhalin Region.  The total volume of oil produced in Sakhalin Region in 2009, was 15.3 million tons. Part of this oil was delivered to the Russian domestic market and a significant share was sold to South Korea. This meant that Japan could only count on purchasing half of the oil produced in Sakhalin.  In light of the fact that oil production in the region fell in 2010 to 15.2 million tons, Japan could not count on increasing supplies from the region in the current year. However, with the appearance of a new transport artery, Russia was able to take advantage of the deteriorating relations between Japan and Iran to increase its sales to Japan. The large jump in supplies of Russian oil to Japan was made possible by East Siberian crude

which Russia began to deliver through the East Siberia-Pacific Ocean (ESPO) pipeline. Currently, only the first line of the pipeline has ben built – to Skorovodino from where some oil is delivered to China. The rest of the oil is sent by rail to the new oil port in Kozmino. Kozmino port began operating in December 2009 and the first shipment of East Siberia oil arrived in Japan in February 2010. The ESPO pipeline can deliver 30 million tons of oil a year. Half of this volume has been reserved for China and a special branch of the pipeline has been built to handle this capacity. The remaining 15 million tons is sent on to Kozmino.  If Japan's purchases of oil from the Russian Federation remain at August-September 2010 levels for the rest of the year, then the total volume of Russian oil imported to Japan will be over 16 million tons a year. About one-third of this volume will come from fields in Sakhalin and another 10 to 11 million tons will be East Siberian oil. Consequently, Japan is already buying over 65 percent of the oil that arrives in Kozmino.

But apart from Japan and China East Siberian oil is in demand on other markets. Specifically, South Korea is prepared to to use East Siberian sources to increase its imports of Russian oil. A small amount of the oil delivered to Kozmino is sold to North American markets where the Russain oil is seen as a possible alternative to dwindling supplies from Alaska. It is clear that at this point in time, Russian oil companies are more concerned in solving the problem of production volumes rather than that of export markets. In light of Tokyo reducing its purchases of oil from Iran, the potential of the Japanese market for Russian oil can be estimated to be 18 million tons per year; added to current supplies this equates to 33 to 34 million tons per year. Still, it is unlikely that this volume will be achieved in the near future. Production in Sakhalin is expected to rise to 23 million tons per year only in 2020. Meanwhile, about one-third of this volume will be delivered to Japan - about 7 to 8 million tons per year. Furthermore, growth in supplies of ESPO oil to Japan could be hindered by the limits of ESPO pipeline capacity.  The second line of the pipeline is scheduled to be launched in 2014. Until that time, Japan cannot count on significant increases in supplies of ESPO oil. Nevertheless, Japan will be waiting for this second line to be launched as it continues to trim imports from Iran and in general lower its dependence on Middle East oil. Currently, Japan buys 83 percent of its oil from the Middle East and can only diversify its sources by increasing cooperation with Russia. Consequently, both Russia and Japan are interested in seeing the ESPO pipeline launched as soon as possible. In addition to the Japanese market, Russia will also strengthen its position on the Asia-Pacific Rim. Judging from early sales of ESPO oil, it will be in demand as it is already being sold on the market at a premium. This fact, as well as the quality of ESPO oil make sit possible to predict the ESPO oil will soon be the benchmark in the Asia Pacific region.

This article first appeared on the VSTO Experts' Portal. For moreinformation on Russian oil and gas activity in the Far East, please visit http://www.vstoneft.ru/.

Gazprom

Gazprom and GDF SUEZ summarize sci-tech cooperation results for 2010http://www.gazprom.com/press/news/2010/december/article106831/

17.12.2010 14:40

Under the chairmanship of Vlada Rusakova, Member of the Management Committee, Head of the Strategic Development Department, Gazprom and Marc Florette, Head of the Research and Innovation Department, GDF SUEZ an extended meeting of experts coordinating the sci-tech cooperation (STC) between the companies took place in Noyabrsk on November 15–16, 2010.

The parties addressed the STC Program results achieved in 2010. The meeting participants delivered speeches on liquefied natural gas (LNG) production safety, ways of protecting gas pipelines against corrosion, optimization of compressor station management and interaction between Gazprom and GDF SUEZ in the energy efficiency and environmental protection sectors. Moreover, Gazprom introduced proposals on shaping a Europe-wide data processing system that would coordinate dispatch services.

As was scheduled, the delegations from Gazprom and GDF SUEZ visited production facilities of Gazprom dobycha Noyabrsk at the Vyngaiakhinskoye gas field.

Report: Helicopter crash kills 1, injures 15http://edition.cnn.com/2010/WORLD/europe/12/19/russia.helicopter.crash/?hpt=T2

By the CNN Wire StaffDecember 19, 2010 -- Updated 1338 GMT (2138 HKT

(CNN) -- A crew commander was killed and 15 passengers were injured when a helicopter crashed on the Russian Arctic island of Yamal, state media reported Sunday.

Three crew commanders were aboard the aircraft in addition to the passengers, according to RIA Novosti.

The helicopter crashed while approaching a gas field that is under development by Gazprom, the Russian energy giant, state media said.

20.12.2010 9:03The corporate body of South Stream Bulgaria AD is officially registeredhttp://www.publics.bg/en/news/3127/

The elected board of directors includes Maya Hristova, Georgi Gegov, Boris Todorov, Alexander Medvedev and Vlada Rusakova

AUTHOR: publics.bg

Bulgarian Energy Holding EAD (BEH) announced that the joint-stock Russian-Bulgarian company South Stream Bulgaria AD has been officially registered in Sofia. The company is owned 50/50 by OAO Gazprom and BEH. The HQ of the new company will be in the office of BEH in the Lyulin district of the Bulgarian capital Sofia.

The new board of directors includes the executive director of BEH Ms. Maya Hristova, the chairman of the BoD of “Bulgartransgaz” (the Bulgarian gas network operator) Mr. Georgi Gegov, the member of BoD of “Bulgargaz” (the Bulgarian public supplier of natural gas) Mr. Boris Todorov, the director of OAO Gazprom Mr. Alexander Medvedev and the BoD member of Gazprom Ms. Vlada Rusakova. The company will be represented together by Georgi Gegov and Alexander Medvedev. According to the public commercial register, the mandate of the board is three years.

The foundation of the new project company for South Stream in Bulgaria was negotiated during the Russian prime minister Mr. Vladimir Putin’s visit to Bulgaria to meet with his counterpart Mr. Boiko Borisov in mid-November this year.