Russia 110819

Basic Political Developments Syrian reforms need time, Moscow insists - Russia wants the United Nations to

give Syrian leader Bashar Assad more time to implement the democratic reforms which he has announced, a source in the Russian Foreign Ministry said on Friday.

o Moscow opposes US and EU calls for Assad resignation Putin may testify in Tymoshenko trial – spokesman: Russia’s Prime Minister

Vladimir Putin may provide testimony in the case of Ukraine’s former prime minister Yulia Tymoshenko, Putin’s press secretary, Dmitry Peskov, has said. However, should the court decide to summon Putin as a witness, Peskov observed, the request will first be examined by lawyers.

Shmatko: Russia in no doubt 2009 gas contracts with Ukraine legitimate Ukraine preparing response to Gazprom proposal – PM: "Miller [Gazprom chief

Alexei Miller] and Russia are awaiting proposals from us. They roughly formulated what they want. We are currently examining and thinking what we could offer to Russia for negotiation," Azarov told journalists in Kyiv on Friday.

Turkmen, Russian presidents agreed to visit exchange - In addition, it is reported that "Berdimuhammadov also invited the Russian president to visit Turkmenistan at any time that would be convenient ".

o Telephone conversation with President of Turkmenistan Gurbanguly Berdimuhamedov - Dmitry Medvedev and Gurbanguly Berdimuhamedov reviewed prospect 2011 contacts at various levels, including the top level.

Obama's lawyers do not deny his right to cancel Jackson-Vanik amendment Violence remains 'chronic problem' in Russia's North Caucasus - U.S. report :

Militant-linked violence remains a "chronic problem" in Russia's North Caucasus region, the U.S. Department of State said in its annual report on global terrorism threats.

'Arms dealer' Bout's lawyer explains client's sales intentions Russia’s foreign minister visits Peru to strengthen bilateral ties - Minister

Roncagliolo said cooperation programs between both countries will be discussed during the meeting, scheduled for August 23.

Investigations central - Already being probed by the anti-trust watchdog for alleged abuse of its dominant market position, Lukoil is now set to be investigated by the country's tax administration, Finance Minister Simeon Dyankov said on August 16. National Revenue Agency inspectors will examine the books of the corporation's two major subsidiaries in the country – refinery Lukoil Neftochim and fuel retailer Lukoil Bulgaria – Dyankov told television channel Nova Televizia.

Czech press survey - August 19: Prague - The biggest threat posed by Russia is its ability to divide Europe, Zbynek Petracek writes in Lidove noviny today.

Police officer shot dead in Russia's North Caucasus

Dagestan to receive federal support for investment projects and counter- terrorism programs - The contracts signed at the first Dagestani economic forum are worth a total of 50 billion rubles, Russian President Dmitry Medvedev said at a meeting with Dagestani Leader Magomedsalam Magomedov at the Bocharov Ruchey Residence in Sochi, RIA Novosti reports.

Premier to meet with reps of disabled people's organizations - "The meeting will take place on the floor of the All Russia People's Front (ONF)," the government press service reported.

Medvedev demands measures against EGE exam cheating MAKS-2011 opens for general public

o MAKS air show opening for general publico IAF's Sukhoi jets to be upgraded to fifth generation fighters - India's air

superiority Sukhoi-30MKI fighters will soon be converted into 'Super Sukhois' by upgrading them with fifth generation combat jet features, the Russian original equipment manufacturer Irkut Corporation has announced.

o MAKS: Armavia doubles Superjet presence at show o PAK FA fighter jet is super-smart, say pilotso Prestigio starts sales of GLONASS/GPS navigators in Europe

Jeppesen working to transform Russian airports - Russia’s airports are looking abroad to increase capacity, efficiency and safety, both on the ground and in the air, to cope with rising traffic and to upgrade ageing infrastructure. Basel Aero Company, operator of Sochi Airport, in cooperation with the Moscow State University of Geodesy and Cartography, has signed an MoU with Boeing to help Russian airports analyse and optimise their ground operational plans. The objective is to introduce new airport and airspace procedures with the goal of improving the safety and efficiency of Russian airspace.

Moscow officialdom facing further cuts - mayoro Moscow to cut 1,000 civil service jobs in 2012 - mayor o Moscow expands privatisation programme to $7bno Mayor says New Moscow project will add 160k ha of land to the city

Russia may allocate $340 mln for new technoparks Petersburg governor Matviyenko not to run for president 9 United Russia members defect to Just Russia Party Politician calls colleague's nazi-styled photo "vile photoshop" Defendants in Moscow riots case ask to question interior minister Rescuers, police patrol Primorye beaches closed after shark attacks All forest fires extinguished in Russia Far East The first Russian Orthodox Church in the UAE held its primary service - The first

Russian Orthodox Church in the Arabian Peninsula held its first service and opening ceremony Saturday.

RIA Russian Press at a Glance, Friday, August 19, 2011

How far to Alaska? - Yakutsk dreams of traveling to America by railway. By Vladimir Tayursky (Yakutsk)

Drunks and Detours in Russia's Unquiet August: Jeffrey Tayler - This summer has been rough for aspiring lawbreakers in Russia. Just as riots were dying down last week in London, they found their analogue in downtown Moscow early Sunday morning as hooligans took to the streets. Their efforts, though, didn’t have quite the same impact.

Japan and Russia: Lessons from each other - Written by Sameer Jafri

National Economic Trends Russian Central Banker Cautious About Liquidity, Kommersant Says

o Russia cbank says too early to inject liquidity-newspaper CBR's reserves data reveals that it was not excessively supporting RUB last week

- rouble to cushion external shocks - supportive for economic growth Banks have 740.1 bln rbs on CBR correspondent accounts on August 19. COMMENT: No time to feel mise-ruble - we do not expect a substantial increase

in price pressures, even if the increasingly challenging global environment were to be accommodated by a more flexible domestic currency. By bne

Russian Stocks Slide to Weekly Low on Oil, Global Growth Concern - By Jason Corcoran

Business, Energy or Environmental regulations or discussions Foreign listings cap to be lifted later than expected - According to Vedomosti

newspaper, a decree to increase the maximum amount of DR programmes from 25% to 100% has been submitted by FSFR, the market regulator, to the government. However, Dmitry Pankin, FSFR head, has stated that this decree will be effective only after the adoption of the law on central depository.

Bank of Moscow, United Aircraft Corp.: Russian Equity Preview Norilsk Nickel's new offer to UC RUSAL to be made on "more conservative"

terms UPDATE 1-Norilsk wants to buy back 15 pct stake from Rusal Long steel data released by independent steel consultancy shows incremental

improvements in consumption VTB Bank May Reduce 10% of Support Personnel, Vedomosti Says Polyus Gold International Increases Stake in Russian Unit Renaissance Capital Plans Rwanda Office as Initial Public Offerings Grow Kremlin’s champagne maker plans IPO Russia designs tablet PC to rival Apple's iPad Russian company Prodis kicked off its investment on the FYR Macedonian

market by constructing a plant in the free economic zone of Bunardzik Report: Pinchuk could get $1.5 billion from sale of ferroalloy interests to

Vekselberg

Activity in the Oil and Gas sector (including regulatory) TNK-BP and Rosneft to boost oil production at Verkhnechonsk up to 7.5mmt in

2014

Crude gains cause gas headache at Russian oilfield Alliance Oil IFRS net profits up 64% at $56 mln for Q2 Itera boosts margins in Q2 by increasing supply of own gas Novatek to unveil development strategy late Nov and early Dec Regional gas distributors: Close to a Happy Ending? - Final steps reported to be

underway Global LNG Market Tightening As New Supply Lags Rising Demand: Analysts

Gazprom Gazprom considering new gas price formula - According to Vedomosti,

Gazprom's Head of Strategy Vlada Rusakova co-authored an article in Gazovaya promishlennost which argues that gas prices need to be delinked from oil prices and driven by supply and demand.

Burned-Up Patience - Gazprom Bows to Demands to Reduce Gas Prices after Coming Under Mounting Pressure from its Customers in Europe and Asia. By Tai Adelaja

Moody's affirms Gazprom's issuer rating at Baa1 MOESK: Gazprombank not allowed to manage 50.9% stake

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Full Text Articles

Basic Political Developments

Syrian reforms need time, Moscow insists http://rt.com/politics/news-line/2011-08-19/#id16569

11:36

Russia wants the United Nations to give Syrian leader Bashar Assad more time to implement the democratic reforms which he has announced, a source in the Russian Foreign Ministry said on Friday. The statement came as representatives of the US, the UK, France and Germany were pushing for the UN Security Council to adopt a resolution on Syria. “We do not support these calls, and we think that now is the time to give the regime of President Assad time to implement the reforms announced earlier,” the unnamed source in the ministry said. Since March, opposition activists have been clashing with governmental forces in Syria, as hundreds of people have been killed in the violence.

Moscow opposes US and EU calls for Assad resignation http://rt.com/news/line/2011-08-19/#id16571

11:50

Russia has voices its opposition to US and the EU calls demanding that Syrian President Bashar Assad leave office and says he needs time for reforms, Interfax news agency quoted a source in the Russian Foreign Ministry as saying on Friday. “We do not support these calls, and we think that now is the time to give the regime of President Assad time to implement the reforms announced earlier,” the source said.  On Thursday  the EU and the US extended sanctions on Syria, in spite of Assad’s assurances to UN Secretary General Ban Ki-moon that military operations against protesters had ended.

RT News line, August 19

Putin may testify in Tymoshenko trial – spokesmanhttp://rt.com/politics/news-line/2011-08-19/#id16563

11:10

Russia’s Prime Minister Vladimir Putin may provide testimony in the case of Ukraine’s former prime minister Yulia Tymoshenko, Putin’s press secretary, Dmitry Peskov, has said. However, should the court decide to summon Putin as a witness, Peskov observed, the request will first be examined by lawyers. Tymoshenko is on trial for allegedly inflicting economic damage on Ukraine in 2009, when she signed a contract for the delivery of Russian gas at an allegedly high price. On Thursday, Ukraine’s ex-president Viktor Yushchenko said the Russian negotiators party to the deal should be questioned to establish the truth.

Shmatko: Russia in no doubt 2009 gas contracts with Ukraine legitimatehttp://www.kyivpost.com/news/politics/detail/111198/

Today at 10:56 | Interfax-Ukraine Moscow, August 19 (Interfax) - Russia has no doubts about the legitimacy of the 2009 gas supply contracts with Ukraine, Energy Minister Sergei Shmatko told RT television channel on Friday.

"In no way do we doubt the legitimacy of the gas supply contracts signed between Russia and Ukraine," he said, commenting on the situation surrounding the 2009 Russian-Ukrainian agreement for supply of gas.

"We still maintain, and have always maintained, that the contracts and agreements signed

entirely meet the norms of intentional law and the spirit of our intergovernmental agreements," Shmatko said.

Read more: http://www.kyivpost.com/news/politics/detail/111198/#ixzz1VSfAzO1p

August 19, 2011 11:50

Ukraine preparing response to Gazprom proposal – PMhttp://www.interfax.com/newsinf.asp?id=267081

KYIV. Aug 19 (Interfax) - Ukraine will submit its own proposal on gas cooperation with Gazprom, Prime Minister Mykola Azarov said.

"Miller [Gazprom chief Alexei Miller] and Russia are awaiting proposals from us. They roughly formulated what they want. We are currently examining and thinking what we could offer to Russia for negotiation," Azarov told journalists in Kyiv on Friday.

At the last meeting with Miller, Ukrainian Energy and Coal Industry Minister Yuriy Boiko did not offer any proposals on the Ukrainian part, because "this matter is at the stage of discussion and consideration," he said.

kk eb

(Our editorial staff can be reached at eng.editors@interfax.ru)

Turkmen, Russian presidents agreed to visit exchangehttp://en.trend.az/regions/casia/turkmenistan/1920246.html

[19.08.2011 10:56]

Turkmenistan , Ashgabat , Aug .19 / Trend , H . Hasanov /

During a telephone conversation which began with Russia’s initiative, the Russian President Dmitry Medvedev invited the Turkmen President Gurbanguly Berdimuhammadov to visit Moscow at any time, the Turkmen government said.

The Russian leader "emphasized the critical importance of regular meetings, during which the sides make common approaches to forming a platform for further efficient intergovernmental partnership."

In addition, it is reported that "Berdimuhammadov also invited the Russian president to visit Turkmenistan at any time that would be convenient ".

Thanking each other for the invitation, the sides agreed to coordinate dates for the visit via lines of diplomacy.

The statesmen exchanged views on the primary direction of bilateral relations which are of mutual interest. In particular, the parties discussed current issues of bilateral trade and economic relations.

"Noting the mutually beneficial strategic partnership between Turkmenistan and Russia, the two leaders expressed satisfaction with the dynamics of the Turkmen-Russian dialogue, which is entering a new stage of mutually beneficial and constructive participation within the CIS, both in bilateral and multilateral formats", the report said.

The parties expressed their support to the desire of various Russian regions’ business circles to expand their presence in the promising Turkmen market, where a number of well-known Russian companies already operate successfully.

The Russian president’s website reports that Medvedev and Berdimuhammadov outlined plans for various contacts, including at the top, by late 2011.

"The presidents discussed urgent issues of the Russian-Turkmen cooperation, as well as the outcome of the recent significant bilateral events in various spheres", the report says.

Prior to commissioning of Turkmenistan-China gas pipeline in 2009, the main buyer of Turkmen gas was Russia’s Gazprom, which significantly decreased fuel purchase due to the world economic and financial crisis.

At the same time, Russian "Zarubezhneft" has recently become the operator of a project on the development of 21 blocks in the Turkmen sector of the Caspian Sea by signing an agreement on cooperation with Itera, which has conducted research since 2009. The investment project is estimated at $6 billion.

Do you have any feedback? Contact our journalist at trend@trend.az

Telephone conversation with President of Turkmenistan Gurbanguly Berdimuhamedovhttp://eng.kremlin.ru/news/2715

August 18, 2011, 20:00

Dmitry Medvedev had a telephone conversation with President of Turkmenistan Gurbanguly Berdimuhamedov.

The Presidents discussed current aspects of Russian-Turkmenistani cooperation and the outcomes of various major recent bilateral events.

Dmitry Medvedev and Gurbanguly Berdimuhamedov reviewed prospect 2011 contacts at various levels, including the top level.

August 18, 2011, 20:00

Obama's lawyers do not deny his right to cancel Jackson-Vanik amendmenthttp://en.rian.ru/world/20110819/165917656.html

06:39 19/08/2011

NEW YORK, August 19 (RIA Novosti)

The U.S. Department of Justice has not ruled out a possibility of repealing the Cold War era Jackson-Vanik amendment that imposes restrictions on Russian-U.S. trade without approval from Congress, an initiator of a lawsuit against the amendment has said.

In their suit, businessmen Edward Lozansky and Anthony Salvia asked a Washington court to order U.S. President Barack Obama to use his constitutional right to repeal the amendment, which prevents the U.S. from granting Russia "most favored nation" trading status that would offer reduced import tariffs and provide state loans and guarantees.

Lozansky told RIA Novosti that after studying carefully a statement issued on August 8 by Department of Justice lawyers representing Obama, his lawyers established that their colleagues have not ruled out a possibility of Obama repealling the amendment without Congressional approval.

Obama's lawyers only said that some countries, including Ukraine and Kyrgyzstan, were deleted from the Jackson-Vanik "blacklist" "after" a vote in Congress, Lozansky said, adding that in line with U.S. laws, such a vote was not necessary.

The Russian authorities have repeatedly said that the Cold War-era amendment was an "anachronism" hindering Russia's World Trade Organization accession bid.

Former U.S. Representative Charles Vanik along with his fellow anti-communist politician Sen. Henry Jackson sponsored the Jackson-Vanik amendment denying normal U.S. trade relations to countries with non-market economies that restrict their citizens' right to emigrate.

The U.S. government has only once tried to cancel the amendment, in 2002, when President George Bush asked Congress to do so. However, Russia banned U.S. poultry imports soon afterwards, prompting an end to discussion of the issue.

Violence remains 'chronic problem' in Russia's North Caucasus - U.S. reporthttp://en.rian.ru/russia/20110819/165914256.html

03:17 19/08/2011

WASHINGTON, August 19 (RIA Novosti)

Militant-linked violence remains a "chronic problem" in Russia's North Caucasus region, the U.S. Department of State said in its annual report on global terrorism threats.

"Terrorist attacks in Russia continued to emanate from the ongoing unrest in the North Caucasus," the report, released on Thursday, said. "Radical militants calling for a Caliphate within the Caucasus continued to constitute the main terrorist threat."

A total of 529 terrorist attacks, which killed 218 people and injured 536 others, were registered in Russia as of mid-December last year, the report said.

The bloodiest of the attacks were carried out in Russian capital on March 29, when two suicide bombers blew themselves up in Moscow's busy metro during morning rush hour, killing 40 people and injuring some 100 others. Other major terrorist attacks occurred in the volatile North Caucasus region, particularly in the republics of Dagestan, Ingushetia, North Ossetia, Chechnya, and Kabardino-Balkaria.

"While these attacks were designed to cause mass civilian casualties, far more numerous were attacks targeting security forces and government facilities in the region," the report said.

In December last year, Russian President Dmitry Medvedev signed amendments to the country's Criminal Code increasing punishment for perpetrating a terrorist attack and promoting terrorist activities. In July, Russia amended its anti-money laundering and counter terrorism financing regulations as part of the government's fight against terrorism.

The Russian authorities have also moved to improve the poor economic conditions in North Caucasus republics and curb unemployment, which are believed to be the main factors driving local residents to join militant groups. In December, Prime Minister Putin announced the creation of a special commission under his chairmanship intended to address the issues of socio-economic development of the region.

Al Qaeda, Iran remain top threats

Al Qaeda "remained the preeminent terrorist threat" to the United States in 2010, the report said. "Though the AQ core in Pakistan has become weaker, it retained the capability to conduct regional and transnational attacks... In addition, the [Qaeda's] affiliates have grown stronger."

In May 2011, Al Qaeda leader Osama bin Laden was killed in a U.S. raid on its compound in Pakistan.

The report named Iran as "the most active state sponsor of terrorism in 2010."

"Iran's financial, material, and logistic support for terrorist and militant groups throughout the Middle East and Central Asia had a direct impact on international efforts to promote peace, threatened economic stability in the Gulf, and undermined the growth of democracy," it said.

According to the report, the United States also continues considering Cuba, Syria and Sudan as countries supporting terrorism.

The report stressed the increasing role of the internet in organizing terrorist attacks.

"In a troubling trend, English-speaking militants increasingly connected to each other through online venues like militant discussion forums and video-sharing platforms, which encouraged both violent behavior and individual action," it said.

'Arms dealer' Bout's lawyer explains client's sales intentionshttp://en.rian.ru/world/20110819/165920904.html

09:31 19/08/2011

NEW YORK, August 19 (RIA Novosti)

A lawyer for suspected Russian arms dealer Viktor Bout has sent a note to a federal court in New York, saying the former Air Force officer went to Bangkok three years ago to negotiate the purchase of aircraft.

Bout is on trial in the United States on charges of conspiracy to sell arms to Colombian militants.

Prosecutors maintain that the Russian, dubbed the Merchant of Death by a British politician, was negotiating the sale of heavy weaponry to FARC, a Colombian militant group, when he was arrested in Bangkok in March 2008 during a U.S.-led sting operation.

Lawyer Albert Dayan said Bout "had no intention of entering the scheme."

"[The U.S.] state agents, probably along with the other defendants, fraudulently enticed Bout into the possible plane bargain while really intending to cajole him into the arms deal," Dayan said in the note.

The U.S. says Bout agreed to sell arms to U.S. informants masquerading as FARC agents, a claim he denies.

11:01

Russia’s foreign minister visits Peru to strengthen bilateral ties

http://www.andina.com.pe/Ingles/Noticia.aspx?Id=QTsXNl8km84=

Lima, Aug. 18 (ANDINA). Russian Foreign Minister Sergey Lavrov will visit Lima next week in order to strengthen bilateral ties and have an open agenda meeting with his Peruvian counterpart Rafael Roncagliolo.

Minister Roncagliolo said cooperation programs between both countries will be discussed during the meeting, scheduled for August 23.

Both chancellors will talk about programs related to technology and transportation, as well as evaluate potential investments in Peru.

"This visit will enable to officially launch employment programs and prospects with Russia," the Peruvian foreign minister said at a press conference held late Wednesday, following the third session of the Council of Ministers at the Government Palace.

Finally, Roncagliolo ruled out that the agenda includes talks on an agreement for the purchase of weapons.

(END) CCR/PSY/LVT

Investigations centralhttp://www.sofiaecho.com/2011/08/19/1141424_investigations-central

Fri, Aug 19 2011 09:00 CET

by Alex Bivol

Russian oil giant Lukoil won a crucial court battle when Bulgaria's Supreme Administrative Court (SAC) confirmed a lower court's ruling to suspend the execution of the Customs Agency's order to revoke operation licences from Lukoil Neftochim refinery and its oil terminal, but its operations are now under more scrutiny then ever.

Already being probed by the anti-trust watchdog for alleged abuse of its dominant market position, Lukoil is now set to be investigated by the country's tax administration, Finance Minister Simeon Dyankov said on August 16.

National Revenue Agency inspectors will examine the books of the corporation's two major subsidiaries in the country – refinery Lukoil Neftochim and fuel retailer Lukoil Bulgaria – Dyankov told television channel Nova Televizia.

The two companies posted net losses in the past two years, a circumstance that Dyankov described as "strange" and coinciding with the current Cabinet taking office.

It was possible that the profit of Lukoil's two subsidiaries was negated by large-scale investments, but the tax authorities would analyse financial results going back 10 years to ensure that the investigation was thorough, Dyankov said.

Separately, 200 Customs Agency officials have been deployed on the premises of Lukoil Neftochim and its Rossenets oil terminal to ensure that all incoming crude and outgoing fuel quantities were being properly accounted for.

Court victory

The agency decided to deploy so many of its employees after the SAC ruled on August 10 to uphold the decision of the Sofia Administrative Court suspending the execution of the Customs Agency's order to revoke operation licences from Lukoil Neftochim refinery and its oil terminal.

The SAC agreed with the lower court's reasoning that the immediate effect of revoking the licences of Neftochim and the Rosenets oil terminal would lead to damages that would be "significant or difficult to redress". SAC's decision is final and cannot be appealed.

The Customs Agency withdrew Lukoil's licences to operate tax warehouses, defined in European Union regulations as "premises approved for the production, holding and movement of excise goods", on July 26. The decision came after Lukoil failed to install measuring equipment mandated by law even after being given a deadline extension.

The stay of execution, however, is only the first stage in the lawsuit filed by Lukoil Neftochim against the Customs Agency's order. The Sofia Administrative Court will hold its first hearing on whether to uphold the order to revoke the licences on August 31.

Whatever the ruling, the losing party is expected to appeal it with the SAC and with the permanent stay of execution in place, the refinery would remain in operation while the courts weigh in on the issue.

Customs scrutinyCustoms Agency director Vanyo Tanov declined to comment on the court decisions, but said that he hoped the subsequent rulings on the substance of the lawsuit would be in favour of the agency.

In an extensive interview with Capital weekly, published on August 13, Tanov said that his agency had collected an additional 150 million leva in excise duties as a result of implementing the tax warehouse regulations. All companies that installed measuring equipment now paid more in excise duties, while Lukoil still paid the same amount as before, he said.

Asked whether the agency had any proof to confirm suspicions that Lukoil Neftochim was declaring lower production and higher exports than in reality, Tanov said that it was impossible without tracking the exports to their final destination.

"I've said it many times that this is difficult at this time. The only way to do that is to track payments and verify whether the exports really happened, but neither Lukoil Bulgaria, nor Lukoil Neftochim are direct exporters," he told Capital.

"The oil group's exports are handled by [Geneva-based trading company] Litasco, which is registered in a tax haven, where it is difficult to check documentation. The buyers are also off-shore companies, so an inquiry cannot be completed quickly and guarantee that the necessary proof is found."

"If we find that all have been paid out, then we're not talking about fictitious exports, but increased exports, but we cannot say anything with any degree of certainty," Tanov said.

The agency launched the inquiries in 2009 and is yet to complete its investigation of Lukoil Neftochim operations.

"The inventory report we made does not give us sufficient data for analysis, because we have to compare the amount in stock against what the company declared. And it is difficult to ascertain how objective those figures are," Tanov said.

The inquiry into Lukoil Bulgaria has been completed, but Tanov said that he could not announce the findings because the results were being appealed in court.

Czech press survey - August 19http://www.ceskenoviny.cz/news/zpravy/czech-press-survey-august-19/676640

Prague - The biggest threat posed by Russia is its ability to divide Europe, Zbynek Petracek writes in Lidove noviny today.

Moscow has won over Germany and is building the Nord Stream oil pipeline at the cost of the Polish energy company, Petracek writes.

Moscow has won over Czech President Vaclav Klaus and torpedoed the project of a U.S. radar base on Czech territory, or U.S. military presence in this country, at the cost of the Czech Republic´s success in embedding itself in the West, he writes.

How does Europe exploit its statistical supremacy over Russia. Was it able to offer alliance to Georgia? Was it capable of reacting to the military exercises off the Polish border? Has it found any way of reacting to Russian obstructions in the U.N. Security Council? No, it has not, there is something to be afraid of," Petracek writes.

"The investigation, or non-investigation of the murder of Anna Politkovaskaya tells something about current Russia," former Czech prime minister Mirek Topoalnek said.

However, such a clear-cut Czech position has been pushed aside by the Pushnikn medal Czech President Vaclav Klaus has received, Petracek writes.

Czech Presisdent Vaclav Klaus is eccentric, but he does not cause any big harm to the country, Martin Komarek writes in Mlada fronta Dnes.

When he is fighting with windmills and stealing pens, he somewhat ridicules the country he rules. Besides his struggle is ridiculously stubborn. He joined forces with people who are defending lost positions and arouse the fear tat they would burn witches to dead if they came to power,Komarek writes.

He writes that people ask whether Klaus might lead a nationalist interwar party or whether a possible turbulence in Europe might take him away from the main stream of democracy.

Komarek writes that he does not think that this could happen because Klaus is right on one point. The ruling liberal ideological stream that preaches tolerance and decency is very strong. It is dominant because it best corresponds to the interests of ordinary Czechs, Moravians and Silesians.

Even though Klaus is Klaus, he will not be able to do anything about this, Komarek writes.

Even if the "strike" of the TOP 09 ministers were motivated by something else than only Ladislav Batora´s statements, it would be welcome, Lukas Jelinek writes in Pravo, adding that this should have come earlier, however.

It should come at the latest when Batora started coming out against civic activists, media, minorities, ambassadors, or when it showed that he is encircling himself with people for whom there is no place at the Education Ministry, Jelinek writes.

However the desire to rule and also to "do reforms" is so strong that it overshadows anything, Jelinek writes.

He says Prime Minister Petr Necas (Civic Democrats, ODS) knows well what is correct and what is not, but he wants to complete his mission and avoid early elections.

Jelinek writes that Necas is like another ODS prime minister, Mirek Topolanek who, too, was striking alliances with strange people and entities until he had to leave the scene.

Author: ČTKwww.ctk.cz

Police officer shot dead in Russia's North Caucasushttp://en.rian.ru/russia/20110819/165911132.html

00:45 19/08/2011

NAZRAN, August 19 (RIA Novosti)

A senior police officer was killed by unknown gunmen in Russia's North Caucasus republic of Ingushetia late on Thursday, a police source said.

The three gunmen attacked Savarbek Matiyev at his house at 10:50 pm local time (18:50 GMT), the source said. The police officer died at the scene.

A criminal case has been initiated over the attack.

Militant attacks and clashes remain common in the volatile North Caucasus region although the Kremlin's anti-terrorism campaign in the region has officially ended.

High unemployment coupled with low living standards are thought to be the main factors driving residents of the North Caucasus to join militant groups.

Dagestan to receive federal support for investment projects and counter-terrorism programshttp://vestnikkavkaza.net/news/politics/17007.html

The contracts signed at the first Dagestani economic forum are worth atotal of 50 billion rubles, Russian President Dmitry Medvedev said ata meeting with Dagestani Leader Magomedsalam Magomedov at the BocharovRuchey Residence in Sochi, RIA Novosti reports.

The forum was held in late July, with officials from 14 foreign statesattending.

Magomedov requested support for projects of the North CaucasianFederal District,  to speed up their realization. This includestransport, water supplies, roads and solutions to social andinfrastructural problems.

Magomedov noted that industry growth rate is 114.7%, agricultural –103%. About 30,000 jobs were created in 2010, 14,000 this year.Unemployment is at 16%, or 37,700, or 13.8% using the MOT methods.

The republic is realizing 60 priority projects worth a total of 200billion rubles. Their realization will create 25,000 jobs and bring 43

billion rubles to the budget. Three major agricultural projects areworth 11 billion rubles, one is worth $780 million and was organizedwith an Italian company, one project is for formation of anagroholding with a US company.

Dmitry Medvedev asked about preparations for the new academic year.Magomedov said that 99% of schools have been prepared and theremaining would be ready by the start of studies.

The Dagestani leader presented a project on a sturgeon-breedingcomplex. The Federal Fishing Agency and the Science, the ResearchInstitute for Fishing and Oceanography of the Russian Academy ofSciences and the Ministry for Regional Development approved it.

One of the main topics of discussions was terrorism. Magomedov saysthat it is a factor dragging the development of Dagestan. Force is theonly way to solve it. Magomedov requested Medvedev to support theformation of law-enforcing structures to fight terrorism and videomonitoring of cities.

The Dagestani leader noted that complex measures are being taken forideological suppression of terrorism and extremism and the formationof proper values of youth. Religious figures and institutions of civilsociety are used for this purpose. An international congress isplanned in autumn, with well-known Islamic teachers invited.

Magomedov said that they need efforts to help people abandon militantformations and come to their senses. Over 40 people have returned.

04:04 19/08/2011ALL NEWS

Premier to meet with reps of disabled people's organizations

http://www.itar-tass.com/en/c154/207251.html

MOSCOW, August 19 (Itar-Tass) — Prime Minister Vladimir Putin will meet on Friday with representatives of disabled people's organizations, and the associations implementing programs to support them.

"The meeting will take place on the floor of the All Russia People's Front (ONF)," the government press service reported.

"Taking part in the discussion will be the All-Russia Society of the Deaf, the All-Russian Union of Public Associations "Soyuz Chernobyl," the Al-Russia Public organizations of Afghan war invalids and military injuries and many other organizations which voiced the decision to join the All Russia People's Front from the beginning. They take an active citizenship position within the scope of the Front and use its tools to resolve disabled people's problems and promote their interests," the press service said.

The main issues on the agenda will be integration of disabled people in the society, the availability of services in the key sphere of life, employment problems and social support.

"The floor of the All Russia People's Front was chosen for discussion of their problems because it has already proven itself as one of the instrument, expected to secure a more active participation of the society in the settlement of acute problems," the press service said.

Earlier, Putin met with representatives of confessions and national and cultural public organizations. A number of "round table" discussion and events were held, at which the public considered pressing economic and social issues.

There are 13.2 million disabled people in Russia, including 550,00 children. Four million of the disabled are employable, 8.7 million are pensioners, and about one million have jobs, which makes up 26 percent of all employable physically handicapped persons.

Goal-oriented federal and regional programs that bring together the efforts of various agencies, became one of the mechanisms to implement the government policy in resolving disabled people's problems in Russia.

06:52 19/08/2011ALL NEWS

Medvedev demands measures against EGE exam cheating

http://www.itar-tass.com/en/c154/207292.html

MAIKOP, August 19 (Itar-Tass) — Russian President Dmitry Medvedev demanded that the government and the Ministry of Education make legal and technical decisions to prevent cheating during the Single State Examination (EGE), and placing problem-solving tasks on the Internet.

"We encountered another array of unpleasant facts this year: EGE questions were placed in social networks on the Internet, and students were doing the tests for many school leavers," Medvedev told a pedagogic conference in Maikop on Thursday.

"I demand the ministry and the government prepare legal and technological decisions to prevent such violations," he underlined.

MAKS-2011 opens for general publichttp://english.ruvr.ru/2011/08/19/54867317.html

Aug 19, 2011 10:02 Moscow Time

The Maks-2011 International Aviation and Space Salon in Zhukovsky near Moscow is opening for the general public today.

The air show was open only for experts in the first three days of its work.

Its organizers offer a wide-ranging program, including a display of passenger, transport and military aircraft and spectacular group flying over Zhukovsky.

Rainy weather forecast for Friday is unlikely to affect the overall festive moods, the organizers say.

10:27 19/08/2011ALL NEWS

MAKS air show opening for general public

http://www.itar-tass.com/en/c154/207412.html

ZHUKOVSKY (Moscow region), August 19 (Itar-Tass) — The International Aviation and Space Salon MAKS-2011 is opening for general public on Friday.

If during the first three days of its work only specialists were admitted to the airfield of the Gromov Flight Research Institute, then now all comers will be able to enjoy the flights of Russian and foreign aces, as well as learn about the latest achievements of the aerospace industry.

The air show directorate told Itar-Tass that the admission ticket price for any of the three coming days is 600 roubles if purchases at the entrance to the exhibition. In the period until August 18 tickets could be bought a hundred roubles cheaper. Children under 14 accompanied by an adult are admitted to the air show for free.

Special tickets are provided for fans of “spotting” - an amateur quality photography of aircraft. “For them there is a special media platform, which is located near the runway, and visitors can get there by a special ticket, which costs 9,000 roubles if purchases before August 16 and 11,000 roubles if purchased on the visiting day,” the source said.

As for the program prepared for the “Days of Mass Attendance,” it will be even larger than during the first three days. Viewers will be able to see dozens of passenger, transport and military aircraft on static display, as well as to enjoy breathtaking flights of Russian and foreign aces in the Moscow region’s sky.

It should be noted that according to Rosgidromet forecast, no heat that has complicated the work of the air show participants is expected in the area of Zhukovsky outside Moscow on Friday. The air temperatures are to keep at 21 degrees Celsius above zero. However, the weathermen do not rule out a little rain.

The International Aviation and Space salon MAKS is a rightful occupant of a leading position in the ratings of major world aviation forums. The very idea of the MAKS lies in demonstrating Russian high technologies and domestic market openness to joint ventures with the use of foreign partners' cutting-edge advances, according to the event’s website.

MAKS is held under the auspices of the Prime Minister of the Russian Federation, being traditionally opened by the President of the Russian Federation. This is the warranty of superior organisation and authoritative participants. During the show, top civil servants are open for business contacts. For all those engaged in aerospace business the air show is a unique opportunity to get the first-hand information on the standpoints of decision-makers whose position can have an impact on key issues of developing and selling aircraft and their weapons, as well as on cooperation in these fields.

MAKS provides participants with the most comprehensive understanding of the Russian aerospace industry's priorities and advances. MAKS Air Show is the only place where one could see aircraft and weapons system prototypes as well as experimental systems that cannot be shown abroad due to some or other reasons.

MAKS provides experts and businessmen a rare opportunity to establish contacts at various levels, further development of R&D and production cooperation and search for new business partners. The role the MAKS plays as a generator of new alliances and promising concepts has been recognised worldwide.

MAKS is held in the town of aircraft science and technology - Zhukovsky - at the airfield of the major national testing facility - Gromov Flight Research Institute. The participants in the show will be able to visit nearby major research, production and experimental organisations of Russia.

High on MAKS agenda are scientific conferences and symposia held under the auspices of the Russian national research centre - TSAGI. The events enable scientists and experts to trade their idea concerning topical aerospace issues of the present and past.

According to Prime Minister Vladimir Putin, “The development of aircraft building and space exploration is an undoubted priority for us today. This is because we associate our plans for diversification of the economy and building up its high technology sector with the development of the space industry and aviation. We stand committed to allocating serious investments and serious resources for aviation building and the space industry, and forming truly competitive companies and enterprises that can win a niche in the market and generate and attract resources for modernization and retrofitting. In developing our own aerospace industry, we are ready for broad cooperation with our partners.”

“I am sure that interesting contracts and broader business connections await the MAKS participants and that the meetings in the Moscow area will bring new opportunities for many of the participants,” Putin said.

On Thursday, the program of demonstration flights on the third day of the MAKS -2011 air show was concluded with the performance of planes of the times of the Second World War. About one hour before the closure of the business day at the air show, reconstructed planes of the times of the Second World War, legendary I-16, MiG-3 and Po-2 appeared in the skies, performing aerobatics for some 40 minutes.

The program of the show for the day was fulfilled completely, although there was a minor incident involving a plane of Latvia’s Baltic Bees group. The world’s biggest airliner, Airbus A380, was flown. Sukhoi Superjet-100 and the fighter of the fifth generation T-50 (PAK FA) also performed. Those watching the show broke out in spontaneous applause when the amphibious Be-200 plane discharged streams of water the colours of the Russian flag. Pilots of the Russian Falcons group and pilots of transport and military helicopters also showed their skills.

IAF's Sukhoi jets to be upgraded to fifth generation fightershttp://www.mid-day.com/news/2011/aug/190811-sukhoi-jets-30MKI-fighters-upgrade-iaf.htm

India's air superiority Sukhoi-30MKI fighters will soon be converted into 'Super Sukhois' by upgrading them with fifth generation combat jet features, the Russian original equipment manufacturer Irkut Corporation has announced.

The upgrade will include a new cockpit, an upgraded radar and advanced stealth characteristics to make the plane less visible to enemy radar than the existing Indian Air

By: Agencies Date:  2011-08-19

 Place: New Delhi

Force (IAF) Sukhoi-30 fleet, Irkut's president and chairman Alexy Fedorov said at the Moscow Air Show here.

The IAF currently has five operational Sukhoi 30MKI squadrons numbering around 100aircraft. It will ultimately have over 230 Sukhoi-30MKIs or 13 squadrons in its fleet.

The fleet is under licenced production at the Bangalore-based Hindustan Aeronautics Limited (HAL) and the entire fleet will be upgraded to the 'Super Sukhoi' configuration.

"The upgrade will apply not only to the aircraft in service with the Indian Air Force (IAF) but also to those yet to be delivered to India and to be licence-manufactured by HAL," Fedorov said.

Most significantly, the aircraft will be able to carry a heavier weapon load, including the airborne version of the BrahMos supersonic cruise missile, he added.

Fedorov said the 'Super Sukhoi' will be a potent aircraft similar in features to a fifth generation aircraft. However, he refused to provide specific details of the upgrade, stating that the exact nature of this was still to be decided between the Indian and Russian sides.

Discussions are currently on regarding various aspects of the proposed upgrade, he said.

The Irkut chief did not provide any indication of the cost of the upgrade project. However, going by the general cost trends of similar upgrades, the price could run close to $1 billion.

Meanwhile, HAL is upbeat over its participation in the cutting-edge technology fifth generation fighter aircraft (FGFA) project.

The Sukhoi T-50 aircraft -- also called the PAK-FA -- unveiled at the Moscow International Air Show (MAKS) 2011 Wednesday will make India the only country outside of the US and Russia to have a fifth generation fighter.

HAL chairman Ashok Naik, who is here for the MAKS, told Defenseworld.net that HAL's participation in the project is "well on track" with a preliminary design contract signed between India and Russia for $295 million.

The preliminary designing could take about 18 months to conclude. Detailed design work would then follow during which the full scope of the project would be defined. The basic requirement for the Indian fighter would be a twin-seater configuration, he added.

"HAL is keen to complete the design phase and move forward on the project," Naik said, adding that the specific details of the Indian components that will go into the FGFA will be decided during the detailed design phase.

HAL will be working with its Russian partner United Aircraft Corporation (UAC) in co-developing an export version of which the IAF will be the first customer.

India has expressed a requirement of 250 to 300 PAK-FAs, which are scheduled for an Indian induction beginning 2016-17 and the procurement cost of the fleet is likely to exceed $35 billion. Russia too requires equal numbers of the jet.

DATE:19/08/11SOURCE:Flight InternationalMAKS: Armavia doubles Superjet presence at show http://www.flightglobal.com/articles/2011/08/19/360886/maks-armavia-doubles-superjet-presence-at-show.html

By David Kaminski-Morrow

Armavia's first Sukhoi Superjet, the initial production aircraft, demonstrated its capabilities at the MAKS show four months after the type entered airline service with the Armenian carrier.

It spent an hour in the skies over Moscow, showing off its performance to media representatives.

The PowerJet SaM146-equipped aircraft, named after cosmonaut Yuri Gagarin, started operating for Armavia on 21 April and by 7 August it had clocked up 617 flight hours across 250 operations.

Sukhoi said the aircraft (EK-95015) had flown on a network from the Armenian capital, Yerevan, covering 20 airports in Russia and Ukraine, as well as Europe and the Middle East.

Daily utilisation had reached, in some cases, up to 16.5h, the airframer said, which displayed the Armavia twinjet at MAKS along with one of its prototype Superjets.

"The aircraft fully confirmed its operability on regional as well as short- and medium-haul sectors," it added.

Aeroflot is the only other user of the type so far, and had logged 227h in 139 operations by 7 August, having put the twinjet into service on 16 June.

It has deployed Superjet on routes from Moscow Sheremetyevo to St Petersburg, Nizhny Novgorod, Ufa and Ekaterinburg.

While Aeroflot's initial experience has not been entirely smooth, Sukhoi said: "Entering commercial operation is one of the most critical and difficult stages of a programme to create a new airliner.

"At the initial stage, without exception, all new aircraft are faced with unforeseen technical problems that may emerge only during intensive use.

"In the first year - especially in the first months - aircraft-on-ground situations occur much more frequently than in subsequent operations."

Sukhoi added that the key issue is not the problems but the speed at which they are resolved.

No such problems emerged during the Armavia demonstration flight, during which participants were able to make a rare in-flight visit to the cockpit.

Sky Aviation of Indonesia has signed for 12 of the twinjets at the show, and sources familiar with the situation say Russian energy giant Gazpromavia also intends to take 10.

PAK FA fighter jet is super-smart, say pilotshttp://rt.com/news/t50-pak-fa-maks/

Published: 19 August, 2011, 09:57Edited: 19 August, 2011, 10:05

The T-50 is still being developed, so most of its technical specifications are top-secret. But visitors to the MAKS-2011 air show got truly unique chance to see the jet in flight when PAK FA’s first-ever public display took place on Wednesday.

The skies around Moscow have been even busier than usual this week, with the MAKS-2011 international air show seeing flying machines performing all kinds of gravity-defying stunts.

Pilots in their military and specialist helicopters have also been showing off their skills, alongside aerobatic teams like the Russian Falcons who have torn up the skies with stunning tricks.

The Russian stealth fighter, the T-50, enjoyed its international debut and is being touted as a rival to America’s F22 Raptor.

Rumours about the aircraft abound, but until now, only a select few have seen it with their own eyes.

To Russian aviation fans, the T-50 is known as PAK FA (short for Advanced Frontline Aircraft System).

The fighter jet is being developed by the Sukhoi design bureau under the watchful eyes of the United Aircraft Corporation, and the entire project is shrouded in secrecy – so much so, that UA said it could not even talk about it on camera. 

Despite the information blackout, the PAK FA fighter jet remains a top priority for the country's aircraft industry.

“The United States and Russia are the only two countries in the world that have the technological potential to implement a large-scale national project for the development of a fifth-generation jet fighter,” believes  Igor Korotchenko, Director of the Centre for Analysis of World Arms Trade. “The fact that Russia is demonstrating two models at this year’s MAKS air show is strong evidence that Russian aviation is in a very good state.”

The jet can reportedly carry out combat duty in any weather at any time of day, and will feature a special coating making it less noticeable to anti-aircraft radars. It will also be able to cruise at super-sonic speed.

But most of the guesswork boils down to this: when fully developed, the Russian 5th generation fighter will give the American F-22 and F-35 a run for their money in terms of stealth capabilities, maneuverability, and cost.

Sergey Bogdan, one of the pilots who tested the PAK FA, told RT:  “This being a new-generation fighter, it is much more comfortable to fly. Everything was designed with safety in mind. It has thrust-vectoring engine nozzles, so it flies safely at low, near-zero speeds.  It's safe even when it flies tail first. The data environment in the cockpit is also new. The fighter provides intelligence support to the pilot.”

The jets are supposed to be fully developed by 2015. It is hoped orders for roughly 600 jets will follow, with one-third of that number going to the Russian Air Force.

But until the final touches to the project are made, the only chance to see the hope and pride of Russian aviation is at the MAKS-2011 air show.

Prestigio starts sales of GLONASS/GPS navigators in Europehttp://abc.az/eng/news_19_08_2011_56927.html

Baku, Fineko/abc.az. Non-Russian companies start promoting Russian conversion system of global positioning GLONASS (analog of American GPS).

" Mobile gadgets: readers, smart-phones, tablets, navigators " agency reports that European release of automobile navigator Prestigio GeoVision GV5135 supporting both GPS and GLONASS has been appointed for the fourth quarter of 2011. Russian sales of navigator will start in September for recommended retail price of 4590 roubles. GeoVision GV5135 is the first navigator supporting GLONASS to be sold beyond CIS.

Prestigio’s Executive director for European and CIS countries Yuri Antoshkin has reported that while working on Prestigio GeoVision GV5135 they particularly oriented on Russian market but a number of European markets demonstrated an unexpected interest to double-system GLONASS- GPS solutions.

" There are already all foreign preconditions for this. GLONASS’s satellite grouping already provides coverage of 90% of the planet and technically GLONASS- GPS solutions are more exact and stable than their GPS analogs. At that the cost of offered GLONASS- GPS solutions is already comparable with one-system GPS analogs ",- Y. Antoshkin said.

Navigator Prestigio GeoVision GV5135 is built on MStar MSB2501 chipset with 400- Mhz processor. Resolution of 5-inch sensor screen is 272 by 480 pixels. The display has no upstands (i.e. not " drowned" in the body ) to facilitate finger control device.

The model is equipped with media record player , 2 GB built-in memory and accumulator for 1200 Mh.

As early as in May Russia started sales of double-system Lexand SG-555 and  Explay GN-510 navigators (the last model was presented in march under the name GN-410; the final version put for sale got other design  and letter index). These navigators have been provided with full simultaneous GLONASS and GPS support. At that unlike Glospace SGK-70 they are comparable with modern GPS navigators for the cost and characteristics. In June it was launched Explay GN-520 model differing in design from GN-510. Thus Russian market of these devices originated in 2011 and this same year it can become international.

 

19.08.2011 11:08

Jeppesen working to transform Russian airportshttp://www.centreforaviation.com/news/2011/08/19/jeppesen-working-to-transform-russian-airports/page1

19th August, 2011

Russia’s airports are looking abroad to increase capacity, efficiency and safety, both on the ground and in the air, to cope with rising traffic and to upgrade ageing infrastructure. Basel Aero Company, operator of Sochi Airport, in cooperation with the Moscow State University of Geodesy and Cartography, has signed an MoU with Boeing to help Russian airports analyse and optimise their ground operational plans. The objective is to introduce new airport and airspace procedures with the goal of improving the safety and efficiency of Russian airspace. [612 words]

06:24 19/08/2011ALL NEWS

Moscow officialdom facing further cuts - mayor

http://www.itar-tass.com/en/c154/207283.html

MOSCOW, August 19 (Itar-Tass) — The Moscow administration should expect further job cuts, city mayor Sergei Sobyanin told reporters.

"In the past 12 months, 2,000 officials have been made redundant, and next year, we'll ax another 1,000 jobs in Moscow administration," Sobyanin said.

According to the mayor, performance is crucial in making the decision on each official. "Job cutting in itself is of little value; we have to look into how well they performed, and review their activities. This is what we're doing within the framework of the city's administrative commission," he said adding that "we carry out review, cut jobs, and streamline and simplify at all the departments."

"There are rather many officials in Moscow, but then, it's a big city. At present, there are more than 24,000 officials," he said, "as for top officials, they are all well-known."

After Sobyanin was appointed Moscow mayor last autumn, he reshuffled the city government and replaced a majority of district board heads. He fired many officials for inefficiency in handling city economy issues.

 

Moscow to cut 1,000 civil service jobs in 2012 - mayorhttp://en.rian.ru/russia/20110819/165912669.html

01:55 19/08/2011

MOSCOW, August 19 (RIA Novosti)

The number of Moscow officials will be cut by some 1,000 next year, Mayor Sergei Sobyanin said on Thursday.

About 2,000 civil service jobs were cut in Moscow over the past year, the mayor told journalists. Currently, the number of Moscow officials stands at 24,000, he added.

Sobyanin became Moscow mayor in October last year, after his predecessor Yury Luzhkov was fired by President Dmitry Medved ev "over loss of confidence." The Moscow government saw significant shifts after the new mayor took office.

Moscow expands privatisation programme to $7bn

http://www.bne.eu/dispatch_text16386

bneAugust 19, 2011

The Moscow city government is expanding its privatization program for 2011-2013, to include a roster of hotels, chain of cinemas and wide network of pharmacies, reports Vedomosti. Overall, the capital hopes to raise $6.95bn, from the two-year program.

The list of the assets to be put on the block now includes Hotel Company (which owns 14 hotels) and a 30% stake in the Hilton Leningradskaya, as well as the United Directorate of Cinema Networks' Property Complex (39 cinemas). The stakes in 86 city pharmacies held by Moskovskaya Apteka will also be sold.

Hotel Company is likely to be priced at $3,000 per sqm, with the asset likely to be bought by a major non-core investor for further resale, a large businessman, or a hotel operator, the paper writes without adding further detail.

The city's stake in the Hilton Leningradskaya is valued at about $90m ($3,500 per sqm), with the current owner of the other 70% holding pre-emptive rights to the city's stake. The city plans to raise RUB 200bn (EUR 4.82bn USD 6.95bn) from its assets privatization in 2011-2013. (c) Esmerk

Mayor says New Moscow project will add 160k ha of land to the city http://www.bne.eu/dispatch_text16386

Renaissance CapitalAugust 19, 2011

Event: Yesterday (18 August), in an interview with journalists, Moscow Mayor Sergey Sobyanin said that the New Moscow project will add 160k ha of land to the City of Moscow. In July, the mayor mentioned that 144k ha of land would be annexed around the Varshavskoe and Kievskoe roads; now, parts of the Leninsky, Podolsky and Naro-Fominsky districts are also planned to be linked to Moscow. A total of 60k ha of residential and 45k ha of commercial real estate are expected to be built in the new area. The plan has not been finalised yet, and it is too early to say how likely it is to be implemented; however, according to the mayor, it might take around two years to coordinate the project (get documentation and make a general plan of development). Average prices in the Moscow Region are more than 20% below those on the outskirts of Moscow proper, and we think companies that have existing projects in those areas should benefit from this plan, while the effect on companies intending to develop new projects in these areas is unclear.

PIK has a 1mn-m2 residential project in Kommunarka, and LSR has a 285k-m2 project in Bolshoye Domodedovo, which are likely to be annexed to Moscow under the New Moscow plan. Etalon remains our preferred play in the sector, and is now trading at 2011E and 2012E EV/EBITDA multiples of 4.8x and 4.1x, respectively, while LSR is trading at 2011E and 2012E EV/EBITDA multiples of 6.7x and 5.3x, respectively; both trade at discounts to PIK Group's respective 2011E and 2012E EV/EBITDA multiples of 12.7x and 8.7x.

Russia may allocate $340 mln for new technoparkshttp://en.rian.ru/russia/20110819/165918854.html

07:45 19/08/2011

MOSCOW, August 19 (RIA Novosti)

The Russian Communications Ministry is hoping to receive an additional 9.9 billion rubles ($340 million) from the state budget for the construction of new technological clusters, Russian daily Izvestia said on Friday.

The allocation of the money is expected to be approved on August 23, during a meeting of the government transport and communications committee, the newspaper quoted a high-ranking ministry official as saying.

The Russian government has already approved the allocation of 6.09 billion rubles ($209 million) for the development of technological clusters in the country by 2014 as part of its efforts to diversify Russia's energy-dependent economy.

In 2008-2010, the Russian technological clusters' joint incomes stood at 22 billion rubles ($755 million).

00:13 19/08/2011ALL NEWS

Petersburg governor Matviyenko not to run for president

http://www.itar-tass.com/en/c154/207188.html

ST PETERSBURG, August 19 (Itar-Tass) — St.Petersburg governor Valentina Matviyenko said she had no ambitions to run for president.

"I have no such ambitions; it's out of the question by definition," she told reporters on Thursday.

05:51 19/08/2011ALL NEWS

9 United Russia members defect to Just Russia Party

http://www.itar-tass.com/en/c154/207266.html

MOSCOW, August 19 (Itar-Tass) — Nine members of the United Russia Party in Smolensk joined the Opposition Just Russia Party. Deputy chairman of the Smolensk regional legislature Nikolai Martynov, regional legislature deputies Alexei Kazakov, Smolensk Town Council deputies Ilya Lazarenkov, Sergei Lebedev, Vladimir Vinogradov, Galina Zhuravkova, and Mikhail Atroshchenko and head of the Talashinskoye rural settlement Sergei Esalnek and his deputy Igor Andreyev announced that they are quitting United Russia.

Just Russia has already named it "the Smolensk Breakthrough" Lawmaker at the State Duma lower house of the Russian parliament Alexander Chetverikov told reporters the issue of joining Just Russia was discussed with other deputies of the Smolensk regional legislature and regional politicians. "This process is under control of Just Russia's regional branch and its head Oksana Laberko," Chetverikov said.

"Unlike our opponents, we're not trying to drag everybody into our ranks at any cost. It is important for us to know to what extent these people share the Party’s' ideology, how honest they are, how sincere their intentions are, whether they are professional and ready for real work for the good of fellow citizens," the Just Russia representative said.

Meanwhile, Just Russia earlier expelled five State Duma lawmakers who had joined the All Russia People's Front. They are deputy speaker Alexander Babakov, former lawmaker Yelena Vtorygina, who had handed over her mandate to Party leader Sergei Mironov, deputy head of the house committee for nationalities Mikhail Starshinov and lawmaker Vlasily Shestakov, as well as deputy chairman of the house committee for protection of health Elmira Glubokovskaya. Also, four deputhyies of a town council in the Kranodard territory joined United Russia.

01:45 19/08/2011ALL NEWS

Politician calls colleague's nazi-styled photo "vile photoshop"

http://www.itar-tass.com/en/c154/207226.html

VLADIKAVKAZ, August 19 (Itar-Tass) — Leader of the Just Russia Party Sergei Mironov said the images of head of Just Russia's election headquarters, lawmaker Oleg Mikheyev sporting a nazi uniform, shown by several mass media outlets, were "a vile photoshop."

"We decided to open the Leningrad and Stalingrad fronts against the (ruling) United Russia Party; two specialized headquarters were set up in these hero cities, because nobody is allowed to use the sacred memory about the war heroes and Russian citizens' hate towards nazism in political struggle," Mironov said at the Congress of Party deputies in Vladikavkaz on Thursday.

02:20 19/08/2011ALL NEWS

Defendants in Moscow riots case ask to question interior minister

http://www.itar-tass.com/en/c154/207229.html

MOSCOW, August 19 (Itar-Tass) — Defendants in the case over mass disturbances in Moscow's Manezhnaya Square last December asked the court on Thursday to question Interior Minister Rashid Nurgaliyev, Moscow police chief Vladimir Kolokoltsev and former Moscow police spokesman Viktor Biryukov.

"Today, defendant Ruslan Khubayev filed a petition to summon to the trial Nurgaliyev, Kolokotsev and Biryukov, and question them as witnesses. Other defendants and their lawyers supported the petition," said Dmitry Agranovsky, who represents the interests of one of the defendants.

According to Agranovsky, Kolokoltsev and Biryukov were in Manezhnaya Square during the rights, therefore they witnesses those events.

"As for Nurgaliyev, the defendants want him to tell the court where he got the information that it was leftist radicals who staged the riots," the lawyer said.

08:04 19/08/2011ALL NEWS

Rescuers, police patrol Primorye beaches closed after shark attacks

http://www.itar-tass.com/en/c154/207330.html

VLADIVOSTOK, August 19 (Itar-Tass) —— More than 60 EMERCOM rescuers together with police this Friday patrol Primorye beaches closed after shark attacks.

Rescuers watch the sea from boats in the most dangerous areas, the press service of the Emergencies Ministry's Primorye regional department told Itar-Tass.

The Emergencies Ministry (EMERCOM) has repeated its warning to residents and guests in the region this Friday not to swim and dive in the sea and not to use water rides. Though no new cases of shark attacks have been reported, swimming in the Sea of Japan near the Primorye coast remains dangerous until all the circumstances are cleared up, rescuers noted in their address.

0:59 19/08/2011ALL NEWS

All forest fires extinguished in Russia Far East

http://www.itar-tass.com/en/c154/207413.html

KHABAROVSK, August 19 (Itar-Tass) — There are no forest fires at present in the Russian Far East. The five most recent outbreaks of fire, which had been registered in Yakutia, were extinguished on Thursday, the Forestry Department of the Far East Federal District told Itar-Tass on Friday.

However, a regional state of emergency introduced by the decree of the President of Yakutia on July 15 because of the large number of wildfires in the region is still in effect in 18 districts of the republic and the city of Yakutsk.

In connection with the start of the hunting and berry season, as well as continuing haymaking season in the territory of Yakutia, the Russian Emergency Situations Ministry’s (EMERCOM) main department for the republic has requested hunters and residents of rural areas to protect forests from fires and observe the basic fire safety rules

in forestlands and reminded them that the emergency situation regime in forests is still in effect. Yakutia’s head Yegor Borisov said earlier that “only regular monitoring from the air may help prevent wildfires in the republic, with a territory of more than three million square metres.” A total of 60 million roubles have been allocated from the federal budget in 2011 to sponsor air survey in Yakutia, although the republic needs 350 million roubles for these purposes.

Since the beginning of the season the Far East has been affected by 1,718 fires, the fire swept over 900,000 hectares of land, including more than 718,000 hectares of forestland.

The region’s forest protection services are currently receiving new equipment. “More than 700 million roubles have been allocated for these purposes from the federal budget to the Far East Federal District, and an additional 50 million roubles have been provided from regional budgets. A total of 28 state contracts on the supply of 253 units of forest fire-fighting equipment have been concluded,” the Forestry Department said. Yakutia has already received 38 units of equipment, and the Khabarovsk Territory - 16 units.

On Wednesday, forest fires in the Russian Far East were continuing only in Yakutia. A total of four fires were registered there on that day - 136.5 hectares of forest and 68.6 hectares of non-forest areas were burning. There were no wildfires in other Russian Federation subjects in the east of the country, the Forestry Department of the Far Eastern Federal District told Itar-Tass. “Over the past day the forest protection service extinguished three fires at an area of 319 hectares,” the department said.

The first Russian Orthodox Church in the UAE held its primary service (advertisement)http://www.kyivpost.com/news/world/detail/111199/

Today at 11:02 | Arnold Savin Next to the Mar Thoma church in Al Yamook, the five blue domes of the Saint Philip the Apostle Russian Orthodox Church Complex rise tall, reminiscent of a little piece of Moscow in a sandy Sharjah site.

The first Russian Orthodox Church in the Arabian Peninsula held its first service and opening ceremony Saturday.

It is the biggest Russian Orthodox Church Complex outside the former Soviet Union that also includes a cultural centre, and was named after Saint Philip, one of the 12 apostles of Jesus Christ.

With the first stone laid in 2007, the church was financed by Ukrainian businessman Yuri Sidorenko, 50, chairman of the advisory board of the EDAPS consortium which produces

identification documents and information systems such as electronic passports. He is also the adviser for International and Corporative Development of the Specialised Enterprise Holography.

Article continues below

Wall of icons

The church has a capacity of 900. Inside, one of the walls is adorned with images of religious icons hanging in ornate golden frames. Called the Wall of Icons, it separates the church from the altar.

One cannot over estimate the importance this church has for the 200,000 Russians in the UAE. It is the first Russian Orthodox Church in this part of the world and people have been wanting to have it for a long time, - Ukrainian businessman Yuri Sidorenko.

The wall is made of Indian teak wood, carved and plated with gold leaf in the UAE. Each of the icons was painted in Moscow and brought to Sharjah.

Above, a painted fresco adorns the high domed ceiling with four smaller frescoes of Jesus Christ's apostles representing Matthew, Mark, Luke and John.

"One cannot over estimate the importance this church has for the 200,000 Russians in the UAE. It is the first Russian Orthodox Church in this part of the world and people have been wanting to have it for a long time," said Sidorenko, who was given the highest award for the Russian Orthodox Church, the order of Glory and Honour First Degree by the Holy Patriarch Kirill of Moscow and All Russia.

"It was not hard getting it built thanks to the support of Sharjah leadership, who expressed a sincere desire for a cultural monument to be located here," he added. "We are grateful to the UAE government."

Father Alexander Zarkeshev, 46, said he was overjoyed this day had come.

Saint Philip the Apostle Russian Orthodox Church Complex will start regular services in September. The building will be open to people of all faiths.

Read more: http://www.kyivpost.com/news/world/detail/111199/#ixzz1VSfLXcdc

Russian Press at a Glance, Friday, August 19, 2011http://en.rian.ru/papers/20110819/165920317.html

09:04 19/08/2011

POLITICS

Russia marks on Friday the 20th anniversary of the unsuccessful coup attempt that led to the collapse of the Soviet Union.

(Kommersant, Nezavisimaya Gazeta, Moskovskiye Novosti, Novaya Gazeta, Rossiiskaya Gazeta) Thursday’s deadly militant attacks on Israel at the border with Egypt may lead to a worsening of Tel Aviv’s relations with Cairo.

(Kommersant)

Former Ukrainian Prime Minister Yulia Tymoshenko, arrested over the signing of an “non-beneficial” gas deal with Russia, has refused to give testimony at a court until she is allowed to meet with her personal doctor to examine “alarming symptoms” of an unknown illness that she says she has been suffering from.

(Kommersant)

During Russian President Dmitry Medvedev’s visit to a school in the southern Russian republic of Adygeya, teachers voiced support of his intention to improve the examination system but kept quiet about attempts by local government officials to force them to join Prime Minister Vladimir Putin’s All-Russia People’s Front.

(Kommersant, Moskovskiye Novosti, Rossiiskaya Gazeta)

BUSINESS

Russian state-run lender VTB may cut 10 percent of its staff in the near future to make the bank’s structure more “business-oriented,” its top manager said.

(Vedomosti)

A media subsidiary of Russian energy giant Gazprom is planning to buy a company owning a large package of popular TV programs and series worth a total of $450 million. The deal may be sealed as early as in September.

(Kommersant)

Russia’s pharmaceutical market, bypassed by the global economic crisis, may face a complete stagnation by the end of the year.

(Moskovskiye Novosti)

SOCIETY

Moscow will be expanded by 160,000 hectares in line with the authorities’ city development plans, Mayor Sergei Sobyanin announced on Thursday.

(Moskovskiye Novosti, Kommersant, Vedomosti)

SPACE

Russian space agency Roscosmos has lost another satellite: Mission Control failed to establish communication with the new Express-AM4 satellite that was launched from the Baikonur Space Center in Kazakhstan on Thursday. The loss constitutes a major blow to Russia’s space communications.

(Vedomosti, Moskovskiye Novosti)

TOURISM

In order to bring more tourists to Russia, the country’s government is planning to attract 200 billion rubles ($6.8 billion) of private investments in the tourism industry within the next eight years and spend some 100 billion rubles ($3.4 billion) from state funds. The government, however, is planning to save money on advertising, which critics say is likely to bring all efforts to naught.

(Vedomosti)

MILITARY

The Russian Security Council will consider replacing military officials at the Chief Military Prosecutor’s Office and the Military Investigative Committee with civil staff during one of its upcoming meetings, a Kremlin source said. A relevant proposal was put forward by Defense Minister Anatoly Serdyukov last spring.

(Nezavisimaya Gazeta)

How far to Alaska?http://rt.com/politics/press/rossijskaya-gazeta/eurasian-american-transcontinental-railway/en/

Published: 19 August, 2011, 02:37Edited: 19 August, 2011, 02:37

By Vladimir Tayursky (Yakutsk)

Yakutsk dreams of traveling to America by railway 

The fate of the Eurasian-American transcontinental railway project became the main topic of discussion at the Comprehensive Infrastructure Development of Russia’s Northeast conference, which took place in Yakutsk. Tunnel construction under the Bering Strait is considered to be one of the most ambitious 21st-century projects. The problem is not even so much that the width in the narrowest part of the strait is 86 kilometers. In order to lay a railroad track from both sides, it is necessary to build about 4,000 kilometers of railway tracks on Russian territory and 2,000 in Alaska and Canada. Meanwhile, a large portion of the route will pass through the polar region.   The railway line, which will reach Yakutsk this fall, will be continued through Magadan to the final destination in the Chukotka settlement of Egvekinot. On the other side of the strait, a railway will stretch from the Canadian city of Dease Lake, through Fairbanks, Alaska, to the small town of Nome.        On both sides, it will need to be laid through sparsely populated areas. For what? “The transport link could account for 25 percent of the global volume of transfers and will have far-reaching implications for global trade,” said the president of the nonprofit organization Transcontinental, George Koumal. The head of the Ministry of Economic Development’s Council for the Study of Productive Forces, Viktor Razbegin, gives a more modest assessment – up to 5 percent of all global trade.“Today, the flow of cargo between East Asia and North America amounts to about 370-380 million tons, and is expected to increase to 460-500 million by 2030,” he said. “If we assume that at least 15-20 percent of cargo will be transported by land, that will be enough for return on investment over 15-20 years.”    According to Razbegin, the transport link could be the backbone for development of Russia’s entire infrastructure in the northeast, as it will attract highways, communication systems, power lines and other communications. Moreover, the railway to Alaska, in accordance with the project, is expected to be built in conjunction with a highway.     The authorities of Yakutia, the most problematic area in terms of regional transport links, believe that construction of the first section of the highway should begin immediately.  “In December 2012, when the construction of the Berkakit-Tommot-Yakutsk railway is fully completed,” said the republic’s first deputy prime minister, Gennady Alekseev. “And already in 2013, it should be extended to Magadan.”Alekseev explains the rush with the need to keep the construction team. If it falls apart, it will be hard to find other experts with work experience in the north. Meanwhile, the line

to Magadan is part of Russia’s transport development strategy, regardless of whether or not the shores of the two continents will be connected. The idea of constructing a transcontinental railway, with an estimated cost of $94 billion, is perceived differently on the two sides of the ocean. The US, for example, allocated $10 million for a feasibility study in 1996. Meanwhile, Transcontinental, which directly handles the project, was founded by the State of Alaska and the American Railroad Association.   Russian authorities have also shown interest in this initiative. In April 2007, Moscow hosted a representative international conference dedicated to the issue of connecting the two shores. At the conference in Yakutsk, the deputy presidential envoy of the Russian Federation to the Far Eastern Federal District, Aleksandr Levintal, said that “no decisions in terms of allocation of funds and approval of the project have yet been made.”   The idea to lay a railroad track between Eurasia and America is credited to former Colorado governor William Gilpin. Since 1890 this project has been capturing people’s imagination, though overland transport between the two continents had existed long before then. Tens of thousands of years ago, instead of the Bering Strait lay the Bering land. It was used by early humans to cross from Asia to uninhibited America and settle the continent.

Drunks and Detours in Russia's Unquiet August: Jeffrey Taylerhttp://www.bloomberg.com/news/2011-08-19/drunks-and-detours-in-russia-s-unquiet-august-jeffrey-tayler.html

By Jeffrey Tayler Aug 19, 2011 4:43 AM GMT+0200 0 Comments

This summer has been rough for aspiring lawbreakers in Russia. Just as riots were dying down last week in London, they found their analogue in downtown Moscow early Sunday morning as hooligans took to the streets. Their efforts, though, didn’t have quite the same impact.

On the central Rozhdestvenka Street “a group of youths between fourteen and twenty-two years of age gathered” and were quickly joined by two hundred more, reported Itar-Tass. The Ministry of the Interior’s press center stated that “a majority of them were in a non-sober state and tried to block traffic,” and that police quickly dispatched special divisions, patrol cars, and rapid-reaction units “with the intent of preventing mass violations of public order.” Contrary to what one might expect, neither politics nor ethnic rancor had fired up the booze-addled, would-be vandals; “an extreme sports championship” had. After conducting “prophylactic talks” with the youths and making arrests, the police identified a pair of twenty-two-year-old Muscovites as the failed event’s initiators and charged them with “petty hooliganism.”

Russian law-enforcement authorities have far more lethal threats than hooliganism, petty or otherwise, to worry about. On Monday, Kommersant reported that the Federal Security Service disrupted a plot last month to blow up the prestigious, high-speed Sapsan train running between Moscow and Saint Petersburg. Had the plot succeeded, the country would have suffered a terrorist attack with “victims numbering in the hundreds” -- the third attack in the past four years against high-speed trains connecting Moscow and Saint Petersburg.

The four suspects, natives of the predominantly Muslim Caucasus region and Mordovia, a republic in central Russia, allegedly conspired to detonate an explosive device made of fertilizer, batteries, and wires in the environs of Firsanovka station, in a northern Moscow suburb. The planned violence was presumed to have a political motive: revenge. Alleged bomber Murad Eldibiyev, wrote Kommersant, “agreed to become a terrorist because, back in 1999, he saw how his ‘comrades were perishing’ in the assaults launched by federal troops” during the war in the southern republic of Chechnya, and how “servicemen were grossly ‘violating the rights of [Chechnya’s] citizens.’” Kommersant also noted that “all preparations for the terrorist attack took place under the surveillance of FSB agents” who arrested the four on 7 and 8 July. They have been charged with “illegally manufacturing and storing a weapon and ammunition.”

Down in the Caucasus itself, the terrorist menace persists. Authorities in Khasavyut, Daghestan, acting on a tip from a local resident, found a bomb when inspecting a truck parked near a flea market, according to Itar-Tass. The device consisted of "a metal tube a yard long and 55 centimeters wide” that was “stuffed with explosive material” equivalent to a hundred kilograms of TNT. Thankfully, “it was deactivated on the spot.”

* * *

For the past three months, strutting Muscovites have weaved their way around municipal employees, mostly Central Asian migrant laborers, hard at work ripping up the capital’s asphalt sidewalks and replacing them with ash-colored bricks. The Moscow Times reported that the inconvenience was just the beginning of Moscow Mayor Sergei Sobyanin's $136 million project to lay 4 million square meters of brick sidewalk over the next few years.

As usual, the project is has attracted conspiracy theories of the kind that in Russia often prove to be at least partly true. "The facelift … was ordered without a City Duma vote or a public discussion, opening the door to speculation about its purpose. …City Hall has been forced to fend off media reports that Sobyanin's wife has a finger in the sidewalk pie, and experts have questioned whether the bricks will really be better for Moscow than good old asphalt." The mayor’s office has strongly denied that either Sobyanin or his wife, who in the early 2000s managed a brick-making factory in Siberia, would profit from the urban renewal efforts.

The way the bricks are laid may be causing problems, contended Komsomolskaya Pravda, whose reporter quoted a middle-aged stroller distressed by the wide interstices

between the bricks: “I feel sorry for girls on high heels. Look at the spaces between the bricks! Your heel slips into one and that’s the end of it!” Plastic barriers direct pedestrians into the often traffic-clogged streets, posing a threat to all afoot, especially mothers with baby carriages. An expert, however, told the newspaper that “from the ecological point of view, the bricks are no doubt better. You see, asphalt is a petroleum byproduct. When it heats up . . . it gives off toxic substances.”

* * *

Perhaps, as many Russians think, the country’s intractable problems stem from corruption in high places. Former Soviet President Mikhail Gorbachev, according to rbc.ru, implied as much in a press conference he gave on Wednesday, on the eve of the hard-line coup attempt against him that took place twenty years ago this month.

“There must be a change at the top level of government,” he told journalists. “It’s about time we climb out of the rut we’re in . . . The policies and proposals of the current government represent a move backwards.”

Just who does Gorbachev think might be fit to lead? “I like [Mikhail] Prokhorov,” citing the nickel and gold magnate (and owner of the New Jersey Nets) who, in May, joined the pro-business party Right Cause, and has criticized the Medvedev-Putin diarchy. “He’s tired of the oligarchs and wants to become premier.”

We’ll see about that. State Duma elections are scheduled for December, but United Russia, though losing support according to opinion surveys, looks set to win them. Presidential polls are due to take place next March. They still lack one thing: candidates.

(Jeffrey Tayler is Moscow correspondent for World View. He is a contributing editor at The Atlantic and the author of six books, including "Murderers in Mausoleums: Riding the Back Roads of Empire between Moscow and Beijing." The opinions expressed are his own.)

To contact the writer of this column: taylerjeffrey@yahoo.com.

To contact the editor responsible for this column: Mark Whitehouse at mwhitehouse1@bloomberg.net.

Japan and Russia: Lessons from each other http://www.oyetimes.com/news/asia/13182-japan-and-russia-lessons

Friday, 19 August 2011 02:21 Written by Sameer Jafri

Russia is about 40 times bigger than Japan in areal extent; still they both complement each other in many ways. Albeit following different systems of administration and governance, both Japan and Russia boast of lots of feats to their credit attained during the post-World War period. Still, there remains much for both of them to learn from each other.

The first lesson pertains to the foreign policy. Ever since the inception of the Soviet Union, Moscow’s foreign policy has been by and large independent. Even though Soviet economy was less integrated with the world, it managed to follow an independent foreign policy without bowing down to any external pressure. Glasnost and Perestroika too symbolized distinct Soviet policy measures instead of being dictated by a foreign power. Even after the breakup of the USSR, Russia continues to chart an independent course of action, as much as possible. In contrast, since the end of the Second World War, Japan’s foreign policy has been dictated by the US to a great extent. Though the Democratic Party of Japan (DPJ) won the last elections on plank on pursuing an “independent” foreign policy and “equal” alliance with the US, little has changed since then. There is little reason that the world’s third largest economy (second largest till recently) should rely on another country for its relations with the world. Here, Japan can learn from Russia, which notwithstanding a modest level of economic development, is audacious enough to assert itself at the global stage.

Both Japan and Russia have made giant leaps forward in the field of science and technology. Russia has been a leader in space, aviation, military equipment and nuclear energy technologies. Russian contribution to the world, inter alia, includes the world’s first space station Mir and the most consistent, safest and presently only functional spaceship Soyuz. On the other hand, Japan has emerged as the undisputed global leader in high-tech semiconductor and automobile industries, with reputed brands like Sony, Toshiba, Honda and Toyota serving as the country’s soft power across the world.

Another major lesson which Russia can and should learn from Japan is that of the utilization of resources. Japan barely has any mineral resource at its end. It imports almost every raw material to feed its industries, and exports finished consumer and capital goods, thus making huge money. In contrast, Russian economy is largely dependent on the export of raw materials and hydrocarbons. Yes, Russia is the richest country in the world in terms of natural resources and they provide it leverage at the global stage, but that is not sustainable. Minerals are exhaustible and bound to end one day. Also, too much reliance on minerals is making Russia vulnerable to the Dutch Disease phenomenon. Hence, rather than being entirely dependent on minerals, Russian government needs to embark on modernisation, research and development and try to develop high-tech industries which would provide large number of high quality jobs to its people.

The size of population of both the countries is similar, and declining population is another major problem which ties both nations together. Moscow has made some efforts in this regard and has witnessed an increase in fertility rates whereas Tokyo’s efforts are yet to show any sign of revival in fertility. Part of the solution to this problem lies in

opening the national borders for immigrants (skilled and semi-skilled) from third world countries. Russia has lately undertaken some steps to ease immigration restrictions, thus paving the way for the arrival of talent. Japan, probably the most conservative country in terms of immigration policy, has so far kept its borders shut to outsiders. Japanese government needs to understand that apart from arresting the decline in population, immigration will bring in new talent which would help sustain it as an economic and technological powerhouse.

One thing is clear. The future of these maritime neighbours lies in cooperation and coordination, not conflict. While Russia can become a major supplier of raw materials for Japanese industry, Japan can be a major source of technical know-how for the modernisation of Russian industries. In the wake of Chinese restrictions on the export of Rare Earth minerals (China accounts for 95% of global rare earth exports); Russian Rare Earth mines can become a viable alternative to feed high-tech Japanese industries. Skolkovo (better known as Russia’s Silicon Valley) can be another starting point of collaboration, whereby Japanese companies can setup their innovation hubs and take on mutually rewarding projects.

They should solve their dispute over Kuril islands in earnest, by agreeing to jointly develop the resources of the region rather than quarreling over its ownership. Recently concluded Russian-Norwegian maritime border demarcation treaty can play a guiding tool in this regard. Moreover, in the wake of emergence of China as an economic giant, and its rapid acquisition of blue water naval capabilities, it becomes imperative that Russia and Japan join their strengths (both economic and defence) and keep potential Chinese domination in the Asia-Pacific region at bay. About- Sameer Jafri is a freelancer and political analyst based in India. He usually writes on global and geopolitical issues.

National Economic Trends

Russian Central Banker Cautious About Liquidity, Kommersant Sayshttp://www.bloomberg.com/news/2011-08-19/russian-central-banker-cautious-about-liquidity-kommersant-says.html

QBy Marina Sysoyeva - Aug 19, 2011 6:13 AM GMT+0200

Alexei Ulyukayev, the first deputy chairman of Russia’s central bank, expressed caution about giving additional liquidity to the market in an interview with Kommersant today.

It would be “untimely” to offer additional liquidity, hence the bank has preferred to raise rates in recent years, Ulyukayev said in the interview. Too much liquidity causes “unwise spending,” including poor quality investments and “incorrect budget liabilities,” he said.

Asked about Prime Minister Vladimir Putin’s comments last week that the government was ready to provide liquidity, Ulyukayev responded that the central bank may provide banks with “any rational volume of funds” in the short term as necessary. He said this could overcome local difficulties for several months, but not solve the “global problem.”

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Russia cbank says too early to inject liquidity-newspaperhttp://www.reuters.com/article/2011/08/19/russia-cbank-idUSLDE77I00W20110819

1:00am EDT

MOSCOW, Aug 19 (Reuters) - The central bank is ready to inject extra liquidity into the market but there is as yet no need, central bank first deputy chairman Alexei Ulyukayev said in an interview published on Friday.

"If there is too much liquidity some unreasonable types of spending occur... It is premature to inject extra liquidity," Ulyukayev told the Kommersant daily.

He said that Russia is in "difficult situation" because the fiscal balance can only be achieved with oil prices at $110 per barrel.

"It can be hardly called rational," Ulyukayev said.

Ulyuakyev also said that the transparency of Russia's banking sector remains low and that the central bank is facing difficulties itself and lacks financial analysts. (Writing by Andrey Ostroukh; Editing by Alissa de Carbonnel)

CBR's reserves data reveals that it was not excessively supporting RUB last week - rouble to cushion external shocks - supportive for economic growth

http://www.bne.eu/dispatch_text16386

VTB CapitalAugust 19, 2011

News: The CBR's reserves increased USD 2.5bn in the week ending 12 August and currently stand at USD 540.2bn (up USD 60.8bn YTD).

Our View: We estimate that the revaluation of the currency, gold and bond portfolio was only slightly higher than the increase in the CBR's reserves, at USD 2.67bn. This implies that the CBR was selling FX volumes in line with the current floating corridor exchange rate regime despite the global market turbulence.

This underpins our view that, were oil prices to decline, it is the RUB (not rates and liquidity) that would absorb the negative external shock. This would be good for economic growth, but obviously negative for the rouble. We estimate that with the average oil price at USD 75/bbl (Brent) in 2012, USDRUB would weaken to 33.30 (for more details, see our What If The World Double-Dips Implications for Russia, of 12 August).

August 19, 2011 09:10

Banks have 740.1 bln rbs on CBR correspondent accounts on August 19.http://www.interfax.com/newsinf.asp?id=267040

MOSCOW. August 19 (Interfax) - Russian banks have 740.1 billion rubles on correspondent accounts in the Central Bank as of August 19 including 569.6 billion rubles for Moscow banks

The balance on August 18 was 790.3 billion rubles and 611.8 billion rubles, respectively.

Banks had 377.3 billion rubles on deposit accounts in the Central Bank on August 19 against 362.0 billion rubles on previous day.

COMMENT: No time to feel mise-ruble http://www.bne.eu/storyf2851/COMMENT_No_time_to_feel_miseruble

Ivan Tchakarov of Renaissance Capital August 19, 2011

After two long weeks of precipitous declines, the ruble exchange rate has now started to stabilise. Nevertheless, the ruble earned the unenviable title of the emerging market currency that saw the largest swings in the latest episode of market volatility. One- and three-month dollar/ruble volatility spiked to levels unseen since the 2008 financial crisis, sparking fears that possible further falls in the currency could exacerbate the severity of external shocks, and inviting calls for the Central Bank of Russia (CBR) to intervene.

The CBR dutifully obliged, selling foreign currency to stem the ruble's decline. However, the sales have been measured and intended only to stabilise excessive currency volatility. We think this move is commendable, as one key lesson from the 2008 crisis was that keeping the currency heavily managed contributed to the acute fall in real GDP in 2009.

We have also argued that the new monetary policy paradigm adopted by the CBR since the 2008 crisis will serve as an important buffer in the case of a deterioration in US and global growth prospects. In a highly managed exchange rate system, external shocks are transmitted one-for-one to the domestic economy, preventing the exchange rate from acting as a shock absorber. Now that the CBR has taken a course towards loosening its grip on the ruble and increasing its tolerance for more ruble volatility, external shocks will be, at least partially, accommodated by a more flexible exchange rate regime.

Shock absorber

While the qualitative appeal of a more flexible exchange rate may seem easy to grasp, it is more challenging to capture the possible benefits on real activity from a quantitative perspective. To investigate this, we use statistical methods and estimate the dynamic effects on Russian GDP of a 1% decline in US GDP growth relative to the baseline under two separate regimes for the dollar/ruble. In particular, we calculate the quarterly year-on-year declines in Russian GDP under a fixed and flexible exchange rate in a dynamic system that includes US and Russian GDP, inflation, policy rates and the dollar/ruble exchange rate.

If we shut out the shock-absorbing capacity of the ruble, Russian GDP contracts by a maximum of 2.5% on year three quarters after the shock, with the average four-quarter (annual) decline at 1.5%. If, on the other hand, we let the ruble take some of the hit by depreciating and supporting economic activity, Russian GDP falls by a maximum of 2.2% year on year in the third quarter, but the annual decline is significantly lower at 0.87%.

A key attendant risk to the prospects of a more flexible exchange rate is higher inflation through increased prices of imported goods. This is a valid concern, in particular when assessed against the fact that food imports make up about 15% of the overall import bill. However, we see a number of reasons why we should not expect a significant acceleration of headline inflation.

First, while the pre-2008 crisis's negative correlation of the dollar/ruble and CPI inflation is indeed robust, the behaviour of CPI inflation during the crisis demonstrates that the 40% ruble depreciation did not translate into higher price growth. This possibly reflects the deflationary nature of the external shock, as declining GDP brought about decelerating inflation.

Second, the most recent increase in inflation was almost exclusively driven by higher food prices for domestically produced goods (bread and bread products) related to the 2010 summer drought. However, with the 2011 harvest now expected to be quite good, we anticipate that food prices will decelerate in a more pronounced fashion over the course of this year and the next. Hence, we do not expect a substantial increase in price pressures, even if the increasingly challenging global environment were to be accommodated by a more flexible domestic currency.

Russian Stocks Slide to Weekly Low on Oil, Global Growth Concernhttp://www.bloomberg.com/news/2011-08-19/russian-stocks-slide-to-weekly-low-on-oil-global-growth-concern.html

QBy Jason Corcoran - Aug 19, 2011 9:27 AM GMT+0200

Russian stocks dropped to the lowest intraday level in a week as oil and metals tumbled on concern slowing economic growth will weaken demand for commodity producers.

The Micex Index (INDEXCF) sank 1.6 percent to 1,430.35 by 11:09 a.m. in Moscow, its lowest intraday level since Aug. 12. Oil producer OAO Gazprom Neft slipped 0.5 percent. OAO Magnit, Russia’s largest food seller, declined 1.8 percent. VTB Group, the country’s second-biggest lender, lost 3.4 percent. The dollar- denominated RTS Index retreated 1.6 percent to 1,558.27.

Crude for September delivery dropped as much as $2 to $80.38 a barrel in New York. Citigroup Inc. cut its forecasts for expansion in the U.S., while Morgan Stanley lowered targets for stock indexes in Indonesia and Singapore. Regulators from the U.S., South Korea and Sweden said the market turmoil posed further risks to growth, after data yesterday showed American jobless claims rose and a measure of manufacturing contracted.

“Concerns over global economic growth and the European debt situation are rising and are unlikely to recede until the market receives concrete indications of an improvement in the US and European economies,” UralSib Financial Corp. analysts led by Konstantin Chernyshev said in an e-mailed report today.

Citigroup cut its U.S. gross domestic product growth estimate to 1.6 percent in 2011 from 1.7 percent, and lowered its forecast for 2012 to 2.1 percent from 2.7 percent. U.S. initial jobless claims climbed by 9,000 to 408,000 in the week ended Aug. 13, topping the median estimate of economists surveyed by Bloomberg for a rise to 400,000.

The 30-stock Micex’s 3.7 percent retreat yesterday was its steepest slide since Aug. 10. The benchmark index halted trading for more than an hour for “technical reasons,” according to spokesman Nikita Bekasov. The gauge is heading for its fourth consecutive weekly decline.

Nickel, zinc, steel and aluminum all fell on the London Metal Exchange, while copper advanced.

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

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

Business, Energy or Environmental regulations or discussions

Foreign listings cap to be lifted later than expectedhttp://www.bne.eu/dispatch_text16386

CitiAugust 18, 2011

According to Vedomosti newspaper, a decree to increase the maximum amount of DR programmes from 25% to 100% has been submitted by FSFR, the market regulator, to the government. However, Dmitry Pankin, FSFR head, has stated that this decree will be effective only after the adoption of the law on central depository.

This step is quite logical from the regulator's point of view as it would not allow Russian market liquidity to move to foreign markets before the proper infrastructure is created locally. However, we expect the market to take this news negatively. The previous plan was to lift all caps starting from 1 September. This scenario seems to have already been priced in as spreads between local stocks and depositary receipts shrank. Now we would expect these spreads to widen again as the timing of the DR cap lift becomes uncertain. Vedomosti argues that the law on central depository will be adopted sooner rather than later, but the earliest scenario implies its adoption at the next Duma session in the autumn.

Bank of Moscow, United Aircraft Corp.: Russian Equity Previewhttp://www.bloomberg.com/news/2011-08-18/bank-of-moscow-united-aircraft-corp-russian-equity-preview.html

QBy Jack Jordan - Aug 18, 2011 10:00 PM GMT+0200

The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

The 30-stock Micex Index (INDEXCF) dropped 3.7 percent to 1,452.83 in Moscow yesterday. The dollar-denominated RTS Index lost 4.8 percent to 1,584.20.

Bank of Moscow (MMBM RX): The lender that received the largest bailout in Russian corporate history this year is being sued for more than 140 million rubles ($4.8 million) by former Chief Executive Officer Andrei Borodin, his lawyer said late yesterday. The stock climbed 1.9 percent to 876.4 rubles.

OAO United Aircraft Corp. (UNAC RX): The maker of the SuperJet mid-range passenger liner is due to report second- quarter earnings today. The shares lost 4.6 percent to 22.45 kopeks.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

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

Norilsk Nickel's new offer to UC RUSAL to be made on "more conservative" terms

http://www.bne.eu/dispatch_text16386

VTB CapitalAugust 19, 2011

News: Interfax quoted Interros representative Larisa Zelkova yesterday speaking about the offer which Norilsk Nickel is to make to UC RUSAL. According to her, the price will be more conservative than under the previous offers.

Our View: The two previous offers to UC RUSAL, in December 2010 and February 2011, stipulated payment of USD 12bn for a 25% stake (USD 250/share) and USD 12.8bn for a 20% stake (USD 336/share) in Norilsk Nickel, respectively. The latest buyback price was set at USD 257/share. The potential cut in the offer price further decreases the chances of UC RUSAL accepting the offer (which we estimated as rather

low anyway). At the same time, the rejection is now to be followed by a buyback. Although the conditions are yet unknown, Interros had earlier hinted that the price could be close to that stipulated by the offer to UC RUSAL; were the latter to be less attractive than the December proposal, the buyback made on the same conditions would imply less than a 12% premium to the current market price, thus making it much less attractive than was initially mooted. Nevertheless, we highlight the risk of a further reduction in Norilsk Nickel's free float, which would eventually trigger the revision of its weight in the MSCI.

UPDATE 1-Norilsk wants to buy back 15 pct stake from Rusalhttp://in.reuters.com/article/2011/08/19/norilsk-buyback-idINLDE77I08220110819

1:40pm IST

* Norilsk to offer 20 pct premium to 6-month average price

* Board to review Aug. 24; offer to run to Sept. 5

* Rusal to consider offer, views stake as strategic

MOSCOW, Aug 19 (Reuters) - Russian metals giant Norilsk Nickel (GMKN.MM: Quote, Profile, Research) said on Friday it had prepared an offer to top aluminium producer UC RUSAL (0486.HK: Quote, Profile, Research) to buy back 15 percent of its shares for around $8.75 billion.

The offer to buy back the shares at $306 apiece, a 20 percent premium to the average market price over the last 6 months, is subject to approval by Norilsk's board at an Aug. 24 meeting and will be valid until Sept. 5, Norilsk said.

The buyback proposal by Norilsk management, loyal to tycoon Vladimir Potanin, marks his latest attempt to end a long-running battle for control over the world's top nickel and palladium producer with RUSAL's main shareholder, Oleg Deripaska.

Responding, RUSAL said it would consider the offer.

"RUSAL considers its investment in Norilsk Nickel as strategic, and as a public company we discuss all the incoming proposals in accordance with the company's internal procedures of corporate governance," it said in an e-mailed statement.

Norilsk shares were up 0.6 percent 6,524 roubles ($230.1) after the buyback news, bucking continuing weakness in the Russian stocks, with the MICEX index down 2.7 percent. (Reporting by Aleksandras Budrys, Editing by Douglas Busvine)

Long steel data released by independent steel consultancy shows incremental improvements in consumption

http://www.bne.eu/dispatch_text16386

CitiAugust 19, 2011

July consumption of long steel increased 5% (MoM) and stands 20% higher YoY. Consumption in June was also 20% higher YoY. Consumption in Jan-July 2011 is +25% compared to Jan-July 2010. The data published by the Russian Statistics office on Monday shows that July was an extraordinary month in terms of residential housing completions - up 19% YoY at 3.7m sq. meters. Taking a broader view, Jan-July 2011 completions stood at 24.4m sq. meters vs. 24.6m sq. meters in Jan-July 2010 - virtually unchanged YoY.

Prices for rebar (used in construction only) in Russia are c.US$120/tonne higher than export prices for the same product. This premium in the domestic market is likely to disappear in the September/October period, as the supply of long steel catches up to demand, and construction steel products eventually find their way to export markets and equilibrium returns.

We do not anticipate the premiums relative to export prices to hold up for much longer, as the deficit of long/construction steel is unlikely to be pronounced due to significant capacity additions made since the GFC in 2008

VTB Bank May Reduce 10% of Support Personnel, Vedomosti Sayshttp://www.bloomberg.com/news/2011-08-19/vtb-bank-may-reduce-10-of-support-personnel-vedomosti-says.html

By Marina Sysoyeva - Aug 19, 2011 6:14 AM GMT+0200

VTB Bank may cut about 10 percent of its support personnel to focus more on business, Vedomosti said, citing the bank’s Chief Financial officer Herbert Moos.

Those involved may include lawyers and back office staff, Moos said. He did not give the number of people considered to be support personnel or how many may be fired in September.

VTB will also merge corporate and investment units and hire some foreign managers, the report said.

VTB Bank had total of 13,132 employees as of July 31, Vedomosti said.

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Polyus Gold International Increases Stake in Russian Unithttp://www.bloomberg.com/news/2011-08-18/polyus-gold-international-increases-stake-in-russian-unit-1-.html

QBy Yuliya Fedorinova - Aug 18, 2011 4:59 PM GMT+0200

Polyus Gold International Ltd. said it gained an additional 2.35 percent stake in its Russian unit after completing the second stage of a share-exchange offer.

Jenington International Inc., a unit of the Jersey- registered company, accepted 1.05 percent of OAO Polyus Gold stock by the Aug. 15 deadline, Polyus Gold International said in a statement today. Jenington also agreed to acquire an additional 4.9 million Polyus Gold ADSs, or a stake of about 1.3 percent, outside of the private exchange offer, it said.

The transactions take Polyus Gold International’s stake in the Russian unit to 91.5 percent. The parent said it bought the 4.9 million ADSs at $29.39 apiece. That’s below the $34.40 per ADS valuation placed on the stock in the share exchange, said Dmitry Smolin, a Uralsib Capital analyst in Moscow.

Polyus Gold International, formerly named KazakhGold Group Ltd., completed the purchase of about 89 percent of OAO Polyus Gold in July to inject the Russian operation’s assets into the U.K.-listed company and boost the group’s access to investors abroad. Only about half of minority investors, holding about a 10th of the shares, joined the so-called reverse takeover, KazakhGold said July 19.

The company is required to declare a mandatory offer to OAO Polyus Gold shareholders within 35 days of July 26, German Pikhoya, chief executive officer of the Russian unit, said last month.

Through the second stage of the exchange offer and by buying shares from the market, Polyus Gold International shaved about $130 million off the cost of buying the stock during a mandatory offer, Smolin said by phone today.

Polyus Gold International will still require $1 billion of funding to buy the rest of the stock during a mandatory offer, he said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Renaissance Capital Plans Rwanda Office as Initial Public Offerings Growhttp://www.bloomberg.com/news/2011-08-19/renaissance-capital-plans-rwanda-office-as-initial-public-offerings-grow.html

QBy Eric Ombok - Aug 19, 2011 8:18 AM GMT+0200

Renaissance Capital, the Russian brokerage half-owned by billionaire Mikhail Prokhorov, said it will open an office in Rwanda as the number of initial public offerings in the East African nation increases.

RenCap, as the Moscow-based company is known, was a transaction adviser in the December IPO of Brassieries et Limonaderies du Rwanda SA, the Rwandan unit of Heineken NV (HEIA), and the sale of shares by Bank of Kigali Ltd., Rwanda’s biggest lender by assets, which closed last month.

“We are bound to see more in the next few months,” Patrick Mweheire, RenCap’s chief executive officer for East Africa, said in an interview yesterday in Nairobi, the Kenyan capital. “We are going to open an office in Kigali by the end of this year; we are already looking for space.”

Rwanda’s government plans to sell shares in six companies over the next three years as part of a plan to attract foreign investors to the East African country, the Capital Market Advisory Council said in April. Among the companies preparing to list are MTN Rwanda, a unit of MTN Group Ltd. (MTN), Africa’s biggest mobile-phone company; Commercial Bank of Rwanda; Sonarwa Insurance and other businesses partly owned by the government.

Rwanda doubled the size of its economy in the nine years to 2010 as it recovers from a genocide in which 800,000 mainly ethnic Tutsis died in 1994.

Investment Banking

RenCap, which has the headquarters for its East African business in Nairobi, became the third-biggest investment bank by value of transactions in Kenya in the first half of this year, compared with 13th a year earlier, Mweheire said. Net income grew to 173 million shillings ($1.86 million), compared with a loss of 34 million shillings a year earlier, as brokerage revenue surged 80 percent, he said.

“We have made a concerted effort to build our brokerage business,” Mweheire said. “On the investment banking side, there hasn’t been an IPO in Kenya since 2008 so we made an effort to build a regional business.”

The company is considering opening an office in Kampala, the capital of neighboring Uganda, next year, he said.

Renaissance bid 251 million shillings for a Kenyan stock- broking license in August 2007. The permit was previously owned by Francis Thuo & Partners Ltd., a Kenyan brokerage declared insolvent in March 2007.

RenCap is a transaction advisor for the initial public offering of Onatel, the state-owned Burundian fixed-line and mobile-phone company, and the sale of shares in a bank in the Democratic Republic of Congo, Mweheire said. He didn’t provide further details.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://blogs.ft.com/beyond-brics/2011/08/18/kremlins-champagne-goes-ahead-with-ipo-plans/#ixzz1VSMCer9Y

Kremlin’s champagne maker plans IPOhttp://blogs.ft.com/beyond-brics/2011/08/18/kremlins-champagne-goes-ahead-with-ipo-plans/#axzz1VSMBJ1yB

August 18, 2011 5:15 pm by Courtney Weaver

The volatility   of Russian markets would seem to dash any hopes for an initial public offering bonanza this fall. But for some the dream lives on.

Abrau-Dyurso, one of Russia’s biggest producers of sparkling wine, will attempt to raise as much as $15m in a Moscow IPO that could value the company at $100m, Boris Titov,

the group’s owner told news outlets this week. And the businessman has few doubts about the deal going through.

Speaking to Russian daily Kommersant in an interview published today, Titov said the brand’s high profile and established history would allow the company to come to market. A producer of Sovetskoe Shampanksoe, a staple of Russian birthdays and New Years celebrations, Abrau-Dyurso was the first winery to actually produce the drink, as well as the Kremlin’s exclusive Sovetskoe-Shampanskoe   supplier during the Soviet Union.

Titov said the recent market volatility didn’t scare him. “I think that oil will maintain about the same level until the end of the year, and a significant drop in the market won’t happen,” he said.

Titov added that the company was not looking to go to market for financial reasons, but to expand the tourism operations at its winery in Novorossisyk in the south of Russia.

Abrau-Dyurso is the fourth biggest sparkling wine producer in Russia, according to the Russian state statistics service, with production volumes of 12.9m bottles a year. Last year revenue reached 2bn roubles while net profit equaled 212.8m roubles.

While Abrau-Dyurso’s small size may give it a better chance of getting to market, most Russian businesses are taking a much more cautious approach to the upcoming IPO season.

Reuters has reported that Centrobuv, the Russian shoe retailer, decided to postpone its IPO until 2012 because of adverse market conditions.

An executive at another group that had planned to list shares this fall told beyondbrics that it would be waiting a few more weeks to see where the markets ended up before it went ahead with the offering.

With current market, Abrau-Dyurso will likely be one of the few that decide to plunge into IPO territory, and with Russian issuers’ track record, there is no guarantee it will succeed.

Then again as Vladimir Putin put it (in the context of Russia winning its bid to hold the 2018 World Cup last year):  “If you do not take risk, you do not drink champagne.”

Russia designs tablet PC to rival Apple's iPadhttp://in.reuters.com/article/2011/08/18/russia-tablet-idINLDE75Q0GN20110818

Thu, Aug 18 2011

* Rosnano CEO shows new tablet to PM Putin

* Tablet will cost $420, less than iPad

* Tablet is made using plastic electronics technology

By Gleb Bryanski

MOSCOW, Aug 18 (Reuters) - A Russian state company plans to start mass production next year of cheap plastic-based tablet computers for school students which it says will rival Apple Inc's iPad.

Anatoly Chubais, an architect of Russian market reform and a head of technology conglomerate Rosnano, told Prime Minister Vladimir Putin the new computer would cost about $420 compared with $670 for the cheapest iPad.

"This tablet is lighter, there is no glass, even in the screen. Even if school students decide to fight each other with these tablets, they are absolutely injury-free," Chubais joked in an bid to promote the technology.

The device would use plastic or organic electronics, developed at Cambridge University in the 1990s, rather than silicon conductors. Chubais sees the technology grabbing a 10 percent share of the global electronics market.

Television footage showed Chubais handing to Putin the 20 by 30 centimetre tablet PC, which visually resembled the iPad but exceeded its rival in size. Putin touched the screen and smiled when a popular proverb came up.

Unlike his partner in Russia's ruling duo, President Dmitry Medvedev, an Apple fan who appears at official events carrying his iPad, Putin is not a computer geek, and officials are often advised not to display their iPads in his presence.

RUSSIAN TABLET

Many younger Russian bureaucrats and entrepreneurs who see Medvedev as their leader and want him to take part in the March 2012 presidential election also carry iPads and are active on Twitter and Facebook.

In January 2011 Rosnano paid $150 million for 25 percent of Plastic Logic, seen as one of the global leaders in plastic electronics and which plans to invest $700 million in building a manufacturing plant outside Moscow.

Apple's main distributor in Russia, Re:Store, estimates the local market for tablet computers at 500,000 per year, with Apple's iPad holding a 60 percent share.

"I can be certain that a Russian tablet computer will not get more than a 10 percent share of the market," Re:Store's CEO Tikhon Smykov told Reuters.

Chubais said Rosnano will test the new tablet, pre-loaded with school books and education materials, in some schools for a year before launching mass production and targeting Russia's 13.6 million school students. (Additional reporting by Maria Plis; Editing by David Holmes) ($1=28.35 Rouble)

Russian company Prodis kicked off its investment on the FYR Macedonian market by constructing a plant in the free economic zone of Bunardzikhttp://www.balkans.com/open-news.php?uniquenumber=116441

Michael Roberts - 19.08.2011

Russian company "Prodis", part of the pharmaceutical holding "Protek Group", kicked off Thursday its investment on the FYR Macedonian market by constructing a plant in the free economic zone of Bunardzik in the vicinity of Skopje after signing agreements with FYR Macedonian institutions for a long-term lease of state land and for allocating state aid.

 Prodis director Cost Dimov and heads of the Agency for Foreign Investments and Technological and Industrial Development Zone Skopje 1 - Bunardzik - Viktor Mizo and Natasa Hadzilega respectively - signed the documents launching the Russian investment. Premier Nikola Gruevski and Protek's top officials also attended the signing.

 Following the signing of the agreements, a cornerstone laying ceremony for the new plant is being held in Bunardzik. The plant should start with production sometime next year. The new investment in Bunardzik is worth Euro five million and enables 130 jobs to be opened, export to increase and GDP to be boosted.

 Protek Group is one of the largest pharmaceutical companies in Russia. The Group has a diversified business structure and is active in all industry sectors, including production of medications, distribution of health and beauty products, and retail sales. Established in 1990, it is the largest distributor of drugs and cosmetics in Russia.

Source: http://www.network54.com

Report: Pinchuk could get $1.5 billion from sale of ferroalloy interests to Vekselberghttp://www.kyivpost.com/news/business/bus_general/detail/111165/

Today at 00:25 | Kyiv Post Staff Kuchma's son-in-law would retain billions of dollars worth of assets in media and industry.

Ukrainian billionaire Victor Pinchuk is in talks to sell his domestic ferroalloy business assets to Russian businessman Viktor Vekselberg, Kommersant business daily reported on Aug. 17 citing informed sources.

Citing analysts, the newspaper said Pinchuk could raise as much as $1.5 billion from the sale of minority stakes in three ferroalloy plants (Nikopol, Zaporizhya and Stakhanov ferroalloy plants), as well as interests in two associated ore-mining companies (Marhanets and Ordzonikidze Ore Mining).

Officials at Pinchuk’s London-based EastOne asset management company and Vekselberg’s Renova Group were not immediately able to confirm or deny the reports.

Sources close to Pinchuk this year said that he lost control in recent years over management and operations at the ferroalloy assets.

The businesses and cash flow are now, according to the sources, under control of a business rival, the so-called Privat group led by billionaires Ihor Kolomoisky and Gennady Bogolubov.

Should the sale to Vekselberg proceed, it remains unclear if he has already or would be able to find common ground with the Privat group.

Born in Drohobych, western Ukraine, Vekselberg is one of the richest businessmen operating in Russia and other former Soviet republics. He and Lviv-born Mikhail Fridman (owner of Alfa Group) are partners of BP in hydrocarbon exploration and production company TNK-BP.

Along with other partners, Vekselberg co-owns lucrative aluminum and energy companies in the CIS region.

Pinchuk established himself as one of Ukraine’s top five richest individuals while his father-in-law, Leonid Kuchma, ruled Ukraine as president from 1994 through 2005.

Should he sell the ferroalloy assets to Vekselberg, Pinchuk would remain owner of billions of dollars worth of other assets in Ukraine, including a handful of steel pipe factories and television channels.

Read more: http://www.kyivpost.com/news/business/bus_general/detail/111165/#ixzz1VSQiUkNz

Activity in the Oil and Gas sector (including regulatory)

TNK-BP and Rosneft to boost oil production at Verkhnechonsk up to 7.5mmt in 2014http://www.bne.eu/dispatch_text16386

VTB CapitalAugust 19, 2011

News: According to a new development plan, Verkhnechonskneftegaz is to reach top production capacity of 7.5mmt in 2014, four years earlier than planned. Thereafter, the company expects near-flat production figures until 2020-21. Igor Rustamov, CEO of Verkhnechonskneftegaz, underlined that expected production for 2011 had increased 0.3mmt to 4.9mmt, while for 2012 it had risen from 4.5mmt to 6.5mmt. To reach such high production, Verkhnechonskneftegaz plans to invest USD 6bn through 2040. CAPEX for 2011 and 2012 is estimated at USD 550mn and USD 650mn respectively. Verkhnechonskneftegaz's primary shareholders are TNK-BP (74%) and Rosneft (25.94%) Our View: The acceleration of VCNG's production is being driven by a delay in the development of Yamal projects, which creates a gap in the company's production in 2012-13. Custom duties reliefs for Verkhnechonskoye were cancelled in May 2011. Verkhnechona is subject for regional MET relief, but the acceleration of production would not increase the tax allowances (as MET relief would be limited by the amount of production rather than by the time). According to our estimates, the acceleration in production does not create value for the company in the current tax regime. While we are aggressively bullish on the Russian sector in general, we do not expect the sock to be driven by this particular news.

Crude gains cause gas headache at Russian oilfieldhttp://in.reuters.com/article/2011/08/18/us-russia-oilfield-idINTRE77H33220110818

Thu, Aug 18 2011

By Melissa Akin

IRKUTSK, Russia (Reuters)- By speeding up output growth at one of Russia's newly-tapped East Siberian oilfields the operators have given themselves a headache -- they are producing much more gas and have little choice but to flare it.

New oil from Verkhnechonsk, launched in 2008, has helped Russia maintain modest crude output growth over the past two years and secure new markets in Asia, even as declines accelerate in the Soviet-era oil heartland of West Siberia.

Encouraged by high oil prices and low taxes for new fields, Anglo-Russian oil company TNK-BP (TNBP.MM: Quote, Profile, Research) and its partner in Verkhnechonsk, state-controlled Rosneft (ROSN.MM: Quote, Profile, Research), pledged extra investment to bring the field to peak output four years early.

It is now expected to produce 7.5 million tons a year from 2014, instead of 2018.

It will pump 4.9 million tons this year, (nearly 100,000 barrels per day), increasing to 6.5 million tons in 2012, Igor Rustamov, head of operator Verkhnechonskneftegaz, told reporters at its headquarters in the Siberian provincial capital Irkutsk.

The plans for accelerated production growth were approved by regulators in Moscow this month, Rustamov said.

But the field is also richer in so-called associated gas than other major Russian fields. And for now, the more crude oil pumped at Verkhnechonsk, the more gas has to be wastefully flared for lack of other possible uses.

The industrial city of Irkutsk, 1,200 km (750 miles) away from Verkhnechonsk on the banks of Lake Baikal, is the nearest major urban gas market. Without a pipeline link, Verkhnechonsk can burn only some of the gas at its own two small power plants.

FLARING CURBS

Russia flared 35 billion cubic meters of gas last year, down from 52 bcm in 2007 but still more than any other country, according to World Bank estimates based on satellite surveillance.

Gas flaring worldwide accounted for 1.2 percent of emissions of carbon dioxide, a gas responsible for global warming, according to climate-change scientists.

Russia wants to cut flaring to just 5 percent of associated gas volumes from the end of this year. Industry officials say privately that the goal -- which has been repeatedly delayed -- will impose huge costs.

For now, TNK-BP is pursuing what it sees as its best option, pumping the gas back underground in hope of retrieving it later.

The planned re-injection facility -- powered by a 1 billion cubic meter per year compressor now under construction at General Electric (GE.N: Quote, Profile, Research) -- will start working at Verkhnechonsk at the end of 2013, just before the field hits peak production.

It will also add a third, larger power station to consume more gas for its own electricity needs.

The strategy, Rustamov said, reflects hope that the operators can eventually pump the gas out of underground reservoirs and into still-unbuilt East Siberian pipeline infrastructure for delivery to clients in Russia and abroad.

"Just 250 km from Verkhnechonsk is Chayandinskoye, an enormous field with enormous gas reserves," said Rustamov.

"We are coordinating our actions with Gazprom (GAZP.MM: Quote, Profile, Research) in order to get access to the infrastructure in 2019-2020."

Gazprom, the state gas export monopoly and operator of the country's unified gas supply system, is planning to bring Chayandinskoye on stream in 2016.

TNK-BP has already seen some success in winning access to Gazprom's pipelines. It secured a six-year access deal to ship gas from its Rospan project in Western Siberia, now pumping 2.7 bcm per year, and would like to obtain a 10-12 year deal.

The No.3 Russian oil producer is pursuing an aggressive strategy to double its natural gas output to 30 billion cubic meters per year by 2020, betting that independent producers will fill more space in Gazprom's pipelines in the coming years.

But East Siberian gas is a tough proposition, in part because of the sheer distance between the region's gas riches and its most lucrative potential markets on the Pacific Rim.

And while Gazprom says Asian buyers must compete for its East Siberian gas, it has so far failed to secure a supply deal with China -- for up to 68 bcm per year -- that could underpin the vast investments needed to bring gas to market.

(Editing by Douglas Busvine and Anthony Barker)

August 19, 2011 10:26

Alliance Oil IFRS net profits up 64% at $56 mln for Q2http://www.interfax.com/newsinf.asp?id=267053

MOSCOW. Aug 19 (Interfax) - Net profits at Alliance Oil Company for the second quarter came to $56 million calculated to International Financial Reporting Standards (IFRS), UP 64% year-on-year, a company statement says.

Analysts from eleven investment companies and banks surveyed by Interfax had expected the company's net profits to weigh in at $67.1 million.

Company sales revenues were up 48% at $784.2 million, roughly in line with the predicted 781.2 million. EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 39% year-on-year to $124.1 million (predicted - $134.8 million).

First-half net profits were up 83% at $146.1 million, sales revenues 42% at $1.463 billion, and EBITDA 45% at $280.4 million.

Alliance Oil extracted about as much hydrocarbons in the second quarter of this year as it did in Q2 2010 - 3.8 million barrels, but refining was up 15% year-on-year at 6.9 million barrels.

Alliance Oil Co. came into begin in 2008 with the merger of Alliance and West Siberian Resources. The company's main shareholders are the Alliance group with 53.7%, SIX SIS AG with 5.1%, and Repsol (Spain) with 3.4%.

Cf

(Our editorial staff can be reached at eng.editors@interfax.ru)

Itera boosts margins in Q2 by increasing supply of own gas

http://www.steelguru.com/russian_news/Itera_boosts_margins_in_Q2_by_increasing_supply_of_own_gas/220987.html

Friday, 19 Aug 2011

Interfax reported that Itera increased 8% to RUB 1.604 billion in the second quarter of 2011 under Russian accounting standards following a 30% profit decline in the first quarter.

As per report, net profit for the first half declined 18% to RUB 3.767 billion.

Itera sells its own gas and purchased gas to consumers. It sold 3.4 billion cubic meters of

its own gas in the first quarter and 3.2 billion cubic meters in the second, thanks to Itera 49% stakes in Purgaz and Sibneftegaz. It purchased another 2.9 billion cubic meters from outside suppliers in the first quarter and 1.7 billion cubic meters in the second.

Gross profit in the first quarter rose 21.8%YoY to RUB 10.2 billion and was up 59% to RUB 8.6 billion in the second. First half revenue was up 49.6% to RUB 29.706 billion due to the Federal Tariff Service's gas rate hike and higher volumes. Costs increased 80% to RUB 10.9 billion. Gross profit was up 36.5% to RUB 18.8 billion. Other expenses increased 150% to RUB 6.9 billion.

(Sourced from Interfax)

Novatek to unveil development strategy late Nov and early Dec

http://www.steelguru.com/russian_news/Novatek_to_unveil_development_strategy_late_Nov_and_early_Dec/220986.html

Friday, 19 Aug 2011

Interfax cited Mr Mark Gyetvey CFO of Novatek as saying that the company will unveil its development strategy late November or early December.

He said that "We're drafting a new corporate strategy for the period after 2015 and we expect to unveil it to the investment community after the Q3 financial results are out and that is late November or early December."

Mr Leonid Mikhelson chief of Novatek has said the company would try and review its strategy in favor of the accelerated introduction of capacity in view of the latest global energy events.

(Sourced from Interfax)

Regional gas distributors: Close to a Happy Ending?

http://www.bne.eu/dispatch_text16386

AtonAugust 19, 2011

Final steps reported to be underway

On 13 Nov 2010, Prime Minister Vladimir Putin signed Decree #2016_r in which the government agreed to sell the shares of 72 regional gas distributors (RGDs) owned by Rosneftegas to Gazprom at a price determined by an independent appraiser, but no lower than the market price. On 17 Aug 2011 RBC Daily reported that Rosneftegas had officially announced a tender for appraising the value of the 72 RGDs for its deal with Gazprom. The deal could thus be finalised within the next three-to-six months, in our view.

Waiting for a buyoutAfter the transaction with Rosneftegas is completed, Gazprom will have to make a buyout offer to minority shareholders at a price no lower than the deal price or the average market price for the previous six months. Most RGDs are deeply illiquid and have seen no trades over the past six months. Therefore, the deal price will determine the buyout price. On our estimates, most RGD stocks hold significant upside potential relative to their Nov 2008 appraisal results. We believe it makes sense to examine not only the previous appraisal results but also the probability of a valuation upgrade or downgrade.

In this note we consider two potential scenarios for the deal between Rosneftegas and GazpromThe current approach assumes the exchange of 0.89% of Gazprom's treasury shares for RGD stakes varying from 20-25%. In this case the market value of Gazprom's stock is the key determinant for appraising the value of the RGDs. However, we see some possibility that the government could abandon this scheme so we considered a second scenario under which Gazprom would purchase the RGD stakes for cash at a price determined by the independent appraiser.

Current valuation approachThe initial scenario assumed that the value of the 72 RGD stakes should be adjusted upwards by an average of 21%. This does not mean that the valuations for all stocks will be upgraded equally: previous appraisals showed that some stocks can be upgraded while others are downgraded. In any case, the market value of 0.89% of Gazprom's shares (RUB31.4bn) forms a cap on the value of the RGDs.

A possible new scenarioGazprom could simply purchase the RGD stakes at prices determined by the independent appraiser. This would be a reasonable approach in our view because the terms of the deal would not need to be amended every time Gazprom's share price changed significantly.

Select with cautionWhatever scenario is finally chosen, we suggest that investors stick with the stocks that: ¤ Offer a strong financial performance, creating a greater chance of a valuation upgrade ¤ Provide more attractive valuation ratios vs their peers ¤ Offer high upside potential relative to the earlier Nov 2008 valuation We favour Vladimiroblgas, Rostovoblgas, Kalugaoblgas, Kostromaoblgas, Belgorodoblgas and Tveroblgas, which delivered solid a

financial performance in 2007-10, feature relatively low valuation ratios and offer more than 100% upside potential vs the Nov 2008 estimates.

№ 6 (June 2011)

Global LNG Market Tightening As New Supply Lags Rising Demand: Analystshttp://www.oilandgaseurasia.com/articles/p/142/article/1562/

Increasing demand and a slowing rate of capacity addition has the global liquefied natural gas market on a "tightening path" that will lead to a rise in spot prices, Barclays Capital analysts said in a report Thursday.

By Chloe Hang, Platts

"Supply growth is no longer constrained by limits on demand. In fact, new supply is desperately needed as we look ahead," the analysts said in the report.

Asian LNG demand in 2011 was expected to increase by 2.2 Bcf/day, largely propelled by Japan looking to replace lost power capacity after to the March earthquake and tsunami, the analysts said.

This was coupled by uncertainty over nuclear plant startups, which has boosted LNG demand in a "sustained fashion" and "poses long-term upside risks to LNG consumption," the analysts said.

But long-term LNG demand in Japan hinges on the construction of new gas-fired capacity, which currently would not be sufficient to replace all the power generated by nuclear plants, the analysts added.

"Regasification terminal additions will attract more cargoes to China and Thailand. Korean demand is being driven by robust economic activity and India should take more LNG due to faltering domestic supply," analysts said.

Argentina, Kuwait and Dubai would also be fueling LNG demand, with Latin America and the Middle East likely to see an average combined growth rate of 0.4 Bcf/d in 2011, according to the report.

Analysts expected global LNG supply to grow by 3 Bcf/d in 2011, but with only two facilities scheduled to start up -- Pluto in Australia and Luanda in Angola -- the rate will likely slow to 1.2 Bcf/d in 2012.

The Middle East, particularly Qatar, would remain the top producer in 2011, according to analysts, supported by the startup of two of Qatar's LNG trains in late 2010 and early

2011.

Yemen posted the second-highest increase in LNG output from January to May this year, despite political and social turbulence in the country.

But production growth in the Middle East could stall in 2012, as no new plants are scheduled to come online.

Growth in the Pacific basin is forecast to slow to 0.5 Bcf/d in 2011, from 1.6 Bcf in 2010, which was boosted by the startup of Indonesia's Tangguh facility.

Europe would likely to be most affected by the tightening of global LNG demand and supply fundamentals in 2011 and especially in 2012, when the continent could see a 0.9 Bcf/d net drop in imports.

"This does not mean that Europe would be short of gas, as the region has plentiful pipeline import capacity; but it dictates gas prices will be higher," the analysts said.

Gazprom

Gazprom considering new gas price formulahttp://www.bne.eu/dispatch_text16386

VTB CapitalAugust 19, 2011

News: According to Vedomosti, Gazprom's Head of Strategy Vlada Rusakova co-authored an article in Gazovaya promishlennost which argues that gas prices need to be delinked from oil prices and driven by supply and demand.

Our View: Rusakova is an experienced and professional member of Gazprom's management board. If she does indeed believe that gas prices should be delinked from oil prices, that would mean a revolution in Gazprom's attitude and the market could thus expect substantial changes in the gas giant's pricing policy in Europe. We would expect this sort of message to have a negative short-term impact on Gazprom's shares (as the company's ability to defend its long-term pricing has been considered as one of its key competitive advantages).

However, we note that not only is the article outdated (it was apparently written in 2009) but also we find some of the arguments less than convincing given that they are based on some statistical analysis and a discussion of publicly available information about the international supply-demand balance. We believe the gas market to be an incomparably

more complicated and politically driven phenomenon and are sure that Rusakova is aware of this.

As a result, we suggest that her name was simply included in the list of authors and not that this article has been inspired by some seachange in Gazprom's thinking. We therefore do not see any impact on Gazprom's fundamentals in the long term.

Burned-Up Patiencehttp://russiaprofile.org/business/43297.html

Gazprom Bows to Demands to Reduce Gas Prices after Coming Under Mounting Pressure from its Customers in Europe and AsiaBy Tai Adelaja Russia Profile 08/18/2011

Russian gas giant Gazprom, which for many years held an unbreakable monopoly over gas supplies and price-setting, may be having a change of heart after getting bitten by its own monopolistic practices. The gas monopoly has lately been losing its hold over the price of gas as double-barreled pressure from its EU and Chinese customers mounts, local media reported on Thursday. Gazprom’s European consumers continue to insist that the company review its gas prices, while Beijing has rejected Russia’s supply price offers as too expensive.

Gazprom has been having it both ways since it inked a groundbreaking gas agreement with China National Petroleum Corporation (CNPC) in March of 2006. According to the terms of the agreement, Moscow pledged to export between 60 and 80 billion cubic meters of Russian natural gas to China starting in 2011. However, the plan remained largely on paper without serious attempts to implement it, Nezavisimaya Gazeta wrote on Thursday. This, the paper wrote, raises suspicion that Russia was only trying to use the agreement on gas supplies to China as a bargaining chip in its price dispute with the European gas consumers. But the Europeans gas consumers no longer buy into such an argument, the paper said.

Many European gas buyers have been pushing Gazprom to loosen the rigid terms of its gas supplies, which are tied up in long-term contracts linked to the price of oil. "More and more EU consumer states are waiting for Russia to revise downward its gas prices on long-term contracts," Gregory Birg, the co-director of the Investkafe agency, said. Gazprom said it has tried to meet its customers half way by altering contracts for a three-year period to include a ratio of up to 15 percent spot prices and 85 percent oil-indexed prices. However, the company still refused to fundamentally alter long-term contracts, which in some cases stretch beyond 2030, arguing that long-term contracts provide a more predictable and stable product with greater flexibility on volumes.

Gazprom CEO Alexei Miller told a June 30 shareholder meeting that the company does not expect changes to its oil-indexed, long-term gas contract system. "We have

demonstrated firmness in the talks with our clients and our sales earnings rose to $43.9 billion in 2010 from $42.5 billion in 2009,” Miller said. Within Europe, Gazprom's market share was 23 percent as of the end of 2010, compared to a 19 percent share for Norway, ten percent for Algeria and six percent for Qatar, Miller said. However, under mounting pressure from EU companies to cut prices, the Russian gas monopoly said this week that its export arm is currently in consultations over demands to renegotiate the contracted price in its long-term gas contracts with several of its key European partners, including GDF Suez, Shell Energy Europe, RWE Transgas, E.ON Ruhrgas and Eni. "Currently Gazprom Export is in commercial consultations with RWE Transgas, SPP, Shell Energy Europe, E.ON Ruhrgas, Eni, GDF Suez, EconGas, GWH Gashandel and Centrex," Gazprom stated in its second quarter financial report on Tuesday.

Analysts say the whole issue hinges on abundance of gas in the market, which has exposed the unfavorable price difference between spot and long-term contract prices indexed to oil. “The difference between the spot and long-term contract price of gas can sometimes reach $100 per thousand cubic meters," Birg said. "That is why European companies are insisting that Gazprom must give them the opportunity to buy large amounts of gas in the spot market." In the present market situation, Gazprom has little choice but to surrender its position and allow its European customers to buy part of their gas requirement in the spot market, he said. “The old ploy that if you don’t buy at our price, we will sell to the Chinese no longer works today,” Birg said.

Birg's words echo the objective reality on the ground. Five years of on-and-off gas price negotiations have not brought China and Russia closer together. Russian officials had expected a final agreement on gas prices to be reached in June of 2009, and gas supplies to start in 2014 to 2015, but instead negotiations dragged on. Gazprom can no longer raise prices without losing its customers, or use threats to drive China, the Asian giant, into a tight corner, Nezavisimaya Gazeta wrote. The Chinese, the paper said, have already begun to import their energy requirements from places like Iran and Australia. Beijing has also inked contracts with Turkmenistan and other Central Asian countries where gas supply pipelines are already in place and functioning, putting further pressure on Gazprom. “Time – perhaps the market situation – is on China’s side,” Birg said. “Despite holding tight onto its monopolistic prosperity, Gazprom is no longer an exclusive supplier of fuel to the Chinese Empire. Australia, for instance, has quite a few projects on the supply of liquefied natural gas. All the Chinese need do is wait quietly until an opportune time."

Moody's affirms Gazprom's issuer rating at Baa1

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Moody'sAugust 18, 2011

London, 18 August 2011 -- Moody's Investors Service has today raised the Baseline Credit Assessment (BCA) of OJSC Gazprom ("Gazprom") to 10 (on a scale of 1 to 21 and equivalent to Baa3 rating) from 11. Concurrently,Moody's has affirmed the company's issuer rating at Baa1 with a stable outlook. Under Moody's methodology, today's rating announcement does not affect Gazprom's assigned senior unsecured issuer and debt ratings -- given the already assumed high level of support for the state-controlled Russian company.

Moody's regards Gazprom as a government-related issuer (GRI). Thus, the company's ratings incorporate uplift from its BCA of 10 (on a scale of 1 to 21 and equivalent to Baa3 rating) and take into account Moody's assessment of a high level of implied state support and dependence.

RATINGS RATIONALE Moody's decision to raise Gazprom's BCA primarily reflects the company's strengthened fundamental credit profile as well as proven resilience to the challenging global economic environment and negative developments on the European gas market in 2009-10. "Gazprom has a consistent track record of strong operational and financial performance, which was particularly tested in 2009 -- a year characterised by lower demand for gas globally and domestically, as well as a generally less favourable pricing environment for hydrocarbons," says Victoria Maisuradze, Moody's Vice President -- Senior Credit Officer and lead analyst for Gazprom. In 2010, Gazprom's revenues and cash flow generation improved to the pre-crisis level on the back of gradual market recovery, steadily growing oil prices and gas consumption, while gas export volumes to Europe continued to be suppressed by intensified competition from cheaper liquefied natural gas supplies to the European market. "The key drivers of Gazprom's solid operating and financial profile during 2009-10 were continuous gas price liberalisation on the domestic market, where the company sells more than 50% of its total gas volumes, as well as netback alignments of gas sales to Former Soviet Union (FSU) countries with those to Western Europe," adds Ms Maisuradze.

The higher BCA also factors in (i) Gazprom's strengthened leverage profile and improved debt portfolio structure, which are largely due to the company's robust cash flow generation and deconsolidation of banking subsidiaries in 2010; (ii) its consistently solid liquidity profile, supported by its substantial cash balance of more than USD15 billion as of the end of the second quarter 2011 and its policy of funding capital expenditure (capex) through internally generated cash flow; (iii) the company's good access to funding on domestic and international markets; and (iv) certain improvements in the level of disclosure and transparency regarding the company's borrowing and investment plans. In addition, Moody's notes a diminishing reliance of Gazprombank (Baa3, stable outlook) on any potential support from Gazprom, which has been factored into the latter's

standalone risk profile.

The BCA and thus the issuer rating are also supported by Gazprom's (i) substantial scale of operations; (ii) leading market position, including the vital role it plays in Western European gas supplies; and (iii) unique position as the sole owner of the Russian gas transportation system, with monopoly on gas exports.

The stable outlook on Gazprom's issuer and debt ratings reflects the robust positioning of Gazprom's BCA as well as the stable outlook on the rating of the Russian Federation. The stable outlook reflects Moody's expectation that Gazprom will maintain solid credit metrics, with a retained cash flow (RCF)/net debt ratio consistently above 30% and debt/total capitalisation below 30% on an adjusted basis. Moody's would also expect Gazprom to maintain solid liquidity and manage capex and acquisitions in a disciplined manner.

Moody's notes that adjustment of the BCA upwards or downwards alone, assuming that all the other GRI inputs were unchanged, would not necessarily result in the respective change in Gazprom's final rating.

However, a sustainable deterioration of the standalone credit quality could potentially put pressure on the company's final rating.

At the same time, given the high support assumption, Gazprom's ratings remain sensitive to changes in sovereign credit quality: a one-notch change in the sovereign rating (upward or downward) could result in a commensurate change of the company's ratings, assuming other rating factors remain intact. In addition, a material reduction of the state support assumption for Gazprom could also negatively affect the company's ratings.

MOESK: Gazprombank not allowed to manage 50.9% stake

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UralSibAugust 19, 2011

FAS believes deal does not meet legal requirements. The Federal Antimonopoly Service (FAS) has prevented Gazprombank from taking 50.9% of MOESK (MSRS RX - Under Review) under its manage- ment. One reason for the refusal was to restrict combined ownership of generation and distribution assets, and another reason was Gaz- prombank's opaque ownership structure.

Agreement details. The agreement between MRSK Holding (MRKH RX - Under Review) (which owns 50.9% of MOESK) and Gazprom- bank would have seen the latter

taking 50.9% of MOESK under man- agement for three and a half years, with MRSK Holding being pre- vented from selling it for 12 months. The agreement would have pre- vented MRSK Holding's stake in MOESK from going below 25% after the 12-month moratorium expired.

More hope for minority shareholders. We see the news as positive for MOESK, as a management contract with Gazprombank with the option of a direct or indirect purchase of the stake by Gazprombank would not motivate Gazprombank to increase MOESK's market cap. It is also positive for MRSK Holding, as the potential sale of a key asset with an unclear future of cash distri- bution is a risk to the holding's minority shareholder interest. As an historical parallel, UES announced a moratorium on core asset sales in 2002, which helped to bring back investor loyalty, which in turn helped finally to break up UES; minority shareholders received proportional stakes in UES subsidiaries.

Matvey Taits