Russia 110909

Basic Political Developments Russia seeks end of conflict in Syria - Russia maintains contacts with a maximum

number of political forces in Syria with a view to end the current political crisis in Syria, Russia’s presidential envoy to Africa Mikhail Margelov said.

o Report: Syria opposition says dialogue at dead end - RIA-Novosti and ITAR-Tass quoted Ammar Qurabi, head of the National Organization for Human Rights in Syria, as saying Friday that the opposition is prepared to talk with the government but that authorities have responded only with bloodletting.

o Situation in Syria ‘deadlocked’ – opposition leaders: . The head of the delegation, Ammar Qurabi, who leads the National Organization for Human Rights, stressed the situation in Syria has reached a deadlock, adding that the opposition insists on the ouster of the President Bashar al-Assad.

‘No NATO plans to interfere in Syrian conflict’ - NATO is not planning to intervene in the Syrian conflict between Bashar al-Assad’s regime and anti-government protesters, Assistant Secretary General for Political Affairs and Security Policy Dirk Brengelmann said while speaking on Echo of Moscow radio. He added that this issue is not on the alliance's agenda.

Russia's envoy to Africa to meet with Syrian opposition leaders in Moscow - Russian presidential envoy to Africa Mikhail Margelov will hold talks with a delegation of Syrian opposition leaders in Moscow later on Friday.

No direct Putin-U.K. contact ‘for 4 years’ o To Russia with love: hopes David Cameron visit will signal new dawn -

By Oliver Wright and Shaun Walker in Moscowo Cameron’s Russia Visit to Yield First U.K. Contact With Putin Since 2007

- By Robert Huttono Russia's Putin to meet Cameron, ending 4-year freeze - By Adrian Crofto David Cameron's Russia visit chance to 'turn the page' says deputy MP -

By Alex Spillius, Moscowo Analysis: Downing Street ready to move on from Litvinenko poisoning -

David Cameron's trip to Russia next week shows that Downing Street is ready to move on from, if far from forget, the poisoning of former Russian spy Alexander Litvinenko in London five years ago.

Magnitsky case investigtn not to be dropped without relatives consnt Finland not in need of add'l Russian gas - Finnish foreign minister - Finland will

be developing nuclear power, making additional supplies of Russian gas unnecessary, Finnish Foreign Minister Erkki Tuomioja said during an interview with Interfax.

Patriarch Kirill sympathizes with Angela Merkel over her father's death Dmitry Medvedev’s interview to the Euronews TV channel – transcript Russia calls for balanced approach to Syria - Medvedev

Ukraine pledges to abide by 2009 gas agreements with Russia - PM's press secretary

o Ukraine pledges to abide by 2009 gas agreements with Russia Medvedev hopes Ukraine will honor gas deal with Russia Medvedev criticizes Ukrainian “friends” for gas dispute Chinese official calls for building harmonious world at int'l political forum -

Addressing the third edition of the Yaroslavl World Political Forum, Li made the appeal in a speech that highlighted a theme of building an inclusive and harmonious world while pushing forward modernization.

Tokyo to express concern to Moscow over Russia AF plane flights - The Japanese government intends through diplomatic channels to express to Moscow its “concern” over the Thursday flight of two Russian strategic bombers over the perimeter of the main Japanese territory, Chief Cabinet Secretary Osamu Fujimura said at a press conference in Tokyo on Friday.

Japanese companies urged to invest in Russia - First Deputy Chairman of the Russian government Igor Shuvalov has urged Japanese companies to make investments in Russia and not to link business with political disagreement. 

Nomura empties offices, but denies Russian exit - Japanese investment bank Nomura has essentially closed its Russian operations, sources told Vedomosti on Wednesday, although the company denies it is pulling out of the country.

SKorea says Russia gas project might accelerateo Lee says Russia gas pipeline project could proceed 'faster than expected'

N. Korea urgently seeks jet fighters from Russia, China against South's superior air force

Russia wants West Bengal nuclear plant relocated - The government is looking at allotting another site for nuclear reactor to Russia in place of Haripur in West Bengal, a location marred by controversy. Confirming that the Russians have officially sought another site, government sources indicated a new site could be allotted soon.

Putin to attend Nizhni Tagil arms show - Putin will visit the Uralvagonzavod producer of the tank which said “it can fight in various weather conditions and achieve success in various types of modern ground combat.”

Defense Ministry may buy another batch of helicopter carriers Mistral without Rosoboronexport's mediation - Isaikin

Nothing bad in CIS as meeting club - deputy minister: “They say the Commonwealth has developed into a club for meetings and nothing else. Even if this were so what is bad in it? Mutual attraction remained,” Russian First Deputy Foreign Minister Andrei Denisov said in an interview with the Rossiyskaya gazeta published on Friday.

Religious leader meets Russian official - Deputy Chairman of Council of Federation of the Federal Assembly of the Russian Federation Ilyas Umakhanov is on a visit to Azerbaijan.

Russia: Investigators examining plane's black box - Investigators have not yet been able to pinpoint what caused the Yak-42 jet to crash Wednesday into the banks of the Volga River shortly after takeoff from Yaroslavl, 150 miles (240 kilometers) northeast of Moscow.

o Duma to hear report on Yak-42 air crash - The State Duma will hear a report of Minister of Transport Igor Levitin on the air crash of the Yak-42 plane near Yaroslavl. A corresponding resolution was adopted on Friday.

o Ice hockey plane crash survivors remain in ‘grave condition’ Blast injures two policemen in Dagestan

o At least 2 police officers injured as blast hits Russia's Dagestan Cargo spacecraft crashed because of fuel supply problem Roscosmos to enhance control of Soyuz rocket engines' production Whistleblower major jailed for beating soldiers - The ex-major gained notoriety

on the web in recent months after exposing corruption at an army base near Vladivostok in a video posted on YouTube.

Police raid Moscow bank linked to liberals - The masked police drove up to the bank, MFK, in which Mikhail Prokhorov is the main shareholder, in an unmarked black Mercedes and BMW.

Bank tied to Russian billionaire politician raided Russian Press at a Glance, Friday, September 9, 2011 Medvedev tries to deflect criticism after aircraft crash - By Courtney Weaver in

Moscow Russian Airplane Crash Clouds Putin Goal of Building World-Class Economy -

By Paul Abelsky How a Tragic Plane Crash Reveals a Crack in Putin's Armor - By Simon Shuster /

Moscow The Economist: The mood of Russia - The Soviet Union was undermined by

stagnation and a sense of hopelessness. Is the same thing happening again? Dmitry Rogozin returns to domestic politics - Having got to know Europe from

within, Dmitry Rogozin urges Russia not to repeat its mistakes Olga Tropkina (Yaroslavl)

The corrupt advantage in Russia - By Kathy Lally

National Economic Trends ECON MINISTRY: PRIVATIZE UP TO 15% OF ROSNEFT, 10% OF VTB,

STOCK IN RUSHYDRO, FGC UES, SOVCOMFLOT IN RULES SETTING LOWEST STATE-CO DIVIDENDS AT 25% OF NET

PROFIT TO STAY IN 2012-2014 - ECON MINISTRY  RZD PRIVATIZATION NOW SLATED TO START IN 2014 - ECON

MINISTRY  RUSSIAN FEDERAL BUDGET REVENUE FROM 2012 PRIVATIZATION -

300 BLN RUBLES, IN 2013 - 380 BLN, IN 2014 - 475 BLN - ECON MINISTRY

Russia Econ Min "Worst Case" Scenario Sees 30% RUB Drop In 2012-Paper GDP will grow 4.4% in H2 - econ ministry CBR's reserves increase on gold revaluation - data reveal additional evidence that

the regulator is minimising FX interventions GDP expected to accelerate in 2H11 after weak 2Q11

Business, Energy or Environmental regulations or discussions Russian markets -- Factors to Watch on Sept 9 Gazprom, Polyus Gold and Razgulay: Russian Equities Preview Sberbank reports steep rise in 8M net profit New round of discussions regarding tariffs for Russian monopolies; NEGATIVE

for grid companies, POSITIVE for GenCos Nestle Holds Talks to Buy Russian Babyfood Maker Progress, Kommersant Says Prokhorov’s Opin Developer Jumps Most in Month on Share Buyback ChelPipe may sell 25 pct stake to Vallourec – report Russians will have to pitch in a ruble for Roman Abramovich Kimkano-Sutarsky expansion will cost IRC $250 mln to 2013 Hyundai Heavy Breaks Ground for Russian Switchgear Plant Wal-Mart Hires Ex-CEO of Big Russian Retailer Singapore's Tay Sees Mutual Lessons in Business With Russia Yandex Figures Out How to Get Paid for Music Service

Activity in the Oil and Gas sector (including regulatory) TNK-BP internal fraud probe leads to 37 criminal cases - Explosive revelations

over the extent of alleged fraud and corruption at BP's Russian joint-venture have emerged just days before David Cameron makes a high-profile visit to Moscow.

o TNK-BP: The key players - Potentially embarassing allegations of fraud and corruption at TNK-BP have emerged involving 37 criminal cases this year, just days before David Cameron is to make a high-profile visit to Moscow.

Rosneft green light for Arctic buys - Russian state oil company Rosneft has been given the nod by the country’s competition watchdog to acquire fresh Arctic offshore assets.

Russia's Litasco eyes Singapore clean storage, crude sales to China - Russian trading house Litasco is in talks to lease gasoline storage tanks in the Asian trading hub of Singapore and hopes to increase crude oil sales to China as the company seeks to expand its business in Asia, its chief executive said.

Gazprom Gazprom acquired a 51% stake in RSP Energy - successive move towards

cherished retail sales

------------------------------------------------------------------------------------------

Full Text Articles

Basic Political Developments

Russia seeks end of conflict in Syriahttp://english.ruvr.ru/2011/09/09/55910076.html

Sep 9, 2011 12:31 Moscow Time

Russia maintains contacts with a maximum number of political forces in Syria with a view to end the current political crisis in Syria, Russia’s presidential envoy to Africa Mikhail Margelov said.

As he met with a delegation of Syrian opposition leaders in Moscow, Margelov said that Russia is concerned about the situation in Syria, as Syria is a key Middle East nation and Russia’s long and reliable partner.

Margelov reaffirmed Russia’s determination to exert every effort to secure the end of bloodshed in Syria.

President Medvedev said in a Euronews program earlier that Russia is interested in securing political dialogue in Syria and will do whatever it can to prevent the developments from following the Libyan scenario.

Report: Syria opposition says dialogue at dead endhttp://www.taiwannews.com.tw/etn/news_content.php?id=1702282

Associated Press 2011-09-09 04:15 PM Russian news agencies have cited a Syrian opposition delegation saying that the prospects of dialogue with the Syrian regime are bleak.

RIA-Novosti and ITAR-Tass quoted Ammar Qurabi, head of the National Organization for Human Rights in Syria, as saying Friday that the opposition is prepared to talk with the government but that authorities have responded only with bloodletting.

The U.N. says 2,200 people have been killed since the Syrian uprising began in March, inspired by the pro-democracy revolutions sweeping the Arab world.

Russia has resisted a draft U.N. Security Council resolution that would impose an arms embargo and other sanctions on Syria.

Mikhail Margelov, a Russian presidential envoy, is due to meet an adviser to Syrian President Bashar Assad next week as part of Moscow's mediation efforts.

Situation in Syria ‘deadlocked’ – opposition leadershttp://rt.com/politics/news-line/2011-09-09/#id17871

11:57

Moscow is continuing dialogue with as most political forces in Syria as possible, Mikhail Margelov, head of the Federation Council Foreign Affairs Committee said at a meeting with a delegation of Syrian opposition in Moscow on Friday. For Russia, it is important to understand if the authorities and the opposition in Syria could draw their positions closer, he said. The head of the delegation, Ammar Qurabi, who leads the National Organization for Human Rights, stressed the situation in Syria has reached a deadlock, adding that the opposition insists on the ouster of the President Bashar al-Assad.

‘No NATO plans to interfere in Syrian conflict’http://rt.com/news/line/2011-09-09/#id17869

11:55

NATO is not planning to intervene in the Syrian conflict between Bashar al-Assad’s regime and anti-government protesters, Assistant Secretary General for Political Affairs and Security Policy Dirk Brengelmann said while speaking on Echo of Moscow radio. He added that this issue is not on the alliance's agenda.

Russia's envoy to Africa to meet with Syrian opposition leaders in Moscowhttp://en.rian.ru/world/20110909/166569573.html

07:41 09/09/2011

MOSCOW, September 9 (RIA Novosti)

Russian presidential envoy to Africa Mikhail Margelov will hold talks with a delegation of Syrian opposition leaders in Moscow later on Friday.

A diplomatic source said the delegation arrived in Moscow on an invitation from a number of Russian non-governmental organizations.

The Russian Foreign Ministry is not planning to have separate contacts with the Syrian delegation, the source said.

The delegation is headed by Ammar Qurabi, the chairman of the Syrian opposition Conference of Change group and the president of the National Organisation for Human Rights in Syria. The delegation also includes representatives of Syria's leftists, the Islamist Muslim Brothers organization, the Kurdish minority, as well as tribal leaders.

The talks will focus on the current political crisis in Syria and the changes occurring within the opposition.

More than 2,200 people have been killed in the crackdown on anti-government protests in Syria since the uprising against President Bashar al-Assad broke out in March, according to UN estimates.

Russian Foreign Minister Sergei Lavrov said on Wednesday, during a meeting with his French counterpart Alain Juppe in Moscow, that international support for the Syrian opposition could lead to "new bloodshed" in the country. He said the refusal of the Syrian opposition to hold talks with the government meant they were seeking international backing similar to that received by Libyan rebels.

After almost six months of fighting against Col. Muammar Gaddafi's troops, the rebels in Libya, have managed to oust Gaddafi with the help of NATO airstrikes and establish control over most of the country. The Libyan Transitional National Council has been recognized by some 60 countries.

No direct Putin-U.K. contact ‘for 4 years’http://en.rian.ru/world/20110909/166574384.html

10:24 09/09/2011

MOSCOW, September 9 (RIA Novosti)

There has been no direct contact between Russian Prime Minister Vladimir Putin and U.K. ministers or diplomats since 2007, the BBC said on Friday, citing Whitehall officials.

British Prime Minister David Cameron is due to make his first visit to Russia next week. A meeting with Putin is expected, but has yet to be confirmed.

Relations between the U.K and Russia soured dramatically in 2006 after the death of former KGB officer Alexander Litvinenko in London and the British government’s subsequent demand that Moscow extradite Andrei Lugovoi, its chief suspect in the case.

Russia’s Constitution forbids the extradition of its citizens, and Putin reacted furiously to the demand.

“They are making proposals to change our constitution that are insulting for our nation and our people,” he told a rally. “It’s their brains, not our constitution, which need to be changed.”

“They forget that Britain is no longer a colonial power and that Russia was never their colony,” he added.

Lugovoi has since been elected to Russia’s lower house of parliament, which gives his immunity from prosecution. He has denied all the charges against him.

Officials told the BBC that tensions remained high, and this was why Putin had not agreed to meet. The last high-level meeting came when then British prime minister Tony Blair met Putin at a G8 summit in 2007.

To Russia with love: hopes David Cameron visit will signal new dawnhttp://www.independent.co.uk/news/uk/politics/to-russia-with-love-hopes-david-cameron-visit-will-signal-new-dawn-2351564.html

By Oliver Wright and Shaun Walker in Moscow

Friday, 9 September 2011Friday

David Cameron will next week become the first senior British politician to speak to the Russian Prime Minister Vladimir Putin for more than three years, it emerged last night.

Mr Cameron will hold talks with Mr Putin and the Russian President Dmitry Medvedev during a visit that represents a high-profile sign of the Coalition Government's attempt to reset Britain's relationship with the country's leaders after it was damaged by the 2006 poisoning of the former Russian spy Alexander Litvinenko in London. The depths to which that relationship had sunk emerged yesterday when British sources admitted that apart from one telephone call not a single senior British politician had met or spoken to Mr Putin since 2007. Mr Putin phoned Gordon Brown when he became Prime Minister in

June 2008 but there has been no top-level contact since and relations have been described as extremely difficult.

Significantly, although Mr Cameron will raise the issue of Mr Litvinenko and Britain's call for the extradition of the former KGB officer accused of poisoning him, he will not prioritise the issue. The Kremlin said the topic was not "worthy of high-level discussion".

Privately, British officials agree and no longer want the case to be an impediment to improving relations. They are keen for Mr Cameron to meet Mr Putin to try to build a relationship with him as he may be re-elected President of Russia in 2012.

During Britain's 'time out in the cold' Mr Putin has cultivated relations with Angela Merkel, the Chancellor of Germany, and the President of France, Nicolas Sarkozy, while his personal friendship with Prime Minister Silvio Berlusconi has brought gains for Italy.

Six hundred UK companies work in Russia, which buys more than £5 billion of British exports each year. But difficulties remain and yesterday British and Russian officials played down expectations that the talks would lead to agreements on areas such a visa restrictions and the terms under which the British Council would be allowed to re-open its offices in the country. The Russians are also smarting at Britain's refusal to join up to a working group on security that they have established ahead of the 2014 Winter Olympics in Sochi.

"We have set up a group for cooperation between security services on security threats. Leading European countries and the US have joined, but Britain has ignored our invitation," said Dmitry Kozak, Russia's deputy prime minister. "We don't know why."

Cameron’s Russia Visit to Yield First U.K. Contact With Putin Since 2007http://www.bloomberg.com/news/2011-09-08/cameron-russia-visit-yields-first-u-k-putin-contact-since-2007.html

QBy Robert Hutton - Sep 8, 2011 11:00 PM GMT+0200

When David Cameron meets Vladimir Putin in Moscow next week, it will be the first face-to-face contact between a British prime minister and the Russian premier since Tony Blair and Putin parted on poor terms in 2007.

With the possibility of Putin regaining the Russian presidency next year, the U.K. government is aiming to re- establish links that collapsed four years ago amid acrimony over the murder of a Russian dissident in London and raids on offices of the British government’s cultural agency in Russia.

“The lack of contact is reflective of the poor state of Russian relations with the U.K.,” James Nixey, manager of the Russia and Eurasia program at the Chatham House foreign-affairs research group in London, said in a telephone interview. “The Brits are still uncertain who they should be dealing with.”

Putin was unable to run for a third consecutive term as president when his eight years in office came to an end in 2008. He picked Dmitry Medvedev to replace him in the Kremlin, while remaining at the center of power as prime minister. Putin hasn’t ruled out a return to the presidency in elections in March.

Blair and Putin met at a Group of Eight summit in Heiligendamm, Germany, just before Blair quit office in June 2007. Blair said afterward the discussion was “very frank.”

“There are real issues there,” Blair told reporters. “I don’t think it will be resolved anytime soon. Putin set out his beliefs that Russia isn’t being treated properly by the west. I set out our view that people are worried and fearful about Russia today.”

Congratulatory Call

The last contact of any kind was a phone call later that month from Putin to Blair’s successor, Gordon Brown, to congratulate him on becoming prime minister. Brown dealt instead with Medvedev, as has Cameron since he took office in May 2010. Medvedev will be Cameron’s host during next week’s visit.

A former Russian agent, Alexander Litvinenko, a Kremlin critic who died in November 2006 after being poisoned in London with the radioactive isotope polonium-210, blamed Putin for the murder in a death-bed statement, an accusation the Kremlin called “absurd.”

Russia refused to hand over an ex-KGB bodyguard, Andrei Lugovoi, who is wanted in Britain for Litvinenko’s murder, as the country’s constitution forbids the extradition of Russian citizens.

The dispute sparked the expulsion of four Russian and four U.K. diplomats and Russia’s closure of U.K. cultural offices outside Moscow. The U.K. also froze cooperation with Russia’s Federal Security Service, the domestic successor to the KGB.

Georgia War

Relations were further damaged by Russia’s 2008 invasion of Georgia. Cameron, then in opposition, flew to Georgia and condemned the act.

Since taking office, Cameron has focused on building trade links around the world in an effort to help the U.K.’s stalling economy.

Business Secretary Vince Cable made a three-day visit to Russia in November 2010 with the largest-ever British business delegation. The group was composed of 37 companies,

including BP Plc (BP/), which has a 50 percent stake in TNK-BP, Russia’s third- largest oil producer, Royal Dutch Shell Plc (RDSA) and Rolls-Royce Group Plc (RR/), the world’s second-largest aircraft-engine maker.

Nixey said U.K. prime ministers moved between “honesty and expediency” in their attitude to Russia. For Cameron, “the question is which is it going to be now.”

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Russia's Putin to meet Cameron, ending 4-year freezehttp://af.reuters.com/article/commoditiesNews/idAFL5E7K83TV20110908

Thu Sep 8, 2011 11:39pm GMT

By Adrian Croft

LONDON, Sept 9 (Reuters) - Russian Prime Minister Vladimir Putin is expected to meet British leader David Cameron next week, ending a four-year period during which Putin has had no high-level contact with British officials.

Cameron has met Russia's President Dmitry Medvedev several times at international events but no British prime minister has visited Russia since 2006, or met Putin -- widely seen as Russia's most powerful man -- since 2007.

The standoff shows the depth of the freeze in British-Russian relations that followed the 2006 murder in London of Kremlin critic Alexander Litvinenko, a former Russian spy who died from poisoning by radioactive polonium-210.

British officials make no secret of the fact they find Medvedev easier to deal with than Putin, who was president at the time of Litvinenko's death. But with Putin seen as possibly returning to the Kremlin in an election next year, London has reasons to reopen dialog with him.

Russia's refusal to extradite Andrei Lugovoy, an ex-KGB bodyguard who Britain wants to prosecute for Litvinenko's murder, sent ties between the countries plunging to a post-Cold War low and led to tit-for-tat diplomatic expulsions.

Cameron is expected to raise the Litvinenko issue in his talks but British officials expect no movement in the dispute.

Putin's talks with Cameron will focus on business, Putin's spokesman Dmitry Peskov said.

"Our business relations with the United Kingdom are far from perfect. The potential is very big and it is not being realised ... But in order for the sides to use the rich potential of economic, investment and trade relations, political will is needed on both sides."

More than 20 business executives, including oil firm BP's Chief Executive Bob Dudley, are set to join Cameron on the trip. Britain is the sixth largest foreign investor in Russia, but its firms have faced problems doing business there.

Only last week, black-clad special forces raided BP's Moscow offices, a day after U.S. giant ExxonMobil signed a deal giving it access to Russian Arctic oilfields that BP had tried to develop, only for its plans to be scuppered by a legal case.

Britain's suspect in the Litvinenko murder, Lugovoy, suggested on Thursday Russia and Britain should ask a third country to carry out an independent investigation into the death. Britain has rejected similar suggestions in the past.

"Are we going to fight about it for the next 100 years? We should be looking for a way out," Lugovoy, now a member of the Russian parliament, told the BBC in an interview while fishing from a boat in Russia's far east. He denies involvement in Litvinenko's murder.

David Cameron's Russia visit chance to 'turn the page' says deputy MP http://www.telegraph.co.uk/news/worldnews/europe/russia/8750234/David-Camerons-Russia-visit-chance-to-turn-the-page-says-deputy-MP.html

A senior Russian politician has said that David Cameron's trip to Russia next week was a chance to "turn the page" after five years of troubled relations between London and Moscow.

By Alex Spillius, Moscow

7:00AM BST 09 Sep 2011

Dmitry Kozak, a deputy prime minister and confidant of Vladimir Putin, said the two countries had to explore common ground and move on from the murder of former Russian spy Alexander Litvinenko in London in 2006.

Underlining the lingering sensitivity of the incident, he said that it was "not appropriate for discussion at high levels" during the Prime Minister's visit, the first since the incident.

In a briefing with British journalists, he added that "you can be sure the Russians will not be raising it".

Moscow has refused an extradition request from the Government for Andrei Lugovoi, a former KGB bodyguard now serving in the Russian parliament. He was suspected of poisoning Mr Litvinenko, who had been given asylum in London and wrote books accusing Mr Putin and his allies of planting bombs and murdering an investigative journalist.

The killing sent diplomatic ties between the two countries to a post-cold war low. London and Moscow expelled diplomats while Britain halted talks on easing visa rules and Russia stopped the British Council from operating in two Russian cities.

"We have very good grounds for friendship between our countries and our people, and for close economic co-operation, and I don't see why shouldn't develop our relations positively," Mr Kozak told British journalists.

The fact that Russia is staging the Winter Olympics just two years after London hosts the main games has provided an opportunity for bridges to be rebuilt.

Regarded as close to Vladimir Putin, the current prime minister and former president, Mr Kozak has been placed in charge of planning the 2014 games in Sochi.

He however revealed that Britain had failed to respond to an invitation accepted by 12 other major countries, including the United States, France and Germany, to join an advisory panel on security for the Russian games.

The issue would be raised next week, he envisaged. "I can't explain why we have not received a reply from Great Britain. We are ready to help with security at the London Olympics, by providing any information we can on the intentions of international terrorist organisations, and we expect to get information in exchange.

He said that otherwise co-operation between the London and Sochi organisers had been cordial.

Mr Cameron's trip is seen as an attempt to thaw relations. He is taking a large business contingent after British business and investment in Russia declined. He will arrive less than two weeks after an armed police raid on the Moscow offices of BP, a day after it was replaced by ExxonMobil in an Arctic oil project with Rosneft.

Bob Dudley, the chief executive of BP, will be part of the delegation in an attempt to repair BP's battered relations in the country.

Analysis: Downing Street ready to move on from Litvinenko poisoning http://www.telegraph.co.uk/news/worldnews/europe/russia/8750448/Analysis-Downing-Street-ready-to-move-on-from-Litvinenko-poisoning.html

David Cameron's trip to Russia next week shows that Downing Street is ready to move on from, if far from forget, the poisoning of former Russian spy Alexander Litvinenko in London five years ago.

7:00AM BST 09 Sep 2011

It will be the first bilateral visit between leaders of the two countries since Tony Blair attended the G8 summit St Petersburg in 2006. At the time relations were warm between Moscow and London, which had seen a state visit by then President Vladimir Putin in 2003.

The bitterness caused by the killing of Litvinenko, allegedly by a former KGB bodyguard, still lingers, as does the Kremlin's refusal to extradite him. Indeed by allowing him to become a member of the Duma, the Russian parliament, he was immunised from prosecution.

The Government is not ready for a full "reset" with Russia of the kind embarked upon by Barack Obama when he took over in 2009. There is no hint that co-operation with the Russian security services will be renewed in a hurry. Russia's organiser for the 2014 Winter Olympics in Sochi has revealed that the British have so far refused to join an international forum on security and counter-terrorism for the games.

But the decision to accept President Dmitry Medvedev's invitation – and the fact that it was offered in the first place – showed that both countries have acknowledged their mutual need to coexist and co-prosper.

For the British, a major motivation is trade. BP is Britain's biggest investor in Russia, owning half of TNK-BP, the country's third-largest oil producer, and other investments. But a spat with its Russian partners, who alleged that they lost billions as BP failed to establish a parallel joint with the state-controlled Rosneft, led to its Moscow offices being raided three weeks ago by armed police. The company's standing in Russia needs to be repaired.

Britain and its old allies in Europe furthermore need Russian oil and gas in stable supply. The West's efforts to persuade the Russians to pressure Syria's Bashar al-Assad to stand down will be helped by a restoration of cordiality between London and Moscow.

For their part the Russians, for all their preparedness to snub the West when forced into a corner, know that they need Britain, a major player at the United Nations and closest European ally of the United States.

Under Mr Medvedev, Moscow has supported sanctions against Iran and, in a major shift from its policy of non-intervention, agreed not to block the UN resolution authorising force against Col Gaddafi's regime in Libya.

"The Russian elite is basically pro-Western – look where they buy houses and send their kids to school," said Dmirty Babich, a political analyst at RIA Novosti, a state-run news agency.

"They realise their future is not primarily with China or Uzbekistan. Though they want good relations with those countries, but know their future and the country's progress depends on good relations with the West."

11:32 09/09/2011ALL NEWS

Magnitsky case investigtn not to be dropped without relatives consnt

http://www.itar-tass.com/en/c154/222007.html

MOSCOW, September 9 (Itar-Tass) —— The investigation into the case of Sergei Magnitsky is prolonged till November 24, as his relatives object to the resumption of the investigation, but at the same time do not give consent to dismiss it, a source at the press service of the Russian Interior Ministry's investigation department told Itar-Tass on Friday.

Magnitsky, a consultant with the British investment fund Hermitage Capital, died in an intensive therapy ward of the hospital of the "Matrosskaya Tishina" jail in November 2009. He was charged with involvement in tax evasion.

The press service recalled that the investigation into the Magnitsky case was dropped on November 30, 2009 in connection with the defendant’s death, though there were enough evidence proving he was involved in illegal activities, and it was resumed on August 9, following the direction of the Russian Prosecutor General's Office and the Russian Constitutional Court's ruling of July 14, 2011.

It is necessary to receive the consent from all the close relatives to drop the proceedings against Magnitsky, the official explained.

Investigators have met with Magnitsky's widow and her attorney, who objected to the decision of the prosecutor's office and the investigative authorities to resume the proceedings against the defendant, but the widow at the same time reserved the right to take a decision later to resume the investigation to rehabilitate her husband.

Besides, the investigation department on September 6 received a written statement from Magnitsky's mother, according to which, she believed the arrest and the prosecution against her son were unlawful.

The dismissing of the case for the second time in connection with the death of the defendant is contrary to the Constitutional Court ruling, the official said. The two women who have lost their man, in their statements, use such words as "immorality" and "unlawfulness", but the notions may not be considered as judicial. To observe all the legal formalities set by the Russian legislation, a legal document is needed -- the consent from all the close relatives to drop the criminal case against Magnitsky.

It is a paradoxical situation -- the relatives object to the investigation resumption, but at the same time do not give their consent to dismiss it, the investigation department official noted.

The proceedings will last until all the close relatives settle the matter.

According to the Russian legislation, close relatives are a husband, a wife, parents, children, adoptive parents, adopted children, brothers, sisters, a grandfather, a grandmother and grandchildren. The investigators will try to find all the close relatives of Magnitsky to know their view and with this aim will extend the term of the investigation. For the time being, it is prolonged till November 24, the official said.

At the same time, all persons concerned have the right to appeal against the decision of the Prosecutor General's Office to resume the investigation.

Magnitsky, 37, died in the jail hospital on November 16, 2009, eleven months after he was taken into custody and seven days after the charge was brought against him. Before the transfer to the hospital, he was held in the "Butyrka" jail,

The investigation into the criminal case opened over Magnitsky's death is also prolonged till November 24, 2011.

September 09, 2011 11:02

Finland not in need of add'l Russian gas - Finnish foreign ministerhttp://www.interfax.com/newsinf.asp?id=271935

MOSCOW. Sept 9 (Interfax) - Finland will be developing nuclear power, making additional supplies of Russian gas unnecessary, Finnish Foreign Minister Erkki Tuomioja said during an interview with Interfax.

"The Finnish government last year adopted a very ambitious program for significantly increasing the proportion of renewable sources in our energy structure. And the plan is to increase the proportion of atomic energy," Tuomioja said. "All this will leave a small place for additional supplies of gas to Finland for the foreseeable future," he said.

The Finns are not interested in connecting to the gas infrastructure the Russians intend to develop in regions bordering Finland - Murmansk Region and Karelia, Tuomioja said.

"Northern Finland is very thinly populated and the distance between populated areas is great. So to build a gas network in Northern Finland is not economically expedient," the foreign minister said.

Cf

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

09 September 2011, 10:07

Patriarch Kirill sympathizes with Angela Merkel over her father's death

http://www.interfax-religion.com/?act=news&div=8716

Moscow, September 9, Interfax - Patriarch Kirill of Moscow and All Russia expressed his condolences to German Chancellor Angela Merkel over her father's death.

"Please, accept my sincere condolences over decease of your father, pastor Horst Kasner. His life fell on critical moments of the 20th century and it required much strength and firm faith. He was always guided by eternal Christian values that exceeded the vanity of this world," the Patriarch said in his message of condolences posted by his press service.

Protestant pastor Horst Kasner died at night on Saturday at the age of 85.

He was born in 1926 in Berlin. He studied theology in Hamburg University after World War II. In 1957 he moved to the town of Templin in 80 kilometers from the capital where he headed a college for pastors.

Dmitry Medvedev’s interview to the Euronews TV channelhttp://eng.kremlin.ru/news/2795

September 9, 2011, 06:00 Yaroslavl

ALEXANDER SHASHKOV: Mr President, the Global Policy Forum is taking place for the third time here in Yaroslavl under your patronage. This year the main theme is multiculturalism. Why do you think this topic is so relevant today?

PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Because it really is relevant. Relations between different ethnic groups, between those who come to work in Europe and the local residents have deteriorated in almost every European country. These problems also exist in the Russian Federation. That is why I thought it was appropriate to raise this issue in the expert community and among professional politicians.

A great deal has been said and written on this subject over the past few months. Most European politicians have started talking about the crisis of multiculturalism, saying that the values of multiculturalism have not withstood the test of time and should be revised. Our attitude to this issue is complex. Of course, a great deal depends on how one understands the term multiculturalism, but ethnically Russia is an extremely complex country, a melting pot of numerous ethnic groups and religions. For us coexistence of different peoples is a matter that is not related to foreign immigrants, who one way or another appear in every country, including Russia. It is a question of internal harmony, which was created over the centuries and which, as we thought in a certain period, we were able to take to a completely new level.

Let me remind you that there was a phrase in the Soviet times: a single community, the Soviet people. In many ways, these principles were purely theoretical but that does not mean we should abandon this issue and this idea. We really need to create a society built on internal harmony, where people are tolerant of each other and at the same time respectful of the traditions that make up the core of an ethnic group. Regardless of which part of the country we are talking about, be it Central Russia, the Caucasus or the Far East, there are Russian citizens living in all of those areas, who have the same rights and responsibilities, and who must follow certain social rules. That is why this topic is vitally important for us.

Europe also has a lot of problems, as I said, and I believe that an exchange of theoretical approaches and practical measures can be very valuable today.

ALEXANDER SHASHKOV: The winter is coming soon and again we can see the start of a conflict between Russia and Ukraine over gas supplies.

DMITRY MEDVEDEV: There is no conflict yet. Rather...

ALEXANDER SHASHKOV: It is brewing.

DMITRY MEDVEDEV: There are different approaches that can turn into a difficult situation.

ALEXANDER SHASHKOV: Can this lead to problems with gas supplies to Europe, for example?

DMITRY MEDVEDEV: You know, I hope the experience of recent years has taught our closest partners and friends not to tear up existing agreements, even if they aren’t completely happy with them. When our colleagues and partners, the President of Ukraine and Prime Minister of Ukraine tell us: “This agreement is unfair, it is the work of the devil and we will not execute it” – that is just outrageous! All contracts must be executed until they are terminated legally through the court or revoked by the parties. And I hope that our partners, our Ukrainian friends will abide by the framework agreement concluded in 2009 equally strictly and meticulously.

As for the future, as I have said many times before, we are ready to discuss various cooperation formats with our Ukrainian colleagues, including more advanced ones, based on integration and Ukraine joining the Customs Union or creating a new one. They are saying for some reason that WTO prevents them from joining the Customs Union, which is a little strange. The WTO doesn’t prevent us from joining the Customs Unions but it prevents them. But this is an internal matter. Alternatively, we can use other mechanisms, including investment in the Ukrainian economy and the gas transportation network. If we reach agreement on this, we will probably be ready to reconsider the parameters of our cooperation. However, some things are immutable: gas cooperation is always based on a formula and that formula is universal. That applies in equal measure to Ukraine and to other countries, and any talk of “we pay more than the others” is groundless. It is propaganda, pure and simple. Ukraine pays according to the same formula and its price is commensurate with the price paid by other European consumers.

The prices are high, that is true, but sometimes they can be extremely low, in which case it is the problem of the energy supplier. So I hope that Ukrainian partners will execute the contract, and then we will reach agreement regarding our future business and the parameters of future cooperation.

ALEXANDER SHASHKOV: During his visit to Moscow, French Foreign Minister Alain Juppe asked Russia to support the EU proposal to introduce sanctions against Syria. What is Russia’s policy on this issue?

DMITRY MEDVEDEV: It is true, I discussed this matter with Mr Juppe and the other minister who accompanied him, the French Defence Minister, as well as with my colleagues. The problem is that we are not completely satisfied with the way [UN Security Council’s] Resolution 1973 was enforced. Now it is a thing of the past because it seems that the situation in Libya has changed. Nevertheless, we believe that the mandate granted by Resolution 1973 on Libya was exceeded. And we do not want the same thing happening with Syria. Yes, we are aware of the problems in Syria, we can see the disproportionate use of force and a large number of victims. We are not happy about it

either. I have repeatedly spoken about this in personal discussions with President Bashar al-Assad, and I recently sent our Deputy Foreign Minister to meet with him and to make our position clear once again. But I think the resolutions we adopt in order to send a strong message to Syria’s leadership should be addressed to both sides, because the situation there is not clearcut. Those rallying with anti-government slogans are not proponents of the refined European democracy; there are very different people among them. Some of them are extremists, and some can even be called terrorists. So we must not idealise the situation and must proceed from the balance of forces and interests.

We are ready to support a variety of approaches but they should not be based on a unilateral condemnation of the government and President al-Assad. They must send a convincing message to all the parties to the conflict: they must sit down and negotiate to end the bloodshed. Russia is interested in this as a great friend of Syria, a country with which we have numerous economic and political ties. So the search for a possible way to resolve this situation will continue.

September 9, 2011, 06:00Yaroslavl

Russia calls for balanced approach to Syria - Medvedevhttp://en.rian.ru/russia/20110909/166562083.html

03:20 09/09/2011

MOSCOW, September 9 (RIA Novosti)

Russia is ready to support various approaches to resolving the situation in Syria, but they should not be based on a unilateral condemnation of the Syrian authorities' response to the popular uprising, Russian President Dmitry Medvedev said in an interview with Euronews.

A "stern message" to end the bloodshed in Syria should be addressed to both sides in the conflict, "because the situation there isn't sterile," Medvedev said.

"Those who shout the anti-government slogans are not solely supporters of a refined European democracy. These are very diverse people," the president said, adding: "Some of them are, frankly, extremists. Some of them may even be called terrorists."

"The situation shouldn't be idealized; instead, we must proceed based on the balance of forces and interests," he said.

Medvedev also said Russia was "not completely satisfied" with how United Nations Resolution 1973 on Libya was implemented.

"Now it's in the past, because, apparently, the situation in Libya has changed," he said. "Even so, we believe that the mandate from the Libya Resolution 1973, was exceeded."

Russia has repeatedly criticized the bombing of Libya by a NATO-led coalition, saying that it was overstepping a UN mandate to protect Libyan civilians.

"We definitely wouldn't want the same thing happening regarding Syria," Medvedev said.

Ukraine pledges to abide by 2009 gas agreements with Russia - PM's press secretaryhttp://www.interfax.com.ua/eng/main/78962/

11:22

Ukraine will abide by the "fettering" gas agreements, signed with Russia in early 2009, even though it is seeking their revision, the Ukrainian government's spokesman Vitaliy Lukyanenko told Interfax-Ukraine.

"The Ukrainian prime minister said firmly and consistently that, even though he deems the agreements fettering and going against Ukraine's strategic interests, Ukraine will honestly abide by all points and positions of the agreement until the moment when we persuade our partners to revise these unfair terms and until we sign a new agreements," he said.

Russian President Dmitry Medvedev, in an interview with the Euronews television channel in Yaroslavl, accused Ukraine of attempting to violate the agreement.

"When our colleagues and partners, the President of Ukraine and Prime Minister of Ukraine tell us: "This agreement is unfair, it is the work of the devil and we will not execute it" - that is just outrageous! All contracts must be executed until they are terminated legally through the court or revoked by the parties," he said.

"And I hope that our partners, our Ukrainian friends will abide by the framework agreement concluded in 2009 equally strictly and meticulously," the Russian president said.

09.09.2011

Ukraine pledges to abide by 2009 gas agreements with Russiahttp://www.kyivpost.com/news/nation/detail/112499/

Today at 11:34 | Interfax-Ukraine Ukraine will abide by the "fettering" gas agreements, signed with Russia in early 2009, even though it is seeking their revision, the Ukrainian government's spokesman Vitaliy Lukyanenko told Interfax-Ukraine.

"The Ukrainian prime minister said firmly and consistently that, even though he deems the agreements fettering and going against Ukraine's strategic interests, Ukraine will honestly abide by all points and positions of the agreement until the moment when we persuade our partners to revise these unfair terms and until we sign a new agreements," he said.

Russian President Dmitry Medvedev, in an interview with the Euronews television channel in Yaroslavl, accused Ukraine of attempting to violate the agreement.

"When our colleagues and partners, the President of Ukraine and Prime Minister of Ukraine tell us: "This agreement is unfair, it is the work of the devil and we will not execute it" - that is just outrageous! All contracts must be executed until they are terminated legally through the court or revoked by the parties," he said.

"And I hope that our partners, our Ukrainian friends will abide by the framework agreement concluded in 2009 equally strictly and meticulously," the Russian president said.

Read more: http://www.kyivpost.com/news/nation/detail/112499/#ixzz1XRXpetti

Medvedev hopes Ukraine will honor gas deal with Russiahttp://en.rian.ru/russia/20110909/166563557.html

04:07 09/09/2011

MOSCOW, September 9 (RIA Novosti)

Russian President Dmitry Medvedev said he hoped Ukraine would stick to the existing gas agreement with Russia and expressed Moscow's readiness to discuss "various cooperation schemes" with Kiev that may result in a lower gas price for Ukraine.

"So far, there's no conflict," between Russia and Ukraine on the gas issue, Medvedev said in an interview with Euronews, "rather there are differences that might lead to various developments."

Ukraine wants Russia to tear up a 10-year deal, agreed on by former Prime Minister Yulia Tymoshenko in 2009. Kiev says the deal set an excessively high price for Russian gas and forces it to import more gas than it needs.

"I hope that after all the recent experiences our close partners and friends must learn that you can't torpedo existing contracts - even if you don't like them," Medvedev said. "It is completely unacceptable. All agreements, as long as they are not refuted in court or abandoned by the parties, must be carried out."

Ukraine has threatened to slash gas purchases to 27 billion cubic meters of gas next year, down from 40 bcm this year, but Russian energy giant Gazprom said that under its 'take-or-pay' contract with Ukraine's energy company Naftogaz Kiev has to pay for 33 bcm of gas regardless of the volume of purchases.

"I hope that our partners, our Ukrainian friends will likewise stick strictly to the framework agreement concluded in 2009," Medvedev said.

He also reiterated that Russia was "willing to discuss various cooperation schemes" with Ukraine, including "advanced plans" based on Ukraine's integration in the Customs Union.

Russia has rejected a proposal by Ukrainian President Viktor Yanukovych on Ukraine's cooperation with the Customs Union of Russia, Belarus and Kazakhstan in a 3+1 format.

Moscow says Ukraine should become a full member of the Customs Union if it wants to get a discount on Russian gas.

Gazprom has said a union entry would cut the country's gas bill by $8 billion every year.

Medvedev said Russia could also discuss integration with Ukraine "based on some other approaches, including our investment in Ukraine's economy or gas transport system."

"If we can agree on this, we will probably be ready to consider change in the scheme of [gas] cooperation," he said.

He added, however, that "the immutable principle remains" that gas cooperation is "always" based on a "universal" formula.

"Talk like 'we're paying more than other countries' isn't based on anything," the president said. This is pure propaganda."

The Russian-Ukrainian gas deal ties the price of gas to the price of oil, which had been rising steadily until recently, boosting Kiev's bill.

"Ukraine pays by the same formula, and pays commensurate with the price paid by other European consumers," Medvedev said. "Current prices are high, that's true. But they can also be extremely low sometimes. And then it's a problem for the energy supplier."

03:34 09/09/2011ALL NEWS

Medvedev criticizes Ukrainian “friends” for gas dispute

http://www.itar-tass.com/en/c154/221804.html

MOSCOW, September 9 (Itar-Tass) —— Russian President Dmitry Medvedev criticized Ukrainian “friends” over a new gas dispute, but refused to describe it as a conflict and said the parties will reach an acceptable agreement provided Ukraine strictly abides by the 2009 gas deal.

The Ukrainian president and prime minister claimed the country is paying too much for the Russian gas and threatened to non comply with the terms of the 2009 agreement and appeal to international arbitration.

“It is an outrage when our colleagues, partners, the president of Ukraine, the prime minister of Ukraine say the agreement is unfair and bad and they will not fulfill it,” Medvedev said in an interview with the Euronews TV channel aired on Friday.

“Unless contested in court or cancelled by the parties all agreements shall be fulfilled and I hope our Ukrainian friends will strictly abide by the framework of the agreement signed in 2009. I hope the experience of our close partners and friends in the past years will teach that it is impossible to explode the existing agreed base even if you do not like it,” Medvedev said.

He stressed Russia is ready to discuss various approaches “both advanced and based on integration or those including investment presence in the economy and gas transportation system of Ukraine.” In case of agreement Moscow may decrease gas prices for Ukraine.

“If we succeed to agree on the issues we might be ready to consider changing the cooperation scheme,” the president said and stressed Ukrainian claims about paying higher prices than others are unfounded.

“The talk that we are paying more than others have no grounds and is pure propaganda,” he said.

“Ukraine is paying by the same formula and the money is commensurate to the price paid by other European consumers. Yes, prices are high but they can also be extremely low which will be a problem for the energy supplier. I hope Ukrainian consumers will properly fulfill the agreement and we shall agree on our future affairs and future cooperation parameters,” Medvedev said.

He refused to describe the current situation as a conflict. “Most likely there are different approaches which can develop into a complicated situation,” the president said.

Chinese official calls for building harmonious world at int'l political forumhttp://news.xinhuanet.com/english2010/china/2011-09/09/c_131119421.htm

  2011-09-09 04:21:35

YAROSLAVL, Russia, Sept. 8 (Xinhua) -- Li Jinhua, vice chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), on Thursday called for building a peaceful and harmonious world at an international political forum here.

Addressing the third edition of the Yaroslavl World Political Forum, Li made the appeal in a speech that highlighted a theme of building an inclusive and harmonious world while pushing forward modernization.

He briefed the participants on China's experience in promoting social inclusiveness and building a harmonious society in the multicutural era.

Li urged other countries around the world to unswervingly explore and follow a path of development that conforms to their respective national conditions, to share and learn from each other their respective experiences and achievements, to respect diverse civilizations, and to push forward the construction of a harmonious world of lasting peace and common prosperity.

The two-day event, which opened Wednesday, was attended by some 5,000 representatives from over 30 countries, including political officials and scholars. The Yaroslavl World Political Forum is an annual global event initiated by Russian President Dmitry Medvedev in 2009.

10:41 09/09/2011ALL NEWS

Tokyo to express concern to Moscow over Russia AF plane flights

http://www.itar-tass.com/en/c154/221951.html

TOKYO, September 9 (Itar-Tass) — The Japanese government intends through diplomatic channels to express to Moscow its “concern” over the Thursday flight of two Russian strategic bombers over the perimeter of the main Japanese territory, Chief Cabinet Secretary Osamu Fujimura said at a press conference in Tokyo on Friday.

“We will deal with the matter appropriately based on Russia’s response,” Fujimura said a day after the bombers flew around Japan in a circle. Fujimura said it is not the first time Russian aircraft have flown around Japan, but noted that the incident was unusual because the bombers flew over a long distance and were refuelled by other planes, the Kyodo news agency reported.

Japan’s Air Self-Defence Force fighters were scrambling on Thursday due to concern that the Russian planes may have violated Japanese airspace. The ministry found out later that there was no such violation, it said. The Russian Defence Ministry has acknowledged that the bombers flew over the Pacific Ocean but they did not violate foreign airspace.

According to Tokyo press reports, on Tuesday two Russian strategic bombers Tu-95MS for about 19 hours were flying over the perimeter of the mainland of Japan from the southern island of Kyushu to northern Hokkaido, flying over international waters. Ten 10 fighter jets the Air Force of South Korea and Japan were watching this patrolling.

On Thursday, the Japanese government also requested explanations from Moscow in connection with reports about the Russian Air Force intentions to conduct air force exercises in the Sea of Okhotsk near Japan’s control zone. According to the Tokyo press, Russia earlier notified the International Civil Aviation Organisation (ICAO) that it closes for flights of civil aircraft a vast area in the Sea of Okhotsk from September 7 until the end of this week because of the exercise. This area is said to be close to Japanese airspace

off the north-eastern coast of the Hokkaido Island on the line from the port of Wakkanai to the Shiretoko Peninsula.

Japanese companies urged to invest in Russiahttp://english.ruvr.ru/2011/09/09/55902039.html

Sep 9, 2011 10:33 Moscow Time

First Deputy Chairman of the Russian government Igor Shuvalov has urged Japanese companies to make investments in Russia and not to link business with political disagreement. 

Shuvalov was speaking with reporters on the eve of the 5th Pacific Economic Congress in Vladivostok.

He said that the territorial conflict should not be an obstacle for Japan to take part in the Russian economy.

The more common people and businessmen cooperate the easier the solution for many problems can be found, Shuvalov said.

Nomura empties offices, but denies Russian exit

http://www.bne.eu/dispatch_text16529

bneSeptember 9, 2011

Japanese investment bank Nomura has essentially closed its Russian operations, sources told Vedomosti on Wednesday, although the company denies it is pulling out of the country.

Having been present in Russia since 1998, Nomura's last significant transaction in the country was a public placement of UC Rusal shares, said Maxim Seltser. That was the aluminum company's listing in Hong Kong, which closed in January 2010. Th former General Director of Nomura in Russia, who left the company in the spring, says that the business has now been wound up.

The head office cut down financing, with only a back office and a team of equity analysts left, said Seltser. A Nomura partner claimed that the last of them quit not long ago.

However, Nomura has no plans to leave Russia, according to a spokesperson in London, "We confirm our commitment to this country and see a big potential for the business in the region, particularly when it comes to providing Russian investors with access to Asian markets."

"Nobody spoke about winding up the business directly. Nobody was dismissed. However, such conditions were created that people wished to resign," says one unnamed source.

Another source said that the bank's strategy in Russia was always questionable, and rumors of a revision of its model had been around for a while.

06:00 09/09/2011ALL NEWS

SKorea says Russia gas project might accelerate

http://www.itar-tass.com/en/c154/221832.html

SEOUL, September 9 (Itar-Tass) —— South Korean President Lee Myung-bak said that a major gas pipeline project involving Russia and the two Koreas could move forward “faster than expected” as it would benefit all sides involved.

“North Korea and Russia are in talks and we are also in talks with Russia. There will be a point where the three parties reach an agreement. I think it will proceed faster than expected,” Lee said on Thursday adding “It will be great if the project materializes.”

The project is to deliver Siberian natural gas to South Korea via the communist North. It gained momentum in recent weeks after North Korean leader Kim Jong-il discussed the project with Russian President Dmitry Medvedev during his trip to Russia last month, Yonhap news agency said.

The two parties said they agreed to set up a joint committee to promote the project.

2011/09/09 00:33 KST

(LEAD) Lee says Russia gas pipeline project could proceed 'faster than expected' http://english.yonhapnews.co.kr/national/2011/09/09/13/0301000000AEN20110909000100315F.HTML

By Chang Jae-soonSEOUL, Sept. 9 (Yonhap) -- President Lee Myung-bak said Thursday that a massive gas

pipeline project involving Russia and the two Koreas could move forward "faster than expected" as it would benefit all sides involved.

   "North Korea and Russia are in talks and we are also in talks with Russia. There will be a point where the three parties reach an agreement. I think it will proceed faster than expected," Lee said during a panel discussion televised live nationwide. "It will be great if the project materializes."

   The ambitious project to build a transnational pipeline shipping Siberian natural gas to South Korea via the communist North has gained momentum in recent weeks after North Korean leader Kim Jong-il discussed the project with Russian President Dmitry Medvedev during his trip to Russia last month.

   The two sides said later that they agreed to set up a joint committee to push for the project.

   Russia's presidential envoy to the Far East Federal District, Viktor Ishaev, also said that the North's leader agreed to permit the envisioned pipeline to go through its territory if Russia and South Korea sign a contract on the project, according to a news report.

On the possibility of a summit with the North, Lee said he is always open to a meeting with the North's leader, but the communist nation should first demonstrate its commitment to peace on the divided peninsula and pledge not to make further provocations.

   "I may or may not hold an inter-Korean summit during my term," Lee said. "If a summit is going to be held, there should be a guarantee that (North Korea) will bring peace to the Korean Peninsula and won't make provocations."

   Lee also expressed skepticism about the usefulness of a summit with Pyongyang, saying that the communist nation kept committing provocations in waters near the western sea border despite the previous two rounds of summit talks with the South.

   Lee also said that he wants to help North Korea revive its broken economy and maintain its security.

   "I can hold (an inter-Korean summit) at any time if it helps open peace and prosperity between the two Koreas," he said.

   Relations between the two Koreas have been tense since Lee took office with a pledge to link aid to the impoverished neighbor to progress in efforts to end its nuclear programs. The already-frayed ties plunged to the lowest levels in decades after the North's two deadly attacks on the South last year.

   Lee rejected Japan's territorial claims to South Korea's easternmost islets of Dokdo, saying he may visit the islets whenever he wants, and "even within this year."

   "I can go there at any time because it's our territory," Lee said.

   Lee said that he had thought of visiting Dokdo as well as the nearby island of Ulleung together with first lady Kim Yoon-ok earlier this year, but called off the plan because of bad weather.

   Japan's attempt to lay claim to Dokdo has long been a thorn in relations between the two countries. South Koreans see those claims as a sign that Japan has not fully repented for its colonial rule of Korea.

   South Korea has rejected Japan's claims over Dokdo as nonsense because the country regained independence from the colonial rule and reclaimed sovereignty over its territory, including Dokdo and many other islands around the Korean Peninsula.

   Lee also talked about pending economic and political issues.

   On the explosive popularity of star IT expert and professor Ahn Cheol-soo as a potential candidate for president, Lee said that the phenomenon illustrates that the South Korean people wants changes from the current political establishment.

   "I think that we are in a 'smart' era, but our politics remains in an 'analog' era," Lee said of the backwardness of South Korean politics. "People are demanding changes from the political circles and I believe such a yearning was vented through professor Ahn."

   Ahn, the 49-year-old founder of South Korea's best-known anti-virus software firm Ahnlab, saw his popularity skyrocket over the past week after hinting that he may run for Seoul mayor. Though he gave up his mayoral candidacy, surveys have put him well ahead of Park Geun-hye of the ruling Grand National Party and other presidential hopefuls.

   Analysts have said that Ahn's popularity illustrates the distrust South Koreans have in existing politicians and political parties, which have often come under fire for engaging in factional or partisan fighting without caring for ordinary people.

   Despite the high popularity, Ahn announced earlier this week that he decided against running for mayor and will instead back a lawyer-turned-liberal activist.

   Lee said that the job of Seoul's mayor has little to do with politics and therefore he believes the post should go to a person with administrative experience.

   On tax cuts, Lee said that the government agreed to halt additional tax cuts for conglomerates as they are better off than small- and medium-sized firms and could make do without such benefits for two to three years.

   In the long-term, however, Lee stressed that South Korea should move in the direction

of expanding tax cuts to make the country an attractive destination for foreign investment.

   jschang@yna.co.kr(END)

Thursday, September 8, 2011    

N. Korea urgently seeks jet fighters from Russia, China against South's superior air force

http://www.worldtribune.com/worldtribune/WTARC/2011/ea_nkorea1125_09_08.asp

By Lee Jong-Heon, special from East-Asia-Intel.com

SEOUL — North Korea has been desperately seeking to acquire state-of-the-art jet fighters from Russia and China to counter South Korea’s air force that has long dominated the sky over the divided Korean peninsula, military sources here say.

North Korean leader Kim Jong-Il brought his air force chief with him on his recent trip to Russia highlighted by a summit with Russian President Dmitry Medvedev in the eastern Siberian city of Ulan-Ude. The North’s Air Force Commander Ri Pyong-Chol was spotted standing close to Kim and Medvedev when they met on Aug. 24.

“It is rare that an air force chief accompanies the North Korean leader on an overseas trip,” the source said. “This likely indicates that one of the primary purposes of the visit was to secure supplies of Sukhoi jet fighters and other aircraft from Russia,” he said.

Kim was also accompanied by key officials in charge of arms manufacture and acquisition — People’s Armed Forces Kim Yong-Chun and Pak To-Chun, Workers’ Party secretary for military industry, and Ju Kyu-Chang, head of the party’s machine industry department.

In a show of his strong interest in Russian jet fighters on the eve of the summit, Kim and the military officials visited a major aircraft factory in Ulan-Ude which among other things produces Sukhoi fighters and helicopters.

“Kim must have gotten a close look at Russian-made fighter jets at the plant,” the source said.

Russia wants West Bengal nuclear plant relocatedhttp://timesofindia.indiatimes.com/india/Russia-wants-West-Bengal-nuclear-plant-relocated/articleshow/9917196.cms

Sachin Parashar, TNN | Sep 9, 2011, 02.50AM ISTNEW DELHI: The government is looking at allotting another site for nuclear reactor to Russia in place of Haripur in West Bengal, a location marred by controversy. Confirming that the Russians have officially sought another site, government sources indicated a new site could be allotted soon.

The Mamta Banerjee-led government in the state announced last month that it was going to scrap the project, but it did not prevent Prime Minister Manmohan Singh from making a strong case for nuclear energy when he visited Kolkata later.

"There is no decision yet but we are looking at the request from the Russians. We can allot another site to them," said a senior government source. The Russians have been expressing concern about protests in Haripur since last year, but the government was still hopeful of a way out. With Mamata's regime not relenting, the Centre has been forced to think of other alternative sites.

West Bengal power minister said in the assembly last month that the government would not allow any nuclear power plant to be set up in the state. Russia's state-owned nuclear power equipment and service giant Rosatom had asked the Department of Atomic Energy (DAE) to consider allotting it another site for the plant.

The coastal region of Haripur had been allotted by the Centre to Russia because of its low population density. The proposed plant had acquired all necessary environmental clearances in January, 2010. Haripur was said to have the potential for six reactor units. It had been earmarked initially for two 1,000mw power plants and the construction work was to commence this year.

However, after the protests led by Trinamool Congress started to gain momentum last year even then state's ruling party CPM tried to distance itself from the project dubbing it was Centre's brainchild.

Rosatom chief Sergei Kiriyenko had earlier said that a total of 12 nuclear power units were to be built at Kudankulam and Haripur. Haripur was said to be an important part of the Centre's plans for achieving its target of generating 30,000MW of nuclear power by 2030.

06:35 09/09/2011ALL NEWS

Putin to attend Nizhni Tagil arms show

http://www.itar-tass.com/en/c154/221846.html

NIZHNI TAGIL, September 9 (Itar-Tass) - Prime Minister Vladimir Putin will attend the annual arms show in Nizhni Tagil on Friday which will for the first time display the modernized T-90S army tank.

Putin will visit the Uralvagonzavod producer of the tank which said “it can fight in various weather conditions and achieve success in various types of modern ground combat.”

The tank has a modified 125-mm gun that increases precision of long-distance fire. The commander will now have a machine-gun to fire at close targets while the vehicle is capable of automatically raising a screen against laser-guided missiles and has a system of electromagnetic protection against mines.

11:56Defense Ministry may buy another batch of helicopter carriers Mistral without Rosoboronexport's mediation - Isaikin

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

07:34 09/09/2011Top News

Nothing bad in CIS as meeting club - deputy minister

http://www.itar-tass.com/en/c32/221945.html

MOSCOW, September 9 (Itar-Tass) —— A top Russian diplomat agreed the Commonwealth of Independent States (CIS) which unites former Soviet republics has developed in 20 years of its existence into a meeting club for national leaders, but said there is nothing bad in it.

“They say the Commonwealth has developed into a club for meetings and nothing else. Even if this were so what is bad in it? Mutual attraction remained,” Russian First Deputy Foreign Minister Andrei Denisov said in an interview with the Rossiyskaya gazeta published on Friday.

“We have divorced, but did not part. That is the way to live, not to impede, but assist each other,” he added.

He admitted the CIS failed to achieve initially proclaimed goals. “At the first stage the talk was no more and no less about joint armed forces and a common foreign policy. However life quickly put everything in place. Overstated expectations did not come true which is only logical.”

Denisov rejected claims that Russia is working to compel CIS countries to join such integration institutions as the Customs Union and EurAsEC economic community.

“Only the perception of own interests can push that or another country to an integration association,” Denisov said. “It is an issue of sovereign political choice,” he added.

He also said Russia is against western attempts to make CIS countries choose between Russia and the European Union. “We are categorically against such a presentation and have never concealed it in talks with partners from the European Union,” he said.

Denisov said Russia plays a specific role in the Customs Union of which also Kazakhstan and Belarus are members, as well as in EurAsEC.

“If we take the aggregate economic potential of Russia, Kazakhstan, and Belarus for a hundred percent, Russia will account for 89 percent, Kazakhstan – 7 and Belarus - 4. The disparity is clear. The Russian GDP is nearly 30 times bigger than that of Belarus. The problem should not be concealed,” he said, but added “it does not mean that Russia sustains someone.”

Naturally, Russia assists CIS economies through the EurAsEC anti-crisis fund. “For the help Russia gets the right to operate on that or another market,” Denisov said.

Religious leader meets Russian officialhttp://www.news.az/articles/society/44020

Fri 09 September 2011 04:04 GMT | 6:04 Local Time

Deputy Chairman of Council of Federation of the Federal Assembly of the Russian Federation Ilyas Umakhanov is on a visit to Azerbaijan.

Chairman of the Caucasian Muslims Board Sheikh ul-Islam Allahshukur Pashazade met with Deputy Chairman of Council of Federation of the Federal Assembly of the Russian Federation Ilyas Umakhanov.

Successful development of Azerbaijan-Russia relations, inter-religious ties and other issues were discussed during the meeting.

Pashazade praised the level of cooperation between the two countries.

The Russian official, in turn, described Azerbaijan as `rapidly developing` country , praised Pashazade`s role towards strengthening inter-religious relations in the CIS area.

AzerTAj

Russia: Investigators examining plane's black box

Today at 10:00 | Associated Press MOSCOW (AP) — Russian air accident investigators say they are examining flight recorder boxes from a plane that crashed this week, killing 43 people and devastating a top ice hockey team.

The Interstate Aviation Committee said on its website Friday that the magnetic tapes holding the flight information were still wet and that work on deciphering them would begin after they had dried out.

Investigators have not yet been able to pinpoint what caused the Yak-42 jet to crash Wednesday into the banks of the Volga River shortly after takeoff from Yaroslavl, 150 miles (240 kilometers) northeast of Moscow.

The crash killed 36 hockey players, coaches and staff of the Lokomotiv Yaroslavl team, that included former NHL players.

Aviation authorities say they will inspect all Yak-42 jets currently in service in Russia.

Read more: http://www.kyivpost.com/news/russia/detail/112489/#ixzz1XR9IlfcN

11:45 09/09/2011ALL NEWS

Duma to hear report on Yak-42 air crash

http://www.itar-tass.com/en/c154/222020.html

MOSCOW, September 9 (Itar-Tass) - The State Duma will hear a report of Minister of Transport Igor Levitin on the air crash of the Yak-42 plane near Yaroslavl. A corresponding resolution was adopted on Friday.

“We may invite him to make a report at the next plenary meeting, on September 20,” said Duma Speaker Boris Gryzlov. He called attention to the fact that previously Levitin’s report at the Duma had been scheduled for October 19, but now the MPs wish to here it a month earlier.

Responding to the question of a MP about a possibility of the creation of a parliamentary commission for investigating the air crash, Gryzlov reminded that he had spoken on Thursday about the decision to create a group for analysing all aspects of the air crash near Yaroslavl. “I have already asked about it Vladimir Vasiliev (head of the Duma committee for security), who was a deputy to the Duma from the Yaroslavl Region. He has joined the work already,” he said. Gryzlov suggested that they should consider a possibility of the creation of such a commission. He believes it is quite probable that a corresponding resolution will be adopted on September 20, the day when Levitin is going to address the Duma.

The Yak-42 plane crashed on September 7 soon after the take-off at the airport of Yaroslavl. It had on board the Locomotive ice hockey team, which was going to Belarus to play against Dynamo Minsk. Only two people survived out of 45 – Alexander Galimov, an ice hockey player, and Alexander Sizov, an air steward. They were both taken to Moscow hospitals.

Ice hockey plane crash survivors remain in ‘grave condition’http://en.rian.ru/russia/20110909/166575465.html

10:54 09/09/2011

YAROSLAVL, September 9 (RIA Novosti)

The two survivors of the plane crash that virtually wiped out the Lokomotiv Yaroslavl ice hockey team remain in critical conditions, a Health Ministry official said on Friday.

Russian national side player Alexander Galimov and crew-member Alexander Sizov survived Wednesday’s crash, which killed 43 people. The plane fell to earth shortly after take-off from an airport near Yaroslavl, some 250km north of Moscow.

“There has been no change in Galimov and Sizov’s conditions,” the official said. “They remain in an extremely grave condition.”

Police eyewitnesses said Galimov walked away from the wreckage of the crash, despite suffering burns to 90% of his body.

Media reports said on Friday that Galimov had spoken to his father and other family members after being brought to hospital.

Investigators have yet to determine the cause of the accident. They say the investigation into the crash of the Yak-42 plane could last a week.

Reports suggest low-quality fuel may have caused the accident, and Yaroslavl airport has been banned from using its own supplies until the investigation is complete, an airport official said on Friday.

The bodies of 39 of the victims have been identified. DNA tests will be used to establish the identities of the four remaining bodies, investigators said.

The Lokomotiv roster included players and coaches from 10 countries, including the team's Canadian coach, Brad McCrimmon, Swedish goalie Stefan Liv and Czech striker Karel Rachunek.

International Ice Hockey Federation president Rene Fasel called the crash "the darkest day in the history of oursport."

01:11 09/09/2011ALL NEWS

Blast injures two policemen in Dagestan

http://www.itar-tass.com/en/c154/221770.html

MAKHACHKALA, September 9 (Itar-Tass) —— A blast injured two policemen at the Dagestani scientific center in Makhachkala overnight, police said on Friday.

It occurred when the traffic policemen stopped a car for a check and the unidentified people inside through an explosive out.

At least 2 police officers injured as blast hits Russia's Dagestanhttp://en.rian.ru/russia/20110909/166559311.html

01:48 09/09/2011

MAKHACHKALA, September 9 (RIA Novosti)

At least two police officers were wounded as an explosion rocked the capital of Russia's volatile North Caucasus republic of Dagestan in the early hours of Friday, a police source said.

The explosion occurred in Makhachkala's central Yaragsky Street soon after midnight (20:00 GMT), the source said.

According to preliminary data, an explosive devise hidden in a bush went off when a police patrol car stopped nearby.

A Dagestani Interior Ministry spokesman confirmed the report, adding that the two police officers had been admitted to hospital with light injuries.

Russia has been battling a low-level Islamist insurgency in several North Caucasus republics. Dagestan, along with Ingushetia, has seen the brunt of the fighting in recent years.

02:30 09/09/2011Top News

Cargo spacecraft crashed because of fuel supply problem

http://www.itar-tass.com/en/c32/221788.html

MOSCOW, September 9 (Itar-Tass) —— The Progress cargo spacecraft crashed in August because of a fuel supply problem in the third stage of the Soyuz booster, the Roskosmos space agency said late on Thursday quoting the results of an investigation by a government commission.

It said the fuel supply tract to the gas generator of the third stage was choked up due to a production fault.

“The analysis of the operating parameters of the third stage engine and the results of telemetric information provided a conclusion about decreased fuel consumption in the gas generator because of choked supply tract. This resulted in incorrect operating conditions and decreased parameters of the engine which was stopped by the emergency engine stop command,” Roskosmos said.

“The exposed production defect was accidental,” it said adding the reason may be qualified as an isolated case only after checking all available engines.

Roscosmos to enhance control of Soyuz rocket engines' productionhttp://en.rian.ru/russia/20110909/166558139.html

01:13 09/09/2011

MOSCOW, September 9 (RIA Novosti)

A special commission investigating the causes of the August 24 failed launch of Russia's Soyuz carrier rocket has recommended enhancing the control of the production of engines for Soyuz rockets, Russian space agency Roscosmos said.

A Soyuz rocket engine failure resulted in the loss of the Progress M-12M space freighter on August 24, the first loss of a Progress freighter in the history of Russia's space industry. The freighter failed to separate from the rocket and fell in South Siberia's Altai Republic.

A clogged fuel supply pipe caused the engine failure, the commission discovered, describing the defect as "accidental," Roscosmos said. However, the space agency said, the commission still recommended introducing additional control procedures to ensure that other similar engines do not have same defects.

The recommendation follows an order by Russian Prime Minister Vladimir Putin to review and improve control procedures in the space industry that came after the August 24 accident, another one is a series of misfortunes faced by Russia's space industry over the last nine months.

After the retirement of the U.S. shuttle fleet earlier this summer, Russian Soyuz spacecraft became the only way for astronauts to reach the ISS until at least the middle of the decade. NASA is paying its Russian counterpart Roscosmos more than $1 billion for crew transport services over the next four years.

Whistleblower major jailed for beating soldiershttp://en.rian.ru/russia/20110909/166575083.html

10:42 09/09/2011

VLADIVOSTOK, September 9 (RIA Novosti)

An army major in the Russian Far East has been sentenced to four years in prison for beating a warrant officer and a soldier.

A military court in Vladivostok also stripped Maj. Igor Matveyev of his rank.

Matveyev, who has a previous criminal record, said he would appeal the conviction.

The ex-major gained notoriety on the web in recent months after exposing corruption at an army base near Vladivostok in a video posted on YouTube.

In it, he accused the base chief of overseeing illegal activities and forcing servicemen to eat dog food.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/d6a2509e-da3a-11e0-bc99-00144feabdc0.html#ixzz1XRJLHbZw

September 9, 2011 12:01 am

Police raid Moscow bank linked to liberals

By Catherine Belton in Moscow

Masked police on Thursday entered the Moscow headquarters of a bank part-owned by a billionaire oligarch and leader of a liberal political party that is contesting elections in December.

The masked police drove up to the bank, MFK, in which Mikhail Prokhorov is the main shareholder, in an unmarked black Mercedes and BMW.

They ordered employees into a room where they were locked for more than 30 minutes, according to Maxim Chizhov, spokesman for the Right Cause party, of which Mr Prokhorov is leader.

The sudden events sowed confusion among the party ranks – gathering for a political discussion in a nearby building – over whether the bank was being raided.

But soon after the police had left, the interior ministry issued a statement saying the police operation had nothing to do with the bank or the party. It had been conducted to detain a bank client suspected of receiving a bribe who happened to be at the MFK headquarters at the time, it said.

“Neither the suspect nor the operation had any relation to the bank,” the ministry said, adding that the head of its economic security department had already telephoned Mr Prokhorov to explain.

MFK, in which Mr Prokhorov holds a 27.7 per cent stake, also issued a statement saying it understood the operation had no relation either to the bank, Mr Prokhorov’s Onexim holding group, or the Right Cause party.

But the incident provoked fears among the party that it was intended as a warning to Mr Prokhorov, who earlier this summer became the first Russian oligarch to enter politics since 2003, bringing an end to an unwritten pact between Vladimir Putin, the prime minister, and big business that tycoons should stay out of politics.

Mr Prokhorov’s recent move to head the Right Cause party, however, has been widely seen as sanctioned by the Kremlin, and indeed, as part of a pet project by Dmitry

Medvedev, the Russian president, to widen the political spectrum represented in the state duma and win seats for a liberal party in forthcoming parliamentary elections.

“No one interferes with Prokhorov. Quite the opposite: he is only helped,” said Vyacheslav Nikonov, a political analyst.

While liberal groups in opposition to the Kremlin are still barred from the political scene, Mr Prokhorov has gained a great deal of air time and billboards advertising his movement are emblazoned across Moscow streets. Mr Prokhorov has even publicly indicated he would like to become prime minister, and on Wednesday said he could not rule out a run for the presidency, depending on how his party fared in the duma elections.

Copyright The Financial Times Limited 2011. You may share using our article tools.Please don't cut articles from FT.com and redistribute by email or post to the web.

Bank tied to Russian billionaire politician raidedhttp://www.reuters.com/article/2011/09/08/russia-bank-idUSL5E7K83LG20110908

Thu, Sep 8 2011

MOSCOW, Sept 8 (Reuters) - Armed, masked law enforcement officers on Thursday raided a bank part-owned by Mikhail Prokhorov, a billionaire Russian magnate who is leading a political party into a December parliamentary election, officials and lawyers said.

The head of the International Finance Club bank, known by its Russian acronym MFK, said the evening raid on the bank's office in central Moscow had nothing to do with Prokhorov's Right Cause party or even with the bank's operations.

"Investigative actions were conducted in relation to one of our borrowers. This has nothing to with Right Cause or Onexim," the bank's chief, Oksana Lifar, told Reuters by telephone. Onexim is Prokhorov's investment vehicle.

But the raid raised eyebrows in a country where critics of the authorities face harassment and law enforcement officers are sometimes employed to put pressure on opponents in business disputes.

A lawyer for the bank, Dmitry Kharitonov, said he could not rule out a link to the party, which Prokhorov took charge of in June, making a controversial political debut ahead of the parliamentary vote and a March 2012 presidential election.

Several luxury cars drew up outside the bank on a busy boulevard near the Kremlin and law enforcement officers, some wearing masks and carrying guns, entered and ordered employees and clients not to leave, Kharitonov said.

"They put all the employees in one area and kept them there for an hour without explaining what was going on," he told reporters. "After an hour, they said there were no claims against the bank, and no searches were carried out."

Asked whether the raid could have been related to Prokhorov's involvement in Right Cause, Kharitonov said, "I cannot rule it out. I don't know, but I think nothing can be ruled out."

Prokhorov, 46, who sold a one-quarter stake in mining giant Norilsk Nickel just before the 2008 financial crisis, was ranked by Forbes magazine this year as Russia's third richest man, with an estimated $18 billion fortune.

Prokhorov, who owns the New Jersey Nets basketball team, is a founder of MFK bank and owns a 27.7 percent share, the largest of several part-owners including tycoons Viktor Vekselberg and Suleiman Kerimov.

Right Cause is one of a handful of parties challenging the dominance of Prime Minister Vladimir Putin's United Russia Party, which holds a 315 of 450 seats in the State Duma, the lower parliament house.

However, many analysts say Prokhorov has the tacit approval of Putin, who may want to channel the votes of United Russia critics to a moderate alternative ahead of the presidential election, in which he has said he might run. (Reporting by Oksana Kobzeva, Albina Kovalyova and Gennady Novbik; Writing by Steve Gutterman; Editing by Elizabeth Fullerton)

Russian Press at a Glance, Friday, September 9, 2011http://en.rian.ru/russia/20110909/166574100.html

10:14 09/09/2011

POLITICS

 Russian President Dmitry Medvedev shared his vision of how Russia should tackle social challenges in the modern world, including ethnic tensions, in his address to participants in an international political forum in the Russian city of Yaroslavl.

(Kommersant, Rossiiskaya Gazeta, Nezavisimaya Gazeta)

Falsifications have been uncovered during the United Russia party’s primaries in the Primorye territory.

(Moskovskiye Novosti)

Ten years on, phobias brought about by the 9/11 are still in place.

(Moskovskiye Novosti)

Russia will not force the former Soviet republics’ integration into the Commonwealth of Independent States, the country’s Deputy Foreign Minister Andrei Denisov said.

(Rossiiskaya Gazeta)

British Prime Minister David Cameron is heading to Moscow to try to reset Britain’s relations with Moscow and help British businesses explore Russia’s resources. But there is a little chance that attempts to settle the differences between London and Moscow will succeed.

(Nezavisimaya Gazeta)

 A professor at Russia’s Tyumen State University has been fired and sentenced to a two-year suspended prison term for promoting “extremist” views while protesting against political persecution and police abuse in the country.

 (Moskovskiye Novosti)

Yury Sindeyev, one of the most influential officials in the Russian Prosecutor General’s Office, has resigned. Law enforcement sources say his resignation may be the result of a recent gambling scandal involving Russian prosecutors.

(Vedomosti)

ECONOMY

 The Russian Finance Ministry has concluded its work on the 2012-2014 draft budget based on the predicted oil price of $100 per barrel. The government is expected to approve the document on September 20, leaving no resources for any additional reforms in the country in the next two years.

(Kommersant)

 If a new wave of economic crisis hits the world, oil prices will drop to $60-80 per barrel and the Russian currency rate will rise to 40 rubles per one U.S. dollar, the Russian Ministry for Economic Development has predicted.

(Vedomosti)

BUSINESS

 Following a tragedy in the Russian city of Yaroslavl, where a plane crash killed virtually the entire Lokomotiv Yaroslavl ice-hockey team, Russian President Dmitry Medvedev urged a radical cut in the number of domestic airlines, a measure the president believes would help improve flight security.

 (Kommersant, Moskovskiye Novosti, Rossiiskaya Gazeta)

The Chelyabinsk Tube Rolling Plant (ChTPZ) may become the first Russian company in the iron and steel production market to sell its shares to a foreign competitor. French pipe production company Vallourec is looking to buying 25 percent of ChTPZ’s shares for $400 million in October.

 (Kommersant)

The government spending on the 2014 Sochi Olympic Games is likely to increase if plans to provide state guarantees worth 123 billion rubles ($4.24 billion) to the contractor involved in the constructions of Olympic facilities are implemented.

(Vedomosti)

 SOCIETY

 The Moscow authorities are planning to create a national park around one of the capital’s most prestigious residential districts at the Rublyovo-Uspenskoye Highway. Ecologists are surprised: they say there are no valuable natural objects in the area.

 (Kommersant)

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://www.ft.com/cms/s/0/02c4b19a-da30-11e0-90b2-00144feabdc0.html#ixzz1XQpGtsmQ

Medvedev tries to deflect criticism after aircraft crash

By Courtney Weaver in Moscow

Published: September 8 2011 18:15 | Last updated: September 8 2011 18:15

An aircraft crash that killed most of a leading Russian ice hockey team has left the Kremlin trying to repair the country’s transport infrastructure after years of decline.

Dmitry Medvedev, Russia’s president, on Thursday sought to deflect criticism for the crash by presenting a plan to overhaul the airline industry and push the market into the hands of the four biggest carriers, including the state-owned Aeroflot, which have better safety records.

Mr Medvedev said that a large portion of old Soviet models would be grounded as soon as January, while small air carriers with fewer than 20 aircraft would be shut over the next 15 months.

Russia has 130 national airlines, but just 10 carriers operate 85 per cent of flights.

The president also announced that the state would encourage Russian carriers to buy aircraft abroad, a dramatic shift from previous years when the government imposed heavy customs duties on foreign aircraft in an effort to lift the domestic industry.

“The value of human life here should be greater than special conditions to support domestic producers,” he said. “I am giving the government an order. It should be a big programme [to buy foreign equipment] and will need a lot of money.”

In 2010, Russia and the Commonwealth of Independent States region saw an average of 7.15 accidents for every million flights compared with an average of 1.76 in 2009, according to the Air Transport Association. The global average was 2.56 in 2010 and 2.54 in 2009.

Industry experts questioned whether the president’s plan would actually fix the myriad problems afflicting the industry, which range from poor training to outdated equipment, corruption and bureaucracy.

“It’s nonsensical. It’s one of the most ill-conceived proposals in a safety sense that I’ve ever heard,” said one industry executive. He warned that small carriers would simply add the cheapest aircraft possible to their fleet to keep their licence and economise on staff training at the same time.

“Authorities [are] not actually getting to grips with the core problem. There’s a state of denial in the regulatory body about what has to be done.”

According to Mikhail Ganelin, an analyst at Troika Dialog, Russia’s three biggest airlines – Aeroflot, Transaero and S7 – already have 50 per cent of the market and are likely to increase their share to 75 per cent by the end of 2013 due to rapid expansion and the consolidation of smaller state airlines into Aeroflot.

Political analysts said Mr Medvedev’s measures would not necessarily be enough placate the Russian public, which has witnessed a series of accidents of late, including Wednesday’s aircraft crash, which killed 36 hockey stars and team officials, and the drowning of dozens of children trapped in a cruise ship’s playroom in July.

“This is all more or less part of the same chain and this is not a coincidence,” said Lilit Gevorgyan, an analyst at IHS Global Insight.

“All of Medvedev’s talk [about modernising Russia’s infrastructure] hasn’t really brought results. If anything, the situation has deteriorated due to spreading corruption and the increased inefficiency of state institutions.”

Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Russian Airplane Crash Clouds Putin Goal of Building World-Class Economyhttp://www.bloomberg.com/news/2011-09-08/russian-airplane-crash-clouds-putin-goal-of-building-world-class-economy.html

QBy Paul Abelsky - Sep 9, 2011 7:19 AM GMT+0200

Russian Prime Minister Vladimir Putin’s goal of turning the economy into one of the top five in the world may be threatened by mounting unease over the country’s transport infrastructure.

The Sept. 7 crash that killed all but two of the 45 passengers aboard an 18-year-old Russian-made Yakovlev-42 plane was the fifth jet airliner accident in the country in the past year, bringing the number of casualties to 99, according to data compiled by researcher Ascend Worldwide Ltd. Other transport accidents included a July 10 shipwreck that killed 119 people.

The catastrophes highlight the failure to overhaul infrastructure in the world’s largest country as the government seeks to modernize the economy and remake Moscow into a global financial hub to reduce dependence on energy exports.

“The number of deadly accidents rules out coincidence and points to fundamental problems with ageing infrastructure and the rule of law,” Lilit Gevorgyan, a London-based analyst at IHS Global Insight, said by e-mail. “This is certainly casting a shadow on Russia aspiring to become a world class economy.”

The age of Russia’s domestically manufactured single-aisle aircraft fleet is between 25 and 30 years, while the U.S. fleet averages around 13 years, according Ascend, a London-based aviation consultant company. Ascend fleet figures show a need for at least

400 new commercial passenger aircraft in Russia, said George Ferguson, senior aerospace and defense analyst for Bloomberg Industries.

‘More Difficulties’

Airline fleet renewal “is required at smaller carriers further afield that will have more difficulties securing bank loans or leasing commitments,” Ferguson said of Russia’s commercial aviation industry.

Russia may turn to foreign aircraft producers to ensure safety of air travel after the accident in the Yaroslavl region, about 300 kilometers (185 miles) northeast of Moscow, President Dmitry Medvedev said. The plane carrying the Lokomotiv Yaroslavl hockey team crashed after failing to gain altitude when taking off from the Tunoshna airport on the opening day of the Kontinental Hockey League season.

“The value of human life overrides other considerations, including support for the domestic producer,” Medvedev said at the crash site yesterday. “Of course it’s necessary to think of our own but if they’re not up to the job, we need to buy equipment overseas.”

‘Strategic Priority’

Supporting the aviation industry is a “strategic priority” for the government, which channeled 270 billion rubles ($9 billion) in state funds to domestic producers between 2009 and 2011, Putin said Aug. 17 at the opening of the MAKS international air show outside Moscow.

The air force suspended flights by MiG-31 fighter jets earlier in September until a probe after a crash that killed two pilots Sept. 6. A cargo spaceship crashed last month in the first such accident with the vessel since it started flights in 1978. Russia lost its most powerful telecommunications satellite in August, setting back the country’s efforts to promote the wider availability of communications services.

The country’s transport infrastructure has also become a target for terrorist attacks. A suicide bomber killed 37 people at Moscow’s Domodedovo Airport in January, while twin subway bombings during the morning rush hour in Moscow killed 40 people last year.

Presidential Election

The accidents are increasing pressure on Medvedev, who may run in a presidential election in March. His approval rating fell to the lowest level on record, dropping to 42 percent last week from 46 percent in mid-August, a survey published Aug. 25 showed.

Approval for Putin, who may also bid to return to the presidency next year, fell to 49 percent, the lowest since 2005, when it last dipped below 50 percent, the Public Opinion Foundation, also known by its Russian acronym FOM, said in a report on its website. The

survey was based on interviews with 3,000 people Aug. 20-21. No margin of error was given.

Still, the accidents may generate sympathy for Russia and its leaders, Tomas Valasek, director of foreign policy and defense at the London-based Centre for European Reform, said in a telephone interview yesterday. While regional airlines may be “decrepit,” the flagship carrier OAO Aeroflot has one of Europe’s newest fleets, he said.

Nothing About Safety

“I don’t know how you draw generalizations for Russia from this incident,” Valasek said. “It appears to have been a pilot error and it says nothing about the safety of the airport.”

As the air accidents were concentrated on domestic routes, where traffic has been increasing, there may not be an effect on visitors from abroad, said Mark Rubinstein, head of research at Metropol IFC in Moscow.

“There have been a number of tragic accidents but it won’t detract from Russia’s appeal as a destination for foreigners, he said in a telephone interview yesterday.

Even with limited immediate impact, the state of Russia’s transport infrastructure may make it difficult to reach Medvedev’s goal of boosting growth to as much as 10 percent within five years from 3.4 percent in the second quarter to match the pace of Brazil, China and India.

“Despite the tough talk by the Russian leaders, positive change in transport sector is going to be in short supply,” wrote Gevorgyan at IHS. “The overhaul of transport, including aircraft, sector is a difficult and long-term project.”

To contact the reporters on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net.

How a Tragic Plane Crash Reveals a Crack in Putin's Armor

Read more: http://www.time.com/time/world/article/0,8599,2092486,00.html#ixzz1XQmHq99n

By Simon Shuster / Moscow Thursday, Sept. 08, 2011

On Wednesday night, about a hundred livid hockey fans, dressed in the red and white

jerseys of Lokomotiv, their home team, gathered outside the St. George hotel in the Russian city of Yaroslavl to vent their indignation at a group of officials visiting from Moscow. "Thank God they were blocked from coming inside," says Evgeny Minchenko, a Kremlin-connected spin doctor who was staying at the St. George. "Until two in the morning they were under our windows yelling, 'Shame! Bastards!' as well as some things I'd rather not repeat." For politicians, it was an awful omen for the election season now getting underway.

The previous afternoon, a plane carrying the Lokomotiv Yaroslavl hockey team, which had won the national championship thrice, clipped an antennae tower during take-off and crashed on the embankment of a nearby river. Practically the entire team was wiped out, including 36 players, coaches and staff, some of whom perished in what witnesses described as a column of fire that rose nine stories into the air. Among the bodies pulled from the river, where part of the fuselage fell, were eight crew members. Two survivors — a player and a member of the flight crew — were rushed to the hospital in critical condition, their bodies covered in burns. In all, 43 people were killed.

By coincidence, Russian President Dmitri Medvedev was due to arrive the next day, Sept. 8, to host a summit in Yaroslavl. Most of his senior advisers and cabinet members were due to attend, and with so much of the political elite converging near the site of the accident, the city's grief quickly morphed into a wave of anger at the visiting officials. The reason was not simply the crash of the Russian-made Yak-42. It would be senseless to blame the state for a single freak occurrence. It was rather the frequency of such disasters, which have been caused not only by slipshod safety regulations but, as Medvedev admitted on Thursday, a rotting fleet of Soviet-era machines whose condition the state has failed to manage. (See more about the Russian plane crash.)

In the past three months, more than 200 people have died in a series of transport tragedies. The crash of a Tupolev plane killed 44 people in northeastern Russia in June. Three weeks later, a 56-year-old cruise ship sank in a reservoir, killing 125 holiday makers, including dozens of children. The next day, another plane crashed, this time an Antonov, killing at least six in Siberia. Now combined with the deaths of some of Russia's greatest athletes, these accidents have exposed the basic failings of the state just a few months before two crucial rounds of voting. In December and March, Prime Minister Vladimir Putin and his ruling party need a landslide to renew their legitimacy for at least a few more years in power.

But as early as Thursday, members of Russia's opposition began laying blame for the Yaroslavl tragedy squarely at the government's door. "Putin has reneged on his social contract with the Russian people," Mikhail Kasyanov, a former prime minister turned dissident, told TIME in an interview Thursday. "He has failed to guarantee safety and peace of mind." Even members of the so-called "constructive" opposition, who are allowed to hold office as long as they don't undermine Putin's rule, took the chance on Thursday to ridicule the state.

"It is 10 times more common in Russia than in any other civilized country for planes to fall, ships to sink, trains to go off the rails, satellites to get lost in space, and ballistic missiles to fail at take-off," chided Gennady Gudkov, a lawmaker for the pro-Kremlin Fair Russia party. This was, of course, part of a political maneuver — Gudkov's proposal was for his own party to help oversee the transport industry — but it pointed to a vulnerable spot in Putin's platform that has gotten even more so with every new catastrophe: If the ruling elite has brought such an era of prosperity, as Putin repeatedly claims, why do Russia's planes keep dropping out of the sky? (See TIME's video, "A Russian Roadtrip.")

"Without a doubt this will keep bubbling up during the election season," says Minchenko, the political strategist, who is now working on the government's campaign. "It is a very sore point for the authorities. And to my deep regret, it is not an issue you can simply sweep under the rug."

Still, President Medvedev's response seems to be doing just that. In July, after the cruise-ship sank and two planes fell out of the sky in the span of a month, he ordered all vessels of the same type to be taken out of commission. But there was a problem. Airlines said it was impossible to ground the dozens of Antonovs and Tupolevs comprising their fleets. Experts agreed because there was nothing available to replace them. So the airlines were forced to keep flying the old rattletraps, and the issue was allowed to fade. Then on Wednesday, when it happened again, Medvedev looked stupefied. He once again ordered all planes of the type that had crashed to be grounded and all airlines who had failed to comply shut down. "We can't go on like this, with this fleet," he told his ministers, the same men he had gathered two months before to discuss the same kind of tragedy. "The value of human life is higher than all others, including the need to support our national manufacturers... If they cannot pull it together, we have to buy planes from abroad."

Putin, meanwhile, stayed silent. His only comment was a dry, one-sentence statement released on Wednesday by his press service, saying that the Prime Minister "expressed his condolences to the relatives and friends of the dead." Clearly this was not enough to stop the grieving fans of Lokomotiv from gathering outside the St. George that night to curse the visiting bigwigs. "I saw a column of the fans marching the next day through the city," Minchenko says. "They looked pretty calm. So I came over and offered my sympathy, and they really seemed to appreciate that someone from Moscow cared." But as of Thursday evening, a group of riot police was still stationed outside the St. George, guarding the Kremlin elites as they hurried back to the capital. None of them, surely, will be using that image in their campaigns.

The mood of Russiahttp://www.economist.com/node/21528596

Time to shove off

The Soviet Union was undermined by stagnation and a sense of hopelessness. Is the same thing happening again?

Sep 10th 2011 | MOSCOW | from the print edition

IN 2000 a group of young Russians, just back from their studies in America, started the website WelcomeHome. Ru. “Life in Russia is becoming more normal. It is possible to live here, make a career and bring up children. Many of those who had left have come home. We are among them,” the site read. It was a typical reaction by young Russian professionals to the growth, opportunities and promise of stability from Vladimir Putin, the new president. Soon, after years of capital flight, money started to flow back into Russia.

Twelve years later, as Mr Putin appears to be preparing to retake his presidential office for another 12 years, the mood is starkly different. WelcomeHome.ru is dead. Instead, a new popular blog has sprung up on a Russian social network. It is called “Pora valit”, which means roughly “Time to shove off”. Its few thousand users exchange stories about how best to leave Russia. The blog’s title sums up perfectly the mood among Russia’s urban and educated class.

Emigration is the talk of the town. Dmitri Bykov, a popular and prolific author, dedicated a recent weekly feuilleton to the flight of money and people and the travelling ban imposed briefly on two opposition politicians, Boris Nemtsov and Vladimir Milov. The Soviet government punished dissidents by expelling them, Mr Bykov quipped. “Now they punish them by keeping them in.”

A recent opinion poll by the Levada Centre shows that 22% of Russia’s adult population would like to leave the country for good. This is a more than threefold increase from four

years ago, when only 7% were considering it. It is the highest figure since the collapse of the Soviet Union, when only 18% said they wanted to get out. Those who are eager to leave are not the poor and desperate. On the contrary, most are entrepreneurs and students.

The Levada Centre recently conducted a survey of people aged 25-39 living in large cities and earning five-to-ten times the average income in Russia. Almost a third would like to emigrate permanently. They are not dissidents or romantics. Half say they have no interest in politics, a third are Kremlin supporters, most work in the private sector and have done well over the past decade. “These are not just people who would like to leave Russia, but people who have the means to do so,” says Lev Gudkov, the head of the Levada Centre.

These figures do not necessarily indicate a brain drain. Mr Gudkov, who has been measuring Russia’s emigration over the past 20 years, says the number of people who will actually leave is probably small. Among the young and well-off, only 6% have filed for a visa, are negotiating a contract or have applied to study abroad. (Though, given Russia’s unfavourable economic and social trends, it can ill afford to lose even a small number of its best educated young people.) What these figures really show is a startling level of frustration with the state of the country. “This is a cardiogram of Russian society,” says Mr Gudkov. If so, things are going badly.

The suitcase syndrome

In some ways, the urge to leave now may seem odd. Mr Gudkov says that what he calls the “suitcase mood” usually spikes either in anticipation of a crisis or just after one. After the financial crisis in 1998, for example, his emigration indicator went up to 21%. Devaluation and default had wiped out savings and Boris Yeltsin had fired his government, raising fears of an unstable succession. But now the succession is in no doubt. Mr Putin will remain in power for the foreseeable future. And even if, by chance, Dimitry Medvedev, the present president, is allowed to stay on in his post, the current regime will continue in some form or another.

The economy also shows no sign of immediate distress. After the 2008 financial crisis, which hit Russia harder than most countries, output bounced back and is now growing at between 4% and 5% a year: not as fast as in the mid-2000s, but certainly no worse than in many other emerging markets, including Brazil. The oil price is 1.5 times higher than it was in 2007, the peak of general optimism; inflation is heading down; employment is up and consumption is robust. Evgeny Gavrilenkov, chief economist at Troika, a Russian investment bank, calls it “a good muddling through”.

Yet, despite this, people and firms are taking money out of Russia. Last year the net outflow was $34 billion (see chart). Some of the capital flight, Mr Gavrilenkov says, can be attributed to the unexpected windfall from higher energy prices: unable to invest everything at short notice domestically, energy firms are parking it abroad. But a lot of capital is leaving the country in small sums and can only be attributed to individual transfers. Soaring sales of mid-price properties to Russian buyers in Europe confirm the trend.

So while the sense of acute crisis has gone, it has been replaced by a feeling of stagnation. Mr Gavrilenkov, one of Russia’s more optimistic analysts, argues that the economy is in a better state than people think—for the moment. “Things can go on like this for another two years. Maybe three. But then…”

Misusing oil

Russia’s most immediate vulnerability is its growing dependence on energy. During Mr Putin’s rule the share of oil and gas in Russia’s export revenues has gone up from half to two-thirds. This increase is almost entirely due to higher prices rather than growing production. The budget depends on them. Five years ago Russia needed $50-a-barrel oil in order to balance its budget. Next year the price will have to be $120 to meet its spending obligations. The current price is $113 a barrel. As Russia gets closer to elections, its budget expenditure (which is already growing by more than 10% a year) is bound to increase.

The fact that Russia has a lot of oil to export is not a problem in itself; as Clifford Gaddy of the Brookings Institution has argued, it ensures a competitive advantage. The problem is the country’s addiction to it, and its misuse of oil revenue. Instead of investing in human capital—such as better schools and hospitals—and modernising the oil and gas

industry, Russia has used the money to perpetuate the inefficient structure of the Soviet economy in exchange for political support. Instead of encouraging people to look for newer opportunities, Russia ties them down with handouts to dinosaur enterprises and one-company towns.

A good example is the case of Avtovaz, maker of the Lada car. After the 2008 crisis, Mr Putin should probably have let the ailing company go bust. It simply could not compete with the new models being produced elsewhere, especially in Japan. Instead, Mr Putin gave Avtovaz more than $1 billion and shielded the company from foreign competition. Since Avtovaz employs 70,000 people directly, and millions of parts-suppliers and car-dealers rely on it, the prime minister’s investment is expected to pay off on election day. Asked who should be Russia’s next president, Igor Komarov, the plant’s boss, replied: “If you weigh up who has helped us in our hardest time, the answer is obvious: Mr Putin.”

Mr Putin’s rule, however, is far from being as beneficent as it seems. Throughout most of his vaunted “period of stability”, disposable income and retail-trade volumes have grown twice as fast as GDP. In the 2000s soaring consumption translated into economic growth, but this was largely achieved by using up the spare capacity of Soviet assets and underinvesting in new industries and infrastructure. A study commissioned by the World Bank in 2007—a year before the crisis—revealed that only 5% of firms were created or destroyed in the decade of high growth. In a healthy market economy the rate is much higher, sometimes approaching 20%.

As a result, Russia now lacks capacity for strong economic growth. The continued increase in consumption, backed by a high oil price, has led to an astonishing increase in imports (up 40% a year), but it no longer stimulates the domestic economy. Such stimulus can come only from a boost in productivity and investment.

Fresh investment, both foreign and domestic, is deterred by Russia’s poor business climate, which shows little sign of changing. When Walmart tried to buy a retail chain there—a three-year flirtation that eventually ended last year—it was apparently fobbed off by bureaucrats who, according to a source familiar with the negotiations, “did not want another whiner like Ikea, which had exposed corruption.”

Not for a sack of gold

That corruption crushes the prospects of active and talented people. The rent-seeking behaviour of Russia’s rulers, who control the money and the levers of repression, stifles competition. Many of the elite have backgrounds in the security services; their instinct is to raid, grab and control, rather than create and compete. The occasional firing of high-ranking officials such as the former mayor of Moscow, Yuri Luzhkov, leads not to a change in the system but to the simple redistribution of cash flow.

Investing in innovation and raising productivity makes little sense when your well-connected competitor can hire the tax police and prosecution service to force you out of business. As Dmitry Kamenshchik, owner of Moscow’s Domodedovo airport (now being

eyed by state-backed competitors), says wryly: “Like anyone else I don’t know whether I will be sent to prison or not. We are all citizens of the Russian Federation and live under the Russian criminal code.”

Mr Medvedev has a grand plan to create a Silicon Valley in Skolkovo, a special zone outside Moscow, and is bringing in Cisco, an internet-services giant, as a flagship firm. But this will do nothing to free up competition or make Russia an attractive place to do business. When two Russian physicists who live and work in Britain won a Nobel prize last year they were asked to come and work in Skolkovo. “You must have all gone mad over there if you think that for a sack of gold you can invite anyone,” Andre Geim replied. The fact that Russian scientists want to work abroad is not a problem in itself; large numbers of Chinese scientists do the same. The problem is that so few want to return. According to the World Bank, 77% of Russian science and engineering students studying in America will never come back.

In the past, Russian entrepreneurs were prepared to put up with bad institutions and corruption because of high returns. Now that the rewards are smaller and the appetites and impudence of bureaucrats greater, large Russian firms are reducing the domestic sector of their business to a minimum, while smaller ones are looking to sell up. A recent survey by Campden Media and UBS, a bank, of 19 Russian businessmen with a personal wealth of more than $50m and a turnover of $100m showed that 88% had moved their personal wealth abroad and were prepared to sell their companies. Few planned to pass their businesses on to their offspring, which is hardly surprising, since most children of the rich and powerful are now ensconced in the West. Parents send their children abroad not to learn to run their businesses more efficiently, but so they never have to come back.

A future amputated

All this is breeding a sense of stagnation that compounds the glum mood of the middle class. It is not fear of impoverishment or unemployment that makes people think of emigrating, as in many other countries, nor the threat of instability or revolution, which have forced out Russians in the past. People want to leave because they feel there is nothing more for them in Russia. The sense of a future has been amputated. According to the Levada Centre, three-quarters of Russians do not plan more than two years ahead; only 3% plan more than ten years ahead. The degradation of infrastructure, institutions and, most important, human capital, creates a desire to tune out of it all.

Those who want to go abroad often have higher material standards of living than their peers in the West. They are looking for things they cannot buy: recognition of achievements, protection of property rights, physical safety, a functioning health service, a proper education for their children. They want to live a life which does not involve paying bribes, or losing one’s business for political reasons, or being jailed at the whim of a corrupt bureaucrat.

The story of Sergei Magnitsky looms large in the minds of professionals. Mr Magnitsky, a successful corporate lawyer, blew the whistle on a big corruption scheme run by a group of police investigators, only to be put in jail and hounded to death by the same

policemen. The government failed to investigate the accusations, and is still covering up the circumstances of Mr Magnitsky’s death.

The feeling that nothing will change, improve or open up is exacerbated by the likelihood of Mr Putin’s return as president. His restoration will be largely symbolic, since he never let power shift out of his hands. But it does, nevertheless, symbolise a reversal, rather than a forward movement.

And the roots of unhappiness go much deeper. After the collapse of the Soviet empire, the country was left without a clear sense of purpose or destiny. After seven decades of trying to set up Utopia, Russia’s only aim in the 1990s was to become a normal, civilised state. But two wars in Chechnya and the destruction of Yukos, Russia’s most successful oil company, in 2003 put an end to that hope.

Mr Putin has stirred and exploited the country’s nostalgia for its Soviet past. But the narrative of resurgence and restoration was combined with contempt for ordinary Russians who, in the view of the Kremlin’s rulers, were not ready for democracy. The double-digit growth of incomes masked problems for a while, but when growth slowed down stability turned into immoveability.

In some ways, says Vladimir Mau, Russia’s leading economic historian, Russia’s situation is similar to that of the Soviet Union in the 1970s and early 1980s, the “era of stagnation (zastoi)”, after a thaw in the 1960s. Then, too, the oil price was high and consumption rising, but the country was consumed by a sense of hopelessness. Life was reasonably comfortable for the well-educated, but social mobility was blocked by party apparatchiks. The gap between expectations and reality was unbridgeable. When the oil price fell, food shortages and fury at the privileges of the elite became catalysts for change.

Russia’s economy is more flexible than the Soviet one was, but frustration with the unfairness of the system is no less strong. Shortages of goods have been replaced by lack of property rights; the humiliation of queueing for meat has been replaced by the humiliation of being milked by bureaucrats. Most important, the gap between rhetoric and reality is just as wide. The question is whether Russia’s middle class, whose demands and expectations exceed the capacity of the system, can play the same role as the relatively affluent Soviet intelligentsia who helped to sweep away the Soviet Union.

In the 1980s the intelligentsia believed that removing senile Communist apparatchiks would be enough to put the country on a path towards normality. Millions of young technocrats who faced spending the rest of their lives behind the Iron Curtain, unable to fulfil their ambitions, did not expect the Communist system to collapse; but when Mikhail Gorbachev started his reforms, they were a powerful force behind them.

Today, Russian society as a whole is much more cynical and distrustful than it was in Soviet times. Aggression, hatred and nationalism have risen to levels not seen even after the Soviet collapse in the 1990s: 34% of Russians “want to shoot” those they blame for

their troubles. As for the middle class, it is much less cohesive and idealistic. It is also less desperate. “They would rather exchange their country than change it,” says Mr Mau.

The Kremlin undoubtedly likes things that way. It has learned from the mistakes of the Soviet Union, which raised levels of education and science to compete with America, but in the end created pressure from within the system that it could not contain. This is one reason why Mr Putin is so keen for Russia to have a visa-free travel arrangement with the rest of Europe. The other is that it would give the Russian elite unhindered access to their European properties.

Yet it is important to remember that Russians are not going to emigrate in their millions. The overwhelming majority will stay at home, discontented. The big question is what will they do? Will their frustration be transformed into protest and an attempt to change things? Or will it simply be dissolved in the general conformism and cynicism which has been nurtured to such harmful effect over the past decade?

The stagnation in the dying days of the Soviet Union was both more restrictive and more productive. Russia’s current stagnation is comfortable for most people, but also less promising. It may take a new generation to make fiercer demands on the system and force change. But what kind of change that will be, nobody knows.

Dmitry Rogozin returns to domestic politicshttp://rt.com/politics/press/izvestiya/rogozin-russian-nationalism-return/en/

Published: 9 September, 2011, 04:23Edited: 9 September, 2011, 07:20

Having got to know Europe from within, Dmitry Rogozin urges Russia not to repeat its mistakes Olga Tropkina (Yaroslavl)

Russia’s permanent envoy to NATO, Dmitry Rogozin, has made a comeback to domestic politics at the Global Policy Forum in Yaroslavl. Dmitry Rogozin’s presentation was held during the sub-forum titled “Global Security and Local Conflicts”. The sub-forum included speakers such as the head of the Institute of Contemporary Development, Igor Jurgens, the chairman of the Federation Council’s Foreign Affairs Committee, Mikhail Margelov, former NATO secretary-general George Robertson, and former foreign affairs minister Igor Ivanov.

“A return from exile to NATO” said experts in anticipation of Rogozin’s speech. Russia’s permanent envoy to NATO did not disappoint their expectations.

He acknowledged that the reason for the failure of multiculturalism in Europe is a result of the reaction to the European Nazism and fascism, which is “another extreme”. It has not been beneficial: Europe’s Muslims are stronger religiously and have more solidarity than the native population. They stay true to their roots, forming ethnic enclaves. At the same time, according to Rogozin, tolerance and multiculturalism in Europe do not promote the integration of foreigners, but create “a fifth column of the South”, which is not averse to “blowing up the infidel West from within”.  Russia, says the politician, is also experiencing an unprecedented migration flow. This immigration is economically unjustified and extremely dangerous, both socially and politically. “It is, almost exclusively, an unskilled labor force that travels to Russia in great numbers. Uncontrolled immigration leads to a significant rise in tensions in large cities, challenging the country’s social and political stability,” he said. Moreover, according to Dmitry Rogozin, today, most conflicts in Russia are not between Russian citizens and immigrants, but between ethnic groups from the North Caucasus and Russians.

“You could easily imagine the level of tensions if I told you that, based on social surveys, between 50% and 70% of Russian citizens would like to see the country separate from the North Caucasus,” he said.

What are the reasons for “Russian irritation”? First, it’s unjustified financial preferences. That is why Russians in Russia are in a socially and ethnically discriminatory society. “This is the first time the Russian ethnic population has begun to mobilize on such a scale and with such intensity since WWII,” said Rogozin. “The Russian question  is the central nerve of Russia’s modern politics”, and “not only do the country’s stability and integrity depend on the resolution of the Russian issue, but so does the vector of its historic development,” warns Dmitry Rogozin.

Is there a way to resolve this problem? “As a Russian, as a politician, and as a patriot, I am confident that there is a way!” he said, emphasizing each phrase. First, it involves “equal rights for Russians and justice for all”. Second, the rejection of false multiculturalism and phony tolerance. And finally, prior to social reconstruction, the North Caucasus must fully return to Russian political and legal control. “There must not be any political or legal offshores in Russia,” said the politician.   After the permanent envoy to NATO’s presentation, silence hung over the roundtable. And only Igor Jurgens had quietly noted that he, personally, would have presented the problem in a slightly different manner. For a while, no other participant reacted.

Dmitry Rogozin explained to Izvestia the reason for the cold reception of his speech. “This is my first speech on this topic, which was made in such a high-profile environment, and did not receive a single reaction. Absolutely no one had anything to say. What does that tell us? The fact that I ‘hit the mark,” grinned the politician. According to him, due to their political correctness and tolerance they are unable to criticize his ideas. Meanwhile, they do not have any constructive proposals.

To the question of whether or not these “intolerant” approaches to resolving the problem of inter-ethnic relations are supported in the Kremlin, Dmitry Rogozin replied: “In all honesty, I was asked to speak here.” According to him, “they” do have an interest, and people who are well-versed in international relations are “in high demand.” Dmitry Olegovich told Izvestia that he would soon propose a number of tentative “government solutions to this problem.” The politician promises to continue his speech at the Congress of Russian Communities on September 21.

The corrupt advantage in Russiahttp://www.washingtonpost.com/world/europe/the-corrupt-advantage-in-russia/2011/09/08/gIQAHmOgCK_story.html

By Kathy Lally, Published: September 8

The first private businesses were already operating and making a lucky few wealthy as the Soviet Union staggered toward its last autumn. Laws were not changing fast enough to keep up with the new economy — many officials still viewed profits as exploitation — making even the most well-intentioned businessmen guilty of some violation or other. The corrupt took full advantage.

Protection rackets flourished — a businessman approached by the rapidly growing criminal groups known as the mafia often felt he was not in a position to call the police. A three-part Washington Post series earlier that summer titled “Soviet Capitalism: The Wild East” had documented the way a new criminal enterprise seemed to spring up next to every legitimate one as the communist system attempted to develop into a free market.

Those crooked roots held fast over the years, providing a rich harvest today and hobbling the nation’s growth. A report published Sept. 7 by the World Economic Forum, the organization that sponsors the annual economic summit in Davos, Switzerland, found that Russia had dropped three places, to 66, on its global competitiveness index.

The report blamed corruption, inefficient government bureaucracy and crime for making Russia less competitive globally, saying it needed to strengthen the rule of law, protection of property rights and the judicial system. Russia came in just behind Vietnam and just ahead of Peru.

The country has also been given a negative ranking on Transparency International’s corruption perception report, which put Russia in 154th place, tied with Kenya, on a list that goes from least to most corrupt.

At an international forum in the city of Yaroslavl on Sept. 8, President Dmitry Medvedev acknowledged that Russia remained haunted by its Soviet past.

“We tried to create a society without the rich in the past,” he said. “That experiment led to stagnation, poverty and disintegration of the country.”

His conclusion? “Inviolability of private property must be guaranteed.”

National Economic Trends

09/09 12:31   ECON MINISTRY: PRIVATIZE UP TO 15% OF ROSNEFT, 10% OF VTB, STOCK IN RUSHYDRO, FGC UES, SOVCOMFLOT INhttp://www.interfax.com/news.asp

09/09 12:28   RULES SETTING LOWEST STATE-CO DIVIDENDS AT 25% OF NET PROFIT TO STAY IN 2012-2014 - ECON MINISTRY http://www.interfax.com/news.asp

09/09 12:27   RZD PRIVATIZATION NOW SLATED TO START IN 2014 - ECON MINISTRY  http://www.interfax.com/news.asp

09/09 12:26   RUSSIAN FEDERAL BUDGET REVENUE FROM 2012 PRIVATIZATION - 300 BLN RUBLES, IN 2013 - 380 BLN, IN 2014 - 475 BLN - ECON MINISTRYhttp://www.interfax.com/news.asp

SEPTEMBER 9, 2011, 3:07 A.M. ET

Russia Econ Min "Worst Case" Scenario Sees 30% RUB Drop In 2012-Paper http://online.wsj.com/article/BT-CO-20110909-702165.html

MOSCOW (Dow Jones)--A worst-case scenario forecast by Russia's Economy Ministry sees the ruble falling by 30% against the dollar next year as oil drops to $60 per barrel amid a second wave of the global economic crisis, Vedomosti reported Friday, citing a government document.

The scenario, which sees the ruble falling to RUB40.0 against the dollar from RUB29.5 today and the economy shrinking by up to 1.4%, is the most pessimistic of four possible economic scenarios drawn up by the ministry. Deputy Economy Minister Andrei Klepach last month illustrated a less negative forecast which still saw the ruble declining by about 10% in the next three years.

Current forecasts expect Russia's economy to grow by 3.7% in 2012, by 4% in 2013 and by 4.6% in 2014. Recent data has shown manufacturing and industrial output stumbling, while other economic indicators, such as inflation, remain strong.

-By Ira Iosebashvili, Dow Jones Newswires,             +7 495 232 9195      ;

ira.iosebashvili@dowjones.com

September 09, 2011 11:23

GDP will grow 4.4% in H2 - econ ministryhttp://www.interfax.com/newsinf.asp?id=271945

MOSCOW. Sept 9 (Interfax) - Russia's gross domestic product will grow 4.4% in H2, the pace quickening from 3.7% in H1, the Economic Development Ministry projects in its main parameters for 2012-2014 socioeconomic growth submitted to the government.

The ministry continues to forecast growth of 4.1% for 2011 as a whole.

Industrial output will slow to 4.3% in H2 from 5.3% in H1, says the document, a copy of which Interfax has obtained.

Cf

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

CBR's reserves increase on gold revaluation - data reveal additional evidence that the regulator is minimising FX interventions http://www.bne.eu/dispatch_text16529

VTB CapitalSeptember 9, 2011

News: CBR's international reserves increased USD 1.6bn in the week ending 2 September to USD 543.4bn, having increased USD 64.0bn YTD.

Our View: We estimate that currency, gold and the bond portfolio revaluation completely explain the increase in CBR's reserves (about USD 1.6bn). The hike in gold prices added USD 2.5bn, while EUR and GBP weakness against USD shaved approximately USD 1.4bn.

The recent data implies that the CBR probably did not intervene on the FX market from 29 August-2 September. This is in line with the BASKETRUB performance as the latter fluctuated within the 34.50-34.80 range that week. This supports our view that the CBR is not intervening when the rouble is within the 34.25-35.25 band.

In addition, the recent data is consistent with the CBR's comments that total interventions stood at USD 0.5bn in August. This makes it only a fraction of July's reading (USD 5.1bn).

GDP expected to accelerate in 2H11 after weak 2Q11http://www.bne.eu/dispatch_text16529

UralSibSeptember 9, 2011

Economic growth decelerated in 2Q11 ... Yesterday Rosstat published detailed 2Q11 GDP data: the preliminary estimate that economic growth decelerated to 3.4% YoY in 2Q11, down from the 1Q11 figure of 4.1% YoY, was reaffirmed. The Russian economy grew 7.2% QoQ to RUB12.8 tln. In 1H11 GDP was up 3.7% YoY to RUB24.2 tln. Economic growth slowed suddenly in 2Q11 against all expectations.

... amid a substantial decline in manufacturing. Rosstat data showed that the main growth driver - manufacturing - lost steam, as growth in that sector decelerated to 6.9% YoY growth versus 12.9% YoY growth in 1Q11. In 2Q11 GDP growth was supported by retail and wholesale trade, which makes up the largest share in GDP (around 16%), as growth accelerated to 2.3% YoY versus 1.3% YoY the previous quarter. The growth rate for the utilities sector returned to positive territory, growing 2% YoY (versus a 0.3% YoY decline in 1Q11). On the other hand, Rosstat recorded deceleration in large sectors such as transport and telecommunications and real estate and services. Construction growth decelerated to 0.1% YoY versus 0.8% YoY in 1Q11, how- ever, we expect the sector to perform much better in the near term.

Economy to moderately accelerate in 2H11. We believe the 2Q11 economic slowdown

was primarily due to an increase in the social security tax at the beginning of the year. Strong dynamics for key macro indicators (industrial output, capital investment) and low unemployment in the summer show that the economy has overcome this initial shock. In particular, construction made a huge jump in July, accelerating to 17.6% YoY growth and driven by housing construction. We forecast this sector - which has lagged behind for a long period of time - to continue to recover and to support real estate sector as well. Agricultural output should post strong growth in 3Q11, due to a good harvest and a low base factor as a result of the severe drought last summer. The only risks that remain are external (European debt problems, slow growth in US and Europe, and commodity price shocks). Thus, we expect GDP growth to accelerate to 4.7% YoY in 2H11, and thus the economy should grow 4.3% this year.

Business, Energy or Environmental regulations or discussions

Russian markets -- Factors to Watch on Sept 9http://www.reuters.com/article/2011/09/09/russia-factors-idUSL5E7K908X20110909

2:42am EDT

MOSCOW, Sept 9 (Reuters) - Here are events and news stories that could move Russian markets on Friday.

You can reach us on:             +7 495 775 1242      

STOCKS CALL (Contributions to moscow.newsroom@reuters.com):

BCS: Expects flat opening. "Today we will price in yesterday's news, which were eagerly awaited... But there is no direction."

URALSIB Capital: "Global news flow failed to impress markets yesterday. In commodity markets, investors are waiting for the release of important statistics before taking positions."

TROIKA: "We are opening our prices this morning down 0.5 percent."

EVENTS (All times GMT):

NIZHNY TAGIL, Russia - Prime Minister Vladimir Putin is visiting weapon exposition at the Urals' city

MOSCOW - German Gref, CEO of Sberbank to brief reporters after the bank clinched a deal to buy VBI, the eastern European arm of Austrian lender Oesterreichische Volksbanken (OTVVp.VI: Quote, Profile, Research, Stock Buzz)

MOSCOW - The city holds a retail conference, featuring executives from Russian and international retailers including X5 (PJPq.L: Quote, Profile, Research, Stock Buzz), Inditex, and IKEA

IN THE PAPERS :

Russian steel-pipe maker ChelPipe may sell up to 25 percent to French maker of seamless industrial tubes for the energy sector Vallourec , Russian business daily Kommersant reported.

The newspaper also said, citing industry sources, that Nestle SA , the world's biggest food group, is in talks to acquire Russian baby food producer Progress.

TOP STORIES IN RUSSIA AND THE CIS : TOP NEWS: Putin to meet Cameron, ending 4-year freeze Medvedev: Syria signals must target both sides Medvedev demands action to improve air safety

COMPANIES/MARKETS: Wal-Mart hires former head of Russia's X5 as VP Russia stocks up before US comments Markets helped by Sberbank report Mordashov lifts stake in TUI above 25 percent Russia August auto sales up 32 pct y/y -AEB Sitronics says Q2 net loss down 28 percent

ECONOMY/POLITICS: VBI deal kick-starts Sberbank's expansion Bank tied to Prokhorov raided Young Chechens want more freedom-envoy Ice hockey to help rebuild Yaroslavl team Russia's Q2 GDP growth confirmed at 3.4 pct

ENERGY: Rosneft to expand its offshore oil base Bashneft Q2 net profit rises to $532 mln

COMMODITIES: Med Crude-Urals jumps to premium Rusal sees aluminium demand staying firm Russia may export 3.3 mln T grain in Sept Gazprom to enter Czech retail energy market Russia may buy grain for intervention stocks MARKETS CLOSE/LATEST: RTS 1,660.9 -0.9 pct MSCI Russia 865.7 +0.5 pct MSCI Emerging Markets 1,010.4 -1.3 pct Russia 30-year Eurobond yield: 4.048/4.030 pct EMBI+ Russia 255 basis points over Rouble/dollar 29.6850 Rouble/euro 41.2995 NYMEX crude CLc1 $89.13 +$0.08 ICE Brent crude LCOc1 $114.75 +$0.20

For Russian bank balances see

For Russian company news, double click on

Treasury news Corporate debt

Russian stocks Russia country guide

All Russian news Scrolling stocks news

Emerging markets top news

Top deals European companies

Gazprom, Polyus Gold and Razgulay: Russian Equities Previewhttp://www.bloomberg.com/news/2011-09-08/gazprom-polyus-gold-and-razgulay-russian-equities-preview.html

QBy Stephen Bierman - Sep 8, 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 of trading in Moscow.

The 30-stock Micex Index rose 0.6 percent to 1,556.46 by the close in Moscow. The dollar-denominated RTS Index gained 0.3 percent to 1,675.14.

OAO Gazprom (GAZP RX): Russia’s monopoly exporter of natural gas will benefit from the diversification of transportation routes with the opening of the Nord Stream gas pipeline to Europe, according to Fitch Ratings. Gazprom gained 0.5 percent to 174.79 rubles.

OAO Polyus Gold (PLZL RX): Gold futures for December delivery gained $34.70, or 1.9 percent, on the Comex in New York after an unexpected rise in U.S. jobless claims. Polyus, Russia’s biggest gold producer, fell 0.2 percent to 1,848.90 rubles.

OAO Razgulay Group (GRAZ) : Sugar headed for its biggest gain in almost two weeks after a report from London-based International Sugar Organization forecast a jump in Chinese imports. The Russian sugar producer gained 0.9 percent to 38.83 rubles.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

Sberbank reports steep rise in 8M net profit

http://www.rbcnews.com/free/20110909112321.shtml

      RBC, 09.09.2011, Moscow 11:23:21.Sberbank's RAS net profit soared to RUB 225.8bn (approx. USD 7.65bn) in January-August from RUB 88.5bn (approx. USD 3bn) in the same period of 2010, the bank announced today.

      Pretax profit reached RUB 282.1bn (approx. USD 9.56bn) in January-August of this year. No comparison was provided. Non-performing loans dropped to 4.39% of the loan portfolio as of August 31 from 5.04% on January 1.

New round of discussions regarding tariffs for Russian monopolies; NEGATIVE for grid companies, POSITIVE for GenCos

http://www.bne.eu/dispatch_text16529

Alfa BankSeptember 9, 2011

The Ministry of Economic Development has made a new proposal regarding tariffs for Russian monopolies to be formally considered by the government by September 22. This proposal involves two scenarios for tariff growth rates: a "differentiated" scenario involving two tariff increases per year (in January and July) and an "inflationary" scenario for 2012-2014. Both scenarios are summarized in the figure below.

Although this is only another government tariff proposal and has yet to be discussed (we expect full clarity on this issue no earlier than the beginning of December), the hike in the gas tariff is above what we currently incorporate into our GenCo models (+8.3% in 2012). Since the gas price is a key driving force behind electricity prices in the European pricing zone, the higher gas price would be mainly POSITIVE for GenCos operating in European Russia and the Urals. Nevertheless, we are reluctant to revise our models, as these proposals are very preliminary.

However, as with previous proposals, the new differentiated scenario also suggests negative implications across the board for MRSKs. In the event that the 2012 end-user electricity tariff increases even by 11.0% (the high end of the range), the gas price is expected to go up by 10.2-15.0%, thus indicating that the MRSK component - contributing up to 30-35% of the end-user price - would be expected to rise to a lesser extent than the end-user electricity price. MRSKs would thus continue to be under pressure in 2012 in order to restrain end-user electricity tariff hikes. We hence reiterate our cautious stance on MRSKs.

Alexander Kornilov

Nestle Holds Talks to Buy Russian Babyfood Maker Progress, Kommersant Sayshttp://www.bloomberg.com/news/2011-09-09/nestle-to-buy-russian-babyfood-maker-progress-kommersant-says.html

QBy Denis Maternovsky - Sep 9, 2011 6:43 AM GMT+0200

Nestle SA (NESN), the world’s largest food company, is in talks to buy Russian babyfood producer Progress, Kommersant reported, citing unidentified people with knowledge of the deal.

The Lipetsk-based company, Russia’s fifth biggest maker of babyfood, may be valued at as much as $350 million and the deal may be completed by the end of the year, according to the Russian newspaper.

To contact the editor responsible for this story: Denis Maternovsky at dmaternovsky@bloomberg.net

Prokhorov’s Opin Developer Jumps Most in Month on Share Buybackhttp://www.bloomberg.com/news/2011-09-09/prokhorov-s-opin-developer-jumps-most-in-month-on-share-buyback.html

QBy Jason Corcoran - Sep 9, 2011 9:00 AM GMT+0200

OAO Opin surged the most in almost a month after the Russian real-estate developer owned by billionaire Mikhail Prokhorov said it will buy back 60,000 ordinary shares at 995.65 rubles each.

The stock jumped as much as 12.8 percent, the biggest intraday gain since Aug. 15, and traded 2 percent higher at 850.1 rubles as of 10:28 a.m. in Moscow.

Bids will be accepted from Oct. 13 to Nov. 11, according to a statement on the company’s website today.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

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

ChelPipe may sell 25 pct stake to Vallourec – reporthttp://af.reuters.com/article/metalsNews/idAFL5E7K908G20110909

Fri Sep 9, 2011 6:42am GMT

Sept 9 (Reuters) - Russian steel pipe maker ChelPipe may sell around a quarter of its shares to French group Vallourec for $400 million, Kommersant business daily reported on Friday, quoting anonymous sources.

It said the deal with the French producer of seamless industrial tubes could be reached in October.

ChelPipe is majority-owned by Russian billionaire Andrei Komarov. (Writing By Aleksandras Budrys; Editing by Dan Lalor)

Russians will have to pitch in a ruble for Roman Abramovichhttp://www.rusbiznews.com/news/n1118.html

08.09.2011 — Analysis

The government of the Sverdlovsk region has approved the development plan for the Vanady mining and processing facility (Evraz Group) in Kachkanar. This plan will mean a dramatic increase in income for the company's owner, Roman Abramovich, as well as more land being contaminated by industrial sludge. As this columnist for RusBusinessNews has determined, the responsibility of paying for the oligarch's ambitious plans will be borne not only by the residents of Kachkanar and the neighboring towns, but also by Russian taxpayers.

Evraz Group intends to build a second conversion facility for the Nizhniy Tagil Iron and Steel Works by 2020. In order to supply the plant, it was decided to process an additional 23 million tons of iron ore per year (a total of 63 million tons) in the Kachkanar mining and processing facility. An entirely new mining and processing plant is now being designed. The new strategy includes developing a deposit that contains five billion tons of reserves, increasing the ore-processing capacity, and constructing a new 800-hectare

sludge disposal site. Forty billion rubles will be invested in building the new processing plant, as well as in reclaiming the land currently being used to impound the tailings.

Experts believe that the project will have significant economic and environmental consequences. Over a thousand people will be involved in this massive building project, including experts and equipment from overseas. All this will require an enormous infusion of resources, which of course will be felt in the wallets of both Evraz Group and its customers. Strictly speaking, the project has already affected the iron ore market - the Kachkanar mining and processing facility steadily increased its prices throughout 2010.

Analysts estimated that in 2010 the price of vanadium sinter went up by 205%, which ensured a 500% increase in net profits for the company in just the first half of the year. Experts from the Federal Antitrust Agency confirm that more than the market was to blame for the increased cost of iron ore. Officials discovered that the Vanady facility, which claims over 65% of the Russian market for sinter and iron pellets, is charging "outsiders" high monopoly prices for its products. For example, the rates they charged the Chusovoy Metallurgical Works were 60%, and at times 100%, more than they demanded from the Nizhniy Tagil Iron and Steel Works, which is a part of Evraz Group. The Federal Antitrust Agency fined them after discovering this violation.

Experts are certain that the suppliers of iron pellets will manipulate the prices in the future because they need to recoup the investments they have made to develop the deposit. Konstantin Lagutin, the vice president of Evraz Group and the head of its ore division, tried to deny this claim, telling a columnist for RusBusinessNews that no one would allow the company to sell raw materials at inflated prices, "Although some people seem to have forgotten this, we do live in a market economy, which demands low prices. And there are many strong players in this market, so we wouldn't be allowed to sell pellets at a price above their market value".

In reality, however, the presence of competitors does not seem to prevent Evraz Group from using a pricing policy not tied to the market. In particular, during the same year of 2010, the Nizhniy Tagil Iron and Steel Works was also fined for charging different prices for the same goods. Experts at the Federal Antitrust Agency determined that the price of their contracts was not affected by the volume of products shipped, the transportation costs, or the expenses incurred by the company. In response to the agency's charges, representatives from the Nizhniy Tagil Iron and Steel Works claimed that they have a policy of providing exclusive rates for some customers. So there can be no doubt that the market will not prevent the mining and processing facility in Kachkanar from making more money than is justified by that market.

The steel company representatives also responded in true Evraz style to questions about the increased risk to the environment posed by a larger sludge disposal site. According to the management of the holding company, the many meters of tailings that remain after processing the ore do not in fact contain any chemicals at all and are therefore completely harmless. But the representatives from the municipal government of the town of Lesnoy, the proposed site of the new sludge disposal site, told reporters that water

adjacent to the current disposal site contained sodium nitrates that affect hemoglobin levels when they are converted to nitrites in the human body.

Konstantin Lagutin believes that the new storage site will solve the problem of contaminated water. There the tailings will be converted into a thick slurry in an artificial pond with a sealed floor. The senior manager claims that this new storage technology will prevent contaminated water from seeping into groundwater. Although, unfortunately for him, he had also previously stated that the project would be very expensive and would take at least four years to complete. Meanwhile the mining and processing facility plans to begin developing the deposit in late 2012, despite the environmental consequences this would entail for the town of Lesnoy.

Konstantin Lagutin thinks it will take at least 15 years to reclaim the land currently being used to store the old sludge. Moreover, at a press conference in Ekaterinburg, the senior manager's statements about the project were so vague that one can feel confident that all the industrial waste will still be in Kachkanar a hundred years from now. There is no guarantee that the water from the new impoundment won't contaminate the local rivers, but the public will never know about it. According to Lesnoy city officials, Evraz Group operates its own laboratory in Kachkanar (licensed through the Federal Service for Ecological, Technological and Nuclear Supervision, Rostekhnadzor) and will therefore be monitoring itself.

When it approved the development plan of the processing and mining facility in Kachkanar, the government of the Sverdlovsk region claimed that water supply for Lesnoy and Kachkanar should not be adversely affected. But in fact, these promises are worthless - they simply want the residents of Lesnoy to allow a sludge disposal site to be built there. Aleksandr Petrov, the minister of industry for the Sverdlovsk region believes that there are no alternatives to increasing the production of ore in Kachkanar. Without raw materials the Nizhniy Tagil Iron and Steel Works cannot expand.

Experts have observed that all Russians will have to bear the burden of this project. In return for keeping its sludge there, Evraz Group has promised to include Lesnoy in the federal Clean Water program. In other words, Russian taxpayers will have to cough up the money to solve the holding company's problems and Roman Abramovich will be able to buy himself a little something with the money he saves.

Vladimir Terletsky

September 09, 2011 09:51

Kimkano-Sutarsky expansion will cost IRC $250 mln to 2013http://www.interfax.com/newsinf.asp?id=271908

MOSCOW. Sept 9 (Interfax) - Expanding mining capacity in the Kimkano-Sutarsky project to 6.3 million tonnes of titanium magnetite concentrate per year (64.5% Fe) could cost iron ore company IRC $250 million to 2013, said Renaissance Capital analysts, who have started analyzing the company's shares.

Initially, production was planned at 3.2 million tonnes in concentrate, but in the summer the company announced its decision to expand to 6.3 million tonnes by 2015.

Renaissance Capital analysts reckon the best way to fund the project is to find a strategic investor in the Chinese steel sector or to raise a new loan from the Industrial and Commercial Bank of China (ICBC). The Bank has already allocated $340 million to IRC for construction of the Kimkano-Sutarsky Beneficiation Plant, which is to be launched in 2013.

Renaissance Capital expects long-term production costs of $57 per tonne (DAF basis Russian-Chinese border) based on a production term of 30 years. The estimate is based on a long-term forecast for crude iron ore of $97 per tonne.

Long-term production costs at the Olekma GOK, launched in 2010, which processes ore from the Kuranakh deposit, is forecast at $75 per tonne of titanium magnetite (including a bonus of $36 per tonne for the sale of ilmenite).

Potential risks include limited production and revenue - until 2013 the only cash flows will be generated by Olekma, which is expected to achieve project capacity of 950,000 tonnes of titanium magnetite and 290,000 tonnes of ilmenite concentrate per year in 2011 - and a strong dependence on Russian Railways tariffs. Renaissance Capital estimates the share of spending on rail transport at 36% of overall spending. If a bridge is built through Amur the share could reduce to 24% from 2016.

Renaissance Capital has started analysing company shares, which are traded on the Hong Kong Stock Exchange, with the recommendation to buy and a target price of 2.9 Hong Kong dollars per share. IRC is the former iron ore unit of the Petropavlovsk alliance, which mines for gold in Russia's far eastern regions. The iron ore company was listed on the Hong Kong Exchange in the fall of 2010. Petropavlovsk owns the controlling stake of 65.6%.

Renaissance Capital has also started to cover Australia's Fortescue Metals Group Ltd., in which Russia's Magnitogorsk Iron and Steel Works (MMK) (RTS: MAGN) is a minority shareholder (4.997%). The recommendation on Fortescue shares is to hold and the target price is 6.3 Australian dollars.

me

09/09/2011 | 01:50 am

Hyundai Heavy Breaks Ground for Russian Switchgear Planthttp://www.4-traders.com/news/Hyundai-Heavy-Breaks-Ground-for-Russian-Switchgear-Plant--13789702/

Hyundai Heavy Industries, the world’s largest shipbuilder and a leading electro electric systems manufacturer, today will break ground for a gas insulated switchgear (GIS) plant, Hyundai Electrosystems, in Vladivostok, Russia.

The 40,000 square meter plant will be completed by June 2012. When completed, the plant will produce 250 units of GIS ranging from 110 kV to 500 kV a year. There are plans to expand its annual capacity to 350 GIS by 2015. Previously, the Company won an order from FGC UES (Federal Grid Company of United Energy System) to supply 50% of its GIS needs from 2013 to 2017. FGC UES is the largest electricity transmission company grid in Russia and a key element in Russia's power generation and supply industry. With the new plant, Hyundai Heavy, which recorded sales of KRW 52 billion (USD 49 million) last year in Russia, expects to achieve KRW 100 billion (USD 94 million) sales by 2013. Gas insulated switchgear is a major piece of electrical equipment used in a substation. It contains a gas circuit breaker, disconnecting switch, earthing switch, voltage transformer, current transformer, and lightning arrester in a grounded metallic enclosure. The switchgear is filled with SF6 gas, which has reliable insulation and arc-quenching capability. Establishment of Hyundai Electrosystems has been drafted as a part of Hyundai Heavy’s long-term strategy to gain a foothold in the Russian GIS market that is expected to grow further to the Russian government’s electric power system modernization policy. Prior to the groundbreaking ceremony, Hyundai Heavy, Primorsky Krai, and FGC UES held an opening ceremony for the new electrical engineering department in Energeticheskiy Kollege in Vladivostok. Hyundai Heavy and FGC UES agreed to nurture talented engineers by modernizing the college building and teaching equipment and preferentially hiring students graduated from the college.

SEPTEMBER 8, 2011, 5:22 P.M. ET

Wal-Mart Hires Ex-CEO of Big Russian Retailer http://online.wsj.com/article/SB10001424053111904103404576558902800704050.html

By MIGUEL BUSTILLO And NADIA POPOVA

Wal-Mart Stores Inc. has hired the former head of Russia's largest retailer by sales, but it said the move doesn't signal any immediate plans to enter the Russian market.

The Bentonville, Ark., company confirmed Thursday that it has hired Lev Khasis, who was the chief executive of X5 Retail Group NV before he left in March to pursue "personal projects."

Mr. Khasis will report directly to Doug McMillon, the head of Wal-Mart's international operation. He will serve as senior vice president and chief leverage officer, a job whose responsibilities include integrating new retail acquisitions and combining purchasing in Wal-Mart's myriad locations to get better deals from suppliers.

In an interview Thursday, the 45-year-old Mr. Khasis said his move to join Wal-Mart didn't mean the company was about to enter Russia. "To my knowledge, Wal-Mart has no plans on entering the country in the short term," he said.

Wal-Mart, the world's largest retailer, notched more than a fourth of its $419 billion in annual revenue from its international wing last year, and it recently entered the African market by acquiring a majority stake in Massmart Holdings Ltd., South Africa's largest retail chain, for roughly $2.3 billion.

Wal-Mart closed its office in Moscow last December, leading some retail experts to speculate it had given up on entering the Russian market, but the company has continued to say it remains open to the possibility.

"We still believe the Russia market has promise, and we'll continue, as we do in markets all over the world, to watch for the right market-entry opportunity," said company spokesman Kevin Gardner.

Just days before Wal-Mart announced it was closing its Moscow office last year, X5 Retail said it had agreed to buy what analysts had called one of the most likely Wal-Mart acquisitions in Russia, the Kopeika grocery chain, for $1.65 billion.

Mr. Khasis later said in an interview that X5 had managed to outbid Wal-Mart because of greater flexibility on timing.

Singapore's Tay Sees Mutual Lessons in Business With Russia 09 September 2011By Khristina Narizhnaya

Read more: http://www.themoscowtimes.com/business/article/singapores-tay-sees-

mutual-lessons-in-business-with-russia/443449.html#ixzz1XQrta9hX The Moscow Times

At first glance, Russia and Singapore could not be more different. One is huge and the other tiny, one is mostly rural and undeveloped while the other has barely any free land.

In the last decade, the countries have been growing closer, and some see Singapore as a role model for Russia. Earlier this week in a Vedomosti editorial Igor Yurgens, chairman of the board of the Institute of Contemporary Development, suggested President Dmitry Medvedev should try to emulate Singapore's former Prime Minister Lee Kuan Yew.

A big part of the credit for bringing the two countries together goes to Singapore's former ambassador to Russia, Michael Tay.

In 2010 Russia ranked as Singapore's 24th largest trading partner, with total trade valued at $5.2 billion, up from $491 million in 2002, according to Singapore's statistics service. Russia's Rosnano and Singapore have joined forces this summer and will be creating a nanotechnology fund with Korea.

For Tay, who is also founder of the Russia-Singapore Business Forum, which will take place on the island nation later this month, that is great news.

"Many Asian companies are willing to go to Russia now," Tay said. "The very young relationship is growing very fast."

In 2006 Tay organized the first annual Russia-Singapore forum, the only business-to-business platform between the two countries targeting small to midsized companies. The forum helped foster business connections, as well as spread knowledge about Russia.

Six years ago Singapore saw Russia as a difficult country, hostile to investment, and with crime, corruption and commercial issues, Tay said. Today Singaporean companies own real estate in Russia and large companies like state-owned Gazprom and privately owned LUKoil have opened offices in Singapore. Smaller Russian businesses are starting to grow in Singapore. It's all about making connections and using Singapore as a gateway to the East, Tay said.

One company following this approach is Parallels, a Russian software maker based in Singapore.

More Russians have moved to Singapore than ever, invested in real estate and opened businesses. There are up to 5,000 Russians permanently living the country, mostly from the Far East. That is at least ten times more than the few hundred that used to live there about six years ago, Tay said.  

He sees a symbiosis in the relationship, in which the island-state provides connections, experience and ease of doing business, and at the same time benefits from Russia's way of "thinking big."

Before Singaporeans were suspicious of anything Russian, but now there is a Russian "fever." A new high-end Russian restaurant with iPad menus, called Buyan, after a Russian fairy tale island, is very popular in Singapore, Tay said. And Singaporeans are now more likely to listen to Russian music, watch Russian films and be familiar with Russian art than they were six years ago.   

During his posting in Russia from 2003 to 2008, Tay was honored as the Patron of Art of the Century by the National Welfare Fund of Russia for commissioning an opera, "Singapore: A Geopolitical Utopia," to bring Russia and Singapore closer together.

The opera premiered in Moscow in 2005. It was described by some spectators as "unique," and included a prelude in which a chorus chanted the word "Singapore," occasionally interspersing a phrase describing the island, for approximately 15 minutes.

The piece was performed again at the 2007 Singapore-Russia forum. A video installation of the opera is now displayed in the National Museum of Singapore.

"Even after 100 years, no matter what happens, Russia and Singapore will be intertwined," Tay said.

Below are some edited excerpts from the interview with Michael Tay:

Q: Do you think Medvedev should take cue from Prime Minister Lee, as Yurgens suggested?

A: Yurgens is a thoughtful and practical man, a thinker with a profound grasp of the historical forces that still shape Russia today. The reality is that Singapore took over 30 years to reach its current status in the world, and it is a much smaller place.  Our miracle is that we had no fallback option, no resources to depend on and no ability to survive if we failed.

Q: Why is Russia important to Singapore?

A: We are a small country with strong economy. We have a very big presence in China, investments in India. Russia is the next big economy we have to engage.

Q: What are Singapore's investment priorities in Russia?

A: We are looking forward to investments in … the food and beverage sector, in stocks, in Russian companies through London, New York — technology companies, research companies. Now we are also looking to participate in the mining, oil, gas and natural resource sectors. We are looking at the special economic zones.

Q: What future business collaboration can you see between the two countries?

A: We are looking at the Skolkovo School of Management, creating a center for emerging markets — connecting the emerging markets of the former Soviet Union. Uzbekistan, Kazakhstan — those are places nobody understands even slightly. Anything can happen.

Q: How can Singapore help Russia?

A: Singapore is small, but it is a fantastic hub. Russia is now only beginning to get connected to the world. Singapore is like a short cut — we have a lot of connections. Take advantage of our connectivity to the rest of the world, access to Asia.

[The Russian-Singapore Business Forum] is bringing a lot of Asian entrepreneurs together with businessmen from Russia and the CIS.

Q: What advice can you offer to Russian entrepreneurs interested in doing business in Singapore?

A: They need to visit, see how we operate. It is very easy to have a business in Singapore. The registration process is online. Just come, meet the right people. Do things through us.

Q: How are the business cultures of Russia and Singapore alike?

A: In business the element of trust in both countries is important. Businessmen tend to be cautious about people they can trust. They build a relationship before doing business.

Q: How are they different?

A: We do everything over e-mail. Russians value face-to-face meetings. It's very different. In Russia, [personal] encounters are important, but here we are totally dependent on e-mails.

Q: What can Russians learn from Singapore?

A: Russia is huge. Grow your regions and cities. Grow the Far East — cities like Tomsk, Kazan. Grow centralized control, transportation. Create investment incentives.

Q: What can Singaporeans learn from Russians?

A: We are a small country that needs big ideas. Singaporean people could learn from Russia the sense of thinking big. Big ideas. Russia will succeed in the future because people are ambitious and want to do great things, move forward.

Q: What do you miss about living in Moscow?

A: I miss the feeling of culture. Any night of the week I could go to a concert, theater, some underground jazz bar.

Russians have a fantastic sense of style. The discotheques, restaurants, cafes, quality of food, drinks, decorations. Somehow the sense of style was never lost despite years of communism.

Q: What do you miss least?

Moscow traffic.

Read more: http://www.themoscowtimes.com/business/article/singapores-tay-sees-mutual-lessons-in-business-with-russia/443449.html#ixzz1XQs1aV2C The Moscow Times

Yandex Figures Out How to Get Paid for Music Service 09 September 2011By Lena Smirnova

Yandex has found a way to make its legal music service profitable and bring greater returns to copyright owners, the company said.

Yandex.Music, which holds more than 2.3 million tracks, will now be monetized by placing a multimedia ad on the service's site beginning this week. Unlike other music portals, Yandex is exploring the possibility of paying copyright owners based on ad viewership rather than the sale of content, which the company said is a more profitable alternative.

"We are confident that in our conditions, the ads will provide copyright owners greater profits than the sale of content," said Alexei Tretyakov, Yandex's commercial director.

The banner, which covers a third of the Yandex.Music site, gives advertisers the option of displaying text, photos, video and flash files to promote their products. Yandex paid copyright owners before, but its representatives declined to disclose how much more the owners will be paid now that the company is selling ad space.

"For most of the existing agreements with copyright owners, we are planning to start paying the owners their share from the ad sales already in the current contract year," Yandex's press office wrote in an e-mailed statement to The Moscow Times.

But the managers of other music portals doubt whether the Yandex venture will be very profitable.

"It doesn't look like they'll be able to make a lot of money off it. Their catalog [of music] is very large, so it's unlikely that one banner will cover the cost," said Dmitry Kurkin, deputy editor-in-chief of the free music portal Zvuki.ru.

The payment model may prove to be profitable five years from now depending on how the labels, artists and listeners react to it, Kurkin said, but for now it only shows that the company bowed to the inevitable — Russians will never pay for digital music.

"This [project] is a sign that the people who sell music are not able to force music listeners in our country to pay for music — that is just unrealistic," Kurkin said.

Sonia Sokolova, co-founder of Zvuki.ru, said she approached Yandex representatives three years ago with a similar idea, but back then the company was focused on getting a bigger audience, so any kind of monetization was discarded as a potentially damaging step.

"It is cool that they are doing this now, even if it is three years later," Sokolova said.

Read more: http://www.themoscowtimes.com/business/article/yandex-figures-out-how-to-get-paid-for-music-service/443445.html#ixzz1XRI2hPkG The Moscow Times

Activity in the Oil and Gas sector (including regulatory)

TNK-BP internal fraud probe leads to 37 criminal caseshttp://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8751128/TNK-BP-internal-fraud-probe-leads-to-37-criminal-cases.html

Explosive revelations over the extent of alleged fraud and corruption at BP's Russian joint-venture have emerged just days before David Cameron makes a high-profile visit to Moscow.

By Rowena Mason

11:00PM BST 08 Sep 2011

TNK-BP, the company jointly owned by the UK oil major and four oligarchs, disclosed the extraordinary details of a new probe, detailing hundreds of allegations of unscrupulous behaviour. They have led to 37 criminal cases involving employees and contractors this year.

The revelations are likely to embarrass BP's embattled chief executive Bob Dudley, who is accompanying the prime minister on his visit to see his counterpart Vladimir Putin. They plan to discuss the climate for UK business in Russia.

BP initially appeared not to know about the announcement, raising further questions over the relationship between the British company and its oligarch partners – Mikhail Fridman, Len Blavatnik, Viktor Vekselberg and German Khan.

The disclosure that TNK-BP investigators have launched 365 inquiries into fraud since January may also make uncomfortable reading for BP's shareholders at a time when Mr Dudley is under pressure over the company's Russian operations.

There have been months of tensions between BP and the oligarchs, with both sides suggesting that they buy each other out. The two sides fell out over BP's failed attempts to do a £10bn deal with the Russian state company Rosneft, freezing out the billionaires. Arbitration over the issue is still ongoing.

Unease about BP's Russian operations grew even stronger last week, when a Siberian court gave permission for its offices in Russia to be raided by masked bailiffs. This was part of a court case brought by a small shareholder, suing for damages over the collapse of the Rosneft deal. Rosneft has since struck an Arctic exploration deal with ExxonMobil.

The new allegations were revealed after management set up a whistleblowing hotline in January this year. TNK-BP said the programme had been undertaken to make it more transparent and ethical. Nevertheless, the oil group's efforts to clean up its act reveal that more than 90 staff have been disciplined, after almost 600 whistleblowing allegations to the hotline.

Thomas Kiehn, a spokesman for TNK-BP, said: "Here in Russia, corruption is rampant in a lot of companies and organisations. The programme was supported by the management last December and the idea was to make it as it as transparent as possible.

"I can't say we expected a certain number of cases. Obviously the amount of information was more than in previous years because there wasn't a well established system for whistleblowing before.

"We wanted to be completely transparent about the results of our findings. There's no hidden agenda."

It is understood that key concerns in the investigation were bribery, "facilitation payments" and uncompetitive contracts.

Maksim Barskiy, TNK-BP's deputy chairman, said: "Integrity is one of TNK-BP's core values, and as such the company does not tolerate any form of corruption or fraud."

BP referred all enquiries to the TNK-BP press office.

Earlier this year, Richard Alderman, director of the Serious Fraud Office (SFO), said the agency plans to be "sympathetic" to oil and gas industry companies locked into joint-venture agreements in countries where corruption is rife. The new Bribery Act giving stronger powers to the SFO only covers cases that took place after July this year.

TNK-BP: The key playershttp://www.telegraph.co.uk/finance/newsbysector/energy/8750128/TNK-BP-The-key-players.html

Potentially embarassing allegations of fraud and corruption at TNK-BP have emerged involving 37 criminal cases this year, just days before David Cameron is to make a high-profile visit to Moscow. 11:00PM BST 08 Sep 2011

The company is jointly owned by BP and Alfa Access Renova (AAR). The AAR consortium is made up of three leading Russian investment, financial and investment groups - Alfa Group, Access Industries and Renova.

AAR's key asset is its 50pc stake in TNK-BP, one of Russia's largest oil companies, that was created through a merger of the oil and gas assets of BP in Russia and those of the consortium. By volume of oil produced, TNK-BP is one of the 10 largest private oil companies in the world.

Here we look at the key players in AAR and BP.

German Khan

The founder of the Alfa Group consortium is also executive director of TNK-BP and is estimated to be worth £5.2bn. According to TNK-BP chief operating officer, Tim Summers, Mr Khan once told him “that The Godfather was his favourite movie, that he watched it every few months, and that he considered it a 'manual for life’.” During a hunting trip with Mr Summers, Mr Khan reportedly came “to dinner armed with a chrome-plated pistol”, and another BP executive contended that he might be “certifiably deranged”.

Mikhail Fridman

Fridman, the 42nd richest man in the world according to Forbes magazine, founded Alfa Group in 1989. The company is one of the largest financial-industrial consortiums in Russia. Its leading company is Alfa-Bank, one of the largest private banks in the country. Alfa-Bank has the second-largest in branch network in Russia and has subsidiaries in Kazakhstan, the Netherlands, Cyprus, the US and Britain.

Len Blavatnik

The American industrialist founded Access Industries in 1986. The privately held, US-based industrial group has long-term investments in the United States, Europe and South America. Its industrial focus covers three sectors: natural resources and chemicals; media and telecommunications; and real estate. As well as TNK-BP, Access also has a stake in Russian aluminium group Rusal.

Viktor Vekselberg

Chairman of and shareholder in the Renova group of companies, Mr Vekselberg began his career as a computing student. He was one of the founders of Renova in 1990. The company is now one of the biggest conglomerates in Russia, with assets in metallurgy, oil, machine-building, mining, chemical, telecoms and construction. Mr Vekselberg has been on the TNK-BP board of directors since 2003, and is also chairman of Rusal.

Bob Dudley, BP chief executive

While serving as head of TNK-BP, Mr Dudley had his office bugged and endured police raids, back-tax demands, legal action and visa problems. He eventually fled the country in 2008.

Born in New York, he has a chemical engineering degree from the University of Illinois and an MBA from Southern Methodist University.

Mr Dudley held senior corporate development roles at US oil company Amoco before it was taken over by BP in 1998. Tony Hayward initially pipped him to the chief executive's role after the resignation of Lord Browne in 2007.

Rosneft green light for Arctic buyshttp://www.upstreamonline.com/live/article277142.ece

Russian state oil company Rosneft has been given the nod by the country’s competition watchdog to acquire fresh Arctic offshore assets.

News wires  08 September 2011 13:11 GMT

The acquisitions would potentially expand the scope of Rosneft’s partnership deal with US supermajor ExxonMobil for Arctic exploration that was signed last week.

The deal centres on joint exploration of the three East Prinovozemelsky blocks in the Kara Sea, and the Tuapse Through block in Russia’s Black Sea waters, with estimated initial investments of $3.2 billion.

Russia’s Federal Antimonopoly Service said it had approved a petition from Rosneft subsidiary Zapad-Shmidt-Invest to acquire the companies Chernomorneftegaz, Sintezneftegaz and Artikprominvest, with assets located mostly in the Arctic.

Details of the investments were not disclosed. However, Uralsib analysts said on Thursday that "Rosneft should be able to acquire the assets for a total of $300 million to $400 million", Reuters reported.

A Rosneft spokesman said the talks on the purchase of the assets are not yet complete.

"The Arctic assets may complement the three blocks in the Kara Sea to be included in the ExxonMobil joint venture," Uralsib analysts said in a note.

Rosneft and the world's top natural gas producer Gazprom have exclusive rights to develop offshore hydrocarbon reserves, according to Russian law.

Uralsib said Chernomorneftegaz, controlled by Novolipetsk Steel owner Vladimir Lisin, holds licences for four blocks in the Black and Azov seas, with prospective oil and gas resources of between 1.4 billion and 2.8 billion barrels of oil equivalent.

Sintezneftegaz, controlled by Russian senator Leonid Lebedev, has licences for two blocks in the Barents Sea with estimated resources of up to 7 billion boe.

Published: 08 September 2011 13:11 GMT  | Last updated: 08 September 2011 13:15 GMT

Russia's Litasco eyes Singapore clean storage, crude sales to China http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7324694

Singapore (Platts)--9Sep2011/146 am EDT/546 GMT

Russian trading house Litasco is in talks to lease gasoline storage tanks in the Asian trading hub of Singapore and hopes to increase crude oil sales to China as the company seeks to expand its business in Asia, its chief executive said.

"We are developing our infrastructure position in the region," Sergey Chaplygin , Litasco's CEO, said in an interview on Thursday.

Litasco is the trading arm of Lukoil and the company handles the marketing and distribution of Lukoil's crude oil and refined products exported from Russia, as well as third-party trading.

The company currently has 230,000 cubic meters in floating storage for fuel oil around Singapore and 55,000 cu m in onshore storage tank space for middle distillates, and it is keen to lease tank space for light distillate products in Singapore.

"We are working on it," Chaplygin said, declining to disclose more details.

The company is also looking to increase trading volumes to China in the coming years, especially when the first crude oil from Iraq's West Qurna II oil field starts at the beginning of 2013.

In June, Lukoil President Vagit Alekperov said the company expects to get its first crude from the Iraqi oil field in 2013, with the first stage output to be at 400,000 b/d, and then to reach the designed plateau production of 1.8 million b/d in seven years.

Lukoil, together with its junior partner Norway's Statoil, was awarded the contract to develop West Qurna II during Iraq's second bidding round for oil fields in December 2009.

In the meantime, Litasco's revenue is expected to increase 10% year on year this year, after what has been a challenging year so far, Chaplygin said.

"The first quarter was not easy. But results have been good and respectable so far," he said.

Just last month, the International Energy Agency cut its estimate of world oil demand in 2011 due to growing signs of an economic slowdown, and warned that any reduction in the growth outlook for 2012 could have a major impact on expected oil consumption.

In its latest monthly oil market report, the IEA reduced its demand estimate for 2011 to 89.48 million b/d, down 60,000 b/d from its previous estimate, attributing the revision to the "sustained pressure of high oil prices and increased evidence of economic slowdown."

"The relative calm in markets in July following the IEA stock release has been replaced by a much darker outlook for the remainder of 2011 on escalating fears of a double dip-recession and sharply lower oil demand growth," it said.

"The markets have been volatile all year long and will continue to be so for the rest of the year. No one is giving a strong opinion that the world economy is going into recession

and we will try to stay positive," Chaplygin said. --Calvin Lee, calvin_lee@platts.com

Similar stories appear in Oilgram News. See more information at http://www.platts.com/Products/oilgramnews

Gazprom

Gazprom acquired a 51% stake in RSP Energy - successive move towards cherished retail saleshttp://www.bne.eu/dispatch_text16529

VTB CapitalSeptember 9, 2011

News: According to Kommersant, Gazprom acquired a 51% stake in RSP Energy in Poland. RSP Energy operates in the gas and energy retail sector, and its main clients are small households. Kommersant also speculates that the total sales of RSP Energy for 2010 were less than 40mmcm, or less than USD 24mn. From the operational side, RSP Energy is a small company with total sales of less than 1% of the sales of Gazprom to Poland.

Our View: It is hard to evaluate the effect on the company, as the details of the deal have not been provided. As a reminder, Gazprom has been trying to enter the European retail sector for a long time, but as for now it sales are only 4.7bcm (around 3% from whole export sales) of gas directly to the end customers. We do not expect any market reaction on the news;