Russia 090820

Basic Political Developments Tymoshenko, Putin Agree Draft Agenda Of Fifth Meeting Of Ukrainian-Russian

Economic Committee in October - According to the statement, Prime Minister Yulia Tymoshenko on Wednesday had a phone conversation with Russian Prime Minister Vladimir Putin. Tymoshenko and Putin agreed that the agenda will include a question of the joint batch production of An-70 plane and other topics of the economic cooperation.

Moldovan, Russian presidents to meet in Sochi on 21 August Uganda-Russia: Sergey Lavrov was yesterday meeting President Yoweri

Museveni currently on a working visit to Moscow. The Russian foreign minister has said his country wants to cooperate in developing the education, science and technology sectors in Uganda.

Ambassador Konuzin on President Medvedev's visit to Serbia - Preparations for Russian President Dmitry Medvedev's visit to Serbia are underway and a series of strategic agreements will be signed during his stay in Belgrade, Russian Ambassador to Serbia Alexander Konuzin has stated.

Missile Maker Offers Fix to Shield Dispute - Raytheon, the world’s biggest missile maker, is developing a new system that could help resolve a U.S.-Russian deadlock over Bush-era plans to extend into Europe the U.S. shield against ballistic missiles.

Russia Air Force admits problems in 5th-generation jet engines Russia decides to resume An-124 cargo plane production HAL to supply components for Sukhoi fighters to Russia India, Russia to ink transport aircraft JV agreement in September Sukhoi leads the way on MAKS 2009 deals - Sukhoi is the star of the show this

year. It signed a $2.5 billion contract with Russia's Defense ministry for 64 fighter jets. It got a hundred million dollar loan from state development bank VEB – and is getting the same amount, to boost its capital, from the federal budget.

Russian MS-21 jetliner to use Rolls Royce, Pratt & Whitney engines Military: Russia, Ukraine to complete An-70 testing soon Russian Air Force Rekindles Upgrade Goals - Moscow is on the brink of

concluding its largest fighter aircraft order in almost 20 years, with the Russian air force's leader setting far-reaching procurement and restructuring plans. Funding, however, is a fundamental concern.

Rosavia Airline Seeks Bids for 65 Jets Aeroflot Signs $100M Olympic Sponsorship - Aeroflot will be the official carrier

of the 2014 Sochi Winter Olympics, pledging $100 million in money and services between 2009 and 2016, Aeroflot head Vitaly Savelyev said Wednesday at the MAKS-2009 air salon.

Rogozin suggests joint deterrence of piracy instead of speculation - A well-organized pirate consortium is responsible for the Arctic Sea ship situation, Russian Permanent

Representative to NATO Dmitry Rogozin said, thus rejecting speculations about the transported cargo.

Eleven Arctic Sea crewmembers return to Moscow, four remain on duty -foreign ministry

Arctic Sea crew, suspected hijackers land in Moscow Freed Arctic Sea crew arrive in Moscow Contradictions Cloud the Arctic Sea Case - the official version of what transpired

is fraught with inconsistencies, prompting observers to suggest that Russian authorities are trying to cover up a smuggling or trafficking operation.

Europe, Russia in Mars exploration deal - The European Space Agency (ESA) has signed a deal with its Russian counterpart Roscosmos to cooperate on two Mars exploration projects, Russia's Interfax news agency reported.

Russia prepares new Arctic research station - Russia continues its arctic research program with drifting ice stations in the high latitudes. The icebreaker “Yamal” sails out to pick up scientists who have spent nearly a year on an ice floe and to find a suitable place for a new station.

Another nuclear sub for scrapping - The nuclear powered submarine K-496 "Borisgleb" this week made its last trip to the Zvezdochka yard in Severodvinsk, Arkhangelsk Oblast, were it will be decommissioned and scrapped.

Timeframe for Sayano-Shushenskaya restoration may be known in a week –minister

Death Toll in RusHydro Dam Accident Climbs to 17, Interfax Says Siberian dam disaster body count reaches 17 with 58 more missing Transformer lubricant didn't leak into Yenisei river – Rostekhnadzor Russia tackles Siberia oil slick - Chemical pollution from Monday's explosion at

Russia's largest hydro-electric power station has killed fish and spread down a major Siberian river.

SCO supports Russia in suppression of terrorist activity in the North Caucasus - Shanghai Cooperation Organization (SCO) supports Russia in suppression of terrorist activity in the North Caucasus. SCO Secretary General, Bolat Nurgaliev, said in connection with terrorism act in Nazran, Kazakhstan Today agency reports citing SCO official site.

One killed, one injured in south Russia blast - One man was killed and another severely wounded when an explosive device went off in south Russia's Republic of Kabardino Balkaria, a local police official said on Thursday.

Medvedev Proposes Ending Jury Trials for More Crimes - President Dmitry Medvedev on Wednesday proposed further restrictions on jury trials and suggested changing jurisdiction rules for extremism and terrorism trials.

Finance Ministry Backs Tax-Evasion Changes - The Finance Ministry has backed a State Duma proposal to not bring criminal charges against individuals accused of tax evasion for the first time. The proposed government note on changes introduced by deputies to the Tax and Criminal codes, which would ease the punishment for individuals not paying taxes, was published Tuesday on the Finance Ministry’s web site.

65 Vietnamese in Forest - Migration officials confirmed Wednesday that they had found 65 illegal Vietnamese migrants living in a Moscow region forest after they lost their jobs because of the closure of Moscow’s Cherkizovsky Market, Interfax reported

‘Ghost’ bus takes migrants to Russia - AP reporter Mansur Mirovalev and AP photographer Alexander Zemlianichenko followed dozens of migrants on an illegal bus for a six-day trip from Uzbekistan to Russia. Here is their story.

National Economic Trends Russia’s Ruble Gains Against Dollar as Oil Prices Advance Russian Reserves Fall $2.8 Billion as Central Bank Intervened Russia c.bank injects 44.6 bln roubles via repos Russia’s Borrowing Plan May Face ‘Difficulties,’ Ministry Says Tax receipts plummet in 1H09 - The government's tax receipts plummeted in the

first half of this year to this year, down by almost 40% on the year. Russia harvested 56.5 mln tonnes of grains

Putin's Limited Options to Restore Growth - Russia's Putin fears pumping money into the economy will weaken the ruble, restrict bank lending, and crimp economic growth

Business, Energy or Environmental regulations or discussions Russia May Impose Progressive Duty on Nickel Exports - Russia may impose a

progressive duty on exports of nickel once prices in London exceed $12,000 a ton under a recommendation made by a government commission for protective measures in foreign trade. The recommendation was posted on the government’s Web site late yesterday.

Russian govt recommends progressive nickel duty MOESK Fined $1.4M After Dacha Complaint - A refusal to connect a Moscow

region dacha to the local power grid could cost MOESK 45.4 million rubles ($1.4 million), the largest fine the Federal Anti-Monopoly Service has ever levied based on an individual’s complaint.

Banks: Ruble retail deposits rose to $7.6bn in 6M09, foreign-currency deposits $7.4bn

VEB Seeks $500M Abroad - State lender VEB is in talks with international lenders to raise about $500 million, three people familiar with the situation said.

Rusnano Will Sharply Boost Spending - Rusnano will approve 40 billion rubles ($1.25 billion) worth of investment this year, one-third more than it planned in May, a spokeswoman said Wednesday.

Amur soars on reserves estimate submission - East Russia-focused exploration and development company Armur Minerals pleased shareholders Thursday with details of a reserves estimate that it has submitted for regulatory approval. Amur upbeat on Maly Krumkon estimate, shares jump

TMK Borrows $450M St. Pete Investment Falling - St. Petersburg lured 33.5 percent less foreign direct

investment in the first half as the credit crisis deterred investors, the city said Wednesday.

Kerimov Purchases Rebuilt Voyentorg - Suleiman Kerimov’s Nafta Ko holding has become the main owner of the legendary Voyentorg department store in central Moscow.

Russian Investor's Ally Dormann In As Sulzer Chairman - Russian billionaire Victor Vekselberg on Tuesday tightened his grip on Sulzer AG (SUN.EB) after

his investment firm Renova succeeded in getting Juergen Dormann elected as the Swiss machinery maker's new chairman.

Russia Construction Industry To Contract By 15.8% In 2009, To Reach US$67.5bn

Activity in the Oil and Gas sector (including regulatory) PetroVietnam to Build $1 Billion Gas Pipeline, Thoi Bao Says - Vietsovpetro, a

joint venture with Russia’s OAO Zarubezhneft, will start construction of the 398-kilometer (247- mile) pipeline this year, Thoi Bao said.

Gazprom, Rosneft to gain from tax shift - "The oil and gas sector in Russia is extremely highly taxed relative to the rest of the economy, and we believe that forthcoming tax changes are likely to benefit oil and gas companies at the expense of other exporters," Kingsmill Bond and Andrey Kuznetsov, analysts at Troika, said yesterday.

Oil shipping gives growth for Northwest Russian ports Lukoil installs Yuri Korchagin SBM - Lukoil has completed assembly of the

single point mooring (SBM) that is part of the site structures and facilities for Yuri Korchagin field in the Caspian Sea.

Tatneft blamed for overpricing its oil while selling it to its shareholder Rosneft - Putin may visit Rosneft's Vankor field in August

Gazprom

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Full Text Articles

Basic Political Developments

Tymoshenko, Putin Agree Draft Agenda Of Fifth Meeting Of Ukrainian-Russian Economic Committeehttp://finchannel.com/Main_News/Ukraine/45417_Tymoshenko,_Putin_Agree_Draft_Agenda_Of_Fifth_Meeting_Of_Ukrainian-Russian_Economic_Committee/

20/08/2009 11:26  (01:22 minutes ago)

The FINANCIAL -- Ukrainian Prime Minister Yulia Tymoshenko and Russian Prime Minister Vladimir Putin have agreed a draft agenda of the fifth meeting of the Ukrainian -Russian economic committee to take place in Ukraine in October. Ukrainian News learned this from a statement by the media department of the Secretariat of the Cabinet of Ministers.

According to the statement, Prime Minister Yulia Tymoshenko on Wednesday had a phone conversation with Russian Prime Minister Vladimir Putin. Tymoshenko and Putin

agreed that the agenda will include a question of the joint batch production of An-70 plane and other topics of the economic cooperation.

The sides also stated positive and effective bilateral cooperation in the implementation of the contracts on Russian gas supplies to Ukraine and transit of gas to Europe.

According to the statement, Prime Minister Tymoshenko and Prime Minister Putin highly assessed the execution of the gas agreement by both sides.

The media department of the Ukrainian government notes that the phone conversation between Tymoshenko and Putin was friendly and constructive in character.

As Ukrainian News earlier reported, Tymoshenko and Putin agreed to hold a bilateral meeting during their visits to Poland in invitations from Polish Prime Minister Donald Tusk on September 1.

Russian President Dmitry Medvedev in his open letter to Ukrainian President Viktor Yuschenko dated August 11 stated aggravation of the Russia-Ukrainian relations during the presidency of Viktor Yuschenko.

He also accused the Ukrainian authorities of hindering the business of the Russian companies in Ukraine and criticized the Ukrainian state for deliveries of weapon to Georgia.

A part of the Ukrainian politicians has sided with the position of Medvedev and a part of politicians criticized the Russian president.

Moldovan, Russian presidents to meet in Sochi on 21 August http://www.moldpres.md/

Aug. 20, 2009 / [6111]Chisinau, 20 August /MOLDPRES/ - Moldovan President Vladimir Voronin will meet Russian President Dmitriy Medvedev in Sochi on Friday, 21 August, the presidential press service has said.

Russia eyes education http://www.newvision.co.ug/D/8/13/691811

Wednesday, 19th August, 2009By Vision Reporter

THE Russian foreign minister has said his country wants to cooperate in developing the education, science and technology sectors in Uganda.

Sergey Lavrov was yesterday meeting President Yoweri Museveni currently on a

working visit to Moscow.

Museveni and Lavrov discussed how to strengthen bilateral cooperation between the two countries, according to a release from State House.

Lovrov said Museveni’s visit would strengthen the ties between the former Soviet Union and East Africa in general.

He said he would encourage investors from the Russia to invest in Uganda and in East Africa through its regional economic blocs.

The minister said Uganda uses a lot of Russian equipment in different areas like agriculture and the army.

He encouraged the country to have direct contacts with Russia in order to avoid third parties. This, he said, would enable proper management, quality supplies and accountability.

Museveni said Uganda has some Russian investments in cotton and other agro-processing areas, but invited more Russians to invest in the country.

The President invited his Russian counterpart Dmitry Medvedev to visit Uganda.

The meeting was attended by the ministers of foreign affairs, Sam Kuteesa, energy and mineral development, Hilary Onek and of State for defence, Lt. Gen. Jeje Odongo.

Uganda’s team included the ambassador to Moscow, Dr. Moses Ebuk, his deputy Samuel Sekajja and the President’s principal private secretary, Amelia Kyambadde.

Ambassador Konuzin on President Medvedev's visit to Serbia http://www.emportal.rs/en/news/serbia/96739.html

20. August 2009. | 08:34

Source: Tanjug

Preparations for Russian President Dmitry Medvedev's visit to Serbia are underway and a series of strategic agreements will be signed during his stay in Belgrade, Russian Ambassador to Serbia Alexander Konuzin has stated.

Preparations for Russian President Dmitry Medvedev's visit to Serbia are underway and a series of strategic agreements will be signed during his stay in Belgrade, Russian Ambassador to Serbia Alexander Konuzin has stated.

Medvedev will head a high-ranking delegation. A wide spectrum of issues regarding

bilateral relations, cooperation in most diverse areas, as well as in the area of international issues, will be discussed during the visit, Ambassador Konuzin said in an interview published by Vecernje Novosti today.

“I am confident that realization of the agreements that are already in effect, particularly those in the area of oil, energy supply, as well as new agreements, will raise the relations of our countries to a qualitatively new level.

Serbia will not only strengthen its status of an important trade and economic partner of Russia, but will also assume a higher position as a European factor. European operators are already examining possibilities of benefit from our privileged economic ties, underscored the ambassador.

Ambassador Konuzin underscored that President Medvedev's visit might coincide with the anniversary of the liberation of Belgrade by the Red Army and Yugoslavs. “That is why the idea was that the presidents of the two countries mark together the anniversary of the expulsion of the German Nazi troops. It is quite appropriate since the peoples of our countries fought together against fascists.”

According to Konuzin, Russia's concept of a new security concept of Europe will be one of the topics of discussions by the two presidents.

Missile Maker Offers Fix to Shield Disputehttp://www.themoscowtimes.com/article/1010/42/380986.htm

20 August 2009By Jim Wolf / Reuters

HUNTSVILLE, Alabama — Raytheon, the world’s biggest missile maker, is developing a new system that could help resolve a U.S.-Russian deadlock over Bush-era plans to extend into Europe the U.S. shield against ballistic missiles.

The plan is to create a land-based version of Raytheon’s existing Standard Missile-3, a mainstay of U.S. missile defense from the sea. It also would use a long-range Raytheon radar already deployed in Israel and Japan as part of yet another U.S. defense system.

“Coming soon to a theater near you,” the company said in a slide presentation on its would-be new SM-3 “ashore” interceptor missile.

Raytheon executives talked up the concept Tuesday at a U.S. Army-organized missile defense conference in Huntsville, Alabama.

The land-based SM-3 systems are being looked at by the Pentagon as an option for European missile defense, Raytheon executives said.

It could play a role there with or without the 10 interceptor missiles that former President George W. Bush proposed to put in Poland, along with a tracking radar in the Czech

Republic, as a hedge against Iran, said Michael Booen, a Raytheon vice president for advanced missile defense.

Moscow has strongly opposed the plans for Poland and the Czech Republic as a threat to its security.

Riki Ellison, a prominent U.S. missile defense advocate, said land-based SM-3 missiles might be easier for the United States to “sell” to Russia as a European missile defense solution aimed at defending against Iran.

Moscow would be more receptive, he said, partly because land-based SM-3s would be incapable of shooting down strategic, long-range Russian missiles. Also, the availability of such a system could lead to a face-saving deal that could substitute for a Polish and Czech installation.

“It’s one of the primary solutions” that President Barack Obama’s administration is mulling, said Ellison, who heads the Missile Defense Advocacy Alliance, a private group close to the Pentagon and industry.

General Kevin Chilton, who oversees missile defense as commander of the U.S. Strategic Command, told the conference that the United States was mindful of maintaining “strategic stability” with Russia and China as it builds its shield.

The U.S. plan to put interceptors in Poland “is akin to having missiles in Cuba to them,” he said of Russia’s concerns, referring to the 1962 U.S.-Soviet showdown generally regarded as the closest the Cold War came to nuclear war.

Chilton declined to comment on whether the land-based SM-3 was one of the alternatives under review by the Obama administration. “I think there’s all kind of potential solutions on the table being discussed,” he said.

Raytheon executives said the land-based SM-3 could be operational as soon as 2013 if funded adequately by the Pentagon. The Pentagon has requested $50 million for its development in fiscal 2010, starting Oct. 1. Raytheon has already made a significant investment, Booen said.

The SM-3 is a defense against short- to intermediate-range missiles. It was developed for ships equipped with Lockheed Martin’s Aegis ballistic missile defense and has notched up 15 “hit-to-kill” test intercepts.

Raytheon said in its slide presentation that the proposed land-based SM-3 system also “could provide Israel a near-term solution to counter ballistic missiles from Iran.”

Russia Air Force admits problems in 5th-generation jet engines

http://en.rian.ru/russia/20090820/155864971.html

ZHUKOVSKY, August 20 (RIA Novosti) - Russia's Air Force chief acknowledged on Thursday faults in engines for a fifth-generation fighter jet currently being developed.

The Advanced Front-Line Aviation Complex (PAK FA) plane is set to replace the Air Force's fourth-generation fighters, namely, the Su-27 Flanker and the MiG-29 Fulcrum.

Speaking at the MAKS air show outside Moscow, Alexander Zelin said: "For the time being the aircraft will use Saturn engines. There are problems, I admit, but research is continuing."

Russia decides to resume An-124 cargo plane productionhttp://en.rian.ru/russia/20090820/155864900.html

ZHUKOVSKY (Moscow Region), August 20 (RIA Novosti) - Russia's Defense Ministry has decided to resume production of one of the world's largest cargo planes, the An-124 Ruslan (Condor), the country's Air Force chief said on Thursday.

Col. Gen. Alexander Zelin told reporters at the MAKS-2009 air show outside Moscow that the aircraft would be used both for commercial domestic flights and for carrying NATO troops to Iraq.

The An-124 was designed by the Antonov Design Bureau in 1982, and was produced in Kiev and Ulyanovsk until 1995. The plane has a maximum payload of 150 metric tons with a flight range of around 3,000 kilometers (1,864 miles).

The cargo jet is the world's third largest after the An-225 and the Airbus A380F.

Russia and Ukraine reached a preliminary agreement to resume production of the An-124 in April 2008.

HAL to supply components for Sukhoi fighters to Russiahttp://www.ptinews.com/news/238525_HAL-to-supply-components-for-Sukhoi-fighters-to-Russia

STAFF WRITER 9:59 HRS IST

Vinay Shukla

Zhukovski, Aug 20 (PTI) The Hindustan Aeronautics Ltd (HAL) will supply components to Russia for its Sukhoi range of combat jets for export to third countries, even as India's premier aviation giant prepares to roll out the first fully indigenous Su-30MKI multi-role fighter next year.

India and Russia are expected to sign an inter- governmental agreement on supply on

components by the end of this year, a top HAL executive has said.

"We are already supplying navigation and communication equipment for installation on the Su-30MK series of fighters exported by Russia to other countries," GM of HAL's Nasik based Aircraft Manufacturing Division, V Balakrishnan told PTI on sidelines of the International Aerospace Show-MAKS-2009.

The new agreement would provide for expanding the inventory to include the supply of airframe components for the multi-role jets to be exported by Russia, he said.

India, Russia to ink transport aircraft JV agreement in Septemberhttp://blog.taragana.com/n/india-russia-to-ink-transport-aircraft-jv-agreement-in-september-143860/

August 19th, 2009

MOSCOW - India and Russia are expected to ink a deal for the setting up of a joint venture for production of state-of-art multi-role transport aircraft (MTA) for their air forces.

The agreement is expected to be signed next month during Defence Minister A K Antony’s visit to Moscow.

A news agency report quoted V Balakrishnan, General Manager of Hindustan Aeronautics Ltd (HAL) aircraft manufacturing division,as saying that Russia has cleared the formalities for the creation of the 50-50 JV.

Russian Prime Minister Vladimir Putin has allocated funds for financing Russia’s share, he told the news agency on the sidelines of the International Aero-space show ‘MAKS-2009′.

From the Indian side HAL will hold 50 per cent equity in the JV.

The inter-government agreement for the joint development and production of MTA was inked in 2006 during the then President Putin’s visit to India. (ANI)

Sukhoi leads the way on MAKS 2009 dealshttp://www.russiatoday.com/Business/2009-08-20/sukhoi-leads-way-maks.html/print

20 August, 2009, 10:30

Deals have been thin on the ground at the MAKS air show near Moscow, with Military planes stealing the show, while civil aircraft production needs state support and foreign technology.

Sukhoi is the star of the show this year. It signed a $2.5 billion contract with Russia's Defense ministry for 64 fighter jets. It got a hundred million dollar loan from state development bank VEB – and is getting the same amount, to boost its capital, from the federal budget.

Russia’s Prime minister said the state will be only supporting truly competitive companies that are capable of making money on the market. It suggests the priority is not future projects but products which are made and sold now. And this is mainly Russia’s traditionally strong military aircraft sector.

Sukhoi’s multi-billion dollar contract to supply Russia’s military, could generate orders for other aircraft and the components industry according to Aleksandr Mikheev, Deputy Managing Director at Rosoboronexport.

”This contract will give an impetus not only to Sukhoi and its suppliers, but to the whole range of military-transport aviation. For MIG producers, it could boost development of many companies related to combat aviation.”

Arms exporters say military sales remain the "tried-and-trusted money-maker" while sales of commercial aircraft struggle to get airborne.  The United Aircraft Corporation, created to revive civil aircraft manufacturing, has instead been selling Soviet era planes at a loss, to get them off the books. It now owes nearly $4 billion to creditors.

Reuben Johnson, analyst at Aviation Week says the only way Russian civilian plane makers can catch up with global leaders is to borrow technology from abroad.

”They should really consider licensed building aircraft from other countries. Like theres this plan to build this MS 21 civil aircraft, which would be larger than the superjet. And by the time they develop this aircraft and they test it and they certify it, and its ready, it’ll be too late. The window will be closed. So they need to talk to somebody like Embraer, in Brazil about building other people’s aircraft in this part of the world.”

The first and the only Russian civil aircraft built since the collapse of the Soviet Union, the Sukhoi Superjet 100, looks set for success. The joint venture of Russian, Italian, French and Germany engineers expects 150 firm orders by the end of the year.

Russian MS-21 jetliner to use Rolls Royce, Pratt & Whitney engines

http://twocircles.net/2009aug19/russian_ms_21_jetliner_use_rolls_royce_pratt_whitney_engines.html20 August 2009 - 12:10pm

By RIA Novosti,

Moscow : Russia's Irkut aircraft building corporation has picked Britain's Rolls Royce and Canada's Pratt & Whitney to supply engines for its new MS-21 aircraft, the corporation's president said Wednesday.

Speaking at the international MAKS air show near Moscow, Oleg Demchenko said: "The best two firms have been chosen. The technical details are being verified at the moment, and the final decision will be announced shortly."

The MS-21 plane, developed by Russia's major manufacturing companies Ilyushin, Tupolev and Yakovlev, is to replace the ageing Tu-154 aircraft, which currently accounts for some 80 percent of Russia's passenger and freight traffic.

The MS-21 is also set to compete with the Airbus A-320 and Boeing 737 aircraft. The new passenger jet is due to enter service in 2012.

Military: Russia, Ukraine to complete An-70 testing soonhttp://www.kyivpost.com/world/47219

Today, 11:17 | Interfax-Ukraine

Zhukovsky, near Moscow - The testing of the Russian-Ukrainian military-transport plane Antonov An-70 will be completed soon, Russian Air Force Commander Col. Gen. Anatoly Zelin told the media on Thursday.

"An agreement was signed on Tuesday between the Ukrainian and Russian defense ministries to complete the An-70 testing. We will concentrate on this task in the near future," Zelin said.

Russian Air Force Rekindles Upgrade Goalshttp://www.aviationweek.com/aw/generic/story_channel.jsp?channel=defense&id=news/GOALS081909.xml&headline=Russian%20Air%20Force%20Rekindles%20Upgrade%20Goals

Aug 19, 2009

Alexey Komarov/MoscowDouglas Barrie/London

Moscow is on the brink of concluding its largest fighter aircraft order in almost 20 years, with the Russian air force's leader setting far-reaching procurement and restructuring plans. Funding, however, is a fundamental concern.

Col. Gen Alexander Zelin, the air force chief, says the overhaul is intended to improve operational readiness and give the service what it urgently needs to counter future threats. All elements of the air force will be affected: organizational structure, aircraft, weaponry, training and infrastructure.

Existing divisions will be replaced by operational commands that will oversee the air force, air defense, strategic aerospace defense, long-range aviation and military air transport. Command of army aviation support units, including rotary-wing and light transport aircraft, will be transferred from the air force.

Zelin's ambition is for the air force fleet to comprise mainly upgraded or new combat types by 2020. As a first step toward this goal, a double-digit fighter order for Sukhoi could be sealed at this week's Moscow air show. A MiG-35 order is also increasingly likely, although funding has not yet been secured.

The intent is to considerably improve the air force's overall combat capability at the tactical and strategic levels. Since the collapse of the Soviet Union, the Russian air force has suffered from inadequate funding.

In terms of Moscow's nuclear triad of land-, submarine- and air-launched missiles, the air force's strategic capability is built on a limited number of Tupolev Tu-160s Blackjacks and the Tu-95 Bear. The primary air-launched nuclear weapon is the Raduga Kh-55 (AS-15 Kent), which was developed in the 1970s.

Zelin confirms that his service is studying a strategic platform known as the "PAK-DA." "Active research work, aimed at outlining the advanced bomber's features and its general specification, is taking place," he says.

Whether the air force will ever be able to support development of the PAK-DA--even in the long term--is questionable. However, in the near term, efforts are continuing to bolster the air force's air-launched cruise missile capability. Alongside the Kh-555, a conventionally armed variant of the Kent that is now in service, senior government officials also suggest that funding for the Kh-102 cruise missile would be included in the 2010 defense budget. This long-range weapon is the replacement for the Kh-55. The Blackjack and Bear are also the focus of avionics, radar and defensive-aids upgrades.

While Washington may use the proliferation of Russian systems to partly justify its military spending, Zelin explicitly identifies the U.S. in discussing the need to bolster Moscow's air and space defenses. "Air forces of foreign states, primarily that of the U.S., will in the next 20 years gain the opportunity to make coordinated, high-precision strikes on a global scale at practically all targets on the territory of the Russian Federation," Zelin asserts.

In terms of air defense systems, the air force has already begun to deploy the Almaz Antey S-400 (SA-21 Growler) and development is underway of the S-500. The latter system will provide a greater engagement capability at extended ranges against ballistic and high-speed targets.

While the Russian air force will buy the Sukhoi Su-35--and potentially the MiG-35--to bolster its current fighter fleet, its medium-term ambitions remain vested in the PAK-FA, which is being developed by Sukhoi.

Three PAK-FA prototypes are already in production, including one airframe for static test. Zelin says prototypes will be flown in November or December. (The aircraft also is known as the T-50, an internal Sukhoi designation.)

In interviews with the Russian press, Zelin also alluded to a requirement for a high-altitude reconnaissance platform, suggesting that a type could be brought into the inventory within the next few years. But he declined to provide details on the nature of any project. Moscow's last foray into developing an aircraft in this class was the Myashichev Mi-17, of which only two prototypes were built in the 1970s.

The air force's reconnaissance capabilities will also be bolstered by the acquisition of additional UAVs. The service recently purchased a number of Israeli systems for evaluation. And while Zelin does not rule out repeating such an exercise, he signaled that domestic manufacturers should take the lead next time.

"From 2011, new vehicles--which will be able to perform not only reconnaissance but also strike missions--will start to enter into service," he notes. Upgrades of current tactical reconnaissance systems could provide a weapons-delivery capability.

Eventually 40% of the air force fleet could consist of unmanned systems, says Zelin. Industry has been working on unmanned combat air vehicle designs--including MiG's Skat--although the status and adequacy of funding for such projects are uncertain.

Mirroring a debate that is also underway in the Western military, Zelin maintains that unmanned aviation is and will remain an integral part of the air force.

A further motive for broadening the use of UAVs is that they could provide relief from Russia's pilot training problems. A shortage of fully trained pilots persists, with the air force also still falling well below the annual target figure for flight hours. While the goal is to provide 100-120 hr. annually, in 2008 the average figure for air force pilots was just 60-65 hr.

Along with the pending order for 48 Su-35s, the air force also expects to take delivery of 36 Su-34 strike aircraft by the end of 2012. Transport aviation is earmarked to receive the Ilyushin Il-112 twin-turboprop to replace the Antonov An-26. The An-12, meanwhile, is due to be replaced by the Multirole Transport Aircraft, a codevelopment with India.

Not surprisingly, a lack of funding could thwart Zelin's ambition. Whether the government will be able to provide even nearly adequate resources to underpin his plan is far from clear. (Previous efforts have foundered over a lack of money.)

According to Deputy Prime Minister Sergei Ivanov, Russia will spend about $15 billion on arms, equipment and support in 2010, a 1.2% increase compared with 2009. In a special cabinet meeting, Prime Minister Vladimir Putin identified these priorities for the armed forces: "The maintenance and development of the nuclear capability and missile and space defense forces; providing troops with modern offensive weapons, as well as command-and-control, communication and intelligence systems; and strengthening military infrastructure in key strategic sectors."

Rosavia Airline Seeks Bids for 65 Jetshttp://www.themoscowtimes.com/article/600/42/381006.htm

20 August 2009By Maria Antonova / The Moscow Times

ZHUKOVSKY, Moscow Region — Nascent airline Rosavia invited three companies to participate in a tender for up to 65 aircraft that will form the basis of its fleet, Russian Technologies chief Sergei Chemezov said Wednesday at the MAKS-2009 air show.

Russian Technologies invited Airbus, Boeing and Irkut to participate in the tender for 50 narrow-aisle jets with an option of purchasing 15 more. Invitations were extended personally to Irkut head Oleg Demchenko, Boeing senior vice president Aldo Basile and Airbus vice president Andreas Kramer.

“I’m intentionally not giving the total value of the contracts. The price for one plane will be between $35 million and $40 million, so you can do the math yourselves,” Chemezov told reporters. At the higher price, 65 planes would cost $2.6 billion.

The announcement breaks the state’s long silence regarding Rosavia, which was unveiled last fall and was originally supposed to begin flying this summer.

State corporation Russian Technologies said in September 2008 that it would help cash-strapped airline alliance AiRUnion — comprised mostly of state-controlled regional carriers — pay off debt and merge with Atlant-Soyuz, a carrier controlled by the Moscow city government.

The new airline has been billed as an eventual competitor to state-controlled Aeroflot, Russia’s largest carrier. The company is currently registered as Airline, while Rosavia is still a working name.

Rosavia will need a total of 120 planes by 2017, Chemezov said. By then, the airline hopes to service 20 million passengers, up from about 1 million now, according to figures

in a Russian Technologies statement. Aeroflot flew 9.27 million passengers last year, or 11.6 million including its subsidiaries.

Chemezov said the airline would need the 65 new planes “in the beginning” to replace some of the 200 old aircraft owned by the airlines that were moved under Russian Technologies’ control. Three-quarters of the planes are obsolete and will be scrapped by 2017.

The jet makers will need to provide a financial plan for the deliveries, Chemezov said. Rosavia may work with Russian, European and U.S. financial organizations, and it could also request state guarantees to finance leasing or direct purchases, he said.

Rosavia hopes to sign a contract for the narrow-aisle planes before the end of the year after examining the companies’ proposals. Deliveries would happen between 2010 and 2016.

The three companies invited Wednesday will need to submit their proposals by Oct. 17, said Igor Zavyalov, deputy head of Russian Technologies. “We will consider all proposals,” he said.

The company will also prepare a tender for regional and wide-body planes by the end of the year, when the airline’s needs will be clearer, Chemezov said.

Chemezov said he was eager to see the new airline brought into operation quickly, but he admitted that the original plans to include Atlant-Soyuz were still shaky.

“We expected Moscow to [enter] with Atlant-Soyuz … but their financial condition does not allow it,” he said.

Atlant-Soyuz may become part of Rosavia later, “after the city government makes it more financially healthy,” he said. Under the original plans for Rosavia, Moscow was to receive 49 percent of the new carrier in exchange for including Atlant-Soyuz and its fleet of nine Boeing 737s.

Last week, City Hall decided to push back the inclusion of Atlant-Soyuz, Vedomosti reported. The airline has debts worth 11.6 billion rubles, the report said.

Although long-term plans still include a unified brand, the six airlines that are now part of Rosavia will have their own fleets and passenger volumes at first, Chemezov said, adding that Rosavia would serve as the “managing center.”

He did not say when Rosavia expected to receive its flight license.

Boeing has not yet read the details of Rosavia’s plane requirements, Basile, the senior vice president, said after the news conference. Usually such requirements include details on the salon interior and the number of passenger seats, he said.

“We’ll offer them whatever they are asking,” he said, referring to the specifications. The U.S. plane maker will gladly participate in the tender and hopes for a further working relationship with Rosavia, added Sergei Kravchenko, Boeing’s Russia head.

Boeing said in a presentation Monday that airlines in Russia and the Commonwealth of Independent States could buy 1,050 planes over the next 20 years, 58 percent of which would be narrow-aisle planes like the Boeing 737.

Gregor von Kursell — a spokesman for EADS, the parent company of Airbus — did not pick up the phone. Airbus’s most popular version of the narrow-aisle jet is the A320.

Irkut had no immediate comment.

Aeroflot Signs $100M Olympic Sponsorshiphttp://www.themoscowtimes.com/article/1010/42/380999.htm

20 August 2009By Maria Antonova / The Moscow Times

ZHUKOVSKY, Moscow Region — Aeroflot will be the official carrier of the 2014 Sochi Winter Olympics, pledging $100 million in money and services between 2009 and 2016, Aeroflot head Vitaly Savelyev said Wednesday at the MAKS-2009 air salon.

Sochi Olympic Committee president Dmitry Chernyshenko said at a signing ceremony that Aeroflot won the tender, “leaving competitors far behind” with a bid that beat “practically all Russian and some foreign airlines” that participated.

He declined to name the participants or say how many bids they received. The companies signed a memorandum of understanding and said they would ink a full deal soon.

Deputy Prime Minister Dmitry Kozak, who is overseeing the Olympic preparations, told Prime Minister Vladimir Putin later in the day that the Aeroflot deal brought the sum of Sochi sponsorship agreements to $750 million.

Aeroflot’s sponsorship includes transporting the Russian Olympic teams and delegations over the next seven years, starting with the Vancouver Olympic Games next winter. In exchange, it can use the Sochi Olympics brand in its marketing for the duration of the deal.

“This is not charity but a partnership that is profitable to both sides,” Chernyshenko added, presenting Savelyev with the trophy of a gold medal. Savelyev gave him a model plane.

The Aeroflot chief declined to say how much of the $100 million would be in the form of services.

“Aeroflot is undervalued on the market, still perceived as a Soviet company, and we need to change that image. We’re a different company with different possibilities,” Savelyev said. The carrier said it plans to use the partnership to raise its passenger volume enough to compensate for the sponsorship by 2016.

“We hope to use the Superjet on our Moscow-Sochi route and in trips taken by the organizing committee,” Savelyev said, referring to a new Sukhoi regional jet.

The Sochi Olympic Games have already signed partnership agreements with MegaFon, Rostelecom, Rosneft and Sberbank. The government is still accepting bids for an official insurer and a gas company.

“We’re certain that events connected to the Olympics will be hosted without using budget funds,” Kozak said in a meeting with Putin, according to a transcript on the government web site.

He said the organizers were expecting to get considerably more funds from the two remaining sponsorship deals. The organizing committee decided Wednesday to not take funds allotted for them in the 2009 and 2010 federal budgets, he told Putin.

Kozak also noted the serious environmental concerns that have been raised about building through Sochi National Park.

He said he expected the International Olympic Committee to agree to allow Russia to hold the cross-country skiing and biathlon competitions on the same track, which would allow Russia to “save a significant amount of funds on building infrastructure for a separate biathlon facility … and lessen the impact on the environment.”

When asked by Putin for his estimate on the savings, Kozak put the figure at 20.5 billion rubles ($640 million). Talks with the committee will be held Thursday, he said.

While Olympic deals were struck in Moscow, 10 environmental activists on Wednesday blocked work on a road that is being built to link the Adler airport with ski lifts in Krasnaya Polyana, stopping logging in one of the construction areas along the route.

The 50-kilometer rail and road link is the single most expensive part of the Sochi Olympics preparations, costing more than half of the state’s overall budget for the games.

The activists demanded that authorities investigate and open a criminal case into the illegal logging.

“We have filed three complaints to the police, and while the workers have no documents that permit the clear-cutting, the police ignored them,” said Andrei Rudomakha, coordinator of the Environmental Watch of the North Caucasus and one of the protesters.

The protest dispersed in the afternoon after a police chief from Adler said they would stop the logging and open the criminal case, Rudomakha said by phone from Sochi.

Kozak told Reuters last month that concerns expressed by environmental groups over the road were “politicized.”

Rogozin suggests joint deterrence of piracy instead of speculationhttp://www.interfax.com/3/512105/news.aspx

BRUSSELS. Aug 20 (Interfax) - A well-organized pirate consortium isresponsible for the Arctic Sea ship situation, Russian PermanentRepresentative to NATO Dmitry Rogozin said, thus rejecting speculationsabout the transported cargo. "Instead of speculating about the cargo carried by the Arctic Seaand possible reasons for the Russian Navy's rescue of the Russian crew,European bureaucrats should learn important lessons from thissituation," Rogozin told Interfax on Wednesday. A number of media bodies, politicians and analysts claimed that theship might have been carrying nuclear equipment, radioactive materials,drugs or armaments. Former Estonian armed forces commander, EU rapporteur Tarmo Koutssuggested the Arctic Sea may have been illegally transporting cruisemissiles to Iran. "Mr. Admiral, who represents 'a great naval power', must clearlyunderstand why servicemen may travel many miles, far beyond the nationalborders. They had only one goal this time - the goal was defined by theRussian president as the release of our citizens and the saving oflives," Rogozin said. Estonian representative's words are an 'invention,' he said. It is time to realize that any pirate attacks, including thoseoffshore Somalia and the Arctic Sea situation, are done by "a well-organized network," he said. Obviously, ships may be attacked in variousregions, including Europe, he noted. The release of crews, including the Russian successful operation,may be discussed in September when the Russia-NATO Council resumed itsactivity, Rogozin said. It is possible to pool the efforts of security services and toexpose international criminal concerns backing sea pirates, he said. These concerns deliberately plan attacks on civilian vessels, "andthey must be deterred with joint efforts of security services so thatsea piracy does not grow worldwide like cancer," Rogozin said.

Eleven Arctic Sea crewmembers return to Moscow, four remain on duty -foreign ministryhttp://www.interfax.com/3/512092/news.aspx

MOSCOW. Aug 20 (Interfax) - Four crewmembers of the dry-cargovessel Arctic Sea, led by the captain, remained on duty on the ship offCape Verde. "Eleven crewmembers arrived in Moscow," the Russian ForeignMinistry announced. "Four crewmembers, led by the captain, remain on duty aboard theship. Their morale and physical condition are good," the foreignministry said in a statement on Thursday. "Moscow has expressed gratitude to the Cape Verde government forits assistance to the Russian side," the statement says.

Arctic Sea crew, suspected hijackers land in Moscowhttp://www.google.com/hostednews/afp/article/ALeqM5g9wfG-kEijyIXPgZ1ze-_oe8P9dA

(AFP) – 26 minutes ago

MOSCOW — The crew of the Arctic Sea cargo ship arrived Thursday at a military airport outside Moscow on board the same Russian military plane as their suspected hijackers, the Interfax news agency reported.

It said the Russian air force Ilyushin-76 transport aircraft arrived at the Chkalovsky military airport outside Moscow at 10:40 am (0640 GMT) carrying 15 crew members and eight suspected hijackers as well as Russian officials.

The Arctic Sea crew had boarded the plane on the remote African archipelago of Cape Verde where a Russian warship had brought them after seizing control of the hijacked ship after a weeks-long search.

Freed Arctic Sea crew arrive in Moscowhttp://en.rian.ru/russia/20090820/155864315.html

MOSCOW, August 20 (RIA Novosti) - The crew of the Arctic Sea cargo ship, which had been missing in the Atlantic for more than two weeks before it was found by a Russian warship, arrived in Moscow on Thursday, Vesti TV reported.

The Maltese-flagged vessel was found off Cape Verde on Monday with 15 Russian crewmembers and eight suspected hijackers on board. The vessel was freed without a single shot fired.

A Russian military official earlier said that an investigation into the suspected hijacking would resume in Russia.

The crew had been transferred on Wednesday from a Russian Navy frigate to one of the Cape Verde islands.

The cargo ship left Finland carrying timber on July 22 en route for Algeria. The ship last made radio contact with British coastguards on July 28.

Contradictions Cloud the Arctic Sea Casehttp://www.themoscowtimes.com/article/600/42/381007.htm

20 August 2009By Nikolaus von Twickel, Alexandra Odynova / The Moscow Times

Two days after the lumber freighter the Arctic Sea resurfaced off the West African coast, questions mounted about the ship’s mysterious hijacking, and national media were abuzz with speculation about what its real cargo was.

The Defense Ministry said Wednesday that eight hijackers, captured on the ship near the island nation of Cape Verde on Monday, had threatened to blow up the ship if their ransom demands were not met.

The men threw their weapons overboard when the Arctic Sea was approached by a Russian anti-submarine frigate that had been dispatched to search for the ship, Interfax reported, citing an unidentified ministry spokesperson.

When Navy officials searched the ship, they found bags with ammunition and explosives, the spokesperson added.

The Arctic Sea, a Maltese-registered cargo ship with a 15-member Russian crew and a load of sawn timber, caused a global media sensation when it seemed to disappear in the Atlantic last month after a mysterious attack in the Baltic Sea.

The lumber’s value has been put at $1.8 million, a sum that hardly justifies an attack that would amount to the most blatant act of sea banditry in European waters in centuries.

Yet the official version of what transpired is fraught with inconsistencies, prompting observers to suggest that Russian authorities are trying to cover up a smuggling or trafficking operation.

When Swedish police first said the ship had been hijacked near the island of Gotland on July 24, they cited the crew as saying masked men had bound and beat them before fleeing in a high-speed boat.

Yet Defense Minister Anatoly Serdyukov said Monday that the same hijackers — four Estonians, two Latvians and two Russians — were found on the ship off West Africa and they surrendered without a shot being fired.

One possible explanation for this contradiction is a statement issued by the European Commission last Friday that said the ship had “supposedly” been attacked twice, the first time off the Swedish coast and then off the Portuguese coast.

Reached by telephone Wednesday, a commission spokesman refused to elaborate on the statement.

The EU also said earlier that “from information currently available, it would seem that these acts … have nothing in common with ‘traditional’ acts of piracy or armed robbery at sea.”

Further complicating the picture are Swedish media reports suggesting that the Arctic Sea was hiding a second, smaller vessel while sailing off Sweden’s east coast.

Data from an automatic vessel tracking system showed that the Arctic Sea’s crew constantly tried to hide one side of the ship from being visible to other ships in the vicinity, the Dagens Nyheter newspaper, citing a Swedish coast guard official, reported on its web site Wednesday.

Also, Malta’s Maritime Authority acknowledged Tuesday that the ship “had never really disappeared,” seemingly confirming a claim by Moscow’s NATO representative Dmitry Rogozin that disinformation “was used intentionally in order not to hamper the military’s work.”

Speaking by telephone from Brussels, a NATO spokesman confirmed Wednesday that the Western alliance had used its tracking system to assist Moscow in finding the ship.

Yet Finnish police said Wednesday that contact with the Arctic Sea was in fact lost for some time. “We did not have full track of the ship for the whole time, but a while before the Russian operation took place we were following one that we strongly suspected to be it,” police spokesman Jan-Olof Nyholm said by telephone from Helsinki.

He added that cooperation with Russian authorities was “very constructive” and that more information on a joint investigation by Sweden, Malta and Finland would be released soon, on Monday at the latest.

Another question raised by official statements is that a ransom was demanded for the ship 10 days after the July 24 hijacking. The ship’s insurer, Renessans Strakhovaniye, said Tuesday that an unknown caller demanded $1.5 million on Aug. 3.

But Vedomosti, citing unidentified managers at various big insurers, reported Wednesday that such a demand was highly doubtful. “No serious insurance firm would ever subject itself to pirates under such circumstances,” the newspaper said.

Tarmo Kouts, an Estonian lawmaker and former commander of the Estonian armed forces, said that the “strange story” surrounding the ship could only be explained by illegal arms trade.

“You can easily hide an alley of cruise missiles under a lumber stockpile,” Kouts told the Postimees newspaper in comments published Wednesday.

Writing in Wednesday’s issue, Moscow Times columnist Yulia Latynina speculated that the vessel was secretly shipping arms via Algeria to a rogue state like Iran or Syria.

Yet other experts voiced serious doubts that the ship had been used to deliver arms.

“Everything is possible. But I do not understand why would they use such a complicated way through Finland when it is much easier to do it straight from Russia,” said Alexander Khramchikhin, chief analyst at the Institute of Political and Military Analysis.

Meanwhile, the Finnish owners of the vessel’s cargo said they were simply shipping redwood for windows and doors in Algeria.

“We sold the timber to three customers in Algeria,” Kari Naumanen, CEO for RETS Timber in Helsinki, told The Moscow Times. He declined to give the customers’ names.

Naumanen said the police have not questioned his company about the ship and its freight.

“The ship’s owner said that after they got a new crew and fuel, the ship will continue its way,” he said, adding that the Arctic Sea is “functional, but the communication equipment needs adjustment.”

Calls to the ship’s operator, the Finnish Solchart company, went unanswered Wednesday. Naumanen said RETS Timber had worked together with Solchart for 13 years and never had any problems.

RETS Timber is a trading company, 50 percent owned by Stora Enso Timber, also from Helsinki. Stora Enso senior vice president Jorma Westlund on Wednesday denied earlier reports that his company owned the Arctic Sea’s cargo.

Meanwhile, all 15 crew members were brought to the Cape Verde island of Sal, where they were met by a group of Russian investigators, Interfax reported Wednesday, citing a military source. The report did not say whether the suspected hijackers had also been taken to the island. Relatives of the sailors complained that they could not get in touch with their loved ones. “We are learning everything from TV,” the wife of a crew member told RIA-Novosti.

Wednesday, 19th August 2009 - 16:12CET

Europe, Russia in Mars exploration dealhttp://www.timesofmalta.com/articles/view/20090819/world-news/europe-russia-sign-mars-exploration-deal

AFP

The European Space Agency (ESA) has signed a deal with its Russian counterpart Roscosmos to cooperate on two Mars exploration projects, Russia's Interfax news agency reported.

The deal was inked by Roscosmos head Anatoli Perminov and the ESA's Jean-Jacques Dordain at the Maks aviation and space show outside Moscow, Interfax quoted an unnamed Roscosmos spokesman as saying.

Under the deal, the ESA will use Russia's Proton rocket as part of its Exomars project to send a robotic rover to the Mars surface and buy Russian parts for the rover's power supply system.

The deal will also see Russia's Phobos-Grunt project -- to send a probe to Mars' Phobos moon in October 2009 -- use the ESA's terrestrial communication facilities during its mission.

ESA comprises 16 members of the European Union (EU) plus Norway and Switzerland. Canada takes part in some of its projects under a cooperation agreement.

Russia prepares new Arctic research stationhttp://www.barentsobserver.com/russia-prepares-new-arctic-research-station.4619961-16176.html

2009-08-19 Russia continues its arctic research program with drifting ice stations in the high latitudes. The icebreaker “Yamal” sails out to pick up scientists who have spent nearly a year on an ice floe and to find a suitable place for a new station.

The nuclear powered icebreaker “Yamal” leaves Murmansk today to pick up the Russian scientists who have spent nearly a year on the drifting ice station “North Pole-36” (NP-36). The station was established on an ice floe between the Wrangel Island and the North Pole in September 2008. Since then, the station has drifted some 2500 kilometers and is now approaching Greenland, RIA Novosti reports.

The icebreaker will pick up the 16 scientist, their dogs and 150 tons of equipment. The vessel will then continue its journey to find a suitable ice floe for the next station, which

will get the name “North Pole-37”. The station will probably be placed near Severnaya Zemlya off the Taymyr Peninsula.

The first scientific drifting ice station in the world, “North Pole-1” was established in May 1937. Since 1954 Soviet "NP" stations worked continuously, with one to three such stations operating simultaneously each year, according to Wikipedia. In the post-Soviet era, Russian exploration of the Arctic by drifting ice stations was suspended for twelve years, and was resumed in 2003.

Watch video Of preparations on the "Yamal" on TV21.ru

Another nuclear sub for scrappinghttp://www.barentsobserver.com/another-nuclear-sub-for-scrapping.4620314-58932.html

2009-08-20 The nuclear powered submarine K-496 "Borisgleb" this week made its last trip to the Zvezdochka yard in Severodvinsk, Arkhangelsk Oblast, were it will be decommissioned and scrapped.The dismantling of the vessel will be done with finances from Russian state nuclear power company Rosatom, as well funding from Canada and the USA, Regnum reports.

The vessel - a Kalmar-class (project 667VDR) sub was constructed by the Sevmash company and included in the Russian fleet in 1978. It has been based in the Northern Fleet's Olenya Bay and Saida Bay in the Kola Peninsula, submarines.narod.ru informs.

Timeframe for Sayano-Shushenskaya restoration may be known in a week –ministerhttp://www.interfax.com/3/512054/news.aspx

MOSCOW/KHAKASIA. Aug 20 (Interfax) - The timeframe for therestoration of the Sayano-Shushenskaya hydroelectric power plant,damaged in an accident on Monday, could be known in a week, EnergyMinister Sergei Shmatko told reporters. "I think the possible timeframe for the plant to resume operationsmight be clear in a week," he said. The debris left by the accident will first have to be cleared inorder to ascertain the true extent of the damage, Shmatko said. But thenew equipment will take time to assemble, and the restoration will begradual, he said. Shmatko earlier said the plant's capacity, currently 6.4 gigawatt,could be increased to 7.3 gigawatt. The Energy Ministry estimates itwill cost 40 billion rubles to restore the plant.

Death Toll in RusHydro Dam Accident Climbs to 17, Interfax Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5oKgZOJ2itA

By Brad Cook

Aug. 20 (Bloomberg) -- The death toll from the Aug. 17 accident at the Sayano-Shushenskaya hydroelectric station in Siberia reached 17 after Russian rescue workers found another body today, Interfax said.

Dozens of workers at the OAO RusHydro dam are still missing, the Russian news service said, citing the Emergency Situations Ministry.

Last Updated: August 20, 2009 00:39 EDT

Siberian dam disaster body count reaches 17 with 58 more missing http://en.rian.ru/russia/20090820/155863825.html

KHAKASIA, August 20 (RIA Novosti) - The official death toll from an accident four days ago at Russia's largest hydropower plant in south Siberia reached 17 on Thursday, with another 58 people still unaccounted for, rescuers said on Thursday.

The latest two bodies were found in the Sayano-Shushenskaya plant's ninth generating unit, a spokesperson for the rescue team said.

The search for the missing people is continuing, and water is being continually pumped out of the turbine room which was flooded early on Monday morning after an explosion, but the chances of finding anyone else alive are now believed to be very low.

The shutdown of the plant on the Yenisei River in the Khakasia Republic, built in 1978, has caused a severe energy shortfall in the region, forcing local factories to turn to temporary supplies. The blast also released a large slick of insulating oil from the plant's transformers, threatening the river's fish.

RusHydro, the plant's owner, has said the damage could take up to two years to repair, and Energy Minister Sergei Shmatko estimated the cost at at least 40 billion rubles ($1.2 billion).

The victims' families have threatened to sue RusHydro over the accident, accusing it of putting profits ahead of safety in failing to update and replace ageing equipment, and have demanded extra compensation.

The relatives met with Khakasia Governor Viktor Zimin on Thursday, and demanded that the offered compensation of 1 million rubles ($31,000) be raised tenfold.

Services were held in churches throughout the republic on Wednesday in memory of the victims.

Transformer lubricant didn't leak into Yenisei river – Rostekhnadzorhttp://www.interfax.com/3/512077/news.aspx

CHERYOMUSHKI TOWN, Khakassia. Aug 20 (Interfax) - Transformerlubricant did not leak into the Yenisei river after the accident at theSayano-Shushenskaya hydroelectric plant. It was oil from thehydroelectric generating units that got into the Yenisei, said NikolaiKutyin, head of the industrial, technological and nuclear safetyoversight service Rostekhnadzor. "Not a single gram of transformer lubricant has leaked into thewater," Kutyin told the media on Thursday. The oil that leaked from the hydroelectric generating unit did notcontain any additives. "It is a pure petrochemical product, used inhydraulics. It could not have contained any additives," he said. The transformers were above the flood level in the plant's machinecompartment, Kutyin said. Each transformer has a protection system,should an oil leak occur. The transformers have been examined visuallyand no damage has been spotted, the official said.

Russia tackles Siberia oil slick http://news.bbc.co.uk/2/hi/europe/8209663.stmPage last updated at 17:14 GMT, Wednesday, 19 August 2009 18:14 UK

Chemical pollution from Monday's explosion at Russia's largest hydro-electric power station has killed fish and spread down a major Siberian river.

Russian officials say booms are being deployed on the Yenisei river to trap the transformer oil. Absorbents are being thrown from helicopters.

In a stormy meeting with officials, relatives of the missing said they feared not being told the whole truth.

The blast killed as many as 76 people at the Sayano-Shushenskaya plant.

The search for dozens of missing workers is continuing.

The number of confirmed dead stands at 14.

The mayor of Abakan, Nikolay Bulakin, said drinking water was unaffected in the town of Abakan, because it was drawn from the Abakan river.

But he said said that environmental damage had already been done, and he had heard reports that many trout at fish farms had been poisoned.

At least 40 tonnes of transformer oil spilled into the Yenisei, which flows north to the Arctic.

Relatives' anger

In a tumultuous meeting with local officials, relatives of the missing men demanded to know what had gone wrong.

"They do not care what has happened to our men," shouted one, according to Reuters news agency. "We want to know the truth."

"The state and the owners just cared about profit," another relative said.

Others said they wanted to know if their relatives had died, but feared they were not being told.

The power plant, one of the world's biggest, lies some 3,000 km (1,875 miles) east of Moscow. It has now stopped working.

The dam is 245m (800ft) high and stretches 1km (0.6 miles) across the Yenisei river.

The explosion flooded a turbine hall and destroyed three generating units.

Divers are examining the debris in the hall and searching for bodies, in icy water.

Emergencies Minister Sergei Shoigu said it would take at least a week to assess damage in the flooded hall.

The blast's cause is unknown but reports said investigators believed a transformer exploded during repairs.

The plant's owner said the flooding had occurred due to a pressure surge in water pipes.

Wednesday is an official day of mourning in the remote mountain region of Khakassia where the plant is located.

RusHydro said the damage would run into "billions of roubles" and take several months to repair.

Mr Shoigu said repairing the turbine hall alone could cost 40bn roubles ($1.3bn; £762m).

But he said it would still be worth doing the repairs, because the dam - undamaged by the blast - had accounted for 80% of the construction cost.

Opened in 1978, the station provides a quarter of RusHydro output and is a major power supplier to at least two smelters owned by United Company RUSAL, the world's largest aluminium producer.

SCO supports Russia in suppression of terrorist activity in the North Caucasushttp://eng.gazeta.kz/art.asp?aid=136061

13:18 20.08.2009 text: Kazakhstan Today

Shanghai Cooperation Organization (SCO) supports Russia in suppression of terrorist activity in the North Caucasus. SCO Secretary General, Bolat Nurgaliev, said in connection with terrorism act in Nazran, Kazakhstan Today agency reports citing SCO official site.

"SCO member states are solidary with the actions undertaken by the Russian authorities to suppress terrorist activity and safety and stability in the country," B. Nurgaliev said.

"In connection with the act of terrorism in Nazran (the Republic of Ingushetia of the Russian Federation), that have entailed numerous human victims, we condole with the victims' families."

One killed, one injured in south Russia blast http://en.rian.ru/russia/20090820/155863858.html

MOSCOW, August 20 (RIA Novosti) - One man was killed and another severely wounded when an explosive device went off in south Russia's Republic of Kabardino Balkaria, a local police official said on Thursday.

The explosion went off near a stadium in the town of Tyrnyauz late on Wednesday, the official said.

"A man died at the scene as a result of the explosion, and another man was taken to hospital with multiple injuries," the official said, adding that police resumed an examination of the scene this morning.

Russia's North Caucasus region has been swept by a wave of militant violence in recent months.

Ingushetia, which borders Chechnya, saw its deadliest attack in years on Monday, when a suicide bomber driving an explosives-laden minivan rammed the gate of the police headquarters in Nazran, killing 24 people and injuring 136.

Medvedev Proposes Ending Jury Trials for More Crimeshttp://www.themoscowtimes.com/article/1010/42/380988.htm

20 August 2009The Moscow Times

President Dmitry Medvedev on Wednesday proposed further restrictions on jury trials and suggested changing jurisdiction rules for extremism and terrorism trials.

Medvedev, speaking at a Security Council meeting in Stavropol, said suspects accused of committing crimes as part of a criminal group should not be allowed to be tried by jury in court.

“Jury trails fail for a variety of reasons. We need to think about teams of professional judges considering these kinds of charges,” Medvedev said, Interfax reported.

Last December, Medvedev signed a controversial law barring suspected terrorists from being tried by jury. The widely criticized initiative was pushed through the State Duma by United Russia, whose leaders argued that jury trials in the North Caucasus often resulted in the release of terrorists.

Human rights activists and legal experts said the change compromised the entire premise of jury trials and offered protection to police officers who used brutal methods to extract confessions from suspected terrorists in the North Caucasus.

Genri Reznik, one of the country’s most prominent defense lawyers, and Moscow Helsinki Group head Lyudmila Alexeyeva criticized Medvedev’s proposal as a new attempt to undercut jury trials, arguing that it would further diminish suspects’ rights in court.

Alexeyeva, however, said that moving terrorism trials from the clannish North Caucasus republics to other Russian regions might be a good idea.

Medvedev said at the meeting that the law should be changed to allow suspected extremists and terrorists to be tried outside their native regions so that “bandits and corrupt people can’t put pressure on the courts.”

“If we cannot properly hold them accountable here, we will do it in another place — in Moscow, St. Petersburg, Kamchatka,” he said.

The current Criminal Procedure Code, however, already allows trials to be moved to other jurisdictions under a range of legal pretexts.

20.08.2009 - Vedomosti/ The Moscow Times

Finance Ministry Backs Tax-Evasion Changeshttp://www.cbonds.info/all/eng/news/index.phtml/params/id/441248

The Finance Ministry has backed a State Duma proposal to not bring criminal charges against individuals accused of tax evasion for the first time.

The proposed government note on changes introduced by deputies to the Tax and Criminal codes, which would ease the punishment for individuals not paying taxes, was published Tuesday on the Finance Ministry’s web site.

A group of United Russia deputies, led by Duma Speaker Boris Gryzlov, proposed the changes July 1, which would end criminal proceedings against first-time offenders who pay the taxes, penalties and fines before a preliminary investigation is completed.

Additionally, the proposed changes would considerably increase the size of tax evasion that would bring criminal charges. For individuals, the criminal charges for major tax evasion would rise to 500,000 rubles unpaid (if the percentage of unpaid taxes is more than 10 percent of the overall sum) or up to 1.5 million rubles ($47,000). Massive tax evasion would be up to 2.5 million rubles (when 20 percent is unpaid) or 7.5 million rubles ($234,000).

For legal entities, the figures were also increased.

The deputies also proposed that police not punish individuals until a tax inspector has registered a violation.

65 Vietnamese in Forest

http://www.moscowtimes.ru/article/1010/42/381001.htm

Migration officials confirmed Wednesday that they had found 65 illegal Vietnamese migrants living in a Moscow region forest after they lost their jobs because of the closure of Moscow’s Cherkizovsky Market, Interfax reported.

Forty-eight migrants without any identification documents were found in the forest near Malakhovka, 30 kilometers southeast of Moscow, on July 30, and another 17 were found in the same forest on Aug. 6, Interfax said.

The migration officials denied news reports earlier this week that put the number of migrants in the forest at 200.

The migrants had worked at an illegal sewing factory that made goods for Cherkizovsky Market, which was closed by Moscow authorities in late June. (MT)

‘Ghost’ bus takes migrants to Russiahttp://www.timesherald.com/articles/2009/08/20/news/doc4a8ca66404188177924982.txt

Published: Thursday, August 20, 2009

By MANSUR MIROVALEVThe Associated PressNote: AP reporter Mansur Mirovalev and AP photographer Alexander Zemlianichenko followed dozens of migrants on an illegal bus for a six-day trip from Uzbekistan to Russia. Here is their story.

BUKHARA, Uzbekistan — On paper, the bus does not exist.

It has no schedule, and no route. It shows up mysteriously, and just as mysteriously, the dozens of men who await it know when it is coming.

Every year, the ghost bus — and its many cousins throughout Uzbekistan — transports hundreds of migrants to Russia, crossing two state borders and 3,500 kilometers (2,200 miles) of steppe, desert and farmland. The men it carries do not exist on the books either, but Russia needs their labor, and they need the money.

Russia’s enormous oil wealth and its plummeting population have turned it into the world’s biggest immigration destination after the U.S., attracting 10 to 15 million labor migrants a year from former Soviet states. Uzbeks make up between 2 million and 4 million of them. They build houses, till the soil and work in Siberian oil towns and even on the Pacific Coast, eight time zones and more than 6,000 miles from home.

Scrawny and swarthy, seasoned by the Uzbek sun and Russian frosts, with a wilted face and the bloodshot eyes of a man who has not seen a doctor in years, Saidullo Sadykov is a veteran labor migrant in Russia. The 54-year-old Uzbek takes the ghost bus every year to what he calls his battlefield.

The bus emerged in the late 1990s, back when it was legal. But in January 2006, a rattletrap bus broke down in the western Usturt plateau, and all 30 passengers froze to death, their bodies turned into ice cocoons. Russia-bound buses were prohibited.

These days, only corruption keeps the buses alive and greases their wheels. Each year, hundreds of Uzbeks without registration and work permits get deported and barred from entering Russia for five years. They can’t get through computerized passport controls at airports or railway stations, so they get on the bus.

To book a $150 ride, Sadykov goes to see the bus owner.

Azim Azizov, 37, has the look and bling of a movie mobster. He sports four golden teeth, two golden chains on his neck, two golden rings on each hand and the complexion of a retired boxer.

He has two houses under construction in suburban Bukhara and Moscow, two wives and five children. Both marriages are legal in each country. He has two passports, and his fathers-in-law shuttle with him twice a month, helping him earn about $5,000 for each trip.

In Uzbekistan, where an average salary is about $50 a month, it is a fortune.

Despite the money the passengers bring, Azizov treats them with a disdain and arrogance they find natural. Clad in a velvet bathing robe and puffing on an expensive cigarette, Azizov scribbles down their names and their passport and telephone numbers. Some bring thick wads of soums, Uzbek currency. Those unable to pay upfront leave their passports. They will work off their debt with Azizov or his “friends.”

Azizov is part of an informal chain of recruiters who lure Uzbeks abroad with promises of jobs. Some of these recruiters use elaborate schemes to ensure the virtual enslavement of their clients, says Shukrat Ganiev, a Bukhara-based human rights advocate and analyst.

“It’s a profitable business perfected to the last bit and piece,” he says.

A recruiter brings up to 200 people to Russia. Their passports are taken away for registration, the promised jobs never materialize, and the migrants panic, agreeing to work for less, he says.

The economic crisis has multiplied cases of forced labor, enslavement and delayed or refused payment, rights groups say. Some companies hire migrants, only to kick them out without payment after a month or two.

In Russia, most Uzbeks live in squalor and save every kopeck to send to their families. In 2008, they wired home $1.3 billion — almost 10 percent of Uzbekistan’s GDP, according to the World Bank. Remittances from abroad account for 38 percent and 19 percent of the economies in neighboring Tajikistan and Kyrgyzstan, two other major exporters of labor to Russia.

Sometimes, missing migrants return home in sealed coffins. In 2008, the Bukhara airport received 14 of them, Ganiev says. Uzbek officials refused to comment.

Until recently, walls of the Uzbek embassy in Moscow were covered with handwritten notes about missing relatives. Some began with “Dear Uzbek Muslims, help us find...”

On Sadykov’s last day at home, his family prays for his safe return at a 14th-century mausoleum of a Muslim saint.

“It’s like a small hajj,” he says.

When he leaves Bukhara the next morning, his head is covered with the snowy white cap pilgrims wear after making the hajj, the Muslim pilgrimage to Mecca.

“I’m going to the front line,” Sadykov says.

The Nightingale arrives at a chaotic bus station at noon. This 33-year-old ghost bus is painted lime yellow, with the Russian word for nightingale and the bird’s cartoonish silhouette on its windshield.

Its drivers look like a comic duo — a corpulent, mustachioed six-footer nicknamed Tyson and his scraggy, almost rodent-like sidekick Alisher. Above their seat dangles a souvenir dagger, Muslim worry beads and a laminated Playmate postcard.

Seventy-three men aged 17 to 60 clamber aboard in the scorching sun. There is one woman, Khafiza Ibragimova, whose braid of henna-dyed hair hangs down her long purple dress. She is travelling with Ulmas Tashev, her gaunt brother, to work at an Uzbek restaurant near Moscow.

Azizov’s fathers-in-law are on board. The Uzbek one is a taciturn man in his sixties who dozes most of the time and occasionally drives. The Russian one is The Nightingale’s figurehead owner, Alexander Kopeikin, who gulps vodka shots and chain-smokes.

Its windows sealed and its air conditioner broken, the Nightingale ventilates on the go through ceiling hatches and open doors. It also carries a Russian license plate to avoid the attention of Russian police.

This time, it attracts the attention of Uzbek police instead. They forbid Azizov to use the Russian-registered bus on Uzbek territory.

So Azizov finds a decrepit Uzbek-registered bus to take the passengers to the border with Kazakhstan, about 700 kilometers (440 miles) westward. He brings along Tozagul, a plump and energetic matron who negotiates with police.

The bus breaks down twice, then is forced to stop overnight at a police station in the Kyzyk-Kum desert. The passengers sleep aboard, in the sand and on the warm asphalt. Many wake up with bug bites.

The next day, the lumbering bus is pulled over five times, once by an armed anti-terrorism squad. After each halt Tozagul jumps out to negotiate a bribe, and comes back cursing “greedy redneck coppers.”

By the second sundown, the bus stops at an inn. Tornadoes of bugs swirl around the bare light bulbs, and the desert outside reeks of burning garbage. Arif Ortykov, 52, airs his grievances over a cup of tea.

“If only I could make $150 a month, I wouldn’t go there,” the potbellied welder says.

It takes him two more cups to get to the fact that Uzbeks depend on jobs in Russia because of their large families and unemployment at home.

“If they close borders, we’re all be at war with each other,” he says. “There’s too many hungry and too few well-fed.”

Uzbeks have fled their country, a Muslim nation of 27 million, because there are no jobs. In the countryside, farmers are forced to sell cotton to the government at a fixed low price. In the cities, growth is stifled by corruption and state control.

But now, the economic crisis in Russia is likely to send millions of jobless migrants back, which could destabilize Uzbekistan. At least a quarter of migrants have left Russia, experts say, and many of those who stayed have joined the army of illegal workers and day-laborers.

The bus moves all night, passing fields encrusted with salt. It enters the lifeless Usturt plateau, where the passengers froze to death in 2006. It drives by a road sign showing directions to Jaslyk, Uzbekistan’s most notorious gulag, located in impassable sand dunes.

By the third night, the bus reaches a Kazakhstan border checkpoint. The passengers of three other migrant buses are already there. The steppe around is dotted with bushes and human excrement, and two mangy camels bellow in the distance.

Over tea and chewing tobacco, Sadykov instructs the youngest passenger, 17-year old Kamol Shamsutdinov, on how to dodge policemen in Moscow.

“Don’t swerve when you see one, but don’t look him in the eyes,” Sadykov says, sounding like an experienced trapper describing a dangerous predator. Men around them nod their heads. “They can smell your fear,” he says.

Even the Russian police admit to routinely preying on labor migrants.

When looking to detain a labor migrant, police officers “make up anything, because they want to live and eat,” says Mikhail Pashkin, head of the Moscow police trade union. “The state created a system where a policeman cannot survive on his salary.”

Rights defenders are less understanding. “Policemen fleece (migrants) like sheep and beat up those who resist extortion so often that they see these incidents as something usual,” says Russian rights defender Svetlana Gannushkina.

Police officers top the list of people Uzbek migrants fear the most. They also fear skinheads. In 2008, 99 people were killed in Russia in apparent racial attacks, 49 of them natives of Uzbekistan and neighboring Tajikistan and Kyrgyzstan, Sova, a Moscow hate crimes watchdog, reports.

To Sadykov, skinheads are easier to avoid than police. “Don’t take suburban trains at night and don’t go outdoors after football games,” he warns Shamsutdinov.

After a night on a dirty reed mat, Sadykov wakes to the sound of honking cars and trucks. “Hope we’ll get through by noon,” he says, putting on his pilgrim cap smeared with sweat and dust.

The border crossing takes nine sweltering hours. Kazakh border guards tell the Uzbeks to line up, and rummage through their bags, throwing their belongings on the dusty asphalt. Then the passengers leave — all but Khafiza Ibragimova.

She has a prior deportation from Russia. She whispers goodbye to her brother and walks away, her head hanging despondently.

The passengers rush to The Nightingale, which is waiting. There are 73 men for 62 seats.

Azizov nonchalantly tells the passengers who did not pay upfront to sit and sleep in shifts.

He occupies his seat of power — an oblong wooden box behind the driver’s seat. Covered with blankets and pillows, it serves as his bed and vault for plastic bags of Uzbek money.

The fathers-in-law, the drivers and respected veterans such as Sadykov occupy the first five rows. The youngest passengers sit and sleep in the aisle, on the dust, next to butt-ends and spits of tobacco.

The bus passes through western Kazakhstan in less than two days, but it takes almost another two days to cross the Russian border at the village of Ilek. Since the bus is too crowded, Azizov tells 11 passengers to stay in the no man’s land.

The passengers again line up with their bags open. Red-faced Russian guards ridicule their shabby clothes and old-fashioned shoes. “He’s gonna dance at a strip bar in these,” one of them says, pointing at a pair of worn-out platform shoes.

The guards tell Azizov to remove some of the Nightingale’s paneling. Azizov says later that the check was “harmless” compared with previous examinations. He says he paid the guards $1,000 for not delaying the bus and letting through several people with prior deportations.

At dawn, eight of the 11 stragglers knock on the bus door. They say three others were deported. Azizov says it is their own fault because they did not bribe him to get them through.

The bus moves past meadows with waist-tall grass and pine forests. Despite the Russian

license plate, police pull it over several times. “They stop you less, but charge more,” Azizov says.

Sadykov, his face covered with gray stubble, is getting fidgety.

“We have to hurry to build Moscow,” he tells Kopeikin.

“Moscow was built long ago,” Kopeikin growls angrily. “All you need is our money to run away with.”

Many Russians think the same way, partly because of a massive anti-migrant campaign by the state-controlled media. Experts say it is designed to divert anger over the financial crisis away from authorities to foreigners.

After the sixth night on the road, the bus approaches southern Moscow and stops near Azizov’s unfinished house. Several Uzbeks are installing plastic windows on the third floor.

Azizov collects the passports of 22 passengers who did not pay and herds them in. “They’ll work it off in here,” he says.

Other passengers pour out, smiling happily. They take their bags from the trunk and rush to a nearby bus station.

Sadykov takes off his gray and dusty pilgrim cap, exposing his bald head to a Russian drizzle.

“The battle is beginning,” he says.

In a week or two, the bus will take another load of Uzbeks home. They will bring along second-hand refrigerators, TV sets and gas stoves for their families.

In the meantime, in the giant yard of Azizov’s house, The Nightingale will wait.

National Economic Trends

Russia’s Ruble Gains Against Dollar as Oil Prices Advancehttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1SYJ0NdT4_I

By Alex Nicholson

Aug. 20 (Bloomberg) -- The ruble touched its highest in almost two weeks against the dollar as oil prices held above $72 a barrel.

The currency of the world’s biggest energy producer gained 1.2 percent to 31.6127 per dollar at 10:15 a.m. in Moscow, after falling 0.1 percent yesterday. The ruble was 0.3 percent stronger against the euro at 45.0116 per euro.

The movements against the dollar and the euro left the ruble up 0.8 percent at 37.6438 against the central bank’s target currency basket, which is used to manage swings that hurt Russian exporters.

Crude oil for September delivery was trading up 27 cents at $72.69 a barrel after U.S. crude stockpiles dropped a more-than- expected 8.4 million barrels last week, the most since the week ended May 23, 2008, an Energy Department report showed yesterday. The dollar traded near a one-week low against the euro on speculation economic data will add to signs the global recession is easing.

The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together. The ruble remains within the 26 to 41 band the central bank pledged Jan. 22 to defend.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

Last Updated: August 20, 2009 02:50 EDT

Russian Reserves Fall $2.8 Billion as Central Bank Intervenedhttp://www.bloomberg.com/apps/news?pid=20601095&sid=a6ZzR0sCJZDk

By Paul Abelsky and Alex Nicholson

Aug. 20 (Bloomberg) -- Russia’s international reserves fell $2.8 billion, the biggest drop in more than a month, as the central bank defended the ruble after it weakened to the lowest level in more than five months against the euro.

The value of the world’s third-largest stockpile slid to $400.6 billion in the week to Aug. 14 after rising by $1.4 billion to $403.4 billion in the previous week, the central bank said in an e-mailed statement today.

“There was a sell-off on Aug. 12 and it seems the central bank was intervening a lot,” Tatiana Orlova, an economist at ING Groep NV in Moscow, said by telephone today. “There was a general worsening of sentiment.”

Gross domestic product slumped 10.9 percent last quarter, which Orlova said “added to negative sentiment,” as the commodity-reliant economy reels from slumping gas and oil prices and banks continue to restrict lending. The deeper-than- estimated contraction triggered a sell-off in the currency, Nikolai Podguzov, a fixed-income analyst at Renaissance Capital in Moscow, wrote in a report last week.

The ruble lost 0.9 percent to 45.9481 per euro in Moscow on Aug. 12, its weakest close since Feb. 24. It slipped 0.7 percent to 32.4736 per dollar, its first six-day drop since January and the lowest close since July 13.

Ruble Declines

Bank Rossii, which lowered the refinancing rate five times since April 24 to spur lending, drained more than a third of foreign-exchange reserves from August to January. The ruble declined 35 percent against the dollar in that period, driven by a 63 percent slump in Urals crude and the global slowdown.

Reserves holdings have added $24.5 billion from a record- low $376.1 billion on March 13 as oil prices have recovered. The central bank has curtailed its purchases of foreign currency as it moves toward a free float of the ruble, which Bank Rossii manages against a basket of dollars and euros to limit fluctuations that hurt exporters.

The central bank sold $3.09 billion and 576.7 million euros ($820.4 million) in July, the first month since January when Bank Rossii showed net sales of foreign currency as the ruble weakened after the price of Urals crude oil, Russia’s chief export earner, dipped below $60 a barrel. The regulator’s net purchases amounted to $32.7 billion between February and June.

The financial crisis has accelerated the central bank’s goal of moving to a free-floating exchange rate and using interest rates to manage inflation, Bank Rossii Chairman Sergey Ignatiev said on June 24.

The central bank will still act to prevent the currency’s daily moves of more than 4 percent in either direction and defend its boundaries within the 26 to 41 band against the regulator’s target basket of dollars and euros, Goldman Sachs Group Inc. said in a report earlier this month.

Russia’s reserves are made up of 45 percent dollars, 44 percent euros, 10 percent pounds and 1 percent yen.

To contact the reporters on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net. Paul Abelsky in St. Petersburg at pabelsky@bloomberg.net.

Last Updated: August 20, 2009 04:04 EDT

Russia c.bank injects 44.6 bln roubles via reposhttp://www.iii.co.uk/news/?type=afxnews&articleid=7484919&subject=economic&action=articleMOSCOW, Aug 20 (Reuters) - The Russian central bank injected 44.62 billion roubles ($1.40 billion) of one-day funds into the banking system at a rate of 8.33 percent in its first repo auction of the day on Thursday.

The minimum interest rate was set at 7.75 percent. A maximum of 75 billion roubles had been on offer for two repo auctions scheduled for the day.Following are results of the latest auction, provided by the central bank on its Web site (www.cbr.ru): Date Aug 20 Aug 19 Aug 19Session 1st 2nd 1stAmount (bln rbls) 44.62 5.28 44.49Bids (bln rbls) 44.62 6.03 62.60Average rate 8.33 9.42 8.42NOTE - For details of central bank repo tenders click here . ($1=31.91 Rouble) Keywords: RUSSIA REPO/FIRST(Moscow Newsroom; +7495 775 1242; moscow.newsroom@reuters.com)

Russia’s Borrowing Plan May Face ‘Difficulties,’ Ministry Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUHxyjewjxkE

By Paul Abelsky

Aug. 19 (Bloomberg) -- Russia’s plan to sell $58.5 billion of bonds in the next three years, its first international debt sale since the 1998 default, may be hampered by private borrowers competing to raise funds, the government said.

“The large amounts of the budget deficit may lead to certain difficulties as a result of competition between the state and the private sector on capital markets,” the Finance Ministry said in a report published on its Web site late yesterday.

The country’s worst economic decline on record has depleted state coffers, sending the budget into deficit this year for the first time in a decade. Gross domestic product slumped 10.9 percent last quarter as the commodity-reliant economy reels from slumping gas and oil prices and banks continue to restrict lending.

The fiscal gap may reach 8.9 percent of GDP in 2009, narrowing to 7.5 percent next year, 4.3 percent in 2011 and 3 percent in 2012, the Finance Ministry said in the report.

A decade of oil-fueled economic expansion that averaged close to 7 percent a year ended in the first three months of 2009 after output slumped an annual 9.8 percent. Oil traded in New York peaked at $147.27 a barrel last July before falling to close to $30 at the beginning of the year.

Oil, which traded at $69.19 a barrel yesterday, is poised to fall as much as 15 percent in coming weeks as the global demand ebbs, according to Australian & New Zealand Banking Group Ltd.

Dried Up

Companies have resorted to selling bonds after other sources of financing dried up during the credit crisis, the ministry said. Russian corporations placed 21 issues of Eurobonds since the start of this year for a total of $10.4 billion, according to the report.

The government expects to raise $17.8 billion from foreign investors next year and a further $40.7 billion in the next two years, the ministry said, listing the amounts in the U.S. currency. It has previously announced plans to borrow a total of 2.2 trillion rubles ($68.9 billion) in the next three years.

The government will also borrow 844.1 billion rubles on the domestic market next year, followed by 957.5 billion rubles in 2011 and 755.4 billion rubles in 2012, the ministry said.

“The next few years will be a transition period as the government balances the need to undertake stimulus budget spending and restore macroeconomic stability,” the report said.

Spending this year will probably grow close to 32 percent to 9.98 trillion rubles, or 25.9 percent of GDP, even as revenue tumbles to 6.6 trillion rubles from 9.3 trillion rubles in 2008. The government expects to reduce expenditures to 23.2 percent of GDP next year, 20 percent in 2011 and 18.5 percent in 2012.

Oil Windfall

Russia is resorting to debt sales as its sovereign wealth funds, where the government stowed away windfall oil profits, may be depleted by 2014 or 2015, the ministry said.

The Reserve Fund will be plundered next year after the government uses it to finance the deficit, with no plans to replenish the fund in 2011 and 2012. The stockpile, which contained 2.8 trillion rubles as of Aug. 1, will have 1.6 trillion left by the start of next year, according to the report.

The National Wellbeing Fund will slide from 2.9 trillion rubles on Aug. 1 to 2.3 trillion rubles in 2011 and 1.6 trillion at the start of 2012, according to the Finance Ministry, which predicts the stockpile may be emptied by as early as 2014.

The government’s spending to service sovereign debt will jump to 602.9 billion rubles in 2012 from 333.2 billion rubles next year.

The country’s debt as percentage of GDP will more than double by 2012, growing from 6.5 percent in 2008 to 16.4 percent by 2012. Government debt will be at 10 percent this year, the ministry estimates.

To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@bloomberg.net.

Last Updated: August 19, 2009 04:15 EDT

Tax receipts plummet in 1H09http://www.businessneweurope.eu/dispatch_text9578

bneAugust 20, 2009

The government's tax receipts plummeted in the first half of this year to this year, down by almost 40% on the year.

Its tax time in Russia, which has been playing hell with the currency market as companies rush to raise tax to pay their bills. And they have paid a lot less than they did last year.

The federal tax service reported that over all federal tax revenue was down 38.9% to RUB1.7 trillion for the first half of this year.

In total the service collected RUB4.8 trillion for the consolidated and non-consolidated budget for the first half of this year, which is down 23.8% on the year. the consolidated budget includes the federal, regional, and local budgets.

Excluding the non-consolidated funds, the service collected a total of RUB3.9 trillion, which is down by 28.2%. The non-consolidated funds includes the Pension Fund, the Social Insurance Fund, and the Federal Mandatory Health Insurance Fund.

The most important tax is VAT, which makes up about a third of budget revenues and also fell by 19.8% on the year to RUB675.7bn.

At the same time the government's spending has increased by about a third year-on-year and the state expects to run a deficit for the first time this year on the order of 7.5%. However, analysts and investors are concerned that the deficit maybe higher. The funding gap will be financed from the reserve fund this year which still has some $90bn, but the government plans to borrow about $60bn on the international capital markets in the next three years to finance budget spending and reduce the deficit to about 3% by 2012, Deputy Prime Minister Alexander Zhukov said on Wednesday.

In 2008 the tax service collected a total of RUB4.1 trillion which was an 8.8% increase on 2007 and Russia's VAT collection decreased 28.2% on the year to RUB998.bn, the tax service said earlier.

Russia harvested 56.5 mln tonnes of grainshttp://www.agrimarket.info/showart.php?id=81445

08/20/2009 09:46  

According to operative data from the regions, as of August 19, 2009, the Russian Federation harvested grains and leguminous plants throughout the area of 20.9 mln ha (44% of sowing areas), the production volumes totaled 56.5 mln tonnes of grains.

Putin's Limited Options to Restore Growthhttp://www.businessweek.com/globalbiz/content/aug2009/gb20090819_308978.htm

Russia's Putin fears pumping money into the economy will weaken the ruble, restrict bank lending, and crimp economic growth By Dmitri Travin

At the end of July, Vladimir Putin made an unusual move in his economic policy. He criticized Russian bankers harshly for providing loans to entrepreneurs at excessively expensive rates, and even indicated a specific interest rate that the Russian government considers normal for modern conditions.

The obliging bankers immediately responded to the criticism. Two of the country’s major financial institutions, Sberbank and Vneshtorgbank (VTB), announced that they were prepared to reduce their interest rates. At least, for borrowers they described as strategic.

In economic terms, this was an extremely debatable decision. Banks had been keeping interest rates high not only out of greed, but because the crisis makes it very difficult to distinguish between good and bad borrowers, i.e. those who are able to pay back their loans and those who will soon go bankrupt. So if the interest rate on loans is kept high, the inevitable losses from unpaid debts are to some extent covered.

In theory, these losses could be covered by selling mortgaged property on the market. But in practice this gives rise to serious problems. For example, property prices have fallen drastically during the crisis; at current prices it is impossible to sell anything, as potential buyers are waiting for houses and apartments to become even cheaper. So when property is transferred from a debtor to a bank, it is practically impossible to convert it into money.

SECOND PHASE OF THE CRISIS?

Experts are currently talking more and more about the imminent so-called second phase of the crisis, when bad debts on a massive scale will lead to the collapse of the banking system. And on top of this bankers are being asked to give favorable interest rates to industry and construction projects. Might the major banks who have decided to please Putin by being so obliging not actually collapse as a result?

No, unlike the small banks, they will not collapse. The Russian economy has one little trick up its sleeve. The government always helps its chosen few. It supports Sberbank, VTB, and Gazprombank. It finds money for Gazprom, Rosneft, the Volga Car Works, and a few other companies. So in responding to Putin’s call for them to reduce their

interest rates, the bankers are sure to know that the Central Bank is prepared to provide them with the necessary liquidity in the event of a second phase of the crisis.

Sberbank holds the savings of tens of millions of Russians. If it were to collapse, Vladimir Putin would have far greater problems with angry depositors than with the head of the bank, German Gref. So Sberbank will not collapse. If it gets into difficulties, it will be “fed” using Central Bank loans or budget funds. And until that moment comes, it will be asked to “feed” borrowers.

In general, the actions of leading bankers are not mysterious. Their motives are clear, although if one is not aware of the little tricks of the Russian economy, it may seem that they are acting against their own interests.

Putin’s pressure on banks is interesting for another reason. It shows what the Russian leader most fears today. However, in order to understand the logic of Putin’s actions, one must take a look at the general state of affairs in the Russian economy.

THE END OF THE ERA OF PROSPERITY

The economic crisis in Russia has proved much more serious than was expected in the autumn of 2008, when the first signs of a serious downturn became apparent. At that time officials only talked about a slowing down of growth rates. Later they began to predict a small slip. But in the end, the situation has proved to be truly catastrophic. According to a recent assessment by the Ministry of Economic Development, GDP dropped by 10.1 percent in the first half of 2009 compared with the first half of 2008.

Russia has not seen a slump like this since the early 1990s, when radical economic reforms were under way. However, that was a so-called transformation slump.

It was unavoidable, as the country was having to abandon a whole range of goods which were manufactured before under the state plan, and which proved to be completely unnecessary in a market environment.

Russia has no need of such extensive reforms today. On the contrary, the oil and gas markets have brought in so much money in recent years that this could be used to strengthen the Russian economy significantly. But alas, the scale of the slump shows that the economy is still weak. The period of the so-called Putin prosperity has been replaced by one of even deeper crisis.

Can the Russian government headed by Vladimir Putin carry out an effective anti-crisis policy? Economists are discussing this all the time, but perhaps it is only now that the logic of the government’s actions has become clear. It is clear what Putin is afraid of, and what he is prepared to do to save the country’s economy.

THE RUBLE DOESN’T OBEY THE GOVERNMENT

Many Russian experts and political figures advise Putin to pump money into the economy more energetically. For example, to reduce the Central Bank’s discount rate and thus expand the credit facilities of commercial banks. The logic of these proposals is quite clear. The Central Bank, by giving out money left right and center, will compensate for the lack of funds in the economy caused by the drastic reduction in the petrodollar revenue. By creating money, the Russian authorities will create a real demand for goods. Supply will inevitably react to this demand. Enterprises will begin to expand the production that was closed down after the crisis began. And as a result, the Russian economy will begin to emerge from the crisis.

Supporters of this approach point to foreign experience. They say that in the United States and in European countries, the state spends large sums supporting the economy. Accordingly, Russia should also take this path.

But Putin does not want to do so. Although the Central Bank is gradually lowering the bank rate, the government is avoiding a sharp increase in money supply. Many are surprised by this. Putin is known as a populist politician. During the period of prosperity he regularly increased the incomes of the public sector and pensioners. In the 2000s real incomes have grown faster than GDP, and GDP itself increased significantly (6-8 percent per year on average). Why is the Russian prime minister now refusing to pursue a policy of pumping cheap money into the economy?

NO FAITH IN THE RUBLE

The problem is that in Russia, even after a decade of economic growth, there is no faith in the national currency, the ruble. In the autumn of 2008, faced with the growing crisis, banks and individuals began actively offloading rubles and investing in dollars and euros, which meant that the Central Bank was forced to resort to a slow devaluation of the national currency. And this devaluation in its turn provoked a further flight from the ruble.

By the spring there had been some growth in international oil prices, which stabilized the Russian currency. But in Russia everyone understands full well that at any moment organizations and individuals may once more be forced by unpropitious circumstances to start offloading their rubles.

What might trigger a new round of panic buying of dollars and euros? It might happen if oil prices fall. For this will mean another reduction in the flow of foreign currency into Russia. Everyone realizes that if Russia did not have oil and gas, the American dollar would be as rare in Russia as the Australian kangaroo.

Alternatively, it might happen if the Central Bank starts pumping money into the economy. Russians are used to cataclysms and will immediately fear devaluation. To put it simply, everyone will start buying currency simply because they will expect others to

do the same. They will understand that when everyone invests in foreign currency, the ruble falls, and so they should also hurry to buy dollars and euros to avoid being caught out.

Thus, in Russia today, the policy of actively pumping money into the economy is more likely to have different consequences than in countries with a strong national currency. Instead of stimulating the work of the economy, this money will descend on the currency market and undermine the ruble’s position. And if the ruble falls, banks will stop lending money to industry, construction, and retail, as it will be much easier for them to make money from currency speculation.

Putin is very afraid of this. He is far more afraid of a disobedient ruble than a disobedient opposition. For the political opposition in Russia does not yet have the support of the people, while Russians like their savings very much, and will not keep them in rubles, even if the Russian national leader Vladimir Putin would like them to.

THE CORRUPTION EFFECT

A similar scenario applies to the possibility of using budget funds to prop up the economy. Recent months have shown that the government actively spends money on pursuing social policy, ignoring major state investments, which some experts and politicians think could create a demand for goods and stimulate the economy.

The fact is that every ruble spent on paying public sector salaries, or pensions to the elderly, probably does create a demand: for groceries, clothes, and medicine. But a ruble spent on state investments will probably not reach its goal and will go to the currency market, where it will be spent on buying dollars or euros. This can be explained by the high level of Russian corruption. The government is incapable of controlling how the money it allocates is spent. Even if after some time it really is spent on building roads or supporting industrial enterprises, in the short-term perspective banks will probably play with money on the currency market. And this will become a serious threat to the stability of the ruble.

So all in all, Vladimir Putin is just not in a position to pursue an anti-crisis policy. He can only hope that as the world economy emerges from the crisis demand for oil will rise, restoring the flow of petrodollars into Russia and strengthening the ruble. If this happens, the Russian economy will gradually recover.

But so far all Putin can do is order bankers to give loans to the economy, and not play the currency market. Who knows, Sberbank and VTB loans might just be able to give a bit of a boost to production.

Provided by Transitions Online—Intelligent Eastern Europe

Business, Energy or Environmental regulations or discussions

Russia May Impose Progressive Duty on Nickel Exportshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=ago9kRRjqKQc

By Maria Kolesnikova

Aug. 20 (Bloomberg) -- Russia may impose a progressive duty on exports of nickel once prices in London exceed $12,000 a ton under a recommendation made by a government commission for protective measures in foreign trade. The recommendation was posted on the government’s Web site late yesterday.

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net

Last Updated: August 20, 2009 01:17 EDT

UPDATE 1-Russian govt recommends progressive nickel dutyhttp://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLJ14508320090819

Wed Aug 19, 2009 1:05pm EDT

(Adds background)

MOSCOW, Aug 19 (Reuters) - A Russian government commission has recommended the introduction of progressive export duties for nickel and the maintenance of current high import duties for cars, the government said on Wednesday.

"The commission has agreed a proposal to apply progressive export duties for nickel. The introduction of export duties is envisaged in case the price for nickel on the London Metal Exchange (LME) exceeds $12,000 per tonne," the commission said in a statement.

Russian Prime Minister Vladimir Putin signed an order in January to abolish export tariffs of 5 percent on nickel to support leading Russian miner Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz) in the midst of an economic crisis.

The three-month nickel contract on the London Metal Exchange MNI3 earlier this month rose to above $20,000 per tonne, the level it held in August last year before falling to about $9,000 per tonne.

Norilsk, the world's largest nickel and palladium producer, said last month output of all its metals declined in the first half of this year from the same period a year ago. (Writing by Gleb Bryanski; editing by James Jukwey)

MOESK Fined $1.4M After Dacha Complainthttp://www.themoscowtimes.com/article/1009/42/380997.htm

20 August 2009By Dmitry Kazmin / Vedomosti

A refusal to connect a Moscow region dacha to the local power grid could cost MOESK 45.4 million rubles ($1.4 million), the largest fine the Federal Anti-Monopoly Service has ever levied based on an individual’s complaint.

The anti-monopoly service said Tuesday on its web site that its Moscow region branch had decided Aug. 5 to fine the grid operator based on a complaint from a resident in the Naro-Fominsky district, about 30 kilometers southwest of Moscow.

The individual, whose name was not disclosed, several times tried to have his house connected but was rejected under various pretenses, said Alexei Azarenko, deputy head of the service’s local branch. “There were technical limitations, then not enough power,” he said.

MOESK was able to connect the house, however, which was confirmed by the local branch of the Federal Inspection Service for the Environment and Technology, which served as the basis for accusing MOESK of “abusing its dominant position,” he said.

The company said it considered the fine illegal and will challenge the decision in court, a spokesperson said, adding that by the time the anti-monopoly case had been opened MOESK had already signed a connection agreement with the dacha owner.

Azarenko disagreed, saying it was signed after the case was opened, which is why the fine was issued. He said it was the smallest possible amount — 1 percent of the company’s 2008 revenue from the Moscow region market. The fine could be up to 15 percent.

Alexander Seleznyov, analyst at UralSib, said the fine would not hurt MOESK. In the first half of the year, the company’s total revenue was 41.45 billion rubles, with a profit of 4.38 billion rubles, to Russian accounting standards.

Banks: Ruble retail deposits rose to $7.6bn in 6M09, foreign-currency deposits $7.4bn

http://www.businessneweurope.eu/dispatch_text9578

Alfa, RussiaThursday, August 20, 2009

According to CBR statistics, Russian individuals have increased deposits by 9.9% YTD. Half of this amount, or $7.6bn came from the inflow to ruble denominated deposits, while a further $7.4bn went to foreign-currency deposits.

This breakdown of retail deposits growth suggests that the population's trust in the ruble is still weak, even though the ruble stopped depreciating in 1Q09. As of July, the share of foreign-currency deposits was 29.4% of total retail deposits, well above the 13% historical minimum reached last summer. The positive news from 2Q09 was, however, that the size of foreign-currency deposits stabilized at around $61bn, and that retail deposit growth in 2Q09 was due to the inflow of ruble-denominated deposits. If the ruble becomes volatile in 2H09 we might see some additional outflow to foreign currencies. In the meantime, as the growth in deposits now seems to be directly supported by the indexation of public sector salaries and pension payments, we believe that these deposits will be less sensitive to FOREX panic.

Natalia Orlova

VEB Seeks $500M Abroad

http://www.themoscowtimes.com/article/1009/42/381002.htm

State lender VEB is in talks with international lenders to raise about $500 million, three people familiar with the situation said.

The bank may pay interest of between 350 basis points and 400 basis points above the London interbank offered rate for three-year loans, said the people, who declined to be identified as the talks are private. (Bloomberg)

Rusnano Will Sharply Boost Spendinghttp://www.themoscowtimes.com/article/1009/42/380994.htm

20 August 2009The Moscow Times

Rusnano will approve 40 billion rubles ($1.25 billion) worth of investment this year, one-third more than it planned in May, a spokeswoman said Wednesday.

Prime Minister Vladimir Putin said earlier Wednesday that Rusnano would approve investment into 50 projects this year that will require 80 billion rubles of funding.

Rusnano spokeswoman Irina Shabanova said the state corporation would chip in 40 billion rubles of that money. Anatoly Chubais, the corporation’s chief, said in May that the plan was to invest 28 billion rubles this year.

Neither Putin nor Rusnano offered any explanation for the steep increase, but the new plans came after Deputy Prime Minister Sergei Ivanov accused the state corporation of being too slow in developing the industry in May.

Putin made the announcement at a meeting dedicated to the nanoindustry, or innovations that work on a scale of nanometers, one-billionth of a meter. Russia wants to capture 3 percent of the global nanotechnology market by 2015.

Addressing a government commission on technology and innovation in May, Ivanov criticized Rusnano for little progress in fulfilling its goal of funding projects.

The increase means that Rusnano will disburse almost all of its money this year. The corporation is also bound to return 85 billion rubles from its budget of 130 billion rubles to the state later this year to help plug a gaping federal budget deficit.

On Wednesday, Putin praised Rusnano for progress in applying the technology to medical equipment, preserving the environment, improving energy efficiency and creating new materials. He did not elaborate.

Chubais also said Rusnano secured Putin’s permission Wednesday to issue bonds under state guarantees. Rusnano may offer bonds as soon as the end of this year, he said, without specifying a figure.

Amur soars on reserves estimate submissionhttp://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=2960622

Thu 20 Aug 2009

LONDON (SHARECAST) - East Russia-focused exploration and development company Armur Minerals pleased shareholders Thursday with details of a reserves estimate that it has submitted for regulatory approval.

The total contained metal value for its Maly Krumkon (MK) deposit is $1.8bn, the company said. This figure is based on the current spot market prices of $20,000 per tonne ($9.07 per pound) for nickel and $6,200 per tonne ($2.81 per pound) for copper.

The estimate has to be approved by he State Committee on Reserves (GKZ). Upon approval and final adjustments as recommended by the GKZ, Amur will then be in a position to submit a mining application for the three deposits located within the Kun-Manie nickel copper licence.

Based on the prices mentioned above, a total metal value of $6.9bn is contained within the three Kun Manie deposits.

‘The addition of Maly Krumkon to the previously certified reserves provides Amur with the largest possible reserve base currently available to us for inclusion in the application for mining. It will also contain the majority of the metal we have drilled to date,’ said Robin Young, Amur’s chief executive officer.

UPDATE 1-Amur upbeat on Maly Krumkon estimate, shares jumphttp://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSB41435520090820

Thu Aug 20, 2009 4:07am EDT

* Maly Krumkon estimate for contained metal worth $1.8 bln

* In ground reserve value of Maly Krumkon is $6.9 bln

* Amur shares soar 124 pct to 4-month high

(Adds details)

LONDON, Aug 20 (Reuters) - Amur Minerals (A7L.L: Quote, Profile, Research, Stock Buzz) said a new reserve estimate for its Maly Krumkon deposit, part of its flagship Kun-Manie nickel copper project in Russia, values the contained metal at $1.8 billion, lifting its shares 124 percent. The AIM-listed company said on Thursday it submitted the reserve estimate to the State Committee on Reserves for review and approval, a necessary step before it can submit a mining application for the three deposits within Kun-Manie.

It said the in-ground reserve value of Maly Krumkon is $6.9 billion.

The shares soared as much as 124 percent to 6.27 pence, a four month high, valuing the company at 9.5 million pound ($15.6 million).

(Reporting by Julie Crust; editing by Matt Scuffham)

TMK Borrows $450M

http://www.themoscowtimes.com/article/1009/42/381002.htm

TMK has taken out a $450 million loan from VTB Bank, the pipe maker said in a statement Wednesday.

TMK will use the loan to refinance $600 million in three-year notes issued in July 2008, it said. (MT)

St. Pete Investment Falling

http://www.themoscowtimes.com/article/1009/42/381002.htm

St. Petersburg lured 33.5 percent less foreign direct investment in the first half as the credit crisis deterred investors, the city said Wednesday.

Direct foreign investment fell to $358.7 million, the municipal government said in a statement. Overall foreign investment, including credits and flows into the securities markets, was $1.5 million, or 33.1 percent less over the year-ago period. (Bloomberg)

Kerimov Purchases Rebuilt Voyentorghttp://www.themoscowtimes.com/article/1009/42/380996.htm

20 August 2009By Anton Filatov / Vedomosti

Suleiman Kerimov’s Nafta Ko holding has become the main owner of the legendary Voyentorg department store in central Moscow.

A source in the real estate consulting market said nearly 100 percent of Torgovy Dom TsVUM, or Voyentorg, belongs to Nafta Ko. Alexander Ilyichyov, Nafta Ko’s financial director, confirmed the information, saying the deal was closed last fall.

In October 2008, the Federal Anti-Monopoly Service approved a request by Tandum Limited to purchase Fayard Limited, which owned 99.58 percent of Voyentorg. It was not previously known in whose interests Tandum Limited was acting.

Voyentorg previously belonged to Telman Ismailov’s AST Group, which was not immediately available for comment. A co-owner of AST Group, Alexander Ismailov, told Vedomosti in May that his company and Nafta Ko each owned half of Voyentorg.

Ilyichyov said the information was inaccurate.

The consulting firm source noted that all of the AST representatives had left the TsVUM board of directors. On April 4, four of the board’s five seats were taken by Nafta Ko officials: Ilyichyov, his deputy Mikhail Freidkin, head of the legal department Irina Pavlikova and deputy chief executive Alexander Ulyanov.

The chairman was Svyatoslav Golitsyn, who represented AST’s interests. But in second-quarter results published Monday, Golitsyn was listed as having left the chairman post, which was taken by Ilyichyov. The fifth board seat was taken by the deputy head of Nafta Ko’s legal department, Yelena Korovina.

Golitsyn retained his post as chief executive.

Ilyichyov declined to comment on the size of the deal, saying only that it was at the market price. The owner of another project in which Nafta Ko is interested in taking a stake said he thought that the department store went for about $300 million and that the two sides agreed that Kerimov’s company would only enter the project once its reconstruction was completed.

Before the crisis, the property was worth about $650 million, although now it’s probably worth about $300 million to $350 million, said Mikhail Gets, managing partner of Novoye Kachestvo.

The store has a prime location in central Moscow, so space in Voyentorg will always be in demand, Gets said, adding that once the crisis is over the property’s value will only appreciate.

The Voyentorg building on Ulitsa Vozdvizhenka was built from 1910 to 1913 and designed by architect Sergei Zalessky. Following its recent reconstruction, the building has five underground levels and eight stories above ground. Of its 70,000 square meters of space, 22,000 square meters are for offices.

The building also has 4,000 square meters of sales space and 30,000 square meters of parking — room for 540 cars. The reconstruction cost $140 million.

AUGUST 18, 2009, 2:14 P.M. ET

UPDATE: Russian Investor's Ally Dormann In As Sulzer Chairman http://online.wsj.com/article/BT-CO-20090818-709743.html

By Goran Mijuk Of DOW JONES NEWSWIRES

ZURICH (Dow Jones)--Russian billionaire Victor Vekselberg on Tuesday tightened his grip on Sulzer AG (SUN.EB) after his investment firm Renova succeeded in getting Juergen Dormann elected as the Swiss machinery maker's new chairman.

The appointment of Dormann at the firm's extraordinary meeting in Winterthur is seen by many as a crucial move in Renova's attempt to fully acquire Sulzer, in which it holds a stake of more than 30%.

But the chances of a quick merger with Swiss peer Oerlikon AG (OERL.VX), in which Renova holds about 40%, slimmed after Dormann told shareholders that he wouldn't support such a move.

Analysts had expected cash-rich Sulzer to soon merge with troubled Oerlikon.

A vast majority of shareholders, meanwhile, backed Dormann's appointment to the company's board. Shareholders also elected Klaus Sturany to join the firm's board, replacing Thor Hakstad and Louis Hughes.

Vekselberg earlier this year was able to oust long-term Chairman Ulf Berg, saying he had lost trust in the manager, who previously led Sulzer as chief executive. Shortly after Berg's dismissal, Vekselberg persuaded Dormann to join Sulzer.

Dormann, 69, is one of Europe's most experienced managers. From 2002 to 2006, the trained economist helped turn around Swiss engineering company ABB Ltd (ABB).

Dormann was also key in one of Europe's first cross-border pharmaceutical deals. His merger of Germany's Hoechst and France's Rhone-Poulenc to Aventis SA - which later merged with Sanofi to Sanofi-Aventis (SAN.FR) - turned into a well-documented success story.

At the meeting in Winterthur, Dormann said he expects Sulzer to continue to grow fast despite the current difficult market environment.

The company, which was profitable in 2008, has recently started to face increased economic pressure, prompting Sulzer to cut more than 10% of its staff base of about 12,000 employees.

Dormann said he wouldn't back a possible merger with Oerlikon, adding that a merger of the two Swiss companies wouldn't create added value.

Analysts, who still see the possibility of a merger at a later stage, had said they expected that two companies to merge soon because of their complementary product portfolio.

Company Web site: http://www.sulzer.com

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

Russia Construction Industry To Contract By 15.8% In 2009, To Reach US$67.5bnhttp://www.officialwire.com/main.php?action=posted_news&rid=16644&catid=408

New report provides detailed analysis of the Construction marketPublished on August 20, 2009

by Press Office

(Companiesandmarkets.com and OfficialWire)

LONDON, ENGLAND In the Q409 Russia Infrastructure Report we have revised down our forecasts for 2009 following worse than anticipated Q109 results. We are now forecasting Russia’s construction industry to contract by 15.77% y-o-y in real terms in

2009, to reach a nominal value of RUB2.24trn (US$67.5bn).

Data released by Russia’s statistics agency, Goskomstat, revealed that in the first quarter of 2009, Russia’s construction industry contracted by 10% y-o-y in nominal terms. This has led us to revise down our forecasts for the year. Still assuming that the second half of the year will be stronger than first half, we now believe that instead of achieving nominal growth over 2009 (and a -7.5% real contraction), there will be a nominal contraction of 4.12% y-o-y in Russia’s construction industry. With high levels of inflation expected in Russia for the year (consumer inflation expected to average at 11.7% for the year) this will push real growth in the industry down to -15.77%.

As previously mentioned, we are still optimistic for an improved second half of 2009, and recent developments in the country’s infrastructure sector substantiate this. The biggest news from the sector over the last quarter is the awarding of the tender for the Pulkovo Airport in St. Petersburg. The US$1.3bn contract to upgrade the airport was awarded to the Northern Capital Gateway (NCG) consortium, which consists of Fraports AG, VTB Europe PLC – which is the UK-based division of Russian bank VTB Group – and Horizon Air Investments, the airports arm of Greece’s Copelouzos Group. The contract can be seen as something of a bellwether for Russia’s infrastructure sector, and a good indication of private investors’ attitudes to the country’s business environment. The message seems to be a mixed one.

A number of major players dropped out of the bidding, but three secure bids made it through, and although it was somewhat delayed, the project was successfully tendered. The true test will come at the financing stage, as access to credit is still limited in Russia. However with early commitments of funding offered by the European Bank for Reconstruction and Development, the World Bank’s IFC and Russia’s VEB Bank, this may prove a less challenging obstacle than expected.

In the utilities sector, majority state-owned hydropower company RusHydro is driving investment in renewables (including hydropower) and has partnered up with Japanese companies Mitsui and J-Power for the construction of a wind farm on Russky Island and a hydropower plant in Russia’s Far East.

Despite ongoing activity, it is still clear that overall activity in the infrastructure sector is reduced compared with last year, with investment budgets being cut over the short term, state-funding unpredictable and private investment scarce.

Russia Infrastructure Report Q4 2009: http://www.companiesandmarkets.com/r.ashx?id=FHDPWTLC1155593

Activity in the Oil and Gas sector (including regulatory)

PetroVietnam to Build $1 Billion Gas Pipeline, Thoi Bao Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9oqidi9jysI

By Nguyen Dieu Tu Uyen

Aug. 20 (Bloomberg) -- Vietnam Oil & Gas Group, the state oil producer, will spend about $1 billion to build a natural gas pipeline in the country’s south, Thoi Bao Kinh Te Vietnam newspaper reported, without saying where it got the information.

Vietsovpetro, a joint venture with Russia’s OAO Zarubezhneft, will start construction of the 398-kilometer (247- mile) pipeline this year, Thoi Bao said.

The pipeline will supply between 16 and 18 million cubic meters of gas a day from a field off the southwest coast to power plants in the southern province of Can Tho, the Vietnamese-language paper said. The report didn’t say how the project will be financed

PetroVietnam, as the company is known, may sell at least $1 billion of bonds next year to fund new projects, Nguyen Ngoc Su , deputy chief executive officer, said in an interview in June.

To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net.

Last Updated: August 19, 2009 22:45 EDT

Gazprom, Rosneft to gain from tax shifthttp://www.gulfnews.com/business/Oil_and_Gas/10341815.html

Bloomberg Published: August 19, 2009, 23:24Moscow: Gaz-prom and Rosneft, Russia's largest energy producers, will attract investors as the government shifts the tax burden to the steel and potash industries to plug a budget shortfall, Troika Dialog said."The oil and gas sector in Russia is extremely highly taxed relative to the rest of the economy, and we believe that forthcoming tax changes are likely to benefit oil and gas companies at the expense of other exporters," Kingsmill Bond and Andrey Kuznetsov, analysts at Troika, said yesterday.The government will probably overhaul the tax system in the next few years by raising domestic energy prices, lowering the burden on so-called greenfield investments in oil and natural- gas projects and levying higher taxes on other exporters, the analysts said. The economy of Russia, the world's biggest energy exporter, slumped 10.9 per cent last quarter as the global slowdown eroded demand for its oil and gas and banks restricted lending. Oil producers face the highest tax burden at 78 per cent of profit, while other industries pay as little as 17 per cent, Troika said.Russia's fiscal gap may reach 8.9 per cent of gross domestic product this year, the nation's first budget deficit in a decade, as the government ramps up spending, the Finance Ministry said. The shortfall will narrow to 7.5 per cent next year, 4.3 per cent in 2011 and 3 per cent in 2012, it said.

Gas companies such as Gazprom and Novatek pay 56 per cent of profit in taxes, Troika said, using an estimated period between 2006 and 2010. Levies on oil and gas producers accounted for more than two-thirds of corporate tax payments to federal and regional budgets last year.

Oil shipping gives growth for Northwest Russian portshttp://www.barentsobserver.com/oil-shipping-gives-growth-for-northwest-russian-ports.4620313-16175.html

2009-08-20 The sea ports in Northwest Russia in the first half of the year had a total growth in turnover of 2,1 percent. That is thanks to the bigger amounts of oil shipped in the region.

While ports like Arkhangelsk and Kaliningrad had a downturn in turnover of respectively 36,9 and 24,8 percent in the period, the ports of Murmansk, Kandalaksha, Ust-Luga and Primorsk had major growth, Regnum reports.

That is thanks to oil shipments. Lukoil’s new Varandey oil terminal in the Pechora Sea has since it started operations last fall boosted exports. That has lead to increased turnover also in Murmansk, the place where the oil is reloaded into bigger tankers.

As BarentsObserver reported, a new report from Akvaplan-Niva and the Norwegian Barents Secretariat estimated that a total of 15 million tons of oil will be shipped through the Barents Sea this year. That is an increase of three million tons from 2008.

Lukoil installs Yuri Korchagin SBMhttp://www.energycurrent.com/index.php?id=2&storyid=20108

8/19/2009 9:45:10 PM GMT

RUSSIA: Lukoil has completed assembly of the single point mooring (SBM) that is part of the site structures and facilities for Yuri Korchagin field in the Caspian Sea.

The SBM is intended for oil transshipment from the subsea pipeline to the floating storage unit and shuttle tankers. The maximum oil transshipment volume will reach 2.3 million tons annually.

The SBM jacket weighing 915 tons was towed offshore. It was installed at a depth of 67 feet (20.5 m) by means of a floating derrick and fixed to the seafloor with five piles, each with the diameter of over 6.6 feet (2 m). Then the topside weighing over 240 tons was assembled onto the SBM.

The SBM topsides were manufactured in the Netherlands by Dutch company Bluewater. The jacket was manufactured at the shipyard of Russia's Astrakhansky Korabel plant.

The Yuri Korchagin field is expected to be commissioned this December. The estimated 3P reserves of the field are 570 million BOE. The maximum annual production rate is 2.3 million tons for oil and gas condensate and 42.38 Bcf (1.2 Bcm) for gas.

Tatneft blamed for overpricing its oil while selling it to its shareholderhttp://www.businessneweurope.eu/dispatch_text9578

Alfa, RussiaThursday, August 20, 2009

According to an interview with Albert Shigabutdinov (CEO of TAIF Group) published in today's Vedomosti, from January to April 2009 Tatneft has been selling its oil to TAIF at a price three times higher than the market average.

This claim was denied by a Tatneft official. According to the CEO of TAIF, the company controls around 3% of Tatneft's shares.

According to an unidentified source close to TAIF, the reason behind the discrepancy in prices is the presence of a long-term agreement between the companies with an embedded formula of oil pricing. According to the same source, the contract terms have been revised and the price is now close to the market average.

We treat this news as NEUTRAL for the company's shares as it is not clear if this issue will eventually attract the attention of the State's tax administrations.

Even if it does, it will have hardly any effect on Tatneft.

Chirvani Abdoullaev

Rosneft - Putin may visit Rosneft's Vankor field in August http://www.businessneweurope.eu/dispatch_text9578

Citibank, RussiaAugust 20, 2009

(ROSN.RU - 2L: Hold/Low Risk, Target Price: USD6; Current Price: USD5.58)

Several Krasnoyarsk region newspapers reported recently that PM Vladimir Putin was expected to visit Rosneft's Vankor field in August. It is possible that his visit could mark the official launch of the field, although we believe Rosneft has already started commercial production at Vankor. The most recent CDU TEK data show that Rosneft's daily production rose to 2,414kbpd on 18 August, +4.5% and +5.7% vs. July and June average numbers. Assuming that production at the rest of Rosneft's fields has remained flat over the past three months, we estimate that Vankor's production is 130 kbpd and, at this rate, its FY09 output could reach 2.7mt.

However, with the official launch of the field Rosneft's management may provide some more guidance on the field's production and economic outlook. According to the company's earlier guidance, Vankor should produce up to 3 mt of oil in 2009 and about 15mt in 2010.

Alexander Korneev

Gazprom