Russia 101022

Basic Political Developments Russian army to be modernized to 70% by 2020. - As reported by Russian

Defense Minister Anatoly Serdyukov during a meeting with the Inspector General of the Defense Ministry, such parameters provide the state armaments program for the 2011-2020. According to A. Serdyukov, work on the program has been completed.

o Serdyukov: forming strategic commands in the Armed Forces completed - Formation of the Armed Forces of the Russian Federation Joint Strategic Commands (USC), which will replace the four military districts, completed ahead of schedule, reported Friday by Russian Defense Minister Anatoly Serdyukov.

US should not delay voting on START – Ryabkov: Russia hopes that the US Senate will put the new START treaty to vote later next month, says Deputy Russian Foreign Minister Sergei Ryabkov in comments for journalists in Brussels.

Medvedev to skip 2011 Munich forum - paper : While the Kremlin says Medvedev's tight schedule is the reason, the Kommersant daily cited analysts as saying the real explanation is that Georgian President Mikhail Saakashvili has also made the guest list.

Russia, U.S. agree on anti-drug cooperation (Part 2) - The agreement is the final document of the U.S.-Russian working group for drug-related problems, including drug trafficking, drug addiction treatment, and exchange of information on Afghanistan, director of Russia's Federal Drug Control Service, Viktor Ivanov, said.

o Russia expects US to destroy Afghan drug labs Russia’s president in Turkmenistan to discuss gas co-operation

o Russian, Turkmen presidents to discuss gas, transport Putin and Borissov Meet One-to-One over Gas Supply - Putin sends by plane the

spare parts for the repairs of sixth unit of Kozloduy NPP Andriy Kliuyev: Ukraine, Russia planning to sign about 11 bipartite documents

o Ukraine rules out possible gas transit issues - Ukraine rules out the possibility of any problems in gas transit to Europe in view of its talks with Russia on gas prices for Ukrainian consumers, the nation's Deputy Prime Minister Andrei Klyuyev told a press conference yesterday.

o Putin visit raises speculation about gas deal to merge Gazprom, Naftogaz - Volodymyr Omelchenko, a gas analyst at the Kyiv-based think tank Razumkov Center, said there is a 50 percent chance that Putin and Azarov will announce some kind of a deal.Putin to visit flooded villages in southern Russia

Putin receives Pskov governor Ivanovo region lawmakers approve Mikhail Men for second term as governor Putin Leads Meeting on Hockey, Heating - The traditional fall discussion about

the country's preparation for winter was preceded by an optimistic discourse about

hosting the Ice Hockey World Championship and welcoming a new Moscow mayor on board at Prime Minister Vladimir Putin's Cabinet meeting Thursday.

o Prime Minister Vladimir Putin chairs a meeting of the Russian government - “The government’s recent initiatives, which have resulted in amendments to legislation, clearly establish the duty of specialists in the power industry to form seasonal fuel reserves and perform scheduled maintenance on equipment. A special law, On Heat Supply, has been adopted. According to reports, preparations are going according to schedule this year.”

Russia, Ukraine, Slovakia sign nuclear fuel transit deal - Russia, Ukraine and Slovakia signed on Thursday in Bratislava an intergovernmental agreement on transit of nuclear materials via Ukraine, the Russian state nuclear corporation Rosatom reported.

Russian speakers gather in Tallinn - The participants will be discussing further partnership between Russia and Russian speakers living in the Baltic countries and will suggest measures to preserve education in Russian. The forum has brought together about 100 delegates and guests from Russia, Estonia, Latvia and Lithuania.

Kasyanov Says Russia’s State Asset Sale Lacks Transparency Russia and Argentina mark 125 years of diplomatic relations Russian, Kazakh pilots to hone live-firing skills prior to CSTO drills Russia to launch 8 Glonass navigation satellites in 2011-2013 Russian spy to face trial in Poland - According to media reports, the alleged spy

worked for Russia's Main Intelligence Directorate on the Polish territory for at least 10 years and used legitimate business as a cover.

Georgia Sentences Russian Citizen For Entering Breakaway Region - Kazbeg Dzugkoev, who is from Vladikavkaz in the Russian republic of North Ossetia, was detained in Georgia's breakaway region of South Ossetia earlier this month and sentenced on October 21.

Two gunmen of group blocked in Molybdenum mine detained - Two militants of the group blocked in the “Molybdenum” mine in Tyrnyauz town in Kabardino-Balkaria have been arrested, an informed source in the republic’s law enforcement agencies told Itar-Tass.

Russian plane lands safely after crack in cockpit windshield - A Russian An-24 passenger aircraft landed safely on Thursday at an airport in the Trans-Baikal city of Chita after the pilots discovered a crack in the plane's windshield, a local police source said.

New mayor to hold first meeting of Moscow govt on Oct 26 - New mayor Sergei Sobyanin is to hold the first meeting of the Moscow government on Tuesday, October 26, ITAR-TASS learnt at the city administration on Friday.

New Moscow mayor ‘tough but fair’ - Moscow’s new mayor is a tough Siberian team player who rose through the ranks with a no-nonsense attitude and developed his home Tyumen region with the support of Moscow.

o Moscow Gets a Hunter and a Technocrat - Natalya Chestyakova-Yaroslavova, a senior member of Sergei Sobyanin’s successful campaign team during the 2001 gubernatorial elections in the Tyumen region, says

her former boss is a political fighter who knows how to work with foreign investors, isn’t afraid to make tough decisions and took tight control of the local media as governor.

o Muscovites to submit transport ideas to new mayor on www - “It will be possible for the city dwellers to leave their suggestions on the Internet site www.mosgortrans.net - “Transport Server of Moscow” until November 1, 2010. All the received messages will be published,” the Moscow mayor’s office told Itar-Tass on Friday.

'Margarine Oligarch' Named Putin's Chief of Staff - Volodin, a staunch Putin ally nicknamed the "margarine oligarch" by the media for his interests in vegetable oil factories, was also appointed as a deputy prime minister by President Dmitry Medvedev, thus acquiring similar political weight to Sobyanin.

o Prime Minister Vladimir Putin meets with Vyacheslav Volodin, appointed deputy prime minister and chief of the Government Executive Office by a presidential decree today

Russia to pursue its innovation policy in long term - The Russian policy of innovation is a long-term one, says the president of the US-Russia Business Council Edward Verona. He was speaking during the ongoing conference in San Francisco, titled “From the ‘Silicon Valley’ to ‘Skolkovo’: Innovation Partnership”.

o Rosnano, Alcoa join hands in hi-tech - Speaking  by phone from San Francisco where he is taking part in the 18th annual meeting of the Russian-US Business Council, Rosnano CEO Anatoly Chubais said several very promising ventures were already in the pipeline. He did not elaborate though. 

o Schwarzenegger concerned about delay in ratifying START - The California Governor Arnold Schwarzenegger says he is concerned with a delay in ratifying the new Russian-US START treaty and is inclined to hold the US Congress responsible for that.

Russian Press at a Glance, Friday, October 22, 2010 o During his inauguration ceremony on Thursday, Moscow's new Mayor

Sergei Sobyanin outlined his plans for the Russian capital, promising to fight corruption and solve the capital's traffic problems. (Rossiiskaya Gazeta, Vedomosti, Vremya Novostei, Kommersant)

o Prime Minister Vladimir Putin appointed State Duma Deputy Speaker Vyacheslav Volodin as his new chief of staff, after Sergei Sobyanin, who previously held the post, was sworn in as the new Moscow mayor. (Vedomosti, Vremya Novostei, Kommersant)

o Former Moscow mayor Yury Luzhkov slammed the country's political system on Thursday, calling his former United Russia party a "servant" to the Kremlin and criticizing the president's "dictatorial" power to dismiss governors. (Vedomosti)

o Shareholders of Russia's top nickel producer Norilsk Nickel voted on Thursday against an attempt by Oleg Deripaska's RusAl, the world's largest aluminum producer, to oust the current board of directors. A total of 46.9 percent of shareholders participating in the emergency

shareholders meeting voted against the move,while 37.88 percent voted in favor. (Vremya Novostei, Vedomosti, Kommersant)

o The Russian Railways (RZhD) company abandoned plans to sell its stake in Transtelecom, citing unfavorable market conditions and poor financial performance of the operator of the largest fiber-optic communication network in Russia. (Vedomosti)

o Russian Presidential Aide Arkady Dvorkovich said Russia would not take part in the so-called "currency wars" and had no plans to restrict capital flows. (Rossiiskaya Gazeta)

o Russia was fined around 30,000 euros by the European Court of Human Rights on Thursday for banning homosexual parades in Moscow (Vremya Novostei, Vedomosti)

o Russia's Federal Security Service (FSB) proposed issuing warnings to Russian citizens of potentially illegal or harmful activities in order to prevent crime. A draft directive has been posted on FSB website for public discussion. (Rossiiskaya Gazeta)

o Russia's Economic Development Ministry promised to simplify in the near future customs regulations for products exported by domestic hi-tech companies. Russia currently has strong customs barriers for hi-tech products to protect its state and industrial secrets. (Vremya Novostei)

o A trade commission from the Customs Union between Russia, Belarus and Kazakhstan will protect cross-border trade competition between the three countries. It will compete with cartels and have the ability to prohibit the countries from regulating prices. (Vedemosti)

Russia hands over 10 lost silent movies to USA - Russia presented Library of Congress with digital copies of ten lost U.S. silent films on Thursday as gratitude for assistance in the creation of the all-digital library named after the first Russian president, Boris Yeltsin.

Russia's opposition rages at corruption but must grapple with forces of apathy - “The Russian authorities under V Putin and D Medvedev are leading the country on a path of authoritarianism and corruption, of lawlessness and the abuse of the rights and freedoms of citizens, monopolisation of power and social injustice,” read a resolution handed out at the rally.

Vedomosti/Russia Today: No jail time, just fines - The Kremlin has approved the idea of reducing punishment for non-violent crimes. In 68 articles of the Criminal Code, incarceration will no longer be mandatory

Khimki mayor ordered to appear in court - Khimki’s mayor Vladimir Strelchenko has been ordered to appear in court to support his lawsuit against newspaper editor Mikhail Beketov.

Strasbourg court finds Moscow authorities' ban on gay pride parades illegal Russian Influence Intensifies in Kyrgyzstan After Elections – by Erica Marat Factional Divisions within the Chechen Separatist Movement – by Mairbek

Vatchagaev A Russian State Secret May Push Palladium’s Price To $1,000 - On October 8,

Norilsk said that it expects the Russian stock pile to be finished this year and that it anticipates no deliveries in 2011. “If so, this will mark a considerable decline in

palladium supply and the market will be minus the 1 million ounces which has been the annual norm over the past two years. Thus a sizeable deficit looms if correct,” a UBS note says.

National Economic Trends Rouble has more chances to firm, not weaken—cbank Ruble Gains Against Dollar for Second Day, Up Versus Euro Overdue loans at Russian banks stabilize at 6.5% - Central Bank Domestic debt strategy - CBR optimistic about rouble perspectives

Rossiyskaya Gazeta/Russia Today: A ruble response - Russia will not resort to currency wars, promised Presidential Aide Arkady Dvorkovich, while speaking at the “The Russian Money Market – 2010: Regional Ambitions” conference yesterday. He also confirmed that the country does not plan to impose restrictions on capital flows.

VTB State Asset Sale Winning Over Bond Investors: Russia Credit

Business, Energy or Environmental regulations or discussions Russian markets -- Factors to Watch on Oct 22

o Transneft sale is off agenda in next 5 yrs o TNK-BP says receives $2 bln loan o Kazakh oil firm KMG may hold IPO in 2011 o Rushydro plans 5-yr rouble Eurobond--source o Russia picks VTB among Eurobond organisers o LUKOIL Eurobond road show seen next week o Rouble recovers in late trade o Kazakh tenge may return to managed float in 2011o Russia cbank signals greater rouble flexibility o New Moscow mayor promises to tackle corruption o Ukraine needs better investment climate-EBRD o Gays win landmark rights case against Russia o Kremlin aide: Russia will not join currency war o Ukraine to raise gas price issue in Russia talkso Petrovietnam can still consider BP assets-paper o Hungary mulls buying Surgut's stake in MOL o Russia's Surgut wants to sell its stake in MOL o Bulgaria, Russia to set up JV for South Stream o Azeri oil output up 1.9 pct in Jan-Sept y/y o Azerbaijan gas output up 14.4 pct in Jan-Sept o Norilsk Nickel shareholders vote to retain board

Polymetal, Gazprom, Lukoil, Polyus: Russian Stocks Preview RusHydro Selling 20 Billion Rubles of 5-Year Ruble Eurobonds Russian Agricultural to Start Selling 10 Billion Rubles of Bonds Sberbank might acquire Renaissance Capital by YE10 Russia's Mechel gets antitrust nod to fully acquire Toplofikatsiya-Ruse Severstal pays USD 4 million for Liberian iron ore stake

Russia's VTB says voted for re-election of Norilsk board RusAl Fails to Re-Elect Norilsk Nickel Board The government plans to hold a controlling stake in Sberbank for the next five

years, Deputy Finance Minister Alexei Savatyugin said Thursday, while the company’s shares closed up nearly 6 percent at 103.29 rubles, their highest level since January 2008. (Bloomberg)

Along with other emerging markets, the 30-stock MICEX Index rose 2.3 percent to 1,528.11 at the close, 2.82 points below this year’s high, with blue chip stocks like VTB Group gaining 6.1 percent and Rosneft adding 4.3 percent.  (Bloomberg)

Gazprombank said Thursday that it boosted profit about 34 percent in the first half to 32.7 billion rubles ($1.1 billion) from 24.4 billion a year earlier, with overdue loans shrinking to 3.3 percent of total lending. (Bloomberg)

The Central Bank sold $3.3 billion of foreign currency on the domestic market “in recent weeks,” Interfax reported Thursday, citing board member Sergei Shvetsov. (Bloomberg)

IG Seismic Services Ltd. is the official name of the joint venture between Russian oil field services provider Integra Group, which will own 75 percent of the company and provide day-to-day management, and WesternGeco, the seismic business segment of Schlumberger, which will own 25 percent, Integra said Thursday. (Interfax)

German independent electricity retailer Teldafax may be acquired by Russian electricity company Energo-Stream, the Handelsblatt newspaper reported Thursday. (Bloomberg)

Daewoo said Thursday that it received an order, together with its venture in Russia, worth about $800 million, from Sovkomflot to build 12 tankers for delivery by 2014. (Bloomberg)

Gazprom chief executive Alexei Miller and Royal Dutch Shell head Peter Voser met in Moscow on Thursday and discussed expanding cooperation on joint projects off Sakhalin Island, where they are partners in the country’s first plant to produce liquefied natural gas. (Bloomberg)

Russian raw-sugar imports may jump 77 percent this year, the Sugar Producers’ Union said Thursday, reaching 2.3 million metric tons. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory) Experts thrash out 3 oil industry development scenarios - Experts assessed the

current economic state and worked out three development scenarios in the context of the oil industry: negative (based on the assumption that oil prices will head down), baseline (based on a moderate price growth and transition to innovative technologies) and optimistic (based on the most favorable foreign economic conditions).

Hungary open to acquiring 21% stake in Mol Source: Surgut May Sell Stake in MOL Zero-tax benefits for Yamal developers

Gazprom On working meeting between Alexey Miller and Peter Voser

Gazprom Neft To Sell Off Oil Services Unit

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Full Text Articles

Basic Political Developments

GOOGLE TRANSLATIONhttp://www.rbc.ru/rbcfreenews/20101022111808.shtmlRussian army to be modernized to 70% by 2020.

RBC 22.10.2010, Moscow 11:18:08 Rate of modern weapons in the Russian army in 2015. should reach 30% by 2020. - 70%. As reported by Russian Defense Minister Anatoly Serdyukov during a meeting with the Inspector General of the Defense Ministry, such parameters provide the state armaments program for the 2011-2020. According to A. Serdyukov, work on the program has been completed. Recall that in May 2010. Russian President Dmitry Medvedev set the task by 2015. to equip the Russian army with modern weapons no less than 30%. The President stressed that the money should be invested in the modernization of the Armed Forces: actively contributing to supply new weapons, change the fleet of obsolete equipment, up to 2012. move to digital media communications.

GOOGLE TRANSLATION

Serdyukov: forming strategic commands in the Armed Forces completed

http://www.rian.ru/defense_safety/20101022/288193354.html

Subject: Reform of the Russian army: Proceedings of transformations 22/10/2010 12:10 MOSCOW, October 22 - RIA Novosti. Formation of the Armed Forces of the Russian Federation Joint Strategic Commands (USC), which will replace the four military districts, completed ahead of schedule, reported Friday by Russian Defense Minister Anatoly Serdyukov. In accordance with the decree of President Dmitry Medvedev on the military-administrative division of the Russian Federation, "USC should be formed by December 1, 2010. "We just finished before the formation of United Strategic Commands, the four military districts. The President has been set for 1 December. We just last week had already completed the job" - said Serdyukov at a working meeting with a group of inspectors general of the Russian military. Replacement of the military districts on joint strategic command was one of the major changes in the military-administrative division of Russia. First, the number of military

regions was reduced from six to four, and on this basis, four USC: West, East, Centre and South. " At USC, "West" included Moscow and Leningrad military districts, as well as the Baltic and Northern fleets with headquarters in St. Petersburg. USC "East", with its headquarters in Khabarovsk, a member of the Far Eastern Military District, the eastern part of the Siberian Military District and the Pacific Fleet. Volga-Ural and Western Siberian Military District, now make up the USC Center "with headquarters in Yekaterinburg. On the basis of the North Caucasian Military District, the Black Sea Fleet and the Caspian Flotilla Bulo created USC South, with headquarters in Rostov-on-Don. Commander of the USC will be subject to all the troops, as well as parts of other security agencies deployed in the administrative boundaries of the command. At a meeting with Secretary of Defense inspector general of the Defense Ministry also discussed the state program of armaments for 2011-2020. According to Serdyukov, in this regard has been done enormous work in the Department of Defense, the Military Industrialization Commission, the State Duma deputies. "Realized incredibly serious work - he said. - There were no such weapons programs long ago they were not there." The minister recalled that as a result of modernization of the Russian army in 2015, the share of modern weapons and military equipment will be 30%, and by 2020 - 70%. Serdyukov also announced its intention to guide the Ministry of Defense to establish a body of work with veterans and veterans' organizations. It is planned that will lead this body assistant secretary of defense, "which will be targeted to address this very important work," he said. "This is a definite need, we feel it and understand," - said the minister.

US should not delay voting on START – Ryabkovhttp://english.ruvr.ru/2010/10/22/27624112.html

Oct 22, 2010 11:59 Moscow TimeRussia hopes that the US Senate will put the new START treaty to vote later next month, says Deputy Russian Foreign Minister Sergei Ryabkov in comments for journalists in Brussels. The issue is too important to delay voting on it, the Russian diplomat said. Ryabkov said that the Russian Duma relevant committees voted on the Russian START-related ratification package backing July, so now it is for the United States and Russia to go through the remaining ratification procedures simultaneously. We hope that the issue will be settled in both countries before the end of this year, as well as the issue of a report on a joint assessment of missile challenges, the Deputy Russian Foreign Minister said.

Medvedev to skip 2011 Munich forum - paperhttp://en.rian.ru/russia/20101022/161048148.html

10:44 22/10/2010

Russian President Dmitry Medvedev has turned down an invitation to go to next year's Munich Security Conference (MSC).

While the Kremlin says Medvedev's tight schedule is the reason, the Kommersant daily cited analysts as saying the real explanation is that Georgian President Mikhail Saakashvili has also made the guest list.

Kremlin sources suggested Medvedev could attend the forum in 2012, the year of the Russian presidential election.

The most recent forum took place earlier this week near Moscow.

MOSCOW, October 22 (RIA Novosti)

October 22, 2010 10:42

Russia, U.S. agree on anti-drug cooperation (Part 2)http://www.interfax.com/newsinf.asp?id=197239

WASHINGTON. Oct 22 (Interfax) - Russia and the United States signed an agreement on Thursday to work together to counter illegal drug trafficking, an Interfax correspondent reported from Washington.

Cooperation in tackling drug trafficking is one of the important components of the U.S.-Russian "reset" agreed between Presidents Barack Obama and Dmitry Medvedev, director of the White House Office of National Drug Control Policy, Gil Kerlikowske, told reporters.

This is a global threat and we must fight it together, he added.

The agreement is the final document of the U.S.-Russian working group for drug-related problems, including drug trafficking, drug addiction treatment, and exchange of information on Afghanistan, director of Russia's Federal Drug Control Service, Viktor Ivanov, said.

One of the provisions of the signed agreement is cooperation on destroying covert Afghan laboratories and catching drug dealers.

"Our contacts are much closer than just meetings at official level," Ivanov said.

"The permanent 'hotline' between the co-chairmen allows to promptly work out a consolidated position on various aspects of the common problem," he said.

"The commission has set up three working groups," the Russian official said.

"One is countering drugs, the second is aimed at improving legislation and court procedures and the third is organizing exchange of experience in treating and rehabilitating drug addicts," he said.

"We worked to devise an anti-drug strategy which largely reflected the experience we learnt in the U.S. on how to organize the work, treatment and rehabilitation," Ivanov said.

He added: Russia provides the U.S. with the latest information regarding Afghan drug trafficking and production.

"Federal Drug Control Service representatives are currently working in Kabul," Ivanov said.

The main disagreement between Russia and the U.S. concerning the Afghan drug trade is over whether to destroy or preserve opium crop.

The U.S. is reluctant to destroy crops and claims that poppy cultivation is the only opportunity for Afghan farmers to earn a living and they should be allowed to grow fruits as an alternative to poppy.

Afghans must decide themselves, Kerlikowske said.

For us reducing crops and getting Afghans to start growing other crops is very important, he continued.

Opium crops have reduced, and we are focusing on the search for laboratories, he added.

kk ap

Russia expects US to destroy Afghan drug labshttp://english.ruvr.ru/2010/10/22/27589841.html

Oct 22, 2010 09:43 Moscow TimeRussia gave the United States the exact coordinates of another five drug laboratories in Afghanistan in July this year, and now expects the US force in the Asian country to wipe these out. This came in a statement for reporters in Washington by the Director of the Russian Drug Control Service Victor Ivanov. According to the official, Russia has informed the US about a total of 150 drug laboratories in Afghanistan. On Thursday Victor Ivanov and his US counterpart Gil Kerlikovsky chaired a third meeting of the bilateral working group to counter illegal drug trafficking. Russia and the United States have decided to step up interaction to cut short the Afghan drug dealers’ efforts. Ivanov and Kerlikovsky have signed a joint statement to that end.    

Russia’s president in Turkmenistan to discuss gas co-operationhttp://rt.com/Top_News/2010-10-22/russian-president-turkmenistan-gas.html/print

22 October, 2010, 08:38

Central Asian gas deliveries to Europe are at stake as Russia's President Dmitry Medvedev visits Turkmenistan at the invitation of the Turkmen president.

Dmitry Medvedev and his counterpart Gurbanguly Berdymukhammedov are to discuss the proposed pipeline that will connect Caspian gas to the South Stream project.

This would help bring the rich gas resources of the region to the European market.

The project was proposed in 2007, but has suffered delays over a number of technicalities.

Among other issues expected to be discussed are agriculture, transport, telecommunications, industrial co-operation and delivery of machinery manufacturing products.

This the fourth visit to Turkmenistan by the Russian president. The previous one was about a year ago.

Russian, Turkmen presidents to discuss gas, transport

http://www.itar-tass.com/eng/level2.html?NewsID=15613388&PageNum=0

22.10.2010, 04.33

TURMENBASHI, October 22 (Itar-Tass) -- Visiting Russian President Dmitry Medvedev will discuss gas and transport cooperation with his Turkmen counterpart Gurbanguly Berdymuhamedov on Friday in the city of Turkmenbasi on the Caspian Sea coast.

Russia is a major buyer of Turkmen gas and the Turkmengaz State Corporation said over 7.8 billion cubic meters were supplied to Russia in nine months of the year and deliveries will reach 12 billion by year-end.

A week before Medvedev’s visit Turkmenia completed the construction of a 200-kilometer long pipeline that connected gas fields in Central Karakum to the Ilyaly compressor station on the Central-Asia – Center gas pipeline going to Russia.

“The pipeline will increase the possibility of gas supplies to Russia,” Berdymukhamedov said and stressed “strategic character of mutually beneficial partnership in the energy sphere between the two countries.”

Turkmen government press service said on the eve of Medvedev’s visit the construction of the Caspian gas pipeline also offers major prospects.

The pipeline is to run from the Caspian Sea coast of Turkmenia to Russia via Kazakhstan.

The press service said ferry service expansion between the sea ports of Turkmenbashi and Olya in Russia is of major significance.

Turkmenbashi, former Krasnovodsk, is located on the coast of the Caspian Sea some 650 kilometers to the west of the capital Ashkhabad.

Bilateral trade turnover (excluding gas) exceeded one billion dollars in 2009 (577.3 million dollars in January-August).

Putin and Borissov Meet One-to-One over Gas Supplyhttp://paper.standartnews.com/en/article.php?d=2010-10-22&article=34499

Putin sends by plane the spare parts for the repairs of sixth unit of Kozloduy NPP

FRIDAY, 22 October 2010

The prime ministers of Bulgaria and Russia will discuss one-to-one the energy projects South Stream and Belene NPP, the Standart learnt. In a phone call Boyko Borissov and Vladimir Putin agreed on the meeting yesterday. They will meet after the start of the joint venture on the gas pipeline, Borissov reported and added that the main topic of the discussions would be the gas long-term price dynamics.   Bulgargaz’ contracts with the mediators are expiring till the end of 2012. The Bulgarian government will have to conclude new long-term contracts with Gazprom for gas supply from Russia, this time mediator-free.  It will be decided later if PM Boyko Borissov will host a meeting in Sofia or will visit his Russian counterpart in Moscow. The basic agreement is by November 15 2010 to be founded a Russian-Bulgarian association, which will work out the technical and economic specifications of the Bulgarian section of South Stream project, ITAR TASS informed. “We have already signed contracts and a road map for the gas pipeline and for the second power plant. Now the associations are supposed to start their work,?” PM Borissov commented.In their conversation on the phone the two premiers noted there is a positive development in implementing the agreements on Belene NPP. They also discussed the inviting of third

investor coming from a country experienced in nuclear energy production.The most important thing is that we agreed the spare parts for unit 6 of Kozloduy NPP to be carried by plane so the repair won’t be prolonged, PM Borissov added. Vladimir Putin promised the protective pipes for the reactor to arrive in Bulgaria as soon as possible.

Siyana Sevova

Andriy Kliuyev: Ukraine, Russia planning to sign about 11 bipartite documents http://bsanna-news.ukrinform.ua/newsitem.php?id=14467&lang=en

KYIV, October 22. /UKRINFORM/. Ukraine and Russia, by results of a meeting of Ukraine-Russia Intergovernmental Committee on economic cooperation that will be held on October 27 in Kyiv, are planning to sign about 11 bipartite documents, First Vice Prime Minister Andriy Kliuyev told a press conference in Kyiv.

According to him, a list of documents will be finally coordinated on October 25.

As the press service of the First Vice Prime Minister told UKRINFORM, Andriy Kliuyev will go on a working visit to Moscow on October 22. Answering a question about possibility of discussing the change of Russian gas price, Andriy Kliuyev said: “A meeting of the Intergovernmental Committee will take place. Naturally, it will touch on the gas price issues and change of the formula and an approach to the gas cost.”

Ukraine rules out possible gas transit issues

http://www.rbcnews.com/free/20101022102743.shtml

      RBC, 22.10.2010, Kiev 10:27:43.Ukraine rules out the possibility of any problems in gas transit to Europe in view of its talks with Russia on gas prices for Ukrainian consumers, the nation's Deputy Prime Minister Andrei Klyuyev told a press conference yesterday. He expressed confidence that Europeans will celebrate the New Year peacefully in their warm homes, as Ukraine undertakes, as a reliable partner, to ensure an uninterrupted supply of Russian gas to Europe.

      Ukraine has come up with a proposal to revise the Russian gas price formula by reducing the base price of $450 per 1,000 cubic meters and substituting some of the formula's other components.

Putin visit raises speculation about gas deal to merge Gazprom, Naftogazhttp://www.kyivpost.com/news/nation/detail/87146/

Today at 00:02 | John Marone

Experts said Russian Prime Minister Vladimir Putin isn’t coming to Ukraine for nothing.

Russian Prime Minister Vladimir Putin is coming to Kyiv, and once again he’s got gas on his mind.

Russia’s most powerful man will meet his Ukrainian counterpart, Mykola Azarov, during the seventh session of the Ukrainian-Russian intergovernmental committee on economic cooperation on Oct. 27.

And although the official visit has received hardly any hype, the last time the two men met, during the sixth session of the same committee in Sochi, Russia, last April, Putin shocked financial markets and foreign governments alike by proposing a merger of the countries’ state oil and natural gas companies.

This time, one of the subjects of talks will also be gas – in particular, changes to bilateral gas agreements, Russian Ambassador to Ukraine Mikhail Zurabov told journalists.

Shortly after Azarov’s boss, the Moscow-friendly Ukrainian President Viktor Yanukovych, came to power in February, Kyiv extended the Russian navy’s presence in Ukraine’s autonomous region of Crimea for another 25 years in exchange for a cheaper gas price, which nevertheless continues to climb.

Then Putin began proposing all kinds of far-reaching integration projects such as the unification of the two countries’ nuclear industries, aviation sectors and, most importantly, their state gas companies – Gazprom and Naftogaz Ukraine.

More recently, Azarov has publicly complained that Ukraine needs an even lower gas price from Gazprom, leading to speculation as to what Kyiv would offer Moscow in return next.

Ukraine depends on the Russian state-controlled gas giant Gazprom for the majority of the gas used by its export-oriented industry, some of which directly competes with Russian companies.

Since Putin came to power in Russia, first as president in 2000 and now as premier, the Kremlin has done little to conceal its use of gas and oil exports to control former satellite countries and influence individual governments of the European Union.

Despite fears that Gazprom, which accounted for 17 percent of world gas production in 2008, would swallow up its much smaller Ukrainian counterpart Naftogaz, officials in Kyiv have denied any intention of allowing this to happen.

Instead, most of the statements coming out of Kyiv since Putin’s April proposal have suggested the creation of an “international” consortium to manage and invest in Ukraine’s international pipeline, which delivers about 80 percent of Russian gas exports

to Europe.

When asked for more details about Putin’s Oct. 26 visit to Kyiv, Naftogaz spokesperson Olena Yurieva said she could neither confirm nor deny whether any agreements were to be signed.

A top official at Ukraine’s Energy Ministry, speaking on condition of anonymity, said no new gas deal would be announced.

However, more than one Kyiv-based gas analyst told the Kyiv Post that Putin was not coming to Ukraine for nothing.

Volodymyr Omelchenko, a gas analyst at the Kyiv-based think tank Razumkov Center, said there is a 50 percent chance that Putin and Azarov will announce some kind of a deal.

“The most realistic scenario is some kind of a joint venture to control Ukraine’s pipelines,” he said. Some kind of European entity would likely be involved to deflect criticism of a Russian takeover, he added.

But the current authorities in Kyiv are divided in their attitudes toward greater Russian involvement in Ukraine’s gas sector.

“If Azarov had his way, a merger deal would have already been signed,” Omelchenko said. But there are also the industrialists like [billionaire Rinat] Akhmetov and others who don’t want the Kremlin monopolizing pricing, and the gas-sector wing like [businessman Dmytro] Firtash and [Energy Ministry Yuriy] Boyko, who want to maintain control over sales and distribution,” Omelchenko said.

Mykhailo Gonchar, a Ukrainian gas analyst, said more likely is a protocol of some kind being signed: “It wouldn’t have any legal force but it would be one step further than the unilateral declaration made following the last session in April.”As evidence that something is brewing, Gonchar noted that Gazprom has been on the prowl for a public relations company in Kyiv to promote the impending deal.

“The Ukrainian public still feels negative about the idea of Gazprom controlling its gas pipelines, so the idea is to soften this position through PR,” he said.

Serhiy Pashinsky, an opposition lawmaker who sits on parliament’s fuel and energy committee, said he doesn’t expect anything on Oct. 27 except more hype: “I think what we’re going to see is another witch-doctor dance by Putin intended to dispel all the evil spirits from Ukrainian-Russian relations.”

Kyiv Post staff writer John Marone can be reached at marone@kyivpost.com.

Putin to visit flooded villages in southern Russia

http://www.itar-tass.com/eng/level2.html?NewsID=15613398

22.10.2010, 05.03

MOSCOW, October 22 (Itar-Tass) -- Prime Minister Vladimir Putin will visit flood-hit settlements in Krasnodar region in southern Russia on Friday and will then discuss grain production at a meeting in Rostov region.

In Krasnodar region “electric and water supplies have been restored to affected settlements, their territories are being cleaned up and essentials provided to the population,” the government press service said.

On Wednesday Putin signed a resolution to grant the region over half a billion rubles for the elimination of the aftermath. He said the federal budget will pay 100 thousand rubles to each affected resident for loss of property and another 50 thousand rubles will be paid from the regional budget. Besides, families who lost their members in the floods will get one million rubles.

In Rostov region Putin will discuss the use of state assistance to drought-hit areas and agriculture development guidelines for 2011.

Putin receives Pskov governor

http://www.itar-tass.com/eng/level2.html?NewsID=15614255&PageNum=0

22.10.2010, 12.05

MOSCOW, October 22 (Itar-Tass) - Prime Minister Vladimir Putin has had a meeting with Andrei Turchak, Governor of the Pskov Region. Putin called his attention to the need for increasing investments in the charter capital and for resolving the problem of unemployment in the region.

Industrial output grew by 16 per cent in the region, while the investments, the pace of housing construction, the yield of farm crops and the head of cattle are being reduced, Putin continued.

“The reduction of investments is a temporary phenomenon. We shall compensate for it in 2011,” Turchak promised.

According to his information, the situation in the region is stable, on the whole, and it is being improved in comparison with 2009. Specifically, metal-working and radio electronic enterprises increased their output. Growth was also registered by the natural monopolies.

“The unemployment rate is high,” Putin said.

Turchak explained that although the official unemployment rate was 2.1 per cent, the real figure was 10 per cent.

According to his information, the Pskov Region takes part in programmes for increasing the employment of the population. The programmes covered 17,000 people this year.

Speaking about the development of the agricultural sector, Turchak said that six investment projects for increasing milk production are being implemented in the Pskov Region. Some 250,000 tons of milk are expected to be produced this year, while the figure for 2009 was 220,000 tons.

“The Pskov Region came third by the milk output in the North-Western Federal District in 2009. Only the renowned leaders – the Leningrad and Vologda Regions – showed better results,” Turchak said.

According to Turchak, a factory for the production of combined fodder will be built in the Pskov Region in 2011.

Ivanovo region lawmakers approve Mikhail Men for second term as governor

http://www.itar-tass.com/eng/level2.html?NewsID=15614206

22.10.2010, 11.59

IVANOVO, October 22 (Itar-Tass) - Lawmakers of the central Russian Ivanovo region on Friday voted for Mikhail Men to continue as the region’s governor.

Men was nominated for the post by Russian President Dmitry Medvedev, who submitted his candidature to the regional legislature on October 19.

A total of 41 lawmakers out of 46 who attended today’s session voted for, and only 5 votes were against, while Men needed 25 votes to be approved for the second term in office.

According to the press service of the regional administration, the inauguration ceremony will be held in late December, when Men’s first term in office expires (December 23).

Mikhail Men was born in 1960. He began his political career in 1993, when he was elected to the Moscow Region Duma (legislature). Later on, he was elected to the State Duma, or the lower house of the national parliament. In 1999, he became deputy governor of the Moscow region, and deputy mayor of Moscow in 2002. In December 2005, he took the office of Ivanovo region governor. Men hold a Ph.D. degree in philosophy, and is an author of a number of books and publications.

Putin Leads Meeting on Hockey, Heating http://www.themoscowtimes.com/business/article/putin-leads-meeting-on-hockey-heating/420814.html

22 October 2010By Olga Razumovskaya

The traditional fall discussion about the country's preparation for winter was preceded by an optimistic discourse about hosting the Ice Hockey World Championship and welcoming a new Moscow mayor on board at Prime Minister Vladimir Putin's Cabinet meeting Thursday.

“The bid will be submitted by May of 2011, and the championship will be held in 2016,” Putin said.

Putin also said Russia would be ready for the upcoming winter, despite a debt of $4.4 billion by companies and individuals to the public utility sector.

Vladislav Tretyak, president of the Russian Ice Hockey Federation and legendary Soviet goalie, said there is a unique opportunity for the country to win the bid to host the championship.

The Czech Republic, Finland and Sweden will have hosted the championships by 2016, Tretyak said, so Russia's prime competitors will be Ukraine and Denmark. Latvia had also wanted to take part but changed its mind at the last minute, he said.

Tretyak proposed in the interim to organize a series of matches between Canada and Russia to commemorate the 40th anniversary of the 1976 successes for the Soviet hockey team.

Tretyak proposed holding the matches in August 2012, with four matches in Canada and four here at home, where Moscow, St. Petersburg, Kazan and possibly Sochi would be potential host cities.

“If the stadium in Sochi is ready [by 2012], holding it there will make a lot of sense because … not all owners of professional hockey teams want to send us their players.

This will be a good way to show the kind of level we will be holding this competition on,” Tretyak said.

The sport discussion segued into a review of the country's preparation for winter.

The government is planning to crack down on debtors to the public utility sector, Energy Minister Sergei Shmatko said. “We believe there is about 134 billion rubles worth of accumulated debt to public utility companies,” he said.

This money should be spent on repairs to the central heating system and equipment, he said, urging local officials to avoid cutting corners.

Shmatko promised increased oversight of repair works. “Under the conditions of possible budget deficit, some may get an urge to economize, which is why, together with the Federal Service for Environmental, Technological and Atomic Inspection, we will be conducting detailed checks,” he said.

Shmatko repeated earlier statements by Deputy Prime Minister Igor Sechin that Transneft will not be up for sale as part of the five-year privatization plan, but that 15 percent of Rosneft would go on the block. “The company is undercapitalized,” he said.

 21 october 15:05

Prime Minister Vladimir Putin chairs a meeting of the Russian government

http://premier.gov.ru/eng/events/news/12655/

“The government’s recent initiatives, which have resulted in amendments to legislation, clearly establish the duty of specialists in the power industry to form seasonal fuel reserves and perform scheduled maintenance on equipment. A special law, On Heat Supply, has been adopted. According to reports, preparations are going according to schedule this year.”

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, ladies and gentlemen.

I'd like to start today's meeting on an untraditional note. Today, as you know, the Moscow City Duma confirmed our colleague Sergei Sobyanin as Moscow's new mayor. Congratulations, Mr Sobyanin!

Sergei Sobyanin: Thank you!

Vladimir Putin: For two and a half years, Mr Sobyanin, who was head of the presidential administration from 2005 to May 2008 before joining the government, has

ensured the smooth operation of the government and its staff. He was the brains behind a number of modernisation projects and played a role in implementing them, for example, lifting administrative barriers for business, Electronic Government, and many others.

I have no doubt that Mr Sobyanin will be equally energetic and effective in his new, very important position as Moscow mayor, and that Muscovites will not regret their choice. I would also like to thank the deputies of United Russia in the Moscow legislature for their decision. I have signed the necessary documents to present Sergei Sobyanin with a government award: the Stolypin Medal, First Class. Thank you, Mr Sobyanin, for all your hard work.

Sergei Sobyanin: Mr Putin, may I say a few words?

Vladimir Putin: Yes, please.

Sergei Sobyanin: Mr Putin, colleagues. I would like to express my sincere appreciation for the experience that I have gained in the government and for your cooperation during all these years. I would like to express special thanks to Prime Minister Putin. My time in the government has been invaluable training. I hope that, even though I will no longer be a member of the government, I will still remain a member of your large team. Not a single major project in Moscow can be implemented without the involvement of the government and the relevant ministries and agencies. I hope I will remain in close cooperation and work extensively and productively with each of you. I am counting on your help and support. Thank you very much, colleagues.

Vladimir Putin: Thank you.

Let's turn now to today's agenda. Today we will consider several important issues. One of them is Russia's development strategy in the Antarctic. Our country strictly adheres to the Antarctic Treaty, which the Soviet Union signed way back in 1960. Our intention is to gradually expand the presence of Russian research expeditions on the continent, upgrade our polar stations and research fleet, and play an active role in international polar projects.

Russia currently has five year-round polar stations in the Antarctic: Mirny, Vostok, Progress, Novolazarevskaya and Bellingshausen.

And, without question, the Atlantic Ocean should remain the most important resource base for our fishing fleet: we have the necessary capabilities for this.

Moving on to the second, but no less important issue: we will hear reports on the readiness of the power industry as well as housing and utility facilities for the autumn and winter period of peak activity. I just saw colleagues on conference calls discussing this matter. This issue is under control, but please keep it in your sights. I would like to remind you that the government's recent initiatives, which have resulted in amendments to legislation, clearly establish the duty of specialists in the power industry to form

seasonal fuel reserves and perform scheduled maintenance on equipment. A special law, On Heat Supply, has been adopted.

According to reports, preparations are going according to schedule this year. By the middle of October, 99% of boiler houses and heat-supply systems were prepared for the heating season and necessary repairs were completed at residential buildings. Nevertheless, I ask the Ministry of Energy and the Ministry of Regional Development to keep this issue under your constant supervision, so that everything goes smoothly in practice, not just on paper.

Another item on our agenda is the draft state programme on energy conservation. We have budgeted 7 billion roubles for its implementation next year. These funds are primarily intended for the constituent entities of the Russian Federation to prepare high-quality energy conservation projects at state-run institutions, housing and utility facilities, as well as on other regional and municipal facilities.

In addition to direct financing, the programme involves the use of non-budget sources for the transition to modern, energy-efficient equipment. As a result, we will be able to considerably accelerate the application of up-to-date and energy-efficient technology in schools, hospitals and other municipal institutions, and state-financed organisations will be able to use the money they save to improve their operations and raise salaries, which is extremely important. The law, On Energy Conservation, establishes a mechanism for doing just this.

One more thing: we have always strongly supported plans to hold major international forums and competitions in Russia. Our Hockey Federation has put forward some interesting ideas and initiatives. I recently discussed them with Vladislav Tretyak.

The Russian Hockey Federation proposes organising a new hockey series between Russia and Canada to mark the anniversary of the 1972 Summits Series between the teams. We have discussed this issue with the Canadian sports ministry and the NHL. The initial response has been favourable.

And there is another initiative, too. We have essentially applied to host the Ice Hockey World Championship in 2016. We are planning to hold the games in Moscow and St Petersburg. And we wouldn't have to build anything new for this. All the facilities for hockey matches are in place, and we can host the world championship at the highest level, including by providing all the necessary government guarantees.

We have notified the International Ice Hockey Federation. In general, the response has been positive here, too. The governor of St Petersburg has been informed. Ms Matvienko is prepared to lend her support. She will have to allocate a modest sum from the city budget. I hope that the new leadership in Moscow will show the same support for this initiative.

The application must be prepared before next May, 2011. We have already forwarded all the necessary preliminary documents. We have excellent chances. Then we will host Student Games in Kazan in 2013, the Sochi Olympics in 2014, maybe the Student Games in 2017, and in 2016 we could host the world hockey championship. So each year - 2012, 2013, 2014... If we manage to do everything necessary for Formula One, we will start hosting races at the end of 2014 or in 2015. We'll see.

Since Mr Tretyak is here, it would only be right to spare him all the agenda items and give him the floor now, so he can leave after his report. Mr Tretyak, please.

Vladislav Tretyak: Mr Putin, members of the government, I would like to thank you on behalf of the Hockey Federation. Ice hockey is our national product. Thank you for your support. Our hockey players have given us a lot to cheer about in the past five years: they won two gold medals, a silver and a bronze. And, of course, we want to continue to advance our sport.

We certainly want to play against Canada in 2012. You know that the 1972 series caused quite a stir around the world. It is remembered to this day because it was the first time our guys played against Canadian professionals.

The International Ice Hockey Federation has given us the go-ahead. In two weeks, I will fly to Canada to meet with the NHL and its unions to discuss this matter again.

This is very important, so our Foreign Ministry should cooperate with the Canadian side on this. Mr Mutko (Minister of Sports, Tourism and Youth Policy) has given his consent, and we are now working together. We should all work together to make this a real celebration.

The most important thing is for us to honour the veterans of 1972; they are almost 70 now. So in 2012, we would like to invite the Canadian players, who made their country famous, and our players too, and have a ceremony in their honour. It would help popularise hockey.

And the second issue: we are, of course, a hockey country, and so we must participate in high-level competitions. For this reason, at a congress in May 2016 we will fight for the right to host the championship. And the government's support is critical for us to get these competitions. You said an agreement has been made with Moscow. I have talked with St Petersburg and Ms Matvienko: she is also with us. Thank you very much once again for the support.

Vladimir Putin: The decision will be taken next May, and the championship will be held in 2016. How do you see our chances of being awarded the right to host the world championship?

Vladislav Tretyak: Our chances are very good. The competition is Denmark. I am going to meet them on November 13: we will give them 2017 in exchange for 2016. So far we have agreed to work toward this end. I think our chances are good.

Vladimir Putin: Our traditional friends and competitors are the Czechs. Are they going to submit an application?

Vladislav Tretyak: They will host it before us. The Finns, Swedes and Czechs will. They all will host the championship prior to 2016, so they are not our competition. The candidates are Ukraine, Denmark and us. Latvia also wanted to, but it dropped its bid at the last minute.

Vladimir Putin: And when can we host the series, in which months?

Vladislav Tretyak: In August, in the end of August, as it was 40 years ago: four games in Canada and four games in our country. We want to play in Moscow, St Petersburg, Kazan and Sochi. We want to have at least one game here in Sochi if the stadium is ready by then, because some owners of pro hockey teams don't want to send their players to us. There is a huge effort to draw attention to Sochi, and these games would help do that. If we host the series, the players will become interested, and they'll see the level at which we host competitions.

Vladimir Putin: Any questions for Mr Tretyak? Thank you very much.

Vladislav Tretyak: Thank you.

Vladimir Putin: Let's get down to work.

Russia, Ukraine, Slovakia sign nuclear fuel transit dealhttp://en.rian.ru/world/20101021/161043820.html

22:39 21/10/2010

Russia, Ukraine and Slovakia signed on Thursday in Bratislava an intergovernmental agreement on transit of nuclear materials via Ukraine, the Russian state nuclear corporation Rosatom reported.

The agreement creates the international legal framework for nuclear fuel transportation by the Russian company TVEL to operating and planned power units of Slovak nuclear power plants. It should ensure uninterrupted fuel supplies to Slovakia.

The document takes into account international treaties and the relevant directives of the International Atomic Energy Agency, as well as the laws of the three states.

In April, Russia and Slovakia signed a long-term deal worth $400 million on the delivery of nuclear fuel for the third and fourth reactors of the Slovakian nuclear power plant at Mochovce, which are currently under construction.

Slovakia currently has six Soviet-designed light-water reactors. Under an intergovernmental agreement signed between the Soviet Union and Czechoslovakia, Russian technology was used to build and operate the Bohunice plant, with a capacity of 1.76 GW (four VVER-440 units) and the Mochovce plant with an output of 880 MW (2 VVER-440 units).

MOSCOW, October 21 (RIA Novosti)

Russian speakers gather in Tallinnhttp://english.ruvr.ru/2010/10/22/27593967.html

Oct 22, 2010 10:10 Moscow TimeRepresentatives of the Russian speaking community in the Baltic are gathering for a regional conference in Tallinn today.   The participants will be discussing further partnership between Russia and Russian speakers living in the Baltic countries and will suggest measures to preserve education in Russian.    The forum has brought together about 100 delegates and guests from Russia, Estonia, Latvia and Lithuania.

Kasyanov Says Russia’s State Asset Sale Lacks Transparency http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aRtfZ96MifY4

By Halia Pavliva

Oct. 22 (Bloomberg) -- Former Russian Prime Minister Mikhail Kasyanov said he’s concerned that the planned sale of stakes in state-controlled companies will be undermined by a lack transparency.

Kasyanov, who served as prime minister from 2000-2004 during Vladimir Putin’s presidency and is part of a pro- democracy opposition group, said the secrecy of the process casts doubt on the credibility of the offerings.

“I have always been in support of privatization, but having in mind that this government is not a transparent one, this privatization is going to be an imitation of the real process,” he said at the Council on Foreign Relations in New York last night. “It is not going to be done in a clear and transparent manner. The revenue is going to finance the budget deficit, but prices will raise a lot of questions.”

Russia’s government unveiled plans this week to sell stakes in the nation’s two largest lenders. The state may give up control of VTB Group within three years and plans to reduce its OAO Sberbank holding by 2014, First Deputy Prime Minister Igor Shuvalov said Oct. 20.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

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

Last Updated: October 21, 2010 21:33 EDT

Russia and Argentina mark 125 years of diplomatic relations

http://www.itar-tass.com/eng/level2.html?NewsID=15613879&PageNum=0

22.10.2010, 07.00

BUENOS AIRES, October 22 (Itar-Tass) -- Argentina and Russia mark 125 years of diplomatic relations on Friday and Russian ambassador said bilateral ties are on the rise.

“Russia-Argentina ties have acquired a multi-level character. It is specifically important that top level dialogue is developing,” Ambassador Alexander Dogadin told Tass adding “bilateral relationship is on the rise and strategic partnership is being built.”

He said Russia and Argentina are cooperating in energy sector, nuclear power engineering, space exploration, high technologies, and transportation.

Trade turnover peaked in pre-crisis 2008 to two billion dollars. “According to forecasts, we shall reach the same level this year,” the ambassador said.

Diplomatic relations between the two countries were established on October 22, 1885, when Moscow appointed traveler and writer Alexander Ionin, who has travelled across the whole of South America, as ambassador to Argentina.

Russian, Kazakh pilots to hone live-firing skills prior to CSTO drillshttp://en.rian.ru/mlitary_news/20101022/161046483.html

06:28 22/10/2010

Russian and Kazakh combat pilots will take part on Friday in live-firing exercises in preparation for the upcoming large-scale exercises of the Collective Security Treaty Organization (CSTO), the Russian Defense Ministry said.

The CSTO Collective Rapid Reaction Force drills will take place on October 25-29 at the Chebarkul training grounds in Russia's Urals region of Chelyabinsk.

"On October 22, pilots of the Russian Su-24 and Su-27 aircraft and Mi-24 helicopters together with Kazakh Su-25 pilots will conduct drills with live firing at the Chebarkul training grounds in the Central military district," a spokesman for the ministry said on Thursday.

The upcoming CSTO drills will involve 1,700 servicemen, 250 armored vehicles and over 30 combat aircraft and helicopters.

The CSTO is a security grouping comprising the former Soviet republics of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Uzbekistan, and Tajikistan.

Five of the seven members signed an agreement on the creation of the Collective Rapid Reaction Force in February 2009. Belarus, which initially refrained from signing the deal because of a trade dispute with Russia, joined it later last year.

The CSTO members insist that the rapid reaction force is designed to improve the security of the CSTO members against the backdrop of existing and potential threats," including terrorism, extremism, drug trafficking, natural disasters and to enhance the organization's role in ensuring international security.

However, many experts believe that the creation of a powerful military contingent in former Soviet Central Asia by members of the Russian-dominated security grouping is seen as Moscow's bid to counterbalance NATO.

MOSCOW, October 22 (RIA Novosti)

Russia to launch 8 Glonass navigation satellites in 2011-2013http://en.rian.ru/russia/20101022/161044859.html

00:59 22/10/2010

Russia will put eight Glonass-M satellites into orbit in 2011-2013 to ensure the effective operation of its satellite navigation network, a Russian space industry official said.

Glonass - the Global Navigation Satellite System - is the Russian equivalent of the U.S. Global Positioning System, or GPS, and is designed for both military and civilian use.

The network requires 18 operational satellites for continuous navigation services covering the entire territory of Russia and at least 24 satellites to provide navigation services worldwide.

"After the Glonass network is complete by the end of 2010, we will have to maintain it by replacing the satellites whose service life has expired," said Nikolai Testoyedov, the head of the Information Satellite Systems (ISS) company, which manufactures satellites for the Glonass project.

"We are making eight more satellites to fulfill this task, and we will launch them in 2011-2013," Testoyedov said in an interview with the Krasnaya Zvezda daily on Thursday.

Russia currently has a total of 26 Glonass satellites in orbit, but three of them are not operational. Three more Glonass-M satellites are scheduled for launch by the end of 2010, allowing Russia to operate a complete Glonass network and have 3-4 satellites in reserve.

Meanwhile, the ISS will continue testing new Glonass-K satellites, which have a lifetime of 10 to 12 years and a reduced weight of only 750 kg. These satellites will gradually replace Glonass-Ms in the network.

MOSCOW, October 22 (RIA Novosti)

Russian spy to face trial in Polandhttp://en.rian.ru/world/20101022/161045286.html

02:19 22/10/2010

Poland will start on Friday a trial of a Russian citizen who was arrested last year on espionage charges, a Warsaw district court official said.

Poland's Internal Security Agency detained the alleged Russian spy in February 2009, but sketchy details of his identity and activities were made public only in January this year.

According to media reports, the alleged spy worked for Russia's Main Intelligence Directorate on the Polish territory for at least 10 years and used legitimate business as a cover.

The man, known only as T.J., was under surveillance for several months and the arrest caught him by surprise. An encoding device and special communications equipment were found at his residence at the time of arrest.

The high-profile trial will be held in the building of the Polish Supreme Court and will be closed to public and media.

The suspected spy could face up to 10 years in prison if convicted, Polish prosecutors said.

WARSAW, October 22 (RIA Novosti)

Georgia Sentences Russian Citizen For Entering Breakaway Region http://www.rferl.org/content/Georgia_Sentences_Russian_Citizen_For_Entering_Breakaway_S_Ossetia/2197905.html

October 22, 2010

GORI, Georgia -- A Russian citizen has been sentenced to three years in jail in the Georgian city of Gori for violating the "law on occupied territories," RFE/RL's Echo of the Caucasus reports.

Kazbeg Dzugkoev, who is from Vladikavkaz in the Russian republic of North Ossetia, was detained in Georgia's breakaway region of South Ossetia earlier this month and sentenced on October 21.

His lawyer, Zurab Dzarkava, said his client understands that he violated the law, which does not allow foreigners to be present in South Ossetia. But he said Dzugkoev went there unintentionally.

Dzarkava said Dzugkoev stopped his truck during the night and approached Georgian police at a checkpoint to ask the way to Tskhinvali, South Ossetia's capital. Dzarkava added that the sentence is too harsh and he will appeal it.

Dzugkoev was hired by a Russian construction company earlier this year to transport construction materials from Russia to South Ossetia.

Georgian law does not allow foreigners to enter South Ossetia or its other breakaway region, Abkhazia.

The Georgian parliament adopted the law after the Russian-Georgian military conflict over South Ossetia in August 2008. Abkhazia and South Ossetia proclaimed independence after that conflict.

Russia recognized both regions' independence and has since been providing them with military and economic aid.

Two gunmen of group blocked in Molybdenum mine detained

http://www.itar-tass.com/eng/level2.html?NewsID=15614050&PageNum=0

22.10.2010, 11.09

NALCHIK, October 22 (Itar-Tass) - Two militants of the group blocked in the “Molybdenum” mine in Tyrnyauz town in Kabardino-Balkaria have been arrested, an informed source in the republic’s law enforcement agencies told Itar-Tass.

“Two militants from this gang were detained. The special operation is continuing,” he said. “There are no casualties among law enforcement officers.”

In addition, the source said, a homemade explosive device was found in a UAZ car that the bandits left at the entrance to the mine. It has been rendered harmless.

Law enforcement officers began to sweep the mine on Thursday afternoon after militants entrenched in it after a gunfight with law enforcers ignored an appeal of the Imam of the Elbrus district and deputies of local self-government to surrender voluntarily. Information about possible hostages from among local residents has not been confirmed. Four civilians were safely removed from a nearby mine, where they were engaged in gathering scrap metal.

The militants’ group was spotted on October 20 during a special search operation to neutralise members of illegal armed groups in the territory of an abandoned tungsten-molybdenum plant. The militants then hid in one of the mines and were blocked. One militant was killed in the shootout, one policeman of the Ebrrus district police department was also killed and an OMON special police task force fighter from Volgograd was wounded.

The counterterrorism operation regime was introduced in this part if Tyrnyauz on October 20 at 19:00, Moscow time. Criminal proceedings were instituted under the RF Criminal Code articles “attempt on the life of law enforcement officers” and “illegal weapons turnover.”

Russian plane lands safely after crack in cockpit windshieldhttp://en.rian.ru/russia/20101022/161045875.html

04:10 22/10/2010

A Russian An-24 passenger aircraft landed safely on Thursday at an airport in the Trans-Baikal city of Chita after the pilots discovered a crack in the plane's windshield, a local police source said.

The IrAero plane with 33 passengers and five crew flew from Blagoveshchensk in Russia's Far East to Chita.

"The aircraft was flying at the altitude of about 12,000 feet when the crack formed on the windshield. There was no threat of pressure loss in the cabin, and the pilots did not request an emergency landing," the source said.

CHITA, October 22 (RIa Novosti)

New mayor to hold first meeting of Moscow govt on Oct 26

http://www.itar-tass.com/eng/level2.html?NewsID=15613876&PageNum=0

22.10.2010, 10.11

MOSCOW, October 22 (Itar-Tass) -- New mayor Sergei Sobyanin is to hold the first meeting of the Moscow government on Tuesday, October 26, ITAR-TASS learnt at the city administration on Friday.

“A regular meeting of the Moscow government will be traditionally held on Tuesday, however, it will begin not at 10.00 Moscow time, but at 11.00 Moscow time,” a representative of the mayor’s office said.

As the official Internet-site of the mayor and the Moscow government says, the meeting agenda includes two issues: “On the electric power supply scheme of the city of Moscow until 2020” and “On further improvement of interaction between the Moscow government and organizations of the wholesale food complex of the city of Moscow according to principles of state and private partnership.”

New Moscow mayor ‘tough but fair’http://themoscownews.com/local/20101021/188145793.html?referfrommn

by Lidia Okorokova at 21/10/2010 20:09

Moscow’s new mayor is a tough Siberian team player who rose through the ranks with a no-nonsense attitude and developed his home Tyumen region with the support of Moscow.

Now Sergei Sobyanin will have to use his alliance-building skills to break down entrenched bureaucracies and tackle the capital’s problems, including traffic, social issues and corruption.

But experts said he will be up to the job.

Born in Nyaksimvol village in the Khanty-Mansiysk autonomous district in 1958, Sobyanin rose from the factory floor to the Kremlin in a meteoric career. In the Tyumen region, he worked variously as a fitter, a leader of a turners’ brigade and an engineer at the Chelyabinsk Pipe Rolling Plant, before becoming mayor of Kogalym and later a governor of the region.

His political career began in earnest in 1982, when Sobyanin became a department head of the local Komsomol in Chelyabinsk.

Ten years after that, Sobyanin became Kogalym’s mayor – thanks to support from Alexander Filipenko, then Khanty-Mansiysk governor and thanks to Lukoil, an influential employer there. 

“Filipenko and other leaders of the north of Tyumen pushed Sobyanin to become Tyumen governor,” Vladimir Pribylovsky, head of the Panorama think tank, told The Moscow News.

Sobyanin’s career then took a big leap forward in 2005, when he was selected to become Kremlin chief of staff in Vladimir Putin’s administration.

Business links

Marking Sobyanin’s rule in Tyumen was a tough approach to business, experts said.

While he fell out with influential people from the north of the region, damaging his friendly relations with Lukoil, he acquired new allies in TNK, the oil company owned by billionaires Mikhail Fridman, Viktor Vekselberg and Len Blavatnik.TNK later merged with BP to become TNK-BP, the country’s third-biggest oil firm.

Sobyanin married Irina Ryubinchik, a cousin of a former energy minister, Alexander Gavrin, and together they have two daughters - Olga and Anna.

Media speculation has been rife since Sobyanin’s nomination for Moscow mayor that Irina could have business links in a similar way to Elena Baturina, the wife of Sobyanin’s predecessor, Yury Luzhkov.

But despite reports about Irina Sobyanina having links to a road construction company in the Tyumen region, privately held Aerodromdorstroy, they remain unproven.

“In Tyumen no one has ever mentioned that Irina is an owner of the company Aerodromdorstroy. I cannot deny this rumour nor confirm it,” Viktor Yegorov, a journalist from Tyumen, told The Moscow News.

Aerodromdorstroy declined to comment on whether it had any links to Sobyanina.

According to her official biography, Sobyanina worked as a teacher at a child development centre in Tyumen for one year until 2005, and now she is a housewife in Moscow.

“In my opinion, Irina is a real housewife. She is a very nice and decent woman, and above all, she is a mother to her two daughters. I treat her with great respect,” Yegorov said.

In an interview given to a local newspaper in the Tyumen region, Sobyanina said she has never regretted the fact that her husband became a big-time politician.

“He makes a decision himself, I take it as our destiny,” she told the local edition of Argumenti i Fakti.

 

Kremlin to call the shots

Experts from Tyumen said Sobyanin was tough, but fair.

“I know Sergei as a focused person, who knows how to concentrate on specific issues. He is very demanding, always insisting on work to be fully completed,” Gennady Raikov, a member of the Central Election Commission, told The Moscow News.

Stanislav Belkovsky, an independent political analyst, told The Moscow News that Sobyanin would not become the same kind of city boss as Luzhkov was.

“The Kremlin will [be in charge],” Belkovsky said. “Key decisions will be made by the federal government. Sobyanin is a man of the system, and thanks to this he became mayor. He is a commissar, sent to establish Kremlin control over Moscow.”

Sobyanin has studiously avoided political controversy during his career, except for once saying that “there are no free journalists by definition.”

Local journalists from Tyumen told The Moscow News that it could be a little difficult to deal with Sobyanin when he was governor.

“It was tough, he created a strange environment,” said one journalist, who asked to remain anonymous. “But at least he wasn’t an idiot as many governors are. Everything he ever told journalist was formal and official.”

At his alma mater, the Kostroma Technological Institute, Sobyanin’s former classmate, Stanislav Mikhailov - now a teacher there - told The Moscow News that Sobyanin was a single-minded and diligent student.

Another side of Sobyanin that may be shown in his new job is his religious convictions.

When Sobyanin became Kremlin chief of staff in 2005, he confirmed in an interview to Vesti Nedeli that some of his ancestors were Old Believers.

“I am Russian Orthodox. In general, I have a lot of tolerance for all different faiths, save for those which preach extremism and violence,” Sobyanin said.

Five years on, the representatives of the country’s main faiths were all in attendance at Sobyanin’s inauguration at City Hall, and Patriarch Kirill was among the first officials to congratulate him on his new appointment.

Moscow Gets a Hunter and a Technocrat http://www.themoscowtimes.com/news/article/moscow-gets-a-hunter-and-a-technocrat/420810.html

22 October 2010By Alexandra Odynova and Alexander Bratersky

Who Is Sergei Sobyanin?

Natalya Chestyakova-Yaroslavova, a senior member of Sergei Sobyanin’s successful campaign team during the 2001 gubernatorial elections in the Tyumen region, says her former boss is a political fighter who knows how to work with foreign investors, isn’t afraid to make tough decisions and took tight control of the local media as governor.

From Sobyanin’s election until he moved to Moscow in 2005, Chestyakova-Yaroslavova kept in contact with him and his office, first as his aide for public communications and later as a senior manager at a Tyumen region energy company.

Here are some of her reflections on Sobyanin:

On information policy:

After Sergei Semyonovich [Sobyanin] came to power in the Tyumen region, all information channels were taken under his control. I personally saw how free speech shrank as more and more topics were censured.

On his supporters:

[His wife] Irina Sobyanina is interested in charity work … but she will not be involved in business.

His team understands the language of symbols, myths and legends, and values them.

On his work style:

Sergei Sobyanin’s behind-the-scenes mentality is close to that of private clubs and secret societies. This allows him to excel at contacts with those who are used to solving high-stakes issues in a small circle.

He is sharp and misses no details and hears what is said even if his face does not betray it.

He knows where the interests of global investors coincide with those of top Russian bureaucracy.

He has no problems ordering big budget decisions and is swift to change the rules to match his decisions on that. This makes him an effective representative of Russia’s big capital, which is concentrated around taxes, benefits and access to profitable businesses.

He usually enters the game plan at the final stages of any given project and gives no credit to those who have carried the project that far.

Any position for him is only a stage.

On what to expect:

Rallies and public protests aren’t really the format Sergei Sobyanin reacts to in the end. But he will surely backtrack to buy time in the short term. And while opponents will rejoice at his concessions, real changes will be implemented, lightning fast and without involving the general public.

New money will usher in new people, new people will bring their own teams, and a new social and human rights bureaucracy will emerge.

I think things did not really work out in Tyumen between Sobyanin and the local intelligentsia and skilled professionals. He replaced the elites there almost completely.

But Sobyanin knows by heart the saying: “In order to be liked by the general public, spruce up the bazaar.” And the pensioners, for example, are happy with a fountain he built in front of the Tyumen outdoor market.

The changes will be radical, but nothing is set in stone yet. A lot hangs now on the people whose opinions Sobyanin reacts to.

— Reported by Alexander Bratersky

Sergei Sobyanin, who was sworn in as Moscow’s mayor Thursday, has kept such a low political profile that his former colleagues are divided on his personality, with some describing him as a good manager and others as “a robot.”

But one thing is clear. Sobyanin is a shining example of the iron system that Vladimir Putin built out of the tumultuous 1990s: A skilled technocrat, Sobyanin turned Tyumen into one of the country’s most prosperous regions and led local initiatives that went on to be embraced nationwide. He also was the first governor to join United Russia and has shown little tolerance of free media, former colleagues said.

“He is not just a screw in the system. He is an ideologist behind it,” said Natalya Chestyakova-Yaroslavova, a senior member of Sobyanin’s campaign team in Tyumen’s gubernatorial elections in 2001.

In stark contrast to flamboyant, outspoken former Mayor Yury Luzhkov, known for his love for bees and a flat cap associated with the working classes, the conservatively dressed Sobyanin cracks no jokes and rarely smiles, keeping a taciturn expression.

“In Tyumen he was called a robot,” said Vadim Bondar, a former State Duma deputy for the Tyumen region.

Bondar, who belonged to the now-defunct Union of Right Forces party, called Sobyanin a “complete technocrat,” but said this was his advantage.

“He could look straight at a computer, working and keeping on talking about various things at the same time,” Bondar said in a telephone interview.

Chestyakova-Yaroslavova called her former boss a seasoned bureaucrat. “He is sharp and misses no details and hears what is said even if his face does not betray it,” she told The Moscow Times.

Tyumen residents still praise

Sobyanin, saying he made the region more prosperous and improved roads, a perpetual sore point in Russian infrastructure — including in Moscow.

“We all were very sad when he left us. Tyumen was blooming under him,” said Eduard Yarchin, an economist from Surgut, a city in the region.

He said Sobyanin won support from public sector employees by providing them with modest but regular subsidies of 1,000 rubles ($30) from the regional budget twice a year. (Speaking ahead of his confirmation as Moscow’s mayor, Sobyanin promised to preserve similar payments provided by Luzhkov to low-income Muscovites.)

Mikhail Averin, head of the liberal Yabloko party’s branch in the Tyumen region, said Surgut has “good memories” about Sobyanin.

“Sobyanin is quite a well-known personality in the city. Tyumen remembers him,” Averin said by telephone.

Moscow now has a chance to become a “prettier city,” just like Tyumen did, he added.

Averin also praised Sobyanin for his diplomatic skills, saying he managed to get along with influential local figures including Alexander Filipenko and Yury Neyolov, who headed autonomous districts located within the Tyumen region.

“He showed an absolutely nonconfrontational personality and managed to gather many decent people around him,” Averin said.

Tyumen’s business environment thrived under Sobyanin and continued to do so after his departure, with Tyumen ranked as one of the country’s 10 most business-friendly cities by Forbes last year.

“He had the money, and he was not afraid to spend it,” Chestyakova-Yaroslavova said.

“He always calculates his steps first. I believe that the Kremlin has great confidence in him now,” Bondar said, adding that Sobyanin was never afraid of making unpopular decisions if he thought them necessary.

Sobyanin is also described as having a harsher side. Despite the economic improvements he implemented or oversaw, he is said to never have favored media freedoms and at times clashed with journalists critical of him.

“I personally saw how free speech shrank as more and more topics were censured,” said Chestyakova-Yaroslavova, who regularly contributed to the Tyumen media during Sobyanin’s term.

The New Times opposition weekly said in 2007 that Sobyanin was behind the firing of a popular local journalist, Natalya Yemelyanova, who in 2003 wrote a critical article about Sobyanin’s plan to bring in cows from France to develop local agriculture.

“It was his favorite idea at the time,” Chestyakova-Yaroslavova, who worked as Sobyanin’s aide for public communications at the time, said about the cows.

But she added that she doubted Sobyanin played a direct role in Yemelyanova’s dismissal. “Some officials just pretended to get orders from him,” she said.

During his time in Tyumen, Sobyanin also anticipated many policies that were later implemented by the federal government.

He was the first governor to join the ruling United Russia party after its establishment in 2001, and the first to initiate “optimization” drives at state-funded institutions — which turned out to be bureaucratic-speak for mass cuts in financing for hospitals and schools.

Tyumen also was one of the regions where the much-discussed monetization of state benefits was tested before being introduced nationwide in 2005.

Sobyanin, 52, was born in a village populated by Mansi, an indigenous people of West Siberia, but lists his nationality as Russian and said in one of his rare interviews that he has Cossack heritage.

In an indication of his fondness for privacy, as governor he even declined to reveal his religious views on the request of local Old Believers, a former aide said on condition of anonymity.

A lawyer by education, Sobyanin worked at a Chelyabinsk factory for some time before going into politics, quickly rising through the ranks of the Communist Party and other Soviet-era institutions in the 1980s.

He served as the mayor of the oil-rich Siberian town of Kogalym from 1991 to 1993 and went on to become a local legislator in 1994 and a Federation Council senator in 1996.

Sobyanin won the 2001 gubernatorial elections in oil-rich Tyumen despite a lack of public exposure, capitalizing on public discontent with incumbent Leonid Roketsky. Soon after the victory, he was also elected chairman of the TNK oil company.

In late 2005, Vladimir Putin, then the president, appointed him as Kremlin chief of staff, replacing Dmitry Medvedev, who was named a first deputy prime minister.

Sobyanin headed Medvedev’s own presidential campaign in 2007 and become a deputy prime minister after his patron’s landslide victory in 2008.

The Tyumen campaign, however, appears to be the landmark of Sobyanin’s own career, acquaintances said.

“We needed a figure who would be able to kick out Roketsky,” said a former member of his campaign team who declined to be identified.

The battle for control of one of the country’s lucrative oil-producing regions was dirty. “Some people stood up during Sobyanin’s meetings with voters to ask questions like, ‘Do you have a villa in Spain?’” said a lawyer from Surgut who worked in the campaign.

But Sobyanin has never been accused of any specific wrongdoing.

“I, personally, have never heard that Sobyanin was involved in any direct corruption,” said Bondar, the former Duma deputy.

Sobyanin has ties to some of the country’s top oil businessmen, including Vladimir Bogdanov, the billionaire head of Surgutneftegaz and a close ally of Putin. Bogdanov, whose operations are based in Surgut, is believed to have advised Sobyanin during his gubernatorial campaign.

But Sobyanin’s former acquaintances said billionaire Roman Abramovich was reluctant to finance the campaign because he did not expect him to defeat the incumbent.

“After we won, Abramovich’s team described what we had done as ‘the takeoff of the Concorde,’” the former senior campaign staffer said.

When he is not working, Sobyanin has his favorite pastimes — in particular, hunting, a hobby that he mentioned in an interview in which he also criticized trophy hunters who

chase captive or semi-captive animals bred in hunting facilities. “I think this a joke, not hunting,” Sobyanin said in an old interview cited by Izvestia. He also enjoys skiing.

Although Sobyanin usually appears serious, he has been known to joke. Leonid Dutov, a roommate from his student days, told the Vzglyad newspaper about a trick Sobyanin played on the students in the 1980s after returning from Britain, where he had managed to win a rare trip outside the Soviet Union.

“He showed us photos where he was together with Margaret Thatcher and Ronald Reagan,” Dutov said in the interview published Wednesday. “Now I understand that the photos were doctored, but at that time we all believed they were real!”

Muscovites to submit transport ideas to new mayor on www

http://www.itar-tass.com/eng/level2.html?NewsID=15614161&PageNum=0

22.10.2010, 11.30

MOSCOW, October 22 (Itar-Tass) - Moscow’s Internet publication “The Transport Server of Moscow” has announced an action called “Memos to the Moscow mayor” during which the Muscovites will be able to submit their proposals on the development of the city’s transport infrastructure.

“It will be possible for the city dwellers to leave their suggestions on the Internet site www.mosgortrans.net - “Transport Server of Moscow” until November 1, 2010. All the received messages will be published,” the Moscow mayor’s office told Itar-Tass on Friday.

After the action is over, all the collected suggestions, comments and concepts will be passed to the city administration for the new mayor Sergei Sobyanin.

Immediately after the inauguration, which was held on Thursday, Sobyanin participated in a meeting on the “most important” issue for the RF capital – transport, according to the mayor.

The Moscow City Duma members on Thursday vested Sergei Sobyanin with the powers of the capital’s mayor. The candidate, proposed by the president of the Russian Federation, gained support from 32 legislators of the 35 having seats in city Duma (32 of the United Russia party and three from the Communist Party). Two ballots were cast against. The meeting was attended by 34 deputies. One deputy from the Communist Party is away on a sick leave. Before the voting procedure the Communists said they would vote against Sobyanin. The voting was held by secret ballot. Sobyanin’s term of office is five years.

Speaking on his programme before the voting Sobyanin said that “managers already present in Moscow today” will form the basis of his team. “I believe that there has been created a good personnel and management backbone. The question is what tasks are to be set to it, and how to demand results,” he noted. At the same time Sobyanin stressed that “this does not mean that there will be personnel stagnation. “We will work on gradual rotation, replacement and selection of new staff,” said Sobyanin, stressing that youth “should also be allowed into the managerial club.”

He also said he intended to work out a comprehensive programme for a solution to the transport problem in Moscow. When presenting his programme before the lawmakers, Sobyanin pointed out that he would do that jointly with the authorities of the Moscow Region and the Federal authorities so that, as he put it, “Moscow roads stop going to nowhere.” In so doing, Sobyanin promised that the implementation of all large-scale transport projects in the city would be continued. Among these he mentioned the “Bolshaya Leningradka” road junction project and the fourth transport ring. In order to attain these goals, he said, a special city road fund would be set up next year. He reminded that city budget appropriations for a solution to the transport problem had been decreasing in recent years.

'Margarine Oligarch' Named Putin's Chief of Staff http://www.themoscowtimes.com/news/article/margarine-oligarch-named-putins-chief-of-staff/420812.html

22 October 2010By Nikolaus von Twickel

Prime Minister Vladimir Putin quickly filled the vacancy created by Sergei Sobyanin's move to City Hall on Thursday by picking State Duma Deputy Speaker Vyacheslav Volodin as his new chief of staff.

Volodin, a staunch Putin ally nicknamed the "margarine oligarch" by the media for his interests in vegetable oil factories, was also appointed as a deputy prime minister by President Dmitry Medvedev, thus acquiring similar political weight to Sobyanin.

While the prime minister appoints his chief of staff alone, the Constitution stipulates that the president appoints the prime minister and his deputies.

Medvedev told Volodin during a meeting at the Gorki presidential residence that he would also succeed Sobyanin as deputy head in the Kremlin's Modernization Commission, according to a transcript of the talks published on the Kremlin web site.

Analysts have said it would be hard to find a suitable successor to Sobyanin, who served as Putin's chief of staff for five years, first in the Kremlin and then at the White House. On Thursday, some said Volodin was a poor match for the job.

"This is a very bad choice — he has no experience in managing a chain of command," said Alexei Mukhin, an analyst with the Center for Political Information, a think tank.

Unlike Sobyanin, Volodin is a politician, not an apparatchik, Mukhin said.

But Lilia Shevtsova, an analyst with the Carnegie Moscow Center, said the new chief of staff shared his predecessor's credentials.

"It was expected that [Sobyanin's successor] would come from Putin's clan — loyal, disciplined and uncharismatic — and Volodin is obviously seen to possess these qualifications," she said.

Volodin is seen as crucial in bringing the White House closer to United Russia before Duma elections next year and the presidential vote in 2012.

The chief of staff's job is to see that orders by both the president and the government are carried out — notably in the regions.

He also oversees the state civil service and personnel decisions and the preparation of the prime minister's speeches and statements, according to the job description published on the government's web site.

The chief of staff has seven deputies, including influential figures like Putin's top foreign policy adviser, Yury Ushakov, and his spokesman Dmitry Peskov.

Anastasia Rakova, a deputy overseeing the government's legal department, has been tipped as a likely candidate to follow Sobyanin to City Hall. Asked if more White House staff changes could be expected, Peskov said by telephone Thursday that it was too early to say.

Vladimir Pribylovsky, head of the Panaroma think tank, said Volodin's appointment was at best a sign of a compromise between two powerful government factions.

"He is neither part of the hardliners around [Deputy Prime Minister Igor] Sechin nor of the group that supports Medvedev," Pribylovsky said.

At worst, he said, the appointment could mean that the battle between the two factions will go on.

Volodin, 46, joined a large pool of candidates only late Wednesday when he was mentioned by the national media, and many analysts had pointed to Kremlin chief of staff Sergei Naryshkin as the most able candidate.

Mukhin and Pribylovsky said Naryshkin had been left in the Kremlin to keep an eye on Medvedev.

Volodin served as deputy governor of his native Saratov region before he was elected to the Duma in 1999 with the Fatherland-All Russia party, which two years later merged with Unity to form United Russia.

He was re-elected in 2003 and 2007 and has been a deputy Duma speaker since January 2004.

He also has served as first secretary of United Russia since 2005, and the post on Thursday was passed to Duma Deputy Sergei Neverov, who had served as his first deputy, the party said in a statement.

Volodin, who is married and has a teenage daughter, is among the wealthiest Duma deputies, declaring a 2009 income of about 360 million rubles ($11.7 million).

His official biography on the Edinros.ru party web site does not mention any business activities, but national media reports compiled by Pribylovsky on Thursday identified him as a co-owner of the Solnechniye Produkty holding, which consists of vegetable oil factories in Moscow and Saratov.

Because these plants mainly produce margarine and mayonnaise, Volodin has been nicknamed the "margarine oligarch" by national media. In 2006, Finans magazine ranked him as the country's 351st richest person, with an estimated wealth of $95 million.

21 october 18:33

Prime Minister Vladimir Putin meets with Vyacheslav Volodin, appointed deputy prime minister and chief of the Government Executive Office by a presidential decree today

http://premier.gov.ru/eng/events/news/12656/

Prime Minister Vladimir Putin expressed the hope that in his new position Vyacheslav Volodin will use the positive management experience he gained in his posts in the Saratov Region, the State Duma and the United Russia party.

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Volodin, you have gained extensive management experience in different positions. We have known each other for a long time. You have performed important functions both in the State Duma and the United Russia party for quite a long time.

However, as you know well, a job in the Government Executive Office, and particularly, in the management of the Executive Office, differs considerably from the work in Parliament. It is much less public but very important.

I hope that you will use your positive experience as the deputy mayor of Saratov and deputy governor of the Saratov Region (in charge of finances and the economy), the State Duma, where you tackled legal issues, and in United Russia, where you devoted a lot of time to work with the regions.

I hope that you will use all the positive experience you have gained over the years in your new job and your new position as chief of the Government Executive Office.

Vyacheslav Volodin: Mr Putin, thank you for placing confidence in me. It goes without saying that this is a new job for me but I'll try to justify your trust and guarantee an effective performance of the Government Executive Office and the implementation of your instructions. I will try to make sure that the government is provided with everything it needs, primarily at its meetings, and, of course, that the government staff supports the major directions of the government's activities, that this work is coordinated.

Vladimir Putin: Now the State Duma has started active work on adopting the main financial and economic law of the next year, the budget of the Russian Federation. It's all in your hands, so to speak. I hope that you will join these efforts and bring them to successful completion together with the Finance Ministry, the Ministry of Economic Development and other departments, and with your long-standing colleagues in parliament.

Vyacheslav Volodin: Mr Putin, I understand the responsibility you are entrusting me with. I worked with the government as a member of the Legislation Commission and I know this part of the work reasonably well.

As for the budget, I supervised our budget policy in the Duma before taking up the party position and we worked with the Ministry Finance a lot. Your idea on the zero reading of the budget, which removes many questions, is now being carried out and helps us make well-balanced decisions.

The budget has been reviewed in the first reading, and now amendments are being formulated. No doubt, this work is very important, and we will try to hear all the opinions of the deputy corps and report to you so that you can make decisions on issues that we will follow through in the State Duma.

Vladimir Putin: But now you will do this in a new capacity and will consider not only the opinion of our parliamentary party, not only the opinion of United Russia but also the views of all parliamentary parties in the State Duma.

Vyacheslav Volodin: Yes, of course, I understand this. Moreover, literally before coming to see you, I submitted my resignation as secretary of the party General Council Presidium because in my opinion this position is incompatible with the job of a government employee.

Vladimir Putin: I wish you success.

Vyacheslav Volodin: Thank you.

Russia to pursue its innovation policy in long termhttp://english.ruvr.ru/2010/10/22/27598913.html

Oct 22, 2010 10:22 Moscow TimeThe Russian policy of innovation is a long-term one, says the president of the US-Russia Business Council Edward Verona. He was speaking during the ongoing conference in San Francisco, titled “From the ‘Silicon Valley’ to ‘Skolkovo’: Innovation Partnership”. He pointed out that economic modernization is the cornerstone of the Russian leaders’ policy. The Russian presidential assistant Arcady Dvorkovich told the forum participants in a message of greeting that Russia would make the most of its partnership with United States in the field of high technology. He pledged Russia’s energetic involvement in join innovation projects.   

Rosnano, Alcoa join hands in hi-techhttp://english.ruvr.ru/2010/10/22/27584469.html

Oct 22, 2010 00:21 Moscow Time 

Russia's Rosnano Corporation and  America's leading aluminum producer, Alcoa, are all set to launch a raft of joint high-tech projects.

Speaking  by phone from San Francisco where he is taking part in the 18th annual meeting of the Russian-US Business Council, Rosnano CEO Anatoly Chubais said several very promising ventures were already in the pipeline. He did not elaborate though. 

In the summer of 2009 Rosnano and Alcoa agreed to conduct a joint study of possible use of nanotechnologies in oil and gas as well as new methods of energy transmission and  new-generation lighting systems.

Schwarzenegger concerned about delay in ratifying STARThttp://english.ruvr.ru/2010/10/22/27598794.html

Oct 22, 2010 10:19 Moscow TimeThe California Governor Arnold Schwarzenegger says he is concerned with a delay in ratifying the new Russian-US START treaty and is inclined to hold the US Congress responsible for that. He points out that the objective of paramount importance in the world today is to secure nuclear arms reductions. He feels that too many nuclear missiles are now trained on one another with no reason whatsoever. Schwarzenegger levelled

criticism at Congress for failing to ratify the Strategic Offensive Arms Reduction Treaty to this day. The Russian and US Presidents signed the treaty on April 8th. 

Russian Press at a Glance, Friday, October 22, 2010http://en.rian.ru/russia/20101022/161047172.html

08:35 22/10/2010

POLITICS

* During his inauguration ceremony on Thursday, Moscow's new Mayor Sergei Sobyanin outlined his plans for the Russian capital, promising to fight corruption and solve the capital's traffic problems. (Rossiiskaya Gazeta, Vedomosti, Vremya Novostei, Kommersant)

* Prime Minister Vladimir Putin appointed State Duma Deputy Speaker Vyacheslav Volodin as his new chief of staff, after Sergei Sobyanin, who previously held the post, was sworn in as the new Moscow mayor. (Vedomosti, Vremya Novostei, Kommersant)

* Former Moscow mayor Yury Luzhkov slammed the country's political system on Thursday, calling his former United Russia party a "servant" to the Kremlin and criticizing the president's "dictatorial" power to dismiss governors. (Vedomosti)

BUSINESS

Shareholders of Russia's top nickel producer Norilsk Nickel voted on Thursday against an attempt by Oleg Deripaska's RusAl, the world's largest aluminum producer, to oust the current board of directors. A total of 46.9 percent of shareholders participating in the emergency shareholders meeting voted against the move,while 37.88 percent voted in favor. (Vremya Novostei, Vedomosti, Kommersant)

The Russian Railways (RZhD) company abandoned plans to sell its stake in Transtelecom, citing unfavorable market conditions and poor financial performance of the operator of the largest fiber-optic communication network in Russia. (Vedomosti)

FINANCE

Russian Presidential Aide Arkady Dvorkovich said Russia would not take part in the so-called "currency wars" and had no plans to restrict capital flows. (Rossiiskaya Gazeta)

SOCIETY

Russia was fined around 30,000 euros by the European Court of Human Rights on Thursday for banning homosexual parades in Moscow (Vremya Novostei, Vedomosti)

LAW ENFORCEMENT

Russia's Federal Security Service (FSB) proposed issuing warnings to Russian citizens of potentially illegal or harmful activities in order to prevent crime. A draft directive has been posted on FSB website for public discussion. (Rossiiskaya Gazeta)

TRADE

Russia's Economic Development Ministry promised to simplify in the near future customs regulations for products exported by domestic hi-tech companies. Russia currently has strong customs barriers for hi-tech products to protect its state and industrial secrets. (Vremya Novostei)

A trade commission from the Customs Union between Russia, Belarus and Kazakhstan will protect cross-border trade competition between the three countries. It will compete with cartels and have the ability to prohibit the countries from regulating prices. (Vedemosti)

Russia hands over 10 lost silent movies to USA

http://www.itar-tass.com/eng/level2.html?NewsID=15613329&PageNum=0

22.10.2010, 03.03

WASHINGTON, October 22 (Itar-Tass) -- Russia presented Library of Congress with digital copies of ten lost U.S. silent films on Thursday as gratitude for assistance in the creation of the all-digital library named after the first Russian president, Boris Yeltsin.

The Library of Congress said it was “a major gift from Russia” that would help the United States reclaim its silent-film heritage.

Vladimir Kozhin, head of the property and business administration of the Russian president, officially presented the films to Librarian of Congress James Billington in a special ceremony in the Library’s Thomas Jefferson Building. The films constitute the first installment of an ongoing series of “lost” films produced by U.S. movie studios. They were digitally preserved by Gosfilmofond, the Russian State film archive, and donated via the Boris Yeltsin Presidential Library in St. Petersburg.

“The Library of Congress very actively helped us create the Boris Yeltsin Library. They opened all doors to us and shared numerous technologies and know-how. Today we are responding with electronic digital copies,” Kozhin told Tass.

He added the work will continue and both countries may also exchange original artifacts.

“The Library is committed to reclaiming America’s cinematic patrimony,” Billington said. “I am grateful to the dedicated staff of Gosfilmofond for their efforts to save these important artifacts of U.S. film history.” He also thanked the Boris Yeltsin Presidential Library “for collaboration and cooperation in making this cultural recovery effort possible.”

Because of neglect and deterioration over time, more than 80 percent of U.S. movies from the silent era no longer exist in the United States. Preliminary research conducted by the Library of Congress indicates that up to 200 movies produced by U.S. movie studios of the silent and sound eras may survive only in the Gosfilmofond archive. Copies of these films will eventually be sent to the Library of Congress.

The presented films comprise The Arab (1924), Kick In (1922), The Conquest of Canaan (1921), The Eternal Struggle (1923), You’re Fired (1919), Keep Smiling (1925), The Call of the Canyon (1923), Canyon of the Fools (1923), Circus Days (1923), and Valley of the Giants (1919).

The Irish Times - Friday, October 22, 2010

Russia's opposition rages at corruption but must grapple with forces of apathyhttp://www.irishtimes.com/newspaper/world/2010/1022/1224281720714.html

DANIEL McLAUGHLIN in Moscow

Few Russians really care about criticism of the Putin-Medvedev ruling ‘tandem’

IT WAS an unusually pleasant day for supporters of Russia’s beleaguered opposition movement. A warm autumn sun shone on their rally, their fractious leaders were vowing to unite under one banner, and the attendant riot police showed no inclination to haul them off to jail.

Multicoloured flags caught the breeze beside the Moscow river and passionate speeches drifted out on the mild afternoon air, mingling with the cheers and applause of the crowd.

It must have made for a pretty scene to anyone looking down from the glinting towers of the nearby Kremlin.

Viewed from up there, the 1,000 or so people gathered below would have been dwarfed by their surroundings – the heavy churn of the broad river, six-lane streets seething with traffic and the massive red walls of the Kremlin itself. But the political task they have taken on is even more daunting.

“The Russian authorities under V Putin and D Medvedev are leading the country on a path of authoritarianism and corruption, of lawlessness and the abuse of the rights and freedoms of citizens, monopolisation of power and social injustice,” read a resolution handed out at the rally.

“It is essential to change this destructive political and economic course. With this aim, we support the creation of the democratic opposition party For Russia Without Lawlessness and Corruption, and express our firm resolve to together ensure the strict observance of the constitution, principles of freedom and fairness, people-power and the supremacy of the law.”

Regular attendees of such rallies could have collected scores of similar resolutions in the last decade, since Vladimir Putin replaced president Boris Yeltsin and then moved to the prime minister’s office, after ushering his protege Dmitry Medvedev into the Kremlin.

Putin and his allies have flattened liberal opponents like skittles in the last 10 years.

The state-controlled media starve them of the oxygen of publicity, election officials tie them up in red tape and exclude their candidates from ballots, and police pounce on any unauthorised protests, sending marchers running for cover and their leaders for a short stay in jail.

Perhaps more painful than the thud of the truncheon or the bite of the handcuffs, however, is the fact that few Russians really care about their criticism of the Putin-Medvedev ruling “tandem”.

Putin presided over eight years of soaring oil values that fuelled an economic boom, raising living standards in Russia and restoring some of the pride lost during the 1990s, when the Soviet collapse plunged the country into a nightmare of poverty, rampant corruption and political chaos.

The last two years have exposed deep flaws in Putin’s handling of the economy, but surveys do not lie when they show him to be easily Russia’s most popular and trusted politician, followed by Medvedev.

This popularity is bolstered by fawningly loyal state-run media. Their coverage casts Putin in the traditional role of the “good tsar”, tirelessly working for the benefit of his people. If things go wrong – as they often do in Russia – it is due to the incompetence or treachery of the tsar’s underlings, never his own failings.

On stage at the rally, the usual opposition suspects are there, including ex-prime minister Mikhail Kasyanov and former deputy premier Boris Nemtsov. Chess grandmaster turned Kremlin critic Garry Kasparov is nowhere to be seen, however, suggesting the new liberal party is not as united as it might claim.

The speakers are adamant, though, that this time there will be no infighting: they will stand as a united opposition force in next year’s parliamentary elections, and propose one candidate in a presidential election in 2012.

Is their time really coming?

Certainly, millions of Russians now find that life is getting harder again after several years of modest improvement, and Mikhail Gorbachev this week warned that “when people realise that their opinion doesn’t matter and nothing depends on them, they will take to the streets”.

It is hard to imagine today’s Russia – which Gorbachev called “a swamp of stagnation, indifference and corruption” – rising up to oust the ruling elite.

More feasible is change from within and, in Medvedev’s recent criticism of Putin’s government and his sacking of powerful Moscow mayor Yuri Luzhkov, some see cracks appearing in the monolith of Russian power.

But in a country where the masses are apathetic, and fear or self-interest silences the rich and the influential, the most likely scenario is no change at all.

That’s how it feels at the Moscow rally, where the crowd waves its flags, the riot police look bored and a wedding party poses for photographs nearby, paying no heed to the supposed stars of the opposition movement. From the Kremlin towers across the river, this protest must look very small indeed.

Vedomosti/Russia Today: No jail time, just fineshttp://rt.com/Top_News/Press/eng.html

The Kremlin has approved the idea of reducing punishment for non-violent crimes. In 68 articles of the Criminal Code, incarceration will no longer be mandatory

Aleksey Nikolsky, Natalia Kostenko, Lilia Biryukova

The final scheme of liberalization of the penal legislation was approved yesterday during a meeting with the president. According to Dmitry Medvedev, a packet of amendments to the Criminal Code has been prepared; minimum jail term (or a mandatory jail sentence) has been lifted in 68 articles; fines, as the main form of punishment, have been prescribed under 11 sections, and community work under 12 sections.

Following the meeting, Justice Minister Aleksandr Konovalov told journalists that the draft law will be introduced in the State Duma in the near future. Incarceration will no longer be a mandatory form of punishment for some of the more common crimes: burglary, theft, assault with intent to rob, and non-severe violent crime. The minister believes this will force the courts to abandon the Soviet practice of issuing an average

term between the minimal and the maximal. A new form of punishment will be introduced – community work. All this, according to Konovalov, will make it possible to bring the average sentence from 6-9 to 2-3 years, which will decrease the population of the colonies by a third (on November first, 707,100 people were serving time in a colony).

A source, close to the presidential administration, knows that the changes will be applied to the “lightest” first and second parts of the Criminal Code which do not deal with assaultive offences, terrorism, and other violent crime. It looks like the liberalization will not affect crime against the life or health of a person, specifies Andrey Nazarov, first deputy chairman of the State Duma Legislative Committee – the amendments will mainly affect chapters 21 (crime against property) and 22 (crimes in the sphere of economic activity) of the Criminal Code.

This is a serious step away form a narrow liberalization of economic articles of the Criminal Code and toward comprehensive changes of the punitive system, says First Deputy Chairman of the Legislative Committee, Vladimir Gruzdev. In his opinion, this is another important signal to law enforcers and judges that the authorities are not interested in seeing the innocent behind bars, and about the authorities’ political will to change the situation. The aim of the Criminal Code should be redirected from punishment to rehabilitation, believes Gruzdev.

Because the maximum term limits remain the same, there is a possibility that judges will issue these sentences for petty crimes, says lawyer Andrey Andrusenko; an explanation by the Supreme Court will be required to prevent this.

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

Khimki mayor ordered to appear in courthttp://themoscownews.com/local/20101022/188146628.html?referfrommn

by Andy Potts at 22/10/2010 11:09

Khimki’s mayor Vladimir Strelchenko has been ordered to appear in court to support his lawsuit against newspaper editor Mikhail Beketov.

Beketov, pictured above on his way to an earlier hearing, is accused of slandering the town’s chief in his Khimkinskaya Pravda newspaper.

But at a court hearing on Thursday mayor Strelchenko failed to show, Kommersant reported, asking for the court to hear from his representative instead.

And the mayor has apparently gone on unpaid leave, making him unable to attend the latest hearing.

 

Strelchenko summoned

Beketov, who attended the hearing despite his serious health problems, launched a counter-claim requiring the mayor to face questions – and was backed from the bench.

“Strelchenko’s representatives asked to restrict the case to the written testimony of the chief, but the court granted our motion and moved the hearing, once against calling on Strelchenko to appear,” defence lawyer Andrei Stolbunov told Kommersant.

 

“Abuse of power”

The court did hear from Alexei Valov, Khimki’s deputy mayor, who admitted he rarely read newspapers and could not remember the name of Beketov’s publication.

But he was quite clear that he had seen the journalist appear on TV making slanderous statements about the city authorities over the destruction of trees in Khimki forest, Newsru reported.

“Does he work for ‘Pravda Khimok’? I don’t remember, I rarely read newspapers,” said Valov. “But I know that in this newspaper he slings mud all over the country. He constantly abused power.

“In general, any article of his is a lie.”

 

Forest furore

Beketov was the first journalist to question the route of the controversial Moscow – St. Petersburg highway which is set to slice through Khimki forest, destroying acres of precious woodland.

He believes the attack on him in Nov. 2008 – which left him fighting for his life and cost him a leg and three fingers – was politically motivated by vested interests in the road.

And his persistent criticism of the Khimki authorities prompted a law suit from Strelchenko after the journalist claimed the city had deliberately failed to investigate a car bomb attack on him a few months before he was beaten up.

22 October 2010, 10:55

Strasbourg court finds Moscow authorities' ban on gay pride parades illegalhttp://www.interfax-religion.com/?act=news&div=7835

Moscow, October 22, Interfax - The European Court of Human Rights has found the Moscow authorities' refusals to allow gay pride parades to be illegal, Nikolay Alexeyev, leader of the Russian gay movement, said.

"On Thursday, October 21, the European Court of Human Rights handed out its historical verdict on Russia, ruling the bans on three public gay pride parades in Moscow (in 2006, 2007, and 2008) to be in breach of the European Convention for the Protection of Human Rights and Fundamental Freedoms," Alexeyev said.

Alexeyev said the European Court has ordered Russia to pay the organizers of the gay rallies 17,000 euros in compensation for legal costs and 12,000 euros in moral damages.

"The Strasbourg court has ruled that by declining to allow 164 marches and pickets planned by gay activists on May 27, 2006, May 27, 2007, and May 27, 2008 Russia violated Article 11 (right to freedom of assembly) and Article 14 (ban on discrimination), and Article 13 (right to effective legal defense) of the European Convention," Alexeyev said.

Alexeyev said the European Court ruling is expected to become effective in three months, a period of time given to the parties to contest the ruling in the Grand Chamber. "Decisions made by the European Court are binding on the territory of the Russian Federation, which is a member of the Council of Europe," he said.

"We, gay activists, have become the first human rights activists in Russia to get their right to freedom of assembly protected in the European Court. In addition, we have won a victory for all organizers of public events because now the Russian authorities will have to reconsider their entire procedures associated with allowing public events," he said.

Russian Influence Intensifies in Kyrgyzstan After Elections

http://georgiandaily.com/index.php?option=com_content&task=view&id=20257&Itemid=132

October 22, 2010

Erica Marat

The leaders of four political parties –Ar-Namys, Ata-Jurt, Respublika, and Social-democratic Party of Kyrgyzstan (SPDK) – traveled to Moscow days after the October 10 parliamentary elections (www.24.kg, October 15).

Reportedly, they met with Russian officials to discuss the possibility of forming a coalition. All four parties won seats in the parliament and share strong pro-Russia views. In the event that they form a parliamentary coalition, it will support Kyrgyzstan’s stronger ties with Moscow.

However, forming a coalition to unite all four parties is not a straight forward process. Ar-Namys and Ata-Jurt strongly advocate returning to a presidential form of governance, while SDPK was behind endorsing the current constitution based on a parliamentary system. Furthermore, Ar-Namys and Ata-Jurt’s constituencies in southern Kyrgyzstan are deeply divided. The ethnic Uzbek population mostly voted for Ar-Namys leader, Felix Kulov, a former KGB official and prime minister, who advocates strong Russian-style one-leader rule. The ethnic Kyrgyz population, in turn, voted for Ata-Jurt that also promotes strong presidential leadership based on ethno-nationalist identity.

By collaborating with Moscow all four parties shield themselves from the Russian media’s black propaganda, compete for the Kremlin’s financial support and gamble on an opportunity to dominate other political forces in the future with the help of a presidential system. Ata-Meken is the only party represented in the parliament that has been showing open support towards strengthening relations with the West and publicly spoke out in support of retaining the US Transit Center in Manas. Partly for his leaning towards the West, Ata-Meken’s leader, Omurbek Tekebayev, was smeared by the Russian media only days before the elections (EDM, October 14).

After the elections, one of the party leaders told Jamestown that unlike its competitors, Ata-Meken did not seek any external support during the campaigning period and its only benefit from being an openly pro-Western party has been “free air.” According to some Kyrgyz experts pro-Russian parties will now need to implement “Moscow’s directive” to return the country to a presidential system of governance. Given that the next presidential elections are scheduled to take place in late 2011, these parties will need to implement this change in the coming months.

The rationale behind converting a parliamentary system to a presidential one is to make Kyrgyzstan’s political sphere controllable and elections more predictable.

Voices against Moscow’s influence in Bishkek are weak and overall the population seems to approve their political leaders’ course towards greater dependence upon Kremlin. On October 20, a small demonstration took place in front of the Russian embassy in Bishkek with protestors demanding that Russian Prime Minister Vladimir Putin stop intervening in Kyrgyz politics (www.akipree.kg, October 20). The demonstration condemned some of the Kremlin’s actions, apart from the role of Putin’s soft power in Kyrgyzstan’s everyday life – the Russian mass media remains an issue no political activist is ready to address.

The role of the mass media extends beyond direct attacks against specific political leaders, also triggering specific ideas. The head of the Polis-Asia think-tank, Elmira Nogoibayeva, told Jamestown that the Kyrgyz public has been fed with explanations that a presidential system equals order, while a parliamentary system inevitably brings chaos. However, the expert notes that a few years ago, when debates about a parliamentary system first began in Kyrgyzstan, the idea of a strong parliamentary system was treated rather as a model that would suit the national cultural divisions based on tribes (Carnegie Center discussion, October 12). “Now it looks as if a parliamentary system is something imposed by the West,” explained Nogoibayeva.

To a large extent, voters in southern Kyrgyzstan support the idea of a presidential system because President Roza Otunbayeva’s government showed incompetence in preventing the ethnic violence in June that cost the lives of 400 people and displaced over 100,000. Some experts in Kyrgyzstan argue that if the June 27 constitutional referendum allowed voters to choose between a presidential and parliamentary system, rather than only a parliamentary system, they likely would have chosen the former. For many in the south, especially ethnic Kyrgyz, the regime change in April lacks legitimacy and is considered to be a result of Bishkek’s internal politics. “Those 80 something victims of the April 7 revolution is incompatible with our sufferings,” a middle aged woman from Osh told Jamestown.

Should the four pro-Moscow parties join one coalition and increase the role of the president before the next elections, this will be a sign of stronger Russian influence in Kyrgyzstan.

Source: http://www.jamestown.org/programs/edm/

Factional Divisions within the Chechen Separatist Movement

http://georgiandaily.com/index.php?option=com_content&task=view&id=20256&Itemid=132

October 22, 2010

Mairbek Vatchagaev

The summer and fall of 2010 have not been pleasant for the leadership of the Chechen armed resistance movement.

A split in the supreme leadership was for a period of time carefully hidden from the public eye by victorious communiqués voiced from other parts of the so-called Caucasus Emirate, but the truth ultimately came out and became known to the entire world (www.djamaattakbir.com/2010/07/blog-post_4210.html). The most prominent commanders of the Chechen resistance movement – such as Emirs Aslanbek, Hussein,

Tarkhan, Mukhannad and others – who in fact represent almost the entire network of armed rebel units of the Chechen Jamaat (http://daymohk.org/cgi-bin/orsi3/index.cgi?id=39985;section=1#39985) announced the ouster of Doku Umarov, the head of the North Caucasus resistance movement. Contrary to the claims voiced by media representing the interests of the Caucasus Emirate and some independent observers, Umarov’s dismissal was not the consequence of statements in which he claimed responsibility for terrorist acts on Russian territory (www.kavkaz-uzel.ru/articles/172981/). Rather, the split was caused by the very idea of the Caucasus Emirate. This means that there is an ongoing struggle between the two major components of the North Caucasus movement: the nationalists and the supporters of the idea of creating an Islamic state from the Black Sea to the Caspian Sea.

This ideological confrontation dates back to the period well before the Chechnya wars in the 1990s. But it was during the first Chechnya war in 1994-1996 that the Islamist wing morphed into an autonomous military structure called a jamaat and put forward the goal of establishing an entity based on the Sharia law in place of the nationalists’ idea of building a nation-state.

From 1996 to 1999, in the aftermath of the first war in Chechnya, a number of developments clearly showed the local population that the supporters of the Islamization of the North Caucasus were becoming more and more popular, especially among the local youth. The first romanticists – such as Khalimov, Udugov, Umarov, Abdullaev, etc. – were followed by the more aggressive younger generation – such as the Akhmadov brothers, Baraev, Abdurakhman and others – that, in their vision of Chechen statehood, rejected even the theoretical coexistence of the ideas of nationalism and Islamism.

During the second Chechnya war, information and media sources representing the proponents of an Islamic state were quite successful in propagating the idea that only their supporters fought. In those years and especially after the death of the president of the Chechen Republic of Ichkeria, Aslan Maskhadov, in March 2005, that view dominated among analysts, experts and researchers of the North Caucasus, who first claimed that the nationalist movement had been already transformed into an Islamic one and then drew their analyses and conclusions based on that false assumption. The adoption by Chechens of the idea of the Caucasus Emirate looked like a concession that was made to the comrades-in-arms representing other brotherly peoples across the region. Meanwhile, Chechens remained -- and still remain -- the “locomotive” of the North Caucasus movement. Whatever happens in the Chechen armed resistance has repercussions throughout the region’s national jamaats. The latest change of rhetoric by the Ingush Jamaat, where nationalist sentiments are now more conspicuous, is identical to what has already happened in the Chechen Jamaat. And this has not started this year. The very idea of the Emirate emerged as a compromise, given the non-recognition of the Chechnya Jamaat’s leading role by individual leaders representing non-Chechen Jamaats - for instance, Emir Seifullah, aka Anzor Astemirov, the commander of the Yarmuk Jamaat. In fact, these leaders insisted that the Chechen jammats forego their demand for an independent Chechen state in exchange for their backing of the Emirate.

The Chechen commanders who are no longer subordinated to Doku Umarov – Emirs Aslanbek, Hussein, Tarkhan and others – represent the nationalist wing of the Chechen insurgency that has become disillusioned with the idea of the Caucasus Emirate and are now demanding that the entire architecture of the organization be thoroughly reformed. One of their first demands was to reorganize the Emirate into a confederation in which the emir would only have a nominal role to play. Pressured by the three commanders, Umarov had to resign in late July-early August 2010, which was nothing short of sensational. Oddly enough, Umarov reneged on his words shortly after the commanders departed for their bases, and declared that the Chechen commanders had orchestrated a putsch against him. The situation was comical, since Umarov looked like an incapacitated ruler without his leading commanders. That was why he tried for three months to persuade them to come back under his command and repent their disobedience.

Umarov has no means to threaten the three commanders, who keep almost all Chechen Jamaats under their effective control. His current rhetoric is far from being reminiscent of September 2007, when he solemnly proclaimed the creation of the Caucasus Emirate and threateningly vowed that anyone acting against him would be killed. The only option he has today is to persuade the disobedient commanders to return to him by arguing that this would be in compliance with the Sharia law and in the common interest of independence from Russia. Against this background, Umarov and his close associates have started a massive campaign involving statements and appeals from abroad by sheikhs unknown in the North Caucasus – one of those being at-Tartusi – in which they ask the schismatic commanders to return under the flag of Doku Umarov, since otherwise their behavior would contradict the Prophet’s deeds and the Islamic legacy. Meanwhile, the commanders who no longer recognize Umarov’s jurisdiction have elected the new leader of the Chechen Jamaat – Emir Khussein Gakaev. This is not the first instance of disobedience. Emir Mansur (aka Arbi Yevmirzaev), who was killed in February 2010, was a famous Chechen commander. He never embraced the idea of the Caucasus Emirate and fought separately from Umarov.

The important point is that jamaats like Dagestan’s Sharia and Kabardino-Balkaria’s Yarmuk support Doku Umarov. To them, he is the symbol of the united resistance movement in the North Caucasus (www.jamaatshariat.com/islam/28-islam/1128-2010-08-17-20-00-57.html). By appointing the incumbent qadi (Sharia judge) of the Dagestan Vilayat, Ali Abu Muhammad ad-Dagestani, as the supreme qadi of the Sharia Court of the Caucasus Emirate (http://kavkaz.tv/russ/content/2010/10/18/75903.shtml), Umarov looks to be in search of allies to counterbalance the breakaway Chechen commanders. In general, the split in the resistance movement has not had any impact on the situation in the region. Although Umarov’s leadership is nominal, there are mechanisms of unified command in place.

Could the split be viewed as irreversible and as the turning point toward the policy of Ichkeria, as it was construed by some Chechen politicians living in the West? It would be better not to jump to conclusions. Time will tell how far the dissident commanders are willing to go from the idea of the Caucasus Emirate, how much they cherish the idea of an independent Ichkeria and, last but not least, whether or not Sufism still has influence.

Based on what we have today, it can be argued that there is an ongoing search within the movement and there seems to be a newly formed political force coming into existence as part of the North Caucasus resistance movement.

URL: http://www.jamestown.org/programs/edm/

Financial Adviser Network

A Russian State Secret May Push Palladium’s Price To $1,000http://blogs.forbes.com/halahtouryalai/2010/10/21/a-russian-state-secret-may-push-palladiums-price-to-1000/?boxes=HomepageFAN

Oct. 21 2010 - 4:19 pm

Yesterday I wrote about a UBS analyst note that said palladium would reach $703 by 2013, and that if certain conditions are in place the precious metal could hit $1,000 or more.

Well, one of those conditions could be met fairly soon.

More than 80% of world’s palladium production comes from two countries: the Russian Federation and South Africa.

Russia built a massive stockpile of palladium over a number of years when the metal wasn’t being used very much. Now though, the metal is widely used tin cars-vehicles manufacturers account for half the world’s palladium consumption.

It’s also found in cell phones, LCD TVs, laptops, iPods, and DVD players.

UBS analysts say cars will be the new mobile phones in China in terms of consumer consumption in the next 10 years. The number of drivers in China is doubling every four years currently.

Good news for Russia, right? Not really. There’s word that the country’s stockpile is dwindling to levels well below what will be necessary to keep up with potential demand. Russian stockpiles supplied over 10% of the world’s palladium output last year.

To make matters more complicated, exact figures on the Russian stockpile of palladium are unknown because the country keeps them a state secret. Very convenient. 

On October 8, Norilsk said that it expects the Russian stock pile to be finished this year and that it anticipates no deliveries in 2011.

“If so, this will mark a considerable decline in palladium supply and the market will be minus the 1 million ounces which has been the annual norm over the past two years. Thus a sizeable deficit looms if correct,” a UBS note says.

Further, if the stock pile does dry up, the analysts say their 2012 forecast of $700 per ounce will be too modest. The drop in Russian supply could push the price of palladium to $1,000.

Palladium reached $602.50 per ounce in early October- the highest price since 2001.

“The industry is buzzing about gold and silver, but palladium, which is part of the platinum group metals, has appreciated the most of any precious metal this year. This often forgotten precious metal is up an extraordinary 38 percent since January. Of all of the precious metals, palladium is the least known but possibly has the greatest profit potential,” says Greg Marshall president and CEO of Global Asset Management.

National Economic Trends

Rouble has more chances to firm, not weaken—cbankhttp://www.reuters.com/article/idUSLDE69L08520101022

2:54am EDT

MOSCOW, Oct 22 (Reuters) - Russia's rouble has more room to firm rather than to weaken from current levels close to 2010 lows, said a central bank board member on Friday.

"Russia is not taking part in "currency wars", but the rouble is nevertheless weaker. Regarding further weakening, I would say there is potential towards firming rather than weakening," Sergeu Shvetsov told a conference.

"It's our assessment," he added.

His comments came out a day after the rouble dropped to its 2010 lows, hit by rising imports, debt redemptions, and investors' intentions to reduce exposure towards Russia. [ID:nLDE69K1Y7] (Reporting by Elena Fabrichnaya; Writing by Andrey Ostroukh; Edtiting by Vladimir Soldatkin)

Ruble Gains Against Dollar for Second Day, Up Versus Euro http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ayzDG9qQqRyk

By Emma O’Brien

Oct. 22 (Bloomberg) -- Russia’s ruble strengthened against the dollar for the second straight day, gaining 0.4 percent to 30.5174 per dollar by 10:02 a.m. in Moscow. It also climbed against the euro, adding 0.4 percent to 42.6645.

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

Last Updated: October 22, 2010 02:03 EDT

October 22, 2010 11:27

Overdue loans at Russian banks stabilize at 6.5% - Central Bankhttp://www.interfax.com/newsinf.asp?id=197264

MOSCOW. Oct 22 (Interfax) - The share of overdue loans at Russian banks has stabilized at 6.5% of the overall loan portfolios, the head of the Central Bank's department of financial market operations, Sergei Shvetsov, said in Moscow on Friday at a forum on ruble settlements.

"According to our forecast, there will be no further growth," he said.

"The banks themselves are able to cope with the overdue debt," he said.

Central Bank Chairman Sergei Ignatyev said at the end of September that so far no steady decline in the level of overdue loans at Russian banks has been detected. "The level of overdue debt on bank loans has stabilized, but so far no steady trend toward decline has been seen," he said.

Overdue retail loans declined to 7.49% of the portfolio as of September 1 from 7.52% as of August 1, mainly due to an increase in the overall portfolio.

The share of overdue loans to corporates also declined in August, to 6.15% as of September 1 from 6.21% a month earlier.

jh

Domestic debt strategy http://www.businessneweurope.eu/dispatch_text13262

Renaissance CapitalOctober 22, 2010

CBR optimistic about rouble perspectives

Sergey Shvetsov, a member of the Central Bank of Russias (CBR) board of directors, commented on the situation on the FX market. He said the CBR would continue to move to the floating exchange rate regime in 2011-13. One of the main reasons for the move, according to Shvetsov, is to make carry-trade operations less attractive.

According to Shvetsov, the current account balance would decline from $73bn in 2010 to $46bn in 2011. He named investment imports (production-related) as the key reason for the decline in the foreign trade balance and, thus, in the current account balance. Furthermore, Shvetsov said the CBR expects capital inflow of $12bn in 2011 on the back of privatisations, and increasing debt burdens in the sovereign segment and export-oriented companies. Given these comments, we think the regulator supports the view that the current rouble dynamics are speculative in nature and its depreciation trend has almost come to an end, so, it may appreciate as soon as in the end of this year.

In addition, Shvetsov said the CBR has already sold $3.3bn in recent weeks. Given official statistics, the interventions in October have been at around $1.8bn. We do not think the CBR sold more than $600mn during 1-15 Oct. As such, the CBR has sold around $1.2bn during 17-21 Oct. While the rouble-basket exchange rate remained below 36.30, it seems to us the CBR has been selling no less than $300mn per day on average, implying that the new intervention mechanism may have not been put into operation yet. We expect it will be launched as soon as the pressure on the rouble weakens and, more generally, we think it will take place at the start of November.

OBR issues attracted high demand Yesterday (21 Oct), the CBR placed around RUB21.5bn in the OBR-15 issues. The cut-off rate was 3.70% (vs 3.57% a week ago). Demand was more than 2x higher than the amount on offer, at RUB48bn.

We are surprised by the results, as Wednesdays OFZ auctions were not that successful. All things considered, OFZs are not a comparable substitute for OBRs: The OBR market is very fragmented, as Sberbank has always been a major holder of OBRs. As such, we see few signs of coordination between CBR and Ministry of Finance actions.

The unexpected increase in the OBR auction rate was most likely a result of the CBRs expectations of high demand, in our view. Still, liquidity conditions remained favourable as OBRs attracted significant demand from commercial banks. As the government accelerates federal budget spending in the end of the year and OFZ placements are moderate, we expect the favourable liquidity conditions to continue through next year.

Shvetsov said he does not see excessive liquidity in the system, as it is sterilised via various tools. According to Shvetsov, the only excessive liquidity is the RUB500bn left on correspondent accounts. However, we disagree with him, as banks usually hold around RUB700bn in overnight banks deposits at the start of each month.

Anton Nikitin

Rossiyskaya Gazeta/Russia Today: A ruble response http://rt.com/Top_News/Press/eng.html

Development of stock trading will help make the ruble a regional currency

Elena Kukol

Russia will not resort to currency wars, promised Presidential Aide Arkady Dvorkovich, while speaking at the “The Russian Money Market – 2010: Regional Ambitions” conference yesterday. He also confirmed that the country does not plan to impose restrictions on capital flows.

We are peaceful people and prefer asymmetric responses, argued Dvorkovich, clearly alluding to the recent decision, made by the Central Bank, to make the Russian ruble more elastic. Note that this step was made at the time when many central banks of the world are increasing their presence in the currency market and establishing barriers for the inflow of speculative funds into the state. However, a refusal to limit capital inflows will, according to Dvorkovich, contribute to a spillover of funds to the Russian market, which will, in turn, extend its depth and volume.

The next phase of the asymmetric response, according to Dvorkovich, should include further promotion of the ruble as a regional currency, increase its share in international payments, and continuation of the discussion in the G-20 format about the inclusion of the ruble in the currency basket, based on which the Special Drawing Rights of the IMF are formed, and finally, creation of an international financial center in the country.

An interagency council for promotion of the ruble’s role in international transactions was set up two days ago, said Deputy Minister of Finance Aleksey Savatyugin. According to the deputy minister, the council will hold its first meeting in the near future. He did not specify, however, what types of first decisions and steps can be expected from the new body. Meanwhile, Dvorkovich had acknowledged that, for now, Russia can be a contender for the status of a regional, and not a global financial center.

The placement of other countries’ sovereign bonds on the Russian market can be considered as the first step in that direction. This decision has already been made by Belarus, recalled Dvorkovich. The placement of Belarusian sovereign bonds, as was reported earlier, is scheduled for November. Following Belarus, other countries may enter the Russian market, hopes Dvorkovich. But for now, he says, we are talking about loans in the amount of several dozen, and not hundred, billion rubles. The Russian market is unable to digest larger placement volumes. The issuer, explains Dvorkovich, needs to be shown that there is enough money, and the bonds will be in demand.

However, in its claims to attract state and corporate bonds from other countries, Russia will be forced to compete with the already existing regional financial centers, warns World Bank economist Lucio Vinhas de Souza. For a Kazakh company, for example, geographically there is no difference between Russian and Shanghai platforms, while for Ukrainian corporations, Warsaw or Frankfurt may seem more attractive. Meanwhile, the

volume of the Shanghai market is four times larger than that of Russia, says de Souza. In the rating of financial centers, based on a survey of investors in Russia, the greatest competition will most likely be in the Asian markets, specifies de Souza. But today, Shanghai, San Paulo, Mumbai, and Johannesburg hold higher positions.

According to Dvorkovich, however, Russia has a chance to use its own advantages in this competition. Russia, says the presidential aide, is perhaps the only remaining large European center with good growth potential. Future investors may be attracted by the similarities between our and the European culture. An advantage over the European platforms could be the presence of natural resources. Plans to form ruble-denominated stock exchange instruments for natural resource assets should help in turning the ruble into a regional currency. Talks about trading oil, gas and other commodities on the stock exchange market have been ongoing for years. However, one should acknowledge that the success, achieved in this area, is not great – trade volumes are not large. And finally, the extensive plans for privatization could increase the liquidity of the Russian market and attract additional capital, says Dvorkovich.

Nevertheless, on the way toward the expansion of the ruble’s role, there are numerous underlying potential problems, warn experts. The Russian national currency could very well be a contender for the resource status, like that of the Canadian or the Australian dollar, says Sergey Guriev, rector of the New Economic School. Such currencies attract investors, wanting to avoid the risk of a sharp collapse or rise in prices on natural resources. But, becoming one of the resource currencies will be difficult for the ruble. The high inflation is an obstacle, which raises the storage cost of such currency, explains Guriev. Another serious problem is the lack of liquid assets on the Russian money market.

Stockbrokers had all complained about the lack of a reliable reference point, based on which the market rates should be formed. The bar could have been set by the federal bonds or distribution of the state debt in the domestic market. In the proposed budget for 2011-2013, the Ministry of Finance announced major plans to enter the domestic market. But last year, there had also been talks about the revival of the federal loan bond market in 2010, though as oil prices began to rise, the need in financing the budget deficit through borrowing was no longer there, the plans have not been fulfilled, says Roman Goryunov, Chairman of the Board of the Russian Trading System. However, Savatyugin, toward whom these claims were addressed, tried to explain, to prove in the parliament and other platforms that it is extremely difficult to borrow money from the budget when there is no need in doing so. Stock market representatives believe that monopolism hinders the development of trade of natural resource commodities on the stock exchange market. Due to this fact, not a single stock market today is able to ensure the supply of goods based on futures contracts, acknowledged Goryunov.

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

VTB State Asset Sale Winning Over Bond Investors: Russia Credit http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a6dH4lwZUaos

By Emma O’Brien and Denis Maternovsky

Oct. 22 (Bloomberg) -- Russia’s $59 billion asset sale program is stoking the biggest rally in VTB Group bonds since July and sending OAO Sberbank yields to record lows on speculation disclosure will improve with less state control.

VTB’s dollar notes due in 2018 jumped the most since July 8 and yields on Sberbank notes maturing next year fell to the lowest since they were issued in 2006, after the government unveiled plans this week to sell stakes in Russia’s two largest lenders. The state may give up control of VTB within three years and plans to reduce its Sberbank holding by 2014, First Deputy Prime Minister Igor Shuvalov said Oct. 20.

“A serious privatization push would be positive for all Russian assets,” said Paul McNamara, who oversees $4.5 billion of emerging-market debt, including Russian corporate bonds, at Augustus Asset Management Ltd. in London. “It will outweigh the problems caused by a lack of state ownership.”

Two decades after the fall of communism, the world’s biggest energy exporter is selling shares in 900 state companies to help plug its budget deficit as Russia seeks to reduce dependence on commodities. Bondholders demand higher yields from Russia than lower-rated Brazil, Colombia and the Philippines, in part because of concerns over the former Soviet nation’s reliance on energy sales and corporate transparency.

Energy Exports

Energy accounts for about 75 percent of Russian exports to the Baltics and countries outside the former Soviet Union, government data show. Russia ranks 146th on Transparency International’s least corrupt nations list, worse than Brazil, India, China and Turkey.

“VTB is often criticized for the fact that the state is allegedly interfering in the bank’s business, even though this is not really happening,” Herbert Moos, deputy chairman of VTB Group in Moscow, said in a phone interview yesterday. “Bringing in investors, chiefly foreign, to our board will undoubtedly affect our profitability and effectiveness in a positive way.”

An official at Moscow-based Sberbank, who wouldn’t be identified in line with the bank’s policy, declined to comment on the effect of a reduced government shareholding on the lender’s debt.

The government, which owns 85.5 percent of Moscow-based VTB, plans to sell a 10 percent stake this year, another 10 percent next year, and a further 10 to 15 percent in 2012, Shuvalov said. Prime Minister Vladimir Putin’s government is also ready to “discuss the possibility” of cutting its holdings in the nation’s second-largest bank to less than a controlling stake of 50 percent plus one share within three years, he said. VTB rose 6.1 percent to 9.93 kopeks yesterday.

Shares Surge

Russia owns 60.3 percent of Sberbank, the country’s biggest lender, data compiled by Bloomberg show. The state may sell more than the planned 9 percent stake, Shuvalov told reporters in Moscow on Oct. 12 after a meeting with foreign investors. Sberbank’s shares surged to its highest since January 2008 yesterday, adding 5.9 percent to 103.29 rubles.

The government also plans to offer as much as 15 percent of OAO Rosneft, Russia’s largest oil producer, along with stakes in OAO Aeroflot, the national carrier, OAO Rostelecom, the main long-distance phone company, OAO Sovcomflot, Russia’s biggest shipper, and OAO Russian Railways, the state-owned rail monopoly. Shares of OAO Transneft, Russia’s oil pipeline monopoly, fell to the lowest in a week after Shuvalov cut it from the list of companies the Finance Ministry issued in July.

Budget Gap

The sales will help the government narrow its budget gap to 1.8 trillion rubles ($59 billion) next year, Shuvalov said. The deficit will amount to 3.6 percent of gross domestic product next year compared with 5.3 percent this year, according to government forecasts.

Bondholders demand higher yields from Sberbank and VTB than from Itau Unibanco Holding SA, Brazil’s largest lender by market value, which is rated one step lower. Sao Paulo-based Itau’s dollar bonds due next year yielded an average 2.54 percent this year compared with 2.91 percent for Sberbank’s 2011 notes, data compiled by Bloomberg show.

The cost of protecting Russian state debt against non- payment for five years using credit-default swaps fell 3 basis points to 133.5 yesterday, down from this year’s peak of 217, according to prices from CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Default Swaps

Credit-default swaps for Russia cost 2.5 basis points less than contracts for Turkey, which is rated four levels lower at Ba2. Russian swaps cost as much as 40 basis points less on April 20.

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries fell 8 basis points to 205 yesterday, according to JPMorgan Chase & Co.’s EMBI+ indexes. The difference compares with 152 for debt of similarly rated Mexico and 185 for Brazil, which is rated two steps lower at Baa3 by Moody’s, 172 for the Philippines and 162 for Colombia.

The so-called yieldspread on Russian bonds is 51 basis points below the average for emerging markets, down from a 15- month high of 105 in February, according to JPMorgan indexes.

The yield on Russia’s dollar bonds due in 2020 fell 3 basis points yesterday to 4.274 percent, 12 basis points short of a record low. The yield on the country’s ruble notes due in August 2016 was unchanged at 7.14 percent.

Bonds Rally

Sberbank dollar bonds due 2017 rose for the first day in six yesterday, pushing the yield down 9 basis points to 5.31 percent, according to prices compiled by Bloomberg. The yield on Sberbank’s 2011 dollar bonds slid 17 basis points to a record- low 2.05 percent.

VTB bonds maturing in 2015 yielded 5.25 percent yesterday, down 10 basis points in the biggest decline since Oct. 6. The yield on debt due in 2018 fell for the first day in six, sliding 9 basis points to 5.83 percent, the largest drop since July 8, according to data compiled by Bloomberg.

The government isn’t talking about definitely giving up control of either VTB or Sberbank, which means their “quasi- sovereign status will not be affected while the entrance of new shareholders may improve governance,” Dmitry Dudkin, head of fixed income research in Moscow at UralSib Financial Corp., said in an e-mail interview yesterday.

“I don’t think losing the sovereign guarantee makes a huge difference,” said Jerome Booth, who helps manage $35 billion in emerging market assets as head of research at Ashmore Investment Management Ltd. in London. “If the asset was strategic beforehand, it’s going to continue to be strategic, and if it wasn’t it won’t be. I don’t think it fundamentally affects the credit quality.”

Controlling Stake

Russia will retain a controlling stake in Sberbank for the next five years, Deputy Finance Minister Alexei Savatyugin told reporters in Moscow yesterday. VTB’s ties with the government won’t be severed by a reduction in its stake as “no one is saying” they’ll be giving up their investment altogether, VTB’s Moos said.

Sberbank’s “importance to the economy” means it would still receive state assistance in the event of a default, Guenter Schwabl, a fund manager at Erste Sparinvest KAG, which holds the equivalent of about $171 million of emerging-market corporate bonds, including Sberbank debt, said by phone yesterday from Vienna.

The asset sale program is part of Putin’s initiative to build investor support after last year’s record economic contraction triggered the country’s first budget deficit in 10 years.

The Micex index, the chief platform for trade of Russian equities and bonds, is instituting reforms to make it easier for foreign investors to buy and sell securities, and the central bank is loosening its control on the ruble as it moves closer to a flexible exchange rate and inflation targeting regime by 2012.

Credit ratings for both VTB and Sberbank will be positively affected by the reduction in state control, Yaroslav Sovgyra, a senior analyst at Moody’s Investors Service, said in an interview in Moscow yesterday. Sberbank and VTB share the same Baa1 credit rating as Russian sovereign debt at Moody’s.

“The impact on corporate governance is unquestionably positive,” Sovgyra said. Privatization “will affect the banks’ standalone ratings which are low partly because of inefficiencies in management,” he said.

To contact the reporters on this story: Emma O’Brien in Moscow at eobrien6@bloomberg.net; Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

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

Last Updated: October 21, 2010 16:46 EDT

Business, Energy or Environmental regulations or discussions

Russian markets -- Factors to Watch on Oct 22http://in.reuters.com/article/idINLDE69L05U20101022

11:16am IST MOSCOW, Oct 22 (Reuters) - Here are events and news storiesthat could move Russian markets on Friday. You can reach us on: +7 495 775 1242 STOCKS CALL (Contributions to moscow.newsroom@reuters.com): OTP Bank: At the moment, stock markets are mixed. We expect the Russian bourse to open flat or above the previous session's closing levels. Gallion Capital: After yesterday's growth in Russian markets a downward correction is expected as U.S. markets and oil prices have weakened since the close of trade in Russia. EVENTS [RU-DIA] (All times GMT): GWANGJU, South Korea - G20 Finance Ministers' and Central Bank Governors' Meeting (to Oct. 23) TURKMENBASHI, Turkmenistan - Russian President Dmitry Medvedev pays a working visit to Turkmenistan MOSCOW - Conference on Russian rouble (0600) MOSCOW - Economy Minister Elvira Nabiullina to meet delegates of Shanghai Cooperation Organisation (SCO), a six-nation group led by Moscow and Beijing (0600)

MOSCOW - The head of Russia's anti-monopoly body (FAS) Igor Artemyev to take part in the conference "Anti-monopoly regulation in Russia" (0530) MOSCOW - Press conference on current level of bad debts in Russian banking system (0800) MOSCOW - Exhibition for luxury products Millionaire Fair Moscow 2010. LINK: millionairfair.ru/ MOSCOW - Polymetal (PMTL.MM: Quote, Profile, Research) Q3 trading update (0600) NICOSIA - Annual general meeting to Urals Energy (UEN.L: Quote, Profile, Research)shareholders IN THE PAPERS [PRESS/RU]: Herbert Hainer, chief executive of German sporting goods maker Adidas (ADSG.DE: Quote, Profile, Research), told business daily Vedomosti the group will see record-high sales of 11 billion euros ($15.32 billion), while net profit will come at between 520 million and 550 million euros this year. TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]: TOP NEWS: Russia mulls $59bln sell-off, gives no timeline [ID:nLDE69K0N2] Putin should not run in 2012 vote--Medvedev aide[ID:nLDE69K2B5] Russia ruling party official named Putin aide [ID:nLDE69K1HK] COMPANIES/MARKETS: Transneft sale is off agenda in next 5 yrs [ID:nLDE69K1PH] TNK-BP says receives $2 bln loan [ID:nLDE69K1NK] Kazakh oil firm KMG may hold IPO in 2011 [ID:nLDE69K1DH] Rushydro plans 5-yr rouble Eurobond--source [ID:nWLA5948] Russia picks VTB among Eurobond organisers [ID:nLDE69K0JI] LUKOIL Eurobond road show seen next week [ID:nLDE69K0KP] ECONOMY/POLITICS: Rouble recovers in late trade [ID:nLDE69K1Y7] Kazakh tenge may return to managed float in 2011[ID:nLDE69K1O9] Russia cbank signals greater rouble flexibility [ID:nLDE69K1LL] New Moscow mayor promises to tackle corruption [ID:nLDE69K10R] Ukraine needs better investment climate-EBRD [ID:nLDE69J16J] Gays win landmark rights case against Russia [ID:nLDE69K11T] Kremlin aide: Russia will not join currency war [ID:nLDE69K14Z] ENERGY: Ukraine to raise gas price issue in Russia talks[ID:nLDE69K1OQ]

Petrovietnam can still consider BP assets-paper [ID:nSGE69L01K] Hungary mulls buying Surgut's stake in MOL [ID:nBUD005560] Russia's Surgut wants to sell its stake in MOL [ID:nLDE69K1VE] Bulgaria, Russia to set up JV for South Stream [ID:nLDE69K26S] Azeri oil output up 1.9 pct in Jan-Sept y/y [ID:nANT150553] Azerbaijan gas output up 14.4 pct in Jan-Sept [ID:nANT151003] COMMODITIES: Norilsk Nickel shareholders vote to retain board[ID:nLDE69K1UY] MARKETS CLOSE/LATEST: RTS .IRTS 1,596.4 -0.5 pct MSCI Russia .MIRU00000PUS 847.4 +2.6 pct MSCI Emerging Markets .MSCIEF 1,104.7 -0.1 pct Russia 30-year EurobondRU011428878= yield: 4.096/4.072 pct EMBI+ Russia 11EMJ 203 basis points over Rouble/dollar RUBUTSTN=MCX 30.6250 Rouble/euro EURRUBTN=MCX 42.8200 NYMEX crude CLc1 $81.05 +$0.49 ICE Brent crude LCOc1 $82.34 +$0.51 For Russian company news, double click on [E-RU] Treasury news [M-RU] Corporate debt [D-RU] Russian stocks [.ME] Russia country guide RUSSIA All Russian news [RU] Scrolling stocks news [STXNEWS/EU] Emerging markets top news [TOP/EMRG] Top deals [TOP/DEALS] European companies [TOP/EQE]

Polymetal, Gazprom, Lukoil, Polyus: Russian Stocks Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aNTooEjSfp5c

By Maria Levitov

Oct. 22 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s Micex Index rose 2.3 percent to 1,528.11. The dollar-denominated RTS Index rose 3.1 percent to 1,604.86.

OAO Polymetal (PMTL RX): The Russian gold and silver producer is due to report third-quarter production. Polymetal was little changed at 506.82 rubles.

OAO Gazprom (GAZP RX): Russia has imported 7.9 billion cubic meters of natural gas from Turkmenistan in almost nine months since resuming shipments through a pipeline that had been damaged by an explosion, according to the Kremlin press service. Gazprom, the world’s biggest natural-gas producer, rose 2.4 percent to 165.84 rubles.

OAO Lukoil (LKOH RX): Crude declined as China’s oil processing grew the least in 18 months after government measures to cool the economy reduced fuel consumption. Lukoil, Russia’s biggest private oil producer, rose 0.8 percent to 1,756.89 rubles.

OAO Polyus Gold (PLZL RX): Gold futures fell on speculation the dollar will rebound, eroding the appeal of the precious metal as an alternative asset. Polyus, Russia’s biggest gold- miner, rose 1.2 percent to 1,561 rubles.

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

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

Last Updated: October 21, 2010 22:00 EDT

RusHydro Selling 20 Billion Rubles of 5-Year Ruble Eurobonds http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aG8tL15KjYfk

By Denis Maternovsky

Oct. 22 (Bloomberg) -- OAO RusHydro, Russia’s largest producer of renewable energy, is selling 20 billion rubles of five-year Eurobonds, which were priced to yield 7.875 percent, at the lower end of the guidance set yesterday, according to a banker with knowledge of the transaction.

JPMorgan Chase & Co., Troika Dialog and OAO Gazprombank arranged the sale, the banker said.

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

Last Updated: October 22, 2010 02:07 EDT

Russian Agricultural to Start Selling 10 Billion Rubles of Bonds http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a8DsKDASCLpM

By Denis Maternovsky

Oct. 22 (Bloomberg) -- Russian Agricultural Bank will start selling 10 billion rubles ($327 million) of three-year bonds on Nov. 2, the Moscow-based lender, known as Rosselkhozbank, said today in a regulatory filing.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

Last Updated: October 22, 2010 01:51 EDT

Sberbank might acquire Renaissance Capital by YE10 http://www.businessneweurope.eu/dispatch_text13262

VTB Capital22 October 2010

News: RBC-Daily speculates that Mikhail Prokhorov has gained the support of some members of Sberbanks Supervisory Committee to acquire Renaissance Capital. The deal is subject to the consent of RenCaps main shareholder, Steven Jennings, and might be closed by YE10.

Our View: This is neutral for Sberbank, which has already flagged its target of building an investment banking division. However, according to management, the bank is still considering a number of choices, including acquiring either RenCap or Troika Dialog. Rumours that Prokhorov wanted to sell his 50% minus one share in RenCap have been circling on the market for a while and it seems as though Sberbank is the only real buyer out there. At this stage it seems that negotiations with both Troika and RenCap are at the bargaining stage. In our view, a deal with Troika is more likely and the RenCap option is used as a bargaining chip. We expect to hear more on that story, although the final stock impact will depend on the deal terms and valuation.

Russia's Mechel gets antitrust nod to fully acquire Toplofikatsiya-Rusehttp://www.sofiaecho.com/2010/10/22/980604_russias-mechel-gets-antitrust-nod-to-fully-acquire-toplofikatsiya-ruse

Fri, Oct 22 2010 08:37 CET

Bulgaria’s competition regulator said it has allowed Russian metals and energy group Mechel to buy the 51 per cent it does not already own in heating and power utility Toplofikatsiya-Ruse from Slovenia’s Holding Slovenske Elektrarne.

The antitrust watchdog has concluded that the full acquisition of Toplofikatsiya-Ruse will not affect the competition in the energy sector of Bulgaria.

Currently, the utility holds 2.8 per cent of the electricity market in the country, according to data of the energy regulator. The Russian group, which specialises in the production of iron ore concentrate, nickel, steel, ferroalloys, heat and electricity, is active mainly on the markets of Russia, Romania and Lithuania. In Bulgaria Mechel sells black and bituminous coal, chiefly to Toplofikatsiya-Ruse.

Mechel will buy the Bulgarian utility through its Swiss-registered unit Mechel International Holdings. When the Russian company entered the equity of Toplofikatsiya- Ruse in 2007, recently after it has been privatised by its Slovenian peer, it said that it planned to increase its holding.

Source: Dnevnik.bg

Severstal pays USD 4 million for Liberian iron ore stakehttp://www.steelguru.com/russian_news/Severstal_pays_USD_4_million_for_Liberian_iron_ore_stake/171192.html

Friday, 22 Oct 2010Interfax-Ukraine reported that Severstal has paid the outstanding USD 4.2 million towards its stake in the Putu iron ore project in Liberia with African Aura Mining.

Severstal paid the first installment of USD 4.2 million in December 2008 and had until December 10 this year to pay the remainder.

African Aura has said it could cost up to USD 2.5 billion to put the Putu project into production. Liberia's government has issued a 25-permit to develop the Putu field with a mineral resource of 1.08 billion tonnes ore, Fe-content 37.6%. The field should produce 20 million tonnes of magnetite concentrate per year. The Liberian government estimates it will receive royalties of USD 1.6 billion in the first 20 years.

Severstal 61.5% subsidiary Severstal Liberia Iron Ore Ltd has entered into an agreement with the Government of Liberia to develop the Putu project. The 25-year Mineral Development Agreement was signed on September 3rd 10 approved by the President of Liberia and ratified by the Liberian Legislature on September 9th 2010.

The project is situated on a 13 kilometers long ridge located only 120km inland from the deepwater shoreline of southeastern Liberia. Exploration works are continuing and the deposit has the potential to contain significant additional resources. A pre-feasibility study on the project should be completed by September 2012. Since 2008 Severstal has

held a 61.5% interest in the project following the investment of USD 30 million into the pre-feasibility study. African Aura holds 38.5% in Putu project. Severstal holds a 3.5% stake in African Aura.

(Sourced from Interfax-Ukraine)

Russia's VTB says voted for re-election of Norilsk boardhttp://en.rian.ru/business/20101022/161047910.html

10:22 22/10/2010

MOSCOW, Oct 22 (RIA Novosti) - Russia's second largest bank VTB, a minority shareholder in the world's largest nickel producer Norilsk Nickel, voted for the re-election of Norilsk's board at the company's extraordinary general meeting (EGM) on Thursday, a VTB spokesman said on Friday.

"VTB voted for the re-election of the current board of directors at the shareholders' meeting," the spokesman told RIA Novosti.

Nearly 38 percent of Norilsk shareholders voted for the re-election and about 47 percent voted against. In accordance with preliminary data, quorum amounted to 92.5 percent at the end of voting, while 78.8 percent voted on the termination of the current board.

The meeting was initiated by RusAl, the world's top aluminum producer and one of Norilsk's core shareholders.

RusAl, controlled by billionaire Oleg Deripaska, and Interros, billionaire Vladimir Potanin's investment arm, which both hold a quarter of Norilsk's shares, have been embroiled in a shareholder row since RusAl lost one seat and Interros increased its representation on Norilsk's board at a June annual general meeting (AGM).

RusAl has accused Interros of ruining the parity and the board of directors of vote fraud.

On Tuesday, Interros called on Norilsk minority shareholders to vote against the termination of the current board at the EGM.

Interros said RusAl's campaign to contest the AGM results, which it said was groundless and aimed to serve RusAl's interests only, was directed against Norilsk's shareholders, management and independent directors.

RusAl said after the meeting that the failure to re-elect the board would not change its plans to implement a program of changes.

RusAl Fails to Re-Elect Norilsk Nickel Board http://www.themoscowtimes.com/business/article/rusal-fails-to-re-elect-norilsk-nickel-board/420808.html

22 October 2010By Irina Filatova

Norilsk Nickel shareholders voted Thursday against an effort by United Company RusAl to oust the current board of directors, a win for rival shareholder Interros and management, which both opposed the maneuver.

A total of 46.9 percent of shareholders participating in the emergency shareholders meeting voted against ending the current board’s power, with 37.88 percent voting in favor.

Another 0.41 percent of shareholders taking part in the meeting, held at the President Hotel in Moscow, abstained from voting. Interros and RusAl had campaigned aggressively in recent weeks for support from smaller shareholders.

Norilsk said about 92 percent of shareholders had cast votes by the end of the meeting, up from a preliminary tally of 70.5 percent before the start.

Norilsk chairman Vasily Titov, a deputy CEO of state-run VTB, said the vote was "legally correct" and meant that the board would retain its power.

“We’ll continue working,” he told reporters after the shareholders meeting.

Representatives from the Federal Service for Financial Markets, Russia's securities watchdog, participated in the vote counting.

“They saw the entire procedure. … We’ve fulfilled all the requirements of the voting,” he said.

RusAl and Interros, which each control 25 percent stakes in Norilsk, have been battling intermittently since RusAl became a shareholder in 2008. RusAl lost its parity with Interros after the nickel and palladium giant's annual shareholders meeting in June.

Interros re-elected four directors to the 13-member board, compared with RusAl’s three. The company's management also won three seats, which RusAl said was the result of voting manipulations using Norilsk shares controlled by subsidiaries of the company.

The rival shareholders had accused each other of trying to run the company in their own interests, to the detriment of other shareholders.

In a statement after the meeting, RusAl thanked minority shareholders who supported their position.

"RusAl welcomes the fact that many Norilsk Nickel shareholders share our vision for the company. The fact that we were not able to secure enough votes will not distract us from the positive agenda that was outlined earlier,” the statement said.

“RusAl remains convinced that proper corporate governance, professional management and a clear growth strategy would deliver enhanced value for all shareholders," it said.

The company also said Norilsk’s management had voted with the treasury shares held by subsidiaries, under influence from Interros “to prevent minority investors from electing new, independent non-executive directors."

The two dominant forces in the shareholder dispute — RusAl CEO and largest owner Oleg Deripaska and Interros owner Vladimir Potanin — were not in attendance Thursday.

The voting showed that most minority shareholders who voted — or about 75 percent — supported the re-election of the board, said Maxim Sokov, RusAl's corporate development director, who represented the aluminum producer.

"It’s clear that the joint voting by Interros’ stake and the treasury shares made it possible to not re-elect the board,” he told reporters, adding that RusAl planned to continue working with minority shareholders to increase Norilsk’s capitalization.

The market took the news in stride, however. Norilsk's shares gained 1.4 percent on Thursday, behind the MICEX Index's 2.3 percent gain but roughly in line with the exchange's metals and mining index, which finished 1.3 percent higher.

Sokov declined to comment on whether RusAl would contest the vote, saying only that it planned to discuss the situation.

RusAl voted to oust the board, he said. The company used its shares to vote for Deripaska, Sokov, former Norilsk chairman Alexander Voloshin and three independent directors to be elected in the new board.

Voloshin lost his seat after the June shareholders meeting, with Titov — whose VTB is a major Interros creditor — becoming chairman.

Interros said it had expected Thursday's outcome.

“There are many professional and experienced investors among the minority shareholders who make informed decisions,” Interros spokesman Andrei Kirpichnikov told The Moscow Times.

“Shareholders demonstrated a responsible approach. We hope this situation will become a starting point for casting aside public disputes and switching to a constructive dialogue among the board of directors,” he said by telephone.

Interros also hopes that the Federal Service for Financial Markets’ participation will prevent any attempts to challenge the outcome of the voting, he said.

Titov said there had never been “evident signs of the conflict” in the board during his chairmanship.

“We certainly argued, but we always found a way to make decisions,” he said, adding that he hoped Norilsk's directors would be able to find compromises in the future.

Norilsk’s board recommended that shareholders vote against terminating its power, the company said in materials distributed to shareholders before the meeting.

Titov, who chaired Thursday's meeting, reiterated the board’s position and said the contested June meeting was held "in strict accordance with the law." He told shareholders, however, that they had “the right to vote the way you think is necessary."

Alexei Bocharov, a minority shareholder who traveled from Voronezh to participate in the extraordinary shareholders meeting, told The Moscow Times that he voted to oust the board, saying he wanted to see Voloshin as chairman.

“I’m not satisfied with the current price of the company’s shares,” he said, adding that the market was likely to react positively to the election of Voloshin, who would be able to provide good government support for Norilsk Nickel.

A married couple, Yelena and Nikolai, said they were satisfied with the board's current structure. The couple, who commented on the condition that their surname not be used, said they worked for more than 30 years at Norilsk Nickel before moving to Moscow.

Another minority shareholder, Sergei, who also declined to give his last name, said he supported Interros’ position, because Potanin had always treated Norilsk’s shareholders with respect and paid good dividends

For the Record http://www.themoscowtimes.com/business/article/for-the-record/420804.html

22 October 2010

The government plans to hold a controlling stake in Sberbank for the next five years, Deputy Finance Minister Alexei Savatyugin said Thursday, while the company’s shares

closed up nearly 6 percent at 103.29 rubles, their highest level since January 2008. (Bloomberg)

Along with other emerging markets, the 30-stock MICEX Index rose 2.3 percent to 1,528.11 at the close, 2.82 points below this year’s high, with blue chip stocks like VTB Group gaining 6.1 percent and Rosneft adding 4.3 percent.  (Bloomberg)

Gazprombank said Thursday that it boosted profit about 34 percent in the first half to 32.7 billion rubles ($1.1 billion) from 24.4 billion a year earlier, with overdue loans shrinking to 3.3 percent of total lending. (Bloomberg)

The Central Bank sold $3.3 billion of foreign currency on the domestic market “in recent weeks,” Interfax reported Thursday, citing board member Sergei Shvetsov. (Bloomberg)

IG Seismic Services Ltd. is the official name of the joint venture between Russian oil field services provider Integra Group, which will own 75 percent of the company and provide day-to-day management, and WesternGeco, the seismic business segment of Schlumberger, which will own 25 percent, Integra said Thursday. (Interfax)

German independent electricity retailer Teldafax may be acquired by Russian electricity company Energo-Stream, the Handelsblatt newspaper reported Thursday. (Bloomberg)

Daewoo said Thursday that it received an order, together with its venture in Russia, worth about $800 million, from Sovkomflot to build 12 tankers for delivery by 2014. (Bloomberg)

Gazprom chief executive Alexei Miller and Royal Dutch Shell head Peter Voser met in Moscow on Thursday and discussed expanding cooperation on joint projects off Sakhalin Island, where they are partners in the country’s first plant to produce liquefied natural gas. (Bloomberg)

Russian raw-sugar imports may jump 77 percent this year, the Sugar Producers’ Union said Thursday, reaching 2.3 million metric tons. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

Experts thrash out 3 oil industry development scenarios

http://www.rbcnews.com/free/20101022115430.shtml

      RBC, 22.10.2010, Moscow 11:54:30.The Institute for Energy Strategy, which until recently was controlled by the Energy Ministry, has published its research on development prospects for the Russian oil industry, RBC Daily reported today. Experts assessed the current economic state and worked out three development scenarios in the context of the oil industry: negative (based on the assumption that oil

prices will head down), baseline (based on a moderate price growth and transition to innovative technologies) and optimistic (based on the most favorable foreign economic conditions).

      The experts also predicted that a few more new oil production centers would pop up in Russia by 2030, with the Eastern Siberia, Far East, Timan-Pechora province, Caspian shelves and arctic and far eastern seas cited among the most promising areas in this respect. Still, the Ural Federal District will remain number one in terms of oil production, generating from 233.8m to 268.1m tonnes of oil a year.

      Experts do not foresee any sharp drop in production. Even under the worst-case scenario, annual oil production will shrink 13.7m tonnes to 479.3m by 2030.

Hungary open to acquiring 21% stake in Molhttp://www.ft.com/cms/s/0/53ab1698-dd2a-11df-9236-00144feabdc0.html

By Chris Bryant in Vienna and Catherine Belton in Moscow

Published: October 22 2010 03:35 | Last updated: October 22 2010 03:35

Hungary is open to acquiring a 21.2 per cent stake in Mol from Surgutneftegaz, the secretive Russian group, to solve a long-running dispute over foreign involvement in the Hungarian oil and gas group.

Tamas Fellegi, national development minister, said that the Surgut stake – worth 460bn forint ($2.3bn) at Wednesday’s close – was one of a package of energy issues that Hungary and Russia would try to resolve by the end of the year.

“It would be beneficial for the state if it could become a shareholder in Mol,” he said, according to Bloomberg. “One of the possible solutions is for the Hungarian state to become a shareholder in Mol by means of purchasing the stake currently held by Surgutneftegaz.”

Surgut, Russia’s fourth-largest oil group, acquired the Mol stake from OMV in March 2009 for €1.4bn ($1.9bn) after the Austrian energy group failed in its attempt to acquire Mol via a hostile takeover.

Neither Mol nor the Hungarian government took kindly to Surgut’s intervention and Mol subsequently barred the company from joining the share register or voting at its annual general meetings. Mol claimed Surgut had not made its intentions towards the company clear.

A new centre-right government swept to power in Hungary following elections in April and has since held talks with Russia on the Surgut stake and other issues of energy co-operation. However, Hungary said it was not in talks with Surgut directly.

Viktor Orban, Hungary’s prime minister, wants to strengthen the state’s influence over the economy. Foreign investors have already raised concerns about “crisis taxes” that the new Hungarian government have imposed on the financial, retail, energy and telecoms sectors.

“It’s safe to say that the government doesn’t welcome the presence of large foreign shareholders in Mol or in other strategic Hungarian companies,” Mr Fellegi said.

Vladimir Bogdanov, general director of Surgut, who is seen as a close ally of Prime Minister Vladimir Putin, told the Financial Times in April that he wished to “build a partnership” with Mol and had been open about his plans.

However, Reuters, citing an unnamed source at Surgut, reported on Thursday that the Russian company wished to sell the stake.

It was also unclear how Hungary would finance the potential purchase given its severe budgetary constraints.

Mr Fellegi said that based on preliminary feedback Hungary might be able to use market financing to fund the potential transaction.

“I’m not worried about raising the necessary funds, should the government wish to,” he said.

Mol declined to comment and Surgut could not be reached for comment.

Source: Surgut May Sell Stake in MOL http://www.themoscowtimes.com/business/article/source-surgut-may-sell-stake-in-mol/420798.html

22 October 2010Combined Reports

Surgutneftegaz is considering the sale of its 21.2 percent stake in Hungarian oil and gas group MOL, a source at the Russian company said Thursday.

"We want to sell it, and we are in constant talks with MOL," he said without elaborating further.

Hungary's National Development Minister Tamas Fellegi said in an interview Wednesday that the government would find it “beneficial” to become a shareholder in Central Europe’s largest refiner MOL and might use market financing for a potential purchase of Surgutneftegaz’s stake in the company.

Hungary and Russia are working to agree on a broad range of energy issues by the end of the year, including Surgut’s stake in MOL, Fellegi said. The detailed accord on Surgut’s stake would be worked out following an agreement between the two countries.

“We believe it would be beneficial for the state if it could become a shareholder in MOL” through the purchase of the stake held by Surgutneftegaz, he said. Hungary may finance the transaction from the market “based on the preliminary feedback we’ve received. I’m not worried about raising the necessary funds, should the government wish to.”

Siberia-based Surgut purchased the MOL stake from Austria’s OMV for 1.4 billion euros ($2 billion) in March 2009 after the Hungarian refiner fended off OMV’s hostile takeover attempt.

MOL and the Hungarian government said Surgut’s acquisition was also a hostile takeover attempt. The Russian company has been barred from exercising its ownership rights as its holding hasn’t yet been registered into MOL’s books.

MOL’s share price has more than doubled since March 30, 2009, when Surgut announced its purchase of the stake. The stock gained 24 percent this year, compared with an 11.2 percent advance in the 13-member benchmark BUX Index.

The MOL stake is one of a “range of issues in the area of energy cooperation” with Russia and the government wants to reach an agreement encompassing these by the end of the year, Fellegi said. Other topics include long-term natural-gas agreements that expire in 2015 and gas projects such as South Stream, Fellegi said.

Hungary, which relies on imports for about 80 percent of its natural gas consumption, is also seeking new supply sources and transport routes to “abolish its one-sided energy dependence” on Russia, Fellegi said this month. The country supports the European Union’s Nabucco and Russia’s South Stream natural gas pipeline projects and the AGRI liquefied natural gas venture with Romania, Georgia and Azerbaijan.

“It’s the ambition of both the Russian and the Hungarian parties to reach an agreement on this energy cooperation package by the end of the year,” he said.

Hungary is also close to a deal on the exit of Russian shareholders from the unprofitable national carrier Malev Zrt., Fellegi said.

Hungary took a 95 percent stake in the airline after the company’s latest privatization attempt failed, replacing Russian state-owned development bank Vneshekonombank as the controlling shareholder. The deal included the lender agreeing to pay 32 million euros in bank guarantees to Hungary and convert Malev’s existing loans to cheaper ones.

(Bloomberg, Reuters)

Zero-tax benefits for Yamal developershttp://www.barentsobserver.com/zero-tax-benefits-for-yamal-developers.4833441-116321.html

2010-10-21 The developers of Yamal fields will get zero-tax on gas exports, the federal government decided.

The Russian Ministry of Economical Development and the Ministry of Energy has along with the Federal Tax Service decided that the developers of the rich Yamal fields will get zero tax on export of LNG and gas condensate.

Prime Minister Vladimir Putin has signed a decree on the issue, newspaper Vedomosti reports. The authorities are also preparing for a zero tax on extraction on the peninsula.

As reported by BarentsObserver, Novatek intends to start the construction of a LNG plant at Yamal in 2012.

Gazprom

On working meeting between Alexey Miller and Peter Voserhttp://www.gazprom.com/press/news/2010/october/article104493/

21.10.2010 17:00

The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Peter Voser, Chief Executive Officer of Royal Dutch Shell

The parties addressed the current status and the prospects for the strategic partnership in the gas sector. An emphasis was placed on possible cooperation deepening as part of the joint projects executed offshore the Sakhalin Island.

The parties also paid attention to the interaction in gas exploration, extraction and processing, LNG production, oil and gas marketing.

21.10.2010

Gazprom Neft To Sell Off Oil Services Unithttp://www.oilandgaseurasia.com/news/p/0/news/9233

Gazprom neft has decided to shed its oil service unit and not put it up on an IPO as was previously planned, Neft Rossii reports.

"We are presently reviewing the idea of selling oil service assets, the idea of an IPO is no longer expedient", the company's press office reported.

Copyright 2010, Gazprom neft. All rights reserved.