Russia 111212

Basic Political Developments Ukrainian-Russian gas agreement submitted to authorities - The

publication Zerkalo Nedeli reported on Monday, December 5, that there had been a two-hour meeting between Ukrainian President Viktor Yanukovich and Prime Minister Mykola Azarov, after which Azarov returned to the cabinet of ministers alarmed and out of sorts, not wishing to assume responsibility for "giving away" Ukraine's gas-transport system.

o Yatseniuk proposes to involve EU, US in gas talks with Russia Senior Chinese legislator meets Russian guests - Chen Zhili, vice

chairwoman of the Standing Committee of the National People's Congress and chief of the All-China Women's Federation (ACWF), met Monday in Beijing with Svetlana Orlova, vice chairwoman of the Russian Federation Council.

Syria's Minister of Defense Meets Russian Ambassador - DAMASCUS - Minister of Defense General Dawood Rajiha on Sunday met with Russia's Ambassador to Syria Azamat Kulmukhametov.

Veteran rebel region leader defies Moscow in poll- The veteran leader of Moldova's breakaway Transdniestria region appeared well in front after a Sunday election in which he ran for a fifth term against the wishes of his former patron Russia.

Russia plans to complete new radar station construction in Azerbaijan by 2019 - Russia plans to complete the construction of a new radar station Voronezh-VP in Gabala, Azerbaijan in 2019. This station will replace a radar station of previous generation Darial, General Director of Academician A.L. Mints Radio Engineering Institute Vladimir Savchenko said in an interview with RIA Novosti.

o [LINK TO INTERVIEW:] Russian Ka-52 will receive the latest communications system in 2012 Russian atomic Project 949 submarines to be armed with new missile

complexes Another Russian bank may appear in Lithuania - a "new industrial bank",

which has an extensive resource support to a member of the board of directors of the company Lietuvos dujos ("Lithuanian Gas"), partly owned by "Gazprom"

Russia offers co-production of passenger jets - Ahead of Prime Minister Manmohan Singh’s visit to Russia next week, Moscow has, for the first time, offered co-production of five passenger aircraft in India, including the 90-seater Sukhoi 100 Superjet.

Nuclear knowhow, S300 are Iran's price for Russian, Chinese access to US drone - DEBKAfile Exclusive Analysis

Russian envoy says regional security key to gas pipeline project - Russia's top envoy to South Korea said Monday that regional security is key to building a gas pipeline linking the two countries via North Korea, adding his nation will cooperate with efforts to resume the deadlocked

multilateral talks on the North's nuclear program and normalize inter-Korean relations.

China turns away from Russian gas supplies-bank - Turns to Turkmenistan and U.S. for supplies-Socgen; Gazprom to remain reliant on Europe; European supplies safe until 2016 at least

Russia offers vast offset program in arms deliveries to Asia Pacific region – Rosoboronexport - The Malaysian Defense Ministry was particularly interested in the Russian wish to take part in the Malaysian tender for 18 fighter jets with a vast offset program, which will involve the Malaysian aircraft industry in the construction of Russian civilian aircraft of the MS-21 type, he said.

Sata invites Russian business team - PRESIDENT Michael Sata has invited the Russian government to send a business delegation to Zambia to explore various areas of investment.

There’s still hope for Afghanistan – Russian envoy: Despite fears that the planned withdrawal of US troops will plunge Afghanistan into chaos, there are still two years left in which to help Kabul buck the doomy predictions, says Russia’s special envoy to the country, Zamir Kabulov.

Russia to start direct uranium supplies to Japan – Rosatom: The Russian state-run civil nuclear corporation Rosatom may start direct supplies of enriched uranium to Japan following ratification of a bilateral agreement in Japan's Diet, Rosatom spokesman Sergei Novikov said on Friday.

Russian tall ship Nadezhda in Yokohama Russia to mark Constitution Day - Russia will mark Constitution Day on

Monday. The Russian fundamental law was approved 18 years ago and laid down the foundations of the state system, outlined the rights and freedoms of Russian citizens, the powers and functions of authorities.

PM Putin to attend launch of nuclear power unit - Russian Prime Minister Vladimir Putin will on Monday visit the Kalininskaya Nuclear Power Plant (NPP) in the central Russian Tver Region north of Moscow to attend the launch of the plant’s fourth power unit, the government press service reported.

RF authorities should have dialogue with opposition – France FM: Russian authorities should maintain dialogue with the opposition and avoid violence, French Foreign Minister Alain Juppe said on Sunday.

Proton orbits Israeli communications satellite, RF relay satellite - The Reshetnev Information Satellite Systems Company has designed the Israeli communications satellite AMOS-5 for the Israeli satellite communication company Spacecom. The service life of the satellite is 15 years.

Russia gives up on failed Mars probe, braces for crash landing next month United Russia to hold rally to support President, PM - The United Russia

party is due to hold a rally in Moscow’s Manezh Square this Monday to support the Russian President and Prime Minister. Over 15,000 are expected to turn up for the authorized event, specifically party members, the members of the party youth wing, - Young Guards, officials of the All-

Russia People’s Front, and also the youth movements that are loyal to the government.

o Medvedev orders Russia poll inquiry, gets insults - Medvedev responded on his Facebook site to the protesters' complaints that the December 4 election, won by Prime Minister Vladimir Putin's United Russia, was slanted in its favour.

o After protests, Putin says he'll listen - If Putin talks with the opposition, it should be done "not with the goal of talks for the sake of talks, hoping that the situation will dissolve by itself, but for finding very meaningful and real compromise," Yevgeny Gontmakher, an adviser to Russian President Dmitry Medvedev, wrote on his blog Sunday.

o Kudrin forecasts emergence of authoritative right-wing force in RF - “Six months ago, when the discussion about the Right Cause party was underway, everybody expressed concern over the lack of an authoritative force on the right flank,” he said in an interview with the Vedomosti business daily published on Monday. “Today it became clear that this deficit turned more acute than we could ever imagine.”

o Russian ex-finance minister says may establish new political party - paper

o [LINK TO INTERVIEW:]o Russian opposition should be “actively moderate” - Constitutional

Court chairmano Situation in RF elite, society should be returned to legal fieldo Four people detained at election result protest action in Permo Krasnoyarsk city mayor files resignation after 15 years in office -

Some observers interlink Pimashkov’s resignation with weak results that United Russia demonstrated during the elections to the lower house of parliament.

o Church urges not to allow new revolution in Russia - Archpriest Vsevolod Chaplin hopes authorities will give "adequate and honest answers" on uncomfortable questions they were asked

o Russian Orthodox Church Adds Influential Voice to Calls for Election Reform

Moscow school evacuated over bomb threat - More than 400 children were evacuated on Monday from a school in eastern Moscow following a bomb threat call, a police source said.

Russian Press at a Glance, Monday, December 12, 2011 In a First, Enemies March Side by Side - activists of all stripes, including

those who usually come to blows at the sight of each other, marching unhappily but peacefully in a sort of "water truce" to an anti-Kremlin rally.

Shaun Walker: The Kremlin has a big problem as young, middle-class Russians engage in politics - Authorities watched with horror as the

number of people who said they would attend Saturday's protest grew steadily throughout the week

Kremlin Softens Line on Opponents - Even After Big Rally, Opponents Express Concern They Will Gain Little; Kudrin Offers to Head a New Liberal Movement - By GREGORY L. WHITE

Web Problems Plague Russia Critics - By ALAN CULLISON The Thaw at Russia's Polls: Tandem’s Liberalization Policy Rocks the

Vote - By Gordon M. Hahn Vladimir Putin's power ebbs - Telegraph View: The Russian strongman

may not be about to fall, but the Moscow protests have dented his legitimacy.

Putin 2.0 Could Be More Autocratic Than 1.0 - By Lilia Shevtsova Kremlin in the Headlights - In the week after the State Duma elections,

many proposals were voiced on how the Kremlin could have defused the tensions that followed and prevented them from culminating in the biggest anti-government rally in Moscow since 1993.

National Economic Trends Russia’s inflation to stand at six and a half percent in 2011

o Inflation revised down o Russia’s economics ministry raises forecast for GDP growth

Russia trims economic outlook amid global crisis Russian Economy Hampered by ‘Poor’ Business Climate, OECD Says The stock market language - Foreign issuers may not be required to

translate their documents into Russian Yulia Krivoshapko

Business, Energy or Environmental regulations or discussions Dollar, euro dip at MICEX open Mon World’s Biggest Stock Drop Stoked by Protests: Russia Overnight Protests Reshaping Financial Markets - "Russian stocks have decoupled

from external markets and newsflow," Kirill Tishchenko, leader of Finam's analytical department, said in a note Friday afternoon. "Trading is now tied to the protest movement."

Russian stock market daily morning report (December 12, 2011, Monday) Sberbank bullish on Russia

o Sberbank 11-Month Results Bullish Russia Severstal takes control of Liberia iron project Norilsk Nickel might link independent director pay to confidentiality

agreement Polyus Gold okays 9M dividends

o OJSC Polyus Gold (RTS, MICEX and LSE - PLZL), Russia's leading gold producer, today announced preliminary results of the Extraordinary General Shareholders' meeting (EGM) held in Moscow on December 09, 2011

Otkritie taps $171m loan from Nomos Bank

Activity in the Oil and Gas sector (including regulatory) Gazprom, LUKOIL and Rosneft among top 20 world oil and gas

corporations TNK-BP warned on legal action - Two of the independent directors in

TNK-BP, the Russian joint venture of BP, warned the board that legal action by the company against either set of shareholders could destabilise the group, according to a letter seen by the Financial Times.

Independents to quit TNK-BP board TN-BP board approves $6 billion Arctic investment Novatek Sees Gas Output Doubling by 2020, Increases 2015 Target Total spends $800m on Novatek stake Bashneft drills well at Trebs Titov fields without JV with Lukoil Rosneft lands MOU in Orinoco belt Rosneft Signs $2 Billion Loan After Increase From $1.5 Billion ANALYSIS: EU, Russian refiners ramp up diesel upgrades

Gazprom Latvijas gaze looks to clinch deal with Gazprom for 2012 in mid-Dec Why Latvia should dispense without "Gazprom"

Gazprom to commission Bovanenkovo field in May-June 2012 - regional authorities

Two JVs with Gazprom to be set up in Ukraine around gas-transport system

Ukrainian authorities after creation of two JVs with Gazprom will lose influence on their activities, according to mass media

Gazprom to Increase Gas Output Next Year After Slow 2011 Growth Gazprom still fights for Shtokman FID in 2011 - Thursday, Moscow:

Mikhail Basarygin, the deputy head of technological dptm in Gazprom, says the company is doing ‘immense work’ to have the final investment decision taken this year.

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Full Text Articles

Basic Political Developments

December 12, 2011 11:56

Ukrainian-Russian gas agreement submitted to authoritieshttp://www.interfax.com/newsinf.asp?id=294300

KYIV. Dec 12 (Interfax) - A draft of an intergovernmental Russian-Ukrainian gas agreement has, in conditions of absolute privacy and without first or last names, been submitted to the two countries' authorities for consideration and approval.

The publication Zerkalo Nedeli reported on Monday, December 5, that there had been a two-hour meeting between Ukrainian President Viktor Yanukovich and Prime Minister Mykola Azarov, after which Azarov returned to the cabinet of ministers alarmed and out of sorts, not wishing to assume responsibility for "giving away" Ukraine's gas-transport system.

At a cabinet meeting on Wednesday, December 7, Azarov ordered the preparation of a "tough variant" of the state budget for 2012 with the price of imported gas at not less than $400 per thousand cubic meters and that the document be submitted to the Verkhovnaya Rada (parliament) for consideration.

Cf

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

Yatseniuk proposes to involve EU, US in gas talks with RussiaToday at 10:15 | Interfax-Ukraine Arseniy Yatseniuk, leader of the Front for Change party, former speaker of the Ukrainian parliament, and former foreign minister of Ukraine, demands that the Ukrainian administration publish directives to Ukrainian-Russian energy negotiations and begin multilateral negotiations at an interstate level involving Ukraine, Russia, the EU, and the U.S.

"The Ukrainian gas transport system should not become Gazrpom's trophy, but part of the EU gas transport system. European buyers should receive gas from Gazprom at the Russian-Ukrainian border and our gas transport operator should sign gas transit contracts with European companies, not with Gazprom," the Front for Change press service quoted Yatseniuk as saying.

Yatseniuk believes the Ukrainian government is going to obtained resources to fight the crisis from selling strategic objects and making concessions in the sphere of national interests.

He says this is indicated by Bill N9429 submitted by the government to the parliament, which, if adopted, will lift the ban on the privatization of the Ukrainian gas transport system.

"They are preparing a barter agreement: Ukraine will get a temporary reduction in

the gas price and President Yanukovych will get hopes to stay in power, and Russia will get our strategic resource, the gas transport system. We will have to pay for ephemeral 'gas discounts' in the form of a loan by giving our internal gas market and strategic industrial objects to Gazprom, like it happened in Belarus," Yatseniuk said.

"In addition, Ukraine's refusal to fulfill its obligations as a member of the energy community will automatically prevent its European integration. The government will turn Ukraine away form Europe to Eurasia," the politician said.

"European companies have managed considerable price discounts from Gazprom using solely legal methods without any political and economic concessions from their countries," Yatseniuk said.

The politician also believes Ukraine should reduce the amount of Russian gas it buys, saying the country's dependence on Russian gas cab be reduced from 65% in 2010 to 25% in 2020 by putting in place energy conservation technologies, developing alternative energy types, building a liquefied gas terminal, and increasing gas extraction in Ukraine.

Read more: http://www.kyivpost.com/news/business/bus_general/detail/118744/#ixzz1gJ5xkIBg

Senior Chinese legislator meets Russian guestshttp://news.xinhuanet.com/english/china/2011-12/12/c_131301952.htm

2011-12-12 16:11:55

BEIJING, Dec. 12 (Xinhua) -- Chen Zhili, vice chairwoman of the Standing Committee of the National People's Congress and chief of the All-China Women's Federation (ACWF), met Monday in Beijing with Svetlana Orlova, vice chairwoman of the Russian Federation Council.

The two sides exchanged views on boosting bilateral relations and promoting friendly communication among women.

Orlova was here to attend the 9th plenary session of the China-Russia Friendship Committee for Peace and Development.

Song Xiuyan, ACWF vice chairwoman, and Russian Ambassador to China Sergei Razov also attended the meeting.

Syria's Minister of Defense Meets Russian Ambassadorhttp://www.zawya.com/story.cfm/sidZAWYA20111212050207

12 Dec 2011By M. Nassr/ H. Sabbagh DAMASCUS - Minister of Defense General Dawood Rajiha on Sunday met with Russia's Ambassador to Syria Azamat Kulmukhametov.The meeting tackled the developments in the region and the cooperation relations between the two friendly countries.

General Rajiha hailed Russia's stance concerning the events in Syria, stressing that Syria will remain strong by its people, leader, army and the support of the friendly countries, particularly Russia.

© SANA (Syria Arab News Agency) 2011

Veteran rebel region leader defies Moscow in pollToday at 07:19 | Reuters TIRASPOL - The veteran leader of Moldova's breakaway Transdniestria region appeared well in front after a Sunday election in which he ran for a fifth term against the wishes of his former patron Russia.

But Igor Smirnov, a 70-year-old Russian who has ruled the territory of half-a-million people for 20 years, seemed likely to fall short of the 50 per cent required to avoid a second round of voting, an exit poll showed.

The poll, by the Vektor agency, gave Smirnov 47.38 percent of the vote, while Moscow-backed parliamentary speaker Anatoly Kaminsky was in third place with 22.6 percent, surprising many analysts who believed his endorsement by the Kremlin made him the strongest challenger.

Instead, Yevgeny Shevchuk, a former parliamentary speaker who was mooted as a possible successor to Smirnov a year ago but whose star seemed to have faded, was in second place on 23.2 percent, the exit poll showed.

Preliminary results were expected on Monday at 0800 gmt.

A ragged strip of land in central Europe running almost the length of Moldova's eastern border with Ukraine, Transdniestria is the most westward of Europe's post-Soviet "frozen conflicts".

Unrecognised internationally, the territory has been in limbo, defying a solution to its status, since its Russian-speaking majority declared independence and broke with the Moldovan central government after a brief war in 1992.

Smirnov billed himself during his campaign as the most reliable defender of its independence and its aspiration of uniting with Russia.

Playing up suspicions among the population that Moldova will one day unite with neighbouring Romania, with whom it shares a common language, Smirnov presented himself as the sole guarantor against a "sell-out" of sovereignty.

Critics in the international community see him as an obstacle to success in talks aimed at finding a settlement to the status of the territory which Moldovan authorities and European Union officials say has become a "black hole" of arms, drugs and people-trafficking.

Russia, whose big-power role is crucial since it supplies the region with free gas and has 1,500 troops there, has kept Smirnov at arms length and may now have tired of his delaying tactics in talks which also involve the United States and EU.

The Kremlin has come under pressure from EU heavyweight Germany to put its shoulder behind efforts to find a solution.

Moscow had urged Smirnov to step aside in favour of Kaminsky, 61, whose own party is close to that of Russian Prime Minister Vladimir Putin's United Russia and who drew heavily on his ties with the Moscow ruling elite in his campaign.

Though he also portrayed himself as a defender of Transdniestrian "statehood" and special ties with Russia, he is widely seen as more likely to listen to alternative ideas and be ready for compromise at settlement talks.

But if the exit poll figures turn out to be correct, the second round will be fought between Smirnov and Shevchuk.

During his campaign Kaminsky criticised Smirnov for leading the region on a path of stagnation. Basic infrastructure such as roads, railways and telecommunications are collapsing, he said, and nepotism is rife in top administrative and business posts. TIRASPOL, Moldova, Dec 11 (Reuters) - The veteran leader of Moldova's breakaway Transdniestria region appeared well in front after a Sunday election in which he ran for a fifth term against the wishes of his former patron Russia.

But Igor Smirnov, a 70-year-old Russian who has ruled the territory of half-a-million people for 20 years, seemed likely to fall short of the 50 per cent required to avoid a second round of voting, an exit poll showed.

The poll, by the Vektor agency, gave Smirnov 47.38 percent of the vote, while Moscow-backed parliamentary speaker Anatoly Kaminsky was in third place with 22.6 percent, surprising many analysts who believed his endorsement by the Kremlin made him the strongest challenger.

Instead, Yevgeny Shevchuk, a former parliamentary speaker who was mooted as a possible successor to Smirnov a year ago but whose star seemed to have faded, was in second place on 23.2 percent, the exit poll showed.

Preliminary results were expected on Monday at 0800 gmt.

A ragged strip of land in central Europe running almost the length of Moldova's eastern border with Ukraine, Transdniestria is the most westward of Europe's post-Soviet "frozen conflicts".

Unrecognised internationally, the territory has been in limbo, defying a solution to its status, since its Russian-speaking majority declared independence and broke with the Moldovan central government after a brief war in 1992.

Smirnov billed himself during his campaign as the most reliable defender of its independence and its aspiration of uniting with Russia.

Playing up suspicions among the population that Moldova will one day unite with neighbouring Romania, with whom it shares a common language, Smirnov presented himself as the sole guarantor against a "sell-out" of sovereignty.

Critics in the international community see him as an obstacle to success in talks aimed at finding a settlement to the status of the territory which Moldovan authorities and European Union officials say has become a "black hole" of arms, drugs and people-trafficking.

Russia, whose big-power role is crucial since it supplies the region with free gas and has 1,500 troops there, has kept Smirnov at arms length and may now have tired of his delaying tactics in talks which also involve the United States and EU.

The Kremlin has come under pressure from EU heavyweight Germany to put its shoulder behind efforts to find a solution.

Moscow had urged Smirnov to step aside in favour of Kaminsky, 61, whose own party is close to that of Russian Prime Minister Vladimir Putin's United Russia and who drew heavily on his ties with the Moscow ruling elite in his campaign.

Though he also portrayed himself as a defender of Transdniestrian "statehood" and special ties with Russia, he is widely seen as more likely to listen to alternative ideas and be ready for compromise at settlement talks.

But if the exit poll figures turn out to be correct, the second round will be fought between Smirnov and Shevchuk.

During his campaign Kaminsky criticised Smirnov for leading the region on a path of stagnation. Basic infrastructure such as roads, railways and telecommunications are collapsing, he said, and nepotism is rife in top administrative and business posts.

RUSSIAN PRESSURE

It remains to be seen what pressure Moscow might bring to bear on Smirnov if he secures a fifth five-year term, though it has already hinted at possible economic repercussions.

Moldova regards Transdniestria as an integral part of its territory and has a big stake in the outcome of the vote.

Deadlock in parliament has kept Moldova without a full-time president for two years. It will make a fresh attempt to elect a head of state, which in Moldova is by parliamentary vote not by direct election of the people, on Dec. 16.

Signs of progress to a Transdniestrian settlement would help Moldova, one of Europe's poorest countries but an aspirant to EU membership, register its presence internationally.

In the main town of Tiraspol, Anastasia Vyrlan, a mother accompanied by her daughter, said she had voted for Kaminsky.

"Smirnov has been running Transdniestria for 21 years and we can scarcely expect any changes for the better from him. We need a new leader with a good reputation with Russia. Everything depends on Russia, including a settlement in relations with Moldova, social protection, pension increases and maternity subsidies," she said.

Teacher Vera Yakovleva said she would vote for Smirnov as a guarantor for stability and backed his calls for international recognition for Transdniestria. "Voting for anyone else would be a betrayal of Igor Smirnov and those who were killed in 1992 defending us against the Moldovan occupiers".

Moldova and Transdniestria on Dec. 1 held their first official meeting in six years under the auspices of the Organization for Security and Cooperation in Europe (OSCE) and involving envoys from Russia, Ukraine, the U.S. and the EU.The next meeting is scheduled for next February.

It remains to be seen what pressure Moscow might bring to bear on Smirnov if he

secures a fifth five-year term, though it has already hinted at possible economic repercussions.

Moldova regards Transdniestria as an integral part of its territory and has a big stake in the outcome of the vote.

Deadlock in parliament has kept Moldova without a full-time president for two years. It will make a fresh attempt to elect a head of state, which in Moldova is by parliamentary vote not by direct election of the people, on Dec. 16.

Signs of progress to a Transdniestrian settlement would help Moldova, one of Europe's poorest countries but an aspirant to EU membership, register its presence internationally.

In the main town of Tiraspol, Anastasia Vyrlan, a mother accompanied by her daughter, said she had voted for Kaminsky.

"Smirnov has been running Transdniestria for 21 years and we can scarcely expect any changes for the better from him. We need a new leader with a good reputation with Russia. Everything depends on Russia, including a settlement in relations with Moldova, social protection, pension increases and maternity subsidies," she said.

Teacher Vera Yakovleva said she would vote for Smirnov as a guarantor for stability and backed his calls for international recognition for Transdniestria. "Voting for anyone else would be a betrayal of Igor Smirnov and those who were killed in 1992 defending us against the Moldovan occupiers".

Moldova and Transdniestria on Dec. 1 held their first official meeting in six years under the auspices of the Organization for Security and Cooperation in Europe (OSCE) and involving envoys from Russia, Ukraine, the U.S. and the EU.The next meeting is scheduled for next February.

Read more: http://www.kyivpost.com/news/russia/detail/118733/#ixzz1gIXVQI29

Russia plans to complete new radar station construction in Azerbaijan by 2019http://en.trend.az/news/politics/1967811.html

12 December 2011, 11:51 (GMT+04:00)

Russia plans to complete the construction of a new radar station Voronezh-VP in Gabala, Azerbaijan in 2019. This station will replace a radar station of previous

generation Darial, General Director of Academician A.L. Mints Radio Engineering Institute Vladimir Savchenko said in an interview with RIA Novosti.

The Academician A.L. Mints Radio Engineering Institute is the only supplier of meter range radar station Voronezh-VP, which along with the decimeter range radar station Voronezh-DM will form Russia's prospective system of early warning of missile attack by 2020.

"It is dealt with high potential station with high manufacture of Voronezh-VP meter range radar station. According to the plans, the terms will cover 2017-2019, but all depends on the goodwill of our esteemed neighbors - a final agreement will be consolidated on a political level," Savchenko said.

According to Savchenko, it is not dealt with dismantling the old station of Darial, since the radar station is owned by Azerbaijan.

"The new station that we plan to build will be owned by Russia, and it will be modular. So, it is always possible to dismantle it, remove and assemble anywhere near," Savchenko said.

Russian Defense Minister Anatoly Serdyukov said in November that Russia plans to fully rebuild the Gabala radar station in Azerbaijan and at the same time reduce the size of the area leased for the radar station's needs.

The Gabala RS is located in north-western Azerbaijan and was built in the Soviet period as one of the most important elements of the Russian missile defense system. After Azerbaijan gained independence, the RS become the country's property and Russia continued to use the station. A 10-year agreement to lease the station was signed in 2002.

[LINK TO INTERVIEW:]

http://ria.ru/moscow_center_interview/20111212/514093820.html

GOOGLE TRANSLATIONRussian Ka-52 will receive the latest communications system in 2012http://ria.ru/defense_safety/20111212/514682892.html

12/12/2011 08:42MOSCOW, December 12 - RIA Novosti. Russian Defense Ministry has concluded with "Radio Engineering Institute named after Academician Mints"

contract to equip the multipurpose Russian military helicopter Ka-52 "Alligator" and its variants data transfer apparatus of the new generation, said in an interview with RIA Novosti General Director Vladimir Savchenko.

Russian atomic Project 949 submarines to be armed with new missile complexeshttp://vestnikkavkaza.net/news/politics/20820.html

Russian atomic Project 949 submarines, similar to the sunken “Kursk” submarine, will be re-equipped with the Oniks and Kalibr missile complexes, RIA Novosti reports.

The submarines are currently armed with Granit cruise missiles.

The Rubin has concluded modernization of the submarines. The Zvezdochka factory (Severodvinsk) in the European part of Russia and Zvezda in the Far East will be carrying out repairs and modernization.

GOOGLE TRANSLATION

Another Russian bank may appear in Lithuania

http://www.regnum.ru/news/economy/1478227.html

The Lithuanian market in a short time, perhaps, will another Russian bank. At this time they can become a "new industrial bank", which has an extensive resource support to a member of the board of directors of the company Lietuvos dujos ("Lithuanian Gas"), partly owned by "Gazprom", Kirill Seleznev. This was a REGNUM informed source at the bank. The source did not rule out that the bank will consider the possibility of a child or a correspondent bank in Lithuania…

Russia offers co-production of passenger jetshttp://www.indianexpress.com/news/Russia-offers-co-production-of-passenger-jets/886672/

PranabDhalSamanta Posted online: Mon Dec 12 2011, 01:03 hrs

New Delhi : Ahead of Prime Minister Manmohan Singh’s visit to Russia next week, Moscow has, for the first time, offered co-production of five passenger aircraft in India, including the 90-seater Sukhoi 100 Superjet. This is the first attempt at taking cooperation beyond military aviation.

Apart from the Sukhoi, the other aircraft Russia has put up on offer are — TU-204 series with a capacity of 200-plus passengers, AN-148 with seating capacity ranging from 75 to 100, MS-21 with 150-200 passenger capacity and the 70-seater BE-200, which is also used for fire-fighting, patrolling as well as search and rescue missions.

While preliminary discussions have already taken place between both sides in the run up to the visit, India has to take a call based on the assessment of its own efforts to build an indigenous civilian aircraft. The Prime Minister had set up a national task force to study the feasibility of such a project under the chairmanship of former ISRO chairman G Madhavan Nair. The report, which was submitted six months ago, had said that India has the capability to develop a 90-seater indigenous civilian aircraft over a period of five years at a cost of about Rs 8,300 crore. It had suggested creation of the National Civilian Aircraft Development Authority for this purpose and until then, recommended that the task force function as the coordinating body.

However, the project seems to have got caught in departmental rivalry with the Council of Scientific and Industrial Research (CSIR) still not processing the papers for Cabinet consideration. CSIR’s National Aerospace Laboratories, sources said, wants to be the nodal agency for the project while the committee had found the facility inadequate.

Russia, on the other hand, has suggested that its offer should be treated separately, on the lines of existing joint collaboration in the military field like the Brahmos venture, Sukhoi MKI and the ongoing joint efforts like building a fifth generation fighter aircraft. Co-production in India, according to Russian officials, will improve commercial prospects of these planes which are currently used by a handful of airlines in a market dominated by US and European aircraft makers.

As of now, New Delhi has agreed to carry the conversation forward and explore its commercial possibilities. Moscow is keen to elevate this to a higher level during the visit to ensure political consideration for India to enter the aviation market.

While this offer is being weighed against the project for an indigenous aircraft, officials admit that India’s own aviation technology has never really taken off and

it needs not just expertise but also creation of high-level ancillary industry for this purpose.

Nuclear knowhow, S300 are Iran's price for Russian, Chinese access to US drone

http://www.debka.com/article/21560/

DEBKAfile Exclusive Analysis December 11, 2011, 6:37 PM (GMT+02:00)

Iran is driving a hard bargain for granting access to the US stealth drone RQ-170 it captured undamaged last week, as Russian and Chinese military intelligence teams arriving in Tehran for a look at the secret aircraft soon found. debkafile's Moscow sources disclose that the price set by Revolutionary Guards commander Gen. Ali Jaafari includes advanced nuclear and missile technology, especially systems using solid fuel, the last word on centrifuges for enriching uranium and the S-300PMU-1 air defense system, which Moscow has consistently refused to sell Tehran.

This super-weapon is effective against stealth warplanes and cruise missiles and therefore capable of seriously impairing any large-scale US or Israeli air or missile attacks on Iran's nuclear sites.Israeli Prime Minister Binyamin Netanyahu sent Russian-speaking Foreign Minister Avigdor Lieberman to Moscow on Dec. 7 to try and dissuade Prime Minister Vladimir Putin from letting Iran have the S-300 batteries as payment for access to the captured US drone.

Sources in Washington report that before sending Lieberman to Moscow, Netanyahu first checked with the White House at the highest levels.

Although he had his hands full with stormy demonstrations in Moscow protesting alleged election fraud, Putin received Lieberman at the Kremlin.  But the interview was short. The Russian prime minister refused to discuss the episode with his Israeli guest or even confirm that Moscow was engaged in any deal with Tehran.In answer to reporters' questions, Lieberman commented: "Russia's positions on the Middle East were not helpful."American efforts to reach President Dmitry Medvedev and Putin on the drone deal through other channels were likewise rebuffed.

debkafile's sources report that the Israeli prime minister's decision to sent Lieberman post-haste to Moscow to intercede with Putin followed intelligence tips which indicated to Washington and Jerusalem that the Russians may have

played a major role in Iran's capture of the RQ-170 on Dec. 4. They are suspected of even supplying Iran with the electronic bag of tricks for downing the US stealth drone undamaged.If that is so, it would mean Moscow is deeply involved in helping Iran repel the next and most critical stage of the cyber war that was to have been launched on the day the US UAV was brought down.

Our exclusive intelligence sources add that that the RQ-170 was the first US drone of this type to enter Iranian skies. Its mission was specific.

Iran's success in determining the moment of the unmanned vehicle's entry and its success in transferring command of the drone's movements from US to Iranian control systems is an exceptional intelligence and technological feat in terms of modern electronic warfare.

Western intelligence watchers keeping track of the Russian and Chinese teams in Tehran have not discovered where the negotiations stand at this time or whether the Iranians have taken on both teams at once or are bargaining with each separately to raise the bidding.

Saturday, Dec. 10, the Revolutionary Guards Deputy Commander Gen. Hossein Salami, said Iran would not  hand the captured drone back to the United States. He boasted: "The gap between us and the US or the Zionist regime and other developed countries is not so wide."

He sounded as though the bargaining with the two visiting teams was going well.

Russian envoy says regional security key to gas pipeline project

http://english.yonhapnews.co.kr/news/2011/12/12/0200000000AEN20111212001800315.HTML

2011/12/12 15:17 KST

By Kim Eun-jungSEOUL, Dec. 12 (Yonhap) -- Russia's top envoy to South Korea said Monday that regional security is key to building a gas pipeline linking the two countries via North Korea, adding his nation will cooperate with efforts to resume the deadlocked multilateral talks on the North's nuclear program and normalize inter-Korean relations.

"The situation on the Korean Peninsula is closely related to the Russian Far East's stability and economy. Russia is making an effort to help resume inter-Korean talks and willing to cooperate in economic development projects between two

Koreas," Ambassador Konstantin Vnukov said in a parliamentary forum. He spoke in Russian through a Korean-language interpreter.

China turns away from Russian gas supplies-bankhttp://www.reuters.com/article/2011/12/08/energy-gas-china-russia-idUSL5E7N84BQ20111208

Thu, Dec 8 2011

* Turns to Turkmenistan and U.S. for supplies-Socgen

* Gazprom to remain reliant on Europe

* European supplies safe until 2016 at least

By Henning Gloystein

LONDON, Dec 8 (Reuters) - China will become a major gas importer in the near future but is unlikely to sign a deal with Russia's Gazprom and is instead looking to Turkmenistan and perhaps even the United States to cover its needs, a report said on Thursday.

China plans to increase gas in its energy mix from 3 percent to 10 percent by 2020 and has secured its gas import needs until around 2018, but after that needs to strike new supply deals to feed a rising appetite for natural gas.

"Judging by the apparent lack of any progress on the gas pricing issue, it seems Beijing is in no particular hurry to sign any gas contracts with Gazprom," French bank Societe Generale said in a research note on Thursday.

An agreement on Russia's gas deliveries to China, the world's largest energy consumer according to the International Energy Agency, would boost Moscow's efforts to reduce its export dependency on the European market, which currently provides around 80 percent of Russia's gas export revenues.

But Moscow and Beijing have haggled for five years over the commercial terms for any deal.

"The various measures China has taken to secure its imports reinforce our view that China would first look into any potential U.S. LNG (liquefied natural gas) deal before reverting to Gazprom," SocGen said.

In November, China signed a deal with Turkmenistan to increase its planned supply of gas to China by 25 billion cubic metres (bcm) of natural gas, to a total of 65 bcm.

SocGen said China's apparent policy meant that Gazprom's exports were likely to remain focused on Europe, and that this "leaves Europe well supplied until 2016 at least."

A Reuters analysis found that 2011 and 2012 are likely to see an import and domestic production excess above consumption of just over 60 bcm.

This compares with a net positive balance of just over 10.5 bcm in 2010, according to BP's annual statistical review.

Record U.S. natural gas production, thanks to new drilling techniques, has led to a series of rival export proposals all hoping to sell LNG to higher paying, thirsty markets in Asia and Europe.

(Editing by William Hardy)

December 12, 2011 11:08

Russia offers vast offset program in arms deliveries to Asia Pacific region – Rosoboronexporthttp://www.interfax.com/newsinf.asp?id=294279

LANGKAWI, Malaysia. Dec 12 (Interfax-AVN) - Due maintenance of Russian armaments and military hardware with the goal of their long useful life is the main focus of Russia's Rosoboronexport in the Asia Pacific region at present, Rosoboronexport Director for Special Projects Nikolai Dimidyuk said on Saturday in comment on the LIMA 2011 arms show, which was held in Langkawi from December 6 to 10.

"A primary task of Rosoboronexport in this region and worldwide is to provide maintenance, to open service centers and joint production facilities and to supply parts," he said.

The conclusions drawn at LIMA 2011 will lay down the foundation of Rosoboronexport's preparations for an arms show in Kuala Lumpur in April 2012.

"Representatives of the Malaysian military and political administration, defense ministers, commanders in chief and armed services commanders of many

countries visited us in Langkawi and showed interest in jets, tanks and air defense systems," he said.

The Malaysian Defense Ministry was particularly interested in the Russian wish to take part in the Malaysian tender for 18 fighter jets with a vast offset program, which will involve the Malaysian aircraft industry in the construction of Russian civilian aircraft of the MS-21 type, he said.

In the opinion of independent experts, to whom Russian journalists spoke at the LIMA 2011, the well-planned exhibition of Rosoboronexport, including 3D presentations, gave Russia a chance to be victorious in the upcoming Malaysian tender.

Malaysian pilots presented the capacities of Sukhoi Su-30MKM fighter jets, 18 of which Russia supplied to Malaysia earlier, at the LIMA 2011 show every day. The prospective participants in the Malaysian tender, among them Eurofighter and Grippen, actively presented their potentials although they did not take part in show flights at LIMA shows earlier.

"Yet [Russian-made] Mikoyan and Sukhoi jets of the Malaysian Air Force had no rivals due to their maneuverability," Dimidyuk said.

Military commanders of Brunei, the Philippines, Indonesia, France, Sweden and some other countries visited the Russian stand at the LIMA 2011 for negotiations.

Twelve defense plants, among them the United Aircraft Corporation (UAC) and the Almaz-Antei Concern, represented Russia at the show.

te

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

Sata invites Russian business teamhttp://www.times.co.zm/index.php?option=com_content&view=article&id=3448:sata-invites-russian-business-team&catid=46:other-headlines

 By Times Reporter

PRESIDENT Michael Sata has invited the Russian government to send a business delegation to Zambia to explore various areas of investment.

The president made the invitation during a meeting at State House on Friday with Mikhail Margelov, the special representative of the president of the Russian Federation for cooperation with African countries.

According to a statement by Special Assistant to the President for Press and Public Relations, George Chellah yesterday, Mr Margelov was in Zambia on a mission to promote trade and cooperation between Russia and Zambia.

During the meeting, President Sata said he recognised the important role Russia played in the freedom struggle for African countries.

He attributed the apparent quiet period in relations between Russia and African countries in the post-Soviet-era to Russia’s need to attend to its own social challenges.

President Sata said at independence, Zambia had less than 100 university graduates but the number increased soon after, through the many scholarships offered by the Russian government.

He cited agriculture, mining, civil engineering, oil exploration and tourism as critical areas in which the two countries could cooperate.

The president informed the Russian delegation that there were no facilities for producing gas in Zambia and yet the country was rich in mineral reserves.

He said Zambia had underutilised her hydro-electricity generation potential.

In response, Mr Margelov said Russia wanted to pursue pragmatic rather than ideological relations with African countries.

He also introduced the chief executive officer for Russia’s largest gas company, Gazprom, which had shown interest in exploring areas of cooperation with Zambia

There’s still hope for Afghanistan – Russian envoyhttp://rt.com/news/afghanistan-recovery-russian-envoy-525/

Published: 11 December, 2011, 11:23Edited: 11 December, 2011, 11:23

Despite fears that the planned withdrawal of US troops will plunge Afghanistan into chaos, there are still two years left in which to help Kabul buck the doomy predictions, says Russia’s special envoy to the country, Zamir Kabulov.

The recent conference on Afghanistan in Bonn demonstrated the solidarity of the international community with the Afghan people and government.  What was also evident was a desire to help the country emerge from an ongoing tragedy which sees suicide bombers killing dozens of civilians every other day.

European leaders at the conference were unstinting in their promises to offer all possible help to the country.

“It [the conference] was designed to ensure that the Afghan people will not be left alone after 2014, when the transition period is over,” the Russian envoy said.

After air strikes by US helicopters massacred 24 Pakistani servicemen at a checkpoint within Pakistani territory, the deeply-eroded relations between Islamabad and Washington will definitely complicate the transition process in Afghanistan – because Pakistan plays a complex but critical role in the war-torn country.

Zamir Kabulov revealed that the Taliban movement which appears dominant in Afghanistan is itself subject to terrorist attacks because it is not the only player fighting the governments in both Pakistan and Afghanistan.

While Pakistan has ignored the Bonn conference, everybody hopes that Islamabad will continue its efforts to stabilize the region in co-operation with the Afghan government and the international community.

Russia’s envoy to Afghanistan does not believe that anyone will benefit if the US changes its withdrawal plans, not least because they do not plan to leave the country altogether.

“We know about the plans of Americans to establish and maintain a number of military bases [in Afghanistan] with perhaps substantial forces deployed,” revealed Kabulov, adding that Washington’s plans have raised questions for the Russian leadership.

“We want to have a transparent picture for these military bases,” he stated, explaining that foreign military bases have never aided stability in this region, and are doubly unlikely to do so if the final goals and agenda of the troops remain unknown.

“We cannot really understand the aim of bases there because if 100,000 American troops – plus 50,000 of other [allied] troops – failed to stabilize the situation in Afghanistan, how can the remaining troops [do so]?” Zamir Kabulov asked. “We really need an answer [to this question].”

The Russian envoy recalled that after Soviet troops left Afghanistan in 1989, “the quality of the military force left behind was so high that they were able – with

some outside logistics support – to provide security in the country and stand alone against all odds [for several years].

“If we make a parallel with the current situation – I’m not quite sure that the Afghan army and police have … this level of capability to do it alone,” Kabulov concluded.

“That is why we always made a point that the Russian Federation does not want any non-regional military force to stay in Afghanistan for long. And at the same time, we do not want them to run away, leaving everything behind uncompleted,” he said, specifying that the transition should be accompanied by the building of genuinely effective Afghan military forces.

The second thing Russia insists on is that the military powers leaving the region should first help to build a sustainable economy capable of covering the basic needs of Afghanistan, including security.

“Unfortunately, as we can see at the moment, the Afghan national police and army are not able to stand alone to control the country and power its security,” the envoy argued, saying the Afghan leadership is not secure today – leave alone in a hypothetical future without military support.

“It is imperative to help President Karzai to have not just well-equipped and loyal national military forces, but a sustainable and working economy that can cover its expenditures,” he emphasized.

Envoy Kabulov compared the renewed infrastructure left behind after the Soviets quit  Afghanistan with the results of the American occupation of the same country for the same period of time, drawing a bleak contrast.

While conceding that the Americans had allocated generous funds for the building of schools and other social structures, he stressed that “it is really difficult to recall any industrial or infrastructural projects that can support the nation’s economy. 

“If things go the way they go now – there is a prospect of chaos,” he said. “But there is still hope and there is still time to correct mistakes.”

Russia to start direct uranium supplies to Japan – Rosatomhttp://en.ria.ru/business/20111210/169643374.html

22:27 10/12/2011

MOSCOW, December 10 (RIA Novosti)

The Russian state-run civil nuclear corporation Rosatom may start direct supplies of enriched uranium to Japan following ratification of a bilateral agreement in Japan's Diet, Rosatom spokesman Sergei Novikov said on Friday.

"The document ... is very important for practical cooperation. In particular it paves the way for direct deliveries of enriched uranium to Japan, not through the third countries as is the case now," Novikov told RIA Novosti.

Ratification of the agreement will radically simplify supply routes, general director of Rosatom's sale subsidiary, Alexei Grigoriyev, told RIA Novosti.

"It meets with Tenex's plans ... to set up a new and more profitable route to transport enriched uranium products through Russian ports in country's Far East," Grigoriyev said, adding that nowadays the company had to deliver the products to Japan from St Petersburg's port.

The ratification of the bilateral agreement also gives opportunities to deliver higher quality products to Japan and enrich Japanese regenerated uranium, stored in Europe, in Russia.

Russian tall ship Nadezhda in Yokohamahttp://english.ruvr.ru/2011/12/12/62046640.html

Dec 12, 2011 10:30 Moscow Time

The Russian tall ship Nadezhda has arrived in the Japanese port of Yokohama, where the vessel is to host an international scientific conference later on Monday.

The conference is named The Complex Development of the World Ocean As a Key Factor of Sustained Growth of APEC Countries.

Also on Monday, the tall ship’s crew will lay flowers at the monument to warrant officer Roman Mofet and Ivan Sokolov of Russia who were killed by Japanese rebels in 1859.

The Nadezhda is expected home before the end of this year.

(TASS)

04:27 12/12/2011ALL NEWS

Russia to mark Constitution Day

http://www.itar-tass.com/en/c154/294901.html

MOSCOW, December 12 (Itar-Tass) —— Russia will mark Constitution Day on Monday. The Russian fundamental law was approved 18 years ago and laid down the foundations of the state system, outlined the rights and freedoms of Russian citizens, the powers and functions of authorities.

In 2011 Russia marks Constitution Day amid the already launched presidential election campaign. The fifth presidential elections will be held on March 4, 2012 after the Constitution of the Russian Federation was enacted in 1993. Already sixth State Duma was elected on December 4.

At the parliamentary elections the United Russia Party lost the constitutional majority and will have only 238 seats out of 450 seats (the ruling party had 315 seats in the fifth State Duma). Although the party retained the absolute majority that enables it to approve all necessary laws and resolutions, the opposition decided that the ruling party missed the target, suspecting that the United Russia election result was achieved with the use of the notorious administrative resource.

The rallies for fair elections are held in all Russian cities already for a week. The most massive protest action was held in Moscow on December 10. The Moscow police reported that no less than 25,000 people were participating in the rally. The protesters have put forward a resolution with the demands to cancel the election results, dismiss Chairman of the Central Elections Commission (CEC) Vladimir Churov and investigate all cases of violations and falsifications.

Meanwhile, Russian President Dmitry Medvedev said he is satisfied with the way the Saturday rallies were held, though he does not agree with their slogans. “Under the Constitution Russian citizens have the freedom of speech and the freedom of assemblies,” the president said in his Facebook blog. Medvedev noted that “people can express their position.” “It is good that all passed under the law,” he added, noting that he gave the instructions “to investigate all reports from the polling stations over the observance of the election law.”

Earlier at a meeting with CEC Chairman Vladimir Churov the president pledged to meet with the leaders of all political parties, both parliamentary and non-parliamentary parties. He did not rule out the possibility for amendments in the election legislation. “Our democracy is just developing. It is not ideal and after each election we always introduce some amendments in the election legislation,” he noted.

As for the Constitution, most politicians and jurists are convinced that its potential is not exhausted yet. The constitutional mechanism for the protection of social, economic and political rights of citizens is not realized fully yet. The same can be said about the relations between legislative, executive and judicial authorities.

For 18 years the Russian Constitution was amended only once. Three years ago the term of the Russian president and the State Duma was increased to six and five years, respectively.

Chairman of the Constitutional Court Valery Zorkin noted repeatedly that the problem of constitutional protection of the human rights, life, safety and property of Russian citizens is “irreversible and fundamental.” All other problems “do not cost a dime,” he believes. A year ago on the eve of Constitution Day he even warned that in despair people “will begin to dream not about democracy, but about the iron dictatorship.” The concerns of the Constitutional Court chairman did not come true.

More than ten years Constitution Day was celebrated as the public holiday, but since 2005 this date is not the public holiday any longer. However, according to sociologists, two thirds of Russian citizens remember this date. Although several articles of the Constitution still sound like “the declaration of intentions,” the Constitution remains the roadmap, which allows Russia neither to step aside nor step back.

PM Putin to attend launch of nuclear power unithttp://en.rian.ru/russia/20111212/170129133.html

06:47 12/12/2011

MOSCOW, December 12 (RIA Novosti)

Russian Prime Minister Vladimir Putin will on Monday visit the Kalininskaya Nuclear Power Plant (NPP) in the central Russian Tver Region north of Moscow to attend the launch of the plant’s fourth power unit, the government press service reported.

The Kalininskaya NPP is one of the largest energy producing facilities in central Russia. It provides electric power to eight regions.

The first and second power units were launched in the 1980s. The construction of the third and fourth units was frozen in early 1990s. The third unit was ultimately launched in 2004.

The construction of the fourth unit resumed in 2007. Today it is one of the key nuclear power industry facilities to be commissioned in 2011. Over 70 billion rubles ($2.2 billion) has been spent on the construction.

The new power unit will generate an additional 7 billion kWh of energy annually, increasing the NPP’s overall annual generation by 31%. The regional budget will additionally receive 433 million rubles ($13.8 million) in taxes. About 100 new jobs will be created.

02:04 12/12/2011ALL NEWS

RF authorities should have dialogue with opposition – France FM

http://www.itar-tass.com/en/c154/294882.html

PARIS, December 12 (Itar-Tass) —— Russian authorities should maintain dialogue with the opposition and avoid violence, French Foreign Minister Alain Juppe said on Sunday.

“We urge Russian authorities to maintain dialogue (with people) and avoid violence. The opposition should be permitted to stage demonstrations,” he said live on the TV-5 Monde television channel in comments on multi-thousand rallies in protest against the results of the elections in the State Duma staged in many Russian cities last weekend.

Russian authorities should “draw conclusions before upcoming presidential elections,” the French foreign minister added.

01:31 12/12/2011ALL NEWS

Proton orbits Israeli communications satellite, RF relay satellite

http://www.itar-tass.com/en/c154/294877.html

MOSCOW, December 12 (Itar-Tass) —— The Russian booster Proton-M launched from the Baikonur spaceport on Sunday put successfully on the designated orbit the Israeli communications satellite AMOS-5.

“The communications satellite AMOS-5 separated at 00.52 Moscow time on Monday from the upper stage Briz-M,” press secretary of the Khrunichev State Space Research-and-Production Centre Alexander Bobrenev told Itar-Tass on Monday.

The Reshetnev Information Satellite Systems Company has designed the Israeli communications satellite AMOS-5 for the Israeli satellite communication company Spacecom. The service life of the satellite is 15 years.

The Russian relay satellite Luch-5A was launched together with the satellite AMOS-5. The Luch-5A satellite separated from the upper stage at 00.11 Moscow time on Monday.

“The Sunday launch became the ninth for the booster Proton-M in 2011 and a total 372nd launch for the launch vehicle. This was the third launch for the Proton booster, when two satellites were put on the geostationary orbit,” the Reshetnev Information Satellite Systems Company recalled.

Russia gives up on failed Mars probe, braces for crash landing next monthhttp://www.washingtonpost.com/national/health-science/russia-gives-up-on-failed-mars-probe-braces-for-crash-landing-next-month/2011/12/10/gIQANaQalO_story.html

By Brian Vastag,

After a frustrating month, Russian space scientists have apparently abandoned efforts to save a Mars probe stranded in Earth orbit since early November.

Known as Phobos-Grunt, the robotic spacecraft carries some 7.5 tons of fuel and a small amount of radioactive cobalt. The Russian space agency, Roscosmos, expects the probe to plunge back to Earth around Jan. 9.

On Saturday, Roscosmos and the Russian defense department announced a task force to study the probe’s reentry.

The creation of the task force “confirmed that the agency had exhausted all hopes for establishing control over the mission,” said Anatoly Zak, a Russian space journalist and historian who operates the news site Russian SpaceWeb.com . Reentry of the spacecraft now appears “inevitable,” he said.

The European Space Agency (ESA) briefly established contact with Phobos-Grunt from a tracking station in the Canary Islands, raising hopes the mission might be salvaged. But further attempts largely failed. After two additional attempts Friday, ESA formally called off the campaign.

A top Russian space scientist sent an open letter on Thursday to colleagues worldwide apologizing for the failure.

“Despite people being at work 24/7 since the launch, all these attempts have not yield[ed] any satisfactory results,” wrote Lev Zelenyi, director of the Space Research Institute in Moscow. The institute, which planned the long-anticipated mission, is part of the Russian Academy of Sciences.

Zelenyi added, “We are working nevertheless on the issue of re-entry and [the] probability of where and which fragments may hit the ground (if any).”

The probe carries a few micrograms of radioactive cobalt-57 to power one of the spacecraft’s instruments, but Zelenyi wrote that this tiny amount of material did not pose a danger.

In the works for two decades, the $165 million mission was designed to vault Russia into the elite ranks of planetary explorers after a 15-year fallow period.

“Getting back into interplanetary exploration has been a real passion, a real obsession for them,” said former NASA engineer James Oberg, now an independent space analyst. “It’s been 25 years since they’ve had an interplanetary mission succeed.”

Phobos-Grunt lifted off from Baikonur Cosmodrome in Kazakhstan on Nov. 9. After the launch placed the probe in low-Earth orbit, a booster rocket failed to ignite. Attempts to diagnose and fix the problem were largely fruitless.

Frantic last-minute repairs to the probe’s electrical system may have contributed to the failure, Zak said, citing sources at NPO Lavochkin, the Russian company that built Phobos-Grunt.

“There was a serious cable connection problem discovered in Baikonur” just weeks before launch, Zak said. “They had to disconnect the cables, and these were hard connections. They had to cut them and wire them to a different route.” He said engineers re-soldered electrical connections even though the craft was fueled with highly flammable hydrazine.

The mission was designed to achieve something never before attempted: a landing on Phobos, one of Mars’s two moons. There, the probe was to scoop up some soil and return it to Earth for study. Phobos-Grunt also carried a small Chinese probe designed to orbit Mars.

Russia space watchers say the mission was set up for failure.

“This project is overly ambitious, it’s overloaded with stuff, and it’s mismanaged,” Zak said. “The Chinese spacecraft was added at the last minute. That required a complete redesign, it complicated the spacecraft, and made it heavier and much harder to control.”

Louis Friedman, former director of the U.S.-based Planetary Society, which flew a small experiment on Phobos-Grunt, called the spacecraft a “kludge,” with extra instruments added late in the design process.

To push this extra weight all the way to Mars, Russian engineers came up with a fast, cheap solution; they added an extra doughnut-shaped fuel tank.

“Instead of redesigning the whole thing, they did it the Russian way and just strapped on some more tanks,” Oberg said.

But the booster rocket fueled by those tanks never fired.

The failure is an indictment of poor management in Russia’s space program, Friedman recently wrote in the Space Review.

He pointed to Roscosmos maintaining just a single ground station capable of communicating with Phobos-Grunt. When the craft became stranded, the Russians had to call on ESA and NASA.

Russia’s space industry has suffered a huge “brain drain” in recent decades, Zak said. Low wages and the lack of opportunities to design new missions sent many engineers packing for the United States and Europe.

“They have people working who are 70 and people who are 25,” Zak said. “They have this lost generation of space workers.”

Reuters reported that of 250,000 Russian space workers, 90 percent are older than 60 or younger than 30.

Russia’s last attempt to reach the Red Planet, in 1996, ended ignominiously when a booster rocket failed and crashed back to Earth.

The Russians may have another chance at Mars in 2016. That’s when ESA and NASA plan to launch an orbiter to study how Mars lost most of its once-thick atmosphere. Earlier this year, NASA said it could no longer afford the necessary rocket. That leaves an opening for Russia to join.

During a meeting Wednesday in Paris, Roscosmos representatives agreed in principle to provide the launch rocket, said Franco Bonacina, an ESA spokesman.

“Russia will then have a lot of say in the mission,” Zak said. “Without them, now it looks like the mission collapses like a house of cards.”

United Russia to hold rally to support President, PMhttp://english.ruvr.ru/2011/12/12/62054739.html

Dec 12, 2011 12:25 Moscow Time

The United Russia party is due to hold a rally in Moscow’s Manezh Square this Monday to support the Russian President and Prime Minister. Over 15,000 are expected to turn up for the authorized event, specifically party members, the members of the party youth wing, - Young Guards, officials of the All-Russia People’s Front, and also the youth movements that are loyal to the government. The rally is clearly held as a reaction to the December 10th massive protests against the recent Duma election fraud. The December 10th protest rally in Moscow’s Bolotnaya Square was attended from 25,000 to 60,000 protesters, according to various estimates. President Dmitry Medvedev disagreed with the slogans chanted during the protest meeting. However, he ordered that all the claimed voting irregularities be checked up on.

(TASS)

Medvedev orders Russia poll inquiry, gets insultshttp://in.reuters.com/article/2011/12/12/russia-idINDEE7BB02820111212

9:24am IST

By Timothy Heritage

MOSCOW (Reuters) - President Dmitry Medvedev ordered an investigation on Sunday into allegations of fraud in Russia's parliamentary election, one day after tens of thousands of protesters demanded it be annulled and rerun.

Medvedev responded on his Facebook site to the protesters' complaints that the December 4 election, won by Prime Minister Vladimir Putin's United Russia, was slanted in its favour.

But he did not mention their calls for an end to Putin's rule and received one insult after another on his Facebook site from people who made clear his reply was insufficient.

"I do not agree with any slogans or statements made at the rallies. Nevertheless, instructions have been given by me to check all information from polling stations regarding compliance with the legislation on elections," Medvedev said in a post on the social media site.

His statement was a sign that the Russian leadership feels under pressure after the biggest opposition protests since Putin rose to power in 1999. The protesters themselves used social media to organise their rallies.

But the protesters have demanded much more than just an investigation and are unlikely to be satisfied.

They want a rerun of the election, the sacking of Central Election Commission chief Vladimir Churov, the registration of opposition parties and the release of people they define as political prisoners.

Within hours of his statement, Medvedev had received several thousand comments on his Facebook site, many of them negative, plenty of them disrespectful and some of them highly insulting.

"We don't believe you," wrote Natalia Akhi.

Irina Arapova asked: "And who's going to do the checking? The executive authorities (United Russia)?"

The next big day of protests is planned on December 24 when Alexei Navalny, one of the protest leaders, will have served a 15-day jail term received for his role in a protest last week.

CHANGE OF MOOD

Like Saturday's protests, which followed big opposition rallies in Moscow and St Petersburg last week, the responses to Medvedev underlined how Russians' faith in their leaders has fallen and that they are no longer afraid to show it.

Anger over the election -- which international monitors and the United States found fault with -- unleashed years of pent-up frustration with Putin and his tight political controls. Frustration had mounted since September, when he announced plans to reclaim the presidency next year, opening up the possibility of him ruling until 2024.

French Foreign Minister Alain Juppe said Russia's leaders should allow demonstrations to go ahead and learn lessons from the election for next year's presidential vote.

"People don't like it when one plays with the democratic process. 'I am Prime Minister, and I'll leave you the Presidency' and vice-versa... that's something that ends up shocking people," Juppe said on RFI radio.

"We call on the Russian authorities to hold a dialogue, prevent violence, let the opposition demonstrate and learn the lessons for the organisation of the next presidential elections."

In a sign the authorities are starting to sense the change of mood, city authorities across Russia allowed Saturday's peaceful protests to go ahead and riot police hardly intervened.

State television and other channels broadcast footage of Saturday's big protest in Moscow, attended by tens of thousands, breaking a policy of showing almost no negative coverage of the authorities, although they included no criticism of Putin.

But there is no indication that Putin, Russia's paramount leader, is about to bow to the protesters' demands and most political experts still expect him to win the presidential election next March and swap jobs with Medvedev.

He is likely now to look for ways to show he has registered their concerns but try to ride out the protests, hoping they will fizzle out as quickly as they began. A statement by Putin's spokesman, Dmitry Peskov, gave no hint of concessions.

"We respect the point of view of the protesters, we are hearing what is being said, and we will continue to listen to them," Peskov said.

RESURGENT OPPOSITION

"December 10, 2011 will go down in history as the day the country's civic virtue and civil society was revived. After 10 years of hibernation, Moscow and all Russia woke up," Boris Nemtsov, an opposition leader, wrote in his blog.

"The main reason why it was such a big success is that a feeling of self-esteem has awakened in us and we have all got so fed up with Putin's and Medvedev's lies, theft and cynicism that we cannot tolerate it any longer ... Together we will win!"

It may not be that simple. The opposition has long been divided, most mainstream parties have little or no role in the rallies and keeping them up across the world's largest country is hard at the best of times but especially in winter.

Most Russian political experts say Putin, the former KGB spy who has dominated the world's largest energy producer for 12 years, is in little immediate danger of falling, despite anger over widespread corruption and the gap between rich and poor.

But they say the 59-year-old leader's authority has been damaged and may gradually wane after he returns as president unless he acts to address the new mood.

"Putin has a formidable task. He has lost Moscow and St Petersburg, crucial cities where everything usually starts," said political analyst and author Liliya Shevtsova. "He looks out of touch."

Putin, as president for eight years until 2008 and as prime minister since then, built up a strongman image by restoring order after the chaos in the decade after the Soviet Union's collapse in 1991. But he no longer seems invincible.

He could release the state's purse strings to satisfy the financial demands of some critics but many of the protesters in Moscow are middle-class people demanding more fundamental changes, such as relaxing the political system he controls.

His charges last week that the United States encouraged the protesters and financed them provoked scorn on the Internet.

(Additional reporting by John Bowker, Editing by Rosalind Russell)

After protests, Putin says he'll listenToday at 07:57 | Associated Press MOSCOW — In his dozen years of leading Russia, Vladimir Putin has been the one doing the talking. Now he may have to learn how to be a listener.

The protests against Putin and his party that arose in more than 60 Russian cities on Saturday, including a vast demonstration a few hundred yards (meters) from the Kremlin, appear to have shaken the man accustomed to giving orders, lecturing journalists at marathon news conferences and dismissing dissenters with barbed and occasionally vulgar comments.

Putin had no immediate comment on the demonstrations, which were the largest public show of anger in post-Soviet Russia, but his spokesman made efforts to portray the prime minister as open to criticism.

"We respect the point of view of the protesters. We are hearing what is being said. We will continue to listen to them," Dmitry Peskov said in a statement late Saturday.

It's unclear how that listening will be done — in actual talks or from a distance — and whether it will be just a disingenuous show until a presidential election in less than three months, during which Putin seeks to return to the post he held in 2000-2008.

But signs of change have already come. State-controlled TV channels gave substantial airtime to the protests, a sharp change from their previously ignoring or deriding the opposition.

If Putin talks with the opposition, it should be done "not with the goal of talks for the sake of talks, hoping that the situation will dissolve by itself, but for finding very meaningful and real compromise," Yevgeny Gontmakher, an adviser to Russian President Dmitry Medvedev, wrote on his blog Sunday.

Medvedev on Sunday promised on his Facebook page that allegations of vote fraud in recent parliamentary elections, the detonator of the nationwide protests, would be investigated. But most of the 2,000-plus comments that flooded in one hour after the post were dismissive, indicating that the opposition would not be satisfied by vague promises from a lame-duck who is widely seen as subordinate to Putin.

Medvedev has agreed to leave office next year, clearing the road for Putin to return as Russia's president. The agreement, announced as a fait-accompli to a congress of the ruling United Russia in September, was widely seen as cynical maneuvering and Putin's political fortunes took a dive.

Surveys from the respected independent polling agency Levada Center showed 42 percent of Russians in late September would have voted for Putin in March's presidential election, but the number fell to 31 percent two months later.

And that was before his image was further tarnished by the Dec. 4 national parliament election, during which United Russia lost a substantial share of seats and observers said even that showing was inflated by vote fraud. Sensing weakness in the party and incensed by the fraud, long-marginalized opposition forces were emboldened to risk the mass protests.

Under Putin, Russian authorities routinely denied opposition groups permission to hold rallies or strangled their effectiveness by limiting attendance to a few hundred. Unauthorized attempts or larger crowds generally brought clashes with police and extensive arrests. But most of Saturday's protests had official sanction and Moscow officials showed unprecedented largesse by authorizing a crowd of 30,000 — and not sending riot police into action when the crowd clearly exceeded that number.

That indicated that Putin, if not already listening, is deeply concerned about his weakened position. He had much to lose if he went for the usual strategy of repressing the opposition.

If Putin had chosen a harsh crackdown, he risked international opprobrium that could have brought expulsion from the Group of Eight and the relocation of prestigious events such as next year's APEC summit in Vladivostok and even the 2014 Winter Olympics in Sochi, Gontmakher said.

Putin's ability to attract such events has been a key part of the esteem citizens held

for him, restoring Russians' sense that their country is again a thriving world power after a long spell of confusion and chaos.

Both sides face a ticking clock.

The opposition has called its next large protest for Dec. 24; in the interim, morale and momentum could fade. Even if determination remains high, the opposition would likely need to mount daily protests, such as those that brought down Egypt's President Hosni Mubarak this year, to force significant changes.

With less than 90 days to go until the presidential ballot, Putin also is under pressure to repair his image and dampen the public discontent. But for all the signs that the pressure may be forcing him to rethink his ways, flashes of his characteristic style also appeared — notably a harsh criticism of U.S. Secretary of State Hillary Clinton for allegedly instigating protesters and trying to undermine Russia.

In addition, despite protesters' demands to annul the recent parliamentary election and hold a new vote, Putin appears far from acknowledging the vote was questionable.

Peskov's statement noted that the results are now official and added, pointedly: "In the past few days we also witnessed demonstrations by other segments of the population who were supporting those results."

Read more: http://www.kyivpost.com/news/russia/detail/118736/#ixzz1gIXLDJGi

09:11 12/12/2011Top News

Kudrin forecasts emergence of authoritative right-wing force in RF

http://www.itar-tass.com/en/c32/294974.html

MOSCOW, December 12 (Itar-Tass) — Russia’s former finance minister Alexei Kudrin believes that emergence of an authoritative right-wing force should become the political outcome of the elections to the State Duma.

“Six months ago, when the discussion about the Right Cause party was underway, everybody expressed concern over the lack of an authoritative force on the right flank,” he said in an interview with the Vedomosti business daily published on Monday. “Today it became clear that this deficit turned more acute than we could ever imagine.”

“Today we can say confidently that the demand for the creation of such a structure is so high that its creation will obligatorily begin. Now we will see the processes of consolidation of liberal and democratic forces,” he said.

Kudrin said he was absolutely confident of this and “was ready to contribute to this,” however at present, there was no talk about a remote opportunity to lead this process.

“The voting at the State Duma elections is a blow to the ruling party. Unfortunately, United Russia was found failing to fulfil its promises. Protection of business, elimination of corruption, the creation of a fair judicial system and the government’s presence in economy – no drastic changes occurred in all these areas despite promises,” Kudrin said.

The elections to the lower house of parliament “became an interesting phenomenon” – “a political discussion became more heated, citizens’ activity increased” and “people well showed their preferences.” “United Russia is losing support,” he said. “The ruling party has to search for compromises with other parties. Their motions will not be passed so easily as before.”

“At these elections we faced a peculiar situation: citizens want to fix and discuss honesty and legitimacy of the elections themselves” and “in this sense people are dissatisfied with the election returns.”

Kudrin considers it fair to raise the issue of resignation of the chairman of the central election commission, Vladimir Churov.

“If this is not done, next elections will pass in a slipshod manner. Disregard of evident violations casts doubt on these elections’ objectivity,” he said.

Russian ex-finance minister says may establish new political party - paperhttp://en.rian.ru/russia/20111212/170183120.html

11:46 12/12/2011

MOSCOW, December 12 (RIA Novosti) – It is an ideal time for establishing a new Russian right-wing party as the country’s “political landscape” is changing, former Russian Finance Minister Alexei Kudrin said in an interview with Vedomosti business daily published on Monday.

New Russian party to be established

In the first interview after his scandalous dismissal, Kudrin, who fell out with the Kremlin and was sacked as finance minister in late September, said that he was

planning to establish a new right-wing party as liberal views in Russia historically had not found wide support.

“The demand on the creation of such a [political] structure is so high that it will inevitably be established…I am ready to contribute to it,” Kudrin told Vedomosti.

The ex-minister, who had previously dismissed reports that he might become the Right Cause party's leader, said that President Dmitry Medvedev had repeatedly asked him to head the party.

“I said no…as I realized that the Right Cause with its 'unclear people' and significant control from the Kremlin will be absolutely powerless,” Kudrin said.

Some Russian media reported earlier that the Right Cause party, once headed by billionaire Mikhail Prokhorov, was allegedly neutered by pro-Kremlin figures concerned about Prokhorov's emergence as a political force.

United Russia loses grip

Kudrin, who confessed he had not voted for the United Russia party at the parliamentary elections on December 4, said that the souring support for the ruling party is a “rational result.”

“The United Russia party is losing support…These elections showed the unusual situation when people want to preserve and discuss the fairness of the elections. In this regard, people are not satisfied with the results, there are too many flaws,” Kudrin said.

Kudrin confirmed that the ruling party had not met the people’s expectations because there were not any significant changes in its key oaths, including easing conditions for business, tackling corruption and restoring the judiciary system.

“United Russia is an experienced and pragmatic party…I think it will return to reality after populist statements,” Kudrin said, referring to Russia’s “changing political landscape.”

No talks to occupy premier post

Kudrin, who was sacked soon after the United Russia’s congress on September 24 where Prime Minister Vladimir Putin said he would swap jobs with President Dmitry Medvedev after presidential elections, was rumored to possibly occupy the premier’s post.

“Nobody has discussed the premier post with me. The genuine reason of my leaving is that the previous incorrect decisions that were made would not be reviewed. I have no plans to fight with the consequences of the decisions that I

was against,” Kudrin told Vedomosti, referring the Kremlin’s decision to increase defense costs, a move that Kudrin had sharply criticized.

The former minister also said that he had never been a close ally to Putin, but continued to respect him regardless “disagreements on several issues.”

[LINK TO INTERVIEW:]

http://www.vedomosti.ru/politics/news/1450004/ne_stal_by_nas_s_putinym_nazyvat_edinomyshlennikami_aleksej

Russian opposition should be “actively moderate” - Constitutional Court chairmanhttp://en.rian.ru/society/20111212/170141171.html

07:28 12/12/2011

MOSCOW, December 12 (RIA Novosti)

Opposition activists in Russia, who are discontent with the results of the December 4 parliamentary elections, should be more moderate not to trigger a national disaster in the country, Russian Constitutional Court Chairman Valery Zorkin said.

“Overflowing frenzy should be contrasted with smart, resolute and active moderation,” Zorkin told the Rossiiskaya Gazeta government newspaper.

He compared the situation with the 1993 constitutional crisis, when military force was used to resolve a standoff between the Russian president and parliament, which resulted in hundreds of deaths, and said any similar developments should be prevented this time.

State Duma elections saw the ruling United Russia party win nearly half of the vote, retaining a simple majority in the lower house. Independent observers and critics claimed the vote was slanted in favor of United Russia and cited some ballot stuffing.

The authorities said the elections were fair and irregularities were minor, pledging to investigate all violations.

Thousands went out to protest the vote results in the first three days after elections, and hundreds were detained. A few days later, on Saturday, an unprecedented number of people - tens of thousands - gathered in downtown Moscow for authorized protests, which ended peacefully.

Rallies also took place in other cities. The protesters demanded a revote or a new vote count at all polling places where violations had been reported, and Central Election Commission head Vladimir Churov’s dismissal. President Dmitry Medvedev said he disagreed with ideas voiced at the protest rallies.

07:17 12/12/2011ALL NEWS

Situation in RF elite, society should be returned to legal field

http://www.itar-tass.com/en/c154/294939.html

MOSCOW, December 12 (Itar-Tass) —— Modern Russia “should protect the law as never before.., and protecting it, we protect Russia,” Chairman of the Russian Constitutional Court Valery Zorkin said with confidence in an interview published in the Rossiiskaya Gazeta daily on Monday.

Zorkin is concerned that protesting tensions in Moscow and several other Russian cities “appeal not to the law again (as in 1993), but to something else.”

“Then Moscow, as today, faced a sharp confrontation between the supporters of the then Russian President Yeltsin and his opponents. Then as today the oppositionists accused the authorities of violating the law and the Constitution. Then as today protesting passions were actively fuelled up from abroad,” Zorkin noted. He recalled that “then these protesting passions grew into the hardest tragedy for the country: street clashes, the shelling of the parliament from the tanks and a major bloodshed... And...in the deepest undermining of that (a very weak respect to the law without any similar incidents in Russia) respect to the law, without which any democracy is impossible.”

Then Russia succeeded to evade the civil war, but “what could have been obtained in the absolutely another way before, had a bloody price and many negative aftermaths very dangerous for the country that we are experiencing up to now.” The Constitutional Court chairman believes that “one of the most hardest and painful negative phenomena for Russia is a deep gap in the legal consciousness and the law execution in the elites and the mass public.”

“Today, in contrast to 1993, we have the testimonies of a full-fledged and viable Constitution. We have the legislation, which is based on this Constitution and embraces all spheres of life. The legislation is far from being perfect, but it exists,” Zorkin pointed out.

“However, the Constitution and the laws are not enough for Russia, which failed to clear the legal hurdle amid Famusov’s tyranny and Chatsky’s growing rabidity (the characters from a famous play Wit Works Woe by Russian playwright and diplomat Alexander Griboedov – Itar-Tass). We need the force, which can prevent the massive protesting from growing into incidents, which are fraught

with the threat to the very existence of our statehood. This should be the force that can bring back the situation in the elite and the society in the legal field and can avert another threat of sliding down to a national catastrophe.”

Last Saturday, the opposition, which protested against the results of the parliamentary elections, succeeded to bring dozens of thousands of people to the streets of Russian cities. At the rally in Moscow the resolution was taken with five demands: the freedom to the prisoners of conscience, the cancellation of the results of the State Duma elections, the dismissal of Chairman of the Central Elections Commission Vladimir Churov and “the investigation of his activities,” the registration of all political parties and the democratization of the legislation in this sphere and the holding of new parliamentary elections.

The organizers of the Moscow rally, which turned out to be the most massive one for more than ten years, pledged to stage a new multi-thousand rally on December 24.

Russian President Dmitry Medvedev said he is satisfied with the way the rallies passed, but did not agree with their slogans.

“Under the Constitution Russian citizens have the freedom of speech and the freedom of assemblies,” the president noted. “People have the right to express their position, what they did yesterday,” the president noted in his Facebook blog. “It is good that all passed under the law,” he noted.

“I do not agree either with slogans or statements made at the rallies,” Medvedev noted, adding that he gave the instructions “to investigate all reports from the polling stations over the observance of the election legislation.”

02:22 12/12/2011ALL NEWS

Four people detained at election result protest action in Perm

http://www.itar-tass.com/en/c154/294885.html

PERM, December 12 (Itar-Tass) —— The protesters against the results of the elections to the State Duma staged a rally here on Sunday.

Some 800 people were participating in the protest action, the Perm territorial police department reported. The initiative group of young people, which announced a rally in the Internet, claimed that from 1,500 to 2,000 people were participating in the rally.

The rally was staged in downtown Perm at the monument entitled Legend about the Perm Bear at the Ural hotel. The police fenced off the area for the rally. Perm residents entered the area through metal detectors.

The protesters were chanting the slogans “Return the power to people!” and “One for all, all for one!” The Communist Party and Yabloko were among the main protesting parties at the rally. The protesters were also carrying the Russian national flag, the Soviet Union flag, the black-yellow-white flag, the anarchist black flag and the flags of Perm public organizations.

The police detained only four people, including two 17-year-old young men, which had component parts for making flares and two drunken adults, the Perm police told Itar-Tass after the rally. The teenagers were ordered to give official explanations, the police protocols were made up against the adults. The stagers of the Perm protest action already thanked the police for the respectful attitude through the VKontakte social network.

10:14 12/12/2011ALL NEWS

Krasnoyarsk city mayor files resignation after 15 years in office

http://www.itar-tass.com/en/c154/295021.html

BARNAUL, December 12 (Itar-Tass) — Krasnoyarsk city mayor Pyort Pimashkov who has been ruling Russia’s third largest city in Siberia for 15 years has filed his resignation, the city council of deputies said on Monday.

In December 1996 Pimashkov was first elected Karnoyarsk city mayor. In March 2008 he was re-elected to this position for the fourth time gaining 70.5 percent of voters’ support.

Some observers interlink Pimashkov’s resignation with weak results that United Russia demonstrated during the elections to the lower house of parliament.

Later in the day the Krasnoyarsk city council will announce, when the local legislature’s session will take place to decide on Pimashkov’s resignation. It may take place on December 14.

12 December 2011, 10:35

Church urges not to allow new revolution in Russia

http://www.interfax-religion.com/?act=news&div=8927

***Archpriest Vsevolod Chaplin hopes authorities will give "adequate and honest answers" on uncomfortable questions they were asked

Moscow, December 12, Interfax - The Russian Orthodox Church urges not to allow civil confrontations in Russia as the part of society is not conformed with results of votes counting at the parliamentary elections.

"We can't but express satisfaction that rallies in Russian cities are generally peaceful, in frames of law. No matter how political positions vary, the most important thing today is to keep civil peace and statehood, not to allow new 1905, 1917, 1991 or 1993," head of the Synodal Department for Church and Society Relations Archpriest Vsevolod Chaplin told an Interfax-Religion correspondent.

The priest urges those who seek new revolutions to remember that "God won't forgive misfortunes they produce, won't forgive sufferings of their neighbors."

He accepted that there were many emotional and even insulting slogans at the recent rallies. "However, very serious questions, not comfortable to authorities, were also raised. Let's hope that authorities will answer them adequately and honestly," the priest said.

According to him, peaceful character of meetings creates conditions for national dialogue on format of electoral processes and means of public control over them.

"I'm sure such a dialogue is needed to preserve civil peace and people's confidence in authorities. All political parties, representatives of different social groups, religious communities, public associations, including liberal and conservative oppositionists could participate in the dialogue. There are many platforms for the dialogue - for example, the Public Chamber," the church representative believes.

December 11, 2011

Russian Orthodox Church Adds Influential Voice to Calls for Election Reformhttp://www.nytimes.com/2011/12/12/world/europe/russian-orthodox-church-joins-in-calls-for-election-reform.html?_r=1

By SOPHIA KISHKOVSKY

MOSCOW — The Russian Orthodox Church added its influential voice over the weekend to calls for a just election process in Russia. The step followed demonstrations across the country that called for a recount or a fresh vote, and outpourings from individual members of the church’s clergy, who reflected popular anger at the flawed Dec. 4 election.

“It is evident that the secretive nature of certain elements of the electoral system concerns people, and there must be more public control over this system,” said Archpriest Vsevolod Chaplin, the most prominent spokesman for the church, in remarks to a widely followed Orthodox news Web site. “We must decide together how to do this through civilized public dialogue.”

The pronouncement by Father Chaplin, chairman of the Moscow Patriarchate’s synodal department of church and society relations, was especially significant because he is often criticized as an apologist for the Kremlin. He has made several conservative statements in the past year, including a call for an Orthodox dress code in Russia, that have stirred controversy.

In a telephone interview on Sunday night, Father Chaplin said that if the church obtained proven documentation of election violations from named sources, it would be ready to take it up with government officials.

“If there are proven facts, then  of course we’re going to examine them, present them to the church hierarchy and discuss them with the Central Election Commission and other government bodies,” he said.

Father Chaplin’s remarks to the Web site appeared intended to get the church back out in front of individual clergy members’ condemnations of election rigging, a first for the post-Soviet Russian Orthodox Church. The comments might suggest the government is accommodating the critique of the political system, perhaps because it has become too widespread to stifle.

“It’s amazing that this awakening of civic consciousness has affected the church as well, and not just lay people but clergy, too,” Sergei Chapnin, editor of the Journal of the Moscow Patriarchate, said last week, on the sidelines of a seminar about Russia’s historical identity, before the new statement by Father Chaplin.

For years, Mr. Chapnin noted, many Orthodox were skeptical or indifferent toward electoral politics, though the church has regained influence since the fall of Communism and is publicly embraced by the Kremlin.

As recently as a few weeks ago, Mr. Chapnin said, “it would have been impossible to imagine” priests speaking out in such sympathy with public anger over election manipulation and fraud.

“I think society simply experienced such a shock,” he added. “We understand very well that elections have been falsified before, but now public consciousness has matured to the point of expressing its opinion or speaking out against it.”

He said he did not meet anyone in the church last week who approved of the official results for the Dec. 4 vote.

The Web site that Father Chaplin spoke to, Pravoslavie i mir (Orthodox Christianity and the World), has become a platform for debate about politics and morals. Its editor, Anna Danilova, said the reaction inside the church arose from disgust at official dishonesty surrounding the election. “A Christian has to protest against lies, especially lies to millions of people,” she said.

Harsh condemnation of the elections among Russian Orthodox priests, theologians and active lay people was evident on Facebook pages and blogs as reports of fraud poured in last week. Concerns were raised that an honest election might have brought Communists back to power. (Their party finished a distant second, far behind the governing United Russia party, in the official results.) Orthodox believers and priests remember the persecution of the church during the Soviet era, even though many modern-day Russian Communists identify themselves as Russian Orthodox as well.

Last Tuesday, when claims of vote rigging were mounting and protests were gathering strength, one priest wrote on his Facebook page: “Falsification of the choice of the people is a grievous sin. There can be no justification for it.”

By midweek, blunt statements by other prominent priests were appearing online. One priest, the Rev. Dmitri Sverdlov, posted a tragicomic narrative of his attempt to act as an election observer during which he witnessed a school director and teachers who were running a polling site commit crude violations in favor of United Russia.

In comments published Wednesday on the site of Neskuchny Sad, an Orthodox magazine that covers social issues, Archpriest Vladimir Shmaliy, a top academic official in the Moscow Patriarchate, said that the authorities must answer to the people. “Power in a contemporary state is not self-sufficient,” Father Shmaliy said. “The relationship between the people who elect the authorities and the authorities presumes mutual responsibility.”

Andrei Zubov, a historian who studies the church and has organized the meetings between church-minded intellectuals and other academics on Russia’s historical identity, attended the rally on Saturday in Moscow. He said clergy members were speaking out because they saw vote-rigging and fraud as violations of the Ten Commandments.

“A priest knows very well that violation of the commandments never passes without a trace,” he said. “It always results in some grave consequences for violators and the entire society in which this act of falsehood occurs.”

Moscow school evacuated over bomb threathttp://en.rian.ru/crime/20111212/170183539.html

12:12 12/12/2011

MOSCOW, December 12 (RIA Novosti)

More than 400 children were evacuated on Monday from a school in eastern Moscow following a bomb threat call, a police source said.

Sappers have rushed to the site.

There has been no official confirmation of the report.

Russian Press at a Glance, Monday, December 12, 2011http://en.ria.ru/papers/20111212/170171476.html

09:11 12/12/2011

A brief look at what is in the Russian papers today

POLITICS

Former Finance Minister Alexei Kudrin said he did not vote for United Russia, is ready for a new right political project and does not have views similar to Prime Minister Vladimir Putin’s.

(Vedomosti)

As protests against the ruling United Russia party swept the nation, opposition party A Just Russia overwhelmingly chose its leader Sergei Mironov, a longtime ally of Prime Minister Vladimir Putin, to run against him in the March presidential election.

(The Moscow Times)

Rallies demanding a revote in the parliamentary elections took place in some 100 Russian cities, as well as near Russian embassies and consulates in dozens of cities around the world. In some regions, the rallies were unauthorized and authorities dispersed them.

(Kommersant)

Prime Minister Vladimir Putin no longer has the support of Russians he earlier enjoyed, analysts said following Saturday’s protest rallies.

(Vedomosti)

Radical writer and former National Bolshevik leader Eduard Limonov will submit an application to become a presidential candidate by next week, despite being locked out of the hotel where he planned to launch his campaign.

(The Moscow Times)

ECONOMY & BUSINESS

Officials proposed obliging developers to build access roads to trade centers they construct. The move could prove fatal for regional companies.

(Kommersant)

Ukraine's ruling Party of Regions called for the creation of a pipeline gas shipment consortium with Russian and European companies, a move that could help the Kiev government negotiate cheaper Russian gas supplies.

(The Moscow Times)

President Dmitry Medvedev proposed that the government restrict the activity of state companies in the sphere of mergers and acquisitions.

(Vedomosti)

SOCIETY

Opposition activists in Russia, who are discontent with the results of the December 4 parliamentary elections, should be more moderate not to trigger a national disaster in the country, Russian Constitutional Court Chairman Valery Zorkin said.

(Rossiiskaya Gazeta)

Russian television viewers saw federal TV channels cover Saturday’s protest rallies despite their earlier position to withhold information about protest demonstrations.

(Kommersant)

For more details on all the news in Russia today, visit our website at http://en.rian.ru.

In a First, Enemies March Side by Side 12 December 2011By Alexandra Odynova

In the hours before Saturday's rally, fears were voiced that police might detain people who arrived at the initially authorized venue, Ploshchad Revolyutsii, instead of Bolotnaya Ploshchad, which was hastily approved a day before the demonstration.

But no crackdown occurred.

Instead, Ploshchad Revolyutsii offered a rare scene: activists of all stripes, including those who usually come to blows at the sight of each other, marching unhappily but peacefully in a sort of "water truce" to an anti-Kremlin rally.

"It is a great day in the history of Russia," environmental and opposition activist Yevgenia Chirikova told reporters as she waited on the platform of the Ploshchad Revolyutsii metro station to meet and redirect people unaware of the venue change.

Chirikova didn't get to talk long on the platform. A policeman showed up soon and told television reporters that they couldn't film in the metro without a special permit.

"We live in a law-based society," the policeman chided them, only to have a pensioner cut him short. "Oh, please, we are years away from that!" the older man said.

Chirikova urged reporters to comply with police orders, however, noting that organizers wanted a "peaceful demonstration."

Minutes later, the group moved aboveground to the eponymous plaza, whose name translates as Revolution Square. The name is what likely prompted city authorities to propose the tongue-in-cheek alternative site: the name Bolotnaya

Ploshchad comes from the Russian word "boloto," or swamp, a term widely used to describe apathetic Russian voters.

By the time Chirikova and her entourage arrived at Ploshchad Revolyutsii, hundreds of people had already drifted through metal detectors to get there, with anarchists waiting on the left of a bronze Karl Marx and nationalists on the right. Both groups followed Chirikova and human rights champion Lev Ponomaryov in a march to Bolotnaya, where thousands of people had already gathered.

At the far side of Ploshchad Revolyutsii, radical opposition leader Eduard Limonov of The Other Russia and, earlier, the banned National Bolshevik Party, was chanting, "Russia without Putin! Russia without Putin!"

Limonov also urged the milling crowd "not to cave in" to authorities and to stay on Ploshchad Revolyutsii.

"It was a compromise made by bourgeois politicians," shouted Limonov, who was a driving force behind the usually unsanctioned Strategy 31 rallies, held on the last day of months with 31 days to call attention to Article 31 of the Constitution that guarantees freedom of assembly.

The Strategy 31 protests, which rarely attracted even several hundred participants, regularly ended in police crackdowns, prompting fears that Ploshchad Revolyutsii would see similar attacks on activists by "cosmonauts," as riot police are known for their stormtrooper-like black helmets.

But the crowd began following Chirikova to Bolotnaya along a cordoned-off route, ignoring Limonov, who drove away after it became evident that there would be no crackdown. He did not appear on Bolotnaya Ploshchad. 

Bitter political enemies marched together behind Chirikova under many different flags. There was the black, yellow and white "imperial" flag of the nationalists, the Jolly Roger of the unregistered Pirate Party and the red-and-black flag of leftist activists. Chants sounded along party lines, ranging from "Go, Russians!" and "Stop Feeding the Caucasus" to "Freedom, Equality, Communism!"

Marchers booed one another's slogans. But they nonetheless marched along side by side, representing the whole of Russia's political spectrum — an event unheard of in modern history.

Stone-faced policemen lined up by the hundreds along the 3-kilometer walk between the two squares, watching the procession. Some nationalists shouted out to them, "Come on guys, join us." But that was, of course, to no avail.

The police ranks swelled to three lines deep near the Kremlin, one formed by the Dzerzhinskaya division of the Interior Troops, known as masters at suppressing urban protests. Many policemen were relatively high-ranking officers, such as majors and lieutenants, and hundreds more huddled in trucks parked along the way and around Red Square.

Media reports said more than 50,000 police officers were deployed in Moscow on Saturday. Unlike during rallies on Monday and Tuesday, however, no mass detentions were reported.

At last the two rallies merged into one, and it truly resembled the 30,000-member event promised by the organizers' Facebook page. People thronged on three nearby bridges and on the riverbank opposite the rally location, undeterred by a stiff December wind from the river and wet snow. The crowd was big enough that people far from the stage regularly shouted out to speakers to speak louder.

At one point, organizers asked people to move off one of the bridges, saying there was a risk that it might collapse. The request "Move!" prompted the ironic advice "Jump!" elsewhere in the crowd.

Many in the crowd wore white ribbons or carried white flowers to symbolize the rally's peaceful nature. A couple of flares were fired over the nationalists' flags, melting in the chilly gray sky above the throng's heads.

The Bolotnaya crowd was regularly roused into angry chants targeting Prime Minister Vladimir Putin and Central Elections Commission head Vladimir Churov, and the Kremlin. The event also offered a wide variety of political posters, many of them ironic and some ironically obscene. The perhaps most laconic one read simply: "The Tsar Is a Fraud."

Vladimir Tirkov, a 46-year-old engineer, said he was a frequent participant in opposition demonstrations, but "this is the first time I saw so many people."

"Maybe it won't change much, but it's an important message for the authorities," Tirkov said.

He added that Russia was better off without a presidential post altogether, but if he were to pick the best person for the job, it would be jailed ex-Yukos owner Mikhail Khodorkovsky.

"There is simply no one else to choose," Tirkov said.

Read more: http://www.themoscowtimes.com/news/article/in-a-first-enemies-march-side-by-side/449680.html#ixzz1gITmBMel The Moscow Times

Shaun Walker: The Kremlin has a big problem as young, middle-class Russians engage in politics http://www.independent.co.uk/opinion/commentators/shaun-walker-the-kremlin-has-a-big-problem-as-young-middleclass-russians-engage-in-politics-6275796.html

Authorities watched with horror as the number of people who said they would attend Saturday's protest grew steadily throughout the week

Monday 12 December 2011

Suddenly the Kremlin has a problem. Vladimir Putin's return to the top job after four years as Prime Minister was meant to go as smoothly as the 2008 mirror-image transition, when he stepped aside for Dmitry Medvedev, while remaining effectively in charge. But this time, things are going badly wrong.

Ever since Mr Putin announced in September that he was coming back, the mood has gradually changed. The first sign was when he was whistled as he addressed the crowd at a stadium after a martial arts fight last month. Then, last week's elections. Everyone has always suspected that totals for United Russia are artificially inflated, and that many of those who vote for the party are forced to do so. This time, though, people got angry. They were the first countrywide elections since young Russians started using Facebook and Twitter, and suddenly the evidence of falsifications was there for all to see.

The Kremlin response has been familiar. Protests have been violently broken up; protest websites have been hacked, and organisers intimidated. Amazingly, none of it worked. Young, middle-class Russians, who for years have enjoyed the fruits of the Putin-era oil boom and have turned a blind eye to politics, have suddenly started taking an interest. Authorities watched with horror as the number of people who said they would attend Saturday's protest grew steadily throughout the week.

The fact that the protest was "sanctioned", that a cordon of riot police was set up to allow protesters to march through central Moscow, and that there was no police violence, suggests that somebody high up realises that while a protest of 200 people can be dispersed with arrests and fear tactics, a protest of 30,000 cannot be.

Mr Putin will still almost certainly win the presidential election in March. But the sudden protest mood cannot be ignored, and if it does not peter out, the Kremlin will face a difficult choice. Does it open up the political process, allowing real criticism and scrutiny of Mr Putin and those around him, which could seriously dent his popularity, or does it repress dissent and risk radicalising the opposition? Either option has obvious pitfalls. The only certainty is that Russian politics has entered a new phase.

DECEMBER 12, 2011

Kremlin Softens Line on Opponents http://online.wsj.com/article/SB10001424052970203518404577092303721252094.html

Even After Big Rally, Opponents Express Concern They Will Gain Little; Kudrin Offers to Head a New Liberal Movement By GREGORY L. WHITE

MOSCOW—Facing the largest antigovernment protests in more than a decade, the Kremlin has for now softened its hard line against opponents. But beyond the sudden appearance of coverage of the rallies on state television and the absence of a police crackdown, the authorities appeared to be digging in to wait their opponents out.

Organizers vowed to continue demonstrations until their demands for new elections and political freedoms are met. But since most of the participants in Saturday's big rally weren't party members or activists, it wasn't clear whether the momentum could be kept up or if it had the staying power to force real change.

President Dmitry Medvedev made his first public response to the demonstrations in a Facebook comment Sunday, saying he had ordered all allegations of election fraud investigated but giving no ground on any other demands. "People have a right to express their position, which they did yesterday," he wrote. "I don't agree with the slogans or the statements that were made at the demonstrations."

Meanwhile, former Finance Minister Alexei Kudrin, a respected economist, said he would consider heading a new liberal movement that he expects to be formed soon.

In an interview with the Russian newspaper Vedomosti published Monday, his first since he was ousted by Mr. Medvedev in September, Mr. Kudrin said,

"Today we can say the demand for such a structure is so great that it will certainly begin to be formed. I'm absolutely confident of that and ready to help." He said such a movement would be able to influence political debate even before the next parliamentary elections in 2016.

Mr. Kudrin didn't indicate whether he had discussed the idea with Kremlin officials, though he said he refused an offer from Mr. Medvedev to head an existing pro-business party early this year because he thought it would fail. Early this week, a top Kremlin official said the country needed a liberal party to appeal to the "annoyed urban communities."

On Saturday, tens of thousands gathered under light snow in a square across the river from the Kremlin chanting "Russia without Putin" in the largest antigovernment protest of Prime Minister Vladimir Putin's 12-year reign. The spark for the demonstrations was allegations of widespread fraud in the Dec. 4 parliamentary elections, but popular ire quickly spread to the Kremlin's stifling dominance of political life.

Police estimated the crowd at 25,000, though aerial photos suggested it was much larger and organizers claimed as many as 100,000 attended. Smaller demonstrations were held in cities around the country. The Moscow rally drew many previously apolitical middle-class Russians, dismayed by the widespread vote fraud documented in Internet videos and accounts from election observers.

"Something changed in this city in a matter of two weeks or so," said Anastasia Astakhova, a 30-year-old manager in the beauty industry. "The last decade with its glamour and glitz is over. Now, no single girl would go out with someone who doesn't have political point of view and a readiness to defend it."

The breadth of the opposition highlighted the sharp decline in public support for Mr. Putin and his ruling United Russia party, especially among urban voters, who are active users of the Internet, where criticism of the Kremlin is open. Popular anger with the Kremlin poses a problem for Mr. Putin as he aims to return to the presidency in elections set for March 4.

But the opposition lacks a clear candidate or unified program—Saturday's rally drew groups ranging from monarchists to gay-rights activists—complicating a direct challenge to the Kremlin.

"The main thing now is to maintain the unity of the opposition," Boris Nemtsov, one of the protest leaders, wrote in his blog Sunday.

Some opposition groups plan another rally in Moscow on Dec. 17, but the next big protest is expected on Dec. 24. That will be a key test of the Kremlin critics' ability to sustain support. By then, Alexei Navalnyi, the anticorruption blogger who inspired much of the protest, is expected to be released from prison. He was

sentenced to a 15-day term for his role in demonstrations Dec. 6. At the end of the month, Russia's long New Year's holidays pose a further threat to the opposition's momentum.

"Yesterday was a great day, of course," novelist Zakhar Prilepin, who attended the Moscow rally, wrote in his blog Sunday. "But one thing worries me: they aren't going to give us anything."

Backstage at Saturday's rally, the mood was giddy but at times dark.

"I've talked to all our people who spoke here, and the general view is that nothing big will happen," said Sergei Petrov, a legislator from the Just Russia party, which won seats in the Dec. 4 election but has allowed members to participate in the protests. The authorities "will try to do something tricky to distract people," he said.

Initial reaction from the Kremlin and the ruling party seemed to suggest the Kremlin would allow opponents to let off steam but not make any major changes.

"What we witnessed today was a democratic protest by a section of the population who are displeased with the official results of last week's elections," Mr. Putin's spokesman said late Saturday, noting that supporters of the results also had demonstrated in recent days. "We respect the point of view of the protestors, we are hearing what is being said, and we will continue to listen to them."

Election officials said over the weekend there's no ground for challenging the results of the Dec. 4 vote. Previous probes of electoral violations have had almost no impact, according to opposition leaders.

The new parliament is expected to hold its first session in the next few weeks, providing a venue for carefully controlled debate. Even opposition-minded legislators like Mr. Petrov said they so far don't plan to heed calls from more radical protesters for them to give up their seats.

—Alexander Kolyandr contributed to this article.

Write to Gregory L. White at greg.white@wsj.com

DECEMBER 12, 2011

Web Problems Plague Russia Critics http://online.wsj.com/article/SB10001424052970204336104577092642660966970.html?mod=googlenews_wsj

By ALAN CULLISON

MOSCOW—When the iPad-toting opposition protesters gathered in central Moscow for a demonstration this weekend, they were surprised by what they said is a growing but familiar danger to their movement: Lack of mobile Internet service.

The leaders said Kremlin-affiliated technicians jammed the airwaves, then lifted the blockade as soon as the rally ended. It was the latest instance, they said, of how the Internet has become a battleground with the Kremlin as it has also become the leading method of rallying Russia's opposition.

"The interference has already begun," said Ilya Ponomaryov, a parliamentary deputy and Web entrepreneur who has been an organizer of rallies. "They are jamming at events like these and we'll see where they go next."

The Kremlin denies such interference, and Russian telecommunications companies say the Web was simply overloaded by the thousands of protesters who converged on central Moscow Saturday, creating a flood of digital demand that was 10 times the norm.

"There wasn't any kind of meddling from the special services," said Anna Aybasheva, spokeswoman for Vimpelcom Ltd., one of Russia's top providers.

But Kremlin critics said that doesn't explain the jammed smartphones at other smaller demonstrations in the past week, or the wave of spam attacks that have crippled opposition websites, news portals and a U.S.-financed vote-monitoring group whose reporting on fraud in parliamentary elections helped spark popular outrage.

They say struggle for Russian cyberspace has only begun, since a stampede of Russians onto the Web in the past decade has rendered the Kremlin's favorite political weapon, state-controlled television, nearly toothless.

In previous elections, state-run television has easily sidelined Kremlin opposition by savaging its leaders or ignoring them. But when channels ignored protests around the country last week, millions of Russians began using the website TV Rain, which broadcasts events live via webcam. The country's most-popular blog platform, LiveJournal, saw its traffic surge by 50%, said its head, Ilya Dronov, despite a wave of hacker attacks.

The Kremlin can shut down the Web because of a monitoring system that has been installed and perfected since Prime Minister Vladimir Putin's rise to power 12 years ago. The government says it needs the system, called SORM, for criminal investigations. SORM forces all traffic to flow past hardware installed at

Internet service providers, allowing it to be observed by Russia's Federal Security System, the successor to the KGB.

"SORM can easily be turned into a firewall," said Mr. Ponomaryov, who sits on a Russian parliamentary committee for communication. "I am not 100% sure that they can do it in five minutes by pressing one button. But it would require very little preparation."

But any sudden cutoff or broad censorship of the Internet would be disruptive, and would likely turn the popular tide further against the Kremlin. Earlier this year, Russia surpassed Germany as having the largest number of Internet users in Europe. President Dmitry Medvedev, who is himself an avid user of Twitter, is also a proud user of an iPad and has hailed the Internet as a modernizer of Russia's economy and culture.

But he has made some high-profile stumbles in the social media in the past week, and he appears to be displeased by some of what he has seen on the Internet since elections—last week, he stopped following TV Rain on his Twitter account.

The Kremlin last week disavowed a Tweet sent out under Mr. Medvedev's name that used obscene language about a prominent opposition blogger. Last week, users poured invective on Mr. Medvedev's Facebook wall, after he posted a promise there to order an investigation into electoral fraud.

Russia's opposition clearly has the upper hand in Internet-based debate, said Robert Shlagel, a deputy with the pro-Kremlin party United Russia. "Its their territory, they feel good there, they know how to use it, and most of all they help one another there," said Mr. Shlagel.

He denied the Kremlin has been behind any Web-based attacks on its critics, which he said only create bad publicity for the government.

For now, Kremlin critics say, the government appears to be trying to disrupt opposition Internet postings, rather than block them.

"They are recruiting all kinds of fake users who put out duplicate posts, saying how much they love Putin and United Russia," said Mr. Ponomaryov. "And they are just creating a lot of white noise."

Opposition websites were running again in recent days, but the massive hacker attacks that crippled several on election day likely presage more to come, Kremlin critics said.

The U.S.-funded vote-monitoring group Golos was buffeted by a so-called denial-of-service attack the day before the vote, as two of the group's sites were saturated by requests from computers trying to log on.

Golos fought off that attack with Internet filters installed by technicians, said Grigory Melkonyants, the group's deputy director. But the next day a much larger attack overwhelmed the filters, and crippled the site of Golos site as well as the Echo Moscow radio station, and news portals Gazeta.ru and Slon.ru.

Golos started posting its reports on Russia's LiveJournal, but that, too, was soon crippled. Finally Golos began posting its reports on the Google Docs blog, but the reports there, too, were somehow jammed within minutes, Mr. Melkonyants said.

While the sites were down, Mr. Melkonyants said, his email accounts were hacked into and clogged by messages that arrived at the rate of about 300 per minute. Telephones were overwhelmed by a torrent of automatic calls, and someone set up a parallel Twitter account that mimicked that of Golos and began sending out reports that the elections had gone smoothly without any fraud. "Alas, we lost," said one Twitter message.

"Attacks on websites are common, and we are used to them," said Mr. Melkonyants. "But now things are getting more interesting."

Write to Alan Cullison at alan.cullison@wsj.com

The Thaw at Russia's Polls: Tandem’s Liberalization Policy Rocks the Vote http://www.bsr-russia.com/en/politics/item/2014-the-thaw-at-russias-polls-tandem%E2%80%99s-liberalization-policy-rocks-the-vote.html

Posted by Editor on Friday, 09 December 2011 16:25 | Published in Politics

By Gordon M. Hahn

Sunday’s election to the State Duma, Russia’s lower house, was stunning. As I expected, it registered a sharp decline in support for the pro-Kremlin United Russia (Yedinaya Rossiya or YeR) led by President Dmitrii Medvedev and Prime Minister and Vladimir Putin, showed a significantly freer and fairer voting and counting process, but a continuing uneven playing field during the pre-election campaign favoring the United Russia (YeR). Voters delivered a strong message of rebuke to the YeR for ongoing corruption, limited economic opportunity, and bureaucratic arbitrariness. Perhaps more important though, the results appear to show that the level of fraud was much more limited than in past elections and cut across party lines, benefiting all parties more or less equally and thus not affording the YeR any significant advantage.

Less fraud and equal opportunity fraud helped shape the sharp decline in YeR support.

As usual, the Washington Post and New York Times produced knee-jerk, ready-made responses to the vote that reflected neither of the vote’s two main outcomes.  A Post editorial characterized the vote as nothing but a “farce” and focused on several of the most arbitrary administrative measures (“The Farce of Russia’s Elections,” Washington Post, 5 December 2011).  The NYT simply reported the OSCE’s assessment that there was an uneven playing field and significant voting irregularies, but it left out the first sentence and almost all the positive OSCE remarks in the following excerpt from the OSCE’s initial report: “The observers also noted that the legal framework had been improved in some respects and televised debates for all parties provided one level platform for contestants.  On election day, voting was well organized overall, but the quality of the process deteriorated considerably during the count, which was characterized by frequent procedural violations and instances of apparent manipulations, including serious indications of ballot box stuffing.

Yesterday’s elections proved that the Russian people can form the future of this country by expressing their will despite many obstacles.  However, changes are needed for the will of the people to be respected” (David M. Herszenhorn and Ellen Barry, “Western Monitors Criticize Russian Elections,” New York Times, 5 December 2011 and “Despite lack of level playing field in Russian elections, voters took advantage of right to express choice, observers say,” OSCE Press Release, 5 December 2011, www.osce.org/odihr/elections/85753).  Neither the Times nor the OSCE addressed the issue of whether irregularities distorted the voting and/or counting so as to favor the YeR, no less offered proof that they did.  Similarly, neither Times nor the Post compared the elections results with other data to determine the extent or reality of the alleged ‘farce.’

Journalists might determine whether the voting process and counting favored the YeR in any significant way by comparing the election with exit polling or pre-election opinion polls as I do this in the Table below that is based on the official preliminary results of Sunday’s voting. The final tally will not differ in any significant way from this preliminary count. In late October, Russia’s Public Opinion Foundation (FOM) found 41 percent of respondents who had decided to vote ready to do so for YeR (“Lyudi kak lyudi,” Fond obshestvennogo mneniya (FOM), 7 October 2011, http://fom.ru/partii/10179). Two weeks later, the All-Russian Center for the Study of Public Opinion (VTSIOM) found 40 percent of decided voters ready to vote for YeR (“Elektoralnyi reiting politicheskikh partiy,” Vse-rossisskii Tsentr Issledovaniya Obshchestvennogo mneniya (VTsIOM), http://wciom.ru/index.php?id=170). If one assumes that YeR took the same percentage of the undecided voters when they came to ‘pull the lever’ on Sunday, then YeR should have gotten approximately 52 percent of the vote (40% of 25% = 11%; 10% + 40-41% = 50-51%). VTsIOM’s final pre-election poll gave YeR 53.7 percent of decided voters. The Levada Center’s polling differed slightly,

showing 56 percent ready to vote for YeR, but its poll excluded undecided from the respondent pool (“Vybory v Gosdumu,” Levada.ru, 25 November 2011, www.levada.ru/25-11-2011/vybory-v-gosdumu). Exit polls carried out by VTsIOM with a 2 point margin of error showed that the official preliminary results did not exceed that margin (see Table).

____________________________________________________________________________

Comparing Final Pre-Election Opinion and Exit Polls with Election Results (figure in %)

Polling Agency YeR KPRF LDPR SR Undecided

FOM (late Oct.)                      41                       12                 10               under 7    25

VTsIOM (Nov. 28)                 54                       17                 12                   10        25

Levada (Nov. 18-21)              56                       21                 13                   10        0

VTsIOM Exit Polling             48.5                 19.8                 11.42               12.8     n/a

Election Results 2011            49.54               19.16               11.66               13.22   n/a

Election Results 2007             64.30               11.57                 8.14                 7.44   n/a

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

YeR = pro-Kremlin United Russia party

KPRF = Communist Party of the Russian Federation

LDPR = populist/nationalist Liberal Democratic Party of Russia

SR = social democratic Just Russia party

Sources: All-Russian Center for the Study of Public Opinion (VTsIOM), http://www.levada.ru/28-11-2011/sotsiologi-otdayut-edinoi-rossii-nemnogim-bolshe-50-golosov; VTsIOM exit poll - http://regnum.ru/news/1475239.html and

http://news.rambler.ru/12027194/?utm_source=regnum&utm_medium=tiser&utm_campaign=main; Levada Center, www.levada.ru/25-11-2011/vybory-v-gosdumu; Public Opinion Foundation (FOM), http://fom.ru/partii/10179; and Russia’s Central Election Commission, www.cikrf.ru/news/cec/2011/12/05/predv.html and www.cikrf.ru/news/cec/2011/12/05/inf_centr_1.html.

_____________________________________________________________________________

The Russian Central Election Commission’s preliminary voting results agree almost exactly with the pre-election and exit polling: YeR – 49 percent, KPRF – 19 percent, the social democratic SR – 13 percent, the populist nationalist LDPR – 12 percent, the liberal democratic Yabloko party – 3.3%, Patriots of Russia – 0.97%, and the Right Cause (Pravoe Delo or PD) party – 0.59%. (Russian Central Election Commission preliminary results, 10:00am, 5 December 2011, http://www.cikrf.ru/news/cec/2011/12/05/predv.html).

This suggests that election voting and counting were not significantly or even at all falisified to the benefit of the YeR.  New laws governing the use of absentee and early ballots seem to have had their effect, limiting ballot box stuffing that plagued previous elections and that the Kremlin winked and nodded at, as governors and local election officials did their best to pad the vote for their bosses in Moscow.  Previously, only in some of the less important regional and local votes were elections allowed to run according to the principle of ‘samotek’ or a free and fair ‘natural course.’

Thus, the dishonest element of the election comes largely from the pre-vote period: the continued use of ‘administrative resources’ to tilt the playing field before the vote.  That means greater access to state television and radio and gathering halls for YeR and using the courts and police to block certain pre-election actions by the opposition.  If there was more fraud in the vote committed on behalf of YeR, then the YeR’s poor showing means the Kremlin truly is in trouble, but this appears to be less likely or very limited in reality.

Also, the practice by regional bosses and clan leaders in the North Caucasus, military officers, and state educational and business enterprise directors of pressuring and herding their underlings to the polls to vote for the ruling party seems to have been reduced.  However, the decline in support for Putin, Medvedev, and the YeR about which I have written previously could have led to a breakdown in discipline or a transfer of such leaders’ allegiances to the communists and the SR.  This practice would not necessarily produce any significant divergence between pre-election and exit polls, on the one hand, and the actual voting results, on the other, since those pressured to vote in the ballot in a certain way would likely feel pressured to answer an opinion survey the same way.  But it cannot fully explain the tight correspondence between pre-election

and exit polls and the official vote tally.  Also, the greater glasnost’ afforded the media and voiced by political leaders during the political thaw that ensued with Medvedev’s presidency surely played a role in whittling away support from the YeR, now dubbed the ‘party of criminals and thieves.’

In the end, the YeR lost nearly a quarter of its voters from the 2007 election, when it took 64 percent compared with this year’s 49 percent.  The communists and social democratic SR were the big winners in 2011 compared with 2007, taking the bulk of voters lost by YeR.  Another surprise was the liberal/social democratic Yabloko’s 3.3 percent, which by breaking the 3 percent barrier is now entitled to state financing.  Its 2011 take of 3.33 percent doubled its vote compared to 2007 (1.59%).  In some regions it received more than 10 percent of the vote, for example in Putin’s and medvedev’s hometown, St. Petersburg.

After estimating the distribution of seats not taken by the two parties that failed to break the 7 percent barrier, the Russian Election Commission preliminarily estimated  the distributed the seats for Russia’s next Duma as follows: YeR – 238 (52.4% and a loss of 77 seats from the previous Duma), KPRF – 92, SR – 64, LDPR – 56.  This gives YeR a slight majority and means, as expected, that it has lost its two-thirds constitutional majority and cannot make changes to the constitution unilaterally.

Meeting with YeR leaders after the vote to celebrate the party’s victory, Medvedev noted that he expected the new Duma to be “lively” and that the YeR’s Duma faction will need to form coalitions with other party factions in the Duma (“Spiker Gosdumy Boris Gryzlov pokinet svoi post,” Ekho Moskvy, 5 December 2011, 12:05, www.echo.msk.ru/news/836198-echo.html).  He emphasized: “I am pleased that we will have a livelier parliament. … We all realize that the truth is only born out of debate, and that no one has a monopoly over the truth” (“New Parliament Will be ‘Lively’ - Medvedev,” RIA Novosti, 5 December 2011, www.rian.ru).  In addition, YeR officials told Ekho Moskvy radio that the party would replace its Duma chairman Gryzlov, who became infamous for his claim that the Duma was no place for political discussion (“Spiker Gosdumy Boris Gryzlov pokinet svoi post”).

Almost all of the above is good news.  The bad news is the continuing, but waning (at least as evidenced by this election) democracy deficit and the rise in support for the communists and the LDPR.  Regarding the latter, the communists, while not social democrats, are not the Stalinists of old, and the LDPR has become a sclerotic party of rent-seekers rather than the ultra-nationalistic brand fostered by Vladimir Zhirinovskii in the 1990s.  Moreover, democratic forces like the SR and Yabloko also made gains at the expense of the YeR party of bureaucrats, despite (or because of) the Kremlin’s removal of SR chairman Sergei Mironov from his position as Chairman of the Federation Council, Russia’s upper house, and Yabloko’s recent years of decline.

So as Russians turn to celebrate the New Year, there is hope that at least semi-democratic pluralist politics is returning to Russia, the regime will become more responsive to the needs of its citizens, and this time in Russian history those predicting or hoping for revolutionary, even violent forms of regime transformation, will be disappointed.  However, the presidential elections and the actions of their likely victor, Vladimir Putin, will be decisive in determining whether these trends continue, stagnate, or backslide.

Gordon M. Hahn is Analyst/Consultant, Russia Other Points of View – Russia Media Watch; Senior Associate, Russia and Eurasia Program, Center for Strategic and International Studies, Washington, D.C.; Senior Researcher, Monterey Terrorism Research and Education Program; Visiting Assistant Professor, Graduate School of International Policy Studies, Monterey Institute of International Studies; and Senior Researcher, Center for Terrorism and Intelligence Studies (CETIS), Akribis Group. Dr Hahn is author of two well-received books, Russia’s Revolution From Above (Transaction, 2002) and Russia’s Islamic Threat (Yale University Press, 2007), which was named an outstanding title of 2007 by Choice magazine.  He has authored hundreds of articles in scholarly journals and other publications on Russian, Eurasian and international politics and publishes the Islam, Islamism, and Politics in Eurasia Report (IIPER) at CSIS at http://csis.org/program/russia-and-eurasia-program.

Vladimir Putin's power ebbshttp://www.telegraph.co.uk/comment/telegraph-view/8950206/Vladimir-Putins-power-ebbs.html

Telegraph View: The Russian strongman may not be about to fall, but the Moscow protests have dented his legitimacy.

7:41AM GMT 12 Dec 2011

Under the chaotic but liberating rule of Boris Yeltsin, the oligarchs made hay. Under Vladimir Putin, a former KGB official, it has been the bureaucrats’ turn to plunder the state. Executive power prevails. Parliament is supine, the judiciary is a political tool and the media is cowed. Business depends on the Kremlin’s favour and the regions have been brought to heel. After his erratic predecessor, Mr Putin offered stability founded on authoritarian rule. His personal popularity and high oil and gas prices left that contract intact for over a decade.

Over the weekend, however, it was fatally undermined by demonstrations across the country. Unchallenged rule had made Mr Putin arrogant. First, he announced in September that an agreement for him to return to the presidency next year, succeeding his puppet, Dmitry Medvedev, had been reached long ago. Second, last week’s parliamentary elections were rigged in favour of the prime minister’s rubber-stamp creation, United Russia. That assumption of impunity led to Saturday’s nationwide protests, the biggest of which, in Moscow, attracted around 50,000 people. Mr Putin’s popularity is falling and, in the current global economic climate, the high petroleum prices on which his corrupt polity relies look under threat.

The tsar is not about to fall, but his legitimacy has been dented – not least by the internet. Further demonstrations have been called for Christmas Eve and there is talk of boycotting the presidential election next March. Mr Putin’s reaction has been to blame foreign powers. Tighter political control and increased public spending may follow. But to win back opponents he must do better than that. Failure to liberalise what has been called his “soft Bonapartism” will leave Russia even more sullen – and less stable. Saturday marked the end of an era.

Putin 2.0 Could Be More Autocratic Than 1.0 12 December 2011By Lilia Shevtsova

The Putin era is ending, but the authorities are doing everything possible to make it a dramatic finale.

The fallout from the widely discredited State Duma elections is a sign that a fundamentally new situation is unfolding in the country. Society has awoken, and it is demonstrating its frustration with the authorities' relentless hold on power. The "Putin contract" — an agreement whereby voters put up with the abuses of a corrupt regime in return for stability — is falling apart. The most dynamic segments of society — Internet-savvy, educated young Russians, the intelligentsia, the middle class and residents of major cities — are stepping up to the fore. By voting against United Russia, they tried to use peaceful, democratic methods to protest Putin and his government.

What was the result? Some observers made optimistic but baseless claims that United Russia's poor showing in the elections and its need to work more closely with the other three parties in the Duma will be a boost for Russia's democracy. In reality, the elections brought little if any change. United Russia manipulated the results to win a simple majority in the Duma so that it could continue rubber-stamping legislation handed down by the Kremlin.

The only way that A Just Russia can meet the expectations of the many protest voters who supported it would be to openly speak out against the Putin regime. But A Just Russia has already demonstrated that it is ready to play the Kremlin chess game.

Russia will face a new trial when Putin attempts to prolong his rule in the March presidential election. It will be important for Putin to win during the first round of voting. Otherwise, he risks losing his ability to control his own team along with the country. Since Putin has little chance of winning in the first round of a competitive and truly fair election, the Kremlin is looking for ways to ensure victory for the leader of a party that a significant percentage — perhaps the majority — of voters rejected in the Duma elections.

What must Putin do to win at least a third of the vote in March without having to resort to mass falsification? As the Kremlin's soft approach to Saturday's rally on Bolotnaya Ploshchad demonstrates, it decided to imitate dialogue with the people, pretending that it was listening to their demands. But if Putin held truly free Duma elections, it would have jeopardized his victory in the March election. Moreover, dumping United Russia in favor of the All-Russia People's Front can save Putin only if he sacrifices his bureaucracy, turning it into a scapegoat for the country's ills. But the bureaucracy is Putin's key basis of support, and he can hardly afford to demonize it.

There is only one thing left to try: create a state of emergency in Russia that would either force people to vote for him as the lesser of two evils. This would make it a lot easier to manipulate the election results. Or Putin will have to cancel the election entirely. The Kremlin team must be desperately searching for a pretext that would leave Russian voters with no option but to agree to another six years of Putin's rule. And they will not let any moral considerations stand in their way. After all, Putin's team has every intention of remaining in power as well.

The way the authorities conducted the Duma elections was essentially a trial run for those in March. It is clear that the presidential campaign will be even dirtier. This will be the next step toward delegitimizing the government and discrediting elections themselves as a democratic mechanism for ensuring the transition of authority. Unfortunately, Russian society will be left with only one way to accomplish that transition — by taking to the streets in protest. This method for getting rid of leaders who have outworn their welcome has always been fraught with unpredictable consequences — especially in Russia. But the Kremlin is not leaving the people any other choice.

How will the authorities respond? One place to look is the 33 percent increase in funds for siloviki agencies over the next two years and a simultaneous 10 percent decrease in spending for the economy, education and health care. That

should silence everyone who claim that we may see a new "Putin 2.0" after his re-election in 2012, one dedicated to reforms and liberalization. The only change we are likely to see from Putin, however, is a shift in a more authoritarian direction.

Putin is not extending his rule to implement reforms that would only undermine his influence and authority. He is returning to the Kremlin to preserve the status quo. But he has no way to accomplish that except through outright intimidation, as evidenced by the excessive use of force in detaining and beating back protestors on Dec. 5 and 6. The authorities are trying to scare the people. But now they are dealing with a new post-Soviet generation that grew up without a deeply ingrained fear of their leaders or an instinctive impulse to obey them.

This suggests that a confrontation between the ruling authorities and the people might be nearly impossible to avoid. Can the pragmatists within the government unite in time to avoid this confrontation? Or are they already too late?

Nobody should be misled by the relative calm despite the protests and broader discontent with the ruling regime. Nobody should be misled by the Kremlin decision not to provoke the protesters. The authorities have already lost Moscow and St. Petersburg, the two cities from which epic changes have always begun in Russia. Once 500,000 people take to the streets, the floodgates of change will finally be flung wide open.

A new era has begun.

Lilia Shevtsova is a senior associate at the Carnegie Moscow Center.

Read more: http://www.themoscowtimes.com/opinion/article/putin-20-could-be-more-autocratic-than-10/449686.html#ixzz1gJ94Kz3w The Moscow Times

Kremlin in the Headlights 12 December 2011Editorial

Read more: http://www.themoscowtimes.com/opinion/article/kremlin-in-the-headlights/449687.html#ixzz1gJ9CGHsm The Moscow Times

In the week after the State Duma elections, many proposals were voiced on how the Kremlin could have defused the tensions that followed and prevented them from culminating in the biggest anti-government rally in Moscow since 1993.

Chief, and most obvious, of those ideas was a partial recount of the Dec. 4 vote, between 10 and 25 percent of which is widely believed to have been rigged, and the punishment of some scapegoats from among regional officials. A shuffle at the Central Elections Commission was also weighed. The removal of its head, Vladimir Churov, who stubbornly dismissed hundreds of grassroots reports of violations as lies, could have placated the masses to the point that the Moscow rally would really only have attracted the 300 people scheduled, not the 25,000-plus who actually turned up.

Prime Minister Vladimir Putin and President Dmitry Medvedev were also urged to acknowledge that violations had occurred, and state-owned television was prodded to report them. Some observers suggested that the government should open the door to new faces like Duma deputy and well-known St. Petersburg politician Oksana Dmitriyeva, tipped as a possible Just Russia presidential candidate.

But no such things happened.

Sanctioning the rally on Bolotnaya Ploshchad was the main concession granted to the disgruntled middle class. State-controlled NTV and Channel One did cover the event, finally breaking their deafening silence about opposition protests. But Churov kept his seat and blithely announced that the elections were fair; the ruling tandem failed to concede that the tens of thousands of protesters who rallied — many for the first time — had a valid reason to hit the streets; and A Just Russia passed over Dmitriyeva at a convention Saturday, nominating Sergei Mironov, A Just Russia's long-standing leader and long-time Putin loyalist, as the party's candidate for the presidential election.

As for Putin himself, he spent the week filing paperwork to run for the Kremlin and toured a Caravaggio exhibit at the Pushkin Museum on Tuesday evening, the same time that police were cracking down on protesters and journalists at an unsanctioned rally on Triumfalnaya Ploshchad.

To the untrained eye, it looks like the Kremlin is either sabotaging its own rule or taking a hard stance come hell or high water. But reality is more complex. To some extent, it is the deer-in-the-headlights syndrome. The public has all but withdrawn from politics since 2000, placated by petrodollars. Meanwhile, the current generation of government officials is simply unaccustomed to dealing with people who aren't content with their status as the mute political background for Putin's orchestrated shows. For the first time in his career as national leader, Putin is on the defensive, and he and his team have no standard operational procedures for that.

But for the Kremlin, the issue is also ideological. The political arsenal of the "power vertical" does not include compromise, which is seen as a sign of weakness. This unyielding stance was one key innovation that Putin brought into Russian politics after the 1990s, when the centers of power were many and the federal government had to negotiate with regional officials and powerful businessmen, not boss them around. The current system could be ruined by a sole concession, a precedent that would signal other political players that it is possible to pressure the Kremlin. In a more advanced political culture of checks and balances, players debate, discuss and reason with one another. But the power vertical, which relies on intimidation to get what it needs, was intentionally created with no capability for this kind of maneuvering.

Then there is the question of what the public wants. In short, they want a crackdown on officials: electoral officials accused (with good cause) of rigging the vote; television officials who distort facts in their reporting; and government officials who embezzle state money and get away with it. There are many bureaucrats in Russia, and many of them are passionately loathed. You could say the current class divide is one between state employees, especially the higher-ranking ones, and the rest of the populace.

But those officials are Putin's power base, much like the party bureaucracy was Leonid Brezhnev's, and there is a strong social contract between them and the Kremlin. In exchange for unconditional obedience and loyalty, elements of the power vertical get de facto immunity from prosecution. Putin has never sacrificed loyal subordinates no matter their mistakes. If he starts now, he risks losing their support and isolating himself, with no City Halls to ban opposition rallies, no judges to fine or jail protesters for 15 days, and no officials to ensure the desired ballot count during the presidential vote in March.

But the Kremlin, as confused as it might be, does realize the need for change. The Bolotnaya Ploshchad rally was sanctioned, after all, and Putin's ideological mastermind, Vladislav Surkov, personally urged the partial dismantlement of the power vertical in a post-election interview.

But cooing noises are not enough. State propagandists insist that public protests pave the way for "color revolutions." But, in fact, it's the stubbornness of the ruling elite that is fueling the discontent. The best — the only — way to prevent any and all revolutions is to react to the people's legitimate grievances and allegations, not to ignore them.

Read more: http://www.themoscowtimes.com/opinion/article/kremlin-in-the-headlights/449687.html#ixzz1gJ9F113C The Moscow Times

National Economic Trends

11:23 12/12/2011ALL NEWS

Russia’s inflation to stand at six and a half percent in 2011

http://www.itar-tass.com/en/c154/295072.html

MOSCOW, December 12 (Itar-Tass) — Russia’s inflation will reach 0.6 percent in December and 6.2-6.5 percent this year in general, Deputy Economic Development Minister Andrei Klepach told reporters on Monday.

“We hope that the inflation rate will be lower than that we forecast earlier and will be closer to its lower bound,” he said.

Inflation revised down

http://www.rbcnews.com/free/20111212121140.shtml

      RBC, 12.12.2011, Moscow 12:11:40.Inflation is expected to total 6.2%-6.5% in 2011, down from 6.5%-7% according to earlier forecasts, Deputy Economic Development Minister Andrey Klepach told reporters today. In December, inflation is likely to come in at 0.6%, Klepach added.

      This updated forecast is based on the results of the first three quarters of 2011, the official went on to say.

      According to the Federal State Statistics Service, inflation stood at 0.4% in November 2011 and reached 5.6% January-November, down from 0.8% and 7.6%, respectively, a year earlier.

12:18 12/12/2011ALL NEWS

Russia’s economics ministry raises forecast for GDP growth

http://www.itar-tass.com/en/c154/295114.html

MOSCOW, December 12 (Itar-Tass) — Russia’s Economic Development Ministry has raised the forecast for the GDP growth from 4.1 percent to 4.2 percent, Deputy Minister Andrei Klepach told reporters on Monday.

At the same time he did not rule out that the GDP growth can be higher after the Russian federal state statistics service (Rosstat) specifies some figures.

The ministry also raised its forecast for the oil price from 108 dollars per barrel to 109 dollars per barrel. The retail trade’s growth will be higher than 6 percent, but exports and imports rates were lowered.

As for investments the growth stands at 6 percent, but probably, in the future Rosstat will raise this rate, as large enterprises “show good dynamics of investment growth – 8-9 percent,” Klepach said.

The ministry reduced its forecast for industrial production growth from 4.8 percent to 4.7 percent, he said.

The outflow of capital from Russia in 2011 is estimated at 80 billion dollars, but it may be even higher.

The deputy minister underlined that the ministry’s forecasts for 2012 remained unchanged.

“We see no grounds for changing the forecasts,” Klepach said adding that amendments can be submitted next spring if necessary.

He noted that it is still early to speak about the effects of the State Duma elections. The markets most probably will react to the election returns, Russia has a positive potential for investors.

Russia trims economic outlook amid global crisishttp://af.reuters.com/article/energyOilNews/idAFL6E7NB0C120111211

Sun Dec 11, 2011 2:36pm GMTBy Darya Korsunskaya MOSCOW, Dec 11 (Reuters) - Russia's economic ministryhas warned the risk of a fall in oil prices has increased in thewake of the euro zone debt crisis, causing it to lower forecastsfor exports as well as the strength of the rouble against thedollar. In a report seen by Reuters, the ministry said there is agrowing risk that oil prices could fall to $80 or even$60 a barrel from $108 now, a decline that would directly affectgrowth of the world's biggest energy exporter. An oil price collapse in late 2008 caused Russia to slide

into recession for the first time in 10 years. A possible fall would likely arise from the failure ofEuropean countries to agree on a solution to the euro zonecrisis, the ministry report said, while the global impact ofbudget reforms in the United States was also a concern. The report left Russian GDP forecasts unchanged for 2012 at3.7 percent, down from an expected 4.2 percent this year, butsaid that exports of crude products would fall as a result oflower oil prices and sluggish global economic growth. Exports for 2012 are now expected to come in at $513.4billion, down from an earlier forecast for $533.1 billion. Economists at the ministry lowered their estimates for therouble against the dollar in 2011-2014. The average annualexchange rate was cut from 28.7 to 31.1 roubles per dollar for2012. The rouble is closely linked to the price of oil. A weaker dollar could, however, help Russia lower its budgetdeficit, the report said. The falling value of the U.S. currencywould increase oil revenue, which would in turn top up thebudget. The economic ministry now sees a budget deficit of 0.6percent of GDP in 2012, against 1.5 percent in a previousforecast. The report did not mention last Sunday's disputed electionand subsequent protests as a risk to economic growth, despitenotable market wariness during the week. Below are the full details of the December forecast: 2011 2012 2013 2014 Oil price, $/barrel 109 100 97 101 (108) (100) (97) (101)

Inflation, % 6,2-6,5 5-6 4,5-5,5 4-5 (6,5-7,0) (5-6) (4,5-5,5) (4-5)

Rouble (annual average), /$ 29,4 31,1 31,3 31,8� (28,6) (28,7) (29,4) (30,5)

GDP, % 4,2-4,5 3,7 3,9 4,4 (4,1) (3,7) (4,0) (4,6)

Industrial production, % 4,7 3,6 3,8 4,1 (4,8) (3,4) (3,9) (4,2)

Investment, % 6,0 7,8 7,1 7,2 (6,0) (7,8) (7,1) (7,2)

Real incomes, % 0,5 4,8 4,8 5,3 (1,5) (5,0) (4,8) (5,3)

Retail trade turnover, % 6,6 5,5 5,3 5,5 (5,3) (5,5) (5,3) (5,5)

Exports, $ billion 523,0 513,4 515,0 543,4 (527,5) (533,1) (535,9) (565,3)

Imports, billion $ 324,0 368,6 412,7 454,0 (340,0) (397,4) (444,6) (486,1)

(Writing By John Bowker)

Russian Economy Hampered by ‘Poor’ Business Climate, OECD Sayshttp://www.businessweek.com/news/2011-12-12/russian-economy-hampered-by-poor-business-climate-oecd-says.html

December 12, 2011, 1:17 AM EST

By Scott Rose

Dec. 12 (Bloomberg) -- Russian economic growth will be constrained in the coming years by a “poor” business environment and energy inefficiency, the Organization for Economic Cooperation and Development said.

Gross domestic product will probably expand by 4.1 percent in 2012 and 2013 after 4 percent this year, the Paris-based OECD said in a report published today. Acting Finance Minister Anton Siluanov expects 2011 growth of as much as 4.5 percent.

The economy “is not fully exploiting opportunities provided by Russia’s rich endowment of natural resources and the high skill level of its population,” the OECD said. “A glaring and persistent handicap for the functioning of the Russian economy is the poor business environment. This is holding Russia back from becoming the modern, diversified, innovative economy that it aspires to be.”

Prime Minister Vladimir Putin, who seeks a return to the presidency next year, targets growth of 6 percent to 7 percent to turn the economy into one of the world’s five largest. Tens of thousands of people in Moscow and other cities protested yesterday over claims of fraud in a Dec. 4 parliamentary vote that reduced his party’s majority.

During Putin’s two terms as president between 2000 and 2008, he worked to centralize power and increase state ownership of the country’s biggest companies. Buffeted by a booming global economy, growth averaged 7 percent a year during his tenure.

Modernize the Economy

Policy makers should focus efforts to modernize the economy on energy efficiency and on improving productivity across the economy rather than on high-tech development, the OECD said.

The economy will also grow “several percentage points of GDP” over the medium-term from entry into the World Trade Organization, primarily as a result of loosening its own regulations, according to the report.

Russia should make monetary policy more transparent and protect the budget from a tendency to spend more as revenue rises, the OECD said.

While Russia will probably end this year with a small federal budget surplus, the government should move faster to reinstate rules that protected windfall oil revenue, the report said. The budget may return to a deficit of 1 percent of GDP next year, followed by 1.1 percent in 2013.

The non-oil deficit, which strips out revenue and expenses related to the oil and gas sector, has surged to 10.2 percent GDP this year, compared with 6.5 in 2008, the report said. The figure will edge up to 10.8 percent in 2012 before falling to 10.2 percent in 2013, it said.

“The non-oil deficit that rose during the boom and then expanded rapidly during the crisis remains very high” and above Russia’s medium-term target of 4.7 percent of GDP, the report said. That “makes the fiscal position vulnerable to a sharp reduction in the oil price.”

--Editors: Balazs Penz, Brad Cook

To contact the reporter on this story: Scott Rose in Moscow at rrose10@bloomberg.net

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

The stock market languagehttp://rt.com/politics/press/rossijskaya-gazeta/market-financial-medvedev-russia/en/

Published: 12 December, 2011, 04:24Edited: 12 December, 2011, 04:28

Foreign issuers may not be required to translate their documents into Russian Yulia Krivoshapko

President Dmitry Medvedev has ordered a range of measures that would make the Russian financial market more accessible to foreigners institutions. For example, they may not be required to have their documents fully translated into Russian.

Russian authorities are going forward with creating an International Financial Center in Moscow. On Friday, Medvedev ordered the Cabinet of Ministers to consider a number of initiatives that would help get the project moving – in particular, he ordered expanded powers be given to the Federal Service for Financial Markets, in order to better enable it to protect investors’ interests.  

The president is also expecting proposals from the government and the Bank of Russia on the creation of a liquid futures market for major commodities exports produced in the country. 

The departments responsible are expected to formulate their proposals by April 1, with one of the main objectives being the creation of a structure for collecting information about financial tools and over-the-counter financial transactions (a repository). Moreover, Medvedev ordered the preparation of amendments to securities legislation, making sure Russians have the opportunity to independently issue debt securities to be traded on foreign markets.     

Experts like the ideas, and suggest expanding this list – while considering the development of Russia's domestic investor base.

“Insurance organizations could act as investment and pension funds. But one of Russia’s main problems is the fact that the level of development of these institutions is one of the lowest in the world,” says Aleksandr Abramov, a professor in the Stock Market and Investments Department of the Higher School of Economics. “This is a serious deterrent, which needs to be addressed before anything else.”

Seeing that Russia lacks its own investors, analysts say, foreign investors will not make the choice of coming here. And without investors, there will simply be no one to buy the securities of the major players. “This means that they will continue choosing New York or London over the Russian trading platforms,” Abramov concludes.   

Evgeny Khmelnitsky, a senior analyst with the Association for Protection of Investors' Rights to Information (AZIPI), says that in order to create a functioning financial center in Russia, it is necessary to prescribe clear and transparent  “rules of the game.” In other words, making sure investors feel comfortable in Russia and have confidence that, if anything were to happen, the government would protect their interests.

“Thus, we are being put in front of a complex task – one that not only involves financial markets, but also various spheres of government. Only by combining efforts across all areas will we be able to achieve the desired result,” Khmelnitsky says.  

And according to Aleksandr Voloshin, head of the Working Group for the Creation of the International Financial Center, one of the main conditions to achieving this goal is high-quality financial regulation. At the Moscow Urban Forum, Voloshin said that Russia will be able to reach top international standards in four to five years. 

Meanwhile, despite the fact that the International Financial Center has yet to be created, Moscow is already ranked in the Global Financial Centers Index. Today, the Russian capital ranks 61st; a year ago, it held the 68th position.

Business, Energy or Environmental regulations or discussionsDecember 12, 2011 10:17

Dollar, euro dip at MICEX open Monhttp://www.interfax.com/newsinf.asp?id=294267

MOSCOW. Dec 12 (Interfax) - Both the dollar and the euro lost a little ground as the MICEX opened the trading week Monday, and the ruble gained against the bicurrency basket amid improving world capital moods and despite persisting domestic political pressure.

The dollar opened at 31.38-31.45 rubles/$1 on the MICEX, 5.5 kopecks down from Friday close and 17 kopecks under the official Monday exchange rate.

The euro began the trading day at 41.88 rubles/EUR1, 12 kopecks down from Friday and 14 kopecks lower than the day's exchange rate.

The bicurrency basket ($0.55 and EUR 0.45) was at 36.12 rubles as trading began, down 8 kopecks from its last close.

Cf

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

World’s Biggest Stock Drop Stoked by Protests: Russia Overnighthttp://www.businessweek.com/news/2011-12-12/world-s-biggest-stock-drop-stoked-by-protests-russia-overnight.html

December 12, 2011, 12:25 AM EST

By Leon Lazaroff and Halia Pavliva

Dec. 12 (Bloomberg) -- Protests against Prime Minister Vladimir Putin are compounding concerns over weaker oil and slower global growth that sent Russia’s RTS index to drop the most in the world last week and spur speculation that more declines are likely.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, fell 1.1 percent to $27.57 on Dec. 9, bringing its decline in the week to 9 percent, the most since September. Fixed-line phone operator OAO Rostelecom dropped to the lowest level since Oct. 20 in U.S. trading after HSBC Holdings Plc cut its share-price target, while OAO Gazprom, Russia’s biggest company, slid more than 9 percent.

As oil prices fell last week and concern mounted that the debt crisis in Europe would crimp energy demand, anger over the Dec. 4 parliamentary elections sent at least 25,000 people into the streets of Moscow on Dec. 10, the biggest demonstration in Putin’s 12 years in power. The cheapest valuations among emerging markets may not be enough to revive demand for Russian equities, according to Tom Furda, director of Russian equity sales at Auerbach Grayson & Co.’s Moscow-based brokerage partner UralSib Financial Corp.

“There’s nothing besides the argument that valuations are cheap to get people excited about Russia,” Furda said in a phone interview from New York on Dec. 9. ‘Oil has been weak, global growth is sluggish, and now for Russia there’s a question of the government’s legitimacy.”

Futures expiring in December on Russia’s dollar-denominated RTS index rose 0.3 percent to 140,975 in New York trading on Dec. 9, after the measure sank 8.8 percent last week, the most among the 21 major emerging-market indexes tracked by Bloomberg.

Climbing Volatility

The RTS Volatility Index, which measures expected swings in the index futures, rose every day last week in the most consecutive increases since November 2010, bringing its advance for the week to 26 percent. The Bloomberg Russia-US 14 Index of Russian companies traded in New York slipped 1.8 percent on Dec. 9 to 91.81, the lowest level since Nov. 25, and extending its weekly decline to 8.1 percent, the most in almost three months.

Russia’s benchmark 30-stock Micex index trades at 4.8 times analysts’ earnings estimates for member companies, the cheapest valuation of 21 emerging-market indexes tracked by Bloomberg.

Moscow-based Gazprom, the world’s largest natural gas producer that makes up 16 percent of the Micex, trades at 3.1 times estimated earnings, compared with 6.2 times for fellow energy producer BP Plc, 7.8 times for Italy’s Eni Spa, 12.6 times for Madrid-based Repsol YPF SA’s ratio, according to data compiled by Bloomberg.

‘Risky Market’

“Regardless of what you think about the valuation of Russian stocks, you can’t disagree that it’s a risky market, so a lot of buyers are on the sidelines unwilling to take on risk at this point in the year,” Arjun Jayaraman, who manages $400 million in emerging-market equities at Causeway Capital Management in Los Angeles, said in a phone interview. “But the market is overreacting. These are certainly not selling opportunities given the valuations.”

The RTS index fell 4.3 percent to 1,410.28 on Dec. 9, the lowest level since Nov. 24, while the Micex slipped 4.1 percent to 1,396.28, bringing its decline in the week to 7.3 percent.

American depositary receipts of Gazprom fell 2.5 percent to $10.68, down 9.2 percent in the week. The company’s shares dropped 4 percent on Dec. 9, and 7.1 percent in the week, to 170.35 rubles, or the equivalent of $5.42. One Gazprom ADR equals two ordinary shares.

Lukoil, VimpelCom

Crude for January delivery on the New York Mercantile exchange fell 0.1 percent to $99.35 a barrel at 11:17 a.m. Hong Kong time. Crude is down 1 percent this month, after jumping 7.7 percent in November, amid concern Europe’s debt crisis is sapping global energy demand. Urals crude, Russia’s chief export blend, climbed 1 percent on Dec. 9 to $108.67, paring its decline to 1.7 percent in the week.

ADRs of OAO Lukoil, Russia’s largest non-state oil producer, fell 8.3 percent last week to $50.85 after shares in Moscow posted a 5.5 percent decline to 1,611.20 rubles, or $51.30. One ADR represents one ordinary share.

VimpelCom Ltd., the nation’s third-largest mobile carrier by subscribers, dropped 0.9 percent to $10.33 in New York trading, extending the weekly decline to 11 percent, as JPMorgan Chase & Co. cut the 12-month price target on the company’s ADRs to $16.50 from $21.50.

VimpelCom said it will decide in January whether to take control of Euroset Holding NV, Russia’s biggest mobile-phone retailer. The company already owns a 49.9 percent stake in Euroset and is yet to decide whether to buy another 25 percent, Elena Prokhorova, the company’s Moscow-based spokeswoman, said in a phone interview on Dec. 9. VimpelCom’s exclusive right to buy another 25 percent in Euroset expires on Jan. 23, she said.

Rusal, Rostelecom

The Hong Kong-listed shares of United Co. Rusal, the world’s largest aluminum producer, rose 0.2 percent to HK$5.27. The MSCI Asia Pacific Index gained 1.2 percent to 116.42.

Rostelecom ADRs fell 3.8 percent to $27.71, and was down 9.9 percent last week, after the Moscow-based company’s Micex shares slid 6.3 percent to 143.37 rubles, equal to $4.55.

HSBC cut Rostelecom’s target price to $35 per ADR from $37, analyst Jean Kaplan wrote in an e-mailed report. The target for ruble-denominated shares listed in Moscow was reduced to 185 rubles from 199 rubles. One depositary receipt is equal to six ordinary shares.

OAO Mechel gained in U.S. trading on Dec. 9, snapping a three-day drop, as Russia’s biggest coal producer for steelmakers resumed production at two mines in Siberia after work there was suspended because of complaints to Russia’s industrial safety watchdog.

Mechel’s ADRs rose 3.2 percent to $10.02 in New York, trimming their weekly decline to 9.9 percent. Shares in Moscow slipped 1.7 percent to 312.20 rubles, or equivalent of $9.93, before the resumption was announced.

--Editors: Emma O’Brien, Lester Pimentel

To contact the reporters on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net; Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Protests Reshaping Financial Markets 12 December 2011By Howard Amos

The 2012 strategy report released two days before the Duma elections by investment bank UralSib Capital on Dec. 2 dismissed the possibility of domestic political disturbances.

The report noted Russia's "stable political environment" and only a "few minor risks" of anything damaging that stability — and only in the case of a macroeconomic shock.

But after the market reacted negatively to expressions of popular dissatisfaction at alleged ballot box-stuffing last week, economists and strategists have been scrambling to factor political risk back into the Russian market.

The MICEX Index tumbled 4 percent Tuesday after the first gathering of protestors Monday evening and the transfer of additional Interior Ministry troops to the capital.

An expectation that unrest will remain a significant factor for investors was near universal among experts at a macroeconomic prognosis conference organized by Vedomosti on Friday.

"It's completely obvious that new models of government are being very actively developed," said Mikhail Khazin, president of consulting firm Neokon. He warned that these new models would "cardinally change the relationship between the state and business."

Equity investors were closing out their positions Friday to be able to take account of the impact expected demonstrations over the weekend would have when markets opened Monday.

"Russian stocks have decoupled from external markets and newsflow," Kirill Tishchenko, leader of Finam's analytical department, said in a note Friday afternoon. "Trading is now tied to the protest movement."

HSBC Russia's chief economist Alexander Morozov told The Moscow Times that there could be a long-term positive effect for Russia's political system, but investors "will need time to assess whether this has taken place."

In the meantime, he added, "investors are keeping a low profile, which means that to finance Russian companies will be harder, to attract international capital will be complicated and … money won't be coming into Russia."

The end of Russia's election cycle with the presidential election in March next year should see a lessening of the political risk, said chief economist at Deutsche Bank in Russia Yaroslav Lissovolik.

Capital outflows, which reached $49.3 billion in the first three quarters according to Central Bank figures, could rise if financial inflows contract in the face of social unrest. Even before last week's elections, Deputy Economic Development Minister Andrei Klepach said total 2011 outflow could reach $80 billion.

But the economists at Friday's gathering were keen to stress the unpredictability of a protest movement that could fizzle out as well as grow. Other macroeconomic factors likely to determine the country's development in 2012 include a high oil price, the possibility of a springtime conflict between the United States and Iran and the worsening of the European debt crisis, they said.

Read more: http://www.themoscowtimes.com/business/article/protests-reshaping-financial-markets/449666.html#ixzz1gIShyWmp The Moscow Times

Russian stock market daily morning report (December 12, 2011, Monday)http://www.stockmarketsreview.com/reports/russian_stock_market_daily_morning_report_20111212_218574/

December 12, 2011, Monday, 07:50 GMT | 02:50 EST | 13:20 IST | 15:50 SGT

By Veles Capital

Despite good dynamics of the foreign markets the trade in Russia went within the red zone. At that the reduction was significant. The market went down due to expectations of protests in Russia and investors departed from shares, due to the uncertainty relating possible protests’ results did not provide for gaining extra political risks. All the liquid shares went negative. Only the preferred shares of Rostelecom were climbing up. 

Main events

Raspasdskaya will mine 25% less coal in 2011 than announced earlier.

Raspadskaya announced its plan of production in 2012. Company plans mining about 10.5 mn tons of coal, which is 18% below the forecasts, announced earlier. Also the time constraints of volume recovery at the mine that suffered an accident were changed also. 

News briefly Oil-and-gas: Total upped its share in NOVATEK to 14.09%.

December 11, 2011 9:07 pm

Sberbank bullish on Russiahttp://www.ft.com/intl/cms/s/0/32201a1e-2293-11e1-acdc-00144feabdc0.html#axzz1gIRM4QQ0

By Patrick Jenkins in London

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/32201a1e-2293-11e1-acdc-00144feabdc0.html#ixzz1gIRRJ7If

Russia is a “special case” and will escape the worst of a deepening global financial crisis, according to Sberbank, the country’s biggest lender.

Anton Karamzin, finance director, told the Financial Times that the Russian growth story was more solid than that of the other so-called Bric nations and should be better insulated.

“Russian growth hasn’t been great, if you compare us with China, for example. But we have become less of a boom and bust economy,” he said. “If the worst happens in the eurozone, Russia might slow down to zero growth maybe for a year. [But] Russia offers the greatest growth opportunity in the Bric area.”

A slowdown in exports and an oil price fall were the main risks, he said.

Mr Karamzin said the Russian banking system, and Sberbank in particular, were much more stable than in the past. “Savers have learnt their lesson and migrated to safer parts of the system,” he said. “Sberbank benefits from adversity as much as from economic growth.”

Two weeks ago, Sberbank revealed a 76 per cent increase in third-quarter net profit to Rb79.7bn ($2.5bn), beating analyst expectations.

Mr Karamzin offered no prediction about whether smaller banks would be at risk in another downturn, but said Russia’s tally of 900 banks “should have been pruned a lot more” in the wake of the 2008 crisis.

Sberbank has emerged strongly from the troubles of recent years and has expanded aggressively. Its most recent foray has been a significant move into eastern Europe with the purchase of the bulk of the regional business of Austria’s Volksbank.

“We need to set up a platform for the next generation at Sberbank,” Mr Karamzin said. “Where should that be? Definitely not western Europe. India and China are obviously attractive but will take many years. Eastern Europe in some ways is less obvious, but for us it is attractive.”

Eastern Europe is braced for tumult, as the region’s banking industry – the vast majority of which is controlled by western European banks – retrenches aggressively. Mr Karamzin conceded that prices of eastern European assets were likely to fall further from current levels, but said the strategic logic of being in the region was compelling.

The bank plans “one or two” more acquisitions, he said – in Turkey and in Poland, although the bank recently pulled out of bidding for Dexia’s Turkish business, DenizBank.

Sberbank 11-Month Results Bullish 11 December 2011Reuters

Sberbank almost doubled net profit for the first 11 months of the year, putting it on course to top its full-year target and contrasting with the faltering performance of most top European banks.

Analysts said Friday that the strong performance, fueled by lower provisions for bad loans and an increase in lending to companies and consumers alike, put Sberbank in a good position to fulfill its plans to expand overseas.

"Based on preliminary estimations, they may spend between $5 billion and $8 billion, keeping Tier 1 [capital ratio] at a comfortable level of 11 percent," said UralSib analyst Leonid Slipchenko.

Sberbank chief financial officer Anton Karamzin recently ruled out major European acquisitions, saying deals were likely to be similar in size to previous ones of about $1 billion.

The bank, whose market capitalization of $61 billion makes it one of Europe's biggest banks, has said it is looking at Central and Eastern Europe, including Poland and Turkey.

Sberbank, which accounts for a quarter of total assets in Russia's banking system, made a net profit of 297.6 billion rubles ($9.5 billion) in the 11 months ended Dec. 1 under Russian Accounting Standards, almost reaching its full-year goal of 300 billion to 310 billion rubles with a month to go.

"It is hard to predict net profit for December but I think the full year's net income is likely to edge closer to 320 billion rubles," said Olga Belenkaya, an analyst with Sovlink.

Her profit forecast matches UralSib's prediction, which also expects Sberbank to beat its target issued only last week. Sberbank declined to comment.

Sberbank made 152.5 billion rubles in the 11-month period last year under Russian Accounting Standards, which is viewed as an indicator for performance under International Financial Reporting Standards.

With its nonperformance loan ratio decreasing to 3.72 percent from 5.04 percent at the beginning of 2011, Sberbank made just 7.3 billion rubles in provisions for the 11 months, compared with 173.1 billion rubles for the same period of 2010.

"The main driver for the net profit increase is lower provision charges," said Belenkaya, adding that Sberbank's key advantage was its capital position, which would "help to absorb possible losses if market conditions are negative."

Sberbank's return-on-equity remains one of the highest in the sector, reaching 27.6 percent in January-November. It is also strongly capitalized with a capital adequacy ratio of 16 percent under Russian Accounting Standards rules, well above the minimum 10 percent.

Sberbank is home to about a half of Russia's retail deposits and a third of overall capital. It has become too big to grow further in its domestic market and recently started expanding abroad.

The state-controlled lender plans to earn at least 5 percent of net profit from operations abroad by 2014.

Sberbank had operations only in the post-Soviet countries until it snapped up VBI, the Eastern European arm of Austria's Oesterreichische Volksbanken, in September.

Read more: http://www.themoscowtimes.com/business/article/sberbank-11-month-results-bullish/449677.html#ixzz1gIRkCT44 The Moscow Times

Russia Severstal takes control of Liberia iron projecthttp://af.reuters.com/article/metalsNews/idAFR4E7K204L20111212

Mon Dec 12, 2011 7:15am GMT

MOSCOW Dec 12 (Reuters) - Severstal, Russia's second largest steelmaker, said on Monday that it had reached an agreement to acquire the remaining 38.5 percent stake in the Putu iron ore project from Afferro for $65 million, as well as possible future payments.

Severstal, which already owns 61.5 percent of the Liberian project, will make the payment by Feb. 18, 2012.

The company, controlled by billionaire Alexei Mordashov, could also pay an additional $50 million to an Afferro subsidiary after a definitive feasibility study of the mine is completed.

If Afferro does not demand the payment, it is eligible to receive future compensation.

Earlier, Putu's iron ore reserves were estimated at 2.4 billion tonnes.

December 12, 2011 09:11

Norilsk Nickel might link independent director pay to confidentiality agreementhttp://www.interfax.com/newsinf.asp?id=294255

MOSCOW. Dec 12 (Interfax) - MMC Norilsk Nickel (RTS: GMKN) might condition payment of remuneration to independent directors on the signing of confidentiality agreements if the mining company's board of directors approves a recommendation made Friday by its human resources and remuneration committee.

"The committee recommended that the board approve a condition under which independent directors can receive remuneration only after signing a confidentiality agreement. [Independent director] Brad Mills said at a board meeting that for international practice this is nonsense, that at a western company they simply could not begin working on the board without signing an agreement," the head of the committee, Marianna Zakharova told Interfax.

Four of the 13 members of Norilsk Nickel's board have not signed confidentiality agreements: Lucian Bebchuk, Farhad Moshiri, Oleg Deripaska and Maxim Sokov. The first two are currently considered to be independent, but under new rules to be adopted by the board and shareholders, only Bebchuk would retain this status.

The committee recommendation will be put forward at the board meeting scheduled for December 13, which will review the agenda of the extraordinary general meeting planned for January.

Norilsk Nickel's charter currently defines as independent those directors who represent shareholders holding less than 10% of company shares. Six of the board's 13 members are therefore defined as independent: Lucian Bebchuk, Alexander Voloshin, Enos Banda, Bradford Mills, Claude Dauphin and Farhad Moshiri.

At least two of them would lose their independent status if the amendments are adopted. Voloshin, as the former chairman of Norilsk Nickel's board, would fall under the amendment that an independent director should not have held a post on the company's executive board or the post of board chairman for three years prior to being elected.

Moshiri, who represents Metalloinvest, falls under another amendment proposing that a shareholder (direct or indirect, including as part of a group) with more than 2% of votes, or an employee of such a shareholder cannot be considered as independent.

This provision would also apply to Dauphin of Trafigura if this commodities trader, whose companies, according to Norilsk Nickel, at the end of 2010 acquired 8% of the miner from a quasi-treasury stake, remains the beneficiary of at least 2% of votes.

"The criteria [for defining directors as independent] should be stricter so that independent directors are in fact that. When investors see that we have strict criteria, they have more confidence in the company," Zakharova said.

"The recommendations on the criteria for independence are not directed against anyone specific, these are generally accepted norms," she said.

Asked about the reasoning behind the proposal to strip a former board chairman of independent status, Zakharova said: "There are examples of this in international practice. If you work as the board chairman, after a certain time you indentify with the company in one way or another."

Zakharova also said that her committee recommended the approval of the same amount of remuneration for independent directors that was in effect prior to the last annual general meeting: $62,500 quarterly, plus up to 2 million rubles in

documented expenses per year, and an additional $31,250 quarterly for chairing a board committee; plus up to 20,000 phantom shares. Remuneration is not supposed to exceed $1 million for an independent director.

For remuneration of an independent chairman of the board (not current board chairman Andrei Bugrov, who represents Interros), the committee recommended hiring international consulting firm Egon Zehnder to make its recommendations, Zakharova said.

In addition to Zakharova, the human resources committee includes another representative of Interros - Larisa Zelkova, as well as independent director Lucian Bebchuk, who was nominated to the board by Rusal.

Zakharova said that Bebchuk did not participate in the committee meeting. "Lucian agreed with the draft recommendations, so this is strange. Particularly considering the fact that Lucian was recommended as a professor of corporate governance and we were counting on his expertise," she said.

Rusal has said it was surprised by the logic of the amendments proposed by Interros that would restrict a director's ability to be considered independent if he held the post of board chairman at any time in the preceding three years. In that case, "any independent director, if he is elected chairman of the board of directors, stops being considered independent if he is reelected to the company's board of directors in the subsequent three years," Rusal said.

Rusal said it supports the initiative that representatives of shareholders who hold large stakes should not be considered independent. "In our view, this threshold should be 5%, which is about the number of votes necessary to elect one director to Norilsk Nickel's board of directors. In this regard, the threshold of 2% proposed by Interros raises questions," the aluminum company said.

Norilsk Nickel will hold an EGM to vote on remuneration for independent directors on or around January 10. The request to call a meeting was made by Norilsk Nickel board director Maxim Sokov.

Norilsk Nickel shareholders at their AGM on June 21 rejected points on remuneration and an options plan for independent directors, although they were unchanged from 2010. Management and principal shareholder Interros voted against, as did minority shareholders on the recommendation of ISS and Glass Lewis. However, new chairman Andrei Bugrov, an executive at Interros, promised to resolve the problem of compensation for independent directors within three months.

Interros and Rusal almost immediately began consultations on a new incentive program for independent directors.

Remuneration was proposed at $62,500 quarterly, plus up to 2 million rubles in documented expenses per year. Independent directors chairing a board committee would receive an additional $31,250 quarterly. Compensation for an independent director - chairman of the board was to be set at $2.5 million, with an annual bonus of $3 million.

Under the options plans rejected by shareholders, each independent director would get a provisional 20,000 shares (208,000 shares for an independent chairman of the board). Participants in the options program would receive remuneration but cannot receive dividends. Remuneration is not supposed to exceed $1 million for an independent director or $10 million for an independent chairman of the board.

Vp

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

Polyus Gold okays 9M dividends

http://www.rbcnews.com/free/20111212123158.shtml

      RBC, 12.12.2011, Moscow 12:31:58.The shareholders of Polyus Gold, the leading gold producer in Russia and Kazakhstan, have decided to pay out RUB 26.23 (approx. USD 0.83) per share in dividends for January-September 2011, according to materials released by the company.

      The dividends will be disbursed within 60 days from the date of the decision.

2011-12-12

Preliminary EGM Results

http://europeaninvestor.com/SiteFiles/company/company.asp?GUID=B88619276E01D64FBD7363BC3D90AEE2&PressID=46916&Customer=1&CompanyCode=ru-plzl&MenuItem=91&wtLang=English

For immediate release

 

OJSC Polyus Gold (RTS, MICEX and LSE - PLZL), Russia's leading gold producer, today announced preliminary results of the Extraordinary General Shareholders' meeting (EGM) held in Moscow on December 09, 2011

 

In accordance with the preliminary results, the following resolutions have been passed by the EGM:

·     To declare dividends for the 9 months of 2011 at the rate of RUR 26,23 per ordinary share of OJSC Polyus Gold and to resolve that dividends shall be paid within 60 days upon the date of the resolution;

·     To approve the revised Charter of OJSC Polyus Gold;

·     To approve the revised Regulations of the Board of Directors of OJSC Polyus Gold;

·     To approve the revised Regulations of the General Shareholders' meeting of OJSC Polyus Gold.

Besides, the EGM resolved to terminate the powers of the Board of directors of OJSC Polyus Gold and to elect the following new members:

1.    Ivan L. Bakulev - General Counsel, CJSC Polyus

2.    Artyom A. Borisanov - Deputy CEO for Strategy and Corporate Development, CJSC Polyus

3.    Oleg V. Ignatov - Chief Financial Officer, CJSC Polyus

4.    Maria A. Kirienko - Director of the Legal Department of the Representation of the limited liability company "NAFTA MOSKVA (CYPRUS) LIMITED", (Republic of Cyprus), Moscow

5.    The Earl of Clanwilliam - Director and Founding Partner, The Gardant Communications

6.    Anthony James Nieuwenhuys - Chief Operating Officer, CJSC Polyus

7.    German R. Pikhoya - Chief Executive Officer, OJSC Polyus Gold

8.    Zumrud H. Rustamova - Deputy General Director of OJSC POLYMETAL MC

9.    Valery V. Senko - Director for investments of ONEXIM Group

 

The results of the EGM will be duly finalized and made available to public in order and within the time period stipulated by the Federal law "On Joint-Stock Companies".

OJSC Polyus Gold is Russia's leading gold producer and one of the world's largest gold mining companies in terms of market capitalization, mineral reserves base and output. The Company's asset portfolio includes hard-rock and alluvial deposits in the Krasnoyarsk, Irkutsk, Magadan and Amur Regions, the Republic of Sakha (Yakutia). The company produced 1.4 m oz of gold in 2010. OJSC Polyus Gold is a majority-owned subsidiary of Polyus Gold International Limited.

For further information please contact: For investors:Alexey V. Chernushkin, Director, CM and IREvguenia V.Buydina, IR manager+7 (495) 641-3377+7 (495) 785-4031 ir@polyusgold.com

For media:Anton A. Arens, PR Director+7 (495) 641-3365+7 (495) 544-5496pr@polyusgold.com

Otkritie taps $171m loan from Nomos Bank

http://www.rbcnews.com/free/20111212111246.shtml

      RBC, 12.12.2011, Moscow 11:12:46.Otkritie Financial Corporation has contracted a RUB 5.4bn (approx. USD $171m) loan with Nomos Bank, the investment banking company said in a statement.

      The term of the loan runs from December 9, 2011 until May 31, 2012 and carries a 12% interest rate.

Activity in the Oil and Gas sector (including regulatory)

Gazprom, LUKOIL and Rosneft among top 20 world oil and gas corporationshttp://vestnikkavkaza.net/news/economy/20823.html

Almost all Russian companies have strengthened their positions in the new rating of 50 world’s largest oil and gas corporations Energy Intelligence. The rating was based on oil and gas reserves, extraction, sales and refinement, Vedomosti reports.

Gazprom has become one of the top 10 for the first time, shifting from the 12th to the 10th position. Lukoil moved from the 17th to the 13th, Surgutneftegaz – from the 28th to the 26th, THK-BP – from the 34th to the 32nd, Novatek – from the 44th to the 41st.

Rosneft is the shifted from the 13th to the 16th position. It used to be successful from assets of Yukos, senior analyst of Energy Intelligence, Yan Nathan said. Lukoil improved its position due to reduction of the ConocoPhillips which has sold its capital stock of Russian companies.

The topc 10 companies are Saudi Aramco, NIOC (Iran), Exxon Mobil, PDV (Venezuela), SNPC (China), BP, Royal Dutch Shell, Сhevron, Total and Gazprom.

Oil and gas companies of developing states continue to challenge national and global oil and gas majors which have been dominating for a long time, Energy Intelligence says. Ratings of national companies are usually more stable due to low competition on the M&A market. Corporations, such as BP, Statoil and Royal Dutch Shell, are both active buyers and sellers of assets. But such active regrouping of the portfolio will have no short-term changes in the rating.

Russian companies are active in the M&A market, but it has little influence on the rating, deals are often realized as foreign partnership. for Gazprom it is ENI, for LUKOIL – ConocoPhillips. Russian companies often act as traders, such as Novatek that sold assets to Total (France) with its current share of 14.09%.

December 11, 2011 7:44 pm

TNK-BP warned on legal action

By Sylvia Pfeifer in London and Catherine Belton in Moscow

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/164ea02a-241f-11e1-bbe6-00144feabdc0.html#ixzz1gISv9OlN

Two of the independent directors in TNK-BP, the Russian joint venture of BP, warned the board that legal action by the company against either set of shareholders could destabilise the group, according to a letter seen by the Financial Times.

In the letter addressed to Mikhail Fridman, TNK-BP’s chairman, and copied to the board, Gerhard Schröder and Jim Leng warned that asking the board to consider taking legal action “could seriously disrupt and destabilise TNK-BP and its executives”.

The  letter, sent on November 29, before last week’s board meeting where both Mr Schröder and Mr Leng said they would resign by the end of this year, also urges the board not to pre-empt “a substantive discussion of the merits” of legal action before “significant further information” is made available to the independent directors.

In the letter, the directors also ask whether a “litigation subcommittee” should be formed to consider the proposed legal claims.

Mr Schröder and Mr Leng had been due to step down at the end of next year but tendered their resignations on Friday amid the ongoing row between TNK-BP’s shareholders – BP and Alfa-Access-Renova, its Russian partners – over the UK oil group’s failed alliance with Rosneft. The venture has been wracked by dispute since the beginning of the year.

AAR has taken BP to international arbitration, claiming it breached the venture’s shareholder pact. BP has denied this.

At the board meeting two international law firms advising TNK-BP gave presentations that the Russian company had strong grounds to pursue claims for billions of dollars in damages against BP over the Rosneft bid.

One person familiar with the situation said: “The key issue is whether BP broke the shareholder agreement. That needs to be ruled on before anyone decides to take legal action.”

“Operationally, the company is performing fantastically but ultimately, it is for the two sets of shareholders to resolve [this dispute],” the person added.

The resignation of the two directors leaves just one independent director on the board and the company without a quorum. It means that any substantive decisions will now have to be voted on unanimously.

BP said it was committed “to the continuing success and future growth of TNK-BP to the benefit of all shareholders”.

A person close to AAR said the independent directors “did not want to be in a situation where they would have to cast their votes on TNK-BP suing BP. If lawyers are making recommendations that there is a strong legal case and that the company could recover billions of dollars from BP, the directors would have to fulfil their fiduciary duty, but also weigh this against the potential disruption this could cause to the company.”

The person said “any disruption would be minimal” and that the company had outperformed its competitors despite previous disputes.

Independents to quit TNK-BP board

http://www.rbcnews.com/free/20111212111926.shtml

      RBC, 12.12.2011, Moscow 11:19:26.TNK-BP's independent directors Gerhard Schroeder, former German Chancellor, and Jim Leng, ex-chairman of U.K. steelmaker Corus, resigned from the board of the British-Russian oil major to avoid having to vote on a lawsuit against BP, RBC Daily reported today.

      The dispute between TNK-BP's shareholders has been dragging on for almost a year. In January 2011, BP announced a joint project with Russia's Rosneft, but the Alfa-Access-Renova (AAR) consortium, BP's Russian partner in TNK-BP, blocked the deal, accusing the British company of violating the shareholder agreement.

      AAR decided to sue BP over infringements and to seek $10bn in damages. On December 9, 2011 two international law firms advised TNK-BP's board to proceed with the lawsuit, prompting Schroeder and Leng to step down.

Dec. 11, 2011, 10:00 a.m. EST

TN-BP board approves $6 billion Arctic investmenthttp://www.marketwatch.com/story/tn-bp-board-approves-6-billion-arctic-investment-2011-12-11

By Rhiannon Hoyle

LONDON -(MarketWatch)- The board of BP PLC's Russian joint venture TNK-BP Ltd. has "pushed the button" on a $6 billion investment in new Arctic fields, The Sunday Times reports.

The newspaper said the investment scheme, which it gave no further details on, was approved at the company's board meeting in Brussels on Friday.

Directors also heard recommendations from external lawyers on whether to sue BP for damages as a result of the U.K. firm's deal with Rosneft independently of TNK-BP. A vote on the matter is expected to take place in 2012.

TNK-BP wasn't immediately available for comment Sunday.

Novatek Sees Gas Output Doubling by 2020, Increases 2015 Targethttp://www.businessweek.com/news/2011-12-12/novatek-sees-gas-output-doubling-by-2020-increases-2015-target.html

December 12, 2011, 12:12 AM EST

By Anna Shiryaevskaya

(Updates with Russian market share in fifth paragraph.)

Dec. 9 (Bloomberg) -- OAO Novatek, Russia’s second-largest natural-gas producer, plans to double gas output by 2020 as it gains a bigger share of the domestic market and breaks into global markets with liquefied natural gas production.

Output may double to 112.5 billion cubic meters by 2020 from current assets as Novatek invests 580 billion rubles ($18 billion), the company said today in a presentation. That doesn’t include Novatek’s share of the $18 billion to $20 billion spending for the planned Yamal LNG project in the Arctic.

The 2015 target has been raised to 68 billion cubic meters from 65 billion, Chief Financial Officer Mark Gyetvay said on a conference call with analysts.

Novatek, controlled by billionaires Leonid Mikhelson and Gennady Timchenko, is boosting output as OAO Gazprom, the world’s biggest gas producer and Russia’s export monopoly, seeks to ship more fuel abroad from aging fields. France’s Total SA said today it raised its stake in Novatek to 14.1 percent after paying about $800 million to add 2 percent.

Novatek aims to capture 13 percent of domestic supply, its only market now for natural gas, from 8 percent this year, even as consumption of the cleaner-burning fuel rises, according to the presentation on the company’s website.

Production of gas for sale will rise about 41 percent this year to 52.6 billion cubic meters this year, according to a presentation on the company’s website.

Novatek plans to double gas condensate and crude oil output to 8.6 million metric tons in 2015 and 13.3 million metric tons a year in 2020, according to the presentation.

--With assistance from Stephen Bierman in Moscow. Editors: Torrey Clark, Alex Devine

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

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

Total spends $800m on Novatek stakehttp://www.upstreamonline.com/live/article293603.ece

France’s Total has increased its stake in Novatek to 14.09% after dishing out $800 million on shares in the Russian gas producer.

Bill Lehane  09 December 2011 10:47 GMT

Total said in a statement on Friday it had finalised the acquisition of an additional 2% of the company from its main shareholders.

The stake sale was completed under the terms of an agreement signed in March that saw Total take a 12.1% stake in Novatek.

The pair created a strategic alliance earlier this year, and Total is also Novatek’s main international partner on the Yamal LNG project with a 20% stake.

Novatek is the largest Russian independent gas producer, with 13% share of the domestic market and production of 38.6 billion cubic metres of gas in the first nine months of 2011.

Total is a leading multinational energy company with more than 96,000 employees and operations in more than 130 countries.

Published: 09 December 2011 10:47 GMT  | Last updated: 09 December 2011 10:49 GMT

Bashneft drills well at Trebs Titov fields without JV with Lukoil

http://www.steelguru.com/russian_news/Bashneft_drills_well_at_Trebs_Titov_fields_without_JV_with_Lukoil/240453.html

Monday, 12 Dec 2011

Interfax cited Mr Alexander Korsik president of Bashneft as saying that the company has drilled its first exploration well at the Trebs and Titov oil fields in the Nenets Autonomous District.

Bashneft told Interfax that subsidiary LLC Bashneft Polyus, the operator of the project to develop the fields has completed drilling the first exploration well at the Trebs field. The 4,218-meter well hit Cenozoic, Mesozoic and Paleozoic deposits, confirming the presence of oil deposits in dolomite and dolomitic limestone of the lower Devonian system and upper Silurian system. Testing has now begun for liquid influx.

Bashneft and Lukoil which in April agreed to work together at the Trebs and Titov fields have still not signed the documents to form a joint venture. Lukoil was expected to buy a 25.1% stake in the Bashneft subsidiary to which the licenses and rights to the fields are to be transferred. The transfer of the licenses has not been completed yet.

The companies said that the joint venture deal will only be finalized after the fulfillment of a number of conditions, including permission and endorsement from corporate governance bodies and the relevant government agencies, as well as the conditions of various agreements concerning the operations of the venture.

Bashneft and Lukoil management have also repeatedly said that they are working

on the development of these fields on the basis of partnership agreements, despite the absence of an official document to form a joint venture.

Geologists have said that the Trebs and Titov fields are very difficult to develop. One geologist who has explored the deposits said any company that develops them will face the problem of difficult reservoir rock. Furthermore, the deposits are broken up into many blocks at different levels. Therefore, different systems and methods of development will have to be selected for each block.

(Sourced from Interfax)

Rosneft lands MOU in Orinoco beltPublished: Dec. 9, 2011 at 7:34 AM

CARACAS, Venezuela, Dec. 9 (UPI) -- Russian state-run oil company Rosneft said it signed a memorandum of understanding to help develop part of one of the biggest oil fields off Venezuela's coast.

"This tentative MOU is a major step in globalizing Rosneft business," Rosneft President Eduard Khudainatov said in a statement. "If Rosneft joins the project, it will gain access to the rich deposits of the Orinoco oil belt, a resource base that could become an important driver of additional growth in the company's output after 2015 and transform Rosneft into a major player in this very promising region of Latin America."

Rosneft signed the deal with Venezuela's state-owned Petroleos de Venezuela to develop crude oil in the Carabobo-2 project, which makes up two blocks in the Orinoco oil belt.

The Russian oil company added that, "in an unprecedented move," it signed two MOU for joint ventures for drilling and construction services in the Orinoco oil belt.

Venezuela has some of the largest deposits of crude oil in the world. The Orinoco belt is considered one of the biggest reserve fields outside of the Middle East.

Moscow last year paid more than half of the $1 billion for work in the Junin-6 block in the Orinoco belt.

Read more: http://www.upi.com/Business_News/Energy-Resources/2011/12/09/Rosneft-lands-MOU-in-Orinoco-belt/UPI-50661323434073/#ixzz1gIlmCCSW

Rosneft Signs $2 Billion Loan After Increase From $1.5 Billionhttp://www.bloomberg.com/news/2011-12-08/rosneft-signs-2-billion-loan-after-increase-from-1-5-billion.html

By Stephen Morris - Dec 8, 2011 8:19 PM GMT+0400

OAO Rosneft (ROSN), Russia’s biggest oil producer, signed a five-year credit line and increased it to $2 billion from $1.5 billion.

The facility is split between $1.4 billion and 470 million- euro ($627 million) portions, according to data compiled by Bloomberg. Both loans pay 1.85 percentage point more than benchmarks rates.

The euro portion was designed for European lenders with dollar funding difficulties, said a person with direct knowledge of the deal, who declined to be identified as the deal is private. The three-month cross-currency basis swap rate banks pay to convert euro payments into dollars is 1.165 percentage point less than the euro interbank offered rate, 14 times more expensive than on May 4, Bloomberg data show.

Barclays Capital led the financing and was joined by 14 banks. The Moscow-based oil exporter started talks with lenders in October to borrow $1.5 billion.

Rustam Kazharov, a spokesman for the Moscow-based exporter, wasn’t immediately available for comment.

-- Editors: Cecile Gutscher, Faris Khan

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.

ANALYSIS: EU, Russian refiners ramp up diesel upgrades http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Petrochemicals/8677937

London (Platts)--8Dec2011/849 am EST/1349 GMT

Faced with growing diesel and declining gasoline demand, European refiners are in a hurry to get new hydrocracker units up and running with the majority set to

go on line this and next year. For somewhat different reasons Russian refineries have also joined the hydrocracker race.

"To stay competitive in Europe, it would be beneficial to have a hydrocracker," says Jonathan Leitch from energy consultancy Wood Mackenzie.

Diesel, unlike gasoline, has demonstrated long-run strong performance, on the back of steadily growing European demand since the late 1980s.

Following significant tax incentives, France currently has the highest diesel demand in the EU, with diesel accounting for 80% of the motor fuel consumption.

French refiners are hence eager to ride on the diesel wave. Total's Gonfreville site is on track to launch a scheduled upgrade of the diesel hydrocracker in the autumn of 2012 which aims to increase its diesel production by 500,000 mt/year.

Across OECD Europe, the diesel share of the total product demand is likely to rise from 30% in 2010 to 34.3% by 2016, according to estimates from the International Energy Agency.

France like the rest of Europe historically has been a net importer of diesel and a net exporter of gasoline, especially to the US.

The economic downturn in 2008 however hit hard the trans-Atlantic gasoline arbitrage and made investments in diesel upgrades more pressing.

"The 2008 crisis accelerated the need for investments," said one refinery manager, adding "all products have seen demand drop apart from diesel."

By 2020, 51% of the cars in Europe are expected to drive on diesel, compared to 32% in 2007.

Spain's Repsol, which joined the upgrade wave in 2008, said that after launching new units aimed at increasing the middle distillates output at Cartagena it will contribute to "clearly reducing the deficit of products in Spain."

Traders suggested that the upgrades at Repsol and Spain's other major refiner Cepsa are not only going to cut the level of diesel imports but might make Spain on occasions a diesel exporter.

Portugal's Galp Energia said that after completing upgrades at its Sines and Porto refineries "the country will produce all the diesel fuel it needs."

"Between 2012 and 2013 we'll see distillate hydrocrackers in Greece, Portugal, Spain coming on line," said WoodMac's Rachel Williams.

Greece's Hellenic Petroleum announced last month that it is "on track" with the upgrade at its Elefsis refinery. The project comes on line at a time when the Greek Parliament passed a law lifting a 20-year ban on diesel-run private vehicles in Athens and Thessaloniki.

And Israel's ORL said it expects a hydrocracker at its Haifa refinery to start production by the end of the second quarter next year.

RUSSIAN REFINERIES UPGRADE FOR TAX REASONS

Whereas investments in Europe have been driven by weakening margins, in Russia "there are different reasons", Rachel Williams says.

"Between last and this year there have been more announcements for investments for diesel mostly due to the export tax regime," Williams said.

In October, the Russian government drastically increased the export tax burden on fuel oil by introducing the new "60-66" export tax regime, aimed to speed up investments in higher yield of light products.

The new tax structure reduced the tax on crude exports to 60% of the price of Urals and introduced a single rate of 66% of the Urals duty for diesel and fuel oil. The move made fuel oil exports, which previously have been taxed at 46.7% less attractive as part of measures to encourage refinery modernization.

Following the change, many Russian refineries sped up projects that have already been underway or have announced new investments.

Gazprom Neft is to launch a new hydro complex at its Omsk refinery in early 2012 and TNK-BP said it will completely refurbish the diesel hydrotreater at Saratov within the next two years.

Lukoil announced that a new diesel hydrodesulrization unit will be launched at Volgograd next year.

TNK-BP and Gazprom Neft's Yaroslavl refinery has already installed a hydrotreater following upgrades that started as early as 2002.

Russia's largest oil producer Rosneft, which owns and operates seven large refineries in Russia, is carrying out a large-scale upgrade in all of its refineries, involving the construction of 57 new processing units and upgrading 20 existing ones.

"Upgrading our refineries is one of the key priorities of Rosneft," said Rosneft President Eduard Khudainatov in a statement.

Faced with the growing competition, those European refiners who had already started their investments, are keen to keep the hydrocracker race on track and hope to profit from them.

Others however who had projects in the pipeline are less likely to pursue them, according to market players.

"Given the combination of the current commercial climate, the outlook for refining in the UK and the rest of the EU, and the substantial cost of upgrade projects, it seems unlikely that such investments will be made in the foreseeable future," according to UK petroleum industry association UKpia.

--Elza Turner, elza_turner@platts.com

Gazprom

12/12 10:08   Latvijas gaze looks to clinch deal with Gazprom for 2012 in mid-Dechttp://www.interfax.com/

http://www.inosmi.ru/economic/20111212/180081687.html

Why Latvia should dispense without "Gazprom"("IR", Latvia)Latvia should also beware of some groups of like-minded people who want to participate in building a gas terminalAndis Kudors (Andis Kudors)12/12/2011

11:53Gazprom to commission Bovanenkovo field in May-June 2012 - regional authoritieshttp://www.interfax.com/news.asp

10:56Two JVs with Gazprom to be set up in Ukraine around gas-transport systemhttp://www.interfax.com/news.asp

Ukrainian authorities after creation of two JVs with Gazprom will lose influence on their activities, according to mass mediahttp://www.interfax.com.ua/eng/main/88360/

14:46

A draft interstate Ukrainian-Russian 'gas' agreement foresees the creation of two joint ventures jointly with OAO Gazprom (50% and 50% stakes) on the basis of the Ukrainian gas transportation system, according to the Dzerkalo Tyzhnia Ukraine weekly, with reference to its own sources.

The first joint (gas transportation) enterprise will include the trunk (transit) gas pipelines and underground gas storage facilities of Ukraine. According to the edition, the Ukrainian part of the negotiating group was against the inclusion at this stage of Ukrainian underground gas storage facilities in the gas transit joint venture.

The gas transportation joint venture will also be authorized with the exclusive, monopoly right to transit gas through Ukraine to Europe. This exclusive right of the gas transit joint ventures is stipulated in the draft gas agreement and, consequently, makes it impossible for any other third party (or company) to participate in imported gas transit, except for the subsidiaries of the gas transit joint venture, the establishment of which is foreseen in the agreement. This joint venture will also manage the trunk gas pipelines and underground gas storage facilities of Ukraine.

The second (gas distribution) joint venture is to be created jointly with Gazprom on the basis of the internal gas distribution networks of Ukraine.

The draft document, according to Dzerkalo Tyzhnia, does not clearly state where both joint ventures should be registered. Thus, it is not ruled out that they could be registered not in Ukraine or Russia.

The points of a possible deal, according to the publication, assume a full legal immunity of the joint ventures created. Any possible changes to the tax legislation of Ukraine, antitrust laws, any tariff changes, the laws on public procurement will not apply to the enterprises.

"Eloquent is the requirement for the Ukrainian side not to interfere in the determination of the profitability of both joint ventures," reads the newspaper.

"The functions of setting prices for gas transportation and distribution in Ukraine, as well as setting gas prices for various categories of domestic consumers, which were earlier performed by the National Electricity Regulatory Commission, will be fulfilled by the two enterprises created. The influence of the parliament, the government or the Energy and Coal Industry Ministry on the activities, particularly financial, of the gas joint ventures is practically ruled out. Gazprom and its affiliated structures will receive full legal protection on the territory of Ukraine (almost at the level of diplomatic), including the inviolability of their property and the impossibility of its forced withdrawal," states the weekly.

10.12.2011

Gazprom to Increase Gas Output Next Year After Slow 2011 Growthhttp://www.bloomberg.com/news/2011-12-09/gazprom-sees-gas-output-at-510-billion-cubic-meters-this-year.html

By Anna Shiryaevskaya - Dec 9, 2011 4:09 PM GMT+0400

OAO Gazprom, the world’s biggest gas producer, plans to raise output at least 2.5 percent in 2012 after slow growth this year.

Russia’s biggest company set a target of 522.5 billion cubic meters next year from estimated output of 510 billion this year, said Nail Gafarov, deputy head of the production department.

Next year’s production may reach 528 billion cubic meters depending on the markets and a “cold winter,” Gafarov told reporters today in Moscow. That remains below the 2008 level, before the economic crisis cut European demand for Russian supplies. “We have production capacity, we are now talking about what will happen on the consumer side.”

Gazprom, the world’s biggest gas producer, estimated in June that 2011 output may climb to 519 billion cubic meters, while leaving its official target at about 505 billion.

Output will probably grow less than 0.5 percent this year, based on Gafarov’s estimate and the state-controlled company’s 2010 production of 508.6 billion cubic meters of gas.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

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

Gazprom still fights for Shtokman FID in 2011http://barentsnova.com/node/1673

Dec 09 2011

Thursday, Moscow: Mikhail Basarygin, the deputy head of technological dptm in Gazprom, says the company is doing ‘immense work’ to have the final investment decision taken this year.

Talking at the Moscow conference – Shelf Equipment; Neftegazshelf 2011 – Mikhail Basarygin underlines that the Shtokman FID is planned to be taken by end of 2011.

The deputy head of Gazprom’s department on techniques management and technology development for offshore oil-and-gas fields, Mikhail Basarygin, says that Shtokman is a challenging project in terms of technology and expenses. 

However, he assures, OAO Gazprom is ‘doing immense work to prepare the final investment decision on Shtokman’. - And we hope the decision will be taken by the end of 2011, says Basarygin three weeks prior to beginning of 2012, informs Rusenergy.  

However, according to recent media reports, the FID may be shifted beyond the scheduled deadline due to suspended determination of the Russian authorities to meet Shtokman stakeholders halfway with tax indulgences.

Kommersant claims that Total’s CEO – Christophe de Margerie – admits a possible delay in taking the final decision. Talking to Reuters, de Margerie says that Gazprom is not submitting a list of assets that are to be transferred to Shtokman Development AG (the project operator owned by Gazprom, Total and Statoil). This list is now being agreed upon, while ‘we would love to see it before taking the FID’, says Total executive. This reason is seen as a ‘formal excuse’, thinks Kommersant, while stakeholders are actually waiting for tax breaks. If the Russian government lifts a mineral extraction tax then it would add annual profits of $400 million to Shtokman developers.

The board meeting of Shtokman Development AG is expected to be held in December 2011. The exact date has not been specified