Russia 110906

Basic Political Developments SYRIAN PRESIDENTIAL ADVISOR FOR POLITICS, MEDIA SHAABAN TO VISIT

RUSSIA SOON - RUSSIAN FOREIGN MINISTRYo Moscow is expecting the Syrian presidential adviser for political

and media affairs - The Russian Foreign Ministry site says that on 12 September, Shaaban will address Russian and foreign journalists and will talk about the situation in Syria.

Moscow supports end to violence, broad dialogue in Syria - Deputy Russian Foreign Minister Mikhail Bogdanov has confirmed Russia’s position on the situation in Syria, saying that external interference in Syrian affairs is unacceptable. During his meeting with Syrian Ambassador to Russia Riad Haddad on Monday, Bogdanov stressed the need for a complete end to any violence in that country, the ministry’s website said.

Russian Expert in ME Affairs: There Are Gunmen, Saboteurs among Protesters in Syria

Time is ripe for sending new ambassador to Libya – Margelov: Margelov pointed to the willingness of the committee of the upper house of parliament concerned "to consider a candidacy of the new Russian ambassador to Libya as soon as it is proposed by the Ministry of Foreign Affairs

Iran takes Russia to International Court of Justice over S-300 Russian, French ministers to discuss Libya, Syria, missile defence, EU,

NATO - The Russian and French foreign and defence ministers will gather in Moscow on Wednesday, September 7, to discuss the situation in Libya and Syria, missile defence, and Russia’s dialogue with the European Union and NATO.

Medvedev to hold talks with Danish Queen Margrethe II - One of the key topics for negotiations will be cooperation in energy and especially the Nord Stream project. The Nord Stream pipeline will eventually pump 55 billion cubic meters of gas per year to Western Europe and will go through the territorial waters and exclusive economic zones of Finland, Sweden, Denmark and Germany

Nord Stream starts carrying Russian gas towards Europe - "Gradually, in a calm manner, we are departing from the diktat of transit states," Putin said in televised remarks. With Moscow in final discussions with Belarus over taking 100% ownership in its pipeline operator Beltranzgas, the country has routes to the north of Europe sewn up.

Yanukovych Wants to Restore Earlier Gas Deal, Kommersant Sayso Ukraine could join Customs Union if this brings advantages –

presidento Ukraine warns of lawsuit over Russian gas-report

o Ukraine to "overpay" $60 billion on gas contract with Russia - Yanukovych

o Ukraine to turn to intl courts over gas dispute with Russiao Ukraine prepares documents for suing RF for gas contract terms

Russian, Ukrainian foreign ministers meet for talks in Moscow - The parties discussed the latest trends in cooperation between Russia and Ukraine, a schedule of bilateral Summit and other high level events until the end of this year, and the state of preparations for the next Russia-Ukraine Interstate Commission session, including the development of documents for signature as part of this exercise.

Cameron to meet Putin in Moscow visit - David Cameron, Britain’s prime minister, will meet Vladimir Putin, Russia’s premier, during an official visit to Moscow on September 12, indicating that both sides are trying to warm a relationship damaged by the assassination of a former Russian spy in London in 2006.

Belarusian servicemen to arrive in Russia for joint military drills - "Overall, some 30 trains are expected to deliver troops and vehicles to proving grounds in the Nizhny Novgorod and Astrakhan regions as part of troop redeployment for the Union Shield 2011 joint exercises," the press service said in a statement.

FM: Georgia does not open its airspace for Russia's military supplies to military bases in Armenia - The Georgian Foreign Ministry refuted U.S. Ambassador John Bass’ reports, according to which the country opened its airspace to transport the Russian military cargo to bases in Armenia.

Georgia will seek to return hotel, located in Moscow Gryzlov opens autumn session of State Duma MiG-21 crashes in Punjab, pilot ejects - Within a period of one month,

one more MiG-21 of the Indian Air Force (IAF) crashed near Rajpura in Punjab on Tuesday morning.

Russian fighter jet crashes in Urals - A Russian Mikoyan MiG-31 fighter jet crashed in the Urals on Tuesday, killing both pilots, officials say. The jet exploded in a fireball minutes after taking off from a military airport in the Perm region in the early hours of Tuesday.

o MiG-31 fighter of RF Air Force crashes in Perm Territoryo MiG-31 fighter crashes in Urals o Reports: 2 pilots killed in Russia fighter jet crash

Not Even Fog and War Can Ground Ka-52 Helicopter - The Ka-52, whose serial production started at Progress in 2008, is among the aircraft to be shipped to the Defense Ministry in the next 10 years as part of the government’s 20 trillion ruble ($683 billion) plan to re-equip the armed services by 2020.

Chechen official attacked in Yekaterinburg - Police said the attacker approached the Chechen official, Salautdin Mamakov, and shot him from behind, probably with a pneumatic pistol. The attacker remains at large.

o Chechen representative in Sverdlovsk Reg injured in attack Police officers to be punished, if guilty of Magnitsky's death Court to announce sentence to alleged Orekhovo gang leader Abandoned KamAZ truck with 40 shells found in Trans-Baikal rgn Five of seven attacks on reporters occurred in Moscow in August -

Glasnost Defense Foundation Reuters PRESS DIGEST - Russia - Sept 6 RIA Russian Press at a Glance, Tuesday, September 6, 2011 Vladimir Putin addressed his United Russia associates for the last time

before the Party's Congress “Medvedev vs. Putin would be the best thing for Russia” - Dmitry

Medvedev and Vladimir Putin both running as presidential candidates would promote the introduction of the classic two-party system in Russia, says Fred Weir from the Christian Science Monitor.

Conflicting findings on Russian's biggest concerns - Leading polling agencies have issued conflicting findings on the issues most worrying people. The public's concerns are drinking and drugs, with inflation taking third place, according to surveys by the All-Russian Public Opinion Research Center (VTsIOM).

RUSSIA VOTES: A Front for progress or an affront to progress? Foreign Minister Yavlinsky, Defense Minister Rogozin - Yabloko co-

founder Grigory Yavlinsky would become foreign minister, Moscow's hawkish NATO representative Dmitry Rogozin would become defense minister, and anti-corruption blogger Alexei Navalny would become prosecutor general if the youth wing of the Just Russia party gets its way.

Dissatisfied Nation - Opinion Polls Show That Ever More Russians Are Dissatisfied with the Government

In Russia’s Dagestan, Salafi Muslims clash with government authorities - By Kathy Lally

Chechen rebels are dangerously desperate - by Mark Galeotti Russian Ambassador To U.S.: Don't Flee Afghanistan - Morning Edition co-

host Renee Montagne, who is reporting from Afghanistan this month, sat down with Avetisyan and asked him about the U.S.-Soviet rivalry in the 1960s, when the superpowers were competing to help develop a poor — but peaceful — Afghanistan.

Want peace, be ready for war: Russian publication addresses armament race between Armenia and Azerbaijan - By Aris Ghazinyan

CSTO reform in the works - "Kommersant" publishes the article titled "CSTO Is Turning to Face NATO" which addressed the reform of the Collective Security Treaty Organization Russia is preparing.

CSTO Moves Into The Information Age - By Roger McDermott

National Economic Trends President approves additional social tax on high salaries Central Bank of Russia directors to discuss monetary policy Sept 15 Russia to Hold Rates After Price Growth Halt Russian central bank warns of European crisis fallout Russian banks exposed to $3bn-$12bn of dodgy debt Putin Sees 8% Inflation In 2011, Above Central Bank Forecast TABLE-Russia posts 1st monthly deflation since 2005 CPI drops to 8.2% YoY on food price deflation in August - CBR to stay on

hold in September Watching for Base Effects - Continuing acceleration in GDP growth does

not seem to be accompanied by a sizeable improvement of the capital account. The CBR has reported an unexpectedly strong $3bn outflow in July, which, combined with very poor reserve growth statistics, forced us to downgrade our August capital outflow expectations to $6-7bn.

Russian shares down as eurozone debt, U.S. economic fears persist Ruble Falls to Four-Week Low Versus Dollar as Oil Price Slips RTS Futures Decline on Global Economy Concern: Russia Overnight

Business, Energy or Environmental regulations or discussions Russian markets -- Factors to Watch on Sept 6 Gazprom, Rosneft, Mobile TeleSystems, Nomos: Russian Preview Russian billionaire Oleg Deripaska may sell as much as 75 percent in the

cement unit of his Basic Element holding company to the Irish company, Kommersant reported, citing unidentified people with knowledge of the plans. The shares fell 5.5 percent to 11.12 euros in Dublin.

S&P upgrades six Russian banks Bank of Moscow could issue 100 bln rubles in new shares by end 2011 Bank of Moscow May Need 73.6 Billion Rubles to Dodge Crisis RusAl Rejects Norilsk Buyback Offer Terms of Freight One auction announced Russian Railways could gain control of private operators' fleets ALROSA SELLS $3.15 BILLION OF DIAMONDS IN JAN-AUG PERIOD 06 Nord Hydro, VEB may invest 2 bln rubles in small hydro plants PhosAgro Plans New Plant M.Video: Possible acquisition through merger with Eldorado CapMan invests in Siberian Networks Yandex develops new targeted advertising

Activity in the Oil and Gas sector (including regulatory) Lukoil's CEO pledges further investments in Bulgaria Rosneft Prepares For Kara Sea Mapping Shell, Warly share Rosneft tender Rosneft-Exxon: insider trading? - by Courtney Weaver

Gazprom Russia To Pump First Gas Through Nord Stream Tuesday Gazprom starts filling Nord Stream pipeline - Russian energy giant

Gazprom started filling the Nord Stream pipeline with technological gas on Tuesday in a preparatory process that is expected to wrap up by October 6.

Gazprom Starts Filling Nord Stream Gas Pipeline Fluxys G acquires 19% stake in Nord Stream connecting pipeline South Stream Gas Pipeline Project On Schedule - Eni South Stream construction goes as scheduled - Gazprom Investment decision on Shtokman anticipated this year

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Full Text Articles

Basic Political Developments

11:46SYRIAN PRESIDENTIAL ADVISOR FOR POLITICS, MEDIA SHAABAN TO VISIT RUSSIA SOON - RUSSIAN FOREIGN MINISTRYhttp://www.interfax.com/news.asp

TRANSLATED FROM RUSSIANMoscow is expecting the Syrian presidential adviser for political and media affairs

September 6, 2011 11:46

Moscow. September 6. INTERFAX.RU - Advisor to the Syrian president on political and media affairs, Butain Shaaban will soon travel to Moscow for a visit.The Russian Foreign Ministry site says that on 12 September, Shaaban will address Russian and foreign journalists and will talk about the situation in Syria.

http://www.interfax.ru/news.asp?id=206644

http://www.mid.ru/brp_4.nsf/0/BA26DD37E36951E2C325790300295BAD

RT News line, September 6

Moscow supports end to violence, broad dialogue in Syriahttp://rt.com/politics/news-line/2011-09-06/

10:31

Deputy Russian Foreign Minister Mikhail Bogdanov has confirmed Russia’s position on the situation in Syria, saying that external interference in Syrian affairs is unacceptable. During his meeting with Syrian Ambassador to Russia Riad Haddad on Monday, Bogdanov stressed the need for a complete end to any violence in that country, the ministry’s website said. Russia is calling for the speedy implementation of political and socio-economic reforms announced by the Syrian government and says the broad dialogue should involve Syrian opposition.

http://www.mid.ru/brp_4.nsf/0/46CA2E7A90234580C3257902005819E7

Last update: 06-09-2011

Russian Expert in ME Affairs: There Are Gunmen, Saboteurs among Protesters in Syria

http://www.syriaonline.sy/details.php?t=syria&id=1879

Russian former diplomat and expert in the affairs of the Middle East region Vyacheslav Matuzov said that there are suspicious groups among the Syrian opposition.

In an interview with the 'Russia Today' TV, he added that there are gunmen among protesters and they sabotaged public properties in addition to army and police posts, indicating that the US had been encouraging the Muslim Brotherhood party to create chaos in Syria since the 1980s.

"Russia will not support any side that tries to provoke sedition in Syria… Most of the Syrian people support their government," he added.

He said that the US violated the international law when its President asked a President of an independent country and member of the UN to step down.

He pointed out that the US is supporting opposition forces in all the Arab countries, expressing concern that changes in the Arab region will be connected to the US policies and purposes in the region.

12:26 06/09/2011ALL NEWS

Time is ripe for sending new ambassador to Libya - Margelov

http://www.itar-tass.com/en/c154/219181.html

MOSCOW, September 6 (Itar-Tass) —— Time is ripe to raise relations with Libya to the traditionally high official level and to dispatch a new Russian ambassador to that country, the special presidential envoy for Africa, chairman of the Federation Council’s Committee on International Affairs, Mikhail Margelov said on Tuesday.

"Obviously, after the recognition of the TNC as a new legitimate government of Libya time is ripe to raise relations with that important country to the traditionally high official level official," he said.

In this context, Margelov pointed to the willingness of the committee of the upper house of parliament concerned "to consider a candidacy of the new Russian ambassador to Libya as soon as it is proposed by the Ministry of Foreign Affairs."

The forthcoming scheduled committee meeting is due on September 19, but the FC members, he assured, "will be ready to gather for an extraordinary meeting for that purpose."

In accordance with the Constitution all candidates of Russian ambassadors to foreign countries and representatives of the Russian Federation at international organizations undergo approval procedures at the relevant committees of both chambers of the Federal Assembly of Russia before the decree appointing them is submitted to the president for signature.

The Russian embassy in Tripoli has not interrupted its work for a single day since the establishment of diplomatic relations between Russia and Libya in the autumn of 1955. However, since the withdrawal of Russian Ambassador Vladimir Chamov at the beginning of the Libyan political crisis the supreme diplomatic person at the embassy has been charge d'affaires Maxim Maximov.

Iran takes Russia to International Court of Justice over S-300http://en.trend.az/regions/iran/1927113.html

[06.09.2011 10:57]

Azerbaijan, Baku, Sept. 6 /Trend/

Iran lodged a complaint against Russia to the International Court of Justice over its refusal to implement a contract for the supply of the S-300 anti-aircraft missile systems, Iran’s Defense Minister Ahmad Vahidi said, Mehr News Agency reported.

20:29 05/09/2011Top News

Russian, French ministers to discuss Libya, Syria, missile defence, EU, NATO

http://www.itar-tass.com/en/c32/218815.html

MOSCOW, September 5 (Itar-Tass) —— The Russian and French foreign and defence ministers will gather in Moscow on Wednesday, September 7, to discuss the situation in Libya and Syria, missile defence, and Russia’s dialogue with the European Union and NATO.

The meetings between Foreign Ministers Sergei Lavrov and Alain Juppe, and Defence Ministers Anatoly Serdyukov and Gerard Longuet will meet within the framework of the bilateral Security Cooperation Council.

In the light of cooperation between Moscow and Paris in the United Nations and the Security Council, the sides will discuss “the state of affairs in the area of pan-European cooperation with a focus on the Russian president’s initiative to sign a legally binging European security treaty, missile defence and Russia’s partnership with the EU and NATO”, Foreign Ministry spokesman Alexander Lukashevich said on Monday, September 5.

The ministers will also touch upon the situation in the Middle East and North Africa, including Libya and Syria. “Escalation of tensions in the region has raised many questions. In the dialogue with the French partners it is important to clarify what our countries, as permanent members of the U.N. Security Council, are ready to offer jointly to the international community as the best recipe for the resolution of such crises,” he said.

Iranian and North Korean nuclear files will also be discussed. “Russia and France have largely identical positions on these issues. However, there are certain discrepancies. And we are interested to clarify where our interests differ, especially in the light of the upcoming discussions at the 66th session of the U.N. General Assembly,’ Lukashevich said.

The sides will also discuss Palestinian-Israeli settlement. Moscow believes that “progress in this process is expected by the international community, and we hope to outline our coordinated actions in contact with our French partners,” the spokesman said.

The foreign and defence ministers will synchronise their approaches towards peace process in Afghanistan, and considers ways to settle the situation in Kosovo, Transdniestria, and Nagorno-Karabakh.

The Russian-French Security Cooperation Council was created in 2002 by the heads of state, and its meetings are held regularly once or twice a year. The latest round of talks took place in Paris on September 7, 2010.

Medvedev to hold talks with Danish Queen Margrethe IIhttp://en.rian.ru/world/20110906/166459728.html

01:52 06/09/2011

MOSCOW, September 6 (RIA Novosti)

Russian President Dmitry Medvedev and Danish Queen Margrethe II will discuss trade and economic interaction on Tuesday, a Kremlin source reported.

"During a top-level meeting on September 6, considerable attention will be paid to discussion of urgent issues of trade, economic and investment cooperation. The Danish Queen is accompanied by an unprecedentedly large delegation - over 100 Danish businessmen," the source said.

The Queen's visit to Russia starts on Tuesday. She will be accompanied by her spouse, Prince Consort Henri, their son Crown Prince Frederik, and a business delegation.

This is Queen Margrethe's second visit to Russia. She visited Moscow and St. Petersburg in 1975. The visit comes after Medvedev's invitation to the royal family during his visit to Denmark in April 2010.

Apart from the talks with Medvedev, the Queen will meet with Russian Prime Minister Vladimir Putin and take part in the opening ceremonies of the second Russian-Danish business forum, a Kremlin source said earlier.

One of the key topics for negotiations will be cooperation in energy and especially the Nord Stream project. The Nord Stream pipeline will eventually pump 55 billion cubic meters of gas per year to Western Europe and will go through the territorial waters and exclusive economic zones of Finland, Sweden, Denmark and Germany.

Russian-Danish trade in 2010 totaled $3.3 billion. Trade in the first half of 2011 grew 21.3% on the same period last year to $1.9 billion. Over 200 Danish companies operate in 25 Russian regions. Some 20% of them have already started their own production lines in the country.

Nord Stream starts carrying Russian gas towards Europe

http://www.bne.eu/dispatch_text16508

bneSeptember 6, 2011

With impeccable timing, Prime Minister Vladimir Putin announced on Monday that the Nord Stream pipeline will start pumping gas today, with the fuel to be available to European customers by November at the latest, reports Reuters. The announcement comes as Europe worries that rising tensions between Russian and Ukraine could see them cut off from gas supplies once more this winter.

Putin has been conspicuous by his absence from the increasingly bad tempered arguments between Kyiv and Moscow last week over gas prices, but clearly couldn't resist pointing out that deliveries from the $10bn pipeline - which runs beneath the Baltic Sea to connect directly to Germany - are set to start.

Ukraine's point of leverage is that it currently transports 80% of Russian gas exports to Europe, and that route was disrupted in 2006 and 2009 when Kyiv and Moscow fought over prices. With a full scale fight in full swing, the worry is that another cut off could come. However, this is exactly the sort of situation that Nord Stream - which will eventually carry 55 bcd of gas to European hubs - is designed to circumvent.

"Gradually, in a calm manner, we are departing from the diktat of transit states," Putin said in televised remarks. With Moscow in final discussions with Belarus over taking 100% ownership in its pipeline operator Beltranzgas, the country has

routes to the north of Europe sewn up.

The southern route - which is by far the largest - is clearly much less under control, although Moscow still says it plans to circumvent the awkward Ukrainian route by building South Stream - which will carry gas to southern European hubs. At the same time, should Europe get cut off again, the EU is likely to rapidly accelerate moth-balled plans to build rival pipeline Nabucco to tap Central Asian supplies.

Meanwhile Ukraine faces losing a chunk of the $4bn or so it earns each year from transit fees to Nord Stream, as well as what little leverage it has. Gazprom says the pipeline will eventually take 20 bcm of the Russian gas currently transiting Ukraine.

http://www.kommersant.ru/doc/1766839

Yanukovych Wants to Restore Earlier Gas Deal, Kommersant Sayshttp://www.bloomberg.com/news/2011-09-06/yanukovych-wants-to-restore-earlier-gas-deal-kommersant-says.html

QBy Kateryna Choursina - Sep 6, 2011 8:24 AM GMT+0200

Ukraine wants to return to a previous agreement with Russia which stipulates annual revisions of gas supply terms, Kommersant-Ukraine reported, citing interview with President Viktor Yanukovych.

The 10-year contract signed between state companies NAK Naftogaz Ukrainy and OAO Gazprom in 2009 is unfair, as Ukraine pays extra for imports and gets a low transit fee, Yanukovych told Kommersant. Ukraine pays an excess of $5 billion to $6 billion a year, the newspaper reported, citing the president.

Should Russian side not change its position in talks, Ukraine will turn to international arbitration to prove that previous government-level agreements were violated, Kommersant cited Yanukovych as saying.

To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net

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

Ukraine could join Customs Union if this brings advantages – presidenthttp://www.interfax.com.ua/eng/main/78547/

09:43

If Ukraine finds it of use it will join the Customs Union, President Viktor Yanukovych has said.

"We have made calculations, some of which indicate that membership of the Customs Union will bring us advantages, while others show that it is of no use. We must watch the Customs Union operating in a couple of years' time and see how relations will be structured within it, when its members join the World Trade Organization. If this membership is advantageous, provided there is political will, we will give our consent," Yanukovych said in an interview, published by the Kommersant Ukraine daily on Tuesday.

Yanukovych said he would reject ultimatums. "Guests are not invited the way Russia does. An invitation like that is tactless and humiliating for us. This language won't work with us, "Yanukovych said.

The parliament and citizens must participate in decision-making on the country's membership of the Customs Union, Yanukovych said.

"We will turn to the Ukrainian parliament, as we will need to amend the Constitution, which today does not allow us to form supranational bodies. And we will turn to the people, if the need arises to call a referendum. So, concerning the prospects, we, as any normal state, continue assessing them," he said.

But Yanukovych said that Ukraine highly values Moscow's invitation for it to join the Customs Union. "When an invitation arrives, it is always welcome and we are grateful for it. But when we are being invited as now, we are surprised," Yanukovych said, noting that Ukraine has not rejected the talks on its accession to the Customs Union.

"The Customs Union has been formed and it is working, and we must understand how trade and economic relations should be built with Russia, Kazakhstan and Belarus. Perhaps it is normal not to be willing to create fresh problems for the industry and economy," Yanukovych said.

 

Ukraine warns of lawsuit over Russian gas-reporthttp://in.reuters.com/article/2011/09/05/ukraine-russia-gas-idINN1E7840TH20110905

3:00am IST

By Steve Gutterman

MOSCOW, Sept 6 (Reuters) - Ukraine's president tried a carrot-and-stick approach in his effort to secure lower prices for Russian gas, warning in remarks published on Tuesday that Kiev could take Moscow to court but hinting at rewards if the Kremlin made concessions.

Viktor Yanukovich's interview with the Ukrainian edition of Russian daily Kommersant was the latest salvo in a persistent dispute that has hurt ties between the mostly Slavic ex-Soviet republics and raised the spectre of supply problems in Europe.

Ukraine is asking Russia to review a 10-year gas trade deal reached in 2009, saying it is paying far too much for Russian gas. Ukraine is paying $354 per 1,000 cubic metres now and expects the price to rise to about $400 in the fourth quarter.

Russia has talked tough. President Dmitry Medvedev accused Ukraine last week of trying to "sponge" off Russia.

A spokesman for Russian Prime Minister Vladimir Putin said on Friday that Moscow would only review the contract if Ukraine's state energy company Naftogaz merged with Russia's gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research).

"The Russian position is completely unacceptable for us and if it does not change, we will go into international arbitrage," Yanukovich said in the interview, which was to be published in the Russia and Ukraine editions of Kommersant.

Some 80 percent of the European Union's Russian gas is piped in via Ukraine, and European nations shivered through winter supply cuts when Russia turned off the taps to Ukraine in a price dispute that ended with the 2009 deal.

"Yes, court is an extreme step, but you see, we have not moved an inch in a year and a half," Yanukovich said.

At the same time, he played to Moscow's desire to draw Ukraine closer to its orbit, and distance it from the West by bringing it into a customs union that now links Russia with Belarus and Kazakhstan.

Kiev has been cool toward the customs union, but Yanukovich suggested it could warm up to the idea in the future.

"We want to see how the customs union works in two or three years, how relations within it work out when its members join the World Trade Organisation. If it is a beneficial membership and there is political will, we will give our consent."

But Yanukovich criticised Medvedev for his "sponging" jibe and warned that was no way to woo a traditional partner.

"We are not poor relations ... we are an independent state," he said.

"If you speak to us from a position of force and ultimatums, it will not bring success."

Yanukovich said that under a pricing mechanism in the 2009 deal, Ukraine could spend 20 percent of its budget over a decade on Russian gas. "We think this is unfair, and moreover, the economy cannot bear this price for long."

Yanukovich said Kiev wants to return to a 2001 agreement, which he said called for annual reviews of the volume and price of Russian gas for Ukraine and the cost for Russia to send its gas through Ukraine to Europe.

"Today's situation is a test, and not for our countries but for their leaders. Do they have the courage, the wisdom to return to normal relations," Yanukovich said.

Seeking to soothe European nations wary of new supply troubles, Yanukovich indicated Kiev would continue paying Russia for gas even if it seeks redress in court.

"We are not talking about stopping payments in the case of an appeal to a court," he was quoted as saying.

Talks between the Ukrainian and Russian foreign ministers on Monday brought no apparent breakthrough in the gas dispute. (Writing by Steve Gutterman; editing by Jeffrey Benkoe)

Ukraine to "overpay" $60 billion on gas contract with Russia - Yanukovychhttp://en.rian.ru/business/20110906/166463865.html

08:03 06/09/2011

MOSCOW, September 6 (RIA Novosti)

Ukraine overpays up to $6 billion annually due to the terms its current gas contract with Russia, which means $60 billion for ten years, Ukrainian President Viktor Yanukovych told the Kommersant daily.

Kiev is seeking to review the gas contract with Moscow signed by then prime minister Yulia Tymoshenko and Russian premier Vladimir Putin in 2009, saying the gas price it pays is unfair. Tymoshenko is now charged with abuse of office over the contract signing.

"The overpayment for us totals $5-6 billion, or some 20% of the country's annual budget," Yanukovych said in the interview.

Ukrainian Foreign Minister Kostyantyn Hryshchenko said on Monday that Kiev would not join the Moscow-led Customs Union of Russia, Belarus and Kazakhstan, a condition for discounts on Russian gas prices.

Ukraine has also ruled out a merger between Russian energy giant Gazprom and Ukraine's Naftogaz, which could also reduce prices for Kiev.

Yanukovych reiterated in the interview that Kiev would seek international arbitration if Russia did not offer a better deal on gas supplies.

September 06, 2011 09:21

Ukraine to turn to intl courts over gas dispute with Russiahttp://www.interfax.com/newsinf.asp?id=270830

KYIV. Sept 6 (Interfax) - Ukraine has prepared documents needed to file a lawsuit on the gas dispute with Russia, President Viktor Yanukovych has announced, according to the daily Kommersant Ukraina.

Kyiv wants Moscow to be guided by the price formula adopted with Germany while defining the price of gas to be shipped to Ukraine, minus transportation costs and the additional discount of $100 per 1,000 cubic meters, laid down in the Kharkiv agreements, Yanukovych said.

"We've been in talks for 18 months on this issue and we have been paying to the day and to the month in compliance with the contracts. The talks lasting 18

months have not been a success. But they must be finalized after all. Russia's position is absolutely unacceptable for us. If it is not changed, we will turn to international arbitration courts. There is a system of international courts in Stockholm and in The Hague," the Ukrainian president said.

"What is at issue now is a return to the fair price - the price charged from Germany minus $70 of the transit tariff from the Russian border to Germany. Incidentally, E.ON Ruhrgas has sued Gazprom (RTS: GAZP), demanding a revision of the contract price. What we are talking about is that the current German price be taken as the basic price," Yanukovych said.

Sd

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

04:55 06/09/2011ALL NEWS

Ukraine prepares documents for suing RF for gas contract terms

http://www.itar-tass.com/en/c154/218944.html

MOSCOW, September 6 (Itar-Tass) —— Ukraine has prepared documents for filing a suit in court of arbitration to resolve the gas dispute with Russia, President of Ukraine Viktor Yanukovich said in an interview with the Kommersant newspaper.

Kiev demands from Moscow an average German gas price minus transportation costs and 100 dollars of additional discount provided under the Kharkov agreements. Answering a question about Ukraine’s possible concessions in the gas negotiations, he agreed that concessions should be, when it comes to discounts and price reductions. However, Yanukovich said that Ukraine "does not need it."

"We just want to go back in a civilized mode, to the European market price," he said.

"The formula of 2009 prices is questionable, it, to put it mildly, is controversial, we can not agree to it. If you look at realistic prices, for example, in Germany, we pay about 200 dollars more,” Yanukovich said. “And we would like understand for what we are punished! But transit tariff in Germany is two times higher than in Ukraine. Why? For us this overpayment - and we believe that we are overpaying – is about 5-6 billion dollars every year. During the ten years of the

contract it is 60 billion! If you look in the context of the country’s annual budget, it is approximately 20 percent. About what kind of additional concessions to Russia can you speak then? Now we speak only about returning to a fair price - a German price minus 70 dollars in transit tariff from the Russian border to Germany."

President of Ukraine expressed the opinion that the existing gas contracts "discredit the strategic level" of relations between Ukraine and Russia, and their terms are "written as if for an enemy."

"We have been negotiating this issue for a year and a half,” Yanukovich said. “Russia's position is absolutely unacceptable for us, and if it is not changes, we will go to international arbitration. There is a system of international courts - the Stockholm court, and the International Court of Arbitration in the Hague.”

20:46 05/09/2011ALL NEWS

Russian, Ukrainian foreign ministers meet for talks in Moscow

http://www.itar-tass.com/en/c154/218808.html

MOSCOW, September 5 (Itar-Tass) —— Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart Konstantin Grishchenko met in Moscow on Monday, September 5.

The parties discussed the latest trends in cooperation between Russia and Ukraine, a schedule of bilateral Summit and other high level events until the end of this year, and the state of preparations for the next Russia-Ukraine Interstate Commission session, including the development of documents for signature as part of this exercise.

They noted the high level of readiness of the Draft Declaration on the Substance of the Russian-Ukrainian Strategic Partnership.

The Ministers agreed to intensify negotiations to resolve the Azov-Kerch water area issue with a view to reaching a mutually acceptable solution.

They also noted the businesslike and constructive nature of the work on streamlining the legal framework governing the Russian Black Sea Fleet presence on Ukrainian territory.

Prospects for cooperation between Russia and Ukraine in the cultural, humanitarian and consular fields were discussed, with the parties reiterating their

readiness to continue facilitating the work of the Russian public organisations of Ukraine and the Ukrainian public organisations of the Russian Federation.

Among the range of international issues, special attention was devoted to bolstering European security, ensuring that the interests of all sides are considered in the creation of anti-missile systems, dealing with the problems of conventional arms control and promoting cooperation in the Black Sea region, the Foreign Ministry said.

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/0/795ff796-d7d9-11e0-a5d9-00144feabdc0.html#ixzz1X9GyzO8O

September 5, 2011 6:24 pm

Cameron to meet Putin in Moscow visit

By Charles Clover in Moscow and James Blitz in London

David Cameron, Britain’s prime minister, will meet Vladimir Putin, Russia’s premier, during an official visit to Moscow on September 12, indicating that both sides are trying to warm a relationship damaged by the assassination of a former Russian spy in London in 2006.

As Mr Cameron prepares to conduct the first trip by a UK prime minister to Russia in five years, the announcement of a face-to-face meeting demonstrates that London and Moscow want to improve their relationship. Mr Cameron will also meet Dmitry Medvedev, Russian president, during his visit.

Britain and Russia announced earlier this year that Mr Cameron would be the first British prime minister to visit Moscow since Tony Blair made an official trip to Moscow in 2006. The relationship had been badly undermined that year by the poisoning in London of Alexander Litvinenko, a former Russian spy. British intelligence officers have suggested in the past that he was murdered at the behest of the Russian state.

Gordon Brown, Mr Cameron’s predecessor, went some way towards repairing relations with Russia, meeting Mr Medvedev at several international conferences during his three years as prime minister.

However, the last time Mr Putin met a British prime minister was in July 2007 when he held a bilateral meeting with Mr Blair at a G7 summit. On that occasion, the two men had a “very frank” hour-long discussion – diplomatic code for a row.

Monday’s announcement indicates that Mr Putin is seeking to rehabilitate his reputation in the west, and will probably fuel speculation that he intends to return to the presidency next year in March elections.

The meeting with Mr Putin also suggests the visit may at least partly focus on the situation of BP, the UK oil major, in the wake of a raid by bailiffs and armed special forces on its offices in Moscow last week.

Mr Putin is widely seen as the primary arbiter of Russia’s vast oil and gas complex, as well as problem solver of last resort in a country where personalities matter more than institutions.

Russia, however, has been keen to show its readiness to welcome foreign investment, and last week announced a partnership between Rosneft and Exxon to explore for oil in Russia’s Arctic offshore areas, the same deal that BP was negotiating.

The chief impediment to closer relations between the UK and Russia remains the poisoning of Mr Litvinenko. Britain has unsuccessfully sought the extradition by Russia of chief suspect Alexander Lugovoi, who has since been elected to Russia’s parliament. Russia says that Britain has not presented enough evidence to warrant extradition.

“There is no room for manoeuvre on either side,” said Fyodor Lukyanov, chief editor of Russia in Global Affairs, the Moscow-based foreign policy journal. “Cameron cannot pretend the issue doesn’t exist, while Putin’s position is clear: no foreign interference in Russian affairs. The success of the meeting will depend on whether they can agree to disagree and move on.”

Belarusian servicemen to arrive in Russia for joint military drillshttp://en.rian.ru/mlitary_news/20110906/166462881.html

07:07 06/09/2011

NIZHNY NOVGOROD, September 6 (RIA Novosti)

The first train with Belarusian servicemen will on Tuesday arrive in Russia's Nizhny Novgorod Region on the Volga for joint military drills, the Russian Western Military District's press service reported.

The train will deliver over 200 Belarusian servicemen and 50 items of hardware to the Gorokhovetsky proving ground.

"Overall, some 30 trains are expected to deliver troops and vehicles to proving grounds in the Nizhny Novgorod and Astrakhan regions as part of troop redeployment for the Union Shield 2011 joint exercises," the press service said in a statement.

The drills will be held on September 16-22 and will involve some 7,000 servicemen from Russia and about 5,000 from Belarus. Joint defense tasks will be practiced at the Gorokhovetsky ground, and air defense tasks will be practiced at the Ashuluk proving ground in the Astrakhan Region in south Russia.

FM: Georgia does not open its airspace for Russia's military supplies to military bases in Armeniahttp://en.trend.az/regions/scaucasus/georgia/1926789.html

[05.09.2011 19:34]

Georgia, Tbilisi, Sept. 5 / Trend N.Kirtzkhalia /

The Georgian Foreign Ministry refuted U.S. Ambassador John Bass’ reports, according to which the country opened its airspace to transport the Russian military cargo to bases in Armenia.

Deputy Foreign Minister Nino Kalandadze said the report contradicts the reality.According to Wikileaks, in his report to Washington sent on Feb 17, 2010, Bass stated that Tbilisi opened its airspace for Russia to transport military supplies to Armenia.

Russia has repeatedly appealed to Georgia to open the air space, but the Georgian side did not satisfy the request, Kalandadze said at traditional Monday briefing.

"This appeal was received from Russia in 2008. We must be wary of Wikileaks material, since we do not know whether they are authentic. The report on the opening of the air space is not true," Kalandadze said.

However, she pointed out that the Georgian side does not expect such proposals from Russia, as the Georgian parliament terminated the earlier ratified Georgia-Russia agreement "On the Use of airspace."

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

Georgia will seek to return hotel, located in Moscowhttp://www.news.az/articles/georgia/43776

Tue 06 September 2011 07:49 GMT | 9:49 Local Time

Georgia will defend its hotel in Moscow through diplomatic ways.

According to Georgian Deputy Minister of Foreign Affairs of Nino Kalandadze, Georgia will seek to return the hotel, located in central Moscow, which has been "taken away" by the Russian side through diplomatic ways. Such a statement was made by Kalandadze to reporters at a traditional briefing. According to her, it was learned that the hotel in the center of Moscow, which was illegally taken away from Georgia, will be put up for auction.

"We consider this dispute as an interstate, since the hotel, located in our property, was taken away illegally in 2006. Now it is being sold at auction. This is lawlessness and at the same time - a violation of the Vienna Convention. Despite this, we are not going to transfer dispute into the legal space and we will solve this issue diplomatically through the Swiss embassy by exchanging notes" - underlined Kalandadze.

She added that the seizure of the hotel, as well as the history of power cut in the Georgian section of the Embassy of Switzerland, is considered by the Georgian side in the same context.

According to Russian media, the hotel "Melody", which is located at Skatertny Lane in central Moscow, last week was put up for auction. Until October 2006, this building was occupied by the guest house "Tbilisi" under the embassy of Georgia. Later, its owner became the Federal State Unitary Enterprise "Melody".

Georgia Times

11:06 06/09/2011ALL NEWS

Gryzlov opens autumn session of State Duma

http://www.itar-tass.com/en/c154/219118.html

MOSCOW, September 6 (Itar-Tass) — Speaker Boris Gryzlov opened the autumn session of the State Duma lower house of the Russian parliament on Tuesday, urging his colleagues to work towards "concrete practical effect."

Reminding that the lawmakers have less than three months for legislative activity, he expressed confidence that "it is a sufficient period if work time is used rationally."

"I'm calling upon the heads of the committees and factions and personnel of the State Duma administration to make their best," the speaker underlined.

"Each plenary session, each session of a committee, commission or a working group, parliamentary hearings and "round table" discussions must yield a concrete practical effect," Gryzlov went on to say.

"To yield a result for the parliament in general, for the country and for Russian citizens. This is what we were elected for," he emphasized.

The autumn session will be the last for the 5th Russian parliament. The next parliamentary elections are due on December 4.

MiG-21 crashes in Punjab, pilot ejectshttp://timesofindia.indiatimes.com/india/MiG-21-crashes-in-Punjab-pilot-ejects/articleshow/9881655.cms

Ajay Sura, TNN | Sep 6, 2011, 12.01PM IST

CHANDIGARH: Within a period of one month, one more MiG-21 of the Indian Air Force (IAF) crashed near Rajpura in Punjab on Tuesday morning. However, it was a miraculous escape for the pilot, Flight Lt Arnav Ghosh, who ejected safely. No civilian causality was reported as it crashed in the open fields.

Earlier on August 2 this year, a MiG-21 was crashed in Bikaner soon after taking off from Naal airfield in Rajasthan's Bikaner district killing the pilot.

Incident took place on Tuesday when the ill-fated aircraft MiG-21 type 96 of the IAF taken off from Ambala based air base on a routine training sortie. At around

11 am it crashed in the fields of Rajpura near Ambala. The pilot immediately ejected safely and he did not receive serious injury. Though, he was taken to the hospital for first aid. Army and air force personnel from Ambala airbase and cantonment cordon off the entire crash area and to gather the remains of the aircraft.

Sources said that prima facie reason of the incident was technical snag developed in the aircraft. However, the spokespersons of the air force informed that a court of inquiry has been ordered to probe the incident.

The single-engined-MiG-21s have a horrifying track record. Of the 793 MiG-21s inducted into IAF since 1963, over 340 have been lost in accidents.

Known as 'Flying Coffin' or 'Widow Makers', it is third MiG type aircraft that has crashed in this year in the country. During the last three years, around 42 accidents of Indian Air Force (IAF) aircrafts have taken place. In these accidents 17 pilots, 24 service personnel and 5 civilians have lost their lives.

Russian fighter jet crashes in Uralshttp://en.rian.ru/mlitary_news/20110906/166465020.html

09:32 06/09/2011

MOSCOW, September 6 (RIA Novosti)

A Russian Mikoyan MiG-31 fighter jet crashed in the Urals on Tuesday, killing both pilots, officials say.

The jet exploded in a fireball minutes after taking off from a military airport in the Perm region in the early hours of Tuesday.

It was on a routine training flight, a spokesman for the Russian Defense Ministry said.

A technical failure is being investigated as the possible cause of the crash, a source in the ministry told RIA Novosti.

A similar jet crashed in the region last year, but the pilots managed to parachute to safety.

All MiG-31s have been grounded following the accident.

The Defense Ministry said the ban would remain in place until the cause of the disaster had been established.

08:45 06/09/2011Top News

MiG-31 fighter of RF Air Force crashes in Perm Territory

http://www.itar-tass.com/en/c32/219002.html

MOSCOW, September 6 (Itar-Tass) — Two crewmembers of the MiG-31 fighter jet of the Russian Air Force that crashed in the Perm Territory on Tuesday have been killed, spokesman for the RF Defence Ministry Colonel Igor Konashenkov told Itar-Tass.

“The search and rescue party that arrived at the crash site has found that the fighter’s crewmembers were killed,” he said.

According to the Defence Ministry official, “there were no weapons on the crashed plane.”

MiG-31 fighter crashes in Uralshttp://en.rian.ru/russia/20110906/166463510.html

08:32 06/09/2011

MOSCOW, September 6 (RIA Novosti)

A Mikoyan MiG-31 Foxhound fighter has crashed in the Perm Territory in the Urals, the Russian Defense Ministry reported on Tuesday.

The Emergencies Ministry said both pilots were killed in the crash.

The plane disappeared from radar screens four minutes after takeoff from a Perm military airfield, a security agency source reported.

Reports: 2 pilots killed in Russia fighter jet crashhttp://edition.cnn.com/2011/WORLD/europe/09/06/russia.plane.crash/

By the CNN Wire StaffSeptember 6, 2011 -- Updated 0548 GMT (1348 HKT)

(CNN) -- Two Russian pilots aboard a MiG-31 fighter jet were killed when it crashed Tuesday, state media said.

The plane crashed minutes after take off from a military airport in the Perm region, the state-owned Ria Novosti news agency said.

It was on a routine training flight, the news agency said, citing the defense ministry.

A similar jet crashed in the region last year, but the pilots were able to parachute to safety, the news agency said.

Following the crash, the defense ministry grounded all MiG-31s while it investigated the cause.

The plane was not carrying weapons when it went down, said Itar-Tass, another official news agency.

Not Even Fog and War Can Ground Ka-52 Helicopter 06 September 2011By Irina Filatova

Read more: http://www.themoscowtimes.com/business/article/not-even-fog-and-war-can-ground-ka-52-helicopter/443267.html#ixzz1X9P8MXOA The Moscow Times

ARSENYEV, Primorye Region — A holiday atmosphere filled the air as people carrying red, white and yellow balloons filled tidy streets in Arsenyev, a small town in the Primorye region, ignoring a thick fog covering the five-story Soviet-era apartment buildings.

Yury Denisenko, managing director of Progress, the local helicopter plant, knew that even the fog was unlikely to spoil the day.

His plant, one of 10 units of state-owned defense contractor Russian Helicopters, was celebrating its 75th anniversary with a demonstration flight of its latest attack helicopter, the Ka-52 Alligator, which can fly in any weather, Denisenko said.

“The Ka-52 can fly in the fog. It’s an all-weather helicopter equipped with all the appropriate systems,” he said Saturday.

The Ka-52, whose serial production started at Progress in 2008, is among the aircraft to be shipped to the Defense Ministry in the next 10 years as part of the government’s 20 trillion ruble ($683 billion) plan to re-equip the armed services by 2020.

The ministry ordered more than 140 of the helicopters and signed a contract with Russian Helicopters last week, said the holding’s chief executive, Dmitry Petrov, adding that shipments had already started.

“The size of the contract is more than 120 billion rubles,” he told journalists ahead of the celebrations.

The holding also signed contracts with the Defense Ministry during the MAKS air show last month to deliver more than 450 helicopters by 2020.

Export shipments of Ka-52 Alligator might start in the near future as state arms trader Rosoboronexport is in talks to begin export supplies, Petrov said.

“According to our information, such negotiations are already being held,” he said, without elaborating.

Petrov declined to specify the potential buyers, but Interfax reported last month, citing a source in the armed forces, that Libya had planned to spend $1 billion to buy the Ka-52 Alligator helicopters before an arms embargo kicked in.

Rosoboronexport chief executive Anatoly Isaikin said last month that Russia has lost $4 billion, including losses from potential contracts, under the sanctions.

But Andrei Reus, head of state-owned Oboronprom, the parent company of Russian Helicopters, said the helicopter manufacturer’s revenues are unlikely to be affected by the loss of potential contracts because it has many orders.

“Russian Helicopters’ production capacities have never been as busy as now,” said Reus, who also attended the celebrations.

Petrov echoed his thoughts. “Our missed profit equals zero,” he said, adding that Progress’ manufacturing facilities are fully loaded till 2020 and production volumes at the plant will increase.

Russian Helicopters — which claims to be the world’s No. 1 producer of attack helicopters — completed consolidation of the country’s helicopter manufacturing facilities into one vertically integrated holding late last year, and Petrov said that Progress is a pearl in the crown of the holding’s units.

The holding’s other units include plants in Rostov-on-Don; Ulan-Ude, Buryatia; Kazan, Tatarstan; and Kumertau, Bashkortostan.

Apart from the Ka-52 helicopters, the plant in Arsenyev, a single-industry town 250 kilometers northeast of Vladivostok, will also commence production of Mi-34C1 light civil helicopters next year and start manufacturing medium-lift Ka-62 helicopters in 2014.

The holding also plans to launch production of a Ka-52K, a modification of the Alligator model intended for equipping the Mistral-class helicopter ships that Russia ordered from France for 1.2 billion euros ($1.7 billion) in June.

The production of trial models of the helicopter will begin at Progress next year, Denisenko said.

Russian Helicopters will spend about $250 million on research and development, including designing new helicopters, this year, Petrov said.

About half of that sum will come from the holding’s revenues, with the rest being provided from the federal budget and in bank loans, he said.

Russian Helicopters planned to raise about $500 million in an initial public offering on the London and Moscow stock exchanges, which would make it the first state-controlled defense company to go public, but called off the listing because of a lack of interest. It had planned to spend the funds on development and paying off debt.

Petrov said the company, which was valued at $1.8 billion to $2.4 billion in May, plans to go public “as soon as the markets allow,” adding that it could list shares in the beginning or the middle of next year. “It’s not our goal to list at just any price,” Petrov said.

Top executives plan to visit major international stock exchanges in November and meet with investors again. But they will wait again on the IPO if  current volatility remains on  global markets, Petrov said.

Russian Helicopters has invested more than 3 billion rubles in modernizing the Arsenyev plant in the last three years and plans to invest another 6 billion rubles in the next several years, he said.

The plant, which has 6,000 employees, benefited from joining Russian Helicopters, which gave the facility the chance to get state orders and create additional jobs, Denisenko said.

The plant has undergone a rebirth with the new facilities equipped with modern machinery, although Denisenko, who came to it in 1975 as an ordinary worker,

cannot forget the hard times in the 1990s, when the country’s helicopter industry was in ruins after the Soviet collapse.

“The plant was in tight economic straits, there was no work, wages were being held up, and many of my colleagues left to different private firms,” said Denisenko, who was head of the plant’s assembly facility at the time.

“My personal achievement is that I remained devoted to my work … because I love aviation,” he told The Moscow Times.

Half an hour later he joined dozens of other aviation lovers to watch the demonstration flight of the Ka-52 at the nearby landing field, as the fog let up and the helicopter maneuvered in the blue sky.

Read more: http://www.themoscowtimes.com/business/article/not-even-fog-and-war-can-ground-ka-52-helicopter/443267.html#ixzz1X9PDd9TI The Moscow Times

Chechen official attacked in Yekaterinburghttp://en.rian.ru/russia/20110906/166467002.html

11:51 06/09/2011

MOSCOW, September 6 (RIA Novosti)

An unidentified assailant attacked and slightly injured a Chechen government official in Yekaterinburg on Monday evening, local police said.

Police said the attacker approached the Chechen official, Salautdin Mamakov, and shot him from behind, probably with a pneumatic pistol. The attacker remains at large.

Mamakov, who is the Chechen president's representative in Sverdlovsk Region, was taken to hospital where he was treated for a superficial wound on his back. "He is now well enough to help produce a composite sketch of the gunman," police said in a statement.

11:48 06/09/2011ALL NEWS

Chechen representative in Sverdlovsk Reg injured in attack

http://www.itar-tass.com/en/c154/219148.html

YEKATERINBURG, September 6 (Itar-Tass) —— An attack was made on representative of the Chechen Republic in the Sverdlovsk Region Salautdin Mamakov. He got insignificant injuries, ITAR-TASS learnt at the press service of the Main Department of the Russian Interior Ministry for the Sverdlovsk Region.

According to the press service, the incident occurred in the evening on September 5. A young man approached Mamakov from his back and fired a shot from a traumatic weapon and quickly disappeared.

Injured Mamakov was rendered medical aid in hospital.

The departments of the Russian Interior Ministry for the Sverdlovsk Region and Yekaterinburg are engaged in investigating the crime.

11:52 06/09/2011ALL NEWS

Police officers to be punished, if guilty of Magnitsky's death

http://www.itar-tass.com/en/c154/219149.html

MOSCOW, September 6 (Itar-Tass) — Russian Interior Minister Rashid Nurgaliyev said if police officers' involvement in the death of Hermitage Capital Management lawyer Sergei Magnitsky was proven, they would be punished.

Nurgaliyev said so as he was answering the reporters' question as to why the policemen, accused of Magnitsky's death, had passed the performance review.

"If something is proven, there are no questions; myself, I'd burn out everything with hot iron, but in this particular case, no conclusions have been drawn; we have nothing against them yet."

"There have been no decisions (on this case) so far," Nurgaliyev added.

Sergei Magnitsky, 37, died in an IT ward of the hospital on the premises of the Matrosskaya Tishina remand prison on November 16, 2009, seven days after he was officially charged with organizing and abetting grand tax evasion.

Magnitsky's case was to have been referred to court in December 2009.

A criminal case was opened over the fact of his death due to the failure to provide assistance to a sick person and non-fulfillment or improper fulfillment of one's duty by an official as a result of negligible attitude to service.

Forensic experts said Magnitsky died of a combination of several illnesses, and untimely medical assistance and diagnostics of chronic diseases.

The confluence of negative factors "deprived Magnitsky of the chance for favorable outcome," experts said.

In the course of the Investigation, a prison doctor was charged with causing death through negligence due to improper performance of his duties. Former deputy prison chief in charge of medical treatment and disease prevention was charged with negligence.

A working group of the Council for developing civil society and human rights under the Russian president published a preliminary conclusion which did not rule out negligence during the investigation into Magnitsky's case, conducted by Interior ministry personnel and the Investigative Committee under the Interior Ministry (which was renamed to Investigative Department of the Interior Ministry during the reform). Magnitsky accused a number of police officials of involvement in illegal re-registration of the Rilend, Parfeinon and Mahaon firms and the subsequent illegal VAT refund to the tune of 5.4 billion roubles.

"Assigning Interior Ministry and Investigative Committee personnel Kuznetsov, Karpov, Tolchinsky, Krechetov, and Droganov to probe the case against Magnitsky created an obvious conflict of interests, which contradicts the requirements of law," the working group said.

The deadline for the investigation into Magnitsky's case was pushed to November 24.

08:42 06/09/2011ALL NEWS

Court to announce sentence to alleged Orekhovo gang leader

http://www.itar-tass.com/en/c154/218998.html

MOSCOW, September 6 (Itar-Tass) — The Moscow City Court on Tuesday will announce the sentence to the alleged leader of the “Orekhovo gang” Sergei Butorin who is accused of 24 murders.

Earlier, during the pleadings the public prosecutor requested a life sentence for Butorin and 15 years imprisonment for another person charged in the case - Marat Polyansky.

Butorin is charged with leading a criminal group and the Orekhovo gang that was part of it, as well as with committing 24 murders and three attempted murders within the gang. Marat Polyansky is charged with membership in the gang and committing four murders and one attempted murder within it. All the crimes, according to the prosecution, were committed in 1994-1998, among the most resonant is the murder of “killer number one” Alexander Solonik and head of the Foundation for Social to Sportsmen Otari Kvantrishvili.

Polyansky has admitted his guilt in court, Butorin insisted that he had nothing to do with the crimes he is charged with.

Butorin and Polyansky were arrested in Spain in February 2001, arrested and sentenced to prison terms for arms trafficking. After serving their sentence abroad they were extradited to Moscow. Polyansky had been extradited to Russian law enforcement authorities in 2009 and Butorin - in 2010.

At the time of the investigation’s completion the criminal case consisted of 68 volumes.

According to investigators, since March 1996 Sergei Butorin and Dmitry Belkin headed the so-called “Orekhovo gang” that was acting in Moscow since 1994. At the same time the gang teamed up with the so-called “Medvedkovo group” in a criminal community. Members of the Orekhovo gang were committing murders and attempted murders in Moscow, in the Moscow and Vladimir regions, in Greece and Ukraine.

09:42 06/09/2011ALL NEWS

Abandoned KamAZ truck with 40 shells found in Trans-Baikal rgn

http://www.itar-tass.com/en/c154/219046.html

ULAN-UDE, September 6 (Itar-Tass) — An abandoned KamAZ truck loaded with 40 artillery shells was found in the Trans-Baikal region near the village of Mogoitui on Tuesday. “The search for the vehicle was announced by the command of a military unit as it was stolen,” the village police department told Itar-Tass. However, according to a preliminary version, the incident was caused by the usual carelessness.

Presumably, the driver soldier drove the KamAZ truck with the hazardous cargo from the military unit to the village on personal business. However, the truck got stuck in the mud. He was afraid to report the incident to the unit. As a result, the hijacking version appeared.

“The investigation will show if it is right or wrong,” the police noted.

September 06, 2011 11:28

Five of seven attacks on reporters occurred in Moscow in August - Glasnost Defense Foundationhttp://www.interfax.com/newsinf.asp?id=270863

MOSCOW. Sept 6 (Interfax) - Seven attacks were carried out against reporters in Russia in August, according to Glasnost

Defense Foundation.

The attacks targeted filming crews of Channel Five and Volga television (both in Nizhny Novgorod), and also, in Moscow, an independent photojournalist, a correspondent of the Grani-ru online newspaper, a journalist of the Fronde TV online television channel, a Novaya Gazeta correspondent and a correspondent of the Russian service of the BBC.

Journalists were threatened four times, prosecuted four times, detained by police three times and denied access to information 48 times. Several other abuses of reporters' rights were registered, according to Glasnost Defense Foundation.

Twenty-two lawsuits were filed against journalists in August, seeking 16.36 million rubles in damages.

Sd

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

PRESS DIGEST - Russia - Sept 6http://www.reuters.com/article/2011/09/06/press-digest-russia-sept-idUSL5E7K60G020110906

2:24am EDT

Moscow, Sept 6 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

VEDOMOSTI

www.vedomosti.ru

- Czech investment group PPF is in talks with Russian electronics retailer M.Video to sell home appliance retailer Eldorado, the daily says.

- Russian President Dmitry Medvedev will discuss ethnic issues at the upcoming political forum in Yaroslavl, the paper writes.

- Inflation in Russia may reach 7 percent in 2011, the paper cites state statistics as indicating.

- The Agriculture Ministry plans to raise 6.77 trillion roubles ($229.5 billion) for the development of the industry up to 2020, including 2.11 trillion roubles ($71.5 billion) from the federal budget, the daily reports.

KOMMERSANT

www.kommersant.ru

- The paper runs an interview with the Ukrainian President Victor Yanukovich, who says Ukraine overpays $5-6 billion yearly for gas supplies from Russia.

- Russian airports lack fuel, partly due to increased purchases by the Defence Ministry, the paper says.

- Russian internet company Yandex plans to earn at least $3 million per year by selling advertising on one of its online music services, the paper writes.

NEZAVISIMAYA GAZETA

www.ng.ru

- Russian gas monopoly Gazprom will spend over 3 billion roubles ($101.7 million) from the federal budget on television advertising in the next three years, the daily reports.

- In the first seven months of 2011 state statistics recorded 4.1 percent boost in the turnover of all Russia's restaurants and cafes compared to 2010, the daily reports. ($1 = 29.493 Russian Roubles) (Writing by Ludmila Danilova)

Russian Press at a Glance, Tuesday, September 6, 2011http://en.rian.ru/papers/20110906/166464545.html

08:59 06/09/2011

A brief look at what is in the Russian papers today

POLITICS

Estonian farmers betrayed the father of Prime Minister Vladimir Putin to the Nazis during World War II - and this is what is fueling tensions between Moscow and Tallinn 60 years on, according to new U.S. cables leaked by Wikileaks.

(Moscow Times)

Yabloko co-founder Grigory Yavlinsky would become foreign minister, Moscow's hawkish NATO representative Dmitry Rogozin would become defense minister, and anti-corruption blogger Alexei Navalny would become prosecutor general if the youth wing of the Just Russia party gets its way.

(Moscow Times)

Russia plans to transform the Collective Security Treaty Organization.

(Kommersant, Vedomosti)

Danish Queen Margrethe II is arriving on an official visit in Russia on Tuesday. She gave an interview to Rossiiskaya Gazeta.

(Rossiiskaya Gazeta)

ECONOMY & BUSINESS

Prime Minister Vladimir Putin and the All-Russia People's Front coordinator Nikolai Fyodorov have disclosed some possible details of the United Russia party's economic program, which stipulates an increase in state expenses.

(Kommersant)

The Agriculture Ministry wants to allocate over 2 trillion rubles ($67.8bn) by 2020 to support the agroindustrial sector.

(Vedomosti)

The Russian Central Bank is concerned over capital outflow from the country. The thirty largest banks took $20 billion abroad in the first half.

(Moskovskiye Novosti)

OIL & GAS

Ukraine has drafted documents to be filed to international arbitration courts if the gas dispute with Russia is not settled peacefully. Ukraine overpays up to $6 billion annually due to the terms its current gas contract with Russia, President Viktor Yanukovych said.

(Kommersant)

Ukraine's Prime Minister Mykola Azarov has sought to allay fears that the increasingly tense discourse on gas trade between Moscow and Kiev will lead to yet another breakdown in supplies across Europe.

(Moscow Times)

SOCIETY

The Prosecutor General's Office has launched a probe into the deficit of aviation fuel in Moscow airports.

(Kommersant, Vedomosti, Rossiiskaya Gazeta)

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

10:56 06/09/2011RUSSIAN PRESS REVIEW

Vladimir Putin addressed his United Russia associates for the last time before the Party's Congress

http://www.itar-tass.com/en/c142/219103.html

MOSCOW, September 6 (Itar-Tass) — Prime Minister Vladimir Putin unveiled some economic items of the Party's election program at the regional conference of United Russia in Cherepovets. He advised the parliamentary majority to worker closer with People's Front and stated that at least half of lawmakers from his party in the future State Duma lower house of parliament would be replaced.

The premier's address looked even more voluminous than the address to the Federal Assembly, the "Moskovsky Komsomolets" writes. Putin dwelt on the housing and utilities sectors, roads, teachers, disabled persons and businesses, as well as about the construction of factories, ships and mines (while complying with environmental regulations, of course), and the exports of round timber. Normally, these themes are discussed at special separate conferences.

In general, Putin's speech tended to address socio-economic issues, the "Komsomolskaya Pravda" writes. The United Russia leader said that taking into account the regional Party conferences (eight have already taken place), the government had approved the development strategy for six federal districts. The programs for the remaining two will be adopted by the end of this year. More than 200 projects will make groundwork for their development. According to Putin, they have to become the locomotive of growth for Russian territories. The aggregate volume of investments will exceed 7 trillion roubles.

The "Kommersant" notes that the ruling party's program envisions an increase in budget spending and budget deficit. Although the economic program of the Party and the All-Russia People's Front has not been finalized yet, it is likely that the Party's main initiative will be an increase in government spending in the medium term, and, to a lesser extent, higher spending on infrastructure projects, at the expense of budget deficit and more government borrowings. The "people's program" may call for "doubling the salaries of low-paid workers on the state payroll." The newspaper also noted that Putin seemed to be scrimpy on long-term promises. For example, the projects Putin mentioned on Monday will be worth over 33 trillion roubles in the next decade. Defense spending accounts for a large part of this sum, as was earlier planned.

“Medvedev vs. Putin would be the best thing for Russia”http://rt.com/news/prime-time/medvedev-putin-weir-election/

Published: 6 September, 2011, 05:07Edited: 6 September, 2011, 05:07

Dmitry Medvedev and Vladimir Putin both running as presidential candidates would promote the introduction of the classic two-party system in Russia, says Fred Weir from the Christian Science Monitor.

In previous years the Kremlin establishment traditionally put up one candidate, and only after the Duma elections had taken place.

In addition to Medvedev and Putin, billionaire Mikhail Prokhorov has emerged as the most interesting case among the fresh Russian presidential candidates. He is trying to build his own party, the Right Cause, which suggests he is entering politics for the long haul, argued Weir.

“He has got a lot of money and a lot of personal charisma and smarts, he is definitely a player,” Weir said. But the 3 percent that Prokhorov’s party is polling, he admitted, is “not even enough to hurdle the barrier to get into the Duma, much less in terms of presidential ambitions.”

Both Communist leader Gennady Zyuganov and Liberal Democrats leader Vladimir Zhirinovsky are expected to hang on to their constituencies.

“They have a reliable percentage of voters who turn out and support them,” Weir stated. “People expect to see them, expect them to put up the fight, and they get predictable results in the end.”

Conflicting findings on Russian's biggest concerns

http://www.bne.eu/dispatch_text16508

RIA Novosti - Nezavisimaya GazetaSeptember 5, 2011

Leading polling agencies have issued conflicting findings on the issues most worrying people. The public's concerns are drinking and drugs, with inflation taking third place, according to surveys by the All-Russian Public Opinion Research Center (VTsIOM).

But a day earlier, Levada-Center reported that economic problems are still front and center for most Russians, specifically inflation, poverty, unemployment and the economic crisis. Meanwhile, VTsIOM insists that economic life is getting back to normal, bringing social ills to the fore. Independent analysts explain the economy normalization argument by the upcoming elections and pollsters' differing attitudes toward the authorities.

Substance abuse is among the main problems facing the country, VTsIOM told Interfax on Thursday. Asked what issues troubled them most in August, respondents put drinking and drug abuse first (50%) and living standards second (49%). Inflation, which was at the top of the list in August, moved to third place (48%). The economic crisis was mentioned by only 16%.

But Levada-Center cites other figures: the key issue for 73% of Russians is inflation, it says, not drinking. Poverty worries 52% of respondents, and 41% of those polled point to growing unemployment. The economic crisis and the state of industry and farming disturb only 32% of those questioned.

These findings were obtained at almost the same time: Levada-Center conducted its poll between August 4-22, and VTsIOM, August 27-28.

Analysts offer a variety of explanations for the mixed message.

Denis Volkov, of Levada-Center, says economic issues traditionally remain on top. "But if you ask about the biggest threat to life, then drug abuse (66%), drinking (59%) and environmental pollution (34%) will move up," he said.

Valery Fedorov, VTsIOM director general, says there are other things that explain the discrepancy. "When life gets back to normal, concerns about drinking and drugs move upstage. During economic troubles people focus on living standards, inflation, etc. This was first observed in 2009-2010. Since then the anxiety over economic problems has declined but not disappeared," he said. "The better the economic situation in the country, the more Russians will be concerned with non-economic matters, above all drinking and drug abuse.

The paradox is that when people show concern for social woes, it means the economy is back to normal." Independent analysts, however, disagree. "Anxiety over economic questions is unlikely to decline," says Irina Vorobyova, an analyst with 2K Audit-Business Consultations/Morison International.

"Judging by poll-based business and consumer indicators, the population's economic fears reached their peak in August or were close to the levels reported over the past two years," agrees Alexander Osin, chief economist at Finam Management. Economic recovery, according to Osin, is based on general growth, not growing consumption. That's why consumers perceive the state of things in

the economy as worse than is reflected in the statistics." Dmitry Shusternyak, director at FinExpertiza Consulting, says: "Many answers are spontaneous because there is often no well-thought-out system of expert views."

RUSSIA VOTES: A Front for progress or an affront to progress? http://www.bne.eu/storyf2883/RUSSIA_VOTES_A_Front_for_progress_or_an_affront_to_progress

Nicholas Watson in Prague September 6, 2011

It's election time again in Russia and, according to much of the western press, the Kremlin is up to its old tricks of locking up protestors, stifling opposition and co-opting any credible alternative figures. But one of those figures that outsiders cite as an example of the latter, the former deputy speaker of the Duma Alexander Babakov, claims the new movement he has joined is not a Kremlin stooge, but a group of like-minded progressives determined to see the reform process in Russia speeded up.

The All-Russia People's Front is an informal alliance of trade unions, women's groups, social groups and other semi-political organisations that was created in May by Prime Minister Vladimir Putin to give them broader representation in the next legislature. However, critics say that by allowing the People's Front at the next parliamentary elections in December to take up a fourth of the seats on the United Russia list, the main pro-Kremlin party in the Duma, it is merely a ploy by Putin to draw off votes from the growing number of Russians who see United Russia as "the party of crooks and thieves" and who are in danger of voting for opposition parties. Another example of Russia's "managed democracy" in action.

Not so, says Babakov, who deserted the ruling party's main rival, A Just Russia, which he had helped set up, to join the People's Front. In an interview with bne, Babakov insists he decided to leave A Just Russia because like other opposition parties it was spiralling into radicalism, trying to turn back the clock on what has been achieved in Russia over the past two decades, and his relationship with the head of the party, Sergei Mironov, had grown very difficult. "We look very differently at the programme of reform and the way it has continued," Babakov says. "The radical opposition just deny everything that is currently in place – the Russia of 2011 is not the Russia of 1991, and to deny this progress is wrong," he says. "I belong to the constructive opposition – while I understand and agree with many government policies, I have my own defined point of view on ways to implement the reforms. If I criticise, I always offer an alternative."

This, of course, is the very definition of "managed democracy." The alternatives that Babakov talks about are real, viable and could become policy, but the point is that these ideas are coming from a party that is lodged firmly under the Kremlin roof. So while this

system offers the variety of ideas that a true democracy would engender, the debate remains very much within a fence the Kremlin has built around the process.

Innovation, renovation and modernisation

The People's Front is not a legal entity, Babakov says (something a local Russian journalist discovered when he tried to join up and found he couldn't), but a movement that brings together progressive thinkers regardless of their political persuasion, and definitely does not mean he has joined United Russia. "I see the People's Front as a sort of incubator for political thought for the social democrat type that I am."

Mironov - a vocal critic of the People's Front, claiming it's merely "an attempt to camouflage United Russia… with people loyal to the ruling establishment" - is certainly not what you’d call progressive, pushing as he does for the setting up of special agricultural exchanges for state purchases of agricultural goods and for more state intervention in regulating prices of basic food stuff. Babakov, on the other hand, may resemble a rather mild-mannered regional bank manager squinting in the glare of unwanted publicity, but he has amassed a fortune from business interests ranging from banking, to energy to hotels (he has his own rumafia page), which some critics claim rather undermines his "social democrat" credentials. Even so, his reformist zeal and belief that Russia can, and will, become a more open and pluralistic democracy seem genuine and, to his mind, inevitable, which would certainly put him at odds with Mironov's A Just Russia.

For Babakov, that he now finds himself on ideologically on the same side of the fence as the Kremlin is not really much of a surprise given there is little appetite among the population at large for a radical opposition and the Kremlin's push for "innovation, renovation and modernisation" is simply what most Russians want these days (though the arrests on August 31 of more democracy activists as they tried to hold a sit-in in central Moscow after they unfurled anti-Kremlin banners suggests the right to peacefully protest is also high on people's lists).

It's this fact that leads Babakov to argue the Kremlin could move even faster with reforms, something he believes most of the government also wants to see. "I agree that there is a need to make these [reform] processes to go a lot faster, but that's what the government is also saying. One of the ways to do this is to invest in the real economy, not just sell oil and gas, as this way you provide guarantees of social development," he says. "The people are ready for reforms and the People's Front is ready to be part of this, but whoever is elected needs to pursue faster movement in reforms."

Foreign Minister Yavlinsky, Defense Minister Rogozin 06 September 2011

By Nikolaus von Twickel

Yabloko co-founder Grigory Yavlinsky would become foreign minister, Moscow's hawkish NATO representative Dmitry Rogozin would become defense minister, and anti-corruption blogger Alexei Navalny would become prosecutor general if the youth wing of the Just Russia party gets its way.

The Young Socialists of Russia on Monday published its vision of a shadow cabinet, which it dubbed a "Government of People's Trust Without Putin."

The motley 18-member list, published on the LiveJournal blog of the group's leader, Dmitry Gudkov, unites opposition figures like Vladimir Ryzhkov (justice minister) and Khimki forest activist Yevgenia Chirikova (environment minister) with senior government officials like United Russia co-founder Sergei Shoigu (designated to keep his job as emergency situations minister) and Channel One television director Konstantin Ernst (culture minister).

"It's no secret that there is little trust left in Vladimir Putin's government," the group said in an e-mailed statement, warning that without a serious reshuffle after the Dec. 4 State Duma elections, the country will "tumble to a level [of democracy] seen in African states."

Gudkov, whose father, Gennady, is a senior Just Russia deputy in the Duma and the list's designated interior minister, said he hoped to unite the country's deeply fractured opposition.

"Our task is to show that there is an alternative to the existing powers that be," he said by telephone.

But he acknowledged that most candidates had not been asked whether they wanted to participate. "What we want is to promote discussion," he said.

Gudkov also noted that the list does not contain a prime minister, but promised to reveal a name at his group's Sept. 20 convention.

Originally seen as a Kremlin-sponsored party to steal votes from the Communists, A Just Russia has seen its fortunes sag after founder Sergei Mironov was ousted from his post of Federation Council speaker earlier this year.

The list comes after billionaire Right Cause leader Mikhail Prokhorov presented his own shadow cabinet Sunday.

The Right Cause list, which is incomplete, contains some of Prokhorov's business partners like pharmacy magnate Artyom Bektemirov (health minister) and veteran television host Alexander Lyubimov (press minister), Interfax reported.

Meanwhile, Kirov Governor Nikita Belykh has confirmed that Prokhorov asked him to team up with Right Cause for the Duma election campaign. Writing in his blog Monday, Belykh said he was thinking about the offer but was not planning to join Right Cause or give up his gubernatorial post.

Read more: http://www.themoscowtimes.com/news/article/foreign-minister-yavlinsky-defense-minister-rogozin/443256.html#ixzz1X9OCgNKs The Moscow Times

Dissatisfied Nationhttp://russiaprofile.org/culture_living/44577.html

Opinion Polls Show That Ever More Russians Are Dissatisfied with the Government

By Svetlana Kononova Special to Russia Profile 09/05/2011

Only five percent of Russians do not have any complaints to make about the government, a recent poll conducted by the Levada Center found. Twelve years ago this figure was five times higher. Those who are critical blame authorities for price rises, a drop in real incomes and an inability to guarantee employment and social protection. The proportion of respondents who believe that top officials are corrupt and acting in their own self-interest has increased from three to 25 percent since 1999.

In contrast, Russians are not as concerned about high levels of crime and terrorist attacks. More respondents fear the government acting in the interests of big business than terrorist attacks, and even the Moscow metro bombing in March of 2010 and the explosion at Domodedovo Airport in January of 2011 have become accepted as horrible reality. Attitudes toward crime and terrorism were largely the same 12 years ago, when such research was first conducted.

Problems in the North Caucasus have become less important to respondents, who put this in last place on the list of complaints for the authorities. The majority, however, are generally dissatisfied, with 63 percent agreeing that they are not happy with what is happening in Russia today. Two thirds of respondents said

they are not satisfied with the government’s economic policy, and half are not satisfied with the political course the country is taking.

“The most positive attitudes toward the government’s economic and political policies were recorded among certain groups: young people aged up to 25; respondents with a high level of disposable income; residents of Moscow and the villages; and people with secondary-level education. The most dissatisfied groups were people aged 40 to 54; people who can only afford to buy food and clothes; people who live in small towns and those who have university degrees,” said Oleg Savelyev, a spokesperson for the Levada Center. “In my opinion, dissatisfaction with economic policy is more noticeable than disappointment in politics because people associate economic policies with their own financial circumstances, whereas politics seems more abstract to them. People get most of their information about it from television, which is full of propaganda,” Savelyev added.

International research shows similar findings. According to the 2011 Trust Barometer report, produced by Edelman, a global PR and research agency, only 39 percent of well-educated and highly-paid Russians trust the government. “Trust in the government remains low after declining in the last year,” said Ekaterina Kvasova, the director for Russia at Edelman.In comparison, the situation in other BRIC countries is the opposite. In China and Brazil, the level of trust in the government is growing every year. Eighty-eight percent of well-educated and highly-paid Chinese citizens and 85 percent of Brazilians said that they trust the government. Russians distrust business and the media more than other nationalities as well, according to the report.

And they seem to have good reason to do so. Activists from the “Odnodolshiki” movement are planning to hold a protest on September 10 on Red Square, opposite the Kremlin. This social movement was formed by people who signed co-investment agreements on to-be-built multiple-unit housing. They invested money in their future flats, but received nothing when more than 1,000 developers went bankrupt. “We have calculated that more than 78,000 people in the Moscow Region and about 120,000 people across Russia were conned by fraudulent developers. Defrauded investors lost about $7 billion, but the authorities are only promising to solve this problem,” said Igor Gulyev, one of the movement’s coordinators.

In August new amendments to the law “On Bankruptcy of Real Estate Developers” came into force. These stipulate that defrauded investors have to create housing cooperatives and finish incomplete construction themselves and at their own expense. “It may lead to a rebellion. Firstly, people have already paid for their flats. How can they find the money to pay for them a second time? Moreover, they don’t have any special skills to manage the process of building. We are not the opposition. We don’t have any political goals. We just want to get our flats,” Gulyev said. “There are no governmental working groups that are

really doing anything to solve our problem. There are no documents or resolutions regarding us. We are only hearing empty promises, some of us for ten years or more.”

People who don’t have money to invest in risky construction schemes also have serious complaints about the government. “Prices for food and utilities are growing every year, but salaries remain the same. While in Moscow and other big cities there are some opportunities to work and earn, in the regions there are very few good jobs. But elderly and vulnerable people are unprotected everywhere,” said muscovite Elena Klimenkova, who works at a state oncology hospitals. “In my experience, cancer patients only receive free medication after a long delay. Retired patients whose pension is 6,000 to 9,000 rubles (about $200 to $300) simply cannot afford to buy drugs, which cost 10,000 rubles ($333). In some cases they die during the waiting period. You have to be young, strong and rich to survive in modern Russia.”

In Russia’s Dagestan, Salafi Muslims clash with government authoritieshttp://www.washingtonpost.com/world/in-russias-dagestan-salafi-muslims-clash-with-government-authorities/2011/07/15/gIQAeBo82J_story.html

By Kathy Lally, Published: September 5

MAKHACHKALA, Russia — The latest episode in Moscow’s struggle with rebellious Muslims is unfolding here in Dagestan, a forbidding North Caucasian realm where peaks as high as 13,000 feet descend sharply to running rivers.

Suicide bombers have emerged. Each week, an average of three policemen are killed and numerous civilians become casualties. Tanks and helicopters, weapons blazing, pursue guerrillas in the woods.

Until recently, it was the insurgency in neighboring Chechnya that had posed the biggest challenge to Russian leaders. But now, it is the traditionally independent and Muslim Dagestanis whose resentments are turning violent, finding expression in a conservative form of Islam taking root in the beautiful severity of the mountain landscape.

Authorities blame Muslim extremists for the unrest. Conservative Muslims blame government repression. The fighting sometimes appears dangerously close to civil war, with imams attacked and killed, liquor stores blown up, and angry young men taking up arms and going into hiding — which in the North Caucasus is called going to the forest.

“They terrorized the people,” a 30-year-old religious leader known as Abu Umar said of regional authorities. “And now, the people terrorize them.”

When the Soviet Union dissolved at the end of 1991, Russia emerged independent, its new president, Boris Yeltsin, promising democracy and prosperity in a multiethnic nation. Twenty years into statehood, a minority has accumulated great wealth while the average citizen has been disappointed by lack of opportunity and an increasingly authoritarian government run on corruption and disregard for law. Ethnic tension has grown.

Few protest. Chechnya has been subdued. But Dagestan roils with religious disputes and anger at Moscow, mixed, almost indistinguishably, with vicious commercial and political struggles.

“Russia will never make Dagestan prosperous,” Abu Umar said. “We are a third-class people for them. They want us humiliated, and we feel it.”

On a late-summer afternoon, only the mosquitoes look bloodthirsty in a muddy field where Abu Umar politely offers insect repellant and a tour of a self-sufficient Islamic community about 70 miles northwest of Makhachkala, the Dagestani capital. He is a Salafi, what Russians call a Wahhabi and consider synonymous with extremism.

The walls are already up on the three-story madrassa, or religious school, where Salafis say they intend to provide social services , sports, education and opportunities untainted by corruption. As a bulldozer rumbled, Abu Umar pointed out the spot reserved for an orphanage to care for children he says the government neglects.

He imagines citizens obeying the law of Allah, making police and other accouterments of the state unneeded, allowing Muslims to live in peace and prosperity. The government considers such talk a dangerous cover for subversion and terrorism. Abu Umar says the authorities have lost their moral bearings and are wrong about the Salafis.

“We are building,” he said, “not destroying.”

Chechen rebels are dangerously desperatehttp://themoscownews.com/siloviks_scoundrels/20110905/189010022.html

by Mark Galeotti at 05/09/2011 21:12

Last week’s triple suicide bombing in Grozny killed nine people and embarrassed Chechen president Ramzan Kadyrov. It was a reminder that even if the center of

gravity of the North Caucasus insurgency has shifted to Dagestan and Ingushetia, the conflict in Chechnya is not over.

However, the main audience for which the attacks were intended were not in the streets of Grozny, nor even in the corridors of the Kremlin, but in the hills of Chechnya.

Although they still have the capacity to launch individual terrorist attacks, including January’s Domodedovo bombing, the Chechen rebel movement is in serious decline. Even Chechens who dislike the autocratic Kadyrov are tired of the almost two decades of war and suspicious of the extreme jihadism of the remaining rebels.

The rebels themselves are squabbling. Last year, a collection of field commanders, backed by the shadowy Saudi-born Mukhannad challenged the authority of rebel leader Doku Umarov.

This became a stalemate that further sapped the rebels’ strength. This April, though, Mukhannad was killed by government forces. Realising that they were fighting to control the rudder of a sinking ship, in July the two factions made a public show of reconciliation, with the challengers reaffirming their support for Umarov.

However, this was very much a reconciliation of convenience. There is no love lost between the commanders and Umarov’s authority over many of the leaders of the smaller gangs of rebels out in the field is tenuous, at best.

Bloodshed is likely to threaten Kadyrov’s position

All terrorism is theater, an attempt to influence an audience. The Grozny attacks were part of the internal drama of rebel politics. Umarov is desperate to try and appear relevant, dynamic and effective, and when he is desperate, he turns to his main remaining ally.

That man is Amir Khamzat, commander of the Riyad-us-Saliheen Martyr Brigade, the rebels’ main source of suicide bombers. His speciality is in persuading young Chechens, often those who have lost loved ones to the war, to blow themselves up.

Whenever Umarov has needed to try to re-establish his authority, suicide attacks have followed, including Domodedovo and the 2010 Moscow metro attack. And so again Khamzat’s bombers set out to make headlines and shore up Umarov’s position. In cold, military terms, the attack was no great success. Trading three suicide bombers for seven police officers is a bad deal for the rebels, as the government forces outnumber them by a margin of at least eight to one.

Umarov hopes that striking at Grozny will help restore his authority. In this he is almost certainly wrong. The rebel movement will continue to fade under his politically-bankrupt leadership.

However, there are three unfortunate implications.

The first is that the rebels, or at least the Riyad-us-Saliheen, will step up their terrorism. They will probably focus on launching new attacks in Chechnya, in the hope this will weaken Kadyrov, but they will not pass up on any opportunities to strike elsewhere in Russia.

The second is that Kadyrov, whose position had been looking a little shaky, is ironically enough strengthened. President Medvedev appears to be no fan of his and was looking for ways to clip his wings. When it looked that he and his army of ‘Kadyrovtsy’ had all but crushed the rebels, it was possible to daydream of a Chechnya without him. For the moment, though, Moscow still needs him, his paramilitaries and his iron fist.

Indeed, the attacks give Kadyrov justification for his authoritarian ways. Even some Chechen officials had begun to question them, but now he has the perfect excuse.

So, expect more attacks, Kadyrov to stay in office and a renewed crackdown in Chechnya. But there is some hope. There are not many would-be suicide bombers, these campaigns don’t last long, and this is a last or next-to-last gasp from a movement that has lost its connection with the Chechen people.

Mark Galeotti is Clinical Professor of Global Affairs at New York University’s SCPS Center for Global Affairs. His blog, “In Moscow’s Shadows,” can be read at: http:// inmoscowsshadows.wordpress.com

Russian Ambassador To U.S.: Don't Flee Afghanistanhttp://www.npr.org/2011/09/05/140148853/russian-ambassador-to-u-s-dont-flee-afghanistan

by NPR Staff

September 5, 2011

When the Soviet military occupied Afghanistan in the 1980s, Andrey Avetisyan served as a young diplomat in Kabul who witnessed a war that ultimately ended with a humiliating Soviet withdrawal.

Today, he is back in Kabul, this time as the Russian ambassador. And his advice to the United States is not to pull out of Afghanistan precipitously.

Morning Edition co-host Renee Montagne, who is reporting from Afghanistan this month, sat down with Avetisyan and asked him about the U.S.-Soviet rivalry in the 1960s, when the superpowers were competing to help develop a poor — but peaceful — Afghanistan.

Andrey Avetisyan: This is the best weapon you can choose in any kind of war — development — because what Afghanistan needed then and what Afghanistan still needs now is development, not fighting. I wouldn't call this situation, the international situation, around Afghanistan in the '60s, a Cold War. It was competition, healthy competition. And both sides, the Soviet Union and the U.S.A., tried their best to help these people, to show them that their way of development, social system, was better. And that was the competition, the fighting that could have done something to Afghanistan. Unfortunately, it stopped later then, but in the '60s, it was golden time for Afghanistan.

Renee Montagne: So in the'60s and the late '50s, you had Helmand province being something of a little America. A lot of development going on — schools, English, young girls being taught, and taught in English. A big dam being built to provide electricity, which even today could provide an enormous amount of electricity for Afghanistan if fighting wasn't preventing it. And then the Soviets, for your part, built a famous tunnel, a really important tunnel [the Salang Tunnel] that was needed.

Avetisyan: Absolutely, and a couple of things that are still working now are those built by the Soviets. Bread is produced by the silo built in Kabul by the Soviet Union. Some fertilizers are produced in Mazar-e-Sharif by the fertilizer factory built by the Soviet Union. So, a lot of important projects were implemented here, even in the '80s, during the fighting.

Montagne: People seem to be very fond of comparing this current conflict to the Soviet-Afghanistan war. It seems to me that there are some very important differences, although in the end, what are the similarities?

Avetisyan: Similarities [are] those who decided to go into Afghanistan to fight terrorism hoped for several months — exactly like the Soviet Union, which didn't want to be involved here for so many years. But they were dragged deeper and deeper into this, and in a couple of years' time found themselves in the midst of internal conflict. So, fighting in Afghanistan is not what you think it's going to be. So, what is the end to this? Just withdraw? I think premature withdrawal now will

bring a lot of problems, new internal war, new civil war to Afghanistan. It is a very dangerous thing just to put yourself a date, artificially calculated, and then withdraw. I don't think today the circumstances are right for withdrawal of the international forces and transition of responsibility for the security to the Afghan security forces. They're not yet ready.

Montagne: Speaking as the Russian ambassador, who was here during the Soviet war in Afghanistan, you'd say now's not the time to get out precipitously.

Avetisyan: Because the job is not done yet. But I'm afraid with the troops drawdown, economic assistance will go as well. Instead, what Afghanistan needs is an increase of development assistance, not just aid money, because we saw billions of them disappearing through the sands of Helmand and other sandy parts of the country. That is not what is needed, pouring Afghanistan with dollars, but giving it to the government in return shows a clear development strategy, but the government must be held responsible for it.

Montagne: Does President [Hamid] Karzai have the will, or the power, to actually change the way the government is being run now, which is widely known to be quite incompetent and corrupt?

Avetisyan: Well, he has all the power he needs by the constitution.

Montagne: But will he do that? Will he do what needs to be done?

Avetisyan: I think if the international community decided to support this government, it must support it in everything, and if they make mistakes — of course they make mistakes because it is an [experiment] in general government, with very able ministers, but generally with very little expertise — they must be helped, supported. A school here, a dam there is not what Afghanistan needs. It needs real development as a country, with infrastructure projects. Not just roads that are needed for foreign tanks to go somewhere, but for the future of the economic development of this country. Not a single big infrastructure project was implemented for the past 10 years.

Montagne: Although the ring road, which is really key to allowing goods and services and people to travel around Afghanistan, a road that, by the way, was originally partly built by the Americans and the Soviets back in the 50s and 60s, that road was repaired and put back into service but the use of it has been thwarted by fighting along the road, where people cant really get on it and travel on it.

Avetisyan: Yes, of course. Without the security situation no serious company will come and put money into it. I had this problem in attracting Russian companies in Afghanistan, like Lada, they were very worried about security and they just don't waste money building things that will be destroyed tomorrow.

Montagne: After the Soviet Union withdrew its troops in the late '80s, in '89, it might have stayed committed to Afghanistan in terms of development and helping with development, but it was actually unable to, because the Soviet Union, pretty shortly after that, broke apart.

Avetisyan: Absolutely. The Soviet Union made a huge mistake sending troops to Afghanistan, and the Soviet Union paid a huge price for this mistake. Russia prefers to learn from the mistakes of the past and we will never send our troops to Afghanistan.

Apart from this, we are ready and already cooperating with Afghanistan on everything. We support the army and police, we support international coalition here, because we share the goals of fighting against terrorism and international crime. For us, drugs are even more important. Every year about 30,000 Russians die from Afghan heroin. Russia can't be involved in Afghanistan from a distance because we are members of the region. We are here. We can't go anywhere like many countries involved now can.

Montagne: Mr. Ambassador, thank you very much.

Avetisyan: Thank you, thank you, it's been a pleasure.

Analysis | 06.09.11 | 10:34

Want peace, be ready for war: Russian publication addresses armament race between Armenia and Azerbaijanhttp://armenianow.com/commentary/analysis/31553/armament_race_armenia_azerbaijan_karabakh_conflict

By Aris GhazinyanArmeniaNow reporter

Armenia and Azerbaijan seem to have started a race of arms and armament, and as opposed to previous years, both countries are emphasizing the creation of a domestic military-industrial complex, rather than importing from abroad.

Russian Argumenty Nedeli (Week's Arguments) publication wrote earlier that Turkey and Azerbaijan had agreed over joint production of infantry rifles and 105 mm caliber cannons, further cooperation implying the creation of also 120 mm caliber ones. (Week’s Argument, widely held as a reputable weekly is published in Russia, CIS, with circulation 570,000 copies)

The same publication reports that Baku is planning to manufacture also antitank

guided missiles. Besides, Azerbaijan has been invited to participate in the Turkish national project on developing Altay third-generation main battle tanks.

During the Israeli president's state visit to Azerbaijan, an agreement was reached to start building military plants, production of military technologies, as well as procurement of armaments for the needs of the Azeri army. A preliminary agreement was reached with Israeli Aeronautics Defense Systems Ltd on the construction of a plant to manufacture reconnaissance and unmanned military aircrafts, as well as spy satellites that can be used for military purposes.

Another Israeli defense company Elta Systems Ltd will be cooperating with Azerbaijan in creation of satellite systems. In addition, serial production of Russian Kalashnikov assault rifles has been launched in Azerbaijan.

At the same time, the publication points out that “Armenia is not exactly idly sitting by either. Recently a Program on the development of military equipment and armament for 2011-2015 has been adopted, providing not only for import of weapon but also development of an Armenian military-industrial complex”.

Argumenty Nedeli also reminded that last year a multi-member Russian delegation visited Armenia and negotiated the terms of further development of military-technical cooperation between the two countries:

“It has become known that nine Russian-Armenian joint weapon manufacturing plants will be built in Armenia in the nearest future. Experts believe that besides ammunition the plants will produce also heavy military equipment.”

The Armenian Program on the development of military equipment and armament for 2011-2015was adopted last December during the special session of the National Security Council summoned by Armenian president Serzh Sargsyan.

Secretary of the Armenian National Security Council Arthur Baghdasaryan stressed that the approved program would become a new incentive to spur defense industry in Armenian. The necessary paper-work has been completed within the past several months, and so far Moscow has ratified 35 documents of great importance to Armenia.

“Experts believe that all facts point to Baku's and Yerevan's preparations to a long-term confrontation in Nagorno Karabakh. Most probably, in case of launch of active hostilities, the world community would impose an embargo on armament supply to the conflict zone. And imported equipment and ammunition might not last long [thus the need for domestic production],” writes the Russian publication.

11:01 06/09/2011RUSSIAN PRESS REVIEW

CSTO reform in the works

http://www.itar-tass.com/en/c142/219105.html

MOSCOW, September 6 (Itar-Tass) — "Kommersant" publishes the article titled "CSTO Is Turning to Face NATO" which addressed the reform of the Collective Security Treaty Organization Russia is preparing.

Russia intends to begin transformation of the CSTO, a military bloc in the post-Soviet space under Moscow's patronage, the newspaper said. According to the reform plan, the CSTO must give up decision-making by consensus, and become the key peacekeeper in the post-Soviet space while beginning to develop partnership relations with NATO.

Moscow has recently begun to pay more attention to the CSTO under the influence of events in North Africa, and the pullout of the IAF forces from Afghanistan scheduled for 2014.

The newspaper believes the proposals prepared by the Modern Development Institute (INSOR) where Dmitry Medvedev is head of the board of guardians, may make groundwork for the transformation of this military bloc. Chairman of INSOR's board Igor Yurgens told the "Kommersant" that ISOR's proposals boil down to the three key points. Firstly, it suggests reforming the CSTO's decision-making by consensus. ISOR suggests amending the Charter's provision on decision-making to a simple majority. Yurgens acknowledges that the key problem to turn the CSTO into an effective organization is the special position which Uzbekistan takes almost on any issue.

"In the light of the upcoming withdrawal of international forces from Afghanistan in 2014, we have to decide which is more important for us: President Karimov's special opinion, or the security of Russia and its neighbors - Tajikistan and Kazakhstan," he explained. "It's obvious that nobody will need the CSTO in the capacity of discussion club. Russia and its partners have this understanding. Consequently, a new decision-making system is required," Yurgens said.

CSTO Moves Into The Information Age http://www.rferl.org/content/commentary_csto_moves_into_information_age/24317363.html

September 04, 2011 By Roger McDermott

Much of the analysis concerning the Collective Security Treaty Organization (CSTO) -- a military alliance comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan -- neglects significant internal dynamics and perpetuates organizational myths.

Such approaches feature within prominent Russian commentaries, questioning the utility of the CSTO, its purpose, and setting out a case for its dysfunctional condition based on the failure to intervene in southern Kyrgyzstan in June 2010, when ethnic clashes targeting minority Uzbeks took the lives of several hundred people and resulted in the displacement of about 400,000. As the CSTO prepares to stage the first major military exercise since making important organizational changes in December 2010, these questions and characterizations have resurfaced.

Later this month, the strategic military exercise Tsentr 2011 will test the capabilities of the new Collective Rapid Reaction Forces (KSOR) and potential responses to a wider range of threat scenarios. Military and security forces will unite under the CSTO banner in southern Russia, Kazakhstan, and Tajikistan; as in previous KSOR exercises, Uzbekistan refuses to participate.

Although CSTO Secretary-General Nikolai Bordyuzha has publicly commented on concern about the drawdown of NATO forces from Afghanistan and its potential impact on security in Central Asia, reportedly this is not reflected in the overall CSTO exercise scenario. Assessing these developments in isolation masks deeper underlying shifts occurring within CSTO transformation and underestimates the complexity of the internal dynamics at play.

Critics of the CSTO highlight its failure to act after Roza Otunbaeva, in her capacity as the interim leader of the Kyrgyz government, requested assistance in response to the violence in southern Kyrgyzstan. This critique is misleading since the CSTO charter would have prohibited such intervention, which pledges "noninterference in matters falling within the national jurisdiction of the member states." And according to Bordyuzha, delegates to the CSTO never contemplated military operations. Uzbekistan was far from absent during these complex diplomatic efforts, indeed, much of the serious deliberations occurred at the bilateral level between Moscow and Tashkent.

In the months that followed, CSTO leaders moved to reconsider the circumstances in which the organization might authorize the use of force. That process culminated in the CSTO summit in Moscow on December 10, 2010, resulting in the signing of 33 documents, including amendments to the Collective Security Treaty and the CSTO Charter. Uzbekistan refused to join other members in this course of action and it continues to question its legal basis (the treaty and charter were amended without the consent of all members).

As a result of the Moscow summit, the CSTO moved to allow intervention in a domestic conflict on the territory of one its members in response to a request by

the host government. Action could not have occurred in June 2010, not least because the CSTO could, at the time, only respond to external aggression, which would trigger its collective mechanism much like NATO's Article 5. Previously, military intervention required consensus among CSTO members, which the Moscow summit modified: in a future crisis, a simple majority may be enough to initiate action. Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan agreed and approved such changes, and are considering additional measures as part of that process.

But Tashkent's position is carefully considered, principled and consistent: the core mission for the CSTO, it believes, is collective defense, and the body should not transition into a regional policeman. The rest of the members, on the other hand, adopt an equally resolute stance: the CSTO must adapt to meet the real security challenges faced by its members and permit action in a broader range of situations. At its heart, the organization is grappling with differing visions of the security architecture model: whether to remain exclusively collective or become more cooperative-based, providing a legal mandate for action agreed by a group of members across a broad range of possible scenarios.

Lessons Of The 'Arab Spring'

This conundrum surfaced long before the Kyrgyz crisis erupted, and arguably stems from the period in 2007 and 2008 when members began addressing the need to develop CSTO peacekeeping forces in addition to the KSOR. The latter was conceived in 2008 and fully discussed during the informal CSTO summit in Borovoye, Kazakhstan, in December 2008. Since Uzbekistan plays no role in KSOR, it is worth noting that the bulk of the force is Russo-Kazakh, reflecting the high level of political will in Moscow and Astana to transform the organization. Russia's main military contribution is a division and brigade from its elite airborne forces (98th Air Division and 31st Air Assault Brigade) while Kazakhstan contributes a brigade (37th Air Assault Brigade). Other members offer no more than a battalion.

Uncertainty persists surrounding the circumstances in which KSOR would be deployed operationally, but its missions certainly transcend mere collective defense. Consequently, a mechanism now exists that would allow some type of CSTO intervention in response to a domestic crisis, but it cannot legally act without the consent of the host government.

One key facilitator of CSTO transformation has been through informal summits, naturally preparing initiatives later finalized at official summit level. Ahead of the informal CSTO summit in Astana on August 12, Bordyuzha confirmed that Belarusian President Alyaksandr Lukashenka had raised the "Arab Spring" and its implications for the CSTO, requesting that it should be placed on the agenda in Astana. In the aftermath of the domestic crackdown following the Belarusian presidential election in December 2010, Lukashenka seemed to be expressing

renewed interest in the potential for the CSTO to prevent Arab Spring-style instability.

Other CSTO leaders were keen to address such sensitive concerns. Kazakhstan's President Nursultan Nazarbaev spoke of the need to build an "impregnable wall" to prevent any spillover of such revolutions in Central Asia. In a keynote speech during the informal summit, the Kazakh leader suggested that an unregulated information space posed "threats to regional security and stability in the CSTO member states, especially in light of the latest developments in the world."

Very little of this discussion is featuring in the public arena, but according to Bordyuzha, the CSTO plans to develop a systematic approach to counter "cyberterrorism." He stated that the CSTO currently conducts operations in cyberspace, which detect a number of websites "working against the state." By December 2011, a high-level expert working group will present its findings on how the CSTO can develop this new approach. "As you see, no troops, terrorist groups, insurgents, or political organizations are required to destabilize the situation in the country by using information technologies," Bordyuzha said. "The work on information counteraction is one of the priorities of the CSTO's activity."

Moscow-based Fyodor Lukyanov, the editor in chief of the journal "Russia in Global Affairs," characterized any move to allow KSOR intervention in a domestic crisis as double-edged, since it might serve as a means to permit essentially Russian military intervention. While the agreements signed in Moscow in December 2010 could form the basis for such missions, any intervention still requires host-nation consent. Lukyanov raised the specter of the CSTO leaning towards resolving internal conflicts rather than repelling external aggression, thus assuming the character of the Gulf Cooperation Council, which earlier this year helped put down a Shi'ite uprising in Bahrain.

As such debates continue, it is already clear that the CSTO will change in response to the Arab Spring. The body's leaders are now seeking to meet the challenges of the information era in reactive terms. Consequently, the first CSTO "operations" may well occur in cyberspace rather than by any recourse to hard power.

Roger McDermott is a senior fellow in Eurasian military studies at the Jamestown Foundation. The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL

National Economic Trends

President approves additional social tax on high salaries http://www.bne.eu/dispatch_text16508

Alfa BankSeptember 6, 2011

Yesterday, Presidential Aide Arkady Dvorkovich announced that the Kremlin agreed to the introduction of an additional 10% social tax on high salaries in large and medium companies starting in 2012. Given that this comes despite the recent Finance Ministry guidance for a potentially lower breakeven this year, this is not a good sign for business regarding taxation policy going forward.

The proposal to introduce a 10% social tax on salaries above RUB60,000/month first appeared in the Finance Ministry's budget strategy for 2012-2014 a couple of months ago and was expected to bring RUB160bn a year into the budget. While this measure mitigated President Dmitry Medvedev's idea to send a positive message to business and high-earning households, which was the reason for the delay in approval, it was needed to partially offset the negative RUB400bn fiscal effect of the reduction of the overall social tax rate from 34% to 30% and was a necessary condition to keep the budget breakeven level at $125/bbl for 2012. However, recent indications from Finance Minister Alexei Kudrin that this year's budget could be balanced instead of seeing the originally drafted deficit of 1.3% of GDP implies that this year's breakeven will stay at $110/bbl, and thus the urgency of this additional tax now seems lower. The decision to still introduce the additional social tax despite the potentially lower budget risks is hence not a good sign, confirming the risk of tighter taxation policy going forward.

Natalia Orlova

September 06, 2011 12:26

Central Bank of Russia directors to discuss monetary policy Sept 15http://www.interfax.com/newsinf.asp?id=270884

MOSCOW. Sept 6 (Interfax) - The Central Bank of Russia's board of directors will discuss the main areas of monetary policy for 2012 and the next three years at a meeting on September 15.

"The agenda contains a ritual item - monetary policy," the bank's first deputy chairman, Georgy Luntovsky, told reporters.

"I don't yet know whether rates [will be on the agenda]," he said.

Asked who might replace Gennady Melikian, who resigned as the CB's first deputy chairman, Luntovsky said: "The appointment of a first deputy is for the chairman to decide."

Pr

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

Russia to Hold Rates After Price Growth Halthttp://www.bloomberg.com/news/2011-09-05/russia-to-hold-rates-after-consumer-price-growth-halted-in-july.html

QBy Alena Chechel - Sep 5, 2011 10:12 AM GMT+0200

Russia’s central bank will probably leave interest rates unchanged for a fourth month as inflation decelerates to the slowest since November and a faltering global recovery saps growth in the world’s biggest energy exporter.

Bank Rossii will hold its refinancing rate at 8.25 percent after increases in February and April, according to all 22 economists in a Bloomberg survey. Inflation probably slowed to 8.3 percent in August from 9 percent, according to the median estimate of 16 economists in a separate survey. The central bank may meet this week. The Federal Statistics Service will release inflation data today or tomorrow.

The increase in weekly consumer prices halted in July, giving scope for lower borrowing costs amid a stuttering economic rebound. Central bank First Deputy Chairman Alexei Ulyukayev said last week that inflation won’t exceed 7 percent, the slowest since the Soviet Union collapsed in 1991.

“An inflation slowdown in August is the main signal for the central bank to leave rates unchanged,” Alexei Moiseev, the Moscow-based chief economist at VTB Capital, said by phone Sept. 2. Consumer costs probably fell 0.2 percent in August from the previous month and the “waning trend of price growth may continue in September,” he said.

Slowing Growth

Europe’s debt crisis and slower U.S. expansion are eroding demand for Russia’s commodity exports. The economy may expand slower than expected in 2011,

growing 4.1 percent compared with an earlier prediction of 4.2 percent, Deputy Economy Minister Andrei Klepach said Aug. 26. The government expects consumer prices to rise 6.5 percent to 7 percent this year, with the final figure likely to be nearer the lower end of that range, Klepach said.

Gross domestic product grew 4 percent in 2010 after a record 7.8 percent contraction the previous year.

Investors have scaled back bets for higher interest rates. Forward-rate agreements show the likelihood of 21 basis points of interest-rate increases in the next three months, down from a 2011 high of 115 basis points on Jan. 26, Bloomberg data show.

Russia’s inflation has declined the most of the so-called BRIC nations since January, allowing Bank Rossii to keep the benchmark refinancing rate within half a percentage point, of a record-low of 7.75 percent.

Brazil on Sept. 1 became the second country in the Group of 20 Nations after Turkey to lower borrowing costs in response to the worsening global outlook. On Aug. 26, Mexico also signaled that it may follow suit. Russia may cut its main policy rate twice this year, Bank of America Corp. predicts.

‘Appropriate’ Rates

Borrowing costs are “appropriate” for balancing risks of quicker inflation and an economic slowdown for the “coming months,” the central bank said in a statement Aug. 4 after its last rate meeting. Policy makers will keep the overnight auction-based repurchase rate at 5.5 percent and the overnight deposit rate at 3.5 percent this month and reserve ratios will be unchanged, separate Bloomberg surveys showed.

The cost to fix payments on ruble debt using one-year swap contracts dropped 7 basis points, or 0.07 percentage point, from last month’s peak on Aug. 9 to 5.305 percent today, according to data compiled by Bloomberg.

The ruble slid for a third day, losing 0.7 percent 29.3425 per dollar as of 11:50 a.m. in Moscow. The Russian currency depreciated 4.4 percent against the dollar in August, the biggest monthly drop since May 2010 and the worst performance among BRIC economies. Brazil’s real fell 2.5 percent against the greenback, India’s rupee slipped 4.1 percent and China’s yuan appreciated 0.9 percent.

Inflation ‘Cushion’

Cumulative consumer-price growth may reach 0.3 percent to 0.4 percent in the third quarter because of a zero-inflation “cushion” in July and August, Ulyukayev

said last week. Russia’s inflation may slow to between 4 percent and 5 percent in 2014, he said.

Modernizing the economy, a priority for President Dmitry Medvedev, “practically doesn’t begin” with inflation above 7 percent, Finance Minister Alexei Kudrin said in April. Russians see inflation as the third-biggest challenge facing the country behind a threat of alcoholism and drugs and low living standards, according to a Sept. 1 poll by the state-run VTsIOM research center.

Consumer prices probably declined 0.1 percent from a month earlier in August, bringing year-to-date growth to 5 percent, two Bloomberg surveys showed. That would be the first monthly deflation in six years, according to Bloomberg data.

“Inflation pressure is dropping,” said Natalia Orlova, chief economist at Alfa Bank in Moscow. “The central bank has no reason to tighten policy.”

To contact the reporter on this story: Alena Chechel in Moscow at achechel@bloomberg.net.

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

Russian central bank warns of European crisis fallout September 6, 2011 - 8:21AM

Read more: http://www.smh.com.au/business/world-business/russian-central-bank-warns-of-european-crisis-fallout-20110906-1jurx.html#ixzz1X9OOf6lM

Russia's central bank has urged the country's finance houses to sell stocks and diversify their portfolios in preparation for another European market implosion in the months to come.

The bank said it had conducted a stress test showing the country's banks losing 351 billion rubles ($11.3 billion) from a 20 per cent decline on the main European exchanges - a figure equivalent to more than six months of industry profits.

"The main foreign markets threat is not coming from the US and its low (debt) rating, but from the European market," said Sergei Moiseyev of the central bank's financial stability department.

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"Our equities market has been integrated into the world system for a long time, and any swings there will reflect pretty strongly," the Prime news agency quoted Moiseyev as saying.

Investors and analysts most recently raised alarm about Russia's financial stability after the country's number two bank VTB had received a massive state bailout to cover unexpected losses from its acquisition of a smaller rival.

The bailout came as a big blow to the government because VTB's supervisory council included Alexei Kudrin - a hawkish finance minister who approved the takeover without apparent knowledge of the smaller bank's problems.

The Russian financial sector lost more than 10 per cent of its worth in the days following last month's historic first downgrade of US debt by the Standard and Poor's ratings agency.

But the bank said it was not running a similar test for US losses because the risks there were less immediate.

Monday's report said that Russian banks would be especially sensitive to European market volatility because - in times of economic uncertainty - their portfolios would mostly be made up of securities rather than loans.

"We would prefer to see the banks holding low-yield but stable credits rather than security assets that are subject to the European crisis," Moiseyev said.

Analyst said that economic turmoil in Europe could also lead to a shortage of cash flowing through the system and an inability by larger banks to secure long-term loans.

Short-term borrowing is often done on the local bond market but "Russian banks make their long-term loans abroad," Vasily Slodkov of the Higher School of Economics told the Gazeta.ru website.

Moiseyev said Russia's largest 30 banks had parked about $US20 billion earned since the start of the year abroad as a risk-avoiding maneuver.

"This trend is somewhat concerning," RIA Novosti quoted Moiseyev as saying at a banking forum in the Black Sea resort town of Sochi.

AFP

Russian banks exposed to $3bn-$12bn of dodgy debt

http://www.bne.eu/dispatch_text16508

bneSeptember 5, 2011

Russian banks may need to raise $3bn (RUB91bn) of fresh capital in the event of a European banking crisis, the Central Bank of Russia (CBR) estimates, according to Prime, but losses could run to $12bn if the crisis was serious.

Debt in the fourth and fifth risk categories which may become irretrievable in the event of a major European banking crisis amounts to RUB91bn the CBR said on Monday. Sergei Moiseyev, deputy head of the CBR's financial stability department, said that Bank of Moscow alone makes up RUB73.6bn of this total.

The CBR considers this amount to be moderate and well within the ability of banks to cover. However, the CBR said that losses could run as high as $12bn in the event of a full-scale meltdown of the European bank system.

Even this amount is a fraction of the money committed by the Russian government to the sector previously: in 2009 the government spent some $66bn supporting the banking sector and more recently promised a further $14bn to bail the Bank of Moscow out.

Moiseyev said the CBR stress tests reveal the bank's exposure to foreign liabilities is relatively low post-crisis. The IMF has recently called European banks to raise $290bn of fresh capital.

"In the event of a serious shock in Europe, losses for Russian banks would be smaller than their annual profits, which would help them cover losses stemming from market risks," Moiseyev said.

As of July 1, Russian banks held RUB452bn in foreign bonds, just over 10% of their fixed-income portfolios, the tests showed. They owned RUB8.3bn of foreign stocks, a little more than 1% of their share holdings.

Russian banks earned over 500 billion rubles in the first seven months of 2011, edging closer to last year's level of 570 billion, meaning that the lenders have enough cash to cover potential losses, he said the tests showed.

Branch ownership by a foreign bank operating in Russia is classic channel to transmit a crisis, but European banks that are considered to be at risk from a major debt shock own only four lenders among Russia's 1,000 plus banks, Moiseyev said.

"There is enough liquidity at the moment - a little less than 13 percent of overall

assets. The Central Bank is ready to inject over 3 trillion rubles via repo auctions [if needed]," he said.

Read more: http://www.smh.com.au/business/world-business/russian-central-bank-warns-of-european-crisis-fallout-20110906-1jurx.html#ixzz1X9OTOWfp

Putin Sees 8% Inflation In 2011, Above Central Bank Forecasthttp://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201109050857dowjonesdjonline000161&title=putin-sees-8inflation-in-2011above-central-bank-forecast

MOSCOW -(Dow Jones)- Russian inflation may hit 8% by the end of the year, Prime Minister Vladimir Putin said Monday, putting the year-end figure above central bank and finance ministry forecasts.

"By the end of the year, cumulative inflation will be... probably around 8%," Putin said at a United Russia congress in the city of Cherepovets, which was broadcast on television.

While 8% would be Russia's lowest annual inflation reading since the collapse of the Soviet Union, it is still above the central bank's forecast of 7% and the finance ministry's 7.5% prediction.

Russian consumer prices contracted 0.2% in August, bringing inflation to 4.7% for the year so far, data from the Federal Statistics Service showed Monday.

-By Ira Iosebashvili, Dow Jones Newswires; +7 495 232-9195; ira.iosebashvili@ dowjones.com

(END) Dow Jones Newswires 09-05-110857ET Copyright (c) 2011 Dow Jones & Company, Inc.

TABLE-Russia posts 1st monthly deflation since 2005http://www.reuters.com/article/2011/09/05/russia-cpi-idUSR4E7JR00I20110905

Mon, Sep 5 2011

MOSCOW, Sept 5 (Reuters) - Russia's Federal Statistics Service posted on Monday the first monthly deflation since 2005 as inflation continued to stabilise, driven by cheaper seasonal foods, making it less likely the central bank will raise key rates this month.

Russia's consumer price index fell 0.2 percent month-on-month in August after staying flat in the previous period.

This brings price growth in the first eight months of the year to 4.7 percent compared with 5.4 percent in the same period of 2010.

The decrease was below analyst expectations for an unchanged CPI index for August, according to a Reuters poll .

The traditional summer decline in fruit and vegetable prices could help the central bank to achieve its full-year target for inflation of no more than 7.0 percent.

The FSS gave the following details:

RUSSIAN CPI Aug 11 July 11 Aug 10

Mth/mth pct change -0.2 0.0 +0.6

- food -1.4 -0.7 +6.6

- non-food +0.5 +0.3 +2.5

- services +0.3 +0.6 +7.3

Y/Y pct change +9.3 +9.0 +6.4

Core CPI m/m +0.4 +0.4 +0.7

NOTE - For key Russian indicators click here <0#ECONRU>. (Reporting By Nastassia Astrasheuskaya)

CPI drops to 8.2% YoY on food price deflation in August - CBR to stay on hold in September

http://www.bne.eu/dispatch_text16508

VTB CapitalSeptember 6, 2011

News: According to Rosstat, CPI declined 0.2% MoM in August and softened to 8.2% YoY from 9.0% YoY in July. This is in line with the weekly data, which also suggested 0.2% MoM deflation.

Core inflation slowed to 8.1% YoY in August from 8.4% YoY in July.

A detailed breakdown of the data reveals that fruit and vegetable prices continue to drag the CPI down. Food inflation dropped to 8.8% YoY from 11.3% YoY in July. Meanwhile, non-food and service tariff inflation edged higher to 6.8% YoY and 9.0% YoY, respectively.

Our View: The August CPI data implies that inflationary pressures remain muted, dragged down by food prices. The recent data is also in line with the PMI indices, which revealed lower inflationary pressures in the manufacturing and services sectors.

Despite the fact that headline inflation fell sharply, core inflation moderated only slightly, pointing to underlying inflationary pressure. Also, credit growth accelerated in August, particularly in the retail sector. CBR also mentioned rapid retail lending growth as a concern in several statements it made after the interest rates decision.

On balance, CBR's September meeting (no date has been specified yet) will most likely result in an 'on hold' decision.

Watching for Base Effects

http://www.bne.eu/dispatch_text16508

Alfa BankSeptember 5, 2011

July's GDP growth reported at 4.2% y/y: While the continuing acceleration in GDP growth is a positive trend that started with 3.1% y/y GDP growth in April, the main question of 3Q11 is whether the positive base effect will overcome the negative implications of recent market turmoil. If the base effect will prevail in August- September, our 4.5% y/y GDP forecast for 3Q11 will be achievable.

Investment growth y/y picked up in July, mainly due to the weak 2010 base: The

7.9% y/y investment growth reported in July is the highest monthly growth rate reported in 2011, but is mainly relying on a very weak July 2010 statistic. The sudden jump in housing construction by 19% y/y last month seems to be related to its 24.8% y/y drop a year ago. We thus have worries that, as last year's monthly investment growth was around 8.0%, the upcoming investment trend will not be spectacular.

Import growth decelerated to +27% y/y in July: As last year's drought hit local production and fuelled imports, it is not surprising that import growth decelerated in 3Q11. In July the figure grew only 27% after the 42% y/y growth in 1H11. However, as July's industrial output growth of 5.2% y/y was below the 5.3% in 1H11, we expect that strong final demand growth will hold this year's import growth at 35-40%.

Capital outflow is again a concern: Continuing acceleration in GDP growth does not seem to be accompanied by a sizeable improvement of the capital account. The CBR has reported an unexpectedly strong $3bn outflow in July, which, combined with very poor reserve growth statistics, forced us to downgrade our August capital outflow expectations to $6-7bn.

September 06, 2011 10:23

Russian shares down as eurozone debt, U.S. economic fears persisthttp://www.interfax.com/newsinf.asp?id=270842

MOSCOW. Sept 6 (Interfax) - Russian share prices fell in early trading amid persisting concerns over eurozone debt and a slowdown in U.S. economic recovery.

The RTS stock index fell 0.43% in the first minute of trading to 1609.98 and the MICEX index was off 0.55% to 1484.62.

Benchmark stocks fell up to 1%. The MICEX saw losses for VTB (RTS: VTBR) (-0.7%), Gazprom (RTS: GAZP) (-0.8%), Gazprom Neft (RTS: SIBN) (-0.8%), Lukoil (RTS: LKOH) (-0.6%), NOVATEK (RTS: NVTK) (-0.3%), MMC Norilsk Nickel (RTS: GMKN) (-0.3%), Rosneft (RTS: ROSN) (-0.5%), Rostelecom (RTS: RTKM) (-0.8%), Sberbank (RTS: SBER) (-0.7%), Surgutneftegas (RTS: SNGS) (-1%), Tatneft (RTS: TATN) (-0.7%) and FGC (RTS: FEES) (-1.2%).

Pr

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

Ruble Falls to Four-Week Low Versus Dollar as Oil Price Slipshttp://www.bloomberg.com/news/2011-09-06/ruble-falls-to-four-week-low-versus-dollar-as-oil-price-slips.html

QBy Denis Maternovsky - Sep 6, 2011 9:38 AM GMT+0200

The ruble declined for a fourth day against the dollar, heading for its lowest close in almost four weeks, as oil traded down before a U.S. report that’s expected to show a slowdown in service industries.

Russia’s currency slipped 0.3 percent to 29.5675 per dollar by 11:09 a.m. in Moscow, poised for its weakest closing level since Aug. 10. It dropped 0.3 percent to 41.6800 per euro.

Oil traded down 3.3 percent in New York and Brent gave up earlier gains in London before a report today that may show U.S. service industries grew at the slowest pace in more than a year, spurring concern the economic recovery is foundering. Energy sales account for as much as 40 percent of Russian government revenue and 17 percent of gross domestic product.

“A severe flight to quality effect is dominating the market space,” VTB Capital analysts Nikolay Podguzov and Maxim Korovin wrote in an e-mailed research note today. “The ruble is likely to remain under pressure.”

The movements against the dollar and the euro left the ruble 0.3 percent weaker at 35.0181 against the central bank’s target currency basket, which is used to manage swings that hurt Russian exporters. The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together.

Non-deliverable forwards show the currency at 29.9055 per dollar in three months. The contracts provide a guide to expectations of currency movements and interest-rate differentials and allow companies to hedge against currency swings.

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

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

RTS Futures Decline on Global Economy Concern: Russia Overnighthttp://www.bloomberg.com/news/2011-09-05/rts-futures-decline-on-global-economy-concern-russia-overnight.html

QBy Belinda Cao - Sep 6, 2011 7:29 AM GMT+0200

Russia’s RTS stock-index futures dropped, indicating shares in Moscow may fall for a third trading day, amid concern slowing growth in the U.S. and China and Europe’s debt woes will spark a global recession.

Futures on the dollar-denominated index expiring in September declined 0.5 percent to 158,260 yesterday, the lowest close in more than a week. Moscow’s 30-stock Micex Index (INDEXCF) dropped 1.5 percent to 1,492.83, as Urals crude, the country’s chief export oil blend, tumbled the most in four weeks. The gauge may slide 1 percent at the start of trading today, according to Alfa Bank. Asian stocks and U.S. futures fell.

Futures contracts on OAO Gazprom, the world’s largest gas producer, slipped 0.2 percent and those for OAO Uralkali (URKA), Russia’s biggest potash producer, dropped 0.6 percent. United Co. Rusal, the world’s largest aluminum producer, sank 2.1 percent in Hong Kong trading.

A government report showing U.S. payrolls unexpectedly stagnated in August has spurred speculation the Federal Reserve will take action to bolster the world’s largest economy beyond its Aug. 9 pledge to hold rates at record lows through mid-2013. A Chinese services index fell to a record low last month, adding to evidence that country’s economy is slowing. China may report this week industrial production for August slowed from a year ago, according to economists’ forecasts.

“Investors continue to view Russia as a derivative play on the strength of global economic growth,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said by e-mail. The drivers will include “how confident investors are that the Fed will come up with additional stimulus and China’s macroeconomic report for August later this week.”

RTS Volatility

The RTS Volatility Index, which measures expected swings in the index futures, rose 5.4 percent to 51.14 points yesterday. One index point equals $20. The RTS index slipped 0.2 percent to 1,614 in Moscow, the lowest close in a week. The Stoxx Europe 600 Index lost 4.1 percent to 223.45 yesterday, posting its biggest two-day drop since March 2009, while the Standard & Poor’s 500 Index futures retreated 2 percent. The U.S. stock markets were closed yesterday for the Labor Day holiday.

A second day has been added to the Fed’s meeting this month to “allow a fuller discussion” of the economy and policy options, Fed Chairman Ben S. Bernanke said in a speech on Aug. 26. Payrolls in the U.S. were unchanged last month, after adding 85,000 in July, and the unemployment rate held at 9.1 percent, the Labor Department said on Sept. 2.

European services and manufacturing growth weakened in August, with a composite index based on a survey of euro-area purchasing managers in both industries dropping to 50.7 from 51.1 in July, Markit Economics said yesterday. A figure above 50 indicates growth. Retail sales in the 17-nation euro region unexpectedly advanced 0.2 percent in July from the previous month, when they rose 0.7 percent, the European Union’s statistics office in Luxembourg said the same day.

Italy Austerity Debate

German Chancellor Angela Merkel’s party lost elections on Sept. 4 in her home state, spurring speculation that support for bailing out Europe’s indebted nations may fade.

Italian bonds plunged for the 11th day yesterday amid concern the government may backslide on its austerity package announced on Aug. 5. The nation’s Senate will begin a debate today on the 45.5 billion-euro ($64 billion) plan just as CGIL, Italy’s biggest union, holds a strike across the country against the measures. The government agreed last week to drop spending cuts and tax increases from the plan.

“Euro crisis is back in the spotlight,” Luis Saenz, chief executive officer of the U.S. unit of Moscow-based brokerage Otkritie Financial Corp., wrote in an e-mail note. “European PMI and retails sales are unlikely to lift the mood.”

Crude Plunges

Urals crude declined 2 percent, the steepest slump since Aug. 8, while crude for October delivery sank 3.3 percent to $83.60 a barrel on the New York Mercantile Exchange. Energy sales contribute as much as 40 percent of Russian government revenue and 17 percent of gross domestic product, Finance Minister Alexei Kudrin said in June.

Consumer prices in Russia rose 8.2 percent from a year earlier last month, the slowest pace since November, the Federal Statistics Service in Moscow said yesterday. Bank Rossii will hold its refinancing rate at 8.25 percent after increases in February and April, according to all 22 economists in a Bloomberg survey. The central bank may meet this week.

The Micex has slumped 12 percent this year and trades at 5.8 times analysts’ earnings estimates. That compares with a 14 percent decline in the MSCI Emerging-Markets index, which trades at 10.5 times profits.

To contact the reporter on this story: Belinda Cao in New York at Lcao4@bloomberg.net

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

Business, Energy or Environmental regulations or discussions

Russian markets -- Factors to Watch on Sept 6http://www.reuters.com/article/2011/09/06/russia-factors-idUSL5E7K60FG20110906

Tue Sep 6, 2011 2:13am EDT

MOSCOW, Sept 6 (Reuters) - Here are events and news storiesthat could move Russian markets on Tuesday. You can reach us on: +7 495 775 1242 STOCKS CALL (Contributions to moscow.newsroom@reuters.com): Aton: The external background is negative with U.S. futureslosing over 2 percent in the morning pressured by weak labourstatistics. Troika: We are opening our prices this morning down 1.0percent.

EVENTS (All times GMT): YAROSLAVL, Russia - Russian President Dmitry Medvedev toopen the Yaroslavl global policy forum. MOSCOW - United Russia senior official Andrei Vorobyov holdsa press conference. RUSSIA - Danish Queen Margrethe II` to visit. MOSCOW - Russia's top mobile phone operator MTS reports Q2 financials. MOSCOW - Nomos bank (NMOSq.L) is expected toannounce Q2 results. MOSCOW - Bank of Moscow first deputy CEO AlexanderYastrib to give a briefing on cooperation with United electronictrading platform. IN THE PAPERS :

Kommersant reports that Russian billionaire Oleg Deripaskamay sell up to 75 percent of Baselcement to Irish buildingmaterials group CRH . The business daily runs an interview with UkrainianPresident Viktor Yanukovich about gas price dispute with Russia. TOP STORIES IN RUSSIA AND THE CIS : TOP NEWS: Russia-Ukraine gas talks head for crunch COMPANIES/MARKETS:Russian banks could withstand euro shock-c.bank RUSAL rejects Norilsk buyback offer Bank of Moscow bailout sequence may change Rouble hurt by falling oil, receding rate rise Phosagro plans $2.5 billion chemical plant INTERVIEW-M.Video mulls secondary share offer Rusagro to buy back shares five months after IPO RUSAL to raise Irish refinery capacity Nomos Q2 net seen at 2.62 bln rbls Russian electricity demand seen up 3-4 pct in 12 TGK-1 H1 net profit at 4.43 bln roubles ECONOMY/POLITICS: Russia posts 1st monthly price falls since 2005 INTERVIEW-Putin's authority wanes in Russia Ukraine warns of lawsuit over Russian gas-report ENERGY: Ukraine hopes for Russia gas deal outside court July Russia coal exports rise to 8.75 mln T Shell, Warly no longer sole winners of Rosneft

COMMODITIES: Russia grain crop up y/y with 56 pct harvested Russia wheat prices rise, barley slips-analysts Russia beet test shows weight up, sugar down Ukraine grain exports fall, farmers blame duty Ukraine govt keeps grain export duties - AgMin Ukraine grain crop at 34.9 mln T from 74 pct MARKETS CLOSE/LATEST: RTS 1,612.3 -0.29 pct MSCI Russia 836.7 -2.54 pct MSCI Emerging Markets 980.2 -0.94 pct Russia 30-yr Eurobond yield: 4.145/4.122 pct EMBI+ Russia 266 basis points over Rouble/dollar 29.6300 Rouble/euro 41.6600

NYMEX crude CLc1 $83.41 -$3.04 ICE Brent crude LCOc1 $110.05 -$0.03 For Russian bank balances see For Russian company news, double click on Treasury news Corporate debt Russian stocks Russia country guide All Russian news Scrolling stocks news Emerging markets top news Top deals European companies

Gazprom, Rosneft, Mobile TeleSystems, Nomos: Russian Previewhttp://www.bloomberg.com/news/2011-09-05/gazprom-rosneft-mobile-telesystems-nomos-russian-preview.html

QBy Anna Shiryaevskaya - Sep 5, 2011 10:01 PM GMT+0200

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

The 30-stock Micex Index (INDEXCF) declined 1.5 percent to 1,492.83 by the close in Moscow. The dollar-denominated RTS Index fell 2.4 percent to 1,617.01.

OAO Gazprom (GAZP RX): The world’s biggest gas producer will start filling the Nord Stream pipeline, which will run from Russia to Germany under the Baltic Sea. Gazprom fell 0.9 percent to 169.43 rubles.

OAO Rosneft (ROSN RX): Oil fell, dipping below $84 a barrel in New York for the first time in a week, on speculation that slowing economic growth in the U.S. and China will crimp fuel consumption in the world’s two biggest crude users. Russia’s largest oil producer fell 2.5 percent to 221.73 rubles.

OAO Mobile TeleSystems (MTSI RX): Russia’s largest mobile- phone company is scheduled to report second-quarter earnings. Its stock fell 2.3 percent to 216.36 rubles.

OAO Nomos Bank (NMOS RX): The Russian bank is due to report first-half earnings. Nomos fell 0.2 percent to 785.30 rubles.

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

By Blanche Gatt and Sarah Jones - Sep 6, 2011 8:37 AM GMT+0200

CRH Plc (CRH) : Russian billionaire Oleg Deripaska may sell as much as 75 percent in the cement unit of his Basic Element holding company to the Irish company, Kommersant reported, citing unidentified people with knowledge of the plans. The shares fell 5.5 percent to 11.12 euros in Dublin.

http://www.bloomberg.com/news/2011-09-05/ashtead-group-bp-ryanair-holdings-u-k-irish-equity-preview.html

S&P upgrades six Russian banks

http://www.bne.eu/dispatch_text16508

Alfa BankSeptember 5, 2011

The decisions are the result of an improvement in operating conditions and the macroeconomic outlook for Russia. The actions include the following:

The agency raised the credit rating of Raiffeisen Bank from bb- to bb and confirmed the rating in the long-term, short-term and on the national scale.

The outlooks for the ratings of Alfa Bank and International Bank of Saint-Petersburg were revised from stable to positive.

S&P raised the long-term rating of Vozrozhdenie Bank from B+ to BB-, and the rating on the national scale from ruA+ to ruAA-. It also reaffirmed its short-term rating.

The outlook for the rating of Urals Bank of Reconstruction and Development was revised from stable to positive, and its rating on the national scale was raised from ruBBB- to ruBBB+.

The long-term rating of Development-Bank was raised from B- to B, and its rating on the national scale was raised from ruBBB+ to ruA-.

Ekaterina Leonova

September 06, 2011 11:11

Bank of Moscow could issue 100 bln rubles in new shares by end 2011http://www.interfax.com/newsinf.asp?id=270853

MOSCOW. Sept 6 (Interfax) - Bank of Moscow (RTS: MMBM) plans to issue 100 billion rubles in new shares in favor of VTB (RTS: VTBR) by the end of 2011.

"I think by the end of the year," Bank of Moscow's deputy CEO, Alexander Yastrib, told reporters.

Yastrib also said the bank's strategy to 2013 would be approved in October.

"I think in October. We'll also have to make all the financial projections and start business planning in the framework of the VTB (RTS: VTBR) group," he said.

Pr

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

Bank of Moscow May Need 73.6 Billion Rubles to Dodge Crisishttp://www.bloomberg.com/news/2011-09-05/bank-of-moscow-may-need-73-6-billion-rubles-to-weather-crisis.html

QBy Anton Doroshev - Sep 5, 2011 3:24 PM GMT+0200

Bank of Moscow, the lender that needed the biggest bailout in Russian history in July, may require 73.6 billion rubles ($2.5 billion) in capital during a crisis scenario, according to the central bank.

Four out of the top 30 banks in the country would need a combined 91 billion-ruble capital boost during a complete loss on loans categorized as “problematic” or “hopeless,” Sergei Moiseyev, deputy head of the central bank’s financial stability department, told reporters Sept. 3 in Sochi.

The $14 billion bailout underscored the potential for “major negative surprises in the banking system,” analysts at Fitch Ratings wrote in a report Sept. 2. Bank Rossii is ready to boost liquidity using repo and lombard instruments, as well as

providing loans backed by gold, central bank First Deputy Chairman Alexei Ulyukayev said in Sochi last week.

“In a crisis the central bank is ready to provide more than 3 trillion rubles of liquidity through repo operations,” Moiseyev said. While there is “no deficit” of funds in the banking system at present, “liquidity will fall in the future,” he said.

Banks are “actively involved” in capital flight, according to Moiseyev. The 30 biggest banks took $20 billion out of the country in the first half of the year, chiefly in the form of interbank loans and loans to non-residents, he said. “This is a worrying tendency.”

Europe Debt Woes

Russia may see $30 billion to $40 billion in capital outflows this year, Deputy Economy Minister Andrei Klepach said Aug. 26, reversing the ministry’s earlier forecast for zero capital flight.

Stocks fell globally, Italian bonds dropped for an 11th day and the cost of government and bank default insurance rose to records today on concern Europe’s debt crisis will worsen.

OAO Sberbank, Russia’s biggest lender, tumbled as much as 3 percent and traded down 0.9 percent at 81.67 rubles as of 4:48 p.m. in Moscow. The benchmark Micex index slid 0.6 percent, while the government’s ruble-denominated Eurobond dropped for a second day, lifting the yield seven basis points to 6.987 percent.

“The main threat” to Russia’s banking industry “doesn’t come from the U.S., but from the European markets,” Moiseyev said.

To contact the reporters on this story: Anton Doroshev in Moscow at adoroshev@bloomberg.net

To contact the editor responsible for this story: Mark Sweetman at msweetman@bloomberg.net

RusAl Rejects Norilsk Buyback Offer 06 September 2011Bloomberg

United Company RusAl's board refused to surrender a stake in Norilsk Nickel for the fourth time in a year, prolonging a battle for control of Russia's largest mining company, the aluminum producer said Monday in an e-mailed statement.

Directors at the aluminum maker rejected Norilsk's Aug. 19 offer to buy back a 15 percent stake for $8.75 billion, said two people, who declined to be identified because the information is confidential.

Norilsk and largest shareholder Interros Holding have been trying to buy back RusAl's shares since October to end a dispute over influence on the board and use of the nickel company's cash. RusAl, controlled by Oleg Deripaska, holds a quarter of Norilsk, while Vladimir Potanin's Interros has almost 30 percent.

Norilsk's directors said Aug. 24 that the offer to RusAl amounted to $306 a share, representing a 20 percent premium on the six-month average stock price. In response, RusAl said the proposal "isn't in the interest of Norilsk and destroys the company's value," according to a statement that day.

The nickel producer previously offered to buy back a 20 percent stake from RusAl for $12.8 billion, a bid that was rebuffed on March 4, even as billionaire RusAl investors Mikhail Prokhorov and Viktor Vekselberg pushed for a sale.

Norilsk will offer to repurchase stock from the remaining shareholders on the same terms, should RusAl reject the latest bid, board member Larisa Zelkova said Aug. 15.

Read more: http://www.themoscowtimes.com/business/article/rusal-rejects-norilsk-buyback-offer/443241.html#ixzz1X9fPB49o The Moscow Times

Terms of Freight One auction announced

http://www.rbcnews.com/free/20110906105446.shtml

      RBC, 06.09.2011, Moscow 10:54:46.Russian Railways today officially announced the terms of the auction for its 75% minus two shares stake in major rail cargo operator Freight One.

      The starting price of the stake is set at RUB 123.38bn (approx. USD 4.21bn), the bid increment is RUB 500m (approx. USD 17.04m), with the exception of the first bid increment, which amounts to RUB 125m (approx. USD 4.26m).

      Bids will be accepted from Wednesday until October 14. A RUB 5bn (approx. USD 170m) caution deposit must be made before October 14. The auction results will be made public on October 28. TransCreditBank will arrange the auction.

Russian Railways could gain control of private operators' fleets

http://www.bne.eu/dispatch_text16508

Renaissance CapitalSeptember 6, 2011

Event: Yesterday (5 September), the president of Russian Railways (RZD), Vladimir Yakunin, reported that the Ministry of Transport is considering requiring private freight railcar companies to provide part of their fleets to RZD to transport cargoes. According to Yakunin's statement, RZD needs at least 250,000 railcars to satisfy market demand. Another option being considered is to oblige private freight operators to carry certain goods if their railcars are situated close to cargo that needs to be transported.

Action: Potentially negative for Globaltrans, TransContainer and FESCO, in our view.

Rationale: There has been a possibility of regulatory changes associated with the market's shortage of open wagons since last autumn, when RZD transferred more than 150,000 railcars to a subsidiary, Second Freight Company. These new restrictions would have a negative impact on the private freight rail transportation industry, in our view, reducing the profitability of private railcar operators if they are forced to carry RZD loads instead of more profitable cargo. In addition, regulatory uncertainty could adversely affect plans for the privatisation of First Freight Company (an auction is expected on 28 October).

Dmitry Kontorshchikov

ALROSA SELLS $3.15 BILLION OF DIAMONDS IN JAN-AUG PERIOD 06 http://www.diamondintelligence.com/magazine/magazine.aspx?id=9820September 2011

Russian diamond conglomerate Alrosa has sold an estimated US$3.15 billion worth of rough and polished diamonds during the first eight months of this year. The Yakutia-based miner also forecasts that its total sales level for 2011, including rough and polished, will reach an estimated US$5 billion.

"The Company has registered a certain price correction in some assortment categories, primarily due to a sharp reduction of speculative pressure on the market. However, the overall volume of demand is stable, which gives grounds to Alrosa to leave its sales outlook at the level of USD5 billion," says Alrosa in a company statement.

For the January-August period, Alrosa reports that its total credit portfolio amounts to US$3.45 billion.

The firm's financial details were released after this week's working meeting with the company's management and presided over by Alrosa president, Fyodor Andreev. Aside from financials, the agenda included issues related to Alrosa's marketing activities, scheduled purchases of equipment and material resources, as well as industrial safety at the company's facilities, especially the underground mining sites.

September 06, 2011 09:15

Nord Hydro, VEB may invest 2 bln rubles in small hydro plantshttp://www.interfax.com/newsinf.asp?id=270820

CHEREPOVETS. Sept 6 (Interfax) - Nord Hydro, a company that builds and overhauls small hydropower plants, is in talks with Russian bank VEB to secure financing for a number of projects that will require investments of about 2 billion rubles.

"Negotiations with VEB are now in the final stage. The amount of projects being discussed is 2 billion rubles," Nord Hydro managing director Alexander Vinogradov said Monday at a presentation of the company's projects at United Russia's interregional party conference in Cherepovets.

The materials for the conference describe two company projects in which VEB is acting as a co-investor: the Ryumyakoski hydro plant with capacity of 0.63 MW and an estimated cost of 144 million rubles and the Lyaskelya plant with capacity of 4.8 MW and a cost of about 687.4 million rubles. The projects, both of which are located in Karelia, are scheduled to be completed by 2013, according to the materials.

"Nord Hydro plans to achieve independent production of about 1 billion kWh per year by the end of 2020. In other words, build 100 plants in ten years," Vinogradov said.

He said the company has already reached an agreement "on operating rules, cost recovery and conditions with a fairly large number of regions, not only in the Northwest Federal District." These regions include "the republic of Karelia, Komi Republic, Samara Region, Lipetsk Region, Krasnoyarsk Territory, Khanty Mansiisk Autonomous District and Saratov Region," Vinogradov added.

However, current regulations do not cover operating rules for small hydro plants on Russia's energy market, though "the base for this is defined" in the law on the electricity sector, Vinogradov said.

"We have already discussed these proposals and even articulations [for small hydro operating rules - ed.] with the Energy Ministry and the Federal Tariff Service and the government administration. There is essential understanding, but it will be difficult for us without your help," Vinogradov said, addressing Prime Minister Vladimir Putin, who attended the conference.

An Energy Ministry official who was also attending the conference said "there are currently no obstacles [to the development of a regulatory base - ed.] as such, we are in a regime of interdepartmental negotiations; I think that we will resolve this issue in a short period of time."

The development of the regulatory base will take about a month, the official said.

The government has repeatedly called for the development of renewable energy sources, which include small hydro plants, but the conditions under which such power generators would operate on the market have not been worked out.

Vinogradov also said that his company faces a number of difficulties in its business, including the lack of competitive Russian equipment. "We are currently holding negotiations with Czech companies on setting up joint assembly in Russia," he said.

Vinogradov also complained that Russian equipment makers approached by the company exhibit mistrust toward the start-up and refuse to work with Nord Hydro.

Commenting on this situation, Putin said: "I ask my colleagues from the Energy Ministry and Industry Ministry to look at this more closely."

The firm Nordenergomanagement is also investing in the Karelia projects discussed at the conference.

Based on information in the SPARK database, this company is owned by two businessmen, one of which is Mikhail Zavorovsky, a former manager at Unified Energy System and former head of St. Petersburg Distribution Company (PSK). While heading PSK, Zavorovsky was simultaneously general director of United Energy Distribution Company (OESK), which included another four retail companies, including Mosenergosbyt, the largest retailer on the Russian energy market.

Zavorovsky left OESK in August 2010 after the management company and its energy distributors were put under the trust management of Inter RAO UES, which subsequently acquired ownership of them. Zavorovsky left the company due to a conflict with the electricity supplier to Defense Ministry enterprises, Oboronenergosbyt, which OESK had planned to take over, according to Interfax's information.

Zavorovsky's firm LLC Trust owns 50% of Nordenergomanagement and the other 50% is held by CJSC Nordenergoinvest, the sole shareholder of which is Alexei Samsakov. Zavorovsky and Samsakov also equally own CJSC Rosoboronenergosbyt and LLC Oboronenergosnab, according to SPARK.

Nord Hydro was founded in 2007 to implement projects to develop and restore small hydro plants in Russia and other CIS countries. Nord Hydro, a management hydropower company, acts as contractor for the design, new construction and refurbishment of hydropower installations, and operates hydro plants. The company is actively involved in the legislative process and initiatives to support and develop small hydro generation.

Vp

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

PhosAgro Plans New Plant 06 September 2011

PhosAgro could invest as much as $2.5 billion by 2015 in a facility to process natural gas into soil nutrients and plastics, chief executive Maxim Volkov said.

The company, which owns fertilizer plants in Cherepovets, northwestern Russia, is seeking an additional 2 billion cubic meters of gas a year for the project from Gazprom, Volkov told reporters Monday at a United Russia conference in the city. Gazprom's Nord Stream pipeline passes through the region.

PhosAgro plans to process heavy fractions of gas that are now being wasted, Volkov said. This may be done in cooperation with petrochemicals producer Sibur Holding, he said.

(Bloomberg)

Read more: http://www.themoscowtimes.com/business/article/phosagro-plans-new-plant/443257.html#ixzz1X9f9PkB0 The Moscow Times

M.Video: Possible acquisition through merger with Eldorado

http://www.bne.eu/dispatch_text16508

UralSibSeptember 6, 2011

Reverse takeover may be offered. Today Vedomosti reported that Czech Group PPF, which recently obtained full control over Eldorado, the second largest Russian consumer electronics retailer, may also wish to acquire M.Video (MVID RX- Not Rated) through a reverse takeover. Thus, PPF would sell Eldorado to M.Video for a controlling stake in the combined company. Vedomo- sti noted that the time line for the deal could be one to three years, citing Alexander Tynkovan, the majority shareholder in M.Video. However, neither side has officially confirmed the possibility of such a deal.

Merger would create absolute market leader. The merger, if it occurred, would create an absolute leader with a roughly 22% stake in the Russian consumer electronics market with annualized combined sales of roughly $7 bln. M.Video and Eldorado con- trol roughly equal market shares of about 11% thanks to M.Video's rapid expansion, which has allowed the retailer to catch up with Eldorado recently. M.Video's strategy calls for only organic growth and it has clearly been successful on the market over past two years. Thus, we do not see how a costly merger with Eldorado with an unknown outcome would benefit M.Video. Both oper- ate in the hypermarket format, Eldorado's stores are larger and it targets low and low-middle income consumers, while M.Video targets middle and upper-middle income consumers.

Event unlikely, but could provide strong speculative support for shares. We see the likelihood of this merger as small, and the news is too preliminary. However,

the news could create strong speculative support for M.Video shares in the short term, and this could very well be the purpose of this news. If M.Video's majority shareholder were ever to give up control of the company, this could only be done for a large premium, given that M.Video's is clearly winning in competition with Eldorado, thanks to its superior business model and strong margins. If the deal was hypothetically closed today, given that M.Video trades at very low 2012E EV/EBITDA of 4, the share premium indeed would have to be quite large.

Tigran Hovhannisyan

Sept. 6, 2011, 2:01 a.m. EDT

CapMan invests in Siberian Networkshttp://www.marketwatch.com/story/capman-invests-in-siberian-networks-2011-09-06

Helsinki, Finland, Sep 06, 2011 (Thomson Reuters ONE via COMTEX) -- CapMan invests in Siberian Networks

CapMan Russia, a fund managed by CapMan, has invested in Siberian Networks. The company is a fast growing Internet Service Provider (ISP) operating in the Siberian Federal District (SFD) of Russia. Siberian Networks aims to further expand its operations in its primary market area with considerable growth opportunities. CapMan will support the company in achieving its targets.

Established in 2004, Siberian Networks is one of the leading Internet Service Providers operating in the Siberian Federal District of Russia. The company provides triple-play services including high-speed Internet and IPTV for both commercial and retail customers. Siberian Networks is the third largest player in Novosibirsk and the leader in Novokuznetsk. The company is expected to generate a turnover of approx. EUR15 million in 2011 and it currently employs approx. 660 people. Siberian Networks has more than 100,000 subscribers.

"Siberian Networks is a significant player in the telecom market of SFD. Since its foundation, the company has grown at a very fast pace and has currently approx. 20% market share in Novosibirsk. In 2007 we also expanded to Novokuznetsk, where we have today a market share of approx. 25%. We are currently providing services in Novosibirsk region, Altai and Kemerovo region and our target is to continue to grow the business across the SFD", says Oleg Kus', CEO of Siberian Networks.

"The broadband market in the SFD offers significant potential as the penetration in the area continues to be relatively low. Siberian Networks is a strong regional player in Novosibirsk and Novokuznetsk and is seeking to further expand its operations in the SFD. In co-operation with the management, CapMan will support the company in executing its growth strategy. I am confident that Siberian Networks is very well placed to partake in the future consolidation of the market", says Maxim Popov, Investment Director at CapMan.

Following the investment, CapMan Russia fund now owns approx. 20% of the shares in Siberian Networks, while the remaining is held by the management team. CapMan Russia fund will increase its ownership to approx. 25% during the following months. CapMan Plc is a major investor in CapMan Russia fund.

Further information:

Maxim Popov, Investment Director, CapMan Russia, tel. +7 495 620 48 85

Oleg Kus', CEO, Siberian Networks, tel. +7 383 205 00 00

CapMan www.capman.com

CapMan is one of the leading private equity firms in the Nordic countries and Russia, with assets under management of EUR3.4 billion. CapMan has four key investment partnerships - CapMan Buyout, CapMan Russia, CapMan Public Market, and CapMan Real Estate - each of which has its own dedicated investment team and funds. Altogether, CapMan employs approx. 120 people in Helsinki, Stockholm, Oslo, Moscow and Luxembourg. CapMan was established in 1989 and has been listed on the Helsinki Stock Exchange since 2001.

Siberian Networks www.sibset.ru

Siberian Networks is a leading telecom company providing services such as high-speed Internet, IPTV and development of corporate IT networks. The company was established in 2004 and currently operates in Novosibirsk, Novokuznetsk, Berdsk, Iskitim, Barnaul, Biysk, Rubtsovsk, Kemerovo and Prokop'evsk utilizing its own telecom infrastructure. The company is one of the leaders in the Siberian telecom market measured by the subscriber base and network coverage.

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the

information contained therein.

Source: CapMan Oyj via Thomson Reuters ONE

HUG#1544233

Copyright (C) 2011 Thomson Reuters ONE. All rights reserved.

Yandex develops new targeted advertisinghttp://rbth.ru/articles/2011/09/05/yandex_develops_new_targeted_advertising_13361.html

September 5, 2011Ksenia Boletskaya, Kommersant

By profiling its audience based on the way they search rather than the information they self-report, Yandex hopes to give advertisers a more honest targeting.

On Sept. 1, Yandex launched a new media ad targeting technology, called Crypta. The technology allows the web portal to target ads by age, gender, income and location, said Lev Gleiser, the company’s director of media projects. According to a Yandex presentation, the company segments users based on the terms and methods they use. For example, women tend to compose longer queries and use question words more often, while men are heavier on numbers and Roman script.

 

According to Gleiser, this method is superior to the ways other web companies base their targeting – focusing on personal data users disclose about themselves in social networks and other Internet services. Gleiser said the Yandex method is better, since some people lie in their web profiles, whereas behavior analysis is supposed to be more refined. Potentially, basing targeting on search queries will make it possible to focus on even narrower audiences targeted by advertisers, such as young owners of foreign-made cars, he added.

 

But Yandex’s front page will not contain any targeted advertising; the company preserves this space for advertisers who purchase banners intended for the broadest possible audience. Instead, the targeted ads will be present in other parts

of the site, including mail, maps and video services. Nearly have of the web traffic will be available to advertisers. Targeted ads will cost 50 percent more than conventional ones.

 

Yandex had been testing this technology for quite a long time with help from advertisers, said IT expert Igor Ashmanov. In the beginning, tests showed a wide margin of error, but this has narrowed. Ashmanov believes that the system will refine itself over time. At the moment, there are no rival products to Yandex’s new offering in Russia, said Ashmanov.

 

Advertisers have been cautious about targeting so far. According to MTS spokesperson Valeria Kuzmenko, the Russian web audience currently matches the audience for services offered by MTS, which is why her company does not see any need for user segmentation. That said, she adds, as the web audience grows and distinctions within it become more blurred, the need for targeting would become much more pressing.

Activity in the Oil and Gas sector (including regulatory)

Lukoil's CEO pledges further investments in Bulgariahttp://www.sofiaecho.com/2011/09/04/1150259_lukoils-ceo-pledges-further-investments-in-bulgaria

Sun, Sep 04 2011 21:04 CET

Russia's oil major Lukoil will continue investing in Bulgaria despite the recent conflict with the country's Government over the operation of its refinery in the Black Sea city of Bourgas, Lukoil Bulgaria said in a media statement, citing the company's chief executive Vagit Alekperov.

In addition, Lukoil plans to install a hydro-cracking unit at the refinery, he said in an interview with news agency Reuters.

Lukoil plans $16 billion worth of investments over the next 10 years to upgrade its existing facilities, bolster its financial metrics and ramp up oil and gas exploration activities.

The company projects to record a drop of between 3.5 per cent and four per cent in crude oil production in 2011. Its output is seen to stabilise next year before resuming growth in 2013.

As to the dispute over Lukoil Neftochim's operation licences, Alekperov said it was sparked by "mutual misunderstanding".

06.09.2011

Rosneft Prepares For Kara Sea Mappinghttp://www.oilandgaseurasia.com/news/p/0/news/12772

State-owned Rosneft is preparing for the exploration of the company’s blocks in the Kara Sea and the Barents Sea.

Rosneft’s Board of Directors has approved a deal with company subsidiary SakhalinNIPImorneft, according to which three blocks in the Kara Sea and one block in the Barents Sea will be mapped, Oilru.com reports.

The three blocks in the Kara Sea are all part of the deal signed last week between Rosneft and ExxonMobil. The East Prinovozemelsky License Blocks cover an area of 126,000 square kilometers and are considered among the most promising in the region.

As BarentsObserver reported, ExxonMobil, the world’s largest public company in market capitalization, snapped the deal ahead of several contenders, among which was Norwegian oil major Statoil. Also Total and Chevron wanted the lucrative areas. Chevron is reportedly still negotiating with Rosneft over other assets in the Arctic, Newsru.com writes.

In the Barents Sea, it is the Yuzhno Russkoye field which is to be mapped. The field is located in the south eastern part of the area, near other structures in the Pechora Sea.

Copyright 2011, Barents Observer. All rights reserved.

Shell, Warly share Rosneft tender

http://www.upstreamonline.com/live/article276593.ece

Supermajor Shell and trader Warly have had to share cargoes with other companies in Russian company Rosneft's latest major Urals crude tender after winning all the business for themselves at a March tender, trading sources said on Monday.

News wires  06 September 2011 02:24 GMT

Reuters reported a source with direct knowledge of the tender results that Shell and Norway’s Statoil won volumes for October to March deliveries from the Baltic port of Primorsk.

Both companies equally shared the Rosneft offer of between 3 million and 7.2 million tonnes of Urals crude for loading in Primorsk.

In the south, Italy’s Eni and traders Warly and Unipec emerged as winners for 80,000-tonne cargoes each, while Total and Eni won 140,000-tonne cargoes each, said the sources, which Reuters did not name.

They added that Eni received priority rights for loadings ex-Novorosiisk, while Warly won the tender for between 255,000 tonnes and 450,000 tonnes of Caspian Pipeline Consortium Blend between October and early January.

Rosneft offered Urals in parcels of varying size from the Black Sea Port of Novorossiisk. Under the tender terms, it can sell between 840,000 tonnes and 2.52 million tonnes as 140,000 tonne cargoes and between 960,000 tonnes and 2.88 million tonnes as 80,000 tonne cargoes.

During the last tender in March, Shell won the Urals crude tender in northwest Europe, while Warly emerged as a winner for all 80,000-tonne cargoes in the south.

Published: 06 September 2011 02:24 GMT  | Last updated: 06 September 2011 02:25 GMT

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://blogs.ft.com/beyond-brics/2011/09/05/rosneft-exxon-insider-trading/#ixzz1X9PtUJPE

Rosneft-Exxon: insider trading?September 5, 2011 5:29 pm by Courtney Weaver Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email

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Rosneft’s new agreement with Exxon last week was a big boost for the Russian oil group. It also appears to have been a big boost for a certain group of investors.

Russia’s market regulator has launched an insider trading investigation into Rosneft’s shares following sharp gains in the stock in the days ahead of last week’s announcement. (Shares in the company rose 12.5 per cent in the three trading days before the deal was announced.)

Unfortunately for those who aim to reform Moscow’s investment climate, these kinds of movements aren’t exactly unusual.

While the Federal Financial Market Service has been vocal about the need to combat insider trading on the local market and passed last year the country’s first real law against insider trading, traders and investors still complain about suspiciously large stock movements, not all of which are investigated.

The new law, which came into effect in January, attempts to curb insider trading by threatening culprits with fines of up to $33,000 and prison sentences of up to six years for market manipulation.

But those on the ground say the law is vague compared to comparable legislation in other countries, and creates more bureaucracy for all traders without actually fixing the problem.

“They created insider trading rules, which are super vague and are essentially going to burden the companies with a bazillion different [forms to fill out] but they are not actually getting at the heart of it,” Steven Dashevsky, a fund manager at Dashevsky & Partners in Moscow, tells beyondbrics.

With the Exxon-Rosneft deal, insider trading seems pretty likely, according to traders, given the absence of any widespread market rumours or speculation about an imminent deal.

Moreover, Rosneft is traded in both London and Moscow, meaning its stock is more liquid than many of its peers’ and isn’t subject to the same sharp swings.

In the days before the Rosneft deal, one investor is said to have purchased 1m shares in the company at an average price of 210 roubles per share, allowing the investor to have made a profit of 19.7m roubles on the deal, if they sold at Monday’s price of 229.7 roubles per share, a market source told Izvestia, the Russian daily.

Russian media outlets have quoted unnamed sources at Rosneft denying any insider trading could have taken place.

Yet this is not the first time the company’s shares have risen ahead of a landmark deal: in January shares rose from 218.85 roubles to 233.51 roubles ahead of the announcement of its ill-fated deal with BP.

Then an insider trading investigation was never opened.

Gazprom

06.09.2011

Russia To Pump First Gas Through Nord Stream Tuesdayhttp://www.oilandgaseurasia.com/news/p/0/news/12773

Russia will begin pumping its first gas through the Nord Stream pipeline on Tuesday, Russian Prime Minister Vladimir Putin said on television today.  so that European clients could receive gas next month or in November.

"Tomorrow we will start pumping technical gas near Vyborg," Putin said during a meeting of the United Russia party.

The 7.4 billion euro pipeline has a projected capacity of 55 billion cubic metres of gas per year. The pipeline will deliver gas directly to Europe, bypassing transit countries such as Ukraine and Belarus.

"Gradually, in a calm manner we are departing from the diktat of transit states," Putin said in televised remarks, speaking from the city of Cherepovets in northwestern Russia.

Copyright 2011, Energy Watch. All rights reserved.

Gazprom starts filling Nord Stream pipeline http://english.ruvr.ru/2011/09/06/55713718.html

Sep 6, 2011 10:02 Moscow Time

Russian energy giant Gazprom started filling the Nord Stream pipeline with technological gas on Tuesday in a preparatory process that is expected to wrap up by October 6.

The 1,000-km-plus pipe, Nord Stream is designed to directly deliver Russian gas to Europe under the Baltic Sea.

In particular, the fuel will be transported to the Czech Republic and Slovakia via Germany bypassing Ukraine.

Gazprom Starts Filling Nord Stream Gas Pipelinehttp://www.bloomberg.com/news/2011-09-05/gazprom-skirting-ukraine-eases-winter-shortage-threat-as-baltic-pipe-opens.html

QBy Anna Shiryaevskaya and Kateryna Choursina - Sep 6, 2011 1:01 AM GMT+0200

OAO Gazprom will today start pumping gas into a $10 billion subsea natural-gas pipeline from Russia to Germany, bypassing Ukraine, where disputes halted supplies to European customers twice since 2006.

The Nord Stream pipeline runs under the Baltic Sea and will be able to carry enough gas to supply 26 million European homes when its fully up and running next year. It’s the first direct link between western Europe and Russia, which supplies about 25 percent of the European Union's gas.

Clashes between Ukraine and Russia over gas prices and debts disrupted shipments to Europe and led Gazprom to seek alternative routes. Nord Stream may weaken Ukraine’s hand in negotiating gas supply deals with Russia. Ukraine, which today carries 80 percent of Russian gas to the European Union through Soviet-era pipelines, wants to revise its long-term contract for fuel imports.

Nord Stream “will be especially important” if existing agreement between Russia and Ukraine “break down this winter over the pricing issue, thus leading to a new dispute,” said Katja Yafimava, a research fellow at the Oxford Institute for Energy Studies.

Gazprom and its partners, BASF SE’s Wintershall AG unit, E.ON Ruhrgas AG, Nederlandse Gasunie NV, and GDF Suez (GSZ) SA, are building the pipeline in stages. The first line will have a capacity of 27.5 billion cubic meters a year, doubling to 55 billion cubic meters when the second is ready in 2012.

Transit States

“We are slowly and surely turning away from the dictate of transit states,” Prime Minister Vladimir Putin said yesterday as he announced that Russia’s gas export

monopoly would start filling the Nord Stream link that runs under the Baltic Sea with gas. The pipeline will begin commercial operations next month.

European winter natural-gas prices, led by the U.K.’s National Balancing Point, the continent’s largest single market for the fuel, advanced to near three-year highs this year amid heightened concerns about supply security and rising import dependency as North Sea production dwindles.

Gas for delivery in Britain during the six-month heating season from October reached a high of 78.25 pence a therm on Aug. 31, the highest since October 2008. It closed at 73.60 pence at yesterday up 17 percent this year. That’s equal to $11.86 a million British thermal units.

Diverted Supplies

Gazprom may divert as much as 20 billion cubic meters that is currently shipped through Ukraine through Nord Stream, Chief Executive Officer Alexei Miller said in May, according to state television Rossiya 24. Sergei Kupriyanov, a spokesman for Gazprom, declined to comment on expected volumes yesterday.

Ukraine’s state-run energy company NAK Naftogaz Ukrainy, which pumps about 100 billion cubic meters of gas a year to Europe, has an annual transit capacity of 142 billion cubic meters.

“Reduction in transit volumes will cause Ukraine to lose about $550 million in revenues from transit next year,” said Denis Sakva, an energy analyst at Dragon Capital, a Kiev-based investment bank.

Nord Stream is nearing completion as Ukraine, the biggest buyer of Russian gas, seeks lower gas purchases from Gazprom and revisions to a pricing formula. Gazprom’s Chief Executive Officer Alexei Miller had offered to revise the contract if Naftogaz agreed to merge with his company. That proposal was rejected by Ukraine.

The eastern European country may have to turn to an international court “as a last resort” in order to revise gas supply contracts, President Viktor Yanukovych said on Sept. 3, according to his website.

From Germany, Nord Stream’s first line will be connected to the OPAL system that connects the Czech Republic. The second line will connect to the NEL onshore pipeline and carry gas to western Germany and other European countries.

Gazprom has contracted about 22 billion cubic meters to supply customers including EON AG and GDF Suez via Nord Stream in the coming years.

To contact the reporters on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net

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

Fluxys G acquires 19% stake in Nord Stream connecting pipelinehttp://www.istockanalyst.com/business/news/5396664/fluxys-g-acquires-19-stake-in-nord-stream-connecting-pipeline

Tuesday, September 06, 2011 3:42 AM(Source: Datamonitor)Fluxys G has announced that it has acquired a 19% stake in the Nord Stream connecting pipeline from Wingas.

The NEL link is one of the two pipelines planned in Germany for accommodating downstream flows from the Nord Stream pipeline which is going to bring additional volumes of Russian natural gas through the Baltic Sea to Europe. Following the signing of this agreement, the NEL ownership is composed of WINGAS 51%, Gasunie 20%, Fluxys G 19% and E.ON Ruhrgas 10%. The planned investments for the pipeline project are approximately at E1 billion, the company said.

Walter Peeraer, CEO of Fluxys G: "We are pleased to join this consortium for the construction of additional import capacity and to contribute to the security of supply of Europe and to the integration of the North-Western European natural gas market. We already have a stake in the Dunkirk LNG terminal project and stakes in the BBL and Interconnector pipelines linking the European continent to the UK. The participation in the NEL pipeline is a next step in our strategy to link different trading places in North-Western Europe."

The NEL pipeline will run from the Nord Stream landfall point in Lubmin near Greifswald to Rehden in Lower Saxony, stretching over 440 kilometers past Schwerin and Hamburg. It will connect Nord Stream with the European gas network, just as the OPAL natural gas pipeline does to the Czech Republic, the company added.

A service of YellowBrix, Inc.

SEPTEMBER 5, 2011, 1:31 P.M. ET

South Stream Gas Pipeline Project On Schedule - Eni http://online.wsj.com/article/BT-CO-20110905-705829.html

MILAN (Dow Jones)--The heads of Italy's Eni SpA and Russia's OAO Gazprom (GAZP.RS) met in Moscow to discuss the progress of the South Stream gas pipeline project, which was going ahead as scheduled, according to an Eni statement Monday.

Eni Chief Executive Paolo Scaroni and his Gazprom counterpart, Alexei Miller, also discussed issues related to the entry of French utility Electricite de France SA (EDF.FR) and the Wintershall unit of German chemicals giant BASF SE (BAS.XE) as shareholders into the joint venture for the construction of the offshore section of the project, it said.

They also discussed the signing modalities for the purchase of SeverEnergia gas, it added. SeverEnergia is partly owned by Eni.

The statement didn't elaborate.

Eni and Gazprom are major shareholders of South Stream, which is to bring Russian gas to the European Union in the coming years.

-By Gilles Castonguay, Dow Jones Newswires; +39 02 5821 9908; gilles.castonguay@dowjones.com

22:33 05/09/2011Top News

South Stream construction goes as scheduled - Gazprom

http://www.itar-tass.com/en/c32/218855.html

MOSCOW, September 5 (Itar-Tass) —— Gazprom CEO Alexei Miller and ENI CEO Paolo Scaroni met on Monday, September 5, to discuss the construction of the South Stream gas pipeline.

“The sides agreed that the implementation of the project proceeds in strict compliance with the schedule,” Gazprom’s press service said.

Miller and Scaroni also discussed the admission of Electricite de France and German oil and gas producer Wintershall to the project company that is responsible for the marine section of the pipeline.

A general feasibility study for the South Stream project will be completed by October, Miller said earlier.

“The work on the marine part of the South Stream, project has been finished, and the drafting of national feasibility studies has also been completed in the European countries participating in the project,” Miller said at a presentation of the project in late May.

“A general feasibility study for the project will be ready by October,” he said, adding that the implementation of the project “is proceeding strictly as scheduled and the first gas will be supplied in December 2015”.

Miller said, “There is a 100 percent guarantee for the pipeline throughput.”

South Stream, which will be jointly built by Gazprom and ENI, will eventually take 30 billion cubic meters of Russian natural gas a year to southern Europe, with Greece becoming a transit state on the southern arm of the pipeline pumping gas to Italy.

Analysts have said that the project, which aims to link Gazprom's Siberian gas fields with Europe and is seen as a competitor to the EU-backed Nabucco pipeline, will cost around 10 billion euro, or 15.82 billion U.S. dollars.

The projected South Steam gas transit pipeline starts at the Beregovaya compressor station at the Russian Black Sea coast. It would run through the Black Sea to the Bulgarian port of Varna, where it splits - the southwestern pipe would go to southern Italy via Greece, whereas the northwestern route would go through Serbia to northern Italy, possibly including Croatia, Slovenia, Hungary, and Austria.

South Stream is scheduled to become operational in 2013. The 900-kilometre-long undersea section of the pipeline will run from the gas compressor facility at Beregovaya, on Russia's Black Sea coast, near Arkhipo-Osipovka, towards the city of Burgas, in Bulgaria. The sea's maximum depth on this route is 2,000 metres.

On the ground the pipeline will split. One (southwestern) branch will be laid across Bulgaria and Greece and the Adriatic Sea towards Brindisi, in Italy, and the other (northwestern one) may follow either of the two routes still being considered - Bulgaria-Serbia-Hungary-Austria, or Bulgaria-Serbia-Croatia, Slovenia-Austria.

South Stream is a strategic project for Europe's energy security and should be implemented by the end of 2015. Work is currently underway to draft a feasibility study for the marine section across the Black Sea and the surface section running through the transit countries.

The inter-governmental agreement signed in Vienna on April 25, 2010 between Russia and Austria on cooperation under the South Stream project removes all legal obstacles to its implementation.

The agreement was the last document that was necessary for the start of the project. Russia has signed similar documents with Serbia, Hungary, Greece, Slovenia, and Croatia.

The overall capacity of the marine section of the pipeline will be 63 billion cubic meters a year. Its cost is about 8.6 billion euros. The section is scheduled to be commissioned before December 31, 2015.

Investment decision on Shtokman anticipated this year

http://www.rbcnews.com/free/20110905160940.shtml

      RBC, 05.09.2011, Cherepovets 16:09:40.The Russian government expects the decision on investments in the first phase of the Shtokman gas project to be made before the end of this year, Prime Minister Vladimir Putin said at a regional conference of United Russia party today.

      Russia has no plans to abandon this project even though Gazprom has suspended work on it due to lower gas demand, Putin noted. He reiterated that Shtokman is part of the government's plan to gain a leading position on the global liquefied natural gas (LNG) market. The LNG plant at the Shtokman field is scheduled for launching in 2017.

      Gazprom holds the license to develop the field located in the Russian sector of the Barents Sea and containing 3.9 trillion cubic meters of gas and 56m tons of gas condensate reserves. France's Total and Norway's Statoil are Gazprom's partners in the Shtokman project.