Russia 090803

Basic Political Developments In Ankara Putin and Erdogan will persuade each other to “discipline” Baku and

Yerevan - There is something symbolic in the date of the RF Prime Minister Vladimir Putin’s visit to Ankara. If we recall that a year ago exactly on these days broke out the Georgian-South Ossetian war, which put the region on the verge of catastrophe, then the visit of Putin to Turkey can be attributed to the list of planned chances.

Russia Accused of Altering Border - Georgia accused Russia of attempting to take a small wedge of additional territory on Sunday on the boundary of the breakaway region of South Ossetia, amid mounting tension days before the anniversary of last year’s five-day war

Eduard Kokoity: I rule out a new Georgian aggression - On the eve of the first anniversary of Georgia’s invasion of South Ossetia, the republic’s President Eduard Kokoity tells RIA Novosti about the investigation of that tragedy, the progress in rebuilding the infrastructure and about who is  awaiting Georgian President Mikheil Saakashvili in Tskhinval.

No Respect for Russia In Its Own Backyard - Medvedev needs to walk a fine line between appearing tough domestically and pragmatic globally, but he cannot afford to be perceived as weak as the slights to Russia increase. Neither can he afford to have Putin settle the scores for him.

Belarus has not taken over security bloc’s presidency, Russian foreign minister says - Belarus has not taken over the rotating presidency of the Collective Security Treaty Organization (CSTO) despite Alyaksandr Lukashenka’s presence at the bloc’s informal summit in Kyrgyzstan last week.

Lukashenko Holds Out on Joint Task Force - Belarussian President Alexander Lukashenko refused to sign an agreement Saturday that would create a rapid-reaction security force, casting doubt on Moscow’s plans to form a post-Soviet military alliance and suggesting that a serious rift in relations with Minsk continues.

The Defense Minister of Azerbaijan met with Russian counterpart - The Defense Minister of Azerbaijan Safar Abiyev met on Sunday with Defense Minister of Russian Federation Anatoly Serdyukov traveling in Azerbaijan on two-day working visit, the the press service of Defense Ministry of Azerbaijan reported. Azerbaijan - President Ilham Aliyev receives Russian Defense Minister

Russia bolsters regional finances - Russia has pledged to put up 75% of the $10 billion dollars in the fund. Stabilizing the economic situation in these countries is a key priority for Russia. The fund also provides for joint financial projects within the community.

No warning for Russian space debris hitting Canada: documents - Federal officials got no warning that a Russian rocket would soar through Canadian airspace last December before splashing down, newly released documents show.

Russia expects $2.6 billion in military aircraft sales in 2009 - "Aviation has always been a predominant part of Rosoboronexport's foreign sales portfolio, and 2009 will not be an exception. According to our plans, exports of Russian military

aircraft will worth about $2.6 billion or 40.6% of the total," said Alexander Mikheyev, the company's deputy general director.

Two generators shut down at Kola Nuclear Power Plant - Two generators at the Kola Nuclear Power Plant were shut down last week due to a fault in the anti-fire system.

Putin proposes tightening sanctions for environ pollution - Putin also said that the government planned to develop mechanisms soon to stimulate Russian companies to introduce environmentally friendly technologies. New production facilities in East Siberia and the Arctic shelf should be based only on new technologies, meeting the highest ecological requirements, he added.

Putin relieves Moskvichev of post of deputy transport minister Ten dead in two attacks in Russia's volatile Caucasus Five policemen die, 4 get injuries in attack in Chechnya Rebels Kill Five Russian Police In Chechnya – Reports Attack on Chechen police convoy kills 5 Russia to reduce poultry import dependence 03 Aug 2009 - “Last year our pork

market was provided with 29% imports, and the poultry market 36%. This is too much. Currently we managed to change the dynamics in favour of the domestic produce; it means, the import is decreasing," Zubkov noted.

Logistics center for Latvian food products to be opened near Moscow - A logistics center for Latvian food products will be developed near the Russian capital city of Moscow, LETA was informed by the Agriculture Ministry's press and public relations department.

Airborne Day in Vladivostok Celebrated with Festive Concert Army servicemen need spiritual support of the Church - Patriarch Kirill Russian Patriarch continues trip to Western Ukraine after delay Ministry: Change in itinerary of Patriarch Kirill's Ukraine tour shouldn't be

politicized - A decision to change the itinerary of the Ukraine tour of Patriarch Kirill of Moscow and All Russia should not be politicized, the Ukrainian Interior Ministry said in a press release on Sunday.

Russian church leader stopped from visiting Ukraine city Voting by Phone Possible in Elections - Voters may be able to cast their ballots

by cell phone as early as March 2010, Vladimir Churov, the country’s top elections official, said at the Seliger youth camp on Sunday.

Text your… ballots! - Vladimir Churov, Head of the Central Election Commission of the Russian Federation, said this will become possible as early as March 2010 when parliamentary elections will take place in many federal regions, Interfax reports.

Russian President Dmitry Medvedev sent a letter to Natalya Solzhenitsyna, the widow of Alexander Solzhenitsyn, on the anniversary of the writer's death

The August Syndrome - Brace yourselves, Russia watchers. August is upon us… in post-Soviet Russia, it has been a time of coup attempts, debilitating economic crises, financial meltdowns, bombings, and wars.

National Economic Trends Russian Manufacturing Shows ‘Modest’ Decline in July, PMI Shows PMI: Russian manufacturing sector edges closer to stabilization Jul

Bonds OK for Pension Fund Russia running out of reserves - The Russian Reserve Fund will be all spent in

2010 in order to cover for budget deficits, the country’s Finance Ministry confirms. In addition, the government considers to ask the World Bank and the International Monetary Fund for credits.

Russia daily c.bank swap limit at 5 bln rbls Budget deficit gives rise to Rouble devaluation talk INDICATORS - Russia - Aug 3 - Russian economic indicators are based on data

provided by the Federal State Statistics Service, government institutions, the central bank and exchanges.

Russia to produce nearly 85 mln tonnes of grains in 2009

Business, Energy or Environmental regulations or discussions Rosneft, Transneft, Gazprom, Severstal: Russian Equity Preview VEB Buys Deputy’s Factory - State-owned Vneshekonombank bought

Amurmetall for an undisclosed price to keep workers at the only steelmaker in the Far East in their jobs.

VTB Issue Only for Owners MTS to Buy Comstar Stake? Mobile firm MTS offers $1.27bln for Comstar's 51% stake – paper Alrosa Rough Diamond Price Cut Refuted - Reports from Russia that Alrosa is

considering a sharp cut in rough diamond prices are being strongly denied. Reports last week claimed that Alrosa’s new president has decided to reduce prices by up to 25 percent to meet current market prices.

Mechel announces placement completion of its 04 series bonds Rexam To Cease Making Beverage Cans At Russian Plant Russian billionaire loses appeal to transfer lawsuit - The UK Court of Appeal on

Friday rejected an appeal by Russian billionaire Oleg Deripaska to have a £2.4bn (€2.8bn) lawsuit against him transferred from London to Russia, according to a report in The Times.

GM-AVTOVAZ suspends Chevrolet NIVA production till Sept AvtoVAZ Workers Prepare for Protest - Yedinstvo, an independent labor union,

will hold a rally on Thursday to appeal to the federal government to “create favorable living and working conditions in Tolyatti,” where AvtoVAZ employs more than 100,000 people.

Toyota plant in Russia closes send workers on two-week vacation Banks Loom Large at Moskva-City - Sberbank and VTB own or hold mortgages

on nearly every building going up in the Moskva-City business district, an unexpected outcome of the financial crisis that has forced the state banks to add the risky portfolio of real estate to their traditional business of lending.

Gas Is The Dominant Fuel In Russia, Accounting For 57.1% Of Primary Energy Demand - BMI forecasts that Russia will account for 47.73% of Central and Eastern Europe (CEE) regional power generation by 2013, and will remain a net exporter of electricity to neighbouring states

Activity in the Oil and Gas sector (including regulatory) U.S. Rules May Affect Russia’s Cash Cow - As regulators in the United States

consider limiting speculative trading on oil exchanges, market players are engaged in their own speculation, wondering how the new rules will affect the country’s most important export.

Russia July oil and gas output rise vs June June Oil Output Up 1.3% Urals Energy hands oil field to Sberbank for debt TNK-BP to Open 5 Fields TNK-BP lines up new Siberian fields PrimeGen Energy Begins Drilling Third Timan-Pechora Well

Gazprom Primorsky Krai Residents Furious At Gazprom Big Boss Pay Gazprom Neft Joins OTCQX - The leading Russian Oil & Gas Producer Joins the

U.S. OTC Market's Highest Tier Scorpion in Gazprom pay row - Bermuda-based driller Scorpion Offshore is in a

dispute with Russian gas monopoly Gazprom over payment for use of the company’s Offshore Vigilant jack-up rig in Venezuela.

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Full Text Articles

Basic Political Developments

In Ankara Putin and Erdogan will persuade each other to “discipline” Baku and Yerevan http://www.panarmenian.net/details/eng/?nid=1053

In a favorable course of events Russia and Turkey will seize almost full power in the region and the hopes of Europe for gas independence will be brought to naught. But Armenia and Azerbaijan are more worried about how Turkey and Russia will wish to regulate the Karabakh conflict.30.07.2009 GMT+04:00 There is something symbolic in the date of the RF Prime Minister Vladimir Putin’s visit to Ankara. If we recall that a year ago exactly on these days broke out the Georgian-South Ossetian war, which put the region on the verge of catastrophe, then the visit of Putin to Turkey can be attributed to the list of planned chances. But if we also recall that it was exactly after this war that the Turkish Premier introduced the Caucasus Platform of Peace and Stability, it can be assumed that Vladimir Putin goes to Turkey not only to discuss the customs problems emergent between the two countries, but also to settle some more serious issues. And the most serious issue now for Russia is the possible realization of the Nabucco project.Settlement of old conflicts like Karabakh, Abkhazia or South-Ossetia is only a supplement to the main part of the story. Turkey and Russia now need that the regulation, in particular, of the Karabakh conflict be controlled by Moscow and Ankara. In a

favorable course of events Russia and Turkey will seize almost full power in the region and the hopes of Europe for gas independence will be brought to naught. But these are, as you might say, not “our” problems. Armenia, and probably Azerbaijan are now anxious to know what conclusion the two premiers will arrive at in the end and how they will wish to solve the Karabakh problem. The recent developments around Azerbaijan show that the positions of Baku have somewhat shaken in the world arena: Azerbaijan is reproached with non-respect for human rights, corruption and other deadly sins. Possibly, this is the charge for selling the gas to Gazprom, who knows? But that very Gazprom, (or, to be more accurate, Russia) promises nothing and it could not promise, for there is Armenia, which will have to turn her back to her Big Brother, what we have been repeatedly writing about. So, it is necessary to come to an agreement with Turkey. By the way, Putin will be persuading Erdogan to “discipline” Baku, and Erdogan, in his turn, will persuade Putin to do the same with respect to Armenia.

Naturally, Nagorno-Karabakh is going to be the defeated party in this trade if Armenia does not show sufficient firmness and does not take measures that would help to preserve her present position. However, actions, or to be more accurate, the inaction of Armenian diplomacy sometimes puts us on our guard. While Baku shouts at the top of her voice about the refugees and Armenian aggressors, Yerevan behaves as if it isn’t at all addressed to her and doesn’t take actions to bar the discussion of the Karabakh issue in the United Nations. Most likely, the issue of United Nations will be touched upon in Ankara during the negotiations, because Turkey has become a non-permanent member of the UN Security Council, and Russia, being a permanent member, can block or, on the contrary, give “green light” to the consideration of Karabakh problem. This, in its turn, means that Baku can achieve her goal by carrying out the process of regulation of the Nagorno-Karabakh conflict beyond the frames of the OSCE Minsk Group. This is, after all, a possible outcome and Armenia, as always, will be set to face a fact. Simply this time everything is much more serious and the resolution on “occupied territories” may be freely accepted by majority of votes. We’ll comfort ourselves with the fact that UN resolutions, as a rule, are not carried out, although this is a not a strong relief and the organization may suddenly insist on the fulfillment of its recommendations.

It is appropriate to mention here that in spite of summer time, political life in the region is rather active and it is not expected to drop off, which gives grounds to assume that considerable changes are expected in two or three months. So far no one takes Iran seriously as a potentially powerful regional player, and this state of affairs will continue until relative order is established in this country. In other words, the situation will carry on until the opposition and the conservatives arrive at a unanimous view.

There is one more delicate point that we did not mention: the Kars agreement, which has become sticking point between Armenia, Turkey and partly Russia. The two premiers will definitely touch upon this agreement during the negotiations, but what they will arrive at is very difficult to say, especially in view of the latest statement of the Armenian President Serzh Sargsyan, who demonstratively presented an ultimatum to Turkey. If Armenia is firm in her position, Sargsyan is not going to attend the football match. But if at the last moment the Armenian President leaves for Bursa, it will actually mean a

political defeat. This is what Armenia should fear most, and what Putin and Erdogan will discuss behind her back is not that vital.

Karine Ter-Sahakyan«PanARMENIAN.Net» analytical department!  Reproduction in full or in part is prohibited without reference to «PanARMENIAN.Net».

Russia Accused of Altering Border http://www.nytimes.com/2009/08/03/world/europe/03georgia.html

By ELLEN BARRYPublished: August 2, 2009

MOSCOW — Georgia accused Russia of attempting to take a small wedge of additional territory on Sunday on the boundary of the breakaway region of South Ossetia, amid mounting tension days before the anniversary of last year’s five-day war. Shota Utiashvili, a spokesman for Georgia’s Interior Ministry, said Russian reconnaissance teams entered the village of Kveshi in the disputed region in an attempt to move the boundary several hundred yards to a strategically better position. Though Russian border guards have been deployed on South Ossetia’s boundary with Georgia since April 30, he said, they have been reinforcing it gradually. Press officers for the separatist government of South Ossetia could not be reached for comment.

Steve Bird, a spokesman for the European Union Monitoring Mission, said patrols in Kveshi found no evidence of any action there. He said there were perennial arguments about the exact location of the boundary of South Ossetia, and that “the overall picture is more tense as the anniversary approaches.”

In recent days, South Ossetia has reported mortar fire from Georgian-controlled territory, leading to an announcement by Russia’s Defense Ministry on Saturday that it was prepared to use military means to protect the enclave. The European Union mission released a statement late on Saturday saying its patrols “have seen no evidence to confirm that any firing has taken place toward Tskhinvali or its surroundings.”

The boundary of South Ossetia was drawn in the 1920s, when the Soviet Union gave South Ossetia autonomous status within Georgia. Georgia revoked that status as the Soviet Union neared collapse, stoking the separatist conflict that flared up last year.

In an interview with the Ria Novosti press service last week, President Eduard Kokoity of South Ossetia said he hoped to expand the boundary to include a gorge that he described as “native Ossetian land, which for unclear reasons in the Soviet period” was included in Georgia.

Eduard Kokoity: I rule out a new Georgian aggressionhttp://en.rian.ru/analysis/20090803/155710016.html

12:4003/08/2009

On the eve of the first anniversary of Georgia’s invasion of South Ossetia, the republic’s President Eduard Kokoity tells RIA Novosti about the investigation of that tragedy, the progress in rebuilding the infrastructure and about who is  awaiting Georgian President Mikheil Saakashvili in Tskhinval.

Question: In July 2009, the head of the Investigative Committee of the Prosecutor General’s Office of Russia disclosed the documented number of South Ossetian civilians who had died as a result of the Georgian aggression: 162 people dead. However, immediately after the war the republic’s authorities claimed ten times that number, about 1,500 dead. Why such a difference in figures? How many people actually died?

Answer: What happened in August 2008 was a great tragedy for our small nation. I sometimes feel that the question is blasphemous. It would have been a tragedy for us even if two people and not two thousand had died. Investigation is in progress and fresh details of that Georgian crime are emerging. You gave the official toll for today. The figures differ not because somebody wanted to inflate them or picture it as a global disaster.

The tragedy was global for our people. Our people faced total destruction, extermination. I cannot bring myself to measure this in figures.

Initially the data that was coming in was based on the fact that there were refugees who crossed the border, people were starting looking for their folks and making calls. They started filing applications. The applications coming from various directions were used to track people down. Later, after the end of the aggression, after Russia had practically saved our nation, it turned out that the people presumed dead were alive.

The figure you gave is the current toll, but it may grow.

You are talking only about civilians, but there were also soldiers who died. Many citizens of South Ossetia died and were buried on Russian territory. Many relatives of the victims, considering our national mentality, did not even file for compensation.

Q: Last October you said that the Prosecutor’s Office of South Ossetia would put Georgian President Mikheil Saakashvili on the wanted list as a war criminal. Why did you not do it?

A: The South Ossetian law enforcement agencies have opened a criminal case against Saakashvili and all those who had organized the aggression against our people. This is a crime under international law. So our law-enforcement bodies are working on that and the issue is still on the agenda. Saakashvili is a criminal who must be behind bars and we

will work toward that end.

He is treated like all the other criminals who organized the aggression and genocide of the Ossetian people; he is on that list. They are all international criminals as far as we are concerned. We have criminal charges against him as the person who was responsible for this, who gave the commands, who ordered the storm of Tskhinval and declared war on South Ossetia, who implemented Operation Clean Field together with his subordinates. And we will seek to bring him to justice.

Q: After the August war South Ossetia claimed that as a result of shelling 80% of the buildings in Tskhinval and 50% of residential houses had been destroyed. How is the reconstruction going? How many houses and administrative buildings have been restored? How many are still to be restored?

A: 70% of residential stock and 80% of administrative buildings were destroyed. Everything is being done, jointly with the Russian Ministry of Regional Development, to restore private houses in the first place. During his recent trip to South Ossetia Russian President Dmitry Medvedev fully backed the position of the republic’s leadership that private housing should be restored first. We have suspended the construction of administrative buildings in order to concentrate all the resources on rebuilding private houses, rebuilding the war-devastated economy for the benefit of the people, as well as the critical elements of infrastructure (I am referring to the Edis-Tskhinval water pipeline and all the urban infrastructure).

Overall, we will build more than 360 houses this year, not counting the gift from the Moscow Government, the Moskovsky district in Tskhinval. Some houses are subject to demolition and some can be partially restored. We take into account the wishes of the victims. The process of coordination is going on. In any case the main task is to build homes and we will build them. I am sure we will have very good results to report by the end of the year.

As a matter of fact, we have planned everything three years ahead. This year we will accommodate the neediest, regardless of whether they live in Tskhinval or in the villages. Some fantasized that Tskhinval could be restored in two months and a whole new city could be built. If it were that easy people would be building a new city every two months all over the place. But that is unrealistic. Breaking is not building. You also have to bear in mind that many houses were destroyed in Tskhinval and in South Ossetian villages in 1989-1992. We must give thought to them too. We have to bring back the refugees.

Q: There is no clearly marked border between South Ossetia and Georgia. Will South Ossetia, with Russia’s help, build a fully-fledged border, which Russian border guards are helping to protect today? If so, what may be the cost and would it perhaps require an increased Russian military presence in South Ossetia?

A: The state border of South Ossetia is already securely protected jointly with Russia after our countries signed a relevant agreement. Yes, there are problem areas in our

republic which will be guarded jointly. I don’t believe there is a need to increase the military presence or the number of border guards. There are enough forces and assets in place, especially since Russian border guards are very professional and very efficient, which eases tensions in the communities with predominantly Georgian population.

As for Georgia, it is not yet ready and it does not seek to ease tensions. In any case, time will pass and we will discuss it together. There is a territory marked as the territory of the South Ossetian Autonomous Region and we will develop it. For now the border will pass through the territory of the South Ossetian Autonomous Region considering that Georgia has not yet given its consent.

But we have very serious territorial issues that must be raised. They are the Truso Gorge, which today is part of the Georgian administrative unit of Mtskheta-Mtianeti. This is historically Ossetian land which was put under the administration of the Georgian SSR in the Soviet times for some obscure reason. Today we should raise the issue of restoring these lands to Ossetia. In principle it is the territory of North Ossetia, but considering that we fully control the Leningorsk District we will raise these issues because these are our lands. For some strange reason in the Soviet times the territory of North Ossetia kept shrinking while the territory of the Georgian SSR kept expanding. This unique place, where many outstanding Ossetians were born, is for some reason claimed by Georgia.

Q: How do you assess the security situation a year after the war? Do you think a repeat of the August events is possible?

A: Georgia, assisted by the United States, NATO, Ukraine, Israel and other states, has quickly restored its military potential. The Georgian army is better equipped today than it was in August 2008. It regularly holds exercises jointly with NATO; and NATO and the U.S. regularly send their military experts there. But we have not been sitting on our hands either. Mindful of the events of August 2008, we are also taking the relevant measures. This does not mean that we are arming ourselves; we have simply drawn conclusions from what happened in 2008. In light of the agreements we have signed with the Russian Federation, I would like to reassure my fellow countrymen that the situation will remain stable and I rule out a new Georgian aggression now. One may supply weapons, but on the other hand we know the morale of the people who fled South Ossetia. As for that lover of wars and bellicose slogans, that international criminal, I would advise him to be careful. Considering his behavior, Georgia has a shortage of mental hospitals.

Q: How do you see the future of South Ossetia, which will have to live side by side with Georgia? Is dialogue with the Georgian leadership possible?

A: We are building an independent sovereign state. We have every reason to believe that we will succeed. The assistance Russia is rendering us is the page of history that the people of Ossetia will always remember, we will always be grateful to Russia wherever the Ossetians may live, in South Ossetia, North Ossetia or any other part of the world. We are all grateful to Russia and the Russian people for their support.

Our small nation was under siege and was being exterminated not for five days in August 2008 and not since 1989, but from the beginning of the 20th century.

We are not a vindictive people. In any case we are going to seek good, friendly relations with the neighboring state, but not with the present criminal regime, which we will put on trial.

Q: If Saakashvili were to come to South Ossetia, what can he expect?

A: In principle I rule out his coming to South Ossetia. I think a rabbit can never visit a leopard; otherwise the outcome will be lamentable for the rabbit. If he finds himself there he will become easy prey for the leopard who is awaiting him.  

No Respect for Russia In Its Own Backyardhttp://www.themoscowtimes.com/article/1016/42/380049.htm

03 August 2009By Vladimir Frolov

President Dmitry Medvedev headed to Central Asia last week amid ominous signs for Russia in its own backyard that are testing his leadership, a year after he sent troops to roll back Georgia’s invasion into South Ossetia.

U.S. Vice President Joe Biden traveled to Ukraine and Georgia last month to reiterate U.S. support for the countries’ plans to join NATO. To rub the point in, Ukraine and Georgia used the occasion of Biden’s visit to order the expulsion of Russian diplomats.

Days earlier, Turkmen President Gurbanguly Berdymukhammedov promised U.S. Undersecretary of State William Burns that his country would supply gas to Nabucco, a threat to Gazprom’s South Stream.

Medvedev was humiliated by the failure of four CIS presidents to show up for a horse race summit in Moscow in July, where a breakthrough in peace talks on Nagorno-Kharabakh between the leaders of Armenia and Azerbaijan did not materialize.

The sharpest slap in the face came from Belarussian President Alexander Lukashenko, who instructed his top diplomats to develop closer ties with the West and called the Russia-Belarus union “a failed project.” Lukashenko’s Foreign Ministry issued a bold statement that reaffirmed Belarus’ recognition of Georgia’s sovereignty over Abkhazia and South Ossetia, despite Moscow’s persistent prodding that Minsk recognize them as independent states.

Lukashenko continued to stall Medvedev at last week’s Collective Security Treaty Organization summit on agreement to form a rapid-response force, while the presidents

of Kyrgyzstan and Uzbekistan resisted the opening of a Russian military base near the Fergana Valley.

To add insult to injury, Tajikistan announced it would ban the use of Russian by state agencies and in official documents, while asking Russia to pay commercial rates for its military base there.

These multiplying rebuffs by Russia’s closest neighbors are putting pressure on Medvedev to respond toughly to reassure the Russian people that their country is not being treated like a doormat. Putin never allowed such indignities to go unanswered. The leaders of Moldova, Ukraine and Georgia learned that lesson the hard way.

Medvedev needs to walk a fine line between appearing tough domestically and pragmatic globally, but he cannot afford to be perceived as weak as the slights to Russia increase. Neither can he afford to have Putin settle the scores for him.

Vladimir Frolov is president of LEFF Group, a government-relations and PR company.

Belarus has not taken over security bloc’s presidency, Russian foreign minister sayshttp://naviny.by/rubrics/inter/2009/08/02/ic_news_259_315521/

02.08 // 16:05 // English 

Belarus has not taken over the rotating presidency of the Collective Security Treaty Organization (CSTO) despite Alyaksandr Lukashenka’s presence at the bloc’s informal summit in Kyrgyzstan last week.

Russia will continue performing the duties of the CSTO presidency “pending the moment when Belarus is ready to assume the full-scale functions of the presidency,” RIA Novosti quoted Russian Foreign Minister Sergei Lavrov as saying.

The Russian minister said with reference to Mr. Lukashenka that Minsk was considering the matter and “appropriate decisions will be made in good time.”

Belarus had been scheduled to take over the duties at a June 14 CSTO summit in Moscow, but Mr. Lukashenka boycotted the event in protest against Russia’s ban on the import of Belarusian dairy products.

At the summit five of the security bloc’s member states — Armenia, Kazakhstan, Kyrgyzstan, Russia and Tajikistan — signed an agreement establishing a CSTO joint rapid response force, but Minsk described the accord as invalid, citing the lack of consensus among members, and sent an appropriate note to the CSTO secretariat.

Speaking on June 18, Andrei Nesterenko, the Russian foreign ministry’s spokesman, said

that Moscow hoped that Belarus would take over the CSTO presidency without delay. //BelaPAN

Lukashenko Holds Out on Joint Task Forcehttp://www.themoscowtimes.com/article/600/42/380105.htm

03 August 2009 By Nikolaus von Twickel / The Moscow Times

Belarussian President Alexander Lukashenko refused to sign an agreement Saturday that would create a rapid-reaction security force, casting doubt on Moscow’s plans to form a post-Soviet military alliance and suggesting that a serious rift in relations with Minsk continues.

Lukashenko attended a Collective Security Treaty Organization summit in the Kyrgyz resort of Choplon-Ata with other heads of state from the seven-member body, but he made no public comments. He boycotted the last CSTO summit, held in Moscow in June, where Belarus was supposed to assume its rotating presidency.

In a sign that Minsk was unrepentant for the slight, Moscow said it would continue to act in lieu of Belarus. We will hold “the CSTO’s technical presidency until Belarus is ready to take on this function fully,” Foreign Minister Sergei Lavrov said Saturday, Interfax reported.

On a more positive note for the Kremlin, Kyrgyzstan agreed to let Russia bolster its troops in the country by opening a joint military training center, according to a memorandum published on the Kremlin’s web site.

Kyrgyzstan has said the facility will be located at an abandoned Soviet-era military base near the southern city of Osh, close to the Uzbek border.

The memorandum allows Russia to locate “up to a battalion” of new troops in the country and station them at a training center. By Nov. 1, the sides will sign an agreement on a “united Russian military base” that would include “all Russian military sites in the Republic of Kyrgyzstan, including the Russian air base in Kant.”

Kyrgyzstan had previously denied that it would allow for a second Russian base, which could be seen as disturbing the balance of foreign powers there. The United States operates an air base in Manas, which it won permission to keep in June after promising more money.

Lavrov suggested on Saturday that the terms of the deal — including the number of new Russian troops — could change by November.

“All questions regarding the geographic parameters of the new Russian military presence and the financial details will be discussed. … The overall number will be determined by military specialists depending on the security needs of the region,” he said, Interfax reported.

The Kyrgyz training center was initially envisioned as a part of the CSTO rapid-response force, which was proposed in February to bolster military capability in energy-rich Central Asia, a Muslim region sensitive for Moscow’s security interests. It has also been described as boosting the military dimension of the alliance, which has served primarily as a forum for security consultations.

The CSTO currently has a rapid-reaction force of about 3,000 but without a unified command. Belarus and Uzbekistan have refused to join, leaving remaining members Russia, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan to the task.

Uzbekistan, which experts believe has the strongest military capacity in the area, has veered from the regional tradition of Kremlin-friendly policies after Russia refused in November to side with Uzbekistan in Central Asia’s ongoing debate over water use.

Relations with Belarus, once Russia’s closest ally, have deteriorated significantly in recent months.

Minsk initiated unprecedented steps to achieve better ties with the European Union earlier this year, winning membership in the 27-member bloc’s Eastern Partnership program, which was duly criticized by Moscow.

When Lukashenko snubbed the CSTO summit in June, an angry President Dmitry Medvedev complained that he had not even called to explain why. Lukashenko also skipped an informal Commonwealth of Independent States gathering in Moscow last month.

Lukashenko’s stance is seen as a delicate balancing act between Moscow and the West, as his country is on the verge of bankruptcy. Belarus this year received $1.5 billion loans each from Russia and the International Monetary Fund.

Russia has delayed another $500 million tranche, saying the country could go bankrupt as early as next year — a claim Lukashenko hotly denied.

Alexei Malashenko, an analyst with the Carnegie Moscow Center, said the summit showed that the Belarussian president was just interested in garnering more bargaining power.

“He will sign only if he gets something for it, first and foremost loans. For now, he is just using it as a lever against Russia,” he said.

Malashenko argued that the rapid-reaction force was not worth much without Belarus.

“It is just Russia, some Central Asian republics plus Armenia. That is not Moscow’s vision for this,” he said.

He also warned that if Uzbekistan opted to leave the Collective Security Treaty Organization, it might view the Russian base in Kyrgyzstan in a different light. “This might then be a threat to Uzbekistan’s security,” he said.

Vladimir Zharikhin, deputy director of the Moscow-based CIS Institute, a think tank, said it was understandable that Belarus was not very interested in a rapid-reaction force in Central Asia.

“[Lukashenko] does not see any particular danger for his country, which lies in a totally different area,” he said.

Zharikhin added that the rapid-reaction force, which he described as “a security guarantee against terrorist actions in participating countries,” could probably do just as well without Belarussian participation.

The Defense Minister of Azerbaijan met with Russian counterparthttp://news-en.trend.az/politics/foreign/1515907.html

02.08.09 14:54

Azerbaijan, Baku, 2 August / Trend News /

The Defense Minister of Azerbaijan Safar Abiyev met on Sunday with Defense Minister of Russian Federation Anatoly Serdyukov traveling in Azerbaijan on two-day working visit, the the press service of Defense Ministry of Azerbaijan reported.

According to information received, at the meeting there were discussed the prospects for military-technical cooperation between Russia and Azerbaijan, the current military-political situation in the Caucasus and the Armenian-Azerbaijani Nagorno-Karabakh conflict. Safar Abiyev said that the efforts of Russia to resolve the conflict appreciated and encouraging. At the same time, if the conflict is not resolved through peaceful means, military confrontation could not be avoided, Abiyev said.

Anatoly Serdyukov thanked for the warm hospitality extended to him during the two-day visit.

Azerbaijan - President Ilham Aliyev receives Russian Defense Ministerhttp://www.isria.com/pages/3_August_2009_111.php

President of Azerbaijan Ilham Aliyev has received today Russian Defense Minister Anatoliy Serdyukov.

The minister conveyed President Dmitry Medvedev `s greetings to the Azerbaijani leader.

He noted military and military-technical cooperation between Russia and Azerbaijan was expanding in accordance with relevant instructions of the two countries` Presidents.

Serdyukov said his current visit would be important in terms of holding exchange of views on prospects for the military cooperation.

President Ilham Aliyev said relationship between Azerbaijan and Russia was successfully developing in various spheres.

The Head of State expressed confidence the bilateral military and military-technical cooperation would continue to enhance.

The President pointed out the military cooperation had always been widely discussed during his meetings with Russian counterpart Dmitry Medvedev.

President Ilham Aliyev expressed assurance the Russian Defense Minister`s current visit would contribute to strengthening the military and military-technical cooperation between the two countries.

The President asked Anatoliy Serdyukov to extend his greetings to Russian leader Dmitry Medvedev.

Russia bolsters regional financeshttp://www.russiatoday.com/Business/2009-08-03/russia-bolsters-regional-finances.html/print

03 August, 2009, 10:49

Russia has passed a law to set up an anti-crisis fund for the Eurasian Economic Community.

The primary task of the bailout fund of Eurasian Economic Community members – Russia, Kazakhstan, Belarus, Kyrgyzstan, Tajikistan, and Armenia – is to provide credit to countries in the post-Soviet space.

Deputy Finance Minister, Dmitry Pankin, says many have fallen into difficult economic situations – brought on by the world financial crisis.

"Russia has already ratified, and other countries will probably due so by September. As soon as everything will be working, then we plan to transfer the first part of our contribution – $750 million, which has been allocated by the 2009 budget."

Russia has pledged to put up 75% of the $10 billion dollars in the fund. Stabilizing the economic situation in these countries is a key priority for Russia. The fund also provides for joint financial projects within the community.

Many of the former Soviet republics have been hit hard. Local currencies have suffered devaluation, and the fund could help promote the Rouble as a reserve currency, analysts say.

Exports in these states are also down as much as 50%, and Andrey Suzdaltsev, Vice Rector, Faculty of World Economy and Politics, at the Higher School of Economics says the worst might be far from over.

"When we get out of the crisis, consumer demand could change. If our post-Soviet neighbors aren't able to restructure their economies even by using money from the anti-crisis fund, they could be stuck in a state of crisis forever, asking for more and more loans."

The fund, which will be run by the Eurasian Development Bank, may offer a temporary solution to problems in a region crucial for Russia's interests.

No warning for Russian space debris hitting Canada: documentshttp://www.google.com/hostednews/canadianpress/article/ALeqM5gvdhdbIbh6MxzHyPMVe5OMZP7XcA

By Dean Beeby (CP) – 14 hours ago

OTTAWA — Federal officials got no warning that a Russian rocket would soar through Canadian airspace last December before splashing down, newly released documents show.

Instead, military and government officials were given three different re-entry points - all far removed from Canada - before learning the rocket had actually come down over Labrador.

The incident highlights a vulnerability of Canadian airspace even as the air force scrambles jets to counter threatened Russian bomber intrusions in the High Arctic.

The Russian Proton-K rocket, carrying three navigation satellites, was launched Dec. 25 from the Baikonur facility in Kazakhstan. Its bus-size fourth stage went into a low orbit for more than a day before crashing back to Earth.

Norad military experts tracking the object alerted Canadian officials and others on Christmas Day that the booster was expected to re-enter the atmosphere somewhere off Antarctica, south of Australia.

But by the next day, the radar-based prediction shifted to a spot over the Pacific Ocean, about 200 kilometres southwest of Nicaragua. Then Norad said the booster would come down about 370 kilometres east of Florida, in the Atlantic Ocean.

In the end, the booster tumbled back to Earth about 120 kilometres north of Blanc Sablon, Que., over a barren stretch of Labrador. The estimated re-entry point was just a few hundred kilometres southeast of the Goose Bay air force base.

The rocket then disappeared from radar. Any debris that did not burn up in the atmosphere is believed to have carried on into the Labrador Sea.

Norad's operation centre at Cheyenne Mountain, Colo., notified Canadian officials of the splashdown minutes after the event, leaving no time for warnings to fishing boats, cargo ships or populated places. The rocket's path had taken it across the Maritime provinces.

"At this time there was not sufficient time to ask the CCG (Canadian Coast Guard) to notify any vessels," says an internal email from a Public Safety official.

Documents detailing the incident, including Norad reports, were obtained by The Canadian Press under the Access to Information Act.

The Proton-K re-entry was reminiscent of a 2005 incident, when a U.S. military rocket splashed down in the vicinity of the Hibernia oil platform, on Newfoundland's Grand Banks, shortly after its launch from Florida.

The planned launch of the Titan IV B-30 rocket prompted Premier Danny Williams to order an evacuation of several offshore-oil platforms.

But the order was soon rescinded when American air force officials assured Ottawa the risks were small and the rocket would be destroyed if it veered off course.

A space debris expert, however, says the uncertainties about splashdown rise significantly if an object has achieved orbit, as did the Russian rocket.

"Once something gets into orbit, where it's going to come down is really unknown," said William Ailor, director of the Center for Orbital and Reentry Debris Studies in El Segundo, Calif.

Objects like boosters can tumble, making their aerodynamics unpredictable, and the upper atmosphere itself can be uneven because of solar storms and other factors, he said in an interview.

"You know the path but you don't know where along the path it's going to come down," Ailor said. "If you're thinking about trying to warn somebody, it makes it very difficult to do that."

Modern orbital hardware is more frequently being equipped with control mechanisms, such as re-entry thrusters, to better control where the debris comes down, he added.

Canada's nastiest encounter with space debris occurred in 1978, when a nuclear-powered Russian satellite broke up across the Northwest Territories, triggering an expensive cleanup of radioactive material. The Soviet Union eventually paid $3 million in compensation for the crash of Cosmos 954.

Today, about 80 large orbiting objects rain down on Earth each year but so far there have been no known deaths or injuries.

A Norad spokesman says Canada is no more likely to be hit with space junk than any other place.

"Rocket bodies tumble through the atmosphere, so the locations of where these rocket bodies land on Earth is geographically random," said U.S. Lt.-Cmdr. Gary Ross.

Earlier this year, Defence Minister Peter MacKay talked tough after a Russian Tupolev bomber headed for Canadian airspace in the High Arctic, prompting the air force to scramble two CF-18 fighter jets.

The jets sent a signal that the Russians should "back off and stay out of our airspace," MacKay said of the Feb. 18 incident.

A spokeswoman for the Public Safety Department said no protest over the Dec. 26 rocket re-entry was made to the Russian government.

"No followup with Russia was deemed necessary because the use of Canadian territory for the re-entry was not planned and there was no evidence that anything physically survived re-entry," said Jacinthe Perras.

Ironically, about two weeks before December's rocket incident, another Proton-K rocket lifted off from Baikonur carrying a Canadian communications satellite

The commercial Ciel-2 satellite, owned by Toronto's Ciel Satellite Group, was successfully placed into orbit on Dec. 10.

Copyright © 2009 The Canadian Press. All rights reserved.

Russia expects $2.6 billion in military aircraft sales in 2009 

http://www.defpro.com/news/details/8901/

11:55 GMT, August 2, 2009 MOSCOW | Russia's state arms exporter Rosoboronexport has said military aircraft will continue to dominate the company's foreign sales in 2009, and will total about $2.6 billion.

The arms export monopoly is planning to sell about $6.5 billion worth of military hardware in 2009, and earlier said its defense order portfolio was worth $27 billion, RIA Novosti reported.

"Aviation has always been a predominant part of Rosoboronexport's foreign sales portfolio, and 2009 will not be an exception. According to our plans, exports of Russian military aircraft will worth about $2.6 billion or 40.6% of the total," said Alexander Mikheyev, the company's deputy general director.

Although India, China, Malaysia, Algeria and Venezuela remain Russia's key customers in the area of military aviation, Rosoboronexport is seeking to expand its presence on other markets.

"We are expecting a major breakthrough in the Libyan direction, because Soviet and Russian-made combat aircraft continue to be the backbone of the Libyan air force," Mikheyev said in an interview with the Arms Export Journal, which is published by Moscow-based Centre for Analysis of Strategies and Technologies.

According to some sources, the Libyan air force has at least 25 MiG-21 and 125 MiG-23 fighter jets, a number of Su-22 and Su-24 attack aircraft, combat helicopters and military transport planes.

"At present, Libya is expressing an interest in MiG-35 [multirole fighter], Su-35 [multirole fighter], advanced attack helicopters, and air defense systems. We are expecting to resume traditional contacts with Libya [in sales of military aircraft] in the near future," the official said.

A source in the Russian defense industry earlier told RIA Novosti that Russia had signed and had started the implementation of a contract with Libya on the overhaul of Su-24 attack aircraft in service with the Libyan air force. 

Two generators shut down at Kola Nuclear Power Planthttp://www.barentsobserver.com/two-generators-shut-down-at-kola-nuclear-power-plant.4616196-116321.html

2009-08-03 Two generators at the Kola Nuclear Power Plant were shut down last week due to a fault in the anti-fire system.

Turbine generators 5 and 6 on reactor number three were stopped last Tuesday, and capacity was reduced from 980MW to 600MW, a press release from Rosenergoatom reads.

One of the generators was restarted Wednesday morning, and capacity is currently at 896MW. According to Rosenergoatom, the plant is working safely and efficiently and the radiation situation at the plant and in its 30-km monitoring zone is within norm.

Putin proposes tightening sanctions for environ pollutionhttp://www.prime-tass.com/news/show.asp?topicid=0&id=461671

LISTVYANKA VILLAGE, Irkutsk Region, Aug 3 (PRIME-TASS) -- Russian Prime Minister Vladimir Putin on August 1 called for tightening sanctions for environmental pollution.

He was speaking at a meeting devoted to environmental protection.

Putin also said that the government planned to develop mechanisms soon to stimulate Russian companies to introduce environmentally friendly technologies. New production facilities in East Siberia and the Arctic shelf should be based only on new technologies, meeting the highest ecological requirements, he added.

Putin also said that the government would not save money on protecting ecology, while implementing various investment projects. He also said that the government planned to enhance cooperation with public environmental organizations.

Putin relieves Moskvichev of post of deputy transport ministerhttp://www.itar-tass.com/eng/level2.html?NewsID=14200405&PageNum=0

MOSCOW, August 3 (Itar-Tass) -- Russian Prime Minister Vladimir Putin has relieved Yevgeny Moskvichev of the post of Russian deputy minister of transport in connection with his transfer to another job.

Viktor Olersky was appointed to this post, PRIME-TASS reports citing Putin’s ordinances which are put on the site of the cabinet of ministers.

Ten dead in two attacks in Russia's volatile Caucasushttp://www.earthtimes.org/articles/show/279990,ten-dead-in-two-attacks-in-russias-volatile-caucasus.html

Mon, 03 Aug 2009 08:26:33 GMT

Moscow - Five police officers were killed in an attack on security forces in the volatile Russian republic of Chechnya, officials in the capital Grozny said Monday. At least four policemen were also injured in Sunday's attack, according to a report by the Interfax news agency.

Also on Sunday, five members of the security forces were killed in the neighbouring republics of Dagestan and Ingushetia. Attacks on the state and civilian population have been on the rise in recent months in the North Caucasus republic, with almost daily kidnappings, shootings or bombings.

On July 15, human rights activist Natalya Estimirova was abducted in Grozny by unknown gunmen and shot dead. That same day, her body was found by the roadside in Ingushetia.

Five policemen die, 4 get injuries in attack in Chechnya

http://www.itar-tass.com/eng/level2.html?NewsID=14200503&PageNum=0

GROZNY, August 3 (Itar-Tass) -- Actions to search for and detain participants in a gang that fired on a police motorcade in the mountain region in Chechnya’s south were resumed in Chechnya on Monday morning, ITAR-TASS learnt at the law enforcement bodies of the republic.

The police motorcade consisting of three UAZ and Niva cars got into an ambush in the motor road Itum-Kala - - Sharoi at about 17.00 Moscow time on Sunday. The motorcade included officers of the Interior Department for the Sharoi region and the operational group of the Temporary Grouping of the Russian Interior Ministry for the Chechen Republic for the Sharoi region.

“Unidentified people opened fire from grenade launchers and automatic arms on the motorcade from several points,” a law enforcer said. “As a result, five policemen, including the police colonel who headed the operational group, died, another four policemen got injuries.”

Investigation is underway.

Criminal proceedings were instituted.

Rebels Kill Five Russian Police In Chechnya – Reportshttp://www.easybourse.com/bourse/actualite/rebels-kill-five-russian-police-in-chechnya-reports-712585

MOSCOW (AFP)--Five Russian police officers were killed in a rebel ambush in Chechnya in the latest attacks in Russia's violence-torn Caucasus region, Russian news agencies reported Monday. The police officers were attacked late Sunday while patrolling a road about 21 kilometers from the village of Itum-Kale, Interfax and RIA Novosti quoted a police source as saying.

"The three-car police column sustained machine gun and grenade fire," the source said. Another six officers were wounded in the attack, he said. Deadly clashes between government forces and Islamist rebels are common in Chechnya,

a predominantly Muslim region in the North Caucasus mountains. The region was the site of two wars between separatists and Russia's central government after the collapse of the Soviet Union in 1991, and the insurgency has spilled over into neighboring areas. Three employees of the Russian emergencies ministry were shot dead Sunday in nearby Ingushetia, while two police officers were killed in Dagestan when their patrol post came under fire Saturday, news agencies reported.

Chechnya Attack Kills 5 Policemen, Interfax Reportshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=amenoUDt.P3Q

By Lyubov Pronina

Aug. 3 (Bloomberg) -- At least five policemen were killed and six wounded when gunmen opened fire on their column in the southern Russian region of Chechnya yesterday, Interfax reported, citing an unidentified law-enforcement official.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

Last Updated: August 3, 2009 00:28 EDT

Attack on Chechen police convoy kills 5http://en.rian.ru/russia/20090803/155708238.html

MOSCOW, August 3 (RIA Novosti) - Five police officers were killed and another six injured when unidentified gunmen opened fire on a police convoy in Russia's southern republic of Chechnya, a police source told RIA Novosti on Monday.

He said the shooting took place on Sunday at around 5:00 pm [13:00 GMT] as the convoy was passing through a gorge near the village of Itum-Kale.

"A convoy of three vehicles...came under automatic and mortar fire," he said.

An investigation into the incident has been launched, the spokesman said.

Chechnya has seen a surge in violence since the Kremlin officially ended its anti-terrorism operation in April. The republic saw two brutal separatist wars in the 1990s and early 2000s.

Four senior police officers were killed in a blast set off by a suicide bomber in central Grozny last week.

Russia to reduce poultry import dependence 03 Aug 2009http://www.worldpoultry.net/news/russia-to-reduce-poultry-import-dependence-4179.html

The dependence of the Russian meat market on poultry and pork imports will be reduced by 2012, the Vice Prime Minister of the Russian Federation Victor Zubkov declared.

“We are planning to reduce the dependence of our poultry and pork markets on overseas import,” stated Zubkov in his interview with the Russian media.

“Last year our pork market was provided with 29% imports, and the poultry market 36%. This is too much. Currently we managed to change the dynamics in favour of the domestic produce; it means, the import is decreasing," Zubkov noted.

According to the Vice Prime Minister’s data, over the past 10 years “all the possible indicators of the meat production in Russia have dropped”. A number of the stock is three times less, and beef production 2.5 times. The consumption per capita reduced from 31 kg in 1999 to 16.6 kg. “It is absolutely an unacceptable situation,” he complains.

Logistics center for Latvian food products to be opened near Moscowhttp://www.baltic-course.com/eng/transport/?doc=16507

Alla Petrova, BC, Riga, 02.08.2009

A logistics center for Latvian food products will be developed near the Russian capital city of Moscow, LETA was informed by the Agriculture Ministry's press and public relations department.

On July 31, Agriculture Minister of Latvia Janis Duklavs was on an official visit to Moscow, where he met with Russian Agriculture Minister Yelena Skrinnik to discuss cooperation possibilities in the agriculture sector. During the meeting, the two sides discussed the possibility of selling Latvian food products in border areas with Russia, and agreed to develop a logistics center for Latvian food products near Moscow. Russia is one of Latvia's most important trade partners.

Airborne Day in Vladivostok Celebrated with Festive Concerthttp://vladivostoktimes.ru/show/?id=41037&r=12&p=The show featured the military personnel of 55 marines division

VLADIVOSTOK, August 3, vladivostoktimes.com

The festive concert on the occasion of the 79th anniversary of the Russian airborne troops and the 10th anniversary of the second counter-terrorist operation in the Chechen Republic took place in the Sportivnaya Gavan on August 2; the correspondent of RIA PrimaMedia informs.

It is no exaggeration to say that the Airborne Troops Day is well-known national holiday in Russia. The feats of arms accomplishing by “blue berets” made them the elite army unit.

Leonid KOKOVKIN, the Deputy Head of the Vladivostok City Administration, Sergey KONDRATENKO, the Chairman of the Primorye Veterans of Battle Actions Public Organization “Contingent,” and the representatives of the Pacific Navy command of the airborne and mariners units congratulated the men and veterans of airborne troops. The commanders of the division military units were awarded with the letter of commendation of the Vladivostok City Administration.

The audience had a chance to enjoy the singing and dancing performing by the artists of the city culture center. The show featured the military personnel of 55 marines division. They conducted hand-to-hand fighting, broke different objects (planks, bricks and bottles) by their legs, arms and even heads.      

The history of the airborne troops dates back to August 2, 1930 when 12 men of the airborne troops made the parachute jumping near Voronezh during the maneuvers of the air forces of the Military District of Moscow. Thanks to that experiment the military theoreticians could see the advantages of the parachute troops, the ability of the air attack and capture of the enemy rapidly. Since that time the Airborne Day has been celebrated.

03 August 2009, 12:29

Army servicemen need spiritual support of the Church - Patriarch Kirillhttp://www.interfax-religion.com/?act=news&div=6284

Sevastopol, August 3, Interfax - Patriarch Kirill of Moscow and All Russia has stressed the importance of the work of Orthodox priests in the army.

"For warriors to be capable of that [sacrificing their lives] we must support them with our prayers while clergymen should be working with the Armed Forces and helping our young people not to give in to any temptations of life and if need be to give up their lives for their neighbors," he said on Sunday addressing sailors of the Russian and Ukrainian Black Sea Fleets.

The Patriarch said that the military men who are sacrificing their lives to save other people "have support from God" because thus they fulfill the crucial commandment of loving one's neighbor. That's why people have always respected and loved those in the Armed Forces, he said.

However, in order to have the will-power and courage to defend others a warrior should be strong in spirit, the Patriarch said.

In this connection he stressed the importance of spiritual support for servicemen noting that "the grim circumstances which the military voluntarily assume by taking the oath cannot be compensated with any money."

The Patriarch paid tribute to the memory of the sailors of the Black Sea Fleet and residents of Sevastopol who heroically defended the city in October 1941 through June 1942.

Russian Patriarch continues trip to Western Ukraine after delayhttp://www.itar-tass.com/eng/level2.html?NewsID=14199933&PageNum=0

ROVNO, Ukraine, August 3 (Itar-Tass) – Patriarch of Moscow and all Russia Kirill continues his pastoral visit to Ukraine after a change of the route that was recommended by the Ukrainian authorities Sunday.

Monday, he is expected to lead a liturgy in the Holy Trinity Convent in the town of Korets, Rovno region.

His Holiness Kirill’s West-Ukrainian itinerary was to begin in the city of Rovno where he was supposed to fly from Sevastopol, the Crimea, Sunday afternoon. However, the Ukrainian authorities issued a strong recommendation to him to stay away from visiting Rovno, saying they could not guarantee his security there.

Rovno is known to be one of the dissenting Ukrainian Orthodox Church reporting to Kiev Patriarchate, which aspires to the status of Ukraine’s only canonical national Orthodox denomination but is not recognized as a legitimate Church by the global Eastern Orthodox community.

The jet carrying Patriarch Kirill and the attending delegation landed in Kiev instead. From there, an automobile escort took His Holiness and delegation members to the Holy Trinity convent that has the status of a stauropegeon – a monastic organization or community reporting directly to the supreme hierarch of a Church, or the Patriarch of Moscow and all Russia in this case.

His Holiness Kirill visited this cloister in 1990 together with his predecessor in the office, the late Patriarch Alexy II who granted the stauropegeon status to the Korets convent 20 years ago.

“Patriarch Kirill regrets the fact that he could not come to Rovno but he hopes that his willingness to meet the clerics and laymen in that city will materialize some time in the future,” said the Most Reverend Hillarion, the chairman of Moscow Patriarchate’s department for external relations.

Nothing has been reported so far about any other possible changes in the itinerary. His Holiness plans to spend three days in the Western regions of Ukraine, to visit the cities of Lutsk and Vladimir Volynsky and to end this visit in the town of Pochayevo, the place where one of the most famous monasteries of the canonical Ukrainian Orthodox Church is located.

The religious rift in Ukraine is particularly strongly felt in the Western regions that are known for especially high religiosity typical of all the denominations present here, as well as for a tense standoff between the disciples of the Ukrainian Orthodox Church reporting to Moscow Patriarchate, on the one hand, and various dissenting factions of Eastern Orthodoxy and non-Orthodox denominations, on the other.

Patriarch Kirill will not visit the nationalistically-minded regions where the popular hostility towards the canonical Orthodox Church and Orthodoxy in general is especially high.

Ministry: Change in itinerary of Patriarch Kirill's Ukraine tour shouldn't be politicizedhttp://www.kyivpost.com/nation/46288

Today, 10:19 | Interfax-UkraineKyiv, August 3 (Interfax) - A decision to change the itinerary of the Ukraine tour of Patriarch Kirill of Moscow and All Russia should not be politicized, the Ukrainian Interior Ministry said in a press release on Sunday.

Patriarch "Kirill, who was supposed to arrive from Crimea in Rivne, unexpectedly change the itinerary of his tour and traveled to this city using a different route," the Ukrainian ministry said.

"The media suggested immediately after it that his itinerary was changed because of threats facing the patriarch's safety during his trip to western Ukraine," it said.

"The Interior Ministry reports that the decision to change the itinerary of the patriarch's tour was taken by representatives of the Russian side, who are responsible for his security," it added.

"No extraordinary events that could harm the patriarch's visit have been reported today. Officers of interior affairs departments are in full control of the situation and are capable of ensuring public order in venues visited by the patriarch," the ministry said.

"When the visit [of Patriarch Kirill to Ukraine] was being prepared, the Ukrainian authorities said that they could not guarantee the patriarch's safety or the absence of any provocations and clashes," Archbishop Illarion of Volokolamsk, head of the Moscow Patriarchate's Department for External Church Relations, told journalists earlier.

"Nevertheless, the patriarch asked the Ukrainian authorities to give him an opportunity to visit Rivne because he wanted to meet with the faithful people of this city very much," Archbishop Illarion said.

Patriarch Kirill "expressed hope that he would be able to visit Rivne in the future," he said.

Russian church leader stopped from visiting Ukraine cityhttp://www.kyivpost.com/world/46286

Today, 10:17 | Interfax-Ukraine

Sevastopol, August 3 (Interfax) - The Ukrainian president's office on Sunday prevented the head of the Russian Orthodox Church, Patriarch Kirill, who is visiting Ukraine, from going to Rivne, a city in the west of the country, pleading security considerations, the Russian church's foreign relations chief said.

"The authorities said the reason was security. The leadership of the office of [Ukrainian President] Viktor Yuschenko told us that, for reasons of security, we would have to change the route of the holy patriarch's pastoral trip," Archbishop Ilarion of Volokolamsk, head of the External Church Relations of the Moscow Patriarchate, told the www.interfax-religion.ru portal.

"We don't know who is plotting any provocations in Rivne or whether there are any provocations being plotted by dissenters or any political groups anyway," Ilarion said.

Earlier on, the Ukrainian government advised Kirill to avoid visiting Rivne but the patriarch insisted that he wished to go and asked for arrangements to be made for such a trip, the archbishop said. "However, today we were told that it was impossible to fly to Rivne and that the plane would land in Kyiv," Ilarion said.

Ilarion deplored the fact that Kirill's planned meeting with Rivne's Orthodox community had not materialized. "Holy Kirill wanted to visit Rivne very much, and he hopes that his desire to meet with the flock of that city will come true," the archbishop said.

Voting by Phone Possible in Electionshttp://www.themoscowtimes.com/article/1010/42/380092.htm

03 August 2009 The Moscow Times

Voters may be able to cast their ballots by cell phone as early as March 2010, Vladimir Churov, the country’s top elections official, said at the Seliger youth camp on Sunday. “I think that in March next year we’ll begin using electronic voting methods, and the citizens of our country will be able to make their choice using mobile phones,” Churov

said, Interfax reported. “The less of a human element there is, the fewer mistakes are made,” Churov told the news agency. “If you stick a coin in a soda vending machine, you can’t start arguing with the waitress. This is the same idea,” he said, apparently referring to widespread complaints of voting irregularities in recent elections, including local and regional campaigns in March. Gennady Raikov, the Central Elections Commission’s official overseeing electronic voting, told Interfax that a law would be passed by the end of the year to allow electronic voting. He said the technical aspects of the system were already developed.

Text your… ballots!http://www.russiatoday.ru/Politics/2009-08-02/text-your-ballots.html/print

02 August, 2009, 20:45

Russian citizens will soon be able to vote with their mobile phones, according to the country’s Central Election Commission.

Vladimir Churov, Head of the Central Election Commission of the Russian Federation, said this will become possible as early as March 2010 when parliamentary elections will take place in many federal regions, Interfax reports.

The news was announced by Churov at the “Seliger-2009” youth forum in Central Russia’s Tver Region. However, he also noted that the use of ordinary paper ballots would not be eliminated.

The authorities did not provide more details as to how the voting process is going to be organized. In particular, how the voting individual’s identity will be verified, for it is not uncommon that one person can have several SIM-cards in use.

Despite all these uncertainties, Commission member Gennady Taykov, who is in charge of the electronic voting, said “the technology has already been polished and all necessary equipment is ready.”

“It is only the legal side that remains to be worked through,” he added.

Raikov also noted that the bill on electronic polling is expected to be ratified by the Russian Parliament – the State Duma – by the end of 2009.

Earlier plans suggested the introduction of such voting systems in Russia not sooner than 2011.

So far, systems involving electronic transmission of ballots, primarily via the Internet, have been used in the United States, the UK, Ireland, Switzerland and Estonia.

Russian President Dmitry Medvedev sent a letter to Natalya Solzhenitsyna, the widow of Alexander Solzhenitsyn, on the anniversary of the writer's deathhttp://www.isria.com/pages/3_August_2009_63.php

The President’s letter reads in part:

“Alexander Solzhenitsyn’s road was that of a true fighter, who withstood all manner of trials and hardships. He was on the front line in war, and lived through Stalin’s labour camps and the suffering of exile. But through all of the tribulations of fate, he held on to his belief in people, in their moral and spiritual greatness. He never once betrayed himself, his convictions and his conscience. He always spoke the truth, no matter what the situation. His works, One Day in the Life of Ivan Denisovich, The Gulag Archipelago, and The First Circle, awoke the nation’s conscience with their call for repentance.

His heart was always filled with boundless love for his homeland and his compatriots. He felt sincere concern for the fate of his motherland and made it the purpose of his life to search tirelessly for ways to build Russia and preserve its people. Many of his ideas on strengthening statehood and developing democratic freedoms are relevant and retain their enduring significance today, and his literary and philosophical works form a legacy requiring in depth and comprehensive study.”

The August Syndrome http://www.rferl.org/content/The_August_Syndrome/1790106.html

July 31, 2009Brace yourselves, Russia watchers. August is upon us.

For most of the world, the eighth month of the year is a time to relax, kick back, and go on vacation.

But in post-Soviet Russia, it has been a time of coup attempts, debilitating economic crises, financial meltdowns, bombings, and wars.

The trend, of course, started on August 19, 1991, when Communist hard-liners attempted to oust Soviet leader Mikhail Gorbachev -- but instead precipitated the collapse of the Soviet Union.

Ever since then, Russia has been plagued by what RIA-Novosti dubbed "The Black August Syndrome."

Being familiar with Russian affairs, readers of this blog will know the really big crises that have come down in August: the debt default and currency collapse on August 17,

1998; the invasion of Daghestan by Chechen fighters on August 7, 1999 that sparked the second Chechen conflict, and last summer's five-day war between Russia and Georgia that began on August 7.

But there's more:

The war in Abkhazia, in which Moscow-backed separatists battled Georgian forces began on August 14, 1992

The infamous MMM pyramid scheme collapsed in August 1994, depriving millions of Russians of their life savings 

A bomb exploded in the pedestrian underpass near the Pushkin Square metro station in downtown Moscow on August 8, 2000, killing 13 people 

The Russian nuclear submarine "Kursk" sank in the Barents Sea on August 12, 2000, killing all 118 sailors on board 

On August 1, 2003, a suicide bomber attacked a military hospital in Mozdok, in North Ossetia, killing over 50 people 

And on August 31, 2004 -- one day before the Beslan school siege -- a suicide bomber blew  herself up outside Moscow's Rizhskaya metrostation, killing 10 people

Take a look at the RIA-Novosti story for a more complete list.

August sometimes figured large in the Soviet Union as well. It was on August 20-21, 1968 that Warsaw Pact forces invaded Czechoslovakia, putting an end to the Prague Spring and "Socialism With A Human Face."

And as my co-Power Verticalist Robert Coalson has pointed out, Russia's current political era began in August. It was on the morning of August 9, 1999 when President Boris Yeltsin appointed Vladimir Putin prime minister and anointed him as his chosen successor.

So what awaits us in the next 31 days? I don't pretend to know. Maybe this August will be uncharacteristically quiet. But I will certainly hold off on taking my vacation until September. 

-- Brian Whitmore

National Economic Trends

Russian Manufacturing Shows ‘Modest’ Decline in July, PMI Showshttp://www.bloomberg.com/apps/news?pid=20601085&sid=aQCLHwMq02H4

By Alex Nicholson

Aug. 3 (Bloomberg) -- Russia’s manufacturing industry shrank last month at the slowest pace since September as new business grew after a nine-month contraction, VTB Capital said.

VTB’s Purchasing Managers’ Index advanced to 48.4 in July from 47.3 in the previous month, the Moscow-based bank said in an e-mailed statement today. A reading below 50 signals a contraction. The bank surveyed 300 purchasing executives.

Russian industrial production fell 12.1 percent in June, the slowest pace this year, as the country’s steepest economic contraction in 15 years showed signs of easing. Prime Minister Vladimir Putin on July 22 called on the nation’s top bankers to spur lending to Russia’s struggling industries and help pull the world’s biggest energy exporter out of recession.

“Higher new orders reflected better market conditions as customers sought to replenish inventories and capital flows improved,” the report said.

While the gauge has continued to rebound from December’s record drop of 33.8, the PMI shrank for the 12th consecutive month, a more severe slump than the downturn seen in 1998, when the Russian government defaulted on $40 billion of debt and devalued the ruble.

Companies cut jobs for the 15th consecutive month as pressure to cut costs continued, the survey said.

“The rate of reduction remained sharp overall despite easing to a nine-month low,” it said.

More than 2.5 trillion rubles ($79 billion) of stimulus funding and four interest-rate cuts since April have so far failed to spur bank lending or stem an economic contraction that the government now expects to reach 8.5 percent this year.

The PMI is derived from indexes that measure changes in output, orders, employment, suppliers’ delivery times and stocks, according to VTB.

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

Last Updated: August 3, 2009 00:00 EDT

PMI: Russian manufacturing sector edges closer to stabilization Julhttp://www.prime-tass.com/news/show.asp?topicid=68&id=461663

MOSCOW, Aug 3 (PRIME-TASS) -- The Russian manufacturing sector edged closer to stabilization in July, London-based VTB Capital said in its latest survey of the sector released on Monday.

The seasonally adjusted headline PMI, a composite index that reflects changes in new orders, output, employment, supplier performance and input stocks, rose to 48.4 in July from 47.3 in June.

Readings above 50.0 signal an increase on the previous month, while readings below 50.0 signal a contraction.

Despite having now spent 12 months below the neutral level of 50.0, the PMI index has signaled that the prolonged downturn across the sector has slowed further, VTB Capital said.

“Encouragingly, the new orders sub-index posted 51.5, the first reading pointing to actual growth rather than a weakness in contraction since September 2008. That, coupled with the output index improving to 49.5, supports expectations of the headline index crossing the 50 mark over July-September,” Dmitry Fedotkin was quoted as saying, an economist at VTB Capital.

“On a less positive note, employment shedding continued for the fifteenth straight month (although the rate of cuts was the slowest since October 2008). Rising commodity prices and freight charges resulted in input prices increasing at their fastest pace in four months, while output prices rose only a fraction, reflecting weak consumer demand and tight competition,” Fedotkin said.

The VTB Capital Manufacturing PMI is derived from a monthly survey of 300 purchasing executives in Russian manufacturing companies and has been conducted since September 1997.

VTB Capital plc is a London-based subsidiary of Russia's second largest bank, government-controlled VTB Bank. VTB Capital was previously known as VTB Bank Europe.

Bonds OK for Pension Fund

http://www.themoscowtimes.com/article/1009/42/380058.htm

Russia’s state pension fund may be allowed to invest up to 40 percent of its cash in corporate bonds, as well as put money in mortgage bonds and foreign currency deposits, Finance Ministry documents showed Friday.

Under the Finance Ministry’s proposals, the fund may be allowed to invest in bonds of companies whose credit ratings are no more than one notch below Russia’s or whose debts are guaranteed by the state. (Reuters)

Russia running out of reserveshttp://www.barentsobserver.com/russia-running-out-of-reserves.4616140-116320.html

2009-08-03 The Russian Reserve Fund will be all spent in 2010 in order to cover for budget deficits, the country’s Finance Ministry confirms. In addition, the government considers to ask the World Bank and the International Monetary Fund for credits.

Russian Prime Minister Vladimir Putin has signed a decree according to which 1,36 trillion RUB of the country’s Reserve Fund will be spent on covering budget deficits.

By July 1, the fund had reserves of 2,96 trillion RUB (94,5 billion USD). With Putin’s 1,36 trillion withdrawal, the fund will see a serious cut. And that withdrawal will not be the last. The Russian Reserve Fund will in 2010 be all empty for funds, newspaper Kommersant reports.

Russian budget deficits will in 2009 amount to an estimated three trillion RUB, or 7,4 percent of GDP.

Not only the Reserve Fund will suffer in the time ahead. The government over the next couple of years also intends to spend about two trillion RUB from the National Welfare Fund.

In addition, Russia is likely to take credits from the international financial institutions World Bank and the International Monetary Fund. That was confirmed last week by Deputy Finance Minister Dmitry Pankin.

Russia daily c.bank swap limit at 5 bln rblshttp://www.lse.co.uk/MacroEconomicNews.asp?ArticleCode=hbi2evrtwqthdti&ArticleHeadline=russia_daily_cbank_swap_limit_at_5_bln_rbls

3-AUG-2009 07:43

MOSCOW, Aug 3 (Reuters) - Russia set the daily limit for currency swap operations with the central bank at 5 billion roubles ($160.5 million) on Monday, the same as in the previous trading session .

Limits on how much foreign currency banks can swap for roubles in the central bank were introduced from Oct. 20 in a bid to hinder currency speculators. Operations which do not involve the central bank are unaffected. ($1=31.15 Rouble) Keywords: RUSSIA SWAP/

(Moscow Newsroom, +7495 775 12 42, moscow.newsroom@reuters.com)

Budget deficit gives rise to Rouble devaluation talkhttp://www.russiatoday.com/Business/2009-08-03/budget-deficit-gives-rise.html/print

03 August, 2009, 10:34

Gloomy economic statistics and melting reserves are giving rise to fears of another Rouble devaluation, after the currency lost one third of its value earlier this year.

The Government allowed the Rouble to weaken significantly at the beginning of the year, adjusting the exchange rate as the oil price fell. Now the Rouble may yet face another wave of devaluation.

So far it's stayed within its trading band, but has gained 16% since February against the Euro-dollar currency basket. Some experts think the Rouble might lose up to a 1/3 of its value, with the government facing an $80 billion budget deficit, possibly being tempted to see devaluation as part of the answer. Deputy Finance Minister, Dmitry Pankin, says devaluation of the Rouble could add additional government revenues.

“All the reserve funds are denominated in dollars and it’s in the Finance Ministry's interest for the Rouble to lose its value. This can effectively produce billion of dollars worth of extra revenue for the government.”

But devaluation would risk fuelling Russia's already rampant inflation. And many in the government are wary of using it as a tool to address fiscal problems, according to Danila Levchenko, Chief economist at Otkritie.

“The government budget deficit cannot be addressed by devaluing the Rouble, it's traditionally used for the trade deficit. And by devaluing the Rouble the government deficit might only increase.”

The wide rouble trading band gives the Central bank some leeway in making large currency interventions. But analysts say that the bank still spends up to $2 billion on bad days like July 10, when the currency slumped over 2%.

For now, many in government and businesses don't see the economic sense of devaluation. But if it has to happen, economists want it to be quick and clean, in order not to waste Russia's dwindling reserves.

INDICATORS - Russia - Aug 3

http://www.iii.co.uk/news/?type=afxnews&articleid=7454780&action=article

MOSCOW, Aug 3 (Reuters) - Russian economic indicators are based on data provided by the Federal State Statistics Service, government institutions, the central bank and exchanges.

=UPDATED TODAY CURRENCY/INTEREST RATES

RBL/DLR (C.BANK RATE) 31.2424 RBL/EURO (C.BANK RATE) 44.4642 ROUBLE/BASKET 37.19 C.BANK ONE-DAY REPO RATE 8.44 OVERNIGHT DEPOSIT RATE 5.50/6.75 3-MONTH MOSPRIME RATE 11.73 10-YEAR T-BOND YIELD 13.20

ECONOMIC INDICATORSPERIOD LATEST PREV YEAR AGO

GDP growth Y/Y Q1 -9.8 +1.2 +8.7CPI M/M June +0.6 +0.6 +1.0CPI Y/Y June +11.9 +12.3 +15.1PPI M/M June +2.2 +0.6 +4.9PPI Y/Y June -9.4 -6.5 +28.1Ind output M/M June +4.5 -2.1 -1.4Ind output Y/Y June -12.1 -17.1 +0.9Retail sales Y/Y June -6.5 -5.6 +14.6Unemployment (mln) June 6.30 6.49 4.22Real disposable income Y/Y June -1.0 +0.3 +4.8Real average wage Y/Y June -5.2 -4.3 +11.1Nominal average wage (rbls) June 18,907 18,007 17,715Capital investment (blnR) June 671.1 568.9 N/ACapital investment Y/Y June -20.1 -23.1 +11.4Trade surplus ($bln) May +8.8 +6.7 +18.1Exports ($bln) May 22.7 21.3 42.6Imports ($bln) May 13.9 14.6 24.5Budget balance (bln rbls) Jan-June -754 -511 1,331C.bank reserves ($bln) July 24 402.4 398.1 593.0Monetary base (blnR) July 27 4,060 4,084 4,471M2 (blnR) July 1 13,161 12,861 14,245REER rouble Jan-June -4.3 -5.7 +3.3 OIL OUTPUT (MLN BPD) JULY 9.91 9.89 9.78 OIL OUTPUT (MLN T) JULY 41.917 40.465 41.361 GAZPROM GAS OUTPUT (BCM) JULY 32.135 27.570 40.101 BALANCE OF PAYMENTS ($bln)

H1 2009 H1 2008 Q1 2009

Current account 17.2 64.3 9.1Cap/fin account -24.9 10.0 -31.8Of which: reserve assets 9.7 -70.7 31.1Net errors/omissions -2.0 -3.6 -8.3

GOVT FORECASTS 2009 2010 2011 2012

GDP Y/Y (pct) -8.5 +1.0 +2.6 +3.8CPI Y/Y (pct) 12.0 10.0 8.0 7.0Industry output (pct) -12.5 +0.8 +1.7 +1.9

ANNUAL DATA2008 2007 2006 2005 2004 2003

GDP (pct) +5.6 +8.1 +7.4 +6.4 +7.2 +7.3CPI Y/Y (pct) +13.3 +11.9 +9.0 +10.9 +11.7 +12.0M2 (bln R) 13,493 13,272 8,996 6,046 4,363 3,213Oil/gas cond.(mln T) 488 491 480 470 459 421Natural gas (bcm) 665 653 656 641 633 620Coal (mln T) 326 315 309 298 282 277Grain (mln T) 108 82 79 78 78 67Beet Sugar (mln T) 3.6 3.2 3.2 n/a n/a n/aGold (T) 184 163 164 168 174 176

LONG-TERM FOREIGN CURRENCY RATINGS

Moody's (December 12, 2008) Baa1 (outlook stable)S&P (December 8, 2008) BBB (outlook negative)Fitch (February 4, 2009) BBB (outlook negative)

Keywords: RUSSIA INDICATORS/ (Email: moscow.newsroom@reuters.com; Tel: +7 495 775 1242)

Russia to produce nearly 85 mln tonnes of grains in 2009http://www.agrimarket.info/showart.php?id=80374

08/03/2009 10:40  In the current year, the actual grain production forecast in Russia totals nearly 85 mln tonnes, which increased the average year indices, declared Sergey Korolev, the Deputy Minister of Agriculture of the Russian Federation. The forecast was prepared by the Ministry of Agriculture in common with the Ministry of Economic Development with allowance to the negative influence macroeconomic and natural and climatic factors. The index of agricultural gross output will total 98.3% compared to 2008, and 108.9% compared to 2007, an increase of 1.1% from the summary index of the governmental program of agricultural development for 2-year term, marked S.Korolev. To date, the condition of the industry is rather stable. In 2008, agricultural organizations of Russia received profits at the level of over 117 bln RUR with the average profitability level of 15.3%.

Business, Energy or Environmental regulations or discussions

Rosneft, Transneft, Gazprom, Severstal: Russian Equity Previewhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aiTgRDGnSH94

By Denis Maternovsky

Aug. 3 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

The dollar-dominated RTS Index gained 1.6 percent to 1,017.47. The 30-stock Micex Index rose 0.7 percent to 1,053.30.

OAO Gazprom (GAZP RX): The European Bank for Reconstruction and Development, the World Bank and the European Investment Bank may give the Ukrainian government and state-run energy company NAK Naftogaz Ukrainy as much as $1.7 billion in loans to support an overhaul of its gas supplies from Russia, the lenders said in joint statement. Shares of Russia’s gas export monopoly fell less than 0.1 percent to 162.29 rubles.

OAO Rosneft (ROSN RX): Russia’s oil production rose 1.37 percent to 41.92 million tons, or 9.91 million barrels a day, in July compared to last year as new developments added output. Shares of the country’s biggest oil producer declined 0.1 percent to 190.87 rubles, trimming its monthly advance to 13 percent.

OAO Severstal (CHMF RX): an increased offer of 30 Canadian cents ($0.28) per share by Russia’s biggest steelmaker for the shares of High River Gold Mines Ltd. that it doesn’t already own is “below fair value,” five money managers who hold stakes in the miner said July 31. Severstal’s shares jumped 8.4 percent to 213.85 rubles, its biggest daily gain since May 29.

OAO Transneft (TRNFP RX): Exports through the state oil-pipeline operator fell 4.39 percent in July from a year earlier to 4.02 million barrels a day. The company’s shares declined 0.9 percent to 15,498.59 rubles.

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

Last Updated: August 3, 2009 00:00 EDT

VEB Buys Deputy’s Factory

http://www.themoscowtimes.com/article/1009/42/380058.htm

State-owned Vneshekonombank bought Amurmetall for an undisclosed price to keep workers at the only steelmaker in the Far East in their jobs.

The purchase will enable Amurmetall, formerly majority owned by State Duma Deputy Alexander Shishkin, to double its capacity to 2.1 million tons, restore profitability and preserve the jobs of 6,100 employees, the lender said Friday on its web site.

Prime Minister Vladimir Putin is chairman of VEB, which bought full control of the steel company. (Bloomberg, MT)

VTB Issue Only for Owners

http://www.themoscowtimes.com/article/1009/42/380058.htm

Subscriptions for an issue of new shares by VTB will open for existing shareholders on Aug. 4, a source close to VTB told Reuters on Friday.

VTB plans to raise no less than 180 billion rubles ($5.73 billion) by issuing new shares both to existing shareholders and on the market. (Reuters)

MTS to Buy Comstar Stake?

http://www.themoscowtimes.com/article/1009/42/380058.htm

Mobile TeleSystems will buy 51 percent of Comstar United TeleSystems for $1.28 billion, or $5.98 a share, Kommersant reported, citing an unidentified person.

The board of Sistema, which controls 53 percent of Mobile TeleSystems, known as MTS, and 51 percent of Comstar, plans to define the details of the purchase on Aug. 5, the newspaper cited the person as saying. (Bloomberg)

Mobile firm MTS offers $1.27bln for Comstar's 51% stake – paperhttp://en.rian.ru/business/20090803/155709419.html

MOSCOW, August 3 (RIA Novosti) - Russia's largest mobile communications operator Mobile TeleSystems (MTS) has offered $1.27 billion for a 51% stake in Moscow's biggest multiservice communications operator, Comstar-UTS, a report said on Monday.

The price, at which MTS will buy a controlling stake in the fixed line communications and broadband Internet operator, may amount to $5.98 per Global Depositary Receipt or $1.27 billion for the whole 51% package, a source close to a company belonging to AFK Sistema, which controls both MTS and Comstar, told Vedomosti.

In June, Russia's Anti-Monopoly Service approved an MTS application to buy up to 100% of Comstar.

However, MTS will buy out only 51% of the company's stock. MTS is not obliged to announce an offer for the purchase of shares from other shareholders upon the acquisition of a stake of over 30% as the deal will not lead to the change of the package's ultimate owner, AFK Sistema, the paper said.

The price of $5.98 per GDR is almost 25% higher than the price for Comstar's GDR on the LSE as of July 23. The deal will enable MTS to compete successfully with its main rival, VimpelCom, on the broadband Internet access market, the paper said.

The deal is also advantageous for AFK Sistema, which will receive funds to settle its debts, the paper said. According to data in late March, the company needed to repay about $900 million in debts in the second half of the year.

Alrosa Rough Diamond Price Cut Refutedhttp://www.idexonline.com/portal_FullNews.asp?id=32717

(August 3, '09, 3:11 Edahn Golan)

Reports from Russia that Alrosa is considering a sharp cut in rough diamond prices are being strongly denied. Reports last week claimed that Alrosa’s new president has decided to reduce prices by up to 25 percent to meet current market prices. Not all agree that the Russian diamond monopoly is going to cut prices, at least not that drastically. A number of sources close to Alrosa told IDEX Online that they do not expect a severe price cut.  One insider noted that the reports are either test balloons by the company to see what kind of reactions it gets in the market. Another option is that clients are making these statements in an effort to exhort pressure on the new president, Fyodor Andreyev, as he steps into office. The Russian business daily Vedomosti quoted Maxim Shkadov, general director of Kristall, as saying that Alrosa is reportedly in the process of creating diamond parcels of certain quality, and the discount to the pre-crisis prices could reach 25 percent Kristall is the largest diamond polisher in Russia, a Diamond Trading Company (DTC) Sightholder and one of Alrosa’s largest clients. Alrosa did not return calls asking for a comment.

Mechel announces placement completion of its 04 series bonds http://www.yourindustrynews.com/mechel+announces+placement+completion+of+its+04+series+bonds_36839.html

Monday, Aug 03, 2009

Mechel OAO, one of the leading Russian mining and metals companies, announces that it has competed placement of its non-convertible, interest bearing, certificated bearer bonds of 04 series for RUR 5.0 billion.

Mechel OAO completed placement of its secured non-convertible, interest bearing, certificated bearer bonds of 04 series callable at bearer's option and at the issuer’s discretion. The bond maturity date is the 2,548-th day following the date of placement (July 30, 2009). Payment of 28 quarterly coupons and three-year earlier redemption offer are stipulated.

The placement was arranged by public offering in the form of tender on the coupon rate and complied with the terms and procedure provided for in the Resolution on the securities issue and Prospectus.

The total quantity of the placed securities was 5,000,000 bonds with the nominal value of RUR 1,000.00 each. The first coupon rate was established at 19% p.a. The underwriter of the placement was Sberbank (Savings Bank of Russia).

Source: Mechel

AUGUST 3, 2009, 2:16 A.M. ET

Rexam To Cease Making Beverage Cans At Russian Plant http://online.wsj.com/article/BT-CO-20090803-701020.htmlLONDON (Dow Jones)--Rexam PLC (REX.LN), a global consumer packaging company, said Monday it is to cease making beverage cans and can ends at its Dmitrov plant near Moscow to address the continued weakness in the Russian beverage can market. MAIN FACTS: -To reduce annual active capacity in Russia by some 1.3 billion cans. -Dmitrov closure will result in annualised savings of GBP6 million in 2010, for an exceptional restructuring charge of GBP16 million in 2009, of which GBP8 million will be cash costs. -Part of capacity reduction programme in European beverage can operation which is expected to save GBP20 million in 2010. -End line will be relocated within Russia, whilst can line will be eventually redeployed as market conditions improve. -By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com

3 August 2009 - Press Briefing

Russian billionaire loses appeal to transfer lawsuithttp://www.wealth-bulletin.com/rich-life/content/1054854174/

The UK Court of Appeal on Friday rejected an appeal by Russian billionaire Oleg Deripaska to have a £2.4bn (€2.8bn) lawsuit against him transferred from London to Russia, according to a report in The Times.

Deripaska, whose net fortune has plummeted $28bn (€19.6bn) this year as per Forbes magazine, will now have to fight a legal dispute over shares in Rusal, Russia’s biggest aluminium producer, in London.

GM-AVTOVAZ suspends Chevrolet NIVA production till Septhttp://www.itar-tass.com/eng/level2.html?NewsID=14200143

MOSCOW, August 3 (Itar-Tass) - The GM-AVTOVAZ JV is suspending the production of the Chevrolet NIVA vehicles from August 3 to 31 in connection with changing the AVTOVAZ production schedule, the JV said in a statement, Prime-Tass reported.

Starting from September 1 the JV will be working 5 days a week in a one-shift 8-hour regime.

The company officials noted that compensation for the idle time for the plant's workers will be paid in accordance with the Russian Labour Code, the pay amounting to two-thirds of the average monthly salary. The personnel on the planned type of work and performing managerial functions will be paid for the factual work hours.

AVTOVAZ that supplies to the JV bodies for Chevrolet NIVA, in the period from August 1 to 31 suspends the production of commercial vehicles. This decision was made by AVTOVAZ leadership in order to bring the production volume in line with the market demand and the need to cut costs with preservation of jobs.

This summer GM-AVTOVAZ has already stopped the production line for a planned summer holiday in the period from July 13 to 27.

GM-AVTOVAZ JV decreased the production volume in the first six months of the year, as compared with the same period of 2008 to 10,399 vehicles. The enterprise’s sales in January-June this year amounted to 10,734 vehicles, against 29,795 vehicles a year earlier.

GM-AVTOVAZ is a joint enterprise created by AVTOVAZ, the American company General Motors and European Bank for Reconstruction and Development (EBRD). The enterprise started the production of vehicles on September 23, 2002.

In 2008, the JV produced 54,654 vehicles and sold 53,305 vehicles.

AvtoVAZ Workers Prepare for Protesthttp://www.themoscowtimes.com/article/600/42/380052.htm

03 August 2009 By Maria Antonova / The Moscow Times

AvtoVAZ workers are set to begin protests this week after the carmaking giant halted production for a month on Friday because of overflowing inventories and flagging demand.

Yedinstvo, an independent labor union, will hold a rally on Thursday to appeal to the federal government to “create favorable living and working conditions in Tolyatti,” where AvtoVAZ employs more than 100,000 people.

“Only the government can fulfill these demands,” union coordinator Pyotr Zolotaryov said.

The government has been quick to act upon signs of social unrest. After 400 unpaid factory workers blocked a highway outside the Leningrad region town of Pikalyovo, Prime Minister Vladimir Putin made a lightening visit to the town, where he rebuked the factory’s owner, Oleg Deripaska, and ordered him to reopen the plant.

President Dmitry Medvedev followed up a week later by threatening to fire governors who failed to cope with unemployment and wage arrears.

AvtoVAZ has said that by halting its assembly line it hopes to bring production volumes back in line with demand and cut costs while retaining jobs. Workers will be paid two-thirds of their average salary during the stoppage.

But when the plant opens again in September, production will switch to a 20-hour week with a corresponding salary reduction. Yedinstvo estimates that the average salary of 12,000 rubles ($380) per month will be effectively cut to 6,000 rubles ($190), Zolotaryov said.

“The atmosphere at the plant is very tense, because people don’t know anything about their future, and AvtoVAZ management hides their intentions and plans about company operations,” Zolotaryov said.

But the firm’s travails may have repercussions that extend beyond its own factory workers. Parts makers are also finding their future dependent upon that of AvtoVAZ. Plastik, which makes steering wheels and bumpers for Lada cars, will not be working during August because of the stoppage. It will instead send most of its 5,000 employees on unpaid leave, said a source in the Syzran-based company who requested anonymity in line with company policy.

While no one was available for official comment at Balakovoresinotekhnika, which makes rubber components for AvtoVAZ, a person who answered the phone said the plant, which employs about 10,000 people, has been stopped for the past two weeks.

Yegorshinsky Radio Plant, another AvtoVAZ supplier in the Sverdlovsk region, filed for bankruptcy last month.

The shutdowns come amid worries that AvtoVAZ may lay off one-fourth of its work force. Acting president Igor Komarov is considering firing 27,000 workers, Interfax cited a source as saying last week. Komarov has headed the company while president Boris Alyoshin has been on vacation. AvtoVAZ has denied that plans for a layoff exist. Zolotaryov said employees had not yet been notified of any layoffs.

Toyota plant in Russia closes send workers on two-week vacation http://en.rian.ru/russia/20090803/155709574.html

ST. PETERSBURG, August 3 (RIA Novosti) - Japanese carmaker Toyota has suspended production at its plant near St. Petersburg until August 16 for planned employee vacations, a company spokeswoman told RIA Novosti on Monday.

According to the spokeswoman, all of the production line employees will be on vacation until mid-August because production is done on conveyors and "it is more convenient when the employees take a collective vacation."

Toyota's Shushary plant has already suspended operations twice this year due to weak car sales amid the global financial crisis. The plant closed for March 30-April 6 and May 1-11. During the closures, the company paid the workers two thirds of their salaries.

The plant, which employs 750 workers and has a capacity of 20,000 cars per year, started manufacturing Camry cars in December 2007.

Since the start of the year several car factories in Russia have temporarily suspended production amid weak sales due to the financial crisis.

General Motors' plant in St. Petersburg closed its operations from July 1 through August 31.

Banks Loom Large at Moskva-Cityhttp://www.themoscowtimes.com/article/600/42/380104.htm

03 August 2009 By Oleg Nikishenkov / Special to The Moscow Times

Sberbank and VTB own or hold mortgages on nearly every building going up in the Moskva-City business district, an unexpected outcome of the financial crisis that has forced the state banks to add the risky portfolio of real estate to their traditional business of lending.

The shift provides an insight into the depth of the banks’ loan exposure ahead of the crisis last fall, and it raises questions about their vulnerability in delving into a sector usually left to developers and construction companies.

At the same time, the two banks are shouldering the grandiose dream that Moskva-City will help turn Moscow into an international financial center.

The rising business district, located on the banks of the Moscow River just five kilometers west of the Kremlin, carries a total price tag of $15 billion, and $9 billion has been invested so far, said an official with City Management Company, which oversees the undertaking.

“Practically all the projects are being financed by Sberbank or VTB,” said Sayan Tsyrenov, an analyst with Cushman & Wakefield Stiles & Riabokobylko, referring to the buildings under construction at Moskva-City. “And it’s quite likely that projects started with the help of these two state banks will be finished.”

Industry watchers are worried about VTB’s and Sberbank’s exposure to real estate.

“Moody’s rating agency is particularly concerned because of Russian banks’ exposure to the real estate and construction sectors, be it through loans or repossessed collateral,” said Moody’s analyst Yevgeny Tarzimanov.

Those loans accounted for a high 40 percent of Sberbank’s Tier 1 capital and more than 100 percent of VTB’s at the end of last year, he said.

“We believe that the probability of default in these sectors ranges from 25 percent to 45 percent, or two times higher than for other types of corporate lending,” Tarzimanov said.

When Sberbank and VTB started extending millions of dollars in loans to Moskva-City developers, they hardly expected to be repaid in square meters. The single exception is the West Tower of the Federation Tower skyscrapers, built by Mirax Group to serve as VTB’s headquarters.

But the developers took a severe jolt when the crisis abruptly cut their financial flows, and they started relinquishing assets or freezing work.

One major developer, Capital Group, not only managed to restructure a $400 million debt but also received an additional $180 million by giving Sberbank 60,000 square meters of space in the twin City of Capitals skyscrapers — called Moscow and St. Petersburg — towers with offices, stores and apartments. The project is now practically complete, with Capital Group putting the final touches on the buildings’ lobbies.

Capital Group manages the 288,700-square-meter property, which includes 101,000 square meters of apartments, under an agreement signed with Sberbank Capital, the bank’s investment branch set up last year, in part to handle its real estate assets. Capital

Group spokeswoman Dinara Lizunova welcomed Sberbank’s involvement, saying, “This is a hallmark project for us.”

Sberbank officials refused to comment on Sberbank Capital for this article. Sberbank and VTB have called themselves “strategic partners” of the developers.

Sberbank Capital’s main job is probably to package its properties financially, making them ready for sale, property consultants said. “There is no reason for banks to keep an unfinished building on their balance sheets, and they will keep investing,” said Vladimir Pinayev, a director with Jones Lang LaSalle. “The banks will start selling the acquired property when the market is on the rise.”

VTB, meanwhile, has taken over Imperia, a twin-building complex with offices, apartments, shops and a water park that developer MCG has been constructing with VTB loans for the past two years. “The last loan tranche allotted for this project was disbursed in June,” VTB spokesman Sergei Kopytov said.

VTB also owns 58,600 square meters of the West Tower of Mirax’s twin-building Federation Tower complex — which it has always wanted for its headquarters — and will move in next year, Kopytov said.

“The entire space is for VTB offices,” Kopytov said.

A Mirax official said the Federation Tower Management Company, which is part of Mirax, manages the entire Federation Complex under a deal with VTB.

If arrangements where banks control the finances and developers manage the property prove successful, many more could follow.

“Banks probably won’t have any other solution than to take over square meters in the skyscrapers, and we might see more of this in the coming year and a half,” said Sergei Dyomin, general director of Snegiri Development, whose own project, City Palace, is frozen.

City Palace, a 48-floor skyscraper long awaited by Muscovites for its 2,000-square-meter wedding palace, is a 50/50 venture between Snegiri and Inteko, controlled by Yelena Baturina, wife of Mayor Yury Luzhkov. Dyomin said the companies invested $30 million each into the project before freezing it because of “unfavorable market conditions,” which he said would last for at least another year.

“If I knew that in one year the situation would stabilize, I would finish the structure, and we’d find the resources,” he said.

The current troubles buffeting Moskva-City are something of a hallmark of the project itself, which has suffered a series of ups and downs since first being proposed by Soviet architect Boris Tkhor in 1991.

Tkhor proposed the creation of the business district as Moscow’s answer to London’s Canary Wharf, Paris’ La Defense and New York’s Lower Manhattan. The district, he said, should symbolize the new Russia, inspired by winds of freedom and private entrepreneurship.

Then-Mayor Gavriil Popov supported the proposal, and a 60-hectare industrial zone in the historical Presnya district was set aside for 4 million square meters of offices, apartments and leisure and transportation facilities. Demolition teams quickly tore down 20 old factories, including several concrete producers, that stood in the area.

Tkhor faced a dilemma with the concept for Moskva-City. He felt that the district had to somehow resemble the Kremlin but at the same time distance itself so as not to detract from the architectural heart of historical Moscow.

To make it look like the Kremlin, Tkhor proposed that its highest skyscraper be called the Russia Tower and be surrounded by other tall buildings, mimicking the imposing Ivan the Great Bell Tower, which sits in the conceptual center of the Kremlin.

Over the years, Moskva-City’s management structure changed several times, and Tkhor, who won an architectural award for his Moskva-City concept, left in 1995 after he was demoted in a shakeup.

The first construction work started that year, and the Moscow city government has been a key investor in its infrastructure ever since, constantly adapting it to Moscow’s realities.

“This year, the Moscow government had to cut its budget for road infrastructure by two-thirds, and it has a goal of finishing two road projects that were started last year,” said a City Hall spokesman, referring to plans to connect the North Entrance — the main street into Moskva-City — to the intersection of Zvenigorodskoye Shosse and the Third Ring Road.

The spokesman also said a city department has been created to help Moskva-City developers get access to money to finish their projects. “Its key role is to attract additional financial resources, primarily through bank credits for problem developers,” the official said.

But while the department scrounges around for money, work is at a standstill at many sites. A visit reveals gaping pits filled with wooden planks and idle construction equipment.

The three main projects have been frozen at the pit stage — all of which failed to get support from VTB or Sberbank, according to an official construction site report prepared by the City Management Company, which supervises infrastructure and security at the site in cooperation with the Moscow city government and developers.

The frozen pits include City Palace, ST Group’s Russia Tower and the Transport Terminal, a critical transfer point between Moscow’s metro lines and other public systems and planned high-speed lines to the city’s airports.

The finished projects include one of Mirax’s Federation towers, the City of Capitals, the Naberezhnaya Tower, the Northern Tower, Tower 2000 and the Bagration pedestrian bridge. Finished infrastructure projects include a new autonomous thermoelectric power station with a capacity of 232 megawatts.

City Management Company vice president Dmitry Grankin said seven of the initially planned 24 skyscrapers have opened, with a combined 700,000 square meters of space, and another 1.5 million square meters will be finished within the next 12 months.

“The initial plan was to gradually increase the activity in the Moskva-City skyscrapers because, otherwise, it would not be possible to supply all the buildings at once with the appropriate infrastructure,” Grankin said. “We advocate sustainable development for the Moskva-City project.”

Crucial to Moskva-City is the so-called Central Core, a curved complex of low-rise buildings that includes a congress hall, a hotel and the giant Mall of Russia, which is to be built by 2010 by AFI Development. The Central Core is also financed by VTB, with the construction arm of AFI Development being 100 percent mortgaged to the bank.

Grankin showed a map of the gigantic underground infrastructure of interconnected passages that will be built at “Level Minus One” in the Central Core. The passages, spread over two-thirds of Moskva-City, will allow people to access every building in the district.

Meanwhile, Moskva-City resembles a phantasmagorical project, with the shiny windows of completed skyscrapers reflecting the cavernous pits beside them. A Renaissance Capital employee who works in one of the finished skyscrapers said the infrastructure was improving and a cafeteria had opened next door. But he did not like the view of the desolate, gaping pit from his 50th-floor window.

Name: Tower 2000 Office Complex Area: 61,000 square meters Investor: Taken over by city Status: Operational 2, 3  Name: City Palace, Wedding Palace Area: 169,000 square meters Developers: Snegiri and Inteko Status: Frozen 4  Name: Imperia Tower Area: 281,245 square meters Developer: MosCity Group Investor: VTB Status: To be completed in 2010 6, 7, 8  Name: Mall of Russia Area: 550,000 square meters Developer: AFI Development Investor: 100 percent mortgaged to VTB Bank Status: To be completed by 2010-2011 9  Name: City of Capitals Area: 288,680 square meters Developer: Capital Group Investor: Fully financed and partly owned by Sberbank Status: South Tower operational, Moscow Tower and St. Petersburg Tower to be completed in 2010 10  Name: Embankment Tower Area: 265,602 square meters Developer: Enka Group

Investor: City Center Investment Status: Operational 11  Name: Transport Terminal Complex Area: 228,000 square meters Developer: CiTer Invest Status: Frozen 12  Name: Eurasia Tower Area: 208,264 square meters Developer: Bovis Lend Lease Status: To be completed by the end of 2010 13  Name: Federation Complex Area: 439,436 square meters Developer: Mirax Group Investor: Financed and partly owned by VTB Status: West Tower operational, East Tower to be completed by 2011 14  Name: Mercury Tower Area: 158,528 square meters Developer: Mercury City Tower Status: Foundation being built, project to be completed in 2010-2011 15  Name: Moscow Government Administrative Complex Area: 636,332 square meters Developer: Moskapstroi Status: To be completed in 201316  Name: Multifunctional Complex Area: 396,000 square meters Developer: Lisario Trading Status: Frozen 17, 18  Name: Russia Tower Area: 500,000 square meters Developer: ST Towers (Russian Land) Status: Frozen — may be turned into parking lot 19  Name: Northern Tower Complex Area: 139,323 square meters Developer: Northern Tower Status: Operational 20  Name: Multifunctional Complex Area: 180,000 square meters Developer: City Status: Approval pending32  Name: Multilevel parking garage beneath the Third Ring Road Area: 20,130 square meters Investor: City Center Investment Status: To be completed in 2010

Source: City Management Company

Gas Is The Dominant Fuel In Russia, Accounting For 57.1% Of Primary Energy Demandhttp://www.officialwire.com/main.php?action=posted_news&rid=12849&catid=679

BMI forecasts that Russia will account for 47.73% of Central and Eastern Europe (CEE) regional power generation by 2013, and will remain a net exporter of electricity to neighbouring statesPublished on August 03, 2009

BMI forecasts that Russia will account for 47.73% of Central and Eastern Europe (CEE) regional power generation by 2013, and will remain a net exporter of electricity to neighbouring states. CEE power generation in 2008 was an estimated 2,096 terawatt hours (twh), representing an increase of 2.8% over the previous year. We are forecasting a rise in regional generation to 2,340twh by 2013, representing an increase of 11.6%.

CEE thermal power generation in 2008 was an estimated 1,322twh, accounting for 62.7% of the total electricity supplied in the region. Our forecast for 2013 is 1,396twh, implying 5.6% growth that reduces only slightly the market share of thermal generation to 59.7% – in spite of environmental concerns promoting renewables, hydro-electricity and nuclear generation. Russia’s thermal generation in 2008 was an estimated 676twh, or 51.18% of the regional total. By 2013, the country is expected to account for 46.27% of thermal generation.

Gas is the dominant fuel in Russia, accounting for 57.1% of primary energy demand (PED). Gas is followed by oil at 18.2%, coal at 13.7%, nuclear at 5.2%, and hydro with a 5.9% share of PED. Regional energy demand is forecast to reach 1,553mn tonnes of oil equivalent (toe) by 2013, representing 11.0% growth over the period. Russia’s estimated 2008 market share of 50.65% is set to fall to 49.42% by 2013.

In 2008, Russia accounted for an estimated 46.17% of regional nuclear energy consumption, with a forecast market share of 50.01% by 2013.

Russia now ranks fourth equal with Turkey in BMI’s updated Power Business Environment Ratings, behind Poland, Kazakhstan and Romania. Russia’s current score reflects the vast size of the country’s electricity market and infrastructure, a high level of GDP per capita growth, and a relatively low level of import dependence. Country risk factors undermine the industry scores to some extent.

BMI now expects Russian real GDP growth to average 1.4% per annum between 2009 and 2013, although the 2009 forecast is for a decline of 7.1%. Russia’s population is expected to fall from 141.8mn to 138.3mn over the forecast period, but GDP per capita and electricity consumption per capita are projected to increase by 36% and 6%, respectively. The country’s power consumption is expected to increase from an estimated 942twh in 2008 to 976twh by the end of the forecast period, while theoretical export capacity should increase from an estimated 108twh in 2008 to 141twh in 2013, assuming

1.6% annual growth in generation.

We are forecasting an increase in Russian electricity generation of 17.4%, between 2008 and 2018, which is towards the lower end of the projected range for the CEE region. This equates to 10.4% in the 2013- 2018 period, up from 6.4% in 2008-2013. PED growth is set to rise from 8.2% in 2008-2013 to 14.8% in 2013-2018, representing 24.2% over the entire forecast period. An increase of 42% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise by less than 1% between 2008 and 2018, with nuclear demand up almost 58%. More detail of BMI’s longterm forecasts can be found later in this report.

Russia Power Report Q3 2009: http://www.companiesandmarkets.com/r.ashx?id=L231P27SJ154323

Activity in the Oil and Gas sector (including regulatory)

U.S. Rules May Affect Russia’s Cash Cowhttp://www.themoscowtimes.com/article/1009/42/380067.htm

03 August 2009 By Alex Anishyuk / Special to The Moscow Times

As regulators in the United States consider limiting speculative trading on oil exchanges, market players are engaged in their own speculation, wondering how the new rules will affect the country’s most important export.

The first of several scheduled hearings on curbing excessive speculation opened in the United States on Tuesday, with the Commodity Futures Trading Commission recommending strict limits in order to keep financial firms from amassing giant positions that contribute to volatility and create price bubbles.

Big buyers of oil, such as airlines and municipal power companies, have complained that last year’s surging oil price —which hit a high of $147 per barrel in July — was driven by speculation, rather than supply and demand, and severely affected their profit margins. Other proponents of market controls point out that oil prices nearly doubled this year, going from a low of $44 per barrel to a high of $73 per barrel, despite a massive economic slowdown and data that consistently show overflowing stockpiles.

In Russia, however, the debate on measures that could keep down oil prices takes on a special urgency. Oil income constitutes a third of budget revenues and affects everything from budget projections to the value of the ruble to the stability of the economy.

Wide swings in oil prices have wreaked havoc on plans for the federal budget. When Prime Minister Vladimir Putin presented a revised budget for 2009 in March, it was based on an oil price of $41 per barrel. The previous budget forecast $95 per barrel, while next year’s plans for $55 per barrel.

“It’s hard to predict how oil prices will behave, but it’s easy to say what will happen to the economy,” said Yevgeny Nadorshin, chief economist at Trust National Bank. “At $70 per barrel, everything is good, at $50 it is still acceptable, at $40 it is tolerable and at below $30 per barrel the economy is in trouble.”

The proposed curbs in speculation may have some effect on volatile oil prices, but it may be limited, Nadorshin said. Prices for Urals crude, Russia’s main export blend, are more closely linked to Brent rather than to the WTI contracts traded in the United States, and therefore would not fall drastically if U.S. regulations were imposed.

Others predict that the regulations would have beneficial effects for the country’s oil-dependent economy.

“The limitations will not fundamentally change oil prices but can influence their dynamics,” said Viktor Markov, an analyst with Zerich Capital Management. “There will be no drastic ups and downs, and the fluctuations will become smoother,” he said. “Economies can be adjusted to any price but are always damaged by sudden jumps.”

The price for crude is unlikely to increase significantly in the near term, but regulations could make it less volatile, said Danila Levchenko, chief economist at Otkritie. “Economic recovery is inevitable, and oil prices are likely to grow gradually. But we shouldn’t expect them to top last summer’s high. That’s just not reasonable,” he said.

Russia July oil and gas output rise vs Junehttp://in.reuters.com/article/oilRpt/idINL356655220090803

Mon Aug 3, 2009 10:30am IST

MOSCOW, Aug 3 (Reuters) - Russian natural gas production rose 10.7 percent in July versus June while oil output rose slightly, Energy Ministry data showed on Monday.

The data obtained by Reuters showed July natural gas production rose to 1.34 billion cubic metres per day from 1.21 bcm per day in June while oil output rose to 9.91 million barrels per day from 9.89 million bpd in June.

The data also showed that gas production by Russia's Gazprom (GAZP.MM: Quote, Profile, Research) rose in July to 1.04 billion cubic metres (bcm) per day, up 12.8 percent from 0.92 bcm per day in June. (Moscow Newsroom, + 7 495 775 12 42, gleb.gorodyankin@reuters.com)

June Oil Output Up 1.3%

http://www.themoscowtimes.com/article/1009/42/380058.htm

Russia’s oil production rose 1.37 percent in July against the previous year on production from new fields.

Oil output rose to 41.92 million tons, or 9.91 million barrels a day, in July, according to CDU-TEK, the Energy Ministry’s central dispatch unit.

Output from Rosneft, LUKoil and TNK-BP grew year on year as new developments added output. Gazprom Neft and Surgutneftegaz failed to pump as much oil as in the same period last year.  (Bloomberg)

UPDATE 1-Urals Energy hands oil field to Sberbank for debthttp://in.reuters.com/article/oilRpt/idINL359634320090803

Mon Aug 3, 2009 11:48am IST

* Divesting 100 pct of Dulisma subsidiary

* Clears $130 mln loan and part of $500 mln loan

* Negotiating similar deal for 35 pct of Taas Uriakh unit

(Adds details)

MOSCOW, Aug 3 (Reuters) - Mid-sized Russian oil firm Urals Energy (UEN.L: Quote, Profile, Research) finalised a deal to hand over a key East Siberian asset to state controlled Sberbank to clear part of its $630 million debt to the bank, Urals said on Monday.

Urals said it would hand 100 percent of its ZAO NK Dulisma unit to Sberbank to clear a $130 million loan and part of a $500 million loan. It is still negotiating a similar deal for 35 percent of its Taas Uriakh unit to clear the rest of the debt. (Writing by Melissa Akin, editing by Will Waterman)

TNK-BP to Open 5 Fields

http://www.themoscowtimes.com/article/1009/42/380058.htm

TNK-BP will start pumping oil from five new fields in Siberia in 2013 and 2014 to boost production as aging reserves go into decline, the company said on its web site last week.

The deposits may hold 7.2 billion barrels of oil equivalent, potentially adding 500,000 barrels a day of crude and gas to TNK-BP’s output capacity, the company said. (Bloomberg)

TNK-BP lines up new Siberian fieldshttp://www.upstreamonline.com/live/article184938.ece

Wire reports

TNK-BP, UK supermajor BP’s 50%-owned Russian venture, will start pumping oil from five new fields in Siberia in 2013 and 2014 to boost production as aging reserves go into decline.

The deposits may hold 7.2 billion barrels of oil equivalent, potentially adding 500,000 barrels per day of crude and gas to TNK-BP’s output capacity, the company said in a presentation posted on its Web site this week.

Some of the five fields, called Suzunskoye, Tagulskoye, Rospan, Messoyakha and Russkoye, are part of the Bolshekhetsky project.

TNK-BP, a joint venture with Russian billionaires that accounts for about a quarter of BP’s production, is bringing new projects on stream to counter the depletion of West Siberian fields, according to a Bloomberg report.

Russian oil output fell for the first time in a decade last year as taxes slowed investment in new deposits and older fields moved into decline.

Two of the new fields, Suzunskoye and Tagulskoye, are located in the Krasnoyarsk region, Marina Dracheva, a spokeswoman for Moscow-based TNK-BP, told Bloomberg.

Russia has granted exemptions from mineral extraction taxes for initial production from Krasnoyarsk reserves.

Russian giant Rosneft owns the neighboring Vankor development, where production will start this quarter after tests are completed on a pipeline to Purpe.

Rosneft is targeting peak output of more than 500,000 barrels per day from the deposit, equal to more than 5% of current Russian output, according to the state-run company.

Unlike Vankor, the two TNK-BP fields didn’t appear on the government’s recent list of developments being considered for export-tax relief.

Friday, 31 July, 2009, 18:25 GMT | last updated: Friday, 31 July, 2009, 18:25 GMT

PrimeGen Energy Begins Drilling Third Timan-Pechora Wellhttp://www.oilvoice.com/n/PrimeGen_Energy_Begins_Drilling_Third_TimanPechora_Well/51d68fd96.aspx

Sunday, August 02, 2009

PrimeGen Energy Corp. advises that as part of the recently announced participation agreement regarding the Company's oil and gas project in Timan-Pechora, Russia, the operator has notified PrimeGen that drilling of a third well commenced on July 31, 2009.

The third well has been titled as the "Kochmesskoye #3" and anticipated to reach a target depth by Monday, August 10, 2009. As part of the accelerated drilling program, preparations are underway on the fourth well site to begin immediate drilling shortly after the completion of the third well. The first well of the project was drilled and completed in the second quarter of 2009 and resulted in setting a new production record for the field of 1,200 barrels of oil per day. The second well's average production flow has been 920 barrels of oil per day. PrimeGen expects that an additional 4 wells will be drilled during the third quarter of 2009.

Using current pricing for Timan-Pechora crude oil, PrimeGen has now projected that both wells have generated $4,100,000 in revenue to date or $50.4 million on an annual basis. Currently, oil at Timan-Pechora has been priced at over $65.00 per barrel.

Company President Robert Charlton comments, "With continued drilling successes in Timan-Pechora, PrimeGen has strong momentum going into the second half of the year."

Gazprom

Primorsky Krai Residents Furious At Gazprom Big Boss Payhttp://www.vostokmedia.com/n52034.html

08:38, 03.08.2009In the face of the ongoing crisis Gazprom has plans to maintain BOD bonus payments at the previous year level

VLADIVOSTOK. August 3. VOSTOK-MEDIA - Alexey Miller, Deputy Chairman of the Board of Directors of Gazprom may get $ 5.3 million in wages for 2008, $ 2.8 million of the sum is for management of the Board of Directors of Gazprom Neft, stated business daily Vedomosti. It is uncertain by now how much money Alexey Miller will get in wages as manager of Gazprom. The aggregate amount that will be payable to Alexey Miller will be entitled to is nearly as much as an all-time high compensation of $ 5.5 million awarded to Alexander Voloshin, Chairman of Norilsk Nickel BOD for 2008. This figure may increase, however, if Gazprombank headed by Alexey Miller will keep up the last year’s benefits. In the face of the ongoing crisis Gazprom has plans to maintain BOD bonus payments at the previous year level.

Gazprom Neft Joins OTCQX http://www.earthtimes.org/articles/show/gazprom-neft-joins-otcqx,912339.shtml

Mon, 03 Aug 2009 05:02:13 GMTThe leading Russian Oil & Gas Producer Joins the U.S. OTC Market's Highest Tier NEW YORK, Aug. 3

NEW YORK, Aug. 3 /PRNewswire/ -- Pink OTC Markets Inc., the leading electronic inter-dealer quotation system, trading technology and financial information provider for over-the-counter (OTC) securities, today announced that Gazprom Neft (RTS: SIBN, OTCQX: GZPFY), one of the world's top twenty largest oil companies, has chosen to list its American Depositary Receipts (ADRs) on OTCQX. Gazprom Neft's ADRs began trading today on the OTC market's highest tier, OTCQX International Premier. Investors can find current financial disclosure and real-time Level 2 quotes for the company on www.otcqx.com and www.pinksheets.com.

(Logo: http://www.newscom.com/cgi-bin/prnh/20090708/NY43125LOGO )

"We are pleased to welcome Gazprom Neft as our first Russian company trading on OTCQX," said R. Cromwell Coulson, Chairman and CEO of Pink OTC Markets. "OTCQX is the natural choice for this leading Russian oil and gas producer to take advantage of the opportunity to expand its investor base and to increase international liquidity by obtaining greater access to the U.S. capital markets."

The Bank of New York Mellon, which acts as Depositary for Gazprom Neft's ADR program, will serve as Gazprom Neft's Principal American Liaison ("PAL") on OTCQX, responsible for providing guidance on listing requirements.

Gazprom's ADRs will trade in the United States on OTCQX under the ticker "GZPFY" where each ADR will represent 5 ordinary shares. Gazprom Neft's shares are also listed on the Russian Trading System Stock Exchange under the symbol SIBN. The company's headquarters are in Moscow, Russia.

Scorpion in Gazprom pay row

http://www.upstreamonline.com/live/article184940.ece

By Upstream staff

Bermuda-based driller Scorpion Offshore is in a dispute with Russian gas monopoly Gazprom over payment for use of the company’s Offshore Vigilant jack-up rig in Venezuela.

Gazprom sought to classify 550 hours of work under the “lost in hole and repair” rate due to a fishing job done in May.

The change would cost Scorpion $3.8 million, according to a Scorpion release.

The comany said it was disputing the move but did not book the revenue during the past quarter.

Scorpion has brought in an independent third party to mediate the dispute.

The Vigilante is a Super LeTourneau 116 jack-up that can drill in water depths up to 350 feet.

It is working under a two-well contract with an option for two more wells signed in November last year at a dayrate in the “high” 200,000-dollar range, the company said in its fleet-status report.

Friday, 31 July, 2009, 19:01 GMT | last updated: Friday, 31 July, 2009, 19:01 GMT