Russia 091013

Basic Political Developments Reuters: PRESS DIGEST - Russia - Oct 13 Interfax: Moscow press review for October 13, 2009 Clinton seeks Russia support over Iran sanctions

o Clinton to Query Russia on Iran Nuclear Sanctions (Update1)o Lavrov, Clinton discussing urgent intl issues & bilateral questionso Clinton Looking For Russian Support On Iran During Moscow Visit o Clinton, Lavrov optimistic ahead of talks in Moscow o U.S. Secretary of State to focus on Iran, arms reduction in Moscowo Clinton to meet Medvedev for wide-ranging talkso Clinton to press Russia over sanctions on Irano Clinton in Moscow to talk missile defense, nuke reduction and Iran o US scrapped missile defense “not just to please Russia”

UPDATE 2-China, Russia bolster ties with $3.5 bln in dealso Chinese Premier Wen meets Russia's Putino China Raises 4-point Proposal to Improve Trade Cooperation with Russia o Russia-China make new $3.5bn pactso China Development Bank Offers Russian Bk US$500M Credit Line o Russia, China sign deals worth $3.5 bln during Putin's visit o Putin visits China: $5.5bln in deals expectedo UPDATE: China, Russia Working On Yuan-Ruble Trade Settlement o Chinalco eyes RUSAL's Australian plant stake-sourceso Russia, China to sign gas supply agreement – Gazpromo China and Russia Set to Sign Gas Pacto Potential Russia-China Gas Deal Positive for Gazprom, BofA Sayso Hong Kong investor buys 51% of East Siberian gas field developero UPDATE 1-Petropavlovsk signs China deal for iron ore projecto Now, Where Were We? - Gas Exports to China Are Almost Inevitable –

the Question Is, What Can Russia Get in Exchange? Antony arrives in Russia; defence ties on agenda A K Antony In Moscow For Joint Ventures In Strategic Weapons Another 102 million USD from India to Sevmash Sultan of Brunei Darussalam Hassanal Bolkiah will make an official visit to

Russia on October 11-16, 2009. Dhaka seeks to hasten nuclear deal with Russia - Bangladesh Prime Minister

Sheikh Hasina will send a team of top officials Saturday to speed up negotiations with Russia for setting up nuclear power plants.

Tymoshenko and Putin expected to hold next meeting in November Russia accuses Georgia of aiding Al-Qaeda: reports Russia accuses Georgia of supporting terrorism in N.Caucasus Georgian Church primate deplores secession of Abkhazia, S. Ossetia

Sargsyan thanks Medvedev for contribution to Armenian-Turkish reconciliation process

S. Sargsyan says trustworthy political dialogue is engine of Armenian-Russian ties

Belgrade: Russians coming to prepare for Medvedev visit Kanin peninsula used as target for ballistic missiles Russia plans to launch three Glonass satellites on Oct. 29 After delays, Russia set to add module to space station Masterminds of attack on Ingush president killed - FSB chief Policemen attacked in Dagestan Terrorist act prevented in Moscow in early September - FSB head Statistics Chief Claims Number Shenanigans Kremlin Revives Soviet-Era War on Dissidents

National Economic Trends Russia FinMin: reserve diversification to continue Kudrin doesn’t expect “avalanche” of bank mergers, acquisitions Russian finance minister foresees closure of 200 banks in 2 years President Dmitry Medvedev: if inflation is cut to 5—7%, Russian banks will be

able to grant loans at adequate rates Troika Warns on Pension Plan Rencap: Russian weekly outlook - 13-19 Oct

Business, Energy or Environmental regulations or discussions Lukoil, Norilsk Nickel, Polyus Gold: Russian Equity Preview Russia Stocks Rise for Seventh Day, Longest Rally Since 2006 Broker BGC to open Moscow office next month Energy Ministry say capacity market to be launched next year Russia's UC RUSAL says no plans to sell stake in QAL Uralkali can use potash from flooded mine –report MTS Acquires Controlling Stake of COMSTAR-UTS Opel sale could be finalized this week AvtoVAZ Sees Record Loss as State Plans Aid

Activity in the Oil and Gas sector (including regulatory) Russia ready to reduce gas price supplied to Armenia TNK-BP Invests Over $400 Million in Yamal Project TNK - BP Eyes Iraqi Oil And Gas Fields Eastern Europe Fears New Era of Russian Dominance - While the Russian-

German pipeline offers clear energy benefits to Western Europe, Central and Eastern European leaders fear it could lead to a new era of gas-leveraged Russian domination of the former Soviet bloc.

Gazprom Gazprom’s bleak prognosis - Russian energy giant Gazprom’s gas production

could this year drop 22 percent to 450 billion cubic meters.

Total confirms Shtokman delay - Leader of the French oil major Total, Christophe de Margerie, confirms that the Shtokman field in the Barents Sea will be delayed. He also underlines that the project will not be profitable with the current gas prices

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

Full Text Articles

Basic Political Developments

PRESS DIGEST - Russia - Oct 13http://www.forbes.com/feeds/afx/2009/10/13/afx6992806.html

10.13.09, 04:21 AM EDT MOSCOW, Oct 13 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- Russia's largest carmaker AvtoVAZ needs financial support to continue operation as its revenues in the last six months fell by 46 percent to 53.1 billion roubles, the daily reports.

- Promsvyazbank plans to sell an 11.7 percent stake to the European Bank for Reconstruction and Development (EBRD) through a share issue, its head Alexander Levkovsky says in an interview.

VEDOMOSTI

www.vedomosti.ru

- Russian telecom company Synterra, a possible takeover target for the country's third biggest mobile operator MegaFon, has been valued at $320-500 million.

- US State Secretary Hilary Clinton is coming to Russia to get Russia's supoprt for economic sanctions against Iran, the daily says.

RBK DAILY

www.rbcdaily.ru

- The former head of Russia's statistics agency Vladimir Sokolhas criticised the Economics Ministry for overestimating economic achievements.

- Russia's largest privately-owned oil producer LUKOIL is planning to issue Eurobonds worth $500 million in the next two months. This could be the first Eurobond placement of a private company during the financial crisis, the daily says. - Sheremetyevo airport, a holder of a 52 percent package of Vladivostok's airport, could sell part of its shares to Vnesheconombank to attract money to reconstruct a Far Eastern international terminal.

VREMYA NOVOSTEI

www.vremya.ru

- Sberbank and VTB could get shares in AvtoVAZ in exchange for its credit debts.

- Sberbank and Magna could complete their discussions with Germany's carmaker Opel and sign a deal for its 55 percent stake by the end of this week, the daily says.

GAZETA

www.gzt.ru

- School directors are cancelling trips of school children abroad during the forthcoming autumn holidays because of their swine flu, the paper says, citing travel agencies.

- Russia's military prosecutors have accused Space troops officials of misusing budget money directed for the Defence Ministry.

NEZAVISIMAYA GAZETA

www.ng.ru

- Former head of the state statistics agency Vladimir Sokolin has said that there are few competent specialists in the government who are able to offer relevant measure to avert the

crisis.

- China could become Russia's biggest buyer of natural gas, the daily reports, predicting the outcome of Prime Minister Vladimir Putin's viist to Beijing.

Keywords: PRESS DIGEST Russia Oct 13

(--Writing by Tatyana Ustinova, Reuters Messaging: tatiana.ustinova.reuters.com@reuters.net, +7 095 775 1242)

Moscow press review for October 13, 2009http://www.interfax.com/3/522636/news.aspx

MOSCOW. Oct 13 (Interfax) - The following is a digest of Moscownewspapers published on October 13. Interfax does not accept liabilityfor information in these stories.

VEDOMOSTI

TNK-BP (RTS: TNBP) announced on Monday it could develophydrocarbons in Iraq, but is not weighing any specific plans connectedwith Iraq. "We are only focusing our interest on this region," a companyspokesman said. Buying out the Kurdistan project from Russianshareholders is not on the company's plans. It has almost no foreignprojects, except assets in Ukraine, an agreement with the VenezuelanPDVSA on the joint prospecting of the Ayacucho block and a stake in aconsortium, which will develop the Junin-6 block, also in Venezuela.(Preparations for Expansion).

The person in charge of the electricity sector could be replaced inthe Energy Ministry, and the duties currently performed by Deputy EnergyMinister Vyacheslav Sinyugin will, by all accounts, be passed over tohis colleague Stanislav Svetlitsky (Who Will Replace Sinyugin?)

Russia's chief statistician Vladimir Sokolin said the government'soptimism about economic growth is erroneous. Politicians have beentrapped by methodological errors, he said. (Statistics and Politics).

China's Chinalco is not planning to buy UC Rusal shares during thealuminum holding company's a contemplated IPO in Hong Kong in December,according to reports, citing the South China Monitoring Post. Thisopportunity was being weighed, but Chinalco made up its mind to refrainfrom the deal, the report says. "China Lost in Thought).

The AvtoVAZ (RTS: AVAZ) management has acknowledged that thecompany is on the brink of bankruptcy and that it will not survivewithout state support. Not only the assembly line, but also otherbusinesses are loss-making. The company cannot even pay interests on theloans (Losses Alone, see also Kommersant, Page 1, AvtoVAZ Begging).

Sollers (RTS: SVAV) plans to start assembling Jeep cross countryvehicles in Russia, the company's General Director Vadim Shvetrsov said.Production volumes, the model line and the floor are a matter ofdiscussions, he said. Details will be defined in a month, Shvetsov said.(Jeep on the Way to Russia).

If MegaFon (RTS: MEGF) finally decides to buy Synterra, it willhave to pay $320 million - $500 million for the deal, according to threeinvestment banks, hired by MegaFon. (MegaFon In No Haste).

KOMMERSANT

Guinea has detailed its demands to RusAl and seeks $1 billion indamages from the company within the framework of the case of privatizingFriguia bauxite-alumina complex. A Guinean court has obliged RusAl toreturn the complex in state ownership, but the court ruling has nottaken effect. Guinea wants to file a new suit, on cash compensation thistime. But lawyers do not think the government will get the money backfrom the company, even if the demand is upheld by the court, whileexperts in the region describe Guinea's suit as "a mock threat." (Page9. Guinea Demands More from RusAl).

Maxi Group co-owner Nikolai Maximov plans to demand 14 billionrubles in compensation payments from the Novolipetsk Metal Plant (RTS:NLMK). Maximov, who has ordered one more appraisal of Maxi-Group withoutNLMK's participation, argues that NLMK has yet to pay 14 billion rulesfor his controlling stake in the company. NLMK rejected the claim asbaseless, because, it said, Maximov failed to fulfill the terms of thedeal by not extending a 7.3 billion ruble loan to Maxi Group. Lawyersagree and they see the claimant's chances as nil. (Page 11, NikolaiMaximov Overestimates Maxi Group).

Following an analysis of the causes of the current crisis in theRussian banking sector, Central Bank is considering the possibility ofincreasing the number of bank standards. After it limited the volumeRussian banks' foreign borrowings, it could get back to the regulationof borrowings from major clients and counter agents - a regulation itdropped in 2004. Tighter standards will lessen the risk of a sharpoutflow of liquidity from banks, but concurrently they could make thingsworse for small banks and prompt large clients to re-channel theirresources to state banks. (Page 10, Banks Face Curbs on Access to LargeClients).

Clinton seeks Russia support over Iran sanctions http://www.alertnet.org/thenews/newsdesk/LD557725.htm

13 Oct 2009 08:32:15 GMT Source: Reuters* Clinton seeks to up pressure on Iran* To discuss Afghanistan, missile defence with Kremlin* Nuclear arms reduction treaty also on agenda(Recasts, adds Clinton comment, details)

By Jeff MasonMOSCOW, Oct 13 (Reuters) - U.S. Secretary of State Hillary Clinton met top Russian officials on Tuesday hoping to win Moscow's support for tougher sanctions against Iran if Tehran fails to allay fears it is making nuclear weapons.U.S. President Barack Obama's decision to scrap plans for an anti-missile system located in eastern Europe has helped improve ties with Moscow after stormy relations under his predecessor George W. Bush.But diplomats say that in return the United States now wants better Russian cooperation on an array of foreign policy issues such as the U.S.-led war in Afghanistan, missile defence and a nuclear arms reduction treaty.Clinton did not attend a July summit between Obama and Russian President Dmitry Medvedev because of an injury but is finishing a European tour with a two-day visit to Russia."I had broken my elbow, but now both my elbow and our relationship are reset and we are moving forward which I greatly welcome," Clinton told her Russian counterpart Sergei Lavrov at the start of talks at a 19th century mansion in central Moscow.The United States needs Russian support for a U.S. push to impose sanctions on Iran, if talks between six major powers and Tehran over its nuclear plans end without resolution."The secretary (Clinton) will want to speak to Foreign Minister Lavrov and President Medvedev about what specific forms of pressure Russia would be prepared to join us and our other allies in if Iran fails to live up to its obligations," a senior State Department official told reporters on Monday.IRANIran agreed at a meeting with six world powers in Geneva on Oct. 1 to allow U.N. experts access to a newly disclosed uranium enrichment plant near the city of Qom.Officials called the talks constructive, but Clinton warned on Sunday the world would not wait forever for Iran to prove it was not building nuclear bombs.Russia has supported three sets of United Nations sanctions on Iran, though Western powers say Russian diplomats refused to agree to tougher measures against Tehran and Moscow has ruled out imposing oil sanctions against the Islamic Republic.Like Washington, Russia formally rejects any linkage between Iran and an anti-missile defence system. But most analysts say Moscow is likely to use Iran as a bargaining chip.Ahead of talks with Clinton, Lavrov said he wanted to discuss with her new U.S. plans for missile defence, redrawn on Obama's orders.Some Russian officials, including Moscow's ambassador to NATO Dmitry Rogozin, have suggested Obama's new missile defence plan involving sea-based and mobile missiles could pose an even stronger security threat.Russian officials have said Moscow's concerns would be finally lifted only if it became an equal partner in any European anti-missile system.Clinton and Lavrov will seek to inject momentum into talks to replace the Strategic Arms Reduction Treaty, which expires on Dec. 5. Obama and Medvedev agreed on the outlines of a deal in July, but several hurdles may make it difficult to finish by the December deadline.The two foreign ministers will also discuss a commission they are coordinating that covers issues such as arms control, energy, fighting terrorism and drug trafficking, and boosting business and scientific links.

Issues that divide the two nations may arise. Clinton will address human rights and Russia's treatment of Georgia, with which it fought a five-day war last year. (Additional reporting by Conor Sweeney; Editing by Dominic Evans)

Clinton to Query Russia on Iran Nuclear Sanctions (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7fms1W42RpQ

By Janine Zacharia Oct. 13 (Bloomberg) -- Secretary of State Hillary Clinton met with Russian Foreign Minister Sergei Lavrov in Moscow as the U.S. seeks clarification on possible Russian support for new sanctions against Iran.

“I unfortunately was not able to come during the summit between our two presidents because I broke my elbow,” Clinton said today at the start of her meeting with Lavrov. “Now both my elbow and our relationship are reset and we’re moving forward, which I greatly welcome.”

Clinton arrived in Moscow last night for meetings with Lavrov and Russian President Dmitry Medvedev.

The U.S. and its European allies are concerned that Iran is making headway on acquiring the capability to build a nuclear weapon. Iran told United Nations nuclear inspectors last month it is building an underground nuclear-fuel plant, a facility that the U.S., Britain and France said was a secret site.

During an Oct. 1 meeting near Geneva with the U.S., other members of the UN Security Council and Germany, Iran agreed to allow an inspection of the new enrichment facility outside Tehran. The country also agreed to meet with negotiators for the U.S. and other UN members later this month.

New Sanctions

The U.S. and other powers have said they will wait until the end of the year before pushing for any new sanctions against Iran. Three rounds of Security Council sanctions have failed to halt Iran’s uranium enrichment. U.S. officials welcomed Medvedev’s comments in New York last month that new sanctions may be inevitable.

Still, Russia has long been cool to new penalties and it is yet to be determined what types of sanctions, if any, Russia would support.

“We should not overestimate how far it carries the Russians in our direction,” James Collins, U.S. ambassador to Russia from 1997-2001, and now an analyst at the Carnegie Endowment for International Peace in Washington, said of Medvedev’s comment.

Clinton will also discuss a proposal, discussed at the Geneva meeting, to ship most of Iran’s low-enriched uranium stockpile to Russia to be turned into fuel for a Tehran

medical research facility, a State Department official said on condition of anonymity to reporters traveling with Clinton to Moscow.

Her trip to Moscow follows President Barack Obama’s visit in July, during which he sought to make a fresh start in U.S.- Russian relations, which were often tense during the Bush administration.

Nuclear Arsenals

Clinton will have wide-ranging discussions as part of a new bilateral commission established by the two presidents, extending beyond Iran to the possibility of expanding cooperation on Afghanistan and finalizing a new treaty to set limits on the two countries’ nuclear arsenals.

While in Moscow, Clinton will meet with civil society activists. On Oct. 7, she issued a statement marking the third anniversary of the killing of journalist Anna Politkovskaya, whose murderers have never been brought to justice.

The U.S. last week welcomed an inaugural flight transporting lethal material through Russian airspace to supply troops in Afghanistan, an arrangement that will save the U.S. roughly $135 million annually in fuel costs, according to the State Department official.

The U.S. would seek broader contributions from Russia in the war against the Taliban in Afghanistan, the official said.

Arms Treaty

Clinton will also discuss sticking points regarding the drafting of a replacement to the Strategic Arms Reduction Treaty governing U.S. and Russian nuclear stockpiles. A new treaty likely won’t be ratified by the U.S. Senate by the time the old one expires Dec. 5, creating a potential vacuum of at least several months.

The treaty sets limits on the numbers of warheads and delivery vehicles the U.S. and Russia can maintain and sets up verification mechanisms.

Russian leaders will also likely raise questions about U.S. plans for missile defense for Europe in the wake of Obama’s decision last month to scrap a Bush administration plan to station a radar and missile interceptors in former Soviet satellites, Poland and the Czech Republic.

Asked about reports that Alexander Vershbow, an assistant secretary of defense, told reporters in Washington that the U.S. might put part of a new system in Ukraine, the official said Vershbow was misquoted. The reported comment drew criticism from Lavrov.

To contact the reporter on this story: Janine Zacharia in Moscow at jzacharia@bloomberg.net

Last Updated: October 13, 2009 03:28 EDT

Lavrov, Clinton discussing urgent intl issues & bilateral questions

http://www.itar-tass.com/eng/level2.html?NewsID=14425931

13.10.2009, 12.07

MOSCOW, October 13 (Itar-Tass) - Russian Foreign Minister Sergei Lavrov and US State Secretary Hillary Clinton are discussing in Moscow pressing international issues and questions of the bilateral agenda.

Opening the talks, Lavrov noted, “the sides were preparing for long this meeting”. “Hope that the work done will help us to work fruitfully this Tuesday during the first round of talks within the bilateral commission, set up by the presidents of the two countries in order to determine completely the commission’s parameters and to pinpoint procedures of its work.”

In turn, the state secretary noted that the sides had made much since the time of the first meeting with Lavrov in Geneva last spring when the presidents of the two countries decided to establish a strategic dialogue. She added that the two ministers have to discuss further development of relations, important international issues as well as the rising number of bilateral questions.

Clinton noted with regret in conclusion that she was unable to attend the Russia-US summit in Moscow last July, but bilateral relations experienced “resetting” since that time.

Clinton Looking For Russian Support On Iran During Moscow Visit http://www.rferl.org/content/Clinton_to_Push_Russia_on_Iran_During_Moscow_Visit/1850020.html

Last updated (GMT/UTC): 13.10.2009 06:39 By Gregory Feifer

When Iran admitted the existence of a previously secret uranium-enrichment plant near the holy city of Qom last month, the news appeared to take Russia by surprise. 

One official channeled Moscow's dissatisfaction to Washington, accusing American intelligence of failing to share information on Iran. But President Dmitry Medvedev

sounded what appeared to be a new note. 

Moscow doesn't consider sanctions the best way to solve the standoff over Iran's nuclear program, he said, but "if all possibilities to influence the situation are exhausted, then we can use international sanctions." 

U.S. Secretary of State Hillary Clinton will try to ascertain just how much of a change Medvedev's words represent when she meets him later on October 13 during a two-day visit to Russia, but few expect she'll win Russian support for increasing pressure on Tehran. Clinton has already held talks with Foreign Minister Sergei Lavrov. 

A Clear Message

Clinton's trip comes as Western countries are mounting pressure on Iran to accept a package of international incentives in return for its cooperation over demands to stop enriching uranium. Washington is leading a drive to impose new sanctions if Tehran doesn't comply by the end of the year. 

Speaking in London on October 11 at the start of a five-day European tour, Clinton said the West was "delivering a clear message" to Iran.

"The international community will not wait indefinitely for evidence that Iran is prepared to live up to its international obligations," she said.  

Iran says it's only interested in developing peaceful nuclear energy. But Western countries suspect Tehran of concealing a secret nuclear weapons program.

The Kremlin has long opposed Western pressure on Tehran, and -- as a permanent member of the UN Security Council -- the Kremlin has veto power over any UN sanctions. Russia has serious business considerations in addition to political ones: Moscow is building a nuclear power plant in Iran that's due to go online by the end of the year. 

Political analyst Andrei Piontkovsky says both sides want to the October 13 meetings to go well but believes they'll produce little besides "nice words."

"Washington treated [Medvedev's stance on sanctions] with great optimism, but it's completely noncommittal," he said. "So nothing has really changed. Russia is very

skeptical about sanctions." 

Piontkovsky says Russia isn't really interested in stopping Iran from acquiring nuclear weapons. Many believe Moscow is playing a complicated game with the West over Iran by using its relatively good relations with Tehran to stymie the West and enhance its own position in the world. 

Experts say Iran's decision to allow inspections of its uranium-enrichment facility in Qom during talks in Geneva last month will make it even harder for Washington to persuade Moscow over sanctions. 

Missile Defense

During her Moscow visit, Clinton will also discuss progress on a major nuclear weapons treaty both sides say they want to sign by the end of the year, when the 1991 START nuclear arms pact expires.

But Russia's push to link the negotiations to U.S. plans for a missile defense system poses a potential obstacle. U.S. President Barack Obama recently decided to scrap Bush administration plans to install part of the missile shield in Central Europe, which Moscow said would threaten Russia. 

Lavrov praised Obama's decision last week, saying it created better conditions for dialogue. 

"According to our initial assessment it does not pose the same risks we talked about when plans for a missile-defense system [in Europe] were being made," Lavrov said. 

But Lavrov later said the new plan "raises more questions than answers," warning Moscow could raise new objections. Lavrov also bridled at a report last week suggesting Washington was considering Ukraine as a site for an early warning radar. 

After her meetings in Moscow, Clinton will travel 800 miles east to the city of Kazan, capital of the largely Muslim Tatarstan region. U.S. State Department spokesman Ian Kelly said last week that Clinton wants to see more of Russia than just Moscow. 

"Really, to understand Russia and its vibrancy and its diversity, you have to get outside of Moscow," Kelly said. "And I think Kazan was a good place to go because it really shows

that the Russian Federation is a multiethnic country." 

The trip will underscore Obama's promise to engage with a broad section of Russian society beyond the Kremlin.

Clinton, Lavrov optimistic ahead of talks in Moscow http://en.rian.ru/russia/20091013/156449473.html

11:4613/10/2009MOSCOW, October 13 (RIA Novosti) - U.S. Secretary of State Hillary Clinton said ahead of a meeting with Russia's foreign minister on Tuesday that progress has been made in bilateral ties, and that the sides expect productive talks.

The top U.S. diplomat will meet with Sergei Lavrov in Moscow, and later with President Dmitry Medvedev.

Speaking to reporters with Lavrov, she said the talks would focus on "important matters we are working on globally."

Since the "reset" in relations with Russia, following the tensions of recent years, "we're moving forward which I greatly welcome," she said.

Lavrov said: "We have prepared for this meeting for a long time, but I think that the work carried out by our ministry will allow us to productively hold the first round of strategic talks through the commission set up by our presidents."

"We will be able to discuss key international issues, as well as the bilateral agenda. I expect fruitful discussions," he said.

Among the key issues on the agenda are arms reduction and Iran's nuclear program.

U.S. President Barack Obama and Russia's Dmitry Medvedev agreed in July in Moscow on the outline of a deal to replace the 1991 Strategic Arms Reduction Treaty (START-1), which expires on December 5.

The United States has been seeking Russia's support in international efforts to pressure Iran to end its nuclear energy program, which Western powers suspect is a cover for a weapons program.

U.S. Secretary of State to focus on Iran, arms reduction in Moscowhttp://en.rian.ru/world/20091013/156446157.html

04:3513/10/2009

MOSCOW, October 13 (RIA Novosti) - U.S. Secretary of State Hilary Clinton is expected to prioritize Iran's controversial nuclear program and the replacement of the current arms reduction treaty during her talks with the Russian leadership in Moscow.

Clinton, who arrived late on Monday for a two-day official visit to Russia, is scheduled to meet with Russian President Dmitry Medvedev, Foreign Minister Sergei Lavrov and other Russian officials.

Prior to the visit, the Western media speculated that Clinton would seek Russia's broader support of the international efforts to force Iran to fold its uranium enrichment program.

Iran has been in the center of a protracted international dispute over its nuclear program. It has the right to the full nuclear fuel cycle if used for civilian purposes, but Western nations fear the program could lead to the production of weapons-grade material.

Tehran is under three sets of UN Security Council sanctions over its refusal to halt uranium enrichment that could be used both for electricity generation and weapons production. Iran insists its nuclear program is aimed at generating peaceful civilian energy.

Russia, which has traditionally supported Iran in the long-running dispute over its nuclear program, has recently voiced concern over Iran's second enrichment site, and urged the country to provide reassurances over its nuclear program.

President Dmitry Medvedev said in a statement circulated at a G20 economic summit in Pittsburgh that the fact that Iran has been building a uranium facility for several years without informing the UN nuclear watchdog is a "source of serious concern."

In addition, Moscow has criticized the recent ballistic missile tests conducted by Iran during a series of military drills.

Clinton and her Russian counterpart Sergei Lavrov are also expected to discuss a new treaty on strategic offensive armaments, to replace the 1991 Strategic Arms Reduction Treaty (START-1), which expires on December 5.

President Medvedev and U.S. President Barack Obama agreed in July in Moscow on the outline of a deal to replace the START-1 treaty, including cutting their countries' nuclear arsenals to 1,500-1,675 operational warheads and delivery vehicles to 500-1,000.

The START-1 treaty obliges Russia and the U.S. to reduce nuclear warheads to 6,000 and their delivery vehicles to 1,600 each. In 2002, a follow-up agreement on strategic offensive arms reduction was concluded in Moscow. The document, known as the Moscow Treaty, envisioned cuts to 1,700-2,200 warheads by December 2012.

Moscow and Washington have been involved in a series of closed-doors talks to prepare a new arms reduction deal until December. Both sides expressed hope that the new agreement would be signed before the expiration of the current treaty.

Russia is the last leg of Clinton's current European tour. She stopped in Switzerland, Ireland and Britain prior to her first visit to Russia as the top U.S. diplomat.

Clinton to meet Medvedev for wide-ranging talkshttp://www.cnn.com/2009/WORLD/europe/10/12/us.russia.clinton.medvedev/

By Jill Dougherty CNN Foreign Affairs CorrespondentMOSCOW, Russia (CNN) -- Russian President Dmitry Medvedev has invited U.S. Secretary of State Hillary Clinton to his private residence in suburban Barvikha for a discussion Tuesday on a broad range of issues in what one senior State Department official called a "relaxed setting."

Issues on the agenda for the two-hour meeting include the next steps on Iran, the Mideast conflict, cooperation on Afghanistan, possible joint work on a missile defense system, Russia's "neighborhood" and climate change.

Clinton also will meet with Foreign Minister Sergey Lavrov, following up on many of the same issues, as well as getting progress reports on the new bilateral presidential commission they jointly chair. The commission, created by presidents Medvedev and Barack Obama during the latter's July visit to Moscow, has 16 working groups dealing with a number of aspects of the relationship, from arms control to health care.

A key issue during Clinton's two-day visit to Russia will be arms control and reaching an accord to replace the 1991 Start II arms control agreement, which expires in December.

Also at the top of the agenda are Iran and international efforts to induce Tehran to end its nuclear program. A senior administration official, briefing reporters on background because of the diplomatic sensitivity of the talks, said Clinton will speak with Medvedev and Lavrov "about what specific forms of pressure Russia would be prepared to join the U.S. and other nations in."

The Obama administration has been cautiously optimistic about previous comments by Medvedev that sanctions "sometimes are inevitable." Russia traditionally opposes sanctions and Prime Minister Vladimir Putin has been highly critical of such steps. Other Russian officials have made contradictory statements on the issue.

Putin will not be in Moscow during the Clinton visit. A State Department official said he is on a previously scheduled trip to China.

During her visit, Clinton also will meet with members of Russia's civil society, including human rights leaders. She will stop by a center where Russian engineers design airplanes for U.S.-based Boeing.

She will hold a town-hall-style meeting with students at Moscow State University, attend an opera at the Bolshoi Theater and participate in the dedication of a statue to American poet Walt Whitman, one of the favorite poets of many Russians.

Clinton to press Russia over sanctions on Iranhttp://uk.reuters.com/article/idUSTRE59B5JB20091012

Tue Oct 13, 2009 12:40am BST

By Jeff Mason

MOSCOW (Reuters) - U.S. Secretary of State Hillary Clinton will press Russia on Tuesday to back sanctions against Iran if international talks over Tehran's nuclear program fail.

Afghanistan, missile defense, and a nuclear arms reduction treaty are also expected to feature prominently in meetings Clinton holds with Foreign Minister Sergei Lavrov and Russian President Dmitry Medvedev.

The top U.S. diplomat is finishing a European tour with a two-day visit to Russia, highlighting Washington's desire to reset ties with the Kremlin.

President Barack Obama's decision to revamp Bush-era plans, opposed by Moscow, for a missile defense shield in eastern Europe has helped improve U.S.-Russia relations.

The White House insists no quid pro quo was expected for that move, but analysts say the United States hopes Russian cooperation on a mix of foreign policy issues will increase.

Clinton needs Russian support for a U.S. push to impose sanctions on Iran if talks between six powers and Tehran over its nuclear plans end without resolution.

"The secretary will want to speak to Foreign Minister Lavrov and President Medvedev about what specific forms of pressure Russia would be prepared to join us and our other allies in if Iran fails to live up to its obligations," a senior State Department official told reporters on Monday.

Iran agreed at a meeting with six world powers in Geneva on October 1 to allow U.N. experts access to a newly disclosed uranium enrichment plant near the city of Qom.

Officials called the talks constructive, but Clinton warned on Sunday the world would not wait forever for Iran to prove it was not building nuclear bombs.

Russia has been traditionally reluctant to impose sanctions on Iran, but Medvedev signaled openness with recent comments in New York that sanctions were sometimes inevitable.

"For the Russian president to say that sometimes they're inevitable underscores what we believe," the official said.

Like Washington, Russia formally rejects any linkage between Iran and an anti-missile shield. But most analysts say Moscow is likely to use Iran as a bargaining chip.

Ahead of talks with Clinton, Lavrov said he wanted to discuss with her new U.S. plans for an anti-missile shield, redrawn on Obama's orders.

Some Russian officials, including Moscow's ambassador to NATO Dmitry Rogozin, have suggested Obama's new missile shield plan involving sea-based and mobile missiles could pose an even stronger security threat.

Russian officials have said Moscow's concerns would be finally lifted only if it became an equal partner in any European anti-missile system.

ARMS CONTROL TALKS

Clinton and Lavrov will seek to inject momentum into talks to replace the Strategic Arms Reduction Treaty, which expires on December 5. Obama and Medvedev agreed on the outlines of a deal in July, but several hurdles may make it difficult to finish by the December deadline.

The two foreign ministers will also discuss a commission they are coordinating that covers issues such as arms control, energy, fighting terrorism and drug trafficking, and boosting business and scientific links.

Issues that divide the two nations may arise. Clinton will address human rights and Russia's treatment of Georgia, with which it fought a five-day war last year.

Lavrov and Medvedev may seek specifics about the U.S. review of its Afghanistan strategy and clarification about comments attributed to a U.S. defense official that Washington planned to put radar stations in Ukraine.

The United States denied such plans, and the senior State Department official said the defense official was misquoted.

(Editing by Charles Dick)

Clinton in Moscow to talk missile defense, nuke reduction and Iran http://russiatoday.com/Top_News/2009-10-13/clinton-moscow-missile-defense.html/print

13 October, 2009, 08:15

Russia and the US are set to thrash out a new deal on nuclear arms cuts and discuss missile defense as US Secretary of State Hillary Clinton prepares to sit down for talks with President Medvedev.

Clinton is also in Moscow to look for Russia's help in taking a tougher stance on Iran’s nuclear program.

The official part of Clinton’s first visit to Russia as US Secretary of State begins on Tuesday morning with talks with Foreign Minister Sergey Lavrov. In the afternoon she will meet with President Dmitry Medvedev.

The visit “will become an important stage in enhancing Russian-American interaction within the framework of future-oriented tasks set by the presidents of the two countries during their summit in Moscow in July,” said Russia’s Foreign Ministry spokesman Andrey Nesterenko.

Clinton’s search for Iran sanctions support

The Iranian nuclear problem is high on the agenda of Clinton’s visit. In September, Tehran informed the UN nuclear watchdog that it has a second uranium enrichment facility near the town of Qom, causing further concerns from the international community over the country’s controversial program.

News agency Interfax, citing official US sources, reports that the US Secretary of State intends to seek Russian backing for imposing new sanctions against Iran if the Islamic republic fails to prove its nuclear program is pursuing peaceful purposes only – something Tehran has been insisting on.

The US, France and the UK have strongly condemned Tehran’s action and have demanded that they immediately cooperate with the International Atomic Energy Agency (IAEA).

At the latest talks on the issue in Geneva this month, Iran did show its willingness to compromise that some of its uranium could be enriched in other parts of the world and then returned to Iran, though nothing concrete has come out so far.

During her five-day tour in Europe, Hillary said that the world would not wait indefinitely for Iran to prove its peaceful intentions. This is why Clinton seeks to have Moscow back up the hard rhetoric coming from Washington.

The White House has said that sanctions would follow if Iran did not meet its promises and allow IAEA observers into its facilities. President Medvedev noted that sanctions rarely lead to productive results, but in some cases they are inevitable.

Missile defense: from foes to friends?

Anti-missile defense will also be on the agenda. It had been a stumbling block in relations between Russia and the US ever since the Bush administration announced plans to build a missile defense shield in Eastern Europe. Moscow was strongly opposed to it, seeing it as a threat to Russia’s security.

However, President Obama recently announced that the US would drop plans to deploy parts of its missile defense in Poland and the Czech Republic, which is seen as a huge step towards better cooperation between Moscow and Washington.

Earlier this month, US Assistant Secretary of Defense Alexander Vershbow, in an interview with a Russian news agency, said the US is considering jointly using two Russian radars– one in Armavir in southern Russia and another in the Azerbaijani city of Gabala – as part of its anti-missile system. The idea was first put forward by Vladimir Putin in 2007.

“For the first time in two decades, Russia, the U.S., and NATO have a chance to become allies, more than allies, in fact – if they agree to build a joint defense system,” said Aleksandr Sharavin from the Institute for Political and Military Analysis. “I think cooperation in the missile shield is more important than Afghanistan.”

Further, Sharavin believes “We can’t miss this chance because it could bring commercial benefits”. He said Russian companies working for the defense industry would be able to receive orders from across Europe “to build S-300, S-400 and, in the future, S-500 units [long range surface-to-air missile systems]”.

“By collaboration in such a sensitive area, we can overcome the stereotypes of the Cold War,” he added.

Politics aside, on Tuesday evening Hillary Clinton will watch “The Love of Three Oranges” – an opera by Sergey Prokofiev – at the Bolshoi Theatre in Moscow.

On Wednesday, the US Secretary of State will speak on the Ekho Moskvy radio station and meet Moscow State University students.

Before flying home, she will also visit Kazan – the capital city of Russia’s Republic of Tatarstan – where Clinton will meet with Tatarstan President Mintimer Shaimiev.

US scrapped missile defense “not just to please Russia”http://russiatoday.com/Politics/2009-10-13/iran-missile-defense.html/print

13 October, 2009, 05:54

The US dropped its plans for its missile defense shield in Europe not only to please Moscow, but after a careful study of possible threats from Iran, Charles Kupchan from the US Council on Foreign Relations told RT.

“The US concluded that the real threat in the next few years is short range and medium range [missiles]. That’s the reason they went to this new sea-based system,” Kupchan said.

A fringe benefit of that decision, he said, “was that the missile defense issue – the deployment in Poland and the Czech Republic – that so irked Russia has been taken off the table”.

And now, one step after another – first meetings, then discussions of missile defense and Strategic Arms Reduction treaty – we may see improvements in relations between Russia and the US.

“I think that the Obama administration finds itself in a somewhat difficult position because there are a lot of people who were saying “You’ve sold out Poland and the Czech Republic, you’ve caved in to Russia,” Kupchan said.

”I don’t think that’s what happened,” he added. “But nonetheless I think, as you look over the horizon where this plan may go, there probably will be some ground based missiles. It may well be that some of them are in Poland or the Czech Republic or somewhere else.”

Kupchan believes if relations between the US and Russia improve, “one can have a conversation that perhaps brings Russia in – Russia becomes a part of the missile defense system, maybe houses a radar”.

And then, he said, the Russians won’t see it as a threat, but as “a collective effort to deal with a threat from Iran to Europe as a whole”.

UPDATE 2-China, Russia bolster ties with $3.5 bln in dealshttp://in.reuters.com/article/oilRpt/idINPEK31178020091013

Tue Oct 13, 2009 12:59pm IST

(Adds Russian deputy prime minister, paragraphs 9-10)

* Gas agreement also in spotlight

* Both counties share many foreign policy views

* But ties constrained by friction, distrust

By Darya Korsunskaya and Chris Buckley

BEIJING, Oct 13 (Reuters) - Russia and China looked to steady their close but increasingly imbalanced relationship on Tuesday when visiting Russian Prime Minister Vladimir Putin ushered through trade deals said to be worth $3.5 billion.

Putin's talks in Beijing with Chinese Premier Wen Jiabao are also likely to cover the international hotspots on which both governments share many views, especially concerning North Korea's nuclear weapons programme and its latest missile tests. [ID:nSEO307496]

But with China's economy steaming ahead while Russia has lagged during the global downturn, the two big neighbours appear focused on shoring up trade, energy and political ties. [ID:nPEK224334]

Russian and Chinese companies signed deals worth $3.5 billion on Tuesday, the second day of Putin's visit to Beijing, his deputy, Alexander Zhukov, told reporters there.

The Kremlin last week said the two sides would sign commercial deals worth $5.5 billion during Putin's visit. [ID:nL8163072]

"This is the revised number, the final figure," Zhukov said of the $3.5 billion figure, without explaining the discrepancy. "There will be no more commercial deals signed during the visit."

The deals included a $500 million loan from the Agricultural Bank of China to Russia's second biggest lender VTB (VTBR.MM: Quote, Profile, Research).

Chinese and Russian news reports have said Putin and Wen may also unveil an agreement on securing Russian natural gas, but it was not clear whether the pact would bring any concrete progress on a deal that has been mired for more than three years amid disagreements over pricing. [ID:nPEK241983]

When asked by reporters about the possibility of any gas deals being signed, Deputy Prime Minister Igor Sechin said: "(Gazprom Chief Executive Alexei) Miller is here, he doesn't just travel around for the sake of it. Make your conclusions."

"We have plenty of gas, (we) will give as much as they need."

Behind Russia's eagerness for deals appear to be worries that the global financial crisis has left it struggling with a shrinking economy and trade while China is confident its GDP will grow 8 percent this year, consolidating its status as the world's third-biggest economy, said Bobo Lo, a senior research fellow at the Centre for European Reform in London.

"The global financial crisis has accentuated the disparity between China and Russia," said Lo, a former Australian diplomat who specialises on Sino-Russian relations. "Really, Russia feels its been kicked into the long grass by the crisis."

Russia, the world's ninth-biggest economy, is struggling to regain its footing after a downturn saw GDP plunge from 7 percent annual growth to an expected 8 percent collapse this year.

Beijing also has its reasons for courting Putin, who remains his country's most powerful figure after leaving the presidency.

China sees Russia as a valuable strategic counterweight to U.S. influence, and believes Russian energy, resources and markets will remain important in coming decades, said Zhao Huasheng, an expert on the two countries' relations at Fudan University in Shanghai.

"The fall-off in trade reflects the overall global crisis...but both countries will be making special efforts to put economic relations back on a healthy track," he said. "This is also the 60th anniversary of diplomatic ties, so both sides want to stress the importance and positiveness of relations."

"IF THE PRICE IS RIGHT"

But behind the frequent vows of deals and undying friendship, ties between Russia and China have been unsettled by frustrations and latent mistrust, said Lo.

Beijing has been irritated by Russian customs policy after the closure of Moscow's Cherkizovsky market where Chinese traders sold goods allegedly smuggled into Russia. [ID:nLG50782]. Chinese media reports have accused Russia of discrimination.

Last year, Putin and Wen oversaw the signing of a deal to build a new overland pipeline to ship Siberian oil to China and negotiated an oil-for-loan deal through which China secured Russian oil supply for the next 20 years and Russian companies borrowed $25 billion from China at low rates. [ID:nLH444229]

Russia's Gazprom said in 2006 that the Russian gas export monopoly would build two pipelines to China but the projects have been delayed due to disagreements over gas pricing.

"China might like to line up another natural gas deal with Russia, if the price is right, but it's not banking on the gas being available," said Zha Daojiong, an expert on Chinese energy diplomacy at Peking University.

A gas pipeline connecting China to gas-rich Turkmenistan in Central Asia is due to be finished by the end of the year, and in June Turkmenistan announced China had agreed to lend it $3 billion to develop its largest gas field. [ID:nLN497864]

"Turkmenistan will keep us busy for a while," said Zha. "It's hard to imagine Russia coming up with a similar mega-project."

The Russian oil pipeline deal came after long contention over prices and conditions, and that agreement and any similar ones on natural gas could still be vulnerable to friction, especially if energy prices rise as global growth resumes, said Lo.

"You have to ask yourself how sustainable some of these deals will be," he said. "China, and Asia in general, are still a default fall-back for Russia, not its priority for energy deals." (Editing by Ken Wills)

Chinese Premier Wen meets Russia's Putinhttp://www.chinadaily.com.cn/china/2009-10/13/content_8787706.htm(Xinhua)Updated: 2009-10-13 15:42

BEIJING: Chinese Premier Wen Jiabao met here Tuesday with his Russian counterpart Vladimir Putin, who is on his first official visit to China since taking office in May 2008.

Wen hosted a welcome ceremony for Putin at the Great Hall of the People in the center of Beijing before a close-door meeting and full-range talks.

China Raises 4-point Proposal to Improve Trade Cooperation with Russia http://english.cri.cn/6909/2009/10/13/195s522153.htm

    2009-10-13 15:49:43     Xinhua      Web Editor: Xu Fei

Vice Premier Zhang Dejiang on Tuesday called upon China and Russia to jointly raise the level of bilateral economic and trade cooperation.

Speaking at the opening ceremony of a China-Russia economic forum, which he attended with Russian counterpart Alexander Zhukov, Zhang reviewed economic and trade cooperation over the past 60 years.

He said it was in line with the fundamental interests of the two peoples to strengthen economic and trade cooperation.

It would not only help to cope with the economic crisis, but also help promote the economic development of both countries and the recovery of the world economy, he said.

Zhang suggested the two sides to enhance cooperation in four aspects.

First, he suggested they strengthen industrial cooperation. The two sides should take full advantage of the mechanism of regular meetings between the Chinese premier and Russian Prime Minister, and turn the inter-governmental consensus on industrial cooperation to extensive cooperation among industries and large enterprises in the areas of investment, technological transformation and industrial standardization.

Second, he suggested they change the pattern of trade. The two sides should jointly fight the practice of the "gray customs clearance," which refers to the practice by some Russian clearance companies of bringing imported goods into the Russian market at a tax rate lower than regulated levels, standardize customs supervision and guide enterprises and businesses to operate according to the law and take the healthy road of sustainable development.

Third, he suggested they improve financial services. The two sides should enhance the banking settlement and credit cooperation, encourage banks to set up standing bodies in each other's countries, and guide financial institutions to provide more extensive and better services for the enterprises of both countries.

Fourth, they should create a good environment for investment, improve the conditions of infrastructure and tax, expand market access and enhance protection for the rights of investors. The two sides should also adhere to opening markets to each other and oppose protectionism in any form.

Zhang also briefed the representatives to the forum on Chinese government measures to cope with the financial crisis and China's economic situation.

Russia-China make new $3.5bn pactshttp://www.upstreamonline.com/live/article195715.ece

By Upstream staff

Russia and China looked to steady their close but increasingly imbalanced relationship today when visiting Russian Prime Minister Vladimir Putin ushered through trade deals said to be worth $3.5 billion.

Putin's talks in Beijing with Chinese Premier Wen Jiabao are also likely to cover the international hotspots on which both governments share many views, especially concerning North Korea's nuclear weapons programme and its latest missile tests.

But with China's economy steaming ahead while Russia has lagged during the global downturn, the two big neighbours appear focused on shoring up trade, energy and political ties.

Russian and Chinese companies signed deals worth $3.5 billion today, the second day of Putin's visit to Beijing, Reuters cited his deputy, Alexander Zhukov, as telling reporters.

The Kremlin last week said the two sides would sign commercial deals worth $5.5 billion during Putin's visit.

"This is the revised number, the final figure," Zhukov said of the $3.5 billion figure, without explaining the discrepancy.

"There will be no more commercial deals signed during the visit."

The deals included a $500 million loan from the Agricultural Bank of China to Russia's second biggest lender VTB.

Chinese and Russian news reports have said Putin and Wen may also unveil an agreement on securing Russian natural gas, but it was not clear whether the pact would bring any concrete progress on a deal that has been mired for more than three years amid disagreements over pricing.

When asked by reporters about the possibility of any gas deals being signed, Deputy Prime Minister Igor Sechin said: "(Gazprom Chief Executive Alexei) Miller is here, he doesn't just travel around for the sake of it. Make your conclusions."

"We have plenty of gas, (we) will give as much as they need."

But behind the frequent vows of deals and undying friendship, ties between Russia and China have been unsettled by frustrations and latent mistrust, said Lo, a former Australian diplomat who specialises on Sino-Russian relations.

Last year, Putin and Wen oversaw the signing of a deal to build a new overland pipeline to ship Siberian oil to China and negotiated an oil-for-loan deal through which China secured Russian oil supply for the next 20 years and Russian companies borrowed $25 billion from China at low rates

Russia's Gazprom said in 2006 that the Russian gas export monopoly would build two pipelines to China but the projects have been delayed due to disagreements over gas pricing.

"China might like to line up another natural gas deal with Russia, if the price is right, but it's not banking on the gas being available," said Zha Daojiong, an expert on Chinese energy diplomacy at Peking University.

A gas pipeline connecting China to gas-rich Turkmenistan in Central Asia is due to be finished by the end of the year, and in June Turkmenistan announced China had agreed to lend it $3 billion to develop its largest gas field.

"Turkmenistan will keep us busy for a while," said Zha. "It's hard to imagine Russia coming up with a similar mega-project."

The Russian oil pipeline deal came after long contention over prices and conditions, and that agreement and any similar ones on natural gas could still be vulnerable to friction, especially if energy prices rise as global growth resumes, said Lo.

"You have to ask yourself how sustainable some of these deals will be," he said. "China, and Asia in general, are still a default fall-back for Russia, not its priority for energy deals."

Tuesday, 13 October, 2009, 07:50 GMT | last updated: Tuesday, 13 October, 2009, 07:57 GMT

OCTOBER 12, 2009, 10:37 P.M. ET

China Development Bank Offers Russian Bk US$500M Credit Line http://online.wsj.com/article/BT-CO-20091012-710833.html

BEIJING (Dow Jones)--China Development Bank Corp. agreed to extend a US$500 million credit line to a Russian bank on Tuesday, the two banks said at a signing ceremony.

It wasn't immediately clear what the credit line will be used for.

The agreement was signed at a China-Russia economic and business summit being held in Beijing.

-Wan Xu and Liu Li contributed to this article, Dow Jones Newswires; 8610 6588-5848; wan.xu@dowjones.com

Russia, China sign deals worth $3.5 bln during Putin's visit http://en.rian.ru/business/20091013/156448364.html

10:0313/10/2009

BEIJING, October 13 (RIA Novosti) - Contracts worth $3.5 billion have been signed at a Russian-Chinese business forum, a Russian deputy prime minister said on Tuesday.

The bilateral business forum coincided with a visit to China by Russian Prime Minister Vladimir Putin, who is expected to meet with his Chinese counterpart, Wen Jiabao, later today.

Deputy premier Alexander Zhukov said the largest contracts were signed between Russia's national development bank, Vnesheconombank, (VEB), and the China Development Bank, and between Russia's second-largest bank VTB and the Agricultural Bank of China, each deal being worth $500 million.

Deals on construction, roads, railways and energy-saving enterprises were also signed.

Customs officials from Russia and China formed a working coordination group, whose major task will be "to improve customs clearing procedures to make Chinese imports to Russia transparent," Zhukov said.

On Wednesday Putin will attend a prime ministerial meeting of the Shanghai Cooperation Organization (SCO).

Putin visits China: $5.5bln in deals expectedhttp://russiatoday.com/Top_News/2009-10-13/putin-visits-china-deals.html/print

13 October, 2009, 10:14

Russia and China are set to seal deals worth more than five billion dollars in energy, infrastructure and telecoms. Prime Minister Vladimir Putin is leading a high-powered delegation to the eastern country.

Around a hundred top Russian business leaders form the delegation, hoping to win a bigger slice of one of the world’s largest markets.

Putin will meet with his Chinese counterpart Wen Jiabao during his visit, as well as China’s President Hu Jintao, and will take part in a meeting of the Shanghai Cooperation Organization (SCO).

Russia is looking to expand machinery exports to China, but also to increase yuan-ruble trade, which soared to 58 billion dollars in 2008 from just over 9 billion in 2002. So, it’s obvious the growth of trade between the two countries is tremendous.

This comes following recent rumors that Gulf states are going to try to dump the dollar, perhaps with Russia and China joining in, as the currency used for oil transactions.

Robert Fisk, the journalist for the Independent newspaper who revealed the scheme, told RT earlier that “one of the Chinese bankers said to me, including a broker sitting at the table, he said: ‘Believe me, your report is correct, but you will receive a thunder of denials,’ and indeed that is what happened. It is interesting that China has not come out with any huge denials. Russia has of course up to a point and the Gulf Arabs. But it is in

the interest of the Arabs, and all the nations involved, to deny this is happening at the moment.”

The demise of the dollar would be catastrophic for China, but there has been great interest expressed from both China and Russia on the idea of a new world reserve currency to replace what financial forecaster Gerald Celente calls “phantom money”.

“This is where the real battle is going to happen. China does not want to see the dollar collapse because they are holding trillions of them. They do not want to be paid back with cheap money and nobody does. This is really a worldwide problem, not just America’s.”

Dropping the dollar as the key trading currency, which would be of interest for the Russia-China partnership, isn’t realistic, believes Natalia Zaderey from the Institute of Far Eastern Studies in Moscow.

The meeting is expected to focus on the strengthening of humanitarian and economic cooperation between the SCO member states, including their cooperation in overcoming the consequences of the global financial crisis.

Heads of Government of the SCO member states are also to discuss joint projects in the transport, energy, information and telecommunication spheres.

The SCO, founded in 2001, consists of Russia, China and the ex-Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.

OCTOBER 13, 2009, 12:10 A.M. ET

UPDATE: China, Russia Working On Yuan-Ruble Trade Settlement http://online.wsj.com/article/BT-CO-20091013-700085.html

BEIJING (Dow Jones)--China and Russia are working on ways to eventually settle their trade with the Chinese yuan and Russian ruble, senior government officials from the two countries said Tuesday.

China Vice Premier Zhang Dejiang said both sides should expand local currency settlement in their border areas, and that China and Russia plan to set up a bilateral currency deal.

As part of such moves, banks in China will be encouraged to set up outlets in Russia, and Russian banks will be encouraged to do the same in China, Zhang said.

At the same time, Russian Deputy Prime Minister Aleksandr Zhukov said Russia and China are working on using their own currencies to settle trade instead of using the dollar and euro, but that such a move would take a long time.

Some trade on the Sino-Russian border is already settled using the yuan. China earlier said it plans to embark on a yuan-settlement trial for trade with Russia and Southeast Asia, but didn't provide a time frame. It has already started a similar trial for trade with Hong Kong.

The officials were speaking during an economic and business summit held during Russian Prime Minister Vladimir Putin's Oct. 12-14 visit to China.

Zhukov said China and Russia share the same view on reforming global financial institutions, but didn't elaborate.

Both China and Russia have espoused fairer representation and a stronger voice from developing economies in multilateral institutions including the International Monetary Fund and the World Bank, and are concerned about the global financial system's reliance on the U.S. dollar.

Zhukov said Russia hopes to deepen its cooperation in the energy sector with China.

Meanwhile, China's Zhang said the domestic economy will expand more quickly in each of the remaining two quarters of this year than in the first half, when gross domestic product grew 7.1% from a year earlier.

His comments were in line with expectations that economic growth is picking up in the second half, due to the government's stimulus program and a favorable base of comparison.

-Li Liu contributed to this article, Dow Jones Newswires; 8610 6588 5848; li.liu@dowjones.com

Chinalco eyes RUSAL's Australian plant stake-sourceshttp://www.forbes.com/feeds/reuters/2009/10/13/2009-10-13T050135Z_01_HKG312257_RTRIDST_0_CHINALCO-RUSAL-UPDATE-1.html

10.13.09, 01:01 AM EDT

CHINALCO-RUSAL/ (UPDATE 1):UPDATE 1-Chinalco eyes RUSAL's Australian plant stake-sources

* Chinalco eyes RUSAL assets, Queensland Alumina Ltd

* RUSAL has 20 pct of QAL, remainder held by Rio Tinto ( RTP - news - people )

* QAL could process bauxite from Aurukun deposit

BEIJING, Oct 13 (Reuters) - Chinese metals conglomerate Chinalco wants to buy UC RUSAL's stake in an alumina refinery in Australia, but is less interested in buying into the indebted Russian company's Hong Kong share issue, two sources familiar with the situation said on Tuesday.

However, state-owned Chinalco, may be obliged to subscribe to the share issue and take a stake in RUSAL because of political pressure, the sources said.

Russian Prime Minister Vladimir Putin is visiting Beijing and is expected to oversee the signing of $5.5 billion-worth of deals, with hopes of more cooperation in energy, trade and political ties.

"The subscription largely depends on how Putin's visit goes. At the state level, Russia and China have a long-term friendship, but a big concern is that Chinalco is a state-owned company while RUSAL is private-sector," one of the sources said.

"Chinalco is not lacking money, but RUSAL is deep in debt. The two sides could seek other ways of cooperating besides the share subscription as Chinalco has shown interest in RUSAL's global production assets," the source said.

The asset that Chinalco is most interested in investing in is Queensland Alumina Ltd ( AWC - news - people ) (QAL), which would improve its supply chain in Australia, the sources said.

The plant is one of the world's largest alumina refineries with a nominal capacity of 3.95 million tonnes of alumina per year, according to RUSAL's website.

RUSAL owns 20 percent and Rio Tinto, in which Chinalco is the biggest shareholder, holds the remaining 80 percent stake in QAL. Chinalco subsidiary Chalco already has a A$3 billion project to develop the vast Aurukun bauxite deposit in Queensland.

"If a deal succeeds, the plant could process Aurukun's bauxite," another source said.

UC RUSAL, more than $16 billion in debt, has restarted plans for a stock listing in Hong Kong to raise between $1.5 billion and $2.5 billion by the end of this year, sources have told Reuters on condition of anonymity.

The company must first settle its debt restructuring plan with more than 70 international and Russian banks, the sources said. UC RUSAL has said it plans to complete this long-delayed process by the end of October. (Reporting by Alfred Cang and Tom Miles; Editing by Chris Lewis)

Russia, China to sign gas supply agreement – Gazpromhttp://www.reuters.com/article/rbssEnergyNews/idUSLD58033320091013

Tue Oct 13, 2009 4:08am EDT

BEIJING, Oct 13 (Reuters) - Russia and China expect to sign a framework agreement on the supply of Russian gas to China during Prime Minister Vladimir Putin's visit to Beijing on Tuesday, the head of state-run gas giant Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) said. Alexei Miller told reporters that Russia could potentially supply about 70 billion cubic metres of gas per year to China.

"A framework agreement about gas deliveries to China will be signed. There are two options: western Siberia and eastern Siberia," Miller said. (Reporting by Darya Korsunskaya, writing by Robin Paxton, editing by Toni Vorobyova)

China and Russia Set to Sign Gas Pacthttp://www.istockanalyst.com/article/viewiStockNews/articleid/3546006

Tuesday, October 13, 2009 1:51 AM(Source: Irish Times)BEIJING - RUSSIAN PRIME minister Vladimir Putin arrived in China yesterday to try to strengthen a relationship forged by Russian oil exports to Asia's largest energy consumer.

Russia, which this year sealed Chinese oil contracts valued at $100 billion, is now negotiating an agreement that would make China OAO Gazprom's biggest customer for natural gas. Its communist neighbour currently buys no Russian gas.

The two countries, which were on the brink of war 40 years ago despite a shared ideology, are deepening ties based on mutual economic gain.

Bilateral trade totalled a record $56 billion in 2008, a six- fold increase in six years, according to Russia's Federal Customs Service.

"Political ties are very good, probably the best since China's communist revolution in 1949," said Fyodor Lukyanov, the editor of Moscow-based Russia in Global Affairs magazine.

"There's never been such closeness in position on major international issues, and there are no more territorial disputes."

China and Russia, the world's third and ninth largest economies respectively, hold two of the five permanent seats on the United Nations Security Council as well as membership in the nascent BRIC group that also includes India and Brazil.

The former enemies, who share a border more than 4,000 kilometres (2,500 miles) long, broke a three-decade diplomatic deadlock in 1989 when the then Soviet leader, Mikhail Gorbachev, visited Beijing.

Mr Putin (57) is set to meet Chinese president Hu Jintao and prime minister Wen Jiabao in two days of talks, starting today. He will also attend a meeting of the Shanghai Co-operation Organisation, a regional group that also includes four former Soviet republics in Central Asia.

- (Bloomberg)

(c) 2009 Irish Times. Provided by ProQuest LLC. All rights Reserved.

Potential Russia-China Gas Deal Positive for Gazprom, BofA Says

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azkQIMEtHA9g

By Stephen Kirkland

Oct. 13 (Bloomberg) -- Russian Prime Minister Vladimir Putin may sign an agreement with China to deliver gas, which would be a positive catalyst for OAO Gazprom’s shares, BofA Merrill Lynch Global Research wrote in a report.

“The valuation impact of additional gas deliveries to China could range between 11 and 30 percent depending on volume and pricing assumptions,” analysts wrote in the report today.

Last Updated: October 13, 2009 02:28 EDT 

Hong Kong investor buys 51% of East Siberian gas field developer

http://www.businessneweurope.eu/dispatch_text10156

RIA NovostiOctober 13, 2009

A Russian-Chinese investment energy company, a subsidiary of the Hong Kong-registered RusEnergy Investment Group, has bought 51% of Russia's Suntarneftegaz, a Chinese newspaper said on Monday.

Suntarneftegaz holds licenses for the Yuzhno-Berezovsky and Cheredeisky fields in Eastern Siberia with aggregated natural gas reserves of 60 billion cubic meters.

The Zhongguo Caijing newspaper did not name the figures involved in the deal. Suntarneftegaz was unavailable for comment.

The newspaper said this was the first joint project between the two countries in oil and following their signing of a deal on cooperation in the natural gas sphere during Chinese

President Hu Jintao's visit to Russia in June. The deal allows for the first time international companies to produce gas in Russia.

"The deal creates a new model in Russian-Chinese energy cooperation," the newspaper said, adding that the RusEnergy Investment Group intended to invest $300 million in the deposits within the next two years. The gas from the deposits will be exported to China, Japan, South Korea and Singapore.

The report on the deal appeared a day after the fifth round of Russian-Chinese energy talks was held in China's capital Beijing. Russia was represented by Deputy Prime Minister Igor Sechin, and China by deputy premier Wang Qishan.

In April, during the fourth round of the talks in Beijing, the two countries signed an intergovernmental agreement on cooperation in the oil sphere for the next 23 years.

In October 2008, Russia and China reached an agreement to build a Chinese leg of the East Siberia-Pacific Ocean (ESPO) oil pipeline, which is designed to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and to energy-hungry China and the Asia-Pacific region. Construction is underway and is expected to be completed by late 2010.

Russia and China are members of the Shanghai Cooperation Organization (SCO), founded in 2001, together with ex-Soviet Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.

UPDATE 1-Petropavlovsk signs China deal for iron ore projecthttp://www.forbes.com/feeds/afx/2009/10/13/afx6992745.html

10.13.09, 04:00 AM EDT

LONDON, Oct 13 (Reuters) - Russian miner Petropavlovsk agreed a deal with a Chinese company to help fund the K&S iron ore project, the London-listed firm said on Tuesday.

London-listed Petropavlovsk, Russia's third biggest gold producer, said it had signed a cooperation agreement with Xuan Yuan Industrial Development Co. Ltd (XY Group), the largest Chinese investor in Russia.

'This agreement is the first step in realising the significant value that I believe is contained in our portfolio of non-precious metal assets,' Petropavlovsk Chairman Peter Hambro said.

The XY Group will provide at least 70 percent of the $375 million capital costs for the first stage of the project in the form of a 10-year project finance loan, a statement said.

Interest would be paid at LIBOR plus 5 percent.

'XY-Group may also choose to invest in new shares in the Petropavlovsk subsidiary that owns the K&S project which would result in XY-Group holding a minority stake in the project,' it added.

That initial phase would produce 3.2 million tonnes of iron ore concentrate, while further stages of the project would increase production and set up a metallurgical plant.

Under a proposed offtake agreement, the XY Group would buy all of the output of the first phase.

(Reporting by Eric Onstad; Editing by Hans Peters) Keywords: PETROPAVLOVSK IRONORE CHINA/

(eric.onstad@thomsonreuters.com; +44 20 7542 7093; Reuters Messaging: eric.onstad.reuters.com@reuters.net)

October 12, 2009Now, Where Were We?http://www.russiaprofile.org/page.php?pageid=Business&articleid=a1255368667&print=yes

By Graham Stack Special to Russia Profile

Gas Exports to China Are Almost Inevitable – the Question Is, What Can Russia Get in Exchange?

Russian Prime Minister Vladimir Putin’s last visit to China, when he attended the opening of the Beijing Olympics in August of 2008, went badly wrong when Georgia used the occasion to opportunistically attack South Ossetia, and the resulting war damaged relations between Russia and the West. But Putin has a chance to continue Russia’s eastward expansion on his upcoming visit to China, by signing long-term gas supply agreements between Gazprom and the China National Petroleum Corporation.

Speculation is mounting that a long-term gas supply agreement might finally be signed between the Russian gas giant Gazprom and China National Petroleum Corporation (CNPC). The plan, outlined in a number of memorandums signed by the Russian and Chinese sides, but since bogged down in negotiations over price, envisages new gas pipelines from Western and Eastern Siberia to China and the development of virgin East Siberian gas fields.

As president, Putin was closely involved in the negotiation process during his previous visits to China, and may feel that it’s now time to go the final mile. The last Memorandum of Understanding on the issue was signed in 2006: it specifies a pipeline running from West Siberia with a 30 billion cubic meters capacity, and another from East

Siberia with a capacity of 38 billion cubic meters, with work due to start in 2011. That date is now clearly unrealistic, but still, for most analysts, it is just a question of time.

“We have long taken for granted that Gazprom will sell significant amounts of gas to China,” said Alfa Bank energy analyst and Head of Research Ron Smith. “The resource base of East Siberia and Russia's Far East is very large, including two untapped world-class gas fields in Chayanda and Kovykta that are very well situated for pipeline exports to China, not to mention the Sakhalin reserves that are already being tapped.” So analysts perceive Putin’s hastily arranged visit to China as indicative of the fact that a long-term deal has been finalized for signing.

Negotiations to date have been shrouded in secrecy, but the main problem holding up implementation of the project has been arguing over the price mechanism. Russia is rooting for the same price mechanism applied to Gazprom’s European Union customers. China has pushed for a discount price previously paid by former Soviet countries, such as Ukraine. “Since then, however, the discounted deal with Ukraine ended in a very high-profile manner, and Russia is also paying full price for gas purchases from Central Asia,” said Chris Weafer, an analyst at UralSib brokerage. “Hence the rationale for China’s discounted price demand is eliminated.”

But the Chinese may instead want a gas price linked to coal prices and not to oil prices, as is the case for European customers. Since there is no global market price for gas, gas prices are linked to the cost of the fuel gas substitutes for, which in Europe is crude oil and heating oil. In China, however, gas will substitute mainly coal used in power generation. “We are not sure whether the Chinese prefer a coal-linked price, as that fuel generates the bulk of the country's power, or whether it is a matter of a simpler argument about the absolute level of prices,” said Smith.

“Linking the price of gas to the one of oil is an anachronism,” argued Mikhail Korchemkin of East European Gas Analysis. “There is an oversupply of inexpensive gas in the world, and the market prices of oil and of gas often move in opposite directions.”

Coal prices are currently very low following the economic crash, while oil prices have soared back up to 2007 levels, making it harder to reach a compromise. However, according to a source quoted by the Russian business daily RBK, in the absence of final agreement on a long-term price mechanism, Gazprom and CPNC could still provisionally agree on fixed prices for short-term delivery volumes.

But the Chinese have some trumps that could induce Gazprom to bring the prices down from the European levels. Firstly, China is flirting not only with Russia, but also with Central Asian countries. The 7,000-kilometer-long Central Asia-China pipeline is set to take Central Asian gas to China, particularly from Turkmenistan, which has contracted to supply 40 billion cubic meters of gas annually for 30 years. Korchemkin believes that Turkmenistan probably agreed to prices around 50 percent lower than Gazprom’s European price. “Moscow will be keen not to lose the opportunity to be a direct gas

supplier to China, especially with a lot more uncertainty over future gas export volumes to Europe,” said Weafer.

Secondly and most importantly, with the economic crisis having raised the cost of borrowing even for Russian giants such as Gazprom, Chinese state companies can offer cheap credits unavailable elsewhere. The summer has seen a slew of Chinese credits granted to Russian companies in telecommunications, cement and energy. According to Kingsmill Bond of Troika Dialog brokerage, “China provides cheap financing and equipment for the development of Russian infrastructure. As the head of the Russian cement association poignantly said, ‘we can't borrow from Russian banks at less than 20 percent, but from China we can borrow at under ten percent.’”

In June of 2009, China provided Turkmenistan with a $4 billion loan to develop its massive South Yolotan field. But the mother of all such deals was signed between Russia and China in February of 2009, with CNPC and the China Development Bank offering a $25 billion loan to Russian oil pipeline operator Transneft and state-owned oil company Rosneft, as part of an agreement for Russia to supply 15 million tons of oil annually for 20 years. The credit, at an unbeatable estimated interest rate of 5.7 percent, will finance oilfield development and pipeline construction from East Siberia to China. “If that deal were to be replicated in the gas sector, we could see a timeline agreed not only for the pipelines, but also for the development of the giant Kovykta gas deposit, as that is the logical source of gas sales to China,” said Weafer.

Antony arrives in Russia; defence ties on agenda

http://www.ptinews.com/news/328482_Antony-arrives-in-Russia--defence-ties-on-agenda

Vinay Shukla

Moscow, Oct 13 (PTI) Defence Minister A K Antony arrived here today for a crucial meeting of a key joint defence commission as the two countries are poised to finalise new co-ventures in strategic weapons, including investment and technical parameters of 5th generation fighters.

During the three-day visit, Antony would hold one-to-one meetings with his Russian counterpart Anatoly Serdyukov and take part in talks at the Indo-Russian Inter-governmental Commission on Military-Technical Cooperation (IRIGC-MTC), the apex body for co-ordination of ongoing defence projects.

The visit comes as several key Indo-Russia defence projects including the delivery of aircraft carrier Gorshkov and nuclear Akula-II class submarine are delayed.

The Russians are playing down the delays and hiccups, saying that the situation has drastically changed over last two years and the projects have been put on fast track.

A K Antony In Moscow For Joint Ventures In Strategic Weaponshttp://www.india-server.com/news/a-k-antony-in-moscow-for-joint-ventures-13747.html

Last Updated: 2009-10-13T12:45:12+05:30

Indian Defence Minister A K Antony has arrived in Moscow for holding discussions to finalise new joint ventures in strategic weapons, including the investment and technical parameters of 5th generation fighters.  Antony, who is on a three-day itinerary, will hold meetings with his Russian counterpart Anatoly Serdyukov on a one-to-one basis. He will also address the the Indo-Russian Inter-governmental Commission on Military-Technical Cooperation (IRIGC-MTC), which coordinates the defence projects. This visit was taken up by Antony after numerous vital India-Russia defence projects, including the delivery of aircraft carrier Gorshkov and nuclear Akula-II class submarine, have been delayed. But The Russians have raised objections against the delays mentioning that there is a drastic change in the scenario and the projects are now on fast track.

Another 102 million USD from India to Sevmashhttp://www.barentsobserver.com/another-102-million-usd-from-india-to-sevmash.4642168-58932.html

2009-10-12 Leader of the Sevmash yard in Severodvinsk, Arkhangelsk Oblast, confirms that the Indian government has transferred another 102 million USD to the yard’s bank account for the upgrade of the aircraft carrier “Admiral Gorshkov”.After a long period of disagreement and negotiations over the sales and upgrades of the aircraft carrier “Admiral Gorshkov”( by the Indians called “Vikramadia”), the Indian government has transferred 102 million USD for continued construction works.

Yard director Nikolai Kalistratov confirms to newspaper Vedomosti that the Indians have transferred the money to the Russian bank account and that construction works at the vessel now has been intensified.

The Russians last year demanded re-negotiations of the contract terms signed by the parts in 2004. Sevmash and the Russian side now demand about two billion USD for the completion of the vessel, which is about a doubling of the original contract price.

October 9, 200915:30http://eng.kremlin.ru/text/news/2009/10/222074.shtml

ANNOUNCEMENT.Sultan of Brunei Darussalam Hassanal Bolkiah will make an official visit to Russia on October 11-16, 2009.

Top-level bilateral talks will take place on October 15, 2009.

The Sultan of Brunei is visiting Russia at Dmitry Medvedev’s invitation.

Dhaka seeks to hasten nuclear deal with Russia

http://story.zimbabwestar.com/index.php/ct/9/cid/2411cd3571b4f088/id/553640/cs/1/

Zimbabwe StarTuesday 13th October, 2009  (IANS)Bangladesh Prime Minister Sheikh Hasina will send a team of top officials Saturday to speed up negotiations with Russia for setting up nuclear power plants.

At her cabinet meeting Monday, she asked officials to expedite ongoing negotiations with Moscow for the country's lone power project at Rooppur in Pabna district in northern Bangladesh.

An eight-member delegation, headed by Science and Information and Communications Technology Minister Yafes Osman will visit some of the Russian nuclear plants 'for having clearer ideas about that country's nuclear technology', The Daily Star said Tuesday.

Moscow has expressed its keen interest in assisting Dhaka while the latter articulated its desire to set up two 1,000 megawatt (MW) power plants.

According to a paper prepared by the science and ICT ministry, the estimated cost of a 1,000 MW nuclear power plant ranges between $1.5 billion and $2 billion.

Experts say installation of such a unit will take at least five years. If the project is realised, it will manifest the government's vision of a mid-term power solution.

Rooppur Nuclear Power Project was conceived in the early 1960s and 260 acres of land was acquired for it. Feasibility studies also found the project to be technically and economically viable, and International Atomic Energy Agency (IAEA) gave Bangladesh the go-ahead.

Various countries including the US, India and China have shown interest in the project in the past.

The talks with the Russians were resumed this year.

Russia's Deputy Director of Rosatom Nuclear Energy State Corporation N.N. Spasskiy visited Bangladesh in the second week of May, and signed a memorandum of understanding (MoU) with Dhaka to pave the way for exchanging nuclear technology, and for setting up nuclear power plants in Bangladesh.

According to the MoU, both countries acknowledged that the use of nuclear energy for peaceful purposes, and assurance of nuclear and radiation safety are important factors in ensuring social and economic development of both states.

Moscow will assist in the development of nuclear energy infrastructure in Bangladesh, the MoU says, adding Russia will supply Bangladesh with nuclear materials, and provide services in the field of nuclear fuel cycle.

Tymoshenko and Putin expected to hold next meeting in Novemberhttp://www.ukrainianjournal.com/index.php?w=article&id=9241

Journal Staff ReportKIEV, Oct. 12 – Prime Minister Yulia Tymoshenko and her Russian counterpart Vladimir Putin will probably hold their next meeting in November, Deputy Prime Minister Hryhoriy Nemyria said Monday.

Tymoshenko and Putin, who met on September 1 in Poland, had been planning to hold the next meeting in October, but it was eventually postponed by the Russian party, people familiar with the situation said.

Russia accuses Georgia of aiding Al-Qaeda: reportshttp://www.google.com/hostednews/afp/article/ALeqM5h85IOmH49xt06JVOy4gVxLqjR6Sw

(AFP) – 16 minutes ago

MOSCOW — Georgia is training and lending safe passage to Al-Qaeda agents planning terrorist acts in the Russian Caucasus, the head of Russia's FSB secret service charged Tuesday.

"Audio evidence seized from insurgents shows that, together with emissaries of Al-Qaeda, they had contacts with representatives of the Georgian secret services," Alexander Bortnikov said, quoted by Russian news agencies.

Through these links, Georgia "participated in the training and transfer of terrorists to the territory of Chechnya," the FSB chief said.

Bortnikov also accused Tbilisi of supplying arms and funding terrorist activities in the neighbouring Caucasus region of Dagestan.

"They perpetually undertake to deliver weapons, explosives and financing for subversive acts on high security sites in Dagestan -- first and foremost on oil and gas pipelines," he said.

Tensions between Moscow and Tbilisi remain high one year after they fought a war last August over Georgia's breakaway region of South Ossetia, which lies just south of the mountains from the turbulent Russian Caucasus.

Russia has faced mounting violence throughout its largely Muslim Northern Caucasus in recent months as Islamist militants wage a low-level insurgency against the Moscow-backed local authorities.

Russian officials have long charged that the insurgency is fuelled by foreign funding. They have also said that Georgia, which shares a mountainous border with Chechnya, has harboured Chechen rebel fighters.

Russia accuses Georgia of supporting terrorism in N.Caucasus http://en.rian.ru/russia/20091013/156449209.html

11:1713/10/2009MOSCOW, October 13 (RIA Novosti) - Russia's security chief accused Georgia on Tuesday of supporting terrorist groups in Russia's North Caucasus.

FSB Director Alexander Bortnikov told a meeting of the national counterterrorism committee that audio recordings found on militants "show that they had worked with Al-Qaeda emissaries in establishing contacts with representatives of Georgia's special services, who participated in organizing training of terrorists and sending them to Chechnya."

Georgian special services also helped supply arms and funds to terrorist groups for attacks in Dagestan, "particularly on oil and gas pipelines," the FSB chief said.

So far this year, 45 terrorist attacks have been prevented in Russia's North Caucasus, including 19 since the start of June, Bortnikov said. A total of 178 militants have been killed or arrested.

Russia's North Caucasus republics, in particular Chechnya, Dagestan and Ingushetia, have seen an upsurge of militant violence this year, with frequent attacks on police and officials.

13 October 2009, 10:41

Georgian Church primate deplores secession of Abkhazia, S. Ossetiahttp://www.interfax-religion.com/?act=news&div=6539

Tbilisi, October 13, Interfax - Catholicos-Patriarch Ilia II of All Georgia deplored the secession of Abkhazia and South Ossetia from Georgia.

At a meeting in Tbilisi with the primate of the Orthodox Church in America (OCA), Metropolitan Jonah of All America and Canada, Ilia insisted that Georgia's territorial integrity be restored.

There is no peace in the Caucasus, the Georgian Patriarch said.

The Georgian Patriarchate told Interfax an OCA delegation had come to Georgia with Jonah, who is on a six-days visit to the Caucasus nation.

Ilia briefed Jonah and his delegation on the situation in Abkhazia and South Ossetia.

Jonah expressed hope that Georgia would restore its territorial integrity in a peaceful way.

Sargsyan thanks Medvedev for contribution to Armenian-Turkish reconciliation process

http://www.panarmenian.net/news/eng/?nid=37765

13.10.2009 12:45 GMT+04:00

/PanARMENIAN.Net/ Armenian President Serzh Sargsyan met in Moscow Monday with his Russian counterpart Dmitry Medvedev to discuss trade and economic cooperation development, strengthening cooperation between regions, military and technical cooperation, and also the prospects for carrying out big joint projects in the energy sector.

“As we agreed, we are continuing our regular meetings and intensive dialogue, getting together, meeting in bilateral and multilateral format. We just saw each other in Chisinau, where we discussed the opportunities and difficulties before the Commonwealth of Independent States, and then we had a meeting with the President of Azerbaijan, on the very complicated matter of settling the Nagorno Karabakh conflict. I think that Russia’s participation as a mediator in this process is also an important dimension of our relations. Today we have the chance to discuss our bilateral relations, the international agenda, and

regional issues too,” Mr. Medvedev said welcoming the guest.

“Unfortunately, the crisis has spared no one, and our bilateral trade has also decreased of late. This is not good news, of course. It is not a dramatic fall, I looked at the figures just now, but the decline is nonetheless significant, around 20 percent. This is cause for concern, obviously, and we need to reflect on how to turn this situation around, because it is very important that Armenia and Russia keep up the pace of trade and economic development that we had set. In other areas the situation is quite good. When it comes to our humanitarian ties, you yourself have made a significant contribution, visiting Orenburg and Rostov-on-Don, and as far as I know, you are heading off to Kaliningrad, too. We are very pleased to see that you are traveling around the regions and meeting with the Armenian community here. I think that our relations benefit from this, and these contacts with the regions do much to strengthen our dialogue in general,” he said.

For his part, President Sargsyan said that a trusting political dialogue is the main driving force behind the Armenian-Russian relations.

“This kind of bilateral meeting in an informal setting is an excellent opportunity for looking through the whole spectrum of our ties. I think that the work we have done over the last two-three years has helped us to make important advances in our economic cooperation, military and technical and military and political cooperation, and our humanitarian ties. I think we therefore have a big and diverse agenda today. I would like to thank you for your personal involvement in efforts to settle the Nagorno Karabakh conflict. I thank the Russian leadership and you personally for supporting us in developing our relations with the Republic of Turkey. The Russian Foreign Minister’s presence at the signing ceremony [of the protocols on normalizing Armenian-Turkish relations] further confirms Russia’s desire for peace and lasting security in the South Caucasus. I am therefore pleased to be here today, and I think that our conversation today will make a substantial contribution to developing our relations,” he said, the Kremlin’s press office reported.

13:12 13/10/2009

S. Sargsyan says trustworthy political dialogue is engine of Armenian-Russian ties http://www.panorama.am/en/politics/2009/10/13/sargsyan/

Armenian President Serzh Sargsyan had a meeting with Russian Dmitry Medvedev in Moscow. It is the seventh meeting the Presidents have within this year, President’s press service reports.

Greeting Armenia’s President, Mr. Medvedev said: “I am happy to see you. As we have agreed we continue our intensive dialogue, we meet and communicate in both bilateral and multisided formats,” said Russian President.

Crisis spares nothing, and the trade circulation, according to Russian Medvedev, between Armenia and Russia has reduced by 20%. Hence measures should be taken to improve the situation. “Regarding other topics of our relations, everything is fine,” Russian Medvedev stated.

President Serzh Sargsyan thanked his Russian counterpart for inviting him and emphasized that trustworthy political dialogue is the engine of Armenian-Russian relations. “This non-formal bilateral meeting is a good format to discuss the entire complex of our relations,” Armenian President said.

“I would like to express my appreciations for your personal mediation in the resolution of Nagorno-Karabakh conflict. I would like to express my appreciations to Russian authorities and personally you for supporting our relations with Turkey. Russian FM was present at the signing ceremony which is the evidence to the fact that Russia is long to contribute to peace and strong security in the South Caucasus,” Armenian Serzh Sargsyan said.

Russians coming to prepare for Medvedev visit http://www.b92.net/eng/news/politics-article.php?yyyy=2009&mm=10&dd=13&nav_id=62303

13 October 2009 | 09:43 | Source: Danas BELGRADE -- The Russian team entrusted with preparing and organizing the details related to Russian President Dmitry Medvedev’s visit to Serbia will soon be in Belgrade.At the same time, the Serbian Interior Ministry is wrapping up the formation of a special committee for policing the visit, which is a high security risk.

The committee will include personnel from the Interior Ministry, the security services, the military security services, as well as the Defense Ministry and Serbian military.

Their task is to draw up a security plan and to form a kind of inner circle to receive all security information related to Medvedev’s visit.

Russian secret service agents will also be on the committee.

Russian Federal Security Service agents will have key responsibility for Medvedev’s security during the visit, however.

A similar committee was also formed when U.S. Vice President Joe Biden visited Serbia in May.

Medvedev’s route through the streets of Belgrade will remain secret, and will probably not be drawn up until the Russian experts arrive.

Police will also be checking flats located on the route that Medvedev’s motorcade will be taking, while some Belgrade streets will have to be closed during the visit.

At the Sava Center, where Medvedev will be speaking, employees will have two days off so that security officials can secure the premises. The concert hall has already made changes and cancellations to its program in order to accommodate the Medvedev visit.

Medvedev will have a doctor, cook and psychologist accompanying him. His cooking staff will arrive a day earlier bringing food and, sometimes, water with them.

Kanin peninsula used as target for ballistic missileshttp://www.barentsobserver.com/kanin-peninsula-used-as-target-for-ballistic-missiles.4642414-58932.html

2009-10-12 The Russian Navy has test fired two submarine-launched ballistic missiles (SLBM) from the northern Pacific Ocean to the sparsely inhabited peninsula Kanin in Nenets Autonomous Okrug.

Two RSM-50 missiles were shot from two of the Pacific Fleet’s nuclear submarines on Tuesday and Wednesday last week,ITAR-TASS reports.

The RSM-50 is capable of carrying from one to seven nuclear warheads and can hit strategic targets at a range of 6,500 to 8000 km (4,040 to 4,970 miles).

The missiles were reported to have hit their designated targets in the uninhabited peninsula of Kanin.

According to Adviser on Indigenous Peoples in the Norwegian Barents Secretariat Christina Henriksen, the Kanin peninsula is used as reindeer pasture land by reindeer herders of the Nenets people. At this time of the year, the herds are moving from the coast of the peninsula to the mainland.

Russia plans to launch three Glonass satellites on Oct. 29http://en.rian.ru/russia/20091013/156445033.html

01:3013/10/2009

MOSCOW, October 12 (RIA Novosti) - Russia is planning to orbit three Glonass navigation satellites on October 29 following their launch cancellation in September, the Federal Space Agency Roscosmos said on Monday.

The planned September 25 launch of Glonass satellites from the Bikonur space center in Kazakhstan has been moved back by over a month due to a technical defect in one of the satellites.

"This launch is in our plans. The expected date is October 29," a Roscosmos official told RIA Novosti.

Roscosmos's head, Anatoly Perminov, earlier reiterated that all six satellites required to complete the Glonass satellite grouping would be launched by the end of 2009.

Glonass - the Global Navigation Satellite System - is the Russian equivalent of the U.S. Global Positioning System, or GPS, and is designed for both military and civilian uses. Both systems allow users to determine their positions to within a few meters.

The 18 satellites the system requires for continuous navigation services covering the entire territory of the Russian Federation are currently in orbit, and the six due to go up in two launches this year would bring numbers up to the 24 needed to provide services worldwide.

The launch of another three Glonass satellites has been scheduled for December 4 also from the Baikonur space center.

A total of 9.9 billion rubles ($360 million at the current exchange rate) was allocated for Glonass from the federal budget in 2007, and 4.7 billion rubles ($170 million) in 2006.

Prime Minister Vladimir Putin signed an order on September 12, 2008, providing an additional $2.6 billion to develop the system.

After delays, Russia set to add module to space stationhttp://www.spaceflightnow.com/station/exp21/091013mrm/

BY STEPHEN CLARKSPACEFLIGHT NOWPosted: October 13, 2009Technicians in Kazakhstan are readying a new docking compartment and airlock for launch to the International Space Station next month, the first Russian addition to the complex in more than eight years.

The Mini-Research Module 2, or MRM 2, is being prepped for launch aboard a Soyuz rocket on Nov. 10.

MRM 2 will serve as a new docking port for visiting Russian vehicles and an airlock for spacewalks.

The 13-foot-long module was transported last month from its factory at Energia in Moscow to the Baikonur Cosmodrome, the famed Russian launch site on the steppes of Kazakhstan.

Since its delivery, MRM 2 has been undergoing electrical testing and leak checks inside a vacuum chamber at Baikonur, according to Energia.

The module's modified Progress space tug will soon be fueled with maneuvering propellant and other gases before being attached to its Soyuz rocket.

After launch, the Progress will guide MRM 2 to the station in a standard rendezvous sequence lasting about two days, according to NASA.

The 8,091-pound module will be attached to the upward-facing of port the Zvezda service module, the nerve center of the space station's Russian segment.

For now, MRM 2 will provide the fourth usable docking interface for Russian Soyuz and Progress ships and the European Automated Transfer Vehicle. When Node 3, also named Tranquility, is added to the station next year, that number will fall to three operational ports because the U.S. connecting node will block access to one of the docking locations on the Russian Zarya module.

During a mission next May, the shuttle Atlantis is scheduled to haul a larger Russian docking and cargo storage module to the station for attachment to Zarya. The new addition will return the fourth docking port to service.

MRM 2 is a near-clone of the Pirs docking module delivered to the outpost on a similar mission in 2001. Pirs was the most recent Russian module added to the station.

New parts for the Russian segment have been plagued by systemic delays due to tight funding.

Pirs is bolted to Zvezda's downward-facing port opposite of the future home of MRM 2.

The new module has a maximum diameter of more than 8 feet and features 523 cubic feet of pressurized volume and 380 cubic feet of habitable volume. It also includes ports for unpressurized science payloads and an external robotic crane.

More than 2,000 pounds of cargo will be delivered to the station inside MRM 2, including life support equipment and Orlan spacesuits, according to a NASA press kit.

MRM 2 is designed as a replacement for Pirs. Current plans call for Pirs to be undocked from the outpost when Russia launches a laboratory module in 2012, but that schedule is uncertain.

Masterminds of attack on Ingush president killed - FSB chief http://en.rian.ru/russia/20091013/156449557.html

11:5313/10/2009MOSCOW, October 13 (RIA Novosti) - The militants who organized an assassination attempt on the president of the North Caucasus Republic of Ingushetia have been killed, the head of the Federal Security Service said on Tuesday.

"The crime committed against President of Ingushetia Yunus-Bek Yevkurov in June has been solved. Its organizers - the chiefs of the 'Ingush dzhamaat' group, named Dzortov and Aliyev, have been killed during a combat operation. The investigation into this case is ongoing," Alexander Bortnikov said.

Yevkurov underwent a series of operations in Moscow after sustaining head and internal injuries when a car bomb exploded as his motorcade passed on June 22. The region has seen a surge in militant violence in recent months.

Bortnikov said that militant activity in some North Caucasus republics increased during the summer despite anti-terrorism measures taken by federal and regional authorities.

"Bandits have started to use the tactic of suicide bombers, and the number of armed attacks on law enforcement bodies and authorities has increased," said Bortnikov, who also chairs the National Counterterrorism Committee.

Attacks on troops, police and other officials have been reported almost daily in Ingushetia and Russia's other North Caucasus republics in recent months. On August 17, Ingushetia was rocked by a suicide bombing which killed at least 20 people and injured 260 people.

Policemen attacked in Dagestanhttp://www.interfax.com/3/522676/news.aspx

MAKHACHKALA. Oct 13 (Interfax) - A police officer has been injuredin an explosion in Dagestan's Buinaksk district, a spokesman for therepublic's Interior Ministry told Interfax. An explosive device went off near a VAZ-2106 car owned byKaramakhin village's police station on a road outside the village ofDurangi, Buinaksk district, at around 8:40 a.m., the spokesman said. "The preliminary information available to us suggests that one ofthe two police officers traveling in this car sustained minor injuries.Investigators are en route to the scene," he said.

Terrorist act prevented in Moscow in early September - FSB headhttp://www.interfax.com/3/522664/news.aspx

MOSCOW. Oct 13 (Interfax) - The authorities prevented a terroristattack militants had planned to carry out during City Day celebrationsin Moscow at the beginning of September, said Director of the RussianFederal Security Service (FSB) Alexander Bortnikov. "According to documents from law enforcement services, theactivities of five militants trained for suicide attacks were dismantledin September. One of them planned to stage a terrorist attack duringCity Day celebrations. He was detained in Moscow," Bortnikov said at asession of the National Anti-Terrorist Committee on Tuesday. A criminal case has been opened, the FSB chief said, declining togive further details.

Statistics Chief Claims Number Shenanigans http://www.themoscowtimes.com/news/article/387305.html

13 October 2009By Alex Anishyuk

Vladimir Sokolin, the head of the State Statistics Service, accused the Economic Development Ministry of playing loosely with his numbers and said in an interview published Monday that he would leave the post next month.

“The body that is the main user of our data and which compiles lots of reports and forecasts has a big temptation to direct statistics in the direction it needs,” Sokolin told Itogi magazine.

The previously independent State Statistics Service was included under the Economic Development Ministry in a government reshuffle initiated by President Dmitry Medvedev last year.

But the move was a mistake, Sokolin said, and has left the government free to pick and choose data as it orchestrates a recovery from Russia’s worst downturn in a decade.

Sokolin, 60, has been in charge of the service for 11 years, and has been working there and at its Soviet predecessor, Goskomstat, since 1971. He said in the interview that he would be transferred by the end of November to head the Interstate Statistical Committee of the Commonwealth of Independent States.

The transfer and criticism come amid infighting over plans to postpone Russia’s next census, a move Sokolin has strongly opposed. Analysts said traditional rivalries among

statisticians — and their models — boiled over under the pressure of the country’s economic decline.

“Now the ministry starts to give orders: We should monitor this and that,” Sokolin said in the interview. “At least they don’t tell us how to monitor. They don’t try to manipulate figures. If they start giving such guidelines, this will mean real trouble.”

In particular, he cited his clash with the ministry over Minister Elvira Nabiullina’s decision to postpone the next census to 2013 from 2010 because of the costs of collecting population data all across the sprawling country.

“I think that was a mistake,” he said. “This is not the first time our office faces such a situation. It happens every time, when [the authorities] don’t understand the meaning of objective statistic data.”

The upcoming census has been a particularly sensitive issue for the government, which has aimed to stem a falling population through incentives for mothers to have additional children and public health campaigns — most notably Medvedev’s recent fight against alcohol consumption.

The Health and Social Development Minister Tatyana Golikova announced in late September that Russia’s population had a natural increase of 1,000 people in August, the first in 15 years, but the figure includes gains from immigration.

Sokolin was also critical of the Economic Development Ministry’s overall handling of the crisis.

“In Russia we have all the ‘pleasures’ at once — the highest inflation and the steepest recession,” he said. “Now, colleagues, explain to me what kind of economy have we built?”

Medvedev said in a televised interview Sunday that the economy could fall 7.5 percent this year, which he said was worse than anyone expected but is better than the government’s current forecast of an 8.5 percent decline.

“The expert environment, on which the government should lean when taking serious economic measures, has effectively been atrophied,” Sokolin said. “The Economic Development Ministry, sadly, cannot come up with such solutions today.”

He also disagreed with the positive “pullout” forecast made by Nabiullina’s office, saying the Russian economy has not started to recover.

“If we look at the Rosstat model, it does not confirm the Economic Development Ministry’s information that we have already started to move upward,” he said, referring to his service by its Russian abbreviation. The trend in industrial production, adjusted for seasonal effects, has been “absolutely horizontal” in the past four months.

According to data published by the State Statistics Service in August, Russian gross domestic product fell 10.9 percent and industrial production shrank 14.8 percent in the second quarter of 2009.

The Economic Development Ministry could not be reached for comment Monday.

“There have always been internal disagreements within the institutions, even in the Soviet times,” said Sergei Kolchagin, senior fellow in the Institute of Economics of the Russian Academy of Sciences, who formerly worked with the State Statistics Service. “Different institutions often have different opinions on the same figures.”

He said the statistics service had been claiming for a while that they had more methodic and precise instruments of monitoring. All data, however, should be carefully evaluated to see which institutions’ figures are most realistic, he said.

“Statistics may use different methods to eliminate a number of seasonal factors, including the number of working days, holidays, vacation periods, weather conditions and so forth,” said Sergei Aleksashenko, a former first deputy chairman of the Central Bank and an expert with the Carnegie Moscow Center. “Rosstat and the Economic Development Ministry have different models to clear out a trend, and the ministry uses its own model that often gives a more optimistic picture.”

Kremlin Revives Soviet-Era War on Dissidents http://www.themoscowtimes.com/opinion/article/387259.html

13 October 2009By Vladimir Ryzhkov

To the accompaniment of the usual official drivel about democratic values, Russia’s political regime continues to reach new heights of authoritarianism. Or more accurately, it is stooping to new lows. Having already eliminated freedoms in television, federalism and parliamentarianism, elections and the formation of multiple parties, and having established an all-powerful ruling bureaucracy, the Kremlin is now reviving one more important element of the Soviet system — the fight against political dissidents.

In true Soviet fashion, individuals have appeared to speak out against the ruling powers and our leaders have sanctioned a campaign of ostracism and persecution against them. Human rights activist and journalist Alexander Podrabinek has kicked off the new epoch of Putin-era dissidents with a drama that is unfolding before our eyes.

After Podrabinek published an article with sharp criticisms of the Soviet Union and World War II veterans, commissars of the Nashi youth movement met with their long-standing patron, chief Kremlin ideologist Vladislav Surkov. They began their organized harassment of the journalist immediately afterward. At that meeting, Surkov lavished praise on the “Nashists,” referring to them as “the vanguard of our political system.” Surkov even credited the Nashi movement for prompting U.S. President Barack Obama

to reject plans to deploy elements of U.S. missile defense batteries in Central Europe. Surkov encouraged them by saying, “Therefore play on! Go ahead! The radar is gone!”

Heady after receiving such enthusiastic support from a top official, Nashi activists set out to “play on” with a vengeance. They demanded that Podrabinek publicly apologize “before Soviet veterans.” Nashi activists showed up at Novaya Gazeta, “serious about coming to terms” with the journalist, and demanding that editor-in-chief Dmitry Muratov hand over Podrabinek’s cell phone number. Other young people rang at Podrabinek’s apartment and questioned his neighbors. With the sanction of authorities, and despite the inconvenience to the neighbors, Nashi activists set up an ongoing picket near his apartment building and publicly warned, “Podrabinek’s life is divided into two parts — before the article, and after the article.”

Threats of physical violence against Podrabinek appeared on the Internet — to the complete indifference of authorities and law enforcement agencies. One Nashi leader, Nikita Borovikov, announced that if Podrabinek did not apologize for his article, Nashi would seek his expulsion from Russia. Simultaneously, several lawsuits “in defense of honor and dignity” were filed in court.

In the face of this “hate campaign,” Podrabinek was forced to go into hiding and cannot return home to see his family. What’s more, the journalist wrote in his blog that he has information that a decision to use physical violence against him had been made on the political level and that the Nashi campaign is being used as a propagandistic cover.

Before the eyes of the Russian public, a major campaign of persecution has been unleashed against a fellow citizen who merely expressed his views in a newspaper article. The campaign is openly violating fundamental constitutional principles and norms — freedom of thought, freedom of conviction, the inviolability of one’s personal residence, the right to live in one’s own country and the right to state protection of life and health. State Duma deputies, the prosecutor general and the federal ombudsman have not spoken up for Podrabinek. The Russian Union of Journalists is silent, as is the Public Chamber. When Ella Pamfilova, a Kremlin human rights aide, dared to berate Nashi for “persecuting” a journalist, Duma deputies demanded that she apologize.

By remaining silent over the persecution of an individual for his criticisms of the Soviet authorities and their crimes — for his decision to express his views and convictions — that practice effectively becomes the official policy of the Russian establishment and the thinking of the political mainstream. This is wholly in keeping with the general policy of the authorities to rehabilitate Soviet leader Josef Stalin, idealize Soviet history and consolidate society on an anti-democratic foundation.

Nashi commissars would do well to keep in mind that on the evening of Dec. 1, 1977, Podrabinek was arrested by the KGB on a public street, and that his father and brother were at the same time being held for questioning by law enforcement officials. All three were accused of “anti-social and anti-Soviet activity” and given 20 days to leave the Soviet Union — or else be sent to a Soviet prison camp. Podrabinek refused and was

exiled for five years to the Yakutian village of Oimyakon. He was rearrested there in 1980 for giving an interview to the Western press and was given another 3 1/2 years. In the 1970s, Podrabinek helped publish the underground press and defended the victims of Soviet punitive psychiatry. The persecution of Podrabinek and his family was carried out by the KGB under the supervision of Yury Andropov — whose name now adorns a Moscow street. Podrabinek now has legitimate grievances against the Soviet authorities, and he has ample right to air those grievances publicly.

Podrabinek was also detained and questioned by the Federal Security Service in the 2000s for distributing the well-known book “The FSB is Blowing up Russia,” published in 2004.

Podrabinek’s latest troubles have received the most media attention, but it is not the first instance of the authorities persecuting dissidents. Criminal proceedings continue against Yury Samodurov and Andrei Yerofeyev (brother of the famous writer) for organizing the “Forbidden Art” exhibition in 2006. The prosecutor is demanding that they serve prison time for “inciting hatred and enmity, and for using their official positions to denigrate human dignity.” Dozens of nationalist nutballs have served or are serving time in penal colonies, effectively having been imprisoned for expressing such political sentiments as “Putin, leave!” Dissident behavior and its persecution by the authorities have become a fact of life in modern Russia.

Moscow and other Russian cities are still full of Soviet symbolism — streets named after Lenin, Marx, Engels and socialism, as well as public squares named in honor of notorious Soviet secret police chiefs Felix Dzerzhinsky, Moisei Uritsky and Vyacheslav Menzhinsky. The word “Anti-Soviet” — until recently the name of a small Moscow restaurant — can no longer affect them. But criticism of the Soviet Union has suddenly become tantamount to criticism of Russia. Now Russian officials, bankers and oligarchs have pulled on their gray Chekist overcoats, donned Soviet soldier caps with red stars, and hung chains bearing Russian Orthodox crosses around their necks. And Nashi activists have told anti-Soviet dissidents to “get out of our country!”

Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvyradio.

National Economic Trends

Russia FinMin: reserve diversification to continuehttp://in.reuters.com/article/fundsNews/idINLAG00383320091012

Tue Oct 13, 2009 1:30am IST

MOSCOW, Oct 13 (Reuters) - Russia and other countries are likely to continue gradual diversification of reserves, but a sharp move away from the dollar is unlikely in the medium term, Russian Finance Minister Alexei Kudrin was quoted as saying.

"Now, after the end of the 'fight to quality' period, the question about changing reserve structure arises again," Kudrin said in an interview with Russian Manufacturer magazine.

Russia has already reduced the dollar's share in its reserves, the world's third-largest, to less than 50 percent, and has called for less global dependence on the U.S. currency.

Along with China, it has called for discussion on the possibility of creating a new supra-national reserve unit, based on the International Monetary Fund's Special Drawing Rights.

But Kudrin said any such process would take years.

"In the short and medium term we can hardly expect sharp changes in the structure of currency reserves, because a sale of dollar assets would lead to a significant fall in their value. This is also true for Russian reserves," he said.

"Most likely there will be continued gradual diversification of reserves."

Russia's central bank has signalled that it is ready to add other currencies to its $400 billion reserves, such as the Australian AUD= or Canadian CAD= dollars, but is constrained by lower liquidity in those units. [ID:nLT556258]

Emerging market currencies could also join the ranks of reserve units over time, Kudrin said.

"The Chinese yuan is now not a convertible currency. But in 10 years it could become convertible and reserve," he said.

"The Russian rouble, if it has not yet fully become a regional reserve currency, has the signs of being such." In recent weeks, the rouble has rallied strongly on firm oil prices and brighter economic prospects, prompting the central bank to regularly intervene in the market as part of a policy to stem excessive currency moves in either direction.

Kudrin and other officials have shrugged off suggestions that the recent rally poses a concern.

"The situation on the global energy market has a significant impact on the national currency. Now the external backdrop ... is positive for the country," he said.

"A weak currency increases risks of inflation, lowers the appeal of investments, leads to the preservation of the current ineffective structure of manufacturing," he said. (Writing by Toni Vorobyova; Editing by Victoria Main)

Kudrin doesn’t expect “avalanche” of bank mergers, acquisitionshttp://www.prime-tass.com/news/show.asp?topicid=68&id=465873

MOSCOW, Oct 13 (PRIME-TASS) -- The number of bank mergers and acquisitions in Russia is expected to increase in the coming years, but there will be no “avalanche” of these processes, Deputy Prime Minister and Finance Minister Alexei Kudrin said in an interview with the Promyshlennik Rossii (Industrialist of Russia) magazine seen by PRIME-TASS Tuesday.

“Restructuring of the banking sector will go gradually,” he said. In the coming two years, about 50–100 banks may cease operations per year, he also said.

Kudrin also said that losses in the banking system during the crisis had been “quite moderate,” noting that Russia lost 42, or about 3.7% of its banks. Withdrawals from personal bank deposits in October–December 2008 stopped at 7.8% of total personal deposits and were caused mainly by devaluation expectations rather than by concerns about banks’ stability, Kudrin said.

There were a total of 1,028 banks operating in Russia as of September 1, the Central Bank of Russia (CBR) said earlier.

At present, situation in the banking sector is stable, Kudrin said. The overdue debt on banking loans is rising, but not at such a rapid rate as was anticipated earlier, he said. Banks’ assets have been increasing for the last two years and a gradual increase is being seen in banks’ ruble-denominated deposits, he added.

Russian finance minister foresees closure of 200 banks in 2 yearshttp://finchannel.com/news_flash/Banks/49219_Russian_finance_minister_foresees_closure_of_200_banks_in_2_years/

13/10/2009 10:55 (00:09 minutes ago) The FINANCIAL -- According to RIA Novosti, Russian Finance Minister Alexei Kudrin has said that up to 200 Russian banks could cease to exist through mergers and acquisitions in the next two years.

"The restructuring of the banking sector [in Russia] will be gradual. About 50-100 banks per year may cease to exist in the next two years," Kudrin said in an interview with the Promyshlennik Rossii (Russian Industrialist) magazine.

There are about 1,100 banks in Russia at present.

Kudrin said that only 42 banks, or 3.7% of the total, have closed down during the first year of the current financial crisis, and while the number of mergers and acquisitions is expected to grow, the process would not become a massive trend.

Overall, the Russian banking system has proven its stability and the capacity to effectively withstand financial problems during the economic crisis and has a sufficient financial cushion to face emergency situations, the finance minister said.

13.10.2009 - Banki.ru

President Dmitry Medvedev: if inflation is cut to 5—7%, Russian banks will be able to grant loans at adequate rateshttp://www.cbonds.info/all/eng/news/index.phtml/params/id/445660

One of the objectives pursued by the Russian authorities is to curb inflation, Russian President Dmitry Medvedev said in an interview to First Channel’s weekend news program Vremya Sunday night. “You see Russia also (before the crisis — comment of the editorial board) saw inflation running at a high pace. We’ve attempted to rein in inflation as hard as we can,“ he pointed out. “Not all steps were successful. Spending in some areas was bumped up more than required. And this certainly caused problems. With regard to, say, lending of households. As for mortgage loans, we pushed for definite lending rates and our efforts were in vain. Currently, the inflation rate has really slowed down. Consequently, prices are growing slower. August figures showed zero inflation. This has been quite a rare phenomenon in the past years. This is driven by several reasons. Certainly, this is attributable to a contraction in the overall amount of money and lower manufacturing. The inflation rate has substantially moderated in Russia. And, as a whole, this is not bad, at least, for household income and the purchasing ability of citizens. This is good for consumers. I do not attribute this only to stabilization measures. This is ultimately the aftermath of the country’s economic recession. Right now our task is to continue efforts to rein in inflation, as our target is to curb inflation at least at 5—7%. With these rates we’ll be able to grant credits at adequate rates. Then Russian citizens will be able to take mortgage and consumer loans at adequate rates,” he noted.

Troika Warns on Pension Plan http://www.themoscowtimes.com/business/article/387289.html

13 October 2009By Irina Filatova

Legislation regulating the activities of nonstate pension funds contain shortcomings that could pose a threat to the Russian financial system if it isn’t amended, Troika Dialog managing director Pavel Teplukhin said Monday.

Teplukhin said the legislation contains vague wording that could be interpreted to mean that asset management companies must offer guaranteed profits on stocks — which would be a contradiction of the law on stock markets.

“It is necessary to forbid giving any guarantees that are impossible to fulfill,” Teplukhin said at a news conference.

Legislative contradictions have led to several conflicts between asset management companies and nonstate pension funds. In April, the Moscow Arbitration Court ordered Pioglobal Asset Management to pay more than 230 million rubles in compensation to the nonstate pension fund TNK-Vladimir. This sum included the money that TNK-Vladimir had given the company to manage and about 24 million rubles in minimum guaranteed profit.

Teplukhin said the shortcomings in the law have only affected a handful of asset management companies and nonstate pension funds in the current crisis, but the country’s financial system could collapse if another crisis erupts in five or six years without any amendments being made.

“Most asset management companies currently have no problems or court trials with nonstate pension funds,” Teplukhin said. “But we understand that the legislation needs to be amended.”

The government has made pension reform a priority, and asset management companies are eager to help fashion amendments to the 1998 law.

“We plan to partner with large nonstate pension funds in amending the legislation,” Teplukhin said. “This is the task for the next one to 1 1/2 years. We are going to start as soon as possible.”

Finam Management is also drawing up proposals for amendments.

“There are undoubtedly many problems. Our pension reform is young and imperfect,” Andrei Shulga, general director of Finam Management, said by telephone. “It needs improvements, and we are taking part in this work.”

Initial steps toward pension reform were taken early this month when representatives of the Finance Ministry, the Economic Development Ministry, the Federal Service for Financial Markets, the National Association of Nonstate Pension Funds and asset management companies discussed the problem at a conference in Khanty-Mansiisk on Oct. 1 and 2.

Russian weekly outlook - 13-19 Octhttp://www.businessneweurope.eu/dispatch_text10156

Rencap

October 13, 2009

Today (13 Oct), we release Russian weekly outlook - 13-19 Oct.

Economic data due this week. This promises to be a busy week for Russian economic data, with a slew of September macro numbers due out, which we expect to show a moderation in the rate of decline in the real economy. We highlight, in particular, I

ndustrial Production data. The August numbers here were disappointing. With the market expecting a 10.9% YoY contraction in August, the data delivered a 12.6% drop. We see the main reasons for this as: 1) a shorter working month in August vs July (two days less); 2) a shutdown in car production by many Russian car manufacturers (car production contracted 69% compared with July); 3) a drop in electricity production due to an abnormally cool month. However, as our economics team highlights, it wasn't all bad news: car production has picked up in September, and electricity consumption has also shown a positive trend, leading us to believe that September's data should be better. The market is expecting a YoY contraction of -12.1%. September unemployment, retail sales and disposable income data are also due out this week.

Corporate events this week: TMK (BUY, TP $5.60) is due to issue 1H09 results later this week. Our metals and mining team expects sales of $1,379mn from 1,203kt of pipe for what was a difficult period; EBITDA of $122mn (about $60mn of this from 1Q09); and a net loss of $266mn, representing an EPS loss of $0.33/share, mainly due to the cost of debt. Norilsk Nickel (BUY, TP $118.00) is also expected to release 1H09 results this week. In the telecoms sector, MTS (HOLD, TP $49.00) will host a capital markets day on 19 Oct.

Market-watch highlights: The MSCI Russia index significantly outperformed the emerging-markets (EM) average over last week, adding 12.5% vs the MSCI Emerging Markets Index which climbed 5%. Oil names gained as the oil price climbed from $70/bbl to $71.8bbl. Gazprom neft was higher by 23%, LUKOIL added 17% and Surgutneftegas added 13%. VTB was one of the strongest performers over the week, adding 22% as it continues to play catch-up with its peer Sberbank, which also remained in focus benefiting from an increase in risk appetite and the interest rate easing cycle - adding 17%. Polyus Gold added 8.5% as the oil price climbed above $1,050/oz. Real estate stocks saw some profit-taking. PIK closed 6% up over the week having slipped 4% on Friday after the company said its properties had dropped 77% in value, from $12.3bn on 1 Jan last year to $2.86bn. There was a marked pick-up in volume traded over the course of the week, with MICEX volume climbing from $2bn per day, on average, to $2.3bn.

Russian risk continues to fall; Russian EMBI spreads are getting close to the same levels as Brazil, at 220. CDS spreads dipped below those of Turkey for the first time since October last year.

Money continued to flow into Russian funds. Russian dedicated equity funds, for the

week ending 7 Oct, saw inflows of $71.5mn (a 1.2% gain on the previous week) and an increase in AuM of some 4.3%. Russia's inflows, in percentage terms, remain robust in comparison with their BRIC peers. China saw outflows of $173.8mn (0.5%) last week, while Brazil and India saw inflows of $120mn (0.75%) and $100mn (0.5%), respectively.

Investment ideas. We continue to recommend remaining broadly underweight the Russian oil and gas sector. We find it difficult to see significant upside for oil beyond $70/bbl, which makes highly correlated Russian oil and gas names vulnerable to volatility at these levels. Nonetheless, we think it makes sense to keep an eye on LUKOIL (BUY, TP $67.8) which, as our oil and gas team notes (see Russian oil majors: Fiscal promises, dated 9 Oct 2009), has underperformed Rosneft 15% in the past three months and is attractively valued relative to its international peer group at an estimated 2010 EV/EBITDA multiple of 3.9x and a consensus 2010 P/E multiple of 6.6x, representing respective discounts of 20% and 14% to Rosneft and 11% and 33% to the international oil majors. We also draw attention to TMK (BUY, TP $5.60), which will release 1H09 financials later this week. Last Friday's 3Q production data indicated a pick-up in volumes, and an improvement in demand, which, combined with allayed fears of a default, go a long way to support a recovery in the company's economics. The numbers this week are likely to reflect a weak 1H09, however, we expect FY10 to improve. Our metals and mining team recently upgraded TMK's target price to $22.45/GDR, from $16.90/GDR believing that the company has favourable dynamics that have not been fully priced-in. We would look at dips to buy into the name.

Business, Energy or Environmental regulations or discussions

Lukoil, Norilsk Nickel, Polyus Gold: Russian Equity Previewhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=apPLyN8Mk1ZA

By Maria Ermakova

Oct. 13 (Bloomberg) -- The following shares may have unusual price changes in Russia trading. Stock symbols are in parentheses, and prices are from the previous close unless otherwise noted.

The 30-stocks Micex Index advanced for a sixth day, rising 3.8 percent to 1,357.44, the highest since September 2008. The dollar-denominated RTS Index gained 4.1 percent to 1,428.06.

OAO Lukoil (LKOH RX): Crude oil rose to a six-week high in New York as advancing U.S. and European equities boosted confidence in the global economic recovery. Lukoil, Russia’s largest non-state oil producer, advanced 2.7 percent to 1,955.74 rubles.

OAO GMK Norilsk Nickel (GMKN RX): Copper rose in New York and London, extending last week’s gains, on speculation that China, the world’s largest consumer, will keep buying the metal. Norilsk, Russia’s largest mining company, advanced 4.7 percent to 4,091.10 rubles.

OAO Polyus Gold (PLZL RX): Gold futures approached a record high as the slumping dollar spurred demand for the precious metal as an alternative investment. Gold reached $1,060.50 an ounce, close to the all-time high of $1,062.70 on Oct. 8. Polyus, Russia’s largest gold producer, increased 3.1 percent to 1,500.25 rubles.

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

Last Updated: October 13, 2009 00:01 EDT

Russia Stocks Rise for Seventh Day, Longest Rally Since 2006http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aabARgTIRRvs

By Stephen Kirkland

Oct. 13 (Bloomberg) -- Russian stocks rose for a seventh day, the longest winning streak since July 2006, as oil traded above $73 a barrel and Goldman Sachs Group Inc. recommended energy-related shares on the outlook for oil prices and tariff liberalization. The Micex gained 0.7 percent to 1,366.48 at 11:02 a.m. in Moscow.

Last Updated: October 13, 2009 03:15 EDT

Broker BGC to open Moscow office next monthhttp://in.reuters.com/article/governmentFilingsNews/idINLC30837020091012

Mon Oct 12, 2009 3:02pm IST

LONDON, Oct 12 (Reuters) - Electronic broker BGC Partners (BGCP.O: Quote, Profile, Research) is to open an office in Moscow next month providing brokerage services to clients locally and internationally, the company said on Monday.

BGC, which has 18 offices around the world, will have about 35 staff in the Moscow office, covering a range of products including bonds, forex and equities, a spokeswoman for BGC said. It gave no reason for the decision to set up in Moscow or the timing of the move.

BGC is an inter-dealer broker providing an electronic marketplace for banks, hedge funds, investment banks, trading firms and investment firms for trading a range of financial products, including bonds, foreign exchange and derivatives. (Editing by David Holmes)

Energy Ministry say capacity market to be launched next year http://www.businessneweurope.eu/dispatch_text10156

VTB Capital

October 13, 2009

general framework likely to be adopted soon - financial parameters later

News: Interfax reports that the Energy Ministry had announced yesterday that the long-awaited capacity market would be launched next year. The first auction is to be held in September. That said, the ministry now suggests splitting the capacity market decree into two different documents. The first would specify a general framework to be adopted soon. The second would provide details on prices and returns for investors and is yet to be considered by different ministries. The news pushed OGKs up 15-30% yesterday.

Our View: The capacity market needs the anticipated adoption of the first part of the legislation. Despite being a positive sign, it fails to shed light on the most important part of the market - pricing mechanism (including possible caps) for the old capacities (commissioned by 2008) and for new capacity. This is the key part of the legislation and the main talking point in the government. Both ministries and market participants have been considering the pricing issue on the capacity market for over a year and still no final decision has been made yet. The latter ultimately defines the investment case of Russian gencos, - if the gap between the current market price (USD160/kW in average) and the replacement cost (more than USD 800/kW) is to be closed in the long run. It also defines the economics of the capex projects and says whether they are value added or not. Should we see breakthrough in the issue of the pricing mechanism in the long-term capacity market, it would be positive for the generation companies. At present, we think the market may overreact to the news. Back to top Dmitry Skryabin

Russia's UC RUSAL says no plans to sell stake in QALhttp://www.lse.co.uk/FinanceNews.asp?shareprice=&ArticleCode=adq5b2rncffy5qz&ArticleHeadline=Russias_UC_RUSAL_says_no_plans_to_sell_stake_in_QAL

Tue, 13th Oct 2009 07:50

MOSCOW, Oct 13 (Reuters ) - Russian aluminium giant United Company RUSAL has no plans to sell its 20 percent stake in Queensland Alumina Ltd (QAL), the company said on Tuesday.

Two sources familiar with the situation said earlier on Tuesday that Chinese metals conglomerate Chinalco wanted to buy UC RUSAL's stake in the Australian alumina refinery.

'UC RUSAL has no intention of selling its stake in the alumina refinery QAL,' the company's press office said in an emailed statement.

(Reporting by Aleksandras Budrys, editing by Robin Paxton) Keywords: CHINALCO RUSAL/QAL

(robin.paxton@reuters.com; +7 495 775 1242; Reuters Messaging: robin.paxton.reuters.com@reuters.net)

Uralkali can use potash from flooded mine –reporthttp://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLD65575220091013

Tue Oct 13, 2009 2:15am EDT

MOSCOW, Oct 13 (Reuters) - Russian miner Uralkali (URKA.MM: Quote, Profile, Research, Stock Buzz) may be able to use more than half of the potash reserves that were thought to be lost in a flood at one of its mines in 2006, Kommersant business daily reported on Tuesday.

The lost reserves had been valued at 84.6 billion roubles ($2.86 billion) by Russian subsoil agency Rosnedra.

Around 50 to 60 percent of the previously "lost" reserves can be used, Kommersant quoted Denis Khramov, head of the Natural Resources Ministry's state policy department, as telling a parliamentary committee.

The reserves can be accessed through some of the functioning mining tunnels, the newspaper said.

Uralkali was not immediately available for comment.

"While these reserves can potentially increase Uralkali's resource base, we do not expect the company to start developing them from the neighbouring mines any time soon," analysts at VTB Capital said in a research note.

"Such extraction would significantly increase technological risks for Mines 2 and 4, while Uralkali currently has other sufficient reserves to produce the necessary volumes," VTB Capital said. ($1=29.60 Rouble) (Writing by Toni Vorobyova; Editing by Hans Peters)

MTS Acquires Controlling Stake of COMSTAR-UTShttp://www.reuters.com/article/pressRelease/idUS61792+13-Oct-2009+PRN20091013

Tue Oct 13, 2009 3:57am EDTMOSCOW RUSSIAN FEDERATION, October 13 /PRNewswire-FirstCall/ -- MobileTeleSystems OJSC ("MTS" - NYSE: MBT), the largest mobile phone operator inRussia and the CIS, announces that it has acquired a 50.91% stake in COMSTAR- United TeleSystems ("COMSTAR-UTS" - LSE: CMST), a leading supplier ofintegrated telecommunication solutions in Russia and the CIS, from AFK

Sistema. Under the terms of the agreement, a wholly owned subsidiary of MTSpurchased Sistema's 50.91% stake in COMSTAR-UTS for 39.15 billion rubles($1.32 billion)(1) or 184.02 rubles ($6.21) per Global Depositary Receipt(GDR). In US dollar terms, this price differs from previously announced pricedue to recent depreciation in the value of the US dollar versus the Russianruble, though the terms of the transaction remain unchanged. MTS and itsrelated subsidiaries have received all necessary regulatory approvals torealize the transaction. No decision has been made regarding the extension ofan offer to minority shareholders of COMSTAR-UTS. MTS believes the transaction will provide access to important growthmarkets in commercial and residential broadband; realize value-accretivesynergies in capital and operational expenditures; and provide a foundationfor the development of effective content platforms and services. The approval of the acquisition of COMSTAR-UTS by the MTS Board ofDirectors was based on the recommendation of the Special Committee to theBoard, which consists of the three independent directors who serve on theBoard. The Special Committee was established on May 22, 2009, to oversee thetransaction process and decide whether to recommend the acquisition to thefull Board. Fairness opinions were provided to the Special Committee byindependent financial advisors J.P. Morgan plc and ING. Cleary Gottlieb Steen& Hamilton LLP served as legal advisor on the transaction, whilePricewaterhouseCoopers Russia provided advice and analysis of the commercial,tax and financial aspects of the transaction. Legal due diligence wasperformed by law firm Liniya Prava. Additional independent legal advice tothe Special Committee was provided by Cravath, Swaine & Moore LLP. The management of MTS will address the investment community about theCOMSTAR-UTS transaction and other aspects of MTS' business during itsupcoming Analyst and Investor Day on October 19, 2009. For more information,please visit http://www.mtsgsm.com/resources/analyst_investor_days Learn more about MTS. Visit the official blog of the Investor RelationsDepartment at http://www.mtsgsm.com/blog/ Mobile TeleSystems OJSC ("MTS") is the largest mobile phone operator inRussia and the CIS. Together with its subsidiaries, the Company services over96.17 million subscribers. The regions of Russia, as well as Armenia,Belarus, Turkmenistan, Ukraine, and Uzbekistan, in which MTS and itsassociates and subsidiaries are licensed to provide GSM services, have atotal population of more than 230 million. Since June 2000, MTS' Level 3 ADRshave been listed on the New York Stock Exchange (ticker symbol MBT).Additional information about MTS can be found on MTS' website athttp://www.mtsgsm.com. Some of the information in this press release may contain projections orother forward-looking statements regarding future events or the futurefinancial performance of MTS, as defined in the safe harbor provisions of theU.S. Private Securities Litigation Reform Act of 1995. You can identifyforward looking statements by terms such as "expect," "believe,"

"anticipate," "estimate," "intend," "will," "could," "may" or "might," andthe negative of such terms or other similar expressions. We wish to cautionyou that these statements are only predictions and that actual events orresults may differ materially. We do not intend to update these statements toreflect events and circumstances occurring after the date hereof or toreflect the occurrence of unanticipated events. We refer you to the documentsMTS files from time to time with the U.S. Securities and Exchange Commission,specifically the Company's most recent Form 20-F. These documents contain andidentify important factors, including those contained in the sectioncaptioned "Risk Factors" that could cause the actual results to differmaterially from those contained in our projections or forward-lookingstatements, including, among others, potential fluctuations in quarterlyresults, our competitive environment, dependence on new service developmentand tariff structures, rapid technological and market change, acquisitionstrategy, risks associated with telecommunications infrastructure, risksassociated with operating in Russia and the CIS, volatility of stock price,financial risk management and future growth subject to risks. "J.P. Morgan plc ("J.P. Morgan") is acting for MTS (as represented by theSpecial Committee) in relation to the Transaction and for no one else andJ.P. Morgan shall not regard any other person (including, without limitation,any person who is a director, officer, employee, shareholder or creditor ofMTS) as its client in relation to the Transaction and shall not beresponsible to any other person for providing protections afforded to clientsof J.P. Morgan or advising any other person involved in the Transaction." ING Bank N.V., London Branch ("ING"), which is authorized by the DutchCentral Bank, is acting exclusively for MTS and no one else in relation tothe Transaction and will not be responsible to anyone other than MTS forproviding the protections afforded to clients of ING nor for providing advicein relation to the Transaction or any other matters referred to in thisannouncement.

Opel sale could be finalized this weekhttp://www.businessneweurope.eu/dispatch_text10156

RIA NovostiOctober 13, 2009

An official at German carmaker Opel has said the deal to transfer control of the company from General Motors to the Magna-Sberbank consortium could be finalized this week, German TV channels reported Monday.

The channels quoted the head of the company's workers' council, Klaus Franz. Unnamed sources said the signing could take place on Tuesday.

General Motors took a long-awaited decision in early September to sell Opel to a consortium of auto parts maker Magna and Russia's largest bank, Sberbank. The decision

was approved by the Opel board and the German government.

The Magna-Sberbank consortium will own a 55% stake in Opel on a parity basis, and the German carmaker will control 10% with GM retaining 35%.

The new owners are set to leave the Opel plants in Germany intact, but plan to close two European production sites, including one in Belgium.

Franz said that before control over the company can be officially transferred, all workers (about 50,000) at European-based Opel enterprises must agree to a reduction of their aggregate earnings until 2014, which would allow the company to annually save up to 265 million euros ($390 million).

He said the deal concluded in September is a draft agreement, and the new contract, including a detailed agreement with Opel workers, has not been signed yet.

AvtoVAZ Sees Record Loss as State Plans Aid http://www.themoscowtimes.com/business/article/387287.html

13 October 2009By Maria Antonova

AvtoVAZ on Monday reported record losses of 19.4 billion rubles ($659 million) for the first six months as sales continued to slide in September and the government discussed plans for additional assistance for the company.

The dismal results came as the government approved a nine-month extension to increased import duties on cars, which all but closed the Russian market to used foreign autos. The initial hikes on used and new cars, signed in December to help domestic producers like AvtoVAZ, caused unrest in the Far East, where many drivers relied on imported Asian vehicles.

The Tolyatti-based company said earnings declined by 50.6 percent year on year. AvtoVAZ, which last month conceded to the government that it makes poor-quality cars, attributed the dismal results to a “decrease of Lada brand sales because of the world economic crisis and the general economic downturn in the country.”

Half-year sales were at 169,000 cars, down from 378,000 for the same period in 2008. The first-half loss is 10 times worse than a year earlier, when the carmaker had a net loss of 1.9 billion rubles. Last year, AvtoVAZ posted a profit of 1.48 million rubles ($50,000).

The carmaker’s September sales of 28,109 cars were a record low for the entire history of the plant, which opened at full capacity in 1974, according to Avtostat, a Tolyatti-based agency that tracks the industry.

Deputy Finance Minister Alexander Novak said Monday that the government was looking at two possible paths to bring AvtoVAZ to financial health, after securing a pledge from shareholder Renault to help with technology.

AvtoVAZ management is asking for state guarantees to refinance loans and subsidies on interest rates. The other possible solution is to convert the company’s debt to state banks Sberbank and VTB into additional shares, but Renault may be against such a measure, Novak said, Interfax reported.

The French carmaker owns a blocking 25 percent stake in AvtoVAZ, as do the state corporation Russian Technologies and brokerage Troika Dialog.

“The situation is likely to be clearer in a month,” Novak said. AvtoVAZ is seeking a state subsidy to cover 11.5 billion rubles of its social obligations related to potential layoffs, but “the sum is not covered by the budget.”

The government has provided roughly $1 billion in aid to AvtoVAZ this year, most of which was used to pay down debt.

In addition to the import tariffs, the government has introduced a range of measures to help the industry, including car-loan subsidies for some vehicles made in Russia and an increase in state orders.

But most dramatic has been the import tariff increase, which helped domestic carmakers boost their market share to 61 percent in the first six months, up from 43 percent a year earlier, the Industry and Trade Ministry said in a report in August.

The resulting decrease in imports, however, more than halved the customs duties that the government was collecting — from 96.2 billion rubles ($3.3 billion) in the first half of 2008 to 43 billion rubles for the first six months of this year, the ministry said.

Still, the ministry calculated that the effect from the protectionist measure was positive.

Andrei Belyaninov, head of the Federal Customs Service, said Monday that the service collected 2.31 trillion rubles in the first nine months of the year, 35 percent lower than the same figure for 2008. He predicted that the service would contribute 3.47 trillion rubles to the federal budget this year.

Activity in the Oil and Gas sector (including regulatory)2:14 13/10/2009

Russia ready to reduce gas price supplied to Armeniahttp://www.panorama.am/en/economy/2009/10/13/gas/

The Russian party is ready to reduce gas price supplied to Armenia.

The meeting of the Armenian and Russian Presidents was due in Moscow Monday. The main topic of the talks was the economic cooperation, particularly in the field of energy.

According to the Kommersant, Russia considers Armenia its strategic partner in the region and is ready to help it overcome the economic crisis by reducing the gas price Russia supplies to Armenia. Instead, Russia will get access to the construction works of the Atomic Power Station, a deal worth 2-5 billion euros.

According to Gasprom sources, the company is holding talks on reducing gas price supplied to Yerevan. In 2010 gas price for a thousand cubic meters supplied to Armenia will be $180 instead of $200. The source highlights that the reduction is not merely conditioned by the goodwill of the Russian party. Gas price reduction for Europe is also foreseen next year. This is what provides opportunity for Gasprom to review the price policy for the countries standing close to Russia, among which the Kremlin also sees Armenia.

TNK-BP Invests Over $400 Million in Yamal Projecthttp://www.istockanalyst.com/article/viewiStockNews/articleid/3546088

Tuesday, October 13, 2009 3:51 AM

(Source: Datamonitor)Russia-based vertically integrated oil company TNK-BP has said that the board of directors has approved investment of over $400 million for the initial phase of the Yamal project in Russia which has the potential to become a principal production center for TNK-BP and Russia on the whole.

The company has said that the funds will be spent on early production activities, exploration work and construction of base infrastructure at the Suzun, Tagul and Russkoye oil fields.

The board endorsed investing in Central Uvat, building on the success of developing the eastern part of the Uvat oil and gas province. In February 2009, TNK-BP has commissioned Urnenskoye and Ust-Tegusskoye oil fields in Eastern Uvat oil which will produce 1.9 million tons by the end of 2009.

In 2010, TNK-BP will start development of the Tyamkinskoye field in Central Uvat. The decision follows a successful exploration and appraisal program resulting in discovery of 10 new oil fields and an over fourfold increase in the Central Uvat reserve base over three years.

The board also endorsed the fuel quality investment program of $1.3 billion over the next five years to upgrade TNK-BP's refineries in Russia and Ukraine in line with new official quality regulations.

The fuel quality program consists of 11 projects of varying timelines. The board supported the first significant project of the program, construction of an isomerization unit at the Saratov refinery for $150 million.

A service of YellowBrix, Inc.

TNK - BP Eyes Iraqi Oil And Gas Fields http://www.nytimes.com/reuters/2009/10/12/business/business-uk-russia-tnkbp-iraq.html

By REUTERSPublished: October 12, 2009

MOSCOW (Reuters) - TNK-BP <TNBPI.RTS>, Russia's third-biggest oil producer, said on Monday it was considering developing hydrocarbon resources in Iraq as it seeks to make its first foray into the oil-rich country.

"TNK-BP is interested in working in Iraqi upstream to the mutual benefit and in close cooperation with the central government of Iraq," TNK-BP, owned 50 percent each by BP <BP.L> and four Russia-connected billionaires, said in a statement.

The company said that, to date, it had not signed any exploration and production contracts with the Iraqi government, including projects in the semi-autonomous Kurdish region.

It did not specify which oilfields in Iraq were of interest to the company.

TNK-BP is not the first Russian oil company to consider investing in Iraq. State-controlled Russian industry leader Rosneft <ROSN.MM> and mid-sized oil firm Tatneft <TATN3.MM> are also examining the Iraq market.

And on Sunday, an Iraqi Oil Ministry official told Reuters the government body was considering revised offers from Exxon Mobil <XOM.N> and Russia's No. 2 crude producer, LUKOIL <LKOH.MM>, for the West Qurna oilfield.

The Russia-connected billionaires and BP last year called a truce in a bitter dispute over management at TNK-BP, which rattled investor confidence in Russia.

The Russian side at the time accused BP of trying to inhibit the joint venture's plans to expand overseas. TNK-BP has said any differences have since been resolved.

Iraq, which relies on oil sales for almost all of its income and desperately needs to boost revenues to rebuild its dilapidated infrastructure, aims to offer another 10 oilfields to oil majors in December.

In a previous round of oil contract auctions in June, the only long-term service deal came to BP and China's CNPC.

Investment in Iraq's oil sector has been dogged by a lack of updated hydrocarbon laws, whose passage has been hampered by a spat between Baghdad and Iraq's Kurdish region over the right to sign oil deals and a host of other issues.

(Reporting by Vladimir Soldatkin, editing by Anthony Barker)

Eastern Europe Fears New Era of Russian Dominance http://www.nytimes.com/2009/10/13/world/europe/13pipes.html?_r=1&em

By ANDREW E. KRAMERPublished: October 12, 2009

MOSCOW — With an ambitious new pipeline planned to run along the bed of the Baltic Sea, the Russian natural gas giant Gazprom is driving a political wedge between Eastern and Western Europe.

While the Russian-German pipeline offers clear energy benefits to Western Europe, Central and Eastern European leaders fear it could lead to a new era of gas-leveraged Russian domination of the former Soviet bloc. With its gas wealth and eyebrow-raising network of personal ties, Russia has divided members of the European Union that have vowed to act collectively to protect their security.

Currently, Russian gas has to be piped through Eastern Europe to reach Western Europe. If Russia shuts off the gas to pressure a neighbor in the east, it is felt in the more powerful, wealthier countries to the west, where it touches off loud protests.

The new Nord Stream pipeline will change that equation. By traveling more than 750 miles underwater, from Vyborg, Russia, to Greifswald, Germany, bypassing the former Soviet and satellite states, it will give Russia a separate supply line to the west.

As a result, many security experts and Eastern European officials say, Russia will be more likely to play pipeline politics with its neighbors.

“Yesterday tanks, today oil,” said Zbigniew Siemiatkowski, a former head of Poland’s security service.

That is not the way the Russians present it. Gazprom, which supplies Europe with 28 percent of its natural gas, says the $10.7 billion project is commercial, not strategic.

Matthias Warnig, Nord Stream’s chief executive and a former East German, said Eastern Europe’s fears were unfounded. “The wall broke down 20 years ago,” he said. Europe

needs additional natural gas to compensate for declining output from the North Sea, he said, and Russia is the best place to get it.

European officials have portrayed the project as one that helps unite Europe and enhance its collective energy security. The European Commission and European Parliament endorsed the pipeline as early as 2000 and both reconfirmed their commitments as recently as 2006.

“As far as common energy policy exists, we are part of it on the highest priority level,” said Sebastian Sass, Nord Stream’s main representative to the European Union.

But officials in Central and Eastern Europe fear that while profits from the pipeline, a joint venture between Gazprom and a trio of German and Dutch companies, will flow to Russian suppliers and German utilities, the long trod-upon countries once under the Soviet umbrella will become more vulnerable to energy blackmail.

Such tactics are hardly without precedent. A Swedish Defense Ministry-affiliated research organization has identified 55 politically linked disruptions in the energy supply of Eastern Europe since the breakup of the Soviet Union.

Until now, Russia’s use of natural gas as a foreign policy tool has been limited to short embargoes, at least in part, analysts say, because it is so blunt a club.

Last January, for example, Russia shut down a pipeline that crossed Ukraine, ostensibly over a dispute with Ukraine on pricing and tariff fees.

The shutoff left hundreds of thousands of homes in southeastern Europe without heat and shuttered hundreds of factories for three weeks.

What had been a bilateral dispute spilled across the Continent, angering influential Western governments and costing Russia money.

The new pipeline and a similar project in southern Europe called South Stream, to run under the Black Sea, will insulate Western Europe from such actions and limit the political and financial costs to Russia.

The ability to shut off one pipeline or the other “depending on whim” makes shutoffs to Eastern Europe more likely, said Zbigniew Brzezinski, the national security adviser in the Carter administration. He called the pipelines a grand Russian initiative to “separate Central Europe from Western Europe insofar as dependence on Russian energy is concerned.”

“The Central Europeans, the former coerced members of the Soviet bloc, are the more worried,” he said.

For Eastern Europeans, the pipeline issue evokes deep memories of a darker era of occupation and collaboration, and has become a proxy debate over Russia’s intentions toward the lands it ruled from the end of World War II to the fall of the Berlin Wall.

In an open letter to President Obama last spring, 23 former Central European heads of state and intellectuals, including a former Czech president, Vaclav Havel, and a former Polish president, Lech Walesa, pointed out that after the war in Georgia last year Russia declared a “sphere of privileged interests” that could include their countries.

With the control of gas pipelines, they wrote, “Russia is back as a revisionist power pursuing a 19th-century agenda with 21st-century tactics.”

Radek Sikorski, the Polish foreign minister, has compared the pipeline deal between Russia and Germany to the 1939 Molotov-Ribbentrop Pact that divided Central Europe into spheres of German and Soviet influence. “Taking the decision first and consulting us later is not our idea of solidarity,” he said.

The din of alarm rising in the East has hardly been heard in the West, however, where Russia has pursued an effective policy of divide and conquer.

“Russia is one of the issues that divides the E.U. the most,” said Angela E. Stent, director of the Center for Eurasian, Russian and East European Studies at Georgetown University in Washington. “Russia and Gazprom go and deal very well with individual countries.”

A web of oil and gas interests in the West, as well as corporations and influential figures with ties to Russia, have greased the process of engagement with Russia.

Perhaps most visibly, a former German chancellor, Gerhard Schröder, has embraced commerce as a means to integrate Russia with Europe. Mr. Schröder was the deal’s “power broker,” says Zeyno Baran, an authority on Eurasian energy at the conservative Hudson Institute in New York. “Without him, it never would have gotten off the ground.”

Mr. Schröder’s government sealed the pipeline deal, including a $1.46 billion German loan guarantee for the project, scant weeks before he lost the 2005 election.

A few weeks later, he took a job as the chairman of Nord Stream. He has said he decided to take the job after leaving office and that he had not known of the loan guarantee.

Mr. Warnig, the project’s chief executive, served as a captain in the foreign intelligence directorate of the East German secret police, the Stasi, in the 1980s. At the time, Vladimir V. Putin, the future Russian president and prime minister, was a K.G.B. agent in Dresden, East Germany.

While his background has fueled speculation of murky cold-war-era ties underlying the project, Mr. Warnig said his spying career was irrelevant to the pipeline debate today.

Other links are more clear-cut. The former prime minister of Finland, Paavo Lipponen, was paid by Nord Stream to help secure permits. Mr. Sass, the Nord Stream liaison in Brussels, was an aide to Mr. Lipponen.

In 2008, Gazprom offered Romano Prodi, then the prime minister of Italy, the chairman’s job at South Stream; Mr. Prodi declined.

Now, with the pipeline looking inevitable, the French have decided to jump on the bandwagon as well, seeking to join the consortium through Gaz de France. Otherwise, they might have to buy gas from a German broker.

The French-German competition, analysts say, illustrates how securing coveted business with Russia has accentuated their rivalry for economic and political preeminence in Europe.

Ultimately, considerations of European unity, like the fears of Eastern Europe, are secondary in the raw struggle over resources by national and corporate interests.

It is a free-market capitalism that post-Communist Russia has cannily exploited, says Pierre Noël, a professor at Cambridge University and a fellow at the European Council on Foreign Relations.

“It is an open, competitive, capitalist economy,” he said. “People build the pipes they want to build.”

Gazprom

Gazprom’s bleak prognosishttp://www.barentsobserver.com/gazproms-bleak-prognosis.4642302-16178.html

2009-10-12 Russian energy giant Gazprom’s gas production could this year drop 22 percent to 450 billion cubic meters.Lower demands might reduce Gazprom’s production to 450-490 billion cubic meters this year, company deputy Aleksandr Ananenkov confirms.

-We have planned a production of 500 billion cubic meters, however, it will probably be lower, Ananenkov said. –We expect it to amount to 450-490 billion cubic meters, he added, Reuters reports.

The company expects production again to pick pace in 2010. Then, production definitely will exceed 500 billion cubic meters, perhaps 520 billion, Ananenkov said.

The negative results come amid the company’s ambitious plans to boost production. According to previous company plans, production is to be boosted towards 560 billion

cubic meters in 2010 and then further towards 590 billion cubic meters in 2020.

In 2008 the Gazprom produced 549,7 billion cubic meters of gas

Total confirms Shtokman delayhttp://www.barentsobserver.com/total-confirms-shtokman-delay.4642328-16178.html

2009-10-12 Leader of the French oil major Total, Christophe de Margerie, confirms that the Shtokman field in the Barents Sea will be delayed. He also underlines that the project will not be profitable with the current gas prices

Speaking to journalists at last week's World Gas Conference, the Total leader underlined that it will take five years to develop the project, the website of the Petroluem Economist reports.

That means that the Shtokman field development inevitably will be delayed. Gazprom has on numerous occasions stressed that there will be no delays in the project, although independent experts long have argued that it will be impossible to start production already in 2013.

Mr. de Margerie also confirmed that that gas prices must increase if the huge project is to become economically viable. -It is "definitely" not economic at $3/m Btu, he said to the reporters.

According to the Petroluem Economist, the Total leader also said that the three partners in the Shtokman Development AG have “a good idea of how they would develop the field, but have yet to calculate the scheme's probable cost.

"That is what we have to do over the next 12 months," he said.