Russia 100210

Basic Political Developments Itar-Tass: Russian Prime Minister, Lithuanian President to discuss cooperation RIA: Putin to visit Finland for Baltic environment protection talks BarentsObserver: Putin to meet Stoltenberg in Finland BarentsObserver: -Open to dialog, but certainly not through media - Russia’s

Foreign Minister Sergey Lavrov hits back on Sweden’s Carl Bildt that last week wrote an up-ed in the New York Times urging Russia to withdraw its tactical nuclear warheads from the Kola Peninsula.

Zeenews: Putin calls Manmohan Singh to discuss upcoming India visit Itar-Tass: RF lauds NATO interested in RF position on NATO strategic concept Aysor.am: Lavrov, Albright to discuss NATO Strategic Concept KyivPost: Madeleine Albright: Former Soviet republics cannot be treated as

Russia's 'sphere of interests' Interfax: Madeleine Albright: NATO does not accept idea of geographically

distinct ‘sphere of interests‘ /Interview/ MID.ru: Russian MFA Spokesman Andrei Nesterenko Response to Media Query

on NATO Secretary General Anders Fogh Rasmussen’s Critical Remarks About the New Military Doctrine of Russia

MID.ru: Russian MFA Spokesman Andrei Nesterenko Interview to RIA Novosti on the Upcoming Visit to Cuba by Russian Minister of Foreign Affairs Sergey Lavrov

Itar-Tass: Gazprom ready to invest in Ukraine gas transportation network - Russia’s gas monopoly Gazprom is ready to consider possible investments in Ukraine’s gas transportation network, Gazprom Deputy CEO Alexander Medvedev told a news conference on Tuesday.

The Korea Herald: 'Korea, Russia on same page over N.K.' - South Korea and Russia are on the same page regarding North Korea's nuclear program and the United Nations sanctions on the impoverished state, said Lee Youn-ho, Seoul's newly appointed ambassador to Russia.

Itar-Tass: N Korean-Russian accord remains basic interstate document – Korean ForMin: The agreement on friendship, neighbourliness and cooperation between North Korea and Russia continues to play a key role in the development of bilateral relations as the basic inter-state document, the Korean Central News Agency said on Tuesday, quoting a message, which was sent by North Korean Foreign Minister Pak Ui Chun to his Russian counterpart Sergei Lavrov on the occasion of the 10th anniversary of the document.

Reuters: China still stuck with Russia over gas price-report: China and Russia are still in protracted price negotiations for a tentative gas supply deal, the official China Daily reported on Wednesday, citing a Russian official.

VladivostokTimes: Joint Project Implementation Fund to Be Created in Russia and Chinese People’s Republic - “U Bango offered to create the fund from both party (Chinese and Russian) to realize joint projects. The fund means financing. Also we need to create the mechanism – work structure, which will rule join project” ISHAYEV said.

Blic: Possibility for larger export to Russia - ‘Serbian producers have larger possibilities for sale of their goods outside Moscow in the regions of Kaluga, Kursk, Krasnodarsk and Novosibirsk’, Milos Bugarin, President of Serbian Chamber of Commerce said in Moscow yesterday after meeting with Yevgeny Primakov, President of the Russian Chamber of Commerce.

Premier.gov.ru: Prime Minister Vladimir Putin chairs a meeting on the Main Guidelines for Government Performance

RIA: Large-scale war less possible, but threats remain - Russia's security chief - Russia's military policies are aimed at avoiding an arms race and military conflicts, but they should also correspond to real threats which the country faces, Russia's security chief Nikolai Patrushev said in an interview with the Russian government daily.

RIA: Japanese fishermen to be arrested over shooting incident off South Kurils Reuters: Shuttle Endeavour docks with space station RIA: Endeavour shuttle docks with International Space Station AFP: Russia wants to charge more for rides to space: report Russia Today: Russian space agency to dictate terms Defpro: Sukhoi PAK FA: First Observations - Part 1 of a comprehensive

overview on Sukhoi’s ambitious 5th generation fighter The Georgian Daily: Moscow Writers Mistaken in Treating North Caucasus

Separately from Russia, KBR Scholar Says LA Times: Can Medvedev emulate Gorbachev? - The odds don't look good. The

Russian president has repudiated key tenets of Putinism, but Putin is ignoring him.

Itar-Tass: SKP chief calls for jury trial moratorium in North Caucasus RFE/RL: Daghestan Lawmakers To Vote On New President Foreign Policy: Dagestan: Russia's Most Overlooked Hot Spot - Why the coming

weeks will only get more dangerous for the troubled North Caucasus Republic. The Moscow Times: Kadyrov Takes Mom's Advice, Drops Libel Case RIA: Russian football team needs homegrown coach - sport minister The Moscow Times: United Russia Doesn't Want Kudrin - United Russia does

not want Finance Minister Alexei Kudrin as a member because of fundamental disagreements over economic policy, State Duma Speaker Boris Gryzlov said Tuesday.

The Moscow Times: Nemtsov, Paper Must Pay Luzhkov The Moscow Times: City to Consider Opposition Council - The City Duma on

Wednesday will consider in a crucial second reading a bill that would create a consultative council consisting of members of political parties that are not represented in the Duma.

Itar-Tass: Perm court to announce verdict in 250-mln-rbls theft case Russia Today: Copycat weapons a threat to Russia's economic security Russia Profile: Et Tu, Brute? - America’s Plans to Install Interceptor Missiles in

Romania and on the Black Sea, an Area of Historic Importance to Russia, Unnerve Moscow

RFE/RL: French-Russian Warship Deal Making Waves Among NATO Allies

National Economic Trends Prime-Tass: CBR says Russia's trade surplus down 37.6% in 2009 RenCap: Russia's trade balance strengthens to 2009 maximum in December Reuters: UPDATE 1-Russia c.banker says further rate cuts can wait The Moscow Times: Fund Interest Leads to January Surplus RenCap: Russia's January budget surplus not set to be sustained

Business, Energy or Environmental regulations or discussions Bloomberg: Rosneft, Gazprom, Norilsk Nickel: Russian Equity Preview Russia Today: Russian innovation companies would go for IPO in Russia –

Chubais BarentsObserver: Drop in northern railway cargo BarentsObserver: Ports up in Murmansk, down in Arkhangelsk UralSib: Thermal Generation Companies: IES may merge all TGKs under its

operational control BarentsObserver: TGK-1 boosted profits Alfa: Gazprom may challenge Inter RAO's position in electricity trading with

Belarus and Baltic countries EmergingMarkets: Savings giant Sberbank creates investment banking unit RBC: VTB North-West posts higher net profit for 2009 RenCap: VTB launchs matrix management system Dow Jones: Agco CEO: Lack Of Credit Hurting Russian Farm Production Alfa: UAC is restructuring its debt Bloomberg: Magnit January Sales Rise 25% to $511 Million on Added Stores The Moscow Times: VimpelCom Merger To Be Done by April The Moscow Times: Caution Urged for Russian Investors in U.S. Assets Reuters: Russia's Uralchem mulls stock market listing –sources The Financial: EBRD agrees to sell 15 percent stake in Swedbank’s Russian

banking arm Barentsnova: Arkhangelsk and Murmansk lose SME investments

Activity in the Oil and Gas sector (including regulatory) RenCap: Russian crude production Organic decline slows UralSib: Tatneft: Bitumen oil output to rise

Gazprom Bloomberg: Citigroup, Gazprom Seal China Carbon-Trading Agreement, WSJ

Says WSJ: Citigroup, Gazprom in Pioneering Energy-Credit Deal in China Reuters: Gazprom says could invest in Ukraine gas network Your Oil and Gas News: Gazprom announces commercial gas inflow reported in

Abakan area Guardian: Scrap UK's wind farm plans, says Gazprom boss Upstreamonline: Gazprom knocks US shales Itar-Tass: EBRD to grant 150-mln-euro loan for developing Serbia’s gas

infrastructure - Last week, the monopoly’s subsidiary, Gazprom-Germany and

Srbijagaz signed an agreement on the setting up of the Banatski Dvor joint venture.

Financial Times: European gas pipelines get green light - Gazprom, Russia’s state-owned gas company, expects to start construction of South Stream – which will deliver gas via the Black Sea and Bulgaria to Austria and Italy – in December after gaining Turkish approval in November. Separately, Nord Stream confirmed it was planning to begin construction in April of its pipeline beneath the Baltic to Germany in spite of delays to approval from Finland and a legal challenge by WWF, the environmental group.

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Full Text Articles

Basic Political Developments

Itar-Tass: Russian Prime Minister, Lithuanian President to discuss cooperation

http://www.itar-tass.com/eng/level2.html?NewsID=14805691

10.02.2010, 08.52

VILNIUS, February 10 (Itar-Tass) - Lithuanian President Dalia Grybauskait· and Russian Prime Minister Vladimir Putin will discuss further cooperation between the two countries during their bilateral meeting in Helsinki on Wednesday.

Grybauskait· and Putin will attend the Baltic Sea Action summit convened on the initiative of the Finish president.

The Lithuanian side is expected to raise the issue of state border demarcation, said a spokesman for the Lithuanian president. Procedures to begin the demarcation process were completed in July 2009 at a Moscow meeting of the bilateral commission, although “no actual work has started yet”, he said. The stretch of the Lithuanian-Russian border (with Russia’s exclave Kaliningrad region) is 295 kilometres, including 255 kilometres of land border.

According to the spokesman, the Lithuanian president will also raise trade and economic issues, including equal, non-discriminatory work conditions on domestic markets of the two countries for Russian and Lithuanian businessmen. A major aspect in this context is promoting agreements in the area of standardization of requirements to the quality of goods and services. For instance, Lithuanian milk producers had hard times in 2009 when Russia temporarily banned Lithuanian imports because of antibiotics found in Lithuanian-produced milk products. Such antibiotic, however, are within the European Union standards, although prohibited in Russia. Harmonization of norms and standards will be in the interests of both Lithuania and Russia, the spokesman added.

RIA: Putin to visit Finland for Baltic environment protection talkshttp://en.rian.ru/world/20100210/157828692.html

07:0410/02/2010

Russian Prime Minister Vladimir Putin will fly on Wednesday to Finland's capital, Helsinki, to take part in the Baltic Sea Action Summit (BSAS) and discuss bilateral cooperation with Finnish, Lithuanian, Danish and Norwegian top officials, the Kremlin has said.

Baltic Sea environmental issues have been in the focus of Baltic states' attention over Russia's plans to build the Nord Stream pipeline, intended to pump gas from Siberia to Europe under the Baltic Sea, bypassing East European transit countries.

The pipeline will pass through the waters of five countries, all of whom have approved the project, although one permit is still required from Finland.

Russian energy giant Gazprom has already signed long-term contracts to supply gas through Nord Stream to customers in several EU countries including Germany, Denmark, the Netherlands, Belgium, France and the United Kingdom.

"In his speech at the summit, [Putin] is expected to put the accent on measures that Russia has already taken to protect the unique ecological system of the Baltic Sea, and on ecological aspects of the Nord Stream construction," a Russian government spokesman said.

During his stay in Helsinki, Putin will meet with Finnish President Tarja Halonen and Prime Minister Matti Vanhanen. He is also expected to hold bilateral talks with Lithuanian President Dalia Grybauskaite and his Danish and Norwegian counterparts, Lars Lokke Rasmussen and Jens Stoltenberg.

MOSCOW, February 10 (RIA Novosti)

BarentsObserver: Putin to meet Stoltenberg in Finlandhttp://www.barentsobserver.com/putin-to-meet-stoltenberg-in-finland.4744875-16178.html

2010-02-10 Russian Prime Minister Vladimir Putin is in Helsinki on Wednesday to talk environment with his Nordic and Baltic counterparts. Afterwards, a private meeting with Norway’s Jens Stoltenberg follows.

Finland’s President Tarja Halonen and Prime Minister Matti Vanhanen host the meeting when Vladimir Putin, Sweden’s King Carl XVI Gustaf and the Norwegian Prime Minister Jens Stoltenberg comes to the Baltic Sea Action Summit in Helsinki today.

The aim of the summit is to bring together the public and private players operating in the area and for them to commit themselves to concrete measures to the benefit of the Baltic Sea, reports Helsingin Sanomat.

Among the issues on the agenda will be Russia’s plans to build the Nord Stream pipeline, intended to bring gas from both Siberia, and later on the Barents Sea Shtokman field, to Germany and by that the European marked.

After the Summit, Vladimir Putin and Jens Stoltenberg will have a bi-lateral Norwegian–Russian meeting. The meeting this afternoon is the first of two important top meetings this year. BarentsObserver has earlier reported that President Dmitri Medvedev will visit Oslo later this spring, the first Presidential visit to Norway since 2002.

Last week, the Norwegian Foreign Minister Jonas Gahr Støre met with his Russian counterpart Sergey Lavrov in Moscow. Like at last week’s meeting between the Foreign Ministers, today’s meeting between Putin and Stoltenberg will also have the two countries cooperation in the Barents Region on the agenda.

Jens Stoltenberg told Norwegian reporters this morning that energy will be an important issue on the agenda in his meeting with Vladimir Putin. The Norwegian oil major Statoil is together with French Total partner with Gazprom in the Shtokman Development AG. Last week, Shtokman Development AG's board of directors decided to postpond the development of the huge gas field in the Barents Sea with three years, as reported by BarentsObserver.

In addition to cooperation within energy, Norway and Russia have the unresolved negotiations regarding the two countries disputed area in the Barents Sea. But, this issue is not officially said to be on the agenda at Wednesday’s meeting between the two Prime Ministers in Helsinki.

Another interesting issue in bi-literal talks between Norway and Russia is the proposed visa-free travel regime in the near-border areas including the Norwegian border town of Kirkenes and the Russian border towns of Nikel and Zapolyarny on the Kola Peninsula.

When Norwegian Prime Minister Jens Stoltenberg visited Moscow in May 2009, Russian Prime Minister Vladimir Putin told the press that he had noted the positive progress in cross-border cooperation between Norway and Russia in the north and that the two countries’ governments were preparing an agreement that would enhance this progress even more by making traveling across the border easier, as reported by BarentsObserver.

BarentsObserver: -Open to dialog, but certainly not through mediahttp://www.barentsobserver.com/-open-to-dialog-but-certainly-not-through-media.4744578-58932.html

2010-02-09

Russia’s Foreign Minister Sergey Lavrov hits back on Sweden’s Carl Bildt that last week wrote an up-ed in the New York Times urging Russia to withdraw its tactical nuclear warheads from the Kola Peninsula.

Lavrov was asked by journalists after the meeting with the Norwegian Foreign Minister to comment on the joint article of Sweden's Foreign Minister Carl Bildt and Poland’s Radoslaw Sikorski regarding Russia’s tactical nuclear weapons in areas adjacent to European Union member states.

- First, literally in the last few weeks I participated in the events which were attended by my colleagues from Sweden and Poland. In the regular contacts that take place between the foreign ministers of Russia and these countries, as well as between the ministries of foreign affairs, the topic was not touched on. Hence the conclusion that if they chose to express this idea not in direct contacts with us, but from the pages of a newspaper, then I suppose they pursued a goal that does not quite meet the task of solving a particular issue. This is the first comment, Lavrov said according to the transcript from the press-conferance posted at the portal of Russia’s Foreign Ministry.

BarentsObserver reported last week about Carl Bildt’s article where he urge Moscow to remove non-strategic nuclear weapons from the Kola Peninsula and Kaliningrad. Carl Bildt and his Polish colleague suggest such a withdrawal could be accompanied by the destruction of relevant storage facilities. 

Commenting on Bildt’s article, Lavrov continued: -For many, many years now, we have been calling for taking the first step in this regard. Namely – removing all tactical nuclear weapons to the territory of the state to which they belong. We’ve been unable to reach out to our partners in order to even begin to talk about it. Our position is well known and, I repeat, we are open to dialogue on any issue, yet certainly not through the media, but directly.

Also the Norwegian Foreign Minister Jonas Gahr Støre has expressed concern about the large quantities of tactical nuclear weapons stockpiled in the world, in Russia in particular.

Talking to the radio station Ekho Moskvy last week, Støre said that the article by Bildt and Sikorski was an important reminder that tactical nuclear arms should also become a part of a comprehensive disarmament formula.

Answering the question whether Oslo is concerned about the presence of Russian nuclear arms near the Norwegian border, Jonas Gahr Støre said he did not think that from the Russian side the arms are aimed at Norway. The two countries are neighbors geographically and strategically, they having been living that way for many decades and have very decent relations, he said.

- However, everyone will be safer, if there are less nuclear arms, Støre said in the interview with Ekho Moskvy.

The Norwegian Foreign Minister reminded that Norway supported the project of clearing the Kola Peninsula of nuclear wastes that were threatening the environment. It would want to recommend Russia to assume the main responsibility for clearing wastes inherited from the Soviet Union.

Zeenews: Putin calls Manmohan Singh to discuss upcoming India visit

http://www.zeenews.com/news602822.html

Updated on Tuesday, February 09, 2010, 19:16 IST

Moscow: Russian Prime Minister Vladimir Putin on Tuesday had a telephonic conversation with his Indian counterpart Manmohan Singh and discussed with him the agenda for his forthcoming India visit.

Putin, who is scheduled to visit New Delhi in March, called Singh to discuss his upcoming trip, the first as Prime Minister of Russia.

"Putin and Singh in their telephonic conversation expressed satisfaction at high dynamism in bilateral trade and economic relations in spite of global recession," Russian PM's spokesman Dmitry Peskov was quoted as saying by ITAR-TASS.

Russian Vice Premier Sergei Sobyanin, Moscow's India pointman, is going to New Delhi next week to finalise Putin's agenda with External Affairs Minister S M Krishna, who is co-chair of Indo-Russian Inter-governmental Commission (IRIGC).

According to sources, Sobyanin could finalise several key defence agreements, including commercial contracts for the joint development of fifth generation fighter and multi-role transport aircraft for signing, at the time of Putin's India visit in the middle of March.

Singh, who visited Russia in December last year, had invited Putin to India.

Itar-Tass: RF lauds NATO interested in RF position on NATO strategic concept

http://www.itar-tass.com/eng/level2.html?NewsID=14806424&PageNum=0

10.02.2010, 12.07

MOSCOW, February 10 (Itar-Tass) - Russia lauds NATO’s interest in Russia’s position on a new NATO strategic concept, Russian Foreign Minister Sergei Lavrov said at a meeting with Madeleine Albright, who heads the NATO Group of Wise Men developing a new strategic concept of the alliance.

“We value NATO’s intentions to hear Russia’s proposals on drafting a new concept of the alliance,” he said. The former U.S. secretary of state reacted positively to the statement of the Russian minister.

Aysor.am: Lavrov, Albright to discuss NATO Strategic Concepthttp://www.aysor.am/en/news/2010/02/10/lavrov-olbrite/

Russia’s Foreign Minister Sergei Lavrov will meet with former U.S. Secretary of State Madeleine Albright to discuss proposals by Russia for a new NATO strategic concept.

Mrs. Albright is reported is on a visit to Russia since yesterday, heading the delegation of NATO's Wise Men, who are responsible for establishment of the new strategic plan.

A spokesperson to the Foreign Ministry of Russia said officials would discuss those proposals which were made by Russian government.

Madeleine Albright will be on a visit to Russia till February 12. She will meet with leaders of the Security Council of Russia, Duma Deputies, and will speak to the students of the Moscow State Institute of International Relations.TODAY, 11:21

KyivPost: Madeleine Albright: Former Soviet republics cannot be treated as Russia's 'sphere of interests'http://www.kyivpost.com/news/russia/detail/59156/

Today at 10:34 | Interfax-Ukraine

Washington, February 10 (Interfax) - Russia needs to recognize that former Soviet republics are now independent and sovereign and cannot be viewed as being under the influence of Russia, said former U.S. Secretary of State Madeleine Albright.

"No country should be treated as if it were merely within the 'sphere of interest' of another. Russia's neighbors are independent and sovereign, as are other countries," Albright, who heads a special 12-strong NATO group to draw up recommendations on the military alliance's new strategic concept, said in an interview with Interfax.

Albright acknowledged that events in one nation can affect the interests of another. "But disagreements should be resolved in accordance with international law - not by the domination of the big over the small. The concept of a 'sphere of interests' is not recognized as a legal principle," she said.

"NATO does not accept the idea of a geographically distinct 'sphere of interests.' Like other countries, NATO members can be affected by developments in almost any region; this is simply a fact of life in the 21st century. That is why NATO places such a strong

emphasis on its partnerships and on cooperating with organizations such as the UN, the EU, and the OSCE," Albright said.

"NATO recognizes that a high degree of international cooperation will be required to maintain stability in a world where potential dangers are quick to arise, highly mobile, and hard to foresee," Albright said.

"NATO has developed partnerships with countries in Central Asia and the Caucasus to deal with common security challenges such as terrorism and drug-trafficking and has enlisted their assistance in efforts to stabilize Afghanistan. All of these efforts serve Russian interests as well," she said.

Asked whether NATO's area of responsibility could go beyond the territory of its member states', Albright answered, "In my view, NATO's core responsibility is to defend the territory of its members."

"The alliance does acknowledge that threats to its members and to world peace can emerge without warning and from diverse places around the globe. Accordingly, NATO works with its many partners to help countries defend against terrorism, piracy, organized crime, and sabotage," she said.

Albright emphasized that her interview reflects only her personal opinions, and in no way should be viewed as the opinion of the NATO group or the U.S. administration.

February 09, 2010

Interfax: Madeleine Albright: NATO does not accept idea of geographically distinct ‘sphere of interests‘http://www.interfax.com/interview.asp?id=146158

Former U.S. Secretary of State Madeleine Albright arrived in Russia on February 9 as the head of a NATO group consisting of 12 prominent experts. The group will advise the NATO secretary-general on the alliance‘s new strategic concept. Before leaving for Moscow, Albright gave an interview to Interfax’s Washington correspondent Peter Cheremushkin. The following interview reflects Dr. Albright’s personal opinions, which do not represent the NATO Group’s views or conclusions.

Question: In 2008 you published a book “The Agenda for the Future President”. At this time we are exactly one year after the new president took the office. How much he is following your advice and what is your assessment of the first year of President Obama?Answer: As I emphasized in my book, President Obama inherited a long list of problems from his predecessor. During the first year of his administration, he showed a willingness to work cooperatively with Russia and others in the world community to address such challenges as the international financial crisis, conflicts in Iraq and Afghanistan, the threat posed by terrorist groups, nuclear non-proliferation, and climate change. Although unafraid to lead, President Obama has also been a good listener, and has shown respect for the interests and views of other countries. He has improved America’s global

reputation, and I expect that he will continue to pursue principled, yet pragmatic, policies in an effort to enhance world stability, prosperity and peace.Q.: How do you view the evolution of NATO? Where in the future of NATO the more emphasis will taken on political, or on military component?A.: As Chair of NATO’s Group of Experts, I have a strong interest in these questions. In May, the Group of Experts will make recommendations to NATO’s Secretary General concerning a new strategic concept for the alliance. Members of the group are visiting Russia as part of a listening process, to gather different ideas and hear various points of view. We are not yet ready to offer conclusions and any ideas I express during my visit will be entirely my own.With respect to your questions, I can say that NATO is a defensive alliance committed to protecting its members from external threats. In the modern era, such threats are more varied, dispersed, and unpredictable than in earlier decades. Thus, to achieve its mission, NATO has adapted both militarily and politically. Because most international security problems cannot be solved through military means alone, it is important for NATO to have the support and trust of people outside the alliance. To this end, NATO will continue to maintain partnerships with key international organizations and a wide range of countries – including Russia. These partnerships provide a regular means for political consultation on security issues and thereby serve the interests of the entire world community in stability, peace and the rule of law.Q.: Do you think NATO will extend its sphere of responsibility beyond the national borders of the member-countries?A.: In my view, NATO’s core responsibility is to defend the territory of its members. The alliance does acknowledge that threats to its members and to world peace can emerge without warning and from diverse places around the globe. Accordingly, NATO works with its many partners to help countries defend against terrorism, piracy, organized crime, and sabotage. Current examples include its assistance to the government of Afghanistan and its support for maritime security off the east coast of Africa. Russia supports both of these objectives.Q.: Does NATO include Central Asia and Caspian Sea into the sphere of its interests?A.: NATO does not accept the idea of a geographically distinct ‘sphere of interests’. Like other countries, NATO members can be affected by developments in almost any region; this is simply a fact of life in the twenty-first century. That is why NATO places such a strong emphasis on its partnerships and on cooperating with organizations such as the UN, the EU, and the OSCE. NATO recognizes that a high degree of international cooperation will be required to maintain stability in a world where potential dangers are quick to arise, highly mobile, and hard to foresee. NATO has developed partnerships with countries in Central Asia and the Caucasus to deal with common security challenges such as terrorism and drug-trafficking and has enlisted their assistance in efforts to stabilize Afghanistan. All of these efforts serve Russian interests as well.Q.: There was an idea to spread Chapter 5 of NATO Charter into the energy field. Namely if one country is under the threat of limitations of energy supply Chapter 5 could be used? What do you think about that?A.: To my knowledge, there are no plans to amend Article 5 of the North Atlantic Treaty, which commits members to mutual defense in the face of an armed attack. The question of how to interpret that article in light of new threats can only be made by members of the

alliance in response to particular circumstances. Certainly, a situation in which crucial oil and gas pipelines were destroyed by terrorists or by other hostile forces would be a matter of concern to the entire international community.Q.: How do you view the future of the adapted CFE Treaty?A.: For two decades, the CFE Treaty has been a cornerstone of stability, transparency, and confidence-building in Europe. As Secretary of State Clinton noted in her recent speech in Paris, this valuable regime is in danger of crumbling. I agree with her that the United States should renew efforts with its NATO allies, Russia, and other signatory countries to agree on “a modern security framework that takes into account developments in Europe since the original treaty was drafted, limits military deployments, and strengthens the principles of territorial integrity, non-first use of force, [and] the right of host countries to consent to stationing foreign troops in their territory.”Q.: How much Russia has changed domestically and how much its foreign policy changed compared to the times, when you were the Secretary of State?A.: Compared to a decade ago, Russia is more assertive on the world stage. This reflects an improved economy and a desire by Russian leaders to ensure that their perspective on global affairs is forcefully articulated and clearly understood. At the same time, political power within Russia has become more centralized. These changes have significant consequences, but do not necessarily diminish the potential for cooperation between Russia and the United States on matters of mutual concern.Q.: Do you believe that the countries of the former Soviet Union can be treated as the sphere of the ‘vital interests of Russia’?A.: I do not. No country should be treated as if it were merely within the ‘sphere of interest’ of another. Russia’s neighbors are independent and sovereign, as are other countries. Obviously, events in one nation can affect the interests of another, but disagreements should be resolved in accordance with international law – not by the domination of the big over the small. The concept of a ‘sphere of interests’ is not recognized as a legal principle.Q.: What is your view on the bringing of the NATO military infrastructure closer to Russia? And do you expect the continuing NATO expansion to Georgia, Ukraine and Azerbaijan?A.: The United States and Russia have both recognized the principle that nations are entitled to make their own decisions about whether or not to join an alliance. In the same way, alliances are entitled to establish criteria for membership. NATO continues to pursue an open door policy, but I cannot predict with certainty how quickly that process will unfold with respect to particular countries. The NATO-Russia Council is a good vehicle for exchanging views on such matters as military infrastructure and armed forces’ training exercises.Q.: Will NATO include Russia as one of the potential threats?A.: In a speech in Moscow this past December, NATO Secretary General Rasmussen said that: “NATO will never attack Russia. Never. And we do not think Russia will attack NATO. We have stopped worrying about that and Russia should stop worrying about that as well.”The Secretary General went on to say that “if we can build real trust and confidence in the relationship between Russia and NATO, then Russia can stop worrying about a menace from the West that simply doesn’t exist.”

NATO members believe that they are threatened by many of the same lawless forces that threaten Russia, including terrorism, violent extremism, and the spread of nuclear weapons. That is why the alliance has invited Russia to work cooperatively to confront and defeat these dangers.Q.: What Russia can do to improve its relations with NATO?

A.: Both Russia and NATO deserve credit for an enhanced dialogue and for showing a willingness in recent months to listen carefully to what the other has to say. The more Russia accepts the sincerity of NATO’s desire to work together on shared challenges, the more productive our partnership will be. I think we have a genuine opportunity to build a significantly improved relationship rooted in cooperation on common concerns.

MID.ru: Russian MFA Spokesman Andrei Nesterenko Response to Media Query on NATO Secretary General Anders Fogh Rasmussen’s Critical Remarks About the New Military Doctrine of Russia http://www.ln.mid.ru/brp_4.nsf/e78a48070f128a7b43256999005bcbb3/d57ee937f690a54fc32576c5005e4c7a?OpenDocument

139-09-02-2010

Question: According to reports, NATO Secretary General Anders Fogh Rasmussen has spoken critically of Russia’s new Military Doctrine, approved on February 5 by President Dmitry Medvedev. Was this issue discussed during the bilateral meeting between Sergey Lavrov and Rasmussen on the sidelines of the 46th Munich Security Conference?

Answer: During the bilateral meeting between Sergey Lavrov and Anders Fogh Rasmussen on February 6 this issue was indeed discussed. The Minister drew the NATO Secretary General’s attention to the relevant formulations of the new Military Doctrine indicating that it is not NATO per se that creates risks to the security of our country, but the “desire to endow the power potential of the North Atlantic Treaty Organization with global functions that are realized in contravention of international law, to bring the military infrastructure of NATO member countries closer to Russian borders, including by expanding the bloc,” as well as the “creation and deployment of strategic missile defense systems that undermine global stability and upset the established balance of power in the nuclear-missile sphere, as well as militarization of outer space and deployment of strategic high-precision nonnuclear weapon systems.” In addition, the Doctrine clearly states that one of Russia’s principal tasks in containing and preventing military conflicts is to develop relations with the European Union and NATO.

Apparently, the NATO Secretary General had little time to grasp the essence of the relevant provisions of the new Military Doctrine of our country. Russia has consistently shown transparency in the discussion at the Russia-NATO Council (RNC) of strategic doctrinal documents. Thus, at the RNC meeting in Brussels on July 22, 2009 Deputy Secretary of the Russian Security Council Vladimir Nazarov presented the main content and key provisions of the National Security Strategy of Russia to 2020.

We stand ready to continue such dialogue, and to give the necessary explanations in the RNC on our new Military Doctrine.

February 9, 2010

MID.ru: Russian MFA Spokesman Andrei Nesterenko Interview to RIA Novosti on the Upcoming Visit to Cuba by Russian Minister of Foreign Affairs Sergey Lavrovhttp://www.ln.mid.ru/brp_4.nsf/e78a48070f128a7b43256999005bcbb3/6fd1a8360cef402cc32576c600256a3b?OpenDocument

141-09-02-2010

Question: Russian Minister of Foreign Affairs Sergey Lavrov will visit Cuba soon. What is the program of the visit?

Answer: Minister of Foreign Affairs of the Russian Federation, Sergey Lavrov, will pay an official visit to Cuba on February 11-13. He will also head up a representative cross-sector delegation at the opening ceremony for the XIX Havana International Book Fair where Russia will participate as the country guest of honor.

Scheduled are the meetings and conversations of our minister with representatives of the Cuban leadership, and talks with Cuban Foreign Minister Bruno Rodriguez, to exchange views on topical issues of the international, regional and bilateral agenda. The visit is intended to ensure maintaining an intensive political interaction and facilitate enhancing bilateral relations in various fields.

Following the talks the ministers plan to sign Joint Statements on the occasion of the 50th anniversary of the re-establishment of diplomatic relations between our countries and on the inadmissibility of a revision of the results of the Second World War, as well as a Plan for Political Consultations between the Foreign Ministries of Russia and Cuba for 2010-2011.

Question: How do you assess the current level of Russian-Cuban relations?

Answer: Russia regards Cuba as a key partner in the Latin American region. Efforts by both sides aim primarily to consolidate the strategic nature of the Russian-Cuban partnership in line with the agreements reached during the Russia-Cuba leaders’ meetings in Havana and Moscow in recent years.

Regular and confidential is the bilateral political dialogue, including at high and highest levels. A firm foundation for this is the similarity or identity of our countries’ positions on most key issues of our time, which allows us to closely collaborate in their solution within the UN and other international organizations.

Inter-parliamentary exchanges are actively conducted; ties between heads of various departments are maintained; and the practice of inter-foreign ministry consultation on a wide range of issues is established.

Our country has consistently advocated normalizing the situation surrounding Cuba, and that it should be fully reintegrated into regional and global processes. Russia annually supports at UN General Assembly sessions a resolution entitled “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba,” and adheres to the line on the inadmissibility of the use of unilateral extraterritorial measures in international relations.

Question: What are the main directions of foreign policy interaction between Russia and Cuba?

Answer: Russia and Cuba firmly adhere to the principles of international law and the Charter of the United Nations, and champion a stronger central role for the world body as a universal instrument for the maintenance of peace and conflict resolution. Also consonant are the parties' positions on major human rights issues, and many aspects of the process of disarmament and nonproliferation.

Moscow and Havana are interested in the continuation of effective cooperation for countering the new challenges and threats, primarily international terrorism, drug trafficking, arms smuggling, and transnational organized crime.

In conditions of global economic turbulence, our countries pay more attention to the problems of transforming international economic relations, constructing a new, balanced financial architecture in the interests of all states and to ensure sustainable development and advocate imparting to the process of globalization social orientation.

Question: How are bilateral relations with Cuba developing in the trade, economic, cultural and humanitarian spheres?

Answer: In addition to examining the tasks in capacity building for political interaction, the talks will feature themes of deepening and diversification of Russian-Cuban trade-and-economic and financial-and-investment ties and promotion of large joint cooperation projects in the fields of electricity, hydrocarbons, transport infrastructure, biopharmaceuticals and high technology. The bilateral trade turnover of around $260 million objectively does not match the existing potential of our countries. We expect the situation to improve after a successful meeting between the co-chairs of the Russia-Cuba Intergovernmental Commission for Commercial, Economic and Scientific-Technical Collaboration (Moscow, January 25-27), the tenth regular session of which will be held in Havana in April.

An important role in bilateral relations belongs to cooperation in the cultural and humanitarian sphere. It is planned to send up to 100,000 tons of Russian wheat in gratuitous aid to Cuba this year (the first shipment of 25,000 tons is scheduled for the first half of February).

In addition to the special status of Russia's representation at the Book Fair, our country has received an invitation to participate as a guest of honor in the Fit Cuba 2010 Tourism International Fair, the 30th such fair to be held this upcoming May. Some 40,000 Russian tourists visit the island annually, whose number is constantly increasing. The practice has been reopened of sending Cuban citizens to Russian tertiary education institutions to study under the Russian government scholarship program.

February 9, 2010

Itar-Tass: Gazprom ready to invest in Ukraine gas transportation network

http://www.itar-tass.com/eng/level2.html?NewsID=14805837&PageNum=0

10.02.2010, 00.53

LONDON, February 10 (Itar-Tass) -- Russia’s gas monopoly Gazprom is ready to consider possible investments in Ukraine’s gas transportation network, Gazprom Deputy CEO Alexander Medvedev told a news conference on Tuesday.

He arrived in the United Kingdom to meet with representatives of the country’s business community.

During the news conference Medvedev was asked to comment on mass media reports that Viktor Yanukovich, who according to preliminary information won the presidential election in Ukraine, has suggested Russia to take part in the upgrading of the Ukrainian gas transportation network.

The Gazprom deputy CEO said that he knew nothing of such Yanukovich’s proposals. At the same time, Medvedev stated that the Russian gas giant is ready to consider possible investments in the Ukrainian gas transportation network.

In his words, any possible investments of the kind cannot put off Gazprom’s plans pertaining to the construction of the South Stream gas pipeline.

The Korea Herald: 'Korea, Russia on same page over N.K.'

http://www.koreaherald.co.kr/NEWKHSITE/data/html_dir/2010/02/11/201002110037.asp

South Korea and Russia are on the same page regarding North Korea's nuclear program and the United Nations sanctions on the impoverished state, said Lee Youn-ho, Seoul's newly appointed ambassador to Russia.

"Seoul and Moscow have no differences on the North Korean nuclear issue," Lee told reporters here yesterday.

"I have not confirmed Russia's official position on the North's demand to negotiate a peace treaty prior to denuclearization, but I believe they will share our view that progress in the North's denuclearization must come first."

Pyongyang said last month that it will return to the six-nation nuclear talks if the United States agrees to discuss a peace treaty to replace the 1953 Armistice Agreement and removes sanctions on it.

Seoul and Washington maintain that the peace treaty can be discussed only after the North returns to the six-way dialogue and shows progress in denuclearization.

"This year marks the 20th anniversary of diplomatic ties between Korea and Russia, but the two countries still have an underdeveloped relationship," Lee said.

"Our goal is to greatly increase the size of bilateral trade and investment, and strengthen industrial and energy cooperation."

Russian President Dmitry Medvedev is expected to visit Seoul around the G20 summit in November or in September which marks the 20th anniversary of bilateral ties, Lee said.

The former minister of knowledge economy was appointed to his new post late last month and is scheduled to take office in Moscow later this month.

Lee had been involved in a series of energy talks with Russia during his term as the first minister of knowledge economy under the Lee Myung-bak administration.

As for the plan to import Russian natural gas through a North Korean pipeline, there hasn't been much development due to the strained inter-Korean relations, the ambassador said.

"Russia has contacted the North about the piped natural gas project, but there has been no response from the North," he said.

"Seoul is conducting a feasibility study on both the pipeline plan and importing liquefied natural gas directly from Russia by ship."

(sophie@heraldm.com)

By Kim So-hyun

Itar-Tass: N Korean-Russian accord remains basic interstate document – Korean ForMin

http://www.itar-tass.com/eng/level2.html?NewsID=14805842&PageNum=0

09.02.2010, 23.41

PYONGYANG, February 9 (Itar-Tass) -- The agreement on friendship, neighbourliness and cooperation between North Korea and Russia continues to play a key role in the development of bilateral relations as the basic inter-state document, the Korean Central News Agency said on Tuesday, quoting a message, which was sent by North Korean

Foreign Minister Pak Ui Chun to his Russian counterpart Sergei Lavrov on the occasion of the 10th anniversary of the document.

The North Korean foreign minister expressed confidence that “the traditional relations of friendship and cooperation between the two countries will further develop in all spheres in compliance with the spirit of the agreement.”

On Monday, the North Korean Foreign Ministry organised a party timed to the anniversary.

During the party, deputy Chairman of the North Korean Supreme People’s Assembly (parliament) Yang Hyong Sop stressed, “We plan to promote the traditionally friendly relations between Russia and North Korea in the interests of the two peoples.”

As an example, he reaffirmed that several days ago North Korean Head of State Kim Jong-il personally had watched a new version of Eugene Onegin opera, which was timed to coincide with the 10th anniversary of the agreement.

The North Korean parliamentarian wished every success to Russia, which is North Korea’s friend and neighbour.

In his words, “the Korean army and the people will translate into reality the great plan of the head of state, Kim Jong-il, and open the gates of the powerful and prosperous power in 2012, when North Korea will celebrate centenary of President Kim Il-sung.”

Russian Ambassador to Pyongyang Valery Sukhinin said that the signing of the agreement made it possible to intensify bilateral contacts between the two parliaments, ministries and departments, non-governmental organisations, as well as promote cooperation in the international arena.

He recalled progress in the interaction within the framework of the six-nation talks on the denuclearisation of the Korean Peninsula.

“I hope that such cooperation will be continued up to the final solution of that pressing problem,” the head of the Russian diplomatic mission said.

Reuters: China still stuck with Russia over gas price-reporthttp://in.reuters.com/article/oilRpt/idINTOE61906320100210

Wed Feb 10, 2010 11:18am IST

BEIJING, Feb 10 (Reuters) - China and Russia are still in protracted price negotiations for a tentative gas supply deal, the official China Daily reported on Wednesday, citing a Russian official.

The world's largest natural gas producer signed a gas supply agreement in October 2009 to supply 70 billion cubic metres of natural gas per year to China from Siberia and the Russian Far East, including Sakhalin.

Russian officials said earlier that gas deliveries could begin in 2014 or 2015, and that pricing issues could be decided at the start of 2010.

"The natural gas supply is still under discussion," the China Daily quoted Russia's trade representative in China, Sergey Tsyplakov, as saying. "The two sides are still negotiating prices before any major projects can be launched."

The report cited the official as saying that electrical products, timber, ferrous and nonferrous metals, instead of natural gas, were priorities for cooperation between China and Russia in 2010.

It has been more than three years since the two sides signed a preliminary gas deal. The latest pact last year did not resolved disagreements over pricing and conditions that have so far blocked concrete progress.

Chinese gas demand, although accounting for a small proportion of the country's total energy consumption, has been rising fast and shortages often emerge in cold winters.

Taking advantage of weaker global demand, China has since 2008 landed a series of liquefied natural gas (LNG) deals with exporters like Australia and Qatar, through long-term supply agreements with companies such as Shell (RDSa.L), ExxonMobil (XOM.N) and Total (TOTF.PA).

In mid-December, China and central Asian countries opened their first cross-border natural gas pipeline, able to pump up to 40 billion cubic metres of gas to China by 2012-13.

VladivostokTimes: Joint Project Implementation Fund to Be Created in Russia and Chinese People’s Republichttp://vladivostoktimes.ru/show/?id=47871&p=

According to Victor ISHAYEV, economic crisis has great influence on economic and trade relations between Russia and China

VLADIVOSTOK, February 9, vladivostoktimes.com Special join project Implementation fund, about which the Chairman of constant committee of All-Chinese Union of People’s Representatives U Bango, will be very useful for the economics of both countries, as the RF President Plenipotentiary in the Far Eastern Federal District Victor ISHAYEV reported to journalists in Khabarovsk.

The meeting between the RF President Plenipotentiary in the Far Eastern Federal District and the Chairman of constant committee of All-Chinese Union of People’s

Representatives was held on Friday in Beijing where the President Plenipotentiary arrived on the invitation of the Chinese Ministry of Foreign Affairs. The participants discussed the opportunities of further development of trade and economic, scientific and cultural relations between the region of the Russian Far East and Eastern Siberia and Chinese provinces.

“U Bango offered to create the fund from both party (Chinese and Russian) to realize joint projects. The fund means financing. Also we need to create the mechanism – work structure, which will rule join project” ISHAYEV said.

According the Presidents Plenipotentiary, today Russia and China have all necessary documents signed – high level agreements, collaboration projects between the regions of the Russian Far East and Chinese North-East.

But, according to Victor ISHAYEV, economic crisis has great influence on trade and economic relations of Russia and China. For example, in 2008 cargo turnover between the RF and Chine was 55 billion dollars, in 2009 – 37 billion, it decreased three times. In the Far Eastern region the cargo turnover with China decreased 10% - from 5 billion dollars down to 4,5 billion in 2009.

“The Chinese part in the total volume of foreign investments both in the Far East and whole Russia is about 1%. It shows that we don’t use all opportunities” he said.

According to the President Plenipotentiary, ever Far East territory offered more than ten implied joint projects to Chinese part. For example, in the sphere of wood, oil and gas processing.

“We would like to see the change in export structure, to go from raw materials to well processed products, and we need technologies. Today the Far East realizes some projects – construction of ESPO, selling power energy from Bureyskaya gas and power station to China and China collaborates in fertilizer production. We have agreement on joint projects in geologic exploration and metallurgy” he said.

According to ISHAYEV, the Chinese party is interested in construction of border crossing points, bridges and transport corridors for container transportation, as RIA Novosti reports (www.dv.rian.ru)

Blic: Possibility for larger export to Russia http://english.blic.rs/Economy/6005/Possibility-for-larger-export-to-Russia

D. P. | 10. 02. 2010. - 08:56h

‘Serbian producers have larger possibilities for sale of their goods outside Moscow in the regions of Kaluga, Kursk, Krasnodarsk and Novosibirsk’, Milos Bugarin, President of Serbian Chamber of Commerce said in Moscow yesterday after meeting with Yevgeny Primakov, President of the Russian Chamber of Commerce.

At the meeting the parties agreed about cooperation in bringing in accordance the technical regulations which significantly impede sale of Serbian goods on the Russian market.

The sides also agreed on bilateral recognition of health, veterinary and phytosanitary certificates.

9 February 18:00

Premier.gov.ru: Prime Minister Vladimir Putin chairs a meeting on the Main Guidelines for Government Performance

http://premier.gov.ru/eng/events/news/9347/

Events / Photos / Аудио / Video

“First and foremost, we should focus on the projects designed to overcome technological backwardness and increase labour productivity, as well as on efforts to resolve urgent healthcare and educational issues.”

Vladimir Putin's opening remarks:

Good afternoon,

Ms Golikova, happy birthday! This is a good way to start. I think the rest of our discussion will be festive.

Today we will discuss the Main Guidelines for Government Initiatives. I think we should focus on the goals we must accomplish in the next few years and how to implement these major government initiatives.

Let me remind you that this document formulates our key priorities. It outlines an integral programme for fundamental economic and social transformation and the formation of an innovative, effective and socially oriented development model.

Needless to say, the global crisis has changed our plans considerably, compelling us to concentrate on urgent support for our citizens, the real economy and finances.

In 2009 we spent a handsome 1.2 trillion roubles from the federal budget on anti-crisis measures. These funds were primarily spent to support our citizens and the real economy, as I have just said. Reserve funds were the main source for these expenditures.

At the same time, we had to resort to cutting spending significantly on many items of the budget, which was bound to affect a number of projects outlined in the Main Guidelines for Government Performance. We also had to delay some projects and revise their targets.

Nevertheless, 2009 was not lost for implementing our strategic goals. Our main achievements are that we managed to overcome a decline in production, stabilise the financial system and the real economy and restart growth in GDP.

We have launched programmes promoting healthy lifestyles and have begun introducing an e-government project. Yesterday we discussed regional e-government with regional leaders in detail. We have also considerably updated anti-monopoly legislation and passed a law encouraging energy conservation.

Finally, we have honoured our repeated promises to our citizens and reformed the pension system, thereby substantially increasing revenues for the older generation.

Today, taking into account all we have accomplished, we should define our priorities once again.

We should pay increasing attention to the projects outlined in the Main Guidelines for Government Performance in the mid-term and long-term perspective. First and foremost, we should focus on the projects designed to overcome technological backwardness and increase labour productivity, as well as on efforts to resolve urgent healthcare and educational issues.

Incidentally, all these goals are set forth in the programme for the country's development until 2020. Speaking about specific government initiatives, we should discuss increasing the effectiveness of our spending.

I have just looked at the key figures related to our spending. We will spend 2.9 billion roubles on modernising education and 450 billion roubles on professional education overall. All this money must be spent effectively and pay for modernisation. If we spend more efficiently, we will both ensure that the country will develop successfully in the next decade and substantially reduce the risks caused by global fluctuations.

Implementing these plans requires substantial law-making and organisational efforts. Today we will see whether our federal agencies are ready for this work. No mishaps should be allowed here.

I would like you to remember that our resources are currently limited. We are running a federal budget deficit. Under the circumstances, we must strictly tailor our strategic goals to budget planning and channel as much money as we can into projects outlined in the Main Guidelines for Government Performance. We will base all our decisions when working on the 2011 federal budget on this fact. We are already starting to work on it.

Obviously, this does not preclude anti-crisis measures in the real economy, the labour market and other areas. These programmes will be in place as long as they are required.

Let's start the discussion.

RIA: Large-scale war less possible, but threats remain - Russia's security chief http://en.rian.ru/russia/20100210/157827706.html

02:4210/02/2010

MOSCOW, February 10 (RIA Novosti) - Russia's military policies are aimed at avoiding an arms race and military conflicts, but they should also correspond to real threats which the country faces, Russia's security chief Nikolai Patrushev said in an interview with the Russian government daily.

On February 5, Russian President Dmitry Medvedev announced that he has approved the country's new military doctrine, which allows preventive nuclear strikes against potential aggressors.

The Rossiyskaya Gazeta published on Wednesday the full text of the doctrine.

"The unleashing of a large-scale war is becoming less possible... At the same time, regions, where conflicts are possible, remain," Patrushev told the paper, adding "these conflicts could lead to a war with the use of both ordinary and nuclear weapons."

Among the threats which could destabilize the situation in the world, the Russian security chief named the expansion of NATO, the Iranian nuclear program, and the Israeli-Palestinian conflict.

"We are interested in the settlement of all problems, and it is very important to avoid war," he said.

Patrushev said the new military doctrine demonstrated "Russia's adherence to UN regulations, universally acknowledged principles and norms of international law, our international agreements in the defense, armament and disarmament spheres."

Under the new doctrine, Russia will continue developing and modernizing its nuclear triad, which comprises land-based ballistic missile systems, nuclear-powered submarines equipped with sea-based ballistic missiles, and strategic bombers carrying nuclear bombs and nuclear-capable cruise missiles.

The new military doctrine also aims to transform the Armed Forces into a more effective and mobile military force. Their structures will be "optimized" through the use of combined arms units performing similar tasks.

The previous document was adopted in 2000. It outlined the role of the Russian military in ensuring the defense of the country and, if necessary, preparing for and waging war, although it stressed that the Russian military doctrine is strictly defensive.

MOSCOW, February 10 (RIA Novosti)

RIA: Japanese fishermen to be arrested over shooting incident off South Kurils http://en.rian.ru/world/20100210/157828418.html

05:4910/02/2010

Japan's maritime security authorities have issued arrest warrants for the captains of two Japanese fishing vessels involved in a shooting incident with Russian border guards off the disputed South Kuril islands in January, the Kyodo news agency reported.

The incident took place on January 29, when the Japanese fishing vessels entered Russia's territorial waters off Kunashir Island and ignored warning shots from a Russian helicopter. As a result, the border guards had to open direct fire at the vessels.

The fishing boats returned to their port of Rausu with numerous bullet holes on their hulls. Japan issued an official protest against the border guards' actions, claiming they could have resulted in the loss of life and were completely inappropriate.

However, Russia's Foreign Ministry rejected Japan's complaints, calling them "ungrounded and unacceptable."

The news agency said the arrest warrants were issued after Japanese investigators discovered that GPS navigation systems were shut down on both vessels at the time of the incident and that bullet holes on vessels' hulls were painted over, which means the fishermen were trying to hide their location and the incident itself.

The captains were to be arrested on Wednesday on charges of breaking fishing laws.

Tokyo's continued claim over four South Kuril Islands (Iturup, Kunashir, Shikotan, and Habomai) has so far prevented Russia and Japan from signing a formal peace treaty to end World War II hostilities.

The four southern islands of the chain to the northeast of Japan were annexed by the Soviet Union after World War II.

TOKYO, February 10 (RIA Novosti)

Reuters: Shuttle Endeavour docks with space stationhttp://in.reuters.com/article/worldNews/idINIndia-46048020100210

Wed Feb 10, 2010 11:44am IST

By Chris Baltimore

HOUSTON (Reuters) - The space shuttle Endeavour and its six astronauts arrived at the International Space Station on Tuesday, carrying the station's last two main components.

After lighting up the sky in a predawn launch from its Florida space port on Monday, Endeavour spent most of Tuesday closing in on the station, 215 miles (346 km) above the Earth.

"Tally ho, you're looking very good back there," said Jeffrey Williams, one of five of the station's residents.

"We'll be there soon," said mission specialist Kay Hire.

Commander George Zamka nudged Endeavour into its berth at 11:06 p.m. CST (0506 GMT), as the station soared above the Atlantic Ocean, west of Portugal.

The shuttle carries the station's last connecting hub and a dome-shaped cupola with seven windows to provide the crew with panoramic views outside the station. Endeavour's crew is to install them during three spacewalks during its nine-day station stay.

The modules were built in Italy for NASA and will complete U.S. assembly of the orbital outpost, a $100 billion project of 16 nations that has been under construction since 1998.

Four more shuttle missions remain to deliver cargo platforms, spare parts and experiments before the fleet is retired later this year. Monday's launch was the last scheduled to take place in the dark.

There currently are no U.S. vehicles to replace the shuttles, which began flying in 1981. For the near future, NASA is buying rides to the space station from Russia, which charges $50 million per seat on its Soyuz capsules.

(Editing by Sandra Maler)

RIA: Endeavour shuttle docks with International Space Station http://en.rian.ru/science/20100210/157829369.html

09:3210/02/2010

The NASA Endeavour space shuttle has successfully reached the International Space Station (ISS), NASA said on its website on Wednesday.

The docking took place some 360 km (225 miles) above the northern coast of Spain at 05:06 GMT.

NASA initially planned to launch the shuttle, carrying a crew of six astronauts, on Sunday but liftoff from the Kennedy Space Centre in Florida was postponed to Monday due to bad weather.

"The shuttle and station crews will open hatches and hold the traditional welcome ceremony at 2:04 a.m. [EST, 07:04 GMT] Endeavour's crew will be working with Expedition 22 commander NASA astronaut Jeff Williams and flight engineers cosmonaut Max Suraev, NASA astronaut T.J. Creamer and Japan Aerospace Exploration Agency astronaut Soichi Noguchi," NASA said in a statement.

The STS-130 crew comprises commander George Zamka, pilot Terry Virts and mission specialists Nicholas Patrick, Robert Behnken, Stephen Robinson and Kathryn Hire.

The shuttle will deliver to the space station a third connecting module, the Italian-built Tranquility node and its attached seven-windowed cupola, which will be used as a control room for robotics.

The mission will feature three spacewalks - on February 11, 13 and 16.

Separation from the ISS is scheduled for February 20.

MOSCOW, February 10 (RIA Novosti)

AFP: Russia wants to charge more for rides to space: reporthttp://www.google.com/hostednews/afp/article/ALeqM5hWcqbj-QifFRii5HpgKTCKt_dhpA

(AFP) – 22 hours ago

MOSCOW — Russia, which is set to hold a monopoly on flights to the international space station (ISS), wants to charge more for rides on its Soyuz rocket, the space agency head said Tuesday.

"At a meeting of the space agency chiefs in Tokyo, I want to discuss the maintenance of transport to the station," Roskomos head Anatoly Perminov was quoted by the Interfax news agency as saying.

"We have an agreement until 2012 that Russia will be responsible for this. But after that? Excuse me but the prices should be absolutely different then!"

When NASA retires its long-serving shuttle fleet as planned later this year, the United States and other countries will be wholly dependent on Russia to fly the station's six-man crew to and from orbit.

NASA has signed a deal worth 306 million dollars (224 million euros) with Roskomos for six rides to the ISS in 2012 and 2013, or a charge of 51 million dollars per US astronaut.

But with space now limited aboard the Soyuz rocket, Russia looks set to curb its lucrative space tourism service, for which it had charged cosmos-crazed tycoons 35 million dollars (28 million euros) for the ultimate adventure.

The floating ISS research station was to be closed in 2015 and ditched in ocean like its predecessor the Russian Mir station, but the 16 countries involved are in talks to extend the station's life to 2020.

Copyright © 2010 AFP. All rights reserved. More »

Russia Today: Russian space agency to dictate termshttp://rt.com/Top_News/2010-02-10/iss-roskosmos-manned-programme.html/print

10 February, 2010, 05:39

Russia is planning to raise the price it charges for taking foreign crew members aboard it's Soyuz rockets to the International Space Station – according to the head of the Russian Space agency Roskosmos.

The announcement comes as NASA prepares to shut down its space shuttle programme by the end of this year.

NASA and Roskosmos had signed an agreement worth over $US 300 million for six trips to the ISS in 2012 and 2013.

Space entrepreneur Jeffrey Manber says the U.S. space programme will soon depend on Russia because of the Bush administration's policies.

“It is really because the Bush administration said ‘we are going to end the space shuttle fleet, we are going to retire it’, said Manber.

“Today we’re in the situation that in order to keep the price down, as some have been arguing, we must bring the Chinese [into the ISS], who also have a manned programme. In this case there is going to be some competition,” said Manber.

He added that “it is going to be a very difficult time for America when the shuttle retires. We won’t be number one, we won’t be leaders in space and Russia will be sending the cargo ships, 90% of them, and completely in charge of the manned programme.”

Defpro: Sukhoi PAK FA: First Observationshttp://www.defpro.com/daily/details/505/

Part 1 of a comprehensive overview on Sukhoi’s ambitious 5th generation fighter

06:51 GMT, February 10, 2010 On 29 January 2010, the Sukhoi PAK-FA (Perspektivnyi Aviatsionnyi Kompleks Frontovoi Aviatsy, literally "Future Front line Aircraft System"), which could variously be described as a technology demonstrator, the first prototype of the future T-50 fighter, or an intermediate step between the two, took to the air for the first time from the freezing runway of Dzemgi Air Force Base (shared with the KnAAPO plant) at Komsomolsk-on-Amur in the Russian Far East Siberia (see also http://www.defpro.com/daily/details/497/). A fundamental step has at last been accomplished in the development of the long-expected Russian response to the American F-22 RAPTOR air dominance fighter.

The aircraft, with Sukhoi test pilot Sergey Bogdan in the cockpit, remained airborne for 47 minutes, enabling an initial evaluation of its controllability, engine performance and primary systems operation, including retraction and extraction of the landing gear. “The aircraft performed excellently at all flight-test points. It is easy and comfortable to pilot”, said Sergey Bogdan.

“Today we’ve embarked on an extensive flight test programme of the 5th generation fighter,” commented Mikhail Pogosyan, Sukhoi Company Director General. “This is a great success of both Russian science and design school. This achievement rests upon a cooperation team comprised of more than a hundred of our suppliers and strategic partners. The PAK FA programme advances Russian aeronautics together with allied industries to an entirely new technological level. These aircraft, together with upgraded 4th generation fighters will define Russian Air Force potential for the next decades.

“Sukhoi plans to further elaborate on the PAK FA programme which will involve our Indian partners”, Mr Pogosyan added. “I am strongly convinced that our joint project will excel its Western rivals in cost-effectiveness and will not only allow strengthening the defence power of Russian and Indian Air Forces, but also gain a significant share of the world market”.

Some Russian sources have suggested that the T-50 will enter service in 2015, but this is but wishful thinking. Only another flyable PAK FA prototype and a ground test item exist thus far, while Sukhoi has indicated they will complete five prototypes for initial testing. These are scheduled for completion in 2011-12, with the company expecting to then produce an initial batch of pre-series aircraft for operational trials by 2015. A more credible projected IOC date for the T-50 would thus be towards the end of the decade - i.e. some 12-15 years after the F-22. Such a delay would be roughly in line when not with the scientific and technological potential of the Russian aerospace industry, then certainly with the Russian MoD’s financial muscle and the irredeemable time loss of the “black years” following the collapse of the USSR. There are persistent rumours of the PAK FA programme being largely financed directly by Sukhoi (some 75%, with the remaining 25% being provided by India), and in any case it is quite obvious that it could only progress thanks to the substantial revenues from export sales of Su-27/-30s.

Much has already been written and speculated about this first Russian 5th combat aircraft, but virtually nothing is known for certain. The few photos and the couple of

videos documenting the first flight are all that is available for a first assessment of the aircraft’s characteristics, analysing its overall external configuration and trying to deduct the Russian Air Force’s requirements on which the PAK FA design can be assumed to be tailored.

Operational Considerations

As expected, the twin-engine PAK FA is a large aircraft, with roughly the same physical size and weight class as the Su-27/-30 family it is aimed to replace. The aircraft’s general configuration strongly suggests a design optimised primarily for the air superiority role, even though the T-50 will almost certainly eventually go along the same road as the Su-27 and evolve into a very capable multirole fighter-bomber. This emphasis on air-to-air combat is arguably due to both the Russian Air Force perceiving its main roles in a very different way than the USAF, and the fact that the Service’s deep strike requirements are satisfactorily covered by the very capable (although admittedly not stealthy) Su-34s currently being delivered.

Even though it is nearly automatic to think of the PAK FA/T-50 in terms of a direct confrontation vs. the F-22, and this may indeed have been the original goal when the programme was first launched in the late 1980s, in the current global strategic scenario it is perhaps more likely that the Russians are rather interested in maintaining an air superiority edge over China’s current J-11s/SU-27s/-30s and future J-12. Also, the expected future worldwide usage of the F-35 JSF attack aircraft with its low observability qualities requires an interceptor capable to deal with this peculiar threat.

Further considerations can be done as regards the expected future place of the T-50 in the Russian Air Force’s inventory, and thus the overall combat aircraft programmes in Russia. When first information on the PAK FA project started to circulate, the programme was widely reported to be intended to replace both the Su-27 and the MiG-29, thus leading to a single-type combat aircraft fleet not unlike the French Air Force’s with its RAFALE. Whether this was purely “disinformacija”, or the Russians were actually planning in that direction back then, it is impossible to ascertain. The fact is, the T-50 given its size and expected avionics complexity will most definitely be an expensive aircraft both to procure and operate, and it is very difficult to imagine how the Russian Air Force could ever be able to acquire it in large number - not to mention the type, for all of Mr Pogosyan’s rosy forecast, having a rather limited potential export market. Current Western and unofficial Russian estimates are of a production run of some 250 aircraft for the Russian Air Force, and even this may prove to be overoptimistic. The combination of the T-50 as the spearhead of a tactical combat fleet composed largely by modernised 4th generation types, as suggested by Mr. Pogosyan, does certainly make sense - but it is rather doubtful whether it could really last for “decades”, apart from the Su-35. Also, the upgrade programmes currently underway do not involve the MiG-29.

Hence, and although the notion of the Russian MoD and national industry being able to sustain the simultaneous development and eventual procurement of t w o different 5th

generation fighters does admittedly defy imagination, the eventual launch of a programme for a smaller and less expensive “lo” fighter in a “hi/lo” mix with the T-50 looks virtually compulsory. Failing to do so would leave the Russian Air Force critically crippled in quantitative terms, and would consign the future export market for “affordable” fighter aircraft to Western and Chinese designs.

>> Part 2 of the article will be published on Thursday, 11 February 2010.

The Georgian Daily: Moscow Writers Mistaken in Treating North Caucasus Separately from Russia, KBR Scholar Sayshttp://georgiandaily.com/index.php?option=com_content&task=view&id=16944&Itemid=72

February 09, 2010

Paul Goble

Moscow writers, including some of the most distinguished, either do not understand or do not want to understand that “the problems of the Caucasus are part of what is taking place in Russia and with Russia and that their resolution must be sought in the general context of the development of the country,” according to a Kabardinian academic.

In an article in “Kabardino-Balkarskaya Pravda,” Khazhismel Tkhagapsoyev, a professor at Kabardino-Balkaria State University, charges that for good motives and bad many journalists and academic specialists in the Russian capital have treated the North Caucasus in ways that many in the West would label as orientalist (www.kbpravda.ru/2010/02/06.pdf).

That is, they have ascribed to the residents of the North Caucasus special qualities which explain what is going on there entirely apart from what has been taking place more generally in the Russian Federation and in the international community, including the world of Islam, over the last two decades.

The occasion for Tkhagapsoyev’s anger was a recent conference in Prielbrus on “Social-Political Stability in the Russian Caucasus: The Ethno-Confessional Dimension.” On the one hand, he expresses concern that the meeting which attracted some of the most notable Moscow scholars did not include any people from the region being discussed.

And on the other, he takes the strongest exception to the conclusions offered at that meeting on Islam in the North Caucasus by Aleksey Malashenko of the Moscow Carnegie Center, a scholar whose expertise on Islamic issues in general Tkhagapsoyev acknowledges and respects.

Much that Malashenko said in Prielbrus, the Karbardinian scholar admits, was absolutely true, especially the former’s statement that what is now being written about the role of

Islam in the North Caucasus “lacks objectivity” because it is “politicized and ideologized.” Unfortunately, Tkhagapsoyev argued, Malashenko is guilty of that himself.

In fact, the Kabardinian scholar says, Malashenko was guilty of “the worst form” of this scientific crime: he imposed on reality a ready-made theoretical structure without considering whether the basic propositions of his theory were in fact true. As a result, whether he intended it or not, Malashenko mislead his readers.

Among the propositions which Malashenko advanced, Tkhagapsoyev says, included the ideas that “in the region a systemic Islamic opposition exists,” that “the opposition follows that political course which is called the Islamic call for reconstructing all life according to the canons of Islam,” and that this “call” has more support than do the powers that be.

“But,” Tkhagapsoyev argues, “who showed that these ‘postulates’ are true?” And he continued that together with these ideas, Malashenko constantly referred to “the return of the Caucasus to its own archaic traditions, to an Islamic way of life,” as if the North Caucasus existed independently from the rest of Russia and the world.

“Why,” the Kabardinian scholar asks, is not a word said about ‘the first causes’ of the current Caucasus problems – namely about the former strategy of ‘take as much sovereignty as you can swallow’ [a reference to Boris Yeltsin’s calls in the early 1990s] and about the terrifying de-modernization of Russia” during that decade?

Why, he asks again, did Malashenko not talk “about the clericalization of the Russian population and about the special role of the Russian Orthodox Church in the political practice of the country?” Those trends help to explain what is going on in the North Caucasus without the need to impute some kind of special character to “persons of Caucasus nationality.”

But Malashenko not only ignored the way in which common Russian developments affected the region, Tkhagapsoyev continues; he insisted that other external factors did not have an influence on developments there, thus forcing one to conclude that there was something unique about the people in that region.

And thus a scholar who should have known better promoted the picture of “the wild Caucasus” which supports “in Russian mass consciousness” the notion of “a person of Caucasus nationality.” The only problem, the Kabardinian scholar argues, is that “no one in the Caucasus knows this person” – because he does not exist in reality.

”The residents of the Caucasus on human measures are exactly the same as the residents of any other region of Russia,” Tkhagapsoyev insists, and consequently, Moscow will only be able to solve their problems when it addresses the problems of the country as a whole, a very different direction than the one in which Malashenko has pointed the authorities.

Tragically, the Kabardinian scholar concludes, anyone who learns how to talk about the North Caucasus using words like “clans,” “taips,” “traditions,” and “Islam” “already sees himself as a specialist” on that region and is seen as a specialist by others outside the region if seldom within it.

And that in turn has the following consequence, Tkhagapsoyev says, “the missionary knights from political science and journalists passionately call to the federal powers that be with the words: ‘Listen to us and only to us –and you will save the Caucasus!’” But that will not be the case, the Kabardinian scholar lamented.

It is time for everyone to recognize, including the most distinguished scholars and journalists in Moscow, that the problems of the Caucasus are part and parcel of the problems of Russia and that the problems of both will only be solved if they are addressed together rather than treated as two entirely different things.

LA Times: Can Medvedev emulate Gorbachev?http://www.latimes.com/news/opinion/la-oe-aron10-2010feb10,0,7122634.story?track=rss

The odds don't look good. The Russian president has repudiated key tenets of Putinism, but Putin is ignoring him.By Leon Aron

February 10, 2010

The security of the United States continues to be tied to decisions in Moscow, as evidenced by President Obama's touting of the pending strategic arms-control agreement with Russia in his State of the Union address. And those decisions, in turn, will hinge on Russian domestic politics. The central question is whether President Dmitry Medvedev's increasingly radical rhetoric will begin to translate into policies that would spell a decisive break with those of his predecessor and current prime minister, Vladimir Putin.

Could 2010 become Medvedev's equivalent of Mikhail Gorbachev's 1987 -- the year when, also after only two years in the Kremlin and against very strong opposition by hard-liners, Gorbachev began lifting totalitarian controls over politics by declaring glasnost and democratization?

Like Gorbachev in 1987, Medvedev faces tough odds. His speeches are still contaminated by the bluster and outright propaganda lies of Putinism. Moreover, unlike Gorbachev -- who had the awesome power of the office of the Communist Party's general secretary -- Medvedev's authority still appears to be on loan from Putin. It's as if Gorbachev had ruled with Leonid Brezhnev watching over him.

And yet, just as unmistakably, in the last few months, Russia's president has not only dissociated himself from key tenets of Putinism but challenged and repudiated them, in effect chipping away at the legitimacy of the political and economic order he inherited.

Medvedev's critique was especially pointed and concentrated in his September article, "Rossiya, vperyod!" ("Russia, forward!"), posted on the opposition Web daily Gazeta.ru -- and more or less reprised, alongside propaganda cliches, in a November address to the Russian parliament.

Medvedev described the Russian economy as "chronically backward," "primitive" and dependent on raw-materials exports. The system "largely ignores" the needs of people, while businesses are averse to inventing or manufacturing things and, instead, trade in commodities and imported goods. The competitiveness of Russian-made goods in world markets is "shamefully" low. Labor productivity is meager as well, as is the quality of "half-Soviet" social services.

Corruption is ubiquitous, Medvedev goes on to say, and people are all but defenseless against "arbitrariness, non-freedom and the disdain"for the law and the courts that corruption breeds. The wide-spread "paternalistic sentiments" result in a lack of initiative and a dearth of new ideas in an "archaic society" where the "bigwigs" think and decide for everyone.

Medvedev also has called for an end of the era of "petulance, haughtiness, the inferiority complex, mistrust and hostility" in relations with leading democracies, and advocates reversing Russia's confrontation and self-isolation.

Yet the Russian president's most portentous, if little noticed, rhetorical break with Putinism goes to the issue of modernization. His statements amount to a rejection of Putin's choices. First, he wrote that oil and gas, in effect, cannot be the cornerstones and engines of lasting prosperity and progress. A truly great modern state cannot be built on petrodollars. Instead, Medvedev reiterated in the November speech, Russia must develop an "intelligent," knowledge-based economy. He also rejected the "classic" model of Russian economic modernization in which -- from Peter the Great to Stalin (with Putin as their proud heir) -- industrial breakthroughs have been accompanied by an ever greater expansion of state control over society.

In perhaps his most impassioned posting -- an Oct. 30 video titled "The memory of national tragedies is as sacred as the memory of triumphs" on Medvedev's personal blog -- he castigated the creeping whitewash of Stalin and Stalinism under Putin by declaring that no "state interests" could justify the "destruction of their own people" and "millions of ruined lives."

Instead, the modernization Medvedev envisions would be founded on humanistic values, on freedom, personal responsibility and individual success, according to the post. Russia must prove to itself and the world, he declared in the November speech, that the country can succeed in a different mode of modernization: not by coercion but persuasion, not by repression but by the flowering of each person's creativity, not by fear but by self-interest. Perhaps the most frequent words in his recent speeches and blog postings are svoboda and svobodnyi -- "freedom" and "free."

In the meantime, Putin's reaction (and the entire "setup" between the two) remains the $1-million question. Is it a "good-cop/bad-cop" routine to assuage the people until Putin regains the presidency in 2012? Is it indicative of the elite understanding that the "power-vertical model" -- that is, the Kremlin's domination of the country's politics and, increasingly, the economy -- has run its course and very gradual liberalization is needed to reignite private initiative as the engine of economic growth?

No one but Putin knows the answer.

Thus far, Putin -- who continues to be far more popular with the people than Medvedev -- has chosen the political textbook strategy of ignoring his junior partner's critiques. He never takes on his protege directly, publicly upholding the facade of unanimity. Yet Putin's de-facto refutations, in deed or word, come fast.

Thus, when Medvedev and his top advisors in June intimated Russia's imminent entrance into the World Trade Organization, Putin announced within days that Russia would not join except as a member of the Russia-Belarus-Kazakhstan "Customs Union" -- that is, not in a foreseeable future. And on the same day that Medvedev posted the "Russia, forward!" article, Putin described Russian politics and the economy to a group of journalists and experts as "fully in line with international standards."

Such rhetorical shadowboxing cannot continue indefinitely. Like Gorbachev, Medvedev will soon discover that no progress -- economic, political, social -- is possible without restoring a modicum of trust between the state and society, the power and the people.

This will not be an easy task. The most damaging legacy of Putinism has been the pervasive cynicism born of daily powerlessness amid lies, corruption and cruelty. The reaction of the Russian independent media (confined largely to the Internet) to Medvedev's rhetorical offensive epitomizes this attitude: Cautiously hopeful comments have been more than counterbalanced by skepticism or even outright dismissal and derision because of the glaring mismatch between words and deeds.

What might some Medvedev deeds include? Gorbachev began by releasing Andrei Sakharov from exile in Gorky in December 1986. Medvedev's equivalents might include an unconditional pardon for the former leading Russian entrepreneur Mikhail Khodorkovsky, who is facing a kangaroo court's sentence of up to 22 years in jail. The murderers of the opposition journalist Anna Politkovskaya in 2006 need to be brought to justice, and the masterminds (not just those who carried out the order) tried in open courts.

There should be an investigation of the shamelessly fraudulent local "elections" in October; a follow-up on the promise made in the state-of-Russia speech to audit (and eventually privatize) state corporations -- created by Putin with Gazprom and Rosneft as his models, and widely believed to be hubs of corruption and mismanagement. Medvedev should, at long last, conduct a credible and full investigation into the 1999 apartment bombings that critics allege were engineered by the secret services to justify the invasion

of Chechnya and boost Putin's popularity.

And perhaps most important, he should relax and eventually abolish the Kremlin censorship of television, enabling Russians to learn the truth about the real state of affairs.

If Medvedev is indeed determined to follow in Gorbachev's footsteps, his rhetoric must be a prologue to actions. In 2010, his glasnost must be followed by perestroika policies -- or he will fade into irrelevance.

Leon Aron, resident scholar and director of Russian studies at the American Enterprise Institute, is the author, most recently, of "Russia's Revolution: Essays 1989-2006."

Itar-Tass: SKP chief calls for jury trial moratorium in North Caucasus

http://www.itar-tass.com/eng/level2.html?NewsID=14805830&PageNum=0

10.02.2010, 05.56

MOSCOW, February 10 (Itar-Tass) - Chairman of the Investigations Committee under the Prosecutor General's Office Alexander Bastrykin called for a temporary moratorium on jury trials in the North Caucasus.

"When jury trials were launched in 1993, it was believed that the direct participation of citizens - who are not professional lawyers - will be an effective means of democratization of criminal proceedings, a guarantee that the presumption of innocence principle is observed in the passing of verdicts," Bastrykin said in an interview carried by the newspaper Rossiiskaya Gazeta on Wednesday.

"At the same time, a necessary condition of the effective work by jury panels is the high level of the legal culture and civil responsibility of the judges selected from among ordinary people.

"Such trials cannot turn into domestic chat-ins, and the jury cannot hand down its verdicts under the principle of whom they like better - the prosecutor of the lawyer, or whether or not they pity the defendant.

"This can undermine the objective of criminal proceedings and become a means of criminals' avoiding the punishment they deserve.

"Such trends clearly manifested themselves in the North Caucasus in 2008-2009. The verdicts passed by jurors in certain cases not only raised serious doubts about their impartiality, but also were obviously wrong.

"(This happened) even in case of direct and obvious proofs, since jurors are selected from several local clans, and in accordance with the local custom, they are often afraid of passing a guilty verdict for the people who have not harmed them in any way.

"This leads to the defamation of the judicial authorities and law-enforcement bodies and puts in doubt the very possibility to hold terrorists and militants criminally responsible.

"In this connection, it would be expedient to consider a moratorium on jury trials in the North Caucasus region until 2012. The measures to restrict jury trials are taken in the countries where terrorism is a threat to the society and its citizens, such as Spain, Ireland and Northern Ireland, where the panels of jurors are barred from reviewing the cases related to terrorism and other crimes against the state.

"The proposed measures should be temporary, effected for the period of tensions heightened by destructive forces in the North Caucasus region," because the institution of the court with the participation of jurors is an integral part of justice, and a democratic achievement," Bastrykin said.

He reminded that in December, Russia's Criminal Procedural Code was amended in the section of territorial jurisdiction of terrorism-related cases, if it is required for the sake of the safety of participants in the trial, their relatives or associates.

RFE/RL: Daghestan Lawmakers To Vote On New President http://www.rferl.org/content/Daghestan_Lawmakers_To_Vote_On_New_President/1953641.html

February 10, 2010 MAKHACHKALA, Russia -- Lawmakers in the southern Russian republic of Daghestan are set to vote today on a new president.

Magomedsalam Magomedov was nominated for the post by Russian President Dmitry Medvedev on February 8.

If approved, Magomedov, a university professor, would succeed Mukhu Aliyev, whose term ends on February 20.

Daghestan is located in Russia's volatile, mainly Muslim, North Caucasus, a region of frequent insurgent attacks.

Medvedev has called the violence there Russia's biggest domestic problem.

Foreign Policy: Dagestan: Russia's Most Overlooked Hot Spothttp://www.foreignpolicy.com/articles/2010/02/09/dagestans_russias_most_overlooked_hot_spot

Why the coming weeks will only get more dangerous for the troubled North Caucasus Republic.

BY GREGORY ZALASKY | FEBRUARY 9, 2010

On Feb. 8, Russian President Dmitry Medvedev selected a new president for the troubled North Caucasus republic of Dagestan. The lead-up to the selection was marked by an uptick in violence, and the political controversy surrounding the choice is likely to lead to even further instability. When the international media reports on the instability in Russia's North Caucasus at all, reporters tend to focus on the violent chaos in Ingushetia and the repressive governance in Chechnya. But it is recent trends in Dagestan -- Russia's most ethnically diverse province -- that most threaten to further inflame this volatile region. Medvedev's selection of Magomedsalam M. Magomedov, a vocal critic of Dagestan's current government, is seen by many as an admission that the region's problems are spiraling out of control. And this month's events might finally put this volatile flashpoint on the world's agenda.

Historically, violence in Dagestan has stemmed from ongoing conflicts between its major ethnic groups -- the Avars, Dargins, Kumyks, Lezgins, and Laks -- over political power, resources, and jobs. More recently, Islamist militant groups, such as Shariat Jamaat, have forged close ties with Chechen separatists to launch terrorist attacks against the government in an effort to unite Muslims across the North Caucasus. Islamist militants have also taken advantage of Dagestan's high unemployment rate and staggering corruption (even by Russian standards) to actively recruit youth in the republic.

In late 2009, Islamist militants and criminal gangs, often described in the media as neizvestniye, or "unknown [assailants]," frequently attacked government officials, religious leaders, and police, as well as the republic's energy and transportation infrastructure. Electricity blackouts sparked protests in the capital city of Makhachkala, and residents in the town of Derbent witnessed mayoral elections so corrupt that officials overturned the results (a rarity in Putin-era Russia).

Due to changes in the provincial electoral process, Dagestan's People's Assembly must now rubber-stamp the choice made by Medvedev and officials from his United Russia party. Despite the lack of direct elections, the political process in Dagestan has been overtly contentious and punctuated by political violence, a lack of confidence in Moscow, and a transparently corrupt electoral process at the local level, as evidenced by a judge's decision to nullify October's mayoral election results in Derbent.

The murder of Interior Minister Adilgerei Magomedtagirov last year exemplifies how political figures have recently become targets of violence. Observers viewed Magomedtagirov as a potential challenger to the rule of incumbent President Mukhu Aliyev, who has governed Dagestan since 2006. On June 5, snipers shot and killed him as he stepped outside during a wedding in Makhachkala, and authorities still have not apprehended any suspects. In the run-up to the presidential selection, attacks and threats against political figures and institutions continued. On Jan. 13 and 14, authorities shut

down central Makhachkala due to a threat of a terrorist attack against several prominent locations, including the presidential administration building and Dagestan's Supreme Court. Two weeks later, unknown assailants shot at the motorcade of Nikolai Alchiyev, deputy chairman of Dagestan's People's Assembly.

Adding to the threat of political violence, there is also an unusually low level of confidence in Russian leaders, and particularly United Russia's selection of election candidates. On Nov. 26, Dagestan's legislature passed a motion asking Medvedev to hold further "consultations" about the most suitable candidate. The motion was an unusual public riposte against United Russia's regional governance. Some politicians' open dissatisfaction with the process led to a rumor that Dagestan's branch of United Russia planned a mass exodus from the party, but regional representatives have since denied all rumors of a potential split.

Meanwhile, Dagestan is experiencing a spate of attacks targeted at police officials, local administrators, and religious leaders. "Gangs" or unidentified individuals attacked police, security force members, or government officials 18 times -- leaving 11 dead and 11 wounded -- from mid-October through mid-December 2009, based on data compiled through the Emerging Threats Project at Georgetown University's Imaging Science and Information Systems Center.

While Ingushetia and Chechnya have also had their share of political violence, attacks against religious leaders are unique to Dagestan. For instance, on Nov. 2 unknown assailants shot and killed an imam based at a mosque in Bavtugai. A few weeks later, unidentified attackers shot and wounded a village imam in Staroye Miatli.

Worrisome as these attacks are, the disruption of transportation and energy networks may be the greater threat to stability. During the same two-month span, "gangs" and unknown assailants detonated bombs along rail lines on four occasions, and police disrupted two attempts to bury roadside bombs. Russia's rail network, as shown by the more deadly and well-known bombing of the Moscow-St. Petersburg railway line in November, is particularly vulnerable, and on each occasion the attacks disrupt rail service through the region.

Russia's vital natural gas pipelines are equally vulnerable. On Nov. 11, police accused "gangs" of detonating a bomb along the Mozdok-Gazimagomed natural gas pipeline. The explosion disrupted service along the pipeline for 560 kilometers and cut service to Makhachkala. The service disruption is particularly troubling in the capital because of ongoing problems with electricity. Even before the bombing, there were multiple blackouts in the capital during the past six months due to poor infrastructure and a lack of financing, prompting street protests. Although political violence and corrupt elections may not outrage Dagestan's jaded populace, poor infrastructure and public services appear to be enough to upset and galvanize citizens.

By all accounts, 2010 will be a difficult year for Dagestan, and its upcoming presidential "selection" is poised to exacerbate already simmering tensions caused by opaque political

procedures, corrupt election practices, rampant violence, and vulnerable infrastructure. Since the beginning of the year, there have already been several high-profile attacks. On Jan. 6, Islamist militants used a car bomb to attack a highway police post in Makhachkala that killed six officers; seven days later, unidentified assailants detonated a bomb along the Mozdok-Gazimagomed pipeline once again.

Russian officials can take a first step toward improving Dagestan's pervasive violence by approaching and describing violence in more exact and realistic terms. Russia does not face a threat from terrorists trained by Georgian special forces, as Russia's Federal Security Service recently claimed, or by members of nondescript "gangs" or "illegally armed formations." Contemporary scapegoats and vague descriptions disguise the full extent of Islamist militant activities occurring in Dagestan and the rest of Russia's North Caucasus.

Russian officials and, by extension, the Russian media do themselves no favors by relying on contemporary scapegoats or vague classifications to describe attackers. In Russia's most ethnically diverse region, the conflicts are deep, complex, and increasingly connected to Islamist militants, and it would be beneficial if Russian authorities and the press recognized it as such.

The Moscow Times: Kadyrov Takes Mom's Advice, Drops Libel Case http://www.themoscowtimes.com/news/article/kadyrov-takes-moms-advice-drops-libel-case/399343.html10 February 2010The Moscow Times

Chechen President Ramzan Kadyrov has withdrawn his libel lawsuits against two prominent rights activists and the liberal newspaper Novaya Gazeta after human rights activists, religious leaders and, finally, his mother asked him to drop the cases, his spokesman said Tuesday.

Kadyrov had filed libel suits against Lyudmila Alexeyeva, head of the Moscow Helsinki Group, Oleg Orlov, head of rights watchdog Memorial, and Novaya Gazeta — all having accused the Chechen leader of ordering kidnappings and killings in the North Caucasus republic.

Numerous human rights activists and Public Chamber members had called on Kadyrov to drop the proceedings, and the Chechen president "stresses that the opinion of the people who have addressed him in letters is very important to him," his spokesman, Alvi Karimov, said in a statement posted on the Chechen government's web site Tuesday.

But Kadyrov was apparently also nudged within his own family: His mother, Aimani, asked him to withdraw the lawsuits, saying it was against Chechen traditions to enter into disputes with the elderly, Karimov said.

Senior Chechen religious leaders had also asked Kadyrov to withdraw the lawsuits, Karimov said.  

The prominent public figures who wrote to Kadyrov suggested that he should focus on solving the economic and social problems in Chechnya instead of "wasting time on litigation," Karimov said.   

RIA: Russian football team needs homegrown coach - sport ministerhttp://en.rian.ru/sports/20100210/157831130.html

12:0910/02/2010

The Russian national football team should be trained by a Russian coach, sports minister Vitaly Mutko said on Wednesday as Guus Hiddink's long-term future with the side remained unclear.

"I am in favor of Russian-born coaches, people who understand our way of thinking," Mutko said.

"We should somehow develop from within. To develop a coach in any type of sport means leaving a legacy. A foreign trainer is only interested in the national team and will not share his experience with the whole country," he added.

The statement comes as Hiddink's future as trainer of the Russian national team remains in doubt after a recent meeting with new Russian Football Union president Sergei Fursenko in Moscow.

Hiddink's some $8 million a year contract runs out in July.

"Guus has a contract until the summer," Fursenko was quoted as saying by the Sovetski Sport paper after the meeting. He refused to comment on whether the 63-year-old trainer would lead Russia's Euro 2012 campaign.

Despite failing to take Russia to this summer's World Cup in South Africa, Hiddink has hauled the Russian team up to number 13 in the latest FIFA ratings.

Hiddink took over the Russian team in the summer of 2006 and worked wonders to transform the fortunes of a side that had become something of a national joke, taking it to the Euro 2008 semi-finals and making a genuine world star of diminutive forward Andrei Arshavin. He was hailed as the saviour of the Russian game and there were calls for him to be granted honorary citizenship. A number of children were also named after him by enthusiastic fans.

However, he was criticized throughout the 2010 World Cup qualifying campaign for spending too little time in Russia and relying too heavily on the players who had served him so well at Euro 2008. Matters came to a head in a crucial play-off against tiny

Slovenia when a lackluster and tired Russia crashed out after a 2-1 win at home was cancelled out by a 1-0 defeat in Maribor, much to the dismay of the watching Russian political and business elite.

FRANKFURT/VANCOUVER, February 10 (RIA Novosti)

The Moscow Times: United Russia Doesn't Want Kudrin http://www.themoscowtimes.com/news/article/united-russia-doesnt-want-kudrin/399349.html

10 February 2010The Moscow Times

United Russia does not want Finance Minister Alexei Kudrin as a member because of fundamental disagreements over economic policy, State Duma Speaker Boris Gryzlov said Tuesday.

Gryzlov, who chairs United Russia's executive committee, reacted to Kudrin's comments Monday that he was unhappy with United Russia's left-leaning policies and its abuse of its status as the ruling party.

"[Kudrin] says he will not join United Russia — well, nobody has invited him to join our party," Gryzlov said, Interfax reported.

He added that the question was a moot point because of "principal differences" with Kudrin over economic policy. "Every time he comes to the Duma, he comes under fire and faces unflattering questions," Gryzlov said.

The rare quarrel between Kudrin, a close ally of Prime Minister Vladimir Putin, and United Russia, which Putin heads, comes on the heels of another highly unusual conflict between United Russia and A Just Russia, the country's second pro-Kremlin party.

That quarrel was settled Monday when Gryzlov and A Just Russia's leader, Federation Council speaker Sergei Mironov, promised to cooperate on key issues such as foreign policy. The two agreed that A Just Russia would continue to maintain its own position on economic policy.

Both conflicts originated in Vladimir Pozner's talk show on state-controlled Channel One, leading to speculation that they were orchestrated by the Kremlin.

Pozner on Tuesday denied the implication, saying his programs have never been subjected to orders. "And I can promise that they never will be," he told RIA-Novosti.

The Moscow Times: Nemtsov, Paper Must Pay Luzhkov http://www.themoscowtimes.com/news/article/nemtsov-paper-must-pay-luzhkov/399360.html

10 February 2010

The Moscow City Court on Tuesday ordered the business daily Kommersant and liberal opposition politician Boris Nemtsov to pay $16,000 each in damages to Mayor Yury Luzhkov for libelous statements, Interfax reported.

With the decision, the court upheld a lower court's ruling that Nemtsov and the newspaper libeled Luzhkov in a report by Nemtsov last year that accused the mayor of breeding corruption in the city.

Nemtsov said he would appeal the case all the way to the European Court for Human Rights in Strasbourg and that another 100,000 copies of his updated report would be distributed soon on the streets of Moscow, Interfax reported.

The Moscow Times: City to Consider Opposition Council http://www.themoscowtimes.com/news/article/city-to-consider-opposition-council/399340.html

10 February 2010By Natalya Krainova

The City Duma on Wednesday will consider in a crucial second reading a bill that would create a consultative council consisting of members of political parties that are not represented in the Duma.

The City Duma is currently made up of deputies from just two parties: the Communists and United Russia, which swept the October city legislature elections that the opposition claimed were rigged. United Russia has 32 seats in the Duma, while the other three went to the Communists.

The bill to be considered Wednesday would give the new council the power to draft legislative proposals for consideration by the Duma and City Hall. The council's head would also be allowed to voice his opinion on proposed legislation during Duma sessions.

Political parties not currently represented in the Duma were skeptical about the new council.

Yabloko leader Sergei Mitrokhin called it merely "an attempt to gloss over" manipulations in the October elections. "We believe the Duma is illegitimate and that cooperation with it is unacceptable," he said.

Igor Trunov, head of the Moscow branch of the Kremlin-loyal, pro-business party Right Cause, called the proposed council's powers "vague" and said his party would consider calling on other opposition parties to refuse to join unless its powers are increased.

Should a boycott fail, however, Right Cause may join, if only for the right to voice its opinions at Duma sessions, Trunov said.

Viktor Sobolev, a senior official with the Moscow branch of the ultranationalist Liberal Democratic Party, said his party would join if the council "would really help us protect the interests of voters." A number of amendments could be introduced to the bill Wednesday, thus changing its proposed powers, Sobolev said.

Nadezhda Korneyeva, a senior official with the Patriots of Russia party, said her party has no illusions "that all our statements will be taken into account" but that it would join the council if given the opportunity because it has "a responsibility for the people we called on to vote for us."

Natalya Borodina, an official with the Moscow branch of A Just Russia, said the council was being created to give the impression of pluralism and that her party would not join the "useless undertaking."

Itar-Tass: Perm court to announce verdict in 250-mln-rbls theft case

http://www.itar-tass.com/eng/level2.html?NewsID=14805833&PageNum=0

10.02.2010, 01.08

PERM, February 10 (Itar-Tass) - Perm's Lenin district court on Wednesday will hand down the verdict for money collector Alexander Shurman, accused of stealing 250 million roubles. The court will also announce the verdicts for Dmitry Khudyakov, who the investigators said had helped ferry the stolen money, Shurman's wife Yelena and father-in-law Rashid Salimzhanov, who had hidden part of the money.

The reading of the verdicts is open to public, the court's secretariat told Itar-Tass. The hearings had been held in camera.

At the previous hearing, the prosecutor for the state demanded 9.5 years for Shurman in a maximum-security penitentiary, 9 years for Dmitry Khudyakov, a 7-year-suspended sentence for Shurman's wife Yelena, and a 2-year suspended sentence for his father-in-law and a 30,000-rouble fine.

The investigators said Alexander Shurman, 36, when transporting money in a Savings Bank car on June 25, 2009, threatened his two colleagues with a submachine gun, and forced the driver to head for the forest, where he ordered his colleagues to give him their mobile phones, locked them in the money transportation compartment, took the bagfuls of cash into a white Zhiguli waiting for him and escaped.

Police found Shurman in a dugout in a forest near Perm on June 30. He did not offer resistance during the arrest and showed the location of the stolen money.

Almost all the cash was returned to the Savings Bank. However, one million roubles are still missing. Police suspect the money has been hidden by Shurman's father-in-law.

Shurman, his wife and Khudyakov were charged with grand robbery committed by organized group.

His father-in-law is accused of acquiring property by criminal means and not reporting a particularly serious crime.

During the trial, Shurman, his wife and the driver partly admitted their guilt. Rashid Salimzhanov pleaded guilty on all counts.

Russia Today: Copycat weapons a threat to Russia's economic securityhttp://rt.com/Politics/2010-02-09/copycat-weapons-threat-russia.html/print

09 February, 2010, 18:58

Pirate production is among the key problems of the global weapons market. Superpowers that used to help their allies establish their own defense industries during the Cold War now face the consequences of that help.

Many countries have created successful copies of foreign weapons and do not need to import arms any more. Furthermore, weapon clones are offered for export, which poses an immediate economic threat for major players in the arms market.

Copying weapons is a worldwide policy favored by countries whose scientific potential and defense industry are not up to the task of producing this or that type of weapons or lack a certain technology. As early as during World War II, combating countries did their best to get hold of the most successful weapon models. For example, Germany was trying to produce something similar to the USSR’s Katyusha MLRS, but their multiple-launch systems were still inferior to the Soviet original. Also, the Wehrmacht recognized the advantages of the T-34 tank, whose efficient sloped-armor design was used in Germany’s Panther tank.

The USSR, too, copied Allied equipment. By the end of the war, the USSR began working on a strategic bomber project, and the Americans involuntarily assisted Soviet designers in that. In 1944, B-29 Superfortresses made numerous emergency landings on Soviet Far East airfields after bombing missions in Japan and Manchuria. According to the Soviet-Japanese Neutrality Pact, the aircraft and their crews were subject to internment. Aircraft designers carefully studied the bomber and created its copy: the Tu-4, which was hard to tell from its American original.

Today, the main victim of weapons piracy is perhaps the famous Kalashnikov assault rifle. During Soviet times, licenses to produce the AK were granted to most Warsaw Pact countries, Cuba, China, Libya, Egypt, and Finland. In most cases, the deals were politics-driven, their goal being to ensure that all friendly armies field uniform weapons. Despite the expiration of the licenses, the Kalashnikov rifle is still manufactured in Hungary, Poland, Croatia, Slovakia, and even the US. Rosoboronexport is trying to change the situation by claiming royalties or seeking new license agreements. However, according to the company, only China has so far obtained a new license to manufacture the world’s most popular assault rifle.

The pirate parade

China is the world-recognized leader in arms copying. This is largely due to the fact that the entire Chinese economy is based on borrowing foreign technology. Besides this, the country has a well-developed defense industry, so its copycats are quite good. The scale of “reproductions” was obvious at the military parade commemorating the 60th anniversary of the People's Republic of China. The Chinese leadership made a point of the fact that only Chinese-made vehicles and equipment took part in the parade.

In reality, many models presented that day clearly had foreign origins. The FT-2000 surface-to-air missile system is a carbon copy of Russia’s S-300. China never obtained a Smerch multiple rocket launcher from Russia, but fields its own look-alike PHL-03 system. The People’s Liberation Army has a “carbon copy” of the Russian-made Msta self-propelled howitzer under the designation of Type 88. A clone of Russia’s BMP-3 is an infantry fighting vehicle with a Russian turret mounted on Chinese ZBD-05 chassis.

Sometimes, Chinese designers create hardware blending two foreign origins at once. For example, the PGZ-04 self-propelled air defense system features 25-mm cannons taken from Italian SIDAM-25 AD system and four QW-2 missiles that copy Russia’s Igla-1. Quite often, Chinese copies, upon permission by China, are further reproduced in other countries. France’s Crotale short-range air defense system has become HQ-7 in China, but that same system, under the designation of Shahab Thaqeb, is now produced in Iran.

According to experts, China has made great progress in copying missile technology. Having purchased the X-55 missile from Ukraine, the Chinese created their own DH-10 cruise missile.

License with no guarantee

Quite often, a license to manufacture military equipment is not protection from copying but quite the opposite: a rather legal way to obtain samples for the development of similar weapons.

Ruslan Pukhov, head of the Strategy and Technology Analysis Center, says software codes are not transferred under military equipment supply agreements. Also, there are restrictions on essential and most complex components and systems of the armaments in

question; such items are usually supplied assembled by the supplying country. However, sales of equipment without sales of technology are impossible, Mr. Pukhov says; some countries (e.g. India) flatly refuse to consider offers that do not provide for production technology handover.

China uses production licenses to create helicopters and airplanes. France’s helicopter SA-365 Dauphin 2 has been upgraded to the WZ-09 combat chopper. However, the clearest example of “licensed copying” is the Chinese J-11 fighter jet, based on Russia’s Su-27. In 2006, Moscow and Beijing struck a deal on licensed production of the Su-27SK (Chinese designation J-11A). The agreement only provided for licensed assembly of components provided by Russia. The Chinese, though, studied the aircraft while assembling it and ended up producing a similar fighter, the J-11B, only with a Chinese-made engine and avionics.

Tehran is keeping up

Iran, spurred by its aspiration to become the leader of the Islamic world yet strangled by numerous sanctions, is forced to develop an independent defense industry of its own. Evidently, the easiest way to achieve such a goal is to upgrade and copy foreign armaments instead of developing weapons from scratch.

However, Tehran, upon permission of friendly powers, often copies the already-copied weapons. Its Sayyad-1A missile is based on the Soviet S-75, supplied by China. Procured during the Iran-Iraq war, those missiles became the base for the development of Iran’s tactical ballistic missile Tondar-68. With the help of the Democratic People’s Republic of Korea, Iranian factories were able to launch production and assembly of SCUD-B missiles (Iranian designation Shahab-1). North Korea also supplied the longer-range version SCUD-C (Shahab-2), with a range of 500km. The North Korean missile Nodong-1 later became Iran’s Shahab-3, capable of hitting targets at ranges of up to 1000km.

Such approaches to creating and upgrading missile armaments now prevail in the development of other missile classes. Iran currently produces anti-tank guided missiles based on American TOW (Toophan and Toophan 2) and Dragon (Saeghe and Saeghe-2) systems, and its I-RAAD-T missiles is nothing else than the Soviet Malyutka ATGM.

Another sphere where Iran is attempting to copy is shipbuilding. Few countries today would sell Tehran warships for use in the Gulf without facing negative reaction from the US. Iranian shipyards are currently busy building small frigates (copies of Britain’s Alvand frigates) and missiles boats (copies of French La Combattante II). The originals were, of course, procured before the complication of relations between Iran and Western countries.

Still unresolved is the issue of possible deliveries of the S-300 surface-to-air missile system to Iran. Such a system can significantly strengthen Iran’s air defense. The US and Israel are strongly against the sale of the S-300 to Iran. All “technical difficulties” hampering the sale of the missile system to Iran are purely diplomatic problems.

In the meanwhile, General Heshmatollah Kasiri said recently that Iran is about to field an air defense complex that is superior to the S-300. According to the general, the new complex is the brainchild of Iran’s defense industry. The unit has yet to be shown to the public, yet experience shows that Iran’s military developments often have Chinese and North Korean roots.

The solution

“There is only one way we can prevent the copying of Russian armaments in other countries, and that is to sign intergovernmental intellectual property agreements,” Rosoboronexport chief Anatoly Isaikin told reporters recently. But the results of that work are scarce so far.

First, licensing and various agreements are complicated bureaucratic procedures that not all Russian companies can cope with. For example, for many years the Russian armored personnel carrier Tigr has had its Jordan-made clone Nimr (which means “tiger” in Arabic).

Second, not all countries are willing to extend existing, or sign new, agreements regarding the production of Soviet military equipment, considering them to be past their expiration date. In the meanwhile, copying of Russian military technology means colossal economic losses for Russia. For example, the United Arab Emirates have purchased the Jordanian-made vehicles for their army, not the Russian “Tigers.” The Malaysian Armed Forces have bought Polish PT-91 tanks, which are a modification of the Russian T-72.

In the future, China may be the key threat to Russia’s arms exports. It is China’s cheap yet quality clones of Russian military products that have aroused the interest of Pakistan and a number of states in Africa and Southeast Asia.

Egor Sozaev-Guryev, Infox.ru

February 9, 2010Russia Profile: Et Tu, Brute?http://www.russiaprofile.org/page.php?pageid=International&articleid=a1265739323

By Tom BalmforthRussia Profile

America’s Plans to Install Interceptor Missiles in Romania and on the Black Sea, an Area of Historic Importance to Russia, Unnerve Moscow

As the United States unveiled plans to install missile interceptors in Romania to shield Europe from an alleged Iranian missile threat, Moscow’s suspicions became palpable. A little more than a fortnight ago Washington agreed to deploy Patriot missiles in Poland, only 100 kilometers from Russia’s border at Kaliningrad. The

new installation in Romania will bring the United States into the strategically important Black Sea region. Missile deployment is a long-time explosive issue for U.S.-Russian relations, but this time Russia won’t be the only one raising an eyebrow.

On Friday, ahead of the Munich Security Conference, Romanian President Traiain Basescu announced that Romania will host U.S. Standard Missile-3 (SM-3) tactical interceptors, which should become operational by 2015. American officials added that SM-3s would also be stationed on Aegis-equipped ships in the Black Sea. Russia’s reaction was typical. Foreign Minister Sergei Lavrov immediately demanded “clarification,” and the Russian Ambassador to NATO Dmitry Rogozin accused Washington of failing to come through on its promise to keep Moscow informed about missile defense in Europe. So is this project really out of the blue?

U.S. President Barack Obama’s decision in June of last year to shelve plans for ground missile interceptor systems in Poland and Czech Republic – an anathema to the Kremlin – created a foundation on which the “reset” relations could be established. However, Obama never entirely abandoned plans for deploying missile systems in Eastern Europe – he merely revised them. And Romania was mentioned in that breath. To that extent, the current plans to install SM-3 interceptors in Romania come as no surprise, especially given the increasing congressional pressure that Obama is facing for having “conceded to Russia” on the Poland and Czech Republic missile defense system, without much progress to show for it on Iran.

But still, the timing is not ideal.

U.S. and Russian negotiators are yet to sign off on an elusive replacement to the Strategic Arms Reduction Treaty (START), which expired on December 5. Moscow has delighted in blaming the United States for the delay. Toward the end of last year, Prime Minister Vladimir Putin said that it was Washington that was delaying the process by persisting with its missile plans in Eastern Europe. Deputy Prime Minister Sergei Ivanov hauled out the very same argument last Saturday in response to the Romania plans: “It is impossible to talk seriously about the reduction of nuclear capabilities when a nuclear power is working to deploy protective systems against vehicles to deliver nuclear warheads possessed by other countries.”

But Alexander Rahr, the program director for Russia and Eurasia at the German Council on Foreign Relations, dismissed the hypothesis. “These are very small range weapons. Intercontinental Ballistic Missiles (ICBM) cannot be threatened by these smaller rockets at all. They are not strategic in nature, so I don’t think they should jeopardize a new START,” said Rahr. Viktor Yesin, a retired Russian colonel general, told the Nezavisimaya Gazeta news daily that the SM-3 missiles only have a combat range of 300 kilometers, but that they could be potentially upgraded to a range of between 500 and 1,000 kilometers.

But Rahr said the real negative impact from these SM-3s was that their deployment would foster an atmosphere of “mistrust.” And Fyodor Lukyanov, the editor in chief of Russia in Global Affairs, agreed: “re-injecting this issue into discussion when these important talks are going on can make them more difficult than before.” The various ongoing attempts to rekindle relations between Russia and NATO after a fall-out over the Russia-Georgia conflict could well also suffer as a result, said Lukyanov.

But it is mainly the strategic positioning of the missiles in the Black Sea that will elicit objection, he said. When Warsaw on January 20 announced that Poland would still host U.S. Patriot missiles and this time only 100 kilometers from Kaliningrad, Russia responded with a surprisingly muted reaction. But the planned deployment of SM-3s on the Black Sea will be a different story. “Any activities in and near the Black Sea make Russia very nervous – this is a region which is very sensitive for Russian security and has been for many centuries,” said Lukyanov.

Ever since Peter the Great made establishing Russia as a naval power a key tenet of his rule, securing Russian access to a warm water port has remained a goal. “The Black Sea used to be the direction of Russian expansion a couple of centuries ago – Russian expansion southward, especially to former Byzantium, was an ideological pillar of Russian foreign policy in the 19th century – that was the dream: to control the straights,” said Lukyanov.

So, symbolically, the Black Sea is key to Russia’s view of itself as a global naval power, and U.S. missiles in its vicinity will be unnerving for Moscow, especially considering the question mark over the status of its Black Sea Fleet stationed in the Ukrainian Crimea, where the lease is due to expire in 2017.

At the Munich Conference, Ivanov made his objections perfectly clear when he referred to the Montreux Treaty signed in 1936, which supposedly limits the presence of outside powers in the Black Sea. But Russia is not the only country likely to possibly challenge the U.S. presence. “I think we can expect a huge diplomatic game around this idea of the Black Sea – and the participants in the game will not be just the United States and Russia and Ukraine, but also Turkey, for instance,” said Lukyanov.

Turkey is showing much more confidence on the international stage than ten years ago, said Lukyanov. Moreover, Russian-Turkish relations have looked to be strengthening recently, as the prime ministers of the two countries signed in a host of cooperative measures in the energy sphere on January 13, which included Turkey giving its preliminary go-ahead for construction of the Turkish leg of Russia’s South Stream pipeline. What is more, Turkey is “extremely concerned” by plans touted by the U.S. Senate to recognize the “Armenian genocide” in 1915 in the near future – “maybe this will happen this year, maybe not – but it is on the agenda,” said Lukyanov. “If the United States does go ahead with this, then its relationship with Turkey will be disturbed profoundly…All of this creates an interesting knot of contradictions,” he added.

However, what will anger Moscow most is that it was not previously consulted about Washington’s plans in Romania and the Black Sea. Russia argues that “unilaterally” installing missile defense systems in Europe is a threat to regional stability and, to that end, Russia champions jointly-built “multilateral” missile systems.

Despite the reset, this clearly remains wishful thinking. “To create a multilateral system in such a delicate, sensitive area as strategic national security, the parties need to have a high degree of mutual confidence, which is not case with the United States and Russia at the moment,” concluded Lukyanov

RFE/RL: French-Russian Warship Deal Making Waves Among NATO Allies http://www.rferl.org/content/FrenchRussian_Warship_Deal_Making_Waves_Among_NATO_Allies/1953455.html

February 09, 2010 By Ahto LobjakasBRUSSELS -- The French daily "Le Monde" broke the news on February 9: Paris had "agreed in principle" to negotiate the sale of one or more Mistral-class ships to Russia.

If the sale goes through, it will be the first deal of its kind between a member of NATO and Russia.Prime Minister Vladimir Putin first voiced Russian interest in buying a Mistral-class ship during a trip to Paris in late November. As he spoke, a Mistral was docked in St Petersburg -- part of a carefully choreographed move -- playing host to Russian combat helicopters.

Feeling vulnerable, a number of Russia's former satellites have mounted a bid to derail the sale.

Georgia is particularly bothered, as memories of its August 2008 war with Russia are still very fresh.

NATO's new Eastern allies along the Baltic Sea are also unsettled, however, and have taken their concerns not only to Paris but to Washington and NATO headquarters in Brussels.

Undermine Security

Harri Tiido, the undersecretary for political affairs at the Estonian Foreign Ministry, told RFE/RL that the Baltic states believe the sale of the Mistrals could undermine their security.

"Definitely, it would not add to the security of the region. And I think the nations around the Baltic Sea in that case would have to see what they have to do to change their defense planning, maybe," Tiido said. "But also, it could influence the defense planning of NATO."

The Mistral is a 200-meter vessel capable of carrying 900 troops, 35 helicopters, four landing barges, and 70 land-going vehicles. It also has facilities for carrying refugees, supplies, and hospitals.

Although it has often been deployed by France in humanitarian missions, Russia seems to have military applications uppermost in its mind. In September, the chief of the Russian Navy, Admiral Vladimir Vysotsky, said a Mistral-type vessel would have allowed Russia to defeat Georgia in 2008 "in 40 minutes instead of 26 hours."

Estonians and the other Baltic states take some solace from the fact that the "Mistral" is not designed to operate in icy conditions.

Russian defense analyst Pavel Felgenhauer tells RFE/RL that Russia is planning to deploy the Mistrals in the Black Sea.

"The most obvious application is to have the capability to perform large-scale landing operations in the Black Sea. And I believe that's first and foremost in the western half of Crimea," Felgenhauer says. "We have quite a number of large landing ships, but they're not new, and they were all built abroad, in Poland, at the Gdansk shipyard. They don't have helicopter landing capabilities.

"So, if by 2017, we would have some kind of problem with Sevastopol, having such a capability would be very important."

Felgenhauer said he doesn't believe the Mistrals would be used against Georgia.

Lobbying The United States

The chairman of Russia's National Security Council, Nikolai Patrushev, said on February 9 that Moscow has not yet made a decision on whether to buy the Mistrals.

In an attempt to make the sale an issue of NATO solidarity, Estonia, Latvia, and Lithuania have jointly lobbied the United States to intervene.

U.S. Defense Secretary Robert Gates met with French President Nicolas Sarkozy in Paris today and said afterward, "It is more a problem of the message being sent than a military issue." At NATO headquarters, officials appear to assume it is now a matter of when and not whether the deal will materialize. NATO spokesman James Appathurai told RFE/RL that the alliance has no objections.

"NATO has no formal role at all in this sale," he said. "Of course, allies talk to each other, including on this issue. We are quite confident that the sale would be -- when it takes place -- perfectly legal, within all the relevant frameworks. But, of course, some allies have expressed concern about the sale, and we are aware of it."

Heavy With Irony

The whole affair is heavy with irony for both NATO and France. Experts point out that Russia is seeking to buy the Mistrals in order to address some its naval weaknesses that were exposed by the Georgian campaign.

Georgia itself now feels threatened and its leaders are warning NATO that Russia intends to use the Mistrals against it.

Four months before the war, in April 2008, NATO turned down Georgia’s bid to join the alliance's membership track after France and Germany voiced their opposition. France, acting as EU president, negotiated the war’s August 12 cease-fire -- the full terms of which Russia has refused to honor.

French Foreign Minister Bernard Kouchner has said that only French intervention prevented Russia from capturing Tbilisi. Both the EU and NATO temporarily broke off relations with Russia after the war.

Last year, France rejoined NATO's military command structure after an absence of 43 years. But Paris also vowed to pursue a European axis within the alliance. Its leaders have repeatedly argued that the alliance can't continue treating Moscow as simultaneously an ally and an enemy, a position Germany agrees with.

Both countries opposed the U.S. plan to site part of its missile shield in Eastern Europe, as well as drawing up NATO defense plans for the three Baltic countries.

Broader Agenda

Arnaud Dubien, a Russia expert at the French Institute of International and Strategic Relations (IRIS), tells RFE/RL that France's pursuit of better relations with Russia is part of a broader national agenda.

"France wants a more ambitious relation with Russia, notably in the economic sphere, but also on the political sphere. France wants to be present in important sectors: energy, aeronautics, railways," Dubien says. "So now [it] decided to make a step forward and give the green light to a project that is removing many taboos in Russia and the West."

Under President Barack Obama, the United States has sought to "reset" its fraught relationship with Russia. NATO, under Secretary-General Anders Fogh Rasmussen, has followed suit. Russia plays an increasingly vital role in NATO's efforts to stabilize Afghanistan.

Dubien also points out that the Mistral deal has a significant domestic dimension for France, which, like other developed nations, is grappling with the effects of the global economic downturn.

"The shipyards of Saint-Nazaire are currently building a third Mistral for the French Navy, but starting from next year, there are no [new] orders," Dubien says. "Building a Mistral employs about 1,500 people for nearly two years, and it would have been very difficult for the French government to explain to the future unemployed that there was an order, but that we refused to honor it."

Potential competition from shipyards in Spain and the Netherlands, both of which have been quietly approached by Moscow, raises the stakes. But Russia, like France, appears to have the bigger picture in mind. Moscow views France as a crucial bridgehead in Europe. Russia's sights are set on Paris: 2010 is "The Year of France" in Russia, and "The Year of Russia” in France.

French officials expect the sale of the Mistrals to be officially announced during Russian President Dmitry Medvedev's visit to Paris in early March.

RFE/RL correspondent Antoine Blua contributed to this story

National Economic Trends

Prime-Tass: CBR says Russia's trade surplus down 37.6% in 2009http://www.prime-tass.com/news/show.asp?topicid=68&id=472846

MOSCOW, Feb 9 (PRIME-TASS) -- Russia's trade surplus fell 37.6% on the year to U.S. $112.11 billion in 2009, the Central Bank of Russia (CBR) said Tuesday.

Russia's exports dropped 35.5% on the year to $303.978 billion, while its imports fell 34.3% to $191.868 billion, the CBR said.

RenCap: Russia's trade balance strengthens to 2009 maximum in December

http://www.businessneweurope.eu/dispatch_text10984

Renaissance Capital, RussiaWednesday, February 10, 2010

Yesterday (9 Feb), the Central Bank of Russia reported foreign trade statistics for Dec 2009, indicating exports amounted to $34.4bn and imports surged to $21.6bn. From November nominal imports rose 11.5%; faster than exports, which increased 10.7%. At the same time, imports were still 9.8% lower than a year previously, while exports added 20.1%. Imports rose despite a weakened rouble (the dual-currency basket average exchange rate moved from RUB35.35/basket to RUB36.2/basket) and Russia's trade balance reached its 2009 maximum in December ($12.7bn).

On 8 Feb, the federal customs agency published foreign trade data by sector, indicating

that exports rose on the back of increased oil and machine-building exports (up to 7.4% of total exports).The imports increase was mainly driven by food, chemicals and machine-building production. The expected rise in retail sales ahead of the new year, and typical consumption of imported fruit and vegetables over the winter led food imports to increase 18% MoM.

We previously estimated that investment increased by a seasonally adjusted 21.2% MoM in 4Q09, and quite expectedly we saw a further notable increase in machinery imports (by 11.6%) for the fourth consecutive month. Imports of cars actually decreased vs the previous month (by $100bn), thus, we explain the rise in total machinery imports due to improved demand for heavy machinery. Nevertheless, we do not expect this tendency to continue as preliminary estimates (by federal customs) indicate a slowdown in foreign trade activity in January. Accordingly, we expect the trade balance to contract significantly, but the February figures to be more impressive.

Reuters: UPDATE 1-Russia c.banker says further rate cuts can waithttp://www.reuters.com/article/idUSLDE6182MB20100209

Tue, Feb 9 2010

* Cenbanker says needs to see inflation outlook

* PM Putin says c.bank did everything it could

(Adds background, details)

MOSCOW, Feb 9 (Reuters) - Russia's key refinancing rate has already been cut substantially and the country can afford to wait before further rate cuts, a senior central banker told state television on Tuesday.

"We have cut rates rather fast and I think that we can wait a bit and to see what is going on with inflation," said Gennady Melikyan, First Deputy Chairman of the central bank responsible for the banking sector's supervision. "I am a supporter of rate cuts but in today's situation I would not rush."

Prime Minister Vladimir Putin, who has repeatedly called on commercial banks to bring down lending rates, supported the central bank's policy, and indicated official rates were at an acceptable level.

"The central bank did all that it could -- the refinancing rate was cut and was cut substantially," Putin told a government meeting.

A rapid fall in inflation rates during the harshest months of the crisis at the start of last year created room for ten consecutive cuts that saw the refinancing rate lose 425 basis points between April and December 2009.

The benchmark refinancing rate is currently at a record low level of 8.75 percent. For a FACTBOX on Russian interest rates, click [ID:nLDE5BO028] The cuts have failed to substantially boost lending to the real economy with the gap between banks' lending rates and the central bank's official interest rates reaching up to ten percentage points.

With rising revenues from commodity exports and resumed capital inflows, Russia is again facing the threat of inflation. Further interest rate cuts could contribute to price rises and asset bubbles formation.

(Writing by Gleb Bryanski, Editing by Andrew Hay)

The Moscow Times: Fund Interest Leads to January Surplus http://www.themoscowtimes.com/business/article/fund-interest-leads-to-january-surplus/399370.html

10 February 2010Vedomosti

The government had a budget surplus of 2.4 percent of gross domestic product at the end of January, the Finance Ministry said Tuesday, a jump in revenues driven largely by income from last year's investments of the sovereign wealth funds.

The Finance Ministry said budget income stood at 737.6 billion rubles ($24.3 billion) in January, while expenses were 671.4 billion rubles, leaving a surplus of 66.1 billion rubles.

But January is a special month for both expenditures and revenues for the budget. Expenditures are typically smaller than in any other month as no one works for one-third of the month. Interest from the previous year's investment of the Reserve Fund and National Welfare Fund at the Central Bank contributes to the income — a total of 100 billion rubles for the year.

"The surplus is artificial," said Alexandra Suslina, from the Economic Expert Group. "Without income from the wealth funds, it would disappear."

Income excluding that coming from oil and gas production stood at 443 billion rubles, about 25 percent less than in January 2009. Income from oil and gas production increased about 60 percent year on year, rising to 294.5 billion rubles, as the price of oil increased and export tariffs nearly doubled to $267 per metric ton from $119 in January 2009.

Last year started with an optimistic precrisis budget, which was reconsidered and revised only at the end of April, Suslina said. Therefore in the first few months of last year, while the plan was unclear, expenditures reached dangerous levels. Besides, January is always a low-expense month, Suslina added. In January the budget spent about 6.8 percent of its planned expenditures for the year, while collecting about 9 percent of the revenues planned for the year.

If the average oil price stays at about $70 per barrel and the economy grows at 5 percent, then the budget deficit will be almost 1.2 trillion rubles, said Yevgeny Gavrilenkov and Anton Struchenevsky, analysts at Troika Dialog.

RenCap: Russia's January budget surplus not set to be sustained

http://www.businessneweurope.eu/dispatch_text10984

Renaissance Capital, RussiaWednesday, February 10, 2010

Yesterday (9 Feb), Russia's Ministry of Finance announced preliminary statistics on the federal budget deficit for Jan 2010. On a cash basis, budget revenues stood at RUB737bn and expenditures amounted to RUB671bn, therefore the ministry ended January with a budget surplus of RUB66bn (2.4%/GDP), which was in line with our expectations.

From an accounting point of view, nothing was transferred from the Reserve Fund to cover a federal budget deficit, but annual income of RUB100bn from the management of state funds (the Reserve Fund and National Welfare Fund) was moved directly into the federal budget (above the deficit line). Accordingly, in January, budget revenues were technically inflated and de-facto monthly budget (not including income from fund management) was closed with a modest deficit of around RUB40bn.

Another reason is that, due to long holidays and numerous bureaucratic procedures related to the implementation of new budget, monthly spending in January is traditionally lower than in other months. Historically, it has accounted for about 59% of average monthly budget spending.

In January, the Ministry of Finance was relatively inactive on the domestic bond market, and held only two OFZ auctions over the month, with the proceeds only covering the redemption of old bonds (around RUB40bn). Moreover, the ministry's deposit auctions met zero demand and commercial banks returned them by the end of January. Thus, budget-related money creation was negative in Jan 2010 (as it was a year previously), although we think this is a one-off event. From February, when the pace of budget spending will increase, the monthly federal budget is likely to move into deficit, with the government continuing to use the Reserve Fund as a source of financing.

Business, Energy or Environmental regulations or discussions

Bloomberg: Rosneft, Gazprom, Norilsk Nickel: Russian Equity Previewhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=abVcFYDpyfU0

By Anna Shiryaevskaya

Feb. 10 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parenthesis and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index rose 1.2 percent to 1,338.16. The dollar-denominated RTS Index gained 1.1 percent to 1,390.32.

OAO Rosneft (ROSN RX): Crude rose 2.6 percent to $73.76 a barrel on the New York Mercantile Exchange. Shares in Russia’s largest oil company advanced 1.9 percent, the most in a week, to 221.16 rubles.

OAO Gazprom (GAZP RX): Gazprom isn’t considering any acquisitions, Deputy Chief Executive Officer Alexander Medvedev said. The company is currently pursuing “a policy of organic growth,” Medvedev told reporters in London. Shares in the world’s biggest gas producer dropped 0.1 percent to 175 rubles.

OAO GMK Norilsk Nickel (GMKN RX): Copper prices rose for a second day on speculation that demand will swell in China, the world’s largest consumer of the metal. Russia’s biggest producer of nickel and copper gained 1.5 percent to 4,568.09 rubles.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

Last Updated: February 9, 2010 22:00 EST

Russia Today: Russian innovation companies would go for IPO in Russia – Chubaishttp://rt.com/Top_News/2010-02-10/russian-innovation-companies-ipo.html/print

10 February, 2010, 08:44

Speaking on the sidelines of the Davos summit in Swtizerland, head of the Russian Nanotechnolgy Corporation, Anatoly Chubais, gave some insight into the future to RT.

“We have over 60 government-approved nanotech projects with total capex [capital expenditure] of 190 billion roubles (US$6.3 billion), 50% of them belong to [governmental agency] Rosnano and 50% to private investors. We target 900 billion roubles in revenue by 2015 from the newly created businesses in the Russian technological sector – that is US$30 billion. Judging by what we achieved last year, this target is realistic,” says the billionaire businessman.

Anatoly Chubais believes that in technology there are certain areas where results are being achieved stage by stage, like in producing semi-conductor chips. The technological cycle simply cannot go any other way but step by step. But in completely new sectors, this condition is not indispensable.

“Let me take the example of photovoltaics. That is, solar batteries. We are developing the five most-advanced pieces of technology in photovoltaics… and each of those pieces will be absolutely cutting edge and in this sector we are able to build super-modern plants which would be able to compete on the world scene,” Chubais outlined. “And each of these plants that we build now for photovoltaics – the share of export is going to be between 30% and 90% – so we are going to the world market, not only to the Russian market.”

Chubais also shared news about an upcoming pharmaceutical project based on nanotechnological procedure that would deal with delivering medicine directly to the affected cells. He said that this would be a classic example of innovative pharmaceuticals and it has been developed from scratch.

Anatoly Chubais told RT that Russia is designing a special exchange for innovative companies using the already-existing Moscow Micex Exchange, so that Russian companies can conduct their IPOs in Russia.

“This is very pragmatic,” he said. “If we are speaking about an innovative company, for them to fly [for IPO] to Hong Kong is not the same as for Mr Deripaska (a Russian billionaire) and we should help them to avoid great expenses, big costs and to do it in a cheap and proper way – that is why it should be Moscow.”

BarentsObserver: Drop in northern railway cargohttp://www.barentsobserver.com/drop-in-northern-railway-cargo.4744904-16175.html

2010-02-10 There was a drop by 17 percent in the railway cargo in the Russian part of the Barents Region last year.

Neftegaz.ru reports a drop in cargo flow at both the October railway from St. Petersburg to Murmansk and the Northern railway linking Moscow with Arkhangelsk Oblast and the Komi Republic.

In 2009, the October railway to Murmansk transported 88,6 million tons of goods, mainly iron ore, oil, fertilizers, forestry products and cargo containers.

The Northern railway transported 57 million tons of goods.

Also passenger traffic had a declined last year, with a drop of 12 percent down to 8,4 million passengers on the Northern line last year.

BarentsObserver: Ports up in Murmansk, down in Arkhangelskhttp://www.barentsobserver.com/ports-up-in-murmansk-down-in-arkhangelsk.4744263-16175.html

2010-02-08 The ports of Murmansk in 2009 boosted goods turnover with 29,7 percent, while the port of Arkhangelsk dropped 23,7 percent.

The ports of Murmansk in 2009 experienced a growth in goods turnover of 29,7 percent to a total of 37,4 million tons, Regnum reports.

The good results are confirmed also by the Murmansk Commercial Seaport, which last year for the first time ever handled more than 15 million tons of goods. A total of 14,396 ton of the goods went for export, of which more than 12 million was coal, a press release from the company reads.

Meanwhile, the situation in Arkhangelsk is a far more negative. According to the JSC Arkhangelsk Sea Commercial Port, goods turnover in 2009 dropped 23,7 percent. A total of 1,34 million tons of goods was handled by the port.

For all of Northwest Russia, the 2009 port result was a growth of 3,9 percent, much thanks to the positive figures from Murmansk, as well as in Ust-Luga, Primorsk and Vysotsk.

UralSib: Thermal Generation Companies: IES may merge all TGKs under its operational control

http://www.businessneweurope.eu/dispatch_text10984

Uralsib February 10, 2010

IES expects to merge all controlled companies. TGK-5 (TGKE - Not Rated), TGK-6 (TGKF - Not Rated), TGK-7 (TGKG - Not Rated), and TGK-9 (TGKI - Not Rated) might be merged, Vedomosti reports today, citing an undisclosed source close to Integrated Energy Systems (IES), the holding that has operating control of each company. The possibility of consolidation was not excluded by IES though no details of potential timing or deal structure have been disclosed.

Major market player. The united company would become a core player on the wholesale electricity market, with total installed electricity capacity of 15.6GW (7.4% of Russia's total). In terms of the potential shareholder structure, we expect IES to receive 48.5% of the unified company and to receive operating control. Other core shareholders will be: Federal Grid Company (FGC; FEES - Hold) with 17%, the state with 3.6%, Prosperity Capital Management with 3.4%, the EBRD with 2.2%, and Gazprom with 0.7%.

Focus on TGK-5, TGK-6. We view the news as positive for TGK-5 and TGK-6 and largely neutral for TGK-7 and TGK-9. We consider TGK-5 and TGK-6 as the best plays on the potential merger, as they are trading at respective EV/capacity of $95/kW and $107/kW versus $197/kW for TGK-7 and $245/kW for TGK-9.

Matvei Taits

BarentsObserver: TGK-1 boosted profitshttp://www.barentsobserver.com/tgk-1-boosted-profits.4744632-16178.html

2010-02-09 Northwest Russian electricity generator TGK-1 in 2009 boosted net profits to 3 billion RUB.General Director Boris Vaynzikher told journalists that the company, the main electicity generator in Northwest Russia, in 2009 had a net profit of three billion RUB. He also said that the company had invested a total of 19 billion RUB in the course of the year, Regnum reports.

TGK-1 is controlled by Gazprom. It owns generating units in Murmansk Oblast, the Republic of Karelia, Leningrad Oblast and the city of St.Petersburg.

-In general, last year was a successful one for us, Mr. Vaynzikher told Regnum.

Electricity generation was down 0,7 percent in 2009. But hydropower generation was up three percent.

In 2010, the company intends to invest a total of 15,9 billion RUB.

Alfa: Gazprom may challenge Inter RAO's position in electricity trading with Belarus and Baltic countrieshttp://www.businessneweurope.eu/dispatch_text10984

Alfa, RussiaWednesday, February 10, 2010

According to Kommersant, Belarus has a proposed that Gazprom participate in Belarus' power assets by building a new power unit with 400-500 MW of installed capacity at the existing Berezovskaya GRES. This would help Belarus negotiate lower prices on imported gas from Russia. According to Kommersant, the construction of the new power unit could have a negative effect on Inter RAO's electricity exports to Belarus and the Baltic countries.

We consider the news NEUTRAL for Inter RAO shares for the following reasons: first, the attractiveness of the new generator in Belarus for local customers and the Baltic countries will depend on the gas price. Because Russia's domestic gas tariff is much

lower than the import price paid by Belarus, the latter prefers to import electricity from Russia rather than producing it on its own using imported gas. Secondly, even if Gazprom takes a part of Inter RAO's business in these countries, the impact on Inter RAO will be small because it will soon derive more revenue from generating than from trading (upon the consolidation of OGK-1 and TGK-11). Last, Gazprom has still not responded to Belarus's proposal, and whether or not it participates will be determined by geopolitical factors.

The total value of this project is $490m, according to Belenergo's estimates.

According to our estimates, Belarus and the Baltic countries account for 27% of Inter RAO's total export volumes based on 2009 figures, while Belarus accounts for only 4.6% of its total revenue, according to 2008 IFRS.

Alexander Kornilov

EmergingMarkets: Savings giant Sberbank creates investment banking unithttp://emergingmarkets.me/2010/02/savings-giant-sberbank-creates-investment-banking-unit/

by admin on February 10, 2010

By Ivan Anderzhanov in MoscowState-controlled savings giant Sberbank is hiring 30 bankers for its new investment banking unit, according to a report in Vedomosti.

The division known as Sberbank Capital is currently focussing on restructuring “problematic’”assets and private equity but the group has plans to develop a fully-fledged investment business providing M&A advisory and syndicated loans origination.

According to the paper, Sberbank has hired already 15 bankers as part of a planned headcount of 30 people. At this stage, the project is headed by Alexander Bazarov, who joined Sberbank from Deutsche Bank .

Sberbank’s portfolio of distressed assets inherited by its parent as collateral for loans is believed to be worth a potential $14bn. Bankers are expected to resell the assets or to organise flotations when valuations improve.

RBC: VTB North-West posts higher net profit for 2009

http://www.rbcnews.com/free/20100210112357.shtml

      RBC, 10.02.2010, Moscow 11:23:57.According to preliminary data, the net profit of VTB North-West under RAS amounted to RUB 3.8bn (approx. USD 125m) in

2009, the lending institution's press release states. Net interest revenue increased 14 percent to RUB 13.1bn (approx. USD 431m) in 2009 compared to the previous year.

      The bank's capital stood at RUB 37bn (approx. USD 1.22bn) as of January 1, 2010, 20 percent greater than a year earlier. The bank's assets amounted to RUB 265bn (approx. USD 8.73bn) as of January 1, 2010, having increased 11 percent from January 1, 2009. Meanwhile, the share of overdue debt stood at 6.2 percent of the loan portfolio.

      According to the bank's statement, it strengthened its positions in the North-West federal district and the Kirov region.

      VTB North-West's loan portfolio rose 16.5 percent from RUB 144bn (approx. USD 4.74bn) to RUB 168bn (approx. USD 5.53bn).

RenCap: VTB launchs matrix management systemhttp://www.businessneweurope.eu/dispatch_text10984

Renaissance Capital, RussiaWednesday, February 10, 2010

Event: Kommersant reported today (10 Feb), citing VTB executive board member Ekaterina Petelina, that VTB has launched matrix management, implying the following improvements:

The operation of the group's subsidiaries is now coordinated by a managing committee, which will make key decisions for the group regarding business-planning, businesses development strategy, risk and liquidity management, among other issues.

VTB expects the new management system will enable the bank to optimise costs, as the group will work with global vendors, eliminate duplicate operations and optimise staff. Bank VTB will reduce its staff and vacancies, both in the head office and the branch network, by an average of 10%.

The new management system introduced a matrix motivation system: The heads of various businesses within the group will have input into the amount of annual bonuses for subordinate division leaders in subsidiaries, thereby motivating those leaders to stick to corporate standards adopted by the group.

Action: Positive for VTB, in our view.

Rationale: The matrix management system has proved to be efficient in Western banks with expanded international network (Unicredit, HCF, Raiffeisen), as it provides better interaction between a bank's units and employees and therefore lowers staff costs. The economic crisis has revealed the necessity to improve corporate governance in state banks and VTB in particular. That said, the newly introduced management system should facilitate improvements on that front, in our view.

Armen Gasparyan

Dow Jones: Agco CEO: Lack Of Credit Hurting Russian Farm Productionhttp://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201002091849dowjonesdjonline000551&title=agco-ceolack-of-credit-hurting-russian-farm-production

By Bob Tita, Of DOW JONES NEWSWIRES

CHICAGO -(Dow Jones)- Russian agriculture production is being undermined by credit conditions in the country that discourage farmers from purchasing machinery and land, the chairman and chief executive of equipment maker Agco Corp. (AGCO) said Tuesday.

Martin Richenhagen said farmland utilization has fallen about 42% since the collapse of the Soviet Union nearly 20 years ago because Russian farmers lack adequate equipment to farm all the available land. He said the volume of tractors and combines in service in Russia has fallen by half in the past decade. The average age of the equipment still in use is 15 years old.

He attributed the aging, dwindling fleet to a lack of financing for equipment purchases.

"The big problem for Russian farmers is they're not in position to do retail financing," Richenhagen said during comments to reporters in New York that were broadcast over the Internet.

Most Russian farmers don't own the land they farm. As a result, they usually lack sufficient assets to qualify for equipment loans. Moreover, the difficulty of repossessing equipment for nonpayment of loans keeps most foreign banks from venturing into the Russian equipment market.

"To do business in Russia right now is very difficult and the main reason is securitization," he said. "You don't have a stable finance system."

While farmers can buy land, Richenhagen noted that few can actually afford to do so. He said the government needs to do overhaul farm-sector lending, especially in the wake of shrinking government programs to promote equipment purchases.

"The system needs to be restructured," he said.

Russia is one of the few farming regions left in the world with the potential for a big increase in row-crop production, making the country a key growth market for Agco, based in Duluth, Ga., and rivals Deere & Co. (DE) and CHN Global N.V. (CNH).

Last year, Agco launched a joint venture with Russian machinery maker Concern Tractor Plants to build diesel engines for farm equipment. Concern Tractor is owned by Russian industrial conglomerate Agromash Holding. Agco also is considering its joint-venture options for production of combines in Russia, the company said.

Agco's stock closed Wednesday up 4.5%, or $1.37, at $31.81.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

Alfa: UAC is restructuring its debt

http://www.businessneweurope.eu/dispatch_text10984

Alfa, RussiaWednesday, February 10, 2010

Kommersant reports that United Aircraft Corporation's RUB9.3bn loan from Sberbank may be converted into a 7% stake in UAC. This is one option for restructuring its debt, and indicates that the company's valuation is $4.36bn, which is 1.8 times higher than the current MCap. Other options include the extension or exchange of the loan for UAC-owned land. In addition, the media reports that this year VEB and the state are set to purchase an additional issue of the aircraft maker's shares for RUB21bn and RUB10.7bn, respectively. The money will be used for UAC's debt repayment.

We do not currently cover UAC; however, we view the news as POSITIVE for the company. Its total debt is estimated at RUB150bn, of which RUB70bn is viewed as problematic. We believe news on the company's debt restructuring will likely be a catalyst for the stock, which is trading at P/B09 = 0.4.

Georgy Ivanin

Bloomberg: Magnit January Sales Rise 25% to $511 Million on Added Storeshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR2DJ.b05TXo

By Maria Ermakova

Feb. 10 (Bloomberg) -- OAO Magnit, Russia’s second-largest food retailer, said sales rose 25 percent in January as it added stores.

Sales reached 15.5 billion rubles ($512 million) from 12.4 billion rubles in the same month last year, the Krasnodar, Russia-based company said in an e-mailed statement today. The company opened 19 stores in January, raising the total to 3,247 outlets.

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

Last Updated: February 10, 2010 00:50 EST

The Moscow Times: VimpelCom Merger To Be Done by April http://www.themoscowtimes.com/business/article/vimpelcom-merger-to-be-done-by-april/399354.html

10 February 2010Bloomberg

Vimpelcom Ltd. expects Alfa Group and Telenor to complete a merger of Russian and Ukrainian mobile-phone assets by the end of April, chief executive Alexander Izosimov said Tuesday.

Vimpelcom Ltd., the company being formed by Telenor and Alfa’s Altimo to consolidate holdings in Russian and Ukrainian mobile operators, said it began a share exchange offer Tuesday. Shareholders and holders of American depositary shares in VimpelCom have until April 15 in the United States and April 20 in Russia to accept the offer, VimpelCom said in a statement.

The government on Feb. 3 approved plans by Telenor and Altimo to combine their stakes in VimpelCom, Russia’s second-largest mobile-phone company, and Ukraine’s Kyivstar after they agreed to invest 137 billion rubles ($4.5 billion) in the new company, Federal Anti-Monopoly Service chief Igor Artemyev said that day. Ukraine’s Anti-Monopoly Commission has yet to approve the plan, Izosimov said Tuesday in a telephone interview.

Vimpelcom Ltd. will become the largest mobile-phone operator in Eastern Europe by revenue, according to the CEO. Its shares will start trading in New York within two weeks after the merger is complete, Izosimov said. The company will consider acquisitions everywhere outside of the Americas, he added.  

“Growth remains an important element in the company’s strategy, but it will be a very selective approach,” Izosimov said Tuesday. “We will evaluate very carefully any risks related to merger and acquisition transactions.”

Telenor and Altimo in October agreed to merge their stakes in VimpelCom and Kyivstar, ending years of legal disputes over control of the two operators. The new joint venture will be based in the Netherlands and incorporated in Bermuda for neutrality, the companies said in October.

“When making their decision about the offer, investors should look at long-term prospects against current multiples and consider that the asset merger will create a global company and will end the conflict between Alfa Group and Telenor,” said Daniel Zatologin, an analyst at the KIT Finance investment bank, with a “buy” recommendation on VimpelCom.

“Altimo will be able to create additional value for the new company because it’s very active in the African and Southeast Asian markets,” Zatologin said.

VimpelCom may expand further in southeast Asia after starting operations in Vietnam and Cambodia, then-chief executive Boris Nemsic said June 6. Altimo is interested in the growing African market, Kommersant reported in September 2008, citing vice president Kirill Babayev.

The Moscow Times: Caution Urged for Russian Investors in U.S. Assets http://www.themoscowtimes.com/business/article/caution-urged-for-russian-investors-in-us-assets/399339.html

10 February 2010By Alex Anishyuk

Russian firms nearly doubled their investment into the United States in 2008, but while U.S. assets can be a lucrative proposition, they are not for the faint of heart, said the director of a U.S. government agency that promotes foreign investment.

"Russian foreign direct investment in the U.S. economy grew almost twofold from 2007 to 2008, and the flow was extremely large," said Aaron Brickman, head of Invest in America.

"In 2007 we saw an influx of $892 million, while in 2008, the last year for which data was available, the figure almost doubled to $1.7 billion," he told The Moscow Times last week on a visit to solicit more active participation of Russian companies on the U.S. market.

Total foreign direct investment in the United States amounted to $325.3 billion in 2008. That was up 37 percent compared with the $237.5 billion in 2007, according to data provided by the Bureau of Economic Analysis.

Foreign direct investment fell globally in 2009, and Brickman said there would likely be a similar decline in Russian investment, but the official figures for that year have not yet been released.

While Russian investors traditionally viewed natural resources and metals as priorities in terms of investment, they may be starting to focus on other sectors, said Brickman, who met with the Russian Union of Industrialists and Entrepreneurs and other trade groups on his visit to Moscow.

Severstal and Evraz, two of Russia's largest steelmakers, went on a buying spree over the last decade, investing billions of dollars in several U.S. assets. But a large part of that has been idled since the global recession severely curtailed demand for steel.

LUKoil, which operates 1,600 stations throughout the United States, had invested a total of $5.9 billion into the country as of April 2009.

"We want more diversification from Russia, and I think we will be seeing that," Brickman said. "We expect big Russian firms coming and doing particularly what they know and what they do best."

As possible targets for diversification, the consumer goods, services and technology sectors are among the easiest to invest in and tend to yield decent margins, he said.

"In the consumer sector there also seems to be room for one more brand, it seems. You don't tend to notice what's no longer on the shelf, you basically notice what's new," he said. "We also look increasingly at the services sector, we look at technology solutions for everyday life as possible investment trends for Russian companies."

But no firm should think that they are guaranteed success when they invest in the United States, he said.

"The United States is a very sophisticated marketplace, and before you commit to placing an investment in America you should take the due diligence that is appropriate for such a marketplace," he said. "I'd rather have a company not come to America, than come to America and fail. I'm not saying it's a cakewalk in terms of achieving a success, but countless firms from around the world have."

Reuters: Russia's Uralchem mulls stock market listing –sources

http://www.iii.co.uk/news/?type=afxnews&articleid=7744724&action=article

MOSCOW, Feb 10 (Reuters) - Russian fertiliser producer Uralchem is considering a stock market listing in March or April of this year, two banking industry sources told Reuters on Wednesday. "Uralchem is the first (Russian) company that will carry out an IPO during the spring -- I think it could take place at the end of March," one of the sources said.Earlier news reports said Russia's market watchdog has allowed Uralchem to place 125 million shares or 25 percent of its equity abroad while the firm has said it could do the IPO both in Moscow and London.Uralchem, which according to its website is the world's second largest ammonium nitrate producer, declined to comment.(Reporting by Olga Popova and Dmitry Sergeyev, writing by Alfred Kueppers, Editing by John Bowker) Keywords: URALCHEM/

(alfred.kueppers@thomsonreuters.com; Tel +7 495 775 1242; Reuters Messaging: alfred.kueppers@thomsonreuters.com@reuters.net)

The Financial: EBRD agrees to sell 15 percent stake in Swedbank’s Russian banking armhttp://finchannel.com/news_flash/Banks/57930_EBRD_agrees_to_sell_15_percent_stake_in_Swedbank%E2%80%99s_Russian_banking_arm/

10/02/2010 11:12 (00:47 minutes ago)

The FINANCIAL -- The European Bank for Reconstruction and Development has agreed to sell its 15 percent stake in OAO Swedbank Russia to its parent and major stakeholder, Sweden’s Swedbank AB, a move which would give it full ownership of its Russian subsidiary.

According to EBRD, the sale is conditional on by Swedbank AB obtaining the approval of the Central Bank of the Russian Federation and will be completed only after such approval is duly received.

The sale decision was agreed with Swedbank after a five-year investment which saw the EBRD become a minority shareholder in March 2005 in what was a start-up Russian corporate banking operation, at the time called OAO Hansabank.

The Russian bank’s name was changed to OAO Swedbank Russia in May 2007. In December 2008, the EBRD participated pro-rata in a capital increase for the bank.

The MOSCOW -registered Swedbank Russia was at the end of September 2009 ranked the country’s 47th largest bank as measured by assets. It also has branches in St. Petersburg and Kaliningrad.

Financial details of the transaction, which is subject to regulatory approval, will not be disclosed.

Barentsnova: Arkhangelsk and Murmansk lose SME investmentshttp://barentsnova.com/news/show/1551

2010-02-10

Statistics: Arkhangelsk and Murmansk suffer low investment volumes into SME capital assets as of Jan-June 2009.

The national non-profit institute on system research of challenges in entrepreneurship (NISSE) published yesterday the results of its monitoring. The research was based on four main parameters: number of small businesses, employment at small businesses, turnover volume and investments into the capital assets, reports Dvina-Inform. The data correlate to the period of Jan-June 2008.

According to the report, a number of registered small businesses in North-West federal district per 100,000 people is quite significant and totals 231,4. Yet the number of businesses increased only by 0,4 comparing Jan-June 2009 versus the same period of 2008. Uralsky federal district is proud of a 38 increase. Far-East federal district suffered a 138,6 decrease. Namely Murmansk region lost 6,56 businesses per 100,000 of its inhabitants, Arkhangelsk region gained 25,63.

A number of SME employees in North-West district totaled 674,000 (82,900 increase). As of this parameter, Murmansk region (25,800 employees) suffered a decrease in number by 1,1%, Arkhangelsk region (45,300) – 10,9%.

The turnover volume of North-West district made up about 598,855 mln RUB (25,6% decrease). Murmansk region (about 34,928 mln RUB) counts 15,2% increase, Arkhangelsk region (about 24,920 mln RUB) decreased by 12,9%.

Investments into the capital assets of SMEs dropped 21,2% in Russia on the whole. North-West suffered 43,6% drop of investments. Murmansk region (70,2 mln RUB) lost 73,2%, Arkhangelsk region (112,6 million RUB) lost 76,2%.

North-West federal district (one of eight in Russia) includes the regions of Arkhangelsk, Vologda, St.Petersburg, Kaliningrad, Murmansk, Pskov, Nenets autonomous area, Karelia and Komi republics.

Activity in the Oil and Gas sector (including regulatory)

RenCap: Russian crude production Organic decline slows http://www.businessneweurope.eu/dispatch_text10984

Renaissance Capital, RussiaWednesday, February 10, 2010

FY09 well completion and flow statistics were published for Russian oil companies this week by CDU TEK. Based on the reported data, and as shown in Figure 2, we estimate organic decline rates for crude production in Russia slowed to 18% in 2009, from 19% in 2008.

Helped by this underlying improvement, production growth of 1.2% was achieved in Russia for 2009 (as reported previously) despite 6.5% fewer wells having been commissioned than in the previous year.

• Company-specific data show little surprise. Gazprom neft continues to lead the decline with 26% lower organic output in 2009 (vs a 27% decline in 2008). Organic decline rates have accelerated for both Surgutneftegas and Rosneft (to 20% and 19%, respectively),

and slowed for both LUKOIL and TNKBP (to 11% and 13%, respectively), on our estimates. Tatneft remains an outlier with just a 3% organic decline rate estimated for 2009 (down from a 2% decline rate in 2007), as the production profile of its super-giant Romashkinskoye field continues to puzzle the scientific community.

• Reported statistics support our BUY ratings on Tatneft, LUKOIL and TNK-BP. Tatneft remains a unique stable producer, requiring low levels of maintenance capex to sustain its output. We attribute below-average decline rates for LUKOIL to its less aggressive approach used historically for oil recovery (especially when compared with the early Sibneft and YUKOS days); while TNK-BP continues to benefit from the wider use of new technologies, in our view.

UralSib: Tatneft: Bitumen oil output to risehttp://www.businessneweurope.eu/dispatch_text10984

UralSib, RussiaFebruary 10, 2010

Production to double at bitumen fields in 2010. Tatneft (RUTATN3006 - Hold) said its bitumen (or tar) oil output may grow 94% YoY to 35 kt in 2010, and reach 3-3.5 mt by 2020, representing 15-17% of total annual production, according to our estimates. Production growth potential and an increased share of heavy and high-viscosity oils might provide advantages for the company in the long run.

Bitumen oil: high opex and high capex. Bitumen field production becomes profitable at about $80/bbl and requires significant capex, according to company's chief geologist Rais Khisamov. The company began production at the Ashalchinskoe field in 2006, requiring about $3.5 bln in capex, according to company estimates. The share of tar oil production in 2009 was still immaterial:

the Ashalchinskoye field's production reached 18.4 ktpa and the Mordovo- Kamalskoye field was at 5 ktpa. However, tar oil development is of strategic importance for Tatneft in terms of production diversification. Bitumen oil reserves in Tatarstan are estimated at 1.5-7 bln tons.

Tax exemptions and international cooperation needed. We believe that the profitability of tar oil extraction hinges on exemptions from mineral extraction tax (MET) for high viscous oil and from the attraction of international partners for the project. With government support for the development of high-viscosity oil projects, the company would be able to increase profitability. International cooperation on the project could also shorten the development period and reduce capex through the introduction of foreign technology and experience (the company previously planned for joint development with a foreign partner but failed to reach an agreement with Shell and Chevron). We will continue to follow this story, and reiterate our Hold recommendation on the name, which has a target price of $4.7/share.

Victor Mishnyakov

Gazprom

Bloomberg: Citigroup, Gazprom Seal China Carbon-Trading Agreement, WSJ Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao8E9t7gsMxg

By Alan Purkiss

Feb. 10 (Bloomberg) -- Citigroup Inc. and Russia’s OAO Gazprom bought energy-intensity credits from three heating utilities in the Chinese port city of Tianjin that had beaten efficiency targets, the Wall Street Journal reported.

The energy savings were packaged as carbon-emissions allowances that could be sold on to other utilities or to buildings in the city that can’t yet meet municipal goals; while they were worth only 500,000 yuan, or $73,250, the transaction could point the way to a bigger Chinese carbon-trading market, the newspaper said.

Click here for web link

Last Updated: February 10, 2010 00:38 EST

FEBRUARY 9, 2010, 10:15 A.M. ET

WSJ: Citigroup, Gazprom in Pioneering Energy-Credit Deal in China http://online.wsj.com/article/SB10001424052748704820904575055131451492108.html?mod=WSJ_hpp_sections_business

By SHAI OSTER

BEIJING – Citigroup Inc. and OAO Gazprom closed a small but pioneering deal in China that could lay the foundation for a bigger nationwide market in carbon trading.

Under the deal, the American bank and the Russian gas giant bought energy-intensity credits from three Tianjin heating utilities that had outperformed efficiency targets set by the port city near Beijing. Worth a mere 500,000 yuan, or $73,250, the energy savings were packaged as carbon-emissions allowances that could be sold on to other utilities or buildings in the city that can't make this year's municipal goals.

"We see this as a start for building a fully implemented carbon-intensity market in China. This is a transaction that has a lot of thinking and systems and rules in place behind it," said John Shi, chief executive officer for carbon-credit broker Arreon Carbon which worked on the deal along with the Tianjin government and the Tianjin Climate Exchange,

a joint venture with state-owned energy giant China National Petroleum Corp. and the Chicago Climate Exchange, owned by Climate Exchange PLC.

The deal's architects said that they want to use cap-and-trade schemes as part of China's energy- and carbon-intensity targets. China has a nationwide goal of reducing energy intensity, or the amount of energy used relative to economic output, by 20% by 2010 from 2005. And China has pledged to slow down the speed of its growing carbon emissions by 40% to 45% from 2005 levels by 2020. Since coal is China's primary energy source, carbon emissions are closely related to its energy use. China has rejected absolute national caps in international climate talks, but some cities are moving more aggressively.

Cap-and-trade systems have been used before, such as to lower sulfur-dioxide emissions in the U.S. Coal-fired power plants were given an emissions limit and could sell off any excess quota to other power plants that couldn't meet the standards. The global carbon trade under the Kyoto Protocol market uses similar ideas.

Other Chinese cities have established carbon exchanges. But so far, there is no legal basis for trading carbon, and Tianjin appears to be taking the lead in attracting high-profile investors such as Citigroup, Gazprom and CNPC.

In China, the few pilot projects using markets to reduce emissions have had mixed results. For example, pilot sulfur-emissions exchanges never expanded and were less effective than government orders mandating power plants install scrubbers on their smokestacks.

But Mr. Shi thinks there's room to target a type of carbon-emissions trading focused on China's buildings, which alone account for 40% of China's energy use.

In Tianjin's case, the city has thrown its support behind the idea. All the city's residential, office and government offices and the utilities that sell district heating were ordered to increase energy efficiency, something that can be relatively easily measured from electricity, heating bills or fuel consumption. The idea is that more-energy-efficient utilities or buildings could sell the credits to less-efficient ones. The tallying of energy use will provide an indirect measure of carbon emissions: The less coal the buildings burn, the less carbon they will emit.

It's unclear whether Gazprom and Citigroup will find buyers for the credits just purchased, because the heating season is almost over. But Mr. Shi said Tianjin is working on rolling out the project next year using carbon-intensity limits that will be imposed citywide and is coming up with building standards.

Third-party energy-efficiency firms could retrofit older houses and make money by selling carbon credits to institutions such as real-estate developers or power plants.

Write to Shai Oster at shai.oster@wsj.com

Reuters: Gazprom says could invest in Ukraine gas networkhttp://in.reuters.com/article/oilRpt/idINLDE6182PJ20100209

Wed Feb 10, 2010 1:10am IST

LONDON, Feb 9 (Reuters) - Russia's Gazprom (GAZP.MM) would be prepared to consider a possible investment in Ukraine's gas pipeline system if invited to do so, the company's deputy chief executive said on Tuesday.

Russian newspaper Kommersant reported on Tuesday that Viktor Yanukovich, who won a narrow majority in Ukraine's presidential elections on Sunday, had invited Gazprom to participate in upgrading the Ukrainian gas pipeline system.

Gazprom Deputy Chief Executive Alexander Medvedev said he was unaware of the offer except from the newspaper report but added that the pipelines needed upgrading and Gazprom would be interested in participating.

"Gazprom would be prepared to consider it and study it," he told reporters at a press conference in London.

Medvedev said any investment would not replace the need for Gazprom to develop the South Stream pipeline, which aims to transport Russian gas to Europe via a route that bypasses Ukraine. (Reporting by Tom Bergin; Editing by Gary Hill)

Your Oil and Gas News: Gazprom announces commercial gas inflow reported in Abakan areahttp://www.youroilandgasnews.com/gazprom+announces+commercial+gas+inflow+reported+in+abakan+area_45387.html

Wednesday, Feb 10, 2010

Gazprom is performing geological exploration in eastern Russia as part of the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries.

In February 2010 Gazprom discovered a new gas field within the Abakan area in the Krasnoyarsk Krai. During the prospecting activities the Abakan exploratory well No.1 with the depth of 3,302 meters reported commercial gas inflow at the rate of over 800 thousand cubic meters per day.

It is planned to carry out the follow-up geological exploration and to estimate the reserves of the discovered field in 2010–2011.

Background

The state-run Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries was adopted in September 2007 pursuant to the Russian Industry and Energy Ministry Order. Gazprom was appointed by the Russian Federation Government as the Program execution coordinator.

At present, Gazprom and its subsidiary companies are performing geological exploration of 18 subsurface areas in the Krasnoyarsk Krai.

As the winner of the auction, in 2007 Gazprom obtained the subsurface use license to survey, explore and produce hydrocarbons in the Abakan area.

Source: Gazprom

Guardian: Scrap UK's wind farm plans, says Gazprom bosshttp://www.guardian.co.uk/business/2010/feb/09/scrap-windfarms-says-gazprom

Deputy chairman of Russia's Gazprom argues plans for renewable energy are irrational and should be replaced by more gas-fired power stations

guardian.co.uk, Tuesday 9 February 2010 19.07 GMTTim Webb

Plans to build thousands of wind farms in the UK are irrational and should be scrapped in favour of more gas plants, according to the deputy chairman of the Russian energy firm Gazprom.

Alexander Medvedev said the UK and other countries should adopt a more "pragmatic" approach towards reducing greenhouse gas emissions following the impasse at the Copenhagen climate change summit. He argued it would be impossible to meet the UK's target to generate a third of its electricity from renewables by 2020 without a big contribution from gas. He also claimed it would be three times cheaper to meet emission reduction targets by replacing dirty coal plants with new gas plants rather than wind farms.

"If we do not want to see the authors of the 2020 strategy decapitated in a public square, I do not think they can forget about gas," he said. "We at Gazprom believe gas should be treated on an equal footing as renewables. I just hope that after the disappointment post-Copenhagen that the decision-makers will take a more pragmatic and rational approach to this."

Energy companies are sceptical that the UK will be able to meet its ambitious 2020 renewable targets. Gas is increasingly being promoted as a clean fossil fuel and the best way to cut emissions.

Gas-fired power stations, for example, emit approximately half the carbon emissions of equivalent coal-fired ones. Shell last year froze investment in renewables to focus on biofuels and carbon capture and storage. Its new chief executive, Peter Voser, recently said Shell would soon be producing more gas than oil.

But politicians are worried that increasing reliance on gas imports from countries such as Russia is threatening the UK's security of supply, something Medvedev's company has dismissed as "Gazpromophobia". Renewable energy companies are also worried that plans to invest in wind farms could also be scaled down.

Medvedev also revealed today that the company, which supplies about a quarter of Europe's gas, had concluded negotiations with suppliers like Italy's ENI and Germany's Ruhrgas over long-term contracts. Because of the recession, gas demand and prices have slumped, and European firms have been trying to renegotiate their "take or pay" contracts with Gazprom, where they commit to buying a fixed amount of gas over several years.

Medvedev would not reveal the details of the new terms, but indicated that Gazprom had taken into account lower demand for gas, which could result in cheaper gas prices in Europe and the UK.

Upstreamonline: Gazprom knocks US shaleshttp://www.upstreamonline.com/live/article205999.ece

Russian gas export monopoly Gazprom warned of environmental risks from shale gas drilling in the United States and Europe today, but said it expected its gas to be able to compete with shale gas prices even if production expands.

Upstream staff  09 February 2010 21:03 GMT

Last week, Gazprom said it was delaying development of the Shtokman field, one of the world's largest, which it hoped would supply liquefied natural gas to the United States, citing expansion of US shale gas production and the subsequent fall in US gas prices.

"This technology endangers drinking water," Gazprom's deputy chief executive, Alexander Medvedev, said in a Reuters report.

Environmentalists and critics say hydraulic fracturing chemicals have polluted aquifers in Pennsylvania and Colorado and can cause cancer and other serious illnesses.

Medvedev said Gazprom was keenly awaiting the results of investigations by the US Environmental Protection Agency into shale gas drilling.

Medvedev said last year that Gazprom aimed to take a 10% share of the U.S. natural gas market within five years, largely by exporting LNG, but analysts say the expansion of shale gas production makes this unlikely.

Much of the gas was supposed to come from Shtokman, which has been delayed for three years. Medvedev said that phase 1 of the project was still targeting production of 23.6 billion cubic metres a year.

He declined to confirm the $15 billion budget for the first phase as he said it was possible this could rise 25% to 30%.

Published: 09 February 2010 21:03 GMT  | Last updated: 09 February 2010 21:03 GMT

Itar-Tass: EBRD to grant 150-mln-euro loan for developing Serbia’s gas infrastructure

http://www.itar-tass.com/eng/level2.html?NewsID=14805839&PageNum=0

09.02.2010, 23.51

BELGARDE, February 9 (Itar-Tass) -- The Board of Directors of the European Bank for Reconstruction and Development (EBRD) had approved the granting of a 150-million-euro loan to Serbia.

The funds will be disbursed to the Srbijagaz state-run company for the development of the country’s gas transportation network and rescheduling of the current debt.

The fund will also be spent for the construction of Sebria’s second underground gas storage facility, the EBRD said in a statement on Tuesday.

The new underground storage with a capacity of one billion cubic metres of gas will be located in the depleted gas reservoir near the village of Itebei. Srbijagaz will be the only owner of the underground gas storage. The company plans to use the facility for the commercial purposes, or for re-export of Russian gas to neighbour countries.

Srbijagaz will use spare circulating assets for the upgrading of the local gas network and for its integration with the regional gas pipelines.

This is already the third project for the construction of an underground gas storage facility in Southeast Europe, which is financed by the EBRD.

Earlier, the bank granted similar loans to the Croatian gas transportation company Plinacro (70 million euros) and Hungary’s petroleum company MOL (200 million euros).

The EBRD management also considered possibilities for the rendering of assistance to the construction of underground gas storage facilities in Moldova and Bulgaria, the statement said.

Russia’s gas monopoly Gazprom has joined the construction of underground gas storages in Serbia.

Last week, the monopoly’s subsidiary, Gazprom-Germany and Srbijagaz signed an agreement on the setting up of the Banatski Dvor joint venture.

The joint venture will be involved in the final stage of the construction and upgrading of the underground gas storage facility, located in Serbia’s northeast.

The underground gas storage’s assets are estimated at 50.5 million euros, which Gazprom’s share is 25.5 million euros and Serbia’s share is 24.5 million euros.

In addition, Gazprom possesses a 51-percent stage in the joint venture’ s authorised capital, which Srbijagaz holds 49 percent.

As many as 470 million cubic metres of Russia-produced natural gas will be loaded into the Banatski Dvor underground gas storage facility before the yearend, Srbijagaz CEO Dusan Bajatovic after signing the agreement with the Russian company.

The volume of 470 million cubic metres will meet Serbia’s current demand in natural gas reserves.

“Further development of the underground storage will depend on the construction of the Serbian section of the South Stream gas pipeline and on the future gas demand of the country,” Bajatovic said.

The feasibility study and other documents related to the construction of the Serbian section of the South Stream gas pipeline are expected to be ready in July-September 2010, he said.

Russia’s gas monopoly Gazprom would start natural gas loading to the Banatski Dvor underground gas storage facility on April 1, 2010, the Gazprom-Germany head said, adding, “Gazprom’s strategic plans envisage construction of several underground gas storages in Europe, and currently the company is focused on six such projects.”

“De facto, Russia’s specialists have already joined the final stage of the underground gas storage construction,” Chief of the Yugorosgas local gas operator Vladimir Koldin said, adding, “From now on, the operations will be more intensive owing to the agreement signed.”

Financial Times: European gas pipelines get green lighthttp://www.ft.com/cms/s/0/04cd59c0-15a0-11df-ad7e-00144feab49a.html

By Carola Hoyos and Ed Crooks in London, and Andrew Ward in Helsinki

Published: February 9 2010 23:07 | Last updated: February 9 2010 23:07

The construction of Nord Stream and South Stream, two major natural gas pipelines from Russia to the European Union, will begin this year in spite of uncertainties surrounding the gas market key partners in the two ventures said on Tuesday.

Gazprom, Russia’s state-owned gas company, expects to start construction of South Stream – which will deliver gas via the Black Sea and Bulgaria to Austria and Italy – in December after gaining Turkish approval in November.

Separately, Nord Stream confirmed it was planning to begin construction in April of its pipeline beneath the Baltic to Germany in spite of delays to approval from Finland and a legal challenge by WWF, the environmental group.

The two pipelines form the pillars of Russia’s policy to reduce its dependency on Ukraine and Belarus as transit states by redirecting the gas it already sells to Europe through routes less prone to interruption.

The pipeline projects are so critical politically to Russia that neither the global recession, nor the collapse of natural gas prices due to the surge in supplies of US shale gas, have been able to deter Moscow.

Russia has powerful European partners on both projects. Germany and Italy see the pipelines as a way to secure their future gas supplies.

Eni, Italy’s largest energy group, is a partner in the South Stream consortium, which is expected to be joined by EDF the French utility. Gazprom holds a 51 per cent stake in South Stream, but says it would be willing to reduce that stake to accommodate EDF as long as Gazprom maintained majority ownership.

Gazprom’s partners in Nord Stream are German companies Eon and BASF, which both hold 20 per cent stakes, and Gasunie, the Dutch company, which has a 9 per cent share.

Environmental authorities in Finland are scheduled to deliver their verdict on the €7.4bn ($10.2bn) project on Friday, marking the final regulatory hurdle to be cleared before work starts.

The Finnish and Swedish governments gave its approval last year as did the governments of Denmark and Germany. It would be a surprise if the western Finland environmental agency, whose consent is also needed, does not follow suit.

The WWF is challenging the German approval in court, amid concern over potential environmental damage to the Baltic Sea. But Sebastian Sass, spokesman for Nord

Stream, said the consortium was confident of starting construction on schedule, in line with its target to start deliveries in 2011.

Nord Stream will be high on the agenda when leaders and ministers from the nine Baltic Sea nations gather in Helsinki on Wednesday for a summit on cleaning up one of the world’s most polluted stretches of water.

In addition to environmental concerns surrounding Nord Stream, there has also been stiff political opposition from Poland and the Baltic states, which will be bypassed by the pipeline.