Russia 100809

Basic Political Developments Moscow remembers victims of August 2008 war in South Ossetia - Two years

ago, overnight from August 7 to 8, the Georgian authorities launched military hostilities against South Ossetia and began mass shelling of its capital, Tskhinval. On August 8, Russia sent its troops to South Ossetia to protect Russian citizens residing in the region and help the Russian peacekeepers; the warships of the Russian Black Sea Fleet reached the shores of Abkhazia. Sixty-five Russian servicemen were killed and about 250 were wounded in the five-day conflict.

Medvedev Stands By Post-War Republics - Russia is seeking to remove all hurdles for goods and money to travel to South Ossetia and Abkhazia and back, and to have a common approach to regulating the market, said Boris Shmelyov, director of the Center for Comparative Political Research at the Russian Academy of Sciences.

Defense Ministry Vague on War's Toll - Two years after a brief war with Georgia, the Defense Ministry still has not provided a final account of the casualties, while its reports of lost military hardware widely differ from estimates by experts.

How to Make Peace With Georgia - By Dmitry Trenin Abkhazia and the Caucasus: the west’s choice - The Georgia-Russia war of

August 2008 refroze a region. The small Black Sea nation of Abkhazia is the key to its unblocking, says Neal Ascherson.

EU diplomat criticises Russian-backed rebels in Georgia - Hansjorg Haber, the German diplomat in charge of the 330-man-strong mission, noted in a written statement at the weekend that Russian-backed Abkhazia and South Ossetia's policy of keeping EU monitors out of their territories contributes to ongoing tension.

Nezavisimaya/Russia Today: Two years in crisis - The economic situation remains as uncertain as it was in the fall of 2008

Caucasus war prompted radical reforms in Russian forces: Expert Russia opens border for cargo from Azerbaijan - Tofig Nurullayev, chairman of

the Association of International Motor Freight Forwarders of Azerbaijan (ABADA), says that today there are not problems with road cargo transportation from Azerbaijan to Russia, in any case the ABADA members made no complaints on the occasion.

Bulava missile’s first test launch in 2010 postponed by 2-3 weeks The first launch of the Bulava in 2010 postponed for two weeks Blueprint for Russian aircraft carrier to be ready this year - A technical design for

Russia’s new-generation aircraft carrier will be ready by the end of the year, the head of the Russian Navy says. Navy experts believe the future aircraft carrier will be nuclear-powered with a displacement of 50,000-60,000 tons.

Public discussion on new Russian police law discloses restrictions on physical force - The website to publicly discuss the new law uses Russia's .ру domain for the Internet in Russian which contains only letters from the Russian alphabet. The bill was posted on законпроект2010.ру on Saturday.

Russia, NORAD shadow jet in Pacific hijack drill

US, Russia hone airline hijack response Kommersant/Russia Today: Moscow and Washington take “pre-arranged” shots

at each-other - But this will not affect the bilateral relations Iran’s Nuclear Sanctions Make China, Russia Winners (Update1) Russia's short affair with the West - Russia recently changed its stance on Iran's

nuclear policies. As an ally of Iran with many strategic and economic interests in the country, Russia's pro-Western stance is unlikely to last - By Tian Wenlin

'Russia trained 4,000 Myanmar nuclear officers' - Russia has trained 4,185 Myanmar military officers in nuclear sciences over the past decade but only a "sprinkling" of scholars have pursued the positive uses of the energy source, a Myanmar academic said on Friday.

U.S. to send billion bushels of wheat to Russia Egypt Asks Russia to Delay Wheat Delivery After Ban (Update1) Schwarzenegger Plans Visit - Schwarzenegger said he would travel to Russia

after a trip to China, Japan and South Korea scheduled for Sept. 9-15. A spokesman said Schwarzenegger had not set a date for the Russia trip, but that the governor discussed it with President Dmitry Medvedev during his recent visit to California. 

WILDFIRES IN RUSSIA o Smoke covers St. Petersburgo Foreign countries join firefighting in Russiao Far East volunteers sign up to extinguish wildfires in European Russia o Luzhkov interrupting his treatment returns to Moscowo Moscow deaths doubled in heatwave: Ifaxo Smoke grounds Moscow's fire-fighting fleeto Southeast winds continue to bring acrid smog to Moscow o Moscow airports work normallyo Moscow starts another workweek amid thick smogo Wildfires rage on shrouding Moscow in blanket of smogo Heat-stricken Pushkin museum closes part of exposition to visitorso Anti-smog rooms open after fires o Anger Rises in Russia Over Unchecked Fires - Critics of the government

also fault a revised forest code, which Mr. Putin pushed through parliament four years ago, for crippling the firefighting effort. This disbanded a centralized system of 70,000 forest wardens, who used to patrol the woods and spot fire hazards. Firefighting responsibility passed to regional governments and logging firms that lease the forests.

Prominent customs boss charged by prosecutors - Leader of the customs department in the Murmansk Sea Port has been charged on suspicion of serious irregularities.

Azerbaijanis, Ossetians clash in Moscow - A traumatic gun shooting took place between Azerbaijanis and the Ossetians in Moscow.

Azerbaijani injures 6 Ossetians in Moscow Experts examine water quality in Amur River - Experts in the Russian Far East

have taken samples of water from in the area where the Chinese Sungari River flows into the Amur River.

As Crops Wither in Russia's Severe Drought, Vital Plant Field Bank Faces Demolition - As the fate of Europe's largest collection of fruit and berries hangs in the balance of a Russian court decision, the Global Crop Diversity Trust issued an urgent appeal for the Russian government to embrace its heroic tradition as protector of the world's crop diversity and halt the planned destruction of an incredibly valuable crop collection near St. Petersburg.

Quashing rallies may not stave off discontent in Russia - By Masha Lipman Russia Profile Weekly Experts Panel: Are Attacks on Human Rights Activists in

Russia Part of the Power Struggle in the Kremlin? CIS residents still keen to migrate for work - The crisis forced millions of

migrant workers to return home, but this has not dampened the enthusiasm among residents of the former Soviet countries for working abroad. In total, around 100m people in the region would be willing to move abroad, according to a Gallup Poll.

Poll: Medvedev, Putin run neck and neck in Russian poll - Real power in Russia is in the hands of President Dmitry Medvedev and Prime Minister Vladimir Putin in equal proportions, half of the people polled by the Levada Center believe. NORTH CAUCASUS

o Two militants killed in Chechnya Violence Reported Across the North Caucasus – Jamestown summary as of

August 6 PRESS DIGEST - Russia - Aug 9

o Russian tycoon Alexander Lebedev has offered buying a blocking stake from Ukraine in the aviation leasing firm Ilyushin Finance for $232.5 million.

o Russia's no. 1 lender Sberbank (SBER03.MM) has agreed to loan alluminium giant UC Rusal (0486.HK) $4.5 million in order to pay off its debts to Vnesheconombank.

o The amount of imported new cars in Russia has fallen by 4.6 percent over the last six months.

o Muscovites are moving out of their homes into air conditioned places -- hotels, trading malls, offices and private cars, the daily says in connection with the worsening ecological situation in the capital, which is blanketed by a toxic cloud caused from peat and forest fires.

o Russia seems ready to consider ways by which it can ease its limitations on grain exports after October.

o Moscow's international airport Domodevodo delayed about 20 flights on Sunday due to low visibility caused by the smoke crisis.

o Funeral homes have claimed that the number of deaths grew at least by 2.5 times in the Moscow region since Russia's biggest heatwave in 130 years started in June, the daily says.

o The families of diplomats are leaving Moscow, where the pollution level now exceeds the norm by several times.

o Officials from Russia's emergencies ministry reported on Sunday they had managed to reduce the areas affected by forest fires to 190,400 hectars from 193,500.

o The death rate in Moscow grew by almost 30 percent over the last month, the daily says, citing medical sources.

National Economic Trends Russian Grain Union Seeks to Postpone Export Ban to Sept. 1 Russian farmers on brink of bankruptcy - At least one-third of the grain crop at

Larsha has been destroyed by the drought this year and the potato harvest, usually sold to the Russian army, wiped out altogether. The fires are also taking a toll.

Will Russia relinquish control to fill the hole? - Neil Shering of Capital Economics talks to Tomas Hirst about how Russia will tackle its budget deficit.

Business, Energy or Environmental regulations or discussions Russia Stocks Rise First Time in Three Days on Crude, Metals Investment banks gear up for Russia’s privatisation drive Russia may tighten rules for foreign car makers-report Plastic Logic in sale talks with Rusnano Russia to establish fertiliser champion - A Silvinit-UralKali merger would form

the world’s second-biggest potash producer behind Canada’s Potash Corp; it would be worth up to $20bn (€15bn) and would have an annual production capacity of 11.5m tonnes, according to Troika Dialog, a Moscow investment bank.

VimpelCom Ltd buys back 100% of VimpelCom's shares VimpelCom Completes Squeeze-out Process To Acquire OJSC VimpelCom -

Quick Facts Investments in Russian steel sector expected to grow Ferrous Metals Exports Rise Russia January-June Copper Exports +8.8% On Year At 231,200 Tons UPDATE: Rusal, Interros Near Loan Pacts With Sberbank – Sources Polyus Boosts H1 Sales 37% Toshiba, TEPCO, JBIC to review alliance with Uranium One - The review of

their alliance was prompted by a proposal from JSC Atomredmetzoloto, a Russian uranium mining firm, to buy a majority stake in Uranium One, the three Japanese firms said

Bloomberg Office in Profit-Tax Spat Port of Arkhangelsk on the way out of crisis Bad Things Happen in August for Russia Investors: Julian Rimmer

Activity in the Oil and Gas sector (including regulatory) RLPC-Russian LUKOIL set to sign $1.5 bln loan Monday-bankers Lukoil looks for loan to finance share repurchase Bulgaria, Serbia Agree On Laying Gas Pipeline With Russia Trebs, Titov Oil Fields to Be Auctioned in Q4 Russian Oil and Gas Company Rosneft To Further Imperil Endangered Gray

Whale

Gazprom Naftogaz Ukrainy owes Gazprom USD 780 million for July gas supply

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

Full Text Articles

Basic Political Developments

Moscow remembers victims of August 2008 war in South Ossetia

http://www.itar-tass.com/eng/level2.html?NewsID=15388171&PageNum=0

09.08.2010, 03.39

MOSCOW, August 9 (Itar-Tass) - More than 500 activists of Russian youth movements gathered near the Cathedral of Christ the Saviour in Moscow late on Sunday, August 8, on the second anniversary of Georgia’s aggression against South Ossetia. The young people lit up candles and observed a minute of silence in memory of civilians and Russian peacekeepers that had died in the republic in August 2008.

“We are holding our action called ‘Candle of Memory’ to remind the world that early on August 8, 2008 the Georgian troops began the shelling of Tskhinval from the Grad mobile artillery rocket system and then stormed the city with tanks. Russian peacekeepers and hundreds of civilians died in the aggression,” Maria Kislitsyna, an activist of the Nashi youth movement, told Itar-Tass.

“We are grieving for all who died in those terrible days and demand condemnation of Georgia’s President Mikhail Saakashvili,” Kislitsyna went on to say.

Two years ago, overnight from August 7 to 8, the Georgian authorities launched military hostilities against South Ossetia and began mass shelling of its capital, Tskhinval. On August 8, Russia sent its troops to South Ossetia to protect Russian citizens residing in the region and help the Russian peacekeepers; the warships of the Russian Black Sea Fleet reached the shores of Abkhazia. Sixty-five Russian servicemen were killed and about 250 were wounded in the five-day conflict. South Ossetia lost about 90 troops and volunteers; hundreds of civilians were killed. The aggression by Georgian government forces in August 2008 caused a huge economic damage to South Ossetia. Most of its infrastructure was gone. Many civilians lost their homes and became homeless. More than 2,500 residential buildings were destroyed.

Medvedev Stands By Post-War Republics http://www.themoscowtimes.com/news/article/medvedev-stands-by-post-war-republics/411948.html

09 August 2010

By Anatoly Medetsky

President Dmitry Medvedev visited Abkhazia to defend Moscow's recognition of the breakaway republic Sunday, two years after a war with Georgia over the territory and nearby South Ossetia.

In a further show of support, the Russian government said Friday that it would donate nearly $330 million to the two breakaway regions next year to build roads and power plants, while asking South Ossetia and Abkhazia to model their economic legislation after Russia's.

Medvedev told Russian tourists that the country had prevented a much more dramatic turn of events by recognizing the regions as independent on Aug. 26, 2008, two weeks after the war ended.

“The decision was difficult, but I don't regret anything,” he said. “If it hadn't been for the recognition of Abkhazia and South Ossetia, we wouldn't be having coffee here now. Everything would have developed into a long, bloody conflict.”

The brief, five-day hostilities resurrected Cold War-style divisions and rhetoric between Moscow and the West, but the ties gradually mended after U.S. President Barack Obama announced a reset in relations with Russia last year.

Georgian President Mikheil Saakashvili said in a radio address broadcast Saturday — the anniversary of when Georgian troops invaded South Ossetia two years ago, prompting Russia to strike back the next day — that his country's historic mission was to “liberate” the regions.

In Moscow, Prime Minister Vladimir Putin said Friday that Russia would budget 9.8 billion rubles ($329 million) to build roads and power plants, and to develop telecoms in the separatist regions next year. He was responding to First Deputy Prime Minister Igor Shuvalov, who said the two new states required a lot of investment in infrastructure before local and foreign private businesses would want to operate there.

Russia will earmark 6.8 billion rubles for South Ossetia in 2011 — 45 percent more than Moscow set aside for this year — and 3 billion rubles for Abkhazia, unchanged from its spending this year, Putin said.

Shuvalov said previous funding, which Russia began disbursing after the war, had achieved its intended effect.

“We agreed to rebuild certain roads and communications lines. This work has been completed,” Shuvalov said, following a trip to the two regions. “Communications lines, including mobile communications, are up and running. We have checked.”

As Moscow is sinking money into the regions' economies, it wants them to draft economic legislation that would be like Russia's, Putin said. Shuvalov responded that he had reached an understanding on the issue with the separatist governments.

Russia is seeking to remove all hurdles for goods and money to travel to South Ossetia and Abkhazia and back, and to have a common approach to regulating the market, said Boris Shmelyov, director of the Center for Comparative Political Research at the Russian Academy of Sciences.

“The economies of these tiny states must become part of the Russian economy,” he said. “There's no way around it. Otherwise, they will just not survive.”

In other economic support, many residents of South Ossetia and Abkhazia get more than 1 billion rubles in retirement pensions from Moscow because they hold Russian passports. Russia is also spending billions of rubles on transportation links with the separatist states and fortifying their borders.

Russia will assist Abkhazia in building an airport and organizing air traffic, Medvedev said during a visit to the region's capital Sukhumi, where he chatted with Russian tourists, who flock to the area's scenic Black Sea coast. Local beach resorts should be comparable to their close foreign competition in Turkey, he said.

Medvedev also walked into a music hall and a secondary school being rebuilt with Russian money.

The independent Levada Center said last week that 64 percent of Russians felt that their government did "everything possible to prevent an escalation of the conflict and bloodshed," up from 57 percent a year earlier.

The poll of 1,600 people in early July had a margin of error of 3.4 percentage points.

Saakashvili also chose to travel for the anniversary of the war. He made the radio speech during a visit to Colombia for the inauguration of Juan Manuel Santos as its president, a ceremony where he appeared to represent the most remote country.

He may have made the effort of traveling so far in an attempt to counterweigh the campaign for support that South Ossetian and Abkhaz government representatives have been waging in Latin America. Saakashvili is hoping to prevent the separatist governments from emerging out of international isolation, Shmelyov said.

“He will pursue this line there. It's a good podium to promote his point of view and blame Russia on the Latin American continent,” he said.

Leaders from just three countries other than Russia have recognized the independence of the regions: Venezuela, Nicaragua and the small South Pacific island nation of Nauru. Putin has attributed the lack of mass support to “pressure” from the United States.

Colombia is a strong U.S. ally in the region, which has difficult relations with neighboring Venezuela. South Ossetian leader Eduard Kokoity said earlier this month that Venezuelan President Hugo Chavez would visit his country soon.

South Ossetian and Abkhaz envoys have thoroughly toured Latin America in an effort to galvanize sympathy for their case — apparently prompted by strong anti-U.S. feelings in some of the area's countries, Shmelyov said.

Defense Ministry Vague on War's Toll http://www.themoscowtimes.com/news/article/defense-ministry-vague-on-wars-toll/411950.html

09 August 2010By Nabi Abdullaev

Two years after a brief war with Georgia, the Defense Ministry still has not provided a final account of the casualties, while its reports of lost military hardware widely differ from estimates by experts.

By contrast, it took Georgia's Defense Ministry a month to compile a detailed list of its losses in the August 2008 hostilities and post it online.

Contacted last week, a Russian Defense Ministry spokesman referred all queries for similar information to the portion of the ministry's web site that runs news clips containing quotes from top military officials. According to the clips, the number of the Russian troops killed in the conflict varies between 48 and 74, differing from official to official and without any clear pattern.

In an interview published in the government's Rossiiskaya Gazeta on Aug. 8 last year, Investigative Committee chief Alexander Bastrykin said his agency, which led the investigation into the conflict, had counted 67 names of those killed. He would not add other details about them other than claiming that 10 of them were Russian peacekeepers killed by their Georgian peers in the first hours of the conflict.

In a comprehensive study of the military conflict in Georgia called Tanks of August, which was released in English last week, the Moscow-based Center for Analysis of Strategies and Technologies, or CAST, an independent think tank, put the number of  Russian military casualties at 65.

The center's experts based their list — detailing ranks, regiments and times of the death — on Russian and Georgian media reports, official documents and eyewitness accounts, said Ruslan Pukhov, the CAST head.

Every fourth death tracked down by CAST — or 17 of the 65 — was not directly related to combat. Soldiers and officers died from mishandling firearms, friendly fire and in traffic accidents on the treacherous mountain roads. Most of the others, or 32 Russian troops, were killed in the first two days of the conflict on Aug. 8-9.

The Defense Ministry has not commented on the CAST study.

As for hardware, the ministry has recognized the loss of only four military aircraft in the conflict: three Su-25 fighters and one Tu-22M3 strategic bomber.

Using open sources, CAST counted two more Su-24 fighters that went down during the hostilities. In addition, two helicopters, an Mi-8 and an Mi-24, crashed in South Ossetia shortly after the war.

How to Make Peace With Georgia http://www.themoscowtimes.com/opinion/article/how-to-make-peace-with-georgia/411927.html

09 August 2010By Dmitry Trenin

The “little war” of August 2008 shook the world, but it did not change it. No new Cold War followed the Russian-Georgian hostilities, but the five-day war demonstrated how brittle security in Europe is nearly two decades after the end of the real Cold War.

This chilling sense of insecurity pushed both sides to change their foreign policies. U.S. President Barack Obama hit the “reset,” and Moscow came up with the notion of “modernization alliances” with the United States and Europe.  

In this seemingly happier world, Georgia has not been forgotten, but it was securely “bracketed,” to use diplomatic jargon. Although the White House and the Kremlin have agreed to disagree on Georgia and the independence of South Ossetia and Abkhazia, the new relationship has still allowed them to work together on more pressing items on the agenda — namely, Iran, Afghanistan, nonproliferation, arms control and attracting technology transfers.   

For the past two years, things have been rather quiet on the Caucasus front, despite the periodic media scares. Indeed, the second anniversary of the war has been allowed to advance without a threat of a new military conflict arising. Russia has taken over Abkhazia’s and South Ossetia’s borders with Georgia, thus reducing the risk of unauthorized provocations. At the same time, European Union monitors have been observing the situation closely. Georgian President Mikheil Saakashvili received a clear signal from Washington that any new attempt to reintegrate Georgia by military force would not be tolerated.

All is quiet in Geneva, too, where representatives from Georgia, Russia, Abkhazia and South Ossetia — along with European and U.S. mediators  — are holding their stiff, but sterile, exchanges. But the talks always break down on the disputed issue of independence for Abkhazia and South Ossetia.

In Moscow, President Dmitry Medvedev has stated that he will not deal with Saakashvili in any form. This may last until 2013, when Saakashvili’s presidential term ends  — or longer if Saakashvili changes the constitution and follows Vladimir Putin’s example, formally stepping down as president but remaining in control as an all-powerful prime minister.

This may be too long a wait, though. Saakashvili has clearly prevented Russian-Georgian relations — and, ironically, Georgian-Western relations — from improving. Of course, he has a constitutional mandate, but when his presidential term expires, he must leave office without “pulling a Putin” — for the sake of his country and all Georgians.     

Meanwhile, the Russian government should reverse its policies in favor of the Georgian people with whom Russians have traditionally had good relations. But Medvedev and Putin’s policy so far has been to let ordinary Georgians feel the pinch of bad relations and indirectly apply pressure on Saakashvili. This policy has failed. Instead of clumsy and ineffective attempts to undercut Saakashvili — which, in reality, actually strengthen his position — Russia could use its soft power to win back sympathy from Georgians and prepare for the post-Saakashvili future. Even small steps can go a long way.

Such steps could include restoring normal air travel, easing visa procedures for Georgian citizens, allowing quality Georgian wines back to the Russian market and encouraging contacts with members of the Georgian public beyond the narrow circle of Kremlin guests.

Some of these contacts could lead to an informal discussion of the options for future settlement on the final territorial status of Abkhazia and South Ossetia. It will eventually dawn on everyone that there can be no return to the status quo ante. It is also obvious that Abkhazia and South Ossetia are two very different cases.

Abkhazia has the geography, resources and a determined elite that could be used for nation-building. It will not return to Georgia, but it could trade land for peace — and recognition. The Gali district, with its ethnic Georgian population, would revert to Georgia in return for Tbilisi’s recognition of the rest of Abkhazia as an independent state. As part of the settlement, Russia’s military presence in Abkhazia would become less relevant and might be reduced.

South Ossetia, by contrast, has virtually no prospect of becoming a viable state. Its reunification with North Ossetia would be a disaster, whether it happens within or beyond the borders of Russia. But South Ossetia would not simply fold back into Georgia, either.

A creative solution to the South Ossetian issue can be found along the lines of the Andorran model. That is, South Ossetia would retain the formal trappings of independence — it could  mint coins, print stamps and raise its flag — but Georgia would be legally present in South Ossetia as a guarantor of its remaining or returning Georgian population. Such presence would also protect Georgia itself from the threat of a surprise attack against its capital. Although Russia would have to pull back its forces north of the Roki tunnel, it would retain the right to protect South Ossetians. A joint police force would keep the peace as necessary.

Admittedly, the bulk of concessions would fall on Georgia, but they will represent an improvement in comparison with the present situation and the indefinite period of the freeze. Cyprus underscores the negative consequences of a conflict that is left frozen for decades.

On the other hand, Georgia would gain enormously as a newly consolidated nation with its conflicts resolved and relations with its northern neighbor improved. It could then focus its resources and considerable talent on the economic and social development of the country. The conflicts, which put the Georgian state on the brink of collapse two years ago, will finally be history.

Dmitry Trenin is director of the Carnegie Moscow Center.

Abkhazia and the Caucasus: the west’s choice

http://georgiandaily.com/index.php?option=com_content&task=view&id=19629&Itemid=130

August 08, 2010

Neal Ascherson

The Georgia-Russia war of August 2008 refroze a region. The small Black Sea nation of Abkhazia is the key to its unblocking, says Neal Ascherson.

“The gentle art of losing face / May one day save the human race”

This was a favourite saying of Hans Blix, when he was head of the United Nations inspection commission in Iraq. He repeated it, no doubt sometimes under his breath, as he tried to persuade George W Bush and Tony Blair to back away from their proclamations that Saddam Hussein had “weapons of mass destruction”.

But they preferred to save face and, as history will probably judge, to lose Iraq, rather than admit that they might be mistaken. Today, there are several other places in the world

where losing face - tearing up a bad policy - might well save a fair few members of the human race. One is Afghanistan. Another is the south Caucasus.

It is now two years since, on the night of 7-8 August 2008, the Georgians bombarded Tskhinvali, the capital of South Ossetia, and the Russians responded by pouring their tanks into Georgia. The “who started it” question is still argued, but the heat has mostly gone out of it. Outside Georgia and Russia, the general view these days shares out the blame. The Georgian president, Mikheil Saakashvili’s decision to attack was crazily provocative, while the Russians - who had been praying for just such a provocation - behaved unforgivably by turning retaliation into a crime of international aggression. But the question which now matters is how to clear up the mess that war left behind.

The closing window

The mess has now congealed into hard-baked confrontation. On 5 July 2010, the United States secretary of state Hillary Clinton returned to Georgia to reaffirm American commitment to Georgia, and to challenge the Russians to end “the occupation of two breakaway Georgian regions” (South Ossetia and Abkhazia). This position, the so-called “defence of Georgia’s territorial integrity” has been maintained by the US, Nato and the European Union since the end of the August 2008 conflict. The “breakaway regions” phrase is still parroted almost daily by western politicians and journalists. To back away from this stance in public would certainly require a courageous loss of face. And yet the “territorial integrity” line is false, useless and dangerous (see “After the war: recognising reality in Abkhazia and Georgia”, 15 August 2008).

Neither of these territories - both ethnically distinct - wanted to be part of Georgia when the Georgians declared independence in 1991. Both fought vicious wars against Georgian encroachment in the next few years. Both have now been effectively independent for over fifteen ears, and there is no prospect of a Tbilisi government taking control of them except by the use of armed force. As that would precipitate another, perhaps even a deeper and more savage Russian invasion of Georgia, it is out of the question. American or British talk of “restoring Georgia’s territorial integrity” is therefore nonsense: at best hypocritical, at worst suicidally ignorant.

But the differences between South Ossetia and Abkhazia matter too. South Ossetia, with a mere 70,000 people, is not really a proposition. Its people, if they were ever allowed a free choice, would probably reject independence and join their North Ossetian relatives in the Russian Federation. Abkhazia, in contrast, has a plausible future. It has about 250,000 inhabitants, the most beautiful stretch of the entire Black Sea coast, and rich sub-tropical agriculture. Most importantly, its people want to make a reality of their independence. They have no intention of letting the Georgians conquer them. To prevent that, they accept the presence of Russian troops and warships. But neither do they want to become just one more slatternly Russian colony. They would like Abkhazia to become a small, free, prosperous Black Sea state with close links to Europe.

That ought to be what the rest of the world wants for Abkhazia too. If “restoring” Georgian rule is a fantasy, then the next best thing must be to prevent Abkhazia falling irrevocably under Russian control. The window to achieve that is still open, but growing smaller all the time. An agreement for permanent Russian naval and military bases at Ochamchira and Gudauta was negotiated this spring; Russian state railways have taken control of the line from the frontier near Sochi to the resort of Gagra, and a Russian trade delegation is now in Abkhazia discussing “joint” economic development.

The immediate need is for the west to establish direct contact with Abkhazia - economic, social and cultural - and to secure sea access to Abkhazian ports. For over a decade after the independence war of 1992-93, Abkhazia lived under a stifling international blockade, in which Russia took a leading part. Now, after Russia’s formal recognition of Abkhaz independence in August 2008, the little nation should on paper be free to open its own contacts with the outside world. It has so far failed to do so, partly because of furious Georgian objections but also because the Abkhazian government has been deplorably nervous of doing anything which might upset its Russian protectors.

Turkey, now in the mood to explore new foreign policies, has recently begun to develop an “unofficial” relationship with Abkhazia which may reduce the latter’s dependence on Russia. There has been a large Abkhaz diaspora in Turkey since the 19th century, and some of its enterprising members have begun to invest and even settle in the “old country”. The European Union ought to risk Georgian protests and launch a modest contact programme - environment, health, theatres, education - which would help Abkhazia out of isolation. Peter Semneby, the wise Swede who is the European Union’s special representative for the south Caucasus, has spoken of “engagement without recognition”.

The escape-route

It’s a good time to change policy. Firstly, because there is growing realisation in Georgia itself that the two territories cannot be “recovered”. Mikheil Saakashvili’s government is still totally obdurate. But moderate opponents like Irakli Alasania, who negotiated with the Abkhazians in 2008, have said that the problems can be resolved by direct talks, and that “the Abkhazian side’s goal also is to create conditions for long-term stability”. And, as Donald Rayfield reports on openDemocracy, Georgian interest has shifted away from sacrificial posturing towards the thrills of economic transformation and money-making (see “Georgia, two years on: a future beyond war”, 5 August 2010).

Secondly, because the west’s non-recognition of the territories, its stolid endorsement of the “breakaway regions” line is doing Georgia no favours. A nation thirled to impossible territorial claims which merely enrage its neighbours is a trapped nation, dependent on more powerful allies who may one day tire of those claims and leave their client in the lurch.

Sterile talks plod on. At Geneva, the discussion on “security and stability in Transcaucasia” has just held its twelfth session. The Abkhazians want an all-round

agreement to renounce the use of force. The Georgians, trying to ignore the Abkhazians as unrecognised unpersons, say they will only sign an agreement with Russia. The Russians - sensibly - suggest that they all sign an agreement; but unilaterally, with international organisations such as the Organisation for Security and Cooperation in Europe (OSCE) and not with each other. Nothing happens.

Everyone, it seems, is gripped in the drying mud of frantic attitudes struck two years ago. And yet any outsider can sketch an escape-route. America, impatient to reset relations with Russia, stops backing Saakashvili’s rhetoric and persuades Georgia to accept irreversible reality. The European Union opens a sub-recognition contact-programme with Abkhazia, and halts its absorption by Russia. Georgia follows the EU example, reopening transport, trade and cultural links with Abhkazia. Some of the Georgian and Mingrelian refugees who fled Abkhazia in 1993 begin to return, on condition that they recognise Abkhazia’s independence and take its citizenship. Abkhazia learns to welcome them as fellow-citizens, not saboteurs and subversives.

The end product? A warm, even intimate relationship between two independent states in the south Caucasus - one larger, one smaller. Perhaps even a special relationship, for in the end the two societies have much in common. All it takes is the gentle art of losing face. But in the Caucasus, that’s an art with no teachers.

 URL: http://www.opendemocracy.net

EU diplomat criticises Russian-backed rebels in Georgiahttp://euobserver.com/9/30596

ANDREW RETTMAN

Today @ 09:29 CET

EUOBSERVER / BRUSSELS - The head of the EU monitoring mission in Georgia has on the two-year-anniversary of the war criticised the Russian side's lack of co-operation and warned that threat of renewed conflict remains.

Hansjorg Haber, the German diplomat in charge of the 330-man-strong mission, noted in a written statement at the weekend that Russian-backed Abkhazia and South Ossetia's policy of keeping EU monitors out of their territories contributes to ongoing tension.

"The de facto authorities' denial of access to South Ossetia and Abkhazia has been hampering the mission's normalisation and stabilisation efforts," he said. "Inability to access areas under the control of Sukhumi and Tskhinvali [the regional capitals] prevents us from helping bring clarity and resolving incidents that take place on the ground."

Mr Haber praised a Georgian agreement to limit military deployment near the disputed borders, adding that "a Russian decision to reciprocate the move would help bring transparency ... and increase security for all."

With unquantified numbers of Russian armour still parked less than one hour's drive from the Georgian capital in violation of the August 2008 truce and with some 30,000 ethnic Georgians still unable to return home to South Ossetia, the EU official warned against international complacency.

"We are not under the illusion that stabilisation equates to the resolution of the conflict. The Georgian people have had plenty of opportunities to learn these lessons between 1993 and 2008, when, in spite of agreements to stabilise the situation and the presence of international organisations to monitor this process, hostilities reignited."

The unarmed EU monitors, the only international presence in the post-war theatre following the withdrawal of the OSCE ad the UN, are likely to stay in place beyond September 2011, the end of their current mandate, Mr Haber added.

In events that shocked Europe, fighting erupted on the night of 7 August 2008 when Georgian forces shelled the rebel capital of Tskhinvali in South Ossetia, prompting a five-day-long Russian incursion into Georgia and threats by Russian Prime Minister Vladimir Putin against the pro-Western Georgian leader, Mikhail Saakashvili.

An independent but EU-funded report by Swiss diplomat Heidi Tagliavini in 2009 condemned both sides, saying Georgia's attack on Tskhinvali was unjustified and that Russia's reaction as "illegal."

But attempts to control the war narrative continue unabated as both Russia and Georgia court better relations with the EU and US two years down the line.

The Russian side at the weekend repeated its claim that the Tagliavini report vindicates its actions.

"It is perceived differently: some think this way, others differently, but anyway there are objective facts and they were laid out by Russian, Abkhaz and South Ossetian sides. Then they were reflected in a report by Heidi Tagliavini and in other documents. That's why I think, that the truth is on our side," Russian President Dmitry Medvedev told press while visiting a Russian garrison in Abkhazia on Sunday.

"The European Union has validated that the [Tskhinvali] attack violated international law ... They [the Georgians] maintain that our country is occupied by the Russian Federation. They are wrong and officials in Washington and Brussels know that," South Ossetian leader Eduard Kokoity said in a statement emailed to Brussels and Washington-based journalists by the US-based PR firm Saylor Company on Saturday.

For his part, Mr Saakashvili kept a low profile at the weekend, speaking of the need to "liberate" Georgia in a TV address beamed over from Columbia on Saturday while on a state trip.

But he used harsh words while addressing the Georgian army in a speech at home on 4 August, calling the Russian side "barbarians" and saying that still today "the enemy ... wants to overthrow the Georgian government" and restore its "imperial sphere of influence."

Mr Saakashvili's allies in the US also continue to take a hardline.

"Though disagreements remain over how the conflict began, there is no denying that two years ago this weekend, Russian troops crossed an internationally recognized border and invaded Georgia," US Republican senator John McCain said in a comment for the Washington Post which urged the US to re-arm Georgia.

Nezavisimaya/Russia Today: Two years in crisis http://rt.com/Top_News/Press/eng.html

The economic situation remains as uncertain as it was in the fall of 2008

By Mikhail Sergeev

Russia’s current economic crisis began with the flight of foreign and Russian investors. Exactly two years ago, after the outbreak of the conflict in South Ossetia, the ruble exchange rate and stock indices began to tumble. Ruble’s exchange rate against the dollar fell by nearly one ruble, and in August 2008, the RTS (Russian Trading System Stock

Exchange) index fell by approximately 250 points. Meanwhile, the authorities did not anticipate that the crisis would be so prolonged. And even after two years of decline, temporary recoveries and stagnation, the future of the the Russian economy remains uncertain.

On the eve of the outbreak of war in South Ossetia, the dollar cost 23.4 rubles. Meanwhile, in mid-August of 2008, its exchange rate fell by 1.1 rubles and continued to decline until the end of the “smooth devaluation regime” in the spring of 2009. In early August 2008, the RTS index remained at 1,840 points. But by the end of August, it lost 15-16 percentage points and continued to decline. Many experts relate the onset of the economic crisis to June 2008, when a sharp decline in investments and a fall in industrial output was recorded. However, these troubling statistics were more likely a harbinger of the acute phase of the crisis.

It is noteworthy that even after the marked deterioration of economic indicators in August 2008, Russian officials were for a long time unable to grasp the scale, the duration and the outcomes of the crisis.

“The severity of the crisis has not yet been fully understood,” Finance Minister Aleksey Kudrin predicted in October 2008 to Argumenty i Fakty. “In Russia, its effect will include a reduced rate of foreign investment and a decrease in demand for Russian products. At the same time, the government and the Central Bank will provide the necessary amount of money in the economy. The banking system will continue to operate stably. The decrease in product demand will slow down economic growth and reduce the revenues of certain companies. But, ordinary citizens will remain practically unaffected. The ruble will continue to be a stable currency. Our economy will re-adjust and become competitive.”

And even in early 2009, the Finance Ministry could not believe the deep economic decline of 7.9% of the GDP, while planning for a zero economic growth.

Kudrin’s October forecast that “ordinary citizens will remain practically unaffected” by the crisis, to put it mildly, did not materialize. At the deepest point of the crisis the real incomes of the population were reduced by more than 6% (and even more, according to certain estimates); retail trade fell by more than 10%.

Today, the government is suggesting that, with the rise of the GDP, it will be possible to overcome the crisis by the end of 2012.

“It is expected that in 2013, the GDP will surpass the pre-crisis level of 2008 by 6.8%,” Ministry of Economic Development experts predict based on scenario conditions for 2011-2013. By the end of the projected period, the volume of industrial output will reach the pre-crisis level and amount to 101-102% against the 2008 level. At the same time, structural changes will take place. Due to an increase in consumer demand and import substitution, the food and light industry share in the total volume of industrial output will

increase (in 2013, the production volume in these sectors will, in real terms, reach 109-115% against the 2008 level).

However, independent economists don’t consider these forecasts to be very reliable.

“Russia’s current economic situation is very similar to the one two years ago, when any event could serve as an impetus to turn the economy, which was under high speculative pressure, into recession,” said Igor Nikolaev, head of the Strategic Analysis Department at FBK. According to him, today economists and officials “have absolutely no idea how 2010 will end.”

The anti-crisis measures in Russia and other countries often look rather unconvincing, says the expert. Thus, despite the calls of the G-20 leaders to fight against protectionism, there are increasingly more protectionist measures across the globe. Overall, Nikolaev says that the main lessons of the crisis have not yet been learned, and many countries continue to rely on speculative means of revitalizing their economies.

Read the article on the newspaper's site

Caucasus war prompted radical reforms in Russian forces: Experthttp://www.zeenews.com/news646816.html

Updated on Sunday, August 08, 2010, 21:35Moscow: The five-day Caucasus war between Russia and neighbouring Georgia over the breakaway republic of South Ossetia resulted in the most radical reforms of the Russian armed forces since 1918, according to a top defence expert.

"Although a superficial observer could see a quick victory over the NATO-trained Georgian army by prompt and massive response by the Russian armed forces, the military experience of 8/8/8 was viewed by the political and military leadership of the country as contradictory and a new stage of radical reforms was launched," said Dr. Ruslan Pukhov, the Director of independent Centre for the Analysis of Strategies and Technologies (CAST)."This was the most radical reform of the military machine since the establishment of the Red Army in 1918," he said.

Releasing the English edition of the CAST publication "The Tanks of August" today on the second anniversary of the Caucasus war, Pukhov said drawing its lessons the political and military leadership realised the need for quick reshaping of the national armed forces to effectively act in local conflicts on the former Soviet territory.

"Within an unprecedented quick timeframe, by the end of the 2009, the Russian armed forces acquired a new profile, which in principle differs from many traditional characteristics of the Red, Soviet and post-Soviet Russian Army," Pukhov said.

He said the recent Vostok-2010 massive wargames -- including over 20,000 men and machines in the Far East close to the borders of China and Japan -- involved combat jets taking off from air bases in the western parts of the country and after several in-flight refelling immediately went into action several thousand kilometres away. For Pukhov, it was one of the examples of a new shape of the Russian armed forces.

"The main idea of the military reform is to abandon the traditional model of the Imperial and Soviet model of mass mobilisation and transition to an army consisting of well-equipped and fully-staffed constantly battle-ready units in the peacetime," he underscored.

Edited by Pukhov, the 144-page 'The Tanks of August' is a collection of papers written by the experts of the CAST on the armed conflict between Russia and Georgia on August 8-12, 2008.

The book looks into the transformation of the Georgian armed forces under President Mikhail Saakashvili and details Tbilisi's key preparations for the war. It also analyses the post-war deployment of Russian military bases in Abkhazia and South Ossetia, now recognized by Moscow as independent states.

PTI

Russia opens border for cargo from Azerbaijan09.08.2010 12:11

Baku, Fineko/abc.az. Despite the start of activities of the Customs Union of Russia, Belarus and Kazakhstan, the former was able to open its borders for goods from other countries.

Tofig Nurullayev, chairman of the Association of International Motor Freight Forwarders of Azerbaijan (ABADA), says that today there are not problems with road cargo transportation from Azerbaijan to Russia, in any case the ABADA members made no complaints on the occasion.

“The matter of new form of declaration for commodities imported into its territory has been solved simply – the Russian side itself fills in declarations for imported goods,” Nurullayev said.

On 1 July 2010 Russia transferred to the new system of declaration for transported cargo applied earlier only by European countries.

That caused certain problems and delay of goods on the border as only on 30 June ABADA was informed officially of Russia’s refusal since 1 July from simplified system

of cargo declaration and transfer to a new form of declaration for transported cargo and a new system of codes for cargo.

Russia is the main country where ABADA members carry out carriages. But the major volume of motor cargo carriages is conducted there in summer period. The Association has 65 members having at disposal a fleet of about 670 trucks.

11:42Bulava missile’s first test launch in 2010 postponed by 2-3 weeks

http://www.interfax.com/news.asp

GOOGLE TRANSLATION

The first launch of the Bulava in 2010 postponed for two weeks

http://rus.ruvr.ru/2010/08/09/15034020.html

08/09/2010, 11:41 The first in 2010 and 13th in a row test-fired an intercontinental ballistic missile Bulava sea-based postponed for two weeks. It was reported today to journalists in the Russian military-industrial complex (DIC). Start extended to two or three weeks, "- said a source in the defense industry. According to him, "the State Commission meeting is not held. He did not give the reason for transfer, ITAR-TASS. Previously it was assumed that the launch will take place from 11 to 14 August, but only in the current year are scheduled three test launch of the Bulava. The final decision was to take the State Commission on August 9. Tests of missiles were suspended after several unsuccessful launches before finding the causes of the accident. According to official figures, out of 12 test launches of the Bulava, only five found to be successful or partially successful. As established by the state commission, the cause of the latest failure was a violation of the production technology of missiles, RIA Novosti reported. As earlier noted in the General Staff of the Navy, "the worst in tests of the Bulava is that we are confronted with a" floating glitch in the rocket, which means it occurs every time a new location. "The last time in December 2009 gave failed the third stage of the Bulava - reminded the General Staff. Intercontinental ballistic missile, sea-based P30 3M30 / RSM-56 / "Mace" - Russia's most recent three-stage solid propellant missile. It is designed to equip future nuclear-powered strategic missile project "Northwind". Designed at the Moscow Institute of Heat Engineering. The missile can carry up to ten hypersonic maneuverable nuclear warheads independently targetable able to change the flight height and the rate and hit targets at a distance of up to 8 kilometers.

Blueprint for Russian aircraft carrier to be ready this yearhttp://www.barentsobserver.com/blueprint-for-russian-aircraft-carrier-to-be-ready-this-year.4805127-58932.html

2010-08-09 A technical design for Russia’s new-generation aircraft carrier will be ready by the end of the year, the head of the Russian Navy says. Navy experts believe the future aircraft carrier will be nuclear-powered with a displacement of 50,000-60,000 tons.

In an interview with RIA Novosti Admiral Vladimir Vysotsky said several organizations were working on the warship's design, including the Severnoye and the Nevskoye design bureaus.

He said it was too early to say what the new aircraft carrier will look like or what its specifications will be, not even with regard to its displacement. - The designers have been given a number of requirements. If they manage to pack everything into a matchbox, they are welcome, he said.

Some Navy experts believe the future aircraft carrier will be nuclear-powered with a displacement of 50,000-60,000 tons.

The admiral said the Russian Navy needs carrier battle groups. – If, for example, we do not have an air craft carrier in the North, then the battle capability of the Northern Fleet’s attack submarines will be reduced to zero after the first day, because the submarine’s principal adversary is aviation, he said.

The Russian navy has only one operating air craft carrier, the Northern Fleet’s “Admiral Kuznetsov”. The carrier is planned to enter a dry dock in 2012 for full-scale modernization, as BarentsObserver reported.

Public discussion on new Russian police law discloses restrictions on physical forcehttp://en.rian.ru/russia/20100809/160124047.html

09:40 09/08/2010

A new police law in Russia put on the Internet for public discussion includes restrictions on how much force law enforcers may use against individuals.

The website to publicly discuss the new law uses Russia's .ру domain for the Internet in Russian which contains only letters from the Russian alphabet. The bill was posted on законпроект2010.ру on Saturday.

One of the new restrictions is the use of nightsticks. According to the new law under discussion, police would no longer be allowed "to deliver blows with a truncheon to the head, neck, collarbone area, abdomen, or to the genitals." The new law would also restrict police from multiple blows to the same area of the body.

The use of physical force could also be restricted so that "a law enforcement agent would be obliged to warn an individual of physical force that he or she intends to use" against the alleged lawbreaker.

Russian President Dmitry Medvedev has also proposed changing the name of Russian law enforcers from the Russian "militsia" to the internationally accepted word "police."

Other reforms include involving "citizen police" when necessary to help out in detaining or arresting an alleged criminal. Ordinary citizens have not in the past been used in Russia for this; whereas in the United States citizen arrests are generally accepted. The change in Russian law would envisage that upon the request of a policeman, a regular citizen may be called on to assist in detaining a lawbreaker.

A special committee and the Interior Ministry's expert council will analyze the comments on the website, the Medvedev said last week. He also said that public discussions of the revised police law would continue until mid-September, giving plenty of time for the people to voice their thoughts.

The state of Russia's police has become a matter of considerable concern after a series of high-profile police scandals, including the random shooting of several people in a supermarket by an off-duty police officer in April 2009.

In response to growing criticism, Medvedev launched a large-scale reform of the police in December 2009, including cutting the number of policemen and increasing salaries.

The new police reform would also prohibit people from entering the police forces if they are alcoholics, drug addicts, or have a past criminal record.

MOSCOW, August 9 (RIA Novosti, David Burghardt)

Russia, NORAD shadow jet in Pacific hijack drillhttp://www.google.com/hostednews/ap/article/ALeqM5hF9xezzIggkZHfvIB_EkgmOF-e-QD9HFPPL80

By DAN ELLIOTT (AP) – 18 minutes ago

ABOARD FENCING 1220 — A chartered jet with American, Russian and Canadian military officers aboard played the role of a hijacked plane in an unprecedented drill Monday as pursuing fighter planes flew close enough to see pilots' helmets silhouetted against the blue sky.

Flying east across the Pacific starting Sunday from Anchorage, Alaska, the Gulfstream jet — code-named Fencing 1220 — was shadowed first by U.S. F-22s and later by Russian Su-27 and MiG-31 fighters in the first joint exercise of its kind among the former Cold War adversaries.

"To see those Russian fighters pull up right on time, to hear the Russians (talking on the radio), it's just incredible," said U.S. Army Maj. Michael Humphreys, a NORAD spokesman and the senior American officer on the jet.

The Russian Air Force representative taking part, Col. Alexander Vasiliev, knew the day would come when the two sides would work in concert, but "never thought it would be him sitting on the aircraft," his translator said. Vasiliev declined to be quoted directly, saying he would leave that to an official Russian spokesman at a news conference planned later in the week.

The exercise running through Tuesday, called Vigilant Eagle, was designed to see how well the two sides could coordinate during a hijacking.

About 10 minutes after taking off from Anchorage, the Gulfstream's civilian pilots radioed an agreed-upon digital code, 5475, to civilian air traffic controllers in Alaska to signal that the plane had been "hijacked."

Ben Rhodes, one of the pilots, followed up with a voice radio call: "Fencing 1220 squawking 5475 for the exercise."

NORAD then dispatched the F-22s and an E-3 Sentry — an airborne surveillance and command post — to shadow Fencing 1220.

The Gulfstream was still over Alaska at about 38,000 feet (11,500 meters) when the angular, silver F-22s drew alongside, about 10 minutes after the hijack signal. They edged to within 500 feet (150 meters) and after about 30 minutes, they turned back to refuel and didn't return.

On the ground and in the air, NORAD commanders and civilian aviation officials were communicating with their Russian counterparts. About two hours after the F-22s fell back, while the Gulfstream was over the Pacific, NORAD told Russian officers the plane was theirs to follow.

Two Russian Su-27 fighters painted pale blue and white soon pulled up from behind Fencing 1220 and hovered off the right side, red stars clearly visible on their wings and twin tails. They shadowed the Gulfstream for about 90 minutes, before banking sharply to the left and peeling away.

Three other Russian fighters, a MiG-31 and two Su-27s, later shadowed the Gulfstream during the 7 1/2-hour flight. All the fighters were unarmed, a condition of the exercise.

Canadian Forces Col. Todd Balfe, NORAD's deputy commander for the Alaska region who was also aboard the flight, acknowledged it may seem "incongruous" that the exercise was taking place amid tension between his country and Russia over recent Russian bomber flights probing the northern boundaries of Canadian airspace. But terrorism transcends national boundaries, he said, and exercises like this could lay the foundation for cooperating on other issues as well.

"So we'll start out with this mission, and if that leads into other missions, for example, probing of air spaces, well, that would be a great thing as well," he said.

Vasiliev said it was too early to evaluate the exercise, but everything had gone according to schedule.

Balfe said things went well from his viewpoint, but he had not talked with NORAD and civilian officials on the ground.

A full-scale evaluation will be made sometime after the second leg of the exercise, scheduled to end Tuesday in Alaska after the Gulfstream flies back across the Pacific, shadowed first by the Russians and then NORAD.

US, Russia hone airline hijack responsehttp://www.boston.com/news/nation/articles/2010/08/09/us_russia_hone_airline_hijack_response/

By Associated Press August 9, 2010 PETERSON AIR FORCE BASE, Colo. — US and Russian jet fighters will take turns pursuing a civilian plane across the Pacific this week in a first-of-its-kind exercise to test their response to a potential international hijacking.

Aircraft and officers from Russia and North American Aerospace Defense Command will track the civilian plane, an executive-style jet that will play the role of a hijacked civilian airliner.

The goal is to test how well the two forces can hand off responsibility for the plane. The three-day exercise started yesterday in Alaska.

Officials on both sides of the trust-building military exercise chose a mutual, modern-day interest — the fight against terror — to simulate an event that could entangle the two countries.

“We try to anticipate any potential areas in which it might be necessary for us to launch fighter jets,’’ said Major Michael S. Humphreys, a NORAD spokesman.

Moscow faces terrorist attacks by radicals from restive Russian provinces. In March, suicide bombers killed 40 on a Moscow subway, and an explosion in November 2009

derailed a Moscow-bound train, killing 26. More recently, on July 29, a man seized a plane with 105 passengers and crew at a Moscow airport. Russian forces overpowered him.

The United States is still wrestling with terrorist threats to airplanes and subways nearly nine years after the Sept. 11, 2001, hijackings. A Nigerian man is accused of trying to blow up a jetliner over Detroit on Christmas Day. Authorities thwarted an alleged plot to carry out three suicide bombings on New York City subways in September 2009.

Kommersant/Russia Today: Moscow and Washington take “pre-arranged” shots at each-otherhttp://rt.com/Top_News/Press/eng.html

But this will not affect the bilateral relations

By Aleksandr Reutov

Last weekend, Russia’s Foreign Affairs Ministry published a report on America’s violation of obligations in the sphere of nonproliferation, weapons of mass destruction and arms control. The document outlines Washington’s non-compliance with the stipulations of the START treaty Intermediate-Range Nuclear Forces Treaty (INF), as well as failure to comply with the Missile Technology Control Regime (MTCR). Moreover, the US is accused of supplying arms to Georgia, which in Moscow’s opinion violates a number of documents of the OSCE. The report of Russia’s Foreign Affairs Ministry became a response to a similar report, drawn by the US Department of State, which accused Moscow of non-compliance with START Treaty provisions in late July. However, Kommersant’s sources say that Russia and the United States have planned to have this “exchange of pleasantries” as early as the fall of last year.

The report, titled “Facts of violations by the United States of its obligations in the sphere of non-proliferation of weapons of mass destruction and arms control,” was published on Russia’s Foreign Affairs Ministry’s website on Saturday. The document indicates that Russia’s concerns regarding America’s compliance with the provisions of the START-1 Treaty, which had expired in December of last year, were never addressed. Namely, Moscow did not receive the telemetric information on the flight trials of submarine-launched ballistic missile (SLBM), Trident-II, which took place on the United States’ Eastern Test Range. Washington explained this by saying that the missiles belonged to Great Britain, which does not have any treaty obligations with Russia in the sphere of strategic nuclear forces. “Such uncontrolled activity on behalf of America in regard to SLBM had practically deprived us of the ability to control one of the basic parameters under START-1 Treaty,” stressed Russia’s Smolenskaya Square officials.

The authors of the report also pointed out the unsanctioned re-equipment of five intercontinental ballistic missile launchers on the Vandenberg Test Range into interceptor

missile launchers. The conversion of B-1 bombers to non-nuclear weapons also raised questions. “The United States failed to present convincing evidence proving that the applied set of procedures make reverse conversion of non-nuclear bombers into the nuclear version impossible,” noted Foreign Affairs Ministry representatives.

Moreover, Russia’s Foreign Affairs Ministry argues that Washington had violated the provisions of the Intermediate-Range Nuclear Forces Treaty. “In testing the Ballistic Missile Defense (BMD) system, the United States are using an entire family of target missiles, that imitate a wide variety of medium-range missiles,” explain the document’s authors. The launches of these products are regarded as trials of the new-type medium-range ground-based ballistic missiles – which is a direct violation of the agreement’s fundamental provision – Art. VI, which prohibits “manufacturing of medium and short-range missiles and conducting their flight trials.”

The remaining accusations against the United States, deal with violations of the international missile technology control regime, control over conventional arms in Europe and other agreements. Washington is also being accused in violating the OSCE document on small arms. Namely, Moscow believes that the supply of more than 18,000 rifles, carbines and heavy machine guns to Georgia violated OSCE’s provisions “to abstain from transferring weapons to tension and conflict zones, which bring a destabilizing military potential to the region or in other ways contribute to regional instability.”

The document, published by Russia’s Foreign Affairs Ministry, became a response to a report, made by the US Department of State, “Adherence to and compliance with the obligations in the sphere of arms, nonproliferation, and disarmament,” which was published in late July and in which the United States accused Moscow in noncompliance with the stipulations of the START Treaty. The exchange of reproaches allowed some observers to conclude that the process of “resetting” the US-Russian relations is stalling, and as a result, the chances for future ratification of the START-3 Treaty look dim. However, according to Kommersant’s sources, the parties agreed to take these shots at each other last year.

“We knew about the US State Department’s report in October of 2009, when START-3 was only being discussed,” Vladimir Orlov, director of PIR-Center, explained to Kommersant. “Already then, the Americans signaled to us that they will be forced to issue a report in which Russia will be subject to some criticism. At the same time, our American colleagues boldly informed us that we could prepare something of our own, thus together nourishing the internal strength of our conservatives.”

However, the expert acknowledged that the report, issued by the Russian Foreign Affairs Ministry, is more critical than that of the United States.

“If the process of ratification of START-3 was more active in the US, then our report would have been softer,” said Mr. Orlov. “But, so far, we don’t have a 100% guarantee that the agreement will be ratified in the fall.”

Iran’s Nuclear Sanctions Make China, Russia Winners (Update1) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ajtjyme1RVLg

By Ali Sheikholeslami, Anthony DiPaola and Alaric Nightingale

Aug. 9 (Bloomberg) -- Sanctions punishing Iran for its nuclear program are deepening the country’s ties with China and handing Russia opportunities to sell more gasoline while hurting suppliers in Europe and India.

Iranian Oil Minister Masoud Mir-Kazemi and Chinese officials pledged for their countries to cooperate more closely in the energy industry during talks in Beijing on Aug. 6, Iran’s government-run Press TV reported. Russia’s state-controlled OAO Rosneft and OAO Gazprom Neft may step up fuel shipments to the Islamic republic this month, the Iran Commission of the Moscow Chamber of Commerce and Industry said in July.

“These countries have long-term interests in the region,” said Gary Sick, a member of the U.S. National Security Council under Presidents Ford, Carter and Reagan and the principal White House aide for Iran during the 1979-81 hostage crisis. China wants “to maintain relations with Iran for the sake of maintaining some access to the oil,” he said.

While sanctions against Iran are denting the country’s fuel imports, squeezing supplies to the country’s 73 million people, they are forcing refiners including India’s Reliance Industries Ltd. to pay higher costs to ship gasoline to more distant markets. Sanctions also translate into lost profit for Paris- based Total SA and other European refiners, which are facing their lowest returns on processing crude since December.

Rations Reduction

Iranian President Mahmoud Ahmadinejad’s government cut gasoline rations by one-fourth on June 22 and may reduce fuel subsidies. The country, which has the second-biggest reserves of oil and gas, said in July it may stop exporting naptha and use the petrochemical as a blending agent to increase gasoline production. National airline Iran Air was forced to redirect jetliners “for a period of time” when BP Plc refused to refuel them last month, Chairman Farhad Parvaresh said on July 28.

That’s giving China and Russia opportunities. Even before Iran’s Mir-Kazemi arrived in Beijing last week, his deputy, Alireza Zeighami, was meeting Chinese officials to press for investment in refineries in the Persian Gulf country, the Oil Ministry’s Shana news agency reported. The two sides committed in the talks to expand their cooperation, and Chinese Vice Premier Li Keqiang said afterward that China is “Iran’s main economic partner,” Press TV reported on Aug. 7, citing official China Central Television.

Russian companies are discussing “serious deliveries” to Iran in late August or September, Rajab Safarov, head of the Iran Commission of the Moscow Chamber of Commerce and Industry, said July 29.

Sanctions Targets

“Looking at the political situation, I’m not sure if Europe and the U.S. were 100 percent sure about the possible responses from places like Russia and China,” said Alexander Poegl, an analyst at JBC Energy in Vienna. “Iran will find partners supplying them gasoline.”

The United Nations Security Council imposed a fourth set of sanctions on Iran June 9, curbing financial transactions and tightening an arms embargo. The U.S. introduced measures on July that target foreign suppliers of gasoline and block access to the American financial system for banks doing business in Iran. The European Union on July 26 banned investment and sales of equipment to the nation’s oil and natural-gas industries.

UN spokesman Farhan Haq in New York declined to comment.

The profit from refining gasoline from Brent crude in northwest Europe for September, or crack spread, fell to $5.95 a barrel on Aug. 6, the lowest level since Dec. 23, 2009, according to PVM Associates Ltd.

Gasoline Imports

India’s sales of gasoline and blending components to the U.S. rose to 2.94 million barrels in May, compared with 492,000 barrels in January, U.S. Energy Department data show. Almost all of the sales were accounted for by Mumbai-based Reliance, said Praveen Kumar, a consultant at Singapore-based Facts Global Energy group.

India-to-U.S. shipping costs, at $1.9 million, are almost five times higher than those to the Persian Gulf, according to Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. Reliance didn’t respond to an e-mail requesting comment.

Iran imported about 60,000 barrels of gasoline a day last month, compared with 120,000 in May, according to Energy Markets Consultants Ltd., a unit of the Singapore-based Facts Global Energy, a provider of data for the U.S. Energy Department.

“We have seen a real quick drop-off in imports into Iran,” said Jamie Webster, a researcher at PFC Energy, a Washington-based consulting firm. “They are down significantly, by over half, from where they were a few months ago.”

Trader ‘Boom Time’

Vitol Group, the world’s largest independent oil trader, said on June 24 it stopped selling refined products to Iran. Reliance, Royal Dutch Shell Plc and traders Glencore International AG and Trafigura Beheer BV have frozen gasoline sales, Robert J. Einhorn, the U.S. State Department’s special adviser for nonproliferation and arms control, said in an interview last week.

“It’s boom time for Russian and Chinese oil traders,” said Michael Swangard, a London-based international trade lawyer at Clyde & Co., which counts BP and Lloyds of London among its clients. It’s “practically impossible” for Europeans to buy Iran’s oil or sell it gasoline, he said.

Sanctions against Iran were ramped up after diplomatic efforts last year failed to halt the country’s uranium enrichment, which can be used to produce fuel or make a nuclear bomb. Iran says the program is for civilian purposes only.

“The sanctions you pass should be thrown into the trash bin like a used tissue,” Ahmadinejad was cited as saying by the state-run Iranian Students News Agency June 9. “They are not capable of harming the Iranian nation.”

China’s Gains

When Iran began rationing gasoline in 2007, protesters burned filling stations. After the presidential election in June 2009 that returned Ahmadinejad to power, at least 44 people died in anti-government demonstrations, which were the biggest since the 1979 Islamic Revolution.

China may gain the most from the sanctions as it forges trade agreements around the world. The Chinese government owns part of a refinery in Sudan, whose President Umar al-Bashir is wanted by the International Criminal Court on charges of crimes against humanity. It’s also building a pipeline to transport oil and natural gas from Myanmar, the country formerly known as Burma, which U.S. Secretary of State Hillary Clinton said on July 22 may be trying to develop a nuclear bomb.

Refining Projects

State-run PetroChina International Co., also known as Chinaoil, and China International United Petroleum & Chemical Corp., known as Unipec, sold refined products to Iran in recent months, a United Arab Emirates-based oil trader with access to shipping reports said last week. The U.A.E. has been the main hub for shipments to Iran. The trader declined to be identified because the matter is confidential.

Huang Wensheng, a spokesman for Chinaoil’s parent company, China National Petroleum Corp., and Liu Weijiang from Unipec’s parent, China Petrochemical Corp., couldn’t be reached for comment at their respective Beijing headquarters or mobile phones today.

Chinese companies are already involved in energy exploration and production projects in Iran worth about $29 billion and in refining and other activities valued at $10 billion, Deputy Oil Minister Hossein Noghrekar Shirazi told the state-run Mehr news agency on July 31.

Iran wants to spend $26 billion on new refineries and $11.5 billion to upgrade existing plants to become self-sufficient in the production of gasoline, the Oil Ministry said on July 26. The government aims to meet its own needs in another two years, Deputy Oil Minister Noureddin Shahnazizadeh said at a conference in Bahrain in May.

To contact the reporters on this story: Ali Sheikholeslami in London at alis2@bloomberg.net; Anthony DiPaola in Abu Dhabi at adipaola@bloomberg.net; Alaric Nightingale in London at anightingal1@bloomberg.net.

Last Updated: August 9, 2010 00:54 EDT

Russia's short affair with the West http://www.china.org.cn/opinion/2010-08/09/content_20669060.htm

By Tian WenlinChina.org.cn, August 9, 2010Russia recently changed its stance on Iran's nuclear policies. As an ally of Iran with many strategic and economic interests in the country, Russia's pro-Western stance is unlikely to last.

Historically, Russia has opposed sanctions against Iran but it slowly began to shift its position following Iran's rejection of a U.N.-brokered uranium enrichment plan late last year. Last month, Russian President Dmitry Medvedev made his toughest comments yet on Iran's nuclear program, saying Iran was moving closer to having the potential to build nuclear weapons. In June, Russia angered Iran by supporting the draft for a new set of U.N. sanctions over the Iranian nuclear program.

Russia has always had a contradictory attitude toward Iran's nuclear program. As one of Iran's important partners, Russia has not only supported Iran's peaceful use of nuclear energy, but also cooperated closely with Iran to develop nuclear energy to make a big profit. But Moscow never expected Iran to master nuclear technology or create nuclear weapons, which Russian leaders now fear could happen.

Iran not only represents an important regional ally for Russia but also a useful bargaining tool in diplomatic relations with the West, especially the U.S. For now, Russia has decided its relations with the U.S. are more important than its relations with Iran. So, its support for sanctions is a sign that Russia is trying to strengthen cooperation with the West.

But will Russia continue to take a tough stance toward Iran? As Russia spans both Asia and Europe, it attaches equal stress to Asia and Europe in its diplomatic strategy. Therefore, it will not give up Iran completely. Russia has done business in Iran for many years. It has many interests in arms, trade and nuclear development markets in Iran.

More importantly, as Russia is increasing its power, it has sped up pace to return to the Middle East. Iran, the only Middle Eastern country connecting the two big oil deposits of the Caspian Sea and Persian Gulf, is an important stronghold and geopolitical partner for Russia to increase its clout in the Middle East and Persian Gulf.

Russia's pandering to Western countries has brought more negative rather than positive results. Russia is going to lose Iran's trust if it leans too much toward the U.S. Iran ordered all Russian pilots to leave within two months in April. In May, Iranian President Mahmoud Ahmadinejad criticized Russia over its support for the UN sanctions. And in July, after Medvedev's critical remarks, Ahmadinejad retaliated by saying that Russia had become the spokesman of the West and listed it as an enemy of Iran.

Russia's cooperation with the U.S. on Iran's nuclear program has not improved relations, either. The U.S. continues to deploy its missile defense system in Poland. And just after Medvedev held a hearty meeting with Obama, the U.S. announced its arrest of 11 Russian spies.

Russia has gained little from its pro-Western stance. Meanwhile, Russians have voiced more doubts and criticism over Medvedev. Against such backdrop, Russia cannot afford to lose Iran. Therefore, in the near future Russia is very likely to soften its tone towards Iran.

(The post was first published in Chinese and translated by Yang Xi and Zhang Ming'ai)

Bangkok, August 06, 2010First Published: 19:08 IST(6/8/2010)Last Updated: 19:09 IST(6/8/2010)

'Russia trained 4,000 Myanmar nuclear officers'http://www.hindustantimes.com/Russia-trained-4-000-Myanmar-nuclear-officers/Article1-583149.aspx

Russia has trained 4,185 Myanmar military officers in nuclear sciences over the past decade but only a "sprinkling" of scholars have pursued the positive uses of the energy source, a Myanmar academic said on Friday.

Myanmar's nuclear ambitions have been a subject of concern in recent years after allegations by defectors that the pariah regime is keen to develop nuclear weapons in cooperation with North Korea.

Myanmar's ruling junta, however, claims that its nuclear ambitions are purely medical in nature.

Maung Zarni, a research fellow at the London School of Economics and Political Science, pointed out that only a handful of the Myanmar graduates who have studied nuclear-related technologies in Moscow had medical backgrounds, raising questions about the regime's claims of pursuing nuclear energy for medicinal reasons.

"Between 400 to 600 graduates are sent to Russia every year and out of those graduates only a sprinkling of officers have medical backgrounds," he told a seminar at Bangkok's Chulalongkorn University.

Zarni estimated that only five to 20 of the military graduates attending nuclear-related courses in Moscow since 2001 had medical backgrounds. He had compiled the list of 4,185 based on interviews with former graduates, he said.

"And if the nuclear programme is for medical purposes why isn't there any involvement by the Ministry of Health," Zarni noted.

He acknowledged that it was still difficult to prove whether Myanmar's military junta had acquired or developed nuclear weapons, but argued their intent to do so was pretty clear.

At this stage the junta might be more interested in using the threat of a potential nuclear arsenal as a "big stick" in diplomacy, he speculated.

"The fact that the US and other powers have not done anything substantive to rein in North Korea is because they have the bomb, so that's a role model for a lot of rogue states," Zarni said.

Myanmar has been under military rule since 1962.

U.S. to send billion bushels of wheat to Russiahttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/06/BUGN1EQEJI.DTL&type=business

Saturday, August 7, 2010

Number of the day

1 billion

That's how many bushels of wheat the USDA expects the United States to export in the next year - and that's not even factoring in Russia's decision to keep all of its grain for itself. Facing the worst drought in 50 years, Russia said this week it would ban wheat exports through the end of the year. Without Russia's contribution, the world is likely to look to rival producers to fill the void, analysts say. "This is going to be one of the great years for American agriculture probably in history," says economist Dennis Gartman.

Egypt Asks Russia to Delay Wheat Delivery After Ban (Update1) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=atQTeAGZ9TWQ

By Ola Galal

Aug. 8 (Bloomberg) -- Egypt, the world’s biggest wheat importer, has asked Russia to reschedule the shipment of 540,000 tons of wheat at prices agreed upon before a grain export ban, the Egyptian Trade Ministry said today.

Egypt sent the Russian Minister of Trade a letter stating that the two countries signed the contracts before the export ban that takes effect from Aug. 15 until Dec. 31, Trade Minister Rachid Mohamed Rachid said in the statement.

“We are suggesting the forming of a joint committee to discuss the rescheduling of the agreed-upon amounts after the lifting of the export ban,” Rachid said. “We are requesting the agreed-upon price be upheld once these shipments can be made.”

The export ban by Russia, which supplies Egypt with more than half of its imported wheat, has no immediate effect on Egypt, and the North African country has enough supplies for subsidized bread for four months, Rachid said.

To contact the reporter on this Ola Galal at ogalal@bloomberg.net

Last Updated: August 8, 2010 07:43 EDT

Schwarzenegger Plans Visit http://www.themoscowtimes.com/business/article/schwarzenegger-plans-visit/411943.html

09 August 2010

SACRAMENTO, California — California Governor Arnold Schwarzenegger said Friday that he would travel to Russia to work with the country on developing its high-tech industry.

Schwarzenegger said he would travel to Russia after a trip to China, Japan and South Korea scheduled for Sept. 9-15. A spokesman said Schwarzenegger had not set a date for the Russia trip, but that the governor discussed it with President Dmitry Medvedev during his recent visit to California. 

(AP)

WILDFIRES IN RUSSIA

Smoke covers St. Petersburghttp://english.ruvr.ru/2010/08/09/15033511.html

Aug 9, 2010 11:41 Moscow TimeFor the first time this summer, St. Petersburg and its suburbs have been covered in a blanket of smoke coming from the fire-affected Novgorod region. The city’s Petrograd and Moscow districts are suffering most from choking odor as the smoggy veil continues to spread across Russia’s Northern Capital. According to latest reports, no severe wildfires have been registered in the Leningrad region as yet.

Foreign countries join firefighting in Russiahttp://news.xinhuanet.com/english2010/world/2010-08/09/c_13435782.htm

2010-08-09 01:45:06 MOSCOW, Aug. 8 (Xinhua) -- As blazing hotspots across Russia reached nearly 600 on Saturday, more countries are sending aircraft, firetrucks and personnel to help Russia battle the blazes.

During a telephone conversation with Russian Prime Minister Vladimir Putin earlier on Saturday, French Prime Minister Francois Fillon said that France would assist Russia in tackling the wildfire and send a plane to the disaster scenes.

Italian Prime Minister Silvio Berlusconi also offered help. Three Italian jets, which arrived in Moscow on Thursday, have already joined operation in the Moscow region, the Russian Emergency Situations Ministry said.

Two Italian firefighting amphibious planes arrived on Saturday in the Samara region on the Volga River. They will help save a natural preserve engulfed by fires.

In a letter to Putin, Polish Prime Minister Donald Tusk said that his country was ready to "render comprehensive aid in dealing with the wildfire and the aftermath."

Poland has dispatched a team of 155 firefighters to Russia, according to RIA Novosti news agency. A convoy of 50 firefighting vehicles headed to Russian border via Lithuania and Latvia on Saturday.

Five former Soviet republics, Armenia, Azerbaijan, Kazakhztan, Ukraine and Belarus have also joined Russia's efforts to put off the wildfire, local media reported.

Two Armenian jets were dispatched to the Nizhny Novgorod region, where the worst fire was reported.

While two Azeri planes were assigned to the Lipetsk region, two Kazakh helicopters were assisting firefighters in the Samara region.

Two Ukrainian firefighting units joined two Ukrainian An-32 jets in the Voronezh region.

Belarus sent a helicopter and 150 firefighters to the Ryazan and Vladimir regions and promised to dispatch another 20 firefighting vehicles.

The areas under fire in central Russia has increased to 190,000 hectares, RIA Novosti reported Sunday.

According to the ScanEx website which receives information from NASA's Terra and Aqua satellites, a total of 564 wildfire scenes were detected across Russia, up from 362 on Friday.

A reinforcement of 1,000 people and 200 units of firefighting equipment was sent to smother wildfire which seized Moscow region, the head of the Ministry's National crisis control center said on Saturday.

Moscow saw its worst air pollution in 2010 on Saturday, with carbon monoxide levels 6.5 times as much as the maximum allowable concentration. The concentration of other poisonous substances in the air was nine times above the normal level.

The already scorching temperature is expected to reach 40 Celsius degrees in the coming weekend in central and southern Russia.

Far East volunteers sign up to extinguish wildfires in European Russiahttp://en.rian.ru/russia/20100809/160122927.html06:27 09/08/2010

Russia's Far East has begun drafting a list of volunteers to help combat raging wildfires in central parts of the country, a regional emergencies ministry spokeswoman said on Monday.

"We are currently forming a reserve force that would help combat wildfires in European Russia," she said.

Any applicant over age of 18 and residing in Russia's Far East is permitted to take part in combating wildfires.

Over the weekend, over 270 new forest fires and at least two new peat bog fires were reported, while 276 fires were extinguished, the emergencies ministry said. There were 554 fires burning on an area of more than 190,000 hectares (469,000 acres).

The ministry considers the worst areas to be the Nizhny Novgorod region, where 76 fires are burning, and the Kirov and Moscow regions, which each have 49 reported fires.

Almost 1,500 volunteers responded on Friday and Saturday to an emergencies ministry call to help extinguish wildfires in the Central Federal District.

The fires have been burning for two weeks, with a total of 51 people reported killed. The hot weather is forecast to continue well into the week, and the southerly and easterly winds blowing smoke across the capital are not expected to shift for at least a couple of days.

VLADIVOSTOK, August 9 (RIA Novosti)

Luzhkov interrupting his treatment returns to Moscowhttp://www.aysor.am/en/news/2010/08/09/lujkov/

Mayor of Moscow Yuri Luzhkov has interrupted his treatment for a sports injury and returned to Moscow on Sunday because of “the developing situation in the city due to fires,” his spokesman Sergei Tsoi said, Interfax reported.

Luzhkov’s Deputy Vladimir Resin also reported about Luzhkov’s return.

“The Mayor of Moscow Yuri Luzhkov has interrupted his treatment for a sports injury and today is returning to Moscow,” Resin said. 

TODAY, 12:50

Aysor.am

Moscow deaths doubled in heatwave: Ifaxhttp://ca.reuters.com/article/topNews/idCATRE6780P920100809

Mon Aug 9, 2010 3:37am EDT

MOSCOW (Reuters) - The mortality rate in Moscow has doubled recently as wildfires blanketed the capital with toxic smoke amid Russia's worst heatwave in over a century, Interfax reported, citing the city's health department chief.

The official, Alexander Seltsovsky, did not give a specific time frame or number of deaths, but indicated that heat and pollution were the cause of the increase.

(Reporting by Amie Ferris-Rotman, editing by Steve Gutterman)

Smoke grounds Moscow's fire-fighting fleethttp://www.mn.ru/local/20100809/187972981.html

by Andy Potts at 09/08/2010 11:10

Fire-fighting planes have been grounded by heavy smoke, according to Russia’s Emergency Services Ministry.

While the country’s authorities claim some progress is being made in tackling the ring of forest and peat bog fires which have turned Moscow into a smog-filled ghost town, they also admitted they were unable to use much of their equipment due to smoke.

The ministry’s media boss Irina Andrianova said the situation was improving but remained serious, RIA Novosti reported.

She said over the weekend 276 fires had been put out, with 271 new blazes reported. In total 554 fires were still burning, 49 of them in Moscow Region.

 Cautious optimism

Despite the continuous waves of acrid smoke blowing into the capital from the southeast, Andrianova said the overall situation was stabilising.

“Thanks to round-the-clock efforts to extinguish the wildfires, the use of new technologies and firefighting equipment, and despite the inability to use aircraft because of the smoke, in the Moscow region they are managing to turn the tide,” she said.

On Sunday night there were 210 hectares reportedly ablaze in Podmoskovye, with 35 forest fires and 14 peat bog fires.

 Volunteer forces

But even limited success against the inferno is built as much on volunteer efforts as on any state-planned intervention.

Almost 3,000 volunteers are working in Nizhny Novgorod Region – the most flammable with 79 reported fires – and a further 1,100 joined fire-fighting efforts in Moscow Region over the weekend.

On Monday authorities in Russia’s Far East put out an appeal for helpers to travel to European Russia and help tackle the crisis.

 Unclear visibility

With thick smoke still billowing across the country it’s far from clear when residents will enjoy a noticeable improvement.

Weather forecasts say that the southeasterly winds blowing the fires towards Moscow are not expected to move for at least two days, while the long spell of hot weather is set to continue well into this week – meaning the risk of further flames remains high.

Southeast winds continue to bring acrid smog to Moscowhttp://en.rian.ru/natural/20100809/160124335.html

The poor ecological situation in Moscow will remain unchanged due to the continuing heat wave and ongoing southeast winds bringing peat bog smog into the city, a statement published on the Meteonovosti weather forecast website said on Monday.

"According to the latest data by the Meteorological Bureau of Moscow, the maximum temperature in Moscow will be 35-37 degrees Celsius (95-98.6 degrees Fahrenheit) and in the Moscow region it will reach 33-38 degrees Celsius (91.4-100.4 degrees Fahrenheit)," the statement said.

Health experts say that even healthy people may feel sick in these unfriendly conditions.

"People who suffer from heart or lung problems, diabetes, thyroid gland conditions or metabolic disease are dealing with [the ecological situation] extremely hard due to lack of oxygen in the air," the statement said.

Muscovites have no chance to escape from the heat and haze as even the subway system, which is traditionally considered a cool haven to hide from the heat, because the acrid smog has already engulfed the rapid transit system.

A scorching heat wave has gripped much of European Russia since mid-June, sparking wildfires and causing the worst drought in decades.

The fires have been burning for two weeks, with a total of 51 people reported killed. The hot weather is forecast to continue well into the week, and the southerly and easterly winds blowing smoke across the capital are not expected to shift for at least a couple of days.

Some 3,500 have been left homeless across the central part of European Russia.

The smog in the Russian capital has been far worse than usual for more than a couple of weeks as smoke from nearby peat bog and forest fires has mixed with exhaust fumes and other pollutants, bringing pollution to an all-time high of 6-7 times the norm over the past weekend.

Peat bog and forest fires raging outside the capital pushed pollution levels to new 2010 highs on Saturday, with carbon monoxide 6.5 times the maximum allowable concentration, but conditions eased a bit on Sunday.

The record-breaking heat wave in Moscow will continue through mid-August, meteorologists say.

MOSCOW, August 9 (RIA Novosti)

Moscow airports work normallyhttp://www.aysor.am/en/news/2010/08/09/moscow-weather/

Moscow airports work in the normal regime, Interfax reported. Some flights are still delayed but only due to flight schedule changes made earlier.

According to meteorologists, hot weather preserves in Moscow. According to ITAR-TASS, today the temperature in Moscow will likely be between 37 degrees and 39 degrees Celsius, and 20 degrees at night.

The temperature will fall only on Sunday - 27 degrees in daytime and between 14 and 15 degrees at night.  

TODAY, 11:24

Aysor.am

Moscow starts another workweek amid thick smoghttp://english.ruvr.ru/2010/08/09/15011266.html

Aug 9, 2010 09:21 Moscow Time

Moscow has begun another workweek amid thick smog, caused by peat-bog and forest fires amid a record heat wave that’s been around for almost two months.

The Russian Emergencies Minister Sergei Shoigu said yesterday that it would take fire-fighters another week to put out peat-bog fires in the Moscow Region. He pointed out that the situation has worsened in the republics of Tatarstan and Mordovia, and also in the Lipetsk, Vladimir, Belgorod and Ulyanovsk Regions.

The situation remains the worst in the Moscow, Nizhni Novgorod and Kirov Regions.

Shoigu added that volunteers have joined forces with the units of the Emergencies Ministry, Interior Ministry and Defence Ministry. Russia is, besides, receiving assistance from Germany, France, Italy, Poland, Bulgaria, Armenia, Ukraine, Belarus, Azerbaijan, Kazakhstan and other countries.    

Wildfires rage on shrouding Moscow in blanket of smoghttp://rt.com/Top_News/2010-08-09/fire-moscow-tough-summer.html/print

09 August, 2010, 08:36

The thick blanket of acrid smog caused by relentless wildfires which has settled across the Russian capital has shown no sign of dispersing.

Forest and peat blazes continue to devastate large swathes of Central Russia, with a record-breaking heat wave forecast to go on until at least next week.

In addition to over a hundred smaller fires burning across the country, eighty large ones have still not been extinguished. The toxic fumes released by the fires are carrying five times the acceptable amount of carbon monoxide.

Physicians have urged Muscovites to avoid leaving their homes. They warn that breathing the toxic air for just a couple of hours has the same harmful effect as smoking two packs of cigarettes.

Scorched Earth

Swathes of Central Russia are still in flames, with firefighters tackling hundreds of new fires every day. It is thought that it will take another week before the scorching temperatures begin to drop.

Russia is in flames. The hottest summer on record has also become one of the most destructive. Massive forest fires have already burnt about a thousand hectares of land, killed more than 40 and left more than 2,000 homeless. With wind speed of 20 meters per second, it's moving too fast, leaving behind a trail of devastation.

Over 520 fires are estimated to be blazing across Russia.

A small picturesque village, nestled in a beautiful pine forest some 150 kilometers south of the Russian capital Moscow – a paradise to the 300 people that lived there, with a kindergarten, a church and a community hall – will never be the same again.

It took just minutes for a frightening display of mother nature's full force to change it forever. Twelve perished in the inferno, some in horrifying circumstances.

Panic has been spreading among people as fast as the flames have been engulfing their homes – five people, an old couple, a mother and a son and another woman, decided to hide in a basement. But their place of refuge became their tomb. Temperatures inside became too hot to survive.

Most people in the village managed to flee. Galina Mikhaleva was one of those that escaped. A day later she's back, hoping to find something intact, but it's all in vain.

“The flames were spreading up high, even above that tall tower, and the black smoke filled all the space below,” Galina said. “I felt really scared when I saw red fire glow and black smoke. You know, I’ve seen houses and barns burning. But here the entire village burned down completely. This was really horrifying.”

The dormitory of a local college has become a new home for dozens of homeless. It's stuffy and smoky in its corridors and rooms, but it's the only shelter they have now.

“We want to say thanks for all this care, they feed us here very well, they talk to us, and we have a corner to sleep!” said one of the survivors.

But they hope their stay here will not be long.

“We've already got about $70,000 in compensation each, pensioners and jobless, a bit more, but what we are especially waiting for, that's a new home, they've promised it for every family within the next three months,” said Alksandra, one of the survivors. “And we are ready to wait.”

When the houses are rebuilt, the victims of this unstoppable and merciless force will try to rebuild their lives and consign the ghost village to a past that all here would rather forget.

Heat-stricken Pushkin museum closes part of exposition to visitors

http://www.itar-tass.com/eng/level2.html?NewsID=15387874&PageNum=0

09.08.2010, 04.19

MOSCOW, August 9 (Itar-Tass) - The State Pushkin Museum of Fine Arts has closed part of its exposition to visitors because of abnormal heat.

“Only two grand halls in our big building which is soon turning a hundred years have air conditioning. We couldn’t install air conditioning in other halls because the museum’s interior structure makes it impossible to control its climatic state from the inside,” Irina Antonova, the museum’ s director, said in an interview with the Ekho Moskvy radio station on Sunday.

“The first floor is working normally. All the halls are open. An exhibition ‘From Rafael to Goya’ is open on the second floor but all the other expositions there are temporary closed because of high temperatures – plus 34 degrees Celsius approximately,” Antonova went on to say.

Antonova said the smoke hadn’t affected the exhibits so far.

“The restorers are carefully watching the state of pictures and sculptures in the halls, and they haven’t noticed any changes,” Antonova went on to say.

Antonova said that the Museum of Private Collections and the Gallery of European and American art of the 19th and 20th centuries work normally from 10 a.m. to 7 p.m. These buildings are relatively new and have good air conditioning.

Anti-smog rooms open after fires http://www.mirror.co.uk/news/top-stories/2010/08/09/anti-smog-rooms-open-after-fires-115875-22474947/

9/08/2010

MOSCOW

Anti-SMOG centres were opened in Moscow yesterday to give people respite from choking smoke and heat.

As wildfires continue around the capital, citizens can "get their breath back" in 123 air-conditioned rooms.

Emergency services said they registered 49 wildfires around Moscow yesterday, including 14 peat bog fires.

About 830 separate forest blazes were also burning nationwide as the country endured its worst heatwave in 130 years.

Daily highs have reached up to 100F (38C) and there is no end in sight.

At least 52 people have died and more than 2,000 homes have been destroyed.

Russian officials have admitted that the 10,000 firefighters battling the blazes are not enough.

AUGUST 9, 2010

Anger Rises in Russia Over Unchecked Fires http://online.wsj.com/article/SB10001424052748704268004575417620623903874.html

By RICHARD BOUDREAUX

LUKHOVITSY, Russia—As forest fires continued to rage near Moscow, the mayor of this front-line town trudged through a blackened peat bog Sunday to oversee volunteer firefighters. "The blaze is under control," Mayor Sergei Stolyarov declared.

But the townspeople's anger is not.

Here, as in other regions overcome by wildfires and choking smog, Russian officials at all levels are facing an outcry over their handling of a mounting environmental disaster. They say the government was ill prepared and equipped to fight the fires, responded too late and is poorly organized to mobilize volunteers who want to help.

President Dmitry Medvedev, Prime Minister Vladimir Putin and Moscow Mayor Yuri Luzhkov have all come under withering criticism. Mr. Luzhkov, whose spokesman had denied Friday that the city was in crisis, returned from a midsummer break, other aides said.

In Lukhovitsy, a logging and industrial town 84 miles southeast of Moscow, people say they fought the flames spreading from the peat bog for days with no outside assistance.

"We survived only because the wind shifted," said Olga Kubysheva, who lives amid the pines on the edge of town and fears the authorities can't protect her if the fast-spreading flames return. "The fire is still in our forest, and the forest is our yard. We are frightened."

Russia's emergencies ministry reported more than 800 fires across the country Sunday, many of them out of control. The fires have killed 52 people since late July, left more than 4,000 others homeless and burned 1.8 million acres of land, the government said.

Those numbers aren't extraordinary by Russian standards. But prolonged, record-breaking heat in western Russia has sparked an unusual number of fires near cities, including 49 that were reported Sunday in the Moscow region, overwhelming millions of people with a thick gray haze.

Smog blanketing the capital Friday and Saturday sent the concentration of airborne pollutants to a level 6.6 times higher than the acceptable norm, according to Moscow's air pollution monitoring service. That figure dropped to 3.1 Sunday, but low visibility at Moscow airports caused delays or diversions of dozens of flights.

Red-eyed and irritated, 70 Moscow volunteers showed up Sunday to help out in Lukhovitsy, whose burning forests and peat bogs have fed the capital's smog.

"It's our country, and we can smell that our country is burning," said Andrei Kolesnik, a 28-year-old economics instructor at a Moscow university who joined the group.

Russian officials have acknowledged that the 10,000 professional firefighters battling the blazes aren't enough. But Mr. Kolesnik and others in the group complained that the government has no organized system for mobilizing volunteers. He said he spent two days calling the emergency ministry and other government agencies before someone referred him to Nashi, a youth group of the ruling United Russia party, which put together Sunday's trip.

Nor is the state equipped to fight fires, according to other volunteers who have been to the forests in recent days. They said that access roads to the forests are often blocked or in poor repair, that reservoirs for refilling their tanks are dangerously low, and that fire hoses often leak.

Critics of the government also fault a revised forest code, which Mr. Putin pushed through parliament four years ago, for crippling the firefighting effort. This disbanded a centralized system of 70,000 forest wardens, who used to patrol the woods and spot fire hazards. Firefighting responsibility passed to regional governments and logging firms that lease the forests.

Ms. Kubysheva, the resident, said the number of wardens in the extensive forests around Lukhovitsy had since dwindled from several dozens to just four people. "The forest has no owner," she said, standing in front of her home at 1 Forest Road. "We are practically unprotected."

In a blog post that drew nationwide attention, a villager from the Tver region complained to Mr. Putin about the state's firefighting inadequacies. In Soviet times, he wrote, "there

were three fire ponds in the village, a bell that tolled when a fire began, and—guess what?—a fire truck."

Mr. Putin wrote a public reply saying he agreed "in general" with the blogger's criticism but noted that Soviet leaders never faced such a prolonged heat wave. He promised the village a bell.

But he and Mr. Medvedev have also tried to deflect criticism to local authorities. Mr. Medvedev said Friday he would hold mayors accountable for negligence.

In an interview at the peat bog, Mayor Stolyarov defended his town's firefighting effort, which relies on local volunteers with shovels. "We would like to have had more equipment, but we managed," he said.

He put the Moscow volunteers to work digging ditches across the bog, shrouded in a smoky haze far thicker than the one they left in Moscow. Water poured into the ditches from a pipe normally used to convey a mixture of sand and water to a nearby factory. The idea was to keep the bog from drying up, bursting into flames again and spreading through the forest.

A longtime resident, Tatyana Vladimirova, approached two reporters at the bog and started to give her account of the fires.

"The older people here say that we angered God," she said.

Perhaps sensitive to criticism of his own effort, the mayor walked over, broke up the interview and told the woman to go away.

Write to Richard Boudreaux at richard.boudreaux@wsj.com

Prominent customs boss charged by prosecutorshttp://www.barentsobserver.com/prominent-customs-boss-charged-by-prosecutors.4805090-16180.html

2010-08-09 Leader of the customs department in the Murmansk Sea Port has been charged on suspicion of serious irregularities.According to Regnum, Aleksey Gladkov is suspected of having “exceeded his powers” and of having inflicted financial damage to the Russian state worth ten million RUB. Mr. Gladkov is reported to have failed to collect export tax on a major party of king crab, the news agency informs.

The exported goods should have been taxed more than 10 million RUB.

The Port of Murmansk is the second biggest in Northwest Russia and the by far biggest in the whole Arctic. It consists of the Murmansk Commercial Sea Port and the Murmansk Fish Port.

Azerbaijanis, Ossetians clash in Moscow

http://news.az/articles/20568

Mon 09 August 2010 | 06:39 GMT

A traumatic gun shooting took place between Azerbaijanis and the Ossetians in Moscow.

At least six people were injured, spokesman for the Moscow Police Office Victor Biryukov told Interfax.

'The incident took place in the Moskvoretsk market at Bolotnokov, 11 between the groups of Azerbaijanis and the Ossetians. One of the Azerbaijanis used a traumatic gun and injured six Ossetians. Other participants of the incident escaped from the site', said Biryukov.

Reasons of the disputes are investigated. Police is searching for the shooter and other involving people.

APA

Azerbaijani injures 6 Ossetians in Moscowhttp://www.aysor.am/en/news/2010/08/09/azerbaijani-osia/

Azerbaijanis clashed with Ossetians in a Moscow market yesterday, leaving 6 injured, Interfax reported. An Azerbaijani citizen opened fire at Ossetians from a traumatic pistol.

The reasons of the clash are not reported yet. The case is investigated. The Azerbaijani and the others involved in the incident have fled.  

TODAY, 11:50

Aysor.am

Experts examine water quality in Amur River http://english.ruvr.ru/2010/08/09/15016424.html

Aug 9, 2010 10:03 Moscow Time

Experts in the Russian Far East have taken samples of water from in the area where the Chinese Sungari River flows into the Amur River.

The aim is to check whether toxic chemicals dumped into the Sungari River have caused any damage to the Russian river. Experts from China are expected to join the research, the RIA-Novosti news agency says.

More than one thousand barrels with highly explosive chemicals were carried by flood waters into the Sungari River in China. Reports by Xinhua news agency say the barrels come from a plant in Jilin.

The Chinese officials insist that there is no threat to the Russian environment.   

As Crops Wither in Russia's Severe Drought, Vital Plant Field Bank Faces Demolitionhttp://www.sciencedaily.com/releases/2010/08/100808212810.htm

ScienceDaily (Aug. 7, 2010) — As the fate of Europe's largest collection of fruit and berries hangs in the balance of a Russian court decision, the Global Crop Diversity Trust issued an urgent appeal for the Russian government to embrace its heroic tradition as protector of the world's crop diversity and halt the planned destruction of an incredibly valuable crop collection near St. Petersburg.

Pavlovsk Experiment Station is the largest European field genebank for fruits and berries, and is part of the N.I. Vavilov Research Institute of Plant Industry, where Russian scientists famously starved to death rather than eat the seeds under their protection during the 900-day siege of Leningrad during World War II.

At issue is an effort by residential real estate developers to build houses on land occupied by Pavlovsk Station. The take-over would involve bulldozing Pavlovsk's field collections amassed over the last century -- collections that contain thousands of varieties of apples, strawberries, cherries, raspberries, currants and other crops -- 90 percent of which are not found anywhere else in the world.

"It is a bitter irony that the single most deliberately destructive act against crop diversity, at least in my lifetime, could be about to happen in Russia of all places -- the country that invented the modern seed bank," said Cary Fowler of the Global Crop Diversity Trust, which aims to ensure the conservation and availability of crop diversity for food security worldwide and supports the operations of the Svalbard Global Seed Vault in the Arctic Circle.

The fate of the Pavlovsk Station is now in the hands of the courts, and the case is due to be heard on August 11th. If, as feared, the court rules in favor of the property developers, and the Russian government does not intervene, Fyodor Mikhovich, the director of the station, predicts bulldozers will be on-site within three to four months, and then, in a few days, destroy almost a century of work and an irreplaceable biological heritage.

"Throughout the 20th century, Russia taught the world about the importance of crop collections for the future of agriculture," Fowler added. "This casual decision to destroy Pavlovsk Station would forever tarnish a cause that generations of Russian plant scientists have lived and, quite literally, died, to protect."

The Pavlovsk Station was established in 1926 by Nikolai Vavilov, the man credited with creating the concept of seed banks as repositories of crop diversity that could be used to breed new varieties in response to threats to food production.

During the Siege of Leningrad in World War II, 12 Russian scientists starved to death while protecting the diversity amassed by Vavilov, even though the seeds of rice, peas, corn, and wheat that they were protecting could have easily sustained them.

Vavilov himself was persecuted for his views on plant genetics and died of malnutrition in prison in 1943. But Russia later renounced his treatment and has since treated Vavliov as a hero. Today, the N.I. Vavilov Research Institute of Plant Industry remains one of the world's most important conservers of crop diversity.

Pavlovsk Station is a key part of Vavilov's legacy to Russia and the world. The field bank was built up initially by collecting local varieties from around European Russia, Siberia and the Far East, as well as accessions collected in the late 19th and early 20th centuries by plant scientists and botanists. After World War II, Pavlovsk Station continued efforts to collect unique crop diversity from all over the world, including samples of apple trees from 35 countries; strawberry from 40 countries; black currant from 30 countries; plum and cherry plum from 12 countries; and honeysuckle from Russia and Canada.

Today, the hundreds of hectares of fields at Pavlovsk Station contain more than 5,000 varieties, including 1,000 varieties of strawberries alone. Its crop collections are thought to possess a host of traits that could be crucial to maintaining productive fruit harvests in many parts of the world as climate change and a rising tide of disease, pests, and drought weaken the varieties farmers are now growing.

Emile Frison, Director General of Bioversity International, an international agricultural research centre, pointed to the importance of the collection for nutrition. "Our research with scientists in Russia and Luxembourg has shown that some of the varieties at Pavlovsk are incredibly rich in chemicals that can help protect people against the growing threats of heart disease, cancers, and Type 2 diabetes," Frison said.

As Pavlovsk is predominantly a field collection, it cannot simply be moved. Fowler and other experts estimate that even if another site were available nearby -- and there is not

one -- it would take many years to relocate. There are efforts underway to craft an emergency relocation plan, but technical and logistical challenges make it unlikely that more than a small fraction of the collection could be transferred. For example, the most suitable sites for relocation are likely outside of Russia, raising complicated legal questions and quarantine issues that accompany any effort to move plant materials across national borders.

In a bit of Kafkaesque logic, the property developers maintain that because it contains a "priceless collection," no monetary value can be assigned to Pavlovsk Station, so, therefore, it is essentially worthless. Furthermore, the Federal Fund of Residential Real Estate Development has argued that the collection was never officially registered and thus it does not officially exist.

"I would hope that in this, the International Year of Biodiversity, the Russian government will honor its history as a protector of crop biodiversity and a guardian of food security for the future and stop this misguided plan to destroy Pavlovsk," said Fowler

Quashing rallies may not stave off discontent in Russia

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/08/AR2010080802394.html?hpid=opinionsbox1

By Masha Lipman

Monday, August 9, 2010

Over the past year Triumphal'naya Ploshchad, a downtown square in the Russian capital, has become the site of standoffs between the government and a small political group called Strategy 31. On the last day of each month with 31 days, the group stages a rally to demand that the government observe Article 31 of the constitution, which grants Russians freedom of assembly. Each of the eight times these protests have been held -- commonly drawing a few hundred people -- the gathering, and the constitution, have been trampled by the authorities.

A high-ranking Kremlin aide has acknowledged that even small signs of opposition make the Kremlin jittery. "We have a heightened perception of [political] turbulence," Vladislav Surkov said in a meeting in early July. "We give a jump up each time anything begins to move." This insecurity is deepening as the Russian people's mood has soured in recent months.

The government does not want to be seen opposing the freedom of assembly, so rather than impose a direct ban, it uses tactics such as informing Strategy 31 activists that another group reserved the same space earlier, leaving their rally "unsanctioned." But

such tricks aren't fooling anyone, and the 31ers have continued to stage rallies in that square. Just as tenaciously, the police have disrupted them.

For months the police actions were not overly harsh: Some people were pushed from the square, a few detained. But on May 31 about 2,000 people turned out -- far more than usual -- and the police reaction shifted. About 170 people were detained. Some were roughed up; others outright beaten. One journalist had his arm broken by the police.

On the last day of July the government sought to refrain from violence. Instead it securely barred the square from unwelcome activists.

Before the 31ers arrived, Triumphal'naya had been cordoned off by double fences guarded by hordes of police and interior troopers. The cordons that afternoon were so tight that no one could get in. Photographers captured small groups of young people trying to push through, but the police and soldiers standing shoulder to shoulder pushed them back.

Inside the square, another "rival" event was staged, this time a car race. Triumphal'naya may be a good size for a public rally, but it is ridiculously small for a motor race. The few cars drifting inside the cordon made a terrible noise; the air was filled with dust and smoke, and the acrid smell was compounded by the 92-degree heat. The scene looked especially grotesque in light of recent comments by Prime Minister Vladimir Putin: In a somewhat tense exchange with popular rock singer Yuri Shevchuk in late May, Putin said that protesters should respect the rights of others who may be disturbed by their gathering.

The rally was effectively quashed. About 80 people were detained, all were released the same day, and no serious injuries were reported.

Apparently eager to demonstrate that the 31ers lack public support, the police reported that only 200 people showed up. But this falsehood -- the rally attracted about 400 -- emphasized the government's overreaction. The absurdity of a rattling motor race in downtown Moscow strengthened the protesters' point: It is hard to imagine freedom of assembly being so physically and graphically denied.

Government policy is to snuff out unwanted political activism before it can evolve as a broader movement. Most protest groups in Russia are small and isolated, and these preemptive efforts have been successful so far. In the past year, the Strategy 31 campaign, whose leaders include veteran Soviet dissident Lyudmila Alekseeva and writer Eduard Limonov, has not gained outsize public support.

The government's measures, though, go beyond tricks and manipulation to quash rallies. Among them are repeated attempts to control the Internet and passing legislation broadening the authority of the state security service, the FSB -- even though this agency enjoys full unaccountability to the public and hardly needs new legal instruments to act at will. The FSB is now authorized to take measures against people whose actions are

merely "creating conditions for committing crimes," vague wording that enables the government to practice selective and arbitrary enforcement.

For the time being, this police-state arsenal is more commonly used to intimidate potential troublemakers than to prosecute them.

The 31ers appear undeterred: The group has pledged to rally on Aug. 31. The 31ers, however, are not the government's main problem.

Public frustration has grown in the past year. Increases in tariffs and some taxes sparked protests in winter and early spring. Online reports of lawlessness and injustice, police violence, corruption, and impunity of the bureaucracy have provoked outbursts of anger among citizens, whose Web use is rising fast. Low quality of governance exposed during crises, such as the fires caused by the unprecedented heat wave in central Russia, add to the disgruntlement.

Most such outbursts have subsided, hardly generating any social organization, but dissatisfaction is growing. To appease socioeconomic fears as the 2011-12 election cycle approaches, Moscow has increased social spending. But the dramatic slowdown of the Russian economy in the past two years means that this generosity cannot last much longer. Sooner or later the government will have to seriously cut social spending, and the public's sour mood may translate into action that can't be quashed by tricks. Then the temptation to resort to oppressive ways may be hard to resist.

Masha Lipman, editor of the Carnegie Moscow Center's Pro et Contra journal, writes a monthly column for The Post.

August 6, 2010Russia Profile Weekly Experts Panel: Are Attacks on Human Rights Activists in Russia Part of the Power Struggle in the Kremlin? http://www.russiaprofile.org/page.php?pageid=Experts%27+Panel&articleid=a1281108024&print=yes

Introduced by Vladimir FrolovRussia Profile

Contributers: Alexandre Strokanov, Vladimir Belaeff, Ethan Burger

Pamfilova's announcement came a day after Medvedev signed into a law a hugely controversial bill expanding the powers of the FSB security service, which activists have slammed as a throwback to the Soviet era. Pamfilova has been a vocal critic of this law and even suggested that the FSB and other Russian security services need to be reformed and restructured along with the Interior Ministry to root out corruption and incompetence in their ranks.

Pamfilova and Russia’s Human Rights Ombudsman Vladimir Lukin also criticized the security forces’ brutal treatment of Russian protesters known as “Strategy 31” who stage unsanctioned rallies in Moscow and other cities on the 31st day of every month which has one to exercise their right to public assembly under Article 31 of the Russian Constitution. Pamfilova and Lukin have been publicly ostracized and humiliated by the United Russia party leaders as well as affiliated youth groups for their voice in defense of the Strategy 31 protesters.

Pamfilova had over the last months clashed repeatedly with the controversial and influential pro-Kremlin youth group Nashi. The latest spat broke out this week over an exhibition staged by a Nashi offshoot at its annual summer camp where images of the heads of Russian liberals like Lyudmila Alexeeva, 83, were stuck on stakes in Nazi headgear.

Nashi and other related youth groups are sponsored by the Kremlin’s chief ideologue Vladislav Surkov, who happens to co-chair the U.S.-Russian Working Group on Civil Society and President Medvedev’s Commission on Modernization. Kommersant reported that it was the constant clashes with Surkov and the public harassment from his sidekicks that influenced Pamfilova’s decision to quit her job.

Some Surkov loyalists, like Alexei Chadayev, the United Russia Party’s chief ideologist, have sought to portray Pamfilova’s resignation as a plot by Medvedev’s senior aides, including presidential Press Secretary Natalya Timakova and his informal advisor and mentor Alexander Voloshin, to weaken Surkov and Prime Minister Vladimir Putin by suggesting that media attacks on Pamfilova and other human rights activists, as well as brutal suppression of dissident marches, had been purposefully engineered by Surkov and Putin to discredit Medvedev and his strategy of seeking modernization alliances with the West.

Could this be true? Are attacks on Russian human rights activists part of the power struggle in the Kremlin? Could this be a sign of an intensifying war of the clans between supporters of Medvedev and Putin? Why are human rights an issue of confrontation between the camps? Is it part of a real ideological divide between Putin and Medvedev or is it merely being manipulated to avoid raising other, much less benign, issues in Russian politics? How should the West react to this? Will it endorse Medvedev’s camp under the universal guise of defending human rights in Russia and thus insert itself into a purely domestic Russian power play?

Alexandre Strokhanov, Professor of History, Director of Institute of Russian Language, History and Culture, Lyndon State College, Lyndonville, VT:

The assumption that Pamfilova’s resignation has anything to do with Medvedev’s strategy of seeking modernization alliances with the West is so ridiculous that I do not think it even deserves a commentary. I will put the emergence of such an assumption in Moscow down to high temperatures and the smoky air.

Nor do I see human rights as an area for confrontation between the Kremlin’s camps or part of an ideological divide between Putin and Medvedev. Medvedev never spoke in favor of those whom you call dissidents and who, in my humble opinion, are insistently and purposefully trying to meet in unauthorized places, seek media attention, and in general act as a group of street showmen. This is really what it is, even if some of them consider their activity as a struggle for freedom and constitutional rights.Now, I would like to say a few words on the resignation of Pamfilova from the Presidential Council on Human Rights and the Development of Civil Society. I personally applaud the decision and interpret it as her final realization that she was not a good choice for such a position from the very beginning. Pamfilova is an interesting example of what I call the “unsinkable boats” that have been in Russian politics since Yeltsin’s time.

In 1991, when she was one of Yeltsin’s favorites, she was appointed to the position of minister of social policy. It was a shocking appointment, due to the fact that none of her previous activities and experiences had anything to do with the field, since she worked as an engineer in MosEnergo (Moscow Electric Energy Company) before her election to the Supreme Soviet of RSFSR in 1989. The results of her performance as social minister are well known to everybody who is familiar with the social disaster of the early 1990s, and I am not going to go into details here. In my opinion and from the impression that I had after my own meetings and conversation with her from 1991 to 1993, she obviously lacked competence in the field.However, her resignation as minister did not end her political career and she again tried to be a lawmaker, serving in the State Duma from 1993 till 1999. She changed her allegiance between several Duma blocs and coalitions of deputies, and with the end of Yeltsin’s epoch she finally failed to be elected to the State Duma, although she tried in 1999. She ran in the presidential elections of 2000, but received only 1.01 percent of votes.In 2002 president Putin appointed her chairperson of the Commission on Human Rights under the President of Russia and in 2004, after the commission was reorganized, she was appointed again by Putin with the title that she carried until her resignation on July 30, 2010. In my opinion, her performance in this position may be qualified, at best, as mediocre. For the majority of Russian people she was just a bureaucrat and her resignation will not even be noticed outside the Kremlin and the Boulevard ring of Moscow.

It is also quite symbolic that she chose to resign at the very moment when the country is going through one of the toughest tests in many decades. Thousands of families are losing their homes to natural fires and people in many regions are experiencing incredible suffering, but in her understanding this, probably, has nothing to do with civil society.

How should the West react to this? It should show, absolutely, no reaction. First, reacting to such things would be such blatant interference in the domestic affairs of another state that no responsible foreign government will ever do it. Second, these events should represent absolutely no serious interest for any country or its government.

It may actually be much more important for the West to express support to the Russian people who are fighting wild fires, and provide help to the country and those who have lost everything in recent weeks. These acts will really prove that we have civil society on a global scale and that the West really wishes Russia and Russians well.

Vladimir Belaeff, Global Society Institute, Inc., San Francisco, CA:

Although unexpected by most observers, the resignation of Pamfilova is not a sign of anything politically substantial. One needs to take into account that she has been in government since 1989. And during that 21-year tenure her overall visibility has been relatively minor. Her position and actions over these two decades are not widely known.Currently, there is a generational change in Russian politics. Political wind-surfers and others who became prominent in the final years of the Soviet Union and the early Yeltsin period are leaving - many with parting decorations and (presumed, undisclosed golden parachutes). Tatarstan President Mintimer Shaimiyev (came to power 1991), Bashkhoristan President Murtaza Rukhimov (1993), and Sverdlovsk Region Governor Eduard Rossel (1995) are the more visible recent retirements. There are many stimuli for such departures. One is the growing anti-corruption pressure: during the past 12 months there have been quite a few widely publicized anti-corruption actions against senior administrators. Although the anti-corruption drive may be a small dent in the overall problem, it can ruin the day for any given individual. Another stimulus is the strong insistence by both Medvedev and Putin on competence and personal accountability of managers and officials.

All we know is that Pamfilova has declared her reasons for resigning as personal, has not made any political declarations and has not described her plans. Any speculation about the real motives behind her departure is hypothetical and possibly an attempt to exploit her resignation to advance extraneous agendas.

The Other Russia group executes its “Strategy 31” campaign as primitive political theatre. To label Strategy 31 as human rights activism and assign it the mantle of a dissident movement is an oblique insult to the truly heroic human rights defenders of the Soviet era like Andrei Sakharov. Boris Nemtsov, the National Bolsheviks and others of that ilk associated with Other Russia have not earned any such qualification. And as a political force this group is marginal even among the tiny political community which seems to be forever stuck in the 1990s. Their political traction within the electorate is within the statistical margin of error even in friendly opinion surveys.

Pamfilova’s departure, like her earlier presence, will be barely noticeable in the real political climate of contemporary Russia.Regarding the supposed ideological contraposition of Medvedev and Putin, it bears repeating that this image resembles a manufactured myth. Differences in style are presented as differences in substance. The determinants of Russian policy are such that any effective government will execute policies that are similar in goals and substance to the ones presently in operation. If Other Russia were to govern, they would fail miserably

in the short time, destabilizing a superpower with thousands of nuclear warheads and global reach. From a practical point of view, no sane person can support this.

Simply put, can one expect a government composed of Nemtsov, Limonov and their ilk to successfully cope with something stressful but relatively uncomplicated like the current forest fire emergency in Central Russia? All Other Russia has proven is its ability to provoke confrontations with Russian police and getting its members spectacularly arrested (to be quickly released afterwards). Even the Communist Party (KPRF), the real opposition to the present government of Russia, has better political instincts.

To suggest that Pamfilova’s resignation is somehow connected with the human rights activism of Strategy 31 appears extremely frivolous. Of course, time will tell. We might yet see her locked arm-in-arm with Nemtsov at the next event - but that hypothetical alliance would say nothing about the political future of Russia.

Ethan S. Burger, Senior Lecturer, Centre for Transnational Crime Prevention, Faculty of Law, Innovation Campus, University of Wollongong, AUSTRALIA:

I am not able to offer insightful analysis of the recent political intrigue between the Kremlin and other leading officials in Moscow. But, if people with progressive views find themselves forced out of their political positions or increasingly marginalized, this does not augur well for Russia in the long term, or for the countries that have sought to improve relations with it.

It was not in Pamfilova’s nature to bless policies she felt were offensive. Although she might have been co-opted to some extent, she did not betray her core values, even if her impact on state policy was marginal. But because her impact was so marginal, it is hard to explain why Pamfilova decided to stay in her position so long. Perhaps initially, she might have thought she could function as a firewall against increased repression in Russian society. But although she had the freedom to speak her mind, she was not apparently able to influence policy. The situation seemed to change with the election of Dmitry Medvedev as president in 2008.

When Vladimir Putin decided to make Dmitry Medvedev his heir apparent, it appeared that he would retain control over national security and foreign policy matters, while Medvedev’s principal responsibilities would lie in the reform of the bureaucracy and judiciary, economic modernization, cultural liberalization, social welfare issues, and the ceremonial aspects of being Russia’s president.

Perhaps, finally, Pamfilova would enjoy real influence: working within the system, finding allies among president Medvedev’s circle and trying to bring about as much positive change as possible.Unfortunately, Putin and his inner circle have an expansive view of national security that has led him and his people to gradually encroach into areas of Medvedev’s responsibility. And in recent days there have been a number of troubling developments in Russia that show what little influence Pamfilova really exercised.

The youth group Nashi, which has threatened to sue Pamfilova for “slanderous” remarks she made about the organization, is growing in influence in the country with the active support of elements within the Russian government. Nashi seems to be a magnet for members of Russia’s radical right, and the idea that such proto-fascist groups might indicate the path Russia is pursuing is out of kilter with president Medvedev’s goal of modernizing Russian society.

The FSB has been granted extra-legal powers, further confirmation that the influence of those within the government seeking to strengthen human and civil rights is waning. The targets of the anti-corruption campaign seem to be increasingly politically motivated.

It is unlikely that Pamfilova will remain a prominent figure on the Russian stage, and her fate might deter those with similar views from any action that could remotely be construed as anti-government.

Nonetheless, there remain individuals in positions of authority in Russia who continue to attempt to influence things in a positive way. Chairman of the Russian Supreme Court Vyachaslav Lebedev has stated Russian lower courts are duty bound to implement the decisions of the European Court of Human Rights. To the dismay of many members of United Russia, Russian Human Rights Ombudsman Vladimir Lukin has called for a comprehensive and thorough inquiry into the "savage and inappropriate" use of violence against a peaceful opposition rally in Moscow. Furthermore, most of those staffing the various regional ombudsman’s offices seem committed to protecting the civil and human rights of Russian citizens. Audit Chamber Head Sergei Stepashin seems committed to implementing the anti-corruption campaign in a uniform fashion against the vast majority of corrupt officials. If these individuals are forced out of their positions or feel morally compelled to resign, any realistic hope of the system reforming itself will probably disappear.

CIS residents still keen to migrate for work http://www.businessneweurope.eu/storyf2234/CIS_residents_still_keen_to_migrate_for_work

Clare Nuttall in Almaty August 9, 2010

The crisis forced millions of migrant workers to return home, but this has not dampened the enthusiasm among residents of the former Soviet countries for working abroad. In total, around 100m people in the region would be willing to move abroad, according to a Gallup Poll.

The poll of 13,200 adults in the 12 Commonwealth of Independent States (CIS) countries

and former member Georgia found that around one quarter – 70m people - would like to temporarily move abroad. 24% of respondents to the survey said they would like to move abroad for temporary work, and 25% said they would move to study or for a work-study programme.

An additional 30m people would be willing to move permanently away from their home countries. Armenians were the most keen to leave their country for good, with 39% of respondents saying they would be willing to move permanently abroad, as did 36% of Moldovans, 20% of Belarusians, and 18% of Kyrgyzstanis.

Meanwhile, 53% of Moldovan respondents said they would migrate for temporary work. "High unemployment and dependency on remittances, in addition to the likelihood that a family member is already working in another country, likely contribute to this relatively high percentage," says the report.

44% of Armenian respondents, 35% of Belarusian respondents and 34% of respondents from Georgia and Kyrgyzstan said they would move abroad temporarily for work.

Sending money home

In recent years, Tajikistan and Moldova have received the greatest influx of remittance payments from migrant workers, in both cases accounting for around one-third of GDP until the crisis struck. According to the Gallup poll, 24% of Tajik respondents said their households had received financial help in the form of remittances (either from within the country or from abroad) in the last 12 months. This was closely followed by Moldova, where 23% of respondents had received remittance payments.

In the depths of the crisis, millions of migrant workers were forced to return home or stopped remittance payments as work dried up. They included many from the Caucasus and southern Central Asia who left their homes to labour on construction sites in Russia and Kazakhstan where work has since stopped. Given the heavy reliance on payments from migrant workers in low-income CIS countries, this had a serious negative impact even in countries not directly affected by the original financial crisis.

Now, however, there are signs the situation is changing, with data from both Kyrgyzstan and Tajikistan indicating that remittances are on their way back up. According to the National Bank of Kyrgyzstan, in January-May, remittances were up 32.6% compared with the same period of last year, with most payments coming from Russia or Kazakhstan. Meanwhile, in the first four months of this year, remittance payments were up 24% on year, according to UNDP data quoted by Eurasianet.

The Gallup report also notes that in addition to the funds sent back, migrant workers can also have a beneficial effect on their home countries once they return. "Not only will temporary workers send remittances while they are in another country, but most of them want to return - and when they do, they return with potentially valuable new experience and knowledge," says the report.

This applies in a majority of cases since overall respondents, especially those from Central Asia, were much keener to move abroad temporarily than to quit their country on a permanent basis. About two-thirds (68%) of those who want to leave temporarily do not want to migrate permanently, says the report.

Poll: Medvedev, Putin run neck and neck in Russian pollhttp://www.kyivpost.com/news/russia/detail/77484/

Today at 09:38 | Interfax-Ukraine Real power in Russia is in the hands of President Dmitry Medvedev and Prime Minister Vladimir Putin in equal proportions, half of the people polled by the Levada Center believe.

In a nation-wide poll taken on July 23-26 13% said that power is in Medvedev's hands, 28% in Putin's hands and 9% were undecided.

The overwhelming majority (72%) believes that Medvedev as president generally continues the policy of his predecessor. Meanwhile, 15% think Medvedev is gradually changing the political course and 5% that he pursues an absolutely new policy.

If presidential elections were held next Sunday 27% would cast their ballots for Putin (28% in 2009) and 20% for Medvedev (17% a year ago).

Communist Party leader Gennady Zyuganov and Liberal Democratic leader Vladimir Zhirinovsky are far behind with 4% and 3% respectively.

The same as a year ago 45% said they had not decided who to choose, would not go to polling stations or were undecided whether to vote or not.

Read more: http://www.kyivpost.com/news/russia/detail/77484/#ixzz0w5dXjZpG

NORTH CAUCASUS

Two militants killed in Chechnyahttp://www.presstv.ir/detail.aspx?id=137965&sectionid=351020602

Sun, 08 Aug 2010 23:15:46 GMT

Two militants have been killed as they engaged in an exchange of fire with police and military forces in the Russian North Caucasus republic of Chechnya.

The militants had been blocked on Sunday morning in an apartment of a nine-storey residential building in the Leninsky district of Chechnya's capital, Grozny. A gunfight broke out after militants refused to heed the demands to surrender, a Chechen Interior Ministry source told ITAR-TASS news agency.

The skirmish left one police officer killed and another wounded. There were no reports of civilian casualties.

Sporadic terrorist attacks and militant clashes are common in Russia's North Caucasus republics, especially Chechnya, Dagestan and Ingushetia.

Russia has been fighting militants in the North Caucasus since the mid 1990s.

Violence Reported Across the North Caucasus

http://georgiandaily.com/index.php?option=com_content&task=view&id=19627&Itemid=132

August 08, 2010

The Jamestown Foundation 

Violence connected to the insurgency –and violence more generally– continued in the North Caucasus this past week, despite reports of splits in the leadership of the rebel Caucasus Emirate.

Three traffic policemen were shot today (August 6) on the Cherkessk-Dombai highway in the village of Ordzhonikidzevsky in the Karachaevsky district of Karachaevo-Cherkessia. One of the policemen was killed and two wounded in the incident, which took place when police tried to stop a stolen car being driven by a suspect in an armed robbery in Stavropol Krai (www.kavkaz-uzel.ru, August 6).

In Dagestan, unidentified attackers shot up a car on the Sergokala-Pervomaiskoe highway in the republic’s Sergokalinsky district on August 4. The car’s driver was killed immediately, while its passenger, a 21-year-old woman from Makhachkala, died on the way to the hospital. The attackers escaped. Investigators said the attack was likely the result of a domestic dispute and not connected to the insurgency.

On August 3, two members of the Russian interior ministry’s mobile detachment were shot and killed in an attack in the Dagestani city of Khasavyurt. Later that evening, unidentified gunmen fired automatic weapons and grenade launchers at a police unit in Khasavyurt, but no one was hurt in that attack. That same day in Kizlyar, the deputy head of the district branch of the interior ministry’s anti-extremism center, Colonel Shevket Kudzhaev, was shot and killed by two unidentified gunmen at his home (ITAR-TASS, August 4; www.kavkaz-uzel.ru, August 5).

On August 2, Magomed Salamov, a long-time campaigner against religious extremism who in 1999 led a group of volunteers set up to resist an incursion into Dagestan by Chechnya-based militants, was shot and killed in an ambush outside a cemetery on the outskirts of Gubden. According to Dagestan’s interior ministry, Salamov was on a rebel execution list (Interfax, August 3).

On August 1, a senior investigator with the investigation department of Dagestan’s interior ministry, Lieutenant-Colonel Yunus Khulataev, was shot to death in his apartment in Makhachkala (www.kavkaz-uzel.ru, August 1). That same day, a suspected rebel was killed in an exchange of fire with police in the village of Bolshebredikhinskoe in Dagestan’s Kizlyar district (Interfax, August 2).

On July 31, a convoy of OMON special purpose policemen came under fire near the village of Gubden in Dagestan’s Karabudakhkentsky district. The Grani.ru website quoted a law-enforcement source as saying that the convoy was first hit by a bomb blast, after which unidentified gunmen opened fire on it. Twelve policemen were wounded in the attack. That same day, the home of a policeman in the village of Sergokala was shot up, while someone shot at an employee of the prosecutor’s office in the city of Kaspiisk. No one was hurt in either incident (www.grani.ru, August 4).

On July 30, the authorities averted a large-scale terrorist attack in the village of Novosulak in Dagestan’s Kizilyurt district when they discovered and defused an explosive device in a grocery store. The bomb consisted of two 10-liter plastic canisters filled with ammonium nitrate and aluminum powder and a timer (www.newsru.com, August 31).

Also on August 30, three people were killed and five others hospitalized in a mass brawl between residents of the villages of Gergebil and Kikuni in Dagestan’s Gergebilsky district. The fight involved roughly 200 people on each side, some of who had firearms (www.newsru.com, August 31).

Russian media reported that since the start of 2010, militants in Dagestan have killed 82 law-enforcement officers and injured 131, while 60 militants were killed and 66 militants and accomplices were detained. Eleven civilians were killed and 57 injured in violence in the republic (ITAR-TASS, August 4).

In Ingushetia, two OMON officers were wounded by gunmen who fired on two police vehicles in Nazran’s Plievo district on August 5 (www.kavkaz-uzel.ru, August 5). On August 4, gunmen shot two police officials in a Nazran café, killing one of them on the spot and wounding the other, who died on the way to the hospital. One of the slain officers was Ibragim Yevloev, the former head of the bodyguard detail for the head of Ingushetia’s interior ministry, who was found guilty last year of the August 2008 accidental killing of Magomed Yevloev, the owner of the opposition Ingushetia.ru website who was shot dead in police custody. Some Russian media speculated that the murder of Ibragim Yevloev may have been in revenge for the killing of Magomed Yevloev, but the father of Magomed Yevloev denied his family was involved in Ibragim Yevloev’s murder (www.lenta.ru, August 4).

In Chechnya, a serviceman with the interior ministry’s internal troops was wounded on August 3 in a firefight with a group of three suspected rebels in a wooded area several kilometers from the village of Shalazhi in Chechnya’s Urus-Martan district (www.kavkaz-uzel, August 4). Early on July 31, two senior policemen were shot and killed in the Chechen capital Grozny. The bodies of the chief of the territorial police section and the commander of the patrol-sentry service of the Zavodsky district police were found with gunshot wounds in a car near a police checkpoint in the village of Chernorechye, also located in Grozny’s Zavodsky district (RIA Novosti, August 1).

Chechnya’s interior ministry reported on August 3 that 51 insurgents have been killed and 128 insurgents and insurgent accomplices have been captured since the start of the year. According to the Kavkazsky Uzel website, some local observers believe these numbers may be exaggerated (www.kavkaz-uzel.ru, August 4).

Source: http://www.jamestown.org/programs/edm/

PRESS DIGEST - Russia - Aug 9http://af.reuters.com/article/metalsNews/idAFLDE67802I20100809

Mon Aug 9, 2010 5:37am GMT

MOSCOW, Aug 9 (Reuters)- The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

VEDOMOSTI

www.vedomosti.ru

- Russian tycoon Alexander Lebedev has offered buying a blocking stake from Ukraine in the aviation leasing firm Ilyushin Finance for $232.5 million.

- Russia's no. 1 lender Sberbank (SBER03.MM) has agreed to loan alluminium giant UC Rusal (0486.HK) $4.5 million in order to pay off its debts to Vnesheconombank.

- The amount of imported new cars in Russia has fallen by 4.6 percent over the last six months.

KOMMERSANT

www.kommersant.ru

- Muscovites are moving out of their homes into air conditioned places -- hotels, trading malls, offices and private cars, the daily says in connection with the worsening ecological situation in the capital, which is blanketed by a toxic cloud caused from peat and forest fires.

- Russia seems ready to consider ways by which it can ease its limitations on grain exports after October.

- Moscow's international airport Domodevodo delayed about 20 flights on Sunday due to low visibility caused by the smoke crisis.

- Funeral homes have claimed that the number of deaths grew at least by 2.5 times in the Moscow region since Russia's biggest heatwave in 130 years started in June, the daily says.

VREMYA NOVOSTEI

www.vremya.ru

- The families of diplomats are leaving Moscow, where the pollution level now exceeds the norm by several times.

- Officials from Russia's emergencies ministry reported on Sunday they had managed to reduce the areas affected by forest fires to 190,400 hectars from 193,500.

- The death rate in Moscow grew by almost 30 percent over the last month, the daily says, citing medical sources.

National Economic Trends

Russian Grain Union Seeks to Postpone Export Ban to Sept. 1 http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=acUb540SBHL0

By Maria Kolesnikova

Aug. 9 (Bloomberg) -- The Russian Grain Union is seeking a delay to the export ban on the produce to Sept. 1 from Aug. 15 to avoid damaging the country’s reputation as a supplier and ease port and rail bottlenecks, said Arkady Zlochevsky, the head of the industry group.

The union asked Agriculture Minister Yelena Skrynnik in an Aug. 7 letter to petition Prime Minister Vladimir Putin to amend his decree, Zlochevsky said today by telephone.

“It’s not too late, we still could fulfill our contracts to Egypt,” Zlochevsky said.

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

Last Updated: August 9, 2010 03:02 EDT

Russian farmers on brink of bankruptcyhttp://www.ft.com/cms/s/0/716ff576-a315-11df-8cf4-00144feabdc0.html

By Isabel Gorst in Nizhny Novgorod

Published: August 8 2010 19:24 | Last updated: August 8 2010 19:24

Under a blazing sun, farmers were digging trenches in Nizhny Novgorod on Sunday to stop wildfires in nearby forests and peat bogs from advancing on their land.

“It would take just one spark and this whole field would disappear in 15 minutes,” said Andrey Skoblikov, gesturing across a huge grain field at his farm at Larsha, 400km east of Moscow.

Mr Skoblikov, who gave up a career in the oil business for farming five years ago, is one of a new generation of Russian entrepreneurs who spotted the huge potential of his country’s neglected agricultural sector a few years ago.

But after several bumper harvests an unprecedented heatwave and drought have scorched grain crops this year driving many farmers to the brink of bankruptcy. An uncontrollable wave of wildfires sweeping across European Russia is adding to farmers’ woes, threatening their land with destruction.

“This year we will be loss- making,” says Mr Skoblikov.

“We spend all our time praying for rain,”

Private investors such as Mr Skoblikov and his business partner Dmitry Tsygankov scooped up Russian land for knock-down prices early this decade as the government launched reforms aimed at reversing the disastrous legacy of Soviet collectivisation.

“Russia’s biggest resource is its land. We once fed the whole of Europe,” said Mr Skoblikov.

Larsha, a dilapidated Soviet collective farm the two men bought in 2006, has been modernised under their management to produce grain, vegetables and milk.

At least one-third of the grain crop at Larsha has been destroyed by the drought this year and the potato harvest, usually sold to the Russian army, wiped out altogether.

The fires are also taking a toll. Tractors that should now be ploughing land for sowing winter grain have been mobilised to dig trenches round fields to stop forest fires encroaching on farmland. Criticism has been mounting of the authorities’ handling of the wildfires which have killed at least 52 people and forced thousands to flee their homes.

Ecologists say the fires were worse than they should have been because of Kremlin-sponsored reforms.

A new Forest Code in 2006 dismantled a federal forest safety system and transferred responsibility to regional authorities and forest tenants, which have performed badly.

Farmers at Larsha have taken steps to protect against fires that break out in forests and peat bogs every year in Nizhny Novgorod.

A Soviet era water tower and been modernised and all emergency fire ponds kept full.

However, the risk of the fires spreading to farms cannot be ruled out.

Local authorities have called for vigilance, nailing lists of emergency instructions to trees at farms and urging people to “keep documents in an accessible, visible place”, in case it is necessary to flee.

Mr Skoblikov said he had been bombarded with requests for animal feed from drought stricken-local farmers, but had decided to sit on his stocks until prices stabilised.

Russia banned grain exports last week in a move to ease panic on domestic markets caused by the failing harvest. But in Nizhny Novgorod grain is still trading at high prices, forcing some small farmers to slaughter livestock. Nizhny Novgorod has been particularly badly hit by the deadly wildfires that have swept across European Russia in the past 10 days.

At least 20 people were killed when a high wind whipped up smouldering forest fires that destroyed three villages in the south of the region ten days ago.

Fire fighters were battling at the weekend to douse fires in the north of the region that cloaked the town of Nizhny Novgorod, the regional capital, in smoke.

Yabloko, a Russian opposition party, accused the governor of Nizhny Novgorod on Sunday of covering up information about the fires by failing to restore internet access to the wyksa.ru website, which was attacked by hackers last week.

Chat rooms on the stricken website had distributed information on the whereabouts of fires and corralled volunteers into joining the battle to douse the flames.

“The destruction of the website, which helped to extinguish the fires, is equivalent to destroying peoples’ lives,” Yabloko said in a statement.

Will Russia relinquish control to fill the hole?http://www.fundstrategy.co.uk/features/qa/will-russia-relinquish-control-to-fill-the-hole?/1016453.article

9 August 2010 | By Tomas Hirst

Neil Shering of Capital Economics talks to Tomas Hirst about how Russia will tackle its budget deficit.

Q. The financial crisis took a particularly severe toll on the Russian economy, swinging the federal budget sharply from years of surplus into deficit territory. What is the scale of country’s budget deficit?

A. Last year the deficit was 5.9% of GDP. This was down from a surplus of 4.8% in 2008 and a surplus of over 5% in 2007.

In terms of where the country is heading this year, it will depend heavily on your view of oil prices. You would need to get oil back to between $90 to $100 a barrel to balance the budget but our view is that it will fall far short of this.

Projections from the Russian Finance Ministry suggest a deficit of 5% this year falling to 3.6% in 2011.

Q. The Russian government has proposed a sale of state-owned assets to raise capital to plug the deficit. Is the asset sale going to be sufficient to accomplish this goal?

A. This depends on who you talk to in Russia. Assuming they raise the $29 billion (£18 billion) figure suggested by press outlets, it would only account for 2% of this year’s budget deficit.

Since the sales are supposed to be carried out over the next three years they will fall short of fully addressing the problem. It will simply not be enough.

Q. Some commentators have argued that the sale of state-owned assets might lead to the government stepping away from direct influence in the economy and allow for broader economic reforms. How plausible are these arguments?

A. It is an important first step but it is still too early to say whether it represents a broader shift towards greater liberalisation in Russia.

The government is split between the Economy Ministry and the Finance Ministry. Officials in the Economy Ministry are pushing for the scale of asset sales to be limited with the government retaining at least a 75% stake in the companies while [Alexei] Kudrin [Russia’s minister of finance] is proposing the Kremlin keep 51%.

At the moment the tone coming from the country suggests the government is leaning towards a more gradualist approach. Kudrin, however, is still pushing for a larger scale and it’s not quite clear yet who will win.

Q. What are the key stumbling blocks that might limit the size of the programme or threaten it altogether?

A. The big problem with all of this is that there are too many vested interests in keeping the status quo. There is a deep-seated rigidity in the politics around these institutions, particularly with the so-called “strategic industries” in the natural resources area.

Even if the Finance Ministry wins the debate, the government will still hold a controlling stake in these businesses. Given that 51% is the same stake the Kremlin holds in Gazprom, the evidence suggests it will not affect the way in which they act towards them.

It would take large-scale political and business culture reform for this enterprise to directly lead to a longer-term structural shift. There is little sign that this is what is happening.

Q. Given the size of the hole in Russia’s federal budget, is it surprising that the plans have caused such a debate within Kremlin ranks?

A. I think it’s more that the political incentive of retaining controlling stakes in what the government sees as strategic assets is outweighing the financial demands posed by the deficit.

They are keen to avoid being seen to make the same mistakes of the mid-1990s where state assets were sold off to powerful oligarchs and eventually had to be wrested back from them.

Of course, many of the comparisons being made between what happened under Yeltsin and the current situation are misguided. Russian financial markets have matured over the past decade and the government has been careful to build up foreign currency reserves to protect the country against external shocks.

What we are seeing now is not a fire sale of assets but an attempt to plug a temporary hole in government finances without dipping back into the reserve pool.

Q. Rosneft, Russia’s state-owned oil producer and one of the companies linked with the asset sale, appeared to link the move with a review of Russia’s windfall tax on oil profits, which mean the government takes 90% of profits above $25 a barrel. Is this an area that is likely to be looked at?

A. The government is really caught between a rock and a hard place on this issue. They have tried to insulate the economy from oil price volatility and came to the conclusion that the best way of doing this was by introducing a windfall tax. This means that they can build up counter-cyclical reserves when the oil price is high and use them to soften the blow when prices fall.

Removing this buffer could cause significant concerns for an economy that is heavily reliant on commodities.

That said if the oil price started to trend higher over the medium to long term there might be a case to review the level at which the windfall tax kicks in for producers.

Q. Might the government use this opportunity to raise money in international markets to help get stalled infrastructure projects moving after state funding was cut in the last budget?

A. If they’re raising capital to plug the deficit then it would be counterproductive to raise government spending on infrastructure. I think we are unlikely to see any moves in that direction until the budget deficit is brought down.

Q. Could the sale be a positive move for investors aiming to increase their exposure to higher-quality businesses in Russia?

A. So far, companies in which the government holds a majority stake have not really paid out to investors. With the government appearing set to keep their majority stakes it looks as if they might not present great opportunities for foreign investors.

Business, Energy or Environmental regulations or discussions

Russia Stocks Rise First Time in Three Days on Crude, Metals http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a7gz738ppC0A

By Jason Corcoran

Aug. 9 (Bloomberg) -- Russian stocks advanced for the first time in three days on as oil and metals gained, boosting the outlook for commodity producers.

OAO Novolipetsk Steel, Russia’s biggest maker of the metal by market value, jumped 2.2 percent. Oil producer OAO Gazprom Neft added 1 percent, helping to push the Micex Index of 30 stocks higher by 0.9 percent to 1,415.48 at 11:54 a.m. in Moscow trading.

Oil, Russia’s chief export, advanced as much as 76 cents, or 0.9 percent, to $81.46 a barrel in New York. Copper rose as much as 1.2 percent to $7,461.25 a metric ton on the London Metal Exchange. Aluminum, zinc, lead, and nickel also advanced.

Stocks in Russia gained even as the city choked for a fourth day under a blanket of smoke as wildfires continued to blaze around the Russian capital. Alfa Bank cancelled it daily research note, and the Russian unit of Austria’s Raiffeisen International Bank Holding AG said it was letting non-essential staff stay at home.

“Despite the smog and smoke engulfing Moscow, markets are advancing thanks to support from oil and commodities,” John Heisel, a sales trader at Citigroup Inc. in Moscow, said by telephone. “Volumes in Moscow have dropped off because there are less traders about but levels are being propped up by institutions in London.”

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

Last Updated: August 9, 2010 04:03 EDT

Investment banks gear up for Russia’s privatisation drivehttp://www.efinancialnews.com/story/2010-08-09/banks-ready-for-russia-privatisation?mod=sectionheadlines-PE-IB

Liam Vaughan and Matt Turner

09 Aug 2010

Russia may be battling through its worst drought in half a century, but investment banks in Moscow could soon be benefiting from a flood of advisory and underwriting mandates after the Ministry of Finance last month unveiled plans to raise $30bn (€23bn) via the privatisation of some of the country’s largest companies.

The part-privatisation scheme, Russia’s biggest since the 1990s, will see the government offload minority stakes in 11 state-run companies before 2013, including banks VTB and Sberbank, shipping group Sovcomflot, oil pipeline group Transneft, oil company Rosneft and hydropower utility RusHydro.

The process is being run concurrently with a broader privatisation drive in which hundreds of small and medium-sized state-owned businesses will be sold off or part-privatised as the government seeks to address Russia’s rising budget deficit and transform the country’s reputation as a global financial centre.

For investment banks, the opportunities for mandates are three-fold: as advisers to the government as it auctions off individual stakes via strategic sales or launches initial public offerings; as advisers to already listed but majority state-owned companies as they undertake share placements or carry out auctions; and as advisers to potential investors looking to make strategic investments.

Andrew Chulack, head of global banking for Russia at Deutsche Bank, said: “There will be plenty of opportunities for banks to advise on how to structure deals, how to price them, how to target investors, whether to split the sales into tranches and so forth. The programme is good for banks, but also good for the capital markets in Russia and for Moscow’s place as a financial centre.”

According to one co-head of banking in Russia at a US bank, the second and third option are the most lucrative. While working on behalf of the government carries cachet, it is likely to pay a fraction of the commercial rate and therefore representing foreign investors will be the plum mandate.

Ranked number one for investment banking revenues in Russia year to date by Dealogic, Deutsche Bank is one of a handful of global investment banks with an established presence that could benefit from the wave of new business. Deutsche Bank was a bookrunner on the IPO of VTB in 2007 and electricity groups OGK-2 in 2007 and OGK-5 in 2006.

Other international banks that are strong in the region include JP Morgan, which was an underwriter on the $11bn IPO of Rosneft in 2006 and the $9bn rights issue by Sberbank in 2007; Credit Suisse, which worked on Sberbank, OGK-5 and the follow-on by LUKoil in 2001; Morgan Stanley, which was an underwriter on Rosneft, Lukoil and Gazprom in 1996; and Citigroup, which featured on the VTB IPO and the sale of oil group Slavneft in 2002.

According to one banker close to the situation, the ministry has come up with a long list of 20 banks to handle the various divestments – 11 international banks and nine domestic banks. That shortlist will be approved by the end of the month, although bankers anticipate the final list will be much shorter.

In the past, the government has opted for a mix of global and domestic institutions. Bankers agree that Renaissance Capital and Troika Dialog are likely to feature strongly. VTB Capital, the state-owned bank which has grown from outsider to top-tier player since launching in 2008, is also expected to take a dominant role. VTB finished last year ranked first by revenues, according to Dealogic.

One of the key questions – and something that will influence which banks the government hires – is the level of non-Russian investment the state is prepared to countenance. Natalya Orlova, chief economist at Russian broker Alfabank, said that one of the goals for the government beyond cutting the deficit was attracting international investment and helping add legitimacy to the market.

She said: “Part of the reason for the privatisation programme is to help transform Russia’s image in the eyes of the international investment community.

“There is likely to be plenty of international interest and without international banks it will be very difficult to attract foreign investors.”

Bankers are keen to stress that the process is still at a very early stage, with little clarity on what will be sold, when and how. The government’s only stipulation is that it will hold on to at least 51% in all the companies under consideration.

While details are tightened up, investment banks are ramping up their marketing efforts. The co-head of Russian banking at a US bank said: “Everybody is pulling on everybody at the moment, trying to use their relationships with the ministry and with the companies themselves to ensure they participate.”

Banks have also been strengthening their presence on the ground. Since the beginning of the year, UBS, Morgan Stanley and JP Morgan have all appointed new heads or co-heads of investment banking in the region, while Renaissance Capital has appointed a new head of financial institutions.

The privatisation programme is not the only game in town, and fees are likely to be comparatively modest, but the stake sales are part of a broader liberalisation of Russian capital markets and every bank is keen to grab a piece of the action.

Russia may tighten rules for foreign car makers-reporthttp://in.reuters.com/article/rbssConsumerGoodsAndRetailNews/idINLDE67801W20100809

11:07am IST

MOSCOW, Aug 9 (Reuters) - The Russian Ministry of Industry and Trade has proposed tightening the regulations surrounding the assembly of foreign cars in Russia in order to boost domestic production, Kommersant business daily said on Monday.

The ministry wants to renew current agreements that give preference for importing auto parts and components with major car producers which have opened car plants in Russia.

Companies likely to be affected include GM [GM.UL], Toyota (7203.T: Quote, Profile, Research), Nissan (7201.T: Quote, Profile, Research), Hyundai (005380.KS: Quote, Profile, Research), Ford (F.N: Quote, Profile, Research), Volkswagen (VOWG_p.DE: Quote, Profile, Research) and Peugeot-Citroen (PEUP.PA: Quote, Profile, Research).

The ministry has proposed keeping the preferences for eight years in exchange for obligations from each carmaker to create production lines within four years.

The production lines should have a capacity of 300,000 cars, 200,000 engines or transmissions, a press operation line and a local auto design bureau.

The ministry also proposed that each company should invest at least $500 million.

Current agreements say a car producer should, within seven years, set up fabrication lines, paint coating and assembly lines, as well as cut the import of auto parts by one third.

However, the ministry has no right to make carmakers sign the new agreemements, but hopes they will serve as a guidance that they will sign under their own free will, Kommersant said, quoting an industry source.

According to PricewaterhouseCoopers, foreign carmakers produced 360,000 units in 2009.

Russian car sales soared 45 percent year-on-year in June as a state scrappage scheme and wider economic recovery boosted the formerly troubled industry. [ID:nLDE6670O4] (Reporting by Dmitry Sergeyev; Editing by Hans Peters)

Plastic Logic in sale talks with Rusnanohttp://www.ft.com/cms/s/2/7d02a1ea-a329-11df-8cf4-00144feabdc0.html

By Lina Saigol and Peter Marsh

Published: August 8 2010 23:02 | Last updated: August 8 2010 23:02

One of Britain’s leading high-tech groups is in advanced talks with a Russian state owned company over the sale of a significant stake, in a development likely to fuel fears about

ownership of potentially world-beating UK technology being transferred to other countries.

Plastic Logic, a Cambridge company that has pioneered the development of low-cost computer chips made from plastic, is in discussions with Rusnano, a Russian state-owned nanotechnology corporation, about a capital infusion that would give it control of the UK company.

Plastic Logic – which has received $200m (£125m) in investments since it started in 2000 – is owned by a consortium of venture capital firms and large groups including Intel of the US and BASF of Germany.

A key condition of Rusnano’s investment would be that Plastic Logic’s production facility for the next phase of the technology is based in Russia.

Dmitry Medvedev, Russian president said last year his country would spend $10.6bn on nanotechnology by 2015.

The Chinese government has also approached Plastic Logic about providing capital, but the two sides failed to reach agreement.

A deal with Rusnano would fuel the debate over foreign takeovers of UK companies and the loss of strategically important factories.

Cambridge has been the hub of the UK’s high-tech business sector for several years, but the venture capital industry has suffered as a result of the credit crunch. Investment in start-ups specialising in new technology has fallen 40 per cent in value over two years, according to the National Endowment for Science, Technology and the Arts.

While Plastic Logic’s technology development centre remains in Cambridge, in the past two years it has shifted its headquarters to Mountain View, California and, in 2007, built its first plant in Dresden, Germany. The plant makes large plastic display screens for use in new generations of e-readers based on plastic chip technology.

For the company to fulfil its long-term potential to make plastic chips, it will require fresh injections of capital that could run to hundreds of millions of dollars. Plastic semiconductors would be a lot cheaper to produce than current-day silicon chips, thereby cutting the price of electronic circuitry by up to 90 per cent.

The low manufacturing cost of the chips could vastly extend the applications for microprocessors in everyday use.

Russia to establish fertiliser champion http://www.ft.com/cms/s/0/e81b3e3a-a322-11df-8cf4-00144feabdc0.html

By Courtney Weaver in Moscow

Published: August 8 2010 22:40 | Last updated: August 8 2010 22:40

Russia is poised to take the first steps to form a global force in fertilisers – possibly as soon as this week – in what would be the first making of a national champion since the state-backed consolidation of the energy sector in the mid-2000s.

Suleiman Kerimov, a Kremlin-backed metals oligarch, is set to take a majority stake in Silvinit, Russia’s biggest potash producer and to merge it with the London-listed UralKali – another Russian potash producer – in which he jointly bought a majority stake this summer.

A Silvinit-UralKali merger would form the world’s second-biggest potash producer behind Canada’s Potash Corp; it would be worth up to $20bn (€15bn) and would have an annual production capacity of 11.5m tonnes, according to Troika Dialog, a Moscow investment bank.

Kremlin involvement reflects fresh interest this year on the part of some of the world’s biggest miners in potash and phosphate as prices recover after a weak 2009. Vale of Brazil has acquired $3.8bn of fertiliser assets, while BHP Billiton bought Canada’s Athabasca Potash for $323m.

People close to the Silvinit purchase said it could take place this week. Mr Kerimov, who is also a parliamentary deputy, wants to buy an extra 30 per cent to 52.4 per cent of the company – using a consortium of buyers so the deal would not need approval by Russia’s anti-monopoly service, said people close to the talks.

Mr Kerimov, who has 25 per cent of Silvinit, is also in talks to acquire at least one other important fertiliser asset, said people close to those talks. He is negotiating with Belaruskali, the world’s third-largest potash producer, and Phosagro, Russia’s largest phosphate fertiliser producer. If successful, another deal would turn the merged holding into either the global potash leader or one of the world’s biggest diversified fertiliser holdings.

The deals have the full support of the Russian state which, say people familiar with the situation, is keen to see consolidation in the industry to erase the inefficiencies left by the sector’s haphazard break-up following the fall of the Soviet Union.

“UralKali and Silvinit use the same potash deposit base which had been broken into two pieces after [the break-up of the Soviet Union], said one banker who knows the industry. “[If you combine] the companies, you enjoy some synergies, don’t have double administrative expenses and become a major world player.”

People close to the talks said the Silvinit acquisition would be funded with the help of state-owned VTB Capital, which helped Mr Kerimov and two business partners finance purchase of a 53.2 per cent stake in UralKali.

VimpelCom Ltd buys back 100% of VimpelCom's shares

http://www.rbcnews.com/free/20100809113715.shtml

      RBC, 09.08.2010, Moscow 11:37:15.VimpelCom Ltd. has increased its share in VimpelCom (the Beeline brand) to 100 percent as a result of the mandatory share buyback from minority shareholders, the telecommunications company indicated in a statement today.

      VimpelCom Ltd. purchased all remaining shares of VimpelCom, including ADS, at RUB 11,800 (app. USD 382) each. The buyback price was set by an independent appraiser in the amount of the company's market share price as of February 28, 2010.

      The new company, VimpelCom Ltd., was formed as a result of the merger between VimpelCom and Kyivstar.

VimpelCom Completes Squeeze-out Process To Acquire OJSC VimpelCom - Quick Facts http://www.rttnews.com/Content/QuickFacts.aspx?Node=B1&Id=1386581

8/9/2010 2:53 AM ET

(RTTNews) - Telecommunications services provider VimpelCom Ltd. (VIP: News ) Monday said it has completed the acquisition of all shares of OJSC "Vimpel-Communications", including those represented by American Depositary Shares, from its remaining minority shareholders by way of a mandatory squeeze-out process.

VimpelCom commenced the mandatory squeeze-out process on May 25 to acquire all remaining OJSC VimpelCom shares that it did not already own, including those represented by ADSs, for a cash payment of RUB 11,800 per share, which is about US$382.18 per share at the exchange rate as of May 25.

VimpelCom noted that as each OJSC VimpelCom ADS represented 1/20 of one OJSC VimpelCom share, holders of OJSC VimpelCom ADSs were entitled to receive RUB 590 per ADS, which was equal to around US$19.11 per ADS at the exchange rate as of May 25, less any costs and expenses incurred by The Bank of New York Mellon, in its capacity as the ADS depositary, in processing the payments and converting the rouble amount it received into US dollars.

Pursuant to the mandatory squeeze-out process under Russian law, VimpelCom, OJSC VimpelCom has become a wholly owned subsidiary of VimpelCom Ltd.

Click here to receive FREE breaking news email alerts for VimpelCom and others in your portfolio

by RTT Staff Writer

Investments in Russian steel sector expected to growhttp://www.steelguru.com/russian_news/Investments_in_Russian_steel_sector_expected_to_grow/159335.html

Monday, 09 Aug 2010According Ministry of Industry and Trade of Russia, investments in modernization of production in ferrous metallurgy will reach RUB 200 billion by 2015 which is 25% over expected investments level in 2010.

During the first six month of 2010 investments to main assets of the industry was RUB 60 billion which is 15% over the same period of 2009.

According to the data from the ministry, sales efficiency level of ferrous metallurgy is 16% during H1 2010 while it was 9% in the same period of 2009.

(Sourced from Rusmet.ru)

Ferrous Metals Exports Rise http://www.themoscowtimes.com/business/article/ferrous-metals-exports-rise/411941.html

09 August 2010

Ferrous metals exports to countries outside the former Soviet Union rose by 13 percent to 18.9 million tons in the first half from a year earlier, the Federal Customs Service said Friday.

The shipments totaled $8.5 billion, the service said in a statement. The country exported $1.6 billion of copper, $2.2 billion of nickel and $2.8 billion of aluminum in the period, it said. Russia increased coal exports by 11 percent to 51.6 million tons for a total of $3.7 billion.

(Bloomberg)

Russia January-June Copper Exports +8.8% On Year At 231,200 Tonshttp://www.tradingmarkets.com/news/stock-alert/bhp_nlkny_dj-base-metals-highlights-top-stories-of-the-day-1096717.html

MOSCOW (Dow Jones)--Russia exported 231,200 metric tons of copper in January-June, 8.8% more than in January-June 2009, the federal customs service reported Friday.

UPDATE: Rusal, Interros Near Loan Pacts With Sberbank – Sourceshttp://www.tradingmarkets.com/news/stock-alert/bhp_nlkny_dj-base-metals-highlights-top-stories-of-the-day-1096717.html

MOSCOW -(Dow Jones)- Russian state-controlled bank OAO Sberbank (SBER.RS) is ready to extend a helping hand to billionaires fighting for control of the country's largest miner, OAO Norilsk Nickel (GMKN.RS), people familiar with the matter said.

Polyus Boosts H1 Sales 37% http://www.themoscowtimes.com/business/article/polyus-boosts-h1-sales-37/411940.html

09 August 2010

Polyus Gold boosted sales 37 percent in the first half to $604 million as prices and output increased, the country’s biggest producer of the precious metal said Friday.

Polyus raised first-half output by 5 percent to 503,000 ounces. Its KazakhGold unit produced 46,000 ounces in the period, Polyus said, without giving a year-earlier figure. (Bloomberg)

Toshiba, TEPCO, JBIC to review alliance with Uranium Onehttp://af.reuters.com/article/energyOilNews/idAFTKB00697520100809

Mon Aug 9, 2010 7:25am GMT

TOKYO Aug 9 (Reuters) - Japan's Toshiba Corp (6502.T), Tokyo Electric Power Co (TEPCO) (9501.T) and Japan Bank for International Cooperation (JBIC) said on Monday they will review their alliance with Uranium One (UUU.TO), a Canadian-listed producer and marketer of uranium.

Electronics conglomerate Toshiba, Japan's largest power supplier, TEPCO, and state-run JBIC will terminate their investment in Uranium One, while securing the rights to buy as much as 2.5 million pounds (1.134 million kg) of natural uranium a year from Uranium One from 2014 to 2025, they said in a statement.

The review of their alliance was prompted by a proposal from JSC Atomredmetzoloto, a Russian uranium mining firm, to buy a majority stake in

Uranium One, the three Japanese firms said. (Reporting by Yumiko Nishitani; Editing by Joseph Radford)

Bloomberg Office in Profit-Tax Spat http://www.themoscowtimes.com/business/article/bloomberg-office-in-profit-tax-spat/411910.html

09 August 2010By Dmitry Kazmin and Ksenia Boletskaya / Vedomosti

Moscow tax authorities charged the Bloomberg news agency 120 million rubles ($4 million) in profit tax in 2006 to 2007, but the company refused to pay, saying it does not have a regular representative office in the country.

For the first time, a U.S. company working in Russia has been accused of tax evasion by taking advantage of an intergovernmental agreement on avoiding double taxation, Vedomosti has learned.

Information on Bloomberg LP’s contestation of the decision from the Federal Tax Service’s Moscow Branch No. 47 was posted on the web site of the Moscow Arbitration Court on Thursday.

The tax inspectorate charged the company 120 million rubles in profit tax, penalties and fines for 2006 to 2007, said a city tax official and a second tax service source. A spokesperson for the inspectorate declined to comment.

Bloomberg paid no profit tax, believing that its operations in Russia do not constitute a permanent representative office, the source told Vedomosti. That benefit for U.S. companies is included in a 1992 agreement between Russia and the United States on avoiding double taxation on income and capital. The agreement allows American residents not to pay taxes in Russia if they are engaged in preparatory or auxiliary activities, or if there is a representation that is only engaged in gathering information or making purchases for the head office.

But the inspectorate believes that there has been a regular office in Russia all along, a tax service employee said, adding that the firm’s Moscow employees were not limited to gathering information, but were creating a finished product, which was even sold to Russian clients. The company’s Moscow office included about 20 reporters, editors, experts and analysts at the time.

According to the inspectorate’s findings, the Bloomberg office’s revenue over the two years was more than 1 billion rubles ($33.6 million). It was calculated indirectly, a tax official said. The company paid about 200 million rubles in value-added tax, which is not excluded under the bilateral tax agreement. After Bloomberg provided those figures to

the tax service, the company gave its data on expenses, which were used to calculate the taxable profit, the source said.

The Moscow branch of the Federal Tax Service, where Bloomberg appealed the decision, agrees with the inspectorate’s position, the Moscow tax source said. A spokesperson for the branch could not be reached by phone.

At the end of 2009, the news agency requested clarification on the issue from the Finance Ministry. In a letter dated April 14, the ministry responded that preparing and editing material to be sent to the head office could not be considered auxiliary or preparatory, and that Bloomberg’s Moscow office should calculate its profit tax in accordance with the principles adopted by the head office.

Bloomberg Group spokeswoman Pam Snook said only that the company always pays taxes as required by law.

Bloomberg’s New York head office did not respond to a request from Vedomosti.

The market for subscription information in Russia was worth $160 million to $200 million in 2009, of which Bloomberg controlled more than 20 percent, according to Interfax calculations. According to Burton-Taylor International Consulting, in 2008, Bloomberg controlled 24 percent ($5.5 billion) of the world market for financial and analytical information.

So far, no similar dispute has made it to court, said Dmitry Kostalgin, a partner at Taxadvisor. The agreement with the United States frees a company engaged in gathering information from profit tax, even if it has a permanent office, he said — but only if the information was gathered, for example, for the opening of a plant, he said, noting that gathering information was Bloomberg’s primary line of work.

The dispute could become a precedent for companies similar to Bloomberg, said a Federal Tax Service employee. In theory, it could also become a precedent for any foreign companies’ Russian offices, Kostalgin said.

Until now, there have only been a few such cases: against foreign airlines, the British Council and China’s Huawei. But the disputes with airlines concerned agreements on air traffic, while the British Council successfully challenged most of the complaints it faced. The Huawei case has not gone to court.

Port of Arkhangelsk on the way out of crisishttp://www.barentsobserver.com/port-of-arkhangelsk-on-the-way-out-of-crisis.4804761-16178.html

2010-08-06

Turnover in the port of Arkhangelsk rose with 36.5 percent in the first seven months of 2010. This might be a sign of better times for the port, which had a 30 percent decline in 2009.

Port of Arkhangelsk handled a little more than 2.5 million tons of goods in the period January-July web site Loglink.ru writes. The amount of oil products for exports encreased most, with 42 percent. In all 473 000 tons of oil products were sent for export from Arkhangelsk.

Also the amount of coal and timber rose, while the amount of crude oil declined more than two times, to 212 000 tons.

Bad Things Happen in August for Russia Investors: Julian Rimmer http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a2PJZcsZ7tQ4

Commentary by Julian Rimmer

Aug. 9 (Bloomberg) -- August is often the cruelest month for Russians, and the 2010 vintage looks no different with wildfires blazing across large swathes of the country.

Maybe it’s pure coincidence the most disastrous news flow over the last dozen years has coincided with this month: the debt default in 1998; the sinking of the Kursk submarine in 2000; terrorist attacks near the Moscow subway and on two airplanes in 2004; the war with Georgia in 2008; and the explosion at OAO RusHydro’s power station in 2009. Bad things happen in August. That’s why you should sell now.

An ominous seasonal pattern is discernible, so investors should react accordingly. With the mercury and the equity markets having risen in tandem during the summer, benchmark indexes are vulnerable to the impression that August will be unlucky again. The overriding concern is that the present emergency threatens to derail Russia’s economic recovery.

So how do you protect your portfolio? Sell shares in companies on whom the government will lean to plug budget gaps or contain inflation. OAO Gazprom has long been used to subsidize other parts of the economy, and the Finance Ministry has made it clear that taxation of oil companies such as OAO Lukoil and OAO Rosneft will remain high to balance the revenue- expenditure ledger. Oil stocks can be expected to shore up government finances.

The heat wave has reduced Russia’s grain harvest by at least 20 percent and deprived the country of export revenue. Last week, Russia banned grain exports from Aug. 15 until the end of the year to contain domestic prices.

Rising Prices

One might expect utilities to fare well in this environment. They won’t. OAO Mosenergo, for example, has seen electricity consumption rise 15 percent in the last two weeks, but water shortages are starting to strain power generation. Since utility bills comprise a large percentage of the inflation basket, the government will delay tariff hikes to tame the consumer-price index. It is estimated the drought will add 1.5 percentage points to the CPI next year, and higher budget spending to deal with the costs of the emergency will aggravate that further.

The inflation genie, never completely rebottled even during the financial crisis, may wreak havoc again, forcing the central bank to reverse its recent policy of lowering interest rates and thereby choking loan growth in the banking industry. This is bad news for banks such as VTB Group and OAO Sberbank, which compete for deposits to repair their balance sheets and whose net interest margins are under pressure as a consequence.

Economic Drag

The debilitating effect of high temperatures on the economy has already been cited by VTB Capital’s purchasing managers index, which dropped to a four-month low of 54.2 in July, and by several companies, including carmaker OAO AvtoVAZ, which suspended production this month.

One challenge facing Russian fund managers is the scarcity of stocks to choose in reaction to the crisis. Wheat prices surged more than 50 percent in July and rallied to the highest price in 23 months last week, a squeeze that will force economists to revise their inflation forecasts. But the Russian market offers no means to profit from this. Prime Minister Vladimir Putin clearly wants to prevent fertilizer companies from profiteering. So there is a dearth of opportunities.

Grain producer OAO Razgulay is risky because of its high leverage, and soil aridity is delaying the planting of winter grains. There are no listed stocks that suit the spike in beer consumption, while consumer companies such as X5 Retail Group N.V. and OAO Magnit will suffer from the disruption to shopping habits caused by bushfires and smog in affected areas.

$15 Mojitos

The heat wave began so beguilingly in July. With temperatures exceeding 100 degrees Fahrenheit on the sun-beaten streets, wealthy Muscovites basked in the novelty, happy to pay $25 for a towel on a sun bed and sip $15 mojitos at swanky beach clubs on the Moscow River.

The hot spell turned sinister. Each day brought a litany of drownings. The bikini-clad beauties, who were frolicking in Moscow’s fountains a few weeks earlier, began to suffocate in the poisonous fug squatting on the capital. Wildfires are still blazing uncontrollably in the surrounding areas as the worst drought on record shows no sign of abating.

Normally at this time of the year Putin likes to decamp to Siberia and engage in the manly pursuits of hunting and fishing. Not this year. He has been frantically crisscrossing the country, extinguishing literal and metaphorical fires.

The Russian government has a well-earned reputation for being remarkably clumsy when it comes to handling crises and this latest one is generating concern among the Russian investment community for precisely this reason. Perhaps it’s also because oligarchs are cruising the Mediterranean in their yachts and not running their companies properly, or because Russian leaders and security services allow their vigilance to lapse. But there’s something about a Russian August that conjures unwelcome drama and extreme market volatility.

Equity investors have one hope. Putin, who was appointed prime minister by President Boris Yeltsin in August 1999, was catapulted into the limelight for his reputation as a man well- versed in crisis management. He and President Dmitry Medvedev need to bring these fires under control before the embryonic economic recovery goes up in flames.

(Julian Rimmer is a trader at CF Global Trading in London. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.)

To contact the writer of this column: Julian Rimmer at jrimmer1@bloomberg.net

Last Updated: August 8, 2010 19:00 EDT

Activity in the Oil and Gas sector (including regulatory)

RLPC-Russian LUKOIL set to sign $1.5 bln loan Monday-bankershttp://af.reuters.com/article/energyOilNews/idAFLDE6750QG20100806

Fri Aug 6, 2010 9:34am GMT

LONDON/MOSCOW Aug 6 (Reuters) - Russian oil major LUKOIL (LKOH.MM) is expected to sign a $1.5 billion loan on Monday to finance a $3.44 billion share repurchase from ConocoPhillips (COP.N), banking sources told Reuters on Friday.

The unsecured one-year deal is set to be provided by six banks -- Bank of Tokyo-Mitsubishi UFJ, Citi, ING Bank, Natixis, Royal Bank of Scotland and WestLB, one of the sources added.

ConocoPhillips, the third-largest U.S. oil company, announced it would sell 40 percent of its 20 percent stake in Russia's second largest oil producer back to the company to boost shareholder returns. [ID:nN28112682]

LUKOIL will use its own funds and an unsecured loan for the repurchase, LUKOIL said last week.

The borrower will be the first Russian oil and gas firm to agree an unsecured loan since Gazprom Neft's $1 billion dual-tranche unsecured syndicated loan that signed in July 2008, according to Thomson Reuters LPC data.

LUKOIL's previous unsecured loan, agreed in April 2008, paid margins of 85-95 bps. That $1 billion loan was split between a $300 million, three-year tranche A that paid 85 bps and a $700 million, five-year tranche B that paid 95 bps.

LUKOIL also signed a secured $1.2 billion, three-year club loan with a group of 12 banks in August last year. That deal paid a margin of 400 bps over LIBOR. (Reporting by Chris Mangham and Dmitry Sergeyev)

Lukoil looks for loan to finance share repurchasehttp://www.upstreamonline.com/live/article225078.ece

Russia’s Lukoil is expected to sign a $1.5 billion loan today to finance a $3.44 billion share repurchase from ConocoPhillips.

News wires  09 August 2010 01:58 GMT

The unsecured one-year deal is set to be provided by six banks -- Bank of Tokyo-Mitsubishi UFJ, Citi, ING Bank, Natixis, Royal Bank of Scotland and WestLB, banking sources told Reuters on Friday.

ConocoPhillips, the third-largest US oil company, announced it would sell 40% of its 20% stake in Russia's second largest oil producer back to the company to boost shareholder returns.

Lukoil has said it would use its own funds and an unsecured loan for the repurchase.

The borrower will be the first Russian oil and gas company to agree an unsecured loan since Gazprom Neft's $1 billion dual-tranche unsecured syndicated loan that signed in July 2008, according to Thomson Reuters LPC data.

Lukoil's previous unsecured loan, agreed in April 2008, paid margins of 85-95 basis points (bps). That $1 billion loan was split between a $300 million, three-year tranche A that paid 85 bps and a $700 million, five-year tranche B that paid 95 bps.

Lukoil also signed a secured $1.2 billion, three-year club loan with a group of 12 banks in August last year. That deal paid a margin of 400 bps over Libor.

Published: 09 August 2010 01:58 GMT  | Last updated: 09 August 2010 02:17 GMT

09.08.2010

Bulgaria, Serbia Agree On Laying Gas Pipeline With Russiahttp://www.oilandgaseurasia.com/news/p/0/news/8278

Sofia and Belgrade have agreed on the route from Bulgaria into Serbia along which they will lay the South Stream pipeline with Russia, Bulgarian Prime Minister Boyko Borisov said Saturday during an interview on bTV television.South Stream is to become a new route for transporting Russian gas across the Black Sea to countries in south and central Europe. Russia has inked intergovernmental agreements with on the project with Bulgaria, Serbia, Hungary, Slovenia, Croatia and Austria. Plans call for the pipeline to be built by the end of 2015. Borisov and Serbian President Boris Tadic held negotiations this week in Bulgaria on ways the two countries will co-operate. Borisov said the pipeline's route will pass through the Serbian city of Dimitrovgrad which is on the border with Bulgaria."For Serbia, Dimitrovgrad is the best route and for us it is not so important since the pipeline will pass through Sofia in any case. I am happy we were able to satisfy and help our neighbors", he said. Copyright 2010, Oil and Gas Information Agency. All rights reserved.

Trebs, Titov Oil Fields to Be Auctioned in Q4 http://www.themoscowtimes.com/business/article/trebs-titov-oil-fields-to-be-auctioned-in-q4/411923.html

09 August 2010Bloomberg

The Federal Subsoil Resource Use Agency has signed an order to auction the strategic Trebs and Titov oil fields in the Arctic in the fourth quarter, after the sale has repeatedly been postponed over six years.

Anatoly Ledovskikh, the agency’s head, signed the decree July 30, the agency said on its web site. Prime Minister Vladimir Putin last month ordered the government to organize the sale of rights for the largest untapped fields in the European part of Russia.

The starting price may be 17.5 billion rubles ($590 million), Ledovskikh said in June. The maximum value of the deposits is estimated at $4 billion, and the license may be sold for $2 billion, Vedomosti reported last month.

Russia had originally planned to auction the Trebs and Titov fields in 2004, but then repeatedly delayed it without formally setting an auction date. The world’s biggest oil producer since then adopted a law banning foreign-controlled entities from buying into strategic assets, including oil fields with reserves of more than 70 million metric tons (525 million barrels).

The 2005 auction was canceled because TNK-BP might have won, Ledovskikh said at the time.

LUKoil has formed a venture with Gazprom Neft to stay in the running for the deposits.

Bashneft will bid for the fields when the government offers them, billionaire Vladimir Yevtushenkov, whose Sistema holding company controls the oil producer, said in June.

Russian Oil and Gas Company Rosneft To Further Imperil Endangered Gray Whalehttp://www.greenfudge.org/2010/08/08/rosnet-threatens-gray-whales/

Posted by TLaylin in Wildlife & Flora, 8 Aug 2010

Western Gray Whales are already perilously close to extinction, but Rosneft will pursue their seismic surveys despite the well-publicized risks

Russia’s good news – that the country plans to set aside huge swaths of land for conservation – has been surpassed by a deluge of subsequent bad news. Heat waves led to fistfuls of citizens succumbing to vodka-induced drownings, and then this last week devastating fires have destroyed forests and left Moscow saturated in smoke.

Against this backdrop of environmental and human drama, not to mention thousands of private and public pleas, Rosneft had the perfect opportunity to elevate the public’s perception of Russia’s environmental attitude. Instead, the company has rejected requests to postpone its seismic surveys near Sakhalin Island, thereby mindfully jeopardizing an already fledgling population of western gray whales.

Desperate pleas to save the Western Gray Whale go unheard

No fewer than 12 governments and 7,000 members of the public directly appealed to Rosneft not to cancel its seismic surveys, but to postpone them, to wait until a time that was safer for the western gray whales. Postponement would ensure that the surveys do not interfere with the whales as they travel to the Sakhalin Islands to feed. Instead, Rosneft is pursuing their plans in haste – sans the blessings of science and society.

“Postponing the surveys would also enable Rosneft to develop the precautionary monitoring and mitigation measures that are essential to minimize the impact of the seismic survey on the whales. Monitoring and mitigation measures have already been developed by a panel of experts (the Western Gray Whale Advisory Panel) and are being used by another company in the same area,” according to the World Wildlife Fund (WWF).

Wendy Elliott, the whale specialist at WWF International, says that the scientific community’s requests for postponement are “not complicated” and calls the company’s proceedings “irresponsible.”

Inching closer to extinction

The National Resource Defense Council claims that less than 100 Western Gray Whales are left, while WWF estimates 130. In any case, there are approximately 30 breeding females left, which give birth every 2 to 3 years. They are dangerously close to extinction, though it’s not the first time  these 30 ton mammals have faced this plight.

Because they are slow swimmers that hug close to shore in shallow water, according to NRDC, they are easy to hunt. As a result, they were hunted to and then rescued from the high-wire of extinction around 1947. Oil and gas exploration, in addition to noise pollution, are among the factors threatening the whales.

“Rosneft is ignoring science for profit, and in doing so could be pushing this species closer to extinction,” she said.

If you would like to add yours to the existing list of appeals, feel free to sign this WWF petition.

Gazprom

Naftogaz Ukrainy owes Gazprom USD 780 million for July gas supplyhttp://www.steelguru.com/russian_news/Naftogaz_Ukrainy_owes_Gazprom_USD_780_million_for_July_gas_supply/159211.html

Sunday, 08 Aug 2010Itar-Tass citing Yevgeny Bakulin CEO of Naftogaz as saying that Naftogaz Ukrainy Company in August should pay to Russia natural gas monopoly Gazprom USD 780 million for gas received in July.

Under the contract of January 19th 2009, Naftogaz Ukrainy is to monthly transmit to Gazprom payments for gas supply no later than the seventh day of the month following the gas supplies, Prime-Tass reports. In the event of the first single non-payment the contract between the companies envisages the transition to an advance payment system.

Naftogaz Ukrainy is the state company of Ukraine concerned with extraction, transportation, and refinement of natural gas and crude oil. The company is also active in Egypt and in the United Arab Emirates. Ukraine system of trunk natural gas pipelines and underground natural gas depots is operated by Ukrtransgaz a subsidiary of Naftogaz Ukrainy.

Another subsidiary of Naftogaz Ukrainy, Gaz Ukrainy is responsible for domestic gas distribution to local Ukrainian heat supply companies. In September 2009 the Fitch Ratings of the company dropped from ‘CC’ to ‘C’. Late 2009 the company restructured of its foreign debt via the exchange of Eurobonds and obligations on bilateral loans for single investment instruments.

(Sourced from Itar-Tass)