Russia 111213

Basic Political Developments Russia, Ukraine aim to split pipeline control-papers: Moscow and Kiev are

considering a deal to divide control of Ukraine's pipelines between themselves, excluding European participation from a deal aimed at securing gas supplies to European consumers, Russian and Ukrainian media reported.

Russian MFA Press and Information Department Comments on Forthcoming Visit to Russia by Polish Minister of Foreign Affairs - The Minister of Foreign Affairs of Poland, Radoslaw Sikorski, will be on a working visit to Moscow on December 13-14 at the invitation of Minister of Foreign Affairs Sergey Lavrov.

PRESS RELEASE: On the situation in the Republic of Yemen Russia supplies Libya with wheat flour - a ship with 2,000 tons of flour

has already set out from St. Petersburg and is heading for Tripoli. Clinton, Hague welcome Medvedev’s promise to investigate alleged fraud

in Russian elections China, Russia vow to further people-to-people ties - The ninth plenary

session of the China-Russia Friendship Committee for Peace and Development (CRFCPD) gathered scores of senior officials and specialists from the two countries, including Assistant Foreign Minister Zhang Kunsheng and Russian Ambassador to China Sergei Razov.

Moscow Expects No Breakthrough in Russia-EU Summit - Speaking during a tele-conference with Brussels, Chizhov acknowledged that, in recent months, talks between Russia and EU had been suspended because a new broad agreement between Moscow and EU could be signed only after Russia's formal accession to the World Trade Organization (WTO) on Dec. 16.

o Russia not to invest in European Financial Stabilization Mechanism

o Cashless EU to meet imperious Russia - Both the EU and Russia took a conciliatory tone ahead of the 14-15 December EU-Russia Summit, when Russian President Dmitry Medvedev will head to Brussels to meet with EU leaders.

o EU Is Expected to Ease Visas o No need for a Brussels-Moscow reset - The summit will launch

discussions on a new framework agreement between Russia and the EU Daria Tsilyurik

Russia, Azerbaijan to negotiate Gabala radar - According to the Russian Defence Minister Anatoly Serdiukov, Russia is interested in preserving the cost of the lease, but would like to largely reduce the compound area.

Russian Deputy FM on Ties with Georgia - “I believe, that reasonable and responsible leadership will emerge in Tbilisi over time, which will make it possible to revive in its full scale good neighborly Russian-Georgian

relations,” he said in an interview with Itar-Tass news agency on December 12, two days before the eighteenth round of Geneva talks.

Kazakh President to participate in CIS informal summit - The President of Kazakhstan is to take part in an informal CIS summit which is to be held in the Russian capital, Moscow next week.

Kazakh President receives CSTO Secretary General - The Secretary General also informed the Kazakh President about the preparations for a scheduled session of the Collective Security Council, which is to be held later in December in Moscow.

Putin to hold traditional Q& A session on Decembre 15 - A special program titled “Conversations with Vladimir Putin. To Be Continued” will go on air at 12:00 Moscow time on December 15. It will be broadcast by the Rossiya-1 and Rossiya-24 television channels, the Mayak radio station, Vesti FM and Radio of Russia.

Kommersant top managers lose jobs over ballot paper photo with obscene caption – source

o Russian paper fires managers over anti-Putin sloganso Kommersant holding director, Kommersant Vlast chief editor firedo Kommersant director explains dismissals by violation of rules

Resin becomes Duma deputy, relieved of his duties as deputy mayor Shvetsova quits Moscow City Hall to work in State Duma Kremlin pollster suspends ratings reports - The Public Opinion Foundation

(FOM), which is believed to have close ties to the Kremlin, did not explain its decision to keep future results from its weekly surveys available only to its clients.

Russian election authorities hesitant over inviting OSCE observers to presidential polls – paper - The Kommersant newspaper said that the Central Election Commission was disappointed with the OSCE’s remarks about December’s parliamentary elections in Russia.

Russian companies to tender for hydroelectric dam project in Mexico - Russian companies will tender for a contract to build an 800-MW La Parota hydroelectric power plant (HPP) near Acapulco, a Russian economics ministry official said on Tuesday.

Hungary has sent marketing expert Tamás Varga to conquer the Urals - cooperation between the Urals and Hungary can be explored, thanks to the new consul for foreign economic affairs who is now stationed at the Consulate General of Hungary in Ekaterinburg

Russia sends humanitarian aid to Kosovo Serbs - Russia sends a shipment of humanitarian aid to Kosovo Serbs on Tuesday totaling 284 tons, the Emergencies Ministry said, adding that a 25-truck convoy will deliver power generators blankets, furniture and food supplies to Kosovo later in the day.

Ringleader of Khasavyurt gang killed in Dagestano Identity of 3 militants destroyed in Dagestan established

Ultranationalist Zhirinovsky to Enter Russia's Presidential Race - Zhirinovsky's candidacy is expected to be officially announced later on

Tuesday, as the party gathers for its 24th congress. This would be his record fifth presidential campaign, his best result being in 2008 when he gathered 9.35% and finished third.

Top blogger Navalny challenges his arrest in European court United Russia's district office in Moscow vandalized 1,600 officials fired for unauthentic income declarations - — Kremlin

chief of staff Sergei Naryshkin said 1,600 officials lost their jobs in six months for unauthentic income declarations. He was speaking at a conference over perfecting state control in Russia on Tuesday.

All tickets for train Moscow-Berlin-Paris sold out till the end of the year. No delay over fire for Vladivostok APEC bridge construction -

Construction terms for a bridge in Vladivostok, which caught fire on Monday afternoon, will remain unchanged, a deputy head of the construction company said on Tuesday.

o Zolotoi Rog bridge fire cause could be welding safety violation Russian woman sentenced to death in China rejects to file appeal Siberian couple stashes heroin in son’s mouth Russian Press at a Glance, Tuesday, November 13, 2011 Deeper Than Oil: Moscow protest fatigue - Weekly column by Marc

Bennetts Civil society awakens in Russia: what next? - By Itar-Tass World Service

Writer Lyudmila Alexandrova Tycoon's candidacy may be 'Kremlin plan' - Russian tycoon Mikhail

Prokhorov's decision to stand against Vladimir Putin in presidential elections could be part of a Kremlin plan rather than a genuine challenge to the authorities, the press says.

Conspiracy Theories Swirl Around Prokhorov's Election Bid - Talking to Gazeta.ru, Stanislav Belkovsky, a political analyst and associate of Boris Berezovsky, argues that Prokhorov's intentions are not to beat Vladimir Putin in next year's presidential elections, but to placate Russia's angry middle classes by giving the impression of choice, and to then take Dimitry Medvedev's place as Prime Minister of the country.

Billionaire to Tap Russia Dissent in Bid Against Putin - “He could certainly act as a channel to vent out the frustration of many young professional voters,” Lilit Gevorgyan, a London-based analyst at IHS Global Insight, said yesterday by e-mail. “His entry could be a game changer in what otherwise seems to be a perfectly controlled vote.”

MOSCOW BLOG: Russia's civilised revolution - The middle class were grateful enough (or at least complacent) in 2008 when they helped United Russia sweep back into power (the ruling party officially won just over 66% of the seats, but even counting out the widely reported election fraud still commanded about 60% of the real vote) and meekly accepted Dmitry Medvedev as their new president. But the global crisis that broke the same year has made bad government more obvious and the pain inflicted has goaded more into action.

Change in Russia Is Unlikely – by Kathryn Stoner-Weiss

Putin's Next Move in Russia: Observations from the 8th Annual Valdai International Discussion Club [LINK]

Raising The stakes: Russian Military Support For Syria – Analysis – by James M. Dorsey

What is in for Russia in Syria? - By: Hassan Barari Dniester region election race turns into scandal – Russian press review

National Economic Trends Russia to float Eurobond in 2012 Russian ruble battered amid pessimism over EU deal, stocks recover CBR interventions to remain flat in December Russia c.bank says money market rates appropriate Banking assets advance 3.7% in November Non-CIS imports to Russia up 34.6% to $235.9 bln in 11mths – FCS Russia to Keep Tax on Raw Sugar Imports at $140 a Ton Next Month (External) Shock Therapy - The IMF Suggests Russia Reduce Spending,

But There’s Little Political Will to Do So OECD Outlines Steps to Accession Recreating the Safety Net - Retirees in Russia Are Relying on Their

Children and Continuing to Work to Survive the Financial Hardship of Retirement

Investors, Stay Away From Russia for Now: Analysts

Business, Energy or Environmental regulations or discussions Russian shares fall as markets worsen Government proposes expensive and inefficient modernization program

for electricity sector Government to create a national electricity supplier Spain’s OHL Group has won a contract to build the €1.95bn (£1.67bn)

Polar Urals railway in Russia. Russia’s WTO Entry May Cause Scrap Shortage, Morgan Stanley Says Glencore May Buy Polyus Gold Kazakhstan Assets, Kommersant Says UPDATE 1-Evraz chairman in favour of Severstal merger-FT Evraz joins FTSE on a tricky day Severstal To Acquire 38.5% Stake In Liberian Iron Ore Project CEO: Rosatom to boost consol revenue to $75 bln by 2030 Citigroup’s Russia Research Chief Quits as Pandit Cuts Commence 12.12.2011   /   FOCUS: Russian operators seen expanding further on cell

phone retail market

Activity in the Oil and Gas sector (including regulatory) Caspian CPC Jan oil exports seen rising 0.7 pct Rosneft granted licenses for five offshore fields Nord Stream says halts gas flows for two days Turkey may give permission for South stream in December Trans-Balkan Pipeline cancels board meeting TNK-BP in '$6bn Arctic spend'

Lukoil: Potential West African reserves estimated at 5-6 bln boe Rosneft signs a contract on bunkering Sakhalin Energy’s tankers Novatek seals $3.8bn gas deals with two gencos

o Novatek expands agreement with OGK-3o NOVATEK is to increase gas sales to Inter RAO

Gazprom Russian Gas Deals at Risk as Bids Rejected - Turkey’s Energy Market

Regulation Association (EPDK) started to return applications of the firms that applied to Gazprom to replace state-run Botaş, which is scheduled to cancel its ongoing deal for 6 billion cubic meters, as the 24 companies could not yet reach an agreement with the Russian company.

GAZPROM GETS LICENSES TO 4 FIELDS IN YAKUTIA FROM GOVT - INSTRUCTION

Gazprom rules out gas pact with Ukraine in 2011o Gazprom: No gas-price deal with Ukraine by year's end

Gazprom spells out terms for Beltransgaz Zambia's President And Gazprom Discuss Oil And Gas Exploration Gazprom to launch Bovanenkovo in May-June of 2012 – Gazprom: Too Many Holes To Plug - Whenever I need a good laugh I

look around to see what Gazprom (OGZPY.PK) says about the perils of spot pricing mechanisms for gas. (OK. I confess. My sense of humor is, uhm, idiosyncratic.) And they seldom disappoint!

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Full Text Articles

Basic Political Developments

Russia, Ukraine aim to split pipeline control-papershttp://af.reuters.com/article/energyOilNews/idAFL6E7ND0I020111213

Tue Dec 13, 2011 8:34am GMT

MOSCOW Dec 13 (Reuters) - Moscow and Kiev are considering a deal to divide control of Ukraine's pipelines between themselves, excluding European participation from a deal aimed at securing gas supplies to European consumers, Russian and Ukrainian media reported.

A spokesman for Russia's gas export monopoly Gazprom declined to comment on Tuesday. Ukrainian state energy firm Naftogaz was not immediately available.

Gazprom Chief Executive Alexei Miller met Ukrainian Energy Minister Yury Boiko on Monday, Gazprom said in a statement.

Joint control of the transit pipelines, which carry Russian gas to Europe through the territory of the former Soviet republic, is seen as a way to preclude their use as a bargaining chip in price conflicts between Russia and Ukraine, which depends on Russia for almost all of its gas.

Direct European participation in a pipeline deal had appeared possible. Ukrainian Prime Minister Mykola Azarov said earlier they had discussed a 40-40 division of control between Russia and Ukraine, with a European entity as a third party.

Russian and EU leaders will meet for a summit in Brussels on Thursday which is expected to focus on fiscal stability in the eurozone, but gas pipelines are a perennial topic between Brussels and the country which supplies over a quarter of Europe's gas.

Gas flows to Europe via Ukraine were cut off in 2006 and 2009 when price talks between Moscow and Kiev failed. The EU also faces Russian resistance to pipeline access rules designed to stop producers monopolising transport routes.

Until the November launch of the Nord Stream pipeline, a subsea route which goes directly from Russia to Germany, Ukraine handled around 80 percent of the roughly 140 billion cubic metres. Nord Stream will reduce that by 20-25 bcm per year.

Russia's Kommersant daily cited sources on Tuesday as saying Gazprom and Ukraine were in talks on joint control over their pipelines. It quoted Gazprom's chief executive as saying a deal was unlikely to be concluded before the end of the year.

The Kommersant story followed a report in Ukrainian weekly Zerkalo Nedeli, which said that the deal on offer involved two 50-50 joint ventures: one to control the trunk pipeline and a second to control the distribution networks.

Zerkalo Nedeli said they were discussing the inclusion of Ukraine's underground gas storage facilities, but Ukraine opposed handing them over to a jointly controlled entity.

Ukraine, coping with rising debt and a big trade deficit, is struggling to pay its gas bill and stands to win a price cut in the deal, as neighbouring Belarus did when it sold half of its pipeline company, Beltransgaz, to Russia for $2.5 billion.

Russian Prime Minister Vladimir Putin, who has called the break-up of the Soviet Union a tragedy for much of its population, called the 40 percent cut in the gas price to Belarus an "integration discount". Russian domestic prices remain far below European ones.

Putin is preparing to mount a bid for a return to the presidency in a March election while his party faces protests over reports of ballot fraud in a Dec. 4 election which returned a majority to his United Russia party.

Russian MFA Press and Information Department Comments on Forthcoming Visit to Russia by Polish Minister of Foreign Affairs http://www.ln.mid.ru/bdomp/brp_4.nsf/e78a48070f128a7b43256999005bcbb3/db605a1a6545270444257965001d7098!OpenDocument

1982-12-12-2011

The Minister of Foreign Affairs of Poland, Radoslaw Sikorski, will be on a working visit to Moscow on December 13-14 at the invitation of Minister of Foreign Affairs Sergey Lavrov. Their talks are expected to focus on the most topical issues of the bilateral and international agenda. An important result of the visit will be the signing of a Russian-Polish intergovernmental Local Border Traffic Agreement that will facilitate mutual travel for residents of the Kaliningrad Region and the adjacent areas of Poland.

Work on the agreement was carried out since 2008. The main problem was that the EU rules set the width of the border zone at 30 km. If we agreed to such terms then people living in the north and south of the Kaliningrad Region would find themselves in an unequal position. To find a way out, we together with our Polish partners have achieved changes to the relevant EU regulations.

It is crucial that the scope of the new agreement will cover the entire territory of the Kaliningrad Region and the neighboring areas of Poland, including major cities such as Gdansk and Olsztyn, which residents of the region will now be able to visit freely without obtaining visas – at the border it will be sufficient to present a passport and a permit which will be issued by consulates of our countries in a simplified manner initially for a period of two years, then for five years. No invitation is any longer required, and the issued permit allows its holder to stay within the border area continuously for up to 30 days, and the whole of 90 days in six months, but without the right to engage in labor or entrepreneurial activity. Special privileges are provided to persons under the age of 16 and older than 65, the disabled and certain other categories of citizens.

Thus, residents of the Kaliningrad Region will now have much wider possibilities for the development of business contacts and interregional co-operation with Polish partners, for humanitarian, youth, student and school exchanges, tourist trips and good-neighborly human communication.

We hope that the signing of the agreement will constitute a noticeable step toward a visa-free regime in relations between Russia and the European Union.

December 12, 2011

GOOGLE TRANSLATION

http://www.mid.ru/brp_4.nsf/0/A01388653E2EA46944257964005B6F3D

PRESS RELEASEOn the situation in the Republic of Yemen

1989-12-12-2011The political process in Yemen, which started gave signed on 23 November this year in Riyadh, the leading political force of the country plan for a phased transfer of power, making its first steps. Despite the serious difficulties and place in the towns of Yemen, Republic of (dP) outbreaks of violence in general is kept fixed in the context of progress in the Saudi capital, arrangements timeline.Moscow welcomes the development and the swearing-in December 10 a national unity government of Yemen, led by an opposition leader Mikhail Basindvoy. A significant number of leading positions in it were representatives of opposition parties. We hope that the new cabinet will be able to cope with dP solve the country's immediate key objectives: to improve the security situation and economic development, the launch of a broad national dialogue to develop programs of the most pressing social and political transformations, and finally - training scheduled for February 21 2012 popular vote transitional president.For its part, intend to continue to adhere to the active involvement in international efforts to support the Yemeni political process. Russia's ambassador to Sana'a S. Kozlov, in accordance with his existing guidelines, in coordination with their counterparts from member countries of the "five" UN Security Council, the EU and the GCC involved in organized steps along this line, aimed at providing external assistance to the Yemeni side.December 12, 2011

Russia supplies Libya with wheat flourhttp://english.ruvr.ru/2011/12/13/62119166.html

Dec 13, 2011 11:34 Moscow Time

Russia has started supplying wheat flour to Libya as part of the UN relief effort for the North African country. According to the Russian Emergencies Ministry, a ship with 2,000 tons of flour has already set out from St. Petersburg and is heading for Tripoli. According to estimates by the UN World Food Programme (WFP) experts, Russia is one of the leaders in the efforts to guarantee food security. The Russian government has supplied over 130,000 tons of foodstuffs to the undernourished population of some foreign countries since 2005, using the money it has allocated as target contribution to the relevant WFP fund.  The Russian Emergencies Ministry was involved in delivering foodstuffs to Afghanistan, Tajikistan, Kyrgyzstan, Vietnam, North Korea and Cuba.

 (RIAN)

Clinton, Hague welcome Medvedev’s promise to investigate alleged fraud in Russian electionshttp://www.washingtonpost.com/politics/campaigns/clinton-hague-welcome-medvedevs-promise-to-investigate-alleged-fraud-in-russian-elections/2011/12/12/gIQA78lGqO_story.html

By Associated Press, Tuesday, December 13, 1:02 AM

WASHINGTON — The Obama administration has welcomed Russian President Dmitry Medvedev’s promise to investigate allegations of fraud in recent parliamentary elections.

But Secretary of State Hillary Rodham Clinton says the proof of the Russian government’s resolve will be in how it conducts the probe and what actions it ultimately takes.

Clinton called the government’s willingness to investigate “reassuring.” She said the U.S. is pleased that protests across Russia because of the elections have remained peaceful.

Clinton spoke Monday alongside British Foreign Secretary William Hague, a day after Medvedev promised on his Facebook page to investigate the fraud claims.

Hague said Russia’s actions should be determined by the findings of the investigation. He said the investigation must be full and transparent, but that countries shouldn’t pre-judge the Kremlin’s efforts.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

China, Russia vow to further people-to-people tieshttp://news.xinhuanet.com/english/china/2011-12/13/c_131304075.htm

2011-12-13 16:32:19

BEIJING, Dec. 13 (Xinhua) -- The presidents of China and Russia voiced their wishes for the expansion of bilateral people-to-people relations in congratulatory messages delivered to a high-level meeting on Tuesday.

The ninth plenary session of the China-Russia Friendship Committee for Peace and Development (CRFCPD) gathered scores of senior officials and specialists from the two countries, including Assistant Foreign Minister Zhang Kunsheng and Russian Ambassador to China Sergei Razov.

In his message, President Hu Jintao said he hopes the committee can pursue innovation, expand areas of cooperation and promote the role played by local communities in boosting people-to-people exchanges.

Hu also hailed the contributions made by the committee in consolidating bilateral people-to-people understanding.

During Hu's visit to Russia in June, both countries agreed to dedicate themselves to the development of a comprehensive strategic cooperative partnership based on equality, mutual trust, mutual support, common prosperity and lasting friendship.

Russian President Dmitry Medvedev said in his message that he believes the plenary meeting will strengthen popular support for China-Russia relations and create new opportunities for the development of bilateral people-to-people ties.

Medvedev said the committee has played an important role in cementing mutual trust since the signing of the China-Russia Treaty of Good-Neighborliness, Friendship and Cooperation 10 years ago.

The plenary meeting was co-chaired by Hua Jianmin, who is also vice chairman of the Standing Committee of the National People's Congress (NPC) and the committee's Russian chairman Leonid Drachevsky.

China is currently Russia's largest trading partner, and trade volume between the two countries is expected to exceed 70 billion U.S. dollars this year.

The CRFCPD, initially proposed by the presidents of both nations, was established in 1997 with the aim of deepening understanding and promoting neighborly cooperation between China and Russia.

Moscow Expects No Breakthrough in Russia-EU Summit http://english.cri.cn/6966/2011/12/13/1461s671343.htm

 2011-12-13 01:03:00     Xinhua       Web Editor: Zhangjin

Russia did not expect the upcoming summit with the European Union (EU) to change the bilateral relationship dramatically, Russia's permanent EU envoy Vladimir Chizhov said Monday.

Speaking during a tele-conference with Brussels, Chizhov acknowledged that, in recent months, talks between Russia and EU had been suspended because a new broad agreement between Moscow and EU could be signed only after Russia's formal accession to the World Trade Organization (WTO) on Dec. 16.

The official said Russia did not expect any favors from the WTO and EU but required equal treatment.

He complained the EU had been "politically reluctant" to ease its visa regime for Russian citizens, although Moscow, in his words, was ready to ease entry requirements for EU nationals.

The 28th Russia-EU summit has been scheduled for Dec. 14-15 in Brussels.

Chizhov said the summit would discuss Russia-EU bilateral ties, global affairs amid the second wave of the financial crisis, and current international politics, especially the situation in the Middle East, North Africa and Kosovo.

01:34 13/12/2011ALL NEWS

Russia not to invest in European Financial Stabilization Mechanism http://www.itar-tass.com/en/c154/295685.html

BRUSSELS, December 13 (Itar-Tass) — Russia’s ambassador to the European Union told a briefing on Monday that Russia wouldn’t invest money in the European

Stabilization Fund.

“Russia doesn’t intend to invest money in the European Financial Stabilization Mechanism. At the same time, Russia is considering the possibility of committing additional funds to the IMF to expand its capabilities to render anti-crisis assistance,” Vladimir Chizhov said, commenting on the outcome of the EU summit held on December 8-9. During the summit, the EU member countries agreed to invest additional 200 billion Euros to the IMF.

Earlier, the European Union had urged the G-20 countries to invest in the standing European Financial Stabilization Mechanism, which begins operation in 2012.

Cashless EU to meet imperious Russiahttp://www.euractiv.com/europes-east/cashless-eu-meet-imperious-russia-news-509661

Published 13 December 2011

While protestors in major Russian cities vent frustration over apparent fraud in the recent parliamentary elections, Russia's president is heading to Brussels to meet EU leaders mollified by the unfolding eurozone crisis.

Both the EU and Russia took a conciliatory tone ahead of the 14-15 December EU-Russia Summit, when Russian President Dmitry Medvedev will head to Brussels to meet with EU leaders.

Asked if the issue of Russia's recent parliamentary elections, which the opposition claims were rigged, a spokesperson for EU foreign policy chief Catherine Ashton took an appeasing tone.

Maja Kociancic said that the election issue would be raised over the talks, while welcoming Medvedev's announcement that inquiries would open on the fraud allegations.

Medvedev said on Sunday he has asked officials to look at reports of possible fraud during the 4 December elections, but rejected calls for a re-run of the vote.

The Commission also published a Eurostat paper showing that despite the economic crisis, the trade of EU's 27 members with Russia had grown by 27% in the first months of 2011.

Russian Ambassador to the EU Vladimir Chizhov, known to Brussels journalists for his biting humour over Europe's failures, also took a pacifying tone.

"Any participant to the summit can raise any topic," Chizhov said, adding that his president "won't be surprised" if the election is mentioned by his EU counterparts.

He also said that Russia's laws regarding demonstrations were "no different" from similar legislation in Western countries.

Asked about his praise for the 8-9 December EU summit, he said that the result was "The best possible under the circumstance".

Russia to bailout EU countries trough IMF?

"My country hasn't lost faith in the euro," he added.

Asked about the possibility that Russia would lend funding to the International Monetary Fund to help bailout cash-strapped EU countries, he said: "We are considering this option".

At their summit last week, EU leaders agreed to beef up the IMF with an additional €200 billion in the form of bilateral loans to help it deal with the crisis.

A EU diplomat told EurActiv that this act was necessary before inviting other countries, such as Brazil or Russia, to contribute to the funding.

"Before asking the others, we should state clearly what sum we are putting on the table," he said.

'Flexibility' needed in energy issues

Asked about EU-Russian energy relations, Chizhov said that the EU's 'third package' of proposals to further liberalise the EU's energy market in fact provided some "flexibility" to accommodate Russia's interests. However, he added that some countries were sticking to the "strictest possible" reading.

Russian Energy Minister Sergei Shmatko said recently that the EU should consider the planned Gazprom-favoured pipeline South Stream as a continuation of the Russian pipeline network, and that it should forbid the access of third parties to it. On that occasion, EU Energy Commissioner Günther Oettinger hinted that the European Commission was heading in this direction, ever since he cited the legitimisation of a EU-Russian gas treaty in November 2010 as "a step in the right direction".

No imperial ambition vis-à-vis Ukraine

Asked about Russia-Ukraine relations, Chizhov said that Ukraine "deserves better than being portrayed as an object of struggle between Moscow and Brussels".

"Ukraine will be best placed at having good relations both with EU and Russia," he said.

The statement, however, contrasts with Prime Minister Vladimir Putin's ambition to create a "Eurasian Union" made up of Russia and other post-Soviet states.

Chizhov also mentioned his country's accession to the World Trade Organisation and an agreement to lift the visa requirement for the citizens of the Russian enclave of Kaliningrad, which is wedged between Poland and Lithuania, as "catalyst" for the developing of relations.

He insisted, however, that efforts for lifting the visa requirement for all Russian citizens should continue, insisting that such a move was in the interest of both the EU and Russia.

No Russia citizenship to Kosovo Serbs

Asked about Kosovo, where reportedly some 20,000 ethnic Serbs have applied for Russian citizenship, he said the request could not be granted according to the Russian law. He added that Russia had "a legitimate concern" over events in Serbia's former province of Kosovo.

Russia's ambassador to NATO, Dmitry Rogozin, recently pleaded in favour of Russia considering with utmost attention the request of Serbs in Kosovo who reportedly applied for Russian citizenship.

EurActiv.com

EU Is Expected to Ease Visas 13 December 2011Reuters

BRUSSELS — The European Union is expected to agree this week to visa-free travel between Kaliningrad and its EU neighbors, and on steps toward offering this to the rest of Russia, diplomats said.  

The visa deals are being prepared in time for Thursday’s EU-Russia summit in Brussels, said Vladimir Chizhov, Russia’s ambassador to the EU. EU officials, too, said they expected the agreements.

“That green light seems to be forthcoming at a very late hour before the summit,” Chizhov said of the Kaliningrad pact. “Together with Poland, we appealed to the European Commission to extend that zone to be able to cover the whole of the Kaliningrad region, which is about 100 kilometers wide.”

Kaliningrad already has a special arrangement that allows some Kaliningrad residents living within 30 kilometers of the border to travel into these EU countries without visas. Under the new accord, this would apply to all residents.

“It’s expected that the summit will approve and launch the implementation of the common steps,” an EU official said. “It’s basically a roadmap on things that need to happen” for the EU to agree visa-free travel with Russia.  

On Kaliningrad, the European Commission and the European Parliament are in favor of amending an EU law which makes the region and certain Polish districts officially a single “border zone.” That status will ease cross-border travel by people living within the zone. The European Council, which represents member state governments, is expected to approve the plan this week, an EU diplomat said.

Read more: http://www.themoscowtimes.com/news/article/eu-is-expected-to-ease-visas/449782.html#ixzz1gONzE98S The Moscow Times

No need for a Brussels-Moscow resethttp://rt.com/politics/press/nezavisimaya/summit-eu-agreement-visa-free/en/

Published: 13 December, 2011, 08:39Edited: 13 December, 2011, 08:47

The summit will launch discussions on a new framework agreement between Russia and the EU Daria Tsilyurik

Tomorrow, Russian President Dmitry Medvedev will set off for Brussels to attend the EU-Russia Summit. There, the parties are expected to confirm the completion of a list of “Common Steps” necessary to move forward on a visa-free regime. There are no plans to sign any specific documents, but according to Nezavisimaya Gazeta’s (NG) sources, several other issues will gain political momentum, making a resolution possible by the end of this year.  

It’s no surprise that on the eve of the summit, journalists started to express concerns over whether Russia’s parliamentary elections would be a topic of discussion. Russia’s Envoy to the EU, Vladimir Chizhov, noted in a Moscow-Brussels video conference that Russia

is prepared to address it. 

A source close to the negotiations also suggested that, in light of the gravity of the problem, Medvedev should be ready to explain his views on the situation. 

The roughly-outlined – albeit already agreed-upon – topics of discussion fit into three categories: global issues, which would take into account a possible second wave of the global financial crisis; today’s global political situation, particularly in the Middle East, North Africa and Kosovo; and finally the central concern – Russian-EU bilateral relations.  In an exclusive interview with NG, Chizhov said

that Russian-EU relations are in no need of a reset. “We don’t need a reset button, but an accelerator pedal,” he explained. “I am talking about accelerating cooperation, and strengthening our strategic partnership.” The Russian envoy is counting on progress on all issues on the agenda. In particular, he says, the summit will launch dialogue on a new framework agreement between Russia and the EU. On the other hand, “the summit is held biannually; therefore, it’s hard to expect cardinal changes in our relations." 

In terms of the upcoming summit's new features in comparison to the previous meeting (held in June of this year in Nizhny Novgorod), Chizhov emphasized the completion of negotiating Russia’s accession to the WTO. “We know that the EU is our country’s largest trade and economic partner, as well as our largest source of foreign investment,” he said. And when it comes to the Eurozone crisis' effects on bilateral relations, Chizhov says he expects a conversation on this topic too: “We're all living in a multipolar world, with a global economy." And, he added, "a significant share of currency assets held by Russian banks is denominated in Euros.”        

Russia also expects the summit to confirm the completion of an agreement dubbed the “Common Steps towards visa-free short-term travel for Russian and EU citizens.” As such, the issue will be given the political force necessary to implement these steps, in turn opening the door to negotiations on a formal visa-free agreement. “They will begin immediately after both parties acknowledge that the steps have been completed,” said Chizhov. “The sooner this happens, the better. I think the process should not be greatly delayed – I expect it will take months, rather than years.” 

It was decided to launch the dialogue on the “Common Steps” exactly one year ago – after the EU-Russia Summit in December of 2010. It was reported in mid-October that both sides agreed on the steps following a meeting in Warsaw, and in November, after meeting with the EU's High Representative for Security Policy Catherine Ashton in Moscow, Russian Foreign Minister Sergey Lavrov promised to “do everything possible to make sure the list is approved at the summit in Brussels.” Lavrov then declared the completion of “a comprehensive document, approved by the negotiators, which we hope will be supported at the summit.”

Another source close to the negotiations specified that he does not expect any documents

to be signed during the summit, including any regarding the visa-free regime. At the same time, he says, the summit will be a culmination of the "Common Steps'" negotiation. The talks on this particular issue have been completed, he says, and the document is ready and approved – but certain technical formalities remain, to be resolved in the near future. This top-level meeting will confirm the arrangements that have already been made, hopefully allowing it to move forward following the summit.  

As for the “Steps” themselves, some involve certain changes, like Russia's introduction of biometric passports that meet international standards. Others entail a continuation of current projects, such as the readmission agreement, though Russia has yet to develop a concrete strategy to implement it with EU member states. And finally, some steps involve issues of border control and cooperation. 

The Russia-EU agreement on a simplified visa process is also expected to gain political momentum at the summit, though according to the source, a couple of minor details must still be addressed. The amendment would expand its jurisdiction, for example by including representatives of civil society. It is expected to be approved shortly after the summit.    

And finally, a third item deals with the extension of special treatment to near-border movement to the Kaliningrad Region. According to the source, this issue should be resolved in the coming days, with a formal agreement to be signed before the end of this year. As a result, all residents of the region will be able to travel more easily across borders and within the neighboring regions.

Russia, Azerbaijan to negotiate Gabala radar http://english.ruvr.ru/2011/12/13/62124656.html

Dec 13, 2011 12:40 Moscow Time

Russia and Azerbaijan are launching talks in Baku on the Russia-leased Gabala radar. The radar was built back in Soviet times as one of the more important elements of the Soviet missile defence system. The lease term expires on December 24th.

According to the Russian Defence Minister Anatoly Serdiukov, Russia is interested in preserving the cost of the lease, but would like to largely reduce the compound area.

(TASS)

Russian Deputy FM on Ties with Georgia

http://www.civil.ge/eng/article.php?id=24262

Civil Georgia, Tbilisi / 13 Dec.'11 / 11:26

The Georgian leadership is creating “image of enemy” from Russia in order to avoid responsibility before its own people “for the collapse of the country,” Russia’s Deputy Foreign Ministry, Grigory Karasin, said.

“I believe, that reasonable and responsible leadership will emerge in Tbilisi over time, which will make it possible to revive in its full scale good neighborly Russian-Georgian relations,” he said in an interview with Itar-Tass news agency on December 12, two days before the eighteenth round of Geneva talks.

Karasin, who is Russia’s chief negotiator in the Geneva talks, launched after the August, 2008 war, said that “new situation” on the ground had emerged and no one could escape from that reality. “Only the war can be an alternative to the negotiating process, which is taking into account new political-legal relations in the region,” Karasin said.

“I hope it is being realized everywhere, including in Tbilisi,” he said.

He criticized Tbilisi for refusing to sign, what Moscow calls, a binding non-use of force treaty with Sokhumi and Tskhinvali.

Georgia has already made unilateral non-use of force pledge and is calling on Russia to reciprocate, but Moscow refuses arguing that it is not a party into the conflict and instead calls on Tbilisi to agree on a non-use of force treaties with Tskhinvali and Sokhumi.

Karasin said that unilateral non-use of force pledge made by Tbilisi and then also by Sokhumi and Tskhinvali helped to move the process forward. He, however, said Tskhinvali and Sokhumi deemed Tbilisi’s unilateral pledge “not sufficient”. He reiterated that Moscow, together with the EU and the U.S., could serve as “a guarantor of peaceful commitments” by Tbilisi, Sokhumi and Tskhinvali.

Asked on prospects of bilateral Russian-Georgian relations, Karasin responded: “Creating ‘image of enemy’ from Russia is a mean for the current leadership in Tbilisi to shun away from responsibility before its own people for the collapse of the country, to distract attention from difficult social-economic and financial situation and violation of democratic freedoms in Georgia. Georgia’s official propaganda distorted in a clearly confrontational manner even the substance of agreements on customs and trade issues between Russia and Georgia in the context of Russia’s WTO accession.”

He also added that the WTO deal had a potential to become “a starting point for improving atmosphere in the bilateral relations.” “It seems that this chance has been

wasted,” Karasin said.

News (13.12.2011) Kazakh President to participate in CIS informal summithttp://caspionet.kz/eng/general/Kazakh_President_to_participate_in_CIS_informal_summit_1323748041.html

The President of Kazakhstan is to take part in an informal CIS summit which is to be held in the Russian capital, Moscow next week. The CIS leaders are expected to summarise the 20 years of the Commonwealth. Altai Abibullayev, the official spokesman of the Kazakh Ministry of Foreign Affairs made a corresponding statement at a media briefing in Astana. In addition, Moscow is scheduled to host a meeting of the Eurasian Economic Council with the participation of Belarus, Russia and Kazakhstan as well as the EurAsEC Interstate Council.

News (13.12.2011)

Kazakh President receives CSTO Secretary Generalhttp://caspionet.kz/eng/business/Kazakh_President_receives_CSTO_Secretary_General_1323748085.html

In his Ak Orda residence in Astana, Kazakh President Nursultan Nazarbayev played host to the Secretary General of the Collective Security Treaty Organisation, Nikolai Bordyuzha who emphasised the importance of the informal CSTO summit that had taken place in Astana in August this year. The Secretary General also informed the Kazakh President about the preparations for a scheduled session of the Collective Security Council, which is to be held later in December in Moscow.

Nikolai Bordyuzha, CSTO Secretary General«The session in Moscow will be a difficult one because we will be discussing a number of issues and documents that are to give a serious impetus to the development of the CSTO. Chairmanship of the Organization will become the Republic of Kazakhstan. Traditionally, Kazakhstan’s chairmanship is very creative and successful, so we are confident that the next year will be marked with intensified activities of the CSTO and its effective results.»

05:36 13/12/2011ALL NEWS

Putin to hold traditional Q& A session on Decembre 15http://www.itar-tass.com/en/c154/295725.html

MOSCOW, December 13 (Itar-Tass) — A special program titled “Conversations with Vladimir Putin. To Be Continued” will go on air at 12:00 Moscow time on December 15. It will be broadcast by the Rossiya-1 and Rossiya-24 television channels, the Mayak radio station, Vesti FM and Radio of Russia.

Like in previous years, during his Q & A session Putin will answer questions that worry the citizens of Russia. Not only guests in the studio but also those to whom the premier is going to talk during live-ins from various Russian cities will have a chance to pose a question to the prime minister. Anybody who’s going to call or send an SMS to the single information processing center or will visit the program’s site will be able to ask Putin a question during a live broadcast.

The single information centre started collecting questions for the prime minister early on Tuesday, December 13. It will work until the end of Putin’s Q & A session on December 15.

December 13, 2011 11:06

Kommersant top managers lose jobs over ballot paper photo with obscene caption – sourcehttp://www.interfax.com/newsinf.asp?id=294595

MOSCOW. Dec 13 (Interfax) - Kommersant Vlast magazine editor-in-chief Maxim Kovalsky and Kommersant holding general director Andrei Galiyev were dismissed following the publication of a photograph in the magazine's last issue depicting a ballot paper accompanied by an obscene caption, a source familiar with the situation told Interfax.

"The main reason behind the high-profile dismissals of some of the holding's top managers was the publication of a photograph in the Kommersant Vlast magazine's Issue No. 49, which came out on Monday, which depicted a ballot paper with an obscene caption," the source said.

Interfax has not yet received any official confirmation of the report.

The Vesti.Ru news website reported earlier that Kommersant holding general director Galiyev and Kommersant Vlast editor-in-chief Kovalsky had lost their jobs.

According to Vesti.Ru, such a decision was made by the publishing house's main shareholder Alisher Usmanov.

tm

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

Russian paper fires managers over anti-Putin sloganshttp://www.google.com/hostednews/afp/article/ALeqM5irIt1LqX8DpbfWoB4NdwNc-4Gxlg?docId=CNG.5611f082b5d1d0d543b2b015f4ad2b41.691

(AFP) – 1 hour ago

MOSCOW — A Russian oligarch has fired the senior management at a leading publisher after its weekly news magazine published expletive-ridden materials insulting Vladimir Putin, reports said on Tuesday.

Alisher Usmanov, the owner of the Kommersant publishing house, told the online newspaper Gazeta.ru that the pictures with anti-Putin slogans published in the Kommersant Vlast weekly magazine "bordered on petty hooliganism".

Kommersant, one of Russia's most respected publishers, publishes the liberally-inclined daily newspaper of the same name, the weekly magazine Kommersant Vlast and also owns the popular Kommersant-FM radio.

Gazeta.ru said the general director of the publisher's holding company Andrei Galiyev had been fired as had the editor-in-chief of Kommersant Vlast, Maxim Kovalsky.

Meanwhile, the general director of the Kommersant publishing house Demyan Kudryavtsev had sent a letter of resignation, it added.

The controversy was sparked by this week's issue of Kommersant Vlast devoted to the parliamentary elections earlier this month, which the opposition insists were rigged to boost Putin's party and sparked mass protests.

The front cover says bluntly: "How the elections were falsified."

The issue contained a report on expatriates voting in Britain, which showed a photograph taken by its correspondent of a spoiled ballot paper with swear words written in red ink

directed at Putin.

It also printed another photograph from London of a spray-painted image of Putin with the slogan in English "Public Enemy No. 1" and "Khutin Pui", a play on his name.

The Interfax news agency quoted a source familiar with the situation as saying the main reason for the sackings was the picture of the spoiled ballot paper "with an indecent, uncensored inscription".

Usmanov, a major shareholder in London's Arsenal Football Club, was quoted as saying by Gazeta.ru that he had never interfered in the journalistic activities of his publications but considered this to be a violation of ethics.

08:53 13/12/2011ALL NEWS

Kommersant holding director, Kommersant Vlast chief editor firedhttp://www.itar-tass.com/en/c154/295787.html

MOSCOW, December 13 (Itar-Tass) — Director General of the Kommersant holding Andrei Galiyev and editor-in-chief of Kommersant VLAST magazine Maxim Kovalsky have been dismissed from their posts.

The Rossiya 24 television news channel reported on Tuesday that “this tough decision was made by the major shareholder of the publishing house, Alisher Usmanov, after the publication of the latest issue of Kommersant Vlast.”

The Kommersant publishing house was founded on the basis of the private newspaper Kommersant in 1989. In 2006 it was bought by businessman Alisher Usmanov. At present the publishing house includes the Kommersant newspaper with thematic supplements and magazines, including Vlast (Power), Dengi (Money), and Ogonek.

Kommersant publishing house is one of the largest in Russia and fourth–fifth by turnover among the leaders of Russian mass media. National daily business newspaper Kommersant - 16 pages of high quality and up-to-date information on world and Russian business, financial and economic news, politics and governmental rearrangements, the major society, culture and sport events. Precise forecasts and in-depth analysis. Kommersant is one of the most authoritative and influential Russian publication for decision-makers. Since February 2009 Kommersant newspaper is printed and distributed in the United Kingdom.

12:51 13/12/2011Top News

Kommersant director explains dismissals by violation of rules

http://www.itar-tass.com/en/c32/296019.html

MOSCOW, December 13 (Itar-Tass) — Director General of the Kommersant publishing house Demyan Kudryavtsev has explained the recent dismissals in the media holding by the fact that during making of the recent issue of the Vlast magazine “the professional journalism standards were violated.”

“During making of the 49th issue of Kommersant Vlast magazine the internal procedures and rules of the Kommersant publishing house, standards of professional journalism and the law of the Russian Federation were violated,” he wrote in his Internet blog, adding: “The management of the publishing house regrets this and offers its apologies to the readers and partners.”

“As a result of this, the board of directors of the publishing houses dismissed the chief editor of Vlast magazine, Maxim Kovalsky. Director General of the publishing house and its board member Demyan Kudryavtsev has tendered his resignation, which will be considered at the next shareholders’ meeting,” according to Kudryavtsev.

Earlier on Tuesday, it was announced that Director General of the Kommersant holding Andrei Galiyev and editor-in-chief of Kommersant Vlast magazine Maxim Kovalsky were dismissed. The Rossiya 24 news television channel reported that “the tough decision was made by the publishing house major shareholder Alisher Usmanov after the latest issue of Vlast was published.”

The Kommersant publishing house was founded on the basis of the private newspaper Kommersant in 1989. In 2006, it was bought by businessman Alisher Usmanov. The publishing house currently includes the Kommersant newspaper with thematic supplements and magazines, including Vlast (Power), Dengi (Money) and Ogonek.

11:32 13/12/2011ALL NEWS

Resin becomes Duma deputy, relieved of his duties as deputy mayorhttp://www.itar-tass.com/en/c154/295914.html

MOSCOW, December 13 (Itar-Tass) — Moscow Mayor Sergei Sobyanin on Tuesday signed a decree firing his first deputy Vladimir Resin in connection with his election to the State Duma lower house of parliament, sources from the city administration have told Tass.

“Vladimir Resin has been relieved of his duties as first deputy Moscow mayor in connection with his election as deputy of the sixth State Duma of the Russian Federal Assembly,” they explained.

Resin has been first deputy mayor for almost 20 years. He stood in elections from the

ruling United Russia Party.

Shvetsova quits Moscow City Hall to work in State Duma http://www.interfax.co.uk/

13/12/11 7:00AM GMT

MOSCOW-SHVETSOVA-TRANSFER-CONFIRMATION

MOSCOW. Dec 13 (Russia News) – Moscow Deputy Mayor Lyudmila Shvetsova has announced her decision to vacate her post in order to take…

Kremlin pollster suspends ratings reportshttp://www.emirates247.com/news/world/kremlin-pollster-suspends-ratings-reports-2011-12-13-1.432503

By AFPPublished Tuesday, December 13, 2011

A top Russian polling agency often cited by the state media said Monday it had suspended the publication of survey findings, a decision taken following a drop in Prime Minister Vladimir Putin's approval.

The Public Opinion Foundation (FOM), which is believed to have close ties to the Kremlin, did not explain its decision to keep future results from its weekly surveys available only to its clients.

"We continue to conduct surveys on a weekly basis, but the results are not being released to the public," an agency spokeswoman told AFP on condition of anonymity.

The agency last published survey findings on November 27, one week before Putin's ruling United Russia party clung on to its parliamentary majority in disputed elections that sparked street protests.

Putin's approval rating was then reported at 54.4 percent, a two-year low and a worrying sign for the powerful premier three months before he runs in a presidential election he had been expected to easily win in the first round.

Russian election authorities hesitant over inviting OSCE observers to presidential polls – paperhttp://en.ria.ru/russia/20111213/170207388.html

10:26 13/12/2011

MOSCOW, December 13 (RIA Novosti)

The Russian Central Election Commission may not invite international observers from the Organization for Security and Co-operation in Europe (OSCE) to the presidential elections in March, a Russian business daily said on Tuesday.

The Kommersant newspaper said that the Central Election Commission was disappointed with the OSCE’s remarks about December’s parliamentary elections in Russia.

OSCE officials, who gave a press conference a day after the elections, said that the polls were slanted in favor of the ruling United Russia party: the election administration lacked independence, most media were partial and state authorities interfered unduly at different levels.

The OSCE’s Office for Democratic Institutions and Human Rights (ODIHR), which is responsible for organizing the observation mission at the polls, is going to send at least 200 observers to Russia but it has not received an invitation from Moscow yet, ODIHR’s spokesman Jens Eschenbaecher told Kommersant.

“We would like to send the same number of observers to Russia for the presidential elections as to the parliamentary polls. Sure, if we receive an invitation. We would like to receive it on time, two months prior to the elections…in order to have time to start a long-term mission,” the paper quoted Eschenbaecher as saying.

“Let’s discuss it later,” the head of the Central Election Commission, Vladimir Churov told the Kommersant, referring to the invitations for the OSCE observers.

He said that the Central Election Commission would decide whether to invite the observers or not after the ODIHR unveils the detailed report about the Russian parliamentary elections.

ODIHR report that is due to be published in mid-January, does not contain the words ‘falsification’ of ‘juggling’, referring to the elections’ procedure, the daily said.

“Thus our elections are recognized as legitimate by default. It is the most important thing,” Kommersant quoted an unknown source in Russia’s Foreign Ministry.

The results of the Russian parliamentary polls have already sparked a wave of strong criticism from tens of thousands of Russians who went to the streets to protest against the alleged violations and vote frauds that gave the pro-Kremlin United Russia party its small majority, leading them to victory in the elections.

Russian authorities deny massive fraud, saying the possible violations did not exceed 0.5 percent of the whole votes.

Russian companies to tender for hydroelectric dam project in Mexicohttp://en.rian.ru/business/20111213/170205142.html

07:45 13/12/2011

MEXICO, December 13 (RIA Novosti)

Russian companies will tender for a contract to build an 800-MW La Parota hydroelectric power plant (HPP) near Acapulco, a Russian economics ministry official said on Tuesday.

"Russian companies closely follow plans to put out a tender for the power plant's construction," a deputy chief of the ministry's department for Americas, Galina Kurochkina, said at a meeting of the Russian-Mexican intergovernmental commission in Mexico City.

Power Machines, a leading Russian producer and supplier of power plant industry equipment, has earlier won a tender to supply equipment for La Yesca, a hydroelectric power plant on the Santiago River to be completed by 2012.

The Russian company has already supplied two turbines with a capacity of 375 MW each and additional equipment for the project. It accounts for about a quarter of the project's budget of about $800 million.

Power Machines also produced equipment for Aguamilpa and El Cajon HPPs.

Hungary has sent marketing expert Tamás Varga to conquer the Uralshttp://www.rusbiznews.com/news/n1200.html

13.12.2011 — Analysis

The Hungarians see Russia as a strategic partner that can supply them with the oil and gas so essential to them. For Russians, the Republic of Hungary is a supplier of wine and agricultural products, as well as a holiday destination. This economic synergy benefits both countries. And now new vistas for cooperation between the Urals and Hungary can be explored, thanks to the new consul for foreign economic affairs who is now stationed at the Consulate General of Hungary in Ekaterinburg. Mr. Varga divulged the business plans of his fellow Hungarians in an exclusive interview with RusBusinessNews.

- Mr. Varga, how did you end up in the Urals? Had you previously worked in Russia?

- I have both studied and worked in Russia. I graduated in 2006 from Plekhanov Russian Economic University with a degree in marketing, and I then began working for the German company HeidelbergCement. Specifically, I oversaw the company's new projects in Russia, including in Bashkortostan. But with the onset of the financial crisis and the economic downturn, I returned to Hungary where I established my own marketing company.

In early 2011, I learned of the competition for the position of trade representative in the Urals. I think I'm a good fit here, because with my experience I can help make it easier for Hungarian companies to thrive in the Urals market.

- You've been working in the Urals for a little over four months now. Have you been able to get a through grasp of the nuts and bolts of the Urals economy during this brief period?

- The past four months have been sort of a start-up for me. I have managed to visit Kamensk-Uralsky, Nizhny Tagil, Chelyabinsk, Khanty-Mansiysk, and Omsk. And wherever I go, I try to meet with representatives of the chambers of commerce and the ministries that handle economic issues. My job is to test the waters and discover the potential opportunities here for Hungarian businesses and their goods and services. Only then can I provide my compatriots with useful investment advice. In addition to offering support to our businessmen in the Urals and promoting Hungarian goods and services, my work to attract investment in Hungary from the Urals is equally important.

- Mr. Varga, does it bother you that the Hungarian trade mission was without a director for almost a year? Did relations between the Urals and Hungary deteriorate during that time?

- My predecessor, Gabor Reppa, could be seen as a Hungarian pioneer in the Urals. He opened the trade mission long before there was a Hungarian Consulate General in Ekaterinburg. When he left, the Hungarian consul in Ekaterinburg, Csaba Bajtai, took over the responsibility for promoting those economic ties. But the truth is that the primary job of the Consulate General is to resolve with visa issues and to assist Hungarian citizens. Thus, my current task is to continue these efforts in economic diplomacy with the different regions in the Urals, expanding our sphere of industrial cooperation.

Despite the recent economic crisis, Ural-Hungarian cooperation has increased, and the statistics bear this out. Between January and June of 2011, Hungarian imports to the Sverdlovsk region rose 53% in comparison with the same period last year. We expect to see an increase in the year-end totals as well.

Traditionally Hungary supplies the Urals with engineering products, mechanical equipment, pumps, computer equipment, and bearings. Hungary imports organic and inorganic chemical goods, mineral fuels, and food products and the raw materials for food products, as well as light industrial goods and ceramic products. Looking at the wide variety of products I just listed, it's safe to say that our investors are interested in many industries in the Urals, not just agriculture and medicine, but also construction, energy, and IT technology. And this is far from an exhaustive list.

- You mentioned IT technology - that's really something new...

- There are many internationally recognized IT companies in Hungary, such as IBM. We also have our own software-development firms that are very competitive in the global market. They create products that are attractive to the average Russian consumer as well as to major corporations. Currently there are no negotiations underway with the Urals in this area. But if we look at a field that overlaps with IT technology, such as telecommunications, we can see some progress. This fall representatives from a major Hungarian company, TMTO, visited Ekaterinburg. TMTO used to supply Hungary with antennas and other auxiliary equipment. The company found some potential partners in the Urals with whom they're negotiating.

- Are there any Hungarian companies with a well-established history in the Urals? For example, before the financial crisis the IGN company was looking at a wide variety of potential projects here, from building a mini-hydroelectric plant in the Central Urals to an office complex in Ekaterinburg...

- As you said, those plans were created before the economic crisis. But of course those projects haven't been completely abandoned, just put on hold until economic conditions are more favorable.

Two of the best-known Hungarian firms represented in the Urals are the pharmaceutical company Gedeon Richter and the Hungarian bank OTP. They both have representative offices here.

Besides these, there are many companies that have found a less expensive way to promote their products and services, by using a dealer or representative who travels around Russia. This costs less than opening an office or a representative office, but still gives them the opportunity to research the needs of the local market. Arrangements like that are more likely to work for sales of food or alcohol. Also, Hungarian businessmen can use existing Russian state programs to promote their technology. One example is the federal Clean Water project, which attracted many Hungarian companies. I believe Hungarian expertise in laying polymer pipe is often relied on in Ekaterinburg. It's a simple idea - the old rusty pipe is used a framework through which the polymer pipe is blown in. The cost savings are obvious. It's much cheaper to lay that kind of pipe once than to dig up and patch the old one dozens of times. In addition, this technique improves the quality of the water by removing rust sediment.

- Polymer pipes and IT technology can be called the cooperation of the future, but what about good old agriculture?

- We only offer our services in areas where we are well-experienced. In agriculture, Hungary can offer its expertise in everything from crop and livestock production to the processing of the resulting products - from the seeds to the finished dumplings, so to speak.

There's an upcoming project in the Sverdlovsk region to construct a meat-processing line and to modernize their old facility. The Korax company represents the Hungarian side of this venture. Another of that company's projects is to establish a slaughtering and meat-processing business in Tatarstan.

We have high hopes for our work to develop an agribusiness sector in the Chelyabinsk region, where the climate and weather are very similar to Hungary. A farm holding is currently in the development stage in the South Urals, and that's something in which we have both experience and the needed technology. I'm planning to bring a farming delegation to the Chelyabinsk region.

- And if we move from the South to the North Urals, what does Hungary find interesting in that region?

- First of all, both areas have Finno-Ugric roots. It's no accident that Ugra State University has a Hungarian office in Khanty-Mansiysk, and there's a similar center in Ekaterinburg. We intend to supply Ugra State University with Hungarian equipment for their practical training exercises. That way, their students will be able to familiarize themselves with new technology, and Hungarian companies

will be able to hire experts who have been carefully trained on their equipment. There are Hungarian companies that are ready to provide Ugra with energy-saving technology. I represented their interests in particular during my recent visit to Khanty-Mansiysk.

- For some time now Hungary has been as active as the Czech Republic in promoting itself as a tourist destination. Are Hungarian spas currently popular with tourists from the Urals?

- The Consulate General of Hungary in Ekaterinburg issued one-third more visas in 2010, and this year we expect to process approximately 12,000 visa documents, which includes not only visas to Hungary, but to Austria, Denmark, Latvia, Slovakia, Slovenia, and Finland (our diplomats have bilateral agreements with those governments to issue visas on their behalf). We expect a similar increase this year. I can say that Hungarian spas are popular with Russian tourists. Statistics such as the number of nights that Russians spent in Hungarian hotels rose by a third. And that's no surprise, because when a tourist arrives in Hungary, he finds himself surrounded by opportunities to enjoy our thermal baths. We Hungarians have been "taking the waters" for over 2,000 years.

In addition, we want to acquaint residents of the Urals with Hungarian private clinics. I've observed that Russians prefer to have their cosmetic and dental surgery done abroad. Hungary has many private clinics that attract even Hollywood celebrities.

- Hungarian pharmaceuticals are also quite renowned... Are any Hungarian companies planning to become part of the Urals pharmaceutical cluster?

- It's possible that some Hungarian companies might link up with the Urals pharmaceutical cluster.

Overall, medical cooperation looks very promising. Hungary underwent its own period of perestroika, just as Russia did, and many businesses were created during that time that were based on old companies from the 1980s. There was one well-known company, MEDICOR, that manufactured X-ray equipment. It shut down long ago, but the professionals who worked there have established their own businesses in various medical industries, and those companies are returning to the Russian market with their products.

- Are there plans to promote Hungarian food products in the Urals?

- Of course. For the most part, alcoholic products go through Moscow, but I have already met with a number of companies that are interested in arranging direct shipment to the Urals. Next year I plan to organize tastings of Hungarian wines and the famous, traditional Pálinka fruit brandy in various locations throughout the Urals, as well as in Ekaterinburg, and it will be possible to sample other

Hungarian products as well during these events. This summer, Surgut, which is a sister city of the Hungarian town of Zalaegerszeg, will host the Hungarian Pálinka Festival. It's been suggested that a workshop in Hungarian cooking be arranged in the Urals, which would give tips on preparing authentic Hungarian dishes, using Hungarian products, naturally. I believe that these types of events are the most effective way to discover whether demand exists for our goods, and I have no doubt that it does.

One Hungarian businessman has another interesting project. He owns a chain of high-end shops in Europe that sell Hungarian goods, and he intends to open a sales outlet in the Urals. He will visit Chelyabinsk and Ekaterinburg in the near future, in order to examine potential sites for the store.

I think that this list of projects will keep expanding. And I'll be working as hard as I can on them. My schedule for the first half of 2012 is booked almost to the minute.

The interview was prepared by Valentina Mazharova

Russia sends humanitarian aid to Kosovo Serbs http://english.ruvr.ru/2011/12/13/62112196.html

Dec 13, 2011 09:06 Moscow Time

Russia sends a shipment of humanitarian aid to Kosovo Serbs on Tuesday totaling 284 tons, the Emergencies Ministry said, adding that a 25-truck convoy will deliver power generators blankets, furniture and food supplies to Kosovo later in the day.

The move comes more than a month after 20,000 Kosovo Serbs asked the Russian Embassy in Belgrade to help them obtain Russian citizenship.

The Russian Foreign Ministry said at the time that Moscow would not be able to comply with the request, pledging, however, to send humanitarian aid to Kosovo Serbs.

(RIA-Novosti)

11:43 13/12/2011ALL NEWS

Ringleader of Khasavyurt gang killed in Dagestan

http://www.itar-tass.com/en/c154/295923.html

MOSCOW, December 13 (Itar-Tass) — The ringleader of the Khasavyurt gang and his accomplices have been physically destroyed in Dagestan, a representative of the information centre of the National Anti-Terrorist Committee (NAC) told Itar-Tass on Tuesday.

“During the investigation, conducted by the security services, information was obtained about the preparation by the so-called Khasavyurt gang of a major act of terrorism on the territory of the Republic of Dagestan,” he said. “Considering the coming reports, within the framework of the legal regime of counter-terrorist operation imposed on the territory of the Khasavyurt District in accordance with the order of the head of the Operational Staff, urgent measures were taken on the territory of the Khasavyurt District for preventing the planned act of terrorism and putting an end to the criminal activities of the gangsters.”

“After receiving a report about a possible route by which the criminals might move, officers of the republican branches of the Federal Security Service and the Interior Ministry tried to stop a car with gangsters inside for inspection on December 12, at 21.00, near the village of Karlanyurt, Khasavyurt District. The criminals offered armed resistance and were killed as a result of reply actions taken by men of the law enforcement agencies,” he continued.

“It was established during a preliminary identification that the killed gangsters were Yusup Magomedov, born in 1986, Shamil Nutsalkhanov, born in 1983, and Shamil Makhmudov, born in 1986 – all residents of Dagestan. Two assault rifles, a grenade and a large amount of ammunition were found in their car during the inspection.

“According to the information of the NAC Operational Staff for the Republic of Dagestan, Yusup Magomedov was the ringleader of the so-called Khasavyurt terrorist group, while the other two gangsters were its active members.They organised and committed several terrorist crimes, including attempts on the life of men of the law enforcement agencies, the blowing up of office cars, as well as the extortion of large sums of money from local business people under the threat of physical destruction,” the representative of the NAC information centre said.

09:54 13/12/2011ALL NEWS

Identity of 3 militants destroyed in Dagestan established

http://www.itar-tass.com/en/c154/295827.html

MAKHACHKALA, December 13 (Itar-Tass) —— Investigators have established the identity of three militants who were destroyed in Dagestan on Monday when they offered armed resistance. One of them was on the federal wanted list for organizing an illegal armed formation, participation in it and illegal trafficking of arms and ammunition, ITAR-TASS learnt at the Interior Ministry of the republic.

“On Monday, at about 21.40 Moscow time, a Lada Priora car was stopped during a search operation on the outskirts of the settlement of Karlanyurt of the Khasavyurt region. The car passengers opened fire at law enforcers form automatic arms,” the ministry’s spokesman said.

Three criminals were destroyed in return fire. Their identity was established. This is a resident of the settlement of Bairamaul of the Khasavyurt region Yusup Magomedov, 25, who was on the federal wanted list, resident of Khasvyurt Shamil Makhmudov, 25, and resident of the settlement of Babayurt Islam Khartishev, 24.

A F-1 grenade, two submachine-guns, four magazines with 7.62-mm-calibre cartridges and two magazines with 5.45-mm-calibre cartridges were found inside the car.

Criminal proceedings were instituted.

Ultranationalist Zhirinovsky to Enter Russia's Presidential Racehttp://www.novinite.com/view_news.php?id=134794

World | December 13, 2011, Tuesday

Controversial Russian nationalist Vladimir Zhirinovsky will be endorsed as the presidential candidate of his Liberal Democrats party, Russian media have reported.

Zhirinovsky's candidacy is expected to be officially announced later on Tuesday, as the party gathers for its 24th congress. This would be his record fifth presidential campaign, his best result being in 2008 when he gathered 9.35% and finished third.

On Monday, Russian billionaire Mikhail Prokhorov announced that he would also run for president against Prime Minister Vladimir Putin next March.

Prokhorov is Russia's third richest man with a fortune estimated at USD 22.7 B. He is the chairman of Polyus Gold, Russia's largest gold producer, President of Onexim Group, and owner of the NBA team New Jersey Nets.

Saturday saw massive protests in the capital Moscow and other major cities in the country against what people have widely perceived as rigged general elections.

The protesters called for the dismissal and prosecution of election officials, unregistered political parties to be allowed to participate in the race, to cancel the results of the earlier vote and to order new elections.

Russia's presidential elections are scheduled for March 4 2012. United Russia leader Vladimir Putin is considered a strong favorite.

Top blogger Navalny challenges his arrest in European courthttp://en.rian.ru/russia/20111213/170200952.html

01:51 13/12/2011

MOSCOW, December 13 (RIA Novosti)

Lawyers of anti-corruption activist and top blogger Alexei Navalny and opposition leader Ilya Yashin, detained during protests last week, lodged their complaint to the European Court of Human Rights (ECHR).

Both men have been sentenced to 15 days in jail for disobeying police orders during protests in Moscow last Monday against the allegedly fraudulent December 4 parliamentary elections.

"We filed a complaint to the ECHR against violations of several European Convention articles, including poor confinement conditions, in which Yashin and Navalny had to spend more than 24 hours, illegal arrest and the infringement on their rights to express their opinion," Navalny's lawyer, Olga Mikhailova, said.

She added that the defense requested to consider the complaint without delay.

More than 300 protesters, including Yashin and Navalny, were detained during Monday's demonstration at Chistiye Prudy, which gathered some 2,000 people, according to police estimates. Some 70 people remain in custody.

A court sentenced Yashin and Navalny to 15 days of administrative arrest. Their detention is due to end on December 21.

The protest against what many view as widespread vote rigging in favor of Prime Minister Vladimir Putin's United Russia party during the December 4 polls was authorized by the authorities. Police dispersed the demonstration, however, when a crowd began marching towards downtown Moscow, which had not been permitted.

10:46 13/12/2011ALL NEWS

United Russia's district office in Moscow vandalized

http://www.itar-tass.com/en/c154/295865.html

MOSCOW, December 13 (Itar-Tass) — Unidentified persons smashed windows of the office of the district executive committee of the ruling "United Russia" Party in eastern Moscow, a law-enforcement source told Itar-Tass.

The deputy head of the Party's office in the Novogireyevo district reported the incident to police. The attackers smashed three windows in the office located in Zelyony Prospek (Avenue), 64.

Police have launched a check.

12:44 13/12/2011ALL NEWS

1,600 officials fired for unauthentic income declarations

http://www.itar-tass.com/en/c154/295987.html

MOSCOW, December 13 (Itar-Tass) — Kremlin chief of staff Sergei Naryshkin said 1,600 officials lost their jobs in six months for unauthentic income declarations. He was speaking at a conference over perfecting state control in Russia on Tuesday.

He reminded that special attention had been paid to the development of anti-corruption legislation. "Important international documents have been ratified, and

bills have been approved that remove many legal loopholes for venal officials," Naryshkin said.

Other measures of the National Anticorruption Strategy are implemented systemically and consistently; officials have been declaring their incomes and the incomes of their families for several years, as well as the main expenditure to purchase real estate, immovable property and securities," he went on to say.

"Whereas official websites placed information on more than 153,000 civil servants in 2010, this figure increased to over 267,000 in 2011," Naryshkin said.

"All the income declarations are carefully checked, while the officials who conceal or distort the data on income and property, lose their jobs. After checks in the first six months of this year, 1,611 municipal and federal officials were relieved of their duties," the Kremlin chief of staff noted.

On December 5, the Russian president signed a federal law envisioning rotation of civil servants. "This will provide for decreasing corruption risks in executive bodies of all levels," he underlined.

13.12.2011 8:11

All tickets for train Moscow-Berlin-Paris sold out till the end of the year.

http://www.tvr.by/eng/society.asp?id=59088

3,000 km long route passes through the territory of Russia, Poland, Germany and France. The route takes 3 hours 37 minutes. In winter it will be going 3 times a week: on Monday, Thursday and Sunday. In summer time it will be available every day except Wednesday and Friday. The cost of one way ticket from Minsk to Paris is 3 million 240 thousand rubles.

No delay over fire for Vladivostok APEC bridge constructionhttp://en.rian.ru/russia/20111213/170204475.html

06:42 13/12/2011

VLADIVOSTOK, December 13 (RIA Novosti)

Construction terms for a bridge in Vladivostok, which caught fire on Monday afternoon, will remain unchanged, a deputy head of the construction company said on Tuesday.

The bridge is among infrastructure objects to be built for the Asia-Pacific Economic Cooperation summit in 2012. It will connect the mainland part of the city with Russky Island, where the main activities of the summit are to take place.

"According to preliminary estimates, the fire won't affect construction terms," said Alexander Yakovlev, deputy head of the TMK construction company.

The formwork at one of the bridge's pylons caught fire on Monday at 13:00 Moscow time [9:00 GMT]. The fire spread to the area of 500 square meters and it took almost 11 hours to extinguish it. 167 people and 38 vehicles took part in the firefighting effort.

In 2009, the bridge was insured for more than 18 billion rubles (almost $570 million)

Prosecutors have already started a probe to establish the cause of the fire and the structure's overall fire safety. The region's emergencies ministry said "human factor" was seen as the most likely cause of the blaze.

11:07 13/12/2011ALL NEWS

Zolotoi Rog bridge fire cause could be welding safety violation

http://www.itar-tass.com/en/c154/295877.html

VLADIVOSTOK, December 13 (Itar-Tass) — The major fire on the bridge across the Zolotoi Rog (Golden Horn) Bay in Vladivostok could be caused by safety rules violations during welding operations. The Interior Ministry department for the Primorsky Territory is considering this and other versions. Its experts on Tuesday started an inspection over violation of fire safety rules at the facility, the ministry’s press service told Itar-Tass.

The bridge that is currently under construction in Vladivostok caught fire on Monday night. Wood shuttering of the concrete span on the 12th pillar of the bridge trestlework on the southern shore of the bay on the Churkin Peninsula at a height of 64 metres was ablaze. The total area of ··the fire reached 500 square metres. The fire was localized only by the middle of the night.

No one was injured. According to the Far Eastern Directorate of the Ministry of Regional Development, the fire has not damages the main structures of the bridge and its cabling system. Fire fighters have been putting out the last smouldering pockets.

A representative of the Pacific Bridge-Building Company that is engaged in the construction of the facility said that damage from the fire will be determined after the structure is examined by members of a special commission. Insurance will possibly fully reimburse the damages.

It is so far unknown when the builders will resume the bridge construction work and if the fire will affect the time of the facility’s commissioning.

On 30 June 2008, the Administration of the Primorsky Territory contracted Pacific Bridge-Building Company to build a bridge across the Zolotoy Rog Bay, a project worth 17.9 billion roubles. On 9 July 2008, Viktor Grebnev, the Executive Director of the company, commented that construction of the other bridge - to the Russky Island - would be impossible to accomplish on schedule for “technological reasons,” however, Vasiliy Avchenko in Expert argues that the Russian government will built the bridge at any cost, but on time, in order to demonstrate the island's possibilities. The construction of the Zolotoy Rog bridge commenced on 25 July 2008.

08:24 13/12/2011ALL NEWS

Russian woman sentenced to death in China rejects to file appeal

http://www.itar-tass.com/en/c154/295775.html

HONG KONG (XIANGGANG), November 28 (Itar-Tass) — Russian citizen Marina Lopatina, 38, sentenced to death with a two-year suspension of sentence for drug smuggling in China rejected to file an appeal to the court, the Russian consulate general in Guangzhou told Itar-Tass on Tuesday.

The consulate general denied Russian mass media reports that the woman appealed to the Supreme People’s Court of China requesting reconsideration of her case.

“Lopatina decided not to file an appeal. Experience proved that there are practically no chances for positive consideration of the appeal in such cases and this will be only the loss of time. Nevertheless, the resident of Khabarovsk can hope for the sentence’s mitigation,” a Russian diplomat said.

He noted that under the Chinese laws, her sentence can be replaced for lifetime imprisonment or reduced to 15-20 years in prison for good behavior.

Marina Lopatina was found guilty by a court in the south Chinese city of Zhuhai, China’s southern province of Guangdong, of smuggling 2 kilograms of heroin to China’s mainland from the Macao special administrative region, where she arrived from Thailand.

The consulate general expects that the sentence will be confirmed by the end of January or the beginning of February. Soon after this the verdict will enter into force and “two years of the suspended sentence will begin to be counted”, after which China can adopt an act of pardon or mitigation of the sentence. After this the consulate general can take attempts to bring Lopatina to the homeland within the framework of the Russian-Chinese agreement on mutual delivery of prisoners, he said.

At present, the number of Russian citizens convicted of drug smuggling in China reached seven. Last July the Supreme People’s Court of China sentenced the Russian citizen to death with the execution delayed for two years for an attempt to smuggle 2.8 kilograms of heroin from Central Asia to China.

Earlier, four Russian women were arrested in different time and convicted in Yunnan province, southwest China, bordering the infamous opium-producing region Golden Triangle. The eldest of them is sixty years old. All of them were taken to a prison in Heilongjiang Province, northeast China, bordering Russia. The Russian man arrested for smuggling 1.9 kilograms of heroin remains in a prison of Beijing.

Under the Chinese laws, the smuggling of over 50 grams of dangerous drugs is the sufficient reason for sentencing to death.

Siberian couple stashes heroin in son’s mouthhttp://en.rian.ru/russia/20111213/170208078.html

11:17 13/12/2011

KRASNOYARSK, December 13 (RIA Novosti)

Police in East Siberia have detained a married couple who hid a bag of heroin in their son’s mouth, police said on Tuesday.

The incident occurred in Krasnoyarsk, Siberia’s third largest city, when a police patrol spotted a parked car with a man, a woman and a nine-year old boy inside.

When the adults saw the police they became nervous and then the woman put a gray package into the boy’s mouth.

After that she opened the door and threw another package out onto the road.

Subsequent examination showed the package contained five grams of heroin.

The couple faces a number of criminal charges, including illegal acquisition, storage, transit, production and processing of narcotic substances and could be sentenced to up to three years in prison if convicted.

Russian Press at a Glance, Tuesday, November 13, 2011http://en.rian.ru/papers/20111213/170205704.html

08:38 13/12/2011

POLITICS

Mikhail Prokhorov, the billionaire and failed State Duma hopeful, said that he would attempt a political comeback by running against Vladimir Putin for president next year. Former Finance Minister Alexei Kudrin said he is ready to take part in the creation of a liberal political party and has consulted ousted Right Cause leader Mikhail Prokhorov on the issue

(The Moscow Times, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Vedomosti, Izvestia)

Two days after a record protest rally in Moscow, the ruling United Russia party staged its own demonstration in the capital but insisted that it was not a reaction to the opposition’s event.

(The Moscow Times, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Izvestia)

The first governor resigned after his region showed poor support for the pro-Kremlin United Russia party in the State Duma elections. Vyacheslav Pozgalyov, the head of the Vologda Region where only some 30% supported United Russia, submitted his resignation on Monday

(The Moscow Time, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Vedomosti, Izvestia)

The European Union is also expected to agree to visa-free travel between Kaliningrad and its EU neighbors and is taking steps toward offering this to the rest of Russia, diplomats said

(The Moscow Times, Kommersant, Nezavisimaya Gazeta)

Moscow City Hall received a notification from organizers of Saturday’s protest against election results about another rally on December 24, with the estimated number of participants of 50,000 people. Organizers request the Vasilievsky Slope and Manezhnaya Square in the vicinity of the Red Square as possible venues

(Kommersant, Izvestia)

The acting president of the unrecognized Moldovan republic of Transdnestr demanded the cancelation of presidential vote results, which are yet to be announced

(Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Vedomosti)

 

ECONOMY

Russia should improve its business climate and further modernize its economy to the standards of the Organization for Economic Cooperation and Development, as a number of problems still hamper the country's accession to the group, which Russia hopes will take place in 2013

(The Moscow Times, Kommersant, Moskovskie Novosti, Vedomosti)

 

METALS & MINING

Russia may export more scrap for steelmaking to Europe after it joins the World Trade Organization this month, resulting in a shortage at home, Morgan Stanley and Novolipetsk Steel said

(The Moscow Times)

 

OIL & GAS

Moscow and Kiev are again in discussions about setting up a joint venture in the gas sector. However, Kiev failed to negotiate a cheaper price for Russian gas so far

(Kommersant, Nezavisimaya Gazeta, Moskovskie Novosti, Vedomosti)

For the first time ever, Russian energy giant Gazprom has made it into the top ten global oil and gas industry leaders, according to the Energy Intelligence International agency

(Moskovskie Novosti)

 

POWER GENERATION

Russian Prime Minister Vladimir Putin visited the Kalininskaya Nuclear Power Plant in the central Russian Tver Region, which is the closest plant to the Russian capital, and attended an opening ceremony for its fourth power unit

(Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Izvestia)

The Russian Investigative Committee said it completed its investigation into the Sayano-Shushenskaya dam accident, which killed 75 people and caused than $1 billion worth of damage. The investigation blamed employees and management of the hydroelectric power plant for the deadly accident but the power plant’s owner RusHydro said construction and maintenance faults were to blame

(Kommersant)

 

STOCK MARKETS

Moscow's bourses continued last week's slide, reaching their lowest levels since October after relief that the weekend's popular protests against the State Duma election results did not end in violence

(The Moscow Times)

 

DEFENCE

Tehran said it would copy the U.S. unmanned aerial vehicle intercepted in the east of the country

(Nezavisimaya Gazeta)

 

SOCIETY

In the last year, the average speed of automobile traffic in Moscow has declined by between 4 and 15 percent depending on the area, experts determined in a study of transportation in the city conducted for Kommersant by Echelon Geolife

(The Moscow Times)

Even though $300 million has been pledged by investors, the design has been completed and a construction firm selected, the construction of what could be the world's largest big wheel is stalled by the absence of approval from City Hall

(The Moscow Times)

 

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

Deeper Than Oil: Moscow protest fatiguehttp://en.rian.ru/columnists/20111212/170199535.html

Topic: Russian Poll Protests22:30 12/12/2011

Weekly column by Marc BennettsAfter seven days of protests, counter rallies, more protests, wild speculation and yet more counter rallies here in Moscow, I finally came down today with demonstration fatigue. I’m all in favor of this week’s unprecedented show of dissent against the rule of Vladimir Putin, of course, but I need a break. Unrest is tiring.

Still, it’s been exciting. A real shot of adrenalin that has only finally just started to wear off. Even though I missed Monday night’s protest in Moscow, in which some 5,000 people gathered to protest alleged (I have to write alleged) fraud at the December 4 parliamentary elections, I could feel the energy riding toward me in waves from across town.

I made it to the next night’s rally, though, and watched as around 1,000 protesters tried to break though to Triumfalnaya Square, where a counter-demonstration by the pro-Kremlin movement Nashi was taking place. The demonstrators weren’t having much luck getting past rows of Omon riot officers and sullen Nashi security. The massive billboard above the square for Tom Cruise’s new Mission Impossible film seemed to sum it all up.

Things were pretty tense though, especially when the cops starting to rush protesters to clear the area around the square. “Russia without Putin!” the crowd shouted back. And, frequently, “Shame! Shame!”

“Meet force with force!” one – I presume – hardened opposition activist shouted as the crowd scattered in the face of the Omon. “Don’t just shout shame!”

The cops might have been rough on the demonstrators, but they were pretty polite – in most cases – to journalists. Well, they were to me. Not sure about the ones they detained. When I had had enough of watching people getting busted, I tried to make my way back home through a courtyard whose entrance the cops were blocking off.

“Closed, go back,” one of them said.

“I’m from the press,” I said, flashing my press card. “And I lost my pen over there.”

The cop frowned as he gazed in the direction of my vague gestures.

“Any chance of going to look for it?”

The cop shrugged, and let me through.

*

The run-up to Saturday’s rally in Moscow saw the Internet burst with frenzied speculation. ‘A crack division of Chechen army officers has been drafted into the city.’ ‘Tanks are being deployed’ ‘American snipers will take out demonstrators from rooftops in a bid to further destabilize the situation.’

Some 50,000 people had pledged on social network sites that they would turn up at 2pm to voice their anger at the poll fraud and Moscow crackled with excitement on the eve of the rally. Helicopters circled ahead and there was a heavy security presence on the streets. Western media outlets were full of stories about the approaching Slavic Spring and the beginning of the end for Putin. The authorities, unexpectedly, gave permission for a mass rally. But would the F***book dissidents show up? Or would the protests turn out to be the flop of the year?

In the end, at least 50,000 people (the police said 25,000 – but who believes the cops?) braved driving sleet to stream into central Moscow, with more rallies all across Russia. The first indication of how the day would turn out came at Revolution Square, where some members of the opposition, led by radical writer and political activist Eduard Limonov, staged an illegal rally. The cops didn’t touch them, and Limonov – mildly insulted perhaps they he hadn’t deemed worthy of arrest – stormed off in a huff.

The cops had obviously been told to treat the protesters with kid gloves on this occasion. It was a pretty clever move – mass disorder in the centre of Moscow could easily have sparked the flames of a simmering popular revolt.

“Can I please get past?” a tooled-up cop asked me as I walked across a downtown Moscow bridge.

“Why, of course,” I replied, stunned by his politeness. Cops usually grunt here, in place of words.

“Thank you,” the cop said, and went on his way.

The main rally continued just as peacefully, unless you count the pretty angry chants of “Swindler and thieves” – as United Russia are known here. There were speeches, more cries of “Putin out!” some more speeches and then it was all over.

But nothing really needed to happen at the rally itself. The main thing was that so many people came out to show that they would quite like to live in a country where corruption isn’t woven into the fabric of daily life, where the cops don’t torture people with impunity, where the country’s oil dollars don’t mysteriously disappear, and where the authorities occasionally stop to consider what the people think. And not in a country where, as an opposition banner I saw a year or so ago put it, “The people just get in the Kremlin’s way.”

Back home, state-run TV had decided to break its no long-standing dissent rule and show the protests. The top-rated Channel One even led with the Moscow rally. But it was an odd sort of coverage – anyone hearing about the unrest for the first time would have been hard-pressed to figure out exactly what everyone was so annoyed about. There were no anti-Putin chants aired and the only placards or banners shown were so vague as to be meaningless. “Love each other!” read one. “Listen to us!” read another. Soundbites were just as hazy. “I came here today to see who else would come. Turns out I’m not alone. Great!” said one middle-aged man.

The demonstrations were for “fair elections,” Russians were told. And who could argue with that? As one blogger put it, “90% of the report was about how well the rallies were organized.” It was all, as a Muscovite friend commented, portrayed as

a “kind of Soviet-type rally in support of something, rather than against something.”

I’d had enough though by this time and went to sleep. The next mass protest is set for December 24. That’s right – Christmas Eve (they celebrate the birth of Christ here on January 7). Will I choose mince pies or Moscow protests? (Mince pies, for our American readers, are traditional English festive delicacies.) Stay tuned…

15:34 12/12/2011OUR COLUMNIST

Civil society awakens in Russia: what next?

http://www.itar-tass.com/en/c39/295311.html

By Itar-Tass World Service Writer Lyudmila Alexandrova

MOSCOW, December 12 (Itar-Tass) – The unprecedented over the past two decades opposition protest rally against rigged parliamentary elections has not led to clashes and riots, as many feared, but quite obviously served as a catalyst for the development of political processes in Russia. The civil society has apparently awakened. Now is the big question: what will happen next? The authorities will have to negotiate and compromise, experts believe.

The Moscow rally, according to the Interior Ministry, gathered 25 thousand people, and according to the organisers – up to 150 thousand. Those who tried to do the calculations on their own say that 60-70 thousand protesters gathered at one time, but some people were coming and going. The main demands of the action that has for the first time in a long period united the representatives of the system, non-system opposition and formerly apolitical Muscovites, were cancelling the results of the State Duma elections in which the ruling United Russia party scored about 50 percent of the vote - significantly more than it “really” scored, in the opinion of the opponents of the party. Rallies, although of a lesser scale, were also staged in nearly 80 cities across the country.

However, it were not political organisations that made people take to the streets. They gathered not at all to listen to the leaders of the Solidarity movement, PARNAS (People’s Freedom Party), the Communist Party (CPRF), Yabloko or Just Russia party. Not “professional dissenters,” but ordinary citizens who have overcome political apathy and fear, gathered on squares. Experts say that the very middle class, the emergence of which the government has been awaiting so long, took part in the rallies. It does not want either revolutions or return to the Soviet era, but is tired of political stagnation and is demanding changes.

Novye Izvestiya notes that the words “This is the beginning of the Russian Revolution” were met in Bolotnaya Square with a groan of disappointment. Some speakers were evoking indignation. When the leader of the Union of Soviet Officers, Yevgeny Kopyshev, ended his speech with a call to restore the Soviet regime, the crowd chanted “Down with the Soviet power!” Thousands of citizens were rather sceptically listening to speeches of the non-system opposition leaders, such as Boris Nemtsov or Yevgeniya Chirikova, and the Communist Party representative was even howled down.

Why citizens that have been passive until now cannot tolerate any longer? experts ask. “The answer lies in one simple phrase - they are sick and tired,” political analyst Leonid Radzikhovsky told the Echo of Moscow radio station. “Concerning the elections rigging - this is a small, completely worthless pretext. The rigging undoubtedly took place, but its scale was not larger than in 2007. The thing is that it was a coincidence. It was an occasion to blow out what has been accumulating for years, at least over the past 2-3 years.”

Head of the Petersburg Politics Foundation Mikhail Vinogradov, quoted by RBC Daily, points out that a sharp politicisation of the society has happened. “But it happened not on the night of the vote count at the Duma elections, but in September at the United Russia party congress when Vladimir Putin’s return to the Kremlin was announced. Those who gathered in Bolotnaya Square protested, in part, against such a scenario,” he said.

The opposition gave the government two weeks for fulfilling their demands, after which it promised to stage another rally, a considerably larger in scale, on December 24. The Saturday’s rally participants adopted a resolution of five paragraphs and gave the government two weeks to meet their demands, namely, recognise the elections null and void, to hold a repeat election, to dismiss the head of the Central Electoral Commission (CEC), Vladimir Churov, to investigate violations at the December 4 elections and introduce amendments to the electoral law.

Writer Boris Akunin, who participated in the meeting, wrote in his blog that “all the steam will be taken by the whistle, if the protesters do not create a coordination centre and fix the demands of Muscovites.”

Writer Zakhar Prilepin most briefly summarised the rally results “It was a wonderful day yesterday, certainly. We have stood well as had a good drink after that. Everybody loves and respects each other. Only one thing is worrying: they will not give us anything. They told us their favourite phrase – “We have heard you.’”

The Kremlin has already reacted to what is happening, analysts say, however. This became evident when the Bolotnaya Square meeting was shown with a high degree of objectivity in the final evening news programs of the federal TV

channels on December 10. Television has for the first time said that “tens of thousands of people” gathered for a protests rally against falsification of the elections in favour of United Russia, and a real picture of the crowd was shown. According to RBC Daily, this order came from the Kremlin, it was given personally by the president.

President Dmitry Medvedev reacted to the protests on his Facebook page in the Internet on Sunday. “Under the Constitution Russian citizens enjoy freedom of speech and freedom of assembly. People have a right to express their position, which they did yesterday. It is good that everything was within the law,” he wrote in the social network. “I do not agree with any slogans or with the statements made at the meetings. Yet I issued instructions to check all the reports from the polling stations concerning the observance of the election law.”

On Sunday, CEC member with a consultative vote, member of the Communist Party Kirill Serdyukov proposed to the CEC to put on the agenda the issue of Churov’s resignation. However, the CEC majority rejected this proposal.

Former co-chair of the Right Cause party Leonid Gozman, quoted by the Vedomosti newspaper, believes that the authorities are scared and it is too early to judge whether they are ready to make concessions, or, on the contrary, to crack down. Also, there is no person so far to negotiate with the authorities on behalf of the protesters – they have no obvious and recognised leader, the politician said.

The mass protest rallies on December 10 have raised before the Russian government issues that to which is has not found an answer yet, believes Nezavisimaya Gazeta. They may call into question the post-election configuration of power, which was announced at the United Russia congress on September 24.

The publication cites the opinion of experts who believe that Putin and Medvedev will not give up their plans. Deputy Director of the Centre for Political Technologies Alexei Makarkin stressed that although from a formal point of view United Russia has gained the majority, the legitimacy of the elections was called into question by Saturday rally participants. However, the expert believes, one of the most important causes of the middle class indignation was “swapping places” (by the ruling tandem). “People have felt that everything was decided without them.” However, the situation will not make the tandem to revise its decision, Makarkin is certain: “Otherwise, it will undermine the principle of informal arrangements.”

Political scientist Boris Makarenko believes that changing the tandem’s plans would mean recognition of United Russia’s defeat. However, he is confident that both the prime minister and president must draw conclusions from what is happening: “Such a political system is absolutely unusable.” The expert believes that one of the main mistakes of the authorities is the failure of the right-wing liberal project: “Had the authorities not strangled the Right Cause party of

Mikhail Prokhorov, United Russia would have a reasonable partner on the right. Instead, the authorities made the urban middle class, which is centre-right in nature, to give their votes to the left.”

Former Finance Minister Alexei Kudrin who was dismissed from his post by the president in September because of disagreements with him on economic issues, said in an interview with the Vedomosti newspaper that it is necessary to create a new right-wing party and expressed his willingness to support it.

This force, he suggested, could take 10 percent or 20 percent in the next State Duma. According to Kudrin, the very presence of such a party in the political arena, not necessarily in the State Duma, can change the situation in the country.

Answering a question whether he sees himself at present as the head of the new right-wing party, Kudrin noted that “we are not talking about a more distant opportunity to head this process,” but he is ready to support the consolidation of liberal forces. The former minister confirmed that he currently maintains contact with Prokhorov, but so far they have no agreements on the party creation.

Tycoon's candidacy may be 'Kremlin plan' http://news.smh.com.au/breaking-news-world/tycoons-candidacy-may-be-kremlin-plan-20111213-1osq7.html

December 13, 2011 - 4:54PM

AFP

Russian tycoon Mikhail Prokhorov's decision to stand against Vladimir Putin in presidential elections could be part of a Kremlin plan rather than a genuine challenge to the authorities, the press says.

Prokhorov announced on Monday he will be a candidate in the March presidential elections, adding new drama to the Russian political scene after mass opposition protests shook the authorities at the weekend.

But several newspapers cast suspicion on his announcement, noting that Prokhorov maintains good ties with the elite and saying the Kremlin could want his candidacy to harmlessly soak up any protest votes against Putin.

The Vedomosti daily quoted a Kremlin source as saying that Prokhorov's candidacy was not unexpected for Putin as the tycoon had kept contact with the Russian strongman and his inner circle.

The source described Prokhorov's move as a "tactical decision" aimed at reducing tensions in society after the protests of the last week accusing the authorities of rigging this month's parliamentary elections.

"The authorities are trying to weaken the protest mood in society, experts believe," the newspaper added.

Online newspaper Gazeta.ru noted that Prokhorov's announcement had come just weeks after he had publicly and apparently acrimoniously fallen out with the Kremlin over a botched plan to lead a pro-business political party.

"Experts believe either Prokhorov has been put forward by the Kremlin for the sake of the angry protesters or his candidacy will not be registered," it added.

The Kommersant daily said: "Some are happy that a candidate for the protest vote has appeared but others are sure that this is a Kremlin plan."

Prokhorov's candidacy also made the front page of the pro-Kremlin mass circulation tabloid Komsomolskaya Pravda, an unusual honour for any challenger to Putin. "The billionaire goes into politics," it said.

Analysts believe Putin in any case faces a far rockier ride to his third term as president after the protests against the parliamentary election results gave Russia's sidelined opposition new confidence.

"Russia's presidential race, it seems, is to stop being boring," commented the liberal Nezavismaya Gazeta.

© 2011 AFP

Conspiracy Theories Swirl Around Prokhorov's Election BidAdam Taylor | Dec. 12, 2011, 4:18 PM

Read more: http://www.businessinsider.com/prokhorovs-election-russia-putin-2011-12#ixzz1gOFSzsUsGiven the smoke and mirrors that seem to be de rigueur in Russian politics (not to mention the sincere Russian love of conspiracy theories), it was inevitable that someone would look deeper at Mikhail Prokhorov's election bid and find something fishy about it.

Talking to Gazeta.ru, Stanislav Belkovsky, a political analyst and associate of Boris Berezovsky, argues that Prokhorov's intentions are not to beat Vladimir Putin in next year's presidential elections, but to placate Russia's angry middle

classes by giving the impression of choice, and to then take Dimitry Medvedev's place as Prime Minister of the country.

Here's a Google-translated version of his comments:

"After the rally at the Bolotnaya area, when it became clear that the urban educated class went against the government and does not hide its position, the Kremlin puts Prokhorov in order to neutralize the energy of this protest, that we all have expired sweet saliva on what a good candidate is nominated the presidency "

While we have no idea whether this is true (and it seems foolish not to question Belkovsky's intentions too), there are a few issues swirling around Prokhorov that do invite curiosity.

For one, the timing of the announcement seems, at best, inopportune. Alexander Rahr, the director of the Russia-Eurasia Program at the German Council on Foreign Relations, told Russia Today that the oligarch has little real chance of really entering the race, let alone winning, at this point.

“I doubt that Prokhorov will get enough followers," Rahr said. "He needs a party, he needs a movement. He has the money to conduct a campaign, but he needs the people who will operate for him.”

Prokhorov's exit from Right Cause, a pro-business party, earlier this year was a little confusing, to say the least. At first Prokhorov denied criticisms that the party was a pro-Kremlin device designed to capture middle class votes in the Duma. Then he said the Kremlin had infiltrated it. Then he quit, calling the entire thing a "farce".

And then there's the possible links to Former Finance Minister Alexei Kudrin, who announced that he and Prokhorov were considering forming a new party this afternoon. Kudrin, who left the Russian government in acrimony this summer, is seen as close to Putin and had been considered a possible Prime Minister himself until some kind of internal power struggle forced him out.

Read more: http://www.businessinsider.com/prokhorovs-election-russia-putin-2011-12#ixzz1gOFax2iH

Billionaire to Tap Russia Dissent in Bid Against Putinhttp://www.bloomberg.com/news/2011-12-12/billionaire-prokhorov-to-tap-russia-s-growing-dissent-in-bid-against-putin.html

QBy Ilya Khrennikov and Lyubov Pronina - Dec 13, 2011 12:00 AM GMT+0400

Billionaire Mikhail Prokhorov is seeking to tap the dissent that sparked Russia’s biggest anti- government demonstrations in a decade, pledging to run against Prime Minister Vladimir Putin for the presidency next March.

“Society is awakening,” the New Jersey Nets basketball team owner told reporters in Moscow yesterday after announcing his candidacy in the wake of protests against alleged fraud in a Dec. 4 parliamentary vote. Those among the authorities who fail to establish dialogue with the public “will have to leave.”

Thousands of Russians took to the streets to protest the results of a parliamentary contest that observers from the U.S. and Europe said was neither free nor fair. Prokhorov, 46, Russia’s third-richest man with a fortune Forbes magazine put at $18 billion, said he plans to build grassroots support and that he opposes “revolution” and “populism.”

“He could certainly act as a channel to vent out the frustration of many young professional voters,” Lilit Gevorgyan, a London-based analyst at IHS Global Insight, said yesterday by e-mail. “His entry could be a game changer in what otherwise seems to be a perfectly controlled vote.”

Russia’s benchmark Micex Index (INDEXCF) of 30 stocks fell 3.3 percent in Moscow, extending last week’s 7.3 percent decline, the biggest in almost three months. The ruble weakened for an eighth-straight day against the dollar, falling 0.4 percent to 31.5841.

Putin Setback

Putin’s ruling United Russia party suffered its biggest setback since he came to power a decade ago, with its majority in the State Duma eroded to 238 of the legislature’s 450 seats from 315 in 2007 as stalling wage growth and the government’s shortcomings in curbing corruption repelled voters.

An opposition crowd of 25,000 people rallied in central Moscow on Dec. 10, according to police, in the city’s largest anti-government protest since Putin first became president in 2000. A same-sized demonstration occupied Red Square yesterday in support of United Russia, authorities said.

“This is the most important decision of my life,” said Prokhorov, who quit as leader of the Right Cause party on Sept. 15 after accusing President Dmitry

Medvedev’s administration of blocking the group’s preparations for the parliamentary vote.

Prokhorov is seeking to be an “integrator” who can unite Russia’s liberal opposition, the billionaire told the Interfax news service yesterday in an interview.

Kudrin Talks

He may have the backing of ousted Finance Minister Alexei Kudrin, who told the Vedomosti newspaper in an interview published yesterday that he supports the creation of a new right-of-center party, a topic he has discussed with Prokhorov. Kudrin was the second longest-serving minister in the government when he resigned Sept. 26, citing disagreements with Medvedev over spending.

The statements by Kudrin and Prokhorov reflect the growing need for a “right-liberal” party, said Olga Kryshtanovskaya, a sociologist who studies the country’s elite at the Russian Academy of Sciences and has been a member of the ruling party since 2009.

“I don’t rule out that Putin will move closer to the right,” she said. “Many people will welcome creating such a party and will join under Kudrin’s banner. People in the right flank have longed for unification.”

Russia needs a new party to accommodate “annoyed” city residents, Vladislav Surkov, Medvedev’s first deputy chief of staff, said of the protests in an interview posted on the Ekho Moskvy radio station’s website on Dec. 6.

‘Agreed With Putin’

Prokhorov’s candidacy may be a ploy to benefit Putin by legitimizing the March vote through the appearance of genuine competition, said Sergei Markov, a former United Russia lawmaker who heads the Institute of Political Studies in Moscow.

“There are two possibilities here, either it’s something agreed with Putin to bolster the legitimacy of the presidential elections after the recent protests or Prokhorov could be jumping on the bandwagon of the protests,” Markov said by phone in Moscow. “Prokhorov is a glamorous oligarch and he’s got plenty of money to spend on promoting himself.”

Stanislav Govorukhin, the film director Putin tapped to lead his presidential campaign, declined to comment on Prokhorov’s candidacy or Putin’s strategy for addressing the protesters, when Bloomberg reached him yesterday by phone.

Dmitry Peskov, Putin’s spokesman, said the premier is aware of Prokhorov’s political intentions, adding that it’s every Russian’s right to run for president, news services including state-run RIA Novosti reported.

Election Probe

Medvedev ordered an investigation into allegations of ballot-stuffing in the parliamentary poll as the swelling resentment threatened to weaken Putin’s Kremlin bid.

Putin served the maximum two consecutive terms from 2000 to 2008, when he stepped aside in favor of his protégé Medvedev. Putin said in September that he’d appoint Medvedev prime minister if he wins in March.

Parliament lengthened the presidential term to six years from four years after Medvedev came to office, giving Putin the opportunity to prolong his stay in power to a quarter century.

Prokhorov said Putin and Medvedev declined to meet with him to discuss his presidential bid and that he’ll spend 10 percent of his campaign criticizing Putin and the rest laying out his proposals. He also said he isn’t afraid of suffering the fate of jailed former Yukos Oil Co. billionaire Mikhail Khodorkovsky.

Khodorkovsky was Russia’s richest man when he was arrested at gunpoint on the tarmac of a Siberian airport in October 2003. He was sentenced to a total of 13 years in two separate convictions for fraud, tax evasion and oil embezzlement as Yukos was dismantled and sold at auction to cover more than $30 billion in back taxes. Khodorkovsky, who denies any guilt, says he was targeted by Putin for financing opposition parties.

Prokhorov said he’ll need about a month to file all the paperwork and collect the 2 million signatures needed to be included on the ballot as an independent.

“Prokhorov’s task is to help Putin get elected,” said Boris Nemtsov, a former deputy prime minister under the late President Boris Yeltsin. “A billionaire would never have taken such a risk if he hadn’t had an agreement with Putin.”

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Brad Cook at bcook7@bloomberg.net

MOSCOW BLOG: Russia's civilised revolution

http://www.bne.eu/storyf3120/MOSCOW_BLOG_Russias_civilised_revolution

bne December 13, 2011

Yevgenia Chirikova caught the mood of this weekend's protestors at a press conference on December 11. She sprang to prominence for organising the protests against the destruction of a forest in the Moscow region suburb of Khimki last summer and successfully prevented the building of a highway, and is an unlikely radical.

"All the meetings of the protests, all the actions of the protests in Russia, are the most civilised protests amongst all those protests that are happening worldwide. There is no broken glass. No overturned or burned cars. This is a civilised citizens' protest against a party of crooks and thieves, against them depriving us of free and fair elections," said Chirikova.

Contrast the 33-year-old former businesswoman, who has a taste for frumpy tank tops, with the freedom fighters in Libya or Syria (or even the hippies in New York's Zuccotti park). She is emblematic of Russia's emerging protest movement – typically middle class in the western sense and, ironically, one of the real beneficiaries of Prime Minister Vladimir Putin's successful reforms that have lead to a 14-fold increase in income over the last 12 years.

Yet she is angry. The middle class were grateful enough (or at least complacent) in 2008 when they helped United Russia sweep back into power (the ruling party officially won just over 66% of the seats, but even counting out the widely reported election fraud still commanded about 60% of the real vote) and meekly accepted Dmitry Medvedev as their new president. But the global crisis that broke the same year has made bad government more obvious and the pain inflicted has goaded more into action.

Even so, Russians remain relatively well off: unemployment is now at 6.1%, a post-Soviet low, inflation will end the year at about 7%, and after a brief reversal incomes continue to rise and have already surpassed their pre-crisis levels. In other words, from a material point of view and relative to their western peers, Russians have little to complain about compared to where they were when Putin became president in 2000.

Russia's relative prosperity has muted the protest movement. The "Arab Spring" was sparked by the self-immolation of a monk in Tunisia, but it was rising food prices and high youth unemployment that provided the tinder.

And it is this very mildness that could make Russia's protest movement so powerful. Of all countries in the world, none are as familiar with sophisticated repression as Russia and Putin, a former KGB colonel, is explicitly schooled in the art. However, he has caught himself on the horns of a dilemma created by his own "managed democracy," and may become victim to the Kremlin's own emphasis on developing the internet and allowing

public discussion of corruption as part of Medvedev's own anti-graft campaign, among other things.

There is a lot of "manage" in this model, such as the state's complete control over the mainstream media and use of administrative resources to manipulate the vote. But there is also real "democracy" in there; Putin needs real votes to legitimise his programme and his own personal popularity (still amongst the highest in the world, albeit falling) is the bedrock on which his power rests on.

The vote in December 4's Duma poll may have been manipulated, but United Russia still only won 49% of the vote (estimates of the real result range from 25% to 35%), not the 90% typical of virtually all of Russia's neighbours to the east and southeast –home to real old-school dictatorships. The Kremlin is subtle enough to realise that it can't get away with that kind of ballot stuffing.

So Putin is attempting a balancing act: giving a real voice to the voters, but using his hold on the levers of power to massage the result and maintain the control he clearly believes he needs to finish his 20-year transformation programme.

What is less noted is the people appear willing to compromise. Unlike Egyptians and Belarusians, the majority don't necessarily want to topple the government; they just want to make it more accountable and representative. The most widely heard complaint is not a call for "change" but for "order", by which people mean an end of the unpredictability and cost that accompanies the endemic corruption (the way officials extract a bribe is to create an unforeseen problem). The Russian people want a quiet life where they can work and enjoy the fruits of the country's ongoing development. It is a quintessentially middle-class aspiration much closer to the occupy Wall Street Movement than the protestors on Cairo's Tahrir Square.

If Russians continue to pursue Chirikova's "civilised" revolution, then ultimately the Kremlin will be powerless to stop it precisely because "managed democracy" requires a measure of civilised voting. The main danger is that the Kremlin reaches for the crackdown lever and then faces the prospect of radicalising the population and losing control. Putin's own stated goal is to raise two-thirds of the population into the middle class by 2020, but the middle class is by definition a political class, concerned with things like property and government services. What has caught Putin out is Russia's growing prosperity has increased so fast that the country is already at the point where the emerging middle class is demanding its say, some 10 years before Putin had expected.

The white ribbons that the protestors were sporting is an appropriate colour, as this revolution won't have the colour of the street battles in Minsk or Wall Street; it will be fought online and in speeches couched in the terms of moderation and insistence. But the ball is in the Kremlin's court now.

Change in Russia Is Unlikelyhttp://www.nytimes.com/roomfordebate/2011/12/12/is-the-kremlin-loosening-its-grip/change-in-russia-is-unlikely

Kathryn Stoner-Weiss is a senior fellow at the Center on Democracy, Development and the Rule of Law, Freeman Spogli Institute for International Studies at Stanford University. She is the author of “Resisting the State: Reform and Retrenchment in Post-Soviet Russia.”

December 12, 2011

Saturday's protests are unlikely to bring about a reversal of the election results or a “Slavic spring” akin to what we witnessed in the Middle East earlier this year. Nor is the re-awakening of Russian civil society an electoral revolution like those that occurred in Ukraine, Georgia and Serbia in the early 2000s.

Although many Russians may not like it, the election results are most likely to stand as they are and the new parliament will be seated by the end of December. Vladimir Putin will undoubtedly continue with his plan to run in (and win) the presidential elections slated for March 4. The protests are a warning shot, but they do not portend any true loss of power for Putin -- at least in the immediate future.

This is for several reasons. First, although his approval ratings have been dropping since the Sept. 24 announcement at the United Russia congress that he would be returning the the Russian presidency, he remains Russia’s most popular politician by far. His leading opponent in the presidential elections currently is Gennady Zyuganov, the head of the Communist Party of the Russian Federation, a staid apparatchik with little popular appeal.

Second, over the last decade, the state has re-established strong control over the news media, which will likely support Putin in his campaign.

Third, Golos, Russia’s only independent election monitoring commission, had come under attack in the two weeks before the Duma election, and is likely to be further eviscerated in advance of the presidential elections this spring.

And finally, there is no consolidated opposition to Putin’s rule. The other “unofficial” opposition parties, like those leading the protests this weekend in Russia, have been shut out of the electoral process for a decade and have no national presence capable of organizing and sustaining a national movement against Mr. Putin. They also have yet to come together and decide to run a single candidate who could challenge Mr. Putin. However desirable, it still seems unlikely that they will be able to do so before March. Indeed, the groups on Bolotnaya Square on Saturday do not intend to occupy any square in the capital for a sustained period of time, as happened in Egypt, for example.

Still, the protests in Russia are not completely meaningless. The Kremlin has clearly taken notice, even allowing the demonstrations to appear on the evening news. Putin must make it look like he is listening to the protesters, and he and Dmitri Medvedev -- Russia’s current president and Putin’s political protégé -- appear to be doing so by establishing an inquiry into reports of electoral fraud. Some lower functionaries will doubtless be blamed for sporadic fraudulent electoral activity, but things will go on much as they did before.

Putin's Next Move in Russia: Observations from the 8th Annual Valdai International Discussion Clubhttp://www.brookings.edu/interviews/2011/1212_putin_gaddy_hill.aspx

Russia, Europe, Governance

Clifford G. Gaddy, Senior Fellow, Foreign Policy, Global Economy and Development, Center on the United States and Europe Fiona Hill, Director, Center on the United States and Europe

The Brookings Institution

December 12, 2011 —

In recent days, Russia has undergone a significant political shift, one that presents a great challenge to Prime Minister Vladimir Putin’s power as well as his potential for winning the upcoming presidential elections. Though it is not yet clear what direction this nascent opposition movement will take, politics in Russia are clearly at a major turning point. Russia’s future trajectory will depend entirely on how Prime Minister Putin reacts to these recent challenges to his power. Given these events, it is critical to understand the underpinnings of Prime Minister Putin’s motivations and actions, as well as what his agenda for Russia’s future may be.

 

Raising The stakes: Russian Military Support For Syria – Analysishttp://www.eurasiareview.com/12122011-raising-the-stakes-russian-military-support-for-syria-analysis-2/

Written by: James M. Dorsey

December 12, 2011Russia is reinforcing its opposition to international efforts to tighten the economic embargo on Syria by sending a Russian battle group of three vessels led by an aircraft carrier to the eastern Mediterranean. The flotilla, expected in the region at the end of this week, is likely to dock in the Syrian port of Tartus, Russia’s only naval base in the Mediterranean, before the end of the month, according to Russian defence officials. The arrival of the flotilla comes on the heels of the delivery to Syria of supersonic anti-ship Yakhont cruise missiles as part of an agreement signed in 2007 and a Russian promise to go ahead with the training of Syrian personnel in the use the state-of-the-art weapons.

As Syria teeters on the brink of civil war, Russia, in sending a flotilla to the eastern Mediterranean and maintaining arms supplies to Syria, is in effect bolstering President Bashar Al Assad’s resolve not to give in to international demands that he halts his brutal eight-month-old crackdown on anti-government protesters. That corner of the Mediterranean is already being patrolled by US 6th Fleet warships led by an aircraft carrier. By raising the bar, Russia is signalling its determination to foil attempts to strangle the Syrian leader’s regime and also hopes to reduce the chances of a military intervention in Syria, possibly spearheaded by Turkey. In a defiant show of force, Syria last week held war games that included test-firing of missiles and air force and ground troop operations.

Capitalising on influence in Damascus

In an ironic twist, Russia’s breaking of ranks with the international community could position it alongside the Arab League as the only power potentially capable of coaxing Assad to moderate his hard line towards his opponents. Russia has consistently resisted efforts in the United Nations Security Council to condemn Turkey as has China, which however, unlike Russia, has declared its support for sanctions imposed by the Arab League.

Syria this week conditionally agreed to allow Arab observers into the country to monitor compliance with a government ceasefire in a bid to fend off stepped up Arab sanctions and an Arab push for UN involvement in the crisis. With Syria having repeatedly broken its earlier pledges to halt the crackdown, it remains to be seen how serious Assad is this time around. Moreover, the battle lines in Syria have hardened to a degree that opposition forces may be unwilling to settle for anything less than Assad’s demise.

Russia’s defiant resistance to allowing Syria to be internationally isolated is fuelled by the fact that it has far more to lose politically, strategically and economically in Syria than it did in Tunisia, Egypt, Libya and Yemen – the four Arab nations whose autocratic leaders were this year swept aside by the wave of anti-government protests sweeping the Middle East and North Africa.

The naval base in Tartus is operated by the Russian military under an agreement signed in 1971 between Syria and the then Soviet Union even though the Soviet Navy’s Mediterranean Fleet was disbanded after the collapse of the Soviet Union. As a result, the port’s floating docks fell into disrepair and Russian naval vessels rarely visited. That changed four years ago when Russia decided to renovate the base and turn it again into its window on the Mediterranean. Some 600 Russian technicians are upgrading facilities, dredging the harbour, and preparing it for Russian Navy port calls of which the Admiral Kuznetsov would be the first.

Political risk outstrips economic and strategic stakes

Russia’s economic stakes in Syria are equally high. Russia has concluded US$4 billion worth of arms contracts with Syria and has invested some $20 billion in Syrian infrastructure, energy and tourism. Russia’s Stroitransgaz is building a natural gas processing plant and supporting an Arab gas pipeline while Tatneft, which is already pumping Syrian oil, announced earlier this year that it would invest $12.8m in oil exploration near the Iraqi border.

If the economic and strategic stakes are high, they pale from Russia’s perspective compared to the potential fallout if Assad’s opponents prevail in the face of a crackdown that has so far cost 4,000 lives, wounded thousands, and led to the arrest of even greater numbers. Russian forces have this year killed some 300 militants in the northern Caucus, a patchwork of ethnic and religious groups where Islamists regularly attack Russian targets. They could well be encouraged by the toppling of Assad. Alternatively, a Syria that disintegrates as a result of civil war could equally inspire militants in Russian republics like Chechnya, Dagestan and Ingushetia.

Syrian acceptance of Arab League observers, if implemented, offers Russia the opportunity to align support for Assad with Arab efforts to resolve the Syrian crisis peacefully. The question is whether a negotiated solution that seeks to meet protesters’ demands for an end to repression and corruption and a transition to democracy, is possible as long as Assad remains in office given that the Syrian leader and his cohorts are unlikely to risk a political opening after so much bloodshed.

At the very least, Russia hopes that by positioning itself alongside the Arab League as a key player with influence in Damascus it will be able to protect its interests by shaping whatever negotiated resolution is achieved whether or not it maintains Assad in office. The alternative – the overthrow of the Assad regime – would constitute a significant setback for Russia not only in the Eastern Mediterranean but also across the Middle East and North Africa.

About the author:

James M. Dorsey

James M. Dorsey is a senior fellow at Nanyang Technological University's S. Rajaratnam School of International Studies in Singapore and the author of the blog, The Turbulent World of Middle East Soccer.

What is in for Russia in Syria?http://nation.com.pk/pakistan-news-newspaper-daily-english-online/International/13-Dec-2011/What-is-in-for-Russia-in-Syria

By: Hassan Barari | Published: December 13, 2011 While an international and regional noose is fast tightening around the neck of the Syrian president, Bashar Assad, it seems that Russia is still hoping that the Damascus regime will survive the uprising.The Russians have so far showed support for the regime in the face of mounting international pressure. Just a few weeks ago, and in an exercise of naval muscle-flexing, the Russians announced that warships were to be sent to the anchorage and naval base of Tartus in Syria. Although Russia is critical of the West’s approach to Syria, this demonstrative gestures will not force different players to reconsider their stand on the matter.Not surprisingly, the Russian stand is not popular in this part of the world. Arabs, for instance, are disappointed that Russia has been backing regimes that do not hesitate to repress and murder their people. Many make the case that the Russian government does not respect the will of the Arab people and is more interested in reaching a deal with the West. Differently put, the Russian stand can be understood within the context of using Syria as a bargaining chip.As matters have come to a boiling point in Syria due to the emergence of a free Syria army and the unwillingness or the incapability of Assad to accommodate the demands of his people for democracy, the Russian fears of Western intervention in Syria are genuine. Any military intervention in Syria will have the potentials to open a Pandora’s box. No one can be sure of the outcome of such a development or the ramifications on Syria even if Assad falls.Perhaps, one of the nightmare scenarios for all including Russia is a civil war in case the Syrian regime falls. Russia is on alert! Instability in the region can harm Russian investments as well. Additionally, Nato interference can undermine the interests of both Russia and China. Apparently, Russia does not want to see further bases for the Nato in this region, as it feels besieged. In fact, Russia feels that the West is taking advantage of any conflict in the region to tighten its grip and to be in a position to influence the world politics. Needless to say, the missile defence shield and Nato intervention in pervious Soviet countries cannot be more striking.And yet, the Russian interests in Syria go well beyond strategic matters. There are economic interests that might be threatened in case the regime falls. At present, the economic ties between Moscow and Damascus are robust. Russia is interested

in more investment, especially in oil and gas industry and the Syrian regime has been welcoming Russian investment as it helps improve the Syrian economy.That said, Russia has yet to come up with a clear position regarding the need of Syrians to enjoy freedom and democracy. There have been many anti-Russia demonstrations in Syria and one wonders how this can help Russian interests in the future. The Syrian people view Russia with suspicion and if this trend continues unchecked, then the environment will be antagonistic to Russia.Now with the new elections in Russia and the modest victory of Vladimir Putin and his party, things may slightly change. In other words, Russia cannot afford to be seen as supporting a dictator who is losing ground. This might take some time but again Moscow’s bet on the wrong horse will be not without costs, especially when Russia is in no position to interfere to save a failing regime.

–Arab News

11:32 13/12/2011RUSSIAN PRESS REVIEW

Dniester region election race turns into scandal

http://www.itar-tass.com/en/c142/295913.html

MOSCOW, December 13 (Itar-Tass) — The presidential race in the breakaway Dniester region ended with a high-profile scandal and may grow into street protests. The incumbent president of the unrecognized republic, Igor Smirnov, demanded cancellation of the election returns that had not been even made public, while the central election commission decided to keep secret the results until Wednesday. Smirnov’s opponents – ex-parliamentary speaker Yevgeny Shevchuk and Moscow-backed parliamentary speaker Anatoly Kaminsky demanded public declaration of the results and announced they entered the run-off race.

The Dniester region that held the presidential election on Sunday is submerging into a political chaos, Kommersant wrote. The incumbent president filed a many-page complaint to the central election commission demanding it to recognize the voting as invalid over multiple violations. Igor Smirnov, who has been ruling the republic over the past 20 years and who won all previous races, for the first time in his career appealed against the election returns. He took this step soon after the headquarters of his opponents – independent candidate Yevgeny Shevchuk and parliamentary speaker Anatoly Kaminsky, who leads the Renovation party – announced that their politicians entered into the run-off election.

“The preliminary results of our headquarters after 99 percent of ballot papers had been counted show that Shvechuk received support of 95,062 voters, Kaminsky and Smirnov – around 65,000 voters each (a total of 404,000 voters were registered in the republic). It is being specified who will be the second contender in the race. I sincerely thank our allies and citizens of the Dniester region who

supported our program of actions,” Shvechuk wrote on his Facebook page. These figures drastically differ from the exit polls made public late on Sunday. According to them, Igor Smirnov gained 47 percent of votes, while Shevchuk and Kaminsky – 23 percent and 22 percent respectively. The central election commission that should make things clear on the election landscape kept itself aloof promising to make public the results only on Wednesday. Smirnov’s opponents expressed indignation over the results’ concealment.

Smirnov has been ruling the republic since its creation in 1991 and was nominated for presidency for the fifth time, the Vedomosti business daily reminded. Moscow opposed his re-election. The head of the Russian president’s administration, Sergei Naryshkin, said it is high time for Smirnov to retire on a pension and Kaminsky is “a decent candidate.” In October and December Russia’s investigative committee instituted two criminal cases against the president’s son, Oleg Smirnov, and plans to put him on the international wanted list.

On Monday, the Russian Foreign Ministry made no comments on the Dniester region’s election. Vladimir Zharikhin of the CIS Institute told the daily that all candidates in the Dniester region are pro-Russian and it is better for Moscow to wait for the declaration of the election returns. If Smirnov fails to enter the run-off race, Moscow’s minimal task can be considered fufilled, but a future partner should be transparent and predictable, while some recent actions of Shevchuk (withdrawal from the Renovation party that has connections with United Russia) raise questions, the political scientist said. Shevchuk himself said he would do his utmost to restore the Russian authorities’ confidence in the republic.

The director of the International Institute of the Newest States, Alexei Martynov, was cited by Nezavisimaya Gazeta as saying that the central election commission will most probably announce the election returns and the date of the run-off soon after it considers complaints not only filed by Smirnov, but also other candidates. International observers will prevent any distortion of the results – it is necessary to check every step under the conditions of illegitimacy. Otherwise, “the Dniester region can lose everything it had accumulated for 20 years,” Martynov said. Smirnov’s attempt to remain in power can cause the development of events on the South Ossetian scenario and “the loss of the Dniester region’s statehood.”

If the central election commission announces the results of the first round, the run-off election should take place in two weeks. It will be declared as valid, if more than 25 percent of voters cast their ballots. A winner will be decided by a simple majority of votes. The Dniester region’s central election commission promises to sort out Smirnov’s complaint on Wednesday.

National Economic Trends

Russia to float Eurobond in 2012

http://www.rbcnews.com/free/20111213115407.shtml

      RBC, 13.12.2011, Moscow 11:54:07.Russia intends to offer a foreign-currency denominated Eurobond in early 2012, Konstantin Vyshkovsky, director of the state debt and assets department at the Finance Ministry, said.

      "We are wrapping up preparations for a flotation on foreign capital markets and would like to be ready at the beginning of next year," he said.

      The size and currency of the Eurobond have not been determined yet. State foreign borrowings are capped at $7bn in the 2012 budget, he reiterated.

Russian ruble battered amid pessimism over EU deal, stocks recover http://en.rian.ru/business/20111213/170209573.html

12:37 13/12/2011

MOSCOW, December 13 (RIA Novosti) – The Russian ruble tumbled on Tuesday against the U.S. dollar amid growing investor pessimism over the EU deal firepower to resolve the eurozone debt problem while Russian stocks were recovering after yesterday’s slump.

The ruble’s fall against the greenback on Tuesday followed world market trends as investors fled the single European currency and rushed to the U.S. dollar safe heaven on fears of the worsening eurozone debt crisis and in the wake of a sovereign credit downgrade by Moody’s on European Union member countries.

As of 11:54 a.m. Moscow time (07:54 GMT) on Tuesday, the ruble fell by 15 kopecks against the U.S. dollar to 31.6678 and rose by nine kopecks against the euro to 41.7634. The value of the bi-currency basket comprising $0.55 and 0.45 euros increased by 1 kopeck to 36.1847.

The ruble-denominated MICEX index gained 1.01 percent to 1,363.54 points after its yesterday’s slump by more than 4 percent to a two-month low, while the dollar-denominated RTS was up 0.72 percent to 1,373.47.

Following S&P’s recent decision to put six leading eurozone economies with the highest AAA rating, including Germany and France, on the list for possible downgrade, Moody’s Investors Service announced on Monday it expected to review sovereign credit ratings of all European Union member states as last week’s agreement by European policymakers offered few solutions to the region’s debt crisis.

The two-day summit resulted in an agreement on Friday for stricter economic policy and fiscal discipline, signed by the 17 eurozone states and six other European Union members (Poland, Romania, Denmark, Lithuania, Latvia and Estonia).

"In substance, however, the communiqué offers few new measures and does not change our view that risks to the cohesion of the euro area continue to rise," Moody's said.

Unless credit market conditions stabilize in the near future, Moody’s may review its ratings of all EU sovereigns already in the first quarter of next year, the agency said.

"Amid the increasing pressure on euro area authorities to act quickly to restore credit market confidence, the constraints they face are also rising. The longer that remains the case, the greater the risk of adverse economic conditions that would add to the already sizable challenges facing the authorities' coordination and debt reduction efforts," Moody’s said in a statement.

Most Asian indexes are falling by an average of 0.6-1.4 percent amid a negative external background.

On the global foreign exchange market, the euro has fallen to a two-month low against the U.S. currency to 1.3190.

Gold prices are trading 0.7 percent lower on yesterday’s close.

CBR interventions to remain flat in December

http://www.rbcnews.com/free/20111213122836.shtml

      RBC, 13.12.2011, Moscow 12:28:36.Foreign exchange interventions by the Central Bank of Russia (CBR) are expected to remain flat in December 2011 compared to the previous month, CBR's Deputy Chairman Sergey Shvetsov told reporters. "We are selling at the same pace as in November," he said.

      Net foreign currency sales stood at USD 1.37bn and EUR 130.6m in November, and CBR did not make any purchases on the foreign currency market.

Russia c.bank says money market rates appropriatehttp://in.reuters.com/article/2011/12/13/russia-rates-idINR4E7MG00H20111213

12:00pm IST

MOSCOW, Dec 13 (Reuters) - Russia's current money market rates are at appropriate levels, Deputy Central Bank Chairman Sergei Shvetsov said on Tuesday.

Overnight interbank money rates stood at around 5.3 percent early on Tuesday.

(Reporting by Oksana Kobzeva; Writing by Lidia Kelly; Editing by Andrey Ostroukh)

Banking assets advance 3.7% in November

http://www.rbcnews.com/free/20111213121052.shtml

      RBC, 13.12.2011, Moscow 12:10:52.Total assets held by the Russian banking system rose 3.7% in November 2011, the Central Bank of Russia said in a statement.

      In November, deposits by legal entities climbed 3.9%, personal deposits gained 1.7%, while the volume of assets held by organizations on operating and other accounts went up 5.1%.

      The total loan portfolio of the Russian banking system net of intrabank loans added 3.3%, while lending to nonfinancial institutions rose 3.4% and individual lending climbed 3.1%.

December 13, 2011 12:24

Non-CIS imports to Russia up 34.6% to $235.9 bln in 11mths – FCShttp://www.interfax.com/newsinf.asp?id=294630

MOSCOW. Dec 13 (Interfax) - Non-CIS imports to Russia increased by 34.6% year-on-year to $235.9263 billion in January-November 2011, the Federal Customs Service said in preliminary stats published on its website.

Imports in November came to $24 billion, which practically unchanged in comparison with October.

Ih

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

Russia to Keep Tax on Raw Sugar Imports at $140 a Ton Next Monthhttp://www.bloomberg.com/news/2011-12-13/russia-to-keep-tax-on-raw-sugar-imports-at-140-a-ton-next-month.html

By Marina Sysoyeva - Dec 13, 2011 10:33 AM GMT+0400

Russia will keep its tax on raw sugar imports at $140 a metric ton in January, the Customs Union Commission said.

The duty is based on monthly sugar prices in New York, with a one-month lag. A minimum rate of $140 a ton is applied from August through April if the monthly average price in New York exceeds $396.84 a ton, according to the commission. The duty may fall to $50 a ton from May through July, while the government said on Nov. 22 that next year it might extend the $140 level through that period because of a “high” sugar-beet crop.

The average raw sugar price in New York was calculated at 24.52 cents a pound, or $540.52 a ton in November, the Customs Union Commission, which oversees the tariffs for Russia, Belarus and Kazakhstan, said on its website.

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net.

(External) Shock Therapyhttp://russiaprofile.org/business/51238.html

The IMF Suggests Russia Reduce Spending, But There’s Little Political Will to Do So

By Andrew Roth Russia Profile 12/13/2011

As foreign investors in Russia look warily at the country’s growing political instability, a potentially devastating crisis in Europe may take its own toll on the Russian economy as well. Last week, the International Monetary Fund released a statement projecting slowing growth in Russia and said its outlook has “significant downside risks as a worsening euro area crisis could trigger a global downturn.” Analysts agreed that Russian growth is likely to slow in the coming year, but there is no consensus yet on whether the country is better prepared for an external shock than it was before the 2008 financial crisis.

The IMF reduced its predictions for growth in Russia from 4.1 percent this year to 3.5 percent in 2012 due to a likely drop in commodity prices in the coming year. Yet Europe, and by extension Russia, has cause for hope. French President Nicolas Sarkozy and German Chancellor Angela Merkel championed a drive last week to limit debt accumulation in a number of EU countries to convince the European Central Bank to continue bailing out local economies. Markets reacted positively to the news, but, as The Economist noted on December 10, there are concerns those same markets will “rally on the news of a deal that peters out once investors examine the fine print.”

Russia, too, has cause for hope. As the IMF report noted, the country is, in many ways, better prepared for a crisis than in 2008: banks in Russia have little direct exposure to the debt market in Europe; the Russian economy is not currently “overheating” as it was several years ago; and the government has extended some of its institutional capabilities to bail out banks at critical moments. Nonetheless, some experts said that Russian growth will likely slow more than the IMF predicted. Ivan Tchakarov, chief economist for Russia & CIS at Renaissance Capital, projected Russian growth at just 2.5 percent in 2012, saying the IMF was “likely taking an optimistic position to avoid shocking the market.”

Russia’s exposure to a European economic slowdown or collapse remains twofold, said Alfa Bank Chief Economist Natalya Orlova. The first is a possible drop in prices for commodities as foreign economies grind to a halt. The second is that as crisis looms over Europe, foreign investors are taking their money out of Russia in order to hedge their risk, making it more expensive to borrow.

A key step for the Russian government would be to reduce its fiscal deficit, said the IMF, yet a series of pre-election promises by Prime Minister Vladimir Putin on social spending are unlikely to be called off in the heat of Russia’s current political turmoil. Reducing pensions, for instance, could push elderly voters away from United Russia, as could cutting salaries for other government workers. Putin, in particular, has built his reputation as a guarantor of stability and economic

growth, but if that trend reverses itself, the opposition ranks will swell before the next presidential election in March.  

Yet as Orlova pointed out, the Russian budget has more pressing questions than even social spending. “I’m not a huge believer in this argument,” she said. “If we look at the Russian budget that was recently passed, then social spending only amounts to a small amount, around ten percent. In comparison to defense spending, that amount is really quite small.”

Defense spending was the primary bone of contention when former Russian Finance Minister Alexei Kudrin was fired by President Dmitri Medvedev in late September. For many, Kudrin was seen as one of the few voices calling for fiscal restraint in the government. In 2008, when Russia faced the first round of the global crisis, Kudrin was the architect of the country’s stability fund, which was saved up from the receipts on oil and gas and helped Russia weather the storm.

Today, that emergency fund is severely reduced and the Russian government relies on oil prices at close to $120 to break even, up from nearly half that in 2008. Yet what really worries economists, noted Tchkarov, is that Kudrin’s absence means that in the case of a real financial meltdown in Europe, there is no strong voice for economic policy in Moscow. “There is not one person that I really can say is dictating Russian economic policy at this point, and I think that is one of the things that is giving a lot of economists cause for concern now,” he said.

OECD Outlines Steps to Accession 13 December 2011By Irina Filatova

Russia should focus on improving its business climate and further modernizing its economy to comply with the standards of the Organization for Economic Cooperation and Development, as a number of problems still hamper the country's accession to the club, the OECD said in a survey issued Monday.

Despite the government's progress in conducting reforms in many areas over the last decade — which has brought Russia's economy and legislation closer to those of the OECD member states — the country's poor business environment remains one of the major areas where Russia lags behind most developed economies, the survey said.

"Across a range of macroeconomic and social indicators there has been clear improvement in recent years, and in general, Russia is within the range of OECD countries, not an outlier," the survey said.

But "the business climate is one of the areas where the gap between Russia and most OECD economies is still very wide," it said.

As the government's involvement in the economy remains rather high, Russia needs a predictable, investor-friendly business environment, respect for intellectual property rights and a reduction of the government's role to just setting the "rules of the game," said OECD secretary general Angel Gurria, who came to Moscow to present the survey.

Such a business environment would stimulate innovations and ease the modernization process, Gurria told a round table at the Economic Development Ministry.

As part of the measures to clarify the rules of doing business in Russia, the OECD signed an agreement with the merged MICEX-RTS bourse on Monday to develop a joint program to help strengthen corporate governance in the country.

The OECD called for the government to improve the business environment by fighting corruption, which remains a serious burden on the country's business, and strengthen the rule of law, in light of a poor judiciary system that hampers investment.

Russia remains "far more corrupt than any OECD country," the OECD said in the survey, citing the Transparency International corruption index.

Russia has signed onto the Anti-Bribery Convention aimed at fighting bribery of public officials in international business transactions and is expected to join the convention this month — a crucial step toward accession to the OECD.

According to the survey, one option to address the corruption issue is to cut the number of government officials and use the freed funds to increase the salaries of those remaining, which is likely to reduce their motivation to take bribes.

The Kremlin plans to cut the number of state civil employees by 20 percent by 2013.

According to the survey, the "poor business environment" is likely to hamper Russia's economic growth in the next several years, and the OECD expects the country's gross domestic product to increase 4 percent this year and 4.1 percent in both 2012 and 2013.

The organization forecasts that the government will attain a budget surplus of 0.2 percent of GDP this year, but it expects a moderate budget deficit of 0.7 percent of GDP in the following two years.

"Russia's economy overall is still relatively backward, exhibiting low productivity and per capita incomes, high inflation, extreme inequality, poor outcomes as regards health and the environment and low access to and use of information and communication technologies," the survey said.

Meanwhile, the Economic Development Ministry is optimistic about the country's economic growth, which is expected to reach 4.2 percent this year, just a notch above the previous forecast of 4.1 percent, Deputy Economic Development Minister Andrei Klepach said Monday.

But growth of 4.5 percent is "fairly likely," he told journalists after the round table.

The ministry has also revised its inflation forecast for this year, with the inflation rate expected to be between 6.2 percent and 6.5 percent and "likely to be closer to the lower limit," Klepach said.

Economic Development Minister Elvira Nabiullina said last month that inflation could be slightly below the ministry's official forecast of 7 percent.

Klepach also said Russia has good potential for development and its attractiveness for investors is growing amid the uncertainty in Europe and growing risks in China, and it's a task for the country's new government to realize this potential.

He said, however, that it's too early to judge how the outcome of the State Duma elections could affect investor confidence, but "as time goes by, the markets are likely to react positively because the course will be continued and succession will be preserved."

Gurria said the upcoming presidential elections and subsequent rotation in the government structure are unlikely to affect negotiations on Russia's accession to the OECD.

"We have changes of government and rotation all the time. I have 34 members in my organization … so for us this is normal," he said in an interview after the round table.

Among other issues Russia should address to catch up with developed countries are further strengthening macroeconomic policy and increasing energy efficiency, while moving forward in modernizing the economy, the OECD said.

The OECD praised the government's efforts to diversify the economy away from the oil and gas industry, saying it's bringing the country closer to the membership.

But the government should focus on reducing the high non-oil deficit — the budget funding gap excluding oil and gas revenues — which remains at 11 percent of GDP, it said.

Nabiullina, who participated in the presentation, said the OECD's recommendations "are of a significant interest" for Russia. She agreed that improving the business environment is crucial, saying the situation has improved slightly this year.

"But we're not satisfied. We'll move forward … in improving the business climate," she said.

Nabiullina said she hoped that Russia's accession to the World Trade Organization would create a base for joining the OECD.

Russia started negotiations on entering the OECD in 2007 and joining the WTO was a necessary condition of accession.

The Economic Development Ministry said last month that Russia could complete talks on accession next year, but Gurria said one of the OECD committees is slated to interview Russia in March 2013.

He said the government is committed to completing negotiations on Russia's accession to the OECD — which is often called a club of rich countries — as soon as possible, but it's hard to predict when the process will end, as there's still much work ahead.

"It's not foreseen. … We see Russia's willingness to do it. We go as fast as the conditions allow," he said.

Read more: http://www.themoscowtimes.com/business/article/oecd-outlines-steps-to-accession/449805.html#ixzz1gOEcRgDv The Moscow Times

Recreating the Safety Nethttp://russiaprofile.org/culture_living/51177.html

Retirees in Russia Are Relying on Their Children and Continuing to Work to Survive the Financial Hardship of Retirement

By Svetlana Kononova Special to Russia Profile 12/12/2011

Today’s young and middle-aged taxpayers in Russia might be left without decent pensions when they reach retirement age, experts say. The main threat to safeguarding their financial security in later life is the ageing of the population, which is gradually changing the proportion of working to retired people in Russia.

The Standard & Poor's rating agency has predicted a decrease in the Russian population from 142.9 million people today to 116 million people by 2050. It also stated that there will be a dramatic change in the old-age dependency ratio (the number of retired persons divided by the number of persons of working age) from 18 to 39 percent. According to the forecast, the proportion of the population which is over 65 will increase to a quarter by 2050. The number of people of working-age will drop to 60 percent. Russia will therefore have to increase state spending on healthcare and pensions at a time when analysts are predicting a slowdown in the GDP growth rate.

Domestic research also suggests there will be a deficit of pensions in the near future. “According to forecasts by the Finance Ministry, the budget deficit of the Pension Fund may amount to two percent of the GDP by 2015, and exceed three percent by 2020 if the current pension system remains in place,” said Alexander Osin, the chief economist at Finam Management. “The need to find resources to cover this deficit is a problem of Russia’s strategic development. The main question is which social groups will have to pay for the modernization, reindustrialization and reorganization of the economy and budget system,” Osin said.

Osin believes that there are a number of suggestions on how to do this, with parliamentary election results indicating that left-wing proposals are becoming more popular. “For example, Just Russia proposed to abandon the contributory pension scheme. Even if the effective yield of the contributory pension system matches the effective yield of the GDP, it would be chronically scarce because of operating expenditures. Only a few managers can outplay the real growth rate of the GDP and inflation. So a more effective pension system, which would decrease risks in the mid to long-term, is needed,” he continued.

Right-wing parties are suggesting increasing the retirement age, but this carries both economic and social risks. “This could lead to an oversupply in the workforce and to a decrease in the population’s real income as a result. Moreover, a shadow economy could develop, because it would no longer make sense to work for ‘white salaries’ and ‘white pensions,’ when the retirement age is the same as life expectancy,” Osin said. “Insuring the earnings of future pensioners, who currently earn above average, looks like a wealth tax. It is unlikely to be effective. So, the government should think more about how to solve the problem of the changing revenue structure and look for non-taxation sources for the state budget,

instead of patching up the holes in the pension system.”

While politicians discuss how to reform the pension system, only five percent of Russians are confident that their future pensions will cover their expenses for life, a survey conducted by the Moscow-based National Agency for Financial Studies (NAFS) found. Others don’t think that their pensions will help them to make ends meet. Those surveyed chose from several different options to describe their strategies for financial security. The most popular ways to survive after retirement are continuing to work and relying on financial help from children.

Seventy-six percent of respondents plan to continue working when they retire; one in five hopes that their children will help out. The third most popular strategy for surviving in retirement is growing vegetables at dachas, Russian summer homes, a strategy that 14 percent of respondents plans to follow. Nine percent plan to live on their savings, and eight – on their spouse’s salary. Only four percent are banking on non-state pension funds; three percent will rent out property and one percent is relying on charities. Currently only 13 percent of Russians of working-age are making voluntary contributions to non-state pension funds. “Our research shows that most Russians don’t use non-state pension funds because they distrust them. Moreover, they don’t fully understand how these schemes work, and don’t know that there is an opportunity not only to invest there, but also to transfer the contributory part of pension as well,” said Guselia Imaeva, the general director of NAFS.

A noticeable trend is that the number of people who plan to work after retirement is growing every year. In comparison, only a third of the currently retired population has addition sources of income apart from state pensions. Another interesting aspect is the strong correlation between the education level and the current earnings and post-retirement plans. Well-educated respondents with relatively high incomes who live in big cities count on extra sources of income much more often than their counterparts in the rest of the country.

So what are the options available to the current generations of young and middle-aged workers to safeguard their financial future? “It is necessary to invest. But that means than the average busy person should learn how financial markets work, which is impossible without long-term practice and a strategy of trial and error. In such circumstances, the most secure options are diversified investment portfolios, or investments which have a long-history of growth, such as buying inexpensive real estate or shares. These options differ from other valuable securities as they allow for greater control over the investment process. Setting up a business might also be a good strategy,” Osin said. “In the short term, shares in some leading Russian and international companies may increase capitalization by 30 percent over the next several quarters,” he added.

Investors, Stay Away From Russia for Now: Analystshttp://www.cnbc.com/id/45640814

Published: Tuesday, 13 Dec 2011 | 2:14 AM ET

By: Antonia OpritaDeputy News Editor, CNBC.com

Russian stocks and the rouble held above the two-week lows they hit ahead of  massive weekend demonstrations against Prime Minister Vladimir Putin, but analysts said that, at least until Dec. 24, investors would be better off staying away from Russia.

Tens of thousands of protestors demonstrated on Saturday demanding a re-run of the parliamentary elections that took place on Dec. 4, saying they had been rigged in favor of Putin's United Russia party.

President Dmitry Medvedev has ordered an inquiry into the accusations of fraud but made no mention of demonstrators' calls for an end to Putin's rule and was insulted on his Facebook page by Russians who believed his response didn't go far enough.

Protestors have promised to take to the streets again on Dec. 24 if their demands are not met.

Liza Ermolenko, emerging markets economist at Capital Economics, said it is risky now to invest in Russia, as "nobody knows what will happen."

"It depends on whether on the 24th people will come out in the same numbers and continue protesting or whether they'll give up," Ermolenko told CNBC.com.

The majority of protesters are highly-educated, middle class people who demand democracy and freedom, so they are unlikely to be appeased with subsidies or promises of higher incomes, according to analysts.

On Saturday, demonstrations went peacefully, but the Kremlin has a history of violent crackdown and arrests of dissenters, so it is unclear if the protesters will take to the streets again.

"It's very hard to say, but I don't think they will give up," Ermolenko said. "If you come out once, you might as well come out again. They'll probably be even angrier."

Business Environment a 'Persistent Handicap'

But they are unlikely to obtain the cancellation of the election results and a re-run of the polls, Simon Quijano-Evans, an EMEA economist at ING, wrote in a market note.

"Given the protests have been apparently initiated by the so-called middle class, one of the main points of focus will be how the leadership approaches the middle class, especially given existing issues such as the flat rather than progressive income tax," Quijano-Evans wrote.

ING has a "Neutral" recommendation for Russian stocks, but Quijano-Evans said the political dimension attached to shares now is positive for the medium term because it should push reforms on the right path.

To develop over the long term and meet the challenges posed by high income inequality, Russia has to modernize its economy further, the Organization for Economic Cooperation and Development warned in a report released on Monday.

"The business environment remains a persistent handicap for the Russian economy," the OECD said in a press release.

The organization urged the country to cut bureaucracy, speed up privatizing state companies and ease its restrictive foreign investment rules and foreign trade regimes.

"There is also a need to reduce pervasive state involvement in the economy, fight high levels of corruption and strengthen the weak rule of law," the OECD said in a statement.

Artem Arkhipov, head of macroeconomic analysis and research at UniCredit Bank Russia, said one trend that makes him cautious about the country's medium-term outlook is a growing outflow of capital.

"On the one hand, the reasons for outflow are obvious: The timing for investment in Russia is not perfect due to [unlikely but possible] political changes, and the situation in the rest of the world now is not suggesting [a great deal] of foreign investments as well," Arkhipov wrote in a market research note.

"On the other hand, available projects (especially large-scale and state-related) allow many opportunities," he added.

Current Prime Minister Vladimir Putin is likely to face fiercer opposition than expected before the demonstrations in the presidential elections in March next year, analysts said.

Billionaire businessman Mikhail D. Prokhorov, who owns the New Jersey Nets basketball franchise in the United States, announced on Monday that he would run for president.

In September, Prokhorov was removed as the head of a pro-business party, Just Cause, after having disagreements with Kremlin political strategists.

Former Russian Finance Minister Aleksei Kudrin, who was ousted after publicly disagreeing with Putin's decision to take Medvedev's job at the presidency, announced, also on Monday, that he will form a new political party to introduce liberal reforms.

© 2011 CNBC.com

Business, Energy or Environmental regulations or discussions

December 13, 2011 10:17

Russian shares fall as markets worsenhttp://www.interfax.com/newsinf.asp?id=294585

MOSCOW. Dec 13 (Interfax) - The Russian stock market fell on opening on the back of deterioration in the international markets caused by news from Moody's and Fitch.

The MICEX stock index was down 0.3% to 1345.58 and the RTS was off 0.4% to 1358.49 in the first minute of trading. Benchmark stocks fell by up to 1% on average, although there were gains for Sberbank (RTS: SBER) (0.4%) and MMC Norilsk Nickel (RTS: GMKN) (0.8%).

Pr

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

Government proposes expensive and inefficient modernization program for electricity sector

http://www.bne.eu/dispatch_text18282

AlfaDecember 13, 2011

Kommersant reports on the key points of the modernization program for the electricity sector for 2011-2020, which was developed by Krzhizhanovsky Energy Research Institute for the Ministry of Energy. The total program amounts to RUB11,500bn, of which RUB4,000bn must be invested in thermal power generation for the commissioning of around 61.5GW of new capacity (23.3GW of old capacity are to be decommissioned). The program assumes that RUB1,100bn out of the RUB4,000bn must be financed via depreciation, RUB1,400bn from the earnings of power generators, and over RUB1,500bn must be financed through a debt burden increase, which will lead to a Òsequential worsening of the creditworthinessÓ of power companies. This program has been aggressively criticized by industry players including power generators as well as sector overseers, such as the non-commercial Council of Power Producers, who find it exaggerated in the context of not so rapidly increasing power demand.

This program appears to be an incomplete draft, in our view. We share the opinion of market participants that it seems to be based on overly aggressive expectations of electricity demand increases (demand is up only 1.5% y/y in 2011 to date). We also believe that the expected capex numbers look quite high Ð the old modernization program assumed only RUB10,500bn until 2030. We therefore expect the program to be discussed further, and it will likely be amended to take into account the opinion of market players. Thus, we find the proposal as having a NEUTRAL implication for the sector while leaving some risk of extra unnecessary capex, which companies might be forced to carry out.

Government to create a national electricity supplier

http://www.bne.eu/dispatch_text18282

RencapDecember 13, 2011

Event: Yesterday (12 December), Vedomosti reported that the government intends to create a national guaranteed electricity supplier in Russia, to take over the functions of regional suppliers in the event of bankruptcy. According to a Vedomosti source, Deputy Prime Minister Igor Sechin has proposed that InterRAO be used as a platform for this activity. Over recent weeks the government has made a series of legislative amendments aimed at reducing the size of the mark-up supply companies are able to charge on electricity tariffs.

Action: Negative for InterRAO and for the Russian power sector in general, in our view.

Rationale: According to the Electricity (Reform) Act of 2003, the electricity supply business was to open up to competition, with the status of guaranteed supplier (i.e. supplier of last resort) in each region subject to auction. The aim was to introduce a degree of competition to electricity supply, leading to lower tariff growth for end-consumers. However, the present government has chosen to move in the opposite direction. We judge that recreating a national monopoly may allow ministers to dampen tariff growth over the short term, but will lead to inefficiency Ð which, one way or another, consumers will have to fund in the long term. For InterRAO, which already controls 15% of Russia's supply volumes, expanding supply revenues implies lower financial margins and greater exposure to a regulated Russian business that typically trades at a very large discount to international peers.

Spain’s OHL Group has won a contract to build the €1.95bn (£1.67bn) Polar Urals railway in Russia.http://www.theconstructionindex.co.uk/news/international-construction-news/spanish-team-lands-2bn-russian-rail-deal

The Polar Ural contract involves construction of 390km of railway and is the largest construction project in OHL’s history.

Work will be carried out by OHL’s Czech subsidiary OHL ZS. The developer of this project is Jamal Railway, which is owned by Russian Railways, Gazprom and Polar Urals Corporation, KUPUP.

OHL ZS is the prime contractor for the project, whose implementation will start after the closure of the full funding arrangment. The contract is closely connected with the signing of a mandate by the Czech Export Bank to finance the project with Russian banks.

Work also includes the construction fo a 2.5km viaduct. The contract term is four years and the project has been divided into three sections for its execution. Several Czech contractors will also be involved. 

Russia’s WTO Entry May Cause Scrap Shortage, Morgan Stanley Sayshttp://www.businessweek.com/news/2011-12-12/russia-s-wto-entry-may-cause-scrap-shortage-morgan-stanley-says.html

December 12, 2011, 1:54 PM EST

By Yuliya Fedorinova

Dec. 12 (Bloomberg) -- Russia may export more scrap for steelmaking to Europe after it joins the World Trade Organization this month, resulting in a shortage at home, said Morgan Stanley and OAO Novolipetsk Steel.

The country will reduce a tax on scrap exports to 5 percent from 15 percent over five years as part of WTO membership requirements, said Anton Bazulev, a spokesman for the steelmaker known as NLMK. “We expect scrap exports to increase and the spread between lower domestic scrap prices and higher European to narrow.”

Domestic demand for the material is set to double to about 40 million metric tons in 2018 from 18 million tons last year as infrastructure spending drives the use of steel for construction, Morgan Stanley analyst Dmitry Kolomytsyn said today by phone from Moscow. Russian companies including OAO Severstal that are adding blast furnaces to turn scrap into steel may see reduced profits from the projects as a result of the tax change, he said.

Severstal invested $350 million in a long-products mini- mill at Balakovo in the Volga region which is expected to start in 2013, according to Metal Bulletin. The total cost may reach $600 million, the Bulletin said.

Local Supplies

Producers in general may seek substitutes for scrap such as steel shavings or cast iron scrap if prices rise, said Natalia Ivanova, a Severstal spokeswoman. The WTO inclusion may mean exports decline as prices at home rise, she said.

Scrap prices in central Russia were about 8,700 rubles ($276) a ton in November, while prices for exports to Europe reached $425 a ton, according to NLMK. Russia sold about 6 million tons of ferrous scrap abroad this year, down from 7.3 million tons in 1998, the year before the tax was introduced, according to the steelmaker.

NLMK, which now consumes about 3.5 million tons of scrap annually, of which 3 million tons it produces itself, is also building a mini-mill in Kaluga. The company “was lucky” to have large scrap sources nearby, so the risks to the

project are low, Kolomytsyn said. NLMK wants scrap output to more than double in five years compared with 2010, Bazulev said.

OAO Magnitogorsk Iron & Steel is self-sufficient in scrap and doesn’t see any risks from the WTO inclusion, the press office said.

--Editors: Alex Devine, Amanda Jordan

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Glencore May Buy Polyus Gold Kazakhstan Assets, Kommersant Sayshttp://www.bloomberg.com/news/2011-12-13/glencore-may-buy-polyus-gold-kazakhstan-assets-kommersant-says.html

By Yuliya Fedorinova - Dec 13, 2011 10:32 AM GMT+0400

Glencore International Plc’s Kazzinc unit is in talks with Polyus Gold International Ltd. to buy the Russian gold producer’s assets in Kazakhstan, Kommersant reported today, citing people it didn’t identify.

The Assaubayev family, which had exclusive rights to buy out Polyus’ Kazakh assets, failed to find the funds by a Dec. 12 deadline, Kommersant said. Polyus is now free to talk about a sale with other potential buyers, the newspaper said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

UPDATE 1-Evraz chairman in favour of Severstal merger-FThttp://af.reuters.com/article/metalsNews/idAFL6E7ND01C20111213

Tue Dec 13, 2011 4:54am GMT

* Merger would create world's eighth-largest producer

* Evraz chairman says no serious discussions with Severstal

* Severstal declines to comment

LONDON/MOSCOW, Dec 13 (Reuters) - Evraz has raised the possibility of a merger with Severstal in a deal that would unite Russia's two biggest steelmakers to create the world's eighth-largest producer by output, the Financial Times reported on Tuesday.

Alexander Abramov, Evraz's chairman and founder, said in an interview with the newspaper that uniting the two businesses, with a combined market capitalisation of 12 billion pounds ($18.7 billion), would be a "good idea".

"I guess that this (the idea of an Evraz/Severstal combination) would have several advantages," Abramov is quoted as saying in the article.

The executive did not provide any details on how the tie-up would take place, including whether Evraz planned to launch a bid for Severstal.

Severstal said in an e-mailed statement that it does not comment on speculation.

Large-scale mergers are a rarity in the Russian steel space, where the major companies are controlled by oligarchs who created the entities in the tumultuous period following the collapse of the Soviet Union.

Severstal, Russia's second largest producer, is controlled by Alexei Mordashov, who has an $18.5 billion fortune according to Forbes magazine.

Evraz is controlled by several tycoons, including Roman Abramovich, who holds 35 percent, and Abramov, who owns 24 percent of the business.

Evraz's main business is in construction and railway steel, while Severstal has a stronger focus on flat steel sold to the white goods and car sectors.

Evraz joins FTSE on a tricky dayDecember 12, 2011 6:15 pm by Alexandra StevensonHigh quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://blogs.ft.com/beyond-brics/2011/12/12/evraz-joins-ftse-on-a-tricky-day/#ixzz1gOFAs27s

Images of tens of thousands of Muscovites protesting in the streets have hit the rouble and the Russian stock market, but one Russian executive says the country’s risk profile has not suffered.

“We don’t feel any pressure,”  Alexander Abramov, chairman of Evraz, the country’s largest steel company,  told the Financial Times on Monday – the day the company made its FTSE 100 debut. Investors weren’t convinced and the stock fell 4.4 per cent amid general concern about Russian political risk.

Evraz (EVR:LSE) anticipates belonging to the index will raise its international profile and give it access to much more liquidity than more volatile domestic markets.

But the foreign investors Evraz hopes to tap through its London listing are likely to be more than a little spooked by recent political backlash against Vladimir Putin, whose United Russia party won just under 50 per cent in parliamentary elections over a week ago.

Accusations that the elections were rigged sent   protesters   to the streets last week , shouting “Putin is a thief”, and raised questions about the run-up to the presidential election next March, where Putin is seeking to return to the Kremlin.  Over the week investors sent Russia’s RTS Index diving 8.8 per cent, and the Micex index 7.2 per cent.

Evraz’s FTSE listing could also help the Russian steel giant should it have any scuffles with the Kremlin, something which may have helped Abramov to be a little more forthcoming in his assessment of Russia’s political system.

“Finally I think people have been able to express their opinion,” Abramov said about the protestors. Lest anyone in the room got too carried away, Giacomo Baizini, chief financial officer quickly added: “in a civilised way.”

Abramov said the protests have had no direct impact on the business environment in Russia, where the company sold 13m tonnes of its 17m total output this year. Investors in Evraz will be hoping things stay that way.

Severstal To Acquire 38.5% Stake In Liberian Iron Ore Project

http://www.bne.eu/dispatch_text18282

TroikaDecember 13, 2011

Severstal announced yesterday that it will acquire the remaining 38.5% it does not own in the Putu Iron ore project in Liberia for $65 mln in cash from its partner, Affero Mining. Severstal currently holds a 61.5% stake in the project that it acquired in 2008 for $37 mln. Affero Mining is a listed company, so its shareholders will need to vote on the transaction at end January. The deal has an embedded contingent payment depending on the feasibility study results ranging from $50 mln to $70 mln, payable in 2013-15.

Putu is an early-stage greenfield iron ore project located in Liberia, West Africa, some 120 km from the coast. Preliminary resource estimates are 3.3 bln tonnes of iron ore grading 34.3% Fe.

The project requires a 120 km railway link to the nearest port.

Troika's view: Severstal has been successful at avoiding large-scale acquisitions recently, and its M&A ambitions have been fulfilled via purchases of mostly small-scale, greenfield assets effectively representing cheap long-dated options. These include a 25% stake in SPG Mineracoa in Brazil (iron ore) for $49 mln and a coking coal license in Tyva (Tsentralnoye) for $19.5 mln. While the scale of these purchases is clearly insignificant for Severstal and there is some strategic rationale, we still remain cautious regarding the company's M&A ambitions and would prefer to see it concentrate on its current operations.

CEO: Rosatom to boost consol revenue to $75 bln by 2030http://www.prime-tass.com/news/0/%7B5AF70B21-E68B-44EE-8C60-56064EAB11E7%7D.uif

MOSCOW, Dec 12 (PRIME) -- Russian nuclear power corporation Rosatom aims to boost its consolidated revenue to U.S. $75 billion by 2030 from the current $15 billion, CEO Sergei Kiriyenko said Monday at a meeting with Russian Prime Minister Vladimir Putin.

Kiriyenko also said Rosatom planned to spend more than $300 billion on its investment projects over the next 20 years. The corporation plans to build 38 nuclear units in Russia and 28 units abroad by 2030, he said.

Kiriyenko also said Russian nuclear power plants were expected to produce 172 billion kilowatt-hours of electric power in 2011, almost flat on the year.

Rosatom incorporates more than 250 enterprises and scientific institutions, including all Russia’s civil nuclear power companies, nuclear weapons complexes, as well as research organizations.

End

12.12.2011 17:54

Citigroup’s Russia Research Chief Quits as Pandit Cuts Commencehttp://www.bloomberg.com/news/2011-12-13/citigroup-s-russia-research-chief-quits-as-pandit-cuts-commence.html

QBy Jason Corcoran and Zijing Wu - Dec 13, 2011 9:44 AM GMT+0400

Citigroup Inc. (C)’s Russia research chief Mikhail Seleznev said he quit as the U.S. bank begins to cut 4,500 jobs worldwide to control costs.

“I’ve decided to leave the company,” Seleznev said by phone in Moscow today, declining to give a reason. His departure follows that of colleagues including sales trader John Heisel.

“As part of our ongoing efforts to control expenses, we are making targeted headcount reductions in certain businesses and functions across Citi,” said Denis Denisov, a Moscow-based spokesman for the bank, by e-mail. “Russia is a priority market for Citi and we continue to invest in our businesses and hire new talents.”

Citigroup Chief Executive Officer Vikram Pandit said Dec. 6 that he aims to cut 4,500 jobs as part of a bid to trim costs amid slumping revenue and what he called “unprecedented” market conditions.

To contact the reporters on this story: Jason Corcoran at Jcorcoran13@bloomberg.net; Zijing Wu in London at zwu17@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

12.12.2011   /   FOCUS: Russian operators seen expanding further on cell phone retail markethttp://www.prime-tass.com/news/our_features/

MOSCOW, Dec 12 (PRIME) -- Russian mobile operators are seeking to develop their own monobrand retail chains, thus following the example of the country’s

largest mobile operator MTS, which is already a serious competitor to independent retail chains. By turning to sales via their own retail chains, mobile operators are expected to avoid paying dealer commission to independent retailers and thus increase their margins to some extent, analysts said, adding that despite mobile operators’ expansion, independent retailers are likely to maintain their strong positions on the market because they may offer more goods and services to consumers than monobrand retail chains focused mainly on loyal subscribers.

Activity in the Oil and Gas sector (including regulatory)

Caspian CPC Jan oil exports seen rising 0.7 pcthttp://af.reuters.com/article/energyOilNews/idAFL6E7ND0RJ20111213

Tue Dec 13, 2011 8:24am GMT

MOSCOW Dec 13 (Reuters) - Russian and Kazakh oil exports via the Caspian Pipeline Consortium (CPC) are expected to rise by 0.7 percent in January to 2.438 million tonnes, month-on-month, a preliminary schedule showed on Tuesday.

The pipeline group is led by U.S. major Chevron and includes Russian pipeline company Transneft, ExxonMobil, Royal Dutch Shell and LUKOIL .

Its state shareholders, Russia and Kazakhstan, own 31 percent and 19 percent of CPC, respectively.

CPC will pump slightly less crude next year than the 32 million tonnes planned for 2011 due to expansion works. It shipped 34.9 million tonnes in 2010.

Rosneft granted licenses for five offshore fields

http://www.rbcnews.com/free/20111213130018.shtml

      RBC, 13.12.2011, Moscow 13:00:18.State-owned oil major Rosneft has been granted licenses to explore five oil and gas fields in the Okhotsk Sea

bypassing the tender procedure, according to a resolution signed by Prime Minister Vladimir Putin.

      The predicted recoverable oil reserves of the fields total 442.3m tons. Natural gas reserves are estimated at 1.5 trillion cubic meters.

Nord Stream says halts gas flows for two dayshttp://af.reuters.com/article/energyOilNews/idAFR4E7MG00J20111213

Tue Dec 13, 2011 8:09am GMT

MOSCOW Dec 13 (Reuters) - The Nord Stream gas pipeline will suspend gas deliveries to Europe from Russia for two days due to maintenance works, the pipeline consortium said on Tuesday.

The first line of Nord Stream supplies Europe with gas at a pace of around 75 million cubic metres a day.

"From 13 December, 6 am CET to 15 December, 6 pm CET, the gas flow through the Nord Stream pipeline will be temporarily suspended due to planned maintenance works at Gazprom's connecting pipeline," the consortium said.

"All contracted gas delivery volumes will be met."

Gazprom owns 51 percent of the project with German companies Wintershall and E.ON each holding 15.5 percent, and France's GDF Suez and Dutch firm Gasunie each with 9 percent. (Reporting by Vladimir Soldatkin)

Turkey may give permission for South stream in Decemberhttp://vestnikkavkaza.net/news/economy/20860.html

Turkey may give permission for the construction of the "South Stream" gas pipelinebefore the end of December.As reported YuGA.ru, in September at the International Investment Forum "Sochi-2011" Russian Gazprom, the Italian Eni, the French EdF and Germany's Wintershall have signed a shareholders' agreement for the construction of gas pipeline South Stream from Russia to Europe via the Black Sea.In total, the project involves companies from 11countries."As a result of negotiations with the Turkish government, I can say that Turkey is ready to give its approval in the nearest  future. It is possible that this could

happen before the end of this year" said Deputy Chairman of OAO "Gazprom" Alexander Medvedev at a meeting with chief editors of the Russian media."The Turkish side does not require any special conditions",  he added.

December 13, 2011 13:01

Trans-Balkan Pipeline cancels board meetinghttp://www.interfax.com/newsinf.asp?id=294641

MOSCOW. Dec 13 (Interfax) - A meeting scheduled for December 14 in Amsterdam of Trans-Balkan Pipeline B.V. (TBP), the operator of the Burgas-Alexandroupolis pipeline project, will not take place, Igor Dyomin, spokesman for Russia's Transneft (RTS: TRNF), one of the project participants, told Interfax.

"We have received the position of our Bulgarian partners. It wasn't an official notification, the official one was sent to the Foreign Ministry. As this is about severing an intergovernmental agreement, it creates a new situation and it doesn't make sense to hold the board meeting. We await instructions from the government as to our next action," Dyomin said.

Those actions could include liquidating the consortium, freezing the project or doing it without the Bulgarian side's involvement, he said.

Greece also suggested not holding the board meeting, Dyomin said.

Bulgaria said last week that it intended to dissolve the 2007 agreement signed with Russia and Turkey to build the pipeline.

The Burgas-Alexandroupolis pipeline, which is to be laid through Greece and Bulgaria, will bypass the congested Bosporus and Dardanelles straits. It will be 300 kilometers in length and have the capacity to transport 35 million tonnes of crude per year with the opportunity to increase that to 50 million tonnes. Construction was estimated to cost around 1 billion euros.

The founders of Trans-Balkan Pipeline B.V. are Russia's TK-BA with 51%, Bulgaria's Project Company Burgas-Alexandroupolis BG with 24.5%, Helle C.A. - Traki C.A. of Greece with 23.5%, and the Greek government with 1%. The founders of TK-BA were Russian oil pipeline company Transneft with 33.34%, Gazprom Neft (RTS: SIBN) with 33.33%, and Rosneft (RTS: ROSN), also with 33.33%.

The meeting on December 14 was due to discuss Bulgaria's funding of the project. At the last board meeting in the summer, Bulgaria promised to repay its debt and pay its dues to the project following approval of the environmental

impact study. The Bulgarian Environment Ministry approved the environmental impact study for the Burgas-Alexandroupolis project on November 3.

Greece plans to continue providing funding for the project after Bulgaria meets its financial obligations, he said.

The environmental impact study's approval was postponed on various occasions. Initially it was expected to be approved in February 2011. This was later extended to March 28 and then for a further two months. The Bulgarian Environment Ministry in June sent the statement back for further work until August 23. Bulgaria approved a request from TBP to extend the deadline for the statement to September 30. Bulgaria said more than once that the project was a risk to the environment and not in its benefit. Bulgaria owed $7.3 million on the project at the beginning of 2011.

Bulgaria's then prime minister, Stanislav Stanishev, said last year that the country faced a possible break fee of EUR 500 million if it pulled out of the pipeline project.

Pr Cf

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

TNK-BP in '$6bn Arctic spend'http://www.upstreamonline.com/live/article293817.ece

The board of BP’s Russian joint venture TNK-BP has “pushed the button” on a $6 billion investment in new Arctic fields, according to a report.

Steve Marshall & News reports  12 December 2011 10:17 GMT

The company aims to open up a new area of production in the Yamal peninsula in the Siberian Arctic and rehabilitate producing fields elsewhere with the planned spending, The Sunday Times reported.

TNK-BP is also targeting expenditure on new exploration acreage it has acquired in Brazil.

The proposed investment was approved at the company’s board meeting in Brussels on Friday, though no further details were released.

The move follows TNK-BP’s earlier abortive attempt to replace BP in a proposed $16 billion alliance for Arctic exploration with Russian state-owned Rosneft.

This deal collapsed after TNK-BP investor group AAR filed a legal challenge claiming the deal violated the terms of its shareholder agreement with the UK supermajor.

Rosneft has subsequently teamed up with US giant ExxonMobil in a $3.2 billion venture for exploration in the Arctic and other areas.

A Siberian court last month rejected a $2.8 billion lawsuit filed by minority shareholders in TNK-BP against board members nominated by BP, claiming damages for being excluded from the original Rosneft deal.

However, the board discussed at its meeting the findings of a pair of Russian law firms, which argued that TNK-BP still has a strong case against BP.

A Swedish arbitration tribunal could give its initial findings before Christmas on whether BP is liable for breaking the shareholder agreement.

A decision on whether to sue BP for damages is set to be made by TNK-BP in the New Year.

BP has offered a settlement to AAR whereby both sides would recommit to the joint venture, drop all lawsuits and the UK supermajor would sell some of its foreign assets to TNK-BP.

Published: 12 December 2011 10:17 GMT  | Last updated: 12 December 2011 11:38 GMT

Lukoil: Potential West African reserves estimated at 5-6 bln boe

http://www.bne.eu/dispatch_text18282

UralSibDecember 13, 2011

Exploration drilling to continue in 2012-13. Lukoil (LKOH RX Ð Buy) held a conference call yesterday giving details on its recent West African discovery and development plans. The company believes its five license blocks Ð one in Ghana, three in the Ivory Coast and one in Sierra Leone Ð could hold as much as 5-6 bln boe in prospective re- sources. The companyÕs recent discovery at Ivorian block CI-401 is being followed up by another well at the structure, to be finished in 2012. All in all, the company plans 11 exploration wells in 2011-13 and is

budgeting $700-900 mln for the drilling, $64-81 mln per well.

Favorable tax regime. If Lukoil were able to convert only 20% of its prospective West African resources into reserves, at 1 bln boe they would make up 8% of its proven oil reserves. But the areaÕs contribution to oil production could be higher, as offshore reserves tend to be produced faster. In addition, we believe the contribution to EBITDA from the area could be as much as 7-10% by 2017-2020, thanks to a favorable tax regime with taxes in the Ivory Coast taking only 15% of revenue (as opposed to 70% in Russia). We reiterate our Buy recommendation for Lukoil.

Rosneft signs a contract on bunkering Sakhalin Energy’s tankershttp://www.bne.eu/dispatch_text18282

VTB CapitalDecember 13, 2011

News: According to Interfax, Rosneft has signed a contract on bunkering the tankers of Sakhalin Energy (which operates the Sakhalin-2 project). The fleet serving the project had previously fuelled in Korea, Singapore and Hong Kong.

Our View: This is yet another case of the company successfully developing highly profitable ‘premium’ business activities. To recap, during 2008-11 Rosneft increased its share in the East Siberian bunkering market from less than 10% to 63%. Although the effect on the companyÕs performance is not significant (limited to USD 70mn of additional EBITDA in 2012F) we believe that this news is part of a positive trend which supports our bullish view on the company, in particular, and on the Russian Oils universe as a whole.

Novatek seals $3.8bn gas deals with two gencos

http://www.rbcnews.com/free/20111213114536.shtml

      RBC, 13.12.2011, Moscow 11:45:36.Russia's second largest natural gas producer Novatek has concluded long-term agreements to deliver gas to two electric power producers OGK-1 and OGK-3, the generating companies (gencos) announced today.

      The gas producer agreed to supply 22.86bcm of gas to OGK-3 in 2012-2015 for RUB 110.91bn (approx. USD 3.53bn) and an unspecified amount of gas to Russia's largest thermal power producer OGK-1 in the same period for RUB 7.46bn (approx. USD 238m).

Novatek expands agreement with OGK-3http://www.bne.eu/dispatch_text18282

AlfaDecember 13, 2011

Novatek may expand its agreement with Inter RAO to include OGK-3Õs Kostromskaya GRES. Under the current agreement, Novatek is to supply 600mcm of the required 3.3bcm. However, the power stationÕs contract expires in 2013E, leaving the door open for negotiations. Novatek is ready to provide discounts to GazpromÕs regulated price. Although the discount has not been disclosed in detail, OGK-3 has stated in documents from its Board of Directors that it may be able to save as much as RUB130/mcm in 2011 on purchases from Novatek versus Gazprom.

Yesterday, Interfax reported that rumors were being circulated that OGK-3 would accelerate the switch from Gazprom to Novatek, with the switch taking place in 2012 instead of 2013, although none of the rumors have been confirmed. We treat the news as NEUTRAL in the current market environment, as the new client is state-affiliated Inter RAO. At the same time, it appears that close ties with the state have fallen from favor and are causing concern.

NOVATEK is to increase gas sales to Inter RAO http://www.bne.eu/dispatch_text18282

VTB CapitalDecember 13, 2011

News: Vedomosti, citing sources in Inter RAO, reports that NOVATEK is currently supplying 53% of the companyÕs more than 24.5bcm in gas consumption, and is to increase that amount to around 70%, or 19bcm (altogether) in 2013.

Our View: The gas supply partnership between NOVATEK and Inter RAO was approved by Inter RAOÕs Board of Directors in June. This news correlates with NOVATEKÕs recently announced plans, implying its share on the domestic gas market growing from 8% now to 10% in 2015 and 14% in 2020. Although we think these plans are unrealistic, it is positive for the company to gain another 5bcm of gas sales, or about 8% of forecasted 2013 sales. Our major concern stems is whether the company will be able to maintain production at levels that match the rapid pace of demand growth.

Gazprom

Russian Gas Deals at Risk as Bids Rejectedhttp://www.turkishweekly.net/news/127895/russian-gas-deals-at-risk-as-bids-rejected.html

Turkey’s Energy Market Regulation Association (EPDK) started to return applications of the firms that applied to Gazprom to replace state-run Botaş, which is scheduled to cancel its ongoing deal for 6 billion cubic meters, as the 24 companies could not yet reach an agreement with the Russian company.

Currently only two companies, Bosporus Gas and Akfen, have signed a memorandum of understanding with Gazprom to complete application documents asked by EPDK. Since no other companies could sign a memorandum of understanding with the Russian gas provider, EPDK started to return the applications to firms yesterday.

The Turkish Energy Ministry announced in September that domestic private companies could buy gas from Gazprom’s Westline because Botaş decided to end a 26-year contract over a price dispute. A total of 26 companies, including Austria’s OMV and Turkey’s Aygaz, Zorlu, Demirören and Turcas had applied for a license to transfer 4 billion cubic meters (bcm) of natural gas through the West Pipeline, according to an EPDK statement Oct.23.

A representative of a bidding company that failed to meet the deadline by Dec. 9 said on condition of anonymity, “It is not that easy to renew a contract that values for not less than $3 billion in such a short period of time.”

Bosporus Gas and Akfel, which signed MOU with Gazprom and completed the documents submitted to EPDK, have asked for additional time for companies to sign the contract with the Russian provider.

11:45GAZPROM GETS LICENSES TO 4 FIELDS IN YAKUTIA FROM GOVT - INSTRUCTION

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

Gazprom rules out gas pact with Ukraine in 2011http://www.steelguru.com/russian_news/Gazprom_rules_out_gas_pact_with_Ukraine_in_2011/240636.html

Tuesday, 13 Dec 2011Ukrainian News Agency reported that Gazprom has ruled out the possibility of new agreements on the conditions of supply of natural gas to Ukraine being signed in 2011.

Gazprom Board Chairman Mr Alexei Miller told reporters “There will be New Year's gifts.”

Earlier, Gazprom issued a press release about today's meeting between Mr Miller and Minister of Energy and the Coal Industry Mr Yurii Boiko, during which current and future cooperation was discussed. Further details were not disclosed.

As Ukrainian News earlier reported, both sides had previously expressed confidence that new gas agreements would be reached before 2012.

Ukraine is seeking reduction of the price at which Russian gas is supplied to Ukraine, which is about USD 400 per thousand cubic meters in the fourth quarter of 2011.

(Sourced from Ukrainian News Agency)

13.12.2011

Gazprom: No gas-price deal with Ukraine by year's endhttp://www.oilandgaseurasia.com/news/p/0/news/13700

The chief executive of Russia's Gazprom, Alexei Miller, said Monday that his company and Naftogaz of Ukraine won't be signing an agreement on natural-gas prices by Dec. 31, Ukrainian news website Zerkalo Nedeli reported. 

"There will be no New Year's gifts," Miller told journalists at a meeting that included Gazprom Deputy Chairman Alexander Medvedev and management committee members Yaroslav Golko (head of investment and construction) and Vsevolod Cherepanov (head of gas, gas condensate and oil production).

The Russian giant had indicated that negotiations with Naftogaz were progressing favorably and would likely yield an agreement by year's end. News reports quoted Ukraine's President Viktor Yanukovych as predicting on Nov. 24 that Ukraine and Russia would reach a gas-pricing accord by Dec. 31.

On Saturday (Dec. 10), Zerkalo Nedeli reported that a draft agreement proposing the formation of two joint ventures with Gazprom was submitted to Russian and

Ukrainian officials. Prime Minister Nikolai Azarov ordered the preparation last week of a 2012 budget for Ukraine that reflects prices of imported gas no higher than $400 per 1,000 cubic meters, the website said.

The first venture would involve gas transit pipelines and underground reservoirs. Once in operation, the venture would take on European energy companies as shareholders, with Naftogaz retaining 34 percent to Gazprom's 33 percent. The second Gazprom-related venture would be a domestic Ukrainian gas distributor formed from networks now leased by regional distribution companies. Gazprom would have 50 percent of that venture, Zerkalo Nedeli cited sources as saying.

Copyright 2011, Oil&Gas Eurasia. All rights reserved.

Gazprom spells out terms for BeltransgazPublished: Dec. 12, 2011 at 8:36 AM

MOSCOW, Dec. 12 (UPI) -- The Belarusian gas transit network and performance benchmarks of state energy company Beltransgaz must meet Russian criteria, gas company Gazprom said.

Gazprom announced in early December that it took control of Beltransgaz as part of a revised energy deal with Belarus.

Alexei Miller, chief executive officer at Gazprom, met with officials from Minsk to discuss the new terms for Beltransgaz.

Gazprom, in a statement, said it was "was planning to significantly increase the efficiency of the Beltransgaz performance." Achieving that, the company said, means corporate norms and standards should be in compliance with Gazprom's.

Minsk blamed rising prices of natural gas from Russia for some of its economic woes.

Gazprom under the terms of the deal would charge $164 per 1,000 cubic meters of natural gas starting in 2012. That's down from the $280 per 1,000 cubic meters paid this year and is less than half of what European consumers pay the natural gas company.

The new phase of ties between Gazprom and Beltransgaz take effect Jan. 1.

Read more: http://www.upi.com/Business_News/Energy-Resources/2011/12/12/Gazprom-spells-out-terms-for-Beltransgaz/UPI-69991323696986/#ixzz1gOWGDrS3

Zambia's President And Gazprom Discuss Oil And Gas Explorationhttp://english.capital.gr/News.asp?id=1352993

DOW JONES NEWSWIRES Zambia's newly elected president, Michael Sata, has held talks with executives of Russia's OAO Gazprom (GAZP.RS) over the prospects of oil and gas exploration in the Southern African nation, the Zambian presidency said Monday. In a statement, George Chileya, said that the talks on Saturday were also attended by Mikhail Margelov, the special representative of the Russian president who is in the country to promote trade and cooperation between Russia and Zambia. "President Sata informed the Russian delegation that there were no facilities for producing gas in Zambia yet the country was rich in mineral reserves," the presidency said. "He identified agriculture, mining (copper and coal), civil engineering, oil exploration and tourism as critical areas where the two countries could cooperate." Zambia, Africa's largest copper producer, first announced it had confirmed oil and gas occurrences in its North Western and Western provinces in 2006, near the border with oil-rich Angola. Tests on 42 soil samples from Zambia were conducted in laboratories in Germany and 19 were found to indicate positive results for oil accumulation in the subsurface, according to the mines and minerals ministry. Zambia has since held two bidding rounds for at least 41 oil blocks attracting a total of eight foreign and local companies. Among the companies that have so far applied for licenses in Zambia are U.K. privately held firm GP Petroleum and Petrodel Resources. Copper-rich Zambia is trying to diversify its mining sector by encouraging investments in oil and gas exploration, as well as other metals such as uranium, gold, nickel and zinc. Zambian geologists believe the East African rift where Uganda recently discovered oil extends to Zambia's Zambezi and Kafue valleys through Lake Tanganyika. -By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615 bariyonic@yahoo.co.uk

Gazprom to launch Bovanenkovo in May-June of 2012 –

http://www.bne.eu/dispatch_text18282

VTB CapitalDcember 13, 2011

News: According to Interfax, First Deputy Governor of the Yamal-Nenets Autonomous District Vladimir Vladimirov has said that production at the Bovanenkovskoye field will start in May-June 2012. He also mentioned that the construction of the gas pipeline through Baidaratskaya guba had been completed.

Our View: Gazprom had previously guided that the Bovanenkovskoye field would be launched in the 3Q12 and produce 7bcm in its first year, with projected volumes of 115bcm per year. The fact that the company will start production earlier is definitely positive for Gazprom from the fundamental standpoint. However, we do not expect this to influence the stockÕs performance in the short term.

Gazprom: Too Many Holes To Plughttp://seekingalpha.com/article/312577-gazprom-too-many-holes-to-plugDecember 8, 2011

Whenever I need a good laugh I look around to see what Gazprom (OGZPY.PK) says about the perils of spot pricing mechanisms for gas. (OK. I confess. My sense of humor is, uhm, idiosyncratic.) And they seldom disappoint!

Like this gem:

Spot prices, which European customers have asked the Russian gas export monopoly to factor into long-term contract prices, should play a “subordinate, balancing role,” said Sergei Komlev, head of pricing and contract formation at Gazprom’s export division.

Gazprom supports “the existing dual hybrid pricing model,” Komlev said today at a conference in Moscow. Switching to 100 percent spot indexation or de-linking oil and gas prices “is unacceptable to gas producers because it will create opportunities for predatory pricing.”

Uhm, just how would that “predatory pricing” work, exactly? Predatory pricing involves the sale of a product at below marginal cost with the intent to drive competitors out of the market. Once exit occurs, the predator then raises price to super-competitive (and perhaps monopoly) levels.

The problem with this strategy, as appealing as it is to the economically illiterate (well, I am talking about Gazprom management, so . . . ), is that (a) it can only work under very special conditions, (b) these conditions unlikely to hold in practice, and (c) the documented examples of successful–or even attempted–predation are virtually non-existent. And I would say that the use of the modifier “virtually” is unduly cautious.

Predation is unlikely to work in an industry as unconcentrated as gas. And if anyone is in a position to be a predator, it is Gazprom, the world’s largest producer with the world’s largest reserves.

But the more basic problem is that predation can’t destroy the competitor’s productive assets. For instance, if a big gas producer tried to charge a below-cost price in an attempt to drive Gazprom out of business, Gazprom’s wells and pipelines would still exist, and could come back on line as soon as the predator attempted to raise price. Meaning that the predator would lose money driving down prices, but would never be able to profit by raising them to super-competitive levels.

In other words, predation is usually a great way for the predator to lose money. Which is why it is more a figment of heated imaginations than an economic reality.

As for empirical examples, Rockefellar’s Standard Oil was the poster child. Ida Tarbell–the daughter of a refiner that lost out in competition to Rockefellar–alleged in various muckraking articles and books that predation is how Standard Oil was built. But the painstaking, non-muckraking, historical research of John McGee (then at Chicago, and published in the JLE) showed that Tarbell’s characterization was all wrong. Standard Oil did not engage in predatory pricing.

So, predatory pricing is just another Gazprom bogeyman. A risible scare tactic employed to defend an increasingly indefensible position.

Gazprom reminds me of the little Dutch boy, holding back the waters by putting his finger in the hole in the dike. But Gazprom’s problem is that there are more holes than it has fingers. Just follow the news and you’ll see story after story

about gas exploration and development and export just about everywhere in the world.

One interesting development occurred the other day in Qatar. Russia has downgraded its diplomatic relationship with the Gulf country because of an incident in which a Russian diplomat was roughed up, allegedly when Qatari officials tried to seize the diplomatic pouch he was carrying.

Recently, Qatar and Russia had been singing of the same hymnal with respect to gas contracting practices. Moreover, Qatar has been Russia’s main interlocutor in discussions to create a gas cartel analogous to OPEC. Given the proliferation of supply sources, actual and potential, the prospects for such a cartel are dim on economic grounds. But political friction between Qatar and Russia makes the prospects even more remote.

Given the gravity of the accusation, one wonders what would have been so serious as to lead Qatar to take such an action. Most likely guess: Something related to Iran. There are many indications that there is a covert war going on against Iran. The Gulf states are in a cold war with Iran–and maybe it is a little warmer than that. Russia’s role with Iran has been equivocal, at best. Under these circumstances, one can readily imagine why Qatar would go after a Russian diplomat.

Regardless of the actual story, political tension between Qatar and Russia is just another hole for Gazprom to plug.