Russia 110322

Basic Political Developments Robert Gates: U.S. will very soon recede back into supportive role in Libya - U.S.

Secretary of Defense Robert Gates during his visit to Russia has given an interview to Interfax in which he speaks about a scenario of the Libyan military operation and U.S. desire to build European missile defense system along with Russia.

o Medvedev, Gates to discuss missile defense in Moscow - Russian President Dmitry Medvedev and U.S. Defense Secretary Robert Gates will discuss the issues of Russian-U.S. military and technical cooperation, including those related to missile defense, during their meeting in Moscow on Tuesday, the Kremlin has said.

o Gates to meet with Russian president on Moscow visit - Gates has stayed on the sidelines of the Medvedev-Putin clash. In public events Monday he avoided speaking about Libya, and told Russia's Interfax news agency that the United States only wants a limited role in the Libyan mission.

o Russia, U.S. begin data exchange under New START - "With entry into force of the Treaty, we have begun implementing an extensive regime of mutual monitoring and information exchange," Rose Gottemoeller, the Assistant Secretary of State for Arms Control, Verification and Compliance, said.

o U.S. welcomes 'mutually reinforcing' missile defense cooperation with Russia - The United States sees Russia as a full-fledged participant in the European missile defense system, Ellen Tauscher, the U.S. Under Secretary of State for Arms Control and International Security Affairs, has said.

o U.S.-Russian talks on tactical nuclear arms cuts will take time - U.S. official - "Moving missile defense from a negative to a positive factor in our relationship could facilitate cooperation in other areas as well, including talks on further reductions in strategic, non-strategic and non-deployed nuclear weapons. But reaching any agreement will not be easy and it will take time," Tauscher said.

o Russia and the United States experienced excellent progress in military field - Valdaiclub.com   interview with Andrew Kuchins, director of the Russia and Eurasia Program at the Center for Strategic and International Studies in Washington, D.C.

No reasons to take Schneerson Library out of Russia – Shvydkoy: The Schneerson Library cannot be taken out to the United States from Russia, presidential envoy for international cultural cooperation Mikhail Shvydkoy told Interfax.

Medvedev, Abbas to discuss Palestinian-Israeli settlement - Russian President Dmitry Medvedev and the head of the Palestinian National Authority, Mahmoud Abbas, will meet on Tuesday for talks to discuss the current situation in the

Palestinian-Israeli settlement, including within the context of the developments in the Middle East and in North Africa, the Kremlin press service reports.

No Moscow meeting planned for Netanyahu and Abbas Israel to return keys to Jerusalem holy site to Russia Patriarch Kirill concerned over oppressions of Christians in the Middle East -

"We are deeply concerned that as recent military conflicts and frequent discrimination have forced many Christians including Maronites to leave their native land," the Patriarch said in his message to Beshara Al-Rai as the latter was elected Patriarch of the Maronite Catholic Church (Lebanon.)

Russian PM to visit Slovenia, Serbia - During his meeting with Slovenia's President  and  Prime Minister, Vladimir Putin will discuss the current state and the future of Russian-Slovenian cooperation in different spheres, including the realisation of the bilateral intergovernmental agreement on Slovenia's joining the South Stream project.

o Russian PM to Visit Slovenia, Serbia - On Tuesday, Mr. Putin will meet with Slovenian President Danilo Turk and Prime Minister Borut Pahor in the capital Ljubljana, to clear the final hurdles for the implementation of the South Stream pipeline project… On Wednesday, the Russian delegation led by Mr. Putin stops in Serbia's capital Belgrade. Serbia signed a major energy agreement with Russia in 2008, which also includes the takeover of the Serbian petrol company NIS by Gazprom.

o Putin to Discuss Slovenia Joining South Stream Japan picks Russia specialist as ambassador to Moscow

o Japan Appoints Chikahito Harada As New Envoy To Russia Russian rescuers return from quake-hit Japan

o Radiation situation in Russian Far East normal – EMERCOMo Russia reviews a power bridge to Japan - Russia has returned to

discussions about a Khabarovsk Region - Sakhalin - Japan power bridge, which implies laying an underwater cable, Interfax reported yesterday.

New IEA Chief Counts on Russian Contacts - Van der Hoeven, who is taking over from Japanese Nobuo Tanaka at the IEA on Sept. 1, said her experience in dealing with Russian government officials and Gazprom executives would affect her new work "in a very positive way."

Nuclear Plant Tours Offered - Kiriyenko said Sunday that ordinary people and journalists would be invited to observe tests at the country's nuclear power plants, Interfax reported.

Gali to host regular meeting within Geneva process - Utiashvili told media that the Russian and Abkhazian sides call for transferring Gali resident Merab Kolbaya detained by the Georgian side. He is accused of a series of terror acts in Georgia.

Russia's Medvedev rebukes Putin's Libya crusade jibe Prime Minister Vladimir Putin meets with top managers of BASF - Transcript of

the beginning of the meeting Russia to deploy permanent warships group in Indian Ocean to fight pirates Thai PM denies role in court ruling to extradite Bout to U.S. Mantra Rises in Sydney After Agreeing to Reduced Takeover Bid From Rosatom

o Uranium One and ARMZ strike deal to buy Mantra Emfesz CEO alleges concerning connection between former owner and Swedish

arbitration court counsel Russia to establish mining companies - KARACHI: Russia will soon establish a

coal mining company in Balochistan to take advantage of rich metal and mineral resources present in the country, according to Russia’s Ambassador to Pakistan Andrey Demidov.

Mina Corp Condemns Atambayev Statement in Moscow - Mina Corp strongly condemns the statement by Kyrgyz Prime Minister Almazbek Atambayev, made on Friday March 18 in Moscow during a meeting with Russian Prime Minister, Vladimir Putin, saying that the Kyrgyz government intends to seize control from Mina Corp of all jet fuel supplies to US forces in Kyrgyzstan. This is part of a continuing illegal campaign to expropriate Mina's business by the Kyrgyz authorities that came to power in April 2010.

New passenger train to link Moscow, Berlin and Paris Polish-Russian relations ‘bad’ says poll - Forty three percent of Poles describe

Polish-Russian relations are “bad”, according to a survey just released by CBOS public opinion research centre.

Russian military trains to protect Sochi Olympics Counter-terrorist operation under way in Dagestan's Kuli distric

o Special operations regime introduced in the Kuli region of Dagestan o Bailiff killed in Dagestan

Investigators dismiss "commercial" theory behind Domodedovo attack – source Islamisation and fear spread in Chechnya - GROZNY: The 28-year-old girl

refuses to give her name for fear of reprisals but her anxiety speaks volumes for the rapid march of Islamisation in the conflict-torn Russian region of Chechnya. By AFP

Moscow experts discuss link between the Circassian question and the Sochi Olympics

Russia’s Duma Delays Corruption Bill Vote Russian Man Probing Mother's Death In Detention Is Attacked Reuters PRESS DIGEST - Russia - March 22 RIA Russian Press at a Glance, Tuesday March 22, 2011 The Clash Over Libya - Russia’s Ambivalent Libya Policy Is Stuck between the

International Mainstream and Its Non-Interference Doctrine. By Tom Balmforth Russia Profile

Immobile, Ineffective, Illegal - The Demographic Crisis and Problems in the Job Market Will Become the Main Impediments to Economic Modernization. By Svetlana Kononova Special to Russia Profile

Russia! Magazine Presents the 10 Biggest Scandals on the Russian Art Market

National Economic Trends Longest Ruble Bond Since 2008 Signals Yield Jump: Russia Credit Government plans to sell 7.58% of Sberbank and 25% of Sovcomflot in 2011 Russian private equity fund: paperwork to be ready by June 1st Moscow's Financial Rank Low - By Howard Amos

Business, Energy or Environmental regulations or discussions Russia's Euroset says to proceed with London IPO UPDATE 1-Petropavlovsk ups reserve and resource estimates Surgutneftegas Reduces Stake in Ad Agency Video International South Korea’s Lotte Plans Moscow Theme Park, Kommersant Reports Russia's SUEK may sell 10-15 pct stake in IPO-paper Sberbank May Buy Anisimov’s 20% of Metalloinvest, Vedomosti Says Sberbank Confirms 4Q Net Profit More Than Quadruples Sberbank Extends Best Winning Streak Since November on Profits UPDATE 1-Ex-VTB exec seen as Bank of Moscow CEO candidate GM, AvtoVAZ to Boost Venture Capacity 28%, Vedomosti Reports Volkswagen asks Putin for amendments to new assembly regime - Will it

abandon GAZ? Russia's EuroSibEnergo has no plans to raise funds in 2011 MMC Norilsk Nickel provides update regarding swap of OGK-3 shares for shares

of Interrao Russia to Liberalize Placement of Company Shares Abroad Aeroflot boosts IFRS earnings 2.3-fold to $280 mln in 2010 - source (Part 2) Russian insurers braced for tougher regulation Russian insurance: potential for strong growth – but what’s the risk?

Activity in the Oil and Gas sector (including regulatory) Germany's BASF boosts Russian pipeline - Russia's bid to build a rival to a US-

backed gas pipeline to Europe received a major boost this week when the project was joined by the hydrocarbon subsidiary of the German powerhouse BASF.

Russia casts aside doubts over South Stream as Germany signs up - Some have expressed concern that Germany - which is a key member of the consortium building the sister Nord Stream pipeline - is only helping Russia in its strategy to exploit EU weakness by picking off individual countries to undermine EU energy policy. But BASF chief executive Juergen Hambrecht said his only concern was getting the final agreement decided by the end of the year.

Rosneft Slides on Lower Oil, Report Chevron May Abandon Project Black Sea JV between Rosneft and Chevron in doubt Potential partners for Rosneft - Rosneft may engage Indian oil companies in

Barents Sea offshore development. Alliance oil SPO to feature 5.8% of shares Alliance Oil Company's major shareholder to sell up to 5.8% in the form of SDRs Burgas-Alexandroupolis Pipeline to "hibernate" as Bulgaria balks at paying -

Bulgaria has failed once again to pay its dues to the joint venture for the construction of the Burgas-Alexandroupolis oil pipeline, according to Transneft Vice President Mikhail Barkov.

Competing Bills Muddy the Waters Over Oil Spills - Two competing bills are adding to the confusion around regulation of Russia's burgeoning offshore oil industry, to the frustration of both oil companies and environmentalists.

Gazprom Miller re-elected as Gazprom CEO for five years

Gazprom May Boost Exports - Gazprom said Monday that it was ready to boost supplies to Europe under a proposal by Prime Minister Vladimir Putin that would reroute Europe-bound liquefied gas to Japan.

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Full Text Articles

Basic Political Developments

March 22, 2011

Robert Gates: U.S. will very soon recede back into supportive role in Libyahttp://www.interfax.com/interview.asp?id=230430

U.S. Secretary of Defense Robert Gates during his visit to Russia has given an interview to Interfax in which he speaks about a scenario of the Libyan military operation and U.S. desire to build European missile defense system along with Russia.

Question: My first question will deal with the relationship between Russia and the United States that have changed greatly over the past 20 years. What do you think about cooperation between our countries in the world and problem points, for example Afghanistan?Answer: Actually, I’ve been dealing with Russia for so long that it seems to me that the first turning point in our relationship came in the early 1970-s at the time of the detente policy between the two states when we began to negotiate strategic arms for the first time. And then 20 years later with the end of the Cold War came a dramatic opportunity for improved relations. I would say that since the end of the Cold War there’ve been some periodic problems, but overall the direction of the relationship has been towards closer partnership, closer working together. I think that the progress has been marked, first of all, bilaterally by our ratification of the New START agreement and internationally by our cooperation together on UN Security Council resolutions with respect to both Korea and Iran.Q.: Next about the New START treaty. When will inspections of the Russian and U.S. strategic nuclear forces take place?A.: I’m sure. I think there is a bilateral meeting with respect to the implementation in the next month or so, but I would expect the implementation to begin as quickly as the two sides can organize it. I haven’t heard of any problems associated with the implementation I think that is just the matter of working out the details.Q.: Of course, I would like to ask you about the latest events in Libya. Can you explain what is the final purpose of the operation Odyssey Dawn and when one will be able to say that the operation is complete?A.: Well, I think the purpose of the operation is exactly the purpose that was described in the UN Security Council Resolution 1973 which was to establish the no-fly zone and prevent a humanitarian disaster, to prevent [Libyan leader Muammar] Gaddafi from

slaughtering his own people. I think we’ve made a lot of progress just in a couple of days towards accomplishing those two objectives.Q.: What is the role of the U.S. Army in this operation?A.: The U.S. agreed that it would use its air and naval forces and our special capabilities at the very beginning of this operation to suppress the Libyan air defenses, so that the air forces of other countries can actually implement the no-fly zone. So, while we had a major role in the first two or three days, I expect us very soon to recede back into a supportive role with other nations carrying the significant proportion of the burden to implement and enforce the no-fly zone. And the President has made very clear: the U.S. will not put any force in Libya, on Libyan soil.Q.: The last question about Libya. The U.S. has declared that it doesn’t aim to destroy Qaddafi’s regime, to kill Gaddafi. Does this mean that the U.S. can deal with him in the future?A.: I think that it’s pretty clear to everybody that Libya would be better off without Qaddafi, but that is a matter for the Libyans themselves to solve. I think given the opportunity and the absence of repression they may well do that. But I think this would be a mistake for us to set that as a goal of our military operation.Q.: Is the U.S. ready to create the European missile defense system along with Russia or we can speak only about Russia’s secondary participation in the missile system created by the U.S. and NATO? And is the U.S. ready to give legally binding assurances to Russia that the global missile system is not directed against Russia?A.: First of all the U.S. would far prefer to have Russia as a partner in the European missile defense. President Medvedev has made some suggestions about joint data centers and so on that I think have great promise and that I will be talking about during my visit.I think that first of all such an assurance would be difficult to get through our Congress. My favorite example of this is that the Senate’s just ratified defense train treaties with the UK and Australia, our two closest allies, and it took them five years to ratify those two treaties. I think that we need a response to the missile threat sooner than five years [] and I think that we can provide political assurances that would reassure Russia that no aspect of our missile defense is ever intended to be used against Russia.There’s another way I would put it is that the risk for Russian participation and partnership now is almost non-existent, and the potential long-term benefit is very large, and of course Russia can always do what is at Russia’s national interests.Q.: Russia has announced the deployment of new weapons, including S-400 systems, on the Kuril Islands and the Far East. Does it make the U.S. concerned and worried?A.: I think that obviously Japan is an alliance and treaty partner with the U.S., and anything that increases tension between Japan and Russia is a concern for us. We would like to see the two countries have strong, positive relationships and work with one another in terms of dealing with issues like this.Q.: Is it your last visit to Russia as defense secretary?A.: Possibly.

Medvedev, Gates to discuss missile defense in Moscowhttp://en.rian.ru/russia/20110322/163135093.html

01:10 22/03/2011

Russian President Dmitry Medvedev and U.S. Defense Secretary Robert Gates will discuss the issues of Russian-U.S. military and technical cooperation, including those related to missile defense, during their meeting in Moscow on Tuesday, the Kremlin has said.

"Russian-U.S. relations have reached a very high level, which is proved by the serious results of joint work in various spheres," a statement issued by the Russian presidential administration said.

"Besides signing and ratifying a new [strategic] arms reduction treaty, [the counties] managed to conclude bilateral negotiations on [Russia's accession to] the World Trade Organization (WTO) and launch a perspective cooperation in the hi-tech and innovation sphere; an agreement on cooperation in the peaceful use of nuclear energy has also come into force," the statement said.

Gates, who arrived in Russia on Monday and delivered a speech at a naval academy in St. Petersburg, will also hold talks with his Russian counterpart Anatoly Serdyukov on Tuesday. The visit is Gates' final trip to Russia as Pentagon chief as he is to retire in 2011, before the 2012 election campaign begins.

Missile defense is expected to become a major issue of discussion during the talks.

"Russia is ready to tackle the common tasks aimed at protecting the continent from possible missile threats together with its partners while sticking to a range of principal conditions, including the existence of real guarantees that the countries' anti-missile potentials will not be aimed at each other, as well as [guarantees of] equality and indivisibility of security," the Kremlin said.

Russia and NATO agreed to cooperate on the so called Euro missile defense system during the Russia-NATO Council summit in Lisbon in November 2010. NATO insists there should be two independent systems that exchange information, while Russia favors a joint system.

MOSCOW, March 22 (RIA Novosti)

Gates to meet with Russian president on Moscow visithttp://edition.cnn.com/2011/WORLD/europe/03/22/russia.gates.visit/

By Charley Keyes, CNN Senior National Security ProducerMarch 22, 2011 -- Updated 0554 GMT (1354 HKT)

St. Petersburg, Russia (CNN) -- U.S. Defense Secretary Robert Gates arrived in Moscow Tuesday while Russia's two most powerful leaders publicly argued over the U.S. and allied mission in Libya.

Gates is scheduled to hold meetings with Russian President Dimitri Medvedev and other top officials.

Not on the itinerary is Prime Minister Vladimir Putin, who a day earlier delivered a scorching critique of the attacks on Libya and the U.N. Resolution that authorized the United States and allies to launch the mission.

Putin, with politically loaded language, compared the resolution to a medieval appeal for a crusade. Under Medvedev, Russia abstained from the U.N. Vote, stopping short of a veto that Putin might have preferred.

Gates has stayed on the sidelines of the Medvedev-Putin clash. In public events Monday he avoided speaking about Libya, and told Russia's Interfax news agency that the United States only wants a limited role in the Libyan mission.

"While we have had a major role in the first two or three days, I expect us very soon to recede back into a supporting role with other nations carrying a significant proportion of the burden in -- implement and enforcing the no-fly zone," Gates said in the Interfax interview according to a transcript provided by the Defense Department. "And the president has made very clear the United States will not put any forces in Libya, on Libyan soil."

Gates has maintained that the fate of Libyan leader Muommar Gadhai is in the hands of his people.

" I think it's pretty clear to everybody that Libya would be better off without Gadhafi. But that is a matter for the Libyans themselves to decide," Gates told Interfax.

Russia, U.S. begin data exchange under New STARThttp://en.rian.ru/world/20110322/163137551.html06:38 22/03/2011

The United States and Russia have begun exchanging information on their nuclear stockpiles under a new U.S.-Russian arms reduction treaty, a senior U.S. official said.

"With entry into force of the Treaty, we have begun implementing an extensive regime of mutual monitoring and information exchange," Rose Gottemoeller, the Assistant Secretary of State for Arms Control, Verification and Compliance, said.

"Our Nuclear Risk Reduction Center transmitted the U.S. database to Russia over this past weekend. Such information includes data on the Parties' missiles, launchers, heavy bombers, and warheads subject to the Treaty," she added.

Under the new arms control deal, which replaces the expired START 1 agreement, the sides are to hold their first information exchange within 45 days after it came into force on February 5. Data exchanges are to be held every six months.

The right to begin conducting on-site inspections officially begins 60 days after the treaty's entry into force, which is April 6, Gottemoeller said. However, she said, the United States has already conducted an exhibition of the B-1B heavy bomber at Davis Monthan Air Force Base in Arizona on March 18 and an exhibition of Russia's newest intercontinental ballistic missile, the RS-24 Yars, is ongoing.

"On-site inspections are a vital complement to the data exchanged. They provide the "boots on the ground" presence to confirm the validity of data declarations, thus helping to verify compliance with Treaty obligations, as well as adding to our confidence and knowledge regarding Russian strategic forces located at those facilities," she said, adding "the same is true for Russia, since all Treaty measures are reciprocal."

The new treaty on strategic arms reduction, signed in April 2010 by the presidents of Russia and the United States, Dmitry Medvedev and Barack Obama, trims nuclear arsenals of both nations to a maximum of 1,550 nuclear warheads, down from the current ceiling of 2,200. The treaty was ratified by the U.S. Congress in December and by the Russian parliament in January.

WASHINGTON, March 22 (RIA Novosti)

U.S. welcomes 'mutually reinforcing' missile defense cooperation with Russiahttp://en.rian.ru/world/20110322/163135633.html

02:10 22/03/2011

The United States sees Russia as a full-fledged participant in the European missile defense system, Ellen Tauscher, the U.S. Under Secretary of State for Arms Control and International Security Affairs, has said.

"There are a few more key components to our approach that we are applying to our missile defense architecture in Europe," Tauscher said. "We want to protect all of Europe, not just some of Europe. We want our European allies and friends to buy into the European Phased Adaptive Approach; it is not something that we want to impose on them - that's not what friends do," she said.

"Finally, we have started discussing potential missile defense cooperation between the United States and Russia and NATO and Russia; we want Russia in the missile defense tent rather than outside that tent," she added.

U.S. Defense Secretary Robert Gates, who is currently on a visit to Russia, will hold talks with Russian President Dmitry Medvedev and Defense Minister Anatoly Serdyukov on Tuesday in Moscow. Missile defense is expected to become a major issue of discussions.

Russia and NATO agreed to cooperate on the so-called Euro missile defense system during the Russia-NATO Council summit in Lisbon in November 2010. NATO insists there should be two independent systems that exchange information, while Russia favors a joint system.

Russia has retained staunch opposition to the deployment of missile-defense systems near its borders, claiming they would be a security threat. NATO and the United States insist that the shield would defend NATO members against missiles from North Korea and Iran and would not be directed at Russia.

Tauscher said the United States and Russia would work together to ensure that "our missile defense systems are mutually reinforcing."

"Russia has assets it can bring to the table, like their early warning radars. There are assets that we can bring to the table as well. We are eager to begin a joint analysis, joint exercises, and sharing of early warning data that could form the basis for a cooperative missile defense system," she said.

Tauscher also dismissed speculations that Russia and the United States were holding "secret talks" and "cutting secret deals" on missile defense. "Nothing could be further from the truth," she said.

WASHINGTON, March 22 (RIA Novosti)

U.S.-Russian talks on tactical nuclear arms cuts will take time - U.S. officialhttp://en.rian.ru/world/20110322/163136512.html

04:19 22/03/2011

Reaching an agreement with Russia on cutting the tactical nuclear weapons stockpiles is likely to be a complicated process, Ellen Tauscher, the U.S. Under Secretary of State for Arms Control and International Security Affairs, has said.

"Moving missile defense from a negative to a positive factor in our relationship could facilitate cooperation in other areas as well, including talks on further reductions in

strategic, non-strategic and non-deployed nuclear weapons. But reaching any agreement will not be easy and it will take time," Tauscher said.

The remarks came on the eve of U.S. Defense Secretary Robert Gates' talks with Russian President Dmitry Medvedev and Defense Minister Anatoly Serdyukov in Moscow, during which they are expected to discuss various issues of Russian-U.S. military and technical cooperation.

When ratifying the new strategic arms reduction treaty with Moscow in December 2010, the U.S. Senate adopted a resolution obligating the government to start bilateral talks on cutting the TNW stockpiles - landmines, artillery shells and short-range missiles. Washington says Moscow has a larger number of these systems.

President Barack Obama said in a message to the Senate in February his country expects to hold talks with Russia on TNW within a year after the New START arms reduction deal came into force on February 5.

Russian Deputy Foreign Minister Sergei Ryabkov said in January that it is too early to discuss limiting TNW with the United States because Russia needs to see the way the U.S. fulfills its commitments under the New START.

Rose Gottemoeller, the U.S. Assistant Secretary of State for the Bureau of Arms Control, Verification and Compliance, said in mid-February that the Washington was ready to begin multilateral talks on tactical nuclear weapons reduction in Europe. U.S. officials will visit a number of countries in Central and Eastern Europe, including Ukraine, the Baltic States and Poland, in the near future to discuss the issue with the countries' authorities, she said.

WASHINGTON, March 22 (RIA Novosti)

Russia and the United States experienced excellent progress in military fieldhttp://en.rian.ru/valdai_op/20110322/163140282.html

11:16 22/03/2011

Andrew Kuchins

U.S.-Russia military to military relationship has been expanding in a number of areas, and certainly one important channel is the Bilateral Presidential Commission’s Working Group on Military Cooperation chaired by Admiral Mullen and General Makarov.

Valdaiclub.com   interview with Andrew Kuchins, director of the Russia and Eurasia Program at the Center for Strategic and International Studies in Washington, D.C.

Some experts are convinced that the partnership between Russia and the United States is possible only by practical cooperation in countering common challenges and threats. In what spheres of military cooperation significant progress, in your opinion, has been achieved?

In the security field, the principle of a Russia-U.S. partnership based on cooperation countering common challenges and threats is absolutely the right one. The key is identifying and agreeing on what we see as common challenges and threats and then developing and implementing concrete cooperative measures to address them.  Frankly, I think we are making considerable progress in this direction, although admittedly it has come in fits and starts over the past two decades as the Russia-US bilateral relationship has been fairly volatile. On the military side, we have experienced excellent progress in the past two years from the low point of the aftermath of the war in Georgia in August 2008 when nearly all cooperation was suspended. Probably the most significant area from the standpoint of Washington has been the expanded cooperation on the transit of supplies through and over Russia eventually to our military forces in Afghanistan.  But the military-military relationship has been expanding in a number of other areas, and certainly one important channel is the Bilateral Presidential Commission’s Working Group on Military Cooperation chaired by Admiral Mullen and General Makarov.

U.S. officials have recently stated the intentions to conclude an antimissile defense treaty with Russia in 2011. What are, in your opinion, the scenarios of creation joint Russia-U.S. missile defense shield in Europe? What forms of cooperation are possible between Russia and U.S. regarding this issue?

The United States and Russia are not seeking to conclude an antimissile defense treaty in 2011, rather, it is my understanding, that the two sides have established a working group coming out of the November 2011 NATO Lisbon summit that is tasked with exploring the possibility of developing cooperation through an integrated missile defense capabilities of both countries and NATO. I believe there is considerable potential in this field, and I think both Washington and Moscow are showing greater commitment than ever before to find ways to work together in this field.  The working group is supposed to report at the NATO June Ministerial meeting, and we will learn more then how progress is developing.

The new deal on the so-called reverse transit signed between Russia and the U.S. allows NATO to ship armored vehicles and other equipment from Afghanistan back to Europe through Central Asia and Russia. Will, in your opinion, the developing of cooperation between Russia and NATO in stabilizing the situation in Afghanistan significantly improve the Russia-NATO relations?  How would you assess the possibility of reset in relations between Russia and NATO modeled after Russia-U.S. process?

I am sure that cooperation between NATO and Russia over stabilizing Afghanistan, most strongly demonstrated in various transit agreements, has already significantly contributed

to improving NATO-Russia relations.  The ISAF mission in Afghanistan, and hopefully its eventual success, is the most important challenge for NATO now and will certainly have a major bearing on the future of the alliance.  Regarding a “reset” of relations between NATO and Russia to parallel the U.S.-Russia “reset,” I would argue this has already been achieved.  Obviously that does not mean that there are not and will not be significant differences between NATO and Russia and in the future (just as there are many differences at various times between NATO members).  But recall that after the Georgia War the NATO-Russia relationship was suspended — virtually put on ice, and compare that with the agreements reached in Lisbon in November.

22 March 2011, 10:13

No reasons to take Schneerson Library out of Russia – Shvydkoyhttp://www.interfax-religion.com/?act=news&div=8299

Moscow, March 22, Interfax - The Schneerson Library cannot be taken out to the United States from Russia, presidential envoy for international cultural cooperation Mikhail Shvydkoy told Interfax.

"The Schneerson collection is part of the Russian State Library's collection, which, in turn, is indivisible and cannot be subject to separation," he said.

"There are no reasons" for moving the collection. These archives have been in the Russian Federation's ownership all through the 20th century, and cannot be alienated or moved on a permanent basis," Shvydkoy said.

Pending the settlement of the Schneerson Library issue, no exhibits of Russian cultural values are possible in the United States, he also said.

"It is impossible to imagine a situation involving seizure of Russian cultural values, which is due to the fact, among other reasons, that special conditions must be created to keep them, which is difficult to do in places unfit for this. Therefore, we will not be able to send any of our exhibits to the United States pending solution of the problem," he said.

A Russian-American agreement is being drafted that would help protect Russian cultural values from third parties' claims, Shvydkoy said, adding, "The drat will be ready within a month, I think."

The Schneerson Library is a collection of old Jewish books and manuscripts, put together by rabbis of the Chabad Jewish community in the late 18th century in Belarus. It is one of the Jewish religious relics.

Part of the collection amassed by Lubavitcher Rebbe Yosef Yitzchok Schneerson, was nationalized by Bolsheviks in 1918 and ended up at the Russian State Library. The other part was taken out of the Soviet Union by Schneerson, who emigrated in the 1930s.

About 25,000 pages of manuscripts got into the hands of the Nazis, and were later seized by the Red Army and handed over to the Russian State Military Archive.

Lubavitchers (adherents of one of the Hasidic movements - IF) have sought the restitution of the Schneerson collection since the late 1980s. According to some reports, at the time Russia's first president Boris Yeltsin promised to James Baker, Secretary of State in the George Bush Sr. administration, that the holy documents will be returned to the Hasids.

On August 6, 2010, a federal judge in Washington, Royce Lamberth, ruled that the Hasids proved the legitimacy of their claims to the ancient Jewish books and manuscripts, which, in his definition, are kept at the Russian State Library and the Russian Military Archive illegally.

The Russian Foreign Ministry challenged the judgment.

Meanwhile, U.S. Ambassador to Russia John Beyrle has assured Russian officials that the U.S. court ruling will not lead to a seizure of Russian cultural values, taken out to the United States for an exhibition.

Medvedev, Abbas to discuss Palestinian-Israeli settlement

http://www.itar-tass.com/eng/level2.html?NewsID=16072420&PageNum=0

22.03.2011, 00.16

MOSCOW, March 21 (Itar-Tass) - Russian President Dmitry Medvedev and the head of the Palestinian National Authority, Mahmoud Abbas, will meet on Tuesday for talks to discuss the current situation in the Palestinian-Israeli settlement, including within the context of the developments in the Middle East and in North Africa, the Kremlin press service reports.

Mahmoud Abbas visits Russia at the invitation of President Medvedev. Russia actively participates in the work of the quartet of international mediators to promote the Middle East peace process and it calls for a better coordination of efforts by the international community in this area.

In this connection it is planned that the two men will discuss the possibility of an early resumption of Israeli-Palestinian negotiations on a generally recognized international legal basis and mandatory compliance with commitments by both parties.

The ultimate goal of this activity should be the termination of the 1967 occupation of Arab lands, the implementation of the fundamental rights of the Palestinian people and

the creation of an independent, sovereign and viable state living side by side in peace and security with Israel.

Particular attention is expected to be given to the theme of restoring intra-Palestinian consensus, needed for the success of the negotiating process on the way towards the establishment of Palestinian statehood.

It is planned that during the talks Medvedev and Abbas will review the current status of bilateral cooperation, an important segment of which is practical assistance to the Palestinians in solving their urgent task of building strong and effective institutions of government and improving the socio-economic situation in the Palestinian territories.

No Moscow meeting planned for Netanyahu and Abbas http://www.jpost.com/DiplomacyAndPolitics/Article.aspx?id=213241

By HERB KEINON  03/22/2011 07:40

Israel to officially transfer ownership of J’lem landmark to Russia before Netanyahu trip.

Both Prime Minister Binyamin Netanyahu and PA President Mahmoud Abbas are scheduled to be in Moscow at the same time later this week, but both Israeli and Russian officials say there is no plan for the two to meet there.

The Kremlin announced on Friday that Abbas would be in Russia from Tuesday to Thursday and was scheduled to meet Russian President Dmitry Medvedev on Tuesday.

Netanyahu is scheduled to leave for Moscow Wednesday evening, and to hold talks with Medvedev, Russian Prime Minister Vladimir Putin and Foreign Minister Sergei Lavrov on Thursday.

One Israeli official said Netanyahu was willing to meet Abbas anywhere, but that this was not the purpose of his visit to Moscow. He said the purpose was to discuss bilateral issues with the Russian leadership.

The Kremlin has a penchant for inviting Israeli and Palestinian leaders around the same time. Netanyahu last visited the Kremlin in February 2010, when he was preceded by both Abbas, who was there two weeks earlier, and Hamas leader Khaled Mashaal, who was there just a matter of days before Netanyahu. The timing of those visits led to speculation that Moscow was trying to create the impression that it was a major broker in the region and able to engage with all the parties to the conflict.

Medvedev visited Jericho via Jordan in January, but did not come to Jerusalem on an official visit because of a Foreign Ministry work stoppage at the time. Diplomatic

officials said Netanyahu’s visit this week was meant to make up for that lost visit.

Netanyahu’s trip comes just three weeks after Russia declared it was going ahead with plans to sell Syria the Yakhont anti-ship cruise missile, and this issue – as well as other security-related topics – is expected to figure prominently in the prime minister’s talks.

Before the prime minister’s departure, Israel is expected to officially hand over Sergei’s Courtyard in Jerusalem to Russian control. In 2008, before a visit by then-prime minister Ehud Olmert to Russia, the cabinet approved the transfer of ownership of the Czarist-era landmark in the center of the capital to the Russian government.

The building, which houses offices of the Agriculture Ministry and the Society for the Protection of Nature in Israel, was built in 1890 to accommodate Russian pilgrims visiting the Holy Land and was named after Tsar Alexander II’s son, Sergei Alexandrovich.

Israel acquired some 90 percent of the Russian Compound in 1964, paying the former Soviet Union $3.5 million. The purchase was dubbed the “Orange Deal” because Israel, lacking hard currency, paid the Russians in citrus fruit. Sergei’s Courtyard, however, was part of the remaining 10% not covered in the deal, and Putin made regaining the property a priority when he was Russia’s president.

Senior diplomatic officials denied reports that the Kremlin had told Netanyahu not to come to Moscow unless the property was officially transferred to Russia’s control.

“No requests were made by the Russians,” the official said, adding that the Prime Minister’s Office on its own wanted to make sure that all outstanding bilateral issues were cleared up before Netanyahu went to Moscow.

In a related development, Netanyahu asked Foreign Minister Avigdor Lieberman to accompany him on the trip, but Lieberman declined because he was scheduled to travel to Paris to meet new French Foreign Minister Alain Juppe.

Juppe said last week that while France would not unilaterally recognize a Palestinian state, the possibility of the entire European Union doing so “should be kept in mind.”

Israel to return keys to Jerusalem holy site to Russiahttp://rt.com/news/line/2011-03-22/#id597902:59 RT News line, March 22

Russia is set to reclaim Sergiev Metochion, a Christian Orthodox complex in East Jerusalem that was originally built by the Imperial Orthodox Palestine Society in 1891 to host Russian pilgrims visiting the Holy Land. The decision to return the complex was made in 2008, and now a symbolic key will be handed to the Russian ambassador to Israel on the eve of Prime Minister Benjamin Netanyahu’s visit to Moscow.

22 March 2011, 11:27

Patriarch Kirill concerned over oppressions of Christians in the Middle Easthttp://www.interfax-religion.com/?act=news&div=8300

Moscow, March 22, Interfax - Patriarch Kirill of Moscow and All Russia expressed his concerns over discrimination of Christians in the Middle East.

"We are deeply concerned that as recent military conflicts and frequent discrimination have forced many Christians including Maronites to leave their native land," the Patriarch said in his message to Beshara Al-Rai as the latter was elected Patriarch of the Maronite Catholic Church (Lebanon.)

The Patriarch stressed that the Russian Church that had been present in the Holy Land for several centuries and "always sequentially and firmly supported Christians living in long-suffering land of the Middle East.

He reminded that for many years the Russian Church had maintained friendly relations with the Maronite Patriarchate representing ancient Antioch tradition to which "many great Fathers of the Church venerated both Catholics and Orthodox" belonged.

"This circumstance appears essential in the prospect of developing Orthodox-Catholic dialogue as the Holy Tradition is the foundation that allows us reaching mutual understanding. Orthodox Church of St.Maron of Syria, especially venerated by the Maronite Church, has existed in Moscow since the 18th century and it proves that our Churches have had long-term relations," the message reads.

Russian PM to visit Slovenia, Serbiahttp://www.emg.rs/en/news/world/150517.html

22. March 2011. | 07:06

Source: Emg.rs

During his meeting with Slovenia's President  and  Prime Minister, Vladimir Putin will discuss the current state and the future of Russian-Slovenian cooperation in different spheres, including the realisation of the bilateral intergovernmental agreement on Slovenia's joining the South Stream project.

During his meeting with Slovenia's President Danilo Türk and talks with Prime Minister Borut Pahor, Prime Minister Vladimir Putin will discuss the current state and the future of Russian-Slovenian cooperation in different spheres, including the realisation of the

bilateral intergovernmental agreement on Slovenia's joining the South Stream project.

On March 23, 2011 Prime Minister Vladimir Putin is to visit the Republic of Serbia. During his visit to Belgrade, Prime Minister Vladimir Putin will meet with Serbia's President Boris Tadić and Prime Minister Mirko Cvetković to discuss the development of trade and economic cooperation, including the fuel and energy sector.

A number of Russian-Serbian agreements will be signed during the visit.

Russian PM to Visit Slovenia, Serbiahttp://www.turkishweekly.net/news/112949/russian-pm-to-visit-slovenia-serbia.html

Tuesday, 22 March 2011

Russian Prime Minister Vladimir Putin will visit Slovenia and Serbia this week for talks expected to focus on energy.

Both Serbia and Slovenia have agreed to let a gas pipeline from the Black Sea to western European destinations to run through their territory.

On Tuesday, Mr. Putin will meet with Slovenian President Danilo Turk and Prime Minister Borut Pahor in the capital Ljubljana, to clear the final hurdles for the implementation of the South Stream pipeline project.

The two sides are also expected to sign other economic cooperation projects.

On Wednesday, the Russian delegation led by Mr. Putin stops in Serbia's capital Belgrade. Serbia signed a major energy agreement with Russia in 2008, which also includes the takeover of the Serbian petrol company NIS by Gazprom.

Serbia considers Russia to be its main economic partner as well as a political ally.

The South Stream pipeline, to be built by Russia's Gazprom and Italy's ENI, will bypass Ukraine, which has been at the center of several gas price and payment disputes between the two eastern European neighbors.

The disputes have caused interruptions of Russian natural gas supplies to many European countries during the cold winter months.

Tuesday, 22 March 2011

Voice Of America

22.03.2011

Putin to Discuss Slovenia Joining South Streamhttp://www.oilandgaseurasia.com/news/p/0/news/10860

Russian Prime Minister Vladimir Putin will arrive in Slovenia today to discuss the possibilities for Moscow and Ljublana to cooperate in various industrial projects including Slovenia's participation in the South Stream pipeline project.

During his visit, the sides will sign an agreement between Gazprom and Slovenia's Geoplin plinovodi on setting up a joint venture to carry out the Slovenian segment of South Stream.

On Wednesday morning, Putin will travel on to Belgrade, ITAR-Tass reports.

Copyright 2011, Golos Rossii. All rights reserved.

Japan picks Russia specialist as ambassador to Moscowhttp://rt.com/news/line/2011-03-22/#id5979RT News line, March 22

05:19

Experienced diplomat Chikahito Harada, 59, a specialist in Russian philology and former head of the Japanese Foreign Ministry’s Russia division, has been named the new Japanese ambassador to Russia. The previous ambassador, Masaharu Kono, was blamed for worsening relations with Russia, which led to demonstrative visits by Russia’s top officials - including President Dmitry Medvedev - to the Kuril Islands bordering Japan, four of which Tokyo calls its “northern territories.”

Japan Appoints Chikahito Harada As New Envoy To Russia

http://www.bernama.com/bernama/v5/newsworld.php?id=572750

TOKYO, March 22 (Bernama) -- Japan appointed Chikahito Harada as ambassador to Russia on Tuesday to replace Masaharu Kono, who has drawn flak in the government for failing to secure information prior to Russian President Dmitry Medvedev's visit last

November to an island Japan claims, the Russian news agency Itar-Tass reported.

Harada, 59, has been ambassador to the Czech Republic since September 2008 after serving as head of the Foreign Ministry's European Affairs Bureau, which covers diplomacy with Russia.

He graduated from Tokyo University and began working at the Japanese Foreign Ministry in 1974, heading at different moments the ministry's Russian and European bureaus.

Meanwhile, Kono, 62, who has been ambassador to Russia since February 2009, was switched to ambassador to Italy in a virtual ouster, according to the appointments endorsed by the Cabinet in the morning, effective the same day.

-- BERNAMA

Russian rescuers return from quake-hit Japanhttp://en.rian.ru/russia/20110322/163140021.html11:04 22/03/2011

The first group of 50 Russian rescuers involved in search efforts in quake- and tsunami-struck Japan has returned to Russia, an Emergencies Ministry Far East spokesman said on Tuesday.

More than 160 Russian rescuers were working in Japan, tackling the consequences of the 9.0 - magnitude earthquake and tsunami that hit the country on March 11.The disasters triggered a number of explosions at the Fukushima Nuclear Power Plant. The tremor knocked out cooling systems at several reactors, leading to a partial meltdown of fuel rods inside them and raising fears of massive nuclear contamination.

"The rescuers are returning to Khabarovsk [Russia's Far East] because they have completely accomplished their tasks in Japan," the spokesman said, adding that as the situation was getting better, the rescuers were returning.

Russian teams worked in the worst damaged Japanese cities of Sendai and Niigata.

The official death toll from the disaster has risen to 9,000, with more than 12,000 people missing, Kyodo reported earlier on Tuesday.

MOSCOW, March 22 (RIA Novosti)

Radiation situation in Russian Far East normal – EMERCOM

http://www.itar-tass.com/eng/level2.html?NewsID=16072757&PageNum=0

22.03.2011, 06.19

KHABAROVSK, March 22 (Itar-Tass) - Specialists continue monitoring the radiation situation in Russia’s Far East round the clock. The situation in the region is normal, the regional centre of the Russian Ministry for Emergency Situations reports.

A total of 610 stationary and mobile posts keep monitoring radiation levels. The admissible level of radiation has not been exceeded at any of them, the deputy chief of the Far Eastern regional centre, Igor Demchishin, said. “The radiation background is within the norm in all regions of the Far Eastern Federal District,” centre’s sources say.

“There is no threat to the health and life of the population and there is either no pollution of the territory of Russia’s Far East,” EMERCOM specialists say. Experts don’t forecast the worsening of the situation in connection with the accident at the Fukushima nuclear power plant in Japan.

Russia reviews a power bridge to Japan

http://www.bne.eu/dispatch_text14525

Troika DialogMarch 22, 2011

Russia has returned to discussions about a Khabarovsk Region - Sakhalin - Japan power bridge, which implies laying an underwater cable, Interfax reported yesterday. This follows the damage that Japan has experienced as a result of the earthquake and tsunami. Eastern Energy Systems (EES) CEO Ivan Blagodyr presented the project during a meeting in which Prime Minister Vladimir Putin participated, the company's press service stated. The idea was voiced by Deputy Prime Minister Igor Sechin the day after the March 11 disaster, and he estimated the possible supply volumes at 6 GW and said it would take two years to lay the underwater cable. Far East Federal District Ambassador of the Russian President Viktor Ishaev yesterday estimated the project's cost at R186 bln (circa $6.5 bln) and said that the plan is to finance it via budget funds (50%), debt (30%) and company funds (20%). The project is based on coal•fired generation and coal reserves in Khabarovsk and Sakhalin regions, he explained. The project includes construction of two coal•fired power plants (1 GW each, one in Khabarovsk Region and one on Sakhalin) and a direct•current cable to Sakhalin and Japan. Construction of the power plant should be completed in 2017 and the export price is estimated at $160/MWh, according to Kommersant. There is a deficit of electricity in Japan at present, and the Japanese side could invest in its production in the Far East and receive a ready product,

Ishaev added. A total of 12 GW has reportedly been decommissioned following accidents at nuclear power plants in Japan.

Japan's position on this potential project is unclear. It is also unclear how budget funds would be injected into the project. If via a new share issue of EES, it could be positive for the stock. By Russian law, a new share issue price cannot be below par value, which currently stands at R0.50 per share, implying 53% upside from yesterday's close. The par value can be changed, though. The budget fund volume is circa $3 bln, versus the current market cap of $0.5 bln for EES. It is unclear whether InterRAO UES could participate in the project as well, potentially as an export agent.

The total capex is very substantial, and so is the R37 bln (20% of total) capex attributable to EES. For comparison, EES' current investment program implies construction of 541 MW of new capacity. The 2 GW would add 23% to the company's current installed capacity.

On a separate note, the government is discussing the idea of contributing EES to the charter capital of RusHydro, but the timeline is unclear, Kommersant related to two unnamed sources. The impact would depend on the terms, but if true, it could be positive for EES, trading at a circa 50% discount to its market SOTP now.

Alexander Kotikov

New IEA Chief Counts on Russian Contacts http://www.themoscowtimes.com/news/article/new-iea-chief-counts-on-russian-contacts/433445.html

22 March 2011By Anatoly Medetsky

One of Maria van der Hoeven's favorite souvenirs —  a tablecloth — is from Russia.

It came as a gift from First Deputy Prime Minister Viktor Zubkov during her multiple visits to the country as the Dutch economic affairs minister.

Now preparing to be the next executive director of the International Energy Agency, she recalled that the cloth stood out from the usual baubles officials receive on international trips.

"It was so special because it showed me that the one who gave it to me … knew I would like it very much," she said in an interview by phone from the Netherlands. "And I liked it very much."

Van der Hoeven could well be the IEA executive director with the most first-hand knowledge of Russia — a fact that could prove conducive to a better understanding in the group's interaction with the world's biggest energy exporter. And seeking closer ties with non-member countries like Russia is a goal that she identified as a key challenge for the IEA, whose focus includes global energy dialogue and research.

Van der Hoeven, who is taking over from Japanese Nobuo Tanaka at the IEA on Sept. 1, said her experience in dealing with Russian government officials and Gazprom executives would affect her new work "in a very positive way."

"Contacts with Russia, as part of an outreach program, are very important for energy security," she said. "I think it's very wise to continue these contacts, to deepen them, to intensify them and see in what way these contacts can really lead to a win-win situation."

Her most frequent Russian counterpart in Russia and the Netherlands was Zubkov, but she also met Energy Minister Sergei Shmatko, Gazprom chief executive Alexei Miller and his deputy Alexander Medvedev.

"If you really want to do business with Russia … it's really very important that you invest in contacts," she said.

They built good interpersonal relations, van der Hoeven added.

"I remember them warmly. If you don't beat about the bushes, if the things you show are the things you are, it leads to trust and confidence," she said. "I think this is what happened."

Her most recent visit was to attend the International Economic Forum in St. Petersburg in June. In her presence, Gazprom and Dutch natural gas transportation company Gasunie signed a memorandum of understanding on strategic cooperation.

Gasunie chief Marcel Kramer has since taken a job to lead the South Stream pipeline project, a joint effort between Gazprom and Italy's Eni.

Van der Hoeven also traveled to Yamal in May to look at Gazprom operations in the frozen Arctic and attend the signing of a cooperation agreement between the company and the Project Delta Group, a collection of Dutch firms — including Shell — that are interested in helping Gazprom develop new fields in the area.

She earlier attended the ceremony for the start of construction of Nord Stream near Vyborg in April. Gasunie is a shareholder in the Gazprom-led project to lay a pipeline to carry Russian gas to Europe across the Baltic Sea.

In addition, she visited Sakhalin and, of course, Moscow.

Van der Hoeven diplomatically said in the interview that South Stream, the planned natural gas pipeline under the Black Sea from Russia to Bulgaria and overland to southern Europe, would be a useful additional route for Russian supplies — a stance largely consistent with what the European Union leaders say, although they usually add that the project isn't a priority for the bloc.

"The capacity of pipelines must be more than it is now," van der Hoeven said, noting that Europe also has interest in Nabucco, which would deliver gas from around the Caspian Sea, as an alternative to Russian supplies.

Speaking about Russia's efforts to step up cooperation of the world's major gas producers — grouped into the Gas Exporting Countries Forum —she warned about any moves toward price-fixing on the market. The Netherlands is an observer in the organization, chaired by a Russian, which also seeks dialogue with customers.

"One of the things we are very keen about is that this group doesn't turn into a kind of cartel that can be compared with OPEC," she said. "Contacts between producers and customers must lead to transparency in pricing."

She declined comment on the EU's third energy package that requires oil and gas producers to sell their pipelines, a measure that Prime Minister Vladimir Putin and Gazprom vehemently oppose. Van der Hoeven, who was elected as the next IEA executive director earlier this month, said she would make her opinion public only after she assumed office.

"It's a very political question," she said.

Nuclear Plant Tours Offered http://www.themoscowtimes.com/news/article/nuclear-plant-tours-offered/433481.html

22 March 2011The Moscow Times

Ordinary people may get the chance to inspect safety at Russia's nuclear power stations, Rosatom chief Sergei Kiriyenko said, offering assurances about the safety of nuclear power following the accident at Japan's Fukushima plant.

Kiriyenko said Sunday that ordinary people and journalists would be invited to observe tests at the country's nuclear power plants, Interfax reported.

Gali to host regular meeting within Geneva processhttp://en.trend.az/news/politics/1849384.html

22.03.2011 11:56 

Georgia, Tbilisi, March 22 / Trend N. Kirtskhalia /

The next meeting will be held in the village of Chuburkhinji in the Gali region of Abkhazia today.It will be held within the Geneva Process to prevent tensions in the South Caucasus, the Georgian Interior Ministry told Trend.

The Georgian delegation will be led by Chief of the Analysis and Information Department under the Interior Ministry Shota Utiashvili, the Interior Ministry told Trend.

The Georgian, Russian, and Abkhazian sides, as well as UN and EU representatives, will attend the meeting.

Utiashvili told media that the Russian and Abkhazian sides call for transferring Gali resident Merab Kolbaya detained by the Georgian side. He is accused of a series of terror acts in Georgia.

Russia's Medvedev rebukes Putin's Libya crusade jibe

http://in.reuters.com/article/2011/03/21/idINIndia-55749420110321?pageNumber=2

By Alexei Anishchuk

GORKI, Russia | Tue Mar 22, 2011 2:22am IST

GORKI, Russia (Reuters) - President Dmitry Medvedev appeared to rebuke Vladimir Putin for comparing Western calls for action on Libya with the crusades on Monday, in the sharpest public difference yet between Russia's ruling 'tandem' ahead of 2012 elections.

Putin, Prime Minister and broadly regarded as the most powerful man in Russia, told workers at a missile factory that a U.N. Security Council resolution authorising use of force against Libyan leader Muammar Gaddafi "resembles medieval calls for crusades."

Shortly afterwards, Medvedev said the use of such terms was unacceptable and could stir up more violence.

Medvedev did not mention Putin by name, but the comments amounted to his sharpest ever public criticism of his mentor and raised concerns of discord between the two leaders ahead of the 2012 presidential election.

"I think we all need to be careful in our evaluations. In no way is it acceptable to use expressions that in essence lead to a clash of civilisations, such as crusades and so forth -- this is unacceptable," Medvedev told the Kremlin pool of reporters.

"Otherwise everything may end up far worse," said Medvedev, dressed in a leather bomber jacket emblazoned with a golden double-headed eagle and the title "Supreme Commander in Chief of the Russian Armed Forces".

Unless Medvedev made a gaffe by inadvertently criticising his mentor, such a public rebuke indicates a rift between Russia's two leaders over Libya on the day U.S. Defence Secretary Robert Gates began a visit to Russia.

"I dislike all this speculation about a Putin-Medvedev rift inside the tandem," said Fyodor Lukyanov, editor-in-chief of journal Russia in Global Affairs. "But this time it seems like they have a really serious difference in positions."

When asked who Medvedev had in mind, his spokeswoman Natalya Timakova said: "He meant Gaddafi and everyone who uses such expressions."

Gaddafi has called the coalition led by the United States, Britain and France a "crusader alliance". Putin's spokesman could not be immediately reached for comment.

RUSSIA'S RULING TANDEM

Medvedev's specially convened eight-minute briefing on Libya with reporters at his Gorki residence outside Moscow appeared to have been calculated to send a clear message that he is Russia's top decision maker on foreign policy.

Medvedev's criticism also marks the first major public split over policy since Putin tapped Medvedev as his successor when a limit of two consecutive terms kept him out of the 2008 presidential race.

But the two leaders differed on much more than tone.

Medvedev defended his order to abstain from the vote on the U.N. resolution which Putin vehemently criticised. He also steered clear of chiding the United States, while Putin lambasted Washington.

"The resolution is defective and flawed. It allows everything," Putin told workers at a ballistic missile factory in Votkinsk in central Russia. "It resembles medieval calls for crusades.

Medvedev defended his decision not to use Russia's veto.

"We did not use it for one simple reason: because I do not consider this resolution wrong. Moreover, on the whole I believe this resolution reflects our understanding of what is going on in Libya as well, but not in every way."

The 45-year-old Kremlin chief's comments were widely reported on state television. Putin's crusade comment was quietly dropped from some state television news bulletins after Medvedev's criticism.

Putin, in some of his harshest criticism of the United States since President Barack Obama began a campaign to improve ties, compared the Libya intervention with the invasion of Iraq under President George W. Bush and said it showed Russia was right to spend billions to bolster its military.

Medvedev did not mention the United States and stressed the international nature of diplomatic efforts over Libya.

"We did not use our veto... so to be flapping our wings and saying we did not know what we were doing would be wrong. We did this consciously," he said. "I gave the instructions to the Foreign Ministry, and they were carried out."

(Additional reporting by Gleb Bryanski in Votkinsk and Alissa de Carbonnel in Moscow; Writing by Guy Faulconbridge and Steve Gutterman; Editing by Ralph Boulton)

21 march 21:45

Prime Minister Vladimir Putin meets with top managers of BASF

http://premier.gov.ru/eng/events/news/14549/

Mr Putin described BASF as one of the principal investors in the Russian economy, and noted its decision to participate in the South Stream project in addition to Nord Stream.

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Hambrecht, Mr Voscherau, ladies and gentlemen,

I am delighted to see you in Moscow. Your company is well known in Russia. The company began working in Russia in 1874, if I am not mistaken. There were long breaks

in our partnership for obvious reasons, but now BASF is very active in Russia and is one of the most serious investors in its economy. I daresay it is one of our principal investors.

You work with Gazprom, LUKoil and other leading Russian companies, and take part in major projects in the regions. The quality of BASF's cooperation with its Russian partners is excellent, up to asset exchanges, and I consider it very important.

You are involved in Nord Stream, and I am glad to see that you find it expedient to participate in South Stream, as well. I am also glad to note that the German leadership supports your participation in South Stream – I mean, among others, this is the stance of German Chancellor Angela Merkel.

Juergen Hambrecht (as translated): Mr Prime Minister, I would like to begin with an expression of heartfelt gratitude for the opportunity to meet with you tonight. We have every reason to celebrate: we are joining the South Stream project. I had enough time to think it all over in the plane today, and I counted our past, present and future investments in Russia and other European countries – and I saw that the figure approached 20 billion euros.

BASF partnership with Gazprom is highly specific not only due to our personal contacts, though they also matter, but also due to our cooperation at every stage – we cooperate in natural gas exploration, mining, transportation and distribution in Russia and Germany alike.

We have a good partnership, which rests on mutual respect. It is also important that both parties are doing all they can for the project, and that they dedicate their best facilities and personnel to it. That is why I am especially pleased today to sign the documents for this project. This is only the beginning – a memorandum of understanding.

Now is the time to work diligently and quickly to sign the relevant detailed agreements. But then, we always work at a good pace, and I have the highest expectations.

* * *

Gazprom and BASF signed a memorandum of understanding on the South Stream project in the presence of Prime Minister Vladimir Putin.

After the signing ceremony, Mr Putin said to those in attendance:

"I would like to congratulate the participants of today's event. This is a significant event in light of what is happening in international energy markets. It is a sign of stability. I wish success to everyone involved in the project. Thank you."

11:42

Russia to deploy permanent warships group in Indian Ocean to fight pirates - source (Part 2)

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

Thai PM denies role in court ruling to extradite Bout to U.S.

http://en.rian.ru/world/20110322/163140198.html

11:12 22/03/2011

Thailand's prime minister, Abhisit Wechachiwa, said on Tuesday that neither he nor his Cabinet made the decision to extradite Russia's alleged arms dealer Viktor Bout to the United States.

Bout, an ex-Soviet military officer dubbed the Merchant of Death by western press, was arrested in Thailand in March 2008 and extradited to the United States on November 16 last year. Thai media reported that it was the decision of Wechachiwa and the Cabinet to hand the Russian over to the U.S. authorities.

"I did not make the decision and there was no order from the Cabinet concerning Bout's transfer to the United States. We were notified about it by the Justice Ministry and the Prosecutor General of Thailand," the prime minister said at his annual meeting with foreign journalists.

Bout, 44, is currently awaiting trial on charges including conspiring to supply arms to a Colombian terrorist group, conspiracy to kill U.S. nationals, and several other charges, including money laundering. He spent more than two and half years behind bars in Thailand waiting for a decision on his extradition after he was arrested during a sting operation led by U.S. agents.

He denies all charges filed against him. He could face from 25 years to life in prison if found guilty under U.S. laws.

BANGKOK, March 22 (RIA Novosti)

Mantra Rises in Sydney After Agreeing to Reduced Takeover Bid From Rosatomhttp://www.bloomberg.com/news/2011-03-21/rosatom-cuts-takeover-bid-for-mantra-by-12-following-japan-nuclear-crisis.html

By Colin McClelland and James Paton - Mar 22, 2011 2:36 AM GMT+0100

Mantra advanced as much as 28 percent to A$6.75 and was at A$6.70 at 11:48 a.m. local time, set for the largest increase since October 2006. The benchmark S&P/ASX 200 Index was 0.3 percent higher.

Rosatom’s ARMZ Uranium Holding Co. cut its offer for Mantra by 12 percent to A$1.02 billion ($1.02 billion) because of Japan’s atomic crisis. ARMZ will pay A$6.87 a share and Mantra investors will also get a dividend of 15 Australian cents per share, Perth-based Mantra said today in a statement.

ARMZ agreed on Dec. 15 to pay A$8 a share. It said last week the terms of that accord couldn’t be met because Tokyo Electric Power Co.’s struggle to control damaged reactors at the Fukushima Dai-Ichi power station was “likely to have a material adverse effect” on Mantra. The Australian company is developing the Mkuju River uranium project in Tanzania.

Mantra agreed to the revised transaction after considering “all available options” and advice from its financial and legal advisers, it said in the statement.

Uranium One Inc. (UUU), a Vancouver-based producer of the nuclear fuel, said in a separate statement the call option allowing it to acquire Mantra from ARMZ for the same price the Russian company will pay can now be extended to two years from one year provided Uranium One partially exercises the option.

Artyom Gorbachev, a spokesman for ARMZ in Moscow, declined to comment.

To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

Uranium One and ARMZ strike deal to buy Mantrahttp://www.calgaryherald.com/Uranium+ARMZ+strike+deal+Mantra/4481336/story.html

Deal of the Day Financial Post March 21, 2011

Uranium One Inc. and Russian uranium giant ARMZ have struck a new deal to buy Mantra Resources Ltd. after ARMZ backed out of the last proposal.

The new bid for Mantra, which owns a uranium project in Tanzania, is worth $7.02 Australian a share, down from the prior offer of $8.00.

ARMZ backed away from the original bid last week, after uranium equities melted down in the wake of the Japanese nuclear crisis.

Under the terms of the original transaction, ARMZ would buy Mantra and Canadian miner Uranium One would have a 12-month option to buy it from ARMZ for the same price. The new agreement extends Uranium One's option to 24 months, provided that Uranium One buys $150 million US of Mantra shares (about 15 per cent of the total) from ARMZ in a shorter time frame.

"The amended put/call structure maintains our ability to acquire a worldclass uranium development project at a lower cost while providing us with additional flexibility to exercise the option," Uranium One chief executive Chris Sattler said in a statement.

ARMZ bought a controlling stake in Uranium One last year, and the two companies pledged to work together on transactions like this.

Emfesz CEO alleges concerning connection between former owner and Swedish arbitration court counselhttp://bbjonline.hu/business/emfesz-ceo-alleges-concerning-connection-between-former-owner-and-swedish-arbitration-court-counsel_56719

MTI – Econews

Tuesday 08:45, March 22nd, 2011

Hungarian gas trader Emfesz will not pay its former parent company the more than $527 million ordered by a Swedish arbitration court because of a concerning connection between the company's owner, Ukrainian businessman Dmytro Firtash, and the court's chief counsel, Emfesz CEO István Góczi said in Tuesday's issue of daily Népszabadság.

Firtash owes Emfesz about just as much as the court ordered it to pay RosUkrEnergo, Góczi said. The decision must still be confirmed in a civil court, he added.

Góczi said Emfesz has about HUF 100 billion in receivables.

Emfesz was ordered to pay RosUkrEnergo $527.3 million plus interest by an arbitration court in Stockholm, Russian business daily Vedomosti reported on Monday. The decision must next be confirmed by a court in Hungary.

Emfesz will appeal the decision in Sweden and in Hungary, Góczi told Vedmosti.

RosUkrEnergo is a joint venture established earlier by Russia's Gazprom and Firtash to sell Russian gas in Europe. The company was cut out of the picture in 2009, after Kiev and Moscow reached an agreement that removed the middleman from sales of Russian gas delivered through Ukraine.

The deal left Emfesz without its supplier, but the company still managed to take delivery of 350 million cubic meters of gas between January and April of 2009.

Góczi, availing of an earlier authorisation, later sold Emfesz to Rosgaz, a Russian-owned company registered in Switzerland, for a token price of $1.

Russia to establish mining companieshttp://tribune.com.pk/story/136061/russia-to-establish-mining-companies/

By Mobin NasirPublished: March 22, 2011

KARACHI: Russia will soon establish a coal mining company in Balochistan to take advantage of rich metal and mineral resources present in the country, according to Russia’s Ambassador to Pakistan Andrey Demidov.

Speaking to The Express Tribune during a visit to the Karachi Stock Exchange (KSE) on Monday, Demidov also disclosed that a similar company will be established in Sindh, as his country was keen to invest in mining for metals and minerals in Pakistan.

“The Russian government has sent several letters to the Government of Pakistan to express interest in Pakistan Steel Mills, but has received no positive response in this regard so far,“ he asserted.

Elaborating on his country’s proposition, Demidov said, “We can assist in upgrading the steel mill to make its processes more efficient and state-of-the-art.“

Russia’s private sector and government appear to be ndum of understanding (MoU) will be signed by the Karachi Stock Exchange and the Moscow Stock Exchange in coming days to enhance cooperation between the two bourses,“ revealed KSE Managing Director Haroon Askari.

He also revealed that a request has been sent to the Moscow Stock Exchange to allow a roadshow for Pakistani businesses. “We intend to conduct a roadshow where some of the most prominent listed com panies of Pakistan can ac company representative of our stock exchanges t Russia,“ said Askari.

He added that this woul help educate prospectiv investors in Russia abou available investment av enues and also familiaris them with relevant laws an regulations.

“Hopefully, this can hel improve the quantum o investment from Russia as roadshows in the Unite States have sparked addi tional interest from there,“ he said.s Speaking to the media, o the Russian ambassador revealed that a delegation d of businessmen from his e country would visit Pakistan t soon. “The delegation will meet representatives of e the Federation of Pakistan d Chambers of Commerce and Industry to discuss avenues p for investment and enf hance bilateral trade,“ said , Demidov.d Stressing the need for building trade ties between the two countries, he said that Russia was pursuing friendly relations and enhanced cooperation in trade within the region. He expressed hope that Pakistan would respond favourably to the offer for renovating the country’s steel mill.

Although he did not reveal specific details, Demidov also said that Russian companies were considering taking stakes in the country’s reserves of oil and natural gas for exploration and production.

Mina Corp Condemns Atambayev Statement in Moscowhttp://www.prnewswire.com/news-releases/mina-corp-condemns-atambayev-statement-in-moscow-118380014.html

DUBAI, UAE, March 21, 2011 /PRNewswire/ -- Mina Corp strongly condemns the statement by Kyrgyz Prime Minister Almazbek Atambayev, made on Friday March 18 in Moscow during a meeting with Russian Prime Minister, Vladimir Putin, saying that the Kyrgyz government intends to seize control from Mina Corp of all jet fuel supplies to US forces in Kyrgyzstan. This is part of a continuing illegal campaign to expropriate Mina's business by the Kyrgyz authorities that came to power in April 2010.

The pretext for this latest effort to raid the company is the fabrication cited many times by Kyrgyz officials in recent months that Mina Corp was "backed" by Maksim Bakiyev, son of the former President of the Kyrgyz Republic. The US Congress conducted a thorough eight-month investigation into this allegation by the Kyrgyz authorities and concluded that there was no credible evidence to support it.

Commenting on Prime Minister Atambayev's statement, Dean Peroff of Amsterdam & Peroff, Mina Corp's international legal counsel said. "The Prime Minister is apparently not content with his government's deal with the US to install a Kyrgyz/Russian state-owned joint venture that will take over up to 50% of Mina's contract with the US Department of Defense. Now they want it all. Mina continues to be the focus of a state-sponsored corporate raid to force it out of business in Kyrgyzstan. This type of attack makes heavy use of disinformation and "black PR" to discredit a target company."

"Prime Minister Atambayev's latest statement is part of an ongoing campaign of illegal harassment and threats against Mina Corp," said William Burck of Weil, Gotshal & Manges LLP, Mina Corp's Washington D.C.-based legal counsel. "The Kyrgyz government is in breach of its legal commitments to protect foreign investment from

expropriation and refrain from interfering with US contractors supplying the Manas Transit Center. There are many legal avenues at the international level and in the US to hold the government accountable for this abuse of power. Mina Corp intends to vigorously pursue all of them."

"The Kyrgyz government tried and failed to mislead the US government into believing that Maxim Bakiyev was behind Mina Corp," said Dean Peroff. "Now the Prime Minister has taken the disinformation campaign from Washington to Moscow."

The state-owned joint venture model that Prime Minister Atambayev outlined to Prime Minister Putin would take over 100% of jet fuel supplies to the US military at Manas using only Russian sources. "The Kyrgyz government wants to make the Department of Defense entirely dependent on a Kyrgyz state company for meeting its jet fuel needs at Manas", said William Burck. "The US government has always insisted on diversity of fuel sources so US troops are not dependent on obtaining fuel from a single country or region. By threatening to put Mina out of business in Kyrgyzstan, Prime Minister Atambayev is on a collision course with US policy."

Note to editors: Mina Corp is part of an international group of companies headquartered in Dubai with trading operations on several continents. Mina has been a supplier of jet fuel to US forces at Manas since 2007. The company was awarded its latest contract to supply jet fuel to the Manas Transit Center in November 2010 after a full and open competition.

SOURCE Mina Corp

New passenger train to link Moscow, Berlin and Paris http://english.ruvr.ru/2011/03/22/47770912.html

Mar 22, 2011 03:03 Moscow Time

A new passenger train shall be introduced by Russia’s Railways, to link Moscow, Berlin and Paris.

The regular train connection between Moscow and Nice, initiated last year, has already proven its relevance. The transport demand is stably high - at peak periods up to 90%  - report the Russian railways.

As for the Moscow-Paris route, at present there is only one through-train connecting the Russian and French capitals.  

The exact date when the new train connection will be operational is not yet revealed.

Polish-Russian relations ‘bad’ says pollhttp://www.thenews.pl/international/artykul151729_polish-russian-relations-bad-says-poll.html

22.03.2011 08:44

Forty three percent of Poles describe Polish-Russian relations are “bad”, according to a survey just released by CBOS public opinion research centre.

Twelve percent of those polled say relations between Warsaw and Moscow are good and just over 40 percent said they are moderate.

The CBOS pollsters observe in their latest report that opinions on the state of Russian-Polish relations have returned to levels before April 2010, which saw the Polish presidential plane crash in Smolensk, western Russia killing Lech Kaczynski and 05 others including the First Lady Maria.

Sixty two percent of Poles (7 percentage points less than last September) are convinced that friendly relations with Russia are possible; 32 percent (a rise by 10 percentage points) are sceptical that they can ever be normalised.

Fifty four percent of those interviewed by CBOS blame both Russia and Poland for the Smolensk air crash, 19 percent put the blame on Poland and 17 percent on Russia.

Over 70 percent of Poles give Russia bad marks for the way it has investigated the Smolensk catastrophe. (kk)

Russian military trains to protect Sochi Olympicshttp://rt.com/news/line/2011-03-22/#id5979RT News line, March 22

04:03

On March 22, Russia’s Black Sea fleet and Southern Command will conduct a three-day command-post rehearsal for the task group that has been ordered to back up law enforcement’s security efforts during the 2014 Sochi Winter Olympics.

09:27Counter-terrorist operation under way in Dagestan's Kuli distric

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

GOOGLE TRANSLATION

Special operations regime introduced in the Kuli region of Dagestan

http://www.itar-tass.com/level2.html?NewsID=16072941&PageNum=0

22.03.2011, 08.52 MAKHACHKALA, March 22. Itar-Tass. In the village of Kani Kuli region of Dagestan today at 07:00 MSK regime introduced counter-terrorism operations. This was reported in the Information Center of the National Anti-Terrorist Committee / NAC. According to NAC, in a private house blocked by several armed men, who may have been involved in the murder of a bailiff Gadis Bagdaev. According to the Interior Ministry, "one of the militants killed." Fight with the trapped militants continues. The body of a 33-year Gadis Bagdaev with gunshot wounds was found Monday about 22:20 MSK on the road between the settlements of the ball and Shovkra Lak area next to his private car VAZ-2109. A little later, law enforcement officials managed to get out on the trail of criminals who managed to lock in a private house nearby village of Kani Kuli area.

Bailiff killed in Dagestan

http://www.itar-tass.com/eng/level2.html?NewsID=16072853

22.03.2011, 07.57

MAKHACHKALA, March 22 (Itar-Tass) - Unidentified criminals killed a bailiff in Dagestan’s Laksky district on Monday night, the republic’s Interior Ministry told Itar-Tass on Tuesday

The body of a 33-year-old Gadis Bagdayev was found near his car on a road between the villages of Shara and Shovkra.

“At present, police tracked down the criminals,” the ministry said. “They are probably blocked in a private house in the village of Kuni, the Laksky district.”

March 22, 2011 09:51

Investigators dismiss "commercial" theory behind Domodedovo attack – sourcehttp://www.interfax.com/newsinf.asp?id=230416

MOSCOW. March 22 (Interfax) - A theory whereby the terrorist attack at Moscow's Domodedovo Airport could have been masterminded by commercial entities with a view to secure spheres of influence is invalid, a law enforcement source told Interfax on Tuesday.

"The so-called 'commercial' theory has been dismissed," he said.

Such a theory "was indeed put forward among others at the initial stage of the investigation," he said.

"However, the commercial theory was discarded after the identification of the suicide bomber and the causal-consecutive links of the crime," the source said.

On Tuesday the Vedomosti newspaper said that investigators were also probing a theory whereby the terrorist attack at Domodedovo Airport on January 24, 2011 could have been ordered by commercial entities.

Islamisation and fear spread in Chechnya

http://www.dawn.com/2011/03/22/islamisation-and-fear-spread-in-chechnya.html

Posted By AFP On March 22, 2011 @ 1:19 pm (27 minutes ago)

GROZNY: The 28-year-old girl refuses to give her name for fear of reprisals but her anxiety speaks volumes for the rapid march of Islamisation in the conflict-torn Russian region of Chechnya.

“I wear the veil so I’m left in peace on the street. Women who do not wear the veil and a long dress risk being refused entry into university,” she said in a hushed voice in the Chechen capital Grozny.

Chechnya may seem an unlikely venue for conservative Islam to pervade everyday life, given it was in this Russian region that the Kremlin fought two wars against militant

separatists after the collapse of the Soviet Union and is still fighting Islamic militants in the mountains.

But while also bringing relative stability to his tiny fiefdom in the Caucasus, Chechnya’s Kremlin-appointed leader Ramzan Kadyrov, 34, has been quietly allowed to de-secularise his Muslim majority homeland.

Mosques have sprouted up as Grozny rebuilds from the devastation of war while Kadyrov has lost no opportunity to make public show of his faith, including making highly-mediatised pilgrimages to Mecca.

But Kadyrov has also moved to draw up special Islamic rules for the region of 1.2 million which some observers say are a flagrant violation of human rights and Russian law.

Kadyrov on January issued a hugely controversial decree telling public servants how to dress in an Islamically-acceptable way at work.

“Men should wear a suit and a tie and on Friday (the Muslim holy day), traditional Muslim dress. For women, their heads should be covered with a headscarf, a dress that goes below the knee and sleeves that cover three-quarters of the arm,” it said.

“Now you can perfectly well talk about the Arabisation of Chechnya,” said one university professor who asked not to be named.

Boris Strakhun, an expert in constitutional law, told AFP in Moscow that Kadyrov’s directive amounted to a “violation of the Russian constitution”.

But the federal authorities in Moscow have yet to sound any concern, raising fears that Kadyrov is being allowed to go too far in exchange for stabilising Chechnya.

Kadyrov, whose father and former Chechnya leader Akhmad was slain in a bomb blast in Grozny in 2004, has long been a hate figure for rights activists, accused of using a private militia to kidnap and torture at will.

Chechen women who spoke to an AFP correspondent in Grozny repeatedly said they had been verbally abused and even at times physically attacked for failing to wear the Islamic veil.

Akhmad Kadyrov was also the Muslim mufti — or chief cleric in Chechnya — and ironically locals recall that he had banned the wearing of the Islamic veil in public places.

But since Ramzan Kadyrov was named head of Chechnya in 2007, “the situation has changed a lot,” said a university professor, pointing to the sacking two years ago of the head of his faculty.

“He was replaced by a man whose first remark was: ‘But the female students and the women in this faculty don’t wear headscarves?’” Officials from Chechnya’s organisation of moral and spiritual education, an organisation linked to the authorities, every week visit schools and universities to give courses on Islamic morality and the Qoran.

Officially, the courses have the aim of making sure young people do not fall out of mainstream society and join the Islamic rebellion that for years has rocked the North Caucasus region.

Russian security forces are still fighting an Islamist-fuelled insurgency in the Caucasus mountains, especially in nearby Ingushetia and Dagestan, that claims dozens of lives each month.

Human Rights Watch has raised the alarm over the Islamisation of Chechnya, saying the authorities were “enforcing a compulsory Islamic dress code for women and condoning violent attacks on women deemed to dress immodestly.”

“The Kremlin should publicly and unambiguously make clear, in particular to the Chechen authorities, that Chechen women, like all Russians, are free to dress as they choose,” said the group’s Russia researcher Tatyana Lokshina.

The group said unknown men, mostly dressed like local law enforcement officials, have shot dozens of women in Grozny with paintball guns for wearing clothes deemed to be revealing and for failing to cover their hair.

The men also distributed leaflets stating that the paintball shootings were a preventive measure aimed at making women wear headscarves, it said. – AFP

Moscow experts discuss link between the Circassian question and the Sochi Olympics

http://georgiandaily.com/index.php?option=com_content&task=view&id=21252&Itemid=132

March 22, 2011

Valery Dzutsev

On March 3, a conference titled “The Circassian Question and the Olympics in Sochi” was held at the Moscow center of the Carnegie Endowment for International Peace. Many of the participants expressed disappointment with the Kremlin’s reluctance to

discuss the issue of the Circassian “genocide” openly and engage in a dialogue with the concerned groups.

The Kavkazsky Uzel (Caucasian Knot) website reported that a majority of the experts did not consider the Circassian question an obstacle to holding the Winter Olympics in Sochi in 2014, but feared its importance may grow over the next several years in the run-up to 2014 (www.kavkaz-uzel.ru, March 17).

The head of the Russian regions’ research center, Denis Sokolov, told Kavkazsky Uzel that people in the North Caucasus are waiting for Russia’s top political leadership to say something about the issue. “Russia behaves not very adequately in the public space,” he said, adding “Nobody says that we should recognize the [Circassian] genocide, but we can publically justify our historiography. Especially as the situation in the [North] Caucasus is rather dire even without this senseless suppression of obvious facts.” According to Sokolov, the real danger for the 2014 Winter Olympic Games in Sochi comes from the conflict between elites in Moscow and the North Caucasus over the distribution of budget money (www.kavkaz-uzel.ru, March 17).

The Russian ministry for regional development’s official estimate of Moscow’s expenditure on the Olympics in Sochi is $30 billion. Unofficial estimates of the Olympics’ costs are even higher - up to $50 billion. Much of the allotted resources are to be spent on overhauling Sochi’s infrastructure to prepare it for hosting the Olympics. These infrastructural costs are often hidden in other budget entries instead of being listed as part of preparations for the Olympics (http://www.newsland.ru/news/detail/id/342936/cat/86/).

Government money is being spent on Sochi in large quantities at the same time as the budgets of the North Caucasus republics undergo deep cuts. In 2010 all republican budgets, even in Chechnya, significantly shrank due to the ailing local economies and the rollback of financial aid from Moscow. While the North Caucasus population and elites had grown accustomed to the astonishing prosperity of Moscow in comparison to their own territories, the sudden influx of government money into the Sochi region may be viewed with resentment in the surrounding regions.

The keynote speaker at the Carnegie conference, Naima Neflyasheva, emphasized the importance of the Sochi area in the Circassian narrative. It is the native land of the Abkhaz and Circassian people, and the Russian empire expelled them from the region into exile after their final defeat in 1864. Many Circassian activists are now demanding that the Sochi Olympics be moved to another territory and that Russia should recognize and alleviate the consequences of what they regard as the “Circassian genocide.” Ironically, Krasnaya Polyana [Beautiful Meadow], where a majority of the Sochi Olympics sport events are to be held, is the same place where the Russian army commemorated its victory over the Circassians exactly 150 years before the Sochi Winter Olympics are to be held.

In March and November 2010, the Jamestown Foundation held two highly acclaimed international conferences under the title “Hidden Nations, Enduring Crimes: The Circassians and the Peoples of the North Caucasus Between Past and Future.” Both conferences were held in Tbilisi, Georgia and were received with great enthusiasm both in Georgia and among Circassians in the North Caucasus and elsewhere in the diasporas. The Georgian parliament has struggled since March 2010 to hold a vote on recognizing the “Circassian genocide.” But Georgia has also significantly expanded its interaction with the North Caucasus, and in October 2010 lifted the visa requirement for people traveling from this troubled region.

The Carnegie Moscow Center’s expert on the North Caucasus and Islam, Aleksei Malashenko, warned that the Russian government should be concerned not only about the Circassian question, but also about the general instability in the North Caucasus. As Moscow’s envoy to the region, Aleksandr Khloponin, himself admitted, 2010 was “disastrous” for the Russian government in the North Caucasus (www.kavkaz-uzel.ru, March 17). Kabardino-Balkaria, where the majority of the Circassians live, became one of the centers of the insurgency in the North Caucasus in 2010.

On March 19, a suspected militant, Marat Zokaev, was killed in the Cherek district of Kabardino-Balkaria in a shootout with the government forces (www.kavkaz-uzel.ru, March 19). On March 16, the security services killed Aslan Yemkuzhev, a suspected rebel, in the center of the republican capital Nalchik. Surprisingly quickly, on the same day he was killed, the authorities announced that Yemkuzhev had received military training in Lebanon and fought in the ranks of the Fatah al-Islam radical organization (www.kavkaz-uzel.ru, March 16). On March 20, an explosion took place at a local market in the city of Prokhladny in Kabardino-Balkaria. One person was injured in the attack (RIA Novosti, March 20).

There are also vibrant Circassian communities in Karachaevo-Cherkessia and Adygea, to the west of Kabardino-Balkaria and in close proximity to the future Olympic sites in Sochi. So it is hardly surprising that during the period from February 23 to March 7, large-scale military exercises were held in Adygea and the Krasnodar region, of which Sochi is a part. Six thousand servicemen, including those of the Federal Security Service (FSB) and its flagship Alfa counterterrorist unit, the Interior Ministry and the Ministry for Emergency Situations (MChS) participated in the exercises. In one of the scenarios played out during the exercises, 20 terrorists captured and held hostages at an administrative building in the area (www.kavkaz-uzel.ru, March 8).

The North Caucasus insurgents claimed responsibility for the attack on the Moscow metro in March 2010 and the attack Moscow’s Domodedovo airport in January 2011. Given the proximity of the Sochi Olympics’ sites to the centers of the insurgency and the poor recent record of the Russian security services, it is extremely questionable whether Moscow will be able to guarantee security for the Olympic visitors in 2014.

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

March 21, 2011, 5:19 PM ET

Russia’s Duma Delays Corruption Bill Votehttp://blogs.wsj.com/corruption-currents/2011/03/21/russias-duma-delays-corruption-bill-vote/?mod=google_news_blog

By Samuel Rubenfeld

A key committee in the Russian Duma delayed for a month consideration of a bill that would go towards the country’s implementation of international agreements on fighting graft, local media reported.

According to a report from Kommersant, translated here, the bill was scheduled to be debated in a security committee this month, but the committee’s “deputies” told the news organization that the Justice Ministry asked them to pull the bill so it could write its own similar legislation.

The Justice Ministry did not appear to have been contacted for comment by Kommersant.

However, the current bill’s language has received vocal support from Prime Minister Vladmir Putin, who said at a United Russia party meeting in March that “a person who enters politics must be transparent, must reveal his earnings,” as well as expenses.

Russia ratified the U.N. Convention Against Corruption in 2006 though there’s been a struggle at getting all of the recommendations put in place. Part of the bill being delayed by the Duma surrounds Article 20 of the Convention, which introduces the concept of “illicit enrichment,” defined as “a significant increase in the assets” of an official that cannot be “reasonably explained” in terms of the official’s income.

Last week, a top U.S. Justice Department official hailed planned legislation in the Duma aimed at curbing bribery in Russia as a “unique moment of opportunity in [the] struggle” against corruption in the country.

Russia ranks worst among G-20 countries at fighting corruption according to the 2010 Corruption Perception Index by Transparency International, placing 154th out of 178 nations.

Russian Man Probing Mother's Death In Detention Is Attacked http://www.rferl.org/content/russia_khimki/2345785.html

March 22, 2011 KHIMKI, Russia -- A man investigating the death of his mother in pretrial detention last year has been attacked by a knife-wielding man, RFE/RL's Russian Service reports.

Vera Trifonova's son, Vyacheslav Raikov, and his friend were attacked in a bar in the town of Khimki, near Moscow, on March 19. A man identified as Roman Bochkin was arrested as the alleged attacker.

Raikov's lawyer, Vladimir Zherebenkov, told journalists that the attacker was detained but later freed by local police. Raikov sustained a wound to his neck but was not hospitalized.

Zherebenkov said police refused to launch an investigation into the attack and the major evidence -- the knife -- has disappeared. Based on the police reaction to the attack, he believes it was a deliberate attempt to intimidate Raikov.

Raikov has been trying to investigate the death of his mother in a detention center in Moscow in April 2010 in the hope that those responsible will be brought to trial. Other relatives of Trifonova say they have received several verbal death threats from unknown people.

Trifonova, the head of a real estate company, was arrested in December 2009 and charged with fraud. She was accused of offering to help two bankers gain seats in the Federation Council, the upper house of parliament, in return for some $1.5 million. She insisted she was innocent of the charges.

Trifonova suffered from diabetes and kidney problems. She died of heart failure in the medical ward of a Moscow pretrial detention center on April 30, 2010, at the age of 53.

In May, the Moscow regional court ruled that extending her term in pretrial detention until July 16 was unlawful.

Several officials were subsequently dismissed, including Olga Makarova, a judge at Moscow's Odintsov District Court; investigator Sergei Pysin; and Investigative Committee deputy head Aleksandr Filippov.

PRESS DIGEST - Russia - March 22http://www.reuters.com/article/2011/03/22/press-digest-russia-march-idUSLDE72L03K20110322

4:00am EDT

MOSCOW, March 22 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- Russian oil major Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz) and U.S. Chevron (CVX.N: Quote, Profile, Research, Stock Buzz) have so far failed to reach agreement on some details in their joint project to develop Russia's off-shore oil field in the Black sea, a deal signed last year.

- Almost 90 percent of revenues belonging to state-run aircraft manufacturer United over the next 15 years will come from orders for military equipment, its head Mikhail Pogosyan says in an interview.

- President Dmitry Medvedev and Prime Minister Vladimir Putin have disagreed on Russia's description of the situation in Libya, in what appears to be the Kremlin chief's first major rebuke of his mentor.

VEDOMOSTI

www.vedomosti.ru

- Russia's no. 1 lender Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz) is ready to pay up to $2.5 billion for a 20 percent stake in iron and steel firm Metalinvest, which previously belonged to Vasily Anisimov, a co-owner at the firm.

IZVESTIA

www.izvestia.ru

- Fish and seafood could face price rises on the back of the cut in supplies from Russia's Far East regions, which have been affected by the increase in radiation levels amid Japan's nuclear disaster.

NEZAVISIMAYA GAZETA

www.ng.ru

- Russia will spend 20 trillion roubles ($707 billion) by 2020 on modernising its army, but experts are casting doubts that local industry is able to produce enough military equipment, the daily says.

Russian Press at a Glance, Tuesday March 22, 2011http://en.rian.ru/papers/20110322/163138890.html

09:11 22/03/2011

POLITICS

Russian Present Dmitry Medvedev and Prime Minister Vladimir Putin have different views of what is happening in Libya. Putin has compared a UN resolution sanctioning foreign military action in Libya to a "medieval call for a crusade,” a statement that Medvedev said was “absolutely inexcusable” and “unacceptable.”

(Vedomosti, Kommersant, Rossiiskaya Gazeta)

The international operation against Libya’s Col. Muammar Gaddafi picks up steam. The bombing of Gaddafi’s compound in Tripoli by coalition forces have made the Libyan authorities believe that the genuine goal of the operation is changing the Gaddafi regime. The United States have dismissed the allegations, while its allies in the coalition have indicated that they were not just empty words.

(Kommersant)

Russian Foreign Minister Sergei Lavrov is visiting Egypt and Algeria to compare notes with the countries’ leadership on the situation in Libya

(Nezavisimaya Gazeta)

The Son of the Desert, who has been in power in Libya for almost 42 years, Gaddafi has his own philosophy of life and power.

(Vedomosti)

An interview with U.S. Defense Secretary Robert Gates about Russian-U.S. relations, missile defense and the U.S. role in the international military operation in Libya.

(Vedomosti)

In a bizarre twist, the Justice Ministry has failed to distinguish between sea rovers and copyright infringers by refusing to register the Russian version of the Pirate Party, a global movement with seats in the European Parliament.

(The Moscow Times)

SOCIETY

Russian President Dmitry Medvedev has fired six police generals. No reason was given for the dismissals but they are seen as part of the ongoing police reform that aims to trim the police force by 20% to about 1.1 million by 2012.

(Izvestia, Rossiiskaya Gazeta, The Moscow Times)

BUSINESS

VTB has raised its share in Bank of Moscow to a controlling stake, and Suleiman Kerimov has joined VTB as a shareholder by buying a 3.88 percent stake from Goldman Sachs.

(The Moscow Times)

Sberbank, Russia's biggest bank, may pay $2.5 billion for a 20-percent stake in Metalloinvest, a leading Russian mining and metals company co-owned by tycoon Vasily Anisimov.

(Vedomosti)

DEFENCE

Russia’s rearmament program for 2011-2020 was the focus of Russian Prime Minister Vladimir Putin’s attention during his Monday visit to the town of Votkinsk, a center of missile construction. The program is expected to cost the Russian government a record 20 trillion rubles ($707 billion).

(Nezavisimaya Gazeta, Kommersant)

ECONOMY

A biannual report compiled by the London-based think tank Z/Yen and released Monday suggests that no one should be holding their breath over Moscow's transformation into an international financial center. Moscow ranked 68th out of 75 in the Global Financial Centers Index and did not feature in the 10 centers likely to be most significant in the coming years.

(The Moscow Times)

OIL&GAS

Germany's BASF on Monday signed a memorandum of understanding with Russia's gas giant Gazprom to enter the South Stream pipeline project. The deal will add more weight to the project, analysts say.

(Vedomosti)

Two competing bills are adding to the confusion around regulation of Russia's burgeoning offshore oil industry, to the frustration of both oil companies and environmentalists. The rival drafts are a response to calls from industry and environmentalists for clearer legal guidance following the disastrous Gulf of Mexico oil spill last year.

(The Moscow Times)

CRIME

The Federal Anti-Monopoly Service promised an investigation Monday after a Moscow-based military unit kicked off a tender offering a whopping 46 billion rubles ($1.6 billion) to private contractors to maintain its fleet of foreign-built cars and buses.

(The Moscow Times)

Commercial rivalry is studied as one of possible reasons for a terrorist attack on Moscow’s Domodedovo Airport in January, which killed 37 people. 

(Vedomosti)

The Clash Over Libyahttp://russiaprofile.org/international/33857.html

Russia’s Ambivalent Libya Policy Is Stuck between the International Mainstream and Its Non-Interference Doctrine

By Tom Balmforth Russia Profile 03/21/2011

The Russian Foreign Ministry on Sunday condemned air strikes on Libya mandated by a UN resolution, despite the fact that Russia abstained from the vote. Moscow continues to send ambivalent signals on Libya, as it wrestles with conflicting policy priorities, analysts say. Earlier today Prime Minister Vladimir Putin waded in to the debate, likening the resolution to a “medieval call to crusade,” only for President Dmitry Medvedev to hit back hours later by describing the premier’s comments as “inadmissible.”

"We believe a mandate given by the UN security council resolution – a controversial move in itself – should not be used to achieve goals outside its provisions, which only see measures necessary to protect the civilian population," Alexander Lukashevich, the Foreign Ministry spokesman, said Sunday. Lukashevich said the West had bombed “non-military” targets in Tripoli, Tarhuna, Maamura and Jmeil, resulting in the death of 48 “civilians,” as well as injuring over 150.

The air strikes came on the heels of Friday’s 1973 UN Resolution, which was passed by

ten votes out of 15, with the remaining five member states abstaining. The Russian Foreign Ministry later called the resolution “brash,” despite not using its veto power in the UN Security Council.

One explanation of this incoherency was offered by the Kommersant business daily on Monday. Dmitry Medvedev’s Kremlin originally sought to vote in favor of the resolution, the business daily reported today, citing “informed sources.” Russia’s Foreign Ministry, on the other hand, favored wielding Russia’s veto power on the UN Security Council to block the resolution. In the end a compromise was reached and Moscow decided to sit on the fence alongside the other three BRIC countries, Brazil, India and China, as well as Germany.

But after Putin on Monday passionately condemned the UN resolution which Medvedev allegedly favors, speculation will mount that there is actually divergence over the Libya question between the two leaders. “This UN Security Council resolution is without doubt defective and harmful,” Putin said on Monday, after calling it a “medieval call to crusade.” The powerful prime minister took care to add that these views represent only his own personal opinion, since foreign policy is the Kremlin’s remit.

By Monday evening disagreement between Putin and Medvedev looked even more evident as the Russian president called Putin’s statement “inadmissible.” “Russia did not exercise [the veto power] for one reason,” Medvedev retorted. “I do not consider this resolution to be wrong. Moreover, I believe that this resolution generally reflects our understanding of what is going on in Libya…It is absolutely inexcusable to use expressions that in effect lead to a clash of civilizations – such as ‘crusades,’ and so on. That is unacceptable,” Medvedev said.

With only a year to go until presidential elections, the apparent spat will be appreciated by undernourished “tandemologists,” but various other incoherencies in Libya policy have been noted by analysts too. “Russia is clearly in a very awkward position,” said Pavel Baev of the Peace Research Institute in Oslo. “What is also very clear is that the signals Moscow is sending are ambivalent, incoherent and even slightly embarrassing.” Medvedev’s press secretary has publically denied such schizophrenia, although analysts point to a number of policies that Russia has pursued, which jar with its criticism and abstention from Friday’s resolution.

Medvedev has condemned abuses committed by the Muammar Gaddafi regime in the raging civil war and also signed off on the initial UN arms embargo on Libya that cost Russia in excess of $4 billion in lost arms contracts. This latter move suggested that Russia’s disapproval of Gaddafi’s regime superseded its non-interventionism, said one analyst. Moreover, unlike Russia’s past noisy opposition to the Iraq and Kosovo interventions, Moscow gave no clear indication which way it would go on the Libya question.

“Libya is a special case and stands out from the revolutions and uprisings in North Africa and the Middle East,” said Baev. “While Russia generally expresses concern about

revolutions, Russia’s position on Libya has been rather negative.” But, when on Friday the UN Security Council convened to pass a “no-fly” zone on Libya when pro-Gaddafi forces were preparing to march on the rebel stronghold of Benghazi, Russia balked.

The ethical dimension of Medvedev’s condemnation of the Gaddafi regime had hinted that the Kremlin was leaning toward the international mainstream. But at the same time, Russia’s old mantra of non-interference in the domestic affairs of foreign countries appears to jar with the measures being imposed by the international community. Russia has watched all the uprisings spreading through North Africa and the Middle East with unease simply because of its policy belief in the ascendancy of stability over democracy – values often touted as mutually exclusive.

“The second component is that Russia has very strong worries about every revolutionary change,” said Baev. “I would say that there is a counter-revolutionary coalition in the making with countries like China, Russia and Saudi Arabia. From Russia’s perspective, what is happening in Bahrain is perfectly fine, and what has happened in Egypt is a matter of concern.” The ironfisted quelling of an uprising in Bahrain last week brought little disapproval from Russia, while Moscow watched the overthrow of Egypt President Hosni Mubarak with unease.

Still, some analysts say that Russia is simply behaving pragmatically on Libya. “Russia’s position is the same as Germany’s and China’s,” said Vladimir Isaev, the head of Oriental Studies at the Russian Academy of Sciences. “To talk about double standards is wrong. Russia has firmly undertaken a policy of neutrality. In my opinion Russia’s position is one of pragmatic non-interference.”

Indeed, a source close to the Kremlin administration cited by today’s Vedomosti said that Russia hopes to benefit from the double dividend of not being associated with the “Western” intervention in the Muslim world. Not only will the intervention drive up the price of oil, but it may also increase – relative to the West – Russia’s image in the Arab world. The Arab world appears to now be taking a dimmer view of the intervention too.

Arab League Envoy to UNESCO Nassif Hitti on Monday said that resolving the crisis in Libya is first and foremost a problem for the Arab world, and only secondly a matter to be dealt with by the international community. "I think Libya is an Arab and nationalist duty, before it is an international duty, and as it is a humanitarian duty too," Hitti was quoted by the Wall Street Journal as saying today. The Arab League had backed a no-fly zone, although it condemned the first round of airstrikes on Saturday. Significantly Hitti is also the League’s envoy in Paris – France led the way with the strikes on Saturday and, as the United States seeks to distance itself from the intervention to forestall comparisons with Iraq, command of the no-fly zone may be deferred to France or the United Kingdom.

As Russia stays off the center stage on Libya, it may well benefit even if its policy appears puzzling, although Medvedev’s apparent clash with Putin over the issue may explain at least some of the incoherence.

Immobile, Ineffective, Illegalhttp://russiaprofile.org/politics/33837.html

The Demographic Crisis and Problems in the Job Market Will Become the Main Impediments to Economic Modernization

By Svetlana Kononova Special to Russia Profile 03/21/2011

From March 16 to 19, Russian economists and experts from other fields attended the so-called Gaidar Forum, titled “Russia and the World: Searching for an Innovation Strategy,” and discussed ways to improve the “Strategy-2020” government program that determines the main vectors for further development of the Russian economy. The participants’ outlook was quite pessimistic: the Russian economy is supposed to be modernized at a time when the population is decreasing and the eastern regions are emptying out, while labor productivity remains low by comparison with the West.

Russia’s population, which currently amounts to 141.9 million people, will drop by five to ten million by 2025, stated a report titled “Migration in the Development of Russia,” which was produced by the Institute of Demography at the Higher School of Economics. The country’s population has continually been in decline since 1992, with a net loss of 13 million people in the past 19 years. Even a predicted growth in birth rates can’t reverse this process, the authors of the report say.

Moreover, the population is growing older. The working population will decrease to 77 million by 2025. One in five Russians will be older than 65 by this time, meaning that financial pressure on people of working age will increase, as they will have to pay more taxes to support those who have retired. The drop in population is partly compensated for by migrants, but only in big cities such as Moscow and St. Petersburg, where most of Russia’s financial sources and attractive employment opportunities with relatively high salaries are concentrated. Moscow still attracts hundreds of thousands of newcomers annually. At the same time, Eastern Siberia and the Far East are emptying out, the report found.

“In fact, Moscow diverts financial resources from other regions to its economy, but doesn’t always use them effectively. The city now has a 12 percent budget deficit. The public debt of the Russian capital is 256.18 billion rubles ($9 billion), which is nearly equal to the total public debt of all other regions together. The finances that accumulate in Moscow might have been put to better use in the regions with more stable modern economic systems,” said Alexander Osin, the chief economist at Finam Management. “More than 60 percent of Moscow’s gross regional product is earned by retail, the service and the financial sectors, while incomes of the population and corporate profits stopped growing after the crisis. Moscow’s economy needs structural adjustments based on the growth of long-term investment in the real sector, for example in high technologies, industrial processing and infrastructure.”

While foreign migrants actively storm both Russian capitals, natives living elsewhere in Russia are not very enthusiastic about moving to another city or region for a better life. Statistics from a large recruitment Web portal Superjob.ru show that only 17 percent of job seekers are interested in offers that involve relocation. At the same time, 60 percent of employers are willing to hire candidates from other cities. The most mobile candidates live in big Siberian cities, have university diplomas and are looking for “white collar” vacancies in consulting, manufacturing and building. Men are twice as mobile as women. “The state’s policy doesn’t promote mobility for job seekers. Instead of creating new jobs and increasing the citizens’ mobility, the authorities are afraid of social unrest and try to lock people in ineffective factories to avoid mass layoffs. They don’t let these people get on the open job market,” said Alexey Zakharov, the president of Superjob.ru. “On the other hand, many employees are themselves inactive. They often prefer stability with a small salary for psychological reasons. People who get used to working at the same company and in the same position for many years don’t want to change anything,” he added.

Low labor productivity will hinder the modernization of the Russian economy, experts say. “Enterprises need money to modernize. But where can this money come from if labor productivity is low? The first way is to increase the prices, but then their suppliers and partners increase prices as well. The second way is to get loans. Everybody does that. As a result, the correlation between debts and liquid assets is now 200 percent in automotive manufacturing, 850 percent in agricultural industry, 300 percent in the food industry and 450 percent in the construction sector,” Osin said.

Zakharov ascribes Russia’s low labor productivity to the use of outdated technologies in many fields of the economy. “People work hard but earn much less than their colleagues in more developed countries due to technical backwardness of production in agricultural and industrial sectors. This problem should be solved by the state and top-management of large corporations. Programs that support ineffective enterprises, imperfections in the law, corruption – all these factors impede the development of an effective economy,” he said.

The other trend on the Russian job market is a growth in informal employment in the gray sector of the economy, experts say. “According to different research, from 20 to 33 percent of able-bodied Russians work in the informal sector. Most of these people do unskilled work and don’t pay any taxes,” said Vladimir Gimpelson, the director of the Center for Labor Market Studies at the Higher School of Economics. The spheres with the most informal employment differ across Russia: for example, in the North Caucasus it is agriculture, in Central Russia – trade and construction. In big cities, babysitters and housekeepers are in demand, while many men work as private taxi-drivers. “Often these people are self-employed because they don’t have any other choice. They simply can’t find jobs in the official market,” Gimpelson said.

Research conducted by the Center for Labor Market Studies found that only a few self-employed Russians work high-skilled jobs. “Of course, there are high-qualified

professionals who work independently, such as translators, architects, designers, and legal advisers. But their number is very limited,” Gimpelson said. Zakharov is more optimistic. “In Russia, self-employment is developing faster than in the West. For many creative jobs, freelancing seems more like the norm, not the exception. The more modern communication technologies develop, the more people will turn to self-employment,” he concluded.

Russia! Magazine Presents the 10 Biggest Scandals on the Russian Art Markethttp://www.readrussia.com/blog/art/00337/

Over the last 10 years, the market for Russian art has grown by a factor of 30 and now accounts for $400 million in sales a year, and the role of Russians on the international art market is ever more noticeable. In turn, art scandals involving Russians are also increasing in number. Russia! magazine has published a Top 10 rating of the biggest scandals on the Russian art market at the beginning of 21st century.

The scandals include fraud and theft, the ownership of wartime spoils, conflicts between the church and society, battles among oligarchs, multi-million dollar corruption and, as always when it comes to Russia a giant penis painted on a bridge opposite an FSB building.

According to experts, the biggest scandal to date is the "Rubens affair," when a Rubens painting stolen during the war, "Tarquin and Lucretia," was obtained by a little-known businessman, Vladimir Logivenko. A criminal case was brought against Logivenko in Germany, and the return of the masterpiece became the subject of political negotiations. Logivenko later cooked up a complicated financial scheme, apparently in a bid to sell the painting for 60 million euros, and convinced a key Russian businessman to transfer money to a special fund. The money mysteriously vanished. The case against Logivenko is currently being heard in court, while the Rubens painting is displayed at the Hermitage, where it is immensely popular thanks to the scandal that engulfed it.

Second place goes to an imbroglio involving Viktor Vekselberg, a key Russian collector, and the Christie’s auction house. Vekselberg’s foundation bought a work by the famous Russian painter Boris Kustodiev for $2.9 million, but it turned out to be a fake. The court case is ongoing.

Other major scandals include a case against the curators of the "Forbidden Art" exhibition – they are charged with inciting ethnic hated, but the curators’ supporters accuse the government of censorship (and are probably right) – as well as a lawsuit against activists from the Voina group, who painted a giant phallus on a bridge opposite an FSB building in St. Petersburg. The government wasn’t too impressed, but the work caught the eye of British graffiti artist Banksy, who donated around $150,000 to support Voina.

The total value of the artworks in our Top 10 is $100 million.

National Economic Trends

Longest Ruble Bond Since 2008 Signals Yield Jump: Russia Credit

http://www.bloomberg.com/news/2011-03-22/eastern-europe-day-ahead-long-ruble-bond-signals-yield-jump.html

By Nathaniel Espino - Mar 22, 2011 7:50 AM GMT+0100

Russia plans to offer its longest dated domestic bonds since the global credit crisis in 2008 to help spur corporate borrowing, even as borrowing costs climb.

To contact the editor responsible for this story: Nathaniel Espino in Warsaw nespino@bloomberg.net

Government plans to sell 7.58% of Sberbank and 25% of Sovcomflot in 2011 http://www.bne.eu/dispatch_text14525

Alfa BankMarch 22, 2011

After taking in RUB32.3bn in revenues from privatization in 2010, the government plans to accelerate the sale of assets in 2011. According to yesterday's decision, 7.58% of Sberbank and 25% of Sovcomflot will be offered to the market this year. The state plans to raise RUB298bn from privatization in 2011.

The abovementioned stakes in Sberbank and Sovcomflot combined are expected to bring in around 70% of the privatization revenues planned for this year. However, as last year showed, it is unclear whether the market can digest these placements, which could affect the speed of the privatization process: the sale of 10% of VTB, scheduled for 2010, was completed only in 2011, and plans to sell another 10% this year were cancelled. Overall, in 2010 only 25% of the planned 663 deals involving state-owned assets were closed. While the privatization of Sovcomflot, expected to bring the budget around $1bn, may be postponed depending on the market, the demand for Sberbank could be significant, especially if privatization comes after the DR placement. We also believe that even if the expected privatization revenues do not play a crucial role in financing the RUB1.8tn

budget deficit, the Russian government will still use the opportunity offered by high commodity prices to sell state- owned stakes at an attractive price.

Natalia Orlova

Russian private equity fund: paperwork to be ready by June 1st http://english.ruvr.ru/2011/03/22/47770147.html

Mar 22, 2011 01:17 Moscow Time

By June 1, a package of documents should be ready for the establishment in Russia of a private equity fund.

Relevant instructions were issued on Monday by President Dmitry Medvedev, following a meeting on economic issues.

This was reported in his Twitter microblog by Presidential aide Arkady Dvorkovich.

Medvedev announced at the meeting that the fund to attract investments from abroad could be launched at the St. Petersburg International Economic Forum. "The main thing is to offer more job vacancies, and attract additional investments to Russia for the latest technologies," - said Medvedev.

Moscow's Financial Rank Low http://www.themoscowtimes.com/business/article/moscows-financial-rank-low/433476.html

22 March 2011By Howard Amos

MT

A biannual report compiled by the London-based think tank Z/Yen and released Monday suggests that no one should be holding their breath over Moscow's transformation into an international financial center.

Moscow ranked 68th out of 75 in the Global Financial Centers Index and did not feature in the 10 centers likely to be most significant in the coming years.

As well as acknowledged financial powerhouses like London, Hong Kong, Tokyo and Geneva, Moscow was behind other cities such as Warsaw, Copenhagen and Manila. It even ranked below debt-ravaged Dublin and Lisbon.

Neither was Moscow a clear leader in Russia itself. Since the last report in September 2010, St. Petersburg had climbed two places and 13 rating points, coming in at 69th place and snapping at Moscow's heels.

Mark Yeandle, the report's author and a member of a Moscow-based working group advising on the changes needed in city's infrastructure, said, however, that it was "early days" for Moscow.

"In the next couple of years," he said, "the future is bright."

He added that Moscow's lack of progress should be seen in the context of "a remaining feeling of uncertainty in the market."

The report was put together using a variety of external indices — from property surveys to measurements of corruption perception — as well as the responses to an online survey that asked respondents to assess competitiveness.

President Dmitry Medvedev has expressed consistently strong support for Moscow's aspirations in the field of international finance.

On March 4, he said "the creation of a financial center remains one of the unconditional priorities of the development of the state," and named Moscow's financial architecture and the city's infrastructure as the two major challenges needing to be addressed.

In line with Monday's report, some commentators are not upbeat about Moscow's prospects.

Speaking at an investment conference two weeks ago, Richard Sobel, chief executive at Alfa Capital Partners, said that, despite a global explosion over the last 10 years, "Russia's share of the private equity market has been falling behind."

"You can't have a leading financial center without equity capital," he added.

Jacob Grapengiesser, a partner at the asset management company Eastern Capital, told The Moscow Times on Monday that a key problem was legislation that prohibits publicly traded Russian issuers from trading more than 25 percent of their shares in American Depositary Receipts.

This cap pushes Russian companies to redomicile abroad and list their shares in London or New York via holding companies.

"This creates a lot of headaches," Grapengiesser said.

He acknowledged that there was a high level of political activity directed at changing Moscow's financial environment.

"However," he added, "it remains to be seen whether this can make its way into legislation."

Business, Energy or Environmental regulations or discussions

Russia's Euroset says to proceed with London IPOhttp://news.stv.tv/business/237790-russias-euroset-says-to-proceed-with-london-ipo/

MOSCOW (Reuters) - Russian mobile phone retailer Euroset said on Tuesday it will proceed with a London IPO that a source close to the potential offering said could seek to raise more than $1 billion (613 million pounds).<br />The company, part-owned by Russian telecoms group Vimpelcom <VIP.N>, said in a statement it would offer ordinary shares in the form of GDRs while businessman Alexander Mamut would also sell shares.

22 March 2011 07:08 GMT

Euroset did not give further detail on the size of the offering.

The source said the fund-raising target was $1 billion, and the desired valuation of the 4,367 store chain at $4 billion.

(Reporting by Olga Popova, Writing by John Bowker, Editing by Alfred Kueppers)

UPDATE 1-Petropavlovsk ups reserve and resource estimateshttp://af.reuters.com/article/metalsNews/idAFLDE72L0CJ20110322

Tue Mar 22, 2011 7:44am GMT

* Proven and probable ore reserves up 36 pct vs March 2010

* Reserves now 9.1 mln ounces on JORC basis

* Total resources jump 96 pct to 23.1 mln ounces

(Adds details)

LONDON, March 22 (Reuters) - Russian miner Petropavlovsk Plc (POG.L) raised its gold reserve and resource estimates following exploration work carried out last year, although the average grades were reduced.

Proven and probable ore reserves increased 36 percent from last March to 9.1 million ounces of gold at an average grade of 1.17 grammes a tonne (g/t) on an internationally recognised Joint Ore Reserves Committee (JORC) basis.

Total mineral resources jumped 96 percent to 23.1 million ounces of gold at an average grade of 0.98 g/t. About 55 percent of the total is comprised of more certain measured and indicated resources.

The London-listed company started to use the JORC standard rather than just give reserves and resources based on the Russian classification in response to requests from western investors.

The estimates were completed using a long-term gold price of $1,000 an ounce. [GOL/]

(Reporting by Julie Crust; editing by Sarah Young)

Surgutneftegas Reduces Stake in Ad Agency Video International

http://www.bloomberg.com/news/2011-03-22/eastern-europe-day-ahead-long-ruble-bond-signals-yield-jump.html

By Nathaniel Espino - Mar 22, 2011 7:50 AM GMT+0100

OAO Surgutneftegas, Russia’s fourth-largest oil producer, cut its stake in Russian advertising wholesaler Video International to 1 percent from 7 percent, Surgutneftegas said in a regulatory filing, without elaborating.

To contact the editor responsible for this story: Nathaniel Espino in Warsaw nespino@bloomberg.net

South Korea’s Lotte Plans Moscow Theme Park, Kommersant Reports

http://www.bloomberg.com/news/2011-03-22/eastern-europe-day-ahead-long-ruble-bond-signals-yield-jump.html

By Nathaniel Espino - Mar 22, 2011 7:50 AM GMT+0100

Lotte Group, a South Korean holding company, plans to build an amusement park in Moscow, Kommersant reported, citing unidentified people familiar with the matter.

To contact the editor responsible for this story: Nathaniel Espino in Warsaw nespino@bloomberg.net

Russia's SUEK may sell 10-15 pct stake in IPO-paperhttp://af.reuters.com/article/energyOilNews/idAFLDE72L04Z20110322

Tue Mar 22, 2011 8:07am GMT

MOSCOW, March 22 (Reuters) - SUEK, Russia's largest steam coal miner, could sell 10 to 15 percent of its shares via an initial public offering (IPO) in the second half of the year after a core shareholder exits, Kommersant reported on Tuesday.

SUEK had said in a statement issued late on Monday that Sergei Popov will sell most of his holdings to his partner Andrei Melnichenko in order to concentrate on developing his MDM Bank.

The newspaper said both investors own 48.65 percent stakes in the company via an offshore holding company.

Bankers had told Reuters in January 2010 SUEK intended to list its shares during the year, but the company's plans fizzled as investor interest in Russian issues remained flat.

Citing one of its sources, Kommersant said SUEK wants to achieve a valuation of about $8 billion through the float.

SUEK's statement did not contain any financial details on the deal between Popov and Melnichenko and a company spokesman could not be reached for immediate comment on the miner's IPO plans. (Reporting by Alfred Kueppers; Editing by David Holmes)

Sberbank May Buy Anisimov’s 20% of Metalloinvest, Vedomosti Sayshttp://www.bloomberg.com/news/2011-03-22/sberbank-may-buy-anisimov-s-20-of-metalloinvest-vedomosti-says.html

By Yuliya Fedorinova - Mar 22, 2011 6:45 AM GMT+0100

Russian billionaire Alisher Usmanov’s partner in Metalloinvest, Vasily Anisimov, plans to sell his 20 percent stake in the holding company to OAO Sberbank, Vedomosti reported, citing unidentified people familiar with the matter.

Sberbank will pay about $2.5 billion for the stake in Russia’s largest iron-ore producer, the Moscow-based newspaper said today. Usmanov will get the right to buy the stake back from Sberbank at a later date, Vedomosti said.

Usmanov said in an e-mailed statement that no agreement has been struck. Sberbank declined to comment.

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

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

MARCH 21, 2011, 1:38 P.M. ET

Sberbank Confirms 4Q Net Profit More Than Quadruples http://online.wsj.com/article/BT-CO-20110321-710071.html

By William Mauldin Of DOW JONES NEWSWIRES

MOSCOW (Dow Jones)--OAO Sberbank (SBER.RS), Russia's biggest bank, on Monday confirmed that its net profit in the fourth quarter more than quadrupled from a year earlier as new provisions against loan losses fell more dramatically than expected amid Russia's economic recovery.

Sberbank's net profit in the last three months of 2010 jumped to RUB72 billion ($2.5 billion), compared with RUB14 billion a year earlier. The company released its full financial results late Monday in Moscow, hours after Chief Executive German Gref told Russian news agencies that net profit totaled RUB181.6 billion for all of 2010.

The bank's earnings figure beat the average estimate of RUB64.3 billion from eight analysts surveyed by Dow Jones Newswires.

Sberbank's net provisions against loan losses dropped to RUB3.8 billion, compared with RUB88 billion a year earlier. Analysts had seen provisions at RUB14.5 billion.

The bank's sale of non-performing loans in the fourth quarter may have been responsible for the lower provisions, UralSib Capital analyst Leonid Slipchenko said.

The bank's net interest income unexpectedly rose from a year earlier, to RUB135 billion. That beat the analysts' estimate of RUB124 billion in net interest income.

Sberbank dramatically boosted its investment in Russian stocks and bonds in the last year, with its equity share holdings, mostly Russian blue chips, nearly tripling to RUB115.3 billion.

Sberbank, which holds about half of Russia's ruble deposits, is seeking to launch an international program for listed depositary receipts abroad this year and may also sell a stake held by the Bank of Russia, reducing the state's take to just over 50%.

The company will pay a dividend of RUB0.91 a share on 2010 earnings, it said Monday. Shares climbed 0.4% to RUB100.54 on Monday on the Micex Stock Exchange in Moscow.

-By William Mauldin, Dow Jones Newswires; +7 495 232-9192, william.mauldin@dowjones.com

Sberbank Extends Best Winning Streak Since November on Profits http://www.bloomberg.com/news/2011-03-22/sberbank-extends-best-winning-streak-since-november-on-profits.html

By Jason Corcoran - Mar 22, 2011 9:34 AM GMT+0100

OAO Sberbank advanced for a fourth day after Russia’s biggest lender yesterday said fourth-quarter profit jumped more than fivefold as provisions for bad loans shrank.

The stock climbed 1 percent to 101.40 rubles by 11:29 a.m. in Moscow, in its fourth day of gains and longest winning streak since November.

Net income rose to 72 billion rubles ($2.6 billion) in the final three months of 2010 from 14.1 billion rubles in the year- earlier period, the Moscow-based company said in a statement on its website late yesterday. Provisions dropped 96 percent to 3.8 billion rubles in the same period, the lender said.

“We view the numbers as positive for Sberbank’s stock due to strong earnings momentum, NIM recovery and healthy loan growth,” Rinat Kirdan and Sergey Kazaryan, analysts at Aton Capital, wrote in an e-mailed report today.

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

UPDATE 1-Ex-VTB exec seen as Bank of Moscow CEO candidatehttp://in.reuters.com/article/2011/03/21/vtb-bankofmoscow-idINLDE72K0P820110321

Mon, Mar 21 2011

* Two Bank of Moscow top managers to compete

* Shareholders to vote on April 21

* VTB has got control over Bank of Moscow - paper

(Adds details, background)

MOSCOW, March 21 (Reuters) - Bank of Moscow's (MMBM.MM: Quote, Profile, Research) board of directors has proposed a former VTB (VTBR.MM: Quote, Profile, Research) executive as a third candidate to head the bank, as the state-owned lender cements its grip over Russia's fifth-largest bank by assets.

Bank of Moscow said on Monday its board of directors, headed by VTB chief executive Andrei Kostin, had added Mikhail Kuzovlev to a shortlist of candidates to be voted on at an extraordinary shareholders meeting on April 21.

VTB, which owns 46.5 percent in Bank of Moscow and a minority stake in shareholder Stolichnaya Strakhovaya Gruppa (SSG), wants to increase its holdings to 100 percent but has faced resistance from the bank's top managers.

The single agenda item of the EGM is the termination of CEO Andrei Borodin's tenure. Borodin, who with associates owns 20.3 percent in the lender, and his first deputy Dmitri Akulinin are the two other candidates to head Bank of Moscow.

VTB has moved towards securing majority control over Bank of Moscow by buying around 1.7 percent from a minority shareholder, the Vedomosti daily reported on Monday, quoting sources close to Bank of Moscow shareholders.

That deal would help VTB to appoint Kuzovlev, who served as a first deputy chief executive at VTB before being appointed to the same position at Bank of Moscow last month, Vedomosti added.

Another 3.88 percent in Bank of Moscow, owned by Goldman Sachs, will be bought by Russian tycoon Suleiman Kerimov, who will swap it for a stake in VTB to become VTB's largest private shareholder, Vedomosti said. [ID:nLDE71G03Q]

A VTB spokesman declined to comment on the Kerimov deal but said the bank still does not have control over Bank of Moscow. Bank of Moscow declined to comment.

Last Friday was the last day for shareholders to register to vote at the Bank of Moscow EGM, Bank of Moscow said on Monday. (Reporting by Katya Golubkova; Editing by Jon Loades-Carter)

GM, AvtoVAZ to Boost Venture Capacity 28%, Vedomosti Reportshttp://www.bloomberg.com/news/2011-03-22/gm-avtovaz-to-boost-venture-capacity-28-vedomosti-reports.html

By Yuliya Fedorinova - Mar 22, 2011 6:59 AM GMT+0100

General Motors Co. (GM) and OAO AvtoVAZ (AVAZ) plan to increase production capacity at their venture in Russia by 28 percent to 120,000 Niva jeeps a year, Vedomosti reported, citing an unidentified AvtoVAZ official.

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

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

Volkswagen asks Putin for amendments to new assembly regime - Will it abandon GAZ?

http://www.bne.eu/dispatch_text14525

Renaissance CapitalMarch 22, 2011

Event: Vedomosti reported today (22 March) that Volkswagen and Fiat have asked Prime Minister Vladimir Putin to change the new assembly regime. The automakers are displeased with the existing requirements for semi-knocked down assembly (which currently accounts for no more than 5% of production facilities) and the localisation of engine production. According to Vedomosti, Marcus Osegowitsch, general director of Volkswagen Group Rus, stated that engine production would be profitable at an annual production volume of 300,000, whereas the company plans annual production of 110,000-120,000 engines in Russia. Volkswagen reportedly plans to withdraw from the new assembly regime, to which it recently applied with GAZ Group, if its requests are not satisfied.

Action: Potentially negative for GAZ Group, but neutral for other automakers, in our view.

Rationale: We do not think Volkswagen's complaint will inspire the government to change the requirements of the new assembly regime; the Ministry of Industry and Trade and Ministry of Economic Development have already rejected Volkswagen's proposed amendments. In February Volkswagen applied for the new assembly regime with GAZ Group. The current assembly regime agreement for Volkswagen expires in 2016, and the company has to decide whether duty- free imports of components under the new assembly regime would provide a net benefit.

Ivan Kim

Russia's EuroSibEnergo has no plans to raise funds in 2011http://af.reuters.com/article/energyOilNews/idAFL3E7EM0KM20110322

Tue Mar 22, 2011 5:46am GMT

SINGAPORE, March 22 (Reuters) - Russian billionaire Oleg Deripaksa's power company, EuroSibEnergo sees no need to raise funds for the remainder of 2011, a senior company executive said on Monday.

"There is no urgent need to do any financing now," EuroSibEnergo chief executive Evgeny Fedorov told Reuters.

The company, which is Russia's largest private power company, had originally planned to start pre-marketing for its proposed $1-$1.5 billion initial public offering (IPO) in Hong Kong.

(Reporting by Francis Kan; Editing by Manash Goswami)

MMC Norilsk Nickel provides update regarding swap of OGK-3 shares for shares of Interraohttp://www.mineweb.com/mineweb/view/mineweb/en/page674?oid=123361&sn=Detail&pid=102055

Tuesday , 22 Mar 2011

Moscow - OJSC "MMC "NORILSK NICKEL" (MMC Norilsk Nickel or Company) is providing an update regarding the transaction on disposal of its stake in OJSC "OGK-3". 

On Friday, March 18, 2011 the stake of the Company in OJSC "OGK-3" decreased down to 0% as part of the planned transaction of swapping the shares of OJSC "OGK-3" for shares of OJSC "INTER RAO UES". 

In accordance with terms of the transaction CJSC "INTER RAO Capital" and MMC Norilsk Nickel entered into a pledge agreement, securing the stake in OJSC "OGK-3" in favor of the Company.  The pledge agreement will be effective till the completion of additional share issue of OJSC "INTER RAO UES", when the share swap deal will be closed. The share swap deal was approved by the Board of the Company on December 28, 2010. 

ABOUT MMC NORILSK NICKEL: 

MMC Norilsk Nickel, a company incorporated under the laws of the Russian Federation, is the largest diversified mining and metals company in Russia, the world's largest producer of nickel and palladium and one of the world's largest producers of platinum, rhodium, copper and cobalt. In addition to this,MMC Norilsk Nickel produces a large number of other by-products, including gold, silver, tellurium, selenium, iridium and ruthenium. The key production units of the Company's group in Russia are at the Polar and Kola Peninsulas. MMC Norilsk Nickel international assets include operations in Finland, Australia, Botswana and South Africa.  MMC Norilsk Nickel's shares are traded at MICEX and RTS. ADR's on the Company's shares are traded on the other the counter market in the US and at the London and Berlin stock exchanges.  Please visit www.norilsknickel.ru for more information about the Company.     

Russia to Liberalize Placement of Company Shares Abroad http://www.themoscowtimes.com/business/business_for_business/article/russia-to-liberalize-placement-of-company-shares-abroad/433455.html

22 March 2011Salans

On March 11, 2011, head of the Federal Service for Financial Markets Vladimir Milovidov announced to Kommersant that the FSFM plans to liberalize Russian companies' ability to place shares outside of Russia. In a nutshell, the proposal will permit Russian companies to place their shares abroad in the form of depositary receipts without any percentage limitations. At present, the general limitation on placing shares, including depositary receipts, outside Russia is 25 percent. Because of the limited market capitalization of the Russian stock exchanges, even after a successful merger of the MICEX and RTS exchanges, expanding Russian companies' access to foreign capital is critical for continued growth against the background of the continuing financial crisis.

The FSFM will lift the existing restrictions gradually, Milovidov said. The restrictions on placing depositary receipts will first be eliminated in countries where the FSFM has signed a memorandum on information exchange with the local regulators. At present there are 15 such memorandums between the FSFM and foreign financial regulators. However, there is no such memorandum in place with the Financial Services Authority in Britain or the Securities and Exchange Commission in the United States, the most important markets for depositary receipts. Notably, the FSFM has signed a memorandum with the German Federal Financial Supervisory Authority.

We note that the changes announced by Milovidov are not yet reflected even in draft legislation. It is impossible to predict the exact form the amendments will take or when the proposed changes will become effective.

Currently, placing shares outside of Russia, including placing "foreign securities" (depositary receipts), is allowed only with the permission of the FSFM. The procedure is set forth in regulations approved by the FSFM Decree of June 10, 2009 No. 09-21/pz-n (hereinafter, the "Regulations"). The Regulations set forth a number of limitations (quotas) on placing or circulating shares of a Russian issuer outside Russia, including placing and circulating foreign securities (depositary receipts).

The number of shares of a Russian issuer that can be placed outside Russia may not exceed 25 percent of the total number of shares of the same category for Quotation List A, 15 percent for Quotation List B, and 5 percent for Quotation Lists V and I. If the applicant is an issuer of foreign securities (depositary receipts) incorporated in a state whose regulators have entered into a memorandum with the FSFM, then up to 25 percent of the total number of the Russian issuer's shares may be offered in that state.

If the Russian issuer is a joint-stock company of strategic importance for Russia, and if it engages in exploration or mining of mineral deposits of federal significance, the limitation is 5 percent of the total number of shares. Many of the most important and widely traded Russian shares are shares of strategic companies subject to the 5 percent limitation. The limitation is also 5 percent in the case of an initial public offering. Since an IPO outside of Russia is not possible if only 5 percent of the shares may be placed abroad, this restriction has forced Russian issuers to reorganize as non-Russian holding companies.

Shares of Russian issuers to be placed abroad must also be offered in the Russian Federation. In addition, no more than 50 percent of the total number of placed shares of an issue can be placed abroad.

The Regulations and the restrictions they establish are applicable not only to direct placement/circulation of Russian shares abroad, but also if the shares are sold indirectly in foreign jurisdictions by placing foreign securities (such as American Depositary Receipts and Global Depositary Receipts) that represent issued securities of a Russian company. Since depositary receipts are issued by non-Russian financial institutions, they are generally considered less risky and easier to invest in than the underlying shares.

Restrictions on Russian issuers accessing foreign capital markets are ill-considered and have resulted both in less access to foreign capital and in unnecessary reorganization or repackaging of Russian companies under foreign holding companies. The Regulations have not been successful in helping the Russian capital markets to develop. Therefore the authors applaud the timely initiative announced by the FSFM to liberalize and expand access of Russian companies to the international capital markets.

March 22, 2011 11:12

Aeroflot boosts IFRS earnings 2.3-fold to $280 mln in 2010 - source (Part 2)http://www.interfax.com/newsinf.asp?id=230454

MOSCOW. March 22 (Interfax) - Aeroflot (RTS: AFLT) boosted net profit to International Financial Reporting Standards (IFRS) 2.3-fold in 2010 to $280 million, a source at the airline told Interfax, quoting a preliminary figure.

Sales revenue rose 33.4% to $3.8 billion and earnings before taxes, depreciation and amortization (EBITDA) rose 22.1% to $630 million, the source said.

Aeroflot had consolidated net profit of $86 million, revenue - $3.3 billion and EBITDA - $461 million in 2009.

Russian insurers braced for tougher regulationhttp://in.reuters.com/article/2011/03/21/idINLDE72H0QH20110321

Mon, Mar 21 2011

* Capital requirements to shake up industry - Chartis

* Large number of Russian players to drop out of market

* Russian state mulling more mandatory insurance

* Chartis to expand into new sectors; rules out acquisition

* Sees Russia market positive due to changing attitudes

By John Bowker

MOSCOW, March 21 (Reuters) - Russia's fledgling insurance industry is likely to mature rapidly over the next two years as the government toughens regulation and mulls more mandatory insurance, the head of Chartis's Russian unit said.

Christos Adamantiadis, head of AIG's (AIG.N: Quote, Profile, Research) Chartis Russia, said new minimum capital requirements to be brought in by regulators in 2012 would lead to many insurers going out of business, leaving fewer but better run competitors.

"Tougher capital requirements (of around $16 million per company) are likely to see many of Russia's 600 players drop out of the market rather than meet the increase ... making room in the crowded sector," he told Reuters in an interview.

He added that the government was also considering plans to enforce mandatory insurance beyond existing requirements for motorists -- but warned that it had to be brought about in the right way to make consumers see the benefit.

"The state has to be careful about how it goes about the process -- it must not be seen by consumers as another tax," he said.

Russia generated insurance premiums of only 978 billion roubles ($34.15 billion) in 2009 compared with just under 200 billion pounds ($322.6 billion) in the UK, despite its much larger population, according to a report by Swiss Re.

Adamantiadis said the small size of the market could be put down to a focus on major corporations at the top end and motorists at the bottom, with little in between.

OWN DESTINY

Property insurance specialist Chartis, in Russia since 1994, is part of bailed-out U.S. giant American Insurance Group (AIG.N: Quote, Profile, Research) and a key part of its parent's recovery strategy.

Greece-born Adamantiadis said the firm's main focus in Russia has been major companies, but as the market matures it would also target mid-size firms and mid-to-high income consumers.

"Russians are now more likely to take out insurance due to an increasing awareness that they are in charge of their own destinies," he said, referring to a widely held viewpoint that a series of economic crises have made Russians reluctant to plan for the future.

He added that Russian drivers' attitude to insurance is to claim as much as they pay in premiums, making it a poorer business than in developed markets, where policyholders take more advantage of no claims bonuses.

"This may change over time," he said, although he ruled out making an acquisition in any sector, citing a preference for organic growth.

In the corporate world, accidents such as the 2009 flood at the Sayano-Shushenskaya dam in Siberia have made companies more aware of the benefits of taking out insurance, Adamantiadis said.

"(Incidents like) these are seen as 'tipping points' for the industry," he said, adding that Russia was seen as one of the less risky emerging markets due to its comparative lack of exposure to natural disasters such as the earthquake that recently struck Japan.

Chartis has an 8 percent share of the Japanese property and casualty market, and AIG has said it will take time to assess the damage from the quake.

(Additional reporting by Katya Golubkova; Editing by Will Waterman)

($1=28.64 Rouble)

($1=.6199 Pound)

((john.bowker@reuters.com;+7 495 775 1242 Reuters Messaging: john.bowker.reuters.com@reuters.net)) Keywords: RUSSIA CHARTIS/

(C) Reuters 2011. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.

Russian insurance: potential for strong growth – but what’s the risk? http://www.risk.net/life-and-pension-risk/feature/2035731/russian-insurance-potential-strong-growth-what-s-risk

Original headline: The road ahead

Author: Blake Evans-Pritchard

Source: Life & Pension Risk | 21 Mar 2011

Categories: Insurance

Topics: Russian Federation, Pension funds

Life companies are starting to see growth opportunities in Russia, but so far this has not been realised. With uncertainty hanging over the sector, firms are approaching with caution. Blake Evans-Pritchard reports

Since shrugging off the shawl of communism 20 years ago, Russia has struggled to integrate itself into the world economy. In February, it finally got the go-ahead to join the World Trade Organisation, which looks set to take place at the beginning of 2012.

But life insurance in the country has lagged behind the development of other sectors. It is only now that large, multinational life insurers are beginning to see viable opportunities in Russia. However, although they are starting to test the water, they are cautious about proclaiming dramatic growth.

Unlike in many former Soviet bloc countries, where life insurers saw dramatic growth opportunities as the region rose to embrace the European Union, investment in Russian life insurance is very much perceived as a long-term strategic move.

“The Russian life insurance market is very young and very under-developed,” says Maxim Chernin, CEO of Allianz Rosno Life, part of the €1 billion (£859 million) insurance company Allianz Rosno, which is 97%-owned by German giant Allianz. “There is a lot of attention on the Russian market at the moment, but we have been speaking about its potential for the last 10 years. It will eventually be booming – but just not yet.”

Taking last year’s growth figures on their own, when the sector grew faster than any other in the economy, it is easy to see what the potential of the market could be. According to data provided by the Federal Service for Insurance Supervision (FSIS), total premiums written jumped more than 14%, from 15.71 billion roubles (£343 million) in 2009 to 17.95 billion roubles in 2010.

But, as Chernin points out, such growth is highly volatile. “It does not mean the market is really developing,” he says. “The high growth ratio is just an indication of the small size of the market so that any changes, down or up, are more pronounced.”

In 2009, two prominent European insurers – ING and Fortis – withdrew from the Russian market in the wake of the financial crisis, preferring to consolidate their operations in markets that offered strong growth, rather than struggle as small participants in a market that appeared to be yielding little. Both of the companies had only been active in the market since 2007.

“The decision was part of a review of all our subsidiaries in light of the ‘back to basics’ programme that we announced in April of that year,” says ING spokesman Frans Middendorf. “Part of this programme was to reduce the complexity of the group by focusing on fewer, stronger franchises.”

ING’s life business ended up with Allianz Rosno Life, while its pensions operations went to Aviva. Allianz Rosno Life also took over much of Fortis’s business.This has made companies even more cautious about throwing everything into the Russian market. While many Western European life insurers have bulldozed their way into Eastern European markets, snapping up local players that they believe offer good growth potential, entrance into the Russian market has been characterised by life companies that would prefer to team up with local partners, rather than set up operations on their own.

A recent example of this is Paris-based Axa, which in 2008 acquired a 36.7% stake in Reso Garantia, the second-largest overall insurer in the Russian market in terms of gross premiums written (although its life business is still fairly small). As part of the deal, Axa was given the opportunity of acquiring the rest of the shares this year, but has not yet made a decision about whether it will do this.

From protection to savings productsCurrently, life insurance in Russia represents less than 2% of the total insurance market, which netted €1 trillion in premiums last year. But, with a growing middle class, the players currently in the market believe that the potential could be vast. Rosgosstrakh, the former state provider of life insurance, predicts the insurance sector will double in the next five years, with life insurance being at the forefront of this development.

“The need for life insurance is certainly there, but we must be careful about how we predict the development,” says Vit Sedlacek, the CEO of the Russian business of Czech-based Generali PPF, a €13.8 billion life insurer that was jointly formed by Italy’s Generali group and private financial group PPF.

“The middle class is in the range of 20 to 25 million strong, and is going to continue to grow, so there is clear potential. But it is going to be a steady increase rather than a sudden jump.”

The majority of life policies sold in Russia concentrate on the protection side of the business – such as term life products or credit protection – with savings components playing a very small role. Those within the industry believe this represents a cultural distrust of long-term financial instruments, which has its origins in the late 1990s. Under the former communist system, the state provided everyone with life insurance cover, but the break-up of the Soviet Union and high inflation in the 1990s meant many people received nothing. Moreover, in 1998, Russia defaulted on its debt, forcing countless banks to close and costing millions of people their life savings.

“People don’t understand [savings] products,” says Sedlacek. “Even if they do buy them, every time they get into some sort of financial trouble, as we saw last crisis, the lapse rate shoots up dramatically, because life policies are the first thing that people drop.”

But life companies hope that, over time, this cultural reluctance will change. Elina Melik-Peshaeva, head of Reso Garantia’s life business, reports that the company now offers twice as many endowment policies as it did in 2008. While this reflects to a large extent a recovery in the economy following the financial meltdown, Melik-Peshaeva is confident the trend will continue.

But, for life savings products to really take hold, the industry recognises that it will need the help of the government – and that has been slow in coming.

A helping handMany in the Russian life insurance industry believe that one thing limiting growth potential is the fact that life companies are prohibited from selling unit-linked policies.

Unit-linked policies are particularly popular in countries in Central and Eastern Europe, and some argue that this has been one of the main driving forces behind the development of the market. In Poland, for example, unit-linked policies account for 80% of the life insurance market, according to Axco, which provides information to the insurance industry. In other countries, such as Hungary, Slovakia and the Czech Republic, the size of the market is smaller but still significant.

“In the past, unit-linked business has been one of the drivers of mature markets,” says Yuriy Galushko, market manager for the Russian business of Scor, a €28 billion French reinsurer. “It is important for the market to have this additional locomotive, which will help to develop the life insurance sector and consequently reinsurance.”

A couple of years ago, a group of the largest life insurers on the market, banded together to convince the Russian government of the value of introducing unit-linked policies on to the market in order to strengthen the sector. Insurers are still waiting for some sign that the government is prepared to lift the restriction on unit-linked policies. In the meantime, some companies, such as Allianz Rosno Life, have been trying to engineer their own equivalent products, which combine capital protection with the potential for a high upside.

“It is a structured note wrapped within an insurance policy,” explains Alexey Rudenko, the company’s chief operations officer. “The main difference between this product and the unit-linked policies available elsewhere is that we cannot transfer the credit risk to the client. So we’re using our capital to give a hard guarantee, while at the same time constructing the upside. We cannot purchase the entire structure from an investment bank because of the limitations already discussed.”

The product is backed by mutual funds of between five and 10 years. Rudenko says longer maturities would be harder to sell, since stock market investors tend to have short-term investment horizons, but adds that Allianz is currently working on a longer-term product.

Other companies, such as Reso Garantia, are less enamoured with offering unit-linked-type products.

“I think it will be another good product for the market, but I can’t say it will increase our sales ten-fold,” says Melik-Peshaeva, whose company, Reso Garantia, has so far not been part of the lobbying effort. “In my view, most people who buy life insurance want to have the biggest guarantee possible. If they want unit-linked policies, they will go to an investment fund.”

Life insurers argue that another thing that could help develop the market would be to offer tax incentives. Tougher tax laws were introduced in Russia at the end of the 1990s, in order to stamp out tax evasion schemes.

While the Kremlin may appear lukewarm when it comes to relaxing tax laws or controls over unit-linked policies, one piece of legislation that has made it through the political apparatus is to quadruple the amount of charter capital that life companies are required to hold.

This new law, which was adopted last April, will become effective in January 2012. Instead of having to hold capital equal to 60 million roubles, life insurers will now be required to hold 240 million roubles. Reinsurance companies will have to hold twice this amount.

The move has been widely seen as an attempt by the government to bolster confidence in the financial services industry in general and the insurance sector in particular, following the global financial crisis, which badly shook investors. While such an aim is broadly welcomed, the move has prompted many insurers to reassess their capital needs to see if they will still be able to cope after the introduction of the new law.

“It was a big discussion on the market last year, because it is a very big leap for Russian companies,” says Melik-Peshaeva from Reso Garantia. “We may see some mergers and acquisitions on the market during 2011, as Russian firms seek compliance with the requirement.”

Such an injection of capital could come from foreign companies, which are displaying an ever-greater interest in the market. A couple of years ago, Reso Garantia ceded 36.7% of its shares to Axa, although Melik-Peshaeva did not say whether this was linked to the need for more capital.

Another disincentive for Russians to take out life insurance savings policies is that, for the time being, life insurers find it difficult, if not impossible, to compete with the savings rates that banks can offer. Bank returns of 12% are not unheard of, while life insurers struggle to offer yields more than 6% or 7%. But many participants in the market believe the rates banks can offer are mispriced and will come down over time.

“I believe the difference in returns is not going to last,” predicts Sedlacek, of Generali PPF. “We can already see that the rates being offered by the banks are starting to decrease and I think this is going to normalise over time, though I would be hesitant in predicting exactly when.”

Guaranteeing the investmentHaving lived for so long under a communist regime, where the state provided for retirement income, Russian investors tend to be habitually prudent. This means that, when they take out a life insurance policy, they like to have some peace of mind that they are going to get an adequate return for their investment. However, the rate that life insurers are able to guarantee tends to be quite low.

Current legislation forbids life companies from discounting their liabilities at a rate of more than 5%. This deters many insurers from offering guarantees significantly above this rate, because the difference would be locked in as a loss. In practice, many insurers offer a guarantee significantly lower than this – 3% tends to be fairly typical – because they are unable to offer more in the current climate.

“It is very difficult at the moment,” says Melik-Peshaeva. “To be interesting for our customers, we should guarantee 4% or 5%, but it is always a struggle with our financial department because they say we can’t guarantee 4% in the current environment, since we don’t know what things will be like in five years’ time.”Allianz Rosno Life’s Rudenko, though, thinks a high guarantee is not the only way to woo potential customers.

“We are striving to show stable investment returns in excess of the guaranteed rate and distribute actual returns to policyholders via profit participation,” says Rudenko. “We see historical returns or our track record as a more important competitive factor compared to the guaranteed rate. Instead of offering extra percentage points on the guarantee, we are trying to construct a class of products that really links the performance to the base assets and allows our clients to earn significantly more than the guarantee.”

Rudenko says that, over the past four years, the yield in US dollars (which makes up the bulk of the company’s portfolio) has never fallen below 6%.

Developing marketAs the Russian market has developed, more financial instruments have emerged that help life companies meet their long-term liabilities. Rudenko says that they now have all the means necessary to meet their needs, although Russian euro bonds and US-nominated debt on the Russian market have only a few durations.

“This tends to drive up price rather than influence product design,” says Rudenko. “Duration mismatch leads to a higher cost of embedded value and guarantees.”The availability of financial instruments on the market means that all the tools are there for proper risk management of products. What is lacking is the acceptance of life insurance as a way for Russians to meet their long-term financial aspirations.

“We believe that growth is going to come because we have the fundamentals on the market,” says Sedlacek. “I have seen some estimates of 40–50% annual growth, but if we are ever to see figures like those we are going to need some help from changes to the legislation. I believe that, in the long-run, the government will see that it is actually better to place the responsibility of retirement in the hands of the people. Until that time comes, I expect we will see double-digit growth, but not as high as some have suggested.”

Activity in the Oil and Gas sector (including regulatory)

Germany's BASF boosts Russian pipelinehttp://www.thelocal.de/national/20110322-33873.html

Published: 22 Mar 11 08:01 CET

Russia's bid to build a rival to a US-backed gas pipeline to Europe received a major boost this week when the project was joined by the hydrocarbon subsidiary of the German powerhouse BASF.

Wintershall's preliminary agreement to acquire a 15 percent stake in South Stream for about €2 billion provides the vital stamp of approval that Russia's Gazprom gas giant needed from the European Union's biggest economy.

The Gazprom-led project will be formally joined later this year by the French electricity group EDF and already includes Italy's ENI as a founding partner.

"This is a tremendously important agreement considering the processes occurring today on the international energy markets," Russia's Prime Minister Vladimir Putin said moments after the framework agreement was signed on Monday.

"This is a sign of stability," the country's de facto leader added before thanking German Chancellor Angela Merkel for personally backing the project.

The deal delivers a double blow to the US-backed Nabucco pipeline: Germany will provide Gazprom with the required market and is likely to fan European doubts about the viability of their own expensive and risky project.

"This means that the South Stream project has been decided and Gazprom will remain a supplier of gas to Europe for many decades to come," Gazprom chief Alexei Miller told reporters.

"Gazprom has the markets and most importantly, Gazprom has the volumes" of natural gas required, he said.

The announcement marks a profound reversal of fortune for South Stream.

The $21.5 billion project - its first gas not expected to flow under the Black Sea until year-end 2015 - seemed in serious peril last week when it failed to receive the required blessing from the Black Sea power Turkey.

One Russian official even suggested cancelling the underwater section of the pipeline and transporting liquefied natural gas by ship instead.

But such plans were firmly dismissed by both BASF executives and Gazprom's Miller at the festive signing ceremony.

"Liquefied natural gas can only be viewed as an additional option," Miller said.

The deal also represents the latest stage of burgeoning energy ties between Germany and a country that has been criticised by the United States for using pipelines as a strategic weapon.

Wintershall is already a partner in Gazprom's Nord Stream project that runs directly to Germany under the Baltic Sea.

Both the South and Nord Stream pipelines avoid running through Ukraine - a country with which Russia has had bitter energy disputes - and also bypass Poland to the country's dismay and frustration.

Other nations have expressed fear that Germany was only pandering to Gazprom's strategy of dividing Europe by striking gas agreements with specific countries to the detriment of the EU as a whole.

But BASF chief executive Jürgen Hambrecht said his only concern was getting the final agreement decided by the end of the year.

"I am very glad to have the opportunity to sign the documents on this project, this is only the start, this is only a memorandum of understanding," he said.

"Now we have to work hard and fast to sign a corresponding detailed agreement, but we always work hard."

Monday's memorandum of understanding will see Gazprom keep its 50 percent stake in South Stream.

Italy's ENI held the other half until it agreed to cede 10 percent to the French company EDF in a deal that is due to be formalised later this year.

Both BASF and Russian officials said that Wintershall's 15 percent stake will come from the shares held by Gazprom's French and Italian partners.

The precise breakdown is not expected to be announced until later this year.

AFP/ka

Russia casts aside doubts over South Stream as Germany signs uphttp://www.bne.eu/dispatch_text14525

bneMarch 22, 2011

Doubt over the fate of the South Stream gas pipeline took a large step backwards on Monday as Germany's Wintershall signed up for a 15% stake in the project.

Wintershall yesterday signed a preliminary agreement to acquire the stake for around EUR2bn, Deputy Prime Minister Igor Sechin told Prime Tass. The news is a coup for Russia, as it has brought the EU's biggest economy in to support what is widely seen as a geo-political, rather than economic, project, which has been fighting tooth and nail with rival EU pipeline Nabucco.

Even though neither project has made it off paper yet, the fight has been ongoing for years, with each accusing the other of lacking economic sense. Whilst South Stream aims to tie-in southern European marketsby 2015 by carrying 63 bcm of Russian gas under the Black Sea and across to Italy, Nabucco has sought to reduce European dependence on Russia by linking directly to Central Asian gas fields.

The signing also marks a swift turnaround for South Stream's apparent prospects, following a bevy of reports over the past week suggesting Russia was close to scrapping the plan.

Those reports were kicked off by Prime Minister Putin when he suggested building LNG

facilities to ship Russian gas across the Black Sea, rather than routing South Stream below it. However, as one analyst told bne last week: "It's bulls**t. The Rostov region is already one of the most under-served in the country due to bottlenecks in the transport system."

Monday's news certainly suggests that the LNG "idea" was a red herring, although with what intention it's difficult to say. Gazprom chief Alexei Miller evidently sought to put the doubts to bed at the signing ceremony, saying: "This means that the South Stream project has been decided and Gazprom will remain a supplier of gas to Europe for many decades to come," reports AFP. "Liquefied natural gas can only be viewed as an additional option."

Putin praised the deal with Wintershall on Monday saying that the BASF subsidiary's participation in the project was a "sign of stability" on the energy market. "This is a tremendously important agreement considering the processes occurring today on the international energy markets," he added. "Gazprom has the markets and most importantly, Gazprom has the volumes."

That final pop at Nabucco - which has yet to secure the supplies to fill it - is a regular one from the PM. However, Brussels will be wary that it is losing more ground in the race in the south. Wintershall is joined in South Stream by Italy's Eni and France's EDF - meaning three of the EU's biggest economies have now signed up.

Some have expressed concern that Germany - which is a key member of the consortium building the sister Nord Stream pipeline - is only helping Russia in its strategy to exploit EU weakness by picking off individual countries to undermine EU energy policy. But BASF chief executive Juergen Hambrecht said his only concern was getting the final agreement decided by the end of the year.

"I am very glad to have the opportunity to sign the documents on this project, this is only the start, this is only a memorandum of understanding," he said. "Now we have to work hard and fast to sign a corresponding detailed agreement, but we always work hard."

Rosneft Slides on Lower Oil, Report Chevron May Abandon Projecthttp://www.bloomberg.com/news/2011-03-22/rosneft-slides-on-lower-oil-report-chevron-may-abandon-project.html

By Jason Corcoran - Mar 22, 2011 9:15 AM GMT+0100

OAO Rosneft slipped for the second day in three as crude fell and after Kommersant reported Chevron Corp. may abandon a joint venture with Russia’s biggest oil producer in the Black Sea.

The stock dropped 0.8 percent to 255.01 rubles by 10:53 a.m. in Moscow trading.

Crude for April delivery declined as much as 55 cents, or 0.5 percent, in New York. Chevron may abandon the Val Shatskogo venture on the Black Sea amid concern the project may not have enough oil to make drilling profitable, Kommersant reported, citing unidentified people familiar with the matter. Chevron also objects to Rosneft’s demand that the venture be registered in Russia, according to Kommersant.

The news is “slightly negative” for Rosneft, Ildar Davletshin, an analyst at Renaissance Capital, wrote in an e- mailed report today.

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Black Sea JV between Rosneft and Chevron in doubt

http://www.bne.eu/dispatch_text14525

Renaissance CapitalMarch 22, 2011

Event: Kommersant reported today (22 March) that Chevron is likely to pass on signing an exploration JV with Rosneft in the Black Sea, due to different views on several important points, including the country of registration, governing law, and choice of contractors. The newspaper also suggests that Chevron may judge the exploration risks of the JV to be too high. According to Kommersant, Chevron will likely decide on 26 March.

Action: We view the news as slightly negative for Rosneft.

Rationale: Rosneft enjoys preferred access to strategic reserves in Russia, and its ability to bring vast resources into commercial reserves is one of the value drivers of the company, in our view, although we think this is only marginally valued by the market. Exploration of the West Chernomorsky block (over 6bn boe of prospective resources) was expected to cost about $1bn, and development costs were estimated at about $33bn. Chevron was supposed to carry-finance the first $100mn of the exploration programme. We wonder whether there are any implications for Rosneft's JV with BP. In our view, the market did not assign any material value to any of Rosneft's offshore exploration licences and, thus, the reaction is likely to be muted.

Ildar Davletshin

Potential partners for Rosnefthttp://indrus.in/articles/2011/03/21/potential_partners_for_rosneft_12305.html

March 21, 2011RBC dailyRosneft may engage Indian oil companies in Barents Sea offshore development.

Rosneft might engage several more international companies to develop its offshore Arctic deposits. Potential partners include three large Chinese companies and a number of Indian firms, CEO of the Russian oil company Eduard Khudainatov told journalists. “We are considering partnering with Chinese and Indian firms. I’d like to say that the whole world is interested in the Arctic,” Khudainatov said.

Rosneft already has two American partners for its offshore projects. The state-owned company has contracted with Chevron to develop the West Black Sea license area, including the Val Shatskogo deposit, and with ExxonMobil, the Tuapse Trough. The UK’s ВР was selected to develop three East Prinovozemelsky areas. Both companies announced an Arctic Alliance back in January of 2011, but interference from Russian TNK-BP shareholders has stalled further progress.

Experts believe Russia finds itself in a rather favourable position right now. The situation surrounding nuclear power plants in Japan seems to put an end to the “nuclear renaissance” and heralds massive nuclear plant closures around the world. In addition, the recent Arab revolutions have revived interest among oil companies in more politically dependable countries.

As a reminder, in 2010 the government transferred to Rosneft, without a tender, the Yuzhno-Russky area off the Barents Sea shore, as well as blocks one, two, and three of the East Prinovozemelsky deposit in the Kara Sea. The company may get 18 more areas in 2011, five of which are located in the Barents Sea: The Pomorsky, the North Pomorsky 1 and 2, the West Matveyevsky, and the South Prinovozemelsky. In 2010, Rosneft filed 28 applications with the Ministry of Natural Resources for offshore areas it counts on receiving by 2020, while Gazprom filed only ten applications.

March 22, 2011 12:00

Alliance oil SPO to feature 5.8% of shareshttp://www.interfax.com/newsinf.asp?id=230474

MOSCOW. March 22 (Interfax) - Alliance oil Company will be conducting an SPO consisting of up to 10 million Swiss Depository Receipts (SDR), or roughly 5.8% of the

company's shares, says a statement from the Alliance group of companies controlled by Alliance Oil.

Cyprus-based Daumier Investments Ltd, which is affiliated with the Alliance group's main shareholders, will be offering institutional investors some of its Alliance Oil stock in the form of SDR.

Cf

Alliance Oil Company's major shareholder to sell up to 5.8% in the form of SDRs

http://www.bne.eu/dispatch_text14525

VTB CapitalMarch 22, 2011

News: According to Bloomberg, Daumier Investments Ltd. (the major shareholder of Alliance Oil Company (AOC), which has 51% in the company) plans to sell up to 10 million shares, or 5.8% of the share capital, in the form of Swedish Depositary Receipts in AOC. The proceeds are to be used to develop the investment projects of Alliance Group's shareholders. The company will not receive any proceeds. The selling shareholder has agreed, subject to customary exceptions, to enter into a lock-up agreement for a period of 90 days following the completion of the placement. The SDRs will be offered to certain eligible institutional investors with the final terms determined through a bookbuilding process.

Our View: The major shareholder of Alliance Oil Company is the Bazhaev family which, apart from controlling the company, has stakes in other different businesses, including gold producing assets. At the current market price, the stake is worth USD 194mn. As a result of the placement, the Bazhaev family would lose control in AOC but remain the major shareholder, with around 45% in the share capital. Therefore, from an operational standpoint the deal does not change much in AOC's current performance. However, we see the placement being marginally negative for the stock, as it creates the risk of an overhang. At current levels, we remain neutral on Alliance Oil Company and are reiterating our Hold recommendation.

Burgas-Alexandroupolis Pipeline to "hibernate" as Bulgaria balks at payinghttp://www.emg.rs/en/news/region/150519.html

22. March 2011. | 07:12

Source: Sofia News Agency

Construction of the pipeline has been on ice even after Bulgaria's government balked at the potential environmental damage that the pipeline could inflict on its resort-dotted coastline. The cabinet has stated that its final decision on the country's participation in the project will depend on its upcoming international environmental assessment.

Bulgaria has failed once again to pay its dues to the joint venture for the construction of the Burgas-Alexandroupolis oil pipeline, according to Transneft Vice President Mikhail Barkov.

On February 17, 2011, a joint general meeting of the Shareholders and the Supervisory Board of Trans-Balkan Pipeline B.V. (ТВР), the Bulgarian-Greek-Russian company, held in Rome, Italy, gave the Bulgarian government March 20 as a deadline to settle all of its dues for the Burgas-Alexandroupolis oil pipeline.

Even though back then all of the Company's shareholders, including the Bulgarian state, supported the idea that the project should be continued, including the revision of the Environmental and Social Impact Assessment (ESIA), according to the comments made by the Bulgarian Ministry of Environment and Water, Bulgaria has failed once again to pay the EUR 7.3 M it owes to the budget of the joint venture.

"The Bulgarian side did not transfer the money claiming some procedural obstacles. We still have money that were provided by the Russian shareholder, which should last the company until June," announced Mikhail Barkov, Chairman of TBP's Supervisory Board, as quoted by RIA Novosti, on Monday, March 21.

"If the Bulgarian side fails to treat the Burgas-Alexandroupolis positively, and does not adopt a positive environmental assessment for the oil pipeline, there will be a decision to put the company into a hibernation mode," he warned saying that neither Greece, nor Russia will pay any more for the project as Bulgaria is constantly refusing to do so.

The "hibernation mode" of Trans-Balkan Pipeline would include keeping one single office in its headquarters in Amsterdam and one single employee. Still, according to Barkov, it is "too early" to speak of that scenario; he says Russia still doesn't plan to abandon the project.

Meanwhile, Greek Deputy Foreign Minister Spyros Kouvelis revealed that Greece has been exercising pressure on Bulgaria for the construction of the Burgas-Alexandroupolis pipeline but that it is blocked by the Borisov government for political reasons.

Trans-Balkan Pipeline B.V. was registered on February 6, 2008, in Amsterdam (the Netherlands) in implementation of the tripartite agreement between the Governments of Russia, Bulgaria, and Greece on the construction and operation of the Burgas-Alexandroupolis oil pipeline, signed in Athens (Greece) on March 15, 2007.

According to the Russian reports, Bulgaria owes EUR 7.3 M as a contribution to the budget of the joint project company; in December 2010, there were concerns by Russia that Bulgaria wants to kill the project by defaulting on its dues. A senior Greek government official commented at the time that Bulgaria was moving to shed the oil pipeline under pressure by American oil interests.

In February, Russia refuted reports that it intended to abandon the project. Shareholders in the project to build the Burgas-Alexandroupolis oil pipeline have no intentions of giving up on it, the CEO of the Russian oil giant Transneft, Igor Demin said.

The Burgas-Alexandroupolis oil pipeline – one of the three major Bulgarian-Russian energy projects – appears to have run into much disrepute with the Bulgarian government in 2010.

In December, news emerged that Bulgaria failed to pay the EUR 6 M that it owes as its contribution to the joint project company with Greece and Russia, which is supposed to construct the Burgas-Alexandroupolis oil pipeline.

Ever since the center-right government of Bulgarian Prime Minister Boyko Borisov took office in the summer of 2009, it has been balking at the construction of the Burgas-Alexandroupolis oil pipeline, which had been promoted vigorously by the formed Socialist-led Stanishev Cabinet and the Socialist President of Bulgaria, Georgi Parvanov. It has also been met with staunch resistance along Bulgaria's southern Black Sea coast over environmental concerns.

In the summer of 2010, Borisov said that Sofia has no money to participate in the construction of the pipeline. Later Sofia has agreed to pay EUR 4.88 M as a contribution to the project company, Trans-Balkan Pipeline. The Bulgarian authorities, however, have made the construction of the pipeline conditional on complex environmental assessment procedures.

In November 2010, the Bulgarian Environment Ministry said the environmental impact assessment of the Burgas-Alexandroupolis oil pipeline is inadequate and needs to be reworked; the ultimate decision about whether Bulgarian will take part in the project has been put off for 2011.

Bulgarian Prime Minister Borisov, however, has written off the project on a number of occasions, declaring that there is no way the ultimate environmental assessment would be positive.

Bulgaria, Greece and Russia agreed to build the pipeline between Burgas and Alexandroupolis, taking Caspian oil to the Mediterranean skirting the congested Bosphorus, in 2007 after more than a decade of intermittent talks.

The agreement for the company which will construct the Burgas-Alexandroupolis oil

transit pipeline was signed by Bulgaria during Russian President Putin's visit to Bulgaria in 2008.

The 280-km pipeline, with 166 km passing through Bulgaria, would have an initial annual capacity of 35 million tons of crude oil, which could be later expanded to 50 million tons. Its costs are estimated at up to USD 1.5 B, up from initial estimates at USD 900 M.

The Trans-Balkan Pipeline company, which is in charge of the construction and subsequent operation of the future pipeline, and is headquartered in the Netherlands, was set up in 2008.

The Russian participant in the project, Pipeline Consortium Burgas-Alexandroupolis Ltd, has a share of 51%. It was founded jointly by three companies: AK Transneft (33.34%), NK Rosneft (33.33%), and Gazrpom Neft (33.33%).

The Bulgarian Joint stock company "Project Company Oil Pipeline Burgas-Alexandroupolis – BG" AD has a share of 24.5%. It was initially founded as jointly by two state companies, Bulgargaz (50%) and Technoexportstroy (50%) but was transferred in full to the Finance Ministry in February 2010.

The Greek participants are Helpe Thraki AE with 23.5% and the Greek government with 1%. The Helpe-Thraki AE was founded jointly by "Hellenic Petroleum" (25%) and "Thraki" (75%).

On July 16, 2010, the Bulgarian government completed the restructuring of its Project Company Oil Pipeline Burgas-Alexadroupolis – BG" AD, which sealed the transfer of the company under the responsibility of the Finance Minister.

Construction of the pipeline has been on ice even after Bulgaria's government balked at the potential environmental damage that the pipeline could inflict on its resort-dotted coastline. The cabinet has stated that its final decision on the country's participation in the project will depend on its upcoming international environmental assessment.

Three Bulgarian Black Sea municipalities - Burgas, Pomorie, and Sozopol - have voted against the pipe in local referendums over environmental concerns.

Municipalities neighboring Pomorie and nearby Burgas are also harboring fears that the pipeline could damage their lucrative tourism business, while environmental NGOs have branded the existing plans to build an oil terminal out at sea a disaster waiting to happen.

Greece has been exercising constant pressure over Bulgaria's Borisov Cabinet to push ahead the construction of the Burgas-Alexandroupolis oil pipeline, Greece's Deputy Foreign Minister Spyros Kouvelis revealed.

Both Greece and Russia are insisting that Bulgaria gives green light to the Bulgarian-

Greece-Russian oil pipeline project but the Borisov government is blocking it for political reasons, Kouvelis has told New Europe.

"I don't know because it depends on Bulgaria. We and the Russian side want very much to move it forward, but Bulgaria blocks it. We constantly say to all directions that we want it to move forward but the ball is in their court. This is a partnership between three and all three must want it and unfortunately Bulgaria has turned weird over this," the Greek diplomat said on the sidelines of an investors' conference organized by the Hellenic-Russian Chamber of Commerce in Athens, as cited by New Europe, which reminds that Russian oil pipeline monopoly Transneft has complained about Bulgaria not paying its contribution to the joint venture in charge of the BA pipe, Trans-Balkan Pipeline.

But Kouvelis told New Europe that it is not about finding an alternative, but that Bulgarian Prime Minister Boyko Borisov has been intransigent.

"Russia wants very much for the project to move forward as we also want to but, as long as Borisov is there, that's difficult. It's simply political. That's clear," the Greek Deputy Foreign Minister said.

Russian Ambassador to Greece Vladimir Chkhikvishvili is quoted as saying that he doesn't think Moscow is losing interest in Burgas-Alexandroupolis. Asked if Russia is considering both pipelines bypassing the Bosporus, the ambassador said, "Yes, still. But we are waiting for the final decision from Sofia."

"It is quite clear that Russia would like to build the Burgas-Alexandroupolis pipeline in addition to the Samsun-Ceyhan pipeline on the Turkish side. They'd like to have both so I would expect (Russian Prime Minister Vladimir) Putin making a very direct reference to Bulgaria's delay in approving Burgas-Alexandroupolis and try to push them along," said Chris Weafer, chief strategist at Uralsib bank, referring to Putin's trip to neighboring Serbia on 23 March.

Three Bulgarian Black Sea municipalities - Burgas, Pomorie, and Sozopol - have voted against the pipe in local referendums over environmental concerns.

Municipalities neighboring Pomorie and nearby Burgas are also harboring fears that the pipeline could damage their lucrative tourism business, while environmental NGOs have branded the existing plans to build an oil terminal out at sea a disaster waiting to happen.

Competing Bills Muddy the Waters Over Oil Spills http://www.themoscowtimes.com/business/article/competing-bills-muddy-the-waters-over-oil-spills/433459.html

22 March 2011By Roland Oliphant

Two competing bills are adding to the confusion around regulation of Russia's burgeoning offshore oil industry, to the frustration of both oil companies and environmentalists.

The rival drafts are a response to calls from industry and environmentalists for clearer legal guidance following the disastrous Gulf of Mexico oil spill last year.

After consultations with environmentalists and major oil companies, a group of State Duma deputies led by environment committee head Yevgeny Tugolukov have nearly finished drafting a bill based on the U.S. Oil Pollution Act of 1990.

The bill, which is due to be distributed to deputies by the end of March, would oblige Russian oil companies to contribute to a contingency fund to prevent and clean up oil spills at sea.

But Kommersant reported Monday that the Natural Resources and Environment Ministry has drafted a rival bill that it will submit to the government for inspection in the near future, before it is passed to the Duma.

The ministry's bill would give companies involved in drilling the choice of using a bank guarantee, taking out insurance or creating their own contingency funds reflecting the scale and nature of their offshore work.

Environmentalists are quite clear which one they prefer.

"The government has offered simply a series of amendments to current legislation. The amendments are minor, impact on nothing, and do not imply the creation of a fund or other financial mechanisms," Vitaly Gorokhov of the Ecojuris environmental law institute said in e-mailed comments.

In contrast, the deputies' bill was developed from a concept authored by World Wildlife Fund, and the group has worked in close consultation with the deputies who developed the draft, Yekaterina Khmeleva, environmental law program officer at WWF Russia, told The Moscow Times.

"That doesn't mean we think it's ideal. But in principle it is comprehensive, it covers much more than simply dealing with the result of oil spills and, most of all, it requires the creation of a contingency fund to use in emergencies," she said.

The Natural Resources and Environment Ministry says there's no need for a fund. "According to the law on subsoil resource use, only two state-owned companies [Gazprom and Rosneft] can work on the Russian shelf," Svetlana Radchenko, head of the ministry's legal department told Kommersant.

But Khmeleva insists that the ministry's draft "doesn't resolve any problems at all," and she even claims that WWF and big oil are, for once, on the same side.

"It is in the industry's interest to have a single law that comprehensively regulates procedure during oil spills," Khmeleva said by telephone. "We disagree on specific points, but in this sense the ministry's draft is as unsatisfactory to oil companies as it is to us."

In a joint statement released via the Association of Entrepreneurs and Industrialists, LUKoil, TNK-BP, Gazpromneft and Rosneft said their previous experience in dealing with oil spills "showed the urgent need for legislation to establish and clarify the authority" of the government.

A spokesman for LUKoil said the company had been closely involved in discussions on the new legislation, but declined to back either bill.

It is unclear how the impasse will be resolved. Khmeleva said she was aware of some "consultations" between the Duma and the ministry on forming one document.

Gazprom

March 22, 2011 10:46

Miller re-elected as Gazprom CEO for five yearshttp://www.interfax.com/newsinf.asp?id=230443

MOSCOW. March 22 (Interfax) - Alexei Miller has been re-elected as chief executive of Gazprom (RTS: GAZP) for another five years from May 31, 2011, the Russian gas giant's press office said.

Gazprom May Boost Exports http://www.themoscowtimes.com/business/article/gazprom-may-boost-exports/433472.html

22 March 2011

Gazprom said Monday that it was ready to boost supplies to Europe under a proposal by Prime Minister Vladimir Putin that would reroute Europe-bound liquefied gas to Japan.

Putin proposed raising gas exports to Europe by 60 million cubic meters per day to allow higher flows of liquefied natural gas to Japan, which is battling a nuclear power crisis after the March 11 earthquake. Gazprom’s single operational LNG project, Sakhalin-2, is located close to Japan, but its annual production of 10 million tons is largely committed

under long-term contracts. The proposal to increase pipeline exports would require European Union support, Gazprom Export said.

Japan’s capacity to increase imports of LNG is limited. “Japan has neither enough regasification capacity nor storage facilities. This should be taken into account,” said Valery Nesterov, energy analyst at Troika Dialog. (Reuters)