Russia 110208

Basic Political Developments Azerbaijani, Iranian and Russian railroaders meet today - . It is expected that the

sides will sign an agreement to create a joint company within the railway project North-South.

Medvedev, Yanukovich discuss bilateral cooperation - Russian President Dmitry Medvedev had a telephone conversation with his Ukrainian counterpart Viktor Yanukovich to discuss pressing issues of bilateral cooperation in trade, economy and other areas, the Kremlin press service said on Tuesday.

Foreign Minister Stubb to visit Northwest Russia - Foreign Minister Alexander Stubb will make a visit to Vyborg, St. Petersburg and Petrozavodsk on 8–10 February.

Kyrgyzstan, Russia to discuss JV plan to ship fuel to Manas air base Russia, Senegal foreign ministers to meet on Tuesday

o Trade and economic relations, cooperation in civilian nuclear and mining industries will be discussed between the Foreign Ministers of the Russian Federation and Senegal

Senator: Washington must pressure Russia on Moldova - Senator Richard Lugar, the highest-ranking Republican on the Foreign Relations Committee of the Democratic-controlled Senate, tasked his staff to research and write the report.

Bullet in envelope for Russian embassy in Tokyo o Bullet sent to Russian embassy in Japan island row - It was reportedly

accompanied by a note that said: 'The Northern Territories are an integral part of Japan.' The bullet was a dummy cartridge without gunpowder, Jiji Press said.

Protest against burning of Russian flag in Japan under way in Vladivostok Russia's sovereignty of the Kuril Islands unquestionable - Russia's sovereignty

with respect to the Kuril Islands is not subject to revision, said presidential aide Sergei Prikhodko. Russia’s Head of State will travel to the island, regardless of the reaction of Tokyo, he said.

Poland invites Russia to 'Weimar Triangle' - French President Nicolas Sarkozy, who was standing alongside Komorowski and German Chancellor Angela Merkel, said Poland's approach to Russia was "intelligent and bold".

Russian shipbuilders, military in conflict over Mistral deal - The Kommersant newspaper cited anonymous defense industry sources as saying state-run arms exporter Rosoboronexport will represent Russia in direct talks with France's DCNS from now on.

Russia to showcase 80 types of weaponry at Indian air show o India authorizes use of Russian Ka-32 helicoptero Russia is pursuing Multiple Helicopter Tenders in India

Rosatom might give up building Belene NPP - Russian state-run company Rosatom might give up building Bulgaria’s Belene nuclear power plant, because no additional agreement has been signed, which delayed the enforcement of the main contract, Interfax news agency reported, citing an anonymous source.

o Everything ready for Belene NPP construction – Atomstroyexport Latvian Law Attracts Russian Investors, Complaints - According to Kristopans,

almost all his buyers are Russians who have been attracted by the Latvian residency permit offer.

Rostransnadzor chief Kurzenkov dismissed List of officials who could be held to account in Domodedovo blast case sent to

presidento Russian intelligence officials fired over Moscow airport bomb

Islamist rebel says he ordered Russian bombingo Chechen terrorist claims responsibility for Domodedovo Airport bombing

Russian lawmakers to review probe into Moscow airport blast Top Russian rights activist calls UK reporter expulsion 'pressure on freedom of

speech'o Russia security service behind reporter ban: reporto Politics may be behind Guardian reporter's expulsion from Russia – experto Russia Expels British Journalist, Guardian Reports (Update1) o Guardian editorial: Press freedom: Retreat from Moscow - Is it as bad as

the old days? No. But it is bad enough. The expulsion of Luke Harding is a bad omen indeed

Internal Troops helicopter attacked in Chechnya - An air strike was launched against the suspected militant hideout in the forest

Branch of Caucasian terror group suppressed in SW Russia - On Tuesday in the Russian republic of Bashkortostan, local police have arrested the head and three other members of a branch of the terrorist group led by Doku Umarov, the most wanted Caucasian militant leader.

o Ministry of Internal Affairs: members of the "Caucasus Emirate" detained in Bashkortostan

o Terrorist group neutralized in Bashkortostan, leader arrested Russian hacker avoids jail over $10 million cyber theft Russia to field own team at F1 Reuters PRESS DIGEST - Russia - Feb 8 RIA Russian Press at a Glance, Tuesday, February 8, 2011 Volcanoes in Russia’s Kamchatka erupt, ashes threaten air service Officer Admits Report on Yashin’s Arrest was Falsified - The police officer who

detained Russian oppositionist Ilya Yashin during a recent Strategy 31 rally has admitted that he falsified the report detailing the arrest, Novaya Gazeta reports.

Engaging the Rebels - Until Tbilisi Changes Its Attitude Toward South Ossetia and Abkhazia, All Western Efforts to Secure Peace and Stability in the Region Will Fail

Kazakhstan: Russia Worries that Customs Union Outpost is Smugglers’ Paradise Boise Man Locked in Russian Prison Returns to Home

National Economic Trends Russia's 2010 trade surplus widens 24.7% to $167.5 bln Rouble hits new highs vs the basket

Privatization Bonanza - The Russian Government Is Launching the First Stage of an Ambitious Privatization Program with the Sale of Assets in VTB Group, the Nation's Second Largest Bank By

Punjab potato growers on verge of Russia deal - A handful of potato growers in Punjab are in the final stages of signing a deal with Russian traders for exporting close to 10,000 tonnes of the crop to Russia for the first time, according to reports.

Russia fears one potato, two potato, three potato more - Commentators obsess over the impact of oil prices on the Russian economy, but it's soaring potato prices that are threatening Russia's recovery and could spark social unrest this year.

CONFERENCE CALL: Little consensus in evidence at Troika's do - Just spent two days at Troika Dialog's Russia Forum 2011 on February 2-3, which is always fascinating, as along with Renaissance Capital's conference in the summer, this annual investment conference provides a benchmark for international sentiment towards Russia. By Ben Aris in Moscow

Business, Energy or Environmental regulations or discussions Norilsk, VimpelCom, VTB, Rosneft: Russia Equity Preview Russian Stocks Fall 1st Time in 3 Days as Oil Retreats on Egypt Micex to introduce minimum commission from March 1 Russian banking sector 2010 results BNP Paribas Investment Reduces Stake In Petropavlovsk Group Severstal said an independent audit of its Putu iron ore project in Liberia shows

that it holds 2.37 billion tons, doubling the company’s estimated reserves, Severstal said Monday.

Oil tycoon buys Port of Murmansk BRIEF-Telenor says Vimpelcom must improve Russia ops Telecoms to Sponsor Online 'Cybermilitia' Russia's WBD to grant over $1 bln to PepsiCo to buy shares of WDB minorities -

paper

Activity in the Oil and Gas sector (including regulatory) Rosneft and TNK-BP: Would It Work? Swiss receive inflow of Russian oil traders - The Geneva Trading and Shipping

Association, the industry body, claims the Swiss city handles about 75 per cent of Russia’s oil exports.

Gazprom Poland initiates new round of talks on gas price discounts Shell may offer Gazprom assets to gain LNG plant expansion Shell Said to Offer Gazprom Assets to Gain LNG Plant Expansion Deloitte to evaluate Gazprom's operational efficiency on domestic market Gazprom Neft closes the book, sets coupon rate on five-year bonds at 8.50%, on

seven-year bonds at 8.90% FT: Your chance to quiz Gazprom’s Alexander Medvedev

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Full Text Articles

Basic Political Developments

Azerbaijani, Iranian and Russian railroaders meet todayhttp://en.trend.az/capital/business/1825275.html

08.02.2011 12:36 

Azerbaijan, Baku, Feb.8 / Trend T. Jafarov /

Today, a meeting of the heads of the railway departments of Iran, Azerbaijan and Russia will be held in the Iranian Presidential Apparatus with the participation of Iranian Deputy Vice President for Economic Affairs Ali Agamohammadi. It is expected that the sides will sign an agreement to create a joint company within the railway project North-South.

As head of Iranian Railways Department Abdulali Sahib Mohammadi said yesterday at a meeting with his Russian counterpart, Iran has adopted laws to develop rail freight and simplify investments in this sphere, the Iranian Railways Department reported.

According to Mohammadi, in terms of prospective development, great attention is paid to foreign investments and participation in private sector projects.

According to him, in accordance with the plan, it is planned to increase the length of the state railways 2.5 times to 25,000 kilometers. The Iranian side is ready to cooperate with Russian Railways in this sphere.

The Rasht-Astara-Astara Railway project was discussed with his Russian counterpart, Mohammadi said.

"In the sphere of cooperation with Russia, it is planned to reconstruct railways, moving to double-track railways, the electrification of the Tabriz-Azershehr railroad branch and the modernization of Iranian railways," he said.

According to head of Russian Railways Vladimir Yakuni n , today Russia cooperates with Iran in the electrification of railway branches. However, if the Iranian side is interested, then Russia is ready to expand cooperation and invest in this sphere.

Medvedev, Yanukovich discuss bilateral cooperation

http://www.itar-tass.com/eng/level2.html?NewsID=15932053

08.02.2011, 10.48

MOSCOW, February 8 (Itar-Tass) - Russian President Dmitry Medvedev had a telephone conversation with his Ukrainian counterpart Viktor Yanukovich to discuss pressing issues of bilateral cooperation in trade, economy and other areas, the Kremlin press service said on Tuesday.

It said they spoke late on Monday.

Ministry for Foreign Affairs 8.2.2011 8.11

Foreign Minister Stubb to visit Northwest Russia http://www.valtioneuvosto.fi/ajankohtaista/tiedotteet/tiedote/en.jsp?oid=320846

Foreign Minister Alexander Stubb will make a visit to Vyborg, St. Petersburg and Petrozavodsk on 8–10 February. During his visit, Foreign Minister Stubb will meet widely with local decision-makers and authorities and with Finns active in the region. Stubb will inaugurate the Finnish Visa Application Centre in St. Petersburg and will deliver speeches at a seminar on Arctic issues and to university students in St. Petersburg and Petrozavodsk.

On his way to St. Petersburg, Stubb will become acquainted with activities at the Vaalimaa border crossing point and the new Allegro high-speed train. The Foreign Minister will meet with Leningrad region leaders in Vygborg and with Governor Valentina Matviyenko in St. Petersburg. The topics of these discussions will include, among others, prospects for cooperation between Finland and Russia in Northwest Russia.

In St. Petersburg, Stubb will inaugurate Finland’s new Visa Application Centre. Three out of every four visas granted by Finland are applied for in St. Petersburg. Last year, Finland’s Consulate General in St. Petersburg granted 751,000 visas. The number of applications rose by one-third.

In St. Petersburg, the Foreign Minister will also meet with representatives of Finnish and Nordic companies operating in the city, and he will visit Stockmann’s new department store. In addition, Stubb will visit Finland House, where he will become acquainted with the Finnish school and the activities of other organizations operating in Finland House.

While in St. Petersburg, Stubb will speak at a seminar aiming to strengthen the bilateral Arctic partnership between Finland and Russia. He will also make presentations to students at the State Universities of St. Petersburg and Petrozavodsk.

In Petrozavodsk, Stubb will also meet with leaders of the Karelian Republic.

Additional information: Mikko Hautala, Adviser to the Minister for Foreign Affairs, mobile tel. +358 40 834 6758, Jaana Teckenberg, Head of the Unit for Russia, mobile tel. +358 40 754 2419, and Sanni Grahn-Laasonen, Press Attaché to the Minister for Foreign Affairs, mobile tel. +358 40 732 8340

02/08 10:51   Kyrgyzstan, Russia to discuss JV plan to ship fuel to Manas air basehttp://www.interfax.com/

02/08 09:28   Russia, Senegal foreign ministers to meet on Tuesdayhttp://www.interfax.com/

GOOGLE TRANSLATION

Trade and economic relations, cooperation in civilian nuclear and mining industries will discuss the Foreign Minister of the Russian Federation and Senegal http://www.itartass-sib.ru/index.php?option=com_content&view=article&id=28043:torgovo-ekonomicheskie-svyazi-sotrudnichestvo-v-sfere-mirnogo-atoma-i-gornodobyvayushhej-promyshlennosti-obsudyat-glavy-mid-rf-i-senegala&catid=37:mr&Itemid=82

08.02.2011 11:17 | MOSCOW, February 8. Itar-Tass. Development of trade and economic ties and cooperation in civilian nuclear and mining industries will be discussed today in Moscow, Russian Foreign Minister Sergei Lavrov and his Senegalese counterpart Madike Niang. "The meeting is designed to confirm the mutual disposition to deepen political dialogue, the desire to bring economic and trade relations to a qualitatively new level", - said Russian Foreign Ministry spokesman Alexander Lukashevich. Unfortunately, experts say, economic and trade relations to date have not received a significant development. " "Trade between the two countries does not exceed $ 4 million - experts stress. - Nevertheless, Senegal is interested in establishing bilateral cooperation, including through the RF subjects, such as Tatarstan. According to experts, the most promising sectors for cooperation are energy, exploration and mining and fishing. In Senegal, have shown interest in the Russian project of floating nuclear power plants with low capacity. On a regular basis, supported by the Russian-Senegalese ties in the field of culture, education and sports. Interuniversity held practice of exchanging students. Many Senegalese study the Russian language. The Russian football clubs playing Senegalese athletes. Particular attention will be allocated FM state of affairs in Africa. "It is planned to raise

the problems associated with the effects of the global financial crisis, the proliferation of cross-border crime and drug trafficking, peacemaking in hot spots and finding solutions to conflicts, which is one of the main obstacles to the development of the African continent," - said Lukaszewicz. Among the other topics on the agenda, he highlighted the cooperation in the UN and other international organizations, promoting Africa's development should be exercised multilaterally. The parties also intend to sign an intergovernmental agreement on cooperation in fisheries, as well as an interdepartmental Memorandum of Understanding between the Ministry of Culture.

Senator: Washington must pressure Russia on Moldovahttp://www.google.com/hostednews/afp/article/ALeqM5jS0KnSsM3TuaGaH8FiGSwsv3BqtQ?docId=CNG.421844de3e38acde175203b0eacf6239.3a1

(AFP) – 15 hours ago

WASHINGTON — The United States should step up efforts to assist the pro-Western government in Moldova by pressuring Russia to resolve a separatist movement in the former Soviet state, according to a Senate report released Monday.

Senator Richard Lugar, the highest-ranking Republican on the Foreign Relations Committee of the Democratic-controlled Senate, tasked his staff to research and write the report.

It recommends that President Barack Obama's administration build on French and German efforts to prioritize Transdniestr, a narrow strip of land controlled by Russian-backed separatists since the collapse of the Soviet Union.

"Decades of experience suggest that US leadership on issues of European security remains indispensable," the report states.

Lugar's report calls for "high-level diplomatic attention" to persuade Russia that "its assistance in brokering a settlement in Transdniestr, and other conflict regions in Eurasia, would serve as an illustration that developments in NATO-Russia relations can tangibly advance Eastern European security."

French President Nicolas Sarkozy and German Chancellor Angela Merkel last year raised Transdniestr security questions with Russian President Dmitri Medvedev.

"The United States should strongly support European efforts to resolve the conflict and thereby assist Moldova in advancing its Euro-Atlantic aspirations," Lugar wrote in the introduction.

"A resolute US commitment to this cause will ensure that we do not cede influence in a region of paramount importance to US foreign policy," Lugan added.

The report said Russia has failed to fulfill its 1999 pledge to remove its military equipment from Transdniestr, where polls show that Russian Prime Minister Vladimir Putin is the most popular politician among the half-million inhabitants.

Several hundred Russian troops remain there and serve with Moldovan and Transdniestrian troops as peacekeepers.

Transdniestr has remained peaceful since the end of a war between separatists and Moldova in 1992, but the region is a hotbed of criminal activity including trafficking of people and weapons.

Moldova's government is "saddled by the unresolved status of Transdniestr," the report said.

Europe's poorest country, Moldova remains mired in a political crisis after elections last November failed to overcome a stalemate in parliament between pro-Western liberals and the pro-Moscow Communists.

In January, Moldova's parliament approved the composition of a new government. Of the 19-member cabinet comprised of members of the country's ruling coalition of pro-European parties, 13 kept their posts, including Prime Minister Vlad Filat.

The United States is providing $262 million in development aid to Moldova, in a compact that requires democratic reforms. The US also provides military training to Moldovan officers.

Bullet in envelope for Russian embassy in Tokyo http://english.ruvr.ru/2011/02/08/43316013.html

Feb 8, 2011 10:13 Moscow Time

The Russian embassy in Tokyo received an unnamed package on Monday containing a bullet and a demand to “give back the Northern territories”.

The embassy has lodged an official protest with the Foreign Ministry over the recent desecration of the Russian flag and other outrages committed by Japanese ultranationalists. Police are investigating.

Feb 8, 2011

Bullet sent to Russian embassy in Japan island row http://www.straitstimes.com/BreakingNews/World/Story/STIStory_632482.html

TOKYO - A RIFLE bullet has been mailed to the Russian embassy in Japan, police said on Tuesday, amid a worsening territorial row over a string of disputed islands.

The disagreement over the Southern Kurils, known as the Northern Territories in Japan, has prevented the signing of a peace treaty between Tokyo and Moscow ever since the end of World War II.

Tensions flared on Monday when Japan's Prime Minister Naoto Kan called President Dmitry Medvedev's visit last year to the islands an 'unforgivable outrage' and the Kremlin again vowed it would never give up the Kurils.

On the same day, marked in Japan as the annual Northern Territories Day, a seven-centimetre rifle bullet was found in an envelope mailed to the Russian embassy in Tokyo, media reports said.

It was reportedly accompanied by a note that said: 'The Northern Territories are an integral part of Japan.' The bullet was a dummy cartridge without gunpowder, Jiji Press said.

A police spokesman confirmed that a bullet had been sent to the embassy, but refused to give further details.

The islands have been controlled by Moscow since they were seized by Soviet troops in the final days of World War II, with their Japanese residents expelled and replaced by Russian settlers. -- AFP

February 08, 2011 09:52

Protest against burning of Russian flag in Japan under way in Vladivostokhttp://www.interfax.com/newsinf.asp?id=220663

VLADIVOSTOK. Feb 8 (Interfax) - A group of young people are staging a rally outside the Japanese diplomatic mission in Vladivostok to collect signatures in support of a statement condemning the burning of a Russian flag in Tokyo.

Photographs depicting the Kuril Islands with a caption reading "The Kuril Islands are Russia's Territory" and a poster with a slogan "The Empty Words of the Japanese Government Won't Boost Its Rating" were attached to the fence surrounding the Japanese diplomatic mission.

Volunteers are distributing pamphlets proclaiming the position of those attending the rally and are encouraging passers-by to sign a poster with a slogan reading "The Desecration of the Flag is a Disgrace for Japan".

Once the demonstration is over, its organizers plan to forward this poster to the Japanese Consulate General in Vladivostok.

"The Kuril Islands are not the "Northern Territories" of Japan. They are our land, which cannot be disputed. Today the Japanese government is effectively waging an information war against Russia, seeking to win points from its voters. Japan must apologize to Russia and must stop its outbursts in territorial issues," one of the rally organizers said.

The South Kuril Islands lie north of Hokkaido and are known as the Northern Territories in Japan, which designated February 7 as Northern Territories Day.

In recent years, Japanese leaders have made a series of public remarks addressing the "territorial" problem. However, their rhetoric has become more heated in 2011 following frequent visits by Russia's high-ranking officials to the islands.

tm

Russia's sovereignty of the Kuril Islands unquestionablehttp://english.ruvr.ru/2011/02/08/43306558.html

Feb 8, 2011 03:23 Moscow Time

Russia's sovereignty with respect to the Kuril Islands is not subject to revision, said presidential aide Sergei Prikhodko. Russia’s Head of State will travel to the island, regardless of the reaction of Tokyo, he said.

On Monday, Prime Minister of Japan Naoto Kan called the recent visit of Dmitry Medvedev in the Kuril Islands "inexcusable rudeness."

Sergey Prikhodko explained that when visiting a particular region of the country to solve urgent problems in the interests of the citizens the head of state does not need to get someone else approval.

The South Kuril Islands were transferred to Russia at the end of the Second World War.

Russian sovereignty over these territories is enshrined in international instruments.

Poland invites Russia to 'Weimar Triangle'http://www.euractiv.com/en/future-eu/poland-invites-russia-weimar-triangle-news-501974

Published: 08 February 2011Polish President Bronisław Komorowski said yesterday (7 February) that he would welcome Russia to meetings of the Weimar Triangle countries – comprising Poland, Germany and France – as a way of strengthening Moscow's ties with the EU. EurActiv Poland reports.

Speaking at a press conference in Warsaw's Wilanów palace, Komorowski said that a meeting of the 'Weimar Triangle' with Russian President Dmitry Medvedev would be "highly advisable".

French President Nicolas Sarkozy, who was standing alongside Komorowski and German Chancellor Angela Merkel, said Poland's approach to Russia was "intelligent and bold".

Any moves reaffirming that the Cold War was over were welcome, he added.

Komorowski has been pushing for a revival of so-called 'Weimar Triangle' meetings (see 'Background') despite the fact that many experts claim the formula has died, because Warsaw on the one hand and Paris and Berlin on the other have divergent interests.

Indeed, the need to coordinate views ahead of the upcoming Polish EU Presidency, set for the second half of this year, appears to have been a factor in the decision to convene another 'triangle' meeting.

The three countries share the common objective of better coordinating their security and defence policies in an EU framework. One of the priorities of the Polish EU Presidency will be to make progress on European defence policy, according to press reports.  

Pact for Competitiveness

For their part, Merkel and Sarkozy are taking the opportunity to push Poland to endorse their newly proposed 'Pact for Competitiveness', aimed at strengthening Europe's economy. The pact met with opposition from several member states as soon as it was unveiled at an EU summit last Friday.

"Regarding this competitiveness pact […] we would like to invite countries that don't yet have the euro to participate," Merkel said at the press conference.

"This pact, where there are most opportunities for reforms, is open and we would like to see our Polish friends [...] participate because they are a reform-friendly country with a tradition of [fiscal] consolidation," said Merkel, quoted by Reuters.

One of the measures of the 'Pact for Competitiveness' is that EU countries should insert a 'debt alert mechanism' into their national constitutions. Poland already has such a constitutional text and is struggling to prevent its public debt from exceeding 55% of gross domestic product (GDP).

EU budget

The three leaders also discussed the EU's next long-term budget, an issue which is dividing net contributors, like Germany and France, and their poorer neighbour Poland, which fears that generous EU funding for infrastructure and cohesion may be slashed to match austerity cuts in national budgets.

Merkel and Sarkozy signalled that these would indeed be difficult talks.

"Everybody must understand there is a need to curb the deficit of particular member states. In this regard you cannot treat the EU budget differently to national budgets, as the EU budget is directly linked to member states' budgets," Sarkozy said.

Asked to comment on the matter, Komorowski was cautious.

"We are now awaiting the European Commission's proposals [...] Polish expectations are linked to our engagement in the Cohesion Policy," he said.

While the leaders were in their meeting, activists from Polish trade union Solidarność were protesting against French investment in the Polish energy sector. French giants GDF Suez and EDF Energy want to purchase shares in the state-owned Polska Grupa Energetyczna (PGE), Poland's largest power company.

Russian shipbuilders, military in conflict over Mistral dealhttp://en.rian.ru/mlitary_news/20110208/162500466.html

06:40 08/02/2011

Russia's United Shipbuilding Corporation (USC) has been taken out of the contractual talks with France on the purchase of Mistral class amphibious assault ships, a Russian business daily said Tuesday.

The Kommersant newspaper cited anonymous defense industry sources as saying state-run arms exporter Rosoboronexport will represent Russia in direct talks with France's DCNS from now on.

Kommersant speculates that the removal of the USC from the talks could be the result of the company's aspirations to acquire a status of an "independent dealer" on the lucrative arms exports market.

Rosoboronexport, backed by the Russian Defense Ministry, has almost monopolized Russia's arms exports and apparently does not want new players to bite into its share in enormous profits from growing arms sales, which totaled $10 billion in 2010.

Moscow and Paris signed on January 25 an intergovernmental agreement to jointly build four Mistral-class helicopter carriers for the Russian Navy.

Russia's input to the construction of the first Mistral-class warship will be 20% and 40% in the second.

The third and fourth ships are to be built in Russia, whose share of labor input will subsequently rise to 80%.

The talks on the actual contract to build Mistral ships are still underway. The Russian Defense Ministry earlier said the contract could be signed in April-march this year.

Under the Russian-French agreement the first Mistral-class ship, with a price tag of 720 million euros, is expected to be built in late 2013-early 2014 and the second in late 2014-early 2015.

A Mistral-class ship is capable of carrying 16 helicopters, four landing vessels, 70 armored vehicles, and 450 personnel.

A number of Russia's neighbors have expressed concern over the upcoming deal, in particular Georgia and Lithuania.

However, the first two Mistral class ships will most likely join Russia's Pacific Fleet with an obvious task to protect the disputed Kuril Islands.

MOSCOW, February 8 (RIA Novosti)

Russia to showcase 80 types of weaponry at Indian air showhttp://en.rian.ru/mlitary_news/20110208/162498403.html

Russia will exhibit over 80 types of weaponry at the upcoming Aero India 2011 air show, state-run arms exporter Rosoboronexport said in a statement.

Aero India-2011, which will be held in the southern city of Bangalore on February 9-13, is expected to attract the record number of over 600 manufacturers, vendors and suppliers from 63 countries.

Russia will be represented by 35 companies, including MiG, Sukhoi, Almaz-Antei and Engineering Design Bureau.

AIRCRAFT

Russia will traditionally promote MiG-35 and Su-35 fighter jets, the Yak-130 combat trainer, two versions of Il-76MD transport plane (with different engines), the Il-78MK aerial tanker and MiG-29K and MiG-29KUB naval fighters.

The Be-200 amphibious aircraft will most likely be one of the top attractions of the Russian exhibit as its popularity with foreign customers steadily grows. The plane could be used in a wide variety of roles, from maritime reconnaissance and rescue to firefighting.

HELICOPTERS

Rosoboronexport and Russian Helicopters will show the Mi-28NE attack helicopter, the light multirole Ka-226T and the heavy transport Mi-26. All three helicopters are currently taking part in separate Indian helicopter tenders.

The visitors will also be able to receive information about the Mi-35M combat transport helicopter, the Kamov Ka-31 radar surveillance helicopter and the Ansat and Kamov Ka-32A11BS multi-role helicopters.

AIR DEFENSE

The air defense part of the Russian exhibit will be represented by the Tor-M2E, the S-300VM, the Buk-M2E and the Tunguska-M1 systems.

Russia's Engineering Design Bureau will unveil a new ultra short-range air defense system based on the Strelets multiple launcher for the portable Igla missiles.

Russia is the world's second largest conventional arms exporter after the United States. In 2010, Russian defense industry companies delivered about $10 billion worth of arms to foreign customers.

MOSCOW, February 8 (RIA Novosti)

India authorizes use of Russian Ka-32 helicopterhttp://english.ruvr.ru/2011/02/08/43344602.html

Feb 8, 2011 11:46 Moscow Time

India has allowed the use of the Russian civilian all-weather helicopter Ka-32.

According to the Russian Helicopters holding, deliveries are due to begin this year.

Ka-32 helicopters are currently effectively being used in Spain, Portugal, Switzerland, Canada, South Korea, Taiwan, Japan, China and so on, - in more than 30 countries all told.

Russia is pursuing Multiple Helicopter Tenders in India

February 8, 2011

http://defense-update.com/wp/20110208_russian_helicopters.html

Pursuing multiple Indian Ministry of Defense helicopters tenders Russian helicopter manufacturers are promoting a line of military helicopters at Aero India 2011, through the Russian state-owned arms marketer Rosoboronexport. In recent years exports of Russian rotary-wing aircraft have been steadily growing with initial deliveries of Mi-17 military transport helicopters to the Indian Air Force.

At Aero-India 2011 Russia is promoting the new Mi-28NE the new export version of the ‘Night Hunter’ combat helicopter, inducted into service with the Russian Army in 2009. In India the Mi-28NE is competing against the American AH-64D Apache, on the Indian tender for the supply of 22 attack helicopters. Two competitors already dropped out of the competition – the Eurocopter Tiger and Inalian A-129 Mongoose. This is the first time the Russian gunship is competing in the international market and Moscow is hopeful that the Indian tender will bring establish the credibility the Night Hunter deserves, among the world’s leading helicopter gunships. Like its U.S. competitor, the Mi-28NE helicopter employs a wide range of weapons, boasts unique survivability features and can operate in day, night and under most adverse weather conditions. These helicopters started entering service with the Russian Armed Forces in 2009. Similar to the American Apache, Mi-28 was designed in the 1980s and received NATO reporting name ‘Havoc’. Unlike the Apache, operational fielding was delayed by more than two decades, as cashed stripped Russia could not afford full scale production.

Russia is also positioning the Ka-226T light multi-role helicopter to compete for the Indian Army multi-role helicopter tender. A significant advantage offered by this type is its service ceiling and optional mission specific reconfiguration, utilizing mission modules installation. Russia is also after India’s tender for heavy lifters, offering the Mi-26T2. The unique model offered to India has the world’s heaviest load-carrying capacity (up to 20 tons).

Rosatom might give up building Belene NPP http://www.focus-fen.net/index.php?id=n241615

07 February 2011 | 18:52 | FOCUS News Agency

Home / WorldMoscow. Russian state-run company Rosatom might give up building Bulgaria’s Belene nuclear power plant, because no additional agreement has been signed, which delayed the enforcement of the main contract, Interfax news agency reported, citing an anonymous source.The move would affect negatively the investment attractiveness of the project, reads Rosatom chief’s note, which Interfax has obtained.

Everything ready for Belene NPP construction – Atomstroyexport

http://www.itar-tass.com/eng/level2.html?NewsID=15931874&PageNum=0

07.02.2011, 23.20

MOSCOW, February 7 (Itar-Tass) -- Everything is ready for large-scale construction at the site of the future Belene nuclear power plant in Bulgaria, with all the necessary infrastructure being in place, the Atomstroyexport company said on Monday, February 7.

The company’s Vice-President Gennady Tepkyan, who oversees the Belene NPP project, said Atomstroyexport would “move on to active construction already this year”.

“It will take 59 months to build the first unit, and the second one will be commissioned 12 months after that,” he said.

He noted that the construction of the nuclear power plant would allow “Bulgaria to preserve its energy independence and sustain its industrial and economic growth.”

Independent international experts say that like no other such project, the Belene NPP project is in a high degree of readiness. The Russian project takes into account high seismic activity in the region, provides for active and passive safety, and designs the reactor building to be able to withstand the fall of a large commercial plane of up to 400 tonnes.

The project was studied and approved by the specialised German company Wolfel.

Valery Rybenko, project deputy supervisor, said, “A great deal of attention is paid to localisation of equipment, work and services supplies. Thirty percent of orders will be placed at Bulgarian enterprises… at the peak of construction, up to 10,000 people will be working at the site.”

The project also involves leading European companies such as Areva, Siemens, Nukem Technologies, GNS.

Russia and Bulgaria signed a memorandum on late November 2010 that lays out the principles of establishing a project company to build the Belene nuclear power plant.

The Belene NPP will cost 6.29 billion euros, Rosatom head Sergei Kiriyenko said.

Earlier, Bulgarian Minister of Economy, Energy and Tourism Traicho Traikov said the cost of building the Belene nuclear power plant proposed by Russia was “excessive” expressed hope that it would be reduced to less than six billion euros in the course of negotiations.

The nuclear power plant will be profitable, and investments will repay in 18-20 years, Kiriyenko said.

“We will be ready to start casting concrete in September 2011, and the first unit will be commissioned in 2016,” he said.

The full set of the nuclear island for unit No. 1 of the Belene NPP will be delivered to Bulgaria by the end of 2011.

Kiriyenko stressed that an updated feasibility study prepared on Bulgaria's demand has been handed over to Bulgarian supervisory authorities for examination, including by international experts and IAEA specialists.

“So the Bulgarian side can see that the project meets all environmental standards and safety guarantee requirements adopted in the European Union,” Kiriyenko said.

“We are ready to lend and invest in the project,” he added, noting that the Bulgarian government should decide on the share it would like to keep in this project.

At the same time, he said Serbia and several other European entities have expressed its willingness to buy into the project. “We support this option,” he said.

Kiriyenko believes that the construction of the nuclear power plant can start quite quickly using the loan to be provided by Russia.

“We will ensure the necessary initial funding. It will be a profitable project,” he said.

Bulgaria started experiencing problems with the project after the outbreak of the global financial crisis. The situation deteriorated after the investor - Germany's RWE concern that was bidding for 49 percent of the NPP shares -- had withdrawn from the project. Now Bulgaria “is looking for a strategic partner”.

Russia is one of the main participants in the project for the construction of the Belene NPP. It is expected to finance the work through a specially established project company and is ready to invest a total of 1.9 billion euros in two years.

The discussions on constructing a second nuclear power plant started in the early 1970s. The Belene site was approved for the construction of a second Bulgarian NPP by a Council of Ministers decree on March 20, 1981. The site was handed to the Ministry of Economics on December 31, 1981 and the documentation for the construction site's preparation was prepared in late 1980 and early 1981 by Energoproekt Sofia. The site's preparation in accordance with the draft projects began in early 1981.

The foundations of the future power plant were laid in 1987 after the design of Atomenergoproekt Kiev from the USSR and Energoproekt Sofia. The design suggested the construction of four VVER-1000/V 320 reactors. Between 1988 and 1990 40 percent of the construction work of reactor 1 was finished and 80 percent of the equipment was supplied. The project was abandoned in 1990 due to the democratic changes in Bulgaria and only conservational work was done. In 2002, the government decided in-principle for a re-start of the Belene Project. On May 10, 2005, the National Electric Company launched a procedure for selection of a contractor for the engineering, procurement, and commissioning of Belene Nuclear Power Plant, Units 1 and 2.

In late October 2006, the offer of the Russian Atomstroyexport, the French Framatome (Areva), and the German Siemens using third-generation VVER-1000/V-446B reactors was approved by the National Electric Company.

Latvian Law Attracts Russian Investors, Complaints http://www.themoscowtimes.com/business/article/latvian-law-attracts-russian-investors-complaints/430525.html

08 February 2011The Moscow Times

A new Latvian law that provides residency rights to foreign investors has provided a boost to the real estate market and nationalist sentiment alike, the BBC reported.

The new law passed came into effect in July and de facto allows non-EU citizens to acquire the right to reside in the EU and travel freely within it — if they purchase Latvian property of at least 70,000 euros ($95,000) in value, or invest in a business.

Property owners say sales are increasing.

"One year ago the market was completely dead. Basically, there was no proper trading. Nothing. But now everything has changed and the number of deals is increasing,” said apartment building owner Kristaps Kristopans.

According to Kristopans, almost all his buyers are Russians who have been attracted by the Latvian residency permit offer.

Although the law does not give investors the right to work anywhere within the European Union, they can still enjoy the freedom of movement within all 25 EU countries in the Schengen zone.

However, not everyone is happy with the new law. Members of the Latvian National Party protested when the bill proposing to grant the privileges was introduced in the parliament. They think the incentive to foreign buyers will inevitably increase prices, making real estate less accessible for Latvians.

"The government is trying to sell our country. They do not bother to think how to bring back Latvians who left the country," said Hardis Paradnieks, one of those opposed to the new law.

Robert Zile, a member of the Latvian parliament, agrees with the opponents of the new law and says the influx of Russian investments will increase Moscow's influence on the country.

February 08, 2011 12:13

Rostransnadzor chief Kurzenkov dismissedhttp://www.interfax.com/newsinf.asp?id=220707

MOSCOW. Feb 8 (Interfax) - Prime Minister Vladimir Putin has freed Gennady Kurzenkov from his duties as chief of the Federal Transport Oversight Service, Rostransnadzor, the government press service reported on Tuesday.

Kurzenkov was relieved of his duties at his own request, it said.

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List of officials who could be held to account in Domodedovo blast case sent to presidentToday at 10:00 | Interfax-Ukraine Moscow, February 8 (Interfax) - Russian Federal Security Service (FSB) Director Alexander Bortnikov has provided President Dmitry Medvedev with a list containing the names of officials who could be held accountable as part of the investigation into the January 24 explosion at Moscow's Domodedovo Airport, Medvedev's spokeswoman Natalya Timakova told Interfax.

"Indeed, the order has been executed. The list of officials has been forwarded to the president," she said.

On January 27, following the Domodedovo terrorist attack, Medvedev gave the Interior Ministry and FSB until February 5 to compile a list of officials in charge of the fight against terrorism and transportation security who could be held accountable as part of the inquiry into the incident.

Two days after the explosion, Russian Interior Minister Rashid Nurgaliyev fired Domodedovo Airport's acting police chief Alexander Trushanin, his acting first deputy Alexander Budtsov and acting deputy Alexander Degteryov.

The Russian government has been given until February 15 to decide which of its officials responsible for transportation security could be held to account over the January 24 explosion.

Read more: http://www.kyivpost.com/news/russia/detail/96617/#ixzz1DLxzeUxi

Russian intelligence officials fired over Moscow airport bombhttp://en.rian.ru/russia/20110208/162502613.html

A number of senior Russian intelligence service officials have been fired after failing to prevent a deadly bomb attack on Moscow's busiest airport last month, a Kremlin spokeswoman said on Tuesday.

The January 24 suicide attack on the international arrivals zone of Domodedovo International Airport killed 36 people and injured dozens more.

Russian President Dmitry Medvedev said security checks at the airport were "in a state of anarchy" and instructed the Interior Ministry and Federal Security Service (FSB) to propose the dismissals of anti-terrorism and transport officials if negligence was proved.

"Such decisions have been made," Kremlin spokeswoman Natalya Timakova told reporters.

A FSB source confirmed there had been a shake-up, but said that anti-terrorism department chiefs "continue working in their posts."

A regional transport chief, a Moscow police deputy head and several others were sacked last month.

Chechen warlord Doku Umarov claimed responsibility for the airport attack in a video carried by the Kavkaz Tsentr website on Monday.

He said further attacks would continue in pursuit of an independent Islamist state in Russia's troubled North Caucasus.

He also earlier claimed twin suicide attacks on the Moscow metro last March that left 39 people dead.

 

MOSCOW, February 8 (RIA Novosti)

Islamist rebel says he ordered Russian bombinghttp://in.reuters.com/article/2011/02/08/idINIndia-54722920110208

LONDON | Tue Feb 8, 2011 5:35am IST

LONDON (Reuters) - Islamist rebel leader Doku Umarov said on Monday he had ordered a suicide bombing that killed 36 people at Russia's busiest airport last month.

Umarov, 46, speaking in a video carried by the Islamist website www.Kavkazcenter.com, said there would be further such attacks in pursuit of an independent Muslim state governed by Sharia law in Russia's Caucasus region -- a territory embracing Chechnya, Dagestan and other nearby territories.

Umarov appeared in the video, apparently made on the day of the Jan. 24 attack on Moscow's Domodedovo airport, wearing combat fatigues, talking quietly and hesitantly.

"The special operation today in Moscow ... was carried out on my orders," said Umarov, who styles himself the Emir of the Caucasus.

"These special operations will continue ... to show the chauvinist regime of (Russian Prime Minister Vladimir) Putin in Moscow ... that we can carry out these operations where we want and when we want," he said, pointing a finger towards the camera.

The attack bore the hallmark of Caucasus rebels but Monday's video was the first time Umarov had claimed direct responsibility for it.

THREAT

Putin launched a war in late 1999 that crushed a rebel government in Chechnya and has made re-establishment of Kremlin rule there a personal political priority. The military operation has largely subdued insurgency in Chechnya, but Islamist rebels now operate with increasing force in neighbouring Dagestan and Ingushetia.

Violence is fed by poverty, corruption, clan rivalries and religious militancy. President Dmitry Medvedev has called insurgency in the Caucasus the biggest threat to national security in the vast multi-ethnic country stretching from the Baltic Sea to the Pacific.

The attack on Moscow's Domodedovo airport took place in a crowded terminal building on a busy late afternoon. Russian officials say the suicide bomber was a 20-year-old native of the North Caucasus.

Umarov appeared in a separate video on Feb. 5 declaring that Russia faced a year of 'blood and tears' if it refused to abandon its North Caucasus territories. He appeared with a young man he described as a 'brother' being dispatched to Moscow to carry out an unspecified operation.

He said he was visiting the Riyadus-Salikhiyn battalion, which took responsibility for the 2004 Beslan school massacre, where more than 320 people died, as well as more recent actions such as a September market bombing in Vladikavkaz in the North Caucasus.

(Writing by Ralph Boulton; editing by Tim Pearce)

Chechen terrorist claims responsibility for Domodedovo Airport bombinghttp://rt.com/news/umarov-domodedovo-blast-responsibility/print/

Published: 8 February, 2011, 06:58Edited: 8 February, 2011, 10:04

Russia’s most wanted terrorist, Doku Umarov, has claimed he was the mastermind behind January’s bombing at Domodedovo Airport, which took the lives of 36 people and injured more than 180.

Umarov made the claims in a video message posted on an extremist website.In an earlier video message Umarov warned of more terrorist acts to follow, saying that Russia is in for a year “of blood and tears.” Umarov backs the idea of independent Muslim state in the North Caucasus that would include Chechnya, Dagestan, Ingushetia and some neighboring regions.

He sees all Western countries as enemies of Muslims and has been proven to have links to Al-Qaeda.

Last year he also took responsibility for the March 2010 Moscow Metro bombings that killed 39 people, as well as the November 2009 bombing of a train from Moscow to St. Petersburg.

Russian authorities have made no comments yet on Umarov’s video.

According to Russian President Dmitry Medvedev, who held a special meeting on Monday with top-ranking law-enforcement officers, the Domodedovo blast revealed obvious flaws in Russia’s security system. The president labeled the lack of police action that made the terror act possible as “absolutely unprofessional and unacceptable.”

Also on Monday, Dmitry Medvedev signed a bill that will fundamentally change the way Russian law enforcement agencies operate and, according to the president, this will significantly improve security in the country.

On Tuesday, Russian lawmakers will hold a meeting behind closed doors to discuss the terror attack at Domodedovo Airport. They will consider a multilevel alarm system that will allow all security agencies work in closer co-operation.

Russian lawmakers to review probe into Moscow airport blasthttp://en.rian.ru/russia/20110208/162499315.html

03:34 08/02/2011

Members of the lower house of the Russian parliament, the State Duma, will hold a session on Tuesday to discuss an ongoing investigation into a recent terrorist attack on Moscow's Domodedovo airport.

State Duma Speaker Boris Gryzlov said on Monday that eight top police, security and transport officials had been invited to attend the "behind-the-closed-doors" session and deliver reports on the progress of the investigation.

Gryzlov added that the reports would help the lawmakers to decide how the legislation should be changed to ensure security of Russian citizens, including on transport.

A powerful blast that ripped through the international arrivals hall of Russia's largest airport on January 24 killed 36 people and injured 180.

The explosive device was detonated by a suicide-bomber who had been reportedly under the influence of a "massive amount" of drugs and "psychotropic substances."

No group has yet taken responsibility for the attack, which came less than 12 months after two female suicide bombers from the North Caucasus republic of Dagestan struck the Moscow metro, killing dozens.

MOSCOW, February 8 (RIA Novosti)

02/08 10:58   Top Russian rights activist calls UK reporter expulsion 'pressure on freedom of speech'

http://www.interfax.com/

Russia security service behind reporter ban: reporthttp://www.google.com/hostednews/afp/article/ALeqM5gUly6tKkVu8rcbJGfkzLwg4zcPWw?docId=CNG.18f7ce5b4ad7a7bfbfb07c18ac5e6163.821

(AFP) – 1 hour ago

MOSCOW — A branch of the Russian security services specifically demanded that the Guardian's Moscow correspondent be barred from entering the country, a report said.

Luke Harding was expelled from Russia after reporting claims in US diplomatic cables released by WikiLeaks that the country had become a "mafia state", the paper announced.

"Harding was not allowed to enter Russian territory on the demand of one of the Russian (security) structures," a security source told the state-run RIA Novosti agency, saying his name was on a list of undesirable persons.

The source did not specify further but the comment indicated the demand may have come from the Foreign Intelligence Service (SVR) or the Federal Security Service (FSB).

The source did not explain why Harding was deemed undesirable.

The Russian foreign ministry has yet to give an explanation for the expulsion, which the Guardian said is believed to be the first removal of a British staff journalist from the country since the end of the Cold War.

Harding flew back to the Russian capital at the weekend after two months in London reporting on the contents of the US cables, given to his paper by whistleblowing website WikiLeaks.

But he was refused entry when his passport was checked on arrival and after 45 minutes in an airport cell was sent back to Britain on the next available plane, according to the Guardian.

Harding's expulsion follows his reporting in December on assessments of modern Russia from the US cables, which listed a string of damaging allegations about the links between top officials, oligarchs and organised crime.

A Spanish prosecutor was quoted describing Russia as a "mafia state", while a top US official was cited questioning whether Russian Prime Minister Vladimir Putin knew beforehand about a plot to kill dissident Alexander Litvinenko.

Harding also coauthored a book, "WikiLeaks: Inside Julian Assange's War on Secrecy", lifting the lid on the paper's publication of the confidential documents.

February 08, 2011 11:14

Politics may be behind Guardian reporter's expulsion from Russia – experthttp://www.interfax.com/newsinf.asp?id=220687

MOSCOW. Feb 8 (Interfax) - The situation surrounding the Guardian's Moscow correspondent Luke Harding, who was refused entry to Russia, may be controversial but it is most likely politically motivated, Glasnost Defense Foundation President Alexei Simonov has said.

"We do not know exactly why the journalist was not cleared into Russia. It is difficult to speculate. The situation looks controversial, although I am 99% sure there are political motives behind this rather than anything else," Simonov told Interfax on Tuesday.

But he said he does not think Britain will retaliate by expelling Russian journalists or barring them from Britain.

"There are people, I think, who will start taking each other to pieces over this," he said.

The British authorities do not yet know the reason for Harding's expulsion, Western media said.

According to The Wall Street Journal, UK Foreign Secretary William Hague brought up the matter during a telephone conversation with Russian Foreign Minister Sergei Lavrov, but did not receive any explanation.

The Guardian reported on Monday that Harding was stopped from re-entering Russia at the weekend and was sent back to the UK.

Echo Moskvy radio has said that in recent months Harding reported on diplomatic cables released by WikiLeaks containing criticism of Russia's leadership and the country's key political and business figures.

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Russia Expels British Journalist, Guardian Reports (Update1) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aJpBo1Guq6iY

By Jason Corcoran

Feb. 8 (Bloomberg) -- A British journalist who co-authored a recent book about the WikiLeaks website has been expelled from Russia, according to a statement from the Guardian newspaper.

Luke Harding, who wrote “WikiLeaks: Inside Julian Assange’s War on Secrecy,” was refused entry to Moscow at the weekend, the newspaper said in an e-mailed statement. Harding was placed on a return flight to London, it added.

Harding has worked in Russia since 2007 and wrote articles about allegations of Kremlin corruption based on U.S. diplomatic cables revealed by WikiLeaks. He reported on Dec. 1 that the cables condemn Russia as a “virtual mafia state.”

Dmitry Peskov, a spokesman for Russian Prime Minister Vladimir Putin, said he couldn’t immediately comment on the matter when reached by phone.

“This is clearly a very troubling development with serious implications for press freedom, and it is worrying that the Russian government should now kick out reporters of whom they disapprove,” said Alan Rusbridger, the Guardian’s editor, in the statement.

Russia denied a visa to a U.S.-born British citizen, William Browder, in November 2005. Browder, who runs Hermitage Capital Management Inc., was told at Moscow’s Sheremetyevo Airport he was not allowed to enter the country, where he had lived for the previous decade. Russia retains the right to deny visas on national security grounds.

Thomas de Waal, a British journalist who has written extensively on Chechnya, was denied a visa to visit Russia in 2006.

With assistance from Henry Meyer in Moscow. Editors: Chris Peterson, Alan Purkiss

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

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

Last Updated: February 8, 2011 00:58 EST

Press freedom: Retreat from Moscowhttp://www.guardian.co.uk/commentisfree/2011/feb/08/press-freedom-moscow-editorial

Is it as bad as the old days? No. But it is bad enough. The expulsion of Luke Harding is a bad omen indeed

Editorial

The Guardian, Tuesday 8 February 2011

Three days ago the Guardian's Moscow correspondent returned to Russia to resume his duties there after a period of secondment in London, where he had been working on the team assessing and organising WikiLeaks material. Half an hour after his arrival he was in a detention cell, in spite of having a valid visa, and an hour after that he was back on the plane that had brought him to Moscow.

For him, an official said, "the Russian Federation is closed". Although no reasons for his expulsion have been given, it is easy to guess at the "crimes" that led the Russian authorities to take this step, unprecedented since Soviet times. These were to report on the many deficiencies that increasingly disfigure Russian politics and society, including the corruption of the state bureaucracy, the security establishment's links to organised crime, the counterproductive brutality of the government's policies in the Caucasus, the shrinking space for a free press, the hollowness of the country's democratic institutions, and the abuses of the judicial system. To name but a few.

We may guess that the crowning offence was his association with this paper's story on what the WikiLeaks material revealed about the views of foreign diplomats and others on the nature of the Russian system as it has evolved, or rather, devolved, under Vladimir Putin in recent years.

That report, it should be emphasised, summed up the opinions of men who, because of their work, were in a position to know a great deal about Russian affairs. These were not as such the Guardian's opinions, but it was right to publish them, because they represented the considered judgment, sometimes the very pained judgment, of people whose job it is to understand Russia.

For a time it seemed that the Soviet Union's ways of controlling and managing the international press had disappeared for good in the new Russian Federation. There was an understandable prickliness about patronising foreigners, including those of the journalistic variety, and there was a lack of openness understandable in a society that had long seen curiosity as a dangerous commodity. But it was permissible to hope they would in time disappear.

Instead, the old ways gradually returned. Rewards for the discreet, but punishment, and harassment, for those who crossed certain red lines. Is it as bad as the old days? No. But it is bad enough. The expulsion of Luke Harding, dismaying as it is for a reporter whose affection for the Russian people cannot be doubted, and distressing for a newspaper that led the way in expanding contacts with the Russian media in more hopeful days, is a bad omen indeed.

February 08, 2011 11:42

Internal Troops helicopter attacked in Chechnyahttp://www.interfax.com/newsinf.asp?id=220697

MOSCOW. Feb 8 (Interfax) - A Mil Mi-8 helicopter carrying Russian Internal Troops servicemen came under fire in the Urus-Martan district in the Republic of Chechnya in Russia's North Caucasus, a source in local law enforcement services told Interfax on Tuesday.

The helicopter flying a reconnaissance mission was attacked from a forested area located 9.5 kilometers from the village of Tangi-Chu on Monday.

"No one was killed or wounded. The aircraft was slightly damaged," the source said.

An air strike was launched against the suspected militant hideout in the forest, he said.

In a separate development, a policeman and a Federal Security Service (FSB) officer were killed in a shootout with militants in Nalchik, the capital of the Republic of Kabardino-Balkaria, a spokesman for the regional branch of the Russian Investigative Committee said.

A group made up of policemen and FSB officers patrolling Nalchik stopped three suspicious looking people for an ID check at around 7:30 p.m. Moscow time on Monday.

The men opened fire.

"As a result of the shootout, two officers of law enforcement services - one from the Interior Ministry and another from the local FSB department - were killed. The criminals managed to escape," the spokesman said.

Three policemen sustained concussions in an explosion in Makhachkala, the capital of Dagestan, a city police spokesman told Interfax.

"An improvised explosive device filled with ball bearings was detonated near a police car moving on Akushinsky Avenue at around 8:00 p.m. Moscow time," he said.

The bomb contained the equivalent of some 100 grams of TNT.

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Branch of Caucasian terror group suppressed in SW Russia http://rt.com/news/line/2011-02-08/#id2809

12:21

RT News line, February 8

On Tuesday in the Russian republic of Bashkortostan, local police have arrested the head and three other members of a branch of the terrorist group led by Doku Umarov, the most wanted Caucasian militant leader. Components necessary for the production of powerful bombs were found in the suspects’ house. Also found were a gun and pictures of a local school building. Sketches, maps and other conspiracy documents were also seized during the raid. The members of the terrorist group, aged between 20 and 40, were involved in the recruitment of Muslim residents for “jihad” war against “the faithless” and terror attacks against local authorities, law enforcement officials, businessmen and clergymen, security officials report.

GOOGLE TRANSLATION

Last Updated: Tuesday, February 8, 2011, 06:31 GMT 09:31 MCK

Ministry of Internal Affairs: members of the "Caucasus Emirate" detained in Bashkortostan

http://www.bbc.co.uk/russian/rolling_news/2011/02/110208_rn_bashkiria_imarat.shtml

Law enforcement authorities of Bashkortostan argue that the four detainees in Oktyabr are members of the Caucasus Emirate group, which, according to investigators, were preparing explosions. According to the press service of the Bashkir Interior Ministry, among the detainees are – a turner of an oil-producing enterprise, who is called the group's leader, as well as an unemployed, an employee of the insurance company and the operator of one of the city industries. In the apartment of a man whom police called the group's leader, the components needed to make a powerful explosive device were seized, according to the press service of Ministry of Internal Affairs. Bashkir Branch of the investigation department of the UK has launched a criminal case under Article 222 of the Criminal Code (illegal purchase, manufacture and sale of major parts of ammunition, explosives and explosive devices), which provides up to eight years imprisonment. The police did not specify the time of detention. Previously it was reported that the self-proclaimed leader of the group called the Caucasus Emirate, Doku Umarov claimed responsibility for the explosion at the Domodedovo airport.

GOOGLE TRANSLATION

08.02.11 08:51

Terrorist group neutralized in Bashkortostan, leader arrestedhttp://www.interfax-russia.ru/Povoljie/main.asp?id=208855

February 8 Interfax-Russia.ru - The city Oktyabr (Bashkortostan) suppressed the activity of so-called Oktyabr Jamaat terrorist organization "Caucasus Emirate", said the agency "Interfax-Volga, on Tuesday, the press service of the Ministry of Internal Affairs of Bashkortostan. Four men were arrested - 42-year-old leader of the Jamaat Oktyabr, working as a turner at one of the city oil producing companies, and his three alleged accomplices - an unemployed worker insurance company and the operator of one of the city industries. They seized the ingredients for the manufacture of a powerful explosive device, including RDX, said the official. Court decision, all four detainees were arrested. As noted in the press-service, as part of a criminal investigation initiated SU IC RF Bashkortostan in the 18-year-old Almira Badykova, which in November 2010, attacked with a knife on Oktyabr ATS guarding a police officer, on February 7 in Oktyabr (250 km west of Ufa) were carried out searches at the leader and members of terrorist groups.

Russian hacker avoids jail over $10 million cyber thefthttp://en.rian.ru/russia/20110208/162501632.html

A Russian man was given a five-year suspended sentence on Tuesday for stealing $10 million from a former division of the Royal Bank of Scotland.

Yevgeny Anikin, 27, was part of an international hacking ring that hacked into the account information of World Pay customers and raised their maximum withdrawal limit before taking money out of cash points across Europe, Asia and the U.S.

In his final comments to the court in Novosibirsk on Monday, the hacker pleaded guilty to stealing $10 million in 2008 and appealed to the judge for leniency. He said he had already started to pay back the stolen money.

"I want to say that I repent and fully admit my guilt," Anikin told the court.

The Royal Bank of Scotland sold World Pay last year to a consortium of Advent International and Bain Capital.

Anikin, who has been under house arrest since 2009, bought two apartments in Novosibirsk as well as a luxury car.

Another member of the hacking ring was sentenced to six years in jail in September 2010.

MOSCOW, February 8 (RIA Novosti)

Russia to field own team at F1http://english.ruvr.ru/2011/02/08/43336830.html

Feb 8, 2011 11:27 Moscow Time

This year Russia will be fielding a team all its own at Formula One races, with this country’s Marussia Virgin Racing team unveiling its brand-new MVR-02 car in London on Monday.

The Marussia Motors team, which currently operates under a British license, will soon get a Russian one.

The Russian F1 team first competed under the red, blue and white flag in 2006.

Marussia Motors acquired a large stake in the UK-based Virgin Racing in November 2010.

The MVR-02’s first test drive is slated for Wednesday.

PRESS DIGEST - Russia - Feb 8http://www.reuters.com/article/2011/02/08/press-digest-russia-feb-idUSLDE71701Z20110208

MOSCOW | Tue Feb 8, 2011 3:39am EST

MOSCOW Feb 8 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- Russia's state company Rosatom is considering ways to withdraw from a project to build a nuclear power plant in Bulgaria's Belene.

- A mid-size bank Rosbank (ROSB.MM) is planning to raise its share in Russia's mortgage loans from 1.5 to 10 percent in the next three-four years, Chief Executive Vladimir Golubkov says in an interview.

- Foreign investors seem to be more optimistic about modernisation of Russia's economy than the national business elite, head of Rosnano Anatoly Chubais says in an interview.

VEDOMOSTI

www.vedomosti.ru

_ Russia's Vnesheconombank could set up a state fund to encourage foreign businessmen to invest in Russia's economy, the daily says

- Russian juice and diary company Wimm-Bill-Dann WBD.MM is ready to grant PepsiCo up to $1 billion to enable the soft-drink producer to buy out WBD shares from small shareholders, the daily says.

ROSSIISKAYA GAZETA

www.rg.ru

- The daily is publishing the text of a new police law that is coming in force on March 1.

RBK DAILY

www.rbcdaily.ru

- Head of Russia's state space agency Roskosmos Anatoly Perminov could lose his job after recent failures of a number of military satellites to reach the orbit, the daily says citing sources.

- Russia's lawmakers will consider ways to ease work permit requirements for foreign teachers, while the government will recognise diplomas from foreign universities.

TRUD

www.trud.ru

- A wave of phone calls about alleged bomb threats has swept Moscow after a suicide blast at Domodedovo airport on Jan. 24, the daily says, suggesting also that extremists could be testing vigilance of the local police.

NEZAVISIMAYA GAZETA

www.ng.ru

- Kremlin's top human rights adviser Mikhail Fedotov, could become a mediator in launching the process of pardoning of Russia's ex-tycoon Mikhail Khodorkovsky by President Dmitry Medvedev, the daily says.

Russian Press at a Glance, Tuesday, February 8, 2011http://en.rian.ru/russia/20110208/162501138.html

08:35 08/02/2011

POLITICS

Moscow Mayor Sergei Sobyanin, who seeks to remedy a growing fraud scandal and install his own team in key municipal posts, sacked on Monday Luzhkov-era Moscow metro chief Dmitry Gayev. (Kommersant, Moscow Times)

Liberal leaders have pledged to get a new party registered ahead of the parliamentary and presidential elections, but skeptics say that it will be nearly impossible for the new party to do so. (Moscow Times)

Russian President Dmitry Medvedev has signed the Law on Police, which will come into force on March 1. (Rossiiskaya Gazeta)

WORLD

Relations between Russia and Japan may deteriorate following Japanese Prime Minister Naoto Kan’s remarks calling the visit of Russian President Dmitry Medvedev to one of the disputed Kuril Islands an "inexcusable rudeness.” (Kommersant, Vedomosti, Rossiiskaya Gazeta)

 BUSINESS

As the country emerges from the recession, the dynamic energy of the food retail business can be felt around the clock, as more and more outlets open, while food prices continue to rise. (Moscow Times)

Russia’s Sberbank has become the country’s largest insurance issuer. Last year the bank sold insurances worth about 5 billion rubles ($163 million). (Vedomosti)

Russia's largest drinks and dairy firm, Wimm-Bill-Dann, will help drinks giant PepsiCo to acquire the remaining part of its shares by lending the U.S. company $1 billion. PepsiCo said on February 3 it had bought around 66 percent of in a $3.8 billion deal. (Vedomosti)

The Russian Grain Union has proposed to introduce quotas on grain exports in 2011-2012 harvest season. (Vedomosti)

DEFENSE

Russia’s United Shipbuilding Corporation (USC) has been taken out of the contractual talks with France on the purchase of Mistral class amphibious assault ships. State-run arms exporter Rosoboronexport will represent Russia in direct talks with France’s DCNS from now on.

SPACE

A glitch in on-board electronics could have caused the failed orbiting of a Russian military satellite on February 1, experts believe. (Kommersant)

SECURITY

Airports nationwide will be fitted with entry checkpoints with metal detectors and luggage screening systems, and a passport or driver's license will be required to enter the premises, a governmental decree said. (Moscow Times, Rossiiskaya Gazeta)

Members of the lower house of the Russian parliament, the State Duma, will hold a behind-the-closed-doors session on Tuesday to discuss an ongoing investigation into the recent terrorist attack on Moscow's Domodedovo airport. (Rossiiskaya Gazeta)

Russian police special units have been assigned under a joint command, which will also include special police air support units. (Kommersant)  

SOCIETY

Unemployment in Russia grew 1.7 percent (by 27,440 people) during the week of Jan. 25 - Feb. 2. According to official statistics, there are 1,607, 153 unemployed in the country. (Rossiiskaya Gazeta)

Russia celebrates the Day of Sciences on Tuesday. President of the Russian Academy of Sciences, Academician Yury Osipov believes that proposed reforms of the current and well-established system may lead to dire consequences. (Rossiiskaya Gazeta)

Ballerina Anastasia Volochkova emerged as a staunch supporter of jailed oil magnate Mikhail Khodorkovsky, five years after signing a letter backing his jail sentence. (Moscow Times)

Volcanoes in Russia’s Kamchatka erupt, ashes threaten air servicehttp://rt.com/news/line/2011-02-08/#id2805

RT News line, February 8

An orange hazard class has been given to the eruption of the Russian far-eastern Kamchatka Region’s volcanoes, meaning air transport in the region is under threat. The volcanoes Kizimen and Karimsky have thrown a 4-kilometer-high column of smoke, ash and fumes into the air. Ash particles getting inside airplane engines can cause shutdowns and even crashes. Scientists have not  predicted further stages of the eruption, but state that at the moment there is no threat to locals in the vicinity of the volcanoes. Karimsky is the most active volcano in the region, while the last eruption of Kizimen was registered in 1929.

Officer Admits Report on Yashin’s Arrest was Falsifiedhttp://www.theotherrussia.org/2011/02/08/officer-admits-report-on-yashins-arrest-was-falsified/

February 8th, 2011 • Related • Filed Under

The police officer who detained Russian oppositionist Ilya Yashin during a recent Strategy 31 rally has admitted that he falsified the report detailing the arrest, Novaya Gazeta reports.

On February 4, Moscow’s Tverskoy Regional Court held a second hearing on Yashin’s complaint about the verdict that sentenced him to 5 days of administrative arrest following the December 31 rally. During the hearing, police officer Artem Charukhin said he was given the oppositionist by an OMON riot police officer, who was “particularly violent” when “nearly shoving” him into a police bus.

When asked whether Charukhin participated in Yashin’s actual detention or whether he saw how fellow opposition leader Boris Nemtsov was detained, he said no – contradicting his own notes in the police report that Yashin was convicted on.

The report reads: “On December 31 at 20:50 hours I was together with Kondrashov. This is when Nemtsov was detained. Citizen Yashin was together with Nemtsov. During Nemtsov’s detention, Yashin actively resisted; he pushed me and Police Sergeant Kondrashov away from Nemtsov; he did not respond to lawful orders to stop his illegal actions, thus preventing us from carrying out our duties.”

Charukhin admitted that the report was, in fact, dictated to him by a Basmanny Internal Affairs agency official named Dmitry Popsuev.

In addition, the court reviewed video recordings of Yashin’s detention that showed he was detained before Nemtsov – making the police accusations that Yashin pushed the officers away from Nemtsov an impossibility.

Yashin’s complaint comes after he served 5 days in jail on charges of disobeying police orders during the New Year’s Eve Strategy 31 rally in Moscow. Fellow oppositionists Boris Nemtsov, Eduard Limonov, and Konstantin Kosyakin were also arrested in connection with the rally and served between 10 to 15 days in jail. Videos indicating that Yashin was innocent were not admitted to the trial as evidence and he promised to appeal his sentence upon being released. The oppositionists and their supporters say the arrests and jail sentences were politically motivated.

Engaging the Rebelshttp://russiaprofile.org/international/32531.html

Until Tbilisi Changes Its Attitude Toward South Ossetia and Abkhazia, All Western Efforts to Secure Peace and Stability in the Region Will Fail

By Justin Lyle Special to Russia Profile 02/07/2011

As Europe looks for ways to sidestep the problematic issue of recognizing Abkhazia and South Ossetia, progress on resolving the conflicts will depend upon a substantive shift in Tbilisi’s attitude toward the breakaway republics. In the face of widespread international acceptance that the present status of Abkhazia and South Ossetia is here to stay, Georgian President Mikheil Saakashvili continues pursuing an uncompromising policy on the ground that will fundamentally undermine the engagement he is promising at an international level.

Last week Tbilisi claimed to welcome a development that it fiercely opposed a year ago. According to the January 27 decision, monitoring of the “consequences of the war between Georgia and Russia” by the Council of Europe’s Parliamentary Assembly (PACE) will no longer be a dossier in its own right. Instead, the European inter-governmental human rights forum has appointed co-monitors of Russia and Georgia’s ceasefire obligations as part of its routine monitoring of the two countries’ obligations.

The leading official of the monitoring commission hailed the re-format as a small breakthrough in finding an acceptable platform for substantive developments. Long reluctant to lose the visibility of the old dossier, Tbilisi has accepted the rebranding since it still obliges Moscow to withdraw its recognition of Abkhazia and South Ossetia. The Russian Foreign Ministry, on the other hand, has welcomed the new monitoring format as a de-politicization of the issue, considering the stalled Geneva discussions an adequate forum for discussing the political aspects of the conflict.    

Since the August 2008 war over South Ossetia, president Saakashvili’s Administration has been determined to establish its story of the war and its aftermath in the international consciousness. Russia responded emphatically to Tbilisi’s August 2008 attempt to retake breakaway South Ossetia by force, sweeping through both South Ossetia and Abkhazia into Georgia-proper before extending recognition to both breakaway regions. Western

politicians were initially stunned at Russia’s actions, which were received not only as a breach of international law, but also as an aggressive redrawing of the Georgian map and a statement of purpose regarding the future of NATO expansion. While many in the West considered Moscow the originator of the conflict, through its economic support and controversial peacekeeping role in the breakaways, an EU-sponsored fact-finding mission later concluded that the Georgian government started the fighting itself.

The influx of $4.5 billion of Western aid to Georgia after the war was testament to the success of Saakashvili’s portrayal of his country as a victim of Russian aggression. But this money was also a substitute for decisive Western political commitment to Tbilisi’s cause. At a time of anxiety about Western political and military overstretch through NATO’s eastward expansion, as well as increasing European energy dependence on Russia, and above all fear of large-scale conflict over an area of Russia’s declared “privileged interest,” Western leaders opted to mediate and donate. The Kremlin, meanwhile, bolstered the breakaways economically and militarily, congratulated itself on protecting innocent civilians and peacekeepers and asserted the rights of Abkhazia and South Ossetia to national self-determination. This locking of horns at the twilight zone of international law – the ambiguous question of self-determination, post-Kosovo – has left Russia and Georgia stranded in principled opposition, without formal relations. European leaders, meanwhile, were left with the unenviable challenge of chairing the discussion.

One key to Saakashvili’s success on the international stage lies in his effective playing down of the inter-ethnic logic of the conflict, which has enabled him to cast Russia as an aggressive outsider propping up mere “puppet regimes” in the breakaways. The situation on the ground has always been more complicated, however. De facto independence in Abkhazia and South Ossetia had been established for 15 years before the war, and was determined more by local inter-ethnic dynamics than by pernicious outside influence. Although Russian support was crucial to the success of Abkhazia and South Ossetia’s independence wars in the early 1990s, the fears that fuelled them were not generated by Russia. It started with the ultra-nationalist agenda of President Zviad Gamsakhurdia, which aimed to incorporate the regions into a “Georgia for the Georgians” in the early 1990s. The “Rose Revolution” of 2004, for all its democratic promise, carried Saakashvili to power on a nationalist ticket; namely the pledge to restore the territorial integrity of the Georgian state. As Mamuka Areshidze of the Tbilisi-based House of Free Opinion noted, “Saakashvili has not yet started to assuage the fears of the breakaway leaderships.”

In search of a way out of the deadlock, the European Union has promoted a strategy of “engagement without recognition” for Abkhazia and South Ossetia. It aims to halt the international isolation of the breakaways by stimulating dialogue toward conflict resolution, without igniting the status issue. With even the restoration of Georgia-Russia formal relations out of sight, the West hopes that constructive contacts at ground level between the breakaways and both Georgia and the broader outside world can reduce the risk of tensions flaring into conflict.

Initially reluctant to take on a policy that could open new and empowering options to

Abkhazia and South Ossetia, the Georgian government has since championed the approach, enshrining it in its “State Strategy on Occupied Territories: Engagement through Cooperation,” adopted in 2010. It is not clear that this strategy marks a departure from the logic of isolation that underpinned policies such as the “Law on Occupied Territories,” which aimed to restrict the breakaways’ commercial and diplomatic contacts with the outside world. Many in Abkhazia remain sceptical about the strategy’s real value, seeing it as a lip service alignment with Western preferences, rather than a substantive policy change. They point out that the document foresees strict limitations on cooperation with international organizations and NGOs, and also highlight the document’s less-than-accommodating references to “occupied territories” and “puppet regimes.”

As Medea Turashvili of the International Crisis Group in Tbilisi pointed out, “EU and international engagement in the breakaway regions is in the interest of Georgia, as it will allow the de-isolation of these territories from extensive Russian influence. Additionally, it will help to improve the quality of education, transparency, democracy and human rights and good governance (not necessarily state-building) practices in these regions.”

The Saakashvili Administration has remained too suspicious to embrace these changes, however, and has as yet shown no sign of the promised constructive engagement. At present even dialogue instruments established by the Geneva talks, such as the Near Border Incidents Prevention and Response Mechanism (IPRM) are proving ineffectual, serving largely as a formal arena for the exchange of accusations and insults between the sides. Policies such as tightening up restrictions on travel abroad for holders of Russian passports resident in Abkhazia and South Ossetia have done little to encourage popular confidence. Perhaps most damaging is Tbilisi’s line that all actions and stances of the breakaways are in fact merely driven by Russia.

More than any outside influence, it is the Saakashvili Administration’s ongoing rejection of engagement with the Abkhaz and South Ossetian leaderships that undermines confidence-building efforts. The lack of confidence in Saakashvili’s recent non-use of force pledge before the European Parliament exemplifies a damaging disconnect between circumstances on the ground and Tbilisi’s presentation of its intentions on the international stage. Without a genuine change of attitude in Tbilisi, even the most imaginative European strategies will founder.

Kazakhstan: Russia Worries that Customs Union Outpost is Smugglers’ Paradisehttp://www.eurasianet.org/node/62843

February 7, 2011 - 12:21pm, by Richard Orange

A line of 150 trucks waits to enter Kazakhstan. It takes so long to clear customs here that each rig usually only makes two round trips a month. And yet, contrary to appearances, documentary discrepancies suggest the checkpoint is a smuggler’s paradise.

Welcome to Khorgos, soon to become Russia’s new trade border with China.

On July 1, the checkpoint, 360 kilometers from Almaty, Kazakhstan’s commercial capital, will cease to be the gateway through which China exports a trickle of goods only to Kazakhstan's 16 million citizens. Instead, it will become Beijing’s main point of entry to the world’s largest customs union by area, stretching from Brest, near Belarus’ border with Poland, right through to Vladivostok in Russia’s Far East.

On that day this summer, Russia is scheduled to close down all checkpoints along its borders with Kazakhstan and Belarus, allowing free movement of goods between the countries, and giving Chinese exporters, via Khorgos, easy access to a market of 170 million people.

“Nobody knows what the increase in customs flow will be because of the Customs Union, maybe more than triple; it could be five times,” says Alexander Beisembiyev, president of Silk Road Logistics, which is building a warehousing and truck unloading facility at Khorgos.

What is certain is that as Khorgos stands soon to become a gateway to the Russian market, Moscow is demanding big changes in how it operates.

A study completed in 2008 for an international firm seeking to invest at Khorgos identified a glaring discrepancy. According to the Kazakh customs’ statistics, 3,000 trucks passed through Khorgos from China to Kazakhstan in 2007. Yet, Chinese customs authorities put the figure at 36,000 trucks. The difference, the firm concluded, was rooted in black market activity.

These days, when Russian Prime Minister Vladimir Putin talks to his Kazakh counterpart, Karim Massimov, containing black market trade is one of the toughest negotiating points.

“This is a very big issue. Putin is talking about this every time he's meeting with Massimov,” said a Kazakh businessman in the logistics industry, speaking on condition of anonymity out of fear of government reprisals. “Russians will not allow a single [black-market] truck to enter Kazakhstan, because by coming into Kazakhstan, they now also enter Russia."

Russia's anxiety is understandable. If everything goes according to plan, as much as 80 percent of the goods that cross the border at Khorgos will be destined for Russia. To make sure it gets its rightful share of revenue, Russia is now even pushing to post its own border officials at Khorgos.

Alexander Korsunov, a press officer at the Customs Union headquarters in Moscow, says the issue, which includes proposals for a joint-border force, will be a central topic of discussion at the Customs Union’s next official meeting at the end of February.

Kazakhstan's Ministry of Industry and Trade hopes to harness the Customs Union to spur the development of the country's manufacturing sector by setting up a 6,000-hectare Special Economic Zone (SEZ) at Khorgos. The idea is that international companies will

set up factories, drawn by the prospect of producing “Made in Kazakhstan” goods with tariff-free access to the Russian and Belarusian markets.

“A Chinese factory from Urumqi will be able to build a factory in the SEZ,” explained Askhat Mukhamediev, director of the Khorgos center. “Goods which come from China will be brought into the SEZ in the form of raw materials. It will be produced in the SEZ, and exported under the brand ‘Made in Kazakhstan.’”

A new bill, presently under consideration in Kazakhstan’s parliament, would, if adopted in its present form, make it easier for temporary foreign workers to be employed in the SEZ. Russia is uncomfortable with this idea. It wants a clause added to the Customs Union regulations specifying that at least 50 percent of the value of such “Made in Kazakhstan” goods must be created on Kazakh soil. Kazakhstan wants this reduced to 30 percent.

Arguably, though, Russia’s revenue-related pressure is less of an immediate problem for Kazakhstan that is own slow progress in building the required infrastructure.

A half-finished new checkpoint is all that has been built so far at the International Center of Boundary Cooperation at Khorgos. Eventually, the $2.5 billion project is supposed to include a trading exhibition zone, seven high-rise hotels, an airport, a tourism and entertainment zone, and an ethnographic park. China finished its own, much larger, International Center of Boundary Cooperation several years ago. On April 1, the two countries are scheduled to begin a new four-lane bridge crossing the river that marks the border.

The hope is that, from July 1, Chinese trucks

KIVI TODAY'S CHANNEL 6 NEWS

Boise Man Locked in Russian Prison Returns to Homehttp://www.kivitv.com/Global/story.asp?S=13987475

A tangible excited anticipation filled the lobby of the Boise airport, Monday evening: anxious young faces holding homemade welcome signs, two beaming parents make nervous and polite conversation, all waiting for 26-year-old Eugene Kravtsov.

Eugene just spent six months in a Russian prison.

"My dad says it looks like a shady story," said his brother, Pavel.

Shady indeed.

The Kravtsov family moved from Ukraine to Boise in 2000. They all gained U.S. citizenship. Eugene graduated from BSU and went on to work at Micron. To say the Kravtsovs lived the American dream would not be hyperbole.

This summer, Eugene planned a trip back to the Motherland to see family in Russia and Ukraine. For Eugene, the problems started at the border between those two countries. Border guards suggested his passport was a fake. His family says as many as 10 interrogators grilled him for hours.

Then they just let him go.

But it wasn't over. Returning to America three weeks later, security stopped Eugene going through customs. Inspectors found two turn-of-the-century Russian rubles – worth approximately $30 American each - in his luggage.

"He didn't know that he couldn't take the coins out," said Pavel.

Eugene's family says the Russians took the coins and told him to come back for a different flight in two days. He came back and they arrested him. Eugene called the U.S. embassy and they gave him a free lawyer – a free lawyer who had never handled a case like this one.

The family hired their own lawyer.

The family's lawyer, the prosecution, the U.S. embassy counsel and a detective then held a meeting. They offered Eugene a deal: Plead guilty and we'll let you go. Eugene had been in jail for three months and the Russians said he had done the time.

Eugene agreed. He went to court. And he plead guilty. His family says the judge looked at him and said: "three years."

"Counsel from U.S. embassy went up to prosecutor and asked him: ‘What's going on? We had a deal,'" Pavel said. "And the prosecutor looked at him and said I don't know what you're talking about.

The Kravstovs say they have been offered bribes. The family appealed Eugene's sentence in the fall, and with the help of Sen. Mike Crapo and the U.S. Embassy, the judge reduced the sentence to six months.

"The reduction of a sentence on appeal," said attorney David Leroy, "is an admission that things were not correctly handled in the trial court."

"Not the best situation," said Lindsay Nothern, a spokesman for Sen. Crapo, "but given the circumstances a fairly positive situation for the family."

The Kravtsov family has been at three-quarters strength for the better part of a year.

It is now whole.

Eugene touched down in Boise to the clapping and cheers of 50 friends and family members, overwhelmed, terribly jet lagged, but smiling - back in the caring arms of his family once more.

National Economic Trends

Russia's 2010 trade surplus widens 24.7% to $167.5 blnhttp://en.rian.ru/business/20110208/162502525.html

11:40 08/02/2011

Russia's trade surplus grew 24.7% in 2010 to $167.5 billion, the Federal Customs Service said on Tuesday.

"The trade surplus amounted to $167.5 billion, or $33.2 billion more than in 2009," it said in a statement.

Exports increased 31.4% year-on-year to $396.4 billion, including a 32.1% growth of exports to non-CIS countries to $336.7 billion and a 27.4% growth of exports to the CIS states to $59.7 billion.

Import rose 36.8% year-on-year to $229.0 billion. Imports from non-CIS countries grew by 35.6% to $197.4 billion, while imports from CIS states rose 44.8% to $31.6 billion.

MOSCOW, February 8 (RIA Novosti)

Rouble hits new highs vs the basket http://www.bne.eu/dispatch_text14174

Renaissance CapitalFebruary 8, 2011

Yesterday (7 February) was another positive day for the rouble, despite a weak opening. On the back of less-favourable oil-price dynamics, the rouble weakened to 34.15-34.20 against the dual-currency basket at the open. However, in the afternoon, the rouble-basket exchange rate reached new highs and closed at 34.00, trading below this level in the OTC market. Overall market activity was muted, and USDRUB turnover with T+1-settlement was approximately $3bn.

The 12-month benchmark NDF rate settled at 4.86%. NDF-XCCY rates fell 5-8 bpts by the end of the trading day. The curve steepened further, with the short-term end down by 5-8 bpts and the longer end by 2-5 bpts.

The rouble-basket exchange rate has rapidly appreciated to 34.00 from 34.70 during the past week. Unless we see some strong movement in global markets, we think the rouble may slow its climb within a couple of days, for the following reasons:

• Currently, the rouble-dollar exchange rate is at 29.30, only 1.0% above the 2010 minimum. This level is not attractive for natural FX sellers, so the FX supply should remain modest until the tax payment period starts on 15 February.

• Yesterday, the Central Bank of Russia (CBR) said that FX purchases were approximately $650mn and EUR124mn in January. In the current environment, FX interventions have persisted, with the regulator purchasing $150mn on a daily basis at levels above 34.0. The volume of daily FX interventions doubles to $300mn when the rouble goes below 34.0. Hence, we should see stronger support from the regulator in this area. Modest turnover volumes indicate that FX supply pressure will not easily compensate for CBR operations.

Anton Nikitin

Privatization Bonanzahttp://russiaprofile.org/business/32512.html

The Russian Government Is Launching the First Stage of an Ambitious Privatization Program with the Sale of Assets in VTB Group, the Nation's Second Largest Bank By Tai Adelaja Russia Profile 02/07/2011

Russia's much-vaunted "Second Privatization Program" is set to kick off on Monday with initial public offerings of state-owned assets in the banking sector. The government plans to sell a ten percent stake in VTB Group, the country’s second largest lender, in the first step of a two-stage privatization program. The government could make as much as one trillion rubles ($34 billion) from selling stakes in ten state assets by 2013. The weighty privatization program, which received the government’s approval in November, is also expected to loosen the government stranglehold on the economy and help plug gaps in the budget created by the worst recession in a decade.

By its sheer size, the present privatization effort is second only to the great privatization bonanza of the 1990s, when nearly half of Russia's wealth was transferred to Kremlin-connected oligarchs at knockdown prices, analysts say. The government expects to raise up to 1.8 trillion rubles ($58.5 billion) by 2015 from privatizations of federal property, including stakes in some 900 companies, First Deputy Prime Minister Igor Shuvalov said in October. Shuvalov, who is also the country’s Investor Ombudsman, said early targets for privatization would include a 100-percent stake in the United Grain Company and 50 percent minus one share in the shipping giant Sovkomflot — both of which are set to be sold by 2013.

In addition to VTB Group, which will start a road show on Monday to promote the sale of ten percent of its shares in the United States and Europe, the government also wants to reduce its massive stakes in other state banks by 2015. As part of this program, the government will whittle back its current 60.3 percent stake in top lender Sberbank to a controlling 50 percent by 2014. It may also sell 25 percent of its 100 percent stake in Rosselkhozbank, the country's fourth biggest lender by assets, before 2015, Shuvalov said. Sberbank hopes to sell a 7.6 percent stake in stages before the end of this year, depending on the performance of the VTB offering. "The list of investors may be the same, so we should probably work together and agree on a common approach," Sberbank CEO German Gref said.

Other assets that the state intends to sell over the next five years include stakes in the country’s largest airline, Aeroflot, and number one oil producer Rosneft. Shuvalov said the state's holding in Aeroflot could be reduced to a controlling 50 percent. Meanwhile, up to 15 percent of Rosneft and 25 percent minus one share in Russian Railways could be up for sale. Shuvalov also said the state was ready to sell 4.11 percent in the Federal Grid Company immediately; eight percent of RusHydro by 2013; part of its stake in Rostelecom after its reorganization with Svyazinvest; and 50 percent minus one share in Rosagrolizing between 2013 and 2015.

But some foreign and local investors have said that the massive government privatization program does not go far enough. They stressed that the government should consider selling stakes larger than just ten percent in state-controlled financial institutions, The Moscow Times reported Friday, citing panelists at last week's forum organized by investment bank Troika Dialog. Presidential Aide Arkady Dvorkovich has put his weight behind the proposal and promised to push for cutting the government’s stakes in state banks to less than controlling, the paper said. “I think that it’s necessary to privatize VTB in full or almost in full if it buys other banks, and it’s quite possible to think of reducing the state’s stake in Sberbank to less than 50 percent — not only to 50 percent plus one share,” the paper quoted Dvorkovich as saying at the forum.

VTB Group had sought to sell the ten percent state-owned stake last year in a private placement to a pool of strategic investors led by the global private investment firm TPG Capital (formerly known as Texas Pacific Group), Kommersant business daily reported Friday, citing unidentified people close to the bank’s shareholders. As part of the terms of the initial deal, investors would be required not to sell shares acquired in the course of privatization over a period of three years. But the deal, expected to have been concluded last year, fell through as the bank failed to form a pool of investors.

The government might also have decided to change its sales pitch in favor of a secondary public offering (SPO) after Merrill Lynch, one of VTB’s bookrunners, expressed concerns that any hitch in private placement could have a negative impact on the whole government privatization program, Kommersant reported. However, TPG Capital, which manages over $47 billion of capital, is still expected to play an active role in attracting “a wide range of investors” to VTB Group in the secondary share placement. Italian insurance group Generali may become one of the strategic investors for the purchase of

state-owned VTB, Vedomosti business daily reported on Monday, citing informed sources. The price of VTB’s London-traded global depositary receipts has fallen from $7.50 to $6.80 over the past week in response to the news that the secondary share placement was going ahead, the Financial Times reported Friday. Chris Weafer, chief strategist at UralSib Financial Corporation said in a note on Sunday that response will remain weak until there is more clarity about the VTB secondary public offering.

Whatever the situation on the ground, the government is poised to sell as much as 20 percent of VTB bank this year and hopes to rake in close to a 67 percent premium on the purchase price, Finance Minister Alexei Kudrin told investors at the Troika investment conference Wednesday. The government has already hired Deutsche Bank, Merrill Lynch and VTB Capital – VTB's investment banking arm – to act as bookrunners, Reuters reported last week, citing unnamed state officials aware of the deal. According to these sources, there will be no further sale of state-owned VTB shares in the three months following the closure of the placement, the official told Reuters. But Interfax reported late Thursday that the government might double its offering to 20 percent if there is sufficiently high demand.

According to the current state privatization plan, the Russian government intends to sell 35 percent of VTB this year and next, reducing its stake to a controlling 50 percent plus one share, RIA Novosti reported. The government boosted its stake in the bank to 85.5 percent from 77.5 percent in September 2009 by acquiring shares for 180 billion rubles as part of a program to stabilize the financial industry. A ten percent stake in VTB was valued at $3.6 billion on the Russian Trading System Stock Exchange (RTS) on Thursday. The sale of the ten percent stake of state-owned shares in the bank could fetch the government a whopping $3.5 billion, analysts say.

Punjab potato growers on verge of Russia deal

http://www.domain-b.com/economy/agriculture/20110208_russian_deal.html

By Jagdeep Worah08 February 2011

A handful of potato growers in Punjab are in the final stages of signing a deal with Russian traders for exporting close to 10,000 tonnes of the crop to Russia for the first time, according to reports.

''We are likely to finalise the deal within a day or two with Russian traders who have approached us for supply of potato crop to Russia,'' a potato grower from Jalandhar district, who has been approached for the supply of crop, told a news agency on condition of anonymity.

Since potatoes form the base of many brands of vodka – Russia's favourite tipple as well as its best-known export – one can only wonder how much of Punjabi potato go into Russian bellies as a food, and how much will find its way to the distilleries.

About 10 potato growers from Punjab have been approached by the Russian traders. They are reluctant to be identified and also refused to reveal the identity of the Russian traders. ''We do not want to disclose the details (of Russian traders) with whom discussions are going on till the deal is finalised ... otherwise some other potato suppliers (from Punjab) may move in, which may jeopardise our deal,'' one of them he explained.

At least two Russian traders have approached the potato growers of Punjab for the supply of the crop in the wake of massive shortage of potato in Russia because of low yields caused by extreme temperatures over the past year or so.

''Their (Russian traders') requirement is about one lakh tonnes, but we could not meet this huge requirement. We could supply only 10,000 tonnes of crop and they will have to source the rest from the open market,'' the grower said.

What led Russian traders to source potato from Punjab was the low rate of the crop and its sufficient availability in view of the ongoing harvesting in the state. ''In view of huge shortage of potato, the rate (in Indian currency) has soared to Rs 30-32 per kg in Russia,'' the potato grower from Punjab said.

The Russians have offered two options to Punjab potato growers for the supply of the crop. ''In the first option, they asked us to get the market rate of the crop and in second option they offered profit sharing in the deal,'' he said. ''The current retail rate of potato in Punjab is Rs5 per kg and if we include transportation cost for supply to Russia in refrigerated containers, the cost of Punjab potatoes in Russia comes to Rs20-22 a kg,'' he said.

 Potato growers are yet to make up their mind about the final rate for the export of the crop.

Punjab, this season, brought 84,000 hectares area under potato with an expected yield of 22 lakh tonnes. Potato is sown in October and its harvesting commences in January, going on till the end of March or the first week of April.

Punjab has about 5 to 7 per cent share in the country's total potato production and over 60 per cent of the state's output is seed potato crop. Potato crop is sown at various places in the state including Jalandhar, Kapurthala, Hoshiarpur, Ludhiana, Moga, Amritsar and Phagwara.

So the next time India's wealthier tipplers say cheers to their favourite imported vodka, it may well be Punjabi potatoes they are drinking!

Russia fears one potato, two potato, three potato more http://www.bne.eu/storyf2504/Russia_fears_one_potato_two_potato_three_potato_more

bne February 8, 2011

Commentators obsess over the impact of oil prices on the Russian economy, but it's soaring potato prices that are threatening Russia's recovery and could spark social unrest this year.

As the world emerges from the frying pan of the 2008 global economic crisis that followed the collapse of Lehman Brothers, it has fallen straight back into the fire of skyrocketing agricultural prices, which had been affecting the global economy in the summer of the same year.

The economic crisis temporarily stymied this rise in food prices as demand collapsed. But with the developing markets of Asia recovering swiftly, and Russia's economy doing better than expected, prices of various agricultural products are already spiking.

Oil prices, of course, remain key to the health of the Russian economy and already broke through the $100 per barrel mark in January. The consensus amongst analysts is for an average price of oil between $80-90 per barrel this year - ahead of the federal budget's assumption of $75. This means the economic outlook for Rusia is good. Deputy Prime Minister and Finance Minister Alexei (Mr Prudence) Kudrin crowed to delegates at an investment conference at the start of February that GDP growth for this year had already surpassed the state's forecast of 3.8%, running at 4.0%, and the budget deficit for 2010 was a mild 3.9% of GDP - much less than the 6-7% forecast at the start of 2010.

Certainly, the Russian economy will do a lot better this year than the government is expecting - barring a car wreck in the Middle East, or other such surprises. Economists' predictions for growth are mostly north of 5% and a few are even whispering that the budget deficit could be cleared entirely by the end of the year. The black cloud on the horizon of an otherwise sunny forecast is inflation.

Consumer price inflation came in at a disappointing 2.4% in January (equivalent to an annualised rate of 9.6%) and twice the rate seen a year previously. The Central Bank of Russia has already reversed its almost two-year run of cutting interest rates to hike them twice since December in a move that will head off more price rises, but will smother growth. More rate hikes are on the cards. However, the real shocker was that Russian potato prices rocketed 22.8% month on month in January, causing a shortage of the most basic foodstuff in the country after bread.

Spud Russians like

A potato crisis is cooking. Russia has already started importing Scottish and Indian potatoes to meet a large shortfall that has been caused by last summer's extreme weather. The shortfall on the Russian market is so big, say experts, that no one country can meet

the gap, so Russian traders have fanned out across the world.

Robert Doig, who is on the board the Scottish Potato Council, said in an interview with The Scotsman in February that European continental buyers were flocking to Scotland to fill shortages. Doig estimated that there is a 4m-tonne shortfall in the Russian potato crop in 2010 that is hitting the market now.

Likewise, Russian buyers have also been in India's Punjab region where they are negotiating for exports of up to 10,000 tonnes of potatoes for the first time, reports Agribusiness Market. "We are likely to finalise the deal within a day or two with Russian traders who have approached us for supply of potato crop to Russia," a potato grower from Jalandhar district, told the trade publication.

While the deal has yet to be done, just the reported negotiations have already sent the cost of potatoes in the Punjab soaring six-fold. The cost of potatoes in Russia is currently about £250 per tonne, more than double the £100 per tonne in Scotland, reported the Scotsman.

Mark Prentice, head of seed and exports for Scotland's Potato Council, confirmed that he had been receiving a large number of enquiries from Russia and also from Poland, normally a major producer of potatoes, the paper added.

And it is not just potatoes: oil may have risen from a low of about $40 per barrel in 2009 to around $100 now, but it's sugar that's been the commodity with the fastest growing price in the world this year, reports Business Insider.

These are serious problems. Protests in Algeria this year are drawing inspiration from Tunisia and Egypt, but the protesters were shouting: "Give us sugar!" after prices for the key ingredient for the tea-addicted nation soared. Likewise, ballooning foodstuff prices have been an important factor in sparking all the protests in North Africa this January.

The soaring cost of food is creating a potentially volatile situation in Russia. The cost of the basic basket of consumer goods in Russia also shot up by a quarter in 2010. With Duma elections due in December that could act as a seed crystal, the chance of the social unrest seen in North Africa occurring in the countries of the former Soviet Union are rising rapidly.

The summer of 2008 was marked by bread riots across Central Asia, leading the governments of Kazakhstan and other countries to contemplate nationalising bread production and the situation in Russia is already sufficiently serious that Deputy Economic Minister Andrei Klepach said in the last week of January that the government could impose administrative price controls on basic goods including potatoes.

CONFERENCE CALL: Little consensus in evidence at Troika's do http://www.bne.eu/storyf2497/CONFERENCE_CALL_Little_consensus_in_evidence_at_Troikas_do

Ben Aris in Moscow February 8, 2011

Just spent two days at Troika Dialog's Russia Forum 2011 on February 2-3, which is always fascinating, as along with Renaissance Capital's conference in the summer, this annual investment conference provides a benchmark for international sentiment towards Russia.

The first thing to note is that based on the conference's attendance, Russia's stock market is going to have a very good year. Much of investing in Russia is driven by sentiment and not fundamentals (the fundamentals have been excellent for more than two years, but Russia almost entirely missed out on last year's rally in global emerging markets, or GEMs). Hermitage Capital's Bill Browder used to say that you could tell how the Russian market would do by counting the number of empty seats at conferences; there were virtually no empty seats at this year's Troika do, which had a record number of well over 2,000 delegates - nearly twice as many as last year.

Clearly, the Russian equity market has already caught the attention of international investors and began its catch-up rally in December: the RTS was up by 23% in 2010, but it was up 18% in December alone. Likewise, mergers and foreign direct investment both suddenly took off in the final months of last year.

Given that historically the least the Russian equity market returns in a non-crisis year is 20% (and 2010 was plagued by problems such as the fires), provided this year is a lot quieter the equity market should return at the high end of the 15-45% that the investment banks have been predicting.

Lack of consensus

The content of the talks was less inspiring. Last year, there were interesting sessions on the rise of China and dramatic talk of double dips and the other "Big Dangers" the global economy faced. Also the presentations were most about long-term trends and eventual convergence in 2050, etc. This year, the sessions were more detailed and (for Russia geeks like us) more interesting, but much less dramatic.

While everyone agreed that the dangers highlighted last year - double dip and second wave - have largely receded, there was no consensus on what will come next. Some people like Marc Faber, editor of the Boom, Gloom & Doom report, says the US economy will crash on the back of debt and deficits, others like Russell Napier of CLSA said rich Americans are bound to spend their savings and so the US economy will boom.

One of the things that struck me was that compared to the sessions that dealt with global issues, like where the flows of capital were going or what asset classes would make the best 10-year investment, the Russia sector-specific sessions were much more detailed and

talking about incremental change - and these sessions were almost entirely missing from last year's conference.

Furthermore, the global sessions were marked by total confusion. The presentation by Hugh Hendry, CEO and CIO of Eclectica Asset Management, on global assets summed up the mood. A highly entertaining speaker and someone who always talks sense, he sat in his chair with his head hanging down and admitted that he didn't know what to say about the outlook for the near term.

Indeed, when Faber asked everyone to pick one asset that would make the best returns over the next 10 years, the panel of worthies could only agree that buying US Treasuries was a really bad idea, but the number of profitable asset suggestions were almost as numerous as the number of speakers on the panel (and included real estate in Lebanon, anything you can eat, oil - which was more popular than most of the others - GEM blue chips, and gold).

Finally, the Russian government's participation was a lot more muted than last year. Deputy Prime Minister and Finance Minister Alexei Kudrin gave the keynote speech and, of course, presidential economic advisor Alexey Dvorkovich was there to report on the progress of reforms. But last year Igor Shuvalov, the number three in the Kremlin hierarchy, used the keynote speech to call on investors to come to Russia.

Kudrin announced a set of good economic results, but his high point was that growth in 2010 came in at 4% not 3.8% as initially thought. Wow. (Not). Delegates appeared pleased, as even this mild result looks great if put into the context of international results for 2010 - a point that is lost on no-one. But they also complained that you could put most of this progress down to the recovery of oil; as usual, there is a lot of talk about "what we are going to do," while the list of "what we just did" is pretty short.

The announcement of the merger between Micex and the RTS was obviously timed to come ahead of the conference, but did little to imbue delegates with a sense of action or optimism. The state is good at these big set pieces, but ultimately all that happened was another big state-controlled entity (Micex is controlled by the Central Bank of Russia) tying up with something else (in this case the privately owned RTS) to create a new big organisation that will do something to make things better - at some point.

The nitty-gritty reforms are still missing. Russia's economy continues to advance by oil prices being pushed up by external forces and corporate investment strategies by big companies on the inside (like the supermarket chains that provided the grist for a good session on retail). But the point here is that the government has contributed little to the success of sectors like this. What is driving Russia forward (and particularly the stock market) is the steady rise in corporate earnings. And to be fair, just this is enough to allow Russian stocks to easily outperform all their GEM peers.

But there is no sense of excitement over Russia's progress. There are no dramatic changes on the ground or in legislation, etc. – the economy is grinding away under its own

momentum, fuelled by oil money.

When all is said and done, this is actually enough to bring Russia's standard of living up to that enjoyed in the West. While everyone is mesmerized by China's 12% GDP growth, they forget that China is a low-income country. Russia's 4% growth is a lot less impressive, but it is already a middle-income country – and as Kudrin noted, the catch-up opportunities that enable double-digit growth have already been exhausted.

To be fair, this year offers more chance of the kind of dramatic change that we journalists love in the form of the launch of a big privatisation programme. First up will be the sale of 10% of VTB Bank (Kudrin actually said 20% - was that a mistake?). But typically, this stake was originally slated to be sold in December, but now they are talking about March. And again it is a big set piece change organised by the state.

I was more encouraged by PM Vladimir Putin's promise at the end of last year on how the state will pump billions of dollars into the domestic pharmaceutical industry and erect some trade barriers to force international companies to invest in Russia and so create a vibrant new domestic sector. This has worked spectacularly well with the car sector (which as an investment/reform story has gone almost entirely unreported), so I expect some real action on at least this front this year. But typically, the Kremlin has not done a good job on selling itself; there wasn't even a pharmaceutical session at the conference.

The last thing to note is that the session on agriculture came at the very end of the second day (and so loads of people skipped it). However, as we move out of 2010 and its associated problems of debt, deficits and double dips, it is already clear that as we emerge from the frying pan of the 2008 financial crisis we are jumping straight back into the inflation/food crisis of the summer of 2008.

The riots in Algeria were spiked by the sharp rise in sugar prices. The Egyptian crisis was partly caused by the soaring bread prices and even in Russia the cost of the basic basket of goods was up 25% in 2010 against the 7% headline inflation. Inflation and food will be the big issue for this year, but it was relegated to an afterthought at the conference.

Business, Energy or Environmental regulations or discussions

Norilsk, VimpelCom, VTB, Rosneft: Russia Equity Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aBrNrOVCIFe4

By Scott Rose

Feb. 8 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

The 30-stock Micex Index was little changed at 1,767.31. The dollar-denominated RTS Index advanced 0.3 percent to 1,935.15.

OAO Norilsk Nickel (GMKN RX): United Co. Rusal, a 25 percent shareholder in Russia’s largest mining company, said yesterday that it won a court ruling blocking voting rights on up to 15 percent of the nickel producer’s shares ahead of a shareholders meeting next month. Norilsk declined 0.9 percent to 7,379.35 rubles.

VimpelCom Ltd. (VIP US): Telenor ASA, the Nordic region’s largest phone company, asked a London court yesterday to help maintain its position in VimpelCom if the Russian mobile operator’s planned merger with Wind Telecom SpA proceeds. VimpelCom rose 0.4 percent to $14.30 in New York.

VTB Group (VTBR RX): Assicurazioni Generali SpA and private equity fund TPG Capital LP may buy a combined $400 million in shares of VTB Group during the Russian government’s planned sale of a 10 percent stake, according to a term sheet for the offering obtained yesterday. VTB fell 0.7 percent to 10.13 kopeks.

OAO Rosneft (ROSN RX): Crude oil fell for the fourth day in five as talks between the Egyptian government and opposition politicians helped ease political tensions and reduced concerns that supplies will be disrupted. Rosneft rose 0.1 percent to 257.44 rubles.

To contact the reporter on this story: Scott Rose in London at rrose10@bloomberg.net.

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net.

Last Updated: February 7, 2011 22:00 EST

Russian Stocks Fall 1st Time in 3 Days as Oil Retreats on Egypt http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aM0n.p0HrroQ

By Jason Corcoran

Feb. 8 (Bloomberg) -- Russian stocks fell for the first time in three days as oil traded near its lowest in more a week on easing political tension in Egypt and speculation a report tomorrow will show U.S. oil stockpiles rose for a fourth week.

The Micex Index of 30 stocks dropped 1.1 percent to 1,748.30 by 11:44 a.m. in Moscow. OAO GMK Norilsk Nickel, Russia’s biggest mining company, lost 1.8 percent one day after its share buyback was suspended because of a court order by United Co. Rusal. OAO Rosneft, the country’s biggest oil producer, declined 1.7 percent. VTB Group, the nation’s second- biggest lender, dropped 1.3 percent. The dollar-denominated RTS Index decreased 0.6 percent to 1,924.05.

Oil, Russia’s main export revenue earner, was at $87.50 a barrel, up 2 cents, in New York. Yesterday, futures closed at $87.48, the lowest since Jan. 27. Investors should consider selling bullish positions because the market may be set for a “notable correction” as the Egyptian crisis subsides, according to JPMorgan Chase & Co.

“The market is weaker today because investors are taking profits after yesterday’s rally into the close and crude is trading below $90 a barrel,” John Heisel, a sales trader at Citigroup Inc., said by telephone in Moscow.

A Department of Energy report tomorrow will probably show U.S. oil stockpiles increased by 2.25 million barrels from 343.2 million in the seven days ended Feb. 4, according to a Bloomberg News survey of analysts showed.

Egypt’s government has promised progress within a month toward free elections, a move intended to persuade protesters to leave Cairo’s Tahrir Square after two weeks of rallies aimed at toppling President Hosni Mubarak.

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

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

Last Updated: February 8, 2011 04:17 EST

Micex to introduce minimum commission from March 1

http://www.rbcnews.com/free/20110208114330.shtml

      RBC, 08.02.2011, Moscow 11:43:30.Russian stock exchange Micex will introduce a minimum commission on transactions with shares and units amounting to RUB 0.18 (approx USD 0.006) starting March 1, the RBC Daily newspaper reported today. The stock exchange will also increase the minimum size of one lot to RUB 1,000 (approx. USD 34). The changes will affect 214 stocks or nearly 70 percent of all stocks traded on the exchange.

      According to Micex representative Nikita Bekasov, these measures are intended to facilitate the growth of large transactions, minimize the number of transaction with a zero commission, and limit the number of transactions that use special software known as exchange robots.

Russian banking sector 2010 results http://www.bne.eu/dispatch_text14174

Troika DialogFebruary 8, 2011

The Central Bank has published December and 2010 banking sector results.

- Retail leading lending recovery. December was a mixed month on the lending front, with a strong retail showing, up 2.2% m-o-m, and the best month of the year balanced by more modest corporate lending, up 1.1%. Overall loan growth in 2010 came to 12.6%, with corporate up just over 12% and retail rising 14%. Loan dynamics have been picking up since late spring, with annualized y-o-y growth of 19% from May-December, and retail leading the recent recovery. Several banks we met at the Russia Forum last week flagged 20% growth in 2011 as very feasible, particularly given strong retail demand as negative rates shift preferences from saving to spending.

- Ample liquidity remains. The sector's balance sheet expanded strongly in December as year-end budget funds and retail deposits flowed into the system. Retail deposit growth in December was typically strong (up 6% m-o-m), mean ing that retail deposit growth in 2010 was a cracking 31%. Corporate accounts rose 17% last year, so deposit inflows for the year comfortably exceeded new lending. Funds placed on account with the Central Bank almost doubled m-o-m to R1.8 trln at year end. Overall sector asset growth in 2010 was a decent enough 15%, with assets ending the year at $1.1 trln, or 73% of GDP.

- Banks further release provisions. Banks released $2.6 bln of provisions in December (just over one quarter coming from Sberbank) as system overdue loans fell from 6.0% in November to 5.7% at year end. While RAS data here have limited direct read-through for our covered banks' IFRS numbers, the broad direction of improving asset quality and declining risk costs is clear.

- Record earnings, but pre-provision income falls. Russian banks earned a record R573 bln ($19 bln) in 2010, with ROAE rising to 12%. However, the strong bottom-line showing was driven by low provision charges, as pre-provisi on income fell 42% y-o-y on the back of shrinking margins, slow credit recovery early in the year and higher costs.

- Overall - a year of gradual recovery. While the first few months of 2010 were tough for banks as they battled margin erosion amid rapid disinflation and weak credit demand, the sector recovered well in 2H10. Annualized loan growth is now running close to 20% and retail looks promising, asset quality improvements feeding into lower provision charges, margins stabilizing and banks sitting on ample liquidity to further extend lending as risk appetite recovers. All of this bodes well for 2011.

BNP Paribas Investment Reduces Stake In Petropavlovsk Grouphttp://www.indiainfoline.com/Markets/News/BNP-Paribas-Investment-Reduces-Stake-In-Petropavlovsk-Group/3537936171

Capital Market / 11:22 , Feb 08, 2011 BNP Paribas Investment Partners S.A reduced its stake in Britain's Petropavlovsk Group to 2.98% from 3.02% on Monday, the London Stock Exchange said. Petropavlovsk, listed on the London Stock Exchange, owns steel and gold mining assets in Russia,

including Petropavlovsk PLC (formerly Peter Hambro Mining). The new deal was struck on February 4 and Petropavlovsk Group was notified on February 7.

BNP Paribas's voting shares in Petropavlovsk shrunk to 5.600 million shares from 5.653 million. On January 18, BNP Paribas., a Russian leader in asset management in private and corporate banking, raised its stake in Petropavlovsk Group to 3.02% from 2.94%.

For the Record http://www.themoscowtimes.com/business/article/for-the-record/430595.html

08 February 2011

…

Severstal said an independent audit of its Putu iron ore project in Liberia shows that it holds 2.37 billion tons, doubling the company’s estimated reserves, Severstal said Monday. (Bloomberg)

Oil tycoon buys Port of Murmanskhttp://www.barentsobserver.com/oil-tycoon-buys-port-of-murmansk.4882029-16178.html

2011-02-08 Russian oil tycoon Gennady Timchenko is reported to have sealed a deal on the acquisition of the Port of Murmansk, the fourth biggest in Russia and a key asset in the development of the country's Arctic.

Business structures belonging to Gennady Timchenko will buy the Murmansk Commercial Sea Port for a total of 250 million USD, Reuters reports. The deal is to be completed in the course of the first quarter of the year.

A spokesman for Timchenko denies that the purchase has taken place. However, sources close to both the buyer and the Murmansk port confirm the deal, the news agency writes.

As previously reported by BarentsObserver, the Murmansk Port was last year included in the list of state-owned enterprises to be privatized. The state owns 25,49 percent of the port, while 34,97 is controlled by Specialized Project Investments and 12,68 by Laterium Commercial Limited.

With the acquisition of the port, Timchenko will become a considerable player also in the Russian Arctic. The Murmansk Port, located strategically in ice-free and deep-sea waters,

will inevitably become a key asset in the development of Russian offshore oil and gas projects in the Arctic.

The port was last year granted status as special economic port zone, something which is expected to boost its popularity among investors. The enhanced port status is also believed to help prepare the ground for the major upcoming developments linked with the Shtokman gas project in the Barents Sea.

The port today has the capacity to handle about 20 million tons of goods per year. In 2010, the port handled 12,87 million tons, a drop of 14,8 percent from 2009. Of this, 9,74 percent was coal, newspaper Vedomosti reports. Also increasing volumes of oil have over the last years been shipped through facilities in the port area.

While all port activities in Murmansk today are based on the eastern side of the Kola Bay, several key activities will in the future take place also on the western side of the bay. As previously reported, a number of major investment projects are in pipeline along the bay. A new railway line will link the western shore of the bay with the regional railway grid and thus pave the way for the construction of several new facilities, among them a coal reloading terminal and an oil terminal.

Gennady Timchenko, reportedly a citizen of Finland, has over the last years been associated with a number of controversial business deals. In 1997, he co-founded the company Gunvor, which a decade later had become the world’s third biggest oil trader. Speculations say that he is closely connected with Prime Minister Vladimir Putin. Timchenko and his business structures have lately shown an increasing appetite for oil company acquisitions. In 2009, he bought 23 percent of the second biggest Russian gas producer Novatek and later acquired also the Geotech Oil Services, as well as an oil terminal in Ust-Luga on the Russian Baltic coast, Vedomosti writes.

Text: Atle Staalesen

BRIEF-Telenor says Vimpelcom must improve Russia opshttp://in.reuters.com/article/2011/02/08/telenor-vimpelcom-idINOSL01576620110208

Feb 8 (Reuters) - Telenor ASA (TEL.OL):

* Says part-owned Vimpelcom (VIP.N) has underperformed competitors in Russia

* Vimpelcom has to focus at operating improvement in its core markets

* Says supports growth profile of Vimpelcom but will vote against Wind deal

Telecoms to Sponsor Online 'Cybermilitia' http://www.themoscowtimes.com/news/article/telecoms-to-sponsor-online-cybermilitia/430573.html

08 February 2011By Natalya Krainova

Four telecom giants have banded together with the government's support to sponsor a “cybermilitia” seeking to combat child pornography and promotion of extremism, violence and drugs.

The group declared no political goals, but vague wording about fighting “negative content” has prompted skeptics to warn that the new project can result in the establishment of a system of censorship similar to the one existing in China.

The League for Safe Internet is formed by Mobile TeleSystems, VimpelCom, MegaFon and Rostelecom, chairman of the group's management board, Konstantin Malofeyev, told The Moscow Times on Monday.

The companies want to fulfill their "social responsibility," Malofeyev, who also sits on Rostelecom's board, said by telephone.

Communications and Press Minister Igor Shchyogolev will head the league's board of trustees, which will oversee how nongovernmental organizations manage grants they receive from the group.

Speaking at a news conference in Moscow on Monday, Shchyogolev called on volunteers to monitor and report illegal online content, state television Vesti reported.

Another member of the trustees' board, children's ombudsman Pavel Astakhov, said at the conference that Internet users should exercise self-censorship by not posting "negative," "disgusting," "extremist" or "dangerous" information online.

"Children draw on [such content] from the Internet uncontrollably and can use it to harm themselves and other people," he said.

Child pornography will be the sole focus of the league this year, but it plans to take on other issues later, Malofeyev said.

"If we succeed in this, we can move on," he said, without elaborating.

Malofeyev refused to specify the group's budget, but said nongovernmental organizations

and law enforcement agencies fighting Internet crime are often underfunded.

Prominent journalist and blogger Maxim Kononenko said on his show on Vesti FM radio Monday that Malofeyev may create a "mechanism to declare some content extremist, or promoting violence or drugs."

The mechanism may later be sold to "someone who might want to buy it ahead of [December] parliamentary elections," Kononenko said, without identifying possible purchasers.

Internet guru Anton Nosik said a “cybermilitia” is already active in China, where volunteers screen web sites for content to report to police, Gazeta.ru reported Friday.

But representatives of existing online watchdogs welcomed the new group.

"All our projects are rather costly," Yevgeny Bespalov, head of the Friendly Runet Foundation, told The Moscow Times by telephone.

He said he has accepted an offer to sit on the league's supervisory board, though the appointment was not confirmed as of late Monday.

"Our organization, which has little funding, can't inform many people about threats of the Internet," said Mark Tverdynin, who chairs the board at the Russian Public Center for Internet Technology.

The Friendly Runet Foundation has on its web site a telephone hotline for reporting crimes on the Internet and it forwards the information to the Interior Ministry.

The service is in demand, as independent watchdogs received 14,000 complaints about illegal online content last year, said the head of the Safer Internet Center, Urvan Parvfentyev, Gazeta.ru reported.

An unidentified police representative said only a small portion of calls results in criminal cases being opened, the report said.

The League for Safe Internet's supervisory board, which will distribute the grants, is headed by Alexei Soldatov, an ex-communications and press minister and a founding father of the Russian segment of the Internet.

The board of trustees also includes chief of the Mail.ru service and president of the business lobby group Delovaya Rossia, as well as representatives of the four sponsor companies, federal legislators and senior government officials.

Russia's WBD to grant over $1 bln to PepsiCo to buy shares of WDB minorities - paper

http://en.rian.ru/business/20110208/162502571.html

11:45 08/02/2011

MOSCOW, February 8 (RIA Novosti) - PepsiCo, which has recently bought 76.98% of Russian dairy and juice maker Wimm-Bill-Dann (WBD) will receive a 31.37 billion ruble ($1.06 billion) loan from WBD to purchase the remaining shares held by minority shareholders, Vedomosti business daily reported on Tuesday.

In December 2010, PepsiCo signed an agreement to buy WBD for $5.8 billion, in which the company purchased a 42.37% stake from WBD's management, 23.52% from subsidiaries, and 11% in the market.

Vedomosti said PepsiCo planned to announce the purchase of WBD's remaining shares by March 11, 2011. The offer will expire in 70 days. The price will amount to $33 per American Depositary Receipt or $132 per share, which is equal to the agreed price.

WBD currently has about 1,500 minority shareholders, including investment funds and individuals, the paper quoted Renaissance Capital analyst Natalya Zagvozdina as saying.

Last week, subsidiaries of PepsiCo and WBD signed a credit agreement, under which PepsiCo Russia (Bermuda) Limited will get a three-year 31.37 billion ruble loan at 9.95% from WBD Finance Cyprus to complete the merger, the paper quoted a WBD statement, adding that PepsiCo had declined to comment.

Bank of Moscow analyst Yegor Fyodorov told the paper the loan deal was very advantageous for WBD because the loan interest rate was very high compared to WBD's ruble bond yield of 7.2-7.4% and PepsiCo's three-year Eurobond yield of 1.5%.

Activity in the Oil and Gas sector (including regulatory)

Rosneft and TNK-BP: Would It Work? http://www.bne.eu/dispatch_text14174

Alfa BankFebruary 7, 2011

The press is again awash with rumors of impending nuptials between TNK-BP and Rosneft, with Vedomosti reporting that AAR is discussing selling its stake in TNK-BP to Rosneft, with a valuation range for the whole company of $44-60bn. We estimate that if

Rosneft acquires 50% of TNK-BP for $30bn (assuming it also buys 1% from BP), it will be DCF neutral @$80/bbl, while the combined valuation could result in a TP of $10.5, up 10%, driven by the higher EBITDA and multiples-based valuation component. We believe a price of over $30bn for 50% would not add DCF value, but the deal would still be taken positively due to upside from scale/oil price/sentiment. Both sides have denied they are in negotiations, but we do not rule out the possibility of a deal.

Rosneft and BP may expand alliance in Russia via TNK-BP, with Rosneft/Rosneftegaz buying AAR's stake in TNK-BP as well as an additional 1 share from BP to gain control. The press have mentioned the possibility of a share-swap, debt or a debt/share-swap, with a valuation range of $44-60bn. While both sides deny they are in negotiations, we have decided to calculate the effect the deal could have on Rosneft.

Consolidation of TNK-BP could boost 2011E output by 73% to over 3.6 mmbpd, making Rosneft the world's largest traded oil producer, with refining capacity of 78 mmtpa, up 45% from its standalone capacity. We estimate combined 2011E EBITDA at $31bn (up 71% vs. Rosneft alone) and revenue of $112bn (up 70%), while FCF could jump a hefty 137% to $11.6bn p.a. All this assumes full-year consolidation and crude at $80/bbl.

Deal could be debt-funded: Rosneft's 2010 Net Debt/EBITDA is 0.7x, meaning the company could raise another $14bn and still trade at a modest 1.5x ratio. The combined company could hope to raise/refinance an even bigger amount ($25bn based on a target Net Debt/EBITDA multiple of 1.5x for 2011E).

Rosneft DCF unlikely to gain anything at $80/bbl and TNK-BP valuation of $60bn: Assuming a valuation of $30bn for 50% + BP's 1 share, we believe Rosneft's DCF will remain unchanged, implying a combined DCF/multiples-based TP of $10.5 (up 10% vs. the current TP, ceteris paribus). The increase would be driven broadly by a significant expansion of EBTIDA and DACF, which would boost the 50% multiples- based component of our valuation. At the same time, we view $30bn for the 50% stake as the upper limit beyond which the deal would not be value-accretive for Rosneft's DCF under current conditions.

Could the deal happen? We do not see why not, assuming shareholders agree on the terms and conditions that would create value for both sides and the valuation is within the range discussed above.

Valuation: Rosneft currently boasts a 2011E EV/EBITDA multiple of 5.7x, vs TNK-BP's respective multiple of 4.2X, although valuation of$60bn implies a deal multiple of 5.6X, virtually on the same level as Rosneft.

Risks: Overpaying for TNK BP could be taken negatively by Rosneft shareholders, and the deal could be just wishful thinking by the press, as both sides actively deny it.

Swiss receive inflow of Russian oil tradershttp://www.ft.com/cms/s/0/693e3758-32eb-11e0-9a61-00144feabdc0.html?ftcamp=rss#axzz1DLvJoNBv

By Javier Blas in London

Published: February 7 2011 21:09 | Last updated: February 7 2011 21:09

Switzerland has witnessed an inflow of Russian oil traders, bolstering the country’s claims to be the world’s leading trading centre for physical oil, industry executives said.

State-owned Rosneft, Russia’s largest oil producer, and Bashneft, a top refiner and fast-growing oil producer, have registered trading operations in Geneva and Zurich, respectively, over the past few weeks. Both currently trade from Moscow.

The arrival of the two Russian oil companies comes in the footsteps of TNK-BP, which announced plans for a Geneva-based trading arm last November.

Switzerland saw the first inflow of Russian oil traders in the late 1990s following the collapse of the Soviet Union.

The Geneva Trading and Shipping Association, the industry body, claims the Swiss city handles about 75 per cent of Russia’s oil exports.

Russia is the world’s top oil producer, after overtaking Saudi Arabia last year.

Rosneft registered last week a subsidiary called Rosneft Trading SA on the Rue du Rhône in Geneva, within walking distance of rivals Trafigura, Gunvor and Mercuria, the world’s third, fourth and fifth-largest oil trading houses, respectively. Bashneft has set up Bashneft Trading AG in the outskirts of Zurich.

Oil executives and bankers said the new arrivals would add to Switzerland’s rising role in physical oil trading at the expense of London, which has seen the departure of several teams.

GTSA believes the Swiss city now “ties with London as Europe’s number-one oil trading hub”.

But oil executives said the balance was turning in Geneva’s favour with the new arrivals. Established companies such as Trafigura are also moving some teams from London to Geneva. The arrivals and transfers come amid broader financial industry complaints about stiffer regulation in London.

Geneva and London have fought for dominance in physical energy trading since the first oil crisis in 1973-74, which saw the emergence of the initial cadre of oil traders in Geneva and Zug, another Swiss city. In the mid-1980s, London started to gain business

and by the 1990s the UK capital was eclipsing Geneva. Since the mid-2000s the Swiss city has won back market share, executives said.

Oil traders said the plans of Rosneft were unclear. In the past, the company has sold some of its output through Gunvor and the rest via competitive tenders. The launch of a trading arm could see an overhaul of the system.

“There is a general view that Rosneft are going to restructure the way they handle their export volumes,” a senior Geneva-based oil trader said.

The Russian company said: “The new entity is registered for meeting growing needs of Rosneft for its international activates.”

Gunvor said it purchases oil products through competitive tenders - in Russia and globally. “We do not see this [Rosneft new trading arm] affecting our business,” it said.

Bashneft said it planned to start trading its own oil and refined products output from Switzerland and move later into third-party oil deals.

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Gazprom

Poland initiates new round of talks on gas price discounts http://www.bne.eu/dispatch_text14174

Alfa BankFebruary 8, 2011

Poland's PGNiG has initiated a new round of talks with Gazprom to discuss potential gas price discounts. The two sides are currently setting up a timetable of meetings, Vedomosti reports. The news indicates that European customers are still trying to take advantage of the loose gas market in Europe to secure more favorable contract terms. Right now, as demand begins to weaken seasonally, they are again attempting to renegotiate gas prices. It is not clear what Poland will be able to accomplish, but Gazprom's agreeing to discuss the topic suggests there will be a new round of price renegotiations. These negotiations, however, will likely not be as aggressive as those of recent years. We note that although the news is negative, it was generally expected by the market, which may dampen its effect on share prices.

In other news, Shell may offer Gazprom assets in Asia in return for a deal to expand the Sakhalin LNG plant, according to press reports.

Pavel Sorokin

Shell may offer Gazprom assets to gain LNG plant expansionhttp://blogs.ft.com/beyond-brics/2011/02/08/london-headlines-182/

Royal Dutch Shell Plc may offer OAO Gazprom assets in Asia in exchange for a deal to expand Russia’s only liquefied gas export plant, part of talks on a wider global alliance, said people with knowledge of the negotiations, Bloomberg reports. Shell wants to add a third liquefied natural gas production unit at the $22bn Sakhalin-2 venture north of Japan, raising output 50 per cent. The Hague-based company is selecting overseas assets to win support from Gazprom, said three people, declining to be identified because the plans are private. Shell may gain access to new offshore blocks to supply the plant.

Shell Said to Offer Gazprom Assets to Gain LNG Plant Expansion http://noir.bloomberg.com/apps/news?pid=20601087&sid=axeFyFXKxzI4&pos=5

By Anna Shiryaevskaya

Feb. 8 (Bloomberg) -- Royal Dutch Shell Plc may offer OAO Gazprom assets in Asia in exchange for a deal to expand Russia’s only liquefied gas export plant, part of talks on a wider global alliance, said people with knowledge of the negotiations.

Shell wants to add a third liquefied natural gas production unit at the $22 billion Sakhalin-2 venture north of Japan, raising output 50 percent. The Hague-based company is selecting overseas assets to win support from Gazprom, said three people, declining to be identified because the plans are private. Shell may gain access to new offshore blocks to supply the plant.

The talks follow an agreement in November to expand cooperation between Europe’s largest oil company and Russia’s gas export monopoly. Shell Chief Executive Officer Peter Voser and Gazprom’s Alexei Miller have set deadlines for the negotiations, one person said, without elaborating.

Shell, Exxon Mobil Corp. and BP Plc are teaming up with state-run companies to gain access to resources in Russia, the world’s biggest producer of oil and gas. For their part, Russian producers are looking to expand overseas and maintain output at home using foreign expertise. Last month, BP agreed with OAO Rosneft to swap shares, explore three blocks in Russia’s Arctic waters and possibly work abroad.

In addition to the talks on Sakhalin, the two companies are exchanging data on oil fields in west Siberia, where they run the Salym Petroleum venture, two people said. The November accord covered possible oil and gas projects in west Siberia, Russia’s Far East and abroad, as well as European refining and retail.

Government Pressure

Shell, which agreed to cede control of Sakhalin-2 to Gazprom in 2006 under government pressure, is pushing to expand the plant and win markets in China and India. Gazprom has held back on agreeing to expand Sakhalin-2 while it examines a rival plant near Vladivostok.

Gazprom will target areas of “strategic interest,” which may include the Asia-Pacific region and LNG projects, one person said. The list of possible assets in exchange for Sakhalin expansions hasn’t been finalized, the people said.

Shell is spending about $50 billion in Australia over the next decade to develop gas export projects. The company is also drilling for unconventional gas in China.

“As Gazprom wants to be a major player in the LNG markets, then I think Australia equity participation would be most obvious” as a candidate for the Russian company, said Oswald Clint, a senior analyst at Bernstein Research.

Prime Minister Vladimir Putin invited the explorer to participate in the nearby Sakhalin-3 and Sakhalin-4 oil and gas projects during a June 2009 meeting with Voser and then CEO Jeroen van der Veer.

Full Capacity

The Sakhlin-2 plant started production in 2009, reaching reached full capacity last year and accounting for 5 percent of global production of the fuel, according to Shell. Gas may account for more than half of Shell’s total production by 2012.

Vera Surzhenko, a spokeswoman at Shell in Moscow, said the companies are “considering opportunities” and declined to name any assets outside Russia that they may consider. Within Russia, Shell and Gazprom are looking at new projects on the basis of existing assets, she said, declining to elaborate. Sergei Kupriyanov, a Gazprom spokesman, and Denis Rebrov, a Gazprom Neft spokesman, declined to comment.

Gazprom owns 50 percent of Sakhalin Energy, the Sakhalin-2 operator. Shell holds 27.5 percent and Mitsubishi Corp. and Mitsui & Co. also have stakes.

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

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Last Updated: February 7, 2011 16:00 EST

Deloitte to evaluate Gazprom's operational efficiency on domestic markethttp://www.kyivpost.com/news/russia/detail/96616/

Today at 09:51 | Interfax-Ukraine Moscow, February 8 (Interfax) - Deloitte & Touche Regional Consulting Services Limited has won a tender held by Gazprom for auditing the Russian gas giant's effectiveness in selling gas on the domestic market, including sales through OOO Mosregiongaz, the company said in its materials.

Deloitte will analyze Gazprom's organizational and administrative documentation in regards to supplying gas in terms of its comprehensiveness and redundancy.

Furthermore, Gazprom is interested in an analysis of the distribution of functions between the main operational actors, as well as uncovering any overlap in these functions. Gazprom also wants to receive an evaluation of the efficiency of its sales structure.

Gazprom has instructed Deloitte to analyze its planning system for supplying gas to Russia's regulated and unregulated sectors, as well as its sales monitoring system.

Deloitte will also review Gazprom's sales of liquefied and pressurized gas.

The consulting company will provide its conclusions on Gazprom's revenue and profit from gas sales in 2008-2010 (broken down according to region in Russia, production type and consumer class). Deloitte will also analyze price trends on gas over this period. The analysis will review costs of gas sales in 2008-2010, as well as client payments.

Deloitte will also analyze Gazprom's system for investing in gas distribution and tax risks facing Gazprom Mezhregiongaz for its sales in Russia (on completed operations). The consulting firm will provide its recommendations based on the analytical results.

The maximum price that Gazprom was ready to pay for these services comes to 6 million rubles (not including VAT). The tender's results were tallied on December 23. The analysis should be ready two months after the signing of the agreement.

Read more: http://www.kyivpost.com/news/russia/detail/96616/#ixzz1DLywZWQK

Gazprom Neft closes the book, sets coupon rate on five-year bonds at 8.50%, on seven-year bonds at 8.90% http://www.bne.eu/dispatch_text14174

Alfa BankFebruary 7, 2011

Gazprom Neft is using the book building method to place three issues totaling RUB30bn. The coupon rates on series 08 bonds maturing in five years and 09 bonds with a five-year

put option were set at 8.50% p.a. and the coupon rate on series 10 bonds maturing in ten years with a seven-year put was set at 8.90% per annum.

The book was closed at the upper boundary of the guided for range. Settlement will take place on the MICEX tomorrow. The organizers of the issue are Gazprombank and Troika Dialog.

Your chance to quiz Gazprom’s Alexander Medvedevhttp://blogs.ft.com/energy-source/2011/02/07/your-chance-to-quiz-gazproms-alexander-medvedev/

February 7, 2011 12:10 pm by Kiran Stacey

Many thanks for all your questions for Josh Fox, the Oscar-nominated director of Gasland. His answers will appear on this site on Friday, February 11th.

Next week, the person in the hotseat will be Alexander Medvedev, deputy chief executive of Gazprom and head of Gazprom’s exports.

This is your chance to ask one of the biggest names in the gas world anything: from how his company can counter the US shale gas boom; to how much pressure he is under to lower prices for foreign governments; to what are the chances and potential consequences of another gas dispute with Ukraine.

Email all your questions to energysource@ft.com by the end of Sunday, February 13th.