Russia 110404

Basic Political Developments MEDVEDEV CONGRATULATES NAZARBAYEV ON WINNING

PRESIDENTIAL ELECTIONS - KREMLIN PRESS SERVICE BRICS Coordinates Stance - Leaders from five of the world's top emerging

economies will discuss a coordinated stance on economic issues such as commodity price fluctuations at the mid-April BRICS summit, Assistant Chinese Foreign Minister Wu Hailong said Saturday.

Belgian trade mission headed by crown prince to arrive in Russia - Crown Prince of Belgium, Duke of Brabant Philippe will begin an official part of his visit in Russia on Monday. He will head the Belgian trade mission that will stay in Russia until April 8.

Young Guard to picket Estonian embassy over Bronze Soldier scandal Putin visit aimed against Brussels ties - Putin is expected to visit Ukraine between

April 11 and April 15, Kommersant daily reported, citing a Russian source. A Ukrainian official said the visit will probably take place on April 12.

Minister: Ukraine Works Against South Stream - "South Stream is a political project of our Russian partners, who want to create an excess of transit capacities for gas, like what they did back in the day for oil," said the Ukrainian minister, quoted by MIGnews.

Radiation background normal in Russia Far East Tanzania: Russian Firm Back in Uranium Project - The Tanzania uranium mining

project is back on track after an Australian firm Mantra Resources Ltd agreed to lower its offer to Russia's JSC Atomredmetzoloto (ARMZ) from $1.16 billion to $944 million.

Karabakh mediators to visit region - 'The goal of the Co-Chairs’ visit is to continue discussions on the basis of basic principles, based on the positive momentum of the Sochi meeting,' the OSCE said.

US puts Russian pilot on trial - According to US investigators, the Russian had long been engaged in transporting drugs to Europe, South America and Africa. But Yaroshenko has pleaded not guilty and rejected any plea bargain.

Russia's Soyuz-21 spacecraft to blast off on April 5 Ex-Foreign Ministry spokesman Nesterenko appointed as ambassador to

Montenegro State Board Purge to Start July 1 - President Dmitry Medvedev has given Prime

Minister Vladimir Putin until July 1 to start removing government ministers from the boards of state companies, adding teeth for the first time to his long-floated initiative to improve the country's investment climate.

Kremlin Rebukes Mironov - Anti-graft measures proposed by Federation Council Speaker Sergei Mironov earned him a rebuke on Sunday from the camp of President Dmitry Medvedev. Mironov, an ally of Prime Minister Vladimir Putin, suggested to Putin on Saturday that the presumption of innocence for state officials should be abolished as a measure to fight graft.

President orders privatization schedule by May 15 - Russian President Dmitry Medvedev has instructed the government to approve a privatization schedule for 2011-2013 before May 15, the president's press service announced on April 2.

Medvedev appoints four major-generals, thee colonels to head regional police departments

o Medvedev appoints heads the Interior Ministry in several Russian regions Deputy authorized presidential envoy to NCFD dismissed - Alexander Khloponin,

plenipotentiary presidential envoy to the North Caucasian Federal District, has dismissed General Arkady Yedelev, his deputy, who was supervising activities with neighbor states, Kommersant reports on Monday.

Rebel food cache destroyed in Dagestan - The dugout was in a forest in the republic’s northern Khasav-Yurt district.

Cache with explosive devices found in Kabardino-Balkaria - The cache contained seven homemade explosive devices of different type and power equivalent to 400 grams and three kilograms of TNT, six homemade detonators, two 200-gram TNT blocks, two grenades and about 200 cartridges of different calibre.

Kadyrov reports death of two militants in Chechnya - "The militants were traced in a police operation in the Shatoi district. They were blocked in the vicinity of Nochkeloi and offered to surrender but opened gunfire," he said.

Umarov could have escaped - Ingushetia heado DNA testing to say whether Umarov killed or alive: Ingush leader

Russia needs 1,300 domestically-built planes - official : Security Council chief Nikolai Patrushev said there had been a tenfold increase in the use of foreign-made planes in recent years, but added that Russia was looking to gain 15 percent of the global civil aviation market by 2020.

One dies, three got burns at silicon plant accident in Irkutsk reg At Domodedovo airport "business as usual" - Media reports earlier said a large

number of passengers thronged the airport’s arrivals area, an average passport check-up took from 40 minutes to an hour and there were problems with baggage claim.

World Cup fans can go far, Urals city says St. Petersburg deputy governors reach out to opposition at protest - Roman

Filimonov and Igor Metelsky - the deputy governors - are believed to be the first high ranking city officials to speak at such an event. Filimonov said they came on the initiative of the mayor, Valentina Matvienko, who he credited with launching a dialogue with public organizations.

Journalist Natalia Seybil beaten in Moscowo Senior police officer sacked for violence against journalist

Khodorkovsky lawyer dismisses frozen accounts as 'gossip' Russian Press at a Glance, Monday, April 4, 2011 Cold War restriction ties up US-Russia trade - Russian and Israeli tourists can

now travel visa-free between their two countries, yet U.S.-Russian trade relations continue to be stymied by a Cold War law censuring the Soviets for holding up Jewish emigration.

Science: Floating in a most peculiar way - The launch pad at Baikonur Cosmodrome, from which Yuri Gagarin blasted off 50 years ago next week, is

due to be in action again tomorrow. A Soyuz rocket will lift two Russians and an American up to the International Space Station on an emotion-laden flight dedicated to the memory of the first man in space.

Yuri Gagarin's Klushino: Forgotten home of space legend Russia Profile Weekly Experts Panel: Can The Split in the Tandem Be Dealt

With? - Contributors: Vlad Ivanenko, Patrick Armstrong, Alexandre Strokanov, Vladimir Belaeff

National Economic Trends A fourth rise for pensions on the way? COMMENT: Russian budget thirsty for more taxes Putin puts in his two cents about alcohol and tobacco - Prime Minister Vladimir

Putin considers a sharp increase in excise taxes on alcohol unacceptable. The measure would not reduce alcoholism and trigger the growth of black market substitutes, as well as growth of moonshine production, says the prime minister.

BOFIT forecast sees brisk GDP growth in 2011-2013 for Russia, despite slowing Rosstat confirms 4.0% YoY GDP growth in 2010, reveals higher inflation

pressures Russian Economic Monitor: Entering 2Q11 with positive expectations

Business, Energy or Environmental regulations or discussions Government approves new capacity rules Insurance brokers face stiffer regulations Gazprom, Rosneft, Globaltrans May Move: Russia Stock Preview RusAl opens bid book for eight series bonds worth 15 bln rubles, coupon

guidance at 8.7%-9% Russia’s Sistema increases its share capital in its India unit Sistema Shyam

TeleServices Ltd Russia's Magnit eyes $500 mln new share sale – paper Russia's SUEK seeking full London listing – report Etalon Group Sets IPO Price Range to Value Russian Company at $2.5 Billion UPDATE 1-Russia's Globaltrans 2010 profit up 86 percent Russia's Globaltrans may buy state's Freight One-CEO Renaissance Capital’s Retail Banking Arm Returns to Profit Severstal to launch new automotive steel line project in North America Severstal Seeks $730M U.S. Government Loan Russian Helicopters makes offer to Kazan Helicopters minorities Azerbaijan to import Russia-assembled Hyundai cars JV Mail.ru Group hires Alexey Basov, Begun's ex-CEO and co-founder Central Bank publishes banking sector data for February Buoyant Russia is undervalued: Vecht

Activity in the Oil and Gas sector (including regulatory) Oil-extraction in Russia up 1.2% in January-March Russian gas production up 0.6% in Jan-Mar CPC oil exports flat in Q1 Lukoil boosts stake in Italian refinery

Lukoil and Russia Ride the Rise of Oil Oligarchs renew bid to halt BP deal with Rosneft - Four Russian oligarchs will

make a renewed attempt to block BP’s proposed $16bn (£10bn) share-swap deal with Rosneft on Monday, claiming it contravenes an existing shareholder agreement.

ExxonMobil named Glenn Waller to run its Russia business, replacing Steve Terni, company spokeswoman Olga Shishkina said Friday, as Terni takes a new position at the company's upstream unit, ExxonMobil Development.Transneft expects 4%YoY growth in FY2010 IFRS earnings

Russia February Refinery Deliveries: Summary Oil and gas monitor - Renaissance Capital

Gazprom Gazprom Neft, TNK-BP Messoyakha Deposit May Cost $20 Billion

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Full Text Articles

Basic Political Developments

04/04 12:36   MEDVEDEV CONGRATULATES NAZARBAYEV ON WINNING PRESIDENTIAL ELECTIONS - KREMLIN PRESS SERVICEhttp://www.interfax.com/

BRICS Coordinates Stance http://www.themoscowtimes.com/business/article/brics-coordinates-stance/434365.html

04 April 2011

BEIJING — Leaders from five of the world's top emerging economies will discuss a coordinated stance on economic issues such as commodity price fluctuations at the mid-April BRICS summit, Assistant Chinese Foreign Minister Wu Hailong said Saturday.

"We hope all sides can strengthen coordination and mutual cooperation on reform of the international currency system, commodity price fluctuations, climate change and sustainable development," Wu told a news conference.

China hoped that the summit, which will bring together leaders of China, Russia, India, Brazil and South Africa in the southern Chinese beach resort of Sanya, would be able to coalesce views ahead of the G20 summit in Cannes, France, later this year, Wu said.

(Reuters)

Belgian trade mission headed by crown prince to arrive in Russia

http://www.itar-tass.com/eng/level2.html?NewsID=16114568&PageNum=0

04.04.2011, 03.26

MOSCOW, April 4 (Itar-Tass) -- Crown Prince of Belgium, Duke of Brabant Philippe will begin an official part of his visit in Russia on Monday. He will head the Belgian trade mission that will stay in Russia until April 8.

More than 400 businesspeople from 210 companies will accompany the crown prince. Belgian Acting Foreign Minister Stephen Vanackere and the economy ministers of the Brussels capital region and Wallonia, Benoit Cerexhe and Jean-Claude Marcourt, as well as the general director of the Flemish agency for international business will also arrive in Russia.

The delegation will begin their trip to Russia with a visit to Skolkovo, where, according to Belgian Ambassador in Russia Guy Trouveroy, “no contracts are planned, this is an introductory meeting.” The Belgian businesspeople headed by the prince will meet with Russian First Deputy Prime Minister Igor Shuvalov, Minister of Economic Development Elvira Nabiullina and Minister of Industry and Trade Viktor Khristenko, Moscow Mayor Sergei Sobyanin and the top managers from Gazprom and Lukoil. Russian President Dmitry Medvedev will receive the Belgian crown prince on April 5.

“We hope that after these negotiations, the doors to cooperation will open even wider,” the prince’s adviser, Director General of the Belgian Foreign Trade Agency Marc Bogaerts said. “Relations with Russia as a member of the BRIC format are very important for us.” The Belgian delegation intends to focus attention on the cooperation with the Russian capital and plans to hold joint seminars on medicine and transport. A Belgian company will present new alarm systems for the Moscow metro.

The space industry is a traditional sphere of bilateral cooperation. The Belgian crown prince will award Russian cosmonauts Sergei Zaletin, Valery Korzun, Gennady Padalka and Roman Romanenko in Moscow. This awarding ceremony is symbolic, because an ESA astronaut from Belgium Frank de Winne was the first European ISS commander in 2009.

On April 6, the guests from Belgium will travel by the Sapsan high-speed train to St. Petersburg, where a contract in the car making is planned to sign. The governors of St. Petersburg and the Leningrad region will meet the mission.

Philippe’s wife Princess Mathilde, who is accompanying the Belgian crown prince, will visit the Hermitage State Museum and the Petropavlovskaya Fortress in St. Petersburg.

Belgian Acting Prime Minister Yves Leterme and Dmitry Medvedev reached an agreement on Philippe’s visit in Russia during Medvedev’s visit in Brussels in December 2010. “We are firmly convinced that this visit is timely,” Leterme said then. “Many Belgian enterprises have invested and continue to invest in Russia’s economy, thus showing an interest in President Medvedev’s policy aimed at modernization of the Russian Federation,” he said.

The bilateral trade reached 11 billion dollars for the past year, the Belgian ambassador said. “Belgium considers Russia as a long-term partner. The Russian market is interesting not for a year or two, but for a long time. Therefore, many Belgian companies continue to make investments in Russia,” he told Itar-Tass. In this respect, the Belgian ambassador stated that the country’s trade mission is mainly seeking “to open up new opportunities for business” during their Russian visit. The Belgian diplomat noted construction, the hydrocarbon supplies, high technologies and the chemical industry as the top priorities of bilateral cooperation. He did not rule out that bilateral business agreements would be concluded in Kazan, Nizhny Novgorod and Samara, where Belgian companies already operate.

12:00Young Guard to picket Estonian embassy over Bronze Soldier scandalhttp://www.interfax.com/news.asp

Putin visit aimed against Brussels tieshttp://www.ukrainianjournal.com/index.php?w=article&id=12259

Journal Staff Report

KIEV, April 2 – Russian Prime Minister Vladimir Putin will come to Ukraine later this month to try to dissuade Kiev against closer economic and political ties with Brussels in favor of joining a Moscow-led alliance.

Putin is expected to visit Ukraine between April 11 and April 15, Kommersant daily reported, citing a Russian source. A Ukrainian official said the visit will probably take place on April 12.

The visit appears to be scheduled only days after Ukraine is due to hold an important round of talks in Brussels over free trade and political association agreements with the EU.

“The consequences for Ukraine of singing the [EU] free trade agreement will dominate the visit,” the Russian source said, according to Kommersant.

The developments underscore diplomatic efforts underway as Moscow seeks to assert and strengthen its influence in the region by trying to engage Kiev economically and politically.

This comes as relations between Kiev and Moscow worsened over the past three months amid growing disagreements over trade and important economic issues, such as natural gas prices.

President Viktor Yanukovych, who was elected in February 2010 on a pro-Russian platform, met his Russian counterpart Dmitry Medvedev 11 times in the course of 10 months last year. The two are yet to hold their first meeting this year.

Putin warned Ukraine last month that prohibitive trade barriers will be erected against Ukrainian goods if Kiev joins the free trade with the EU.

His Ukrainian counterpart, Mykola Azarov, immediately responded that Kiev will “persist” with the EU talks and will seek to sign the free trade accord before the end of the year.

Putin argued that Ukraine would benefit economically from joining the Moscow-led trade bloc, known as the Customs Union, which includes Russia, Belarus and Kazakhstan.

During his visit to Kiev, Putin will seek to spell out economic benefits that Ukraine might obtain after joining the Customs Union.

Minister: Ukraine Works Against South Stream

http://www.novinite.com/view_news.php?id=126879

Energy | April 2, 2011, Saturday

The South Stream natural gas pipeline project is not in the best interest of Ukraine and the country is working against it, according to Ukrainian Minister of Energy Yuriy Boyko.

Boyko said his country is undergoing "tense discussions" with Russia, the main country supporting the project, set to deliver gas to southern and central Europe, bypassing Ukraine.

"South Stream is a political project of our Russian partners, who want to create an excess of transit capacities for gas, like what they did back in the day for oil," said the

Ukrainian minister, quoted by MIGnews.

Boyko said that in collaboration with Ukraine's "EU partners," the country will be putting efforts so that in the end the pipeline be not built.

Radiation background normal in Russia Far East

http://www.itar-tass.com/eng/level2.html?NewsID=16115161&PageNum=0

04.04.2011, 10.20

VLADIVOSTOK, April 4 (Itar-Tass) - The Russian Far East reports no increases in the radiation background on Monday following the accidents at the Fukushima nuclear power plant in Japan, spokesman for the Far Eastern regional centre of the Russian Ministry for Emergency Situations Sergei Viktorov said.

A total of 630 stationary and mobile stations monitor radiation levels in the region. In Sakhalin and on the Kuril Islands, the closest to Japan among Russian regions, the radiation background early on Monday was five to 14 microroentgen per hour, which is below the permissible level of 25 to 30 microroentgen per hour.

In the Sakhalin region, 99 stations monitor the radiation background. They include stations on EMERCOM helicopters and coast guard ships of the Sakhalin border department. No radiation danger is forecasted, and there is no risk for the health of the local population.

Tanzania: Russian Firm Back in Uranium Project http://allafrica.com/stories/201104040249.html

Mike Mande

4 April 2011

Nairobi — The Tanzania uranium mining project is back on track after an Australian firm Mantra Resources Ltd agreed to lower its offer to Russia's JSC Atomredmetzoloto (ARMZ) from $1.16 billion to $944 million.

ARMZ had said last week it had shelved plans to purchase the Mkuju uranium assets in southern Tanzania from Mantra over the recent Japanese nuclear plant crisis.

The transaction, to be closed in July this year, will see ARMZ acquiring all of the issued share capital in Mantra including its flagship Mkuju River project in Tanzania.

Construction of the mining plant in southern Tanzania will start in the first quarter of 2011 with operations beginning in the fourth quarter of 2013.

Last week, ARMZ had given Mantra a notice that the ongoing nuclear crisis in Japan could hurt its operations.

ARMZ, however, indicated that it was willing to explore how the transaction could proceed by way of an alternative approach.

Tony Devlin, managing director of Mantra Tanzania said the revised transaction is in Mantra's best interest taking into consideration the current global equity market conditions and increased uncertainty for the uranium sector.

Mr Devlin said the capital cost for construction of the mining plant including all associated infrastructure stands at $298 million.

Minister for Energy and Minerals, William Ngeleja, told The EastAfrican that the Mkuju River Project is shaping up into a truly world-class venture and has the potential, in its first phase of development, to position Tanzania as the third, and perhaps even the second largest producer of Uranium in Africa.

Mr Ngeleja said that the pre-feasibility study in March 2010, indicated that, once developed, the mine would produce 1,650 tonnes of uranium oxide a year, thus overtaking the US - which produced 1,560 tonnes in 2009 - to become the eighth largest producer in the world.

"Tanzania will produce three times more uranium oxide than South Africa," he said.

The mining plant will have an average annual production of 1,650 tonnes per annum with the potential to expand production in the second phase of the project.

This will be the first major mining development in south eastern Tanzania, bringing jobs to an under developed region with a foreign direct investment of $450 million generating approximately $250 million in annual foreign currency receipts.

The government expects about $630 million in royalties, income and employee taxes directly from the project based on the 15 year estimated life of the mine.

Karabakh mediators to visit regionhttp://www.news.az/articles/karabakh/33676

Mon 04 April 2011 06:59 GMT | 8:59 Local Time

The Co-Chairs of the OSCE Minsk Group plan to visit region in the near future, the OSCE reported.

'The goal of the Co-Chairs’ visit is to continue discussions on the basis of basic principles, based on the positive momentum of the Sochi meeting,' the OSCE said.

Specific measures on fulfilling the obligations assumed in Sochi regarding to the investigation of ceasefire violations with the participation of all sides will also be discussed.

Presidents of Azerbaijan, Russia and Armenia Ilham Aliyev, Dmitriy Medvedev and Serzh Sargsyan met at the Krasnaya Polyana ski resort near Sochi on March 5.

After the talks in Sochi, the Presidents of Azerbaijan, Russia and Armenia, Ilham Aliyev, Dmitriy Medvedev and Serzh Sargsyan, made a joint statement on the Nagorno-Karabakh settlement.

The document stresses the desire to resolve all disputed issues by peaceful means and to investigate possible incidents along the ceasefire line, with the participation of the parties under the aegis of the OSCE Minsk Group co-chairmen and with the assistance of the Special Representative of the OSCE Chairman.

The conflict between the two South Caucasus countries began in 1988 when Armenia made territorial claims against Azerbaijan. Armenian armed forces have occupied 20 percent of Azerbaijan since 1992, including the Nagorno-Karabakh region and seven surrounding districts.

Azerbaijan and Armenia signed a ceasefire agreement in 1994. The co-chairs of the OSCE Minsk Group - Russia, France, and the US - are currently holding the peace negotiations. Armenia has not yet implemented the UN Security Council's four resolutions on the liberation of the Nagorno-Karabakh and the surrounding regions.

Trend

US puts Russian pilot on trialhttp://english.ruvr.ru/2011/04/04/48408481.html

Apr 4, 2011 09:41 Moscow Time

A Russian pilot is due to appear before a court of law in the United States on drug smuggling charges.

Konstantin Yaroshenko was arrested in the African country of Liberia almost a year ago.

According to US investigators, the Russian had long been engaged in transporting drugs to Europe, South America and Africa. But Yaroshenko has pleaded not guilty and rejected any plea bargain.

He is currently being held at the New York pretrial detention centre and suffering health problems, specifically the ones that have to do with his stomach.

But he’s been denied a healthy diet and appropriate medical aid. He has also been denied fresh air and exercise, just as an opportunity to receive the required medicines from Russia.

Russia's Soyuz-21 spacecraft to blast off on April 5http://english.ruvr.ru/2011/04/04/48409058.html

Apr 4, 2011 10:01 Moscow Time

Russia’s Soyuz-21 spacecraft with the international crew on board will blast off from the Baikonur Cosmodrome on April 5 and is due to dock with the International Space Station on April 7, news reports said.

The crew includes Russian cosmonauts Alexander Samokutyayev and Andrey Borisenko plus American astronaut Ronald Garan.

The mission comes ahead of the 50th anniversary of Soviet cosmonaut Yuri Gagarin’s first-ever flight to outer space, which grabbed international headlines on April 12, 1961. 

12:21Ex-Foreign Ministry spokesman Nesterenko appointed as ambassador to Montenegro

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

State Board Purge to Start July 1 http://www.themoscowtimes.com/business/article/state-board-purge-to-start-july-1/434348.html

04 April 2011By Olga Razumovskaya

President Dmitry Medvedev has given Prime Minister Vladimir Putin until July 1 to start removing government ministers from the boards of state companies, adding teeth for the first time to his long-floated initiative to improve the country's investment climate.

In light of next spring's presidential election, the deadline imposed by Medvedev on Saturday could also be construed as a challenge to Putin, who has key allies among the ministers sitting on the boards of those companies.

But with the ax poised to fall on both hard-liners and foreign investor-friendly liberals in the Cabinet, the shuffle appears to be more about business than politics, analysts said.

Medvedev signed off on the initiative to replace deputy prime ministers and ministers with independent directors on Saturday, just three days after resurrecting the issue at a meeting of his modernization commission. There are 17 companies with government ministers who might have to quit their posts this summer. Among them are Rosneft, chaired by Deputy Prime Minister Igor Sechin, the close Putin ally responsible for the energy sector, and VTB bank, chaired by Finance Minister Alexei Kudrin, who is deemed a more liberal politician sensitive to the worries of investors.

Medvedev expects Putin to ensure that independent directors are appointed to the vacant positions by Oct. 1, according to a statement published on the Kremlin's web site.

The president will also require the departure of all other senior government and Kremlin officials from the boards of companies with any degree of state ownership, presidential aide Arkady Dvorkovich said Saturday.

"Only lower-level officials will be able to remain on a board of directors — for example, a deputy minister or a department head — but they will not be able to head the board of directors," Dvorkovich said, Interfax reported.

The measure was first proposed by Medvedev during the campaign before his 2008 election but was quickly swept under the carpet as the economic crisis spread across the country.

This time Medvedev has set a firm deadline for Putin and made a list of people involved, showing his determination, said Maria Lipman, editor of Pro et Contra, a policy journal published by the Carnegie Moscow Center.

"It will be important to know who will come in to replace them," she said.

But Lipman advised taking a wait-and-see stance on the shuffle, which, she said, "is very important in Russia, where people talk a lot and little is done."

Others expressed more enthusiasm, saying the crisis and not politics was to blame for Medvedev's seeming hesitation in following through on his campaign trail plans.

"The crisis did not allow Medvedev to address the issue properly," said Yaroslav Lissovolik, chief economist at Deutsche Bank. "Problems like economic stability and currency exchange were more of a priority at that time. Many issues that had been discussed pre-crisis were put on hold when it began."

Lissovolik saw the measure largely as economically beneficial and having little, if anything, to do with pre-election politics between Medvedev and Putin.

"This is definitely a positive decision because corporate governance should improve as a result," Lissovolik said, adding that investors' attitude toward Russia could improve significantly by removing any conflict of interest between the government and the companies in which it participates.

Several analysts declined to comment on the issue, saying that separating business from politics is really difficult with state-owned companies in Russia.

The Kremlin has sent many signals to foreign investors over the past few years that pushed them away, Lipman said, and changing this dynamic will not be easy.

"No single action will fix Russia's investment climate," she said. "A substantial amount of time should pass for the rule of law to become visible in Russia."

But if Medvedev were to look for a single decision to dramatically improve the investment climate, she said, it would have to be a rethink of the legal onslaught against former Yukos CEO Mikhail Khodorkovsky, who is serving a 14-year prison sentence after two trials that supporters call Putin's punishment for his political and commercial ambitions.

"He is a symbol of the law in Russia," Lipman said.

Kremlin Rebukes Mironov 04 April 2011http://www.themoscowtimes.com/news/article/kremlin-rebukes-mironov/434385.html

Anti-graft measures proposed by Federation Council Speaker Sergei Mironov earned him a rebuke on Sunday from the camp of President Dmitry Medvedev.

Mironov, an ally of Prime Minister Vladimir Putin, suggested to Putin on Saturday that the presumption of innocence for state officials should be abolished as a measure to fight graft.

Putin did not comment, but the next day Medvedev's camp weighed in with a sharp rebuke.

"We are surprised that the head of the upper chamber calls for measures that contradict … the Constitution," a senior Kremlin source told Interfax. "This strange suggestion of Mironov's can … be explained by nothing else but populism and the desire to attract attention to his party."

(Reuters)

President orders privatization schedule by May 15

http://www.rbcnews.com/free/20110404115009.shtml

      RBC, 04.04.2011, Moscow 11:50:09.Russian President Dmitry Medvedev has instructed the government to approve a privatization schedule for 2011-2013 before May 15, the president's press service announced on April 2.

      The government was also tasked with enacting before July 1 a procedure for large state-owned companies to make public their plans to purchase goods and services, including their cost, as well as information about all contracts concluded.

      The government also expects the shareholders of 17 major state-controlled companies to replace before July 1 all deputy prime ministers and ministers on the boards of directors with independent directors and shareholders of other state-controlled companies as a result of similar decisions adopted before October 1.

04/04 10:15   Medvedev appoints four major-generals, thee colonels to head regional police departmentshttp://www.interfax.com/http://kremlin.ru/acts/10809

GOOGLE TRANSLATION

Medvedev appoints heads the Interior Ministry in several Russian regions

http://www.itar-tass.com/level2.html?NewsID=16115146&PageNum=0

04.04.2011, 10.17

MOSCOW, April 4. Itar-Tass. Russian President Dmitry Medvedev appointed heads the Interior Ministry in several regions of the country, including in Ivanovo, Bryansk, Tula, Yaroslavl, Belgorod regions. Appointed as Minister of Internal Affairs of the Republic of Tyva. As reported today, the Kremlin press service, the President signed a decree "On awarding a special rank highest officers of the employees of the Interior of the Russian Federation and the appointment of police officers of the Russian Federation." The document states that, in accordance with federal law on February 7, 2011 "On Police" special rank of major general assigned to the police major general of militia Alexander Zabegalov, major general of militia Valentin Kuzmin, major general of militia Sergei Matveev, and Maj. Police Nikolay Trifonov. Zabegalov appointed head of the Russian Interior Ministry in the Ivanovo region, Kuzmin - Chief of Internal Affairs of the Bryansk region, Matveev - Chief of Internal Affairs in the Tula region, Trifonov - Chief of Internal Affairs of the Yaroslavl region. In addition, Police Colonel Alexander Lobanov appointed Minister of Internal Affairs of the Republic of Tuva, Police Colonel Victor Pesterev - Chief of the Interior Ministry in the Belgorod region, police colonel Boris Pishchulin - Head of the Department of Internal Affairs in the South-Eastern Administrative District of the Main Department of the Interior Ministry in Moscow.

Deputy authorized presidential envoy to NCFD dismissedhttp://vestnikkavkaza.net/news/politics/12510.html

Alexander Khloponin, plenipotentiary presidential envoy to the North Caucasian Federal District, has dismissed General Arkady Yedelev, his deputy, who was supervising activities with neighbor states, Kommersant reports on Monday.

Yedelev was heading the counter-terrorism headquarters in the North Caucasus. He had good ties with Chechen leader Ramzan Kadyrov but had tensions with Khloponin’s other deputy Vladimir Shevtsov.

Arkady Yedelev was heading the section for security of strategic facilities of the Trans-Baikal department of the FSB in 1992-1998. He became the head of the operative-coordination department of the FSB in the North Caucasus in 2001, deputy head of the FSB for terrorism in 2002. Yedelev was appointed deputy minister of the interior and head of the counter-terrorism headquarters in September 2004. He started supervision of all law-enforcement affairs in Ingushetia in August 2009. He was dismissed as deputy minister of the interior on February 18, 2010. He became the deputy plenipotentiary presidential envoy to the NCFD on April 17, 2010.

Rebel food cache destroyed in Dagestan http://english.ruvr.ru/2011/04/04/48403250.html

Apr 4, 2011 00:16 Moscow Time

In Dagestan police and security forces have destroyed a rebel hideout with considerable amounts of flour, sugar and other food.

The dugout was in a forest in the republic’s northern Khasav-Yurt district.

Cache with explosive devices found in Kabardino-Balkaria

http://www.itar-tass.com/eng/level2.html?NewsID=16115215

04.04.2011, 10.36

NALCHIK, April 4 (Itar-Tass) -- A cache with a considerable amount of homemade explosive devices and other means used by terrorists has been found in the Elbrus region of Kabardino-Balkaria within the framework of a counterterrorist operation, ITAR-TASS learnt at the Unified Information Centre of the republic’s law enforcement bodies.

The cache contained seven homemade explosive devices of different type and power equivalent to 400 grams and three kilograms of TNT, six homemade detonators, two 200-gram TNT blocks, two grenades and about 200 cartridges of different calibre.

The find is sent for an examination. Investigation is underway.

April 04, 2011 12:06

Kadyrov reports death of two militants in Chechnyahttp://www.interfax.com/newsinf.asp?id=233705

MOSCOW. April 4 (Interfax) - Two militants were killed in the Shatoi district of Chechnya, head of the Chechen Republic Ramzan Kadyrov told Interfax.

"The militants were traced in a police operation in the Shatoi district. They were blocked in the vicinity of Nochkeloi and offered to surrender but opened gunfire," he said.

The search for more militants is underway in the highlands in southern Chechnya, Kadyrov said.

The dead militants were identified as Arbi Isayev and Rizvan Zunulayev. Both men were wanted. Armaments, explosives and ammunition were found on the clash scene. None of the policemen was hurt.

In the meantime, a large bomb went off near a private house in Sagapshi in the Malgobek district of Ingushetia, a source in the police of the North Caucasian Federal District told Interfax.

"The explosion happened at 3:30 a.m. Moscow time on Saturday. The house was uninhabited at the moment. Two homes were damaged, and roofs of several houses located nearby also sustained damage," he said.

The bomb is preliminary estimated at 15-20 kilograms of TNT.

The Ingush Interior Ministry confirmed the explosion.

April 04, 2011 09:43

Umarov could have escaped - Ingushetia headhttp://www.interfax.com/newsinf.asp?id=233658

NAZRAN. April 4 (Interfax) - The North Caucasus militant leader Doku Umarov has not been identified yet among the militants, killed in Ingushetia's Sunzha district, Ingushetia head Yunus-Bek Yevkurov told Interfax on Monday.

"No information is available about Umarov," Yevkurov said, when asked whether Umarov was among the militants, killed in a security operation in Ingushetia last week.

Umarov could have escaped and is in hiding somewhere in the North Caucasus, he said. "Clearly, he is hiding somewhere, probably in Ingushetia," Yevkurov said.

DNA testing to say whether Umarov killed or alive: Ingush leader

http://www.itar-tass.com/eng/level2.html?NewsID=16115455

04.04.2011, 12.00

NAZRAN, April 4 (Itar-Tass) - It is impossible to say for sure that Chechen warlord Doku Umarov was killed in a special operation in Ingushetia before DNA testing is made, Ingushetia’s leader Yunus-Bek Yevkurov told Itar-Tass on Monday.

He said there was no confirmation that Umarov had been killed. “However, the expertise is not yet finished, and we cannot say that he was killed or stayed alive,” Yevkurov stressed.

He believes that if he stayed alive “he may be hiding in the republic, as well as in other territories. Unfortunately, he has possibilities for hiding,” the leader of the southern Russian republic stressed. However, the number of hideaways is getting fewer and fewer, he stressed.

A multi-stage operation to liquidate Chechen warlord Doku Umarov was launched at the beginning of this year. The crucial stage of the operation to liquidate the warlord and his closest allies took place in a mountainous area 20 kilometres away from the settlement of Verkhny Alkun, Sunzha district, on March 28.

It is the so-called "Sunzha triangle" between Ingushetia, Chechnya and North Ossetia, from where it is possible to go through mountain passes to Georgia. In the early 2000s, it was a transshipment base of gunmen, and, according to the operational information, for the wide possibility to maneuver, it was one of the most likely places where Umarov could base.

Seventeen to 19 gunmen were killed in an air strike, and two suspects in the terrorist act at Moscow’s Domodedovo airport on January 24 were detained.

Gunmen leader Doku Umarov's common-law wife, his personal doctor and handy assistant are identified among those killed in a large-scale special operation in Ingushetia's Sunzha district, an informed source of the republic's law enforcement authorities told Itar-Tass last week.

Thus, it is highly probable that Umarov himself was killed in the operation, the source stressed.

The woman who was the gunmen leader's common-law wife, his personal doctor Khamzat Byutukayev and his "right-hand man", 54-year-old Supyan Abdullayev, who, according to law-enforcers' information, was always present near Umarov, are already identified.

Also identified are other two gunmen – a 23-year-old resident of the village of Ali-Yurt of the Nazran district and a 24-year-old resident of the Nasyr-Kortovsky municipal area of Nazran. Remains of two gunmen were taken for genetic examination in Moscow,

Yevkurov said earlier. “I think everything will become clear within a week’s time,” he said.

Suicide bombers were trained at a base destroyed in Ingushetia’s Sunzha district during a large-scale special operation on March 28. They were trained for terrorist acts both in Ingushetia and outside the North Caucasus, Yevkurov told a news conference in Moscow on Friday.

“That was a base where suicide bombers were trained and ideologically brainwashed,” he said. Teenagers were drawn there by means of deceit to be never let out. “Plans were to use them for terrorist acts in the republic, outside it and outside the North Caucasus,” Yevkurov said.

Only genetic examination can exactly establish the identities of the gunmen. It is impossible to visually identify them – several bombs equivalent to a total of up three tonnes of TNT hit the dugout where they were.

Russia needs 1,300 domestically-built planes - officialhttp://en.rian.ru/russia/20110404/163361106.html

10:22 04/04/2011

Russia needs to build 1,300 new aircraft by 2020 to make a comeback in civil aviation, the head of Russia's Security Council has said.

Security Council chief Nikolai Patrushev said there had been a tenfold increase in the use of foreign-made planes in recent years, but added that Russia was looking to gain 15 percent of the global civil aviation market by 2020.

"Our industry does have competitive planes - the Sukhoi Superjet 100 and Irkut MS-21," Patrushev said in an interview with the daily newspaper Izvestia.

He said both planes are designed to replace the Soviet-era short- and mid-range planes that entered service between the 1960s and 1980s.

"The demand is put at 1,300 aircraft."

But he also spoke of the need to modernize technology, echoing President Dmitry Medvedev who chastised Russian plane-makers last week for lagging behind Western giants like Boeing and Airbus.

"Large parts of the industry are outdated and also not certified by the International Civil Aviation Organization (ICAO)," Patrushev said.

There is still a long way to go, he said, and investment is required before the struggling industry can begin to pick up.

MOSCOW, April 4 (RIA Novosti)

One dies, three got burns at silicon plant accident in Irkutsk reg

http://www.itar-tass.com/eng/level2.html?NewsID=16114846&PageNum=0

04.04.2011, 08.28

IRKUTSK, April 4 (Itar-Tass) - One person died and another three got burns in an accident at the silicon producing plant Kremny in Russia’s Irlutsk region, a senior aide to the head of the regional investigative department, Vladimir Salovarov, told Itar-Tass on Monday.

“The investigative group is finding out the reasons of the accident,” he said.

Experts of the Interior Ministry and the technical watchdog Rostekhnadzor are working on the site.

Kremny is a member of the SUAL group, one of Russia’s biggest aluminium producers. The plant is Russia’s only refined silicon producer.

At Domodedovo airport "business as usual" http://english.ruvr.ru/2011/04/04/48403294.html

Apr 4, 2011 00:30 Moscow Time

The managers at Moscow’s Domodedovo airport  dismiss as “rumours” reports about the terminal allegedly facing problems handling passengers. 

Media reports earlier said a large number of passengers thronged the airport’s arrivals area, an average passport check-up took from 40 minutes to an hour and there were problems with baggage claim.

World Cup fans can go far, Urals city sayshttp://in.reuters.com/article/2011/04/04/idINIndia-56093920110404

9:26am IST

By Gennady Fyodorov

YEKATERINBURG, Russia (Reuters) - Free travel on new high-speed trains should allay fans' fears about the long journey to the most far-flung city on Russia's list of proposed sites for the 2018 World Cup, officials say.

Jetlag, though, could be a consideration for players going to Yekaterinburg, located at the foot of the Ural mountains near the Europe-Asia border some 1,800 kilometres from Moscow, one football doctor has warned.

When Russia won the right to host the World Cup some critics said that long-distance travel within the world's largest country could be tiring for the players and costly for the fans.

Yekaterinburg is one of 13 proposed host cities. If it is included in the final plan, which must be approved by soccer's world governing body FIFA, fans could be travelling distances of more than 3,000 kilometres from the Baltic exclave of Kaliningrad to this most easterly location.

Yekaterinburg regional governor Alexander Misharin, however, was quick to dispel concerns about the distances.

"For the fans, we can offer something special. They can take an overnight train and enjoy sightseeing the country in addition to soccer," he told Reuters in an interview. "And the best thing for them, it would be free of charge."

The Russian government has guaranteed free railway travel for all fans with valid tickets during the 2018 tournament.

It takes about 26 hours to travel by train from Moscow to Yekaterinburg but Russia plans to build high-speed railways by 2018 that would significantly reduce travel time.

"With high-speed trains it would take about seven to eight hours instead of 26," said Misharin, a former railway engineer who was appointed by Prime Minister Vladimir Putin last month to serve on the supervisory board of the World Cup.

TIME DIFFERENCE

Experts say jetlag and the time difference could affect players' performances. Yekaterinburg is two time zones east of Moscow, four ahead of central Europe and six ahead of Greenwich Mean Time (GMT).

"We've always prepared ourselves if we had to travel to places like (Pacific Ocean port city) Vladivostok," said Vyacheslav Beresnev, a doctor for local side Ural, who play in Russia's Division One (second tier).

"Jetlag could be a negative factor in the team's play unless you prepare yourself well in advance. Normally, players need at least five days to acclimatise themselves in a new environment."

Yekaterinburg officials point to the 1994 World Cup held in the United States, where fans also had to travel up to 3,000 kilometres, flying from New York to Los Angeles.

"Brazil (2014 World Cup hosts) is not a small country either, so to say that in Russia fans and players would suffer from long travels like never before is not true," Misharin said.

"In 2018, the teams would be travelling by plane anyway, so it should take them no more than just a couple of hours at most to fly here.

"It's just a perception that we're far away from Moscow, from central Russia," Misharin added. "We need to try to change such a perception.

"A flight to Moscow or St Petersburg takes just over two hours, about the same time it takes to fly from London to Lisbon or Rome for example."

The Russians originally picked a total of 16 venues in four geographical clusters for the 2018 edition but that number will likely be cut to 12, eliminating at least three smaller cities because Moscow alone will have three separate stadiums.

The decision on the World Cup venues will be made in 2013.

FOREIGN TOURISTS

Russian experts say Yekaterinburg, the only prospective 2018 venue located outside Russia's European zone, has a good chance of being selected in the final list for political reasons.

When Russia bid to host the sport's biggest spectacle, the plan was for the whole country to be involved. Excluding Yekaterinburg would mean leaving the largest part of the country -- the whole of Siberia and the Far East -- out in the cold.

Asked by Reuters if he was optimistic that Yekaterinburg would make the final cut, a confident Misharin said: "Do I hope? No, I'm practically sure we would be in the final list."

Yekaterinburg, named after Tsaritsa Yekaterina I -- the wife of Peter the Great -- was hoping to attract foreign tourists to the Urals, and hosting World Cup matches would greatly enhance its reputation abroad, Misharin said.

The city changed its name to Sverdlovsk after the Bolshevik leader Yakov Sverdlov in 1924 before going back to the original after the break-up of the Soviet Union in 1991.

Until now, the country's third biggest city behind Moscow and St Petersburg has been mainly known to foreigners for two reasons: being the birthplace of Russia's first president Boris Yeltsin and the place where the Bolsheviks killed Tsar Nikolai II and his family in 1918.

Like other prospective World Cup venues, Yekaterinburg is building a new stadium with the hope of being included in the 2018 plans.

"The old arena was built more than half a century ago and it really looked in decay," Vadim Vorobyev, director of the Central stadium, told Reuters, pointing to the stadium's facade which would be preserved as a historical monument.

"It had to be rebuilt regardless if we're selected as one of the World Cup venues or not. The capacity of the new arena will be 27,000, just like the old one but it could be expanded to 40,000 for the 2018 tournament.

"The stadium should be completed by July 2011."

(Editing by Clare Fallon; To query or comment on this story email sportsfeedback@thomsonreuters.com)

St. Petersburg deputy governors reach out to opposition at protest

http://www.bne.eu/dispatch_text14650

RIA NovostiApril 3, 2011

Two of St. Petersburg's deputy governors took the stage at an opposition rally in the city on Sunday in an apparent bid to woo voters ahead of city and national legislative elections in December.

The "March for the protection of St. Petersburg" was attended by about 350 people, including representatives of opposition parties such as Yabloko, the Communist Party and A Just Russia.

Roman Filimonov and Igor Metelsky - the deputy governors - are believed to be the first

high ranking city officials to speak at such an event. Filimonov said they came on the initiative of the mayor, Valentina Matvienko, who he credited with launching a dialogue with public organizations.

Metelsky said the mayor's office was always ready to talk, and called on the public to "trust those who are engaged in constructive dialogue," not people who just want "to take the place of bureaucrats." The officials were met with boos and shouts of "Resign!" The gathering was in part a celebration of activists' defeat of the Okhta Tower project, which would have seen Russian energy giant Gazprom build a 400-meter skyscraper on the banks of the Neva River near downtown, but also saw a range of protests, including for the city's architectural heritage, and against the construction of a floating nuclear power plant in a city shipyard.

CORRECTED GOOGLE TRANSLATION

Journalist Natalia Seybil beaten in Moscow

http://www.gazeta.ru/social/2011/04/04/3574057.shtml?lj2

- 04/04/1911 11:18 -TEXT: Dmitry Karelin

Podmoskovnaya journalist said that a senior police officer beat her up. Natalia Seybil was walking the dog around the house, when a car drove by and the man ran out and began to beat her. According to her assailant's name is Alexei Klimov, he headed the Criminal Investigation of the city of Moscow. Klimov has been already fired and the Investigation Committee decide on which articles to initiate criminal case against him.

Senior police officer sacked for violence against journalist

http://www.itar-tass.com/eng/level2.html?NewsID=16115422&PageNum=0

04.04.2011, 11.47

MOSCOW, April 4 (Itar-Tass) -- Acting Chief of the Criminal Investigative Department ( CID) of the Moscow Region Andrei Klimov has been fired after he beat up a journalist, Natalia Seibil, Chief of the press and information department of the Moscow region Yevgeny Gildeyev told Itar-Tass on Monday.

Chief of the regional Head Interior Department Nikolai Golovkin ordered an inquiry into the incident which found out that a conflict between the acting CID chief and the journalist was provoked by words of criticism the journalist used against the policeman who violated parking rules and showed an inadequate reaction, beating up the woman.

After all the circumstances of the incident were clarified Interior department Chief of the Moscow region made a decision to sack Klimov from the Interior bodies. The results of the inquiry will be turned over to the Head Investigating Department of the Moscow region for purposes of opening a criminal case against Klimov.

“On behalf of the leadership of the Interior Ministry I express sincere apology to Natalia Seibil. I hope that no such incidents will happen in future because only highly professional people will be left on police staff," Gildeyev said.

Khodorkovsky lawyer dismisses frozen accounts as 'gossip'http://en.rian.ru/russia/20110404/163363176.html

12:51 04/04/2011

MOSCOW, April 4 (RIA Novosti) - A lawyer for former Yukos CEO Mikhail Khodorkovsky dismissed on Monday reports that his client's bank accounts in Ireland were frozen.

"I don't comment on gossip," Vadim Klyuvgant said.

However, he did not deny that Khodorkovsky has foreign bank accounts. He added that such information is confidential and not subject to disclosure, refusing to answer any more questions on the subject.

The Sunday Times reported Irish authorities had frozen 65 million euros and another 36 million is under investigation with an estimated total of 200 million on Khodorkovsky's bank accounts in Ireland.

On New Year's Eve, Khodorkovsky and his business partner Platon Lebedev were sentenced to another six years in jail after being found guilty on new charges of stealing millions of tons of oil from their now defunct company Yukos. The two have already served eight years on fraud charges.

The charges are widely viewed as political revenge by Russian Prime Minister Vladimir Putin for Khodorkovsky's support of the country's tiny opposition movement. The two men are expected to remain in jail until 2017, well after the 2012 presidential election.

Russian Press at a Glance, Monday, April 4, 2011http://en.rian.ru/papers/20110404/163360461.html

09:20 04/04/2011

POLITICS

President Dmitry Medvedev has given Prime Minister Vladimir Putin until July 1 to start removing government ministers from the boards of state companies.

(Moscow Times, Kommersant, Vedomosti, Rossiiskaya Gazeta)

President Dmitry Medvedev dismissed 22 police generals and reappointed 19 others over the weekend, the Kremlin said, as the country's police force undergoes a broad reform.

(Moscow Times)

The United Nations' highest court threw out Georgia's complaint accusing Russia and separatist militias of years of ethnic cleansing in South Ossetia and Abkhazia.

(Moscow Times)

Sergei Mironov, chairman of the upper house of Russian parliament, suggested annulling the presumption of innocence for government officials and their relatives.

(Kommersant)

ECONOMY & BUSINESS

President Dmitry Medvedev on Friday promised the biggest tranche of government spending on the aviation industry since the fall of the Soviet Union - and then told Russia's aviation firms to "work harder instead of begging for money."

(Moscow Times, Rossiiskaya Gazeta)

South Korea's carmaker Hyundai has voiced plans to export St. Petersburg-made cars to the CIS.

(Vedomosti)

Russia's major potash producer Uralkali had to pay some 402 million rubles ($14.2mn) to top managers the company dismissed last year.

(Vedomosti, Kommersant)

SOCIETY

An Interior Ministry order simplifying vehicle registration procedure came into force on April 3.

(Kommersant, Rossiiskaya Gazeta)

Kemerovo Region governor Aman Tuleyev receives a fifth of his revenues from the budgets of the region's districts and towns for being their honorary citizen.

(Vedomosti)

WORLD

Pavel Yershov, a career diplomat with the U.N.'s Afghan mission, emerged the sole survivor of an attack on the UN compound he headed in the Afghan town of Mazar-i-Sharif. He survived by convincing his attackers - in their own language - that he was Muslim.

(Moscow Times)

IT

The court of the central Russian city of Vladimir made an unprecedented ruling. It rejected a top cell phone operator's lawsuit against a couple who the company claimed owed it over 1 million rubles ($35,000) for using the Internet in international roaming.

(Rossiiskaya Gazeta)

Cold War restriction ties up US-Russia tradehttp://www.cnbc.com/id/42409519

Published: Monday, 4 Apr 2011 | 1:16 AM ET

WASHINGTON - Russian and Israeli tourists can now travel visa-free between their two countries, yet U.S.-Russian trade relations continue to be stymied by a Cold War law censuring the Soviets for holding up Jewish emigration.

In 1974 Sen. Henry Jackson and Rep. Charles Vanik attached a provision to a trade bill denying normal trade relations to communist states that restrict emigration or punish those seeking to leave the country. In the following years the Jackson-Vanik amendment was a major factor in compelling Moscow to allow more Jews to emigrate.

It lost much of its relevancy after the collapse of the Soviet Union, and since 1994 U.S. presidents have annually waived its application in extending normal trade relations to Russia.

But the amendment remains on the books, and now poses a threat to U.S. businesses in danger of losing greater access to the Russian market if Congress doesn't repeal the

measure. Republicans say they're not going to allow that until the Obama administration submits pending free trade agreements with Colombia and Panama to Congress.

Russia is working to wrap up negotiations in the coming months on entry into the World Trade Organization. If it succeeds, the United States would have to lift the Jackson-Vanick law and grant Russia permanent normal trade relations to gain more unfettered access for American companies to Russian markets.

Congress must act "to avoid putting U.S. companies at a disadvantage in the world's 10th-largest economy," said Edward Verona, president of the U.S.-Russia Business Council,

Vice President Joe Biden, in a trip to Moscow last month, said lifting Jackson-Vanik would both create new jobs in the United States and help strengthen relations with Russia. He lamented that the value of goods that cross the U.S. borders with Canada and Mexico every few days exceeds annual U.S. trade with Russia.

Russia was the United States' 28th largest export market in 2008, buying some $9.3 billion in U.S. goods. It sold about $27 billion to the United States, led by oil exports.

Mark Levin, executive director of the National Conference on Soviet Jewry, said at a House Foreign Affairs Committee hearing last year that his group supports "graduating" Russia from Jackson-Vanik. Russia needs to do more in such areas as human rights and hate crimes, he said, but "now we think it is time to move forward and recognize the profound changes for the better that have taken place in Russia and in Russia's Jewish community."

Congress has lifted Jackson-Vanik for several former Soviet states, most recently Armenia in 2005 and Ukraine in 2006. But the amendment still applies to eight others, including Russia, Kazakhstan, Azerbaijan and Moldova. There's no guarantee that Congress will address the issue this year.

Republicans are demanding that the Obama administration send three pending free trade agreements — with South Korea, Colombia and Panama — to Congress for ratification. The administration says Colombia and Panama aren't quite ready, prompting Republicans to declare that they won't act on any trade matters, not a pending trade accord with South Korea and certainly not with Russia, until the Colombia and Panama accords are submitted.

Congress is ready to work with the White House, when the time is right, to make Russia part of the rule-based trading community, said Rep. Kevin Brady, Republican chairman of the House Ways and Means trade subcommittee. But "none of that will occur until we have successfully moved the three pending free trade agreements."

Even with action on the three trade deals, ending Jackson-Vanik and extending permanent normal trade relations to Russia will be no easy sell. There's concern on both

sides of the aisle about Russia's backsliding on democracy, its poor human rights record and its lack of cooperation on Iran. Economically there is anger over Russian curbs on U.S. poultry and other meat imports and its poor enforcement of intellectual property rights.

Improvement in those two economic areas are needed "to give Congress the confidence that Russia can and will live up to its commitments," Brady said.

At a recent Senate Finance Committee hearing, U.S. Trade Representative Ron Kirk said he would work with Congress this year to grant Russia permanent normal trade relations. Senators demanded guarantees that Russia would not be like China, which was given permanent trade status in 1999 but continues to violate U.S. intellectual property rights.

At question is whether Jackson-Vanik serves any purpose in steering Russia toward becoming a better trading partner. The U.S.-Russia Business Council's Verona maintains that it is no longer relevant to political and social realities in Russia.

Instead, "it remains an irritant" in U.S.-Russia relations, Verona said. "Many Russians see the unfulfilled promises of the past three U.S. administrations to lift the amendment as evidence of bad faith on our part."

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

Science: Floating in a most peculiar wayhttp://www.ft.com/cms/s/0/09f2e38a-5e23-11e0-b1d8-00144feab49a.html#axzz1IXEnr930

By Clive Cookson

Published: April 3 2011 22:06 | Last updated: April 3 2011 22:06

The launch pad at Baikonur Cosmodrome, from which Yuri Gagarin blasted off 50 years ago next week, is due to be in action again tomorrow. A Soyuz rocket will lift two Russians and an American up to the International Space Station on an emotion-laden flight dedicated to the memory of the first man in space.

If Gagarin, who died in an air accident at the height of the cold war space race, were still alive, he would be surprised to see a US astronaut sharing a ride with cosmonauts. He would probably be impressed to learn that five space agencies had collaborated over the past 13 years to spend $100bn – at a conservative estimate – to provide people with a permanent presence in orbit.

But given enough time back on Earth to read newspapers and watch television, Gagarin might remark on the low level of public interest in the space station, in contrast to the space frenzy of the 1960s. It is by far the biggest scientific and engineering project in history, yet the ISS has largely failed to catch the imagination of the public and media. In the US in particular, more attention has been paid to the vehicles that take people to and from the ISS – the saga of the space shuttle fleet’s retirement and its still unknown replacement – than to what happens at their destination.

The problem is that most people have little idea what the ISS is for. Is it a giant laboratory, where scientists can take advantage of a gravity-free environment beyond the atmosphere to carry out experiments? Is it a demonstration of international collaboration, designed to show that former enemies can work successfully on a grand technical project? Or should we see it as a stepping stone on the way to future human exploration of the solar system and beyond?

“All of the above,” space scientists might say. But they emphasise different answers – and how you see the ISS’s purpose determines your view of its success or otherwise.

“If you take a hard-nosed financial view of the science – or if you regard human space flight as an expensive folly – then the ISS is a gigantic waste of money,” says Kevin Fong, head of space medicine research at University College London. “But if you are interested in human exploration of space, it is an essential first step towards a glorious future.”

Paul Murdin, astronomy professor at Cambridge University, takes a slightly differing view. “As a global engineering enterprise contributing to the relaxation of cold war tensions, the space station has been a fantastic success,” he says. “We don’t know yet whether it will be a useful stepping stone for exploring the planets. But we can say that the science coming out of the experiments on the space station so far has been very weak – no revolutionary results to report in journals such as Nature and Science.”

For people in the space agencies who look after the ISS, criticism of the science is premature. Although some research has been carried out there from the moment the station’s first component, Russia’s Zarya module, was placed in orbit in 1998, the focus has been on assembling the station. Now that it is almost complete, attention has switched to carrying out research in orbit.

“My feeling is that there is great potential both for biology and biotechnology and for research into new materials,” says Mark Uhran, who runs the ISS utilisation programme for Nasa, the US space agency. For example, experiments are showing how the absence of gravity affects the virulence of disease-causing bacteria – which may give clues to controlling the germs on Earth.

The role of the crew is changing too, he says. “We are seeing more astronauts who are PhD scientists and fewer of the traditional pilots of a decade or so ago.”

. . .

Ronald Garan, the astronaut due to launch tomorrow, is looking forward to doing research during his six months in orbit. “In one role we’re lab assistant [operating equipment] and in the other role we’re lab rat: the experiment is being conducted on [us],” he says.

There is a lot of medical research to monitor the long-term effects of space on the human body. The crew’s rigorous exercise regimes are not sufficient to counteract the wastage of bones, muscles and cardiovascular system, which have less work to do in zero gravity.

The space agencies are also encouraging private companies to site experiments on board the ISS, preferably in collaboration with university researchers. “Although we already have more demand [to run experiments] than we can satisfy, we will give companies priority in the queue,” says Martin Zell, the European Space Agency’s ISS utilisation manager.

But the space station turns out to be a poor platform for most astronomical instruments, whether they study the stars or look down on Earth, because it is not as clean or as free from vibrations as an independently orbiting space telescope.

Even so, one very costly space experiment is about to join the ISS. On its final flight before retirement, the space shuttle Endeavour will deliver the Alpha Magnetic Spectrometer to the station this month. This $1.5bn instrument is designed to detect and identify mysterious particles of “dark matter” and “anti-matter” coming from outer space. The observations will help cosmologists answer questions about the origin and composition of the universe.

At present, the five partners are committed to keep the ISS going until 2020. “Technically, it can continue for another two decades or more,” says Simonetta Di Pippo, the ESA’s director of human space flight. The ISS could be developed into a more extensive infrastructure – perhaps even a spaceport from which people could depart for interplanetary exploration.

However, it remains uncertain whether sufficient funding will be available to maintain the ISS into the 2020s. If not, the 60th anniversary of Gagarin’s pioneering flight could be a dour occasion for space enthusiasts, with the space station broken up and sent crashing, piece by piece, into the Earth’s oceans.

Copyright The Financial Times Limited 2011. You may share using our article tools.

4 April 2011 Last updated at 00:57 GMT

Yuri Gagarin's Klushino: Forgotten home of space legendhttp://www.bbc.co.uk/news/science-environment-12875848

By Katia Moskvitch Science reporter, BBC News, Moscow

Yuri Gagarin's niece Tamara Filatova recalls the day her uncle became the first man in space

When Yuri Gagarin became the first person to travel in space on 12 April 1961, millions of people marvelled.

But one teenager, gazing at the endless sky from a window of a Russian school, was petrified.

It was Yuri's niece, Tamara Filatova, who was 14 at the time.

"I was worried sick for him," she says, sitting at the tiny Gagarin museum in the town where the first cosmonaut grew up - and which now bears his name.

"I remember that day - I was at school, and our teacher suddenly said: 'Tamara, your uncle is a pilot, right?'

"'Yes,' I said.

"'Yuri Gagarin?'

"'Yes.'

"'Well, do you know that he's in space?'"

Tamara just wanted Yuri to come back to Earth, and only when her teacher announced 108 minutes later - the duration of his trip - that Gagarin had safely returned, was Tamara able to sigh with relief. "At that time, although satellites had already been sent into orbit and animals flew and came back alive, space was still seen as something very scary, very dangerous, like a black abyss that could easily gulp someone.

"So my first feeling was that of extreme concern for a person I cared for deeply."

Ms Filatova is one of those few people from Gagarin's inner circle of family and friends who is willing to openly discuss his short but very eventful life.

The charismatic Russian cosmonaut was transformed into a hero when he returned from his brief trip to space.

Described as the first "citizen of the world", Gagarin was welcomed by the capitalist US and socialist France alike, embraced by Fidel Castro and introduced to Queen Elizabeth II.

But the details of Mr Gagarin's early years - especially of a rural childhood overshadowed by World War II - are more obscure.

Country boy

The small village of Klushino lies about 200km from Moscow, surrounded by vast fields.

Clucking hens wander around old, lopsided wooden houses. A tractor roars nearby.

It looks just like many other Russian villages, but a sign off the main road - a dusty two-lane stretch of broken asphalt - reads: "Home of the first cosmonaut."

But Klushino does not exactly look like the birthplace of a legend.

All that reminds us of the cosmonaut in Klushino is the sagging road sign with peeling, discoloured paint, and an old one-storey house. This house is an exact replica of the one where Yuri's family lived before they moved to the nearby city of Gzhatsk (now renamed Gagarin).

Not only did the family take along all their possessions, but the walls and the ceilings too. Gagarin's father completely dismantled the house, moved it to Gzhatsk and re-built it there.

A replica of the original Gagarin family home was constructed in Klushino in 1971 and has now been turned into a museum, cared for by a devoted worker who has been there for more than three decades - Nadezhda Yakovleva.

The museum in Klushino has never been funded by the government, she says. The cosmonaut's family and friends, as well as a handful of people from the city of Gagarin, have been looking after the place as best they can.

This may explain the absence of tourists. Getting to Klushino is a pain - there are no proper roads, no infrastructure to welcome visitors, and there has never really been any kind of publicity campaign to draw attention to the forgotten village.

"Yuri was a very bubbly, fun-loving boy," says Ms Yakovleva, who has spent years studying the life of the cosmonaut and his family, talking to his relatives and friends.

"The family lived here from 1933 to 1945. His was a carpenter and his mum a milkmaid."

'Mud hut'

The family - like many others in Russia - was thrown into turmoil during World War II.

Gagarin had just started in school when the German army invaded Klushino in November 1941, on their way towards Moscow.

Many villagers were forced out of their homes, and the Gagarin family had to leave the house in the hands of a Bavarian officer.

"They were allowed to stay on their land behind the house, where they grew vegetables," says Ms Yakovleva, pointing to a patch of land that is now fenced off.

"So they constructed a tiny mud hut, where they spent the entire German occupation - a year and nine months."

The mud hut's replica in today's Klushino is no more than three by three square metres, with a small table, two narrow bunk beds where the parents and two older children slept, and a heater which could also be used as a bed.

It was shared by Yuri, then aged seven, and his younger brother Boris.

Even after the occupation ended, school pupils had to use spent ammunition cartridges to learn addition and subtraction because of a lack of basic supplies.

Path to space

In early 1946, when the future cosmonaut was 13, the Gagarin family moved to Gzhatsk.

Yelena Kozlova taught Gagarin botany at school there.

"It was not his favourite subject, but he approached it very seriously, just like he did with physics and maths, which he enjoyed the most," the 91-year-old former teacher recalls.

Gagarin liked pranks, she says, but he was always able to get people to forgive him.

"No-one was able to resist his smile! And girls always liked him, too."

A visit to the birthplace of the world's first cosmonaut, Yuri Gagarin

Ms Kozlova said that Gagarin was in the sixth grade when he joined the school's aviation club and started dreaming of the stars.

Although his first job was as a foundryman, Gagarin later enrolled in the Saratov Technical College, where he learned to pilot a light aircraft.

Ms Filatova says: "When he was a student [in Saratov], he didn't have much money, and to make some extra cash he had to work part-time as a dock labourer on the Volga River - and he used the money to buy presents for his family.

"My first real presents, like a bicycle, were from him."

Gazing at her uncle's picture on the wall at the museum in Gzhatsk, she says: "I loved Yuri very much. We were very close - he was only 13 years old when I was born and he became my godfather. But he was like my older brother, really - I could talk to him about anything."

Feet on the ground

In 1955, Yuri Gagarin entered the Orenburg Pilot School, and upon graduation joined the Soviet air force as a lieutenant.

It was from among the best pilots that cosmonauts were selected.

Gagarin was just 27 years old when he blasted off on the first manned spaceflight.

"It was such an important day for everyone," remembers his teacher Ms Kozlova.

"The school was closed for three days, there were celebrations everywhere.

"After he returned to Earth, he went to visit his parents here in Gzhatsk and came by his old school.

"When he approached me, his first question was: 'How are your little girls?' This touched me deeply. I thought then: 'My God, he is world-famous, but he remembered to ask about my children!'

"Then he was called into a reception room where all the teachers had gathered. As he entered, everyone just froze. We were all shy and did not know how to address him properly.

"Then someone finally said: 'Come in please, Mr Gagarin'.

"As he heard that, he laughed and replied: 'Mr Gagarin? To you all, I will always be simply Yuri!'"

However keen he was to show that he still had his feet on the ground, Gagarin's life had been transformed by his celebrity status.

Final flight

But the cosmonaut continued with his training, keen to improve his skills as a pilot, eventually embarking on a fateful flight from which he would never return.

"He was supposed to come back for his father's birthday in 30 March 1968 - he always used to come to his parents' birthdays," Tamara Filatova recalls.

"He called his dad and told him he'd be there. But three days before the birthday, on 27 March, he died in a plane crash."

Exactly what went wrong on the training flight, and why Gagarin and his co-pilot Vladimir Seregin did not eject from the MiG-15 plane before it hit the ground at 600km/h, are unclear.

But theories abound. According to one idea, another jet - flying below its minimum altitude - triggered turbulence that caused the pilots to lose control of their plane.

The crash also gave rise to conspiracy theories and speculation, ranging from claims that Gagarin was drunk to suggestions that he was deliberately killed following a dispute with Soviet leader Leonid Brezhnev.

For Tamara Filatova, the different versions carry little meaning. All she cares about is that someone very dear to her passed away on 27 March 1968.

"It's been so many years since he died, but I still can't accept it," says Ms Filatova.

"There is one thing that makes me very sad - that I don't see him in my dreams."

Russia Profile Weekly Experts Panel: Can The Split in the Tandem Be Dealt With?http://russiaprofile.org/experts_panel/34437.html

Introduced by Vladimir Frolov Russia Profile 04/01/2011

Contributors: Vlad Ivanenko , Patrick Armstrong , Alexandre Strokanov , Vladimir Belaeff

With Prime Minister Vladimir Putin and President Dmitry Medvedev publicly sparring over the UN resolution on Libya, and the Russian elites agonizing over an emerging rift in the tandem, an ominous question has begun to cloud Russia’s political scene: can the split in the tandem be smoothed over? Or could it drag the country into a situation reminiscent of 1991?

Of course, we cannot be certain of the state of play between the two Russian leaders. It could well be that the recent spat over Libya is nothing more than a carefully choreographed attempt to pander to different domestic and international audiences, designed to maximize Russia’s political gains from the controversial decision to allow the UN Security Council to authorize military force against Libya’s leader Muammar Gaddafi.

But it is not hard to notice that such spats are becoming increasingly frequent and confrontational, as the Russian presidential elections loom ever closer and the two leaders are faced with deciding which one of them will run for president in 2012.

Putin has engaged in needless provocations since last summer, red-flagging the limits on Medvedev’s power and testing his readiness to push back. His criticism of Medvedev’s decision to “let the UN resolution on Libya pass” was inappropriate, undermining Russia’s position abroad. Were Medvedev to let Putin’s statement stand, he would have immediately become a lame duck at home and abroad. 

Putin, however, was probably right in terms of the substance of what he said, emphasizing that the UN resolution allowed a foreign intervention against a government in a sovereign country that was putting down an armed rebellion - not entirely unlike what Russia did in Chechnya, twice.

Medvedev, for his part, has allowed a self-promoting claque of “advisors” to cast him and his potential second term as a repudiation of Putin and his system of government. Medvedev is ill-served by the ridiculous writings of the Institute of Contemporary Development (INSOR), which keeps releasing unsolicited reports with only one message: fire Putin and bring Russia back to the merry 1990s.

The liberal camp around Medvedev is prodding him to run against Putin at all costs, in order to dismantle Putin’s system during Medvedev’s second term. This camp seems to be betting on a growing sense of weariness with Putin both among the elites and the public at large. They say that there exists a public demand for “change we can believe in.”

This raises the question of how Putin should react. He cannot allow a replay of the Gorbachev-Yeltsin tug-of-war that destroyed the country. He might be forced to come back and run for president against his will to safeguard his system of power.

How the split in the tandem can be handled is an open question. There is potential for open rivalry and a split in elite loyalties, resulting in government paralysis. But Medvedev’s camp is basically a small group of advisors and friendly businessmen with no broad public movement behind his agenda were it to become separated from Putin’s. Putin remains the dominant player, still enjoying greater public trust and with political instincts more attuned to broader public sentiments. He also has the full support of the security agencies and leading Russian businessmen.

Still, the question remains – how would Russia handle a split in the tandem? Would it result in major upheaval, not unlike what we saw in the late 1980s and early 1990s? Were Putin to decide he had to return to safeguard his legacy, would that lead to public outcry or would it be met with approval?

Would people go out into the streets demanding that Medvedev run for president against Putin? Could a war of the elites like the one witnessed in the late 1990s reignite if Putin and Medvedev parted ways? Could that result in parallel structures of power, as happened during the Gorbachev-Yeltsin feud in 1989 and 1991? Or is the balance of power so uneven in Putin’s favor that it eliminates such a risk?

Would this balance shift in Medvedev’s favor were he to leave Putin’s shadow and openly challenge the “National Leader”? How would that affect Russia’s political parties and their loyalties? Would splitting the tandem end Medvedev’s presidency before it has had the chance to succeed?

Vlad Ivanenko, PhD economics, Ottawa:

The situation in modern Russia is as unpredictable as it was in the Arab world a few months ago, when what had seemed to be long-term stability was turned upside down in a short space of time. However, two factors will definitely play a role in the way events unfold prior to the Russian presidential election in 2012.

Firstly, the emergence of the middle class and its increasing eagerness to test the limits of the status quo is becoming a force to reckon with. I remember talking to proponents of “democracy promotion” in Russia in 2006. At that time I said that it would be more practical to direct their efforts into nurturing movements aimed against local bureaucratic arbitrariness and corruption instead of trying to draw attention to “human rights,” which remains a poorly understood concept in this country. My argument was that as the average voter gets richer, they pay more attention to basic inconveniences like having to use potholed roads, encounter everyday insolence on the part of officials, or deal with petty lawlessness in the street. The latest civic actions against traffic violations committed by top officials or the Khodorkovsky court scandal are cases in point.

Secondly, I find that since the end of 2007, Prime Minister Putin’s behavior has evolved from being that of a man with certain principles to mere opportunism. In this respect president Medvedev may realize better than his tutor does that maintaining the status quo is not an option in the long run. In this interpretation, it is more a lack of vision on the part of Putin rather than Medvedev’s willingness to break the tandem that is causing tension. But how far will Putin allow Medvedev to assert his principles as they start to encroach upon the interests of his powerbase is an open question.

In the end, Putin may decide to fight against the “rogue elements,” that is, against the section of the middle class that includes people such as blogger Alexei Navalny. If he does this, he will likely have the upper hand, like Libyan leader Gaddafi had, before the western intervention, simply for the reason that he has more resources at his disposal.

Would it be a good or bad thing for Russians to live under stability a la Putin (the power vertical, lack of social mobility, and national dependence on crude oil export revenues) for the next 6 years? My feeling is that the answer is marginally in the affirmative.

Patrick Armstrong, Patrick Armstrong Analysis, Ottawa, Canada:

The first thing that we have to ask ourselves is whether Medvedev’s comment about the inadmissibility of using the word “crusade” was actually aimed at Putin. When Medvedev (in Moscow) made his formal statement, was he aware that Putin (in the Republic of Udmurtia) had given his “personal opinion” four hours earlier? We don’t know.

What many commentators don’t seem to realize is that the word “crusaders” is commonly used by jihadists to describe the West and Gaddafi is now using it too. So was it a coincidence or a direct rebuke? In any case Putin (in Slovenia) has denied any split saying: “We have a president in Russia who directs foreign policy and there cannot be a split.” And (in Serbia) he said it again.

What this episode shows is that Putin and Medvedev have a difference of opinion on the Libya affair. Putin, probably remembering all the times he has been burned by the West, is skeptical; Medvedev is more accepting. The second thing that it shows is that the naive assumption that Medvedev is Putin’s puppet is – well – naive.

Nevertheless, this incident has set off the usual speculation that the two are in some sort of struggle for the next election. Putin could have easily changed the article in the Constitution and could have been re-elected President. Why would he go through the elaborate rigmarole of putting up a puppet so he could get back into the presidency when he could, so easily, never have left office? Anyone who so speculates should be obliged, by law, to explain, before he opines why Putin wants to be president again and why he is not today.

I maintain that Putin and Medvedev are a team, they are united on the big plan of Russia’s development, and are not likely to be diverted from this purpose by anything as trivial (in the Russian context) as actions in Libya.

Eventually there will be a serious point of disagreement, but this is not it.

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

I will begin with an answer to the last question. It is absolutely clear to me that the end of the tandem will mean first and foremost the end of the political career of Dmitry Medvedev who does not have his own base of support in the country.

Medvedev’s chances for success in political life without support from Vladimir Putin

could be comparable with the chances of former Prime Minister Mikhail Kasyanov winning the presidency - chances which are in my opinion equal to zero. The most hilarious assumption that I read was that people will sincerely go on the streets to support Medvedev against Putin. This is probably the best joke that I have read recently on Russian politics.

Now, about the so-called disagreement between the two Russian leaders. I never read that Prime Minister Vladimir Putin criticized Medvedev’s decision to “let the UN resolution on Libya pass.” Let’s return to the exact words of Vladimir Putin that he said in Votkinsk about the UNSC resolution. I quote it from his official site: “This resolution is flawed and inadequate… By the way, Russia did not vote for this Security Council resolution.” That is it, and where is that what you call “His criticism of Medvedev’s decision … was inappropriate, undermining Russia’s position abroad?” I do not see it at all.

However, it was president Medvedev whose nerves, for whatever reason, gave in when he spoke about the situation in Libya on March 21. Instead of focusing on Russia’s abstention from the vote and distancing himself from the bombing of Libyan cities by coalitional forces, Medvedev decided to defend this truly awful resolution that Russia actually did not support.

This was obviously a serious political error that could be the result of bad advice from his inner circle. At least, I hope that this was so. Otherwise, I will have to consider his lack of understanding of international affairs and his inability to see the real intentions of several western countries in their “crusade” against Libya. And there is nothing wrong in labeling the coalition and now NATO action as a “crusade” because it is quite obvious to any objective observer that stated goals of the operation in Libya do not represent the real objectives of regime change and the establishment of western political control over this Arab country.

I also seriously doubt that the story about disagreement between Putin and Medvedev about Libya has any significance. I hope that in the following weeks, as soon as the now NATO-led campaign in Libya brings even more casualties from civilians in the country (even the Vatican news agency admitted this today), the rhetoric against the resolution will build up and not only in Moscow but in Beijing, New Delhi, Brasilia and other world capitals. President Medvedev will be forced to see better what the West wants in reality and does in Libya and his opinion on many things (including the Resolution UNSC #1973) probably will be changed. Again, I hope that this is so, because if it is not, he is seriously risking his own political future.

It is quite obvious already today that more and more Russian people are skeptical of his ability to lead the country in the future and doubt that it will be good for Russia if he stays for a second, now extended six-year term. At the same time, and mainly due to his age, I believe that the Russian people will not be overly enthusiastic of the return of Vladimir Putin to the presidency. Neither, I think, does he want this himself.

It means that the idea of the third candidate will gain more and more popularity. At this

point it is absolutely unclear who could be that third person, but such thoughts are gaining traction more and more and a search for a third or even fourth runner may soon intensify within the Russian political elite. This will also bring intrigue to the election and may eventually open the door for real competition in Russian political life which will only be of good to the country and the people. An election with real choice is what Russia really needs. 

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

Mountains out of molehills. The malapropism by Vladimir Putin and the immediate rebuke by  Dmitry Medvedev was not a pretty sight. Ironically, this spat was about something as peripheral to Russian affairs as the fate of “Che Guevara of North Africa” – a human relic from the days when the Soviet Union literally sacrificed the well-being of its own citizens in the cause of socialist solidarity with very strange people indeed. Russia will be struggling for decades to recover from the damage caused by Soviet support of dictators like Gaddafi.

But was this very public and embarrassing episode an indication of a real “split in the tandem?” There are those who – grasping at straws – would like to think so. Clumsy adolescents, prey to unrequited passion, interpret even the most casual and irrelevant action of their objet as proof of a hoped-for and unlikely favor. They pine, they dream, they toss and turn in their lonely beds. These are the images invoked by speculations about a “split,” using as “evidence” the Libya controversy between Medvedev and Putin.

One must warn all concerned, that a genuine split in Russia’s governing arrangements at this time will benefit not the “neo-liberal” dreamers, but extremists from the left – the communists, and the emerging fascist and crypto fascist groups which showed their teeth already on Manezhnaya square. Russian history in the 20th century has a powerful example, which resonates in the world to this day. A confrontation of the liberal bloc in the Duma with the Tsarist government between November 1916 and March 1917 resulted in the victory of the communists in November of that same year. George Santayana famously pointed out: “those who cannot remember the past are condemned to repeat it.”

To one’s great amazement, there are bizarre views that favor the political destabilization of Russia. They seem to forget that instability is a danger to world order, in a country armed with nuclear weapons, a still strong revolutionary socialist party that is openly and unconditionally anti-Western, and other geopolitical factors too obvious to mention.

It is true that in Russia there appears a very impractical and even romantic attachment to the faded Valentino-like “socialist sheikh of Tripoli.” It does not seem to be economic – Russia is wealthy and Libya’s business, though not insignificant, is not a “make-or-break” opportunity. It does not appear to be anti-Western (“the enemy of my enemy…”) – Russia’s relationship with the West is steadily improving and one would imagine that the Russian leadership, which has demonstrated repeatedly a healthy pragmatism, is unlikely to lose their heads completely for the charms of an aging dictator of the sands.

It may be that some see parallels between Russia “vs Chechnya” and Tripoli vs Benghazi. However, the Russia vs Chechnya affair is part of those “wild 1990s” for which pine the Russian neo-liberals. It is in the past now. Russia is definitely unlike Gaddafi’s Libya. Russia is an open country, with completely free access to world-wide information, it has political parties, a boisterous opposition, plentiful public opinion, a growing economy, U.S. Radio Liberty broadcasting in Moscow, elections.

One very embarrassing controversy does not define a “split.” If the “tandem” were to really split, the benefits would not flow to the neo-liberals, but to the communists and the fascists, who would not treat the INSORs of Russia kindly. Liberalism had its chance in Russia in the 1990s. For whatever reason, it failed miserably. In politics, such defeats mean decades of pariah status, new ideas and new faces before a next chance becomes available. This is a lesson that yet needs to be learned.

National Economic Trends

A fourth rise for pensions on the way?http://www.bne.eu/dispatch_text14650

bneApril 4, 2011

Russia could increase pensions a fourth time this year if inflation comes in higher than expectations, State Duma Speaker and former United Russia chairman Boris Gryzlov said on Friday, reports Itar-Tass.

Pensioners got a 10% boost to their payments on Friday, which included a hike originally set for June, but brought forward on the demand of Prime Minister Vladimir Putin. As the country heads for twin national elections - to the lower house (Duma) in December, and to the presidency next year - a fight over government spending is becoming increasingly public.

Speaking on Friday's rise, Gryzlov told ITAR-Tass, "This is a higher increase than we planned earlier, as at the initiative of [Prime Minister] Vladimir Putin we've taken a decision to unify two indexations of social pensions, those of April and of June. As of February 1, work pensions had already been increased by 8.8%," he noted.

"If within the year the inflation rate exceeds the forecast, parliamentarians will raise the issue of additional indexation," Gryzlov said.

COMMENT: Russian budget thirsty for more taxes http://www.bne.eu/storyf2595/COMMENT_Russian_budget_thirsty_for_more_taxes

Alexandra Evtifyeva of VTB Capital April 4, 2011

Russia's Ministry of Finance is calling for RUB1.9 trillion ($61bn, 3% of GDP) of additional taxes in 2012-14 to meet the commitment to ramp up spending on various items, from reforming the MVD (Interior Ministry) to providing housing for veterans. As the government faces increasingly stringent budget constraints after five years of a progressively lax spending stance and 2012 is the presidential election year, the Ministry of Finance's bargaining position on tax hikes is stronger than ever.

Key sources are consumers, natural gas and monopolies. The main components of the tax proposal, as published by Vedomosti last Thursday, are radical hikes in the natural gas mineral extraction tax (MET), as well as the alcohol and tobacco excises, the abolition of the property tax break on pipelines, electric grids and railways, and the elimination of accelerated depreciation. Even though the exact distribution of incremental taxes between these groups will be determined through protracted horse trading (and will only unfold over the coming months), it is unlikely that any of them will be spared from having to shoulder a fair proportion of the extra tax burden.

Gas targets

From the top down perspective, the sheer magnitude of the tax "call" to be tabled by the MinFin is an indication of the mounting spending commitments in the face of the hard budget constraint of the structural fiscal deficit (the exact size of that deficit is open to a debate, as it depends on one's view of mid-cycle oil prices). Our economics team estimates the incremental permanent spending commitment/social tax cuts for small and medium-sized enterprises at RUB855bn over 2011-12 ($29bn, 2% of GDP). This obviously leaves the MinFin no option but to search for additional sources of revenue. Thus, it is safe to assume that the aforementioned headline number for additional tax revenues is unlikely to be reduced significantly.

The draft proposal gives a good idea about the dominant vectors along which the MinFin's wants to search for those additional revenues. Of the key initiatives, the most prominent are consumers (alcohol and tobacco excises), natural gas producers (a radical increase in the MET) and, to a lesser extent, natural monopolies (the staged abolition of the property tax breaks for pipelines, electric grids and railways; this, however, in some cases might eventually be passed into the regulated tariffs, but not in 2012).

We note that neither oil producers nor metals & mining companies are among the direct targets of this year's tax proposals. This strongly supports the view that the government thinks the tax take from oil and oil products is already excessive, while implementing an economically sensible scheme of progressive natural resource rent taxation for steels is fraught with difficulties.

From the practical perspective, we see Novatek and Gazprom as the stocks which are most directly exposed to downside risks from this year's tax initiatives, and to the greatest extent. Were these to be implemented in full, we would be looking at 12% and 7% downgrades to our current 2012-14 Ebitda projections for these companies. Otherwise, the scale of the proposed alcohol excise hikes (almost quadrupling over three years) creates a new dimension of uncertainty about the structure of the Russian spirits market (namely, the split between legitimate and counterfeit producers). That said, the ultimate impact on Synergy and CEDC might well be rather muted, as the higher tax take boosts the incentive for the government to strengthen the enforcement of anti-counterfeit measures. As for FSK, MRSKs, and Transneft, it is entirely possible that the removal of the property tax breaks will eventually be passed through into the regulated tariffs. That said, the tax uncertainty does not strengthen their investment cases in the meantime.

The policy debate on these tax proposals is likely to unfold in April-June and might well last through August (when the government is due to submit the 2012 budget to the Duma). Even though there could be bright spots on the newswires during these debates, we expect that the ultimate result will be downgrades to consensus 2012-14 earnings expectations relative to the current baseline. Stay tuned, but do not hope for a miracle, as Russia's fiscal balance does not allow for the latter.

Putin puts in his two cents about alcohol and tobaccohttp://english.pravda.ru/business/finance/04-04-2011/117436-alcohol_tobacco-0/

04.04.2011

Prime Minister Vladimir Putin considers a sharp increase in excise taxes on alcohol unacceptable. The measure would not reduce alcoholism and trigger the growth of black market substitutes, as well as growth of moonshine production, says the prime minister. Earlier the idea of the revision of excise rates on alcohol and tobacco was proposed by the Ministry of Finance.

Russian President Dmitry Medvedev at a meeting of the Commission for modernization in Magnitogorsk instructed the government to prepare by June 1 a proposal for a possible mechanism for the reduction of compulsory insurance contributions starting January 1 of next year. According to the Prime Minister, lowering rates of insurance contributions to social funds would rob the budget of 400 to 800 billion rubles.

Ministry of Finance proposed to increase budget revenue in 2012-2014 to 1.9 trillion rubles by revising the planned excise taxes on alcohol, tobacco and mineral extraction tax on gas upward, as well as the abolition of certain privileges for depreciation and property taxes. Ministry of Economic Development has already announced its support of the Finance Ministry on tobacco and alcohol issues.

The financial department forecasts that by 2014 the increase in excise duties on alcohol will bring the budget 315.9 billion rubles of additional revenue. VAT revenues will also increase.

In particular, the Finance Ministry proposed increase in excise tax on alcohol as a source of additional revenue starting January 1, 2012 by 20%, with further increases in July 1 of 2012 and January of 2013 and 2014. This will result in 180 rubles ($6) of excise tax for a half-liter bottle of vodka against today's 46.2 rubles ($1.5). The current minimum retail price for a bottle of vodka is 98 rubles ($3).

"A sharp increase will not reduce alcoholism, but will only lead to the use of surrogates and an increase in moonshine production," said Prime Minister Vladimir Putin.

According to head of the Center for the federal and regional markets for alcohol Vadim Drobiz, as a result of a sharp increase in excise duties in the Russian Federation 90% of legitimate vodka factories may shut down, and only 10% of production will remain in legal circulation in 2014.

"This means that the excise reform of Mr. Kudrin would make the bill that aims to regulate the legal market meaningless. After all, most of the alcohol market will go underground. And it will not be just illegal, but largely underground-surrogate-illegal market", the expert noted in the commentary to radio "Svoboda".

Thus, the opinions of several experts support the idea that a radical increase in excise taxes on tobacco and alcohol in an election year will not be allowed by the government.

Their growth is large enough and will be felt on the wallets of the consumers of alcohol and tobacco.

The existing order of calculation and payment of excise duty on alcohol and alcohol products is changing as well. Indexation of excise rates on alcohol and alcohol assumes an increase in the current year from 10 to 42.9% in 2012- from 8 to 23%, and in 2013- from 5.7 up to 16.7%.

President Dmitry Medvedev is also attentive to the alcohol market. In particular, he criticized the idea of classifying alcoholic beverages with the addition of ethanol as beer drinks.

Also, according to the head of state, a bill to regulate the production and distribution of alcoholic beverages does not take into account the order of the President of September 10, 2009 that talked about expanding the powers of the state power of subjects of the Russian Federation to regulate and control distribution of alcoholic beverages.

Anastasia Romasheva Bigness

BOFIT forecast sees brisk GDP growth in 2011-2013 for Russia, despite slowinghttp://www.bne.eu/dispatch_text14650

Bank of FinlandApril 1, 2011

The recovery of Russian output from one of the deepest drops globally slowed temporarily in autumn 2010 but continued in winter. Imports, in contrast, recovered in 2010 faster than predicted due in part to an exceptionally hot and dry summer that decimated agricultural production in particular.

The latest BOFIT Forecast for Russia sees GDP rising briskly and even stronger import growth. GDP growth should reach 5.5 % this year, due e.g. to a rise of prices for oil and Russia's other key exports in 2009-2010, as well as the relatively low GDP level of 2010. Starting from the first half of 2011, GDP growth is projected to decelerate gradually as the impact of the earlier rise of export prices on the economy ebbs and prices in the forecast period remain at the level of early this year (we assume an average oil price of about $100 a barrel). GDP growth is expected to be 4.7 % in 2012, and just over 4 % in 2013.

Consumption growth is forecast to pick up and become the main driver of economic growth. This should help spur a recovery in agriculture, which experienced a sharp decline in 2010. The brisk rise in wages should continue, with inflation and the upcoming elections next winter adding to the pressure to raise public sector wages and pensions. Household saving is expected to fall from its recession height. Growth in purchasing

power is restrained by inflation, which has accelerated to nearly 10 % due to rising food prices. Consumption growth is also curbed by a slow decline in unemployment, as underemployment in firms is higher than before the recession.

Public spending is expected to rise slowly. This view is supported by government extra revenue which flows from a higher oil price than assumed in the budget. That will also make it easier for the government to meet its target of returning the state budget to balance by 2015.

The volume of exports is expected to grow rather slowly in relation to global trade as exports of crude oil and fuel oils are not expected to increase. Natural gas and other basic export commodities should mend some of the slack.

Investment is expected to recover strongly this year and next year as production capacity utilisation climbs back this year to pre-crisis levels. Banks have sufficient liquidity to meet the financing needs of investors. As in the 1998 recession, inventories have had a large impact on GDP, with inventories first declining and then rising. The economy has now largely moved beyond this down-up cycle.

Imports, which are expected to increase about 15 % this year and about 10 % p.a. in 2012-2013, will restrain GDP growth. The Russian economy's propensity to import, while high, should ease off gradually. On the other hand, appreciation in the ruble's real exchange rate should encourage imports. The current account surplus should be sufficient to support appreciation of the ruble's nominal exchange rate even if import prices would rise substantially.

This forecast carries with it inherent upside and downside risks. Oil prices could rise from the level assumed, while the impact might be slower due to oil taxes. Higher-than-expected inflation from e.g. higher food prices could shrink the consumption base. Import growth could possibly outstrip the projection.

Rosstat confirms 4.0% YoY GDP growth in 2010, reveals higher inflation pressures http://www.bne.eu/dispatch_text14650

VTB CapitalApril 4, 2011

News: Rosstat published its second estimate for 2010 GDP in 2010 last Friday. The real GDP growth estimate remained unchanged at 4.0%YoY, while the GDP deflator was revised upwards to 11.4% YoY from 10.3% YoY. This resulted in a nominal GDP of RUB 44939.2bn (compared with the RUB 44491.4bn from the first estimate).

Rosstat also made its first estimate for 4Q10 GDP growth at 4.5% YoY. At the same time, it increased the 3Q10 GDP numbers to 3.1% YoY from 2.7% YoY and marginally altered the 1Q10 and 2Q10 data.

Our view: The recent data indicates that inflationary pressures in the economy were higher than the first estimate suggested. The revised 2H10 GDP growth numbers reveal that (i) consequences of the summer drought were slightly less acute than initially thought and (ii) that economic growth accelerated less in 4Q10 than the first annual growth estimate implied.

The new estimate does not change our call for a 25bp hike (the last for this year) in CBR's policy interest rates in April.

Alexey Moiseev

Russian Economic Monitor: Entering 2Q11 with positive expectations http://www.bne.eu/dispatch_text14650

Alfa BankApril 1, 2011

Disposable income growth still negative: Real disposable incomes shrank by 1.5% y/y in February, and Rosstat has downgraded its January growth estimate from -5.5% to -5.8% y/y. Combined with the unemployment rate of 7.4%, above the 7.2% posted in December last year, this suggests that final demand may remain depressed in March, and the 3.3% y/y jump in retail trade in February lacks fundamental support.

Housing construction constraining investment recovery: The decline in Investments has somewhat slowed from -4.7% y/y in January to -0.4% y/y in February, but the recovery is still under pressure from low construction activity. Housing segment growth was -6.4% y/y in February, keeping overall construction growth at only 0.4% y/y.

Positive news on the horizon: In spite of negative current indicators, we believe 2Q11 is very likely to bring good news. First, President Medvedev recently decided to increase pensions by 10% in April, which will help to boost consumption. Second, the Moscow city government recently finalized the revision of its construction plans and is now ready to resume providing financing. We also expect the capital account to improve once the negative impact of high taxes is fully played out.

CBR leaves rate unchanged but raises reserve requirements: The CBR's decision to increase reserve requirements from 4.5% to 5.5% for international borrowing and from 3.5% to 4.0% for domestic funding was a sign that it expects economic trends to improve. The fact that the regulator left the refinancing rate at 8.0% will support loan growth and help industry recover.

IN THE SPOTLIGHT

WTO accession: Let's not be too hasty

Russia expects to make progress on WTO negotiations in April: Last year, the Russian government announced its firm intention to speed up WTO negotiations, with entry possible as soon as April this year. While accession could have a positive impact on exports, imports and the investment climate, we believe much depends on whether the government combines WTO entry with internal reforms. By itself, WTO accession will not resolve structural issues.

Export diversification possible through CIS markets: Given that 64% of Russia's exports are related to fuel and another 16% to metals, the positive impact of WTO accession on exports will be relatively limited. The natural way to diversify exports is to focus on CIS markets. WTO accession may help, but efforts to increase competitiveness are crucial.

Only 15% of Russia's imports are investment-related: WTO accession could help to improve the quality of Russia's imports, which at the moment are mainly consumer-driven. However, to reach this goal, Russia has to open its domestic market to foreign investors and stimulate investment.

Russia maintained the status quo in negotiations: Fears of losing control over monetary and economic policy explain Russia's conservative negotiation strategy. In fact, in a number of sectors, including banking, insurance, agriculture and transportation, Russia has already opted to keep its markets closed instead of opening up to gain access to global markets.

WTO accession likely motivated by politics: As the government is not focused on promoting competition, we see little economic interest in joining the WTO now. Russia may use the excuses of the customs union with Kazakhstan and Belarus and issues with Georgia. If Russia joins this year, we believe the move would be largely politically motivated, with the economic impact coming much later.

Business, Energy or Environmental regulations or discussions

Government approves new capacity rules http://www.bne.eu/dispatch_text14650

Renaissance CapitalApril 4, 2011

Event: Reuters reported on Friday (1 April) that the government had signed into law adjustments to the rules for Russia's new generation capacity markets. According to Energy Minister Sergei Shmatko, the changes cover measures to slow down the rate of electricity tariff growth that were revealed by Deputy Prime Minister Igor Sechin on 17 February 2011. The changes will be backdated to 27 December 2010 and will affect capacity prices for the whole of 2011. Elsewhere, electricity department head at the

Federal Tariff Service, Maxim Egorov, announced that adjustments to MRSK tariffs would be announced in the next few weeks. Where appropriate, the new tariffs would take effect from 1 May 2011.

Action: In our view negative for TGKs, RusHydro and MRSKs.

Rationale: Among the measures proposed by Sechin were adjustments to capacity tariffs for forced generation, the abolition of inflation adjustment for capacity price caps in 2011 and a reduction of the investment uplift on capacity tariffs for RusHydro plants and nuclear plants. None of these, in our view, would significantly affect OGK's profitability growth. However, we believe that margins at TGKs (which have up to 25% of their generation capacity operating under forced regimes) and at RusHydro (which receives up to 25% of current projected EBITDA from investment uplifts) will be squeezed.

Vladimir Sklyar

Insurance brokers face stiffer regulations

http://www.rbcnews.com/free/20110404122221.shtml

      RBC, 04.04.2011, Moscow 12:22:21.Russia's Federal Anti-Monopoly Service (FAS) plans to tighten the regulation of insurance brokers and agents in the near future, RBC Daily announced today citing an FAS official. The regulator intends to establish a state registry of insurance intermediaries and hold insurers liable for the actions of intermediaries.

      "An insurer should be liable for all agreements concluded on its behalf irrespective of the date and means of sale of insurance policies or premiums received," said Yuliya Bondareva, head of the watchdog's financial market oversight department. The measure is intended to make insurers select intermediaries more carefully and squeeze t unscrupulous intermediaries off the market, she added.

      The regulator also plans to oblige large insurance brokers to join self-regulated organizations that have a compensation fund. This move would have a positive effect on the competitive environment and reduce insurers' risks.

Gazprom, Rosneft, Globaltrans May Move: Russia Stock Previewhttp://www.bloomberg.com/news/2011-04-03/gazprom-rosneft-globaltrans-may-move-russia-stock-preview.html

By Henry Meyer - Apr 4, 2011 6:00 AM GMT+0200

The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close in Moscow.

The 30-stock Micex Index (INDEXCF) added 1.7 percent to 1,843.43.

OAO Gazprom (GAZP RX) and OAO Rosneft (ROSN RX): President Dmitry Medvedev instructed the government to start removing all top state officials from the boards of public companies by Oct. 1 to improve the investment climate. Gazprom, Russia’s state gas export monopoly, rose 2.6 percent to 235.07 rubles. Rosneft, Russia’s biggest producer of crude, rose 1.4 percent in Moscow to 263.89 rubles.

Globaltrans Investment Plc (GLTR) : Russia’s largest non- state rail operator will announce 2010 financial results. The company’s global depository receipts rose 3.3 percent to $19 in London trading.

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net

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

April 04, 2011 10:40

RusAl opens bid book for eight series bonds worth 15 bln rubles, coupon guidance at 8.7%-9%http://www.interfax.com/newsinf.asp?id=233674

MOSCOW. April 4 (Interfax) - UC RusAl will open the bid book for its eighth series bond issue worth 15 billion rubles on April 4, the company said in a statement filed with the Hong Kong Stock Exchange citing a decision of its board of directors.

The bid book is slated to close on April 14, statement said. Renaissance Capital, Gazprombank, VTB Capital and Sberbank (RTS: SBER) will accept applications.

The starting guidance on coupon yield comes to 8.7%-9%.

The bonds include a put-option, which can be exercise in no earlier than four years.

The placement is slated to take place on the MICEX (in quotation list B) on April 18, the company said.

RusAl's subsidiary Bratsky Aluminum Plant (BrAZ) placed 15 billion rubles in bonds in March. The bonds mature in seven years at 8.3%.

The funds raised have already go to refinancing debt.

The company, which restructured $14.9 billion in debt in 2009, plans to have refinanced $5 billion in debt by the close of 2012.

Russia’s Sistema increases its share capital in its India unit Sistema Shyam TeleServices Ltdhttp://investinindia.com/news/russia%E2%80%99s-sistema-increases-its-share-capital-its-india-unit-sistema-shyam-teleservices-ltd-96g7

Sistema, the largest diversified public financial corporation in Russia and the CIS, Friday announced an increase in the share capital of Sistema Shyam TeleServices Ltd (SSTL). Sistema Shyam TeleServices is Sistema's subsidiary in India that provides telecommunications services under the MTS brand. The capital stake increase was by means of an additional Sistema share issue.

Sistema said SSTL increased its share capital by 28,894.5 million rupees, around US$ 647 million. The move follows the placement of additional shares with the Russian government and investors in India. The Russian government was represented by the Federal Agency for State Property Management and acquired a 17.14% stake in SSTL for 26,988 million rupees, around US$ 600 million.

The Russian Federation's portion of the transaction was financed with funds held in Indian rupees, which represented Indian government debt to the Russian Federation. Post the transaction, Sistema's stake in SSTL amounts to 56.68%, while Indian investors own 26.05%.

Under the agreement between the Russian Federal Agency for State Property Management and Sistema, the Russian state agency retains a put option to sell its stake in SSTL to Sistema during a one year period beginning five years after the purchase of shares in SSTL. However, Sistema has an obligation to purchase SSTL shares from the Russian government for the higher of US$ 777 million or market value determined by an independent valuator.

Under the terms of the agreement, until the put has been exercised or expires, Sistema has agreed not to reduce its stake in MTS below 50%+1 share, said the announcement. SSTL plans to use the proceeds from the secondary offering to further strengthen its position in the mobile broadband market, to expand its mono-brand retail network in existing telecommunications circles, and to launch services in new circles.

Sistema is the largest diversified public financial corporation in Russia and the CIS. The firm invests in and is a major shareholder of companies serving over 100 million customers in the sectors of telecommunications, high technology, oil and energy, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Sistema reported revenues of US$ 7.3 billion for the third quarter of 2010, and total

assets of US$ 42.0 billion as at September 30, 2010.

Sistema Shyam TeleServices Ltd launched its full operations in the State of Rajasthan in 2000. The company received the pan-Indian license for mobile network operations in March 2008, and presently owns right to use frequencies for provision of mobile telephony services in 22 circles across the country.

3rd April 2011

Russia's Magnit eyes $500 mln new share sale – paperhttp://in.reuters.com/article/2011/04/04/magnit-spo-idINLDE73301L20110404

10:23am IST

* Considering a secondary share placement in autumn

* To finance part of $1.8 bln investment programme

MOSCOW, April 4 (Reuters) - Fast-expanding Russian retail chain Magnit is considering a new share placement worth at least $500 million to help finance its investment programme, Vedomosti business daily reported on Monday.

The newspaper quoted two unnamed investment banking sources as saying the secondary placement, equal to around 4 percent of Magnit's (MGNTq.L: Quote, Profile, Research) share capital, may take place in autumn.

Magnit, controlled by its chief executive Sergei Galitskiy, last month raised capital expenditure guidance to $1.8 billion from the earlier expected $1.5 billion to keep pace with recovering consumer demand. [ID:nLDE72O06U]

The SPO would allow Russia's biggest food retailer by stores to avoid a major increase in debt burden as it plans to open between 800 and 1,000 stores in 2011 and renovate hundreds of outlets.

Magnit was not immediately available for comment. (Reporting by Maria Kiselyova; Editing by Muralikumar Anantharaman)

Russia's SUEK seeking full London listing – reporthttp://in.reuters.com/article/2011/04/03/us-suek-ipo-idINTRE7321D820110403

Sun, Apr 3 2011

LONDON (Reuters) - SUEK, Russia's largest steam coal miner, is planning a full listing of its shares in London, allowing it entry into the FTSE 100 .FTSE index, after it improved corporate governance, The Independent on Sunday said.

A floatation was expected to go ahead in June and could value the company at close to $5 billion, enabling it to qualify for entry into the blue-chip index, the newspaper said.

The group -- the Siberian Coal Energy Company in full -- had planned to trade only global depository receipts, the newspaper said, which would have allowed it to register in a more tax friendly jurisdiction and also escape the FTSE index's stringent corporate government standards.

However, the group believed it had improved its structure over the last year, the newspaper said, and it quoted a mining sector source saying SUEK wanted a premium listing.

A report in Kommersant in March said the group could sell 10 to 15 percent of its shares via an initial public offering.

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

SUEK was not immediately available for comment.

(Reporting by Paul Sandle; Editing by Erica Billingham)

Etalon Group Sets IPO Price Range to Value Russian Company at $2.5 Billionhttp://www.bloomberg.com/news/2011-04-04/russia-s-etalon-group-sets-ipo-price-range-at-7-9-per-gdr.html

By Ilya Khrennikov - Apr 4, 2011 8:01 AM GMT+0200

Etalon Group Ltd., a St. Petersburg, Russia-based property developer, set a price range of $7 to $9 per global depositary receipt, valuing the company at as much as $2.51 billion after new shares have been issued, Etalon said in a regulatory filing today.

The company will sell new shares to raise $500 million and may sell existing shares to attract a further $150 million, according to the statement.

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

To contact the editor responsible for this story: Alexander Nicholson at anicholson6@bloomberg.net

UPDATE 1-Russia's Globaltrans 2010 profit up 86 percenthttp://af.reuters.com/article/energyOilNews/idAFLDE73307V20110404

Mon Apr 4, 2011 6:27am GMT

* Says 2010 profit rose 86 percent to $225.9 million

* Russian economic growth should support business in 2010

* Will pay $58.5 mln in dividend, more than double 2010

(Adds CEO comment, detail)

MOSCOW, April 4 (Reuters) - Russia's largest private freight operator Globaltrans Investment (GLTRq.L) said it expects a strong year ahead on the back of faster economic growth after posting 2010 profit up 86 percent at $225.9 million.

The company, seen as a barometer for Russian health as it transports the oil, coal and metals that are the lifeblood of the economy, said it would benefit from the arrival of new rolling stock and government plans to deregulate the industry.

"The combination of economic growth and continued deregulation continues to provide a powerful stimulus to our market," Chief Executive Sergey Maltsev said in a statement on Monday.

Globaltrans said it would pay $0.37 a share or a total of $58.5 million in dividends, more than double last year's pay-out.

The company's revenue climbed 32 percent in 2010 to $903 million, driven by higher turnover of goods and higher prices as the economy rebounded from the global economic crisis.

(Reporting by John Bowker, Editing by Maria Kiselyova)

Russia's Globaltrans may buy state's Freight One-CEOhttp://in.reuters.com/article/2011/04/04/globaltrans-idINWLA715920110404

1:02pm IST

MOSCOW, April 4 (Reuters) - Russia's biggest private freight operator Globaltrans Investment (GLTRq.L: Quote, Profile, Research) may be interested in buying state-owned Freight One when it comes up for sale later this year, Chief Executive Sergey Maltsev said on Monday.

"We are interested in any acquisition that moves around the railways," Maltsev told reporters on a conference call, adding that a decision would be made after the government and seller Russian Railways finalise a valuation and format for the sale.

He added that Russia's economic growth and the company's prospects indicated turnover growth of 20 percent this year, compared to a 32 percent rise in 2010.

(Reporting by John Bowker, Editing by Maria Kiselyova)

Renaissance Capital’s Retail Banking Arm Returns to Profithttp://www.bloomberg.com/news/2011-04-04/renaissance-capital-s-retail-banking-arm-returns-to-profit.html

By Henry Meyer - Apr 4, 2011 6:04 AM GMT+0200

Renaissance Credit, the retail banking arm of Renaissance Capital Financial Holdings Ltd., a Russian emerging-markets bank, said it achieved the same profitability in 2010 as before the financial crisis.

The bank, the parent company of which is half-owned by billionaire Mikhail Prokhorov, reported, in an e-mailed statement, net income for the year of 1.6 billion rubles ($57 million), exceeding the 2008 profit of 1.5 billion rubles. In 2009, Renaissance Credit posted a net loss of 4.23 billion rubles.

The bank issued new loans worth 22.8 billion rubles in 2010, a 530 percent increase over 2009.

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net;

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

Severstal to launch new automotive steel line project in North America

http://www.bne.eu/dispatch_text14650

VTB CapitalApril 4, 2011

News: Vedomosti report today that following the completion of sale of several North American assets to Renco, Severstal has applied for U.S. federal loan of USD730mn intended for construction of a 900ktpa line for high quality automotive sheet.

Our view: Severstal once again bets on US automotive sector which so far has brought it only huge losses on P&L. This is another step is clearly aimed to shift production into a more high value added segment while attracting financing at more attractive conditions compared to loan portfolio. Strategy wise it is yet to show the execution (including timing) and once again its success will depend on the recovery of US automotive sector and how the company manages to stricture the operating assets in terms of costs. We treat the news as neural at the moment.

Alexander Pukhaev

Severstal Seeks $730M U.S. Government Loan http://www.themoscowtimes.com/business/article/severstal-seeks-730m-us-government-loan/434329.html

04 April 2011Bloomberg

Severstal, a supplier of steel to General Motors and Ford, requested a $730 million U.S. government loan to expand in Michigan as President Barack Obama rewards carmakers for using lighter steel.

Part of the long-term loan will fund a new production unit at the company's Dearborn plant to make lightweight, high-strength sheet steel for automakers, Severstal North America chief executive Sergei Kuznetsov said. He completed the sale of three U.S. plants late last week as he seeks to focus on more profitable operations.

Severstal could become the first Russian company to win a U.S. government loan under the Advanced Technology Vehicles Manufacturing plan, according to the U.S. Energy Department. The $25 billion incentive program was funded in 2008 to spur makers of cars and auto parts to produce models that cause less environmental damage.

Severstal sold three of its five U.S. plants after rising costs and dwindling demand led to a $1.32 billion loss from the sites in three years. It offloaded the Sparrows Point, Warren and Wheeling mills, which produce steel mainly for construction, as it bets on faster growth in the car and pipeline industries.

Severstal is negotiating the loan with the Energy Department, Kuznetsov said, adding that the interest rate, currently estimated at about 2.5 percent, would make it the company's

cheapest loan. Severstal pays an average 7 percent on its $4.1 billion net debt, said Boris Krasnozhenov, an analyst at Renaissance Capital.

Once the new line at Dearborn is built and its existing facilities expanded, the plant will have a production capacity of 900,000 tons of advanced, high-strength steel, Natalya Ivanova, a Moscow-based spokeswoman for Severstal, said. The new production unit will cost $280 million to build, according to data on Dearborn's local government web site.

Severstal North America will focus on "organic growth and selective investments in finishing units and raw materials," and may set up a scrap-collection and processing unit to become more self-sufficient in raw materials, he said.

Steelmakers in the United States are using 75 percent of their capacity, up from 34 percent in December 2008, according to the American Iron and Steel Institute. Severstal's two remaining U.S. plants are running at full capacity as prices climb, Kuznetsov said.

U.S. prices for hot-rolled steel coil, a benchmark product used in cars and buildings, have gained 29 percent this year, peaking at $900 a short ton on Feb. 17. Prices plunged to $370 a ton in April 2009, according to Metal Bulletin.

Severstal has supply contracts with automakers including Detroit's "Big Three," Kuznetsov said, referring to General Motors, Ford and Chrysler Group. The company is also targeting Asian and European car producers in the United States as new product lines come on stream, he said.

U.S. automobile sales may rise to 12.9 million vehicles in 2011, according to analysts' estimates. Sales rebounded to 11.6 million vehicles last year from a 27-year low in 2009, according to Woodcliff Lake, New Jersey-based Autodata.

Severstal said Feb. 21 that it plans to invest $465 million this year to complete new facilities in the United States, including an expansion at Columbus and a cold-rolling steel complex at Dearborn. Its U.S. capacity will be 5.4 million tons once construction is completed this year, keeping it among the country's five largest steelmakers, according to Kuznetsov.

The company's biggest competitors in the United States are U.S. Steel, ArcelorMittal, Nucor and AK Steel Holding. Severstal North America is in competition with Renco for fifth place.

Russian Helicopters makes offer to Kazan Helicopters minorities

http://www.bne.eu/dispatch_text14650

Troika DialogApril 4, 2011

Russian Helicopters has consolidated an 87.7% stake in Kazan Helicopters and announced a buyout offer to its minority shareholders at R102.51 per share, which is almost in line with the current market price. This implies a market capitalization of $530 mln and 4.0 times 2010 earnings. In our view, following Russian Helicopters' IPO, interest in its subsidiaries will decline. We thus recommend accepting the offer, as it is the only possible exit strategy from the stock. The offer will last for 70 days.

Mikhail Ganelin

Azerbaijan to import Russia-assembled Hyundai carshttp://abc.az/eng/news_04_04_2011_52772.html

Baku, Fineko/abc.az. This month Azerbaijan is likely to import Russia-assembled Hyundai automobiles.

The Russian media report that speech is of C-class sedans Hyundai Solaris, produced at the St. Petersburg automobile factory. Up to date, this enterprise has signed contracts for delivery of Hyundai Solaris cars to a range of ex-Soviet republics, including Ukraine, Azerbaijan, Kazakhstan, Belarus, Uzbekistan, Moldova, Armenia and Kyrgyzstan.

In 2011, Hyundai intends to export 7,000-8,000 Russian Solaris, i.e. about 7.5% of the St. Petersburg factory’s total output of 105,000 vehicles.

Hyundai cars designed for export to the CIS countries will not be subjected to customs duty as an added value to their production in Russia exceeds 50%.

JV Mail.ru Group hires Alexey Basov, Begun's ex-CEO and co-founder

http://www.bne.eu/dispatch_text14650

VTB CapitalApril 4, 2011

News: Vedomosti and RBC-Daily run a story this morning that Alexey Basov, co- founder and ex-CEO of Begun, would join Mail,ru Group as of tomorrow as the Vice-President responsible for developing context and targeting advertising in the social networks.

Our View: Basov's extensive experience in the launching and developing context advertising in Russia (Begun is the second largest context agency in Russia after Yandex

Direct) may improve Mail.ru Group's positioning in finding non-banner advertising ways of monetizing the social networks' exposure (via 100% stakes in Odnoklassniki and MyWorld, the second and third largest Russian social networks). The material impact from these steps, however, is unlikely to be seen until the end 2011, while first results could be potentially seen in the 1H11 results to be announced in September.

Anastasia Obukhova

Central Bank publishes banking sector data for February

http://www.bne.eu/dispatch_text14650

Troika DialogApril 4, 2011

The Central Bank published banking sector data for February at the end of last week.

- Lending. Key loan data had been previously flagged by the Central Bank. To recap, February was a moderate month for lending, corporate loans rising 0.4% (but by 1.0% if stripping out the effects of ruble appreciation) and retail loans expanding 0.6%. Total loans were up 0.8% YTD. The y-o-y dynamics were helped by the low base effect, with total loans up 15% y-o-y and corporate and retail lending up 14% and 16%, respectively. The first quarter is typically the seasonally weakest of the year, and we still see 20% growth for the sector as a whole as feasible for 2011.

- Loan rates stabilizing? Corporate loan rates seem to be stabilizing, with a 10 bps increase in average rates in February (ex-Sberbank), meaning that rates have fallen just 20 bps in the past four months. Average retail deposit rates, by contrast, continue their downward march, shedding another 20 bps in February to 6.5%, and marking 17 consecutive months of declining (or flat) rates. These twin dynamics should be supportive for banks' margins.

- Impact of VTB-Bank of Moscow deal. February's acquisition of Moscow's 50.8% stake in Bank of Moscow impacted the sector's CAR, which fell from 18.0% to 17.2%. According to news reports, VTB's N1 ratio under RAS (minimum limit 11%) fell from XXX% in January to 16.1% in February. The deal also explains the 5.5% m- o-m rise in securities, as the purchase was likely accounted for as a stake in equity under RAS.

- Deposit growth picks up. February was a strong month for both retail and corporate deposits, with total deposits up 2.1%, helped by strong oil revenues. Strongly negative real savings rates continue to do little to dampen the population's appetite to save, with y-o-y growth still running at close to 30%. Banking sector liquidity remains high, with voluntary reserves at R1.7 trln at end March and loans/assets declining to 54%.

- Stable earnings dynamics. Monthly netincome has been reasonably steady for the past five months, with 2m11 annualized ROAE at 19%. On a y-o-y basis, pre- provision income is almost flat, but provision charges have declined massively, hence the banking sector's bottom line looks much healthier now. Banks provisioned just a net R1 bln in February, while overdue loans stayed flat at 5.7% for the third month running.

Buoyant Russia is undervalued: Vechthttp://www.ftadviser.com/InvestmentAdviser/Investments/News/article/20110404/f8bf114a-5ac3-11e0-bcb9-00144f2af8e8/Buoyant-Russia-is-undervalued-Vecht.jsp

Story by: James SmithMagazine: InvestmentAdviser Published Monday , April 04, 2011

Russia remains an undervalued market that will benefit from global reflation, BlackRock’s Sam Vecht has claimed.

The manager of the Eastern European Investment Trust cited the country’s multi-year privatisation programme and several options to generate demand for the equity.

“The fact the government is purposefully rolling back the share of the state in the economy is in itself a remarkable reform,” added the manager.

“We believe the country has a good chance to complete the requirements to enter the WTO in 2011, which would be an excellent sign that the administration is serious about attracting investment.”

Elsewhere, Mr Vecht said inflation would become a core focus for the region, as output gaps shrink and the monetary effects of further quantitative easing are felt.

“Many agricultural and hard commodity markets remain tight and we noted last year that the Chinese labour market has started to tighten while Asian currencies remain strong, making it harder for global inflationary pressure to be absorbed,” he added.

Looking around eastern Europe, the manager said that in spite of a very positive long-term outlook on Poland, he is more cautious in the short run, as the government has chosen to reduce the funding of pension schemes that are major buyers of Polish stock.

“At the same time, the state is continuing with a major privatisation plan that will increase the supply of stock over the same period. We expect a compelling entry point once these policy implications have been fully digested.

“Poland continues to manage its economy prudently and is likely to continue to benefit from surging exports and a powerful domestic recovery.”

Elsewhere, he said the Czech Republic and Hungary were also likely to gain from the strong the German recovery.

Mr Vecht highlighted Russian gas producer Novatek as a key stock in recent months, performing strongly after the announcement of good production figures.

Energy giant Gazprom has also contributed to returns after European gas spot prices converged with long-term contacts, increasing the probability that the company’s pricing model will be preserved.

“Hungarian energy company MOL performed well as a beneficiary of rising energy prices, while the discovery of oil outside of its domestic market added to positive market sentiment,” added Mr Vecht.

“During February, we added a new position in Russian energy company Tatneft, which we expect to be a beneficiary of the continued tax reform of the domestic energy sector.”

Activity in the Oil and Gas sector (including regulatory)12:15Oil-extraction in Russia up 1.2% in January-Marchhttp://www.interfax.com/news.asp

12:25Russian gas production up 0.6% in Jan-Marhttp://www.interfax.com/news.asp

CPC oil exports flat in Q1

http://www.rbcnews.com/free/20110404123322.shtml

      RBC, 04.04.2011, Moscow 12:33:22.The Caspian Pipeline Consortium (CPC) transported 8.53m tons of oil exports in January-March, nearly unchanged from the year-earlier period, the consortium announced today.

      In March alone, crude exports via CPC rose 1.2% year-on-year to 2.87m tons.

Lukoil boosts stake in Italian refinery

http://www.rbcnews.com/free/20110404104717.shtml

      RBC, 04.04.2011, Moscow 10:47:17.Russian oil major Lukoil has completed a deal to buy an 11%-stake in Sicily-based ISAB refinery from Italy's ERG, thus raising its stake from 49% to 60%, Lukoil's press service announced. The value of the deal amounted to EUR 205m not including the cost of petroleum products.

      As reported earlier, ERG's board of directors approved selling Lukoil the 11% in the ISAB joint venture in January. This decision is a partial execution of the option to sell ERG's share in the joint venture in line with the companies' agreement to set up the venture in 2008.

Lukoil and Russia Ride the Rise of Oil http://seekingalpha.com/article/261561-lukoil-and-russia-ride-the-rise-of-oil

April 04, 2011

The rising importance of oil in global economic growth is good for buy-recommended Lukoil (LUKOY.PK) and its home country, Russia. By our analysis, Lukoil stock has 105% unlevered appreciation potential to estimated Net Present Value (NPV) of $150 a share, where the McDep Ratio would be 1.0. NPV corresponds to an unlevered multiple of cash flow (PV/Ebitda) at just 6 times, at the low end of the range for large cap companies.

Normally, the longer life of Lukoil’s reserves would justify a premium multiple. Nor does NPV presume much improvement in the untypically low cash flow margin for oil production clocked at 19% in 2010, according to our interpretation of latest results released on March 10 in New York . At the same time, we see increasing alignment of interest between the Russian government and Lukoil and between management of Lukoil and investors in the stock.

Russia has a wide margin for reducing the oil export tax to incentivize Lukoil to reinvest in order to replace the decline in old oil fields, thereby keeping export revenues up for the country and profits growing for Lukoil. Management leaders, President Alekperov and Head of Strategy Fedun, have large holdings of Lukoil stock and are committed to reinvesting and building Lukoil. Vagit Alekperov also “knows where the oil is” having life-long experience in the Russian oil industry beginning from his roots in the historic oil center of Baku. Further certifying his credentials, author Alekperov just published his book on the history of the Russian oil industry, which he signed for us.

Finally, underscoring the prospects in the wake of the tragic earthquake and tsunami in Japan, crude oil price is in an uptrend with the current quote of $101 a barrel for the next six years above the rising 40-week average of $90.

Originally published on March 15, 2011

Oligarchs renew bid to halt BP deal with Rosnefthttp://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8425366/Oligarchs-renew-bid-to-halt-BP-deal-with-Rosneft.html

By Alistair Osborne, and Rachel Cooper 9:58PM BST 03 Apr 2011

Four Russian oligarchs will make a renewed attempt to block BP’s proposed $16bn (£10bn) share-swap deal with Rosneft on Monday, claiming it contravenes an existing shareholder agreement.

The billionaires, who operate as Alfa-Access-Renova – Mikhail Fridman, Len Blavatnik, Viktor Vekselberg and German Khan – form the other half of the UK oil giant’s current Russian joint-venture TNK-BP.

Last month the four won a ruling from the Stockholm Arbitration Tribunal that BP’s planned Arctic exploration deal with Rosneft breached an agreement stipulating that TNK–BP is BP’s “primary vehicle” for all oil and gas exploration in Russia and Ukraine.

BP will attempt to convince the tribunal on Monday that the share-swap element alone should be allowed to proceed – despite opposition from some BP shareholders, including Standard Life, that there is no logic to such a transaction without the exploration deal.

Lawyers for the oligarchs will argue that BP would not raise its stake in Rosneft from 1.5pc to 11pc, in exchange for Rosneft taking 5pc of BP, unless it had commercial motives.

The tribunal comes as BP awaits confirmation from US regulators that it will be allowed to resume drilling in the Gulf of Mexico as early as July – less than 15 months after the rig explosion that killed 11 workers.

BP hopes to start work on 10 wells that were underway before the catastrophic spill that left the group facing manslaughter charges and a $41bn bill. Although BP will not be allowed to drill new exploration wells, its return to the Gulf is likely to fuel public anger.

A source close to the company said: “BP is hoping to resume drilling in the summer once it shows it can satisfy applicable regulatory conditions, as set out by the US offshore regulator.”

Last month analysts at RBS estimated that BP’s value had fallen by $69bn versus peers since the spill – despite a $20 per barrel rise in the oil price.

For the Record http://www.themoscowtimes.com/business/article/for-the-record/434369.html

04 April 2011

ExxonMobil named Glenn Waller to run its Russia business, replacing Steve Terni, company spokeswoman Olga Shishkina said Friday, as Terni takes a new position at the company's upstream unit, ExxonMobil Development.(Bloomberg)

Transneft expects 4%YoY growth in FY2010 IFRS earnings

http://www.bne.eu/dispatch_text14650

CitiApril 4, 2011

Transneft corporate magazine quoted Vice-President Maxim Grishanin as saying that the company's FY2010 IFRS earnings will grow by 4%YoY vs. 1.9% growth in our forecast. We attribute relatively small growth despite 23%YoY higher tariffs largely to offsetting growth of costs on the ESPO route.

After launch of the phase I of the ESPO pipeline in 2010 Transneft started to charge a single network tariff for the combined pipeline+railways Taishet-Kosmino route (1685 rubles per ton of crude shipped from Vankor field) and to pay railways cost to Russian Railways (in excess of 2,000 rubles per ton). When Transneft completes phase II of the ESPO pipeline there will be no need for the railways services and Transneft's margins should recover assuming stable pipeline transportation costs.

We view this guidance as largely neutral for our forecasts and note that both RAS and IFRS results of Transneft have rarely been a strong driver for the stock.

Ildar Khaziev

Russia February Refinery Deliveries: Summaryhttp://www.bloomberg.com/news/print/2011-04-04/russia-february-refinery-deliveries-summary-table-.html

By Zoya Shilova - Apr 4, 2011

Following is a summary of the February refinery deliveries report from the Federal Service of State Statistics in Moscow:

============================================================================ Feb. Feb. Feb. YTD 2011 2011 2011 2011 Mln tons YOY % MOM % YOY%============================================================================Gasoline 2.7 1.4% -12.6% 3.5%Diesel 5.6 1.4% -9.3% 3.5%Mazut* 5.2 1.9% -12.2% 4.6%============================================================================Note: Mazut is fuel, used in generating plants.

SOURCE: Federal Service of State Statistics of Russia

To contact the reporter on this story: Zoya Shilova in Moscow at zoya@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net

Oil and gas monitor http://www.bne.eu/dispatch_text14650

Renaissance CapitalApril 4, 2011

Medvedev requests changes at state-owned companies. Last week (30 March), President Dmitry Medvedev spoke at a commission on modernisation in Magnitogorsk, expressing general concerns about the poor investment climate in Russia. Among the measures to improve this, the president specifically mentioned changes at state-run companies, which could include the following: 1) the specification of privatisation plans for the next three years; 2) prohibiting government officials in charge of regulating certain industries from serving on the boards of state-owned companies, and replacing them with independent directors; 3) increasing transparency in the procurement process; and 4) reducing the cost base per unit of output by 10% pa during the next three years at state companies. Poor corporate governance at companies such as Gazprom and Transneft is one of the reasons for their low valuations, in our view. While we doubt potential changes would alter the nature and not just the form of state involvement, we note that the market is not fully pricing in any positive potential changes.

Performance and ratings update. EMEA oil and gas stocks were up 0.7% on average last week, underperforming the Bloomberg World Oil and Gas Index (up 1.3%), the Brent price (up 1.5%), the MSCI Emerging Markets Index (up 2.4%) and the MSCI Renaissance Index (up 3.4%). Among the blue chips, Transneft (pref), Gazprom and Surgutneftegas (pref) demonstrated the best performance, up 5%, 3.3% and 1.2%, respectively. Among the small caps, the best performers were Regal Petroleum, Urals Energy, and Alliance Oil Company, up 22.3%, 7.6% and 4.5%, respectively.

Our watch list for the current week includes: KazMunaiGas Exploration and Production's 1Q11 operating results, Alliance Oil's 1Q11 production results, Zhaikmunai's FY10 IFRS results, and a Stockholm arbitration tribunal hearing on the BP/AAR situation.

Chart of the week. Most Russian oil and gas companies typically announce dividends in April-May. The common perception is that the state takes most of their profits through higher taxes, thus leaving little for minority shareholders. However, we note that some companies, such as Surgutneftegas and Tatneft, offer quite attractive dividend yields, especially for preferred shareholders (about 6.9%). The companies with the lowest dividend yields include Rosneft and Novatek (1.1% and 0.7%, respectively). For Novatek, this excludes the interim dividend, which new investors are not entitled to (otherwise, the yield is about 1.1%).

Gazprom

Gazprom Neft, TNK-BP Messoyakha Deposit May Cost $20 Billionhttp://www.bloomberg.com/news/2011-04-04/gazprom-neft-tnk-bp-messoyakha-deposit-may-cost-20-billion.html

By Stephen Bierman - Apr 4, 2011 10:45 AM GMT+0200

OAO Gazprom Neft, the liquids arm of Russia’s natural gas exporter, estimates it may cost $20 billion to tap the Messoyakha deposit with TNK-BP.

The project plans 2 million metric tons, or 40,000 barrels a day, to 5 million tons a year output in 2015 to 2017, according to an FSU Energy interview with Marat Atnashev, head of major projects at Gazprom Neft, posted on the company website. Maximum production will reach 20 million tons of oil a year and 10 billion cubic meters of gas, Atnashev said.

A final investment decision will likely be $10 billion to $15 billion, he said. Overall investment may reach $20 billion, Atnashev said. The venture plans investments of $130 million this year, increasing to as much as $300 million next year and $1 billion in 2013,

A new tax structure by 2013-2014 that will better support the development of new projects, Atnashev said. Full scale development will require a new tax environment, he said.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

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