Russia 090818

Basic Political Developments Peres Departs for Russia - President Shimon Peres will depart Tuesday for a state

visit to Russia. He will meet with his Russian counterpart, Dmitry Medvedev. Medvedev and Peres to meet on Middle East tensions - The meeting will also

cover Iran’s nuclear program and will focus on plans for Moscow to host an international Middle East peace conference.

Russian, Israeli presidents to discuss Mideast in Sochi - The sides will also discuss the development of bilateral relations, including cooperation in advanced technology, and the prospects for adopting new agreements on investment protection.

Russia, Israel set to discuss Mideast peace, Iran - Israel also wants Russia, which has close ties with Iran, to increase pressure on Tehran over its nuclear program. Iran, whose president has expressed hatred of Israel, maintains its nuclear programs are only designed to provide electricity.

Dmitry Medvedev suggests again establishment of Caspian Economic Cooperation Organization - Russian President Dmitry Medvedev suggested again establishment of the Caspian Economic Cooperation Organization. APA reports quoting ITAR-TASS that Russian President said this at the conference on August 17.

Prague decides to expel two Russian diplomats from Czech Republic, Moscow names it an unfriendly act

Italy to Cut Dependence on Russian Gas, Scajola Tells La Stampa - Italy wants to import more gas from Algeria than from Russia and in 2010 will increase imports from Libya, Scajola said, according to the newspaper. Italy will also import 10 percent of the country’s gas consumption through a new terminal at Rovigo, Scajola said in the report.

Deal agreed for Russian to buy German shipyard - The Wadan shipyard's insolvency administrator, Marc Odebrecht, said that all parties involved had agreed on the terms of a deal that still needs to be signed. The takeover foresees Yusufov founding a new company called Nordic Yards, which will then take over the Wadan production. Some 1,600 of 2,500 jobs at the yards, located in Wismar and Rostock, are to be kept.

Russia, Mongolia hold joint military exercises - The drills, dubbed Darkhan-2, are being held in Mongolia and involve a Russian engineer maintenance battalion numbering about 200 military personnel and 90 vehicles from the Siberian Military District, as well as a number of Mongolian military units.

DIMDEX promotion in Russia - The DIMDEX 2010 delegation, headed by Chairman and Commander of the Qatar Emiri Naval Forces Staff Brigadier (Sea) Mohammed bin Nasser M Al Mohannadi, met with senior military commanders including Vyacheslav Dzirkaln, Deputy Director of the Russian Federal Service for Military and Technical Cooperation. Among topics discussed was the likelihood of including DIMDEX 2010 on the list of approved international maritime events for Russian companies’ participation.

India releases $122 million for Gorshkov modification - India has cleared an installment of $122 million to Russia to ensure that the modification work on aircraft carrier Gorshkov, also known as Vikramaditya, continues till a settlement on the final price is reached.

Chavez to visit Russia, Belarus, Libya in September - "I should be visiting Russia, Belarus and Libya within a month," Chavez said during a political event. "This trip has been planned since the beginning of the year, but now we have much weightier reasons to step up cooperation with these countries."

Russians revealed in secret talks with Crystallex to resolve Las Cristinas gold mine dilemma in Venezuela before cash runs out completely!

Russia Set To Modernize Libya's Soviet-Era Tanks - Russia and Libya have signed a contract to overhaul at least 145 T-72 Russian-made battle tanks in service with the Libyan Army, a senior government official said on Monday.

Georgia officially withdraws from CIS Moscow warns Georgia over consequences of its defection from CIS - Moscow

warns Georgia over the consequences, which may follow to its defection from the Commonwealth of Independent States, an international organization formed after the collapse of the Soviet Union. Russian Foreign Ministry has released a special statement, which says that the act of defection will inflict damage on the ordinary citizens of Georgia.

Georgia waves goodbye to the CIS - According to CIS regulations, the legal action to leave the organization takes a year. Therefore, as confirmed by representatives of both Georgia and the CIS, the country’s membership will end on the 18th of August 2009.

Russia to Build Berlin-Style Wall in Abkhazia, Georgia Says Russia says Arctic Sea was hijacked, suspects arrested Russia detains ship 'hijackers' - Eight people have been arrested for hijacking the

cargo ship Arctic Sea, Russia's defence minister says. Russian Navy Questions Sailors After Missing Freighter Is Found Mystery deepens as Russia maintains radio silence on Arctic Sea Putin is set to open Russia's air show - Analysts expect few major deals to be

signed during the weeklong show held at a formerly secret military airfield outside Moscow. Russia is using the event to showcase its huge but aging aerospace indsutry.

Russian PM Putin to attend MAKS-2009 air show - Over 711 companies, including 465 Russian firms, will participate in the biennial MAKS air show outside Moscow on August 18-23.

Putin to attend MAKS 2009, to hold meeting on aircraft building - Russian Prime Minister Vladimir Putin on Tuesday will visit Zhukovsky outside Moscow where he will hold a meeting on issues of the national aircraft building industry development and will visit the MAKS 2009 international aerospace show that is held for the 9th time.

MAKS 2009 about to kick off - This year the show will be opened with a minutes silence after a midair tragedy, involving two SU-27 fighter jets, over the weekend. The “Russian Knights” aerobatics team squadron leader Igor Tkachenko was

killed in the collision, and the team will not be performing its routine at this years show.

Antonov Design Bureau to present new stages of An-70, An-124, An-124, An-148 programs realized jointly with Russia

VEB, Ilyushin Finance seal deal on plane construction financing Killed Pilot Called Su-27 Unsafe: “The planes that the Air Force sent us … could

not be used by the combat forces,” Tkachenko told the defense journal Independent Military Review on June 3, 2005. “I’ve flown the aircraft and would not put another pilot behind the wheel. It’s not safe.”

With Many Foreign Parts, Sukhoi Jet Doesn't Make State Fleet - The Rossiya Special Flights Squadron, a state carrier responsible for flying top Kremlin and government officials, won't include the new Sukhoi Superjet 100 in its fleet because the jet uses too many foreign parts.

Shoigu confirms hydraulic impact causes HPP accident - Russian Emergency Situations Minister Sergei Shoigu has again confirmed that a hydraulic impact caused the Monday morning accident at the Sayano-Shushenskaya hydropower plant. “The main version of the emergency is a hydraulic impact, but it is necessary to find out what caused the hydraulic impact,” he said.

Sixty-four missing in Russian dam disaster likely dead-owner RusHydro to work Sayano-Shushenskaya repair costs into 2010 tariff request The losses of RusHydro HYDRO.MM, the owner of the Sayano-Shushinskay

plant, could exceed 27 million roubles. It could take up to four years to restore turbines damaged on Monday in an

accident at the Sayano-Shushinskaya hydro-power station in Siberia, according to some experts.

RusHydro: Too Big to Fail, Four years to recover - One third of RusHydro's total capacity was shut down this morning due to a huge accident at the Sayano-Shushenskaya HPP. Interfax reports that units 2, 6 and 7 (30% of the HPP's capacity) were destroyed and it will take up to two years to return them to operation.

Russian hydro plant accident kills 12, 64 missing Death toll in hydropower plant accident grows to 12 Version of Sayano-Shushenskaya HPP terror act unconfirmed Blast in south Russia's Dagestan injures four - "An unidentified explosive device

went off at 10:05 local time (06:05 GMT) not far from the market in Kizilyurt [a town west of the republic's capital Makhachkala]. The blast went off when a police patrol was passing by. Four people, including two police officers, were injured," a ministry official said.

38 injured in Nazran blast are at Ingush Clinical Hospital Plane with 9 victims of terrorist act in Nazran lands in Moscow FACTBOX-Key facts about Russia's region of Ingushetia Ingush Police Got Tip About Deadly Blast - Ingush police received a tip Friday

that insurgents were planning to stage a suicide bombing with a GAZelle minivan. Truck bomb signals trouble on Russia’s southern flank - A week of regional

violence climaxed Monday in Ingushetia when a suicide bomber blew a hole in a heavily fortified police headquarters, killing at least 20.

Activists, Reporters Leaving Chechnya - Human rights activists and journalists are leaving Chechnya after a series of murders, saying the danger level in the region has reached the highest level.

Islamologist: Terrorists in the North Caucasus are trying to demonstrate that they wield the real power in the region

From Byzantium To Grozny -- Russia's U-Turn Toward Zakayev Welcome Back to Arms - Summer is the traditional fighting season in the North

Caucasus, but this year has been particularly bloody. Chechen separatism has been replaced by an increasingly vicious Islamist insurgency that has struck in republics across the region. The security services like to point to foreign fighters, but most strategists acknowledge that the deciding factor is local: a generation of young men brought up to war, with no employment prospects and a grudge against the brutality of federal forces.

Up close but detached - As president, Vladimir Putin occasionally had an op-ed published in foreign newspapers, putting forth the Kremlin's position on various international issues.

There is no need for Kremlin in this hypothesis or why DDOS is the new poetry Russia’s botched policy in its own backyard - Relations between Russia and

Ukraine have always been difficult. Since Ukraine’s Orange revolution in late 2004 they have been dismal. Conflicts have involved gas, agricultural trade, the Russian naval base in the Crimea, the war in Georgia and Ukraine’s interest in Nato. Even so, politicians from the two countries rarely meet.

Mikhalkov Directs Himself Back To Top Of Russian Film Industry - At the center of the fray is the 63-year-old Mikhalkov -- once a beloved Soviet film actor and now one of Russia's most famous directors, whose close Kremlin ties are a reminder that culture and politics remain deeply entwined in post-Soviet Russia.

Less Russians move abroad - The Russian Migration Service has registered a sharp decline in the number of Russians moving abroad. At the same time, the number of Russians resettling inside Russia is increasing.

National Economic Trends Russia’s industrial output goes down by 14% in January-July Slowdown in Industrial Output Eases - Output decreased an annual 10.8 percent,

falling for the ninth consecutive month, compared with a drop of 12.1 percent in June.

Russian unemployment still falling - It is not exactly good news, but Russia's macroeconomic results continue to improve slowly. In the last bit of good news the Healthcare and Social Development Ministry said the number of officially unemployed was down by 0.4% in the week to August 12, reports Prime Tass.

Russia’s Ruble Climbs Against Dollar, Euro as Oil Price Rises Ruble Takes Biggest Hit Since Early July China and Russia decreased investments into American bonds Russian grain harvest 10m tons below last year's level - Russian farmers had

already brought in 53.8m tons of grain as of August 17, which is 10m tons down on last year's level, reports Interfax citing the Agriculture Ministry.

Business, Energy or Environmental regulations or discussions Anti-Monopoly Service Wants Unitary Enterprises Eliminated - The Federal

Anti-Monopoly Service has proposed eliminating all state and municipal unitary enterprises that aren’t involved in strategic sectors, saying they stifle competition and are used to misappropriate budget funds.

Evraz Group, Lukoil, OGK6, Rosneft: Russian Equities Preview VTB shares likely to be offered to market at 4.8 kopecks Shares in Russia VTB rise after report on valuation The state-owned bank VEB has held 8.75 percent of Surgutneftegas, 1.96 percent

of Gazprom and 1.42 percent of Rosneft by the end of the first quarter Banks Stepping Up Debt Collection - Banks are three times more active in going

after overdue corporate loans today than in March, when President Dmitry Medvedev castigated lenders who resist rescheduling payments for “corporate selfishness.”

Russia's diamond Alrosa sees demand up Alrosa Appoints Igor Kulichik As Vp For Financial Policy KazakhGold BoD and management reshuffle: Polyus Gold taking Troika, Russia POWER CONCERNS IN SIBERIA

o Electricity prices on balancing market in Siberia up 400% after Sayano-Shushenskaya HPP accident

o RUSAL considering production cuts on power concerns - The group is looking to help reduce electricity consumption ahead of winter after an Accident at a Hydroelectric power station that feeds some of the firms smelters

o Evraz energy supply situation due to accident at Sayano-Shushenksaya GES

Evraz Sells Stake in Miner - Evraz Group sold its stake in the Cape Lambert Iron Ore project in Western Australia, the Australian company said in a statement Monday

Russia Severstal to issue 45 bln rbls in 5 bonds Vekselberg Company Orders Solar Modules Worth $277M AvtoVAZ extends losses - Although sales grew 37%, financial performance

deteriorated further: AvtoVAZ once again posted losses even on the gross profit level, with a negative gross profit margin, widening to a negative 5%.

AFI Development reports $201m second quarter loss

Activity in the Oil and Gas sector (including regulatory) Russia ups oil export 0.2% to 122.9 mln tonnes in H1 mths – Rosstat Russia lifts oil export duty - Russia will raise its oil export duty by 7.5% to $238.6

a tonne from 1 September, reflecting an increase in crude prices over the last month.

Medvedev Wants Sea Developed - President Dmitry Medvedev said Monday that Russian companies should develop offshore oil production in the Caspian Sea and build more ports and upgrade shipyards on the shore as a way of boosting the regional economy.

LUKoil posts 3.4% rise in oil output, 12.4% drop in gas production Korchagin SBM installed - Lukoil said the single point mooring (SBM) system at

Yuri Korchagin field has been installed in the Russian sector of the Caspian Sea. Lukoil takes delivery of vessel for Caspian work TNK-BP Drilled the First Five-Leg Wel on Russkoye Russia's Slavneft posts 9.2% profit drop in 2008 New Russian shipyard for tankers and oil rigs - Russia’s Vneshekonombank

confirms that it is ready to grant up to 28 billion RUB on the construction of a new shipyard in Primorsk on the Baltic Sea coast.

SNC-Lavalin buys 48 percent stake in Russian firm - The Moscow-based company, with about 900 employees, has designed more than 40 refineries and industrial projects in Russia Europe and the Middle East.

Gazprom Gazprom’s overdue debts - Gazprom’s overdue debts to supply companies and

contractors in the first half of 2009 increased by 64 percent to a total of 78.2 billion RUB, newspaper Vedomosti reports.

Gazprom retakes its positions in EU - Russian gas giant Gazprom is consolidating its positions on the way to Central Europe, the French Le Figaro newspaper reports.

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Full Text Articles

Basic Political Developments

Peres Departs for Russiahttp://www.israelnationalnews.com/News/Flash.aspx/169654

Reported: 08:45 AM - Aug/18/09

(IsraelNN.com) President Shimon Peres will depart Tuesday for a state visit to Russia. He will meet with his Russian counterpart, Dmitry Medvedev.

President Peres’ bureau said in a statement that the two will deliberate in strengthening strategic relations between Israel and Russia, Moscow’s involvement in the political process, and Iran’s nuclear program. The one-day visit will take place at Medvedev’s summer home in Sochi.

Medvedev and Peres to meet on Middle East tensions http://www.gulfnews.com/world/Russia/10341283.htmlAgenciesPublished: August 18, 2009, 09:33Moscow: Russian President Dmitry Medvedev is holding talks on the stalled Middle East peace talks with Israeli President Shimon Peres on Tuesday.

The meeting will also cover Iran’s nuclear program and will focus on plans for Moscow to host an international Middle East peace conference.

"The situation in the Middle East, which raises serious concern in Russia, will be at the centre of attention in the meeting," the Kremlin said ahead of the meeting in Sochi.

Russia is helping Iran build its first nuclear power station while Israel and the United States fear Tehran secretly intends to build atomic weapons.

Russian, Israeli presidents to discuss Mideast in Sochihttp://en.rian.ru/russia/20090817/155836148.html

MOSCOW, August 17 (RIA Novosti) - The Russian and Israeli presidents will meet in the Russian Black Sea resort city of Sochi on Tuesday to discuss bilateral ties and the situation in the Middle East, a Kremlin source said.

The meeting between Dmitry Medvedev and Shimon Peres, who will be visiting Russia for the first time since he assumed office in July 2007, will be informal, the official told RIA Novosti.

"The talks with the Israeli president will be centered on the situation in the Middle East, which is of serious concern to Russia," he said.

The discussions will focus on Israeli-Palestinian peace negotiations and preparations for an international conference on the Middle East due to be held in Moscow by the end of 2009.

Russia is involved in the Mideast peace process as a member of the Quartet of mediators, along with the United States, the United Nations, and the European Union.

The sides will also discuss the development of bilateral relations, including cooperation in advanced technology, and the prospects for adopting new agreements on investment protection.

Russia, Israel set to discuss Mideast peace, Iranhttp://www.google.com/hostednews/ap/article/ALeqM5hb8njivapk4b5WCCzmAyX2WYB2yQD9A55HS00

(AP) – 32 minutes ago

MOSCOW — Russia's President Dmitry Medvedev is set to host Israeli counterpart Shimon Peres for talks expected to focus on the Middle East and the Iranian nuclear standoff.

Russia aspires to host an international conference to discuss the Middle East peace process, and Medvedev and Peres are expected to discuss the issue during Tuesday's talks in the Russian Black Sea resort of Sochi.

Israel also wants Russia, which has close ties with Iran, to increase pressure on Tehran over its nuclear program. Iran, whose president has expressed hatred of Israel, maintains its nuclear programs are only designed to provide electricity.

Israel, the United States and other nations fear the effort is aimed at acquiring nuclear weapons.

Dmitry Medvedev suggests again establishment of Caspian Economic Cooperation Organization

http://en.apa.az/news.php?id=106322

[ 18 Aug 2009 11:30 ] Baku. Viktoria Dementieva – APA. Russian President Dmitry Medvedev suggested again establishment of the Caspian Economic Cooperation Organization. APA

reports quoting ITAR-TASS that Russian President said this at the conference on August 17.

Medvedev noted that establishment of this organization would contribute to expanding the economic relations in the region. He mentioned that the issue was discussed at the intergovernmental economic conference in Astrakhan last autumn.“Though no related decisions were passed, much interest was shown in the idea. I think this work should be continued,” he said.

The intergovernmental economic conference was held on the level of Deputy Prime Ministers in Astrakhan on October 3-4, 2008. Though establishment of the Caspian Economic Cooperation Organization was discussed, no recommendations were made to the heads of littoral states. Firstly Russia and Iran and then Kazakhstan and Azerbaijan supported the idea of establishing the organization. To bring the positions closer, Russia offered to hold a second conference in Astrakhan. Other littoral states have not supported the idea yet.

Prague decides to expel two Russian diplomats from Czech Republic, Moscow names it an unfriendly act http://www.axisglobe.com/article.asp?article=188617.08.2009Russia considers the decision on expulsion of two Russian diplomats from Czech Republic an unfriendly act, which will not promote development of normal relations between the two countries, news agency ITAR-TASS reports, referring to a source in the Russian Ministry of Foreign Affairs. Today it became known, that the Czech Republic is

to expel two Russian diplomats from the country as they have been suspected of espionage.According to the online edition of Mlada fronta Dnes, the deputy military attache of the Russian embassy in Prague will leave the Czech Republic, another diplomat has been recommended not to return from holiday. The Czech Ministry of Foreign Affairs does not make comments on this information, Russian news agency notes. Czech Prime Minister Jan Fischer also did not want to comment on the news, CTK says. In his turn, Russian Foreign Minister Sergei Lavrov described the decision of the Czech Republic as "another provocation." He did not say whether Russia planned to take immediate reciprocal measures, RIA Novosti adds.Czech Military Intelligence reportedly received information that the two diplomats were apparently working for the Russian secret services,  online paper iDnes writes. "The ministry does not comment on such sort of information, whether this has or has not taken place," Czech Foreign Ministry spokesman Milan Rape told iDnes and CTK. The Czech military secret service also did not wish to explain details to the press, CTK says. "Military Intelligence defends the interests of the Czech Republic in accordance with the law. Information on its operational activities are not published for natural reasons," news agency cites its spokesman Andrej Cirtek. Russian Foreign Minister Lavrov who is in the Russian city of Astrakhan, together with Russian President Dmitry Medvedev, named the Czech decision „a further provocation”, answering the question of journalists. The spokesman of the Russian embassy in Prague, Vladimir Fedorov, initially said that he "does not know about anything like that" and that "it is nonsense".According to Mladá fronta Dnes about 200 people have been working for the Russian Embassy in Prague and the consulates in Brno and Karlovy Vary. Czech secret services assume that almost two thirds of them are spies, CTK notes. Many more Russians have been working in various associations or agencies. A dozen Russian journalists is officially accredited with the Czech Ministry of Foreign Affairs. One can only guess how many of these people are working for Russian intelligence, iDnes points out.In its last annual report for 2007, the Security Information Service (BIS) was drawing attention to the still increasing activity of Russian spies in the Czech Republic. According to the BIS, Russian secret services have been trying to influence public opinion and causing resistance against building of the US radar at Brdy. Russian spies were said as having interest of sensitive information on the Czech economy and contacts with politicians and state officials. "BIS concludes that the Russian spy activity in the Czech Republic has currently reached an extremely high level and intensity," says the report. The BIS for the first time clearly has said that the Russian secret services in the Czech Republic have been carrying out the so-called active measures, not only watching the situation in the Czech Republic, but actively trying to influence it. The reality is even more serious, according to experts, iDnes adds. The findings of the BIS have been confirmed in a similar report of the military counterintelligence, CTK notes.

Italy to Cut Dependence on Russian Gas, Scajola Tells La Stampahttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=av9SgOpewUX8

By Armorel Kenna

Aug. 18 (Bloomberg) -- Italy will reduce its dependence on Russian gas and won’t “ever” be dependent on one country for the fuel, Industry Minister Claudio Scajola told daily La Stampa in an interview.

Italy wants to import more gas from Algeria than from Russia and in 2010 will increase imports from Libya, Scajola said, according to the newspaper. Italy will also import 10 percent of the country’s gas consumption through a new terminal at Rovigo, Scajola said in the report.

The Italian government’s objective for 2020 is to have 25 percent of national energy consumption supplied by renewable energy, 25 percent from nuclear energy and the rest from “traditional sources,” Scajola told La Stampa.

Scajola said he’ll be in Washington at the end of September to sign an Italian, U.S. protocol for research and development in the nuclear industry, according to the daily. U.S. companies will have the opportunity to compete for the construction of as many as 10 plants that Italy aims to build in the next 20 years.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

Last Updated: August 18, 2009 01:58 EDT

Deal agreed for Russian to buy German shipyardhttp://www.businessweek.com/ap/financialnews/D9A4PND01.htm

August 17, 2009, 2:04PM ET

A former Russian energy minister is poised to take over an ailing shipbuilder in northeastern Germany, after state authorities and creditors agreed Monday with Igor Yusufov on a euro40 billion ($56 billion) deal.

The Wadan shipyard's insolvency administrator, Marc Odebrecht, said that all parties involved had agreed on the terms of a deal that still needs to be signed. The takeover foresees Yusufov founding a new company called Nordic Yards, which will then take over the Wadan production. Some 1,600 of 2,500 jobs at the yards, located in Wismar and Rostock, are to be kept.

German Chancellor Angela Merkel discussed the terms of the takeover last week in a meeting with Russian President Dmitry Medvedev and expressed confidence in the deal.

Mecklenburg-Western Pomerania governor Erwin Sellering said the chancellor's vote of confidence had been important to the state, which is providing more than euro35 billion in credit as part of the deal.

Yusufov, 53, also sits on the management board of Russian energy giant Gazprom.

Nordic Yards is to produce specialized ships, such as ice breakers and tankers for liquefied natural gas, its representative said in a statement.

Russia, Mongolia hold joint military exerciseshttp://en.rian.ru/mlitary_news/20090818/155839929.html

CHITA (Siberia), August 18 (RIA Novosti) - Russia and Mongolia are holding joint tactical exercises to practice interoperability during peacekeeping operations, the press service for Russia's Siberian Military District has said.

The drills, dubbed Darkhan-2, are being held in Mongolia and involve a Russian engineer maintenance battalion numbering about 200 military personnel and 90 vehicles from the Siberian Military District, as well as a number of Mongolian military units.

"Col. Gen. Alexander Postnikov [commander of the Siberian Military District] and a group of staff officers arrived in Mongolia to inspect the deployment of the Russian troops participating in the exercise," the press service said.

The Darkhan-2 exercise started on Monday and will continue until September 15.

Last year, the two countries held a similar exercise, Darkhan-1, in the central and northern parts of Mongolia. The drills involved 250 Mongolian and 450 Russian troops, including a repair battalion from the Siberian Military District.

DIMDEX promotion in Russia http://www.thepeninsulaqatar.com/Display_news.asp?section=Local_News&month=August2009&file=Local_News200908172743.xml

Web posted at: 8/17/2009 2:7:43Source ::: THE PENINSULA DOHA: An official DIMDEX 2010 delegation has recently returned from a successful visit to the International Maritime Defence Show (IMDS) in St. Petersburg, Russia to promote DIMDEX 2010 to more than 300 leading Russian and international maritime exhibitors. The DIMDEX 2010 delegation, headed by Chairman and Commander of the Qatar Emiri Naval Forces Staff Brigadier (Sea) Mohammed bin Nasser M Al Mohannadi, met with senior military commanders including Vyacheslav Dzirkaln, Deputy Director of the Russian Federal Service for Military and Technical Cooperation. Among topics discussed was the likelihood of including DIMDEX 2010 on the list of approved international maritime events for Russian companies’ participation. Held under the auspices of the Emir H H Sheikh Hamad bin Khalifa Al Thani and the Heir Apparent H H Sheikh Tamim bin Hamad Al Thani DIMDEX 2010 is the Middle East and North Africa’s largest exhibition and conference dedicated to the Maritime

Defence industry. Supported by the Qatar Armed Forces, DIMDEX 2010 is again hosted by Qatar Emiri Naval Forces in Doha from March 29 to 31. Underlining Qatar’s growing reputation in global maritime defence circles, the DIMDEX 2010/Qatar Emiri Naval Forces delegation received a prestigious honor when they were invited to attend the IMDS VIP Delegation lunch hosted by Admiral Vladimir Vysotsky, Chief Commander of the Russian Navy. “DIMDEX continues to build successful alliances and close business relationships across the world, and participating at IMDS allows us to continue our dialogue with key stakeholders,” said Staff Brigadier Al-Mohannadi. “Our objective is to work closely with military forces and maritime corporations to establish DIMDEX as a must-attend event on the international defence and security calendar.” The delegation met prominent international maritime manufacturers, in particular Rosoboronexport, Rostechnologies and other leading Russian defence companies who expressed interest in visiting Doha as part of the DIMDEX 2010 Russian Pavilion. “Visiting IMDS gave us the opportunity to influence the major industry players that DIMDEX 2010 is a crucial event in the international maritime defence calendar. Over the next 10 years more than 350 military vessels will be procured as 19 MENA countries spend $17bn on maritime defence and security technology in a region that traditionally focuses on smaller vessels for coastal defence and EEZ protection,” said Staff Brig. Al Mohannadi.

India releases $122 million for Gorshkov modificationhttp://www.thaindian.com/newsportal/business/india-releases-122-million-for-gorshkov-modification_100233278.html

August 16th, 2009 - 5:18 pm ICT by IANS By Gulshan LuthraNew Delhi, Aug 16 (IANS)

India has cleared an installment of $122 million to Russia to ensure that the modification work on aircraft carrier Gorshkov, also known as Vikramaditya, continues till a settlement on the final price is reached.

The payment was sanctioned earlier this month by the government following demands by Rosoboronexport, the sole Russian agency designated for importing or exporting defence equipment, according to India Strategic defence magazine.

India had paid around $600 million initially after an agreement between the two countries in 2004, according to which the old aircraft carrier was gifted as free but India was to pay $974 million to modify and upgrade it in accordance with Indian Navy’s specifications.

In 2007, however, the Russians said they had made a mistake in their calculations to repair and modify Gorshkov, and demanded another $1.2 billion. Recently, they have added still another $700 million saying that modifications, and then sea trials, would be more expensive than as considered by them earlier.

The total demand by the Russians now touches $2.9 billion, instead of $974 million, or, approximately one billion as originally contracted.

The delivery of the aircraft carrier has also been pushed from 2008 to 2012-13, although repair work on it is continuing without break at the Sevmash shipyard in northern Russia on its Arctic coast.

The Russian government had extended $250 million to the shipyard in 2008, and now the installment of $122 million being paid by India is also to ensure that there is no break in the repair work, India Strategic quoted sources as saying.

Indian naval officials have been stationed at Sevmash for the past several years to monitor the day-to-day activity and to ensure that the repair and modifications are in line with the Naval Staff Qualitative Requirements (NSQRs), the dispute over the additional monetary demands notwithstanding.

India has naturally been reluctant to meet the post-contract Russian demands, and even the Comptroller General of India (CGI) has described the deal as a mess. But the Navy needs Gorshkov as early as possible as its only existing aircraft carrier, Viraat, is on life extension and undergoing a refit to serve for another few years.

It takes nearly 8 to 10 years to acquire an aircraft carrier. Procedures within the Indian bureaucratic system require two to three years, and then a company which is ordered to build it, should take another 5 to 8 years.

Although the Indian Navy is already building one of its two aircraft carriers in design consultancy with Italy’s Fincantieri, it has no choice but to go in for Gorshkov in line with its sanctioned three-carrier planning. Ideally though, a country the size of India with 7,500 km of coastline should have at least five aircraft carriers.

A Russian defence delegation was in New Delhi in July but it refused to negotiate lower than its demand for $2.9 billion.

Discussions though will continue.

The government’s Cabinet Committee on Security (CCS) is reported to have asked the Ministry of Defence to continue the negotiations but has not acceded to the two revised Russian demands.

It may be noted that the Gorshkov deal also involves a related $740 million contract for 16 Mig 29K aircraft. That deal is going smoothly and the first four of these aircraft are likely to arrive at INS Hansa, the Indian Navy training facility in Goa, by year-end.

Ten pilots, initially trained by the US Navy for carrier landing at its Naval Air Station, Pensacola training facility, are now in Russia training on the Mig 29Ks.

Four of these Mig 29Ks are twin-seaters for training and the remaining 12 for routine operational flying.

The Navy will continue to operate the Mig 29Ks from its ground stations as all 16 of them are likely to be in India before the arrival of Gorshkov.

Chavez to visit Russia, Belarus, Libya in Septemberhttp://www.google.com/hostednews/afp/article/ALeqM5guMgn4O-lxCBp6_Z1iQw6GxRwf_g

(AFP) – 2 days ago

CARACAS — Venezuelan President Hugo Chavez confirmed his plans to visit Russia, Belarus and Libya in September to bolster cooperation with these three countries.

"I should be visiting Russia, Belarus and Libya within a month," Chavez said during a political event. "This trip has been planned since the beginning of the year, but now we have much weightier reasons to step up cooperation with these countries."

Chavez has expressed serious concern at the decision of neighboring Colombia to allow the US military use of seven bases on its territory, saying it could lead to war in the region.

The Venezuelan leader, who just paid a quick visit to Cuba and met with ailing Cuban leader Fidel Castro, suggested in his speech the Colombian-US accord specifically targeted Venezuela and its "Bolivarian revolution."

"Fidel told me, 'Don't worry about us, their real target is you.'" And Fidel is right," Chavez said. "The target is the Bolivarian revolution."

Russians revealed in secret talks with Crystallex to resolve Las Cristinas gold mine dilemma in Venezuela before cash runs out completely!

http://www.vheadline.com/readnews.asp?id=83018

VHeadline Venezuela News reports: Confidential sources close to Crystallex de Venezuela C.A. -- speaking exclusively to VHeadline.com -- have revealed that the Toronto-based transnational mining corporation is in urgent talks with the Russians aimed at a resolution to the company's Las Cristinas gold mine dilemma in Venezuela before its available cash runs out completely next month.  Negotiations with the Russians have been held under conditions of utmost secrecy but we can reveal that Crystallex chairman & CEO Robert Fung has been talking with key executives of Russian Gazprom at various locations in France and (we understand) Moscow during an unlikely "vacation" in Northern Europe.

Crystallex' urgency to strike a deal is also exacerbated by the fact that even by their own admissions they only have cash to see them (barely) into Q4 2009 and with at least two legal cases pending, lawyers' fees are astronomical ... said to be in the order of $2 million a month and running on empty.It had early been thought that Venezuela's National Mining Corporation would simply take over both Las Cristinas and adjacent Las Brisas del Cuyuni in one fell swoop -- and while this is still possible, it appears that Fung's last ditch efforts are designed to get rid of the Las Cristinas contract with the Venezuelan government and into the hands of an entity which is more acceptable to the Chavez government in Caracas.The Venezuelan President is known to be seriously at odds with the management structure at Crystallex' Venezuelan subsidiary, Crystallex de Venezuela, because of links to senior ex-diplomat Enrique Tejera Paris.  Although the elderly ETP had resigned from Crystallex International's board and chairmanship of the Venezuelan subsidiary, his family ties to Crystallex' lawyers and the subsidiary's management team are too close for comfort for Chavez who believes that ETP had been ready to take on the presidency prior to the April 2002 coup d'etat which saw Dictator for a Day Pedro Carmona Estanga seize (temporary) control because ETP's limousine was stuck in traffic and could not reach the Presidential Palace in time to take advantage of fast-moving events in the coup.In the continuing drama, the Agapov Group-owned Rusoro Mining (based in Vancouver with its own Venezuelan subsidiary in Caracas) appears to have been thwarted in its behind-the-scenes efforts to snatch Las Cristinas and Las Brisas del Cuyuni, following protracted secret negotiations with Crystallex and a massively rejected takeover bid for Gold Reserve, but it still remains as a strategic partner with the Venezuelan Guayana Corporation (CVG) gold-mining subsidiary, CVG-Minerven, and a major player in Venezuela's gold-mining future.Russian Gazprom is already involved with Petroleos de Venezuela (PDVSA) in a massive oil exploration and development joint venture and industry experts say any move to branch into Venezuela's gold mining industry reflects Gazprom's Moscow managements aim to diversify, especially when Venezuela's gold reserves can be secured against serious investments that are required not just in Venezuela's gold industry but across a broad spectrum of heavy industries currently controlled by the Venezuelan Executive.

Russia Set To Modernize Libya's Soviet-Era Tankshttp://www.spacewar.com/reports/Russia_Set_To_Modernize_Libya_Soviet_Era_Tanks_999.html

by Staff WritersMoscow, Russia (RIA Novosti) Aug 18, 2009Russia and Libya have signed a contract to overhaul at least 145 T-72 Russian-made battle tanks in service with the Libyan Army, a senior government official said on Monday.

Moscow and Tripoli have been involved in talks on the modernization of the T-72 tanks since 2006 as part of renewed efforts to revive bilateral military-technical cooperation.

"Work has been conducted in the Libyan direction, and we have already made headway after signing a number of contracts with the country over the past year, including on the modernization of T-72 tanks," Konstantin Biryulin, deputy head of the Federal Service for Military-Technical Cooperation, said in an interview with RIA Novosti.

The official said talks on Russian arms deliveries to Libya are underway, but refused to disclose any details of the future contracts due to their confidential nature.

"I do not want to help our competitors in their work [on the Libyan arms market]," Biryulin said.

Russia has encountered tough competition with Western nations in arms sales to Tripoli since the UN lifted sanctions against Libya in 2003, when the Libyan president announced he would halt the country's nuclear weapons program and accepted responsibility for the 1998 terrorist bombing over Lockerbie in Scotland, agreeing to pay compensation to the victims' families.

Libya was one of the largest buyers of Russian-made armaments in the second half of the 20th century. Tripoli has acquired from the Soviet Union more than 2,000 tanks, 2,000 armored infantry fighting vehicles and armored personnel carriers, about 450 self-propelled artillery pieces, as well as a number of combat aircraft and large quantities of small arms since the beginning of the 1970s.

Konstantin Makiyenko, deputy director of the Russian Center for Strategic and Technological Analysis, said last year that future Russian arms contracts with Libya could be worth up to $4 billion, and include the total overhaul of Libya's obsolete arsenal of tanks.

"In particular, over 100 T-72s require an urgent overhaul, and the same refers to the T-62, T-55 and T-54 tanks, which constitute the backbone of the Libyan Army," the analyst said.

Georgia officially withdraws from CIShttp://en.rian.ru/exsoviet/20090818/155839605.html

TBILISI, August 18 (RIA Novosti) - Georgia officially ended its membership of the Commonwealth of Independent States (CIS) on Tuesday.

Tbilisi announced its desire to quit the Russian-dominated organization after a five-day war with Russia over the Georgian breakaway republic of South Ossetia last August.

In line with the CIS Charter, formal withdrawal comes into effect 12 months after the CIS executive committee is informed of the decision.

Georgian Deputy Foreign Minister David Jalaghania said on Monday the Georgian authorities are ready to continue cooperating with the members of the post Soviet alliance provided that its territorial integrity is respected.

In February 2006, Georgia officially withdrew from the CIS Council of Defense Ministers, saying that the country was bidding to join NATO and could not be part of two military alliances simultaneously.

The CIS comprises Russia, Belarus, Kazakhstan, Kyrgyzstan, Azerbaijan, Armenia, Moldova, Tajikistan and Uzbekistan. Ukraine is a founding and participating country but technically not a member state. Turkmenistan holds associate status.

Moscow warns Georgia over consequences of its defection from CIS

http://www.geotimes.ge/index.php?m=home&newsid=17890

Rustavi2 2009.08.18 12:06

Moscow warns Georgia over the consequences, which may follow to its defection from the Commonwealth of Independent States, an international organization formed after the collapse of the Soviet Union. Russian Foreign Ministry has released a special statement, which says that the act of defection will inflict damage on the ordinary citizens of Georgia.`Dramatizing of the events is not really necessary. Each sovereign state, Georgia among them, has a right to decide its membership in any organization,` the statement says. Georgia`s membership of the CIS has been officially finished today. The decision was made a year ago by Georgian president but the required procedures took whole year to complete the defection procedures.The statement also says the defection of the country from the CIS will only affect the interests of ordinary citizens of Georgia.

Georgia waves goodbye to the CIShttp://www.russiatoday.ru/Politics/2009-08-18/georgia-waves-goodbye-cis.html/print

18 August, 2009, 06:15

Georgia has finalized plans to withdraw from the Commonwealth of Independent States, a regional alliance of former Soviet republics.

Tbilisi initiated the withdrawal on the 14th of August 2008 when the country’s parliament unanimously supported president Saakashvili’s motion to do so. The decision came immediately after the conflict in South Ossetia.

According to CIS regulations, the legal action to leave the organization takes a year. Therefore, as confirmed by representatives of both Georgia and the CIS, the country’s membership will end on the 18th of August 2009.

The CIS executive committee has, however, pointed out that Georgia has expressed a desire to continue to participate in agreements ratified over the course of its membership.

Russia’s Foreign Ministry noted that the situation should be taken at face value:

“The events should not be dramatized, each sovereign state has the right to decide on its participation in any organization. It is the sovereign right of every state,” a ministry spokesperson told TASS.

Nevertheless, the ministry is concerned that Georgia’s withdrawal may have a “negative effect on the country’s citizens”.

Leonid Slutsky, the deputy chairman of the Russian Duma committee on foreign affairs, agrees with this view:

“Tbilisi will have to re-establish the agreements which were drawn up in the CIS framework, including visa-free travel as well as education and labour migration. In the current situation this could be problematic,” he said.

“However, nothing dramatic will happen, especially for the Commonwealth,” he added.

Russia to Build Berlin-Style Wall in Abkhazia, Georgia Says

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEjRH.MD3Zg0

By Helena Bedwell

Aug. 17 (Bloomberg) -- Russia plans to build a “Berlin- style” wall along the de facto border between Georgia and its separatist region of Abkhazia, Georgia’s Foreign Ministry said.

“This once again proves that Russia’s real intention is to turn Abkhazia into a military outpost and to isolate the region from the rest of the world,” Georgian Deputy Foreign Minister Davit Jalaghania told reporters in the capital Tbilisi today.

Abkhaz Foreign Minister Sergei Shamba said planned improvements of border defenses “may involving building a wall in some areas that are considered dangerous.” The Abkhaz government is still demarcating the border, which runs along the Inguri River, Shamba said by telephone from the regional capital Sukhumi.

Russia routed Georgia’s U.S.-trained army in a five-day war last August over the breakaway region of South Ossetia. Moscow later recognized Abkhazia and South Ossetia as sovereign states, a move condemned by the U.S. and many European countries. Russia has agreed to defend both regions’ borders.

Russia has deployed 1,700 soldiers in Abkhazia and will increase that number to 3,636 by the end of this year when renovations are completed at its military base in the region, Defense Minister Anatoly Serdyukov said on Aug. 12. The number of Russian military personnel stationed in South Ossetia is slightly smaller, Serdyukov said.

To contact the reporter on this story: Helena Bedwell in Tbilisi at hbedwell@bloomberg.net

Last Updated: August 17, 2009 05:51 EDT

Russia says Arctic Sea was hijacked, suspects arrestedhttp://news.smh.com.au/breaking-news-world/russia-says-arctic-sea-was-hijacked-suspects-arrested-20090818-eowy.html

August 18, 2009 - 5:54PM

The Arctic Sea cargo ship was hijacked on July 24 by pirates including Russian, Latvian and Estonian citizens and suspects have been arrested, Defence Minister Anatoly Serdyukov said Tuesday.

Russia detains ship 'hijackers' http://news.bbc.co.uk/2/hi/8206691.stm

Eight people have been arrested for hijacking the cargo ship Arctic Sea, Russia's defence minister says.

Anatoly Serdyukov said the group of suspects included Russian, Estonian and Latvian nationals.

The Finnish-owned Arctic Sea went off radar after passing through the English Channel in late July, but was found on Sunday night off Cape Verde.

Speculation swirled after the ship vanished, with suggestions of piracy, a mafia dispute or a commercial row.

Russian Navy Questions Sailors After Missing Freighter Is Foundhttp://www.bloomberg.com/apps/news?pid=20601116&sid=acf13UYxUZr8

By Peter S. Green and Lyubov Pronina

Aug. 18 (Bloomberg) -- The Russian navy was questioning the captain and crew of the Maltese-flagged freighter Arctic Sea after the ship, missing for three weeks, was found off the west coast of Africa.

The 15 Russian crewmembers were being held aboard the Ladny, a Russian warship that found the merchant vessel about 300 nautical miles off the Cape Verde islands, Russian Defense Minister Anatoly Serdyukov said yesterday.

Russian sailors searched the vessel for 12 hours, the state-owned RIA Novosti news agency reported yesterday. Serdyukov said the crew was well and that more details of its voyage would be released.

The crew “are being interrogated now in order to find out what happened,” Serdyukov said. He said the ship didn’t appear to be under armed guard when the navy found it.

The Arctic Sea was en route from Finland to Algeria with a cargo of timber valued at about 1.3 million euros ($1.8 million) and belonging to Europe’s largest papermaker, Stora Enso Oyj, according to Helsingin Sanomat, a Finnish newspaper.

Swedish police said July 30 that the ship’s Finnish owner reported the vessel was boarded on July 24 in Swedish waters by a group that claimed to be police officers, and allegedly tied up the crew, then fled in an inflatable speedboat, the Associated Press reported.

The owner, Helsinki-based Oy Solchart Management AB, received a ransom demand, Finnish police said on Aug. 15, before the ship was located.

International Mystery

The disappearance of the 98-meter (320-foot) cargo ship created an international mystery. After the alleged encounter with pirates, the ship continued through the North Sea and the English Channel to the Atlantic. Radio contact was lost when it was off the coast of Portugal, RIA Novosti said.

The Arctic Sea may have been attacked a second time off Portugal, Martin Selmayr, a spokesman for the European Commission, the 27-nation European Union’s executive arm in Brussels, said on Aug. 14.

Russian President Dmitry Medvedev ordered Serdyukov to conduct a thorough investigation of the incident and to inform “all interested parties,” including the media, of the results.

On Aug. 12, Medvedev ordered Serdyukov to take “all necessary steps” to find the ship and, if necessary, to free its crew. Russia used satellites and naval vessels, led by the Ladny, to search for the freighter.

The ship was scheduled to deliver its cargo to Bejaia, Algeria, on Aug. 4, the Sovfracht maritime news service reported.

To contact the reporters on this story: Peter S. Green in New York at psgreen@bloomberg.net; Lyubov Pronina in Astrakhan at lpronina@bloomberg.net

Last Updated: August 17, 2009 17:25 EDT

Mystery deepens as Russia maintains radio silence on Arctic Seahttp://news.asiaone.com/News/AsiaOne%2BNews/World/Story/A1Story20090818-161814.html

Tue, Aug 18, 2009AFP

MOSCOW, Russia - Mystery over the Arctic Sea cargo ship deepened Tuesday as Russia failed to provide promised details a day after locating the missing vessel in the ocean off Africa and taking its crew onboard a warship.

Authorities in the Cape Verde capital Praia said a Russian anti-submarine naval ship with the Arctic Sea crew onboard was heading for the island of Sal where a Russian plane was standing by to fly the group to Russia.

But in Russia itself, officials offered no further information on a range of questions surrounding the Arctic Sea intrigue, including on the whereabouts of the vessel itself, despite promises more information would be forthcoming.

In his announcement Monday that the 3,988-tonne Russian-owned ship and crew had been found, Russian Defence Minister Anatoly Serdyukov told President Dmitry Medvedev that details would be given "in the coming few hours."

"I think that we will be able to recount more details by the end of the day," Serdyukov told Medvedev during a meeting that was broadcast on Russian state television.

That was late afternoon Monday, Moscow time, already more than 16 hours, according to Serdyukov, after the Arctic Sea was located 300 miles (483 kilometres) from the Cape Verde archipelago in the Atlantic Ocean.

Serdyukov said he expected a debriefing of the crew aboard the submarine hunter Ladny to yield more information about the cargo ship, specifically "what happened to it, why communications with it were lost, why it changed course."

In response to Serdyukov's comments, Medvedev said: "Explain it, report to me and inform the media."

The Arctic Sea saga captured international attention soon after the Maltese-flagged ship left Finland on July 23 on its way to Algeria with a crew of 15 and a cargo of sawn timber estimated to be worth 1.16 million euros.

All contact with the ship however was lost shortly thereafter amid reports of multiple pirate hijackings, a zig-zagging itinerary and speculation that the vessel was carrying a secret, illicit cargo.

In an apparent effort to dispel the intrigue surrounding the ship's fate, Medvedev called for a full investigation of the Arctic Sea mystery and vowed that "all interested parties" would be informed on the results.

In a report on the finding of the vessel however, the liberal Russian daily Kommersant ran a sub-headline reading: "Interested Parties Have Agreed to Keep Silent About the Circumstances of the Ship Hijacking."

"Circumstances of the disappearance and the subsequent discovery of the cargo ship, along with information about what went on aboard the ship all this time, was not divulged yesterday by the interested parties," the paper noted.

Finnish authorities on Sunday dismissed reports that the Arctic Sea was bearing a cargo of nuclear material, saying the vessel underwent radiation tests in Finland before leaving port.

Putin is set to open Russia's air showhttp://news.yahoo.com/s/ap/20090818/ap_on_re_eu/eu_russia_air_show_1

ZHUKOVSKY, Russia – Russia's largest and most important air show is getting under way, overshadowed by a bad economy, a terrorist attack and a deadly air force crash.

Prime Minister Vladimir Putin is set to open the International Aviation and Space Show on Tuesday.

Analysts expect few major deals to be signed during the weeklong show held at a formerly secret military airfield outside Moscow. Russia is using the event to showcase its huge but aging aerospace indsutry.

The show's opening was marred by Sunday's collision of two air force jets, which killed the leader of the Air Force's elite aerobatic squadron, as well as a suicide bombing Monday in the North Caucasus that killed at least 20 people and wounded more than 130 others.

Russian PM Putin to attend MAKS-2009 air showhttp://en.rian.ru/russia/20090818/155840671.html

MOSCOW, August 18 (RIA Novosti) - Russian Prime Minister Vladimir Putin will visit on Tuesday the MAKS-2009 air show near Moscow and attend a meeting on the development of Russia's aircraft industry.

Over 711 companies, including 465 Russian firms, will participate in the biennial MAKS air show outside Moscow on August 18-23.

"The prime minister will watch the performance of the Russian and foreign aerobatics teams and visit the booths of leading aircraft manufacturers," the government press service said.

The meeting with aircraft industry officials will focus on the restructuring of the sphere, expansion of the range of models and exports of Russian-made aircraft.

According to the government sources, the financing of the aircraft industry has increased twenty-fold in the past five years. Despite the current economic crisis, the government allocated about 80 billion rubles ($2.5 billion) in 2009 for the development of the industry.

MAKS bills itself as "a demonstration of the advantages and development trends of Russian science and industry in such high-tech areas as aviation, space, missile engineering."

Overall, 1,449 exhibits will be on display, including 470 full-scale models.

The organizers said more than 500,000 people are expected to visit the MAKS-2009 air show.

Putin to attend MAKS 2009, to hold meeting on aircraft buildinghttp://www.itar-tass.com/eng/level2.html?NewsID=14243893&PageNum=0

MOSCOW, August 18 (Itar-Tass) - Russian Prime Minister Vladimir Putin on Tuesday will visit Zhukovsky outside Moscow where he will hold a meeting on issues of the national aircraft building industry development and will visit the MAKS 2009 international aerospace show that is held for the 9th time.

The government’s press service told Itar-Tass that members of the government, heads of related ministries and departments, the leadership of the United Aircraft Corporation (UAC), as well as representatives of Russia’s leading aircraft producers will take part in the meeting. The agenda includes a set of measures on restructuring the national aircraft building, enhancing the sector’s stability, expansion of the model range, as well as improving export opportunities of Russian aircraft producers.

Within the framework of visiting the air show the prime minister will watch performing of Russian and foreign aerobatics groups and will visit pavilions of the world’s leading aircraft producers.

The development of the aircraft building industry, along with cosmonautics, shipbuilding and atomic power industry is a key priority in Russia’s industrial policy. Since 2004 the volume of state financing of aircraft building increased more than 20 times. This year alone, with taking into account the anti-crisis measures the RF government allocated for these purposes 80 billion roubles that were spent on the purchase of national planes and subsidising expenses on technical re-equipment of serial plants. Some 35 million roubles from the budget were spent on increasing the authorised capital of key enterprises of the sector.

The International Aviation and Space salon MAKS held in Zhukovsky is a rightful occupant of a leading position in the ratings of major world aviation forums. The very idea of the MAKS lies in demonstrating Russian high technologies and domestic market openness to joint ventures with the use of foreign partners' cutting-edge advances, it is said in the event’s press release.

MAKS is held under the auspices of the Prime Minister of the Russian Federation, being traditionally opened by the President of the Russian Federation. This is the warranty of superior organisation and authoritative participants. During the show, top civil servants are open for business contacts. For all those engaged in aerospace business the air show is a unique opportunity to get the first-hand information on the standpoints of decision-makers whose position can have an impact on key issues of developing and selling aircraft and their weapons, as well as on cooperation in these fields.

MAKS provides participants with the most comprehensive understanding of the Russian aerospace industry's priorities and advances. MAKS Air Show is the only place where one could see aircraft and weapons system prototypes as well as experimental systems that cannot be shown abroad due to some or other reasons.

MAKS provides experts and businessmen a rare opportunity to establish contacts at various levels, further development of R&D and production cooperation and search for new business partners. The role the MAKS plays as a generator of new alliances and promising concepts has been recognised worldwide.

MAKS is held in the town of aircraft science and technology - Zhukovsky - at the airfield of the major national testing facility - Gromov Flight Research Institute. The participants in the show will be able to visit nearby major research, production and experimental organisations of Russia.

High on MAKS agenda are scientific conferences and symposia held under the auspices of the Russian national research centre - TSAGI. The events enable scientists and experts to trade their idea concerning topical aerospace issues of the present and past.

More than 80 aircraft are taking part in the MAKS 2009 flight programme. For the first time in the static exposition and in the flight programme the newest Sukhoi Superjet-100 passenger plane will be presented. The Sukhoi Superjet-100 is a modern, fly-by-wire regional jet in the 75- to 95-seat category. The Superjet-100 will be produced by Russian

aerospace firm Sukhoi's civil division, of which Finmeccanica of Italy owns 25 percent. The jet is being developed in collaboration with Finmeccanica subsidiary Alenia Aeronautica. Italian design group Pininfarina will design optional interiors. The Superjet-100 is currently undergoing certification process.

As of June 2009, thirteen planes were under construction, and the first four will be handed over to clients by the end of 2009. After 2012, the company will build 70 Superjets per year.

On July the 26th, the third of four SSJ100 prototypes SN95004 took to the skies.

The Sukhoi Superjet 100 is designed to compete against the Embraer E-Jets and the Bombardier CRJ programs. Sukhoi claims the SSJ will have 10-15 percent lower operation costs than its Embraer or Bombardier counterparts for the price of $27.8 million.

MAKS 2009 about to kick offhttp://www.russiatoday.ru/Top_News/2009-08-18/maks-superjet-plane-exhibition.html/print

18 August, 2009, 10:38

Russian Prime Minister, Vladimir Putin, is expected to arrive to MAKS exhibition by helicopter to officially open the country’s main air show.

This year the show will be opened with a minutes silence after a midair tragedy, involving two SU-27 fighter jets, over the weekend. The “Russian Knights” aerobatics team squadron leader Igor Tkachenko was killed in the collision, and the team will not be performing its routine at this years show.

However, the world’s leading aerobatics groups, including Russia’s ‘Falcons’ and ‘Swifts’, Italy’s Frecce Tricolore (Tricolor Arrows), and Patrouille de France (French Patrol) will be performing.

There will be over 700 stands of Russian and foreign companies at the exhibition, with leading aircraft and parts manufacturers displaying their latest developments and wares.

“Historic legacy of Russian space accomplishment is unparalleled”

Among them is the joint venture Excalibur Almaz that is preparing to open space to the public. Artur Dula, the CEO of the private space exploration company, says his start up has brought a spacecraft to the exhibition, capable of carrying three persons into orbit.

“Our capsule has flown two times in experimental tests of our Russian contractor Mashinostroenie, one of the leading aerospace corporations of the world,” says Dula,

“We will be using Russia technology already successfully tested in space. We expect to start flying in 2013 and our capsules are meant to be used again and again.”

Russian producers will be unveiling a range of major improvements to their systems. These wont include new items but bits and pieces of weapons and aircrafts systems that will make them from 20% to 50% more effective than they have been in the past, according to Ruben F. Johnson of Aviation Week Show magazine in Washington D.C. who has visited all the worlds major air shows.

Commenting on Russian plans to become the world’s third major aircraft manufacturer, Johnson said that Russia should “start to build a lot of commercial airplanes because that is what makes Boeing and Airbus number one and number two.”

“Superjet shows the strength of Russia’s aviation industry and clearly there is a great deal of international capital here. In 5-15 years we fully expect to see some competition come from another country, Russia or China,” Boeing's Marketing Vice President Randy Tinseth said to RT. Superjet to make a name at MAKS 2009

Russian commercial airliner production is being spearheaded by the Sukhoi Superjet. The first post soviet airliner designed and constructed in Russia will be on display. Even with a price tag of $30 million there's already a waiting list including international air companies lining up to order.

“The crisis will be, sooner or later, over, and then you can expect that we will see strong demand for new aircraft, in particular in that sector where Superjet is established,” says EC industry commissioner Gunther Verheugen.

Sukhoi's first foray into civil aviation, its technical characteristics, fuel economy and quiet engines fully meet modern regional passenger market needs. The plane incorporates work by Russian, Italian, French and German engineers. Next year the company is planning to produce 20 jets, eventually rising to 70 a year.

The star of this year's MAKS air show has already been tested in extreme temperatures and extreme situations.

“We have already flown for over 500 hours on this plane. It showed excellent results in the toughest conditions," disclosed test pilot, Aleksander Yablontsev. “This plane has a so called joystick or a side control handle which makes it much easier to fly.”

Those who've flown the plane say it doesn't take a top gun to fly it. Its creators hope to take a 5% share in global civil aviation, leaving other regional passenger planes high and dry.

Antonov Design Bureau to present new stages of An-70, An-124, An-124, An-148 programs realized jointly with Russiahttp://www.kyivpost.com/business/47101

Today, 11:53 | Interfax-Ukraine

Kyiv, August 18 (Interfax-Ukraine) – Kyiv-based Antonov Design Bureau is to present new stages and directions of programs, which are realized jointly with Russian partners, at the MAKS 2009 international aerospace show to take place in Zhukovsky on August 18-23, 2009.

The bureau's press service told Interfax-Ukraine that a successful result of joint activities with Voronezh joint-stock aircraft building company (VASO) is a first regional new generation jet An-148-100V built at the VASO's production facilities.

The jet is a basic model of the new An-148/-158/-168 family. The bureau said that a total of 126 Russian companies are engaged in the creation of the jets and over 28,000 jobs have been created in the country. High results and a wide range of capabilities of the family jets are linked to rich experience of companies-partners along with advance world's technologies.

The press service said that the first Ukrainian An-148 started flying in June and AeroSvit-Ukrainian Airlines used it on regional routes. In two months, the aircraft made 150 flights and carried some 8,000 passengers.

Apart from the basic 65-85 passenger An-148, designs of a 99-passenger An-158 aircraft and An-168 comfort airliner would be exhibited. By now, the number of applications received from aircraft exploiters from Russia, Ukraine and Kazakhstan to buy the An-148/-158/-168 family aircraft exceeded 170, the press service said.

The bureau said that among programs presented at the exhibition is the 50-passenger An-140, operating on regional routes.

In June, the An-140 aircraft built at a Samara-based aviation plant belonged to Yakutia Company set a 350-hour flying record. In August, Yakutia plans to receive its third An-140 under a leasing agreement, Antonov Design Bureau said.

Another important joint project presented at the MAKS 2009 show is the An-70 military and transport aircraft.

"The share of Russian companies in the program reaches 80%. Today, tests of the aircraft are being finished and its production would be launched," the bureau said.

Antonov Design Bureau said that meetings and talks aimed atthe resumption of production of upgraded heavy transport An-124-100 Ruslan – An-124-100M-150 with the carrying capacity of 150 tonnes are scheduled to hold during the show.

"Services of the aircraft are of great demand all over the world. Only in H1, 2009 Ruslans of Russian and Ukrainian airlines carried over 52,500 tonnes of various cargos," the press service said.

The press service said that the bureau plans to discuss other directions of its joint work with Russian partners.

VEB, Ilyushin Finance seal deal on plane construction financinghttp://www.itar-tass.com/eng/level2.html?NewsID=14243710&PageNum=0

ZHUKOVSKY, Moscow region, August 18 (Itar-Tass) - Vnesheconombank and Ilyushin Finance Co. have signed an agreement to finance the construction and lease of 70 planes.

The parties plan to cooperate in investing promising programs of Ilyushin Finance Co. (IFC) and in developing sales strategies for Russian aircraft, including An-148-100B planes, both on the domestic and foreign markets with the use of leasing and export financing mechanisms.

“The agreement of intentions stipulates the financing of around 70 different planes,” said IFC director-general Alexander Rubtsov. “I hope that within the framework of this agreement state-run air carrier GTK Rossiya will get its first plane already this year.” He stressed that contracts for 45 planes for Atlant Soyuz air carrier has already been fixed.

VEB president Vladimir Dmitriyev said in turn the state corporation “is interested in cooperating with the IFC in aircraft supplies with the use of leasing mechanisms on the domestic and foreign markets.”

GTK Rossiya will get six planes from the first batch of An-148, he said.

The supplies are estimated at around 3 billion roubles.

Killed Pilot Called Su-27 Unsafehttp://www.themoscowtimes.com/article/1010/42/380893.htm

18 August 2009The Moscow Times

Air Force pilot Igor Tkachenko, who was killed in a midair collision over the weekend, expressed concern about the safety of the fighter jets he flew in 2005.

Tkachenko, 45, the leader of the elite Russian Knights flying group, died Sunday when his Su-27 hit another Su-27 during rehearsals over the Moscow region for the MAKS air show.

“The planes that the Air Force sent us … could not be used by the combat forces,” Tkachenko told the defense journal Independent Military Review on June 3, 2005. “I’ve flown the aircraft and would not put another pilot behind the wheel. It’s not safe.”

He said the jets’ pedals and engines did not work properly and needed adjustment. Crash investigators believe that the crash was caused by pilot error or a mechanical malfunction.

The Russian Knights have canceled their performance at MAKS, which opens Tuesday.

With Many Foreign Parts, Sukhoi Jet Doesn't Make State Fleethttp://www.themoscowtimes.com/article/1010/42/380867.htm

17 August 2009Vedomosti

The Rossiya Special Flights Squadron, a state carrier responsible for flying top Kremlin and government officials, won't include the new Sukhoi Superjet 100 in its fleet because the jet uses too many foreign parts.

The squadron, which has about 30 aircraft and was split from the state Rossiya airline this year, needs new planes in the near future, including two Il-96-300s, two An-148s and four Tu-204/212s, according to a letter to President Dmitry Medvedev signed by Vladimir Kozhin, head of the Office for Presidential Affairs.

A copy of the letter, dated July 22 and stamped with Medvedev's approval, was obtained by Vedomosti. Viktor Khrekov, spokesman for the Office of Presidential Affairs, confirmed the letter's existence.

In an interview with Vedomosti last year, Kozhin said the fleet would be upgraded since many of the planes "don't meet modern requirements and have already reached the end of their technical life spans."

While for middle- and long-range flights there were no options beyond Ilyushins and Tupolevs, the office had a choice for regional flights: the An-148, the Tu-334 or the Superjet.

The Tu-334 started as the front-runner, although there were concerns that it could be too expensive. The plane is not in production, meaning the presidential order would need to be specially accommodated and the six planes would cost a total of 8 billion rubles ($252 million), said Konstantin Lantratov, spokesman for the United Aircraft Corporation.

After the Superjet's first flight last year, its chances rose considerably, a source close to Sukhoi told Vedomosti. But the An-148 was ultimately given the nod.

Khrekov, of the Office of Presidential Affairs, said the decision was made on security concerns. More than 70 percent of the An-148 is now produced in Russia, and the figure

will increase to 90 percent. The Superjet is built as part of an international joint venture, with key elements being produced abroad.

Olga Kayukova, a spokeswoman for Sukhoi Civil Aviation, said decreasing the amount of imported Superjet parts would be very expensive, although such a pricey and prestigious order for the new plane would have been a boost for the new jet.

The regional An-148, with a catalog price of 750 million rubles, was developed in Ukraine and is produced under license at a Voronezh plant owned by the United Aircraft Corporation.

Two An-148s, built for the special squadron, will be handed over in 2010 and used to carry those accompanying top officials, such as aides and reporters, Lantratov said.

Shoigu confirms hydraulic impact causes HPP accidenthttp://www.itar-tass.com/eng/level2.html?NewsID=14243815&PageNum=0

SAYANO-SHUSHENSKAYA HPP, August 18 (Itar-Tass) - Russian Emergency Situations Minister Sergei Shoigu has again confirmed that a hydraulic impact caused the Monday morning accident at the Sayano-Shushenskaya hydropower plant. “The main version of the emergency is a hydraulic impact, but it is necessary to find out what caused the hydraulic impact,” he said.

RF Energy Minister Sergei Shmatko agreed with him. “It is so far early to speak about the causes,” he said.

Shoigu also said that no emergency situations took place at the aluminium smelters in Khakassia, in the Krasnoyarsk Territory, in the Kemerovo and Novosibirsk regions. “Owing to the modern equipment installed at them serious breakdowns were prevented,” Shoigu stated.

The RF emergencies minister heads efforts aimed at the elimination of the aftermath of the Sayano-Shushenskaya hydropower plant’s accident. He personally controls the progress of all operations in site. A large group of the ministry’s specialists is also working at the emergency site together with experts from the Energy Ministry, RF Federal Service of Environmental, Technological and Nuclear Supervision (Rostekhnadzor) and other services.

Sixty-four missing in Russian dam disaster likely dead-ownerhttp://uk.reuters.com/article/idUKLI8705020090818

Tue Aug 18, 2009 9:47am BST

MOSCOW, Aug 18 (Reuters) - The 64 people missing after the disaster at Russia's largest hydro-electric dam are most likely dead, the dam's owner said on Tuesday, presaging a far higher death toll than the 12 confirmed killed so far. "Finding anyone alive in the flood zone is unlikely, but the search continues," Vasily Zubakin, the chairman of state-run hydro-electricity company RusHydro (HYDR.MM: Quote, Profile, Research), said through a spokesman.

He said 64 people are still unaccounted for after one of the turbine rooms flooded at the Sayano-Shushenskaya dam early on Monday. (Reporting Simon Shuster; Editing by Charles Dick)

RusHydro to work Sayano-Shushenskaya repair costs into 2010 tariff requesthttp://www.interfax.com/3/511638/news.aspx

MOSCOW. Aug 18 (Interfax) - RusHydro (RTS: HYDR), Russia's federalhydrogenerating company, will submit a new request to adjust tariffs for2010 to the Federal Tariffs Service (FTS) which takes the cost ofrestoring the Sayano-Shushenskaya hydroelectric plant intoconsideration, Yevgeny Desyatov, the company's sales manager, toldreporters. Desyatov said the company would be revising its request fortargeted investment resources, which are to be built into the tariff fornext year. RusHydro's previous request envisaged tariff growth of 6%without the investment resources and 30% with them. The details of thenew request are not yet ready. Desyatov said the genco would probably have to revise itsinvestment program in order to accommodate the costs of the Sayano-Shushenskaya restoration.

http://uk.reuters.com/article/idUKLI1402020090818www.vedomosti.ru

The losses of RusHydro HYDRO.MM, the owner of the Sayano-Shushinskay plant, could exceed 27 million roubles.

http://uk.reuters.com/article/idUKLI1402020090818

www.kommersant.ru

It could take up to four years to restore turbines damaged on Monday in an accident at the Sayano-Shushinskaya hydro-power station in Siberia, according to some experts.

RusHydro: Too Big to Fail, Four years to recoverhttp://www.businessneweurope.eu/dispatch_text9540

VTB, Alfa Bank August 17, 2009

One third of RusHydro's total capacity was shut down this morning due to a huge accident at the Sayano-Shushenskaya HPP. Interfax reports that units 2, 6 and 7 (30% of the HPP's capacity) were destroyed and it will take up to two years to return them to operation.

The accident claimed the lives of seven people and management representatives called it the worst in the power plant's history.

The financial consequences of the accident have yet to be clarified although we have made our own calculations: i) USD 12mn/month - purchases of electricity from the free market at higher prices to fulfill take or pay obligations (50% of production); ii) USD 15mn/month - lost profits from not selling electricity on the free market.

If the power plant remains unavailable until the end of this year it would result in some USD 100mn of losses from the (non-)sale of electricity. To this have to be added repair works and the cost of new equipment (while it is difficult to work out all the details of the damage, we estimate the cost of one hydro unit at USD 3mn), with the problem being the timing of the delivery. We also highlight possible penalties for ecological violations, the amount of which can only be speculated, that are not currently reflected in the figures.

All in all, we estimate the financial loss of the accident at USD 110mn at a maximum, which is peanuts for a USD 10bn company (some 1% of its Mcap). We note that this is in line with today's statements from management (which estimates the damage at several billion roubles).

We see today's 15% drop in GDR quotes as excessive and note that the situation might be used as a buying opportunity. As a statecontrolled company, RusHydro could get better treatment in terms of tariffs for next year as a result of the accident. In general, though, the event once again points to the poor condition of the equipment and lack of investment in the sector. This is the first serious accident since UES was broken up and, as with the Moscow blackout in 2005, it could force the authorities to re-balance the key goals in the sector's outlook.

Alfa adds:

According to various media sources, the recovery and reconstruction of the Sayano-Shushenskaya GES, which was seriously damaged after an accident yesterday leading to operations at the plant being completely halted, might take more than four years. According to the company's acting CEO, Vasily Zubakin, three turbines (out of ten) have been completely destroyed, while the state of the others is being investigated. In addition,

the company estimates losses of RUB1.5bn per month in the aftermath of the accident and the associated reduction of the electricity production by the damaged power plant.

The recovery of the other turbines that were not damaged reportedly could take around 1.5 months.

The causes of the accident are being investigated, and the preliminary results of the investigation are expected to be ready this afternoon.

We view the accident at RusHydro's largest power plant (it made up a quarter of the company's annual electricity production) and its consequences as VERY NEGATIVE for the stock. Although it is still hard to quantify RusHydro's potential losses, we see three main areas where the losses will come from:

1. Repair and recovery work. The company has said that it will finance all the work on its own, but it will also rely on insurance compensation (up to $200m according to Interfax, quoting ROSNO representatives).

2. Regulated bilateral agreements. Like all generators in Russia, RusHydro (and its Sayano-Shushenskaya GES) is committed to mandatory electricity supplies under regulated tariffs. According to the terms of these contracts, the company is obliged to supply electricity regardless of its ability to produce.

And though we do not know if these contracts contain any force majeure clauses, the company will likely have to replace its own production at the damaged power plant with purchased electricity, and therefore will make considerable losses under these agreements given that regulated tariffs for hydropower plants are considerably lower than the free-market prices (especially as they could rise following the increase of coal-fired electricity production).

3. Opportunity costs. Electricity production at Sayano-Shushenskaya GES has currently come to a complete halt, and it still unclear how long this will last. The company expects a full recovery of the power plant to take over four years. The opportunity costs of the halted power unit, which makes 25% of RusHydro's entire production, could be very significant for RusHydro.

Russian hydro plant accident kills 12, 64 missinghttp://www.google.com/hostednews/ap/article/ALeqM5iP8LEhWDkeRuNFgkFHV4E-oee6TAD9A56ENG0

By NATALIYA VASILYEVA (AP) – 12 minutes ago

MOSCOW — Rescue workers searched Russia's largest hydroelectric plant Tuesday for an estimated 64 missing workers after an accident during repairs killed at least 12 of their colleagues.

The cause of Monday's accident at the Sayano-Shushinskaya plant in southern Siberia was unclear. Federal investigators said a transformer exploded during repair works, destroying walls and the ceiling in an engine room where turbines are located and causing the room to flood.

The plant's owner said the flooding occurred due to a pressure surge in water pipes.

Twelve workers were confirmed dead and 64 were missing, Russian Emergency Situations Minister Sergei Shoigu told the Itar-Tass news agency. Ministry spokesman Roman Dotsov said 14 people had been injured.

Some of the dead had drowned and others were crushed by debris, Dotsov told The Associated Press. The survivors were hospitalized with a range of injuries, including concussions and exposure.

Rescue workers combed through the cavernous engine room Tuesday, trying to find the missing workers.

The accident shut down the power station, which supplies several major aluminum plants. The government said electricity supplies from other power plants were being rerouted to help cover the shortfall, but outages were reported throughout the region.

The plant's dam, a towering structure that stretches about a kilometer (more than half a mile) across the Yenisei River, was not damaged and towns downstream were in no danger, Shoigu said.

The accident produced an oil spill, however, and a slick as large as 10 square miles (25 square kilometers) was floating downriver, the Natural Resources Ministry said.

Two of the plant's 10 turbines were destroyed and a third was seriously damaged, said Vasily Zubakin, acting chief executive of the plant's owner, RusHydro. He said the company was still assessing the state of the remaining seven turbines.

Shoigu said the repairs would be difficult.

"We're probably talking about years rather than months to restore three of the 10 turbines," he said on state-run television.

The world's largest aluminum producer, Rusal, was operating as usual, with its smelters being powered from other plants, company spokeswoman Yelena Shuliveistrova said.

The company was talking with the government about reducing output to free up energy supplies needed elsewhere in the region, Rusal said.

Half of the residential buildings in Abakan, the capital of the Khakassia region where the plant is located, were left without power. Residents were stocking up on basic supplies and gasoline, Mayor Nikolai Bulakin said on Ekho Moskvy radio.

Abakan, home to 160,000 people, is located 110 miles (180 kilometers) north of the plant. Power shortages also were reported in the Tomsk and Kemerovo regions.

It was not immediately clear how many people were potentially affected by the accident. The plant satisfies 10 percent of Siberia's energy needs, according to Russian media reports.

The Sayano-Shushinskaya plant was working at record capacity in June and July due to high water levels in the river, RusHydro reported last week. The plant went into operation in 1978.

Aging infrastructure has long been regarded as a key obstacle to Russia's development.

Analysts have warned that Russia needs to boost its power production significantly to meet the growing demand of industrial producers or it would face regular power shortages in the next several years. Monday's accident put these plans in jeopardy.

RusHydro's stocks were down more than 7 percent on the MICEX on Monday morning before the stock exchange suspended trading for its shares.

Death toll in hydropower plant accident grows to 12http://www.itar-tass.com/eng/level2.html?NewsID=14242655

SAYANO-SHUSHENSKAYA HYDROPOWER PLANT (Khakassia), August 18 (Itar-Tass) - The death toll in the accident at the Sayano-Shushenskaya hydropower plant has grown to 12, Russian Minister for Emergency Situations Sergei Shoigu has reported. The fate of 64 people is still unclear, said the minister who heads work to eliminate the damage caused by the accident.

Version of Sayano-Shushenskaya HPP terror act unconfirmedhttp://www.itar-tass.com/eng/level2.html?NewsID=14243274&PageNum=0

MOSCOW, August 18 (Itar-Tass) - The version that a terrorist act was staged at the Sayano-Shushenskaya hydropower plant has not been confirmed, the Russian Prosecutor’s Investigative Committee (SKP) said on Tuesday.

“Bomb experts of the Russian Federal Security Service (FSB) have not found traces of explosive substances at the accident site,” the SKP stressed.

Blast in south Russia's Dagestan injures fourhttp://en.rian.ru/russia/20090818/155840465.html

MAKHACHKALA, August 18 (RIA Novosti) - Four people were injured in an explosion in Dagestan early on Tuesday, the volatile southern Russian republic's interior ministry said.

"An unidentified explosive device went off at 10:05 local time (06:05 GMT) not far from the market in Kizilyurt [a town west of the republic's capital Makhachkala]. The blast went off when a police patrol was passing by. Four people, including two police officers, were injured," a ministry official said.

He said investigation was underway.

Russia's mainly Muslim North Caucasus republics have been swept by a wave of violence in recent months, with attacks on troops, police and other officials a daily occurrence.

Neighboring Ingushetia saw its deadliest attack in years on Monday. A suicide bomber rammed an explosives-laden minivan into the gates of the police headquarters in the republic's largest city Nazran, killing at least 20 people and injuring 138, mainly civilians.

President Dmitry Medvedev dismissed Ingushetia's interior minister on Monday and ordered a probe into police performance in the wake of the bombing.

38 injured in Nazran blast are at Ingush Clinical Hospitalhttp://www.itar-tass.com/eng/level2.html?NewsID=14243273&PageNum=0

NAZRAN, August 18 (Itar-Tass) - There are a total of 38 injured in the Monday suicide bombing undergoing treatment at the Ingush Clinical Hospital. Four of them are in medium gravity condition, Itar-Tass was told at the reception ward of the medical establishment.

The medics said that on Monday 33 injured, including heavily, were transported for treatment to Rostov-on-Don, Vladikavkaz and Moscow. Ten injured were airlifted to Moscow overnight to Tuesday. Doctors of the Russian Emergency Situations Ministry and the All-Russia Disaster Medicine Centre “Zashchita” were accompanying them during the flight.

The clinic’s reception ward disproved information that another person died at hospital overnight. According to latest information of the RF Emergency Situations Ministry, the death toll of the Nazran terrorist act is 20 and 138 injured, including 10 children.

On Monday morning a suicide bomb attacker driving a Gazelle light truck steered his vehicle through the gate of a local police station, as police officers lined up in the yard for

the morning check and detonated the explosive device. According to preliminary estimates, the bomb’s yield measured up to one tonne of TNT. The blast left a crater four meters wide and 1.5-2 meters deep. Ingushetia’s acting President Rashid Gaisanov declared August 17-19 as days of mourning. “During the days of mourning, all cultural and entertaining events are cancelled,” the presidential press service told Itar-Tass on Monday.

Russian President Dmitry Medvedev expressed condolences to the next-of-kin as a result of the terrorist act in Ingushetia. Medvedev instructed Interior Minister Rashid Nurgaliyev to take additional measures in order to establish order in the Ingush Interior Ministry and give proposals to consolidate the staff. The president also instructed the interior minister to provide any assistance.

The Ingush government will render material aid to all victims of the explosion. Families of those died in the blast will be paid 100,000 roubles and injured people will receive 50,000 roubles, spokeswoman for the Ingush government Zhanna Almazova said on Monday.

Plane with 9 victims of terrorist act in Nazran lands in Moscowhttp://www.itar-tass.com/eng/level2.html?NewsID=14242507&PageNum=0

MOSCOW, August 18 (Itar-Tass) - A plane of the Russian Ministry for Emergency Situations with nine people seriously injured in the Monday terrorist act in Nazran on board has landed in Moscow, sources from the ministry’s information department told Tass.

They said an Il-76 transport plane, which took off from the airport of Beslan (North Ossetia) at 00:10 Moscow time on Tuesday, landed in Moscow at 2:25 am. The plane is equipped with four special ambulance modules. The wounded passengers were accompanied by medics. They were transported from Domodedovo airport to Moscow clinics.

Twenty people were killed and 136 were injured when a suicide bomber rammed a light truck into a police station in the capital of Russia’s southern republic of Ingushetia.

FACTBOX-Key facts about Russia's region of Ingushetiahttp://www.reuters.com/article/latestCrisis/idUSLH205142

Mon Aug 17, 2009 6:56am EDT

Aug 17 (Reuters) - A suicide bomber detonated a truck packed with explosives on Monday at a police headquarters in Russia's Ingushetia region, killing at least 19 people and wounding 68.

For the latest story, click on [ID:nLH532762]

The following are key facts about Ingushetia:

* Ingushetia has be plagued by violence in recent months and analysts say the situation is spiralling out of control, threatening to undermine the Kremlin's policy in the North Caucasus.

* Ingush President Yunus-Bek Yevkurov was seriously wounded in a suicide bomb attack in June. He was treated in Moscow and is still not back at work. At his first public appearance since the attack, the 46-year-old former paratrooper general pledged to step up the fight against rebels.

* Locals say the insurgency in Ingushetia has been fuelled by a mix of desperate poverty, Islamic radicalism and heavy handed actions by the local security services. Russian and Ingush officials say publicly that corruption is at shocking levels, adding to the vast gulf between the region's rulers and its population of around half a million.

* The smallest region in Russia, Ingushetia is wedged between North Ossetia and Chechnya. It is one of Russia's poorest regions with an estimated unemployment rate of over 50 percent as of March this year. Over 90 percent of Ingushetia's revenue comes in the form of subsidies from Moscow.

* The Sufi branch of Islam is Ingushetia's main religion. It is one of 21 republics within Russia and has nominal autonomy with its own president, parliament and constitution.

* The Soviet Union lumped ethnically close Ingushetia and Chechnya together, but after its 1991 fall, Chechnya declared independence and Ingushetia chose to become a republic within Russia.

* Relations between Ingushetia and North Ossetia are strained. Paramilitary groups fought a brief war in 1992 over a disputed district. Hundreds died and thousands became refugees.

* Ruslan Aushev was Ingushetia's president from 1992-2001. He steered Ingushetia away from the conflict in Chechnya, where rebels fought federal forces in two wars from 1994. Backed by Russian leader Vladimir Putin, Murat Zyazikov, an ex-KGB general, took over as president in 2002. In October last year, President Dmitry Medvedev appointed Yevkurov as the region's new boss. Yevkurov clamped down on corrupt officials and proposed a poverty reduction programme in a bid to prevent people from yielding to radical Islam.

* During the second Chechen war which began in 1999, Ingushetia was the destination for thousands of Chechen refugees. Since 2002, Russian special forces have cracked down on rebels in Ingushetia. Around 90 people died in a rebel attack on the city of

Nazran in 2004. (Writing by Dmitry Solovyov and Guy Faulconbridge; Editing by Janet Lawrence)

Ingush Police Got Tip About Deadly Blasthttp://www.themoscowtimes.com/article/600/42/380906.htm

18 August 2009By Nabi Abdullaev / The Moscow Times

Ingush police received a tip Friday that insurgents were planning to stage a suicide bombing with a GAZelle minivan.

But they were caught off guard Monday when a GAZelle packed with explosives rammed into the closed gates of a police station in Nazran as police officers were lining up nearby for a morning briefing.

The powerful explosion killed at least 20 people and wounded 138 others, including 10 children, marking the most deadly attack in the North Caucasus in recent years.

Ingush President Yunus-Bek Yevkurov, who is recovering in Moscow from a similar attack in June, accused insurgents of being behind the bombing and other recent attacks and darkly hinted that the United States, Britain and Israel had the most to gain from instability in the region.

Police officers were being briefed in the fenced-in courtyard of the Nazran police station when the GAZelle came speeding toward them at 9:08 a.m., the Investigative Committee said in a statement.

When minivan plowed into the metal gates, one of the police officers threw open the driver’s door and tried to pull the driver out, an Ingush law enforcement source told Itar-Tass. A second suicide bomber in the vehicle then detonated the explosives.

The explosion, which investigators said had the force of 500 kilograms to 1 ton of dynamite, destroyed the police station and badly damaged several nearby buildings, including a five-story apartment building. State television showed pictures of the blackened police station and smoldering debris, dozens of burned-out cars, destroyed apartment balconies and shattered windows.

Ingush Deputy Interior Minister Zyaudin Dourbekov said the police had received information that a GAZelle was being used in preparation for a terrorist attack three days earlier.

“The GAZelle that the suicide terrorist was in was on our search list,” Dourbekov said, RIA-Novosti reported. “We had information on Aug. 15 about preparations for a terrorist attack with the use of this vehicle.”

President Dmitry Medvedev said the attack could have been avoided and dismissed Ingush Interior Minister Ruslan Meiriyev.

Medvedev also ordered Interior Minister Rashid Nurgaliyev to undertake “additional measures to bring the necessary order in the Ingush Interior Ministry” and to come up with suggestions on the “strengthening of the republican Interior Ministry’s personnel,” the Kremlin said.

Meiriyev, who was appointed as Ingushetia’s top police official in January, oversaw a sharp escalation in violence this summer, including the shooting deaths of Ingushetia’s construction minister last week and a deputy chief justice of the republic’s Supreme Court in June.

Ingush President Yevkurov, who is recovering from injuries inflicted when his motorcade was targeted in a suicide bombing on June 22, said Monday that insurgents were trying to raise their profile with attacks in Ingushetia and other parts of the North Caucasus. He suggested that Western countries had the most to benefit from the attacks. “I am far from thinking that Arabs are behind all of this,” he said on Russian News Service radio. “We understand who is interested: the United States and Britain. Including Israel. It is quite real.”

Asked by telephone about whether the Kremlin shares the same views on the West’s interest in instability in the North Caucasus, a Kremlin spokesman declined to comment, saying he was too busy.

Yevkurov, who was authorized by Medvedev to resume his duties as president last week, also said Monday that a Chechen rebel leader had organized the attempt on his life and Ingush law enforcement officials had “torn the heads off” the rebels who had participated in it within the following month.

No one claimed responsibility for the Nazran police station attack as of Monday evening. The republic announced three days of mourning.

An unidentified Ingush police source told Itar-Tass that investigators were trying to establish the owner of the GAZelle by examining the debris. He also said investigators had found a severed human head about 50 meters from the site of the explosion and that they were working to establish whether it belonged to a suicide bomber.

Rescue workers were digging through the destroyed police station in a search for survivors late Monday. About 20 people might be buried in the debris, RIA-Novosti reported.

Local hospitals were flooded with injured people, and a special Emergency Situations Ministry airplane with medical personnel and supplies was sent from Moscow, Channel One reported.

The surge in attacks in the North Caucasus is linked to a drop in federal subsidies amid the economic crisis, said Maxim Agarkov, an analyst with the SK-Strategia think tank who previously worked as a terrorism analyst for the Interior Ministry. “Moscow had been showering the regional elites with money, and they in exchange secured stability by distributing the money and setting law enforcement officials against potential troublemakers,” Agarkov said. “This strategy is no longer working because less money is trickling down and public rage against law enforcement officials is becoming stronger.”

Federal subsidies for Ingushetia, Chechnya and Dagestan have been slashed by about a third this year because of the crisis and the end of the active phase of the reconstruction effort in Chechnya, Agarkov said.

Truck bomb signals trouble on Russia’s southern flank http://features.csmonitor.com/globalnews/2009/08/17/truck-bomb-signals-trouble-on-russias-southern-flank/

A week of regional violence climaxed Monday in Ingushetia when a suicide bomber blew a hole in a heavily fortified police headquarters, killing at least 20.

By Fred Weir | Correspondent 08.17.09

A week of extremist attacks on Russia’s seething southern flank climaxed Monday with a suicide truck bombing in Ingushetia that killed at least 20 and injured scores outside a police station in the tiny republic’s main city, Nazran.

The resulting explosion triggered a “raging fire” that destroyed a weapons room, incinerated nearby cars, and damaged nearby apartment buildings, according to an Associated Press (AP) report from Nazran. It was one of the deadliest attacks in the region in years, the AP said.

Violence by Islamist insurgents, once confined mainly to separatist Chechnya, has gradually spread throughout much of Russia’s northern Caucasus, leaving Russian authorities increasingly unable to guarantee order, or even protect pro-Moscow officials, in the mainly Muslim region. (See map.)

For Moscow, the stakes are huge. The northern Caucasus region is Russia’s gateway to the energy-rich and strategically vital southern Caucasus, which includes the former Soviet nations of Georgia, Azerbaijan, and Armenia.

Worsening violence in the area could seriously disrupt the planned 2014 Winter Olympics in nearby Sochi, into which former President Vladimir Putin invested about $12 billion along with his own personal prestige.

Concerns Moscow could lose controlLong-simmering concerns that Moscow could lose control in the volatile northern

Caucasus, where Chechen rebels have waged a persistent insurgency since 1991, are spiking again given the past week of attacks.

Monday’s bombing in Ingushetia, which blew a huge hole in Nazran’s fortified police headquarters, was reminiscent of attacks carried out by Chechen rebels at the height of that insurgency against Russian troops in the early days of Mr. Putin’s 2000-08 term.

Over the weekend, at least two gun battles between police and separatist insurgents in Chechnya itself left about a dozen people dead and made the Kremlin’s boast of restoring order in that troubled republic look increasingly hollow.

In nearby Dagestan, a multiethnic mountain republic on the Caspian Sea, insurgent snipers killed two policemen in separate attacks on Saturday.

Last week, insurgents killed four police officers at a checkpoint in Buinaksk, near Dagestan’s border with Chechnya.

And in Ingushetia, where violence has been spiking in recent months, three gunmen shot an killed a female fortune-teller this past Thursday. Occultists are a common target of Islamist extremists, who regard them as blasphemers, occording to Russian press reports. The previous day, insurgents assassinated Ingushetia’s construction minister in his own heavily guarded office.

Cracks in Moscow’s strategy to contain CaucasusRussia’s northern Caucasus includes eight republics, six of which are populated mainly by Muslims, that were conquered and incorporated into the Russian Empire in the 19th century.

Following the collapse of the Soviet Union, Russia fought two savage wars to regain control of separatist Chechnya.

The Kremlin seemed to find a winning formula in handing power to a local pro-Moscow strongman, Ramzan Kadyrov, who pacified the republic by co-opting former rebels into his personal security corps and allegedly launching a wave of terror to suppress any dissent against his rule.

Several human rights activists who attempted to report on Mr. Kadyrov’s methods have been killed in recent months.

But attempts to install similarly effective local bosses in other republics, notably Ingushetia, have proven less successful.

In June, Ingushetia’s recently appointed president, Yunus-Bek Yevkurov, received grave injuries in a car-bombing, from which he is still recovering. Mr. Yevkurov blamed Monday’s attack on militants retaliating against heightened security measures along the border with Chechnya, reported the Associated Press.

“It was an attempt to stablize the situation and sow panic,” said the president in a statement.

Activists, Reporters Leaving Chechnyahttp://www.themoscowtimes.com/article/600/42/380876.htm

18 August 2009By Alexandra Odynova / The Moscow Times

Human rights activists and journalists are leaving Chechnya after a series of murders, saying the danger level in the region has reached the highest level.

The Memorial human rights group has suspended its work in Chechnya, while the opposition newspaper Novaya Gazeta, known for its investigative reports about the region, has withdrawn its reporters.

On Monday, Memorial and Human Rights Watch said they had appealed to federal ombudsman Vladimir Lukin and law enforcement agencies to investigate the latest human rights murders and guarantee their safety in Chechnya.

Memorial said its workers in Chechnya have received death threats and unknown people were following at least three of them in July. Among them were Natalya Estemirova, who was abducted on a Grozny street and killed on July 15, and Akhmed Gisayev, who was investigating an abduction case involving federal forces, Memorial activist Alexander Cherkasov said.

“This is an individual case amid a big campaign,” Cherkasov told The Moscow Times.

Soon after the killing, Memorial shut down its office in Chechnya.

“The level of danger was so high that Memorial had to evacuate its worker [Gisayev],” said Tatyana Lokshina, a researcher with Human Rights Watch.

Last week, two activists with the Chechen-based children’s charity Save the Generation were found dead in the trunk of their car in Chechnya.

The attacks resemble a campaign of intimidation against human rights activities in Chechnya, Lokshina said. “These events are aimed at putting an end to all independent organizations in Chechnya,” she said.

Human rights campaigners had faced pressure before, but now it has reach boiling point, said Nikolai Silayev, a Caucasus analyst with the Moscow State Institute of International Relations. He said previous pressure included attacks on reporters who covered Chechnya such as the 2006 slaying of Novaya Gazeta reporter Anna Politkovskaya.

Politkovskaya, a Kremlin critic who reported about human rights abuses in Chechnya, was shot dead in her apartment building in central Moscow. Her death shocked the world, but Novaya Gazeta and Memorial did not leave Chechnya.

Last week, Novaya Gazeta announced that it was withdrawing all reporters from Chechnya because of a lack of security. Memorial is continuing its work in the region through offices outside Chechnya.

Silayev said Chechnya was becoming more and more closed to the rest of the world and that it was increasingly difficult to understand what was going on there because of a lack of information.

“Chechnya is turning into a closed region like Turkmenistan,” Lokshina said, cautioning that this would hurt the image and security of the entire country.

Ingushetia has seen a series of attacks on government targets, including the suicide bombing of a Nazran police station that killed at least 20 people Monday. But human rights and reporters are staying there.

Chechen President Ramzan Kadyrov said last week that the killings of human rights activists showed that rebels were adopting a new tactic in an attempt to discredit him and other regional leaders.

Human rights groups including Memorial have blamed Kadyrov for the killings, a charge he denies. Kadyrov has filed a defamation lawsuit against Memorial’s chief.

17 August 2009, 14:47

Islamologist: Terrorists in the North Caucasus are trying to demonstrate that they wield the real power in the regionhttp://www.interfax-religion.com/?act=news&div=6338

Moscow, August 17, Interfax - The situation concerning religious extremism in the North Caucuses is aggravating and it takes statewide efforts to put it under control, Roman Silantyev, a well-known islamologist, and Associated Professor in Moscow State Linguistic University, believes.

"The development of terrorism has long passed into its second stage when rebel fighters attack members of law enforcement agencies, officials and Muslim clergy, rather than schools and hospitals," Silantyev said to Interfax-Religion on Monday in a commentary on the explosion near the Department of Internal Affairs of Nazran which killed 19 people, according to the most recent information.

According to Silantyev, "The rebel fighters have performed their intimidation actions, now they have to show the people who wields the real power in the region."

According to his information, the major funding sources and terrorists' bases are located "outside the North Caucasus, in many cases, in Moscow and other large Russian cities."

Silantyev noted that the rebel fighters are funded by several counties of the Arab world and the Western Europe, "but the problem is that they collect a lot of funding on site, and now they have reached such a stage in their development when they can rely on self-financing."

"These people are engaged in racketeering which gained a religious form: they have imposed a kind of the "holy war" tax which they believe every Muslim should pay. And they explicitly suggest that it is better to pay such a tax," Silantyev noted.

From Byzantium To Grozny -- Russia's U-Turn Toward Zakayev http://www.rferl.org/content/From_Byzantium_To_Grozny__Russias_UTurn_Toward_Zakayev/1801249.html

August 17, 2009By Aslan DoukaevIt is not for nothing that Russia considers itself to be the successor and spiritual heir to the Byzantine Empire. Just like the long-vanished realm on the shores of the Bosporus, Russia straddles Europe and Asia, and its culture, political tradition, and way of life reflect both influences.

Ordered in mysterious ways, both Byzantium and then Russia engaged in politics that were viewed by others as opaque, duplicitous, and hypocritical. In their heyday, they exerted real influence on the world stage, but their disastrous decline was precipitated not so much by external pressures or infighting among the ruling class as by their excessive fondness for dogma, and their inability to evolve and embrace change.

For all their reputation for somnolence, corruption, intrigue, and occasional descent into paranoia, however, Russian rulers, courtiers and bureaucrats, just like their Byzantine predecessors, have been anything but uncreative, inflexible and lacking in ideas. Even today, a Russian politician can perform U-turns and somersaults that would turn any acrobat green with envy.

Witness, for example, the Kremlin's recent overtures to the exiled Chechen leader Akhmed Zakayev. Over the past two months, officials from the pro-Moscow administration in Chechnya have been conducting negotiations with Zakayev purportedly aimed at the "consolidation of the Chechen people." One of those officials, Chechen parliament speaker Dukvakha Abdurakhmanov, confirmed last week in London that their mission was endorsed by both President Dmitry Medvedev and Prime Minister Vladimir Putin.

Just two years ago, however, Putin, then Russian president, issued a public demand that Zakayev, who had received asylum in the United Kingdom, be extradited to Russia to

face criminal charges.

"There is no need to sift through any archives for this," Putin told a news conference at the end of a G8 summit. "We have the evidence -- video footage of his criminal activity."'Why? Why?'

Last September, Putin accused Britain of providing a safe haven for Russia's enemies, in clear reference to a group of Russian emigres, including Zakayev. His country's relations with the U.K. would never recover, Putin declared, as long as London remained a base for anti-Kremlin dissent.

"Why are you allowing the territory of Great Britain to fight Russia? Why do you allow Great Britain to be used as a launch pad?" he asked a bemused group of foreign journalists and academics at a meeting in the Black Sea resort of Sochi. It would be like Russia letting IRA terrorists use Russia as a safe haven to plan attacks, he claimed.

So why the volte-face? Why have the Russian authorities abandoned the old and worn-out "we-never-talk-to-terrorists" mantra so quickly?

There are two possible reasons.

First, Russia never truly believed Zakayev had ever been involved in any terrorist activities. When the Russian Federation sought Zakayev's extradition from Britain in late 2002, the materials presented by the office of the Russian Prosecutor-General to the court in London did not contain any charges of terrorism, though in the media Russian officials routinely branded him as a terrorist.

Second, and perhaps more importantly, the Russian leadership seems to be increasingly frustrated with the situation in Chechnya and with its current head, Ramzan Kadyrov. Since November 2008, at least four known critics of his regime have been murdered execution-style in Russia and abroad. Kadyrov strenuously denies any involvement, but those killings, no doubt, have caused the Kremlin diplomatic and political embarrassment.

Deteriorating Security

To add insult to injury, the security situation in Chechnya, after a period of relative calm, has begun to deteriorate again, with a recent upsurge in bombings and attacks. If anything, Kadyrov's leadership style, his dictatorial ways, brutality, and contempt for justice only fuel resentment and impel more young men and women to join the ranks of the insurgents.

The Zakayev team will probably attempt to capitalize on Kadyrov's failures and present an alternative program for Chechnya's stabilization at "a world Chechen congress" that the two negotiating parties have agreed to convene within the next few months. Zakayev may also call for a more vigorous investigation of the recent killings, an amnesty for

thousands of Chechens currently serving lengthy prison sentences on charges of "participating in illegal armed formations," and the re-burial of several prominent Chechen leaders, such as Djokhar Dudayev and Aslan Maskhadov.

Finally, the prime minister of the Chechen separatist government-in-exile is likely to appeal to the Russian authorities not to persecute the families and relatives of the alleged rebel fighters, as such reprisals only furnish another steady source of recruits for the insurgency.

Zakayev's agenda appears to differ radically from that of the pro-Moscow Chechen negotiators, who seek primarily to rally Chechen factions behind the Kadyrov leadership. However, the Kremlin's tacit approval of the negotiating process and of the forthcoming Chechen congress may signal a realization that a change of course is essential if Chechnya is ever to be truly stabilized.

Exactly how far the Russian leadership is prepared to go is still unclear. The inner workings of Russia's Byzantine politics are as difficult to decrypt as ever.

Aslan Doukaev is director of RFE/RL's North Caucasus Service. The views expressed in this commentary are his own, and do not necessarily reflect those of RFE/RL.

August 17, 2009Welcome Back to Armshttp://www.russiaprofile.org/page.php?pageid=Politics&articleid=a1250530347By Roland OliphantRussia Profile

It Will Take Political (Not Military) Will to End the Insurgency in the North Caucasus

Summer is the traditional fighting season in the North Caucasus, but this year has been particularly bloody. Chechen separatism has been replaced by an increasingly vicious Islamist insurgency that has struck in republics across the region. The security services like to point to foreign fighters, but most strategists acknowledge that the deciding factor is local: a generation of young men brought up to war, with no employment prospects and a grudge against the brutality of federal forces.

The death toll is still rising from this morning’s bomb attack in Nazran. At the time of writing it had reached 20. The details are still hazy, but it appears that a suicide bomber drove a Gazelle truck into the courtyard of the police headquarters in Nazran, the capital of Ingushetia, as officers  lined up for a change of shift. The blast was powerful – Kaloi Akhilgov, an Ingush government spokesman, told Reuters that “practically all the cars and buildings in the yard of the police headquarters were completely destroyed.” More than sixty people were injured, including children.

The attack in Nazran caps a bloody several days in Russia’s North Caucasus. On Friday, gunmen murdered four policemen and seven women in the town of Buinaksk in Dagestan. On Wednesday, the Ingush construction minister was shot dead in his office. And today’s attack was at least the third suicide bombing since the attack on Ingush President Yunnus-bek Yevkurov’s motorcade on June 22 (the other, involving a bomber on foot, killed five senior police officers in the Chechen capital Grozny on July 26). And this is only a small sample.

For a few years the insurgency in the North Caucasus seemed to be on its last legs. The relative increase in violence in Ingushetia was seen as a symptom of Chechen President Ramzan Kadyrov’s success in crushing the rebels in Chechnya. Kadyrov himself would make regular statements about how few rebels still held out in the forests and mountains. If the rebels could be pushed from Chechnya to Ingushetia, presumably they could be crushed.

But somehow that has not happened, and it is not clear why. The former-rebel president’s outlandishly brutal approach to counter-insurgency, and the Kremlin’s willingness to overlook it, could be to blame. Or the dire economic situation. Or, as some, including the president of Chechnya, believe, it’s the work of mind-controlling drugs (following the attack on Yevkurov, Kadyrov told the Interfax news agency that a captured fighter had provided information about “tablets” that make a man “like a robot.” The peddlers of these zombie pills were, he hinted, the Western special services).

According to the United Nations Development Program unemployment in some of the North Caucasian republics may reach as high as 70 or 80 percent. And, as Anatoly Tsiganok, the head of the Center for Military prognosis pointed out, when fighting terrorism the most important thing is the economy. “No matter which strategy you follow, you have to find people work,” he said. “The difficulty of finding work in the North Caucasus is the first problem.”

Whatever the combination of causes, it is clear that Kadyrov’s claims that there are only 20 to 40 fighters clinging on in the mountains were at best willfully optimistic, and at worst misleading. According to Tsiganok, the police and the Federal Security Service reckon there are between 500 and 600 terrorists in the North Caucasus. That estimate is partly based on the amount of money the security services think is supporting the insurgency. “If there was more sponsorship, it would allow more fighters,” said Tsiganov.

The official Russian line as that many of these “sponsored” fighters come from abroad, mostly from the same countries Western governments blame for supplying Islamic extremists - Pakistan, Afghanistan and Saudi Arabia. It is certainly true that the surge in violence this summer, especially the suicide attacks, have given news from the North Caucasus a similar flavor to the one the world has become accustomed to hearing from Iraq and Afghanistan.

But like most insurgencies, working out where foreign involvement stops and local disaffection begins is almost impossible. It is not foreigners who are affected by the lack of employment options in the North Caucasus. And most analysts accept that there are other local factors fueling the insurgency. “There are children who are currently 17 or 18 years old, who have grown up only in the conditions of war, and they do not know anything else apart from military action,” said Tsiganok. “And then there are a lot of fighters who have lost many of their relatives through the actions of the federal forces.”

Both Human Rights groups and some military strategists say that the “Kadyrov model” of counter-terrorism, which has seen security forces conduct house burnings, abductions and extra-judicial executions, is counter productive. But even boosters of Yevkurov’s rival strategy of reigning in the security services in order to win back the public’s trust acknowledge that it does not bring “such short-term results.” The question is whether the federal government will have the patience to stick with the longer-term strategy.

There are already signs of frustration in Moscow. Late Monday, Russian President Dmitry Medvedev fired the Ingush Interior Minister Ruslan Meyriev over the Nazran attack.

Conventional military thinking is that the violence of the past several weeks is partly seasonal. Fighting in the Caucasus usually ends in autumn, when colder weather and the falling of foliage forces fighters to return to the towns and villages to take up more peaceful employment (if they can find it). Winter, in theory, should be a calmer season. But this will be small comfort to those who lost loved ones in Nazran on Monday morning. And there is still a month and a half until October. 

Up close but detachedhttp://www.mnweekly.ru/news/20090818/55385599.html

18/08/2009

Anna Arutunyan

As president, Vladimir Putin occasionally had an op-ed published in foreign newspapers, putting forth the Kremlin's position on various international issues.

But only once has Putin penned a purely personal opinion in the Russian press.

That journalistic debut was in Russky Pioner, the celebrity magazine launched this year by veteran Kremlin and now White House correspondent Andrei Kolesnikov.

In May, Kolesnikov asked for a short meeting with the prime minister, and in return got a column, "Why it's hard to fire someone", for his new magazine.

Putin's article drew so much publicity, Kolesnikov says, that it turned his Italian vacation "into a living hell. I was interviewed in every alley of Venice".

That Kolesnikov persuaded Putin to write the article - and that he got his meeting at all - speaks volumes about the Kommersant reporter, who became the Kremlin pool's most famous member during the Putin era.

It's hard to imagine the exclusive Kremlin and now White House press pool without Kolesnikov, who has been an integral (if not the most noticeable) part of it since 2001.

In a country that Kolesnikov himself acknowledges has serious problems with freedom of speech and self-censorship, writing about the Kremlin takes on an irony - sometimes hyper-realistically Kafkaesque, sometimes plain surreal - that has become a trademark of this veteran reporter. He writes about how the president walks and talks, about the shoes he wears and the unexpected gifts of Superbowl rings, and about the strange black dress with the long zipper that Ukrainian Prime Minister Yulia Tymoshenko donned when she met with Putin to settle the latest gas war in January.

How else, after all, can one write about Putin, nearly a decade after he came to power?

Detachment, Kolesnikov said in a recent interview in a Moscow café, is the key. He downplays the amount of access that he has to Putin as a journalist, but the Pioner article would indicate that his access is about the best there is.

"Since I have been working in the pool for a long time, probably if I ask for a short meeting, I will get it. But I won't use this option unless I'm in dire need. Like if this is a question of life and death for someone very close. You have to keep your distance in this situation as much as possible. Because I write regular articles for Kommersant, and I write whatever I feel is necessary. I am limited neither by the editor, nor by the White House press service.

Nor by myself. It's a rare situation, and I'd like to keep it that way."

The "short meeting" in May probably indicates that Kolesnikov and Putin have a strong feeling of mutual respect for each other's work.

The 43-year-old Kolesnikov boasts a reporter's biography typical of his generation: he worked at a regional newspaper in the Yaroslavl region, then went to journalism school at Moscow State University. Then there was a stint at Moskovskiye Novosti, the Russian-language sister paper of The Moscow News, in the 1990s.

Finally came Kommersant, which shares the reputation with Vedomosti of being one of the few respected business dailies in the country.

The turning point in Kolesnikov's career came in early 2000, just after Putin was appointed acting president. That year, he was picked along with Natalia Gevorkyan, a

fellow correspondent, and Natalia Timakova, who worked for the prime minister's press service, to interview Putin for his authorized biography, "In the First Person".

Altogether, the journalists spent about 24 hours with Putin, and produced a book that was instrumental in introducing Putin to a wider public during his presidential campaign that spring.

Today, Gevorkyan lives in Paris, where she writes columns that are virulently critical of Putin. Timakova is President Dmitry Medvedev's press secretary. And Kolesnikov is still, well, the same Kolesnikov.

"Natalia Gevorkyan chose this lifestyle herself. Part of it was technical - she left for Paris as a special correspondent for Kommersant. As for [her] view of Putin, she has the one that she has.

"My view of Putin has a purely working character, the kind that a Kommersant reporter should have.

I don't have any strong feelings for him. I notice, with a lot of satisfaction, that as time goes by I have neither grown to like him nor to hate him. This kind of even attitude is the guarantee of real journalism."

Occasionally, Kolesnikov's trademark irony has landed him in tricky situations.

At the recent launch party for Russky Pioner, Mikhail Fridman, the billionaire chief of Alfa Group and one of the contributors to the magazine, was asked by Kolesnikov what he thought of Putin's 10 years in power.

"I am afraid that after such a question I will have to stop talking to you," Fridman replied in an apparent joke.

But every joke has a grain of truth in it.

"Actually, this is a pretty serious situation," Kolesnikov said when asked about the exchange the day after the party. "In the last several years, people have grown accustomed to talking about the president and the prime minister with caution. Television has conditioned them to talk like this. And television is in very bad shape when it comes to freedom of speech. I had a chance to mention this to Putin - I said, listen, can't you free television from government pressure? Don't act as if this pressure doesn't exist. And he didn't act as if it didn't exist. He said to me, ‘Yes, you're probably right, but right now society is in a position where it needs this kind of television. When society changes, he said, so will television.'"

The influence of television is enormous, Kolesnikov says, so much so that his columns pale in comparison. "The people, the newspapers, and journalists take their cues from

television. Because where there is no censorship there is self-censorship. And it even pops up at Russky Pioner readings. We joke about it, but in reality it exists."

Indeed, there is a suspicion that the detached façade sometimes falters. Kolesnikov described an incident about three years ago when he and the Kremlin pool photographer, Dmitry Azarov, decided to publish a photo-album titled "Four Seasons of Vladimir Putin". All the photographs were purchased from the Kommersant archive, but Kolesnikov decided to show the album to Putin first.

"It was so harsh on [Putin] at times that I thought it wouldn't be fair to publish it without saying anything to him first. So I decided to show it to him, although it was a difficult decision to make. I thought that he would hate us afterwards. And when we met, in his personal office in Sochi, he was standing there, paging through a Monet album. We should have just turned around and left, because how can we compete with Monet? He won the first round, from the psychological standpoint, if he was thinking about it (and I think he was). Anyway, he looked at our album for over an hour. He was very displeased with certain photographs. ‘What, is that me drunk?' he asked about one."

But in the end, Putin seemed to like the album, Kolesnikov says. In fact, he told Dmitry Azarov that he was a "cut above" a Western photographer recommended to Putin by Jacques Chirac and Gerhard Schröder.

"And I thought to myself then, so this is what these people are really worried about - how they look," says Kolesnikov. "However calm and condescending they seem to be about their image, this is what they talk about among themselves."

Spending seven years in the Kremlin press pool, Kolesnikov went over to the White House pool when Putin became prime minister.

"I don't have the feeling that I'm not so much at the centre of events now as I was in the presidential press pool," he says of his reporting from the White House. "This is where it's at. And it will only get more interesting."

There is no need for Kremlin in this hypothesis or why DDOS is the new poetryhttp://neteffect.foreignpolicy.com/posts/2009/08/17/there_is_no_need_for_kremlin_in_this_hypothesis

Mon, 08/17/2009 - 10:01am

August must be taking a really heavy toll on the news media. How else to explain a recent flurry of half-baked newspaper articles about cyberwarfare? It seems that not a single day could pass without yet another take on how "we all are going to die" at the hands of some evil-minded Russian nationalists, secretly funded by pro-Kremlin oligarchs, intent on blowing up the country's power grids, water dams, and whatever else is left of the crumbling American infrastructure. Ah, if only those pesky Russians understood the basics of PR! They could already be playing up the fears of the inevitable

"cyber-death panels" that would punish all of us for not running that annoying anti-virus check...

It's not surprising that the public debate on the issue hasn't changed much since early spring. We keep drowning in a stream of classified reports from numerous cybersecurity organizations (on lucky weeks- like this one - such reports come with unclassified summaries that only make us more concerned, for we could only guess what ominous details have been omitted). We keep wasting time on criticizing the never-ending fear-mongering articles in the Wall Street Journal. We keep dissecting the most outrageous assertions about the impending cyber-Armaggedon. And those assertions keep coming...

Today we've got a new summary to play with; this one is from a new report of the US Cyber Consequences Unit (CCU), an independent nonprofit research institute studying, you guessed it, cybersecurity. Several articles - including those in the Wall Street Journal and PC World - report on its findings, featuring numerous quotes from CCU's experts. There is plenty of stuff in there that I strongly disagree with. However, what really irks me is that the researchers are drawing too many insights from the fact that last year's cyber-attacks on Georgia started a few hours after the war had begun. To them, this is a sure sign that the Russian military must have been coordinating its actions with hackers, or, at least, granting them access to their war plans.

Yes, you heard it right: the Russian military sharing their plans with a bunch of bloggers, hoping they could help them defeat the Georgians. You can't make this stuff up. I wonder if those who believe that the Russian military is capable of this would also think that such a scenario is feasible in the US. Imagine Robert Gates inviting Robert Scoble and Giga Om to give them a classified briefing about the US strategy in Afghanistan. 

But even if we leave such absurdity aside, this theory assumes that nobody was expecting this war and the cyber-attackers had to be tipped off - or they wouldn't be able to launch the attacks so promptly. But what about the fact that all three parties to the conflict - i.e. Georgians, South Ossetians and Russians - had been trading rocket fire, grenades, and explosions for a good few months before the conflict began? Those of us who closely followed last summer's public debates in Russia (and, to a certain extent, Georgia) surely noticed that there had been much talk of a possible war even in June and July.

True, most analysts thought it would happen in Abkhazia, not South Ossetia, but last August's war was hardly a surprise on the scale of, say, 9/11. Thus, the conflict was actually the culmination of a long-drawn squabble between political leaderships of both countries; those squabbles were well publicized and openly discussed. Did many Russians have animosity towards the Georgian president before the war? Yes, they did - and the same goes for Georgian attitudes towards Kremlin. Once you factor in the much-overlooked regional politics, many things become clear. For example, politics explains why the web-site of the Georgian president had first been attacked a few weeks before the war broke out: enough people hated him already.

It's time for the cybersecurity community to accept the uncomfortable truth that DDOS is what people do when they hate each other. In the past, they used to trade hate mail; today, they trade DDOS attacks. Historical parallels abound: in the first few months of WWI, German newspapers received almost a million amateurish poems lauding the war; at least at the very beginning of the conflict, many Germans were extremely excited and supportive of the war effort. Thanks to the Internet, today there are plenty of other ways for concerned and patriotic citizens to show their excitement about a war their country is fighting. DDOS is the new poetry.

That said, what I don't really understand is why it's so hard to accept the fact that a bevy of nationalistic Russians may have decided to take revenge on Georgia after reading the news of the war WITHOUT coordinating their actions with the Russian government. Why did they need to coordinate anything if they were capable of launching DDOS without government assistance? By the same logic, we should be theorizing that the hordes of people who launched DDOS attacks on the Iranian government's web-sites two months ago were also being led by DOD or the State Department. How many reasonable people believe that this wouldn't have happened if the US government didn't get involved?

This may look silly, but every time I hear of such theories, I am reminded of the famous conversation between Napoleon and the French astronomer Laplace. When the emperor asked the scientist why he didn't mention God in his vision for the comprehensive world system, Laplace quipped that he had no need for that hypothesis. Similarly, there is no need for DOD or the State Department in explaining the cyber-attacks on Iran; there is also no need for invoking the Russian government in the attacks on Georgia. If the Russian government really wanted to destroy the Georgian communications, they could have done so by destroying their Internet cables or bombing their TV stations. Somehow NATO knew that bombs are usually more effective than DDOS attacks and showed very little restraint in bombing the Serbian television headquarters in 1999; are we holding the Russian military to a higher moral standard?

Military history aside, I am quite surprised that the WSJ article didn't mention the Iranian DDOS angle at all. Or is it only considered "cyber-terror" when pro-American governments like Georgia get attacked? Why doesn't the Cyber Consequences Unit also study the Iranian attacks to draw some insights about any timing coincidences? After all, the attacks started only a few hours after the protests had begun: that surely is a sign that the protesters were coordinating their actions with their Western supporters who were behind DDOS?

Of course, I wouldn't be surprised if this is also the argument that is now used by the Iranian authorities to get the arrested protesters to confess to foreign backing. Something must be really wrong with our own public debate about cyberwarfare if our cyberwarfare experts have to share the same intellectual base with Ahmadinejad.  I am being ironic here, but isn't the fact that America has home-bred "cyber-terrorist" units capable of striking down foreign governments also a cause for concern? I mean, today they DDOS Iran, tomorrow they might DDOS Israel...

Frankly, I am not much surprised by the lack of critical analysis of the attacks on Georgia: this is what happens when technological analysis is conducted in complete isolation from the world of politics. I'd be surprised if any of the recent cyberwarfare reports actually reached out to the non-military and non-tech regional experts, particularly those who are knowledgeable about the political developments in the region. Trying to analyze the cyberdemension of a real war is impossible without understanding the causes, the conduct, and the aftermath of the war. However, in a quest for anecdotes that could help establish a tenuous connection between DDOS and the "real world"  (i.e. the governments rather than petty criminals), most observers of cyberwarfare fail to take notice of the forces shaping that "real world". Perhaps, this is to expected, but that more and more journalists fall for this narrative is quite disconcerting.

Evgeny Morozov, originally from Belarus, is a fellow at the Open Society Institute in New York and serves on the board of OSI's Information Program. He is currently at work on a book about the impact of the Internet on global politics, with a particular focus on authoritarian states.

Russia’s botched policy in its own backyardhttp://www.ft.com/cms/s/0/e799a49c-8b59-11de-9f50-00144feabdc0.html

By Anders Åslund

Published: August 17 2009 19:47 | Last updated: August 17 2009 19:47

Relations between Russia and Ukraine have always been difficult. Since Ukraine’s Orange revolution in late 2004 they have been dismal. Conflicts have involved gas, agricultural trade, the Russian naval base in the Crimea, the war in Georgia and Ukraine’s interest in Nato. Even so, politicians from the two countries rarely meet.

Last year Vladimir Putin, then Russia’s president, escalated the conflict by publicly questioning Ukraine’s sovereignty and territorial integrity. He has repeated his claims as prime minister. President Dmitri Medvedev’s strident open letter to President Viktor Yushchenko amounted to a further escalation, with its declaration that Russia would not send a new ambassador to Kiev. Mr Medvedev offered no constructive proposals but listed old Russian grudges, claiming that all faults lie with Ukraine.

The language was reminiscent of Leonid Brezhnev in its detachment from reality. Mr Medvedev claimed that no Russian threat against Ukraine exists, as if he were unaware of his prime minister’s statements. He went on in Soviet vein: “Russia endeavours to be a predictable, strong and accommodating partner” to its neighbours. Well, hardly, as Mr Yushchenko noted in his response.

Mr Medvedev’s obvious aim was to influence the Ukrainian presidential elections scheduled for January, expressing hopes for improved relations with the “new Ukrainian leadership”. Mr Yushchenko is no longer a credible candidate, having proven himself an ineffective ruler. The two leading candidates are instead Yulia Tymoshenko, the current prime minister, and Viktor Yanukovich, the former prime minister, with Arseniy Yatseniuk, the former speaker, as the only other plausible contender.

But however much effort Moscow puts into the Ukrainian elections, it is not likely to achieve its aims, as the Orange revolution illustrated. Contrary to common misconceptions, no real separatism exists in Ukraine. The Kremlin has given up on Mr Yanukovich, the leader of largely Russian-speaking eastern Ukraine, realising that no serious Ukrainian politician can be pro-Russian. Recently, the Kremlin has preferred Ms Tymoshenko as somebody they can do business with, but there is no love lost.

The Kremlin’s misunderstanding of Ukrainian politics is based on the fact that, unlike Russia, Ukraine is a democracy. The Russian leaders think they can “buy” Ukrainian politicians, but in the end they must listen to their voters, not Moscow, to gain office. This is an alien thought to the authoritarian Muscovites, who believe everything is manipulated from above and by Washington. Persistent anti-Ukrainian propaganda on Russian state television also turns eastern Ukrainians against the current Russian regime.

Mr Medvedev’s statements appear to be a reflection of the rivalry between the Putin and Medvedev camps, which confuses all central policymaking in Russia at present. Ominously, Mr Putin has made Ukraine-bashing one of his trademarks and Medvedev needs to keep up. Russian economic policy is suffering as a result of this strife and Ukraine may do so too.

The broader problem for Russian foreign policy is that the country’s rulers do not know how to deal with their post-Soviet neighbours. Their policy objectives are mixed. Gazprom wants to monopolise gas supply, transportation and sales. Private businessmen aspire to expand their corporations. Agricultural interests block imports. Russian nationalists persist in neo-imperialism and populist politicians try to win domestic support by attacking their neighbours.

The result is that post-Soviet nations are trying to develop relations with anybody but Russia. Kazakhstan and Turkmenistan are opting for gas exports to China. Most starkly, Georgia and Ukraine are turning to the west, but even Belarus, the ultimate Russian loyalist, is fed up with the Kremlin and seeking other options.

For the west, the conclusion is that it needs to solidify its support for Ukraine regardless of who wins the elections. Fortunately, it is doing so. Joe Biden, the US vice-president, made this point clearly during his recent trip to Kiev, while the European Union is pursuing efforts at integration, notably through a forthcoming European Association Agreement on trade.

The writer is a senior fellow of the Peterson Institute for International Economics and author of How Ukraine Became a Market Economy and Democracy

Mikhalkov Directs Himself Back To Top Of Russian Film Industry http://www.rferl.org/content/Mikhalkov_Directs_Himself_Back_To_Top_Of_Russian_Film_Industry/1801656.html

August 17, 2009By Kevin O'FlynnMOSCOW -- The Russian film journal "Iskusstvo kino" (Art of Cinema) is the oldest film publication in Europe. Founded in 1931, it outdates both Britain's "Sight and Sound," and France's "Les Cahiers du Cinema."

But its time-honored reputation wasn't enough to save "Iskusstvo kino" from being forced from its premises this month at the order of the head of the Russian Cinematographers' Union, Nikita Mikhalkov.

Editor Daniil Dondurei says the ejection was revenge for the journal's decision to back veteran director Marlen Khutsiyev, not Mikhalkov, in elections to pick a union head.

"After I didn't vote [for him] and my colleagues all voted for Khutsiyev, Nikita Mikhalkov made the decision to throw us out," Dondurei says. "We decided it was better to go out on the street but remain an independent journal. Because if we become dependent, there's no sense in it at all."

The eviction of an industry stalwart like "Iskusstvo kino" is just the latest Shakespearean twist in a bitter battle over the future of the Russian film industry.

At the center of the fray is the 63-year-old Mikhalkov -- once a beloved Soviet film actor and now one of Russia's most famous directors, whose close Kremlin ties are a reminder that culture and politics remain deeply entwined in post-Soviet Russia.

Close To The Kremlin

Mikhalkov is an unquestioned member of Russia's cultural royalty, born to a family of painters and poets. His brother, Andrei Konchalovsky, is himself an esteemed film director. His father, Sergei, authored the lyrics to the Soviet national anthem (as well as the current Russian anthem). Mikhalkov's family has always enjoyed warm relations with the power elite before and after the Soviet collapse.

Despite critical looks at the country's Stalinist past in works like "Burnt By The Sun" -- for which he won a U.S. Academy Award for best foreign film -- Mikhalkov is an unabashed fan of Vladimir Putin, even directing a hagiographic film about the then-president on the occasion of his 50th birthday. Together, the two men last year launched a government advisory panel on the Russian film industry that will be headed by Putin. The move sparked fears among critics and filmmakers that the Kremlin may be seeking to

harness moviemaking for its own ideological ends.

Mikhalkov's most recent film, "12," may serve as a template for the future of Russian filmmaking. The film examines the consequences of Russia's wars in the North Caucasus by portraying the jury trial of a young Chechen man accused of murdering his stepfather, a retired Russian Army officer.

While "12" proved popular, many critics found the film -- and particularly Mikhalkov's own role, as a former KGB officer serving as the jury foreman, too eager to portray some Russians as paternal, understanding observers of the Chechen conflict.

Many see films like "12" as setting the tone for Russia's $500 million-plus film industry. Russia in recent years released a number of big-budget historical epics that reflect the Kremlin's drive to burnish the national image.

These include films like "Admiral," a portrait of White Army commander Aleksandr Kolchak, and "1612," a depiction of the Polish-Muscovite War.

Battle For Union Leadership

But as recently as December 2008, the cultural world was still ready to push back against political pressure. That was when Dondurei and other members of the Cinematographers' Union gathered for a congress to elect a successor to Mikhalkov, who was stepping down from the post after serving as its head for 11 years.

Delegates were already frustrated by Mikhalkov, whom they accused of mismanaging union funds and doing little to support the Russian film industry. They were further disenchanted when Mikhalkov presented his preferred successor, 39-year-old Mikhail Porechenkov.

Porechenkov, known mainly for his roles in action movies and as the host of the TV series "Battle of the Psychics," was not a popular choice. Many at the congress were incensed that an actor, and an undistinguished one at that, could be put in charge of a body previously led by the cream of the country's directors.

Opposition was growing among the 400-plus delegates. Ultimately, the congress rejected Mikhalkov's candidate, voting in 83-year-old Khutsiyev instead. Within months, however, the December vote was subjected to a court inquiry because of alleged procedural violations.

A new congress was held in March to conduct fresh elections, this time pitting Khutsiyev against Mikhalkov.

Many in the Moscow film community cried foul, including director Yuly Gusman, who refused to attend the gathering, which was held at the Gostiny Dvor exhibition center, a stone's throw from the Kremlin.

"What took place at Gostiny Dvor had so much PR support, so much administrative and financial support that it turned into a cinematic spectacle -- a televised spectacle with a two-hour report that didn't contain a single word of truth," Gusman says.

During the congress, Mikhalkov accused his detractors of being pro-Western liberals and revolutionaries. He also alleged his opponents had spent $400,000 on a press smear campaign.

A second election saw Mikhalkov returned to his former post at the helm of the union, and -- according to his critics -- ready for revenge.

'Keep Quiet -- Or Else'

"Iskusstvo kino" has not been the only victim of the election. Khutsiyev has left VGIK, the most prestigious film school in the country. Despite denials by the rector, many believe he was forced out. For Russian filmmakers who have differences with Mikhalkov, the lesson is clear,

Daniil Dondurei says those who speak out against Mikhalkov "must be punished."says. If you want to have a successful career, stay quiet.

"There are those who do agree with his conception; those who disagree, but keep quiet and think they will be able to survive in the world of Mikhalkov culture," Dondurei says. "Then there are those few who talk about it. Those who speak have to be punished."

Still the list of those who have spoken out against Mikhalkov is impressive, and includes such legends of Russian film such as film directors Eldar Ryazanov and Aleksei German, theater directors Yury Lyubimov and Mark Zakharov, and animator Yury Norshtein.

The election controversy has been a bitter experience for the Cinematographers' Union, which was the first of the artistic unions to rebel against attempts by Soviet authorities to impose a leader.

Union members held their first election in 1986 -- a step that Dondurei credits with helping to usher in the era of glasnost that led to the collapse of the Soviet Union.

But he says that now "it's going backwards. Nikita Mikhalkov names himself the head so as to go backwards and close the doors of freedom closed definitely."

Yury Bogomolov, a culture critic at official Russian newspaper "Rossiiskaya gazeta," says that it's a sign of tightening control.

"It seems the head of the union, and maybe the country, are looking for a loyal sector within the intellectuals who can be relied upon," Bogomolov says. "Not by force but by intellect."

RFE/RL's Russian Service contributed to this report

Less Russians move abroadhttp://www.barentsobserver.com/less-russians-move-abroad.4619588-16180.html

2009-08-18 The Russian Migration Service has registered a sharp decline in the number of Russians moving abroad. At the same time, the number of Russians resettling inside Russia is increasing.-We have registered a 20 percent decrease in the number of Russian moving abroad, Deputy Head of the Migration Service Yekaterina Yerova told journalists, RIA Novosti reports.

At the same time, the number of Russians moving to other places in the country is on the increase. Ten percent more people now change place of residence in Russia, Ms Yegorova confirmed.

The higher level of domestic migration is believed to follow the growing unemployment in the country with more people moving to find jobs.

National Economic Trends

Russia’s industrial output goes down by 14% in January-Julyhttp://www.itar-tass.com/eng/level2.html?NewsID=14241821&PageNum=0

MOSCOW, August 17 (Itar-Tass) -- Russia’s industrial production decreased by 14.2 percent in the first seven months of the current year as compared to the same period of 2008, the Prime Tass economic news agency said on Monday, quoting a report on the Federal State Statistics Service.

In July 2009, the country’s industrial output dropped by 10.8 percent as compared to last July, and went up by 4.7 percent as against this June, the economic news agency said.

In January-July 2009, Russia’s mining production shrank by 3.1 percent, Prime Tass said, adding that the production in the processing industries went down by 20.3 percent.

In addition, the country’s production and distribution of electricity, gas and water decreased by 5.9 percent this January-July, as compared to the same period of 2008, Prime Tass cited the statistical report.

In the reporting period, Russia’s oil and gas condensate production increased by 0.3 percent to make up 284 million tonnes, Prime Tass said.

In the period under review, gas production dropped by 20.2 percent to 315 billion cubic metres and coal output contracted by 14.1 percent to 50.7 million tonnes, the economic news agency said.

In January-July 2009, production of iron ore decreased by 19.5 percent as compared to the same period of 2008, and made up 50.7 million tonnes, Prime Tass said.

In the first seven months of the year, Russia’s electricity production went down by 6.2 percent to 567 billion kilowatt-hours, and production of thermal power decreased by 1.7 percent to 802 million Gcal, the economic news agency quoted the State Statistics Service’s report.

Slowdown in Industrial Output Easeshttp://www.themoscowtimes.com/article/1009/42/380886.htm

18 August 2009Combined Reports

The State Statistics Service said Monday that the slump in industrial production eased for a second month in July after the Central Bank cut interest rates five times since April.

Output decreased an annual 10.8 percent, falling for the ninth consecutive month, compared with a drop of 12.1 percent in June.

The economy of the world’s biggest energy exporter contracted the most on record last quarter, shrinking an annual 10.9 percent.

Wage arrears declined 9.9 percent to 6.5 billion rubles ($201.8 million) in July.

While the fall in wage arrears is a “good tendency,” it may not be that indicative of employment conditions, said Sergei Guriyev, rector at the New Economic School.

“Many enterprises cut their staff, and therefore, wage funds are being cut,” Guriyev said.

(MT, Bloomberg)

Russian unemployment still falling

http://www.businessneweurope.eu/dispatch_text9540

bneAugust 18, 2009

It is not exactly good news, but Russia's macroeconomic results continue to improve slowly. In the last bit of good news the Healthcare and Social Development Ministry said the number of officially unemployed was down by 0.4% in the week to August 12, reports Prime Tass.

This is actually a much more encouraging result than it seems to be and comes on top of a raft of other results that strongly suggest the Russian economy is at or has already passed bottom. In a crash unemployment spikes as companies cut costs, but in the post crash period unemployment takes a lot longer to fall than production and profits take to recovery.

The reason is obvious: companies are slow to increase their wage bill as they try to rebuild profits and the surviving workers are usually happy to work more for less after passing through the scare of joblessness that crashes bring.

In other new Europe countries to the west of Russia, governments are expecting a slower recovery but the relatively quick bounce back in Russia's unemployment rates suggest, like the stock market, the joblessness rates have overshot and demand is stronger than was expected so companies are hiring a bit more than would be expected. There is a chance that the eastern Europe economies will do a "first in, first out" style of recovery, which is still a long way from a V shape recovery, but certain could surprise on the upside.

In related news, the level of total overdue wages was down nearly 10% to RUB6.5bn as of August 1, reports Rosstat. This is also encouraging as companies basically froze payments as the crisis struck and the reduction of overdue pay suggests that money is beginning to flow again as companies start to pay off their debts.

Most of the payments were made by state organs which have been suffering from funding problems, but have received state help recently.

Wage arrears caused by delays in federal government financing decreased 38.5% in July to 93 million rubles as of August 1, while wage arrears caused by delays in regional government financing decreased 56.6% to 34 million rubles, and wage arrears caused by delays in municipal government financing decreased 14.8% to 33 million rubles, the statistics service said, reports Interfax.

Russia’s Ruble Climbs Against Dollar, Euro as Oil Price Rises

http://www.bloomberg.com/apps/news?pid=20601095&sid=aY1RLayN29Ow

By Alex Nicholson

Aug. 18 (Bloomberg) -- The ruble strengthened against the dollar and euro as crude oil advanced.

Russia’s currency gained 1.2 percent to 31.8516 per dollar at 10:43 a.m. in Moscow. The ruble fell 2 percent yesterday. The ruble increased 0.8 percent to 45.0171 per euro.

The movements against the dollar and the euro left the ruble up 0.8 percent at 37.8759 against the central bank’s target currency basket, which is used to manage swings that hurt Russian exporters.

Crude oil for September delivery rose 29 cents to $67.04 a barrel.

The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together. The ruble remains within the 26 to 41 band the central bank pledged Jan. 22 to defend.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

Last Updated: August 18, 2009 02:45 EDT

Ruble Takes Biggest Hit Since Early Julyhttp://www.themoscowtimes.com/article/600/42/380877.htm

18 August 2009By Alex Nicholson / The Moscow Times

The ruble weakened the most in five weeks against the dollar, and the MICEX Index slumped as concern about the pace of the global recovery curbed appetite for investments in the world’s biggest energy exporter.

The ruble fell 2 percent to 32.24 per dollar, its biggest decline since July 10. The MICEX Index fell 3.5 percent, after earlier sliding as much as 3.9 percent, the steepest intraday drop since July 6.

Urals crude, the country’s main export, fell 3 percent to $68.09 per barrel in Monday trading.

The ruble is “the iconic high-yielding, emerging market currency that people don’t want to have anything to do with when risk conditions are looking a bit unsupportive,” Manik Narain, strategist at Standard Chartered in London, said Monday. “There is some nervousness that markets have been pricing in too fast a pace of global recovery.”

Rosneft, the nation’s biggest oil producer, dropped 5.2 percent to 179.70 rubles a share. Shares of Norilsk Nickel, the country’s largest mining company, fell 3.5 percent to 3,234.46 rubles. Novolipetsk Steel, Russia’s biggest producer of the metal by market value, lost 2.1 percent to 78.05 rubles.

“The correlation between oil and the ruble over the course of this year is going to remain very strong,” Narain said. “It’s so critical for the management of cash flow in Russia and also given the deteriorating fiscal balance.”

Russia’s budget deficit widened in the first seven months to the equivalent of 4.3 percent of gross domestic product as the government spent 924 billion rubles ($28.7 billion) more than it collected, the Finance Ministry said Aug. 12. The gap could reach 9.4 percent of GDP this year, it forecasts.

Energy, including oil and natural gas, accounted for 68.8 percent of Russia’s exports to the Baltic states and countries outside the former Soviet Union in the first six months, according to the Federal Customs Service.

The ruble weakened 0.9 percent to 45.41 per euro. The movements against the dollar and the euro left the ruble down 0.7 percent at 38.15 against the Central Bank’s target currency basket, which it uses to manage swings that hurt Russian exporters.

The drop in Chinese equities “is driving the entire commodity rally to an end,” Shahin Vallee, an emerging-market currency strategist at BNP Paribas in London, said Monday. “You have a number of people with long ruble positions that are now reconsidering them on the back of something that looks like a change of outlook for commodities prices.”

China and Russia decreased investments into American bondshttp://www.makfax.com.mk/en-Us/Details.aspx?itemID=8095

Washington / 18/08/09 / 09:38 China and Russia decreased investments into American securities, although China stayed America’s largest investor of financial instruments.

Despite the fact they decreased their investments from 801.5 billion dollars in May to 776.4 billion in June, Beijing is still the largest foreign investor of American securities.

At the same time Russia decreased its input in American securities by 3.7 % or 119.9 billion dollars.

It has been showed that it’s trend to invest in American securities. In June 91 billion dollars of securities have been bought.

Japan is the second owner of American securities, which increased its investments by 5.1 % or 712 billion dollars.

Russian grain harvest 10m tons below last year's levelhttp://www.businessneweurope.eu/dispatch_text9540

bneAugust 18, 2009

Russian farmers had already brought in 53.8m tons of grain as of August 17, which is 10m tons down on last year's level, reports Interfax citing the Agriculture Ministry.

However, last year Russia enjoyed a very strong harvest and this year's result will still be good. Russia has already significantly boosted grain exports and the sector remains one of the more attractive.

The main factor behind the lower harvest is a reduction in yield, which has totalled 2.71 tonnes per hectare so far this year versus 3.07 tonnes in 2008, reports Interfax.

The Agriculture Ministry expects the total harvest to reach 85m tons this year against to 108.1m tons in 2008.

Business, Energy or Environmental regulations or discussions

Anti-Monopoly Service Wants Unitary Enterprises Eliminatedhttp://www.themoscowtimes.com/article/1009/42/380894.htm

18 August 2009Vedomosti

The Federal Anti-Monopoly Service has proposed eliminating all state and municipal unitary enterprises that aren’t involved in strategic sectors, saying they stifle competition and are used to misappropriate budget funds.

State enterprises, known by their acronym as FGUPs, and municipal enterprises, or MUPs, are among the biggest hindrances to competition, the anti-monopoly watchdog said in a report on its web site. They frequently perform oversight, manage property and provide paid services to citizens, and they get preference for budget funds, the report said.

Often the money is removed from state control, which boosts the chances for corruption, it said.

The service proposed privatizing all FGUPs and MUPs not involved in strategic sectors. The enterprises could also be reformed as state or commercial organizations that are 100 percent state owned, said Alexei Sushkevich, director of the service’s analytical department.

The FGUPs were recognized as inefficient 15 years ago, and the government has been trying to reduce their number through privatizations since 1994, with varying success, a Cabinet source said.

“It’s even harder with the MUPs,” he said, since no one knows how many exist. “There are at least 100,000.”

On Jan. 1, 2008, according to the Federal Property Management Agency, the government owned 5,709 FGUPs, or 824 fewer than a year earlier. The agency was supposed to privatize the property of 440 unitary enterprises last year. In 2009, 235 FGUPs are supposed to be privatized.

The Transportation Ministry has been reforming the way it uses FGUPs for more than five years to decrease their number and make sure that budget funds are used more efficiently, a ministry official said.

“Sure, not everything is working out, but that doesn’t mean that you should stop trying,” the official said.

Evraz Group, Lukoil, OGK6, Rosneft: Russian Equities Previewhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZU1fvjs6vUU

By Anastasia Ustinova

Aug. 18 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

The 30-stock Micex Index fell 3.5 percent, the most since July 6, to 1,035.4 in Moscow. The RTS Index dropped 5.1 percent to 1,005.77.

Evraz Group SA (EVR LI): Russia’s second-largest steelmaker said output was affected after an accident shut Russia’s largest hydroelectric power plant and reduced electricity supply to the company. Evraz fell 5.8 percent to $21.88 in London.

OAO Lukoil (LKOH RX): Russia’s largest non-state oil producer said it plans annual production of 13 billion cubic meters of natural gas and 16 million metric tons of oil and gas condensate from the Caspian Sea by 2020. Lukoil declined 3.02 percent to 1,451 rubles on the Micex Stock Exchange.

OAO OGK-6 (OGK6 RX): Siberian electricity prices may rise from 5 percent to 7 percent after an accident today closed Russia’s largest hydropower station, RIA Novosti said, citing Energy Minister Sergei Shmatko.

OGK6 fell 4.9 percent to 58 kopeks.

OAO Rosneft (ROSN RX): Crude oil for September delivery fell to a two-week low on the New York Mercantile Exchange as global equities dropped and the U.S. dollar advanced, reducint the appeal of commodities to investors.

Rosneft, Russia’s biggest oil producer, dropped 5.2 percent to 179.70 rubles.

To contact the reporter on this story: Anastasia Ustinova in St. Petersburg at austinova@bloomberg.net.

Last Updated: August 17, 2009 22:00 EDT

VTB shares likely to be offered to market at 4.8 kopeckshttp://www.interfax.com/3/511575/news.aspx

MOSCOW. Aug 18 (Interfax) - New shares issued by VTB (RTS: VTBR)are have now been valued ahead of their placement on the market, asource close to the banking group told Interfax. "It'll probably be 4.8 kopecks," the source said. "The placement price already exists. The supervisory board willgive its final approval when it meets next week," the source said. VTB traded at 4.1 kopecks a share on the MICEX Stock Exchange onMonday. Earlier reports said the VTB board would approve the share priceonce a rights offering expires on August 24.

Shares in Russia VTB rise after report on valuationhttp://www.reuters.com/article/rbssBanks/idUSLI2120620090818

Tue Aug 18, 2009 2:44am EDT

MOSCOW, August 18 (Reuters) - Shares in Russia's second largest lender VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) rose 3.9 percent on the early trading after A Reuters report the bank was independently valued at 20 percent premium to market ahead of a secondary placement.

State-controlled VTB is struggling with losses as provisions for bad loans rise and the state has already allocated 180 billion roubles to inject into the bank's capital. (Reporting by Dmitry Sergeyev)

http://uk.reuters.com/article/idUKLI1402020090818www.vedomosti.ru

The state-owned bank VEB has held 8.75 percent of Surgutneftegas (SNGS.MM: Quote, Profile, Research), 1.96 percent of Gazprom (GAZP.MM: Quote, Profile, Research) and 1.42 percent of Rosneft (ROSN.MM: Quote, Profile, Research) by the end of the first quarter, the daily reports.

Banks Stepping Up Debt Collectionhttp://www.themoscowtimes.com/article/600/42/380883.htm

18 August 2009By Alex Anishyuk / Special to The Moscow Times

Banks are three times more active in going after overdue corporate loans today than in March, when President Dmitry Medvedev castigated lenders who resist rescheduling payments for “corporate selfishness.”

The total amount of overdue debt sought in court by the country’s top five banks has increased by almost 250 percent, from 26 billion rubles ($792 million) in March to 91 billion rubles ($2.8 billion) today, Kommersant reported Monday, citing data from the Moscow Arbitration Court.

The leading position is held by Alfa Bank, which is attempting to recover a total of 26.4 billion rubles. The company’s biggest debtors are meat processor Prodo Group and GAZ, who have 3.9 billion rubles and 3.8 billion rubles of debt outstanding, respectively, the newspaper reported.

Just slightly behind is VTB, with 26.1 billion rubles — although the bank would be in first place if it were counted together with its retail banking arm, VTB-24, which is seeking to recover over a billion rubles of debt itself.

Nomos Bank, MDM and Sberbank round out the top five. Bank of Moscow, seeking just over 100 million rubles, is at the bottom of the list.

In March, an irritated Medvedev moved to defend struggling producers from banks seeking to recover their loans, saying lenders should not be able to halt the operations of a company even if they had legitimate complaints.

“We can’t sacrifice the future of entire enterprises and the employment of many thousands of workers to satisfy the ambitions of individual lending institutions,” Medvedev said. “It’s time to end corporate selfishness.”

The comment seemed to be aimed at Alfa Bank, the country’s largest private lender, who at the time was involved in a legal battle over loans with companies that are part of Basic Element.

Banks, however, said they are acting lawfully and have no other means of getting their money back.

“We are a 100 percent private bank, and we receive all our loans from the Central Bank and VEB on certain conditions and at a certain rate of interest,” an Alfa Bank spokesperson said in an e-mailed statement. “Therefore, the cash we loan to our clients is mostly borrowed and can be demanded back by our creditors at any time.”

Alfa Bank’s shareholders recently gave it $320 million in capital, which makes the lender highly accountable to them, the lender said. “If some of our clients are in trouble, we are ready for an open dialogue,” the bank said.

Other banks said they rush to recover loans in order to avoid being taken advantage of by debtors.

Some debtors prefer to have their companies liquidated, which allows them to be in control of the bankruptcy process, said Irina Gordeyeva, vice president at Nomos Bank.

“Banks are aware of such behavior and try to get a court ruling as soon as possible in order to control the bankruptcy process and prevent the debtor from divesting assets,” she said.

Nevertheless, stringent loan repayment policies during difficult economic times might not be in lenders’ best interests. “The banks that apply tough policies have chosen an irrational approach,” said Metropol’s Mark Rubinstein. “During a recession, the real sector expects banks to be more concessive and cooperative.”

Russia's diamond Alrosa sees demand uphttp://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLH54212820090817

Mon Aug 17, 2009 11:21am EDT

* Alrosa saw market demand in August, first time in 2009

* Hopes to break even with help of state purchases

* Agreed a $276 mln debt restructuring with Alfa bank

By Polina Devitt and Dmitry Sergeev

MOSCOW, Aug 17 (Reuters) - Russian state diamond miner Alrosa has started to feel demand on the market for the first time this year, but will depend on the state to manage its $3.6 billion debt, Alrosa's spokesman said on Monday.

Alrosa, the main rival to global major De Beers, produces about one-quarter of the world's rough diamonds and sold $66 million worth of diamonds on the market of in August.

These were the first sales of the year to anyone other than its buyer of last resort, the Finance-Ministry controlled State Precious Metals and Gems Repository (Gokhran).

"We have managed to start paying down our debt because we have started selling our output to the market again," the spokesman said. "We sold rough and cut diamonds worth $66 million in August."

Alrosa paid off 2.8 billion roubles ($88.27 million) owed to Russia's largest private lender, Alfa Bank, under a newly struck restructuring deal, the companies said on Monday.

"Alrosa has redeemed an overdue loan for 2.8 billion roubles. Three other loans for 2.8 billion roubles, $48 million and $52 million respectively, the company will pay back in 2010," Alexey Zotov, director for major corporate business at Alfa Bank told Reuters on Monday.

The rouble loan bears a rate of 15 percent while the dollar-denominated loans pay 13 and 13.25 percent respectively, plus the restructuring fee.

LOSS MAKER

Alrosa posted a net loss of 14.7 billion roubles for the first six months of 2009 under Russian accounting standards as sales plummeted in the global economic recession. It is expected to rely on more government purchases to keep cash coming in, a Gokhran source told Reuters on Monday.

Diamond producers across the globe have been badly hit by weak demand as a global recession tightens its grip, but the world's top diamond producer De Beers has said demand should pick up in the second half. [ID:nLN374020]

Gokhran bought diamonds worth 14 billion roubles for state reserves in the first half of the year, and Alrosa was seeking to sell Gokhran another $3 billion worth of gems during 2009-2010 to earn enough to serve the company's outstanding debt, which totalled $3.6 billion at the beginning of 2009.

"The company hopes shareholders will help it to restructure the short-term debt and will increase the purchasings from the State Reserves to help the company to pay the debt from its own account," the source close to Alrosa said, adding that Gokhran had not decided on future purchases.

Alrosa earned 1.57 billion roubles in 2008. If Gokhran maintains its purchases, it hopes to break even in 2009 despite recent heavy losses, Alrosa's spokesman said.

Early in the crisis, Alrosa acted as a state agent in the bailout of Russia's first victim of the financial turbulence, investment bank KIT Finance.

Alrosa has already decided to sell off non-core assets -- specifically its domestic gas and oil assets -- to state-controlled VTB bank (VTBR.MM: Quote, Profile, Research, Stock Buzz), one of its major creditors, for around $600 million. [ID:nLE391803]

Alfa Bank, controlled by billionaire Mikhail Fridman, is widely known for a tough approach to the debt restructuring process and is involved in dozens of court cases to retrieve debts from troubled borrowers.

Among them are companies controlled by indebted businessman Oleg Deripaska, who is near a deal with a 70-strong pool of creditors to restructure $7.4 billion in foreign debts owed by aluminium giant RUSAL, Russia's biggest debt settlement.

Early in the process the creditors' club sought state intervention in a dispute between Alfa and RUSAL. ($1=31.72 ROUBLE) (Reporting by Polina Devitt and Dmitry Sergeyev; editing by Mariam Karouny)

Alrosa Appoints Igor Kulichik As Vp For Financial Policy http://www.diamondintelligence.com/magazine/magazine.aspx?id=8132

16 August 2009

Alrosa has named Igor Kulichik, the company's former chief treasurer and finance director, as vice president for financial policy. Under his new title, Kulichik will now be responsible for financial policy issues, Alrosa's projects in Africa and the activity of the mining company's subsidiaries and affiliates.

In other company news, Alrosa reported that it sold $35 million in rough diamonds to the market during the first ten days of August. With regard to cut diamonds, Alrosa's newly appointed president, Fyodor Andreyev, has ordered Brillianty Alrosa, the division that handles cut diamonds sales, to draft proposals on pricing and selling the stockpiles, reports Interfax.

KazakhGold BoD and management reshuffle: Polyus Gold taking Troika, Russia

http://www.businessneweurope.eu/dispatch_text9540

Tuesday, August 18, 2009charge

Following the acquisition of 50.1% in KazakhGold, Polyus Gold expectedly reelected the company's BoD. Four representatives from Polyus Gold were appointed to the seven seat board: Evgeny Ivanov (CEO), German Pikhoya (Deputy CEO), Oleg Ignatov (CFO) and Boris Zakharov (COO).

Aidar Assaubayev will keep a seat on the BoD, in essence now representing the second largest shareholder with 20% of votes. David Netherway will keep his position as an independent, non executive director, and Stephen Oke will return as the second independent director.

Ivanov has been appointed as Chairman of the BoD and CEO of KazakhGold. Polyus Gold also replaced all top managers at the Kazakh company, its appointees including the CFO, COO and head of the London office. Overall, we expect Polyus Gold's team to take full charge of operations, and the recent high profile appointments highlight the company's strong commitment to the asset.

POWER CONCERNS IN SIBERIA Electricity prices on balancing market in Siberia up 400% after Sayano-Shushenskaya HPP accidenthttp://www.businessneweurope.eu/dispatch_text9540

Citibank, RussiaAugust 18, 2009

Electricity prices on the balancing market in the Siberian price zone increased 400%, reaching Rbl 1,000/MWh yesterday as a result of the accident at Sayano-Shushenskaya HPP, Interfax reports, citing the System Operator. The reason is that the System Operator quickly redistributed the load from the HPP to the more expensive thermal power plants in Siberia, namely TGK-11, TGK-12, OGK-3, OGK-6 to cover the lack of electricity as Sayano-Shushenskaya HPP's capacity should have covered 30% of Monday's electricity output in Siberia. The Energy Ministry is planning to increase the load to maximum levels for Krasnoyarskaya HPP (Not rated) and Bratskaya HPP, which is controlled by

Irkutskenergo (IRGZ.RTS; US$0.28; 1H) and other thermal power plants.

We think the news will be positive for electricity prices in Siberia, the beneficiaries of which are hydro power plants: Krasnoyarskaya HPP and Irkutskenergo's HPPs and then thermal power plants in Siberia, such as Berezovskaya GRES (OGK-4), Gusinoozerskaya and Kharanorskaya GRES (OGK-3), and Krasnoyarskaya GRES-2 (OGK-6). However, there is a risk of tariff regulation in Siberia by the government.

RUSAL considering production cuts on power concernshttp://www.mineweb.co.za/mineweb/view/mineweb/en/page36?oid=87661&sn=Detail

The group is looking to help reduce electricity consumption ahead of winter after an Accident at a Hydroelectric power station that feeds some of the firms smelters

Posted:  Tuesday , 18 Aug 2009

MOSCOW, (REUTERS) - 

Russia's UC RUSAL, the world's largest aluminium producer, is considering a possible output cut due to a fatal accident at a hydroelectric power station that feeds two of its Siberian smelters, the company said.

UC RUSAL's majority owner, billionaire Oleg Deripaska, took part in an emergency meeting chaired by Energy Minister Sergei Shmatko to discuss the use of back-up capacity to ensure energy supplies to RUSAL's smelters, the company said in a statement.

"One of the issues discussed was the possibility of reducing output at RUSAL's smelters to create additional reserves of energy required for the stable functioning of the region on the eve of the autumn-winter season, when the load on the energy system increases," the company said.

UC RUSAL did not give any details about how much capacity could potentially be cut.

Ten people died and more than 60 are missing after a turbine room flooded on Monday at the Sayano-Shushenskaya hydroelectric power station, Russia's largest.

UC RUSAL said production at its Khakassia and Sayanogorsk smelters -- which run on electricity from the damaged power plant -- was so far unaffected as they had switched to alternative suppliers. UC RUSAL, with debts of $16.8 billion, has already embarked on a cost reduction programme this year that led to a 10% reduction in aluminium output in the first six months of 2009.

The company produced 1.98 million tonnes of primary aluminium in the first half of the year. Cuts at its Siberian smelters totalled 4.5% in the period.

In 2008, the company produced 4.4 million tonnes of primary aluminium, up from 4.2 million tonnes in 2007.

Power for the Sayanogorsk and Khakassia plants is now being supplied from the neighbouring regions of Krasnoyarsk and Kemerovo, said Vladimir Shulekin, spokesman for the Sayanogorsk plant, located about 50 km (30 miles) from the dam. (Reporting by Robin Paxton; editing by Sue Thomas)

Evraz energy supply situation due to accident at Sayano-Shushenksaya GES

http://www.businessneweurope.eu/dispatch_text9540

Renaissance Capital, RussiaTuesday, August 18, 2009

Event: As a result of the accident at Sayano-Shushenksaya GES yesterday (17 Aug), Evraz's subsidiaries located in the Siberian energy zone (NKMK and ZSMK) may experience an electricity supply shortage due to the conservation of energy resources introduced in the region. Evraz confirmed that the aforementioned subsidiaries partially cover energy needs through supply from RusHydro assets including Sayano-Shushenksaya GES. The company will maintain operations on all major aggregates including coke batteries, blast furnaces and converters while production may be reduced in the downstream segment particularly at the ZSMK site. Evraz management did not provide official estimates of the potential impact of the accident on steel-mill operations so far.

Rationale: Evraz steel assets located in Western Siberia have 60-65% self-sufficiency in electric energy through on-site generation. Thus, we do not expect NKMK and ZSMK to experience a significant energy supply shortage. As for the temporary stoppage of downstream operations at ZSMK, excessive pig iron volumes may be redirected to the NKMK site. Evraz has previously commented on the high efficiency of supplying NKMK operations with pig iron from the low cost production platform of ZSMK. Another area which is potentially vulnerable to energy supply disruptions is electric-arc furnace (EAF) production at NKMK. However, we do not expect essential changes of Evraz production plans this quarter due to the accident at Sayano-Shushenksaya GES.

Evraz Sells Stake in Miner

http://www.themoscowtimes.com/article/1009/42/380895.htm

Evraz Group sold its stake in the Cape Lambert Iron Ore project in Western Australia, the Australian company said in a statement Monday.

Evraz sold 60 million shares in Cape Lambert Iron Ore to British  and Australian investors. Evraz spokesman Sergei Lavrinenko confirmed that the company exited the project. (Bloomberg)

Russia Severstal to issue 45 bln rbls in 5 bondshttp://in.reuters.com/article/oilRpt/idINL03941320090818

Tue Aug 18, 2009 11:46am IST

MOSCOW, August 18 (Reuters) - Severstal (CHMF.MM: Quote, Profile, Research), Russia's largest steel producer, plans to issue five rouble-denominated bonds totalling 45 billion roubles ($1.42 billion), the company reported on Tuesday.

The company plans to sell a 15 billion rouble bond, two 10 billion rouble bonds and two 5 billion rouble bonds.

All have a maturity of 3 years.

(Reporting by Yelena Fabrichnaya, writing by Dmitry Sergeyev)

Vekselberg Company Orders Solar Modules Worth $277Mhttp://www.themoscowtimes.com/article/1009/42/380880.htm

18 August 2009Bloomberg

Oerlikon won a Russian solar order that analysts say may be worth more than 300 million Swiss francs ($277 million) from a business partly owned by the Swiss company’s biggest investor, billionaire Viktor Vekselberg, Oerlikon said Monday.

Nano Solar Technology, a joint venture between Vekselberg’s Renova Group and Rusnano, ordered a 120-megawatt production line for thin-film solar modules, Oerlikon said in an e-mailed statement.

“With the envisaged production capacity of 1 million solar modules annually, this is the largest equipment order in the worldwide thin-film silicon photovoltaic market in 2009,” the company said.

The order may be worth more than 300 million Swiss francs, according to Helvea analyst Reto Amstalden. Vontobel analyst Michael Foeth estimates it to be at least 200 million francs. Renova spokesman Daniel Grotzky said the parties agreed not to disclose details of the contract. He said the whole project has a “volume” of 20.1 billion rubles ($620 million).

The contract is “absolutely” necessary for Oerlikon, as order intake at the solar unit probably won’t meet Helvea’s expectations for the first half, Amstalden said in a research note. Oerlikon also makes machinery for the textile industry and drive systems for cars.

“This order may show that the business for large project financing is opening up again, although we would like to see Oerlikon Solar also receive big orders from other customers that are not linked to Renova,” he added.

AvtoVAZ extends losses

http://www.businessneweurope.eu/dispatch_text9540

Renaissance Capital, RussiaTuesday, August 18, 2009

Yesterday (17 Aug) AvtoVAZ reported 2Q09 non-consolidated RAS financials. Although sales grew 37%, financial performance deteriorated further: AvtoVAZ once again posted losses even on the gross profit level, with a negative gross profit margin, widening to a negative 5%. AvtoVAZ's 1H09 net loss was almost RUB17bn. The non-consolidated RAS accounts do not include a significant amount of operating expenses (eg administrative) and this is the reason we think that on a consolidated IFRS basis AvtoVAZ figures would look significantly worse. AvtoVAZ car sales in Russia in 2Q09 rebounded slightly (+2.8% to 91,200 cars), but still are far below the breakeven point, which, according to CFO Oleg Lobanov (cited by Vedomosti) is currently at 600,000 cars a year, or 50% higher than the company's current sales level.

According to AvtoVAZ management, the company is not expected to return to profit on the operating level by the end of the year. AvtoVAZ's bonds are indicatively quoted around 20%, and if there are still market investors in the bonds, it is better to exit in our vie, because we think the state could finally limit its support to the loss-generating company.

AFI Development reports $201m second quarter losshttp://www.globes.co.il/serveen/globes/docview.asp?did=1000490793&fid=942

The company, controlled by Lev Leviev, wrote $297 million off the value of investment properties in the quarter.Ouriel Herman18 Aug 09 09:40AFI Development PLC, the Russia and CIS real estate arm of Africa-Israel Investments (TASE: AFIL), controlled by Lev Leviev, published its results for the second quarter and first half of 2009 this morning. The company made a net loss was of $201.7 million in the second quarter, compared with a net profit of $28.5 million in the second quarter of 2008. The gross loss for the quarter was $245.4 million, compared with a gross profit of $40.3 million for the second quarter of 2008. For the first half, the company made a net profit of $215.1 million, compared with $97.3 million for the first half of 2008. At the end of June, AFI had $132.5 million in cash and cash equivalents. The company said that the second quarter loss stemmed from the decrease in the value of some of investment properties under development since the first quarter, which led to an

impairment recorded to their book value totaling $297 million. After the end of the reporting period, AFI sold its Kossinskaya project for $195 million, reflecting a premium of $44.2 million over its book value. The cumulative effect of the impairment and of the sale after the tax was $211.6 million AFI also mentioned that it had made further progress in leasing activity for the Mall of Russia development, with lease agreements reflecting a total take-up of about 30%, with an additional 30-35% covered by non-binding letters of intent and memoranda of understanding. It commented that "a less marked downward pressure continues to affect the real estate market in Moscow across all asset classes." AFI CEO Alexander Khaldey said, "Our first half results were adversely affected by the continuing decrease in the values of our properties under development. At the same time as evidenced by the sale of our Kossinskaya project at significant premium to its book value, we believe that our projects continue to have potential for revaluation gain in future. "Aside from the impact of revaluations resulting from the current economic uncertainty, we have seen a steady growth in lettings. Although funding remains scarce across the market, our cash resources, reinforced by the recent Kossinskaya sale, mean that we are better placed than many other developers to cope with the challenges of this still volatile market. "We are focusing on Mall of Russia which will now be positioned as one of the few new high quality retail centers to be opening in Moscow in 2010. This will strengthen the Mall's ability to attract major operators as tenants, as shown by our recent leasing agreement with Inditex and its major brands such as Zara and Bershka."

Activity in the Oil and Gas sector (including regulatory)

Russia ups oil export 0.2% to 122.9 mln tonnes in H1 mths – Rosstathttp://www.interfax.com/3/511615/news.aspx

MOSCOW. Aug 18 (Interfax) - Russian oil and gas condensate exportsedged up 0.2% year-on-year in January-June to 122.9 million tonnes, theFederal State Statistics Service (Rosstat) said, quoting figures fromthe Federal Customs Service (FCS) that include oil exported to Belarus. Oil accounted for 32.7% of overall Russian exports, down from 36.5%in January-June last year. Oil fell to 49.9% of overall fuel and energyexports, from 52.2% a year previously. Rosstat said Russia exported 50.7% of the oil it produced inJanuary-June 2009. The average export price for oil in June was $417.8 per tonne, or16.5% higher than in May. Urals blend traded at $498.7 a tonne in theworld market, up 20% from May. Russia increased oil and gas condensate production 0.1%year-on-year in H1 2009 to 242.2 million tonnes. Refinery throughputfell 0.8% to 115.4 million tonnes.

Russia lifts oil export dutyhttp://www.upstreamonline.com/incoming/article185925.ece

Wire services

Russia will raise its oil export duty by 7.5% to $238.6 a tonne from 1 September, reflecting an increase in crude prices over the last month.

The duty was based on the monitoring of international prices for Russia's benchmark Urals crude blend between 15 July and 14 August, a Finance Ministry official told Reuters.

The duty, which plays a big role in the financial results of Russia's oil companies, was set at $222 a tonne for August.

Alexander Sakovich, deputy head of the Finance Ministry's customs monitoring department, said the average price of Urals in the latest monitoring period was $69.14 a barrel, which works out at around $507 a tonne.

The September duty was in line with the $237 to $241 range forecast by the ministry on 11 August, three days before the end of the monitoring period.

Export duties on light refined products, such as gasoline and gas oil, will rise to $173.1 a tonne in September, up from $161.9 a tonne this month.

On heavy refined products, such as fuel oil, the September tariff will be set at $93.2 a tonne, up from $87.2.

Monday, 17 August, 2009, 07:29 GMT | last updated: Monday, 17 August, 2009, 07:29 GMT

Medvedev Wants Sea Developedhttp://www.themoscowtimes.com/article/1009/42/380884.htm

18 August 2009The Moscow Times

President Dmitry Medvedev said Monday that Russian companies should develop offshore oil production in the Caspian Sea and build more ports and upgrade shipyards on the shore as a way of boosting the regional economy.

“Think about achieving these goals,” Medvedev told the chief executives assembled for a meeting of his advisory State Council in Astrakhan, including Gazprom chief Alexei Miller and LUKoil chief Vagit Alekperov.

The Caspian Sea area is home to economically depressed regions such as Dagestan and the Astrakhan region.

Alekperov told the meeting that LUKoil expected to start pumping oil from its Caspian field, called Yury Korchagin, next year. It is also developing another offshore field with Gazprom.

Medvedev also called for a quicker division of the sea by the five littoral countries that include Iran, Azerbaijan, Kazakhstan and Turkmenistan. Medvedev announced that he would meet with the heads of the other Caspian states “in the near future.” He didn’t elaborate, but his visit to Turkmenistan is scheduled for next month.

Russia and the other four littoral states have been negotiating for 12 years to divide the energy-rich sea but haven’t been able to reconcile their proposals.

“I will put it bluntly: These talks haven’t gone ahead easily. Sometimes they simply don’t move forward,” Medvedev said, Interfax reported.

LUKoil posts 3.4% rise in oil output, 12.4% drop in gas productionhttp://en.rian.ru/business/20090817/155834965.html

MOSCOW, August 17 (RIA Novosti) - Russia's LUKoil posted on Monday a 3.4% rise in oil output year-on-year to 48.63 million metric tones and a 12.4% decline in natural gas production to 7.36 billion cubic meters.

Russia's largest privately owned oil producer said oil refining had increased 4% to 1.98 million barrels a day.

LUKoil, which accounts for around 1.3% of global oil reserves and some 2.3% of global oil output, earlier announced plans to boost its oil output 2.9% in 2009 to 98.2 million metric tons (1.97 million barrels a day).

In 2008, LUKoil's U.S. GAAP net profit fell 3.9% year-on-year to $9.14 billion. The company's oil output declined 1.5% year-on-year in 2008 to 95.24 million metric tons (1.9 million barrels per day), while gas production rose 22% in the reporting period to 17.02 billion cubic meters.

LUKoil's nominal majority shareholder with 63.3% of shares is Russia's ING Bank (Eurasia). U.S. oil major ConocoPhillips has a 20% stake. LUKoil President Vagit Alekperov directly and indirectly controls about 20% of the company's stock.

Korchagin SBM installed http://www.upstreamonline.com/live/article185977.ece

By Upstream staff

Lukoil said the single point mooring (SBM) system at Yuri Korchagin field has been installed in the Russian sector of the Caspian Sea.

The SBM is intended for oil transshipment from the subsea pipeline to the floating storage unit and shuttle tankers.

Lukoil said the maximum transshipment volume reaches 2.3 million tonnes per annum.

The SBM jacket weighing 915 tonnes was fabricated at the shipyard of the Russian plant, Astrakhanshy Korabel. The jacket was installed by a floating derrick and fixed to the seafloor with five piles, each with the diameter of over two metres.

The 240-tonne topsides were delivered from Bluewater’s facility and installed over the jacket.

The SBM will be connected to the drilling complex and the fixed offshore ice-resistant platform via a 300-millimetre subsea pipeline, which has been laid on the seafloor.

Yu. Korchagin field is expected to be commissioned in December 2009. The field holds estimated reserves of 570 million barrels of oil equivalent. Its annual production rate is expected to ramp up to 2.3 million tonnes of oil and gas condensate and 1.2 billion cubic meters of gas.

Tuesday, 18 August, 2009, 07:13 GMT | last updated: Tuesday, 18 August, 2009, 07:13 GMT

Lukoil takes delivery of vessel for Caspian workhttp://www.energycurrent.com/index.php?id=2&storyid=20003

8/14/2009 4:37:40 PM GMT

KALININGRAD, RUSSIA: Lukoil has received multipurpose ice reinforcement ship Langepas, which was constructed at Keppel Singmarine Shipyard in Singapore, to operate in the Caspian Sea.

Langepas left Singapore on Aug. 6, and is expected to arrive in the Caspian Sea on Sept. 3 or Sept. 4. It will be performing some standby and rescue operations as part of Lukoil's offshore oil and gas projects.

The ship is 213 feet (65 m) in length and 49 feet (15 m) in width, with a draft of 14 feet (4.3 m) and deadweight of 900 tons. It can reach a speed of 13 knots. The ship can operate in temperatures as low as minus 20 degrees Centigrade and navigate ice 28 inches (70 cm) thick. Langepas' home port is Kaliningrad, which is a Russian city located on the Baltic Sea.

Presently, the development and construction works at Yu. Korchagin field located in the Caspian Sea are carried out by support vessels Tsarevsky, Gandurinsky, Svetly and Vzmorye, which are owned by Lukoil-Kaliningradmorneft. Soon, Kogalym will join them.

Construction of a floating storage unit with the deadweight of 28,000 tons is also nearing completion. It will become part of the offshore trans-shipment complex for oil delivery from Yu. Korchagin field to the onshore facilities. This storage unit is being constructed at Keppel Singmarine Shipyard in Baku, Azerbaijan, on commission from Lukoil.

Yu. Korchagin field, the first one to be commissioned in the Northern Caspian region, will start production next December. The field is located 112 miles (180 km) away from Astrakhan, Russia in 36 feet (11 m) to 43 feet (13 m) of water. The estimated 3P reserves in the field are 570 million BOE.

18.08.2009

TNK-BP Drilled the First Five-Leg Wel on Russkoyehttp://www.oilandgaseurasia.com/news/p/0/news/5482

Tyumenneftegaz, a subsidiary of TNK-BP, drilled the first five-leg horizontal well in the Russkoe field in the Yamalo-Nenets Autonomous Area, informed the Regional Public Relations Department of TNK-BP Sibir, the Tyumen branch of OJSC TNK-BP Management.

The flow rate of the well exceeded the expectations, but the actual yield of the well will be known in winter after construction of a winter road to the field for export of oil.

Wells like this are drilled for production of oil in multi-factor fields. The Russkoe field is characterized by viscous oil, a large gas cap, and permafrost rocks. “This drilling technology was chosen for better coverage of the reservoir and determination of adhesion and filtration properties of reservoir rocks,” explained Evgeny Zadorozhny, General Director of Tyumenneftegaz. “The results of this new drilling technology will be evaluated after commissioning of the well.”

A total of 6,500 m was drilled in the Russkoe field in the first half of 2009. The technology of multi-hole drilling was tested in three wells in a pilot area, after which the entire volume of drill cuttings and drilling wastes was utilized and disposed of. Oil production in the first six months of the year in the field amounted to 19,000 tons, which is twice the volume of oil production in the same period last year.

Construction of the first line of a startup oil import and export complex is completed, a well pad is built, and a pilot road is constructed in the field, which is utterly important in the complete absence of infrastructure in the production area.

The Russkoe field is in the Tazovsky District of the Yamalo-Nenets Autonomous Area. Pilot operation of wells in the field was started by TNK-BP in 2007. The recoverable reserves of the field amount to 400 million tons of oil and over 85 billion cubic meters of gas.

Copyright 2009.  Prime TASS. All rights reserved.

17.08.2009

Russia's Slavneft posts 9.2% profit drop in 2008http://www.oilandgaseurasia.com/news/p/0/news/5477Russia's Slavneft posts 9.2% profit drop in 2008 Crude oil producer Slavneft, ranked among Russia's top ten oil companies, posted a 9.2% drop, year-on-year, to $483.56 million in its 2008 U.S. GAAP net profits.The crude producer's revenue increased 18.4% to $7.26 billion in the reporting period.Earlier reports said Slavneft's net profit calculated to Russian Accounting Standards reached 6.18 billion rubles ($194.5 million) last year, up fivefold against the 2007 index.Slavneft is co-owned by Gazprom Neft, the oil arm of Russian energy giant Gazprom, and Russian-British joint oil venture TNK-BP. -  Copyright 2009, RIA Novosti. All rights reserved.  

New Russian shipyard for tankers and oil rigshttp://www.barentsobserver.com/new-russian-shipyard-for-tankers-and-oil-rigs.4619593-16175.html

2009-08-18 Russia’s Vneshekonombank confirms that it is ready to grant up to 28 billion RUB on the construction of a new shipyard in Primorsk on the Baltic Sea coast.

The shipyard will be designed to construct large-scale tankers, LNG carriers and drilling rigs, Vedomosti reports. It is Russia’s major plans for shelf development, which is the underlying reason for the planned investments.

VTB leader Vladimir Dmitriyev in a meeting with Prime Minister Putin yesterday said that his bank is ready to provide up to 28 billion RUB for the construction of the new yard, a government press release informs.

According to newspaper Vedomosti, board director of the Vyborg Yard Georgy Poryadin has earlier said that the new yard can be constructed in three years.

SNC-Lavalin buys 48 percent stake in Russian firmhttp://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN1430370420090814

Fri Aug 14, 2009 3:04pm EDT

OTTAWA, Aug 14 (Reuters) - SNC-Lavalin Group Inc (SNC.TO: Quote, Profile, Research, Stock Buzz) said on Friday it has bought a 48 percent stake in a Russian engineering company, a deal the Canadian firm hopes will help it become a leader in that country's oil and gas market.

Financial terms of the investment in OAO VNIPIneft, which specializes in oil refining, gas processing, petrochemicals and chemicals, were not disclosed.

The Moscow-based company, with about 900 employees, has designed more than 40 refineries and industrial projects in Russia Europe and the Middle East.

Jean Beaudoin, the head of SNC's chemicals and petroleum unit, said the Montreal-based engineering and construction company has been operating in Russia for more than 30 years and considers it a key market.

Shares in SNC were down C$1.28, or 2.5 percent, at C$48.71 on the Toronto Stock Exchange on Friday.

($1=$1.10 Canadian) (Reporting by Susan Taylor; editing by Rob Wilson)

Gazprom

Gazprom’s overdue debtshttp://www.barentsobserver.com/gazproms-overdue-debts.4618832-116321.html

2009-08-17 Gazprom’s overdue debts to supply companies and contractors in the first half of 2009 increased by 64 percent to a total of 78.2 billion RUB, newspaper Vedomosti reports.Meanwhile, the company is itself the victim of non-paid debts. Other companies owe Gazprom about the same amount – 78.4 billion RUB – most of it for gas deliveries sold on guarantees, the newspaper writes.

Gazprom retakes its positions in EU http://www.focus-fen.net/index.php?id=n191136

16 August 2009 | 00:07 | FOCUS News Agency Moscow. Russian gas giant Gazprom is consolidating its positions on the way to Central Europe, the French Le Figaro newspaper reports.A step forward in this direction is the “Baumgarten” gas terminal on the norder between Austria and Hungary. The “Baumgarten” terminal is the company’s incarnation of its fight against the Nabucco gas pipeline. Gazprom is still reinforcing its positions along the route of the South Stream pipeline, which is the same as the planned Nabucco route.