Russia 100803

Basic Political Developments Kuwaiti-Russian committee continues talks on cooperation - The meetings, which

will conclude on Tuesday, are attended by head of the Kuwaiti side Oil Minister and Information Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah and Russia's Energy Minister Sergey Ivanovich Shmatko.

Ukraine optimistic about gas transporting consortium talks - "The talks are in full swing, and we would like to secure guarantees from Gazprom that there will be sufficient gas transit amounts in the future. Although the conditions that we are proposing allow us to be optimistic about the outcome, it is still too early to make them public," Boyko noted.

Impasse in Polish-Russian cooperation - Prime Minister Tusk said that he expects Russia to give an explanation for not handing over the documents to the Polish side.

Poland accuses Russia of delaying handover of Smolensk air crash data - The exact date of Mr Miller's visit to Moscow is not yet known. Meanwhile, Mr Tusk said he would personally meet Russian government leaders or President Medvedev, if necessary.

Moscow for preventing escalation of Palestinian-Israeli conflict: The Russian Foreign Ministry points out in a statement that Israeli aircraft have bombed the Gaza Strip for two days in retaliation for missile fire from Gaza on Israeli territory.

NORAD, Russia to test hijack response - Military aircraft from Russia and the North American Aerospace Defense Command will track a plane across the Pacific, at one point handing off responsibility for tracking the plane from the U.S. to Russia.

SA PRESIDENT ZUMA VISIT TO MOSCOWo S. Africa to Raise Steel, Power With Russia, Bus. Day Says - South Africa

will discuss tariffs on its steel exports and the purchase of power from a Russian-owned natural-gas fired plant when President Jacob Zuma visits Russia, Business Day said, citing an unidentified government official.

o PREVIEW: Zuma visit boosts Russian bid to muscle back in on Africa o Zuma to Visit in BRIC Charm Offensive - The trips mean that Zuma will

have visited all four of the BRIC countries — Brazil, Russia, India and China — in a little over a year after taking office.

o South Africa: Russia Will Have Eye on China for Zuma Visit - The courtship with SA is also a Russian attempt to stay ahead of China, which has usurped the influence that Europe and the US used to command in Africa.

'Sale of S-300 may encourage Azerbaijan' - “This is a wrong message of Baku”, said director of the Armenian center of strategic and national studies, Richard Giragosian commenting on possible sale of Russian anti-missile S-300 complexes to Azerbaijan.Russia to have weekly TV program about Azerbaijan - A weekly television

program about Azerbaijan is to air for the first time in Siberia and the Urals region on 7 August.

Russia interested in int’l recognition of Abkhazia, South Ossetia Belarus promises to recognize Abkhazia, South Ossetia - Medvedev Medvedev: Abkhazia, S.Ossetia recognition ‘not a goal in itself’ Medvedev: Lukashenko promised to recognize the independence of Abkhazia and

South Ossetia Medvedev orders inquiry into conflict between Norilsk Nickel shareholders -

"The head of state has instructed the Prosecutor General's Office to carry out an inquiry. It is still unclear whether any violations have been committed. What each side says is partly true. But it is a large enterprise, and the presence of such a serious conflict between its shareholders is not good," the source said.

Norilsk should remain private-media cite Kremlin - Ria added that an ideal solution would be the sale of the stake belonging to one of core shareholders, Oleg Deripaska or Vladimir Potanin, but it did not specify which one.

Putin to hold meeting of govt high technology & innovation comsn - Russian Prime Minister Vladimir Putin on Tuesday will visit the Gazprom VNIIGAZ Research Institute of Natural Gases and Gas Technologies in the Razvilka settlement of the Moscow region. He will hold there a meeting of the Government Commission on High Technology and Innovation.

WILDFIRES IN WESTERN AND CENTRAL RUSSIA o Russian officials urged to do more to fight fires - Vladimir Stepanov, the

head of Emergency Situations Ministry Crisis Center, said Tuesday that munipical officials in regions around central Russia "must mobilize all their forces, not just sit and wait for fire brigades to arrive."

o Russia'' Emergencies Ministry to buy 8 Be-200 planeso Temperature to hit 40 degrees in Moscow on Tuesday – Roshydrometo 323 new wildfires reported in Russian in past 24 hours - “As many as 776

wildfires, including 57 peat-bog fires, were reported in Russia. A total of 323 new fires were registered in the past 24 hours, of which 247 have been extinguished,” the spokesman said.

o Wildfire sweep across 17 Russian regions – ministryo Central Russia ravaged by forest and peat-bog fireso Baikal area rescuers save village in Nizhny Novgorod from fireo Central Russia blanketed in smog as wildfires continueo Wildfires ravage Central Russiao Environmentalists Blame Fires on Policies - Environmentalists said the

consequences of the fires are so dire because a centralized woodland-fire control system was canceled by the 2007 Forest Code, a law lobbied by timber-processing companies and signed by then-President Vladimir Putin.

o Will Russia's Heat Wave End Its Global-Warming Doubts? - By Simon Shuster

Medvedev’s stay in Sochi no vacation - Dmitry Medvedev asked journalists not to regard his stay in Sochi as a vacation. “This is simply a transfer of work to the southern residence,” said the president. “Either way, each day I go to the office,

hold meetings and events, and by the time I finally come out to the sea, it turns out that the time is already nine in the evening,” he said.

NORTH CAUCASUS o Explosives belonging to Baksan plant attackers uncovered in Russian N.

Caucasuso Bomb-making laboratory found ion Kabardino-Balkaria found o Umarov, Vadalov must surrender, or die – Kadyrovo Tactical Toothache - Doku Umarov’s Resignation Does Not Signify a

Change in Tactics, but an Insurgency Where Heads Are Growing Back Before They Are Even Decapitated Well-Known Journalist Killed in Car Accident in Chechnya

o In Dagestan, the chairman of the public council settlement shot and killed o In Dagestan, the police fired, there were no injuries

Airliner crashes in Russia’s Krasnoyarsk Region - An airliner An-24 has crashed in the Krasnoyarsk Region, in Eastern Siberia. The accident occurred when the plane was 700 metres away from the Igarka airport runway and about to land. 11 people died in the crash, specifically 10 passengers, including one child, and also a flight attendant.

Death toll in Russia's East Siberia airliner crash rises to 12 (Update-4) 4 survivors in An-24 crash hospitalized in Igarka Krasnoyarsk territory to mourn An-24 crash victims on August 4 Putin positioning himself to reclaim Russia presidency - By Sergei L. Loiko, Los

Angeles Times FACTBOX-Key political risks to watch in Russia U.S. woman used as patsy in smuggling military hardware to Russia - The 44-

year-old woman from Wisconsin was landed a job via a Website and had to change packaging and address labels on parcels she received, which in reality contained sniper scopes, night-vision goggles and military gear, rather than clothing for orphans in Russia.

Central Asia close to chaos due to US efforts – Russian MP: The US is destabilizing Central Asia by means of drug trafficking, disintegrating Kyrgyzstan and putting pressure on Iran, shared Semyon Bagdasarov, member of the State Duma’s International Affairs Committee.

National Economic Trends IMF on Russian fragile recovery from crisis - IMF Survey Online spoke with Poul

Thomsen, who is now moving on after having been mission chief for Russia since 2004, about how the government has been managing Russia's economy and what more needs to be done.

IMF Sees Strong Russian Growth, Calls For Fiscal Stimulus Exit IMF Expects Near-Term ‘Moderate Recovery’ for Russia (Update1) Russia Plans First Six-Year Bond Since ‘08 as Debt Funding Lags Russia delays grain interventions for undefined period - The Russian Agriculture

Ministry has postponed the government's interventions on the grain market, the ministry's press office announced today. Originally, interventions were scheduled to begin on Wednesday. The ministry did not reveal any new dates, however.

Russia will not restrict grain exports - The Agriculture Ministry plans to keep gain exports at the previous years' level, he said. Russia exported 21.4 tons of grain in 2009.

Russia expected to bring in 70 mln tons of grain this year Rise in grain prices unfounded says grain association Russian State Trader to Bid in Egypt, Jordan, Iraq Grain Tenders - United Grain

Co. signed agent agreements to bid in government tenders to sell the commodity in Jordan and Iraq and plans to sign agreements in Egypt, Libya and Tunisia, the Russian state trader said today in an e-mailed statement.

Wheat Advances for Sixth Day on Russian Drought, Erasing Losses Worst Russian Drought in 50 Years Threatens More Crops, Sowing Russia: locust infested 1.8 mln ha of agricultural lands Reserve fund - no changes in July - Yesterday (2 Aug) the Ministry of Finance

(MinFin) released monthly statistics on the usage of the Reserve and National Welfare Funds. As of 1 Aug, the Reserve Fund was at RUB1.23trn ($40.6bn) and the National Welfare Fund RUB2.66trn ($88.2bn).

Business, Energy or Environmental regulations or discussions Razgulay, Rosneft, RusHydro: Russian Market Equity Preview Russian government to axe more business licenses - The Russian government has

submitted a draft bill that will abolish or relax licensing for some types of economic activity to the State Duma, ITAR-TASS reported on Monday citing a report on the State Duma's Web site.

Import duties for the majority of aircraft to be cancelled - According to Vedomosti, the Commission of the Customs Union of Russia, Belarus and Kazakhstan has decided to cancel the 20% import duty for planes with 112-159 and 220-299 seats. For those planes contracted before 2014, zero import duties will be effective until the end of 2018.

Russia's KTK H1 coal production up 3 pct Russia domestic consumption of rolled steel products and pipes increases in H1 Russia sees 43pct increase in pipe output in H1 Sberbank increases interest rates on dollar deposits Starbucks delays opening in Russia's second largest city Renaissance CEO Sees 20% of Business From Africa, FT Reports Russian bank hopes Africa will prove lucky - Fifteen years after he quit Credit

Suisse to co-found RenCap with another Credit Suisse banker, Mr Jennings is building the investment bank up for the third time – having seen it all but collapse after the 1998 Russian crisis, and again amid the global financial crisis a decade later.

Severstal sues Mezhprombank over $62 mln deposit Deripaska Seeks to Regain 25% Stake in Strabag by Mid-October Oleg Deripaska wants to exchange Russian building assets for 25% of Strabag Potanin’s man appointed Norilsk president Russian Billionaires Battle Over Norilsk Nickel Real estate prices rise as supply shortage looms - Russian real estate prices are on

the rebound, with the construction halt at the height of the downturn likely to push apartment prices higher as demand grows.

Russia's AvtoVAZ says July sales up 60 pct

Activity in the Oil and Gas sector (including regulatory) Rosneft revenues in H1 up by 69pct YoY Rosneft releases full 2Q10 financial statements Rosneft braces for long slog in Vankorskoye talks TNK-BP to Hike Spending - TNK-BP plans to increase spending on three North

Siberian deposits in the second half as it seeks to boost production, Rustem Bakirov, head of TNK-BP’s Rospan International unit said Monday.

Lukoil might buy only part of its shares from ConocoPhillips Drillers Say Output Yet to Peak - But oil servicing firms say the quest for the best

equipment and technology may allow Russia to achieve even its ambitious targets to produce as much as 10.7 million bpd by 2030 if Arctic and offshore Caspian Sea fields are also put on stream.

Russia's "Resource Curse": How High Oil Prices Are Stunting Reforms

Gazprom Gazprom Neft to take out syndicated loan - Gazprom Neft has signed a loan

agreement on a five-year syndicated loan worth $1.5bn, the company indicated in a statement today.

South Stream has solid foundation - "We have no intention of reducing the role of Nabucco because we do not regard it as a rival project," he said in Berlin. "If the participants of (Nabucco) can find gas, form a good (corporate) leadership and secure partners, God help them. South Stream has it all already."

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Full Text Articles

Basic Political Developments

Kuwaiti-Russian committee continues talks on cooperationhttp://www.zawya.com/story.cfm/sidZAWYA20100803072435

03 August 2010MOSCOW -- The meetings of the third session of the Kuwaiti-Russian government committee for trade, economic, scientific and technical cooperation continue here Tuesday for the second day in a row.

The meetings, which will conclude on Tuesday, are attended by head of the Kuwaiti side Oil Minister and Information Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah and Russia's Energy Minister Sergey Ivanovich Shmatko.

After speeches by Al-Sabah and Shmatko, the two sides will sign a final protocol for the committee's activities.

The meetings aim to stress cooperation between Kuwait and Russia in the fields of economy, trade, oil. investment, tourism, culture, renewable energy, the uses of nuclear energy for peaceful purposes, scientific and technology research, water, agriculture and health.

The Kuwaiti delegation includes Kuwait's Ambassador to Russia Nasser Al-Mozayen, head of the Foreign Ministry's economic department Sheikh Ali Al-Khalid, Commerce and Industry Undersecretary Rasheed Al-Tabtebaie, Finance Undersecretary Khalifa Hamada, and Director General of Kuwait Institute for Scientific Research (KISR) Dr. Naji Al-Mutairi.

The delegation also includes Assistant Undersecretary for Economic Affairs at the Oil Ministry Nawaf Al-Fzai', Deputy Managing Director for the affairs of the president's office at Kuwait Petroleum Corporation (KPC), Suhail Al-Mutairi, head of the culture department at the National Council for Culture, Arts, and Letters (NCCAL) Sahl Al-Ajmi, head of the loans department at Kuwait Investment Authority (KIA) Mishaal Al-Hammad, assistant chief of staff at the Defense Ministry's supplies body Major General Ali Al-Ateeqi, and Sahib Al-Mosawi of the Oil Ministry.

© KUNA (Kuwait News Agency) 2010

Ukraine optimistic about gas transporting consortium talks

http://www.rbcnews.com/free/20100803105253.shtml

      RBC, 03.08.2010, Kiev 10:52:53.Ukraine's Fuel and Energy Minister Yury Boyko is optimistic about the results of negotiations on the creation of a gas transporting consortium. "The talks are in full swing, and we would like to secure guarantees from Gazprom that there will be sufficient gas transit amounts in the future. Although the conditions that we are proposing allow us to be optimistic about the outcome, it is still too early to make them public," Boyko noted.

      According to the minister, Ukraine had already drafted a technical plan for the gas transporting system's reconstruction. "Our delegation is working on it with the EU in order to secure preferential loans for the reconstruction," he added. He went on to explain that some $300m worth of pipes would require replacement in the next three years.

      The official also stressed that the Nord Stream and the South Stream gas pipelines were "a sensitive matter" for Ukraine. "Our talks with Russia are aimed at ensuring that Russia's natural gas transportation routes do not squeeze Ukraine out. The previous government did not pay much attention to these developments, and now we are forced to solve this problem. We are poised to act quickly and by various means," he stated.

Impasse in Polish-Russian cooperationhttp://www.wbj.pl/article-50541-impasse-in-polish-russian-cooperation.html?typ=ise

3rd August 2010

"The Russians are refusing to hand over documents indispensable in finding an explanation for the Smolensk disaster," said Prime Minister Donald Tusk. This news was confirmed by Jerzy Miller, head of the Ministry of Interior and Administration (MSWiA).

According to Mr Miller, who chairs the Polish commission examining the Smolensk plane crash, the commission's work is nearing end, but its full completion is made impossible owing to the lack of documents from Russia.

"A couple of weeks ago I submitted a list of documents that were important to our side, but so far we have not received them. Knowing the complicated procedures binding in the Soviet Union, I see it solely as a procedural lengthiness," Mr Miller said.

Prime Minister Tusk said that he expects Russia to give an explanation for not handing over the documents to the Polish side.

Poland AM

Poland accuses Russia of delaying handover of Smolensk air crash datahttp://euobserver.com/9/30576

MATEJ HRUSKA

Today @ 09:26 CET

Polish prime miniser Donald Tusk wants an explanation from Moscow as to why it has not yet provided evidence from a plane crash that killed President Lech Kaczynski and 95 other people in April.

Mr Tusk said Monday (2 August) that the interior minister and head of an investigation commission, Jerzy Miller, should during his forthcoming visit to Russia tell Moscow that Poland "categorically" expects documents needed for the ongoing inquiry.

"The Polish side will be waiting for information and explanations about the reasons hampering the Russian side in forwarding the appropriate documents," Mr Tusk said, according to the Irish Times. "Now, when the probe is entering its final phase, our co-operation is worse than at the beginning," he added.

A formal request questioning the reasons for the delay will be addressed to the head of the Russian MAK Interstate Aviation Committee.

"Several weeks ago I submitted a list of documents that are of interest to the Polish commission but which it has not yet received," Mr Miller said Monday.

The exact date of Mr Miller's visit to Moscow is not yet known. Meanwhile, Mr Tusk said he would personally meet Russian government leaders or President Medvedev, if necessary.

Attorney general Andrzej Seremet said during a press conference last week that Poland was promised a further ten volumes of documents to be provided in August and expressed "slight concern" about the lack of Russian response in the hand-over deal.

Russia's initial cooperation after the crash near Katyn was seen as a possible new beginning in the relations between Warsaw and Moscow and was welcomed by Polish leaders.

But local Russian authorities since then have appeared to delay the passing of some documents and evidence from the aircraft crash site, causing annoyance in Warsaw.

In May, Mr Miller, accompanied by the attorney general and chief military prosecutor, went to Moscow to negotiate access to the black boxes storing recordings of pilots' conversation before the crash.

A spokesman for the Polish prosecution service said before the visit its main purpose was "to get assurances that the investigation materials will be transmitted to Poland as soon as possible."

Moscow for preventing escalation of Palestinian-Israeli conflicthttp://english.ruvr.ru/2010/08/03/14311244.html

Aug 3, 2010 10:06 Moscow TimeMoscow has urged that escalation of the Palestinian-Israeli conflict be prevented. The Russian Foreign Ministry points out in a statement that Israeli aircraft have bombed the Gaza Strip for two days in retaliation for missile fire from Gaza on Israeli territory. A leader of the military wing of the HAMAS movement, in control of Gaza, is reported killed, while another 11 people are said to have been wounded. Russia has denounced missile attacks by Gaza-based militants on the south of Israel, as well as Israel’s disproportionate use of force in retaliation. The Russian Foreign Ministry points out in its statement that to stabilize the situation is a priority to all those interested in a resumption of a direct Palestinian-Israeli dialogue.

NORAD, Russia to test hijack responsehttp://www.google.com/hostednews/ap/article/ALeqM5ivDU2zp9y1X0g3Ud91KaG40WXZggD9HBJK980

(AP) – 6 hours ago

PETERSON AIR FORCE BASE, Colo. — The U.S. and Russia are planning a joint exercise to see how well they can coordinate their efforts in the event of an international hijacking.

Military aircraft from Russia and the North American Aerospace Defense Command will track a plane across the Pacific, at one point handing off responsibility for tracking the plane from the U.S. to Russia.

On the return trip, the drill will be reversed.

The exercise includes fighters and surveillance aircraft, civilian aviation agencies and civilian and military personnel from both nations.

The two countries have performed many joint exercises since the collapse of the Soviet Union. This is believed to be the first involving a hijack scenario.

The exercise is scheduled for Aug. 8-10.

SA PRESIDENT ZUMA VISIT TO MOSCOW

S. Africa to Raise Steel, Power With Russia, Bus. Day Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=azSQ.2AA_Ir8

By Antony Sguazzin

Aug. 3 (Bloomberg) -- South Africa will discuss tariffs on its steel exports and the purchase of power from a Russian-owned natural-gas fired plant when President Jacob Zuma visits Russia, Business Day said, citing an unidentified government official.

South Africa wants to discuss the imposition of a 33.3 percent surcharge on Russian imports of stainless steel from Acerinox SA-owned Columbus Stainless, the Johannesburg-based newspaper said, citing the official.

The country will also raise the possible purchase of 500 to 800 megawatts of power from the OAO Gazprom-onwed Kudu plant in Namibia, Business Day said, citing the official.

Last Updated: August 3, 2010 01:25 EDT

PREVIEW: Zuma visit boosts Russian bid to muscle back in on Africa http://www.earthtimes.org/articles/news/337606,bid-muscle-back-africa.html

Posted : Mon, 02 Aug 2010 12:14:30 GMT By : Clare ByrneJohannesburg - Russia will get a chance to play catch up on China, India and Brazil this week when South African President Jacob Zuma arrives for talks with President Dmitry Medvedev on how to grow trade between the energy giant and Africa's biggest economy.Zuma is on a diplomatic blitz of the four biggest emerging markets, or so-called BRIC bloc - Brazil, Russia, India and China. South Africa is clamouring to become the fifth member of the grouping.In April, Zuma tried to get a foot in the door at the second BRIC summit in Brasilia, a visit he followed with a visit to India in June.On Thursday, it's Russia's turn.African National Congress leader Zuma is to be accompanied by 10 cabinet ministers and several business leaders on a two-day visit to the country. He will hold talks with Medvedev in the Black Sea resort of Sochi on Thursday.The visit is Zuma's penultimate visit of the four countries, on which South Africa is pinning its expansion hopes. Before August is out, he will also have visited China."He's going there in light of the four countries - Brazil Russia, India and China - being the only trading bloc that experienced massive economic growth in the last five years when the whole world was going through a crisis," Department of International Relations and Co-operation spokesman Saul Kgomotso Molobi told the German Press Agency dpa.For Russia, meanwhile, it's a further opportunity to fight back for influence in Africa, where the Soviet Union was a key backer of leftist liberation movements during the Cold War but Moscow has since been shunted aside by China.At over 100 billion dollars a year, China's trade with Africa, which supplies most of its oil, copper and other metals and minerals, makes other countries look like bit players.By contrast, Russia's trade with Africa - mostly in weapons and military hardware - amounted to only about 6 billion dollars in 2008, putting it a distant fourth among BRIC states, behind India (36 billion dollars) and Brazil (26 billion dollars).Two Africa visits by Russian leaders in the past four years - in 2006 by now-prime minister Vladimir Putin, and last year by Medvedev - have attempted to buck that trend.Medvedev came away from his four-country visit with a 2.5-billion- dollar energy deal between state-owned Gazprom and the Nigerian state oil company to develop oil and gas fields and build a gas pipeline from Nigeria to Europe.Russia also pitched to build Egypt's first nuclear power plant and scouted for oil in Angola, China's biggest supplier of the fuel, and uranium in Namibia.The world's seventh-largest economy has also been waving its space know-how at African countries.After a long delay Russia last year launched South Africa's first satellite on the back of a Soyuz rocket and also arranged a loan to allow Angola to launch its own Angosat.Some analysts remain sceptical about Russia's ability to climb back into the Africa game."When oil prices went over 100 dollars a barrel, Russia got expansive," Tom Wheeler, research associate at the South African Institute for International Affairs in Pretoria noted.Now that oil prices had fallen back to around 78 dollars, Russia had less cash to invest outside its borders, he said.Cultural and language barriers further hamper trade between Russia and Africa, compared with the likes of Brazil, which is using a common language of Portuguese to

corner the biofuels market in Mozambique, or India, which has a ready-made market in the sizeable ethnic Indian populations of former British colonies in Africa."It's more about geopolitics than trade for Russia," according to Wheeler. "It's useful if you want to achieve things in the United Nations. If you have the backing of 54 African states, that's nearly a third of the UN General Assembly."

Zuma to Visit in BRIC Charm Offensive http://www.themoscowtimes.com/news/article/zuma-to-visit-in-bric-charm-offensive/411557.html

03 August 2010Reuters

JOHANNESBURG, South Africa — South African President Jacob Zuma will visit Russia this week as part of a push to open new trade and investment routes to the fast-growing BRIC economies to replace traditional markets in Europe.

Zuma will be in Moscow on Thursday and Friday for talks with President Dmitry Medvedev, who made his maiden trip to Africa a year ago, although he did not visit South Africa, easily the continent's biggest economy.

The Russia trip has a formal focus on building ties in sectors such as agriculture, defense and mining, although it will also enable Zuma to get a glimpse of how Moscow oversees an economy set to grow twice as fast as his own this year.

Zuma will then go to China on an official visit toward the end of the month, although final dates are still being drawn up, a Foreign Ministry spokesman said.

The trips mean that Zuma will have visited all four of the BRIC countries — Brazil, Russia, India and China — in a little over a year after taking office.

"It's very telling," said Martyn Davies of Frontier Advisory, a Johannesburg-based consultancy. "This year Zuma will have been to all four BRIC economies. That is quite something."

With forecast expansion of just 2.3 percent this year, South Africa stacks up even less favorably against China and India — a prime reason "BRICs" is just "BRICs," and not "BRICSA," as many policymakers in Pretoria would wish.

South Africa: Russia Will Have Eye on China for Zuma Visit http://allafrica.com/stories/201008030041.html

Loyiso Langeni

3 August 2010

Johannesburg — PRESIDENT Jacob Zuma will this week lead a high-powered government and business delegation to Russia to narrow the trade deficit with one of the most populous nations in the world.

Figures from the Department of Trade and Industry indicate that SA's imports from the Russian Federation more than doubled last year: SA imported goods to the value of R3,6bn, while its exports generated R1,5bn.

With an estimated population of 140-million people, Russia is the 12th-largest economy in the world, according to SA's Department of International Relations and Co- operation.

Russia, in hosting SA, is on a quest to regain lost ground as an influential player on the continent. Its influence has waned significantly since the collapse of the Soviet Union almost two decades ago.

During those days, most exiled African leaders who belonged to liberation movements - including the African National Congress - received their tuition, including grounding in economic policy, in the Soviet Union.

The collapse of the Soviet Union not only reduced Russia's influence in Africa politically but also saw its communist economic principles discarded. Russia is now a democracy pursuing a free market economic system, the very system it detested so passionately during its days as the Soviet Union.

World politics have shifted and the new economic blocs have their sights on commodities in Africa.

The courtship with SA is also a Russian attempt to stay ahead of China, which has usurped the influence that Europe and the US used to command in Africa.

According to the Russian embassy in Pretoria, SA's exports to Russia are mainly within the agricultural industry while imports are more diversified. SA exports agri-products, beverages, fruit and prepared foodstuffs, while Russian imports include base metals, chemical products, machinery, mechanical appliances and vehicles.

The high-profile delegation is made up of 75 officials from 13 departments, including five young people from the newly revamped youth entity, the National Youth Development Agency.

Presidency officials will accompany the delegation. Key departments that will be represented during the visit are the Departments of Energy, Mineral Resources, Tourism, Trade and Industry and Science and Technology There is also a strong business delegation, which is expected to be led by the chairman of the SA-Russia Business Council, Robert Gumede.

A wide range of issues are expected to appear on the agenda during the presidential visit, such as aviation safety, maritime transport, nuclear co-operation, mining, mineral resources and agriculture.

A high-ranking government official who has been privy to the preparation talks told Business Day yesterday that SA would be raising its gripes regarding Russian trade relations.

One of SA's concerns has been the recently imposed five-year import penalty surcharge of 33,3% on SA's Columbus Steel. Russia is accusing Columbus Steel, together with other entities from China, Brazil, South Korea and Taiwan, of dumping their steel products on the Russian market.

Also on the agenda will be cooperation in the field of energy affairs. GazProm, a Russian energy enterprise, is looking to explore new natural gas deposits along SA's western coast.

There are also plans to hold further discussions on the proposed Kudu power plant on Namibia's border with SA. It is estimated the plant will yield 50-billion to 60-billion cubic metres of gas.

Energy utility Eskom has reportedly shown interest in acquiring 500MW of the 800MW output from the Kudu power plant to increase its electricity supply to the local market.

Mr Zuma and Russia's President Dmitry Medvedev are expected to sign memorandums of understanding in the fields of plant quarantine and visa exemption for diplomatic and official passport holders. Other memorandums of understanding to be discussed or signed include maritime transport, aviation safety and an extradition order between the two nations.

Agriculture Minister Tina Joemat-Pettersson will raise the issue of ostrich meat, which Russia refuses to allow into the country due to health reasons.

With so many items on the agenda, it is likely that these discussions will yield positive results for both countries. However, only time will tell if Russia will be able to regain its position as an influential leading figure in African affairs.

'Sale of S-300 may encourage Azerbaijan'http://news.az/articles/20250

Tue 03 August 2010 | 06:03 GMT

Richard Giragosian comments on possible sale of Russian S-300 anti-missile complexes to Azerbaijan.

“This is a wrong message of Baku”, said director of the Armenian center of strategic and national studies, Richard Giragosian commenting on possible sale of Russian anti-missile S-300 complexes to Azerbaijan.

He said considering the recently voiced bellicose statements of Baku, the sale of S-300 may encourage Azerbaijan.

The Department of the News Service and Information of the Russian Defense Ministry speaking to Radio Liberty has not refuted or confirmed information about the planned sale of S-300 complexes to Azerbaijan.

“In the result of S-300 complexes sale Azerbaijan’s confidence about its strength is becoming more dangerous and in case of existence of defense complexes the tensions between Azerbaijan and Armenia and Nagorno Karabakh will grow. But this is the most serious and possibly the last sign of growing tensions in the region and the war becomes likely not only in Karabakh but also in Iran”, Giragosian said.

According to Giragosian, in purely military sense the sale of S-300 complexes to Azerbaijan cannot violate the military balance between Armenia and Azerbaijan since S-300 is a purely defensive type of arms but as Russia is a strategic ally of Armenia, Armenia should ponder over this.

“This creates a strategic concern for Armenia since this is a part of Moscow’s intention to deepen ties with Azerbaijan. This is really too dangerous for Armenia because every time Russia gives something to Azerbaijan, Armenia must also get something from Russia to maintain the balance. However. Yerevan has not yet received anything”, said the expert.

ARMENIA Today

Russia to have weekly TV program about Azerbaijan

http://news.az/articles/20265

Tue 03 August 2010 | 08:45 GMT

A weekly television program about Azerbaijan is to air for the first time in Siberia and the Urals region on 7 August.

The Road to Azerbaijan will be shown on Sverdlovsk Region's major channel, OTV, which broadcasts to Siberia and the Russian Far East, and will also be beamed to Eastern Europe and Central Asia via the Yamal satellite.

The project is the initiative of the Azerbaijani General Consulate in Yekaterinburg, Consul Suleyman Gasimov told AzerTaj. The consulate is helping to organize the broadcasts, while information is provided by state-run AzerTaj news agency and AzTV.

Gasimov said that the program was designed to promote Azerbaijan in Siberia.

It will feature sections on the work of Azerbaijani President Ilham Aliyev and the Heydar Aliyev Foundation, including its work in Russia.

"The program will help to strengthen the traditionally friendly bilateral and interregional ties between our countries and help people learn about Azerbaijan, understand our people and its traditions," Sultan Gasimov said.

1 news.az

Russia interested in int’l recognition of Abkhazia, South Ossetia

http://www.itar-tass.com/eng/level2.html?NewsID=15370596&PageNum=0

03.08.2010, 11.11

SOCHI, August 3 (Itar-Tass) - Russia is interested in the international recognition of Abkhazia and South Ossetia, but does not set such a goal, Russian President Dmitry Medvedev said on Tuesday.

“We are interested in them to be recognized. But it is not the goal in itself. We did not set and do not set such a task,” the Russian president told reporters.

Speaking on Belarusian position on this issue Medvedev noted that Belarusian President Alexander Lukashenko had earlier been speaking about the country’s intentions to recognize Abkhazia and South Ossetia. According to the Russian leader, his Belarusian counterpart gave this pledge in the presence of the top officials of several CIS countries. “He said, “I promise solemnly that I will do all for the shortest period of time,” the Russian president said.

Belarus promises to recognize Abkhazia, South Ossetia - Medvedevhttp://en.rian.ru/world/20100803/160049373.html

10:28 03/08/2010

Belarusian President Alexander Lukashenko has promised to recognize the independence of Abkhazia and South Ossetia, Russian President Dmitry Medvedev said on Tuesday.

Lukashenko made the promise in the presence of several CIS leaders, Medvedev said.

"Recognition [of the republics] is in our interests," Medvedev added.

SOCHI, August 3 (RIA Novosti)

Medvedev: Abkhazia, S.Ossetia recognition ‘not a goal in itself’http://www.kyivpost.com/news/russia/detail/76596/

Today at 10:12 | Associated Press Russia would like other countries to recognize Abkhazia and South Ossetia, President Dmitry Medvedev said.

"We are interested in their recognition. But this is not a goal in itself. No such task has ever been set," Medvedev told journalists in Sochi.

On Minsk's position on this issue, Medvedev said that Belarusian President Alexander Lukashenko had earlier declared plans to recognize Abkhazia and South Ossetia in the presence of leaders of some countries of the Commonwealth of Independent States. "I solemnly declare, said Lukashenko, that I will do this very shortly," Medvedev said

Read more: http://www.kyivpost.com/news/russia/detail/76596/#ixzz0vWeaS7Ds

Medvedev: Lukashenko promised to recognize the independence of Abkhazia and South Ossetia

http://www.forbesrussia.ru/node/53891?from=lastnews

GOOGLE TRANSLATION

August 3, 2010 11:01 Russia is interested in international recognition of independence of Abkhazia and South Ossetia, but this is not an end in itself for the Russian government, said President Dmitry Medvedev. According to him, the Belarusian leader Alexander Lukashenko in the presence of colleagues promised to recognize the two republics. "We are interested in to be appreciated. But this is not an end in itself. Such problems do not stood and not worth "- quoted Medvedev RIA Novosti. The President assured that Lukashenko articulated commitment to recognize Abkhazia and South Ossetia. Such a promise Belarusian president has given in the presence of leaders of several CIS countries, according to Medvedev. "He said:" I solemnly promise that I'll do anything for a very short time ", - quoted the Russian leader of his Belarusian counterpart. Moscow has repeatedly complained of the mouth of the top leaders of the unreliability of

Minsk in the recognition of Abkhazia and South Ossetia. For example, Prime Minister Vladimir Putin said that the only advantage of "suspended" state of Belarus is the normalization of relations in a neighboring country with the West. Russia is expected to support Belarus in such an important issue for themselves. "Ultimately this is an issue that belongs to the sovereign right of the Belarusian state, and it is the sovereign right to formulate the legally elected president - Alexander Grigorievich Lukashenko", - said Putin. Lukashenka himself has publicly resolved only on the approval of the actions of the Russian army during the military conflict with Georgia in August 2008, but his comments on the recognition of Abkhazia and South Ossetia, were reduced to a formal phrases about the need for a parliamentary consensus. However, the worsening relations between Moscow and Minsk, following the escalation of the gas dispute between Gazprom and the authorities of Belarus, resulted in a number of incriminating material on Lukashenko, the Russian media. In response to the Belarus state television broadcast was granted to the President of Georgia Mikheil Saaakashvili, which remains for the Kremlin's persona non grata. The convergence of Minsk and Tbilisi has called into doubt the prospects of recognition of Abkhazia and South Ossetia. Besides Russia, the sovereignty of the former Georgian territories officially recognized Nauru, Venezuela and Nicaragua.

August 03, 2010 10:35

Medvedev orders inquiry into conflict between Norilsk Nickel shareholdershttp://www.interfax.com/newsinf.asp?id=180832

MOSCOW. Aug 3 (Interfax) - Russian President Dmitry Medvedev has ordered the Prosecutor General's Office to investigate a conflict between stockholders of MMC Norilsk Nickel (RTS: GMKN) following a letter from Rusal head Oleg Deripaska, who also holds a stake in Norilsk Nickel, a Kremlin source told journalists on Tuesday.

"The head of state has instructed the Prosecutor General's Office to carry out an inquiry. It is still unclear whether any violations have been committed. What each side says is partly true. But it is a large enterprise, and the presence of such a serious conflict between its shareholders is not good," the source said.

Theoretically, the purchase of the company's shares by a third party would be the most optimal way out of this situation, but this buyer should not be the Russian government, including the Rostekhnologii (Russian Technologies) state-controlled corporation, he said.

"Norilsk Nickel is a privately owned enterprise and it should stay like that in the future. The company should belong to private owners," the source said.

On Monday, the members of the Rusal board of directors forwarded a letter to the board of directors of Norilsk Nickel, demanding the appointment of an independent auditor to

verify the results of the vote held at the shareholders' annual meeting, as well as measures to prevent a possible buy-back of Norilsk Nickel shares.

tm ap

Norilsk should remain private-media cite Kremlinhttp://af.reuters.com/article/metalsNews/idAFLDE67206H20100803

Tue Aug 3, 2010 6:29am GMT

MOSCOW Aug 3 (Reuters) - Russian metals giant Norilsk Nickel GMKN.NN, should remain private, although one of its warring shareholders could sell out, Russian agencies quoted a Kremlin source as saying.

"Norilsk Nickel is a private company," Ria Novosti quoted the source as saying on Tuesday. "It should stay this way in the future."

Interfax quoted the source as saying that the Kremlin thinks that a buyout of a stake in Norilsk by a third party, but not by the state or state-run conglomerate Russian Technologies would be an ideal solution to the conflict.

Ria added that an ideal solution would be the sale of the stake belonging to one of core shareholders, Oleg Deripaska or Vladimir Potanin, but it did not specify which one.

The source also said that President Dmitry Medvedev has asked the Prosecutor General's office to investigate the ongoing conflict in the company.

The top two shareholders in the company are UC RUSAL (0486.HK) (RUAL.PA), majority owned by Deripaska and Interros, controlled by fellow tycoon Potanin.

Both hold 25 percent stakes in the miner. (Reporting by Aleksandras Budrys; editing by Alfred Kueppers)

Putin to hold meeting of govt high technology & innovation comsn

http://www.itar-tass.com/eng/level2.html?NewsID=15370207

03.08.2010, 09.23

MOSCOW, August 3 (Itar-Tass) - Russian Prime Minister Vladimir Putin on Tuesday will visit the Gazprom VNIIGAZ Research Institute of Natural Gases and Gas

Technologies in the Razvilka settlement of the Moscow region. He will hold there a meeting of the Government Commission on High Technology and Innovation.

The RF government’s press service reported that taking part in the meeting will be Deputy Prime Minister Sergei Ivanov, Deputy Prime Minister - chief of the government staff Sergei Sobyanin, Industry and Trade Minister Viktor Khristenko, Defence Minister Anatoly Serdyukov, Education and Science Minister Andrei Fursenko, governor of the Moscow region Boris Gromov, representatives of a number of ministries and departments, major state corporations and natural monopolies.

The meeting participants intend to consider issues of preparation by subjects of natural monopolies and major government-sponsored companies of innovation development and technological modernisation programmes. These documents are to determine the forms of participation of big business in the innovation development of the Russian economy. Besides, such programmes will also influence the formation of the state policy in the scientific-technical and innovation spheres, as well as in the sphere of technological development. The use of such programmes will make it possible to accelerate the development and introduction of new technologies, innovation products and services, as well as the innovation development of the key industry sectors of the Russian Federation.

At the Gazprom VNIIGAZ Institute the prime minister will see the exhibition “Innovations in Major State Companies,” will familiarise himself with the work of VNIIGAZ’s Research and Technology Centre, Centre of Gas and Liquid Hydrocarbons Processing, Centre for the Protection of the Environment, Environmental Security and Labour Protection.

VNIIGAZ was established in 1948 for the discovery, prospecting and development of natural gas fields, as well as gas processing.

At present the JSC Gazprom VNIIGAZ is a 100-percent daughter company of the OJSC Gazprom, it is the main research centre of Gazprom in the sphere of technology development and process design for the natural gas sphere. VNIIGAZ’s work sphere includes the exploration and development and natural gas fields, development of offshore oil and gas reserves, gas processing and commercial gas conditioning, regulatory support, designing and exploitation of the gas transportation and underground storage systems, the use of gas engine fuel on transport, etc.

Over the past decades Gazprom VNIIGAZ has been developing scientific cooperation in nanotechnology and hydro energy with leading specialized R&D organisations and institutions of the Russian Academy of Sciences, implementing joint educational programmes with prominent oil and gas companies and partner organisations from 38 countries of the world, as well as representing Gazprom in the Working Committees of the International Gas Union. Gazprom VNIIGAZ participates in the work of the UNECE Committee on Sustainable Energy and in the Natural Gas Committee of the International Organisation for Standardisation.

VNIIGAZ provides the scientific research and engineering support of all major sectoral projects, it is the leader of innovation activities of Gazprom. The institute developed the technologies of assessment of the prospects of oil-and-gas-bearing capacity of fields and control of the development of deposits with the use of Earth remote sensing, simultaneous development of oil and gas deposits of oil and gas condensate fields. It has also developed three-dimensional models of the Shtokman, Yamburg, Astrakhan fields. VNIIGAZ scientists worked out the technology of preparation of commercial reserves in the Arctic seas conditions that has a considerable economic benefit. In Yamal it tested the technology of reclamation of lands contaminated with hydrocarbons with the use of innovative biological substances.

WILDFIRES IN WESTERN AND CENTRAL RUSSIA

Russian officials urged to do more to fight fireshttp://www.google.com/hostednews/ap/article/ALeqM5iX-16FttPkCulMdckFjFJyOJCXlAD9HBST3G0

(AP) – 14 minutes ago

MOSCOW — A Russian emergency official is urging provincial authorities to throw all the manpower they have at fighting vast forest fires that have killed at least 40 people.

Vladimir Stepanov, the head of Emergency Situations Ministry Crisis Center, said Tuesday that munipical officials in regions around central Russia "must mobilize all their forces, not just sit and wait for fire brigades to arrive."

The fires come after weeks of searing heat and practically no rain. Experts predict temperatures in the Moscow area will reach around 38 degrees Celsius (100 Fahrenheit) this week.

Prime Minister Vladimir Putin on Monday warned that local officials who don't respond adequately to the fires that have destroyed nearly 2,000 homes risk losing their jobs.

Russia'' Emergencies Ministry to buy 8 Be-200 planeshttp://ibnlive.in.com/generalnewsfeed/news/russia-emergencies-ministry-to-buy-8-be200-planes/196062.html

PTI

Moscow, Aug 3 (Itar-Tass) The Russian Emergencies Ministry will buy eight Be-200 amphibious planes in then next 2.5 years to fight fires. "Eight Be-200 planes will be bought in the next two and a half years," Emergencies Minister Sergei Shoigu said on

yesterday. He said one such plane cost about USD 33.37 million (one billion roubles). "We intend to create three squadrons, which will also include the Be-200, in the Far East, Siberia and Central Russia. They will be used not only for fire fighting purposes but in other emergencies as well," the minister said. According to Shoigu, an order for the Be-200 planes will be placed shortly. In addition, it has been decided to equip the Defence Ministry''s and the Interior Ministry''s Mi-8, Mi-26 and Ka-32 helicopters with pray tanks and train their pilots at the Emergencies Ministry. More than 1,55,000 people, including from the Interior Ministry and the Defence Ministry, and more than 25,000 pieces of machinery are currently fighting fires in Russia. Damage from the fires raging across Russia has exceeded USD 216.90 million, Minister of Regional Development Viktor Basargin said. "The amount of money provided for compensation [to fire victims] and the cost of building new housing have already exceeded 6.5 billion roubles," Basargin said. The Be-200 is an amphibious multirole turbofan aircraft. The first flight took place in 1998 and the aircraft was first seen in the West at the 1999 Paris Air Show. IAPO and EADS signed a memorandum of understanding in May 2002 to jointly carry out a market study and to define the conditions and costs of international certification and the logistics of setting up a worldwide after-sales service. The plane was first developed for fire-fighting missions. It can start, take-off and land on water and can carry a load of 12 tonnes of water. The first prototype aircraft has successfully completed 650 flight hours and carries Russian certification as a fire-fighting aircraft. Two Be-200 aircraft were used to fight the devastating forest fires in Greece in the summer of 2007 and, in December 2007. The Russian Navy has announced plans to acquire four Be-200 aircraft for search and rescue operations.(Itar-Tass)

August 03, 2010 11:07

Temperature to hit 40 degrees in Moscow on Tuesday – Roshydromethttp://www.interfax.com/newsinf.asp?id=180842

MOSCOW. Aug 3 (Interfax) - Temperatures will climb to 40 degrees Celsius in Moscow on Tuesday, the federal service for hydrometeorology and environmental monitoring Roshydromet reported.

"The maximum temperature in Moscow on Tuesday will be 36-38 degrees, and outside Moscow - 34-39 degrees Celsius," Roshydromet said on Tuesday.

Visibility will deteriorate to less than 1,000 meters due to smog.

The average daily temperature will be 9-10 degrees above the norm.

sd

323 new wildfires reported in Russian in past 24 hours

http://www.itar-tass.com/eng/level2.html?NewsID=15370559&PageNum=0

03.08.2010, 11.02

MOSCOW, August 3 (Itar-Tass) - A total of 323 new wildfires were registered across Russia in the past 24 hours, a spokesman for the Russian Emergencies Ministry said on Tuesday.

“As many as 776 wildfires, including 57 peat-bog fires, were reported in Russia. A total of 323 new fires were registered in the past 24 hours, of which 247 have been extinguished,” the spokesman said.

According to the ministry data, a total of 529 wildfires are currently ravaging on an area of 172,300 hectares, against Monday’s 460 fires (115,000 hectares).

The bulk of fires (378) have been contained on an area of 127,600 hectares, although 70 big fires are still ravaging on an area of 117,000 hectares, the spokesman said.

As many as 57 new peat-bog fires were reported in the past 24 hours, of which 56 have not yet been put out. The majority of peat-bog fires (51) are registered in the Moscow region. Three peat-bog fires were reported in the Kirov region, one – in the Ivanovo regions, one – in the Sverdlovsk region, and another one in Vologda region.

More than 155,700 fire fighters and more than 25,000 pieces of hardware, including 20 planes and helicopters of the Emergencies Ministry, are involved in fire fighting operations.

Wildfire sweep across 17 Russian regions – ministry

http://www.itar-tass.com/eng/level2.html?NewsID=15369923&PageNum=0

03.08.2010, 04.01

MOSCOW, August 3 (Itar-Tass) - Data for Monday, August 2 suggests that wildfires are raging in seventeen regions of Russia in the aftermath of an unprecedented heatwave, the Ministry of Public Health and Social Development said in a report.

“There have been no calls for medical assistance /in the wake of the situation/ in eight regions – Arkhangelsk, Volgograd, Saratov, Vladimir, Ivanovo, Sverdlovsk, Leningrad, and Mary-El,” the report said.

“However, fires caused medical and sanitary consequences among the population of nine regions – Mordovia, Kamchatka, Belgorod, Voronezh, Lipetsk, Moscow, Nizhny Novgorod, Ryazan, and Tambov.”

All in all, the medics received 323 requests for urgent aid in these regions.

Of that number, 261 people received aid at outpatient clinics and 62 persons have been admitted to hospitals.

At the time of reporting, 48 people affected by forest fires were still staying at hospitals.

Along with it, 40 people have died after the outbreak of fires, the report indicated.

Central Russia ravaged by forest and peat-bog fireshttp://english.ruvr.ru/2010/08/03/14311234.html

Aug 3, 2010 10:05 Moscow Time

Forest and peat-bog fires are raging throughout central Russia owing to anomalous heat.

In some place smoke is so thick that it prevents satellites from registering all fire sources.

40 people have to date died in the fires, while more than 2,000 have been left homeless.

The damage is estimated at 6.5 billion roubles.

President Dmitry Medvedev has signed a decree to impose an emergency situation in the seven worst-hit regions.

He urges the compatriots to help the people in distress and has ordered that construction of homes for the homeless fire victims be launched without delay.

Military units have been sent to fight the fires on orders from Medvedev.

Baikal area rescuers save village in Nizhny Novgorod from fire

http://www.itar-tass.com/eng/level2.html?NewsID=15370465&PageNum=0

03.08.2010, 09.34

IRKUTSK, August 3 (Itar-Tass) - Smokejumpers of the Baikal area have helped to save from fire the Gornitsa village in the Navansky district of the Nizhny Novgorod region,

the press service of the governor and government of the Irkutsk region told Itar-Tass on Tuesday with reference to head of the regional forestry agency Vladimir Shkoda.

“Thanks to skilful actions of our rescuers the casualties and destruction of the populated locality by fire was avoided,” the press service specified.

A total of 25 smokejumpers flew early last week from the Baikal area to the Nizhny Novgorod region to provide assistance in extinguishing forest fires there. Due to the persisting difficult situation there, another detachment of 25 firefighters of the Irkutsk base of aerial protection of forests flew to the region on Saturday.

According to the forestry agency, no forest fires have been registered as of today in the Baikal area.

Nineteen people have died among forest fires in the Vyksa district of the Nizhny Novgorod region, the press service of the regional emergencies ministry reported Monday. It is one of the Russian regions that have been affected heavily by the outrageous wildfires.

The sources said five bodies had been found in the debris of a house destroyed by fire. Earlier reports said 14 residents died in the settlement of Upper Vereya, where 574 houses burnt down. Work to put out fires in the Vyksa district continues. No incidents in which forest fires would approach settlements have been registered over the past 24 hours, the sources said. There is no danger for the local settlements. Latest reports said that 7 out of 18 separate fires have not been put out in the Nizhny Novgorod region. However, all of them have been localized. Eleven fires are raging in an area of more than 37,000 hectares in 7 districts of the region. In the Vyksa district alone, fire has damaged seven villages and one of them, Upper Vereya, burnt down to ashes.

On July 30, Russian Prime Minister Vladimir Putin visited the region. He offered some of the regional officials and heads of the agencies of local self-government, who fulfilled their duties unscrupulously, to resign voluntarily.

Central Russia blanketed in smog as wildfires continuehttp://news.xinhuanet.com/english2010/world/2010-08/03/c_13426974.htm

2010-08-03 06:02:49

by Igor Serebryany

MOSCOW, Aug. 2 (Xinhua) -- The highway leading to the Vladimir region east of Moscow, where wildfire has been raging for days, is blanketed in smoke, which turns thicker and thicker with every mile of driving.

Approaching the town of Noginsk, where the Russian Emergency Ministry's principal base is located, drivers have to turn on their cars' fog lamps and switch the air conditioners to internal circulation mode, in order to prevent the turbid smoke from coming in.

It is difficult to see through the smog, and it is hard to breathe outside.

Actually, many drivers have opted to make a U-turn there, some 67 km east of the Russian capital, trying to bypass the area via some side roads.

It is still a tricky task. Many side roads have been ditched, to stop cars from getting into unsafe areas in the woods, after Russian Prime Minister Vladimir Putin demanded governors of the fire-stricken regions to restrain residents from visiting the forests.

"Citizens' negligence costs too much for us," said Putin.

And for tens of thousands of local residents, there is no place to escape or switch to. According to the Health Ministry, the number of people killed by the fire in six regions has so far climbed up to 40.

Russian President Dmitry Medvedev on Monday declared a state of emergency in seven regions engulfed by the wildfires, and restricted citizens' entries to certain areas.

All the regions were in the central part of Russia, including Moscow, Vladimir, Nizhny Novgorod, Mariy El, Mordovia, Voronezh and Ryazan.

"Thousands of our citizens lost everything in the blink of an eye. This is a terrible tragedy," Medvedev wrote in his blog.

Even before the presidential decree, some local authorities have already tried to keep people away from the forests.

However, all the government measures seem to be weak and insufficient in the face of the raging blazes.

Twenty-four more people died in the wildfires in the Volga region on Monday, Grigory Rapota, the presidential representative to the region, was quoted as saying by local media.

In the region of Nizhny Novgorod, some 400 km east of Moscow, the international airport has been closed at least until Tuesday because of heavy smoke posing a threat to safe landing.

Fifty more houses were burnt to ashes in the Lipetsk region the same day, according to Russian Emergency Situations Minister Sergei Shoigu.

The Emergency Situations Ministry announced on Monday it was going to purchase eight planes specially equipped with fire- fighting machinery, and to assemble a fire extinguishing equipment on the Defense Ministry's planes and helicopters.

Deputy Chairman of the State Duma Vladimir Zhirinovsky, well- known for his flamboyant remarks, urged his colleagues to cut short their summer breaks and travel to those fire-affected regions.

According to the latest estimation from the Regional Development Ministry, the total compensation for those who lost their homes in the fires will reach 6.4 billion rubles (212 million U.S. dollars), up from the previously estimated 166 million dollars.

Meteorologists warned that the fire-incited fog in Moscow may stay for at least one more week.  

Wildfires ravage Central Russiahttp://rt.com/Top_News/2010-08-03/russia-fires-smog-disaster.html/print

03 August, 2010, 09:24

Intense temperatures and the worst dry spell for generations continue to pound parts of Russia, with 40 lives now claimed by fires, over 300 injured, and thousands left homeless.

Seven of the hardest-hit regions are now in a state of emergency. One of them is the greater Moscow area, where the air is thick with smoke. The smog is so dense that it resembles fog and makes it difficult to breathe.

President Dmitry Medvedev has assured that the government is doing everything within its powers to extinguish the fires.

“The situation remains very difficult, the heat is still here, and the forecasts are bleak. Therefore, the threat of new fires persists,” Medvedev warned.

“I have signed a decree today announcing the emergency situation in a number of regions of our country which are hardest hit by the fires. But much will depend on our actions,” he said.

“It’s difficult to stay in the city [of Moscow]; it’s stuffy and very hot. People want to escape to the countryside. That is where we should be very careful and cautious. We must remember that one dropped match could result in disaster. The government understands its unconditional responsibility. Our main task today is to help the victims to get back to their normal lives as soon as possible,” the president appealed.

More than 250,000 people are involved in the effort of extinguishing fires, including fire brigades, Emergency ministry specialists, the military and volunteers who have stepped in.

This summer has been the hottest one in the history of meteorological records. All the vegetation in Central Russia is dried out, making the region one big tinderbox. Despite all the warnings and efforts made, the new fires occur every day – all of them man-made.

The air in the Russian capital now is seven times more polluted than usual due to the smog caused by the forest and peat bog fires. Doctors say breathing this air is equivalent to smoking cigarettes heavily all day long. Some people are wearing gauze face veils. Those who have lung and heart diseases are recommended to stay at home.

Prime Minister Vladimir Putin has already accounted for allocating money to every family that lost their homes and to those who lost their relatives in fires. The money will be handed over by next week. An initial payment has already been given to those in need.

There are reports that some people are taking advantage of the situation, by setting fire to their homes in order to get new houses as a result. Some acts of looting have also been reported.

Unfortunately, the weather forecasts are not very optimistic. There will probably be some short spells of rain this week, but meteorologists say the temperatures may rise as high as 40ºC – something completely unprecedented for Moscow.

Environmentalists Blame Fires on Policies http://www.themoscowtimes.com/news/article/environmentalists-blame-fires-on-policies/411559.html

03 August 2010By Alexandra Odynova

As the death toll from wildfires rose to 40 on Monday, environmentalists accused the government of shortsighted policies that have hindered firefighting efforts, and people hoping for quick money let their homes go up in flames.

President Dmitry Medvedev declared a state of emergency in seven areas: the Moscow, Vladimir, Ryazan, Voronezh and Novgorod regions, as well as the republics of Mordovia and Marii-El.

Smoke from the Moscow region fires blanketed the capital in thick smog.

But firefighters seemed to be making progress, with fires covering 125,000 hectares, compared with 128,000 hectares on Sunday, Vladimir Stepanov, a senior Emergency Situations Ministry official, said in televised remarks.

Environmentalists said the consequences of the fires are so dire because a centralized woodland-fire control system was canceled by the 2007 Forest Code, a law lobbied by timber-processing companies and signed by then-President Vladimir Putin.

"Formerly, each forest had a man who would discover fires at an early stage," Alexei Yaroshenko, a forestry expert at Greenpeace Russia, told The Moscow Times.

But under the new system, the number of personnel employed in fieldwork has been cut by 75 percent, while 12,000 new bureaucrats were hired to do related office work, he said.

In addition, it may take a week to move firefighting equipment from one location to another, while it only took a day before the 2007 law went into force, he said.

"There is no central body to oversee the transfer of equipment because it was broken into several structures," he said.

Putin, who is now prime minister, did not comment on the criticism Monday during a meeting with governors from the fire-hit regions, telling them that “besides urgent measures, we should make decisions in perspective.”

Putin said all forces, including volunteers, should be mobilized for the fight to "extinguish everything," and that "the main task remains the protection of inhabited settlements,” according to the transcript of the meeting published on the government's web site.

All state-owned helicopters must be equipped for firefighting, regardless of what agency they belong to, Putin said. He also asked the governors to visit the sites of the fires and talk with people there.

Putin ordered the initiation of new federal and regional fire prevention programs.

The government has pledged to pay 3 million rubles ($100,000) to owners whose houses burned down in the wildfires. Putin said Monday that those who lost any other property would receive 200,000 rubles ($6,630) as compensation.

Some rural residents in the Voronezh and Vladimir regions have let the fires burn their houses in hope of getting new ones, Ekho Moskvy radio reported Monday.

Costs of damages nationwide reached 6.5 billion rubles ($215 million), Regional Development Minister Viktor Basargin said Monday, Itar-Tass reported.

At least 1,862 houses were damaged by fires as of Sunday, the Regional Development Ministry said. Medvedev said Monday that more than 2,000 people have been left homeless.

About 155,000 people were fighting fires on Monday, and another 81,000 were waiting in reserve in case the situation got worse, the Emergency Situations Ministry said in a statement. Also deployed were 25,000 firefighting vehicles and 20 aircraft.

Meanwhile, the Federal Security Service opened an inquiry into a shortage of fuel for firefighting helicopters, Lifenews.ru reported, citing an unidentified source at the Emergency Situations Ministry.

"Now it has turned out that there is hardly any fuel left for the aircraft fighting fires in the Moscow region," the source was quoted as saying.

The report did not elaborate on what had caused the fuel shortage.

Russian Orthodox Patriarch Kirill said Russians should seek to stop sinning in order to end a record drought that has stoked the fires.

"One shouldn't think that the drought will pass if we just pray to God and then forget and fall into sin," Kirill said during a visit to the town of Lukoyanov in the Novgorod region, Interfax reported.

He cited an Old Testament story about a drought sent on the Jews for worshipping a pagan god and said Russians should turn into "a different people" by abandoning their sins.

Will Russia's Heat Wave End Its Global-Warming Doubts?http://www.time.com/time/world/article/0,8599,2008081,00.html

By Simon Shuster / Moscow Monday, Aug. 02, 2010

Russians are not used to heat waves. When the high temperatures that have overwhelmed Russia over the past six weeks first arrived in June, some 1,200 Russians drowned at the country's beaches. "The majority of those who drowned were drunk," the Emergencies Ministry concluded in mid-July, citing the Russian habit of taking vodka to cool off by the sea. But while overconsumption of vodka is a familiar scourge in Russia, extreme heat is not, and as the worst heat wave on record spawns wildfires that are destroying entire villages, Russian officials have made what for them is a startling admission: global warming is very real.

At a meeting of international sporting officials in Moscow on July 30, Russian President Dmitri Medvedev announced that in 14 regions of the country, "practically everything is

burning. The weather is anomalously hot." Then, as TV cameras zoomed in on the perspiration shining on his forehead, Medvedev announced, "What's happening with the planet's climate right now needs to be a wake-up call to all of us, meaning all heads of state, all heads of social organizations, in order to take a more energetic approach to countering the global changes to the climate." (See pictures of Medvedev and Vladimir Putin on vacation.)

For Medvedev, such sentiments mark a striking about-face. Only last year, he announced that Russia, the world's third largest polluter after China and the U.S., would be spewing 30% more planet-warming gases into the atmosphere by 2020. "We will not cut our development potential," he said during the summer of 2009 (an unusually mild one), just a few months before attending the Copenhagen climate summit, which in December failed to reach a substantial agreement on how to limit carbon emissions.

But even that pronouncement, grim as it seemed to the organizers of the Copenhagen talks, was mild compared with the broader Russian campaign against the idea that global warming is taking place. Two months before Copenhagen, state-owned Channel One television aired a documentary called The History of a Deception: Global Warming, which argued that the notion of man-made climate change was the result of an international media conspiracy. A month later, hackers sparked the so-called Climategate scandal by stealing e-mails from European climate researchers. The hacked e-mails, which were then used to support the arguments of global-warming skeptics, appeared to have been distributed through a server in the Siberian oil town of Tomsk, raising suspicion among some environmental activists of Russia's involvement in the leak. (See TIME's Ecocentric blog for more on Climategate.)

"Broadly speaking, the Russian position has always been that climate change is an invention of the West to try to bring Russia to its knees," says Vladimir Chuprov, director of the Greenpeace energy department in Moscow. Case in point: when Medvedev visited Tomsk last winter, he called the global-warming debate "some kind of tricky campaign made up by some commercial structures to promote their business projects." That was two months after the Copenhagen talks. But Medvedev's climate-sensitive comments on Friday, Chuprov says, could finally mark the start of a policy shift. "You don't just throw comments like that around when you are the leader of the nation, and if you look at what is happening with this heat wave, it's horrible. It's clearly enough to shake people out of their delusions about global warming."

The heat wave first started alarming authorities in June, when local officials recorded abnormally high fatalities on Russia's beaches. At the same time, a devastating drought was withering Russia's crops. As of July 30, some 25 million acres (about 10 million hectares) of grain had been lost, an area roughly the size of Kentucky — and growing. Then last week, fires that had been ignored for days by local officials began spreading out of control. By Aug. 2, they had scorched more than 300,000 acres (121,000 hectares) and destroyed 1,500 homes in more than a dozen regions, some of which declared a state of emergency. Scores of people have been killed in the fires, and in the outskirts of Moscow, burning fields of peat, a kind of fuel made of decayed vegetation, periodically

covered the city in a cloud of noxious smoke, making it painful to breathe in parts of the Russian capital.

Medvedev has not been the only person in Russia to link the ongoing heat wave to climate change. Alexei Lyakhov, head of Moscow's meteorological center, tells TIME it is "clearly part of a global phenomenon" that is hitting Russia. "We have to start taking systemic measures of adaptation. It's obvious now. Just like human beings at one point took steps to adapt to the Ice Age, we now have to adapt to this," he says, citing cuts to carbon emissions as one of the necessary adaptations.

Now that Medvedev is also acknowledging the effects of climate change, Russia's official line on the subject could start to change, Chuprov says. But he warns that convincing the public of the threat from global warming may be difficult. "The status quo can change quickly in the minds of bureaucrats if the leadership gives the signal. But in the minds of the people, myths are much more difficult to uproot," he says. As if to prove the point, Russia's largest circulation newspaper, Komsomolskaya Pravda, ran a headline on July 31 that asked, "Is the Russian heat wave the result of the USA testing its climate weapon?" The daily's answer was "Yes, probably." (See pictures of Russians celebrating Victory Day.)

But if Medvedev stands by his pronouncements, there may turn out to be a bright side to Russia's devastating weather: one of the nations most responsible for driving climate change may finally start trying to do something about it.

Medvedev’s stay in Sochi no vacationhttp://rt.com/Top_News/Press/eng.html

The head of state transferred his work to the southern residence

Dmitry Medvedev asked journalists not to regard his stay in Sochi as a vacation. “This is simply a transfer of work to the southern residence,” said the president. “Either way, each day I go to the office, hold meetings and events, and by the time I finally come out to the sea, it turns out that the time is already nine in the evening,” he said.

“On another hand, being in Sochi is also an opportunity to change the scenery, and breathe the fresh sea air,” acknowledged the head of state. Medvedev told journalists that in addition to working, he will try to allocate some time for rest.

“As for sports, I began bicycling, but I won’t be riding here, because it’s too hot,” noted the president. “I’m hoping to do some yoga, which I have been neglecting lately.”

The president is also trying not to miss an opportunity to distract himself from work by reading.

“Recently, I have been enjoying reading on the iPad,” said Medvedev. “It is high quality, and makes it possible to upload hundreds of books and read various books, depending on the mood,” he explained.One of the most recent books on the president’s list is Stieg Larsson’s novel “The Girl with the Dragon Tattoo.”

Medvedev noted that he may possibly go fishing.

“Maybe we’ll go fishing; if we go with the prime minister, that is an Astrakhan topic,” said the president, and stressed that he will only realize this idea if the situation in the country permits -- namely, the situation with the forest fires. On Monday, Medvedev signed a decree declaring a state of emergency due to the wildlife fires in seven of Russia’s regions.

Read the article on the newspaper's site

NORTH CAUCASUS

Explosives belonging to Baksan plant attackers uncovered in Russian N. Caucasushttp://en.rian.ru/russia/20100803/160049233.html

10:11 03/08/2010

Policemen in the Russian North Caucasus city of Baksan have seized over 100 kilograms of explosive materials possibly belonging to militants involved in the Baksan hydropower plant bombing on July 21, a local police source said on Tuesday.

"Police officers believe the garage where the components of explosive devises were found, belonged to members of illegal armed groups who were eliminated at the end of June after taking part in the attack on Baksan Hydropower Plant," the source said.

On July 25, law enforcement officers eliminated two men thought to be involved in a range of serious crimes, including the attack on Baksan Hydropower Plant. Two submachine guns, one gun, grenades and ammunition were confiscated from the men.

The blasts at the hydropower plant in Russia's North Caucasus republic of Kabardino-Balkaria were together equivalent to more than 10 kg (22 lbs) of TNT.

The attack saw a group of up to four gunmen burst into Kabardino-Balkaria's Baksan Hydropower Plant, shoot dead two security guards and detonate four explosive devices. The resulting blaze covered an area of 250 sq meters.

MOSCOW, August 3 (RIA Novosti)

Bomb-making laboratory found ion Kabardino-Balkaria found

http://www.rosbalt.ru/2010/08/03/758957.html

GOOGLE TRANSLATION

Rosbalt-Caucasus 03.08.2010, 12:06 News

NALCHIK, August 3. In the town of Baksan detected mini-laboratory for the production of explosive devices. As a correspondent Rosbalt in the press service of Ministry of Internal Affairs of Kabardino-Balkaria, the laboratory was discovered in the course of operational activities on the disclosure of sabotage at the Baksan hydroelectric power station. In one of the garages in the Baksan police seized over 100 kilograms of explosives, representing failure mixture of ammonium nitrate and aluminum powder, as well as submunitions, which are filled with bombs. From the garage and seized military unloading vests and car registration number of the car resident of Baksan, who was killed by criminals June 2, 2010. Are currently being further operatively-investigatory actions and expertise to determine whether the explosives used in a lab discovered in explosions at Baksan hydroelectric and other serious crimes on the territory of the republic. Recall the night July 21 at least six armed men entered the territory of Baksan hydroelectric station and killed two police officers guarding the site. The bandits laid for hydroelectric five explosive devices, according to preliminary information made of ammonium nitrate and aluminum powder. When the criminals escaped, four bombs worked. In order to undermine used as a clock mechanism and mechanism of remote control.

August 02, 2010 22:14

Umarov, Vadalov must surrender, or die – Kadyrovhttp://www.interfax.com/newsinf.asp?id=180807

GROZNY. Aug 2 (Interfax) - Intensive special operations to track down Doku Umarov will continue, Chechen President Ramzan Kadyrov said.

"I have said more than once that no forces stand behind Umarov. And there are no detachments subordinated to him. He is ill and he is hiding in a hole like a rat, lice-

ridden. He has lost his teeth and he cannot issue commands," Kadyrov told journalists on Monday.

"Media reports claiming that one leader has been replaced by another, is mere propaganda," he said.

"I don't care who calls himself what. It is a fresh attempt to place the terrorist in the limelight, and to feign the presence of some organized force with a control structure. All this is a farce," he said.

"Special operations to track down Umarov and other bandits, who have closed the door on peaceful life behind them, will be continued," Kadyrov said.

"Umarov has long been dead in the Chechens' eyes. He is practically forgotten. All this talk about Umarov mostly comes from journalists, especially foreign. Nine out of ten Chechens do not know about what 'imarate' Umarov is talking and who Umarov is. But some media maintain this theme, knowingly or unintentionally," he said.

Kadyrov also said that law enforcement services are looking for Aslambek Vadalov. "There is no difference for the participants in the operation what title Vadalov has in the bandit hierarchy," he said.

"Both ringleaders will be found," he said.

"They should better hold their hands up and walk directly to the court. This will save them their lives, given the moratorium on the death penalty. Or the fate of their predecessors - Khattab, Basayev and others - will befall them," Kadyrov said.

sd

August 2, 2010Tactical Toothachehttp://www.russiaprofile.org/page.php?pageid=Politics&articleid=a1280774095

By Roland OliphantRussia Profile

Doku Umarov’s Resignation Does Not Signify a Change in Tactics, but an Insurgency Where Heads Are Growing Back Before They Are Even Decapitated  Doku Umarov, the Islamist insurgent leader and “emir of the Caucasus” who claimed responsibility for organizing the March 29 Moscow metro suicide bombings, announced his retirement Sunday night. In a statement posted on the jihadist Kavkaz Center Web site, the Chechen-born terrorist said that he was stepping aside to let “younger, more energetic” leaders take control of the movement. But at the moment, the man who will take over is almost unknown.

 In a video posted on YouTube and Kavkaz Center – the same jihadist Web site that posted his claim of responsibility for the Moscow metro bombings – the self-styled “emir of the Caucasus” said that that he was standing down because of ill health. In shaky video footage shot in a forest and flanked by two aides, one of whom appears to be his chosen successor Aslambek Vadalov, a man claiming to be Umarov explained that “our brother Aslambek is younger, will be more energetic and will achieve different results.” “That doesn’t mean I’m giving up Jihad. God willing, as an old mujahidin fighter I will do all I can, in word or deed,” he added. Doku Umarov, 46, has led the insurgency in the North Caucasus since succeeding Abdul Halim Sadulaev as president of the unrecognized Chechen Republic of Ichkeria in 2006, and as a terrorist he has been a “very active man” as Alexei Malashenko, a Caucasus watcher at the Moscow Carnegie Center, put it. He is wanted by Russia in connection with dozens of murders and the Moscow metro bombings on March 29 this year, which killed 40 people. Besides organizing and directing attacks, he has also built up a small cult of personality. “Not as bright a symbol as [Shamil] Basayev [who organized Beslan],” noted Malashenko, “but he is a symbol nonetheless.” But the most significant legacy of his four years at the head of the insurgency is the formalizing of the evolution of the insurgency from a Chechen separatist affair to an ideological, North-Caucasus-wide “jihad.” In October 2007 he announced the “Caucasian Emirate,” of which he appointed himself “emir,” and aligned the movement with “international jihad.” That effectively amounted to a rejection of Chechen independence in favor of pursuing an independent Islamic state stretching from the Caspian to the Black Sea and reaching into the Volga region of Russia. The move prompted the final schism with the remaining nationalist leaders, led by Akhmed Zakayev in exile in London, who is now thought to have little or no influence over the insurgency at all.  Dark horse In yesterday’s video Umarov named as his successor Aslambek Vadalov, a relatively little-known fighter with a big, black beard and, if his manner in yesterday’s video is anything to go by, a nervous manner in front of camera. “I have nothing to add,” he said to the camera after Umarov had announced his resignation. “Inshallah everything will be alright, and if I have any questions I will ask Umarov.”  A second aide, sitting on Umarov’s left, then backed the choice of successor and said that commanders in Ingushetia, Dagestan, and Kabardino-Balkaria would all rally around the new leader. Despite appearing alongside Umarov in a succession of videos over the past few years, relatively little is known about Vadalov except that he’s from the small town of Gudermes in east Chechnya and he was appointed to leader of the insurgency’s “eastern front” – basically a symbolic title with little relation to the geography of his

activities - in 2007.  “Vadalov’s a dark horse,” said Malashenko. “Generally nothing is known about him. He’s not known to have taken part in any really big actions – at least not as an organizer.” “He’s practically unknown,” concurred Andrei Soldatov, an expert on the Russian Security Services. “I mean, he may be known to insurgents, and maybe even to the FSB. But not to journalists or academics who specialize in the region.” Umarov already named Vadalov his successor in a video posted on Kavkaz Center on July 23. Initially that was seen as a move to ensure the succession in the event of his own death or capture by Russian forces (in June a veteran Ingush commander known only by the nom-de-guerre “Magas” was captured alive, apparently after being betrayed. Umarov, it was speculated, feared he could be next).  The move is not likely to signify a change in tactics, however. The insurgents show no sign of moving away from the tight-knit cell structure they adopted in 2006 to 2007 to resist infiltration, and their attacks will most likely continue to be characterized by the small-scale bombings and assassinations that such groups are capable of. But it may well be frustrating for the FSB, who have been following a strategy of decapitating the insurgency, to see its heads growing back before they’ve even been chopped off.  “The whole tactic was based on the assumption that if we kill the prominent leaders the movement will be thrown into disarray,” said Soldatov. “But for the militants now publicity is not so important. They only need forty or fifty people in the forest at a time, so they don’t need a prominent and famous leader to appeal to public opinion,” he added. Laid low by toothache But the sudden resignation today has refocused attention on Umarov’s health – an ongoing obsession for insurgency watchers, including Chechen President Ramzan Kadyrov, who earlier this year declared the self-proclaimed emir was seriously ill. “Well, you can believe Ramzan or not,” said Alexei Malashenko, apparently alluding to the Chechen leader’s unfortunate record of over-optimistic speculation on his enemies’ demise, “but it seems to me this really was about Umarov’s health and fatigue.”  The recently retired emir is variously rumored to have a tooth problem from an old jaw wound, and according to other accounts he has a gammy leg from an encounter with a land mine. Then there’s a report from the Rosbalt news agency on July 29 that the FSB had killed “17 bandits and their leaders” by poisoning their food. Rosbalt claimed Umarov had been targeted the same way but survived the poison. The story has not been corroborated elsewhere, however, and looks suspiciously like it was planted by the FSB, said Soldatov. But whatever the cause, Kadyrov is still confident his enemy is on his last legs. “He is

sick, hiding like a rat in a hole, overrun with lice, toothless and in no position to lead,” the Chechen president told Interfax Monday.

Photo on the front page: AFP/Ansar AlJihad Network

Well-Known Journalist Killed in Car Accident in Chechnya http://www.rferl.org/content/WellKnown_Journalist_Killed_in_Car_Accident_in_Chechnya/2116720.html

August 02, 2010 GROZNY, Russia -- Well-known Chechen journalist Malika Betiyeva and four members of her family have been killed in a car crash, RFE/RL's Russian Service reports.

Betiyeva's two teenage sons, her husband, and her husband's sister were all killed in the August 1 crash on the Grozny-Shatoi road.

The Chechen department of the Russian Interior Ministry reported that two other unnamed people were also injured.

Betiyeva, 44, was the deputy editor of the official Chechen newspaper "Molodezhnaya smena."

The crash is being investigated.

— 03.08.2010 08:24 —

In Dagestan, the chairman of the public council settlement shot and killed

http://www.gazeta.ru/news/lenta/2010/08/03/n_1528849.shtml

GOOGLE TRANSLATIONIn the district of Dagestan Karabudahkentskom unidentified persons fired at a car village council chairman of the public Gubden Magomed Salamova. From his wounds, he died on the spot, told Itar-Tass, the press service of the Ministry of Internal Affairs of the Republic. "An attempt was carried out on Monday afternoon near the village cemetery, which was driving past Salamov, - said in the ministry. - He held antivahhabistskuyu position in 1999 was an active member of the militia during the invasion of Dagestan gang of international terrorists. " Criminals who traveled in a stolen car along with a host of transport, left her a few dozen kilometers from the scene of the attack near the village of Kakashura. Steps were taken to their detention. ITAR-TASS

August 3, 2010 8:05 In Dagestan, the police fired, there were no injuries

http://www.interfax.ru/news.asp?id=147792

GOOGLE TRANSLATIONMakhachkala. August 3. INTERFAX - Combined police patrol came under fire from automatic weapons and rocket-propelled grenade on Tuesday night in the Khasavyurt, there were no injuries, reported to Interfax, the press service of Ministry of Internal Affairs of Dagestan. "The attack occurred at 01:00 Moscow time on the street Babayurtavskaya. UAZ Ural and in which there were 15 employees ATC Khasavyurt and mobile squad the Russian Interior Ministry came under fire from automatic weapons and rocket-propelled grenade from a passing car VAZ-2114" - said on Tuesday spokesman. According to him, the police returned fire, the car the attackers was also injured. "Someone left a car and escaped," - he added In an abandoned car was found to shoot disposable RPG-18, a shop from a Kalashnikov and brown spots resembling blood stains, the spokesman said.

Airliner crashes in Russia’s Krasnoyarsk Regionhttp://english.ruvr.ru/2010/08/03/14308743.html

Aug 3, 2010 09:20 Moscow TimeAn airliner An-24 has crashed in the Krasnoyarsk Region, in Eastern Siberia. The accident occurred when the plane was 700 metres away from the Igarka airport runway and about to land. 11 people died in the crash, specifically 10 passengers, including one child, and also a flight attendant. According to the Emergencies Ministry regional centre, three crewmembers and one passenger have survived the crash and are now in hospital. The KATEKAVIA air-carrier’s plane was en route from Krasnoyarsk to Igarka. So far it has been unknown what has caused the disaster. The aircraft was landing amid rain and thick fog. The Russian Prosecutor’s Office Investigative Committee has opened a criminal case on charges of air safety rules violation. A day’s mourning is due to be observed in Krasnoyarsk Region on Wednesday.   

Death toll in Russia's East Siberia airliner crash rises to 12 (Update-4)http://en.rian.ru/russia/20100803/160047781.html

06:19 03/08/2010

A passenger, who survived an An-24 crash with 15 people on board in Russia's Krasnoyarsk Territory in East Siberia, died in a hospital bringing the death toll to 12, a spokesman for the regional emergencies ministry said.

The plane, which was flying from the city of Krasnoyarsk to the town of Igarka, crashed on Monday night some 700 meters (2,300 feet) from the runway during landing at 21:19 Moscow time [17:19 GMT]. There were four crewmembers and 11 passengers, including a child, on board.

Sergei Isakov, born in 1968, was hospitalized in Igarka in intensive care with serious burns.

"We have information from the hospital that he died," the spokesman said.

The Russian Air Transport Agency said the other three of the survivors are the members of the crew, who are Nikolai Kozlov, the captain of the plane, Igor Kabanov, a co-pilot, and Yevgeny Pertunin, a flight engineer.

The Transport Agency said the plane was landing in adverse weather conditions.

"Before landing, the plane veered to the right of its landing course and collided with the ground in front of the runway," the agency said.

It said a fire broke out at the site of the crash but was put out by firefighters at the airport.

A West Siberian transport investigative committee said preliminary investigation shows that a thick fog near the landing area was the cause for the tragic accident.

Meanwhile, a spokesman for the Igarka airport said the crash did not obstruct the work of the airport and other planes kept landing and taking off in accordance with their schedule.

Lev Kuznetsov, the governor of the Krasnoyarsk Territory, decided to cancel his vacation and is currently back on his way to Krasnoyarsk from Moscow, where he was visiting with his family, a spokesman for the governor said.

The airline running the flight, Katekavia, has been running short-haul flights in the region for 14 years. The airline served some 122,000 passengers over 2009.

A spokesman for the Transport Agency said a special commission has been set up to investigate how Katekavia was organizing its flights.

MOSCOW, August 3 (RIA Novosti)

4 survivors in An-24 crash hospitalized in Igarka

http://www.itar-tass.com/eng/level2.html?NewsID=15369627

03.08.2010, 03.39

MOSCOW, August 3 (Itar-Tass) - Four survivors in the An-24 crash in Russia’s Siberian town of Igarka, Krasnoyarsk territory, have been hospitalized to Igarka’s central clinic, a spokesman for the Siberian regional emergencies centre told Itar-Tass on Tuesday.

According to the spokesman, passenger Sergei Isakov, who reportedly died in hospital, is in extremely severe but stable condition.

The three other survivors – An-24 pilot Nikolai Kozlov, co-pilot Igor Kabanov and flight engineer Yevgeny Petrunin – are in satisfactory condition.

The accident occurred in the small hours of August 3, when the An-24 turboprop crashed while landing in conditions of heavy fog near the airport in the town of Igarka, Krasnoyarsk territory. The aircraft owned by KATEKAVIA airlines was en route from Krasnoyarsk to Igarka and had 11 passengers, including one child and four crew members onboard. The aircraft hit the ground 700 meters off runway. One crew member and 10 passengers were killed in the crash.

Krasnoyarsk territory to mourn An-24 crash victims on August 4

http://www.itar-tass.com/eng/level2.html?NewsID=15370486&PageNum=0

03.08.2010, 10.40

KRASNOYARSK, August 3 (Itar-Tass) - A day of mourning will be announced in Russia’s Siberian Krasnoyarsk territory on August 4 over the An-24 crash killing 11, the press service of the local government said on Tuesday.

“A relevant order will be signed by Krasnoyarsk territory governor Lev Kuznetsov as soon as he returns from the scene of the tragedy,” the press service said on its website.

Flags will be flown at half-mast on all the buildings of state and local authorities, all entertainment broadcasts will be cancelled on local TV and radio.

The governor expressed condolences with the families of those killed in the crash. “I vow the families of the killed will receive necessary assistance, the causes of the crash will be established,” Kuznetsov said. “We share your pain and are morning with you.”

According to the Investigative Committee of the Russian Prosecutor General’s Office (SKP), an Antonov-24 turboprop en route No. 9357 from Krasnoyarsk to Igarka crashed

while landing because of heavy fog near Igarka’s airport at 01:19 a.m. local time on Tuesday. The crash caused fire.

“There were 11 passengers, including one child, and four crew members onboard. One crew member and 10 passengers were killed in the crash. The plane’s pilot, co-pilot, flight engineer and one passenger were hospitalized,” a spokesman for the SKP said.

Criminal case was opened on charges of violations of air traffic safety rules causing death of two or more people by inadvertency. Investigation is underway.

Putin positioning himself to reclaim Russia presidency

http://mobile.latimes.com/wap/news/text.jsp?sid=294&nid=17693149&cid=16692&scid=-1&ith=0&title=World

By Sergei L. Loiko, Los Angeles TimesStory posted 2010.08.02 at 03:22 PM PDT

Reporting from Moscow-- From the smoke of the wildfires engulfing the Moscow region and the embarrassment of this summer's spy scandal, Vladimir Putin is reemerging as Russia's most powerful man and, experts say, a candidate to reclaim the presidency a little more than a year and a half from now.

For more than two years since term limits forced him to give up office and take the prime minister's job instead, Putin and his protege, President Dmitry Medvedev, have seemed to be in lockstep. One could see a television report on Medvedev meeting with business owners followed by one on Putin talking to children in a sports stadium. Or read about Medvedev signing a nuclear arms treaty with the U.S., and Putin promising grants for university research.

But many analysts long have predicted that one of the two eventually would elbow the other aside. And in the last month, the situation has changed.

While Medvedev appears mostly confined to his Kremlin office, Putin is rushing around the country with the news media in tow. He comforts fire victims, upbraids local officials — and publicly dictates to the president what should be done about the fires that have killed 40 people and ravaged more than 1.2 million acres.

Putin held an urgent meeting Monday with regional governors in Moscow and reprimanded them for not being ready for the fires.

On Friday, he flew to the Nizhny Novgorod region, where he visited a village that had been reduced to ashes. Dressed in a light blue shirt and dark blue jeans, Putin moved

from one blackened ruin to another, shaking his head. He ended up surrounded by a big group of grieving residents.

"Before winter, all the houses will be standing," Putin said, raising his voice to be heard by the entire crowd — and by cameras of all the main television networks that broadcast the meeting across Russia.

"Do you promise us?" a woman asked. "Yes, I promise," Putin replied, adding that each family member will receive more than $6,000 in compensation.

"We will visit you with a huge bow [of gratitude] from the newly built village," said one woman. Putin hugged and kissed her; she kissed him back.

In the next televised report, Putin is standing in a picturesque birch grove, his cellphone to his ear as he talks to Medvedev, who is sitting at his Kremlin desk.

Putin: "All the necessary measures on the spot we have taken, and I think it is expedient and would ask you to sanction the use of additional Defense Ministry forces and means to combat the fire."

Medvedev: "As for the idea to use the Defense Ministry, I give such sanction."

Putin: "We need to talk with the governors of other regions and take children out to other regions not as smoky as this one."

Medvedev: "Yes, it is a good idea. Unfortunately we have casualties. Relatives of the deceased should be paid compensation."

Putin: "We have done that already."

Lilia Shevtsova, a Kremlin expert at the Moscow Carnegie Center, said the conversation was about more than fire relief.

"It is quite obvious that Putin uses these difficult times to show the people who is the strong man in the country, who is the national leader, who is the can-do man — and who is just a Kremlin clerk," she said.

"It is clear to me that Putin started his presidential campaign now as Russia is passing through difficult times, she added. "He needs to unequivocally indicate to the country that he is in control, and not Medvedev, whom Putin never counted for much anyway."

A regional vice governor who spoke on condition of anonymity grumbled that Putin was overstepping his authority as prime minister.

"He needs to stay in Moscow and run the federal government, but instead he runs around everywhere intimidating governors and giving them orders on how to run things in their

regions," the official said. "Governors among themselves call Putin 'the Commander,' and they can't ignore him, because they knew from the beginning who is really in charge in the country."

Igor Klyamkin, vice president of the Liberal Mission Foundation, a Moscow-based think tank, said Putin's behavior indicates that he is worried about the falling popularity of his United Russia party and has decided to use his personal prestige to bolster it far ahead of the April 2012 election.

"The way Putin has been behaving recently sends only one signal: that he is set to run for his third presidency," Klyamkin said.

Medvedev told Russian news agencies Monday that he was already thinking about running for president again in 2012, but that he wasn't sure whether he, Putin or someone else would be the candidate. Speaking about his relationship with Putin, Medvedev added, "On the one hand, our relations haven't changed at all; on the other hand they have changed radically."

Putin hasn't limited himself to fighting fires. He was photographed driving to an international motorcycle show near the Russian naval base at Sevastopol in Ukraine on a Harley-Davidson, wearing black boots, black pants and shirt, a black belt with a silver buckle and dark sunglasses.

"Putin loves to employ his favorite Benito Mussolini-the-father-of-the-nation image, wearing all black and looking tough," Shevtsova said.

But then he shocked reporters when he said that he had a party with the Russian spies who had been expelled from the United States, and they sang a song from his favorite Soviet World War II spy thriller.

Putin, a former spy himself, praised them for their professionalism and predicted bright futures for the spies.

That too was vintage Putin, said Shevtsova: "He thus took responsibility and demonstrated that he doesn't betray his own."

But Shevtsova cautioned that the behavior that helped Putin win reelection in 2004 might not work again. "Then the times were different, and Russia was on the rise, so now people may start saying, 'We don't believe you any more.' "

Vadim Adianov, a 47-year-old surgeon, his wife and son watched helplessly Friday as fire consumed their village, Izlegoshche, about 300 miles south of Moscow.

"Nothing was left, not even a single grass," Adianov said. "No firefighters came, nobody helped us and we couldn't do anything against a wall of fire." An old firetruck did come to a neighboring village, spent its water in 10 minutes, left and never came back.

"I heard what Putin said about compensation," Adianov said. "I doubt that we will get the compensation though.... I lived a long time in Russia, and I've learned to doubt everything."

sergei.loiko@latimes.com

FACTBOX-Key political risks to watch in Russiahttp://af.reuters.com/article/energyOilNews/idAFRISKRU20100802

Mon Aug 2, 2010 12:36pm GMT

MOSCOW Aug 2 (Reuters) - Russia is one of the world's most lucrative emerging markets but the risks are big.

Oil sales are the foundation of Russian stability. The plans of Prime Minister Vladimir Putin, the country's paramount leader, also remain central to Russia's future.

Otherwise, the biggest risks remain corruption and the arbitrary rule of law.

OIL

Russia is the world's biggest energy producer and remains heavily reliant on oil and gas exports, which make up 65 percent of exports despite Kremlin calls to diversify the economy.

A sharp and sustained fall in oil prices would lead to a sell-off in the equity, bond and currency markets, undermine the economic recovery and erode Putin's popularity before the March 2012 presidential election.

Major investment banks expect this year's Gross Domestic Product (GDP) to grow by more than the official 4.0 percent forecast after the economy shrank by 7.9 percent in 2009, the worst annual GDP result in 15 years.

While Russia's 2010 growth forecasts look impressive when compared to developed markets such as the European Union, they are less rosy when compared to China and India which are expected to grow by about 10 and 8.5 percent respectively.

The Kremlin is betting on oil prices of over $75 per barrel for its recovery and a moderate fall in prices could push the budget further into deficit.

Russia posted a budget deficit of 5.9 percent of GDP in 2009 and with an oil price assumption of $75 per barrel in the 2010 budget, it is forecast to be 5 percent of GDP.

Russia's Finance Ministry wants to be in the black by 2015 but spending has been raised and there is a lack of political appetite for tax increases ahead of the 2012 election.

Under current spending plans, the budget would only be balanced at an average price for Russia's Urals blend of oil of about $95 per barrel, according to investment banks.

Investors snapped up $5.5 billion of Russia's first sovereign Eurobond issue in more than a decade this April, but their appetite could wane if oil prices fell, the very time when Russia could need cash.

Even so, Russia's foreign exchange and currency reserves rose to $469.3 billion on July 16 and are the world's third largest after China and Japan.

Russia also has plans to sell $29 billion in state assets, the most ambitious privatisation plan since the rigged sales of the 1990s.

What to watch:

-- Prices for oil, gas and metals. Chinese demand is key.

-- Russia's rouble could appreciate further against the U.S dollar if oil prices are high, undermining the recovery.

-- What Putin and Medvedev say about spending ahead of the 2012 election, or about potential borrowing.

-- Comments from Finance Minister Alexei Kudrin, a fiscal conservative, on additional sources for budget revenue, such as borrowing or asset sales.

VLADIMIR PUTIN

Putin is Russia's most powerful and popular politician and dominates the political system despite stepping down as president in 2008.

Putin is the senior member of what Russian officials call a ruling "tandem" with Medvedev, the former corporate lawyer Putin tapped as his successor when a constitutional limit of two consecutive terms kept him out of the 2008 presidential race.

Both Putin, 57, and Medvedev, 44, have suggested that one of them will run for president in 2012, and that they will agree in advance which one it will be.

Many analysts expect Putin to return to the Kremlin in 2012 but some diplomats say he does not even need to be president to remain Russia's paramount leader. Putin is also leader of the biggest party in parliament.

Medvedev's biggest constitutional reform as Kremlin chief was to extend the presidential term to six years from four, meaning that the next president could serve until 2024.

Any strong signal from Putin that he will run for president in 2012 could spark a rally in Russian assets, just as any indication he was preparing to leave power or unable to fulfil his duties would have unpredictable consequences.

Returning to the Kremlin or staying in power beyond 2012 could raise concerns about the long-term stability of a political system based on the rule of one man.

What to watch:

-- Clarity from Putin and Medvedev on their presidential election plans.

-- Any real signs of discord between the two men could provoke a constitutional crisis, though there have been no indications of any major policy difference to date.

-- How Putin and Medvedev are presented in the domestic media and in opinion polls. Any drive for public relations stunts could indicate the beginning of silent campaigning ahead of the 2012 election.

-- Most of the key posts in the Kremlin administration and the cabinet are held by long-time Putin loyalists. A significant shake-up of high-level officials could mark a major shift in the balance of power and herald major policy changes.

RULE OF LAW, CORRUPTION

Western executives say the biggest barriers for business in Russia are endemic corruption, red tape and the arbitrary way the rule of law is imposed.

Medvedev says corruption is one of the biggest threats to Russian national security and has promised to reform the judicial system and courts to improve property rights.

But he admitted in July that his administration had made almost no progress in fighting corruption, which pervades all walks of life in Russia and amounts to an additional tax on businesses.

Officials can demand multi-million-dollar kickbacks before investments are approved and then threaten to close down a business unless they get a slice of the profits. A corrupt court system prevents owners from protecting property rights.

Last year Transparency International placed Russia in joint 146th place -- along with Zimbabwe and Sierra Leone -- of 180 countries in its Corruption Perception Index, saying bribe-taking cost about $300 billion a year.

Transparency said Russia was perceived to be far more corrupt than its emerging market peers such as India, China and Brazil, which were ranked, respectively, 84th, 79th and 75th.

Most Russians believe the problem has worsened in the past decade and companies ranging from IKEA, the world's biggest furniture retailer, to fund managers such as Hermitage Capital Management say they have fallen foul of corrupt Russian officials.

What to watch:

-- Dismissals of senior Kremlin or government officials for bribe-taking.

-- Polls on perceptions of corruption.

-- The second trial of imprisoned former YUKOS oil company chief Mikhail Khodorkovsky is seen as a bellwether of policy. A not-guilty verdict or decision to drop the case could be a sign of liberalisation.

ATTACKS BY INSURGENTS

Twin suicide bombings in Moscow's subway system on March 29 killed 40 people -- the deadliest attack in the capital in six years -- and sparked fears that Islamist rebels from the north Caucasus could unleash a wave of attacks in Russia's heartland.

Islamist rebels who want to create an independent sharia-based state along Russia's southern flank claimed responsibility for the metro bombings.

The self-proclaimed leader of the militants, a Chechen rebel named Doku Umarov who calls himself the "Emir of the Caucasus Emirate", has vowed to attack economic infrastructure such as the pipelines which feed Russia's $1.4 trillion economy. On Sunday, Umarov said in an Internet statement he was stepping down and appointing a successor, Aslambek Vadalov.

Suspected Islamist militants stormed the Baksanskaya power plant in Kabardino-Balkaria in July, shot dead two guards and set off remote-controlled bombs beside the main generator units, bringing the station to a halt.

What to watch:

-- Markets shrugged off the Moscow bombings and subsequent attacks within the North Caucasus, but further strikes on Russian cities or against economic infrastructure such as pipelines or power stations could spook investors. (Reporting by Guy Faulconbridge, Editing by Mark Trevelyan)

U.S. woman used as patsy in smuggling military hardware to Russiahttp://en.rian.ru/world/20100803/160048082.html

07:26 03/08/2010

A U.S. woman is suspected of smuggling military hardware to Russia, although she firmly believes that she helped sending humanitarian aid for Russian orphans, ABC News.com reported.

The 44-year-old woman from Wisconsin was landed a job via a Website and had to change packaging and address labels on parcels she received, which in reality contained sniper scopes, night-vision goggles and military gear, rather than clothing for orphans in Russia.

"If 'ABC Arms Dealer' in California sends a package with a rifle scope directly to Russia that is going to raise a red flag and likely get stopped and searched. But a package being sent from a private citizen in Wisconsin might not get searched. That's why they were using her," ABC News.com quoted Capt. Bill Wallner of the Ripon Police Department, as saying.

All sensitive equipment was purchased in the United States using stolen credit cards and police got tipped of the scheme after an arms dealer in Iowa got suspicious about a discrepancy between the billing address and the shipping address on a purchased $1,600 rifle scope.

Police established that for weeks the woman was receiving several packages a day and was paid $30 for each shipped parcel. After police obtained a search warrant and examined the woman's house they found 20 packages waiting to be mailed and containing rifle and sniper scopes, night vision equipment, GPS units, camouflage clothing, worth a total of $15,500.

As for the time being police believes that the woman from Ripon, Wisconsin, was rather an unwitting participant in a scheme to ship sensitive equipment bought using stolen credit cards and probably will not be charged.

"She's been very cooperative. We seized her computer and the messages she received, verified everything she told us. When we came knocking on her door, she was very surprised. She was pretty devastated about it and couldn't believe she'd been sucked in," Capt. Bill Walner continued.

She told the police that she was hired by the company, which called itself Switzerland Watches, and was always communicated via e-mail. She was permitted to open first five packages, which according to her, contained items like diapers and baby clothing, but was prohibited to open the rest of the packages.

Police, who handed over the investigation of the case to the FBI, said the packages were shipped to different addresses in Novorossiisk, a port city on the Black Sea in Russia's Krasnodar Territory.

"We are looking into the matter. Time will tell how big this is," ABC News.com quoted Monica Shipley, a spokeswoman in the Milwaukee FBI field office, as saying.

MOSCOW, August 3 (RIA Novosti)

Central Asia close to chaos due to US efforts – Russian MPhttp://rt.com/Politics/2010-08-03/us-central-asia-chaos.html/print

03 August, 2010, 10:27

The US is destabilizing Central Asia by means of drug trafficking, disintegrating Kyrgyzstan and putting pressure on Iran, shared Semyon Bagdasarov, member of the State Duma’s International Affairs Committee.

RT: The EU and the US adopted a new set of unilateral sanctions targeting Iran’s foreign trade, banks and insurance companies and energy sectors. Russia has expressed its strong opposition. What move do you think could satisfy Russia?

Semyon Bagdasarov: Firstly, to support the list of sanctions approved by the UN. And secondly for Iran to have a more transparent nuclear program.

Of course, Russia definitely doesn’t want Iran to have nuclear weapons. Objectively, there isn’t enough transparency in many aspects on their part. This was one of the reasons that Russia supported UN sanctions. But they expanded these sanctions, prohibiting supplies of fuels and lubricants to Iran.

I believe it was a wrong move in relation to our country. We’ve been worried about recent talks on possible attacks on Iran or a war with Iran. This is a serious problem. We cannot ignore the fact that they are trying to destabilize the situation not only by economic sanctions but by ethical means also. Iran is a multi-ethnic country of 70 million people. A destabilization attempt is rather dangerous.

RT: The US and Great Britain say within a year they will start withdrawing their troops from Afghanistan, despite almost daily reports of attacks there and an increasing number of victims. Do you think Karzai’s government will be able to control the situation without foreign military support?

SB: It is obvious that Karzai’s administration is a puppet government managed by occupation forces. This administration is corrupted and isn’t supported by the local population. As for the withdrawal – two dates were set, July 2011 and the end of 2014.

Initially, those dates were determined after President Obama’s so-called Afghan strategic policy was announced. It included several points, such as increasing the presence of US armed forces and their allies such as the UK in Afghanistan; implementing programs for winning members of Taliban over to their side; and building up Afghan forces. We see today however that these programs are not working. The Taliban movement has been seizing more control over the territory. Afghan armed forces remain inefficient. American and allied forces keep losing more people. So we wonder whether this policy would result in stabilizing the situation at all.

RT: How does the situation in Afghanistan affect stability in Central Asia?

SB: There are two factors which strongly affect the situation in the region: drug trafficking and terrorism. A number of politicians in the West and in Russia have, until recently, seriously believed that the presence of the US and allied troops in Afghanistan is good, including for Russia, because the United States and their allies are fighting drug trafficking and terrorism. I always prefer giving concrete facts. In October 2009, the United Nations stated, in a very professional and comprehensive report, absolutely clearly that at the time US troops went to Afghanistan, no drugs were cultivated in the Taliban-controlled areas. An absolute record in this respect, 8,200 tons [of opium], was set in 2007 after the US troops had arrived in Afghanistan. No comment here. Second, in that report Mr. [Luiz Carlos da] Costa, the deputy special representative of the United Nations’ Secretary General who is also the head of the UN Office on Drugs and Crime, said that drugs were not the biggest problem. Can you imagine it, given the fact that 30,000 or 40,000 Russians were annually dying of drug abuse. I think that today these figures are much higher. Europe also has a high death toll from drugs.

Terrorism, well, before the US troops came to Afghanistan, we had had absolutely no trustworthy information about the Taliban’s participation in raids in the territories of Central Asian states: near Kyrgyzstan, in 1999 and in Uzbekistan in 2000. On the contrary, we know that those militants infiltrated from the territory of Tajikistan to where they had come from northern Afghanistan which, at that time, was being controlled by the Northern Alliance – a US ally against the Taliban regime.

RT: In July, Kyrgyzstan, another Central Asian country, was hit by massive ethnic clashes with hundreds dead. Is there any danger we could see a repeat?

SB: You know, back in April I warned about this kind of scenario for southern Kyrgyzstan. First of all, the situation in southern Kyrgyzstan had been intensively destabilized. Second, inter-ethnic tensions are also high in that region.

The southern regions of Kyrgyzstan are open to that part of Tajikistan which borders on Afghanistan. And that border is also open. So, those who want to stage provocations and heat up the situation can easily attract militants of all hues. So there were all preconditions for the outbreak of violence. But the world community was pretty much passive. Now we are talking about a death toll of 2,000 and a huge number of injured. Seventy percent of [the city of] Osh’s houses have been destroyed.

The worst is that the preconditions for further tension remain, they haven’t vanished. The inter-ethnic tension remains. And still, there are people interested in kindling ethnic tension. These preconditions should be eliminated.

Now, there are plans to send 52 OSCE policemen to Kyrgyzstan who are supposed to do something there. But what can 52 unarmed men do? Kyrgyzstan is not Kosovo. If anything happens to these OSCE policemen, orders will be given to bring in armed units to Kyrgyzstan. Who is going to send military units there? Of course, it’s NATO. There’s a US military base in Manas, a French air base in Dushanbe, a 154,000 NATO military contingent in Afghanistan. What’s the problem? If that happens, we will witness a very interesting situation that will resemble the one in Kosovo.

By the way, at the end of last year the US Senate held hearings on the situation in Central Asia. Clause 5 of that report described Kyrgyzstan as a failed state which might disintegrate. And the threat of active Western interference according to the Kosovo scenario is realistic. But many in Kyrgyzstan don’t want that to happen. They would gladly welcome Russian troops and meet them with bread and salt, but in no way the Western ones. This is a very serious contradiction, which may lead to serious consequences.

RT: Just days ago thousands of secret Pentagon military documents were leaked to the public. Why did it happen?

SB: Obviously, there are political groups who raise the question of the ineffectiveness of US troops, intelligence and other services in Afghanistan.

And right now, they are deliberately dwelling on the war in Afghanistan in detail to explain that it is useless. They have spent over $400 billion. One American soldier costs $1 million a year. So they spend $100 billion directly on soldiers apart from other expenses which are high as well. And the result is – nothing. That’s why they start raising such questions and giving publicity to various documents relating to the issue.

RT: It reveals that probably the American secret services probably know Osama Bin Laden’s whereabouts. If so – why hasn’t he been captured or killed?

SB: Who is Bin Laden? He’s a person who knows a lot. He closely worked together with the CIA, with Saudi Arabian intelligence. He was acquainted with the Head of Saudi Arabian Intelligence, etc. He has great knowledge of many contacts. Pakistan Inter-agency Intelligence closely works with US Intelligence. It might be so that somebody is interested in his presence in a certain place. Americans say that they fight against Al-Qaeda in Pakistan and Afghanistan. But the UN reports that in Afghanistan there are less than 300 Al-Qaeda members in comparison with the 154,000 armed US personnel. And according to our information, they are no more than 100 people, perhaps even less. You understand what this means when there are 100 or 300 terrorists against a 154,000 army. But the symbol should remain. Otherwise there is a question “What are they doing there?”

RT: One of this year’s major political global events was the signing of a new START treaty by Russia and the US. How do you think ratification will go both in the State Duma in Moscow and in America’s Senate?

SB: For our part, there have been hearings in the State Duma and the Foreign Affairs Committee. The parties United Russia and Fair Russia support the treaty. The Liberal-Democratic Party is against it. They have a weak argument, but it’s their choice. The Communists are in doubt and tend to be against it too. But all the same, we are gathering votes, but in the end it depends on the outcome in America. Of course there are opponents of this treaty who are sure that it does not comply with US interests.

RT: Let’s now go to another part of the world… North Korea, which condemned joint exercises between US and South Korean military forces and has threatened to respond. How dangerous is the situation on the Korean peninsular?

SB: North Korea would have been destroyed long ago if they did not have 10 or 12 warheads. Nobody knows whether they have them or not for sure, but it’s enough for military containment for both South Korea and America. That is why they are holding the exercise there.

I know little about the North Korean regime, but I definitely know that it’s very archaic and dangerous. It’s a sort of a mixture of the Middle Ages with pseudo-Marxist slogans. This regime is dangerous for the entire world. In my opinion that’s the regime we should take all kinds of sanctions against. And it’s dangerous to threaten them with weapons, because we cannot predict their reaction. And they also have a several million strong army which can cross the border, and this may lead to any number of consequences. It’s an Empire-Monarchy-power which could collapse at any moment.

RT: The World economy is slowly recovering and mostly due to the economic growth in Asia, especially in China. How big is Beijing’s role today in global politics?

SB: China is said to be the locomotive of the world economy. This is why there are a lot of things that depend on China. We should give the Chinese credit for having created, over the last few decades, a powerful economy that, in addition to everything else, is just round the corner from where we are. Politically, I think, the Chinese are aimed at strengthening their economic might. They are pursuing a very aggressive economic policy everywhere – Central Asia, Africa, and God knows where else – even in Afghanistan. It’s a case of expansion directed at grabbing raw material resources.

China is building up its power base, its army too. Presumably they have 100 nuclear warheads more than we believed they had. It’s a powerful army. Prospectively, it is a very dangerous expansion-prone state. All of this is pointing to a possibility that sooner or later they are going to embark on a policy of active expansion. It is dangerous for us too. We say that China is our strategic partner and it is one. But in relation to that partner we should also have powerful armed forces of our own, a powerful economy and be ready for a show of strength too.

RT: And the question many Russians and Europeans are worrying about – how real are the chances of a visa-free regime between the two?

SB: I think that the EU is concerned over us having a visa-free regime with certain Central Asian states, where drugs and a terrorist threat come from. This is why the Europeans are wary, but basically we should, of course, seek a visa-free regime. It is realistic, but how realistic in the short term is anyone’s guess.

National Economic Trends

IMF on Russian fragile recovery from crisishttp://www.businessneweurope.eu/dispatch_text12260

IMFAugust 2, 2010

The IMF expects Russia's economy to resume growth in 2010, by 41/4 percent, after a contraction of 7.9 percent in 2009.

Inflation has fallen rapidly, the current and capital accounts have both rebounded from sharp deteriorations, and the ruble has strengthened. But the IMF says the banking system is still under strain and financial markets remain vulnerable. The key policy challenges are to reverse the large fiscal stimulus and implement structural reforms to boost potential growth.

The IMF's Russia team recently conducted its annual checkup of Russia's economy, known as the Article IV consultation. IMF Survey Online spoke with Poul Thomsen, who is now moving on after having been mission chief for Russia since 2004, about how the government has been managing Russia's economy and what more needs to be done.

IMF Survey Online: The authorities responded strongly to the crisis. What allowed them to do so?

Poul Thomsen: Above all, the authorities' precrisis policy of taxing and saving much of the oil revenue windfall gave them ample room for maneuver in responding to the crisis. They were running large headline budget surpluses in the precrisis years. And in the process, they accumulated large reserves-almost $600 billion-as a result of sizable current account surpluses and substantial capital inflows.

So when oil prices declined and the crisis hit, the oil stabilization fund mechanism meant the authorities had significant scope for a vigorous policy response. There was room for a dramatic turnaround in the fiscal position from a large surplus to a large deficit-this

turnaround amounted to almost 10 percent of GDP. And the authorities could, at the same time, have an accommodating monetary policy- essentially financing the deficit by drawing down on their oil funds held at the central bank, which is equivalent to printing money. This was on top of their earlier massive support to the banking system and to private entities that had large, unhedged foreign exchange exposures.

IMF Survey Online: Despite the forceful response, Russia was hit hard by the crisis. Why do you think this happened?

Thomsen: Even though the authorities did save much of the oil windfall, they gradually began to spend more and more of it in the years preceding the crisis.

At the same time, private sector activity was very buoyant, so the economy began to overheat. Then, when the crisis hit, the economy was in overdrive, and output dropped by more than in many other countries.

Another problem was that the relatively fixed exchange rate policy before the crisis fueled expectations of ruble appreciation as oil prices increased steadily. This policy essentially encouraged investors and borrowers to take one-way bets on the ruble, which led to very large capital inflows. This was especially pervasive among Russian banks and corporates. Indeed, the private sector built up external liabilities of almost half a trillion dollars, while the government built up reserves of roughly the same amount. This left Russia vulnerable to the reversal of capital flows that took place during the crisis.

IMF Survey Online: What do you see as the main challenges facing Russia in the future?

Thomsen: Our main concern is on the fiscal side. Russia has undertaken an enormous fiscal stimulus-almost 10 percent of GDP-to help mitigate the impact of the crisis. It will now have to reverse this fiscal stimulus as cyclical conditions in the economy normalize and private sector demand picks up. Some three-quarters of the stimulus reflects permanent measures, mostly in the form of higher pension outlays, which means expenditure cuts will have to happen in other areas. Discretionary spending, as opposed to statutory spending, accounts for only 9 percent of GDP. This means that Russia will not be able to withdraw the fiscal stimulus unless it undertakes significant public sector reforms in order to allow savings in socially sensitive areas such as health care, education, and pensions. Obviously, these social sector reforms have to be done in a way that protects the most vulnerable. But without such structural changes, it will be difficult for Russia to complete the necessary unwinding of the fiscal stimulus.

IMF Survey Online: Russia has made progress in strengthening banking supervision. What more is needed to increase confidence in the Russian banking system and to facilitate credit extension?

Thomsen: Much has indeed been done to improve banking supervision in recent years. The central bank has stepped up its monitoring and analysis of risks to the banking system. Clear progress has also been made on day-to-day supervision over institutions,

including recently through stress testing. And the central bank now has a wide range of tools that can be used to provide emergency liquidity.

But there are still some weak spots. Perhaps one of the most important ones is the ongoing pervasiveness of connected lending in the Russian banking system, with banks lending to owners and their related enterprises, which is a potential source of serious instability if there is a shock to the system. This is why we have called for the central bank to be granted greater supervisory powers over banks and their affiliates.

Another area of concern in the banking sector is the loan classification and provisioning system, which is still not up to international standards. For instance, it is not clear how many current loans were actually restructured during the crisis, so greater transparency is needed in this area. And loan provisioning needs to be made more forward looking, so that banks are preparing for expected future losses and not just those that have already taken place.

We do believe the authorities are well-positioned to continue to deal with threats to financial stability. First, the banking system is still relatively small compared to the size of the economy. Second, the authorities have shown that they have the room for maneuver to deal with problems and that they are prepared to act forcefully.

IMF Survey Online: Given the shrinking labor force, the aging population, and the limited potential for increased productivity in Russia, it seems likely that potential growth is going to be less in the future. What steps can the authorities take to lessen the effects of these developments?

Thomsen: The overarching challenge facing Russian policymakers is to boost potential growth by improving the investment climate. There is a need for fundamental reforms, not least in the public sector, to curtail interference of the public sector on all levels of economic decision making. Russia needs public administration reform, civil service reform, and judicial reforms to ensure a level playing field for all investors. This is the key to achieving modernization and diversification of the economy. President Medvedev's calls for progress in this area are very much welcome.

AUGUST 2, 2010, 3:28 P.M. ET

IMF Sees Strong Russian Growth, Calls For Fiscal Stimulus Exit http://online.wsj.com/article/BT-CO-20100802-711230.html

By Ian Talley Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The International Monetary Fund on Monday forecast strong growth for Russia, but the board criticized the recent passage of a supplementary budget and said Moscow needs to begin withdrawing fiscal stimulus used to counter the impact of the global recession.

Russia's oil-funded stabilization fund has helped the nation to rebound from a nearly 8% contraction in 2009 to an estimated 4.3% growth this year, the IMF said in an annual economic review.

But the IMF said most board directors believed that "given the scale of the required fiscal adjustment, the authorities should begin now to gradually withdraw the stimulus and step up the process in 2011-12."

Directors also said they "regretted" recent passage of Moscow's supplementary budget, cautioned against another supplement expected later this year and said authorities needed to strengthen the fiscal framework.

They warned that unless the government pushed forward with long-stalled public-sector reforms, Russia risked overheating the economy and rapid appreciation of its currency.

Most directors said authorities should begin tightening monetary policy, focusing on controlling inflation. A few others said, however, that tightening at this stage "would be premature and could lead to a resurgence of capital inflows and greater exchange rate volatility."

Although the directors welcomed the recent increase in exchange-rate flexibility and said the ruble is broadly in line with market fundamentals, most said greater flexibility could help limit unhealthy inflows of capital. A few directors warned that the economy's not yet ready to cope with increased exchange rate volatility because of Russia's reliance on commodity prices and exposure of the financial sector to foreign exchange fluctuations.

The IMF also said Russia needed to improve the business climate for the private sector, with such reforms "key to the modernization and diversification of the Russian economy."

By Ian Talley, Dow Jones Newswires; 202-862-9285; ian.talley@dowjones.com

IMF Expects Near-Term ‘Moderate Recovery’ for Russia (Update1) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a4Dmmc9_wIWM

By Vivien Lou Chen

Aug. 2 (Bloomberg) -- The International Monetary Fund’s executive board said Russian authorities took a “forceful response” to the recession last year and forecast a “moderate recovery” of 4.3 percent economic growth for this year.

“Directors agreed that the main challenges will be to implement medium-term fiscal consolidation, mitigate pressures for real appreciation and inflation, restore the health of

the banking system, and improve the investment climate through ambitious structural reforms,” the fund said today in a statement.

The IMF’s assessment comes close to the forecast released in June by the World Bank, which said Russia’s economy may expand 4.5 percent in 2010. The gross domestic product of Russia, the world’s biggest energy exporter, fell by 7.9 percent last year after a plunge in oil prices and reversal of capital flows that brought an end to a credit boom.

“The banking system is still under strain and credit is likely to recover only gradually,” the Washington-based fund said. “There are signs, however, that the accumulation of overdue loans is now decelerating and that banks are scaling back efforts to boost provisions and capital.”

Russia’s central bank left its main interest rates unchanged for a second month in July, after inflation slowed and the country’s recovery gathered speed. Bank Rossii kept the refinancing rate at a record low 7.75 percent, as expected by all 21 economists in a Bloomberg survey. It also left the repurchase rate charged on one- and seven-day loans unchanged at 6.75 percent.

‘Step Up Process’

Most IMF’s directors concluded that “authorities should begin now to gradually withdraw the stimulus and step up the process in 2011-2012,” the statement said. They also “stressed that monetary policy should focus on controlling inflation, and advised the authorities that the next move should begin a tightening cycle.”

IMF directors “commended the authorities’ forceful response to the recession,” and concluded that “the near-term economic outlook is for a moderate recovery,” the statement said.

To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

Last Updated: August 2, 2010 15:53 EDT

Russia Plans First Six-Year Bond Since ‘08 as Debt Funding Lags http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aFbPYyXzldRU

By Jason Webb and Artyom Danielyan

Aug. 3 (Bloomberg) -- Russia is planning its first sale of six-year ruble bonds since 2008, lengthening maturities after raising 21 percent of this year’s target for debt financing.

The government will offer 25 billion rubles ($834.4 million) of 2016 bonds tomorrow, the longest-dated debt since the sale of 10- and 28-year bonds in August 2008, according to the Finance Ministry. The yield on Russian bonds due 2014 fell to 6.63 percent, the

lowest since April, from 6.91 percent a month ago, according to data compiled by Bloomberg. The new securities may yield 7.08 percent to 7.25 percent, Alfa Bank, UralSib Financial Corp. and Troika Dialog analysts said.

Russia’s budget calls for raising 1.2 trillion rubles with local bonds this year to help finance a deficit the government said on June 10 could reach 2.4 trillion rubles, or 5.4 percent of gross domestic product. About 75 percent of the nation’s $39.3 billion Reserve Fund may be used in 2010 to help make up for any shortfall, Deputy Finance Minister Dmitry Pankin said last week.

The financing program “is the whole annual plan, but this doesn’t mean that it will be fulfilled entirely,” Pankin said in an interview yesterday. “So far that’s the budget we have, it has been approved and, consequently, we are basing our work on this. Technically it is realistic to sell this much. We can place the bonds if necessary.”

Russia is seeking to borrow a total 45 billion rubles tomorrow, its biggest planned sale this month.

Budget Deficit

The budget gap grew last year to 5.9 percent of GDP, the highest level since the collapse of the Soviet Union in 1991, as the economy contracted a record 7.9 percent. The rebound in oil prices and increased domestic spending fueled a recovery, with GDP increasing by 5.4 percent in the second quarter, according to Deputy Economy Minister Andrei Klepach.

Prime Minister Vladimir Putin’s government cancelled an auction of five-year notes on July 22 because investors demanded higher yields than the administration was prepared to offer at 7 percent to 7.51 percent, according to the Finance Ministry.

Last week, the ministry issued the same bonds at a yield of 7 percent. Russia raised $5.5 billion from a sale of Eurobonds in April, its first offering in international debt markets since the government defaulted on $40 billion of domestic obligations in August 1998.

Market Rates

“It is not realistic to borrow as much as 1.2 trillion rubles by the end of the year as in order to achieve this goal they will have to increase their pace of borrowings almost two times,” said Nikolai Podguzov, a fixed-income analyst at Renaissance Capital in Moscow. “Moreover I think that probably they do not need 1.2 trillion as budget execution should be much better given current oil prices level.”

The yield on Russia’s dollar bonds due in 2020 fell 21 basis points, or 0.21 percentage point, to 4.687 percent yesterday, the lowest level since they were sold in April.

The cost of protecting Russian debt against non-payment for five years using credit-default swaps declined 2 basis points to 162 on July 30, bringing the monthly decline to 33, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Russia credit-default swaps cost the same as contracts for Turkey, which is rated four levels lower at Ba2 by Moody’s Investors Service. That difference has narrowed from 40 basis points on April 20.

Extra Yield

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries fell 16 basis points to 223, according to JPMorgan EMBI+ indexes. The difference compares with 142 for debt of similarly rated Mexico and 203 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

The yield spread on Russian bonds is 48 basis points below the average for emerging markets, down from a 15-month high of 105 in February, according to JPMorgan indexes.

The ruble gained 0.6 percent to 30.0950 per dollar yesterday, its strongest closing level since May 13. Non- deliverable forwards, or NDFs, which provide a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a specific level in the future, show the ruble at 30.1925 per dollar in three months.

The government will probably end up borrowing between 500 rubles and 600 billion rubles through local debt markets this year, said Podguzov at Renaissance. He expects the new six- year bonds to yield 7.05 percent to 7.1 percent.

New Bonds

Alfa Bank analyst Ekaterina Leonova in Moscow said she expects the yield on the new bonds will be between 7.1 percent and 7.2 percent. The government will have to accept higher yields, she said.

“The Finance Ministry will have to pay market rates if it needs to attract all the funds planned to cover the budget deficit,” Leonova said.

Alexander Ovchinnikov, a vice-president of global markets in Moscow at Troika Dialog, Russia’s oldest investment bank, forecast a yield of 7.08 percent to 7.22 percent. Dmitry Dudkin, head of fixed-income research at UralSib Financial Corp. in Moscow, said he expects an average yield of 7.16 percent to 7.2 percent and a cut-off yield of 7.25 percent.

Longer-maturity bonds may fail to lure demand because they carry “high market risk” as policy makers have finished cutting interest rates and drier weather in Russia risks triggering inflation through grain shortages, Dudkin said.

Annual inflation fell to 5.8 percent in June from 6 percent in May, government data show.

Reserve Fund

Should the government fail to sell enough ruble bonds, it will have to rely more on the reserve fund, which accumulates money from taxes on oil, said Marina Vlasenko, the lead emerging market credit analyst at Commerzbank AG in London.

“The oil reserve fund will be depleted this year,” Vlasenko said.

Russia will have little difficulty selling debt once it agrees to pay a higher yield, said Paul McNamara, fund manager at Augustus Asset Managers Ltd. in London. The government expects a public debt to GDP ratio of 11.5 percent at the end of this year, according to Finance Minister Alexei Kudrin.

“The world is extremely comfortable with Russian sovereign risk, it’s just a question of where should this stuff trade,” McNamara said.

To contact the reporter on this story Jason Webb in London at jwebb25@bloomberg.net.

Last Updated: August 2, 2010 17:10 EDT

Russia delays grain interventions for undefined period

http://www.rbcnews.com/free/20100803112201.shtml

      RBC, 03.08.2010, Moscow 11:22:01.The Russian Agriculture Ministry has postponed the government's interventions on the grain market, the ministry's press office announced today. Originally, interventions were scheduled to begin on Wednesday. The ministry did not reveal any new dates, however.

Russia will not restrict grain exportshttp://en.rian.ru/russia/20100803/160051126.html

12:30 03/08/2010

NOVOSIBIRSK, August 3 (RIA Novosti) - Russia does not plan to restrict grain exports despite the million hectares of crops that have been destroyed by the worst drought to hit the country in decades, the Agriculture Ministry said on Tuesday.

"[Restrictions] will not be brought in... Exports are very easy to lose and very hard to win," Deputy Minister Alexander Belyayev said.

The Agriculture Ministry plans to keep gain exports at the previous years' level, he said. Russia exported 21.4 tons of grain in 2009.

Belyayev added that Russia will harvest 70-75 million tons of grain this year.

Over 10 million hectares of crops across much of western Russia have been destroyed by drought and wildfires, which were caused by temperatures of up to and over 40 degrees Celsius (104 Fahrenheit).

Russia expected to bring in 70 mln tons of grain this year

http://www.itar-tass.com/eng/level2.html?NewsID=15370662

03.08.2010, 11.42

NOVOSIBIRSK, August 3 (Itar-Tass) - Russia is expected to bring in 70 to 75 million tons of grain this year, according to the forecast made by the Agriculture Ministry. The estimated grain harvest figures were announced by Deputy Agriculture Minister Alexander Belyayev at the international conference on grain-producing Siberian regions in Novosibirsk on Tuesday.

"The prognosis will be updated when Siberia begins harvesting," the deputy agriculture minister said.

Russia is expected to export some 21,5 million tons of grain this year, which approximates the volume of grain exports in the past few years.

Meanwhile, Russian Agriculture Minister Yelena Skrynnik said the government grain interventions had been postponed.

Early, Skrynnik said the grain interventions would begin from August 4.

"The beginning of trade in grain on exchanges has been delayed in connection with the fact that the ministry is specifying the estimated balances of resources and the use of grain in Russian regions, as well as the regions' needs for supplies from the intervention fund," the Agriculture Ministry said.

Last week, First Deputy Prime Minister Viktor Zubkov stated that using the intervention fund to help the drought-hit region would be possible after the government had received the report on the stocks of grain from the Agriculture Ministry.

As of now, twenty-seven Russian regions have announced an emergency situation because of the drought while seven regions have an emergency situation because of wildfires.

Rise in grain prices unfounded says grain association http://www.businessneweurope.eu/dispatch_text12260

bneAugust 3, 2010

The current spike in grain prices is unfounded says the Russian Grain Union President Arkady Zlochevsky said, reports ITAR-TASS.

Even in the regions that are worst hit by the drough and record temperatures will bring in enough grain to meet domestic demand this year, Zlochevsky said.

Grain prices are up by 40% over the last two weeks, according to the Agriculture Ministry, on fears that this years harvest will be dramatically reduce by the heatwave.

The Russian Grain Union expects grain prices to increase to RUB8,000-RUB9,000 per tonne in the near future from RUB5,000 per tonne currently, Zlochevsky said.

The Russian Grain Union has called on the government to start selling grain from its reserves in the regions hit by the drought in order to check the growth in grain prices, something the government has already said it will do.

The ongoing drought has killed crops in 26 Russian regions. Crops have been killed on 10 million hectares, or 20% of the total planted area in Russia, Zlochevsky said.

The cost of the damage caused by forest fires that have hit European Russia amid the ongoing heatwave is now preliminarily estimated at RUB5bn and is likely to increase further, Deputy Prime Minister and Finance Minister Alexei Kudrin told reporters on July 31.

The government plans to provide compensation to people who have been affected by the forest fires and also support regions hit by the ongoing drought, Kudrin said. Specifically, the government plans to refinance agricultural producers' loans, reduce loan rates, and extend loans, he said.

Russian State Trader to Bid in Egypt, Jordan, Iraq Grain Tenders http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=am.UkX4P1wqc

By Maria Kolesnikova

Aug. 3 (Bloomberg) -- United Grain Co. signed agent agreements to bid in government tenders to sell the commodity in Jordan and Iraq and plans to sign agreements in Egypt, Libya and Tunisia, the Russian state trader said today in an e-mailed statement.

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net

Last Updated: August 3, 2010 01:19 EDT

Wheat Advances for Sixth Day on Russian Drought, Erasing Losses http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aSLV13GP_F.A

By Luzi Ann Javier

Aug. 3 (Bloomberg) -- Wheat futures climbed for a sixth day, trading near a 22-month high, after the Russian Grain Union said the hottest July in the nation’s history may almost halve exports of all grains.

Wheat for September delivery advanced 0.5 percent to $6.9650 a bushel on the Chicago Board of Trade at 1:18 p.m. Singapore time, erasing a 0.5 percent loss. The contract gained as much as 7.5 percent yesterday to $7.1125 a bushel, the highest price for the most-active month since Sept. 29, 2008.

Drought in Russia, the third-largest exporter in 2009-2010, prompted the government to declare twenty-seven crop-producing regions under emergency. Exports of all grains may plunge to as low as 11 million metric tons in the year that began July 1, under a “worst-case scenario,” from 21.5 million tons a year earlier, the Russian Grain Union said yesterday, without defining the weather that would spur that outcome.

“The momentum in the market could certainly result in further gains,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone from Sydney before futures reversed losses.

Futures surged 63 percent through yesterday from this year’s low of $4.255 a bushel June 9. The rally lured investors back into the market, sustaining gains, CWA Global Markets Pty Managing Director Peter McGuire said from Sydney today. The price may jump to between $8 and $8.50 a bushel, he said. That’s up 23 percent from yesterday’s close.

“Speculators are entering the market,” he said in a Bloomberg Television interview. “You hunt what’s moving, and I think that’s going to continue in the next couple of weeks.”

Forecast Cut

Russia’s Agriculture Ministry said it will cut its grain- crop forecast from 85 million tons. The harvest may drop as low as 72 million tons should drought persist and will be about 75 million tons under a “normal” scenario, the Grain Union said.

Wheat exports from Russia may drop 23 percent to 14 million tons in the year that began July 1, from an estimated 18.2 million tons a year earlier, the USDA Foreign Agricultural Service forecast yesterday.

That compares with a forecast of 13 million tons this year by International Grain Co., the local unit of Glencore International AG, and 9.5 million tons by the Institute for Agricultural Market Studies.

Corn futures advanced after their discount to wheat widened and crude oil gained, boosting the appeal of the grain as livestock feed and for use in biofuel.

Corn’s Catchup

December-delivery corn climbed 0.7 percent to $4.0725 a bushel on the Chicago Board of Trade at 1:09 p.m. Singapore time. The grain closed 0.6 percent lower yesterday, which widened its discount to wheat by 13 percent to $2.8875 a bushel.

Crude oil futures traded near a three-month high after breaching $81 a barrel for the first time since May, as global equities advanced on optimism the economic recovery may be sustained. Oil for September delivery was little changed at $81.41 a barrel in New York.

Corn is “playing a little bit of catchup to those other grains, where it lost value yesterday,” said CBA’s Mathews. “Obviously, we’ve had quite a strong start in the crude oil market and that’s something that’s supportive.”

An estimated 71 percent of the corn crop in the U.S., the largest grower and exporter, was rated good or excellent as of Aug. 1, down from 72 percent a week earlier, the nation’s Department of Agriculture said in a report yesterday.

November-delivery soybeans advanced 0.4 percent to $10.14 a bushel, after losing as much as 0.5 percent.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

Last Updated: August 3, 2010 01:50 EDT

Worst Russian Drought in 50 Years Threatens More Crops, Sowing http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=arkbL5X_v71I

By Maria Kolesnikova

Aug. 3 (Bloomberg) -- Russia’s worst drought in at least 50 years, which already drove wheat prices to the biggest jump since 1973, will continue in August and threaten more crops and winter-grain sowings, the national weather center said.

The dry weather forecast for the central areas of Russia’s European regions will damage crops including sugar beet, potatoes and corn, the Hydrometeorological Center of Russia said in a statement on its website. Winter-grain plantings scheduled to start in August in the north eastern areas of those regions will be hampered by dry soil, the center said.

“This is the first time in 50 years we’ve seen the combination of such a long period of abnormal heat and both atmospheric and soil drought,” the center said. Russia’s Grain Union has said the drought is the worst since record-keeping started 130 years ago.

Wheat jumped to a 22-month high in Chicago trading yesterday, extending a 38 percent advance in July that was the biggest since 1973. Prices in Russia rose 19 percent last week, according to researcher SovEcon. That’s faster than at the peak of the global food crisis in 2008, according to the Grain Union.

Rainfall last month in central Russia and along the Volga River in the west of the country was 10 percent to 30 percent of the long-term average, according to the center. Twenty-seven crop-producing regions declared emergencies because of the drought.

The Russian Agriculture Ministry cut its 2010 grain harvest forecast to 70 million to 75 million metric tons, RIA Novosti reported, citing Alexander Belyaev, a deputy minister. The ministry’s previous forecast was for about 85 million tons, compared with last year’s output of 97.1 million tons.

Russian grain exports may fall as low as 11 million tons in the marketing year that started July 1 under a “worst-case scenario,” from 21.5 million tons last year, the country’s Grain Union said yesterday.

To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net,

Last Updated: August 3, 2010 03:56 EDT

Russia: locust infested 1.8 mln ha of agricultural landshttp://www.agrimarket.info/showart.php?id=96135

08/03/2010 09:41  

In addition to droughts, which has stricken agricultural sowings in Russia throughout over 10 mln ha, to date, agricultural lands are infested by locust, especially in the regions,

neighbored with Kazakhstan, stated Peter Chekmarev, the head of the department of plant growing, chemization and plant protection of the Ministry of Agriculture of the Russian Federation, on July 30.

According to him, the areas, infested with the locust, total 1.8 mln ha, up 1 mln ha compared to the economic safety level.

P.Chekmarev also announced that due to droughts, the regime of emergency was announced in 27 regions of the Russian Federation.

According to his estimations, in the Siberian and Urals Federal Districts grain production forecast exceeds the level of 19 mln tonnes as opposed to 23.3 mln tonnes last year. In the Siberian Federal District, the harvest volume will decrease from 18 mln tonnes last year to 15 mln tonnes in the current year, in the Urals Federal District, the harvest volume will decrease from 5.3 to 4 mln tonnes.

As of July 29, Russia produced 33 mln tonnes of grains, up 2 mln tonnes compared to the same date of the last year.

The Volga and Central Federal Districts started grain harvesting campaign 2 week earlier compared to the standard dates due to droughts, the yield indices are low, stated P.Chekmarev.

The Head of the Department also declared that due to rather unfavorable weather conditions, the grain cost increases, during two week, the increase totaled 40%.

Reserve fund - no changes in Julyhttp://www.businessneweurope.eu/dispatch_text12260

Renaissance Capital, RussiaTuesday, August 3, 2010

Yesterday (2 Aug) the Ministry of Finance (MinFin) released monthly statistics on the usage of the Reserve and National Welfare Funds. As of 1 Aug, the Reserve Fund was at RUB1.23trn ($40.6bn) and the National Welfare Fund RUB2.66trn ($88.2bn). According to the announcement, the Ministry of Finance did not use the Reserve Fund to cover the budget gap in July, and the change in the nominal volume of those funds is related to FX revaluation effects.

Last month the Ministry of Finance placed around RUB60bn in the domestic bond market actively in primary auctions. Traditionally, in the middle of the year the MinFin decided to refuse making additional placements in the secondary market, focusing on the primary market alone. However, we think this policy is not as successful as it could be if the MinFin played in the secondary market as well. YtD, transfers from the Reserve Fund reached RUB520bn, and it was not used since April, as financing from other sources (including one-off income from the Central Bank of Russia and sovereign fund

management) exceeded the budget gap by RUB50-100bn, we estimate. Hence, we expect that if traditional acceleration in budget spending starts in August (which could be postponed to autumn due to extreme heat in Russia), the Reserve Fund is likely to be tapped again in August.

Business, Energy or Environmental regulations or discussions

Razgulay, Rosneft, RusHydro: Russian Market Equity Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aA_gc1vNC9bI

By Denis Maternovsky

Aug. 3 (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.

Russia’s ruble-based Micex Index added 2.3 percent to 1,429.36 in Moscow, its highest close since April 30.

OAO Rosneft (ROSN RX): Crude oil surged above $81 a barrel for the first time since May as a rally in global equity markets increased speculation the economy is strengthening. Shares of Russia’s biggest oil producer rose 3.1 percent to 209.39 rubles.

OAO Razgulay (GRAZ RX): Wheat rose to a 22-month high, with futures contract touching $7.1125 a bushel, the highest since Sept. 29, 2008, after the hottest July temperatures in Russia in 130 years withered crops, shrinking a global surplus and boosting demand for U.S. supplies. The Russian grain and sugar producer added 6.8 percent to 47.272 rubles.

OAO RusHydro (HYDR RX): Russia’s largest renewable-energy utility plans to sell 20 billion rubles ($667.5 million) of 10- year bonds to finance its investment program, the company said in a regulatory filing after the market close in Moscow. RusHydro added 3.7 percent to 1.635 rubles.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

Last Updated: August 2, 2010 22:00 EDT

Russian government to axe more business licenses http://www.businessneweurope.eu/dispatch_text12260

bneAugust 3, 2010

This is an encouraging story. Bureaucracy are the biggest drags on economic growth in Russia and the Kremlin has on several occasions tried to cut through the red tape to make the lives of small- and medium-sized enterprise easier, with limited success.

After launching his eponymous plan, then Minister of Economic Development and Trade German Gref began to nix the system of licenses and permits needed to go into business. These are a major source of corruption as most regional authorities demand "fees" for permits or force would-be businessmen to use an "official" agency to do the paperwork to get them (that is actually owned by wives and sons of the officials).

Even after Gref removed swaths of permits the local authorities largely ignored the changes and continue to ask for permits and licenses that no longer have any standing in law.

Gref's drive to reduce the red tape lost steam as his attention was drawn away to deal with other problems like the Gazprom ring fence and reform of the banking system.

But now the government is coming back to deal with one of the core ills of the country and has restarted its drive to cut red tape. Ironically, in this the Kremlin is aping its nemesis the Republic of Georgia which shot up the World Bank's ease of doing business ranking after it hired former Russian businessman Kakha Bendukidze to work through the regulations and cut out every permit and license he could to create one of the most flexible business regimes in the CIS.

The Russian government has submitted a draft bill that will abolish or relax licensing for some types of economic activity to the State Duma, ITAR-TASS reported on Monday citing a report on the State Duma's Web site.

The government is proposing to nix licensing for medical and pharmaceutical activities; exhibition and collecting of weapons; aviation safety procedures; and production and sales of specialized gaming equipment, among others. Under the draft bill, entrepreneurs would only have to give notice about the start of their activity instead of applying for a license.

Import duties for the majority of aircraft to be cancelled http://www.businessneweurope.eu/dispatch_text12260

VTB CapitalAugust 3, 2010

News: According to Vedomosti, the Commission of the Customs Union of Russia, Belarus and Kazakhstan has decided to cancel the 20% import duty for planes with 112-159 and 220-299 seats. For those planes contracted before 2014, zero import duties will be effective until the end of 2018.

Our View: This long-awaited decision is absolutely logical since the target segments for Russian aircraft producers will be protected by duties, while airlines will get more freedom in upgrading their fleets. We note that the import duties for planes with less than 50 and over 300 seats were cancelled earlier.

The news is positive for Aeroflot since the company is expanding its fleet by leasing new foreign planes (primarily Airbuses). It will be able to save when importing the medium-haul A-319 (116 seats) and A-320 (140 seats) planes, the main workhorses of its fleet. The A-330, which has 302 seats, already enjoys zero duties. Thus, Aeroflot will only continue paying duties for the A-321 (171 seats). We note that customs duties are paid in several instalments over three years, so the positive effect from this measure (which we calculate as several hundred million US dollars) on Aeroflot's financials is likely to be seen for a decade.

The news is supportive for the overall development of the Russian airline industry. Modifications of the B-737 will also enjoy zero duties, meaning that it will be cheaper for industry players to upgrade their fleets with foreign aircraft. This is also likely to improve flight safety.

Russia's KTK H1 coal production up 3 pcthttp://af.reuters.com/article/energyOilNews/idAFLDE6710E920100802

Mon Aug 2, 2010 8:24am GMT

* Produced 2.72 mln T vs 2.64 mln T in H1 2009

* Sales volumes grew 15 pct to 3.52 mln T

* Export sales jumped 38 pct to 1.64 mln T

* Average export coal price down 18 pct due base effect

MOSCOW, Aug 2 (Reuters) - Kuzbasskaya Toplivnaya Co (KBTK.MM), Russia's No. 7 steam coal miner, said on Monday its first-half 2010 coal production rose 3 percent on the back of strong demand on local and international markets.

The company, also known as KTK or Kuzbass Fuel Company, produced 2.72 million tonnes of coal in the January through June period, it said in a statement.

Sales grew 15 percent to 3.52 million tonnes, led by a 38 percent increase in exports which totalled 1.64 million tonnes, the company said.

China and South Korea accounted for 63 percent of its total export sales in the first half versus 33 percent in the same period of 2009.

However, the company said export prices at 923 roubles ($30.52) per tonne were 18 percent lower than a year ago due mainly to the base effect.

KTK in April became the first Russian steam coal miner to carry out a large-scale public offering, raising nearly $100 million. [ID:nLDE63T19U]

Chief Financial Officer Eduard Alexeyenko told Reuters in an interview in April KTK planned to raise coal production by 10.6 percent in 2010 to 6.8 million tonnes and to 11 million tonnes by 2013. [ID:nLDE63G096] ($1=30.24 Rouble) (Reporting by Maria Kiselyova; editing by Dmitry Sergeyev and Louise Heavens)

Russia domestic consumption of rolled steel products and pipes increases in H1http://www.steelguru.com/russian_news/Russia_domestic_consumption_of_rolled_steel_products_and_pipes_increases_in_H1/158435.html

Tuesday, 03 Aug 2010According to Russia Ministry of Industry and Trade, for the first half of the current year Russia domestic consumption of rolled steel products is estimated at 14 million tonnes, showing an increase of 29.6%YoY. Deliveries of Russian origin rolled steel products to the domestic market increased by 15.9% YoY while imports went up by 45.5%YoY.

The country's domestic consumption of steel pipes in January to June this year is estimated at 4.4 million tonnes up by 55.6%YoY. In the period in question, deliveries to the domestic market of Russian origin pipes increased by 64.3%YoY while imports decreased by 40.6%YoY.

(Sourced from www.steelorbis.com)

Russia sees 43pct increase in pipe output in H1http://www.steelguru.com/russian_news/Russia_sees_43pct_increase_in_pipe_output_in_H1/158430.html

Tuesday, 03 Aug 2010According to the data issued by the Ministry of Industry and Trade of the Russian Federation, in the first half of this year Russia registered a 43.1% increase in its pipe production to 4.291 million tonnes.

In particular, in January to June 2010, Russian output of electric-welded large diameter pipes increased by 81.4% YoY, its production of electric-welded pipes, excluding LD pipes, went up by 31.5% YoY, its production of welded pipes, excluding electric-welded pipes, rose by 18.2% YoY, production of seamless pipes saw an increase of 29.5% YoY,

output of casing pipes increased 25.1% YoY, production of drill pipes went up by 61% YoY while output of tubing increased by 7.3%YoY.

Accordingly, the increase in pipe output indicates a rise of consumption in Russian industrial sectors, such as oil and gas, machine building and construction.

(Sourced from www.steelorbis.com)

Sberbank increases interest rates on dollar deposits http://www.businessneweurope.eu/dispatch_text12260

Renaissance CapitalAugust 3, 2010

Event: Kommersant and RBC Daily reported today (3 Aug) that Sberbank has increased interest rates on dollar- denominated deposits for the first time since last summer - on average, rates added 0.5-0.75 bpts, and the maximum interest paid on dollar-denominated deposits is now 5.3% pa (rates on euro-denominated deposits are unchanged). According to Kommersant and RBC Daily, citing Sberbank's press office, the changes were made in order to maintain the proportion of FX funds in the bank's deposit base at 14-15%, after this fell 3 ppts YtD. This news followed Sberbank's recent placement of a $1.5bn eurobond (at 5.499% pa, with maturity in 2015), as well as the bank's announcement of its intention to refinance RUSAL's $4.5bn debt to VEB.

Action: Neutral for Sberbank, in our view.

Rationale: We think Sberbank's decision to raise rates on dollar deposits is likely motivated by the need to optimise the currency structure of its balance sheet, in light of the upcoming refinancing of RUSAL's debt to VEB, which RUSAL should repay by 29 Oct, according to Kommersant. RUSAL's $4.5bn loan is equivalent to about 2.1% of Sberbank's non-equity liabilities (as of 1Q10 IFRS results).

Armen Gasparyan

August 2, 2010 at 11:35 AM

Starbucks delays opening in Russia's second largest cityhttp://seattletimes.nwsource.com/html/coffeecity/2012513211_starbucks_delays_opening_in_ru.html

Posted by Melissa Allison

Starbucks postponed the opening of its first shop in St. Petersburg, Russia, by two years, The Moscow Times reported.

"We are not disclosing information about the reasons for the delay because of investors' plans," Lia Dovgun told the paper. She is marketing manager of Monaks Trading in Moscow, which is Starbucks' partner for Russia. Monaks is owned by Kuwait-based Alshaya Group, which also operates Starbucks in the Middle East.

The coffee chain will not be part of a St. Petersburg mall project "for political reasons," Stanislava Bilen, a representative of Jones Lang LaSalle, which represents a mall where Starbucks was set to open, told the Times.

Starbucks is behind other coffeehouses in Russia, having entered the market late because of a long-running dispute with a Moscow attorney.

Moscow now has 148 Shokoladnitsa cafes, about 190 Coffee House outlets and 32 Starbucks, The Moscow Times reported.

Renaissance CEO Sees 20% of Business From Africa, FT Reports http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ahYHRrt_zA_s

By Ben Martin

Aug. 3 (Bloomberg) -- Renaissance Capital Chief Executive Officer Stephen Jennings said Africa “will account for 20 percent of our business” this year, the Financial Times reported, citing an interview. Russia will carry on accounting for about two-thirds, the newspaper said.

Jennings said the company is “a little bit behind in North Africa, but we’ll attack that in the second half of the year,” the FT reported.

To contact the reporter on this story: Ben Martin in London bmartin38@bloomberg.net.

Last Updated: August 2, 2010 21:11 EDT

Russian bank hopes Africa will prove luckyhttp://www.ft.com/cms/s/0/f2774e36-9e55-11df-a5a4-00144feab49a.html

By Patrick Jenkins and Catherine Belton

Published: August 2 2010 22:20 | Last updated: August 2 2010 22:20

As investment bank strategies go, it is an unusual one. A New Zealander founds a Russian bank and ends up betting on growth in Africa. But the New Zealander in question, Stephen Jennings, chief executive of Russia’s Renaissance Capital, is no normal banker.

Fifteen years after he quit Credit Suisse to co-found RenCap with another Credit Suisse banker, Mr Jennings is building the investment bank up for the third time – having seen it all but collapse after the 1998 Russian crisis, and again amid the global financial crisis a decade later.

Now, well into that third incarnation, the aptly named Renaissance group is back on an aggressive growth path. “We’re coming out of being pretty badly beaten up but we’re on the front foot again,” says an energetic Mr Jennings on one of his whistle-stop trips through London. The question many are asking is: will it be for good this time?

RenCap today is certainly growing from firmer foundations this time, following a $500m capital injection from Mikhail Prokhorov, the Russian metals tycoon who had been a business associate in the past.

But the injection – negotiated from a position of weakness, when a highly leveraged RenCap ran out of access to funds in the wake of Lehman Brothers’ collapse in 2008 – left Mr Jennings forced to give up ownership of half of the bank. Just two years earlier he had turned down a $3bn offer for the same stake from VTB, the Russian state bank.

“The providers of short-term liquidity to us said: ‘we want our funds back and we want it back now’,” says Mr Jennings with a degree of bitterness. “We had no choice but to raise equity fast, within a matter of days. We had to substitute liquidity for equity.”

A brutal restructuring followed. The whole Renaissance group, which also comprises a vast consumer credit business, was forced to cut its costs by 40 per cent, or $350m, and lay off 6,000 people. “Ours was restructuring without anaesthetic,” says Mr Jennings.

But with his risk appetite undaunted, the New Zealander has decided he must diversify his business away from its focus on Russia. After flirting with African expansion in the period before the financial crisis, he is now jumping in with both feet. “This year, Africa will account for 20 per cent of our business,” he says.

In recent months, RenCap has bought South African brokerage BJM, and rebuilt its presence in Nigeria, not to mention a string of other expansionist moves across emerging markets (a joint venture in Serbia, one in South Korea, a start-up in Mongolia and a partnership deal with veteran investment banker Jeff Waterous in the energy markets).

Mr Jennings expects to be in 15 or 16 markets by the end of 2010, adding to its existing presence of about 100 staff, in Nigeria, Ghana, Zambia, Zimbabwe, Kenya and South Africa. “We’re a little bit behind in North Africa, but we’ll attack that in the second half of the year,” he says. “By the end of the year we’ll have a truly pan-African trading capacity.”

Expounding his reasoning with typical enthusiasm, Mr Jennings rattles off his big-picture macroeconomic view of the world. “We definitely see Africa on an Asian-style transition. We don’t see any reason why the African performance won’t outstrip Asia.”

It is Nigeria that Mr Jennings sounds most excited about and Rwanda, where talks are ongoing to secure a local partner.

The strategy is not for the risk-averse. But Mr Jennings dismisses concerns that the political risks of his new favourite markets make Russia look stable. He concedes that some fast-growth emerging economies, such as Argentina a decade ago, do falter. “But that’s more and more proving to be the exception.”

, despite the advent of a new competitor, part state-owned VTB, which has crowded out some rivals, although Mr Jennings insists it has not eaten into RenCap’s market share.

RenCap’s Russian stronghold heartens the market, as does its push into Asia, where it recently opened in Hong Kong. “Whoever builds the bridge with Asia is going to be the winner,” says one seasoned Russia investor.

But the Africa bet – and Mr Jennings’ broader mission to become what the investor terms “the Goldman Sachs of the emerging markets” – is a very different one, fraught with the need for “unorthodox business practices and excellent contacts”. “That could well make him a billionaire again and then probably see him blow up again,” adds the investor.

Mr Jennings is unfazed. Much as he likes to spend spare time relaxing on his farm in southern England with his family, the excitement of conquering a new market, like Nigeria, reminds him of his first forays into Russia in the early 1990s. “When you get off the plane in Lagos,” he says with a boyish grin, “you have a chance to start it all over again.”

Severstal sues Mezhprombank over $62 mln deposithttp://in.reuters.com/article/financialsSector/idINLDE67209C20100803

12:15pm IST

MOSCOW, August 3 (Reuters) - Severstal (CHMF.MM: Quote, Profile, Research), Russia's largest steelmaker, is suing International Industrial Bank for the return of a 1.9 billion roubles ($63 million) deposit, adding uncertainty to IIB's $1.5 billion debt restructuring.

Moscow Arbitrage Court said on its Web site Severstal had filed a lawsuit against IIB -- known in Russian as Mezhprombank and controlled by member of parliament Sergei Pugachev -- to claim back a 1.869 billion roubles deposit the company had placed with the lender.

IIB was not immediately available to comment.

The court has scheduled a preliminary hearing on Sept. 14, proposing the bank demonstrates evidence it has returned the deposit to the company.

IIB, Russia's first private bank to default on an external bond in more than 10 years, last month agreed to restructure 200 million euros worth of Eurobonds, as well as 32 billion roubles worth of debt to the central bank. [ID:nLDE6660AS]

However the loss-making lender may see its banking license revoked if Pugachev fails to sell major shipyards and a giant coal deposit to help the bank meet its obligations. [ID:nLDE66L0XD] ($1=30.19 Rouble) (Reporting by Dmitry Sergeyev; editing by Simon Jessop)

Deripaska Seeks to Regain 25% Stake in Strabag by Mid-October http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=adzRX4Y2A168

By Ilya Khrennikov

Aug. 3 (Bloomberg) -- Billionaire Oleg Deripaska is seeking to regain 25 percent in Strabag SE after ceding his stake in the Austrian builder for debt last year, Sergei Babichenko, a spokesman for the businessman’s Basic Element, said today by telephone.

Babichenko declined to comment on a report in Vedomosti today that Deripaska may swap stakes in his Russian construction assets Transstroy and Glavmosstroy for the Strabag shares.

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

Last Updated: August 3, 2010 02:21 EDT

Oleg Deripaska wants to exchange Russian building assets for 25% of Strabag

http://www.businessneweurope.eu/dispatch_text12260

MetropolAugust 3, 2010

According to an unconfirmed report in Vedomosti, Oleg Deripaska hopes to exchange his Russian building assets for 25% of Strabag. If the deal goes through, we believe it would be supportive of the shares of Glavmosstroy and Transstroy.

Mr. Deripaska plans to regain 25% of Strabag, which he lost due to a EUR 500mn margin

call. He is reported to be negotiating with the owners of the block, Raiffeisen/Uniqa Group and the Hans-Peter Haselsteiner family. Deripaska wants to exchange his building assets in Russia, including PSK Transstroy and Glavstroy and its subsidiaries, for the 25% stake. Deripaska's assets could possibly be included in the Strabag holding after the proposed deal, the report said.

We believe the news could have a positive impact on the shares of Transstroy (ticker: ktrs) and Glavmosstroy (ticker: gmst), which are subsidiaries of PSK Transstroy and Glavstroy, respectively, since both companies' minorities could end up benefitting from better transparency and corporate governance.

Potanin’s man appointed Norilsk president http://www.ft.com/cms/s/0/abd3fa3e-9e54-11df-a5a4-00144feab49a.html

By Catherine Belton in Moscow

Published: August 2 2010 22:54 | Last updated: August 2 2010 22:54

Vladimir Potanin on Monday moved to strengthen his dominant position at Norilsk Nickel as the world’s largest nickel producer said it was appointing the general director of the Russian tycoon’s holding company, Interros, as its president.

Andrei Klishas, Mr Potanin’s right-hand man at Interros, is to become Norilsk’s president and report directly to Vladimir Strzhalkovsky, its chief executive, the company said.

The move exacerbates the battle between Mr Potanin and Oleg Deripaska, the rival metals tycoon, over control of Norilsk Nickel. Mr Deripaska has accused company management of manipulating a shareholder vote in June to reduce his UC Rusal’s presence on the board. Rusal said Mr Klishas’s appointment on Monday was final proof that management was acting in the interests of just one of its shareholders, Interros.

“The unopposed appointment of Klishas as president means that Norilsk Nickel is being controlled not by the board of directors of [Norilsk] but by Interros, which acts in its own interest,” Rusal said in a statement, claiming that the appointment came in breach of corporate governance standards because it should have been forwarded to the board, while alternative candidates should have been forwarded too.

Norilsk, however, said the move was aimed precisely at lifting Rusal’s concerns and restoring parity on the board between the company’s two main shareholders, Mr Deripaska and Mr Potanin, who each own 25 per cent. Parity on the board had been a key plank of a peace agreement between the two men, which ended after the June annual meeting left Rusal with three seats to Interros’s four.

“This nomination may be considered [as] restoring parity to the board of directors, where Interros and Rusal will now have three representatives each, three seats will belong to independent directors and four to the company’s top managers,” Mr Strzhalkovsky said.

Analysts, however, said that the appointment looked like a clear sign Interros was now in the driving seat at the company.

In a letter to the board dated August 2, Rusal stepped up its criticism of the company management and called on the board to hire an independent auditor to review the results of the annual meeting and for Norilsk “to stop improper conduct and self-dealing by Norilsk and some of its shareholders”.

Norilsk denies any wrongdoing, as does Interros.

Russian Billionaires Battle Over Norilsk Nickelhttp://dealbook.blogs.nytimes.com/2010/08/02/russian-billionaires-battle-over-norilsk-nickel/

August 2, 2010, 6:44 pm

A feud between Russian billionaires threatens to destabilize Norilsk Nickel, one of the world’s largest mining companies. The fallout could result in a major change of control at the company, leading to further consolidation in Russia’s powerful natural resource sector.

Norilsk Nickel is half-owned by two of Russia’s richest men: Oleg V. Deripaska, the chief executive of Rusal, the world’s largest aluminum producer; and Vladimir Potanin, the chief executive of Interros, a multibillion-dollar Russian holding company. The other half of the company is owned by independent shareholders around the world.

Mr. Deripaska contends that Mr. Potanin appears to have rigged the most recent board elections at Norilsk Nickel, giving Interros effective control over the company.

“It is our belief that certain voting irregularities occurred at the latest shareholders’ meeting, including last-minute voting of ADR-related shares, which appears to have favored only the interests of one of the company’s largest shareholders,” Mr. Deripaska told Norilsk’s board on Monday in a letter obtained by DealBook.

He added, “No public company can survive violation of shareholders’ fundamental right to fair and honest elections.”

Interros has denied that irregularities in shareholder voting took place, telling Bloomberg News that Mr. Deripaska’s accusations were groundless. Interros agreed Sunday to

release all details of the voting ballots, according to Mr. Deripaska’s letter, but he is still calling for new board vote.

Mr. Deripaska is upset at the way that Norilsk is running its business, saying that he would like to replace its management, which turns out to be loyal to Interros. The two sides are at odds as to how to return cash to shareholders, with Mr. Deripaska pushing for dividends and Mr. Potanin insisting on a share repurchase program.

Mr. Deripaska told reporters on Friday that he would be willing to work with his partners to possibly buy out Mr. Potanin’s share of the business, which would give Rusal effective control of large chunk of the Russian mining sector. Rusal has $12 billion in debt, so it would need significant help to buy out Interros’s portion of the company, which is worth around $8 billion, based on the company’s current share price.

Mr. Potanin may have acquisition dreams of his own. Norilsk’s management said Monday that it had hired Andrey Klishas to oversee strategy and acquisitions for the company, according to Bloomberg. Mr. Klishas has worked at Interros for over a decade.

– Cyrus Sanati

Real estate prices rise as supply shortage loomshttp://rt.com/Business/2010-08-03/real-estate-prices-rise.html/print

03 August, 2010, 09:25

Russian real estate prices are on the rebound, with the construction halt at the height of the downturn likely to push apartment prices higher as demand grows.

It seems the slowdown in Russia’s real estate market may finally be over. In the first half of this year alone, prices grew by 15 to 20% with an increasing number of transactions, after they virtually ceased during mid 2009.

“Most of the developers declare that their turnover is about 2-3 times higher than it was in 2009. So we could say that, on the basis of that, the demand is growing, and most of the developers could declare today that the prices are growing.”

The rise is seen in every single sector- from economy apartments to luxury homes.

In the part of Moscow where the city’s most expensive apartments are located, the starting price of one square meter tops $30 thousand. And prices are expected to rise even higher over the next year.

The economic downturn hit real estate by forcing developers to halt many projects and shelve more, at the same time demand has continued to grow, and the full impact of the downturn will only be felt when the projects aren’t there for tomorrow’s buyers.

Irina Kirsanova, Marketing director of Peresvet Invest says supply will not keep up with demand and that will push prices even higher.

“I believe the economic situation has stabilized. And it's again become very profitable to invest in real estate. I’m sure we will see further growth in demand as well as in property prices.”

The Russian development market feeling the after effects of the global financial, with this week’s purchase by VTB of a stake in builder DonStroy the latest of a series of bailouts for builders. Analysts say only an increase in the number of well-financed builders, committed to producing quality real estate, can keep prices stable. 

Russia's AvtoVAZ says July sales up 60 pcthttp://www.reuters.com/article/idUSLDE6720EL20100803

3:50am EDT

MOSCOW, Aug. 3 (Reuters) - Russia's biggest automaker, AvtoVAZ (AVAZ.MM: Quote, Profile, Research, Stock Buzz), said on Tuesday its car sales grew 60 percent in July, year-on-year, benefiting from the state-sponsored scrappage scheme and continued economic recovery.

Almost half of the 51,800 vehicles sold in July were part of the cash-for-clunkers programme.

The scheme awards 50,000 roubles ($1,656) to car owners willing to trade in 10-year-old locally produced vehicles for new models.

In the first seven months of 2010, AvtoVAZ sold 272,600 autos, an increase of 28.4 percent on the year ago period.

The performance of the Lada-maker, 25 percent-owned by France's Renault (RENA.PA: Quote, Profile, Research, Stock Buzz), is indicative of the overall market in Russia as its sales far outstrip all other manufacturers. (Reporting by Gleb Stolyarov; Writing by Lidia Kelly; editing by Simon Jessop)

Activity in the Oil and Gas sector (including regulatory)

Rosneft revenues in H1 up by 69pct YoYhttp://www.steelguru.com/russian_news/Rosneft_revenues_in_H1_up_by_69pct_YoY/158438.html

Tuesday, 03 Aug 2010

RIA Novosti reported that Russia largest oil company, Rosneft, posted a 69.1%YoY increase in its January to June revenues to USD 16.44 billion to US GAAP.

Revenues from exports to non-CIS countries jumped 70.7% to USD 15.549 billion including exports to Europe and other states which grew 50% to USD 10.729 billion. Exports to Asian states rose 146 percent to USD 4.82 billion. Rosneft revenues from oil exports to the CIS increased 30.8 percent to USD 755 million. The company domestic sales grew 300%YoY to USD 136 million.

Rosneft said the company second quarter revenues from exports to non-CIS countries rose 2.4% to USD 7.868 billion YoY. Rosneft said the increase was due to an increase in average oil prices, worth USD 110 million. A slight increase in oil sales contributed one percent or USD 77 million to revenues.

Revenue growth from exports to Non-CIS states was due to a 51.2% growth in prices, worth USD 5.268 billion and to the company growing sales up by 12.9% or USD 1.171 billion. That growth was primarily provided by output from the Vankorskoye field in Eastern Siberia.

Second quarter revenues from oil exports to CIS states jumped 159.5% to USD 545 million compared to the first quarter. Rosneft attributed the growth in supplies to the start of sales to Ukraine and by a slight increase in oil supplies to Belarus.

(Sourced from RIA Novosti)

Rosneft releases full 2Q10 financial statements http://www.businessneweurope.eu/dispatch_text12260

Alfa BankAugust 3, 2010

Yesterday Rosneft published its full 2Q10 financials and held a conference call to discuss the results. We note that Rosneft had a fairly strong quarter on the back of zero export duty in E. Siberia in 2Q10 and the ramp-up at Vankor to this year's full capacity of 250,000 bpd. This helped drive Rosneft's production up 8.6% y-o-y, while our full-year production growth forecast is 6.6%. Yugansk's production profile was also a pleasant surprise, with Rosneft managing to stabilize output and even achieve some growth through higher- than-expected new well flow rates and more successful well intervention. Going forward, the company expects to see a decline rate of 1.5-2.5% at the field.

Net debt decreased by $2.7 bln, but we were somewhat disappointed by the real debt decline of just $1.3. The rest of the change came from additional cash flows received by the company thanks to the zero export duty in E. Siberia. Rosneft has already started paying the reduced export duty that has replaced the zero rate: the company now pays 45% of the price in excess of $50 per bbl. However, whether the reduced duty will be replaced by a standard one in 2011 or later is an open question. We believe that news on

this topic may be a key short-term driver for the stock.

We believe the results were already partly priced in last week and partly yesterday after their release and the conference call owing to positive market sentiment and the stock rebounding to reasonable levels after significantly underperforming YTD.

Rosneft braces for long slog in Vankorskoye talks http://www.businessneweurope.eu/dispatch_text12260

Troika DialogAugust 3, 2010

During an investor conference call yesterday, Rosneft said that discussions with the Finance Ministry regarding the tax status of the Vankorskoye field are continuing and may go on for a while, possibly even into next year.

We understand that the company may continue to pay a sharply reduced export duty on Vankorskoye oil until a decision has been reached. Currently, East Siberian export duties are set according to the formula (Urals oil price - 50) x 45%. For instance, the duty for August is set at $80.3/tonne (about $10.95/bbl) based on an average price of $74.3/bbl during the monitoring period of June 15 - July 14 ((74.3•50) x 45% = 10.95).

However, we think that Rosneft stock will keep on trading in a tight range while the uncertainty persists.

Oleg Maximov

TNK-BP to Hike Spending http://www.themoscowtimes.com/business/article/tnk-bp-to-hike-spending/411568.html

03 August 2010

TNK-BP plans to increase spending on three North Siberian deposits in the second half as it seeks to boost production, Rustem Bakirov, head of TNK-BP’s Rospan International unit said Monday.

Investment in the Suzun, Tagul and Russko-Rechenskoye oil fields will rise more than 73 percent in the second half, he said. The company spent 2.4 billion rubles ($80 million) on the fields, part of the Bolshekhetsky project, in the first half.

(Bloomberg)

Lukoil might buy only part of its shares from ConocoPhillips http://www.businessneweurope.eu/dispatch_text12260

bneAugust 3, 2010

Russian oil major Lukoil says it may only buy part of its own shares back from US oil company ConocoPhillips.

The Russian company says it could buy 7.6% of its own stock from ConocoPhillips, company Vice President Leonid Fedun told Interfax, from the total stake of 20% that the American company owns.

The decision follows on from a statement by ratings agencies that they might downgrade the Russian company if it used up spare cash to buy back the entire stake.

Lukoil's Fedun said the company would not borrow to finance the buyback. "For 7.6% we'll not be [borrowing], because we have a cushion of our own funds for this deal," he said. "We'll spend $3.4 billion for now. That is cash on the company's balance sheet."

Drillers Say Output Yet to Peak http://www.themoscowtimes.com/business/article/drillers-say-output-yet-to-peak/411583.html

03 August 2010ReutersGlobal oil servicing firms are seeing strong growth in Russia as companies order advanced technology for depleted West Siberian fields in a move that may allow Russian output to grow further from current peak levels.

Russian oil output has grown by 70 percent since 1999 to exceed 10 million barrels per day and has become the world’s largest. It has defied repeated predictions that it would fall as depletion of West Siberian fields outpaces production growth in East Siberia.

But oil servicing firms say the quest for the best equipment and technology may allow Russia to achieve even its ambitious targets to produce as much as 10.7 million bpd by 2030 if Arctic and offshore Caspian Sea fields are also put on stream.

“We are ordering more advanced, heavier and mobile rigs. Now operators are willing to pay more for better efficiency,” said Kim Kruschwitz, marketing manager at Russia’s top drilling firm, Eurasia Drilling.

He said West Siberia could see output up 10 percent in coming years despite a wide industry belief that its reservoirs were ruined by speedy Soviet exploration.

“The gain in efficiency and output that results from improved technology will only become more pronounced in the next few years, and I expect Russian production to hold around the level of 10 million barrels per day for years to come,” Kruschwitz said.

The simple, vertical drilling phase is over for the majority of West Siberian fields, and to sustain output, operators are beholden to more expensive processes and hardware suited to extracting the oil in more technically challenging conditions.

Advanced drilling and oil recovery applications bode well not only for Russia’s production levels, but are also a boon for the companies that specialize in drilling execution, well construction and oil field services.

“The market for enhanced performance drilling services in Russia is growing at a rate of 10 to 15 percent this year, outpacing even the drilling market,” said Timothy Adams, business development head of Baker Hughes.

Russia Petroleum Investor sees the country’s drilling and oil field services market reaching $13 billion this year, an 11 percent increase from last year.

Russia’s top oil firm Rosneft said new drilling technologies have spurred output growth despite high levels of reserve depletion.

“New wells in Samaraneftegaz and Udmurtneft have been more productive than we originally planned. We are drilling faster, and the flow rates have increased,” said Peter O’Brien, Rosneft’s vice president for finance.

TNK-BP, which works on some of the country’s most mature fields, also said new technology is being tested to increase output and cut costs.

“In many cases our technology pilots involve partnerships with service companies, with the goal being to access new or untapped reserves, optimize lifting costs and accelerate production,” chief operating officer Bill Schrader said.

The bigger game-changer for drilling and services firms’ business in Russia, however, is the development push on deposits in East Siberia, the Arctic and the offshore Caspian.

“We compete in the high-value, high-cost segment of the oil services market. It is very small at the moment, but East Siberia is about to change that,” said Halle Aslaksen, vice president of Smith International in Russia.

“In East Siberia, the wells are deeper and more challenging, so to get the same amount of oil for the same price as the wells drilled in Western Siberia, you have to drill a lot smarter. And that means you need high-quality, efficient Western equipment,” he said.

Smith, which oil services giant Schlumberger is set to acquire later this year, expects to see 30 percent annual growth in Russia because of new opportunities in East Siberia and the Yamal Peninsula in the Arctic.

Companies say East Siberia’s remote geography also plays a big role in producers’ willingness to pay higher rates than in West Siberia for rigs, well equipment and drilling services.

“Western Siberia has hundreds of the same rig models, so if one breaks down, you’ve got another sitting idle nearby to rob for parts. In East Siberia, you’ve got to have good equipment; that is not negotiable,” said Jon Van De Sand, Smith’s regional manager.

Baker Hughes, the world’s No. 3 oil service firm, has Russia as one of the world’s top high-growth regions through 2013 and expects East Siberia’s share in its Russian revenues to rise to 30 percent from single digits now.

№ 7 (July - August 2010)

Russia's "Resource Curse": How High Oil Prices Are Stunting Reformshttp://www.oilandgaseurasia.com/articles/p/123/article/1273/

Can Russia escape the "resource curse” implied by high oil prices, or will it succumb to what we call a "70-80” scenario? That is the question confronting Russians today, and we fear that their fate will be the latter: if oil prices remain at $70-80 per barrel, Russia is likely to relive key features of the Brezhnev era of the 1970s and 1980s ― with a stagnating economy and 70-80 percent approval ratings for its political leaders.

By Aleh Tsyvinski and Sergei Guriev

The resource curse means, of course, that Russian elites will prefer to postpone restructuring the economy and modernizing the country’s political and economic institutions. This will undermine economic performance, making it very unlikely that Russia will catch up with the advanced economies in the next 10-15 years, as officials promise.

Fast and sustainable economic growth requires the rule of law, accountable, meritocratic, and non-corrupt bureaucrats, protection of property rights, contract enforcement, and competitive markets. Such institutions are difficult to build in every society. In Russia, the task is especially problematic, because the ruling elite’s interests run counter to undertaking it.

In post-crisis Russia, the resource curse is reinforced by two factors. First, massive renationalization since 2004 has left state-owned companies once again controlling the

commanding heights of the economy. These firms have no interest in developing modern institutions that protect private property and promote the rule of law.

Second, Russia’s high degree of economic inequality sustains the majority’s preference for redistribution rather than private entrepreneurship.

Russia’s leaders acknowledge the need for modernization, and pay it frequent lip-service, as is evidenced by President Dmitri Medvedev’s manifesto "Go, Russia!” But the incentives to escape the resource trap are weakened by the overwhelming importance of the resource rents to the wider political elite.

When the economy was near collapse during the recent crisis, we thought that the government would recognize the need to push ahead with radical reforms that would eventually lead to a diverse, de-centralized, and fast-growing economy. But, while stimulus policies were mostly effective in dealing with the immediate crisis, they did not address the long-term issues that impede growth.

Still, the government continues to tout plans to boost the economy. Vertical industrial policy, horizontal industrial policy, investment in education ― all have been tried in the last 10 years. Yet Russia’s public institutions remain as weak as ever (for example, corruption is as prevalent as it was 10 years ago, if not more so), and the economy is no less dependent on commodity prices.

Today’s economic silver bullet is an "innovation city” in Skolkovo, which the government hopes will spur inflows of modern technology. But there are no magic recipes for modernization. Moreover, there is no need to reinvent the wheel. A comprehensive and consistent reform plan was already included in then-President Vladimir Putin’s own economic agenda at the beginning of his first term in 2000.

The so-called Gref Program (named after former Minister of the Economy German Gref) foresaw many of the reforms that are vitally needed ― privatization, deregulation, accession to the World Trade Organization, and reform of the government, natural monopolies, and social security. Many of these reforms are outlined in the current government’s own "Long-Term Strategy for 2020.” The problem is that ― as with the Gref program in 2000 ― the Strategy is unlikely to be fully implemented, owing to the same old weak incentives.

Even the recently announced privatization of non-controlling stakes in the largest state-owned firms ― while timely and laudable ― will not create an irreversible commitment to reform. So far, the government does not want to let control over these firms get into private hands. Hence, the sales that Prime Minister Putin announced will not increase the demand for pro-market institutions.

By contrast, the "70-80” scenario seems increasingly likely. In June, during the St. Petersburg Economic Forum, participants in two sessions ― Russian government and business leaders, as well as influential foreign players ― were asked about the future of

Russia’s economy. The results were drearily similar.

In one session, 61 percent of participants foresaw stagnation in the next 2-5 years (33 percent predicted growth and 5 percent expected a crisis). In the other session, 55 percent of participants foresaw stagnation in the next 10 years (with 41 percent projecting growth and 4 percent expecting collapse).

The factors that drove the Putin era of rapid economic growth ― high and rising oil prices, cheap labor, and unused production capacity ― are all exhausted. Russia will thus be forced to start spending the reserves that saved the economy in the recent crisis.

The "70-80” scenario will preserve the status quo, but eventually the economy will reach a dead end, at which point the only choice will be genuine economic reform or decline and dangerous civil disorder.

Gazprom

Gazprom Neft to take out syndicated loan

http://www.rbcnews.com/free/20100803123039.shtml

      RBC, 03.08.2010, Moscow 12:30:39.Gazprom Neft has signed a loan agreement on a five-year syndicated loan worth $1.5bn, the company indicated in a statement today.

South Stream has solid foundationhttp://www.upi.com/Science_News/Resource-Wars/2010/08/02/South-Stream-has-solid-foundation/UPI-87721280755191/

Published: Aug. 2, 2010 at 9:19 AM

BERLIN, Aug. 2 (UPI) -- The members of the South Stream natural gas pipeline project have the leadership and the gas to move ahead, an official at Gazprom said.

Russian gas monopoly Gazprom aims to diversify its transit networks to Europe through the South Stream natural gas pipeline.

The project is designed to carry as much as 2.2 trillion cubic feet of natural gas each year through the Balkans to southern Europe.

Alexander Medvedev, the deputy chairman at Gazprom, said the project has the resources needed to press ahead.

Europe is looking to the Nabucco gas pipeline to transport non-Russian gas as a way to break Moscow's grip on the regional energy sector. Medvedev said South Stream had the backing necessary to advance first, Russia's state-run news agency RIA Novosti reports.

"We have no intention of reducing the role of Nabucco because we do not regard it as a rival project," he said in Berlin. "If the participants of (Nabucco) can find gas, form a good (corporate) leadership and secure partners, God help them. South Stream has it all already."

The report adds that while both sides insist that neither project is meant to rival the other, both would rely on many of the same Caspian natural gas suppliers.