Russia 090403

Basic Political Developments President Omar al-Bashir of Sudan has forwarded a message to his Russian

counterpart - It was handed on Friday at the talks between Russian Foreign Minister Sergei Lavrov and a representative of the Sudanese President – Minister of Finance and National Economy Awad Ahmed Al Jazz, who is visiting Moscow.

Moscow hosts new round of talks on Russia-EU deal - A new round of talks on a comprehensive Russia-EU partnership deal opens in Moscow on Friday.

RIA: NATO leaders gather for 60th anniversary summit Russia, Afghanistan vital to NATO future, alliance chief says Mahmoud Abbas will visit Russia on April 5-8 and meet with Medvedev –

Kremlin Chile President Starts Russia Visit - Chilean Ambassador to Russia Augusto Parra

says that Saturday she is to hold talks with Peer Dmitri Medvedev and Prime Minister Vladimir Putin.

Tusk Says Putin ‘Open’ To New Gas Proposals - Russian Prime Minister Vladimir Putin is “very open” to Poland’s proposals on a new long-term gas contract, his Polish counterpart Donald Tusk said at a press conference in Warsaw on Thursday.

Ukrainian territory will not be used against Russian interests –Yushchenko UPDATE 1-Ukraine PM vows timely payment for March Russia gas Tymoshenko: Naftogaz to pay Gazprom for gas supplied in March on time Russian diplomat expelled from Riga - Latvian TV: A Russian diplomat

previously accused of involvement in a plot to assassinate the Georgian president has been expelled from Latvia, the country's TV5 television reported.

Russia to deliver 22 Mi-17 helicopters to Iraq PRAVDA: G20 summit members decide to dance to US tune and agree to waste 5

trillion dollars Medvedev content that Obama ready to talk on ABM issue settlement US missile shield problem requires both sides’ efforts – Medvedev U.S.- Russian Nuclear Talks Reject Past Leaders' Policies, Officials Say USA launches process of space militarization – Russian general China, Russia to boost co-op in finance, energy Medvedev Calls War Georgia’s Fault, Refuses to Meet Saakashvili Medvedev: Russia ready to talk to next Georgia leader Russia Keeps Some Troops in Georgia, Defying Deal RUSSIA PUSHES FOR "NORTH-SOUTH" RAIL LINK THROUGH

TURKMENISTAN - Russia has endorsed the construction of two railway lines connecting Iran with Azerbaijan, Turkmenistan, Kazakhstan and Russia.

Sergey Shoigu to visit Serbia - The delegation of Russian Ministry of Emergency Situations, headed by the Minister Sergey Shoigu is visiting Serbia at the end of the week.

Putin to attend ceremonies marking WW2 outbreak anniversary in Poland

Russian Prime Minister Vladimir Putin met with the leaders of parliamentary parties and groups, and public and political organizations

Military workers protesting against non-payment of wages - Workers at military shipyards in Murmansk Oblast are fighting for their wages. Many have not been paid in 5-7 months and unrest is rising.

Steel makers starve to protest and to survive - Workers at a metal production factory in the Russian city of Zlatoust in the Urals have found themselves starving after their salaries were slashed by two-thirds, and their hunger strike has had little effect.

Putin allows multiple entry of foreign cargo vessels to Sochi Sochi 2014 unveils Sberbank as banking partner No TV Coverage In Sochi Election - Major television and radio stations in the

Black Sea resort of Sochi have refused to give airtime to candidates in the upcoming mayoral elections while providing coverage of United Russia's candidate, acting Sochi Mayor Anatoly Pakhomov, the web site Kavkaz-uzel.ru reported Thursday.

Russian police officer, brothers shot dead near Chechnya Suspect in Yamadayev murder to be named next week - Dubai police Russian police officer, brothers shot dead near Chechnya Suspect in Yamadayev murder to be named next week - Dubai police Investigation of Yamadayev attack case enters final stage - Dubai police chief The lesson of Chechnya: no war ever ends cleanly The Economist - A new Moscow show trial: A fresh trial of Russia’s jailed

oligarch is a critical test for President Medvedev Nashi Activist Held In Bribery Inquiry Russian authorities re-arrest suspect in journalist murder case - Russian law

enforcement has re-arrested a man who had only recently been cleared of charges in the 2006 murder of journalist Anna Politkovskaya, dpa reported.Russian police detained a criminal group which had engaged in illegal banking operations

RUSSIA: WHEN KREMLIN DELUSIONS CAN TURN DANGEROUS - What happens when the Kremlin starts to flex its muscles, seeking to impose its will, and the khans who run Central Asia no longer flinch? The early indicators suggest that the outcome is not going to be pretty for Vladimir Putin’s crew.

Russia's Moncloa Debate - References to Spain's Moncloa Pact have been popping up a lot lately in the Russian media -- particularly among liberal and opposition commentators.

National Economic Trends Russia Stability May Prompt Rate Cut, Melikyan Says (Update1) Russian monetary base up 0.8% in week to $111.7 bln Ministry of Finance is using Reserve Fund Klepach Says Q1 GDP Decreased 7% Russian Service Industries Contracted for Sixth Month in March Putin sees Russia’s consumer price inflation slowing soon Russia 2Q09: Markets See a Silver Lining Russia External Debt Falls by USD 57bn in 4Q08

Business, Energy or Environmental regulations or discussions Russian Power Shares Have ‘Huge Scope’ for Gains, UralSib Says RusHydro estimates cost of Boguchanskaya GES delay at more than R9bn Belon Says It Agrees to Refinance Short-Term Debt (Update1) Yakutia government proposes infrastructure bonds to Mechel Russia Mechel vehicle bought all preferred shares Deripaska Says He’s Trailblazer for Russian Debt Restructuring GAZ Eyes Creation of Joint Venture - GAZ is in talks with a foreign partner on

setting up a car venture in Russia as the country's second-largest automaker seeks to tap demand once the economy recovers, billionaire owner Oleg Deripaska said Thursday.

Alfa and BasEl Step Back Into Ring - Just two weeks after being pried apart by President Dmitry Medvedev, Alfa Group and Basic Element stepped back into the ring with a round of interviews, publicly making their cases in a fight over credit and collateral.

Alfa May Sell Up to 49% Stake RusAl and Evraz reportedly in talks with VEB on restructuring debts VTB RUB 6bn loan restructured for three months - Razgulay negotiating

restructuring bond issues VTB hopes for share placement cash by October-CEO VTB to Open Unit As Arrears Increase East Capital Invests SK320 Million in Russia’s Probusinessbank Russia's PIK mandates Sberbank for restructuring Ford in talks to cut work week at Russia plant Telenor asks for postponement again Burger King Is Coming - Fast-food chain Burger King may open its first store in

Russia by 2010, Kommersant reported Thursday. Lufthansa Appeal Denied - The Moscow Arbitration Court declined a Lufthansa

appeal against tax claims on its operations in Russia, Interfax reported Thursday. Lebedev's Airline Loses Its Wings - Billionaire Alexander Lebedev's German

airline Blue Wings lost its license after regulators concluded that the discount carrier had "business problems," a decision Lebedev said he would appeal.

Nuclear-waste contract opposed - RUSSIAN environmental groups are urging rejection for a contract renewal to ship radioactive waste through St Petersburg’s port to a storage facility at Ust-Luga on the Gulf of Finland.

Activity in the Oil and Gas sector (including regulatory) TABLE-Russian oil output rises in March, exports fall Russia to Supply China with Significant Portion of Oil Needs Russian gas flow to Europe down:Ukraine's Naftogaz Moldova pipeline for Russian gas under repair Watchdog launches MOL stake sale probe - Hungary's financial markets

watchdog PSZAF will investigate the sale of a stake in Hungarian oil group MOL by Austria's OMV to Russia's Surgutneftegaz, a PSZAF spokesman said today.

BasEl values RussNeft at $7.5 bln-$8 bln; may end talks with GazpromNeft – Vedomosti

TNK-BP to Increase Its Energy Efficiency by 7% in 3 Years Compared to the Level of Its Actual Energy Consumption in 2008

TNK-BP's Samotlor Field - TNK-BP plans to invest about $1 billion in the Samotlor oil field every year until 2012 to maintain output, Interfax reported Thursday.

“Shtokman companies should be registered in Murmansk” - The companies engaged in the development of the Shtokman field should be registered in Murmansk, the region’s new governor Dmitry Dmitriyenko said yesterday.

Gazprom Gazprom Balks at $8 Billion Price for Russneft, Vedomosti Says Gazprom says Turkey to get more gas Eni's Scaroni, Gazprom's Miller Discuss South Stream Project Eni, Gazprom chiefs meet, silent on Gazpromneft UPDATE 1-Polish PM says Gazprom, PGNiG agree gas contract Poland, Gazprom Agree on Contract Gazprom Sells Russia’s 1st Corporate Bond in 9 Months (Update2) Gazprom eyes diversification with LNG Management Committee considers implementation of Gazprom’s Strategy to

consolidate positions in global LNG market Gazprom to offer energy assets as collateral for state loans Belarus to pay $210 per 1,000 cubic meters for gas On working meeting of Alexey Miller, Jeannot Krecke, Etienne Schneider and

Jean Lucius Gazprom threatens to switch to non-European markets Russia's Gazprom looks to Asia, US after EU rebuff: report Gazprom's Oil Up, Gas Down - Gazprom's March gas production slumped by

one-quarter from a year ago as demand shriveled in Europe and at home and buyers delayed purchases in hopes that prices would fall.

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Full Text Articles

Basic Political Developments

President Omar al-Bashir of Sudan has forwarded a message to his Russian counterpart

http://www.itar-tass.com/eng/level2.html?NewsID=13753265

MOSCOW, April 3 (Itar-Tass) -- President Omar al-Bashir of Sudan has forwarded a message to his Russian counterpart Dmitry Medvedev. It was handed on Friday at the talks between Russian Foreign Minister Sergei Lavrov and a representative of the Sudanese President – Minister of Finance and National Economy Awad Ahmed Al Jazz, who is visiting Moscow.

Opening the meeting, Lavrov said that he regarded it as a continuation of an intensive political dialogue between the two parties. “I hope we shall make a headway in the development of relations between our two countries both in the political and economic spheres. Since your are the minister of economy and finance, your stand should especially promote the process,” Lavrov continued. “We understand, of course, that you are also a special representative of the Sudanese president, and we are willing to hear your opinion, considering this aspect.”

Moscow hosts new round of talks on Russia-EU dealhttp://en.rian.ru/russia/20090403/120894121.html

MOSCOW/BRUSSELS, April 3 (RIA Novosti) - A new round of talks on a comprehensive Russia-EU partnership deal opens in Moscow on Friday.

The agreement would replace the 1997 Partnership and Cooperation Agreement, which was extended for a year when it expired in December 2007. Talks on a new deal have been repeatedly delayed, initially by Poland and Lithuania and most recently over Russia's August conflict with Georgia over South Ossetia.

Marc Franco, chief of the European Commission in Russia, earlier told RIA Novosti that negotiators, headed by EC director general of external relations Eneko Landaburu and Russia's European Union envoy Vladimir Chizhov, would meet on Friday to assess the results of the activities of working groups.

He also said that Moscow and Brussels had made progress in their attempts to find a common position on the format and content of the document, and that working groups were now focusing on the deal's more detailed points.

The diplomat said that while progress was being made, this did not mean that there was complete mutual understanding on all aspects of the deal, in particular human rights. He also added that the energy aspects of the agreement were important for both sides, but that it was unclear how the issue would be worded in the final document.

He also stressed that Russia's accession to the World Trade Organization (WTO) was essential for an understanding of many aspects of the final agreement. Russia is the largest economy outside the global trade body.

Russia also linked the partnership deal to its prospective WTO membership.

"If Russia is a member of the WTO when we round off our talks, then that will be quite a different situation from if it is not," Chizhov earlier told RIA Novosti.

Chizhov said approximately one-third of the current Russia-EU agreement covered issues regulated by WTO norms.

He also said he was satisfied with how the talks on the new deal were progressing.

"If we are talking about substance, then we are already close to being able to start the business of writing its text," he said, adding that while the sides still had differences over the final wording of the agreement, "the ground had been laid."

A decision to resume negotiations was made at the Russia-EU summit in Nice on November 14, despite objections from Lithuania.

NATO leaders gather for 60th anniversary summithttp://en.rian.ru/world/20090403/120894366.html

STRASBOURG, April 3 (RIA Novosti) - Leaders of NATO member countries are gathering for a two-day summit to mark NATO's 60th anniversary and discuss new challenges facing the world's most powerful military alliance.

The North Atlantic Treaty Organization was formed in 1949 as a counterweight to the Soviet Union and its East European allies. Since the collapse of the Soviet Union in 1991, NATO has absorbed a number of former Warsaw Pact countries and has grown to 28 member states.

The latest addition took place on Wednesday, when U.S. Deputy Secretary of State James Steinberg accepted Albania's and Croatia's instruments of accession to NATO for which the United States is the depositary government.

The agenda of the summit, held in Strasbourg, France and Kehl, Germany, will focus on NATO's mission in Afghanistan, relations with Russia, combating terrorism and sea piracy, and energy security.

NATO's outgoing secretary general, Jaap de Hoop Scheffer, is expected to deliver a report on a draft document outlining the alliance's "strategic concept for the 21st century."

Relations with Moscow, which have deteriorated to levels not seen since the Cold War after Russia's retaliation over Georgia's attack on South Ossetia in August last year, will be a key discussion issue during the summit.

NATO called Russia's military response to Georgia's attack on South Ossetia "disproportionate" and condemned Moscow's decision in late August to recognize South Ossetia and Abkhazia as independent states.

In response to NATO's decision to halt cooperation in September, Russia put on hold a number of programs, including the Partnership for Peace program, a high-ranking visit to Moscow, some joint naval training and NATO visits to Russian ports. However Russia continued its work with NATO on arms control, cooperation in airspace, and the war in Afghanistan.

After a meeting with foreign ministers from NATO member states on March 5, Secretary General de Hoop Scheffer announced the alliance's decision to restart cooperation with Russia.

Russia, Afghanistan vital to NATO future, alliance chief sayshttp://news-en.trend.az/world/wnews/1449749.html

03.04.09 00:53Success in Afghanistan and improved relations with Russia are vital to the future of NATO, the alliance's secretary general, Jaap de Hoop Scheffer, said Thursday in the French city of Strasbourg, according to dpa.

"We need to succeed in Afghanistan," since "success in Afghanistan will have an impact on how NATO is perceived in the rest of the world," de Hoop Scheffer told a group of students from around the world on the eve of a two-day NATO summit in France and Germany.

Succeeding in Afghanistan also means improving relations with the country's prickly neighbours, Pakistan and Iran, de Hoop Scheffer said.

NATO "should not be involved in the Iranian nuclear dispute," he said in response to a question.

"But Iran is an important neighbour of Afghanistan, and stability in Afghanistan depends to a large extent on stability in the region," he said as he called for greater dialogue with Tehran.

In a speech titled NATO in 2020 - What Lies Ahead, the alliance head also underlined the importance of improving relations with Russia.

"We need to set our relationship with Russia back on track," said de Hoop Scheffer, who will be stepping down from his post at the end of July.

"If we disagree, and we do disagree ... we both stand to lose. Russia needs NATO, and NATO needs Russia," he said.

NATO suspended direct talks with Russia in the aftermath of Russia's invasion of Georgia in August, but in December decided to resume meetings of the so-called NATO-Russia Council. The first such meeting at level of foreign ministers was expected to take place before the summer.

Responding to a student from Georgia, the NATO chief said Russia's "occupation" of the Georgian breakaway provinces of South Ossetia and Abkhazia represented "a fundamental difference of opinion" between the alliance and the Kremlin.

De Hoop Scheffer also criticized Moscow's plans to build up its military bases in the two

provinces, calling the occupation a "contravention of the principle of territorial integrity."

NATO's 28 heads of state and government were to meet in Strasbourg and in the German towns of Kehl and Baden Baden on Friday and Saturday for a summit marking the transatlantic alliance's 60th anniversary.

The Afghan mission, relations with Russia, and the search for a new NATO chief were all expected to feature prominently during the talks.

Leaders were also expected to formally welcome at their table their colleagues from Albania and Croatia, which formally joined the alliance on Wednesday. 

Mahmoud Abbas will visit Russia on April 5-8 and meet with Medvedev – Kremlin

http://www.itar-tass.com/eng/level2.html?NewsID=13749079&PageNum=0

MOSCOW, April 2 (Itar-Tass) - Palestinian Authority President Mahmoud Abbas will make a visit to Russia on April 5-8 for talks on a wide range of issues, the Kremlin press service reported on Thursday.

The visit will be paid at the invitation of Russian President Dmitry Medvedev, the press service said.

This year Medvedev and Abbas have not met yet, but they had telephone talks. Their last meeting took place in Moscow last December. During the December 2008 visit, Abbas also visited the Chechen Republic.

Abbas visited Russia several times – in July 1996, in January and October 1997, in February, August and November 1998, in March 1999, in September 2001, in October 2002, in February 2003 and in May 2004 when he was secretary-general of the PLO Executive Committee and co-chairman of the working committee for the Middle East. On January 30 – February 1, 2005 Abbas paid an official visit to Moscow.

On May 15, 2006 Abbas travelled to Sochi for talks with the then President Vladimir Putin. On July 29-31, 2007 Abbas held talks with Vladimir Putin and Foreign Minister Sergei Lavrov on the situation on Palestinian territories after Hamas Islamists seized power in the Gaza Strip. The talks also focused on further aid to the Palestinian people. On April 16-18, 2008 during his working visit to Russia, Abbas conferred with Vladimir Putin and Sergei Lavrov to discuss the Middle East settlement and Russian-Palestinian cooperation.

Chile President Starts Russia Visithttp://www.plenglish.com/article.asp?ID={8E76D241-4456-45DE-A700-F1828D3B8FF1})&language=EN

Moscow, Apr 2 (Prensa Latina) Chilean President Michelle Bachelet starts today an official three-day visit to St. Petersburg on which she will hold talks with the top Federal officials.

Chilean Ambassador to Russia Augusto Parra says that Saturday she is to hold talks with Peer Dmitri Medvedev and Prime Minister Vladimir Putin.

The diplomat told media that Bachelet will also meet with Governor Valentina Matvienko and lay a wreath at the cemetery of the second important Russian city.

The Chilean president will attend the opening of the Russia-Chile business meeting, considered of special importance to strengthen bilateral economic and commercial ties.

Before her departure, Bachelet will meet with local female leaders and pay a short visit to the Ermitage Museum.

This is her second visit to Russia and she will be presented the Doctor Honoris Causa title of the Foreign Ministry International Relations Institute and will give a master conference.

The same day she will inaugurate the bilateral work table at the Russian Academy of Science and will meet with city Major Yuri Luzhkov.

With Luzhkov she is to attend the closing session of the Chile-Russia Business and Investment Seminar at the President Hotel, added the sources.

The meeting with Putin completes the agenda for the day, which includes a ceremony to decorate a group of artists with special ties to Chile, said Parra.

On her last day in Russia, Bachelet will meet with President Medvedev at the Kremlim, attend the signing of a group of accords and a reception the president arranged in her honor.

The program includes a meeting with the community of resident Chileans in Moscow and laying a wreath at the tomb of the Unknown Soldier.

Bachelet will attend the opening of the Week of Chilean Cinema in Moscow to run here and St. Petersburg until May. The cinema week will also include fine arts, literature, music and cuisine, concluded the ambassador.

Tusk Says Putin ‘Open’ To New Gas Proposalshttp://www.sptimes.ru/index.php?action_id=2&story_id=28668

WARSAW (Bloomberg) — Russian Prime Minister Vladimir Putin is “very open” to Poland’s proposals on a new long-term gas contract, his Polish counterpart Donald Tusk said at a press conference in Warsaw on Thursday.

Polskie Gornictwo Naftowe i Gazownictwo, the dominant Polish gas company, is seeking new supplies after deliveries from RosUkrEnergo AG, the gas trader that sells about 22 percent of gas exports to Poland from the former Soviet Union, were halted earlier this year by a dispute between Russia and transit country Ukraine.

The agreement with RosUkrEnergo was already scheduled to expire at the end of this year, meaning Poland and Russia need a new contract.

Gornictwo and Gazprom have already reached a preliminary agreement to replace the RosUkrEnergo supplies through the end of this year and Putin is “ready” to accept this contract, Tusk said, citing a phone conversation with the Russian prime minister.

Ukrainian territory will not be used against Russian interests –Yushchenkohttp://www.interfax.com/3/484843/news.aspx

KYIV. April 3 (Interfax) - Ukraine will never accommodate militarybases and nuclear weapons of foreign countries on its territory,Ukrainian President Viktor Yushchenko said. "We are ready to provide our neighbor, the great Russian people,with every guarantee that our territory will not be used againstanyone's interests in particular Russia's," Yushchenko told the EkhoMoskvy radio station in an interview. "We will never have anyone's bases and we will never accommodateour or some else nuclear weapons," the president said.

UPDATE 1-Ukraine PM vows timely payment for March Russia gashttp://uk.reuters.com/article/oilRpt/idUKL297347520090402

Thu Apr 2, 2009 2:11pm BST

(adds Naftogaz comment, background)

KIEV, April 2 (Reuters) - Prime Minister Yulia Tymoshenko pledged on Thursday that Ukraine's state energy company Naftogaz would make timely, full payment for gas shipments in March by Russian giant Gazprom (GAZP.MM: Quote, Profile, Research).

"I am pleased to announce that from February 1, payment for gas has been proceeding in timely fashion," Tymoshenko told a news conference after a cabinet meeting.

"In January, payment was made in full and on time, as was done in February. For March, the same payment will be made as set down in the contract. There will no longer be any instability in Naftogaz's activity."

Under a contract signed in January to end a dispute that led to an interruption of more than two weeks in supplies of Russian gas, Ukraine agreed to make payments for gas by the seventh day of the following month.

In case of a failure to pay, the contract specifies that Naftogaz will have to pay for supplies in advance.

"We are bringing together the funds for payment," Naftogaz spokesman Valentyn Zemlyansky said by telephone.

The standoff in January was linked to disputes over price and payment arrears, leaving millions of European consumers who rely on flows through Ukraine's pipelines without supplies of Russian gas.

Tymoshenko, estranged ally of President Viktor Yushchenko, clinched a deal to end the standoff under which Ukraine is to pay more for its gas -- $360 for 1,000 cubic metres in the first quarter against $179.50 last year.

The president criticised the accord as a "defeat", while the prime minister said it was the best available deal.

Naftogaz has secured credits from state banks to help make payments to Gazprom.

Ukrainian media say the primary creditor is state Oshchadbank, which provided 19.33 billion hryvnias ($2.51 billion) and estimate Naftogaz's debts at about 34.5 billion hryvnias ($4.5 billion). The company is believed to have to pay off about 25 billion hryvnias in debt this year.

The company says its financial problems are compounded by the low rates that Ukrainian utilities still pay for gas.

Parliament has yet to consider a plan to balance Naftogaz's finances as part of legislation needed to restore the flow of credits from a $16.4 International Monetary Fund loan.

The government last week said it planned to loan money to Naftogaz to allow gas to be stockpiled in underground storage areas. It also said it would ask the central bank to sell it dollars at the lower official rate. (Editing by Anthony Barker)

Tymoshenko: Naftogaz to pay Gazprom for gas supplied in March on timehttp://www.kyivpost.com/nation/38817

Yesterday, 19:01 | Interfax-Ukraine

National joint-stock company Naftogaz Ukrainy will pay Russia's Gazprom for natural gas supplied in March 2009 on time and in full, Ukrainian Prime Minister Yulia Tymoshenko has said.

"Gas payments have been made on time and in full since January 1… as will the payments for March, as foreseen by the contracts," she said at a press conference in Kyiv on Thursday.

Tymoshenko said that there would be no surprises in the work of the Ukrainian company following the removal of "corrupt intermediaries" from the gas trade between Naftogaz and Gazprom.

Speaking about Russian objections to Ukraine's plans to modernize and reconstruct its gas transportation system along with the European Union, Tymoshenko said that Ukrainian Fuel and Energy Minister Yuriy Prodan and Acting Naftogaz Head Ihor Didenko are currently holding the necessary talks on this issue with their colleagues at the Russian Energy Ministry and Gazprom.

"This is an open option of cooperation. We are ready to cooperate with everybody who offers the best options with the lowest prices and the highest quality," Tymoshenko said.

Russian diplomat expelled from Riga - Latvian TVhttp://en.rian.ru/russia/20090403/120897234.html

RIGA, April 3 (RIA Novosti) - A Russian diplomat previously accused of involvement in a plot to assassinate the Georgian president has been expelled from Latvia, the country's TV5 television reported.

The press attache for the Russian Embassy in Latvia denied in an interview on Thursday with TV5 that Alexander Khapilov, an advisor to the ambassador, had been expelled from the country. Sergei Abramkin said the diplomat had left the country after being assigned to another post, although he did not say where.

Latvia's Foreign Ministry declined to comment on the expulsion claims.

Another Latvian TV channel reported in October last year that while serving in Tbilisi, Khapilov had attempted to arrange the assassination of Georgian President Mikheil Saakashvili.

TV3 cited unidentified sources in Georgia as saying that while deputy ambassador in Tbilisi between 2000 and 2004, Khapilov sought out individuals to assassinate Saakashvili. The TV channel said the attempt did not go ahead only because the hired assassins had a car accident just prior to their planned attack.

The Russian Embassy in Riga has denied that Khapilov was involved in any plot to assassinate Saakashvili.

Latvia's Foreign Ministry ordered its intelligence agency to investigate TV3's accusations against the diplomat, but they could not be substantiated.

April 3, 2009

Russia to deliver 22 Mi-17 helicopters to Iraq http://english.pravda.ru/russia/economics/02-04-2009/107349-Mi17-0

02.04.2009

Helicopters of Russia Holding signed a contract with Airfreight Aviation Ltd of Saudi Arabia to deliver 22 Mi-17 civil helicopters to Iraq, Interfax reports. Airfreight Aviation Ltd is a certified service center that has an extensive experience of working with Russia’s Mi helicopters in the Middle East, an official spokesperson for the holding said.

The Arab company will refine the Russian helicopters in cooperation with the Moscow-based helicopter plant, which designs Mi-17 and other Mi helicopters.

The deal to deliver 22 Russian helicopters to Iraq is evaluated at $80 million.

The Mil Mi-17 (also known as the Mi-8M series in Russian service, NATO reporting name ("Hip") is a Russian-designed helicopter currently in production at two factories in Kazan and Ulan-Ude.

Developed from the basic Mi-8 airframe, the Mi-17 was fitted with the larger TV3-117MT engines, rotors, and transmission developed for the Mi-14, along with fuselage improvements for heavier loads. Optional engines for 'hot and high' conditions are the 1545kW (2070 shp) Isotov TV3-117VM. Recent exports to China and Venezuela for use in high mountains have the new VK-2500 version of the engine with FADEC control.

The designation Mi-17 is for export; Russian armed forces call it Mi-8MT. The Mi-17 can be recognized because it has the tail rotor on the port side instead of the starboard side, and dust shields in front of the engine intakes. Engine cowls are shorter than on the TV2 powered Mi-8, not extending as far over the cockpit, and an opening for bleed-valve outlet is present forward of the exhaust.

PRAVDA: G20 summit members decide to dance to US tune and agree to waste 5 trillion dollarshttp://english.pravda.ru/world/europe/03-04-2009/107351-g20_summit-0

03.04.2009A compromise, the American style, became the main result of the G20 summit in London. The world’s leading countries decided to boost the world economy with the help of grand investments, which goes along the US model of the anti-crisis struggle. Such an approach may result in the loss of control over the situation, economists say. The United States and Great Britain solve their own problems first and foremost.

The leading countries of the world achieved “almost a historic compromise” as a result of the G20 summit, as German Chancellor Angela Merkel put it. The twenty countries, which make up to 80 percent of the global GDP, gathered in the British capital to solve the future of the world financial system.

Many analysts said that they were not expecting any landmark decisions to be made because of the considerable differences between the participants of the summit. US President Barack Obama and British Prime Minister Gordon Brown insisted that only considerable investments in the international economy could save it from decline.

France and Germany did not support the idea. The two countries believe that the solution of the problem lies in the reforms and tough regulations of the whole international financial market. Yet, the USA and Britain were not willing to give more market-regulating powers to financial structures.

In addition, France stood up for sanctions against offshore zones, where taxation can be avoidable. French President Nicolas Sarkozy even threatened to leave the summit if it was not going to bring any certain results.

China and Russia suggested the creation of new reserve currencies to avoid the US dollar peg, although the countries were not persistent in their proposals.

As a result, the summit members agreed to spend $5 trillion on the solution of current economic problems before 2010. British Prime Minister Gordon Brown said that the funds should help the economy grow by four percent.

"Today's decisions, of course, will not immediately solve the crisis. But we have begun the process by which it will be solved," Brown said.

It was originally reported that the amount of financial assistance would make up only $1 trillion, though. The world has thus made a choice in favor of the US strategy.

“America is the world’s leading country, which makes it impossible not to listen to what they say,” Aleksei Belyanin, an expert with the International Institute for Economy and Finance told Bigness.ru.

No one knows which decisions would be absolutely correct under the conditions of the current crisis. The world does not have an experience, which it could use in overcoming the crisis conditions. The world has no other way out.

The G20 also decided to make the list of ‘tax haven’ countries to struggle against offshore zones in which billions of dollars are kept out of reach. The members also agreed not to make bonus payments to top managers who resorted to governmental assistance over their critical financial condition of their companis.

As for the idea to create new reserve currencies, there were no decisions made on the matter. The issue, which Russia proposed, was not even listed on the agenda of the summit. The G20 only promised to give it another consideration some time later.

Darya Yurishcheva

Medvedev content that Obama ready to talk on ABM issue settlement

http://www.itar-tass.com/eng/level2.html?NewsID=13752033&PageNum=0

LONDON, April 3 (Itar-Tass) - Russian President Dmitry Medvedev has said that he is satisfied with the approach of US President Barack Obama to the discussion of the US missile defence issue. Medvedev told reporters after the G20 summit on Thursday that the US side is ready to discuss several variants of the settlement of this question that the Russian leader called “one of the most complicated issues.”

“We have dwelt on this issue and agreed that conversations on this matter, contacts and the discussion of it will be continued,” the RF president said.

“It seemed to me as a minimum that our partners are not taking a primitive stance on this question, but are ready to discuss various variants, and this is important,” believes Medvedev. “Because we had heard before quite another things (regarding US plans on the deployment of elements of its missile shield in Eastern Europe): “what’s the difference, there are some insignificant several tens missiles, we have already decided everything, so come if you want and see what will be done, maybe if they admit you there, but upon the whole that’s all, the question is closed,” he said.

“But today we have quite a different manner of the presentation of the issue, quite another approach to the discussion of this issue,” the RF president noted. “All this is very and very satisfactory for me,” he added.

US missile shield problem requires both sides’ efforts – Medvedev

http://www.itar-tass.com/eng/level2.html?NewsID=13752001&PageNum=0

LONDON, April 3 (Itar-Tass) - It is possible to settle the problem of the US missile shield in Europe if the efforts are made from both sides, Russian President Dmitry Medvedev said on Thursday.

“If efforts are taken from both sides we will be able to overcome this unpleasant situation,” Medvedev believes. “Now the American side will not try to cut and say that the issue (of the missile shield) is settled,” the RF president noted with satisfaction. “I’ve talked to US President Barack Obama and saw that the America has the desire to listen to our arguments,” Medvedev added.

He called the deployment of the missile defence elements in Eastern Europe “a mistake that was on the conscience of the former US administration.” “Many European colleagues are of the same opinion,” the RF president added.

“As it appears to us, the American missile defence system cannot work against all the threats, but at the same time it is close to our territory,” he said. “And we cannot take the sacramental declarations that the system is not targeted against us,” the president added.

“Therefore the response measures were worked out; I would not want to take them at all,” the Russian head of state stressed.

U.S.- Russian Nuclear Talks Reject Past Leaders' Policies, Officials Sayhttp://www.globalsecuritynewswire.org/siteservices/print_friendly.php?ID=nw_20090402_2551

Thursday, April 2, 2009 By Greg Webb

Global Security Newswire

WASHINGTON -- Yesterday's U.S.-Russian agreement to immediately begin nuclear arms reduction talks represents an effort by Presidents Barack Obama and Dmitry Medvedev to create a more businesslike relationship than the one established by their predecessors, according to officials from both nations (see GSN, April 1).

The leaders' meeting in London was their first, and they agreed to instruct negotiators to craft a treaty that would set lower caps on the number of strategic nuclear weapons each nation can deploy. The new pact would succeed two similar agreements currently in force, one of which is set to expire in December and the other just three years later. Both nations are well below the 6,000-warhead ceiling set by the 1991 Strategic Arms Reduction Treaty, and the United States has already met the 2,200-warhead limit established by the 2002 Strategic Offensive Reductions Treaty (see GSN, Feb. 11).

The latter treaty, signed by then-Presidents George W. Bush and Vladimir Putin, was remarkable for its brevity, made possible by the complete absence of any verification or monitoring provisions. Bush administration officials repeatedly expressed distaste for cumbersome Cold War-style arms control negotiations and never seriously pursued an agreement that would limit U.S. and Russian forces after SORT dissolves in 2012.

The new presidents believe that arms control agreements can bolster each nation's national security and serve larger interests as well, officials said yesterday.

"The reason to have a verifiable, legally binding agreement to continue on from START is to not only have an agreement with Russia, which ... along with us, is the biggest holder of such weapons, it's also to send a very clear message to the world -- places like Iran, where we continue to have very serious concerns about their illicit nuclear program,

and other countries throughout the world -- that this is a United States that's very serious about the challenge posed by nuclear weapons and the proliferation of such technology," a U.S. senior administration official told reporters in a background briefing yesterday.

"We're now returning to a more robust arms control negotiation," the official added.

U.S. and Russian officials both suggested yesterday that Bush-Putin meetings were focused more on sustaining a strong relationship between the leaders than on solving problems.

At his first meeting with Putin in June 2001, Bush famously delivered a line that stuck with him for the rest of his presidency and the more than two dozen meetings the two leaders subsequently held. "I looked the man in the eye," he said. "I was able to get a sense of his soul."

Russian Foreign Minister Sergei Lavrov said today's presidents are more serious.

Their London meeting indicated "a new atmosphere of trust ... which does not create the illusion of good relations because they develop well on a personal level but which ensures taking into account mutual interests and readiness to listen to each other," he said. "We missed this much in the past years," the Washington Post reported.

"We are focused on our national interests. And our objectives are to pursue those interests," said a U.S. senior administration official in a second background briefing. "Sometimes in the past I think we've gotten that backwards, where forging a close, personal bond becomes the objective -- and that gets you in a lot of mess, and we're not going to do that."

"If you go back and you remember the first Bush-Putin meeting where that famous quote came from, that was a conscious strategy on the Bush administration's part to develop this personal rapport. Our strategy is different than that," one of the senior administration officials said in the first briefing.

"Our strategy is to develop an agenda based on interests; also accentuating where we disagree -- but not to make the goal of these meetings to establish some, you know, buddy-buddy relationship. The goal is to advance our interests," the official added. "If having these kind of dialogues is a means to that end, that's great, and I think we saw some of that today. But ... the goal is not to have a personal relationship."

International security experts praised the approach.

"The Obama administration and the president see arms control as an important tool to advance American security," Steven Pifer, a former State Department official in the Bush administration, told the New York Times. "That's a big philosophical difference."

"It was a meeting without much intimacy to it, which is a good thing," Dmitri Trenin of the Carnegie Moscow Center told the Post. They know what's to be expected, what's to be done, and neither is trying to recruit the other guy. No one is trying to impress each other."

"Both of these guys are wary of producing any new jokes about souls and eyes," agreed Stephen Sestanovich of the Council on Foreign Relations in the Post. "They know the relationship has not been good, and if you look at the statement of what they want to work on, it's less warm than the Bush-Putin Sochi agreement of last year, which mentioned friendship, partnership and human rights" (see GSN, April 7, 2008).

Next Steps

The New York Times reported yesterday that treaty negotiators would aim for a new warhead limit of 1,500 for each nation, but the U.S. background briefers said no specific goal has been agreed upon.

"There's been some suggestions that perhaps we've settled on a number that we'll get to in this, and I think that's premature," said one official. "I think that there is a lot of deliberation on our end on what we need in terms of protecting our interests and then what is the goal that we want to work to throughout these negotiations" (see GSN, April 1).

Whatever the final limit, negotiators will need to act quickly. U.S. Senator Richard Lugar, the senior Republican on the Foreign Relations Committee, told the Post yesterday that any new agreement would need to be signed by early August if senators are to provide their approval for ratification before START expires in December.

Obama and Medvedev agreed to have their next meeting in Moscow in July, perhaps creating one signature opportunity if their representatives can complete the deal by then.

USA launches process of space militarization – Russian general

http://www.itar-tass.com/eng/level2.html?NewsID=13752941&PageNum=0

MOSCOW, April 3 (Itar-Tass) - The United States has already launched the process of militarization of outer space, the deputy head of the Russian Defence Ministry’s chief department for international military cooperation said in an interview with the Krasnaya Zvezda newspaper on Friday.

Lieutenant General Yevgeny Buzhinsky reminded the readers that the U.S. National Space Policy, signed by the U.S. president on August 31, 2008, announces the right to a free flight and an unimpeded functioning in outer space of American space systems as the national property of the USA.

The document also stresses that the USA will resolutely prevent any threats to its space means as well as hostile space activity by other states. “The new doctrine adds a tougher and more unilateral nature to these actions,” Buzhinsky believes.

“Russian military experts see in this doctrine a disguised bid of the USA to weaponization of outer space,” he noted. “As you know, space is already used for military purposes. Many countries have deployed and continue deploying in it satellites of reconnaissance, communications, navigation and other systems designed to perform tasks for ensuring their defence potential and security,” the general stressed.

“However, so far there has been no weaponization as it is, which specialists understand as the deployment of weapons in space as well a creating a threat with force or the use of force against space targets, either from space against targets on Earth or in the atmosphere,” he added.

China, Russia to boost co-op in finance, energyhttp://www.chinadaily.com.cn/china/2009-04/03/content_7645591.htm

By Zhang Xin (China Daily)Updated: 2009-04-03 08:13China and Russia vowed to strengthen cooperation in finance and energy sectors to fight the global financial crisis."As the international financial crisis continues to spread, strengthening the Sino-Russian strategic partnership is of particular urgency and importance," President Hu Jintao said. He made the remarks during the meeting with his Russian counterpart Dmitry Medvedev, before the G20 summit in London on Wednesday.Hu, who will visit Russia in June, said the two countries should work together to push forward the reform of the global financial system. He also said the neighbors must promote cooperation in all economic fields to tide over the world's worst economic woes in more than six decades.Existing deals in natural gas and nuclear energy should be implemented and new deals should be sought, he said, while calling for an inter-governmental agreement on cooperation in the oil sector to be inked as soon as possible.Medvedev said Russia is willing to push for cooperation in fields such as trade and energy.Chen Fengying, an expert with China Institute of Contemporary International Relations, said a Sino-Russian partnership will help the emerging economies gain a bigger say in the financial system."The two countries will spare no effort to fight protectionism. This is in their common interest", Chen said.She also believed the cooperation in the oil sector would improve as Russia is keen to secure oil export market shares amid the financial crisis.

Xiao Lian, an expert in World Politics and Economy with Chinese Academy of Social Sciences, said Russia is "a military power neighboring China as well as China's strategic partner in the region".

Medvedev Calls War Georgia’s Fault, Refuses to Meet Saakashvili

http://www.bloomberg.com/apps/news?pid=20601085&sid=a6oxeWWZz4ME&refer=europe

By Lyubov Pronina and Emma O’Brien

April 2 (Bloomberg) -- Russian President Dmitry Medvedev said responsibility for the August war between Georgia and Russia should be shouldered by the Georgian leadership and Russia will only sit down with a new Georgian president.

In an address at the London School of Economics today, Medvedev said he won’t discuss the two countries’ ongoing issues with current President Mikheil Saakashvili.

To contact the reporters on this story: Lyubov Pronina in London via the Moscow newsroom at 7732 or lpronina@bloomberg.net; Emma O’Brien in Moscow at eobrien6@bloomberg.net

Last Updated: April 2, 2009 14:20 EDT

Medvedev: Russia ready to talk to next Georgia leaderhttp://www.kyivpost.com/world/38821

Yesterday, 21:15 | Reuters

LONDON, April 2 (Reuters) - Russian President Dmitry Medvedev said on Thursday he would be ready to talk to any leader of ex-Soviet Georgia who will replace incumbent leader Mikheil Saakashvili.

"We want to have good relations with Georgia, but I do not want to have any relations with President Saakashvili and will not deal with him," Medvedev told students of the London School of Economics. "But if the authorities change sooner or later as part of a democratic process, we are ready to discuss any themes with them." (Reporting by Oleg Shchedrov; Editing by Charles Dick)

Russia Keeps Some Troops in Georgia, Defying Deal http://www.nytimes.com/2009/04/03/world/europe/03georgia.html?_r=1&hp

By C. J. CHIVERS

TBILISI, Georgia — Nearly eight months after the war between Russia and Georgia, Russian troops continue to hold Georgian territory that the Kremlin agreed to vacate as part of a formal cease-fire, leaving a basic condition of that agreement unfulfilled.

The Russian military, working with the governments and the small military forces of South Ossetia and Abkhazia, two separatist regions in Georgia, has stationed forces in two large swaths of territory that were under Georgian control before the war. Observers and diplomats say Russia has also used attack helicopters and stationed tanks in areas where none existed before the war.

The sustained Russian military presence on land captured last summer — evident during two recent days spent in the area by two reporters — provides a backdrop of lingering disagreement between the West and Russia at a crucial time: The Obama administration is pledging to recalibrate the relationship with Russia, restore cooperation in other areas and explore a new treaty on nuclear arms.

It also underscores the strength of Russia’s military position in the southern Caucasus and its enduring confidence in undermining President Mikheil Saakashvili of Georgia and standing up to the West, even as Mr. Obama and President Dmitri A. Medvedev of Russia have signaled an intention to improve relations. Mr. Obama and Mr. Medvedev met on Wednesday, and exchanged warm remarks and pledges to cooperate, raising questions in Tbilisi, Georgia’s capital, about whether the United States would push to have the cease-fire plan fully honored.

Under the conditions of the cease-fire, the armed forces of all sides were to return to the positions they held before the war, which erupted Aug. 7. The agreement required a cessation of fighting, corridors for aid delivery and no use of force. It also granted Russia a loosely defined permission to take further security measures while waiting for international monitors.

In the weeks after open hostilities ended, Russia did withdraw many armored and infantry units to prewar boundaries, including units posted along Georgia’s main highway and or near Georgia’s military bases.

The withdrawal eventually allowed many displaced Georgian civilians to return to villages that had been behind the Russian positions.

But even though European monitors have long been on the ground, Russia still holds large areas that had irrefutably been under Georgian control, and thousands of Georgians have not been allowed free access to homes far from the disputed territory where the war began.

Several areas under Russian control are at odds with the terms of the cease-fire plan. The most obvious examples are in the Kodori Gorge and the agricultural valley outside the town of Akhalgori — two large parcels of land dotted with Georgian villages that were partly deserted over the winter. No Russian forces were in either place before last August.

Russian armor remains in defensive positions on the road to Akhalgori, blocking access to the valley beyond. The checkpoint is jointly administered by Russia and South Ossetia, and the senior official present during a visit last week by two The New York Times journalists identified himself as a Russian Army major.

Russia also holds a fortified position and checkpoint at Perevi, and an observation post near the village of Orkhosani that overlooks Georgia’s highway.

Further, in recent months, Russia has conducted military patrols on territory it did not hold, landing helicopter-borne units just behind the boundary, according to the European Union Monitoring Mission, which was established after the war.

The Russian military also conducts aviation patrols just inside the line with helicopter gunships, the monitoring mission said, and has built a military highway through the mountains linking the Ossetian capital, Tskhinvali, with Akhalgori.

The Russian government declined multiple requests to explain the composition and roles of its forces.

Gilles Janvier, deputy head of the European monitoring mission, said in an interview that Russia had told diplomats that it had entered its own military agreement with the two breakaway regions in Georgia, which the Kremlin recognizes as independent states, and that these newer arrangements rendered the troop withdrawal component of the cease-fire plan obsolete.

“They say there is now a new bilateral agreement between them and South Ossetian and Abkhaz forces that lets them station troops,” Mr. Janvier said.

The posture has frustrated diplomats and the Georgian government alike. A senior American official said that Secretary of State Hillary Rodham Clinton raised the subject in her meeting in early March with Sergey V. Lavrov, Russia’s foreign minister, to no apparent effect.

The official also said that European leaders had been reluctant to confront Russia over the cease-fire plan. Instead, they have appeared willing to accept the cessation of open fighting and the withdrawal of Russian forces from other positions as significant steps.

“My own sense is that they were happy that the fundamentals were done, and moved on,” said the official, who spoke on condition of anonymity because the issues remain politically delicate and the position of the United States is publicly unresolved.

The Bush administration declared that Russia was not in compliance with the cease-fire. The Obama administration, which has been exploring options for cooperation with the Kremlin, has not yet taken a clear public position.

The public indecision was predictable, one independent analyst said, even though the cease-fire plan “is obviously not being fulfilled.”

“It’s business as usual,” said the analyst, Lawrence S. Sheets of the International Crisis Group. “Georgia is a country of four million people without any energy resources, and Russia is a country of 140 million people and with the ability to turn off Europe’s natural gas.”

Georgian officials have not been publicly critical of the United States. They have made clear, however, that their own ability to get Russia to comply with the agreement is essentially nonexistent.

Asked what tools were available to Georgia, Shota Utiashvili, who heads the analysis section of Georgia’s Interior Ministry, answered with a single word: “None.”

The Georgian Defense Ministry said that several thousand troops remained in the conflict area, and that Russia had a presence in at least 51 villages that it did not occupy before last summer.

The Ossetian government does not allow European monitors on its territory, and it denied access to a Times reporter seeking to cross the boundary; for these reasons, the Georgian numbers and assertions could not be independently confirmed.

With the situation at a stalemate, Irakli Alasania, who was Georgia’s ambassador to the United Nations during the war but now is in the opposition to Mr. Saakashvili, said the Russian occupation of territory beyond the old boundaries had settled into a new status quo.

The immediate question, he said, is whether the situation will get worse.

“The only thing we can do now, and the only thing we can hope for,” he said, “is to prevent another war.”

Olesya Vartanyan contributed reporting.

RUSSIA PUSHES FOR "NORTH-SOUTH" RAIL LINK THROUGH TURKMENISTAN

http://www.eurasianet.org/departments/news/articles/eav040209d.shtml

4/02/09

Russia has endorsed the construction of two railway lines connecting Iran with Azerbaijan, Turkmenistan, Kazakhstan and Russia.

Russian Transport Minister Igor Levitin, attending an April 2 meeting in Baku of Caspian Basin official, said work was still needed to ease customs and border issues, but that Moscow, Tehran and Ashgabat were discussing ways to overcome the red tape.

"We are interested in building new rail lines -- first, Iran-Azerbaijan-Russia, and, secondly, Iran-Turkmenistan-Kazakhstan-Russia. The Russian government is negotiating to build both of these routes," the official Russian news agency RIA Novosti quoted Levitin as saying.

Future negotiations on the "North-South" corridor would focus on the "unimpeded [transport of] goods in this area. There are problems at the borders, customs and border formalities," Levitin added.

Sergey Shoigu to visit Serbia http://www.emportal.rs/en/news/serbia/84025.html

01. April 2009. | 09:32

Source: Tanjug, limun.hr

The delegation of Russian Ministry of Emergency Situations, headed by the Minister Sergey Shoigu is visiting Serbia at the end of the week.

The delegation of Russian Ministry of Emergency Situations, headed by the Minister Sergey Shoigu is visiting Serbia at the end of the week.

Shoigu is to meet with Serbian President Boris Tadic, the PM, Mirko Cvetkovic and the Minister of Foreign Affairs Vuk Jeremic.

During the visit, Serbia and Russia should sign several agreements.

Shoigu is also to hold talks with Serbian Minister of Internal Affairs Ivica Dacic and the NIS board of directors.

Putin to attend ceremonies marking WW2 outbreak anniversary in Poland

http://news.xinhuanet.com/english/2009-04/02/content_11122694.htm

2009-04-02 23:45:29

 WARSAW, April 2 (Xinhua) -- Russia's Prime Minister Vladimir Putin is to attend ceremonies marking the 70th anniversary of the outbreak of World War Two in the Baltic coastal city of Gdansk on September 1, Polish Government Information Centre reported on Thursday.

    According to the report, the visit was agreed on during a phonetalk between Vladimir Putin and Polish Prime Minister Donald Tusk on Wednesday.

    Earlier the information about the visit was released in Moscow by Putin's spokesman Dmitry Peskov.

    "Putin and Tusk agreed on the date of the Russian PM's visit to Poland. Moreover they decided that meetings will be held by the bilateral inter-governmental commission and the commission for economy and trade. Dates of the commissions' meetings will be set at a later date," Peskov said.

    According to the spokesman, "during their talk the two PMs covered a wide range of issues related to economic and trade cooperation between Russia and Poland."

Russian Prime Minister Vladimir Putin met with the leaders of parliamentary parties and groups, and public and political organizationshttp://www.isria.info/en/2_April_2009_141.htm

"Next week I am to present the anti-crisis plan and to speak in part about the 2009 budget estimates at the State Duma. Therefore I’d like to consult you, to hear you proposals and opinions concerning the programme that the Government has developed and submitted."

Vladimir Putin's introductory remarks:

Good afternoon, colleagues!

The recent weeks have seen an active discussion of the Government anti-crisis plan, with the participation of political parties, unions and business associations-virtually the entire range of public organisations. The very fact of that the plan has sparked active debates has been very useful.

Our meeting today is important also because, as you know, next week I am to present the anti-crisis plan and to speak in part about the 2009 budget estimates at the State Duma.

Therefore I'd like to consult you, to hear you proposals and opinions concerning the programme that the Government has developed and submitted. The mass media have also played an important role. I want to thank them for their detailed and involved scrutiny of this plan. I'd like to emphasise once again that I find this discussion very useful.

Let me note at the very start: I have already told the leaders of parliamentary parties that any constructive, reasonable and feasible offers will be considered, irrespective of the fact who voiced them-it doesn't matter whether they come from the right-wing, left-wing

or centrist political forces. What really matters is that they should be professional, well thought-out and viable.

Now I'd like us to consider the basic provisions of the anti-crisis plan, which, as I have already mentioned, is very closely linked with the 2009 budget. In fact, these are two sides to the same medal-one document cannot exist without the other. In the context of current developments, we cannot pretend that nothing is happening. It stands to reason that a specific situation in the world and Russian economies calls us to respond. This is by no means a reason to give up the strategic guidelines for the country's development laid out, as we all know, in the Programme for Russia's Development until 2020.

On the contrary-and it has already been pointed out on several occasions-we have every reason to believe that this country will go through these hardships and come out stronger. One may wonder how. The answer is simple. To survive today and to have a chance to develop, an enterprise has to use state-of-the-art technologies, lower production costs and, all the more, nonmanufacturing costs. For example, it is important to focus on saving energy. We have to put special emphasis on that as it is one of the key aspects in present conditions. There are many other essential issues, and I hope that the crisis will push businesses to be more rational and efficient. For its part, the Government will encourage such efforts in every way.

Another integral part of this plan-and perhaps the crucial one-is support for the people, social security and fulfilment of our social commitments. Notably, our task is not just to provide support in the crisis-hit environment, to help people cope with all the ensuing difficulties - though that is also very important - but to be consistent in the development of human resources. That is why we have introduced virtually no cuts to our Priority National Programmes. That is why we are determined to continue investing money in the healthcare system, education, demographics and the pension system. In general, we are committed to improving the quality of life.

Naturally, this goes hand-in-hand with preserving and developing the technological and industrial potential. I would particularly like to stress the "developing" part of the equation. I am referring to innovation development and retooling, which in the end will enable our economy, its real sector, to recover and become stronger.

I am sure we will talk today in greater detail about what this thesis implies in the government anti-crisis programme. But you must have already read the programme and realised that when I speak about development and support for the innovation development of our economy, that rests on precise figures and the Government's clear-cut intentions. We have not cut a single high-technology programme, including federal targeted programmes. This applies to the energy industry, including nuclear power engineering, to ship-building, aircraft building and space programmes. As regards these items, all the federal allocations have been preserved as planned.

We are going to continue developing the structure, with ample funds earmarked for this. There is slightly less than had been planned for 2009, but more than in 2008. I think this

is encouraging during the crisis.

Finally, and I have already mentioned this, I would very much like for our discussion to be to the point and constructive. This will enable us to find the most successful solutions that will help us to tackle the challenges facing us today, and to come out of this difficult situation stronger and more resourceful.

That is what I wanted to say at the beginning.

Vladimir Putin made the following remarks during the discussion:

I would like to point out two issues. The first is that there is a real need to consolidate society in the face of the challenges presented by the crisis. Whenever this country has been confronted with grave problems we succeeded in achieving consolidation. I would like to see the nation responding productively to what is happening and working out comprehensive measures to resolve the problems caused by the crisis.

The second issue is more specific and bears on all the economy, which also affects the social sphere. I mean the macroeconomic situation and the accessibility of loans. Inflation is still very high but the Government sees one of its priorities in sustaining the macroeconomic stability and sending the inflation rate down this year and in the subsequent years.

Judging from the current state of the economy, we can, to my mind, witness an inflation drop rather soon.

I proceed also from the grounds that comparing the present situation with the same period last year we see no rise in inflation despite the crisis. The Central Bank's latest figures testify to that.

I want to repeat that there is every hope to witness a drop in inflation in the near future and, as a result, a better access to credit resources.

view original source

Military workers protesting against non-payment of wageshttp://www.barentsobserver.com/military-workers-protesting-against-non-payment-of-wages.4575715-58932.html

2009-04-02

Workers at military shipyards in Murmansk Oblast are fighting for their wages. Many have not been paid in 5-7 months and unrest is rising.

120 workers at the military shipyard in Roslaykovo outside Severomorsk have not been paid for five months and have now laid down their work. The shipyard is the main

employer for the town’s 9600 inhabitants. The yard has Russia’s only dock capable of holding nuclear-powered missile cruisers like the Northern Fleet’s flagship “Petr Veliky”, regional television channel GTRK Murman reports.

-  People are getting desperate and have laid down their work at the dock. All depends now on the reactions from the authorities, an engineer at the yard said.

The ship yard in Roslyakovo is completely depending on state military orders, and wages are paid from the Ministry of Defence. This is not the first time ship yard workers in Roslyakovo protest – in 1999 they barricaded the road between Severomorsk and Murmansk after not having being paid for four months.

In Murmansk, workers at a plant for service and repairs of navy quays have not seen payment for up to seven months, and are planning a large protest meeting in the beginning of April. The Ministry of Defence has outstanding debts amounting to 20 million RUB to the plant for fulfilled orders in 2004, GTRK Murman reports.

Steel makers starve to protest and to survive http://www.russiatoday.ru/Top_News/2009-04-03/Steel_makers_starve_to_protest_and_to_survive_.html

03 April, 2009, 08:47

Workers at a metal production factory in the Russian city of Zlatoust in the Urals have found themselves starving after their salaries were slashed by two-thirds, and their hunger strike has had little effect.

Viktor and his wife say their situation is among the worst as both of them work at the factory:

“Nobody cares about us. Even after we went on hunger strike our salaries remained as low as ever,” complains Viktor Moskvin, a steel maker.

The reduced working hours and salaries have hit the pockets of thousands of local workers.

The factory’s top manager, Sergey Khomyanin, says they made the cuts because the factory is producing six times less steel than six months ago. He claims they made the move in order to avoid mass layoffs.

“What the workers did on that hunger strike was rather like blackmail. They’re actually free to choose whether they want to work under the new conditions or quit,” Khomyanin said.

Viktor, who is also a father of two, says he can’t quit, as making steel is all he can do. His father was the same, and his grandfather also worked at the same factory. However, it's not the profession he wants for his son.

“There was a time when the profession of steelmaker was something to be proud of in this country. Now I’m often embarrassed to tell people what I do,” Viktor says.

Most of the metal workers now receive less than $200 a month. Almost half of it goes towards paying household bills. To survive on the remaining one hundred is possible only if you eat just bread and potatoes. What makes the situation worse are the loans many people took from banks.

“Several months ago I felt confident with the loans I took from the bank, I could save something. Now I have nothing to save,” Viktor Moskvin continues.

The factory’s management says the workers might not see any salary increase for years. Some city officials claim the crisis could get even worse, as the company is nearing bankruptcy.

“Bankruptcy is probably what the owners want now,” believes Zlatoust mayor advisor Sergey Kostromin. “The debts of the factory now exceed its worth.”

Now the workers are taking legal action for greater compensation for the downtime they are facing. Its outcome depends on whether or not the court decides if the crisis at the factory is the employer’s fault.

Putin allows multiple entry of foreign cargo vessels to Sochi

http://www.itar-tass.com/eng/level2.html?NewsID=13751639&PageNum=0

MOSCOW, April 2 (Itar-Tass) - Russian Prime Minister Vladimir Putin has issued a resolution authorising the “multiple entry in the period until December 30, 2010 of foreign vessels in areas of the internal sea waters and territorial sea of the Russian Federation.” The document says that this is done “for ensuring the delivery of cargoes needed for the construction of Olympic facilities in Sochi.”

The full text of the document is published on the RF government’s website (www.government.ru).

Sochi 2014 unveils Sberbank as banking partnerhttp://www.aroundtherings.com/articles/view.aspx?id=31916

4/3/2009 Sberbank, Russia's largest bank, is the third domestic partner of the Sochi 2014 Winter Olympics.

Russia's state-controlled retail savings bank is expected to spend $110 - $130 million on the sponsorship, according to an official from the Tourism and Sport Ministry.Dmitry Chernyshenko, President and CEO of Sochi 2014, is due to officially announce the deal at 12pm Moscow time.Sochi 2014 has already signed Russian oil company Rosneft and telecoms giant Rostelecom, in partnership with mobile carrier MegaFon, in multimillion dollar agreements to fill the oil and telecoms slots. There are currently six other major sponsorships to fill: apparel, automobile, metallurgy, gas, airline and insurance. An apparel sponsorship is the next to be announced.Sochi's marketing chief Igor Stolyarov plans to secure up to 10 top tier domestic partners and a similar number of second tier sponsors. Another 15 suppliers would fill third tier slots and be designated 'Sochi 2014 partners.'

No TV Coverage In Sochi Electionhttp://www.themoscowtimes.com/article/1010/42/375909.htm

03 April 2009 The Moscow Times

Major television and radio stations in the Black Sea resort of Sochi have refused to give airtime to candidates in the upcoming mayoral elections while providing coverage of United Russia's candidate, acting Sochi Mayor Anatoly Pakhomov, the web site Kavkaz-uzel.ru reported Thursday.

One candidate in the April 26 race, opposition politician Boris Nemtsov, wrote on his LiveJournal blog this week that two radio stations had refused to broadcast his campaign ads under pressure from regional authorities.

The race will see several prominent political figures battling against local and novelty candidates.

Sochi is slated to host the 2014 Winter Olympics, a project for which the federal government has earmarked billions of dollars. The next Sochi mayor will have a strong say over how the government will spend the money.

The election will be the country's last mayoral race in which candidates can submit a deposit to get on the ballot instead of collecting signatures from supporters, a requirement that opposition candidates say allows for manipulation by election officials to prevent them from running for office.

Russian police officer, brothers shot dead near Chechnyahttp://en.rian.ru/russia/20090403/120893753.html

MOSCOW, April 3 (RIA Novosti) - The bodies of a police officer and two of his brothers were found shot dead in a wood near what looked like a militant hideout in the southern Russian republic of Daghestan, local police said on Friday.

"Police found five automatic weapon and pistol shells at the scene," a police officer said. "A dugout to accommodate five people was discovered nearby."

The dugout contained food, camouflage uniforms, a gas stove with canisters, medicines, radical Islamist literature and materials and manuals for making bombs, police said.

The bodies were found late on Thursday in Daghestan's Khasavyurt district, which borders Chechnya.

Russia's Caucasus republics are plagued by violence linked both to separatist fighting in Chechnya and local criminal groups.

Suspect in Yamadayev murder to be named next week - Dubai policehttp://en.rian.ru/world/20090403/120896630.html

ABU DHABI, April 3 (RIA Novosti) - Dubai's police chief has promised to name the main suspect in the murder of former Chechen military commander Sulim Yamadayev as early as next week.

"The investigation into the murder of Sulim Yamadayev is coming to an end. The name of the person who committed this crime will be announced next week after the probe is wrapped up," Lt. Gen. Dhahi Khalfan Tamim said in an interview with the Al Bayan newspaper published on Friday.

Yamadayev, 35, a Hero of Russia who commanded the elite Vostok battalion in Chechnya, was shot early on Saturday by a lone gunman in the underground parking lot of the Dubai apartment building where he lived.

Another Abu Dhabi-based newspaper, the National, reported that a main suspect in the murder was detained in one of the United Arab Emirates, of which Dubai is one. Dubai police sources called the arrest "a breakthrough in the investigation," but refused to reveal the nationality and the name of the suspect.

Dubai police had previously released everyone detained in connection with the murder, except a Russian businessman from St. Petersburg, who may have been involved in other "unrelated crimes."

Yamadayev was officially dismissed as Vostok commander last August over alleged involvement in the 1998 abduction and murder of a Chechen businessman. The battalion, which answered directly to the federal Defense Ministry rather than Chechen authorities, has since been disbanded.

The killing of Yamadayev is the sixth in a series of killings of Chechens in the past year.

Sulim's brother, Ruslan Yamadayev, a former member of the Russian parliament's lower house, was gunned down in central Moscow last September. He was a prominent opponent of Chechen President Ramzan Kadyrov, who has denied any involvement in the either of the Yamadayev killings.

Investigation of Yamadayev attack case enters final stage - Dubai police chief

http://www.itar-tass.com/eng/level2.html?NewsID=13752700

ABU DHABI, April 3 (Itar-Tass) - Dubai police have arrested in Umm Al Quwain one more suspect in the attack on Suleiman Yamadayev at the parking place near his house on March 28. “The investigation is practically finished and its details will soon be made public,” Dubai police chief Lt-Gen Khaflan Tamin said on Friday.

On Friday some people detained on suspicion of involvement in the attack on Suleiman Yamadayev were released. Those were mainly Russian tourists holidaying in the United Arab Emirates. According to some reports, the suspect detained in the Emirate of Umm Al Quwain, whose name is not disclosed, can be one of the main participants in that high-profile case.

The Dubai police chief once again dismissed rumours that Yamadayev is alive. “Nobody could have survived an attack when he is shot in the head from a close distance,” the general said. He once again said it had been an organized crime, dismissing the version of a banal street quarrel.

Khaflan Tamim said on Thursday Yamadayev had been killed "by an organized criminal group with foreign connections."

In the course of the investigations, several people with "Slavic surnames" were arrested, Khaflan Tamim said.

Yamadayev was reportedly attacked in the Dubai Marina district on March 28. An unidentified man fired several shots at him and fled.

The lesson of Chechnya: no war ever ends cleanlyhttp://www.thenational.ae/article/20090403/OPINION/883787716/1080

Alan Philps

Last Updated: April 03. 2009 8:30AM UAE / April 3. 2009 4:30AM GMT

As with all things involving the bloody conflict in Chechnya, there are many unanswered questions about the shooting in Dubai of Sulim Yamadayev, the rebel commander turned pro-Russian militia leader. One thing is clear: his death had been widely predicted since the summer of last year when Yamadayev’s youngest brother, Badrudi, got into a fire fight with the bodyguards of the Kremlin-installed president of Chechnya, Ramzan Kadyrov. Badrudi and his men refused to give way to the presidential convoy, leading to the death of two of Kadyrov’s body guards.

This small incident highlighted a growing rift between the two clans that had served the Kremlin well in its drive to “pacify” the restive Chechen republic after a decade of war. Both clans started out on the rebel side, but they joined the Russians in 1999, when Vladimir Putin launched the second Chechen war.

For many in the Middle East, the Kadyrovs and Yamadayevs might look like traitors to the cause of Chechen independence. This is a romantic view. At the time, many Chechens were caught between the hammer of the Russian army and the anvil of the incompetent, bandit-ridden pro-independence government, and its unruly foreign jihadist allies.

There is a parallel here with Iraq: America’s success in ending the war in Anbar province began by exploiting the local tribal leaders’ rejection of the al Qa’eda linked jihadists. The Russians followed a similar path a decade earlier.

Thus it was that Yamadayev and the father of the current Chechen president, Akhmad Kadyrov, the mufti of the republic, handed over the town of Gudermes to the Russian army without a shot being fired. Yamadayev’s men were enrolled into a unit called the Vostok (“East”) battalion which was controlled by the GRU, Russian military intelligence. He was showered with medals – including Hero of the Russian Federation – after his 700 men battled some of the last rebels, saving the lives of countless Russian soldiers.

Political power fell to the Kadyrovs. After the elder Kadyrov was blown up by an artillery shell placed under his seat at a football stadium, Ramzan became the president-in-waiting until he reached the minimum age of 30, whereupon he was appointed by Putin. At a cost of billions of roubles, the Chechen capital, Grozny, which was practically flattened by the Russian armed forces, has risen from the ashes at a speed which would impress even Dubai. The Chechen president now lives in great style in a new presidential palace, stocked with a zoo including tigers and exotic birds.

There is no doubt that Yamadayev and his clan chafed at playing second fiddle to a 32-year-old who held all the political power and enjoyed vast patronage. After the August shoot-out, Kadyrov set about consolidating his power. He persuaded the Russians to cut the Vostok battalion down to 150 men and fold it into regular Russian army stationed in Chechnya. Thus disappeared the only Chechen military formation not led by a Kadyrov loyalist. Yamadayev was charged with the kidnap and murder of two businessmen.

In September a gunman walked up to a car stopped at the traffic lights on the Moscow River embankment and shot dead a Chechen man. The victim was immediately identified as Sulim Yamadayev. Two hours later it emerged that it was one of his brothers, Ruslan, a member of the Russian parliament. The two men, it seems, used the same car. Since then, the assassination of Sulim Yamadayev has been a death foretold. He moved to Dubai and lived under a false name.

Yesterday the Russian newspapers were full of stories about how the shooting resulted from brawl at a party of drunken Russian tourists, a most unlikely tale. An alternative version states that he was the victim of a blood feud. He certainly had many enemies among the families of the rebels he killed. His love of chopping off the heads of his victims and displaying them to rebel villages is well documented.

But all the evidence points to him being removed as a rival for power to Ramzan Kadyrov. Since September, six prominent Chechen exiles have been liquidated – in Moscow, Istanbul, Vienna and now Dubai. There has been almost no reaction abroad. America and Nato need Russia for the war in Afghanistan.

In Moscow, however, there are a few signs of dissatisfaction with Kadyrov. Putin was shown on television mildly reprimanding the youthful Chechen leader for not building enough hospitals, a clear hint that he should remember who put him in power and pays the bills. For his part, Kadyrov may think he is powerful enough to stand on his own now. For Putin, controlling his creation is a delicate issue. With the Russian economy in trouble, he does not want to upset his great legacy, the restoration of constitutional order to Chechnya.

The UAE is entitled to the fullest co-operation from Moscow in clearing up this crime. If it turns out to be a political murder, the Russian government should establish whether help was provided to the gunman by official Russian agencies, whether at the Moscow level or the Chechen level. If there was any kind of official assistance, the Russian military will surely not be happy, for Yamadayev rendered incalculable services in Chechnya, and indeed fought bravely for the Kremlin in last year’s war in Georgia.

For the rest of the world, there are two lessons. Wars never end cleanly, much as we like to put neat dates around them. And secondly, if the pacification of Chechnya has ended thus, we need to think what it means for Iraq. When the Americans leave, what will be the fate of the tribal militias of the Sunni Awakening who took the US dollar to fight off the jihadists? Will their leaders have to flee across the water to seek safety from an assassin’s bullet?

The Khodorkovsky case

A new Moscow show trialhttp://www.economist.com/world/europe/displaystory.cfm?story_id=13415161

Apr 2nd 2009 | MOSCOWFrom The Economist print edition

A fresh trial of Russia’s jailed oligarch is a critical test for President Medvedev

BIG changes in Russian political life are often ushered in by trials. The first show trial of the Shakhty engineers in 1928 paved the way for Stalin’s consolidation of power in 1929. The 1935-36 trials of Kamenev and Zinoviev, two Bolshevik revolutionaries who fell out with Stalin, heralded the great terror a year later. The trial of Mikhail Khodorkovsky and Platon Lebedev, which opened in Moscow on March 31st, could be as pivotal for Russian political life today.

This is the second trial of Mr Khodorkovsky—and the first under the presidency of Dmitry Medvedev. It may earn Mr Medvedev either a place in history or a footnote in the story of his predecessor, Vladimir Putin. The arrest of Mr Lebedev in July 2003, followed by that of Mr Khodorkovsky in October 2003, ended in the destruction of their Yukos oil company and eight-year jail terms for both men. It heralded a turn away from the liberalism of the 1990s towards an authoritarian corporatism. And it began the redistribution of property and power towards former and present security-service men, collectively known as siloviki.

Mr Khodorkovsky has asserted in interviews that it was the siloviki’s informal leader, Igor Sechin, now deputy prime minister, who initiated the attack on Yukos. He says that the siloviki favour isolation over integration, secrecy over transparency and repression over the rule of law. The Yukos dismemberment was their victory. It ended a brief period of politically independent courts, turning them into a mechanism of repression. As Lyudmila Alekseeva, a noted human-rights advocate and dissident, puts it, Mr Khodorkovsky was not a prisoner of conscience and was not tried for his beliefs—but he is a victim of political repression.

His firmness and dignity in jail have indeed brought Mr Khodorkovsky closer to generations of political prisoners in Russia, a point he underlined at the opening of his trial this week by adopting a slogan of 1970s dissidents: “Power: carry out your laws”. This ought to resonate with Mr Medvedev, who likes to advertise his background as a lawyer and his priorities of making the courts independent and fighting what he has labelled “legal nihilism”.

The defence lawyers argue that the case against Mr Khodorkovsky and Mr Lebedev is a prime example of legal nihilism. It ignores the universal rule that nobody can be tried for the same crime twice. And it goes over the same territory and time. In the first trial, Mr Khodorkovsky and his partners were accused of tax evasion. Now they are charged with the embezzlement of 350m tonnes of oil and laundering the proceeds through offshore trading companies. This is the same oil on which Mr Khodorkovsky was said not to have paid enough tax, says Vadim Klyuvgant, Mr Khodorkovsky’s lawyer.

Mr Klyuvgant says that none of the 188 volumes of prosecution evidence in the case explains how Mr Khodorkovsky stole Yukos’s entire oil production over six years. Instead they imply that the existence of what was once the country’s largest and most transparent firm was illegal. In that case, Mr Khodorkovsky retorted in court, anyone (including the prosecutors) who bought petrol from a Yukos filling station in those years participated in the crime.

The maximum sentence for the charges is 22 years. Yuri Shmidt, a lawyer whose father was jailed both in 1929 and in 1937, says that “they could not bring these charges against Khodorkovsky in 2004. The Kremlin was still mindful of public opinion at home and abroad. Today it feels it can do whatever it likes.” And yet the outcome of the second trial is uncertain.

For one thing, the public mood is different. In 2003 Mr Khodorkovsky’s arrest was seen as the first sign of the state’s reckoning with the unpopular oligarchs, who had not deserved their sudden riches. His imprisonment seemed to many to be just, if not strictly legal. Today, he is a prisoner who has lost everything and did not break down in a tough Siberian prison camp. He commands far more sympathy and respect than bureaucrats and politicians.

The case was initiated in 2006 but has lain dormant for the past year. It has come to the fore now for two reasons. Mr Khodorkovsky’s sentence runs out in 2011, a few months before the next presidential election, which could put Mr Putin back in the Kremlin. A free (and popular) Mr Khodorkovsky could yet interfere with this plan by running himself, or backing another candidate.

Even more alarming for the Kremlin is that Yukos’s former management has brought a case to the European Court of Human Rights in Strasbourg. If the court finds that Russia applied the law retrospectively and unlawfully levied $34 billion in back taxes that destroyed the company, or that it singled out Yukos to disguise expropriation, it could order the government to compensate the company and its shareholders. This embarrassing prospect is so serious that some claim it prompted the Kremlin to discuss whether to pull out of the Council of Europe.

The coincidence in the timing of the Strasbourg case and the Moscow trial is striking. On January 29th the European court declared that the Yukos case was admissible. Within days, the Russian prosecutors had issued a criminal indictment against Mr Khodorkovsky, having concluded their investigation two years earlier. The Kremlin may be hoping that a Russian court ruling that declared Yukos’s operations to be illegal could enable it to stall the Strasbourg case.

But as Kirill Rogov, a political analyst, argues, those who started this case cannot win it politically. To convict Mr Khodorkovsky this time round would raise doubts over his guilt in the first case: the charges look contradictory. But nor can they just let Mr Khodorkovsky go. Pragmatists in the Kremlin may prefer to negotiate with Mr

Khodorkovsky, offering him an acquittal or short sentence in exchange for dropping Yukos’s claims to compensation and showing his gratitude.

As a lawyer, Mr Medvedev has little interest in being tainted by another sham trial in Moscow. He has been careful to distance himself from the Yukos affair. Mr Khodorkovsky acknowledges this. In one interview through his lawyers he said: “I respect Dmitry Medvedev as Russia’s legitimate president, although his political views are not completely clear to me. He certainly did not plunder Yukos and has nothing to fear from Platon Lebedev or myself.” At the opening of the trial, Mr Khodorkovsky cited Mr Medvedev’s words about law and corruption. But he did not pull any punches when talking about the prosecutors who put him in jail.

Letting Mr Khodorkovsky out must have attractions for Mr Medvedev. It would strengthen him as a force in Russian politics, gain him international kudos and lay the Yukos ghost that still haunts the Kremlin. But to achieve all this he has to convince Mr Putin and fight those who benefited from the dismantling of Yukos and want Mr Khodorkovsky in prison for the rest of their lives.

Nashi Activist Held In Bribery Inquiryhttp://www.themoscowtimes.com/article/600/42/375911.htm

03 April 2009By Natalya Krainova / The Moscow Times

Investigators have opened a criminal case against a Nashi activist who tried to bribe Novaya Gazeta editors into publishing articles discrediting the government and the Russian Orthodox patriarch.

The suspect, Dmitry Kopylov, was detained last week as he handed 89,000 rubles ($2,646) to the editors as payment for publication of stories discrediting Patriarch Kirill and the policies of the Russian authorities, the Investigative Committee's Moscow branch said Thursday in a statement.

Novaya Gazeta has linked Kopylov to Nashi, the pro-Kremlin youth group, Sergei Sokolov, deputy editor at the opposition newspaper, told The Moscow Times.

Nashi spokeswoman Kristina Potupchik said by telephone that Kopylov had taken part in Nashi activities, but stressed that the group bore no responsibility for his personal actions.

Sokolov said Kopylov took part in a Nashi protest in Nizhny Novgorod in July 2007, when activists threw a rake under the car of former Prime Minister Mikhail Kasyanov, leader of the Russian People's Democratic Union, citing information from the union.

He said Kopylov came to Novaya Gazeta's office last week and identified himself as Dmitry Krestovsky, a public relations agent who had received a black PR order. Kopylov

told editors that he had "a certain sum of money" to offer for the publication of "certain articles," Sokolov said.

The editors reported the case to the police, and Kopylov was detained with the cash at a subsequent meeting, Sokolov said.

If charged and convicted of attempted bribery, Kopylov faces up to three years in prison.

In another incident, Novaya Gazeta received a package in the mail Tuesday containing severed donkey ears and a note signed "from the presidential administration," Sokolov said.

He refused to comment on whether the newspaper believed that the parcel and the bribery arrest were connected.

Potupchik, the Nashi spokeswoman, denied that Nashi was behind the package.

Dead animals have been used in demonstrations against the opposition in the past. A group of unknown men, including one wearing a Young Russia jacket, dumped about 20 dead and dying sheep wearing Solidarity T-shirts in front of the venue where the opposition group was holding its founding congress in mid-December. No group has taken responsibility for the stunt.

Russian authorities re-arrest suspect in journalist murder casehttp://news-en.trend.az/cis/russia/1449770.html

03.04.09 03:50Russian law enforcement has re-arrested a man who had only recently been cleared of charges in the 2006 murder of journalist Anna Politkovskaya, dpa reported.

The suspect, who previously worked in a Moscow agency fighting organized crime, has been charged with blackmailing a witness, reported the Interfax news agency on Thursday, citing sources in the investigation.

The suspect is one of four people who was released in February after a trial found insufficient evidence against him in the case. He is now charged with blackmailing one of the most important witnesses in the case to the tune of 50,000 dollars.

The arrest reopens the investigation into the murder of Politkovskaya, who was shot in front of her apartment. Politkovskaya had frequently riled Russian authorities with her work, which was often critical of Russian policy. 

Russian police detained a criminal group which had engaged in illegal banking operationshttp://www.itar-tass.com/eng/level2.html?NewsID=13753069

MOSCOW, April 3 (Itar-Tass) - Agents of the Economic Security Department (DEB) of the Russian Interior Ministry, together with the Federal Security Service (FSB) detained a criminal group which had engaged in illegal banking operations to expatriate funds.

"In the period from January 2007 to September 2008 alone, the criminal group derived a profit worth over nine billion roubles," the DEB press service told Itar-Tass on Friday.

"It has been ascertained that the administration of a well-known commercial bank had engaged in illegal banking activity for an extended period of time; it derived huge profits and legalized this money through a consulting firm," the DEB said.

"A significant portion of illegal money was remitted to foreign organizations' accounts at foreign banks under fictitious grounds. It was cashed for use in further criminal activity," a DEB officer said.

"Police found documents of 40 dummy firms, seals of more than 30 foreign companies that were used in illegal money expatriation schemes. They also found seals and stamps of Russian customs bodies, stamped letterheads of fly-by-night firms that were used to forge customs control documents and more than 20 computers with passwords to organizations' account through the Bank-Client system," police said.

In addition, authorities found undeclared cash funds worth over 25 million roubles, 130,000 euros and 10,000 dollars.

The masterminds have been detained. A criminal case has been opened under Article 172, Part 2 (illegal banking), and Article 174, Part 4 (money laundering).

"Police are taking measures to establish the identity of and apprehend other members of the criminal group," the DEB noted.

RUSSIA: WHEN KREMLIN DELUSIONS CAN TURN DANGEROUS

http://www.eurasianet.org/departments/insightb/articles/eav040209.shtml

4/02/09 A EurasiaNet commentary

What happens when the Kremlin starts to flex its muscles, seeking to impose its will, and the khans who run Central Asia no longer flinch? The early indicators suggest that the outcome is not going to be pretty for Vladimir Putin’s crew.

Russia right before our eyes is undergoing a transformation from the brawny bully of Eurasia into a toothless, hollow-cheeked addict always on the lookout for the next score. With the Kremlin hooked on easy energy profits, Russia is careening into a blind alley,

where the aspirations for a better life held by millions of Russians stand to meet an agonizing end.

The April 1 meeting between US President Barack Obama and his Russian counterpart, Dmitry Medvedev, underscored the extent to which the Kremlin is in a state of denial. Russia’s domestic economy is imploding, but all the Russian leadership seems interested in is avenging all slights -- both real and perceived -- that the country endured amid the Cold War’s end game. Putin and Medvedev are desperately clinging to the notion that Russia is a restored great power, even as its recent economic performance indicates otherwise.

While American profligacy certainly stoked the global economic crisis, Obama’s administration is taking a sober look at the facts, and making a sincere, albeit contentious effort to fix imperfections in the financial system. Russia, on the other hand, does not seem to want to make any concessions to the new economic reality. The Kremlin cannot seem to budge from a dream of reviving the concept of Moscow becoming the Third Rome. The net effect is that Putin and Medvedev are behaving like neo-Neros, fiddling as the Russian economic goes up in smoke.

The economic news coming out of Russia just gets grimmer by the day. The state statistical agency, Rosstat, in late March released data that suggests the country’s economy is in a free fall. Output of essential goods and services declined by 11.6 percent in February this year compared with the figure for February 2008. Meanwhile, export earnings crashed during the year-long period ending February 28, experiencing over a 40-percent drop, according to Rosstat. The inflation rate in February was pegged at 13.9 percent.

Also highlighting the precarious state of Russia’s finances, Rosstat reported that while in 2008, 11 Russian regions were net contributors to the state’s coffers, collectively accounting for a 70-percent share of government revenues, only two regions are likely to remain net contributors by the end of this year -- Moscow and St. Petersburg.

According to a recent World Bank report on Russia, the country is in for a 4.5 percent contraction of its economy in 2009. The immediate reaction of Russian government officials was to criticize the World Bank’s predictions as overly pessimistic.

Perhaps the most ominous aspect of the bank’s report was its assessment that Russia was not in position to quickly pull out of its nosedive. "As the crisis continues to spread to the real economy around the world," the report stated, "initial expectations that Russia and other countries would recover fast are no longer likely."

Russia has already poured a vast sum of money into stabilization efforts -- over $85 billion to date. But virtually all of the government funds have been devoted to propping up banks and business. Not much has gone to supporting hard-pressed Russian workers.

There is little evidence to suggest that the money already spent has accomplished the goal of stabilizing Russian finances. But a serious problem is looming: Russia by the end of 2009 may well have run through its reserve fund, which had been built up over the past few years when energy prices were high. When the reserve fund runs dry, it is hard to see where the Kremlin will obtain the means to finance stabilization programs. Global lenders may not be so eager to come to the rescue, and energy prices are expected to remain modest for the foreseeable future. Perhaps the Kremlin’s only option, then, will be to resort to the printing press. But history shows that such a method invariably ends badly.

The danger is that with the Russian government not acting aggressively to confront domestic economic issues, the country’s poverty problem will reach dangerous, destabilizing proportions.

The World Bank report suggested that roughly a quarter of Russia’s population -- fully 37 million individuals -- "were vulnerable to poverty in 2006." The number of vulnerable Russians could well be higher at present. The bank urged that immediate action be taken to prevent millions of Russians from slipping below the poverty line, specifically calling for huge investments in education, health care and housing, along with extensive job creation programs and a vast expansion of the social safety net.

The Russian government does not seem interested in undertaking any of the substantial commitments necessary to improving the basic welfare of a huge portion of the country’s population. Instead, Medvedev in recent weeks has emphasized the government’s continuing desire to embark on a massive military buildup. On March 17, during a meeting with top military commanders, the Russian president insisted that the military modernization program would remain a priority. To reinforce the message, state television on March 28 broadcast images of Medvedev flying in an advanced Sukhoi-34 fighter-bomber.

"A modern military, well trained and well equipped with modern weapons . . . is a guarantee of our protection," Medvedev stated.

This is where Central Asia comes in. The energy-rich region is becoming increasingly important to the Kremlin in terms of it being a source of cheap energy. Despite the fact that the World Bank and other institutions have described it as vital for Russia’s future social well-being to diversify its economy, Putin & Co. seem more determined than ever to use energy to solve their policy dilemmas. Energy exports account for about three-quarters of Russia’s foreign-earned revenue.

Moscow’s growing need to retain control of energy export routes to Europe threatens to touch off a dangerous cycle. And already some ominous signs, from the Kremlin’s viewpoint, have manifested themselves. In particular, Russian officials received a jolt when, contrary to their expectations, Turkmen leader Gurbanguly Berdymukhamedov refused to follow the Kremlin script during a late March visit to Moscow. Russian leaders were ready to use the visit to jump-start their efforts to launch the long-planned

Prikaspiiski pipeline network expansion, but they were forced to backtrack when Berdymukhamedov refused to proceed with the deal. [For background see the Eurasia Insight archive]. Berdymukhamedov evidently based his decision on the impression that Russia now does not possess the financial resources to follow through on its commitments.

It is not just Berdymukhamedov who seems to be losing his fear of Putin’s ability to retaliate. The Russian prime minister’s long-time nemesis, the former energy baron Mikhail Khodorkovsky, is once again taking verbal jabs at the Kremlin after a prolonged silence.

In another sign that confidence in the Russian leadership is rapidly eroding, capital flight is taking off. Already during the first quarter of 2009, Russia has experienced a drain of about $33-$34 billion, according to official Russian sources. The World Bank has predicted the total amount of capital flight this year could reach $170 billion.

Given that Russia has never really been a law-governed state, any given leader’s ability to rule the country -- whether during the Tsarist, Soviet or post-Soviet eras -- has depended on his power to command respect. The Putin-Medvedev team’s ability to command respect is vitally linked to the country’s economic performance. Thus, if Russian leaders keep on ignoring the plight of millions of Russians for much longer, they may soon find themselves under intense pressure at home.

The chief worry for those watching Russia from the outside is that as the Russian economy sails off into oblivion, Putin and Medvedev remain in possession of a formidable fighting force, even one that is not as modern as they would like. The Kremlin, as its brief war with Georgia in 2008 demonstrated, is more than willing to resort to force to get what it wants. Therefore, the more desperate its energy interest in Central Asia becomes, and the more Central Asian leaders sense that Russia is economically weakened, the greater the chances that the Kremlin might embark on some sort of political, or perhaps even armed adventure in the Caspian Basin.

Russia's Moncloa Debate http://www.rferl.org/content/Russias_Moncloa_Debate/1601049.html

April 02, 2009 References to Spain's Moncloa Pact have been popping up a lot lately in the Russian media -- particularly among liberal and opposition commentators.

The 1977 agreement among leading politicians, parties, and trade unions set the ground rules for the Spanish economy and political system during the transition from Francisco Franco's dictatorship and the democratic system that followed.

And why are Russian intellectuals and political commentators suddenly so interested in a three-decades old Spanish agreement? As we have written here on several occasions, there is a growing sense that the authoritarian social contract that dominated Russia since

Vladimir Putin's rose to power in 2000 -- that Russians give up civil and political rights in exchange for economic prosperity --  is perilously close to being null and void and needs to be replaced.

Igor Yurgens director of the Institute of Contemporary Development and a aide to Russian President Dmitry Medvedev got the ball rolling back in February, saying that "at the current moment, economic well being is shrinking" and therefore "civil rights should expand."

Others soon followed suit. Arkady Dvorkovich, the head of the Kremlin's experts directorate, said the current elite was incapable of dealing with the economic crisis and called for "a new elite, which will be more open to society."

Yevgeny Gontmakher, director of the Center for Social Policy at the Institute of Economics of the Russian Academy of Sciences, has long warned of social upheaval if the crisis deepens and called for the political system to be liberalized.

There has, of course, been push back from those who want to keep things just as they are.

As we have noted, Deputy Kremlin Chief of Staff Vladislav Surkov, widely seen as the regime's "chief ideologist," ridiculed claims that Russia's social contract was teetering:

The authorities have been handing out petrodollars, feeding everyone, while in return society has been waiving its rights and freedoms. Now that petrodollars have dried up, it has suddenly come back to people's minds - 'give us our freedom'.

In a recent article in "Nezavisimaya gazeta," Dmitry Orlov, director of the Agency for Political and Economic Communications," weighed into the debate, arguing that historically, Russian social contracts have little in common with their Western counterparts. In Russia, Orlov argues, "the main (and decisive) contracting party...was always the state," which imposed the social order from above. This "vertical contract" contrasts with the "horizontal contract" prevalent in Western societies, "where the estates and social groups agree first and foremost among themselves."

And whenever Russia's "vertical social contracts" have collapsed, the result has been chaos and disaster:

The "vertical contract" is far from ideal. But the "liberal" alternative is much worse. In our country, a severe weakening or disintegration of authority has always been followed not by...a transition to the "horizontal" model beloved of the West, but by the rapid disintegration of political and social institutions and social interconnections. Examples are the Time of Troubles, the February Revolution, and the collapse of the USSR.

Orlov's argument dovetails with recent warnings by pro-Kremlin analyst and political strategist Gleb Pavlovsky that a cabal exists in the Russian elite that is seeking to exploit

the economic crisis and bring down the current regime. Pavlovsky is a close ally of Surkov's and nothing he says for public consumption is an accident.

The strong pushback against Yurgens, Dvorkovich, and Gontmakher seems to indicate that there is real fear in high places -- mostly among those associated with the 'siloviki' clan -- that a liberalizing agenda could gain traction in the current environment.

-- Brian Whitmore

National Economic Trends

Russia Stability May Prompt Rate Cut, Melikyan Says (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9WZ4Wq2IBgc

By Alex Nicholson and Emma O’Brien

April 3 (Bloomberg) -- The stability of the ruble and Russian equity markets may provide the conditions for a reduction in the key refinancing rate, said central bank Deputy Chairman Gennady Melikyan

“The situation has stabilized significantly,” Melikyan told reporters in Moscow today. “If that continues, the conditions may have been created for a reduction in the refinancing rate.”

Bank Rossii has raised rates to limit the cash available to banks and companies as it allowed the ruble to depreciate 19 percent versus the dollar. The refinancing rate, seen as a ceiling for borrowing money and a benchmark for calculating tax payments, is currently at 13 percent after being raised in November and December. The central bank increased the repo rate charged on central bank loans twice in February.

Banks should be able to handle 10 percent of their portfolios being non-performing loans, or credits in or close to default, Melikyan said, though such a situation may see their “capital adequacy fall.” Capital adequacy is a ratio of a bank’s capital to its assets.

Problems with dealing with non-performing loans “could arise, though I don’t think this is empty talk,” the central banker said. Bank Rossii will seek a solution should the banks be forced to increase reserves to deal with possible losses on loans, he added.

NPLs held by OAO Sberbank, Russia’s largest lender, are rising and now make up about 2.8 percent of the bank’s loan portfolio, Chief Executive Officer German Gref said this week.

To contact the reporters on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net; Emma O’Brien in Moscow at eobrien6@bloomberg.net

Last Updated: April 3, 2009 02:56 EDT

Russian monetary base up 0.8% in week to $111.7 bln http://en.rian.ru/russia/20090403/120895882.html

MOSCOW, April 3 (RIA Novosti) - Russia's Central Bank said on Friday the country's narrowly defined money supply (M1) was 3 trillion 729.8 billion rubles ($111.7 billion at the current exchange rate) as of April 3, up by 29.8 billion rubles ($892.5 million) in the week since March 23.

According to the Bank, M1 money supply consists of the currency issued by the bank, including cash in vaults of credit institutions, and required reserves balances on ruble deposits with the Central Bank.

Ministry of Finance is using Reserve Fundhttp://businessneweurope.eu/users/subs.php

Rencap, RussiaThursday, April 2, 2009

The Ministry of Finance published data 1 April that showed a decrease of the Reserve Fund. According to the ministry, the Reserve Fund was $121bn (or RUB4,118bn) on 1 Apr, a notable decrease from $136bn (or RUB4,870bn) on 1 Mar 2009. Therefore, the Reserve Fund has decreased by $15bn in March. According to the ministry, RUB600bn (about $17bn) was taken from the fund to balance the federal budget.

Spending of the Reserve Fund was forced by the country's increasing budget deficit, which reached almost 9% of GDP in February, and is likely to grow in March as additional spending on anti-crisis measures is implemented (the ministry has not yet published budget execution details for March). The budget deficit is expected to account for 8% of GDP (about $94bn) this year, reflecting the global crisis and low oil prices. In comparison, the US budget deficit is projected at 13% of GDP in 2009.

The spending of reserve funds does not mean a reduction of gross international reserves, as the spending is in roubles, which the Central Bank of Russia is printing in exchange for dollars from the Ministry of Finance.

Klepach Says Q1 GDP Decreased 7%http://www.themoscowtimes.com/article/600/42/375906.htm

03 April 2009Combined Reports

Deputy Economic Development Minister Andrei Klepach said Thursday that Russia's economy shrank by 7 percent in the first quarter, Itar-Tass reported Thursday, marking a staggering downturn after eight years of oil-fueled growth.

"These figures are worse than we expected," Klepach said at a conference in Kiev, Ukraine. He was citing preliminary figures.

Klepach also said net capital outflows reached $33 billion in the first quarter, with record outflows of $130 billion last year.

Government officials are sticking to their view that the economy will shrink by 2.2 percent in 2009, and they expect a recovery in the final quarter.

Klepach said that forecast takes into account a package of anti-crisis measures currently being debated by lawmakers that should bolster domestic demand and help boost GDP. Without it, the economy could contract by 4 percent to 5 percent, Klepach said.

The announcement came as the State Statistics Service released its official gross domestic product figures for the fourth quarter.

GDP rose 1.2 percent in the quarter, the least since the first quarter of 1999, from a revised 6 percent in the previous three months, according to the statistics service. The median forecast of 11 economists in a Bloomberg survey was for 1 percent growth, and the Economy Ministry had given an initial estimate of 1.1 percent.

The slump may be deeper than the one that followed the government debt default and ruble devaluation in 1998, which triggered bank runs and wiped out savings, according to the World Bank. The bank forecasts a 4.5 percent contraction this year. Russia should brace itself for a "second wave of problems" as nonbanking companies fail to repay loans, Finance Minister Alexei Kudrin said last week.

Industrial production contracted for a fourth consecutive month in February as the credit squeeze and falling incomes eroded demand for metals, cars and consumer goods. That month, retail sales contracted for the first time since February 1999.

The unemployment rate rose to 8.5 percent in February, the highest since January 2005, as plunging demand forced companies to cut staff. Severstal, Russia's biggest steelmaker, plans to cut as many as 9,500 jobs at its Russian units, CEO Alexei Mordashov said on March 11.

From August through January, the Central Bank used up a third of its reserves to defend the ruble, which fell 34 percent against the dollar as prices for oil, Russia's biggest export, plunged. The price of Urals crude oil has fallen almost 70 percent from a July record of $142.50 per barrel.

The Cabinet this month approved a revised budget with the first deficit in 10 years of

2.98 trillion rubles ($88.5 billion), or 7.4 percent of projected gross domestic product. 1.6 trillion rubles have been earmarked for anti-crisis spending.

The Finance Ministry began to transfer money from its Reserve Fund, from which it expects to drain some 2.7 trillion rubles this year to help fund the budget gap.

Russian Service Industries Contracted for Sixth Month in Marchhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=axU4lEWWSICs

By Alex Nicholson

April 3 (Bloomberg) -- An index of Russian service industries ranging from banks to restaurants remained negative for a sixth month in March as companies cut jobs at the fastest rate in the survey’s history.

The Purchasing Managers’ Index was at 43.9 last month, compared with 40 in February, VTB Capital said in an e-mailed statement today. A reading above 50 indicates expansion, below 50 a contraction. The VTB survey of 300 purchasing managers at service companies began in October 2001.

“The results signal a further general decline in the Russian services sector,” said Svetlana Aslanova, an analyst at VTB Capital, in the report. “Surging price competition on the back of weak market demand has prompted companies to tighten their cost-cutting programs.”

Retail sales in Russia contracted in February for the first time in 10 years as credit markets dried up, demand fell and unemployment rose. The economy will shrink 2.2 percent this year after 5.6 percent growth in 2008, the Economy Ministry estimates, and the government anticipates a budget deficit equal to 7.4 percent of gross domestic product, its first in a decade.

Job cuts were most severe in the hotel and restaurant industries, while business activity fell at the fastest rates in the transport, storage, post and telecommunications sectors.

The seasonally adjusted services PMI is a composite of five differently weighted indexes including business, employment and new, outstanding and future business, according to VTB.

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

Last Updated: April 3, 2009 00:00 EDT

Putin sees Russia’s consumer price inflation slowing soonhttp://www.prime-tass.com/news/show.asp?topicid=68&id=454950

MOSCOW, Apr 2 (Prime-Tass) -- Consumer price inflation in Russia is expected to slow soon, Prime Minister Vladimir Putin said Thursday at a meeting with leaders of political parties and representatives of non-governmental organizations.

“Judging by what is currently going on in the economy, we could soon witness a decrease in inflation,” Putin said.

The government is aiming to maintain macroeconomic stability in the country and decrease inflation in 2009 and in subsequent years, Putin said.

Consumer price inflation in Russia amounted to 5.3% in the period from January 1 through Monday, the Federal State Statistics Service said earlier. Government officials are forecasting that inflation will exceed 13% in 2009. Last year, inflation in Russia amounted to 13.3%.

Russia 2Q09: Markets See a Silver Lininghttp://businessneweurope.eu/users/subs.phpAlfa, RussiaWednesday, April 1, 2009

The government plans to use R1.6 trln from the stabilization fund in 1H09. As the CBR is able to withdraw R850bn from the banking system, the net increase in the monetary supply from the state will be around R750bn. If expectations of devaluation stay moderate in the coming months, this liquidity inflow will support financial markets.

Russian government approves new budget: The new draft budget sent to the Duma indicates a fiscal deficit of R2.9 trln, with R6.7 trln in revenues (down 27% y-o-y) and R9.6 trln in expenditures (up 28% y-o-y). Some R2.7 trln from the stabilization fund will be needed to finance this deficit, with R1.6 trln, or 60%, expected to be spent by July. This concentration of spending in the first half of the year suggests that in 2H09, either revenues will have to increase or the fiscal deficit will be higher than the current target of 8% of GDP.

CBR cannot offset government's R1.6 trln injection: According to the schedule for the redemption of uncollateralized loans, the CBR will be able to withdraw around R850bn before July: R200bn in May and R650bn in June. Along with the R1.6 trln from the fiscal deficit, this suggests that the state will increase its financing of the economy and the banking sector by at least R750bn, and the CBR will not be able to completely offset this fiscal easing.

Inflation or ruble depreciation: This additional inflow of ruble liquidity will either translate directly into higher local price growth, or it will finance capital outflow and boost inflation via a weaker ruble exchange rate. We believe that since the Russian government has to delve deeper into the stabilization fund than expected, it would prefer a weaker ruble exchange rate by year-end, as its savings are in foreign currencies. Therefore, we reiterate our view that the ruble's recent appreciation is only temporary.

Decline in GDP reported at 8% y-o-y in 2M09: According to preliminary estimates, Russia's GDP declined 8% y-o-y in January- February. Even though this shows some stabilization after the 8.8% y-o-y drop in January, we believe we have not yet hit bottom, as none of the leading indicators has shown any signs of improvement. The construction sector shrank 18.8% y-o-y in 2M09, down from 16.8% y-o-y in January. The transportation sector, another important indicator, decreased by 18.2% y-o-y in 2M09 from 17.4% in January. What is more, retail trade turnover fell 2.4% y-o-y in February, indicating that households have begun to cut spending, a trend that will only accelerate in the coming months. Therefore, we expect GDP to continue to contract in 2Q09.

Russia External Debt Falls by USD 57bn in 4Q08 http://businessneweurope.eu/users/subs.php

VTB CapitalApril 1, 2009

According to the data released by the CBR today, Russia's total external debt rose by 4.1% to USD484.7bn in 2008 reflecting the active private borrowing in 1H08. More importantly, the data pointed to a sharp USD 57bn decline in public and private sectors' external debt in 4Q08.

Banks and corporates repaid USD 31.8bn and USD 15.6bn respectively in 4Q08. These data suggest that banks have been unable to roll-over maturing liabilities and probably even redeemed some debts in advance.

According to the CBR, banks had about USD 25bn of external debt scheduled for repayment in 4Q08. The Minister of Finance, Alexey Kudrin recently mentioned that bank debt declined by USD50bn since 1 October 2008. This implies that in the first months of this year, banks have redeemed about USD 18bn.

Corporates have been more successful in debt refinancing with a rollover ratio of about 37% in 4Q08. This may indicate that a part of corporate debt is intercompany lending and actual corporate sector debt repayments scheduled for 2009 may be lower than USD 62bn (according to the CBR).

According to the today's data, the decline in Russia's private sector external debt is higher than the initial CBR's estimate of capital outflows suggested (USD 28bn for banks and USD 8bn for corporates.

Hence, an updated schedule of debt repayments (the latest available is as of 1 October 2008) might bring a positive surprise when announced.

Business, Energy or Environmental regulations or discussions

Russian Power Shares Have ‘Huge Scope’ for Gains, UralSib Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKS9pznm_cMk

By William Mauldin

April 3 (Bloomberg) -- Russian electricity company shares have “huge scope for gains” because the industry has trailed other Russian stocks this year and the government plans to discuss power price and capital spending reductions, according to UralSib Financial Corp.

The Micex Power Index had risen only 20 percent this year as of yesterday, compared with a gain of 35 percent for the overall Micex Index, 47 percent for the Micex Oil & Gas Index, and 51 percent for the Micex Metals & Mining Index.

Russian First Deputy Prime Minister Igor Shuvalov is scheduled to hold two meetings with power company executives next week to discuss planned increases in electricity prices and the industry’s spending obligations, Moscow-based UralSib said.

“If the government agrees to allow the generation companies to delay or significantly reduce current spending commitments, then that will remove what has been a major negative for the sector,” Chris Weafer, UralSib’s chief strategist, said in a note to investors today.

UralSib recommended shares of power generators OAO OGK-4 and OAO OGK-5, as well as state-controlled hydropower producer OAO RusHydro, because the bank’s 12-month price estimates are more than 50 percent higher than current stock prices.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net

Last Updated: April 3, 2009 02:46 EDT

RusHydro estimates cost of Boguchanskaya GES delay at more than R9bn http://businessneweurope.eu/users/subs.php

Alfa, RussiaThursday, April 2, 2009

According to Interfax, RusHydro estimates the cost of the postponement of the commissioning of Boguchanskaya GES at R7.28bn, which is needed for the halt in construction, while the annual maintenance of the station will cost an additional R1bn p.a. The postponement of the launch of Boguchanskaya GES to 2012 from 2010 was recently suggested by Oleg Deripaska, CEO of UC RusAl, RusHydro's partner in the BEMA project. RusHydro is strongly against these proposals owing to increasing costs as well as the fact that 70% of the construction work has already been completed. The BEMA project is being carried out on a parity basis by RusHydro and RusAl. It entails

the construction of Boguchanskaya GES with a target capacity of 3 GW along with an aluminum plant, which will be one of the main customers of the hydropower plant's electricity. CAPEX for the project totals R54.93bn, while R23.3bn has already been invested. Even though we do not yet know the final outcome of the dispute between RusAl and RusHydro, these debates will likely last for a long time. We therefore consider this as slightly NEGATIVE for the shares of RusHydro. First, it increases uncertainty surrounding the economics of the BEMA projects. Second, if the commissioning of the power plant is postponed, it will substantially worsen the NPV of the project, negatively impacting on RusHydro's value. However, we believe the BEMA project only marginally contributes to the company's value, and we therefore do not want to over emphasize the impact of this development.

Belon Says It Agrees to Refinance Short-Term Debt (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUSnmu8Fbd5A

By Maria Kolesnikova

April 3 (Bloomberg) -- OAO Belon, the coal producer part- owned by Russia’s third-largest steelmaker, said it agreed to refinance most of its 9 billion rubles ($270 million) of short- term debt and can keep up repayments at current coal prices.

“We are not getting hysterical over short-term debt,” Chief Executive Officer Andrey Dobrov said in an interview in Moscow yesterday.

The Novosibirsk-based company, in which OAO Magnitogorsk Iron & Steel and Dobrov both have 41 percent stakes, repaid 1.8 billion rubles on bank loans between November and April 1, he said. Belon is also seeking as much as 5 billion rubles of government-backed loans to repay 3.5 billion rubles of bonds.

Belon, aluminum producer United Co. Rusal and steelmaker Evraz Group SA are among Russian commodity producers that have struggled to repay borrowings after prices plunged as the global economy contracted. Belon forecast a fourth-quarter loss after demand from steelmakers for coking coal plunged and prices for thermal coal, which is used by power stations, fell 50 percent.

Belon rose as much as 1.5 percent and was unchanged at 5.32 rubles in Moscow at 8:50 a.m. in Moscow trading. The shares have slumped 60 percent this year, while Russia’s benchmark Micex Index gained 33 percent.

Dobrov, 46, said Belon may break even in 2009. The company contracted most of its thermal coal output for this year at $68 to $72 a metric ton on a so-called free-on-board basis, he said.

Rising Sales

Belon is selling as much as 260,000 tons of washed coking coal a month in the first half and is getting $55 a ton on a so- called ex-works basis, Dobrov said. It predicts sales may rise to 300,000 tons in the second half.

Coking coal for Russian steelmakers may rise by $10 a ton after a better-than-expected settlement between Australian mining company BHP Billiton Ltd. and Tokyo-based Nippon Steel Corp., he said. BHP and Nippon agreed to coking coal prices of $128-129 a ton, two industry executives with knowledge of the deal said last week. The global benchmark price in 2008 was a record $300 a ton.

Magnitogorsk will buy about 1.7 million tons of coking coal from Belon this year, Dobrov said. Belon is returning to quarterly supply contracts with its Russian customers, which also include OAO Novolipetsk Steel. It switched to monthly contracts after demand plunged in the fourth quarter.

Foreign Share Sale

Belon plans to export about 15 percent of its coking coal output this year, Dobrov said.

He reiterated the company’s plan to sell shares abroad. The market for initial public offerings won’t revive for at least 18 months, he added. Belon has previously said it may sell 20 percent of the company to investors in London or Frankfurt. Asian markets may be more attractive now, Dobrov said.

“Investors are so scared, and they lost so much in the current market, so I think they won’t come back sooner,” Dobrov said. “To make things worse, the commodity markets are at the bottom levels.”

Belon’s net debt was about 14 billion rubles at Jan. 1. That included 3 billion rubles denominated in dollars and euros, Dobrov said. The ruble has fallen 42 percent against the dollar in the past 12 months and 21 percent against the euro.

Short-term debt has dropped “significantly” from June 30, when it stood at 9 billion rubles, after repayments and refinancing agreements with banks including VTB Group, OAO Gazprombank and TransCreditbank, Dobrov said. The coal producer is in talks with lenders including VTB for a loan over at least two years to repay bonds.

Belon is also considering selling new three-year bonds to repay the 3.5 billion rubles of securities that mature or have put options, giving investors early redemption rights, between June and August.

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

Last Updated: April 3, 2009 03:55 EDT

Yakutia government proposes infrastructure bonds to Mechelhttp://businessneweurope.eu/users/subs.php

Alfa, RussiaThursday, April 2, 2009

Yesterday, the government of Yakutia said that it had made a proposal to Mechel on issuing infrastructure bonds to develop the Elga coal deposit. The same topic was discussed at a meeting between the president of Yakutia, Vyacheslav Shtyrov, and Russian Prime Minister Vladimir Putin on March 6. According to Mr. Shtyrov, the bonds could be acquired by state banks and pension funds. As this instrument is new to Russia, the law governing them is still under discussion and will not be passed before the autumn. Russian Railways is currently in the process of placing infrastructure bonds, while Transneft and Gazprom have also said they might use them. The news could be POSITIVE for Mechel if the central government agrees to back up the company and the law on infrastructure bonds is passed in the near future. In that case, Mechel could obtain the funds necessary to fulfill its CAPEX obligations.

Russia Mechel vehicle bought all preferred shareshttp://www.reuters.com/article/companyNewsAndPR/idUSB55077020090403

MOSCOW, April 3 (Reuters) - Mechel (MTL.N), Russia's largest coking coal producer, said its Skyblock Limited subsidiary bought all of the 138,756,915 preferred shares it placed this week.

Mechel said the shares, which have a nominal value of 10 roubles each, are now effectively treasury shares. (Reporting by Alfred Kueppers; editing by Melissa Akin)

Deripaska Says He’s Trailblazer for Russian Debt Restructuringhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCBtE94T08uM

By Yuriy Humber

April 2 (Bloomberg) -- Billionaire Oleg Deripaska, Russia’s biggest non-state debtor, said his success in renegotiating bank loans is a model that his compatriots will follow if they want to preserve what’s left of their assets.

Deripaska, whose companies owe more than $25 billion, according to the Kommersant and Vedomosti newspapers, said he’s in constant contact with banks on restructuring those loans and expects to win agreements that will let him keep control of his biggest holdings.

“We are having success in restructuring,” Deripaska said during a meeting with reporters in Moscow that started at 2 a.m. today. “Others will follow in our footsteps.”

Deripaska, 41, won a two-month moratorium on $7.4 billion that his aluminum company, United Co. Rusal, owes to more than 70 banks, including ABN Amro NV, Citigroup Inc., BNP Paribas SA and Merrill Lynch & Co., on March 6. Last week, Deputy Prime Minister Sergei Ivanov said Deripaska’s vehicle maker OAO GAZ is too big for the government to let fail because it employs “half of the city” of Nizhny Novgorod.

Russian companies owe foreign and domestic banks about $180 billion this year, though that figure doesn’t include the penalties that will have to be paid because “covenants have been broken,” Deripaska said.

The main goal now, Deripaska said, “is to not give up” assets to creditors. Doing that requires “convincing them to believe in the business model,” he said.

Alfa

GAZ, which owes 45 billion rubles ($1.34 billion), won’t go bankrupt “under any circumstances,” Deripaska said. “By the end of April, we’ll get an agreement with the banks on restructuring the debt,” he said.

Deripaska is having less success convincing fellow billionaires Mikhail Fridman and Pyotr Aven to reschedule payments to their Alfa Bank, Russia’s biggest non-state lender. Alfa last month said it won a ruling in Jersey’s Royal Court freezing 13.7 million pounds ($19 million) of assets controlled by Deripaska.

Alfa will continue to pursue the “usual measures” to recoup its $800 million loan to Deripaska’s holding company, Basic Element, Aven said in an interview published today in Vedomosti. His remarks were confirmed by the bank.

Alfa may agree to restructure the debt and even lend Deripaska more money if more collateral is provided, Aven said. In particular, Alfa is interested in Deripaska’s stakes in insurer Ingosstrakh, builder Transstroy and press distributor Rospechat, according to Vedomosti.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

Last Updated: April 2, 2009 07:00 EDT

GAZ Eyes Creation of Joint Venturehttp://www.themoscowtimes.com/article/600/42/375899.htm

03 April 2009 Bloomberg

GAZ is in talks with a foreign partner on setting up a car venture in Russia as the country's second-largest automaker seeks to tap demand once the economy recovers,

billionaire owner Oleg Deripaska said Thursday.

Talks were held within the last two days, Deripaska said at a meeting with reporters. GAZ does not plan to sell new shares, he said.

GAZ, the maker of a Russian version of Chrysler's Sebring sedan, considered partnering with General Motors last year to develop a $10,000 budget car for the Russian market as well as buying into a GM diesel engine venture in Italy. Deripaska declined to comment on whether the talks were with a U.S. carmaker or to give further details.

"The problem is their situation is even worse than ours," he said, regarding the potential partner. "As you mentioned, the U.S. auto industry has been in a difficult situation for the last eight years, tied to their pension liabilities, relations with suppliers."

Prime Minister Vladimir Putin this week allocated about $1 billion in state aid to Russian automakers, citing the state's forecast for a sales drop of as much as 60 percent this year. The government economy may contract 2.2 percent this year, according to the government.

U.S. President Barack Obama believes that GM, which has lost $82 billion since 2004, and Chrysler would benefit from a quick, negotiated bankruptcy to regain competitiveness, people familiar with the matter said Wednesday.

GAZ's financial results for 2008 were "reasonable," Deripaska said, declining to comment further. Talks on restructuring 45 billion rubles ($1.3 billion) of debts should be completed this month before price terms with suppliers are renegotiated, he said.

GAZ is operating at 30 percent of capacity, and demand for commercial vehicles, its biggest market, has plummeted 70 percent since last summer, Deripaska said. The Nizhny Novgorod-based maker bought a stake in Canada's Magna International in May 2007 before ceding the shares to banks in October on rising debt repayments.

"Our situation is different from America: They have a fundamental lack of demand" because the population can put off purchases of new models for a few years, said Deripaska. "We need the new cars, the new roads."

The company aims to roll out a new product range within six months, focusing partly on clients in agriculture with the new $6,000 GAZel-Farmer light commercial vehicle.

"We still see demand in this segment, but the price will play an important role," Deripaska said. "Prices are returning to 2003 levels. It may be a coincidence, but that's when the stimulated consumer boom started."

The carmaker also plans to retain the license to produce the Maxus van, which is also assembled in Britain by unit LDV. Deripaska, who is seeking a buyer for LDV, said he expected to bring in "a couple of new partners who will develop the product with us."

"Competition will be fierce and bloody," he said. Still, GAZ, which started production at its main factory in 1932, will not go bankrupt "under any condition."

Alfa and BasEl Step Back Into Ringhttp://www.themoscowtimes.com/article/600/42/375890.htm

03 April 2009By Ira Iosebashvili / The Moscow Times

Just two weeks after being pried apart by President Dmitry Medvedev, Alfa Group and Basic Element stepped back into the ring with a round of interviews, publicly making their cases in a fight over credit and collateral.

Alfa Bank president and co-owner Pyotr Aven said BasEl, Oleg Deripaska's troubled holding company, was not cooperating in the bank's efforts to restructure or repay debts of $800 million. Later in the day, Deripaska gave an interview on state television saying his efforts to restructure would serve as a "model" for Russian business.

Although Deripaska did not specifically refer to the ongoing litigation or his company's relations with Alfa, the comments appeared to answer one of Aven's primary contentions.

"Unfortunately, Basic Element is not being a model of cooperation in regards to our bank," Aven said in an interview with Vedomosti published Thursday. He said BasEl was not keeping Alfa Bank informed on the status of some of its largest units, which could be used as new collateral for additional lines of credit.

Alfa Bank is "not a monster out for others' blood," Aven said, but it will continue pursuing BasEl for the debt using everything at its disposal. "We will push for the fulfillment of obligations -- arrest assets, bank accounts, maybe bankrupt somebody -- the usual assortment," he said.

Aven said Alfa Bank would be willing to restructure Deripaska's loans and even provide new money if he would pay the restructured credits and be more forthcoming regarding the status of major holdings, including insurer Ingosstrakh, builder Transstroi and press distributor Rospechat.

"We, [BasEl's] biggest creditors, do not have clear information on which assets have already been pledged as collateral and which are still free," Aven said. "Is this normal?"

State bank VEB gave Deripaska $4.5 billion late last year to refinance his purchase of a blocking stake in Norilsk Nickel. Vedomosti and Kommersant have reported that Deripaska's companies owe more than $25 billion.

Aven singled out Ingosstrakh as a "very serious asset" for which Alfa could extend BasEl new financing. However, "no answer was forthcoming" to the offer, Aven said.

Of the $800 million owed by BasEl, Aven said "half" was overdue. BasEl has said its units owe Alfa $650 million.

When contacted for comment on the Aven interview, a source at BasEl referred The Moscow Times to comments by corporate finance director Andrei Yashchenko that were posted on the company web site March 17.

BasEl is "ready to provide assets as collateral if we can agree on acceptable parameters for restructuring," but it is not prepared to "do a large-scale 'fire' sale," Yashchenko said.

"We cannot give a 50 percent discount to the liquidation price -- that is unacceptable," he said in the document, which also said the company was "ready to discuss mutually acceptable solutions."

BasEl declined further comment on the matter.

The legal and public relations battle between two of the country's best-connected business groups has resounded throughout Russian and foreign courts and even in the Kremlin, forcing Medvedev into the role of referee.

Deripaska was the first of the country's billionaires to cede assets to banks last year as credit markets seized up and stock prices tumbled. In October, he gave up stakes in Canadian auto-parts maker Magna International and German builder Hochtief to Western banks after the stakes lost more than half of their market value.

At a February meeting in Irkutsk, Medvedev told Deripaska that he "absolutely agreed" that squabbling among billionaires could not be allowed to sink Russia's biggest producers and employers. Several weeks and lawsuits later, Alfa Group chairman Mikhail Fridman was invited to the Kremlin for a meeting with Medvedev.

Fridman and Aven control Alfa Bank, part of the larger Alfa Group holding.

En+ Group -- through which Deripaska controls the centerpiece of his vast BasEl conglomerate, United Company RusAl -- has complained since the meeting that Alfa has continued to be uncooperative.

Other creditors have been more willing to negotiate. RusAl said in February that it reached a so-called standstill agreement to halt repayments for two months on $7.4 billion of loans from more than 70 international and Russian banks.

On March 17, Medvedev defended struggling producers from private lenders that resist rescheduling payments, saying it was not the time for "corporate selfishness," and that banks must not be able to halt a company's operations -- even if they have legitimate

complaints.

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

A day later, the president met with Fridman, who used the meeting to say that Alfa Group was also a major employer and to highlight the good that its units have done.

Fridman said Alfa Group employed 250,000 people and has worked to avoid layoffs by continuing investments, including at TNK-BP, in which it is a 50-50 partner with BP. Alfa-controlled X5 Retail Group had opened dozens of new stores this year, he added.

Later in the day, Fridman and Deripaska issued a joint statement saying they would work to settle their disputes because they were friends.

Days later, however, the Moscow Arbitration Court ordered Deripaska's struggling developer Glavmosstroi to pay 502.6 million rubles ($15 million) to Alfa in an overdue loan and fees, turning down the defendant's motion to allow time for an amicable settlement.

Glavmosstroi said it would appeal.

Deripaska was upbeat in his interview Thursday, touting negotiations that his GAZ carmaker was holding with an unidentified foreign partner on setting up a venture in Russia. He said his main goal now was hanging on to his assets and "convincing [creditors] to believe in the business model."

"We are having success in restructuring," Deripaska said. "Others will follow in our footsteps."

Alfa May Sell Up to 49% Stakehttp://www.themoscowtimes.com/article/1009/42/375901.htm

03 April 2009 Combined Reports

Alfa Bank, the country's largest privately owned lender, is ready to sell up to 49 percent to get capital to develop its operations, president Pyotr Aven said in an interview published Thursday.

"The only possible investor today is the state. I think that the state buying into the capital of private banks is today an almost unavoidable evil," Aven told Vedomosti. "We are ready to give the government up to, but not including, a controlling stake in exchange for a capital injection."

Russia is working on a new package of support for the banking system and has said it

could potentially take minority stakes in lenders. So far, assistance for the sector has largely focused on state-controlled Sberbank and VTB, which have been tasked with financing the real economy and smaller banks.

In the interview, Aven said Alfa has received just 10.2 billion rubles ($300 million) in a subordinated loan as part of the government's economic package, while Sberbank got 500 billion rubles and VTB received 400 billion rubles.

Aven estimated that Russian companies have to pay back a total of $220 billion worth of debt this year -- $120 billion in rubles to banks within the country, $60 billion to foreign banks and $40 billion in dollar loans to Russian banks.

"This number is not liftable. So there will be a chain of bankruptcies," he said.

Aven told The Financial Times last week that bad loans in Russia could hit 15 percent to 20 percent by year-end. He also predicted hundreds of bankruptcies in the financial sector, while the state would focus on saving the 20 to 30 largest of the 1,200-plus lenders -- a prediction he repeated Thursday.

The problem of nonperforming loans "will become huge, and one way of recapitalizing banks without providing them with direct support is to depreciate the ruble exchange rate to allow the banking sector to report foreign-exchange gains," Natalya Orlova, chief economist at Alfa, wrote in a research note Wednesday. "We do not believe the current stability of the ruble exchange rate is sustainable in the long run."

The government may provide as much as 750 billion rubles ($22 billion) to support the economy and banking system in April and May, Orlova wrote.

The ruble strengthened 0.6 percent to 38.69 Thursday afternoon against the Central Bank's target basket, which is made up of about 55 percent dollars and the rest euros.

Alfa Bank predicted last month that the ruble could reach 49 against the basket by the end of 2009. That's 21 percent weaker than Thursday's rate.

RusAl and Evraz reportedly in talks with VEB on restructuring debts http://businessneweurope.eu/users/subs.php

VTB CapitalApril 2, 2009

According to Vedomosti, citing an unnamed source, UC RusAl and Evraz are in talks with the Bank for Development (VEB) on restructuring their debts to the bank. According to the speculation, the VEB might issue bonds on UC RusAl's debt, which could be swapped into RusAl bonds convertible into shares.

For Evraz, a bond issue on the company's debt to the bank is also being considered. No

other details were provided.

Both RusAl and Evraz attracted credits from the VEB last year (USD 4.5 bn and USD 1.8bn, respectively). These were short-term debts and are due to be paid towards the end of 2009. Obviously, for both companies the VEB's terms are unfavourable and they are looking to restructure (both also remain the most debt-laden companies in the metals and mining universe). This is especially important for RusAl as it is also trying to restructure the remaining part of its short-term debt. A bond issue was previously discussed as one of the options, as it might give the company a 2-3 year break.

VTB RUB 6bn loan restructured for three months - Razgulay negotiating restructuring bond issueshttp://businessneweurope.eu/users/subs.php

VTB CapitalApril 2, 2009

Vedomosti reports today that VTB has agreed to restructure its loan to Razgulay amounting to RUB 6.bn (USD 191mn) for the three months which it will take to decide on further actions while the agro producer is to increase collateral by another RUB1-1.5bn. According to the paper, the company is trying to negotiate restructuring for five years.

Meanwhile, Razgulay has three bond issues to redeem in April-May totalling USD 235mn. The company made an offer to its bond holders to redeem 25% of the issues now, with the remaining part being redeemed in 2010. Bondholders are asking for 35% to be redeemed now, while company president Igor Potapenko says that Razgulay does not have this amount of money. The result of the negotiations is to be announced in the coming days.

Razgulyay's debt consists of USD 500mn of bonds and USD 335mn of bank loans.

VTB hopes for share placement cash by October-CEOhttp://www.reuters.com/article/rbssBanks/idUSL310299120090403

Fri Apr 3, 2009 2:25am EDT

MOSCOW, April 3 (Reuters) - Russia's second-biggest lender VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) hopes to receive money from an additional share placement by October, CEO Andrei Kostin told Reuters on Friday.

Russia's government has allocated 200 billion roubles ($5.95 billion) to buy shares in state-controlled VTB to help the bank meet capital requirements [ID:nL5387234].

Asked about a proposal to issue special OFZ treasury bonds as a way for the state to boost banks' capitalisation, Kostin replied: "That is not for VTB". (Reporting by Dmitry Sergeyev, writing by Toni Vorobyova)

VTB to Open Unit As Arrears Increasehttp://www.themoscowtimes.com/article/600/42/375902.htm

03 April 2009 By Jessica Bachman / The Moscow Times

VTB Group on Thursday announced their expansion into yet another financial field, saying it will begin buying up struggling firms' accounts receivable as payment arrears across the country skyrocket.

"Our factoring unit will open up new financing opportunities for those companies that currently don't have access to credit," said Michael Yakunin, vice president and head of VTB's financial subsidiaries division.

Factoring, or selling accounts receivable to third parties, has become an increasingly popular practice in Russia in recent years. In 2008, total invoices transferred to the factoring market totaled $22.1 billion, more than twice as large than in 2006.

VTB, Russia's second-largest lender, is entering the market as Russian producers are confronting a rising number of delayed payments from clients, liquidity concerns and limited access to capital markets.

"The management decided to develop the factoring business ... to support the Russian government's plan to pacify the current financial crisis," said Yakunin, who added that the unit aimed to become one of the top-three factoring companies in the country by the end of the year.

VTB's largest would-be competitor, Eurokommerz, is currently facing bankruptcy with 28 billion rubles ($840 million) in debt and a portfolio that is 84 percent delinquent, managing director Ilya Volkov said in a recent interview with Vedomosti.

In March, the company entered technical default on a 5 billion ruble bond issue, citing a "liquidity shortage" and "a difficult situation on the financial markets." In the fourth quarter of 2008, the company was unable to meet a series of payments to creditors or pay coupons on other bond issues.

"The situation hasn't ameliorated, and bankruptcy is still highly possible if an agreement with creditors can't be reached," said Dmitry Belkin, the company's investor-relations manager.

Market participants, however, do not expect Eurokommerz's woes to rub off on a state-

owned financial giant.

"I believe VTB could do very well, because the financial crisis is a good environment for some financial services products, and factoring is one of them," said Alexander Tyutyunnik, a partner at KPMG in Russia.

"In this environment, companies are struggling because retailers are delaying their payments by as much as four months. You need cash to operate, and factoring is the instrument that can provide you with the cash," Tyutyunnik said.

Even VTB's competitors do not see much going wrong for the bank.

"VTB has a strong balance sheet compared with other factoring companies," said a representative of a top factoring company who refused to be named because of his company's delicate position during the crisis. "It's a state-owned bank. ... You don't pay them, you're not paying the state."

East Capital Invests SK320 Million in Russia’s Probusinessbankhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=awy6MfDS0xPA

By Toby Alder

April 3 (Bloomberg) -- East Capital Explorer AB’s capital fund East Capital Financial Fund has invested 320 million kronor ($39.7 million) in Russia’s Probusinessbank BRD, Svenska Dagbladet reported.

The Russian bank needed new capital and East Capital invested the equivalent of 11 percent of the funds total capital in the bank, the newspaper reported.

Last Updated: April 3, 2009 01:30 EDT

Russia's PIK mandates Sberbank for restructuringhttp://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL38295620090403

Fri Apr 3, 2009 2:11am EDT

MOSCOW, April 3 (Reuters) - Russian developer PIK (PIKK.MM: Quote, Profile, Research, Stock Buzz) mandated Russia's biggest bank, state owned Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz), to restructure its 44.8 billion rouble ($1.33 billion) loan portfolio, PIK said on Friday.

Its main creditors are Sberbank, fellow state banks VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) and VEB, and private banks Rosbank and Promsvyazbank, it said. (Reporting by Yuliya Komleva; writing by Melissa Akin)

Ford in talks to cut work week at Russia planthttp://uk.reuters.com/article/governmentFilingsNews/idUKL296421420090402

Thu Apr 2, 2009 6:29pm BST

ST PETERSBURG, Russia, April, 2 (Reuters) - U.S. carmaker Ford Motor Co (F.N: Quote, Profile, Research) is in talks with unions to cut the working week at its sole Russian assembly plant to compensate for expected falls in demand, a Ford spokeswoman said on Thursday.

"As we forecast continuing overall declines in sales of new cars on the Russian market, Ford ... is proposing to cut the work week to four days, as we did at our European plants," Ford spokeswoman Yekaterina Kulinenko said by email.

She said that under Russian labour laws it would take two months to put a cut into effect from the day the order is given to cut the week at the plant in Vsevolozhsk, just outside St Petersburg. "There has been no order yet."

The union at the plant issued a statement protesting the proposal.

"The union committee believes the company is conducting its business in bad faith in the financial crisis by imposing a partial work week, and (the union) retains the right to appeal to the regional government ... to investigate the situation at the plant," the union said.

The government of Prime Minister Vladimir Putin, facing rising unemployment, has told Russian carmakers not to emulate U.S. car giant GM in making heavy job losses at its plants.

Putin's government has also suggested foreign carmakers with operations in Russia were technically eligible for government aid to the industry.

Russian media have reported that Ford reduced the price of the Russian-assembled Focus to a level just below the cut-off point for state subsidies on car loans.

The plant had been planning to produce 100,000 Focuses and recently launched assembly of the mid-range Mondeo at the Vsevolozhsk plant. It had planned to produce 25,000 Mondeos.

New car sales have fallen 36 percent in Russia this year, with 252,314 sold in January and February, the Association of European Businesses has said. Last year, 3.2 million automobiles worth a total of $69 billion were sold in Russia.

Ford shares rose were up 6.57 percent at 1623 GMT in New York on Thursday on better-than-expected sales in the United States and Europe. [ID:nNL2938160] (Reporting by Denis Pinchuk; writing by Melissa Akin, editing by Will Waterman)

Telenor asks for postponement againhttp://businessneweurope.eu/users/subs.phpRencap, RussiaThursday, April 2, 2009According to Vedomosti today (2 Apr), Telenor has appealed the decision of the Federal Arbitration Court of the West-Siberian District, which on 23 Mar dismissed Telenor's application to postpone an earlier decision made by the Omsk Arbitration Court regarding its $1.7bn liability. A hearing has been set for 28 Apr. Telenor is applying to the court to avoid the sale of shares ahead of a hearing in the court of cassation in Tyumen set for 26 May. Previously, the Omsk court ruled that Telenor is liable for $1.7bn in damages for VimpelCom's late entry into the Ukrainian market and following this decision bailiffs seized Telenor shares on 12 Mar 2009.

Overall, we stick to our previous view. Although the threat of selling shares remains, we do not believe in a worst case scenario. We think the next potential step in this case (negative for Telenor), will be the actual sale of Telenor shares. As we think it is unlikely to happen, further negative newsflow in this case is likely to be limited, in our view. On the positive side, if the court allows Telenor's appeal it is likely to be taken positively by the market, in our view.

Burger King Is Cominghttp://www.themoscowtimes.com/article/1009/42/375900.htm

Fast-food chain Burger King may open its first store in Russia by 2010, Kommersant reported Thursday.The restaurant posted an announcement on the career services site Headhunters.ru that it was seeking managers who would be expected to work in real estate and construction. Burger King, the second-largest fast-food restaurant in the world, would enter a highly competitive marketplace, with McDonald's operating 240 restaurants in the country and Rostik's-KFC running 170 restaurants.(MT)

Lufthansa Appeal Denied

http://www.themoscowtimes.com/article/1009/42/375900.htm

The Moscow Arbitration Court declined a Lufthansa appeal against tax claims on its operations in Russia, Interfax reported Thursday.

The contested sum is about 230 million rubles ($6.9 million), and the case has moved through the Russian court system since late 2007, a Lufthansa spokesman said. He declined to comment on the court decision until the company receives the court's letter.

The airline claims that it owes no taxes because of a 1971 bilateral agreement between Germany and the Soviet Union that exempts airlines from being taxed on operations abroad if they are paying taxes in their home countries, the spokesman said.

Lufthansa has contested similar tax claims in Russia before and won one of them in 2002, the spokesman said. (MT)

Lebedev's Airline Loses Its Wingshttp://www.themoscowtimes.com/article/1009/42/375895.htm

03 April 2009 Bloomberg

Billionaire Alexander Lebedev's German airline Blue Wings lost its license after regulators concluded that the discount carrier had "business problems," a decision Lebedev said he would appeal.

"Effective immediately, Blue Wings is no longer allowed to transport passengers, mail and/or cargo," the LBA, Germany's aviation authorities, said in a statement on its web site that is dated March 31. In January, the LBA turned Blue Wings' license into a three-month permit that expired March 31.

Lebedev, who owns about 48 percent of Blue Wings, said Thursday that concerns over the carrier's financial health were unfounded and that he plans to appeal the decision. The airline, with a fleet of 10 Airbus A320s, had sales of about 150 million euros ($202 million) last year and revenue growth of 25 percent this January and February, Lebedev said.

"We didn't give the German government any reasons to behave like this," Lebedev said.

Blue Wings operated regular flights between Germany and Russia and charter flights to tourist destinations in Turkey and the Middle East. Lebedev bought London's Evening Standard newspaper in January and controls about 29 percent of Aeroflot, Russia's biggest airline.

Lebedev said he is still committed to uniting Blue Wings with his Russian low-cost carrier Red Wings.

Nuclear-waste contract opposedhttp://fairplay.co.uk/login.aspx?reason=denied_empty&script_name=/secure/display.aspx&path_info=/secure/display.aspx&articlename=dn0020090402000009

Daily News 02 Apr 2009

RUSSIAN environmental groups are urging rejection for a contract renewal to ship radioactive waste through St Petersburg’s port to a storage facility at Ust-Luga on the Gulf of Finland. Greenpeace told Fairplay that it had urged Russia's government-owned nuclear fuel trading company Techsnabexport (Tenex) not to renew its contract to accept uranium hexafluoride ...

Activity in the Oil and Gas sector (including regulatory)

TABLE-Russian oil output rises in March, exports fallhttp://uk.reuters.com/article/oilRpt/idUKL212681620090402

Thu Apr 2, 2009 10:17am BST MOSCOW, April 2 (Reuters) - Russia's oil output rose in March to 9.79 million barrels perday (41.44 million tonnes) from 9.72 million bpd in February, while exports via pipelinemonopoly Transneft (TRNF_p.RTS: Quote, Profile, Research) fell to 4.22 mln bpd from 4.33 million bpd. The following oil production and exports data were supplied by Russia's Energy Ministry. The volume figures are in millions of tonnes and show the month's total and the year todate. Percentage change figures are based on daily volumes. OIL AND CONDENSATE PRODUCTION TRANSNEFT EXPORTS Pct Change vs Pct Change vs Mar 09 Feb 09 Mar 08 YTD Mar 09 Feb 09 Mar 08 YTDRosneft 9.615 1.8 -0.4 27.801 3.672 -4.2 1.8 11.193LUKOIL 7.880 -0.2 3.4 22.806 2.284 -4.1 -13.9 6.857TNK-BP 5.864 1.7 1.9 16.848 3.134 11.7 2.2 8.233Surgutneftegas 5.034 -0.5 -3.6 14.762 2.180 -8.4 -15.5 6.846Gazprom Neft 2.487 -0.2 -5.5 7.255 1.362 1.1 -1.4 3.992Slavneft* 1.611 0.1 -4.4 4.681 0.0 n/a n/a 0.0Tatneft 2.219 0.3 -1.3 6.425 1.224 -16.6 14.6 3.713Gazprom 0.958 -1.9 -15.7 2.779 0.016 2.2 68.0 0.046Bashneft 0.966 -2.6 -0.8 2.823 0.153 -9.9 -61.8 0.465Russneft 1.086 -0.3 -9.9 3.193 0.408 -4.2 17.3 1.202Novatek 0.262 0.8 22.0 0.748 n/a n/a

Small producers 2.201 2.8 12.0 6.307 0.745 0.3 18.7 2.220PSA operators 1.239 4.3 28.3 3.547 0.105 -5.2 36.3 0.305TOTAL OUTPUT 41.437 0.8 0.4 120.021 n/a n/aTotal Russian exports through Transneft 15.628 -2.6 -1.8 46.057including Caspian pipeline 0.344 -4.3 272.6 0.985Transit through Russia:from Azerbaijan 0.224 -7.3 167.9 0.610from Kazakhstan 1.834 -3.0 2.8 5.308Belarus production 0.146 0.1 16.7 0.400TOTAL TRANSNEFT THROUGHPUT 17.833 -2.7 -0.4 52.375Routes other than Transneft** 1.999 5.0 91.2 6.167 NOTES: *Slavneft is half-owned by TNK-BP Holding and Gazprom Neft. ** Some companies export crude by sea tankers, filling them at ports close to offshoreoilfields, or by rail, thereby bypassing Transneft, the Russian crude oil pipeline monopoly. Russia was exporting up to 1 million bpd of crude oil by alternative means such as railand river in the past years but volumes dropped significantly in 2005 due to very high crudeoil export duties. To read a story on Russian oil production and exports in March, please click on[ID:nL1980608]. To see a table of Russia's gas production in February click on [ID:nL2186271]. To see a table of Russia's seaborne exports in February, click on [ID:nL2254433]. For key Russian statistical oil reports [O/RUS1] For key Russian oil data <OILSTAT/RU>

Russia to Supply China with Significant Portion of Oil Needs http://www.voanews.com/english/2009-04-02-voa10.cfm

By Anya Ardayeva Moscow02 April 2009A global credit crunch is prompting Russia to diversify its energy sales eastwards. In February, Moscow and Beijing signed an agreement, where Russia would supply oil to energy-hungry China for the next 20 years. In exchange China will lend Russia $25 billion, which will help fund an extension of the new Siberian pipeline to the Chinese border. Analysts in Moscow say that while the deal is beneficial for both Russia and China, it might not be all good news for the Western customers of Russian oil.

Russia shifts energy exports from main market

The oil Russia pumps from its frozen, Siberian fields, with one energy deal, will soon provide a significant amount of China's daily needs, about four percent. Russia will deliver about 300,000 barrels of crude a day. In return, China will finance the pipeline Russia will build from its eastern Siberian oil fields to the Chinese border.

Energy analysts say the deal is another indication of Russia's eagerness to shift some of its energy exports from its main market, Europe.

Re-orientation towards the East

"What is happening right now with China is a logical development of re-orientation of Russian politics and economy towards the East which has been happening for the past five, six years," Evgeny Volk said. Russia's state-owned petroleum company Rosneft, will get $15 billion of the work and the state pipeline owner Transneft, is set to receive $10 billion.

Construction has been delayed repeatedly as the two countries bargained over the cost of transporting crude oil to the border.

But the Russian oil industry, which for decades has been a main source of revenue for the country, has suffered a dramatic shortfall as the price of oil fell during the global economic crisis.

Energy analysts say the economy is pushing Russia to build closer ties with the Chinese. They say Russia also is seeking allies in the East where the Kremlin is seen more favorably than in the West.

Evgeny Volk, who heads the Moscow office of the Heritage Foundation says, "Economically it is also close to the majority of states in that region." And, he adds, "it fits better in the Asian states community when it comes to cooperation in politics and economy."

Using energy as a diplomatic weapon

Russia has used energy as a diplomatic weapon with the West. In January, it shut off gas supplies to Ukraine over a pricing dispute, leaving hundreds of homes in Ukraine without heating for three weeks. Russia also opposes Kyiv's desire to join NATO. Tom Mundy is an equity strategist at Moscow's Renaissance Capital investment bank. "So there's clearly a threat," Mundy asserts. "There's a precedent of a threat and it's entirely feasible that as Russia's bargaining position improves, that can be used again.

Mundy says there is no immediate threat to the Western consumers of Russian oil and gas. But the pipeline's first link should be complete later this year and he adds, once the

crude is flowing, Russia will have leverage that will only grow along with the world's reliance on natural energy resources.

Russian gas flow to Europe down:Ukraine's Naftogazhttp://www.reuters.com/article/rbssEnergyNews/idUSL282301320090402

Thu Apr 2, 2009 9:56am EDT

KIEV, April 2 (Reuters) - Russian gas transit to Europe via Ukraine fell by nearly 53 percent to 16.4 billion cubic metres in the first quarter of 2009 from 34.7 billion in the same period of 2008, state energy company Naftogaz said on Thursday.

"Latest data show from the first quarter put transit at 16.4 bcm," Naftogaz spokesman Valentyn Zemlyansky told Reuters. "Transit had initially been planned at 28.4 bcm."

Zemlyansky gave no explanation for the decline, but an official from Ukraine's pipeline monopoly Ukrtransgaz last month linked the decline to a fall in consumption in Europe. (Reporting by Pavel Polityuk, writing by Ron Popeski)

Moldova pipeline for Russian gas under repairhttp://www.google.com/hostednews/ap/article/ALeqM5hZg3MA-WL-FQsRAvC8zMU0jPLL2QD97A8S680

19 hours ago

CHISINAU, Moldova (AP) — A gas official says that a fire in a pipeline carrying Russian gas to the Balkans has been extinguished.

Aleksandr Gusev, head of Moldova-Gaz, says Thursday that repair work to the ruptured pipeline will take three days.

Piotr Stepanov, an official in the separatist Trans-Dniester region, says that 110 feet (30 meters) of pipeline needs be replaced.

A blast Wednesday was heard six miles (10 kilometers) away and flames leapt 165 feet (50 meters) high. Nobody was hurt. The fire was extinguished late that day.

Trans-Dniester officials said that the blast had been caused by a landslide after days of heavy rain in the hilly region, which is controlled by separatists.

Watchdog launches MOL stake sale probehttp://www.upstreamonline.com/live/article175339.ece

News wires

Hungary's financial markets watchdog PSZAF will investigate the sale of a stake in Hungarian oil group MOL by Austria's OMV to Russia's Surgutneftegaz, a PSZAF spokesman said today.

The watchdog has launched its probe at MOL's request, its spokesman Istvan Binder told Reuters.

The spokesman said the regulator would look into whether the deal breached Hungary's capital market law. He declined to predict when the investigation will end.

Oil producer Surgutneftegaz said on Monday that it would buy 21% of MOL from OMV for €1.4 billion ($1.8 billion), or nearly twice MOL's trading price on the Budapest bourse on the previous Friday.

Both Hungary's government and opposition said they supported MOL's independence.

Friday, 03 April, 2009, 07:03 GMT  | last updated: Friday, 03 April, 2009, 07:03 GMT

BasEl values RussNeft at $7.5 bln-$8 bln; may end talks with GazpromNeft – Vedomostihttp://www.interfax.com/3/484857/news.aspx

MOSCOW. April 3 (Interfax) -Oleg Deripaska's Basic Element group(Basel) has valued oil company RussNeft (RTS: RUSN) at $7.5 billion-$8billion excluding debt. Gazprom Neft (RTS: SIBN), the leading candidate to buy RussNeftfrom Basel, had only been prepared to assume the company's debts, forwhich it would have provided new security, the newspaper Vedomostireported. As a result, talks between Basel and Gazprom Neft have come to astandstill. Moreover, about two weeks ago Sberbank Russia (RTS: SBER) agreed torestructure a Basel loan raised in 2007 totaling $2.8 billion. The loanwas originally received by the group's Russian Machines division securedwith 61% of shares in auto maker GAZ (RTS: GAZA). Later the loan wasreissued to RussNeft. Under the restructured terms, the loan matures inseven years, with no principal payments due until 2012. Sources told Interfax previously that companies in the Basel grouphad hired Troika Dialog (RTS: TROY) and Gazprombank to lead talks onrestructuring the group's debt or selling RussNeft. RussNeft's debt to Sberbank totaled $1 billion and 14.7 billionrubles at the end of 2008.

TNK-BP to Increase Its Energy Efficiency by 7% in 3 Years Compared to the Level of Its Actual Energy Consumption in 2008http://www.tnk-bp.com/press/news/2009/4/1468/

April 02, 2009, Thursday

In 2009, TNK-BP has opened a new phase in implementation of a program aimed at raising the energy efficiency of oil production and is going to increase it by 7% in three years compared to the level of actual energy consumption by the company in 2008, according to company’s materials.

The necessity of changing the approach to power consumption expenditures is caused by the 20% rise of electricity prices and the expected considerable surge of prices in the wake of planned liberalization of the energy market by 2011. The complexity of this problem is augmented by the fact that the water cut of the well stream grows due to the high depletion of the main fields of TNK-BP.

In accordance with the program, subsidiaries of TNK-BP started implementation of infrastructure projects, including those for maximization of pumping equipment efficiency and optimization of well stream transportation flows, and assessment of various scenarios for altering the field development strategies and increasing their energy efficiency. All these measures will reduce the energy consumption of the company by 1.5–2% by early 2010.

Discussions on development of the energy-saving system are now underway in the State Duma (Russian Parliament). The goals set in the draft legislative document of the State Duma may only be achieved by means of highly efficient and well balanced mechanisms of stimulating and administrative regulation. According to the company, attainment of these goals requires considerable changes in the conceptual approach of this document to establishment of a certain “sufficient level” of energy consumption for all consumers with payments for exceeding this level and to control of compliance with these requirements by state authorities. The company holds that this mechanism will not objectively stimulate higher energy efficiency, will result in unproductive diversion of resources, and, most importantly, will amplify corrupt practices during its implementation.

Source: Prime-TASS

TNK-BP's Samotlor Field

http://www.themoscowtimes.com/article/1009/42/375900.htm

TNK-BP plans to invest about $1 billion in the Samotlor oil field every year until 2012 to maintain output, Interfax reported Thursday.

Production from the field will be stable for five years at about 30 million tons a year, it said, citing an unidentified TNK-BP official. (Bloomberg)

“Shtokman companies should be registered in Murmansk”http://www.barentsobserver.com/shtokman-companies-should-be-registered-in-murmansk.4576317-16178.html

2009-04-03The companies engaged in the development of the Shtokman field should be registered in Murmansk, the region’s new governor Dmitry Dmitriyenko said yesterday.

In a meeting with the Murmansk regional parliament, Mr. Dmitriyenko underlined that the companies involved in the development of the Shtokman field should be registered in Murmansk. That will help boost the region’s tax revenues, he said.

He also said that he would go to Moscow this week to raise the issue in talks with federal authorities, a video report  from the Murmansk  regional administration says.

Dmitry Dmitriyenko was last week approved as the new governor of Murmansk Oblast. He replaced the long-serving Yury Yevdokimov, who was an active proponent of international cooperation in the Shtokman project. On several occasions, Mr. Yevdokimov called the Shtokman field a pilot project for international offshore petroleum cooperation.

Gazprom

Gazprom Balks at $8 Billion Price for Russneft, Vedomosti Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBCIkaJZpUDs

By Torrey Clark

April 3 (Bloomberg) -- OAO Gazprom Neft suspended talks on buying OAO Russneft after billionaire Oleg Deripaska sought as much as $8 billion for the crude producer, Vedomosti said, citing two people familiar with the negotiations.

The oil arm of Moscow-based OAO Gazprom doesn’t want to pay cash in addition to assuming Russneft’s debts of $5.6 billion, Vedomosti said. OAO Sberbank, Russneft’s biggest creditor, initiated the sales talks, the newspaper said.

Negotiations between the companies broke down after state- owned Sberbank agreed to restructure a $2.8 billion loan to Russneft secured with shares of OAO GAZ, the automaker owned by Deripaska’s Basic Element holding company, the newspaper said.

To contact the reporter on this story: Torrey Clark in Moscow at tclark8@bloomberg.net.

Last Updated: April 3, 2009 01:21 EDT

Gazprom says Turkey to get more gas http://www.hurriyet.com.tr/english/domestic/11352138.asp?scr=1

Friday, April 03, 2009 08:36MOSCOW - Russia's Gazprom will increase supplies to Turkey via the Blue Stream pipeline after it was forced to cut supplies to the Balkans by 40 percent because of a

blast on a pipeline in Moldova, the firm said late Wednesday.

Botaş, the Turkish pipeline company, was using gas in storage units to cover the shortfall, because of a halt in gas flow that occurred in the separatist region of Transdniestria.

APRIL 2, 2009, 1:34 P.M. ET

Eni's Scaroni, Gazprom's Miller Discuss South Stream Project http://online.wsj.com/article/BT-CO-20090402-712780.html

ROME (Dow Jones)--The heads of Russian gas giant OAO Gazprom (GAZP.RS) and Italy's largest energy company, Eni SpA (ENI.MI), discussed the progress of the South Stream natural gas pipeline at a meeting in Moscow Thursday, Eni said.

In a statement, Eni said Chief Executive Paolo Scaroni and Gazprom head Alexei Miller looked at "the progress in implementing the pre-investment stage of the South Stream project, given its strategic relevance to providing a significant contribution to secure direct gas supplies to Europe."

The EUR10 billion pipeline - a 50-50 joint venture between the two companies - is expected to pump as much as 30 billion cubic meters of Russian gas into the European market.

-By Luca Di Leo, Dow Jones Newswires; +39 06 697 66921; luca.dileo@dowjones.com

Eni, Gazprom chiefs meet, silent on Gazpromnefthttp://uk.reuters.com/article/oilRpt/idUKL296673020090402

Thu Apr 2, 2009 7:23pm BST

MILAN, April 2 (Reuters) - The chief executives of Italy's oil and gas major Eni (ENI.MI: Quote, Profile, Research) and Russia's Gazprom (GAZP.MM: Quote, Profile, Research) discussed joint projects on Thursday, Eni said, but it did not mention a looming deadline for a $4 billion deal.

Gazprom's call option on a 20 percent stake in Gazpromneft (SIBN.MM: Quote, Profile, Research), the oil wing of gas export monopoly Gazprom, held by Eni and valued at about $4.3 billion, expires in early April.

Industry sources said last week Gazprom was lining up funds for the deal.

Eni's Paolo Scaroni and Gazprom's Alexei Miller met in Moscow and "talked about the implementation of the strategic partnership agreement established in November 2006 and the further development of their joint projects," Eni said in a statement.

Eni and Gazprom have declined official comment on the Gazpromneft option as the deadline approached, and Gazprom's statement on a March 24 meeting between Miller and Scaroni also failed to mention it.

Eni said on Thursday that the two top managers also discussed progress in implementing the pre-investment stage of the South Stream project, aimed to take Russian gas to Europe under the Black Sea bypassing Ukraine. (Reporting by Svetlana Kovalyova, editing by Anthony Barker)

UPDATE 1-Polish PM says Gazprom, PGNiG agree gas contracthttp://uk.reuters.com/article/oilRpt/idUKL298325820090402

Thu Apr 2, 2009 3:16pm BST

* Gazprom, PGNiG clinch gas deal running until end-2009

* Prime Minister Vladimir Putin assures deal's approval

* Long-term deal talks still ongoing

(Adds background)

WARSAW, April 2 (Reuters) - Russia's Gazprom (GAZP.MM: Quote, Profile, Research) and Poland's gas monopoly PGNiG PGNI.WA have agreed on a gas contract until the end of this year, Poland's Prime Minister Donald Tusk said on Thursday.

Poland has not received all of its contracted gas supplies from Russia after a Ukrainian intermediary RosUkrEnergo, an opaque joint venture between Gazprom and two Ukrainian businessmen, ceased deliveries following the Moscow/Kiev gas row in January.

"I have spoken to (Russia's) Prime Minister Putin about gas...the good news is that talks on short-term contract between PGNiG and Gazprom are finalised," Tusk told a news conference.

"Prime Minister Putin assured me he is ready to approve the deal," he added.

PGNiG was unavailable for an immediate comment.

The gas monopoly imports about 9.5 billion cubic metres of gas from Russia under two contracts. The main, long-term, Yamal deal expires in 2022, while the short-term agreement with RosUkrEnergo was due by end-2009.

The Prime Minister said talks continued to replace the RosUkrEnergo deal past 2009 and fill the annual gap in gas supplies of 2.5 billion cubic metres.

(Reporting by Adrian Krajewski, writing by Patryk Wasilewski)

Poland, Gazprom Agree on Contracthttp://www.themoscowtimes.com/article/1009/42/375903.htm

03 April 2009 Reuters

WARSAW -- Gazprom and Poland's gas monopoly PGNiG have agreed on a gas contract until the end of this year, Poland's Prime Minister Donald Tusk said Thursday.

Poland has not received all of its contracted gas supplies from Russia after a Ukrainian intermediary RosUkrEnergo ceased deliveries following the Moscow-Kiev gas dispute in January.

"I have spoken to Prime Minister [Vladimir] Putin about gas. ... The good news is that talks on a short-term contract between PGNiG and Gazprom are finalized," Tusk told a news conference. "Prime Minister Putin assured me he is ready to approve the deal," he added.

The gas monopoly imports about 9.5 billion cubic meters of gas from Russia under two contracts. The main, long-term Yamal deal expires in 2022, while the short-term agreement with RosUkrEnergo was due by the end of 2009.

Gazprom Sells Russia’s 1st Corporate Bond in 9 Months (Update2)http://www.bloomberg.com/apps/news?pid=20601085&sid=anf.RyBnKgTw&refer=europe

By Denis Maternovsky

April 2 (Bloomberg) -- OAO Gazprom, Russia’s largest company, sold 400 million Swiss francs ($353 million) of bonds, the first international corporate debt issue from the country in nine months.

Moscow-based Gazprom, which supplies a quarter of Europe’s gas, was seeking a minimum 200 million francs, according to a banker involved in the transaction. The two-year note sale may open the door for other Russian companies including oil pipeline

operator OAO Transneft and lender VTB Group to issue bonds, said Luis Costa, an emerging-markets debt analyst at Commerzbank AG.

“The very fact that the deal is being done shows the market’s ready to accept new Russian debt,” said London-based Costa. “There’s clear room for top-quality Russian credits.”

Gazprom’s bond sale was the first by a Russian company to international investors since July, a month before the country fought a war against the neighboring nation of Georgia. The conflict froze bank lending and helped send Russian stocks tumbling 63 percent in the second half, the biggest six-month decline since the country’s sovereign default a decade earlier.

This was the first bond issue in Swiss francs for Gazprom, which has dollar, euro, yen and ruble-denominated debt, according to data compiled by Bloomberg. Today’s sale was oversubscribed and Gazprom priced the notes with a coupon of 9 percent, said the banker involved, who declined to be identified.

Denis Ignatyev, a Moscow-based spokesman for Gazprom, didn’t comment beyond a company statement on the bond sale.

Improved Sentiment

Gazprom’s debt issue reflected a recovery in investor sentiment toward Russia, which has seen the benchmark Micex Index of stocks rally 32 percent this year, the most of any equities market after China’s Shanghai Stock Exchange Composite Index and the Lima General Index in Peru, Bloomberg data show.

“Gazprom’s successful bond sale is certainly a good sign for other potential borrowers in Russia,” said Stas Ponomarenko, a fixed-income analyst at ING Bank NV in Moscow.

Russian companies need to refinance about $100 billion amid the country’s first economic contraction in more than a decade, according to Bloomberg data. The government halted a $50 billion bailout program in February after dispensing $11 billion and said companies should instead work with domestic commercial banks to meet their international debt obligations.

Gazprom has $27 billion of bonds outstanding, including $1.2 billion due this year, according to Bloomberg data.

‘Testing the Market’

“Gazprom, as Russia’s flagship borrower, is testing the market to see how Russian issuers are received,” said Mikhail Galkin, a fixed-income analyst at MDM Bank in Moscow. “This is a logical move as markets have rallied and yields come down to levels where top issuers from Russia can try to do new deals.”

The risk of Gazprom defaulting on its debt fell to the lowest since October, according to credit-default swap prices.

Contracts on the company’s bonds declined 22 basis points to 670 as of 2:30 p.m. in London, and have fallen 34 percent since March 10, CMA Datavision prices show.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.

Gazprom rose 6.8 percent in Moscow trading today, according to data compiled by Bloomberg.

The company is rated A3 by Moody’s Investors Service, its seventh-highest investment-grade ranking, and two levels lower by Standard & Poor’s at BBB. Today’s bond issue, which isn’t guaranteed by Russia, was managed by BNP Paribas SA.

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

Last Updated: April 2, 2009 11:32 EDT

Gazprom eyes diversification with LNGhttp://www.upi.com/Energy_Resources/2009/04/02/Gazprom_eyes_diversification_with_LNG/UPI-37751238678922/

MOSCOW, April 2 (UPI) -- Russian gas giant Gazprom sees liquefied natural gas as an option to diversify its export potential amid European concerns over energy security, officials said.

Gazprom chief Alexei Miller said the LNG market provided his company with the option to expand its energy position while moving away from an exclusive reliance on transit pipelines, BarentsObserver reports.

"In a time of enhanced globalization processes in the LNG market, we see that there is a need for a new review of the (company's) strategy in the field of LNG as transit risks rise considerably and risky documents which ignore Russian interest are signed," Miller said.

A January row between Moscow and Kiev over gas arrears and contracts prompted Gazprom to disrupt gas supplies to Ukraine. Europe receives about 25 percent of its gas from Russia, though 80 percent of that travels through Ukrainian pipelines.

That dispute and diplomatic concerns over several gas transit arteries in Europe have left the pipeline sector tumultuous.

Cargo LNG transits offer a greater potential for companies to reach a broader market base. Gazprom launched its first LNG plant on Sakhalin Island this year, with a customer base that includes Japan and the United States.

That LNG facility delivered its first shipments to Japan on Wednesday, but several Asian customers are predicting saturation in the LNG market.

April 1 2009 19:50Moscow

Management Committee considers implementation of Gazprom’s Strategy to consolidate positions in global LNG markethttp://www.gazprom.com/eng/news/2009/04/35641.shtml

The Management Committee took notice of the information on measures taken to consolidate the positions of Gazprom in the global LNG market.

For the purpose of diversifying export routes, ensuring supply security and consolidating the Company’s leading positions in the international gas market the Management Committee tasked the specialized structural units to continue work aimed at implementing Gazprom’s Strategy in the area of liquefied natural gas (LNG) production and supply.

A decision was taken to address the issue of new promising LNG projects at one of the upcoming Management Committee meetings.

“As long as the LNG market globalization is deepening, the transit risks are increasing significantly and risky documents are signed without regard to the interests of Russia, we believe, it is necessary to take a new look at the LNG strategy and analyze the practicability of launching new projects in this area,” emphasized Alexey Miller, Chairman of the Management Committee during the meeting.

The issue of consolidating the positions of Gazprom in the global LNG market will be submitted to the Company's Board of Directors for consideration.

Background:

In 2008 the LNG market hit a record high of 172.3 million tons (237.8 billion cubic meters). Its share in the international gas trade totaled 29 per cent. By 2015 the worldwide LNG demand is forecasted to reach 327 million tons per annum due to the increased demand for natural gas in the Atlantic basin countries and primarily in the USA.

In order to retain the leading positions in the global gas market, Gazprom is implementing the Strategy for the Liquefied Natural Gas Production and Supply. The Strategy particularly stipulates the actions to be taken in the following key areas:

Commercial activities development.

From 2005 to 2008 the amount of LNG sold by Gazprom Group totaled 1.84 billion cubic meters. The Sakhalin II project will play a key role in the further development of this kind of business. Within the project Gazprom started its first Russian LNG deliveries. In the short term the project will enable the Company to significantly expand its presence in the LNG market.

In addition, maximization of profit from LNG trade and retention of control over LNG flows require Gazprom's presence in the markets of ultimate LNG consumers that may be ensured through access to the gas marketing sector and the respective regasification capacities.

Long-term goals achievement.

Gazprom is active in implementing the Shtokman field development project aimed at ensuring in the long term uninterrupted LNG supplies to the target markets (North America and Asia-Pacific region) and fortifying the Company’s positions in the LNG trade segment. At present, the efforts are being taken to provide the project with the required infrastructure. In particular, the work is being done to gain access to regasification facilities and create a tanker fleet to be used by Gazprom on a leasehold basis.

Among the long-term objectives of Gazprom are entry into international projects for acquisition or purchase of gas which subsequently may be used for LNG production and export. This work is important for enhancing the scope of LNG trading operations and compiling a diversified contract portfolio.

Gazprom to offer energy assets as collateral for state loans http://businessneweurope.eu/users/subs.phpbneApril 2, 2009

Russia's state-owned gas giant Gazprom said on Wednesday that it may offer energy assets as collateral for targeted loans from the state, reports Vedomosti.

The company said it needs at least RUB100bn for investments this year, but like everyone else is unable to borrow more on the international capital markets. In all the company's investment plan calls for at least RUB424bn for construction projects.

The need for investment is pressing as the company's production relies on three large fields which are at, or passed, peak production and the company needs to start developing new resources if it is to meet its long-term obligations.

Gazprom is considering several schemes to raise additional money, including additional shares of at least three subsidiaries in 2009 that would be worth RUB101.75bn These

include: OGK-2 (RUB35bn), OGK-6 (RUB33bn) and TGK-1 (RUB33.74bn).

Gazprom has never pledged its assets against credits before.

Belarus to pay $210 per 1,000 cubic meters for gas http://businessneweurope.eu/users/subs.php

bneApril 2, 2009

This is why Belarus is opening up the west: Minsk will have to pay $210 per 1000 cubic meters for gas over the first quarter of this year, up from the $50 it used to pay only two years ago.

However, Gazprom Deputy CEO Valery Golubev said the price will fall starting in April, reports the company's magazine.

According to him, gas supplies to Belarus are based on the December 31, 2006 agreement, in which OAO Beltransgaz and OAO Gazprom agreed the volume of gas deliveries to Belarus and gas transit through Belarus in 2007-2011.

April 1 2009 20:00Moscow

On working meeting of Alexey Miller, Jeannot Krecke, Etienne Schneider and Jean Luciushttp://www.gazprom.com/eng/news/2009/04/35630.shtml

The Gazprom Headquarters hosted today a working meeting of Alexey Miller, Chairman of the Gazprom Management Committee, Jeannot Krecke, Economy and Foreign Trade Minister of Luxembourg, Etienne Schneider, President of Soteg SA and Jean Lucius, Director General of Soteg SA.

The meeting discussed the progress with joint actions as part of the earlier signed cooperation agreements between Gazprom and Soteg SA as well as potential interaction within the energy projects, in third countries inclusive.

The parties confirmed their mutual interest in furthering the partnership ties. It was particularly emphasized that successful implementation of joint projects would promote Gazprom’s strategy to enter the European final consumer market.

Background:

Luxembourg is almost fully reliant on natural gas imports.

Luxembourg’s Soteg SA was established in 1974. The company’s shareholding structure is as follows: the Government holds 21 per cent, Arcelor – 20 per cent, E.ON Ruhrgas AG – 20 per cent, Cegedel – 19 per cent, Saar-Ferngas – 10 per cent and SNCI – 10 per cent. Soteg SA is a major natural gas and power energy supplier in Luxemburg.

In April 2007 Gazprom Marketing & Trading Ltd. and Soteg SA signed the Memorandum of Understanding to set up a joint venture to construct in Germany a Combined-Cycle Plant (CCP) on a parity basis. The CCP with the total capacity of 800 MW is planed to be constructed in the town of Eisenhuttenstadt. A part of produced power energy will be sold by the joint venture directly to industrial consumers under long-term arrangements, with the rest to be marketed by Gazprom Marketing & Trading Ltd. and Soteg SA.

In May 2007 Gazprom and Soteg SA signed the Joint Action Agreement as well as the Operational Agreement on financial and supply services for the Combined-Cycle Plant (CCP) construction project in Germany.

Kommersant

Gazprom threatens to switch to non-European markets

http://en.rian.ru/analysis/20090402/120887632.html

Russian energy giant Gazprom has given its answer to the Brussels declaration, which is an obstacle to Russia's attempts to gain control over Ukraine's gas pipelines. The monopoly has pledged to increase output of liquefied natural gas for alternative supplies to the United States and the Asia Pacific region, rather than to Europe. But Gazprom is unlikely to act on this threat any time soon. In addition, the new LNG markets may not prove as attractive. Russia was not mentioned in a declaration between Ukraine and the European Commission signed on March 23, nor did it take part in the draft process, which drew sharp protests from Moscow. "If Moscow's interests are ignored, we will also be forced to start reviewing the principles of our relations," said Prime Minister Vladimir Putin. A Gazprom source said that the monopoly will now consider boosting LNG production for export to alternative non-EU markets - Asia Pacific countries and the U.S., but did not specify which projects he meant. So far, Russia has only one LNG plant as part of the Sakhalin II project (9.6 million tons a year). But by 2030 the monopoly is planning to raise LNG output to 90 million tons. However, all declared projects will only be able to be implemented in four to five years' time at the earliest. LNG deliveries from the Shtokman deposit are not scheduled to begin before 2014, while the Yamal LNG plant (based on the Yuzhno-Tambeisky deposit) is just in the feasibility study stage. Gazprom merely wants to demonstrate its displeasure over the Brussels declaration, says Konstantin Cherepanov, from KIT Finance. Theoretically, the monopoly could easily revise its LNG strategy. But the analyst is confident that Gazprom will not in any case risk long-term European contracts.

The source repeated that all plans to make deliveries through existing pipelines and to construct new lines, such as Nord Stream or South Stream, remain in force. But LNG markets may fail to live up to the big expectations. According to Mikhail Korchemkin, head of East European Gas, the U.S. is now increasing the use of shale gas (already at 15%). Given such a rate, the analyst said, U.S. demand for LNG supplies may drop markedly.

Russia's Gazprom looks to Asia, US after EU rebuff: report http://www.eubusiness.com/news-eu/1238670122.01

02 April 2009, 13:16 CET

(MOSCOW) - Russian state-run gas giant Gazprom, angered at being left out of a transit deal between Ukraine and the EU, has threatened to turn to US and Asian markets, a newspaper reported Thursday.

Gazprom chief executive Alexei Miller said "dangerous" agreements bypassing Russia would lead Moscow to boost production of liquefied natural gas (LNG), which can be shipped overseas, the Kommersant daily said.

"In the context of the increasing globalisation of the LNG market and the heightened risk of transits -- when dangerous documents ignoring Russian interests are signed -- it is necessary to review our strategy in the sphere of LNG," the newspaper quoted Miller as saying in a statement.

Kommersant said Gazprom was "pledging to increase its deliveries of liquefied natural gas to Asia and the United States as an alternative to Europe."

But the newspaper noted that Russia, which opened its first LNG plant on Sakhalin Island near Japan in February, would need time to restructure its exports to reach non-European markets.

Russia was livid at being excluded from talks in Brussels last month, where the European Commission signed a memorandum pledging to help develop Ukraine's gas pipeline system.

Prime Minister Vladimir Putin blasted the deal as "unprofessional" and said Russia would review ties with the EU if Moscow continued to be sidelined from consultations.

Europe depends on Russia for one quarter of its natural gas imports, 80 per cent of which are shipped via Ukraine. European leaders want to reduce this dependence by piping gas directly from the Caspian region, bypassing Russia.

Gazprom's Oil Up, Gas Downhttp://www.themoscowtimes.com/article/1009/42/375904.htm

03 April 2009 Reuters

Gazprom's March gas production slumped by one-quarter from a year ago as demand shriveled in Europe and at home and buyers delayed purchases in hopes that prices would fall.

Oil output, however, managed a 1 percent gain in March, month on month, surprising industry sources who expected extraction to fall on lower prices and a cut in upstream investments.

Energy Ministry data showed Thursday that the gas export monopoly's output last month was 1.24 billion cubic meters per day, down 12 percent from 1.41 bcm per day in February 2009 and 24 percent down from 1.63 bcm per day in March 2008.

Mikhail Korchemkin, from the East European Gas Analysis think tank, said his data showed that Gazprom's gas output fell as low as 1.146 bcm on some days in March.

"Such low production levels have been unseen over the past decade, even during summer months, when Gazprom puts some wells on planned maintenance," he said.

Gazprom said Tuesday that its European gas exports were likely to fall more than it had expected as the global financial crisis hit demand.

Russia's total gas output in March was 1.58 bcm per day, down 9 percent from 1.74 bcm per day in February and 19 percent less than the 1.94 bcm per day produced in March 2008.

Novatek, the country's second-largest gas producer, extracted a total 2.6 bcm of gas in March, down 13 percent from February but up 2 percent from March 2008, the data showed.

Gazprom's production started to fall from January, when its supplies to Europe were severely disrupted by a pricing dispute with Ukraine. Analysts only expect a recovery in the second quarter, when gas prices drop as they follow oil prices with a lag of six to nine months.

Gazprom, the world's biggest gas producer and supplier of a quarter of Europe's gas, has kept output relatively stable over the past few years.

Production contracted sharply only in January, but it did not recover in February, a sign that cash-strapped consumers were cutting consumption and choosing cheaper alternative fuels.

Gazprom extracts about 80 percent of gas in Russia. The rest is produced by smaller gas firms or oil majors.

Russian oil output in March stood at 9.8 million barrels per day, up 1 percent from 9.72 million bpd in February 2009 and up 0.5 percent from 9.76 million bpd in March 2008.

Oil production in Russia, the world's No. 2 exporter, fell by about 1 percent last year because of aging reserves and plunging prices.

Rosneft raised oil output in March by 1.8 percent compared with February, but production was down 0.4 percent from March 2008.

TNK-BP, Tatneft, Novatek and small producers increased oil output month on month, while output at LUKoil, Surgutneftegaz, Gazprom, Bashneft and Russneft declined, the data showed.

Small producers boosted oil output by 12 percent versus March 2008, while Russneft's output dropped by 10 percent in the same comparison.

Production Sharing Agreement operators increased crude production by 4 percent versus February 2008 and 28 percent from March 2008, demonstrating the highest production rise in Russia's oil industry.

Pipeline oil exports stood at 4.22 million bpd, down from 4.33 million in February and nearly flat with 4.23 million in March 2008.

nGazprom said Wednesday that it would consider new projects to liquefy gas instead of supplying it to Europe through pipelines, citing increased transit risks.

"In circumstances when LNG markets are becoming more global, and because of a substantial increase in transit risks, when documents ignoring the interests of Russia are signed, we need to have a new look at our LNG strategy and study the need to start new projects," Gazprom chief executive Alexei Miller said in a statement.

Miller did not say what "documents ignoring the interests of Russia" he was referring to, but Russian leaders and Gazprom have severely criticized a March agreement between Ukraine and the European Union.

Gazprom and Prime Minister Vladimir Putin have given repeated warning that Russia will produce more LNG if Europe does not move quickly enough in clearing Gazprom's new pipeline projects, such as Nord Stream.