Russia 090504

Basic Political Developments SWINE FLU

o Russian authorities to discuss swine flu prevention on Monday - Russian authorities will have an intercom conference on Monday to discuss the prevention of swine flu cases in the country, the Federal Consumer Rights and Human Well Being Service said on Sunday.

o RUSSIA -- Recommends Russians avoid trips to Mexico.o Tiberi calls for Russia to lift ban on Ohio pork - The Genoa Township

Republican has written a letter to the Russian ambassador to the United States, Sergey I. Kislyak, protesting the ban as unfounded and not based on any actual threat.

o Russia Panned for Pork Import Bans - "Statements from WHO officials who have not provided the virus's characteristics to state medical authorities are perplexing," Gennady Onishchenko, head of the Federal Consumer Protection Service told Interfax on Sunday

Indian defense secretary to visit Moscow for defense deals - India and Russia will try hard to resolve the aircraft carrier Admiral Gorkshov issue and other defense deals during the visit of Indian Defense Secretary V.K. Singh in Moscow on Sunday, local media reported on Saturday.

Chinese delegation arrives in Ulyanovsk for visit - representatives of party agencies of the province of Hunan, local executive bodies of power and entrepreneurs will visit a number of plants, in particular the Ulyanovsk motor-car and aircraft building works.

Russia stresses support for Iran-U.S. direct talks - Speaking to the Islamic republic news agency, Russian Foreign Ministry Spokesman Andrei Nesterenko pointed out that the U.S. has double-standard policies towards Iran, and underlined that Tehran’s nuclear issue should be solved just through negotiations.

Reuters: NATO games in Georgia draw fire from Russia NATO Tensions Flare Over Spy Flap - Diplomats said that from the statement's

wording, a tit-for-tat expulsion seemed unavoidable. "They will have to expel someone this week, and the interesting thing to watch will be which country will be hit," a senior Western diplomat told The Moscow Times, speaking on condition of anonymity because of the sensitivity of the matter

Medvedev brings new style to the Kremlin - After a year in office, President Dmitry Medvedev is showing a different Kremlin style to that of predecessor Vladimir Putin, though analysts can only guess if this might herald major change or not.

Russian army scraps new uniforms - A plan to replace Soviet-era Russian military uniforms with ones by a leading fashion designer has been abandoned because of a lack of money.

Police officer killed, three injured by gunmen in Chechnya - A police officer was killed and three others were injured when militants opened fire on their cars in Russia's North Caucasus republic of Chechnya, a police source said on Monday.

“I’ll resign when Chechnya prospers” – President: In ten years from now, Kadyrov imagines Chechnya as a “flourishing republic with the most handsome people in the world”, according to Austrian newspaper, Die Presse, who interviewed the often-unconventional Caucasus leader.

Security forces expect fiercest resistance of militants in spring-summer in Russia’s Dagestan

Six Months After Zyazikov’s Ouster, Ingushetia Remains Unstable Russian police seize over 16 kg of heroin in southeast Urals Criminal case opened over Irkutsk house blast that killed 8 Forest fires raging on almost 24,000 hectares in Russia Moscow authorities to breathalyze all Eurovision show spectators Gay parade won’t be sanctioned in Moscow, any attempt to hold it "will be

curbed toughly but within the law" – city authorities Despite odds, Russians rush to Goa - Statistics from the tourism department show

that nearly 25,000 Russians (both chartered and independently travelling tourists) visited Goa during the tourist season here, which coincides with the harsh sub-zero Russian winter temperatures back home.

The rise and rise of Russian nationalism - Long tolerated by the authorities, right-wing groups are now being seen as a serious threat to national security. Shaun Walker reports from Moscow

Debating Russian Coverage of the Financial Crisis - In a wide-ranging debate on Russian media coverage of the financial crisis, Kommersant's Washington Bureau Chief, Dmitry Sidorov said "there is no critical analysis of the crisis in the Russian media whatsoever." But ITAR-TASS's Washington Bureau Chief, Andrei Sitov, strongly disagreed: "To the extent that coverage is thin, it's mainly due to the fact that it's not our crisis."

Susanne Scholl: Victims of Russia's lawless legality - A cynical observer remarked at the preliminary hearing that by the looks of it the Russian authorities couldn't make up their mind: either the former Yukos bosses didn't pay taxes or they embezzled money. But since when does one pay taxes on embezzled funds?

EUROPE: Democracy Failing Under Russian Shadow - Eighteen years after the collapse of the Soviet Union, many of the newly created republics are still struggling to find a working democracy amidst failing economies.

Reuters PRESS DIGEST - Russia - May 4

National Economic Trends Russian Ruble Gains Against Dollar, Little Changed Versus Euro Russia daily c.bank swap limit at 5 bln rbls RF govt coordinating anti-crisis measures in construction – Kozak Price rises may come back to haunt - Economists warn price rises during a

downturn will hurt companies in the longer term. Ford raised the cost of its vehicles by up to a quarter from May, but the company says it has no choice.

Rencap: Russian industrial confidence - Hopes of a quick rebound look unfounded in April

Manufacturing PMI rises from 42.0 to 43.2 in April

Business, Energy or Environmental regulations or discussions FGC management still expects transition to RAB from 2010 TGK net profit doubles in Q1 VEB May Sell Bonds to Reorganize RusAl's Debt Norilsk to seek debt restructuring – paper KazakhGold makes statement on Polyus Gold offer Analyst doubts Severstal Warren sale Severstal seeking sale of NorthAm assets to raise liquidity despite severe

downturn in steel industry GM Said to Consider European and Global Proposals for Opel Unit - The

Canadian company has formulated a joint offer with Deripaska and unidentified Russian banks, a German government official said April 28. Magna’s stake in Opel wouldn’t exceed 25 percent, the aide said.

Holiday week announced at Russian carmaker - A week of May holidays has been announced at Russia’s AvtoVAZ carmaker, its press service reported on Monday. This is done in line with the regime of saving production costs and maintaining jobs.

Apatit net profit down 36% in Q1 Russian Government to support residential construction Insurance sector braces for consolidation Bailiffs ask RTS for value of VimpelCom shares, worse case scenario still

unlikely The Long Case for Russia's Mobile Telesystems - Although in Q4 2008, Mobile

Telesystems [MTS] (MBT) suffered a disastrous $794.8 million foreign exchange loss to reflect book value of the company’s foreign-denominated debt due to the weak ruble, there are plenty of signs Russia’s largest mobile operator is worth investing in now.

Russians rejecting money for barter - Increasing numbers of Russians are rejecting money in favour of barter and it's not just individuals. Companies large and small are bartering as a way of staying in business.

Activity in the Oil and Gas sector (including regulatory) Urals crude averaged $45 in Jan.-Apr. - Russian Finance Ministry Russian gas output collapse deepens - In April, Gazprom's gas output was 1.15

billion cubic metres per day, 7% down from 1.24 bcm in March 2009 and 28% down from 1.60 bcm in April 2008, the data showed.

RPT-Russian gas output collapse deepens in April Oil giant Rosneft posts $175 mln net loss in first quarter Sechin Says EU Faces Ukraine Supply Risk - Ukraine needs to buy 19.5 billion

cubic meters of gas in the near future to make sure that flows to Europe remain uninterrupted, Sechin told EU Energy Commissioner Andris Piebalgs at the fourth EU-Russia Permanent Partnership Council on Energy.

Vietnamese to start pumping Nenets oil - The joint venture RusVietpetro will start extracting oil in Nenets Autonomus Okrug.The plan is to drill 13 wells this and next year, reports Thanh Nien Daily.

Integra Posts 2008 Loss of $272M

Gazprom Gazprom opens office in Latvia to cover Baltics - "Although the biggest owner of

Gazprom is the Russian state, it is a commercial company and its main objective is selling its products. Europe is a large market for us, and we want to develop here," said Pavel Litvinov, vice-director of the Gazprom representation office in Latvia.

Gas Master Plan: Gazprom To Unveil Strategy This Week - Speaking in an exclusive telephone interview, during the week, managing director of the firm in Nigeria, Mr. Vladimir Ilyanin, said "Gazprom is currently holding talks with the Nigeria National Petroleum Commission, some local firms and oil communities and will make its position public on May 8, 2009."

Srbijagas: Contract with Gazprom on May 14 Gazprom not economizing on top managers' wages - For the first time in years,

energy giant Gazprom has saved nearly 8 billion rubles ($240 million) on staff expenditure in 2008. However, payments to its top managers have grown.

Gazprom's April Output Hits Its Lowest Level in a Decade Teriberka asks Gazprom for help - Valery Yarantsev, Head of the village of

Teriberka on the Russian Barents coast has asked Gazprom to grant money for modernization of the village, future location for the Shtokman field LNG plant.

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Full Text Articles

Basic Political Developments

SWINE FLU

Russian authorities to discuss swine flu prevention on Mondayhttp://www.itar-tass.com/eng/level2.html?NewsID=13900273&PageNum=0

MOSCOW, May 3 (Itar-Tass) -- Russian authorities will have an intercom conference on Monday to discuss the prevention of swine flu cases in the country, the Federal Consumer Rights and Human Well Being Service said on Sunday.

As of 3:00 p.m. Moscow time on May 3, the number of countries reporting A/H1N1 cases had grown from 15 to 17, the service said with the reference to the World Health Organization (WHO). In all, 787 cases were reported, including 20 lethal.

http://www.reuters.com/article/GCA-SwineFlu/idUSTRE5421G420090504?pageNumber=2&virtualBrandChannel=0

RUSSIA -- Recommends Russians avoid trips to Mexico.

-- Has ban on raw meat imports from the U.S. states of Indiana and New Jersey. Russia also bans all types of raw meat and meat products originating from the states of California, Texas and New York. A ban on raw pork and pork products will be applied to

Alabama, Arizona, Arkansas, Georgia, Indiana, Kansas, Louisiana, New Jersey, New Mexico, Ohio, Oklahoma and Florida.

-- Has applied a ban on meat imports from Mexico and countries of Central America and the Caribbean.

Tiberi calls for Russia to lift ban on Ohio porkhttp://www.columbusdispatch.com/live/content/local_news/stories/2009/05/03/dctiberi.html?sid=101

Sunday,  May 3, 2009 6:12 AM

Swine flu and Ohio pork are not related subjects, Rep. Pat Tiberi says, and Russia should immediately lift its ban on imports of the latter.

The Genoa Township Republican has written a letter to the Russian ambassador to the United States, Sergey I. Kislyak, protesting the ban as unfounded and not based on any actual threat.

"All reported cases of H1N1 virus have been spread per son to person," Tiberi said, using swine flu's official name. "In addition, there are no reported cases of this H1N1 virus strain occurring in live pigs in the United States."

Tiberi also noted that the World Health Organization has found that, in any case, cooking pork at proper temperatures would kill a virus.

  "In the absence of scientific evidence to demonstrate any risk to human or animal health, there is no standing for a ban on meat produced in the state of Ohio related to concern about swine influenza A (H1N1)," Tiberi wrote in urging that the ban be lifted. 

Russia Panned for Pork Import Banshttp://www.themoscowtimes.com/article/1009/42/376766.htm

04 May 2009

By Maria Antonova / The Moscow Times

Russia is facing widespread criticism for import bans on pork in response to the A/H1N1 influenza virus, also known as the swine flu, which U.S. officials and international organizations say has not been transmitted by food.

The World Health Organization said Saturday that there was no risk of infection from consumption of well-cooked pork and pork products, following similar comments in letters from the U.S. commerce secretary urging Russia and China to reconsider the

restrictions.

The outpouring of criticism from international and U.S. health agencies appeared to put Gennady Onishchenko, head of the Federal Consumer Protection Service, on the defensive over the weekend.

"Statements from WHO officials who have not provided the virus's characteristics to state medical authorities are perplexing," he told Interfax on Sunday. A day earlier, he said Russian scientists were ready to study the deadly strain of the virus once they receive it from their U.S. colleagues.

In a joint statement — signed by the Food and Agriculture Organization of the United Nations, the World Organization for Animal Health, and the World Trade Organization — the WHO said Saturday that there was so far "no evidence that the virus is transmitted by food" and "no justification … for the imposition of trade measures on the importation of pigs or their products."

Since April 26, the Agriculture Ministry's veterinary health watchdog has been restricting raw meat imports from countries and U.S. states with reported cases of the virus. On Wednesday, a commission chaired by First Deputy Prime Minister Viktor Zubkov decided to keep the bans in place until June 1.

In letters dated Thursday, U.S. Secretary of Commerce Gary Locke urged Finance Minister Alexei Kudrin and Economic Development Minister Elvira Nabiullina to request that the restrictions be lifted.

"Both the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC) in the United States have stated that it is safe to eat properly prepared pork and pork products. The CDC has said categorically that the H1N1 virus is not transmitted by food. There have been no reports of the new H1N1 human influenza occurring in swine in the United States," Locke wrote to Nabiullina.

"There should be no restrictions on trade without cause," he wrote to Kudrin.

Bans on pork and chicken have been a sticking point in trade relations between Moscow and Washington. A letter was also sent to Chinese Commerce Minister Chen Deming.

China and Russia account for 20 percent of U.S. pork exports.

"These moves have greatly disrupted all meat trade with Russia, creating tremendous confusion among exporters about product eligibility," the U.S. Meat Export Federation said in a statement on its web site late last week.

In a troublesome sign for pork producers, Canada on Saturday confirmed the first case of the new virus in pigs.

The Russian Agriculture Ministry's health watchdog said Saturday that it was extending the ban on all meat imports from South Carolina and on pork imports from Spain and some Canadian provinces. The watchdog also said it might extend the ban on meat products from Canada and the United Kingdom.

As of Sunday, Russia has halted pork imports from 11 U.S. states, three Canadian provinces, Spain and nine Latin American countries. Additionally, all meat imports are banned from Mexico, California, New York, South Carolina and Texas.

Indian defense secretary to visit Moscow for defense dealshttp://news.xinhuanet.com/english/2009-05/02/content_11300721.htm

2009-05-02 19:31:03

 NEW DELHI, May 2 (Xinhua) -- India and Russia will try hard to resolve the aircraft carrier Admiral Gorkshov issue and other defense deals during the visit of Indian Defense Secretary V.K. Singh in Moscow on Sunday, local media reported on Saturday.

    Singh will hold talks with Russian counterparts on the financial aspects of modernizing the Russian aircraft carrier, according to a report by the Hindi daily Navbharat Times.

    Also on agenda are talks on Russia selling nuclear submarines to India.

    The report said Russia has told India that when Gorkshov aircraft issue is resolved, the remaining deals will also hang in balance.

    Senior members from the Indian defense forces will accompanying Singh on his visit, according to the report.

    India and Russia currently disagree on the costs of modernization of Gorkshov.

    Russia had promised to give India the aircraft carrier for free with India bearing the modernization costs. However due to disagreement, the carrier has not yet been delivered to India, even as time for delivery elapsed long ago.

Chinese delegation arrives in Ulyanovsk for visit

http://www.itar-tass.com/eng/level2.html?NewsID=13901636

ULYANOVSK, May 4 (Itar-Tass) -- A Chinese delegation has arrived in Ulyanovsk to expand bilateral interregional contacts. As the government of the region reported on Monday, representatives of party agencies of the province of Hunan, local executive bodies of power and entrepreneurs will visit a number of plants, in particular the Ulyanovsk motor-car and aircraft building works.

The regions’ twin relations were established in 2008. The province of Hunan and the Ulyanovsk region are involved in developing partnership in agriculture, tourism, machine building and industrial production. China purchases passenger planes Tu-204-120-SE of the Ulyanovsk plant Aviastar-SP.

A special tour of Ulyanovsk’s historical sights where the museum-apartment of V.I.Lenin is situated was prepared for the Chinese guests.

The delegation is headed by secretary of the party committee of the Chinese Communist Party, chairman of the Standing Committee of the Assembly of People’s Representatives Zhang Chunxian. The delegation includes mayor of the city of Changsha (an administrative center of the province of Hunan) Zhang Jianfei, leaders of departments of the provincial people’s government, major firms, specialists in external trade and journalists.

May 10, 2009Russia stresses support for Iran-U.S. direct talks

http://www.tehrantimes.com/Index_view.asp?code=193643

TEHRAN (FNA) - Russia announced on Saturday it supports Tehran and Washington’s direct talks provided that it is performed in a respectful atmosphere and away from threats. Speaking to the Islamic republic news agency, Russian Foreign Ministry Spokesman Andrei Nesterenko pointed out that the U.S. has double-standard policies towards Iran, and underlined that Tehran’s nuclear issue should be solved just through negotiations.

Noting that Russia will not agree with new UN Security council sanctions against Iran, he reiterated that Moscow’s stand on this issue is transparent and the language of sanctions is not accepted by his country.

Russia’s Foreign Minister Sergei Lavrov has recently said that Iran’s nuclear activities are in conformity with the Non-Proliferation Treaty (NPT).

He has also said that Iran has recently had vast cooperation with the International Atomic Energy Agency (IAEA) inspectors in order to remove ambiguities about its nuclear program and build the other side’s confidence.

Washington and its Western allies accuse Iran of trying to develop nuclear weapons under the cover of a civilian nuclear program, while they have never presented any corroborative evidence to substantiate their allegations. Iran denies the charges and insists that its nuclear program is for peaceful purposes only.

Tehran stresses that the country has always pursued a civilian path to provide power to the growing number of Iranian population, whose fossil fuel would eventually run dry.

Despite the rules enshrined in the Non-Proliferation Treaty (NPT) entitling every member state, including Iran, to the right of uranium enrichment, Tehran is now under three rounds of UN Security Council sanctions for turning down West’s illegitimate calls to give up its right of uranium enrichment.

NATO games in Georgia draw fire from Russiahttp://www.reuters.com/article/worldNews/idUSTRE5421EA20090503

Sun May 3, 2009 9:53am EDT

By Matt Robinson

TBILISI (Reuters) - NATO begins military exercises in Georgia on Wednesday in a gesture of solidarity condemned by Russia as "muscle-flexing" coming nine months after war between the former Soviet neighbors.

Around 1,000 soldiers from over a dozen NATO member states and partners will practice "crisis response" at a Georgian army base east of Tbilisi, around 70 kilometers (44 miles) from the nearest Russian troop positions in breakaway South Ossetia.

Russia has reacted angrily.

Last year's five-day war, when Moscow crushed a Georgian assault on pro-Russia South Ossetia, slammed the brakes on Georgia's bid for membership of NATO, which the Kremlin fiercely opposes as an encroachment on its ex-Soviet backyard.

The month-long exercises at a former Russian air force base in Vaziani are seen as a signal from the 28-member alliance that, despite doubts over the promise of eventual membership, Georgia has not been forgotten.

Russian President Dmitry Medvedev accused NATO of "muscle-flexing" and said the decision to go ahead with the exercises was wrong and dangerous.

Relations had been on the mend. NATO and Russia last week resumed formal contacts suspended over the war, when the West accused Moscow of a "disproportionate" response to Georgia's assault on separatists in South Ossetia.

But the exercises, coupled with the expulsion last week of two Russian diplomats from NATO over a spying scandal and a Russian decision to take control of South Ossetia's borders, have put the relationship under renewed pressure.

"Anything involving NATO and Georgia is very sensitive for Moscow," said Maria Lipman of the Moscow Carnegie Center. "The idea of NATO exercises in Georgia of all places was sure to provoke angry statements from the Russian establishment."

TESTING ALLEGIANCES

Georgia -- its military routed by Russia's devastating counter-strike -- has told Moscow to mind its own business.

"Cooperative Longbow" -- based on a fictitious crisis response operation -- and the "Cooperative Lancer" field training exercise provide a boost for President Mikheil Saakashvili, the target of weeks of opposition protests in Tbilisi over his record on democracy and the war with Russia.

NATO is sending a message that despite placing Georgian membership on the back-burner, "that doesn't mean they will be abandoning the Georgians to Russia's sphere of influence or that Russia's going to be able to dictate what the Georgians can and can't do," said Jeffrey Mankoff of the U.S.-based Council on Foreign Relations.

The exercises are testing allegiances.

Former Soviet Kazakhstan pulled out following Russia's objections. But Armenia, Russia's strategic ally in the South Caucasus, will take part.

In responding so angrily, Russia is testing U.S. President Barack Obama's pledge to "reset" relations with Moscow that hit a post-Cold War low under his predecessor, George W. Bush.

But neither side is likely to let the dispute endanger the mutual benefits of improved ties, analysts say.

"The Russians are trying to use Obama's interest in getting relations on a more positive track to get their own way on the question of NATO's relationship with Georgia," said Mankoff.

"The exercises are one part of this. But at the same time I don't think the leadership in Moscow is ready to risk the more broad benefits of an improved relationship with the West over what is a relatively small scale issue."

(Additional reporting by Conor Humphries in Moscow; Editing by Sophie Hares)

NATO Tensions Flare Over Spy Flaphttp://www.themoscowtimes.com/article/600/42/376758.htm

04 May 2009

By Nikolaus von Twickel / The Moscow Times

A new round of tensions with the West ratcheted up over the holiday weekend when a spy dispute unfolded with NATO that is expected to prompt Russia to expel Western

diplomats.

NATO also traded barbs with the government over an agreement giving Russian forces direct control over the de facto borders of Georgia's South Ossetia and Abkhazia regions. (Story, Page 5.)

The tensions are likely to grow this week, because NATO plans to kick off military exercises in Georgia that have drawn fire from Moscow, which itself is preparing for Victory Day, the May 9 holiday celebrating the end of World War II.

NATO last week expelled two senior diplomats from Russia's permanent mission to the alliance's headquarters in Brussels on spying charges, just hours after it had resumed official contacts with Moscow that had been severed since last year's brief war in Georgia.

Russia's NATO representative Dmitry Rogozin said Thursday that the alliance's secretary-general, Jaap de Hoop Scheffer, briefed him about the expulsion just after the NATO-Russia Council had convened for the first time.

Rogozin vehemently denied that the diplomats had been involved in spying activities.

"These accusations are fabricated, irresponsible and provocative," he said, Interfax reported.

The Foreign Ministry issued a furious statement in which it accused elements inside NATO of trying to disrupt the normalization of ties with Moscow. "We ask all NATO members to think about the consequences. We will certainly make our conclusions from this provocation," the ministry said.

Diplomats said that from the statement's wording, a tit-for-tat expulsion seemed unavoidable. "They will have to expel someone this week, and the interesting thing to watch will be which country will be hit," a senior Western diplomat told The Moscow Times, speaking on condition of anonymity because of the sensitivity of the matter.

Reciprocal expulsions are complicated by the fact that NATO only has an information office in Moscow, and it is nothing close to matching Russia's NATO mission in Brussels.

NATO officials linked the expulsion to the uncovering of a top Russian spy, Herman Simm, in Estonia last year, news reports said.

A NATO spokesman reached by telephone Sunday refused to comment on the affair.Simm, the former head of security at the Estonian Defense Ministry, was sentenced to 12 years in prison in February for passing NATO secrets to Moscow.

Yet questions remained why NATO would choose to retaliate more than two months after Simm's conviction just as it was taking the key step of rebuilding ties by getting the NATO-Russia Council back to work.

Rihards Piks, a former Latvian foreign minister who is a deputy in the European Parliament, said that the timing of the spy spat was counterproductive.

"It is not in NATO's interest to disturb the dialogue with Russia," he said by telephone from Riga on Sunday.

He said NATO's member states should continue to talk and develop relations with Moscow.

Alexei Malashenko, an analyst at the Carnegie Moscow Center, suggested that the whole affair might have been staged by a Kremlin faction that is opposed to better relations with the West. "This is a very typical step for Russian foreign policy, and this might point to forces in the Kremlin that are against resetting ties," he said.

In another twist, one of the expelled Russian diplomats, Vasily Chizhov, is the son of Moscow's ambassador to the European Union, Vladimir Chizhov.

Vasily Chizhov was a mission secretary, while the other expelled diplomat, Viktor Kochukov, headed the political section, Rogozin said.

A Foreign Ministry official said that Ambassador Chizhov's work would not be affected by his son's expulsion, Interfax reported.

The senior Chizhov was in Moscow last week for talks between EU Energy Commissioner Andris Piebalgs and Deputy Prime Minister Igor Sechin about the European Energy Charter.

Relations with the EU turned sour last week when Foreign Minister Sergei Lavrov warned the 27-member union against meddling with former Soviet republics. An upcoming EU summit with six former republics "should not get in the way of the post-Soviet area," Lavrov said after talks with EU officials in Luxembourg.

Medvedev brings new style to the Kremlinhttp://af.reuters.com/article/worldNews/idAFTRE54210320090503

Sun May 3, 2009 11:02am GMT

By Oleg Shchedrov

MOSCOW (Reuters) - After a year in office, President Dmitry Medvedev is showing a different Kremlin style to that of predecessor Vladimir Putin, though analysts can only guess if this might herald major change or not.

Medvedev was installed in the Kremlin on May 7 last year after being picked by Putin as his preferred successor, a choice endorsed in a subsequent election. Putin became prime minister and the two men said they would rule Russia together as a "tandem."

Since then, the state of the two men's relationship has been the subject of intense speculation.

"They are good partners, who share views on Russia's future but there is a big difference in their background, manner and views on how to manage things," one official said, reacting to repeated reports of an imminent split between the two.

The visual difference between the 43-year-old ex-lawyer and the steely-eyed 56-year-old former KGB spy is striking.

In his 2000-2008 presidency, marked by Russia's resurgence on the world stage on the back of an economic boom, Putin turned the Kremlin into the centre of Russian life.

No major question could be decided without the president.

In his public appearances, Putin loved demonstrating a grasp of the details of citizens' lives and showed a personal touch through gestures such as sending a Christmas tree to a little girl or ordering a road to be built in a remote village.

"The president is responsible for everything in Russia," Putin said in one of his early speeches, chiming with traditional views of how the Kremlin ruler should behave.

A MAN OF THE SYSTEM

Medvedev started out from a different point. "A system where everything is decided in the Kremlin is not ideal," he once told governors, in a clear contrast to Putin's imperial style.

Medvedev, who now has to handle Russia's worst economic crisis in a decade, shows far less inclination to impose his own will on key ministers and is less driven by emotion than Putin.

Putin's colourful street language, which won him popularity among ordinary Russians, has given way to Medvedev's lawyerly style, full of references to legal norms.

Things unimaginable in Putin's Russia have started happening: Medvedev's ministers venture to clash over issues on which national leaders have already expressed an opinion. Surprisingly, no one has been fired yet.

"Putin is in a way a true Russian tsar, who believes that without his intervention the world will not go round," an analyst close to the Kremlin said. "Medvedev is more of a manager, who bets on a system rather than a personal will."

As opposed to Putin, who has often been driven by emotion when fighting Chechen separatists or politically ambitious oligarchs, Medvedev looks far more pragmatic in his decisions.

While Putin has been swinging between embracing U.S. President George W. Bush and denouncing Washington for seeking "world domination," Medvedev looked reserved when meeting the new U.S. leader Barack Obama last month, with whom he plans to "press a reset button" on rocky ties.

The first year of Medvedev's rule has also seen a sharp decline in nationalist rhetoric coming from the Kremlin.

The hardline pro-Kremlin youth movements, which scared Russian liberals with their displays of aggressive patriotism under Putin, have all but disappeared.

Medvedev has urged a bigger role for non-governmental organisations, entities which his predecessor accused of being in the pocket of Western governments.

"Medvedev is a post-Soviet man, who does not have Putin's personal memories of the humiliation suffered by the nation after the collapse of the Communist empire," the analyst said.

SEARCHING FOR NEW ALLIES

Putin felt at home speaking to the military top brass and loved flying on jet fighters and sailing aboard nuclear submarines. Medvedev feels more at home in front of his laptop.

"Freedom is better than non-freedom," he said in a pre-election speech, raising a topic which had become a taboo during Putin's years.

Does the difference in style presage Russia's departure from Putin's course, blamed by opponents for crushing democracy, or is it rather part of Medvedev's game to change the balance of forces in the ruling tandem? Views differ.

"Medvedev desperately needs his own power base and he now has to win supporters in every corner," said Alexei Mukhin of the Centre for Political Information.

Others think the style has been worked out with Putin.

"The very choice of Medvedev as president showed that Putin was ready for a certain correction of the political style," Boris Makarenko of Medvedev's think-tank INSOR said. "What is happening is a mild liberalisation."

(Writing by Oleg Shchedrov; Editing by Richard Balmforth)

Russian army scraps new uniforms http://news.bbc.co.uk/2/hi/europe/8029632.stm

By Steven Eke BBC Russian affairs analyst

A plan to replace Soviet-era Russian military uniforms with ones by a leading fashion designer has been abandoned because of a lack of money.

The plan to bring in the new uniforms, designed by Valentin Yudashkin, was supported by Russian PM Vladimir Putin.

There is now only enough money to pay for uniforms for soldiers taking part in the forthcoming Victory Day parade.

Everyone else, it seems, will remain in the rather drab olive shades Russia inherited from the former Soviet Union.

'Less frumpy'

On Friday, Senator Viktor Ozerov, chairman of Russian Federation Council committee on defence and security, told the radio station Ekho Moskvy that the army knew what to spend money on - and that new uniforms were not a priority.

"I think that the uniforms which servicemen now wear make it possible to distinguish them from civilians," he said.

The new designs for the army uniforms come from Russia's leading fashion designer, Valentin Yudashkin.

They build on the uniforms of imperial Russia, with strong emphasis on red and blue colours, together with polished brass adornments for parade dress.

They are decidedly less frumpy than the oversized fur hats and foot wraps that still form part of the standard kit.

Prime Minister Putin was an admirer of Yudashkin's proposals and took a personal involvement in them while president.

The report that the new uniforms have fallen victim to Russia's own credit crunch suggests financial difficulties greater than those publicly acknowledged.

Russian defence spending has grown very quickly over recent years.

Before the global financial crisis hit, Russia's government had planned to spend more than $100bn (£67bn) on modernisation and re-armament projects.

The idea was to move away from a bloated, inefficient, often poorly trained military, and to focus on advanced technology, in military aviation and Russia's strategic nuclear rocket forces.

There is now a huge question mark over the project, with recent announcements of swingeing cuts in the officer corps and general staff.

Police officer killed, three injured by gunmen in Chechnya http://en.rian.ru/russia/20090504/121418644.html

MOSCOW, May 4 (RIA Novosti) - A police officer was killed and three others were injured when militants opened fire on their cars in Russia's North Caucasus republic of Chechnya, a police source said on Monday.

The incident occurred late on Sunday in southern Chechnya's Achkhoi-Martan region. "The police officers were forced to return fire," the source said.

The attackers fled the scene, and the search for them is continuing.

Two weeks ago the Kremlin announced a formal end to its 10-year counter-terrorism operation in the troubled region.

“I’ll resign when Chechnya prospers” – Presidenthttp://www.russiatoday.ru/Politics/2009-05-03/_I_ll_resign_when_Chechnya_prospers____President.html

03 May, 2009, 20:47

Ramzan Kadyrov says he’ll quit as Chechen president in 2019, when the republic “flourishes”. The leader says running a prosperous country wouldn’t interest him.

In ten years from now, Kadyrov imagines Chechnya as a “flourishing republic with the most handsome people in the world”, according to Austrian newspaper, Die Presse, who interviewed the often-unconventional Caucasus leader.

“I wouldn’t like being a President at that moment. I have a number of tasks which I need to fulfill until things go alright, and then I’ll take up something else. While I’m still young, I want to live, see the world and have time for myself and my family,” the 32-year-old said.

Kadyrov was asked to briefly define himself, and the President said: “The man, during whose office, counter-terrorist operations ceased in Chechnya”. Speaking about this issue, he stressed the fact that besides Chechen separatists, during the two anti-terrorist

campaigns, the armed forces also had to fight mercenaries from fifty different countries. They came, Kadyrov said, “to destroy Russia’s integrity”.

“Together with the Russian army and police we won this war,” he added.

Speaking about his role as a Muslim leader, Kadyrov said that he regards his presidency as a mission given to him by God. “I want to prove that Muslims are not murderers, Wahhabites or terrorosts, and that it wasn’t about a religious war.” Neither does he support the idea of imposing Sharia law, saying “in our country church is separated from the state”.

“Chechen refugees could live better at home”

“Fifty per cent of Chechen refugees in Austria left for quick big money in a rich country,” the President said, answering the question about the problem of Chechen emigrants. “These people were cheated by those who organized their emigration. Now in Austria they live worse than they could live at home,” Kadyrov believes.

Some left for Austria for medical treatment, others were fleeing the war, the President said. “And some were begging for asylum, telling lies about our realities. I took them on after they came back and each of those I spoke to said he was used by different special services,” he said.

Bodyguard murder case

The president denied any involvement in the murder of his former bodyguard. Twenty-seven-year-old Umar Israilov, who was given asylum in Austria in 2006, was shot dead in Vienna in January of this year.

Kadyrov said that not only did he not order the assassination of Israilov, but that he “granted him amnesty and built a house for him”. According to the Chechen leader, a meeting was organised between the republic’s officials and the former security guard in order to try to persuade him to return to his home country.

Who wanted this murder? Kadyrov believes it was the same people who “triggered off the war”.

“The murder in the heart of Vienna was performed in order to blow up this issue and by this intimidate the people who want to go back to their country, and also to blacken me by the imaginable ‘list of those to be eliminated’ which I was thought to have made,” the Chechen leader said.

Security forces expect fiercest resistance of militants in spring-summer in Russia’s Dagestan http://www.axisglobe.com/article.asp?article=181403.05.2009

The Russian security services and the Dagestan’s police continue to report to the public about their successes on the frontlines of the battle with the armed opposition, North Caucasus Weekly points out. On April 14, the law enforcement authorities for the umpteenth time reported the liquidation of yet another Al-Qaeda “emissary” in the North Caucasus - the Turkish citizen Ziya Peche. He has already been “killed” twice in Chechnya, judging by the information provided by the Federal Security Service (FSB), according to online media. This time the FSB is certain that its operatives eliminated him in Dagestan’s Khasavyurt district. Following its old habits, the FSB views all foreign citizens in the ranks of the armed underground exclusively as Al-Qaeda emissaries, North Caucasus Weekly notes. At the same time, it is not quite clear why Al-Qaeda would dispatch so many emissaries to a small territory in the North Caucasus region, one which is never mentioned in any of the public statements made by Al-Qaeda leaders, the oline site comments. North Caucasus Weekly mentions yet one more example of a news report about the liquidation of another figure from the Sharia Jamaat leadership, Zakir Navruzov. This is also not the first news the FSB report about his elimination. He was already declared to have been killed back in September 2008, as online paper Grani.ru says. This time, however, the Russian security services say they managed to track him down while he was having a rendezvous with his family. After a brief gunfight the security services reported that they killed him. Navruzov was famous as a close supporter of Emir Abdul Mejid (Ilgar Mollachiyev), who was killed in September 2008. The lethality of the militant assaults on both law enforcement authorities and civilians in Dagestan in 2008 increased by 40 percent, online paper Yuga.ru says, referring to former Russian Interior Minister Anatoly Kulikov who is now chairman of the Directorate of Global Anti-Criminal and Anti-Terrorist Forum. The estimates clearly demonstrate that Dagestan’s Sharia Jamaat not only has not been crippled by the loss of leadership but, on the contrary, continues to conduct multiple strikes. Recently Al Bar, who commands the militant front in Dagestan, was named the new emir of Dagestan’s Sharia Jamaat by the emir of Caucasus Emirate, Dokka Umarov. The security forces expect spring-summer to become a period of the fiercest resistance by the militants against the state bodies in the region, North Caucasus Weekly concludes.

Six Months After Zyazikov’s Ouster, Ingushetia Remains Unstablehttp://www.themoscowtimes.com/article/1328/42/376742.htm

03 May 2009

By Paul Goble / Special to The Moscow Times

On October 31 of last year, Moscow dismissed Murat Zyazikov, the widely despised president of Ingushetia, and in his place installed Yunus-Bek Yevkurov, a much-decorated Ingush colonel in the Russian Army, in a move that many both in the North Caucasus republic and elsewhere believe marked the dawn of a new day there.

Now, six months later, Caucasus news site Kavkaz-uzel.ru has offered an assessment of

what has changed and what has not, concluding that while Yevkurov has been far more effective than his predecessor in working with the population and with Moscow, the republic he heads is still “far from stable” and in some respects may be getting even less so.

Because Zyazikov sought to suppress all independent media, falsified election results and other data, and is widely suspected of ordering the killing of at least one major opposition figure, many Ingush were prepared to see almost anyone else as an improvement. At the very least, they were ready to give the new man the benefit of the doubt.

Yevkurov, the Caucasus news service points out, made the most of this. He “began a dialogue with the opposition” and even appointed some of its members to senior positions in his administration. He developed good relations with the human rights community. And he worked hard to end blood feuds among the Ingush taips.

Moreover, Yevkurov purged the organs of power, using charges of corruption as the basis for ousting many of Zyazikov’s people. Because of his actions in reaching out to the population and fighting corruption, the current president was far more successful in obtaining federal funds, something that by itself helped him to build authority.

During the last few months, Kavkz-uzel.ru continues, Yevkurov has begun to purge the law enforcement agencies, many of which had become little more than Zyazikov’s personal hit squads. Yevkurov set up a hot line for Ingush to telephone in complaints about the violation of their rights by these groups.

Even more important, the new president set up a Societal Commission on Human Rights and included in its membership “deputies of parliament, representatives of the force structures, as well as leaders of non-governmental organizations and ordinary citizens of the republic,” an institution that marked a clean break from Zyazikov’s approach.

On one of the most sensitive issues, the question of the Prigorodny district from which many Ingush were forced to flee more than 15 years ago, Yevkurov made it clear that he did not intend to try to change its borders but that he supported “the most rapid return of Ingush refugees to the places of their former residence on the territory of North Ossetia.”

But at the same time, the Internet news portal continued, Yevkurov “has not yet been able to establish complete control over the situation in the region” or limit the upward trend of some of the most disturbing measures of violence in that republic, which, prior to Zyazikov, was an island of stability but now ranks among the most unstable.

According to the Memorial Human Rights Center, the number of killings is up sharply this year. Since January 1, 21 civilians, 12 officials of local force structures, and six military personnel have been killed, and over the same period, the force structures have killed 20 militants. Moreover, kidnappings have remained frequent.

(Figures from the republic’s interior ministry are slightly different but also worrisome.

During the first quarter, it reports, the authorities killed 27 militants, losing 18 uniformed law enforcement officers and two civilian officials.” In addition, the ministry said, some 44 people on the government side had been wounded during militant attacks.)

But if the statistics tell one side of the story, the attitudes of the population tell another. One Ingush man told Kavkaz-uzel.ru that Yevkurov “really enjoys the sympathy of the population. He travels throughout the republic, tries to listen to all, and gives people the chance to openly express themselves on the most pressing problems.”

Those were steps Zyazikov never took, and they are welcome. But now six months into his presidency, many in Ingushetia appear to be concerned that however open Yevkurov is to contacts with the population, he has not been able to reduce the level of violence. And with each passing week, more of them are likely asking whether openness, however welcome, is enough.

Russian police seize over 16 kg of heroin in southeast Uralshttp://en.rian.ru/russia/20090504/121420565.html

YEKATERINBURG, May 4 (RIA Novosti) - Police in Kurgan, in Russia's southeast Urals, have seized more than 16 kilograms (35 lbs) of heroin from drug couriers, local prosecutors said on Monday.

The drugs were found in two vehicles traveling on the Chelyabinsk-Omsk highway last week, a spokesman for the Urals department of the Prosecutor General's Office said.

Four suspects have been detained on suspicion of drug trafficking, the spokesman said. The suspects face up to 20 years in jail and a 1 million-ruble ($30,300) fine if convicted.

The heroin, equivalent to more than 160,000 doses, was intended to be sold in the Chelyabinsk Region in the Urals.

Criminal case opened over Irkutsk house blast that killed 8

http://www.itar-tass.com/eng/level2.html?NewsID=13900967&PageNum=0

IRKUTSK, May 4 (Itar-Tass) - Criminal proceedings have been instituted over the Sunday explosion in an apartment house in Irkutsk that killed 8 people, including 3 children. The case has been opened under Article 109 part 3 of the RF Criminal Code (causing the death of two and more persons by negligence), senior aide to the head of the territorial department of the RF Prosecutor’s Investigative Committee (SKP) Vladimir Salovarov told Itar-Tass on Monday.

The explosion took place on May 3 on the first floor of an apartment of the two-storey wooden house at 1, Almaznaya Street, on the outskirts of the city. According to

preliminary information, a household gas cylinder exploded. “The forensic medical and explosive technical expert examinations are currently underway,” a spokesman for the SKP department noted.

Another 8 residents of the house that burnt down were hurt and hospitalised.

A government commission was set up in the Irkutsk region to ascertain the causes of the blast and fire at the dwelling house, as a result of which people died and were injured, the regional administration told Itar-Tass on Sunday. The commission headed by acting governor of the Irkutsk Region Sergei Sokol, will be also engaged in rendering aid to those affected by the tragedy. The bodies of six adults and two toddlers were found at the place of the fire at the dwelling house in the Pervomaisky residential area. Another seven – three men, three women and a child – received injuries and burns.

According to the latest data, 31 people lived at the house where a household gas cylinder blasted on Sunday morning, triggering the fire, the regional branch of the Russian Ministry for Emergencies reported. Twenty people were inside the house at the time of the fire. Five people went unscathed.

Forest fires raging on almost 24,000 hectares in Russia

http://www.itar-tass.com/eng/level2.html?NewsID=13901230

MOSCOW, May 4 (Itar-Tass) -- There are 105 pockets of forest fires in Russia taking up a total area of almost 24,000 hectares, a source in the information department of the Russian Ministry for Emergency Situations told Itar-Tass on Monday

“Large fires are raging on a total area of over 20,000 hectares in the Khabarovsk and Primorsky territories, in the Amur region and the Jewish autonomous region, and in the Baikal area,” said the source.

Nearly 4,000 people fight the forest fires, using over 800 units of equipment. “Thirty planes and helicopters are used to monitor the situation from the air,” the source in the ministry said.

It was noted that fires are not hazardous for populated localities and economic facilities.

A total number of 5,309 forest fires occurred in Russia since the beginning of the forest fires’ period. Fires took up a total area of over 245,000 hectares.

Moscow authorities to breathalyze all Eurovision show spectatorshttp://www.mosnews.com/society/2009/05/04/breathalyzeme/

Today, 11:22 PM

Everyone who comes to see the Eurovision song contest in Moscow will be tested for the level of alcohol in their blood, Moscow authorities have announced.

The Olimpisky Stadium that will host the all-European show is heavily guarded and fitted with traditional metal detectors, but Moscow authorities decided to go even further in their care for public safety.

Alcohol will not be allowed inside the stadium in any form – neither in bottles or cans, nor inside the spectators, Moskovsky Komsomolets daily reports.

“Every person entering the stadium will be tested for the level of alcohol in their blood,” a source in the law-enforcement agencies told the newspaper.

Portable alcohol testers are widely used by Moscow traffic police to trace down drunken drivers, but the Eurovision contest will be the first public event in the city to be mass-tested for drunkenness.

On May 16, thousands of tourists are expected to be in Moscow to see the final stage of the Eurovision show.

30 April 2009, 14:36

Gay parade won’t be sanctioned in Moscow, any attempt to hold it "will be curbed toughly but within the law" – city authoritieshttp://www.interfax-religion.com/?act=news&div=5988

Moscow, April 30, Interfax - Moscow city administration did not receive any applications regarding the organization of a gay parade during the 2009 Eurovision Song Contest, Valery Vinogradov, a deputy Moscow mayor, said.

"You know the city's position on this account. It will not change," he said.

Moscow city police deputy chief Vyacheslav Kozlov said at the press conference that any attempts to hold an unsanctioned gay parade "will be curbed toughly but within the law."

Despite odds, Russians rush to Goahttp://timesofindia.indiatimes.com/Goa/Despite-odds-Russians-rush-to-Goa/articleshow/4480032.cms

4 May 2009, 0534 hrs IST, AGENCIES

PANAJI: Irrespective of the meltdown, job losses and wage cuts, for thousands of vacation-going Russians this season, the sun has continued to shine in Goa. Even as the coastal state with its palm-fringed coastline and sun-soaked beaches saw a drop in the

number of tourists from other European countries, which form the bulk of its foreign visitors, it was the Russians are coming' buzz that kept tourism alive and kicking in coastal tourism pockets.

From the nearly 2 lakh foreigners who visit Goa each tourist season from October to March, Russians rank second in the list of arrivals. Statistics from the tourism department show that nearly 25,000 Russians (both chartered and independently travelling tourists) visited Goa during the tourist season here, which coincides with the harsh sub-zero Russian winter temperatures back home.

While there were more than 35,000 British tourists visiting India during the last tourist season, the Germans were a poor third with only about 5,000 tourists visiting Goa. So how did Goa attract the high-spending tourists from Russia? According to Goa Tourism Development Corporation (GTDC) vice chairman Lyndon Monteiro, the connect came as a result of a lot of hard work.

"The first conscious move to attract Russian tourists was made by the state government in 2002, when a Goan delegation comprising political leaders and industry stakeholders met their Russian counterparts and formally pitched Goa as a tourism destination to them" Monteiro said.

The move came at a time when a lull had set into Goa's tourism scene after peaking in the millennium year. With the scourge of terrorism and a global fiscal downturn afflicting tourism in Goa yet again this year, a high-profile tourism department team visited Moscow late last year to make sure that the steady flow of tourists from Russia did not go down.

"Russians did not let us down during our toughest year. If you notice, despite the global adversities, the number of Russians coming to India has in fact only marginally dipped," Monteiro said, adding that people from all over Russia and not just Moscow were visiting Goa. Superintendent of police (SP) Tony Fernandes confirmed this.

"It was not just Moscow alone. This year we have had tourists coming in from other provinces like St Petersburg, Leningrad, Yekaterinburg," he said. The official said that the visa relaxation given to Russian tourists could have also supplemented numbers this year.

"Russians arriving in India for tourism purposes were allowed entry on the basis of Temporary Landing Permits (TLP) for a period of 14 days. The Indian embassy is in Moscow, and so tourists from other areas would have had a problem processing their visas," Fernandes said.

However, the bulk arrival of Russians had initially resulted in a temporary scare in the Goan coastal community, especially in areas such as Morjim and Arambol, where several Russians have set up eateries and other commercial ventures.

The few crimes registered against Russians involving charges of vandalism, dressing inappropriately and other offences like setting up fake companies and forgery had triggered echoes of the Russian mafia in the media and political circles.

Dan Sorokin, a Russian entrepreneur, was assaulted by a few rave party organisers last year. He was accused of being a part of the Russian mafia by the local media, a charge which he had to deny by addressing a press conference.

"I am in Goa because I love Goa. The media should exercise restraint before calling every Russian a mafia man," Sorokin said.

The tourism department, however, feels that such incidents were isolated cases and that the growing number of Russians coming to Goa was proof that they love the place.

"Nothing travels faster in tourism than mouth to mouth publicity. If Goa did not treat Russians well, then the numbers would not have increased over the years. The untoward incidents mentioned are isolated," Monteiro said.

The rise and rise of Russian nationalismhttp://www.independent.co.uk/news/world/europe/the-rise-and-rise-of-russian-nationalism-1678130.html

Long tolerated by the authorities, right-wing groups are now being seen as a serious threat to national security. Shaun Walker reports from Moscow

Sunday, 3 May 2009

There have been a number of threats to Russia's security in recent years, from Chechen terrorism to the country's worrying demographic decline. But according to sources close to the Russian security services, what the authorities fear most in these times of economic crisis is the very thing that many Russians see as the country's saviour – nationalism.

Amid a dizzying array of May Day marches, featuring various groups from across the political spectrum, all eyes were on the nationalists. They gathered around a metro station in north Moscow, as well as in other cities across the country, calling for all immigrants to be deported and a "Russia for the Russians". In the event, the Moscow meeting passed off peacefully; police arrested a few demonstrators for the possession of knives, and the rest dispersed without incident. But with a huge migrant population, poverty and unemployment among locals, and with the high oil prices that fuelled the economic boom of the past few years a fast-receding memory, many feel the time for Russia's nationalists to take the political initiative is coming soon.

Then there's Alexander Belov, Moscow's answer to the BNP's Nick Griffin. Dressed in a sharp black suit, the light of a Bluetooth receptor constantly winking over his left ear, he fingers a set of Orthodox Christian prayer beads and sips a freshly squeezed orange juice, looking like one of the thousands of well-to-do businessmen who have made decent

money as Russia boomed over the past decade. But as well as being successful in the construction industry, Mr Belov is also Russia's most famous racist. He believes that the time for the nationalists to take the limelight is coming soon.

"What I want is very simple," he says, in a quiet and measured voice. "I don't want parts of Moscow to be ghettos. This city is already full of places where Russians aren't welcome, and it's unacceptable. This is a Russian city and should remain that way."

An erudite and self-assured man who heads a group of skinheads with a reputation for violence, he leads the Movement Against Illegal Immigration – the DPNI, as it's known by its Russian initials – one of Russia's largest far-right groups. One of its main policies is that Russia should introduce a visa regime for migrants from the former Soviet republics, sending most of the millions of Gastarbeiters (Russians use the German term to refer to guest-workers) back home.

Talking to Mr Belov and his DPNI associates is alarming. One minute they are complaining that the Russian government is corrupt, and that under Vladimir Putin civil society has been muffled and the people should be given more chance to express their democratic will (words that could come straight from the mouths of liberal opposition politicians such as the former chess grandmaster Garry Kasparov). The next minute, they are suddenly talking about cleansing Moscow of anyone who doesn't have white skin, and ranking races according to their "cultural level".

"Migrants should only be allowed if they are in the interests of society; if they have a particular skill that no locals possess, which is very unusual," says Viktor Yakushev, a giant man with a shaven head, who claims to have two higher degrees and is the DPNI's chief ideologue. "There's no denying the fact that different races have different cultural levels. You just have to look at how many black people are in prison in America, and that's after all these years of positive discrimination. Here, take Azerbaijan, for example, from where we have a lot of migrants. The society is feudal. They are unsophisticated people; they don't understand European civilisation."

The rhetoric is unpleasant, but it finds resonance among great swathes of Russian society, which is notoriously racist towards anyone with non-Slavic features. These xenophobic leanings can manifest themselves in an ugly and tasteless way, such as the tanning salons that employ African students to stand outside wearing grass skirts and holding signs that read: "I got my tan here." There is also a more sinister side to Russian racism, as evidenced by the multitude of attacks on immigrants in Moscow and across Russia.

According to Alexander Brod, the director of the Moscow Bureau of Human Rights and one of Russia's leading anti-racism campaigners, racist attacks have risen fourfold in the past five years, and may increase more sharply as the economic crisis deepens. His organisation monitors hate crimes in the country, keeping a log on its website that makes for scary reading. For one randomly selected week in April, the data shows that a Tajik citizen was murdered, citizens of Azerbaijan and Kyrgyzstan were attacked, graves were

vandalised at a Jewish cemetery, and a swastika was found freshly painted on to the wall of an apartment block.

In 2008, there were 293 racist attacks, according to official statistics, including 122 deaths, but as Mr Brod points out, those that make it to the record are just the tip of the iceberg. Given that many migrant workers are in Russia illegally, they are afraid to report attacks, and indeed many see the police as more of a threat than the skinheads. Nobody knows how many attacks there really are, but most immigrants have stories of being threatened, at the very least, during their time in Russia.

Russia has more than 10 million immigrants by some estimates, giving it the second-largest immigrant population in the world, after the United States. Most of them are from the impoverished former Soviet republics of central Asia and the Caucasus, who come to Russia to earn cash to send to their families back home. Now, with the financial crisis bringing Russia's economic boom to a grinding halt, hundreds of thousands of migrant labourers who were the engine behind the construction frenzy that overtook Moscow and other Russian cities find themselves out of work. At the same time, unemployment and anger are on the rise among ethnic Russians. Analysts say it could be a dangerous combination, and people such as Mr Belov believe their moment is nigh.

He has come to the interview straight from a hearing in a court case, where he stands accused of inciting racial hatred and faces up to a year and a half in prison if convicted. It seems to be one of many signs that the Russian authorities, who for a long time have at the very least turned a blind eye to nationalist movements, are beginning to get worried. Whereas the DPNI and groups such as the Slavic Union used to have powerful backers among members of Russia's Duma, and according to rumours, even within the presidential administration, it now seems that the word has gone out that the nationalists should be muffled. While nationalist posturing towards the West and Nato is a mainstay of Russian foreign policy, there is now a growing realisation that nationalism within the country could be a dangerous force if it gets out of control.

"There is mass unemployment in the country, and the economic crisis is getting worse," Mr Belov says. "The authorities are scared of people who find a common language with the masses and tell the truth." He claims that he preaches an ideology of non-violence: "By trying to sideline me, they will only promote a real wave of violence," he says.

"I've heard from sources in the Moscow FSB [Federal Security Service] that they have been told that in this time of economic crisis, nationalism is a bigger threat to national security than terrorism," says Andrei Soldatov, one of the leading experts on the Russian security services.

A recent mockumentary film called Russia 88, which so far has failed to find a cinema chain in Russia willing to show it, highlights the issue. Shot using grainy footage from handheld cameras, the film follows a group of Russian skinheads as they beat up immigrants in the metro and on the street. The skinheads are played by actors, says the director, Pavel Bardin, but all the neo-Nazi clothing and paraphernalia was bought from

real Russian online shops, many of the words are taken from internet forums, and the on-street vox pop, where many people are seen voicing racist statements and declaring that "Russia is for the Russians", is real.

While genuine neo-Nazis will remain on the periphery and never gain widespread popularity in a country that still feels immense pride in its role in the defeat of fascism during the Second World War, the casual racism and hatred of immigrants that could provoke a nationalist uprising are certainly there in abundance. Indeed, some surveys show that up to 60 per cent of Russians agree with the slogan "Russia for the Russians", the catchphrase of Russian nationalists.

"There is no legal way for people to express their dislike for immigrants," Mr Yakushev says. "This means there will be increasing street violence. There will be killings and bombs."

The latest attempts by the authorities to silence people like Mr Belov are overdue, but are unlikely to be effective, rights campaigners say.

"Racism is like a dragon, where you cut off one head and another simply grows back in its place," Mr Brod says. "The authorities are trying to fight xenophobia with punitive measures, but the only way to do it properly is to combine this with solutions to the root causes of nationalism – poverty, unemployment, and young people who have no prospects."

Debating Russian Coverage of the Financial Crisis http://www.rferl.org/content/Debating_Russian_Coverage_of_the_Financial_Crisis/1620039.html

May 01, 2009

(WASHINGTON, DC) In a wide-ranging debate on Russian media coverage of the financial crisis, Kommersant's Washington Bureau Chief, Dmitry Sidorov said "there is no critical analysis of the crisis in the Russian media whatsoever." But ITAR-TASS's Washington Bureau Chief, Andrei Sitov, strongly disagreed: "To the extent that coverage is thin, it's mainly due to the fact that it's not our crisis."

"In Russia, the media is free only when the Kremlin allows it to be," said Sidorov, who also contributes to Forbes.com. Calling Putin's Russia a "dictatorship," Sidorov said, "There is no way for ordinary Russians to get credible, reliable news except via the Internet, which is relatively free due to its small audience."

Sidorov and Sitov spoke at RFE/RL's Washington, DC office during a briefing titled Muzzled Media: Coverage in Russia of the Financial Crisis. Joining them was independent consultant Daniel Kimmage, RFE/RL's Brian Whitmore (via videolink from Prague) and Hudson Institute Senior Fellow David Satter, who moderated the discussion. "It's not that Putin and Russia's leaders are broadcasting outright propaganda like during

the Soviet era," said Kimmage. "The situation is more of information manipulation. The Kremlin subtly spins its message by, for example, crafting an official message for the global audience that contains subtexts for domestic consumption."

Sitov, a journalist with Russia's largest state-controlled media company, said he is "not muzzled at all." Citing coverage of an alleged Putin affair, he said the Russian media does, in fact, criticize its leaders.

According to Kimmage, though, "there is no evidence of a process where the media brings something to light that influences the Russian elite or forces the government to react."

"For example, there is a complete absence of reporting on the financial interests of the Russian leaders," he said.

Whitmore, co-author of RFE/RL's popular Power Vertical blog about Russia, said independent media voices in Russia do exist, "but you have to play detective and connect the dots."

"The information is there - especially on the Internet - but it is not being carried on television," he said. "Based on TV coverage, one would get the impression that the Russian government is united in its handling of the financial crisis. But, by digging through online news sites and knowing where to look, one sees that the elite is very much divided on the issue."

The group noted that this is the first financial crisis in recent memory to strike Russia after a period of extended growth. Satter observed that "this improvement in economic conditions came after years of sacrifices in the interest of someday having a more decent European standard of life."

"But that standard is now threatened and it will be very important to see how the press depicts events to the Russian people," he said. "It seems to me that, if Russians are exposed to a fictitious view of reality - when they can see the genuine reality every day in their own lives - we could face a very explosive situation in Russia and the possibility of instability."

Victims of Russia's lawless legalityhttp://www.gulfnews.com/opinion/columns/world/10310052.html

By Susanne Scholl, Special to Gulf NewsPublished: May 04, 2009, 01:12Colonel Yuri Budanov is a convicted rapist and murderer. After serving half his prison sentence for the rape and murder of an 18-year-old Chechen, Elsa Kungayeva, he was released last December.Svetlana Bakhmina was a lawyer at Yukos, the oil company formerly run by Mikhail Khodorkovsky. In 2004, she was arrested and, in 2006, sentenced to six-and-a-half years

on embezzlement and tax fraud charges. Like Budanov, she applied for early release from prison in 2008. Her request was refused, as was her earlier plea in 2006 to suspend her sentence until her two small sons reached the age of 14 - a request she was entitled to make under Russian law. Vasily Aleksanyan was executive vice president of Yukos, and, as a lawyer, defended Khodorkovsky and his partner, Platon Lebedev, after their arrest in 2003. He was subsequently disbarred and was himself arrested in April 2006. By that time, Aleksanyan was critically ill with Aids, for which treatment was withheld. In December 2008, the Moscow City Court approved his release on bail of 50 million roubles (around Dh6.5 million at the time).Finally, consider Khodorkovsky and Lebedev themselves. Arrested in 2003, they were sentenced in 2005 to eight years in prison on charges of tax fraud. They are serving their sentence in Chita on the Chinese border, although Russian law prescribes that, for the crimes with which they were charged, they were entitled to be imprisoned near their place of domicile, i.e., in Moscow.When Dmitry Medvedev was elected as Russia's president a little more than a year ago, he promised to do away with the "legal nihilism" in Russia. Although he was a close confidante of Vladimir Putin and probably was able to assume presidential office exclusively for that reason, many dared to hope that he would stop the vendetta against Khodorkovsky and all those who had been close to him.Disillusion fully set in only one year after Medvedev's election, when a new case against Khodorkovsky and Lebedev was brought, this time for embezzlement of billions and money laundering.A cynical observer remarked at the preliminary hearing that by the looks of it the Russian authorities couldn't make up their mind: either the former Yukos bosses didn't pay taxes or they embezzled money. But since when does one pay taxes on embezzled funds?The courtroom where the new trial against Khodorkovsky and Lebedev is taking place is slightly larger than a spacious classroom. And it is full of heavily armed guards. Despite this, the two defendants are forced to sit inside a narrow cage whose glass front has only two small holes through which their lawyers can communicate with them. Every day, they are brought into the courtroom handcuffed like dangerous felons. One cannot help but contrast this with Budanov, the rapist and murderer who is now free to move about Russia at will. The judge refused without comment requests by the defence to remove the cage and to replace one of the prosecutors, who had already been a prosecuting counsel during the first trial. So the authorities' aim seems clear: put Khodorkovsky and Lebedev away for a much longer time - more than 20 years if they are convicted. Few doubt that they will be.Still, this new trial is of course also a test case for Medvedev's presidency. So far, he has done nothing to counteract the legal nihilism against which he himself has spoken. But maybe he will in the course of this trial, which resembles a personal vendetta even more than the first one did.To be sure, Khodorkovsky is no saint. Like many others in Russia who are allowed to enjoy their wealth in peace today (or maybe are lamenting its loss due to the financial crisis), he made his money in thoroughly obscure ways during the early post-Soviet

years. But, instead of buying villas, yachts, or soccer clubs abroad, he invested his fortune in Russia.Of course, he did mainly fill his own pockets - and his social and political activities certainly were not entirely altruistic, either. But what made him public enemy No 1 for Putin was his desire to move Russia in a political direction that he viewed as positive and desirable. It was his ambition to subject the country to truly far-reaching social and political reforms that sealed his downfall and also brought about this new trial, which appears intended to silence him for good.Medvedev's presidency will inevitably be measured by this case. Will he tolerate and endorse his prime minister's personal aversions, or is he willing to put an end to the infamous spectacle of a judicial process that has been manipulated and abused from beginning to end? Little speaks for the latter scenario, but Russia has always been a country where hope dies last.- Project Syndicate, 2009Susanne Scholl is Moscow Bureau Chief of ORF (Austrian Public Television). Her latest book is Tochter des Krieges: berleben in Tschetschenien (Daughters of the War: Surviving in Chechnya).

EUROPE: Democracy Failing Under Russian Shadowhttp://www.ipsnews.net/news.asp?idnews=46705

By Kester Kenn KlomegahMOSCOW, May 4 (IPS) - Eighteen years after the collapse of the Soviet Union, many of the newly created republics are still struggling to find a working democracy amidst failing economies.

"I believe that the main causes of political instability in post-Soviet states are the weaknesses of democratic political tradition, civil society and rule of law in these countries," Yevgeny Volk, head of Moscow's office of the Heritage Foundation, a policy think tank, told IPS. "The legacy of a totalitarian past and its institutions, such as Communist parties, is still strong."

And Russia has an interest in "destabilising these nations in order to discredit them in western public opinion and to alienate it against integrating these states into the European Union and the North Atlantic Treaty Organisation as reliable and secure partners," Volk said.

Governments in these countries, he said, had done very little to improve economic performance, diversify economies, and reduce dependence on Russian energy resources, labour and its consumer goods market.

Ukraine, Moldova and Georgia are going through tough times. Ukraine, which shares borders with Russia, Belarus, Moldova and Hungary, successfully organised the "orange revolution" in 2005, but its now third president, Viktor Yushchenko, whose term of office is to end late this year or early next year, is deeply unpopular.

In Georgia, opposition groups are holding nationwide protests against President Mikheil Saakashvili. His policy of integrating the ex-Soviet state with Europe and NATO, and his increasingly totalitarian tendencies have sparked criticism from opposition groups. His severe handling of the opposition - he himself came to power through street protests in 2003 - has triggered sharp criticism in the west.

The Georgian leader's popularity has plummeted since last August's disastrous war with Russia, and his failure to carry out the democratic reforms promised after the revolution that brought him to power. After the 'rose revolution' in Georgia and the 'orange revolution' in Ukraine, democratic growth has stagnated in Ukraine and even reversed in Georgia.

However, while political instability in Ukraine and Georgia have led to limited media and political freedom, the reverse is the case in Moldova. There has been political stability in Moldova ever since the communists came to power in 2001 and again in 2005.

"The communists used this strength to control the executive and the judiciary," George Dura, political researcher at the Centre for European Policy Studies (CEPS) in Brussels told IPS. "Moldovan authorities also increasingly put obstacles to media freedom. I think that the main reason for protests in Moldova is failing democracy linked to growing political stability and control under an increasingly authoritarian regime."

Moldova emerged as one of the poorest countries in Europe after the 1991 Soviet collapse. Up to a fourth of the population of four million works in the EU or Russia, and their remittances amount to almost 40 percent of Moldova's Gross Domestic Product (GDP), according to the World Bank.

While older Moldovans tend to regard Russia as their country's chief ally, many youth look west to Europe and neighbouring Romania, which shares close linguistic, ethnic and historical ties with Moldova. Many have joined protests to demand unification with Romania, a member of the European Union and NATO. President Vladimir Voronin has accused Romanian authorities of supporting the violent protests and of helping the opposition organise the political revolt.

And many in all these countries blame Russia.

"The development of democracy in ex-Soviet space is not failing, it is deliberately an attack from Russian authorities," minister for reintegration of Georgia Temuri Yakobashvili told IPS by email. "Democratic achievements are still fragile and need some kind of greenhouse conditions, or at least not storms or a hurricane. The west should play its part as well," said Yakobashvili, a former executive vice-president of the Tbilisi-based Georgian Foundation for Strategic and International Studies (GFSIS).

A spokesman for the opposition Georgian Conservative Party, Kakha Kukava, says the opposition is struggling to secure a democratic change of leadership.

"It is a wide question, the list of mistakes by Saakashvili is long such as planned restriction of media freedom, incomprehensible militarisation, inexplicable military rhetoric that led us to the August conflict, a discredited judicial system, state pressure on business, election fraud and as a result non-existence of real opposition in the parliament, and worse, negligence the of rule of law," Kukava told IPS from Tbilisi.

Chris Walker from the London-based Freedom House, an NGO that tracks democracy in many countries, told IPS that "efforts to advance democratic reform in poor countries such as Ukraine, Georgia and Moldova will invariably be put to even greater tests given the depth and sharpness of the global economic downturn. Therefore, political leadership in these nascent and partially consolidated democracies must find ways to engage the public and seek buy-in for policies that are capable of meeting these enormous challenges."

Walker said that the reform challenge throughout the former Soviet Union remains formidable, and virtually every state in the region is confronting serious democratic governance problems. "All of the countries of the Soviet region will undoubtedly face enormous challenges in the coming term but those that work towards more accountable and transparent governance will be better positioned to succeed in a modern, globalised environment."

PRESS DIGEST - Russia - May 4http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL446751220090504

Mon May 4, 2009 2:23am EDT

MOSCOW, May 4 (Reuters) - The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- President Dmitry Medvedev has appointed the governor of Khabarovsk region as his new envoy in Russia's Far East, the daily writes. - Labour Day rallies in Moscow last weekend gathered half of people than authorities expected, the paper says.

- President Dmitry Medvedev will personally present his message on outlines of 2010 budget to parliament. Previously such documents were sent to parliament and presented by a presidential aide.

- Eight people including three children died on Sunday agter kitchen gas exploded in an apartment block in the eastern city of Irkutsk, the daily writes.

VEDDOMOSTI

www.vedomosti.ru

- Severstal (CHMF.MM: Quote, Profile, Research, Stock Buzz), Russia's largest steel maker, is seeking to sell its U.S. assets by the end of the year, the daily reports, citing Financial Times.

- Oil price on the domestic market will fall by 7.2 percent in May, the daily says.

- Gazprom's net profit felt 4.7 times in the first quarter of 2009 compared to the same period of 2008, the daily writes.

GAZETA

www.gzt.ru

- Russian Defence Ministry is launching a programme aimed at retraining officers due to be sacked fromthe armed forces in the military reform, the papers reports.

- Russia's stock market grew by 19.4 percent in April, the daily writes.

National Economic Trends

Russian Ruble Gains Against Dollar, Little Changed Versus Eurohttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYgN0bUMYeSw

By Stephen Kirkland

May 4 (Bloomberg) -- Russia’s ruble strengthened against the dollar and was little changed versus the euro.

The currency advanced 0.2 percent to 32.9859 per dollar by 10:08 a.m. in Moscow, versus 33.0628 against the dollar on May 1, when official markets were closed for a public holiday. The currency ended at 33.1005 on April 30. The ruble was steady at 43.8826 per euro, from 43.8803 on May 1 and 43.7900 on April 30, according to Bloomberg data.

Those movements left the ruble 0.1 percent higher at 37.8888 against the central bank’s target basket, which is made up of about 55 percent dollars and the rest euros. It closed at 37.9307 on May 1 and 37.9108 on April 30, and remains above the 41 threshold policy makers pledged to defend on Jan. 22.

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

Last Updated: May 4, 2009 02:30 EDT

Russia daily c.bank swap limit at 5 bln rblshttp://www.forbes.com/feeds/afx/2009/05/04/afx6371596.html

05.04.09, 03:37 AM EDT

MOSCOW, May 4 (Reuters) - Russia set the daily limit for currency swap operations with the central bank at 5 billion roubles ($151.7 million) on Monday, the same as in the previous trading session.

Limits on how much foreign currency banks can swap for roubles in the central bank were introduced from Oct. 20 in a bid to hinder currency speculators. Operations which do not involve the central bank are unaffected. ($1=32.97 Rouble)

RF govt coordinating anti-crisis measures in construction – Kozakhttp://www.itar-tass.com/eng/level2.html?NewsID=13901129&PageNum=0

MOSCOW, May 4 (Itar-Tass) - Russian Deputy Prime Minister Dmitry Kozak said in an interview published by the Vedomosti newspaper on Monday that 12,000 apartments have been bought with funds allocated for the support of the Russian construction industry, 35,000 citizens will get new housing.

The official noted that the global financial crisis has affected the construction industry one of the first. “The main funds for the support of the construction sector were allocated from the Fund for Assisting the Housing and Public Utilities Reform (for resettling citizens from dilapidated housing) and from the budget of the Defence Ministry (for buying apartments for military servicemen),” Kozak said. “With these funds (about 20 billion roubles) 12,000 apartments have already been bought and over 35,000 citizens will receive new housing. It is a serious support for the builders as well – they will be able to complete unfinished houses and fulfil obligations to citizens that investment money in the housing construction,” according to the deputy prime minister.

Millions of workers are engaged in the construction sphere, “this sector has the largest multiplier effect for the whole economy, therefore coordination of anti-crisis measures in the government is coming to an end now,” Kozak said.

According to him, administrative procedures will be simplified, the antimonopoly regulation will be bettered, the system of control over price formation for construction materials and mechanisms of connection to utility networks will be improved.

“Speaking about money, more than 400 billion roubles (last year it was 226 billion roubles) will be allocated under various federal and regional programmes in the housing

sphere alone for the construction, modernisation of the housing fund and encouragement of the demand,” the RF deputy prime minister noted.

“In 2009, we will start the implementation of the major investment projects – Olympic Games, Student Games and Asia-Pacific Economic Cooperation (APEC) forum’s summit. This is also a basis for the future growth and encouragement of the demand, which is a most important element of the anti-crisis policy in the construction sphere,” Kozak emphasized.

The current cost of construction for the APEC summit to be held on Russky Island outside Vladivostok in 2012 is 140 billion roubles, Dmitry Kozak said earlier. He said the cost of construction had been reduced by 15 percent as in Sochi. The environmental situation in the Russian Far East is worse than that in Sochi, but the preparations for the APEC summit, including the construction of waste treatment plants and energy facilities, will help improve it, Kozak said.

The preparation of the APEC Summit 2012 will boost the social and economic development of Russia’s Far East, First Vice Prime Minister Igor Shuvalov said earlier. Shuvalov, who is the chairman of the summit organising committee, visited construction sites on the Russky Island. “This is means more than just the prestige of the country. The implementation of the programme of preparations for the APEC summit will boost the social and economic development of the whole Far Eastern Federal District and will create several thousand new jobs,” he said.

Price rises may come back to haunthttp://www.russiatoday.ru/Business/2009-05-04/Price_rises_may_come_back_to_haunt.html

04 May, 2009, 10:43

Economists warn price rises during a downturn will hurt companies in the longer term. Ford raised the cost of its vehicles by up to a quarter from May, but the company says it has no choice.

As demand slows, carmakers in the West offer record discounts. In the UK it's now cheaper to buy a new car than a used one, claim auto experts Parker's. But Russia's heading the other way, with Nigel Brackenbury saying cost pressures mean there is no alternative.

“[As for] Anybody with a large imported content in the product, the devaluation has been substantial in terms of the impact on our margins, so we've had to take successive price rises through this year, and what you saw in May is our latest instalment of that. It's something we've seen in our competitors too, and it's something that will continue through the year.”

Imported goods are worst hit by the recent double whammy of rouble devaluation and

higher customs duties, leading many to push up prices. Studies show Russian shops are now twice as expensive as in the EU. But Natalya Zagvozdina, Head of Russian research at Renaissance Capital warns price rises will come back to haunt firms.

“Producers are trying to compensate for rising costs and falling sales by increasing prices. Ultimately it will further hurt their sales.”

But corporate moans sound more like crocodile tears. Per square metre, top retailers in Russia sell more than 20,000 dollars worth of goods, double the volumes in Western Europe. With two times the footfall, there seems little justification for twice the price.

Russian industrial confidence: Hopes of a quick rebound look unfounded in Aprilhttp://www.businessneweurope.eu/dispatch_text8526

Rencap, RussiaMonday, May 4, 2009

IET's (Gaidar Institute) April industrial confidence index for Russia indicates a decline in demand for industrial production over Apr 2009. From Jan-Apr, sales of industrial products declined steadily, with no changes (positive or negative). Positive dynamics (seasonally adjusted) were registered in the chemicals industry, with sales in all other sectors declining - most significantly in the construction, food and machinery sectors.

In April, industrial production plans for the coming two months were significantly revised, with the expected rate of decline equaling that recorded in Dec 2008 and Jan 2009. The decline in demand forced enterprises to cut prices (the rate of price decline in April remaining the same as in January). Also negative is the registered lack of floating funding for enterprise.

The IET Index seems to indicate that the previous focus of businesses on observing the crisis as it unfolded has evolved into a more sober view of the real situation, with post-crisis perspectives now on the agenda.

Elena Sharipova

Manufacturing PMI rises from 42.0 to 43.2 in April http://www.businessneweurope.eu/dispatch_text8526

VTB CapitalMay 4, 2009

VTB Capital's Manufacturing PMI rose to 43.4 in April, from 42.0 the month before. This is its highest level in six months and points to a further easing in the rate of contraction across the sector. The key output sub-index remained nearly flat at 43.7 over the month and the new orders sub-index, having climbed from 40.5 to 43.9, remained

well below the no-change 50 mark.

The employment outturn pointed to a weakening, but still sharp, rate of redundancies. Output prices declined after the one-off rebound recorded last month, while the pace of input prices growth slowed in April.

While the latest report continued to point to a moderate easing in the rate of decline across the Russian manufacturing sector, the headline index remained below the no-change 50 level. The recent results of the PMI reports were followed by official industrial production data, similarly highlighting MoM improvements in output in February (+6.4%) and March (+11.1%), suggesting April's Rosstat results could again point to a further rise in industrial output (albeit at a slightly more modest rate than in the previous month).

Survey participants are increasingly pointing to financial difficulties at clients and manufacturing companies. Clients' deteriorating ability to pay was one of the reasons for the continued decline in output. It also resulted in output prices falling in April following the temporary rise in March. The financial problems experienced by manufacturing companies led to weaker demand from them, which to a certain extent helped them to negotiate better prices from suppliers.

This partially offset the higher energy costs and losses from exchange rate fluctuations, resulting in input prices rising at a weaker rate than a month ago.

Financial difficulties were also mentioned as being behind the lengthening delivery times to factories and quantities of purchases made by manufacturers.

Business, Energy or Environmental regulations or discussions

FGC management still expects transition to RAB from 2010http://www.businessneweurope.eu/dispatch_text8526

Troika, RussiaMonday, May 4, 2009

Federal Grid Company (FGC) is counting on being transferred to RAB from 2010, Interfax reports citing FGC Management Board member Alexey Maslov as stating last Thursday. He said: "We hope the transition will take place, we have got the relevant support from the state authorities. This week, sector leadership and heads of tariff agencies once again confirmed that transition to RAB is an important task". He noted that the key difficulty is transition to RAB, but limitation of the tariff growth at the same time. This task is clear and solvable, so we think that it is fully possible to be transferred to RAB from 2010. In terms of further possible amendments to the new 2009 11 investment program (R456bn), he stated that it is rather firm. It is already very much trimmed down in terms of budget financing and tariff growth expectations. Maslov also added that in terms of the tariff regulation the government's emphasis is on the electricity sector, hence

there are all chances to stay within the current parameters.

Transition to RAB is one of the key value drivers for FGC longer term and the alleged support from state authorities in this issue is positive news for the company, especially now that there is pressure on lower tariff hikes in the next few years (Economics Ministry's proposal). Transition from 2010 is in line with the management's previous statements, but no planned delay is good news. A "solvable" task likely refers to the price smoothing mechanism, i.e. that actual allowed tariff growth would be smaller than that implied by the RAB parameters in the beginning. However, the missed profits should be compensated in the future; thus, it would ultimately be not that bad. The key priority is to have the initial RAB (iRAB) approved at an adequate level, as once set, it is difficult to change. It is better to forego short term profits, but to have the iRAB approved at a sufficiently high level.

As the new investment program is very slim in terms of tariff growth expectation, there is a chance that the proposed RAB parameters may be accepted, even though price smoothing can be applied. The investment program financing implies a 60% y o y increase in the own funds to be allocated for the 2010 investment, which should warrant a relatively strong tariff increase next year, we believe, if the capex is to be fulfilled. There is an agreement with the regulator to fix all of the decisions on FGC by mid June, FGC Deputy Management Board Chairman Chistyakov said mid April.

Alexander Kotikov

TGK net profit doubles in Q1http://www.interfax.com/3/491503/news.aspx

ST. PETERSBURG. May 4 (Interfax) - TGK-1 (RTS: TGKA) posted a netprofit of 1.720 billion rubles in the first quarter of 2009 underRussian accounting standards (RAS), roughly double the profit of 864million rubles in the first quarter last year, the generating companysaid in a statement. TGK-1 includes 55 power stations in St. Petersburg, the Leningradand Murmansk regions, and Karelia. Installed capacity equals 6,275megawatts of electricity and 14,548 Gcal/hr of heat. Gazprom (RTS: GAZP)owns a controlling stake.

VEB May Sell Bonds to Reorganize RusAl's Debthttp://www.themoscowtimes.com/article/1009/42/376777.htm

04 May 2009 Bloomberg

Vneshekonombank may sell bonds convertible to stock in United Company RusAl to help reorganize a $4.5 billion loan, said Viktor Vekselberg, the metals company's

billionaire chairman.

RusAl and Vneshekonombank, or VEB, are in talks on the debt, Vekselberg said in an interview with Russian newspaper Vedomosti published Thursday. Vekselberg spokesman Andrei Shtorkh confirmed the remarks. VEB declined by e-mail to comment on "ongoing talks."

Vekselberg also said RusAl may move to reorganize the debt by selling its 25 percent stake in Norilsk Nickel worth about $4 billion at the stock's current price.

"The acquisition was a strategic investment for RusAl, and today we are not looking at sales options," RusAl spokeswoman Vera Kurochkina said of the stake in comments e-mailed after the interview was published.

The holding was used as collateral for the one-year loan, which is due in October. RusAl would only sell the shares if it were to get more than it paid to buy them from billionaire Mikhail Prokhorov, Vekselberg said. If VEB were to sell convertible bonds, they would be backed by RusAl debt, he said.

RusAl agreed in April 2008 to pay more than $7 billion in cash and 14 percent of its shares for the Norilsk stake.

The aluminum company was valued at $36 billion recently after it agreed to swap $2 billion of the cash payment to Prokhorov for a further 4.5 percent of its stock, Vekselberg said.

Norilsk shareholder Vladimir Potanin is among "many people" who are interested in RusAl's stake, Vekselberg said. Norilsk is Russia's biggest mining company.

RusAl was "close" to breaking even in the first quarter and may report a "small" profit by the end of the year as it cuts costs and retires unprofitable capacity, Vekselberg said.

The company is cutting output by 11 percent this year to 3.9 million metric tons, which RusAl expects will still be more than its rivals. The risk of a default by RusAl on the VEB loan is "minimal," Vekselberg said.

Also in the interview, Vekselberg said he did not rule out a merger of Oerlikon and Sulzer, although it makes no sense at present because of the financial crisis.

Oerlikon should not solve its financial difficulties via a merger with Sulzer, Vekselberg said. A merger may involve all or parts of the two Swiss companies.

Vekselberg said his Renova Holding does not plan to increase its stake in Sulzer and will support Juergen Dormann as the new chairman.

Renova has renegotiated the terms of the loans with banks that helped finance its

purchases of Oerlikon and Sulzer stakes, Vekselberg said. The loans are no longer tied to the price of the companies' shares, although Vekselberg's stakes are still used as collateral.

Norilsk to seek debt restructuring – paperhttp://www.reuters.com/article/rbssMiningMetalsSpecialty/idUSB21978320090503

Sun May 3, 2009 9:12am EDT

MOSCOW, May 3 (Reuters) - Russian miner Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz), the world's largest nickel producer, is seeking to reschedule debts linked to the 2007 takeover of Canada's LionOre, London's Independent on Sunday reported on Sunday.

Norilsk declined to comment when contacted by Reuters after the newspaper reported it "is looking to ease the terms of the loan taken out on its $6.4bn purchase of Canadian rival LionOre in 2007".

The London offices of investment banks Rothschild and Lazard have been approached by Norilsk to help "sort out its debt difficulties", the Independent on Sunday reported.

The company, also Russia's largest platinum and copper miner, is co-owned by some of Russia's richest men.

Billionaire Vladimir Potanin has reduced his stake to 25 percent plus one share, while United Company RUSAL -- majority owned by Oleg Deripaska -- holds a similar stake. (Reporting by Conor Sweeney; Editing by Hans Peters)

KazakhGold makes statement on Polyus Gold offerhttp://www.businessneweurope.eu/dispatch_text8526

Troika, RussiaMonday, May 4, 2009

KazakhGold made a statement on the conditional offer that was previously made by Polyus Gold, commenting that due to a serious deterioration of the financial position of the company during 1Q09 the proposal will now be revised, but Polyus Gold remains committed to making a final binding offer (under Rule 2.5 of the UK "Takeover Code") on new conditions by end May. The final offer will obviously be subject to the approval of the UK Takeover Panel and the BoDs of both Polyus Gold and KazakhGold.

Additionally, KazakhGold failed to post its annual financial results by end April, as per new regulations on LSE taking effect this year, and it thus requested that the regulator suspend share trading until the results are released.

The latest available financials for KazakhGold are its 1H08 results in which the company had $68m in cash and $258 in debt, including $200m in Eurobonds maturing in 2013. Considering its decent cost structure, KazakhGold should have been operationally cash flow positive through 2H08 1Q09, and we presume only severe operational issues could have caused a deterioration in liquidity.

As a reminder, the previous offer from Polyus Gold stood at 0.423 local shares per KazakhGold share, translating into circa $17 per KazakhGold share. The offer has already been revised downward by some 30% last autumn.

Mikhail Stiskin

Analyst doubts Severstal Warren salehttp://steelguru.com/news/index/2009/05/04/OTI5NTI%3D/Analyst_doubts_Severstal_Warren_sale.html

Monday, 04 May 2009Tribtoday quoted a prominent steel industry analyst as saying that he doubts AK Steel wants to buy the OAO Severstal Warren steel mill, saying the Warren mill wouldn't be a good fit.

Mr Charles Bradford president of Bradford Research said of a report by Steel Business Briefing that AK Steel and Severstal executives discussed the possible transaction in meetings late last week that "It makes no sense to me whatsoever."

Noting a rumour didn't pan out last year that Severstal was interested in buying AK Steel, Mr Bradford said AK Steel doesn't have the money to buy the Warren mill.

He added the two operations don't fit because Warren doesn't have a supply of coke, which fuels the blast furnace, and that AK Steel also is very short on the raw material because of local opposition to construction of a coke plant at the company's Middletown base.

(Sourced from Tribtoday)

Severstal seeking sale of NorthAm assets to raise liquidity despite severe downturn in steel industry http://www.ft.com/cms/s/2/cea60910-3589-11de-a997-00144feabdc0,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

By Michael Ross and Yana Morris

Published: April 30 2009 15:40 | Last updated: April 30 2009 15:40

Severstal, the listed Russian steelmaker, is quietly shopping its North American business to potential buyers as it faces substantial debt repayments over the next few years, according to sources familiar with the situation. The company was said to be having discussions with a limited number of parties through financial advisor Lazard.

Severstal declined to comment.

Severstal’s monetization efforts come at a surprising time, as the steel industry continues to see weak demand from end user markets. ”When you see the end users like auto and homebuilding continue to show a fairly long bottom cycle, it gives a very dim outlook for the steel industry,” said one sector banker.

Other than its SeverCorr mini-mill operation in Columbus Mississippi, Severstal’s North American assets are considered nothing spectacular, and the company is likely to struggle to find an entity willing to take on the entire portfolio in the current climate, sources agreed.

Severstal reported a total of USD 1.868bn in contractual debt maturities for 2009 that either have to be repaid or refinanced. It already repaid USD 325m in Eurobonds in February and has to repay another USD 480m in notes during the course of the year, which will be done though the company’s own cash flows, the source said. The company had a total of USD 2.653bn of cash and cash equivalents as of 31 December, 2008.

In 2010 Severstal will have another USD 900m in debt repayments, but the biggest challenge comes after 2010 though to 2013 when the company is facing over USD 4bn in maturities.

While liquidity pressures are not immediate, Severstal is still eager to exit North America by year end, said the source. North American business was the biggest contributor to the group’s USD 1.8bn loss through significant impairment charges coming from acquisitions of Sparrow Point and WCI Steel in 2008.

With a rising level of unpaid receivables and pressure on working capital, Severstal needs to raise capital levels, he said. ”Cutting CAPEX and layoffs are not going to help as much when demand continues to fall.”

Two sources claimed that Severstal has been talking to steel companies from Brazil, as well as Nucor, ArcelorMittal and Essar. Yet despite exploratory discussions, given the fact that most steelmakers are slowing supply and focusing on being well capitalized for an extended downturn, garnering a sale of the assets will prove to be a challenging task, sources said.

Even if Severstal can find a buyer for SeverCorr, there is still uncertainty around whether it could achieve an acceptable price, added one of the sources. Also, if Severstal sold SeverCorr independently, it would be left with a portfolio of less attractive assets, hindering its negotiating position for any future divestiture, he said.

However, if there is any interest in SeverCorr or any other of Severstal’s assets, CSN of Brazil may be a leading contender, one source said. The steel major had been considering acquisitions in North America before the cycle took a downturn and at one point was even considering acquiring American steel giant Nucor, he added. CSN was not available for comment.

SeverCorr plans to produce 3m tonnes by 2010. Depending on prices assumed, it could garner anywhere from USD 1bn to 1.75bn in the event of a sale, said a banker familiar with the operations. Although he doubted the likelihood of any suitors stepping forward in the current environment.

GM Said to Consider European and Global Proposals for Opel Unithttp://www.bloomberg.com/apps/news?pid=20601087&sid=asZp6LlEV9lk&refer=home

By Serena Saitto and Jeff Green

May 4 (Bloomberg) -- General Motors Corp. started due- diligence talks last week with potential bidders for Opel, people familiar with the discussions said.

One focus is on a proposal, such as that from Magna International Inc. and Russian carmaker OAO Gaz, to take over the bulk of GM’s European unit, said the people, who asked not to be named because the talks are private. A second approach, with Fiat SpA, includes the sale of Opel in Europe and possible tie-ups with GM operations in Latin America, Europe or elsewhere, they said.

GM needs a partner to run Opel, maker of the compact Astra and midsize Insignia sedan, before June 1 or the German unit faces bankruptcy, its top labor leader said last week. GM is trying to cut $1.2 billion in costs and win European aid to keep the unit operating independent of U.S. operations.

Other parties interested in Opel include sovereign wealth funds Abu Dhabi Investment Council and the Government of Singapore Investment Corp. and three private-equity funds, one of the people said.

While GM hasn’t yet selected a frontrunner, a tie-up with Fiat may offer the best strategic solution in terms of sharing platforms, technology and management, one of the people said.

Fiat’s spokesman Gualberto Ranieri declined to comment on Opel. Fiat’s CEO Sergio Marchionne confirmed that reaching a deal with GM is his next goal, after sealing U.S. support for a partnership with Chrysler LLC, the Auburn Hills, Michigan-based automaker that filed for bankruptcy protection April 30.

A combination of Fiat, Chrysler and GM’s European operations would generate 80 billion euros in annual revenue, Fiat’s board said in a statement yesterday.

Aiming for Opel

“Now we have to concentrate on Opel,” Marchionne told Fiat-owned newspaper La Stampa of Turin, Italy, in a May 1 interview, “They are our perfect partner.”

Opel began as a manufacturer of sewing machines in 1862 and became a carmaker before GM bought it in 1929.

Identified by a lightning-bolt trademark, the unit has been in slow decline for decades as poor quality turned off consumers. Combined market share in Western Europe for Opel and Vauxhall, its British twin, fell to 7.9 percent in 2008 from 12.6 percent in 1993, according to the European Automobile Manufacturers’ Association.

Magna, Fiat and financial investors are vying for stakes in Opel. Detroit-based GM, surviving on $15.4 billion in U.S. loans, can’t provide financial support to Opel and is looking to sell a stake in the carmaker to secure 3.3 billion euros ($4.4 billion) in European state aid.

Marchionne has said that a global auto group needs 5.5 million to 6 million vehicles annually to have the economies of scale to compete.

Combining Fiat with Chrysler and GM’s Latin American and European Opel/Vauxhall operations could create a 6.8-million unit giant.

Worker Representatives

Opel worker representatives have repeatedly ruled out an agreement with Fiat, Italy’s biggest manufacturer. Employees have a say in the process as GM’s rescue plan for the European unit calls for workers to make concessions. A person close to GM noted that whoever is going to take control of Opel will have to close the least-profitable plants.

“We are open to working with Magna, but not with Fiat,” Klaus Franz, head of Opel’s works council, told Bloomberg last week. A deal with Turin, Italy-based automaker, “would be a Fiat rescue at Opel’s expense,” the labor representative said, arguing Magna would offer access to technology and opportunities to enter new markets, such as Eastern Europe.

The two European automakers would have a combined 20 billion euros in debt and 1 million vehicles in excess capacity, he said.

Aid for Opel

GM, seeking $11.6 billion in additional U.S. aid, has also been trying to win aid from governments in Germany, the U.K. and Spain to obtain funds for Opel and the Luton, England-based Vauxhall brand.

Magna, based in Aurora, Ontario, hasn’t specified how much it would invest or the size of the stake it wants, Franz said April 28.

Rheinische Post, citing unidentified people close to the companies, reported April 29 that Magna and Russian partners are seeking 5 billion euros to help buy a stake in Opel. Magna would own 19 percent of the German carmaker, while Moscow-based OAO Sberbank, Russia’s biggest lender, and Nizhny Novgorod-based carmaker OAO GAZ would hold 31 percent, the newspaper reported.

Magna-GAZ Concept

GAZ denied on April 23 an earlier report of interest in Opel. The Russian manufacturer is controlled by billionaire Oleg Deripaska, who held a stake in Magna for more than a year until his rising debts prompted a sale of the holding in October.

Magna executives held talks April 28 with German Economy Minister Karl-Theodor zu Guttenberg in Berlin. He called Magna’s concept for securing Opel’s viability “interesting” and said possible bidders would meet with GM to clarify financial data before presenting industrial plans.

The Canadian company has formulated a joint offer with Deripaska and unidentified Russian banks, a German government official said April 28. Magna’s stake in Opel wouldn’t exceed 25 percent, the aide said.

Financial investors and private-equity firms remain interested in Opel, Franz said last week, declining to discuss the approaches for fear of scaring them off.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net.

Last Updated: May 3, 2009 21:44 EDT

Holiday week announced at Russian carmaker

http://www.itar-tass.com/eng/level2.html?NewsID=13900929&PageNum=0

SAMARA, May 4 (Itar-Tass) - A week of May holidays has been announced at Russia’s AvtoVAZ carmaker, its press service reported on Monday. This is done in line with the regime of saving production costs and maintaining jobs.

May 4 to 8 have been announced days off at the enterprise with the compensation of two thirds of average salaries as it is done during the idle time.

The plant will be reopened on May 12. In May, the personnel engaged in the production of Lada Priora, Lada Kalina, Lada Samara and Lada 2105/2107 makes will work four days a week in two six-hour shifts.

Workers producing Lada 4x4 vehicles will work five days a week in two eight-hour shifts. The personnel not engaged in the production of cars and urgent work will not work in May, but will get two-thirds of their average salaries.

The plant seeks to avoid sackings. The decision on the week of holidays has been coordinated with the plant’s trade union committee. Kindergartens, canteens and health centres will keep operating.

Apatit net profit down 36% in Q1http://www.interfax.com/3/491532/news.aspx

ST. PETERSBURG. May 4 (Interfax) - Apatit (RTS: APAT) in Murmanskregion, a company in the PosAgro group, posted a net profit of 1.135billion rubles in the first quarter of 2009 under Russian accountingstandards, the company said in a statement. That was 36% lower than the net profit of 1.777 billion rubles inthe first quarter last year. Apatit is Russia's biggest producer of apatite concentrate. Thecompany is developing the Khibiny deposit. Six deposits are in operationand ore is treated at two apatite-nepheline concentrating plants.

Russian Government to support residential constructionhttp://www.businessneweurope.eu/dispatch_text8526

Rencap, RussiaMonday, May 4, 2009

The government has said that it intends to channel RUB427bn ($12.8bn) into residential construction this year, of which RUB127.5bn ($3.8bn) will be used for construction of new residential buildings. Separately, the Ministry of Regional Development has said that it expects almost 52mn/m2 of residential housing to be commissioned in 2009. During the first quarter of this year 10.4mn/m2 of housing was introduced to the market, in contrast to 63.8m/m2 last year. We see government contracts for housing construction as one of the main tools the government will use to support homebuilders such as PIK and LSR Group this year. Whilst this is positive in the absence of housing demand stablising, at this point we are not aware of either PIK or LSR having finalised any contracts. Furthermore, margins for government contracts are only around 5-15% which is low

(mid-20% usually) and this is unlikely to be fully reflected in 2009 consensus forecasts.

David Ferguson

Insurance sector braces for consolidation http://www.russiatoday.ru/Business/2009-05-04/Insurance_sector_braces_for_consolidation_.html

04 May, 2009, 10:47

Along with banking and the financial sector, Russia's insurance market has been hard hit by the downturn. Experts say they expect a massive consolidation in the sector.

Insurance is a growth industry – often for the wrong reasons. People’s mishaps drive premiums and profits. But car insurance, which used to provide a stable income, now has become unprofitable due to low tariffs set by the government. And that’s driving talk of consolidation.

Industry players can not say whether Russia has too many or too few insurance companies, but Russian drivers and their accident rates have already contributed to keeping up demand

Until recently top Russian insurance companies were rocketing at an annual growth rate of 40%. At the time western counterparts thought 2% a success. As a result, a large number of new insurance companies appeared on the Russian market, according to Dmitry Markarov, First Deputy General Director at Rosgosstrakh.

“At the beginning of the century there were 1500 companies. Each year at least 100 would leave the market. It went in waves, due to increases in capital, and battles against illegal schemes.”

This brought the number of insurance companies to fewer than 800. However, market players are saying there’s already more than enough. Three quarters of the market is controlled by the top 10 companies. Now Markarov believes the economic crisis could lead to another round of changes.

“Due to competition and the need for income, insurance companies are dropping their rates. Now reserves don’t cover everything and that results in weak financial stability. Dumping only accelerates the company’s death. According to forecasts the number of companies will shrink by 50%. Other forecasts predict there will only be 200 players left.”

But others, like Sergey Tsikalyuk, Chairman of VSK Insurance House, are more optimistic and expect only an erosion of credit quality, with the number of companies

barely changing. For evidence, they point to the US, which has over 7000 companies or Germany, with 2500 firms.

“The market should decide, it should not be done artificially. Healthy competition and the presence of hundreds, thousands of insurance companies tells of a healthy society and the right path of development.”

Bailiffs ask RTS for value of VimpelCom shares, worse case scenario still unlikelyhttp://www.businessneweurope.eu/dispatch_text8526

Combined reports May 4, 2009

Vedomosti reports today that court bailiffs have asked the RTS for information regarding VimpelCom (VIP) shares.

A Russian court found that the Norwegian shareholder in the company Telenor is liable for a fine of $1.7bn in a case bought by Farimex, a minority shareholder that is widely believed to be fronting for the Alfa Group, which is the other major shareholder in VIP. The bailiffs have seized Telenor's company's stake in VIP. The bailiffs have the right now to auction off the shares to pay the bill, but few analysts believe the row will get to that point.

Bailiffs asked if the VIP shares were traded on the RTS and at what price.

Ivan Kim of Rencap wrote: "We believe the news will create negative sentiment toward VimpelCom stock. The sale of the Telenor shares could happen quickly, in our view, if the bailiffs or Farimex want it, although the bailiffs has said earlier they might need at least one month to execute the sale of shares."

However, the Moscow Arbitration Court postponed until May 6 the hearing of Telenor's plea for a stay of enforcement of the Omsk court ruling on the Farimex-Telenor case ordering Telenor to pay $1.7bn in damages to VimpelCom.

The court has asked for the details of the judgment of another court in Siberia which rejected a similar motion by Telenor just two days earlier.

Uralsib writes: "In our view, the chances remain quite good that the Moscow Arbitration Court will grant Telenor a stay of enforcement thereby eliminating the risk of Telenor's stake in VimpelCom being sold."

Uralsib wrote: "[The bailiffs request for information from RTS] means that the risk of a forced sale of Telenor's stake in VimpelCom, most of which has been seized by Russian bailiffs, still exists. That said, we believe that the likelihood of such a scenario remains very low and the most probable outcome is the reaching of an agreement between Telenor and [Alfa Group's telecom holding] Altimo.

"The news is neutral for the stock. We view this news as neutral for Vimpelcom's shares, as the market seems to believe that the status quo will be maintained until the start of the hearing of Telenor's appeal on the Farimex case scheduled for May 26."

VTBC concurs: "The news is fairly technical as we do not expect the shares to be sold in the coming three days... Should the Moscow Arbitration Court dismiss Telenor's appeal this Thursday, the next hearing, at which the Norwegian holding will try to stop the execution of the sale, will be the 26 May cassation in the West Siberian Court (Tyumen)."

The current value of Telenor's 29.9% stake in VimpelCom on the RTS is $1.83bn, estimates Rencap.

Most analysts still have the VIP shares marked down as a "buy".

"If the Moscow court does grant Telenor a stay on May 6 this could provide short-term support to VimpelCom's share price. Meanwhile we continue to regard VimpelCom as fundamentally attractive at current levels traded at 2009E EV/EBITDA of 4.1 and offering 12% upside potential to our 12-month target price of $11/GDR. We reiterate our Buy rating for the stock," says Uralsib.

The Long Case for Russia's Mobile Telesystems

http://seekingalpha.com/article/134812-the-long-case-for-russia-s-mobile-telesystems

by: Paul Harper May 03, 2009 | about stocks: MBT / VIP / VOD    

Although in Q4 2008, Mobile Telesystems [MTS] (MBT) suffered a disastrous $794.8 million foreign exchange loss to reflect book value of the company’s foreign-denominated debt due to the weak ruble, there are plenty of signs Russia’s largest mobile operator is worth investing in now. Revenue grew 4.0% to $2.42 billion from $2.33 billion a year ago, which is healthy in the current economic climate. Taking into account that the ruble declined by 16% against the dollar in the last three months of 2008, this is a signal that Mobile Telesystems is a very robust play indeed.

MTS operates GSM based mobile services across six countries within the CIS (Commonwealth of Independent States); Russia, Ukraine, Uzbekistan, Armenia, Turkmenistan and Belarus. It also has interests in foreign mobile operations in Daghestan and India, with more on this later. Within Russia, it has the highest number of post paid customers, as it looks to serve higher end users.

In mid-April the company released subscriber figures for the 12 months ending Q1 2009 and they show some impressive growth in all markets served : Russia-8.7%, Ukraine-

8.5%, Uzbekistan-67.9%, Turkmenistan-141.4%, Armenia-44.8% and Belarus-11.9%. This brings the total subscriber number for MTS up to just short of 93 million end users of which 65 million are in Russia. In comparison, the next largest operator Beeline (Vimpelcom (VIP)) has 49 million subscribers, out of a total addressable base of 190 million.

With a current market cap of $13.1Bn and sales of more than $10.2Bn in the last year, MTS looks set to be able to service its $2.9 billion in debt. With net annual income of $1.9Bn, MTS would not seem to be overly burdened by debt.

MTS' forward-looking strategy is working on two distinct areas: cost reduction and ARPU growth through the introduction of VAS (Value Added Services). A good example of both can be seen in the partnership with Vodafone (VOD) last year, which should bring some interesting synergies, including CAPEx optimizations on the introduction of the Vodafone Live! platform, advice on network deployment, retail network insight to develop distribution and the introduction of CRM services based on the Vodafone Globals platform which will hopefully enhance subscriber loyalty and have a positive impact on churn.

Meanwhile, MTS is also introducing a number of new 3G based services, looking to capitalize on the low internet penetration rate in Russia. Chief Commercial Officer Mikhail Gerchuk said the company would double the number of large Russian cities in which it has third-generation mobile networks to 50 by the end of the year, and is looking for opportunities to enter the fixed-line market. MTS hopes to use its dominant position in post-paid to attract users to a slate of new services and has recently launched a new mobile internet platform, Omlet, to provide entertainment services to content hungry young Russians.

“We want to become what iTunes is for America,” Gerchuk told Reuters in an interview, referring to Apple’s online music store, from which more than 6 billion songs have been bought and downloaded since it launched in 2001.

Gerchuk said the relatively low presence in Russia of global brands such as Apple (AAPL), Google (GOOG) and Amazon (AMZN) would help MTS. With less than 27% of Russians currently enjoying internet access and less than 4M broadband users, MTS has a good case of sucking up new users with all you can eat data plans via a mobile broadband USB offering. The company is also looking at the potential of entering the fixed line market, MTS plans to invest $1.5 billion in capital expenditures this year, including $450 million to develop infrastructure.

“We have the opportunity to give many people the chance to access the Internet for the first time,” Gerchuk said. “Acquisition is faster than building for fixed networks, but it has to be profitable.”

As previously mentioned, MTS is actively looking for further overseas expansion, including further expansion into ex-Soviet countries. The company has a track record of

being able to manage these sorts of deals and partnerships. Of more interest is its position further afield, namely in India. MTS franchised its brand to Shyam TeleServices last year in what is becoming one of the fastest growing global mobile markets.

Shyam which currently has operations in 3 states in India, currently serves 5 million users and has ambitions to double that in the next three months. Shyam has also stated that it will be in a position to serve all 22 Indian states by the third quarter of 2010. MTS’s parent company, Sistema, owns a 74% stake in Shyam TeleServices. Gerchuk said MBT would have to monitor the situation in India before deciding whether to enter the market in earnest, and would probably do so through an acquisition if it decides to go that route.

“India is a very competitive market, with eight operators,” he said. “There’s also the possibility of entering the market by acquisition — probably the better option in a crowded market.”

Taking all of the above factors into consideration, it points to strong growth and some very interesting potential both through new services at home and new network operations abroad. For me, this is a good long term investment and as such, I initiated a buy last week.

Looking at the chart to the right shows that MTS has returned 62% through steady growth, which is pretty formidable. I’m just kicking myself that I didn’t move sooner. Mobile Telesystems closed on Friday at $35.15. So far the stock has recorded a 52-week low of $18.36 and 52-week high of $89.24

Disclosure: Long MBT

Russians rejecting money for barterhttp://www.abc.net.au/lateline/content/2008/s2558853.htm

Australian Broadcasting Corporation

Broadcast: 01/05/2009

Reporter: Scott Bevan

Increasing numbers of Russians are rejecting money in favour of barter and it's not just individuals. Companies large and small are bartering as a way of staying in business.

TranscriptLEIGH SALES, PRESENTER: According to the old saying, money makes the world go round. But in Russia, more and more people are relying on bartering. And it's not just individuals who are exchanging goods and services; companies large and small are bartering as a way of staying in business. But some analysts warn that bartering is trading away a quicker economic recovery for Russia. Moscow correspondent Scott Bevan reports.

SCOTT BEVAN, REPORTER: This may be how business is usually done, but with money drying up, many Russians are looking to exchange goods and services directly.

KHADIS ALIEV, RUSBARTER (voiceover translation): With the economic crisis, barter deals, barter companies, the whole barter market is growing quite fast.

SCOTT BEVAN: On bartering websites, thousands of exchange offers are popping up, suggesting how tough times are for some. A cottage for a car, rubber boots for a box of chocolates, even retail discount cards for baby food.

KHADIS ALIEV (voiceover translation): Barter is saving the Russian economy.

SCOTT BEVAN: Companies are also bartering, with everything from building products to apartments being used as currency and as a means of survival.

ANDREI YAKOVLEV, HIGHER SCHOOL OF ECONOMICS: Non-payments from our customers, from consumers is the main reason for development of barter.

SCOTT BEVAN: Dmitry Morenkov from a firm called Russian Grain says his company is doing fine, but under extraordinary circumstances they've had to accept payment in forms other than money from customers. On the whole, he's sceptical of bartering.

DMITRY MORENKOV, RUSSIAN GRAIN: For example, for a grain trading company to be paid by cars, for example, or whatever, by oranges, it will be quite difficult because to sell it to someone else and to be paid by let's say a third type of commodity.

SCOTT BEVAN: German Sterligov thinks linking up companies and exchanging commodities is the way of the future.

GERMAN STERLIGOV, ANTI-CRISIS SETTLEMENT AND ACCOUNTING CENTRE: The money is like this good or like this good or like this good.

SCOTT BEVAN: After becoming a millionaire in the new Russia in the 1990s, German Sterligov retired to a simpler life in the country.

Now he's come out of the wilderness and set up what's called the Anti-Crisis Settlement and Accounting Centre. His aim is to create a global chain through a database, linking five or so companies at a time where goods, services, even debts, and for those who have

it, money, can be exchanged.

Sterligov believes the credit crunch may be a nightmare for banks, but it's an opportunity for his system and it helps companies with products but no cash flow to stay in business.

GERMAN STERLIGOV (voiceover translation): It's a simple case of exchanging commodities for other commodities. It's the way it's been done through the history of mankind, before the banking system came to the fore.

SCOTT BEVAN: Bartering is estimated to account for up to 5 per cent of total sales in Russia, still a far cry from its prominence during the turbulent 1990s when bartering was believed to be involved in more than half of all transaction.

Analyst Andrei Yakovlev says bartering could help struggling companies ride out the crisis, but in the longer term it could prove to be a hindrance to Russia's economic growth, particularly in its recovery from the downturn.

ANDREI YAKOVLEV: For state budget it's practically impossible to collect taxes in kind, in barter. It will reduce opportunities for government and for state to resolve some problems due to the crisis.

SCOTT BEVAN: Russian Grain's Dmitry Morenkov says while it's difficult for the private sector to use bartering, it could be a tool for governments to exchange goods on a global scale.

DMITRY MORENKOV: Maybe with the time, in case the world economic crisis develops more, so just we will have to think about this possibilities and realities.

SCOTT BEVAN: But the trading director hopes it doesn't come to that and that the crisis ends quickly and money once more flows freely.

Scott Bevan, Lateline.

Activity in the Oil and Gas sector (including regulatory)

Urals crude averaged $45 in Jan.-Apr. - Russian Finance Ministryhttp://en.rian.ru/business/20090504/121422455.html

MOSCOW, May 4 (RIA Novosti) - The average price of Russia's benchmark Urals blend crude was $44.79 in January-April 2009 against $96.50 in the same period last year, the deputy head of the Finance Ministry's customs department said on Monday.

"The price for Russian oil was $48.81 per barrel in April this year against $105.2 per barrel last April," Alexander Sakovich said.

The official voiced the opinion that the oil export duty would be lower in June than in May. He said last month Russian export oil duty would grow to $137.7 per ton from the current $110 from May 1.

The amended budget for 2009 fixes the average oil price at $41 per barrel.

Russian gas output collapse deepens

http://www.upstreamonline.com/incoming/article177432.ece

By Upstream staff 

Natural gas production at Russian gas giant Gazprom fell by a more than a quarter last month to the lowest levels in a decade, continuing its spiral downward in response to plummeting European demand.

Oil extraction, however, continued to climb in April despite concerns that the lower oil price and lagging investment would lead to a repeat of last year's decline, data from the Russian Energy Ministry showed on Saturday.

In April, Gazprom's gas output was 1.15 billion cubic metres per day, 7% down from 1.24 bcm in March 2009 and 28% down from 1.60 bcm in April 2008, the data showed.

Analysts say such low production levels have not been seen in a decade, but they predict a recovery in the second half when gas prices are expected to catch up with the lower oil price, which they follow after a lag of six to nine months.

For now, cash-strapped consumers are delaying purchases until gas is cheaper, and switching to alternative fuels.

Around 80% of Russian gas output comes from Gazprom, which supplies a quarter of Europe's gas and is the world's largest producer of the fuel. The rest is produced by smaller independent gas companies or oil majors.

Novatek , Russia's second-largest gas producer, extracted a total of 2.5 bcm of gas in April, flat year-on-year and slightly down from March 2009, the data showed. The company had planned to increase output by 10% this year.

Gazprom, which controls all trunk pipelines in Russia, has said it would ask independent producers to cap output to share the pain of lower demand.

Russia's total gas output in April was 1.47 bcm per day, down 7% from 1.58 bcm per day in March and 23% less than the 1.92 bcm per day produced in April 2008.

The data showed oil output meanwhile increased 0.5% to 9.85 million barrels per day last month from 9.8 million in March and up 1.3% from 9.72 million bpd in April of 2008.

Russia's oil output has surprised experts in recent months, inching upwards despite expectations it would fall as a result of low energy prices and a reduction in upstream investments.

Oil production in Russia, the world's No. 2 exporter, fell by about 1% last year because of ageing reserves and plunging oil prices. The decline is cause for concern in a country highly dependent on oil export revenues for its budget.

Pipeline oil exports stood at 4.37 million bpd in April, an increase of 3.6% from 4.22 million bpd in March but down 3.3% from 4.52 million in April of last year.

State oil major Rosneft , the country's top oil producer, kept output flat last month compared to April 2008.

Monday, 04 May, 2009, 04:04 GMT  | last updated: Monday, 04 May, 2009, 04:05 GMT

RPT-Russian gas output collapse deepens in Aprilhttp://uk.reuters.com/article/oilRpt/idUKL235621020090504http://uk.reuters.com/article/oilRpt/idUKL235621020090504

Mon May 4, 2009 8:20 am BST

* Gazprom's April output down 28 pct year-on-year

* Oil production continues growing, up 1.3 pct year-on-year

* Oil exports up 3.6 pct vs March, down 3.3 pct vs April 08

By Simon Shuster

MOSCOW, May 2 (Reuters) - Natural gas production at Russian gas giant Gazprom (GAZP.MM: Quote, Profile, Research) fell by more than a quarter last month to the lowest levels in a decade, continuing its spiral downward in response to plummeting European demand.

Oil extraction, however, continued to climb in April despite concerns that the lower oil price and lagging investment would lead to a repeat of last year's decline, data from the Russian Energy Ministry showed on Saturday.

In April, Gazprom's gas output was 1.15 billion cubic metres (bcm) per day, 7 percent down from 1.24 bcm in March 2009 and 28 percent down from 1.60 bcm in April 2008, the data showed.

Analysts say such low production levels have not been seen in a decade, but they predict a recovery in the second half when gas prices are expected to catch up with the lower oil price, which they follow after a lag of six to nine months.

For now, cash-strapped consumers are delaying purchases until gas is cheaper, and switching to alternative fuels.

Around 80 percent of Russian gas output comes from Gazprom, which supplies a quarter of Europe's gas and is the world's largest producer of the fuel. The rest is produced by smaller independent gas firms or oil majors.

Novatek (NVTK.MM: Quote, Profile, Research), Russia's second-largest gas producer, extracted a total of 2.5 bcm of gas in April, flat year-on-year and slightly down from March 2009, the data showed. The firm had planned to increase output by 10 percent this year.

Gazprom, which controls all trunk pipelines in Russia, has said it would ask independent producers to cap output to share the pain of lower demand.

Russia's total gas output in April was 1.47 bcm per day, down 7 percent from 1.58 bcm per day in March and 23 percent less than the 1.92 bcm per day produced in April 2008.

OIL OUTPUT KEEPS RISING

The data showed oil output meanwhile increased 0.5 percent to 9.85 million barrels per day last month from 9.8 million in March and up 1.3 percent from 9.72 million bpd in April of 2008.

Russia's oil output has surprised experts in recent months, inching upwards despite expectations it would fall as a result of low energy prices and a reduction in upstream investments.

Oil production in Russia, the world's No. 2 exporter, fell by about 1 percent last year because of ageing reserves and plunging oil prices. The decline is cause for concern in a country highly dependent on oil export revenues for its budget.

Pipeline oil exports stood at 4.37 million bpd in April, an increase of 3.6 percent from 4.22 million bpd in March but down 3.3 percent from 4.52 million in April of last year.

State oil major Rosneft (ROSN.MM: Quote, Profile, Research), the country's top oil producer, kept output flat last month compared to April 2008. (Editing by James Jukwey)

Oil giant Rosneft posts $175 mln net loss in first quarterhttp://en.rian.ru/business/20090504/121422248.html

MOSCOW, May 4 (RIA Novosti) - Russia's state-controlled oil producer Rosneft announced on Monday a net loss under Russian Accounting Standards of 5.77 billion rubles ($175 million) in January-March 2009.

In January-March 2008, Rosneft posted a net profit of 65 billion rubles.

Rosneft, which became Russia's largest crude producer after acquiring most of the assets of bankrupt oil firm Yukos through liquidation auctions in 2007, said its first-quarter loss had declined more than 90% compared with the fourth quarter of 2008, when the company posted a 65 billion-ruble loss.

Rosneft earlier reported that its net profit calculated to Russian Accounting Standards declined 12.8%, year-on-year, in 2008 to 141.31 billion rubles ($4.2 billion).

Crude production grew 9%, year-on-year, in 2008 to more than 110.1 million metric tons (807 million barrels) of oil. The company expects to produce 112.3 million metric tons (823 million barrels) of oil in 2009.

Sechin Says EU Faces Ukraine Supply Riskhttp://www.themoscowtimes.com/article/600/42/376782.htm

04 May 2009By Anatoly Medetsky / The Moscow Times

Deputy Prime Minister Igor Sechin warned the European Union's top energy official on Thursday that gas supplies to Europe through Ukraine could still break down because of limitations in the country's pipeline system.

Ukraine needs to buy 19.5 billion cubic meters of gas in the near future to make sure that flows to Europe remain uninterrupted, Sechin told EU Energy Commissioner Andris Piebalgs at the fourth EU-Russia Permanent Partnership Council on Energy.

"If this is not done, the tragedy that we lived through in January will develop catastrophically," Sechin said, Interfax reported. But Ukraine's outdated transit network might be unable to handle the increased volumes, he said.

The comments appeared to hammer home Russian frustration at initially being excluded from an EU-Ukraine agreement on modernizing the country's energy infrastructure.

Russia suspended exports through Ukraine for two weeks in January -- leading to widespread shortages in Europe -- after accusing Kiev of stealing "technical gas," which is used to power transmission stations. Ukraine denied the charge.

"I just want us to realize the existence of risks that continue to influence the gas transit situation," he said.

Piebalgs responded by urging against making a drama out of the problem.

Ukraine usually fills its gas reservoirs in the summer to prepare for winter consumption peaks in Europe.

The country pumped 800 million cubic meters of gas into storage in April, Prime Minister Yulia Tymoshenko said Thursday in Kiev. The statement came a day after she returned from Moscow, where she and Prime Minister Vladimir Putin agreed that Gazprom would pay an advance for transit fees to enable Ukraine to pay for the gas.

Ukraine transports 80 percent of Russia's gas sales to Europe.

Sechin said Russia was ready to help Ukraine pay for some of the technical gas and that it was considering state loans to help.

"When we say there's a problem, we also propose a solution. We have even agreed to co-financing," Sechin said.

Sechin also brought up the Energy Charter, restating Russia's disappointment with the treaty, which he said failed to regulate the dispute with Ukraine.

Adopted in 1991 and signed by 49 countries and the EU, the charter sets energy investment, trade and transit rules. Russia signed it in 1994 but never ratified the treaty, and Putin suggested last week that Russia could withdraw its signature. "The Energy Charter treaty has proved nonviable," Sechin said, according to excerpts of his speech on the Cabinet web site.

Piebalgs ruled out a proposal by President Dmitry Medvedev to replace the charter with a new treaty that would provide greater security to producers and include the coal and nuclear power industries under its auspices.

"The Energy Charter treaty will continue to live its life until the countries that established it decide differently," Piebalgs told reporters.

Vietnamese to start pumping Nenets oilhttp://www.barentsobserver.com/vietnamese-to-start-pumping-nenets-oil.4587014-16178.html

2009-05-03 The joint venture RusVietpetro will start extracting oil in Nenets Autonomus Okrug.The plan is to drill 13 wells this and next year, reports Thanh Nien Daily.

RusVietpetro, a joint venture between Zarubezhneft and PetroVietnam, anticipates extracting 500,000 tons of oil by the end of 2010 and two million tons in 2011.Read more - Thanh Nien Daily

Integra Posts 2008 Loss of $272Mhttp://www.themoscowtimes.com/article/600/42/376781.htm

04 May 2009 Reuters

Oil services company Integra posted a 2008 net loss of $272 million, more than five times its 2007 loss, and expects to be in technical breach this June of a $250 million loan agreement, it said.

The company said Thursday that the loan -- granted by the European Bank for Reconstruction and Development and a consortium of commercial banks in February 2008 to help it refinance its debt and fund capital expenses -- requires a debt-to-EBITDA ratio of 2.5.

"Because of the considerable losses which we reported in second half of 2008, on a trading basis, we expect to be in breach of this covenant as of June 20," chief executive Felix Lubashevsky said during a conference call.

He said Integra's lenders were aware of the likely breach and had said it should be in a position to receive a waiver from them. "If we are unable to secure this waiver, we will have to seek alternative solutions, because the loan may be accelerated at the discretion of the lenders," chief financial officer Dmitry Avdeyev said during the call.

Net debt was about $300 million, including a cash position of about $50 million, while 39 percent of its outstanding debt of $356 million is due within 12 months. In 2008, EBITDA fell 23.4 percent to $162 million because of the deteriorating market conditions.

Capex plans for 2009 have been cut nearly 75 percent to about $40 million, Integra said in its financial results.

Gazprom

Gazprom opens office in Latvia to cover Balticshttp://www.businessneweurope.eu/dispatch_text8524

bneMay 4, 2009

Russian gas giant Gasprom has opened a representation office in Latvia with an aim to develop its business in the European market, a representative of the company's Latvian representation office told BNS.

"Although the biggest owner of Gazprom is the Russian state, it is a commercial company and its main objective is selling its products. Europe is a large market for us, and we want to develop here," said Pavel Litvinov, vice-director of the Gazprom representation office in Latvia.

Although the Latvian market is small, Latvia is an EU member which is why Gazprom decided to open its representation office in this country. "From Latvia we will be operating in all three Baltic states. This is a Gazprom embassy in a sense," the representative said.

Litvinov added that the representation office was not authorized to engage in commercial activities, its task would be to represent Gazprom in the Baltics, supervise and follow the company's activities in all three Baltic states, as well as to expand the scope of the gas company`s operations. "You know that Gazprom is a shareholder in Latvijas Gaze in Latvia, Eesti Gas in Estonia and Lietuvos Dujos in Lithuania. Gazprom is the sole owner of Kaunas Thermal Power Plant," Litvinov noted.

Asked if the company planned to expand its operations outside the Baltics, Litvinov said there were no such plans at the moment.

Sunday, May 03, 2009              

Gas Master Plan: Gazprom To Unveil Strategy This Week

http://www.ngrguardiannews.com/business/article01/indexn2_html?pdate=030509&ptitle=Gas%20Master%20Plan:%20Gazprom%20To%20Unveil%20Strategy%20This%20Week

By Marcel Mbamalu

AFTER holding talks with some international oil companies, local firms, state governments, and marginal operators, in line with the guidelines for the formation of consortium issued by the Nigeria National Petroleum Commission (NNPC), Russian gas giant, Gazprom, may unveil its strategy for the Nigeria gas master plan later this week. The Guardian learnt that the firm is on the final leg of widespread consultations to meet the specifications for the project.

Speaking in an exclusive telephone interview, during the week, managing director of the firm in Nigeria, Mr. Vladimir Ilyanin, said "Gazprom is currently holding talks with the Nigeria National Petroleum Commission, some local firms and oil communities and will make its position public on May 8, 2009."

Although he declined comments on the identities of the stakeholders in the potential consortium for the $30 billion Nigeria Gas Master plan, Ilyanin, insisted that the firm is capable and ready to contribute to the growth of the gas industry through qualitative long-term investments in the gas and power sectors, as well as participatory community development initiatives in ravaged oil-producing regions.

Gazprom and 14 other bidders, including Shell and Oando, upper week, made the list of 15 potential investors expected to continue in the prequalification process for Nigeria Gas Master plan. The top 15 oil and gas companies were part of the 46 that initially responded to the Federal Government's invitation for Expressions of Interest for the project.

Dr. David Ige, who is the Group General Manager/ Special Technical Assistant to the Group Managing Director, had said the short-listed companies would, as a prerequisite, form consortia among themselves and would be considered for the project based on specific criteria, including credibility, viability of technical design, and compliance with local content and social development plan.

Ige, who addressed the short-listed companies, further disclosed that the successful consortium, which will serve as definers of the new Nigerian gas industry, would be expected to co-opt strategic investors, including the IOCs, marginal field operators, with 10 per cent thresholds of equity investments coming from indigenous companies and five per cent from host state governments.

A critical component of the NGMP implementation is the execution of a gas infrastructure blueprint in three designated franchise clusters across the gas producing areas.

Srbijagas: Contract with Gazprom on May 14 http://www.b92.net/eng/news/business-article.php?yyyy=2009&mm=04&dd=30&nav_id=58851

30 April 2009 | 15:08 | Source: B92

BELGRADE, NOVI SAD -- A contract for forming a joint company between Srbijagas and Russian Gazprom will probably be signed on May 14, says Srbijagas CEO Dušan Bajatović.Bajatović told daily Dnevnik that as well as the contract and the joint company’s statute, an annex would also be signed governing relations between the partners, whereby no decision could be taken without Srbijagas or the Serbian government’s say-so.

He said that the South Stream pipeline was due for completion in late 2015, with the first delivery of gas to arrive in the first few days of 2016.

Russian Prime Minister Vladimir Putin has confirmed that Russia and Bulgaria have reached an agreement to build the pipeline.

Bajatović said earlier that someone would have to pay for the EUR 100mn in gas losses incurred—either the citizens or the state.

According to the Srbijagas CEO, the losses were not the fault of the company leadership, but the disparity between the purchasing and sale price, as gas was being sold at a loss.

He said that he expected gas prices to be lower in the third quarter of this year, in line with the fall on world markets, but that the most pressing matter was to resolve the problem of losses and debts among the biggest consumers.

“Work on the gas reservoir at Banatski Dvor is under way, and filling should begin in July. We’ll collect enough gas by the start of the heating season to be able to draw five million cubics a day for up to two months,“ Bajatović told daily Dnevnik.

Vedomosti, Nezavisimaya Gazeta

Gazprom not economizing on top managers' wages

http://en.rian.ru/analysis/20090430/121398752.html

For the first time in years, energy giant Gazprom has saved nearly 8 billion rubles ($240 million) on staff expenditure in 2008. However, payments to its top managers have grown.

Gazprom's total spending on wages fell by 3% in 2008, to 240.607 billion rubles ($7.2 billion), and by nearly 39% in the fourth quarter alone, compared to October-December 2007.

One of the main reasons for the drop was the deconsolidation of Gazprombank, meaning the removal of its financial results from the gas monopoly's consolidated financial reports, in the second half of 2008. Another reason was a cut in pension payments.

However, part of that saving was counterbalanced by growth in average salaries and consolidation of the company's power subsidiaries.

The number of Gazprom's overall personnel grew to 456,000 in 2008 from 445,000 in 2007, said a company spokesman. This means that the average monthly wage was 43,970 rubles ($1,322), down 6% year on year.

The thing is that Gazprombank has higher average wages than Gazprom, while wages at the power companies that were consolidated last year are lower than at Gazprom, said a company manager.

Gazprombank spent an average of 110,000 rubles ($3,310) per employee a month (excluding social benefits) in the first nine months of 2008.

Salaries at Gazprom's central office were 88,500 rubles ($2,670), and at the Mosenergo utility 40,500 rubles ($1,220).

However, Gazprom has not cut the salaries of its top managers. On the contrary, it has increased payments to the management committee and the board of directors by 21% to 2.056 billion rubles ($61.8 million) in 2008, the company said in its financial report for 2008 calculated to International Financial Reporting Standards.

The concern spent the following on seven directors who are not state officials and 17 members of its Management Committee (taking into account the money due to them from Gazprom's subsidiaries):

In 2008, directors received 15 million rubles ($451,130) each, while the salary of CEO Alexei Miller, who is also deputy head of the Board of Director, was set at 17.5 million rubles ($526,320), in accordance with decisions taken at last year's annual meeting.

This adds up to as much as 110 million rubles ($3.3 million). The remainder was divided between the other top managers, who received 114.5 million rubles each last year.

Gazprom is in a position to allow itself to look after its top management because its prices are growing faster than inflation. This year alone, the government has allowed the concern to hike its gas prices for the population by 5% every three months.

Gazprom's April Output Hits Its Lowest Level in a Decadehttp://www.themoscowtimes.com/article/1009/42/376780.htm

04 May 2009 Reuters

Gas production at Gazprom fell by more than one-quarter last month to the lowest levels in a decade, continuing its spiral downward in response to plummeting European demand.

Oil extraction, however, continued to climb in April, despite concerns that the lower oil price and lagging investment would lead to a repeat of last year's decline, data from the Energy Ministry showed Saturday.

In April, Gazprom's gas output was 1.15 billion cubic meters per day, 7 percent down from 1.24 bcm a month earlier and 28 percent down from 1.6 bcm in April 2008, the data showed.

Analysts say such low production levels have not been seen in a decade, but they predict a recovery in the second half, when gas prices are expected to catch up with the lower oil price, which they lag by six to nine months.

About 80 percent of Russian gas comes from Gazprom.

Novatek, the country's second-largest gas producer, extracted 2.5 bcm of gas in April, flat year on year and slightly down from March 2009, the data showed.

The firm had planned to increase output 10 percent this year.

Russia's total gas output in April was 1.47 bcm per day, down 7 percent from 1.58 bcm per day in March and 23 percent less than the 1.92 bcm per day produced in April 2008.

Oil output, meanwhile, increased 0.5 percent to 9.85 million barrels per day last month from 9.8 million bpd in March and up 1.3 percent from 9.72 million bpd in April of 2008.

Pipeline oil exports stood at 4.37 million bpd in April, an increase of 3.6 percent from 4.22 million bpd in March but down 3.3 percent from 4.52 million in April of last year.

Oil output has inched upward in recent months despite expectations that it would fall because of low energy prices and a drop in upstream investments.

Teriberka asks Gazprom for helphttp://www.barentsobserver.com/teriberka-asks-gazprom-for-help.4587098-116321.html

2009-05-04 Valery Yarantsev, Head of the village of Teriberka on the Russian Barents coast has asked Gazprom to grant money for modernization of the village, future location for the Shtokman field LNG plant.

The regional department of the Ministry of Emergency Situations wants to close the village’s hospital because of the risk for fire, TV channel Murman reports. Nearly all buildings in Teriberka are made from wood.

As BarentsObserver reported, two weeks ago a fire in the local boiler left the 400 houses, the school and kindergarten in the village without heating. A closure of the hospital would leave the inhabitants without any health service. The nearest hospital is more than 100 kilometers away.

The newly elected Mayor of Teriberka Valery Yarentsev has appealed to Gazprom for help to modernize the village.

- We need one billion rubles, but even half of this would give us a new start, Yarantsev says.