Russia 110512

Basic Political Developments Dmitry Medvedev will meet with President of Slovenia Danilo Turk on May 16 Russia, Brazil to discuss energy cooperation in Moscow - Mr. Temer will head a

Brazilian delegation at the meeting of a bilateral commission for cooperation in Moscow on May 17th.

Medvedev, Zardari to discuss RF-Pakistan relations, int’l issues - The presidents of Russia and Pakistan plan to adopt a joint statement. The two asides will also sign several bilateral documents, including a inter-governmental agreement on air service and interagency memorandums in the fields of energy and agriculture.

o Medvedev, Pakistani president to meet in Moscow - The projects include rail monopoly Russian Railways' prospective construction of railroad infrastructure in Pakistan, Russian companies' planned participation in upgrading a metallurgical plant, as well as energy giant Gazprom joining the work to develop oil and gas fields in the country.

o Tackling terrorism and drug trafficking focus of Pakistan-Russia talkso Russian, Pakistan leaders to meet on Thursdayo Zardari hopes to revitalise Russia ties - President Asif Ali Zardari was

expected in Moscow on Wednesday for talks with Russian leaders on his first major foreign visit since the killing of Osama bin Laden by US forces.

o Zardari invites Russia to invest in Pakistan’s trans-regional projects - President Zardari sought Russian cooperation in developing and exploiting energy resources in Pakistan since it has special expertise in mining and heavy industries. He said Pakistan is facing energy shortage and Russia can facilitate the proposed CASA 1000 and TAPI projects.

Russian foreign minister going to Greenland for Arctic Council meeting - During his stay in the capital Nuuk, Lavrov will sign an agreement on Russia's participation in creating instruments to support the Council's projects and an agreement on search and rescue in the Arctic, which will be the first legally binding agreement negotiated under the auspices of the Arctic Council.

House panel approves limits on complying with arms pact with Russia - The House Armed Services Committee approved an amendment Wednesday that could limit presidential authority to comply with a new arms treaty with Russia by reducing the number of strategic nuclear weapons.

Rasmussen says NATO, Russia bound to cooperate with each other - “NATO and Russia still have disagreements of principle on issues such as Georgia. We insist on full respect for Georgia’s sovereignty and territorial integrity. And we call on Russia to live up to her international obligations in that respect. We must not shy away from discussing these disagreements. But neither must we allow them to paralyse our partnership,” Rasmussen said.

o Rasmussen calls for NATO, Russia to 'build security together' - NATO General Secretary Anders Fogh Rasmussen stressed the importance of cooperation with Russia on a European missile defense shield on

Wednesday, but failed to offer a solution to a critical rift between the two sides on the issue.

Russian Black Sea Fleet to surrender a lease of some facilities in Sevastopol o Russia, Ukraine have no disagreements over Black Sea Fleet property -

Russia has no plans to leave Sevastopol ahead of time, but intends to build facilities for the Black Sea Fleet in Novorossiisk, the chief of the Russian General Staff, Nikolai Makarov, said.

Russian politician says Moscow won't let balance of force change in Middle East - Sergei Mironov, who met with an Israeli foreign affairs and defense delegation and Israel's ambassador to Moscow, said that he has discussed the arms deals between Moscow and Damascus that have been highly sensitive for Israel.

Why Is Russia Keeping the U.N. from Condemning Syria? - "Russia has retained close ties with Syria since the Soviet era and is currently supplying the country with advanced missiles and other arms," the news outlet notes, and Russian President Dmitry Medvedev paid a visit to Damascus last year to deepen trade ties between the two countries and "promote Russia's waning presence in the Middle East." Syria, moreover, was one of the few countries to support Russia in its war with Georgia.

Maliki: Russia renews business interests in Iraq - After having been absent from the Iraqi business arena since the fall of the former regime in 2003, Russia is returning with large-scale plans to work once more in the country, said the Iraqi Prime Minister on Wednesday.

Georgia-Russia row blocks Council of Europe declaration - A diplomatic spat between Russia and Georgia has left a Council of Europe ministers meeting unable to release a joint declaration.

Vladikavkaz - election headquarters of the Tskhinvali opposition Russian police recertification to finish August 1 – decree CORRUPTION WATCH: Russia's celebrated police reform delayed until

December Russia amends labor law at immigrant workers' expense - Russia's new

employment support program involves amending existing legislation to better manage labor migration while expanding the dwindling workforce.

Opposition wants amnesty of economic crime convicts to mark independence jubilee (Part 2)

Novosibirsk Communists detained at illegal protest against gasoline price hikes Bank Rossii’s Ignatiev May Leave Sberbank Board: Vedomosti Says Ivanov’s Son Goes to Rosselkhozbank Moscow Buys 23% of Luzhniki Stadium for $14 Mln, Vedomosti Says Over 100 football fans detained in Moscow

o Nationalist disturbance in Central Moscow as big match kicks off - To mark a notorious riot of 5,000 nationalists last year, their supporters tried to stage a press conference in Central Moscow on Wednesday evening… And last night, against the backdrop of a high-profile football match between Spartak and CSKA, the latest unauthorized rally was scheduled for Manezhnaya Ploshchad.

Russian top oil CEO’s daughter death confirmed – DNA test

o DNA test confirms dead girl was Lukoil executive's daughter Twin attacks in Russian Caucasus, 4 killed

o Two police officers killed in Dagestan Team Caucasus shines in Grozny soccer friendly - Team Caucasus outplayed a

world football team 5:2 in a friendly match in Grozny, Chechnya, marking the opening of the city’s new sports arena named after Akhmat-Hadzhi Kadyrov, the slain father of the republic’s head Ramzan Kadyrov.

o Chechen leader eclipses Maradona with friendly hat-tricko Dagestani President takes part in the opening ceremony of the new

stadium in Groznyo Maradona and Liverpool greats play exhibition match for Chechen leader -

All-star football game in Grozny the latest attempt by president Ramzan Kadyrov to show republic has recovered from war. By Miriam Elder in Grozny

RIA Russian Press at a Glance, Thursday, May 12, 2011 Putin's Feckless Front - "I will be the next president of Russia” was the clear and

direct message Prime Minister Vladimir Putin sent when he announced the creation of the All-Russia People’s Front. By Yulia Latynina

National Economic Trends Alexei Kudrin indicates Russia unlikely to borrow from global markets in 2011 Russian oil export revenue climbs 25pct RenCap-NES Macro Monitor Banking sector maintains loan growth in April Customs Union introduces zero import duties for some vegetables

Business, Energy or Environmental regulations or discussions Russian markets -- Factors to Watch on May 12 Rusal First-Quarter Net Triples on Higher Aluminum Prices (2) UPDATE 1-RUSAL Q1 net triples, sees strong demand intact RusAl Q1 net profit triples to $746 mln Renaissance Hires UBS Resources Banker Cash for Infrastructure Projects Lure Big Players - By Anatoly Medetsky Rostelecom consolidates mobile assets to catch up with Big-3

Activity in the Oil and Gas sector (including regulatory) Ecological Issues Slow Production of Shale Gas - France's National Assembly

voted Wednesday to rescind licenses granted for unconventional gas exploration in a move that is likely to put smiles on faces in Gazprom headquarters.

Russia redrawing Europe energy map - Things couldn't have been better for Russia's energy giant Gazprom even before news came in over the weekend that curtains could be coming down on one of the keenest battles of the Caspian great game, and Moscow is on a winning streak.

Gazprom Gazprom miffed with GAIL over non payment of dues

Gazprom remains the key target for the Ministry of Finance

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Full Text Articles

Basic Political Developments

Dmitry Medvedev will meet with President of Slovenia Danilo Turk on May 16http://eng.kremlin.ru/news/2199

May 11, 2011, 15:15

Tags: foreign policy, Slovenia

President of the Republic of Slovenia Danilo Turk will be in Russia on a working visit.

Russia, Brazil to discuss energy cooperation in Moscowhttp://english.ruvr.ru/2011/05/12/50176137.html

May 12, 2011 11:01 Moscow Time

Brazil appreciates cooperation with Russia in energy industry and high technology, Brazilian Vice President Michel Temer said in an exclusive interview with the ITAR-TASS news agency on Wednesday.

Mr. Temer will head a Brazilian delegation at the meeting of a bilateral commission for cooperation in Moscow on May 17th.

Temer said that Brazil expects Russia to invest in its energy industry and added that the two countries could also discover chances for military cooperation and space exploration.

07:34 12/05/2011Top News

Medvedev, Zardari to discuss RF-Pakistan relations, int’l issues http://www.itar-tass.com/en/c32/140505.html

MOSCOW, May 12 (Itar-Tass) —— President Dmitry Medvedev and Pakistani President Asif Ali Zardari will meet ion Thursday, May 12, to discuss bilateral relations and the most pressing international issues.

This will be the fifth meeting between Medvedev and Zardari. The previous four were held on the sidelines of the quadripartite meeting between the presidents of Afghanistan, Pakistan, Tajikistan, and Russia in Sochi on August 18, 2010; on the sidelines of the

Shanghai Cooperation Organisation (SCO) meeting in Tashkent on June 10, 2010; at the meeting of the four presidents in Dushanbe on July 30, 2009; and on the sidelines of the SCO Summit in Yekaterinburg on June 16, 2009.

The presidents of Russia and Pakistan plan to adopt a joint statement. The two asides will also sign several bilateral documents, including a inter-governmental agreement on air service and interagency memorandums in the fields of energy and agriculture.

The joint statement will emphasise the considerable potential for further deepening of bilateral ties, particularly trade and economic ones. Pakistan will express gratitude to Russia for timely humanitarian aid (70 tonnes of basic necessities, targeted contributions to specialised international organisations to a tune of seven million U.S. dollars) provided after a disastrous flood in Pakistan last year.

Bilateral trade turnover has not yet reached the pre-crisis level and stood at 362.7 million U.S. dollars in 2010 (615.6 million U.S. dollars in 2008, and 334.4 million U.S. dollars in 2009).

The sides pin great hopes on the work of the Russian-Pakistani Inter-Governmental Commission on Trade, Economic, Scientific and Technical Cooperation.

At its first meeting in Moscow on September 21, 2010, the sides mapped out specific bilateral and regional projects in such fields as transport, energy, metallurgy, and high technologies. These include the participation of Russian Railways Company in the construction of railway infrastructure in Pakistan and of interested Russian companies in the upgrading of Pak Steel Mill in Karachi, the engagement of Gazprom in the TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline project, exploration and production of oil and gas in Pakistan, and the development of underground gas storage facilities in the country.

Another promising area of cooperation is power engineering. Russia is would be interested in joining the CASA-1000 project to supply electricity to Pakistan from Central Asian republics through Afghanistan.

Medvedev and Zardari will also discuss coordination of efforts to maintain peace and stability in the region, including the fight against terrorism, illegal drug trafficking and organised crime.

Medvedev, Pakistani president to meet in Moscowhttp://en.rian.ru/world/20110512/163981297.html

01:40 12/05/2011

Russian President Dmitry Medvedev will meet with his Pakistani counterpart Asif Ali Zardari in Moscow on Thursday to discuss bilateral and international relations, the Kremlin reported.

The two leaders' talks, held as part of Zardari's four-day visit agenda, will in particular touch upon the fight against terrorism and drug trafficking in Central and South Asia.

The talks will culminate in the adoption of a joint statement, which will stress the mutual trade cooperation potential. Bilateral trade totaled $362.7 million in 2010, down from $615.6mn in 2008.

Medvedev and Zardari are also expected to sign a number of bilateral documents - an intergovernmental agreement on air links and interdepartmental memorandums on energy and agriculture.

In September 2010 the two countries outlined specific bilateral and regional projects in the spheres of transport, energy, metalworking and high technology.

The projects include rail monopoly Russian Railways' prospective construction of railroad infrastructure in Pakistan, Russian companies' planned participation in upgrading a metallurgical plant, as well as energy giant Gazprom joining the work to develop oil and gas fields in the country.

MOSCOW, May 12 (RIA Novosti)

Tackling terrorism and drug trafficking focus of Pakistan-Russia talkshttp://rt.com/news/pakistan-russia-talks-politics/

Published: 12 May, 2011, 11:55Edited: 12 May, 2011, 12:13

Common threats are set to get a joint response as Pakistani President Asif Ali Zardari is in Moscow to discuss the fight against terrorism and drug trafficking with Russian President Dmitry Medvedev.

The Pakistani leader arrived in the Russian capital on May 11 for an official visit which will conclude on May 14. Zardari is due to meet Medvedev on Thursday.

The talks are expected to focus on the development of Russia-Pakistan relations and cover cooperation in trade, economy, science and technology. The countries’ bilateral

trade has yet to reach the pre-crisis level and stood at almost US$363 million dollars in 2010.

Fighting terrorism, drug trafficking and organized crime, as well as maintaining peace and regional stability, are also high on the agenda.

May 12, 2011 09:18

Russian, Pakistan leaders to meet on Thursdayhttp://www.interfax.com/newsinf.asp?id=242893

MOSCOW. May 12 (Interfax) - The meeting between Russian President Dmitry Medvedev and Pakistani President Asif Ali Zardari, who is in Russia on a formal visit on May 11-14 at the invitation of the Russian head of state, will be held on May 12, the Kremlin said on Wednesday.

The meeting will focus on the development of Russian-Pakistani relations and more pressing international issues. This will be the fifth meeting between Medvedev and Zardari.

Their previous meetings were held on the sidelines of four-party meetings of the presidents of Afghanistan, Pakistan, Tajikistan and Russia in Sochi on August 18, 2010, on the sidelines of the SCO (Shanghai Cooperation Organization) summit in Tashkent on June 10, 2010, at the quartet summit in Dushanbe on July 30, 2009, and on the sidelines of the SCO summit in Yekaterinburg on June 16, 2009.

The high-level talks are expected to result in a joint statement by the Russian and Pakistani presidents and the signing of a number of bilateral documents - an intergovernmental agreement on air traffic and inter-agency memoranda on energy and agriculture.

The presidents' joint statement will emphasize, in particular, the presence of a significant potential for further enhancing bilateral - particularly trade and economic - relations, the Kremlin said.

Zardari will also thank Russia on behalf of the Pakistani people for the timely humanitarian aid (70 tons of essential items, a total of $7 million in target contributions to specialized international organizations) provided in the wake of a massive flood that struck Pakistan in 2010.

With regards to bilateral trade, it has yet to reach the pre-crisis level: in 2010 it stood at $362.7 million (in 2008 - $615.6 million, in 2009 - $334.4 million). The countries'

biggest hope is the Russian-Pakistani intergovernmental commission for trade, economic, scientific and technical cooperation.

Among issues on the agenda of the forthcoming talks between the Russian and Pakistani presidents are: coordination of efforts to maintain peace and stability in the region, including the fight against terrorism, illicit drug trafficking and organized crime.

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Zardari hopes to revitalise Russia tieshttp://tribune.com.pk/story/166870/zardari-hopes-to-revitalise-russia-ties/

By AFP Published: May 12, 2011

MOSCOW: 

President Asif Ali Zardari was expected in Moscow on Wednesday for talks with Russian leaders on his first major foreign visit since the killing of Osama bin Laden by US forces.

Russian President Dmitry Medvedev will host Zardari for talks on Thursday atthe Kremlin where officials from the two countries were also expected to sign agreements on cooperation in agriculture, aviation and energy, said Pakistan Embassy spokesperson Raja Abdul Qayyum.

Zardari visited Kuwait at the weekend for talks with its leaders and business executives, while Prime Minister Yousaf Raza Gilani is due to visit China next week as Pakistan looks to bolster its alliances at a time of crisis.

Zardari’s programme includes a tour of Skolkovo, a future high-tech centre outside Moscow billed as Russia’s answer to Silicon Valley and a trip to the former imperial capital Saint Petersburg.

Speaking in an interview with Russia’s Itar-Tass news agency ahead of the visit, Zardari said he hoped his talks in Russia would breathe a new life into bilateral ties.

“I expect a lot from my upcoming visit to Russia,” he was quoted as saying. “I hope that during this visit the relations between our countries will receive a new development impetus.”

The president also said ramping up economic and political ties was in the interests of both countries. “Tsarist Russia was dreaming about getting access to southern seas,” he was quoted as saying.

“Pakistan invites modern Russia to take advantage of its access to southern seas which will no doubt facilitate economic prosperity of the two countries.”

Moscow is not usually seen as an ally of Islamabad, not least because of its close ties to India.

Tensions also still linger over the Pakistani secret service’s backing of mujahedeen insurgents against Soviet forces in Afghanistan during the 1980s.

Citing a source close to the management of state conglomerate Russian Technologies, Vedomosti business daily said on Wednesday that the highlight of the Zardari visit would be a preliminary agreement to give Pakistan a $540 million loan to modernise the Soviet-built Pakistan Steel plant.

A delegation from Prominvest, a Russian Technologies subsidiary, has visited the plant and reached preliminary agreements, the source told the newspaper.

Russian Technologies could not confirm the report.

Published in The Express Tribune, May 12th, 2011.

Zardari invites Russia to invest in Pakistan’s trans-regional projectshttp://ftpapp.app.com.pk/en_/index.php?option=com_content&task=view&id=139027&Itemid=2

By Mohammad Ilyas KhanMOSCOW, May 11 (APP): President Asif Ali Zardari on Wednesday said that Russia can invest in regional and trans-regional projects while benefitting from  Pakistan’s strategic location and investment friendly policies.Speaking at Skolkovo Moscow School of Management here, he said both Pakistan and Russia share the common objectives of peace and development and therefore it will be natural for the two countries to cooperate for these goals.President Zardari said, “Our two countries need to expand and diversify their economic cooperation by engaging the corporate sectors. People to people contacts have their own dynamics to promote relations between countries.”The President said involving private entrepreneurs of the two countries is the key to enhancing cooperation. He said that trade and investment are the key in today’s international relations and Russia should take benefits from the investment friendly policies of the government.President Zardari sought Russian cooperation in developing and exploiting energy resources in Pakistan since it has special expertise in mining and heavy industries. He said Pakistan is facing energy shortage and Russia can facilitate the proposed CASA 1000 and TAPI projects.He said all countries in the current era are moving forward, creating new alliances and partnerships for their economic benefits.  Referring to the availability of skilled manpower

in Pakistan, the President said Russia can take advantage of it by exporting “our young and skilled labour”.Referring to the first official visit to Russia by any President of Pakistan in more than 30 years, President Zardari said “for too long our two peoples had been kept at some distance.”He said bilateral relations between Pakistan and the then Soviet Union during the Cold War period were not warm. “But the Cold War is now long over. The world has changed and it is changing fast.  And so are our two countries”. He said that Pakistan and Russia should leave the past behind and take advantage of the abundant opportunities. We should not and cannot remain frozen in time.”He said, “We have therefore decided to turn a new page in Pakistan-Russia relations. My visit is driven by this decision.” He said there are great opportunities which could be explored in diverse fields, including energy, infrastructure development, science and technology and agriculture. Both countries can mutually benefit from cooperation in these areas, he noted.“We plan to establish Information Technology Campuses in over 100 districts in Pakistan. This is an area where your school can collaborate to mutual benefit.”The President asked the Skolkove management and BOI to sign an MoU on exchange of students and academia to take benefits from each other experiences particularly from the academia of the prestigious school.The President also urged for expanding air links by the respective airlines of the two countries to promote people to people contacts.He said Pakistan is passing through a phase of militancy and extremism but it has a strong resolve to fight terrorism “The pain inflicted on us by militancy has not weakened our resolve to fight it.  We will fight militancy to the finish, no matter what the cost.  Russia, too, is facing terrorism,” he said.Calling Pakistan and Russia natural partners in the fight against terrorism, President Zardari said, “We can learn from each other’s experiences and join hands to promote peace and stability in our region.”He stressed the need for cooperating in fight against drug-trafficking and other organized crimes.  Pakistan and Russia have every reason to get closer together in the interest of people of the region, he said adding, “We need to engage our two peoples belonging to all walks of life to build a strong Pakistan-Russia relationship.”He said relationship of Pakistan and Russia is important for peace and development of the whole region and beyond. “I am confident that together we will contribute towards this relationship.”He said Moscow School of Management is a symbol of Russia’s drive for modernization under its dynamic leadership.This School has made great contribution to bringing stability to the global financial and economic order, he added.Later, the Chairman Board of Investment Salim  H Mandviwala and the Head of Russian National Investment Agency signed a Memorandum of Understanding on behalf of their respective governments to promote and increase investment in each other’s countries.  

Russian foreign minister going to Greenland for Arctic Council meetinghttp://en.rian.ru/world/20110512/163983566.html

06:43 12/05/2011

Russian Foreign Minister Sergei Lavrov is heading to Greenland to attend a ministerial meeting of the Arctic Council.

During his stay in the capital Nuuk, Lavrov will sign an agreement on Russia's participation in creating instruments to support the Council's projects and an agreement on search and rescue in the Arctic, which will be the first legally binding agreement negotiated under the auspices of the Arctic Council.

The Council was set up in 1996 in Ottawa, Canada, as a high level intergovernmental forum to promote cooperation and coordination among the Arctic states on common issues, in particular sustainable development and environmental protection.

Member states of the Arctic Council are Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russia, Sweden, and the United States.

The meeting marks the end of the two-year Danish chairmanship, with Sweden ready to take over as Arctic Council Chair for the next two-year period.

 MOSCOW, May 12 (RIA Novosti)

House panel approves limits on complying with arms pact with Russiahttp://www.washingtonpost.com/national/house-panel-approves-limits-on-complying-with-arms-pact-with-russia/2011/05/11/AF953ftG_story.html

By Walter Pincus and Greg Jaffe, Thursday, May 12, 3:05 AM

The House Armed Services Committee approved an amendment Wednesday that could limit presidential authority to comply with a new arms treaty with Russia by reducing the number of strategic nuclear weapons.

The panel’s action came as it spent the day marking up the $553 billion Defense Authorization Bill, which covers spending on military programs for the fiscal year that begins Oct. 1.

The New Strategic Arms Reduction Treaty, which took effect in February, requires the United States and Russia to cut the number of strategic warheads from 2,200 to 1,550 and

to limit to 700 the number of deployed strategic delivery systems, such as intercontinental ballistic missiles and strategic bombers.

Under the amendment, passed by voice vote, none of those reductions could be made through 2017 without a certification to Congress from the secretaries of the Defense and Energy departments that costly modernization plans for the U.S. nuclear weapons complex were being carried out. The Obama administration agreed to those plans last year.

A second element in the amendment would prohibit any reductions outside the treaty — whether unilateral or agreed-upon — in the roughly 3,000 non-deployed strategic warheads before the energy secretary certifies two new weapons-production facilities as operational. Both are still in the planning stages at national laboratories in Los Alamos, N.M., and Oak Ridge, Tenn.

Rep. Doug Lamborn (R-Colo.), who sponsored the amendment, told his colleagues that the goals are to ensure that promises made to the Senate to get ratification are carried out and to put a brake on any effort to cut nuclear weapons that would not give Congress a role.

Rep. Rick Larsen (D-Wash.), who led opposition to the measure, said the amendment is an attempt to rewrite the treaty or at least tie the hands of President Obama or future presidents in managing the U.S. nuclear arsenal.

The committee also voted 54 to 5 to allow General Electric to use unique Pentagon-owned test facilities and equipment in its self-financed effort to keep alive its second engine for the F-35 Joint Strike Fighter. Although the House recently voted to support Defense Secretary Robert M. Gates’s plan to discontinue the second engine, the panel was told that this approach would cost taxpayers nothing because GE would have to pay for its use of the government-owned facility.

Another section of the bill would reopen the competition if the Pentagon found that the winning Pratt & Whitney engine did not have enough power to handle any increased weight needed for the controversial new fighter.

In a related matter, the leaders of the Senate Armed Services Committee said Wednesday that Defense Department plans for a major reorganization of U.S. forces in Asia are too costly and need to be reconsidered.

Sens. Carl M. Levin (D-Mich.) and John McCain (R-Ariz.) asked the Pentagon to rethink its plans for basing forces in South Korea, Guam and the southern Japanese island of Okinawa.

The plans were designed to move thousands of Marines off Okinawa, where many locals oppose the U.S. troop presence. Sen. James Webb (D-Va.), who served as a Marine in the Vietnam War, joined Levin and McCain in calling for a change.

One way to reduce costs would be to base both Marine and Air Force units at Kadena Air Base, a major U.S. Air Force hub in Japan — a move that some of the services have resisted. The senators said that the current basing plan would impose too much cost on Japan as it recovers from a devastating earthquake and tsunami.

07:01 12/05/2011Top News

Rasmussen says NATO, Russia bound to cooperate with each otherhttp://www.itar-tass.com/en/c32/140501.html

WASHINGTON, May 12 (Itar-Tass) —— NATO and Russia “have an obligation to cooperate”, NATO Secretary-General Anders Fogh Rasmussen said.

More than 60 years after its creation, NATO remains the vital link between the United States and Europe in protecting and promoting the core values of American and European civilisation – freedom, democracy, human rights, and the rule of law.

“Our relations with Russia also play an important role in that equation,” he said in a speech titled “NATO and Russia: why cooperation counts” delivered at the University of Chicago on Wednesday, May 11.

“I know that Russia is still seen in some circles as our former Cold War foe. But it has been a longstanding, strategic objective of NATO to help create a Europe that is whole, free and at peace. We have made great progress, but we are not there yet. And I maintain that Russia plays a key role if we want to achieve it,” he said.

Rasmussen admitted that “when the Cold War ended, we may have had false expectations about each other. Some in the West thought that Russia would align its interests with ours. And many in Russia thought that, since the Warsaw Pact had dissolved, NATO should too”.

Both these expectations proved to be plain wrong. They hampered the relationship between NATO and Russia for a long time. They even brought it close to a complete standstill, he stressed.

“Ironically, at the same time, the case for broader, more solid NATO-Russia cooperation became more and more compelling. Because the threats to the security of our nations increased all the time - both in number and in complexity,” the Secretary-General said.

Among the global threats he named terrorism, fragile states, piracy, the proliferation of nuclear weapons -- these are all global threats that affect all nations. “There is no way for any single nation, not even the world’ s most powerful nation, either to escape these threats, or to tackle them on its own,” he said.

In his opinion, “the best way to meet them is through the broadest possible international cooperation. NATO and Russia have a vital stake in that cooperation – and a major responsibility for driving it forward.”

Rasmussen pointed out one more, “obvious reason for us to cooperate”: “Russia and the United States hold more than 90 percent of the world’s nuclear arsenal. This means that both countries have a special responsibility to work together on nuclear issues. And NATO has a stake in that too”.

In Lisbon last November, Rasmussen and Russian President Dmitry Medvedev agreed to develop “a true, strategic NATO-Russia partnership”. “This decision was grounded in a sober assessment of the new security environment. But it was also accompanied by a strong determination to translate solemn words into action. And we have seen concrete action in a number of areas these last few months,” he said.

At the same time, he acknowledged that “we don’t always see eye to eye”.

“NATO and Russia still have disagreements of principle on issues such as Georgia. We insist on full respect for Georgia’s sovereignty and territorial integrity. And we call on Russia to live up to her international obligations in that respect. We must not shy away from discussing these disagreements. But neither must we allow them to paralyse our partnership,” Rasmussen said.

Rasmussen calls for NATO, Russia to 'build security together'http://en.rian.ru/world/20110512/163985309.html

09:38 12/05/2011

NATO General Secretary Anders Fogh Rasmussen stressed the importance of cooperation with Russia on a European missile defense shield on Wednesday, but failed to offer a solution to a critical rift between the two sides on the issue.

Speaking at the University of Chicago during a visit to the United States, Rasmussen described the shield as "great opportunity to advance our relationship with Russia."

After years of dispute over the issue, Russia and NATO agreed to cooperate on the missile defense shield at a summit in Lisbon in November. However, the sides remain in dispute over how the shield should be implemented. While NATO favors two separate shields which exchange information, Russia is pushing for a joint system.

"If we can make our missile defense systems coordinate and communicate, it will be the first time that - instead of building security against each other - NATO and Russia will build security together," Rasmussen said on Wednesday.

"This is well within our grasp. With the continued support and leadership of the United States, I am convinced we can make it a reality."

Initial U.S. plans to deploy a radar station and anti-missiles near Russia's western borders infuriated Russia. Washington claimed the shield was necessary to protect the United States and NATO allies from a potential missile strike from Iran, but Moscow said the shield undermined Russia's defense capabilities.

NATO leaders agreed in November to consider the Russian proposal and a task force of Russian and NATO military experts will present an assessment of the joint system to defense ministers from both sides in June.

"That work of connecting two systems, with one purpose, is ongoing," Rasmussen said in Chicaco. "There are many difficult technical, legal and political issues still to be solved, but we are making good progress."

WASHINGTON, May 12 (RIA Novosti)

Russian Black Sea Fleet to surrender a lease of some facilities in Sevastopolhttp://vestnikkavkaza.net/news/politics/13719.html

Kiev and Moscow negotiate on surrendering a lease of some major land parcels in Sevastopol by the Black Sea Fleet of Russia.

The ambassador of Ukraine Viktor Semenov, a coordinator of relations with Russia in this sphere, stated that this issue will be the subject of the talks.

In June a set of questions on Russian participation in the development of social sphere of Sevastopol will be discussed by experts.

05:03 12/05/2011Top News

Russia, Ukraine have no disagreements over Black Sea Fleet property http://www.itar-tass.com/en/c32/140475.html

KIEV, May 12 (Itar-Tass) —— Russia and Ukraine have no disagreements over the Ukrainian property currently leased by the Russian Black Sea Fleet in the Crimea, Ukrainian State Property Fund Chairman Alexander Ryabchenko said.

“We are inventorying the property being used by the Black Sea Fleet. Some of the property has not been included in the agreements and there is property that the Black Sea Fleet may no longer need but is still on its books. This process must be streamlined,” Ryabchenko told Itar-Tass.

“The Black Sea Fleet would like he texts of the agreements to correspond to the real situation. Work is underway all the time. There are no disagreements or contradictions at this point,” he said.

He did not rule out that the Black Sea Fleet might give up some of the territories that are no longer vital for it but might lease the facilities the legal status of which is not regulated yet.

The Sevastopol city administration confirmed that negotiations are underway with Russia for a possible transfer of five sites with a total area of 749 hectares to the city for commercial development.

Sevastopol city administration head Valery Saratov and Russian Defence Minister Anatoly Serdyukov said on April 19 that the idea of using certain sites currently leased by the Black Sea Fleet for investment projects should be discussed at the level of presidents.

According to the agreements signed in Kharkov a year ago, the Russian Black Sea Fleet will be based in Sevastopol at least till 2042, and the agreement on its presence there may be prolonged further on.

Under the agreement, the term of the Russian base's presence in Ukraine is to be prolonged for another 25 years after the current agreement, signed in 1997, expires in 2017.

The term of the base's presence is to be prolonged by 25 years after 2017, with chances of further five-year extensions, unless either party declares the intention to terminate the operation of the agreement.

Russian President Dmitry Medvedev said, “Russia seeks to determine the term of the Russian Black Sea Fleet's base presence in Sevastopol. The term has been extended for 25 years with the option of extending for additional five years after the term expires.”

In his opinion, “this will create the best security guarantees in the Black Sea region”.

Medvedev said he would instruct Defence Minister Anatoly Serdyukov and Navy commander Vladimir Vysotsky to decide on the Black Sea Fleet base participation in Sevastopol's social and economic development. “For Russia Sevastopol is an especial city. It is our base and a decision on its extension is very important for us,” Medvedev said.

In his words, “we seek to ensure security in the region, help solve border problems, improve the security climate and help Sevastopol resolve social and economic tasks.” “This is normal partnership between the countries. We would like the good attitude towards our base to continue as before.” “I'll instruct the defence minister and the Navy commander to involve our base in the social and economic development of Sevastopol,” he said.

“We prefer a good attitude towards the base as it was before,” he said.

After the break-up of the USSR in 1991, the Black Sea Fleet became a bone of contention between Russia and Ukraine. The issue of dividing it was hot on the agenda. The first move to resolve it was the signing in Mukhalatka (near Yalta) on August 3, 1992, of the agreement on the principles of forming the navies of Russia and Ukraine on the basis of the Black Sea Fleet of the former USSR.

The parties conducted difficult negotiations for five years. As a result, they signed the agreements in Kiev on May 28, 1997 on the division, mutual settlements, status and terms of stay of the Black Sea Fleet in the territory of Ukraine.

Under these agreements, the Russian fleet is to stay in Sevastopol for 20 years, until 2017. The annual payment for the lease is 97.75 million dollars.

Russia has no plans to leave Sevastopol ahead of time, but intends to build facilities for the Black Sea Fleet in Novorossiisk, the chief of the Russian General Staff, Nikolai Makarov, said.

“We have no goal of leaving Sevastopol. We want to accommodate all units and formations of the Novorossiisk naval base in the first place,” he said.

Meanwhile, Russia is building a new Black Sea Fleet base for deep-draft surface ships in Novorossiisk. The construction of the Black Sea Fleet base in Novorossiisk began in 2005. The project covers all ship, aircraft and coastal infrastructure. Work is expected to be completed by 2020.

Prime Minister Vladimir Putin said the construction of the base would cost 92 billion U.S. dollars.

The main base of the Black Sea Fleet ships and all infrastructure for marines, coastal troops and naval aviation will be ready by 2017-2020. Up to 80 warships of various classes will be deployed in Novorossiisk.

Russian politician says Moscow won't let balance of force change in Middle East http://english.peopledaily.com.cn/90001/90777/90853/7378067.html

14:26, May 12, 2011 

Russia won't let the balance of forces in the Middle East change, so its arms sales to Syria should not disturb Israel, the chairman of the Federation Council said Wednesday.

Sergei Mironov, who met with an Israeli foreign affairs and defense delegation and Israel's ambassador to Moscow, said that he has discussed the arms deals between Moscow and Damascus that have been highly sensitive for Israel.

"Russia controls the situation in order not to alter the balance of forces in the region," Mironov was quoted by Interfax news agency as saying.

The parties also discussed the situation in Northern Africa, the Iranian nuclear program and fighting international terrorism.

"We are certain that the international community must unite in fighting against international terrorism," Mironov said.

Source: Xinhua

Why Is Russia Keeping the U.N. from Condemning Syria?http://www.theatlanticwire.com/global/2011/05/why-russia-keeping-un-condemning-syria/37615/

By Uri Friedman May 11, 2011

On a day in which Syria shelled the city of Homs as part of an escalated crackdown on protesters and withdrew its controversial bid for a seat on the U.N. Human Rights Council, Russia once again rejected a British-led effort to persuade the U.N. Security Council to condemn the Syrian regime's use of violence. "The Security Council cannot discuss Syria," a Russian foreign ministry official told the Interfax news agency. The official claimed that the Syrian opposition was guilty of violence as well. "The opposition there was never peaceful to begin with,"he said.

Russia has called for negotiations and political reforms in Syria, but the veto-wielding member of the Security Council has consistently blocked U.N. action on Syria. Why? News reports over the last month suggest a few reasons.

First, as AFP points out, Syria is Russia's Middle East ally. "Russia has retained close ties with Syria since the Soviet era and is currently supplying the country with advanced missiles and other arms," the news outlet notes, and Russian President Dmitry Medvedev paid a visit to Damascus last year to deepen trade ties between the two countries and

"promote Russia's waning presence in the Middle East." Syria, moreover, was one of the few countries to support Russia in its war with Georgia.

There are other reasons, too. Russia generally champions national sovereignty and opposes interventionism and, as The Jerusalem Post notes, Russia and China view "Syria's protests as an internal matter that should be handled domestically." Russia also isn't happy about how the military campaign in Libya is going--a campaign that the Security Council authorized in a vote in which Russia abstained. As Colum Lynch explains at Foreign Policy, "China, Russia, India, and to a lesser extent, Brazil and South Africa, have expressed concern that [Libyan campaign] has exceeded its U.N. mandate to protect civilians, and has taken sides in a civil war." When Russia blocked the Security Council's first effort to condemn Syria, Russia's Deputy U.N. Ambassador declared that "a real threat could arise from outside interference or taking of sides."

Maliki: Russia renews business interests in Iraqhttp://www.zawya.com/story.cfm/sidZAWYA20110512071438

12 May 2011 By Sirwa Horami Erbil, May 12 (AKnews) - After having been absent from the Iraqi business arena since the fall of the former regime in 2003, Russia is returning with large-scale plans to work once more in the country, said the Iraqi Prime Minister on Wednesday.

Speaking at a press conference, Nouri al-Maliki said that recent developments in Iraq had renewed Russia's confidence and raised its interest in a variety of economic sectors.

"...this is a good step because they previously believed that Iraq lacked sovereignty and was a country of terrorism and sectarianism," he said, "It is convinced now that Iraq is a stable country and perhaps one of the most stable countries in the region".

The Iraqi PM said that until now, Russia had participated only in oil licensing rounds and some electricity projects but were looking to return at a much greater capacity.

"They've come back with big plans," Maliki continued, "that include cultural, oil, gas, power plant construction and military projects."  

Maliki said that all of Russia's proposals were welcome, including their visions of military cooperation.

"...this issue will be left to the Ministry of Defense and it will decide what it needs," he said.

"Russia played a role in the fields of industry and agriculture," the PM continued, saying that all of these issues would be discussed at an imminent meeting between officials from the two countries in the Iraqi capital.

"The joint supreme committees of both countries will meet in Baghdad along with a delegation of experts. Each (Russian) minister will speak with his Iraqi counterpart in order to set in motion Russia's plans".© AK News 2011

Georgia-Russia row blocks Council of Europe declarationhttp://www.news.az/articles/turkey/36198

Thu 12 May 2011 06:59 GMT | 8:59 Local Time

A diplomatic spat between Russia and Georgia has left a Council of Europe ministers meeting unable to release a joint declaration.

Georgian and Russian ministers differed strongly on the wording applied to their five-day war in August 2008 over the breakaway regions of South Ossetia and Abkhazia. Diplomatic sources told the Hurriyet Daily News that the spat had been ongoing since drafting of the declaration began at a previous meeting in Strasbourg.

Turkey, the outgoing chair of the ministers’ committee, and its successor, Ukraine, worked to find a way around the crisis by issuing a draft version of the declaration, which does not mention the disputed matter, on Wednesday as a presidential statement. Neither Georgia nor Russia signed this statement.

The draft text prepared in Strasbourg, which the council’s deputy ministers approved, said, in part: “We remain concerned that persisting unresolved conflicts affecting certain parts of our continent put at risk the security, unity and democratic stability of member states and deprive populations concerned of their fundamental human rights and freedoms.”

Georgia, however, sought to include a mention in the text of “military conflict”, a move opposed by the Russian delegation, which proposed substitute wording referring to “the situation in Georgia”. Georgia continued to insist on its demand at the Istanbul meeting, where Turkish Foreign Minister Ahmet Davutoglu met Georgian Deputy Foreign Minister David Jalagania in an unsuccessful attempt to convince his delegation to let the matter drop.

Following a delay due to Davutoglu and Jalagania’s meeting, Turkey handed over the

rotating presidency of the Council of Europe’s Committee of Ministers to Ukraine. Turkey assumed the presidency of the committee for a six-month term on 10 November.

In a joint press conference with Ukrainian Foreign Minister Kostyantyn Hryshchenko and Council of Europe Secretary-General Thorbjorn Jagland, Davutoglu said that Turkey worked during its presidency to establish and monitor standards in the Council of Europe.

Hurriyet Daily News

Vladikavkaz - election headquarters of the Tskhinvali opposition http://eng.expertclub.ge/portal/cnid__8525/alias__Expertclub/lang__en/tabid__2546/default.aspx

11/05/2011 09:20

South Ossetian opposition will fight against Eduard Kokoity from Vladikavkaz. It cannot pursue its campaign activities in Tskhinvali because of threat of physical elimination. This was stated by the head of the public organization "Civil Initiative" Oleg Teziev who is a former "prime minister" of the puppet regime. He stressed that in recent years Kokoity started elimination of the opposition and repressions are under way in the occupied region. Members of the opposition fear for lives of their relatives.

10:47Russian police recertification to finish August 1 – decreehttp://www.interfax.com/news.asp

CORRUPTION WATCH: Russia's celebrated police reform delayed until December

http://www.bne.eu/dispatch_text15114

RIA Novosti - Vedomosti May 11, 2011

Russia's police reforms will not be completed before December: not even top Interior Ministry officials have been re-hired.

The process of rebranding Russia's corrupt and distrusted militsia (militia) as the more international-sounding politsia (police) is a cornerstone of the Interior Ministry's reforms. However, it now faces unexpected obstacles and may be seriously delayed. On March 1, President Dmitry Medvedev signed a decree giving the deadline of June 1. It was hoped this would mean that incompetent or dishonest officers would be dismissed and that it would significantly strengthen the ministry's human resources potential.

Human rights activists volunteered to join re-certification boards, saying the public should play a role. Specialists advocated a more scientific approach, suggesting mandatory lie detector tests to rule out corruption. No one thought it would become mired in lobbyist battles, which now mean the president's deadline will not be met.

One law enforcement agency chief outlined a three-stage process. First a board headed by Sergei Naryshkin, Chief of the Presidential Executive Office, was to certify sub-division heads in the ministry's central administration, as well as federal district and regional department chiefs. Then certified central administration chiefs will form a central board to approve members of regional boards which would then certify the rest. Naryshkin's board has approved most regional chiefs but barely any central administration division heads. The certification of rank-and-file officers is still a long way off.

An official close to the Presidential Executive Office ascribes the delay to overly optimistic initial deadlines, which supposed all senior central administration officers and regional chiefs could be screened in two months and regional certification programs launched.

The stumbling block came with the re-appointment of top officials in the central administration as they battled to save their jobs. An official close to the administration mentioned rumors that people are offering between $1 million and $10 million for approval. The ministry's HR department chief, the police chief and the economic security department chief have still not been appointed.

One central administration operational officer said he did not know anyone who had been re-certified, adding he had no idea when it would happen, and that he was told the new staff lists would be circulated after the New Year.

With no key appointments made, determining the central administration's structure, number of division chiefs, their ranks and drafting regional certification regulations is all impossible. One official mentioned that many unpleasant chiefs had already been dismissed.

Two law enforcement officers told Vedomosti the deadline has to be extended to December 1.

Lawyer and board member Anatoly Kucherena agreed, explaining the delay by meticulous checks, but saying it was an announcement for the president to make.

Moscow police trade union head Mikhail Pashkin said delays will only make officers more nervous and impair their performance. He believes incompetent Interior Ministry bosses were to blame for setting unrealistic deadlines.

An Interior Ministry spokesperson declined to comment.

Presidential Press Secretary Natalia Timakova said the president prioritizes the retention of professional police officers over deadlines.

Russia amends labor law at immigrant workers' expense

http://www.bne.eu/dispatch_text15114

RIA Novosti - Moskovskiye NovostiMay 11, 2011

Russia's new employment support program involves amending existing legislation to better manage labor migration while expanding the dwindling workforce.

MN has had an opportunity to study the new state program which was drafted by the Ministry of Healthcare and Social Development and submitted to the government.

Along with the further liberalization of migration laws, the program calls to bring people with disabilities and retired citizens back into the workforce. This is absolutely necessary because the country's average working age will continue to decline. Without this initiative, the only alternative for a renewed workforce is more foreign workers.

Although the number of foreign workers is expected to grow from 158,000 in 2010 to 325,000 in 2015, the government has set itself the ambitious goal of retrieving 35 percent of the jobs currently occupied by immigrants and redistributing them to Russian nationals.

There is no doubt that Russia does require some foreign workforce. "We are short of workers for physical labor jobs, not white collar positions," said parliament member Oleg Shein. Yet, he doubts that even the new state program, which emphasizes employing foreigners within bilateral interstate agreements, will be able to curb illegal immigration.

The program also includes policies to encourage internal migration in Russia, such as offering cash guarantees to workers moving to a different region. Sergei Khramov, head of SotsProf, a trade union association, does not believe the government has enough money to do this. "Besides, money is not everything. People won't move willingly as long as residence registration is required." The retraining programs planned are expected to cut

unemployment from 7.5 to 6.2 percent by 2015. The new labor law will encourage new mothers on leave with young children to attend retraining courses. Even cutting unemployment by 1 percent is progress, Shein said, because a 1 percent increase correlates to a 4 percent rise in the crime rate.

The program's authors expect the number of the unemployed opting for self-employment or starting new businesses to rise from the current 3.3 to 8 percent in 2015. They also plan to target labor productivity by introducing standards which would "eliminate jobs with poor working conditions and low productivity." The ministry plans to spend 500 billion rubles ($18bn) in four years on this program - about as much as the government's annual spending on employment as part of its anti-crisis policy during 2009 and 2010. The government said it has not yet considered the ministry's request for financing.

May 12, 2011 12:03

Opposition wants amnesty of economic crime convicts to mark independence jubilee (Part 2)http://www.interfax.com/newsinf.asp?id=242940

MOSCOW. May 12 (Interfax) - Members of the three opposition factions in the State Duma - A Just Russia, the Communist Party and the Liberal Democratic Party - have proposed an amnesty on the occasion of the 20th anniversary of Russia's independence.

The proposal was submitted to the State Duma, a source at the press office of the faction of A Just Russia told Interfax on Thursday.

"We propose an amnesty of those convicted of economic crimes if they did not do large damage to the country," proposal co-author Oleg Mikheyev (A Just Russia) told Interfax.

From 70,000 to 100,000 criminal cases are opened yearly on economic charges, but only 8% to 12% of them are brought to court, he said.

"In our opinion, the statistics show that the majority of people who catch the attention of detectives avoid prosecution," he said.

Bearing in mind liberalization of criminal laws and amendments alleviating criminal prosecution of economic crimes, it is necessary to take the next logical step and consider a possible amnesty of people convicted of economic misdemeanors, Mikheyev said.

"It is hard to tell to how many people this amnesty may apply; most probably, the number will be small," he said. However, such people will able to return to a normal life and do something good for society, he added.

te eb

May 12, 2011 10:22

Novosibirsk Communists detained at illegal protest against gasoline price hikeshttp://www.interfax.com/newsinf.asp?id=242905

NOVOSIBIRSK. May 12 (Interfax) - Police detained several members of the Russian Communist Party for staging a protest against growing gasoline prices in the center of Novosibirsk on Wednesday, Viktor Strelnikov, the second secretary of the party's Zheleznodorozhny district committee, told Interfax on Thursday.

"All those detained were taken to the police station no. 1 of Novosibirsk's interior affairs department, where they were held for about four hours. The protesters have been accused of breaching rules for holding a public event. An administrative protocol has been compiled, and all of the participants in the rally have provided their explanations," Strelnikov said.

The action involved five people who were pushing a car with an empty gasoline tank, and one more protester was sitting at the steering wheel, he said.

"The car with an empty tank moved along the far right lane with its hazard light switched on from the State Public Scientific and Technical Library to Lenin Square in total compliance with traffic rules," Strelnikov said.

The Communists did not hold a picket or a procession, he said.

Pictures posted on the website of the Communist Party's regional branch show that the car in question was decorated with slogans and a red flag with party symbols.

tm

Bank Rossii’s Ignatiev May Leave Sberbank Board: Vedomosti Sayshttp://www.bloomberg.com/news/2011-05-12/bank-rossii-s-ignatiev-may-leave-sberbank-board-vedomosti-says.html

By Marina Sysoyeva - May 12, 2011 6:16 AM GMT+0200

Russian central banker Sergey Ignatiev may step down as board chairman at OAO Sberbank, after a presidential order to replace government officials with independent figures as chairmen of state-owned companies, Vedomosti reported, citing unidentified government officials.

As chief of Bank Rossii, Ignatiev counts as a state official and may decide whether to step down before Sberbank’s shareholders meeting on June 3, the newspaper said.

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Ivanov’s Son Goes to Rosselkhozbank http://www.themoscowtimes.com/business/article/ivanovs-son-goes-to-rosselkhozbank/436636.html

12 May 2011The Moscow Times

The son of Deputy Prime Minister Sergei Ivanov, whose name is also Sergei Ivanov, is slated to join the supervisory board of Rosselkhozbank, Moskovskiye Novosti reported.

Dmitry Patrushev, son of Security Council head Sergei Patrushev, has led the management board of the state agricultural bank since May last year.

"Following the orders of President Dmitry Medvedev to replace officials on the boards of state companies with independent directors, they are being replaced by their children," the paper quipped.

A spokeswoman at the bank contacted by The Moscow Times said she could neither confirm nor deny the story. A source close to the bank said, "The media reports are in line with the current trend to replace government officials on boards."

First Deputy Prime Minister Viktor Zubkov sent the request to appoint the younger Ivanov to Prime Minister Vladimir Putin, who supports the move, and the documents for finalizing the assignment are being processed by the government, the paper reported.

The younger Ivanov previously served as deputy chairman of the board of Gazprombank, where he oversaw relations with corporate clients and was responsible for interfacing with state authorities.

He is also chairman of the board of insurance company Sogaz.

Moscow Buys 23% of Luzhniki Stadium for $14 Mln, Vedomosti Sayshttp://www.bloomberg.com/news/2011-05-12/moscow-buys-23-of-luzhniki-stadium-for-14-mln-vedomosti-says.html

By Marina Sysoyeva - May 12, 2011 6:48 AM GMT+0200

Moscow city authorities agreed to purchase another 23 percent of the Luzhniki stadium from Vladimir Aleshin, the arena’s main owner, for 10 million euros ($14 million), Vedomosti reported, citing unidentified city officials.

The stadium,the city’s premier sports venue, covers an area of 145 hectares (358 acres) and is the only one in Moscow that meets the requirements of FIFA, soccer’s international governing body, and UEFA, which represents Europe’s national soccer associations, the report said. The city will own about 48 percent of Luzhniki after the transaction.

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Over 100 football fans detained in Moscowhttp://en.rian.ru/sports/20110512/163982024.html

03:15 12/05/2011

More than 100 football fans were detained in the Russian capital on Wednesday for various offenses after a match between rival Moscow clubs Spartak and CSKA, police reported.

Earlier it was reported that 20 people were held for being drunk at the city's southwestern Luzhniki stadium before the game.

Police said over 36,000 fans attended the match that saw CSKA win 5-4 on penalties after the game finished 3-3 following extra time.

MOSCOW, May 12 (RIA Novosti)

Nationalist disturbance in Central Moscow as big match kicks offhttp://themoscownews.com/local/20110512/188659617.html

by Andy Potts at 12/05/2011 11:28

 

To mark a notorious riot of 5,000 nationalists last year, their supporters tried to stage a press conference in Central Moscow on Wednesday evening.

The Dec. 11 disturbances, which came in the wake of the murder of Spartak football fan Yegor Sviridov in a brawl with a group from the North Caucasus, have been commemorated on the 11th of each subsequent month.

And last night, against the backdrop of a high-profile football match between Spartak and CSKA, the latest unauthorized rally was scheduled for Manezhnaya Ploshchad.

 

Press conference or protest?

The organisers claimed it was a chance for reporters to discuss the stance of nationalist groups and hoped to put their case to the media.

But as soon as Georgy Borovikov, one of the leaders, began to talk to a journalist he was arrested, gzt.ru reported. Police said the arrest was due to a document check.

At roughly the same time Dmitry Demushkin, leader of the banned Slavyansky Soyuz far-right group, was arrested outside his home.

Elena Denezhkina, press secretary of the recently-formed Russkiye umbrella movement for nationalist groups, said Demushkin had been bundled into a car and driven away as he headed towards the demo.

Demushkin later confirmed these reports with text messages to Interfax, while Denezhkina was also detained by police at Manezhnaya.

 

Rival attraction

The situation was complicated by football fans traveling to Luzhniki for the big football match – many of whom were changing trains at Okhotny Ryad station beneath Manezhnaya.

Metro staff reported a “tense situation” in stations along the red line, with large groups of rival fans gathering to chant abusive slogans towards each other, the police and migrants from the North Caucasus, gzt.ru reported.

About 20 fans were arrested during the match, which CSKA won on penalties after a 3-3 draw. There was sporadic fighting in the stadium during the game, but police said that fans were arrested for drunkenness rather than public order offences.

Russian top oil CEO’s daughter death confirmed – DNA test http://rt.com/news/line/

RT News line, May 12

The death of Viktoria Teslyuk, a daughter of a senior manager of the Russian oil giant Lukoil, has been confirmed by an official DNA test, according to reports on Thursday. Genetic expertise proved the body found in the Moscow suburb was that of Viktoria. The girl was killed by a blow to the head, the test confirmed. The daughter of the Lukoil CEO was found dead in early May, but the Investigative Committee refrained from confirming the news, saying that some more identification procedures were to be done.

DNA test confirms dead girl was Lukoil executive's daughterhttp://en.rian.ru/crime/20110512/163987112.html

11:45 12/05/2011

A DNA test proved that a girl's body found near Moscow in early April was that of the missing daughter of an executive at Russia's second largest oil producer, investigators said on Thursday.

"The identity was established in a forensic DNA examination. It was that of missing 16-year-old Moscow Region resident Viktoria Teslyuk," said Vladimir Markin, spokesman for the Investigative Committee of the Russian Prosecutor-General's Office.

The body, bearing serious head injuries, was found by the roadside near the town of Taldom, about 100 km north of Moscow when the winter snows melted. Teslyuk was reported missing on March 26.

Viktoria's father, Robert Teslyuk, is general director of the Arman oil producing company, a joint venture between Lukoil, Shell and Sinopec that is based in Kazakhstan.

MOSCOW, May 12 (RIA Novosti)

Twin attacks in Russian Caucasus, 4 killed http://rt.com/news/line/2011-05-12/#id9909

RT News line, May 1210:29

The Dagestan region of the Russian Caucasus has become the scene of armed attacks once again, this time in a residential district and also in a mountainous area. Two civilians and two police were killed. Early on Thursday morning, a house came under attack by militants, two people were reportedly killed in the shootout, and they are still being identified. On the same day, two police officers were hospitalized and later died after a fire exchange with militants in a mountainous tribal area where an operation by federal forces was underway. One of the assailants was killed in the shooting.

Two police officers killed in Dagestanhttp://en.rian.ru/russia/20110512/163987298.html12:00 12/05/2011

A man shot dead two police officers in the southern Russian republic of Dagestan on Wednesday morning, local police reported.

The attack happened in a village of Karamakhi in the Buinaksky region while the officers were carrying out an "inspection" at the residence of a local, whose identity has not yet been disclosed.

The officers were shot at from within the house. The attacker was killed in return fire.

Terrorist attacks and shootouts with police are common in Russia's volatile southern republics, where the government has been fighting insurgents for over a decade.

PYATIGORSK, May 12 (RIA Novosti)

Team Caucasus shines in Grozny soccer friendly http://english.ruvr.ru/2011/05/12/50171811.html

May 12, 2011 09:57 Moscow Time

Team Caucasus outplayed a world football team 5:2 in a friendly match in Grozny, Chechnya, marking the opening of the city’s new sports arena named after Akhmat-Hadzhi Kadyrov, the slain father of the republic’s head Ramzan Kadyrov.

Team Caucasus’ goal scorers were Anzor Ismailov, Timur Dzhibrailov and Andrei Fedkov (one goal each) and Zaur Sadayev (two goals).

Diego Maradona and Ivan Samorano netted one goal each into Team Caucasus’ goals.

Chechen leader eclipses Maradona with friendly hat-trickhttp://in.reuters.com/article/2011/05/12/idINIndia-56949020110512

8:03am IST

GROZNY, Russia (Reuters) - Ramzan Kadyrov, leader of Russia's volatile Chechnya region, outshone a team of former international footballers including Diego Maradona by scoring a hat-trick in a friendly match on Wednesday.

After two and a half hours of celebrations marking the opening of a renovated stadium in the capital Grozny, a Russian Premier League Select XI beat an International XI 5-2.

Local team Terek Grozny, who are coached by Dutch great Ruud Gullit, will be using the new venue for their home games in future.

"We're glad that in Chechnya highly modern structures like this stadium are being constructed," said Terek's club president Kadyrov in a speech before the game.

"The republic is being reborn, we are on the right path," added the 34-year-old as fans cheered at the 30,000-capacity stadium which has been rebuilt at a cost of at least seven billion roubles ($253.6 million).

Kadyrov raised his arms to salute the crowd as they chanted his name throughout the match.

Former Argentina coach and captain Maradona scored one goal for the International XI which also included his countryman Roberto Ayala and Uruguayan Enzo Francescoli.

(Editing by Tony Jimenez. To comment on this story: sportsfeedback@thomsonreuters.com)

Dagestani President takes part in the opening ceremony of the new stadium in Groznyhttp://www.riadagestan.com/news/2011/05/12/6461/

12.05.2011 , 11:10

Grozny, May 12, 2011. On May 11, the President of the Republic of Dagestan Magomedsalam Magomedov attended the opening of Ahmad-Haji Kadyrov Stadium in Grozny.

During the ceremony a friendly match between the combined team of world football stars, which included Diego Maradona, Luis Figo and Fabien Barthez, and the team of Russian politicians and well known Russian football players was held. The Vice-Premier of the Russian Federation and Plenipotentiary Envoy of the President in the North Caucasian Federal District Alexander Khloponin acted as the captain of the Russian team.

The new stadium was designed with a capacity of 30, 000 spectators. It is also planned to build a sports complex with swimming pool, tennis courts, volleyball and basketball courts.

During a visit to the Chechen Republic, Dagestani Head also visited the Memorial Complex "Walk of Fame" of Ahmad-Haji Kadyrov in Grozny.

Maradona and Liverpool greats play exhibition match for Chechen leaderhttp://www.guardian.co.uk/world/2011/may/11/chechens-flock-team-soccer-stars

All-star football game in Grozny the latest attempt by president Ramzan Kadyrov to show republic has recovered from war

Miriam Elder in Grozny

guardian.co.uk, Wednesday 11 May 2011 22.08 BST

As night fell on the Chechen capital, the roars reached a fever pitch. A helicopter hovered overhead. Snipers readied their sights.

Ten years ago these would have been signs of war. Last night, they indicated that the former Liverpool striker Robbie Fowler and the legendary Argentine captain Diego Maradona were in town for a game of football.

In what will go down as one of the most bizarre matches in footballing history, Chechnya hosted a game between some of the world's greatest players and a side comprising Chechen and Russian players, captained by the Chechen leader, Ramzan Kadyrov.

With an 11pm start time, the former Liverpool and Real Madrid midfielder Steve McManaman, the ex-Italian defender Franco Baresi, former French goalkeeper Fabien Barthez and the ex-Portuguese player Luis Figo, in addition to Maradona and Fowler, were among those invited to attend. The World Cup-winning French midfielder Zinedine Zidane denied reports he would play.

The match was the latest attempt by Kadyrov to prove that the republic he has turned into his personal fiefdom has fully recovered from the ravages of war. Now he has drafted some of football's biggest names into his games, attempting to whitewash his reputation as an international pariah because of the gruesome human rights abuses that have taken place under his watch.

After losing to an all-star Brazilian side two months ago, Kadyrov ensured this match would bring glory to Chechnya. The "world team" played lackadaisical football, letting passes slide through and melting away whenever Kadyrov, stocky and heavy on his feet, had the ball. They scored two goals within the first 18 minutes of the 40-minute match, only to lose 5-2 in the end. All the Chechen goals, save one, were assisted by Kadyrov, the announcer heartily noted. Fans barely noticed the western players, cheering rabidly whenever Kadyrov had the ball and chanting "Ramzan! Ramzan!" throughout the match. One got a sense that building up Chechnya's image was a secondary goal: having built a top-class stadium, Kadyrov simply wanted to play football with his friends, and invited several global superstars to the event.

The half-time entertainment – almost as stellar as the footballing legends on the pitch – was provided by R&B performer Craig David.

Outside the stadium, police beat back anxious football fans with batons, attempting to control a crowd numbering tens of thousands. At least one girl fainted and was carried away to safety.

Some 30,000 were allowed to enter the gleaming new stadium, which opened on Wednesday to replace one destroyed when Kadyrov's father, Akhmad, was killed in a bomb blast in 2004. The stadium, which will be the home ground for the local club, Terek Grozny, is decorated with huge posters of Akhmad Kadyrov and Vladimir Putin, Russia's prime minister. "People here have long forgotten that Dmitry Medvedev exists," said Abdullo, a driver near the stadium, explaining the absence of the Russian president.

Fans wore T-shirts imprinted with Kadyrov's face and waved massive flags praising Putin and Kadyrov and the ruling United Russia party.

It had the air of a political rally rather than a sporting event.

"Thank you to our national leader, Vladimir Putin," Kadyrov said, opening a five-hour event that included a performance by the Italian crooner Toto Cutugno and Chechen national dances.the late-night match.

Fans filled the cloudy skies above Grozny with deafening cheers. "It's so great," said Magomed Zhvakhalov, a 17-year-old student in the stands. "I'm proud of Terek and of our president." He was not aware of the big names drafted into the match. "I think they're old footballers?"

he asked.Chechnya's footballing star began to shine with the hiring of the Dutch legend Ruud Gullit as Terek manager in January. Since then, Kadyrov has plastered Grozny with posters touting football's great merits: "Football unites the world!" and "Sport brings peace to the Chechen Republic!"

He has never said where the money comes from. After a match in March, in which he he captained a Chechen side against a Brazilian-all star team that included Cafu and Romario, he said the Brazilian players hadn't been paid a penny and played in Grozny "out of respect" for the Chechen people.

Yet few imagine that players some may question why players such as Maradona and Fowler of worldwide renown would make the long trip trek to one of the world's most iunstable corners without hefty paysome kind of reimbursement.

The Chechen government said the game was part-sponsored by Dagmara Trading, a Swiss-based firm owned by secretive Chechen businessman Bulat Chagayev, an close associate of Kadyrov's.

There were rumours of a grand party to be hosted after the match, something Fowler, McManaman and Barthes would likely enjoy. Although Kadyrov is known to enjoy a good fetetime, dancing up a storm and showering guests with money, he has imposed a steadily strict Islamism on the republic, discouraging alcohol and nightclubs. Women who walk around town without headscarves have been shot at by security services with paintguns.

There was no word on whether the footballers would comment on being dragged into partnershipbeing associated with a man roundly criticised by human rights groups for the kidnappings, executions and torture that happen in his republic. After March's Brazil match, Gullit told reporters he would rather not think about it. "I have to be concerned only with football, the rest is not my concern," he said.

Russian Press at a Glance, Thursday, May 12, 2011http://en.rian.ru/papers/20110512/163984962.html

09:19 12/05/2011

A brief look at what is in the Russian papers today

POLITICS

Russia refused to provide a bailout loan to Belarus on Wednesday, telling it to privatize state assets and seek help from the International Monetary Fund, which in turn urged it to speed through reforms to overcome a currency crisis

(Moscow Times)

President Dmitry Medvedev announced the venue and format of his first large-scale news conference due on May 18

(Kommersant)

U.S. leader Barack Obama has made public an immigration reform program that would give U.S. citizenship to millions of current illegal immigrants. Analysts say it is a move to win over voters ahead of forthcoming presidential elections

(Kommersant)

ECONOMY & BUSINESS

French engineering conglomerate Alstom has done a spectacular job making inroads in Russia over the past 12 months. It gained approval for deals with nine major companies including RusHydro and Rosatom, chiefly seeking to develop technology and manufacture domestically rather than selling from abroad

(Moscow Times)

The government commission on budget planning is to consider the Finance Ministry's key document on tax policy for 2012-2014. Under the document, energy giant Gazprom would pay 30 percent more tax

(Kommersant)

The Moscow authorities have agreed to buy the city's Luzhniki stadium for 10 million euros

(Vedomosti)

SOCIETY

Prime Minister Vladimir Putin struggled with the modern features of Lada's new budget sedan during a visit to carmaker Avtovaz's Togliatti headquarters on Wednesday

(Moscow Times, Kommersant, Rossiiskaya Gazeta)

Whistleblowing blogger Alexei Navalny said on Wednesday he would not cop out of a criminal case against him by seeking parliamentary immunity

(Moscow Times)

Wikileaks founder Julian Assange won the Sydney Peace Foundation's gold medal

(Nezavisimaya Gazeta)

IT

Russia, known as a global stronghold of spam, will finally crack down on unsolicited e-mails, as the State Duma reviews this week a bill introducing fines and punishments for spammers

(Moscow Times, Kommersant, Vedomosti)

The United States has announced plans to create a hi-tech emergencies warning system (Rossiiskaya Gazeta)

AUTOMOTIVE INDUSTRY

Hyundai Solaris has become the most popular foreign car brand in Russia four months after it began sales in the country

(Vedomosti)

For more details on all the news in Russia today, visit our website at http://en.rian.ru.

Putin's Feckless Front http://www.themoscowtimes.com/opinion/article/putins-feckless-front/436662.html

12 May 2011By Yulia Latynina

"I will be the next president of Russia” was the clear and direct message Prime Minister Vladimir Putin sent when he announced the creation of the All-Russia People’s Front.

On Saturday, a hodgepodge of the front’s representatives appeared at Putin’s residence in Novo-Ogaryovo. Putin held a second meeting with the group on Wednesday. It marks the final end to any hopes that the Twitter-happy President Dmitry Medvedev might have had for re-election, although this was pretty clear long ago.

But before delivering the coup de grace to Medvedev, Putin first killed off the Right Cause party. Its creation was purportedly Medvedev’s brainchild, with former Kremlin chief of staff Alexander Voloshin and Rusnano CEO Anatoly Chubais placed in charge with organizing the Kremlin-friendly party.

Finance Minister Alexei Kudrin was initially offered the top spot in Right Cause, but he refused it outright. By all indications, Kudrin has his sights on becoming prime minister after Putin regains the presidency and has little interest in getting bogged down in a dead-end position with a party that few people to this day know exists.

Then the job was offered to First Deputy Prime Minister Igor Shuvalov. He mulled over the proposition for a couple weeks and then went to Putin for advice. The national leader told him, “Do what you want, but if I were you I wouldn’t rush into anything.”

Then Putin and his gang went after A Just Russia, headed by the determined defender of muskrats, Sergei Mironov. His party’s only crime is that it is not United Russia. That is, it was created according to the political concept: “Everyone who doesn’t want to vote for United Russia should have an alternative.” But now that concept has been narrowed to: “Everybody should vote for Putin.”

I can picture Putin and Medvedev discussing Medvedev’s political future:

Medvedev says, “I want to be president.”

Putin replies: “I’ve got United Russia plus the entire people’s front backing me. Who have you got?”

Putin wanted his announcement of the new front to sound like a menacing roar from the national leader:  “I’m in charge!”

 But Putin’s roar comes off pretty meek. Although he calls his organization the people’s front, it isn’t at all clear what this front is supposed to be fighting against. In the Soviet period, similar fronts were created to fight “bloody bourgeois regimes” in the West and “capitalists who drink the blood of the people.” But who are Putin’s front members — pensioners, factory workers, veterans, women’s groups, automobile owners — supposed to be fighting in post-Soviet Russia? Former Yukos CEO Mikhail Khodorkovsky? Without any help from the front, he will spend many more years in prison anyway. Maybe the front was intended to fight Medvedev? But who needs the front when Medvedev was a long time ago doomed to be an eternal lame duck on the country’s political landscape.

And what is the people’s front supposed to be fighting for? For Putin’s right to build another multimillion-dollar palace for himself? For the political and business elite to get off scot-free after committing bloody road rage using their flashing blue lights? For the right of tax officials with annual household salaries of $40,000 to buy a luxury villas in Dubai and Montenegro?

Who will be the avant-garde of this front? Who will defend the expanded version of “the party of crooks and thieves” and carry Putin on their shoulders into a new presidency? They are a bunch of nobodies — so much so that we don’t even know their names. The public is simply informed that: “On Saturday, representatives of the Russian Union of Industrialists and Entrepreneurs, the Russian Federation of Independent Trade Unions, the Russian Pensioners Union, Young Guard, United Russia, the Union of Afghanistan Veterans, the Women’s Union of Russia and others” had a meeting with the prime minister. By strange coincidence, this is roughly the same list of organizations that signed the notorious open “letter of 55” earlier this year in opposition to Khodorkovsky.

In contrast, look at the open letter in support for Khodorkovsky that was signed by the respectable writers Boris Strugatsky and Boris Akunin, actress Lia Akhedzhakov, actor Oleg Basilashvili, film director Eldar Ryazanov, theatrical director Kama Ginkas and television journalists Vladimir Pozner and Leonid Parfyonov.

During elections, Russian voters are often bused to polling stations to vote for United Russia candidates. In a similar fashion, “representatives of the people” were bused in to Putin’s residence to create a new popular front. Are we supposed to be impressed?

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

National Economic Trends

Alexei Kudrin indicates Russia unlikely to borrow from global markets in 2011http://www.bne.eu/dispatch_text15114

Alfa BankMay 12, 2011

Yesterday, Finance Minister Alexei Kudrin indicated that Russia is unlikely to borrow from global markets in 2011 owing to high oil prices. If the budget goes into deficit in 2H11, it will be covered by domestic borrowing, which we view as preferable.

Though Russia's state foreign debt is only $47bn, or less than 3% of GDP, we still

believe foreign borrowing should not be the key source for covering the deficit. First, Russian banks and companies have accumulated $458bn in corporate foreign debt, a big portion of which belongs to state entities and is quasi-sovereign. Second, the very sharp jump in the current account breakeven oil price from $31/bbl in 1Q10 to $61/bbl in 1Q11 suggests that excessive import growth is offsetting the positive effect of oil prices on the ruble exchange rate. Russia requires a constant increase in oil prices in order to keep the ruble stable, and ruble appreciation is unlikely to continue for long. Thus, accumulating exposure to the local debt market is much more prudent than foreign borrowing.

In the meantime, this policy will lead companies and banks to accumulate foreign currency risk as soon as the government begins to compete with them for local funding. At the moment, low demand means loan growth is only 10-15% a year, and banks still have excess liquidity. The latter, however, is not an immediate threat: as suggested by the liquidity squeeze at the end of April, liquidity is fragile and interest rates may rise very fast.

Russian oil export revenue climbs 25pcthttp://www.steelguru.com/russian_news/Russian_oil_export_revenue_climbs_25pct/204743.html

Thursday, 12 May 2011According to the Federal Customs Service, Russia's revenue from oil exports surged 25% to USD 37.72 billion in January to March 2011 up from USD 30.14 billion in Q1 2010.

Revenue from oil exports to non CIS countries climbed 27.7% from USD 28.86 to USD 36.86 billion while revenue from exports to CIS countries dropped 33% from USD 1.29 to USD 854.5 million.

Meanwhile, actual oil exports slid 6.4% to 53.75 million tonnes in Q1 including 52.5 million tonnes to non CIS countries and 1.25 million tonnes to the CIS.

(Sourced from www.rbcnews.com)

RenCap-NES Macro Monitor http://www.bne.eu/dispatch_text15114

Renaissance CapitalMay 12, 2011

* The robust recovery continues, despite disappointing fixed investment figures (-0.3% YoY in March), with industrial production growing 1.3% QoQ s/a in 1Q11 and 5.3% YoY in March. The RenCap-NES Leading GDP Indicator projects YoY GDP growth at 6.5% for 2Q11 and 6.2% for 1H11.

* Solid growth of 4.8% YoY in real retail sales looks surprising, given documented declines in real wages and real disposable income, down 0.4% YoY and 3.4% YoY,

respectively. This pattern can be explained by the willingness of households to dip into savings and increase expenditures on durable goods, in an attempt to buy protection against inflation.

* The government's finances are heavily exposed to volatility in commodity prices. In 2011-2012, the federal budget will balance if the annual average price of crude oil reaches $120/bbl.

* High inflation remains a real threat. Consumer price growth of 9.6% YoY in April was partially driven by continuing gasoline shortages in a number of Russian regions. In an attempt to meet the earlier-announced target of 6-7% for 2011, the Central Bank of Russia (CBR) raised policy rates: the overnight deposit rate to 3.25%, the auction repo rate to 5.5%, and the refinancing rate to 8.5%.

* The strong current account surplus ($31.8bn in 1Q11), which is due to favourable developments in global commodity markets, remains the main driver of the recovery. In the short term, we think substantial capital inflows from abroad are unlikely because of high political uncertainty related to the 2012 presidential elections. With oil at around $100-110/bbl, we expect the exchange rate to stay close to RUB33.3-33.5 vs the dual-currency basket for the rest of 2011.

Banking sector maintains loan growth in Aprilhttp://www.bne.eu/dispatch_text15114

Renaissance CapitalMay 12, 2011

Event: Yesterday (11 May), Interfax reported the following statements made by Alexei Simanovsky, head of the Central Bank of Russia's (CBR) supervisory department:

* According to the CBR's preliminary estimates, the sector's (ex. Sberbank) corporate lending was up 1.5% MoM in April (+1.6% MoM in March), while retail loans grew 2.9% MoM (+2.4% MoM in March). Over the 4M11 period, loan growth amounted to 3.8% in the corporate segment and 5.7% in retail. The CBR expects loan growth to accelerate later in the year and sticks to its earlier forecast of 20-25% YoY growth in 2011.

* Corporate and retail NPL ratios (under the CBR definition) declined in April by 6 bpts (to 4.85%) and 20 bpts (to 8.25%), respectively.

Action: Moderately positive for the sector, in our view.

Rationale: Preliminary results suggest that the trends of recent months largely continued in April: the sector loan book saw rather healthy growth of around 2% MoM, with retail loan expansion once again outpacing corporate loan growth, while the NPL ratio

continued to decline. The CBR is due to release a full set of statistics in late May/early June.

Svetlana Kovalskaya

Customs Union introduces zero import duties for some vegetableshttp://caspionet.kz/eng/business/Customs_Union_introduces_zero_import_duties_for_some_vegetables_1305173375.html

5 types of vegetables may now enjoy duty-free export privilege for Customs Union countries, which are Russia, Belarus, and Kazakhstan. Once Russia made cabbage and potato import duty-free in 2010, the Russian government also introduced zero import duties for carrots, buckwheat, and onions, the “Kazakh Zerno” grain portal reports. In 2010 there was a lack of vegetable reserves in Russia due to heat and drought. In fall 2010 Russia, in its turn, reduced the import duty for such products as potatoes and cabbage. In 2011, March and April coincided with the season of vegetable shortage. The Russian Customs addressed measures in order to supply national consumption and exempted carrots, buckwheat, and onions from 15% of import duties. This measure will be in effect until June 30, 2011. However, zero import duties for cucumbers, tomatoes, and apples hasn’t been approved yet. According to experts, there was a shortage of these types of fruit and vegetables this spring in Russia and their prices were high. It is unlikely that zero import duties will be able to improve their quality and reduce their price.

Business, Energy or Environmental regulations or discussions

Russian markets -- Factors to Watch on May 12http://in.reuters.com/article/2011/05/12/russia-factors-idINLDE74B08T20110512

Thu May 12, 2011 11:36am IST

MOSCOW, May 12 (Reuters) - Here are events and news storiesthat could move Russian markets on Thursday. You can reach us on: +7 495 775 1242 STOCKS CALL (Contributions to moscow.newsroom@reuters.com): ForexClub: Russian markets will open 0.3 percent downagainst a moderately negative backdrop, with low activityexpected during the day. Troika: We are opening our prices this morning down 1.5

percent. EVENTS [RU-DIA] (All times GMT): MOSCOW- Russian President Dmitry Medvedev to meet hisPakistani counterpart Asif Ali Zardari. SOCHI, Russia- Russian Prime Minister Vladimir Putin to meetthe ruling United Russia party. MOSCOW- Russian presidential aide Arkady Dvorkovich to holda press conference on the upcoming St Petersburg Economic Forum. MOSCOW- UC RUSAL (0486.HK) Q1 2011 IFRS results. MOSCOW- Gazprom Neft (SIBN.MM) Q1 2011 U.S. GAAP results. MOSCOW- Restaurant holding company Rosinter (ROST.MM) Apriltrading update. IN THE PAPERS [PRESS/RU]: Russian bank St Petersburg (BSPB.MM) plans to place GlobalDepository Receipts on the London Stock Exchange in the secondhalf of 2011, business daily Vedomosti reports citing sources. Sweden's Tele2 (TEL2b.ST) has offered to buy 97 percent ofRussian regional telecoms operator Smarts for $390 million,including $100 million of net debt, Vedomosti writes. TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]: TOP NEWS:* Bin Laden's killing benefits Russia-Medvedev [ID:nLDE74A1GN] COMPANIES/MARKETS:* Russian car sales up 42 pct, f'cast raised [ID:nLDE74A1X5]* Eurocement plans IPO by early 2012-sources [ID:nLDE72C0EC]* Gazprom Neft Q1 net seen up 62 pct [ID:nLDE74A1PM]* Exporters help rouble to highest since '08 [ID:nLDE74A1BA]* Severstal buys stake in Brazil's Mineracao [ID:nWLA0057]* Magnit pushes up prices after sales surge [ID:nLDE74A0DA]* Enel's Russian unit OGK-5 posts flat profit [ID:nLDE74A1AO] ECONOMY/POLITICS:* Russia buys $3.6 bln to curb rouble rise [ID:nLDE74A0WZ]* Russia says Belarus should seek more funds [ID:nLDE74A183]* Firmer rouble boosts demand for OFZ bills [ID:nLDE74A0ZT]* Russia to send arms to disputed islands [ID:nLDE74A0PG] ENERGY:* Russia June oil export duty seen at 3 yr-high [ID:nLDE74A0HF]* Russia low on petrol even as duty slows export[ID:nLDE72C0DI]

* Russia top coal region cuts 4-m output 2.4 pct[ID:nLDE74A1LR] MARKETS CLOSE/LATEST: RTS .IRTS 1,892.6 -0.83 pct MSCI Russia .MIRU00000PUS 1,012.4 -1.20 pct MSCI Emerging Markets .MSCIEF 1,156.2 -0.83 pct Russia 30-year EurobondRU011428878= yield: 4.500/4.478 pct EMBI+ Russia 11EMJ 181 basis points over Rouble/dollar RUBUTSTN=MCX 27.6600 Rouble/euro EURRUBTN=MCX 39.6800 NYMEX crude CLc1 $99.32 +$1.11 ICE Brent crude LCOc1 $113.50 +$0.93 For Russian bank balances see CBDEPOS For Russian company news, double click on [E-RU] Treasury news [M-RU] Corporate debt [D-RU] Russian stocks [.ME] Russia country guide RUSSIA All Russian news [RU] Scrolling stocks news [STXNEWS/EU] Emerging markets top news [TOP/EMRG] Top deals [TOP/DEALS] European companies [TOP/EQE]

Rusal First-Quarter Net Triples on Higher Aluminum Prices (2) http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awWLvzvk.Snw

By Yuriy Humber and Yulia Fedorinova - May 12, 2011 00:36 EDT

May 12 (Bloomberg) -- United Co. Rusal, the world’s largest aluminum maker, said first-quarter profit more than tripled, aided by rising metal prices and a revaluation of long-term power contracts.

Net income climbed to $746 million from $247 million a year ago, the Moscow-based company said today in a statement. That’s more than the $570 million median of three analyst forecasts collated by Bloomberg News. Revenue rose 28 percent to $2.99 billion, helped by a 4 percent increase in aluminum output.

“Rusal’s strong industry positions coupled with aluminum price performance continue to support our bullish view on the stock and could result in faster de-leveraging and opening up of dividend potential, despite cost pressures,” Goldman Sachs Group Inc. analysts, led by Yulia Chekunaeva, said in a report before the results were published.

The producer, controlled by billionaire Oleg Deripaska, increased the average premium it charges for aluminum over the London Metal Exchange price by 84 percent in the quarter. That added to the average 15 percent increase in the price of LME aluminum over the period.

Higher Prices

Rusal today raised its forecast for average aluminum prices this year to $2,700 a metric ton and its prediction for demand growth in China, the world’s biggest aluminum user. Demand there will reach 19 million metric tons as consumption grows 15 percent compared with last year, Rusal said. India’s demand may grow 16 percent this year, the company said.

Rusal fell 1.2 percent to HK$11.60 as of 12:10 p.m. in Hong Kong, paring gains in the past year to 41 percent. That compares with a 14 percent increase in the Hong Kong’s benchmark stock index. Rusal sold shares for HK$10.80 in January 2010.

Aluminum price gains are being tempered by higher power and rail tariff costs in Russia, home to most of Rusal’s smelters. Gains in the ruble, prompted by higher oil prices, are also a concern for future earnings, according to Deutsche Bank AG.

Russia stopped capping electricity prices for industrial consumers from Jan. 1 this year and plans to auction some state- owned railcar assets to private owners. A 19 percent surge in New York-traded oil futures during the first quarter has translated into a 7.1 percent weakening of the dollar against the ruble.

Accounting Change

Rusal is “taking a number of steps to mitigate the impact of escalating tariffs through the negotiation of new long-term electricity supply contracts and the development of our own energy base,” Deripaska, also Rusal’s chief executive officer, said in today’s statement.

For the first quarter, Rusal’s profit was boosted by a one- time gain of $715 million from the revaluation of the company’s power contracts, Chief Financial Officer Evgeny Kornilov said today on a conference call. New Russian legislation does not recognize power contracts that stretch beyond a year and this has led to the accounting revaluation, he said.

“Without any change to these contracts themselves, we had to review their accounting treatment by shortening the timeframe of the value of the derivative,” Kornilov said.

Aluminum for delivery in three months on the London Metal Exchange averaged $2,530 a metric ton in the first three months, compared with $2,200 a ton a year earlier.

Rusal’s net debt dropped 0.8 percent from three months earlier to $11.4 billion at March 31, compared with close to $17 billion in 2008. The producer paid creditors $860 million in the first quarter.

Lower Debt

The lower debt burden helped Rusal cut interest on the remaining obligations. The company sold 15 billion rubles of 10- year bonds, redeemable in 2015, on April 18 at par with an 8.5 percent coupon. Rusal raised the same amount in March in its first offering of ruble debt since 2005, paying an 8.3 percent coupon on the 2018 bonds redeemable in 2014.

The bond sales will save about 1 percentage point in annual interest compared with its dollar debt, Oleg Mukhamedshin, the company’s head of capital markets, said in March.

Rusal is also in talks with its 10 biggest international creditor banks on a $4 billion syndicated loan, and a deal may be completed this month, Mukhamedshin said on the conference call today.

Creditors of Rusal have already approved $700 million in capital expenditure for this year, which does not include funding for the BEMO hydropower plant and aluminum smelter project and the Taishet smelter construction plan, Mukhamedshin said.

Rusal restarted BEMO smelter building this year and will do the same at Taishet by the end of the summer after securing 16 billion rubles ($576 million) project financing for it, he said. BEMO, also known as the Boguchansk project, will have an initial capacity of 150,000 tons a year, while Taishet’s will be 375,000 tons.

To contact the Bloomberg News staff on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net; Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

UPDATE 1-RUSAL Q1 net triples, sees strong demand intacthttp://in.reuters.com/article/2011/05/12/rusal-idINL3E7GB21R20110512

7:15am IST

* Q1 net profit $746 mln vs year earlier $247 mln

* Rusal cuts debt restructuring agreements by $860 mln in Q1

* Reduces company's leverage ratio to below 4:1

* Hong Kong-listed shares end up 2.1 pct on Wednesday (Adds details)

By Alison Leung

HONG KONG, May 12 (Reuters) - Russia's United Company RUSAL Plc , the world's top aluminium producer, said on Thursday that first-quarter net profit tripled, beating forecasts, and lifted its forecasts for prices and demand for the year.

RUSAL , which competes with U.S. aluminium maker Alcoa Inc , said steady rises in prices and demand for aluminium, used in the transport, packaging and building sectors, boosted earnings in the last quarter.

The Russian company said the first quarter was difficult for global aluminium companies because of cost inflation and its cost of sales also rose 28 percent during period but was in line with revenue growth.

"RUSAL is well positioned to take advantage of the strengthening price of aluminium by increasing production and launching new facilities," it said in a statement to the Hong Kong stock exchange.

The company repaid $530 million of debt from the proceeds of its Russian ruble bond in the first quarter, helping to cut debt restructuring agreements by $860 million, it said in a statement.

It forecast strong aluminium demand to continue and revised upwards its average aluminium price forecast for the year to $2,700 per tonne from $2,500-2,600 estimated in March.

RUSAL said aluminium consumption in China, the world's largest producer and consumer of the metal, would rise 15 percent this year to 19 million tonnes, compared with an April forecast of 8 percent. Global demand was likely to rise 13 percent to 46 million tonnes in 2011, it said.

Its first-quarter results outperformed those of rival Aluminum Corp of China Ltd , which reported a near 50 percent drop in first-quarter profit to 331.17 million yuan on rising costs.

RUSAL posted a net profit of $746 million for the first three months of 2011, compared with an average forecast of $462 million from seven analysts polled by Reuters [ID:nLDE7491V2]

The net was up from $247 million a year ago, it said in a statement.

A higher valuation of its stake in Norilsk Nickel , which rose 12.3 percent, helped lift the company's profit.

Hong Kong-listed shares of RUSAL ended up 2.1 percent on Wednesday but have lost 1.5 percent this year against a 1.1 percent gain by the Hang Seng Index . (Editing by Chris Lewis)

RusAl Q1 net profit triples to $746 mlnhttp://en.rian.ru/business/20110512/163986973.html11:42 12/05/2011

MOSCOW, May 12 (RIA Novosti) - RusAl, the world's largest aluminum company, saw first quarter IFRS net profits jump to $746 million from $247 million in the same period last year, RusAl said on Thursday.

RusAl's net profit was above a consensus forecast of analysts polled by RIA Novosti who expected the aluminum giant's net profit to be just $500.2 million.

The company's revenue grew by 28.4 percent to $2.993 billion as a result of higher aluminum and alumina market prices, as well as improved product mix and realized premiums over London Metals Exchange prices, RusAl said in a statement.

The sales of primary aluminum and alloys grew by 29.1 percent in January-March 2011 to $2.508 billion.

Revenue from alumina sales rose 29.5 percent to $167 million and revenue from the sale of aluminum foil products grew to $73 million from $59 million year-on-year, while other sales increased by 21.9 percent to $245 million.

RusAl's net debt amounted to $11.382 billion as of March 31 this year. In the first three months of 2011, RusAl reduced its obligations under the debt restructuring agreements by $860 million, including the repayment of $530 million out of the proceeds from the Russian ruble-denominated bonds issue in March 2011.

Adjusted EBITDA grew by 40.6 percent to $682 million mainly owing to higher selling prices and increased sales.

"On the one hand, high inflation has had a negative impact on all aluminum producers, with UC RusAl coming under particular pressure due to the sharp rise in energy tariffs in Russia in the first quarter of 2011. On the other hand, the increasing demand for aluminum, supported by a return to pre-crisis rates of growth of the global economy, has seen a steady growth of aluminum prices, which in the first quarter exceeded our expectations," RusAl CEO and owner Oleg Deripaska was quoted in the statement.

"We have revised our forecast and now expect that the average price for aluminum in 2011 will be above $2,700 per ton. RusAl is well positioned to take advantage of the

strengthening price of aluminum by increasing production and launching new facilities, such as the Boguchansky and Taishet aluminum smelters," he said.

RusAl expects strong demand for aluminum to continue in 2011 with a 13 percent growth to 46 million tons. The emerging markets of China, Brazil, India and Russia are expected to be driving the growth of aluminum consumption in 2011, the firm said.

May 12, 2011, 11:12 AM HKT

Renaissance Hires UBS Resources Bankerhttp://blogs.wsj.com/exchange/2011/05/12/renaissance-hires-ubs-resources-banker/

By Isabella Steger

It seems like barely a week can go by without another major move at UBS AG.

Moscow-based investment bank Renaissance Capital said Thursday it had hired Matthew Whittall as head of Asian metals and mining research in Hong Kong. Mr. Whittall previously ran specialist resources sales at UBS.

Mr. Whittall’s departure follows that of Patrick Loftus-Hills, who went from joint head of UBS’s Asian industrials group and head of natural resources to managing director for mining and metals at boutique advisory firm Moelis & Co.

Renaissance opened its Hong Kong office last June with the aim of focusing on metals and mining, as more Russian resource companies seek to raise capital in the region. It hired Philip Gregory from UBS to head its investment-banking division in Asia.

Renaissance also named Sheldon Trainor, founder of resource-focused boutique investment firm PacBridge Capital Partners, as Asia chairman last month.

Cash for Infrastructure Projects Lure Big Players http://www.themoscowtimes.com/business/article/cash-for-infrastructure-projects-lure-big-players/436640.html

12 May 2011By Anatoly Medetsky

French engineering conglomerate Alstom has done a spectacular job making inroads in Russia over the past 12 months.

It signed tentative agreements — or gained approval for deals — with nine major companies including RusHydro and Rosatom, chiefly seeking to develop technology and manufacture domestically rather than selling from abroad.

"We have changed our strategy," Alstom's country president Philippe Pegorier said in an interview. "The Russian market is sufficiently large, to say the least of it, to produce things locally."

The country's enormous needs and willingness to pay to upgrade its key industries of railway transportation and power generation has persuaded the French company and some of its global rivals to put down roots here, in line with the government's expectations. As the state controls many of the biggest corporate spenders, these commitments have been a two-way street, paying back with a swelling number of contracts.

Other Siemens Projects Include:

An agreement signed in December 2009 to supply Russian Railways with 54 Desiro commuter trains — known in locally as Lastochka — of which 16 trains will be partially produced at a Siemens joint venture to be created in Russia.

Germany's Siemens, Canada's Bombardier, U.S.-based General Electric and Italy's Finmeccanica have in recent years all invested — or announced plans to invest — in local facilities to produce energy turbines or railway equipment.

Alstom's most advanced Russian project is a purchase of a stake of 25 percent plus 1 share in Transmashholding — a maker of railcars and locomotives. The deal, approved by the government's foreign investment commission in March, envisages that the French will help the company design and manufacture a new passenger train in the southern city of Novocherkassk. Other types of rolling stock will follow elsewhere in the country.

Alstom's reward for the investment came in the form of an order from state-owned Russian Railways to Transmashholding — which is 25 percent owned by the railway monopoly — for 200 of the new locomotives for delivery from next year to 2020 at a total price of 1 billion euros ($1.44 billion). Alstom's share of the contract will be 450 million euros, the company said.

The companies, which are now testing the first locomotives made by the venture, have adapted French technology to withstand freezing winters and roll on the broader 1,522-millimeter track used in the former Soviet Union. The plan is for Russian Railways to start using the engines on the line between Moscow and Sochi in time for the February 2014 Winter Olympics at the Black Sea resort.

Siemens and Other RivalsOther Alstom Projects Include:

A contract signed last month with the Russian company RESAD to supply a gas turbine to the Molzhaninovka power plant.

A partnership agreement signed in March with the Skolkovo Foundation to help build transport and power generation for the planned innovation hub.

A memorandum of understanding signed in December with state-controlled Inter RAO that includes the option of producing small steam turbines at the Podolsk plant.

An agreement with Mosenergo, a power unit of state-controlled Gazprom, signed in December to upgrade the electricity producer’s equipment.

A cooperation agreement signed in December with Russian Technologies to supply coal-fired power plants.

An agreement signed in December with the state-run Federal Grid Company to study the option to produce Alstom’s grid equipment locally.

Another Russian Railways contract — for 221 freight locomotives worth 42 billion rubles, or $1.5 billion — went to the joint venture that Siemens created with Sinara, a company controlled by billionaire Dmitry Pumpyansky. Siemens holds 49 percent of the venture, which will apply the German technological expertise to design and produce the machines at a plant in the Ural Mountains town of Verkhnyaya Pyshma, for deliveries from this year to 2016. The first two locomotives have already come off the line and tests are underway.

Russian Railways has said it needs to replace many more of its 14,000 locomotives in the coming years, as well as upgrade other equipment and build more tracks, tunnels and bridges. Its investment budget for this year rose 11 percent over last year to almost 350 billion rubles, or $12.7 billion.

In further evidence that foreign majors are seeing the logic in manufacturing locally, in March, Bombardier increased its foothold by acquiring a stake in the domestic signaling equipment manufacturer United Electrical Engineering Plants, known as Elteza. Finmeccanica expanded its approach to the signaling market in November when it signed a memorandum of understanding with Russian Railways to set up a joint venture.

For anyone interested in supplying Russian Railways, there's even more opportunities in sight because the country will need new rail lines and equipment as the host country for the 2018 football World Cup. Pegorier said Alstom is assembling a consortium to bid in related tenders.

Energy TurbinesGE Projects Include:

An agreement signed last week to supply a Frame 6FA gas turbine and associated generator to upgrade a power plant that serves the rapidly growing industrial district of Kolpino in St. Petersburg.

An agreement signed in March with power generation company TGK-9, an affiliate of the privately-controlled Integrated Energy Systems (IES), to supply two Frame 6FA gas turbines and associated generators for a plant that will supply heat and electricity for the residents of Berezniki, an industrial city in the Urals Federal District.

A memorandum of understanding signed in December with Russian Technologies and Inter RAO to set up a jointly-owned entity to manufacture, sell and service GE’s mid-sized 6FA gas turbines at a factory to be built in the vicinity of the Russian city of Rybinsk.

A contract signed in September to supply a 1-megawatt J320 Jenbacher gas engine for Russia’s first project to burn coal-bed methane to produce electricity, which celebrated its grand opening at Kuzbasskaya Energosetevaya Kompania’s Talda site, located near Kemerovo, in February. The gas comes from test drills that Gazprom is conducting to capture the huge reserves of the methane in this traditional coal mining region.

In the energy industry, one of Alstom's achievements was an agreement to create a joint venture with RusHydro, the world's second biggest hydropower producer by capacity. After the partners complete negotiating their exact shares in the venture, Alstom will invest at least 50 million euros in an Ufa plant to produce turbines and other equipment for small hydropower plants, Pegorier said. The plant may start production in 2013, he said.

As the companies reached a tentative agreement on the plant, RusHydro signed a memorandum of understanding with Alstom to upgrade its nine Kuban River dams. Their joint venture will provide the equipment, Pegorier said.

Siemens has a presence on the market through its 25 percent stake in domestic turbine producer Power Machines. General Electric has only indicated it has plans to localize production here.

Alstom is negotiating potential contracts with Rosatom for French nuclear-powered Arabelle turbines, while the partners move on to equipping a facility in Podolsk to produce them. Rosatom has ambitious plans to build power plants at home and abroad, refusing to back down even at the risk of potential radioactive contamination proved by the earthquake in Japan.

"I don't see that Rosatom wants to cancel these projects," Pegorier said.

Russia's power-generating companies plan to spend 1 trillion rubles, or $37 billion, over the next three years to buy equipment, Prime Minister Vladimir Putin said last month at a meeting where he also ordered the Economic Development Ministry to propose import duties that would encourage local supplies. Putin urged cooperation with international

manufacturers so they move their production to Russia, adding that gas-powered turbines of high capacity were in greatest demand.

"They want to capture the market," he said about foreign companies, addressing an assembly of Cabinet ministers and company chiefs. "But I want to say it again — and you know it well — the market costs money. In exchange for letting them in, we may well demand … a certain level of localization."

Other Alstom Projects Include:

A contract signed last month with the Russian company RESAD to supply a gas turbine to the Molzhaninovka power plant.

A partnership agreement signed in March with the Skolkovo Foundation to help build transport and power generation for the planned innovation hub.

A memorandum of understanding signed in December with state-controlled Inter RAO that includes the option of producing small steam turbines at the Podolsk plant.

An agreement with Mosenergo, a power unit of state-controlled Gazprom, signed in December to upgrade the electricity producer's equipment.

A cooperation agreement signed in December with Russian Technologies to supply coal-fired power plants.

An agreement signed in December with the state-run Federal Grid Company to study the option to produce Alstom's grid equipment locally.

Other Siemens Projects Include:

An agreement signed in December 2009 to supply Russian Railways with 54 Desiro commuter trains — known in locally as Lastochka — of which 16 trains will be partially produced at a Siemens joint venture to be created in Russia.

Rostelecom consolidates mobile assets to catch up with Big-3

http://www.rbcnews.com/free/20110512112643.shtml

      RBC, 12.05.2011, Moscow 11:26:43.Rostelecom has mapped out a strategy until 2015 to develop its mobile operations in order to catch up with Big-3 mobile operators, RBC Daily reported today. The daily cited several managers familiar with the agenda of the meeting of Rostelecom's strategy committee, which is scheduled to review the strategy today.

      Rostelecom has GSM assets and holds licenses to provide telecom services in the 2.3-2.4 GHz frequency range. Svyazinvest, which owns a 43% stake in Rostelecom, includes CDMA operator Sky Link, recently licensed to build a UMTS network. Rostelecom has decided to consolidate its cellular telephony operations with those of Sky Link, which will make it possible to connect nearly 90% of Russia's territory with Rostelecom's mobile network, one of the sources said. Currently, Rostelecom is Russia's fifth largest mobile operator in terms of subscriber base after the Big-3 and Tele2.

Activity in the Oil and Gas sector (including regulatory)

Ecological Issues Slow Production of Shale Gas http://www.themoscowtimes.com/business/article/ecological-issues-slow-production-of-shale-gas/436672.html

12 May 2011By Howard Amos

France's National Assembly voted Wednesday to rescind licenses granted for unconventional gas exploration in a move that is likely to put smiles on faces in Gazprom headquarters.

The vote was a culmination of months of Gallic protests over the environmental risks of hydraulic fracturing — or "fracking" — dramatically highlighted by the Academy Award-nominated documentary "Gasland" that examined the United States' shale gas industry.

French Environment Minister Nathalie Kosciusko-Morizet said Tuesday that fracking involved "risks we don't want to take," Bloomberg reported.

The French developments are unlikely to alter increasing European preoccupation with the potential of unconventional gas, however.

According to a study released in April by the European Center for Energy and Resource Security, or EUCERS, the continent's unconventional gas reserves are between 33 trillion and 38 trillion cubic meters. Total conventional reserves are a mere 2.42 tcm.

Comparisons are often drawn with the United States, where sharp growth has meant unconventional gas makes up 50 percent of total production. The United States overtook Russia as the planet's biggest gas producer in 2009.

Some would like to think Europe is on the cusp of a similar revolution, which would stem falling internal production and have significant consequences for Russia, which supplies 40 percent of Europe's gas imports.

"Even if only a fraction of the potential unconventional gas resources becomes available," the EUCERS report said, it would undercut the high price of Russian gas fields, put into doubt the development of Arctic reserves — like the enormous Shtokman gas field — and improve the European Union's energy security situation.

The report added that even the threat of shale gas — without the digging of a single well — could alter the European gas market and weaken dependence on Russia.

Shale gas reserves, the most abundant variant of unconventional gas, are extensive in three large European basins that stretch under countries including the United Kingdom, France, Sweden, Poland and Ukraine.

Mikhail Korchemkin, director of East European Gas Analysis, said, "Gazprom should be afraid of shale gas reserves in Europe."

He pointed to the falling costs of shale gas production, which dropped in the United States from $140 per 1,000 cubic meters in 2008 to $93 in 2010. Gazprom, he said, was providing gas to Europe for $346 per 1,000 cubic meters in the first quarter of 2011.

However, as the French example demonstrates, there are a number of stumbling blocks.

Extraction of the gas from rock sometimes as impermeable as concrete requires horizontal drilling deep underground, followed by fracking — the high-pressure injection of a water-based chemical mixture to fracture the rock and release the gas.

Besides a lack of equipment and land ownership structures that complicate access, Europe presents its own specific logistical challenges, the EUCERS report said.

Denis Daniilidis, spokesman for the European Delegation to Moscow, said there was a lack of conviction that shale gas will substantially alter the EU's energy relationship with Moscow.

"We do not share initial enthusiasm that this will bring about sweeping changes," he told The Moscow Times.

The biggest obstacle could be environmental objections, which have been publicized by Josh Fox's "Gasland," a documentary in the polemical style of Michael Moore that shows people igniting the water from their home taps because aquifers have been polluted by the fracking process.

Shale gas company Cuadrilla has only two sites in Britain and 50 staff, but was forced to conduct a huge public relations campaign after the release of "Gasland" dramatically raised awareness.

A company spokesman said they had hosted seven or eight television crews in less than a year and been featured in almost all national newspapers.

An unlikely bedfellow of filmmaker Fox was state-owned Gazprom, which, according to media reports, looked at ways of supporting the project.

In public, Gazprom has been more blase about the threat from shale gas than rumors of an alliance with the anti-corporate Fox might indicate. "We would suggest that a little time is taken before the strategic effects [of shale gas] are determined," said Gazprom deputy chief executive Alexander Medvedev in February, the Financial Times reported.

While shale gas developments in Western Europe are stalling on environmental concerns, however, Eastern Europe — where popular protest against shale gas is practically nonexistent — is drawing ahead.

Poland, with reserves of 5.2 tcm, is furthest along with more than 70 drilling licenses already issued.

Ukraine has not issued licenses yet, but this year began talks with international oil majors Shell, Chevron and ExxonMobil.

"The regulation and legislation of environmental safety is much stronger and stricter in Western Europe than in Eastern Europe, particularly Ukraine," said Alexander Bespalov, a gas analyst at Alfa Bank.

Ian Baron, chief executive of Cadogan Energy, a British-based gas firm operating in Ukraine, said there was "a lot of industry interest" in shale gas.

Though he estimated that, at best, production could only begin in four or five years, Ukrainian gas currently meets only 30 to 40 percent of internal demand, with the rest purchased from Gazprom. Ukrainian businesses, he said, "are desperate to buy" domestically produced gas.

Russia redrawing Europe energy map http://www.atimes.com/atimes/Central_Asia/ME12Ag02.html

By M K Bhadrakumar

Things couldn't have been better for Russia's energy giant Gazprom even before news came in over the weekend that curtains could be coming down on one of the keenest battles of the Caspian great game, and Moscow is on a winning streak.

Gazprom increased its gas supplies to Europe in April by over 21% on the same month last year. In 2011, Gazprom's overall export revenue is estimated to be a whopping US$72.4 billion. In anticipation of increased supplies to Europe, the Russian company has begun plans to nearly double its underground storage capacities for gas by 2015 to almost 4.9 billion cubic meters (bcm) and by next year to 6.5 bcm.

Gazprom operates gas storage facilities in Austria and lease facilities in Britain, France and Germany. This work is in anticipation of the vastly increased flow of Russian gas through the new pipeline systems known as South Stream and North Stream, which are becoming operational in the very near future.The increased storage facilities in Austria will cater to the markets in Slovenia, Croatia, Slovakia, Hungary, Germany and Italy. A new storage, Katrina, which Gazprom is building as a joint venture with VNG in Germany, will support gas exports to Western European hubs. Gazprom built another joint venture storage facility with Serbia that will support gas exports to Serbia, Bosnia-Herzegovina and Hungary. Feasibility studies are being conducted on similar joint storage projects in the Czech Republic, France, Romania, Belgium, Britain, Slovakia, Turkey and Greece.

With this, the "gas map" of Europe, which was largely drawn in the Soviet era, is poised to undergo a phenomenal change. The great consolidation of Russia's status as the pre-eminent energy supplier - Russia today supplies over 41% of Europe's gas needs - is certain to transform east-west relations in the medium and long term and will figure as a key factor in the United States' trans-Atlanticism.

Nabucco on backburner When good news come, it comes in battalions. The latest heartening news for Gazprom is that the Nabucco natural gas pipeline, the pet project of the United States' Caspian energy diplomacy that aims at reducing Europe's energy dependence on Russia, has suffered a considerable, and potentially lethal, setback.

Reinhard Mitschek, managing director of Nabucco Gas Pipeline International, revealed that the project has been pushed back until 2017 - three years later than originally planned. The construction work stands postponed by one year at least to 2013. He left things delightfully vague, saying gas would flow through the pipeline "as soon as there are firm indications that gas supply commitments are in place".

Nabucco was conceived to funnel gas 3,900 kilometers from Turkey to Austria and was designed to carry 31 bcm of natural gas a year from the Middle East and the Caspian region to markets in Europe. Bypassing Russia, the pipeline would run through Bulgaria, Romania and Hungary to a hub just outside Vienna for onward distribution all across the European Union countries. The Nabucco consortium consists of the energy companies RWE of Germany; OMV of Austria; MOL of Hungary; Botas of Turkey; Bulgaria Energy Holding of Bulgaria; and Transgaz of Romania.The postponement of the project will almost certainly drive up its cost. European Union Energy Commissioner Guenther Oettinger warns that costs could rise as high as $21.4

billion, up from an earlier estimate at about $11.2 billion. BP makes similar estimates of cost escalation. Indeed, ballooning costs put a big question mark on the project's economic viability.

The main hitch, however, lies in the lack of availability of gas to feed the pipeline. The surplus capacity of Turkmenistan to feed Nabucco remains problematic, as Ashgabat cannot pursue independent energy policies that undercut Russian interests. Iran would be an ideal source to feed Nabucco, but US-Iran standoff precludes the possibility. Thus, Nabucco's best hope lies in gas supplies from Azerbaijan's Shah Deniz 2 field, which is expected to come on-stream in 2017.

The one-trillion-cubic-meter Azeri gas field is being developed by a consortium led by BP and Norwegian national oil company Statoil. The first phase of production, Shah Deniz I, started up in 2006 and produces a maximum of 8.6 bcm of gas annually; the second phase is expected to produce 16 bcm of gas annually when it becomes operational in 2017.However, two other rival claimants for the Azeri gas have appeared: Interconnector Turkey-Greece-Italy (ITGI) and the Trans-Adriatic Pipeline (TAP). Turkey also hopes to buy Shah Deniz II gas directly. Last week, Turkey signed an agreement with Azerbaijan to buy six billion cubic meters of gas from the second phase of the Shah Deniz gas field in 2017.

To be sure, the setback for Nabucco works as Russia's gain. Nabucco versus South Stream (see map here) has been one of the most keenly fought sagas of the Caspian great game - perhaps, next only to the Baku-Ceyhan-Tbilisi pipeline which the Bill Clinton administration rammed through despite Russian opposition. Turkey worked solidly with the US at that time but now Ankara and Moscow are close collaborators in the field of energy.

Gazprom would be in a celebratory mood, as in comparison with Nabucco, South Stream project is cruising merrily. The 900-kilometer South Stream gas pipeline can carry 63 bcm of gas to central and southern Europe via the Black Sea. The project is expected to be completed by end-2015.

South Stream and North Stream (also known as Nord Stream, see map here) are Russian Prime Minister Vladimir Putin's trophies, which will stand out as his enduring legacy to the surge of the Russian economy and Russia's return to the world stage. He pushed the negotiations with the European partners almost single-handedly. The defining moment for South Stream came in March when Wintershall, the energy subsidiary of the German chemicals giant BASF, agreed to join the project. BASF will hold a 15% share in South Stream.

At the signing ceremony in Moscow, Putin said, "The move indicates stability and is crucial for the entire energy market." He welcomed Germany's support for the market, "including the position of Chancellor Angela Merkel". Russia's "German connection" is almost entirely the personal handiwork of Putin's untiring diplomacy. Wintershall also

holds a 15.5% stake in North Stream, which connects Russia with an undersea pipeline through the Baltics with Germany, and E.ON Ruhrgas AG is Gazprom's partner in constructing North Stream.

Russia can now be expected to go for the kill and bury Nabucco once and for all by negotiating more contracts for additional gas supplies to Europe over the next two years. South Stream and North Stream are poised to redraw the energy equations between Russia and the European countries.

US rallies "New Europeans" South Stream bypasses Ukraine while North Stream, is expected to be launched in October, cuts out Poland as a transit country. In geopolitical terms, Russia can now negotiate with Ukraine and Poland from a position of strength as its dependence on these two temperamental transit countries for its highly strategic energy exports to Europe stands diminished.

Meanwhile, South Stream brings Russia back as a player across the board in the Balkans (a role that the US denied Russia by breaking up the former Yugoslavia). Europe now faces an uphill task to execute its plans to cut back on its gas purchases from Russia. North Stream undoubtedly uplifts the overall Russian-German strategic ties to a qualitatively new level of partnership.

South Stream and North Stream have trivialized the United States' policy to fuel the latent feelings of antipathy among the Central European countries toward Russia, a policy that dates back to the late 1990s. President Barack Obama is expected to visit Warsaw later this month. The London Telegraph reported on Tuesday that Obama will confirm the deployment of F-16 aircraft in Poland as a mark of direct US guarantee in addition to the North Atlantic Treaty Organization for the country's defense.

In Warsaw, Obama is expected to have a summit meeting with the presidents of the Central European states. Evidently, the US is cranking up the Central European vector - famously called the "New Europeans" by George W Bush's defense secretary, Donald Rumsfeld - against the backdrop of Russia's energy surge in Europe.

In a major policy speech at Bratislava in March, the US assistant secretary of state for European and Eurasian affairs Philip Gordon said the Central Europe region as a bloc "plays a crucial role as a partner of the United Sates in promoting democracy and stability in Europe, but its contributions run far beyond Europe's borders... efforts at cooperation with Russia will in no way limit the US or NATO's capacity to deploy missile defense or other collective defense capabilities... none of the progress we have made in our so-called bilateral reset with Russia comes at the expense of any ally... we work very closely with Europe on every major issue, both internationally and within Europe... [and] Central Europe plays a crucial role in advancing this agenda."

Clearly, the US realizes that energy is the lever with which Russia is undermining its strategy. So, it also has a few cards up its sleeves. It is gearing up liquefied natural gas

terminals to export US natural gas to higher-paying markets overseas by 2015, and Europe is a major destination. The fact of the matter is that the US is becoming self-sufficient in gas. The Financial Times carried a sensational report last Friday about a potential shift in the politics of energy thanks to Europe's potential shale gas bonanza, which would have the potential to reshape the continent's supply, reducing its dependency on Russia and the Middle East.

However, these are rushed ideas necessitated by the unavoidable prospect of Europe's heavy dependence on Russian energy supplies for the foreseeable future. Many challenges need to be addressed before commercial production from unconventional sources such as shale gas could become a reality in the European market.

The FT report says, "Shale gas is trapped in rocks thousands of feet underground. It is released by fracturing rocks using high-pressured water in a process known as 'hydraulic fracking'. Fluids and other components such as sand are injected into a well bore under high pressure to force the release of gas from rock formations. One of the biggest environmental concerns is the impact of such fracturing techniques on the water table."

Compared with the US, Europe lacks any detailed and reliable geological study, making it difficult to estimate the potential for unconventional gas.

From all perspectives, what emerges is that Nabucco's promoters are stoically adapting themselves to the realities of an increasingly volatile global energy marketplace, shaken up by multiple factors such as the prospect of shale gas production, the upheaval in the Middle East and of course the killer tsunami in Japan that puts question marks on nuclear power. And the advantage goes to the Russian bird. The Europeans cannot but appreciate that it is better to keep it than hanker for two American birds in the bush.

M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for over 29 years, with postings including India's ambassador to Uzbekistan (1995-1998) and to Turkey (1998-2001).

(Copyright 2011 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Gazprom

Gazprom miffed with GAIL over non payment of dueshttp://www.steelguru.com/indian_news/Gazprom_miffed_with_GAIL_over_non_payment_of_dues/204676.html

Thursday, 12 May 2011Petroleum Bazar reported that expressing its resentment over the non payment of outstanding dues amounting to USD 6 million by GAIL, Russian gas major and operator

of the block, NEC-OSN-97/1, Gazprom, has sought government’s intervention in the matter.

The company claims that despite repeated reminders, it has failed in its pursuit to claim outstanding dues pending between the two companies, which include cost incurred by Gazprom on operational and legal expenses.

The Mahanadi basin block was awarded to a consortium comprising Gazprom and GAIL in the first NELP round that was held in 1999. While Gazprom was the operator in the block, both the companies held equal participating interest. Gazprom signed a production sharing agreement in October 2000.

After the completion of minimum work commitment under the first phase, GAIL decided not to go forward with the second phase in September, 2007, and surrendered its PI, after which Gazprom started the third phase of exploration.

The Russian major which has spent a total of USD 392 million in the block has now decided to approach the petroleum ministry after GAIL did not respond to various reminders sent by the company.

Gazprom has stated that it is ready to provide clarifications along with documents to substantiate the outstanding amounts payable by GAIL.

(Sourced from Petroleum Bazar)

Gazprom remains the key target for the Ministry of Finance http://www.bne.eu/dispatch_text15114

VTB CapitalMay 12, 2011

News: According to Kommersant, the Ministry of Finance is to submit the final version of the three-year tax policy document to the government by 15 May. According to the paper, no final decision has been taken on the amount of additional taxation to be imposed on Gazprom and NOVATEK in 2012, although the Ministry of Finance is aiming to propose a 35% increase in the gas MET and introduce an export duty on gas sold to Ukraine.

Our View: Given recent developments, we see 25-35% as a likely increase in the 2012 MET on gas. This would essentially imply i) the government taking away about half of the positive effect from the domestic gas price increase but ii) a fairly marginal effect on EBITDA compared with our current forecasts.

However, the downside risk is that an MET hike might prove to be a sustained threat. Assuming the government continues to tax away half of the domestic tariff reform

benefits, both Gazprom and NOVATEK could suffer a 20-30% loss in terms of DCF valuation. We therefore view taxation newsflow as a major short-term risk for the gas sector, limiting Gazprom's upside in that period despite the gas market's appealing fundamentals.