Russia 090717

Basic Political Developments Medvedev urges to develop RF-German civil dialogue - “I’m certain that they

will be in demand among the numerous Russian-speaking diaspora in Germany,” said the Russian leader.

President Medvedev defends his European security proposal - "Those who see some kind of foul play behind these proposals or an attempt to create an anti-NATO pact are certainly mistaken because I said from the very beginning, when I presented this idea in Berlin last year, that it should be a document that would bind all Euro-Atlantic structures, including NATO, the EU, the CIS, the CSTO, and certainly the OSCE," Medvedev said at a joint news conference with German Chancellor Angela Merkel.

German government renews backing for Magna - Sberbank Opel bid Merkel Gets Behind Sberbank’s Opel Bid German scholar: Medvedev-Merkel summit strengthens ties -  "Of course, the

bilateral relations are moving much closer," Alexander Rahr, program director for Russia/Eurasia at the German Council on Foreign Relations (DGAP), told Xinhua in a telephone interview.

Armenia, Azeri leaders meet on Karabakh in Moscow - Fresh round of talks on festering dispute; Medvedev to meet leaders on Saturday

Azeri, Armenian leaders to discuss Nagorno-Karabakh in Moscow Sargsyan-Aliev Meeting Is Due Today - It is also supposed that on 18 July the

Presidents of Armenia, Russia and Azerbaijan will have a meeting. Experts say that no document is expected to be signed in Moscow.

Russia, Armenia and Azerbaijan to hold a summit on Karabakh in Moscow Armenia FM: No decision possible without the consent of Nagorno Karabakh Russian Deputy PM Sees WTO Accession Possible by 2010, WSJ Says Russia lifts pork ban from U.S. Wisconsin, Canada - The animal and plant health

watchdog Rosselkhoznadzor said it now applies a ban on imports of live pigs and uncooked pork from only one U.S. state -- Florida, as well as the whole of Great Britain and three Japanese prefectures.

Officials: New round of US-Russia START talks this month - Diplomats in Geneva, where the talks are taking place, told the German Press Agency dpa that on July 22, and running for three days, Russian and US officials will meet to negotiate a successor to the cold war-era Strategic Arms Reduction Treaty.

China urges Russian calm on bazaar crackdown - China has called on Russia not to overreact in its clampdown on a Moscow bazaar, home to tens of thousands of Chinese traders and well-known for its thriving contraband trade.

Lebanon: Moscow will not interfere in cabinet formation – Sultanov Russia: Lebanon gov't formation not easy - Russian Deputy Foreign Minister

Alexander Sultanov has called for the 'smooth' formation of Lebanese cabinet in Lebanon where the task is not that 'easy'.

India commission finds faults in Russia-produced missiles – report Urals Company Will Ship Su-30 Spares to Malaysia

Vietnam, Russia launch joint website - Vietnam and Russia launched a website Thursday to beef-up trade relations between the two countries.

Bakiev: Kyrgyz, Russian Defense Ministries consider opening of anti-terrorism centre

Kyrgyzstan studies possibility of joining Customs Union of Belarus, Russia and Kazakhstan

Central Asia: Russian Carrier Wants Afghan Transit Role - Russia’s largest air freight carrier, the Volga-Dnepr Group, says it is "first in line" to transport US military goods to Afghanistan.

Russia forms commission to study #failed test-launch of Bulava missile Russia will not give up Bulava missile project despite yet another failed launch Bulava failure must not stop tests - Russian arms sector official 2 dead in Ingushetia attack, minister alive: official Gunmen kill two people in southern Russian province - At least four militants in

two cars raked with gunfire a car owned by deputy sports minister Akhmed Chakhiev, the Ingush Investigative Committee said in statement.

Ingush sports and tourism minister 'alive and well' – spokeswoman Ingush minister not hurt, as he not inside car under fire Doctors say Ingush President Yevkurov will return to his duties Police officer killed in Chechnya - The off-duty police officer was attacked by

two unknown assailants in Grozny's Oktyabrsky district on Thursday, the source said.

Russia's north Caucasus: A mountain of troubles - The north Caucasus continues to suffer kidnappings, torture and killings on a horrifying scale

Law Enforcement Officers Get Powers to Open Mail - The police, Federal Security Service and six other law enforcement agencies will be allowed to open letters and packages and obtain personal data from the postal service starting Tuesday.

State Duma OKs introducing mandatory insur payments in 3rd read - The State Duma, the Russian parliament's lower house, Friday approved the third reading of a bill seeking to replace the unified social tax with mandatory insurance payments on January 1, 2010 and subsequently raise these payments on January 1, 2011.

The Russian State Council in the Kremlin to discuss youth policy Khristenko Plots ‘Shadow’ War - Industry and Trade Minister Viktor Khristenko

called for the government to draft a strategy regarding the country’s consumer goods trade up to 2020 in a report to the presidium on June 1, a copy of which was obtained by Vedomosti.

Police Kick Off ‘Operation Garry’ - Dan Glickman, the head of the Motion Picture Association of America, in April named Russia among five countries where movie piracy has reached “alarming levels.” The others countries were Canada, China, Mexico and Spain.

US pastor sentenced for bribery on Sakhalin - A US pastor was sentenced to 18 months in jail on Russia’s Pacific Island of Sakhalin for an attempt to bribe an immigration official, the press service of the local branch of the Federal Security Service told Tass on Friday.

Jehovah's Witnesses in Rostov region accused of extremism

Intl Fishery Congress to focus on sustainable management - The International Fishery Congress that will be held in Vladivostok on September 8-10 will be devoted to the strategy of sustainable management of fisheries and maintenance of stability of the markets of fish products.

National Economic Trends Russian monetary base up 1.7% in week to $127.7 bln CBR reserves dropped $8.4 bln in the first week of July

Business, Energy or Environmental regulations or discussions OAO GMK Norilsk Nickel, OAO Rosneft: Russian Equity Preview Third Senior Banker Leaves Troika Dialog Brokerage - Gerrit Heyns, who has

stepped down from his position after joining Troika in 2002, follows the resignation of the firm's chief executive for the U.K. division, Howard Snell, and the departure of Giedrius Pukas, the managing director of Troika Capital Partners in late May.

Assets frozen in RBC-Rosbank management and shareholder row BRIEF-Russia's Mosenergo doubles Q1 profit y/y Mosenergo: Reiterating Bullish Stance on the Stock Russian Steelmakers Set To Avoid Worst of Tariffs - Mounting pressure on

governments to impose protectionist tariffs is not likely to halt surging Russian steel exports because widespread foreign demand can blunt the impact of scattered import duties.

MMK Sees Signs of Recovery on Steel Market TMK announces H1 2009 production results Russian mining industry showing some signs of recovery Yamal is Getting Ready for Construction of Strategic Mainline - The Salekhard-

Nadym railway construction will begin in 2010 in Yamal, the line will become a part of the transport infrastructure of the Industrial Urals - Polar Urals project.

St. Pete Airport Deal Signed - Fraport said Thursday that it signed an initial agreement on operating and developing Pulkovo Airport.

Local Real Estate Prices Sink to Three-Year Low - Prices for new build real estate in St. Petersburg have dropped to as little as 50,000 rubles ($1,580) per square meter, bringing them down to 2006 levels.

Dairy prices in Russia won't rise more than 5%-7% by Oct - Dairy Union Unexpected amendments to draft on trade law Russia retail law seeks to cap grocers' growth

Activity in the Oil and Gas sector (including regulatory) No quick revival for Russian gas - Russian gas production will not be restored to

2008-levels until after year 2012, the country’s Ministry of Economic Development maintains.

Russian Government Holds VAT Rate Steady, Raises Export Tariff Ukraine: contract for Azeri gas supply to Russia will allow to understand pricing Interview with Stroytransgaz CEO: Reasonable measures to turn the company

around

Gazprom Gazprom's gas output increased to 1,020mcm/day Gazprom Neft lowers guidance on rouble bond –sources Bulgaria might buy gas from Blue Stream - BEH had already talked to Gazprom

on the matter, but no deal had been clinched that far Bulgargaz-Gazprom: State gas monopoly Bulgargaz wants to receive gas supplies

via the Blue Stream pipeline which carries Russian gas to Turkey as part of talks for new supply contracts with Russia's Gazprom

Ericsson to take charge of Zenit? - Former England boss Sven Goran Ericsson could be heading for Russia. The Swedish specialist is tipped to succeed Dick Advocaat as coach of Zenit St. Petersburg.

------------------------------------------------------------------------------------------

Full Text Articles

Basic Political Developments

Medvedev urges to develop RF-German civil dialoguehttp://www.itar-tass.com/eng/level2.html?NewsID=14154134&PageNum=0

MUNICH, July 17 (Itar-Tass) - Russian President Dmitry Medvedev at a meeting of the Petersburg dialogue forum on Thursday urged to develop the Russian-German civil dialogue. Speaking about the need to develop bilateral relations he expressed the view that it is necessary to more actively use cooperation between the two countries’ youth.

The president also believes it is necessary to develop the studying of the German and Russian languages in the two countries. “This interest exists,” he stated calling for the creation of bilingual schools in Russia and Germany. “I’m certain that they will be in demand among the numerous Russian-speaking diaspora in Germany,” said the Russian leader.

President Medvedev defends his European security proposal http://www.b92.net/eng/news/world-article.php?yyyy=2009&mm=07&dd=17&nav_id=60549

17 July 2009 | 10:24 | Source: Ria novosti

MUNICH -- Russian President Dmitry Medvedev described as a mistake the attempts to detect "foul play" in Russia's proposals for a new European security treaty.

Medvedev proposed a new legally binding European security pact in Berlin last June, but so far his initiative has been met with caution by the West.

"Those who see some kind of foul play behind these proposals or an attempt to create an anti-NATO pact are certainly mistaken because I said from the very beginning, when I presented this idea in Berlin last year, that it should be a document that would bind all

Euro-Atlantic structures, including NATO, the EU, the CIS, the CSTO, and certainly the OSCE," Medvedev said at a joint news conference with German Chancellor Angela Merkel.

He said all sides should develop a common approach to European security rather than pursue solely their own national security interests.

"If we approach this document in this manner, we will certainly achieve success," he said.

The Russian president also dismissed arguments that no new security arrangements were needed, pointing to the number of simmering regional conflicts.

"I would like to stress that we do not agree with this point of view because European security is currently not being ensured to the full extent and we have a large number of supporting examples, including recent ones, and from the last year, rather dramatic examples," Medvedev said.

Russia and Georgia fought a five-day war last August, which began when Georgian forces attacked South Ossetia in a bid to bring it back under central control. The West supported Tbilisi's position during and after the conflict, and labeled Russia's actions "disproportionate."

German government renews backing for Magna - Sberbank Opel bidhttp://www.russiatoday.ru/Business/2009-07-17/German_government_renews_backing_for_Magna_-_Sberbank_Opel_bid.html/print

17 July, 2009, 12:58

German Chancellor, Angela Merkel, gave strong support for the Russian-Canadian bid for car maker Opel, when she hosted the Russian President in Munich, as the deal hangs in the balance.

The German government has said it will re-think its financial support for the Opel take-over if GM doesn't choose Magna. 6 weeks ago an agreement was signed with Canadian car parts manufacturer Magna and Russia's Sberbank.

Berlin has agreed to pay a 1.5 billion euro bridge loan to make that deal happen. But GM has reopened the bidding – striking non-binding agreements with Beijing Motors and RHJ of Belgium.

German Chancellor Angela Merkel said she hoped for a quick solution.

“The concept of Magna offers very attractive points in order to open up the Opel plans once again and we also hope that Russia will also play an important role within this

project and I think that the investors Magna in Russia will also contribute to this development.”

Germany is likely to make a decision before the national elections in two months time. But experts such as Dr Frank Schauff, CEO of the Association of European Business in Russia, say the outcome is beyond their control, with the erstwhile parent – a GM emerging from bankruptcy – calling the shots.

“Certainly the last word regarding the deal will be made in Detroit. And it's up to GM, not the Russian government or German government.”

One of the biggest issues with Magna is intellectual property rights, with GM seeking royalties from Opel. 

Merkel Gets Behind Sberbank’s Opel Bidhttp://www.themoscowtimes.com/article/600/42/379589.htm

17 July 2009 Combined Reports

Chancellor Angela Merkel expressed support for a Russia-backed bid to buy carmaker Opel on Thursday and said her government aimed to clear up outstanding questions in the next few days.

She told reporters after meeting with President Dmitry Medvedev that the two were working together on Opel’s future and that Canadian supplier Magna’s bid, backed by state bank Sberbank, had benefits.

“There are still a number of questions to be cleared up. But the Magna concept offers excellent starting points,” Merkel said at a joint news conference with Medvedev.

“It offers Opel a chance and also creates the possibility of establishing a strategic partnership in the car sector with Russia,” she said. “That’s why we are doing all we can to resolve the remaining questions … and we are counting on Magna to do its bit.”

The race for Opel, a European unit of General Motors, is heating up. While Magna is in talks about taking a stake, other contenders have also emerged, including Belgium-based industrial investment company RHJ International and Chinese carmaker BAIC.

Earlier, several sources familiar with the situation said BAIC had lost ground to rivals Magna and RHJ.

While BAIC has not officially withdrawn from the race, RHJ and Magna are expected to submit binding contracts in just a matter of days and a decision could come shortly afterward.

Medvedev, who backs the Magna-Sberbank plans, said he hoped the deal would come to fruition.

“We are looking at the project with interest and optimism. We will try to make progress in realizing it,” he said.

Merkel also offered support to Medvedev over the Nord Stream pipeline project. The Nord Stream consortium aims to bring 55 billion cubic meters of Russian gas to Germany and on to other European Union countries each year across the Baltic seabed from 2011.

But the timetable looks uncertain as some states are worried that the pipeline may damage the environment, especially as it would pass close to dumped munitions from the two world wars.

“We will do everything we can to get the approvals that are needed,” said Merkel, adding that progress had been made with Finland but that the consortium was still waiting for Sweden.

Medvedev called on Sweden to clear the project, arguing that it could contribute to European energy security.

He also cast doubt on the planned Nabucco pipeline, designed to reduce Europe’s dependence on Russian gas, a project Merkel defended. The 7.9 billion euro ($11 billion) Nabucco project bypasses Russia and Ukraine.

“If Nabucco gets gas, then it means someone needs it,” Medvedev said after the two leaders met for talks near Munich. “But so far no one has been able to explain to me where the gas will come from,” he said.

“I’m among those who don’t think of this project in oppositional terms,” Merkel told reporters. “I think Nord Stream is one project, Nabucco is another.”

(Reuters, Bloomberg)

German scholar: Medvedev-Merkel summit strengthens tieshttp://news.xinhuanet.com/english/2009-07/17/content_11723637.htm

2009-07-17 12:57:29

by Xinhua writer Wu Liming

    BERLIN, July 16 (Xinhua) -- The summit between Russian President Dimitri Medvedev and German Chancellor Angela Merkel in Munich has made the "special

partnership" between Germany and Russia "closer," a German specialist on Russia said Thursday.

    "Of course, the bilateral relations are moving much closer," Alexander Rahr, program director for Russia/Eurasia at the German Council on Foreign Relations (DGAP), told Xinhua in a telephone interview.

    Medvedev held talks with Merkel in Munich on Thursday, resuming the so-called St. Petersburg Dialogue on a wide range of issues.

    "The summit intensified the partnership dialogue between Germany and Russia," said Rahr, who was also in Munich to attend an outreach meeting of the St. Petersburg Dialogue.

    "A number of new projects are underway. The good strategic partnership will continue," he added.

    During the summit, the two leaders came up with joint plans to tackle the global economic downturn. They also agreed on international issues like Iran and pledged to work more closely together to fight crime and terrorism.

    The "new projects" agreed upon by the two sides include a deal for Siemens to deliver trains to Russia and for the German federal development bank KfW's provision of 500 million euros (around 700 million U.S. dollars) for a joint fund to boost bilateral trade. Moreover, the foundation for a joint energy agency was also laid.

    Rahr highlighted the establishment of the joint fund to boost trade.

    "Before the global financial crisis, numerous Russian firms got credit from German banks. The big problem is that they can not return money to the banks, so the trade volume between Germany and Russia dropped by 40 percent this year, and imports from Germany almost stopped because Russian dealers are short of money," he explained.

    To tackle the financial turmoil, a special fund had been created with funds mostly coming from the German state, Rahr said. He added that the fund would guarantee that German sellers would get money back from Russian importers and boost bilateral trade.

    "It is very positive, showing politicians' will to fight the global financial crisis," he observed. Rahr also praised the establishment of the energy agency as another "step forward."

    "Russia needs Western technology, like the environmental technology Germany can offer. The agency can also facilitate the energy cooperation in a broader manner," he said.

    The closer energy cooperation between Germany and Russia, like the North Stream pipeline that bypasses a few Eastern European countries, has aroused criticism from Germany's Eastern neighbors.

    Rahr defended Germany's decision, saying such cooperation "does not undermine the interests of Eastern European countries like Poland and Baltic countries."

    "Germany and Russia have a long-standing strategic cooperation on energy. The construction of the North Stream pipeline is not against those countries. Rather, Germany seeks full-fledged cooperation with (the) whole (of) Europe, asking for their participation like the Netherlands, Poland and other nations," he said.

    However, Germany and Russia have different opinions regarding the Nabucco gas pipeline, a huge project agreed upon by a number of European countries plus Turkey and Iraq earlier this week. The project is designed to reduce Europe's dependence on Russian natural gas.

    Merkel defended the project while Medvedev was unhappy with it.

    "Germany wants to diversify energy supply. We need both pipelines. We support the Nabucco pipeline, but we prefer the North Stream pipeline," Rahr said.

    Russia, of course, is against the Nabucco pipeline, and Rahr also has his doubts about the project.

    "Geographically, the Nabucco pipeline is close to Iran. There are uncertain elements in the project," he said.

    Regarding the sensitive missile defense issue, Rahr said that the two leaders did not address it.

    However, Germany was "reluctant" to see a further expansion of NATO.

    On the whole, Merkel wants to convey the image of Germany's strengthening its special strategic partnership with Russia, a national policy dating back to her predecessors Helmut Kohl and Gerhard Schroeder, Rahr observed.

    Rahr admitted that the special partnership between Germany and Russia is occasionally imcompatible with the relations between Russia and the European Union (EU) at large.

    "Some European Union member states like Poland and Baltic countries want to contain Russia. The task for Germany is to convince them that Europe needs Russia, (and is) not against Russia," he said.

Armenia, Azeri leaders meet on Karabakh in Moscow

http://www.alertnet.org/thenews/newsdesk/LF332906.htm

17 Jul 2009 07:58:53 GMT Source: Reuters

* Fresh round of talks on festering dispute * Medvedev to meet leaders on Saturday

By Conor SweeneyMOSCOW, July 17 (Reuters) - The presidents of Armenia and Azerbaijan meet on Friday in a Moscow-brokered quest to try to solve one of the bitterest disputes left by the 1991 collapse of the Soviet Union.Muslim Azerbaijan fought a bloody war in the 1990s over Nagorno-Karabakh, a mainly ethnic Armenian Christian land lying inside Azeri borders. The enclave declared independence in 1991 with support from Armenia, though no country has recognised it.The dispute, which led to Azerbaijan and its Muslim ally Turkey closing their borders with Armenia, is one of the biggest threats to stability in the South Caucasus -- a key route for energy supplies from the oil and gas-rich Caspian to Europe."The talks will start today but there will be no press access," said a press officer at the Armenian Embassy in Moscow on Friday. They will take place in the President Hotel.Russian President Dmitry Medvedev is to meet Azeri leader Ilham Aliyev and Armenia's Serzh Sarksyan in Moscow on Saturday.While hopes have been raised of an imminent breakthrough, some Moscow-based analysts are sceptical if the climate is ripe for a deal and warn that a renewal of conflict cannot be ruled out, with devastating consequences for the wider region. "Azerbaijan has been renewing its military capabilities with the help of Israeli technology. Any military action would be catastrophic for the Southern Caucasus and the wider region," said Vladimir Zakharov, the deputy director of the centre for Caucasus Research at MGIMO university.Around 35,000 people died in fighting over Karabakh until a shaky ceasefire was signed in 1994. Karabakh proclaimed its independence and runs its own affairs with heavy support from Armenia and its forces control chunks of nearby Azeri territory.It also sits at a crossroads between East and West, where big-power rivalry has played out for centuries and where Russia and the West are vying for influence over oil and gas transit from Central Asia -- complicating peace efforts.A peace accord has never been signed and Azerbaijan, its military budget swollen by oil and gas sales to the West, refuses to rule out taking the territory back by force. On the Armenian side, Sarksyan was born in Nagorno-Karabakh and served as a Soviet soldier and Armenian defence minister.For years, attempts to negotiate a compromise on Karabakh under international mediation failed because of tough resistance to any compromise from either capital.The international mediators in the Karabakh talks -- Russia, France and the United States -- issued a special statement at the summit of G8 group of leading economies in Italy last week urging all sides to step up work on a compromise deal.But Aliyev poured cold water on prospects of reaching a breakthrough in Moscow during a speech in London on Monday.

He said that while the negotiations were "more promising", Baku still ruled out any talk of independence for the region."We are ready to grant the highest possible level of autonomy for those who live in Nagorno-Karabakh within the framework of a sovereign Azerbaijani state," he said.Karabakh says it refuses anything less than independence.Russia has said Medvedev's past mediation has delivered some positive elements in the efforts. The last talks took place in St Petersburg last month. (Reporting by Conor Sweeney; editing by Philippa Fletcher)

Azeri, Armenian leaders to discuss Nagorno-Karabakh in Moscowhttp://www.itar-tass.com/eng/level2.html?NewsID=14154536&PageNum=0

BAKU, July 17 (Itar-Tass) -- Azerbaijani President Ilham Aliyev is leaving for Moscow on Friday to discuss Nagorno-Karabakh settlement with his Armenian counterpart Serzh Sargsyan and then jointly with Russian leader Dmitry Medvedev.

In early July Aliyev said one issue is out of question for his country – the independence of Nagorno-Karabakh.

“Azerbaijan will not accept any decision that might envisage separation, independence of Nagorno-Karabakh either today or in ten or a hundred years,” he said.

“Azerbaijan is ready to grant Nagorno-Karabakh the necessary autonomous status but only within the united Azerbaijani state,” he added.

“In the past five years we agreed on many important issues that seemed hardly agreeable. However the principle of the negotiating process is such that nothing is agreed until everything is agreed,” Aliyev said.

This week the president said “inspiring dynamic and certain results” have been achieved at talks with Armenia.

It will be the sixth bilateral meeting of the two presidents in the past year and four of them were held in Russia.

The trilateral meeting with Medvedev is scheduled for Saturday.

11:54 17/07/2009

Sargsyan-Aliev Meeting Is Due Today http://www.panorama.am/en/politics/2009/07/17/moscow/

The Presidents of Armenia and Azerbaijan Serzh Sargsyan and Ilhaam Aliev are going to have a meeting in Moscow, in the afternoon to negotiate over the Nagorno-Karabakh conflict resolution.

The Foreign Ministers of the conflict parties and the OSCE Minsk Group co-chairs are going to be present at the negotiations. The Presidents will have a separated meeting and then the co-chairs will meet with the Foreign Ministers.

It is also supposed that on 18 July the Presidents of Armenia, Russia and Azerbaijan will have a meeting. Experts say that no document is expected to be signed in Moscow.

Russia, Armenia and Azerbaijan to hold a summit on Karabakh in Moscow http://www.businessneweurope.eu/dispatch_text9125Arminfo News Agency July 17, 2009

Russia, Armenia and Azerbaijan will hold a summit on Karabakh in Moscow.

Russian media report with reference to Russian President's Assistant Sergey Prikhodko that the trilateral meeting of the Russian, Armenian and Azerbaijani presidents dedicated to Nagorno-Karabakh problem will take place in Moscow on July 18.

The Armenian-Azerbaijani negotiations will be followed by a trilateral meeting of the presidents with participation of Russian President Dmitry Medvedev.

President of Azerbaijan Ilham Aliyev and President of Armenia Serzh Sargsyan will meet on July 17 in Moscow to discuss the Nagorno Karabakh settlement.http://www.kremlin.ru/eng/text/news/2009/07/219685.shtml

The presidents are then scheduled to meet in a tripartite format with Dmitry Medvedev on July 18, 2009.

Armenia FM: No decision possible without the consent of Nagorno Karabakh http://www.armradio.am/news/?part=pol&id=15434

17.07.2009 11:24Lusine Avanesyan“Radiolur”

On 16 July the Foreign Minister of the Republic of Armenia, Edward Nalbandyan, had a meeting with the President of the Nagorno Karabakh Republic, Bako Sahakyan, in Stepanakert.

Issues related to the current stage of the Karabakh conflict settlement process were discussed at the meeting.

The parties underlined that restoration of the full-fledged negotiation format was a must because no decision could be implemented without the consent of Artsakh.

The meeting was followed by a short briefing. The Armenian Foreign Minister said he appreciates the wish and consistent efforts of Presidents of Russia, the United States and France, as leaders of he Minsk Group co-chair countries, to help the parties bring their positions closer and move forward towards settlement.

Turing to the Madrid Proposals posted on the OSCE official webpage, the Minister said those are simply suggestions for resolution, negotiations are under way on some provisions.

“I’d like to draw attention to the fact that the document includes the three principles Armenia has always declared about as basic principles for settlement. Those are the determination of the status of Nagorno Karabakh through the expression of free will on the people of Nagorno Karabakh, which should have a legal binding force; uninterrupted land communication between Armenia and Artsakh; international security guarantees,” the Minister said.

The Madrid Principles include the issue of return of the refugees and displaced persons. Commenting on this, Minister Nalbandian noted that “no discussions are held on the return of refugees to Karabakh. The questions will be referred to only after the final settlement of the Karabakh issue and in a wider context, taking into account the question of 400 000 Armenian refugees as well.”

According to Edward Nalbandian, Armenia considers that the full participation of Karabakh in the talks is a must and an effective guarantee of the peace process.

“Naturally, Nagorno Karabakh may have different approaches to some issues, but I’d like to underline that the opinion of Nagorno Karabakh is of great importance for us. Armenia cannot ignore it and agree to anything without the consent of the people and authorities of Artsakh. My presence here today is another proof of it,” Minister Nalbandian said.

Russian Deputy PM Sees WTO Accession Possible by 2010, WSJ Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aikJfG2IJn9c

By Chris Peterson

July 17 (Bloomberg) -- Russia could join the World Trade Organization as soon as next year if it gets the backing the U.S. has publicly pledged, the Wall Street Journal reported, citing an interview with Deputy Prime Minister Igor Shuvalov.

He said Russia wasn't discarding previous agreements struck with the WTO but would continue talks along with Belrus and Kazakhstan; Shuvalov also warned Russia must be

weaned away from its dependence on oil and gas because high energy prices presented a danger to long-term economic development, the newspaper said.

Last Updated: July 17, 2009 00:04 EDT

Russia lifts pork ban from U.S. Wisconsin, Canadahttp://ca.reuters.com/article/domesticNews/idCATRE56G1V020090717

Fri Jul 17, 2009 3:45am EDT

MOSCOW (Reuters) - Russia said on Friday it would lift a ban on live pigs and raw pork imports from the U.S. state of Wisconsin and Canada's Ontario province from July 18 due to what it said was a "stabilization" of the situation of the H1N1 virus in those places.

The animal and plant health watchdog Rosselkhoznadzor said it now applies a ban on imports of live pigs and uncooked pork from only one U.S. state -- Florida, as well as the whole of Great Britain and three Japanese prefectures.

Bans will no longer be applied to Canada from July 18.

Rosselkhoznadzor, which did not provide details about how the situation had improved, is keeping a tougher ban on all types of meat from Mexico, Central American and Caribbean states.

The ban also applies to all raw and cooked meat products which may be carried in the personal luggage of passengers and crew, as well as to food served on board airplanes and ships which have stopped in these places.

The spread of the virus, commonly known as swine flu, is not caused by pigs and pork, but some countries including Russia have nevertheless slapped bans on some imports.

The World Health Organization, which has repeatedly said it is safe to eat pork, last month declared the H1N1 outbreak a pandemic. U.S. health officials estimate at least a million people have been infected and that the virus is spreading out of control.

As of July 16, Russia had officially registered only 4 cases -- none fatal -- of H1N1 virus on its territory, though the actual numbers are likely much higher.

(Reporting by Aleksandras Budrys, Editing by Michael Kahn)

Officials: New round of US-Russia START talks this month http://www.monstersandcritics.com/news/europe/news/article_1490114.php/Officials_New_round_of_US-Russia_START_talks_this_month_

Jul 16, 2009, 13:26 GMT

Geneva - The United States and Russia will engage in a new round of talks this month on replacing START, the nuclear arms reduction treaty that is set to expire at the end of the year, officials said Thursday.

This would be the first round since US President Barack Obama met with his Russian counterpart Dmitry Medvedev in Moscow earlier this month and reached a basic agreement that there must be a follow-up treaty.

Diplomats in Geneva, where the talks are taking place, told the German Press Agency dpa that on July 22, and running for three days, Russian and US officials will meet to negotiate a successor to the cold war-era Strategic Arms Reduction Treaty.

The first meeting on a deal was held in Moscow two months ago, followed by two rounds in Geneva, all leading up to the summit of the two presidents.

Obama and Medvedev reached a 'joint understanding' which aims to reduce the number of nuclear warheads held by each to between 1,500 and 1,675, compared with the maximum of 2,200 under START.

They would also aim to reduce the number of missiles capable of delivering the warheads from the current maximum of 1,600 allowed for each side to between 500 and 1,100.

Experts from defence, space and atomic divisions of the foreign and defence ministries of the two nuclear powers are expected to attend the Geneva talks.

China urges Russian calm on bazaar crackdownhttp://www.google.com/hostednews/afp/article/ALeqM5gSG-vkiieDRG47PNo5kEVCgzKPIw

(AFP) – 1 hour ago

BEIJING — China has called on Russia not to overreact in its clampdown on a Moscow bazaar, home to tens of thousands of Chinese traders and well-known for its thriving contraband trade.

The unexpected shutdown of the sprawling Cherkizovsky Market in the Russian capital last month has caused "enormous economic losses" to Chinese traders there, the commerce ministry said in a statement posted on its website.

"The Chinese side pays deep attention to this and... urges the Russian side to handle the issue with discretion," said ministry spokesman Yao Jian in the statement.

The statement urged Russian authorities to protect the legal rights of Chinese firms "particularly their safety and property security", but added that it supported all efforts to clamp down on illegal smuggling.

China also pointed out that an historical tax loophole that traders exploited to import goods more easily into Russia was also a problem, but solving it would take time.

"(China) hopes relevant Russian authorities and the Moscow city government take into account the historic factors... avoid overreacting, and solve the problem via a friendly negotiation and in a gradual manner," Yao said.

The Cherkizovsky Market, where traders from China and Central Asia sell their goods out of shipping containers and from open-air stalls, was closed June 30 for sanitary violations on a temporary basis.

The closure came after reports said Russian Prime Minister Vladimir Putin was annoyed by recent extravagance shown by Cherkizovsky's multimillionaire owner Telman Ismailov.

Russian officials have said it was likely to be shut for good this year.

Nearly 80,000 Chinese merchants trade at the market and the crackdown will force many out of business, earlier Chinese state media reports said, quoting experts warning the row could stymie Chinese investment in Russia.

Moscow will not interfere in cabinet formation – Sultanovhttp://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=2&article_id=104312

Russia opposes politicization of hariri tribunal, official saysBy Elias Sakr Daily Star staffFriday, July 17, 2009

BEIRUT: Russian Deputy Foreign Minister and Mideast envoy Alexander Sultanov said on Thursday his country would not interfere in the cabinet formation process in Lebanon, adding that Russia opposed the politicization of the Special Tribunal for Lebanon (STL). Prior to Sultanov's meeting with Prime Minister-designate Saad Hariri, the Russian envoy discussed with President Michel Sleiman the progress of the Middle East peace process and the issue of the Palestinian refugees.

Tackling the work of the STL to try suspects in the February 2005 assassination of former Prime Minister Rafik Hariri, Sultanov told reporters after a meeting with Hariri that his country opposed the "politicization of the international tribunal and would not negotiate a regional settlement at Lebanon's expense."

Sultanov, who stressed Russia's interest in uncovering Hariri's killers, added that the cabinet formation task was "not easy."

"However, Russia would not interfere," he said.

Sultanov underscored that "regional stability was influenced by Lebanon's stability." 

Following talks with Sleiman at the Presidential Palace, Sultanov announced that Russia understood Lebanon's refusal to naturalize Palestinian refugees, adding that his country recognized the refugees' right of return.

Sultanov stressed that US President Barack Obama's new policies would benefit the Middle East peace process.

The Russian envoy is expected to continue his tour in the Middle East with visits to Syria, Jordan, Israel and the Palestinian territories.

Explaining the objectives of his tour, Sultanov said it aimed to "boost regional negotiations and promote a possible peace conference in Moscow."

Sultanov praised Sleiman for the "success" of the June 7 parliamentary polls as well as his "good management of Lebanon's domestic affairs which secured the country's stability."

Concerning the formation of the next government, Sultanov voiced hope on Thursday for a quick agreement on its shape among Lebanon's leaders and renewed his country's invitation for Sleiman to visit Russia.

In turn, Sleiman expressed support for an international Middle East peace conference, provided that it complies with the Madrid summit and the Arab Peace Initiative, adding that any peace proposal should embrace the Palestinian refugees' right of return.

Later on Thursday, Sultanov held discussions with Hizbullah's Loyalty to the Resistance bloc head MP Mohammad Raad.

In other news, Christian leaders of the March 14 coalition criticized on Thursday Progressive Socialist Party (PSP) MP Walid Jumblatt's call for a gathering joining his party with the Future Movement, Amal and Hizbullah.

Speaking to Kuwaiti newspaper Awan, Jumblatt asked the Christians not to fear his call given the conservative policies of the US and Israel which aimed to divide the Arab world, adding that the "Muslim base in Beirut and its suburbs was the essential [constituent]."

In response to Jumblatt's statement, Phalange Party leader Amin Gemayel said Thursday that no alliance could protect Lebanon if it excluded the Christians. "Any Lebanese

agreement should be comprehensive if it was to serve the country's best interest," he added.

However, Gemayel toned down his rhetoric when he added that the PSP leader's call was "understandable "following the May 7, 2008, events.

"We hope for all factions to be united on [the principle of] defending Lebanon; when a slip of tongue takes place we move on," Gemayel added.

Armed clashes between pro-government and opposition supporters broke out in Beirut and the Chouf mountains on May 7, 2008, following the Cabinet's decisions to dismantle Hizbullah's telecommunication network.

Echoing Gemayel, Lebanese Forces leader Samir Geagea said Thursday that "Jumblatt was definitely trying to wipe out the traces of the May 7 events," adding that "such a move was beneficial to Lebanon and the Lebanese people."

Nevertheless, during an interview with Voice of Lebanon's radio station, Geagea criticized Jumblatt's remarks that the country's "basic scene is the Muslim community."

"Such claims are incorrect. What is essential is the national scene; it is more important than both the Christian and Muslim scenes," Geagea said.

Regarding the timing of the next cabinet's formation, Geagea ruled out the possibility of reaching an agreement on its shape in the next few days given the opposition's demand for veto power.

Commenting on accusations of switching political stances, Jumblatt denied "such rumors,"adding that tensions broke out into armed clashes on the streets following two years of political deadlock after Hariri's assassination in 2005.

In an interview with Nahar al-Shabab published Thursday, Jumblatt expressed concerns about a new Sunni-Shiite discord.

"It is important that we avoid this," he warned.

The PSP leader also reiterated his demand for normalizing ties with Syria, adding that he would visit Damascus following Saad Hariri's trip after the formation of the next Cabinet.

Future MP Okab Sakr said on Thursday that Parliament Speaker Nabih Berri had informed Hariri during their meeting on Wednesday that the opposition had relinquished its demands for veto power in the next cabinet.

However, Amal Movement MP Ali Bazzi slammed Sakr's remarks, describing statements by some MPs as "baseless."

Bazzi stressed on Thursday that Berri's demands were set prior to the June 7 parliamentary elections, adding that the speaker had called for "a national-unity government granting the opposition real partnership."

Russia: Lebanon gov't formation not easyhttp://www.presstv.ir/detail.aspx?id=100917&sectionid=351020203

Fri, 17 Jul 2009 08:17:33 GMT

Russian Deputy Foreign Minister Alexander Sultanov has called for the 'smooth' formation of Lebanese cabinet in Lebanon where the task is not that 'easy'.

Sultanov made the remarks following his meeting with Lebanese Premier Saad Hariri in Beirut on Thursday.

"The formation task (of the cabinet) was not easy," the Russian envoy said.

The Prime Minister-designate Hariri is finding obstacles in the way of forming a national unity government, which is to include all the major rival parties in Lebanon.

Earlier, Sultanov also met with Lebanon's President Michel Suleiman at the Presidential Palace to discuss the progress of the Middle East peace process and the issue of the Palestinian refugees early Thursday.

After talks with Suleiman, Sultanov voiced hope for the "smooth" formation of a government "especially" after all sides accepted the outcome of the June 7 parliamentary elections.

The two discussed the progress of the Middle East peace process and the issue of the Palestinian refugees early Thursday.

The Russian envoy further pointed out that "regional stability was influenced by Lebanon's stability."

The Russian special envoy for the Middle East is expected to continue his tour of the Middle East with visits to Syria, Jordan, Israel and the Palestinian territories.

India commission finds faults in Russia-produced missiles – reporthttp://www.mosnews.com/military/2009/07/17/2801/

Today, 12:25 PM

Nearly half of Indian Air Force’s beyond visual range (BVR) air-to-air missiles that were tested either did not home in on targets during evaluations or failed ground tests because they were ageing much before their shelf lives, a report claimed on Thursday.

As per the report by an leading English daily, the Comptroller and Auditor General (CAG) in its yet to be released report has raised serious questions on the usability of the R 77 (RVV-AE) BVR missiles, each costing Rs 2 crore, which are fitted on board the Su-30 MKIs, MiG-29s and MiG-21 Bisons.

India has been procuring these missiles from Russia since 1996 and has even ordered for more than 2,000 missiles after the Kargil conflict out of which 1,000 have already been delivered.

The missiles failure has affected the “operational preparedness” of the IAF, the daily said quoting CAG report.

Moreover, just yesterday Defence Minister A K Antony had disclosed that there were structural problems with India’s lead fighter planes, the MiG-29.

Urals Company Will Ship Su-30 Spares to Malaysiahttp://www.rusbiznews.com/news/n406.html

15.07.2009 — News

FGUP (Federal State Unitary Enterprise) PO Ural Optical and Mechanical Plant will be supplying spare parts for the Su-30MKM fighter jets to Malaysia. The contract worth some million US dollars will be signed in Kuala Lumpur on 20 July 2009.

The plant is an independent subject of the military-technical collaboration since 2003. This lets the plant without the participation from Rosoboronexport to supply spare parts abroad and to carry out all types of repairs to optical and electronic systems made by the plant.

The company informed RusBusinessNews that in 2008 the income from the military-technical collaboration amounted to 30 million US dollars. Military equipment manufacture, repair, and maintenance make up 75% of the production at the Ural Optical and Mechanical Plant.

Su-30MKM is a version of the Russian fighter jet Su-30, made especially for Malaysia.

Vietnam, Russia launch joint websitehttp://www.thanhniennews.com/business/?catid=2&newsid=50850

Vietnam and Russia launched a website Thursday to beef-up trade relations between the two countries.

The site, www.vietrussia.com, introduces the Vietnamese business and investment environment, legal and trade policies to Russian businesses.Doan Duy Khuong, vice chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said the website also provided information to Vietnamese firms about the market, and business partners and opportunities in Russia.The website was launched by VCCI and the Vietnamese Russian Business Council.Reported by Ngan Anh  Story from Thanh Nien NewsPublished: 17 July, 2009, 11:41:24 (GMT+7)Copyright Thanh Nien News

Bakiev: Kyrgyz, Russian Defense Ministries consider opening of anti-terrorism centre http://eng.24.kg/politic/2009/07/17/8554.html

17/07-2009 12:29, Bishkek – News Agency “24.kg”

Defense Ministries of Kyrgyzstan and Russia consider opening of anti-terrorism centre in Batken or Osh regions, Kurmanbek Bakiev the President of Kyrgyzstan said in an interview with New York Times. Shorthand report of the interview, provided to the news agency 24.kg by the presidential press service, quotes Kurmanbek Bakiev: “We have large economic programs with Russia such as construction of the Hydropower station Kambarata-1 and other projects. Russia has always been our strategic partner mainly in economic sphere. At that time we discussed establishment of anti-terrorism center in the south of Kyrgyzstan. North Kyrgyzstan faces no special problems. There is our neighbors China and Kazakhstan and the Kant airbase. More problems we have in the south, in Batken region which borders with Tajikistan. In order to reinforce anti-terrorism activity and increase efficiency of control over terrorism in the south of Kyrgyzstan, our Defense Ministries consider opening of an anti-terrorism centre in the south - in Batken, Osh or Jalalabad regions of Kyrgyzstan. The centre could be used for joint anti-terrorist trainings of Kyrgyz and Russian servicemen. The issue is under consideration now,” the president said.

Kyrgyzstan studies possibility of joining Customs Union of Belarus, Russia and Kazakhstanhttp://eng.gazeta.kz/art.asp?aid=134699

[14:55] 17.07.2009,  Kazakhstan Today

Kyrgyzstan studies possibility of joining the Customs Union of Belarus, Russia and Kazakhstan, "Kazakhstan Today" agency reports citing the press service of the Ministry of Economic Development and Commerce of Kyrgyzstan.

According to the press service, this question was considered today in Bishkek during the meeting of the Deputy Minister of Economic Development and Commerce of Kyrgyzstan, Sanzhar Mukanbetov and EurAsEC Assistant Secretary General, Evgeniy Vorsin.

The participants of the working group during the meeting discussed participation of Kyrgyzstan in the Customs Union of Belorussia, Kazakhstan and the Russian Federation. The working group was created on May, 29th, 2009 and is headed by E. Vorsin.

The structure of the group also included heads of expert groups of the state-participants of the Customs Union concerning formation of the contract-legal base of the EurAsEC Customs Union and the representatives of Kyrgyzstan.

Central Asia: Russian Carrier Wants Afghan Transit Role

http://www.eurasianet.org/departments/news/articles/eav071609b.shtml

7/16/09

Russia’s largest air freight carrier, the Volga-Dnepr Group, says it is "first in line" to transport US military goods to Afghanistan.

"Several carriers have already lined up for the transit of US cargoes to Afghanistan, and we are the first in line. We believe that our participation [. . .] is absolutely necessary," the official Russian RIA Novosti news agency quoted Valery Gabriel, the company’s executive director, as saying on July 15.

An agreement allowing US military goods to reach Afghanistan via Russian territory was signed on July 6. It is scheduled to come into effect in September and is valid for one year.

Russia forms commission to study #failed test-launch of Bulava missilehttp://www.kyivpost.com/world/45406

Today, 10:15 | Interfax-UkraineMoscow, July 17 (Interfax-AVN) - A commission has been set up to investigate what could have caused the latest aborted test-launch of Russia's new Bulava strategic missile, which destroyed itself shortly after it was launched.

"The commission has already begun working. It includes representatives of this industry and the Defense Ministry of the Russian Federation," a source in the space and rocket sector told Interfax-AVN on Friday.

The results of the test-launch will be thoroughly analyzed by the specialists in charge of these issues, the source said.

"I believe that it [an inquiry] will take at least two-three months," he added.

Russia will not give up Bulava missile project despite yet another failed launch http://english.pravda.ru/russia/economics/17-07-2009/108206-bulava-0

17.07.2009

Another launch of Russia’s Bulava missile ended with a failure. The Dmitry Donskoy nuclear cruiser launched the ballistic missile in the White Sea on July 15. However, the missile destroyed itself after a malfunction in the primary stage of the rocket. Russia has held ten test launches of the Bulava rocket since 2003: five of them proved to be unsuccessful. The Bulava missile complex is capable of carrying up to ten individually guided nuclear warheads. The missile can hit targets at a distance of up to 8,000 kilometers.

Bulava is supposed to become the basic missile for state-of-the-art nuclear-powered Borei class submarines. Russia’s major shipyard, Sevmash Enterprise, is currently building three of such nuclear submarines. Their constriction is said to be complete by 2010.

Experts say that several consecutive unsuccessful launches of the missile endanger the whole project. The missile was designed to minimize modern threats like the US missile defense system in Eastern Europe. Many Russian experts believe that Moscow intends to use the new missile for political reasons to earn Russia the reputation of a superpower.

However, Russia will not scrap up the Bulava project even after the recent failure since the missile is needed to maintain the nuclear parity with the United States.

It was said in 1998 that the Bulava project would be relatively inexpensive. The project was evaluated at $227 million. For the time being, it is obvious that Bulava has taken more than $300 million in ten years.

Alexander Khramchikhin, the deputy director of the Institute of Military and Political Analysis, believes that Russia should stop the tests of the Bulava missile

“It is obvious that one should stop testing the missile and leaving money on the table. Russia should work on the Sineva missile – the only missile that flies. However, in this case it’s not clear what to do with the submarines that have been designed to carry Bulava on board. Billions of rubles have been wasted on the submarines and the missile – who is going to be responsible for that?” the expert said.

Vladimir Dvorkin, a senior scientist with the Institute for World Economy and International Affairs, shares a different point of view. Russia should continue testing the Bulava missile, he believes.

“One should investigate the reasons of the sixth unsuccessful test launch before making hasty conclusions,” the official said. “It is quite possible to take the missile to the operational condition. An Unsuccessful launch is a sad event, but it does not mean that we should refuse from the missile. There is no alternative to Bulava,” the specialist said.

Bulava failure must not stop tests - Russian arms sector official http://en.rian.ru/mlitary_news/20090717/155547975.html

MOSCOW, July 17 (RIA Novosti) - Russia should continue test launches of the new Bulava submarine-launched ballistic missile despite a series of failures, a defense industry source said on Friday.

On July 15, a Bulava SLBM self-destructed after its first stage malfunctioned when it was fired from the submerged Dmitry Donskoi strategic nuclear-powered submarine in the White Sea.

"The tests of the Bulava should be continued after a thorough investigation of the incident. These failures are unavoidable during the development of new missiles," the source in the Russian government's Military-Industrial Committee said.

He added, however, that the failure during the separation of the first stage was a serious concern because this had never previously been a problem.

The source said the Bulava program had been overly politicized and fierce competition among the companies involved in the project was negatively affecting the manufacturing and the testing process.

Six of the 11 test launches of the Bulava have ended in failure. The launches were temporarily suspended and the missile components were tested in the labs after a series of previous failures.

An investigation established that the failure in December last year occurred because one of the subcontractors supplied faulty ejection cartridges which were used in the separation of the missile's stages.

Russian security-related agencies could join the investigation into the July 15 failure because the incident may be considered an act of sabotage, a security official said on Friday.

"A faulty part could be installed in a missile due to the absence of effective quality control by the manufacturer, or directly during the assembly. Taking into account the

importance of the new missile for the naval component of Russia's nuclear triad, both cases will be considered acts of sabotage," the source said.

The Russian military expects the Bulava, along with Topol-M land-based ballistic missiles, to become the core of Russia's nuclear triad.

The Bulava (SS-NX-30) SLBM carries up to 10 MIRV warheads and has a range of over 8,000 kilometers (5,000 miles). The three-stage ballistic missile is designed for deployment on Borey-class Project 955 nuclear-powered submarines.

2 dead in Ingushetia attack, minister alive: officialhttp://www.google.com/hostednews/afp/article/ALeqM5hoTN2U4NRxrw7cox9SuPm9CFIHoA

(AFP) – 1 hour ago

MOSCOW — Two people were killed in an attack on a car in Russia's turbulent Ingushetia region, officials said, denying initial reports that a regional minister was among the dead.

Unidentified assailants opened fire at a Kia car in the village of Sredniye Achaluki in Ingushetia, the investigation committee of the Russian prosecutor general's office said in a statement.

"As a result, two people, who had been in the car, were taken to hospital where they subsequently died," the statement said. Efforts were under way to identify the victims and the details of the crime, it added.

Earlier, security sources said Ruslan Balayev, the sports and tourism minister for Ingushetia, had died on the spot when his car was attacked in the early morning.

But an official identifying himself as Balayev denied the reports when contacted by telephone.

"The minister has been at work since 8:00 am," he said.

"I don't even know" what's happening, he said, referring to the reports of his death. Asked if he was alive and well, he said: "As you see."

The investigation committee statement confirmed that the authorities had managed to establish that Balayev had not been in the car that came under attack.

Balayev told AFP that the confusion stemmed from the fact that "it was probably a ministry registered car."

The incident follows a string of brazen attacks on officials, including an assassination bid last month that critically wounded the leader of Ingushetia, Yunus-Bek Yevkurov.

On Wednesday, the body of a leading rights activist Natalya Estemirova was found in Ingushetia after she was abducted in neighbouring Chechnya.

Last month, Russian President Dmitry Medvedev vowed to destroy Islamist militants whom he blamed for the unrest.

Gunmen kill two people in southern Russian provincehttp://www.kyivpost.com/world/45413

Today, 11:33 | Associated PressROSTOV-ON-DON, Russia (AP) - Assailants gunned down two people in the Russian region of Ingushetia on Friday, officials said - the latest violence to hit the North Caucasus region.

At least four militants in two cars raked with gunfire a car owned by deputy sports minister Akhmed Chakhiev, the Ingush Investigative Committee said in statement.

Two people were killed, including Chakhiev's driver, but Chakiev was not in the car, according the investigative committee and Ingush Security Council chief Alexei Vorobyov.

"It's unclear to us who exactly was killed, law enforcement agencies are working on it," Vorobyov told AP, correcting earlier information from officials that said Chakhiev was hit in the attack.

The gunmen escaped after shooting, near Nizhny-Achaluki, a village about 20 kilometers (12 miles) north of Ingushetia's largest city, Nazran, the committee said.

Ingushetia, which borders Chechnya to the west, has been roiled by shootings, bombings and other attacks targeting police and government officials.

The region's president was wounded in a suicide car bombing last month, and a top judge and a former vice prime minister have also been killed by gunmen.

Earlier this week, the body of Natalya Estemirova, an activist renowned for her investigations of rights abuses in Chechnya, was found on a roadside in Ingushetia.  

Ingush sports and tourism minister 'alive and well' – spokeswomanhttp://en.rian.ru/russia/20090717/155546536.html

ROSTOV-ON-DON, July 17 (RIA Novosti) - An Ingush government spokeswoman refuted media reports on Friday that the Russian North Caucasus republic's sports and tourism minister had been killed in an attack.

Ruslan Balayev's car reportedly came under attack in the republic's Malgobek district at about 07:50 a.m. (03:50 GMT).

"The minister is alive and well. The attack targeted his deputy, Akhmed Chakhkiyev," Zhanna Almazova told RIA Novosti. "Media reports that Balayev has died as the result of an attack are false."

There is currently no information on Chakhkiyev's condition.

According to the Investigation Committee of the Russian Prosecutor General's Office, it has been established that Balayev was not in the car.

Russian investigators said however that two people were killed in an attack on their car in the same district on Friday morning. The bodies are currently being identified.

Russia's Ingushetia has seen a rise in violence in recent months, with the republic's president, Yunus-Bek Yevkurov, badly injured in an assassination attempt on June 22. He is currently recovering in a top Moscow clinic.

A leading Chechen human rights activist, Natalya Estemirova, was shot dead in the republic on Wednesday.

Ingush minister not hurt, as he not inside car under fire

http://www.itar-tass.com/eng/level2.html?NewsID=14154957

17.07.2009, 10.02

MOSCOW, July 17 (Itar-Tass) -- Ingush Minister of Tourism and Sports Ruslan Balayev was not inside the car, which came under fire in the republic on Friday, spokesman for the Prosecutor General’s Office Investigation Committee (SKP) Vladimir Markin told Itar-Tass on Friday.

According to him, two people driving in a KIA car were killed. They are passing an identification procedure.

Doctors say Ingush President Yevkurov will return to his dutieshttp://en.rian.ru/russia/20090717/155547227.html

MOSCOW, July 17 (RIA Novosti) - The president of the south Russian republic of Ingushetia, who was seriously injured in an assassination attempt, will be able to return to his duties after his rehabilitation, a doctor said on Friday.

Yunus-Bek Yevkurov received serious head and internal injuries when a car bomb exploded as his motorcade passed by on June 22, and underwent a series of operations at a top Moscow clinic.

"He has regained consciousness and is now absolutely lucid. We can now say that the president will return to active life and there is practically no chance that he will be disabled," a high-level medical source told RIA Novosti on Friday.

He added, however, that the president's rehabilitation would take a long time.

Police officer killed in Chechnyahttp://en.rian.ru/russia/20090717/155546132.html

MOSCOW, July 17 (RIA Novosti) - A police officer has been shot dead in the Chechen capital of Grozny, a police source told RIA Novosti on Friday.

The off-duty police officer was attacked by two unknown assailants in Grozny's Oktyabrsky district on Thursday, the source said.

Russia's North Caucasus has seen a rise in violence in recent months, despite the Kremlin officially ending its 10-year counter-terrorism operation in Chechnya.

Russia's north Caucasus

A mountain of troubleshttp://www.economist.com/world/europe/displaystory.cfm?story_id=14054840

Jul 16th 2009 | MOSCOWFrom The Economist print edition

The north Caucasus continues to suffer kidnappings, torture and killings on a horrifying scale

ON JULY 7th, as Barack Obama and Dmitry Medvedev discussed world security in the Kremlin, people charged with security in Chechnya kidnapped a local man and his son. Twelve hours later the man was dragged from a car in his underwear and executed before a few villagers. And this was but one of many punitive actions taken by Chechen authorities against relatives of alleged rebels.

It was brought to light by Natalia Estemirova, a human-rights activist who has chronicled kidnappings, torture and killings for a decade on behalf of Memorial, Russia’s oldest human-rights group. Ms Estemirova received prizes in Europe, but no thanks from her government. On July 15th, as she left home in Chechnya, she herself was kidnapped. A few hours later she was found dead in neighbouring Ingushetia. Her hands were tied and she had two bullets in her head and chest.

Ms Estemirova’s murder topped the headlines of foreign television networks, but was mentioned only in passing by Russian channels, despite a prompt condemnation from Mr Medvedev. Her colleagues say that her work had outraged Ramzan Kadyrov, Chechnya’s president. They blame him for her murder (though Mr Kadyrov pledged to lead the investigation into her murder himself).

Chechnya is no longer considered a “zone of a counter-terrorist operation”. This status was removed a few months ago at the request of Mr Kadyrov. Since then the number of disappearances, house burnings and killings has risen. Even before Ms Estemirova’s murder, Ekaterina Sokiryanskaya, a colleague, talked of escalating fear in the region and pressure on human-rights activists. “Natalia [Estemirova], who tried to fight the victims’ cases, was braver than many of the relatives,” she said after the murder. Fear and force have been Mr Kadyrov’s main tools of governance. As a former rebel, he has coerced those who fought alongside him and got rid of those who opposed him. He has turned Chechnya into his fief, more Russia’s ally than its subject.

Across the region, killings and kidnappings have become common. Ingushetia has descended into what amounts to a civil war, says Grigory Shvedov of Caucasian Knot, an independent news service. The killing of policemen has become systematic. In an especially daring attack on June 22nd, rebels used a suicide-bomber to try to kill Yunus-Bek Yevkurov, Ingushetia’s president. His driver and a bodyguard were killed; he is still in hospital. A Chechen group involved in the Beslan school siege in 2004 took responsibility and its leader promised more attacks. Nobody knows how many rebels there are in Ingushetia or neighbouring Dagestan. Many are local and young, born when Russia first went to war in Chechnya in 1994, says Mr Shvedov.

Russia’s brutal repression and lawlessness have pushed people towards Islamic fundamentalism. The rebels are now driven not by ideas of independence but by revenge or the vision of an Islamist state. Their influence has become especially visible in Ingushetia. “People are afraid to go out in the evening, cafés are closed, there are fire exchanges almost every night,” says Ms Sokiryanskaya.

Mr Yevkurov, a paratrooper, inherited a corrupt and weak government from his predecessor, a KGB general named Murat Zyazikov. His first steps were encouraging: he unearthed corruption, engaged with opposition leaders and began to fight against armed rebels. He also insisted that Russia’s federal forces should not carry out “special operations” in Ingushetia without his knowledge. But this has had little effect, says Ms Sokiryanskaya. “They simply do not know any other way,” she explains.

The Kremlin likes to blame Western security services for destabilising the region. Some Russian security men also blame Georgia’s president, Mikheil Saakashvili. “For as long as people like Saakashvili—the neo-Nazis and neo-Führers—lead neighbouring states, we will not be in peace,” Arkady Yedelev, Russia’s deputy interior minister, said recently.

Russia’s large-scale “Caucasus 2009” military manoeuvres were held under the banner of fighting terrorism. Mr Medvedev, who inspected the Russian units, explicitly linked the exercises to last year’s war in Georgia. “The main lesson for us from these events is the necessity to hold fully fledged, ongoing and highly effective exercises,” he said this week, a day after visiting South Ossetia, which Russia (almost alone) recognises as independent. This came only a few days after Mr Obama said that America recognises Georgia’s territorial integrity and does not want a renewal of military conflict. To ram that message home, an American warship arrived in Georgia this week to hold the first joint exercise since the end of last August’s war. Joe Biden, America’s vice-president, is expected to visit Tbilisi shortly.

The south Caucasus remains so tense that the European Union has delayed its report into the origins of the Georgia war, which was to have been published at the end of July. But even as the world’s attention is fixed on Georgia, Russian citizens keep dying in the north Caucasus. Vladimir Putin, Russia’s prime minister, once promised to hang Mr Saakashvili “by the balls”. Sadly he seems to have no such feeling for those who killed Ms Estemirova.

Law Enforcement Officers Get Powers to Open Mailhttp://www.themoscowtimes.com/article/1010/42/379583.htm

17 July 2009 By Alexandra Odynova / The Moscow Times

The police, Federal Security Service and six other law enforcement agencies will be allowed to open letters and packages and obtain personal data from the postal service starting Tuesday.

A rights group warned that the change, authorized by a decree released by the Communications and Press Ministry on July 6, violated the constitutional right to privacy.

The decree, posted on the ministry’s web site, says the postal service must provide access to information about senders and addressees and, if needed, allow law enforcement officials to hold letters and packages for examination.

Post offices will have special inspection rooms set up for officers from the Interior Ministry, Federal Security Service, Foreign Intelligence Service, Federal Security Guard Service, Federal Customs Service, Federal Prison Service and Federal Drug Control Service, the decree says.

“The decree flies in the face of the basic right of citizens for privacy in the Russian Constitution,” said Yury Vdovin, deputy chairman of the human rights group Civil Control.

The Constitution guarantees “privacy of correspondence” in Article 23, and mail now can only be examined with a court order.

The new decree does not mention anything about the need for a court order.

The Communications and Press Ministry defended the new rules as an attempt to “regulate cooperation between post offices and special agencies in the course of investigative work.”

“The document was approved by the Justice Ministry, which means that it corresponds with the Constitution and the other laws of the Russian Federation,” the ministry said in a brief reply to e-mailed questions.

Vdovin said the decree looked more like an attempt to exert more control over the population to gauge the threat of social unrest during the economic crisis. “The powers that be are cowardly,” he said. “They are afraid of public demonstrations and a united people.”

Many people still rely on traditional mail services despite the growth in popularity of e-mail and other forms of electronic communication. The security services have long been allowed to monitor electronic communication.

State Duma OKs introducing mandatory insur payments in 3rd readhttp://www.prime-tass.com/news/show.asp?topicid=68&id=460892

MOSCOW, Jul 17 (Prime-Tass) -- The State Duma, the Russian parliament's lower house, Friday approved the third reading of a bill seeking to replace the unified social tax with mandatory insurance payments on January 1, 2010 and subsequently raise these payments on January 1, 2011.

After January 1, 2011, those making less than 415,000 rubles per year will be required to pay 34% of their wages in insurance contributions. Those making more than 415,000 rubles will pay 34% of that amount, which is equal to 141,100 rubles, while the remainder of their annual wages will be exempt from these contributions. The 415,000-ruble threshold will be revised annually.

Under the current system, those earning less than 280,000 rubles per year pay a payroll tax of 26%, while those making between 280,000 rubles and 600,000 rubles per year pay 72,800 rubles and 10% of the difference between 280,000 rubles and their annual wage, and those making more than 600,000 rubles per year pay 104,800 rubles and 2% of the difference between 600,000 rubles and their annual wage.

To become law, the bill must be approved in one reading by the Federation Council, the upper house, and then be signed by the president.

The Russian State Council in the Kremlin to discuss youth policy

http://www.itar-tass.com/eng/level2.html?NewsID=14154456&PageNum=0

MOSCOW, July 17 (Itar-Tass) -- The Russian State Council will meet in the Kremlin on Friday to discuss the national youth policy.

Amur Governor Oleg Kozhemyako and Sport, Tourism and Youth Policy Minister Vitaly Mutko will deliver the main reports.

The working group that drafted documents for the meeting proposed to launch the federal Youth of Russia program for 2011-2015. It aims to develop the innovation potential of the young, to promote patriotic education and tolerance, support youth initiatives, young families, experts and scientists. Anti-crisis measures call to expand the network of youth business schools, consulting centers and the number of grants for the young to open their own business.

Khristenko Plots ‘Shadow’ Warhttp://www.themoscowtimes.com/article/1009/42/379591.htm

17 July 2009 By Alyona Chechel, Yelena Vinogradova, Alexei Nikolsky / Vedomosti

The recently closed Cherkizovsky Market is only the first casualty in a war on “shadow” products that are “choking off” the country’s light industry sector, according to a ministry report.

Industry and Trade Minister Viktor Khristenko called for the government to draft a strategy regarding the country’s consumer goods trade up to 2020 in a report to the presidium on June 1, a copy of which was obtained by Vedomosti.

Despite state investment of almost $2 billion into the consumer goods industry in the late 1980s and early 1990s, the sector has been in a woeful state since the middle of the last decade, the report said.

Russian companies, seeing their production volumes plummet, have been selling their manufacturing equipment to businesses in Turkey and China, where the consumer products sector is booming.

In the meantime, the situation has given birth to an opaque and unregulated shuttle industry, where goods are made in sweatshops or illegally brought into the country. The federal budget loses about 650 billion rubles ($20.4 billion) in unpaid taxes annually, and price discrimination in favor of illegal goods has “literally choked” domestic production, the report said.

The situation has even affected the country’s military readiness. While the law calls for 51 percent of light goods used by the military to be manufactured by domestic producers, only 17 percent to 36 percent actually come from Russia, the report said.

A civilized, competitive market needs to develop in order to achieve that figure, with goods being sold in chain stores rather than in markets, the ministry said.

Prime Minister Vladimir Putin has expressed his outrage about the state of affairs. “It seems the fight against contraband is being waged, but there are not many results,” he said at the June 1 presidium meeting. “A result would be [to obtain] convictions, but where are the convictions?”

Putin then went on to mention “a certain market” where $2 billion in purportedly smuggled goods had been seized. Prosecutor General Yury Chaika later explained that the market in question was in fact Cherkizovsky.

Mayor Yury Luzhkov said Wednesday that the market was probably closed “forever.”

Its products will be moved to other markets, and “we will make room for domestic producers, while products of Chinese and Vietnamese origin will have to leave Moscow,” Luzhkov said, Itar-Tass reported.

Every stall at Cherkizovsky Market represents a closed Russian factory, said Deputy Industry and Trade Minister Stanislav Naumov. The market also acted as a wholesale base for many smaller markets in central Russia, he said.

There will be no victory over counterfeit goods and smuggling until dozens of similar markets are also closed, an Interior Ministry official said. He said an order to begin such actions has already come “from upstairs.”

Not all markets will be closed, but such retail points do need to be led to civilized methods, said Putin’s spokesman Dmitry Peskov. This includes payment of taxes and necessary customs control, he said.

Some retailers, however, feel differently. Contraband cannot completely be wiped out unless all markets like Cherkizovsky are closed, said Vladimir Melnikov, general director of Gloria Jeans, Russia’s largest clothing producer. “It’s true that this will leave about 500,000 people unemployed, but these are capable people. They will find jobs elsewhere,” Melnikov said.

It is specifically because of these markets that Russia does not have a single clothing retail chain with a turnover of $1 billion, he said.

The war against markets is not going to prevent contraband if the degree of corruption among state officials remains the same, said Vladlen Maximov, chairman of the coordination council at League of Freedom, a small-business union.

Cherkizovsky is a prime example of this, Maximov said. Before Putin directed his attention to the market, it was not subject to any serious complaints from authorities.

Checks should result in the persecution of all parties responsible for the supplying and selling of contraband goods, including customs and tax service officials, not just suppliers and sellers, said Madzhumder Mukhammad Amin, president of the Migrants of Russia Federation.

Police Kick Off ‘Operation Garry’http://www.themoscowtimes.com/article/1010/42/379596.htm

17 July 2009 The Moscow Times

Moscow police launched Operation Garry on Thursday to crack down on pirated versions of the new Harry Potter film, “Harry Potter and the Half-Blood Prince.”

But police said an initial series of raids turned up no pirated copies of the film, which opened on more than 900 movie screens in Russia on Thursday, a day after its U.S. premiere.

The operation, named after the Russian pronunciation of Harry, included a raid on a warehouse with a “large amount” of printed sleeves for DVDs, said Filipp Zolotnitsky, a spokesman for the economic crimes squad, Interfax reported.

Police were also working to stop master copies of the film from entering the country from abroad and to catch people who attempt to record copies in movie theaters.

As part of Operation Garry, police officers confiscated 100,000 DVDs of other films but didn’t find any Harry Potter copies, Zolotnitsky said.

The operation follows a series of highly publicized attempts by police to curb the booming pirate DVD market.

In 2005, a nationwide operation named Kontrafakt, or Bootleg, coincided with the release of Fyodor Bondarchuk’s period action drama “9th Company.”

In September last year, police confiscated 1 million pirated DVDs in raids on factories and warehouses in Moscow and the Moscow region.

Russia remains one of the leading markets for pirate production.

Piracy of movies, music, books and business and entertainment software cost copyright owners more than $2.7 billion last year, according to a report by the International Intellectual Property Alliance, an international group of private sector companies that promotes copyright laws worldwide.

Dan Glickman, the head of the Motion Picture Association of America, in April named Russia among five countries where movie piracy has reached “alarming levels.” The others countries were Canada, China, Mexico and Spain.

“While Russia has made some progress on the implementation of its obligations under the IPR [Intellectual Property Provisions in Regional Trade] Bilateral Agreement, much work remains before Russia should be permitted to accede to the World Trade Organization,” Glickman said.

US pastor sentenced for bribery on Sakhalinhttp://www.itar-tass.com/eng/level2.html?NewsID=14154372&PageNum=0

YUZHNO-SAKHALINSK, July 17 (Itar-Tass) -- A US pastor was sentenced to 18 months in jail on Russia’s Pacific Island of Sakhalin for an attempt to bribe an immigration official, the press service of the local branch of the Federal Security Service told Tass on Friday.

Hio Sun Pak, a 65-year-old US citizen and Pentecostal pastor of the Blagodat (Grace) church, and his interpreter in July 2007 offered the official 300,000 rubles (10,000 US dollars) for halting an investigation into the use of illegal Chinese labor migrants at the construction of a Blagodat church in the city of Kholmsk.

After two months in custody the pastor was released for health reasons, but restricted in travel.

The Kholmsk city court conditionally sentenced the interpreter to 16 months with a two-year probation.

17 July 2009, 10:14

Jehovah's Witnesses in Rostov region accused of extremismhttp://www.interfax-religion.com/?act=news&div=6226

Rostov-On-Don, July 17, Interfax - Members of the local Jehovah's Witnesses religious organization in the town of Novoshakhtinsk, Rostov region, could face criminal charges of extremism.

"Jehovah's Witnesses operating in Novoshakhtinsk are preaching in public places, propagating the exclusivity and supremacy of the Jehovah's religious doctrine above all

others and promoting refusal from civil duty, voting at elections and serving in the army, which led to multiple complaints from the public and to a protest by local residents," the Rostov regional prosecutor's office said on Thursday.

Novoshakhtinsk prosecutors sent case files to an investigative body to consider a criminal prosecution of the local members of the Jehovah's Witnesses organization.

Moreover, the regional prosecutor asked the Rostov regional court to order the closure of the organization in Taganrog for extremist activities, inciting religious hatred and human rights violations.

"For their part, prosecutors in Novoshakhtinsk and the Yegorlyk district issued a warning to religious organizations and to the chairman of the governing committee of the Administrative Center for Jehovah's Witnesses in Russia about the unacceptability of extremist activities," the Rostov regional prosecutor's office said.

Intl Fishery Congress to focus on sustainable management

http://www.itar-tass.com/eng/level2.html?NewsID=14154960

VLADIVOSTOK, July 17 (Itar-Tass) - The International Fishery Congress that will be held in Vladivostok on September 8-10 will be devoted to the strategy of sustainable management of fisheries and maintenance of stability of the markets of fish products. The press centre of the Primorsky Territory administration told Itar-Tass that the commission for the preparation for the forum in early July approved the programme of the event.

Taking part in the congress will be delegations from 11 countries, including Vietnam, Denmark, Germany, Iceland, Spain, China, South Korea, Japan and the United States. The forum’s guests are expected to be head of the Russian Federal Agency for Fisheries Andrei Krainy, senior officer of the department for fishery and aquaculture of the UN Food and Agriculture Organisation (FAO) William Emerson, Fisheries Ecology Division Director Churchill Grimes of the US National Oceanic and Atmospheric Administration (NOAA).

The Fishery Congress in Vladivostok will be held for the seventh time. The first two forums were organised as all-Russian, but then the events got the international status. Decisions made on the forums’ results are more often reflected in Russian laws. Thus, in Vladivostok fishermen have repeatedly raised the issue of giving long-term quotas to enterprises. In 2008 a decision was made on the preservation of the share principle in granting catch quotas to fishing companies for a term of 10 years.

Last year, representatives of 18 states participated in the forum, including Belarus, Great Britain, Vietnam, Germany, China, South Korea, North Korea, Norway, the United States, Thailand, Ukraine and Japan. During three days they discussed problems of the development of international markets of fish products, fighting poaching and issues of port services.

They adopted a resolution on the results of the congress that noted the need to develop closer interaction and cooperation between all participants in world fishing, including state institutions and business communities.

The document also proposed measures aimed at combating poaching. Counties of the Asia-Pacific region proposed to introduce the system of state port control of fish products’ unloading and reloading at ports, to intensify information exchange on illegal activities at sea of fishing vessels using registration documents of “convenience flag” states.

Primorye is rightfully considered to be fishing capital of Russia. Many catching and processing capacities of Russian fishery are located here. For five years now, Vladivostok, the capital city of Primorsky Territory, has been a meeting place for Russia’s Federal and regional executive officers, CEOs of major Russian and international fishing companies, academic researchers, and world's leading fishery experts, the forum’s press release says.

During such public forums many proposals developed by the fishing community were fixed in legislative acts of Russian government. In 2009 the Russian fishing industry has started to work under new conditions, and the basic theme of the Congress is “Strategies for Sustainable Fishery Management and Maintaining Stable Fishery Markets.”

The Congress participants will have an opportunity to discuss and outline mutually beneficial terms of foreign trade to conclude the international trade agreements; overcoming problems, caused by the world economic recession; development of civilised fish products trade; fixing of fair market price for fish products and other themes.

Meanwhile, Delegations of 11 countries have already confirmed their participation in the IV International Fishery Congress, among which the Republic of Korea, Japan, Italy, Vietnam, Belarus, the USA, Germany, Norway, Democratic People’s Republic of Korea, China and Spain. According to the Fisheries Department of Primorsky Territory Government, the representatives of Iceland, Denmark and Mexico are also expected to participate in the Congress.

According to the Organising Committee, at the moment the Plenary Session’s agenda is currently being determined. The world business and science representatives submit their reports and abstracts to be presented at the Congress Plenary Session.

As it was mentioned, the major themes of the Congress will be issues of international measures against poaching, sustainable development of fishing industry and fish production markets, and new methods of catching and processing.

The International Fishery Congress and International Fishery Expo will be held in Vladivostok on September 8-10, 2009. Russian and international fish industry representatives will meet in Primorye for the seventh time to discuss and outline key fishery issues and outlook, to exchange experience. At the Expo, fishermen of the world

will be able to survey up-to-date scientific-technical fisheries achievements and make profitable contracts.

National Economic Trends

Russian monetary base up 1.7% in week to $127.7 blnhttp://en.rian.ru/business/20090717/155546755.html

MOSCOW, July 17 (RIA Novosti) - Russia's Central Bank said Friday the country's narrowly defined money supply (M1) was 4 trillion 55.8 billion rubles ($127.7 billion at the current exchange rate) as of July 13, up 1.7% in the week since July 6.

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

CBR reserves dropped $8.4 bln in the first week of Julyhttp://www.businessneweurope.eu/dispatch_text9128

AlfaJuly 17, 2009

CBR reserves declined by $8.4 bln, or 2.1%, during the week of July 3-10. As of July 10, they totaled $401 bln. This decline does not reflect the interventions the CBR was forced to make last Friday to support the ruble.

We believe the change to banking sector regulations was the key reason behind the sharp decline in reserves. At the beginning of July, the CBR withdrew its recommendation not to increase foreign currency assets, which was introduced last fall to prevent ruble depreciation. Previously, this recommendation forced banks to keep foreign currency in CBR correspondent accounts at the beginning of the year. The estimated size of these holdings was around $30-40 bln. We believe that following the recent change in regulations, banks transferred the remaining funds from the CBR foreign-currency denominated correspondent accounts (which were included in the CBR reserves) to other assets with higher remuneration. Technically, this translated into a drop in reserves without being reflected in higher purchases on the foreign currency market.

Even though we view the decline in CBR reserves as a technical change, we believe that the drop in reserves confirms expectations of ruble depreciation, and will be viewed by the market as negative news. Natalia Orlova

Business, Energy or Environmental regulations or discussions

OAO GMK Norilsk Nickel, OAO Rosneft: Russian Equity Previewhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9_ZZqNN3mZU

By Maria Ermakova

July 17 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses, and share prices are from the previous close.

The 30-stock Micex Index fell 0.3 percent to 938.73 in Moscow. The RTS Index climbed 1.7 percent to 903.23.

OAO GMK Norilsk Nickel (GMKN RX): Copper prices fell for the first time this week. Russia’s biggest miner lost 0.3 percent to 2,755.67 rubles.

OAO Rosneft (ROSN RX): Crude oil rose to a one-week high as equities climbed and economist Nouriel Roubini said the recession will end this year. Russia’s biggest oil producer added 0.3 percent to 167.75 rubles.

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

Last Updated: July 16, 2009 22:00 EDT

JULY 17, 2009

Third Senior Banker Leaves Troika Dialog Brokerage http://online.wsj.com/article/SB124778410178154403.html?mod=googlenews_wsj

By JASON CORCORAN

MOSCOW -- The head of sales at Troika Dialog has become the third senior banker at the Russian brokerage to step down in less than three months.

Gerrit Heyns, who has stepped down from his position after joining Troika in 2002, follows the resignation of the firm's chief executive for the U.K. division, Howard Snell, and the departure of Giedrius Pukas, the managing director of Troika Capital Partners in late May.

A Troika Dialog spokeswoman said Mr. Heyns hadn't left the firm and would be retained in some capacity. "Gerrit has gone on a kind of academic leave," she said. "There's no arrangement yet. He has gone away to think about his future but he is still with Troika."

Troika Dialog entered a strategic alliance with South African bank Standard Bank in March after selling a 33% stake in itself for $200 million and is reorganizing its business lines to integrate it with the Standard's Moscow-based operations.

Mr. Heyns, who is one of the senior partners at Troika, is one of the most experienced and well-known bankers in Moscow.

Prior to joining Troika, he helped to establish the equity business of Kleinwort Benson in Asia as its first head of equity sales in Hong Kong. He later joined Lehman Brothers to establish and manage an institutional equity sales team as its head of sales and went on from there to be head of sales for J.P. Morgan Securities.

He began in the equity broking business in Bangkok as a salesman and then head of sales with Crosby Securities, which later became SocGen Securities Asia.

He couldn't be reached for comment.

Russian banks are hiring in numbers as domestic corporates queue up to issue new debt. After a 10-month break, the euro-bond market has been pried open for Russian issuers by OAO Gazprom and Russian Agricultural Bank, which recently raised a combined $3.25 billion on it.

Assets frozen in RBC-Rosbank management and shareholder rowhttp://www.businessneweurope.eu/dispatch_text9128 UralSibJuly 17, 2009

Rosbank asset management protests reshuffling of subsidiaries. The Moscow Arbitration Court froze several stakes in RBC (RBCI - Sell) subsidiaries, which have recently been reshuffled within RBC, Vedomosti reported today. The freeze was made following a claim by Rosbank Asset Management, an 11% stakeholder in RBC. The freeze further complicates relations between RBC's shareholders, management and creditors and reduces the chances of an amicable restructuring of RBC's debt load.

Complicated debt situation. RBC's debt load is estimated at $220 mln, and the company has already failed to repay part of its debt obligations on time. RBC seeks to restructure its debt obligations by converting them into two bond issues due in 2012 and 2014, but reportedly only half of creditors have agreed to the scheme so far. In the meantime, RBC transferred stakes in some of its key subsidiaries to other subsidiaries. RBC claimed this was a reshuffle of assets within the group. However, the move may raise concern among creditors and shareholders over the potential stripping of assets.

BRIEF-Russia's Mosenergo doubles Q1 profit y/yhttp://www.reuters.com/article/rbssUtilitiesElectric/idUSLH42806520090717

Fri Jul 17, 2009 2:12am EDT

MOSCOW, July 17 (Reuters) - Mosenergo (MSNG3.MM: Quote, Profile, Research, Stock Buzz):

* Posts net profit of 4.7 billion roubles ($146.7 million) for first quarter 2009, up 117 percent year-on-year

* Revenues up 22 percent year-on-year to 37.9 billion roubles

* Company controlled by Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) (Writing by Toni Vorobyova)

Mosenergo: Reiterating Bullish Stance on the Stock http://www.businessneweurope.eu/dispatch_text9128

CitiJuly 17, 2009

Strong electricity demand in Moscow region - Electricity consumption in Moscow region increased 2.2% yoy in 1H09, while electricity consumption contracted 6.8% yoy in Russia as a whole, which suggests that no impact from the recession is likely to be seen in Mosenergo's operating activities.

Flexibility in the investment programme - Gazprom's representatives indicated that the next stages of the investment programme for its gencos will only be implemented after the long-term capacity market model is developed and approved by the government (expected this year), so that NPV of the projects can be calculated. Unless the capacity market rules are approved, the investment programme is limited to the mandatory projects, which are at the final stage. Thus, either Mosenergo will become FCF positive as soon as next year, or the company will finance projects only with positive NPV, which should also be value accretive for minorities.

Undervalued to global peers - Mosenergo trades at US$165/kW EV per installed capacity and US$150/kW MCap per installed capacity, which are 75% and 90% discounts to global peers respectively.

Potential catalysts - (a) Approval of the long-term capacity model later this year; and (b) tomorrow's IFRS 1Q09 financials. We would pay attention to the net debt levels and profitability, which might be high both seasonally and yoy, as gas prices rose only 5% in 1Q, while electricity prices on the regulated market (c70% of Mosenergo's deliveries in 1Q) increased by 14% yoy.

Russian Steelmakers Set To Avoid Worst of Tariffshttp://www.themoscowtimes.com/article/600/42/379580.htm

17 July 2009 By Alfred Kueppers / Reuters

Mounting pressure on governments to impose protectionist tariffs is not likely to halt surging Russian steel exports because widespread foreign demand can blunt the impact of scattered import duties.

A sharp slowdown in global trade has also made it difficult for countries to prove domestic producers are under threat from imports, even though an increasing number of governments are considering tariffs.

The London-based Iron and Steel Statistics Bureau says global steel production fell 22 percent year on year in January through May, while exports by the world’s top 10 exporters dropped 30 percent in the first quarter.

“We’ve seen a slowdown in global trade and I don’t think there is any question that this makes it more difficult for domestic industry in the U.S.A. and elsewhere in the world to file dumping cases,” said David Phelps, president of the American Institute for International Steel.

Ordinarily, tariff actions increase during recessions as politicians respond to pressure from local industries to preserve jobs by blocking foreign competitors’ access, and from Washington to Beijing, anti-dumping investigations and other measures are on the rise.

In May, the WTO noted that anti-dumping investigations rose 17 percent year on year in the second half of 2008.

While some analysts argue that the situation is destined to change as the global downturn worsens, Morgan Stanley’s Dmitry Kolomytsyn maintains that Russia, the world’s fourth-largest steel producer, will continue to thrive.

“Risk remains but is less of a concern given the wide dispersion of Russian steel exports across countries and continuing hesitation on the part of some governments to increase duties,” he said, adding Iran, Turkey and Taiwan were Russia’s top export markets for long steel in the first quarter.

In recent months, almost every major Russian steel producer has announced that first-quarter exports increased compared with the fourth quarter.

Some analysts, however, are convinced that the pace of Russian steel exports to China could raise hackles among domestic producers there.

Thus far, China’s sole move has been a June investigation into Russian and U.S. electrical steel, though a recent Citibank report cited industry newsletters reporting that Beijing had also ordered a probe of Russian flat steel imports.

“It’s surprising that Russian steel exports have endured as long as they have, and we still question whether it is sustainable,” said Michael Kavanagh, UralSib senior metals and mining analyst.

“Don’t be surprised when the Chinese producers scream to the government for protection.”

But Morgan Stanley’s Kolomytsyn said that, despite recent inroads, Russian steel exports remain a small part of the overall Chinese market.

“Russia is selling nothing compared to how much China is consuming or producing,” he said, adding that this makes it difficult for Beijing to make a successful anti-dumping case.

MMK Sees Signs of Recovery on Steel Markethttp://www.themoscowtimes.com/article/600/42/379579.htm

17 July 2009 By Nadia Popova / The Moscow Times

MAGNITOGORSK, Chelyabinsk Region — Magnitogorsk Iron & Steel Works, or MMK, said Thursday that it saw encouraging signs of a recovery on the steel market, but the company is also preparing for a dip in demand later this year.

“We see some reasons for the revival of demand on the market. The bottom has been reached, and now we are seeing a rebound” Vladimir Shmakov, MMK vice president for sales, said at a news conference organized for a small number of reporters.

“We have felt some revival beginning this month, and we expect it to go on like that in August,” he said.

But he also said he expected some slowdown in the fall. “We expect some slowdown on the market in the third and fourth quarters,” Shmakov said. “But we certainly do not expect a second wave of the crisis. We will never go back to that bad satiation we all found ourselves in during the fourth quarter of 2008.”

Many Russian steelmakers were loss-making in late 2008 and early 2009.

MMK, now Russia’s biggest steelmaker by volume, will produce 830,000 tons of steel in July and will keep production at that level in August, Rafkat Takhautdinov, vice president for strategic development, said at the same news conference. MMK produced 1.9 million tons of steel in the second quarter, and it expects to produce 8.4 million to 8.5 million tons of finished products this year, down from 10.9 million in 2008, he said.

“We see exports and domestic prices rising as the demand grows,” Shmakov said. “We mainly export hot-rolled coil to the Middle East and Europe and sell mainly hot-rolled coil and rolled section in Russia.” MMK sells two-thirds of its products in Russia.

Takhautdinov said MMK was not planning acquisitions this year and would concentrate on current projects.

The company’s biggest project is a massive plate-steel plant, known as Steel Mill-5,000, which Prime Minister Vladimir Putin is expected to open July 24 when he travels to Magnitogorsk for an annual meeting with all of Russia’s major metals producers. The mill — which will make plates of up to 4,850 mm in width that are used by the pipe industry, ship builders and for bridges — will produce 300,000 tons by the end of the year. MMK has invested 40 billion rubles ($1.26 billion) in the project.

MMK is also going to open a second color-coating mill next week, which will have an annual capacity of 200,000 tons, as the demand for the product has exceeded the supply, the company said.

“Polymer-coated steel is in high demand, despite the crisis,” Alexander Raskopov, who led construction of the polymer-coated steel mill, said at the production site. “We currently produce 17,000 to 18,000 tons of color-coated steel per month, while we get orders for 29,000 tons.”

MMK chief financial officer Oleg Fedonin said the second quarter was better than the beginning of the year. Revenue in the first half of 2009 by Russian accounting standards amounted to 56 billion rubles, with sales totaling 9 billion rubles, he said.

MMK has repaid a 5.8 billion ruble loan to Gazprombank and is going to begin talks on early repayment of 4 billion rubles to VTB and 6.5 billion rubles to Sberbank, Fedonin said.

 The company’s current net debt stands at $965 million,  Fedonin said.

MMK’s MICEX-traded shares rose 6.8 percent Thursday after Bank of America-Merrill Lynch named it as a top pick in the Russian coal and steel sector, Bloomberg reported.

In line with the overall market optimism, Novolipetsk Steel, or n NLMK, said Thursday that its second-quarter finished product output rose 18 percent quarter on quarter to 2.5 million tons.

“At the end of the second quarter, demand improved both in the domestic and export markets with a corresponding revival in the pricing environment,” NLMK said in an e-mailed statement.

“[The domestic increase] in demand is primarily driven by consumer restocking coupled with a seasonal revival in the construction sector,” NLMK said. “We also expect higher demand in the export markets as orders in July and August improved.”

TMK announces H1 2009 production resultshttp://steelguru.com/news/index/2009/07/17/MTAyNjAw/TMK_announces_H1_2009_production_results.html

Friday, 17 Jul 2009

OAO TMK one of the world’s largest oil and gas pipe producers and the market leader of the Russian pipe industry announces its production results for the 1st April to 30th June 2009 period.

For the first six months of 2009, TMK shipped a total of 1,203,000 tonnes of pipes to customers, a 20% decrease on the amount shipped over the same period the previous year.

Product 2009 2008 Change

Seamless pipes 765 985 -22%

Including OCTG 450 460 -2%

Welded pipe 437 511 -14%

Including OCTG 48 24 100%

Total pipes 1,203 1,495 -20%

In ‘000 tonnes

The decrease in pipe shipments was mainly related to the weak market demand observed in the first and second quarters of the year. The Company estimates that the Russian pipe market declined by 34.8% in the first half of 2009 as compared to H1 2008.

Despite the weak pipe market, the Company increased shipments of high-margin OCTG products by 3% and premium connection shipments grew 47% to reach 61,000 tonnes, allowing TMK to strengthen its leading position on the Russian oil and gas pipe market. The Company had an estimated 71% seamless OCTG market share in Russia in the first half of the year.

In the second quarter, TMK increased pipe shipments by 7% as compared to the previous three-month period, mainly as a result of its new longitudinal welded large-diameter pipe capacity. TMK secured longitudinal welded LD supply agreements for Gazprom’s Bovanenkovo Ukhta pipeline, Transneft’s Eastern Siberia Pacific Ocean oil pipeline and projects in Central Asia.

The Company expects further growth in large-diameter pipe demand in the second half of the year with the implementation of the Sakhalin Khabarovsk Vladivostok and Baltic Pipeline System 2 pipeline projects. Demand growth is also expected in the CIS as state-

owned oil and gas companies in Uzbekistan, Turkmenistan and Kazakhstan invest in the development of oil and gas fields and related infrastructure.

TMK expects to continue increasing shipments of LD pipe thanks to its recently launched longitudinal welded capacity which allows the Company to successfully participate in large-diameter supply tenders.

Russian mining industry showing some signs of recoveryhttp://www.miningweekly.com/article/russian-mining-industry-shows-some-signs-of-recovery-2009-07-17

By: Keith Campbell17th July 2009

Last December, the Russian mining industry felt beleaguered by the global recession. That month, Norilsk Nickel CEO Vladimir Strzhalkovsky issued an appeal to the Kremlin. “The industry is in a very difficult situation now. The revenues of Norilsk Nickel alone will drop 50% [in 2009]. Besides, we are losing in terms of competition, as our rivals don’t pay export duty on nickel and copper. In Russia, it stands at 15%, so we ask you to abolish it.”

Nickel prices had fallen to around a third of their peak in February 2008, and Russia’s third-largest nickel producer, Ufaleynickel, had stopped production in October as a result of the low prices the metal was fetching. In response, in January, the Russian government cut its export duties on nickel and copper, a move that was expected to save the affected companies up to $300-million this year.

It has been calculated that the Russian mining sector contracted by 5% in real terms in 2008.

The predicament of a number of the country’s biggest mining and related metals companies was such that, in January, there was a widely reported plan to merge them, and have the Kremlin take a 25% share in the resulting group in return for writing off their collective debts, which came to more than $27-billion, most of which was owed to State-owned banks. The companies proposed for this megamerger were Norilsk Nickel, potash- miner Uralkali, iron-ore-miner and steel producer Metalloinvest, and steel groups Evraz and Mechel. Had the megamerger gone through, it would have created a group with a market capitalisation of between $70- billion and $100-billion, sales of $60-billion, and earnings before interest, tax, depreciation and amortisation of $23-billion.

But it did not happen. Reportedly, the idea was vetoed by the Russian government, apparently because it did not wish to take on the accumulated debts of the companies concerned.

So, what is the state of the Russian mining sector today? That is connected to the state of the Russian, and the wider world, economies.

Russian Economy Blues

Russia is still mired in a deep recession. In the first quarter of 2009, the economy contracted by 9,5% in year-on-year terms, with industrial output falling 15%. It is predicted that the country’s economy will shrink by 8,5% this year.

Inflation reached almost 15% late last year, and this, along with concerns about major capital outflows from the country, caused the central bank to put up interest rates. As a result, inflation has come down a little (it is forecast to remain above 13% for much of this year) but the cost to many Russian companies of borrowing money has shot up from 8% to 25%. Also, the country has failed to develop its own financial markets, with the result that both major State- and private- sector-owned companies rely heavily on loans from foreign creditors, racking up almost $500-billion in foreign debt.

The financial crisis in the wider Western world has almost closed the credit tap for Russian business. Although the Kremlin has injected massive amounts of money into the country’s banking system, loans are still difficult to obtain. There are reports that Russian companies have reverted to bartering to trade among themselves (a trading system that was common in the country during the 1990s).

Foreign investment continues to be hampered by a weak and unreliable legal system, political interference (often at local, not national, level), bureaucratic indifference, and corruption. In the latest World Bank survey on how easy it was to do business in countries, Russia was ranked at 120 out of 181 countries – Nigeria had a better ranking.

The country does, however, have foreign reserves of $380-billion, carefully built up from oil revenues during the recent boom years, which gives Russian enough money to pull through the recession. And the country also has liberal business regulations and low taxes, which help local companies survive and make profits, despite the tough environment.

Further, the oil price has rebounded, to between $60/bl and $70/bl, from an average of $49/bl in the first half of the year. The Russian budget is predicated on an oil price of $41/bl, and 90% of oil revenues above $25/bl are taken by the State in taxes. Not only does the country remain heavily dependent on oil and gas, it is, if anything, more dependent on these hydrocarbons than it was at the turn of the millennium.

Resource-Rich Russia

Russia is, geographically speaking, the largest country in the world, with a total area of 17 075 200 km2, roughly equivalent to 1,8 times the size of the US. Unsurprisingly, then, the country has a huge resources base. Back in 2003 (there does not appear to be a more

recent published figure), the value of Russian explored mineral resources was estimated to be $10-trillion and that of its unexplored resources at a minimum of $200-trillion. However, many of these are in places that are hard to access or in deposits that are difficult to exploit.

So far, some 20 000 mineral deposits have been explored. More than a third of these are now being mined or developed, but while these account for more than 70% of the country’s metals and minerals reserves, they encompass a mere 5% of Russia’s explored metals and mineral resources.

The country is the world’s biggest producer of natural gas (about 25% of global production) and the second-biggest exporter of oil (Russian oil production is about 10% of total world production). It is also responsible for 20% of global nickel and cobalt production, 5% to 7% of world coal production, 7% to 8% of global iron-ore production, more than 10% of world tungsten, and 12% of the globe’s potash, production, along with significant production shares for non-ferrous and rare earth metals, platinum-group metals, and diamonds.

Russia reportedly hosts 33% of the world’s natural gas reserves, more than 10% of global oil reserves, 11% of world coal, and 26% of global iron-ore reserves. Other metals and minerals that the country possesses and produces include antimony, barite, bauxite, chrome, copper, fluorspar, gold, lead, mag-nesium, manganese, mercury, mica, molyb- denum, rhenium, niobium, phosphates (including apatite), salt (sodium chloride), scandium, silver, strontium, talc, tantalum, tin, titanium, uranium, yttrium, zinc and zirconium.

Russian Miners

There are believed to be some 130 mining companies active in Russia, a figure that includes foreign as well as Russian companies. What follows can only be a snapshot of such a large sector. The list of Russian mining and hydrocarbons companies includes some that are undoubtedly global majors, a group that comprises both private-sector and State-owned companies.

Gazprom, the natural gas giant that holds 17% of the world’s, and more than 60% of Russia’s, natural gas reserves, is such a global major. One of the ten biggest energy com- panies in the world, it is 50,002%-owned by the Russian State, and its aim is to become a leading global energy company.

In his statement to shareholders at the company’s annual general meeting (AGM) on June 26, Gazprom management committee chairperson (and deputy chairperson of the board of directors) Alexei Miller stated: “The global financial and economic crisis hasn’t bypassed Russia and its energy industry. Nevertheless, on [sic] the background of the unfavourable financial and economic trends worldwide, our company has again shown high reliability, stability, and potential for sustainable development. We use all the

advantages of vertical integration for responding with promptness and flexibility to changes in the market situation . . . . Our present-day task is to retain the accumulated potential and not to lose new opportunities emerging in the period of crisis. Crisis is a flexibility test.”

Last year, the company increased its A+B+C1 gas reserves by 11% and its oil reserves by 6%. Last month alone, Gazprom signed a $2,5-billion deal with Nigeria’s State-owned NNPC to create a joint venture company to be called Nigaz, that will build refineries, pipelines, and gas-powered power stations in the African country, and a deal (value undisclosed) with Azerbaijan to import 500-million cubic metres of natural gas from the Central Asian country and then export it to Europe.

Russia’s largest oil company, Rosneft, is another leading State-owned minerals com- pany, with the Kremlin holding 75,16%. Despite the recession, the company enjoyed excellent results for 2008 and, at its June 19 AGM, was able to announce a dividend to shareholders that was 20% higher than the dividend for 2007. However, its net income for the first quarter of this year, which amounted to $2,06-billion, was a decrease of 50,7% in comparison with figures for the first quarter of 2008, although a 165,8% increase in relation to figures for the last quarter of last year.

Company president Sergei Bogdanchikov commented during the first quarter: “Rosneft demonstrated outstanding flexibility in managing costs and product flows . . . . Throughout 2009, we will continue to focus on cost improvements, net debt reduction, strategic projects . . . and further progress with government on tax and monopoly tariff reform.”

On June 9, Rosneft was able to announce that it had repaid a $1,85-billion loan that it had taken out almost a year earlier from a syndicate of international banks. Between the end of September 2007 and the end of March 2009, the company was able to reduce its net debt by more than $8,5-billion to $19,2- billion, and Rosneft recently signed a 20-year, $15-billion loan agreement with the China Development Bank.

Russian diamond major Alrosa, which is majority-owned by the Russian State, and which is the world’s number two producer of the gems, with a 25% share in the world diamond market, has been able to meet its operation targets only because it was able to sell rough diamonds to the Gokhran agency. Gokhran is the Russian State’s diamond, jewellery, and precious metals depository and is a branch of the Ministry of Finance. Indeed, for the four months from December 2008 to March 2009, Alrosa sold its entire rough output to Gokhran.

Speaking to the Interfax news agency in April, Alrosa president Sergei Vybornov affirmed: “I believe that there is a very good outlook in terms of demand for Russian rough . . . . As soon as we feel upturn trends in the market – and here I mean Russian rough – we shall just increase the number of long-term clients. Maybe we shall sell something on the spot market, but the amount will hardly be great.”

Russia’s leading private-sector mining company is Norilsk Nickel. It is the world’s number one producer of nickel (18,8% of global output) and palladium (46,3%) and is the fourth-biggest producer of platinum (12%), while its share of world copper production is 2,7% (these figures are all 2007 estimates). As by-products to these metals, it also produces cobalt, gold, iridium, rhodium, ruthenium, selenium, silver, sulphur and tellurium. It has functional operations in Botswana, Finland, South Africa and the US, as well as in Russia, but its operations in Australia have been suspended “for an indefinite period” because of the global recession.

Total group revenues for 2008 came to $13,98-billion, a decrease of 18% in comparison with 2007 revenues, which were almost $17,12-billion. Last year was the first in which the group made a loss.

In terms of physical volumes of metals sold, the 2008 figure for copper was down 5% in comparison with figures for 2007, the figure for palladium was down 7%, platinum was down 18%, and gold down 15%. The physical volume of nickel sales fell only fractionally: 287 000 t was sold in 2008 compared with 288 000 t in 2007.

However, the revenues gained from nickel dropped by 40% in 2008 in comparison with figures for 2007. Nickel sales accounted for 51% of the group’s total revenues last year. Copper sales contributed 25% of total revenues and were down 2% in value compared with figures for 2007. Palladium’s share was 11%, and the revenues gained by this metal were down 3% on those for the previous year. Norilsk was also hit by impairment charges of $4,7-billion.

Still, Strzhalkovsky was able to tell the shareholders at the AGM on June 30 that Norilsk had returned to profit during the first half of this year, and that he expected the company to achieve revenues of $7,5- billion to $8-billion and core earnings of $1,8-billion to $2-billion this year. He also revealed that Norilsk was on the acquisition trail again. “The funds from the sale of utility assets could be spent on the purchase of a certain core asset,” he said, without identifying the likely target.

Meanwhile, Ufaleynickel resumed nickel production at the start of February. Its shutdown had lasted three months.

Another private-sector mining major in Russia is Metalloinvest. This company is the fourth-largest iron-ore-miner, and possesses the largest iron-ore deposits in the world. It is also Russia’s number five steelmaker.

Last month, the company signed a licence agreement with the Russian Subsoil Agency (also known by the acronym Rosnedra) to develop the Udokan copper deposit. (Rosnedra is an agency of Russia’s Federal Ministry of Natural Resources.)

And early this month, it was reported by Russian business newspaper Vedomosti that Metalloinvest had reached an agreement with some of its creditors for a four- to five-year extension on the repayment of $2,2-billion in debt. The newspaper added that

Metalloinvest’s total debt was some $5,4-billion to $5,5-billion, of which $1,5- billion was scheduled to be repaid this year, and that the company was in talks with other creditors to repay its debts once the steel markets recovered. A spokesperson for the company would only say that “consultations are under way with financial institutions”.

Uralkali is the world’s largest, publicly traded, purely potash-mining company. Speaking at the company’s AGM on June 30, CEO Vladislav Baumgertner stated: “[The year 2008] was a difficult and complex year for our company . . . In the first nine months of 2008, world demand for potash fertiliser grew consistently . . . . However, the global economic downturn . . . had an effect on everybody. Our production has slowed down, and we are prepared to respond to a market situation that will continue to remain unstable for some time. Under these conditions, our priorities are to preserve jobs and the company’s workforce capacity, [as well as] reduce costs and [optimise] expenses.”

On July 9, Uralkali was able to announce a 12,5% pay increase for its employees, effective from August 1. Board of directors chairperson Dmitry Rybolovlev stated: “Uralkali’s staff is the foundation of the company, its core asset. Retaining our personnel, we will be able to see the crisis through.”

These companies, although industry majors, are far from the whole of Russia’s mining industry. Thus, there is the State- owned uranium-miner, Atomredmetzoloto, which, in November last year, announced plans to invest $5,9-billion by 2015 to expand its operations. And private-sector Polyus Gold, Russia’s biggest gold-miner, producing 38 t of the yellow metal in 2008, in January signed a deal with Canada’s Kinross Gold to develop the Nezhdaninskoye project, in Yakutia, Russia.

Overall, the Russian mining industry is expected to contract again this year, although only slightly. From next year, it is forecast to return to growth, and consultancy MarketResearch.com expects the Russian mining industry to be worth $175,8-billion in 2013.

Edited by: Martin Zhuwakinyu

Yamal is Getting Ready for Construction of Strategic Mainlinehttp://www.rusbiznews.com/news/n412.html

16.07.2009 — News

The Salekhard-Nadym railway construction will begin in 2010 in Yamal, the line will become a part of the transport infrastructure of the Industrial Urals - Polar Urals project. Partially it will recreate the road built by the Stalin camps prisoners in the forties and fifties of the last century.

The subpolar transcontinental line, according to the USSR leaders was supposed to go from the Urals to Chukotka and connect Russia with America. A thousand kilometres of railway had been laid by 1954. The project stopped with Stalin's death.

The YaNAO Government informed RusBusinessNews that the new line 376 kilometres long will be completed in five years. The estimated cost of the project is 65.5 billion roubles.

St. Pete Airport Deal Signed

http://www.themoscowtimes.com/article/1009/42/379593.htm

Fraport said Thursday that it signed an initial agreement on operating and developing Pulkovo Airport.

The memorandum of understanding outlines terms for Fraport taking over running the airport in 2010 should it win the final contract, the company said. (Bloomberg)

Local Real Estate Prices Sink to Three-Year Lowhttp://www.times.spb.ru/index.php?action_id=2&story_id=29455

By Irina TitovaThe St. Petersburg Times

Prices for new build real estate in St. Petersburg have dropped to as little as 50,000 rubles ($1,580) per square meter, bringing them down to 2006 levels.

The first major developer in the city to offer such a price was LEK, Delovoi Peterburg reported.

Pavel Andreyev, head of LEK, said the decrease in prices was made possible due to lower costs, including production costs, cost of contractors’ work and use of barter schemes, the newspaper reported.

Andreyev said the company was not currently thinking about profits.

“Today our cost price is equal to the price that we sell the objects for,” he said.

The policy of such a large company has influenced the market as a whole, with some other construction companies also beginning to lower their real estate prices. Among the residential buildings planned for completion and permitting in 2009, there are price offers of 52,000 to 53,000 rubles ($1,640 to $1,670). Until recently, such prices were only offered in the city for projects at the initial stage of construction, Delovoi Peterburg reported.

Lenspetsstroi construction company is prepared to sell its new build housing planned for completion in 2010 to 2011 for 47,300 ($1,480) rubles per square meter, Vedomosti daily reported.

Local real estate agency Arin said that since the beginning of 2009, the price for a square meter of new build real estate decreased by 12 percent, and by 15 percent on existing real estate.

Zosya Zakharova, an analyst at ARIN, said the market had not yet hit the bottom, and that the city can expect a further decrease in costs per square meter of real estate, Vedomosti reported.

According to ARIN’s data, during the second quarter of the year the average city price for a square meter was 62,249 rubles ($1,965) in economy-class apartments, 66,966 rubles ($2,110) in comfort-class apartments, and 156,886 rubles ($4,950) in elite buildings.

The current tendency may lead to the fulfillment of President Dmitry Medvedev’s dream of real estate that costs 30,000 rubles ($950) per square meter.

Nikolai Pashkov, director for professional activities at Knight Frank Consultancy, told The St. Petersburg Times that in a pessimistic scenario, prices for real estate in St. Petersburg may drop to the level of 2005 to 2006 when they stood at $1,000 to $1,200 per square meter.

“This may happen if the macro economic situation gets worse in the event of a second wave of the economic crisis,” Pashkov said.

Pashkov said that even the lower prices on the city’s real estate market were not attracting many more clients.

“This is the effect of the expected dynamics, when people expect that prices may fall even lower,” he said.

Pashkov said the fall in real estate prices “was conditioned by a decrease in the population’s income and narrowing of opportunities for construction companies, through a deficit of financial resources, say.”

The volume of new build real estate is also decreasing in St. Petersburg. According to statistics from the city’s construction committee from January through May this year, 681,000 square meters of real estate became available, — 72,000 square meters less than for the same period last year.

Arin’s data for the first quarter of 2009 showed that 300,000 new build square meters (5,000 apartments) were sold in the city, whereas this index before the crisis was three times higher, Vedomosti reported.

Leonid Sandalov, deputy head of Becar real estate agency, said that today clients mainly look for either economy class apartments or elite real estate. Previously, demand was

distributed fairly equally among all classes of real estate. Currently, business-class apartments are seeing very low demand, he said.

Experts say most potential clients have been affected by a decrease in their income and reduced chances of getting a mortgage.

St. Petersburg Mortgage Agency said that in the first quarter of this year, only 693 mortgages were issued in the city, compared to 5,461 loans last year.

Dairy prices in Russia won't rise more than 5%-7% by Oct - Dairy Unionhttp://www.interfax.com/3/506263/news.aspx

MOSCOW. July 17 (Interfax) - Prices on dairy products in Russiawill rise by no more than 5%-7% by October, the executive director ofthe Russian Dairy Union, Vladimir Labinov, predicted. Labinov believes the dairy product market is stabilizing."Consumption volumes are rising. That is vividly demonstrated by theincrease in milk production," he said. Since the beginning of the yearcheese production rose 9% and imports fell 7%. "It's clearly importreplacement. There is a trend toward increases in consumption of our ownproduction," he said. "Russian producers are ready to replace imports," said AndreiDanilenko, the CEO of the National Union of Milk Producers. The Agriculture Ministry will allocate 3 billion-5 billion rublessoon for implementation of select regional programs to boost milkproduction. Another support measure was the increase of the import duty dairyproducts effective March 6 for nine months. The import duty on milk,cream and condensed milk was raised to 20% from 15% of its customsvalue, while the duty on butter and other milk fats rose to 15% of thecustoms value but no less than 0.35 euro per kilogram, compared with 15%but no less than 0.22 euro per kilogram previously.

Unexpected amendments to draft on trade law http://www.businessneweurope.eu/dispatch_text9128

UralSibJuly 17, 2009

Unexpected negative surprise. Yesterday, unexpected changes were made to the draft law on trade that was approved by a government panel earlier this week. The new amendment will restrict trade chains with sales turnovers in excess of $31.6 mln from constructing or acquiring new trading premises if sales exceed 25% of the total retail within a city district or municipal community. The previous version of the bill, passed to the Duma earlier this week, had no dominant position or 'monopoly' threshold for retailers on local markets.

Managers and owners of retailers are furious. According to Vedomosti, X5 Retail Group's (Five - Hold) CEO, Lev Khassis, believes these changes are absurd and they will impede the retailer's development and expansion. Sergey Galitskiy, a shareholder in Magnit (MGNT - Buy) claimed that the company will be unable to develop in small cities where Magnit's share already exceeds 25%.

Negative for expansion plans. This change to the law on trade, if passed, would be negative for all large retailers such as Magnit, X5 Retail Group, and Dixy, which pursue strategies of fast expansion. Magnit has already opened 226 new stores in 2009. But we note that this is not the final version of the law and there is still some time for additional changes to be made. A new law is expected to be enforced this autumn.

Natalia Smirnova

Russia retail law seeks to cap grocers' growthhttp://www.forbes.com/feeds/afx/2009/07/16/afx6662872.html

07.16.09, 10:30 AM EDT

By Maria Kiselyova and Maria Plis

MOSCOW, July 16 (Reuters) - Russia's government, which came to the aid of top food retailers in hopes they would mop up weak rivals in the crisis, is now putting the brakes on growth in a new draft law, a copy of the bill showed on Thursday.

Prime Minister Vladimir Putin paid a surprise visit last month to a supermarket run by Russia's largest retail chain and scolded its management for charging too much for meat and sausasge. The chain immediately announced a 'grand sale'.

Ordinary Russians' purchasing power slumped in the country's first recession in a decade, which saw the rouble devalued, unemployment spike to 10 percent and real wages decline. Putin's government is keen to avoid public outrage at economic decline.

The bill stipulates food retailers with annual sales of more than 1 billion roubles ($31.21 million) or market share of more than 25 percent in Moscow, St Petersburg, or any given city district, cannot buy or lease additional trade space.

Yevgeny Fyodorov, head of the Duma Committee for Economic Policies, told Reuters the amendment was explicitly intended to rein in national retail chains.

'It is always better to have ten small Gazproms than one big one,' Fyodorov said, referring to the powerful Russian state gas export monopoly.

'The sector must develop...but it does not mean that we should have one chain for the entire country,' he said by telephone.

He said the draft law, submitted to the Duma lower house of parliament on Thursday, received the government's backing on Monday.

It was unclear how the bill would affect Wal-Mart ( WMT - news - people ), Carrefour and other aspirants to Russia's retail market, one of the fastest growing in the world until the crisis and still lacking in modern, Western style shops.

Earlier versions of the bill were based on industry consultations between suppliers and food retailers, who escaped outright price controls in the draft.

X5, MAGNIT PROTEST

The chief executives of Russia's two top food retailers, who have managed to staunch sales declines by opening new stores this year, decried the unexpected amendment to the bill and said they expected it would be changed during debate in parliament.

Lev Khasis, the chief executive officer of Russia's largest grocer by sales, X5 Retail Group, said the amendments were absurd.

'They are so absurd that I hope that the government will adjust them in accordance with common sense,' he told Reuters.

'It cannot be that they forbid us to open new stores and develop. The whole sense of the business is getting lost. It will hit the investment appeal of the retail business,' Sergei Galitski, the CEO of Magnit, said.

The Federal Anti-monopoly Service which, Fyodorov said, is backing the amendments, declined immediate comment.

X5 and Magnit, which is Russia's largest grocery chain by the number of stores, had sales of about $9 billion and more than $5 billion respectively in 2008.

They received a combined total of roughly 11.5 billion roubles in state bank loans and credit lines to help cope with the crisis.

(Writing by Melissa Akin and Maria Kiselyova; Editing by David Cowell)

($1=32.04 Rouble) Keywords: RUSSIA RETAIL/LAW

(maria.kiselyova@reuters.com, +7 495 775 12 42, Reuters Messaging: maria.kiselyova.reuters.com@reuters.net)

Activity in the Oil and Gas sector (including regulatory)

No quick revival for Russian gashttp://www.barentsobserver.com/no-quick-revival-for-russian-gas.4614209-16178.html

2009-07-16 Russian gas production will not be restored to 2008-levels until after year 2012, the country’s Ministry of Economic Development maintains.

Only few months ago, the ministry believed Russian economy would be fully up running again in 2012, and that Gazprom’s gas production that same year would total 570 billion cubic meters, which is four percent higher than in 2008.

Now, the ministry is down-grading its forecasts, newspaper Vedomosti reports. According to the ministry, Russia’s total gas production will in 2012 be only between 621-645 billion cubic meters which is 3-6 percent less than in 2008. Gazprom, which produces more than 80 percent of the Russian gas will that same year produce five percent less than in 2008, the ministry argues.

Russian gas production is this year expected to decline 12,5 percent. Gazprom’s production might drop even more. Some estimates include a 18 percent decline in output this year from last year's 549,7 billion cubic meters.

At the same time, exports shrink dramatically and revenues dry up. The tough times has made Gazprom postpone the launch of its Bovanenkovo field with one year. What will happen with Gazprom's second top priority project, the Shtokman field in the Barents Sea, still remains to be seen.

Until recently, Gazprom said it intended to increase output to 550–560 billion cubic meters by 2010, to 580–590 billion by 2020 and to 610–630 billion m3 by 2030.

16.07.2009

Russian Government Holds VAT Rate Steady, Raises Export Tariffhttp://www.oilandgaseurasia.com/news/p/0/news/5263

Russia cannot cut value added tax while the crisis puts a crunch on the country's public finances, and is unlikely to abolish oil export duty even in the medium term, Deputy Economy Minister Andrei Klepach said. "In our view during the crisis we cannot lower the VAT rates," Reuters quoted Klepach as saying. The VAT rate is currently at 18%.

The oil export duty, currently at $212.6 per tonne of crude, will rise to $222 per tonne in August.Russia exports the vast majority of its oil as crude due to the domestic refining shortage, hence the increase in the export tariff on crude while the VAT rate remains unchanged. If Lukoil and Rosneft promises to increase conventional and deep-cracking refining capacities materialize, the VAT tax could be revisited.Copyright 2009 Upstream Online. All rights reserved.

Ukraine: contract for Azeri gas supply to Russia will allow to understand pricinghttp://abc.az/eng/news_17_07_2009_36778.html

Baku, Fineko/abc.az.

Ukraine regarded with optimism Azeri gas sales to Russia.

Ukrainian ambassador Boris Klimchuk to Azerbaijan says that Ukraine welcomes sale of Azeri gas to Russia.

“We are going to understand price formation for gas export. We also welcome participation of industry & energy minister Natig Aliyev of Azerbaijan in Nabucco project discussion. Europe’s gas needs will increase 1.7 fold and that is why both pipelineы are necessary. Then gas will not be a political commodity as oil has been once, as it is unprofitable for any country’s citizens as consumers,” Klimchuk said.

Interview with Stroytransgaz CEO: Reasonable measures to turn the company aroundhttp://www.businessneweurope.eu/dispatch_text9128

RencapJuly 17, 2009

Yesterday (16 July) Vedomosti published an interview with Alexander Ryazanov, CEO of Stroytransgaz (STG), in which he highlighted plans to turn the company around. Our key takeaways from the interview are:

The company is cutting costs. Total headcount will be cut from 12,000-15,000 to 5,000 people. Salaries have been reduced by 50% from 1 July for all employees. STG is also cutting non-operating costs and perks, such as service vehicles, excessive mobile corporate services, corporate medical services as well as other services. Unused office space (10,000 m2) is now being leased to one of Gazprom's subsidiaries and will probably be sold sometime in the future.

Contract works for this year amount to RUB51bn, with international projects accounting for 55-56% of total sales. Among the major projects to be implements this year, Ryazanov mentioned a gas pipeline in Turkmenistan (part of Central Asia-China pipeline) for RUB14.6bn, a gas pipeline in UAE with works valued at RUB6.6bn this year, the Vankor field development valued at RUB6bn, and other oil fields development

for about RUB5bn. Contracts in the energy sector will bring the company RUB2.5bn, according to Ryazanov. STG expects RUB4bn of operating profit in 2009. The company's long-term plan includes sales growth to RUB70bn by 2013.

STG aims to win FSK UES' contracts (FSK UES' investment programme is planned at approximately RUB1trn for 2008-2012). In the oil sector, the company is targeting more contracts from its core clients, Transneft and Rosneft. STG recently won the contract for the construction part of the Baltic Pipeline System and wants to win contracts for ESPO's second pipeline. STG will also be bidding for contracts for development of Rosneft's oil fields in Eastern Siberia.

STG wants to sell non-core investments in oil and gas projects. Among the company's investments the largest are its joint stake with Rosneft in a project in Algeria (STG and Rosneft jointly own 60% and Sonatrach 40% of the Algerian project, oil resources are estimated at 415mn barrels of oil and 24.6bn m3 of gas), 50% in a large gas deposit Angaro-Lenskoye in the Irkutsk Region (reserves of C1+C2 are 1.2trn m3) and a 62% stake in CJSC Uralneftegazprom (an oil and gas company operating in the Orenburg Region). We mentioned earlier that the sale of these non-core investments can significantly improve STG's financial standing if sold at market price. Currently, STG is negotiating the sale of its stake in the Algerian project for $300mn to Rosneft. In the company's non-consolidated RAS accounts of STG's investments are reported as loans to affiliated companies, RUB5.7bn for the Algerian project, and RUB4.5bn for the Angaro-Lenskoye deposit.

All the key measures intended to turn the company around announced by Ryazanov sounded very reasonable to us. If the company sells its non-core investments at market prices, its debt burden, which reached RUB22.5bn as of 1Q09, could be reduced significantly. There is room for improvement in the company's operating results as well. STG's 1Q09 results were notably better than in 2H08. STG reported a RUB400mn operating profit in 1Q09 vs RUB4.9bn loss in 4Q08. However, STG's ability to continue to improve has yet to be tested. We are currently neutral on the STG-2 bond with maturity in 2012 and a yield in the low 20s.

Gazprom

Gazprom's gas output increased to 1,020mcm/dayhttp://www.businessneweurope.eu/dispatch_text9128

CitiJuly 17, 2009

Gazprom's output reached 1,020mcm/day at the end of last week, a level that is 12% higher vs. average output in June but still 21% lower YoY. The data may indicate that gas demand in Europe has started its recovery. We view the news as supportive both for Gazprom and Novatek and believe that Gazprom's production has bottomed out and it

should continue to rise during 3Q08.

Gazprom Neft lowers guidance on rouble bond –sourceshttp://in.reuters.com/article/oilRpt/idINLG36701220090716

Thu Jul 16, 2009 11:04pm IST

MOSCOW, July 16 (Reuters) - Gazprom Neft (SIBN.MM: Quote, Profile, Research), Russia's fifth biggest oil firm, lowered guidance on its 8 billion rouble ($250 million) bond after closing order books early on strong demand, sources close to the issue organisers said on Thursday.

Russia's domestic bond market was severely hit by the stock market collapse last year and rouble devaluation but has come back to life now due to solid demand from investors seeking to benefit from central bank rate cuts and a stronger rouble.

The coupon guidance is now set at 14.75-15.00 percent, two sources said, compared to a 15.00-15.75 percent range set earlier. The final price will be set before 1600 GMT on Friday.

The seven-year bond, which carries a three-year put option, was at least three times oversubscribed and the company closed order books on Thursday, one day ahead of schedule, they said.

Renaissance Capital and Gazprombank are arranging the issue.

In April, Gazprom Neft, the oil arm of gas giant Gazprom (GAZP.MM: Quote, Profile, Research), placed its debut 10 billion rouble bond with an annual coupon of 16.70 percent. [ID:nLH632334] ($1=32.04 roubles) (Reporting by Melissa Akin and Oksana Kobzeva; Writing by Maria Kiselyova; Editing by Greg Mahlich)

Bulgaria might buy gas from Blue Stream http://www.focus-fen.net/index.php?id=n187847

17 July 2009 | 03:39 | FOCUS News Agency Sofia. Bulgaria could buy natural gas from the Russian-Turkish gas pipeline Blue Stream, the executive director of Bulgarian Energy Holding EAD (BEH EAD) Galina Tosheva said. In her words, BEH had already talked to Gazprom on the matter, but no deal had been clinched that far. Bulgaria had other options as well – receiving gas via Greece. BEH had already filed the application papers with the European Commission (EC), seeking funding for the construction of the intersystem links with Greece and Romania, worth respectively EUR 45 million and EUR 10 million.

Bulgargaz-Gazpromhttp://in.reuters.com/article/oilRpt/idINLH64380020090717?sp=true

State gas monopoly Bulgargaz wants to receive gas supplies via the Blue Stream pipeline which carries Russian gas to Turkey as part of talks for new supply contracts with Russia's Gazprom (GAZP.MM: Quote, Profile, Research), the Bulgarian Energy Holding said (Dnevnik, Standart).

Ericsson to take charge of Zenit?http://www.russiatoday.ru/Top_News/2009-07-17/Ericsson_to_take_charge_of_Zenit.html/print

17 July, 2009, 10:47

Former England boss Sven Goran Ericsson could be heading for Russia. The Swedish specialist is tipped to succeed Dick Advocaat as coach of Zenit St. Petersburg.

Eriksson has been out of business since April when he was fired as Mexico coach after less than a year in charge.

And now he is reported to be in talks with former Russian and UEFA CUP champions Zenit.

The St Petersburg paper Fontanka quotes him as saying, “working in Russia could be a good option” for him.

Eriksson is expected to fill Advocaat's boots when he moves on to manage the Belgian national side after the end of the season.

Among other possible options for the St Petersburg side are Eric Geretz – former Olympique de Marseille, PSV Eindhoven and Galatasaray manager – as well as Juande Ramos, who was at the helm of Sevilla, Tottenham Hotspur and Real Madrid.