Russia 110912

Basic Political Developments Parallel Russian, U.S. missile defense systems may supplement each other –

Vershbowo "We are able to marry the NATO missile defense system with Russia"

Interview with the deputy Pentagon Alexander Vershbow Delegation of FC members to visit Syria with fact-finding mission - "The Russian

delegation will be led by FC deputy speaker Ilyas Umakhanov," Margelov said. He underlined that both the Opposition and Mrs Shaaban had supported the idea to send the mission.

o Syria backs Russian senators’ Damascus mission - Syria backs Russian senators’ Damascus mission

o Shaaban: the Russian stance stands by peoples' right and justice Japan regrets Russian official's recent trip to disputed isles -''Our country

considers a visit to the Northern Territories by a key Russian government official unacceptable,'' the chief Cabinet secretary said in a news conference, a day after Russian Security Council Secretary Nikolai Patrushev visited the islands of Kunashiri and the Habomai group of islets.

o Russian Security Council head visits Kuril Islands - The meeting focused on the construction of civilian and border infrastructure on Kunashir Island, Interfax reports. Patrushev visited several facilities of the Sakhalin unit of the FSB Coast Guard, including the frontier post on Tanfilyev island, closest to Japan.

o Russian Security Council chief Patrushev visits Kunashiri, Habomai Russia negotiates loan for Cyprus – Finance Minister: Cash-strapped Cyprus is in

talks for a 2-2.5 bln euro loan either from or set up through the Russian government – Source

o Cash-strapped Cyprus is in talks for a 2-2.5 bln euro loan either from or set up through the Russian government – Source

Iran Says First Nuclear Plant at Bushehr to Start Power Production Todayo Iran, Russia agree on more nuclear cooperation - Salehi spoke after

meeting with visiting Russian Energy Minister Sergei Shmatko. Salehi did not elaborate. Currently there are no plans for Russia to help build another plant.

o Iran, Russia prepare to launch first unit of Bushehr NPP - The ceremony to launch Unit One of the Russian-build nuclear power plant will be attended by Russian Energy Minister Sergei Shmatko and the head of Russia's Federal Agency for Atomic Energy, Sergei Kiriyenko.

o Russian high-ranking officials to visit Bushehr start-up ceremony - Taking part in the ceremony will by Russian Energy Minister Sergei Shmatko, the head of the Russian state-run nuclear power corporation Rosatom, Sergei Kiriyenko, Iran’s Foreign Minister Ali Akbar Salehi, the president of the Atomic Energy Organization of Iran Fereydoon Abbasi-Davani and Iran’s Energy Minister Majid Namjoo.

o Russian minister: We are proud of unique Bushehr N-projecto RF-Iran’s experience in Bushehr NPP to be used in future - Shmatko

BRITISH PRIME MINISTER DAVID CAMERON IN MOSCOW o British PM Cameron looks to melt tensions on Russia visit o Britain favors Russian accession to WTO – UK PMo Medvedev, Cameron to discuss visaso Cameron raises Litvinenko case in Moscow - Mr Cameron, in the first

speech given by a British prime minister on Russia soil since 2006, did not shy away from awkward subjects at the start of a one-day visit to Moscow, saying the rule of law was “vital” for foreign investment.

o Cameron Urges a Fresh Start in Russia Relations After Litvinenko Killing - By Robert Hutton and Henry Meyer

o David Cameron says Russia and UK must 'rebuild' relationship - In a speech to Moscow State University, Cameron broadly broached some uncomfortable issues for the two countries but his tone was conciliatory, saying he wanted to "rebuild" the relationship and put an end to the "tit-for-tat" behaviour of the two countries.

o Pressure on Cameron may have negative influence on his Moscow talks - David Cameron came under unprecedented pressure both from the Opposition - the Labor Party and his colleagues from the Conservative Party, the "Nezavisimaya Gazeta" writes. The opponents to the normalization of relations with Russia turned the premier's trip to Moscow into a subject of domestic political struggle.

o David Cameron to meet Russian leaders in Moscow o Vladimir Putin is the man David Cameron really needs to meet in Moscow

- David Cameron's main host when he visits Moscow on Monday will be President Dmitry Medvedev.

o FT: Cameron to focus on trade with Russia - Mr Cameron will be accompanied by William Hague, foreign secretary, as well as Lord Green, his trade minister, and a clutch of prominent business leaders including Bob Dudley, the chairman of BP, Ian Cheshire, the chief executive of Kingfisher, Peter Vosner, chief executive of Royal Dutch Shell and Sir Simon Robertson, the chairman of Rolls-Royce. By Elizabeth Rigby, Chief Political Correspondent

o David Cameron in Russia: aiming high in trade talks, despite warning - PM hopes to seal £215m in deals for UK but is urged by former foreign secretaries to raise corruption with Putin and Medvedev. Allegra Stratton and Miriam Elder in Moscow

o UK's Cameron meets Medvedev, Putin in rare visito UPDATE 1-British PM calls for more business with Russia - First visit by

British leader since spy poisoning in London; Expected to sign $345 million of business deals; Cameron urged to raise human rights issues (Adds Cameron comments)

o Cameron looks forward to good discussions on trade, foreign policyo Talks in Moscow – great opportunity to improve partnership - Cameron

o UK, Russia need closer ties – Camerono Kremlin Sees No Reset in Historic Cameron Visit - By Nikolaus von

Twickelo Russia, UK to explore cooperation potential – by Alexander Vatutino Kingfisher to open 9 new stores in Russia - UK PMo UK firms sign £200m trade deals as Cameron woos Russiao Medvedev to Propose Shell-Gazprom Expansion During Cameron Visito 'Similar challenges’ - British PM on one-day Moscow visito Ousted Moscow Mayor Living in U.K., Russian Ambassador Tells BBCo Russia takes stake in unusual British drug company - Anglo-Russian drug

firm Pro Bono Bio launchedo InterContinental Hotel Group to open 100 hotels in Russia and CIS by

2020 Gulfstream flying into Russian market - With its international order book

continuing to grow, Savannah-based Gulfstream Aerospace Corp. will bring three of its top-selling business jets to the sixth annual Jet Expo Russian International Business Aviation Exhibition next week near Moscow.

Moscow and Washington to Host Bilateral Open Government Codeathon for Civic Apps - Moscow and Washington to Host Bilateral Open Government Codeathon for Civic Apps

Medvedev to hold meeting on Lokomotiv Yaroslavl team futureo Detectives to question Yak-42 engineer when doctors allowo Russian ice-hockey plane crash survivor dies in hospital

Medvedev orders shutdown of airlines not ensuring flights safety Baikal Economic Forum underway in Irkutsk - The Baikal Economic Forum that

is held in Irkutsk for the 7th time has gathered parliamentarians, officials of relevant agencies and representatives of the business community.

o Proximity to APR to help Russia innovation market - FC official: The proximity to the booming Asia-Pacific Region (APR) will help develop Russia’s innovation market, this confidence was expressed on Monday by first vice-speaker of the Federation Council upper house of Russia’s parliament Alexander Torshin at the Baikal Economic Forum in Irkutsk.

Russian railroads chief partially wins defamation case "Islam Report Card" now available in Russian Reuters PRESS DIGEST - Russia - Sept 12

o www.vedomosti.ru o The paper runs an interview with Swiss Economy Minister Johann

Schneider-Ammann, who says Switzerland may sign a deal on free trade with Russia in the next year and a half.

o Russia's Economy Ministry proposes to privatize the state's 15 percent stake in Russian oil producer Rosneft in 2012, the paper writes.

o www.kommersant.ru o Despite promises from Russian President Dmitry Medvedev to find and

punish those responsible for security lapses that allowed a suicide bomber to kill 37 in a Moscow airport earlier this year, a subsequent investigation

did not find any transport officials to blame for the airport's lack of security, the paper writes.

o Russia has decided to bar from operation airlines that fail to meet safety standarts. Experts say passenger traffic will shrink by 40 percent, the paper writes. (Writing by Ludmila Danilova)

RIA Russian Press at a Glance, Monday, September 12, 2011 An air-defense commonwealth - The spread of new Russian ABM defense systems

in post-Soviet space is hampered by arms manufacturers Sergey Konovalov Why Medvedev Got Tough on Yanukovych - By Vladimir Frolov In Russian Leadership Battle, Medvedev Hints He Lacks Fire - By ELLEN

BARRY Russia Profile Weekly Experts Panel: Russia’s New Gas War with Ukraine This Week in Review - By Russia Profile Staff Atomic Ivan in love with the atom - In a unique public communication

project, Rosatom has lent its support to a feature film set at a nuclear power plant.  

National Economic Trends Gov't to cut borrowings this year - Domestic borrowings will be reduced to RUB

1.4 trillion (approx. USD 47bn) this year from RUB 1.7 trillion (approx. USD 57bn) planned earlier, Deputy Prime Minister and Finance Minister Alexey Kudrin told reporters on September 10.

Rouble at weakest since early 2011 vs dollar Wheat Rallying as Great Plains Drought Overcomes Surge in Russian Exports Rosneft to Lead in $40Bln Sell-Off - By Irina Filatova Sberbank privatization on hold Growing Efforts to Extract Healthier Dividend Payments from State-owned

Companies Russia balances budget by raising 2012 oil price forecast to $100

Business, Energy or Environmental regulations or discussions RTS, MICEX indices drop 1.4%-2% at market open Gazprom, Rosneft and Mosenergo: Russian Equities Preview Cross ownership between gencos and grids could be allowed New regulations will support the top-five Russian airlines UPDATE 1-Russia's Global Ports doubles H1 profit to $82.4 mln Summa May Build 2 Power Plants in Far East, Vedomosti Says State-owned MMTC keen on buying stake in Russian diamond miner Russian TV Ads May Cost 20% More Next Year, Kommersant Says CEO: Russia’s VimpelCom mulls closing DVB-H mobile TV project BRICKS & MORTAR: Russian real estate - back to the bubble

Activity in the Oil and Gas sector (including regulatory) Russian oil exports to non-CIS down 3.3% in 7mths TNK-BP plans no new oil refineries in Siberia, Russia's Far East

Hayward to step down from TNK-BP board Petronet likely to set up third LNG terminal in Dhamra port Nord Stream Will Deprive Slovakia, Ukraine of 20 Percent of Transit Revenue –

Fitch Nord Stream’s technological gas reaches Germany

o Tests of Nord Stream begin EU set to act on Caspian pipeline plan - A move to give Brussels the power to

negotiate a pipeline deal with Azerbaijan and Turkmenistan is expected to be agreed at a meeting of European Union ministers on Monday.

Gas field discovered off Azerbaijan - Total, the French oil group, has discovered a large gas field off Azerbaijan that will boost the European Union’s plans to import Caspian gas and diversify away from Russian energy supplies.

Rosneft Head Said to Be Out of Favor

Gazprom Gazprom, Shell may increase gas extraction under Sakhalin 2 project – Prikhodko

o Gazprom, Shell plan to increase gas production at Sakhalin-2 Gazprom arm rebrands and outlines further growth plans - The Manchester-based

European energy supply arm of Russia's state-owned gas supplier today turned up the heat on its expansion plans as it unveiled a new name.

PIB: Russian firm may suspend N380bn gas project

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Full Text Articles

Basic Political Developments09/12 12:20   Parallel Russian, U.S. missile defense systems may supplement each other – Vershbowhttp://www.interfax.com/news.asp

GOOGLE TRANSLATION"We are able to marry the NATO missile defense system with Russia"Interview with the deputy Pentagon Alexander Vershbow- 09/11/11 21:24 -TEXT: Alexander ArtemevPHOTO: ReutersThe deputy head of the Pentagon, former U.S. Ambassador to Russia Alexander Vershbow, flew to Moscow to meet with representatives of the Russian Ministry of Defense - as Vershbow, a former diplomat. We will talk about the results of the "Arab Spring", the prospects for harmonizing the positions of the two countries and cooperation EUROPRO in Afghanistan, said "Gazeta.ru" Vershbow

Interview for gazeta.ru:http://www.gazeta.ru/politics/2011/09/10_a_3762461.shtml

11:26 12/09/2011ALL NEWS

Delegation of FC members to visit Syria with fact-finding mission

http://www.itar-tass.com/en/c154/223513.html

MOSCOW, September 12 (Itar-Tass) — A delegation of Russian Federation Council members is ready to visit Syria with a fact-finding mission in the near future, member of the committee on international affairs under the Federation Council upper house of the Russian parliament Mikhail Margelov told reporters on Monday.

Margelov was speaking after a meeting with representative of the Syrian president for information and political issues Bouthaina Shaaban.

"The Russian delegation will be led by FC deputy speaker Ilyas Umakhanov," Margelov said. He underlined that both the Opposition and Mrs Shaaban had supported the idea to send the mission.

Syria backs Russian senators’ Damascus missionhttp://rt.com/politics/news-line/2011-09-12/#id18039

11:50

The Federation Council’s delegation is ready to visit Syria in the near future, Mikhail Margelov, the chairman of the upper house International Affairs Committee has said. The idea of the visit was supported at a Monday meeting with advisor to the Syrian president on political and information issues, Buseina Shaaban, Margelov said. Deputy Speaker of the Federation Council Ilyas Umakhanov will lead the delegation.

Shaaban: the Russian stance stands by peoples' right and justice

http://www.sana.sy/eng/22/2011/09/11/368736.htm

Sep 11, 2011

MOSCOW, (SANA)-Presidential Political and Media Advisor Bouthaina Shaaban said Sunday she will convey to the Russian leadership what is really happening in Syria in light of the media distortion that broadcast lies and rumors on the events in the country.

"We will exchange viewpoints with the Russian officials, brief them on the Syrian stance and be acquainted with their opinions too," Shaaban added in a statement to journalists in Moscow upon arrival, by an invitation of the Russian Foreign Ministry and Parliament.

She underlined that Syria appreciates the Russian balanced stances regarding all crises in the Middle East and the current events in Syria, saying "the Russian stance always supports justice and peoples' right.

"We don't ask anyone to be biased, but to stand by the reality and get rid of rumors, fabrications and agendas plotted for bad purposes," Shaaban said.

She hailed the positive role played by the Russian media delegation who has recently visited Syria to spread facts as they are.

Mazen

Japan regrets Russian official's recent trip to disputed isleshttp://english.kyodonews.jp/news/2011/09/114358.html

TOKYO, Sept. 12, Kyodo

Top government spokesman Osamu Fujimura on Monday voiced regret over a recent trip made by a Russian official to disputed islands off Hokkaido.

''Our country considers a visit to the Northern Territories by a key Russian government official unacceptable,'' the chief Cabinet secretary said in a news conference, a day after Russian Security Council Secretary Nikolai Patrushev visited the islands of Kunashiri and the Habomai group of islets.

Tokyo and Moscow remain at odds over the sovereignty of the islands of Etorofu, Kunashiri and Shikotan as well as the Habomai islet group, which Soviet troops seized at the end of World War II.

Russian Security Council head visits Kuril Islandshttp://rt.com/politics/news-line/2011-09-12/

10:27

The secretary of the Russian Security Council, Nikolay Patrushev, held a conference on security on the South Kuril Islands on Sunday. The meeting focused on the construction of civilian and border infrastructure on Kunashir Island, Interfax reports. Patrushev visited several facilities of the Sakhalin unit of the FSB Coast Guard, including the frontier post on Tanfilyev island, closest to Japan. The Japanese government on Monday expressed concern over the visit. Russian Foreign Minister Sergey Lavrov said late last week that Tokyo’s statements that Russia has no legal grounds to possess the South Kuril Islands are unacceptable for Moscow.

Russian Security Council chief Patrushev visits Kunashiri, Habomaihttp://mdn.mainichi.jp/mdnnews/news/20110912p2g00m0dm012000c.html

MOSCOW (Kyodo) -- Russian Security Council Secretary Nikolai Patrushev visited the disputed islands of Kunashiri and the Habomai group of islets off Hokkaido on Sunday, sources familiar with the matter said.

Patrushev flew to Russian-held Kunashiri from Yuzhno-Sakhalinsk, the administrative center of the Russian Far Eastern island of Sakhalin, and while there inspected its airport, the settlement of Yuzhno-Kurilsk called Furukamappu in Japan, and Russian boarder guards, they said.

Patrushev also shuttled between Kunashiri and Suisho-jima (Crystal Island) in the Habomai group by helicopter, staying in the islands for a total of five hours.

Patrushev is a former director of the Russian FSB, the successor organization of the KGB, and he is a close advisor to Russian Prime Minister Vladimir Putin, who is also a former KGB official.

Recently, Putin signed an ordinance to spend an extra 1.2 billion rubles to develop infrastructure on the Kuril Islands.

Tokyo recognizes the islands as part of what it calls the Northern Territories, while Moscow says the sovereignty over the Kuril Islands, called the Chishima Islands in Japan, rests with Russia.

The islands were seized by the Soviet Union following Japan's surrender in World War II on Aug. 15, 1945. The long-standing territorial row has prevented the two countries from signing an official peace treaty ending their World War II hostilities.

(Mainichi Japan) September 12, 2011

Russia negotiates loan for Cyprus – Finance Ministerhttp://rt.com/news/line/2011-09-12/#id18027

09:58

Russia is “in the process of negotiations on a loan for Cyprus,” Interfax news agency quotes Russian Finance Minister Alexey Kudrin as confirming on Monday. However, he did not say what sum is to be lent to the Mediterranean country. Earlier, Cypriot Finance Minister Kikis Kazamias said Russia is among those several countries that are likely to become lenders to it.

Cash-strapped Cyprus is in talks for a 2-2.5 bln euro loan either from or set up through the Russian government – Sourcehttp://www.balkans.com/open-news.php?uniquenumber=119115

Balkan Business News Correspondent - 12.09.2011

Cash-strapped Cyprus is in talks for a 2-2.5 bln euro loan either from or set up through the Russian government to refinance maturing debt and plug a deficit hole, local media reported on Friday repots Financial Mirror.Authorities declined to confirm or deny the report. Finance Minister Kikis Kazamias said it was known that authorities had been seeking long-term financing, but he was non-committal on possible sources of credit. "For some time now we have been looking for sources of long-term financing to give us some kind of breathing space - not solve the problems we are trying to find solutions to ...but to give us a breather on the management of public debt. "Provided that the conditions of financing and lending are advantageous and that there are no irrational demands, then it would be on the table for negotiation," Kazamias told Astra, a private radio station. The Politis and Phileleftheros dailies cited government sources as saying consultations were underway with Moscow but nothing had been finalised. Phileleftheros said the two sides were very close to a deal. Yields on Cypriot bonds on secondary markets have surged in recent months after repeated downgrades of the euro zone minnow by ratings agencies concerned over fiscal slippage, and exposure of the island's banking sector to Greece. 

Iran Says First Nuclear Plant at Bushehr to Start Power Production Todayhttp://www.bloomberg.com/news/2011-09-12/iran-says-first-nuclear-plant-at-bushehr-to-start-power-production-today.html

QBy Ladane Nasseri - Sep 12, 2011 8:17 AM GMT+0200

Iran, which has been punished by international sanctions for years over its nuclear program, will start electricity production today at Bushehr, its first atomic power plant.

The 1,000-megawatt Russian-built plant in southern Iran will start generating electricity at up to 40 percent of its capacity, Iranian Foreign Minister Ali Akbar Salehi said in Tehran yesterday, according to the official Islamic Republic News Agency.

Iran is holding an official ceremony near the port city of Bushehr today to mark the event. Russian Energy Minister Sergei Shmatko, who arrived in the Iranian capital yesterday, is due to attend.

The U.S. and the European Union say the sanctions against Iran are justified because its nuclear program may be a cover for the development of atomic weapons. Iran rejects the allegation, saying it needs nuclear power to meet the energy needs of its growing population.

Bushehr joined the national electricity network with a capacity of about 60 megawatts on Sept. 3. Power generation at the plant, which Iranian officials had estimated would start as early as 2009, has been repeatedly delayed because of technical glitches and the international dispute.

To contact the reporter on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

Iran, Russia agree on more nuclear cooperationhttp://www.kyivpost.com/news/russia/detail/112610/

Today at 08:23 | Associated Press TEHRAN, Iran (AP) — Iran's official news agency is reporting the country has agreed to more nuclear cooperation with Russia.

Iran's first nuclear power plant was built with Russian help and after years of delays is to begin a preliminary phase of electricity production on Monday.

The IRNA news agency reported Sunday that Iranian Foreign Minister Ali Akbar Salehi said important agreements were signed by both sides in nuclear and other fields.

Salehi spoke after meeting with visiting Russian Energy Minister Sergei Shmatko. Salehi did not elaborate. Currently there are no plans for Russia to help build another plant.

Shmatko will attend Monday's inauguration ceremony at the Bushehr power plant.

Iran says its nuclear program is only for peaceful purposes, but the U.S. fears Tehran is intent on a weapons capability.

Read more: http://www.kyivpost.com/news/russia/detail/112610/#ixzz1XiVcSShm

Iran, Russia prepare to launch first unit of Bushehr NPPhttp://en.rian.ru/world/20110912/166767673.html

07:44 12/09/2011

MOSCOW, September 12 (RIA Novosti)

A ceremony to officially launch the first unit of Iran's first nuclear power plant, Bushehr, will be held on Monday.

The ceremony to launch Unit One of the Russian-build nuclear power plant will be attended by Russian Energy Minister Sergei Shmatko and the head of Russia's Federal Agency for Atomic Energy, Sergei Kiriyenko.

Bushehr was connected into the national grid early on Sunday. The first unit's capacity is estimated at 1,000 megawatt.

The International Atomic Energy Agency (IAEA) has already included Bushehr's first unit into its list of operating nuclear power plants. The IAEA record says the plant was first connected to the grid on September 3.

The fuel for Bushehr was provided by Russia, which completed the long-delayed construction of the plant last summer. The plant was expected to start operating in February.

Under a bilateral agreement approved by the International Atomic Energy Agency, Russia will operate the plant, supply its fuel and take away all the spent fuel for the next two or three years, but will eventually hand over full control to Iran.

02:43 12/09/2011ALL NEWS

Russian high-ranking officials to visit Bushehr start-up ceremony

http://www.itar-tass.com/en/c154/223316.html

TEHRAN, September 12 (Itar-Tass) — The Bushehr nuclear power plant will be officially inaugurated in Iran’s southern province on Monday.

Taking part in the ceremony will by Russian Energy Minister Sergei Shmatko, the head of the Russian state-run nuclear power corporation Rosatom, Sergei Kiriyenko, Iran’s Foreign Minister Ali Akbar Salehi, the president of the Atomic Energy Organization of Iran Fereydoon Abbasi-Davani and Iran’s Energy Minister Majid Namjoo.

The Bushehr nuclear power plant was started in 1975 by Germany’s Kraftwerk Union AG – Siemens’ subsidiary, but the construction was brought to a halt after Iran’s Islamic Revolution in 1979. On January 8, 1995, the Russian-Iranian contract was signed to resume the construction of the first power-generating unit. In 1998 the two countries inked an addendum to the contract on the plant’s turnkey construction by Russia’s Atomstroiexport.

“We’ve been waiting for this event for 35 years,” Iran’s Foreign Minister Ali Akbar Salehi told a news conference in Tehran on Sunday describing this event “as a big holiday for Iran”. “Finally, the Islamic Republic of Iran with the support of Russian specialists brought the plant’s construction to completion.”

Russian minister: We are proud of unique Bushehr N-project

http://www.isna.ir/ISNA/NewsView.aspx?ID=News-1845256&Lang=E

ISNA - Tehran Service: Foreign Policy

Service: Foreign Policy 1390/06/21 09-12-2011 10:38:03 News Code :9006-13428

TEHRAN (ISNA)-Russian Energy Minister Sergei Shmatko said the country is proud of Bushehr nuclear power plant's project and is interested in boosting cooperation with Iranian corporations on oil and gas fields.

He praised Iran’s Bushehr power plant project and added, “Iran’s Bushehr power plant built by Russian cooperation will be accomplished Monday.”

"We experienced different problems on the project as Iranians did. Today we are proud of the project as well which has drawn the attention of the whole world,” he told a press conference with Iranian Foreign Minister Ali Akbar Salehi in Tehran.

Russian Energy Minister added, "I assure you we will continue our cooperation with Iran on launching Bushehr power plant and developing atomic energy in Iran’s other projects."

As to Persian Gulf neighboring states’ concern on the security of Bushehr power plant, Shmatko said, "Bushehr power plant is built based on all international standards. We perceive the concern of the countries, but all tests conducted in the nuclear facility were approved by all international processes and the International Atomic Energy Agency (IAEA). There is no deviation from international standards.”

He noted, "We believe there is a great transparency in launching Bushehr power plant due to respecting the experts' work and the presence of international bodies.”

Iranian Foreign Minister Ali Akbar Salehi on his part said, "The official ceremony for pre-launching Bushehr power plant will be held on Monday and then the power plant will be connected to the national grid.”

“Bushehr power plant has achieved 35 to 40 percent of its nominal power reaching 350-400 megawatt. We hope the plant reach its outmost power of 900 to 1000 megawatt," he added.

Salehi continued, “The power plant will be disconnected for different tests some time after the connection. The tests might take several weeks. The power plant will regain the power and will obtain its 100 percent power of 900-1000 megawatt.”

Salehi expressed hope all the projects would be accomplished over the next two or three months to be handed to Iranian engineers and technicians in charge of the power plant.

He added, ”At the moment, Iranian engineers work on the power plant, but Russian engineers are observing the process.”

End Item

00:40 12/09/2011ALL NEWS

RF-Iran’s experience in Bushehr NPP to be used in future - Shmatko

http://www.itar-tass.com/en/c154/223290.html

TEHRAN, September 11 (Itar-Tass) —— Experience, gained over construction of the Bushehr nuclear power plant, should be used in future, Russia’s Minister of Energy Sergei Shmatko told a news conference while answering a question whether Russia would support Iran in construction of other nuclear energy objects.

“The level of cooperation between Russian and Iranian engineers, gained over the construction of the Bushehr nuclear power plant, is our mutual value, and I believe it should be used in future,” he said. “As for other projects, I have to admit that nuclear energy has been going through tough times after the dreadful accident at Fukushima.”

“I believe that Russia and Iran have big future in implementation of other projects in nuclear energy, but we should remember that this activity should be synchronised fully, should be integrated into the processes, which happen in the world nowadays regarding nuclear energy,” Shmatko said.

On Monday, co-chairs of the intergovernmental commission Sergei Shmatko and Minister of Foreign Affairs of the Islamic Republic Ali Akbar Salehi, as well as Head of Rosatom state corporation Sergei Kiriyenko will participate in the ceremony of putting operational the first energy block of the Bushehr nuclear power plant, which has been constructed by Russia’s Atomstoiexport Company.

BRITISH PRIME MINISTER DAVID CAMERON IN MOSCOW

British PM Cameron looks to melt tensions on Russia visithttp://en.rian.ru/world/20110912/166777672.html

12:19 12/09/2011

MOSCOW, September 12 (RIA Novosti)

British Prime Minister David Cameron began a visit to Russia on Monday, the first by a U.K. leader since 2005.

Speaking before his departure, Cameron said he hoped the two countries could make “progress” and cooperate for mutual benefit.

"Although our differences in recent years are well known, we face many similar challenges and both the president and I believe that we can make more progress by working together on matters of real importance for the prosperity and security of people in both countries," he said.

Ties between Britain and Russia have been strained since the 2006 death of former KGB officer Alexander Litvinenko in London and the British government’s subsequent demand that Moscow extradite Andrei Lugovoi, its chief suspect in the case.

Relations were also soured by Britain's criticism of Moscow after the Russian-Georgian military conflict in August 2008. Russia has also accused Britain of acting as a refuge for fugitive Russian businessmen, including Boris Berezovsky.

Whitehall officials revealed ahead of the visit that there had been no direct contact between Russia’s powerful Prime Minster Vladimir Putin and British ministers of diplomats for over four years.

Cameron is expected to meet Russian President Dmitry Medvedev during his visit. Talks with Putin are also expected.

Britain favors Russian accession to WTO – UK PMhttp://rt.com/news/line/2011-09-12/#id18027

11:23

Britain supports Russia’s bid for accession to the World Trade Organization, British Prime Minister David Cameron announced while speaking at Moscow State University on Monday. He has also noted that Britain hopes for a dialogue with Russia on the case of Aleksandr Litvinenko, who was poisoned in London in 2006.

September 12, 2011 11:28

Medvedev, Cameron to discuss visashttp://www.interfax.com/newsinf.asp?id=272321

MOSCOW. Sept 12 (Interfax) - British Prime Minister David Cameron said while giving a lecture at Moscow State University that he is hoping to discuss with Russian President Dmitry Medvedev the visa issue between the two countries.

At the same time, Cameron said he does not see any problems with visas, saying that 96% of the Russians who filed visa applications this year were given visas for the UK.

Av

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September 12, 2011 8:43 am

Cameron raises Litvinenko case in Moscow

By Elizabeth Rigby, Chief Political Correspondent

David Cameron on Monday told Russia that Britain would not back down over the Litvinenko case as he warned Moscow that a fear of corruption was holding back investment.

Mr Cameron, in the first speech given by a British prime minister on Russia soil since 2006, did not shy away from awkward subjects at the start of a one-day visit to Moscow, saying the rule of law was “vital” for foreign investment.

“I’ve talked to many British businesses. I have no doubt about their ambition to work in Russia but it’s also clear that the concerns that continue to make them hold back are real,” said Mr Cameron.

“They need to have faith that the state, the judiciary and the police will protect their hard work and not put the obstacles of bureaucracy, regulation and corruption in their way.”

Speaking at Moscow State University Mr Cameron, confronted the Litvinenko case head-on. He told Russia that Britain still wanted to conduct a trial in Britain over the murder of the former KGB officer on British soil five years ago.

“It is the job of governments to help courts to do their work and that will continue to be our approach. So we can’t pretend these differences don’t exist,” he said.

Relations between London and Moscow hit a post-cold war low five years ago over the murder of Alexander Litvinenko, a former KGB officer. British security services have long believed that the murder, which involved polonium poisoning, was carried out at the behest of the Russian state.

Four years ago, the UK imposed a string of sanctions on Russia because if refused to extradite the man whom London wants to charge for the murder, Andrei Lugovoi. The prime minister is also expected to raise the question of human rights abuses, including the imprisonment of Mikhail Khodorkovsky, the former oil tycoon, at a meeting with president Medvedev later on Monday.

Both sides admitted ahead of the visit that such differences would not be resolved in the whistle-stop tour, choosing to characterise the visit as a chance to “re-open dialogue” between the powerbrokers in the two nations rather than make real progress on diplomatic issues.

“It is a step in the right direction rather than a re-setting of relations,” is how one senior aide to Mr Cameron put it this weekend.

Mr Cameron is using the visit to promote Britain’s economic interests and is flanked by a delegation of 24 leaders of blue-chip companies such as BP, British Airways and Rolls Royce. The delegation will take part in a lunch with President Dmitry Medvedev and seeks to strengthen ties with Russia’s elite.

Mr Cameron will meet Vladimir Putin, the prime minister, who has met no British minister or official for four years. The pair are expected to discuss economic and trade matters, including the BP’s recent difficulties in Russia. Earlier this month, the oil company was raided in an long-running rift with minority shareholders over its failed Rosneft deal.

Mr Cameron told students at the university that while he accepted Britain and Russia have had a “difficult relationship”, now was the time to “make the case for a new approach based on co-operation”.

He said that new deal between the two sides should focus on creating a better environment for trade and investment, closer co-operation on science and innovation and a better partnership on the global stage.

The government is expecting £215m ($340m) of new deals to be signed during the trip, creating nearly 500 jobs in the UK. It hopes that an agreement with Rosatom, the Russian state energy corporation, will help British companies win contracts as Moscow expands its nuclear power industry.

Both sides are playing down the prospect of significant announcements.

“It is just a start,” said one senior British aide on Sunday. “We want to come away having made a good step in the right direction in the opening up diplomatic relations.”

Cameron Urges a Fresh Start in Russia Relations After Litvinenko Killinghttp://www.bloomberg.com/news/2011-09-12/cameron-urges-a-fresh-start-in-russia-relations-after-litvinenko-killing.html

Q

By Robert Hutton and Henry Meyer - Sep 12, 2011 9:42 AM GMT+0200

U.K. Prime Minister David Cameron, the first British leader to visit Russia since the 2006 murder in London of dissident Russian agent Alexander Litvinenko, urged the two countries to cooperate over shared economic interests.

“I accept that Britain and Russia have had a difficult relationship for some time, and we should be candid about the areas where we still disagree,” Cameron said in a speech at Moscow State University today. “But I want to make the case for a new approach based on cooperation.”

Cameron’s visit marks the first contact between a British leader and Russian Prime Minister Vladimir Putin since Putin, then the president, parted from Tony Blair on bad terms in 2007 over the Litvinenko murder. Cameron will also hold talks with President Dmitry Medvedev. In a letter to the Sunday Times newspaper yesterday, four former U.K. foreign secretaries urged Cameron to confront the Russians over “hostility” toward journalists and business.

Among corporate leaders joining Cameron in Moscow are BP Chief Executive Officer Robert Dudley, Royal Dutch Shell Plc (RDSA) Chief Executive Officer Peter Voser, Xavier Rolet, chief executive officer of London Stock Exchange Group Plc (LSE), and Simon Robertson, chairman of Rolls-Royce Group Plc. (RR/)

Resource-Rich, Services-Light

“Russia is resource-rich and services-light, Britain is the opposite,” Cameron said in his speech. “In fact, Britain is already one of the largest foreign direct investors in Russia. And Russian companies already account for about a quarter of all foreign initial public offerings on the London Stock Exchange.”

Cameron said deals valued at 215 million pounds ($340 million) will be signed during his one-day visit to Moscow, including store expansion by Kingfisher Plc (KGF) and a venture between Rolls-Royce, the world’s second-largest aircraft-engine maker, and Rosatom Corp., Russia’s government-owned nuclear holding company.

In their letter to the Sunday Times yesterday, the former foreign secretaries -- David Miliband, Malcolm Rifkind, Jack Straw and Margaret Beckett -- asked Cameron to raise the 2006 murder of Litvinenko, the imprisonment in Russia of the oil billionaire, Mikhail Khodorkovsky, and his business partner, Platon Lebedev, and the death in custody of Sergei Magnitsky, an anti-corruption lawyer.

Polonium-210

Litvinenko, a Kremlin critic who died in November 2006 after being poisoned with the radioactive isotope polonium-210, blamed Putin for the murder in a death-bed statement,

an accusation the Kremlin called “absurd.” Relations between the two countries have been strained since then.

Russia refused to hand over an ex-KGB bodyguard, Andrei Lugovoi, who is wanted in Britain for Litvinenko’s murder, because the country’s constitution forbids the extradition of Russian citizens.

The dispute sparked the expulsion of four Russian and four U.K. diplomats and Russia’s closure of U.K. cultural offices outside Moscow. The U.K. also froze cooperation with Russia’s Federal Security Service, the domestic successor to the KGB.

Tony Brenton, who was U.K. ambassador to Russia from 2004 to 2008, said the Litvinenko affair remains “unfinished business” that still bedevils relations between the two countries unlike Russia’s ties with Germany or Italy.

‘Political Difficulties’

“We have had more political difficulties, without a doubt,” Brenton said in a phone interview last week.

British mergers and acquisitions in Russia slumped to $346 million last year, compared with $428 million for German companies and down from a peak of $2.1 billion in 2007, data compiled by Bloomberg show. The value of U.S. deals surged to $5.7 billion last year from $1.2 billion in 2007, including PepsiCo Inc.’s $3.8 billion purchase of a majority stake in OAO Wimm-Bill-Dann in December.

Cameron said U.K. companies needed more assurances about the rule of law in Russia to encourage them to invest.

“They need to know that they can go to a court confident that a contract will be enforced objectively and that their assets and premises won’t be unlawfully taken away from them,” he said.

The British leader’s trip comes less than a fortnight after Russian officials’ raid on the Moscow offices of BP Plc (BP/), a day after it was replaced by Exxon Mobil Corp. (XOM) in an Arctic oil project with OAO Rosneft. Court bailiffs, accompanied by armed men, were enforcing a $3 billion lawsuit.

BP, which in 2003 forged a joint venture with a group of Russian billionaires with Putin’s blessing, has fallen out with its partners in TNK-BP for the second time in three years. The London-based company, which relies on the venture for a quarter of its output, had to give up a deal to explore Arctic fields with Rosneft after the billionaire partners sued to block it.

In 2006, Shell agreed to cede control of Sakhalin-2, Russia’s only liquefied natural gas plant, to OAO Gazprom after months of pressure from regulators.

To contact the reporters on this story: Robert Hutton in Moscow at rhutton1@bloomberg.net Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net Balazs Penz at bpenz@bloomberg.net

David Cameron says Russia and UK must 'rebuild' relationshiphttp://www.guardian.co.uk/politics/2011/sep/12/david-cameron-russia-rebuild-relationship

On one-day visit to Moscow, Cameron strikes conciliatory tone but also urges Russia to stamp out corruption, and reiterates demand for extradition of Andrei Lugovoi

Allegra Stratton in Moscow

guardian.co.uk, Monday 12 September 2011 08.23 BST

David Cameron has called for Russia to redouble its efforts to stamp out corruption and said there would be no let-up in UK demands for the extradition of the man suspected of killing a Russian spy in the UK.

In a speech to Moscow State University, Cameron broadly broached some uncomfortable issues for the two countries but his tone was conciliatory, saying he wanted to "rebuild" the relationship and put an end to the "tit-for-tat" behaviour of the two countries.

He said: "I accept that Britain and Russia have had a difficult relationship for some time. And we should be candid about the areas where we still disagree. But I want to make the case for a new approach based on co-operation."

There were "sceptics" in both countries, he said, "who will doubt whether we can ever get beyond the competitive ideological instincts of our past", but he said he would take on those groups.

The prime minister has arrived in Moscow for a one-day bout of intense diplomacy, and will be afforded the first face-to-face contact for a British prime minister with the Russian, prime minister, Vladimir Putin, since 2007. His speech is intended to begin a modest rapprochement between the two countries, with officials acknowledging there remains an "impasse" on many major issues.

Relations have been strained since the murder in London in 2006 of former KGB agent Alexander Litvinenko and the Russian government's refusal to extradite the man Britain suspects of the murder, Andrei Lugovoi, now state deputy in the Russian parliament.

In his speech on Monday morning, Cameron tackled this head on for the first time on Russian soil. He said: "Our approach is simple and principled. When a crime is committed, that is a matter for the courts. It is their job to examine the evidence impartially and to determine innocence or guilt. The accused has a right to a fair trial. The victim and their family have a right to justice.

"It is the job of governments to help courts to do their work and that will continue to be our approach."

Cameron had also been under pressure to mention human rights infringements, including the fate of lawyer Sergei Magnitsky and the prosecution of former Yukos CEO Mikhail Khordokovsky, but made no reference to them in his speech.

The government insists relations between the two countries could be more cordial than they currently are and the emphasis is on improving conditions for business.

On Sunday four former British foreign secretaries wrote to the Sunday Times to urge Cameron caution in this area, saying corruption was still rife in Russia.

Travelling with the prime minister is Bob Dudley, CEO of BP, and an exemplar of the constraints on British and Russian businesses attempting to operate in the country.

On 31 August court marshals raided BP's Moscow office in connection with a lawsuit, one day after BP's rival – the US oil major Exxon Mobil – struck a deal with Russian state-owned Rosneft for an Arctic exploration.

Cameron tackled this in his speech: "I've talked to many British businesses. I have no doubt about their ambition to work in Russia … but it's also clear that the concerns that continue to make them hold back are real.

"They need to know that they can go to a court confident that a contract will be enforced objectively … and that their assets and premises won't be unlawfully taken away from them. In the long run the rule of law is what delivers stability and security."

UK goods exports to Russia are already worth £3.5bn, up 50% in the last year and, according to officials, growing by almost another two-thirds in the first half of this year.

By the end of the trip, Downing Street hopes £215m worth of trade deals will have been struck – part of its attempt to galvanise inward investment in the UK and boost an export-led recovery. The prime minister said Britain would support Russia's accession to the World Trade Organisation.

He also acknowledged the different perspectives between the two countries over UN action in Libya. Russia feels the UK and France went beyond the remit of the UN resolution 1773.

In his speech, Cameron said: "Let me put my cards on the table. The view I have come to is that the stability of corrupt and violently repressive dictatorships in Middle Eastern states like Gaddafi's in Libya is false stability.

"The transition to democracy may well have its difficulties and dangers … but it is the best long term path to peaceful progress … and is a powerful alternative to the poisonous narrative of Islamist extremism.

"And I believe that Britain and Russia – and the whole international community – have a role to play in helping to support peace, stability and security across the Arab world."

Despite Cameron's words, a Russian newspaper on Sunday reported a top Kremlin aide as saying no "reset" loomed, a reference to the word used by the US secretary of state, Hillary Clinton, to describe recent US attempts to restart their relations with Russia.

The aide, Sergei Prikhodko, a top foreign policy adviser to the Russian president, Dmitry Medvedev, said: "I think that the visit will be pragmatic and calm. No one is expecting any breakthroughs, and in fact they are not needed. Why fight? It is not necessary for us to have a reset with Britain. We will continue to work the way that we have been working in the past."

Describing his first visit to the country, Cameron said: "I first came to Russia as a student on my gap year between school and university in 1985. I took the Trans-Siberian Railway from Nakhodka to Moscow and went on to the Black Sea coast. There two Russians – speaking perfect English – turned up on a beach mostly used by foreigners.

"They took me out to lunch and dinner and asked me about life in England and what I thought about politics. When I got back I told my tutor at university and he asked me whether it was an interview. If it was, it seems I didn't get the job! My fortunes have improved a bit since then. So have those of Russia."

He finished his speech by appearing to make a link between the two periods. "In the last 20 years Russia and Britain have both come a long way but each largely on their own. In the next 20 years I believe we can go very much further as we prove that 'Вместе мы сильнее' [we are stronger together]."

11:52 12/09/2011RUSSIAN PRESS REVIEW

Pressure on Cameron may have negative influence on his Moscow talks

http://www.itar-tass.com/en/c142/223540.html

MOSCOW, September 12 (Itar-Tass) — British Prime Minister David Cameron arrived in Moscow on his first official visit. It the first time in six years the head of the British Cabinet visits the Russian capital. Supposedly, he will be discussing mostly economic issues at the meeting with President Dmitry Medvedev and Prime Minister Vladimir Putin, despite the worsening of relations after the murder of Litvinenko.  Trade turnover between the two countries continues to grow. Experts believe that the parties will consider political issues, because the British primer might attempt to improve relations with Putin before the presidential election in Russia. Meanwhile, a number of British politicians urged Cameron ahead of his visit to take a tough stance at the talks in Moscow.

David Cameron came under unprecedented pressure both from the Opposition - the Labor Party and his colleagues from the Conservative Party, the "Nezavisimaya Gazeta" writes. The opponents to the normalization of relations with Russia turned the premier's trip to Moscow into a subject of domestic political struggle. Four former foreign ministers called upon him to protect business in Russia from corruption. Two former deputy ministers joined the clamor, demanded punishment for the Russian officials involved in Magnitsky's death. British politicians also came out in support of former Yukos CEO Mikhail Khodorkovsky. But Khodorkovsky said he objected to confrontation between London and Moscow.

Answering the Daily Telegraph's questions, Khodorkovsky said it would make no sense for Britain to take a confrontational stance toward Moscow.

The "Nezavisimaya Gazeta" writes that one can hardly hope for successful talks, given the campaign unleashed in Britain by politicians and the mass media.

David Cameron to meet Russian leaders in Moscow http://www.telegraph.co.uk/news/worldnews/europe/russia/8756604/David-Cameron-to-meet-Russian-leaders-in-Moscow.html

David Cameron will hold landmark talks with Russian leaders today, aiming to strengthen business and political ties with Moscow despite a long-running dispute over the murder of a Kremlin critic in London five years ago.

7:00AM BST 12 Sep 2011

Mr Cameron is due to meet President Dmitry Medvedev and Prime Minister Vladimir Putin, Russia's most powerful man, during a visit of less than 24 hours to Moscow - the first by a British leader since former Russian spy Alexander Litvinenko died in London from poisoning by radioactive polonium-210 in 2006.

The visit fits squarely into Mr Cameron's strategy of trying to bolster Britain's weak recovery by boosting exports to fast-growing emerging markets such as Russia, India and China.

Mr Cameron is accompanied by a high-powered 24-strong business delegation, including BP Chairman Bob Dudley, Royal Dutch Shell Chief Executive Peter Voser and Rolls-Royce Chairman Simon Robertson.

Mr Cameron's office said the visit was expected to seal £215 million pounds worth of business deals, creating almost 500 new jobs in Britain and safeguarding thousands more, although it gave no details.

The two countries are expected to agree to strengthen cooperation in civil nuclear energy. That will put British firms in a good position to bid for work on projects with Russian atomic energy agency Rosatom, potentially worth more than one billion pounds, Mr Cameron's office said.

Russia's refusal to extradite Andrei Lugovoy, an ex-KGB bodyguard Britain wants to prosecute for Litvinenko's murder, sent bilateral relations plunging to a post-Cold War low.

"Although our differences in recent years are well known, we face many similar challenges and both the President (Medvedev) and I believe that we can make more progress by working together on matters of real importance for the prosperity and security of people in both countries," Mr Cameron said in a statement before his trip.

Bad feeling over the issue runs as deep as ever and no progress is expected during the visit on resolving it, or on lifting the sanctions Britain imposed, including halting cooperation with Russia's security services and suspending talks on speeding up visa issuance.

But the British government is keen to open effective channels of communication to both Mr Medvedev and Mr Putin, to reinforce the position of British business in Russia and to encourage respect for the rule of law and reform in Russia, British government sources say.

Mr Putin, who has not met a British leader since 2007, could become president again after 2012 elections.

Vladimir Putin is the man David Cameron really needs to meet in Moscow

David Cameron's main host when he visits Moscow on Monday will be President Dmitry Medvedev.

By Alex Spillius in Moscow

7:30AM BST 12 Sep 2011

But his more important encounter may be with Vladimir Putin, whom many Russians regard as the real president of Russia.

Mr Putin has been prime minister since 2008, when he was constitutionally obliged to stand down after serving two terms as president.

He handpicked Mr Medvedev, then one of his deputies, to succeed him. Mr Medvedev, who is 14 years younger, has been more independent than many Russia-watchers expected. Regarded as a more cordial and pro-Western figure than his former boss, he has collaborated on sanctions against Iran and did not stand in the way of the United Nations resolution to bomb the Gaddafi regime in Libya.

He has endeavoured to modernize the Russian economy away from oil and gas, developing Rusnano, state-run firm that fosters young micro-technology firms, and opening Skolkovo, a state of the art business school designed by British architect David Adjaye.

He talks of the need to establish fair courts and an environment that attracts foreign businesses, rather than makes them worry about being locked up. He stresses the importance of developing the Russian Federation's unsettled regions in the Caucasus.

Though Russians are unhappy with the spectacular wealth of the elite and rampant corruption, Mr Medvedev received a popularity rate of 63 per cent in a recent poll, a number that Western leaders would die for.

His problem is that Mr Putin is even more popular and in March could stand for president again.

Guessing which one of the ruling tandem will represent the ruling United Russia Party - and be guaranteed victory - is Moscow's favourite political parlour game.

There is no doubt Mr Medvedev wants a second term. His advisers have spoken bullishly about his ambition and the good he could do for the country. Privately they fear that another two terms of Mr Putin, which he would be entitled to, would stunt national development and create even more of a modern tsardom.

But no one truly knows Mr Putin's intentions. There is an argument that he is tired of the travel and glad-handing with foreign leaders that the presidential office demands, and would rather stay on as prime minister, where he can continue to oversee the economy and look after the interests of the elite he has so skillfully nurtured and co-opted. This theory holds that if the country is still stable enough closer to the election, he will allow Mr Medvedev to stay on and pursue his gentle pro-Western course, while remaining the power behind the throne.

On the other hand, the temptation of reassuming the top job could simply be too much to resist. One thing is for sure, it is his decision to make.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/ad134f22-dc7d-11e0-8654-00144feabdc0.html#ixzz1XiYBXz26

September 12, 2011 12:01 am

Cameron to focus on trade with Russia

By Elizabeth Rigby, Chief Political Correspondent

David Cameron will today seek to put to one side the troubled relationship between Russia and Britain as he uses a one-day state visit to Moscow to emphasise common commercial interests between the two nations.

During the first visit of a British prime minister to Russia since Tony Blair’s trip in 2006, Mr Cameron will be accompanied by a delegation of 24 business leaders from blue-chip companies such as Royal Dutch Shell, BP, Rolls-Royce and British Airways.

Relations between the two countries collapsed five years ago after the murder in London of Alexander Litvinenko, a former KGB officer. British security services have long believed that the murder, which involved polonium poisoning, was carried out at the behest of the Russian state.

The British government will use the trip to try to put the damaged relationship on “firmer footing” by focusing on commercial interests rather than diplomatic rifts. Trade between the two nations is up 50 per cent in the first six months of 2011 compared to the same period last year.

But Mr Cameron – embarking on what could prove his most challenging overseas trip yet – is under pressure to confront Russian leaders over the regime’s hostility to businessmen and journalists.

Four former foreign secretaries – David Miliband, Margaret Beckett, Jack Straw and Sir Malcolm Rifkind – said the prime minister had to raise the “potent mix of corruption and lawlessness” that beset those trying to do business in the country.

In a letter to the Sunday Times, they also urged Mr Cameron to tackle the Litvinenko murder as well as the imprisonment of Mikhail Khodorkovsky, the former oil tycoon.

Mr Cameron’s aides said on Sunday he had “no intention of shying away from difficult issues” and officials confirmed that the issues of both Mr Khodorkovsky and Mr Litvinenko will be raised.

“Russia is an important partner for the UK. Although our differences in recent years are well known, we face many similar challenges and both the President and I believe that we can make more progress by working together on matters of real importance for the prosperity and security of people in both countries,” Mr Cameron said ahead of the visit.

The government is expecting £215m of new deals to be signed during the trip, creating nearly 500 jobs in the UK. It is also hoping that an agreement with Rosatom, the Russian State Energy Corporation, will help British companies win contracts as Moscow expands its nuclear power industry.

Mr Cameron will be accompanied by William Hague, foreign secretary, as well as Lord Green, his trade minister, and a clutch of prominent business leaders including Bob Dudley, the chairman of BP, Ian Cheshire, the chief executive of Kingfisher, Peter Vosner, chief executive of Royal Dutch Shell and Sir Simon Robertson, the chairman of Rolls-Royce.

The prime minister will first meet with Dmitry Medvedev, Russian president. But the main focus of the trip will be on his meeting with Vladimir Putin, prime minister, the more hardline figure in Russia’s duumvirate. Mr Putin has met no British minister or official in the past four years.

Both sides are playing down the prospect of significant announcements, admitting that the main goal of the trip is to reopen a political dialogue between the power brokers in each country.

“We are not resetting the relationship, it is just a start,” said one senior British aide on Sunday. “We want to come away having made a good step in the right direction in the opening up diplomatic relations.”

XREF Comps p22 TNK-BP; and RusNano

David Cameron in Russia: aiming high in trade talks, despite warninghttp://www.guardian.co.uk/politics/2011/sep/12/cameron-moscow-business-corruption

PM hopes to seal £215m in deals for UK but is urged by former foreign secretaries to raise corruption with Putin and Medvedev

Allegra Stratton and Miriam Elder in Moscow

The Guardian, Monday 12 September 2011

Downing Street intends for £215m worth of deals to be done between Russia and the UK when the prime minister visits the Kremlin, despite a warning to David Cameron from four former foreign secretaries that business people already operating in the country are "victims of an increasingly potent mix of corruption and lawlessness".

In advance of Cameron's visit, the first face-to-face contact between a British prime minister and the Russian prime minister, Vladimir Putin, since 2007, No 10 said it hoped to build on trade links between the two countries.

The British government hopes Russia's high level of economic growth, compared with the European average, could help fuel the export-led recovery it is trying to galvanise. If £215m in deals could be struck, 500 British jobs would be created, Downing Street said.

But in a move that makes clear the difficulties of the visit, the former foreign secretaries Margaret Beckett, Jack Straw and David Miliband, who are all Labour, and the Conservative Sir Malcolm Rifkind, have written to the Sunday Times calling on Cameron to raise the issue of the Russian government's treatment of business people, lawyers and journalists with Putin and the president, Dmitry Medvedev.

Their letter says hundreds of thousands of Russian businessmen are detained in jails after falling victim to corruption sanctioned by the authorities.

The PM will need to try to smooth out tensions in the wake of BP's offices being raided, just a day after the firm lost out on a multibillion pound Arctic exploration deal with Rosneft to its American rival, ExxonMobil.

Britain is the sixth largest investor in Russia, with deals worth around £20bn and hundreds of companies working there, but if Cameron is to increase that number he needs the business environment to become more benign.

The exiled Russian tycoon Boris Berezovsky has warned Cameron that his decision to meet Putin is a "historical mistake" that will lead to more bloodshed inside the country. "The longer you speak with the gangster head of a country, the more victims there will be … until these cannibals are erased from the story," Berezovsky said in a telephone interview from London.

This is the first visit to Russia of a British prime minister since the murder of former Russian spy Alexander Litvinenko in 2006.

Russian dissidents and exiles are urging the prime minister to prominently raise Russia's disastrous human rights record in his talks with the country's leadership.

Cameron is due to hold a day of talks in Russia on Monday, accompanied by two dozen British businessmen, as the two countries seek to revive a relationship all but frozen in the wake of Litvinenko's death.

Conditions for the diplomatic froideur of the last five years remain, with British and Russian officials locked in deadlock over British requests for the extradition of Andrei Lugovoi, suspected of murdering Litvinenko.

The Russian ambassador said on Friday that Moscow would continue to turn down this request, adding that if Britain offered more evidence to support its allegation, then the case might be considered in a Russian court. The ambassador said that as the two government's positions remained unchanged, he doubted the issue would be raised.

Despite deep differences, Cameron is insistent that a better relationship can still be forged. Before the visit, he said: "Some people talk about trade as a competition in which one country's success is another country's failure. That if our exports grow then someone else's will shrink. But the whole point about trade is that we're baking a bigger cake and everyone can benefit from it. And this is particularly true of Russia and Britain.

"Russia is resource rich and services light. Britain is the opposite. In fact Britain is already one of the largest foreign direct investors in Russia. And Russian companies already account for about a quarter of all foreign initial public offerings on the London Stock Exchange"

The prime minister went on to say that Russia offered one of the strongest business environments in Europe and had some of the "lowest barriers to entrepreneurship" in the world. Britain, he said, was keen to work with the Russian government to help strengthen the business environment in the country, so that more British businesses were able to invest.

"UK exports to Russia are already worth £3.5bn, doubling in value last year alone and growing by almost another two-thirds in the first half of this year. We want to do everything we can now to build on this and take our trade and investment to a new level."

UK's Cameron meets Medvedev, Putin in rare visitToday at 08:06 MOSCOW (AP) — British Prime Minister David Cameron insisted Monday that Russia and Britain can overcome sharp differences in their relations — including the 2006 poisoning death of a Kremlin critic in London — and seal new trading ties.

Cameron was in Moscow for the first visit to Russia's capital by a British leader in six years, meeting with President Dmitry Medvedev. He was also scheduled to hold the first talks by any British official with Prime Minister Vladimir Putin in more than four years.

Ties between Britain and Russia soured over the 2006 poisoning death of dissident ex-Russian security agent Alexander Litvinenko in London. On his deathbed, Litvinenko accused Putin of authorizing his killing.

Russia has repeatedly refused British requests for the extradition of the chief suspect in the case, ex-KGB agent Andrei Lugovoi.

British Foreign Secretary William Hague, who was accompanying Cameron along with business executives, acknowledged Cameron would raise the issue, but said the leader's visit would be focused on businesses opportunities — knowing there is little prospect of progress on the Litvinenko case.

In an interview with Britain's Sky News television, Lugvoi urged Britain to use meetings to seal possible new trade rather than discuss the killing.

"I am sure that this is the dream of Cameron — don't speak about me. It looks idiotic," Lugovoi said. "For the last four years the first question from every British politician has been about me, despite the fact that Britain is the biggest investor in the Russian economy."

Cameron hopes to seal new deals worth 215 million pounds ($340 million) — which would create 500 new jobs in Britain — during talks Monday.

British companies are likely to win new rights to bid for contracts on Russian-led civil nuclear projects, while Britain will support Russia's efforts to join the World Trade Organization.

"Russia is an important partner for the U.K., although our differences in recent years are well known. We face many similar challenges and both the president and I believe that we can make more progress by working together on matters of real importance for the prosperity and security of people in both countries," Cameron said.

"That's why we've sought to put our relationship on a firmer footing over the last year and why I'm looking forward to my visit to Moscow. It's an opportunity to improve our

partnership to the benefit of both the British and the Russian people."

Cameron was accompanied by about 20 business leaders, including oil company BP's chief executive Bob Dudley and Royal Dutch Shell CEO Peter Voser.

Dudley was joining the trip following the collapse earlier this year of a planned Arctic oil deal with state-owned energy company Rosneft — an agreement that had been seen as critical to the company's recovery from the Gulf of Mexico spill.

Rosneft last month agreed a partnership with U.S. company Exxon Mobil to develop offshore oil fields in the Russian Arctic, one of the world's last regions with major untapped hydrocarbon deposits. In return, Rosneft has the option to acquire parts of oil projects in Texas and the Gulf of Mexico.

Read more: http://www.kyivpost.com/news/russia/detail/112607/#ixzz1XiVnkr27

UPDATE 1-British PM calls for more business with Russiahttp://in.reuters.com/article/2011/09/12/russia-britain-idINL5E7KC0C520110912

12:56pm IST

* First visit by British leader since spy poisoning in London

* Expected to sign $345 million of business deals

* Cameron urged to raise human rights issues (Adds Cameron comments)

By Adrian Croft

MOSCOW, Sept 12 (Reuters) - British Prime Minister David Cameron called for better business ties with Russia on Monday before talks with Russian leaders intended to improve relations soured by the murder of a Kremlin critic in London five years ago.

Cameron will meet Prime Minister Vladimir Putin and President Dmitry Medvedev on a visit to Moscow lasting less than 24 hours.

It is the first visit by a British prime minister since former Russian spy Alexander Litvinenko died in London from poisoning by radioactive polonium-210 in 2006.

"We should be candid about the areas where we still disagree," Cameron told students at Moscow University. "But I want to make the case for a new approach based on cooperation."

The visit fits into Cameron's strategy of trying to bolster Britain's weak recovery by boosting exports to fast-growing emerging markets such as Russia, India and China.

Cameron is accompanied by a high-powered 24-strong business delegation, including BP Chairman Bob Dudley, Royal Dutch Shell (RDSa.L: Quote, Profile, Research) Chief Executive Peter Voser and Rolls-Royce Chairman Simon Robertson.

Cameron's office said the visit was expected to seal 215 million pounds ($345 million) worth of business deals, creating almost 500 new jobs in Britain and safeguarding thousands more, although it gave no details.

British home improvements retailer Kingfisher will open nine new stores in Russia and Rolls-Royce will collaborate with Russian atomic energy agency Rosatom under deals to be signed on Monday, Cameron said.

He called for an "honest and open dialogue" to address differences between the two countries, including Russia's refusal to extradite Andrei Lugovoy, an ex-KGB bodyguard Britain wants to prosecute for Litvinenko's murder. Litvinenko's death sent relations to a post-Cold War low.

"Our approach is simple and principled. When a crime is committed that is a matter for the courts," Cameron said in a speech, in which he recalled an approach from suspected KGB agents during a visit to the Soviet Union in his gap year between school and university in 1985.

BAD FEELING

Litvinenko's death sent relations to a post-Cold War low.

Bad feeling over it runs as deep as ever and no progress is expected during the visit on resolving it, or on lifting the sanctions Britain imposed, including halting cooperation with Russia's security services and suspending talks on speeding up visa issuance.

But the British government wants to open effective channels of communication to both Medvedev and Putin, to reinforce the position of British business in Russia and to encourage respect for the rule of law and reform in Russia, British government sources say.

Putin, who has not met a British leader since 2007, is widely expected to run for president in the 2012 election.

Four former British foreign ministers urged Cameron on Sunday to raise human rights cases with Medvedev, including what they called the "politically motivated detention" of business partners Mikhail Khodorkovsky and Platon Lebedev and the death in detention of lawyer Sergei Magnitsky.

"These concerns need to be addressed before business can truly flourish," the former ministers -- Malcolm Rifkind of Cameron's Conservative Party, and David Miliband, Margaret Beckett and Jack Straw of the opposition Labour Party -- wrote in a letter to the Sunday Times.

Cameron is expected to raise the Litvinenko issue and some human rights cases but officials have not specified which ones.

Some 600 British companies operate in Russia and British exports to Russia are up by 63 percent in the first half of this year, according to the British government.

But British firms sometimes encounter problems in Russia. Last month, special forces raided BP's Moscow offices, a day after U.S. giant ExxonMobil signed a deal giving it access to Russian Arctic oilfields that BP had tried to develop, only for its plans to be scuppered by a legal case. (Reporting by Adrian Croft; Editing by Alison Williams)

00:53 12/09/2011ALL NEWS

Cameron looks forward to good discussions on trade, foreign policy

http://www.itar-tass.com/en/c154/223296.html

LONDON, September 12 (Itar-Tass) — The UK and Russia share a common aim of tackling terrorism and preventing the proliferation of nuclear weapons, UK Prime Minister David Cameron said in an exclusive interview with Itar-Tass ahead of his official talks in Moscow on Monday.

“On foreign affairs, we share a common aim of tackling terrorism and the extremist ideology that supports it, and preventing the proliferation of nuclear weapons to countries like Iran,” he said. “On Libya, both Britain and Russia now recognize the National Transitional Council and agreed at the recent Paris summit on the goal of a stable, democratic and united Libya.”

Speaking about such areas where UK-Russia cooperation could be strengthened, Cameron noted that “at a time when the world is undergoing fundamental changes it’s essential that two leading countries – both members of the UN Security Council and the G8 - are able to engage effectively with each other to tackle the challenges and opportunities we face.”

“That’s why we’ve put our relationship on a stronger footing in the last year, and I look forward to good discussions on trade, foreign policy and the rule of law,” he said.

“Of course, Britain and Russia are both hosting the next Summer and Winter Olympic Games so I’m sure we’ll be working together on those,” the prime minister said. “I hope we can share experience of running a successful London 2012 to help Russian preparations for the Sochi Winter Olympics in 2014.”

00:35 12/09/2011ALL NEWS

Talks in Moscow – great opportunity to improve partnership - Cameron

http://www.itar-tass.com/en/c154/223287.html

LONDON, September 12 (Itar-Tass) — The UK and Russia have sought to put relations on a firmer footing over the last year and the talks in Moscow is a great opportunity to improve UK-Russia partnership, UK Prime Minister David Cameron said in an exclusive interview with Itar-Tass.

“Russia is an important partner for the UK,” he said. “Although our differences in recent years are well known, we face many similar challenges and both the President and I believe that we can make more progress by working together on matters of real importance for the prosperity and security of people in both countries.”

“That’s why we’ve sought to put our relationship on a firmer footing over the last year and why I’m looking forward to my visit to Moscow tomorrow,” Cameron said.

The UK prime minister noted that the upcoming talks in Moscow “will be a great opportunity to improve our partnership to the benefit of both the British and the Russian people.”

UK, Russia need closer ties – Cameronhttp://english.ruvr.ru/2011/09/12/56024465.html

Sep 12, 2011 06:58 Moscow Time

During the past year Britain and Russia have consistently been building up their mutually rewarding cooperation and the talks in Moscow offer a great chance for further such work.

Speaking ahead of his Monday’s meeting in Moscow with Russian President Dmitry Medvedev, British PM James Cameron said both countries were facing similar challenges and by working together would be able to achieve considerable progress in solving acute international problems.

Cameron also said that economic relations between the two nations had notably improved over the past year and that he hoped there would be more such progress down the road.

Kremlin Sees No Reset in Historic Cameron Visit http://www.themoscowtimes.com/news/article/kremlin-sees-no-reset-in-historic-cameron-visit/443550.html

12 September 2011By Nikolaus von Twickel

A top Kremlin aide cautioned on Sunday that no “reset” looms in long-troubled relations with Britain, hours before Prime Minister David Cameron was to arrive in Moscow for the first visit by a British leader in six years.

Cameron is leading a delegation including Foreign Secretary William Hague and BP chief executive Bob Dudley to talks with President Dmitry Medvedev and Prime Minister Vladimir Putin that he hopes will boost economic ties and perhaps mend some fences.

Relations have been strained since the polonium poisoning death of former KGB officer Alexander Litvinenko in London in November 2006 and the Russian government refused to extradite Britain’s prime suspect, State Duma Deputy Andrei Lugovoi.

Cameron is facing pressure to confront the Russian side on Litvinenko, the death of lawyer Sergei Magnitsky, the prosecution of former Yukos CEO Mikhail Khodorkovsky and the fairness of the upcoming Duma elections.

No British minister or diplomat has spoken with Putin directly in the four years since Putin made a brief phone call in June 2007 to congratulate Cameron’s predecessor, Gordon Brown, on his appointment. The last British prime minister to visit Russia was Tony Blair when he attended a Group of Eight summit in St. Petersburg in July 2006.

Since becoming prime minister in May 2010, Cameron has met four times with Medvedev, who invited him for this week’s visit.

But Medvedev’s top foreign policy adviser, Sergei Prikhodko, played down any expectations that the trip, which was to start late Sunday, would result in a “reset” in relations. “I think that the visit will be pragmatic and calm,” Prikhodko told reporters Sunday. “No one is expecting any breakthroughs, and in fact they are not needed. Why fight?

“It is not necessary for us to have a ‘reset’ with Britain,” he added, Interfax reported. “We will continue to work the way that we have been working in the past.”

He said Medvedev would meet with Cameron on Monday for talks that would cover Libya, Syria, Iran and “the good results from our joint creation of TNK-BP.”

Court marshals raided BP’s Moscow office in connection with a lawsuit on Aug. 31, a day after U.S. oil major ExxonMobil struck a deal with state-owned Rosneft for an Arctic exploration that BP had hoped to clinch.

With Cameron's focus on business, four former British foreign secretaries urged him in an open letter Sunday to press Medvedev to protect companies against corruption. The letter, published in The Sunday Times, says hundreds of thousands of Russian businesspeople are behind bars after falling victim to government-sanctioned corruption.

"The dangers of this corruption do not stop at Russia's borders, and Alexander Litvinenko's murder shows the consequences of such lawlessness hitting British shores," says the letter, signed by Margaret Beckett, David Miliband, Jack Straw and Malcolm Rifkind. "In this regard the prime minister has both a domestic and international duty to tackle this issue head on during his visit."

Russia's ambassador to Britain, Alexander Yakovenko, headed off questions on Litvinenko on the eve of Cameron's trip, telling reporters in London that "Mr. Livinenko's murder was an abhorrent crime which needs to be investigated," but "the over-politicization of this issue will not help solve it."

"We have repeatedly suggested to our British colleagues that they give us the materials they have accumulated, to allow Russian prosecutors to make the necessary investigations, with British cooperation," he said Friday, according to a transcript on the Russian Embassy's web site.

He said the Russian side hoped to re-establish intelligence contacts that were cut by Britain after Litvinenko's death.

The Russian Embassy's web site, incidentally, was down Sunday after being knocked offline late Friday in a suspected hacker attack. The embassy was operating a mirror site Sunday.

Lugovoi, who represents the Liberal Democratic Party in the Duma, has again denied having anything to do with Litvinenko's murder.

"If you spin it the right way … it seems obvious. But it's not a fingerprint. It's impossible to say who left the polonium," he told the BBC during a fishing trip to the Kamchatka region.

Instead, Lugovoi suggested that British intelligence might have been involved.

"Litvinenko was an opportunist. … We may presume that he was involved in the polonium trade with the intention of staging an act of provocation or an act of terrorism," he said in the interview published Friday.

Prikhodko, the Kremlin aide, said the Litvinenko case "is not going to dominate the agenda."

"There are other issues that are more important," he said.

The four former foreign secretaries also called on Cameron to discuss Magnitsky, who died shortly after being brutally beaten in a Moscow jail, and Khodorkovsky, who is serving a prison term on charges that his supporters call politically motivated.

A senior European lawmaker said Cameron also should urge Putin to ensure that the Duma elections in December are democratic. Cameron is slated to hold talks with Putin on Monday afternoon.

"Cameron should stand by his principles and make it very clear to Prime Minister Putin that the upcoming election cannot be considered free and fair if the government continues to block all opposition parties of any credibility," Edward McMillan-Scott, a vice president of the European Parliament, told The Moscow Times.

The Dec. 4 vote is expected to be contested by the country's seven registered parties, of which four are in the current Duma, dominated by Putin's United Russia with a two-thirds majority.

In June, the Justice Ministry refused to register the opposition Party of People's Freedom on the grounds that it had submitted a fraudulent membership list, causing an outcry among the opposition.

Speaking by telephone from London, McMillan-Scott, a member of Britain's Liberal Democrats, who form a coalition government with Cameron's Conservatives, said Cameron should also press for the admission of Western election observers.

Their presence is "absolutely essential to ensure credibility of the poll and their absence would be construed as concerning business as usual within the Putin regime," he said.

Election observers will top the political agenda Tuesday and Wednesday, when Janez Lenarcic, the top responsible official of the Organization of Security and Cooperation in Europe, or OSCE, is holding talks in Moscow about sending observers for the Duma vote.

Earlier this month, Medvedev accused the OSCE election observer missions of double standards and of meddling in internal affairs of former Soviet nations.

Despite being a founding member, Moscow has long expressed dissatisfaction with the 56-member body's democratization efforts. Before the last Duma election in 2007, the organization angrily canceled its observer mission because of what it said were the Kremlin's unacceptable restrictions.

But Denis Bilunov, a leading activist of the Solidarity opposition movement, which is part the Party of People's Freedom, said he had little hope that Cameron could influence the country's domestic politics.

"I expect that London will act pragmatic like the majority of European countries who close their eyes to human rights violations," he said by telephone.

Bilunov said the issue of election monitors was marginal after the Party of People's Freedom was denied registration.

"It would be better for them to acknowledge that voters' rights have already been gravely violated," he said with regard to the OSCE.

Read more: http://www.themoscowtimes.com/news/article/kremlin-sees-no-reset-in-historic-cameron-visit/443550.html#ixzz1XiP8DoO2 The Moscow Times

Russia, UK to explore cooperation potentialhttp://english.ruvr.ru/2011/09/11/56016689.html

Sep 11, 2011 20:25 Moscow Time

Alexander Vatutin

Recalling an England tour by Tsar Peter I more than 3 centuries ago, the British Foreign Secretary William Hague has described Russia and the UK as age-old partners on the international scene who can successfully build mutually beneficial cooperation in all fields, despite occasional obstacles.

He was speaking in London Sunday ahead of a Moscow visit by David Cameron, the first by a British Prime Minister in 6 years.

The obstacles mentioned by Mr Hague include tension over Moscow’s refusal to extradite the Russian lawmaker Andrei Lugovoy, who is wanted in London on charges of complicity in the 2006 poisoning of the former Russian security officer Alexander

Litvinenko. The Russian law explicitly bans the extradition of nationals. According to the Kremlin aide Sergei Prikhodko, Russia’s position on the matter remains unchanged, which, however, does not rule out Russian cooperation with the British probe into Litvinenko’s death. Fortunately, London indicates willingness to put the Litvinenko case to one side, so that it does not hamper dialogue at all levels.

Mr Hague mentioned Russia’s clout as member of the G-8 and the G-20, a permanent seat holder on the UN Security Council and a leading economy within the powerful BRICS group, which experts believe is set to outstrip the G-7 before 2050 in everything that concerns economic output. It is only natural that Britain seeks a bilateral thaw and a working relationship with this country.

Some experts, however, strike a note of cautious pessimism over Mr Cameron’s visit. They include Dr Andrei Kulikov of the Europe Institute of the Russian Academy of Sciences:

"True, the visit is an important step towards a much better relationship. At the same time, it is unlikely to bring breakthroughs or resolve all problems that still exist between the two countries. Its significance is largely symbolic. It signals mutual willingness to move closer together in all fields."

The Kremlin describes the visit as purely pragmatic. According to Sergei Prikhodko, a summit between Mr Cameron and President Medvedev on Monday will revolve around trade and cooperation in energy and technology industries.

Britain is an important trading partner of Russia. In the six months to June, the turnover amounted to $10.3 billion, which is 50 percent more than in the same period in 2010. The British investment in Russia is at $41 billion, which makes the UK this country’s fifth biggest foreign investor after Cyprus, the Netherlands, Luxembourg and Germany. British companies help Russian counterparts develop oil and natural gas off Sakhalin. Britain’s BP is a valuable partner within the TNK-BP oil company.

In the technology sector, Britain contributes to Russia’s Skolkovo project, and Russia, to Britain’s East London technology park.

Dmitry Medvedev and David Cameron will also discuss the global economic crisis, Libya, Syria, the nuclear programme of Iran, Russia’s relations with the European Union and NATO and preparations for the next summit of the G-20.

Kingfisher to open 9 new stores in Russia - UK PMhttp://af.reuters.com/article/commoditiesNews/idAFR4E7JR01E20110912

Mon Sep 12, 2011 6:34am GMT

MOSCOW, Sept 12 (Reuters) - British retailer Kingfisher will open nine new stores in Russia and engine maker Rolls-Royce will collaborate with Russian atomic energy agency Rosatom under deals to be signed on Monday, British Prime Minister David Cameron said.

Cameron, on a one-day visit to Russia, said 215 million pounds ($345 million) of business deals would be signed later in the day.

They included Kingfisher, the world's third biggest home improvement retailer, opening nine new stores in Russia over the next three years and "an important collaboration" between Rolls-Royce and Rosatom on civil nuclear cooperation, he said.

He gave no further details.

UK firms sign £200m trade deals as Cameron woos Russiahttp://www.independent.co.uk/news/world/europe/uk-firms-sign-163200m-trade-deals-as-cameron-woos-russia-2353153.html

By Oliver Wright, Whitehall Editor

Monday, 12 September 2011

David Cameron will today announce trade deals with Russia worth £200m including plans to co-operate over civil nuclear energy as part of attempts to recalibrate Britain's relationship with Moscow. The Prime Minister was due to arrive in the Russian capital late last night, accompanied by 24 British business leaders including the BP chief executive Bob Dudley and the CEO of Rolls Royce, Sir Simon Robertson.

Today he will meet the Russian President Dmitry Medvedev and Prime Minister Vladimir Putin. It will be the first official bilateral visit to the country by a British Prime Minister since 2005, and comes as the UK seeks to "re-set" its relationship with Russia following the murder of Alexander Litvinenko by suspected Russian agents in 2006. While Mr Cameron is expected to raise the issue of Litvinenko, the British have made it clear that they no longer regard it as an issue that should get in the way of improving relations with the Kremlin.

This has caused concern among four former Foreign Secretaries who wrote to The Sunday Times yesterday demanding Mr Cameron confronts the Russians over the regime's hostility to businessmen, lawyers and journalists. "More than half of Russian businessmen said they would like to leave the country entirely and their reasons are obvious," wrote David Miliband, Margaret Beckett, Jack Straw and Malcolm Rifkind.

"One in six of their fellow businessmen have been subject to criminal proceedings, and hundreds of thousands are currently detained in Russia's jails, victims of an increasingly potent mix of corruption and lawlessness."

But Mr Cameron said improving relations were a priority: "Although our differences in recent years are well known, we face many similar challenges and the President and I believe we can make more progress by working together on matters of real importance. That's why we've sought to put our relationship on a firmer footing and why I'm looking forward to my visit."

There are 600 British companies already operating in Russia, where economic growth is around 4 per cent – well above the European average.

On this trip deals worth £215m are expected to be announced. The two countries are expected to strengthen co-operation in the area of civil nuclear energy, paving the way for increased commercial co-operation between the UK nuclear supply chain and Russian state energy corporation Rosatom, which is developing civil nuclear projects around the world.

The agreement is expected to put leading British firms involved in nuclear engineering and manufacturing in a good position to bid for work on Rosatom's contracts with the possibility that they could secure business worth £1bn. Speaking about the trading relationship between the UK and Russia in a speech tomorrow, Mr Cameron will say: "Russia is resource rich and services light. Britain's the opposite. So we 're uniquely placed to help each other grow."

Medvedev to Propose Shell-Gazprom Expansion During Cameron Visithttp://www.bloomberg.com/news/2011-09-11/medvedev-to-propose-shell-gazprom-expansion-during-cameron-visit.html

QBy Anton Doroshev - Sep 11, 2011 12:00 PM GMT+0200

Russian President Dmitry Medvedev will propose Royal Dutch Shell Plc (RDSA) expand cooperation with state-run OAO Gazprom during the first visit by a U.K. prime minister in six years, as the leader seeks to improve relations between the countries.

Medvedev and U.K. Premier David Cameron will discuss a plan for Gazprom and Shell to increase output at Sakhalin-2, Russia’s only liquefied natural gas project, boosting supplies to Asia, said a Kremlin official who declined to be identified, citing state policy. Shell agreed to cede control of the project to OAO Gazprom in 2006 after months of pressure from regulators.

Russia expects Cameron’s visit to signal better relations between the two countries, which soured in 2006 after Alexander Litvinenko, a former Russian agent, was poisoned in London with the radioactive isotope polonium-210. Litvinenko on his death bed blamed then-President Vladimir Putin for the murder, an accusation the Kremlin called “absurd.”

“We’d like to make it clear to both Russian and British business that the show must go on,” the official said, commenting on the impact of the Litvinenko case. “It’s wrong when a topic that’s sensitive to a certain part of society leads all other directions into a dead end.”

Scotland Yard suspects Andrei Lugovoi, a former KGB agent, of Litvinenko’s murder and has unsuccessfully sought his extradition from Russia. Lugovoi will not dominate the talks between the two leaders, the official said.

BP Raid

The offer to Shell may be an attempt to balance some of the troubles BP Plc (BP/) has faced in Russia this year. The U.K. energy company’s planned share swap and Arctic exploration deal with state-controlled OAO Rosneft collapsed after a challenge from its billionaire partners in Russian oil producer TNK-BP, who claimed it violated their shareholder agreement. Rosneft last month selected Exxon Mobil Corp. (XOM) as its partner for the Arctic.

A group of minority investors in TNK-BP’s traded unit sued BP for about $3 billion in damages they say result from the lost opportunity, and court bailiffs searched BP’s Moscow office for documents starting Aug. 31.

Medvedev won’t discuss BP or the raid with Cameron, the official said. BP Chief Executive Officer Robert Dudley may accompany Cameron, Sky News reported, without saying where it got the information.

“Gazprom and Shell are discussing and analyzing the possibility of boosting production at the Lunskoye field to feed the liquefied natural gas lines,” the official said, without specifying the extent of the expansion.

Sakhalin LNG

The venture produces at the Lunskoye and Piltun-Astokhskoye offshore fields and runs an LNG plant with a capacity of 9.6 million metric tons a year on Sakhalin Island north of Japan.

Shell may offer Gazprom assets in Asia in exchange for a deal to expand Sakhalin-2, people with knowledge of the negotiations said in February. The talks follow an agreement in November to expand cooperation under a possible global alliance. Shell

wants to add a third liquefied natural gas production unit at the $22 billion venture, which could raise output by 50 percent.

Gazprom, Russia’s biggest gas producer and export monopoly, bought just more than 50 percent of the Sakhalin-2 venture for $7.45 billion from Shell and its partners, Mitsubishi Corp. (8058) and Mitsui & Co. Shell controls 27.5 percent of the Sakhalin Energy Investment Co. operator, and Mitsubishi and Mitsui hold the balance.

To contact the reporter on this story: Anton Doroshev in Moscow at adoroshev@bloomberg.net

To contact the editor responsible for this story: Mark Sweetman at msweetman@bloomberg.net

'Similar challenges’ - British PM on one-day Moscow visithttp://rt.com/news/cameron-uk-visits-moscow-301/print/

Published: 12 September, 2011, 10:10Edited: 12 September, 2011, 10:12

British Prime Minister David Cameron is in Moscow for talks aimed at rebuilding strained relations between the UK and Russia. The one-day visit, first since 2005, is expected to focus on trade links between the two countries.

Cameron is due to hold a day of talks in Russia on Monday, accompanied by two dozen British businessmen, including oil company BP's chief executive Bob Dudley and Royal Dutch Shell CEO Peter Voser. The two sides are seeking to revive worsened relations.

In addition to talks with President Dmitry Medvedev, the British PM is to meet his Russian counterpart Vladimir Putin. No British minister or diplomat has spoken with Putin directly in the four years.

The British PM apparently views his visit to Moscow as a major opportunity to thaw frozen ties with Russia.

Ties between Russia and UK have been strained in recent years over a number of issues, notably the poisoning death of a former Russian security agent in London.

That case was followed by a diplomatic row and expulsions. There has also been reluctance by the British authorities over the past couple of years to extradite several Russian citizens to face charges in Russian courts.

Moscow from its side has also refused to satisfy a long-standing request from the UK to extradite Andrey Lugovoi, suspected of involvement in the death a former KGB officer. Lugovoi has always denied involvement.

Regardless, extradition of citizens to other countries is prohibited by the Russian constitution.

According to Russian presidential aide Sergey Prikhodko, Dmitry Medvedev, and David Cameron will also discuss the situation around Syria, Iran's nuclear program, preparations for the G20 summit, the relations between Russia and NATO, Russia and the EU, the issues of global financial crisis.

According to a Kremlin source "special attention" will be paid to the Libya and Syria crises. Britain and Russia have different view on the goings on in those turbulent countries. Britain was one of the first countries to try to secure the UN resolution to go in Libya and also to apply force against the Gaddafi regime. Moscow has also refused to support UN sanctions against Syria.

Despite deep differences, both sides have common ground on which they can begin to rebuild.

Both countries understand their responsibility as major economies in global financial crisis.

"Russia is an important partner for the U.K., although our differences in recent years are well known. We face many similar challenges and both the president [Dmitry Medvedev] and I believe that we can make more progress by working together on matters of real importance for the prosperity and security of people in both countries," Cameron said, as quoted by Itar-Tass news agency.

Britain is one of the largest foreign direct investors in Russian economy. British investments in Russia reached US$40 billion by the end of 2010.

Cameron hopes to seal new deals worth $340 million, which would create 500 new jobs in Britain.

Russia and Britain both are to host upcoming Olympic Games – the summer games in London 2012 and the next winter games in Russia’s Sochi 2014. Both sides believe that they can learn from each other.

Cameron's visit to Russia is the first by a British prime minister since Tony Blair visited St. Petersburg for a G8 summit in July 2006. Since becoming prime minister in May 2010, Cameron has met four times with Medvedev, who invited him for this week’s visit.

Ousted Moscow Mayor Living in U.K., Russian Ambassador Tells BBChttp://www.bloomberg.com/news/2011-09-09/ousted-moscow-mayor-living-in-u-k-russian-ambassador-tells-bbc.html

QBy Henry Meyer - Sep 9, 2011 5:48 PM GMT+0200

Ousted Moscow mayor Yury Luzhkov, whose billionaire wife agreed last week to sell her construction empire, is living in the U.K., Russia’s ambassador to Britain said.

“I know he is living in Britain, but this is his personal affair,” Alexander Yakovenko said in an interview with the British Broadcasting Corp. posted on its website.

Russian state media ran a series of critical reports against Luzhkov and his wife, Yelena Baturina, in the runup to the ex-mayor’s sacking last September by President Dmitry Medvedev. They accused the mayor, 74, of corruption and favoritism toward his wife, Russia’s richest woman, during his 18-year stewardship of Europe’s largest city. Both denied any impropriety.

Sberbank Investments, a unit of Russia’s state-run lender, and B&N Bank Chief Executive Officer Mikhail Shishkhanov said Sept. 6 they had agreed to buy Baturina’s ZAO Inteco construction company. Lukhkov’s wife decided to sell the company after getting a fair offer, statements cited her as saying.

In the almost two decades her husband ran City Hall, Baturina, 48, built up a fortune estimated by Forbes in June 2010 at $2.9 billion. Her wealth fell to $1.2 billion, Forbes said in March.

Inteco is worth about $1.2 billion, according to the sale announcement, which didn’t specify the price. The company had debts of around $1 billion, meaning Baturina will get $200 million in cash, the Vedomosti newspaper reported Sept. 7.

Prominent Russians

The U.K. is home to other prominent Russians who have sought exile, including one-time billionaire Boris Berezovsky, provoking friction with Russia. Berezovsky, who received political asylum in the U.K. after fleeing Russia in 2001, has been sentenced in absentia to prison for embezzlement.

“Today, there are of course well-known figures like Mr. Berezovsky” in the U.K., Yakovenko said. “There are also around 40-50 people who, according to Russian law, are just criminals.”

“They are linked to various drug deals and to organized crime and money-laundering and we will work with the U.K. authorities to ensure they are handed over to the Russian judiciary,” the ambassador said.

U.K. Prime Minister David Cameron will hold talks in Moscow on Sept. 12 with Medvedev and Prime Minister Vladimir Putin, becoming the first British leader to visit Russia since 2005 as relations soured to a post-Cold War low after the 2006 murder of ex-KGB agent Alexander Litvinenko in London.

Deathbed Statement

In a deathbed statement, Litvinenko, a Berezovsky associate who died of radiation poisoning in London, blamed then-President Putin for his murder. The Kremlin dismissed the accusation as “absurd.”

The former chief executive officer of Bank of Moscow, Andrei Borodin is the subject of an international arrest warrant by Russian authorities over his connection to a $428 million loan alleged to have ended up in the accounts of Baturina. Borodin’s current whereabouts are unknown. The state-run RIA Novosti news service initially said he was in London.

Investigators haven’t provided any proof of wrongdoing and the loan is being repaid on schedule, Borodin’s Moscow-based attorney Mikhail Dolomanov said in July. Gennady Terebkov, a spokesman for Inteco, said April 6 that Baturina hasn’t done anything wrong.

The criminal proceedings against Borodin and state-run VTB Group’s February takeover of Bank of Moscow, formerly owned 46.5-percent by the Moscow City Hall, were a “political” move to change the bank’s shareholders, Borodin said Aug. 24 in e- mailed comments to Bloomberg.

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net

Russia takes stake in unusual British drug companyhttp://www.reuters.com/article/2011/09/12/britain-russia-pharmaceuticals-idUSL5E7KC0QA20110912

3:51am EDT

* Anglo-Russian drug firm Pro Bono Bio launched

* Collaboration between Celtic Pharma and RusNano

* New group eyes eventual listings in London, Moscow

LONDON, Sept 12 (Reuters) - The Russian government has become the leading shareholder in a new Anglo-Russian drug company with an unusual mission to develop nanotechnology, help the world's poor -- and list in London and Moscow within a few years.

Pro Bono Bio is formed from the assets of Celtic Pharma, a private equity group based in London that specialises in life sciences, and RusNano, a Russian state corporation formed to champion nanotechnology.

A company spokesman said on Monday that RusNano had already invested around 300 million pounds ($477 million) in Celtic's funds and would have a stake of more than 40 percent in Pro Bono Bio.

Pro Bono Bio has a commitment to price its products in different countries based on their ability to pay and it will provide free drug donations to Africa based on sales of products at normal prices in Western Europe.

The company's first product is being launched in Britain this week. Flexiseq is a prescription cream for the treatment of pain in osteoarthritis, which contains nano-scale particles.

The launch of the new company coincides with a visit to Russia by British Prime Minister David Cameron, who described the venture as "a great example of UK-Russia collaboration at the cutting edge of R&D".

Two further products will be launched in the coming months for inflammatory skin disorders, including psoriasis and eczema. Initially, these products will be supplied by European and Russian manufacturers, but in the mid-term Pro Bono Bio said it planned to build its own pharmaceutical plant close to Moscow and a sister plant in Britain.

Pro Bono Bio is being led by John Mayo, the founder of Celtic Pharma. ($1 = 0.629 British Pounds) (Reporting by Ben Hirschler; Editing by Jon Loades-Carter)

InterContinental Hotel Group to open 100 hotels in Russia and CIS by 2020http://en.rian.ru/business/20110912/166773371.html

11:09 12/09/2011

MOSCOW, September 12 (RIA Novosti)

The world's biggest hotel chain, InterContinental Hotels Group (IHG), has announced plans to open 100 hotels in Russia and the Commonwealth of Independent States (CIS) by 2020.

The company said these hotels would create more than 8,000 Russian jobs.

IHG, which first entered Russia in 1998 when it opened the Holiday Inn Vinogradovo in Moscow, currently has 11 hotels across Russia and five in the CIS.

"We aim to grow our presence in Russia by more than six times in the next decade," Aron Libinson, IHG's vice-president for development in Russia and CIS, said in a press release.

"We believe the demand for all our brands will continue to grow over the next 10 years as domestic travel increases and greater numbers of businesspeople and tourists travel to Russia from overseas."

IHG also announced it plans to introduce its newest hotel brand, Hotel Indigo, into Russia.

Angela Brav, chief executive officer for IHG in Europe, is among 24 senior executives travelling on Monday with British Prime Minister David Cameron to Moscow.

Brav said the company was working with Russia's leading property development company Crocus Group to build Europe's biggest Holiday Inn in Moscow. The new hotel is due to open in 2014.

IHG also said it was opening the Moscow branch of the IHG Academy in February next year. The program, which first started in China, provides international standard hospitality training, helping students gain real experience of working in a hotel and enhancing their chances of finding jobs in the hotel industry.

Gulfstream flying into Russian markethttp://www.charterx.com/resources/article.aspx?id=8887

12-Sep-2011

By Mary Carr Mayle

With its international order book continuing to grow, Savannah-based Gulfstream Aerospace Corp. will bring three of its top-selling business jets to the sixth annual Jet Expo Russian International Business Aviation Exhibition next week near Moscow.

Expected to be on display at the three-day expo, which begins Wednesday, are the wide-cabin, high-speed Gulfstream G150; the large-cabin, long-range Gulfstream G450 and the large-cabin, ultra-long-range Gulfstream G550.

The company will also conduct an onsite operator’s forum Thursday to provide updates and technical presentations on maintenance and operational subjects relevant to Gulfstream operators in Russia.

Several members of the company’s senior leadership team will be on hand to meet with customers and the media.

“The number of Gulfstream aircraft in Russia has grown considerably over the past several years,” said Gulfstream President Larry Flynn.

“Since 2007, the Gulfstream fleet in the country more than quadrupled and all of our aircraft, from the G150 to G550, are well-represented.”

Gulfstream aircraft are ideally suited to the diverse needs of the Russian market, Flynn said.

“The G150, for example, can fly 3,000 nautical miles at mach 0.75, meaning you can fly to London from Moscow in the morning, conduct business in the city and be home for dinner that night. The aircraft’s nonstop range and flexibility make it an absolute best-in-class.”

The same holds true for the G550, one of the most popular Gulfstream aircraft in Russia, Flynn said. With a range of 4,350 nautical miles, the G550 can fly nonstop from Moscow to such far-flung cities as Sao Paulo, Brazil or Perth, Australia.

“In addition to seeing our aircraft, Jet Expo attendees will have an opportunity to learn more about our worldwide product support network and our research-and-development efforts,” Flynn said.

Gulfstream continues to benefit from international market growth in the business jet industry, said Joe Lombardo, Executive Vice President of Aerospace for Gulfstream parent General Dynamics.

“Starting about five years ago, we began to see our (order) intake portfolio changing, with more than 50 percent of sales outside of North America,” Lombardo said.

The company finished last year with 60 percent in international sales.

“World economic conditions have helped us in countries that have fared well during the recent downturn,” he said. “Prospects continue to remain favorable in such countries as Brazil, India and China as well as Russia.”

Moscow and Washington to Host Bilateral Open Government Codeathon for Civic Apps http://www.huffingtonpost.com/alexander-howard/moscow-and-washington-to-_b_956084.html

Posted: 9/11/11 10:34 PM ET

Innovations in democratic governance have been and likely always will be a global phenomenon. In less than two weeks, an unprecedented bilateral codeathon between the United States and Russia held in both Washington, D.C. and Moscow, Russia will further extend the reach and collaborative flavor of the open government movement.

Needless to say, this sort of event probably wouldn't have been possible twenty years ago. The "Code 4 Country codeathon" will last between September 24 at 9AM until September 25 at 5:00 PM and will be held at American University in D.C. and across the Atlantic ocean in the offices of Yandex in Moscow. The codeathon organizers are actively encouraging creative ideas for civic applications that civic developers can work on that will make civil society stronger, solve problems for citizens and enable more government transparency.

"This is a really exciting, cutting-edge event," said Emily Parker, a member of Secretary of State Hillary Clinton's policy planning staff who covers innovation, technology and 21st Century statecraft at the United States Department of State. "It's the first time that programmers from the U.S and Russia have joined forces in this way to address challenges of open government and transparency."

Unlike the recent EPA hackathon that was recently held at American University, this codeathon is not specifically sponsored by government, despite the understandable awareness and interest in the nation's diplomatic corps, given the transnational component. (Organizers have chosen to call this a codeathon, not a "hackathon," given continued sensitivities about the negative connotation of "hacking" in government circles.) Code4Country was convened within the framework of activities of the Bilateral Presidential Commission and represents a collaboration between the Skolkovo Foundation, Yandex, Google, civil society organizations in Russia and the United States. The codeathon will be seeded with volunteers from both Google, in the U.S., and Yandex, which will host the Russian side of the event. That involvement substantially increases the likelihood that working apps will emerge at the other end of the weekend.

Early expectations for the codeathon appear high with the open government community. "So awesome: Russian and American coders unite for an open gov and transparency hackathon. The Rocky 4 of civic coding." tweeted Mark Headd, a strong proponent of the value of open government hackathons.

The codeathon will be held simultaneously in both Washington DC and Moscow. Both codeathons will begin on Saturday morning, which means coders in Russia will have a few hours of coding before the U.S. begins, and the U.S. effort will go a few hours longer. For most of the weekend, however, the codeathons will be working simultaneously will be connected through a live stream, Skype, IM and a wiki, leveraging the tools for online collaboration that are now applied in codeathons everywhere.

Given the history of corruption in Russia, as in many other countries, there's ample room for citizens, technology and government to collaborate here. According to a 2010 Transparency International report on global corruption perceptions around the world, Russia slid from 146th place to 154th from the bottom, out of 178 countries measured. Procurement reform is a significant issue in government. The Russian government recently launched an initiatives to conduct government procurement online to increase transparency and reduce the opportunities for corruption. Such efforts are posed against tremendous challenges.

The outcomes for the codeathon looks fairly "blue sky" at the moment. Code4Country is open to both mobile and web-based apps. There are already problem definitions going up at the Code4Country website which could include either direction. Organizers are actively seeking creative ideas and input about how to increase transparency and openness in their communities from civil society, NGOs, media, and citizens.

There's considerable context for the codeathon. From Kenya to Brazil to British Columbia, new laws and platforms are giving citizens new means to ask for, demand or simply create greater government transparency. Technology has dramatically changed the way that government, citizens and civil society can share information, hold government accountable or, crucially, donate their skills. Russia already has notable examples of open government platforms, like OpenGovData.ru, Russian-Fires.ru, Streetjournal.ru, and Datagov.ru that come from non-government and non-profit projects. 21st century ideas require 21st century models of collaboration.

This codeathon could provide an important model for other countries analyze and potentially adopt, along with producing prototypes for apps that could have an even broader impact. Follow the @Code4Country Twitter account for more details going forward.

09:15 12/09/2011ALL NEWS

Medvedev to hold meeting on Lokomotiv Yaroslavl team future

http://www.itar-tass.com/en/c154/223409.html

MOSCOW, September 12 (Itar-Tass) — Russian President Dmitry Medvedev will hold a meeting on the future of the Lokomotiv Yaroslavl ice hockey club the first team of which was killed in a plane crash last Wednesday.

The press service of the Ice Hockey Federation of Russia, taking part in the meeting will be head of the Russian Ice Hockey Federation Vladislav Tretyak, the leaders of the Kontinental Hockey League (KHL), of the Lokomotiv club, its sponsors, as well as the Yaroslavl region officials.

The meeting is expected to discuss how not only to restore the Lokomotiv Yaroslavl team, but also to preserve it as one of the best clubs in the KHL.

“Taking into account that it was really a favourite team in Yaroslavl, and also in our country, because it was the champion several times and took other prizes, it is necessary to think about how to revive the potential and I think that it exists,” Medvedev said on Thursday at a meeting of the emergency response headquarters in the aftermath of the air crash. “In this regard, our hockey league should do all that is necessary together with those who helped develop the team,” the president said. “After parting with the people it is, of course, necessary to think about the support measures, I mean not only material but also the kind of support that would enable the club to work in the coming years, given the tragedy that has happened,” Medvedev said.

On Saturday, Prime Minister Vladimir Putin held a brief meeting on the subject when he attended the ceremony of paying the last respects to the ice hockey players killed in the plane crash. Having paying tribute to them, the prime had a brief meeting with sports professionals, which was attended by Russian Ice Hockey Federation President Tretyak, President of the Kontinental Hockey League Alexander Medvedev, head of the International Ice Hockey Federation (IIHF) Rene Fasel, Russian Minister of Sports and Tourism Vitaly Mutko, Chairman of the Board of Directors of KHL Vyacheslav Fetisov and RF presidential adviser Arkady Dvorkovich.

The Yakovlev Yak-42 plane, carrying the Lokomotiv team was on its way to Belarus to play a match against the Dynamo Minsk team, crashed near Yaroslavl on September 7. Of the 45 people who were on the plane, only two survived: hockey player Alexander Galimov and steward Alexander Sizov. Doctors are now trying to save their lives.

The whole Lokomotiv team - 37 people – was aboard. It comprised sportsmen and coaches from Russia and seven other countries - Canada, the Czech Republic, Slovakia, Latvia, Sweden, Belarus and Ukraine.

Lokomotiv was one of the strongest and most popular teams in Russia. Three times it became the champion of the country back in those years when there was no KHL yet - in 1997 (then it was called Torpedo), as well as in 2002 and 2003.

In the new league, bringing together Russian and foreign teams, Lokomotiv also played the leading roles. The Kommersant daily reported that the club, which has always been an

example of an organic blend of athletic style and combination play, competent selection and intelligent work with youngsters (in terms of productivity its school was among the best in Russia), was among the top favourites in the championship this season.

The tragedy has affected not only Russia. On the list of passengers of the ill-fortunate flight there were some foreigners. This summer, the position of the club’s head coach was taken by Brad McCrimmon, who had long worked as an assistant coach at Detroit Red Wings. In the off-season, the team noticeably reinforced its composition. Lokomotiv acquired Czech Jan Marek, the world champion of 2010, the star of Dallas Karlis Skrastins, of Latvia, Swedish goalkeeper Stefan Liv, the rising star of Russian hockey Alexander Vasyunov, of New Jersey ... Among the dead there were Josef Vasicek and Karel Rachunek, who were the leaders of the Czech national team, Pavol Demitra, of Slovakia, and Ruslan Salei, from the national team of Belarus. The club’s management spared no money to buy players, hoping that this season the club would win a fourth national title. The ice hockey club Lokomotiv, according to Komsomolskaya Pravda, was in fact a team of the world. Russian Ice Hockey Federation President Vladislav Tretyak on Wednesday announced that Yaroslavl’s Lokomotiv should be revived soon “as a monument to the perished team.”

The loss of the hockey club brings back the memories of a plane crash of 1979, which killed Tashkent’s soccer club Pakhtakor, of the USSR’s top league. Then the accident was blamed on an air traffic controller’s error, which caused two aircraft collide in the sky over the Dniepropetrovsk Region of Ukraine. Pakhtakor, too, was on the way to Minsk.

September 12, 2011 11:53

Detectives to question Yak-42 engineer when doctors allowhttp://www.interfax.com/newsinf.asp?id=272331

MOSCOW. Sept 12 (Interfax) - Yakovlev Yak-42 engineer Alexander Sizov, who survived the air crash in Yaroslavl on September 7, will be questioned as soon as his health condition permits that, Russian Investigations Committee spokesman Vladimir Markin told Interfax.

"Alexander Sizov will be questioned within the Yak-42 crash case as soon as doctors permit detectives to speak to the engineer," he said.

te

(Our editorial staff can be reached at eng.editors@interfax.ru)

Russian ice-hockey plane crash survivor dies in hospitalhttp://en.rian.ru/russia/20110912/166773461.html

11:14 12/09/2011

MOSCOW, September 12 (RIA Novosti)

One of the only two survivors of last week's plane crash that wiped out almost the entire Lokomotiv Yaroslavl ice-hockey team died in hospital on Monday, hospital officials said.

Alexander Galimov, a Yaroslavl native, began his career in 2004 and was a member of the silver-medal winning Russian U20 team at the 2005 World Junior Ice-Hockey Championships. He also played for the senior national team. He was 26.

"Alexander Galimov died from severe burns in the burn center of the Vishnevsky Institute of Surgery," the statement said.

"We did everythng possible to save him," burn specialist Andrei Alekseev said.

Forty-five people died on Wednesday afternoon when a plane carrying the Lokomotiv Yaroslavl ice-hockey team crashed during take-off near Yaroslavl, some 300 kilometers from Moscow.

Galimov, who had suffered burns to 90% of his body, was sent to Moscow Institute of Surgery on Thursday together with another survivor, crew member Alexander Sizov.

Sizov was moved from intensive care to a ward on Monday and his life is now out of danger, hospital officials said.

Police eyewitnesses said that Galimov walked away from the wreckage of the plane.

Medvedev orders shutdown of airlines not ensuring flights safetyhttp://www.prime-tass.com/news/_Medvedev_orders_shutdown_of_airlines_not_ensuring_flights_safety/0/%7B35E45ED2-B10D-4B6D-B0AA-977C9139169A%7D.uif

MOSCOW, Sep 12 (PRIME) -- Russian President Dmitry Medvedev has ordered the government to immediately shut down the operations of all airlines that cannot ensure the safety of their flights, the Kremlin’s press service reported on September 11, as cited by RIA Novosti.

“A complex set of measures to halt the activities of airlines that do not meet Russia’s flight safety standards must be developed by November 15, 2011,” the press service said.

The order came following the September 7 crash of a Yak-42 plane in the Yaroslavl Region that killed 43 people on board.

The president also ordered the government to develop and submit to the State Duma, the lower house of parliament, draft bills seeking to increase the fines for violations of flight safety rules by December 20.

Among other measures, Medvedev also ordered the government to subsidize local and regional flights as well as leasing out planes that meet the safety necessary requirements by February 1, 2012.

He also instructed the government to work out measures to equip planes with KOSPAS-SARSAT emergency locator transmitters by December 31, 2012.

The government is also looking into the possibility of only clearing airlines with a minimum of five planes the right to operate a maximum of three routes, while airlines with 10 planes of the same type would be allowed to make flights on more than three routes, Kommersant business daily reported on Monday citing a source on the market. According to data from the Federal Air Transport Agency, all Russian airlines except for Aeroflot Russian Airlines, Transaero, Siberia Airlines, UTair, and Urals Airlines, have less than 10 planes of the same type or are operating old planes that are likely to be put out of operation, the daily said.

Sources also told Kommersant that the agency was unlikely to clear airlines operating obsolete Soviet-era planes such as the Yak-40, Yak-42, Tu-134, Tu-154 B, An-24, and An-26.

End

12.09.2011 12:00

10:14 12/09/2011ALL NEWS

Baikal Economic Forum underway in Irkutsk

http://www.itar-tass.com/en/c154/223444.html

IRKUTSK, September 12 (Itar-Tass) — The Baikal Economic Forum (BEF) has opened in Irkutsk on Monday.

BEF participants “are to discuss strategy for economic development of Siberia and the Russian Far East and the related long-term investment projects, to consider possible ways of strengthening cross-border and regional cooperation with countries in the Asia-Pacific Region (APR), and special attention will be given to youth entrepreneurship in the Shanghai Cooperation Organisation (SCO) countries,” it is said in address of Russian President Dmitry Medvedev that was read out by his envoy to the Siberian Federal District Viktor Tolokonsky.

RF Prime Minister Vladimir Putin has also expressed confidence that the discussion in the East Siberian capital will be held “in a constructive and creative manner, to help implement the popular and useful initiatives.” “For many years, BEF has been an authoritative discussion platform that provides an excellent opportunity for an interested professional discussion of the economic development in Russia, especially Siberia and the Far East,” the prime minister noted in his messaged that was read out by the governor of the Irkutsk region, Dmitry Mezentsev. Among the main priorities for the eastern territories of the Russian Federation Putin outlined the “implementation of innovative projects to create new jobs in modern industries, improvement of the transport, communication and energy infrastructure, effective development of natural resources, expansion of business and cultural contacts with Asia-Pacific and European countries.”

The Baikal Economic Forum that is held in Irkutsk for the 7th time has gathered parliamentarians, officials of relevant agencies and representatives of the business community. A distinctive feature of BEF 2011 is broad participation of foreign representatives. In addition to the discussions in plenary and thematic “roundtable” meetings, the international conference “Europe-Russia-APR: the development of transport infrastructure,” is planned for the three days of the forum, as well as meetings of the Commission on the Modernisation and Technological Development of the Russian Economy, the Council of the Association of Innovative Regions of Russia, the Council on the Development of the Forestry Sector of Russia under the RF government. The forum’s business part will have the signing of agreements on cooperation of the leading national corporations with the RF regions and foreign partners, as well as an exhibition of investment projects. By tradition, the Shanghai Cooperation Organisation (SCO) day will end the event’s programme.

According to the BEF release, In 2010, the VI BEF was held; and as its participants thought it became one of the most impressive - 1,607 people, including delegations of 17 countries (Kazakhstan, Poland, China, Japan, France, and South Korea among them), participated in the Plenary Sessions and Round Tables discussions. As many as 34 members of the Federation Council and 12 State Duma deputies, the heads of 22 federal authorities and 53 delegations from the regions were the Forum participants. Representatives of 66 major Russian and foreign companies, as well as authoritative Russian public associations, Chamber of Commerce, the Russian Union of Industrialists and Entrepreneurs, Association of Russian Banks, etc. worked at the BEF.

Twenty-one agreements between regional governments and major companies, as well as between commercial entities were concluded in the frames of the VI BEF. Estimated volume of investments may reach 214 billion roubles.

In 2011 (September, 12-14), the VII Baikal International Economic is held in Irkutsk. The Forum official opening ceremony was held on September 12th, as well as the plenary session on “the State policy for the development of the Far East and the Baikal region.” Viktor Basargin, the RF Minister Regional Development Minister, will present a report “On the Strategy for the Development of the Far East and the Baikal Region.”

The exhibition of investment projects of Siberia, the Far East and the countries of the SCO is to be opened on the same day. Traditionally, the second day will focus on the BEF Round Tables activity and the signing of a series of treaties and agreements. In addition, the meeting of the Council for Development of the timber industry complex of Russia at the Russian Government led by Victor Maslyakov will be conducted on September 13th; as well as an international conference and reception held by the RF Federation Council. September 14 will be the SCO Day- a series of business meetings, in which SCO representatives will participate, will be held.

09:50 12/09/2011ALL NEWS

Proximity to APR to help Russia innovation market - FC official

http://www.itar-tass.com/en/c154/223430.html

IRKUTSK, September 12 (Itar-Tass) — The proximity to the booming Asia-Pacific Region (APR) will help develop Russia’s innovation market, this confidence was expressed on Monday by first vice-speaker of the Federation Council upper house of Russia’s parliament Alexander Torshin at the Baikal Economic Forum in Irkutsk.

“Siberia and the Far East with their richest resources, scientific, industrial and human potential can be zones of strong economic growth, the regions that will ensure the future of our country,” the FC member noted. “An important role in this is played by the nearness of the rapidly developing Asia-Pacific countries,” he believes. “It is important for us to focus on the best scientific and technological progress in these countries and to use good-neighbourly relations to implement our own innovative breakthrough,” Torshin said.

“Russia is a key player in the region,” he is certain. “Stability in the Asia-Pacific Region largely depends on the economic decisions that we make,” he added.

The Baikal Economic Forum is one of the biggest business forums in Russia, the key event in the economic and political life of the East Siberia and Far East regions. Over the

past 10 years, notable people of the country and representatives of the Russian business elite and foreign countries have been traditionally the participants of the Forum, according to the event’s website.

The Forum is organised by the Federation Council of the Russian Federal Assembly, the RF Ministry of Regional Development, RF Economic Development and Trade Ministry and Irkutsk Oblast Administration. Before 2010, the BEF had been held in Irkutsk once in two years. In 2010, the decision to hold the Forum annually was made at the Federal level.

The first Baikal Economic Forum took place in 2000. According to the organisers’ plans, it should have been an ideological continuation of the “CIS Countries Economic Forum, St. Petersburg, held in the Russia’s ‘northern capital’ since 1996, that plays an important role in establishing economic and political relationships between the participating countries.

12 September 2011, 10:18

Russian railroads chief partially wins defamation casehttp://www.interfax-religion.com/?act=news&div=8723

Moscow, September 12, Interfax - Head of the Council of Trustees of the St. Andrew the First-Called Foundation and JSC Russian Railways Vladimir Yakunin, has partially won a defamation court case against a man who accused him of "a direct role in the impoverishment of the Russian people" and said he was not worthy of taking part in bringing to Russia fires lit from the Holy Flame in Jerusalem during Easter.

Businessman Mikhail Dvorkovich launched his attack on Yakunin in an appeal to the Patriarch Kirill of Moscow and All Russia, which was posted on the Vzglyad website.

Yakunin responded by bringing a suit to the Dorogomilovsky Court in Moscow.

"The court has partially satisfied Yakunin's suit. We asked for 200,000 rubles, and the court ordered 100,000 to be paid - 50,000 by the newspaper Vzglyad and 50,000 by Dvorkovich," the railroad chief's lawyer Alexey Melnikov told Interfax.

The court also ordered the defendants to refute the information that was published.

"It is not the amount of compensation that is important for us but the fact that the court has recognized that what was published was a lie," Melnikov stressed.

Yakunin is involved in transporting fires lit from the Holy Flame as chairman of the Council of Trustees of the St. Andrew the First-Called Foundation.

"Islam Report Card" now available in Russian

http://abna.ir/data.asp?lang=3&id=265043

The Russian version of "Islam Report Card" by renowned Iranian scholar Abdolhossein Zarrinkub is available at the 24th Moscow International Book Fair.

(Ahlul Bayt News Agency) - The Russian version of "Islam Report Card" by renowned Iranian scholar Abdolhossein Zarrinkub is available at the 24th Moscow International Book Fair.

Translated by the Iranian cultural attachés office in Moscow, the book was released by Irans Amirkabir publications and Russias Veche Publisher.

The Russian versions of a number of Persian literary and historical books were jointly published in that country after the managing director of the Amirkabir Publications Ahmad Nesari travelled to Moscow in the previous year.

The sublime position of science in Islam, the masterpiece of Islamic culture, Islamic civilization, books and libraries, medicine and natural sciences, and mathematics and astrology are some of the chapters of the book.

Abdolhossein Zarinkub (1923-1999) was a prominent scholar of Iranian literature, history of literature, Persian culture and history. His research made him a global Iranologist and undisputed master of Persian literature and poetry. He wrote dozens of books in Persian, French, and English, and published hundreds of articles.

The 24th Moscow International Book Fair is currently underway in Russia and will run until September 12.

PRESS DIGEST - Russia - Sept 12http://in.reuters.com/article/2011/09/12/press-digest-russia-sept-idINL5E7KC0GW20110912

12:37pm IST

Moscow, Sept 12 (Reuters) - The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

VEDOMOSTI

www.vedomosti.ru

- The paper runs an interview with Swiss Economy Minister Johann Schneider-Ammann, who says Switzerland may sign a deal on free trade with Russia in the next year and a half.

- Russia's Economy Ministry proposes to privatize the state's 15 percent stake in Russian oil producer Rosneft in 2012, the paper writes.

KOMMERSANT

www.kommersant.ru

- Despite promises from Russian President Dmitry Medvedev to find and punish those responsible for security lapses that allowed a suicide bomber to kill 37 in a Moscow airport earlier this year, a subsequent investigation did not find any transport officials to blame for the airport's lack of security, the paper writes.

- Russia has decided to bar from operation airlines that fail to meet safety standarts. Experts say passenger traffic will shrink by 40 percent, the paper writes. (Writing by Ludmila Danilova)

Russian Press at a Glance, Monday, September 12, 2011http://en.rian.ru/papers/20110912/166768976.html

08:46 12/09/2011

POLITICS

A top Kremlin aide cautioned on Sunday that no “reset” looms in long-troubled relations with Britain, hours before Prime Minister David Cameron was to arrive in Moscow for the first visit by a British leader in six years. Ahead of the visit, four former foreign ministers called on Cameron to defend Russian businesses from corruption, and two former deputy ministers demanded to bring to justice those guilty in Hermitage Capital lawyer Sergei Magnitsky(The Moscow Times, Nezavisimaya Gazeta, Moskovskie Novosti)

An attack on the Israeli Embassy in Cairo may grow into a serious crisis in the country’s relations with Egypt as Israel almost immediately withdrew its ambassador from the

country (Nezavisimaya Gazeta, Kommersant, Rossiiskaya Gazeta, Moskovskie Novosti)

The Yabloko right-wing opposition party co-founder Grigory Yavlinsky will come out of political retirement to head the party's list in the State Duma elections, the party announced Sunday at a Moscow congress(The Moscow Times, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Vedomosti, Izvestia)

ECONOMY

Finance Minister Alexei Kudrin called on the European Union on Saturday to make a clear commitment to a common economic policy that would aid debt-ridden countries and keep the euro-zone crisis from spreading.(The Moscow Times, Nezavisimaya Gazeta, Rossiiskaya Gazeta)

OIL & GAS

More than half of additional budget income this year was not related to hydrocarbons, which the Foreign Ministry sees as a positive tendency in the Russian economy. Experts, however, say the Russian economy still relies mainly on natural resources exports, meaning that the link between budget incomes and oil prices, though not direct, will persist.(Nezavisimaya Gazeta)

The government is seeking to raise 1.2 trillion rubles ($40 billion) from selling state assets in the next three years, with Rosneft expected to be the biggest contributor, bringing in more than 200 billion rubles in 2012, the Economic Development Ministry said.(The Moscow Times, Vedomosti)

Rosneft President Eduard Khudainatov could soon be replaced, media reports said little more than a week after the state company signed an Arctic offshore development deal with ExxonMobil. The company dismissed the reports. (The Moscow Times, Kommersant, Moskovskie Novosti)

Total, Europe's third-largest oil company, has made a "major" natural gas discovery in the Caspian Sea off Azerbaijan that may boost supplies of the fuel pumped to the European Union(The Moscow Times, Nezavisimaya Gazeta)

AVIATION & AEROSPACE

The Kremlin proposed to increase fines for flight safety violations and subsidize the lease of new aircraft following last week's Yak-42 crash that killed 43, including most of the Lokomotiv Yaroslavl ice hockey team.

(The Moscow Times, Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, Moskovskie Novosti, Vedomosti)

TELECOMS & IT

Three leading companies on the Smartphone market - Apple, HTC and Samsung Electronics - have become involved in another patent litigation(Kommersant)

CONSUMER

Knockoff Chinese Jin Ling cigarettes from Kaliningrad, Italian Asti wines actually made in the CIS and Bavarian car parts made in Podolsk imply a certain geographic schizophrenia for Russian consumers. But the harsh reality is a market for counterfeit goods worth between $3 billion and $6 billion per year.(The Moscow Times)

DEFENSE

A fan of military hardware, Prime Minister Vladimir Putin climbed inside a battle tank at a weapons exhibition in Nizhny Tagil on Friday, before promising 64 billion rubles ($2.2 billion) to state-owned Uralvagonzavod.(The Moscow Times, Kommersant, Rossiiskaya Gazeta, Izvestia)

SOCIETY

The Russian Investigative Department lifted charges against officials suspected of negligence and lax security after the January blast in Russia’s largest airport Domodedovo(Kommersant)

SPORT

A funeral ceremony for members of the Lokomotiv Yaroslavl hockey team who were killed in a plane crash last week was held in Yaroslavl on Saturday. The ceremony was attended by at least 100,000 people(Kommersant, Rossiiskaya Gazeta)

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

An air-defense commonwealth

http://rt.com/politics/press/nezavisimaya/air-defense-russia-cis/en/

Published: 12 September, 2011, 06:42Edited: 12 September, 2011, 06:55

The spread of new Russian ABM defense systems in post-Soviet space is hampered by arms manufacturers Sergey Konovalov

The active phase of training the Joint CIS Air Defense System members, the Combat Commonwealth 2011 air defense exercises, conducted at the Ashuluk air defense test site, comes to an end today. Despite the fact that not all member states are taking part in the maneuvers, the missile combat crews (of Armenia, Belarus, Russia, Kyrgyzstan, and Tajikistan) will be monitored by defense ministry representatives of all 11 states of the CIS.

Observers from Azerbaijan and Moldova, who are not members of the Joint CIS Air Defense System, arrived at the training field. Their interest is understandable. The Joint CIS Air Defense System is practically a military-coalition alliance of the Commonwealth, which is showing a certain level of efficiency.

As is shown by the military actions of the US and NATO in Iraq, Afghanistan and Libya, unmanned aerial strikes are one of today’s main methods of defeating the enemy. To repel such attacks, ABM defense means are needed like never before. But because they are not cheap and in post-Soviet states these means are still mainly of old Soviet production, the dependence of CIS countries on Russia is evident. Russia is the only country on post-Soviet territory that is modernizing the entire spectrum of air defense and air defense missile systems produced in the USSR. At the same time, Moscow is also developing and manufacturing new systems.

Apparently, it’s no coincidence that last Saturday after a meeting of the Coordination Committee on ABM Issues under the Council of Defense Ministers of the CIS, Commander of the Belarusian Air Force and ABM Maj.-Gen. Sergey Lemeshevsky, said that his country intends to purchase the new S-400 anti-aircraft missile systems from Russia. As is known, Belarusian representatives have expressed these intentions more than once. As early as May, the secretary general of the Union State of Russia and Belarus, Pavel Borodin, announced that the issue concerning the supplies of the S-400 Triumph air defense missile systems (designed and produced by the ABM concern Almaz-Antei) to Belarus had been almost settled. Diplomatic and military sources told Nezavisimaya Gazeta (NG) that after this summer’s failed negotiations between Moscow and NATO regarding the creation of a single Euro-ABM system, Russia is, in practical terms, considering the possibility of allocating S-400 divisions on the territory of Belarus.

An indirect confirmation of these intentions has been the statement made by Defense Ministry spokesman Vladimir Drik that missile combat crews equipped with the S-400 will take part in the joint Russian-Belarusian “Union Shield 2011” exercises, which will start on September 16. The head of the General Staff of the Armed Forces of Belarus,

Petr Tikhonovsky, while revealing the intention of these maneuvers, said: “We are working on the application of a single regional ABM system, which is expected to be used not only to repel air assault weapons, but also cover ground forces”. Meanwhile, Russia has not yet made any official statements regarding the transfer of S-400 divisions to Belarus. This is of course due to the fact that Russian army regiments and divisions are being equipped with the S-400 systems with delays. Russian defense minister Anatoly Serdyukov has frequently reiterated the need to build several new factories for the production of AMB systems. But it looks like the defense industry sector is coming up short.

Meanwhile, Russia evidently has certain obligations to supply air-defense means to not only Belarus. Russia’s closest allies, Kazakhstan and Armenia, are also waiting for Russia to sign contracts for the allocation of S-300 and S-400 systems on their territories. However, as was recently stated by the co-chairman of the Non-Departmental Advisory Council for Aerospace Defense, Igor Ashurbeili, production of the S-300 systems in Russia has been stopped, and the S-400 systems are not yet being offered for sale.

Another problem is the fact that last year two S-300 divisions were sold by Russia to Azerbaijan, which is preparing to go to war with Armenia, Russia’s ally. Negotiations about a possible purchase of 10 S-300 divisions by Kazakhstan have already been ongoing for more than three years. But, argues Ashurbeili, because the production of S-300 systems in Russia has ceased, Kazakhstan will most likely get these systems from the army reserve. In other words, it will be secondhand equipment. The fact that this will be the case is confirmed by the Kazakh army commanders’ acknowledgement that the transfer will occur at no cost.

The director of the Global Arms Trade Analysis Center, Igor Korotchenko, told NG that the Almaz-Antei concern has currently “begun the construction of three new factories (one in St. Petersburg and two in the Volga Region) for the production of an entire series of modern ABM defense systems.” With their opening, Korotchenko said that “all needs for new ABM systems in Russia as well as export obligations will be met.” However, the question is when will these factories begin to operate? According to government officials and Almaz-Antei representatives the ABM production facilities are expected to open in 2015. In other words – not any time soon.

Why Medvedev Got Tough on Yanukovych 11 September 2011By Vladimir Frolov

Can foreign policy serve as an indication of where things are heading within Russia’s ruling tandem? A closer look at what’s happening in relations with Ukraine provides insight into maneuverings within the tandem as it approaches the time to decide who will run for president.

In the past couple of weeks, President Dmitry Medvedev has taken an unusually hard-line stance toward Ukraine. He has ridiculed President Viktor Yanukovych and his government over their pleas to reconsider Gazprom’s lucrative gas contract with Ukraine. He has accused the Ukrainian authorities of “free-riding,” admonished them on the sanctity of contracts, and delivered an ultimatum on Ukraine’s Independence Day to join the customs union or sell their pipelines and get an “integration discount” for gas. He also rejected Yanukovych’s proposal for a “3+1” formula for Ukraine’s relations with the customs union.

This is unexpected hardball from Medvedev on an issue that he has counted as one of his foreign policy achievements — resetting Russia’s relations with Ukraine with a friendly leadership in Kiev.

Yanukovych owes his election as president in 2010 to Medvedev as muсh as he does to the Ukrainian people.

In June 2009, Yanukovych and then-Prime Minister Yulia Tymoshenko flew to St. Petersburg to sign off on a blockbuster political deal to create a supermajority coalition government in Kiev between the Party of the Regions and the Yulia Tymoshenko Bloc. Under a new constitution, Ukraine would have become a parliamentary republic with the executive power vested in the prime minister (Tymoshenko), while the president (Yanukovych) would be elected by the parliament with largely ceremonial functions.

Hours before the deal was to be inaugurated, Yanukovych met separately with Medvedev and told him he was uncomfortable with the plan and thought he had a good chance of winning the presidential election in 2010. Medvedev agreed, and Yanukovych scrapped a deal with Tymoshenko that would have provided Russia with much more leverage in Kiev than it has now.

Ever since, Yanukovych and his team have placed their bets on Medvedev and a second Medvedev presidential term, hoping to negotiate a better gas deal with him as opposed to Prime Minister Vladimir Putin. Yanukovych sought to boost Medvedev’s standing by signing a deal with him to extend Russia’s lease on its naval base in Sevastopol for another 45 years.

Medvedev’s hard-line stance toward Yanukovych is indicative of his desire to closely align himself with Putin in an effort to secure his blessing for a second presidential term.

Putin has made no secret that he regards Yanukovych as weak and untrustworthy. On the contrary, he found in Tymoshenko a rare Ukrainian politician with whom he could do business.

The kangaroo trial of Tymoshenko is a personal affront to Putin, whom the authorities in Kiev have seriously considered calling as a prosecution witness.

Russia’s Foreign Ministry has declared the charges against Tymoshenko bogus, while Medvedev has gone as far as to say Tymoshenko is being jailed for her “ability to strike a deal with Russia.”

Ever since his major news conference in May, Medvedev has sought to eliminate any difference between his and Putin’s positions on international issues. Apart from Ukraine, this approach has been on display with Medvedev’s tough stand against Western efforts to pressure President Bashar Assad’s regime in Syria and in his criticism of NATO’s operations in Libya. This is both smart politics and a good management of foreign policy in the short term. But if Medvedev is serious about re-election, he needs to provide a strategic vision of where he wants to take the country internationally in the 21st century. And he must make sure that this vision aligns with Putin’s.

Vladimir Frolov is president of LEFF Group, a government-relations and PR company.

Read more: http://www.themoscowtimes.com/opinion/article/why-medvedev-got-tough-on-yanukovych/443544.html#ixzz1XihzWLrl The Moscow Times

September 11, 2011

In Russian Leadership Battle, Medvedev Hints He Lacks Firehttp://www.nytimes.com/2011/09/12/world/europe/12medvedev.html

By ELLEN BARRY

YAROSLAVL, Russia — When President Dmitri A. Medvedev of Russia took the lectern here at his annual political forum last week, the circles under his eyes suggested he had barely slept.

The audience was waiting to find out who would be ruling Russia next spring, Mr. Medvedev or Prime Minister Vladimir V. Putin — a question that has gripped this country for months. Meanwhile, a plane crash had killed this city’s elite hockey team, sending thousands of people, weeping, into the streets.

What would Mr. Medvedev do? Put aside his prepared remarks and speak about the tragedy? Address the year’s devastating series of transport disasters?

His choice mattered. As the more liberal partner of Russia’s ruling tandem, Mr. Medvedev still has power to guide Russia between authoritarianism and reform, though it is ebbing. When the moment came, Mr. Medvedev decided to go ahead with his script, a 30-minute discourse on the state’s approach to diversity.

By the time he took his seat, the implication seemed clear: Mr. Medvedev was not prepared to fight for his job.

“In any other country he would have used this as an opportunity to mobilize people,” said Alexander Rahr, a Russia expert at the German Council on Foreign Relations. “Either he is not allowed to do this, or he does not want to.”

Russia’s current leadership crisis was set in motion in 2008, when Mr. Putin, the most powerful and popular figure in the country, had to step down because the Russian Constitution limits a president to two consecutive terms. The solution was the “tandem”: the younger and more pro-Western Mr. Medvedev became president and Mr. Putin moved to the post of prime minister, though he remained the most influential man in Russian politics.

The arrangement has led the political system into a blind alley. Each man has indicated that he would like to run for president in 2012, but the two have apparently not been able to reach an agreement. For months, Moscow has been consumed by the stalemate, leaving no room for discussion of the long-term challenges that Russia faces.

In a brief conversation on the sidelines of the Yaroslavl forum, Vladislav Y. Surkov, the Kremlin’s pre-eminent political strategist, said the decision would be made this month.

At the center of this crisis is the strange spectacle in which Mr. Medvedev — whose extraordinary powers are enshrined in the Constitution — is forced to wait many months for Mr. Putin’s permission to declare his candidacy. In May, the president gathered 800 journalists for a news conference that had all the trappings of a major political announcement. Then he said he could not make one.

Meanwhile, Mr. Putin has been openly gearing up for his own political campaign. These facts have not been lost on Russia’s governing class, who have been sniffing the air like so many bloodhounds. The consensus on who will rule Russia next year has been moving slowly but surely in the direction of Mr. Putin.

One of the most revealing details about Mr. Medvedev’s event in Yaroslavl this year was the list of officials who were not there — not Finance Minister Aleksei L. Kudrin or Economic Development Minister Elvira S. Nabiullina, not even the ministers overseeing transport or emergency situations, who had actually flown to Yaroslavl to take part in a morning meeting devoted to the plane crash.

The only minister visible at the forum was Foreign Minister Sergey V. Lavrov, who gave interviews to national television from the lobby at the site but was not shown in the audience when the president was speaking. What is happening, said Aleksei Mukhin, an analyst, is that political camps are gradually coming into focus.

“The groups around Putin and Medvedev are polarizing,” said Mr. Mukhin, the director of the Center for Political Information in Moscow. “This is about an expression of loyalty

to their leaders. There is a signaling system. On Staraya Ploshchad and in the White House” — where the staffs of Mr. Putin and Mr. Medvedev have their headquarters — “they already know well who is on whose side. But now it is becoming clear to everyone.”

Nikolai Zlobin, an analyst based in Washington, said his own friends in Moscow were so wary of being perceived as endorsing Mr. Medvedev’s candidacy that they did not answer his queries about whether they planned to attend Mr. Medvedev’s political forum.

“Nobody wants to make a mistake,” Mr. Zlobin said. “And every single thing can be interpreted as pro and contra.”

There are great differences between Mr. Putin, 58, who grew up brawling with neighborhood toughs, and Mr. Medvedev, 45, the brainy child of two academics. But Mr. Putin singled out the younger man as his successor, in part because of his loyalty. Asked repeatedly why he endorsed Mr. Medvedev for the presidency in 2007, he finally said, “I trust him; I just trust him.”

Though Mr. Putin has never criticized Mr. Medvedev, his campaign activities send the message that he no longer has full confidence in his protégé.

Mr. Putin formed a new political organization, the All-Russia People’s Front; he has held campaign appearances, pouring his heart out to steelworkers in Magnitogorsk and riding through Novorossiysk on a Harley-Davidson. Even in Yaroslavl, guests at Mr. Medvedev’s political forum were bused past a long series of billboards showing Mr. Putin’s face, with the motto “Russia Unites Us.”

Still, it would be folly to declare that Mr. Medvedev has no chance of returning as president.

Mr. Medvedev’s selection as a candidate in 2007 was similarly opaque and unpredictable. If there was a consensus that year, it favored his rival, Sergei B. Ivanov, who was then a deputy prime minister. Mr. Ivanov, a close friend of Mr. Putin’s from their days in the Leningrad directorate of the K.G.B., was so confident that Mr. Putin would choose him that he underwent a public-relations makeover, complete with coiffure and haberdashery.

Mr. Putin’s maneuverings, in the end, may simply be attempts to publicly reassert his dominance before extending the tandem arrangement.

But the lesson of this summer is a sobering one: If Mr. Medvedev does stay in the presidency under those terms, he will assume a post weaker than the one he has occupied for the past four years.

Mr. Medvedev entered his first term with enthusiasm that sometimes verged on delight. Though his supporters understood that his authority was provisional, most expected him

to accrue power over time, gradually paving the way for a transition to a system not oriented around Mr. Putin.

It is impossible to know whether Mr. Medvedev, who as a candidate four years ago denounced Russia’s “legal nihilism” and “eternal corruption,” expected to be permitted to carry out his agenda. But it was a far more experienced man who took the lectern at Yaroslavl last week, his face a mask of weariness, and delivered a speech devoid of memorable lines.

Alison Smale contributed reporting.

Russia Profile Weekly Experts Panel: Russia’s New Gas War with Ukrainehttp://russiaprofile.org/experts_panel/45138.html

Introduced by Vladimir Frolov Russia Profile 09/09/2011

Contributors: Vladimir Belaeff, Vlad Ivanenko, James Jatras, Alexandre Strokanov

Relations between Moscow and Kiev are getting sourer by the day over the prices for Russian gas deliveries to Ukraine. President Viktor Yanukovich’s government believes that Ukraine is forced to purchase the Russian gas at unfair and even exorbitant prices, set by the price formula in the 2009 gas contract between Gazprom and Naftogaz, negotiated with the direct participation of Russian Prime Minister Vladimir Putin and Ukraine’s former Prime Minster Yulia Tymoshenko. Are we on the brink of a new gas war between Russia and Ukraine, albeit now with a technically pro-Russian government in Kiev? Who would the European public blame more for another gas cut-off – Ukraine, or Russia’s Gazprom? Indeed Ukraine pays well over $300 for 1,000 cubic meters of Russian gas, which is more than  Germany, the Baltic States and even some Italian companies that have just renegotiated their contracts with Gazprom pay.

Tymoshenko is currently on trial in Kiev for allegedly having gone beyond her negotiating mandate in the gas deal of 2009, thus causing serious financial damage to the state of Ukraine (apart from having the bad luck of opposing Victor Yanukovich in the last presidential elections of 2010). Many in Kiev believe that the Tymoshenko trial, besides making the leader of the opposition ineligible to stand in the 2012 parliamentary elections, would provide legal grounds for abrogating the gas contract with Gazprom or for taking the case to the International Arbitration Court in Stockholm.

No wonder Moscow is looking at Ukraine’s maneuvers with barely concealed disgust. The Russians think that they already gave Ukraine a “political discount” by agreeing to cut the delivery price for Russian gas by $100 per 1,000 cubic meters, after Ukraine agreed to extend Russia’s lease on its naval base in Sevastopol for another 25 years.

Moscow is using the gas pricing issue as leverage to secure further geopolitical concessions from president Yanukovich, like getting Ukraine to join the Customs Union with Russia, Kazakhstan and Belarus (while cancelling plans to establish a free trade zone with the EU, where negotiations have entered the final stage). Another of Moscow’s demands has been that Ukraine sell Russia’s Gazprom the controlling stake in Ukraine’s gas pipeline and gas storage system, or allows Naftogaz Ukraini, Ukraine’s state oil and gas company, to merge with Gazprom at market valuations.

Russian President Dmitry Medvedev recently declared that Ukraine should follow the Belarusian example and receive an “integration discount” for Russian gas if it joins the Customs Union or cedes control over its gas pipeline network (Belarus has just sold its stake in the Beltransgaz company to Russia’s Gazprom). Medvedev also cautioned Ukraine against seeking interim arrangements, like the “3+1” formula proposed by Kiev for Ukraine’s relationship with the Customs Union. Medvedev scolded Ukraine’s government for “behaving like beggars” to secure the gas discount, instead of offering political incentives and lucrative deals to Russia to consider a price break for Ukraine.

The Ukrainian government responded with plans to reduce purchases of Russian gas next year to 27 billion cubic meters, as opposed to the 52 billion cubic meters stipulated in the 2009 agreement, or the 37 billion cubic meters purchased last year. The 2009 contract requires Kiev to pay for at least 33 billion cubic meters a year on a “take or pay” basis, even if the actual gas deliveries are less than that.

Ukraine hopes to diversify its gas supplies and reduce its dependence on Russian gas by drilling for shale gas (it has just signed an $800 million contract with Shell for shale gas drilling in the Donbass Region), by building a liquefied gas facility on its Black Sea coast to receive LNG shipments from Qatar, and by purchasing gas from Azerbaijan and Turkmenistan (although how they can do that bypassing Gazprom is less clear).

By the end of last week, the Ukrainian government announced that it is liquidating the state oil and gas company Naftogaz Ukraini, the legal party to the infamous 2009 contract with Gazprom, claiming that that would render the contract null and void. Gazprom begged to disagree, claiming that the contract stands. Gazprom’s Chairman Alexei Miller said that Ukraine could sell Naftogaz to Gazprom and this would result in a new legal situation that would require new gas contracts with likely lower gas prices for Ukrainian consumers, now Gazprom’s direct customers. President Medvedev again warned that existing contracts should be fulfilled, while stopping just short of saying that a cut off in gas deliveries could ensue were the contract to be violated by Kiev.

Are we on the brink of a new gas war between Russia and Ukraine, albeit now with a technically pro-Russian government in Kiev? Has Moscow overplayed its energy hand in extorting painful geopolitical concessions from Ukraine, essentially demanding that it leave aside its European aspirations and return to Russia’s fold? Was it a feasible strategy? Can the Yanukovich government abrogate the 2009 contract without being blamed for disrupting gas deliveries to Europe? Who would the European public blame

more for another gas cut-off – Ukraine, or Russia’s Gazprom? What would another gas war do to Gazprom’s reputation as a reliable energy supplier to Europe? How would it affect its market share in Europe? What would be the EU’s reaction to another gas war between Russia and Ukraine? Would Medvedev benefit politically for standing firm in defense of Russian interests before the unreliable Ukrainian leadership? Is the Medvedev-Yanukovich partnership and Russia's rapprochement with Ukraine over?

Vlad Ivanenko, Ph.D. economics, Ottawa

“You can't blame the mirror for your ugly face,” says a Russian proverb. Russian Prime Minister Vladimir Putin can only blame himself for finding his match in Ukrainian President Victor Yanukovich.

Not long ago Western pundits claimed that Yanukovich’s victory in the Ukrainian presidential race of 2010 would usher in an era of Russian dominance in this country. Their prediction has come true, albeit in a peculiar sense. The Ukrainian president has not become a Moscow puppet. Instead, it was the Ukrainian political system that has embraced Russian political culture, creating problems for the Kremlin. But in order to understand the reasons for the current Russo-Ukrainian confrontation, it is necessary to review the main rules of the game that the Kremlin has chosen to play in internal politics and in international affairs in the post-Soviet space.

The rules are pretty simple: it is the war of “every man against every man” that lasts as long as more than one center of power exists. Following the turbulent 1990s, the Kremlin has consistently built up a strictly hierarchical structure of governance, and become a single command center in Russia. It controls the underlying layers of public service and promotes the extension of this structure to lower, regional and municipal, ranks. Each participant of the system possesses certain rights and recognizes certain obligations defined by higher ranks. Conflicts among lower ranks of power are resolved through intermediation of a higher level of authority, while at the top the center passes internal reorganization through negotiation among key power brokers.

The only way to preserve a modicum of internal solidarity within such a system is to establish dependencies among players that none of them can challenge. And here lies a structural problem that Moscow does not know how to handle. As a subject of international politics, Ukraine (as well as Belarus) represents the center of supreme power that the Kremlin cannot control directly. Instead, it has to “negotiate” with its supposed peer, hoping to make it an offer it “can't refuse.” Necessarily, such bargaining involves the elements of “foul play,” which are all considered to be ethically acceptable “normal business practices.” Since the other side employs the same tools of trade – infraction of contractual rights, double crossing, and coercion – confrontations are not only inevitable but, in fact indispensable for the parties to arrive at a “mutually-acceptable solution.”

The double play that Yanukovich conducts toward the two largest Ukrainian trade partners (Russia and the EU) is nothing more than a bargaining tool to solicit favors from

the weakest party in the game. Unfortunately for him, he is that weakest party. Ukraine runs a persistent trade deficit (about $9 billion in 2010) and needs a similar inflow on the capital account that, for now, it can receive only from Russia and Germany. The trouble for Ukraine is that Russia, despite its formal rhetoric, is not fully committed to its self-proclaimed goal of creating a Eurasian Economic Union, but instead it strengthens economic ties with the EU, particularly with Germany. How can Yanukovich set one side against the other if they have interests far exceeding the gains Ukraine can offer?

In fact, wider circumstances do not instill confidence that the current showdown would be successfully resolved, either. On the one hand, the approaching global storm may capsize the Ukrainian economy altogether. The EU is not immune to troubles as well, as it ponders how to address accumulated economic misbalance within its “old core.” Meanwhile, the Kremlin is incapable of going beyond the logic of domination and subordination dealing with Russian neighbors. For example, when I suggested the merger of Gazprom and Naftogaz (see my article in Russia in Global Affairs), I meant that such a deal could “prevent conflicts associated with the distribution of energy gains within the union.” Unfortunately, it is not a result that the Kremlin finds preferable.

Alexandre Strokanov, Professor of History, Director of Institute of Russian Language, History and Culture, Lyndon State College, Lyndonville, VT

It seems that the Russian leadership is finally beginning to follow Russian national interests, and is at the same time taking integration processes on the post-Soviet space seriously. It is quite clear that the mission of the Commonwealth of Independent States (CIS) is coming to the end, the divorce is final and the role of the CIS as a mechanism of implementation is coming to its logical end.

However, any objective observer of the events on the territory of the former Soviet Union over the past 20 years will agree that post-Soviet countries have great potential for new forms of integration that will be mutually beneficial for all participants. The majority of Russian, Belarusian and Ukrainian people will support closer ties among these Slavic peoples and their countries. The success of this integration will be beneficial for the European Union and the United States, because it will minimize the chances of radicalization of regimes in Central Asia, as well as allowing all states involved to improve living conditions and their economic standing. The Customs Union and the Collective Security Treaty Organization (CSTO) are two major forms of this new integration. In both, the key role today is played by Russia, Belarus and Kazakhstan. Meanwhile, Ukraine’s participation in both of these projects, but primarily in the Customs Union, is critical.

For many years since independence, the Ukrainian leadership has tried to play one and the same game, expressing desire to join the European Union but promising Russia its strategic partnership and enjoying benefits from economic cooperation with its eastern neighbor. In different circumstances this game could be played endlessly, but it was the EU that first demanded that the Ukrainian government make up its mind. In April of this year, European Commission President Jose Manuel Barroso said: “It is impossible to

integrate into the Customs Union and have a deepened all-covering free-trade zone with the EU.” In other words it was the ultimatum issued by the EU for the Ukrainian government.

Russia simply reminded Ukraine that this is really the time to decide. Will the Ukrainian government wish to enjoy the benefits of economic integration with the Customs Union, or will it continue to wait for a “carrot” from the West? And this is only the beginning, because if Ukraine really achieves a free-trade regime with the EU and Ukrainian goods begin to lose the competition with European products, they will flow to Russia and countries of the Customs Union, which will have to take reasonable measures to protect their own producers and markets. The current economic crisis is making this reality even harsher.

Ideally, the free-trade zone should be established from the Atlantic to the Pacific, as we dreamed of in the middle of the 1980s – it would really benefit the EU, Ukraine and the Customs Union states. It seems that instead the EU leadership simply wants to cut off Ukraine’s ties with Russia, following the Cold War mentality rather than thinking within the new paradigm of the post-Cold War reality.

The main loser will most likely be Yanukovich personally – he won the presidential elections by waiving the partnership flag with Russia and promised to make Russian language an official language in Ukraine. It is obvious today that he failed to implement both his pledges. Now he brings this dispute over the gas price to the public, and makes statements that annul the possibility for future compromise. At the same time, the tough position taken by president Medvedev will certainly add some points to his chances to run again in 2012, since the majority of the Russian people will support his views in this conflict.

In general, Russia’s position is much more clear and understandable. There is the contract signed in 2009, and as any contract, it should be followed. I have to pay much more for natural gas to heat my own home today than I paid in 2009, and this is the reality of the market, whether you like it or not. Understandably, if Ukraine wants a different price formula than it agreed to two years ago, it should provide Russia with an offer that will be acceptable to the other side. Just begging to lower the price and comparing its own price with the prices paid by other consumers will not necessary work. However, Russia has to be much more media and politically active, explaining this situation to the European public. Otherwise, this story will be presented by biased Western media in a completely different way, accusing Russia of all sins and presenting it as an unreliable partner for Europe. As stated earlier, the Cold War mentality is still alive. It is time for Russia to learn some lessons from the conflicts with Ukraine in 2006 and in 2009.

Russian partners in the Customs Union should join these efforts also, and explain their positions clearly, because this situation is important for them as well. It is time to ask the Ukrainian leadership where it sees its country in the future. And, if the decision of the Ukrainian government does not go in line with the Customs Union, it has the right to treat Ukraine accordingly.

Vladimir Belaeff, Global Society Institute, San Francisco, CA

“Gas war” is a bit too strident a definition. In fact, to date natural gas deliveries to Ukraine and through Ukraine are continuing uninterrupted, and Ukrainian payments for Russian gas deliveries are also current at this time.

Additionally, Ukraine continues to receive handsome fees for gas transit from Russia to Europe.There is a challenge to the terms of the 2009 gas contract, raised by Ukraine, which wants to negotiate the price even further below the under-market rates it obtained earlier. At present, the annual price subsidy that Ukraine gets from Russia for the gas it purchases under the 2009 agreement is $4 billion; which adds up to $40 billion over the life of the contract. It is supposed that some (much?) of the gas sold to Ukraine at below market rates by Russia might be re-sold at spot-market prices elsewhere, with the profit also accruing to the buying entity.

It is notable that the contractual challenge by Ukraine has emerged only now, years after the contract was signed. Suddenly Ukraine objects to an agreement made many months ago. Why?It is generally recognized that Ukraine’s economy is in trouble, in particular after several years of the global financial crisis. Maybe it is even a bigger mess than is generally reported, and that country cannot meet its current account deficit? There has been some bailout funding by the IMF, but given the strains of national finances worldwide, the possible defaults of several large economies and the downgrading of American sovereign debt, Ukraine’s needs for an additional bailout may not be satisfied, especially if there is little hard evidence that the IMF’s conditions for the earlier assistance were successfully met.

Hence, the ploy to lower the price for Russian gas deliveries. It seems, however, that Moscow’s largesse and patience have reached a limit. In the past Russia gave Ukraine every substantial economic concession, in the expectation of good-neighborly relations. Ukraine accepted the largesse (and now is demanding even more), but was not very forthcoming with reciprocal actions. The upsetting, though symbolic, events that really stained Ukraine in the eyes of Russia were street fights this summer, when Ukrainian nationalists who claim Ukrainian Nazi collaborators as their heroes attacked Ukrainian citizens, including World War II veterans, commemorating the events of the war. These episodes had strong resonance in Russia; strangely, the Western media barely reported on the actions of Ukrainian Nazi sympathizers.

Reason would suggest to Ukraine that joining an integrated economic space with Russia and Kazakhstan would solve many of its problems. In particular, Ukraine’s relative influence in the Customs Union would be very high. Instead, some Ukrainian politicians fantasize about joining the EU – which is currently struggling with several weak economies that should not have joined the EU to begin with, and has neither the excess funds nor the political stamina to accept another dysfunctional member.

Relying on coal or extraction of gas from shale would cause environmental protection problems under the rules of the very EU that Ukraine’s policymakers hope to join. Building LNG terminals or alternative gas delivery systems requires direct investment, which is not so readily available. All these feeble and far-fetched schemes are in contrast with a simpler, more productive and rational solution: join the Customs Union and benefit from enhanced access to a BRICS economy.

The threats to dismantle Naftogaz are infantile. Contracts have routine provisions, which transfer the responsibilities of a defunct enterprise to its successors or buyers – or to its creditors under the contract, among whom Gazprom would be prominent. Ukrainian policymakers are not following a logical course of action. As a consequence, they may harm their personal interests and those of their country.

James Jatras, Deputy Director, American Institute in Ukraine, Kiev

Are we on the verge of a new gas war between Russia and Ukraine? The answer is as simple as it is sad: yes. It is a war that could easily be avoided if the Kiev administration were willing to take realistic stock of Ukraine's options and face the fact that the outcome of the looming crisis will not benefit Ukraine.

With this week's opening of Nord Stream, Russian Prime Minister Vladimir Putin observed: "Like any transit country, [Ukraine] is tempted to benefit from its position. Now this exclusive right disappears. Our relations will become more civilized." Or to put it another way, Kiev – whether under the previous anti-Russian "Orange" regime or now with President Yanukovich's putatively pro-Russian administration – can no longer pretend that the laws of geography and of supply and demand do not apply to Ukraine's energy transit policy. Simply put, the Europeans, especially the Germans, want to buy, the Russians want to sell, and Ukraine is not the only way to get gas from point A to point B.

No one should expect that European opinion, with Germany in the lead, would blame Russia if a gas war were to break out. Ukraine has a point in complaining about the price of gas, but then Russia has proposed no dearth of possible remedies. The prospect of Ukraine obtaining the lower gas prices it so desperately needs to revitalize its economy would greatly improve if Kiev would negotiate seriously with Moscow. Instead, it relies on legal gimmicks, such as seeking to invalidate the 2009 energy pricing agreement with Russia (while conveniently eliminating Tymoshenko as a rival), and playing clever games with Naftogaz's legal structure. The fact is, Moscow has options and Kiev does not.

It is understandable that Ukraine would resist Moscow's pressure to merge Naftogaz and Gazprom, and to join the Customs Union (although the prospect of Ukraine joining a free trade zone with the European Union offers far fewer tangible benefits). But the terms for securing the nation's energy future – and at an acceptable price – are not going to get any better. No amount of environmentally hazardous "fracking" for shale gas on the Black

Sea shelf is going to change Ukraine's energy picture any time soon, if ever (if Nord Stream reduces Ukraine's transit leverage, South Stream would virtually eliminate it).

So why would Ukraine opt for a war it cannot win? Some speculate that Ukraine does not really have a "national" energy policy at all, but one dictated by the interests of various oligarchs. Others maintain that policy decisions are motivated by personal animus between various combinations of top Russian and Ukrainian politicians. While not entirely discounting the "personal" element in politics, such explanations are too facile by half. To be sure, Yanukovich seems to have allowed himself (probably against his better judgment) to be painted into a corner on the prosecution of Tymoshenko, perhaps on the advice of some smart lawyer who suggested that convicting her would provide Ukraine a deus ex machina escape from the current pricing deal. Once started down that road, it's hard to turn back without embarrassment. Or perhaps Kiev intends ultimately to accept Moscow's terms, and is only pretending to resist (as some Orange critics have suggested) so as to counter accusations that it sold out too readily.

Both Ukraine and Russia have a clear interest in avoiding a new gas war. To do so, Ukraine must negotiate seriously with Moscow along lines that are perfectly obvious to everyone – in the context of accession to the Custom Union, at which point, Russia would charge Ukraine domestic Russian rates for gas, as Moscow has already offered; or in the context of a possible merger of Naftogaz and Gazprom, whereby Kiev would seek the best possible gas pricing deal, while its pipeline system still retains some viability as a strategic asset.

The best way forward is through personal negotiation between presidents Medvedev and Yanukovich. It would be, as Medvedev's prime minister has said, the "civilized" way to proceed.

This Week in Reviewhttp://russiaprofile.org/Review/45137.html

By Russia Profile Staff Russia Profile 09/09/2011

Want to stay in the loop? Russia Profile brings you a concise summary of this week's top stories, carefully selected and packaged for your convenience. In headlines this week, Yaroslavl’s ice hockey team “Lokomotiv” was killed in a plane crash, raising further concerns about the safety of air travel in Russia. The world has learned that Estonians betrayed Vladimir Putin’s father, Mikhail Prokhorov set up a shadow government, and corruption is to blame for Russia’s misfortunes in space. Russia and Ukraine are at odds over gas (again!), Wal-Mart is in denial, and Moscow got its own Banana Republic. Journalist Oleg Kashin got richer and pilot Konstantin Yaroshenko got a jail sentence for drug trafficking.

In Politics

WikiLeaks whistle-blowers' site leaked some curious info this week about the roots of the Russo-Estonian love-hate relationship. Estonian farmers, it happened, betrayed the father of Prime Minister Vladimir Putin to the Nazis during World War II – and this is what is fueling tensions between Moscow and Tallinn 60 years on, new U.S. cables leaked by WikiLeaks show. The cable, which dated back to December 2009 and was published by Kommersant on Monday, cites the Estonian Foreign Ministry's undersecretary and ambassador to Afghanistan and Pakistan, Harri Tiido, as saying that relations with Russia remained "difficult at the political level" because of Putin, who alone decides the policy toward Estonia even after trading the presidency for the prime minister's post in 2008. "Putin has a personal gripe with Estonia," Tiido is quoted as saying. Putin's father, also Vladimir, fought in the Red Army during the war and parachuted into Estonia for an unspecified operation. But the locals, still disgruntled with the country's occupation by the Soviet Union in 1940 – a year before the Germans invaded Estonia – handed him over to the Nazi forces, Tiido said. Putin's father later managed to flee, but was injured as he left, he said.

President Dmitry Medvedev has always been on the hot seat, but recent spates of failed space launches aren’t helping his anti-corruption crusade. Sergei Stepashin, the head of the country's Audit Chamber, said this week that misuse of funds was at least in part responsible for the recent spate of accidents in the space industry that has cost that nation billions of rubles. “An audit check of the Russian Space Agency reported last spring has revealed financial irregularities and misuse of budgetary funds,” Stepashin said. “Unfortunately, the latest series of failed space launches could well be traced to financial violations.” In December 2010 three Glonass-M satellites fell into the Pacific Ocean. The damage, according to Deputy Prime Minister Sergei Ivanov, amounted to 2.5 billion rubles ($83 million). On August 18, a Russian Proton-M rocket lost the prized Express-AM4 satellite that was designed to provide digital television and secure government communications for Siberia and the Far East. And on August 24, the unmanned Progress cargo craft, Progress-M12M, carrying cargo to the International Space Station, crashed in a remote area of Siberia.

Billionaire turned politician Mikhail Prokhorov this week unveiled his shadow government even if his prospects for winning elections remain in high clouds. The leader of the Right Cause liberal party told journalists that he has selected “remarkable personalities” who could potentially fill posts in his “shadow Cabinet.” The line-up include Mikhail Slobodin, vice president of Gas and Power at TNK-BP as shadow minister of energy and utilities; Artyom Bektemirov, co-owner of 36.6 Pharmacy Chain, as healthcare minister; journalist Alexander Lyubimov as media minister; Yevgeny Roizman as anti-substance abuse minister; Yekaterina Geniyeva as culture minister; Yevgeny Ivanov, Polyus Gold CEO as finance minister, and four-time Olympic champion swimmer Alexander Popov as sports minister. Prokhorov, who owns the New Jersey Nets, also dreams of running for president in 2012 if his party can collect 15 percent of the vote in December's parliamentary elections.

It’s not politics – just expression of some hard-feeling. Thus said Georgia as it confirmed it may not support Russia’s 18- year-old bid to join the World Trade Organization until customs transparency is improved. “We want Russia to join the WTO. That would mean it had to keep to rules it’s currently ignoring, such as the illegal goods embargo it imposed on Georgia,” Deputy Foreign Minister Tornike Gordadze said. Russia halted the import of Georgian food products in 2006, expanding the ban later the same year in a move that cut road, rail, air and sea links with Georgia, halted postal services and blocked money transfers after Georgia arrested four Russian servicemen, accusing them of espionage. The four were released and expelled on October 2, 2006, after which Russia imposed sanctions. Georgia’s Borjomi mineral water, banned in Russia for the last five years, is also set to resume exports to Russia if only Russian and Georgian authorities could agree. “We’re not politicizing the issue, and we’re definitely not saying we’ll only allow Russia’s WTO membership in exchange for the end of the occupation of our territory, nothing like that,” Gordadze said.

In Business

Russia has been salivating over its victory in the gas spat with Ukraine after the successful launch of the Nord Stream gas pipeline on September 6. Moscow gleefully trumpeted the opening of the Nord Stream gas pipeline, which traverses the Baltic Sea bed, connecting Russia and Germany. When the twin pipes are fully operational next year, the lines are expected to carry up to 55 billion cubic meters of gas – potentially threatening Ukraine’s privileged status as a transit nation. However, the dispute took an unexpected turn on Wednesday when Ukraine threatened to lure away Gazprom’s European clients. For over a year, Ukraine has been insisting on a review of the 11-year contract former Prime Minister Yulia Tymoshenko signed with Gazprom in 2009. Gazprom demands payment for 33.3 billion cubic meters of gas, although Ukraine will need only 27 billion in 2012, Ukrainian Energy Minister Yuriy Boyko said on Wednesday, Vedomosti reported. “If our Russian partners insist that we buy more gas than our economy needs, we will take it and then sell locally produced gas [to Europe] on the spot market,” Boyko said. This is the first such statement since Ukraine’s last conflict with Gazprom in 2006, the paper said.

Wal-Mart, the world's largest retailer, continues to snub the Russian market. But company officials continue to deny that they are snubbing Russia. Wal-Mart closed its office in Moscow last December, amid speculations that it had given up on entering the Russian market, but the company has continued to say it remains open to the possibility. "We still believe that Russia’s market has promise, and we'll continue, as we do in markets all over the world, to watch for the right market-entry opportunity," said Company Spokesman Kevin Gardner. This week, the retailer hired Lev Khasis, the former chief executive of X5 Retail Group, Russia's largest retailer by sales, but it said the move doesn't signal any immediate plans to enter the Russian market, the Wall Street Journal reported.

But while Wal-Mart continues to dilly-dally, the California-based premier international specialty retailer, Gap Inc., has just opened its first ever Banana Republic store in Russia

through its franchisee channel. Moreover, the company is going to open its first ever Gap store in Serbia on Friday, which will represent its 200th franchise store. The Banana Republic store is located in AfiMall City, the largest shopping and entertainment complex in Moscow. The company believes that the consumers in Russia have more disposable income compared with average western consumers, making the country a viable location for introducing Banana Republic's luxurious lifestyle collections at approachable prices. Gap first introduced its products in the Russian market through its first Gap store in 2008, and since then the company has increased its franchise store base count to 11, of which nine are located in Moscow.

Moscow-based OZON.ru, Russia’s leading online retailer – often described as the country’s Amazon – has closed a $100 million round in the largest private investment the Russian E-commerce market has seen to date. Existing investors Index Ventures and RU-net are joined by new investors including Rakuten, the major Japanese E-tailer, and Swiss Equity Fund, Alpha Associates. According to Maelle Gavet, the French 33-year-old ex-Boston Consulting Group and now CEO, the decision by the two original investors to stay in rather than cash out “is a huge vote of confidence” in the company that was founded in St. Petersburg in 1998. OZON Group had a turnover of $137 million in 2010, delivering 2.1 million orders to its 5.2 million registered users.

In Society

A fatal plane crash near the city of Yaroslavl this week claimed the lives of most of the city’s “Lokomotiv” ice hockey team. Seven crew members died alongside 36 members of the club, when the plane carrying them to a fixture in Minsk crashed shortly after take-off. Czech, Slovakian, Swedish and Canadian citizens have been confirmed among the dead, as well as Russians. President Dmitry Medvedev visited the crash site and has promised a full investigation, but Russia’s appalling air safety record is becoming an increasingly critical issue. The opening games of the Kontinental Hockey League were postponed in the wake of the accident, as other clubs promised to provide players so that “Lokomotiv Yaroslavl” will still be able to compete this season. The crash came in what started out as a good week for Russian sports fans, when the national team managed to put in its best performance at an Athletics World Championship for 20 years. The team came second overall at the IAAF World Championships in Daegu, South Korea, winning nine gold, four silver and five bronze medals.

Kommersant reporter Oleg Kashin was awarded “The Prize for the Freedom and Future of the Media this week.” Kashin, who was seriously beaten in October last year by unknown attackers, will be awarded a €30,000 prize in recognition of his reporting on controversial issues such as nationalism, pro-Kremlin youth groups and the movement to save the Khimki Forest. The award, which is given by the German Media Foundation of Sparkasse Leipzig, was given to murdered journalist Anna Politkovskaya in 2005, a year before her death.

Russian pilot Konstantin Yaroshenko was sentenced to 20 years in jail by a U.S. court this week after being found guilty of drug smuggling. Forty-three year old Yaroshenko

was arrested in Liberia last year and found guilty in April of conspiring to smuggle a large quantity of cocaine into the United States. Russian authorities have raised questions about the case and are now pushing for Yaroshenko to be extradited to his home country. 

St. Petersburg marked 70 years since the start of the siege of Leningrad on Thursday, as air raid sirens sounded throughout the city. The siege, which lasted 29 months, left an estimated one million of the city’s residents dead from starvation, bombings and defending the city from Nazi troops that had blockaded it. Survivors gathered to remember the dead on Nevsky Prospekt and visited schools to teach the younger generation about their experiences.

Atomic Ivan in love with the atom 09 September 2011

In a unique public communication project, Rosatom has lent its support to a feature film set at a nuclear power plant.  

http://www.world-nuclear-news.org/C_Atomic_Ivan_in_love_with_the_atom_0909111.html

Atomic Ivan follows a demanding and ambitous young scientist named Vanya (Ivan) with a family history in nuclear energy and an obsession for experiencing all human feelings. Set in a small closed city, where all life relates in some way to the nuclear power plant, Vanya follows in his grandparents' footsteps to work at the plant - at the same time kindling a relationship with childhood sweetheart Tanya.

 

Snigirev Dobrygin and Julie Gregory take the starring roles under direction from Vasily Barkhatov, who uses family and nuclear culture to explore themes of commitment, stability and continuity between generations. Rosatom said that nuclear work is portayed as prestigious and exciting, as complicated and intricate as personal relationships, and coming with extensive training and great responsibility.

Producers Telestro are now editing the film, produced with the full support of Russian state nuclear company Rosatom which arranged for crews to film interiors at Leningrad and take exterior shots at Kalinin - all during normal operation.

 

A Rosatom presentation listed some of its goals in this unique public communication project: projecting an image of modern young scientists; promoting the idea of continuity of skills and culture between generations of nuclear workers; illustrating the true nature of the nuclear industry; and attracting a target audience through modern, topical cinematic language and expression.

 

Barkhatov treated the plants as urban environments and brought out their beauty using 35mm film, as compared to digital techniques used in other locations. Computer graphics and colour correction help to create 'magical man-made pictures to present a modern nuclear power station.'

 

One of the aims of the film was, 'despite the seriousness of the theme, to dispel fears and prejudices with irony' and end with 'a warm human story about love of the peaceful atom.' Researched and writtenby World Nuclear News

National Economic Trends

Gov't to cut borrowings this year

http://www.rbcnews.com/free/20110912104252.shtml

      RBC, 12.09.2011, Moscow 10:42:52.Domestic borrowings will be reduced to RUB 1.4 trillion (approx. USD 47bn) this year from RUB 1.7 trillion (approx. USD 57bn) planned earlier, Deputy Prime Minister and Finance Minister Alexey Kudrin told reporters on September 10.

      The government does not intend to borrow abroad this year, he added. Changes in the borrowings plan are attributable to the target of achieving a balanced budget. Earlier, the government planned to implement this year's budget with a deficit of 1.3% of GDP.

Rouble at weakest since early 2011 vs dollarhttp://www.reuters.com/article/2011/09/12/russia-markets-idUSL5E7KC0BJ20110912

2:14am EDT

MOSCOW, Sept 12 (Reuters) - The Russian rouble came under pressure from continuing sell-off on stock and commodity markets at opening on Monday, briefly sliding to its weakest level since the first trading day in 2011 at 30.31 versus the dollar .

By 0609 GMT, the rouble was down 1.1 percent at 30.28 versus the dollar on the MICEX exchange and was almost unchanged at 41.05 against the euro .

Versus the euro-dollar basket, the rouble eased 0.55 percent to 35.13 , closing in on the range of above 35.15 where the central bank is expected to start selling few hundred million dollars a day to limit downside pressure on the rouble. (Reporting By Andrey Ostroukh)

Wheat Rallying as Great Plains Drought Overcomes Surge in Russian Exportshttp://www.bloomberg.com/news/2011-09-12/wheat-rallying-as-great-plains-drought-overcomes-surge-in-russian-exports.html

QBy Maria Kolesnikova, Whitney McFerron and Marina Sysoyeva - Sep 12, 2011 7:34 AM GMT+0200

This year’s surge in Russian wheat exports, big enough to feed Japan for more than two years, may fail to stop a rally as global demand overwhelms supply curbed by droughts from the U.S. to Australia.

Russian sales will gain more than fourfold to 17.9 million metric tons this year, second only to the U.S., the median of 16 analysts’ forecasts compiled by Bloomberg showed. That won’t be enough to stop global stockpiles shrinking for a second year, the U.S. Department of Agriculture estimates. Prices will rise 16 percent to $8.50 a bushel by the end of December, according to 20 analysts surveyed by Bloomberg.

Russia resumed exports in July after an almost yearlong ban prompted by its worst drought in a half century. Dry conditions are now hurting crops from Texas to Iowa, just as near-record corn prices spur livestock farmers to use the most wheat for feed in two decades. Grupo Bimbo SAB, the world’s largest bread maker, and CSM NV, the biggest manufacturer of bakery ingredients, increased prices as grain costs rose.

“Wheat is definitely a bullish market,” Romain Lathiere, a fund manager at Diapason Commodities Management in Lausanne, Switzerland, which has about $9 billion invested

in raw materials, said by telephone on Sept. 5. “We don’t have good news concerning the crop, and there is no solution that will last until farmers seed the next crop during this winter. And demand, particularly for feed, is increasing.”

Shrinking Stockpiles

Wheat rose 20 percent on the Chicago Board of Trade since Russia resumed exports July 1, as drought spread across the Great Plains in the U.S. and Europe began harvesting crops after the driest spring in three decades. The Standard & Poor’s GSCI Agriculture index of eight commodities rose 12 percent while the MSCI All-Country World Index of equities slumped 16 percent. Treasuries returned 6.3 percent, a Bank of America Corp. index shows.

Global wheat demand will advance 3 percent to 675 million metric tons in the 2011-2012 season, according to the USDA, which uses a combination of local marketing years for its estimates. Production will expand faster at 3.7 percent and still fall short of consumption by almost 2.9 million tons, reducing stockpiles to a three-year low of 188.9 million tons.

While wheat, which closed at $7.2975 on Sept. 9, is already trading 55 percent above its 10-year average, it would have to gain another 84 percent to match the all-time high of $13.495 of February 2008. Corn is within 9 percent of $7.9975, the price on June 10 for the July futures that was the highest ever for the contract.

Livestock Feed

The two grains are trading close to parity, compared with a five-year average of wheat costing about 1.45 times more than corn. That will spur an 11 percent gain in the use of wheat in livestock feed this year to 127.9 million tons, the most in 21 years, the USDA estimates.

Russia exported 3.98 million tons of wheat in the last marketing year, the USDA estimates. The additional 13.9 million tons anticipated in the Bloomberg survey compares with annual Japanese consumption of about 6.15 million tons.

Analysts aren’t forecasting a return to the record prices of 2008 because of bigger harvests in Kazakhstan, China, India and Egypt. The four nations’ combined output will increase 6.9 percent to 227.6 million tons, equal to 34 percent of global production, USDA estimates show. The Washington-based department is scheduled to release its monthly update today on production and consumption.

Egyptian output will mean less need for overseas purchases by the world’s biggest importer. The most-populous Arab nation will buy 10 million tons, the fewest in three years, USDA forecasts show.

Ukraine Exports

Additional exports may come from Ukraine, which curbed shipments last year through a quota system after a drought. The sales will more than double to 9 million tons this marketing year, the USDA estimates. Ukraine still has a 9 percent duty on outbound wheat shipments.

The rally may also be curbed by investors betting that a weaker global economy will hurt demand. Consumption fell 0.8 percent in 2008 as the world suffered its worst recession since World War II. More than $8.2 trillion was erased from the value of global equities since April 30, data compiled by Bloomberg show.

Speculators remain bullish on wheat. Hedge funds switched to a net-long position, or bet on higher prices, in the week ended Aug. 23, having been bearish since June, data from the Commodity Futures Trading Commission show. The following week, they more than tripled their combined wager to the highest in almost two months.

The most widely held option in Chicago futures trading gives holders the right to buy wheat at $9 by November, with the next biggest contracts at $8 and $10 by the same date, Chicago Board of Trade data show.

Grupo Bimbo

Costlier grain drove Mexico City-based Grupo Bimbo, which makes Entenmann’s cakes and Thomas’ English muffins, to raise prices by 3 percent to 4 percent in the first half. Flour expenses rose 30 percent in the second quarter, Chief Executive Officer Daniel Servitje said in a conference call July 22. The company will report a 14 percent gain in net income to 6.13 billion pesos ($483 million) this year, the mean of four analyst estimates compiled by Bloomberg shows.

CSM (CSM), based in Amsterdam, said in July its price increases weren’t keeping up with raw material costs, which will increase by about 240 million euros ($328 million) for the year. The company will report net income of 84.6 million euros this year, compared with 99.3 million in 2010, the mean of seven analysts’ estimates shows.

The U.S. drought may keep limiting supply into next year. The current harvest will drop 6 percent to 56.5 million tons, a four-year low, the USDA estimates. The next crop may be even smaller unless rain comes in the coming two months, said Shawn McCambridge, the senior grain analyst for Jefferies Bache Commodities LLC in Chicago.

Fields Fallow

“They’re in such an exceptional drought now, I have to wonder if farmers are going to be willing to plant into basically dust,” McCambridge said. Farmers may leave fields fallow over the winter and instead plant sorghum or corn in spring, he said.

Parts of southern Kansas and western Oklahoma have had less than half their normal rainfall, while areas of Texas had 25 percent or less, National Weather Service data show. Drought has spread northeastward, hurting corn and soybeans in Iowa, Illinois and Indiana. In southwestern U.S. wheat-growing areas, the drought may last through November, because of the developing La Nina, a period of cooling equatorial waters on the Pacific Ocean, the National Weather Service estimates.

Winter Crops

Kansas, Texas and Oklahoma are historically the biggest growers of hard, red winter wheat used to make bread, and in 2010 they accounted for about 28 percent of U.S. production of all varieties. Winter-wheat crops are planted from September and harvested beginning in May.

Australia’s crop, forecast by the USDA to drop about 4 percent to 25 million tons, is also threatened. Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd., Westpac Banking Corp. and Commonwealth Bank of Australia all cut estimates in the last month, citing dry conditions in eastern states. The harvest starts in October.

The 27-nation European Union will reap 133.5 million tons this year, a decline of 1.6 percent and the lowest in four years, the USDA estimates. Spring drought hurt yields in France and Germany, the EU’s largest growers and shippers, and rain during the German harvest delayed harvesting.

“The high harvest in Russia to unlikely to compensate for losses in the U.S. and European harvests,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by telephone on Sept. 7. “Wheat is a defensive play during economic slowdowns, so prices and demand are likely to be more stable or even rise compared with industrial commodities.”

To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; Whitney McFerron in Chicago at wmcferron1@bloomberg.net; Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net

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

Rosneft to Lead in $40Bln Sell-Off http://www.themoscowtimes.com/business/article/rosneft-to-lead-in-40bln-sell-off/443535.html

12 September 2011

By Irina Filatova

The government is seeking to raise 1.2 trillion rubles ($40 billion) from selling state assets in the next three years, with Rosneft expected to be the biggest contributor, bringing in more than 200 billion rubles in 2012, the Economic Development Ministry said Friday.

The ministry expects selling stakes in the largest state companies to bring a total of 300 billion rubles to the federal budget next year, while the forecast for 2013 and 2014 is 380 billion rubles and 475 billion rubles, respectively, said Alexei Uvarov, head of the Economic Development Ministry's property department.

The forecast is "conservative," given the current strained market conditions, Uvarov told reporters, adding that the real revenue could be higher.

"We understand the complicated situation in the financial markets and don't want to be too optimistic," he said, PRIME reported.

The volatility in global financial markets, fueled by Standard & Poor's downgrade of the U.S. credit rating and the debt crisis in Europe, has already affected the initial privatization schedule.

Sberbank, which slid about 20 percent on the MICEX Index in August, is not ready to proceed with the placement of a 7.6 percent stake — initially scheduled for September or October — in the current market conditions, the lender's chief executive German Gref said Friday.

The lender discussed the situation with its major shareholder — the Central Bank — and "will try to list at the first opportunity as soon as the market stabilizes," he told reporters in Sberbank's office.

"So far, we see great volatility, turbulence in the market, and we can't sell in the current situation," Gref said, adding that selling the stake remains a priority for the bank.

Central Bank First Deputy Chairman Alexei Ulyukayev said last month that there is no specific deadline for closing the deal, except for the obligation to sell the stake by 2013, so the decision would be made taking into account the market situation.

Gref, however, did not rule out that the lender could sell shares by the end of this year or in early 2012.

"Probably such a window will appear before the New Year … or right after it," he said. "As soon as a window of opportunity appears we'll use it immediately."

Vyacheslav Smolyaninov, a strategist at UralSib Capital, said it is possible to sell state assets even in the current market, if reducing its presence in state companies is a priority for the government.

"But if the goal is to raise maximum funding, such market conditions are undoubtedly not favorable," he told The Moscow Times.

Smolyaninov also said the target of raising 1.2 trillion rubles from the sale of state assets is realistic, given the scale of the privatization.

"It's a rather realistic forecast," he said. "The privatization includes selling big stakes in pubic companies that have high value despite the market slide."

The anticipated figure is part of the government's ambitious privatization plan through 2017, and revenue from selling assets in state companies could reach 6 trillion rubles, or about 13 percent of gross domestic product last year, RIA-Novosti reported early last month, citing a source in a government economic agency.

This target, which "looks challenging at first glance," is in line with the companies' market values and the stakes to be sold, Smolyaninov said.

Rosneft, VTB, Sovkomflot, RusHydro, the Federal Grid Company, Uralvagonzavod, Russian Railways, Transneft, Zarubezhneft, Alrosa and United Grain Company are among the companies that face partial or full privatization as part of the government's plan to cut the budget deficit.

The biggest revenue in next year's privatization pie is expected to come from selling a stake in Rosneft, Uvarov said.

"We expect the largest revenue in 2012 from privatizing Rosneft. We're discussing a stake of … up to 15 percent so far. We plan to raise more than 200 billion rubles from selling this stake," he said, Interfax reported.

Meanwhile, Smolyaninov said the announced value of the stake is underestimated because, given Rosneft's current market capitalization of $82 billion, a 15 percent stake is worth about 368 billion rubles.

"It means that the government is ready to sell [that stake] with a 40 percent discount," he said, adding, however, that the announced figure is likely to be the minimum the governments hopes to get for the stake.

The Economic Development Ministry also expects to raise at least 94 billion rubles from selling a 10 percent stake in VTB next year.

According to Uvarov, the ministry is considering selling 4.11 percent in the Federal Grid Company and 25 percent minus one share in Sovkomflot in 2012, as the government must fully withdraw from the shipper's capital by 2017.

"It will take us a long time to sell all of Sovkomflot. We hold 100 percent in Sovkomflot and plan to withdraw from it. That's why we'll be gradually offering the market 25 percent [pieces] in Sovkomflot with time-stretched periodicity."

Selling that stake will reduce the government's presence in the company by half, as privatization of the other 25 percent in Sovkomflot is scheduled for this year and could be completed in late November or in early December, Uvarov said, adding that revenue from selling state assets this year currently stands at 100 billion rubles.

The government also plans to withdraw from the capital of several other state companies, including Rosneft, VTB, Inter RAO, Sheremetyevo Airport and Zarubezhneft by 2017, according to an updated list drafted earlier this year after President Dmitry Medvedev called the initial privatization plan "too modest."

The initial privatization program approved last year involved reducing the government's stake in 10 companies, including — among other things — cutting the stakes in Rosneft and VTB to 50 percent plus one share and 50 percent, respectively, by 2014.

The government also plans to sell stakes in a number of smaller companies, like Apatit, S7 Airlines and Ulyanovsk Automotive Plant.

Sberbank is interested in acquisitions in Romania after signing an agreement to buy Austria's Volksbank International without its Romanian unit, the lender's chief executive German Gref said Friday.

Sberbank refused to buy VBI's Romanian unit because of risks the Russian lender had noticed in its portfolio, he told reporters in Sberbank's office.

"We're not ready to take such risks yet … We'll probably come back to this issue in two or three years," Gref said.

Sberbank agreed Thursday to buy 100 percent of VBI — the Eastern European operations of Oesterreichische Volksbanken — excluding its unit in Romania, for 585 million to 645 million euros ($823 million to $911 million), which equals VBI's combined equity, depending on its financial performance in 2011.

Read more: http://www.themoscowtimes.com/business/article/rosneft-to-lead-in-40bln-sell-off/443535.html#ixzz1XiPklLSG The Moscow Times

Sberbank privatization on holdhttp://www.bne.eu/dispatch_text16549

bneSeptember 12, 2011

The privatization of a 7.58% -1 stake in Sberbank will be delayed due to market conditions, CEO German Gref said on Friday. The news is of little shock considering the precarious state of sentiment on the markets.

"A... decision was made to try to enter the market at the first opportunity. But at the moment , we see strong volatility, and we won't enter in the current situation," the CEO said, reports Prime.

The sale of the stake was originally planned for mid-September, but that was clearly not going to happen as markets buckled throughout August. Sberbank's shares lost about 20% and the value of the stake fell by $1.2 billion to $4.8 billion. As debate rose, Sberbank began pulling back on its roadshow.

Gref said that he sees no chance that the stake will be offered in the near future, with the markets at the mercy of fears over the economic climate in the US and the Eurozone. CBR First Deputy Chairman Alexei Ulyukayev admitted in August that the sale could be delayed, but was to be to be completed by 2013.

In fact, it would have been surprising if Gref hadn't announced that the sale is to be delayed, as that volume of shares would hit the entire Russian universe hard. However, the concern is that it derails one of the few privatisations that had actually been scheduled.

Resistance to the $50bn privatisation programme has been stiff within many companies, and the lack of a schedule - as President Dmitry Medvedev knows - is a risk to completing the sales. Company managers and other opponents of the plan will simply delay proceedings in the hope that the wind will change.

However, Gref reiterated that Sberbank is now fully prepared technically to conduct the sale, and is ready to go with the placement if a suitable window opens before the end of the year.

Growing Efforts to Extract Healthier Dividend Payments from State-owned Companies http://www.bne.eu/dispatch_text16549

AtonSeptember 12, 2011

Interfax reported on Friday (9 Sep), citing Alexei Uvarov, director of the Ministry of Economic Development's property department, that the ministry has proposed tighter enforcement of the current guidelines on dividend payments by state-owned companies. The ministry wants to make it a legal requirement for state-owned companies to pay at least 25% of their net income as dividends. Uvarov said the law should remain in force until at least 2012-14. He added that the government would make it more difficult for companies to make lower payments.

Uvarov said the state budget envisages revenues from dividends amounting to RUB119bn in 2012, RUB121bn in 2013, and RUB119bn in 2014. For comparison, the government anticipates receiving revenues of RUB84bn in 2011 for the year 2010.

However, Uvarov cautioned that dividend payout ratios could be reduced in certain circumstances, on approval by the prime min ister, if a company requires funds for its investment programme.

Bottom lineRussian companies have often been criticised for offering uninspiring dividends. Hence, we view any steps to increase payments as a key factor which could boost the appeal of Russian markets, especially given that investors are likely to favour the relative security of dividends in such an uncertain economic and market climate.

Russia balances budget by raising 2012 oil price forecast to $100http://www.bne.eu/dispatch_text16549

RIA Novosti - KommersantSeptember 11, 2011

Russia's Ministry of Finance has completed its 2012-2014 budget revision, raising the projected oil price to $100 per barrel. The government can now pay for all its pre-election vows.

In June, the ministry made all of its budget estimates based on oil priced at $93. In fact the lower forecast was used as an excuse to include such unpopular budgetary measures as a sharp rise in alcohol and tobacco excise taxes and a new set of requirements for corporate social security contributions last summer.

A modest rise in the projected oil price for 2012 would have made it closer to the effective 2011 level and enabled the Finance Ministry to adjust federal revenues and expenditures without changing the 2.7% estimate for the budget deficit made this summer, a level quite acceptable even by pre-crisis EU standards. However, the ministry preferred to use the opportunity to cut the planned budget deficit instead.

Deputy Minister Tatyana Nesterenko said the new estimate has increased federal revenue

to 11.8 trillion rubles ($400 billion) in 2012 while projected federal expenditures will grow by a far smaller margin, to 12.7 trillion rubles ($430.5 billion). The ministry also decided to cut the 2012 budget deficit by half, to 1.5%. As a result, the average projected oil price that would enable Russia's budget to be balanced has declined to $116.2/bbl from July's level of $124.6.

The ministry's latest estimates are obviously a compromise to suit all the agencies involved in budgeting. When Minister Alexei Kudrin started working on the draft budget in May 2011, he began by proposing that President Dmitry Medvedev and his government go back on some of their pre-election promises, including budget cuts totaling 500 billion rubles. However, his latest estimates indicate that the Finance Ministry no longer has to turn down the president's financing requests.

Although the ministry has yet to publish details of its spending plans, no special interests will be able to benefit from the additional revenue, because the government is scheduled to approve the final version of the budget on September 20.

The adjusted budget will also be more stable in case the $100/bbl forecast proves unrealistic, as Kudrin had warned earlier. If the price falls to $90, the effective budget deficit will be around 3% if spending remains unchanged.

On the other hand, it remains vulnerable because the 2012-2014 draft budget was calculated assuming Russia will have a stable balance of payments. If the oil price falls fast enough, the balance of payments will deteriorate as well, which will immediately lead Russia's industry to require more "budget support." Conceptually, the new budget is as dependent on the stable growth of oil prices in 2012-2013 as the previous - balanced - budgets of 2009-2010 were.

Business, Energy or Environmental regulations or discussions

September 12, 2011 10:16

RTS, MICEX indices drop 1.4%-2% at market openhttp://www.interfax.com/newsinf.asp?id=272299

MOSCOW. Sept 12 (Interfax) - Share-trading on the Russian Trading System (RTS) and MICEX exchanges opened for business Monday with the indices slumping 1.4%-2% amid worldwide expectations of default by Greece.

By 10:01 a.m. Moscow time, the RTS index was down 1.37% at 1602.95 points, the MICEX index had lost 2.02% to 1487.53 points, and prices for most benchmark shares had slipped as much as 3.1%.

VTB (RTS: VTBR) was down 2.2% on the MICEX by that time, Gazprom (RTS: GAZP) had lost 1.8%, Gazprom Neft (RTS: SIBN) 2.4%, Lukoil (RTS: LKOH) 1.8%, NOVATEK (RTS: NVTK) 3.1%, Norilsk Nickel (RTS: GMKN) 1.7%, Polyus Gold (RTS: PLZL) 0.7%, Rosneft (RTS: ROSN) 1.9%, Rostelecom (RTS: RTKM) 1.4%, Sberbank of Russia (RTS: SBER) 2.5%, Surgutneftegas (RTS: SNGS) 1.9%, Tatneft (RTS: TATN) 2.6%, and FGC UES (RTS: FEES) 2.9%.

Cf

(Our editorial staff can be reached at eng.editors@interfax.ru)

Gazprom, Rosneft and Mosenergo: Russian Equities Previewhttp://www.bloomberg.com/news/2011-09-11/gazprom-rosneft-and-mosenergo-russian-equities-preview.html

QBy Stephen Bierman - Sep 12, 2011 6:00 AM GMT+0200

The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index fell 2.5 percent to 1,518.22 at the close in Moscow. The dollar-denominated RTS Index fell 3 percent to 1,625.29.

OAO Gazprom (GAZP RX): President Dmitry Medvedev will support the expansion of a venture with Royal Dutch Shell Plc on Russia’s Sakhalin Island. Russia’s natural gas exporter dropped 3.4 percent to 168.86 rubles.

OAO Rosneft (ROSN RX): Oil retreated the most in a week in New York as the euro dropped against the dollar on concerns about a possible Greek default. Russia’s largest oil producer fell 2.9 percent to 221.67 rubles.

OAO Mosenergo (MSNG RX): The Gazprom-controlled power generator is scheduled to release first-half results. The Moscow utility fell 2.2 percent to 2.212 rubles.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

Cross ownership between gencos and grids could be allowed

http://www.bne.eu/dispatch_text16549

VTB CapitalSeptember 12, 2011

News: Energy Minister Sergey Shmatko said that the current ban on cross-ownership for grids, generation companies and retail businesses might be lifted in the future. No details were provided. The energy minister also added that the potential MOESK move to Gazprombank's operating management (which was rejected due to the ban) is still on the agenda.

Our View: The initial idea for imposing a ban on cross-ownership was based on the grounds that it might affect competition and grant dominant market power for certain players. This is first time that top level authorities are speaking about potential changes on that front.

If the proposed changes are accepted, they could significantly change the utilities market landscape in Russia. In particular, we think that the changes would make the privatisation of electricity grids easier, as it would significantly increase the number of quality bidders that are quite familiar with the Russian power market. We think that Inter RAO (which is looking for M&A targets) and Bashkirenergo (which already controls grids and gencos) could be the primary beneficiaries of the potential changes. Also, the change would strengthen the investment case for EuroSibEnergo. Finally, MRSKs are the other group of companies that could play the news, as the changes (if implemented) could accelerate their privatisation. As a reminder, previously MinEnergy mentioned MRKZ and MRKS as possible candidates for privatisation.

New regulations will support the top-five Russian airlines

http://www.bne.eu/dispatch_text16549

Renaissance CapitalSeptember 12, 2011

Event: Today (12 September), Kommersant reported that the government is considering measures to reduce the number of airlines, following the recent crash of a Yak-42 near Yaroslavl. First, according to the newspaper, the government would subsidise flights between cities of more than a million people, similar to the current system in the Far East, by which the state reimburses airlines for a portion of the ticket price. This subsidy would only be offered to the five largest airlines: Aeroflot, Transaero, Sibir, UTair and

Orenburg Airlines. Second, permits to operate international charter flights during the winter may be directed toward these airlines. Third, from 1 January 2012, commercial flights on aircraft without ground proximity warning systems will be banned, effectively grounding the An-24/26, Yak-40/42, TU-134 and Tu-154B, which currently form the basis of the fleets of most small and medium-sized Russian airlines. Fourth, in order to operate long-haul flights, airlines will be required to have a fleet of at least 10 similar aircraft with a capacity of not less than 50 seats.

Action: Moderately positive for Aeroflot, in our view.

Rationale: The introduction of these measures would significantly increase the market share of the top-five Russian airlines, which in 2010 had a 52% market share of domestic and international passenger traffic. Aeroflot could be a major beneficiary of the new regulations, in light of the expansion of the fleet by the merger with Rosavia. On the other hand, about 24 of the 102 aircraft operated by Rosavia would be banned under the new rules, which means that Aeroflot will have to invest in fleet renewal.

Dmitry Kontorshchikov

UPDATE 1-Russia's Global Ports doubles H1 profit to $82.4 mln http://www.reuters.com/article/2011/09/12/global-ports-idUSL5E7K92IQ20110912

2:46am EDT

(Adds detail)

* Says profit up 99 pct in maiden H1 results

* Will pay interim divs of $28.2 mln, $0.18 per share

* Says has ability to navigate uncertain economy

MOSCOW, Sept 12 (Reuters) - Russian ports operator Global Ports (GLPRq.L: Quote, Profile, Research, Stock Buzz) said on Monday it had the track record to beat any global economic downturn as it showed a doubling of first half profit in its maiden results as a public company.

The firm, which raised $588 million in a London initial public (IPO) offering in June, said profit reached $82.4 million in the first six months of the year, compared to $41.4 million in the same period last year.

It added that based on the strength of the results the group would pay an interim dividend of $28.2 million, or $0.18 per share.

Looking ahead, Global Ports said it was braced for an economic downturn if or when one materialises.

"While there is uncertainty about the outlook for the global economy, Global Ports has a track record of having successfully navigated the recent financial crisis," the group said in a statement.

"Global Ports is on solid footing to capitalise on growth opportunities ... particularly in the under-penetrated and fast-growing Russian container market," it added.

Shares in Global Ports have bucked the trend of other Russian newly public stocks in that they are trading higher than their listing price.

They closed on Friday at $17.3 a global depository receipt (GDR), compared to a debut price of $15.

"We expect Global Ports' results to be supportive for its shares. Container transshipment is benefiting from the substantial growth of imports, and remains the fastest-growing segment of port business in Russia," Renaissance Capital analyst Dmitry Kontorshchikov said in a note last week. (Reporting By John Bowker)

Summa May Build 2 Power Plants in Far East, Vedomosti Sayshttp://www.bloomberg.com/news/2011-09-12/summa-may-build-2-power-plants-in-far-east-vedomosti-says.html

By Stephen Bierman - Sep 12, 2011 6:45 AM GMT+0200

Summa Capital may build two power stations in the Russian Far East at a cost of 50 billion rubles ($1.66 billion), Vedomosti said, citing a Summa official who was not identified.

Summa will seek a partner and financing to build the two plants between 2012 and 2015, the Moscow-based newspaper said.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

12 Sep, 2011, 05.55AM IST, Deepshikha Sikarwar & Amiti Sen,ET Bureau

State-owned MMTC keen on buying stake in Russian diamond minerhttp://economictimes.indiatimes.com/news/economy/foreign-trade/state-owned-mmtc-keen-on-buying-stake-in-russian-diamond-miner/articleshow/9951132.cms

NEW DELHI: The government has given green signal to state-run companies to pick up stake in Russian diamond major Alrosa, subject to it scrutinizing the company.

Alrosa plans to divest 20% of its equity in the current year in a deal expected to cross $2 billion. New Delhi is keen on an Indian entity picking up interest in Alrosa in order to ensure a stable supply of rough diamonds for its over Rs 60,000-crore industry that employs more than five lakh people, a government official said.

State-owned MMTC is keen to pick up stake in Alrosa. The government is also exploring asking two or more state-run companies to put in a joint bid, but wants to tread cautiously. "The government wants a thorough examination of the company before any Indian entity puts in a bid," said a government official.

The decision for a scrutiny of Alrosa, which has a 25% share in world's rough diamonds production, was taken at a meeting of officials from ministries of commerce, finance and mines. Commerce ministry is likely to seek details of the company, its mines and balance sheet from the Russian government, said an official privy to the deliberations. India has 95% share in the world's cut and polished diamond exports. Its total exports in 2010-11 stood at $28.25 billion.

A secure supply of rough diamonds can give a leg up to the local diamond processing industry and boost employment. Moreover, New Delhi also wants to preempt any move by other countries, such as China and US, to buy stake in world's largest diamond miner as it could have long-term supply and pricing implications for its diamond hub. Commerce minister AnandSharma has already had preliminary discussions with his Russian counterpart.

He had sought Russian government's support for participation of Indian companies in Alrosa stake sale during his meeting with Russian minister of economic development Elvira Nabiullina in June this year.

Sale of stake in Alrosa is part of Russian government's privatization plans, which envisages sale of stakes in 10 major state-owned banks and companies worth 1 trillion roubles or $33 billion over the next three years. These include Rosneft, RusHydro, shipping company Sovcomflot, Sberbank, VTB bank and the United Grain Company.

The Russian federal government holds 50.92% in Alrosa, republic of Sakha (a state in Russia) has 32%, administrations of eight municipal districts in Sakha have 8% share and the balance 9% is held by other legal entities and individuals.

Russian TV Ads May Cost 20% More Next Year, Kommersant Sayshttp://www.bloomberg.com/news/2011-09-12/russian-tv-ads-may-cost-20-more-next-year-kommersant-says.html

QBy Stephen Bierman - Sep 12, 2011 7:02 AM GMT+0200

Advertisements on Russian television may cost 20 percent more on average next year, Kommersant reported, citing Sergei Vasilyev, the general director of Video International.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

CEO: Russia’s VimpelCom mulls closing DVB-H mobile TV projecthttp://www.prime-tass.com/news/_CEO_Russias_VimpelCom_mulls_closing_DVB-H_mobile_TV_project/0/%7BF591B187-2BD5-4776-B45A-BD414E2B1C9E%7D.uif

MOSCOW, Sep 12 (PRIME) -- Major Russian mobile operator VimpelCom is considering closing down a project to provide mobile TV services in the Digital Video Broadcasting Handheld (DVB-H) standard, VimpelCom’s CEO Yelena Shmatova told reporters late on September 9.

No timeline for closing the project has been determined yet, Shmatova said.

VimpelCom’s subsidiary Dominanta started testing mobile TV services in Moscow in late 2009, investing about U.S. $10 million to $12 million in the project, but has not launched commercial operations because of uncertainties regarding the regulation of the mobile TV market, Shmatova said, adding that at present the development of mobile TV, in the DVB-H standard, would be unreasonable, because the standard is outdated.

End

12.09.2011 12:09

BRICKS & MORTAR: Russian real estate - back to the bubble http://www.bne.eu/storyf2892/BRICKS__MORTAR_Russian_real_estate__back_to_the_bubble

Ben Aris in Moscow September 12, 2011

For many cash-strapped Russians, the global downturn seemed to offer a chance to scrape together enough money to get a mortgage and move house. But those hopes have been dashed as the market has recovered more quickly than expected and prices are already back to pre-crisis levels.

At 80%, Russia has the second highest level of home ownership in Europe after Ireland, but unlike the Irish (or indeed any other Europeans) almost no one has a mortgage.

The state simply gave people the public housing they occupied after the collapse of the Soviet Union in what must be one of the biggest transfers of wealth in history. Russians had an average of 16.8 square meters of space per person in 1990, worth nearly $3,000bn today – about twice the value of GDP.

However, estimating property values is pretty arbitrary. While eight out of 10 Russians say they want to move house, very few are able to do so. There are only about 300,000 mortgage contracts in the whole country: less than half of 1% of the population has borrowed from a bank to buy their home. "During the worst of the crisis, the top end of the market was not affected at all. No one wanted to sell. They didn't want the cash as they had nowhere to put it," says Ekaterina Thain, founder of Chesterton Russia, a real estate agency in Moscow. "In business class, prices came down by 30% and in economy class they were down by 50%. However, prices already began to recover in 2009 and now they are almost back to pre-crisis levels."

The average price of Moscow residential real estate has soared from around $900 per square meter in 2003 when mortgages first became available, reaching $4,000 in January 2010 and $5,107 as of August this year, according to the irn.ru website.

Prices were also propped up, as any Russians with money ploughed it to real estate, the preferred asset class during the worst of the crisis. And as Thain points out, there is still a huge housing shortfall in Moscow and the country as a whole.

Banks have begun issuing mortgages again and volumes have doubled since the start of this year. In August AIZhK, Russia's mortgage agency, said the number of mortgages and housing loans would rise to 741,000 by 2015 and continue climbing to 868,000 by 2020.

It's a similar situation in office space, where there is a huge shortfall in class A properties, though developers have had even more of a rollercoaster ride than home owners. "The crisis arrived at absolutely the worst possible time for the real estate market," says Darrell Stanaford, managing director at CB Richard Ellis Russia.

No vacancies

In the economic boom from about 2006, real estate became a "get rich quick" deal for many businesses that poured money into ill planned projects, says Stanaford. In the

spring of 2008, he says, over a million square meters of new office space was added to the city's stock of 12m square meters, so when prices began to fall they collapsed completely.

The reanimation of the market was clearly seen this week when Rosstat, the government statistics agency, reported a jump in July construction volumes, up 17.8% on year after being moribund for most of the previous 18 months. Developers who had borrowed heavily to finance projects have largely restructured their loans – or lost their assets to banks – and are now able to raise fresh money to finish half-completed buildings that were abandoned during the crisis.

Sergei Sobyanin, the new mayor of Moscow, has suspended construction permits issued by his predecessor Yuri Luzhkov so there will be no new office space on the market until 2013, which will also support prices, Stanaford predicts.

At prime locations prices have already passed their pre-bubble peaks, while office vacancy rates in Moscow have fallen to 12.5% from 25% at the end of 2009. Vacancy rates are only around 1% and 3% in the prime retail and logistics sectors, respectively, according to Renaissance Capital. "Before the crisis there were no vacancies and the trick to was to do the deal fast before prices went up further – if you could get the building at all," says Stanaford. "Now there is supply but the gap between supply and demand is closing fast."

Moscow's new administration is working on a development plan for the capital and says it plans to double the size of the city, building suburbs in the western European style. But this will take several years and redevelopment of the centre of Moscow is still badly needed. "A city is like an ocean liner. It takes time to change direction and it is best to do it slowly and get it right," says Stanaford."

Activity in the Oil and Gas sector (including regulatory)September 12, 2011 11:05

Russian oil exports to non-CIS down 3.3% in 7mthshttp://www.interfax.com/newsinf.asp?id=272311

MOSCOW. Sept 12 (Interfax) - Russia exported 124.403 million tonnes of oil to countries outside the Commonwealth of Independent States during the period January-July, a 3.3% year-on-year decrease, the Federal Customs Service (FCS) reported.

The physical volume of oil-product exports was down 7.8% for the seven months, including 11.7% less diesel fuel and 7% less liquid fuel. Exports of automobile gasoline were up 32.4%.

The value of Russia's January-July fuel and energy exports was up 31.4% year-on-year.

Customs figures indicate that fuel and energy exports to non-CIS countries represented 73% of overall exports to those countries (71.6% in January-July 2010).

The physical volume of oil exports CIS countries weighed in at 2.713 million tonnes for the seven months, 63.4% less than in the same period last year.

Compared to January-July 2010, the physical volume of oil-products exported was down 12.5%, including 62.9% for gasoline and 66% for kerosene. Liquid-fuel exports increased 52%, those of diesel fuel 9.9%.

The value of the fuel and energy exported to CIS countries in January-July increased 28.3% year-on-year.

Of exports to CIS countries, fuel and energy represented 58.9% of total exports to those countries (49.2% in January-July last year).

Total oil exports form Russia reached 127.116 million tonnes for the period, up 6.5% year-on-year.

The FCS said that Russia exported 14.5% more natural gas over the seven months, 100.5 billion cubic meters (bcm) in all. That included 69.1 bcm to non-CIS countries (up 9.3%) and 31.4 bcm to CIS countries (up 31%).

Export of oil and oil products from Russia in January-July 2011:

Total Non-CIS CIS1,000 tonnes $ mln 1,000

tonnes $ mln 1,000 tonnes $ mln

Crude oil 127 116.2 97 988.5 124403.4 95991.0 2712.8 1997.5

Oil products 69 496.3 49 746.5 67080.1 47922.0 2416.2 1824.5

Automobile gasoline 2 060.9 1 762.1 1769.1 1573.3 291.8 188.8

Diesel fuel 21 614.2 18 946.4 20519.1 18005.3 1095.1 941.1

Liquid fuel 37 347.2 21 356.7 36637.2 20966.7 710.0 390.0

Natural gas, liquefied, mln m3 13.9 2 175.9 13.9 2175.9 - -

Natural gas, bcm 100.5 33 523.2 69.1 ... 31.4 ...

Import of oil and oil products into Russia in January-July 2011:

Total Non-CIS CIS1,000 tonnes $ mln 1,000 tonnes $ mln 1,000 tonnes $ mln

Oil products 1 670.5 1 812.1 229.4 602.5 1441.1 1209.6Automobile gasoline 471.0 472.5 3.3 3.9 467.7 468.6Diesel fuel 378.3 362.5 0.8 1.2 377.5 361.3Liquid fuel 592.8 373.8 0.7 0.5 592.1 373.3

Source: Russian Federal Customs Service (FCS).

Cf

(Our editorial staff can be reached at eng.editors@interfax.ru)

TNK-BP plans no new oil refineries in Siberia, Russia's Far Easthttp://en.rian.ru/business/20110912/166774103.html

11:21 12/09/2011

IRKUTSK, September 12 (RIA Novosti)

Russian-British joint venture TNK-BP has no plans to build oil refineries in Eastern Siberia or the Russian Far East despite Prime Minister Vladimir Putin's call on oil companies to build refineries in the region to reduce fuel prices, Deputy CEO Maxim Barsky said on Monday.

"We have no such plans in Eastern Siberia. As for refineries, we are well represented in the central region. Our oil refinery in Khabarovsk in the Far East is being modernized, Rosneft plans to build a refinery there. I think the market will be saturated in the next five years," Barsky said.

The government boosted gasoline export tariffs to  44 percent from May 1 to fight local shortages which started in April in some regions. Russian oil companies preferred selling gasoline abroad where prices are higher than in Russia, where the state has capped prices.

The Federal Antimonopoly Service has accused large oil companies of price collusion. It has ordered them to bring wholesale fuel prices down in line with market prices and warned that it may launch new investigations into price fixing.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/68228c7e-dc79-11e0-8654-00144feabdc0.html#ixzz1XiNJb0pa

September 11, 2011 7:39 pm

Hayward to step down from TNK-BP board

By Sylvia Pfeifer, Energy Editor

Tony Hayward, the former chief executive of BP, will sever his ties with the UK oil group in the next few weeks when he steps down from the board of its Russian joint venture, TNK-BP.

Mr Hayward, who left BP last year in the wake of the devastating Gulf of Mexico spill after nearly four years at the helm, is expected to attend one final board meeting at TNK-BP later this month before stepping down. He joined the board as non-executive director last year after his departure from BP but the position was always only seen as a temporary one until his own plans became clearer.

Mr Hayward last week announced the $2.1bn acquisition of Genel Energy, a Kurdistan-focused exploration and production company, by his acquisition vehicle Vallares. His ambition is to build the group into a regional champion that will list on the London Stock Exchange later this year and join the FTSE 100.

Sources familiar with the situation said on Sunday Mr Hayward recently indicated his intention to leave TNK-BP to BP, which is understood to have already identified several internal candidates to succeed him on the board. Mr Hayward is also a non-executive director of Glencore, the FTSE 100 trading group.

BP said it had been aware of Mr Hayward’s intentions to step down for some time but had not yet received formal notification.

Mr Hayward’s departure will come at a sensitive time for the venture that has been riven by discord since BP’s attempt to team up with Rosneft, the Russian state oil champion, earlier this year. The proposed alliance to explore in the Arctic alongside a $16bn share swap foundered after opposition from BP’s Russian billionaire partners in TNK-BP who hold their stake through the group Alfa-Access-Renova (AAR). AAR has asked for an arbitration tribunal to rule whether BP broke the venture’s shareholder agreement by trying to strike the Rosneft alliance. Rosneft has since agreed an Arctic exploration alliance with ExxonMobil, the US group.

BP is also being sued by minority shareholders in TNK-BP for $3bn in damages over the collapse of the alliance. Its Moscow offices were raided by bailiffs and armed forces ten days ago in connection with the lawsuit. BP last week appealed against the court’s decision to allow the raids. Sources familiar with the situation said on Sunday that Rosneft had also filed with the court to restrict any searches.

BP’s relations in Russia will be in the spotlight this week when Bob Dudley, its chief executive, visits Moscow as part of a trade delegation accompanying David Cameron, Britain’s prime minister. The visit is expected to strike a conciliatory tone over BP’s turbulent few months in the country.

Petronet likely to set up third LNG terminal in Dhamra porthttp://www.thehindubusinessline.com/companies/article2439725.ece

Pratim Ranjan Bose

Kolkata, Sept. 9: 

Petronet LNG Ltd appears to have zeroed in on Dhamra port in Orissa for setting up its third LNG terminal, incidentally the first on east coast. Plans are also afoot to kick-start coastal trade of LNG through daughter vessels beginning 2012-end, once the Kochi terminal is operational to large users in Sri Lanka, Andaman and Nicobar Islands and others.

Sources close to the development told Business Line that PLL had already completed a pre-feasibility on Dhamra and was set to launch the feasibility study — expected to be taken up by global major Mercator — in a couple of weeks. The feasibility study will be ready for seeking board approval in 2011-end.

PLL had earlier referred a number of ports on the east coast including Machhlipatnam and Gangavaram as possible locations for the terminal.

According to the Petronet Chairman, Mr A. K. Balyan, the proposed east coast port would contribute to the company's plan to create a distributional channel independent of pipelines. To start with, PLL is planning to use nearly half of the projected 5 mt Kochi terminal capacity for coastal trade through smaller cryogenic vessels, with smaller re-gasification facilities to be put up at the customer end.

“We are looking forward to sell over 2 mt LNG through this route to 2-3 large consumers,” Mr Balyan said adding that the company had an offer to supply LNG to an upcoming (LNG-based) thermal power generation facility in the island nation.

Discussions are also on to offer clean fuel solutions for city gas and industrial applications in Andaman and Nicobar Islands. Opportunities are explored to cater industrial users along the east cost, including ones at Haldia in West Bengal.

Yamal Opportunities

Meanwhile, a consortium of Petronet, ONGC Videsh and GAIL is expecting an early decision on its offer to acquire interest in the upcoming Yamal LNG in Russia in the next two months. The acquisition — if comes through — would ensure much needed backward integration for PLL.

Operated by Russia's Novatek, Yamal would aggregate production from 11 gas fields and 15 oil and condensate fields in the Yamal Peninsula. PLL is also exploring the opportunities to tie up supplies in a liquefaction facility expected to come up at the Anadarko Petroleum-operated field in Mozambique. BPCL and Videocon hold 10 per cent equity interest each in the gas field.

Keywords: Petronet LNG, Dhamra port, LNG terminal, Mercator, Yamal LNG, Novatek

12.09.2011

Nord Stream Will Deprive Slovakia, Ukraine of 20 Percent of Transit Revenue – Fitchhttp://www.oilandgaseurasia.com/news/p/0/news/12865

The international ratings agency Fitch has reported that with Russia' new Nord Stream pipeline coming on-line, revenue from transit services in Slovakia and Ukraine might drop as much as 20 per cent in 2012.

Russia began filling the pipeline with technological gas last Tuesday.

According to Fitch, this alternative route for pumping gas to Europe will strengthen Gazprom's position in its dispute with UKraine's Naftohaz over the conditions of the two  companies' current contract.

In light of this, Fitch does not rule out possible problems with the transit of gas from Russia via Ukraine.

Copyright 2011, Ukroil. All rights reserved.

22:56 11/09/2011ALL NEWS

Nord Stream’s technological gas reaches Germany

http://www.itar-tass.com/en/c154/223245.html

BERLIN, September 11 (Itar-Tass) —— The technology gas filled in the Nord Stream pipeline, which is 1,224 kilometres long, has reached Germany’s Lubmin, Steffen Ebert of the Nord Stream Company said on Sunday.

Technical gas is necessary to replace nitrogen from the pipeline and to reach necessary pressure. On September 6, Russia’s Prime Minister started filling the pipeline with technical gas.

It will take about a month to reach the pressure necessary for gas supplies, Ebert said. It is expected, the gas pipeline will go operational in November. Sources say that Russia’s President Dmitry Medvedev and Germany’s Chancellor Angela Merkel will participate in the official opening ceremony.

Tests of Nord Stream beginhttp://english.ruvr.ru/2011/09/11/56018625.html

Sep 11, 2011 21:27 Moscow Time

Technical gas has reached the German city of Lubmin by the Nord Stream pipeline, a Nord Stream company representative has reported.

Technical gas is meant to displace nitrogen from the pipeline and to provide the required pressure levels. The pipeline was officially started-up by Russian Prime Minister Vladimir Putin in Vyborg on the 6th of September. It will take about a month to reach the level of pressure required for regular gas deliveries, the German representative said.

The official launching ceremony of the Nord Stream is scheduled for November. Russian President Dmitry Medvedev and German Chancellor Angela Merkel are expected to attend the ceremony.

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September 11, 2011 10:23 pm

EU set to act on Caspian pipeline plan

By Joshua Chaffin in Brussels

European governments are attempting to revive a stalled effort to beat Russia’s effort to bring central Asia’s vast natural gas reserves to Europe.

A move to give Brussels the power to negotiate a pipeline deal with Azerbaijan and Turkmenistan is expected to be agreed at a meeting of European Union ministers on Monday.

If approved, it will be the first time the bloc’s 27 member states have given the European Commission the power to agree an external energy treaty on their behalf.

The unprecedented ceding of power is the latest sign of how concerned the EU has become over its reliance on Russia, which supplies about a quarter of its gas.

The scheme is the cornerstone of the EU’s strategy to break that dependence and has long been one of the highest priorities of José Manuel Barroso, the Commission president.

The Commission has been holding informal talks with Turkmenistan for two years in the hope of convincing the country to commit some of its gas reserves to the west.

Doing so would require the construction of a pipeline under the Caspian Sea to Azerbaijan, which has already pledged to send gas to Europe.

Previous efforts to develop a trans-Caspian link have been frustrated by territorial disputes between the two central Asian countries as well as Russian objections.

The EU’s members, who have traditionally cut their own deals with the Kremlin and other energy exporters, have long been wary of ceding authority to Brussels on energy policy. Yet they appear willing to do so now in order to demonstrate to Turkmenistan, which is also being courted by Russia and China, that Europe is committed to a closer partnership.

Günther Oettinger, the EU’s energy commissioner, called the member states’ decision a “milestone”, adding: “After all, it is Europe and not only one single country that will benefit from Caspian gas.”

If the project advances, then it could provide a much-needed boost to Nabucco, a 3,900-kilometre pipeline that aims to carry gas from Azerbaijan to Austria via Turkey, intentionally skirting Russian territory. Gazprom, Russia’s state-controlled gas export monopoly, has been charging ahead with a rival pipeline, called South Stream.

In spite of the Commission’s backing, Nabucco has been plagued by doubts about whether its backers will be able to win access to enough gas to make it commercially viable – particularly in its early years. It boasts an annual capacity of 31bn cubic metres.

Two smaller and less-expensive projects – the Trans-Adriatic Pipeline and the Interconnector-Turkey-Greece-Italy – are also vying for a share of roughly 20bcm that Azerbaijan has pledged to direct to a southern corridor of European pipelines.

That contest is intensifying as an October 1 deadline draws near for the parties to submit tariff proposals to the consortium developing the second phase of Azerbaijan’s Shah Deniz field. The group, which includes Britain’s BP, Norway’s Statoil, France’s Total and the Azeri-owned Socar, could make its decision before the end of the year. .

Nabucco’s backers believe that an additional 10bcm per year from Turkmenistan would brighten the project’s outlook. That is a fraction of the central Asian country’s 8,000bcm in proved reserves, according to BP estimates.

Commission officials believe that the trans-Caspian link could eventually carry supplies from other parts of the region.

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September 11, 2011 4:20 pm

Gas field discovered off Azerbaijan

By Isabel Gorst in Moscow

Total, the French oil group, has discovered a large gas field off Azerbaijan that will boost the European Union’s plans to import Caspian gas and diversify away from Russian energy supplies.

Ilham Aliev, the president of Azerbaijan, said the gas find was a “major event” that underscored Azerbaijan’s long-term prospects as a global energy supplier.

“This will allow us to press ahead more confidently with our gas strategy and strengthen the position of our country as a world gas exporter,” he said.

Total said it had found a large gas reservoir that could potentially hold “several trillion cubic feet of gas reserves and associated condensates” while drilling a first well on the Absheron block offshore Azerbaijan about 25km from the huge Shak Deniz gas field.

“This discovery could be very significant in terms of resources,” Marc Blaizot, senior vice-president of exploration at Total, said in a statement. “Drilling will continue to explore further deeper objectives that look attractive.”

Analysts said the gas discovery brightened the prospects for the EU-backed Nabucco pipeline to transport Caspian and Middle East gas to Europe and reduce dependence on Russian energy supplies. Investors have struggled to secure sufficient gas supplies to fill the 31bn cubic metres a year pipeline.

Russia is competing for control of Caspian gas and has offered to buy all Azerbaijan’s surplus gas production. Gazprom, the Russian gas monopoly, plans to build the South Stream pipeline to bring gas across the Black Sea to south and central Europe that would compete in markets targeted by Nabucco.

Azerbaijan exports small amounts of gas to Turkey, Georgia and Greece from the Shah Deniz field, where a foreign consortium led by BP is developing one trillion cubic metres of gas reserves. The group is in talks to supply gas to Nabucco from the second phase of Shah Deniz expected onstream in 2017.

Azerbaijan exports about 1m barrels a day of oil through a pipeline across the Caucasus to the Turkish Mediterranean that bypasses Russian routes to world markets. Growing gas exports in the coming decade will help compensate for an anticipated decline at Azerbaijan’s Caspian oil fields.

Read more: http://www.themoscowtimes.com/business/article/rosneft-head-said-to-be-out-of-favor/443533.html#ixzz1XiQ2ZemE The Moscow Times

Rosneft Head Said to Be Out of Favor 12 September 2011Reuters

The president of Rosneft could soon be replaced, industry sources said Friday, little more than a week after the state company signed an Arctic offshore development deal with ExxonMobil.

A Rosneft spokesman said Eduard Khudainatov was continuing work and dismissed what he called rumors.

Rosneft has been under pressure since the collapse of an earlier Arctic deal with BP, which was blocked by minority shareholders in the British oil company's Russian joint venture TNK-BP.

The sources did not say whether Khudainatov's potential dismissal was linked to the failure of the BP deal, but said he had fallen out of favor with Deputy Prime Minister Sechin.

"Igor Ivanovich [Sechin] is dissatisfied with Khudainatov's actions," one of the sources said.

Another source close to Rosneft said Khudainatov's removal from the post, which he took up a year ago, could be discussed at a board meeting next week.

Khudainatov replaced Rosneft's long-serving chief, Sergei Bogdanchikov, last September. Bogdanchikov's contract was not extended after he lost the confidence of Sechin.

"People in Rosneft are discussing the possibility of his departure," the source said. "He was elected as a temporary person. … But the only problem is that there is no obvious candidate to replace him."

Read more: http://www.themoscowtimes.com/business/article/rosneft-head-said-to-be-out-of-favor/443533.html#ixzz1XiQ4tQMd The Moscow Times

Gazprom

September 12, 2011 09:36

Gazprom, Shell may increase gas extraction under Sakhalin 2 project – Prikhodkohttp://www.interfax.com/newsinf.asp?id=272286

MOSCOW. Sept 12 (Interfax) - Russia's Gazprom and the British company Shell are considering the possibility of increasing gas extraction and the production of liquefied gas under Sakhalin 2 project.

"Gazprom and Shell are analyzing the possibility of increasing extraction on the Lunsky deposit to use the additional liquefied gas production lines," Russian presidential aide Sergei Prikhodko told reporters.

Av of

20:12 11/09/2011ALL NEWS

Gazprom, Shell plan to increase gas production at Sakhalin-2

http://www.itar-tass.com/en/c154/223208.html

MOSCOW, September 11 (Itar-Tass) —— Russia’s gas monopoly, Gazprom, and British Shell corporation plan to increase production of gas in the Sakhalin-2 project, Russia’s Presidential Aide Sergei Prikhodko told a briefing devoted to the visit of the UK’s Prime Minister to Moscow on September 11-12.

“Shell is our strategic partner in Sakhalin-2,” he said. “It has a many-years’ experience in working at shelf deposits of the kind.”

“Gazprom and Shell agree and study an option to increase production at the Lunskoye field to supply gas to additional lines for further production of liquefied natural gas,” he continued. “We aspire increasing of production of liquefied natural gas at Sakhalin-2 in order to increase its supplies to the Asia-Pacific region’s market.”

The Sakhalin-2 project is implemented by Sakhalin Energy Company in compliance with a profit share agreement. The company was organised in 1994 with the purpose to develop Piltun-Astokhskoye and Lunskoye gas fields in the Sea of Okhotsk on Sakhalin’s shelf. In April of 2007, Sakhalin Energy’s shareholders signed a buying-selling agreement with Gazprom, where the companies shares are redistributed. According to the agreement, Gazprom’s share is 50 percent plus one share, Shell’s – 27.5 percent, Mitsui’s – 12.5 percent and that of Mitsubishi is ten percent.

Gazprom arm rebrands and outlines further growth planshttp://menmedia.co.uk/manchestereveningnews/news/business/s/1458477_gazprom-arm-rebrands-and-outlines-further-growth-plans

Simon Donohue

September 12, 2011

The Manchester-based European energy supply arm of Russia's state-owned gas supplier today turned up the heat on its expansion plans as it unveiled a new name.

Gazprom Energy is the new name of Gazprom Marketing and Trading Retail, which currently employs 132 at its offices in Quay Street and a further 25 in Europe.

The rebranding – designed to emphasise the company's role as a supplier to trade customers of gas, electricity and other energy products – was created by Mark Studio, Manchester, in collaboration with Leeds web design agency, Bloom Media.

Speaking about the changes, Gazprom Energy's managing director, Jon Feingold, said that it was about providing existing and potential new customers with "clarification" about the brand as it is rolls out into new territories.

A supplier to 30,000 business customers in the UK, France and Ireland, including Manchester United, McDonald's and the NHS, Gazprom Energy has recently begun sales in Holland and plans to launch in another European country before the end of the year.

The company has licences for the supply of gas and power/electricity in Norway, Romania and Slovakia.

Having already stated an ambition to grow the workforce to 300 in the next four years, Mr Feingold said he expects staffing levels to have reached 147 in Manchester by the end of this year and 185 during 2012.

He added: "The new brand identity reflects the company's commitment to further development and expansion of its successful energy supply business in partnership with our customers, and highlights our product innovation and excellence in customer service.

"The launch of the new brand name, brand identity and redesigned website are a direct result of the continued growth the company has experienced in the last five years and its goal to broaden its reach and appeal to a wider customer base and, over time, expand into new geographies."

PIB: Russian firm may suspend N380bn gas projecthttp://www.momentng.com/en/news/3907/pib-russian-firm-may-suspend-n380bn-gas-project.html

THE continued delay in the passage of the Petroleum Industry Bill (PIB) may force Russian gas giant, Gazprom to suspend the proposed N380bn investment in the Nigerian oil and gas industry.

By Anayo Korie

RUSSIAN gas giant, Gazprom, may suspend the proposed N380 billion ($2.5billion), investment in the Nigeria’s oil and gas industry. The envisaged suspension is due to continued delay in the passage of the Petroleum Industry Bill (PIB), investigation revealed. The Russian gas company in 2008 signed a memorandum of understanding (MoU) with the Nigerian National Petroleum Corporation (NNPC) on joint venture projects, covering petroleum, gas exploration and power. Sources conversant with the deal hinted that the parties were yet to reach final agreement on the actual take-off date of the proposed multi dollar business, originally scheduled to come on stream in 2015, fuelling rumours that theRussian firm may have suspended the project due to absence of clear rules. Last year, Gazprom said it would delay plans to invest billions of dollars in Nigeria until after the passage of PIB and general elections in Nigeria. Chief Executive Officer of Gazprom’s Nigerian subsidiary, Vladimir Ilyanin, stated last year that any investment decision had to be after the general elections. He assured that the company would roll out its plans on the massive Nigerian project once the polls were over and the PIB signed into law. But PIB is yet to be passed into law five months after election. Oil sector sources said the continuous delay in passing the bill was a major impediment as the company had insisted that the law must be in place before it could make any meaningful commitment on the project. It had been planned that 90 per cent of the project would be for developing the Nigerian domestic gas production, processing and transportation. Gazprom had stated that investing in Nigeria's Liquefied Natural gas (LNG) made strategic sense as it was much closer to its main North American market than Russia. It is intended that the gas would be through the Trans-Saharan Gas Pipeline, a project aimed at sending Nigerian gas through Niger and Algeria to the Mediterranean. Nigeria proven gas reserve is about 187 trillion cubic feet, with about 600 trillion cubic feet additional in undiscovered gas potential. Nigeria is currently the world’s seventh largest in terms of proven gas reserves, but with the estimated undiscovered potential, could easily be within the world’s top three in gas reserves. Gazprom was among the 15 oil companies selected by the Nigerian government in March last year as potential investors to help develop gas projects.