Russia 110523

Basic Political Developments Russian denial of S-300 systems to Iran cuts bilateral trade - Iranian ambassador Iran ready for oil, gas cooperation with Russia US steps up shipments to Afghanistan via Russia - The Pentagon says that Russia

will account for the transportation of 75% of US land-shipped cargoes for Afghanistan, as against the current 60%.

Lavrov, Abbas discuss ways of resuming Palestine-Israel talks o Palestinian leader Abbas joins calls for Mideast quartet meeting -

Palestinian Authority President Mahmoud Abbas on Monday backed Russia's calls for an urgent meeting of the Quartet of Middle East peace mediators. Abbas was speaking in a phone call with Russian Foreign Minister Sergei Lavrov.

Russia urges Libyan authorities, opposition to cease fire – Lavrovo Lavrov meets Libyan opposition and Palestinian partnerso Russian FM Lavrov to meet with Libyan opposition representatives - The

meeting in the Russian capital will focus on preconditions for a ceasefire and negotiations between the government in Tripoli and rebel authorities in Benghazi.

o Russia's top diplomat set for talks with Hamas, Fatah leaders in Moscow o Palestinians seek Lavrov backing for reconciliation deal

China sovereign fund eyeing Russia investment - The direct investment fund, for which Moscow plans to raise $10 billion within five years, will look for projects in the country for foreign investors as a way to attract overseas capital, according to the report.

o China wealth fund may buy into Russia: reporto China's $300bn sovereign fund looking for Russian opportunities

Poland, Germany and Russia condemn Lukashenko - Minister of Foreign Affairs Radosław Sikorski has called for fresh sanctions against Belarusian authorities during a meeting with his German and Russian counterparts, Guido Westerwelle and Sergey Lavrov, at a meeting in Kaliningrad.

Belarus looks to sell pipeline stake - Belarus plans to sell its stake in the country's gas pipeline network to Russia for $2.5 billion and to unify rouble exchange rates once it receives a bailout loan from Moscow, Prime Minister Mikhail Myasnikovich has said.

o Minsk hands Beltransgaz to Moscow - more to follow? Russia, Germany to expand scientific collaboration - More than 200 joint

conferences, symposiums and round table discussions are slated for later this year in Russia and Germany, where a spate of state-of-the-art research institutes will soon be constructed.

Israel-Russia to sign emergency cooperation agreement - Despite expulsion of military attaché, Vilna'i is set to host counterpart from Moscow, sign deal to increase cooperation in emergency planning.

Report: Russia warned Israel before expelling attaché - Moscow paper reports Israel received three warnings that Colonel Leiderman was violating Vienna Convention on Diplomatic Relations before Russia expelled him. In response, Israel vowed he would observe diplomatic law

o Questions persist regarding arrest of Israel's military attaché in Russia - Colonel Vadim Leiderman may have been trying to gather information on arms sales to Syria, and reportedly 'lobbied' on behalf of Israeli company Elbit, which is keen on selling unmanned aerial vehicles to Russia.

Nicaragua gets more Russian-made buses Assistant to Russian Ambassador to Armenia involved in car accident St. Pete. Kazan. Speaker - Administration of Kyrgyz Parliament said the visit of

Speaker to Russian and Republic of Tatarstan was symbolic. They explained it by the fact that Speaker allegedly visited the most cooperation promising countries.

Kyrgyzstan to invite Angela Merkel and Vladimir Putin - Chancellor of Germany Angela Merkel and Prime Minister of Russia Vladimir Putin will be invited to Kyrgyzstan to International conference on snow leopard rescue, reported DEUTSCHE WELLE news agency.

Uzbekistan: Russian Politician Spreads False Rumors of Unrest Presidential Human Rights Council to discuss Khimkinsky forest Moscow to test all officials on lie detector, looking for corruption Dmitry Medvedev has dismissed three MIA generals Russian Air Defense chief dismissed from military service Medvedev to meet former Russian scientists in Moscow Russian opposition establishes own Popular Front

o Limonov, Udaltsov to form National Salvation Committee Four arrested over south Russian traffic police HQ bomb - The men, aged

between 28 and 30, are members of a criminal gang detained in the neighboring Astrakhan region earlier this month.

o Four militants detained in Astrakhan Policemen kill 2 suspected militants in Russia's North Caucasus - Two suspected

militants were killed in a shootout with police in Russia's North Caucasus republic of Kabardino-Balkaria, a local police source said on Monday.

o Kabardino-Balkaria police investigating clash Over 52,000 hectares of forests, tundra on fire in Yakutia Orthodox believers hold rally against gay pride, WTO in Moscow

o Rival rallies over gay rights in Russia Housing scams put more Muscovites on the streets Reuters PRESS DIGEST - Russia - May 23 RIA Russian Press at a Glance, Monday, May 23, 2011 Russia Profile Weekly Experts Panel: Putin’s Controversial People’s Front Russia’s Growing Engagement with Pakistan – by Smita Purushottam Why Does Syria Matter for Russia? - by Habibe Ozdal

National Economic Trends Ruble Tumbles to Seven-Week Low Versus Dollar as Oil Declines Dvorkovich not supportive of FAS suggestion to lower gasoline excises

o State must adjust subsoil tax to stabilize internal fuel prices - Kremlin aide Banks have 718.6 bln rbs on CBR correspondent accounts on May 23. April capital outflow reported at $7.8bn, March capital account downgraded Government unlikely to cut payroll tax from 34% Study explores rise in Russian living standards, increased income disparity and

changes in consumption patterns - Bank of Finland Manufacturing industries fared variably during the recession - Bank of Finland

Business, Energy or Environmental regulations or discussions Kuzbass Fuel, Inter RAO, Rosneft May Move: Russia Equity Preview Russia’s RTS-Index Futures Advance After Oil, Commodities Gain UPDATE 1-Yandex raises IPO price guidance-source

o Yandex Offers Shares at Twice Google Valuations on Surging Ads in Russia

Russian Q1 2011 stainless steel consumption up by 21pct YoY Rushydro recommends 2010 dividends at 0.0086 rbls/shr UAC wraps up additional share offering Sweco wins energy contract in Russia KAMAZ delays launch of cash-for-clunkers programme Avtovaz shareholders asked to waive dividends for 2010 (Part 2) Alfa to divest stake in CTC Media Russian Railways sets additional requirements for buyer of First Freight Aeroflot to hire deputy CEO from Alitalia

o Aeroflot to hire Alitalia official as deputy CEO Polyus Gold CEO comments on production and global M&A

Activity in the Oil and Gas sector (including regulatory) President Karimov receives Lukoil chief - Lukoil is one of the largest investors in

Uzbekistan. Within the long-term production sharing agreements signed in 2004, a number of joint investment projects have been carried out in Uzbekistan. Along with such companies as Uzbekneftegaz, Petronas, Korean National Oil Corporation and China National Petrolium Corporation, Lukoil is in the consortium to implement multilateral projects on Uzbek part of Aral Sea area.

ERG Sets Up Renewable Energy Joint Venture With Lukoil Sino-Russian Refinery To Start Construction - Oriental Refinery, the joint venture

with an investment of 30 billion yuan ($4.62 billion), was co-funded by PetroChina Company Ltd and Russia's Rosneft. It is designed to process 13 million tons of crude oil every year.

Tatneft could delay second phase of TANECO TNK-BP Holding's final 2010 dividend may be R3.85 per share

o TNK-BP to spend almost all profit on 2010 dividend – report RPT-PROFILE-Russia's oil tsar unbowed after BP breakdown

Gazprom Former German chancellor to get place on Gazprom board? - Former chancellor

of Germany Gerhard Schröder may be appointed to the board of directors of

Gazprom, Vedomosti newspaper reports.  Schröder may replace one of the ministers on the board - either Energy Minister Sergey Shmatko or the Minister of Economic Development, Elvira Nabiullina.

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Full Text Articles

Basic Political Developments

11:16Russian denial of S-300 systems to Iran cuts bilateral trade - Iranian ambassadorhttp://www.interfax.com/news.asp

Iran ready for oil, gas cooperation with Russiahttp://english.ruvr.ru/2011/05/23/50670043.html

May 23, 2011 11:39 Moscow Time

Iran is prepared to take part in Russia’s southward oil and gas deliveries, says the Iranian Ambassador to Moscow Mahmoud Reza Sajjadi. He was speaking in the Russian capital earlier today.

The official said that Tehran is interested in the involvement of Russian companies in a number of projects in Iran.

The Ambassador also came out for cooperation between Russian and Iranian oil and gas companies in third countries, specifically in developing the deposits of hydrocarbons. 

US steps up shipments to Afghanistan via Russiahttp://english.ruvr.ru/2011/05/23/50663619.html

May 23, 2011 09:52 Moscow Time

The United States has stepped up cargo deliveries to its troops in Afghanistan via Russia.

The Pentagon says that Russia will account for the transportation of 75% of US land-shipped cargoes for Afghanistan, as against the current 60%.

The rest of the goods are being shipped through Pakistan, which is quite a problem, given that truck convoys come under frequent attacks from Taliban there.

Via Russia, the US is sending non-military cargoes, such as petrol, foodstuffs and outfit.

11:24 23/05/2011Top News

Lavrov, Abbas discuss ways of resuming Palestine-Israel talks http://www.itar-tass.com/en/c32/148067.html

MOSCOW, May 23 (Itar-Tass) —— Russian Foreign Minister Sergei Lavrov had a telephone conversation with Head of the Palestine Authority (PA) Mahmoud Abbas to discuss the ways of resuming the talks between the Palestinians and the Israelis, the Russian Foreign Ministry reported on Monday.

“On May 22, on the initiative of the Palestinian side, the minister had a telephone conversation with the PA head,” the ministry said. “Issues of the present situation in the Palestine-Israel settlement with an accent on the search for ways of resuming the process of talks on the generally recognized international-legal basis” were discussed in detail.

Palestinian leader Abbas joins calls for Mideast quartet meetinghttp://en.rian.ru/world/20110523/164174609.html

12:13 23/05/2011

Palestinian Authority President Mahmoud Abbas on Monday backed Russia's calls for an urgent meeting of the Quartet of Middle East peace mediators.

Abbas was speaking in a phone call with Russian Foreign Minister Sergei Lavrov.

A statement from the Russian Foreign Ministry said Abbas "expressed gratitude to Russia's leadership" for their efforts to build a lasting peace in the Middle East and their "firm position" on 1967 boundaries.

Palestinians want the borders of their future state to follow pre-1967 lines, a desire which received a powerful boost last week when U.S. President Barack Obama said in a major speech to the State Department that any future Palestinian state must be based on the borders that existed before the 1967 Arab-Israeli war.

"The borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states," he said.

The Middle East Quartet - which is made up of the United States, European Union, United Nations and Russia - expressed "strong support" for the plan last week.

Israel has rejected the proposal.

The Palestinians will seek UN recognition as an independent state in September at the annual meeting of the UN General Assembly.

The leaders of two main Palestinian fractions, Fatah and Hamas, as well as of the People's and Democratic Front for the Liberation of Palestine and the Palestinian People's Party, Al-Shaabare, are meeting with Lavrov later on Monday.

Fatah and Hamas signed a peace deal in Egypt's capital Cairo on May 4 to end their four-year rift.

Israeli Prime Minister Benjamin Netanyahu said the accord was a "tremendous blow to peace and a great victory for terrorism," and called on Abbas to choose peace with Israel rather than reconciliation with Hamas.

MOSCOW, May 23 (RIA Novosti)

May 23, 2011 12:35

Russia urges Libyan authorities, opposition to cease fire - Lavrov http://www.interfax.com/newsinf.asp?id=245667

MOSCOW. May 23 (Interfax) - The main goal of Moscow contacts with representatives of the Libyan opposition is to promote the quickest ceasefire and dialog with the Libyan authorities, which is inevitable, Russian Foreign Minister Sergei Lavrov told a Monday press conference in Moscow.

"What do we expect from this meeting? We are trying to promote the soonest end of bloodshed and the soonest termination of the hostilities by everyone involved. That was the main goal of our meetings with representatives of Tripoli; that was also the main goal of our negotiations with Special Representative of the UN Secretary General Mr. Khatib," he said.

Lavrov meets Libyan opposition and Palestinian partnershttp://rt.com/news/lavrov-meet-libya-palestine/

Published: 23 May, 2011, 08:26Edited: 23 May, 2011, 09:55

The Russian Foreign Minister Sergey Lavrov is set to hold separate talks with Libyan rebels and Palestinian officials, in Moscow on Monday.

Russia is offering a helping hand to both Libyans and Palestinians, in an effort to negotiate peace agreements in the region.

The main issues of the meeting with Libyan opposition are preconditions for a ceasefire and negotiations between the government in Tripoli and rebel authorities in Benghazi.

During a meeting in Moscow last week, representatives from Tripoli assured that they are ready to adhere to all UN resolutions and to consider a ceasefire, provided rebels lay down their arms and NATO stops its shelling.

Moscow has been saying it does not want to be a mediator in the conflict as this is an internal matter for Libya. It is just trying to help both sides, trying to find a way to move forward towards the ceasefire in order for peace finally to be established after months of violence in the country.

Later on Monday Lavrov is also to meet leaders of the Palestinian Fatah and Hamas movements to discuss plans for the recognition of a Palestinian state.

This matter took a new turn when Barack Obama made a proposal that the borders of this possible new independent Palestinian state should be based on the 1967 borders before the so-called Six-Day War, and that would mean that the borders of the future independent Palestinian state would go through Jerusalem and East Jerusalem would belong to the Palestinian lands. The proposal was welcomed by the international community and by the Middle East Quartet, but it was strongly criticized by the Israeli PM, who said such borders would make Israel absolutely defenseless against the Palestinians.

Russian FM Lavrov to meet with Libyan opposition representativeshttp://en.rian.ru/world/20110523/164170687.html

05:15 23/05/2011

Russian Foreign Minister Sergei Lavrov will meet on Monday in Moscow with representatives of the Libyan opposition to discuss the current state of affairs in Libya.

The meeting in the Russian capital will focus on preconditions for a ceasefire and negotiations between the government in Tripoli and rebel authorities in Benghazi.

The delegation from Benghazi initially planned to pay its visit to Moscow last week, but later postponed it "for technical reasons."

The revolt in Libya against Muammar Gaddafi's forty-year rule, which began in mid-February, has already claimed thousands of lives, with Gaddafi's troops maintaining their combat capabilities despite NATO airstrikes against them.

Despite allied efforts under UN mandate, fighting between the rebels and Gaddafi loyalists has come to a standstill on several fronts.

 MOSCOW, May 23 (RIA Novosti)

Russia's top diplomat set for talks with Hamas, Fatah leaders in Moscowhttp://en.rian.ru/world/20110523/164169127.html

02:01 23/05/2011

Russian Foreign Minister Sergei Lavrov will meet on Monday with the leaders of the Palestinian Fatah and Hamas movements to discuss plans for the recognition of a Palestinian state.

The leaders of Fatah, Hamas, the People's and Democratic Front for the Liberation of Palestine and the head of the Palestinian People's Party, Al-Shaab, arrived in Moscow last Friday.

Fatah and Hamas signed a peace deal in Cairo on May 4, ending a four-year split between the two factions that opened when Hamas ousted Fatah forces from Gaza in 2007.

According to the agreement, Hamas and Fatah will form a technocratic government to unify national institutions on the Gaza Strip and the West Bank and prepare for national elections within a year.

Israeli authorities denounced the peace deal between Hamas and Fatah and threatened sanctions, calling on Palestinian leader Mahmoud Abbas to choose between peace with the "terrorist organization," Hamas, or Israel.

MOSCOW, May 23 (RIA Novosti)

Palestinians seek Lavrov backing for reconciliation deal

http://www.jordantimes.com/index.php?news=37723

MOSCOW (AFP) - Palestinian factions, including Fateh and Hamas, will seek Russian backing for a new government after their reconciliation deal at talks with Foreign Minister Sergei Lavrov on Monday, a delegate said.

"We are expecting that he will show his support for the reconciliation accord and the formation of the new Palestinian government," Bassam Salhi, leader of the Palestinian People's Party, told AFP on the eve of the talks in Moscow.

Salhi said the factions had held talks among themselves over the weekend about the formation of a unity government, without giving further details.

Azzam Al Ahmed led the Fateh delegtion, Mussa Abu Marzuk was in attendance for the Islamsists of Hamas while Maher Al Taher represented the Popular Front for the Liberation of Palestine, according to Salhi.

The factions are due to meet Lavrov on Monday morning where they will try to drum up support from Moscow for the reconciliation accord.

Fateh and Hamas, which rule the Palestinian territories of the West Bank and Gaza Strip respectively, were among the 11 signatories to the reconciliation agreement inked in the Egyptian capital Cairo earlier this month.

The accord aims to put a stop to the animosity which has split the Palestinian territories into two camps since 2007 and to pave the way for elections within a year.

But while there has been widespread welcome in Palestinian circles to the reconciliation agreement, Israel has voiced its opposition as Hamas refuses to accept Israel’s right to exist.

The new government is not expected to include members of the factions but rather be made up of technocrats who will serve until the elections.

23 May 2011

China sovereign fund eyeing Russia investmenthttp://www.google.com/hostednews/afp/article/ALeqM5iohTXEvmDIuQ4301AKjYqnnanEPA?docId=CNG.3d900581fffa7766f0c0b69709f235d0.551

(AFP) – 1 hour ago

BEIJING — China Investment Corp (CIC), the country's $300 billion sovereign wealth fund, is looking to Russia for investment opportunities, state media reported Monday.

Russia "has big development potential given its vast market and rich resources," CIC chairman Lou Jiwei told the official Xinhua news agency in an interview during a trip to Moscow.

"CIC is willing to invest in Russia," he said.

The company sees Russia's planned direct investment fund and a new round of privatisation as two channels for possible investment in the country, Lou said.

The direct investment fund, for which Moscow plans to raise $10 billion within five years, will look for projects in the country for foreign investors as a way to attract overseas capital, according to the report.

Lou said CIC's potential Russian portfolio was likely to include stocks and bonds, commodities, infrastructure and real estate projects to diversify risks, the report said.

CIC was set up in 2007 to invest some of China's massive foreign exchange reserves -- the world's largest at $3.045 trillion at the end of March -- partly to gain better returns.

The reserves are mainly parked in safe but low-yielding instruments such as US Treasury bonds, but amid the global crisis CIC has tried to diversify its investments and be more aggressive to improve returns.

May 22, 2011, 11:40 p.m. EDT

China wealth fund may buy into Russia: reporthttp://www.marketwatch.com/story/china-wealth-fund-may-buy-into-russia-report-2011-05-22

BEIJING (MarketWatch) -- China's sovereign wealth fund sees great development potential in Russia, with its vast market and ample resources, and is willing to invest in the country, Xinhua News Agency reported Monday, citing China Investment Corp. Chairman Lou Jiwei.

CIC sees two channels for possible investments in Russia: either through Russia's direct investment fund, or through a new round of privatization in the country, the report cited Lou as saying, adding he sees many investment opportunities as the Russian government

is actively adjusting the country's economic structure.

Moscow is setting up a $10 billion direct investment fund to attract foreign investment in an attempt to help modernize the Russian economy.

China's $300bn sovereign fund looking for Russian opportunities

http://www.bne.eu/dispatch_text15409

bneMay 23, 2011

China's $300bn sovereign wealth fund is looking to Russia for investment opportunities, according to a report from the official Xinhua news agency this morning.

Lou Jiwei, head of China Investment Corp, suggested in an interview on a trip to Moscow that Russia "has big development potential given its vast market and rich resources." He added that government action to adjust Russia's economic structure only adds to the opposrtunities.

More specifically, Lou said that the fund is looking at two channels for investment: the direct investment fund initiated by President Dmitry Medvedev and the wide-ranging $50bn privatization programme announced last year. The direct investment fund hopes to attract $50bn in foreign money with a commitment of $10bn from the state, and will offer investors participation mostly in infrastructure projects on a case by case basis.

Lou said CIC's potential Russian portfolio was likely to include stocks and bonds, commodities, infrastructure and real estate projects to diversify risks, reports AFP.CIC was set up in 2007 to invest some of China's massive foreign exchange reserves - the world's largest at $3.045 trillion at the end of March.

The reserves are mainly parked in safe but low-yielding instruments such as US Treasury bonds, but amid the global crisis CIC has tried to diversify its investments and be more aggressive to improve returns.

Poland, Germany and Russia condemn Lukashenkohttp://www.wbj.pl/article-54611-poland-germany-and-russia-condemn-lukashenko.html?typ=wbj

23rd May 2011

FM Sikorski called for new sanctions against the Belarusian regime

Minister of Foreign Affairs Radosław Sikorski has called for fresh sanctions against Belarusian authorities during a meeting with his German and Russian counterparts, Guido Westerwelle and Sergey Lavrov, at a meeting in Kaliningrad.

The European ministers decried and criticized the repressive actions against opposition members carried out in Belarus and discussed new sanctions.

Mr Sikorski said any new economic sanctions would be aimed at specific businesses, rather than at ordinary people.

Poland AM

Belarus looks to sell pipeline stake http://www.upstreamonline.com/live/article257726.ece

Belarus plans to sell its stake in the country's gas pipeline network to Russia for $2.5 billion and to unify rouble exchange rates once it receives a bailout loan from Moscow, Prime Minister Mikhail Myasnikovich has said.

News wires  23 May 2011 07:28 GMT

Russia this week urged Belarus to sell state assets to complement a planned $3 billion – $3.5 billion loan that could be agreed early next month and help the former Soviet republic overcome a currency crisis, Reuters reported.

"The Russian side is ready to buy our stake in (pipeline operator) Beltransgaz for $2.5 billion," Myasnikovich told state news agency Belta late on Friday.

The deal would give Russia complete control over Belarus'pipeline network which tranships Russian gas to Europe.

Russia's Gazprom paid the same sum for the 50% stake in Beltransgaz that it acquired through a series of purchases between 2007 and 2010.

Myasnikovich said Belarus could receive the first $800 million tranche of the bailout loan this summer.

This would allow Belarus to unify the official exchange rate, which now stands at 3145 roubles per dollar, and the free floating interbank market rate which has reached about 8000 per dollar, he said.

"Once we receive the loan the exchange rate will be based on supply and demand," Myasnikovich said.

Published: 23 May 2011 07:28 GMT  | Last updated: 63 minutes ago

Minsk hands Beltransgaz to Moscow - more to follow?

http://www.bne.eu/dispatch_text15409

bneMay 23, 2011

Minsk will sell its remaining 50% stake in Belarus' gas pipeline network to Russia for $2.5bn, the country's prime minister said on Friday, suggesting that talks over other assets are also under way. However, Mikhail Myasnikovich denied that the sale agreement has any connection with the bail out that Minsk has been begging from Moscow in recent weeks, and specifically claimed that the giant Belaruskali potash producer - one of the prime assets Russia is thought to covet - is not going on the block any time soon, reports Belapan.

The deal will give Russia 100% of Beltransgaz, after Gazprom bought four 12.5% stakes between 2007 - 2010 for a total of $2.5bn. Moscow was reported to be close to consolidating control of the asset a year ago as it endured a mini gas war with Minsk, although Russia has been trying to get its hands on the company since the collapse of the Soviet Union. Whilst the Belarusian network is about to lose much of its strategic value when Nord Stream comes on-line, control officially cements Russia's dominance of the routes in northern Europe, whilst the 75bcm capacity is nothing to sneeze at.

That dominance is clearly a risk for Minsk, which relies heavily on revenues from carrying Russian oil and gas export to Europe. Therefore, despite Belarus' dire financial position having seen it lose its grip on an asset it has been using to bait Russia for years, Myasnikovich warned that the authorities would set certain conditions before selling. ‘The enterprise must operate, the pipelines must be linked, transit must be secured, certain funds must go to the budget. Simultaneously, we are taking efforts to forecast prices,’ he said, according to Belta.

Myasnikovich also tried to claim that the sale was not a condition for the bail out that Minsk is about to secure for its cash-strapped economy from the Eurasian Economic Community Anti-Crisis Fund. Isolated from the West - and therefore institutions such as the IMF - Belarus has few options but to turn to Russia, as its foreign reserves continue to dwindle. Talks over a rescue package have dragged on however, with most assuming the delay has been caused by Russian demands - particularly for prime privatization assets.

However, the PM stressed that the government’s privatization program would focus on finding the right partners. "Privatization is not an end in itself, we must find efficient owners, he said, adding that the bail out is not tied to any privatization deals. “It is not tied to any conditions, we are not required to sell anything,” he insisted. Asked about Belaruskali - in which Russia is thought to be extremely interested as it's thought to be in the midst of consolidating a potash national champion based on Uralkali - Myasnikovich said that the company would not be sold for the time being but investors would be attracted to develop certain potash deposits. In general, Belarus seeks to draw direct foreign investment and create transnational corporations, the prime minister said, adding that talks are ongoing with Russia and Ukraine about the establishment of such corporations.

Returning to the loan talks, Belarus could receive the first $800m tranche of the bailout - which is thought to total $3-3.5bn - this summer, Myasnikovich said, according to Reuters. This will be used to unify the official exchange rate, which stands at 3,145 roubles per dollar, and the free floating interbank market rate, which has reached about 8,000. "Once we receive the loan the exchange rate will be based on supply and demand," Myasnikovich said. However, analysts suggest that the country needs about $10bn overall in 2011.

Alfa Bank writes: In light of the upcoming launch of the Nord Stream pipeline, we see limited economic benefits for Gazprom from the consolidation of the entire stake in Beltransgas. The move indicates that Gazprom is acting as a political tool by providing economic aid to former CIS countries. While an additional $2.5bn is not a particularly large amount given Gazprom’s scale of business (around 10% of 2011E CAPEX budget), we view the potential acquisition as a doubtful investment and believe it will likely be NEGATIVELY perceived by the market.

Russia, Germany to expand scientific collaboration http://english.ruvr.ru/2011/05/23/50668200.html

May 23, 2011 11:09 Moscow Time

Monday will see the opening the Russian-German Year of Science, Education and Innovations, an event that is specifically aimed at shoring up young scientists.

More than 200 joint conferences, symposiums and round table discussions are slated for later this year in Russia and Germany, where a spate of state-of-the-art research institutes will soon be constructed.

The Russian Education and Science Ministry in turn expressed hope that the two countries will further boost what it touted as bilateral strategic partnership in the science

sector.

Israel-Russia to sign emergency cooperation agreement http://www.jpost.com/Defense/Article.aspx?id=221792

By YAAKOV KATZ  05/23/2011 10:13

Despite expulsion of military attaché, Vilna'i is set to host counterpart from Moscow, sign deal to increase cooperation in emergency planning.

 Despite the recent deportation of Israel’s military attaché from Moscow, the Defense Ministry has decided to continue high-level contacts with the Russian government.

Next week, Homeland Security Minister Matan Vilna'i will host his Russian counterpart Emergencies Minister Sergei Shoigu and will sign an agreement to increase Israeli-Russian cooperation in emergency situations. The two will sign the agreement during a ceremony at the Knesset next Monday.

Report: Russia warned Israel before expelling attachéhttp://www.ynetnews.com/articles/0,7340,L-4072583,00.html

Moscow paper reports Israel received three warnings that Colonel Leiderman was violating Vienna Convention on Diplomatic Relations before Russia expelled him. In response, Israel vowed he would observe diplomatic law

Stav Spivak

Published: 05.23.11, 10:47 / Israel NewsThe Russian foreign ministry warned Israel three times before finally deciding to expel Military Attaché Colonel Vadim Leiderman, a Moscow paper reported Monday.

The ministry accused Leiderman of violating the Vienna Convention on Diplomatic Relations in its warnings, before expelling him last week on espionage charges, Komsomolskaya Pravda reported.

The Israeli attaché made contact with Russian security agencies without first coordinating his moves with the Russian foreign ministry and the defense ministry's foreign affairs department, the report adds, thus violating diplomatic law.

Russia's first warning came in November of 2009, according to the report. A second letter was sent in April of 2010 and a third in December of the same year. In response, Israel's embassy in Moscow reassured the foreign ministry that all of Leiderman's future steps would "observe the Vienna Convention's orders".

Leiderman has been accused by Russia's spy agencies of attempting to obtain information on Russia's arms deals with Arab countries. He returned to Israel last week and was interrogated extensively by both

the Defense Ministry and the Shin Bet. A lie-detector test cleared him of the espionage charges, Israel announced.

But the Russian foreign ministry continues to claim that Leiderman was caught red-handed and arrested on May 12, while seated with a Russian officer at a Moscow coffee shop. He was declared persona non-grata on May 14, and ordered to leave the country within 48 hours.

Despite the recent tensions surrounding Leiderman's expulsion, however, Israel and Russia are scheduled to sign an emergency cooperation agreement next week. Homeland Security Minister Matan Vilnai and his Russian counterpart will sign the accord at the Knesset, the army says.

 

Hanan Greenberg contributed to this report

 

Published 01:45 23.05.11

Latest update 01:45 23.05.11

Questions persist regarding arrest of Israel's military attaché in Russiahttp://www.haaretz.com/print-edition/news/questions-persist-regarding-arrest-of-israel-s-military-attache-in-russia-1.363409

Colonel Vadim Leiderman may have been trying to gather

information on arms sales to Syria, and reportedly 'lobbied' on behalf of Israeli company Elbit, which is keen on selling unmanned aerial vehicles to Russia.By Yossi Melman and Eli Shvidler

Contradictory reports emerged over the weekend in Russia as to the reasons for the expulsion of Israeli military attache, Air Force Colonel Vadim Leiderman, a week and a half ago.

Russia's FSB, the equivalent of Israel's Shin Bet security service but with far greater influence and power, told the local media that Leiderman was expelled because of his attempts to acquire secret information on military sales to Arab states.

The newspaper Izvestiya reported that he may have been particularly interested in Russian arms sales to Syria and noted that Israel has been concerned for some time now about Russia's 2007 agreement to sell Syria Yakhont anti-ship cruise missiles, which can target ships up to 300 kilometers away and defend 600 kilometers of coastline.

According to a statement provided by the FSB to the Russian New Agency Interfax, Leiderman had tried to obtain information from several civil servants about Russia's military-technological cooperation with some Arab states and the former Soviet republics. "The documents in the possession of the Russian security services prove without doubt the hostile activities of Vadim Leiderman against the Russian Federation," the statement read.

The statement did not mention the sort of military equipment that the Israeli military attache was interested in, though Israel has tried to block two deals for transferring advanced air defense systems from Russia to Iran and Syria. Both Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak have been involved in these efforts.

In its statement, the FSB said that it had "impregnable evidence" of the "illegal activities in our country, whose substance was to recruit a number of Russian civilians as possible information providers."

The Russian security services have leaked video to Russian television showing Leiderman being arrested on May 12 as he was having dinner at a restaurant with one of the Russians he is accused of trying to secure information from. Earlier, though, a Russian security source told the media that he was being expelled for "industrial espionage activities."

The newspaper Vedomosti reported over the weekend that Leiderman was "lobbying" on behalf of the Israeli company Elbit, which is keen on selling unmanned aerial vehicles to Russia. This would seem to contradict the interests of Russia's state-run military industry, which signed a $400 million contract for Israeli Searcher UAVs that are built

under license by a factory in the Russian Urals.

A source told the Izvestiya newspaper that Leiderman was actively lobbying on behalf of an Israeli company, adding that he had vigorously promoted Elbit's unmanned aircraft, which Russia had refused to purchase because they had been sold to the former Soviet republic of Georgia, with which Russia has been in military confrontation.

If there is validity to these accounts, they would seem to indicate a new trend in the defense establishment, according to which military attaches must fulfill a dual role today because of cuts in funding and manpower, representing both the interests of military contractors and the Defense Ministry.

The FSB complained that it was Israeli media that leaked reports concerning Leiderman and that the Russian authorities had done everything possible to prevent the case from affecting relations with Israel. Russia did not accord Leiderman diplomatic immunity, though, as he was arrested and interrogated for several hours before being asked to leave the country. Upon his arrival in Israel, he underwent three days of questioning by the security services here to ensure that there had been no effort to recruit him by the Russian intelligence services.

Nicaragua gets more Russian-made buses http://english.ruvr.ru/2011/05/23/50663458.html

May 23, 2011 09:47 Moscow Time

The second consignment of Russian-made buses has arrived in Nicaragua to service suburban routes between the capital city and district centres. Russia is delivering buses free as part of an intergovernmental cooperation agreement, signed on May 19th 2007. The first consignment was delivered in May 2009.

Assistant to Russian Ambassador to Armenia involved in car accident

http://news.am/eng/news/60312.html

May 23, 2011 | 10:47

YEREVAN . - An employee of Russian Embassy in Armenia had a car accident on Spitak-Gyumri highway in Armenia on May 22.

Aleksan Kuchmasov, 38, is a Military Assistant to RF Ambassador to Yerevan, photo journalist Gagik Shamshyan told Armenian News-NEWS.am. His Honda ran off the road way and overturned. Kuchmasov was taken to Gyumri military hospital.

An investigation is underway.

St. Pete. Kazan. Speaker23/05-2011 09:34, Bishkek – 24.kg news agency , by Julia MAZYKINA

Administration of Kyrgyz Parliament said the visit of Speaker to Russian and Republic of Tatarstan was symbolic. They explained it by the fact that Speaker allegedly visited the most cooperation promising countries.

The Kyrgyz delegation was the most numerous among those visited the sessions of CIS Council of Heads of Government, EurAsEC, and CSTO. Kyrgyz Speaker Akhmatbek Keldibekov was accompanied by bodyguards, parliamentary colleagues, and journalists.

The main issue for Bishkek at all the sessions was of course the economic one – Customs Unions, the single economic space, and energy sector.

In addition to participation in CIS Council of Heads of Government, Speaker of the Kyrgyz Parliament met with his CIS counterparts. The first meeting was with Chairman of Belarus parliament Anatoly Rubinov. Both speakers exchange the traditional phrases and assured each other of cooperation strengthening. It is essential that majority of journalists were interested in Kurmanbek Bakiyev’s residency in Belarus. However, journalists were repeatedly advised not to raise this issue during the press conferences with the Kyrgyz Speaker.

In general, Akhmatbek Keldibekov did not hide that Kyrgyzstan has difficult economic, social, and partly political situation. During the meeting with Russian State Duma Speaker Boris Gryzlov he noted that international commissions were non-objective in their reports on events in the republic and even promised to present reports, including report of deputies’ commission on ethnic violence in Osh, to Russian deputies.

Osh events were also discussed during the extended session of CIS Council of Heads of Government and CSTO. Journalists were waiting for achievements of post conflict development, because a year has already passed since the Osh conflict and the April events. But in response they heard only about the deficit of budget.

In St. Pete, Kyrgyz delegation also met with Chairman of CIS Council of Heads of Government Sergei Mironov, who said that the Russian Federation was carefully

“monitoring all the stages of parliamentary system introduction in the Kyrgyz Republic.” In response, Kyrgyz Speaker noted that Kyrgyz-Russian relations were always trust-based and friendly. In conclusion he added that Kyrgyzstan needed the assistance and was ready to accept it.

The most informational event among those during the visit of the Kyrgyz delegation to Saint Petersburg was the meeting with Kyrgyz Diaspora. The most respectful compatriots participated in the meeting. According to them, the main problem of migrants is the change of the Kyrgyz citizenship to the Russian one, as migrants lose the right to buy property in their motherland. Akhmatbek Keldibekov assured that the Parliament was actively solving this problem, because about 300 hundred of Kyrgyz citizens became citizens of the Russian Federation and could not officially invest money to their historical motherland.

Kyrgyz citizens in Tatarstan have almost the same problems. Additional group of deputies and businessmen joined the Kyrgyz delegation, which headed to Tatarstan from St. Pete.

It turned out that both countries have not only common religion and similar languages but also agreements, concluded by former authorities of Kyrgyzstan and still unfulfilled. As speaker of Tatarstan’s Parliament Farid Mukhametshin noted, there were a lot of them and they had to be implemented.

Akhmatbek Keldibekov mentioned about the POL delivery issue during the meeting with Tatar counterpart. He said that fuel became the “lever of pressure” on Kyrgyzstan, as the country does not produce it and asked Mukhametshin to consider the possibility of the POL delivery to Kyrgyzstan from Tatarstan.

Mass media immediately responded to the statement of the Kyrgyz Speaker. In Kyrgyzstan, Keldibekov was almost accused of political ignorance, noting that he negotiated the POL delivery from Republic of Tatarstan by-passing official Moscow and government of the Kyrgyz Republic.

Official Kazan seems to be proud of its comparative independence from Russia and possibility to make independent decisions. Tatarstan made boast of its budget, Constitution, and active economic development. “Kyrgyzstan is two Tatarstans. You must work,” said president of Republic of Tatarstan Rustam Minnikhanov, regretting about the miserable trade turn over between the two republics.

Tatarstan’s developing economy impressed Kyrgyz delegation: billions of rubles are invested in information technologies, industry, education. That is why more and more Kyrgyz migrants move to Tatarstan. Work in Tatarstan is more topical on the threshold of the World Universiade 2013. Representatives of the organization committee announced their readiness to employ highly qualified professionals from the KR. However, they stressed: the candidates would have to undergo a careful selection, because Russia has already allocated big money - €110 million for construction of dozens of sports facilities.

“We would be glad if Kyrgyz sport teams participate in the Universiade,” said head of Tatarstan Rustam Minnikhanov.

During the visit to Tatarstan, Kyrgyz delegation was extremely impressed by oil production and processing. They even asked president Minnikhanov, under the impression of work of “Nizhnekamskneftehim” OJSC, to send oil deposit developers to Kyrgyzstan.

However, Kyrgyz deputies came home not only with impressions but also with promises: they assured president of Tatarstan Rustam Minnikhanov that they would consider naming one of Kyrgyz peaks after Tatar writer Gabdulla Turay and making Elabuzh region of Republic of Tatarstan twin region of Issyk-Kul province.

URL: http://eng.24.kg/community/2011/05/23/18223.html

Kyrgyzstan to invite Angela Merkel and Vladimir Putin 23/05-2011 10:47, Bishkek – 24.kg news agency , by Julia MAZYKINA

Chancellor of Germany Angela Merkel and Prime Minister of Russia Vladimir Putin will be invited to Kyrgyzstan to International conference on snow leopard rescue, reported DEUTSCHE WELLE news agency.

Members of German non-profit nature conservation organization NABU will also participate in the conference.

According to experts, nowadays, there are about 350 snow leopards in Kyrgyzstan. Kyrgyz authorities and NABU made an agreement on protection of rare animals. The program is developed for the period of 10 years. According to the leader of the NABU project in Central Asia Boris Tikhomirov, following the results of the conference, ecologists hope to implement a number of projects in nature conservancy.

Recall, the native land of the snow leopards is mountains of Central Asia (from Himalayas to Altai and Tien-Shan to Hindu Kush, and Eastern Tibet. Now, snow leopards are on the verge of extinction in all over the world. It is listed in the Red Book of the International Union for Conservation of Nature.

URL: http://eng.24.kg/community/2011/05/23/18225.html

Uzbekistan: Russian Politician Spreads False Rumors of Unresthttp://www.eurasianet.org/node/63536

May 23, 2011 - 1:17am, by Catherine A. Fitzpatrick

The Rapture didn't take place on May 21 as some believers had scheduled it -- and the Facebook revolution didn't take place in Uzbekistan last week, either.

A Russian politician in Moscow blogging a false story of "10,000 citizens on the streets of Andijan" set off a wave of speculation on Russian and Uzbek news sites, but reputable outlets such as fergananews.com immediately denied the rumor, citing their own reporters who found nothing happening. Local human rights activists also reported that no demonstrations were taking place, and later some Western diplomats confirmed that no crowds were forming on the streets -- that many people would not go unnoticed.

Mitrofanov, described as a Russian nationalist, is a former parliamentary member formerly from the Liberal Democratic Party of Russia headed by the controversial Vladimir Zhirinovsky, and is now active in Just Russia, a center-left party supportive of the current Russian leadership. His brief blog entry on one of Russia's few independent media sites, Ekho Mosvky, doesn't explain where he got the story.

The involvement of a Russian politician in spreading such an obviously false story immediately fueled hateful commentary and fears that possibly Russia was meddling in Uzbekistan's internal affairs. The independent Uzbek news site uznews.net cited an unnamed "Western observer" who saw the rumor of mass demonstrations "as likely to be part of a long-term strategy adopted by Russia to foment popular unrest in Uzbekistan. He suggested that Mitrofanov was unlikely to be acting without the knowledge of his political allies – the Just Russia party, created by Vladimir Putin."

It doesn't seem likely that the Kremlin would deliberately start trouble with an ally with whom it has sometimes testy relations. Yet Mitrofanov's blog asks a question that the Kremlin no doubt asks itself privately, even if this week's story proved untrue: how will Moscow react if unrest breaks out in Central Asian republics, as it did in April 2010 when then-president Kurmanbek Bakiyev was toppled? Whom will it support?

And conspiracy theorists could also ask whether the aim of such rumors is ultimately to discredit the very idea of social movements appearing authentically in Uzbekistan, despite the real grievances people have there, seeing them inevitably only as instruments of outside forces -- and thereby making people suspicious even when protest is genuine. It's in the interests of the Karimov regime to pretend that it maintains social peace with ever-rising GNP numbers published by the IMF, but the lengths to which the Uzbek government goes to silence dissent betray the concerns under the facade.

Last week, for example, Tatyana Dovlatova, a human rights activist who appeared in a Russian film critical of the treatment of the Russian minority in Uzbekistan was fined $4,000 on libel charges.

It's at times when the regime doles out one political prisoner, tortured, broken, and with the sentence against him still in effect, as it did with Uzbek poet Yusuf Juma this week, that we are reminded of thousands of others who remain behind bars not benefiting from such bargaining with the West.

The wave of demonstrations in the "Arab Spring" in the Middle East has naturally provoked debate as to whether such developments could happen in Central Asia, where, like Egypt's Hosni Mubarak, Uzbekistan's President Karimov has maintained an oppressive rule for 22 years, jailing numerous human rights activists, political opponents and religious believers. And as in Egypt, there have now been at least some calls for people to gather in Tashkent's central Mustakillik (Independence) Square July 1.

Recently, the appearance of a new political movement named Uzbekiston Halk Harakati (Popular Movement of Uzbekistan or PMU), made up of activists from the older opposition party Erk and various Andijan justice groups operating outside and inside Uzbekistan, has prompted further speculation of Facebook and Twitter revolutions. The Halk Harakati Facebook group in the Uzbek language has only 302 members currently -- but that's 302 more than can meet openly in a hall or club in Tashkent to organize opposition activities.

The PMU has already begun to stage demonstrations, such as one in Dusseldorf demanding justice for the Andijan massacre, and seems determined to go further than some past emigre groups that have been splintered and ineffective.

The group says that demanding democracy makes as little sense as "preaching to a wild boar that attacks you" and plans to incite civil disobedience, fergananews.com reported. The activists say the opposition has tried for 20 years to fight tyranny by engaging in elections, but it is facing an anti-democratic dictator, and now must move to another form of struggle.

The PMU plans to convene next week in Berlin, and has asked Uzbek Deputy Foreign Minister Vladimir Norov, visiting German May 24-26, to meet with them.

A group of four German parliamentarians has appealed to Norov for the release of Azkam Turgunov and 12 other human rights defenders in Uzbekistan, Freedom Now, an advocacy group for prisoners of conscience, reported.

RT News line, May 23

Presidential Human Rights Council to discuss Khimkinsky foresthttp://rt.com/news/line/2011-05-23/#id10655

The Presidential Human Rights Council is to discuss the Khimkinsky forest problem on Monday. This comes in the wake of worrying news about aggravation of the situation in the forest. The parties involved in the conflict will also be present at the meeting. The head of the council is expected to suggest that ecologists and representatives of the road construction companies should organize joint patrols and share control of the construction works. The conflict regarding the Khimkinsky forest arose from a project to build a highway connecting Moscow and St. Petersburg, which is planned to go through the forest

RT News line, May 23

Moscow to test all officials on lie detector, looking for corruptionhttp://rt.com/politics/news-line/

In order to reduce corruption among state officials, Moscow authorities are planning to introduce obligatory lie detector tests for all public servants. At the moment, the testing is voluntary, observed Gennady Dyogtev, head of the Competitive Policy Department. “I think that officials whose work is related to certain [corruption] risks must pass this test. They must also pass one before they are hired. This requires some changes in the Moscow legislation, which will soon be introduced,” Dyogtev said.

GOOGLE TRANSLATIONDmitry Medvedev has dismissed three MIA generals

http://www.bbc.co.uk/russian/rolling_news/2011/05/110523_rn_russia_mvd_sackings.shtml

Last Updated: Monday, May 23, 2011, 06:43 GMT 10:43 MCKBy presidential decree, their posts have lost the chief of criminal police, Deputy Chief of the Interior for the Stavropol Territory Victor Barnashov and deputy chief of the Main Department of Internal Affairs Directorate in Volgograd region, Ivan Nechaev.Was also sacked the head of Main Directorate of the Federal Penitentiary Service in the Kemerovo region, Valery Dolzhantsev.

05/23 11:56   Russian Air Defense chief dismissed from military servicehttp://www.interfax.com/news.asp

Medvedev to meet former Russian scientists in Moscow http://english.ruvr.ru/2011/05/23/50665151.html

May 23, 2011 10:25 Moscow Time

The Russian President Dmitry Medvedev is receiving in Moscow today former Russian scientists who have been awarded grants to conduct research at Russian universities.

The 33 scientists who’ve been invited to talk with Medvedev are the “first portents”, currently representing the universities of the US, Japan, the UK, Germany, Italy, Switzerland and other countries.

The Russian authorities hope that grant-awarding will help reverse the brain-drain trend and attract the best of former Russian researchers back to the homeland to do research.

Priority is given to innovation projects, specifically those related to information technology, biology and medicine.   

Russian opposition establishes own Popular Front

http://rt.com/politics/news-line/2011-05-23/

RT News line, May 23

Russia’s unrecognized opposition parties have agreed to establish a Committee for National Salvation, an organization modeled on Vladimir Putin’s recently established Popular Front. On Sunday, representatives of Rot Front, Other Russia, Rodina, and Left Front movements signed a declaration announcing the creation of the committee. The organization is open for other opposition parties and activists to join.

May 23, 2011 12:20

Limonov, Udaltsov to form National Salvation Committee http://www.interfax.com/newsinf.asp?id=245657

MOSCOW. May 23 (Interfax) - Some unregistered parties representing the left wing of the Russian "non-system" opposition have officially announced the creation of the National Salvation Committee.

The committee will comprise representatives of Other Russia, RotFront, and Rodina; Zdravy Smysl, the other Russia representative Alexander Averin told Interfax on Monday.

The new committee has issued a declaration saying that "the real opposition is illegally barred from participation in elections, thus violating the constitutional rights of millions of citizens."

The declaration, which was issued in Moscow on Monday, states that the National Liberation Committee "is open to participation with all political and public organizations."

"The National Liberation Committee is calling on Russian citizens to go to the squares of our cities on the day of the parliamentary elections in December 2011," the declaration says.

The declaration was signed by opposition activists Eduard Limonov, Sergei Udaltsov, Konstantin Kosyakin, Alexander Gusak, Alexander Averin, etc.

According to Russian legislation, parties cannot create blocs for participation in elections.

Opposition activist and writer Eduard Limonov said earlier that parties making up the new association will not be able to participate in elections because the Justice Ministry has denied them registration.

"The Front is being created for political struggle. Political struggle is not limited to elections. The methods are peaceful, non-violent resistance, as we have always declared," Limonov said.

av jv

Four arrested over south Russian traffic police HQ bombhttp://en.rian.ru/russia/20110523/164173040.html

10:26 23/05/2011

Russian police have arrested four men in connection with the bombing of a traffic police headquarters in the southern city of Volgograd last month.

The men, aged between 28 and 30, are members of a criminal gang detained in the neighboring Astrakhan region earlier this month.

The April 26 explosion damaged the entrance to the traffic police headquarters in Volgograd, though no one was hurt.

"According to investigators, the suspects set up an armed group in January 2011," Vladimir Markin, spokesman of the Investigative Committee of the Prosecutor General's Office, told reporters on Monday.

Markin said the men carried out the attack as a "test act of terror."

A second explosive device planted outside the city's Interior Ministry Academy was defused by police.

A criminal case was opened on charges of hooliganism and illegal arms trafficking.

More that a decade after the end of a federal war against separatists in Russia's North Caucasus republic of Chechnya, Russian security forces continue to fight militants in other regions of the North Caucasus, who stage frequent attacks on security forces, police and civilians.

MOSCOW, May 23 (RIA Novosti)

09:45 23/05/2011Top News

Four militants detained in Astrakhanhttp://www.itar-tass.com/en/c32/148005.html

MOSCOW, May 23 (Itar-Tass) —— Four militants responsible for organisation of explosions at the Interior Ministry’s Academy in Volgograd on April 26 and at the municipal traffic police’s building were detained in the Astrakhan Region. They were involved in preparation of an act of terror on May 9 in Astrakhan, spokesman of Russia’s Investigation Committee Vladimir Markin said on Monday.

“In January, the suspects organised a gang to prepare acts of terror and infringement on life of law enforcement staff,” he said. “A thirty year-old local, who adopted Islam and had a nickname of Umar, was elected leader.”

“The gang participants contacted followers of radical Islam, including those imprisoned,” he added.

The investigation found out that the two self-made explosive devices which had gone off in Volgograd were trial acts of intimidation.

“Having returned to Astrakhan, the suspects started preparing for acts of terror in public places and were planning to organise an explosion in the Dair leisure centre in the Boyevaya Street in central Astrakhan,” Markin said. “For that purpose, they have prepared all necessary components of an explosive device.”

Policemen kill 2 suspected militants in Russia's North Caucasushttp://en.rian.ru/crime/20110523/164170174.html

04:03 23/05/2011

Two suspected militants were killed in a shootout with police in Russia's North Caucasus republic of Kabardino-Balkaria, a local police source said on Monday.

"Policemen attempted to stop a suspicious car on a highway near the village of Elbrus late on Sunday night, but those in the car opened fire on them," the source said.

Policemen opened fire in response killing two attackers. None of the law enforcers were hurt in the shootout, he added.

A special investigation group is working at the scene of the incident, while the suspected militants are being identified, the source said.

More than a decade after the end of a war against separatists in Russia's North Caucasus republic of Chechnya, Russian security forces continue to fight militants in other regions in the area besides Chechnya, including Kabardino-Balkaria, Ingushetia, Dagestan, and North Ossetia. Frequent attacks are staged on security forces, police and civilians.

NALCHIK, May 23 (RIA Novosti)

May 23, 2011 12:07

Kabardino-Balkaria police investigating clashhttp://www.interfax.com/newsinf.asp?id=245646

NALCHIK. May 23 (Interfax) - A criminal case has been opened in Kabardino-Balkaria over a clash in the Elbrus region, in which two militants died, a source at the republican office of the Russian Investigations Committee told Interfax on Monday.

"Federal Security Service officers tried to stop a GAZ-3102 vehicle at the 96th kilometer of the Baksan-Azau federal road at 10:30 p.m. Moscow time on Sunday. Two residents of the Elbrus district opened gunfire from the car. They were killed in the gunfire exchange," he said.

"The car caught fire, and everyone inside burned," the source added.

Charred pieces of an Austrian Glock pistol and nine millimeter ammunition were found in the car.

DNA tests will identify the militants.

"So far, the police say that they are residents of the Elbrus district, and one of them may be a militant wanted federally," he said.

te jv

05:52 23/05/2011Russia

Over 52,000 hectares of forests, tundra on fire in Yakutiahttp://www.itar-tass.com/en/c34/147927.html

VLADIVOSTOK, May 23 (Itar-Tass) —— More than 52,000 hectares of forests and the tundra are on fire in Yakutia, the press service of the Yakutia emergencies department said on Monday.

About 2,000 people and over 203 units of machinery are involved in the firefighting efforts. The helicopters dropped 440 tonnes of water on the spots of major forest fires, the press service said.

Some 114,400 hectares of forests and non-forest areas have burnt down in Yakutia since the start of the fire-prone season.

Some 17 people were brought to responsibility for the forest fires to spark up in five districts of the republic and in the city of Yakutsk.

23 May 2011, 10:18

Orthodox believers hold rally against gay pride, WTO in Moscowhttp://www.interfax-religion.com/?act=news&div=8471

Moscow, May 23, Interfax - About 1,000 Muscovites identifying themselves as Orthodox believers have gathered on Bolotnaya Square in Moscow on Saturday for a rally against gay pride parades and globalization, Alexander Lapin, the head of the Moscow branch of the Orthodox organization People's Council, told Interfax.

Some 85% of them are young people, that is, activists under 30 years old.

The people who have come to the rally have unfolded banners and posters. "Some of them say, "We Support Gay Parade Ban", "For Protection of Traditional Family", and "We Are Against Joining WTO".

Police deployed on Bolotnaya Square to maintain public order are not intervening, he said.

Rival rallies over gay rights in Russia http://themoscownews.com/society/20110523/188684992.html

by Tom Washington at 23/05/2011 12:02

 

A weekend of protest and counter protest has kept gay rights firmly on the agenda, days after City Hall slapped a ban next Sunday’s planned Gay Pride march.

Saturday saw the combined forces of the Russian Orthodox Church, ultra-nationalist movement Narodny Sobor, the Eurasian Youth Union and social movement Family, Love and Fatherland converge on Bolotnaya Ploshchad, the riverside spot where gay activists applied to hold their rally on May 28.

It was followed by a gay lobby march on Gogolyevsky Bulvar the next day, with activists vowing to hit the streets, regardless of municipal rulings, the following weekend.

 

“Perverts”

Saturday’s meeting was postponed at first by rain, which one of the demonstrators blamed on the “Sobyanin lesbians.”

Once the thunder clouds had passed Vladimir Khomyakov, Narodny Sobor leader, took to the microphone and railed against Strasbourg’s ruling that City Hall bans on Gay Pride were illegal.

“The European Court of Human Rights adopted an atrocious decision when it allowed our mental perverts to rally,” he said, Kommersant reported. “They want their sickness to become the norm, but we won’t allow this!” he declared.

Vsevolod Chaplin, head of the Synodal Department for Church and Society Relations of the Moscow Patriarchate, added that the authorities had been right to ban it for fears of public disorder, “We are pleased that the government sided with the people. All the people are against this monstrous immorality,” he said.

 

“Incitement”

Gay activists submitted an application to hold their march on April 12, expecting either a ban within 10 working days or default permission to hold their march. No ban came and on April 26 Nikolai Alexeyev, Moscow’s Gay Pride figure head, said the march had been allowed. The next day the authorities said it had not and that it was still considering the issue.

On May 17 the ban came through, saying that the right to peaceful assembly could be restricted in the interests of public order, health or morality, and that subsequently the march had been disallowed.

Alexeyev was unequivocal in his condemnation.

“We understand that there will be a lot of provocation on May 28. All these religious types, Narodny Sobor and nationalist organisations should be in jail for incitement to violence and murder and not dictating their will to the government,” he told Gazeta.ru.

Marchers on Sunday added to the theme, handing out flyers saying “Our main Goal is to destroy patriarchy in society.”

 

Trouble brewing

But while gay activists are determined to go ahead and show their pride on May 28 their opponents are no less committed.

“We will drive them off,” Yury Ageshchev, coordinator of the Orthodox Brotherhood of the Russian Orthodox Church told Kommersant. “True, last year we had some issues with

the police and there were arrests, but this time we will not give up. It’s going to get hot,” he threatened.

Housing scams put more Muscovites on the streetshttp://themoscownews.com/local/20110523/188684544.html

by Andy Potts at 23/05/2011 11:13

 

Russia’s complex registration procedures had many foreigners worried earlier this year – but the perils posed by patrolling police pale in comparison with the threat to locals who cannot get registered.

And figures released by the Moscow Commission for Human Rights show that increasing numbers of Muscovites are falling foul of the system, prompting a sharp rise in homelessness.

In 2006 about 6 per cent of the capital’s population was homeless, but that climbed to 14.2 per cent by last year – more than double the numbers.

 

Struggles with scams

While the survey found that a large number of these people tended to come from disadvantaged backgrounds – including people with mental illnesses and children from orphanages – it also recorded a rise in people being denied registration and turned out of homes they thought were theirs.

“Housing scams have become more sophisticated and it is not always easy to clearly verify the buyer of a property from a legal point of view,” Tatyana Kochetov, an expert at the Commission, told Moskovskiye Novosti. “As a result courts are repealing contracts on the purchase of homes.”

That leaves some Muscovites unregistered in the city, making it harder for them to access social services or find regular work - and increasing the risk that they will remain on the streets.

 

One step from the streets

Svetlana Gladysheva is a case in point. In 2005 she took out a mortgage to buy a studio apartment where she lived with her son Nikita, now 12.

Unknown to her, the property had been fraudulently sold using false papers and the apartment is now being returned to the city – without its current occupants.

A lawsuit from the city’s Department of Housing Policy sealed her fate – even though she claims the same department was involved in the original scam .

“I am sure I suffered from a fraudulent scheme which involved staff from the housing policy department,” she told MN. “During the first hearing I was approached by staff and offered a bribe of $60,000 to dismiss the case.

“I recorded the conversation and the officer was caught red-handed and sentenced to five years for fraud.”

Now she faces the prospect of moving into a kiosk at Noviye Cheryomushky, but even there she is under threat since that kiosk has been earmarked for demolition as part of the mayor’s campaign to clean up the streets.

At that point she too may be forced into living rough.

PRESS DIGEST - Russia - May 23http://af.reuters.com/article/energyOilNews/idAFLDE74M02620110523

Mon May 23, 2011 7:10am GMT

MOSCOW May 23 (Reuters) - The following are some of the leading stories in Russia's newspapers on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- Russian flagship carrier Aeroflot (AFLT.MM) has hired a top manager from Italy's Alitalia to work on its development strategy, the daily reported.

- The Moscow City Court has set up a special commission to watch judges and court officials for violations, the daily says.

VEDOMOSTI

www.vedomosti.ru

- Germany's former chancellor Gerhard Schroder may be invited to Gazprom's (GAZP.MM) board of directors to replace state officials forced to quit the board under a new presidential decree aimed at reducing the state's role over the economy.

- The capital outflow in April was $7.8 billion compared to $6.2 billion in March, according to Central Bank statistics.

- Russia's nuclear-energy giant Rosatom and the Emergencies Ministry have come up with a response plan in case of a crisis like that at Japan's Fukushima power plant, Emergencies Minister Sergei Shoigu is cited as saying.

IZVESTIA

www.izvestia.ru

- The Russian government will monitor petrol prices to hold inflation at 7.5 percent until 2015, when local oil producers plan to increase their production by 30 percent, the daily says.

RBK DAILY

www.rbcdaily.ru

- Russia's Skolkovo project, aimed at mimicking the U.S. high-tech hub Silicon Valley, has raised half a billion roubles ($17 billion), Skolkovo fund director, Russian tycoon Viktor Vekselberg told the daily.

NEZAVISISMAYA GAZETA

www.ng.ru

- The incomes of Russians fell 3.8 percent in the first quarter of 2011 compared to the same period in 2010, according to official statistics.

Russian Press at a Glance, Monday, May 23, 2011http://en.rian.ru/papers/20110523/164171997.html

08:37 23/05/2011

POLITICS

The pro-Kremlin Right Cause party will submit its registration documents to the Ministry of Justice on Monday. Russian tycoon Mikhail Prokhorov is likely to head the new party after June 25

(Kommersant, Rossiiskaya Gazeta)

During an address to the St. Petersburg international legal forum Russian President Dmitry Medvedev praised efforts to improve Russia's legal system

(Rossiiskaya Gazeta)

Billionaire Alexander Lebedev announced that he would give up his banking business because of harassment from the Federal Security Service and team up with Prime Minister Vladimir Putin's All-Russia People's Front

(The Moscow Times)

ECONOMY & BUSINESS

The Russian Economic Development Ministry has approved a list of documents that regions must submit to receive federal budget subsidies for the support of small- and medium-sized businesses

(Rossiiskaya Gazeta)

Former Russian presidential envoy Igor Yusufov is in talks to buy a controlling stake in Moscow's Domodedovo International Airport for $1 billion

(Vedomosti)

WORLD

Tens of thousands of opposition supporters rallied in Tbilisi on Saturday and Sunday to demand President Mikheil Saakashvili's early resignation. Opposition members say Saakashvili will step down on Wednesday

(Kommersant, Vedomosti, Nezavisimaya Gazeta)

A bipartisan bill freezing assets and blocking visas of individuals who commit gross human-rights violations against Russian rights activists was introduced in the U.S. Senate last week

(Nezavisimaya Gazeta)

Saif al-Adel, who has been named Al-Qaeda's "interim leader," has vowed to "crush" London in retaliation for the U.S. killing of Osama bin Laden

(Rossiiskaya Gazeta)

OIL & GAS

Former German chancellor Gerhard Schroeder may join the board of directors of Russian energy giant Gazprom

(Vedomosti)

Transneft said it would fight a court ruling mandating it to release minutes from its board meetings, accusing anti-corruption blogger Alexei Navalny of conspiring against Russia and using the minutes for commercial interests

(The Moscow Times)

AUTOMOBILE INDUSTRY

General Motors has decided to further develop its business in Russia without forming any other joint ventures. The company plans to invest over $1 billion in Russia in the next few years

(Vedomosti)

SOCIETY

Protesters gathered in downtown Moscow on Saturday calling for a permanent ban on gay parades in the capital

(Kommersant)

NATURAL DISASTERS

Iceland temporarily closed its air space after an eruption at the Vatnajokull glacier volcano sent a plume of ash and smoke high into the air late on Saturday

(Rossiiskaya Gazeta)

SPORTS

CSKA Moscow won the Russian football cup final in Yaroslavl on Sunday after two goals from Ivory Coast striker Seydou Doumbia

(Kommersant, Rossiiskaya Gazeta)

Russia Profile Weekly Experts Panel: Putin’s Controversial People’s Fronthttp://russiaprofile.org/experts_panel/36857.html

Introduced by Vladimir Frolov Russia Profile 05/20/2011

Contributors: Patrick Armstrong , Vladimir Belaeff , Elena Miskova , Alexandre Strokanov

No other political initiative by Russia’s Prime Minister Vladimir Putin (since the cancellation of popular elections for governors in 2004) has created as much controversy and has had so many observers scratching their heads in bewilderment as his call last week for the formation of an All-Russia Popular Front. The group includes diverse political parties and civil groups, cobbled together around the United Russia Party to confront an unspecified national threat. Why does Putin need his Popular Front? Is it simply an attempt to rebrand United Russia and burnish its image before the key elections to the State Duma?

"I propose the creation of something that in practical politics is called a unified civil front, an organization to unify the efforts of various political forces ahead of major events of a political nature," Putin told a conference of United Russia in the central Russian city of Volgograd on May 6. “The front should recruit into its ranks all organizations and people who are united by the idea of strengthening our country and by the wish to search for the most optimal ways of solving our current problems," he added, promising to put them on United Russia’s ticket in the federal and regional elections. The following day Putin personally met with a number of civic leaders, including a popular leader of the Car Owners’ Movement, Vyacheslav Lyisakov. “United Russia needs new ideas and new faces,” Putin said at the meeting.

However, Putin’s Popular Front project has been met with outright skepticism and even derision by Russian political and business leaders. Although some say it holds the promise of broadening United Russia’s support base as well as bringing fresh faces into the party, most are skeptical that this is likely to work and that there will be a large inflow of energetic and popular figures who have so far shied from associating themselves too closely with United Russia or even Putin.

And indeed, most of the civil groups that have already signed up for the Popular Front are loyal United Russia satellites, like the Union of Afghan War Veterans, Russia’s Women’s Union or United Russia’s Young Guards, with almost no “new faces” to speak of.

Many observers believe that the Popular Front has become necessary for Putin and United Russia as an electoral rebranding to offset plunging poll numbers for the party and Putin himself as recorded in recent polls (polling agencies have put United Russia’s ratings in April between 43 percent (FOM) and 55 percent (Levada), while Putin’s

approval ratings have slipped to 53 percent (FOM)).

The rebranding allows Putin to distance himself from the increasingly unpopular United Russia party (which at least 30 percent of Russians now call a “party of crooks and thieves,” according to an April Levada poll). He would also have laid the groundwork to launch a presidential bid, if he chooses to do so, from a broader political platform that would better reflect Putin’s larger-than-life status in Russian politics than a partisan nomination by United Russia.

Some analysts argue that Putin’s All-Russia Popular Front would soon have to enlist some Russian nationalists in order to strengthen Putin’s position in this electoral segment and to deny the opposition the ability to merge its anti-Putin message with the emotionally explosive narrative of Russian nationalism.

And indeed last week, the Russian Justice Ministry officially registered The Congress of Russian Communities, an umbrella organization of moderate Russian nationalists founded and now “spiritually led” by Dmitri Rogozin, currently languishing in his “Brussels exile” as Russia’s ambassador to NATO.

Many observers believe that Putin’s front with Rogozin’s moderate nationalists will serve as an instrument of control over radical Russian nationalist groups and help deny them a broader following.

There are, however, those who warn that Putin may be seeking to reshape Russian political culture into one of forced social unity, similar to the former Soviet system or even to Benito Mussolini’s state corporatism of bringing all social forces under the control of one man. It is also noteworthy that Putin’s front does not seem to include Russia’s President Dmitry Medvedev, despite Putin’s claim that Medvedev was fully supportive of the idea.

In his first public comments on Putin’s initiative last week, Medvedev fell short of embracing the project, only saying, "as president I believe that this is normal electoral technology," and that it "is within the bounds of our electoral law."

More tellingly, Medvedev publicly warned that no party could claim a dominant role and that political competition was vital for Russia’s future. "No one political force can regard itself as a dominant one," he said, warning that "if everyone decides that things will follow a definitive scenario, then our political system does not have a future," and that "all the electoral battles still lie ahead." He then went on to suggest that opposition parties may just as well form their own popular fronts to better compete in elections.

Why does Putin need his Popular Front? Is it simply an attempt to rebrand United Russia and burnish its image before the key elections to the State Duma? Will Russian nationalists, led by Dmitri Rogozin, be enlisted into the front? And what could their role be there? Or is Putin seeking to build a broader political platform for his possible presidential run in 2012, while subtly distancing himself from United Russia? Or is it a

way for Putin to find a political position as a National Leader when he steps aside to allow Medvedev to run for a second presidential term? Or are there ominous signs that Putin might be seeking to socially engineer Russian society into a corporatist Soviet-Style model of political subservience to a dominant party? And why is president Medvedev openly cool toward Putin’s front initiative?

Does Medvedev see Putin’s front as a political threat, or could the front be used to provide broad support for Medvedev’s presidential bid under Putin’s tight control? Is the front initiative a sign of Putin's strength or of bad political judgment? 

Patrick Armstrong, Patrick Armstrong Analysis, Ottawa, Canada:

Believing that Occam’s Razor is the most powerful analytical principle ever articulated, I would try first to understand Putin’s Popular Front idea by assessing the reasons he gave before trying to fit it into more elaborate schema.

Putin’s two reasons were: “First, the State Duma elections will be held soon… And it is very important how the parliament will be formed. Secondly, frankly speaking, United Russia, our leading political force, needs an influx of new ideas, proposals and people in these circumstances” (note “and people”).

The first reason ties into his speech in April: “If United Russia wants to be competitive in the political struggle with other public organizations and political parties it should create a competitive atmosphere within its own ranks,” and “The 600 candidates listed on the ballots should be up for review and discussion with all voters in the regions and municipalities, not just their respective party members.” The popular front speech is a follow-up to that speech.

The second reason – related to the first – is his concern that United Russia is stagnating. “New ideas” have been a concern of his for some time; for example, in 2008 he stated that “The goal of our party is to generate new ideas and projects and control their implementation. We need to understand public opinion and people’s needs.” He has evidently decided that United Russia, from its own resources, has not met that goal.

And it’s not surprising that United Russia is no wellspring of creativity: its membership is drawn from those who want to be close to power and profit from that closeness. They wait to be told what “new ideas” they should support; it is not in the nature of power-seekers to propose new ideas: what if the boss doesn’t like them? But, for better or for worse, it is Russia’s “leading political force” and the team must work with it. Therefore, Occam’s Razor would suggest that the popular front is Putin’s latest attempt to bring a dose of creativity into United Russia.

Russia’s politics are stagnating: United Russia is what it is; no “new ideas” will come from either the communists or Vladimir Zhirinovsky; Just Russia is a fading earlier attempt by the center to force creative tension; the liberals refuse to unite. This political reality will endure for some time.

It does not seem very likely that Putin’s popular front will attract much creativity: now that the boss has given them a new box to check, they will simulate creativity. Bureaucracies the world over are skilled at adjusting their behavior to pretend to give the boss what he wants.

Ultimately the “influx of new ideas” must come from the bottom and that brings us to the infant state of Russia’s civil society. Both Medvedev and Putin have spoken of this lack: Putin in his 2000 Federal Assembly Address said “Many of our failures are rooted in the fact that civil society is underdeveloped” and, eleven years later, Medvedev: “I think that bigger involvement on the part of civil society in discussing sensitive issues will do our country good. We have deeply rooted totalitarian traditions, and it will take time.”

It will indeed take time, and a healthy civil society will not appear by fiat from the top. Until it appears and strengthens Russia is stuck with its present political landscape.

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

It seems that Putin’s idea of the Popular Front may have several reasons behind it.

First of all, it is no secret that traditional political parties in most countries are losing popular support, people’s membership and direct involvement, as well as obviously failing to serve as channels for talented, honest and charismatic individuals to get into political life. It is enough to look at the political establishment in the United States, France or most other European countries, to see the poor qualifications of those who dominate the political scene today and how far they are from the real needs of their electorates. Modern Russia and its political parties are not exceptions from this tendency. We can see the same bureaucratization, cronyism, lack of new ideas and initiatives from Russian political parties, be it oppositionist Communist Party or ruling United Russia. Putin’s idea of the Popular Front may be explained by his realizing this fact and his desire to shake up the political system and to bring new faces into it. However, the efficiency of this method is not guaranteed.

The second factor for this initiative may be stemming from something else. At the end of this year Russia, as well as all other post-Soviet states, will mark the 20th anniversary of the dissolution of the Soviet Union. The results of these two decades are quite depressing and not encouraging at all. The comparison with first two decades of the Soviet history will not be in favor of the so-called democratic and capitalist countries formed from the previously united country of “matured or developed socialism.” All post-Soviet countries continue to live on the basis of economic, educational, and other socio-economic accomplishments created in their “communist” past.

It is not an accident that Vladimir Putin was recently talking about the need for a new industrialization of Russia. It won’t be greatly surprising if we hear soon about the need for new consolidation in agriculture and a new cultural revolution. The past 20 years

quite evidently proved that the political and socio-economic models selected in the early 1990s for Russia and other post-Soviet states failed miserably, and only caused deterioration and degradation in every sphere of life. This realization about the “great failure” is well known to power holders in Russia, but they may come to two completely different plans of action. One may choose to stubbornly continue the same policies and defend them with the new “front.” However, there is a chance that the Popular Front will be needed for a serious reconsideration of the future course of the development of the country. Which of these two options Vladimir Putin has in mind remains unclear.

These two aspects covered above seem much more important than what the reaction of president Medvedev to it is, or why he seems to be cool toward this initiative. In three years of his presidency he proved to be obviously inadequate for the position he occupies, and he is a perfect representation of this “great failure.” However, it does not mean that he will lose his position and can perfectly fit into this Popular Front eventually, if the first type of plan will be approved and Russian power holders will decide to defend their liberal “reforms” till the end. Dmitry Rogozin may or may not join this coalition, and again, it is a relatively minor issue. But it needs to be stressed that Rogozin remains one of a few charismatic leaders who still has a political future due to his energy and enthusiasm.

Overall, Vladimir Putin again proved that he is the national leader who determines the future of Russian political life. It is only unclear what goals he is going to use his own leadership, popularity, charisma and political structures he initiated for. Whether he will eventually find his place in history as a person who opened a new page in Russian development and finally brought the country to unquestionable success, or whether he will only remain a popular politician from Boris Yeltsin’s “times of trouble” remains to be seen.

Elena Miskova, Managing Partner, LEFF GROUP Government and Public Relations, Moscow:

The political motives behind Putin’s decision to form a People’s Front are clear and require little further elaboration. It is meant to maximize United Russia’s representation in the next State Duma by resorting to rather unceremonious methods of administrative pressure, and thus secure Putin’s dominant electoral position in the run up to the presidential election in 2012.

The front, however, lacks any ideological basis. Its political vehicle is United Russia – a party devoid of any ideology.

One has to engage in “proxemics” – the process of deciphering the language of public gestures and rhetorical blows that Putin and Medvedev are exchanging while performing their political tango.

Having called upon his sympathizers to join the front, Putin has revealed that he has the wherewithal to dominate the tandem and the nomination for Russia’s presidency.

The Russian prime minister has also sought to intimidate the Russian president and has renewed efforts to salvage his personal rating, which, according to all opinion polls, has been going south since early winter, while analysts have begun questioning its “Teflon nature.”

Putin has rushed to strengthen the only natural claim to his political legitimacy – the popular recognition of his unquestioned primacy in everything and everywhere. Putin has basically unmasked himself and has demonstrated that there is simply no time for ideological contraptions. It might seem that Putin’s new “combative and militaristic style” contrasts sharply with his earlier calls for maintaining stability and for “sustainable modernization” without much public sacrifice. Now all of this is no longer important – “Everything for the front! Everything for victory!”

And what about president Medvedev? Has he bowed his head in tacit agreement? Does he show fear?

So far he does not. He bravely offers to all those not enlisted in Putin’s front to get together and form their own fronts, hints at a possibility of joining a political party so that a president be a leader of a political force and points to the dangers of continued political monopoly.

Putin offers all real machos in Russia to approach the forthcoming elections and the political process in general as a viral reality show, like a cockfight. Russians are allowed to equate themselves with the symbols of masculinity – Putin or Medvedev – the way men of the Bali Island equate themselves with their pet cocks in a cockfight, as brilliantly described by a prominent American anthropologist Clifford Geertz.

Everyone’s gone to the front while all other forms of political sublimation, like democratic elections or the competition of ideological platforms, have been deemed irrelevant and quickly forgotten.

Vladimir Belaeff, Global Society Institute, Inc., San Francisco, CA:

It seems that sometimes people spend so much time “reading tea leaves” and convincing themselves of the evil scheming of this or that object of their irrational rejection – that they seek sinister and underhanded significance in even the simplest events. This is a slippery slope – at its extreme lie beliefs in diverse “Protocols” and such bizarre theories like the “staging” of the Apollo moon landing or that a certain prominent global banker was “set-up” by an amorphous conspiracy involving a hotel, the police, a district attorney, a judge and an African-American chambermaid…

The Popular front (to be accurate in translation) announced by Putin in his capacity as head of United Russia can only be controversial to those “wannabe” political activists in Russia who did not think of it first.

It is very characteristic and notable that Russian political groups, on the liberal side of the political spectrum, struggling for wider recognition, did not themselves think of such a formation. This factual distance from the electorate perhaps explains the poor results in elections for such parties as The Right Cause (which may soon become a wholly owned component of Mikhail Prokhorov’s investment portfolio, joining his American basketball team).

The suggestion that Mr Medvedev’s comments about the Popular front were somehow “cool” or “distant” misses the fact that legally the President of the Russian Federation must be non-partisan (Medvedev recently commented on this aspect of the Constitution) and as a specialist in jurisprudence, Medvedev is consciously observing this restriction. In his comments about the Popular front Medvedev pointedly hinted that other parties may also create similar assemblies. This comment keeps the Russian president legally in the clear of accusations of partisanship (which would have been made, had his comments been tilted in favor of the Popular front).

Realistically, the other political parties in Russia have missed the boat (again). There was absolutely no reason why they could not have advanced such an initiative earlier.

Medvedev is mistaken however, when he categorically rejects the presence of a “dominant” political party in a democratic landscape. Of course, in his political experience the image of the CPSU looms large, but the Soviet Communist party was not really a political party in the dictionary sense of the word (and actually insisted on not being such), so the CPSU is not a suitable example sensu lato, being a political deviant. In normal political life, dominant political parties are present in many completely democratic societies, including Canada, Sweden, Japan, France, and even on occasion in the UK and the United States – where parties have had control of government even for decades, despite the presence of competent, active and vigorous opposition. In fact, the democratic process aims at identifying a representation for the majority of voters, and then subordinates governance to this majority. The late modern focus on political empowerment of non-majority segments is a deviation from pure democracy. This aspect is separate from universal human rights, which must be generally respected.

The objectives of the Popular front have been stated publically (new faces, new ideas, possible Duma representation for non-party members). In our age of Internet democracy, such declarations are obligations and there can be nothing underhanded about these openly stated objectives. If the Popular front fails to deliver on its declared goals, the fact will become widely known and the project will fail. There is no room in this for political legerdemain, and United Russia and Putin know this. Therefore, we should take them at their word – there is no margin for dissembling here

Russia’s Growing Engagement with Pakistanhttp://www.idsa.in/idsacomments/RussiasGrowingEngagementwithPakistan_spurushottam_230511?q=print/7526

Smita Purushottam

May 23, 2011

Asif Ali Zardari’s first official visit to Russia, which, according to his website, was also the first time that a Pakistani President had been officially invited to Russia since 1974, took place on May 11-13, 2011. The bilateral Summit yielded agreements on air services, energy and agriculture. The two sides agreed to maintain regional peace and reiterated support for the joint fight against terrorism and drug trafficking, and expansion of coordination on these and other issues. They also agreed to cooperate in bilateral trade, investment, the financial sector including barter and swap schemes, and business and joint projects including the modernization of a metallurgical plant in Karachi, construction of power generation facilities and the development of gas fields in Pakistan.

Since Russia had announced its interest in participating in the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, the Joint Statement issued at the Summit mentioned the interest of both sides in TAPI and the Tajikistan- Afghanistan-Pakistan CASA-1000 (Central Asia-South Asia) electricity transmission project. Russian energy companies such as Gazprom are backing the initiative. Interestingly, Gazprom is also seeking a role in Bangladesh.

The two main themes at the Summit were therefore energy, business and economic cooperation on the one hand and combating drug trafficking and terrorism to stabilise the security situation in the region on the other. Russia and Pakistan had earlier discussed transit issues and opening a route to the “warm waters”. So it was not surprising that on the eve of the Summit President Zardari reiterated the invitation to Russia to take advantage of Pakistan’s access to the southern seas.

ASSESSMENTS

The timing of the Summit - just 10 days after the killing of Osama bin Laden - inevitably gave rise to some speculation as to whether it was calculated to send a signal to the US. This needs to be laid to rest. Such high-level visits are planned well in advance. Thus, this visit had been planned after President Zardari told President Medvedev - on the sidelines of the second Pakistan-Afghanistan-Russia-Tajikistan (hereinafter referred to as the PART) Summit at Sochi in August 20101 [1] - that he wished to visit Moscow.

Moreover, President Medvedev and other Russian leaders left no one in doubt about their reactions to the killing of Osama bin Laden.2 [2] The Kremlin welcomed the operation and the Russian Foreign Ministry publicly appreciated the US informing Russia about the operation before President Obama’s official announcement. Dmitry Rogozin, Russian envoy to NATO, reportedly called the liquidation of Osama “a great political success”.

Sergei Lavrov, Russian Foreign Minister, justified it by referring to the Security Council resolution adopted after 9/11 “recognizing the US’ right of self-defense under Article 51… The right of self-defense envisages no restrictions. Those who carried out the operation, had a sound legal basis” as per “the right of self-defense under the UN Charter, confirmed moreover in the resolution of the Security Council.” Thus Article 51 allowed “a country against which an attack was made to take all necessary measures to prevent any future such attacks and punish those responsible.”3 [3]

A high-level security meeting on terrorist attacks on Russian targets abroad was held a day before President Zardari’s arrival in Russia, inadvertently serving as the backdrop to his visit.

Post American Withdrawal Scenario

Clearly, therefore, the Summit was not timed to exploit Pakistan’s emerging rift with the United States. Instead, it was part of Russia’s ongoing initiatives to play a greater role in stabilising the region before the expected withdrawal of American troops from Afghanistan presented the region with “a whole range of potential worst-case scenarios,” with the only hope being “they will not all come true at once”.4 [4]

Thus, Pakistan, already suffering from multiple crises, had accelerated its tactical nuclear weapons programme. China is moreover readying itself to take advantage of the American withdrawal. Pakistan immediately rushed to China to find succor, and reportedly weighed in on Afghan President Karzai to throw in his lot with Pakistan and China.5 [5] In fact, the tone of the American Administration seemed to change once the China card was played by Pakistan. The China factor may even be a reason for the Americans to reconsider their withdrawal plans after 2014.

Significantly, the CSTO’s Russian Secretary-General Nikolai Bordyuzha stated that foreign troops needed to stay in Afghanistan.6 [6] Fyodor Lukyanov, the reputed Editor in Chief of Russia in Global Affairs also opined that Russia and neighboring countries were not interested in a quick US withdrawal.

Russia’s Concerns

Like all affected countries, Russia is deeply concerned at the accentuation of instability in the region and its spillover effects into its southern periphery, increase in drug trafficking and terrorism, etc. Russia may also be uneasy at the erosion of its influence in Eurasia, while China increases its stranglehold over the region’s resources, transportation and energy networks. Thus the massive copper deposits at Aynak – discovered by Soviet experts – are now being exploited by China.

Russia has accordingly tried to re-engage constructively in the region over the past few years. Apart from its activism in SCO and CSTO, Russia has intensified its involvement in Afghanistan, through the Russia-Afghan forum, the SCO-Afghan contact group and the CTSO7 [7]-Afghan working group. Despite severe funding constraints, Russia has

also explored the possibilities of greater engagement in Afghanistan’s development programmes, such as restoring Soviet-era pipelines and hydroelectric stations, and investing in Afghanistan’s mineral, oil and gas deposits – many of which were discovered by the Soviets.

Russia has moreover facilitated the transit of military supplies for NATO forces in Afghanistan through its territory, in addition to making available helicopters and other facilities. It is to be hoped that the stand-off regarding stationing of ballistic missile defences in the European theatre does not derail the developing understanding between the US, NATO and Russia for stabilising the region.

Russia may have also concluded that isolating Pakistan from any dialogue to stabilise the region would be counter-productive, and hence intensified its outreach to Pakistan. This explains the PART initiative in 2009 and why Russia publicly supported Pakistan’s membership in the SCO at the Moscow Summit of May 2011, with India also formally applying for SCO membership around this time.8 [8] The bilateral Summit was a logical extension of this strategy.

Implications for India

A perennial question is whether a rapprochement between Russia and Pakistan will adversely impact Indo-Russian relations, particularly whether Russia will sell arms to Pakistan. The Russian Secretary of the Security Council and Pakistan’s Defence Minister were reportedly present at the talks at the recent Summit. India’s relationship with Russia is however too well entrenched to be easily disturbed, while the possibility of major Russian arms sales to Pakistan in the near future is remote. Russia’s outreach to Pakistan is a part of its efforts to stabilise this volatile region, and also part of its multi-vector diplomacy and desire to play a more meaningful role in Asia. Russia probably means to resurrect the role of “honest broker” it played at Tashkent, and India may thus expect a little more even-handedness from Russia. Other than that, India and Russia should not perceive each other’s relationships with other countries as a zero sum game.

Of far greater urgency, especially for India, is the need to address the worsening regional security situation. The Indian PM’s visit to Afghanistan to forge a strategic partnership was a good move. But the effort to shape the agenda for regional cooperation and the contours of a peaceful Eurasia has to extend beyond Afghanistan by proactively reaching out to Russia, the Central Asian countries, the United States and other constructive partners like the EU, UN and the ADB, and even China - to build connectivity and spheres for mutual engagement and cooperation.

The Summit has underlined the necessity for skilful regional diplomacy to manage the complex dynamics and fresh security challenges emerging in the region, which India would do well to factor into its own security strategy.

Smita Purushottam is Senior Fellow at IDSA. The views expressed are personal.

Why Does Syria Matter for Russia?

http://www.turkishweekly.net/columnist/3454/why-does-syria-matter-for-russia-.html

by Habibe OzdalMonday, 23 May 2011

Winds of change continue in the Middle East. Now Syria is in the spotlight. Since there is a consensus on the idea that recent developments in Syria may cause different consequences from other regional countries, international actors are more precautionary. The ‘cautious’ stance of Moscow regarding international intervention to Libya replaced to a more distinctive one in the case of Syria. Apparently, for Russia cost of possible regime change in Syria will be more than cancellation of the arms trade agreements. How does Russia evaluates recent developments is another hot topic since Damascus is one of the most important allies of Moscow in the Middle East. 

First of all, Russia prefers to evaluate uprisings in the Middle East as domestic issues of the countries. In the case of international operation to Libya, Russia did not veto the UN resolution, choosing to abstain instead. As for Syria, Russia firmly stands against such intervention not only because Moscow is not content with the Libya operation but also Syria means a lot to Russia.

Putin took over from the Yeltsin era the tendency of looking to the Middle East from an economic point of view. Since Putin knew that recovery of the Russian economy is a must in order to restore Russia’s great power status, this trend sustained. Therefore during the early 2000s Russia used mostly economic tools, mainly arms trade agreements in its policy towards Middle East. As a consequence of these agreements Moscow became the number one arms supplier in the Middle East. According to Igor Korotchenko, head of a Moscow-based think-tank on international arms trade, Russian arms sales to Algeria and Syria constitute about one-eighth of Russia's portfolio of arms orders worldwide, which totals $ 48 billion.

While Russian foreign policy was dominated by economy in Middle East, when it comes to Syria another dimension of Russian foreign policy towards this region fade in: mediation. Relative improvement in Russian economy was followed by Russian great power claims in international arena. Moscow’s great power initiative in the Middle East was formulated as a mediator. Syria is one of the pillars upon which Russia establishes its mediation role. Indeed Moscow tries to

be part of any initiative aiming solution between Israel and Syria.

2005 has been a breaking point in terms of Damascus-Moscow relations. During Syrian President Bashar Assad’s state visit to Russia in January 2005, a protocol was signed to write-off % 73 of Syria's debt ($ 9,8 million). This protocol paved the way to enhanced mutual relations. For Syria, which was isolated in international scene, Russia was a very important partner. As for Russia we can say that Moscow discovered the advantages that can have in exchange for debt cancellation. As mentioned above the most important advantage was having good relations not only with Israel but also with Syria which could strengthen Russia’s hand in its mediator role. The reason why Syria matters for Russia can be explained in light of three facts. The first fact is that if Russia loses its good relations with the Assad regime, its role as a mediator will probably be damaged.

Secondly, Tartus base which is the only Russian naval base in the Middle East is another factor that makes Syria an important partner for Moscow. Russian Naval Forces were using Tartus as a naval base according to the agreement that was signed in 1971. Moscow started to restore the base since 2008 and this step was evaluated as a strategic decision of Moscow as a response to tense relations with Ukraine. It was said that during its dispute with Ukraine over the presence of the Black Sea Fleet in Sevastopol, Russia was eyeing the prospect of deploying a naval base in Tartus. From this standpoint since Russia-Ukraine relations are in a good level and the Black Sea Fleet’s presence in Crimea after 2017 extended for another 25 years, Syrian authorities question whether Russia still want to have Tartus naval base or not. However, recent uprising and its aftermath in the Middle East showed the Tartus base is no less important than before.

Thirdly, Russia has retained close ties with Syria since the Soviet era and is currently supplying the country with advanced missiles and other arms. And Russian President Dmitry Medvedev paid a visit to Damascus last year to strengthen trade ties between the two countries and promote Russia's waning presence in the Middle East. Moreover Syria was one of the few countries to support Russia in its war with Georgia. For Russia possible regime change may also mean to lose its most important ally in the region.

In conclusion, Russia’s cautious stance was replaced with a firmer posture in terms of possible international intervention to Syria. Since Damascus means not only economic gains but also political card for Moscow, possible regime chance in Syria has a potential to affect Russian influence in the region much more than any country.

National Economic Trends

Ruble Tumbles to Seven-Week Low Versus Dollar as Oil Declineshttp://www.bloomberg.com/news/2011-05-23/ruble-tumbles-to-seven-week-low-versus-dollar-as-oil-declines.html

By Denis Maternovsky - May 23, 2011 9:35 AM GMT+0200

The ruble tumbled to its lowest level in more than seven weeks against the dollar as crude oil fell amid signs of slowing economy in the U.S. and concern Europe’s debt crisis is escalating.

The Russian currency depreciated 1.2 percent to 28.37 per dollar by 11:10 a.m. in Moscow trading, heading for its weakest close since April 1. Against the euro, the ruble added 0.2 percent to 39.8400, a weekly high.

Crude oil, Russia’s chief export, fell as much as 1.5 percent to $98.61 a barrel. Greek Prime Minister George Papandreou is scheduled to brief his Cabinet today on budget cuts. U.S. consumer spending probably cooled in April amid higher fuel prices, a Bloomberg News survey showed before a May 27 report.

Moves against the dollar and the euro left the ruble little changed at 33.5315, the weakest level since April 26, versus the central bank’s target currency basket, which it uses to manage swings that hurt Russian exporters. The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together.

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

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

May 23, 2011 11:34

Dvorkovich not supportive of FAS suggestion to lower gasoline exciseshttp://www.interfax.com/newsinf.asp?id=245636

MOSCOW. May 23 (Interfax) - Russian presidential aide Arkady Dvorkovich has said he does not support the proposal by the Federal Antimonopoly Service (FAS) that gasoline excises be lowered if oil prices top $90 per barrel.

"It is more logical, I think, and needed to adjust the natural resource extraction tax (NRET) formula and not reduce excises. Partly because excises go to regional budgets and the NRET completely to the federal budget," Dvorkovich told reporters on Monday in comments on the FAS proposal.

"We don't need to centralize tax collections more, we need to decentralize them more," he said. This issue is a subject of ongoing discussion and no final decision has yet been made, he said.

Cf

State must adjust subsoil tax to stabilize internal fuel prices - Kremlin aidehttp://en.rian.ru/business/20110523/164175072.html

The Russian government should adjust its minerals extraction tax rather than excise duties to stabilize domestic fuel prices and avoid gasoline shortages, Kremlin aide Arkady Dvorkovich said on Monday.

"I believe it would be more logical to adjust the subsoil tax formula rather than excise duties," Dvorkovich said.

Last week Russia's competition watchdog proposed reducing excise duties on gasoline, if world oil prices rise above $90 per barrel, in a bid to fight fuel price hikes on the domestic market.

The government boosted the gasoline export tariff to a nearly prohibitive 44 percent from May 1 to fight local shortages and fuel price hikes which started in mid-April in some regions.

Russian oil companies prefer to sell gasoline abroad where prices are higher than in Russia.

MOSCOW, May 23 (RIA Novosti)

May 23, 2011 09:25

Banks have 718.6 bln rbs on CBR correspondent accounts on May 23.http://www.interfax.com/newsinf.asp?id=245601

MOSCOW. May 23 (Interfax) - Russian banks have 718.6 billion rubles on correspondent accounts in the Central Bank as of May 23 including 569.1 billion rubles for Moscow banks

The balance on May 20 was 747.4 billion rubles and 578.3 billion rubles, respectively.

Banks had 250.9 billion rubles on deposit accounts in the Central Bank on May 23 against 303.7 billion rubles on previous day.

April capital outflow reported at $7.8bn, March capital account downgraded

http://www.bne.eu/dispatch_text15409

Alfa BankMay 23, 2011

On Friday, CBR Deputy Chairman Gennady Melikiyan announced that Russia saw a $7.8bn capital outflow in April, and he said the bank had downgraded the March outflow figure from $4bn to $6bn. The lack of improvement in the capital account in 4M11, combined with the poor reserves statistics in May, create the risk of a negative capital account in 2Q11.

The downgrade to the March capital account figure substantially changes the capital account trend. Previously, the official capital outflow figures suggested a gradual improvement from $11bn in January to $6bn in February and $4bn in March. We relied on these estimates when forecasting the April figure. The almost $8bn outflow in April is therefore a major disappointment. As it is even higher than the $7bn average monthly outflow seen in 4Q10-1Q11, it confirms that Russia has been unable to attract capital since September of last year despite strong oil price growth. The recent drop in crude prices is highly likely to accelerate the capital outflow even further in May and makes our FY11 forecast of a $5bn capital account surplus look very optimistic.

The capital outflow figures are particularly worrying because they appear to reflect an outflow of domestic capital. While some experts suggest the outflow primarily reflects an increase in non-repatriated oil revenues, we do not see this as a convincing argument. Additional oil revenue should go directly to the budget, so any increase in non-repatriated revenues would lead to higher tax arrears, which we have not seen. Also, in 1Q11 the amount of non-repatriated oil revenues was virtually the same as in 1Q10, a quarter in which Russia did not experience such a strong capital outflow. We therefore continue to believe that uncertainly over what the country's tax regime will look like after the elections is the key driving force behind the capital outflow, so the latter is unlikely to decelerate in 2H11.

Natalia Orlova

Government unlikely to cut payroll tax from 34%

http://www.bne.eu/dispatch_text15409

Alfa BankMay 23, 2011

According to Vedomosti, the government is unlikely to support President Medvedev's proposal to cut the payroll tax from the current 34%. Given that the high breakeven oil price of $120/bbl leaves no room for a reduction in the net tax burden, we believe the government's stance is realistic and thus POSITIVE.

Recent discussions over the need to cut the payroll tax from 34% to 26% were meant to address the concerns of the business community, while we had noted that the government was not in a position to cut the net tax burden. The overly high $120/bbl federal budget breakeven oil price implies that the tax burden should be increased, not reduced, in order to address budgetary risks. Thus, even if the payroll tax is cut, we doubt the real sector would react positively and reduce capital outflow in response to such an impractical step, fearing that such easing would lead to future increases in other taxes. The government's confirmation that it is unable to cut the tax is a realistic and therefore positive step, which may help to reduce uncertainty over the tax regime going forward.

Natalia Orlova

Study explores rise in Russian living standards, increased income disparity and changes in consumption patterns

http://www.bne.eu/dispatch_text15409

Bank of FinlandMay 20, 2011

A joint survey conducted by the Moscow Higher School of Economics (Vyschaya shkola ekonomiki) and Russia's leading economy magazine Expert examined changes in the living standards of the Russians and their material well-being between 1990 and 2009. Living standards and well-being were determined using a variety of measures related to e.g. incomes and income distribution, purchasing power and consumption patterns, as well as the kinds of household goods stocked in Russian homes.

Per capita consumption was estimated to have risen on average 45-50 % between the early 1990s and 2009. Depending on the statistical data used, however, the results vary

considerably. The study found that purchasing power-adjusted income per capita increased 45 %, while the volume of consumption per capita more than doubled according to GDP-based consumption figures (the difference is not explained by increased savings).

The relatively modest change of purchasing power in relation to the time span is explained by the drop in household income after the collapse of the Soviet Union. Real incomes only began to increase after the 1998 financial crisis and really only took off in the roaring boom of the 2000s. The researchers also note shortcomings in the data that diminish their reliability and comparability of Soviet era figures with figures based on current methods.

Thus, regarding incomes, either 40 % or 80 % (depending on the measure) of Russians enjoy higher real incomes than 20 years ago; in any case, the income of every fifth wage-earner has not improved since the end of the Soviet Union. Professor Yevgeni Yasin of the Moscow Higher School of Economics says Russia has split into two parts. In comparison with OECD countries, the survey recalls quick growth of income disparity; the Gini coefficient for Russia in the past 20 years has risen way faster than in any OECD country, and is on par with Turkey and Mexico.

Consumer purchasing power has mostly grown, but also diminished, depending on the good. Compared to the Soviet era, a consumer could buy 70 % more durable goods in 2008 and 25 % more food. The consumer could also buy two to three times more cigarettes, alcoholic beverages, cars and clothing, but only a third as much services related to housing such as heating and electricity.

Although household wealth has grown, the mere number of traditional household appliances has changed little. On the other hand, the numbers of entertainment electronics devices and cars have skyrocketed. There are currently about 50 cars and 160 televisions per 100 households in Russia. The average amount of living space per capita has risen about 40 % over the past two decades to a current level of about 22 m2 per capita. In Finland, the corresponding figure in 2009 was 39 m2 per capita.

Household spending on child care and education, which were provided for free during the Soviet era, has increased substantially. Private health care spending has increased many-fold in real terms. The survey notes that the World Health Organization (WHO) data says private spending constitutes about 40 % of all health care spending, a level above the EU average.

Manufacturing industries fared variably during the recessionhttp://www.bne.eu/dispatch_text15409

Bank of FinlandMay 20, 2011

Many of Russia's primary domestic producers, including producers of oil, gas and electricity, as well as farmers, were scarcely touched by the global financial meltdown. In contrast, construction and manufacturing were hit hard by the downturn.

Manufacturing output overall fell from its quarterly peak about 25 % before hitting bottom. Despite a rapid recovery, production in 1Q11 was still well below the2008 peak. The structure of manufacturing appears not to have returned to its previous stand, so far, as many branches sustained different impacts from the recession.

One of the largest manufacturing branches, Russia's food industry, contracted only slightly in the recession and has seen steady growth, for a year at levels above the pre crisis level. Production, however, dipped in 1Q11.

At the other extreme, the machinery & equipment industries and the construction materials industry, which produce largely for domestic investors, saw steep declines in the recession and are still about 25 % off their pre-crisis peak; even if one part of the machinery & equipment segment, defence production, saw growth of over 10 % a year throughout the recession. Government subsidies for consumption and production have helped manufacturing of vehicles rebound to levels of the summer 2008 peak.

Developments in branches manufacturing both for the domestic market and exports were varied. Production of oil products was relatively scarcely touched by the recession, and production has grown, at levels surpassing pre crisis highs. The chemicals industry and the plastics & rubber industry, as well as metals production rebounded from deep dips well with chemicals and plastics & rubber industries surpassing pre-crisis levels. Production in the hard-hit forest industries remain far off their 2008 highs, partly due to a decline this past winter.

Business, Energy or Environmental regulations or discussions

Kuzbass Fuel, Inter RAO, Rosneft May Move: Russia Equity Previewhttp://www.bloomberg.com/news/2011-05-23/kuzbass-fuel-inter-rao-rosneft-may-move-russia-equity-preview.html

By Henry Meyer - May 23, 2011 4:00 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 in Moscow.

The 30-stock Micex Index (INDEXCF) retreated 1.6 percent to 1,603.97.

OAO Kuzbass Fuel Co. (KBTK RX): The Russian producer of coal for power stations that raised $163 million in an initial public offering in Moscow last year, reports first-quarter earnings today. Kuzbass fell 1 percent to 206.01 rubles.

OAO Inter RAO UES (IUES RX): The state-run power utility will discuss a new share sale today. The share fell two percent to 0.03375 rubles.

OAO Rosneft (ROSN RX): Rosneft, Russia’s largest oil company, and PetroChina Co. are to start building a joint refinery in the second half of this year in the northern Chinese city of Tianjin, the official Xinhua News Agency reported yesterday, citing local officials. Shares fell 1.2 percent to 227.08 rubles.

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

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

Russia’s RTS-Index Futures Advance After Oil, Commodities Gainhttp://www.bloomberg.com/news/2011-05-22/russia-s-rts-index-futures-advance-after-oil-commodities-gain.html

By Halia Pavliva - May 22, 2011 10:01 PM GMT+0200

Russia’s RTS stock-index futures gained, signaling stocks may rebound from a six-month low in Moscow, as oil and metals, the country’s major exports, rose.

Futures on the dollar-denominated index expiring in June advanced 0.2 percent on May 20. Contracts on OAO Rosneft, the country’s biggest oil producer, rose 0.5 percent while those on OAO Lukoil, the second-largest, added 0.4 percent. Futures on OAO Gazprom, the world’s top gas producer, climbed 0.1 percent.

“The strength in commodities still forms the basis of any inflows” into Russian assets, Yan Gloukhovski, a trader at Alforma Capital Markets, the New York branch of Russia’s Alfa Bank, said in a telephone interview. “As easy money is being scaled back, the outlook for commodities is no longer certain.”

Crude oil for June delivery rose 1.1 percent to settle at $99.49 a barrel on the New York Mercantile Exchange. Oil gained after the American Petroleum Institute reported that fuel consumption increased in April as economic growth bolstered demand for diesel by truckers. Prices have risen 42 percent in the past year.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose 0.7 percent. For the week, the index gained 0.9 percent, its second weekly advance. Russia is the world’s largest energy exporter and produces metals including gold, silver, copper, nickel,

palladium and aluminum. Oil and natural gas account for a quarter of the economic output.

Equity Fund Outflows

Russia-focused equity funds saw their biggest weekly outflows since 2006 as risk appetite weakened and investors withdrew from emerging markets, mutual fund tracking company EPFR Global said. Russia funds lost $353 million in the week to May 18, compared with $71 million the week before, according to Cambridge, Massachusetts-based EPFR.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, fell 2.1 percent on May 20. Lukoil’s American depositary receipts fell 1.8 percent. Gazprom’s ADRs fell 3.9 percent. OAO GMK Norilsk Nickel’s ADRs dropped 3.2 percent.

The Micex Index of 30 stocks slipped 1.6 percent to 1,603.97 at the close in Moscow on May 20. The gauge has fallen 1.7 percent since May 13, its fourth straight weekly decline.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; David Papadopoulos at papadopoulos@bloomberg.net

UPDATE 1-Yandex raises IPO price guidance-sourcehttp://in.reuters.com/article/2011/05/23/yandex-idINLDE74M0D820110523

1:14pm IST

* Price range raised to $24-$25 from $20-$22 - source

* New guidance may see Yandex raise up to $1.4 bln

* Order book closes later on Monday

(Adds detail, background)

MOSCOW, May 23 (Reuters) - Russian internet company Yandex has raised the price guidance for its Nasdaq initial public offering due to strong investor demand, a source said on Monday.

The company now plans to sell the shares in the IPO at $24 to $25 per share, compared with earlier guidance of $20 to $22, a source close to the issue told Reuters.

Yandex, which had initially planned to raise up to $1 billion for itself and selling shareholders, has enjoyed strong demand for its shares with investors looking for exposure to the fast-growing online advertising market. [ID:nLDE74I143]

It may now attract up to $1.4 billion from the offer if it prices new and existing shares at the top of their range and the banks exercise an over-allotment option.

Yandex, Russia's most popular search engine, is expected to close the order book and price the offering later on Monday. Trading under the symbol (YNDX.O: Quote, Profile, Research) will begin on May 24. (Reporting by Olga Popova; Writing by Maria Kiselyova; Editing by David Holmes)

Yandex Offers Shares at Twice Google Valuations on Surging Ads in Russiahttp://www.bloomberg.com/news/2011-05-23/yandex-offers-shares-at-twice-google-valuations-on-surging-ads-in-russia.html

By Maria Levitov - May 23, 2011 10:13 AM GMT+0200

Yandex NV, the owner of Russia’s most popular Internet search engine, is offering shares at about twice the price of Google Inc. relative to earnings.

The Moscow-based company, which has almost triple Google’s market share in Russia, plans to sell shares at a price equivalent to at least 23 times next year’s earnings, said two people involved in the sale who declined to be identified until the deal is announced. Google trades at 13 times expected 2012 earnings.

Underwriters stopped taking investor orders for Yandex shares on May 20, rather than this week as planned, because of surging demand for Internet IPOs, said two other people with knowledge of the matter. The initial public offering in the U.S. may raise as much as $1.26 billion, making it the world’s biggest technology IPO this year.

“It’s a bit scary to pay such multiples, but if that’s how the market values it, that’s how much it’s worth,” said Dmitri Kryukov, founder of Moscow-based Verno Capital, which has about $150 million under management and is seeking to buy Yandex shares. “This is a good, fast-growing company.”

The sale comes less than a week after Mountain View, California-based LinkedIn Corp. raised $352.8 million, pricing its IPO at top end of the range proposed to investors.

Yandex’s profit jumped 62 percent to 820 million rubles ($29 million) in the first quarter from a year earlier, as sales climbed 65 percent to 3.89 billion rubles, according to the company’s prospectus.

Ad Spend

Yandex, co-founded by Chief Executive Officer Arkady Volozh and registered in The Hague, makes most of its revenue from advertising, the company said in the prospectus. Online advertising in Russia climbed 51 percent from 2008 through 2010, when it reached 26.65 billion rubles, according to the Moscow- based Association of Communication Agencies. Spending on print ads plunged 41 percent in the same period, while the radio and television segments fell 21 percent and 6 percent, respectively.

“It’s still not clear how social networking sites can monetize their business, but Yandex has a straightforward business model,” said Anna Lepetukhina, an analyst at Troika Dialog in Moscow. “It’s not a start-up.”

Yandex said it was issuing 52.2 million shares at $20 to $22 each and planned to list on the Nasdaq Stock Market under the YNDX symbol. About 70 percent of the stock in the IPO comes from existing investors, including Baring Vostok Capital Partners and Tiger Global Management LLC, according to the company’s filing.

Weak Demand

Proceeds from the sale will be invested in technology, infrastructure and possibly acquisitions, the company said in the prospectus. Morgan Stanley (MS), Deutsche Bank AG (DBK) and Goldman Sachs Group Inc. (GS) were hired to manage the sale.

Five Russian companies including Euroset Holding NV, a mobile-phone retailer, and OAO Russian Helicopters pulled their offerings in London and Moscow this year because of weak demand.

Russian stocks are “cheap,” trading at a discount to other emerging-market equities relative to earnings because investors view Russia as a riskier market, said Hugo Bain, senior investment manager at London-based Pictet Asset Management, which has about $1.5 billion invested in Russia. Yandex stands out because it “seems to be a very well established company” in a growth industry, he said.

Companies in the Micex Index (INDEXCF) of Russian stocks trade at 6.7 times estimated earnings, compared with 10.7 for the MSCI Emerging Markets Index of shares from 21 developing countries, according to data compiled by Bloomberg.

Medvedev Blogs

The Russian search engine started its website in 1997 when it only took 4 gigabytes to index the entire Russian Internet. It now takes about 6 gigabytes to download a high-definition movie.

About 47 million Russians, or 33 percent of the country’s 143 million people, used the Internet in March, the biggest number in Europe after Germany, according to research

firm ComScore Inc. The Internet audience has risen 13 percent in the past year, with 60 percent of teenagers and adults in cities with populations greater than 100,000 using the Internet, according to a March poll conducted by researcher TNS Russia.

Russia’s Internet industry, the largest in Europe after Germany, is experiencing “rapid growth” and may account for 3.7 percent of gross domestic product by 2015, more than double the industry’s contribution in 2009, the Boston Consulting Group said in a May 18 report. President Dmitry Medvedev, who posts online blogs and visited the San Francisco offices of Twitter Inc. during a trip to California last June, has made “modernization” a priority of his administration. About half of state budget revenue comes from energy sales.

Buying Growth

“Everyone wants to buy future growth,” says Victor Klimovich, an analyst at VTB Capital in Moscow. The Internet industry is expanding, he said.

Mail.ru Group Ltd. (MAIL), an investor in Facebook Inc. and the operator of Russian social-networking sites and games, raised $912 million in an IPO in London in November. Shares were sold at the top end of the company’s $23.70 to $27.70 range and were 20 times oversubscribed. The stock rose 2.8 percent to $37.40 on May 20, extending its gain from the offer price to 35 percent.

Investors in LinkedIn, the first IPO of a major U.S. social-media site, are left with a 107 percent gain after the shares began trading on May 19. Google rose 18 percent in its 2004 IPO. There’s mounting concern that some technology shares may be overvalued as investors shake off their apprehension from the 2007-2009 collapse of the credit markets, former U.S. Treasury Secretary Lawrence Summers said at a conference May 20 in Shanghai.

Yandex ranks sixth in the world among global search engines by number of requests, and handles 65 percent of Russian searches, according to UralSib Financial Corp., a Moscow-based investment bank. That compares with a 22 percent share of the Russian market for Mountain View, California-based Google and 7 percent for Mail.ru., UralSib said.

“If the sale goes well it will send a positive signal to the whole market,” Verno Capital’s Kryukov said.

To contact the reporters on this story: Maria Levitov in London at mlevitov@bloomberg.net;

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Russian Q1 2011 stainless steel consumption up by 21pct YoYhttp://www.steelguru.com/stainless_steel_news/Russian_Q1_2011_stainless_steel_consumption_up_by_21pct_YoY/206472.html

Monday, 23 May 2011

According to Spetsstal Association, Russian stainless steel consumption rose by 21% YoY to 70,600 tonnes in Q1 2011 as compared with Q1 2010.

A comprehensive review of the current state and forecast on Russia stainless steel production, exports, imports in 2007-2011 will be presented by Spetsstal Association at the upcoming international conference 'Stainless Steel: Technologies - Equipment - Products' on May 26th 2011 at Moscow Radisson Hotel.

Rushydro recommends 2010 dividends at 0.0086 rbls/shrhttp://af.reuters.com/article/energyOilNews/idAFLDE74M08E20110523

Mon May 23, 2011 7:05am GMT

MOSCOW May 23 (Reuters) - Russia's biggest hydroelectric power producer RusHydro (HYDR.MM) said on Monday it may pay 0.0086 roubles per share in 2010 dividends.

Late in April, the company said that its 2010 net profit rose almost 12 percent to 35.9 billion roubles ($1.30 billion), below an analyst forecast [ID:nLDE73Q0XQ]. (Reporting by Gleb Stolyarov; Writing by Lidia Kelly; Editing by Alfred Kueppers)

UAC wraps up additional share offering

http://www.rbcnews.com/free/20110523115235.shtml

      RBC, 23.05.2011, Moscow 11:52:35.United Aircraft Company (UAC) has placed 66.47% of its additional share issue, the state-controlled aircraft holding said in a statement today. UAC placed shares worth RUB 13.29bn (approx. USD 476m).

      The holding was paid RUB 12.61bn (approx. 452m) in cash and the remainder in the ordinary shares of Myasishchev Experimental Design Bureau.

      In November 2010, UAC sold additional shares worth RUB 14.03bn (approx. USD 503m) to the government. After the first additional share offering UAC's share capital rose to RUB 188.63bn (approx. USD 6.76bn). After the recent offering, this figure will increase to RUB 201.93bn (approx. USD 7.24bn).

Sweco wins energy contract in Russiahttp://www.yourrenewablenews.com/sweco+wins+energy+contract+in+russia_63701.html

Monday, May 23, 2011

Sweco’s industry consultants have together with the Russian company Soyuz been chosen to lead and supervise the rehabilitation of three major CHP plants in Moscow. The contract is worth in total about SEK 34 million and Sweco's share amounts to approximately SEK 22 million.

The client is the Russian energy company Mosenergo and the assignment is an “Owner’s engineering” contract, which means that Sweco together with Soyuz will be the client's engineering arm throughout the whole project, including procurement consulting, technical audit and design verification. The CHP plants will be streamlined with so-called CCGT technology and will after the modernization have a capacity of up to 420 MW.

Sweco is an international consulting group with combined expertise in consulting engineering, environmental technology and architecture. Sweco has about 5,900 employees in 11 countries and recorded annual sales of approximately SEK 5.3 billion in 2010. The company has projects currently underway in some 80 countries worldwide. Sweco is listed on NASDAQ OMX Stockholm AB.

KAMAZ delays launch of cash-for-clunkers programmehttp://www.bne.eu/dispatch_text15409

Renaissance CapitalMay 23, 2011

Event: Today (23 May), RBC Daily reported that KAMAZ will not launch a cash-for-clunkers programme this year, given solid growth in truck sales. According to KAMAZ's marketing director, Ashot Arutunyan, the company could launch the programme next year if sales growth slows.

Action: Neutral for KAMAZ, in our view.

Rationale: The company had been considering the launch of its own scrappage programme to support sales, with 3,000 vehicles at an 8-10% rebate. However, KAMAZ's sales are strong (45% YoY growth in vehicle and kit sales in 4M11), and given the additional costs involved with the potential programme, management's decision to postpone it seems reasonable to us. We expect the company to show substantial sales and revenue growth and meet its upwardly revised FY11 targets without such a programme, on the back of a recovery in the truck market. We think the company might

not launch the programme next year, either, preferring to wait for the start of the government's truck scrappage programme, which is scheduled for 2012.Ivan Kim

May 23, 2011 10:30

Avtovaz shareholders asked to waive dividends for 2010 (Part 2)http://www.interfax.com/newsinf.asp?id=245613

MOSCOW. May 23 (Interfax) - The board of directors of Avtovaz (RTS: AVAZ) has recommended that shareholders waive dividends for 2010, Russia's biggest carmaker said in a statement.

Avtovaz did not pay a dividend for 2009 due to losses that year.

The AGM is scheduled for June 23. The register of shareholders closed on May 6.

Sergei Chemezov, who is the head of Russian Technologies, a major shareholder in Avtovaz, has said that it is too early for Avtovaz to pay dividends. "I don't think it is needed for now. It would be better to use the money for growth," he said.

Avtovaz posted a net profit of 2.1 billion rubles in 2010 under Russian accounting standards (RAS) compared with a net loss in 2009. Revenue was 137.9 billion rubles last year.

Avtovaz charter capital totals 9.250 billion rubles split into 1,388,289,720 ordinary and 461,764,300 preferred shares. Renault, Troika Dialog (RTS: TROY) and Russian Technologies each own 25% plus one share in Avtovaz.

Alfa to divest stake in CTC Media

http://www.rbcnews.com/free/20110523104741.shtml

      RBC, 23.05.2011, Moscow 10:47:41.Telcrest, owned by Russia's National Media Group-led (NMG) pool of investors, will buy Alfa Group's blocking stake of 39.55m shares, or 25% in independent media company CTC Media for a total of $1.1bn or $27.1 per share, CTC Media said in a statement on May 20.

      The deal is possible because the other shareholder of CTC Media, Sweden's Modern Times Group (MTG), refused to exercise its preemptive right to buy Alfa Group's stake. MTG owns 38% of CTC Media.

      The owners of Telcrest are NMG, controlled by Bank Rossiya; Mediaset, affiliated with NMG; oil company Surgutneftegas; Itera Media Limited; and Abit Holdings Limited.

Russian Railways sets additional requirements for buyer of First Freight

http://www.bne.eu/dispatch_text15409

Renaissance CapitalMay 23, 2011

Event: Today (23 May), Kommersant reported that Russian Railways is preparing a shareholders' agreement for the future buyer of 75% in First Freight Company (PGK), which will be auctioned off in 3Q11, with the starting bid set at RUB115.5bn. The agreement will reportedly prohibit the sale of shares in the short term and the use of shares as collateral without Russian Railways' approval. Russian Railways plans to complete a draft of the agreement by 15-20 June, and also expects to receive the government's approval to sell the stake by then.

Action: According to a Russian Railways representative, the terms of the agreement have not been finalised, but the new conditions will be more stringent for bidders. We think obligatory approval from Russian Railways for using PGK shares as collateral will not be necessary, but could potentially be an additional obstacle for Globaltrans to acquire PGK, which may need to raise additional funds for the purchase.

Rationale: The shareholders' agreement is likely meant to protect Russian Railways' interest in PGK after the sale. It would establish additional requirements for the potential buyer, besides those previously set (the buyer should be a non-state, profitable company with more than 10-15,000 railcars). We think Globaltrans would most likely need a combination of an SPO and a debt offering to buy a stake in PGK and, thus, can be affected by the agreement. It is reported that almost none of the current potential buyers can easily pay for PGK in cash.Ivan Kim

Aeroflot to hire deputy CEO from Alitalia http://www.bne.eu/dispatch_text15409

VTB CapitalMay 23, 2011

News: Aeroflot plans to name Alitalia Vice President Giorgio Callegari as its Deputy CEO for Strategy, Kommersant reports.

Our View: Even though Russian companies' experience with Western managers has not always been a success, we welcome Aeroflot's attempts to bring in foreign expertise. Callegari, who has worked for over 20 years in the global aviation industry and has held various positions with Sky Team and IATA, could provide a new impetus to Aeroflot's strategic development.

Elena Sakhnova

Aeroflot to hire Alitalia official as deputy CEO

http://en.rian.ru/business/20110523/164174298.html

11:55 23/05/2011

Russia's flagship airline Aeroflot plans to hire Alitalia's Vice President in charge of strategy Giorgio Callegari as deputy CEO for strategy, Kommersant business daily reported on Monday citing sources close to the company.

"He has impressed management with his knowledge and competence," an Aeroflot board source said.

Aeroflot is now working on its strategy with marketing, fleet and route strategies yet to be approved.

"Even though Russian companies' experience with Western managers has not always been a success, we welcome Aeroflot's attempts to bring in foreign expertise. Callegari, who has worked for over 20 years in the global aviation industry and has held various positions with Sky Team and IATA, could provide a new impetus to Aeroflot's strategic development," VTB Capital said in a research note.

Kommersant quoted Infomost consulting company Boris Rybak as saying that unlike other industries, Russian aviation did not use many foreign specialists as the government did not welcome the practice. He said that legislation prohibited foreigners from becoming general directors of aviation companies.

MOSCOW, May 23 (RIA Novosti)

Polyus Gold CEO comments on production and global M&A http://www.bne.eu/dispatch_text15409

Troika DialogMay 23, 2011

Polyus Gold is expected to announce its updated strategy for 2011-20 in June, CEO Mikhail Prokhorov said at the company's AGM on Friday. The key focus should be on brownfield expansion, allowing the company to capitalize on the already existing infrastructure. As such, the company envisages an increase of milling capacities at the recently launched Blagodatnoye, from 6 mln tpy of ore to 8 mln tpy, or by 33%. The company also plans to double the capacity of its greenfield Verninskoye, following the substantial buildup in the P&P reserve base from 1.6 mln oz to 5.8 mln oz. The project's commissioning is now scheduled for end 2011 (after a four to six-month pushback) and the initial processing capacities should be 2.2 mln tpy of ore.

On a separate note, Prokhorov announced that Polyus Gold could merge with a global gold miner by year end, while the reverse takeover (RTO) into Jersey-registered KazakhGold (to be completed by summer) should facilitate the deal. The company has reportedly short-listed potential targets, though no details have been disclosed so far.

Troika's view: While the expansion of Verninskoye has been mulled for a while, the news on Blagodatnoye should be something new for the market. Assuming all other operational parameters are unchanged at Blagodatnoye and Verninskoye, the increase in milling capacities should boost mid-cycle gold production by around 220-235 koz. Polyus Gold may add around 115 koz at Blagodatnoye, increasing output to 440-460 koz, while gold production at Verninskoye could grow from 160-170 koz to 270-280 koz. The company did not provide any timing for such expansion, but it usually takes as much as two and a half to three years to expand a plant (requiring a feasibility study, equipment order, etc). On our numbers, the expansion of Blagodatnoye could cost $100-125 mln, and $240-270 mln could be paid for the expansion at Verninskoye. As of now, our operational forecasts imply production of 1.7-1.9 mln oz in 2013-14, so there would be 10-12% upside to our projections should the company go ahead with these plans.

We expect Polyus Gold to announce the RTO terms (including swap ratios) by end June and complete the whole transaction by end summer. We are cautious with regard to the company's M&A plans during the current stage of the cycle from both strategy and valuation perspectives.

Mikhail Stiskin

Activity in the Oil and Gas sector (including regulatory)

President Karimov receives Lukoil chiefhttp://mfa.uz/eng/press_and_media_service/news_and_events/230511en.mgr

23.05.2011 09:06

President of Uzbekistan Islam Karimov received the head of Lukoil Vagit Alekperov at Oqsaroy Residence on 20 May.

Welcoming the guest, President noted the positive results of cooperation with Lukoil. As a foreign direct investor, Lukoil has been actively involved in major projects in Uzbekistan.

The on-gong projects within the frame of agreements on extraction of gas, gas condensate and oil fields, had been giving significant results.

Uzbekistan is interested in using the capacity of Lukoil to further deepen the economic, trade and investment cooperation between Uzbekistan and Russia, the sides emphasized during the meeting.

Also, the sides exchanged views on the implementation of joint projects and prospects for further cooperation.

Lukoil is one of the largest investors in Uzbekistan. Within the long-term production sharing agreements signed in 2004, a number of joint investment projects have been carried out in Uzbekistan. Along with such companies as Uzbekneftegaz, Petronas, Korean National Oil Corporation and China National Petrolium Corporation, Lukoil is in the consortium to implement multilateral projects on Uzbek part of Aral Sea area.

MAY 20, 2011, 12:02 P.M. ET

ERG Sets Up Renewable Energy Joint Venture With Lukoil http://online.wsj.com/article/BT-CO-20110520-709583.html

ROME (Dow Jones)--ERG SpA (ERG.MI), Italy's biggest independent refiner by capacity, said Friday it has agreed to form a renewable energy joint venture with OAO Lukoil Holdings (LKOH.RS) as it cements its link with the Russian oil company.

In a statement, ERG said the new equally owned venture is called LUKErg Renew and is based in Vienna.

The venture will initially focus its operations on Bulgaria and Romania, followed by Ukraine and Russia.

ERG website: http://www.erg.it

-By Liam Moloney, Dow Jones Newswires; +39 06 6976 6924; liam.moloney@dowjones.com

23.05.2011

Sino-Russian Refinery To Start Constructionhttp://www.oilandgaseurasia.com/news/p/0/news/11430

The construction of a Sino-Russian crude oil refinery is expected to start in the northern industrial city of Tianjin in the second half of the year, local officials said.

Oriental Refinery, the joint venture with an investment of 30 billion yuan ($4.62 billion), was co-funded by PetroChina Company Ltd and Russia's Rosneft. It is designed to process 13 million tons of crude oil every year.

"The project is a priority for construction. We hope it can start operation by 2015," said Wang Junming, general manager of the Nangang industrial zone development firm, where the project is located.The Sino-Russian refinery is expected to generate annual revenue of 60 billion yuan once operation commences.

Wang said the authorities aim to build a complete industrial chain from oil refining to petrochemical engineering in the zone.

In Tianjin, Sinopec is operating a 10-million-tons per year refinery, which has ethylene production capacity of 1 million tons/year and is building a crude oil storage depot. PetroChina's crude oil storage depot, with capacity of 1 million tons, went into operation in 2010.

Copyright 2011, China Daily. All rights reserved.

Tatneft could delay second phase of TANECO

http://www.bne.eu/dispatch_text15409

Renaissance CapitalMay 23, 2011

Event: Kommersant reported today (23 May) that according to Tatneft CEO Shafagat Takhautdinov, the company may decide to delay construction of a deeper conversion plant and not expand capacity to 14mn tpa if the 60/66 regime is introduced. According to Takhautdinov, the new regime could extend the payback period from seven to 15 years, and the company is looking at various options to get compensation from the government.

Action: We think the news is tentatively positive for Tatneft.

Rationale: Having spent over $5bn on construction of the first phase of the 7mn tpa Taneco refinery, Tatneft's project turned out to be one of the most expensive in Russia. Clearly, the possibility of lower capex or additional tax benefits could partially mitigate this. We note that the new refinery would refine low quality crude, which could at least partially improve Urals quality, and as such the project should be in the interests of the Russian government. We believe a special tax regime for Taneco or some tax holidays for Tatneft (e.g. reduced MET) are quite possible.Ildar Davletshin

TNK-BP Holding's final 2010 dividend may be R3.85 per share

http://www.bne.eu/dispatch_text15409

Troika DialogMay 23, 2011

TNK-BP Holding's BoD has recommended a final 2010 dividend of R3.85 ($0.14) per both common and preferred share, Vedomosti reports this morning, citing two unnamed sources that it says are close to the company.

Troika's view: With R8.04 per share distributed for 9m10, the total payout for 2010 would come to R11.89 per share, or R183.6 bln ($6.6 bln). This is some 92% of 2010 net income, and about 9% more than the company's free cash flow last year. The company has been paying out most or all of its free cash flow since it took its current form in 2005. The record date was May 16. The latest reported dividend yields about 5% on both commons and prefs.

Oleg Maximov

TNK-BP to spend almost all profit on 2010 dividend – reporthttp://news.stv.tv/business/251448-tnkbp-to-send-almost-all-profit-on-2010-dividend-report/

22 May 2011 20:18 GMT

MOSCOW (Reuters) - BP's <BP.L> Russian oil venture, TNK-BP, is set to spend almost all of its 2010 profit in the form of a dividend, business daily Vedomosti said on Monday citing two sources at TNK-BP.<br />The newspaper said the board of TNK-BP Holding, the traded unit of TNK-BP <TNBP.MM>, recommended paying 3.85 rubles per share on fourth-quarter dividend, or 59.47 billion rubles total.

RPT-PROFILE-Russia's oil tsar unbowed after BP breakdownhttp://in.reuters.com/article/2011/05/23/russia-sechin-idINLDE74M0FY20110523

1:18pm IST

* Sechin says no mistakes made in Rosneft-BP deal

* Still in control at Rosneft

(Repeats to additional subscribers)

By Vladimir Soldatkin

PURPE, Russia, May 20 (Reuters) - Deputy Prime Minister Igor Sechin, who this week saw the crowning achievement of his career as Russia's energy tsar thwarted by rival businessmen, shows no sign of conceding defeat.

Russia's top energy official was hours away from a deal with British major BP (BP.L: Quote, Profile, Research) that would have secured state-controlled Rosneft's (ROSN.MM: Quote, Profile, Research) lead in tapping Russia's Arctic oil riches and bound it to the British major via a $16 billion share swap.

The alliance would have brought the government closer to realising its grand design of turning Rosneft into the world's top publicly listed oil firm by output and creating a platform to take Kremlin Oil global.

But it was thwarted on Monday by the four tycoons who are BP's partners in Rosneft rival TNK-BP (TNBP.MM: Quote, Profile, Research) who insisted BP was bound to do deals in Russia only through the joint venture.

When the quartet, who had tried to gatecrash the deal, refused a $32 billion offer to sell out, Sechin let the BP deal expire rather than compromise, prompting President Dmitry Medvedev to take a jibe at him on live television. [ID:nLDE74H0R5]

FOUGHT LIKE A LION

Sechin, on a trip to Siberia to cut the ribbon on a pipeline link that would shorten the route of Russian exports eastward to China and the Asia-Pacific, was unbowed.

After Medvedev's criticism was relayed to him, he approached reporters to say: "Rosneft fought like a lion for interests of the company and its shareholders.

"I wouldn't say that anyone contributed to the deal's collapse. It's just when there is no full information, when Rosneft had no opportunity to become familiar with the (TNK-BP) corporate agreement, it's hard to make a decision," he added.

Sechin, 50, who for years shied away from the public eye, has been a confidant of Prime Minister Vladimir Putin since they worked in St. Petersburg city hall in the early 1990s. He went on to become Putin's deputy chief of staff in the Kremlin and was long regarded as the second most powerful man in Russia.

Russia holds a presidential election in March 2012. Medvedev and Putin, who steered him into the Kremlin in 2008, have yet to agree which of the pair will run.

The breakdown of the BP deal followed setbacks for Sechin in both business and politics. An agreement he helped broker to sell Russian oil to China is under threat from Rosneft's Chinese customers who are challenging the price laid out in the deal.

Medvedev's rebuke also followed a Kremlin edict that government officials step down from the boards of companies they regulate, depriving Sechin of the Rosneft chairmanship.

Some analysts have speculated Medvedev's order was designed to strengthen his hand before the election at the expense of a Putin ally. But Sechin rejected suggestions that Medvedev's order left him weakened.

"The government, including myself, still controls Rosneft," he said.

GROWTH STORY

In 1998, Rosneft produced just 250,000 barrels per day (bpd) of oil and the company faced the prospect of being privatised at the hands of Russian businessman Boris Berezovsky, who is now living in exile in London after falling from government favour.

Under Sechin's chairmanship, Rosneft was transformed into Russia's top crude producer with daily output of 2.4 million bpd -- on a par with OPEC member Kuwait -- since the company bought the assets of defunct company Yukos.

Jailed oil tycoon Mikhail Khodorkovsky named Sechin as the man who masterminded the Kremlin's destruction of his Yukos business empire, which fell foul of Putin during his first term as president.

Sechin was in Siberia to bless the 430-km (270-mile) Purpe-Samotlor pipeline that will speed oil deliveries to China -- a deal he masterminded -- from Rosneft's huge Vankor oilfield in the Arctic starting from December.

The link will help Russia to sustain its oil production at 505 million tonnes a year (10.14 million barrels a day), the world's largest, through to 2020, officials say. "The pipeline is very important to keep oil production high," said Sechin. (Editing by Melissa Akin and Douglas Busvine)

Gazprom

Former German chancellor to get place on Gazprom board?http://rt.com/news/line/2011-05-23/#id10655

RT News line, May 23

Former chancellor of Germany Gerhard Schröder may be appointed to the board of directors of Gazprom, Vedomosti newspaper reports.  Schröder may replace one of the ministers on the board - either Energy Minister Sergey Shmatko or the Minister of Economic Development, Elvira Nabiullina. However, no final decision has yet been made on whether Schröder should take up the position, and no candidate has been approved by the Kremlin yet. According to President Medvedev’s decision, all state officials that form part of the directors’ boards of state companies and banks are to be replaced by independent directors. Schröder is head of the shareholders’ committee of Nord Stream.