Russia 110701

Basic Political Developments ITAR-TASS news digest of July 1: 1.

o MOSCOW - - Gazprom CEO Alexei Miller said on Thursday Ukraine could get cheaper Russian gas if it agrees to merge its Naftogaz Company with Gazprom.

o MOSCOW - - Gazprom CEO Alexei Miller on Thursday denied reports that a new gas price had been agreed with Belarus and said talks will begin in the second half of the year. He also denied claims Russia may agree to a lower the price in case Belarus sells the remaining 50 percent of stock in its national Beltransgaz operator to Gazprom.

o MOSCOW - - Gazprom CEO Alexei Miller said on Thursday the Lithuanian decision to separate gas supply and transportation assets will “not go unnoticed”, but did not specify which measures the Russian gas monopoly may resort to in response.

o MOSCOW - - Russia will resume grain exports on Friday which were suspended in August 2010 because of a major drought and subsequent loss of up to 30 percent of grain crops.

o MOSCOW - - Russian President Dmitry Medvedev and other top officials and VIPs will again use the government airport in Vnukovo from Friday as the overhaul of the runway which lasted for two and a half months has been completed.

o VLADIVOSTOK - - President Dmitry Medvedev believes the Far Eastern Federal University which is under the construction on Russky Island for APEC summit in 2012 may develop into a completely new educational cluster in the region that will train Russians from all over the country as well as foreigners.

o MOSCOW - - Russian Foreign Minister Sergei Lavrov and his French counterpart Alain Juppe will meet on Friday to discuss Russian relations with the European Union and NATO and the situation in Northern Africa.

o ASTANA - - The long-delayed project worth 5.4 billion dollars to modernize and expand the 1,500-km long oil pipeline of the Caspian Pipeline Consortium (CPC) linking the Tengiz field in western Kazakhstan with the Russian port of Novorossiisk on the Black Sea coast will be officially launched on Friday in the Kazakh city of Atyrau.

o VLADIVOSTOK - - Russian coast guards detained four poaching vessels flying the flag of Cambodia near Sakhalin in the past days. Warning shots had to be fired to force the Atika fishing boat to stop, the Sakhalin coast guard service said in a press release on Friday.

o MOSCOW - - Former Soviet Defense Minister Sergei Sokolov, who personally led the Soviet troops into Afghanistan in 1979, is marking the hundredth birthday on Friday.

o ULAN-UDE - - The Russian Railways company's investments in Buryatia will exceed rbls 5.2 bln this year and amount to 105 bln by 2030, both in

the development of railroads and the social sector development, the company's First Vice-President Vadim Morozov said in Ulan-Ude on Friday.

o ULAN-UDE - - A meeting of the APEC finance ministers will be held in the capital of Buryatia in 2012 on the threshold of the organization’s Vladivostok summit, Russian Finance Minister Alexei Kudrin said in Ulan-Ude on Friday.

o MOSCOW - - The customs borders inside the Customs Union of Russia, Belarus and Kazakhstan are removed beginning this Friday, and transported goods will pass through control points only on the external borders of the union. Beginning July 1, 2011, customs control over goods and transport crossing into the Customs Union's territory will be exercised by checkpoint on the union's external border, the Russian Federal Customs Service said.

o VIENNA - - Russia wants to take the issue of conventional forces in Europe (CFE) out of the deadlock and called to avoid politicizing the security issue.

o SUKHUM - - Abkhazia will always follow the policy to be close to Russia, the republic's Prime-Minister Sergei Shamba told reporters here… Sea transportation service is already opened, and talks are underway to open Sukhum's airport.

Russia and China renew rejection of any condemnation against Syria ROGOZIN INTERVIEW TO INTERFAX

o Russia ready to compromise on Euro-ABMo Russia wants NATO to compromise in missile defense talkso Rogozin: Russia won't give NATO military access to its control button

“NATO will never get access to Russia’s big red button”o Rogozin hopes Sochi meeting will give NATO better idea of Russia's

positiono Russia won't attend NATO's Chicago summit if no agreement reached on

missile defense – Rogozino IF RUSSIA, NATO FAIL TO COME TO TERMS ON MISSILE

DEFENSE BEFORE YEAR'S END RUSSIA WILL START DEVELOPING ITS NATIONAL SYSTEM – ROGOZIN

o RUSSIA'S TALKS WITH U.S., NATO ON MISSILE DEFENSE IN IMPASSE - ROGOZIN 

o Absolute absence of American missile defense would be main security guarantee for Russia – Rogozin

o Russia will build its own missile defense system by all means – Rogozin Russia’s NATO envoy says the 2 have until 2018 to agree on a missile defense

plan Russian, French formins to discuss Libya, relations with NATO - Russian Foreign

Minister Sergei Lavrov and his French counterpart Alain Juppe will meet on Friday to discuss Russian relations with the European Union and NATO and the situation in Northern Africa.

French MFA: Yerevan, Baku to be submitted additional proposals on Karabakh - “It’s sad that the meeting in Kazan did not yield results but France hails Russian President’s efforts to help the sides find a solution to the problem,” Juppe said in an interview with Echo of Moscow.

French arms to Libya rebels expose tensions over war - Russian Foreign Minister Sergei Lavrov said supplying arms was a "crude violation" of U.N. Security Council Resolution 1970, which imposed a comprehensive arms embargo in February.

Russia wants to take CFE out of deadlock - “The main task today is to restore control over the armaments in Europe. It is necessary to take effort and bring the consultations to design a new framework for negotiations on conventional forces out of the deadlock,” Deputy Foreign Minister Alexander Grushko told Tass on Thursday.

Customs Union eliminates internal borderso RF, Belarus, Kazakh PMs give high marks to work towards CES - the

three prime ministers had agreed to meet in the Russian capital on July 12 for a three-party working meeting, as well as “to initiate a business forum in Moscow with participation of business circles of the three countries”.

EU Meat-Duty Demand May Pressure Russian Prices, Interfax Says - A European Union demand that Russia, which is in talks to join the World Trade Organization, scrap import duties for three meat quotas may pressure prices in the country, Interfax cited Russian Agriculture Minister Yelena Skrynnik as saying.

APEC finance ministers to meet in Buryatia capital in 2012 (adds). Medvedev visits construction site of future federal university in Russia's Far East Russia accuses Georgia of politicizing humanitarian issue - Russian Foreign

Ministry has published a special statement regarding the resolution adopted by the UN General Assembly regarding the rights of IDPs from Georgia`s occupied Abkhazia and South Ossetia.

Abkhazia together with Russia forever -- Shamba. o Abkhazia to pursue a policy of rapprochement with Russia

India to get Russian Nerpa submarine by yearend - Russia will transfer the K-152 Nerpa attack submarine to India on a 10-year lease by the end of 2011, Navy commander Adm. Vladimir Vysotsky said on Friday.

o Russia to supply nuclear submarine to India-RIA No need to ground MiG 29s, crash due to human error: Russia Russian Navy expects to receive three nuclear submarines by yearend - "These

are nuclear-powered multipurpose attack submarine Severodvinsk, and a strategic nuclear submarine Yuri Dolgoruky," Vysotsky said. "And we are planning [to receive] ... Alexander Nevsky [strategic submarine]."

Russia detains four poaching vessels under Cambodia flag. Russian sailboat Pallada set for international trans-Pacific expedition Russia's Progress M-11M set to make another correction of ISS orbit Three more men injured in HPP fire died at hospital in Surgut. Woman injured in Vladikavkaz gas explosion dies, toll rises to 3. Firefighters in Russia's Far East put out all but one forest fires Russian court bans Scientology books

Paris plays host to Orthodox forum - The Orthodox Youth Forum is opening in Paris today, for the first time since the Moscow Patriarchate and the Russian Orthodox Church established canonical communication in 2006.

Russians to get new domestic passports - The inscription contains all information about the passport holder and will therefore make it easier to buy tickets, and perform banking transactions, and will also simplify a number of other services.

Court in Arkhangelsk Reg to consider Platon Lebedev parole appl. Reuters PRESS DIGEST - Russia - July 1 RIA Russian Press at a Glance, Friday, July 1, 2011 A geopolitical game on the Roof of the World - Moscow and Washington’s

interests have yet again collided in Tajikistan Viktoria Panfilova Russia’s stage-managed politics – By Editorial Washington Post Putin says Russia faces dirty election campaign - By Darya Korsunskaya Opposing the Opposition - As the billionaire New Jersey Nets owner steps into

his new role as Kremlin-approved opposition leader, what do voters actually think? BY JULIA IOFFE

Special prosecutors for senior officials - The State Duma has received a draft law on the establishment of the institution of independent prosecutors Ekaterina Vinokurova, Svetlana Bocharova

Rethinking the Reset - By Andrei Tsygankov

National Economic Trends Russia June manufacturing PMI at 15-month low

o Russian Factory Activity Growth Eases Slightly In June Russia resumes grain exports on Friday Russia may face grain shortage as ban ends - As Russian grain exports resume,

foreign producers fear prices could fall, but experts say an international shortage is inevitable

Russia’s Wheat Harvest May Be 56 Million Tons, Grain Union Says

Business, Energy or Environmental regulations or discussions Gazprom, Bank of Moscow and Rusal: Russian Equities Preview Railways co investments in Buryatia to amount rbls 105 bln by 2030. Russia's Bank of Moscow gets $14 bln bailout

o Bank of Moscow to Get $8.9 Bln From Central Bank, Vedomosti Sayso Deposit Insurance Agency to provide Bank of Moscow 295 bln ruble loan

at 0.51% Euroset to reconsider IPO in 2012 Russian airlines boost air traffic in 5M RTS and Micex merger: the end of the beginning – by Ben Aris in Moscow

Activity in the Oil and Gas sector (including regulatory) Oil export duty to decline to $445.1 per tonne in July, discount duty - $205.8

(Part 2) Kazakstan-Russia oil pipeline to begin expansion Friday.

TNK-BP: To Halve West Siberia Output Field Decline In 3 Years Russia TNK-BP plans to borrow $1 bln in 2011-CFO TNK-BP Said to Offer East Siberian Crude for Loading in August Season’s First Oil Tanker Sails Northern Sea Route Putin sees $309Bln in Oil Investment by 2020

Gazprom Gazprom: Lithuanian unbundling will not go unnoticed. Gazprom may consider possible asset swap with Japanese - Miller (Part 2) Gazprom ready to lay gas pipeline to China - Miller Russia's Gazprom says no new gas price deal with Belarus Boyko to cut Gazprom-Naftogaz merger deal - Energy Minister Yuriy Boyko will

travel to Moscow Friday for a meeting with top Gazprom officials as the parties are due to discuss a potential merger with Naftogaz Ukrayiny, an official said Thursday.Russia to review Ukraine gas prices after merging with Naftogaz - Gazprom CEO

Gazprom ousts ministers - Russian state-owned gas monopoly Gazprom has replaced two government ministers on its board.

Kazakh president's son in-law elected to Board of Directors of "Gazprom" JSC Kazakh billionaire cozies up to Gazprom Former head of E.On Bergman, now adviser to Gazprom's Alexei Miller Gazprom will swap gas for electricity in Germany - The monopoly plans to

purchase power plants operating in Europe, in order, first, to make money by selling them gas and then, by generating electricity. These thermal power plants (TPP) will be able to purchase Russian gas at a lower price than others.

Gazprom elects new board; CEO bullish on gas market conditions - RenCap

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

Full Text Articles

Basic Political Developments

11:15 01/07/2011ALL NEWS

ITAR-TASS news digest of July 1: 1.

http://www.itar-tass.com/en/c154/177378.html

1/7 Tass 150

MOSCOW - - Gazprom CEO Alexei Miller said on Thursday Ukraine could get cheaper Russian gas if it agrees to merge its Naftogaz Company with Gazprom.

“Our vision is as follows: Naftogaz and Ukraine in general could resolve the issue of reduced price by accepting our proposal to merge Naftogaz and Gazprom into a single company. Then the pricing policy would be unified,” he told a press conference.

He said the creation of a joint venture between the two companies is currently being considered as the first step towards the merger and cannot result in a lower price.

MOSCOW - - Gazprom CEO Alexei Miller on Thursday denied reports that a new gas price had been agreed with Belarus and said talks will begin in the second half of the year.

He also denied claims Russia may agree to a lower the price in case Belarus sells the remaining 50 percent of stock in its national Beltransgaz operator to Gazprom.

MOSCOW - - Gazprom CEO Alexei Miller said on Thursday the Lithuanian decision to separate gas supply and transportation assets will “not go unnoticed”, but did not specify which measures the Russian gas monopoly may resort to in response.

Lithuanian parliament approved the lawbill on the so-called unbundling of gas assets. If the national president signs it into law Gazprom will have to sell its 37.1 percent stake in the Lithuanian Lietuvos Dujos operator.

MOSCOW - - Russia will resume grain exports on Friday which were suspended in August 2010 because of a major drought and subsequent loss of up to 30 percent of grain crops.

Prime Minister Vladimir Putin said last week the country may export up to 15 million tons of grain and recover a leading place on the market.

This year grain crops are forecast at 85 million tons in Russia.

In the past three weeks the world price of grain fell 70-80 dollars per ton. The price of Russian wheat of the fourth class fell in the past week by 85 rubles to 5815 rubles.

MOSCOW - - Russian President Dmitry Medvedev and other top officials and VIPs will again use the government airport in Vnukovo from Friday as the overhaul of the runway which lasted for two and a half months has been completed.

All aircraft will be moved to Vnukovo from Sheremetyevo airport in a week, spokesman of the Kremlin business administration Viktor Khrekov told Tass.

VLADIVOSTOK - - President Dmitry Medvedev believes the Far Eastern Federal University which is under the construction on Russky Island for APEC summit in 2012 may develop into a completely new educational cluster in the region that will train Russians from all over the country as well as foreigners.

MOSCOW - - Russian Foreign Minister Sergei Lavrov and his French counterpart Alain Juppe will meet on Friday to discuss Russian relations with the European Union and NATO and the situation in Northern Africa.

The Russian foreign ministry said the main topics will include bilateral cooperation, Russia-NATO dialogue including the planned missile shield in Europe, the situation in the Middle East and Northern Africa, and several regional conflicts.

Ministry spokesman Alexander Lukashevich said the dialogue between Moscow and Paris has reached the level of strategic partnership.

ASTANA - - The long-delayed project worth 5.4 billion dollars to modernize and expand the 1,500-km long oil pipeline of the Caspian Pipeline Consortium (CPC) linking the Tengiz field in western Kazakhstan with the Russian port of Novorossiisk on the Black Sea coast will be officially launched on Friday in the Kazakh city of Atyrau.

The project will allow Kazakhstan to double the amount of oil exported via Russia.

VLADIVOSTOK - - Russian coast guards detained four poaching vessels flying the flag of Cambodia near Sakhalin in the past days. Warning shots had to be fired to force the Atika fishing boat to stop, the Sakhalin coast guard service said in a press release on Friday.

Besides Atika, Adams, Iris and Sirius-7 boats were detained with a total of 44 tons of live crab which the coast guards released back into the sea.

The prevented damage was estimated at over 38 million rubles.

MOSCOW - - Former Soviet Defense Minister Sergei Sokolov, who personally led the Soviet troops into Afghanistan in 1979, is marking the hundredth birthday on Friday.

ULAN-UDE - - The Russian Railways company's investments in Buryatia will exceed rbls 5.2 bln this year and amount to 105 bln by 2030, both in the development of railroads and the social sector development, the company's First Vice-President Vadim Morozov said in Ulan-Ude on Friday.

ULAN-UDE - - A meeting of the APEC finance ministers will be held in the capital of Buryatia in 2012 on the threshold of the organization’s Vladivostok summit, Russian Finance Minister Alexei Kudrin said in Ulan-Ude on Friday.

MOSCOW - - The customs borders inside the Customs Union of Russia, Belarus and Kazakhstan are removed beginning this Friday, and transported goods will pass through control points only on the external borders of the union.

Beginning July 1, 2011, customs control over goods and transport crossing into the Customs Union's territory will be exercised by checkpoint on the union's external border, the Russian Federal Customs Service said.

VIENNA - - Russia wants to take the issue of conventional forces in Europe (CFE) out of the deadlock and called to avoid politicizing the security issue.

“The main task today is to restore control over the armaments in Europe. It is necessary to take effort and bring the consultations to design a new framework for negotiations on conventional forces out of the deadlock,” Deputy Foreign Minister Alexander Grushko told Tass on Thursday. He heads the Russian delegation at the OSCE security conference.

SUKHUM - - Abkhazia will always follow the policy to be close to Russia, the republic's Prime-Minister Sergei Shamba told reporters here.

"Abkhazia has chosen the policy to be closer to Russia and will always follow it. Together with Russia, we implement the strategic union, which is forever, and we are sure it will only consolidate. The Russian leaders' all actions are aimed at it", he said.

It is necessary to open all the kinds of communications, he believes.

Sea transportation service is already opened, and talks are underway to open Sukhum's airport.

Russia and China renew rejection of any condemnation against Syria

http://www.sana.sy/eng/22/2011/06/30/355796.htm

Jun 30, 2011

The UN, NEW YORK, (SANA)-Russia and China on Thursday renewed rejection of any condemnation against Syria by the UN Security Council, underlining that the events in Syria are considered as an internal affair.

The UN News Center reported that the Chinese and Russian stance came during a debate for discussing the extension of the UN Disengagement Observer Force (UNDOF) mission in the occupied Syrian Golan.

The UN Security Council agreed to extend UNDOF mission for an extra 6 months.

M.Eyon

Russia ready to compromise on Euro-ABMhttp://english.ruvr.ru/2011/07/01/52638968.html

Jul 1, 2011 10:40 Moscow Time

Russia is ready for a compromise with NATO on Euro-ABM, but feels that the West, which has created the problem, should make the first move to that end.

This came in a statement for reporters by the Russian Ambassador to the North Atlantic Alliance, Dmitry Rogozin.

He added that Moscow is not expecting any immediate enlightenment, as he put it, as well as quick reconsideration of NATO countries’ stand on cooperation with Russia in setting up a joint ABM system.

According to Rogozin, this is exactly the reason why Russia makes part of its programme of arms development whatever may prove necessary for a military-technological reaction to any tricks of fortune.

RT News line, July 1

Russia wants NATO to compromise in missile defense talkshttp://rt.com/politics/news-line/2011-07-01/#id13419

11:39

Russia is ready for a compromise on the controversial European missile defense issue with NATO, but it is expecting the alliance to take the first step, Russia’s special envoy to NATO, Dmitry Rogozin, has said. “Of course our position during negotiations will develop in accordance with an analysis of the other party’s capabilities, as well as developments in the world,” Rogozin said in an interview. “But we insist that NATO take the first step, because this whole affair was NATO’s idea,” he pointed out. Moscow is ready to invest time and effort in order to persuade NATO members that a joint system of missile defense is more effective than its current EU missile shield project. “We will be very patient in trying to make them accept our position, because the truth is on our side,” Rogozin said.

Rogozin: Russia won't give NATO military access to its control buttonhttp://www.kyivpost.com/news/russia/detail/107843/

Today at 09:42 | Interfax-Ukraine Russia will not give the NATO military access to its command posts in case a missile defense system is built jointly with NATO.

"Giving anyone access to this virtual red button, so much discussed by some media, is something that can never happen. It is impossible," Russia's NATO Ambassador Dmitry Rogozin said in an interview with Interfax.

"We will not put our system of strategic nuclear forces and system of aerospace defense under anyone else's control. They will always remain under Russian sovereign national control," he said.

The same principles will work in the reverse direction, he also said.

"No illusions should be built concerning the Russian finger being on some NATO, or American virtual red button. This is unrealistic. Cooperation must proceed within absolutely different parameters," Rogozin said.

Read more: http://www.kyivpost.com/news/russia/detail/107843/#ixzz1QpmBG3oR

“NATO will never get access to Russia’s big red button”http://rt.com/politics/rogozin-nato-control-button/print/

Published: 1 July, 2011, 10:38Edited: 1 July, 2011, 12:06

Russia will not give the Western alliance access to its command posts even if the two sides start to work together on a missile defense system, Moscow’s envoy to NATO has warned.

“Giving anyone access to this virtual red button… is something that can never happen,” Dmitry Rogozin told Interfax on Friday. “It is impossible.” Moscow will never put its system of strategic nuclear forces or aerospace defense under anyone else’s control,” the ambassador said. This system will always remain “under Russian sovereign national control.”

But Rogozin added that the same principles would work in the contrapositive. Russian control over a portion of the NATO or US defense systems is equally unrealistic, he noted. Cooperation in this area must proceed “within absolutely different parameters,” he said.

NATO General Secretary Anders Fogh Rasmussen said in May that Moscow and the alliance should have separate missile defense systems working towards a common goal to defend the Euro-Atlantic area. The two sides should develop their missile defense systems separately, but they should also find ways to cooperate while using them, he noted.

Initially, Rasmussen had invited Russia to take part in building a common European defense system, but its parameters are still not clear. Later, NATO officials started to insist on separate systems of missile defense, while Russia favored a united “sectoral system.”

The Russian leadership has warned that the creation of a European missile defense system without Moscow’s participation might provoke a new arms race. Russia is also insisting on guarantees that the new Western missile shield, whoever builds it – the US or NATO – should not pose a threat to Moscow’s strategic nuclear arsenal.

The main security guarantee for Russia would be the “absolute absence of a US missile defense system,” Rogozin said on Friday. He admitted that Russia’s talks on this problem with Washington and NATO are in a deadlock now “thanks to the American side." Missile defense has become “a kind of incantation, rhythmically pronounced by all American politicians and diplomats,” he said.

They are not going to depart from it, and it is “practically impossible to move them from this point,” Rogozin said. He was speaking ahead of the Russia-NATO Council meeting scheduled for July 3-4 in Sochi. It will focus on NATO's European missile defense shield project. Neither side has reported any breakthroughs thus far.

Russia will build its national missile defense system “irrespective of what its Western partners will be doing in this field,” Rogozin noted. He said that while Moscow “is somewhat behind the US in missile defense,” serious efforts have been made in recent years to restore Russia’s parity in this area.

11:25 Rogozin hopes Sochi meeting will give NATO better idea of Russia's position

07/01 10:37   Russia won't attend NATO's Chicago summit if no agreement reached on missile defense – Rogozin

07/01 10:11   IF RUSSIA, NATO FAIL TO COME TO TERMS ON MISSILE DEFENSE BEFORE YEAR'S END RUSSIA WILL START DEVELOPING ITS NATIONAL SYSTEM – ROGOZIN

07/01 09:46   RUSSIA'S TALKS WITH U.S., NATO ON MISSILE DEFENSE IN IMPASSE - ROGOZIN 

09:56 Absolute absence of American missile defense would be main security guarantee for Russia – Rogozin

07/01 09:24   Russia will build its own missile defense system by all means – Rogozinhttp://www.interfax.com/newsinf.asp?id=256078

Russia’s NATO envoy says the 2 have until 2018 to agree on a missile defense planhttp://www.washingtonpost.com/world/europe/russias-nato-envoy-says-the-2-have-until-2018-to-agree-on-a-missile-defense-plan/2011/06/30/AGJ3QFsH_story.html

By Associated Press, Published: June 30

WARSAW, Poland — Russia’s NATO envoy says that Moscow and the alliance have until 2018 to find agreement on a prospective U.S.-led missile defense plan in Europe.

Dmitry Rogozin said Thursday the two sides should show creativity in finding a solution that would satisfy both sides before the year 2018, when Washington would like first interceptor missiles to be based in Poland, close to Russia.

Moscow considers Washington’s plan as a potential threat to its security.

Rogozin stressed that the plan stands a chance of success only if it is implemented with Russia, and not against its interests.

He said he believes a solution will be found because NATO and the U.S. are ready to talk. Rogozin was in NATO-member Poland for talks with top security advisers.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

06:42 01/07/2011ALL NEWS

Russian, French formins to discuss Libya, relations with NATO.

http://www.itar-tass.com/en/c154/177251.html

1/7 Tass 5

MOSCOW, July 1 (Itar-Tass) —— Russian Foreign Minister Sergei Lavrov and his French counterpart Alain Juppe will meet on Friday to discuss Russian relations with the European Union and NATO and the situation in Northern Africa.

The Russian foreign ministry said the main topics will include bilateral cooperation, Russia-NATO dialogue including the planned missile shield in Europe, the situation in the Middle East and Northern Africa, and several regional conflicts.

Ministry spokesman Alexander Lukashevich said the dialogue between Moscow and Paris has reached the level of strategic partnership.

“Business cooperation gains momentum after numerous difficulties encountered at the peak of the global economic and financial crisis. The number and scope of joint projects is rapidly increasing, trade turnover and French investments in Russia are growing,” he said.

The dialogue between the two countries is based “on strict adherence to multilateral principles of modern world order, the key role of the United Nations and the primacy of international law,” he added.

French MFA: Yerevan, Baku to be submitted additional proposals on Karabakhhttp://www.panarmenian.net/eng/news/73646/

July 1, 2011 - 12:26 AMT

PanARMENIAN.Net - French Foreign Minister Alain Juppe has said that Armenia and Azerbaijan will be submitted additional proposals for resolution of the Nagorno Karabakh settlement.

“It’s sad that the meeting in Kazan did not yield results but France hails Russian President’s efforts to help the sides find a solution to the problem,” Juppe said in an interview with Echo of Moscow.

Despite optimistic forecasts and encouragement, the June 24 meeting between the Armenian, Russian and Azerbaijani Presidents ended in a statement saying that the heads of state “noted the reaching of mutual understanding on a number of questions, whose resolution helps create conditions to approve the basic principles."

The leaders of Armenia and Azerbaijan praised the OSCE Minsk Group co-chair countries for their continuous attention to the problem and once again thanked Russian President for his personal endeavors to bring the positions of the conflicting sides closer.

French arms to Libya rebels expose tensions over warhttp://in.reuters.com/article/2011/07/01/columns-us-libya-idINTRE7270JP20110701

5:30am IST

By Anis Mili

NEAR BIR AL-GHANAM, Libya (Reuters) - Libyan rebels gathered on a ridge overlooking a strategic town only 80 km (50 miles) from Tripoli on Thursday, preparing for a battle that could allow them to march directly to the seat of Muammar Gaddafi's power.

About 50 rebel fighters spent Thursday at an observation post 2 km outside the town of Bir al-Ghanam, using binoculars to try to assess the position of Gaddafi's forces.

They reached the area on Sunday after fighting in the Western Mountains southwest of Tripoli, an area where France said this week it had air-dropped arms, provoking a diplomatic storm among world powers.

A French military spokesman confirmed on Thursday a report in Le Figaro that rocket launchers and assault rifles were among arms parachuted in, prompting an angry reaction from Russia, one of many countries who have kept doors open to Gaddafi.

Russian Foreign Minister Sergei Lavrov said supplying arms was a "crude violation" of U.N. Security Council Resolution 1970, which imposed a comprehensive arms embargo in February.

Gaddafi's forces in Bir al-Ghanam know the rebels are watching them from the ridge. At one point on Thursday they fired mortars and artillery, sending people running for cover.

The town is just an hour's drive from Aziziyah on Tripoli's southern outskirts, and a similar distance from Zawiyah, which controls the coastal highway that links Tripoli to the Tunisian border and the outside world.

A trickle of fighters from around the region joined them throughout the day. Some came from Zintan, in the mountains behind them, while others said they had made their way clandestinely from Zawiyah, where Gaddafi's forces have put down two revolts since February.

The rebels encouraged more arms deliveries.

"Giving (us) weapons we will be able to decide the battle more quickly, so that we can shed as little blood as possible," senior rebel figure Mahmoud Jibril said in Vienna.

FRUSTRATION

The rebels advance in the west contrasts with little progress east of Tripoli, increasing frustration among NATO allies over a three-month-old air campaign to back the rebels that has exceeded costs and time-frames originally envisaged.

France, Britain and the United States say the air campaign will not end until Gaddafi falls. The war has become the bloodiest of the "Arab Spring" uprisings sweeping North Africa and the Middle East.

Paris says it has not violated the U.N. embargo because the weapons it gave the rebels were needed to protect civilians from an imminent attack, which a later resolution seems to endorse.

Washington agreed. "We believe that U.N. Security Council resolutions 1970 and 1973, read together, neither specified nor precluded providing defense materiel to the Libyan opposition," State Department spokesman Mark Toner said.

"We would respectfully disagree with the Russian assessment," he added.

Nevertheless, the United States had not taken steps to arm the rebels, he said.

Rebels acknowledged French support, saying it had helped sustain them in the region.

"There should be no doubt that Libyans in the Nafusa Mountain (Western Mountains) area are alive and safe today thanks to a combination of heroic Libyan bravery and French wisdom and support," Vice Chairman Abdul Hafeedh Ghoga of the Transitional National Council said in a statement.

Libyan television broadcast a statement from tribal leaders condemning French President Nicolas Sarkozy over the arms, calling the rebels in the Berber area "a product of France."

But the rebel advance toward Tripoli's southwest outskirts from the Western Mountains has not been matched by progress toward the capital from the east, where they hold Misrata on the coast about 200 km (130 miles) from the capital.

The city has been bombarded for months by Gaddafi's forces. Six rockets landed early on Thursday near the oil refinery and port. A Reuters journalist there reported no casualties.

Insurgents say Gaddafi's forces are massing and bringing weapons to quell an uprising in Zlitan, the next big town along the road from Misrata to the capital. Rebels inside Zlitan said they mounted a raid on pro-Gaddafi positions on Wednesday night and killed three men in an army patrol on Thursday morning.

NATO DILEMMA

France's weapons airlift, while possibly increasing the insurgent threat to Gaddafi, highlights a dilemma for NATO.

More than 90 days into its bombing campaign, Gaddafi is still in power and no breakthrough is in sight, making some NATO members feel they should help the rebels more actively, something the poorly-armed insurgents have encouraged.

But if they do that, they risk fracturing the international coalition over how far to go.

Russia is not involved in the air campaign, but its stance could add to reservations among some NATO countries over the air war. Moscow could also challenge Paris at the U.N. Security Council, where both are veto-wielding permanent members.

U.N. spokesman Farhan Haq said it was up to the Security Council to determine what is permitted by its resolutions.

Even before news of the French arms supply emerged, fissures were emerging in the coalition over the high cost, civilian casualties and the elusiveness of a military victory.

Gaddafi says the NATO campaign is an act of colonial aggression aimed at stealing the North African state's oil. He says NATO's U.N.-mandated justification for its campaign -- to protect Libyan civilians from attack -- is spurious.

The World Bank's Libya representative said on Thursday Islamist militants could gain ground if the conflict wears on.

"If this civil war goes on, it would be a new Somalia, which I don't say lightly. In three months we could be dealing with extremists. " said Marouane Abassi, World Bank country manager for Libya who has been in Tunisia since February.

Gaddafi's daughter Aisha told French 2 television the government was involved in talks with the rebels.

"There are direct and indirect negotiations and we should stop letting Libyan blood," she said in an interview aired on Thursday. "And for that we are ready to ally with the devil and that is the armed rebels."

(Additional reporting by Hamid Ould Ahmed in Algiers, Andrew Hammond in Tunis, Maria Tsvetkova in Moscow, Fredrik Dahl and Michael Shields in Vienna, Chris Buckley in Beijing, Andrew Quinn in Washington and London bureau; Writing by Andrew Hammond; editing by Angus MacSwan)

03:31 01/07/2011ALL NEWS

Russia wants to take CFE out of deadlock.

http://www.itar-tass.com/en/c154/177204.html

1/7 Tass 498

VIENNA, July 1 (Itar-Tass) —— Russia wants to take the issue of conventional forces in Europe (CFE) out of the deadlock and called to avoid politicizing the security issue.

“The main task today is to restore control over the armaments in Europe. It is necessary to take effort and bring the consultations to design a new framework for negotiations on conventional forces out of the deadlock,” Deputy Foreign Minister Alexander Grushko told Tass on Thursday. He heads the Russian delegation at the OSCE security conference.

“We again noted that attempts to link political problems unrelated to the interests of maintaining military security and stability in Europe with conventional forces are inadmissible,” he said.

“No vacuum in the sphere of arms control is admissible. Otherwise OSCE member-states will resort to unilateral approaches rather than collective actions in security issues,” he stressed.

“We call to actualize the Vienna document (on confidence and security-building measures) in compliance with the new situation in the sphere of security and modern trends in military buildup. The main thing is to refrain from temptation and not to use the instruments and approaches that are characteristic of the Cold War period. Modernization shall be pinpointed and aimed at reflecting in the Vienna document a new partnership character of relations between countries,” Grushko said.

Customs Union eliminates internal bordershttp://english.ruvr.ru/2011/07/01/52638485.html

Jul 1, 2011 10:27 Moscow Time

The Customs Union of Russia, Belarus and Kazakhstan has opened internal borders.

From now on, control of goods transfer and of the flow of Customs Union-bound traffic is due to be exercised on the Union’s outer borders.

The three countries’ customs officers will exchange information about each consignment of goods that they allow to enter their territory.

Russia, Belarus and Kazakhstan account for some 180 million people and boast almost 83% of the former USSR’s economic potential.

Their consolidated economy may largely grow through removing customs restrictions.

11:21 01/07/2011ALL NEWS

RF, Belarus, Kazakh PMs give high marks to work towards CES.

http://www.itar-tass.com/en/c154/177381.html

1/7 Tass 146

ULAN-UDE, July 1 (Itar-Tass) — The prime ministers of Russia, Belarus and Kazakhstan have given high marks to work towards setting up common economic space and agreed to meet in Moscow on July 12.

Russian Prime Minister Vladimir Putin held telephone conversations during a working trip to Ulan-Ude with his Belarus and Kazakh counterparts, Mikhail Myasnikovich and Karim Masimov.

“During the telephone conversations the parties gave high marks to the present state of the formation of common economic space between the three countries,” Putin’s spokesman Dmitry Peskov said.

At this stage the countries remove starting from Friday all customs checkpoints on the borders between the three countries, Peskov said. The interlocutors stated that thus Russia, Kazakhstan and Belarus have fulfilled all obligations on the formation of common customs space, Peskov added.

“Vladimir Putin noted that this is the biggest event on the territory of the former Soviet Union since its disintegration,” Peskov stressed. He also said the three prime ministers had agreed to meet in the Russian capital on July 12 for a three-party working meeting, as well as “to initiate a business forum in Moscow with participation of business circles of the three countries”.

EU Meat-Duty Demand May Pressure Russian Prices, Interfax Sayshttp://www.bloomberg.com/news/2011-07-01/eu-meat-duty-demand-may-pressure-russian-prices-interfax-says.html

By Marina Sysoyeva - Jul 1, 2011 9:55 AM GMT+0200

A European Union demand that Russia, which is in talks to join the World Trade Organization, scrap import duties for three meat quotas may pressure prices in the country, Interfax cited Russian Agriculture Minister Yelena Skrynnik as saying.

The demand is “impossible” to fulfill and would complicate domestic producers’ operations, she said today in Yekaterinburg, according to the news service. The government will proceed with WTO accession talks, it cited her as saying. Interfax gave no details on the size of the meat quotas.

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

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

10:33 01/07/2011ALL NEWS

APEC finance ministers to meet in Buryatia capital in 2012 (adds).

http://www.itar-tass.com/en/c154/177345.html

1/7 Tass 119

ULAN-UDE, July 1 (Itar-Tass) — A meeting of the APEC finance ministers will be held in the capital of Buryatia in 2012 on the threshold of the organization’s Vladivostok summit, Russian Finance Minister Alexei Kudrin said in Ulan-Ude on Friday.

He said his decision came after he had assessed preparations to mark the 350th anniversary of Buryatia’s voluntary accession to Russia. “We have seen for ourselves how friendly and hospitable the people of the republic are, and how well the local authorities can organize large-scale events,” the deputy prime minister said. Kudrin headed the organising committee for celebrations.

He said he will hold the presentation of Ulan-Ude as the venue of the APEC financial ministerial meeting already next autumn, in Honolulu.

A detailed report will be given there on Buryatia. “Not only Russia must be interested in its successful development, as Lake Baikal, whose eastern coast is situated in Buryatia, has universal importance,” Kudrin is confident.

Besides, he drew attention to the fact that problems of the world economy will be discussed in the region, which is the centre of Russian Buddhism. “This proves once again that the Asian vector is not a random choice for Russia, it has traditions in this respect that bring Russia closer to the APEC countries,” he said.

“These and other factors, like for example unique cultural traditions of Buryatia, its actively developing tourism, prove that the popularity of Buryatia will be only growing in the future,” Kudrin stressed.

Medvedev visits construction site of future federal university in Russia's Far Easthttp://en.rian.ru/russia/20110701/164943598.html

07:16 01/07/2011

VLADIVOSTOK, July 1 (RIA Novosti)

Russian President Dmitry Medvedev visited a construction site of a new federal university on the Russian Island in the country's Far East that will host the Asia-Pacific Economic Cooperation summit in 2012.

The president told Primorye Governor Sergei Darkin that in order to make the future Far Eastern Federal University prestigious "it is very important to find right teachers and famous professors, both from Russia and abroad."

Medvedev inspected several already constructed buildings on the campus area of the future university and said that he would not mind to come here in the future "to give lectures."

The Far Eastern Federal University is intended to become the largest scientific and educational center in the region for students from Russia and the Asia-Pacific region countries.

The university will boast research centers in the spheres of nanotechnologies, microbiology, medicine, telecommunications and other.

Russia accuses Georgia of politicizing humanitarian issuehttp://news.az/articles/russia/39593

Fri 01 July 2011 07:49 GMT | 9:49 Local Time

Russian Foreign Ministry has published a special statement regarding the resolution adopted by the UN General Assembly regarding the rights of IDPs from Georgia`s occupied Abkhazia and South Ossetia.

Russia asserts the adoption of the resolution would have been reasonable if the representatives of the Abkhazia and South Ossetia leaderships were taking part in the vote.

Russian Foreign Ministry also accuses Georgia of politicizing a humanitarian issue by evading Geneva international negotiations.

Russian Ministry says they would never support this kind of resolution, because it will only grow tension in the region.

`The Russian side voted against the resolution, convinced that its adoption at the UN General Assembly is fraught with an aggravation of the situation in the region, a delay in the solution of the many humanitarian issues, and the undermining of trust among the Abkhaz, South Ossetian and Georgian sides, which is an essential condition for the solution of, inter alia, the problem of refugees,`  the statement says.

Rustavi2

08:10 01/07/2011ALL NEWS

Abkhazia together with Russia forever -- Shamba.

http://www.itar-tass.com/en/c154/177286.html

1/7 Tass 103

SUKHUM, July 1 (Itar-Tass) —— Abkhazia will always follow the policy to be close to Russia, the republic's Prime-Minister Sergei Shamba told reporters here.

"Abkhazia has chosen the policy to be closer to Russia and will always follow it. Together with Russia, we implement the strategic union, which is forever, and we are sure it will only consolidate. The Russian leaders' all actions are aimed at it", he said.

It is necessary to open all the kinds of communications, he believes.

Sea transportation service is already opened, and talks are underway to open Sukhum's airport. The link will also begin working in the near future, the premier said.

The more links wil be between Abkhazia and Russia, the more benefit, he believes.

Railway service between Adler and Sukhum, suspended in February due to the large-scale repair done by Russian Railways, resumed on Thursday.

Abkhazia to pursue a policy of rapprochement with Russia http://english.ruvr.ru/2011/07/01/52636875.html

Jul 1, 2011 10:00 Moscow Time

Abkhazia will continue to pursue the policy of rapprochement with Russia, Abkhaz Prime Minister Sergei Shamba told reporters.

Abkhazia and Russia are in strategic union for centuries, and we are certain that these relations will be growing stronger as the years go by.

Russia bends every effort to secure this, he said. A railway service was launched between the two countries on Thursday.

India to get Russian Nerpa submarine by yearendhttp://en.rian.ru/mlitary_news/20110701/164947339.html

10:20 01/07/2011

ST. PETERSBURG, July 1 (RIA Novosti)

Russia will transfer the K-152 Nerpa attack submarine to India on a 10-year lease by the end of 2011, Navy commander Adm. Vladimir Vysotsky said on Friday.

"We will hand this submarine to the client by the year's end," Vysotsky said and emphasized that the Indian crew is completely trained to operate the submarine.

The lease contract, estimated at some $900 million, was drawn up after an agreement between Moscow and New Delhi in January 2004, in which India agreed to fund part of the Nerpa's construction.

The Nerpa was scheduled to be introduced into the Indian Navy as INS Chakra by mid-2008 but technical problems stalled the process.

Then, shortly after the start of sea trials in November 2008, 20 sailors and technical workers were killed onboard the submarine due to a toxic gas leak when the automatic fire extinguishing system malfunctioned. After repairs, the Nerpa is now fully operational.

Russia to supply nuclear submarine to India-RIAhttp://in.reuters.com/article/2011/07/01/russia-india-submarine-idINLDE76003M20110701

12:39pm IST

MOSCOW, July 1 (Reuters) - Russia will deliver a nuclear submarine to India by the end of the year, Russia's navy chief was quoted as saying on Friday by state news agency RIA.

India sees Russia as a strategic counterweight to China but New Delhi has been upset by repeated delays to major weapons orders from Moscow, including the Admiral Gorshkov heavy aircraft carrier.

The date for delivering the Nerpa submarine to India, Russia's close economic and political partner since Soviet days, has repeatedly been put back.

"We shall definitely supply this vessel to the customer by the end of this year," RIA quoted navy commander Admiral Vladimir Vysotsky as saying.

Vysotsky said an fully trained Indian navy crew were ready to receive the submarine, which some Russian media reported last year had already been handed over to India.

The Nerpa, an attack submarine codenamed "Akula" -- or "Shark" -- by NATO, is usually armed with torpedoes and cruise missiles. It can go down to depths of 600 metres (2000 ft) for about 100 days. It can carry 73 people.

Construction of the Nerpa began in 1991 -- the year the Soviet Union collapsed -- but funding was frozen in the chaotic 1990s and the submarine was only launched and started sea trials in 2008, according to Russian media.

Twenty people died on the Nerpa after inhaling the toxic gas used as a fire suppressant when its fire extinguishing system switched on unexpectedly at sea trials in November 2008.

The accident was the deadliest to hit Russia's navy since August 2000, when the Kursk nuclear submarine sank beneath the Barents Sea, killing all 118 sailors on board.

India agreed to buy the Gorshkov aircraft carrier and have it upgraded in 2004. But Moscow has repeatedly asked for more money and the latest price tag reported for the ship is $2.3 billion. It has still not been delivered to India. (Reporting by Guy Faulconbridge, editing by Mark Heinrich)

No need to ground MiG 29s, crash due to human error: Russiahttp://www.indianexpress.com/news/No-need-to-ground-MiG-29s--crash-due-to-human-error--Russia/811212/

Posted: Fri Jul 01 2011, 02:00 hrs

New Delhi:

After the Indian Navy raised concerns over the safety of its new fleet of MiG 29Ks following the crash of a twin-seater fighter in Russia weeks before it was to be delivered to India, Moscow has informed that there is no need to ground the fighters as the crash occurred due to a human error.

A senior official said that clarifications were sought when the incident occurred last Thursday and Russia has informed that the crash occurred when the fighter was conducting tight manoeuvres before coming in to land with full weapons on board after a test flight. “The manoeuvres were being conducted at a low altitude that probably should not have been done,” an official said.

The Navy was specially concerned about the crash as the fighter in question was to be delivered to it over the next few weeks as part of the deal for 16 carrier borne fighters being procured for the Gorshkov aircraft carrier.

Russian Navy expects to receive three nuclear submarines by yearendhttp://en.rian.ru/mlitary_news/20110701/164947229.html

11:47 01/07/2011

ST. PETERSBURG, July 1 (RIA Novosti)

Russian Navy plans to receive three nuclear submarines by the yearend, Navy commander Adm. Vladimir Vysotsky said on Friday.

"These are nuclear-powered multipurpose attack submarine Severodvinsk, and a strategic nuclear submarine Yuri Dolgoruky," Vysotsky said. "And we are planning [to receive] ... Alexander Nevsky [strategic submarine]."

He said these plans are optimistic but quite real.

07:33 01/07/2011ALL NEWS

Russia detains four poaching vessels under Cambodia flag.

http://www.itar-tass.com/en/c154/177266.html

1/7 Tass 64

VLADIVOSTOK, July 1 (Itar-Tass) —— Russian coast guards detained four poaching vessels flying the flag of Cambodia near Sakhalin in the past days. Warning shots had to be fired to force the Atika fishing boat to stop, the Sakhalin coast guard service said in a press release on Friday.

Besides Atika, Adams, Iris and Sirius-7 boats were detained with a total of 44 tons of live crab which the coast guards released back into the sea.

The prevented damage was estimated at over 38 million rubles.

Sakhalin coast guards said they detained 22 poaching boats in the past two months. Over 230 tons of live seafood were released into the sea and the prevented damage is estimated at 300 million rubles.

Ten criminal cases were instituted against the captains of poaching vessels and fines worth 12.7 million rubles were imposed.

Russian sailboat Pallada set for international trans-Pacific expeditionhttp://en.rian.ru/russia/20110701/164941773.html

03:44 01/07/2011

VLADIVOSTOK, July 1 (RIA Novosti)

The Russian sailing vessel Pallada sets off on Friday from Vladivostok in Russia's Far East for an over three-month international trans-Pacific expedition, a spokesman for the Far Eastern State Technical Fisheries University, which owns the vessel, said.

The expedition is dedicated to the 50th anniversary of Yury Gagarin's first space flight and to the 270th anniversary of discovery of the Russian America by Russian seafarers.

"The new expedition of the Pallada will last over three months. The route of the sailboat stretches along the coast of North America, the lands that were discovered by Russian

seamen in the middle of the 17th century and which are Alaska and the Aleutian Islands. The sailboat with cadets onboard will pay visits to ports of the United States, Canada and Japan," the spokesman said.

Russian President Dmitry Medvedev, who paid a visit to Vladivostok on Thursday, also visited the Pallada and met with the cadets and the crew of the vessel.

The three-mast Pallada is listed in the Guinness Book of Records as the fastest sailing vessel in the world, with a speed exceeding 18 knots.

The sailing ship, the winner of many international festivals and races, has performed over 100 international trips over 13 years. It has also been visited by many famous people, including Jackie Chan and Arnold Schwarzenegger.

Russia's Progress M-11M set to make another correction of ISS orbithttp://en.rian.ru/science/20110701/164940749.html

02:13 01/07/2011

MOSCOW, July 1 (RIA Novosti)

Russia's Mission Control will make another adjustment of the International Space Station (ISS) orbit on Friday using Progress M-11M cargo ship, a spokesman for Mission Control said.

The previous correction of the station's orbit was conducted on Wednesday after Russia's Progress M-11M raised it by 3.6 km (2.2 miles) to 384.7 km (239 miles).

On Friday, at 16:00 Moscow time (12:00 GMT), the space freighter will raise the ISS orbit by another 3.6 km (2.2 miles) to 388.3 km (241 miles).

Progress M-11M cargo ship docked with the International Space Station on June 23, three days after it was launched atop a Soyuz-U carrier rocket from the Baikonur space center in Kazakhstan.

It delivered to the ISS 2.5 tons of expendables, including fuel, water and food, particularly green apples, lemons, oranges, onions and garlic.

Progress-family freighters have been the backbone of the Russian space cargo fleet for decades. In addition to their main mission as cargo spacecraft, they are used to adjust the ISS's orbit and conduct scientific experiments.

Corrections to the space station's orbit are conducted periodically before launches of Russian cargo ships and U.S. shuttles to compensate for Earth's gravity and to safeguard successful dockings.

10:34 01/07/2011ALL NEWS

Three more men injured in HPP fire died at hospital in Surgut.

http://www.itar-tass.com/en/c154/177346.html

1/7 Tass 122

TYUMEN, July 1 (Itar-Tass) —— Three workers of a power plant in Surgut, who were injured in a blast and subsequent fire at the plant on June 28, have died of sweeping burns at a Surgut-based clinic, a source in the clinic told Itar-Tass on Friday.

Artem Tishchenko died late on Thursday, Viktor Ignatenko died overnight, and Anatoly Tsukanov died early on Friday, the source said.

According to previous reports, another worker, Vladimir Balasov, died earlier on Thursday, also of sweeping burns.

Eight more persons injured in the accident are still getting treatment at hospitals in Surgut. One of them is in critical condition.

A gas explosion occurred early on Tuesday at a gas distributing unite of the Surgut power plant, the explosion was followed by fire. A total of 12 persons were hospitalised with burns. According to preliminary data, the blast occurred when a cap at an inner section of the gas pipeline, under repairs at the moment, was removed. The blast sent the remaining gas on fire.

A criminal case over the accident was opened.

09:07 01/07/2011ALL NEWS

Woman injured in Vladikavkaz gas explosion dies, toll rises to 3.

http://www.itar-tass.com/en/c154/177308.html

1/7 Tass 109

VLADIKAVKAZ, July 1 (Itar-Tass) —— A 53-year-old woman injured in the gas explosion during a wedding in Vladikavkaz died in the city's first aid clinic overnight. Thus, the death toll has risen to three.

Earlier, a 76-year-old man who had severe burns died in a Vladikavkaz hospital, and a woman died in a Moscow clinic. She was in very heavy condition.

Doctors are seriously concerned over the state of other four patients.

The explosion occurred in central Vladikavkaz last Saturday. A gas tank exploded at a private house where a wedding was celebrated at the time. Fifty five people, including six children, were injured. All of them had burns.

Firefighters in Russia's Far East put out all but one forest fireshttp://en.rian.ru/russia/20110701/164942810.html

05:49 01/07/2011

KHABAROVSK, July 1 (RIA Novosti)

Rescuers and firefighters in Russia's Far East put out seven forest fires out of eight raging in Russia's Far East over the past 24 hours, a spokesman for the local emergencies ministry's department said on Friday.

"Only one active forest fire was registered in the Far Eastern territory as of 8:00 local time Friday [21:00 GMT Thursday]. The fire is located on the territory of the Chukotka autonomous district and covers an area of eight hectares," the spokesman said.

Russian President Dmitry Medvedev completes on Friday his two-day visit to the Far Eastern city of Vladivostok, which prepares to host the Asia-Pacific Economic Cooperation (APEC) summit in 2012.

Wildfires in forested regions of Russia are common during the dry and hot summer season. Most of the time, the fires start because of the careless behavior of local residents in the woods.

Forest fires devastated a number of regions in central Russia last summer, killing 62 people and leaving thousands homeless.

Russian court bans Scientology bookshttp://www.kyivpost.com/news/russia/detail/107840/

Today at 08:55 | Associated Press

A court in a Moscow suburb has banned works by the founder of the Church of Scientology, officials said Thursday.

The Shchyolkovo court ruled that "What is Scientology?" and other books by L. Ron Hubbard "contain calls for extremist activities," the Prosecutor General's office said in a statement.

It said that once the court decision comes into force, scientology books will be put on the federal list of extremist materials banned for release throughout Russia. The court made the ruling following a request by local prosecutors.

Attempts by Russian authorities to ban Scientology literature have been overturned recently. In May, the Russian Justice Ministry removed Hubbard's books from the list of banned literature after a decision by a court in Siberia was overturned.

Scientology officials said they would protest the latest court decision.

"There have been many legal violations, the case is unfounded and the trial was hasty," the group's attorney Sergei Korzikov told The Associated Press. "We could not defend our legal interests."

The group's spokesman in Russia, Yuri Maximov, said that Russia is home to "tens of thousands" of Scientology devotees. Russian media have claimed that some powerful businessmen and officials are among Scientology adepts.

Russia's dominant Orthodox Church has denounced Scientology as a "totalitarian sect," and the European Court of Human Rights ruled that Moscow city authorities infringed on the group's rights by repeatedly refusing to register it. In 2007 and 2009 the Strasbourg-based court issued decisions upholding the rights of Russian Scientologists to practice their religion free from unlawful government interference.

Hubbard, a science fiction writer, founded the Los Angeles-based Church of Scientology in 1954. It teaches that technology can expand the mind and help solve problems.

The group claims 10 million members around the world, including film stars Tom Cruise and John Travolta.

Scientologists say that there are more than 280 million copies of Hubbard's books distributed around the world.

Belgium, Germany and other European countries have been criticized by the U.S. State Department for labeling Scientology as a cult or sect and enacting laws to restrict its operations and monitor its activities.

Read more: http://www.kyivpost.com/news/russia/detail/107840/#ixzz1QpcsWeaz

Paris plays host to Orthodox forumhttp://english.ruvr.ru/2011/07/01/52638888.html

Jul 1, 2011 10:37 Moscow Time

The Orthodox Youth Forum is opening in Paris today, for the first time since the Moscow Patriarchate and the Russian Orthodox Church established canonical communication in 2006.

The purpose of the forum is to establish communication between young people from different countries and introduce them to new kinds of church and missionary activities.

Russians to get new domestic passportshttp://english.ruvr.ru/2011/07/01/52636731.html

Jul 1, 2011 09:55 Moscow Time

New internal passports are issued to Russians as of today. Compared to passports of the previous standard, they boast two more lines of special purpose inscription that can only be read by a scanner.

The inscription contains all information about the passport holder and will therefore make it easier to buy tickets, and perform banking transactions, and will also simplify a number of other services.

The old standard passports that were issued prior to July 1st will remain effective until expiry.

12:07 01/07/2011ALL NEWS

Court in Arkhangelsk Reg to consider Platon Lebedev parole appl.

http://www.itar-tass.com/en/c154/177410.html

1/7 Tass 135

ARKHANGELSK, July 1 (Itar-Tass) — The Velsk district court in the Arkhangelsk Region plans to consider ex-Menatep CEO Platon Lebedev's parole application on July 26, regional court press secretary Ksenia Solovyova told Itar-Tass on Friday.

Moscow's Khamovniki court on December 30, 2010, sentenced ex-Yukos head Mikhail Khodorkovsky and ex-Menatep head Lebedev to 14 years in prison for oil theft and money laundering. The defendants and their attorneys appealed against the decision. As a result, the Moscow city court on May 24 shortened the imprisonment term by one year. Thus, the term for Khodorkovsky and Lebedev lasts till 2016. The sentence has come into force.

The convicts filed parole applications in Moscow, as they had served more than half of the term, including over the first criminal case. But the applications were returned to their attorneys because the convicts were transferred to the Arkhangelsk Region and Karelia. Lebedev is in Corrective Colony No 14 in Velsk at present.

PRESS DIGEST - Russia - July 1http://af.reuters.com/article/energyOilNews/idAFLDE7600A420110701

Fri Jul 1, 2011 7:27am GMT

MOSCOW, July 1 (Reuters) - The following are some of the leading stories in Russia's newspapers on Friday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- Russian President Dmitry Medvedev on Thursday criticised preparations for the 2012 APEC summit in Vladivostok, the daily writes.

- Russia's Constitutional Court on Thursday permitted state officials, including policemen, to publicly express their opinion on issues of public interest and disclose illegal deeds of officials, the paper writes.

- The Russian government will pay 40,000 ($1,435) to 120,000 roubles ($4,306) to those unemployed who will want to move to another region for work, the daily says.

VEDOMOSTI

www.vedomosti.ru

- Russian lawmakers delayed adoption of a law which will allow the Constitutional Court to block decisions by the European Court of Human Rights, the paper says.

- Prime Minister Vladimir Putin said on Thursday that more than 1 trillion roubles ($35.88 billion) will be invested in Novatek's (NOTK.MM) Yamal LNG project, the daily says.

- Kraft Foods Inc (KFT.N) is considering selling Moscow's oldest confectionary factory, the paper says.

NEZAVISIMAYA GAZETA

www.ng.ru

- Customs checks on the borders between Russia, Belarus and Kazakhstan will be moved starting Friday to the external borders of the three states, the paper says.

Russian Press at a Glance, Friday, July 1, 2011http://en.rian.ru/papers/20110701/164944285.html

08:30 01/07/2011

POLITICS

Russian President Dmitry Medvedev paid a visit to Far East to see how the region prepares to host Asia-Pacific Economic Cooperation summit in 2012. The president criticized the preparations and urged the local authorities to speed up all works.(Kommersant)

Vladimir Putin gave a cryptic hint as to his possible participation in the 2012 presidential polls, saying that he would need to “wash” himself after the elections.(Kommersant, Nezavisimaya Gazeta, Rossiiskaya Gazeta, The Moscow Times)

Russian Foreign Minister Sergei Lavrov attended a meeting of the State Duma international committee that discussed protection of Russian nationals' rights abroad.(Rossiiskaya Gazeta)

In an interview with Vedomosti daily Russian tycoon and leader of Right Cause political party Mikhail Prokhorov speaks about why he abandoned business and about his political ambitions.(Vedomosti)

ECONOMY & BUSINESS

Customs offices on the world's longest land border, between Russia and Kazakhstan, will be closed indefinitely starting Friday as a new international free-trade zone comes to fruition.(The Moscow Times)

Expert RA rating agency found that large corporations in Russia are the least involved in research and development. Foreign corporations finance more than 65 percent of their countries' total R&D compared to 20 percent for Russian corporations.(The Moscow Times)

ENERGY

Russia's gas export monopoly Gazprom boosted gas exports to Europe by 26 percent year on year in the first half of 2011, Gazprom CEO Alexei Miller said.(Nezavisimaya Gazeta)

DEFENSE

Russian Defense Minister Anatoly Serdyukov said the ministry will provide extra safety measures at the country’s arms depots following last month’s incidents.(Rossiiskaya Gazeta)

The Russian Navy is planning to test launch the Bulava ballistic missile from the Alexander Nevsky strategic submarine later this year.(Nezavisimaya Gazeta)

WORLD

Ninety nine people have been hospitalized in Athens in clashes between police and demonstrators protesting an unpopular government austerity program.(Nezavisimaya Gazeta)

TRANSPORTATION

Reconstruction of landing stripes in the Moscow Vnukovo airport has been completed. The airport becomes fully operational again starting Friday.(Rossiiskaya Gazeta)

MOSCOW

Authorities of the Russian capital and the Moscow Region will soon begin talks on the expansion of the Moscow borders into the region, as was earlier proposed by President Dmitry Medvedev.(Kommersant)

CULTURE

The founder of Moscow's famed Taganka Theatre, Yuri Lyabimov, once again confirmed his intention to quit the theatre he had led for nearly half a century due to a row with actors over pay.(Rossiiskaya Gazeta)

SPORTS

Russia's Maria Sharapova is on her run for another Grand Slam trophy as she defeated Germany's Sabine Lisicki 6-4, 6-3 to advance to the Wimbledon finals.

(Kommersant, Rossiiskaya Gazeta)

A geopolitical game on the Roof of the Worldhttp://rt.com/politics/press/nezavisimaya/russia-military-us-tajikistan/en/

Published: 1 July, 2011, 04:11Edited: 1 July, 2011, 04:15

Moscow and Washington’s interests have yet again collided in Tajikistan Viktoria Panfilova

Two military-political delegations arrived in Dushanbe on Wednesday: Russia was represented by the head of the presidential administration, Sergey Naryshkin, and defense minister, Anatoly Serdyukov, and the United States by the assistant secretary for the Bureau of International Narcotics and Law Enforcement Affairs, William Brownfield. Both parties were interested in issues concerning border security and establishing their military bases on the territory of the republic.  

While President Emomali Rahmon was meeting with Sergey Naryshkin and Anatoly Serdyukov on Wednesday, the US official was sent to inspect the country’s southern borders. He met with the head of state on Thursday. At the Tajik border, the US assistant secretary took part in the opening of barracks in the Sharabad Border Guard Detachment and a new frontier post at Yakhchi-Pun, the construction of which cost the USU more than $1.6 million. This is not the first project implemented by the US authorities on the Tajik-Afghan border. After the Russian border guards withdrew six years ago, the US began upgrading the frontier posts and re-arming the border guards. According to the US Embassy in Tajikistan, since 1992 more than $984 million has been invested into programs promoting the development of law enforcement agencies and security. This time in Dushanbe issues concerning Tajik-Russian military co-operation and Russian President Dmitry Medvedev’s upcoming visit to Tajikistan, scheduled for early September, were discussed. Following the talks, Anatoly Serdyukov did not appear before the press.           

However, an optimistic, yet at the same time intriguing, announcement was made by Sergey Naryshkin. In particular, he said that the main documents to be signed in the course of Dmitry Medvedev’s visit have already been determined. “They include a program for bilateral economic cooperation in 2011-2014, as well as a border co-operation agreement between Tajikistan and Russia,” said Naryshkin. In regard to the presence of the 201-st Russian base in the country, Naryshkin said that “orders had been issued to both sides related to the status and further stay of the base in Tajikistan.” He stressed that it was not only in Russia’s interests, but also in the interests of Tajikistan.”  

“The reason for Naryshkin’s optimism is not quite clear because, objectively, the sphere of Russian interests in Tajikistan is narrowing, just as it is in the entire region,” Aleksandr Knyazev, senior researcher at the Institute of Oriental Studies, told Nezavisimaya Gazeta (NG).

According to him, “having declared the withdrawal of troops from Afghanistan, the Americans are strengthening their positions in all of the republics in the region. American units are in full control of the Uzbek-Afghan border and a large part of the Tajik-Afghan border in Afghanistan. Talks are ongoing about the establishment of new full-featured US military facilities on the territories of Tajikistan and Kyrgyzstan. In particular, this includes establishing US military bases in Batken in Kyrgyzstan, in the Ayni and in Fahrabad in Tajikistan, perhaps in Murghab, Pamirs, in direct proximity to China,” said Knyazev. This is evidenced by the dynamics of high-ranking US diplomats and military officials’ visits to Dushanbe. “Against this background, Naryshkin and Serdyukov’s talks look less than modest,” says the expert.         

President of the Academy of Geopolitical Studies, Leonid Ivashov, agrees with these assessments, and asserts that Russia is being pushed out of Central Asia, on the one hand by China, which following the liquidation of Osama bin Laden declared Pakistan its zone of responsibility, and on another, and even more forcefully by the United States. “Regional configuration is changing. And in order to establish its military presence here, which is a determining factor, Washington is taking control over the local elite by all means possible. In the state of crisis, amid the cooling of relations with Russia, Tajikistan is preparing for a long-term US presence on its territory. Soon all the countries in the region, starting with Afghanistan and ending with Turkmenistan, will be dotted with military bases. And they won’t be Russian,” Leonid Ivashov told NG.  

This is also being recalled in Dushanbe. “Today the region is gaining in significance for the West. The US and European interests in Central Asia will expand. Dushanbe has the opportunity to find a new form of constructive relations with its partners, including Russia,” Sukhrob Sharipov, director of the Center for Strategic Research under the President of the Republic of Tajikistan, told NG. In his opinion, Tajikistan is a more reliable ally of Moscow in the military sphere. “Since Soviet times, the 201-st military base has been deployed in the republic free of charge. The Okno (Window) optical fiber complex in Nurek, which could bring profits to the republic each year, was transferred practically free of charge. And what did we get in return? Today, Dushanbe is no longer expecting anything from Moscow, as it understands that it will not keep any of its

promises,” noted Sharipov. He believes that if Russia intends to continue its military presence in the republic, then it must pay.     

“Tajikistan has set forth its demands: if you want Ayni, then pay, just as you are paying in Kazakhstan, and Azerbaijan. Why doesn’t Moscow want to pay Tajikistan?” asked the Tajik political scientist. Moscow, meanwhile, disagrees with Dushanbe’s conditions. Apparently that is the reason why talks regarding the deployment of the 201-st base and the use of the Ayni airfield have gone on for three years. Russian units of 6,800 people are stationed in Dushanbe, Kulyab, and Kurgan-Tyube. In 2004, a document was signed for a period of 10 years, on the basis of which the Russian base is stationed in Tajikistan. Not long before the contract expires, the republic’s officials suggested setting the partnership on a commercial track and presented a bill for $300 million. In Moscow’s opinion, that is an inflated amount. “This is typical eastern bargaining. It would be more logical for Tajikistan to agree on gradual payments, rather than on the payment of the entire amount at once,” Azhdar Kurtov, a leading expert with the Russian Institute of Strategic Research, told NG. He believes that Russia is not ready to pay a lot of money. But, as was noted by Sergey Naryshkin, talks regarding the use of the Ayni airfield continue, “the process is in good condition”, he said.    

According to Azhdar Kurtov, today it is important for Russia to have Ayni at its disposal because aerial capabilities are the leading component in modern warfare. This has been shown by the events in Iraq, Afghanistan and Libya. The expert believes that it would be more logical to use the Ayni airfield within the framework of the CSTO, such as Kant (Kyrgyzstan), where an aerial division of the regional organization is deployed. “It’s another issue that not all of the CSTO states are able to fund their air force presence. But it’s not right to demand money from only one country. Besides, the price of Ayni will hardly exceed $10 million. There are no plans to deploy a large military contingent there,” noted Kurtov.  

Experts say Russia’s desire to use the Ayni airfield could be supported financially through investments and discounts on petroleum supplies. “In politics, there are no ideals, its basis are interests, which not only Russia has. And the niche which Russia had occupied in Tajikistan, partially due to the post-Soviet inertia, is now becoming increasingly more narrow,” Knyazev told NG.

Russia’s stage-managed politicshttp://www.washingtonpost.com/opinions/russias-stage-managed-politics/2011/06/27/AGQ4ulsH_story.html

By Editorial, Friday, July 1, 2:21 AM

A FAMILIAR political drama has played out in Moscow as Russia’s autocratic rulers prepare to stage elections for parliament and president in the next nine months. First, a

coalition formed by the country’s leading liberal opposition figures was denied registration as a political party last week, supposedly on technical grounds — making it the ninth such party to be turned down in the past four years. Days later, a billionaire businessman with close ties to President Dmitry Medvedev was suddenly installed as leader of a previously dormant party called Right Cause, which describes itself as the pro-business alternative to the left-leaning United Russia party founded by Vladimir Putin.

Presto: Russia’s upcoming elections will feature a choice, other than Mr. Putin’s party and fringe players such as the throwback Communists. There will be no monopoly on power, the Kremlin’s spokesmen can say. But there will also be no opposition to the Putin-Medvedev regime — as Mikhail Prokhorov, the newly minted Right Cause leader (and owner of the New Jersey Nets NBA franchise) was quick to make clear. “Let’s forget the word ‘opposition,’ ” he said on accepting his new office. “There should be two parties of power, while there is only one now.”

The Kremlin’s tactic is not a new one. Official alternative parties were a standard feature of the Soviet bloc; in the 2007 parliamentary election, one called Fair Russia sprang up. If there is something slightly intriguing about Mr. Prokhorov’s vehicle, it is the indications that it serves the purposes of Mr. Medvedev, who is engaged in opaque deliberations with Mr. Putin to determine which one of them will be the regime’s candidate for president next year. Mr. Prokhorov echoes some of Mr. Medvedev’s ideas: that political power in Russia should be decentralized; that the economy badly needs to attract foreign investment; that corruption and lawlessness are serious problems. After the two met on Monday, Mr. Medvedev said that Mr. Prokhorov’s “ideas in some way correlate with my proposals.”

Western governments may be tempted to seize on this development as a seed of genuine pluralism in Russia — just as Mr. Medvedev has been courted by the Obama administration as an alternative to Mr. Putin. But true political competition will come when the regime agrees to allow movements it does not create or control to operate freely, to assemble without being assaulted by security forces, to have access to television and to register for elections. The State Department rightly objected when the Party of People’s Freedom — the real opposition — was denied registration. It is on seeking space for such groups, and not Mr. Medvedev’s Potemkin initiative, that the focus of U.S. policy should remain.

Putin says Russia faces dirty election campaignhttp://in.reuters.com/article/2011/07/01/idINIndia-58011220110701

11:54am IST

By Darya Korsunskaya

YEKATERINBURG, Russia (Reuters) - Prime Minister Vladimir Putin said on Thursday he will have to clean up Russia's politics next year after a presidential election campaign that will inevitably be dirty, but stopped short of saying whether he will run himself.

Many experts believe Russia's most popular politician will seek to return to the Kremlin in a March vote after being required to step down as president in 2008 following two consecutive terms. Russia also elects parliament in December.

Putin has yet to say whether he will run for president, but he made clear to supporters at a regional conference of his United Russia party that he plans to play a significant role in the election campaign.

Asked what he would do the day after the March presidential vote, he said: "I shall go wash, in the hygienic sense of the word but also in the political sense".

"After all the campaigns which we shall have to endure, you have to be properly hygienic. Unfortunately, this is an inevitable process," he said.

Putin's remarks appeared aimed at portraying the parliamentary and presidential votes as hard-fought contests, contradicting political opponents who say government control of the levers of power means results are preordained.

Putin's remarks also sounded like a warning to opponents of United Russia that they were in for a no-holds-barred battle.

"As Churchill said: Democracy is the worst form of government but there is no better one," Putin said in the Urals city of Yekaterinburg.

Putin and his protege, President Dmitry Medvedev, have indicated one of them, but not both, will run in the presidential election. The decision is expected to take place around the parliamentary election in December.

Putin has already told his party, which holds two-thirds of the seats in the State Duma, to concentrate on the parliamentary poll in December 2011. Its popularity fell in June to its lowest level since Putin became prime minister in 2008, a poll showed on Wednesday.

"If we want United Russia to be an effective political instrument, to meet the challenges, it should be open to new faces and fresh ideas," Putin said. "There is nothing to be afraid about."

Putin has created a new movement linked to United Russia, known as the All-Russian People's Front, aiming to broaden its role beyond politics into other areas of civil society. Critics compare the front to the Soviet Union's Communist Party which was given a pervasive role in all walks of life.

Vladimir Yakunin, head of state-owned railway monopoly Russian Railways which employs over 1 million people across the country, said he wanted his entire company to join the front as members. Putin suggested that was not what he had in mind.

"We are against membership (in the Front) on orders from above so that work is done according to bureaucratic, administrative rules," Putin told the party conference. "It can only discredit the idea.

(Reporting by Darya Korsunskaya; Writing by Guy Faulconbridge and Gleb Bryanski)

Opposing the Oppositionhttp://www.foreignpolicy.com/articles/2011/06/30/opposing_the_opposition

As the billionaire New Jersey Nets owner steps into his new role as Kremlin-approved opposition leader, what do voters actually think? BY JULIA IOFFE | JUNE 30, 2011

MOSCOW — Dodging yet another question at the St. Petersburg Forum two weeks ago about whether he'll re-seek the presidency, Dmitry Medvedev requested that "people be patient for a little while, to keep up the intrigue and the suspense." He added, "That will be more interesting." And yet, there seems to be movement in that inscrutable Moscow summer swamp of intrigue. Finally, things are happening. Finally, things are getting interesting.

To wit: On Saturday, billionaire Mikhail Prokhorov was easily elected leader of the Right Cause Party* at the party's congress, just as expected. Speaking ex tempore, Prokhorov delivered a rather spicy, provocative speech. "Our country is called the Russian Federation, but judging by the leadership it is an empire where only the executive branch is working," he said. He spoke of an ongoing 100-year civil war in Russia, and laid out an ambitious, liberal party platform: slashing defense spending, introducing voluntary army service, returning power to the regions, reinstating the elections of mayors, and introducing the election of police chiefs and judges. He even said that political prisoners Mikhail Khodorkovsky and Platon Lebedev should be paroled.

These ideas are usually propagated by the liberal opposition and are therefore roundly ignored by the state. But this is a billionaire, the third-richest man in Russia -- a position one cannot maintain without the Kremlin's warm feelings -- voicing them. What's more, all of this was carried on national TV, still the only real way that information can be broadly disseminated here and therefore a medium that tends to bar messengers of such liberal ideas. Arkady Dvorkovich, the president's economic advisor, weighed in later on Twitter. "The majority of the issues voiced by Prokhorov are attractive to me," he said. "Some needed to be discussed further." And as if this weren't enough, Medvedev himself

decided to meet with the leader of this marginal, liberal party with no parliamentary representation to tell him that "some of your ideas line up with my own." Some of these ideas, the president said, are "revolutionary."

This is not particularly difficult to decipher. As I wrote earlier, the Right Cause Party is a Kremlin attempt to co-opt the well-educated, well-traveled, and well-off liberals increasingly dissatisfied with the system. Within the Russian political spectrum, they fall to the right. The idea is to create for this tier-two elite a party that would bring them into the system. It would also provide a steam valve for the so-called "pragmatists," liberals stuck in the increasingly stodgy and corrupt ruling party, United Russia. Leonid Gozman, the co-founder of Right Cause, has been very open about this. Prokhorov has been, too. "Let's forget the word 'opposition,'" he said at the party congress Saturday. "This is a word linked to marginal parties that have lost their connection to reality long ago."

This isn't a vague reference. Prokhorov is calling out specific parties: Yabloko, the party of the first generation of post-Soviet liberals, all the other failed parties of the next decade, and their latest incarnation, the Party of the People's Freedom, shortened as Parnas. The party is led by four liberal, ousted veterans of government: Boris Nemtsov, a prime minister under Yeltsin; Vladimir Ryzhkov, a former speaker of parliament; Vladimir Milov, a former deputy energy minister; and Mikhail Kasyanov, once a prime minister known as "Misha 2 percent" for his skimming of the proverbial milk. Their experience in government makes them obvious choices to a Westerner searching out democratic heroes, but to a Russian their experience taints them, and their fractiousness is still more of a turn-off.

While Prokhorov was delivering his "revolutionary" speech, Parnas was picketing across town. A couple days earlier, Parnas's official petition to register as a party -- and enter December's parliamentary election -- had been denied because 40 people on their list of 46,148 signatures were found to have been dead or minors or had recanted their support of the party. ("Those who recanted told us they had done so because of pressure from the Interior Ministry [the police] and the FSB," Milov told me.)

Parnas's position is vague -- it was founded as an anti-corruption party. But its target demographic is the white-collar, increasingly frustrated middle class; that is, exactly the same as the target demographic of Right Cause. Gozman makes no secret of this. "Our goals coincide 100 percent," he said. And both Parnas and Right Cause could be called "marginal," as Prokhorov put it: Parnas clocked in with 3 percent in Levada's most recent poll; Right Cause got only 1. The difference? Gozman said, "We believe more in working inside the system." Which is a strange thing to say since Parnas is also trying to work inside the system: It is trying to run for parliament and eventually to field a presidential candidate. But Gozman meant something else.

Right Cause is not about working inside the system, it is about being the system. Back in 2006, Vladislav Surkov, the master puppeteer of Russian politics, told a congress of another party that became A Just Russia, that Russia needed a two-party system. "Society doesn't have a ‘second leg' onto which it can shift its weight when the first leg has fallen

asleep," he said at the time. "Russia needs a second large party." That is, a second "party of power" to dilute -- mostly in appearance -- the monopoly of United Russia. And so Surkov created A Just Russia, a vaguely socialist party designed to appeal to the pensioners who were then taking to the street over their shrinking social benefits and pensions. Part of the platform, therefore, was progressive taxation and a luxury tax. Those measures never became a reality, but A Just Russia became the second leg. It was a voice of opposition in the Duma, constantly criticizing United Russia and voting against it. Which, of course, never meant anything because the party has only 38 seats out of 450.

This is the box-ticking formality that's come to be known in Russia as "managed democracy." This is Vladimir Putin's credo for controlling the rudder, for choosing how to react to external stimuli from the masses. Five years ago, the thorn in Putin's side was geriatric rioters who remembered the glory days of the Soviet welfare state, so the state response was to shower them with oil money and to create a party that purported to be about their interests while not actually having the power to do anything about them.

These days, the group giving the Kremlin the most grief is the so-called "office plankton," the young people who see what life is like in the West, who want some control over their future, who are nauseated by the corruption around them -- not out of envy, but on principle. This is the Russian bourgeoisie: people who have far more money than power, which is why they donate millions of rubles to anti-corruption crusader Alexey Navalny.

Were these bankers and managers to form their own party, it would be small -- Levada estimates that they make up, at most, 15 percent of the Russian population -- but it would still insert some unpredictability into the game, which the Kremlin cannot tolerate. The answer, of course, is to create a party modeled after the one that is already starting to form on its own, install a fully loyal leader, and give it a seat at the table. This is why Medvedev has just proposed a law lowering the electoral barrier to 5 percent, from 7. (Right Cause's goal, Prokhorov keeps saying, is second place in the Duma, which, given the crushing majority United Russia will undoubtedly retain, will be rather small: 5 to 7 percent of seats, according to Boris Gryzlov, the current speaker of the Duma.)

Arithmetically speaking, it's strange that, even after the A Just Russia experiment, talk in the Kremlin and around Prokhorov's party continues to be about creating a two-party state. A Just Russia, so far, hasn't gone anywhere, nor have the Communists or the right-wing nationalists at the Liberal Democratic party, which are also of the loyal "systemic opposition." That's five state-certified parties. Do those other parties not count? Are A Just Russia and Right Cause going to share the title of "second leg"? Or will there now be three legs?

And there's another question: Who will vote for this new second -- or third -- leg? Will the target demographic -- highly educated and thoroughly cynical -- buy it? Milov pointed out that the pragmatists who put results above the unsavoriness of certain bedfellows, are probably already voting for United Russia. That party, after all, still has all the resources; why bet on a new, unproven quantity?

I called a friend who helps run a fairly well-known bank in Moscow to ask him what he thought. He is in his 30s, wealthy, property-owning, globe-trotting, and a Russian patriot. He asked not to be named, because bankers, he said, should remain apolitical managers, like the Swiss. "Personally, though, I don't really believe in this," he said of Prokhorov's party. "It's just another political technology, as they say. Clearly, they have to carve up public opinion into several channels and maintain their rule." The December parliamentary elections are irrelevant to him. He said, "What's the point of choosing while not having a choice? Even without me, they'll split up the votes. Even without me, everything will be just fine."

*In a previous article, we translated the party name as "Just Cause." A less confusing, and more widely accepted translation of the name is "Right Cause."

Special prosecutors for senior officialshttp://rt.com/politics/press/gazeta-ru/special-prosecutor-committee-investigation/en/

Published: 1 July, 2011, 06:50Edited: 1 July, 2011, 07:04

The State Duma has received a draft law on the establishment of the institution of independent prosecutors Ekaterina Vinokurova, Svetlana Bocharova

Independent prosecutors, similar to those in the United States where they initiated the Watergate and Monica Lewinski trials, could appear in Russia. Special prosecutors will have the right to investigate the activity of senior government officials, including the heads of the Prosecutor General’s Office, the Investigation Committee, and the Government. A corresponding bill has been submitted to the parliament where it has a high chance of passing, say security officials.

The chairman of the Federation Council Committee on Legal and Judiciary Issues, Anatoly Lyskov, had submitted a draft law to the State Duma, in which he suggests creating the institution of special prosecutors in Russia. They will be empowered to examine the work of the subordinates of the Prosecutor General’s Office and the head of the Investigation Committee, members of the government, as well as other senior government officials following their resignation.

Lyskov told Gazeta.Ru that, according to his proposal, officially the collegium will be part of the prosecutor’s office, and its members will be given the status of deputy prosecutor general. However, the prosecutor general will not have the right to fire special prosecutors. Only the Federation Council, which will approve members of the collegium, will be able to dismiss them.

The collegium of prosecutors will work on inquiries made by the president, both houses of the parliament, as well as conduct its own investigations in the event of senior officials’ reports on violations committed by their “subordinates”. According to Lyskov, this will contribute to the independence of the new body during investigations, including of the highest ranks in the Prosecutor General’s Office.

The collegium of prosecutors, according to Lyskov’s concept, must consist of 17 people appointed to serve an eight-year term by the Federation Council by analogy with the prosecutor general. Five candidates each will be nominated by the president, the Federation Council, and the State Duma, and another two shall be nominated by the human rights ombudsman.

The collegium will have the right to examine the work of senior officials at the Prosecutor General’s Office and the Investigation Committee, work with the documents from the parliamentary investigations of the State Duma and the Federation Council, and at the request of the president, conduct preliminary investigations of actions of heads of ministries and state agencies, immediately subordinate to the head of state, including the prime minster.

Former high-ranking officials also will not be able to sleep in peace. Special prosecutors will be empowered to investigate reports on violations committed by officials who resign during their time in office including speakers of the Federation Council, the State Duma, chairmen of the Constitutional and Supreme Courts and the Higher Court of Arbitration, the head of the Investigation Committee and the Prosecutor General’s Office, directors of the Audit Committee, Central Bank, Central Election Commission, the human rights ombudsman, as well as the Russian president.

According to Lyskov, in today’s Russia it is impossible to conduct an objective investigation of the activities of the prosecutor general or the head of the Investigation Committee, as this will be done by their own subordinates. The senator notes that these prosecutors and investigators, under the Code of Criminal Procedures, are potential witnesses and must refuse to take on the investigation of their superiors.

The senator’s second reason for developing the draft law was the recent conflict between the prosecutor general, Yury Chaika, and the head of the Investigation Committee, Aleksandr Bastrykin. The scandal between the law enforcement officials began after the Investigation Committee filed a case against Moscow’s regional prosecutors on suspicion of protecting illegal casinos. The Prosecutor General’s Office called the investigators’ actions “unconstitutional”. As a result President Dmitry Medvedev was forced to personally intervene in the affair by inviting the heads of both offices to a closed-door meeting, after which passions subsided.

The fact that the president is personally engaged in making peace between heads of law enforcement agencies is incorrect, says Lyskov, and believes that his suggested institution of special prosecutors will be an effective tool in the president’s hands, which can be used to keep heads of law enforcement agencies under control and have objective

information about their work.

Lyskov’s proposal has every chance of being adopted, say members of the State Duma Security Committee.

The committee’s deputy chairman and Just Russia deputy, Gennady Gudkov, told Gazeta.Ru that he finds Lyskov’s idea to be absolutely correct, as its implementation will help strengthen the controlling function of the parliament, as it is common in developed democratic states.

Gudkov believes that special prosecutors must be given a broad range of powers, comparable to those of the prosecutor general, in order to ensure an effective investigation of the work of senior officials in law enforcement agencies. The deputy suggested that the bill could find the ruling party’s support in the State Duma, though he fears that the idea will meet opposition, which will lead to its emasculation and the creation of a practically powerless structure.

The deputy chairman of the State Duma Security Committee and United Russia deputy, Aleksey Volkov, told Gazeta.Ru that he supports the idea, but the main objective when considering the bill is to take into account all of the control mechanisms of the special prosecutors. Similar institutions successfully exist in many countries. Therefore, introducing a collegium of prosecutors in Russia is justified, says Volkov.

“Such a group of prosecutors is certainly needed and it could eliminate many questions that arise after officials leave their posts. They start to say this or that was done, this much or that much was stolen, but nothing is examined, no one goes back to these issues, no assessments are made,” says the former director of the International Legal Affairs Administration under the Prosecutor General’s Office, Issa Kostoyev.

At the same time, the group’s effectiveness will largely depend on how the bill deals with issues concerning procedural powers and the formation of the group, the expert told Gazeta.Ru. According to Kostoyev, the draft law must clearly indicate to whom the group will report to, how it will be formed, and what it can and cannot do.

Making the group subordinate to the president or the parliament will be the wrong decision, says Kostoyev. However, there needs to be the right to initiate investigations against various officials that resign from the presidential administration and the parliament, says Gazeta.Ru’s interlocutor. The independent prosecutors themselves should pursue an entire set of investigation activities until they reach a decision that there are, indeed, signs of an offence in the activities conducted by the official in question. After this, the documents should be submitted to the investigative of prosecution agencies, says Kostoyev.

“Without addressing these issues, the idea to have independent prosecutors will perhaps be a good one, but also non-viable,” warned the expert.

Rethinking the Reset http://www.themoscowtimes.com/opinion/article/rethinking-the-reset/439854.html

01 July 2011By Andrei Tsygankov

Since the reset button in U.S.-Russian relations has been pressed, Russia and the West have learned to cooperate on multiple issues from Iran and Afghanistan to nuclear arms control. Still, the momentum for improving Western ties with Russia seems to be caught in a holding pattern. It seems that both sides are increasingly frustrated with each other's policies.

NATO Secretary-General Anders Fogh Rasmussen recently condemned Russia for its sharp reaction to NATO's plans for a missile defense system in Europe. The Kremlin threatened to develop new intercontinental ballistic missiles that could spark a new arms race. Clearly frustrated, Rasmussen chided Russia's outdated thinking. "We are not a threat to Russia, we will not attack Russia, we will not undermine the security of Russia," he said.

The Kremlin, however, maintains that NATO's missile defense plans could undermine Russia's security as soon as 2020, when the system's fourth phase will be deployed. Moscow is suspicious of the fact that in response to the concerns it voices, it only receives vague, rhetorical assurances and other brushoffs.

Moscow is very much interested in improving security ties with the West. The Kremlin's initiatives — from merging the two missile defense systems to negotiating a new pan-European security treaty — demonstrate the desire to develop the kind of mutual trust that befits true allies. But U.S.-Russian relations have never been able to graduate from the status of being "partners" on certain occasional projects.

Russia blames the West for its reluctance to move to a new level of relations. The West has never hidden what it wants from the relationship: more favors from Moscow — from allowing transit routes to Afghanistan to pressuring Iran into nuclear compliance and negotiating a political exit for Libyan leader Moammar Gadhafi. But Moscow rightfully wants something in exchange, and when the Kremlin repeatedly gets the cold shoulder to its initiatives, this impedes the reset.

There are other issues that divide the two sides besides missile defense. At the end of 2010, Moscow shelved its initiative to negotiate a new security treaty with European nations after not getting any support from NATO officials and the United States. More recently, the Kremlin has criticized the West's handling of the Middle Eastern crisis by going after the regime change and Gadhafi personally. Now that France and Britain are pushing for a new resolution on Syria, Russia is not likely to let it pass.

The underlying reason why the United States developed a reset policy toward Russia has less to do with Russia itself and more to do with the U.S. economic decline and its fear of strategic competitors, such as China, Iran and radical Islam. This was not lost on the Kremlin, which wants much more out of the relationship than a being simply a means to U.S. ends.

The United States must move from fear to confidence. But this would require a new vision — one that would transform the nature of security ties with Russia. In the absence of a new vision, another cycle of hostilities shaped by clashing perceptions of each other's intentions is likely.

To prevent this, the two sides should clarify their long-term objectives, which could be assessed by an ad hoc Russian-Western advisory council made up of Russia and foreign policy experts. This could help minimize existing fears, stereotypes and misperceptions from both sides.

Ideally, this process would lead to an agreement on common threats facing both countries, such as the danger of Islamist extremism spreading to Central Asia and perhaps Russia after U.S. forces leave Afghanistan. This could pave the way to a greater cooperation in collective security for both Eurasia and Europe.

Andrei Tsygankov is professor of international relations and political science at San Francisco State University.

National Economic Trends

Russia June manufacturing PMI at 15-month lowhttp://www.forexyard.com/en/news/Russia-June-manufacturing-PMI-at-15-month-low-2011-07-01T040005Z

Friday July 01, 2011 05:00:04 AM GMTPMI-MANUFACTURING/RUSSIA (URGENT, EMBARGOED)

MOSCOW, July 1 (Reuters) - Russian manufacturing expanded at its slowest pace in 15 months in June, slipping dangerously close to the mark that separates growth from contraction, the HSBC purchasing managers' index (PMI) showed on Friday.

The index's headline reading fell to 50.6 from 50.7 the previous month, its weakest since March 2010 and barely above the 50.0 mark that separates expansion from contraction.

It has now fallen 5 points from March's 55-month high of 55.6, the largest sustained decline recorded since the 2008 financial crisis.

"The downward movement in the PMI mainly reflected a weaker contribution from the employment component," HSBC said in an accompanying comment.

The decline in manufacturing employment last month followed an eight-month stretch of sustained job creation.

The moderation in business activity growth in June, however, was softer than in the previous couple of months, with new output, new orders and new export orders edging up.

"Steady, albeit very moderate growth of new export orders is especially encouraging in this respect," said Alexander Morozov, chief economist for Russia and CIS at HSBC.

"It appears that global demand for manufacturing is staying on and upward trend, which supports growth in Russian manufacturing."

Seasonally adjusted new export orders rose for the second month in a row, climbing to 50.36 from 50.14 in May, the poll showed.

But worries about the coming months remain, Morozov said.

"There are reasons to expect manufacturing growth to ease a little bit in the coming months," he said.

"Growth in new orders is weaker than output growth, pointing to the likely build up of inventories. If so, companies would have to adjust output growth to (match) milder demand growth."

Inflationary pressures in manufacturing remain high, Morozov said, notwithstanding subdued output growth as input prices grew faster in June.

"It should sustain strong imports growth and/or keep inflation elevated," he added. (Writing by Lidia Kelly; Editing by Hugh Lawson)

Russian Factory Activity Growth Eases Slightly In June http://www.rttnews.com/Content/AllEconomicNews.aspx?Node=B2&Id=1657866

7/1/2011 1:33 AM ET

(RTTNews) - Russia's manufacturing industry expanded at a slightly slower pace in June, data from a survey conducted by HSBC and Markit Economics showed Friday.

The HSBC/Markit purchasing managers' index (PMI) for the manufacturing sector edged down to 50.6 in June from 50.7 in May, and remained well below the long-run average. A PMI reading above 50 indicates expansion in the sector, while one below suggests decline. The manufacturing industry recorded growth for the 23rd straight month.

The sluggishness in production growth was a mainly due weakness in new business, which was stagnant in May.

At the same time, input price inflation for the month remained steady at May's 22-low. Meanwhile, output price slowed for the third consecutive month in June. There was a marginal drop in workforce in Russian manufacturing firms during the month.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

04:01 01/07/2011Top News

Russia resumes grain exports on Fridayhttp://www.itar-tass.com/en/c32/177313.html

MOSCOW, July 1 (Itar-Tass) —— Russia will resume grain exports on Friday which were suspended in August 2010 because of a major drought and subsequent loss of up to 30 percent of grain crops.

Prime Minister Vladimir Putin said last week the country may export up to 15 million tons of grain and recover a leading place on the market.

This year grain crops are forecast at 85 million tons in Russia.

In the past three weeks the world price of grain fell 70-80 dollars per ton. The price of Russian wheat of the fourth class fell in the past week by 85 rubles to 5815 rubles.

Friday 01 July 2011

Russia may face grain shortage as ban endshttp://www.telegraph.co.uk/sponsored/russianow/business/8608953/Russia-may-face-grain-shortage-as-ban-ends.html

This online supplement is produced and published by Rossiyskaya Gazeta (Russia), which takes sole responsibility for the content.

Nikita Dulnev, Russia Now

4:36PM BST 30 Jun 2011

As Russian grain exports resume, foreign producers fear prices could fall, but experts say an international shortage is inevitable

Russia’s decision to lift its grain export ban has led to fears of shortages at home and of falling prices for European farmers.

The ban, which ends on July 1, was imposed in August 2010 following the rampant wildfires and drought that caused a substantial decrease in the country’s grain yield, and threatened a shortfall in Russian agricultural production.

With exports due to resume imminently, Sergei Ignatiev, chairman of the Central Bank, has proposed solving this problem in part by introducing export a temporary duty on grain. Supported in his initiative by the Ministry of Economic Development and the Ministry of Agriculture, Mr Ignatiev is convinced that introducing duties is the only way to curb inflation and maintain steady supplies of the foodstuff on the domestic market.

“Export duties should soften the inflationary effect from the lifting of the ban,” the central banker said. Foreign producers and consumers are also concerned about the resumed supply of Russian grain to the international market.

The influx could affect grain prices in Europe and on the stock market, and since the market has adjusted to the absence of Russian imports, they now have no guaranteed consumers.

Since May 23, when Russia announced that it would lift the almost year-long embargo, European wheat futures have dropped steadily.

But Tim Hannagan, an analyst with PFGBEST in Chicago, does not believe that there is any cause for panic on the grain market.

“Russia will not dump huge volumes of grain on the market,” Mr Hannagan said. “Last year it endured a genuine disaster, therefore a large part of the production will go to the domestic market.”

Russia was not expected to have a strong grain harvest this year, so there may be almost nothing left over to sell abroad, he predicted.

The International Grain Council maintains that a shortage of grain on the world market over the coming year is inevitable. According to the council, the world’s consumption of cereals this autumn and next spring will outstrip total global production by several per cent.

Weather forecasters are also warning of the possibility of another unusually arid summer, which could lead to another poor harvest.

Russia’s Wheat Harvest May Be 56 Million Tons, Grain Union Says

http://www.blackseagrain.net/about-ukragroconsult/news-bsg/russia2019s-wheat-harvest-may-be-56-million-tons-grain-union-says

1 July 2011 Friday

Russian farmers may harvest as much as 56 million metric tons of wheat this year, the country’s Grain Union President Arkady Zlochevsky said, a third more than in 2010.

The new grains harvest may reach as much as 90 million tons if favorable weather continues into July, he told journalists today in Moscow. The harvest was 60.9 million tons last year after drought damaged crops, according to the Federal State Statistics Service. The harvest will include between 52 million and 56 million tons of wheat, Zlochevsky said. The wheat harvest was 41.4 million tons last year, the statistics service said.

Russia will produce more feed grain in the new season because it sowed seeds of “not very good” quality this year, Zlochevsky said. Milling wheat has traditionally comprised between 67 percent and 68 percent of the harvest, and the share will drop to about 62 percent this year, he added.

Russia has the potential to export between 20 million and 25 million tons of grains. Still, between 15 million and 16 million tons may be exported as demand weakened after the country banned shipments last year following the drought, Zlochevsky said. The restrictions end tomorrow.

The barley harvest is estimated at between 15.5 million and 16 million tons, and the sunflower seeds harvest is expected to reach between 7.5 million and 8 million tons. Corn is seen at between 5 million and 6 million tons, he said.

Russia’s grain reserves are estimated at 21 million tons before the new marketing season that starts tomorrow, the Grain Union president said. Stockpiles exceeded 26 million tons a year earlier, he added.

Business, Energy or Environmental regulations or discussions

Gazprom, Bank of Moscow and Rusal: Russian Equities Previewhttp://www.bloomberg.com/news/2011-06-30/gazprom-bank-of-moscow-and-rusal-russian-equities-preview.html

By Stephen Bierman - Jun 30, 2011 10:01 PM GMT+0200

The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index rose 0.4 percent to 1,666.59. The dollar-denominated RTS Index climbed 0.6 percent to 1,906.71.

OAO Gazprom (GAZP RX): Russia’s largest natural gas producer may reach pre-crisis output levels in 2012, earlier than planned, Chief Executive Officer Alexei Miller said. He also said company earnings before interest, taxation, depreciation and amortization may reach $60 billion this year. The Moscow-based gas producer rose 1.2 percent to 203.87 rubles in Moscow.

Bank of Moscow (MMBM RX): Russian authorities agreed to bail out Bank of Moscow, a press official for the Deposit Insurance Agency said by telephone without providing further details. The bank rose 1.9 percent to 799 rubles.

United Co. Rusal (486 HK) should keep its policy of paying out half its earnings in dividends, according to shareholder Sual Partners. Russia’s largest aluminum producer rose 1.5 percent to HK$10.68 in Hong Kong.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

09:01 01/07/2011ALL NEWS

Railways co investments in Buryatia to amount rbls 105 bln by 2030.

http://www.itar-tass.com/en/c154/177304.html

1/7 Tass 88

ULAN-UDE, July 1 (Itar-Tass) —— The Russian Railways company's investments in Buryatia will exceed rbls 5.2 bln this year and amount to 105 bln by 2030, both in the development of railroads and the social sector development, the company's First Vice-President Vadim Morozov said in Ulan-Ude on Friday.

Discussing the prospects for the railway transport development in Buryatia with the republic's head Vyacheslav Nagovitsyn, Morozov noted the Trans-Siberian main line at its present condition operated almost at its utmost capacity. Meanwhile, there is good growth of rail transportations in East Siberia, and there are great prospects, he said, explaining the company's interest in the region, across which, aside from the Trans-Siberian railroad, the Baikal-Amur line runs.

Among the joint projects with Russian Railways, Nagovitsyn pointed out as very important the reconstruction of the railway station in Ulan-Ude to turn it into a major change point. The work will begin in 2013. It is important for the republic, where the special federal tourism zone Baikal Harbour is being set up on Lake Baikal's eastern shore. Beginning 2016, Buryatia is expected to receive at least 1.8 million tourists a year, five times more that at present. Ulan-Ude, including its railway junction, will become transport gates of the tourism area.

Morozov participates in the meeting of the Russian-Mongolian intergovernmental commission on trade-economic and scientific technical cooperation. The meeting chaired by Russian Transport Minister Igor Levitin and Mongolian First Vice-Premier Norovyn Altankhuyag opened in Ulan-Ude on Friday. The sides discussed transport prospects, exploration of Uranium deposits, activities of joint Russian-Mongolian companies and the development of links between border areas.

The Russian Railways delegation also participates in the celebration marking the 350th anniversary of Buryatia's voluntary joining the Russian state. The celebration opened in Ulan-Ude on Friday.

Russia's Bank of Moscow gets $14 bln bailouthttp://www.reuters.com/article/2011/07/01/vtb-bankofmoscow-idUSWLA279620110701

3:56am EDT

MOSCOW, July 1 (Reuters) - Russia's Bank of Moscow (MMBM.MM: Quote, Profile, Research, Stock Buzz) will receive a $14 billion bailout, the central bank said on Friday, after a hostile takeover bid by VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) revealed a gaping hole in the books of the country's fifth-largest bank.

The central bank said that Russia's Deposit Insurance Agency (DIA) would lend Bank of Moscow 295 billion roubles ($10.60 billion) at a concessionary rate of 0.51 percent for 10 years.

The loan would be financed by the central bank, which will lend the DIA the money for five years at a rate of 0.5 percent.

State-controlled VTB, Russia's second-largest bank, will contribute 100 billion roubles to recapitalise Bank of Moscow, the central bank said in a statement.

The size of the overall package was much larger than earlier indications that the bailout would cost around 250 billion roubles, although the VTB equity injection was in line with expectations. (Reporting by Douglas Busvine, Editing by Lidia Kelly)

Bank of Moscow to Get $8.9 Bln From Central Bank, Vedomosti Sayshttp://www.bloomberg.com/news/2011-07-01/bank-of-moscow-to-get-8-9-bln-from-central-bank-vedomosti-says.html

By Yuliya Fedorinova - Jul 1, 2011 6:59 AM GMT+0200

OAO Bank of Moscow will get 250 billion rubles ($8.9 billion) of financing from Russia’s central bank as the authorities agreed on a bailout yesterday, Vedomosti reported.

The final size of the 10-year loan may be even more than 250 billion rubles, the newspaper said, citing unidentified people aware of the details of the plan. The annual interest rate will be 0.5 percent, it added.

Bank of Moscow is in the process of being acquired by state-owned VTB Group, which will give it a loan of about 100 billion rubles, Vedomosti said.

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

July 01, 2011 12:05

Deposit Insurance Agency to provide Bank of Moscow 295 bln ruble loan at 0.51%http://www.interfax.com/newsinf.asp?id=256126

MOSCOW. July 1 (Interfax) - Russia's Deposit Insurance Agency (ASV) will provide a loan of 295 billion rubles to Bank of Moscow (RTS: MMBM) at 0.51% annual interest for 10 years, the Central Bank said in a press release.

The Central Bank will provide the money to ASV in the form of a five-year loan at 0.5% annually.

The VTB (RTS: VTBR) Group is also expected to boost Bank of Moscow charter capital by 100 billion rubles.

RTS$#&: MMBM, VTBR

jh

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

Euroset to reconsider IPO in 2012

http://www.rbcnews.com/free/20110701114501.shtml

      RBC, 01.07.2011, Moscow 11:45:01.Russian mobile phone retailer Euroset could go public on a stock exchange in the second quarter of 2012, two sources close to the company's shareholders told RBC Daily. Euroset and its shareholders are forming a syndicate of investors and holding talks with various European funds. The retailer called off its IPO on the London Stock Exchange (LSE) this spring due to sluggish investor demand.

      The company is also considering other expansion options such as farming out equity to private investors, other source said. Euroset also could pay up to 75% of net profit in dividends to its shareholders, the source said. In the documents submitted to LSE this spring Euroset stated its intention to disburse 45%-75% of net profit in dividends after the IPO.

      Euroset President Alexander Malis said that the company is discussing paying out annual dividends to shareholders. At the same time, he noted that the retailer will need funds to open several thousand stores in the next 2-3 years.

Russian airlines boost air traffic in 5M

http://www.rbcnews.com/free/20110701120432.shtml

      RBC, 01.07.2011, Moscow 12:04:32.Russian airlines lifted air traffic 10.6% year-on-year to 20.71m passengers in January-May, the Federal Air Transport Agency announced today.

      Passenger traffic increased 11.9% to 54.95bn passenger-kilometers in the period, cargo transportation rose 4.5% to 1.89bn ton-kilometers.

      In May alone, Russian air carriers flew 5.28m passengers, up 10.6% year-on-year. Their passenger traffic went up 11.1% to 13.30bn passenger-kilometers and cargo transportation amounted to 431.22m ton-kilometers, flat year-on-year.

      Among major airlines, Aeroflot flew 4.95m passengers in January-May, up 22.3%; Transaero flew 2.52m passengers, up 21.2%; S7 flew 1.79m passengers, up 4%; and UTair flew 1.49m passengers, up 7.5%.

RTS and Micex merger: the end of the beginning http://www.bne.eu/storyf2763/RTS_and_Micex_merger_the_end_of_the_beginning

Ben Aris in Moscow July 1, 2011

Oleg Jelezko just made a packet from the biggest private equity deal in Russia to date. Da Vinci Capital Management, of which Jelezko is managing partner, can partly cash out of its 20% stake in Russia’s RTS after the exchange announced it would merge with its larger rival Micex on June 30.

The merger is a significant step in the Kremlin’s much-vaunted plans to turn Moscow into an international financial centre (IFC) and build up the domestic capital market so it can better serve Russia’s growing investment needs. The Russian pension system is also in desperate need of reform – a quarter of the current state deficit goes toward topping up the state’s pension obligations – and a more efficient and better capitalised exchange is a first step in the pension reforms widely excepted next year.

Da Vinci is one of the five major shareholders in the RTS, along with leading Russian investment banks Renaissance Capital, Aton Capital, Alfa Bank and Troika Dialog. Under the terms of the merger, each of these banks can take a 35% of their stake out as cash and will get shares in the combined entity at a ratio of three RTS shares to one merged Micex/RTS share for the rest.

"All of the investors are going to take out some cash as the merger is a validation of their investment, but we still see a lot of upside in the coming years and will remain investors and involved in the exchanges," says Jelezko, who cut his teeth at Renaissance Capital and help build Russia’s derivatives market in partnership with the RTS a few years ago.

Jelezko draws a parallel with Brazil: "Brazil is comparable with Russia: it has the same level of technology, the same economic size and a similar economic profile. The Brazilian stock exchange is listed with a market capitalisation of between $15bn and $16bn. The combined Micex and RTS has a valuation of about $4.5bn, so we believe this will rise three-fold in the next five years or so."

There are already plans to IPO the combined exchange by 2013 or earlier and raise at least $300m, Micex President Ruben Aganbegyan told journalists at a press conference on Wednesday.

The merger will be finalised in the autumn, as it still needs to be approved by the regulator and also the anti-monopolies service (FAS). But given there are about 50 licensed exchanges in Russia (of which about six are functioning), participants don’t see any problems with completing the paperwork.

Plugged in

The creation of a single stock exchange really only marks the beginnings of the IFC project. Despite the provocative moniker, the main point of the reforms is to create the financial infrastructure the market needs to integrate itself with the international capital markets, rather any attempt to somehow replace the likes of London and New York as the dominant global exchanges. “Really all we are doing it trying to make a giant plug that we can plug into the global markets,” says Jelezko.

The next big challenge will be to create a central securities depository (CSD), something that has been under discussion for more than a decade. But that is likely to be as difficult as getting the two exchanges merged. Currently, there are two main depositories, DCC and NDC, that worked with the RTS and Micex respectively. Neither of these depositories are keen to merge and the situation is made more complicated by the fact that much of Russian equity trading is cleared and settled through the company registrars. Many of these are owned by oligarchs and used as a last line of defence to protect their companies from corporate raiders, who also don’t want to see any more mergers.

However, the government is clearly committed to forcing through change in the sector. Jelezko is also a member of “Group #1″ of a task force dealing with financial infrastructure, headed by Alexander Voloshin, former chief of Boris Yeltsin’s presidential staff and widely regarded as the éminence grise in the Kremlin in the 1990s.

And the stock exchange merger is a positive sign that political will exists to implement financial reform, despite the two bourses’ rivalry and the global economic crisis.

In the meantime Da Vinci is putting its money where its mouth is and hopes to follow through on the success of its first fund that invested in the RTS with a second one to launch this autumn targeting financial services in general.

Activity in the Oil and Gas sector (including regulatory)

July 01, 2011 10:40

Oil export duty to decline to $445.1 per tonne in July, discount duty - $205.8 (Part 2)http://www.interfax.com/newsinf.asp?id=256093

MOSCOW. July 1 (Interfax) - Russia will lower the export duty on crude oil $17 to $445.1 per tonne on July 1, according to a government resolution dated June 22.

The export duty is currently $462.1 per tonne.

The discounted export duty will declined to $205.8 per tonne from $217.5.

The export duty will decline to $298.2 per tonne for light oil products and $207.8 for dark products (from $309.6 and $215.8 respectively).

The prohibitive export duty on commercial gasoline grades and straight-run gasoline (naphtha) will remain in effect at $400.5 per tonne.

The duty on liquefied petroleum gas will decline to $172.9 per tonne from $189.8 currently.

In addition, the customs nomenclature (TN VED) used to declare exports of trimers and tetramers of propylene has been transferred from the "light distillates" category to "straight-run gasoline." The change raises the export duty on those commodities to $400.5 per tonne on July 1 (the gasoline duty) from $309.6 per tonne previously (light oil products).

The Customs Union instituted the customs code at the request of Nizhnekamskneftekhim, following discussions on introduction of a reduced export duty for those commodities.

jh

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

07:03 01/07/2011ALL NEWS

Kazakstan-Russia oil pipeline to begin expansion Friday.

http://www.itar-tass.com/en/c154/177260.html

1/7 Tass 6

ASTANA, July 1 (Itar-Tass) —— The long-delayed project worth 5.4 billion dollars to modernize and expand the 1,500-km long oil pipeline of the Caspian Pipeline Consortium (CPC) linking the Tengiz field in western Kazakhstan with the Russian port of Novorossiisk on the Black Sea coast will be officially launched on Friday in the Kazakh city of Atyrau.

The project will allow Kazakhstan to double the amount of oil exported via Russia.

The project which was several times delayed because of investment disagreements among CPC stockholders will raise the annual carrying capacity of the pipeline from 28.2 million tons to 67 million tons while Kazakhstan will up deliveries from current 27 million tons to 52 million.

The project envisages modernization of existing pumping stations, the construction of eight new ones in Russia and two in Kazakhstan, six oil storage tanks in Novorossiisk and a new seaport terminal. An 88-km long pipeline section on the Kazakh territory will be replaced. The project is scheduled to start up in 2015.

CTC stockholders comprise Russia’s Transneft (24 percent), CPC Company (7), Kazmunaigaz of Kazakhstan (19), Kazakhstan Pipeline Ventures LLC (1.75), Chevron Caspian Pipeline Consortium Company, LUKARCO B.V., Mobil Caspian Pipeline Company, and others.

Russian Energy Minister Sergei Shmatko and Kazakh Oil and Gas Minister Sauat Mynbayev will attend the ceremony.

TNK-BP: To Halve West Siberia Output Field Decline In 3 Yearshttp://www.foxbusiness.com/markets/2011/06/30/tnk-bp-to-halve-west-siberia-output-field-decline-in-3-years/

By Jacob Gronholt-pedersen and Ira Iosebashvili

Published June 30, 2011

| Dow Jones Newswires

MOSCOW -(Dow Jones)- Anglo-Russian oil joint venture TNK-BP Ltd. plans in the next three years to lower the decline in production at its West Siberian fields to 3% annually from 6% now, the company's Deputy Chief Executive Maxim Barsky said Thursday.

TNK-BP, owned on a 50-50 basis by U.K. oil major BP PLC (BP) and a group of Russian businessmen, pumps around 70% of its production at mature fields in West Siberia, many of which were developed during Soviet times.

Last year, TNK-BP increased overall production by 3.1% to 1.742 million barrels of oil equivalent a day.

Copyright © 2011 Dow Jones Newswires

Read more: http://www.foxbusiness.com/markets/2011/06/30/tnk-bp-to-halve-west-siberia-output-field-decline-in-3-years/#ixzz1Qq4wityT

Russia TNK-BP plans to borrow $1 bln in 2011-CFOhttp://www.reuters.com/article/2011/06/30/tnkbp-borrowing-idUSLDE75T0G820110630

Thu, Jun 30 2011

MOSCOW, June 30 (Reuters) - TNK-BP (TNBP.MM: Quote, Profile, Research, Stock Buzz), Russia's third biggest oil company, plans to borrow about $1 billion this year, Chief Financial Officer Jonathan Muir said on Thursday.

Muir said gearing levels were currently at the low end of a range described in the shareholder agreement.

"Therefore we do plan to borrow around $1 billion," he said.

"It is unlikely to be bonded, it is more likely to be bank debt," Muir told a news conference after the company's annual shareholder meeting. (Reporting by Melissa Akin; writing by Maria Kiselyova; editing by Guy Faulconbridge)

TNK-BP Said to Offer East Siberian Crude for Loading in Augusthttp://www.bloomberg.com/news/2011-07-01/tnk-bp-said-to-offer-east-siberian-crude-for-loading-in-august.html

By Christian Schmollinger and Sherry Su - Jul 1, 2011 8:52 AM GMT+0200

TNK-BP offered to sell 300,000 metric tons of East Siberian Pacific Ocean pipeline crude, or ESPO, for loading in August, said three traders who participate in the market, declining to be identified because the information is confidential.

Details of the offer are as follows:

------------------------------------------------------------Crude: East Siberian Pipeline Oil, RussiaQuantity: 100,000 tons (or 730,000 barrels) x 3 cargoesLoading: Aug. 6-9, Aug. 15-18, Aug. 26-29Port: Kozmino Bay Terminal, Russia’s Far EastBids due: July 1--------------------------------------------------------------

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Sherry Su in London at lsu23@bloomberg.net.

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

01.07.2011

Season’s First Oil Tanker Sails Northern Sea Routehttp://www.oilandgaseurasia.com/news/p/0/news/11877

Painted with shark teeth, the nuclear powered icebreaker "Yamal" sailed from Murmansk this week to break ice along the Northern Sea Route for the season's first larger oil-tanker.

The sailing season along the Northern Sea Route has never before stared earlier as the Arctic sea ice heads for another major melt.

It is the Belgium owned oil-tanker "Perseverance" is loaded with 70.000 tons of oil condensate that earlier this week sailed from Murmansk towards the north east. The tanker is this summer chartered by the Russian oil company Novatek, reports Petroarctic, a network of suppliers for petroleum projects in the north.

"Perseverance" holds ice-class 1A and is expected to be at port in China around July 20, sailing nearly half the time the vessel would have spent from Murmansk to China if sailing the Suez canal.

Several other ice-classed oil tankers are waiting in the Kola bay for the sailing season to start. Novatek plans to ship 110.000 tons of oil condensate along the north coast of Siberia with the oil tanker "Vladimir Tikhonov" later this summer. In total, Russia’s nuclear powered icebreaker fleet will reportedly escort some 15 larger bulk and oil tankers along the Northern Sea Route this year.

As previously reported by BarentsObserver, the maximum extent of Arctic sea ice before the melting season started this year was at its lowest ever measured.

Copyright 2011, Barents Observer. All rights reserved.

Putin sees $309Bln in Oil Investment by 2020 http://www.themoscowtimes.com/business/article/putin-sees-309bln-in-oil-investment-by-2020/439842.html

01 July 2011Combined Reports

Domestic oil companies plan to invest 8.6 trillion rubles ($309 billion) to 2020, Prime Minister Vladimir Putin said.

Of that, 5.9 trillion rubles will be spent developing fields and 780 billion rubles will be spent on modernizing refineries, Putin said Thursday at a meeting of the United Russia party in Yekaterinburg.

The prime minister also said one of the government's top priorities is to put conditions in place for small and medium businesses to operate in the oil sector.

The development of small fields and raising well flows is a considerable reserve for sustaining oil production at 500 million tons, he said.

Major investment is needed in exploration, oil recovery and new technology, the prime minister said.

Putin said 60 percent of the 500 million tons of oil that the country produces comes from the West Siberian oil province.

"I again ask the Finance Ministry and Economic Development Ministry to look at the profitability of … small fields and to build a midterm policy," he said.

Putin said the ministries should analyze taxation in the course of this work. "If [tax breaks] cannot be introduced right now, let them show when this will be possible, so that small business are able in the long term to plan their work, their incomes and expenditures," Putin said.

Small oil companies should not expect tax breaks in the short term. "The oil and gas sector is considered to be profitable and it does not need special tax regimes. Small fields are usually in regions that have communications and infrastructure as a rule. At a time when the budget is not balanced, the fiscal agencies, above all the Finance Ministry, object to lower taxation and tax breaks. It is difficult to argue with this for now," Putin said.

Indeed, the government is raising taxes for the gas industry.

But the government will "definitely return" to the issue of tax breaks for small oil companies once the budget has been balanced, Putin said.

The prime minister also addressed Russia's presence in the Arctic, saying the country is seeking to expand and will "firmly and consistently" defend its geopolitical interests in the region.

Putin also addressed the possibility of upgrading the Glonass satellite system.

"Satellites were rather old and quickly broke down at the beginning of the program. The period of their useful life was three to four years," he said.

Now the government will replace them with more modern satellites with a useful life of seven to 10 years, Putin said.

"The land-based infrastructure is the main problem," he added.

"It would be cheaper to make that equipment in China, India, South Korea and so on. However, the production of the equipment with good quality and good prices inside the country would be absolutely perfect," Putin said.

It is also necessary to form a civilized market of services. "We must control the domestic market and take relevant niches on the world market," he said.

(Bloomberg, Interfax)

Gazprom

02:31 01/07/2011ALL NEWS

Gazprom: Lithuanian unbundling will not go unnoticed.

http://www.itar-tass.com/en/c154/177193.html

1/7 Tass 516

MOSCOW, July 1 (Itar-Tass) —— Gazprom CEO Alexei Miller said on Thursday the Lithuanian decision to separate gas supply and transportation assets will “not go unnoticed”, but did not specify which measures the Russian gas monopoly may resort to in response.

Lithuanian parliament approved the lawbill on the so-called unbundling of gas assets. If the national president signs it into law Gazprom will have to sell its 37.1 percent stake in the Lithuanian Lietuvos Dujos operator.

“Actually we have already provided very tough assessments to the proposed option. I will not repeat them, but I can say the decision, if implemented, will not go unnoticed,” Miller said.

Earlier Gazprom and E.ON, which own a combined 76 percent of Lietuvos Dujos, said the unbundling would reduce efficiency and increase costs at consumers’ expense. Gazprom also said it may take legal action to receive compensation.

July 01, 2011 11:12

Gazprom may consider possible asset swap with Japanese - Miller (Part 2)http://www.interfax.com/newsinf.asp?id=256103

MOSCOW. July 1 (Interfax) - Gazprom (RTS: GAZP) may consider a possible asset swap with Japanese companies, Gazprom head Alexei Miller told reporters on Thursday.

"This would involve Japanese companies taking part in a project [development of Chayanda, Kovykta], but as of today I haven't heard from anyone - not to mention anyone at Gazprom - that the Japanese companies are becoming resource users," he said.

"There is a very simple principle at work here: we are ready to examine potential participation in resource use, including by Japanese companies, but on an asset swap basis. The Japanese companies have been informed of this position," Miller said.

"In that connection, if the Japanese colleagues offer interesting, equivalent assets, if the Japanese side has an interest in joining in resource use, we are ready to look at that possibility," he said.

RTS$#&: GAZP

lg eb jh

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

Gazprom ready to lay gas pipeline to China - Millerhttp://en.rian.ru/russia/20110630/164936135.html

20:53 30/06/2011

MOSCOW, June 30 (RIA Novosti)

Russian gas giant Gazprom is "completely ready" to start the construction of a natural gas pipeline to China, CEO Alexei Miller said after an annual shareholders' meeting on Thursday.

"We are completely ready to begin pipeline construction," Miller said without mentioning the estimated costs of the project.

Miller said that another round of talks will be held soon.

"The next round [will be held] next month, but July begins tomorrow," he said.

Russia and China signed a legally binding agreement on basic terms of gas supplies in September 2010. It was earlier reported that Gazprom may begin the construction this summer.

The Russian gas giant is set to become China's major gas supplier, but the price is yet to be agreed. Beijing wants Gazprom to set a lower price than it sells the blue fuel to Europe for, to which Gazprom is opposed.

"In regard to the price, it's not about the difference between absolute prices, it is the equal profitability with Europe which is of principal importance to us," Miller said.

Last September, Moscow and Beijing, the world largest energy market, signed a binding supply document, which outlined the western supply route, where gas comes from Western Siberia and the eastern route from Eastern Siberia, Russia's Far East and Sakhalin. The western route is the basic and Russia's gas export monopoly Gazprom plans to start building the Altai gas pipeline in the middle of this year and launch at the end of 2015.

Russia's Gazprom says no new gas price deal with Belarushttp://en.rian.ru/business/20110630/164936413.html

21:04 30/06/2011

MOSCOW, June 30 (RIA Novosti)

Moscow and Minsk have so far failed to reach an agreement on a new price formula for Russian gas supplies to Belarus, Gazprom CEO Alexei Miller said on Thursday.

"There is an existing contract until December 31, 2011. Some reports from Belarus claimed that new agreements on the price formula had been reached, but that is not true," Miller said.

"The gas price for Belarus will remain at the current level until the [current] contract expires," he said.

The current price for Russian gas supplies to Belarus is $244.70 per 1,000 cubic meters.

The sides are negotiating a new deal for 2012-2014, which Belarus intends to tie with the sale of the remaining 50 percent of Belarusian Beltransgaz for $2.5 billion. Russia has already bought 50 percent of the Belarusian state-run company for the same price.

"We are ready to pay that price on the same conditions as with the purchase of the first half," Miller said, adding that the two deals on a new gas formula and the purchase of Beltransgaz should be considered separately.

Boyko to cut Gazprom-Naftogaz merger dealhttp://www.ukrainianjournal.com/index.php?w=article&id=12732

Journal Staff Report

KIEV, June 30 – Energy Minister Yuriy Boyko will travel to Moscow Friday for a meeting with top Gazprom officials as the parties are due to discuss a potential merger with Naftogaz Ukrayiny, an official said Thursday.

Alexei Miller, the CEO of Gazprom, said the merger is the key condition for lowering prices for Russian natural gas for Ukrainian consumers.

“We can meet our friends half way with understanding that this will be a single company,” Miller said at a press conference. “Here is our vision: Naftogaz and Ukraine could solve many problems by accepting our proposal to merge Gazprom and Naftogaz.”

Ukraine has been refusing to merge the two companies for more than 12 months, insisting that the merger would reduce Ukraine’s economic and political independence.

This will be the second meeting between Boyko and Miller this week, suggesting the parties have intensified their contacts over the past several days.

Russian Prime Minister Vladimir Putin met Ukrainian President Viktor Yanukovych for informal talks in Crimea during the weekend, but no details of the talks had been reported.

Former Prime Minister Yulia Tymoshenko, who is tried in Kiev for alleged abuse of power while negotiating a 10-year natural gas deal with Russia in January 2009, said Friday Ukraine may be preparing to surrender its gas pipelines to Gazprom.

“Collusion is underway behind the back of Ukraine, behind the back of the Ukrainian people, to surrender the gas pipelines,” Tymoshenko said.

Ukraine has been seeking over the past 12 months to change the gas agreement signed in January 2009 in order to lower gas prices, but Russia has refused.

Ukraine’s gas pipelines move up to 110 billion cubic meters of Russian gas annually, or 80% of Russia’s Europe-bound gas shipments.

Ukraine wants to secure lower natural gas prices now because growing prices of crude oil may push gas price to $500 per 1,000 cu m that will make the operations of Ukrainian fertilizer producers unprofitable. (sb/ez)

Russia to review Ukraine gas prices after merging with Naftogaz - Gazprom CEOhttp://en.rian.ru/world/20110630/164937797.html

22:36 30/06/2011

MOSCOW, June 30 (RAI Novosti)

Russia's gas giant Gazprom will discuss the possibility of revising the gas pricing formula for Ukraine only after signing an agreement on merging with Ukraine's energy company Naftogas, Gazprom CEO Alexei Miller said on Thursday.

"We can meet our Ukrainian colleagues half way, but only with the understanding that it will be one company," Miller said, adding that Ukraine insists on decreasing the gas price while Russia is proposing that Gazprom and Naftogaz merge.

The idea of merging the two energy companies was put forward by Russian Prime Minister Vladimir Putin in 2010. Miller said at the time that both companies should seek the merger through joint ventures as the first step towards consolidation, adding that Russia could contribute reserves, while Ukraine could contribute its gas transportation system.

However, in October 2010, Ukrainian Prime Minister Mykola Azarov ruled out a merger between Gazprom and Naftogaz, but welcomed the idea of a joint venture between the two companies to develop gas deposits in the Astrakhan region in southern Russia and in the Yamal region in the Russian Arctic.

"The talks with our Ukrainian colleagues are about the creation of a joint venture, but this proposal only comes from our side. We are talking about [our] readiness to set up a joint venture, the first step, preceding the merger of both companies," Miller said.

Ukraine, which is 100 percent dependent on Russian energy supplies, is seeking to revise a 2009 gas supply contract signed by former Prime Minister Yulia Tymoshenko.

The country is $295.60 per 1,000 cubic meters of Russian gas in the second quarter of this year and expects to pay $350 in the third quarter.

Gazprom ousts ministershttp://www.upstreamonline.com/live/article264703.ece

Russian state-owned gas monopoly Gazprom has replaced two government ministers on its board.

News wires  30 June 2011 17:15 GMT

The company, led by Alexei Miller, said today prominent economist Vladimir Mau and Kazakh sovereign wealth fund chief Timur Kulibayev were elected to its board, replacing Russian Energy Minister Sergei Shmatko and Economy Minister Elvira Nabiullina.

However, Deputy Prime Minister Viktor Zubkov was re-elected to the board as chairman, Dow Jones reported.

The changes come after President Dmitry Medvedev earlier this year said state companies should replace ministers and other senior government officials on their boards.

Published: 30 June 2011 17:15 GMT  | Last updated: 30 June 2011 17:18 GMT

Kazakh president's son in-law elected to Board of Directors of "Gazprom" JSChttp://en.trend.az/capital/energy/1899232.html

[01.07.2011 11:13]

Kazakhstan, Astana, July 1 / Trend A.Maratov /

The head of the National Welfare Fund "Samruk-Kazyna", Kazakh President Nursultan Nazarbayev’s son in-law, Timur Kulibayev, was elected o the Board of Directors of "Gazprom" JSC as Independent Director, the Fund reported.

The extraordinary General Shareholders Meeting of "Gazprom" JSC have been held, which elected the Company’s new Board of Directors, was held in Moscow on June 30.

The election of Kulibayev to the Board of Directors of the Russian largest energy company shows the particular importance of economic cooperation between Kazakhstan and the Russian Federation, as well as a recognition of high professional qualities of the Chief Executive of "Samruk-Kazyna" Fund.

Chairman of the Board of Directors of "Gazprom" JSC was elected First Deputy Prime Minister of the Russian Federation Viktor Zubkov, the Fund reported.

Do you have any feedback? Contact our journalist at trend@trend.az

Kazakh billionaire cozies up to Gazpromhttp://themoscownews.com/business/20110630/188800204.html

by Lidia Okorokova at 30/06/2011 19:24

A spate of protests and hunger strikes by up to 15,000 oil and gas workers in western Kazakhstan is raising fears of widespread unrest in Russia’s oil-rich neighbor.

The protesters were demanding better salaries and working conditions in a conflict that looked likely to play into a major turning point for the son-in-law of Kazakh leader Nursultan Nazarbayev – the powerful Timur Kulibayev, who controls the country’s energy sector.

Tensions are escalating just as Russia’s state-owned gas monopoly, Gazprom, is making a major foray into Kazakhstan’s energy sector. It is also cozying up to Kazmunaigas, the country’s oil and gas company which is controlled by President Nursultan Nazarbayev’s billionaire son-in-law, Timur Kulibayev.

On Thursday, Kulibayev was one of 12 candidates for the 11 seats on Gazprom’s board of directors at the gas giant’s Moscow AGM.

Kulibayev, who is chairman of the board at KazMunaiGas, is also chairman of the supervisory board of Samruk-Kazyn, the Kazakh National Welfare Fund, which controls the state’s stakes in a swathe of the country’s key industries, including KazMunaiGas.

GazpromNeft, the oil arm of Gazprom, had earlier announced interest in an oil refinery factory which is owned by KazMunaiGas, according to a statement by the Kazakh Association of Oil, Gas and the Energy Complex, headed by Kulibayev.

Earlier in June, KazMunaiGas expressed interest in working together with GazpromNeft in projects in Russia.

Experts said that poor corporate management by a number of both state-owned and private companies had fueled the social tensions.

A market entry by a major corporation like Gazprom could improve corporate management, Konstantin Simonov, an independent oil and gas expert, told The Moscow News.

“Oil and gas assets are being redistributed between different companies there and business elite very soon enough will stop independent production,” Simonov said. “Russian companies could take part in the purchase of assets there.”

With Kazakhstan due to become one of the biggest gas exporters in the world after the completion of the huge Kashagan project in the Kazakh section of the Caspian Sea, Russia’s interest is understandable, experts said.

“Clearly Russia and Kazakhstan are neighbors, and have billions of dollars worth of joint economic activities, including exports of Kazakh energy,” Ariel Cohen, senior research fellow at the Heritage Foundation, told The Moscow News.

“It’s logical that Gazprom is interested in Kazakh oil and gas sector,” Svetlana Grizan, oil and gas expert at VTB Capital, told The Moscow News.

As for Kulibayev – a billionaire who figured in a Wikileaks scandal revolving around British royal Prince Andrew’s allegedly corrupt dealings with him – getting a job abroad as an expert on a country’s energy sector is a normal practice, Grizan said.

Unprecedented strikes

In a country known for brutally repressing any public dissent, the strikes pointed to a situation that seemed to be spiraling out of control.

The protests began mid-May, when about 700 workers declared a strike at Karazhanbasmunai oil company. They were joined by 250 workers from two other companies – Ozenmunaygaz, and KMG subsidiary Exploration and Production, IA News-Kazakhstan reported. As the protests snowballed, in June 300 people went on a hunger strike.

“We only demand that the trade unions, our employers and us sit down and discuss the situation. Instead, the company I work for has sacked over 300 people for taking part in the protests,” Maksat Dosmagametov, an employee at OzenmunaiGaz, told The Moscow News.

A brutal response from state authorities – who have reportedly jailed and beaten a number of them while threatening their families – is only fueling the standoff.

“Our salary is around $550 per month, this is nothing as all of us have families and water and food prices are high,” Marat, another worker at OzenmunaiGaz, told The Moscow News.

To date, there are around 15,000 people taking part in the protests across western Kazakhstan, the workers say.

“Instead of a dialogue the authorities and employers tend to use harsh methods to ‘talk to’ the protestors,” Ainur Kurmanov, leader of the left-wing Socialist Movement Kazakhstan, told The Moscow News.

KazMunaiGaz and Chinese energy firm CITIC, who each own half of Karazhanbasmunai, were not available for comment Thursday.

A spokeswoman for Italy’s ENI, which does oil and gas exploration in western Kazakhstan with Kazmunaigas, denied any knowledge of strikes in the country.

Conflict may spread

“For now the conflict is being localized, but the authorities are using very tough methods to end the row,” Andrei Chebotaryov, head of Almaty-based political think tank Alternativa, told The Moscow News.

Such major protests are usually solved by roundtable talks between the authorities, employers and official trade unions, Chebotaryov said. “Why this hasn’t been done yet is a good question,” he said.

The strike will undermine the image of Kazakhstan’s energy sector, which is flourishing amid rising oil prices, Cohen, of the Heritage Foundation, said.

Former head of E.On Bergman, now adviser to Gazprom's Alexei Millerhttp://english.ruvr.ru/2011/07/01/52630957.html

Jul 1, 2011 00:30 Moscow Time

The former head of the German company E. On Ruhrgas AG, Burckhard Bergmann has been appointed adviser to Alexey Miller the head of the Russian gas holding company "Gazprom".

This was reported on Thursday at a press conference after a meeting of shareholders of the Russian company, RIA Novosti reports.

Bergman was a member of the board of directors of "Gazprom" as an independent director from 2000 to 2011.

Previously, he headed the German energy company E. On Ruhrgas AG.

In June 2011, Bergman was awarded the Russian Order of Friendship.

Gazprom will swap gas for electricity in Germanyhttp://rt.com/politics/press/izvestiya/gazprom-germany-gas-electricity/en/

Published: 1 July, 2011, 06:52Edited: 1 July, 2011, 08:46

Pavel Arabov

The monopoly plans to purchase power plants operating in Europe, in order, first, to make money by selling them gas and then, by generating electricity. These thermal power plants (TPP) will be able to purchase Russian gas at a lower price than others.

“We are studying a number of opportunities to join projects that will allow us to create additional demand for our gas and generate additional revenue from the sale of electricity. The parameters of contracts for the supply of gas with respect to these projects will be updated with the consideration of specific conditions,” chairman of the Management Committee of Gazprom, Aleksey Miller, told shareholders at the annual meeting on Thursday. 

Talks about the acquisition of shares in electricity-generating plants in exchange for a reduction of prices are ongoing with several European companies. Mostly, however, the Russian concern is interested in purchasing power generating facilities in Germany, explained official Gazprom spokesman, Sergey Kupriyanov. Perhaps power stations will be built jointly with the German energy concern E.On, Gazprom management said earlier. 

Germany has become more attractive to Gazprom after the country’s government decided to stop using nuclear energy following the accident at the Japanese Fukushima nuclear power plant. Today, nuclear power stations generate about 23 per cent of all electricity in Germany and, in order to replace them, it will be necessary to build new power plants, operating on traditional forms of fuel, and mainly gas.  

Company representatives do not say at what expense and how low Gazprom is willing to “drop” prices. However, it is known that the price of gas for Germany’s end-user is calculated in about equal proportions to the price of fuel supplied to Russia, taxes and margin (or profit) of the intermediary-importer. Miller had simply stated that Gazprom will not lose anything by supplying discounted gas to certain power plants.   

Gazprom will be able to supply several billion cubic meters of inexpensive gas per year, say experts. “A single power plant with the annual capacity of 600 megawatts consumes more than a billion cubic meters of gas. As a result, the volume will depend on the number of plants, in which Gazprom will own a share,” says president of GazEnergoStroy Corporation, Sergey Chernin.  

The Russian monopoly’s purchase of shares in European power generation companies violates the provisions of the Third Energy Packet of the EU, argues Mikhail Korchemkin, director of East European Gas Analysis. “In Europe, it is forbidden to build a chain from supplier to the consumer. Besides, that is inconsistent with Gazprom’s

policy to ‘always keep to a price’ and could send a signal to the buyers of Russian gas that it is now possible to revise all of the long-term contracts,” he notes.    

The Third Energy Packet, adopted in 2007 (officially the document is called the Third Energy Directive) prohibits one company from simultaneously engaging in the supply, production, and transfer of energy and energy products. In other words, in strict compliance with the law, the producing company, Gazprom, cannot own any pipelines of power stations in The EU. As planned by the European officials, the Third Energy Packet should free Europe’s energy market from any restrictions on competition, this resulting in lower prices.   

In order to implement its idea, Gazprom will need to get the approval of Germany’s anti-monopoly service. “It will be necessary to obtain agreements on the deal in the anti-monopoly agencies of Germany and the EU, if it turns out to be a fairly large amount,” suggests senior attorney at the Russian-German Chamber of Commerce, Dmitry Sizov.  

E.On declined to comment on the negotiations with Gazprom. But Russian experts suggest that Germany is highly interested in working with Gazprom. 

“Germany will go for preferences. Of course, they have their own anti-monopoly lobby, but this region is dependent on Russian gas supplies, and over many years Gazprom has established itself as a reliable fuel supplier. There are two other very important factors. After the catastrophe at the Japanese Fukushima-1, a ban was imposed on the construction of new nuclear power plants. And on January 1, 2012, European countries will stop subsidizing the production of solar and wind power. This means that gas continues being the most ecologically clean and inexpensive form of fuel for Europe,” says Sergey Chernin.

Gazprom elects new board; CEO bullish on gas market conditionshttp://www.bne.eu/dispatch_text16042

Renaissance CapitalJuly 1, 2011

Event: Yesterday (30 June), Gazprom held an AGM, at which a record high dividend of RUB3.85/share was approved (61% higher than in 2010) and three new board members were elected (Andrei Akimov, CEO of Gazprombank; Timur Kulibaev, head of Kazakhstan's sovereign wealth fund, Samruk-Kazyna; and Vladimir Mau, rector of the Academy of National Economy). Akimov, Kulibaev and Mau replace former CEO of E.ON Ruhrgas Burckhard Bergmann, Minister of Economy Elvira Nabiullina, and Minister of Energy Sergey Shmatko. Deputy Prime Minister Viktor Zubkov was re-elected as chairman of Gazprom's board. After the AGM, Gazprom CEO Alexei Miller spoke to the media, stating that:

* He expects 2011 EBITDA of c. $60bn, on rising export volumes (+26% YoY in 1H11) and prices. Domestic sales volumes market added 8bcm during 1H11 (c. 5% YoY growth).

* Gas production could reach pre-crisis levels in 2012, vs earlier guidance of 2013 (over 550bcm).

* Gazprom could consider asset swaps with international partners, and in particular could invite Japanese companies to develop the Chayanda and Kovykta fields, however no firm offers have been received so far.

* Gazprom's plans to launch pipeline deliveries from Shtokman in 2016, followed by LNG in 2017, remain unchanged.

* Gazprom could provide discounts for Ukraine if a merger with Naftogas is accomplished.

Action: We find Miller's comments positive for investor sentiment on Gazprom.

Rationale: Strong gas market conditions and expectations of an even stronger market in future support sentiment, and are in line with current trends in the global gas market. However, it remains to be seen to what extent minority shareholders could participate in future earnings growth, which has historically been matched with rising capex.

Ildar Davletshin