Russia 110708

Basic Political Developments Itar-Tass news outlook for Friday, July 8.

o NEW YORK – The American space shuttle Atlantis will leave for the International Space Station for the last time off Cape Canaveral (Florida): the flight will close the 30 years' Space Shuttle program.

o ST. PETERSBURG – Russia's Prime Minister Vladimir Putin will visit during a working trip an oil processing plant in the city of Kirishi, the Leningrad Region, where he will chair a meeting on the state of oil products market.

o LONDON – Russia's Deputy Prime Minister, Finance Minister Alexei Kudrin will begin a visit to the United Kingdom, where he will participate in the Russian-British intergovernmental committee on trade and investments. The British co-chair of the commission is Secretary of State for Business Vince Cable.

o YEREVAN/BAKU - Russia's Foreign Minister will have meetings in Armenia and Azerbaijan to bring closer positions of the sides in the Karabakh settlement.

o MOSCOW – The State Duma finalizes the spring session. o PARIS – The court’s decision allows to start an official investigation of

suspects that Christine Lagarde, Managing Director of the International Monetary Fund (IMF), abused her position when she was France’s Minister for Economy, Industry and Employment.

o CAIRO – Mass protesters’ actions demanding immediate reforms and quicker trials of the former power will be organized in Egypt. The rallies will feature adherents of the influential Muslim Brotherhood organization.

o MUROM /the Vladimir Region/ - Main festive events of the All-Russian holiday – Day of family, love and fidelity – will be organized in an ancient Russian town. A chamomile flower will be a symbol of purity and joy.

o KALININGRAD – The Yantar shipbuilding plant will start a new service ship for Russia’s Navy. The modern frigate will be called the Admiral Essen.

o BOLSHOYE ZAVIDOVO – The Tver Region opens the 10th jubilee open-air festival called Nashestviye /Incursion/.

o MOSCOW – A legendary performance of the Lenkom Theatre in Moscow - a rock opera Yunona and Avos - celebrates its 30th jubilee.

o KRASNOYARSK - Best folk groups from Russia and abroad have gathered for the eighth international festival of ethnic music called the Sayany Circle, which is organized in the Shushenskoye village in the Krasnoyarsk Territory.

Itar-Tass news digest for Friday, July 8. o MOSCOW — Russian First Lady Svetlana Medvedeva on Friday

congratulated the nation on the Day of Family, Love, and Fidelity the introduction of which she encouraged in 2008 and offered a daisy as a

symbol of the new holiday. “The family is a pillar of support for a person. It provides the happiness of motherhood and fatherhood, forms the character and life values of a child, plays a specific role in the development of society and upbringing of the young on high spiritual and moral ideals,” she said in a message published by Rossiyskaya gazeta.

o MOSCOW — Russia’s President Dmitry Medvedev has presented for further ratification by the State Duma a law on payment and calculation of export duties when oil and oil products are exported from the territory of Belarus outside the customs territory of the Customs Union. The law was signed in Moscow on December 9, 2010, the Kremlin’s press service reported on Friday.

o MOSCOW — Prime Minister Vladimir Putin will visit the oil refinery in Kirishi near St. Petersburg on Friday to discuss the situation on the domestic petrol market following price hikes and shortages of the fuel in some regions of the country.

o LONDOIN — Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will on Friday discuss preparations for the visit of British Prime Minister David Cameron to Russia this year as well as plans to develop Moscow into an international financial center.

o MOSCOW — Russian Foreign Minister Sergei Lavrov will visit Armenia and Azerbaijan on Friday to promote Nagorno-Karabakh settlement after the presidents of the two countries failed to agree the guidelines of the settlement at the latest summit in Russia’s Kazan in June mediated by Dmitry Medvedev. “The visit of the minister is paid upon an instruction of Russian President Dmitry Medvedev,” the foreign ministry said.

o MOSCOW — The fourth reactor of the biggest Russian nuclear power plant in Balakovo on the Volga River (Saratov region), some 900 kilometers southeast of Moscow, had to be shut down overnight because of a thunderstorm that switched off two power transmission lines. “The thunderstorm on the border between Saratov and Samara regions switched off two power transmission lines going from the Balakovo NPP and powered by the fourth reactor. Automatic protection system switched off the reactor at 22:05 hours Moscow time,” Rosenergoatom operator said in a statement early on Friday.

o PARIS — Popular Russian singer Alsou was awarded the title of UNESCO Artist for Peace by the organization’s Director General Irina Bokova on Thursday “in recognition of her commitment to help the most vulnerable people throughout the world, her charitable activities aiming to empower childhood development, and her dedication to the ideals and aims of the Organization.”

o ULAN-UDE — The Russian customs in Transbaikalia seized a batch of equipment which a Chinese national tried to smuggle out into China in his car. The batch included two plunger pumps which are used in MiG-29 and Su-27 combat jets, the customs said on Friday. “Military-designation products can be taken in and out of the country upon licenses issued by the

Russian Service for military-technical cooperation,” it said adding a criminal case was instituted on charges of contraband.

o NEW YORK — Seven people, including a child, were shot dead inside separate homes on Thursday and police were searching for one suspect, the Associated Press reported from Grand Rapids (Michigan). It quoted Mayor George Hartwell as saying four people were found dead in one home and three in another. He said police are seeking 34-year-old Rodrick Shonte Dantzler who fled the crime scene in a car.

o KIEV — Deputies of the Verkhovna Rada (parliament) of Ukraine overnight to Friday passed in the second reading and on the whole the government’s draft pension reform. A total of 248 MPs of 226 required minimum voted for the document.Consideration of the bill lasted 8.5 hours. The document raises the retirement age for women from 55 to 60 years, the pensionable service was raised from 20 to 30 years for women and from 25 to 35 years - for men. The retirement age of male civil servants men was raised to 63 years.

o BAKU — Crisis-hit Belarus is working to expand the sales of its products on the Azerbaijani market and attract local investments into its national economy. On Thursday a memorandum was signed in the presence of visiting Belarussian Prime Minister Mikhail Myasnikovich between the Ganja Car Plant and Minsk truck works (MAZ) to produce garbage-collecting vehicles using MAZ trucks and German Haller’s equipment.

o TIRASPOL — Police in the breakaway Dniester region of Moldova said on Thursday it uncovered an underground network providing services to foreign pedophiles. “The scope of the phenomenon was rather impressing. Organizers of the criminal business looked for teenagers from problem families, rented apartments for clients and received fabulous profits,” the interior ministry said.

o KRASNOYARSK — There are no more major fires in Siberia, 19 spots of wildfires were liquidated on Thursday at an area of about 1.5 thousand hectares, the press service of the Siberian regional emergencies centre told Itar-Tass. On Friday morning, the region was affected by 10 fires at an area of 455.7 hectares. Of these, five forest fires were localised at an area of 234.5 hectares. The main cause of the fires is dry thunderstorms.

o VLADIVOSTOK — The Leninsky district court in Vladivostok ruled on Friday to arrest the chief of the Federal Migration Service's Primorsky regional department, Alexander Mukhin, suspected of bribe taking, the press service of the Russian Investigative Committee's regional department told Itar-Tass. A criminal case was opened against the official on July 5 on bribery charges.

o YEKATERINBURG— A severe thunderstorm has left more than 40 inhabited localities in the Sverdlovsk Region without electricity. More than 30 electro-transmission lines and over 350 transformer sub-stations are cut off. For the present, 41 localities of about 19,000 people have no electricity. The storm most severely hit the Sverdlovsk Region's south-

western, eastern and south-eastern areas, the press service of the Ural inter-regional electric network operating company told Itar-Tass.

o CHERKESSK— It is planned to create a high-technology aircraft industry enterprise and a modern technology park the Karachai-Cherkessia Republic. The regional press service told Itar-Tass that “head of Karachai-Cherkessia Rashid Temrezov approved the proposal of the Interavia design bureau on the creation of the technology park, the decision has been made to sign an agreement between the republic’s authorities and the leadership of the company for the implementation of the project.”

Kudrin in London to prepare Cameron’s visit, discuss IFC. - Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will on Friday discuss preparations for the visit of British Prime Minister David Cameron to Russia this year as well as plans to develop Moscow into an international financial center.

Armenian President to reply to Medvedev’s proposal soon – Lavrovo S. Lavrov: Russia’s waiting for answers from Armenia and Azerbaijano Armenian MFA: progress on Karabakh possible if Baku withdraws its

reservationso Progress on Karabakh possible if Baku withdraws 10 amendments –

Armenian FMo Karabakh mediators to visit conflict zone next week – ambassador: The

co-chairmen of the OSCE (Organization for Security and Cooperation in Europe) Minsk Group will pay another visit to the Nagorno-Karabakh region next week to advance the negotiating process, U.S. Ambassador to Azerbaijan Matthew Bryza said.

o Lavrov to push on with Nagorno-Karabakh settlement. o Russian FM presents Armenian President Medvedev’s proposals on

Karabakho Russian FM conveys Medvedev’s proposals on Karabakh to Sargsyano Moscow prepares proposals on Karabakh - By Sokhbet Mamedov (Baku)

Russia vows to support euro zone stability - Speaking to the national Russia-24 television channel, Lavrov pointed out that Moscow has been concerned with what was going on in the euro zone.

Russia to establish ties with South Sudan - The diplomat also said that the Russian president's special envoy to Africa Mikhail Margelov was going to attend the official ceremony of South Sudan's independence proclamation due on July 9 in Juba, future capital of the country.

Ambassador to Russia Pushes Iraqi Interests - Iraq’s ambassador to Russia says that despite the Russian government allocating 150 scholarships to students from Iraq, the ministries of higher education in Baghdad and Erbil have not helped students study at Russian universities. As a result, most of the scholarships are going unused.

Russia charges Chinese man with contraband of military equipment o Russia seized China-bound combat jet spare parts.

Medvedev presents law on Belarus export oil duties outside CU. Voloshin is reappointed head of group on int’l financial centre. Financing of Skolkovo work not to be cut - Dvorkovich.

Putin to discuss petrol supplies. - The government press service said Putin will “discuss the current situation in the industry and modernization prospects of petrochemical facilities, in particular, increased refining capacities, higher oil conversion ratio, uninterrupted supply of fuel to the domestic Russian market and the necessary changes in customs, tariff, and tax policies.”

Putin Throws Crumbs at Tajikistan - Something must be going right in the rickety relationship between Dushanbe and Moscow. by David Trilling

Russia makes good 20-year-old US$36 million Soviet rice export debt to Thailand Russia to get new icebreakers - Russia is building three new nuclear icebreakers.

The icebreakers will be assembled in part at the Admiralty Shipyard in St.Petersburg, in part in Helsinki.

State Duma goes on summer vacation Russian defense minister lashes out at missile designer for criticism Kremlin says Swedish seizure of property “illegitimate”. T-storm shuts down nuclear reactor in central Russia Investigators request arrest in absentia of former first deputy prosecutor of

Moscow regiono Police hints wanted Russian prosecutor not in Belarus.

Dniester uncovers child molester network. FMS Primorsky Reg chief arrested on bribery charges. Far East forest fire area does not decrease despite rains.

o No major fires in Siberia, 19 wildfires put out Thur. Russia’s First Lady congratulates nation on Family Day.

o Divorce-prone Russia marks Family Day In a village in Dagestan, a powerful explosive device found Dagestani parliament renames the title of the republic’s top official position

o 2011 Dagestan Head’s Message to the Parliament aims at economic priorities, consolidation of society and struggle against corruption

Russian Pilgrimage Center to open in Jordan this autumn Human rights advocate urges Russian authorities to protect Christians of the

world Top Duma official suggests booting opposition leaders from Russia - Vladimir

Zhirinovsky, head of the Liberal Democratic Party (LDPR), wants Yeltsin-era market oriented liberal Boris Nemtsov “and his team” ousted from Russia for good.

Moscow mayor dismisses official accused of power abuse. o Strong economic growth in Russia's capital - The industrial production in

Moscow increased by 11.9 percent in the first half of 2011, while it has grown in the same period last year with approximately four percent, Moscow's mayor Sergey Sobyanin said at a meeting.

o Moscow to build 62 thousand car parking lots by metro stations. Russians aboard ISS work to restart oxygen regeneration system. RIA Russian Press at a Glance, Friday, July 8, 2011 Interfax Moscow press review for July 8, 2011 The reason for the Tu-134 crash was found on the ground - By Aleksandr

Andryukhin and Andrey Gridasov

MOSCOW BLOG: Duma approves bill to lower election threshold Some Russians Happy To Back Status Quo In Election - by David Greene Putin and the Slimmer, Sleeker, Slimier Soviet State - Posted by Seth Mandel Trickle Down Politics - Business Leaders Clamor for Increased Ease of Travel,

Though They Expect Little Movement on Visa Regulations. By Andrew Roth Afghanistan and Pakistan: perspectives from Russia – By Teresita Howard

Schaffer Russia's Summer of Fire, Intrigue, Political Mystery: World View - By Jeffrey

Tayler

National Economic Trends 10% payroll tax on high salaries incorporated in 2012 budget draft Pre-election Budget Maneuver - The Russian Government Is Finding It Hard to

Trim Deficit Spending in its Pre-election Budget Russia: Loosening the fiscal purse – RenCap Consumers feeling better – Based on a Rosstat survey, consumer confidence

recovered and grew from -13% in 1Q11 to -9% in 2Q11. INTERVIEW: CBR expects inflation at 5.5% Jan–Sep, up to 7% in 2011 CBR buys USD4.0bn in June Russian banking sector delivers c. 2% MoM loan growth in June Central Bank to issue extra shares for BoM bailout

Business, Energy or Environmental regulations or discussions X5 Retail, Rosneft, Tatneft May Move: Russian Equity Preview X5 Retail posts upswing in H1 revenue

o X5 Retail Q2 Net Retail Sales Jumps - Quick Facts President of Troika Dialog Ruben Vardanian takes over Rosgosstrakh High-technology air enterprise to be set up in Karachai-Cherkessia. Alfa Group Has Been Disappointed in Aircraft Business Russia’s grasp on electricity tightens - By Catherine Belton in Moscow Usmanov builds Arsenal of shares - Russian businessman Alisher Usmanov has

signalled his ongoing interest in Arsenal, spending $1.5 million on new shares despite Stan Kroenke's takeover.

Activity in the Oil and Gas sector (including regulatory) Libya Courts Russia and China with ENI’s Assets Bulgaria Determined to Give Up Russian Gas Hungary completes acquisition of MOL stake from Surgut S&P Revises Outlook For Novatek To Stable Alliance Oil Publishes Operational Update For The Second Quarter 2011 TGS Announces New 2D Survey in Laptev and East Siberian Seas TNK-BP to Hold Second Supplier and Contractor Forum on September 16 UPDATE: Victoria Oil & Gas continues to make progress with Siberian

exploration Russian Parliament Approves Zero-Rate Subsoil Tax For Select Fields

Gazprom Gazprom Seeks $40 Billion Advance Payment in China Deal, Vedomosti Reports Gas negotiations with China may be complicated by rumored prepayment demand Gazprom, E.ON Ruhrgas Hold Coordinating Council Positive Report on Nord Stream’s Environmental Impact

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Full Text Articles

Basic Political Developments

10:41 08/07/2011ALL NEWS

Itar-Tass news outlook for Friday, July 8.

http://www.itar-tass.com/en/c154/181719.html

8/7 Tass 85

Telephone: 8 (499) 791-00-18

Fax: 8 (499) 791-00-19

ATLANTIS LAST FLIGHT

NEW YORK – The American space shuttle Atlantis will leave for the International Space Station for the last time off Cape Canaveral (Florida): the flight will close the 30 years' Space Shuttle program.

RUSSIA'S GOVERNMENT

ST. PETERSBURG – Russia's Prime Minister Vladimir Putin will visit during a working trip an oil processing plant in the city of Kirishi, the Leningrad Region, where he will chair a meeting on the state of oil products market.

KUDRIN’S VISIT TO THE UK

LONDON – Russia's Deputy Prime Minister, Finance Minister Alexei Kudrin will begin a visit to the United Kingdom, where he will participate in the Russian-British intergovernmental committee on trade and investments. The British co-chair of the commission is Secretary of State for Business Vince Cable.

VISIT OF RUSSIA'S FOREIGN MINISTER

YEREVAN/BAKU - Russia's Foreign Minister will have meetings in Armenia and Azerbaijan to bring closer positions of the sides in the Karabakh settlement.

STATE DUMA

MOSCOW – The State Duma finalizes the spring session.

IMF – COURT

PARIS – The court’s decision allows to start an official investigation of suspects that Christine Lagarde, Managing Director of the International Monetary Fund (IMF), abused her position when she was France’s Minister for Economy, Industry and Employment.

EGYPT – DEMONSTRATIONS

CAIRO – Mass protesters’ actions demanding immediate reforms and quicker trials of the former power will be organized in Egypt. The rallies will feature adherents of the influential Muslim Brotherhood organization.

RUSSIAN REGIONS

MUROM /the Vladimir Region/ - Main festive events of the All-Russian holiday – Day of family, love and fidelity – will be organized in an ancient Russian town. A chamomile flower will be a symbol of purity and joy.

KALININGRAD – The Yantar shipbuilding plant will start a new service ship for Russia’s Navy. The modern frigate will be called the Admiral Essen.

CUTURE NEWS

BOLSHOYE ZAVIDOVO – The Tver Region opens the 10th jubilee open-air festival called Nashestviye /Incursion/.

MOSCOW – A legendary performance of the Lenkom Theatre in Moscow - a rock opera Yunona and Avos - celebrates its 30th jubilee.

KRASNOYARSK - Best folk groups from Russia and abroad have gathered for the eighth international festival of ethnic music called the Sayany Circle, which is organized in the Shushenskoye village in the Krasnoyarsk Territory.

11:09 08/07/2011ALL NEWS

Itar-Tass news digest for Friday, July 8.

http://www.itar-tass.com/en/c154/181745.html

8/7 Tass 114

MOSCOW — Russian First Lady Svetlana Medvedeva on Friday congratulated the nation on the Day of Family, Love, and Fidelity the introduction of which she encouraged in 2008 and offered a daisy as a symbol of the new holiday. “The family is a pillar of support for a person. It provides the happiness of motherhood and fatherhood, forms the character and life values of a child, plays a specific role in the development of society and upbringing of the young on high spiritual and moral ideals,” she said in a message published by Rossiyskaya gazeta.

MOSCOW — Russia’s President Dmitry Medvedev has presented for further ratification by the State Duma a law on payment and calculation of export duties when oil and oil products are exported from the territory of Belarus outside the customs territory of the Customs Union. The law was signed in Moscow on December 9, 2010, the Kremlin’s press service reported on Friday.

MOSCOW — Prime Minister Vladimir Putin will visit the oil refinery in Kirishi near St. Petersburg on Friday to discuss the situation on the domestic petrol market following price hikes and shortages of the fuel in some regions of the country.

LONDOIN — Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will on Friday discuss preparations for the visit of British Prime Minister David Cameron to Russia this year as well as plans to develop Moscow into an international financial center.

MOSCOW — Russian Foreign Minister Sergei Lavrov will visit Armenia and Azerbaijan on Friday to promote Nagorno-Karabakh settlement after the presidents of the two countries failed to agree the guidelines of the settlement at the latest summit in Russia’s Kazan in June mediated by Dmitry Medvedev. “The visit of the minister is paid upon an instruction of Russian President Dmitry Medvedev,” the foreign ministry said.

MOSCOW — The fourth reactor of the biggest Russian nuclear power plant in Balakovo on the Volga River (Saratov region), some 900 kilometers southeast of Moscow, had to be shut down overnight because of a thunderstorm that switched off two power transmission lines. “The thunderstorm on the border between Saratov and Samara regions switched off two power transmission lines going from the Balakovo NPP and powered by the fourth reactor. Automatic protection system switched off the reactor at 22:05 hours Moscow time,” Rosenergoatom operator said in a statement early on Friday.

PARIS — Popular Russian singer Alsou was awarded the title of UNESCO Artist for Peace by the organization’s Director General Irina Bokova on Thursday “in recognition of her commitment to help the most vulnerable people throughout the world, her

charitable activities aiming to empower childhood development, and her dedication to the ideals and aims of the Organization.”

ULAN-UDE — The Russian customs in Transbaikalia seized a batch of equipment which a Chinese national tried to smuggle out into China in his car. The batch included two plunger pumps which are used in MiG-29 and Su-27 combat jets, the customs said on Friday. “Military-designation products can be taken in and out of the country upon licenses issued by the Russian Service for military-technical cooperation,” it said adding a criminal case was instituted on charges of contraband.

NEW YORK — Seven people, including a child, were shot dead inside separate homes on Thursday and police were searching for one suspect, the Associated Press reported from Grand Rapids (Michigan). It quoted Mayor George Hartwell as saying four people were found dead in one home and three in another. He said police are seeking 34-year-old Rodrick Shonte Dantzler who fled the crime scene in a car.

KIEV — Deputies of the Verkhovna Rada (parliament) of Ukraine overnight to Friday passed in the second reading and on the whole the government’s draft pension reform. A total of 248 MPs of 226 required minimum voted for the document.Consideration of the bill lasted 8.5 hours. The document raises the retirement age for women from 55 to 60 years, the pensionable service was raised from 20 to 30 years for women and from 25 to 35 years - for men. The retirement age of male civil servants men was raised to 63 years.

BAKU — Crisis-hit Belarus is working to expand the sales of its products on the Azerbaijani market and attract local investments into its national economy. On Thursday a memorandum was signed in the presence of visiting Belarussian Prime Minister Mikhail Myasnikovich between the Ganja Car Plant and Minsk truck works (MAZ) to produce garbage-collecting vehicles using MAZ trucks and German Haller’s equipment.

TIRASPOL — Police in the breakaway Dniester region of Moldova said on Thursday it uncovered an underground network providing services to foreign pedophiles. “The scope of the phenomenon was rather impressing. Organizers of the criminal business looked for teenagers from problem families, rented apartments for clients and received fabulous profits,” the interior ministry said.

KRASNOYARSK — There are no more major fires in Siberia, 19 spots of wildfires were liquidated on Thursday at an area of about 1.5 thousand hectares, the press service of the Siberian regional emergencies centre told Itar-Tass. On Friday morning, the region was affected by 10 fires at an area of 455.7 hectares. Of these, five forest fires were localised at an area of 234.5 hectares. The main cause of the fires is dry thunderstorms.

VLADIVOSTOK — The Leninsky district court in Vladivostok ruled on Friday to arrest the chief of the Federal Migration Service's Primorsky regional department, Alexander Mukhin, suspected of bribe taking, the press service of the Russian Investigative Committee's regional department told Itar-Tass. A criminal case was opened against the official on July 5 on bribery charges.

YEKATERINBURG— A severe thunderstorm has left more than 40 inhabited localities in the Sverdlovsk Region without electricity. More than 30 electro-transmission lines and over 350 transformer sub-stations are cut off. For the present, 41 localities of about 19,000 people have no electricity. The storm most severely hit the Sverdlovsk Region's south-western, eastern and south-eastern areas, the press service of the Ural inter-regional electric network operating company told Itar-Tass.

CHERKESSK— It is planned to create a high-technology aircraft industry enterprise and a modern technology park the Karachai-Cherkessia Republic. The regional press service told Itar-Tass that “head of Karachai-Cherkessia Rashid Temrezov approved the proposal of the Interavia design bureau on the creation of the technology park, the decision has been made to sign an agreement between the republic’s authorities and the leadership of the company for the implementation of the project.”

07:34 08/07/2011ALL NEWS

Kudrin in London to prepare Cameron’s visit, discuss IFC.

http://www.itar-tass.com/en/c154/181619.html

8/7 Tass 15

LONDOIN, July 8 (Itar-Tass) —— Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will on Friday discuss preparations for the visit of British Prime Minister David Cameron to Russia this year as well as plans to develop Moscow into an international financial center.

Kudrin, who co-chairs the bilateral committee on trade and investments, will meet British co-chair and Business Secretary Vince Cable to discuss plans for the visit of Cameron to Russia later this year, an official of the UK Department for Business told Tass.

Kudrin will then meet Michael Bear, the Lord Mayor of the City of London, to discuss prospects for the creation of the international financial center in Moscow. Bear co-chairs the Russian-British group on the IFC in Moscow. The Russian co-chair is Alexander Voloshin.

Kudrin is also scheduled to have a private meeting with his British counterpart Chancellor George Osborne.

Armenian President to reply to Medvedev’s proposal soon – Lavrovhttp://www.aysor.am/en/news/2011/07/08/sergey-lavrov-serj-sargsyan/

Friday, July 08

Armenian President Serzh Sargsyan is going to prepare a response to his Russian counterpart Dmitry Medvedev’s proposal and message on the Nagorno Karabakh settlement, according to Russian FM Sergey Lavrov.

“President Serzh Sargsyan said he will thoroughly study the message and proposal by President Dmitry Medvedev and will prepare a response. Now we are waiting for a reply. Serzh Sargsyan assured the reply will come soon,” Sergey Lavrov told a joint press briefing with Armenian FM Edward Nabandian following his meeting with President Serzh Sargsyan.

TODAY, 12:39

12:17 08/07/2011 » Politics

S. Lavrov: Russia’s waiting for answers from Armenia and Azerbaijanhttp://www.panorama.am/en/politics/2011/07/08/lavrov-s/

 “A short while ago a meeting took place with President of Armenia Serzh Sargsyan. Assigned by the Russian President and on behalf of Dmitry Medvedev I’ve handed the package of proposals defined after Kazan-hosted summit. Soon after this meeting, I’m departing for Baku to hand a similar message to the President of Azerbaijan,” Russian FM Sergey Lavrov declared in a joint news conference with his Armenian counterpart.

“The Armenian President has highly appreciated the activities of the co-chairs, and the personal efforts of the Russian President. Serzh Sargsyan has confirmed his commitment to record a real advancement in NK issue. He said he would carefully study the Russian President’s recommendations and prepare a proposal,” Russian FM said.

S. Lavrov said the Armenian President promised to prepare the soonest answer to the message. Russian FM says now Russia is waiting for answers back from Armenia and Azerbaijan.

Armenian MFA: progress on Karabakh possible if Baku withdraws its reservationshttp://www.panarmenian.net/eng/news/74025/Armenian_MFA_progress_on_Karabakh_possible_if_Baku_withdraws_its_reservations

July 8, 2011 - 11:49 AMT

PanARMENIAN.Net - Armenia believes that progress in Nagorno Karabakh conflict settlement process is possible.

“Breakthrough is possible if Azerbaijan withdraws 10 reservations it made during the recent presidential meeting in Kazan,” RA Foreign Minister Edward Nalbandian said when responding to a PanARMENIAN.Net reporter’s question during a joint briefing with his Russian counterpart Sergei Lavrov in Yerevan.

Minister Nalbandian expressed gratitude for Russian President Dmitry Medvedev’s continuous efforts for Karabakh conflict resolution.

Despite optimistic forecasts and international 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.

Later on Minister of Foreign Affairs Edward Nalbandian noted that meeting was not a breakthrough, as Azerbaijan proved unready to accept the final version of the basic principles suggested by the OSCE Minsk Group Co-chairs. “Instead, the Azerbaijani leader attempted to impose 10 new proposals, thus precluding the possibility of any agreement on the issue,” he said.

Progress on Karabakh possible if Baku withdraws 10 amendments – Armenian FM

http://news.am/eng/news/67194.html

July 08, 2011 | 11:44

YEREVAN.- Armenia is grateful to Russian President Dmitry Mevedev for his efforts aimed at helping the sides to agree on basic principles of Karabakh conflict settlement, said Armenian Foreign Minister Edward Nalbandian.

We came to Kazan in a positive mood, he said during a joint press conference with his Russian counterpart Sergey Lavrov.

“If Azerbaijan withdraws its amendments, ten amendments they put forward in Kazan, progress will be possible,” he said commenting on future prospects for the settlement of Karabakh conflict.

July 08, 2011 12:09

Karabakh mediators to visit conflict zone next week – ambassadorhttp://www.interfax.com/newsinf.asp?id=257845

BAKU. July 8 (Interfax) - The co-chairmen of the OSCE (Organization for Security and Cooperation in Europe) Minsk Group will pay another visit to the Nagorno-Karabakh region next week to advance the negotiating process, U.S. Ambassador to Azerbaijan Matthew Bryza said.

Hopefully, the co-chairs will make sure that the negotiating progress continues, he told journalists in Baku on Friday.

Despite the disappointing results of the latest talks between the Azeri and Armenian presidents in Kazan, the main thing is that the talks to resolve the Nagorno-Karabakh conflict will continue, he said.

kk eb

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

06:30 08/07/2011ALL NEWS

Lavrov to push on with Nagorno-Karabakh settlement.

http://www.itar-tass.com/en/c154/181608.html

8/7 Tass 4

MOSCOW, July 8 (Itar-Tass) —— Russian Foreign Minister Sergei Lavrov will visit Armenia and Azerbaijan on Friday to promote Nagorno-Karabakh settlement after the presidents of the two countries failed to agree the guidelines of the settlement at the latest summit in Russia’s Kazan in June mediated by Dmitry Medvedev.

“The visit of the minister is paid upon an instruction of Russian President Dmitry Medvedev,” the foreign ministry said.

The summit in Kazan was the ninth trilateral meeting since 2008 and the second in 2011. Although the guidelines were not agreed the parties expressed political will to continue the search for mutually acceptable solutions to resolve the conflict.

Russian FM presents Armenian President Medvedev’s proposals on Karabakh

http://news.am/eng/news/67193.html

July 08, 2011 | 11:38

YEREVAN.- Armenian President Serzh Sargsyan received Russian Foreign Minister Sergey Lavrov on Friday.

Minister Lavrov handed in proposals of the Russian President Dmitry Medvedev formed as a result of debates on Nagorno-Karabakh held in Kazan, he told journalists on Friday.

“Proposals are accompanied by personal message of the Russian President,” said Lavrov.

Russian FM said he is leaving for Baku to convey the message to Azerbaijani leadership.

Lavrov stressed that President Sargsyan reiterated his appraisal of the activities of OSCE Minsk Group and personal efforts of the Russian President. The Armenian leader also confirmed the interest of making progress in the Karabakh peace process, adding he would study  the message and  proposals to prepare a response.

Russian FM conveys Medvedev’s proposals on Karabakh to Sargsyanhttp://www.panarmenian.net/eng/news/74024/Russian_FM_conveys_Medvedevs_proposals_on_Karabakh_to_Sargsyan

July 8, 2011 - 11:34 AMT

PanARMENIAN.Net - Russian Foreign Minister Sergei Lavrov handed over a personal message and proposals of RF President Dmitry Medvedev to Armenian leader Serzh Sargsyan.

“The proposals on the Nagorno Karabakh conflict settlement were formulated following the outcomes of the meeting between the Russian, Armenian and Azerbaijani Presidents in Kazan. I will convey a similar message to Baku as well,” Lavrov said at a briefing in Yerevan.

According to him, reiterating interest in the conflict resolution, the Armenian President said he will examine the proposals and prepare an answer.

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.

Later on Minister of Foreign Affairs Edward Nalbandian noted that meeting was not a breakthrough, as Azerbaijan proved unready to accept the final version of the basic principles suggested by the OSCE Minsk Group Co-chairs. “Instead, the Azerbaijani leader attempted to impose 10 new proposals, thus precluding the possibility of any agreement on the issue,” he added.

Moscow prepares proposals on Karabakhhttp://rt.com/politics/press/nezavisimaya/karabakh-conflict-settlement-russia/en/

Published: 8 July, 2011, 04:34Edited: 8 July, 2011, 04:36

By Sokhbet Mamedov (Baku)

In Baku, Sergey Lavrov will talk about a new meeting between the three presidents 

Today, Russia’s foreign affairs minister will travel to Azerbaijan on a short work visit. In Baku, he will hold talks with representatives of the country’s leadership, in the course of which various approaches to the Nagorno-Karabakh conflict settlement should be addressed. But according to the head of the Center for Political Innovations and Technologies, Mubariz Ahmedoglu, the main objective of Lavrov’s visit is to organize another meeting between the Russian, Azerbaijani and Armenian presidents.     

Foreign Affairs Minister Sergey Lavrov’s visit was unscheduled. Therefore, Azerbaijan’s foreign affairs minister, Elmar Mamedyarov, was forced to cut short his tour of France and Italy and return to Baku. Nevertheless, the Azerbaijani minister was able to cross off all of the main items on the agenda. In particular, in Paris he was able to meet with French Foreign Affairs Minister Alain Juppe and discuss the prospects for resolving the Nagorno-Karabakh conflict, as well as France’s new proposals.     

The details of the current meeting with Lavrov, just as those of the recent meeting between Lavrov and Armenian Foreign Affairs Minister Eduard Nalbandyan, are not being disclosed. Lavrov is known to believe that replacing the OSCE Minsk Group with any other structure would be impractical, as it “only diverts attention from the root of the problem.” Meanwhile, experts say there is a possibility Moscow could make new proposals to Baku and Yerevan. Moreover, it should be noted that after the meeting in Kazan, which took place on June 24, the countries co-chairing the OSCE Minsk Group did not take a time out, as they did before, instead deciding to intensify the negotiating process.       

This position was fully supported by the European Union, whose high representative for foreign affairs and security policy, Catherine Ashton, confirmed last Wednesday that the EU supports the mediating role of Russia, and the personal involvement of President Dmitry Medvedev, in the settlement of the Nagorno-Karabakh conflict. According to Ashton, US President Barack Obama, Medvedev and French President Nicolas Sarkozy’s joint statement in Deauville indicated that the time has come to reach an agreement, the absence of which would cast doubt on the parties’ obligations. 

“The relations between the two states are complicated,” said Ashton. “The co-chairmen fully inform me and the European External Action Service on the work that has been accomplished by them, and the many difficulties they encounter. But despite this fact, the parties need to double their efforts in order to reach an agreement before the end of this year.”

From her statement, it can be concluded that the countries co-chairing the OSCE Minsk Group will no longer tolerate further delay in finding an agreement on the basic principles, and want to complete the process this year. According to Azerbaijani analysts, the reasons for the mediator’s haste are understandable – next year, elections will be held in a number of countries that are taking part in the negotiating process, which will reduce interest in the Karabakh problem.   

It is in this context that we should view Lavrov’s unscheduled visit to Baku, the goal of which, says the head of the Center for Political Innovations and Technologies, Mubariz Ahmedoglu, is to schedule another meeting between the presidents of Russia, Azerbaijan and Armenia.

Russia vows to support euro zone stability http://english.peopledaily.com.cn/90001/90777/90853/7434040.html

13:50, July 08, 2011  Russia was going to facilitate calming the situation on the European currency market during the upcoming G20 summit, Russian Foreign Minister Sergei Lavrov said on Thursday.

Speaking to the national Russia-24 television channel, Lavrov pointed out that Moscow has been concerned with what was going on in the euro zone.

"We hear panic forecasts that Greece is doomed to default, that euro zone will be weakened dramatically; we hear the calls in some countries to leave the euro zone to return to the national currencies," Lavrov said, stressing that market players ought to refrain from making decisions under influence of the "artificial panic."

He said that Moscow would actively facilitate in calming down the situation by active participation in the G20 summit.

"We are certain that the European Union realizes the meaning of the situation not for EU countries only but for the global economy and global finances, judging the role euro occupies in the global payments. International Monetary Fund also understands the importance of well-calculated stabilizing actions without any emotions, screams and sobs," Lavrov was quoted as saying.

According to Lavrov, the situation in the euro zone showed that the reshaping of the global financial system pushed by the BRICS countries has been "as timely as never."

Source: Xinhua

Russia to establish ties with South Sudanhttp://www.chinadaily.com.cn/world/2011-07/08/content_12864074.htm

Updated: 2011-07-08 13:18

(Xinhua)MOSCOW - Russia is ready to establish diplomatic relations with South Sudan after declaration of its independence, Russian Foreign Ministry's spokesman said on Thursday.

"We are ready to establish diplomatic relations with the new state in Africa and in the nearest future we expect to hold substantive talks on the issue with South Sudanese representatives," the spokesman Alexander Lukashevich said.

The diplomat also said that the Russian president's special envoy to Africa Mikhail Margelov was going to attend the official ceremony of South Sudan's independence proclamation due on July 9 in Juba, future capital of the country.

According to Lukashevich, the Russian envoy is to hand a letter from Russian President Dmitry Medvedev to the leaders of the new state.

South Sudan voted to secede from the north in a referendum in January, which is part of the Comprehensive Peace Agreement in 2005 to end two decades of civil war in the largest Africa nation.

Ambassador to Russia Pushes Iraqi Interestshttp://www.rudaw.net/english/kurds/3808.html

08/07/2011 05:19:00 By KHOSHAWI MOHAMMED

Iraq’s ambassador to Russia says that despite the Russian government allocating 150 scholarships to students from Iraq, the ministries of higher education in Baghdad and Erbil have not helped students study at Russian universities. As a result, most of the scholarships are going unused.

“We have not been able to properly use the scholarships because we still have some problems in the ministries of higher education in Iraq and Kurdistan,” Ambassador Fayiq Fariq Nerwayi said. “Many Iraqi students would like to study in Russia but we don’t have a system in Iraq that can efficiently process the students’ demands yet.”

Nerwayi reported that out of the 150 scholarships, 50 of them have been allocated for Kurdistan. 

The ambassador added that delegations from two Russian universities have visited the Kurdistan Region to build academic ties. 

“If a Kurdish delegation visits Russia, the ministry of higher education’s view of Russian universities will change,” said Nerwayi.  

He added his embassy can convince the Russians to open up schools, colleges, language and industrial institutes in Iraq and Kurdistan.

Nerwayi was born in Erbil, the capital of Iraqi Kurdistan, in 1948 and holds a master’s degree in political science from a university in Finland. He was the Kurdistan Democratic Party (KDP)’s representative in Jordan and Turkey for many years.

Nerwayi said Iraqi diplomats and the media have not done enough to inform Russia about the changes in Iraq. The Iraqi embassy is trying to counter that by signing an agreement with Russia Today television channel. 

He argued that Russia has always valued its relations with Iraq, maintaining that Moscow and St. Petersburg have the largest collection of archive documents on Iraq.

Regarding Russia’s stance on the 2003 US invasion of Iraq, the Iraqi ambassador said Russia has had major trade, military and diplomatic relations with Iraq and that by opposing the war “it was defending its interests. It is not against freedom for the Iraqi people.”

Nerwayi also maintained that Russia “is an old friend of the Kurds. We want to tell the Russian government to support the freedom and democracy that has come about in Iraq so that the disasters that the Kurds and others went through in Iraq will not be repeated.” 

While Iraq’s constitution allows the Kurdistan Regional Government (KRG) to have offices inside Iraqi embassies, there is no KRG section in the embassy in Russia because it has not been approved by the Iraqi parliament, he said. However, there is a KRG office in Moscow that operates independently from the Iraqi embassy.

Nerwayi said the KRG office in Russia is not an official entity as far as the Iraqi embassy is concerned but that the two sides deal with each other and “have good relations.”

Nerwayi said he recently had a meeting with Russian President Dmitry Medvedev, who said Russia would try to improve relations with Iraq.  

Russia charges Chinese man with contraband of military equipmenthttp://en.rian.ru/russia/20110708/165082151.html

05:37 08/07/2011

CHITA, July 8 (RIA Novosti)

Customs authorities in Russia's Far East have launched a criminal case against a Chinese citizen who attempted to smuggle spare parts for Russian MiG-29 and Su-27 fighters last year, a customs' spokesperson said on Friday.

The man, whose identity has not been revealed, was caught at one of the border checkpoints in Transbaikal region in July last year. Customs officials found six stepping motors, two piston pumps, 54 connectors, an elapsed-time meter and other parts in the trunk of his car.

"It took experts from the Defense Ministry almost a year to prove that the confiscated equipment is part of assembly kits for MiG-29 and Su-27 fighter jets," Yulia Philipova said.

"A criminal case has been opened," she said.

It is the second attempt by Chinese nationals to smuggle spare parts for fighter jets from Russia in the past three years.

A Chinese man was detained at the same border checkpoint in 2009 while trying to smuggle power supply circuits for Su-27s.

China is notorious for producing copycat versions of military equipment from all over the world.

Russia has accused China of producing its own clones of some Russian-made weaponry, including the Su-27SK fighter jet, in violation of intellectual property agreements.

04:30 08/07/2011ALL NEWS

Russia seized China-bound combat jet spare parts.

http://www.itar-tass.com/en/c154/181584.html

8/7 Tass 35

ULAN-UDE, July 8 (Itar-Tass) —— The Russian customs in Transbaikalia seized a batch of equipment which a Chinese national tried to smuggle out into China in his car.

The batch included two plunger pumps which are used in MiG-29 and Su-27 combat jets, the customs said on Friday.

“Military-designation products can be taken in and out of the country upon licenses issued by the Russian Service for military-technical cooperation,” it said adding a criminal case was instituted on charges of contraband.

Customs spokeswoman Yulia Filippova recalled another batch of Su-27 devices was seized at the same checkpoint in 2009 from a Chinese national who claimed he was carrying water pumps for an acquaintance.

11:05 08/07/2011ALL NEWS

Medvedev presents law on Belarus export oil duties outside CU.

http://www.itar-tass.com/en/c154/181741.html

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(Adds information)

MOSCOW, July 8 (Itar-Tass) — Russia’s President Dmitry Medvedev has presented for further ratification by the State Duma a law on payment and calculation of export duties when oil and oil products are exported from the territory of Belarus outside the customs territory of the Customs Union.

The law was signed in Moscow on December 9, 2010, the Kremlin’s press service reported on Friday.

Medvedev appointed Secretary of State, Deputy Finance Minister Sergei Shatalov his official representative during the ratification procedures in the two chambers of the Federal Assembly.

In December, Russia's Minister of Economic Development Elvira Nabiullina said that Russia and Belarus had agreed to nil oil duties, but to charge ten percent of export duties on oil products.

Experts forecast that the new methods of charging duties will benefit about 3.9 billion dollars to Belarus’ budget.

“As for Russia, we shall not have an immediate effect: we would rather have an effect of bigger sale of the products,” the minister said. “Russia's economy will gain in mid-term more that it may lose in short-term.”

The Belarussian parliament ratified the agreement on December 21.

The agreement does not cover oil produced in the territory of Belarus and oil products produced from third countries’ raw materials and those for re-export.

The duties will be equal to those in the Russian Federation on the day the customs of the Republic of Belarus register a declaration on imported goods. At the same time, Belarus will have a right to charge additional payments to its budget above the export duty payable to the Russian budget.

11:19 08/07/2011ALL NEWS

Voloshin is reappointed head of group on int’l financial centre.

http://www.itar-tass.com/en/c154/181751.html

8/7 Tass 113

MOSCOW, July 8 (Itar-Tass) —— Russia’s President Dmitry Medvedev renewed team of the working group on organization of the international financial centre in the Russian

Federation, supervised by the presidential council on development of financial market, the Kremlins press service said on Friday.

Uralkali’s Chairman of the Board of Directors Alexander Voloshin was reappointed the group’s leader.

The group will feature federal and Moscow officials, representatives of legislative authorities, financial experts, businessmen and scientists.

12:06 08/07/2011ALL NEWS

Financing of Skolkovo work not to be cut - Dvorkovich.

http://www.itar-tass.com/en/c154/181788.html

8/7 Tass 129

MOSCOW, July 8 (Itar-Tass) —— Russia will not cut financing of the Skolkovo’s main work in future, Russia’s Presidential Aide Arkady Dvorkovich said on Friday.

His comment is placed on the site of the presidential commission on modernization.

“Less financing of the Skolkovo innovations centre is caused by the planned finalizing of the infrastructures’ construction,” he explained. “We shall use more private money for construction of buildings, and for the main work – support of projects, university and other directions – financing will not be cut.”

According to the finance ministry’s information, expenses for Skolkovo will be cut from 27.1 billion rubles in 2012 to 17.1 billion in 2014.

Besides, according to the bill of the budget policies for 2012 and for 2013 and 2014, financing of projects, approved by the presidential commission on modernization will be made by private investments, the federal and regional budgets.

Russia plans to allocate for these projects in 2012 – ten billion rubles of federal funds, in 2013 – 6.3 billion, and in 2014 – 3.6 billion rubles.

Lower budget allocations by 2014 are caused by planned finalizing of ten projects in 2013.

“Those are the projects, which were approved in the very beginning, and now they are being completed,” Dvorkovich said.

06:00 08/07/2011ALL NEWS

Putin to discuss petrol supplies.

http://www.itar-tass.com/en/c154/181598.html

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MOSCOW, July 8 (Itar-Tass) —— Prime Minister Vladimir Putin will visit the oil refinery in Kirishi near St. Petersburg on Friday to discuss the situation on the domestic petrol market following price hikes and shortages of the fuel in some regions of the country.

The government press service said Putin will “discuss the current situation in the industry and modernization prospects of petrochemical facilities, in particular, increased refining capacities, higher oil conversion ratio, uninterrupted supply of fuel to the domestic Russian market and the necessary changes in customs, tariff, and tax policies.”

Deputy Prime Minister Igor Sechin in charge of the fuel and energy complex will accompany Putin.

Putin Throws Crumbs at Tajikistanhttp://www.eurasianet.org/node/63827

July 8, 2011 - 12:36am, by David Trilling Something must be going right in the rickety relationship between Dushanbe and Moscow. 

In late March, Moscow increased fuel export duties on petroleum products destined for Tajikistan, the poorest country to emerge from the former Soviet Union. This blog speculated on possible causes: Could it have been pressure to allow Russian troops to reassume control over the Tajiks’ wide-open border with Afghanistan, which Moscow says is a conduit for millions of dollars of heroin blighting Russian youth? Or something thornier, such as whether Moscow should pay to station its troops on Tajik soil? 

Certainly, Russian primo Vladimir Putin isn’t the kind of leader who responds to irritations with charity. In May, prices for gasoline in Tajikistan jumped 44 percent thanks to his tariffs. But in a sudden about-face, the all-powerful Putin has signed a decree actually lowering – slightly, immediately, even retroactively – those fuel duties. Light crude prices will decrease by a modest 3.7 percent as of July 1, CA-News reported on July 5.

Putin is no doubt concerned by what the US Embassy, in a WikiLeaked cable, described last year as a “poorly trained, poorly paid, underequipped and often under-fed” Tajik border force that allows 40 tons of opiates to enter Russia each year. 

But what has he received in return?

It appears something has finally come out of months of meetings over the fate of that vexing frontier, and the few remaining Russian military trainers there. In Dushanbe last week, a high-level Russian delegation including Sergey Naryshkin, the head of the presidential administration, and Defense Minister Anatoly Serdukov announced they had made a deal. 

Though the Tajiks say there is no way they will allow the Russians to retake control of the frontier, Russian President Dmitry Medvedev is set to sign the heretofore-undisclosed agreement with his counterpart, Emomali Rakhmon, when he travels to Dushanbe to attend the annual CIS Summit in September. That party happens to coincide with Tajikistan’s celebrations of 20 years of independence from Moscow.  

The city’s makeup artists are frantically slapping on a smiley face, repaving roads and repainting buildings for the event. Will we learn then what deal the two countries have struck? Or will we be left guessing long after the paint dries?

Russia makes good 20-year-old US$36 million Soviet rice export debt to Thailand http://www.pattayamail.com/business/russia-makes-good-20-year-old-us-36-million-soviet-rice-export-debt-to-thailand-4624

Friday, 08 July 2011By  MCOT

Russia has paid its rice debt of US$36 million, over Bt1.1 billion, inherited from the former Soviet Union, according to Commerce Ministry spokesman Chatchai Chookaew.

The funds transfer was made on June 15 by the Russian government to the Export-Import Bank of Thailand (EXIM Bank). The debt payment was later transferred to the Ministry of Commerce, which will transfer the sum to the Ministry of Finance.

Thai Commerce Minister Pornthiva Nakasai travelled to the Russian capital on behalf of the Thai government to sign the agreement May 31 with Russian Deputy Finance Minister Sergey Storchak that Russia would repay its rice debt’s principal sum of about US$36 million to Thailand by July 12.

At that time, the minister said the accord was to maintain good relations between both countries and that some of the interest had previously been paid to the Thai government

by Russia, and that the latter is an interesting market for Thailand, as the country is dependent on rice imports of 400,000 tonnes annually.

The US$36 million debt was in arrears for over 20 years as Thailand sold 200,000 tonnes of rice to the former Soviet Union in 1990 under a government-to-government contract. It was understood at that time to be repaid in two years, but the Soviet Union collapsed the following year and the Russian Federation government could not meet the obligation.

Several negotiations followed. The latest agreement relieves Russia of the accrued interest of US$9 million.

Russia to get new icebreakershttp://english.ruvr.ru/2011/07/08/52945870.html

Jul 8, 2011 11:35 Moscow Time

Russia is building three new nuclear icebreakers.

   The icebreakers will be assembled in part at the Admiralty Shipyard in St.Petersburg, in part in Helsinki.

   The new icebreakers will be provided with the Rhythm-200 innovative high-powered reactor with an advanced radiation protection system.

   They will be used to cut way for vessels in the Arctic.

RT News line, July 8

State Duma goes on summer vacationhttp://rt.com/politics/news-line/2011-07-08/#id13909

12:26

The State Duma, the lower chamber of the Russian Parliament, on Friday closed the spring session and adjourned for summer recess. During the past season, the MPs ratified 264 federal laws and three constitutional laws, Duma Speaker Boris Gryzlov said. The next session, starting in the autumn, will be the last one for the current configuration of the lower chamber, since in November 2011 Russia will elect a new, 6th State Duma. “I have no doubts that even during the election campaign, we will still be able to stick to the constructive discussion of laws,” Gryzlov told the MPs as he closed the session.

Russian defense minister lashes out at missile designer for criticismhttp://en.rian.ru/russia/20110708/165080824.html

01:58 08/07/2011

MOSCOW, July 8 (RIA Novosti)

Russian Defense Minister Anatoly Serdyukov has accused leading missile designer Yury Solomonov of having grudges against the ministry and lobbying for defense industry.

Solomonov, who designed RS-24 and Bulava ballistic missiles, said in an interview with Russia's Kommersant daily on Wednesday that the 2011 state defense order was in jeopardy partly because the Defense Ministry had delayed the signing of new defense contracts, especially on procurement of strategic nuclear armaments.

"I suspect that he is holding grudges because of his dismissal from the post of the general director of the Moscow Institute of Thermal Technology [MITT]," Serdyukov told reporters on Thursday.

"It could be also viewed as a form of lobbyism, an attempt to interfere with our work," the minister added.

Solomonov was fired from the post of general director of the MITT in July 2009 after a series of unsuccessful Bulava tests. He was replaced by Sergei Nikulin, the former head of the Vympel tool-making plant.

All four launches of Bulava after the replacement were successful, and the Defense Ministry said the missile is ready for commissioning.

"I don't know whether it's a coincidence or not, but his departure and the arrival of a new director changed the work for the better," Serdyukov said.

He said the ministry will recommend the Russian leadership to reprimand Solomonov for ungrounded accusations.

Meanwhile, Serdyukov admitted on Thursday that his ministry failed to conclude contracts worth around 18% (108 billion rubles) out of the overall 2011 state defense order, approved in the amount of 581.5 billion rubles ($20.7 bln), due to soaring prices for military products.

He also said his ministry is ready to buy military products from manufacturers, providing a 25%-plus profitability for them, following Prime Minister Vladimir Putin's statement in May that defense industry enterprises' profitability should not be less than 15% but that ready items should not be overcharged.

If the price the Defense Ministry pays for military products is not transparent and it is unclear where the profit goes, it will not pay extra money to arms manufacturers, he concluded.

01:32 08/07/2011ALL NEWS

Kremlin says Swedish seizure of property “illegitimate”.

http://www.itar-tass.com/en/c154/181554.html

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MOSCOW, July 8 (Itar-Tass) —— The Kremlin property department described the Swedish judicial decision to arrest a building of the Russian trade mission near Stockholm as “illegitimate” and said it would not comply with it.

The arrest was imposed upon a claim of German businessmen Franz Sedelmayer who is seeking close to five million euro of compensation for lost investments while launching a business in St. Petersburg in early 1990s.

The arrest was imposed by the Stockholm City Court and in early July the Supreme Court of Sweden confirmed the judgment.

However spokesman of the Kremlin property administration Viktor Khrekov said on Thursday the Swedish courts “incorrectly applied the norms of international law.”

In particular, the court referred to the UN Convention on Jurisdictional Immunities of States and Property of December 2, 2004, which has not yet entered into force.

“It is even more surprising that the Stockholm City Court did not apply the provision of the 1968 Vienna Convention and the 1927 convention between the USSR and Sweden which have to regulate such an issue,” Khrekov added.

“In connection with the foregoing, and considering that in that case the Swedish courts have gone beyond their powers and committed a violation of universally recognized principles of international law stipulating sovereign equality of states, non-interference into their internal affairs and honest fulfillment of international legal acts, we consider this decision as illegitimate and not subject to execution,” Khrekov said.

The spokesman actually reiterated the statement of the Russian foreign ministry which also recognized the Swedish decision as illegitimate.

The Swedish charge d’affaires was summoned to the ministry on Wednesday to be informed that “the Russian side does not recognize the legitimacy of the given judgment of the Swedish Supreme Court as contradicting international law,” the ministry said.

T-storm shuts down nuclear reactor in central Russiahttp://en.rian.ru/natural/20110708/165081125.html

02:38 08/07/2011

SARATOV, July 8 (RIA Novosti)

A powerful thunderstorm forced the shutdown of one of the reactors at the Balakovskaya nuclear power plant (NPP) in central Russia, the NPP's press service said on Friday.

"A thunderstorm on the border of the Saratov and the Samara regions in late evening on July 7 damaged two power supply lines serving the fourth reactor at the Balakovskaya NPP, causing an automatic safety shutdown," the press service said in a statement.

Radiation levels around the NPP remain unchanged and the work of the fourth reactor will resume after the repairs on two damaged power lines have been done.

The Balakovskaya NPP has four modernized VVER-1000 nuclear reactors with power output of 1,000 MWt each.

Only two of them are currently operational as the first reactor was shut down for scheduled maintenance on June 8 for 60 days.

Natural disasters pose a real threat to nuclear power installations around the world. The recent double-disaster tragedy in Japan has confirmed the vulnerability of the NPP's with most sophisticated safety features.

July 08, 2011 11:43

Investigators request arrest in absentia of former first deputy prosecutor of Moscow regionhttp://www.interfax.com/newsinf.asp?id=257834

MOSCOW. July 8 (Interfax) - The Investigations Committee has asked the court to arrest in absentia Alexander Ignatenko, first deputy prosecutor of the Moscow region, Vladimir Markin from the Investigations Committee told Interfax on Friday.

Ignatenko is involved in a high-profile case involving illegal gambling businesses in the Moscow region. He is currently hiding from the investigators.

av eb

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

02:02 08/07/2011ALL NEWS

Police hints wanted Russian prosecutor not in Belarus.

http://www.itar-tass.com/en/c154/181557.html

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MINSK, July 8 (Itar-Tass) —— Belarussian police unofficially hinted that wanted Russian prosecutor Alexander Ignatenko was not in the republic and officially stated it had not received any requests from Russia to arrest him.

“Competent agencies of the Belarussian interior ministry have so far received no Russian request to find Ignatenko,” deputy spokesman of the ministry Viktor Novikov said.

Unofficially, police officers said the wanted former first deputy prosecutor of the Moscow region was unlikely in Belarus.

“It is possible to hide for a week or two only somewhere in a forest. But it is hardly possible for a former prosecutor who is used to live in comfort,” a police source said.

Ignatenko was placed on the international wanted list on charges of covering an illegal gambling business in Moscow region. Russian media reported he fled the country in May either to Belarus or Ukraine.

05:30 08/07/2011ALL NEWS

Dniester uncovers child molester network.

http://www.itar-tass.com/en/c154/181593.html

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TIRASPOL, July 8 (Itar-Tass) —— Police in the breakaway Dniester region of Moldova said on Thursday it uncovered an underground network providing services to foreign pedophiles.

“The scope of the phenomenon was rather impressing. Organizers of the criminal business looked for teenagers from problem families, rented apartments for clients and received fabulous profits,” the interior ministry said.

It said numerous minors confirmed a relationship, in particular, with a 46-year old German national. He did not confess but told investigators he was “nearly in love with the boys” who wanted to meet him themselves.

Nearly a third of able-bodied population left Moldova in search of work and police estimated over 100,000 children remained without parents. Pedophile scandals rocked the country several times. Last year a British national was detained and in August a US millionaire was sentenced in the United States.

08:41 08/07/2011ALL NEWS

FMS Primorsky Reg chief arrested on bribery charges.

http://www.itar-tass.com/en/c154/181644.html

8/7 Tass 49

VLADIVOSTOK, July 8 (Itar-Tass) — The Leninsky district court in Vladivostok ruled on Friday to arrest the chief of the Federal Migration Service's Primorsky regional department, Alexander Mukhin, suspected of bribe taking, the press service of the Russian Investigative Committee's regional department told Itar-Tass.

A criminal case was opened against the official on July 5 on bribery charges. According to the information of law enforcement authorities, Mukhin had a criminal agreement with a group of persons, not migration service employees, who found people seeking a speedily issued passport for foreign travel. For the accelerated passport issuing procedure, the chief received a sum that was agreed upon beforehand.

Part of the money given to Mukhin as a bribe and other things and documents have been taken as evidence in the investigation.

Mukhin previously headed the Kamchatka Territory's police department. He was invited to work in the FMS Primorsky department and appointed to the position last spring.

11:26 08/07/2011ALL NEWS

Far East forest fire area does not decrease despite rains.

http://www.itar-tass.com/en/c154/181757.html

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KHABAROVSK, July 8 (Itar-Tass) — The area of forest fires in Russia’s Far East is not decreasing, despite rains. Five fires were liquidated in the region on Thursday, but there have been five new outbreaks of fires in the taiga because of thunderstorms.

“By Friday morning, seven fires at a total area of 195 hectares have been registered. There are four fires in Yakutia - 158 hectares of forest are burning there. Three forest fires continue in Chukotka and in the Amur region, the Far Eastern Federal District’s Forestry Department told Itar-Tass on Friday. There are no fires in other territories of the Far East.

There is no threat to human settlements and economic facilities there.

“New thermal anomalies are observed daily in the Fast East during monitoring of the fire hazard situation with the use of the space data system,” the Far Eastern Regional Emergencies Centre reported. Satellite information helps quickly identify spots of fire in remote taiga areas.

08:39 08/07/2011ALL NEWS

No major fires in Siberia, 19 wildfires put out Thur.

http://www.itar-tass.com/en/c154/181643.html

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KRASNOYARSK, July 8 (Itar-Tass) — There are no more major fires in Siberia, 19 spots of wildfires were liquidated on Thursday at an area of about 1.5 thousand hectares, the press service of the Siberian regional emergencies centre told Itar-Tass.

On Friday morning, the region was affected by 10 fires at an area of 455.7 hectares. Of these, five forest fires were localised at an area of 234.5 hectares.

The main cause of the fires is dry thunderstorms.

Despite the improvement of the situation, fire inspectors and foresters continue to struggle now against violators of forest fire safety requirements. On Thursday, they conducted 278 raids to identify such violators. In order to limit people’s access to forests and monitor the situation they have set up 746 mobile and stationary posts.

07:00 08/07/2011ALL NEWS

Russia’s First Lady congratulates nation on Family Day.

http://www.itar-tass.com/en/c154/181614.html

8/7 Tass 33

MOSCOW, July 8 (Itar-Tass) —— Russian First Lady Svetlana Medvedeva on Friday congratulated the nation on the Day of Family, Love, and Fidelity the introduction of which she encouraged in 2008 and offered a daisy as a symbol of the new holiday.

“The family is a pillar of support for a person. It provides the happiness of motherhood and fatherhood, forms the character and life values of a child, plays a specific role in the development of society and upbringing of the young on high spiritual and moral ideals,” she said in a message published by Rossiyskaya gazeta.

The holiday which is often called a version of St. Valentine’s Day was introduced in 2008 and is marked on July 8, the day the Russian Orthodox Church commemorates St. Peter and Fevroniya of Murom – actual characters from an early 13-th century chronicle.

Prince Peter’s love to Fevroniya was so strong that when his counselors objected his marriage with a commoner, Peter abdicated the throne and left the city with his wife. Peter and Fevroniya took monastic vows when they grew old and lived in different monasteries, but died on the same day and at the same hour. They asked to be buried in one coffin, but people thought this was an improper request and buried them in different caskets and even in different monasteries. Then, a miracle happened – on the day after the burial, the bodies were in one coffin. Three hundred years later the Russian Orthodox Church canonized Peter and Fevroniya as saints.

Medvedeva said although the holiday commemorates Russian Orthodox Church saints “it has been supported by all traditional Russian confessions” as “since times immemorial marital fidelity, care about children and the elderly have been the main values in our country.”

Divorce-prone Russia marks Family Dayhttp://en.rian.ru/russia/20110708/165084698.html

11:48 08/07/2011

MOSCOW, July 8 (RIA Novosti)

Russia marked the Day of Married Love and Family Happiness on Friday amid a deepening demographic crisis and a record divorce rate.

The annual celebration was established in 2008 and coincides with a Russian Orthodox Christianity religious holiday devoted to the patron saints of married couples.

Touted as an alternative to Valentine’s Day, which was imported from the West after the collapse of the Soviet Union, Family Day has yet to establish itself in Russia.

Russia had the world’s highest divorce rates in 2010, according to UN figures, and there have been proposals this year that the day be used to stem the tide of separations.

A number of registry offices (which also formalize break-ups in Russia) across the central part of the country proposed on the eve of Family Day that divorces should not be registered on July 8.

This would, the organizers of the proposal said, give unhappy couples an extra day “to think things over.”

Both central and regional authorities have attempted to promote family stability in recent years in an effort to counter both a demographic crisis and shockingly high child abuse rates.

Russia’s population has shrunk from around 150 million in 1991 to just under 142 million today, with no sign of an upturn. Birthrates declined drastically after the Soviet collapse, and show no genuine signs of the kind of improvement needed to - at the very least - maintain current population figures.

The years since perestroika have also seen a startling rise in child violence statistics. Some 2,000 children are killed by adults every year in Russia, many at the hands of parents or relatives.

A social campaign in parts of Siberia this year urged parents to “reject violence for your children’s sake.”

Alcohol abuse has been cited as a major cause of the partial disintegration of the family unit. According to official statistics, over 23,000 Russians die as a result of alcohol abuse every year.

GOOGLE TRANSLATION

In a village in Dagestan, a powerful explosive device found

http://www.interfax.ru/news.asp?id=198300

July 8, 2011 9:38Moscow. July 8. INTERFAX.RU - Improvised explosive device found and defused in the Dagestani village Chontaul Kizilyurt district."Law enforcement officials in conducting operational investigations by the fence outside the house 15 Kadi Abakarova found a sports bag in which there were 30-liter plastic bottle filled with a mixture of ammonium nitrate and aluminum powder with an attached timing mechanism, and a 3-liter glass jar with a triggering agent and bred wires ", - has informed" Interfax "on Friday a law enforcement source.Experts FSB Russia on the country defused the devices. Review.

Dagestani parliament renames the title of the republic’s top official position http://www.riadagestan.com/news/2011/07/07/6893/

07.07.2011 , 12:25Photo: Albert TokayevText: Albina Trosnina

Makhachkala, July 7, 2011. During the session of the People's Assembly of the Republic of Dagestan of the fifth convocation deputies voted for a bill “About replacing of the current title of the top official position of the Republic of Dagestan". It was decided that the title "The President of the Republic of Dagestan" will be changed to "The Head of the Republic of Dagestan." This law will enter into force on January 1, 2015.

2011 Dagestan Head’s Message to the Parliament aims at economic priorities, consolidation of society and struggle against corruption http://www.riadagestan.com/news/2011/07/08/6899/

08.07.2011 , 10:16

Makhachkala, July 7, 2011. Today, July 7, the Head of the Republic of Dagestan Magomedsalam Magomedov has delivered his annual message to the Dagestan Legislative Assembly of the fifth convocation.

"First of all, I consider it necessary to analyze the results of work for 2010 to understand and identify the main directions of economic development, social services, public administration, measures to improve the socio-political relations” – Magomedov said.

“At the present time we can say that in general, it is the turning point in the fight against extremism and terrorism. The state bodies will continue intensifying efforts to eradicate this evil. Along with the security measures it is necessary to strengthen preventive and ideological work. To do this, we plan to create a special republican structure which will be tailored to deal with information policy, including the ideological opposition to the religious extremism"- the Head of the Republic pointed out.

The significant part of the Message was devoted to anti-corruption policy. The Head of Dagestan declared that the measures taken to combat corruption occurred to be insufficient. "The vast majority of corruption phenomena remain outside the purview of law enforcement agencies". As to Magomedov the fight against corruption must acquire a complex character. “The society, in its turn, should demonstrate intolerance to all manifestations of corruption”.

Then Magomedsalam Magomedov proceeded to the economic and social issues: "The major economic problems in Dagestan are long-standing. Among them the deformation of branch structure, the low proportion of real economy in the gross regional product, the high degree of depreciation of fixed assets in the industry, the inadequate material and technical base in agriculture, subsidized budget of the republic, shadow economy, labor surplus, high unemployment level and low wages , poor transportation and engineering infrastructure. "

At the same time the Head of republic pointed out progress in development of key industries in 2010: "Experts register growth in the volume of industrial output, agricultural production, paid services and the retail trade turnover. The index of output of goods and services on the basic activities totals more than 107%. In 2010, the annual income tax and nontax revenues increased by 22.7%. It is scheduled to achieve 24.5% growth in 2011. The endowment of the consolidated budget of the republic in 2010 decreased to 70.9%, i.e. 6.3% less compared to the 2009 indices.

We have managed to preserve positive dynamics in attracting investments, which grew by 10% and totaled to 115 billion rubles. The republic’s executives established an escrow fund of 2.4 billion and an investment land fund with total area of 1,800 hectares. 61 investment projects worth 200 billion rubles have been created. 20 projects have received priority status, which enables us to provide state assistance including a variety of preferences.

By 2025, Dagestan is expected to become one of the leading regions of the Russian Federation in terms of gross regional product and the human development index. There are all necessary conditions for this: natural resources, employment potential and support of the federal government”.

Magomedov drew attention of parliamentarians to the implementation of the public health modernization program, the development of mass sports in the republic and the education modernization program.

In conclusion, the Head of RD said: "Only joint activity among business and government, political parties, religious and social organizations, intellectuals will allow us to achieve all the goals and successfully move forward."

08 July 2011, 10:03

Russian Pilgrimage Center to open in Jordan this autumnhttp://www.interfax-religion.com/?act=news&div=8575

Jerusalem, July 8, Interfax - The Pilgrimage Center in Jordan is expected to be solemnly open this September.

Today finishing works are at the final stage and necessary equipment is purchased, the Russian Ecclesiastic Mission in Jerusalem reports at its website.

The land lot where the Pilgrimage Center is located was transferred to Russia in unlimited use in 2006 on initiative of Jordan King Abdullah II. The complex consists of a hotel for pilgrims, a church, a canteen and a house for honorary guests.

The land transferred to Russia is located on the Eastern bank of Jordan River not far from the historic place of the Lord's Baptism.

The site for building the Pilgrimage Center was consecrated in March 2008, then the first stone in its foundation was also laid.

In January 2011 on the Feast of Baptism, Russian President Dmitry Medvedev had a dip in sacred Jordan waters. He also visited the site of building the pilgrimage center for Russian pilgrims.

08 July 2011, 10:01

Human rights advocate urges Russian authorities to protect Christians of the world http://www.interfax-religion.com/?act=news&div=8574

Moscow, July 8, Interfax - Russia should take the initiative and protect Christians from persecutions in various countries, director of the Human Rights Center of the World Russian People's Council Roman Silantyev believes.

"I believe Russian authorities can take care and protect rights of Christians all around the world as far as neither USA nor the European Union do it," Silantyev said in his interview with the NG-Religii paper.

He reminded that according to head of the Synodal Department for External Church Relations Metropolitan Hilarion each five minute one Christian in the world dies for faith and this statistics proves that "Christianity is the most persecuted religion in the world."

According to Silantyev, most discriminated are Christians in Iraq, Nigeria, Pakistan, Afghanistan, India and Saudi Arabia. It is primarily Catholics, Protestants and representatives of pre-Chalcedon Churches - Monophysites and Nestorians, but "the most frequent are messages about attacks against Orthodox Christians."

"Annual reports of the USA State Department on religious rights should have attracted attention to the problem of religious freedom, but in fact they don't reflect objective situation and are used as an instrument of political pressure," he said.

According to the human rights advocate, authors of these reports "don't see any principal difference between legal sanctions against certain Protestant denominations and massive murder of their members."

RT News line, July 8

Top Duma official suggests booting opposition leaders from Russiahttp://rt.com/politics/news-line/2011-07-08/#id13907

12:04

Vladimir Zhirinovsky, head of the Liberal Democratic Party (LDPR), wants Yeltsin-era market oriented liberal Boris Nemtsov “and his team” ousted from Russia for good. According to Zhirinovsky, Nemstov and other opposition politicians, such as Vladimir Milov or Eduard Limonov, are actually enemies of Russia, intentionally acting so as to provoke a negative reaction towards the Russian authorities from the West. His comments came after Nemtsov complained that he had been banned from leaving Russia for failing to abide by a court order. The restriction, which was lifted by the end of the day, raised a wave of criticism from politicians in the EU and the US.

10:31 08/07/2011ALL NEWS

Moscow mayor dismisses official accused of power abuse.

http://www.itar-tass.com/en/c154/181712.html

8/7 Tass 83

MOSCOW, July 8 (Itar-Tass) — Moscow Mayor Sergei Sobyanin has signed an order removing deputy chief of the city's health department Sergei Volkov from the state service. Volkov is charged with power abuse.

The mayor's office reported that "Volkov was relieved of the position and dismissed from the city civil service on his own initiative."

The official was detained in late June on suspicion of attempting to illegitimately take possession of an expensive apartment in central Moscow. Later, the Russian Investigative Committee brought a charge of power abuse against him (Article 285 of the Russian Criminal Code) in connection with the flat case.

According to the investigation materials, Volkov, using his official position, committed unlawful actions to take possession of a flat in central Moscow. As it has been established, the official, when he previously was first deputy head of the city's department for construction investment programmes, did not carried out a contact for the flat that was destined for a Moscow resident's family to improve their housing conditions. Without canceling the contract, Volkov gave directions to his subordinates not to fulfill it, but to conclude another sale contract for the same flat with his relative -- his wife's mother. Later, the apartment provided at a lower cost was sold at a market price.

A criminal case was opened over the fact under Article 285 and Article 292 of the Criminal Code (power abuse and forgery).

Moscow's Basmanny court has placed Volkov under home arrest.

Strong economic growth in Russia's capital

http://www.russia-media.ru/mainmore.php?tpl=Economy+News&iditem=1741

[08.07.11]

The industrial production in Moscow increased by 11.9 percent in the first half of 2011, while it has grown in the same period last year with approximately four percent, Moscow's mayor Sergey Sobyanin said at a meeting.

"Also our other indicators have improved more than twice the national average. The number of officially registered unemployed has declined to 0.8 percent", said the mayor.

When it comes to the local economy, Sobyanin said: "It depends on the growth of industrial production and retail ... The growth in industrial output was 11.9 percent and sales of goods increased by 4.7 percent; tax revenue increases proportionately”.

Also salaries are on the rise. Wages rose by about 12 percent. The average monthly salary in Russia's capital is now just below 40,000 rubles net, equivalent to about 1.000 Euros. (Source: russland.RU – Internetzeitung)

11:35 08/07/2011ALL NEWS

Moscow to build 62 thousand car parking lots by metro stations.

http://www.itar-tass.com/en/c154/181762.html

8/7 Tass 112

MOSCOW, July 8 (Itar-Tass) —— Moscow will build near metro stations parking lots to house 62,000 vehicles, Deputy Mayor Petr Biryukov said on Friday.

“The objective is to use 25 locations near metro stations for construction of parking lots for about 12,000 vehicles, and this task is being implemented,” he said.

“Today, five of the city’s ten districts have started the process, and the full-fledged work will begin from July 25, as we finalize the competition procedures,” he continued. “We plan to finish the work in October.”

Additional parking lots for 50 vehicles are to be built in territories neighboring metro stations, he added.

“This is one of the most important tasks in solving the transport issues,” Moscow’s Mayor Sergei Sobyanin said.

11:55 08/07/2011ALL NEWS

Russians aboard ISS work to restart oxygen regeneration system.

http://www.itar-tass.com/en/c154/181780.html8/7 Tass 84

MOSCOW, July 8 (Itar-Tass) — Commander of ISS Crew 28 Andrei Borisenko and flight engineer Alexander Samokutyayev work in the Russian segment this Friday for the second day to restart the Electron oxygen regeneration system.

The cosmonauts will be busy all the day long with the replacing of the liquid unit. The day before, they assembled and laid cables of the measurement system for the Electron, the official spokesman for the Mission Control Centre based near Moscow, Valery Lyndin, told Itar-Tass.

The new unit was delivered by the Progress M-11M cargo craft to the ISS last April.

The Electron system caused some problems for the crew in recent time. Since the old unit ran out of its resource long ago, the maintenance and repair work was done regularly aboard the station, and it took much time.

According to the chief of the Cosmonaut Training Centre, space expedition duration record holder Sergei Krikalyov, the ISS crew could not start the reserve unit of the Electron system so long because the unit lay in the "storehouse" too long.

The old unit was expected to work for 365 days, but it worked for more than three resource periods. Since nobody on the earth expected it to operate so long, a new unit was delivered to the orbit by the planned time (in a year). It lay in the Russian segment too long, and as a result it caused the problems to start it.

Krikalyov noted the regular malfunctions of the Electron system did not have any effect on the crew life support. There are more than enough oxygen blocks. In addition, there are oxygen reserves in the Russian Progress cargo craft.

There are three oxygen supply systems aboard the International Space Station -- the Electron, which produces oxygen from water, a solid fuel generator and oxygen cylinders in the Russian and American segments. In case of failure of one of the systems, the other two are used.

Russian Press at a Glance, Friday, July 8, 2011http://en.rian.ru/papers/20110708/165084117.html

10:30 08/07/2011

 

POLITICS

 Russia has lifted a six-month travel ban for Russian opposition leader Boris Nemtsov in response to a resolution by the European Parliament. (Kommersant)

The Kremlin property department described a decision by a Swedish court to arrest a building of the Russian trade mission near Stockholm as "illegitimate" and said it would not comply with it. (Kommersant, Vedomosti)

The Russian parliament is expected to pass on Friday draft law on health care in Russia. Many health officials believe the law is not ready for adoption. (Vedomosti, Moskovskiye Novosti)

ECONOMY & BUSINESS

Heads of Russia’s Gazprom, France’s Total and Germany’s Statoil are expected to gather at an informal meeting in Paris to resolve controversial issues of the Shtokman project. (Moscovskiye Novosti)

The State Duma passed a bill on Thursday enabling the Federal Tax Service to control transfer prices for goods and services traded between parent companies and their affiliates starting Jan. 1, in a measure expected to prevent tax evasion. (Moscow Times,Vedomosti)

Russian business elite continues to distrust the ruble and prefers to keep the money abroad, a survey by UBS and Campden Research shows. (Vedomosti)

Russian grain returns on the Egyptian market. Egyptian state trader GASC agreed to buy 180,000 metric tons of wheat from Russia. (Vedomosti)

The prospects of success at the upcoming gas talks between Russia and China remain bleak. Russia’s Gazprom demands an advanced payment of $25 billion, while China’s CNPC wants an unacceptably low price. (Izvestia, Vedomosti)

DEFENSE

Russian Defense Minister Anatoly Serdyukov said on Thursday his ministry will buy military products from manufacturers only when the price is right. (Vedomosti)

Russia's Defense Ministry promised to introduce by the end of the year a special military police division in the national armed forces to uproot hazing practices and thefts. (Rossiiskaya Gazeta)

SOCIETY

President Dmitry Medvedev has fired five generals from the Interior Ministry and the Federal Migration Service (FMS). All five officials were involved in the fight against economic crimes. (Vedomosti)

Russians are hesitant to take mortgage loans and even if they do, they try to pay them off as soon as possible. The financial burden is too heavy, they say. (Izvestia)

CRIME

The Kremlin human rights council asked President Dmitry Medvedev on Thursday to order a review into the case of former senator Igor Izmestyev, who was sentenced last year to life in prison on charges of terrorism and organizing contract hits. (Moscow Times)

WORLD

Russia is ready to establish diplomatic relations with a new African country - Southern Sudan. Russian presidential envoy Mikhail Margelov will attend the official ceremony of the declaration of independence in Juba on July 9. (Moskovskiye Novosti)

China has postponed the execution of Russian citizen Ildar Sultanov, who was arrested in the country for drug-trafficking, for two years. Chinese authorities say the sentencing could be reduced to a lower- degree punishment if Sultanov cooperates with them. (Moskovskiye Novosti, Izvestia)  

FLIGHT SAFETY

Experts predict that the peak of volcanic activity on Earth will occur in 2014-2015. It could pose a serious threat to commercial aircraft. Some airlines have already equipped their aircraft with volcanic ash detectors. (Rossiiskaya Gazeta)

The U.S. Transportation Security Administration has warned that Islamic terrorists are considering hiding bombs inside surgical implants in an attempt to evade airport security. (Rossiiskaya Gazeta)

July 08, 2011 10:26

Moscow press review for July 8, 2011http://www.interfax.com/newsinf.asp?id=257812

MOSCOW. July 8 (Interfax) - The following is a digest of Moscow newspapers published on July 8. Interfax does not accept liability for information in these stories.

VEDOMOSTI:

Moscow and Beijing are in talks over more than decade-long gas supplies, but have so failed to agree on a price. Another round of talks was held in May-June, but the contract was never signed. It turns out price is not the only problem. Gazprom (RTS: GAZP) wants to get from CNPC an advance payment for future gas supplies, Interfax reported, citing a source close to the top management in the Chinese state corporation. A source close to Gazprom, and a source close to the Russian government said the sum in question is around $40 billion. ("$40 bln up front," also Kommersant page 6, "China is taking Gazprom in advance").

On Thursday, Gazrpom CEO Alexei Miller and Renova Group board chairman Viktor Vekselberg signed an agreement of intention to join the companies' energy assets, the gas corporation said. The joint company will control the main power generating and power supply assets owned by both parties. If the deal goes ahead, Russia will have an energy giant, whose plants will have an installed electric capacity of 52.2 gigawatts (a quarter of the country's total capacity and almost a third of RAO UES which closed down in 2008); thermal capacity 122,000 Gcal/hour. ("One third of RAO UES," also Kommersant, page 5, "Inter RAO switches off TGK").

The Otrkytiye financial corporation is planning to buy an insurer in 2011, Otrkytiye bank CEO Vasily Zablotsky said recently. "Otkrytiye is interested in KIT Finance (RTS: CITB) Insurance," a FK top manager and its former employee said. The company's key owners are RZD and private pension fund Blagosostoyaniye, about 10% is held by managers. KIT Finance Insurance has in fact gone on sale, said Yury Novozhilov, KIT Finance Bank board chairman, who confirmed Otkrytiye's interest in the company. Two foreign investors have also shown interest in the insurer. ("Otkrytiye chasing KIT").

A control stake at Svyazinvest bought by Rostelecom (RTS: RTKM) in October 2010 from AFK for 26 billion rubles, was estimated at 35.25 billion rubles on March 25, 2011, the Audit Chamber said in a report based on the results of the Svyazinvest inspection. Thus, the state or its agent will have to pay for it 9.25 billion rubles more than in the event of the control stake being bought by the VEB as instructed by Prime Minister Vladimir Putin. The state will have to buy this stake from Rostelecom, otherwise after the merger between Rostelecom and Svyazinvest it risks losing control over the new company. ("Expensive control").

Rostelecom and Central Telegraph (RTS: CNTL) are discussing possibilities of merging broadband Internet access projects. Options include a mutual channel lease and a buyout of the Qwerty project by Rostelecom. Currently, there are two rival broadband projects within Svyazinvest: Qwerty run by Central Telegraph (according to AC&M-Consulting, provided services to 220,000 households in Moscow in March 2011) and Onlime run by National Telecommunications (controlled by Rostelecom since February 2011 (around

160,000). Talks over the merger of these projects are under way, Rostelecom President Alexander Provorotov confirmed to the Vedomosti newspaper. Various options are on the table, but the choice has yet to be made. ("Qwerty for two ").

KOMMERSANT:

FAS has suggested to halve the volume of petroleum products traded at commodities exchanges to 15% from domestic supplies. In the run-up to elections this measure will enable the government to keep domestic fuel prices low by ruling out uncontrolled growth of petroleum product exports, which was the companies' reply to the previous government 'recommendation' to reduce retail prices. (page 2, "Petrol turns out to be non-public commodity").

The reason for the Tu-134 crash was found on the groundhttp://rt.com/politics/press/izvestiya/plane-crash-reason/en/

Published: 8 July, 2011, 03:34Edited: 8 July, 2011, 03:43

By Aleksandr Andryukhin and Andrey Gridasov

Investigators became interested in the technical equipment at Besovets Airport, where 47 people died in a plane crash in July.  

During the course of the investigation, the commission determined that a mistake made by the crew was not the only factor that led to the tragedy. Pilots went to land the plane while relying on deficient airfield equipment. Prior to departure to Petrozavodsk, aircraft commander Aleksandr Fedotov was informed of a sudden deterioration in weather conditions in Petrozavodsk. However, the aircraft was allowed to takeoff, because the weather conditions were consistent with the allowable limit.   

“When the airplane passed through the first drive, it reported to ground control,” a source close to the investigation told Izvestia. “The dispatcher warned that the cloud height was lower than usual, and recommended changing course to another airfield. But the commander responded that he would continue to land. The airplane went through the first drive at an exceedingly high altitude and therefore went into a sharp descent. As a result, the crew failed to keep up with the vertical speed.”   

Investigators determined that the dispatcher noticed the airplane had diverted its course when it was already at a height of 15 meters instead of 60 meters, and at the distance of 1 kilometer away from the airfield. He recommended going for another loop before landing. The pilot jerked on the control wheel, the airplane tipped and brushing against

treetops. Had the dispatcher informed him a minute earlier, the catastrophe could have been avoided.

“The dispatcher is not at fault!”, the president of the Russian Trade Union of Air Dispatchers, Sergey Kovalev, told Izvestia. “The Besovets Airport does not have a landing locator. Once there had been one. Instead, now there is a dispatcher’s locator – which is a screen displaying a moving flashing dot. The dispatcher only sees the direction of the flight, but cannot recognize a minor deviation from the course at a distance of 2 kilometer, or a dangerous decrease in altitude.”

Pilots are also complaining about outdated equipment.

“I am very familiar with the Besovets airfield,” Honored Pilot of Russia Leonid Scherbak told Izvestia. “Its only landing system is the OSP blind landing equipment. In all Russian airports it is used only as a spare. The OSP at Besovets has an error margin of 10-12 degrees. All pilots who land there in poor weather conditions always miss the airfield on the first try.”   

The Besovets Airport has had been shut down several times due to non-compliance with safety regulations. The most recent attempt to close it was made by the Northwestern Transportation Prosecutor’s Office in February. Several times, the airport even filed for bankruptcy and changed owners. In 2009, the government of the republic, having paid the previous owner’s debt of 47 million rubles, reopened the airport and became its owner.

“In course of the Prosecutor Office’s investigation, it was discovered that the airport did not have an aviation safety license,” a senior assistant to the prosecutor general of the Republic of Karelia, Tatiana Kordyukova, told Izvestia.

Neither did the airport have search-and-rescue and emergency response certification. The airport’s operations were found by the prosecutors to be “threatening to the life and health of citizens.” However, local authorities did not allow for the airport to be shut down. The first thing that the head of Karelia, Andrey Nelidov, said after the catastrophe was: “The airport’s technical equipment could not have been the cause of the accident.”

But pilots have a different opinion.

“If the airport had a landing locator, the catastrophe would have been averted,” said Sergey Kovalev. “RosAviation officials have argued that it is necessary to install an advanced landing system. But it is too expensive.”

The scandalous purchase of lighting navigation aids should have a special mention. Izvestia learned that in 2008, had opened a bid for the reconstruction of equipment at the airport in Karelia with a starting price of 53.6 million rubles. Initially, the Aviaspetsmontazh assembly and production firm won the bid. Its offer was 4 million rubles less, and included an extended warranty of 10 months. But on the same day it was suddenly discovered that the Aerotekhstroy company had actually won the bid. The bid

organizer explained the initial information as a technical error. As a result, equipment was purchased for twice the original price – 139 million rubles.

MOSCOW BLOG: Duma approves bill to lower election threshold http://www.bne.eu/storyf2774/MOSCOW_BLOG_Duma_approves_bill_to_lower_election_threshold

bne July 8, 2011

The state Duma passed this week in its first of three readings a bill that will reduce the election threshold needed to get into parliament from the current 7% to 5%, the approval of which says a lot about the Dmitry Medvedev-Vladimir Putin duo's plans for politics.

The bill was submitted to the Russian parliament's lower house by President Dmitry Medvedev. First and foremost, it shows the Kremlin is getting ready to loosen its hold on political power and civil society. In effect, it has conceded the fact that the people are tired and want more say over how the country is run. The Kremlin is also preparing to cede more power to genuine opposition groups. This strongly suggests that in future elections the Kremlin will be satisfied with a simple majority.

But not in the parliamentary elections set for December – the new bill won't come into effect until the following Duma elections. This means the Kremlin (ie. Prime Minister Putin) intends to go for a constitutional majority in the upcoming elections. But we knew that already thanks to the PM's move to set up a new alliance in an effort to revitalize the party of power's appeal to the electorate, as it becomes increasingly obvious that United Russia is bankrupt as a political force.

This bill also strongly suggests that Medvedev will stay on as president. This bill could only pass the Duma with Putin's approval, as the PM is fully in control of the parliament. Thus, the decision to pass this bill vindicates bne's belief that Putin intends to introduce more political freedom and gradually ease Russia towards something that looks more like a parliamentary democracy – but to do this slowly.

Both Putin and Medvedev have said explicitly that they want to avoid the mistake that Gorbachev made: he introduced political freedoms first, then tried to push through economic reforms, which led to the collapse of the system. Putin wants to do the economic reforms first and once he has build a stable and prosperous society, only then will he introduce the political freedoms.

This is one of the reasons he is pushing for increased home ownership so hard, as people who own property don't make good rebels. On July 6, he called on Sberbank to reduce interest rates to 8% and these two pieces of news are linked to the same goal.

Too far off

The news that Medvedev has ordered the bar on entry to the Russian parliament to be lowered is a major signal of the duo's future plans for politics in Russia, but this event has passed off with almost no comment. Easing control over politics (albeit in a very limited fashion) doesn't fit with the authoritarian stereotype that Putin's Russia has been branded with.

Political freedoms are coming and there is an increasing amount of noise that suggests as soon as the presidential elections in March are passed, we will see several new big reforms that will attempt to pick up the pace of change significantly.

But all said and done what is so disappointing about this news is that it will only apply to the 2015 elections. That means the opposition will be left in the wildness for another four years.

It's a mistake, because the population is becoming increasingly disillusioned. The middle aged are already drawing parallels with the Brezhnev era, the middle class are frustrated with their political impotence and the young are leaving, complaining that the tight control the state has over the system means that social mobility has been destroyed. If you are not born into the privileged elite, it is extremely difficult to enter for anyone of modest origins.

Putin is betting that if he can repeat his trick of producing fast growth and material gain (incomes increase 14-fold while he was president), then this will be enough to satisfy the voters. But as people become wealthier, they also become increasingly political, or at least demand more say in the political process. If they don't get it, they will eventually revolt. Russia is already prosperous – the time to ease control over the political system is now.

Some Russians Happy To Back Status Quo In Electionhttp://www.npr.org/2011/07/07/137622664/some-russians-happy-to-back-status-quo-in-election

by David Greene

July 7, 2011

Sixteen months out from the 2012 election, U.S. presidential campaigns are already in hyperdrive. There have been debates, stump speeches and attack ads, and the candidates are obsessed with winning over voters.

Russia also has a presidential election next year, but it's a very different kind of democracy. Russia will choose a president sooner, in March, but right now there's no visible campaign. And it's no secret that President Dmitry Medvedev and Prime Minister Vladimir Putin will essentially decide the winner behind closed doors.

Content With The Status Quo

Russia is like the U.S. in one way, though: For a true sense of what people are thinking, it's better to leave the capital.

Two hours outside of Moscow, in the industrial city of Tver, Russians have their own opinions about the state of their democracy, and what should — or shouldn't — be done about it.

Tver isn't just a railroad town; it also builds the railroad. The town's pride and joy is a sprawling factory that produces rail cars.

Mikhail, a 42-year-old who would give only his first name, works in that factory. He says he sleeps better the less people know about him.

Mikhail sounds like a holdover from Soviet times, and in many ways he is. He still lives in the apartment assigned to him by the Soviet government, so there's no rent or mortgage. Mikhail supports his wife and two daughters making $700 a month building rail cars. Life isn't easy, but Mikhail says he lives by a lesson: Change can only be for the worse.

So in this March's presidential election, he's happy to support the status quo, either by re-electing Medvedev or voting for Putin. It's just a matter of those two men deciding which name goes on the ticket.

"If I could, I would vote for both of them. It doesn't make sense to vote for anyone else. It's better to have someone who is tested, or else someone new will come along and start making a mess," Mikhail says.

Little Opportunity For The Opposition

Chances are that nobody new is coming along. Putin, who served eight years as president before stepping down, is considering a comeback. As for Putin's protege, Medvedev has been mum about his plans. The assumption is the two of them will decide together who gets the nod.

As for anyone else? The government routinely bars opposition parties, and organized rallies are against the law unless sanctioned by the government. So whoever jumps on the ballot — Putin or Medvedev — is expected to coast. That doesn't sit well with everyone.

A 28-year-old named Pavel, who feared that giving his last name in an interview would get him punished at work, says Russia's leaders have done little to brighten the future for young people.

Pavel does not live in Soviet-era housing and says he has a costly mortgage on his apartment because the government lets interest rates climb out of control. He works as a government veterinarian but says he has to drive a cab on the side to survive. He could make a statement at the ballot box, he says, if Russia had a truly fair election. Instead, opposition leaders who might speak for him are blocked out.

"This is just not right. It's time for us to have new leaders. It's time for us to look at how other countries choose their rulers. Here, these people are in power too long, and they're starting to get brazen," Pavel says.

Support For Stability

As much as people like Pavel want change, though, something has kept Russia from exploding with outrage. Everyone has his own explanation: Maybe too many people fear the authorities, or maybe enough citizens are satisfied with their wages and the state of Russia's economy.

Whatever it is, Russia probably won't see full-scale demonstrations for democracy until people like Julia Repich are driven to act.

Repich is a 35-year-old chef at a restaurant in Tver that plays American country music. Repich herself spent years in the U.S. attending cooking school and tasting American democracy before returning home to be with family.

When asked if she missed the political system in the U.S. when she moved back to Russia, she says no — she missed the food.

Repich said the idea of a real election in March is a farce. Yet these days feel stable, compared with the tumult at the end of Soviet times. So she's happy to support Putin or Medvedev and isn't interested in joining some opposition group.

"It's [nicer] to just go to work and take care of my family and [that's] just it. I think we don't have any time for this," she says.

No time, she says, for a pro-democracy movement that might only create chaos.

Putin and the Slimmer, Sleeker, Slimier Soviet Statehttp://frontpagemag.com/2011/07/08/putin-and-the-slimmer-sleeker-slimier-soviet-state/

Posted by Seth Mandel on Jul 8th, 2011

In Vladimir Sorokin’s dark new novel, set in the year 2028, Russia has traversed the slippery slope from Putinism back to czarism. The main character, Andrei Danilovich Komiaga, a member of the oprichnina—the czar’s elite federal enforcers—catches one of his men reading a banned book and reprimands him. “You understand, you idiot, we’re guards. We have to keep our minds cold and our hearts pure.”

Stephen Kotkin, a professor of history at Princeton who is writing a book on Stalin, immediately recognized that the more you follow Putin’s Russia, the less ridiculous the book, called Day of the Oprichnik, sounds.

“So it is in Putin’s Russia, where a gang of police officials, the siloviki, lord over not just the richest private citizens but also other parts of the state,” Kotkin wrote in the New York Times Book Review. “Sorokin’s imaginative diagnosis of Putinism further grasps that the officials’ looting is driven not by profiteering alone, but by their conviction that they are defending Russian interests. Everything Sorokin’s oprichniks do is a transaction, but their love of country runs deep. They may give in to temptation and tune in to foreign radio (‘enemy voices’), but these moments of weakness vitiate neither their pride in their work nor their code of honor. They have ideals.”

This is all worth keeping in mind as Putin prepares to retake the presidency. Most analysts agree that Putin is really in control now despite Dmitry Medvedev’s position as head of state. There aren’t many practical reasons, therefore, for Putin to lift the curtain on his puppeteer act and reveal the farcical nature of his premiership during Medvedev’s presidency.

It also doesn’t make much sense to stop attempting to fool NGOs and proponents of demokratizatsiya by so boldly rebuking the accepted social norms of modern statecraft, an essential element of which, for postcommunist states, is to pretend your people are much freer than they actually are.

But it makes perfect sense if you understand the importance of national identity. Putin’s decision to return to full power is mostly a symbolic one—but that symbolism, like the photograph of Putin after he supposedly shot a charging tiger with a tranquilizer gun, saving an entire camera crew, is an essential element of the projection of power for the state, not just its leadership. Medvedev may be something of a reformer, but those reforms are not only modest but also irrelevant if they must be acquired through the depletion of national pride. Putin recognizes this, and understands that if he can provide stability and security, the rest won’t matter.

Trickle Down Politicshttp://russiaprofile.org/business/40417.html

Business Leaders Clamor for Increased Ease of Travel, Though They Expect Little Movement on Visa RegulationsBy Andrew Roth Russia Profile 07/07/2011

Russia is set to considerably ease its visa regime with the United States and members of the Schengen Zone by introducing long-term visas and simplifying the necessary paperwork to receive them. At the same time Russians travelling to the United Kingdom have become incensed in recent days over considerable delays for visas, leaving potential travelers stranded and bearing the costs of cancelled travel plans. With public criticism of the visa process mounting, debates are emerging over whether a similar easing of the visa regime between Russia and the United Kingdom is necessary, or even possible.

For Russians travelling abroad, in particular to Europe and the United States, nerve-racking waiting periods for visas and a fear of rejection are the norm. Yet recently the issue has come to a head as hundreds of Russians waiting for visas to the United Kingdom have suffered delays, igniting anger against a system that regular travelers to the country say is excessively convoluted.

“I would say that the real issue here is a lack of respect for people travelling as scientists, professors, and so on,” said Viktor Khrul, a professor of Journalism at Moscow State University, who was delayed en route to an official convention taking place at Cambridge. “In the American Consulate, you have people that you can talk to, some sort of contact, but in the British office, you hand in your documents, and you have no idea what happens after that.”

Tour operators too have been hit with major delays in processing visas in recent weeks, prompting official complaints from Russia’s Association of Tour Operators. Maya Lomidze, the acting director of the organization, told Russia Profile that as of this Saturday, 60 families with plans to travel to the United Kingdom on official tours had been forced to change or cancel travel plans, with additional costs being split between themselves and local tour operators.

Lomidze noted that while visa applicants attempting to travel to the United Kingdom and the United States were fairly similar, an important difference was Britain’s higher rate of refusals for visas. “Britain is also the leader in terms of denying visas. While the United States is close to two percent, the United Kingdom is close to eight percent,” said Lomidze. Schengen visas to mainland Europe, she further noted, were considerably easier to obtain.

A beleaguered British passport service has cited an unprecedented growth in applications for travel to the United Kingdom as the main cause behind the delays. Embassy officials said in e-mailed statements that early figures for the months of April, May, and June indicated a continuing trend of a 37 percent jump in applications for tourist visas this year, and said that travel companies block-booking reservations to sell to customers are further hampering the process. Embassy officials said that they were extending working hours and increasing staff to deal with the increase in applications, adding “we hope to

meet our published targets again soon.”

The visa hold-up is emerging as considerable advances in easing visa restrictions between Russia and the United States and Russia and the member states of the Schengen Zone are set to take place.

Russian Foreign Minister Sergei Lavrov and US Secretary of State Hillary Clinton are set to sign an agreement in Washington next week that will allow for three-year multiple entry business and tourist visas and eliminate some of the documents necessary to receive a visa, including invitations. Lavrov said today that the signing was on track, and that the document was in the “final stage” of preparation. Europe, too is seeing considerable progress, where France and other countries in the Schengen Zone plan to introduce five-year tourist visas for Russians by the end of year. The Schengen Zone consists of 25 countries covering much of Europe, but not the United Kingdom and Ireland.

American Ambassador to Russia John Beyrle, likely to be replaced by Michael McFaul soon, noted in remarks on July 4 that the new visa regimes are for him the “best” part of the reset between the two countries, putting those negotiations on level with the signing of the new START treaty. “The main thing that I have learned in the three years that I have been here is that as important as the relationship is between the governments, the relationship between the people is more important,” said Beyrle, reported the Moscow Times.

In contrast, visa restrictions between the United Kingdom and Russia appear unlikely to change in the near future. British Minister for Europe David Lidington made waves in the Russian press this week when he said on Wednesday that any discussion of relaxing the British visa regime were contingent on progress in the case of Andrei Lugovoi, whom the British want extradited from Russia on suspicion of the murder of ex-KGB spy Alexander Litvinenko in 2006. Clarifying statements by the Russian Embassy in Moscow said that Lidington was referring specifically to travel restrictions for bureaucrats, and not for regular Russians travelling as tourists or on business.

All the same, both countries have protested the other’s border policies in high-profile cases in the past. While the United Kingdom has protested visa annulments in cases like Guardian journalist Luke Harding this February and Hermitage Capital head William Browder in 2006, Russian authorities have also complained about Russian fugitives, such as oligarchs Boris Berezovsky and Andrei Borodin, taking refuge in the United Kingdom after running foul of the Kremlin. 

Agitators for a relaxed visa regime between the United Kingdom and Russia have focused more closely on eliminating bureaucracy than on high-profile political cases, however. Executive Director of the Russo-British Chamber of Commerce Stephen Daizel wrote in a recent op-ed for Russia Beyond the Headlines: “For once, I should be delighted if we were to take a leaf out of the Americans’ book. It’s high time that the bureaucrats realized the benefits that international business brings to the country and made the visa process simpler or – shock, horror – abolished it altogether. This, of

course, is unlikely to happen any time soon.”

Lomidze said that the primary issues were simply administrative problems in the embassy’s visa department, which needed to plan accordingly for future demand.  “Some long term changes need to be made, like increasing the number of workers and shortening the period for receipt of visas,” said Lomidze. “But we don’t see this as a political issue, just as an administrative issue.” Lomidze further noted that despite publicity over the delays, interest in travel to the United Kingdom remained at previous levels.

Published: July 8, 2011 01:27 IST | Updated: July 8, 2011 01:27 IST

Afghanistan and Pakistan: perspectives from Russiahttp://www.thehindu.com/opinion/op-ed/article2208167.ece

Teresita Howard Schaffer

Russia's concerns about Afghanistan stem mainly from its impact on their neighbourhood through narcotics trafficking and the export of Islamic radicalism. China's growing economic footprint is also a worry. There seems little interest in a major policy role.

July 6, 2011: A group of senior non-official American and Russian policy analysts recently spent a long, intense day comparing notes on Afghanistan and Pakistan, part of a longer meeting on U.S.-Russia relations. Both countries' analysts started with some important common concerns. Primary among them was their hope that Afghanistan would emerge as a stable country, able to develop economically and to govern itself effectively. Containing Islamic radicalism and preventing it from radiating outward from Afghanistan and Pakistan was on both countries' radar screen; so too was the problem of narcotics trafficking through Central Asia.

But as the discussion grew more specific, the differences in the priorities as seen from Washington and Moscow became clearer. The first and most striking concerned the U.S. presence in Afghanistan. Ironically, the Russians in the group were “alarmed” — a word several used — at the prospect of an early withdrawal of U.S. forces, and appeared surprised that most of their American colleagues considered U.S. military withdrawal by 2014 a near-certainty. From the Russians' point of view, the U.S. military presence helped reduce the flow of drugs, extremism and other undesirable “exports” into Central Asia and thence into Russia itself. A few commented that they saw history repeating itself, but their policy priorities gave remarkably little vent to snickering that the U.S. had fallen into the same morass that the Russians had experienced two decades ago.

Narcotics control

Narcotics control was described by most of the Russian participants as a high priority; several listed it as Russia's biggest problem with Afghanistan. One person referred to

“some Russian people's” suspicions that the United States was turning a blind eye to drug trafficking in order to keep dissident tribes from making trouble.

Also high on the Russians' list was the problem of Islamic extremists moving into Central Asia and thence into Russia itself. The Russian scholars worried that the freedom of movement established in post-Soviet times made it easier for Muslims from Russia to visit Afghanistan and Pakistan and return radicalised (“returning as gunmen,” in the words of one participant). In the new dispensation, the Russian authorities had much less information than they would like about the people involved or even how many might be involved. Movement of drugs and extremists contributed to repeated references to Russian “vulnerabilities” that would be exacerbated by U.S. withdrawal.

Continuing turmoil in Afghanistan complicated Russia's policy of economic and political “reintegration of the former Soviet space.” China was also on the Russian group's mind. The discussion started with the implications of Chinese investment in natural resource industries in Afghanistan, but the real concern was expanding Chinese influence elsewhere in the region. “In twenty years, they will own Central Asia,” one commented. The undertone of general suspicion about China was unmistakable.

Some of the Russian scholars worried about the weakness and illegitimacy of the Afghan government in terms very similar to discussions one hears these days in Washington. On the U.S. side, there were different views on this subject, with one expert on Afghanistan notably more optimistic and other participants sharing the dark view of their Russian counterparts.

On the American side, concerns about Pakistan weighed more heavily, including worries about the Pakistan economy and about the insurgency inside Pakistan. Several Russian participants commented on Pakistan's troubles, but it was clear that the problem of Pakistan as “Sick Man of South Asia,” as it so frequently appears in Washington, was not on the Russians' minds to the same extent. Americans' concern about the export of Islamic extremism focused more on Western Europe and the United States.

India-Pakistan relations

Members of the American team were searching for implementable ideas on how to improve governance in states that were institutionally weak and in danger of failing. This general idea had relatively little resonance with the Russian group, but one person mused that if the goal was to “restructure Afghan society,” this could not be done from a distance.

Everyone agreed that Pakistan's goals in Afghanistan were strongly influenced by its desire to eliminate Indian influence. Some of the Russian participants went a step further and argued that changing India-Pakistan relations was essential to stabilising Afghanistan. There was not, however, any discernible appetite for active Russian diplomacy on India-Pakistan issues. One of the Russian team cited India's lack of enthusiasm for an earlier proposal that Gorbachev serve as an envoy for India and

Pakistan. The Russians showed little expectation of an India-Pakistan breakthrough, but also little concern about India-Pakistan hostilities in the near term.

Several ideas for U.S.-Russian cooperation on Afghanistan came up. Russia's involvement in creating alternative logistical routes for the United States was noted, and several American participants spoke of possibly buying supplies for U.S. troops in Afghanistan from Russia. Some cooperative efforts are in fact already in operation, e.g. on narcotics control. But in general, this part of the discussion seemed less realistic than the analytical part. Several Russians noted that Russia considered itself an aid donor. They expressed an interest in taking an active part in Afghanistan's reconstruction, but little interest in paying for that reconstruction.

The Russian participants did not appear to expect Russia to be a major player in South Asia. Every once in a while, echoes of the more expansive policies of bygone years came through, along with a palpable concern about being caught off guard by changing U.S. policies. But today's Russian policy elites have focused their most intense interest on issues closer to home and to the heartland. The aspects of Afghanistan and Pakistan that were on their minds are those that affect Russia's neighbourhood — narcotics and radicalisation — but these countries are at, or even beyond, the boundaries of the neighbourhood.

(Teresita and Howard Schaffer are former U.S. ambassadors, with long years of service in South Asia. They are co-founders of southasiahand.com. Howard Schaffer teaches at Georgetown University; Teresita Schaffer is a non-resident senior fellow at Brookings Institution.)

Russia's Summer of Fire, Intrigue, Political Mystery: World Viewhttp://www.bloomberg.com/news/2011-07-07/russia-s-summer-of-fire-intrigue-political-mystery-world-view.html

By Jeffrey Tayler Jul 7, 2011 9:29 PM GMT+0200

Is lightning striking twice in the same place? Kommersant has sounded the tocsin, warning that once again peat bogs around Moscow are burning: "According to the Ministry of Emergency Situations, on Sunday in the region around Moscow sixteen wildfires broke out simultaneously."

Authorities said that the fires have been extinguished, but Kommersant quoted Grigory Kuksin, of Greenpeace Russia, who refuted the good news. "In the Gus-Khrustalny district alone, five fires are burning," Kuksin said. "The situation in the region is bad. There aren't enough resources to put out fires or even contain them."

The bogs currently ablaze may prefigure a return of the catastrophic wildfires that last summer coincided with a record-shattering heat wave and raged for weeks, generating

lethal smog that blanketed the capital, wrought billions of dollars worth of damage and, at least indirectly, caused tens of thousands of deaths.

Disaster may well hit again. Zhivoy Zhurnal published a photo of a grim poster of unknown provenance that has mysteriously been turning up in the capital's elevators. The poster states: "In accordance with predictions of an emergency in 2011, the threat of wildfires in the Moscow region continues."

For now, rains are holding the smog at bay. Alarmed Muscovites may take additional comfort in the (reportedly air-conditioned) "anti-smog" centers to be established at the mayor's orders in each district of the capital, according to Russkaya Sluzhba Novostey. But will such facilities really manage to accommodate many of Moscow's 12 million residents? Don't count on it.

***

A bombshell has just landed on President Dmitry Medvedev's desk. A report on July 5 from the Presidential Council on Civil Society and Human Rights delivered the latest turn in the investigation of the 2009 death of Sergei Magnitsky in Matrosskaya Tishina prison.

Magnitsky was a lawyer who represented the investment company Hermitage Capital. In response to allegations of tax fraud and evasion against his client, Magnitsky had accused various agencies of the Russian government of perpetrating fraud against Hermitage -- a perilous demarche in Moscow's current business environment.

In 2008, Magnitsky was detained on "no legal grounds," the council stated in its preliminary conclusion. "He had been arrested on tax evasion charges just days after claiming to have uncovered massive embezzlement of state funds on the part of law-enforcement officials."

The press had long conjectured that Magnitsky died of (possibly deliberate) medical neglect. But the report said that his death may have been the result of a beating, according to RIA Novosti's summation:

"Before his death, Magnitsky was deprived of medical care. In addition, there is reasonable suspicion to believe that the death was triggered by beating Magnitsky: Subsequently his relatives recorded smashed knuckles and bruises on his body. In addition, there is no medical description of the last hours of his life."

Medvedev responded that Magnitsky's death was "caused by criminal actions," according to RIA Novosti.

Alexandra Odynova of the Moscow Times provided the gruesome details from the report:

"Eight prison guards severely beat lawyer Sergei Magnitsky shortly before his ... death in pretrial detention ... providing a new twist to allegations that Magnitsky had been tortured in prison."

This news broke just after Dutch parliamentarians passed a resolution calling for sanctions against Russian officials involved in the Magnitsky affair, according to Lev Makedonov at Gazeta.ru. Makedonov reminded readers that the U.S. Senate and the European Parliament are also poised to impose sanctions.

The Magnitsky affair puts pressure on Medvedev, a professed liberal who has decried Russia's "legal nihilism" and often calls for judicial reform. But in the Moscow Times, Vladimir Frolov issued a damning op-ed critique of the head of state and his self-avowed liberalism, comparing Medvedev to Prime Minister Vladimir Putin:

It is hard to figure out where the real Medvedev is. He says one thing and then does the opposite ... Putin is different, however. At least he does what he says, and you know what to expect from him, even though you might not like it. We now know who Mr. Putin is. But who is the real Mr. Medvedev?

***

Putin, meanwhile, continues to drum up support for the All-Russia People's Front, an organization created at his initiative that aims to unite unions and business associations, presumably to back Putin's candidacy in next year's presidential elections. Zhivoy Zhurnal reported on the front's newest, and certainly most scantily clad, members. "Premier Putin's call has been heard by representatives of the younger generation. The Union of Russian Cheerleaders has joined the All-Russia People's Front!" The pictures accompanying the text are revealing of more than just the union's support for Putin.

But is the former spymaster really planning to mount a campaign? Speaking at a United Russia conference in Yekaterinburg, Putin declared that the morning after the vote, "I'll go and wash up, in the hygienic and political sense of the word" -- a metaphorical admission that the election, scheduled for March 2012, is bound to sully its participants. Colorful though his statement was, it didn't clarify whether he intends to again seek the office he held for two terms, from 2000 to 2008. (The constitution prohibits a third consecutive term.) He has yet to announce his candidacy, though he is widely expected to run.

But against whom? Nina Khrushcheva, an associate professor of international relations at the New School in New York and the daughter of former Soviet leader Nikita Khrushchev, has a good idea of who won't be running. In her syndicated column, Khrushcheva dismissed (perhaps too hastily) a Medvedev candidacy, calling him "meek" and citing his recently announced disinclination to run against Putin, who, she reminds us, "put him in power in the first place."

Medvedev’s role can't be understood outside the political environment in which he operates, Khrushcheva continued:

The current regime is clearly autocratic. Yet it aspires to democratic legitimacy in the eyes of Russian citizens and the international community. It is to this end that Medvedev performs his civilizing mission -- participating in world forums, posting Twitter updates, berating rampant corruption and supporting "modernization" and the "rule of law."

She denied "that anything Medvedev says means that Russia is changing," and implied that the Obama administration is under no illusions, even as it hopes to sway the outcome of the elections:

U.S. Vice President Joe Biden, usually a critic of Russia, arrived in Moscow in March, supposedly to convince Putin to surrender his presidential ambitions for 2012. A month later, talking to Putin by phone, Biden invited him to visit Washington, despite the fact that the prime minister has no foreign-policy role, according to Russia's constitution. Does the U.S. support Putin in the election? Or by recognizing Putin's historic importance, does Washington mean to convince him to leave power? No one knows.

The U.S. government's preferences will have little or no effect on who next holds the keys to the Kremlin. At the heights of power in Russia, a mysterium tremendum prevails, stymieing predictions and thwarting attempts at outside influence.

(Jeffrey Tayler is Moscow correspondent for World View. He is a contributing editor at The Atlantic and the author of six books, including "Murderers in Mausoleums: Riding the Back Roads of Empire between Moscow and Beijing." The opinions expressed are his own.)

To contact the writer of this column: taylerjeffrey@yahoo.com.

To contact the editor responsible for this column: Timothy Lavin at tlavin1@bloomberg.net.

National Economic Trends

10% payroll tax on high salaries incorporated in 2012 budget drafthttp://www.bne.eu/dispatch_text16100

Alfa BankJuly 8, 2011

The government yesterday approved key parameters for the 2012 budget, with the budget deficit at 2.7% of GDP when under $93/bbl for oil prices. The budget draft assumes a

budget breakeven of $125/bbl, which did not come as a surprise. The bad news, however, is that this increase in the breakeven happened despite the introduction of a 10% payroll tax on annual salaries above RUB 512,000.

As we mentioned yesterday, the 11% y/y increase in expenditures came as a surprise, as it appears to contradict Medvedev's recent budget address calling for controlled budget risks. Furthermore, we are very surprised by the silent approval of the 10% payroll tax on higher-level salaries, which offsets the positive effect on business that was expected from the reduction of the payroll tax rate from 34% to 30%. While we have discussed this risk previously, we were not expecting that this measure would be approved without discussion. The fact that even after the introduction of this additional payroll tax the breakeven is expected to increase to $125/bbl next year is definitely NEGATIVE.

While the market reacted positively yesterday, we reiterate our cautious view. First, the reaction was due to the significant reversal of the plan for the next three years, which previously implied flat spending in real terms but now assumes around 10% real growth for the period. However, we believe that this is a reflection of 2012 political trends that could return to consideration within the government. Secondly, as 80% of the increase in overall spending will be compensated by the increase in tax revenues, the net impact on the real sector will be relatively modest. Finally, we consider the $125/bbl breakeven too high, which may result in a call for tightening in policy soon.

Natalia Orlova

Pre-election Budget Maneuverhttp://russiaprofile.org/business/40437.html

The Russian Government Is Finding It Hard to Trim Deficit Spending in its Pre-election Budget

By Tai Adelaja Russia Profile 07/07/2011

With Russian parliamentary elections on the horizon, the Russian government is opening up its treasury and plans to spend trillions of rubles on pumping up salaries, raising pensions and easing the social tax burdens on businesses. The cabinet on Thursday considered the country’s largely predetermined budget parameters that provide for 3.8 trillion rubles ($135.66 billion) in social spending, by far the largest item in the three-year federal budget. The preliminary budget further puts baseline defense spending at 1.85 trillion rubles ($66 billion) and another 1.69 trillion rubles ($60.2 billion) has been earmarked for security and law enforcement.

Over the next three years, the Russian government plans to spend 293.3 billion rubles ($10.47 billion) to raise public workers' salaries using indexation mechanisms. Another 1.2 trillion rubles ($42.84 billion) will go toward building new roads and upgrading the country’s dilapidated transport infrastructure. State pension funds will continue to get a

boost after a surge in commodities prices helped bolster state finances. The government plans to transfer 2.3 trillion rubles to the funds this year and up to 3.1 trillion by 2014. Easing the social tax burden for companies will cost the budget 236.4 billion rubles in 2012 and another 275.6 billion rubles in 2013, according to the budget parameters considered on Thursday.

Despite rising global oil prices, the new spending spree is expected to punch a hole in the budget. The federal budget deficit is expected to make up 2.7 percent of gross domestic product in 2012-2013, which is twice the 1.3 percent calculated for 2011, but should drop to 2.3 percent in 2014, according to the preliminary budget drawn up by the Finance Ministry. Prime Minister Vladimir Putin told the cabinet on Thursday that Russia's federal budget deficit this year may in fact be lower than 2.7 percent of GDP. “The projected budget deficit in 2012 is 1.6 trillion rubles ($57 billion), or 2.7 percent of GDP ... We hope that next year the real deficit will be lower than projected,” RIA Novosti quoted Putin as saying. Putin added that the government should continue to look for ways to achieve a deficit-free budget.

The Cabinet may have to forgo its plans to cut government spending and return to a deficit-free budget in 2015, Vedomosti business daily said Thursday, citing unnamed sources at the Ministry of Finance. The country's 2012 budget is based on an average oil price of $93 per barrel, but Finance Ministry officials have said that the government can only achieve a deficit-free budget if Urals crude, the country's chief oil export blend, is trading at $124 per barrel. The government is hoping to pay for the budget deficit mainly by borrowing about 1.6 trillion rubles ($57 billion) over three years, and tapping into incomes from its privatization program which could yield up to 300 billion rubles ($10.7 billion), Vedomosti reported. That will still leave the country with a national debt equal to 11.2 percent of gross national product in 2012 and 17 percent of GDP in 2014. Putin said Thursday that the budget could receive 10.6 trillion rubles ($378.42 billion) in revenues in 2012, while government spending is expected to reach 12.2 billion rubles ($435 million).

Total public debt is expected to grow to about 10 trillion rubles ($356 billion) from 6.6 trillion rubles ($235 billion) over three years, Vedomosti reported. The country recorded its lowest debt level in 2008 when it barely hit 6.5 percent of GDP. Despite expanding pre-election spending, the Finance Ministry appeared determined to protect Russia's two sovereign wealth funds, the Reserve Fund and the National Welfare Fund. The Reserve Fund is expected to grow from 1.4 trillion rubles ($50 billion) in 2012 to 1.6 trillion ($57 billion) in 2014. However, further transfer to the fund is expected to stop in 2014 as the government expects revenues from oil and gas to dip to 7.7 percent of GDP in 2014 from a high of 8.2 percent in 2013, the Finance Ministry said. That means that Russia's "safety cushion," the country’s sovereign wealth funds, will flatten out over three years, going down slightly from 2.56 trillion rubles ($91 billion) in 2012 to 2.53 trillion rubles ($90 billion) in 2014.

The government hopes to use a combination of tax increases and spending cuts to spread the burden of bringing down the country's budget deficits over the next three years. An

increase in the tax burden on the gas sector is expected to boost budget revenues by 504.2 billion rubles ($18 billion) while keeping the present level of contract soldiers could save the budget an additional 371.1 billion rubles ($13.2 billion). The government also hopes to save 179.7 billion rubles ($6.4 billion) by withholding its contribution to the country's mortgage fund and an additional 54.3 billion rubles ($1.9 billion) is expected from reducing the number of army servicemen.

However, the budget also reflects government determination to keep its controversial procurement system intact while it considers proposals to cut back on its budget by 300 billion rubles ($10.7 billion) over the next three years. The government is also planning to go ahead with all its investment and other federally targeted programs. As a way of patching the budget hole, regional and municipal authorities will be required, starting next year, to channel into the federal budget about two-thirds of all revenues from excise taxes on alcohol and hydrolysis spirits as well as a stamp duty on motor vehicle registration and penalties for traffic violations.

Russia: Loosening the fiscal purse

http://www.bne.eu/dispatch_text16100

Renaissance CapitalJuly 8, 2011

In our view the new medium-term fiscal framework for 2012-2014 raises serious concerns about government's previous intentions to balance the budget by 2015. The Russian Ministry of Finance (MinFin) yesterday (6 June) announced its medium-term fiscal framework for 2012-2014 and the key macroeconomic assumptions underpinning those projections (Figure 1). The most salient feature of the new budget framework is that the headline deficit is estimated at 2.3% of GDP in 2014, thus jeopardising previous claims targeting a balanced budget by 2015. While the federal deficits remain broadly unchanged, relative to the previous framework as a share of GDP, we think this masks the fact that these are achieved at much higher forecast oil price levels, suggesting a substantial increase in expenditure. This naturally implies heightened vulnerability to oil price fluctuations.

The macroeconomic assumptions on GDP, inflation and oil prices seem realistic. The underlying macroeconomic assumptions on output growth and inflation are broadly in line with our own view on the medium-term prospects of the Russian economy. We have argued that in a post-crisis environment, characterised by subdued G-10 growth and with less scope for multi-year oil price increases, Russia's potential growth is about 4.5-5%. The government assumes 3.5%, 4.2% and 4.6% GDP growth for 2012, 2013 and 2014, respectively. With regard to inflation, it is expected to decelerate gradually from 7.5% in

2011 to 5.0% in 2014. This implies average annual nominal GDP growth of about 10% which, in our view, accurately reflects the current macroeconomic environment. At the same time, in contrast to the earlier practice of making fairly conservative assumptions on oil prices, the fiscal framework now anticipates an average oil price of $95/bbl over the next three years.

However, the significant non-discretionary increase in public spending on the eve of elections is a key driver of the deteriorating fiscal position. 2012 expenditures are increased by RUB947bn ($33.8bn) while 2013 outlays are raised by RUB1,242bn ($44.4bn) relative to the previous budget framework which ran until 2013. The key areas that will see increases in spending are pensions, public sector salaries and military personnel. In addition, a planned reduction of the social security tax from 34% to 30% will also be compensated for by increased allocation of budget funds. Overall, we see the nature of the planned increases in government expenditure as conveying the message that these are conveniently done to match the upcoming political cycle. After two consecutive years of nominal expenditure growing lower or in line with inflation (5% in 2010 and 9% in 2011), subsequent spending growth is set to accelerate to levels above those of projected inflation (11% in 2012 and 10% in 2013). We believe this has thrown to the winds earlier intentions to maintain slightly negative real expenditure growth to reverse the massive pre-crisis expansions of real spending (Figure 2).

Most worrying to us, the non-oil structural deficit remains in double digits as a share of GDP until the end of the forecast period. The headline deficit numbers do not look excessive, but it presents a somewhat misleading picture of the health of public finances, since in commodity-exporting economies, one has to adjust for volatile natural resource revenues in order to get a better sense of the underlying fiscal stance. We therefore compute the structural non-oil deficit, which adjusts the headline budget number for the state of the economic cycle. The new fiscal framework brings an adjustment of only 1.7% of GDP of the non-oil deficit from 2011-2014 (from -11.5% in 2011 to -9.7% in 2014). This also leaves the non-oil structural deficit at about twice the level consistent with preserving the country's oil wealth constant over time (-4.7% of GDP). The latter was also the government's own recommended target which was enshrined in the budget code, but removed in late 2008 to allow for accelerated anti-crisis spending.

The $125/bbl oil price which balances the budget suggests heightened sensitivity to external shocks. The rise in the break-even oil price over the past couple of years has been nothing short of exceptional and suggests the increasing vulnerability of the budget to adverse shocks in commodity prices. This process has of course been driven by the steady expansion of government spending pre- and post-crisis. While the severity of the 2008 crisis correctly led to an aggressive counter-cyclical fiscal policy, the economic recovery has also argued for a reversal of fiscal spending and a consolidation of fiscal policy. Unfortunately, the pressures arising from the upcoming parliamentary and presidential elections have dented previously espoused ambitions to rein in spending, necessitating very high oil prices to balance the budget, in our view.

The budget framework does not bode well for inflation and raises the chances of an

earlier rate hike. We previously maintained the view that government's avowed intention to pursue negative real expenditure growth was commendable as it demonstrated a desire to bring the non-oil deficit back to more normal levels. We also argued that, although not ambitious enough, this policy is at least consistent in flavour with its genuine expenditure-consolidating mood. However, the latest medium-term framework delivers a serious blow to our beliefs as it suggests a much weaker ambition to steer fiscal policy on the right track. Given the tight historical correlation between government spending and inflation, our more benign inflation view will also come under threat. Consequently, interest rates may need to be raised earlier than the end of the year, as we previously argued. Overall, we believe the new fiscal framework is sending the wrong message at a time when consolidation should have been the overriding policy objective.

Consumers feeling better

http://www.bne.eu/dispatch_text16100

UralSibJuly 8, 2011

Consumers more confident... Based on a Rosstat survey, consumer confidence recovered and grew from -13% in 1Q11 to -9% in 2Q11. The index of expected changes in the economic situation in the near future grew 4.8 ppt QoQ to -0.2%, indicating that more people are expecting the economic situation to improve over the next 12 months. The index of changes that have occurred in the economy rose 5 ppt QoQ to -7%, meaning that the number of people valuing past economic changes as negative has de- creased. The index of expected changes in individuals' material standing grew 5 ppt QoQ to -3%. The index of past changes in individuals' material position also rose 4 ppt QoQ to -10%. The number of respondents who consider their material position has deteriorated, declined to 30% from 35% in 1Q11. The index of favorable conditions for large purchases grew 5 ppt QoQ to - 23% and the savings index improved 4 ppt QoQ to -39%. Consumer confidence improved among all age groups, but, positively, the main improvement was recorded among the younger population aged 16-29 years.

... thanks to improvement in their financial position. Consumer confidence rebounded after a sudden drop in 1Q11, due to a hike in the social tax at the beginning of the year. The latest economic statistics show that the economy has improved after a weak start to the year and unemployment has declined close to the pre-crisis level. However, real incomes are still falling, despite growth in real salaries and higher retail sales, indicating that domestic demand is still quite strong, which is also confirmed by im- ports growing at a faster pace than exports. We believe that real incomes are negative due to a decline in entrepreneurial income as it has partly moved into the gray economy after the tax increase at the beginning of the year. Consumer confidence improved on a QoQ basis in the larger European economies, such as Germany, France and Britain, but declined in PIIGS countries, due to the latest spike in the sovereign debt crisis. We forecast further

improvement in consumer confidence as we expect GDP growth to accelerate to 4.5% YoY in 2H11, which will support consumer spending.

Alexei Devyatov

INTERVIEW: CBR expects inflation at 5.5% Jan–Sep, up to 7% in 2011http://www.prime-tass.com/news/interviews/_INTERVIEW_CBR_expects_inflation_at_55_Jan%E2%80%93Sep_up_to_7_in_2011/-202/%7B3BDB9004-E5E6-4B74-81D0-E42363CFCBCD%7D.uif

Interview with CBR First Deputy Chairman Alexei Ulyukayev

MOSCOW, Jul 7 (PRIME) -- Russia’s consumer price inflation is expected to amount to 0.5% in July–September, up to 5.5% in January–September, and up to 7% in 2011, the Central Bank of Russia’s (CBR) First Deputy Chairman Alexei Ulyukayev said in an interview with PRIME Thursday.

“We will likely have inflation at up to 5.5% after nine months (January–September) and up to 7.0% for the entire year,” Ulyukayev said. He added that the pace of inflation was slowing due to a decrease in the growth of the money supply, as well as the stabilization of world prices on energy resources and food products, and the strengthening of the Russian ruble.

Speaking about the macroeconomic situation in the country, Ulyukayev said that Russia had recorded a net capital inflow of U.S. $3 billion in June. “However, there is no need to overestimate this fact, (because) no major turning points came. June is always a more positive month in this respect as companies are paying dividends,” he added.

Speaking about the banking sector, Ulyukayev said that Russian banks’ combined loan portfolio grew 8.3% in January–June, under preliminary data.

Commenting on a recent statement by Presidential Aide Arkady Dvorkovich, Ulyukayev said that the CBR did not plan to fundamentally change the structure of its foreign exchange and gold reserves. However, the CBR plans to start investing in Australian dollars later this year and this could lead to a slight decrease in the volume of investments held in other currencies, he said.

“As we are starting to invest in Australian dollars later this year, the volume of investments into operations with other currencies will slightly decrease, but this will be within a tenth of a percent,” Ulyukayev said. The bank purchased around U.S. $4 billion on the domestic market in June, he also added.

Separately, Ulyukayev said that earlier approved measures aimed at bailing out the Bank of Moscow were not expected to impact inflation and liquidity on the market. Moreover, state-controlled VTB Bank’s plans to inject 100 billion rubles into the Bank of Moscow are unlikely to significantly affect the liquidity of VTB Bank, as most of the funds will be allocated from VTB Bank’s profit for 2011, he said.

(27.8907 rubles – U.S. $1)

End

07.07.2011 19:20

CBR buys USD4.0bn in June

http://www.bne.eu/dispatch_text16100

VTB CapitalJuly 8, 2011

News: The CBR's interventions on the FX market moderated to USD 4.0bn (USD 3.2bn and EUR 0.5bn) in June, from USD 4.5bn (USD 3.9bn and EUR 0.4bn) in May. In the week ending 1 July, the CBR's reserves climbed to USD 526.7bn, from USD 524.3bn in the previous week, having increased USD 5.6bn in June and USD 47.3bn YTD.

In separate news, the rouble real effective exchange rate (REER) appreciated 1.2% MoM in June despite weakening in nominal and real terms against USD and EUR.

Our View: Most of the increase in the CBR's reserves can be explained by the currency and gold revaluation. This implies that the monetary authorities abstained from interventions on the FX market in the last week of June.

The size of the interventions in June was very similar to that in April-May, suggesting that the balance of payment dynamics were similar (unless the CBR changed the intervention rules). At the same time, the 2Q11 balance of payment data implies capital inflows in June, instead of the hefty capital outflows as was the case in April-May.

We attribute the rouble REER appreciation in June to the sharp depreciation in the Belarus rouble (BYR).

Russian banking sector delivers c. 2% MoM loan growth in June

http://www.bne.eu/dispatch_text16100

Renaissance CapitalJuly 8, 2011

Event: Today (8 July) Vedomosti quoted Central Bank of Russia (CBR) Deputy Chairman Gennady Melikyan as saying that, according to the CBR's preliminary estimates, corporate lending in the banking sector (excluding Sberbank) was up 1.9% MoM in June, while retail loans (excluding Sberbank) grew 2.3% MoM. On our estimates, these numbers imply that the sector's (excluding Sberbank) total loan book added c. 2.0% MoM in June. To recap, yesterday (7 July) Kommersant reported, citing Sberbank Deputy CFO Alexander Morozov, that Sberbank's loan book increased 8% in 1H11 (implying c. 1.3% MoM loan growth in June, on our estimates).

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

Rationale: The preliminary estimates suggest that the sector's loan book was up approximately 8-9% in 1H11 and the trends of recent months largely continued in June: the sector's credit portfolio saw rather robust growth of around 2% MoM, with retail loan expansion once again outpacing corporate loan growth. Sberbank is expected to publish headline numbers from its 1H11 results under RAS on 13 July; the full sector's stats will be published by the CBR by the end of this month.

Svetlana Kovalskaya

Central Bank to issue extra shares for BoM bailout

http://www.rbcnews.com/free/20110708115227.shtml

      RBC, 08.07.2011, Moscow 11:52:27.The Central Bank of Russia (CBR) will issue additional shares to bail out the Bank of Moscow (BoM), RBC Daily reported today, citing CBR First Deputy Chairman Alexey Ulyukayev. Using the proceeds from the offering, CBR will extend a RUB 295bn (approx. USD 10.54bn) loan to Deposit Insurance Agency, which will help rescue the distressed lender, Ulyukayev said. The offering will not have a negative impact on money supply or the economy, since these funds will be invested in federal government bonds in the future, he added.

      VTB, the major shareholder of BoM, is expected to use its 2011 net profit to inject RUB 100bn (approx. USD 3.57bn) in BoM, Ulyukayev also said. VTB's net profit is projected to exceed RUB 80bn (approx. USD 2.86bn) this year. The remainder could be taken from VTB's shareholder equity, which totaled 486.6bn (approx. USD 17.38bn) as of June 1.

Business, Energy or Environmental regulations or discussions

X5 Retail, Rosneft, Tatneft May Move: Russian Equity Previewhttp://www.bloomberg.com/news/2011-07-07/x5-retail-rosneft-tatneft-may-move-russian-equity-preview.html

By Henry Meyer - Jul 7, 2011 10:00 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 in Moscow.

The 30-stock Micex Index (INDEXCF) increased 2.1 percent to 1,740.53.

X5 Retail Group NV (FIVE) : Russia’s largest retailer by sales may publish a second-quarter trading update. Its London- listed shares surged 3.5 percent to $41.62.

OAO Rosneft (ROSN RX): Russia’s largest oil company may move after oil surged to a three-week high in New York on signs that the U.S. economic recovery is whittling down crude inventories in the world’s largest user of the commodity. Shares gained 2.1 percent to 241.7 rubles.

OAO Tatneft (TATN3 RX): Deputy Finance Minister Sergei Shatalov said Russia’s plan to adjust oil export taxes to boost production without eating into budget revenue may be delayed beyond Aug. 1 as producers OAO Bashneft and Tatneft (TATN) and refiner TAIF complain of potential losses. Shares in the oil company based in Russia’s Tatarstan region rose 1 percent to 188.22 rubles.

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

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

X5 Retail posts upswing in H1 revenue

http://www.rbcnews.com/free/20110708103433.shtml

      RBC, 08.07.2011, London 10:34:33.X5 Retail Group's revenue surged 44% year-on-year to RUB 224.2bn (approx. USD 8.01bn) in January-June, the retailer said in a statement today.

      In April-June, the group's revenue soared 41% to RUB 112.2bn (approx. USD 4.01bn).

X5 Retail Q2 Net Retail Sales Jumps - Quick Facts http://www.rttnews.com/Content/QuickFacts.aspx?Id=1661644&SM=1

7/8/2011 2:43 AM ET

(RTTNews) - Russia-based X5 Retail Group NV (FIVE.L: News ) Friday reported a 41 percent jump in second-quarter net retail sales on a Russian ruble-basis, thanks primarily to the acquisition of Kopeyka stores and also strong performances in the soft discounters and supermarkets segment. Like-for-like, or LFL, sales improved 10 percent year-over-year.

Net retail sales for the quarter were 112.20 billion Russian rubles, compared to 79.76 billion Russian rubles last year. On a US dollar basis, net retail sales surged 52 percent to $4.01 billion from $2.64 billion in the prior year. The soft discounters segment saw a 9 percent LFL sales growth, and the supermarkets segment contributed an 18 percent climb in LFL sales.

Click here to receive FREE breaking news email alerts for X5 Retail Group and others in your portfolio

by RTT Staff Writer

For comments and feedback: contact editorial@rttnews.com

President of Troika Dialog Ruben Vardanian takes over Rosgosstrakhhttp://news.am/eng/news/67137.html

July 07, 2011 | 21:27

MOSCOW. - President of Troika Dialog company, businessman Ruben Vardanian and LLC Rosgosstrakh advisory council chairman Lomakin-Rumyantsev, entered the board of directors of Rosgosstrakh as independent directors.

The invitation of independent directors to the board is related to the recent decision by the shareholders of Rosgosstrakh to intensify the process of preparing for affiliation to IPO, reports Vedomosti.

10:02 08/07/2011ALL NEWS

High-technology air enterprise to be set up in Karachai-Cherkessia.

http://www.itar-tass.com/en/c154/181690.html

8/7 Tass 73

CHERKESSK, July 8 (Itar-Tass) — It is planned to create a high-technology aircraft industry enterprise and a modern technology park the Karachai-Cherkessia Republic. The regional press service told Itar-Tass that “head of Karachai-Cherkessia Rashid Temrezov approved the proposal of the Interavia design bureau on the creation of the technology park, the decision has been made to sign an agreement between the republic’s authorities and the leadership of the company for the implementation of the project.”

According to Interavia, the company intends to register here an aircraft industry group based on the federal and private property. It is planned to organise serial production of aircraft equipment for fulfilling the national economy tasks and provide the full maintenance service cycle. The company also plans to create the research and production and flight facilities, including an airfield, which would ensure flight tests and operation of the equipment. The republic also needs a centre for training of engineers, technicians and pilots based on methods developed at flight academies of the Russian Federation and at the Moscow Institute of Aviation.

“This programme will help organise a prestigious high-yield aircraft production, to create 450 jobs in manufacturing and a significant number – at the sites of operation of the manufactured equipment,” the press-service noted.

Alfa Group Has Been Disappointed in Aircraft Business

Read more: http://www.businessinsider.com/alfa-group-has-been-disappointed-in-aircraft-business-2011-7#ixzz1RUa7ghsn

Jul. 7, 2011, 11:30 AM

Russian newspaper Vedomosti has found out that investment branch of Alfa Group, called A1, being disappointed in aircraft business, has decided to sell its 51% stake in OOO “Avianova”. The decision was made in the end of 2010, as Dmitriy Chernyak, managing director of A1, told Vedomosti.

A1 is actively seeking for a buyer for the asset. The stake has been already proposed to Aeroflot who was not very interested at the time. Investment bankers value their “Avianova” stake at roughly $70 million, market sources report. 

Read more: http://www.businessinsider.com/alfa-group-has-been-disappointed-in-aircraft-business-2011-7#ixzz1RUaEclpT

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/92ef58fa-a8c2-11e0-b877-00144feabdc0.html#ixzz1RUkVweNh

July 7, 2011 10:32 pm

Russia’s grasp on electricity tightens

By Catherine Belton in Moscow

Viktor Vekselberg, the Russian billionaire, has agreed to merge his power assets into the power-generation holding of Gazprom to create a state-controlled national electricity champion that will control a quarter of the country’s electricity market.

Analysts said the merger announced on Thursday risked overturning the country’s hard-won privatisation of the sector, one of the few successful market reforms of the past decade, with state control of the sector set to increase from 50 per cent to 70 per cent as a result of the deal.

“After the merger, the state will simply dominate the market,” said Derek Weaving, electricity sector analyst with Renaissance Capital, the Moscow investment bank. “It will be impossible to have a competitive market with one player controlling 70 per cent of capacity.

“When this comes at the same time as the Russian president [Dmitry Medvedev] is calling for more privatisation, you have to wonder who is running the country.”

The move by Mr Vekselberg comes amid increasing investor uncertainty about the future of the sector after the Russian government, worried about inflation in a pre-election year, also indicated it could backtrack on electricity price liberalisation by regulating future tariff rises.

The break-up of Unified energy systems, the state electricity monopoly, had been hailed as one of the successful efforts at deregulation in a decade when the state had tightened its grip over the economy. It saw the sale of the country’s power-generation assets to a string of strategic investors, including Eon of Germany and Fortum of Finland, in a bid to raise investment to upgrade Soviet-era capacity.

But state-owned electricity company Inter RAO and Gazprom have started to consolidate assets. Vladimir Putin, Russian prime minister, in February called for electricity tariff increases to be regulated.

Mr Weaving said: “A year ago the sector was on track ... with an almost fully liberalised electricity market and a plan to fully liberalise capacity markets.

“And then first Putin and then Medvedev started saying they were going back to the old days where every year they will decide how much electricity prices are going to rise per year.”

Mr Vekselberg denied that the deal, which will merge the power-generation assets held by his company IES into the assets of GazpromEnergo Holding, marked a reversal of the privatisation of the sector, saying the merged entity would list its shares.

Mr Vekselberg’s Renova holding company will retain a 25 per cent plus one share stake in the merged entity, which will keep the name GazpromEnergo Holding.

David Herne, head of Halcyon Advisors, said consolidation in the sector was inevitable. “The unfortunate element is that the companies ... doing the consolidating are government owned.”

Usmanov builds Arsenal of shareshttp://www.edmontonjournal.com/Usmanov+builds+Arsenal+shares/5070241/story.html  Edmonton Journal July 7, 2011 10:00 PM

Russian businessman Alisher Usmanov has signalled his ongoing interest in Arsenal, spending $1.5 million on new shares despite Stan Kroenke's takeover.

Usmanov owns more than 29 per cent of the English Premier League club and is edging closer to the 30-per-cent mark that will give him access to management accounts despite not being a director.

Kroenke owns 66.64 per cent after mostly buying shares from fellow directors earlier this year. The American businessman also owns the NFL's St. Louis Rams, the NBA's Denver Nuggets and the NHL's Colorado Avalanche.

© Copyright (c) The Edmonton Journal

Activity in the Oil and Gas sector (including regulatory)

08.07.2011

Libya Courts Russia and China with ENI’s Assetshttp://www.oilandgaseurasia.com/news/p/0/news/11963

ENI may be out in the cold in Libya if the war between leader Muammar Qaddafi’s loyalist troops and opposition fighters goes the wrong way. According to reports the Qaddafi government has begun negotiations with Russian and Chinese firms to take over the Italian firm’s projects inside the country.

"This withdrawal happened without warning and the Libyan state has started negotiating with big Russian and Chinese oil companies to enter into a partnership in these investments," the official, who did not want to be identified, told Reuters.

Copyright 2011, Petroleum Africa. All rights reserved.

08.07.2011

Bulgaria Determined to Give Up Russian Gashttp://www.oilandgaseurasia.com/news/p/0/news/11975

Bulgaria is making definite steps to achieve a fourfold reduction in the amount of natural gas it is buying from Russia, according to an extensive publication by the Russian newspaper Kommersant.

Looking at boosting its own gas production, but also at diversifying imports, Bulgaria hopes to achieve a reduction from the 2 B cubic meters of gas it buys from Russia per annum, to some 500 M cub.m in 2-3 years.

Bulgarian Minister of Economy and Energy has already declared Bulgaria's intention to give up on long-term contracts with Russian gas giant Gazprom in a bid to give his country more leeway in negotiating terms and prices.

Among recent developments, the Bulgarian state's commitment to exploring for shale gas on its territory is seen as a pressure against Gazprom.

Recently US energy giant Chevron received a permit to explore for shale gas in the north

east part of the country, at a site that is believed to contain massive amounts that could satisfy the country's gas needs for decades on.

Bulgarian-American company Direct Petroleum has already made significant findings of 10 B cub.m. shale gas in central northern Bulgaria and plans to start producing in 1-2 years at a rate of some 1 B cub.m. per annum.

Shale gas has already raised controversy in Bulgaria though, with environmentalists, local authorities and the opposition Bulgarian Socialist Party alarming about its possible negative environmental impact.

Copyright 2011, Novinite. All rights reserved.

Hungary completes acquisition of MOL stake from Surguthttp://af.reuters.com/article/energyOilNews/idAFLDE76704N20110708

Fri Jul 8, 2011 6:16am GMT

BUDAPEST, July 8 (Reuters) - Hungary has completed its acquisition of a 21.2 percent stake in oil group MOL by paying 1.88 billion euros ($2.7 billion) to Russian group Surgut .

"Hungary on July 7 paid the purchase price of the 21.2 percent MOL package," the National Development Ministry said.

The government announced in May it would buy the stake from Surgut and later said it would boost its holdings to around 25 percent. (Reporting by Marton Dunai; Editing by Dan Lalor) ($1 = 0.6991 euro)

08.07.2011

S&P Revises Outlook For Novatek To Stablehttp://www.oilandgaseurasia.com/news/p/0/news/11971

Novatek has announced that Standard & Poor’s (S&P) has revised its outlook for the Company to stable from negative and reaffirmed Novatek’s BBB- long-term issuer and ruAA+ Russia national scale ratings. The revision in the outlook was based on the Company’s strong credit ratios primarily due to strong operational cash flows resulting from production growth and higher prices.

OAO Novatek is Russia’s largest independent gas producer and the second-largest natural gas producer in Russia. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. The Company’s upstream activities are concentrated in the prolific Yamal-Nenets Autonomous Region, which is the world's largest natural gas producing area and accounts for over 83% of Russia's natural gas production and 16% of the world’s gas production.

Novatek is an open joint stock company established under the laws of the Russian Federation. The Company’s shares are listed on the Russian Trading System (RTS), MICEX Stock Exchange and the London Stock Exchange (LSE) under the ticker symbol ‘NVTK’ and on the NASDAQ PORTAL System as Rule 144A GDR under the ticker symbol “NVATY”.

Copyright 2011, Novatek. All rights reserved.

08.07.2011

Alliance Oil Publishes Operational Update For The Second Quarter 2011http://www.oilandgaseurasia.com/news/p/0/news/11972

Alliance Oil Company's total oil production for the second quarter of 2011 amounted to 3.8 mbbl compared to 3.8 mbbl in the second quarter of 2010. Preliminary refining volumes at the Khabarovsk refinery amounted to 6.9 mbbl in the second quarter of 2011 compared to 6.0 mbbl in the second quarter of 2010. Preliminary crude oil and oil product sales amounted to 3.6 mbbl and 7.0 mbbl respectively in the second quarter of 2011 compared to 3.7 mbbl and 6.0 mbbl in the second quarter of 2010.

Currently, the Company is producing about 41,000 barrels and refining about 77,000 barrels per day. Due to strong demand for oil products, the downstream volume target has been revised from 23 mbbl to 25 mbbl in 2011. The Kolvinskoye oil field is scheduled to be on production in the beginning of September.

For the first six months of 2011, the Company's oil production amounted to 8.0 mbbl (44,000 bpd) and refining volumes at the Khabarovsk refinery preliminarily totalled 13.1 mbbl (64,000 bpd).

Oil production in the Volga-Urals region and Kazakhstan totaled 2.0 mbbl in the second

quarter of 2011 compared to 2.0 mbbl in the second quarter of 2010. Oil production in the Timano-Pechora region totaled 1.1 mbbl in the second quarter of 2011 compared to 1.1 mbbl in the second quarter of 2010. Oil production in the Tomsk region totaled 0.8 mbbl in the second quarter of 2011 compared to 0.7 mbbl in the second quarter of 2010.

In the upstream segment, 18 new wells were drilled in the second quarter of 2011. To date, 17 production wells have been drilled at the Kolvinskoye oil field. Preparations are being finalised for launching the Kolvinskoye field and marketing oil through the Transneft-pipeline system. The 146 kilometer pipeline from the Kolvinskoe field to the Kharyaga terminal has been completed. Oil preparation and transfer unit construction works are anticipated to be completed by the end of August. The field is scheduled to be on production in early September 2011 with 22,000 barrels of oil per day.

In the downstream segment, demand for oil products continued to increase and capacity utilization at the Khabarovsk refinery remained high. Accordingly, the downstream volume target has been increased from 23 mbbl to 25 mbbl in 2011.

"The price of oil stabilized in the second quarter and upstream segment economics improved further. Oil product demand traditionally strengthened. We are raising our downstream volume target and look forward to the timely launch of the Kolvinskoye field which is expected to be a significant driver of oil production growth going forward", says Arsen Idrisov, Managing Director of Alliance Oil Company.

Copyright 2011, Alliance Oil. All rights reserved.

8 Jul, 2011 07:50 CET

TGS Announces New 2D Survey in Laptev and East Siberian Seashttp://www.cisionwire.com/tgs-ext/r/tgs-announces-new-2d-survey-in-laptev-and-east-siberian-seas,e245919

ASKER, NORWAY (8 July 2011) - TGS will commence acquisition of a new 7,700 km2D survey in the Russian Arctic Sea.  Data acquisition will begin in earlyAugust with 4,500 km in the Laptev Sea before the vessel moves to the EastSiberian Sea to acquire an additional 3,200 km.  The survey is in partnershipwith Dalmornefte Geophysica Yuzhno-Sakhalinsk (DMNG) under the 2D CooperationAgreement previously announced in a press release on 4 January 2011.

The seismic data will be acquired by M/V Akademik Fersman and will be completedin early Q4 2011.  Data processing from the new acquisition will be performed byDMNG and available to clients from late Q1 2012.  The survey is supported byindustry funding.

08.07.2011

TNK-BP to Hold Second Supplier and Contractor Forum on September 16http://www.oilandgaseurasia.com/news/p/0/news/11982

Today, TNK-BP (MICEX: TNBP, TNBPP; “The Company”) has announced that the Second TNK-BP Supplier and Contractor Forum will be held in Moscow on September 16, 2011. Participating in the Forum will be Suppliers and Contractors who, in the period from July 7 to August 22, have responded to the questionnaire survey on the official Company web site at www.tnk-bp.com: Supplier and Contractor Questionnaire Survey.

The First TNK-BP Supplier and Contractor Forum was held in September 2010. Based on the Forum outcomes, a mechanism was developed to resolve contracting disputes. Supplier and Contractor Interaction Councils were formed in key operating regions of the Company. To date, special dispute resolution commissions have reviewed 31 grievances, with 50% of them resolved in favor of claimants.

The TNK-BP Supplier and Contractor Forum is an effective tool for setting up a direct dialogue with the Company’s partners, improving the quality of the contracting process, getting the Suppliers and Contractors to understand the principles and practices of working with the Company and identifying and preventing non-compliances with these principles and practices.

“TNK-BP is a major player on the Russian goods and services contracting market, with an annual contracting budget of circa RUR 180 bln. The new supplier and contractor interaction system rolled out since September 2010 is an important element of improving the Company’s performance and achieving its ambitious goals, - said Anatoly Tyomkin, TNK-BP Executive Vice President, - TNK-BP has always adhered to the highest business standards by consistently implementing measures to counter corruption and unfair competition and requiring the same of our suppliers and contractors”.

Copyright 2011, TNK-BP. All rights reserved.

UPDATE: Victoria Oil & Gas continues to make progress with Siberian explorationhttp://www.proactiveinvestors.co.uk/companies/news/30356/update-victoria-oil-gas-continues-to-make-progress-with-siberian-exploration-30356.html

Thu 7:55 am by Kam PatelUPDATE...with broker comment

Victoria Oil & Gas (LON:VOG) put out an encouraging update on its exploration work across its West Medvezhye block in Siberia. It is also making progress with taking its first discovery there, Well-103, to full commercialisation.

Victoria, through its wholly owned subsidiary ZAO SeverGas-Invest (SGI), holds a 20-year exploitation licence for West Medvezhye (West Med) covering 1,224 km2.

Located in Nenets region of Siberia, West Med is located in one of the most prolific oil and gas producing areas of the world and is adjacent to Gazprom's giant Medvezhye field that has already produced over 70 trillion cubic feet of gas.

Independent assessment in 2006 indicated West Med held total prospective resources of approximately 1.1 billion barrels of oil equivalent.

The latest phase of exploration work on West Med has involved integration of new data with previous seismic and well data to firm up prospects and leads that have already been identified.

Key initial findings include an estimated 400 million barrels of oil equivalent in-place in six features mapped by passive seismic and gas tomography surveys.

The continuing encouraging findings have led to the company commissioning a seismic reprocessing and geological modelling study for the prospect. The first phase of this technical work, which included reprocessing of 845 km of 2D seismic, was completed in June 2011.

Analysis of the reprocessed seismic data has begun and will incorporate the passive seismic and gas tomography results.

The results of the analysis are scheduled to be considered in a workshop in Tyumen, Russia in July 2011, said the company.  

In addition to the subsurface technical studies, Victoria Oil & Gas has also started development studies to support commercialisation of prospective resources and exploitation of its first discovery in the West Med, Well-103.

These studies cover areas such as drilling and well engineering, as well as design work to establish costs and schedules for oil, gas and condensate production facilities and supporting infrastructure.

The company has also been looking into downstream and export issues with regards to future production from West Med.

Several routes to market for commercialisation are available, it says, including the Chircha railroad station, located within the southwest boundary of the licence, and the river port and loading terminal of Old Nadym are located 22 km away.

In addition, one of Gazprom's principal gas transmission pipeline's in the area runs along the eastern border of the licence and the nearest Central Gas Processing Unit is located 18.5 km from West Med.

Initial studies suggest an early production scheme for the Well 103 discovery could involve the sale of small volumes of crude into the local market with prices of US$60 per barrel achievable. This would be followed by full scale oil and gas development for export as the oil and gas export market is well established in this part of Siberia.

The results of Victoria’s preliminary development assessment work on the Well 103 discovery indicate first oil sales in 2015, subject to further refinement and screening.

While the West Med is looking promising for the company, Victoria’s principal focus has been the development of and commencement of gas and condensate production at Logbaba in Cameroon, scheduled for the fourth quarter of 2011.

Logbaba is located in Douala, the economic capital of Cameroon. The field was discovered in the 1950s and all four exploration wells have encountered gas.

Broker Northlands welcomed the update saying that at its current valuation for the company it considers West Med as a ‘in for free upside’ for the shares.

It added: “Whilst detailed economics and a recoverable reserve figure may take a while, the honing in on the ‘in place’ estimate is encouraging whilst potential first oil sales in 2015 puts a timescale on monetisation.”

Westhouse also gave the update the thumbs up, saying given the resource potential, West Med “clearly holds great upside” for Victoria Oil & Gas.

“However, the work there still remains at a relatively early stage. The focus therefore remains on the group’s progress at Logbaba, in Cameroon, where we still expect first gas sales before the end of 2011,” it adds.

Westhouse reiterated ‘buy’ on the stock, with an unchanged target price of 7.4p.

Russian Parliament Approves Zero-Rate Subsoil Tax For Select Fieldshttp://www.oilandgaseurasia.com/articles/p/142/article/1556/

The Russian legislature, or Duma, passed amendments to the law subsoil mineral taxes in the third reading which will will zero-rate the tax on operations on several oil and gas fields meeting certain requirements. The amendments are being made to Article 342, Part II of the Russian Tax Code.

By A.N.G.I.

The documents stipulate a zero-rate tax on mineral production when producing crude on fields which are either wholly or partially located on the Black and Okhotsk seas: for fields on the Black Sea, this will cover fields with production of up to 20 million tons of crude in the initial stages and on the Okhotsk Sea for production of up to 30 million tons.

The period over which reserves at such fields are produced should not exceed 10 years (or be equal to 10 years) when the field in question is in the e&p stage and not more than 15 years (or equal to 15 years) when geological studies are being performed.

According to the law, the zero-rate subsoil mineral tax covers crude produced in the Yamal-Nenets autonomous district north of the 65th latitude and at which production has reached 25 million tons under the circumstances that development of the field has not exceeded 10 years, RBK reports.

The zero-rate tax is also envisioned for gas produced on the Yamal peninsula exclusively for making LNG.

Furthermore, from January 1, 2013 through 31 December 2017, the zero-rate subsoil tax will cover some ore mining in the Far East.

This federal law comes into effect on January 1, 2012, but no earlier than one month after being officially published and no earlier than the first day of the subsequent tax period.

Gazprom

Gazprom Seeks $40 Billion Advance Payment in China Deal, Vedomosti Reportshttp://www.bloomberg.com/news/2011-07-08/gazprom-seeks-40-billion-advance-in-china-deal-vedomosti-says.html

By Jack Jordan - Jul 8, 2011 6:02 AM GMT+0200

OAO Gazprom may be seeking an advance payment of as much as $40 billion against future deliveries of gas to China, Vedomosti reported, citing unidentified people close to the Russian gas export monopoly and Russia’s government.

The proposed payment would be made between 2012 and 2015 for deliveries over 30 years, starting from 2015-2016, the newspaper said.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

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

Gas negotiations with China may be complicated by rumored prepayment demand

http://www.bne.eu/dispatch_text16100

Alfa BankJuly 8, 2011

Gazprom is demanding material prepayment for future gas supplies to China, according to anonymous sources close to CNPC cited by Interfax yesterday, hence complicating the ongoing negotiations. The exact amount of prepayment was not disclosed, but it is rumored to exceed the $25bn received previously by Rosneft and Transneft. Today's Vedomosti states that Gazprom is looking for as much as $40bn, which would be subsequently paid down in the next 30 years.

The Interfax report further states that the funds are needed to finance construction of the Altai gas pipeline. Gazprom claims that the company will need to raise additional debt, which would expose it to significant financing costs. Although the pipeline's cost is estimated at some $13.6bn, considerably below the demanded $40bn prepayment, the excess funds may be used to finance other ambitious projects (South Stream, Shtokman, etc.) or simply refinance/optimize the company's debt structure.

However, pricing still remains the major stumbling block in the negotiations process. The price gap has reportedly narrowed from $100/mcm to $65/mcm, but this is still rather significant. Favorable financing or division of the construction CAPEX looks reasonable, but most likely these options should be reflected in the contract price.

Considering all the details of the negotiation process that were recently made public (pricing, prepayment), we believe the risk that the agreement will be further delayed beyond 2011 is still there, although we believe the agreement is inevitable and only a matter of time. At the same time, any move toward an earlier agreement may serve as a major sentiment catalyst for Gazprom, as it will open up a third core market for the company.

Pavel Sorokin

08.07.2011

Gazprom, E.ON Ruhrgas Hold Coordinating Councilhttp://www.oilandgaseurasia.com/news/p/0/news/11984

Nizhny Novgorod hosted the seventh meeting of the Coordinating Council between Gazprom and E.ON Ruhrgas AG on sci-tech cooperation, personnel training and career development, Gazprom reported in a news release.

The meeting was moderated by the Council Co-Chairpersons: Vlada Rusakova, Member of the Management Committee, Head of the Strategic Development Department on behalf of Gazprom; and Dr. Henning Deters, Member of the Board of Management, Head of Supply, Trading and Infrastructure Divisions, and Dr. Thomas Koenig, Member of the Board of Management and Director of Labor Relations on behalf of E.ON Ruhrgas.

The meeting participants discussed the recent results achieved in implementing the programs for sci-tech cooperation, personnel training and career development in the companies. The meeting highlighted the primary role of natural gas in the energy sector of the future and importance of its wider use in vehicles. Consideration was also given to energy saving potential in the gas industry as well as the energy-efficient technology of gas injection into an underground storage facility, development of complex reservoirs using advanced drilling and well completion methods, telecommunications and metrological support of natural gas supplies via the Nord Stream gas pipeline. Special attention was paid to crucial challenges in the gas production process: use of membrane technology for inert components separation, optimization of inhibitors, treatment and disposal of reservoir/industrial waters.

Based on the meeting results, the parties expressed their contentment with the achieved results of cooperation between Gazprom and E.ON Ruhrgas in human relations, science and technology.

Copyright 2011, Gazprom. All rights reserved.

06.07.2011

Positive Report on Nord Stream’s Environmental Impacthttp://www.oilandgaseurasia.com/news/p/0/news/11981

The latest results from Nord Stream’s environmental monitoring programme in the Swedish Exclusive Economic Zone, EEZ show that the company has  complied with and even exceeded the conditions in the permit granted by the Swedish government, the company reported in a news release. Calculations and models in Nord Stream’s Environmental Study have proven accurate, and it is now estimated that the environmental impact so far has been smaller than anticipated.

Lars O Grönstedt, Senior Adviser to Nord Stream: “We are happy to be able to demonstrate that our Environmental Study, the basis for Nord Stream’s permit

application, has been correct and that construction works have had no negative impact on the environment of the Baltic Sea.”

At a seminar in Visby today Nord Stream presented three new reports on the company’s environmental monitoring activities. The reports contain results from the measurement of seabed currents and inflow of saltwater to the Baltic Sea; potential turbidity caused by construction works in the vicinity of the Natura 2000 areas at Hoburg’s Bank and Norra Midsjöbanken, as well as the prevalence of contaminants in common mussels.

Measurements of seabed currents and saltwater inflow, so called hydrographical monitoring have taken place in the Bornholm Basin during 2010 – 2011. The pipeline has an average height of 0.7 meter above the seabed in the Swedish EEZ. The purpose has been to verify the assessment that Nord Stream’s pipeline will not cause any blocking of the inflow of saltwater. Two monitoring stations have performed measurements of temperature, salinity and direction and speed of the water currents. Additional measurements have also been carried out from vessels. The surveys have been executed by the Swedish Meteorological and Hydrological Institute, SMHI, on behalf of Nord Stream. The results confirm the previous analysis: Nord Stream’s pipeline will have no negative impact either on the inflow of saltwater or on the water quality of the Baltic Sea.

Monitoring of potential turbidity has been performed in Sweden in areas bordering to the Natura 2000 areas Hoburg’s Bank and Norra Midsjöbanken. The purpose has been to measure turbidity and sediment concentrations during Nord Stream’s trenching activities along certain parts of the pipeline. Four permanent monitoring stations, with direct data transmission were placed at the borders of the Natura 2000 areas and measurements of sediment were also made from vessels close to the trenching vessel. The survey was carried out by Danish DHI and Swedish SMHI on behalf of Nord Stream. Trenching in the Swedish EEZ took place during February – Mach 2011. The measurements show lower levels than estimated in the Environmental Study. The threshold value, 15 mg/l, established by the Swedish government in the permit has never been even close to being exceeded. In fact, average turbidity was below 2mg/l during Nord Stream’s trenching activities.

Eco-toxicological effects on mussels have also been monitored in the Natura 2000 areas south-east of Gotland during 2010 – 2011. The purpose has been to verify that mussels and other living organisms were not affected by potential spreading of sediments and contaminants which could be released due to Nord Stream’s trenching activities. By placing cages with mussels on six different locations (three impact stations and three reference stations) at both offshore banks, samples were collected before, during and after the trenching activities. The collected mussels have been analyzed in order to measure the concentration of metals and tin compounds. The survey was made by Marin Monitoring AB on behalf of Nord Stream. The weighted results from monitoring of eco-toxicological effects on mussels show no measurable impact on the environment of the two Natura 2000 areas Hoburg’s Bank and Norra Midsjöbanken.

Copyright 2011, Nord Stream AG. All rights reserved.