SOURCE: The St. Petersburg Times
DATE: Issue #1084 (50), Tuesday, July 5, 2005
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TITLE: Delay In Verdict Of Mitki Fate
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: The future of the studio assigned to Mitki, a group of St. Petersburg artists, was left hanging in the air after a hearing in the Kuibyshevsky district court, scheduled for Monday, was postponed until July 18.
Mitki face eviction from their spacious studio at 16 Ulitsa Pravdy. They have rented the studio since 1996 when former St. Petersburg mayor Anatoly Sobchak assigned it to them. 
The court is to decide if the privatization of part of the attic that the Mitki artists use was legal.
The studios occupy 193 square meters of the attic, and the art center takes up the remaining 200 square meters. Mitki, like many other artists assigned city-owned property, pay a rental well below market prices. 
In addition, the group does not have rights to the entire attic, because Sobchak assigned them only part of it.
The commercial sale price for the property is up to $1,500 per square meter, Mitki’s lawyers estimate.
“In the documentation, several rooms in the attic are listed as residential, although there is no gas, or water or even heating radiators in them,” Mitki leader Dmitry Shagin said Friday at a news conference. “The district administration used a trick to register some people in the rooms, the rooms were quietly privatized and now half of the attic is up for sale at the awesome price of $1,300 per square meter.”
Lawyer Andrei Tyndik, who represents Mitki, said two rooms were privatized in a series of murky deals, involving registering two orphans in the attic and then subsequently selling their rooms to other people.
“We have already found out that the people who privatized them used forged documents that state these spaces are fit for habitation, and all have heating and electricity,” Tyndik said at the news conference.
Mitki, famous for their use of blue-and-white striped sailors shirts that they wear and portray in their artworks, said the involvement of orphans in the transaction was an underhand tactic.
“Despite numerous inquiries none of us was ever able to see those orphans or find out if they exist,” Shagin said.
Ulitsa Pravdy has recently been turned into a prestigious pedestrian area, lined with boutiques and smart coffee shops. The view from Mitki’s studio is self-explanatory: this former industrial wasteland has been transformed into a giant construction site where a Turkish company is building a shopping center.
City Hall is supporting Mitki and is asking the court to declare the entire attic city property so that the city will be able to decide its fate, Tatyana Prosvirnina, spokeswoman for the city property committee, or KUGI, said Friday in a telephone interview.
Governor Valentina Matviyenko has on several occasions publicly supported Mitki, declaring their art “St. Petersburg’s cultural property.”
The standoff has been dragging on for months. 
Shagin said that a year ago City Hall had told the group that their tenancy would not be extended. 
“They gave us no explanation,” he added. “We made a huge fuss so they backed off, but only to change their methods.” 
In April, a group of large, muscle-bound men broke into the studio. They destroyed the entrance door and started kicking paintings and beating the artists. Many paintings were severely damaged before the police intervened.
Tyndik said no connection between the intruders and the two nominal owners of the privatized space — Olga Orlova and Yevgenia Lapitskaya — has been established.
The women could not be reached for comment. Their lawyer Lidia Sychyova, said in court that the deals were legitimate. One orphan sold their apartment, while the other gave his away. Both transactions happened on the same day.
The deals were legal and there was nothing suspicious about them, she said.
Mitki’s plight has roused the city’s artistic community to support them.
In April, a group of the city’s leading and most respected cultural luminaries, including film director Alexander Sokurov, Andrei Petrov, head of the city’s Union of Composers, Valery Popov, chairman of the St. Petersburg Writers’ Union, rock musician Boris Grebenshchikov and Andrei Bitov, international vice-president of writers’ organization PEN, sent a letter of support to Matviyenko asking her to intervene on Mitki’s behalf.
“The Mitki-VKhUTEMAS art center is one of the very few surviving footholds of St. Petersburg culture, and once again, it is at risk of going underground,” the letter says. “What we see is the brutal violence of a brainless but forceful barbarian against a weak artist over a potentially profitable subject.” 
If the court rules against Mitki, the artists aren’t going to vacate their studio, but appeal the verdict in the city court. Mitki’s philosophy of nonaggression is encapsulated in their memorable slogan “The Mitki aren’t out for victory.” 
If they don’t get any justice there, the group has vowed to go underground to return to their Soviet-era lifestyle. 
“We won’t leave our city whatever happens,” Shagin said. “We are true patriots of this place, and can’t imagine ourselves away from it.”

TITLE: Live 8 Gets Passionate Welcome
AUTHOR: By Kevin O’Flynn
TEXT: MOSCOW — Less than two weeks ago, most people in Russia had never heard of Live 8. But as hundreds of thousands watched concerts in eight other cities around the world, up to 60,000 people gathered in the shadow of St. Basil’s Cathedral to see the Pet Shop Boys headline the Moscow concert.
Moscow was a late addition to the series of Live 8 concerts after organizers seemingly forgot that Russia was a member of the Group of Eight industrialized nations. Told only on June 20, Moscow organizers managed something of a miracle in slapping together a slick concert.
With very little time for publicity, the numbers at the Moscow concert were inevitably small compared with the hundreds of thousands of people in other countries, and some people were specially bused in by city authorities. 
Many of those who did come could not say much about what the purpose of the concert was.
When asked what the concert aided, one woman, who had been bused in, said, “Something to do with the Olympics.” 
The gray rainy weather did not help, but when the clouds cleared, presenter Irena Ponaroshku of MTV squealed: “We didn’t seed the clouds; it’s because we have pure hearts.”
However, organizers did a good job of explaining clearly and frequently the aims of the Live 8 to get the world’s richest nations to cancel debts, increase aid to developing countries and promote fair trade.
“We hope Vladimir Vladimirovich [Putin] hears us,” Ponaroshku said as the music blasted over the Kremlin walls. President Putin was in Kaliningrad and not in his Kremlin office over the weekend.
Large television screens showed scenes of African poverty, and shots of the Russian groups on stage were interspersed with live footage from the other concerts from around the world.
Organizers had had to appeal to the Kremlin for help in getting the concert up and running on such short notice. 
Hundreds of people were bused in by municipal councils and city government-owned businesses, a ploy that traces its origins back to Soviet demonstrations. For such an event, it looked somewhat odd to see a relatively large number of men and women in their 50s and 60s, standing around looking somewhat bemused at the start. 
“They told us to come, but I liked it when I got here,” said Mila, 48, who works for the city council in Severny Medvedkovo, adding that she was going to stay until the end.
From the stage, organizer Artemy Troitsky persuaded many in the audience to send an SMS to G8 leaders, although some audience members complained when they realized it meant sending a text message to a telephone number in Britain. 
“I think Russia can afford with all its oil dollars to cancel its debts,” said Andrei, a 32-year-old computer programmer. “We can’t hand it out here as it will only cause inflation.”
The short notice for the concert may not have allowed many fans of the Pet Shop Boys to converge on the square, but it was enough time for someone to print up flyers offering ring tones and pictures of naked women to cell phone users and promising to send proceeds to the hungry in Africa.
As Live 8 has a policy of not asking for money, the flyer was at the least unofficial and almost certainly a con. The unknown advertiser also hired boys definetly under the legal working age of 16 to hand out the flyers to concertgoers for 200 rubles. 
When asked what would happen to the money, Alexei, who was in charge of the boys handing out the flyers, appeared ill at ease. After a pause, he said slowly, “It goes into an account… for Africa.” He refused to give a contact number for the company in charge of the service.
Back at the concert, numbers were increasing and the message appeared to be getting through.
“We also have children like this. We are very close to it,” said Natalya Generalova, a former school principal. “This is not politics. It is humanity.”
Russian group Moralny Kodeks began the concert by waking the crowd with a storming version of “Do Svidaniya Mama,” or “Goodbye Mama.” Part of their act was shown around the world.
By the end of the night, crowds had swelled to some 60,000, Troitsky said, citing an estimate by the Kremlin security force.
“The concert went down really well considering the funny amount of time we had — funny because it was ridiculously tight,” Troitsky said. “I think it was great. Technically, it was very good. We got a very big crowd.
“Neil [Tennant] told me at the end he was absolutely happy with what they had done and was really stunned by the audience’s response,” he said, referring to the singer with Pet Shop Boys.
The Pet Shop Boys, last to perform, received a rapturous welcome when they came on stage. After a rousing set, the band finished off with “Go West,” a song that echoes the Russian national anthem. 
The crowd, however, refused to leave, and the Pet Shop Boys were called back for an encore. It was clearly unexpected because there was a slight delay as organizers turned the group’s computer back on again.

TITLE: Yabloko Takes Speaker, Channel 5 to Task
AUTHOR: By Vladimir Kovalev
PUBLISHER: Staff Writer
TEXT: The St. Petersburg branch of the Yabloko party is defending its reputation in a legal battle with Vadim Tyulpanov, the speaker of the city’s Legislative Assembly and head of the Kremlin-loyal United Russia party. 
The dispute is based on comments by Tyulpanov that Yabloko had paid participants in a protest outside the Legislative Assembly against the replacement of in-kind benefits with cash.
The speaker’s press service said Friday that Tyulpanov had no comment on the lawsuit. 
The speaker also declined to send a lawyer to a preliminary hearing of the suit on Friday.
Maxim Reznik, head of the city branch of Yabloko, said the St. Petersburg city court agreed to hear Yabloko’s case, and would hold a further hearing on July 22.
“We have had negotiations today [at the court] and clarified all the circumstances of the matter,” Reznik said Friday in a telephone interview. “We don’t want any money from Tyulpanov. All we would get are 30 pieces of silver from him and we don’t want this.
“All we want is confirmation that what he said was a lie,” he added.
Yabloko alleges that Tyulpanov twice made allegations that the party paid protesters to take part in a rally on the St. Isaac’s Square next to the Legislative Assembly building on Feb. 16.
“I believe, the organizers who organized this demonstration, [and] who are, in fact, present at the rally, have been paid. They, in their turn, buy people for the rally, by paying them,” Tyulpanov said to reporters on the day of the rally.
“The protesters in the rally were paid … people were getting money in buses after the rallies finished,” he said in another interview, quoted by the local media.
Yabloko’s first response to the allegations was to organize “a visit of ordinary citizens” to Tyulpanov’s office in the Legislative Assembly on March 23. Yabloko issued single-entry passes to the city parliament for several of their activists. But Tyulpanov has banned anyone using any passes for the whole day after he found out about the attempt by the protesters to enter his office.
Last Monday, Yabloko went to city court with another lawsuit, alleging that City Hall-controlled television station Channel 5 had defamed the party.
The suit concerns a statement by anchor Igor Fesunenko, host of news program Glavnoye, who on Jan. 30 said that the party had organized protesting rallies together with skinheads.
The lawsuit was filed after the party received an official refusal from the management of Channel 5 to broadcast an apology for the statement. Yabloko had demanded the apology under the federal media law, which provides for false statements to be corrected.
“There are no legal grounds to broadcast a retraction, according to the current law,” Rosbalt on June 27 quoted Andrei Shishkin, deputy director of Channel 5, as saying in his official reply to Yabloko.
“The text proposed [by Yabloko] for broadcast is not in accordance with the norms of the media law,” the reply said.
But Andrei Richter, director of Moscow’s Media Law and Policy Institute, said Yabloko has grounds for a suit if it is certain the information broadcast by Channel 5 was incorrect.
“According to the media law Articles No. 43, 44 and 45 as well as Article No. 152 of the Civil Code a retraction should be placed if a media outlet has released incorrect information in relation to a registered organization. As far as I know, Yabloko is a registered organization, so for this reason they have grounds to demand a retraction in accordance to the Civil Code and the media law if they are sure that the information was incorrect,” Richter said Friday in a telephone interview.
The suit against Channel 5 is due to be heard in the Kuibyshevsky district court in September.
Human rights advocates on Friday supported Yabloko, saying that the authorities are playing a dirty game and not fulfilling their statutory obligations.
“When Tyulpanov has irresponsibly accused some organization of setting up a protest against the violation of their rights, such as that pensioners have been deprived of the right to free transportation, as a state authority he should be held responsible for doing that,” Yury Vdovin, co-head of the city branch of human rights organization Citizen’s Watch said Friday in a telephone interview.
“As for Channel 5, as a media outlet set up using taxpayers’ money, it has to provide them with objective information … . The problem is that the authorities don’t want people to be informed and to make such conclusions,” he said.

o Opposition parties are demanding airtime on state television and radio, The Associated Press quoted the liberal Yabloko party as announcing Friday. 
In a letter sent Thursday to President Vladimir Putin and the heads of Channel One and Rossia and Radio Russia, the parties demanded that weekly live radio and television political debates be held with the participation of the country’s different political parties. 
Yabloko, the Union of Right Forces and the Communist and nationalist Rodina parties, among others, formed a committee to defend free speech in May. 
Former Soviet leader Mikhail Gorbachev objected to the growing state control over media earlier this year on the 20th anniversary of his pioneering policy of perestroika, or restructuring.

TITLE: IN BRIEF
TEXT: Ivannikova Retrial 
MOSCOW (SPT) — The Moscow City Court on Monday overturned the murder conviction of a woman on the grounds that she acted in self-defense against a man who was trying to rape her, RIA-Novosti reported Monday. The court, however, sided with the dead man’s relatives and has ordered a retrial.
Monday’s decision overturned the Lyublinsky District Court’s conviction last month of Alexandra Ivannikova, 29, who stabbed Sergei Bagdasaryan, 23, in the thigh with a knife after waving down his car for a ride in December 2003. Ivannikova was given a suspended sentence, which Bagdasaryan’s father appealed. 
 
Extortion Arrests
MOSCOW (SPT) — Two men have been detained in Ivanovo on suspicion of attempting to extort $50,000 from the editor of Russian Newsweek magazine, Leonid Parfyonov, RIA-Novosti reported Monday, citing Interior Ministry officials.
Last week, one of the men contacted NTV television, where Parfyonov worked until last year, and told reporters that for $50,000 he would divulge information about preparations to kill Parfyonov. 
The man, who police identified only as Viktor, said that a security chief for an unidentified Ukrainian businessman had ordered him to help a group of hitmen with accommodation in Moscow, and that he needed the money to flee from the hitmen.

Plea for Governors 
KALININGRAD (SPT) — St. Petersburg Governor Valentina Matviyenko has criticized President Vladmir Putin’s reform of the Federation Council, saying that governors should return to the upper house of parliament to represent their regions, Interfax reported Monday.
“The absence of plenary powers in the Federation Council leads to a situation when its conclusions and decisions oblige no one to do anything,” Interfax cited Matviyenko as saying Saturday at a State Council meeting in Kaliningrad.
“I don’t understand why the regional elite, governors and speakers in the Federation Council are unable to participate in making the most important decisions in the country,” she said.

Windows for Return?
MOSCOW (SPT) — Russia could return six stained-glass windows to Germany if it is confirmed that the artworks are from the Marienkirche in Frankfurt an Oder, Interfax reported Monday quoting Hermitage management.
The windows are stored in Alexander Pushkin Institute in St. Petersburg and are being examined by art specialists.
“It is quite likely that thy are some stained glass windows from Marienkirche,” Hermitage director Mikhail Piotrovsky said. “If the stained glass windows at the institute are really from the Marienkirche, then the following procedure can take place: the German government can request them, they can be examined by the responsible commission and the question can be handed over to the State Duma.” 
“We have confiscated a significant part of German cultural heritage … as a compensation for our cultural heritage that was destroyed [during World War II.] The talks should be …not from the position that if [we] stole it, it should be returned,” he said.

TITLE: Music Hall to Fight
Fine for ‘Nord-Ost’
AUTHOR: By Angelina Borovikova
PUBLISHER: The St. Petersburg Times
TEXT: The St. Petersburg Music Hall says it will appeal against a Moscow Arbitration Court ruling that said it must pay the producers of musical “Nord-Ost” about 10 million rubles ($350,000), the theater’s director, Alexander Platunov, said Monday. 
The award was made for the Music Hall breaching its contract with the production company to stage the musical, which was at the center of a Moscow hostage crisis in 2002. The Music Hall refused to let the musical be performed in the hall in September last year, saying that the hall was in urgent need of repairs.
Platunov said the hall will hire more experienced lawyers than those it had used to date.
The verdict was released Thursday. The fine to be exacted from Music Hall in compensation for the production company’s losses, included refund of an advance payment of $15,000, which the theater had not returned, Interfax reported.
“I consider the verdict unfair, otherwise we wouldn’t have contested the lawsuit,” Platunov said Monday in a written response to faxed questions. “I’ll be able to comment on the situation in more detail when we receive the papers on the verdict of the Moscow Arbitration Court in 10 days.”
“As soon as we receive it, an appeal will be prepared,” he added.
Georgy Vasilyev, the musical’s producer, said he had tried to compromise with the St. Petersburg city government’s culture committee and the Music Hall before the court case started, Interfax reported. 
The Music Hall is owned by the city property committee and operates under the authority of the culture committee.
Nord-Ost’s lawyer Marina Popova welcomed the ruling.
“St. Petersburg courts have declared the contract between “Nord-Ost” and the Music Hall valid twice this spring, and it’s become the crucial argument in the Moscow lawsuit,” she said.
The Music Hall had had to consult the property committee before signing the contract with “Nord-Ost” because the commitments involved for the theater were greater than the money available on its account and the total cost of its property. 
The committee lodged a claim to the St. Petersburg Arbitration Court, arguing the contract was invalid, but the claim was rejected. The authorities then went on to file an appeal, supported by the city prosecutor’s office, but it wasn’t satisfied either. 
Vasilyev said he is ready to forgo the fine provided that “Nord-Ost” is staged in St.-Petersburg under license.  However, the culture committee’s heads rejected the offer without putting forward any alternative, the report said.
“The utter refusal of the St.-Petersburg authorities to allow “Nord-Ost” on the Music Hall stage must be connected to the coming reconstruction of the Mariinsky Theater”, Rosbalt reported Friday. “The ‘Mariinka’ is supposed to move to the Music Hall stage for a few years.”
Platunov said there had been several attempts to make a compromise. 
The Music Hall’s administration had suggested that “Nord-Ost” be performed in St.-Petersburg at any other time convenient for the production company, but in response Georgy Vasilyev suggested that we should buy the license to produce the musical, Platunov said. 
He estimated the cost of the license would be 10 million rubles. 
The Music Hall has neither the resources nor the will to produce its own “Nord-Ost.” “So unfortunately we didn’t manage to compromise,” Platunov said.
The theater’s former director Anzhela Khachaturyan canceled the performance less than a month before the opening night. 
The music hall’s official reason for refusing to host “Nord-Ost” was the dilapidated condition of the stage. The massive sets of the musical were said to be too heavy to be installed.
City Hall assigned a special commission to investigate into the problem. It confirmed that the fragile stage would not able to cope with the musical’s sets and announced the Music Hall would close for renovation soon.
“The stage equipment was indeed being repaired in Sept.-Oct. 2004. A significant sum of 4.5 million rubles was spent for that purpose. That renovation has allowed the Music Hall to function properly since Dec. 2004,” Platunov said.
“Nord-Ost” has been performed in Moscow, Nizhny Novgorod and Tyumen, but its further tour of the country has been delayed due to financial problems caused by the cancellation of the show in St. Petersburg, Interfax reported.

TITLE: Roses Planted at Peterhof
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: German Baroness Clotilde von Rintelen, great greatgranddaughter of Russia’s national poet Alexander Pushkin, on Monday brought 300 rose bushes to be planted at Peterhof.
Her donation was a reference to events in 1852, when Tsarina Alexandra Fyodorovna bought 1,000 rose bushes for Peterhof to mark the completion of the Dvortsovy hospital at Peterhof.
Von Rintelen, a psychiatrist, who once worked at a mental rehabilitation clinic in German resort Wiesbaden, is in town to inspect the hospital, which is now called Nikolayevsky. She has been patronizing it for the past 10 years. 
Born Clotilde von Merenberg, she is also the greatgranddaughter of tsar Alexander II, husband of Alexandra Fyodorovna.
Von Rintelen chose roses of beautiful, ancient types with melodic and romantic names — Madame de la Charme, Triumphe de Beville, Hero de Bataille and Louis Bonaparte — for Peterhof. The donation was supported by von Rintelen’s charitable foundation and Rotary International.
“By planting these roses, we are restoring both the historical truth and the beauty of nature,” she said.
In the mid-1990s, when working in Wiesbaden, von Rintelen met and befriended Russian psychiatrist Yury Linets, chief doctor of the Nikolayevsky hospital. 
In 1995, she established a charitable foundation to help the then cash-strapped hospital, which had been struggling to stay afloat. The foundation has since accumulated and donated financial aid and equipment to several local clinics, including children’s hospitals.
Von Rintelen travels to St. Petersburg at least twice a year, often around the time of Pushkin’s birthday on July 6. Her donations have ranged from bed linen to very expensive medical equipment, including blood testing equipment worth 250,000 euros for the Nikolayevsky hospital in June 2004.
Rintelen, 70, hasn’t inherited much of her ancestors’ wealth but cherishes a family relic, a manuscript in which Pushkin’s daughter Natalya describes her romance with Count Orlov.

TITLE: Russian Museum May Close
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: The State Russian Museum is facing imminent temporary closure because it is operating without its charter having been ratified.
Museum director Vladimir Gusev said last week that because the organization hasn’t registered a charter, its bank accounts could be frozen and federal funding promptly stopped. 
If the museum, which has one of the biggest art collections in Russia, has to close, it will not be the museum’s management but Moscow bureaucrats that are to blame, he added.
Following recent structural changes within the federal Culture and Press Ministry, which the museum is subsidized by and accountable to, amendments have to be made to its charter to reflect the changes.
“Amending and ratifying a charter is not very time consuming but then the document has to be revised and approved by the Justice Ministry, the Finance Ministry, the Economic Development and Trade Ministry and the Culture and Press Ministry,” Gusev said. “We have done all the work and are now waiting for several ministries’ officials to complete the revision and coordinate their decisions.”
Many of Russia’s largest museums and art galleries face similar problems. 
The amendments were submitted to Moscow a year ago. The deadline for all museums to amend their charters and for their revision by federal authorities expired on July 1.
Anna Tsvetkova, who oversees the museums section in the Culture Ministry, has asked the government to shift the deadline but no new date has been set.

TITLE: Severstal Purchase Gives State Control of Ren-TV Station
AUTHOR: By Alex Fak and Anatoly Medetsky
PUBLISHER: Staff Writer
TEXT: MOSCOW — The liberal-minded owners of Ren-TV, the last national television channel that offers critical news coverage, have sold a controlling stake to Kremlin-friendly steel giant Severstal, raising the specter of total state control over the country’s television airwaves. 
Unified Energy Systems, the electricity monopoly headed by liberal reformer Anatoly Chubais, said Friday that it has sold its 70 percent stake in Ren-TV for $100 million to a subsidiary of Severstal Group, which is controlled by Alexei Mordashov, a billionaire and open supporter of President Vladimir Putin.
Also Friday, Ren-TV founders and top managers Irina and Dmitry Lesnevsky announced that they have sold their 30 percent of the channel to RTL Group, a Luxembourg-based media company controlled by Germany’s Bertelsmann holding. Neither side would disclose the value of the deal.
RTL Group, which will oversee the channel’s operations, said it would not curtail Ren-TV’s coverage.
“We wanted a general interest channel that appeals to a lot of people, and that includes its editorial line,” Andrew Buckhurst, RTL Group’s senior vice president, said by telephone from Luxembourg. “Our policy is not to change anything in the current programming- grid or style of Ren-TV.” 
Buckhurst would not say what RTL would do if it were to come under pressure from the Kremlin to mute political criticism. “We’ll cross that bridge when we get there,” he said. 
A Severstal source confirmed the purchase but refused to say whether the Kremlin had played a role.

TITLE: IN BRIEF
TEXT: Governor’s Rating Up
ST. PETERSBURG (SPT) — St. Petersburgers’ trust in Governor Valentina Matviyenko grew 6 percentage points in June, Interfax reported Friday, quoting a survey by the Agency of Social Information last month.
Forty-six percent of respondents said they trust the governor, while in May the comparable figure was only 40 percent. Both surveys were of 500 city residents, the report said.
The growth in trust was linked to the number of new business projects announced for the city, including the project to develop a business area, the Baltic Pearl, the announcement of investments totaling $1.5 billion coming from China and the construction of a Toyota car plant, the report said.
“The trust in the government is determined by trust in its activity,” Interfax quoted Roman Mogilevsky, head of the agency, as saying. “The results show that city residents have positive feelings in regard to the increased business activity of the governor.”
Plans to build a new sea passenger terminal on Vasilyevsky Island were supported by 63 percent of respondents.

Friendship Square 
KALININGRAD (SPT) — A public Square For Friendship with St. Petersburg has opened in Kaliningrad on Friday, Interfax reported, citing members of a City Hall delegation visiting the exclave to celebrate the 750th anniversary of Kaliningrad.
“Our cities have lots in common,” Interfax cited St. Petersburg Governor Valentina Matviyenko as saying at the ceremony to open the square. “We are the most western, the most European cities of Russia, we are united by the Baltic Sea and recently we’ve been connected by a ferry line.”
The authorities installed a pillar in the square that displays the distance between St. Petersburg and Kaliningrad. It bears the coat of arms of the Northern Capital.

Airspace Breach Denied
MOSCOW (SPT) — Russian military officials have denied that a Russian Il-18 violated Estonian airspace on June 29, Interfax reported Monday, quoting the Russian Air Force press service.
“There were no flights of Il-18 aircraft scheduled for that day. At this time there was a plane Tu-154, which flew strictly according to its flight plan,” Interfax cited Alexander Drobyshevsky, the Air Force spokesman as saying.
The Tu-154 flew to Kaliningrad along the Estonian-Russian border, the spokesman said.
According to Estonian authorities, an Il-18 entered Estonian airspace at 4:59 p.m. on June 29 without permission near Vaindloo Island and was over Estonia for 13 seconds.

Strasbourg Eyes NBP
MOSCOW (SPT) — The European Court for Human Rights has accepted a complaint by the Russian National Bolshevik Party members who were convicted and jailed for up to three years after conductin an unsanctioned protest at the Health Ministry, Interfax reported Monday.
“A lawyer representing the interests of the seven NBP members convicted for the protest at the Health Ministry, has submitted a complaint from the detainees to the European Court for Human rights this spring. Now there is information that the court has accepted this complaint for examination,” NBP spokesman Alexander Averin said.
The protesters are demanding $120,000 in compensation from Russian authorities as well as asking the court to rule that the international convention on human rights was violated by the Kremlin in relation to them.

TITLE: Berezovsky Releases Sale Price of Holdings
AUTHOR: By Catherine Belton
PUBLISHER: Staff Writer
TEXT: LONDON — Boris Berezovsky has for the first time disclosed how much he earned from selling his vast Russian holdings, as the self-exiled oligarch prepares a lawsuit against his former protege, Roman Abramovich.
Berezovsky said that he and his partner Badri Patarkatsishvili each made nearly $1 billion from the sale of their jointly held stakes in the Sibneft oil major, Russian Aluminum and national television channel ORT. 
That was significantly less than the stakes’ real worth, Berezovsky said, and he intends to file suit later this year against Abramovich, whom he accused of doing the Kremlin’s bidding to strip him of his assets at knock-down prices.
“This was not a sale but racketeering conducted by [President Vladimir] Putin, Abramovich and [former presidential chief of staff Alexander] Voloshin,” Berezovsky said in an interview in the elegant boardroom of his Mayfair office last week. “This is a crime, and I intend to start an official investigation into all three transactions in the West.”
Berezovsky said he was crafting a case under English law against Abramovich, who has gained fame in Britain as the deep-pocketed owner of Chelsea Football Club. 
“Abramovich said that if we didn’t sell, they would take it off us anyway,” Berezovsky said, referring to what he claimed was the forced sale of the 50 percent stake in Sibneft he owned jointly with Patarkatsishvili. 
Berezovsky said Abramovich had told them he was speaking in Putin’s name and offered them little choice but to accept the sale price of $1.3 billion for the stake — a sum that Berezovsky said was paid out to them in several tranches between 2000 and 2003. 
“This is less than the dividends we should have received over the same period,” he said.
Berezovsky said his case against Abramovich was “almost ready” to be filed in a London court.
A spokesman for Sibneft said Abramovich would contest any court case filed by Berezovsky. 
“I can’t comment on Mr. Berezovsky’s specific allegations, but any lawsuit will be vigorously contested,” said John Mann, a Sibneft spokesman.
Abramovich is also under fire from British-based Sibir Energy, which last week said it was planning legal action against Sibneft for pushing it out of a joint venture in Siberia. Sibneft denies any wrongdoing.
Berezovsky has often claimed that Abramovich, a former partner, joined forces with the Kremlin to push him out his holdings in Russia after he openly clashed with Putin in 2000. 
Berezovsky, the one-time Kremlin kingmaker, fled Russia in November 2000 after prosecutors launched a mounting probe into his affairs. They arrested the deputy director of his Aeroflot airline, Nikolai Glushkov, on charges he had embezzled funds and charged Berezovsky with fraud in a separate case linked to his business with carmaker AvtoVAZ. 
By the time he left the country, Berezovsky had already started selling his stake in Sibneft and had sold his holdings in ORT, which had come under fire after airing critical coverage of Putin’s handling of the August 2000 Kursk submarine disaster.
In 1995, Berezovsky and Abra-movich won Sibneft for a little more than $100 million in the controversial loans-for-shares auctions, which were widely seen as rigged. 
Now Sibneft is worth $15.6 billion, and 57.5 percent of the oil firm is owned via Abramovich’s London-based investment vehicle Millhouse Capital.
Berezovsky said Abramovich used the same tactics he had used with the Sibneft sale to force him into selling his stakes in ORT and Russian Aluminum. 
“In the case of ORT, he said that if we did not sell Glushkov would sit in prison for the rest of his life,” he said. “It was the same with RusAl. ... Abramovich said that if we didn’t sell our shares then we would get nothing at all.”
In 2003, Abramovich sold his 25 percent stake in RusAl for an estimated $1.8 billion to Basic Element owner Oleg Deripaska, who already owned 50 percent.
“In breach of all our agreements, [Abramovich] sold his stake for a sum close to $2 billion. And we were told to sell ours for a significantly smaller sum of $500 million, maybe for even less, ... $400 million — a price four or five times less than what Abramovich got. This is called racketeering,” Berezovsky said.
Berezovsky said he and Patarkatsishvili sold their 49 percent stake in ORT for approximately $140 million in 2000, while the 25 percent stake they held in RusAl was sold between 2003 and 2004.
Berezovsky declined to give specific details of these transactions, saying Patarkatsishvili had been in charge of them. 
Berezovsky said he and Patarkatsishvili held the stakes in a 50-50 ownership structure. He said Patarkatsishvili, who now lives in exile in his native Georgia, was unlikely to join him in his lawsuit. 
“My position is different from Badri’s. He still has relations with Abramovich.” 
Patarkatsishvili could not be reached for comment.
It is unclear what consequences legal action taken by Berezovsky might have. 
Legal experts said the case would be difficult to evaluate until Berezovsky actually filed suit. There is no legal provision for racketeering under English law, unlike the extensive RICO provisions in the United States. But English law does hold some provision for contesting transactions made “under duress,” which could give Berezovsky room to maneuver, legal experts said.
“There have been cases in the last few years where people have succeeded in cases of duress, but Berezovsky would need to have a lot of evidence and a long paper trail proving these transactions were made under duress,” said one British lawyer speaking on condition of anonymity. “I can imagine there will be arguments about jurisdiction too.”
Under English law, such transactions can be disputed only in the six years after they were conducted, he said.

TITLE: Putin Appeals for Stability in Iraq
AUTHOR: By Maria Danilova
PUBLISHER: The Associated Press
TEXT: SVETLOGORSK, Kaliningrad Region — President Vladimir Putin on Sunday called on the world community to work together to bring stability to violence-wracked Iraq, saying after meeting with French and German leaders that past disputes should not prevent future cooperation. 
“All of the disagreements on the Iraqi problem must remain in the past,” Putin said. 
“We should be pooling efforts with the United States and with the countries that are present in Iraq today and that have assumed the function of promoting stability in that country in order to help the Iraqi people assume responsibility for its future,” he said. 
Like France and Germany, Russia sharply opposed the invasion of Iraq and has expressed concerns about continuing violence and increased attacks on civilians and soldiers that have been blamed largely on Sunni Arab insurgents. 
Meeting with Putin near the Baltic Sea port of Kaliningrad were French President Jacques Chirac and German Chancellor Gerhard Schroeder, who came at Putin’s invitation to mark the 750th anniversary of the exclave’s founding. 
Earlier the two leaders told Putin that the positive relations between Russia and the EU were vital for world stability and for the prosperity of Kaliningrad, which is cut off from the rest of Russia by EU members Poland and Lithuania. 
“The relationship between Russia and the European Union is essential for world equilibrium,” Chirac told Putin. 
Putin defended Russia’s decision last month to reject a proposed treaty with Estonia that would have delineated a final border between the two former Soviet republics. Moscow balked at Estonian lawmakers’ proposal to insert a statement about the five-decade Soviet occupation of the Baltic states. 
Talks between the three leaders also focused on Iran’s nuclear program, North Korea and other issues. 
Putin largely enjoys the support of the French and German leaders, though some domestic critics blame the two countries for not confronting him on human rights abuses, such as those committed by Russian forces in the brutal war in Chechnya. 
The three leaders were also attending ceremonies commemorating the founding of Kaliningrad, a city that was founded in 1255 by the Teutonic Order of Knights and called Koenigsberg until Soviet troops took it over in 1945. 
The festivities, which were attended by the leaders of all of Russia’s 89 regions, were meant to reassert Russia’s commitment to this region, which has been separated geographically from the rest of Russia since the Soviet collapse. 
“In its heart, [this city] will always be called Koenigsberg, although this absolutely does not concern any territorial claims,” Schroeder said. 
Notable was the absence of the leaders of Poland and Lithuania, whom Putin did not invite — sparking criticism that he was paying too little attention to Russia’s closest neighbors to the west, both former Soviet satellites. 
“We are celebrating the 750th anniversary of Kaliningrad/Koenigsberg as an internal Russian event,” Putin said.

TITLE: Georgian Police Quell Riot
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia — Riot police with masks and truncheons clashed Friday with protesters who tried to block a main road in the Georgian capital, Tbilisi, in support of two wrestling champions who have been accused of extortion. 
The protest, involving hundreds of fans of Georgia’s favorite sport, quickly grew into a demonstration against the ruling authorities. In the evening, 1,000 opposition supporters massed in a central park to demand the dismissal of the interior minister. 
An opposition lawmaker had his nose broken as fist fights erupted in parliament. 
“All citizens, not just athletes, Tbilisi residents or not, must protect their dignity,” said David Gamkrelidze, head of the Right Opposition: New and Industrialists parliamentary group. 
“I have no illusions that there will be 50,000 people, but this protest is necessary so that the authorities can see that not all is going as they thought it would.”
About 25 people were detained overnight on suspicion of organizing the unrest, Interior Ministry spokesman Guram Donadze said.
The Supreme Court approved the detention of Aleko Davitashvili, president of the Georgian Wrestling Federation, and a runner-up world champion, Georgy Revasishvili, on Thursday on charges of extorting $8,000 from a Greek businessman.

TITLE: MN Sold To Ukrainian Media Holding
PUBLISHER: Combined Reports
TEXT: MOSCOW — Media International Group, a holding owned by Ukrainian businessman Vadim Rabinovich, said Sunday that it had purchased 100 percent of the Moskovskiye Novosti newspaper from Yukos investor Leonid Nevzlin, Interfax-Ukraine reported.
Moskovskiye Novosti spokeswoman Tatyana Blinova said Friday that Nevzlin had sold the newspaper to a media company earlier in the week, but declined to identify it. She said an official announcement would be made Monday. 
Moskovskiye Novosti, a weekly published in Russian and English, was thrown into crisis this year when editor Yevgeny Kiselyov fired a number of senior journalists. 
The announcement of Kiselyov’s own sacking could come soon, Interfax reported, again citing people close to the deal. 
Media International Group owns newspapers in the United States, Israel and Ukraine, including the U.S. daily Novoye Russkoye Slovo, as well as television and radio stations and Internet news sites, Interfax said.
(Reuters, SPT)

TITLE: Akayev Blames U.S. For Kyrgyz Uprising
AUTHOR: By Vladimir Isachenkov
PUBLISHER: The Associated Press
TEXT: Former Kyrgyz President Askar Akayev on Thursday accused the United States of engineering his ouster to expand its clout in Central Asia and warned that the regime change could encourage Islamic radicals to overthrow secular governments in the region. 
In an interview, Akayev said Washington wanted to project influence in Central Asia and was apparently vexed by his efforts to balance U.S., Russian and Chinese interests in the region. 
“I did everything to balance the interests of the three great powers,” said Akayev, who fled to Russia after the March 24 uprising. 
“But the United States doesn’t want a balance. Americans want [others] to have a clear orientation to Washington.”
While in office, Akayev allowed U.S. military deployment in Kyrgyzstan for operations in Afghanistan, but later also allowed Russia to open a military air base just 30 kilometers from the U.S. base. 
One reason for the U.S. discontent was “our pro-Russian foreign policy,” Akayev said. 
He said he had fallen out of favor with Washington when he decided to host the Russian base. 
“The United States apparently decided that it hurt its interests,” Akayev said. 
“That marked the start of the preparation of plans for my ouster.”
Akayev was speaking at a country residence outside Moscow provided by the Russian government. 
He said Kyrgyzstan’s rampant poverty and unemployment helped fuel a popular uprising, but added that “foreign factors played the key role.” 
He said a dozen U.S. nongovernmental organizations, including Freedom House and the National Republican Institute, helped stage the regime change, and “their efforts clearly have been coordinated by the U.S. Embassy.”
The U.S. administration has denied allegations of instigating the uprising in Kyrgyzstan, which followed similar regime changes in Georgia and Ukraine. 
In all three countries, the unrest was triggered by allegations of vote fraud and widespread allegations of official corruption. 
Akayev, who ruled for 14 years, had taken the helm in Kyrgyzstan a year before it gained independence in the 1991 Soviet collapse. 
Under him, the country was widely viewed as being more open and democratic than other former Soviet republics in Central Asia. But Akayev came under increasing criticism for cracking down on the opposition. 
He dismissed the accusations of authoritarianism in the interview, saying the country had dozens of political parties, hundreds of independent media outlets and thousands of NGOs, and argued that it was actually the high level of Kyrgyzstan’s democratic development that facilitated the regime change. 
“Kyrgyzstan was a good place for staging a revolution because it had ... free media and an active opposition,” he said. 
“Kyrgyzstan was a convenient venue for conducting a revolution and it could serve as a springboard for exporting it to other Central Asian nations.”
He spoke with bitterness about what he called the U.S. role in his ouster and warned that it could backfire, undermining regional stability in the volatile region, which is simmering with Islamic extremism. 
“Attempts to accelerate democratic processes in Central Asia without paying attention to local traditions ... and the Islamic factor was a mistake,” he said. 
“I honestly was taking the nation along the democratic path, but time and patience were needed for democracy to take root. The United States lacked patience, and it didn’t give us time.” 
Akayev said the rulers of Uzbekistan and Kazakhstan would learn lessons from the events in Kyrgyzstan and successfully resist any attempts to chase them from power.

TITLE: Policeman Jailed For Plane Bombs
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A Moscow region court on Thursday found airport police Captain Mikhail Artamonov guilty of negligence in the deaths of 90 people in the suicide bombings of two planes last August and sentenced him to seven years in prison, Interfax reported. 
Artamonov, 30, was accused of releasing two women suspected of carrying bombs onto two passenger planes in Domodedovo Airport without inspecting their belongings on Aug. 24. 
A Volga Avia-Express Tu-134 and Sibir Tu-154 exploded in midair that night, killing everyone aboard. 
Prosecutors had asked for six years for Artamonov, but the Domodedovo City Court judge handed down the maximum sentence allowed by law, Interfax reported. “The court has no doubt that Artamonov is guilty of negligence,” Judge Natalya Mishina said. “The terrorists needed a more thorough check than Artamonov gave.”
In a closing statement to the court late last week, Artamonov said that the Law on Police held senior airline officials, not the police, accountable for not properly inspecting passengers’ belongings, Gazeta reported.
On April 15, the Domodedovo court sentenced a former Sibir employee and a ticket scalper to 18 months each in a penal colony for their role in the bombings. 
Artamonov’s lawyer Sergei Kazimirov said his client would appeal, Interfax reported.

TITLE: German WWI Soldiers Dug Up in Lithuania
AUTHOR: By Liudas Dapkus
PUBLISHER: The Associated Press
TEXT: PANEVEZYS, Lithuania — As the soil is brushed aside centimeter by centimeter below this Soviet-built soccer stadium, the original purpose of the site becomes chillingly clear. 
Human skulls and bones, fragments of coffins and pointed German military helmets emerge from the dirt, unearthed by a team of Lithuanian archeologists. 
“We are here to restore the historical truth. Those German soldiers deserve to be buried properly,” said Albinas Kuncevicius, a Vilnius University archaeology professor leading the excavations in Panevezys, some 140 kilometers north of the capital. 
Kuncevicius and his colleagues believe at least 600 German soldiers were buried here during World War I. Their remains tell grim tales of war: Some have bullet holes in their skulls, others are missing legs or arms. 
German troops occupied Lithuania from 1915 to 1918 and built the cemetery next to a military hospital. It was left intact until the Red Army occupied Lithuania in 1940. The Soviets bulldozed the cemetery, crushing the tombstones, and built a stadium on top of it. 
But its history was never forgotten: People used to say they were treading on the dead when they played soccer on the field. 
Last year the Lithuanian government allocated 200,000 litas ($70,000) to exhume the soldiers’ remains and rebury them at a cemetery in Klaipeda, a seaport some 300 kilometers west of Vilnius. The process is expected to take until September. 
“For Lithuanians, it has always been very important to bury the departed ones in a proper way. The Soviet regime humiliated the memory of those Germans. Now the time has come to fix this injustice,” said Raimondas Dambrauskas, the local school principal behind the project. 
Dambrauskas first learned about the graves underneath the stadium’s grass when reading a history book 15 years ago, but it was only recently that he was able to persuade the local government to finance excavations and reburials. 
“It took longer than I thought. Now my conscience is clear. Graves should not be trampled by soccer players’ feet,” he said.
Kuncevicius showed a 77-year-old map of the cemetery, where all tombstones are marked with numbers and burial dates. 
“Back in Berlin, they must have more detailed plans of cemeteries like this with names of the troops. We have already discovered several golden rings, marked with soldiers’ names. After our search is completed, someone in Germany may receive news of their grandparent’s fate,” Kuncevicius said. 
After they are marked and placed in plastic bags, the soldiers’ remains are taken to the gym at Dambrauskas’ nearby school for closer examination. 
Some of the older teachers are uncomfortable with having hundreds of skeletons lined up in the gymnasium. 
They cross themselves when they walk by, and some have suggested the building should be consecrated, Dambrauskas said.
The students, however, are eager to help. 
“No basketball here this summer. But this grave-digging thing is even more interesting,” said Petras Jurakas, 16, who assists the scientists every day as they examine skulls, bones and teeth, trying to determine the sex and age of the skeletons. 
Simone Stemmler, a spokeswoman for the German Embassy in Vilnius, said the project was very important. 
“We applaud the Lithuanian authorities for the decision to rebury those soldiers at their final place of rest,” Stemmler said.

TITLE: Ministry Halts Pipeline Survey
PUBLISHER: The Associated Press
TEXT: MOSCOW — The Natural Resources Ministry said Thursday that surveying work for an oil pipeline to Asian markets had been halted around Lake Baikal, the world’s biggest freshwater lake, over ecology fears. 
In a statement, deputy natural resources minister Valentin Stepankov said that surveying work had been conducted outside the limits specified in government approved guidelines and trees had been felled illegally. 
Stepankov sent a letter to Greenpeace Russia, thanking the environmental group for helping to monitor the surveying work. 
When complete, the pipeline will pump oil from Siberia to lucrative markets in Japan and other parts of Asia. 
The project has already drawn fire from environmental groups. As well as its proximity to Baikal, it envisions an oil terminal on the shore of the Perevoznaya Bay on the Pacific Coast, which ecologists warn would create the risk of major oil spills in a pristine area that is home to popular beaches, fishing grounds and rich marine life.

TITLE: Orthodox, Vatican to Talk
PUBLISHER: Reuters
TEXT: VATICAN CITY — Orthodox leaders on Thursday hailed Pope Benedict’s commitment to Christian unity and said they were prepared to resume a theological dialogue that has been stalled for five years. 
“Our Orthodox Church shares fully the same commitment,” said Metropolitan Ioannis of Pergamum, a leading Orthodox theologian, in Rome for the feast of Saints Peter and Paul. 
He said their highest-ranking prelate, Ecumenical Patriarch Bartholomew I of Constantinople, had convinced the Orthodox churches that follow him to appoint two delegates each to the international mixed religious commission. 
“This will allow us to resume our theological dialogue in the near future, concentrating now on crucial ecclesiological issues concerning, in particular, the subject of the primacy” of the pope, he said. 
Benedict has made reconciliation with the Orthodox, who split from Rome in 1054 in disputes including one over the pope’s role, a top priority of his papacy. 
The new Pope, elected in April, sent an envoy to Russia this month to see how to repair strained ties. 
In a homily on Wednesday, the Pope urged the visiting Orthodox prelates to focus on what unites them with Rome rather than on millennium-old disputes. 
On Thursday, he took up the theme again: “The unity that we are seeking is not one of absorption or fusion, but fully respecting the many forms of the Church.” 
The commission on theological dialogue was interrupted five years ago amid souring relations with Russia and a row over property. 
Bartholomew met John Paul last year. On that occasion, John Paul expressed “disgust and pain” for the Catholic sacking of Constantinople during the Fourth Crusade in 1204.

TITLE: Visa-Free Kiev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW  — Since Friday, U.S. citizens no longer need visas for visits of up to 90 days to Ukraine, Interfax reported, citing the Ukrainian presidential office.
The July 1 change takes effect exactly two months after Ukraine lifted visa requirements for citizens of European Union countries.
The presidential office said the decision to relax the rules for U.S. citizens was aimed at developing ties with the United States. 
Ukraine is eager to attract foreign investmente.

TITLE: Russian Capitalism Has Muscle Behind It
AUTHOR: By Kim Murphy
PUBLISHER: Staff Writer
TEXT: MOSCOW — In a city mad for the automobile, even a tiny downtown showroom was a license to print money. Selling Chevrolets, Cadillacs and Opels, Trinity Motors was raking in $1 million a month.
A group of Canadian and British investors operated the dealership on upmarket Tverskaya Ulitsa for 13 years. Until one morning late in May, when Trinity Motors ceased to exist.
Shortly before noon, about 30 men, some dressed as security guards, some in jeans and shorts, swarmed into the showroom, forced Trinity’s managers and employees out of the building and proceeded to paint over the windows. The dealership’s lease, Trinity was told, had not been renewed by the Kremlin property administration.
The truth was more complicated — and ultimately much more worrying for anyone who has money invested in Russia, said Trinity spokesman Rudy Amirkhanian. Trinity managers were told that the new lease on the property was being awarded to a little-known company with friends at the Kremlin.
“Somebody at the presidential administration wants this facility. I have my hands tied behind my back,” an agent from the property administration told Amirkhanian in a tape-recorded conversation a week before the bouncers showed up.
“Are you telling me the presidential administration is above the law?” Amirkhanian queried.
“The president is above the law – of course above the law. We do not live in a law-governed state, though the actions we’re taking are strictly legal,” the federal property services agent replied. “Bandits? OK, we’re federal bandits. And if you want to see who’s stronger, you’re welcome to.”
In the 1990s, when Russian capitalism was young and the law was pliable, business disputes routinely were settled by teams of thugs and showers of bullets.
It’s not supposed to be that way in 2005. Now, contract laws are in place; uniformed bailiffs deliver eviction notices; courts mediate disputes. Most of the time.
In the new, “normal” Russia – which concluded a strategic partnership agreement on key economic issues with Europe in May and hopes to join the World Trade Organization by next year – business disputes are still sometimes settled by fleets of SUVs showing up at the curb. Men with buzz cuts and big neck muscles get out, and property abruptly changes hands in favor of the guy who hired the neck muscles.
Last year, operators of the Aerostar Hotel, one of Moscow’s longest-operating four-star hotels, found themselves thrown out onto the street by 30 security toughs after their landlord suddenly demanded a $30-million rent increase for their long-term lease — after the Canadian managers had invested $40 million of their own money in upgrading the hotel. Registered guests were ejected 36 hours later.
A few months earlier, the Moscow office of billionaire philanthropist George Soros’ Open Society Institute was raided at midnight by the landlord and 50 men in camouflage outfits, who burst through a window, shocked the organization’s guards with electric prods, covered up surveillance cameras and then proceeded to lock up the building and all its contents, including files and computers.
A few days later, 20 masked men bearing clubs swooped into the building in an apparently unsuccessful attempt to take it back.
Such transactions are often wryly referred to by lawyers in Moscow as “self-help” — the act of advancing a troublesome legal case by swiftly establishing new facts on the ground.
“You can’t legally throw the other party out if you have a rental dispute, but it happens here all the time,” said Jamison Firestone, an attorney who represents business clients in Russia. “The other party can’t get to their possessions, they can’t run their business, so they capitulate because by the time they get it back, there’ll be nothing left.”
The point, many businessmen say, is not who is right or wrong in these often-murky contract disputes, but the frequency with which they are decided by physical force.
Of particular concern, said Firestone, is in a case like Trinity’s, where the government uses muscle.
“With Trinity Motors, there should have been a court case, and even then, only the bailiffs can throw somebody out. They just didn’t bother to wait,” he said. “Actions like that don’t give investors warm, fuzzy feelings.
“It sets a horrible precedent, and it’s one of the reasons that capital flight out of this country is estimated to be $14 billion over the next two years.”
The number of such cases is far fewer than in past years but seems to be experiencing a minor upsurge, some business leaders said.
“In the early ’90s, this was very commonplace. It was the Wild West. And then, it seemed like the country stabilized. But suddenly it seems like, in the last 18 months, things have gotten worse,” said Andrew Ivanyi, who managed the Aerostar for AeroIMP, a joint venture of a Halifax, Nova Scotia-based investment group, IMP Group, and Aeroflot Airlines.
“If this can happen to the Soros foundation, can you imagine what can happen to the little businessman?”
And not just the little businessman. In October 2003, Yukos Oil Chief Executive Mikhail Khodorkovsky found his private jet surrounded by masked law enforcement agents in commando gear, and the oil executive – then Russia’s richest man – was arrested on fraud and tax evasion charges.
Yukos was gutted when its main production unit, Yuganskneftegaz, was seized by the tax authorities and sold for a fraction of its value to a state-controlled oil company whose chairman happens to be a senior Kremlin official. 
Yukos shares, many of them held by foreign investors, plummeted, and the company is now on the verge of bankruptcy.
In the case of the Aerostar Hotel, AeroIMP was forced out in August 2004 by a Russian company known as Aviacity, which AeroIMP alleged had illegally acquired property rights to the building. Aviacity raised the rent by millions of dollars and ordered a halt to all subleases at an adjoining office complex. IMP had by then sunk $40 million into the complex.
AeroIMP alleged that Aviacity was trying to seize a valuable piece of central Moscow real estate.
Aviacity went to court, alleging that AeroIMP was in violation of its long-standing lease by subleasing the office property without Aviacity’s permission. The court initially agreed. But instead of allowing the issue to be fully litigated or waiting for court bailiffs to execute any court orders, Aviacity’s attorneys showed up with what Ivanyi described as “about 30 goons” outside his office.
“Their lawyer said, ‘I would advise you to leave quietly. It would be better for you.’ The words he used were, ‘Or we’ll carry you out,’ “ Ivanyi recalled. “We picked up the papers on our desks and left.”
That was a Friday afternoon. Hotel guests were given until Sunday morning to decamp, while Ivanyi and his managers retreated to a room of a competing hotel across town.
The Russian legal system, notorious for corruption and government interference, was of little help. AeroIMP lost its first round in court, won on appeal, then lost again. Finally, the Supreme Arbitration Court issued an injunction, upholding the management’s right to possession of the hotel while the legal case played out.
Without explanation, the court reversed itself seven days later.
“I’m not going to say the obvious,” said the hotel management’s lawyer, Alexander Skoblo.
Aviacity officials said they were merely executing valid rulings of the court. “We did everything legally,” said Marina Khvostova, general director of the company.
“Do you think if they had a lease [that was] valid … the courts could have ignored that? Now they are declaring to the entire world that they were evicted illegally. I can tell you, it’s not true.”
In the Trinity car dealer case, presidential property department spokesman Viktor Khrekov said the dealership’s lease on the federally owned property expired March 30, well before the eviction in May.
“They were directed to leave the premises. They did not do so. The whole procedure was taped. It is clear no violence took place. So why they are making a big thing out of a small one, I do not understand,” Khrekov said.
One of the main sore points for Trinity was that the company had spent $860,000 renovating the building after assurances they would be allowed to renew their lease. Then they were told by Izvestia, the government-controlled firm administering the building, that the lease would be awarded to another company.
Trinity believed it had a legal right of first refusal. Then, during a conversation that Trinity spokesman Amirkhanian tape-recorded, an Izvestia official told Trinity that it would be fruitless to try to hold on to the property.
“You can hear on the tape where he says, ‘Go ahead and record,’ “ Amirkhanian said. “Either he didn’t believe we were really recording it, or he was so arrogant that he didn’t care.”
Corruption in its many forms is something foreign businesses have to deal with all over Europe, observed Andreas Romanos, head of the Assn. of European Businesses in Russia. The difference, he suggested, is that corruption elsewhere may be “more refined” than the Russians who show up in SUVs.
Despite the rough stuff, he said, most investors have decided that the potential returns in Russia outweigh the obvious risks.
“If you’re willing to bite your lips and go to work in Russia,” Romanos said, “your payback’s going to be faster and your growth is going to be larger.”
Ivanyi agreed. After all, nearly 10 months after he was thrown out of his office, he’s still in Moscow, ready to work.
“Despite all the difficulties and potential dangers, if you look at the number of multinationals working in this country, the answer is, we have to be here. It’s a country with a future,” he said. “It’s a country of 150 million people. The customers are here.”

TITLE: Brother Sits Exam for His Sister
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Moscow State University rejected the application of a young woman after her brother, masquerading as a woman, was caught trying to take an entrance exam for her Monday.
The woman was applying to the university’s journalism department, which is widely regarded as one of the leading journalism schools in the country, a department spokeswoman said.
The brother was caught as he tried to join other hopeful applicants in taking the psychology exam, one of a battery of tests required for entry, she said. 
No other university officials were immediately available for comment.
But Yassen Zasursky, the dean of the journalism department, told Interfax that the brother’s “especially protruding female features” aroused the suspicion of university security guards, who were on the lookout for cheaters.
He said the brother’s disproportionately large breasts were particularly suspicious.
“The guards at first thought the student might have stashed cheat sheets there. However, it turned out that they were just fake breasts,” Zasursky said.
“Upon further investigation, it turned out that this was a young man who had decided to disguise himself as a girl in order to take the psychology entrance exam for his sister,” he said.
The brother also wore heavy makeup, he said.
Universities and colleges face numerous problems with cheating. Bribery is also commonplace, with students paying billions of dollars every year to gain entry into schools of higher education and to pass their courses.

TITLE: Chechen Rock Show Canceled
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Some concerts get canceled due to slow ticket sales, bad weather or stars crying off sick, but a planned rock concert in Chechnya was called off a day before it was due to take place because of security concerns.
Chechen Prime Minister Sergei Abramov said Monday in Grozny that the “Phoenix: Return to Life” concert planned for Tuesday would be postponed until September, Interfax reported, as organizers said they had been advised by military officials to call off the concert. 
The cancellation came three days after the deadliest bomb blast this year in the North Caucasus, which killed 10 soldiers in neighboring Dagestan.
The concert’s impressive line-up, including groups Va-Bank, B-2 and Night Snipers, had been set to rock Gudermes, the republic’s second-largest city, under the watchful eye of the event’s security chief, Chechen First Deputy Prime Minister Ramzan Kadyrov.
Twenty thousand tickets had been printed for what would have been Chechnya’s biggest musical event since the start of the second war in 1999.
A smaller concert took place January in Gudermes to mark the beginning of work on the city’s water park.
“We’re very upset,” said one of the members of the organizing committee speaking from Grozny by telephone, who asked not to be named.

TITLE: Alfa Will Finance Turkish Deal Alone
PUBLISHER: Reuters
TEXT: ANKARA, Turkey — Alfa Group will finance its $3.3 billion deal with Turkey’s debt-laden Cukurova Group through its own resources, Alfa’s owner, billionaire Mikhail Fridman, said on Monday. 
The financing deal consists of a $1.707 billion loan and $1.593 billion in six-year bonds convertible into shares which would enable the group’s Alfa Telecom to take a 13.22 percent stake in Cukurova’s mobile phone arm Turkcell. 
Fridman was speaking in the Turkish capital before talks with the country’s State Minister Kursad Tuzmen, who is in charge of foreign trade. 
“One positive side of this cooperation is that it will open the way for Cukurova to pay its debts to the state,” Fridman told reporters. 
Cukurova says it will use the financing from Alfa to repay its debts to state banking regulators after the 2002 collapse of its Pamukbank, and to buy a Turkcell stake held by leading bank Yapi Kredi, which Cukurova is selling to a Turkish-Italian venture. 
“The most important thing is that with our cooperation, control of Turkcell will remain in the hands of a Turkish company,” Fridman said. 
The Alfa deal was reached last month despite a legal challenge from Nordic telecoms firm TeliaSonera, which holds 37 percent of Turkcell and had agreed in March to acquire another 27 percent, a deal Cukurova has since abandoned. 
Alfa’s interest in Turkey has been linked with an ownership dispute between Alfa and TeliaSonera in Russia, where they are shareholders in No. 3 mobile firm, MegaFon. 
But Fridman shrugged off this assertion. 
“This is just a viewpoint. We see this cooperation as very advantageous in itself,” he said. 
In comments seen as signaling that the Turkish government looked favorably on the deal, Tuzmen said the investment was very important for both Russia and Turkey. 
“Positive developments have increased interest in Turkey. We see the investment decision of Alfa Group as a sign of stability,” Tuzmen said. 
When the deal with Alfa was announced last month, Sweden’s industry minister said the TeliaSonera dispute was a test of Turkey’s economic and legal system. 
Turkcell is the only Turkish firm listed on the New York Stock Exchange and is the mobile phone market leader, with 23 million subscribers.

TITLE: IN BRIEF
TEXT: Q2 Capital Outflow 
MOSCOW (Bloomberg) — Russian private capital outflow totaled $5.5 billion in the second quarter of the year, Central Bank said.
Russians withdrew $200 million from the country in the first quarter of the year, the bank said.
The net capital outflow is expected to decrease to between $5 billion and $7 billion in 2005, from $8 billion in 2004, because Russia is dedicated to improving the business climate, including lowering taxes, Andrei Klepach, head of macroeconomic forecasts at the Economic Development and Trade Ministry, said in June.

Transneft Exports Fall
MOSCOW (Reuters) — Oil exports by pipeline monopoly Transneft fell by 390,000 barrels per day in June from May, to an average of 4.22 million barrels per day, the Industry and Energy Ministry said Monday.
Exports fell from almost all major ports such as the Black Sea ports of Novorossiisk and Yuzhny, Butinge on the Baltic Sea and the Druzhba pipeline to Central Europe.

Vekselberg In Power
MOSCOW (Bloomberg) — The owners of Integrated Energy Systems, which is controlled by billionaire Viktor Vekselberg, bought stakes in Kirovenergo and Udmurtenergo as they seek to form a regional power utility.
Integrated Energy Systems’ owners also bought units of Kirovenergo and Udmurtenergo, the Moscow-based company said in an statement Monday. 
The company did not say how large the stakes were or give information on the prices paid.
Intergraded Energy, established in 2002, is buying stakes in regional energy companies as Russia breaks up the industry to attract billions of dollars in investment.
Russia is splitting up 72 regional utilities owned by national utility Unified Energy Systems into their underlying assets and merging them into larger generation, transmission and distribution companies.

Chevron’s Kazakh Cut
MOSCOW (Bloomberg) — A Chevron-managed pipeline that ships Kazakh oil to the Black Sea cut crude exports from Kazakhstan after its largest client, Tengizchevroil, stopped supplies into the link after a shutdown at its oil-processing plant.
“An electrical fault caused the electrical power generators at Tengiz to shut down on” on July 2, Tengizchevroil, Kazakhstan’s largest oil producer, said Monday.
The company expects operations return to normal Monday. “We hope this will be a short-term interruption,” Maxim Syssoev, a spokesman for the Caspian Pipeline Consortium said.

Evraz Suit Thrown Out
MOSCOW (SPT) — A court in Luxembourg on Friday dismissed a lawsuit filed against Evraz Group by a group of plaintiffs in a dispute over Evraz’s Kachkanarsky ore-processing plant, both sides confirmed Monday.
The court said Luxembourg did not have jurisdiction in this case, sources in steelmaker Evraz said.
The group of plaintiffs had argued Kachkanarsky was illegally seized from them before Evraz bought it in 2004. The plaintiffs included Kachkanarsky’s former owner, recent media reports said.
Law firm Marks & Sokolov, which represents the plaintiffs, has filed a complaint with financial authorities overseas against Evraz and its underwriters for allegedly misinforming investors about its ownership in Kachkanarsky ahead of its June flotation.

Russian Jets To Thailand
MOSCOW (SPT) — Russia could sell ten of its Sukhoi Su-30 jets to Thailand if it wins an international tender for fighter jets, the Thai ambassador to Russia said Monday.
“Thailand has never before bought Russian weapons; therefore, we have to approach this issue seriously. But if there is talk about buying this type of technology we will take no less than 10 fighters,” Ambassador Sorayouth Prompoj told Interfax.
Russia is competing against Sweden and the United States for the Thai contract.
A source in the Russian aviation industry said a $500 million contract for 12 jets could be in place by the end of the year.

RTS Plans New Futures
MOSCOW (SPT) — Russian Trading System, the dollar-denominated stock exchange in Moscow, plans to launch futures contracts on its benchmark RTS index this summer, its president told journalists on Monday, Interfax reported.
This expands the type of futures contract available, with players on RTS’s futures market — known as FORTS — already able to buy and sell futures or options contracts on stocks including Unified Energy Systems, Gazprom, LUKoil, Rostelecom and Norilsk Nickel.
A futures contract is an agreement to buy or sell a particular asset, such as a stock or a bundle of stocks, at a specific price on a stipulated future date. An options contract gives the buyer of the contract an option to do the same before a specific date.

TITLE: Russia May Upgrade Iran’s Subs
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russia is reportedly in talks to upgrade three Iranian submarines, a $270 million deal that could revive the bilateral arms trade but further irritate the United States.
Rosoboronexport, the state-owned arms selling agency, is in negotiations to refurbish three Kilo-class diesel submarines and equip them with Club-S anti-ship missiles, Kommersant reported Monday, citing unidentified sources. 
Rosoboronexport refused to comment on the Kommersant report, as did St. Petersburg’s Admiralteiskie Verfi shipyard, which delivered the three subs to Iran in the 1990s.
An arms deal would likely inflame relations with Washington, which is already irritated by Russia’s participation in Tehran’s nuclear program.
“The United States will be unhappy if this contract is signed,” said Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies defense think tank.
The Kommersant report came less than a week after Russian officials said they were ready to build more nuclear reactors in Iran. Moscow’s construction of the Islamic republic’s Bushehr reactor has already raised international concern that Russia is unwittingly helping Iran develop a nuclear weapon. 
Large-scale deliveries of conventional weapons to Iran began in 1990 and included about 40 MiG-29 fighters, S-200 air defense systems, the three Kilo-class submarines and licenses to produce T-72 tanks and BMP-2 infantry fighting vehicles. But in 1995, Prime Minister Viktor Chernomyrdin signed a deal with U.S. Vice President Al Gore not to deliver any more weapons to Iran.
When Russia withdrew from the agreement in 2000, analysts predicted that Iran could become Russia’s No. 3 arms client after China and India. But aside from a batch of Mi-17 helicopters, there have been no reported arms deliveries since.
Annual arms sales to Iran, including spare parts, have been less than $50 million, said Marat Kenzhetayev, an expert with the Center for Arms Control think tank.
But if a deal to refurbish the submarines comes through — worth $90 million a piece — the picture could change.
“This deal would galvanize the arms trade between the two countries,” said Kenzhetayev.
Kenzhetayev said that pressure from Washington thwarted a deal to deliver Iskander surface-to-surface missiles about two years ago.
In 2003, the U.S. State Department blacklisted Tula KBP company for the sale of laser-guided Krasnopol-M artillery shells to Iran, which the company denied.
The 200-kilometer range Club-S missile systems, which reportedly would be fitted on the Iranian submarines, are unlikely to present a serious threat to the United States, said Makiyenko of the Center for Analysis of Strategies and Technologies, adding that “[the Americans] would get excited even if we sold them cartridges.”
Kommersant quoted Rosoboronexport’s deputy general director Vladimir Pakhomov as saying that while aviation dominated arms exports in recent years, naval systems would account for 51 percent of weapons deliveries in 2005, as opposed to 24 percent last year. 
This year Russia is set to deliver seven Kilo-class subs to China, all of them fitted with Club-S missiles, Makiyenko said.

TITLE: Report: Lack of Trust Hampers the Economy
AUTHOR: By Alex Fak
PUBLISHER: Staff Writer
TEXT: MOSCOW — Would you trust a stranger in a train to look after your bag while you run to the toilet? 
Probably not if you’re Russian. Seventy percent of people in Russia believe “you can’t be too careful in dealing with people” — while only a quarter agree that “generally most people can be trusted,” according to a poll of 1,500 Russians conducted by Bashkirova & Partners market research firm last month.
The lack of trust does not just translate into a greater air of suspicion — it also carries a heavy price that weighs down the entire economy.
In the absence of effective mechanisms that enforce contracts and protect property rights — what economists broadly call “legal institutions” — trust is left as one of the few informal pillars of economic activity. 
Although the costs of mistrust are indirect and hard to quantify, they undeniably take a heavy toll on economic activity. Insecurity forces companies into unprofitable business to secure supplies; confines entrepreneurs to dealing only with close partners; and deforms the whole structure of the economy. 
“When institutions are good, you do not need mutual trust that much” because people have faith that legal pledges they sign are enforceable, said Yekaterina Zhuravskaya, academic director at Moscow’s Center for Economic and Financial Research. “Our institutions — such as the judicial system — are horrible, so we need trust; but trust is nowhere to be found.”  
That’s not to say that Russians are necessarily the most untrusting of people. The World Values Survey, organized by the University of Michigan sociologist Ronald Inglehart, puts Russia somewhere in the middle of some 80 nations polled about whether one should trust people in general. Brazilians and Filipinos were the most leery of their compatriots, while Scandinavians and Chinese were the most trusting.
In an Eastern European context, however, Russia was one of only two nations where more people said they do not trust “most people in this country” than said they do, according to a 2004 poll conducted by the Center for the Study of Public Policy at the University of Strathclyde in Glasgow. (Bulgaria was the other country.)
Institutional uncertainty is also well documented. A World Bank survey published in September found that 75 percent of Russian firms polled complained of “unpredictability of the interpretation of laws” — compared to one third of companies in China — and an equal number cited regulatory unpredictability. Two-thirds of Russian firms told the World Bank that they had no confidence that the courts would defend their property rights. 
The lack of trust makes it difficult for entrepreneurs to commit money to their own businesses. 
Companies that find their property rights the most secure reinvest 64 percent more money in their businesses than those who are least secure, according to a 2002 survey of 269 Russian firms conducted by three American economists. 
Excessive caution also makes doing business more costly. The days when “people would just make deals and run” — when Russians would only sign short-term contracts — may be over, said Alexei Dudko, head of the dispute resolution group at Linklaters Moscow law firm. But businesses still have to go to great lengths to protect themselves against their partners, he said.
Sometimes companies establish subsidiaries abroad so they can sign contracts under other legal systems, like the English law, “because the Russian legal system does not do a good job of regulating things like shareholder agreements,” said Dudko. 
Russian businessmen are also more likely to use escrow arrangements, in which they transfer money through third parties, Dudko said. In an economy where contracts are more secure, the money spent on such detours could have gone instead on producing a product or delivering a service. 
Eric Michailov, a partner at White & Case law firm, said many of his firm’s clients preferred to do business with companies they had known for years. 
“This will have to change,” he said. “As the business base in Russia grows, you’re going to have to make deals with people you don’t know.” 
But change is coming only slowly. The survey by the American economists found that 95 percent of the companies polled would retain an existing supplier — even if offered a lower price from a newcomer — for fear the courts would not enforce a new agreement. 
Russia’s notorious opacity is also responsible for caution. Entrepreneurs who are forced to forge new relationships typically approach potential partners with the thoroughness of a private detective.
“Russian businesses tend to use all possible [legal] means to check the background of the other company before signing a contract,” said Olga Krysanova, a lawyer at CMS Cameron McKenna. 
Large companies that can afford to do so often bypass partners altogether and try to control the whole production chain. 
About two-thirds of Russian industrial companies have some sort of vertical integration, said Yevgeny Nadorshin, an economist at Trust brokerage. Although comparable statistics are hard to find, he said that “vertical integration here is much deeper than in developed countries,” where cost-saving outsourcing of most non-core activities is common.
Oil firms secure their own distribution channels, buying service stations even when the money could be invested in more profitable core ventures; metal firms mine their own coal, which is necessary for smelting; and all large companies prefer to own their own banks. 
“The company knows that documents won’t get lost, accounts won’t get pilfered,” said Nadorshin. 
The accumulation of non-core assets leads to further losses, since management time is diverted from concentrating on the core business. Yet companies still feel they have no choice.
“In Russia, if you want to guarantee the loyalty of your partner, buy him,” said Nadorshin.

TITLE: Sibneft Payout Fuels Talk of Takeover
AUTHOR: By Dmitry Zhdannikov and Tom Miles
PUBLISHER: Reuters
TEXT: MOSCOW — The country’s No. 5 oil firm Sibneft fuelled bid speculation Monday by saying it planned to pay out a record $2.29 billion in dividends to shareholders, led by billionaire Chelsea soccer club boss Roman Abramovich. 
The payout prompted speculation from analysts that the company was being stripped of cash prior to sale. 
“Sibneft had a successful year in 2004 and it is proper that we share that success with all of our individual shareholders and institutional investors,” Sibneft president Eugene Shvidler said in a statement. 
But the announcement signals a U-turn in dividend policy after an initial plan to pay nothing before Sibneft fully divorces its former merger partner Yukos. 
The new proposed payout is bigger than Sibneft’s entire 2003 profit of $2.28 billion. The firm has not yet released its 2004 results to International Accounting Standards. 
“It’s a return to the glorious past of distributing pretty much every dollar they earn,” said Adam Landes, oil and gas analyst at Renaissance Capital bank. 
Abramovich, who Forbes Magazine named in May as Russia’s richest man, controls Sibneft through an investment firm called Millhouse Capital, which has a 57.5 percent of the shares. 
He has not declared his holding in the firm, preferring to appear in public as the Chelsea boss whose $14.7 billion wealth helped bring the club the English league championship this year. 
Millhouse stands to gain more than $1.3 billion under the proposed payout, which will leave Sibneft a smaller target for a possible takeover. 
“Sibneft, clearly, is signaling — by decapitalizing the firm — that it’s for sale,” said Landes. 
Abramovich, governor of the remote eastern Chukotka region, has already sold many of his Russian assets. 
Some investors predict that Sibneft will go for sale next as the Kremlin is tightening its grip over the economy, but others see Abramovich’s position as secure in Vladimir Putin’s Russia. 
Rumors have swirled for months about Sibneft’s future, but the firm’s ownership has been confused since it pulled out of a plan to merge with Yukos, once Russia’s top oil firm but now laid low by a $27.5 billion tax claim. 
Although the merger was called off, 34.5 percent of Sibneft is still either in Yukos’ hands or frozen by Russian officials in their tax evasion investigation against Yukos. 
“The change in Sibneft’s dividend position means that either it is close to reaching a deal with Yukos and getting back 34.5 percent of its stock or its principle shareholders are close to selling out,” said Valery Nesterov from Troika Dialog. 
Firms named as possible buyers of Sibneft include Russia’s state oil company Rosneft and gas monopoly Gazprom. 
The latter has grand ambitions to expand into oil and, unlike Rosneft which is laboring under $22.5 billion of debt, it is about to come into some money. The government is buying a 10.7 percent stake in Gazprom that should bring in $6.35 billion after tax by the end of this year. 
Kommersant newspaper reported Monday that Gazprom was lining up a joint bid for Sibneft with Royal Dutch/Shell, as part of a wider deal between the two. 
But analysts said Gazprom did not yet have the cash from the state and that money was unlikely to go towards buying Sibneft. 
“A lot of people are spending on Gazprom’s behalf when it doesn’t even have the money yet,” said Landes. “It’s already ear-marked for a number of very significant projects and it’s questionable whether there will be any left for a major acquisition like this.” 
Sibneft did not say when it would hold an extraordinary general meeting to approve the dividend, which is equivalent to 13.91 roubles per ordinary share. 
A company source said the EGM date would be decided upon at the next board meeting. The register of shareholders entitled to dividend payments had not yet been closed.

TITLE: Small Business Loses Confidence in City
AUTHOR: Yekaterina Dranitsyna
PUBLISHER: Staff Writer
TEXT: The impact of St. Petersburg’s small and medium-sized business on the gross domestic product has decreased from 10 percent to 5 percent last year, Oksana Dmitriyeva, State Duma deputy, said last week at a round table.
The event was organized by a lobby group called Public Government (Narodnoye Pravitelstvo,) which claims that the business climate in St. Petersburg has drastically deteriorated.
“Russia needs 10 million small business ventures to have economical stability. In 1995, only 960,000 ventures were registered and their number has decreased to 700,000 since then,” said Ivan Grachyov, a representative of Public Government.
In 2003, the total earnings of the small and medium-sized business sector in St. Petersburg reached 138 billion rubles ($4.79 billion), in 2004 — only 133 billion.
Public Government members draw a gloomy picture of the local business environment, which they say is lacking in resourses and legal protection.
One of the major headaches for small and medium-sized business has been long-term rent, the lobby group said. Leasing space for a small cafe may cost $1.5 million for 49 years, the group said.
Smaller business ventures cannot afford bank credit, especially since interest rates as high as 18 percent on top of 12 percent inflation levels demand massive profit levels so as to cover liabilities, the group said.
The lobbyists say that small and medium-sized ventures are virtually excluded from most dynamic business areas, such as construction and the communal services sector, due to high entry costs and tangled legislation.
According to a survey of smaller businesses across the country, compiled by the consultancy firm Grant Thornton Trid, “the greatest constraint on expansion for Russian businesses is red tape,” with 58 percent of respondees naming it as a major drawback. The same affects about 37 percent of  businesses around the world.
A shortage of working capital is the next most significant constraint for Russian businesses (44 percent), which is double the global average (22%). The lack of long-term finance is the third most serious constraint with 39 percent, the report said.
“Entrepreneur forces are divided. We lack a coordinating center to protect our interests,” said Roman Pastukhov, president of St. Petersburg’s Entrepreneurs’ Union. The union has more than 1,000 members. 
“Every committee in the city controls small business, pulling it in different directions. Decisions, made at the governor level, are later perverted by local officials. It’s a hypocrisy and a farce,” Pastukhov said.
The union president called for a single local government committee to be set up that can deal exclusively with small businesses.
Dmitriyeva said that the most stark example of smaller businesses losing out was in the retail sector.
In St. Petersburg there are 240,000 small ventures employing 600,000 staff. Of those, 15,000 will lose jobs after the liquidation of small retail outlets at bus stations, said deputy chairman of Small and Medium Sized Business Association Marina Zhuravlyova.
Efforts to help smaller enterprises were made in the form of a unified profits tax that was set at 5 percent for companies with annual turnover of less than 20 million rubles ($694,000).
Small businesses say the bar was set too low. “All public associations asked to raise the level to 40 million or 50 million, but large retailers lobbied their interests in federal ministries to stifle the competition,” Dmitriyeva said. She declined to say who lobbied on behalf of large retailers.
Small businesses said they lose about 3.3 percent of annual turnover in bribery, because legal disputes cannot be resolved otherwise.
“The authorities do not solve controversial situations automatically. Bribery is now disguised in the form of various social fund donations,” Pastukhov said, which leads to a drop in business confidence.

TITLE: Bolloyev Brews a Socially Kind Fund
AUTHOR: By Yuriy Humber
PUBLISHER: Staff Writer
TEXT: In yet another thought-provoking business venture since quitting his directorship at the city-based Baltika brewery, Timur Bolloyev has initiated a mutual fund that will invest specifically in social infrastructure in the Northwest.
To add to the city’s uniform-making factory Trud, of which Bolloyev acquired a controlling share packet earlier this year, the former head of Baltika has gathered over 200 private and company investors and a sum total of 280 million rubles ($10 million) in the country’s first investment fund which targets construction of leisure and social facilities.
At a Monday press briefing, Bolloyev announced himself as head of an advisory board of directors that will oversee the work of a Real Estate Trust Fund (REIT) named Baltika. The fund will be managed by Leader, the country’s largest fund manager in terms of assets volume — hitherto a pocket company for Gazprom’s pension fund manager Gazfond.
“There simply do not exist enough places in the Northwestern region where people can spend their salaries during leisure time,” Bolloyev said. “Each weekend, about 400,000 people from Moscow and a good number from St. Petersburg and the Northwest seek some weekend retreat, but they are soarly limited in choice.”
In an unusual move for the Russian fund market, the Baltika fund will play largely on its star-studded advisory board — which includes popular actor turned singer Mikhail Boyarsky, the Mariinsky theater’s creative director Valery Gergiyev, as well as prominent city business leaders.
Although technically managed by Leader, the fund’s advisory board will promote certain investment-worthy projects that the REIT will then either fully exploit or recommend to others as “projects with great possibilities,” Bolloyev said.
“The fund will act as a guarantor for some of the projects, without necessarily investing [each time]. Our presence can be purely symbolic,” Bolloyev said. He admitted that he was also “a major shareholder” in the Baltika fund, as is at least one other member of the advisory board.
While realtors say the chosen investment sphere, leisure property especially, titters on the verge of a boom in Russia, other fund companies have replied with skepticism verging on disbelief.
“The fund’s base capital will be enough to cover one large investment project … it will not stretch into a series of projects in its current form,” said Vadim Barausov, spokesman for CIT fund managing company. CIT operates two REITS, which have 400 million rubles ($13.8 million) and 500 million rubles (17.3 million) in base capital.
“And if [the fund] is mainly going to act as a broker, introducing investors to potentially profitable projects, then why set up a mutual fund at all?”
Alexei Lestovkin, head of development and client services at AVK Dvortsovaya Ploshchad fund managing firm, notes that the Baltika fund will be the first in Russia to “play on the image of its leader.”
“It looks like Leader will fulfil more the technical side,” while the advisory board will have greater sway over which projects the REIT invests in and the amounts.
Baltika fund — poised to cash-in on Bolloyev’s fame and reputation as head of the same-name brewery — has already won political support from city governor Valentina Matviyenko and Leningrad Oblast governor Valery Serdyukov.
Hoping to sway investment towards the city’s infrastructure needs, Matviyenko said “we will show any support necessary for this fund,” and hinted that St. Petersburg was badly in need of a modern-day maternity home.
A similar investment project was already successfully under way in Moscow, she said.
Precisely what kind of “projects of social infrastructure” the fund will invest in remains unclear, as Anatoly Gavrilenko, head of Leader, said Monday that several ideas were under consideration.
Gavrilenko added that the REIT may increase its base capital at any time in the future, and that the fund’s shareholders have the option of selling their stakes. He would not comment whether the fund would be used to invest in less commercial social projects such as hospitals or schools.
Bekar real estate agency’s Igor Luchkov estimates that the most profitable investment in leisure facilities in the Northwest will be along the Gulf of Finland, in the city’s Primorsky district, or south by the Karelsky Peresheyek.
“If the fund picks the right location, the currently high demand for entertainment facilities  will make the project very profitable,” Luchkov, consulting and land valuation department manager, said Monday.
AVK’s Lestovkin is less optimistic. “The fund will have to stretch to build a few cottage districts, and the return on profits on such construction has generally been slow.”

TITLE: Eurocypria Airline Lands in City
AUTHOR: By Yuriy Humber
TEXT: Breaking Pulkovo airline’s monopoly on the St. Petersburg-Cyprus route, the sunny isle’s air carrier Eurocypria finally launched its Russian operations last Friday.
After two years of stern negotiations with Pulkovo and federal aviation authorities, which led to the countries signing a bilateral agreement on flights in spring, Eurocypria negotiated for one scheduled flight a week.
According to the agreement, Eurocypria may run a second flight to match Pulkovo’s two, “which we hope to do if business proves successful,” the company said Friday.
Over 7,000 Russian tourists visited Cyprus last year, while only 1,000 Cypriots came to St. Petersburg, according to data from the Cyprian Tourist Board.
City tour operators Avatara, Solvex, and Taurus, which act as ticket agents for the Cypriot airliner, said Friday at the briefing that they expected the company to gain a 27-percent market share in St. Petersburg by the end of the year. That equals 2,700 Cyprus-bound Russians opting for the European liner in 2005.
Eurocypria’s Boeing 737-800 will leave Cyprus on Fridays at 10 p.m. local time, taking 4 hours 45 minutes to reach St. Petersburg. The return leg to Cyprus will depart Pulkovo airport early Saturday morning, at 1.30 a.m.
Despite the late departure hour, Eurocypria aims for a 75 percent load on its 189-seater flights. It will compete with domestic carrier Pulkovo on “the attention to customer service,” and extra services such as e-tickets and pre-flight duty-free orders, Stavros Stavrou, Eurocypria’s marketing and sales manager, said at a press briefing.
“We have a policy of generating sales not through discounting, but simply by offering value for money,” Stavrou said. He did not specify the price range within which Eurocypria will operate.
Nikita Savoyarov, head of tourism consultancy ET Consult, sees the European carriers extra services as more likely to appeal to the younger audience, who are more Internet-savvy.
“Since Cyprus joined the European Union, the number of Russian firms operating there has decreased or scaled down operations due to work permit restrictions,” Savoyarov said. “That will definitely affect the business traffic, so bringing in a younger [clientele] is a plus.”
Tamara Khaletskaya, head of Solvex, said that Eurocypria and Pulkovo offer very similar ticket prices.
Demetris Samuel, consul general of the Republic of Cyprus in St. Petersburg, said Friday at the briefing that the consulate will do its best to cope with an increased visa volume to stimulate easier travel to the island.

TITLE: Soyuz Contributes $20M in Oil Plant
PUBLISHER: The St. Petersburg Times
TEXT: The largest Russian producer of oil-seed and grease substitutes, St. Petersburg-based Soyuz, will invest $20 million into expanding its Kaliningrad plant, the firm’s head said Friday, Interfax reported.
A new container sea-line between St. Petersburg and Kaliningrad will be used to transport the products.
Vladimir Sidorov, the CEO of Soyuz corporation, said the company will put $20 million of both its own and attracted finances into engineering and construction works, and new software and logistic facilities, Interfax reported.
By 2007, the plant will increase annual production by 66 percent to 250,000 tons. Sidorov said the plant’s three processing lines currently produce 28,000 tons of grease substitutes an hour.
To minimize transportation costs and time, Soyuz has organized a sealine between Kaliningrad and the city, with  Rusmarine-Forwarding as operator.
“Kirsui Liniya line was organized to service freight from several companies. Soyuz is the first, and a strategic partner,” said Kirill Alexandrov, commercial director of Rusmarine.

TITLE: Consul: Learning Differences to Achieve Closeness
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The new Japanese Consul General in St. Petersburg, Takuo Kidokoro, 59, says the main goal of a diplomat is to understand why people of another nation act or live differently.
“I still remember how my daughter’s teacher in Japan crossed out her answer to what season people play tennis in. She marked in the paper that it was in winter,” Kidokoro said. “And she marked so because for a long time we lived in San Francisco, where there was no real winter and people could play tennis all the time.”
“The teacher didn’t think of asking her why she thought people played tennis in winter,” he said.
Kidokoro believes that people, and particularly diplomats, should always try to understand the reasons for other people’s behavior and culture in general. It leads to fruitful relations, in business as well as society.
Since arriving in St. Petersburg at the start of May, Kidokoro said he has set his goal “to take care of the Japanese community and tourists, as well as businessmen, who want to open their business in the city.”
“I personally want to have more Japanese companies coming to the St. Petersburg market. However, in order for that to happen, we’ll need to explain to them how to enter this market, and equally to explain to the city government what conditions would attract more Japanese business,” he said.
One of the biggest problems worrying Japanese companies interested in the Russian market is the complicated documentation and registration procedure for opening a new business, Kidokoro said.
“Of course, if those businesses had to prepare just one document for this purpose, they would come here more willingly,” he said.
Delays in customs clearance in Russia also discourage the businesses, Kidokoro said.
The Japanese community in the city makes about 170 people at the moment, most of whom are students of Russian or art, as well as businessmen and those attached to the diplomatic corps, Kidokoro said. The diplomat hoped that the arrival of new businesses would broaden the community.
Already the number of Japanese tourists to St. Petersburg has increased this year by 20 percent. Of their favorite places to visit, Kidokoro naturally names the State Hermitage Museum for its size, beauty and “an excellent collection of art.”
Despite the attraction of Russia, several factors limit higher tourist numbers from Japan. Kidokoro mentions particularly the concern over safety that many Japanese feel in St. Petersburg, fueled in part by reports and on occasion personal experience of pick-pocketing and petty theft in the city’s metro and cafÎs.
A further practical complication for tourists is the absence of direct flights between Japan and St. Petersburg, the diplomat said.
Life abroad began early on for Kidokoro. After graduating from Tokyo University for Foreign Studies, where he learnt English, Mongolian and Russian, Kidokoro secured a position at the Japanese Foreign Affairs Ministry. 
He performed his first Russian diplomatic mission in 1983, sent to work as a consul to the then Soviet city of Leningrad (now St. Petersburg.) With time, Kidokoro traveled to work as a diplomat in San Francisco, Mongolia, Chicago, and Moscow.
In every country he stayed, Kidokoro learnt something valuable. In America, the lesson seemed that happiness could be gained only from work, but also from donating oneself to the community.
“After learning that I decided to dedicate a part of my life to taking care of the local community, in the current case it’s the Japanese community in St. Petersburg,” Kidokoro said.
The luck of Kidokoro’s post in Leningrad as a young man and his return since, to Moscow, and now St. Petersburg, have given the diplomat plenty of material for comparisons.
In modern Russia, life has acquired some conveniences, such as supermarkets, where everything is weighed and packed. Yet, during the Soviet era Kidokoro felt safer, and there was less traffic.
Kidokoro, who gives an impression of being an open man, said that after 20 years of working abroad he prefers the European sport of tennis to traditional Japanese judo, and is fond of all kinds of folk songs. Traveling enriches his knowledge, and as a diplomatic principle, Kidokoro aims “to feel as if every country I work in is my hometown.”
Tetsuya Uchida, head of the St. Petersburg office of the European Bank for Reconstruction and Development has known Kidokoro since 2000 when both men worked in Moscow.
At the time a chief representative of Japan Bank for International Cooperation, Uchida said he often turned to Kidokoro for advice.
Besides being an “experienced diplomat,” Uchida rates Kidokoro as a tricky tennis opponent, but also a man with a very friendly character liked by all of the Japanese community in St. Petersburg.
True to his word of trying to understand others and supporting communities, Kidokoro often lectures on Russian affairs at universities in Japan. Because someone has to explain how tennis is played in winter, even in Russia.

TITLE: It’s a Brand-Savvy Dog’s Life for Licensing
AUTHOR: By Angela Moore
PUBLISHER: Reuters
TEXT: NEW YORK — Fido might seem just as happy drinking his water out of your toilet as he would a Homer Simpson water bowl. 
But retailers are betting pet owners are a bit more finicky — and fashionable — and willing to pay for new lines of pet products from well-known brand names. 
Dog owners now can indulge their inner fashion stylists by outfitting their pets in SpongeBob SquarePants dog collars or Elvis dog sweaters, for example, rather than no-name items. 
At the International Licensing Show in New York last month, leading dog brands like the American Kennel Club and Milk-Bone, and entertainment companies like Fox and Nickelodeon were banking that the growing pet products industry will end up being a gold mine. 
“This is a huge untapped market,” said Virginia King, executive director for Fox licensing and merchandising. “Whether it’s a collar or a leash or a T-shirt or a sweater, it’s probably one of the biggest potential growth areas for retailers.” 
People see companion animals as extensions of themselves, which has led to an explosion in designer pet clothing, high-end accessories, swanky carriers and toys based on familiar characters. 
Americans will spend more than $35.9 billion — which includes food, vet care and services like grooming — on pet-related products in 2005, according to the American Pet Products Manufacturers Association. 
In contrast, the U.S. toy industry rang up $20 billion in sales last year. 
“If we buy kids a licensed product because we think it’s cute, we might do the same for pets,” said Sean McGowan, an analyst with Harris Nesbitt. 
“But kids are not indifferent to brands, and pets largely are,” McGowan said. “If you buy the licensed product, you’re really buying it for yourself. So there’s a limit to how far you’re going to go with it.” 
Universal Studio’s consumer products group is working on pet accessories licensed under the “Curious George,” “King Kong” and “Scarface” brands. And it is looking for pet product opportunities with retro movie and TV brands such as “Animal House,” “American Graffiti” and “The Munsters.” 

Edible Dog Books
Scholastic Corp, best known for its children’s books, is pairing its popular “Clifford the Big Red Dog” character with dog food. 
“There is a tremendous market in pets. For many people, their pets are like their children,” said Al Kahn, chief executive of 4Kids Entertainment, which is the licensing agent for the American Kennel Club brand. 
“I don’t think the growth has even started. We are just in preliminary stages. Many more pet products are going to be introduced, but like anything else, this, too, can be overdone.” 
Even corporate brands are getting a piece of the action. DaimlerChrysler unit Jeep makes pet crates and plans to move into pet carriers. 
“Pet products have become such a popular category,” said Debra Joester, chief executive of The Joester Loria Group, a licensing agency representing Jeep. “I’m seeing more and more pet owners buying toys, clothing, even boots and Halloween costumes. It’s an emerging market, and we’ll explore any legitimate opportunity.”

TITLE: Russian Luxury Sales to Grow 20% a Year
AUTHOR: By Sara Gay Forden
PUBLISHER: Bloomberg
TEXT: MOSCOW — Russia’s luxury-goods market will expand at an annual rate of about 20 percent in the years ahead, fueled by demand for products such as Fendi handbags, Valentino gowns and Ermenegildo Zegna suits, according to the head of JamilCo, a distributor of European brands.
The growing number of wealthy Russians and the improving business environment are prompting European fashion companies to open outlets in Russia, and especially in Moscow. The country accounts for 5 percent of the global luxury market, which is worth about 130 billion euros ($158 billion), according to Bain & Co.
“Moscow is awash with luxury goods,” said Eric Krause, managing director and chief strategist of Sovlink LLC, an investment bank based in Moscow. “There is a lot of money ÿowing in and huge pent-up demand.”
Gianni Versace was the ¸rst European fashion label to open a freestanding store in Moscow, in 1993 on Kuznetsky Most. Since then, high-class retailers have steadily arrived in Moscow: Gucci in 1997, Versace in 2003 and Louis Vuitton in 2002.
In St. Petersburg, the luxury-goods market is considered to be still in the process of development, although a number of luxury-class stores have arrived in the city since 1994, such as Versace, Vanity, Day&Night, Ermenegildo Zegna, Canali, and most recently Emporia Armani.
In 2003, Comme des GarÍons group built its first Russian fashion shop on Suvorovsky prospect, and in May 2005 the owners of Versace boutique opened a new multibrand 1,500 square meter store. Along the Nevsky Prospekt, the Bosco di Ciliegi family is in the process of reconstructing an old building to open an outlet selling Etro and Kenzo.

Be There or Be Square
Zegna, a Milan-based men’s wear company, will open its fourth outlet in Russia this September. Zegna expects its Russian sales to double during the next 10 years, and they will then account for about 10 percent of its global sales.
“If you’re not already there, you’d better get there if you want to be on the wave of the new luxury market,” said Gildo Zegna, the company’s chief executive of¸cer.
The number of high-net-worth individuals in Russia increased 4.2 percent to 88,000 last year, according to a report published June 9 by Capgemini and Merrill Lynch & Co. The economy is expanding for a seventh straight year. Moscow leapfrogged New York last year as home to the world’s largest number of super-rich before a decline in the stock market reduced the billionaire count to 30 from 36, Forbes magazine reported.
“There is a lot of money, a lot of fashion awareness and a big focus on the most expensive, most pro¸table pieces,” said Brian Blake, chief operating of¸cer of Burberry Group Plc.
The London-based company opened its ¸rst store in Russia in 2004 with JamilCo and its second in Moscow’s GUM department store last September.
The Russian luxury-goods market, of which at least 80 percent is in Moscow, is helping the European labels boost their wholesale revenue through franchise agreements with local partners and raise their pro¸le locally. These partners include Mercury Group, Bosco di Ciliegi and JamilCo, who are investing in various retail developments and the refurbishment of former Soviet department stores.
“We are investing some 10 to 15 percent of our turnover in new projects,” said Khaled Jamil, CEO of JamilCo, a distributor of European labels including Burberry, Christian Dior and Ferragamo.
Jamil, who spoke in an interview in Rome at a conference sponsored by Italian luxury-goods association Altagamma, declined to disclose sales ¸gures.
Mikhail Kusnirovich bought a majority stake in Moscow’s department store GUM last year through his company, Bosco di Ciliegi, and operates more than 60 stores for labels like Kenzo, Etro, Mandarina Duck and Jean Paul Gaultier.
“The penetration of this region was possible thanks to close relationships with local leading luxury players with strong market knowledge and wide expertise in the luxury industry,” Robert Polet, Gucci Group’s CEO, said in an e-mailed statement.
“This market is showing signi¸cant growth, and we intend to further strengthen the group presence there in the near future.” Spending on luxury goods in Moscow has risen to as much as $4 billion a year including cars, compared with about $2 billion in New York for luxury apparel and accessories excluding cars, according to Claudia D’Arpizio, a luxury-goods analyst for Bain & Co. in Milan.
“Russian consumers are much more audacious than most Europeans. They like exotic vacations, fast cars and ÿashy fashion,” said Vittorio Radice, chairman of the advisory board for TsUM.

TITLE: Foreign Car Sales Soar in First Half of ’05
AUTHOR: By Anna Smolchenko
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russians bought 225,000 new foreign cars in the first half of this year, compared with 280,000 sold in all of 2004, according to a new report by PricewaterhouseCoopers. 
The global consultancy firm said that Russia’s automotive production would grow by 45 percent by 2008, making the country the world’s fastest-growing car market after China.
Domestic makers are passing on hikes in the price of metals and components to consumers, pricing their models out of the market and watching sales drop 14 percent in the first half of 2005, the report said. At the same time, foreign automotive giants are lining up to open production lines in Russia to meet the surge in demand.
“The automotive industry in Russia is changing before our eyes,” Stanley Root, PwC partner and the author of the report, told reporters at a presentation Wednesday.
In a separate report to be released Thursday, Ernst & Young said that Russia ranked third in Europe in terms of foreign direct investment in automobile assembly.
“I wouldn’t be surprised if new car imports grew to half a million cars a year within the next two years,” said Jean-Francois Tremblay, Ernst & Young’s chief automotive analyst for Russia and the CIS. 
South Korea’s KIA and Hyundai models are already assembled in Russia, and Toyota broke ground on a $140 million plant earlier this month. More Asian carmakers, primarily from Japan and Korea, are considering entering the market in the near future, Tremblay said.
PwC’s Root said that Mazda, Nissan or Hyundai might be next to build a Russian plant. 
“Some dealers have taken pre-orders up to February of next year,” said Andrei Glazkov, Mazda’s marketing director for Russia. However, the company has not made public any immediate plans to bring production to Russia.
In the first half of 2005, South Korea’s Daewoo emerged as the bestselling foreign make in the first quarter of 2005 with 15,199 models sold, overtaking last year’s leader, Hyundai, which had sales of 14,560, according to PwC. The Chevy Niva took third place with 14,036 cars sold; No. 10 Mazda saw sales soar 230 percent to 3,350 vehicles. 
According to the PwC report, average car prices by Russia’s domestic makers jumped by 11 percent to $6,400 in the first six months of 2005, while the cost of new imports fell by 3 percent to $25,300.

TITLE: Struggle for Assets Not Over
AUTHOR: By Greg Walters
PUBLISHER: Staff Writer
TEXT: MOSCOW — Top Kremlin officials with links to the military and to intelligence agencies are fighting for control over the choicest pieces of the Russian economy, and the battle looks likely to escalate, according to a new report by the Center for Current Politics in Russia. 
However, those officials, commonly known as the siloviki, are facing growing opposition from other Kremlin insiders who are banding together in a tentative “anti-siloviki alliance,” the Moscow think tank said in a 76-page report published earlier this month.
President Vladimir Putin himself appears to be growing increasingly wary of the siloviki’s advance and is taking steps to stem their influence, the report said.
While analysts at other think tanks agreed that a battle for assets was under way, they cautioned that the report itself might be the product of an individual or political group inside the Kremlin. 
A previous director of the Center for Current Politics, Alexei Chesnakov, now works for Vladislav Surkov, deputy head of the presidential administration. Chesnakov’s successor, Vasily Fyodorov, was appointed as head of the VTsIOM polling agency after the Kremlin tightened control over it in August 2003.
The center’s report says the siloviki aim to turn gas monopoly Gazprom and state-owned oil company Rosneft into vehicles for consolidating the energy sector — but are struggling first to oust the gas giant’s CEO, Alexei Miller. 
 The siloviki’s end goal is to bring top oil companies LUKoil, Sibneft, Surgutneftegaz and Transneft, as well as electricity monopoly Unified Energy Systems, into a single energy behemoth, the report said.
Igor Sechin, deputy head of the presidential administration and chairman of state-owned Rosneft, is a siloviki leader and the most influential person in Putin’s inner circle, the report said. 
Other key members and allies of the siloviki clan are identified as Federal Security Service chief Nikolai Patrushev, presidential aide Viktor Ivanov, IT and Communications Minister Leonid Reiman, Prosecutor General Vladimir Ustinov and Anatoly Serdyukov, the head of the Federal Tax Service. 
Consolidating Russia’s energy sector into a state-controlled goliath and channeling financial flows through the hands of the siloviki is their main goal, the report said, but they are also encroaching on other sectors including telecommunications, metals, forestry and aviation. The siloviki aim to limit the role of foreigners in the economy to “junior partner” status, the report said. 
However, the siloviki are facing growing opposition from other Kremlin insiders, as well as big business, who are beginning to form a common front to keep the faction in check, according to the report. Yet the alliance is not fully formed, as big business is waiting for signals that its sympathizers in the government will protect its interests.
The center identifies the main opposition to the siloviki as the so-called “St. Petersburg liberals,” including Economic Development and Trade Minister German Gref and Finance Minister Alexei Kudrin, and their traditional partners, the “St. Petersburg lawyers,” whose leader is presidential administration chief of staff Dmitry Medvedev and Gazprom’s Miller. 
The liberals are working to rein in the tax service, the report said, while the lawyers have successfully fended off the siloviki’s bid to take control of Gazprom.
The center said that Putin was increasingly distancing himself from the siloviki but was interested in preserving a balance of power rather than rolling back the group completely.
If the siloviki end up victorious in their battle for economic supremacy, they will be in a better position to influence the presidential election in 2008, when Putin has said he will step down, the report said. 
Analysts from other think tanks said the report might represent the views of individual players within the government. 
Political analyst Stanislav Belkovsky called the existence of a monolithic group of siloviki “a myth” perpetuated by the media. The report appears to be a PR move by deputy head of the presidential administration Surkov, who wields influence over the center and is seeking legitimacy in the West, he said.
Surkov is a peripheral figure in the report, which calls him the political leader of the “Old Muscovites,” a group vying for influence with the siloviki. 
Vladimir Pribylovsky, head of the Panorama think tank, said Surkov might well have been behind the report: “It’s not clear whom Surkov is representing these days. He’s a political servant.”
Pribylovsky also disagreed with the report’s grouping of political actors. He said gaps had appeared between Sechin and Ustinov on the one side, and Patryushev and Ivanov on the other.
“There is no St. Petersburg siloviki group,” Belkovsky said. “The redistribution of assets is a reality of Russian oligarchic capitalism that has been going on since before Putin’s time. There is a limited amount of assets, therefore these people are more like enemies than friends.” 
Belkovsky himself authored a controversial report in May 2003 that charged that oligarchs were plotting a “creeping coup.” Only weeks later, Platon Lebedev, a key business partner of Yukos CEO Mikhail Khodorkovsky, was arrested, heralding the legal crackdown on the oil company.
Alexei Titkov, a political analyst with the Carnegie Moscow Center, agreed the Center for Current Politics likely had close links to Kremlin insiders. 
“I suppose this center is closely connected with one of these groups, but it’s not clear which,” Titkov said. 
The center’s director, Konstantin Simonov, insisted on the think tank’s independence and said the report represented an objective view of the situation within the Kremlin. 
“This is our analysis; it’s not a PR move,” he said. “We’re not trying to create a scandal.”

TITLE: Blue Russian Skies for Business
AUTHOR: By Bob Dole
TEXT: To read the papers, you would think Russia had reverted to communism, renationalized its industries and caused foreign businessmen to panic and run for the borders. 
The imprisonment of Mikhail Khodorkovsky and the crushing of Yukos have undoubtedly had a chilling effect on U.S. and Western investment. These apparent illegalities clearly call into question the independence of the judiciary and Russia’s commitment to the rule of law.
Nevertheless, American companies doing business in Russia are unfailingly bullish about the future and see the Yukos affair as an aberration. Their biggest fear is not being closed down and having their assets stripped by the state — a prospect they view as exceedingly remote — but rather a diminished foreign capital ÿow into Russia because potential investors believe all the apocalyptic warnings.
At a recent Moscow breakfast, two dozen U.S. businessmen based in Russia implored me to let U.S. policymakers, opinion-shapers, and potential investors know Russia is not only wide open for business but that, in most sectors, business is booming and opportunities for expanding market and pro¸ts are better than ever.
Russian household income is rising, and the ruble is stable. Business owners are no longer selling out to foreign investors, but are retaining blocks of shares for themselves. The quality of midlevel Russian management is improving, and foreign companies in Russia are ¸lling more and more management positions with Russian citizens.
Land is being privatized, and agribusiness is growing exponentially. Some venture capital funds are reporting returns so high they call to mind the U.S. high-technology bubble of the late 1990s — only this is no bubble. A major U.S. accounting ¸rm reports 78 percent of Western companies in Russia plan to continue investing at the same rate or greater over the next two years.
The American Chamber of Commerce in Russia already has 800 members, and continues growing. One successful venture capitalist told me foreign businesses “have liberty to do what they want to do” and that, even if the Kremlin were ill-intentioned, it is simply too weak to obstruct foreign business. Another told me foreign companies win 78 percent of tax cases brought against them by the state.
All this is cold comfort to the Yukos owners, but it stands in stark contrast to the reams of reports of falling skies all over Russia. The country has some of the world’s greatest natural and other resources, and, even after the robber-barons’ exports of capital, many remain unfaithful.
Of course, the U.S. businessmen with whom I met in Moscow know the Yukos affair is not Russia’s only problem. These representatives of our top companies didn’t get where they are today by being Pollyannas. Russia is not the new Singapore. Often, there are great risks to ÿoating capital in these largely uncharted waters. Oil prices are too high. Corruption is endemic in many quarters, and may even be increasing overall.
Unlike in every other Western country, life expectancy is falling. Only half of Russia’s men live to retirement age. More than 300,000 Russians die each year in accidents of one kind or another. Russia also has developed the functional equivalent of an underclass subsisting on pensions averaging only $50 monthly.
The U.S. businessmen with whom I talked would like to see the Russian government address these issues by continuing its political and economic reforms, while initiating strong efforts to combat corruption, ensure transparency in every sector and increase the percentage of gross domestic product spent on health care. They would also like to see greater of¸cial U.S. support for business development and investment in Russia.
They complain French and German government leaders march hand-in-hand together into Moscow with their businessmen, while U.S. investors enjoy support at the U.S. Embassy level.
A good start from the U.S. administration and Congress would be to draw a line in the sand to mark an end of the Khodorkovsky affair.  Bush should inform Putin further persecution of the Yukos principals, or similar attacks, could have serious and tangible consequences. Our countries can mark a new beginning of a U.S.-Russian business partnership of almost unprecedented potential.

Bob Dole is a former U.S. Senate majority leader and 1996 Republican candidate for president. He contributed this column to Washington Times.

TITLE: Now That Gazprom Is Ours
AUTHOR: By Konstantin Sonkin
TEXT: Last month, the government announced that it had acquired a controlling stake in Russia’s largest company, the natural gas monopoly Gazprom. Skeptics in some quarters maintain that the deal is far from complete. But let’s assume that on June 23, 2005, the citizens of Russia really did take ownership of a controlling stake in Gazprom. What are we going to do with it?
After increasing its share in Gazprom to over 50 percent by agreeing to purchase a 10.7 percent stake for $7.12 billion, the government announced that it would remove all curbs on trading in Gazprom stock by the end of the year. Liberalization will make Gazprom the world’s second-ranked emerging-market blue chip, so the warm response from fund managers was only to be expected. 
But increased market capitalization won’t provide any direct benefit to average Russians who — let’s not forget — now own a controlling stake in the gas giant. In fact, we’re not planning to sell our stake. A hefty market cap presents a golden opportunity for a company to borrow money on the stock market, but by all accounts money is not what Gazprom needs at the moment. On the contrary, surplus cash has created a fundamental problem for Gazprom because it encourages the company to accumulate noncore assets and allows it to avoid taking measures to improve efficiency.
Until recently, Gazprom planned to offload its holdings in the media sector, but now those plans have changed. Through its subsidiary Gazprom-Media, the gas giant has moved to acquire a controlling stake in Izvestia, to complement its existing media properties, the television stations NTV and NTV+ and the newspapers Trud and Tribuna.
The acquisition of Izvestia isn’t necessarily a bad thing for the newspaper’s readership. As you recall, Gazprom was a major financial backer of NTV during the station’s glory years in the mid-1990s. But we citizens of Russia who own a controlling stake in Gazprom also need to ask if these media companies are really all that profitable. If the television stations broadcast talk shows all day and the papers fill their pages with stories about serial killers, then they’re a good investment. But if they’re going to jabber about politics, then we’re better off selling them and paying dividends to the federal budget — to ourselves, in other words.
Gazprom’s media holdings are small potatoes, however. Our company also has ambitious plans to expand into the oil sector. We as shareholders should be pleased that the Prosecutor General’s Office can be used to drive down the price of assets our company wants to snap up. But one thing worries me. Let’s say Gazprom continues to buy up assets in the oil and electricity sectors. Who’s going to manage this enormous energy conglomerate? After all, the policies of its executives will have far greater economic consequences than those of the Russian government. Will President Vladimir Putin run the company personally? 
You might say that he’s already on the job, proposing earlier this month that Gazprom invest $1 billion to deliver natural gas to remote regions of the country. That’s a good thing, even if the residents of other regions don’t see any economic benefit.

Konstantin Sonin, professor at the New Economic School/CEFIR, wrote this column for Vedomosti.

TITLE: When Russia Takes the G8 Helm
AUTHOR: By Jeffrey Garten
TEXT: It is already possible to envisage the communique emanating from the Group of Eight summit at Gleneagles on Wednesday to Friday. No doubt there will be congratulatory chest-beating on the progress made in debt relief for Africa and for increased pledges of foreign aid. There is sure to be some reference to the importance of dealing with global warming. We can expect the usual exhortations about completing the Doha trade negotiations, not to mention dealing with global economic imbalances. But the issue that may have more significance for the G8 itself — and hence for global economic management — has not been subject to pre-summit consultation and maneuvering and may take up no more than a line in the final G8 document. That is the fact that at the conclusion of the summit, the chairmanship of the group will pass to Vladimir Putin’s Russia.
If ever there were a travesty of leadership by example, this is it. Two trends are changing the world for the better — freer markets and democratization. Is it too much to expect that the G8 should stand for both? But, alone among the summit members, Russia is moving in the opposite direction of what is desirable. Moscow’s leadership of the G8 reduces the credibility and the relevance of the group to zero. It also makes a mockery of the Bush administration’s push for democratic, market-oriented societies around the world. Putting Russia in charge of the G8 is akin to the United Nations having allowed Sudan and Liberia to play large roles in its UN Human Rights Commission — a move that resulted in the irrelevance of the commission and a subsequent plan for radical reorganization.
The facts about Russia are well known. Putin has crushed much of the country’s free media. Earlier this month, the Kremlin took another step in this direction when it was announced that Gazprom, the state-run gas monopoly, intended to buy Izvestia, the respected newspaper. Russia’s president has replaced regionally elected political leaders with his own appointees, centralizing power in his and his close advisers’ hands. He has moved to renationalize Russia’s energy sector, creating a petro-state with all the problems that other countries so highly dependent on oil revenues have. Russian courts have tried Mikhail Khodorkovsky in what can only be called a political show trial, raising questions about whether the Kremlin gives a hoot about the rule of law. Putin has meddled in the Ukraine elections and maintains close ties to totalitarian leaders in Belarus and other repressive former Soviet republics.
We all hope that one day Russia will allow its talented citizens to build a vibrant, open society that makes a big contribution to global progress. But today this country has little to offer the world. It has no standing in global economic affairs because, aside from oil, Russia is not a player — not in monetary policy, not in trade, not in foreign aid, not in technological innovation. It has no credibility when it comes to advancing political reform; indeed, on this score it is among the most significant failures of modern governance in the post-cold war era.
Earlier last week, we got a glimpse of Putin’s top priority for his G8 chairmanship when he and Tony Blair, the prime minister, held a joint news conference. The Russian leader wants to mobilize more aid to former Soviet republics. One tries to picture him making the rounds of Western capitals, explaining why this goal is so critical, in the same way that Blair so effectively lobbied for Africa. But one cringes trying to envisage him engaging his counterparts on issues of monetary stability or wrapping up World Trade Organization negotiations when Russia is not even a member of the WTO.
Russia’s chairmanship will be a farce and the United States, European Union and Japan should have seen it coming. But if they did, they lacked the guts to address it. John McCain and Joseph Lieberman, the U.S. senators, were right in proposing a congressional resolution several months ago to make Moscow’s G8 chairmanship conditional on reforms in Russia itself, but no one wanted to listen. It is too late for that now, so here are two sets of issues that Washington, Paris, Berlin and Tokyo ought to be discussing in the next few days before the summit convenes.
First, when they get to Scotland, they should be planning to tell Putin — privately but forcefully — that they will put him under enormous pressure all year to pursue a number of political and economic changes. These would include measures to open the economy, free up the media, clean up the courts and allow former Soviet nations to find their own way without heavy handed interference from the Kremlin. They should tell him that he should not automatically assume that they will attend the 2006 summit now scheduled for St. Petersburg if progress is not made — potentially a devastating embarrassment to him. To demonstrate their seriousness, they should demand a G8 taskforce of ministers to assess progress on Russian reforms on a quarterly basis.
Second, they should insert into the Gleneagles communique some agenda items for the next year, so as not to leave the slate empty for Putin. For example, the communique could specify that the G8 will be studying ways to anticipate and smooth out the rocky road ahead for China’s integration into the world economy — an issue that encompasses everything from trade, currency and, most recently, the global expansion of Chinese companies.
In addition, this coming year would be a good time to consider ways to restructure the G8 itself. It makes no sense for countries such as Canada and Italy to have a seat; they are simply too small and inconsequential on the world stage. Nor should Russia have membership when China, India and Brazil do not. Africa must be represented, as should the Islamic world. There needs to be closer ties to the International Monetary Fund, World Bank and WTO, as well as to business leaders.
Will any of this happen? Not a chance. The Bush administration likes a weak and fractured G8 that it can push around. European leaders are preoccupied with the future of the EU. Both, and Japan, are in any event weak-kneed when it comes to confronting Russia. The Gleneagles summit will be as undistinguished as so many of its lackluster predecessors. But even by the low standards that the G8 has set in the past, when the baton is passed to Moscow, it will have been a gigantic step backwards.

Jeffery Garter is dean of the Yale School of Management and held economic and foreign policy posts in the Nixon, Ford, Carter and Clinton administrations. He contributed this comment to the Financial Times, where it first appeared.

TITLE: Signatories to Address on Yukos Discredit Themselves
AUTHOR: By Vladimir Gryaznevich
TEXT: Today I want to comment on the publication last Monday in Izvestia of the “address of cultural, scientific and community leaders in connection with the sentence received by the former managers of Yukos.”
The first thing that comes to mind is this: the publication is just the latest sham of Russian society, concocted in the spirit of the anonymous letters that used to be written against Soviet dissidents. Especially incredible are some of the names of those who signed, for instance, the former dissidents Anton Antonov-Ovseyenko and Roy Medvedev. After what has happened to them, they shouldn’t behave like that — they’ve been through the thick of it already.
The methods for perfecting such “public protests” were refined in Soviet times in the process of persecuting Boris Pasternak, Andrei Sinyavsky and Yury Daniel, Joseph Brodsky and Alexander Solzhenitsyn. A seemingly harmless text is prepared, featuring a collection of banalities such as “the state must ensure that everyone is equal before the law,” or that “all members of society must pay taxes and link them to a specific subject.” And in this context the banalities already sound like accusations — absolutely false ones at that.
Then the signatures are arranged. They call up some famous person and ask: “Are you for democracy and the rule of law? Do you agree that everyone is equal before the law and should pay their taxes?” “Of course,” the respondent replies. Then comes a text like this: “We are preparing an address that calls for democracy and the rule of law. Will you sign it?” “Well, all right then,” the naÕve respondent replies. And the next day they read the concocted letter with their own signature in Izvestia. Most of those who have been stood up in this way curse — in the kitchen — but in most cases they do not demand that their name be withdrawn. One of the signatories of the address, composer Vladimir Shainsky, admitted on Ren TV the day after publication that exactly such an operation was carried out on him. He said nothing about any intention to write to Izvestia withdrawing his signature.
In Soviet times, signatories could justifiably be afraid of frightening consequences meted out by the authorities if they refused to sign something libelous.  Furthermore, they did not know all the circumstances - although those who really wanted to know could find out if they were willing to disregard the vigilance of the secret police and the existence of the article of the Criminal Code regarding anti-Soviet agitation and propaganda. Such articles no longer exist and there is no reason to fear the revenge of the authorities for refusing to sign. In addition there’s a flood of information on the subject — the Internet is full of detailed information about Mikhail Khodorkovsky and the Yukos case. Just take at look at the special edition of Novaya Gazeta on its web site. Arguments such as “I was afraid,” or “I didn’t know,” don’t work today. If you are signing or agreeing to sign up over the phone to a letter about “democracy and the rule of law” — it means you know all the details. 
You know that Khodorkovsky, Platon Lebedev and Andrei Krainov paid all the taxes that the law demanded, and not just enough, but even more than others, and they had the written gratitude of the heads of the tax authorities.  What they were sentenced for were simply crimes that did not exist. The events never happened. Once you have signed the government’s letter —you have in effect approved of such a system of justice.
The approval stretches further: to the crime of the century — the open theft by an organized criminal group of bureaucrats of about $20 billion in the form of Yuganskneftegaz crude mining unit. It also means approving the harm to the Russian stock market, in which millions of Russians who had put their savings into shares were hurt. And the destruction of the Russian judicial system by the organizers of these actions. And the illegal persecution of the Yukos lawyers, visits by secret police to the school where Khodorkovsky’s daughter studies and all the similar abominations.
I am certain that the Strasbourg Court of Human Rights will dot all the “i”s. A huge scandal looms. Then today’s signatories may fully realize what they got involved in. I hope that at least one of them will repent. But they will never be clean of this dirt. And for those who have a drop of conscience, it will torture them to the end of their days. Just as Dmitry Shostakovich was tormented that he had signed a letter against Andrei Sakharov and Solzhenitsyn. But the circumstances still justified his action because at that time a refusal could result in to sign extremely unpleasant consequences. Those who refuse to sign today risk nothing. 
In addition, the authorities don’t especially need their signatures. What do the wellfed authorities have to fear from the opinions of artistic and scientific leaders? Their authority is minor, especially in comparison with such respected personalities as, for instance, Yevgeny Yasin, Andrei Illarionov and Genri Reznik. And the opinion of the latter is quite clear: the Yukos case is the greatest crime of President Vladimir Putin’s regime. Thus, the baseness of those who signed the address have done the greatest harm to themselves. As for the public’s opinion, their betrayal has no effect on the unjust sentence passed.

Vladimir Gryaznevich is a political analyst with Expert Severo-Zapad magazine. His comment was first broadcast on Ekho Moskvy in St. Petersburg on Friday.

TITLE: Heaven’s Gate
AUTHOR: By Chris Floyd
TEXT: This week, President George W. Bush gave a big speech “explaining” the Iraq war to the American people. It was the usual load of lying blather and false piety — deeply, even murderously cynical. But there’s no point in wasting a single thought over these clown shows anymore. Bush is a nasty little moral cretin fronting a gang of elitist thugs whose only concerns are loot and power. Nothing he says has the slightest credibility. Only his actions — crimes soaked with human blood — have any meaning or truth.
So let’s deal in truth. Let’s talk about crime. Specifically, the flagrant war crime committed by Bush and his comrade in moral cretinhood, British Prime Minister Tony Blair, in May 2002, as TomPaine.com reports. Yes, 2002 — long before the ground invasion of Iraq in March 2003. The “Downing Street Memos” — top-level British government documents whose authenticity has been confirmed by Blair’s own office — show clearly that Bush and Blair began a ferocious air war against Iraq in May 2002, despite the unequivocal ruling by Blair’s lawyers that such a campaign constituted a clear act of military aggression: the “supreme international crime” for which the Nazi leaders were condemned at Nuremberg.
 The avowed purpose of this bombing campaign — openly admitted to by U.S. military brass — was to destroy Iraq’s defenses in preparation for the long-planned ground assault. It began months before the U.S. Congress gave its rather vague approval for possible military action to enforce the disarming of Iraq’s nonexistent WMD. And it had nothing to do with the “no-fly zones” maintained for years over southern Iraq by the United States and Britain, ostensibly to prevent Saddam Hussein from using aircraft to suppress Shiite unrest. (Strangely enough, the only time Saddam actually tried to use airpower against the Shiites, in 1991, he was given explicit permission to do so by America’s leaders at the time: President George H.W. Bush and Pentagon chief Dick Cheney.)
Bush and Blair’s secret air war against Iraq is perhaps the most blatant and indefensible aspect of their multi-headed war crime in Iraq. No amount of contorted legal quibbling or weasel-worded readings of UN resolutions can justify such a large-scale military action undertaken without the approval — or even the notification — of Congress and Parliament. And the documents make clear that the Anglo-American leaders knew the air campaign was illegal — as was the whole case for “regime change,” which the memos admit was “weak” and unsupported by evidence.
But the memos reveal that Bush and Blair had already decided on war, during their April 2002 meeting at Bush’s ranch in Crawford. No doubt the two Christian leaders — who bray their faith in Jesus at every opportunity — knelt in prayer together as they sealed their pact of blood. From that point on, the memos show, Blair and Bush ignored all concerns about legality, all questions about the shaky WMD evidence and the extensive worries of many insiders about the near-total lack of planning for the postwar situation. They sought only to “create the political conditions” for war, manufacturing public consent through slick, fear-mongering propaganda and, in the memos’ most famous phrase, by “fixing the facts and intelligence around the policy” of aggression.
Thus, with full knowledge that they were following in the footsteps of the Nuremberg criminals, Bush and Blair began the war in May 2002, dropping hundreds of tons of bombs on Iraq over the next 10 months. Not only were they clearing the path for the coming invasion, but the memos show that the leaders also hoped to provoke Saddam into retaliating, thereby giving them a PR excuse for war: “self-defense” against Iraqi “aggression.”
But Saddam, this “raging madman” lusting to destroy America with his fearsome weapons, did nothing. He sat meekly while his air and naval defenses were pounded. And here we see how the bombing campaign strips bare the Big Lie that drove the whole enterprise: the supposed threat of Saddam’s WMD. The Crawford knee-benders never would have launched their war if they really believed Saddam might rain anthrax on Jerusalem or slip Osama a plutonium core. They knew, as his lack of response to the air assault proved, that the WMD threat was empty, that Saddam, their former ally, was a broken reed.
In fact, Saddam spent the months of bombardment frantically offering a virtual surrender: unhindered WMD inspections, free elections under international supervision, support for any U.S. position on Israel-Palestine, vast oil concessions. But these offers, negotiated through back channels with U.S. intelligence and leading neo-conservatives, were spurned by Bush, The New York Times reported in November 2003. The moral cretins wanted conquest, not disarmament or Iraqi freedom; they wanted the power and status given to “war leaders,” as Bush himself told the family biographer, Mickey Herskowitz, in 1999, CommonDreams reports.
“One of the keys to being seen as a great leader is to be seen as a commander-in-chief,” then-candidate Bush told Herskowitz. “My father had all this political capital built up when he drove the Iraqis out of Kuwait and he wasted it. If I have a chance to invade ... I’m not going to waste it. I’m going to get everything passed that I want to get passed and I’m going to have a successful presidency.”
Thus, by his own admission, Bush regards war — slaughter, ruin, chaos and terror — as the measure of success, the path to greatness. He sees blood as the prime lubricant for his rapacious domestic policies. He uses unprovoked military aggression to achieve his personal and political goals.
In what way, then, is he different from the moral cretins who were hanged at Nuremberg?

TITLE: Egyptian Envoy to Iraq Kidnapped by Gunmen
PUBLISHER: Reuters
TEXT: BAGHDAD — Kidnappers have seized Egypt’s envoy to Iraq, possibly in response to reports he was to become the first full-ranking Arab ambassador to the U.S.-backed Iraqi government, diplomats and police sources said Sunday. 
Ihab el-Sherif, the head of mission, was cornered by gunmen in cars while on a short trip to buy a newspaper near his home Saturday evening and had not been heard from since, an Egyptian diplomat said on condition of anonymity.
“The motives are believed to be political,” he added, noting that Iraq’s foreign minister had said just last week that Egypt would become the first Arab state to appoint a full-ranking ambassador to Baghdad since the fall of Saddam Hussein.
The Egyptian Foreign Ministry, which said it was checking reports that Sherif had disappeared, has yet to confirm its plans to upgrade his post. The Baghdad mission did not comment.
The envoy’s white four-wheel drive car was found undamaged close to a newspaper stand not far from his home.
An upgrade to full ambassadorial status for Sherif on the part of Egypt, the most populous and traditionally most powerful Arab state, could enhance the standing of a new Iraqi government many Arabs view with suspicion because of its backing from the United States and sectarian ties to Shi’ite Iran.
Washington, which sees the post-invasion election held in Iraq as a model for Arab states, has been urging other Arab governments to recognize fully the new Baghdad administration.
More than 200 foreigners and thousands of Iraqis have been kidnapped in the past two years. Many have been released after the payment of ransoms, while others have been used to further political ends by insurgents from the Sunni Arab community — a minority in Iraq but the majority in most other Arab states.

TITLE: Saudi Security Forces Eliminate Most-Wanted Al-Qaida Leader
AUTHOR: By Dominic Evans
PUBLISHER: Reuters
TEXT: RIYADH — Saudi Arabia’s security forces killed a most-wanted al-Qaida leader in a clash in the capital Riyadh early Sunday, the Interior Ministry said.
Moroccan national Younis Mohammad Ibrahim al-Hayyari, accused of involvement in a series of recent attacks in the world’s biggest oil exporter, died after exchanging fire and hurling hand grenades at police, the ministry said.
Hayyari’s name was at the top of a list of 36 al-Qaida suspects announced by Riyadh last week. The ministry said he had helped prepare explosives and had played a part in several attacks on targets in Saudi Arabia.
Saudi Arabia has been battling suspected al-Qaida militants since May 2003, when they launched their campaign of violence with triple suicide bombings at expatriate housing compounds in Riyadh.
Interior Minister Prince Nayef said the operation was the result of extensive surveillance by Saudi security forces, and pledged to pursue other suspected militants.
“What happened today was the result of the effort of the previous period and God willing, we will reach the rest using the same method,” he said after visiting wounded security forces in the hospital.
Al-Qaida is fighting to expel non-Muslims from the Gulf state, which is home to Islam’s two holiest sites,  Mecca and Medina, and topple its pro-Western absolute monarchy.
The attacks have killed 91 foreigners and Saudi civilians and wounded 510 people, Saudi Arabia’s ambassador to London and former intelligence chief Prince Turki al-Faisal said last week.
Forty-one security force members have been killed and 218 wounded, while 112 militants have been killed and 25 wounded, he added. He estimated material losses at 1 billion riyals.
There have been fewer attacks this year, but last month attackers gunned down a senior security officer in Mecca and diplomats say three helicopters were set on fire at a military base north of Riyadh.
Western counterterrorism experts say al-Qaida has shown a resilience and ability to regenerate.
One other man was arrested at the scene of Saturday’s clash and two others surrendered without a struggle in a simultaneous police raid in the same district of eastern Riyadh. Six policemen were slightly wounded, the ministry said.
Prince Nayef described Hayyari as a “dangerous man” but said others on the wanted list were as dangerous. The three captured men were not on the wanted list, he added without elaborating.
Last week, Saudi Arabia issued the new wanted list of al-Qaida suspects — most of whom were Saudis but some were from Chad, Yemen, Morocco and Mauritania. Fifteen were believed to be at large inside Saudi Arabia, while 21 were outside the kingdom.
It offered a bounty of up to 7 million riyals ($187,000) to anyone who helps capture a militant or foil a planned attack.

TITLE: Cross-Atlantic Flight Succeeds
AUTHOR: By Shawn Pogatchnik
PUBLISHER: The Associated Press
TEXT: CLIFDEN, Ireland — Commemorating a record-setting flight 86 years ago, adventurer Steve Fossett and his copilot successfully flew a biplane across the Atlantic and landed Sunday on an Irish golf course to the cheers of 2,000 onlookers. 
Fossett and antique airplane enthusiast Mark Rebholz, who jointly operated a custom-built replica Vickers Vimy, wanted to honor the June 1919 achievement of British pilots John Alcock and Arthur Whitten-Brown.
Both air crews flew from Newfoundland to Clifden in western Ireland using compasses and sextants for navigation. While Alcock and Whitten-Brown managed the feat in 16 hours, 20 minutes, Fossett and Rebholz took about 45 minutes longer. And while the British pioneers crash-landed in a bog, their American successors landed smoothly on a local golf course.
The British duo was the first to fly nonstop across the Atlantic, completing the milestone eight years before Charles Lindbergh made his more famous solo crossing.
“This was an endurance test,” Fossett said. “This airplane is very primitive. You have to keep your hands on the controls at all times.”
Rebholz, 52, said they had “intentionally minimized the instrumentation on the plane” to try to replicate some of the challenges that faced Alcock and Whitten-Brown, save for a modern radio.
“On the way over we were in contact with all the commercial airlines flying overhead,” Rebholz said. “That is a comforting feeling, talking to other people while you’re flying.”

TITLE: Space Probe Collides With Comet
PUBLISHER: The Associated Press
TEXT: PASADENA, California — A space probe hit its comet target late Sunday in a NASA-directed, Hollywood-style mission that scientists hope will reveal clues to how the solar system formed. 
It marked the first time a spacecraft touched the surface of a comet, igniting a dazzling Independence Day weekend fireworks display in space.
The successful strike 134 million kilometers away from Earth occurred just before 11 p.m. Pacific Daylight Time, according to mission control at NASA’s Jet Propulsion Laboratory in Pasadena, which is managing the $333 million mission.
It was a milestone for the U.S. space agency, which hopes the experiment will answer critical questions.
“We hit it just exactly where we wanted to,” co-investigator Don Yeomans said.
A day earlier, the Deep Impact spacecraft successfully released its barrel-sized “impactor” probe on a high-speed collision course with Tempel 1 — a pickle-shaped comet half the size of Manhattan.
After its release, the battery-powered probe tumbled in free flight toward the comet and flew on its own without interference during the critical two hours before the crash, firing its thrusters to take the perfect aim at the comet’s nucleus.
A direct hit was a challenge because NASA’s Jet Propulsion Laboratory no longer controlled the probe once it was released from the spacecraft. 
Soon after the probe’s crash on the comet’s sunlit side, the mothership prepared to approach Tempel 1 to peer into the crater site and send more data back to Earth. The spacecraft planned to fly within 500 kilometers of the comet before it activated its dust shields to protect itself from a blizzard of debris.

TITLE: High Alert at Hotel As G-8 Meeting Nears
AUTHOR: By Ed Johnson
PUBLISHER: The Associated Press
TEXT: GLENEAGLES, Scotland  — With an eight kilometer  ring of steel, 10,000 police on standby, watchtowers and a no-fly zone, Gleneagles Hotel is locked down under a sophisticated G-8 security operation to protect the world’s most powerful men. 
Chief Constable John Vine of Tayside Police has spent 18 months planning for the arrival Wednesday of leaders of the Group of Eight industrialized nations in this picturesque corner of rural Scotland.
His team is braced for hundreds of anarchists and anti-globalization protesters who intend to disrupt the three-day summit — and the possibility of a terrorist strike.
“It is a potential terrorist target,” Vine said. “All our planning has been based on it both being a terrorist target and of course a target for public protest, so there is a necessity for us to have an exclusion zone.”
Operation Sorbus — named after the berry of the rowan tree, which according to folklore wards off evil spirits — includes a 1.8-meter-high steel mesh fence around the perimeter of the exclusive Gleneagles hotel and country club, running through rolling farmland in the Perthshire countryside. As well as a formidable obstacle, the fence is also a clear demarcation line; protesters who attempt to cross it face immediate arrest, Tayside police say.
Inside the perimeter, where the leaders of Britain, the United States, France, Germany, Russia, Canada, Japan and Italy will meet Wednesday through Friday, are further extensive  security measures, which police officials declined to describe.
About 10,000 officers drafted from across the United Kingdom are available to deal with G-8 protesters — from peaceful environmental and anti-poverty campaigners to hardcore anarchists. Some 3,000 police are assigned to Gleneagles itself, including a specialist firearms team, officers mounted on horseback and a guard-dog unit.
Police have set up four checkpoints on rural roads that pass close to the hotel’s grounds and championship golf courses. 
Only delegates, media and local residents issued with accreditation will be allowed to pass. In a further security measure, gasoline stations across central Scotland have been banned from selling fuel in portable containers until the summit ends.
Vine, who has 22 years of policing experience, said an extensive intelligence operation had been under way for months, involving Britain’s domestic intelligence service MI5, Special Branch and London’s Metropolitan Police, gathering details on anarchist groups.
“Our strategy will be to try to deal with those people very quickly, very effectively, to try to separate them out from the peaceful protesters,” said Vine. “We know that this event will attract those elements to it. It always has done and it will on this occasion.”

TITLE: Venus Shows Her Mettle at Wimbledon
PUBLISHER: The Associated Press
TEXT: WIMBLEDON, England — Everyone had a theory about what was wrong with Venus Williams: 
She couldn’t handle being surpassed by younger sister Serena. 
She wasn’t investing enough time in tennis, distracted by other interests, such as her interior design company. 
She couldn’t overcome a long string of injuries. 
She needed someone other than Mom and Dad to coach her. 
The shooting death of half-sister Yetunde weighed heavily on her. 
As the time since Williams’ last Grand Slam title grew to four years, as her losses in majors came earlier and earlier, more and more explanations were offered. 
Her confidence and desire were gone, her game had slipped, other women on tour caught up. 
And on, and on, and on. 
With one spectacular fortnight, capped by saving a match point en route to a stirring 4-6 7-6 9-7 victory over top-ranked Lindsay Davenport in the Wimbledon final Saturday, Williams served notice that she never really went away. 
“I always felt like a champion in my heart because every single time I walked out on the court, I always gave my best. Whatever it was at that time, I gave 100 percent,” Williams said shortly after accepting her third Wimbledon trophy. 
“I feel great to have accomplished this, but I feel like I want to do a lot more.” 
She certainly appears capable of just that, now that she’s healthy and happy, which she let everyone know by jumping over and over and laughing uncontrollably after hugging Davenport at the net. 
The wrist, abdominal and shoulder injuries that slowed her in recent times weren’t evident while Williams ran corner to corner and smacked powerful and precise shots against Davenport and, two days earlier in the semifinals, against defending champion and No. 2-ranked Maria Sharapova. 
It was nothing that wouldn’t have been expected of Williams from 2000 to 2003, when she won her first four major titles and reached five other Grand Slam finals, losing each of those to little sis. 
But she arrived at the All England Club having claimed only one tournament title in the preceding 13 months, and that came at a lower-tier event. 
Once ranked No. 1, then No. 2 behind her sibling, Williams had tumbled all the way to No. 16. She lost in the second round at Wimbledon last year, and barely mustered a fight in a 6-1 third-set defeat against 15-year-old Sesil Karatantcheva in the third round at the French Open in May. 
She was seeded 14th at Wimbledon, and no one slotted that low had won the championship. 
“She wasn’t in my pick of favorites,” two-time U.S. Open champion Tracy Austin said after watching the 2-hour, 45-minute women’s final, the longest on record at Wimbledon. “I didn’t have Venus in any tier, and I don’t think anyone did.” 
But that’s because no one could crawl inside Williams’ head and understand that whatever the reasons for her recent lack of good results, she still had plenty of fight. 
That was apparent in the way she was “scratching and clawing,” as Austin put it, while trailing through nearly all of the final. When Davenport served for the title at 6-5 in the second set, Williams broke her at love. No shot was gutsier than the backhand winner Williams hit when serving while trailing 4-5, 30-40 in the third set; no woman had saved match point in the Wimbledon final and gone on to win since 1935. 
“I was just thinking, ‘I’ve got to stay tougher. I’ve got to stay tougher than whoever’s across the net,’” Williams said. 
Her victory Saturday means six women have split the past six Grand Slam titles, the first time that’s happened since the late 1970s. 
Now, if Serena Williams — who lost in the third round to 85th-ranked Jill Craybas, the woman Venus beat in the fourth round — gets her left ankle healthy and follows through on her vow to practice more, the U.S. Open should be very interesting. 
With the Williams sisters, Davenport, Sharapova, reigning French Open champion Justine Henin-Hardenne, reigning U.S. Open champion Svetlana Kuznetsova, four-time major runner-up Kim Clijsters, 2004 French Open champion Anastasia Myskina, and former No. 1 Amelie Mauresmo in the mix, the top of women’s tennis might just be the deepest and strongest it’s ever been. 
And once more, after a trying two years, it’s Venus Williams leading the way. 
“It’s great to have her back at the top of the heap,” Austin said, “because the heap is really cozy now.”

TITLE: Kuznetsova Loses Out In Doubles
PUBLISHER: The Associated Press
TEXT: WIMBLEDON, England — Cara Black of Zimbabwe won her second consecutive women’s doubles title at Wimbledon on Sunday, this time with Liezel Huber of South Africa as her partner. 
The second-seeded duo beat U.S. Open singles champion, St. Petersburg-born Svetlana Kuznetsova and three-time Wimbledon singles semifinalist Amelie Mauresmo 6-2 6-1. 
Black won the doubles title last year with Rennae Stubbs, beating Huber and Ai Sugiyama in the final. 
Black also took the mixed doubles title with her brother, Wayne, in 2004. 
Huber became the first South African woman to win a doubles title at Wimbledon. 
“We went out today and really had a goal and a purpose. To go out and play like we did was a great feeling,” Black said. “We knew we had to come out and put a lot of pressure on them. We had to intimidate them by being as active as we could.” 
Black and Huber, who will move up to No. 1 in the rankings, lost in the French Open final. 
Later Sunday, Huber and Kevin Ullyett of Zimbabwe lost to Paul Hanley of Australia and Tatiana Perebiynis of Ukraine 6-3 6-4 in the mixed doubles semifinals. 
Hanley and Perebiynis then lost to Mahesh Bhupathi of India and Mary Pierce of France in the final 6-4 6-2. It was Bhupathi’s fourth mixed doubles title. 
For Kuznetsova and Mauresmo, the tournament was their first together. Mauresmo is 160th in doubles, making her the lowest-ranked player in the Open era to reach the doubles final.
 Kuznetsova has lost five of her six Grand Slam doubles finals, with her only win coming this year at the Australian Open with Alicia Molik.

TITLE: Federer Clinches Third Wimbledon Title
PUBLISHER: The Associated Press
TEXT: WIMBLEDON, England — Closing in on his third consecutive Wimbledon title, Roger Federer hit one shot so hard it darted between Andy Roddick’s legs. 
Federer wanted this one badly, which is why he played so well. With his typical mix of precision and power, the Swiss marvel drubbed Roddick 6-2 7-6 6-4 in Sunday’s final. 
Even by the top-ranked Federer’s high standards, his latest performance was special. Gliding across the lawn he loves, he always seemed to be in the right place to choose the right shots — some of which only he could hit. 
By beating the No. 4-ranked Roddick and No. 2 Lleyton Hewitt in the last two rounds without dropping a set, Federer strengthened his case for consideration among the game’s great players. He became the third man since 1936 to win three consecutive Wimbledon crowns, joining seven-time champion Pete Sampras and five-time winner Bjorn Borg. 
Still just 23, Federer joined a list of three-time Wimbledon winners that includes Boris Becker and John McEnroe. 
“I can’t believe the way he played,” Becker said. “We are watching greatness unfold.”
“He’s the greatest talent of all time,” McEnroe said. 
Federer improved to 5-0 in Grand Slam finals. He’s the first man since Tony Trabert in 1953-55 to win his first five major finals. 
“I amaze myself how incredible, actually, I use my talent to win,” Federer said. “Nobody would have ever thought it would be this extreme, basically dominating the game, winning three Wimbledons. 
“One, you think, ‘Wow, that’s fantastic.’ When you end up winning three, you’re really starting to wonder, ‘What have I done right?’” 
Also earning a third title at the All England Club was Venus Williams, who overcame a championship point to beat top-ranked Lindsay Davenport in a thrilling women’s final Saturday (see page 23). 
The drama in the men’s final centered on what Federer would come up with next. He saved several of his most spectacular shots for the seventh game of the final set, when he broke for a 4-3 lead. 
Three passing shots won points, and he lined a return between the legs of an onrushing Roddick. Reaching behind him, Roddick somehow managed to block the ball back, but Federer put away a forehand. 
That summed up the extent of Federer’s superiority: Roddick hit the trick shot of the tournament and still lost the point. 
The title was the eighth this year for Federer, whose game remains unrivaled in its versatility. He can attack or play from the baseline, depending on the opponent and surface. Each of his shots — serve, forehand, backhand, volley — ranks with the best in the game. He possesses an uncanny knack for rising to the occasion, winning in his past 21 tournament finals. 
“He’s the most physically gifted player I’ve played against,” Roddick said. “But with that, he has just become so solid mentally. ... If he keeps up this level, I don’t know many people in history who would beat him.” 
Federer will be chasing history in the years to come. He has won 36 consecutive grass-court matches, and next year he’ll try to break Borg’s record of 41. With Wimbledon titles the next two years, he would match Borg’s modern record of five in a row. 
And then there’s Sampras’ record of 14 Grand Slam titles. Sampras won his fifth major title a month before his 24th birthday, which means Federer — who turns 24 on Aug. 8 — is right on pace. 
Not that Federer is unbeatable. As he noted during the trophy ceremony, he lost this year in the semifinals of the Australian Open and the French Open. 
But he has beaten Hewitt eight times in a row, and he’s 9-1 against Roddick. He’ll be the favorite to repeat as champion at the U.S. Open in two months, and oddsmakers already list him as an 8-15 favorite to win Wimbledon next year. 
“Obviously for the next few years, I’ll definitely be a huge favorite for this tournament,” Federer said. “It doesn’t mean necessarily I’ll take them all.”
Among those searching for a way to challenge Federer’s supremacy is Roddick. He has lost to Federer at Wimbledon each of the past three years, including in last year’s final. Against everyone else, he’s 32-0 on grass since 2003. 
“You just have to sit back and say ‘too good’ sometimes — hope he gets bored or something,” Roddick said. “I have loads of a respect for him, as a person as well. I’ve told him before, ‘I’d love to hate you, but you’re really nice.’”

TITLE: All to Play For as Olympic Host City is Picked
PUBLISHER: Combined Reports
TEXT: SINGAPORE — Royalty is in residence and world leaders will be wheeling around the polished salons and marble halls of Singapore’s opulent Raffles complex. 
Welcome to the 2012 Olympic Games host city vote. 
Lobbying is feverish in this steamy city-state on the tip of the Malaysian peninsula as hyperbole, brinkmanship and paranoia reign. 
The vote for the 2012 Olympic host city is in the hands of sports administrators, former athletes and royalty, who have a record of selecting underdogs. 
London, Madrid, Moscow and New York will take on the frontrunner Paris when 100 International Olympic Committee members start voting Wednesday. 
Bookmaker William Hill rates Paris a 1-4 favorite, London at 11-4, Madrid 20-1 and New York 25-1. 
Moscow is considered a rank outsider at 50-1. 
“History has not been that kind to the frontrunner,” Michael Payne, the IOC’s former marketing director, said. “It’s a brave man to say at this stage it’s impossible for any city to win because IOC votes are unique affairs.”
At stake are rights that would trigger construction investment from $15.8 billion in London to $6.2 billion in Paris and lift the winning nation’s economy with jobs and tourism. 
Four of the past six votes for the summer games were upsets, including Atlanta beating Athens to the 1996 Olympics, Payne said. 
A climate of secrecy resulting from bidding guidelines introduced in 1999 after the Salt Lake City bribery scandal has made gauging voting intentions more difficult, said Alex Gilady, an IOC member from Israel. Then, 10 members quit or were expelled for receiving money and perks from 2002 Winter Games organizers. 
“I’ve no idea how anyone is voting since we don’t talk to each other about it,” Gilady, an NBC Sports Vice President, said last month in Beijing. 
Singapore’s Raffles complex has been overrun by bid officials and consultants, celebrities and spin doctors as each city pulls out all the stops in their pursuit of the grand prize. 
Rumours of alliances, pacts and agreements are rife. Groups and quorums huddle in corridors and bars, deep in earnest conversation. 
All committee members, from Russian pole-vault champion Sergey Bubka to Senegal’s Lamine Diack, track and field’s highest official, are barred from visiting bid cities. 
Instead, they receive reports on the candidates prepared by an IOC commission and see presentations on the day of the ballot. 
Once electronic voting begins one city will drop out each round until a candidate polls an overall majority of members’ votes. 
“We spent the first few days working on our presentation,” Sebastian Coe, chairman of the London bid, said. “Now we are concentrating on the relationship end of the deal.”
Coe’s team is being boosted by British Prime Minister Tony Blair who touched down on Singaporean tarmac at the weekend. England soccer captain David Beckham is also due to join the circus. 
Not to be trumped, Paris is wheeling in President Jacques Chirac while New York boasts an all-star line-up including former First Lady Hillary Clinton and boxing great Muhammad Ali. 
Queen Sofia of Spain is the figurehead of the quietly confident Madrid contingent. 
Russian Prime Minister Mikhail Fradkov and Moscow Mayor Yury Luzhkov were due to fly to Singapore to back the bid by the Russian capital, Itar-Tass reported Friday. 
The Russian delegation also includes IOC vice president Vitaly Smirnov, and Olympic champions Irina Rodnina and Alexander Popov, Itar-Tass reported Friday. 
Moscow has an advantage over the other four cities vying to host the 2012 Olympics because the selection of Moscow would be a historic event, Luzhkov said Monday, reported RIA Novosti. 
Luzhkov drew a parallel between the selection of Beijing as host city for the 2008 Games and the possible selection of Moscow for the 2012 Olympics. 
He said Moscow was very optimistic because the Olympic Games could change the future of people, cities and nations. 
The Moscow delegation was confident that IOC members would decide that only one nation and one city would change drastically after hosting the Olympics, reported RIA Novosti. 
(Bloomberg, Reuters)